Court Opinion

ID: 3211005
Source: CourtListenerOpinion
Date Created: 2016-06-09 06:06:01.289214+00
Date Added: 2024-06-11T13:28:14.339998
License: Public Domain

This opinion will be unpublished and
                           may not be cited except as provided by
                           Minn. Stat. § 480A.08, subd. 3 (2014).

                                STATE OF MINNESOTA
                                IN COURT OF APPEALS
                                      A15-1831

                               In the Matter of the Petition of
                     Northern States Power Company, d/b/a Xcel Energy,
                                for Approval of Its Proposed
                             Community Solar Garden Program.

                                    Filed May 31, 2016
                                         Affirmed
                                    Halbrooks, Judge

                                Public Utilities Commission
                                 File No. E-002/M-13-867

Christopher W. Madel, Jennifer M. Robbins, William Bornstein, Cassandra M.
Batchelder, Robins Kaplan LLP, Minneapolis, Minnesota (for relator Sunrise Energy
Ventures, LLC)

Lori Swanson, Attorney General, Anjali V. Shankar, Assistant Attorney General,
St. Paul, Minnesota (for respondent Minnesota Public Utilities Commission)

Vernle C. Durocher, Jr., F. Matthew Ralph, Phil Steger, Brian B. Bell, Dorsey & Whitney
LLP, Minneapolis, Minnesota (for respondent Northern States Power Company)

      Considered and decided by Halbrooks, Presiding Judge; Bjorkman, Judge; and

Toussaint, Judge.


 Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to
Minn. Const. art. VI, § 10.
                         UNPUBLISHED OPINION

HALBROOKS, Judge

       Relator, a developer of solar-energy facilities, challenges an August 6, 2015 order

issued by respondent Minnesota Public Utilities Commission (PUC), arguing that the

PUC (1) engaged in unlawful rulemaking, (2) violated relator’s due-process rights, and

(3) acted in excess of its statutory authority by limiting relator’s interconnection rights.

We affirm.

                                         FACTS

       Minnesota’s community solar garden (CSG) statute, Minn. Stat. § 216B.1641

(2014), was enacted in 2013 to promote solar growth in the state by providing individual

customers and communities the opportunity to work together to have a community solar

resource. Under this model, non-utility-scale customers who typically face economic

barriers to participation in a solar program would purchase or lease a subscription at a

central solar installation and receive a bill credit for the electricity generated in

proportion to the size of their subscription. See Minn. Stat. § 216B.1641(a)-(b).

       Under the statute, respondent Northern States Power Company d/b/a Xcel Energy

was required to file a plan with the PUC outlining its proposed CSG program. Minn.

Stat. § 216B.1641(a). Xcel met the statutorily defined deadline by submitting a proposed

plan on September 30, 2013. The PUC received voluminous comments between October

4 and December 3, 2013, from various high-level stakeholders in the solar industry who

provided input on Xcel’s proposed plan. Based on this feedback, the PUC issued an

                                             2
order on April 7, 2014, rejecting Xcel’s proposal and requiring the company to file a

revised CSG plan. Xcel complied by filing a revised plan on May 7, 2014.

       After additional stakeholder commentary, the PUC issued an order on September

17, 2014, approving Xcel’s modified CSG plan. Both this order and the previous April 7

order permitted co-location of CSGs but were silent on the topic of co-location caps. The

program launched on December 12, 2014, and Xcel began accepting applications from

individuals and developers hoping to construct and operate CSGs. The overall response

to the CSG program was unquestionably more positive than originally anticipated, and

Xcel became concerned that utility-scale producers were taking advantage of the

lucrative benefits provided by the program. Relator Sunrise Energy Ventures, LLC

submitted 100 applications in the first hour of the program.

       Xcel first raised the issue of utility-scale developers on January 13, 2015, in

supplemental comments submitted to the PUC. Xcel urged the PUC to place limitations

on co-located solar gardens in the CSG program for multiple reasons, including

(1) possible complications created by interconnecting utility-scale solar projects to the

distribution system, (2) the company’s belief that permitting large-scale operations to

participate in the program would run counter to legislative intent, and (3) potential rate

impacts to non-participating customers.

