Law Offices Of
MORRIS L. SILVER, ESQ.
THE KELLOGG FARM
Stage Road
Post Office Box 606
Benson, Vermont 05731-0606
TELEPHONE 802-537-2264
FAX 802-537-2265
MLSILVER@SOVER.NET
December 3, 2007
Ms. Susan M. Hudson, Clerk
Public Service Board
Chittenden Bank Building, 4th Floor
112 State Street
Post Office Drawer 20
Montpelier, Vermont 05620-2701
Re:
Via Electronic Mail
Energy Efficiency Utility Structure Working Group
Memorandum regarding Board Authority
Dear Ms. Hudson:
In accordance with the process developed in the Public Service Board’s (the “Board”)
Energy Efficiency Utility (“EEU”) Structure Working Group, this letter will explore the legal
authority issues associated with the proposal to reform the EEU and in particular the ability of
the Board to make an “appointment” in the general form contemplated by the Draft of a
Recommendation for a New Energy Efficiency Utility Structure (the “Draft Recommendation”)
consider by participants at the Workshop held November 28, 2007. Specifically, the Draft
Recommendation provides:
…the Board should, at this time, establish a single mechanism, one or more
EEUs, for the acquisition of cost-effective demand-side resources, including
planning and delivery of Comprehensive Energy Efficiency Programs that are
called for as a part of the provision of regulated utility service under 30 V.S.A. §
218c. An EEU shall be the subject of an Order of Appointment to be issued by
the Board under its existing authority conferred pursuant to 30 V.S.A. §209(d)(2).
This letter is filed on behalf of Central Vermont Public Service Corporation.
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1. Nature and Status of Public Service Board.
In a general sense, the Vermont Supreme Court has explained that the Board is:
…an administrative body clothed in some respects with quasi judicial functions,
authorized in the exercise of the police power to make rules and regulations
required by the public safety and convenience and to determine facts upon which
existing laws shall operate, and having, in a sense, auxiliary or subordinate
legislative powers which have been delegated to it by the General Assembly.
Sabre et al. v. Rutland R. R. Co. et al., 86 Vt. 347, 361, 362, 85 Atl. 693, Ann.
Cas. 1915C 1269; Bessette v. Goddard, 87 Vt. 77, 81, 88 Atl. 1. It is a body
exercising special and statutory powers not according to the course of the
common law, as to which nothing will be presumed in favor of its jurisdiction.
Bessette v. Goddard, supra, page 82; Sayers v. Montpelier and Wells River R. R.,
90 Vt. 201, 209, 97 Atl. 660. It has only such powers as are expressly conferred
upon it by the Legislature, together with such incidental powers expressly granted
or necessarily implied as are necessary to the full exercise of those granted, and it
is merely an administrative board created by the State for carrying into effect the
will of the State as expressed by its legislation. In re James, 97 Vt. 362, 367, 368,
123 Atl. 385; Trustees of Newport Center et al. v. Niles et al., 102 Vt. 121, 123,
146 Atl. 71.
Trybulski v. Bellows Falls Hydro-Elec. Corp., 112 Vt. 1, 7 (1941). This holding was recently
followed in Green Mountain Power Corporation v. Sprint Communications, 172 Vt. 416, 20
(2001).
2. Standard for Reviewing Board Action
When reviewing agency actions, the Vermont Supreme Court explains:
We approach this review of administrative agency action with a gingerly step.
Bathed in a singleness of concern and anointed with an aura of expertise,
administrative actions have traditionally kept reviewing courts an arm's length
away. This Court has been no exception. Repeatedly we have articulated our
willingness to defer to agency determinations, Genier v. Department of
Employment Security, 140 Vt. 453, 438 A.2d 1116 (1981); State Department of
Taxes v. Tri-State Industrial Laundries, Inc., 138 Vt. 292, 294, 415 A.2d 216, 218
(1980); In re Young, 134 Vt. 569, 570, 367 A.2d 665, 666 (1976); International
Association of Firefighters Local #2287 v. City of Montpelier, 133 Vt. 175, 178,
332 A.2d 795, 797 (1975), and we have no wish to repudiate that position here.
Where warranted by the evidence, an administrative board's findings of fact are
conclusively binding on this Court. Norman v. American Woolen Co., 117 Vt. 28,
31, 84 A.2d 125, 127 (1951). We will uphold the validity of an administratively
adopted rule where we can do so without compromising the intent of the statute
which authorized it, Committee To Save the Bishop's House, Inc. v. Medical
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Center Hospital of Vermont, Inc., 137 Vt. 142, 150, 400 A.2d 1015, 1019 (1979),
and construction of statutes by those charged with their execution will be
followed unless there are compelling indications that the construction is wrong.
