In the Matter of the Petition of Northern States Power Company, d/b/a Xcel Energy, for Approval of Its Proposed Community Solar Garden Program. ( 2016 )

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2014).
STATE OF MINNESOTA
IN COURT OF APPEALS
A15-1831
In the Matter of the Petition of
Northern States Power Company, d/b/a Xcel Energy,
for Approval of Its Proposed
Community Solar Garden Program.
Filed May 31, 2016
Affirmed
Halbrooks, Judge
Public Utilities Commission
File No. E-002/M-13-867
Christopher W. Madel, Jennifer M. Robbins, William Bornstein, Cassandra M.
Batchelder, Robins Kaplan LLP, Minneapolis, Minnesota (for relator Sunrise Energy
Ventures, LLC)
Lori Swanson, Attorney General, Anjali V. Shankar, Assistant Attorney General,
St. Paul, Minnesota (for respondent Minnesota Public Utilities Commission)
Vernle C. Durocher, Jr., F. Matthew Ralph, Phil Steger, Brian B. Bell, Dorsey & Whitney
LLP, Minneapolis, Minnesota (for respondent Northern States Power Company)
Considered and decided by Halbrooks, Presiding Judge; Bjorkman, Judge; and
Toussaint, Judge.

Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to
Minn. Const. art. VI, § 10.
UNPUBLISHED OPINION
HALBROOKS, Judge
Relator, a developer of solar-energy facilities, challenges an August 6, 2015 order
issued by respondent Minnesota Public Utilities Commission (PUC), arguing that the
PUC (1) engaged in unlawful rulemaking, (2) violated relator’s due-process rights, and
(3) acted in excess of its statutory authority by limiting relator’s interconnection rights.
We affirm.
FACTS
Minnesota’s community solar garden (CSG) statute, Minn. Stat. § 216B.1641
(2014), was enacted in 2013 to promote solar growth in the state by providing individual
customers and communities the opportunity to work together to have a community solar
resource. Under this model, non-utility-scale customers who typically face economic
barriers to participation in a solar program would purchase or lease a subscription at a
central solar installation and receive a bill credit for the electricity generated in
proportion to the size of their subscription. See Minn. Stat. § 216B.1641(a)-(b).
Under the statute, respondent Northern States Power Company d/b/a Xcel Energy
was required to file a plan with the PUC outlining its proposed CSG program. Minn.
Stat. § 216B.1641(a). Xcel met the statutorily defined deadline by submitting a proposed
plan on September 30, 2013. The PUC received voluminous comments between October
4 and December 3, 2013, from various high-level stakeholders in the solar industry who
provided input on Xcel’s proposed plan. Based on this feedback, the PUC issued an
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order on April 7, 2014, rejecting Xcel’s proposal and requiring the company to file a
revised CSG plan. Xcel complied by filing a revised plan on May 7, 2014.
After additional stakeholder commentary, the PUC issued an order on September
17, 2014, approving Xcel’s modified CSG plan. Both this order and the previous April 7
order permitted co-location of CSGs but were silent on the topic of co-location caps. The
program launched on December 12, 2014, and Xcel began accepting applications from
individuals and developers hoping to construct and operate CSGs. The overall response
to the CSG program was unquestionably more positive than originally anticipated, and
Xcel became concerned that utility-scale producers were taking advantage of the
lucrative benefits provided by the program. Relator Sunrise Energy Ventures, LLC
submitted 100 applications in the first hour of the program.
Xcel first raised the issue of utility-scale developers on January 13, 2015, in
supplemental comments submitted to the PUC. Xcel urged the PUC to place limitations
on co-located solar gardens in the CSG program for multiple reasons, including
(1) possible complications created by interconnecting utility-scale solar projects to the
distribution system, (2) the company’s belief that permitting large-scale operations to
participate in the program would run counter to legislative intent, and (3) potential rate
impacts to non-participating customers.
Xcel requested that the PUC affirm its intention to process only those applications
proposing CSGs of no more than 1 megawatt (MW) in size, meaning that co-located
applications from a single developer would be processed so long as they, in the
aggregate, did not exceed 1-MW. On June 22, 2015, Xcel entered into a partial
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settlement with several stakeholders in the solar industry. Sunrise was not part of this
process. The agreement proposed to limit the aggregate capacity of co-located CSGs to
5-MW for applicants already in the approval queue and 1-MW for applications submitted
after September 25, 2015, allowing Xcel to unilaterally scale down any larger CSGs and
refund application deposits and fees associated with the scaled-down portions. The PUC
held a public hearing in late June 2015 to discuss proposed limitations to the program.