       Xcel requested that the PUC affirm its intention to process only those applications

proposing CSGs of no more than 1 megawatt (MW) in size, meaning that co-located

applications from a single developer would be processed so long as they, in the

aggregate, did not exceed 1-MW.        On June 22, 2015, Xcel entered into a partial

                                             3
settlement with several stakeholders in the solar industry. Sunrise was not part of this

process. The agreement proposed to limit the aggregate capacity of co-located CSGs to

5-MW for applicants already in the approval queue and 1-MW for applications submitted

after September 25, 2015, allowing Xcel to unilaterally scale down any larger CSGs and

refund application deposits and fees associated with the scaled-down portions. The PUC

held a public hearing in late June 2015 to discuss proposed limitations to the program.

By the end of the hearing, the PUC had received, either orally or through written

comments, extensive feedback from many stakeholders, including government entities,

solar-industry representatives, nonprofit organizations, Xcel, and members of the public.

       The PUC approved a modified plan adopting portions of the partial settlement

agreement, including the CSG co-location caps.            Sunrise filed a petition for

reconsideration with the PUC on August 26, 2015, that the commission denied on

October 15, 2015.1 The PUC reiterated that its August 6, 2015 order modifying Xcel’s

plan to include co-limitation caps was based on its determination that “allowing unlimited

co-location would render the 1 MW statutory limit superfluous, undermine the legislative

intent to foster small, widely distributed solar gardens rather than utility-scale solar

developments, and create a risk of significant rate increases to ratepayers.” The PUC also

denied Sunrise’s request to stay the August 6 order pending appeal to this court. This

certiorari appeal follows.

1
 The implementation of the CSG program is currently proceeding under the terms of the
PUC’s August 6, 2015 order.

                                            4
                                     DECISION

       “On writ of certiorari, we determine whether the Commission violated the

constitution, exceeded its authority, engaged in unlawful procedure, erred as a matter of

law, issued a decision unsupported by substantial evidence, or acted arbitrarily or

capriciously.” In re Investigation into Intra-LATA Equal Access & Presubscription, 532
N.W.2d 583, 588 (Minn. App. 1995), review denied (Minn. Aug. 30, 1995). An agency’s

decision bears a presumption of correctness, and we defer to the agency’s expertise in

fact finding. Id. “When reviewing questions of law, however, we are not bound by the

agency’s decision and need not defer to the agency’s expertise.” Id.

                                I.     RULEMAKING

       Sunrise makes several arguments concerning the PUC’s actions, including that the

PUC (1) violated the Minnesota Administrative Procedure Act (MAPA) by failing to

make required findings and failing to follow procedures required by Minn. Stat.

§ 216B.1641(e), (2) engaged in unlawful retroactive rulemaking, and (3) arbitrarily and

capriciously decided to implement limitations on CSG co-location.         Because these

nuanced arguments depend on whether the PUC engaged in rulemaking, we first address

that issue.

       Under MAPA, a “‘rule’ means every agency statement of general applicability and

future effect, including amendments, suspensions, and repeals of rules, adopted to

implement or make specific the law enforced or administered by that agency or to govern

its organization or procedure.” Minn. Stat. § 14.02, subd. 4 (2014). Thus, if an agency

statement (1) has general applicability; (2) has future effect; and (3) is intended to

                                            5
interpret or create law, policy, or procedure, it is a rule. 21 William J. Keppel, Minnesota

Practice § 5.01 (2d ed. 2007).

       Under this “expansive definition,” an agency must generally promulgate

legislative rules and interpretive rules. In re PERA Salary Determinations Affecting

Retired & Active Emps. of the City of Duluth, 820 N.W.2d 563, 570 (Minn. App. 2012).

“Legislative rules are those promulgated pursuant to delegated powers to make

substantive law.” Minn. Transitions Charter Sch. v. Comm’r of Minn. Dep’t of Educ.,

844 N.W.2d 223, 233 (Minn. App. 2014) (quotation omitted), review denied (Minn. May

28, 2014).    “Interpretive rules are those that make specific the law enforced or

administered by the agency.” Id. (quotation omitted). A properly promulgated rule,

whether legislative or interpretive, is a powerful rule that has the full “force and effect of

law.” Minn. Stat. § 14.38, subd. 1 (2014).

