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In re Programmatic Changes to Standard-Offer Program & Investigation into Establishment of Standard-Offer Prices (Allco Renewable Energy Limited and PLH LLC)

Supreme Court of Vermont

August 25, 2017

In re Programmatic Changes to Standard-Offer Program & Investigation into Establishment of Standard-Offer Prices (Allco Renewable Energy Limited and PLH LLC, Appellants)

         On Appeal from Public Service Board James Volz, Chair

          Thomas Melone, New York, New York, for Appellants.

          Geoffrey Commons, Acting Director for Public Advocacy, and Jeanne Elias, Special Counsel, Montpelier, for Appellee Department of Public Service.

          PRESENT: Skoglund, Robinson, Eaton and Carroll, JJ., and Burgess, J. (Ret.), Specially Assigned

          SKOGLUND, J.

         ¶ 1. Allco Renewable Energy Limited and PLH LLC (collectively Allco) appeal the Public Service Board's order denying their motion to reconsider. As in its motion to reconsider, Allco argues on appeal that the Board was required to award standard-offer contracts to several solar projects because they provided "sufficient benefits" to the operation of Vermont's electric grid, as set forth in 30 V.S.A. § 8005a(d)(2). Because Allco's claims relating to the correct application of § 8005a(d)(2) were neither raised nor decided below, we decline to address them on appeal. Accordingly, we conclude that the Board did not err in denying Allco's motion for reconsideration, and affirm.

         ¶ 2. The standard-offer program is a component of Vermont's Sustainably Priced Energy Enterprise Development (SPEED) program, which promotes the development of renewable energy in Vermont. See id. § 8001. The standard-offer program-codified in 30 V.S.A. § 8005a-provides the Public Service Board with the authority to offer power-purchase contracts to new renewable-energy plants if the proposed plants satisfy certain requirements; for example, the plant must be located in Vermont, have a capacity of 2.2 megawatts or less, and comply with other restrictions. Id. § 8005a(b).

         ¶ 3. Allco's appeal involves the interplay between two categories of standard-offer contracts. The first type of contracts count against the annual cumulative capacity; the second type do not count against the cumulative capacity. Id. § 8005a(c), (d). As described below, § 8005a and the Board orders interpreting the statute set forth distinct qualification requirements for the contract types.

         ¶ 4. Those contracts that count against the cumulative capacity are governed by § 8005a(c).[1] That subsection requires the Board to issue standard offer contracts until a certain cumulative plant capacity is reached; each year, the Board sets the available capacity for new plants and then receives proposals to fill that capacity. Id. § 8005a(c). In a March 1, 2013 order, [2]the Board established a request-for-proposals mechanism to determine which standard-offer projects would fill the annual cumulative capacity. Establishment of Standard-Offer Prices & Programmatic Changes to the Standard-Offer Program, Docket Nos. 7873 & 7874, at 22-26 (Vt. Public Serv. Bd. Mar. 1, 2013) [hereinafter 2013 Board Order], available at [].

         ¶ 5. The second type of standard-offer contract applies to plants that do not count towards the cumulative capacity, including those that provide "sufficient benefits" to the electric grid. See 30 V.S.A. § 8005a(d)(2).[3] As set forth in the 2013 Board Order, to satisfy the "sufficient benefits" standard, the plant must be "intended to mitigate transmission and distribution constraints, as opposed to those that provide more generalized benefits." 2013 Board Order at 44; see also 30 V.S.A. § 8005a(d)(2). The 2013 Board Order also adopted a screening framework and guidelines to award plants standard-offer contracts under § 8005a(d)(2), outside of the cumulative capacity. See 2013 Board Order at 49-51.

         ¶ 6. With that background in mind, here are the facts leading to Allco's appeal. On April 1, 2016, the standard-offer facilitator issued a request for proposals to meet the annual requirements of 30 V.S.A. § 8005a(c)-that is, the subsection governing cumulative capacity standard-offer contracts described above. In defining eligibility for the award group, the request for proposals specifically cited to 30 V.S.A. § 8005a(c) and stated that the available annual capacity in 2016 was approximately 6.375 megawatts. The facilitator received twenty-four proposals. After allocating technology specific set-asides for four small wind projects and one large wind project, approximately 3.875 megawatts of plant capacity remained for solar projects. Of the eighteen solar projects submitted, Allco submitted eleven. The combined megawatt capacity of the eighteen proposed solar projects was 37.23 megawatts, well over the remaining annual capacity. Following its normal procedures, the Board ranked the solar projects from lowest price to highest price per kilowatt hour and selected the projects based on the price offered. Once the Board filled the remaining 3.875 megawatts with the lowest priced projects, no additional cumulative capacity projects were authorized. Only two solar projects received standard-offer contracts, one of which was an Allco project. On May 27, 2016, the Board awarded standard-offer contracts to the two solar projects as well as to the five wind projects and established a reserve with two additional solar projects.

         ¶ 7. Allco filed a motion to reconsider the Board's determination. In the motion, Allco moved for "the Board to award standard offer contracts to all the remaining eligible proposals submitted" and cited 30 V.S.A. § 8005a(d) as support for its contention that the contracts should be awarded outside of the cumulative capacity. Allco argued that § 8005a(d) required the Board to award standard-offer contracts to renewable-energy plants that provide "sufficient benefits" to the operation and management of the electric grid. Because each of the remaining proposals satisfied this "sufficient benefits" test, Allco claimed that the Board was required to grant standard-offer contracts to the remaining projects outside of the cumulative capacity.

         ¶ 8. The Board denied Allco's motion to reconsider. In doing so, the Board noted that the purpose of the request for proposals was for standard-offer projects that met the annual capacity requirements set forth in 30 V.S.A. § 8005a(c). Because the facilitator's request for proposals and the Board's subsequent order did not invoke the "sufficient benefits" test set forth in 30 V.S.A. § 8005a(d), the Board concluded that Allco's motion for reconsideration was outside the scope of the request for proposals. The Board further noted that Allco could pursue a standard-offer contract outside of the cumulative capacity by following the procedures in the 2013 Board Order. Allco appealed.

         ¶ 9. On appeal, Allco again focuses on the application of § 8005a(d)(2).[4] Allco argues that the Board used the wrong framework for determining whether its proposed projects should be awarded standard-offer contracts as plants outside the cumulative capacity under § 8005a(d)(2). Allco emphasizes § 8005a(d)(2)'s language and claims that the Board's interpretation of this language erroneously limits the "sufficient benefits" test to those energy plants that "mitigate transmission and distribution constraints." 2013 Board Order at 44. Allco further argues that § 8005a(d)(2) is not limited in this manner and that the language relating to mitigation is illustrative, not exclusive. Based on this interpretation, Allco argues that it was not necessary to prove that its proposed projects mitigate transmission and distribution constraints and that, as a result, the ...

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