Wind farm challenged in R.I. Supreme Court
8/28/10 — Three entities have asked the Rhode Island Supreme Court to overturn the approval of the Block Island wind farm contract.
Attorney General Patrick Lynch, the Conservation Law Foundation and large industrial concerns Toray Plastics and Polytop Corp. argue that the state Public Utilities Commission approval of the Power Purchase Agreement reached between Deepwater Wind and National Grid was legally flawed on several levels.
The three-member PUC, which approved the contract 2-1 August 11, issued its written order August 16. Appeals had to be filed within seven days.
All three appellants argue that the contract does not fulfill four basic requirements called for in legislation created specifically for the project, while the attorney general and CLF also point to underlying legal difficulties, such as res judicata — the time-honored legal mandate that an issue not be decided twice — and separation of powers issues regarding the law itself.
Last June, in reaction to the PUC’s unanimous March rejection of a similar Block Island wind farm contract, the General Assembly passed a law mandating the commission revisit a modified contract. The law delineated what the three commission members could consider in its deliberations and also defined “commercially reasonable.”
Assistant Attorney General Michael Rubin prepared the state’s brief.
Both Rubin and CLF attorney Jerry Elmer argue that res judicata was in play, in that the same matter cannot be decided twice.
Rubin writes that the PUC is a quasi-judicial body, and as such its decisions are final and cannot be reversed by the General Assembly. Also, the finality of res judicata “does not yield to intervening changes in the law.”
CLF further argues “this is even true where, as here, the legislature is complicit in forcing the second review.”
When Lynch first challenged the contract before the PUC, the attorney representing National Grid and Deepwater argued that it was not the same contract, therefore res judicata was not a factor.
However, in his Supreme Court brief, Rubin argues the only difference between the two contracts was an open book pricing provision, which he says was submitted three times prior for review, “thereby demonstrating that this revision is not different in kind from what was considered earlier.”
Both also argue that the law that paved the way for the modified contract violated separation of powers. “Although a legislature may withdraw jurisdiction or alter the mandate of a quasi-judicial tribunal [such as the PUC] while a decision is pending, it may not, by legislative enactment, force the tribunal to either reconsider or to reverse a final decision,” writes Rubin.
Elmer argues that legislation violates separation of powers because it was “designed to retroactively undo a PUC decision and force PUC approval of a contract that is substantially identical to the other contract that the PUC already rejected. The General Assembly was trying to control directly the execution of its enactment and, in so doing, violated the separation of powers provisions of the Rhode Island Constitution.”
Both fault the legislation as having been tailored for one project and one developer.
Rubin points out that when it rejected the first wind farm contract, the PUC had difficulty determining whether the project cost was appropriate because there was only one bidder. This situation, according to Rubin, was the result of Deepwater being the state’s preferred developer by virtue of the Joint Development Agreement signed in January 2008.
Elmer agrees: “A renewable energy law that is enacted for the sole benefit of a single project and a single company is neither good for renewable energy nor for the good of the whole.”
Contract falls short of law
Both CLF and Toray/Polytop attorney Michael McElroy argue that the modified contract also falls short of the requirements set out in the legislation: that it be commercially reasonable, provide a decrease in pricing if construction savings are achieved and that it is likely to provide economic as well as environmental benefits.
Elmer writes that the legislation “creates the appearance that the PUC was simply being asked to apply a new set of criteria to a new PPA, this appearance is nothing more than an empty pretense.”
According to the Toray/Polytop filing, “the PPA is much more expensive than any similar projects when the statutorily mandated cable cost is included.”
The cable is expected to add at least another $40 million in cost to the $205 million project. McElroy argues that therefore does not meet the conditions that it is “commercially reasonable.”
In the first contract hearings, Deepwater CEO William Moore testified that the farm would cost $219 million to build; in the second round, he said it would cost $205 million. Yet, despite the $14 million difference, the PPA price would still be 24.4 cents per kilowatt-hour.
McElroy therefore argues that the contract allocates the first $14 million in savings to Deepwater, and thus does not meet the condition that savings are to be allocated to the ratepayers; furthermore the $14 million difference in price did “not reduce the initial fixed price contained in the signed PPA” submitted in the first go-round.
Elmer similarly argues that the provision pass cost savings on to ratepayers is “meaningless” because there is no definition of what costs are being referred, also the contract does not require “any specific price savings be passed along to ratepayers.”
McElroy also challenges the notion that the approved contract fulfills the requirement to produce economic benefits, because during the life of the 20-year contract ratepayers would pay $370 million in above-market costs, while estimates of benefits coming from the farm would be $129 million. “The evidence demonstrates that the PPA is likely to discourage economic development in Rhode Island…,” writes McElroy
McElroy also says that the net environmental benefits of the project are paltry compared to “extremely high costs” it brings.
In a statement announcing the appeal, AG Lynch said: “In appealing the PUC’s decision to approve this outrageously bad sweetheart deal for Rhode Island, we appeal to the court of last resort to correct the result of a distorted process during which only one PUC commissioner, Mary Bray, displayed wisdom and courage in voting to block a deal that will line the pockets of Deepwater Wind at the expense of hardworking Rhode Islanders, our state’s business community and sustainable economic development….”
In reaction to the appeals, Deepwater CEO Moore said, “We will vigorously defend the Rhode Island Public Utilities Commission’s decision, as we believe it represents a major milestone toward solidifying Rhode Island’s leadership position in the offshore wind-development industry. At the same time, we look forward to the completion of the ocean SAMP process and the continuation of permitting and development of the Block Island Wind Farm.”
Appeals of PUC decisions are not discriminatory; that is, the state Supreme Court must hear them.