       The parties dispute whether the PUC’s orders constitute rulemaking or merely

clarify or interpret newly enacted statutory law. Sunrise argues that they constitute

interpretive rules and that the PUC engaged in improper rulemaking by permitting caps

on co-location, maintaining that the statute only restricts each parcel to a “nameplate

capacity of no more than one megawatt.”           Minn. Stat. § 216B.1641(b).       Sunrise’s

argument fails in several respects.

Newly Enacted Statute

       An agency need not promulgate administrative rules as soon as a new statute goes

into effect. “Not every principle can or should be cast immediately into the mold of a rule

because some principles must be adjusted to meet particular situations.” Intra-LATA

                                              6
Equal Access & Presubscription, 532 N.W.2d at 590 (emphasis added). After Xcel’s

CSG program was unveiled, it quickly became apparent that the initial response to the

program far outpaced what was anticipated.          Xcel’s original forecasted program

participation ranged from 40- to 100-MWs over the span of five to ten years. By

December 2014, Xcel noted that it had received over 400 applications representing more

than 400-MW. By June 2015, the aggregate generating capacity had risen to nearly

1,000-MWs (1-GW) worth of applications—still in the program’s initial roll-out period.

Sunrise alone submitted 100 applications constituting 100-MWs within the first hour of

the program’s opening. These facts indicate that the PUC was not engaged in rulemaking

but was modifying (or approving Xcel’s request to modify) the plan to respond to

implementation. In light of the overwhelming response to Xcel’s CSG program, we

conclude that the PUC made lawful and reasonable fact-specific determinations under the

circumstances.

General Applicability

       The PUC’s orders are limited to Xcel. They outline the terms under which solar-

power developers may participate in Xcel’s program but do not purport to bind any

energy company other than Xcel to the terms of the orders. Thus, the PUC’s statements

cannot be said to be of “general applicability.”

Statutory Interpretation

       The PUC’s actions are consistent with the statute. “The object of all interpretation

and construction of laws is to ascertain and effectuate the intention of the legislature.”

Minn. Stat. § 645.16 (2014). “A statute should be interpreted, whenever possible, to give

                                             7
effect to all of its provisions; no word, phrase, or sentence should be deemed superfluous,

void, or insignificant.” Minn. Transitions Charter Sch., 844 N.W.2d at 227 (quotations

omitted). Statutory interpretation is a question of law, which we review de novo. Lee v.

Lee, 775 N.W.2d 631, 637 (Minn. 2009).

       The statute reads: “There shall be no limitation on the number or cumulative

generating capacity of community solar garden facilities other than the limitations

imposed under section 216B.164, subdivision 4c, or other limitations provided in law or

regulations.” Minn. Stat. § 216B.1641(a). Sunrise interprets this phrase to mean that

there can be no limitations at all imposed on co-location so long as the capacity of each

individual nameplate does not exceed 1-MW. See Minn. Stat. § 216B.1641(b) (“The

solar garden must have a nameplate capacity of no more than one megawatt.”). We agree

with Xcel and the PUC that such an interpretation renders the 1-MW nameplate provision

superfluous. We read the “no limitation” provision in part (a) of the statute to refer to the

CSG program as a whole. Interpreting the nameplate-capacity limitation to suggest that

any given CSG may be indeterminately large is not consistent with that plain language of

the statute.

       Sunrise argues that the PUC “reversed course” in its August 6 order by placing

caps on co-located CSGs for the first time after it issued two previous orders in which it

did not place any limitations on co-location.          In its August 6 order, the PUC

acknowledged that it had previously required Xcel to allow CSGs to co-locate, but it also

clarified that it “was not aware at that time of the extent to which developers planned to

                                             8
co-locate gardens and thus did not address whether any limits should be placed on co-

location.”

       We are unable to find any evidence supporting Sunrise’s assertion that the August

6 order is inconsistent with the PUC’s previous orders. At no time before August 6 did

the PUC address whether limits should be placed on co-located CSGs. It addressed the

idea of co-location generally but did not specifically address the issue of caps. Thus,

nothing in the August 6 order is inconsistent with previous orders. Further, nothing in the

order is inconsistent with the statute because the PUC placed no limitations on co-

location; rather, it simply placed a cap on the aggregate co-location of CSGs in a single

location so as not to render the 1-MW nameplate restriction superfluous.

