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In re Investigation into SolarCity Corp.

Supreme Court of Vermont

April 26, 2019

In re Investigation into SolarCity Corporation

          On Appeal from Public Utility Commission Anthony Z. Roisman, Chair

          Kimberly K. Hayden of Paul Frank Collins P.C., Burlington, for Appellant.

          Thomas J. Donovan, Jr., Attorney General, and Ryan P. Kane, Assistant Attorney General, Montpelier, for Appellee Public Utility Commission.

          PRESENT: Reiber, C.J., Skoglund, Robinson, Eaton and Carroll, JJ.

          REIBER, C.J.

         ¶ 1. Petitioner SolarCity Corporation appeals the Public Utility Commission's decision that petitioner violated 30 V.S.A. § 248 and Commission Rule 5.101 by constructing rooftop solar-energy net-metering systems without first obtaining certificates of public good and its imposition of a civil penalty pursuant to 30 V.S.A. § 30.[1] We affirm.

         I. Overview of Net-Metering Process

         ¶ 2. We begin with a brief overview of the net-metering process. With an exception not relevant here, Vermont law prohibits any corporation from constructing a new electric-generation facility without first obtaining a certificate of public good (CPG) from the Commission. 30 V.S.A. § 248(a)(2). The Commission determines whether to issue a CPG according to the extensive process set forth in § 248. As an alternative to the § 248 process, the Legislature has provided a simplified procedure for the approval of certain small net-metering systems, such as the solar arrays at issue here. Prior to January 1, 2017, that simplified process was codified at 30 V.S.A. § 219a (2016) (repealed by 2013, No. 99 (Adj. Sess.), § 2 (effective Jan. 1, 2017)).[2] Since January 1, 2017, the net-metering process has been codified at 30 V.S.A. § 8010. 2013, No. 99 (Adj. Sess.), § 10(d). The Commission promulgated regulations pursuant to both statutes, as directed by the Legislature. See 30 V.S.A. § 219a(c) (2016)[3]; 30 V.S.A. § 8010(c); Regulations Pertaining to Construction and Operation of Net Metering Systems, Rule 5.100 [hereinafter Prior Rule 5.100], [] (implementing § 219a); Regulations Pertaining to Construction and Operation of Net-Metering Systems, Rule 5.100, Code of Vt. Rules 30 000 5100 [hereinafter Current Rule 5.100], [] (implementing § 8010).[4] According to this simplified procedure, someone intending to install an applicable net-metering system begins the approval process by submitting a registration form with the Commission, the interconnecting utility company, and the Department of Public Service (Department) prior to construction. 30 V.S.A. § 219a(c)(1); Prior Rule 5.100, § 5.110; Current Rule 5.100, § 5.105. If the utility does not raise any issues regarding interconnection within ten days, a CPG is then "deemed issued" for that system. The system may then be installed. 30 V.S.A. § 219a(c)(1); Prior Rule 5.100, § 5.110(A)(3); Current Rule 5.100, § 5.105(E).

         II. Facts

         ¶ 3. Petitioner has been installing solar net-metering systems in Vermont since 2015. In June 2017, the Commission informed petitioner that it had failed to file registration forms with the Commission for some of the systems it had installed in 2016. Petitioner subsequently discovered additional systems for which it had failed to file registration forms with the Commission in 2015 and 2017. It had filed the registration forms with the interconnecting utilities and the Department. Petitioner attempted to cure its error by submitting 2016 registration forms for the omitted systems; however, for 134 systems, the Commission required registration under the 2017 form. Petitioner did not challenge the Commission's instruction to use 2017 forms to register the systems. Due to a substantial change in the net-metering program between 2016 and 2017, registering the omitted systems under the 2017 form rather than the 2016 form meant a potentially adverse financial impact for petitioner's customers. To mitigate that financial harm, petitioner modified its customer agreements and offered payment adjustments. Petitioner estimated that these efforts would cost the company around $200, 000 and would protect its customers from any adverse financial impact.

         ¶ 4. In September 2017, after petitioner had begun working to correct its error, the Department petitioned the Commission to open an investigation into petitioner's business practices. The Commission did so, pursuant to 30 V.S.A. §§ 30, 209, 247, 248, and 8010, and it appointed a hearing officer to review the matter.[5] During September and October 2017, the Department and petitioner engaged in discovery and in settlement negotiations. No other parties intervened in the action. The Department and petitioner filed a Statement of Stipulated Facts with the Commission in October 2017. Among other things, the stipulation stated that petitioner installed 134 systems without filing the appropriate registration forms with the Commission; a penalty was not appropriate; and petitioner did not admit to liability. The Department requested that the Commission approve the stipulation without further proceedings.