By the end of the hearing, the PUC had received, either orally or through written
comments, extensive feedback from many stakeholders, including government entities,
solar-industry representatives, nonprofit organizations, Xcel, and members of the public.
The PUC approved a modified plan adopting portions of the partial settlement
agreement, including the CSG co-location caps. Sunrise filed a petition for
reconsideration with the PUC on August 26, 2015, that the commission denied on
October 15, 2015.1 The PUC reiterated that its August 6, 2015 order modifying Xcel’s
plan to include co-limitation caps was based on its determination that “allowing unlimited
co-location would render the 1 MW statutory limit superfluous, undermine the legislative
intent to foster small, widely distributed solar gardens rather than utility-scale solar
developments, and create a risk of significant rate increases to ratepayers.” The PUC also
denied Sunrise’s request to stay the August 6 order pending appeal to this court. This
certiorari appeal follows.
1
The implementation of the CSG program is currently proceeding under the terms of the
PUC’s August 6, 2015 order.
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DECISION
“On writ of certiorari, we determine whether the Commission violated the
constitution, exceeded its authority, engaged in unlawful procedure, erred as a matter of
law, issued a decision unsupported by substantial evidence, or acted arbitrarily or
capriciously.” In re Investigation into Intra-LATA Equal Access & Presubscription, 532
N.W.2d 583, 588 (Minn. App. 1995), review denied (Minn. Aug. 30, 1995). An agency’s
decision bears a presumption of correctness, and we defer to the agency’s expertise in
fact finding. Id. “When reviewing questions of law, however, we are not bound by the
agency’s decision and need not defer to the agency’s expertise.” Id.
I. RULEMAKING
Sunrise makes several arguments concerning the PUC’s actions, including that the
PUC (1) violated the Minnesota Administrative Procedure Act (MAPA) by failing to
make required findings and failing to follow procedures required by Minn. Stat.
§ 216B.1641(e), (2) engaged in unlawful retroactive rulemaking, and (3) arbitrarily and
capriciously decided to implement limitations on CSG co-location. Because these
nuanced arguments depend on whether the PUC engaged in rulemaking, we first address
that issue.
Under MAPA, a “‘rule’ means every agency statement of general applicability and
future effect, including amendments, suspensions, and repeals of rules, adopted to
implement or make specific the law enforced or administered by that agency or to govern
its organization or procedure.” Minn. Stat. § 14.02, subd. 4 (2014). Thus, if an agency
statement (1) has general applicability; (2) has future effect; and (3) is intended to
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interpret or create law, policy, or procedure, it is a rule. 21 William J. Keppel, Minnesota
Practice § 5.01 (2d ed. 2007).
Under this “expansive definition,” an agency must generally promulgate
legislative rules and interpretive rules. In re PERA Salary Determinations Affecting
Retired & Active Emps. of the City of Duluth, 820 N.W.2d 563, 570 (Minn. App. 2012).
“Legislative rules are those promulgated pursuant to delegated powers to make
substantive law.” Minn. Transitions Charter Sch. v. Comm’r of Minn. Dep’t of Educ.,
844 N.W.2d 223, 233 (Minn. App. 2014) (quotation omitted), review denied (Minn. May
28, 2014). “Interpretive rules are those that make specific the law enforced or
administered by the agency.” Id. (quotation omitted). A properly promulgated rule,
whether legislative or interpretive, is a powerful rule that has the full “force and effect of
law.” Minn. Stat. § 14.38, subd. 1 (2014).
The parties dispute whether the PUC’s orders constitute rulemaking or merely
clarify or interpret newly enacted statutory law. Sunrise argues that they constitute
interpretive rules and that the PUC engaged in improper rulemaking by permitting caps
on co-location, maintaining that the statute only restricts each parcel to a “nameplate
capacity of no more than one megawatt.” Minn. Stat. § 216B.1641(b). Sunrise’s
argument fails in several respects.