Utility-Scale Solar Producers

       Minnesota law provides a platform for the implementation of solar-energy

production through two statutes—Minn. Stat. §§ 216B.164 (2014) and 216B.1641. If a

developer proceeds under Minn. Stat. § 216B.164, that developer is subject to the Public

Utilities Regulatory Policies Act of 1978 (PURPA), which provides that a qualifying

facility (QF) such as Sunrise may take advantage of an “avoided cost rate.” This rate is

the “cost to the electric utility of the electric energy which, but for the purchase from

such cogenerator or small power producer, such utility would generate or purchase from

another source.” 16 U.S.C. § 824a-3(d) (2012). A developer proceeding under the CSG

program is eligible for enhanced “applicable retail rates.” It is undisputed that the rates

available through the CSG program are higher than those available to developers through

the traditional vehicle, which also involves a competitive bid process. Accessing higher

                                            9
rates and avoiding a competitive bid process creates an incentive for developers to

proceed under the CSG statute.

       When Xcel brought the issue of utility-scale producers to the PUC’s attention, it

noted that of the approximately 400 applications it had received, only 75 separate sites

were proposed. Xcel “described these large projects as resembling utility-scale solar

development more than community-scale development, [which] was not consistent with

what the Commission intended when approving the Company’s program” and that

“developers were essentially planning utility-scale solar projects; then, solely for the

purposes of meeting program requirements, designating each one MW portion as a single

garden.” Xcel expressed concern that the “majority of subscribed production capacity

was being marketed to large commercial and industrial customers and that there is

potential for residential or small business customers to be largely excluded from

participation.”

       The potential to “lock out” direct individual and community participants—the

consumer base directly targeted by the CSG statute—is another indication that the statute

is intended to allow communities and individuals historically foreclosed from cost-

prohibitive solar energy the opportunity to take advantage of benefits previously

unavailable to them. The PUC’s August 6 order is consistent with the legislature’s intent.

Public Policy

       The PUC must ensure that any approved plans both “reasonably allow for the

creation, financing, and accessibility of community solar gardens” and “be consistent

with public interest.” Minn. Stat. § 216B.1641(e)(1), (4). The statute also expressly

                                           10
provides that “[t]he [PUC] may approve, disapprove, or modify a community solar

garden.” Minn. Stat. § 216B.1641(e).

       In the August 6 order, the PUC determined that the co-location caps were a

“workable solution consistent with the public interest and the statutory intent to create a

solar-garden program that is community-focused.” The PUC shared Xcel’s concern that

non-participating customers would be affected by a rate hike should Xcel be forced to

accommodate unlimited co-location because of current infrastructure constraints. The

PUC heard from many stakeholders in the solar industry at every point in the process and

exercised its authority to modify the program in accordance with statutory requirements

as the program changed in its implementation stages. Its actions are amply supported by

a robust record, especially in light of the fact that the PUC has a statutory duty to provide

a CSG program that is aligned with the public interest.

       For these reasons, we conclude that the PUC did not engage in improper

rulemaking2 and did not err in interpreting the statute.

                              II.    DUE-PROCESS RIGHTS

Substantive Due Process

       Sunrise argues that its 100 reservation letters represent property interests and serve

as enforceable contracts. It also maintains that it was deprived of its property rights

without just compensation when the PUC implemented co-location caps after Sunrise

2
  Because we conclude that the PUC did not engage in rulemaking, we decline to address
the issues of whether the PUC violated MAPA by failing to make findings or failing to
follow MAPA procedures and whether the August 6 order was arbitrary, capricious, or
unsupported by substantial evidence.

                                             11
invested large amounts of money into the CSG program. The Minnesota Constitution

provides that “[p]rivate property shall not be taken, destroyed or damaged for public use

without just compensation.” Minn. Const. art. 1, § 13. “It is well established that the

government need not directly appropriate or physically invade private property to

effectuate a taking.” Wensmann Realty, Inc. v. City of Eagan, 734 N.W.2d 623, 632

(Minn. 2007).      Under certain limited circumstances, a taking may result through

government regulation. Id. “In the context of government regulation a taking may result

when the government ‘goes ‘too far’ in its regulation, so as to unfairly diminish the value

of the individual’s property, thus causing the individual to bear the burden rightly borne

by the public.’” Id. (quoting Westling v. County of Mille Lacs, 581 N.W.2d 815, 823

(Minn. 1998)).