Id. at 150, 400 A.2d at 1019--20 (citing Red Lion Broadcasting Co. v. Federal
Communications Commission, 395 U.S. 367, 381 (1969)).
Still, under our constitutional system, administrative agencies are subject to the
same checks and balances which apply to our three formal branches of
government. An agency must operate for the purposes and within the bounds
authorized by its enabling legislation, or this Court will intervene. Where it
exercises its adjudicative function we will be especially vigilant, since proper
utilization of the judicial process is unrelated to expertise in any particular subject
matter. Although findings of fact of an administrative agency will not be set aside
unless clearly erroneous, In re Young, supra, conclusions of law are not so
protected. In re McGrath, 138 Vt. 77, 82, 411 A.2d 1362, 1365 (1980).
In re: Agency of Administration, 141 Vt. 68, 74-75 (1982). Similarly, in Petition of Vermont
Electric Power Producers, 165 Vt. 282 (1996), the Court states:
In reviewing a PSB order, we employ “a strong presumption that orders issued by
the Public Service Board are valid,” East Georgia Cogeneration Ltd. Partnership,
158 Vt. at 531, 614 A.2d at 803, and “we give great weight to the Board's
interpretations of its own regulations.” Id. We also accord “great deference to the
particular expertise and informed judgment of the Board.” Vermont Power Exch.,
159 Vt. at 179, 617 A.2d at 424. Where the PSB’s findings fairly and reasonably
support its conclusions of law, we will uphold the PSB’s decision. In re New
England Tel. & Tel Co., 159 Vt. 459, 461--62, 621 A.2d 232, 235 (1993).
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The PSB is a body of special and statutory powers, as to which nothing is presumed in
favor of its jurisdiction. Vermont Power Exch., 159 Vt. at 176, 617 A.2d at 422.
Consequently, the PSB’s powers include only those expressly granted by the Legislature
and such incidental powers as are necessarily implied to carry out its express grant. Id.
Id. at 288-289.
3. Grant of Statutory Authority Re: EEU.
The Vermont General Assembly has endowed the Board with certain authority concerning
the provision of energy efficiency programs and services. Specifically 30 V.S.A. § 209(e)
provides that the Board shall:
(1) Ensure that all retail consumers, regardless of retail electricity or gas provider,
will have an opportunity to participate in and benefit from a comprehensive set of
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cost-effective energy efficiency programs and initiatives designed to overcome
barriers to participation.
(2) Require that continued or improved efficiencies be made in the production,
delivery, and use of energy efficiency services.
(3) Build on the energy efficiency expertise and capabilities that have developed
or may develop in the state.
(4) Promote program initiatives and market strategies that address the needs of
persons or businesses facing the most significant barriers to participation.
(5) Promote coordinated program delivery, including coordination with low
income weatherization programs, other efficiency programs, and utility programs.
(6) Consider innovative approaches to delivering energy efficiency, including
strategies to encourage third party financing and customer contributions to the
cost of efficiency measures.
(7) Provide a reasonably stable multiyear budget and planning cycle and promote
program improvement, program stability, and maturation of programs and
delivery resources.
(8) Approve programs, measures, and delivery mechanisms that reasonably reflect
current and projected market conditions, technological options, and environmental
benefits.
(9) Provide for delivery of these programs as rapidly as possible, taking into
consideration the need for these services, and cost-effective delivery mechanisms.
(10) Provide for the independent evaluation of programs delivered under
subsection (d) of this section.
(11) Require that any entity approved by the board under subsection (d) of this
section deliver board-approved programs in an effective, efficient, timely, and
competent manner and meet standards that are consistent with those in section
218c of this title, the board's orders in public service board docket 5270, and any
relevant board orders in subsequent energy efficiency proceedings.
(12) Require verification, on or before January 1, 2003, and every three years
thereafter, by an independent auditor of the reported energy and capacity savings
and cost-effectiveness of programs delivered by any entity appointed by the board
to deliver energy efficiency programs under subdivision (d)(2) of this section.
(13) Ensure that any energy efficiency program approved by the board shall be
reasonable and cost-effective.
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(14) Consider the impact on retail electric rates of programs delivered under
subsection (d) of this section.
