State Programs To Encourage Renewable Energy Are Constitutional (In Case You Were Worried)

Author:Mr Seth Jaffe
Profession:Foley Hoag LLP
 
FREE EXCERPT

Last week, the 2nd Circuit Court of Appeals affirmed a District Court decision rejecting a challenge to Connecticut statutes intended to encourage renewable energy development in Connecticut. 

It's a critical win, not just for Connecticut, but for many renewable energy programs in other states across the country as well.

(Important caveat.  These cases are bloody complicated and no blog could possibly summarize them without omitting important details.  Hold your criticism!)

Allco Finance develops small renewable energy facilities that are considered "qualifying facilities" under Public Utility Regulatory Policies Act.  PURPA guarantees QFs the right to sell energy to utilities at the utilities' avoided costs.

In 2013 and 2015, Connecticut enacted legislation to encourage use of renewable energy in Connecticut.  The legislation authorized the Department of Energy and Environmental Protection to solicit renewable energy proposal and to "direct" utilities to enter into bilateral contracts with the winners.  Allco alleged that DEEP was "compelling" utilities to enter into contracts and thus encroached on FERC's exclusive regulatory authority over wholesale prices.

Even though the case was at the motion to dismiss stage, the Court was able to reject Allco's arguments, because, notwithstanding the "direct" language, documents referenced in Allco's complaint made clear that:

[t]his RFP process, including any selection of preferred projects, does not obligate any [utility] to accept any bid," and (b) that the winning bidders "will enter into separate contracts with one or more [utilities] at the discretion of the [utilities].

Thus, the Court concluded that the statute did not encroach on FERC authority and was not preempted.  Importantly, the Court distinguished the Supreme Court's recent decision in Hughes v. Talen Energy Marketing.  Rather than interfering with a FERC-approved auction, as was the case with the Maryland program in Hughes, the Connecticut RFP actually required FERC approval of any contracts between utilities and renewable power producers....

To continue reading

FREE SIGN UP