Court Opinion

ID: 9761160
Source: CourtListenerOpinion
Date Created: 2023-08-29 01:32:55.503857+00
Date Added: 2024-06-11T07:29:20.447726
License: Public Domain

Morse, J.,
concurring. I agree with the Court’s result but believe it rests on an incorrect ground. The parties raised the issue of whether EGC’s agreement with VPX was a legally enforceable obligation to produce power, entitling it to Docket 5177 rates. The Court needlessly sidesteps this familiar issue, recently addressed in In re Department of Public Service (Rye-gate), 157 Vt. 120, 125, 596 A.2d 1303, 1306 (1991), and instead embarks on a remarkable interpretation of avoided cost.
Avoided cost is the central concept in the PURPA scheme, and FERC regulations — not state law — define the term. See 18 C.F.R. § 292.101(b)(6) (1991) (avoided costs are “the incremental costs to an electric utility of electric energy or capacity or both which, but for the purchase from the qualifying facility..., such utility would generate itself or purchase from another source”). Although FERC regulations place implementation of PURPA in the state’s hands, see 18 C.F.R. § 292.401(a), the state is not free directly or indirectly to redefine avoided cost. Instead, the state’s role is to calculate (DPS) and approve (PSB) the rates utilities pay for power that qualified producers generate based on avoided cost. Ryegate, 157 Vt. at 122, 596 A.2d at 1304.
Under FERC regulations, again as a matter of federal law, the power producer has the option of choosing avoided costs either at the time of delivery or at the time the obligation is incurred. The rates are calculated over time, in Docket 5177 as long as thirty years, and the producer is entitled to the rates “over a specific term.” 18 C.F.R. § 292.304(d)(2). If EGC’s agreement with VPX is a legally enforceable obligation and if Docket 5177 was the most recent DPS/PSB rate order at the time of that agreement, EGC should be entitled to choose from those rates.
I find no federal authority for ignoring the Docket 5177 rates, which were the result of a prolonged administrative and quasi-*540judicial process, or for recalculating new rates for this appellant. I also find unsatisfactory the Court’s after-the-fact attempt to justify this procedure by distinguishing short-term and long-term avoided costs and levelized and nonlevelized rates based on avoided costs. These distinctions do not appear in PURPA, FERC, or the Board’s own regulations. Although I did not agree with the result in Ryegate, at least that decision held out some expectation to power producers that they could rely on offered rates if they were willing to legally obligate themselves.
Comparing the facts in this case against the requirement for a certificate of public good would convince even a novice in this regulatory field that the certificate for EGC was not in the public good. The benefit of EGC’s bargain would undoubtedly be at the public’s expense. The Court’s analysis is a curious, and I believe disingenuous, way to reach an affirmance in this case.
Ryegate is ample authority to affirm the Board because the “obligation” here is no more “enforceable” than the one there. As stated in Ryegate, 157 Vt. at 125, 596 A.2d at 1306: “At best, Ryegate has obligated itself to go through a number of development and regulatory steps that may lead to an obligation to deliver energy, if all goes well.” This case is no different. I question why the Court does not apply this precedent, affirm, and be done with it. Instead, the Court necessarily violates Ryegate by analyzing this case as one not involving “avoided costs.” The rates in this case are avoided costs by definition, and Ryegate teaches that avoided costs, as approved by the Board (as these were in Docket 5177), are “available as a matter of federal law” when and if the qualifying facility [here EGC] “incurs ‘a legally enforceable obligation for the delivery of energy or capacity over a specified term.’ ” 157 Vt. at 125, 596 A.2d at 1306 (quoting 18 C.F.R. § 292.304(d)(2)) (emphasis added).
Levelization, which seems to be the linchpin of the Court’s decision, does not undermine the existence of avoided costs any more than short-term or long-term rates do. Avoided costs are calculated over the short and long term, and rates based on avoided costs may be levelized or nonlevelized. Levelization merely flattens the payments — more now, less later. Once rates are calculated on avoided costs, how does levelization cause those rates no longer to be based on avoided costs? The Court’s *541opinion begs that question, because the answer must be, “Because we say so.”
The Court simply cannot make the Board’s magic (turning avoided costs into something else by levelization) real by incanting that “[the Board’s] paramount obligation [is] to ensure that Vermont’s ratepayers are not burdened with uneconomic power purchases.” The Court today nullifies federal law by reading out “specified term” in the federal regulation as applying to avoided costs. While the end may be worthy, a “sleight of word” does not dignify the means.
Although the Court recognizes that the PURPA scheme leaves power producers open to financial risks resulting from unforeseen changes in economic circumstances, it refuses to acknowledge that the state and the consumers it represents are vulnerable to the same risks. PURPA was designed to encourage small power producers. If that policy goal is no longer desirable, the change should come through federal legislation.