Connecticut Renewable Portfolio Standard Upheld

Author: Keith Martin Publication | August 2017

A renewable portfolio standard in Connecticut withstood challenge again in court.

Solar developer Allco has been waging a multi-year effort to invalidate the results of auctions the state government has run to buy renewable energy.

The state legislature authorized the Connecticut Department of Energy and Environmental Protection in 2013 to solicit proposals to supply renewable energy for up to 4% of the state’s electricity supply and to order the two main utilities — Connecticut Light & Power and United Illuminating — to enter into power purchase agreements with terms of up to 20 years with the winners.

Connecticut selected two winners in the 2013 auction: a large wind project in Maine and a small solar project in Connecticut.

Allco sued to have the results set aside and lost both in a federal district court and on appeal. It lost in part because the courts said it should have taken its complaints first to the Federal Energy Regulatory Commission.

The state asked for more bids in 2015 after the Maine wind farm failed to meet milestones in its power contract.

Allco sued again in an effort to prevent Connecticut from accepting bids from any projects that are more than 80 megawatts in size and, therefore, too large to be “qualifying facilities” — or QFs — under the Public Utility Regulatory Policies Act, a 1978 federal law that requires regulated utilities to buy electricity from cogeneration facilities, and from other independent power plants of up to 80 megawatts that use waste or renewable energy, at the “avoided cost” the utility would spend to generate the electricity itself.

The latest lawsuit is, at heart, a challenge to the state’s renewable portfolio standard, since the state’s solicitation is based on the RPS law.

Allco lost in federal district court in August 2016 and again in a US appeals court at the end of June. The case is called Allco Finance Limited v. Klee.

The federal government has sole authority to regulate wholesale rates for power sold in interstate markets. The US Supreme Court held in a case called Hughes v. Talen Energy Marketing in April 2016 that Maryland and New Jersey strayed impermissibly into wholesale ratemaking when they ordered utilities in their states to sign power contracts with an independent generator for electricity from two gas-fired power plants. The power contracts had the effect of setting the price the generator would receive for its electricity, the court said. (For more detail, see “Supreme Court Nixes Two PPAs” in the April 2016 NewsWire.)

Not so in Connecticut. The appeals court in the Allco case said the Connecticut actions were well within broad powers that states possess to direct the resource decisions of utilities under their jurisdiction. For example, the court said, states can order utilities to build renewable power plants themselves or to buy renewable electricity from other generators without that being considered state regulation of the wholesale power market.

The court also rejected complaints by Allco that the Connecticut RPS program discriminates against renewable energy generators in other states. Connecticut honors RECs from renewable energy projects in and around Connecticut that will have a measurable effect on clean air in the state.  

Other recent court decisions have tested whether renewable portfolio standards and laws to discourage the use of coal to generate electricity impede interstate commerce. (For additional information, see “Renewable Portfolio Standards” in the September 2015 NewsWire and “Minnesota Carbon Statute Invalidated” in the August 2016 NewsWire.)


Contacts

Keith  Martin

Keith Martin

Washington, DC