Opinion
X07HHDCV186102689S
01-25-2019
WINDHAM SOLAR, LLC et al. v. The CONNECTICUT LIGHT AND POWER COMPANY dba Eversource
UNPUBLISHED OPINION
Moukawsher, J.
1. Summary: Solar Companies Say Eversource Thwarted Efforts
Congress and the Connecticut General Assembly have created programs to encourage renewable energy sources like solar energy. A long-standing federal program, administered by the state, requires electric distribution companies like the defendant Eversource to buy all the renewable power a small, qualified company can generate. A state law requires distribution companies to produce renewable energy or reward those who do by buying renewable energy credits from them.
16 U.S.C. § 824a-3 (The Public Utility Regulatory Policies Act (PURPA)).
General Statutes §§ 16-244r, 16-244s, and 16-244t.
This lawsuit is about three renewable energy companies who claim to have joined together to build solar farms in Connecticut that might benefit from the programs. They say that Eversource, the company that controls the distribution of much of the power in Connecticut, has refused to buy the power they created and sabotaged their contracts to sell them renewable energy credits.
2. The Solar Companies May Remedy Any PURPA Statutory Violations Through PURA
a. The Solar Companies Have No Federal Cause of Action
The solar companies say the federal PURPA law requires Eversource to buy all the power they can produce and to pay for it by projecting a "cost avoidance" rate as the price for it. The solar companies say Eversource refused to negotiate or sign contracts using a cost avoidance rate, insisting on buying only at the lower ordinary market rates.
The solar companies complained to PURA. PURA ultimately said Eversource had to pay the companies at the cost avoidance rate but found the cost avoidance rate was zero because Eversource didn’t need the power. Windham complained to federal regulators and PURA backtracked. A year ago PURA withdrew its initial ruling and promised to adopt new regulations setting the cost avoidance rate. The court takes notice that comments on the proposed new regulation were due on January 4, 2019.
The solar companies sue in part under federal law asking for an order forcing Eversource to negotiate a cost avoidance rate with them without waiting for the new regulation. They say its failure to negotiate violates a provision of General Statutes § 16-243a requiring electric distributors to negotiate contracts with small suppliers and to do so in good faith.
The solar companies say they can sue in this court because the federal PURPA statute-16 U.S.C. § 824a-3(g)(2)-says that: "Any person ... may bring an action against any electric utility ... to enforce any requirement established by a State regulatory authority ..." PURPA says the Federal Power Act defines "State regulatory authority" to have the same meaning as "state commission": a "regulatory body ... [that] regulate[s] rates and charges ..."
The court’s job is to apply this language as written. The language allows lawsuits to enforce requirements established by the regulatory body that regulates rates and charges. But the solar companies aren’t doing that; they are trying to enforce the good faith negotiation requirements imposed by the General Assembly, not by PURA. In Connecticut, PURA not the General Assembly, is the regulatory body that regulates rates and charges under Chapter 283 of the General Statutes.
The General Assembly passes laws. PURA adopts regulations. The court would have to torture the basic functions of the two entities to call the General Assembly the rate setting regulatory body. After all, the federal law doesn’t refer to the authority that empowers the authority to set rates. It refers to the authority-the regulatory body-that sets the rates. That is PURA not the General Assembly. The solar companies have no standing to sue under the federal statute to enforce the statutory requirement of good faith negotiations or to enforce any contract terms. As our Supreme Court held in 2000 in Ramos v. Vernon, when a party has no standing to bring a claim the court has no subject matter jurisdiction to hear it, and the claim must be dismissed. Therefore, the fourth count of the solar companies’ complaint is dismissed.
b. The Solar Companies Have Administrative Remedies to Assist Them in Yielding Good Faith Contract Negotiations
The solar companies claim Eversource violated General Statutes § 16-243a(d) by ignoring its mandate to "negotiate in good faith to arrive at a contract which fairly reflects the provisions of this section ..." They claim Eversource acted in bad faith and refused them contracts under PURPA.
General Statutes § 16-243a(f) gives PURA the power to order these negotiations. It says that "[i]f a private power producer believes an electric distribution company has violated any provision of this section it may submit a written petition alleging such violation to the authority." The statute further says that "if it finds the company has violated any such provision, [PURA may] prescribe the manner in which it shall comply."
This means the solar power producers can’t use the court to order Eversource to comply with the statutes unless PURA decides against it and PURA is overturned by the court in an appeal under the Uniform Administrative Procedures Act. As the Supreme Court reaffirmed in 2016 in Allen v. Commissioner of Revenue Services, where administrative remedies exist they must be exhausted.