       Sunrise argues that the reservation letters serve as enforceable contracts because

each “reservation letter signals to the developer that it can begin seeking investors and

expending the resources necessary to complete the project.” Thus, Sunrise asserts that

the PUC’s actions on August 6 resulted in a taking of the company’s cognizable property

interests.   Xcel counters that the very terms of the reservation letter contradict any

interpretation of it as a legally enforceable contract.

       We note that the record contains no signed reservation letters. But an unsigned

sample reservation letter includes language suggesting that a party’s signature and

acceptance of the offer contained in the reservation letter pertains to the rate, not the

entire project, as Sunrise suggests.      For instance, the first paragraph addresses the

developer’s ability to lock in a rate on the date the reservation letter is signed. The

                                              12
paragraph concludes, “This is contingent upon approval of the completed photovoltaic

project as specified below.” The letter also includes the following language: “If there is

any conflict with this document and the Solar*Rewards community contract, the terms of

the contract control.” The letter concludes, “I hereby confirm and accept this Reservation

Letter to secure the offer[.]”

       In a separate order clarifying the CSG application process, the PUC provided the

following feedback on the application process:

                      Under Xcel’s solar-garden program, developers must
              apply to the Company for permission to operate a community
              solar garden.        The Company processes solar-garden
              applications on a “first-ready, first-served” basis to ensure
              that priority is given to those projects with the best chance of
              succeeding.

                     The process begins with a developer submitting an
              application, including information about itself and the
              proposed solar garden, an application fee, a deposit,
              engineering documents, and an interconnection application.
              Xcel then has 30 days to determine whether the solar-garden
              application is complete and forward it for engineering review.

                      After Xcel determines initial application completeness,
              the developer must submit additional evidence of project
              readiness, including evidence that the developer has arranged
              for insurance, evidence that the developer has control of the
              solar-garden site, projected subscription at the time of
              construction, and signed operation and interconnection
              agreements. The developer has 24 months from when Xcel
              finds its application complete to finish the project, subject to
              possible extension for interconnection delays.

                                            13
We conclude that the PUC’s interpretation of the application process is consistent with

the terms of the reservation letter and that the reservation letter cannot serve as an

enforceable contract.

      Sunrise maintains that, in the alternative, it should be provided relief under the

theory of promissory estoppel because it proceeded in the CSG program with an

understanding that the PUC would permit unlimited co-location. Under Minnesota law,

the elements of promissory estoppel are (1) a clear and definite promise; (2) the promisor

intended to induce reliance and such reliance occurred; and (3) the promise must be

enforced to prevent injustice. Ruud v. Great Plains Supply, Inc., 526 N.W.2d 369, 372

(Minn. 1995). “[T]he doctrine of promissory estoppel only applies where no contract

exists.” Banbury v. Omnitrition Int’l, Inc., 533 N.W.2d 876, 881 (Minn. App. 1995).

      It is undisputed that a developer must take further actions after signing and

uploading a reservation letter but before the final approval of the CSG project. Some of

these actions are bound to result in cost to the developer. But the reservation letters did

not serve to promise anything except a locked-in rate and a favorable position in the

interconnection queue.    Further, Sunrise cannot succeed under this theory absent a

conclusion that the PUC engaged in rulemaking. Because we conclude that the PUC did

not issue a rule but rather used its express statutory authority to modify Xcel’s CSG

program in its implementation stages, Sunrise cannot bind the PUC to its statements in

order to succeed under a theory of promissory estoppel.

                                            14
Procedural Due Process

       Sunrise argues that the commission violated Minnesota’s open-meeting law on

June 25, 2015, when it took a ten-minute break before returning to the public forum to

make a decision.      The open-meeting law requires, with limited exception, that all

meetings of public bodies, including the commission, be open to the public. Minn. Stat.