Id. Like legislative findings, these statutory provisions are designed to clarify and direct the
exercise of specific authority conferred on the Board in connection with its administration of the
provision of energy efficiency programs and services as a part of the delivery of regulated
electric and gas service at retail to Vermont consumers.
a. Appointment of Entity to Delivery
Energy Efficiency Programs and Services.
In addition to its broader authority in connection with the administration of energy
efficiency programs and services, the Board has been granted certain enumerated powers
concerning the provision of energy efficiency programs and services as a component of utility
service. Specifically, 30 V.S.A. § 209(d)(2) provides:
In place of utility-specific programs developed pursuant to section 218c of this
title, the board may, after notice and opportunity for hearing, provide for the
development, implementation, and monitoring of gas and electric energy
efficiency and conservation programs and measures including programs and
measures delivered in multiple service territories, by one or more entities
appointed by the board for these purposes. The board may include appropriate
combined heat and power systems that result in the conservation and efficient use
of energy and meet the applicable agency of natural resources' air quality
standards. The board may specify that the implementation of these programs
and measures satisfies a utility's corresponding obligations, in whole or in part,
under section 218c of this title and under any prior orders of the board.
(emphasis added) Id. Pursuant to 30 V.S.A. § 218c, a utility is required to engage in least-cost
planning including the provision of “comprehensive energy efficiency programs” which are
defined to mean:
… a coordinated set of investments or program expenditures made by a regulated
electric or gas utility or other entity as approved by the board pursuant to
subsection 209(d) of this title to meet the public's need for energy services
through efficiency, conservation or load management in all customer classes and
areas of opportunity which is designed to acquire the full amount of cost effective
savings from such investments or programs.
30 V.S.A. § 218c(a)(2). Based on this express grant of authority under Section 209(d)(2), and
consistent with the goals set forth section 209(e), it appears that the Board may, after notice and
opportunity for hearing, “appoint” an entity to develop, implement, and monitor such
“comprehensive energy efficiency programs” as may be required in connection with an electric
utility’s provision of integrated least-cost service.
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b. Role of the Energy Efficiency Charge.
In addition to its authority to appoint an entity to develop, implement, and monitor
comprehensive energy efficiency programs, the General Assembly has conferred authority on the
Board to fund such programs and services via an “Energy Efficiency Charge” or “EEC.” In
pertinent part, 30 V.S.A. § 209(d) provides:
(3) In addition to its existing authority, the board may establish by order or rule
a volumetric charge to customers for the support of energy efficiency programs
that meet the requirements of section 218c of this title. The charge shall be
known as the energy efficiency charge, shall be shown separately on each
customer's bill, and shall be paid to a fund administrator appointed by the board.
When such a charge is shown, notice as to how to obtain information about
energy efficiency programs approved under this section shall be provided in a
manner directed by the board. This notice shall include, at a minimum, a toll free
telephone number, and to the extent feasible shall be on the customer's bill and
near the energy efficiency charge. Balances in the fund shall be ratepayer funds,
shall be used to support the activities authorized in this subdivision, and shall be
carried forward and remain in the fund at the end of each fiscal year. These
monies shall not be available to meet the general obligations of the state. Interest
earned shall remain in the fund. The board will annually provide the legislature
with a report detailing the revenues collected and the expenditures made for
energy efficiency programs under this section.
(4) The charge established by the board pursuant to subdivision (3) of this
subsection shall be in an amount determined by the board by rule or order that
is consistent with the principles of least cost integrated planning as defined in
section 218c of this title. As circumstances and programs evolve, the amount of
the charge shall be reviewed for unrealized energy efficiency potential and shall
be adjusted as necessary in order to realize all reasonably available, costeffective energy efficiency savings. In setting the amount of the charge and its
allocation, the board shall determine an appropriate balance among the following
objectives; provided, however, that particular emphasis shall be accorded to the
first four of these objectives: reducing the size of future power purchases;
reducing the generation of greenhouse gases; limiting the need to upgrade the
state's transmission and distribution infrastructure; minimizing the costs of
electricity; providing efficiency and conservation as a part of a comprehensive
resource supply strategy; providing the opportunity for all Vermonters to
participate in efficiency and conservation programs; and the value of targeting
efficiency and conservation efforts to locations, markets or customers where they
may provide the greatest value…
(emphasis added) Id. Consistent with this authority, the Board has established an EEC and
promulgated Rule 5.300 to govern its calculation.