324 Conn. 292, 302, cert. denied, 137 S.Ct. 2217 (2017).
That explains why the solar companies have also appealed administrative claims from PURA-two of them in fact. An appeal of the ruling on one of the claims is before this court. The appeal will be considered separately as an appeal under the UAPA.
In any case, the solar companies’ claims about bad faith belong in administrative proceedings, not here. Because there is an administrative remedy, the solar companies have no standing to bring their statutory-based bad faith negotiation claims in this action. They also may not seek the court’s jurisdiction under CUTPA to the extent the claim addresses the failure to contract and to negotiate in good faith. Therefore, the solar companies’ claims are dismissed in the following counts: one, two, three, nine, and twelve. CUTPA (count 11) is dismissed to the extent it is rooted in the failure to negotiate and contract in good faith.
3. The Solar Companies Have Standing to Sue Under CUTPA for Alleged Unscrupulous Behavior Associated With Connecting Them to the Grid
While the solar companies complain that Eversource refused to contract with them under the PURPA program, the parties do have some contracts for the state renewable energy credits. The contracts appear to be solely with Ecos Energy, LLC and PLH, LLC. These solar companies sue for damages and injunctive relief for breach of these contracts and the statutes governing them.
Windham doesn’t seem to be a party to the contracts. The complaint’s reference to the "plaintiffs" having contracts is perhaps too broad, but it doesn’t deprive the court of subject matter jurisdiction. It may be remedied by a request to revise or may simply be reflected in any relief that may be ordered. At this stage, PLH’s status as a foreign limited liability company hardly matters either. The allegations are collective and the rulings here depend on the undisputed fact that at least one of the companies can sue.
The companies claim Eversource scuppered their plans to generate and sell energy credits under the state program by failing to "timely and properly proceed on a just and reasonable basis with the interconnection process ..." and by its "unreasonable and unjust practices and costs in the interconnection process ..."
The solar companies say Eversource used its control of the electrical distribution system to keep the companies from hooking up their farms to the power grid at reasonable expense and in time to meet a contractual deadline to deliver credits. The contracts and the deadline were in fact between two of the solar companies and Eversource. Under the contracts, two of the solar companies-Ecos Energy, LLC and PLH, LLC-had to start supplying energy credits to Eversource by the deadline or Eversource could cancel their contracts.
The solar companies say that thanks to Eversource’s own misdeeds they missed the deadlines and Eversource seized its opportunity to cancel the contracts. The solar companies sue to recover the money they would have made from selling the energy credits.
Eversource denies any wrongdoing. But it insists that even if it acted as accused the solar companies can’t get any money for it. Eversource claims this court has no subject matter jurisdiction over this case. It says the Public Utility Regulatory Authority (PURA) has exclusive jurisdiction over this dispute by contract and by statute. It says the solar companies’ only remedy is to file a complaint with PURA.
Eversource says that in 1994 in Connecticut Resources Recovery Authority v. Connecticut Light & Power Co. our Appellate Court held that PURA may resolve a contract dispute when, as in this case, a clause in the contract says PURA will resolve any disputes related to it. They claim this case and the statutes commit the entire process to PURA. It says this reflects the legislature’s desire to block lawsuits like this one. To Eversource, the legislature’s top priority was to get clean energy flowing without being slowed down by lawsuits.
But Eversource is wrong. The grid-connection interference claim isn’t about a breach of contract, it’s about a separate wrong-one consequence of which was the loss of the money the solar companies anticipated receiving under the contracts. The claim doesn’t arise out of the agreement; it is an independent wrong and is pleaded that way in the plaintiffs’ complaint. Its independence is illustrated by the fact that if the contract at issue was with someone other than Eversource, the solar companies could still sue Eversource under CUTPA for unscrupulously costing them their rights under it.
PURA has no jurisdiction over that claim and has never even considered it. PURA can’t decide a civil action for damages brought by one power company against another under CUTPA. And PURA admitted it has no authority to award damages to the solar companies even if Eversource deliberately delayed the solar companies’ grid connections.
PURA isn’t powerless. It might find a way under its regulatory authority to punish Eversource for misconduct. It could order Eversource to follow the law and perhaps impose a fine or other sanction if it didn’t. But the solar companies want someone to order Eversource to pay them the money from the lost energy and credit sales it suffered when Eversource allegedly hindered the solar companies’ grid connection. All sides agree that PURA can’t do that.