§ 13D.01, subd. 1(a)(3) (2014). It is undisputed that the commission was subject to the

open-meeting law on that date—it was a “gathering[] of a quorum or more members of

the . . . commission thereof, at which members discuss, decide, or receive information as

a group on issues relating to the official business of that governing body.” Moberg v.

Indep. Sch. Dist. No. 281, 336 N.W.2d 510, 518 (Minn. 1983). This court must decide

(1) whether the commission violated the open-meeting law and, if so, (2) whether a

certiorari appeal is the proper vehicle for redress.

       During the full-day hearing, the commissioners took several breaks. Immediately

before taking its final break, the commission chair stated:

                     I suggest we just take a break for ten minutes so that
              we have a chance to talk to the staff and see whether we can
              come to any clarity about whether we’re going to proceed
              today or not.

                      ....

                     . . . So we’ll take ten minutes, give the Commissioners
              a chance to confer with staff, and we’ll decide whether we’re
              going today or we’re not.

Sunrise takes issue with this because the commissioners returned and immediately voted

to adopt the partial settlement’s temporary co-location cap after expressing hesitation

                                              15
about limitations earlier in the day. The party alleging a violation of the open-meeting

law bears the burden of proving that a “group consensus” was formed outside of the

public space. Franzwa v. City of Hackensack, 567 F. Supp. 2d 1097, 1115 (D. Minn.

2008); Moberg, 336 N.W.2d at 519.

       Here, the only evidence proffered by Sunrise that the commissioners violated the

open-meeting law is that the commission adopted the co-location cap after the break

despite some members expressing concerns about it before the break.            This is not

evidence that the commissioners conducted a closed “meeting” for purposes of the

statute. Immediately before taking the break, the commissioners agreed that a change

needed to be implemented but were “a little torn between 5 and 10 (MW’s),” noting that

“if we go with 5 we’re going to have the divestiture argument big time. And if we go

with 10, I’m not sure the ratepayer impact isn’t too great.” The chair suggested they

break for ten minutes, noting that “the choices are difficult. . . . [A]re we insufficiently

well informed today to make a decision or is it just that we have a hard choice to make?

That’s what I think we have to try to figure out in the next ten minutes.” Another

commissioner stated, “No, I agree. That’s what I have to know. If I have all the

information I can get, I’m ready to make a decision, but I want to know I have the

information I need.” The chair responded, “All right, so we’ll take ten minutes, give the

Commissioners a chance to confer with staff, and we’ll decide whether we’re going today

or we’re not.”

       From this, Sunrise asserts that the commissioners arrived at a back-door decision

to adopt Xcel’s partial settlement terms with regard to the cap. This is not enough

                                            16
evidence to support a conclusion that the commission inappropriately formed a “group

consensus” outside the presence of the public. Further, a meeting between a member of a

governing body and a non-member generally is not subject to the open-meeting law. See

Minn. Educ. Ass’n v. Bennett, 321 N.W.2d 395, 398 (Minn. 1982) (holding that a

telephone conversation between school superintendent and board member did not violate

open-meeting law because superintendent was not entitled to vote and was not member of

governing body). Thus, the fact that the commissioners broke with the express purpose

of conferring with staff did not violate the open-meeting law, as staff are not voting

members of the commission.

       Even if the commission did violate the open-meeting law, Minnesota courts have

held that such impropriety does not justify invalidation of the commission’s actions either

partially or in entirety. See, e.g., Sullivan v. Credit River Township, 299 Minn. 170, 176-

77, 217 N.W.2d 502, 507 (1974); In re Petitions of D & A Truck Line, Inc., 524 N.W.2d
1, 6 (Minn. App. 1994). The sole remedy available in this case is a $300 civil penalty

against individual commissioners found to be in violation of the open-meeting law.

Minn. Stat. § 13D.06, subd. 1 (2014) (“Any person who intentionally violates this chapter

shall be subject to personal liability in the form of a civil penalty in an amount not to

exceed $300 for a single occurrence, which may not be paid by the public body.”).

Sunrise urges this court to vacate the PUC’s order, arguing that the “violation of

Minnesota’s Open Meeting Law renders the PUC’s August 6, 2015 Order unlawful and

invalid under Minn. Stat. § 14.69.” Even if this court were to conclude that the PUC

                                            17
violated the open-meeting law, the solution Sunrise seeks is not one this court is

authorized to implement.