         ¶ 5. Before deciding whether to approve the stipulation, the hearing officer assigned to petitioner's case requested additional information and briefing. After reviewing these additional filings, the hearing officer recommended that the Commission find that petitioner violated 30 V.S.A. §§ 219a and 248 and § 5.101 of Current Rule 5.100, and recommended a $1000 civil penalty pursuant to 30 V.S.A. § 30. The Department and petitioner both filed comments objecting to the hearing officer's proposal for decision. Petitioner also filed a motion requesting the Commission to close the investigation. The Department did not oppose petitioner's motion and recommended that the Commission close the docket.

         ¶ 6. In May 2018, the hearing officer responded to the parties' comments and repeated his recommendations to the Commission, with some modifications. Without further proceedings, the Commission considered the proposal for decision, the objections to the proposal, and petitioner's motion to close the investigation. The Commission adopted the hearing officer's findings, conclusions, and recommendations, with some modifications. The Commission denied petitioner's motion to close the investigation. It found petitioner had violated 30 V.S.A. §§ 219a and 248 and § 5.101 of Current Rule 5.100, and it concluded that a penalty was warranted pursuant to 30 V.S.A. § 30. In recognition of petitioner's efforts to mitigate potential harm to its customers, the Commission set a "relatively small civil penalty" of $1000. Petitioner timely appealed.

         ¶ 7. Petitioner argues on appeal that: (1) the Commission erred in failing to close the investigation based on the joint stipulation and motion for dismissal; (2) its filing registrations were complete and the Commission erred in saying no filings were made; (3) there was insufficient evidence to support findings of violations or liability or the imposition of a civil penalty; (4) the Commission abused its discretion in failing to treat like cases alike; (5) the Commission failed its mandatory duty to permit petitioner to file the registrations; (6) the Commission abused its discretion in failing to waive a strict application of its rules for good cause; and (7) the Commission erred by ignoring petitioner's intent.[6] We consider each argument in turn.

         III. Stipulation

         ¶ 8. Petitioner contends that pursuant to Vermont Rule of Civil Procedure 41(a)(1)(ii) and 3 V.S.A. § 809(d), the stipulation and motion to close the investigation effectively concluded the proceedings; therefore, the Commission acted outside its authority in finding a violation and imposing a penalty after the stipulation was filed.[7]

         ¶ 9. We review with deference the Commission's decisions and its "interpretation of statutes it implements and its rules." In re GMPSolar-Richmond, LLC, 2017 VT 108, ¶ 19, ___ Vt. ___, 179 A.3d 1232; In re Citizens Utils. Co., 171 Vt. 447, 450, 769 A.2d 19, 23 (2000) ("As long as the [Commission's] decisions are directed at proper regulatory objectives, they enjoy a strong presumption of validity and are subject to great deference in this Court." (quotation omitted)). At the same time, "we do not abdicate our responsibility to examine a disputed statute independently and ultimately determine its meaning." In re Stowe Cady Hill Solar, LLC, 2018 VT 3, ¶ 20, ___ Vt. ___, 182 A.3d 53 (quotation omitted). We do not defer to the Commission in its interpretation of the Vermont Rules of Civil Procedure, which are neither the Commission's rules nor a statute it implements.

         ¶ 10. Petitioner's argument essentially asserts that the Commission is only an adjudicative body and that it has no power independently to evaluate the matters within its jurisdiction. This is incorrect. To explain, we begin with background information about the Commission's powers.

         A. Commission's Powers

         ¶ 11. The Legislature has granted the Commission oversight of electricity companies and electric-generation facilities, and the Commission shares this responsibility with the Department. See, e.g., 30 V.S.A. § 203 ("The Public Utility Commission and the Department of Public Service shall have jurisdiction over the following described companies within the State, . . . and of all plants, lines, exchanges, and equipment of . . . [a] company engaged in the manufacture, transmission, distribution, or sale of gas or electricity . . . ."). The Commission and the Department are wholly separate bodies. See id. §§ 1, 3. Some powers of oversight belong only to the Department, and others belong only to the Commission. See, e.g., id. § 2(a)(5) (authorizing Department to act as state's representative in purchasing electricity from out-of-state producers); id. § 9 (granting Commission authority to act as court of record in proceedings under its jurisdiction). Other powers the Commission and the Department share. See, e.g., id. § 18 (authorizing Commission and Department to "examine the books, accounts, and papers of any company . . . operating any line, plant, or property, subject to the Commission's or the Department's jurisdiction").