Instead, the solar companies ask the court to act under the Connecticut Unfair Trade Practices Act. As the Supreme Court in 2010 in Naples v. Keystone Building & Development Corp., said CUTPA is aimed at unscrupulous business practices, including those that are unfair, oppressive or violate public policy.
295 Conn. 214, 227 (2010).
The solar companies’ complaint alleges that Eversource delayed their grid connections to frustrate and delay the solar companies because they were clean power competitors that Eversource wanted to crush. If this were true not only would this violate conventional notions of unscrupulousness but it would also frustrate the clear public policy in the general statutes seeking to promote the creation and competition in the clear energy field. Thus, allowing a CUTPA lawsuit would vindicate the policy Eversource said was at stake rather than frustrate it.
The court denies Eversource’s motion to dismiss the CUTPA claims in the eleventh count of the complaint to the extent they seek damages for unscrupulously hindering the solar companies’ efforts to get their solar farms connected to the electric grid Eversource controls.
4. PURA Has No Jurisdiction Over Ordinary Breach Claims Under the Contracts That Got Signed.
In addition to the CUTPA claim about matters not covered by the contract the solar companies sue for damages and injunctive relief for breach of the contracts. The two solar companies signed agreements, section 17.3 of which makes PURA the sole arbiter of their disputes under the contract and waiving "their right to bring disputes or issues to any other forum except as provided in the Uniform Administrative Procedures Act ..."
While the agreement might ordinarily be enforceable between the parties, it can’t empower PURA to resolve these ordinary breach of contract claims for damages and other relief. In 2015, the Connecticut Supreme Court decided Kleen Energy Systems, LLC v. Commissioner of Energy & Environmental Protection. In that case the court held that the parties to a contract can’t give an administrative agency the power to hear their disputes-only the General Statutes can.
Id. at 393.
That case was similar to this one. It was a contract dispute-in that case about the correct interpretation of a provision about pricing. There, as here, there was no explicit provision granting an agency the power to resolve the contract dispute. The court held that absent express language agencies don’t have jurisdiction over these kind of ordinary contract claims. It held they do have jurisdiction over disputes that arise from the interpretation of regulations or the application of the agency’s expertise but where that expertise isn’t involved, then neither should the agency be involved.
By contrast, as noted above, General Statutes § 16-243a(d) expressly grants PURA jurisdiction to enforce the PURPA statutory obligations of companies like Eversource, including the obligation to contract and to negotiate in good faith.
Id.
In the complaint’s fifth count the solar companies claim a declaratory remedy under the contract for an alleged force majeure. The validity of this claim here appears a simple matter of reading and enforcing plain language in the contract quoted in the complaint. This requires that application of contract law, not regulatory expertise. The application of that law might mean a rapid resolution of this claim, but it doesn’t deprive the court of jurisdiction over it. The motion to dismiss the fifth count is denied.
In the sixth count, the complaint alleges that the contract requires return of the security deposit. The same applies. It is for a court not the agency to read the provision cited to determine if the deposit must be returned. The motion to dismiss the sixth count is denied.
Likewise, the solar companies’ claims under the "prevention doctrine," anticipatory breach, "disproportionate forfeiture," and any CUTPA claims related to are legal, not administrative claims. Therefore, the motion to dismiss is denied as to counts seven, eight, and ten.
The parties claim the contract bars much if not all of the relief the parties claim under these contract claims, but the first question is whether the court has subject matter jurisdiction to hear the claims, not whether they are barred by the contract’s plain language. These claims will have to be decided later.
The motion to dismiss is denied as to the fifth, sixth, seventh, eighth and tenth counts.
5. Conclusion: The Court Has Jurisdiction Over Some Claims
The legislature gave PURA jurisdiction to enforce PURPA-related good faith contracting requirements. The solar companies must make their claims there before they can bring them here under the Uniform Administrative Procedure Act.
The legislature did not expressly give PURA jurisdiction over the ordinary contract disputes arising under the state’s renewable energy program. The court won’t imply jurisdiction in PURA either. These are matters of contract law, not administrative expertise. There is no reason for PURA to decide them.
Likewise, PURA has no jurisdiction over the solar companies’ unfair trade practices claims for hindering their connection to the electrical grid. They don’t involve the PURA statutes and PURA agrees it has no power to grant a remedy for violating this statute.
Counts one, two, three, four, and nine are dismissed. The motion to dismiss is denied as to counts five, six, seven, eight, and ten. Count eleven is dismissed to the extent it alleges violations of the PURPA-related good faith contracting requirements over which the court has held PURA has jurisdiction.