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As described in Section 209(d)(3), the Board is expressly granted authority to utilize an
EEC to support “comprehensive energy efficiency programs.” Pursuant to section 209(d)(4)
the amount of the EEC may be determined by the Board in order to realize all reasonably
available, cost-effective energy efficiency savings consistent with the principles of least cost
integrated planning as defined in section 218c. When these provisions are read together, they
fully confirm the conclusion that the Board can fund the efforts undertaken by an EEU appointed
pursuant to section 209(d)(2) to develop, implement, and monitor such “comprehensive energy
efficiency programs” as may be required in connection with an electric utility’s provision of
integrated least-cost service. To the extent that this authority is not express, it can be necessarily
implied from such authority as is expressly granted.
c. Need for Service Contract.
It should be noted that sections 209(d) and (e) are utterly silent on the need for a contract
or other writing in connection with the establishment of an EEU to provide for the development,
implementation, and monitoring of comprehensive energy efficiency programs, or in association
with the funding of such programs and services via an EEC. However, section 209(e) is
instructive and suggests that the grant of authority to administer such services was intended to be
quite broad. As described above, section 209(e)(6) directs the Board to consider innovative
approaches to delivering energy efficiency. Thus, rather than directing that the services be
provided by a contractor subject to a personal services agreement, the Board is given greater
authority to consider and implement innovative approaches. As the Board noted at the November
29th Workshop, even if an agreement is required, it could be limited to one which provides for
the acceptance by the appointed entity of the terms and conditions of its “appointment” where
the appointment otherwise defines the roles and responsibilities of the entities involved in the
delivery of energy efficiency (including the Board, the EEU, the fiscal agent and the Department
of Public Service).
d. Process for Appointment.
To effect an “appointment” as contemplated under the Draft Recommendation, section
209(d)(2) makes clear that the Board may act “after notice and opportunity for hearing” Id. This
language generally implicates the need for a contested case procedure as prescribed under 3
V.S.A. § 803 which provides:
(a) In a contested case, all parties shall be given an opportunity for hearing after
reasonable notice.
(b) The notice shall include:
(1) a statement of the time, place, and nature of the hearing;
(2) a statement of the legal authority and jurisdiction under which the hearing is to
be held;
(3) a reference to the particular sections of the statutes and rules involved;
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(4) a short and plain statement of the matters at issue. If the agency or other party
is unable to state the matters in detail at the time the notice is served, the initial
notice may be limited to a statement of the issues involved. Thereafter upon
application a more definite and detailed statement shall be furnished.
(c) Opportunity shall be given all parties to respond and present evidence and
argument on all issues involved.
(d) Unless precluded by law, informal disposition may be made of any contested
case by stipulation, agreed settlement, consent order, or default.
(e) The record in a contested case shall include:
(1) all pleadings, motions, intermediate rulings;
(2) all evidence received or considered;
(3) a statement of matters officially noticed;
(4) questions and offers of proof, objections, and rulings thereon;
(5) proposed findings and exceptions; and
(6) any decision, opinion, or report.
(f) Oral proceedings or any part thereof shall be transcribed on request of any
party subject to other applicable provisions of law, and upon payment by the
requesting party of the reasonable costs thereof.
(g) Findings of fact shall be based exclusively on the evidence and on matters
officially noticed.
(h) The chairman of a board, commission or panel, a hearing officer appointed by
a board, commission or panel, or a licensed attorney representing a party before a
board, commission or panel may, whether or not specifically authorized in any
other provision of law, compel, by subpoena, the attendance and testimony of
witnesses and the production of books and records. Sections 809a and 809b of this
title shall apply to all subpoenas issued under this subsection. Notwithstanding the
provisions of section 816 of this title, this subsection shall apply to the human
services board, the labor relations board and the employment security board.
Id. This procedure is readily satisfied through the establishment of a docket opened by the
Board for the purpose of considering the making of an “appointment” as contemplated by the
Draft Recommendation.
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Based on a review of the express grant of authority to the Board pursuant to 30 V.S.A. §
209, and the standards established by the Vermont Supreme Court for interpreting the scope and
reach of the Board’s jurisdiction, Central Vermont Public Service Corporation concludes that the
Board currently posses such authority that is reasonable necessary to implement the basic
framework for the restructuring of the EEU contemplated under the Draft Recommendation.
Should you have questions concerning this filing, please do not hesitate to contact me. In
the meantime I remain,
Respectfully yours,
Morris L. Silver
MLS/m
cc:
Workshop Service List
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