On May 1, 2013, Otter Creek Solar, LLC (“Otter Creek”) filed a Petition for Enforcement under the Public Utility Regulatory Policies Act of 1978 (“PURPA”), asking the Federal Energy Regulatory Commission (“Commission”) to bring an enforcement action against the Vermont Public Service Board (“Board”) because, as it alleged, the standard-offer program is inconsistent with PURPA and the Federal Power Act.   Otter Creek alleged that: (1) the methodology used to establish standard-offer rates prior to statutory changes in 2013 violated PURPA’s requirement that wholesale rates equal a utility’s avoided costs; (2) the standard-offer program[1] fixes wholesale prices for utilities (other than Green Mountain Power) that are not subject to PURPA; (3) PURPA does not permit the SPEED Facilitator to be the power purchaser rather than the utilities themselves; (4) the standard-offer program constitutes a de facto rule with respect to rates under PURPA and eliminates a Qualifying Facility’s (“QF”) ability to seek an avoided cost long-run rate except through the SPEED program; and (5) the provider block is inconsistent with PURPA because it eliminates the ability of a QF to displace the additional capacity that the utilities occupy.

On the June 7^th deadline for comments, the Vermont Department of Public Service (“DPS”) filed a Protest and Motion to Dismiss, addressing each of Otter Creek’s allegations and defending the standard-offer program.  Also on the deadline, Green Mountain Power filed a protest, essentially joining in the filing of DPS; Burlington Electric Department filed a Motion to Intervene; the National Association of Regulatory Utility Commissions filed a Motion to Intervene and Protest (“NARUC”)[2]; and the Public Service Board (“Board”) filed a Motion to Intervene and Protest, joining in the filing of DPS.

Addressing each of Otter Creek’s claims, the DPS’s Protest was the most comprehensive.  The DPS argued that, in essence, Otter Creek has no standing to set forth the claims it has made because it has suffered no identifiable injury in Vermont.  DPS also argued that Otter Creek’s claims regarding the avoided cost methodology are misplaced because they are based on the previous methodology used to calculate costs, and that changes to the program in 2013 (discussed here) essentially mooted Otter Creek’s claims.  DPS also defended the use of the SPEED Facilitator, arguing that this mechanism of the Standard Offer program is akin to using a purchasing agent under Rule 4.100—a practice which has been assailed before the Commission before; the Commission has never concluded that the use of a purchasing agent violates PURPA.  The DPS also claimed that Otter Creek misconstrued PURPA, and that, in fact, the purchase obligations do apply to all Vermont utilities—not just Green Mountain Power.  Finally, the DPS argued that the “provider block” aspect of the Standard Offer program is consistent with PURPA, because, among other reasons, it holds utilities to the same standards and terms as non-utility owned projects.

A more detailed summary of the DPS’s Protest can be found here.

It will be interesting to watch how this proceeding plays out.  In practice, it is a very rare occasion for the Commission to institute an enforcement action against a state utility commission, even where the Commission determines that a state utility commission action violates PURPA.  SRH Law will update this blog appropriately as this matter unfolds.