         ¶ 12. With regard to investigations, in various sections throughout Title 30 the Legislature has authorized the Department to petition the Commission to open an investigation, and it has also authorized the Commission to open investigations on its own initiative. See, e.g., id. § 218(a) (authorizing Commission to open investigation and make findings and judgment regarding rates, tolls, charges, or schedules); id. § 227a(c) (authorizing Commission to investigate whether to reimpose regulatory requirements for telecommunications services, either upon Department's petition or upon its own initiative); id. § 4002a(b)(1) (authorizing Commission to investigate certain contracts if Department opposes contract or upon Commission's own motion).

         ¶ 13. The Legislature has invested the Commission with "the powers of a court of record," id. § 9, but the Commission "is not a court in the strict sense." Trybulski v. Bellows Falls Hydro-Elec. Corp., 112 Vt. 1, 8, 20 A.2d 117, 120 (1941). Rather, the Commission is an administrative agency that possesses quasi-judicial powers. See id. at 7-8, 20 A.2d at 120 (describing Commission as "an administrative body, clothed in some respects with quasi judicial functions" and holding that Commission's jurisdiction is "of a supervisory nature, to be exercised in the interest and for the welfare of the general public"); see also Vt. Elec. Power Co. v. Bandel, 135 Vt. 141, 146, 375 A.2d 975, 979 (1977) (recognizing that "the combination of administrative and adjudicative responsibilities of the [Commission] does demand an exacting balance" (quotation omitted)). In its quasi-judicial role, the Commission oversees many different types of proceedings, such as: consumer complaints regarding utility services, see, e.g., Kettle Brook Condo. Owners' Ass'n, Nos. 7552, 7568, 2013 WL 6442690 (Vt. Pub. Serv. Bd. Dec. 4, 2013) (addressing consumer complaints alleging unauthorized sale of water services); petitions for condemnation of private property, see, e.g., Vt. Elec. Coop., Inc., No. 7680, 2011 WL 917018 (Vt. Pub. Serv. Bd. Mar. 11, 2011) (addressing petition to condemn private property to facilitate electricity distribution line and telephone lines); filings for approval of rate schedules, see, e.g., Establishing Rates for Power Sold, No. 8010, 2015 WL 777935 (Vt. Pub. Serv. Bd. Feb. 9, 2015); and petitions for CPGs, see, e.g., Burlington Schs. PV, LLC, No. 7646, 2010 WL 5139218 (Vt. Pub. Serv. Bd. Dec. 9, 2010) (addressing petition for CPG for electric-generation facility).

         ¶ 14. As we explain below, some of the proceedings that come before the Commission are essentially private disputes that affect only the interests of the parties to the proceeding. Other proceedings more broadly affect the public interest. Where a proceeding involves not only the interests of the parties, but also the interests of the public, the Commission may be responsible for independently evaluating what disposition of the matter is in the public interest.

         ¶ 15. The Commission made this distinction between its different types of proceedings in Ledgewood, No. 7424, 2012 WL 1453873 (Vt. Pub. Serv. Bd. April 23, 2012). That case arose out of a consumer complaint that alleged the defendants had been unlawfully operating a water-service business without a CPG. After the consumer and one of the defendants had agreed to a settlement, which the Department approved, those parties filed a stipulation of dismissal with the Commission. According to the Commission, "[t]he dismissal with prejudice was effective upon the filing with the [Commission] of the signed stipulation of dismissal with prejudice without further Order of the [Commission]."[8] Ledgewood, No. 7424, 2012 WL 1453873, at *1. However, the Commission further stated:

A stipulation of dismissal applies to a [Commission] proceeding, such as a consumer complaint, initiated by a private party that is akin to a civil court litigation (assuming that the complaint has not prompted an independent [Commission] investigation of a company subject to the [Commission's] jurisdiction). A stipulation of dismissal obviously would not have the effect of dismissing an investigation proceeding opened by the [Commission] or any proceeding in which the [Commission] is required to make an ...

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