                           III.   INTERCONNECTION RIGHTS

       Sunrise argues that the PUC violated the Public Utility Regulatory Policies Act of

1978 (PURPA) by allowing Xcel to refuse interconnection based on upgrade needs if the

costs exceed $1 million. PURPA was enacted in late 1978 to address a nationwide

energy crisis. Fed. Energy Regulatory Comm’n v. Mississippi, 456 U.S. 742, 745, 102
S. Ct. 2126, 2130 (1982). PURPA promotes the development of new generating facilities

and the conservation of fossil fuels. New York v. Fed. Energy Regulatory Comm’n, 535
U.S. 1, 9, 122 S. Ct. 1012, 1019 (2002). The purpose of the act is to “encourage

(1) conservation of energy supplied by electric utilities; (2) the optimization of the

efficiency of use of facilities and resources by electric utilities; and (3) equitable rates to

electric consumers.” 16 U.S.C. § 2611 (2012). Congress granted the Federal Energy

Regulatory Commission (FERC) exclusive jurisdiction over the regulation and sale of

electric power at wholesale cost in interstate commerce. Occidental Chem. Corp. v. La.

Pub. Serv. Comm’n, 494 F. Supp. 2d 401, 406 (M.D. La. 2007). “[T]he FERC . . .

promulgate[s] rules to encourage cogeneration and small power production, including

rules requiring electric utilities to purchase electricity from, and sell electricity to, QF’s.”

Id. PURPA was codified in Minnesota under Minn. Stat. § 216B.164, which enables the

PUC to regulate the energy industry and implement PURPA’s provisions.

       Sunrise maintains that PURPA and Minnesota’s implementing statutes do not

permit caps as a basis to refuse interconnection. See 16 U.S.C. § 2621(d)(15) (2012)

                                              18
(“Each electric utility shall make available, upon request, interconnection service to any

electric consumer that the electric utility serves.”); Minn. Stat. § 216B.164. Because of

this mandatory language, Sunrise argues that the PUC’s $1 million interconnection cap as

a basis for refusal is per se unlawful. Respondents assert that Sunrise’s argument is

misplaced because (1) the retail rate that developers would receive under the CSG statute

is higher than what they would receive under the other solar-production statute for large-

scale utility developments, (2) the CSG program forbids a developer from continuing

under the statute if it would require Xcel to make a “material upgrade,” and (3) the CSG

program is an alternative to the section 10 tariff, which allows solar projects to be

completed with an aggregate production of 10-MW.

      The entirety of Sunrise’s PURPA argument rests on the contention that PURPA

controls and, therefore, prohibits Xcel from denying a project on the basis of

interconnection costs. But the CSG is an alternative program to the section 10 tariff that

governs larger utility-scale projects because Minn. Stat. § 216B.164 already offers

developers a vehicle for solar development.

      We find it persuasive that the FERC recently addressed this question in another

jurisdiction. Winding Creek Solar LLC filed a petition for enforcement against the

California Public Utilities Commission, arguing that California’s alternative-energy

program is inconsistent with PURPA because of statewide caps on the obligation of

utility companies under the statute. Winding Creek Solar LLC, 151 FERC ¶ 61,103 at *1

(2015). The FERC held that

                                              19
              as long as a state provides QFs the opportunity to enter into
              long-term legally enforceable obligations at avoided cost
              rates, a state may also have alternative programs that QFs and
              electric utilities may agree to participate in; such alternative
              programs may limit how many QFs, or the total capacity of
              QFs, that may participate in the program.

Id. at *3. Here, Sunrise provides no evidence that it elected to be governed by PURPA

instead of under the CSG statute, and this is likely due to the difference in rates that

Sunrise would be subjected to under the different statutes.         Sunrise would benefit

economically by participating in this state’s solar-power initiative through the CSG

program rather than through the traditional competitive-bid process. Because the CSG

program is an alternative to the statute governing the solar-power competitive-bid

process, the PUC may lawfully place limitations on participation, including on

interconnection costs, without violating state and federal law.

       Affirmed.

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