Newly Enacted Statute
An agency need not promulgate administrative rules as soon as a new statute goes
into effect. “Not every principle can or should be cast immediately into the mold of a rule
because some principles must be adjusted to meet particular situations.” Intra-LATA
6
Equal Access & Presubscription, 532 N.W.2d at 590 (emphasis added). After Xcel’s
CSG program was unveiled, it quickly became apparent that the initial response to the
program far outpaced what was anticipated. Xcel’s original forecasted program
participation ranged from 40- to 100-MWs over the span of five to ten years. By
December 2014, Xcel noted that it had received over 400 applications representing more
than 400-MW. By June 2015, the aggregate generating capacity had risen to nearly
1,000-MWs (1-GW) worth of applications—still in the program’s initial roll-out period.
Sunrise alone submitted 100 applications constituting 100-MWs within the first hour of
the program’s opening. These facts indicate that the PUC was not engaged in rulemaking
but was modifying (or approving Xcel’s request to modify) the plan to respond to
implementation. In light of the overwhelming response to Xcel’s CSG program, we
conclude that the PUC made lawful and reasonable fact-specific determinations under the
circumstances.
General Applicability
The PUC’s orders are limited to Xcel. They outline the terms under which solar-
power developers may participate in Xcel’s program but do not purport to bind any
energy company other than Xcel to the terms of the orders. Thus, the PUC’s statements
cannot be said to be of “general applicability.”
Statutory Interpretation
The PUC’s actions are consistent with the statute. “The object of all interpretation
and construction of laws is to ascertain and effectuate the intention of the legislature.”
Minn. Stat. § 645.16 (2014). “A statute should be interpreted, whenever possible, to give
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effect to all of its provisions; no word, phrase, or sentence should be deemed superfluous,
void, or insignificant.” Minn. Transitions Charter Sch., 844 N.W.2d at 227 (quotations
omitted). Statutory interpretation is a question of law, which we review de novo. Lee v.
Lee, 775 N.W.2d 631, 637 (Minn. 2009).
The statute reads: “There shall be no limitation on the number or cumulative
generating capacity of community solar garden facilities other than the limitations
imposed under section 216B.164, subdivision 4c, or other limitations provided in law or
regulations.” Minn. Stat. § 216B.1641(a). Sunrise interprets this phrase to mean that
there can be no limitations at all imposed on co-location so long as the capacity of each
individual nameplate does not exceed 1-MW. See Minn. Stat. § 216B.1641(b) (“The
solar garden must have a nameplate capacity of no more than one megawatt.”). We agree
with Xcel and the PUC that such an interpretation renders the 1-MW nameplate provision
superfluous. We read the “no limitation” provision in part (a) of the statute to refer to the
CSG program as a whole. Interpreting the nameplate-capacity limitation to suggest that
any given CSG may be indeterminately large is not consistent with that plain language of
the statute.
Sunrise argues that the PUC “reversed course” in its August 6 order by placing
caps on co-located CSGs for the first time after it issued two previous orders in which it
did not place any limitations on co-location. In its August 6 order, the PUC
acknowledged that it had previously required Xcel to allow CSGs to co-locate, but it also
clarified that it “was not aware at that time of the extent to which developers planned to
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co-locate gardens and thus did not address whether any limits should be placed on co-
location.”
We are unable to find any evidence supporting Sunrise’s assertion that the August
6 order is inconsistent with the PUC’s previous orders. At no time before August 6 did
the PUC address whether limits should be placed on co-located CSGs. It addressed the
idea of co-location generally but did not specifically address the issue of caps. Thus,
nothing in the August 6 order is inconsistent with previous orders. Further, nothing in the
order is inconsistent with the statute because the PUC placed no limitations on co-
location; rather, it simply placed a cap on the aggregate co-location of CSGs in a single
location so as not to render the 1-MW nameplate restriction superfluous.
Utility-Scale Solar Producers
Minnesota law provides a platform for the implementation of solar-energy
production through two statutes—Minn. Stat. §§ 216B.164 (2014) and 216B.1641. If a
developer proceeds under Minn. Stat. § 216B.164, that developer is subject to the Public
Utilities Regulatory Policies Act of 1978 (PURPA), which provides that a qualifying
facility (QF) such as Sunrise may take advantage of an “avoided cost rate.” This rate is
the “cost to the electric utility of the electric energy which, but for the purchase from
such cogenerator or small power producer, such utility would generate or purchase from
another source.” 16 U.S.C. § 824a-3(d) (2012). A developer proceeding under the CSG
program is eligible for enhanced “applicable retail rates.” It is undisputed that the rates
available through the CSG program are higher than those available to developers through
the traditional vehicle, which also involves a competitive bid process. Accessing higher
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rates and avoiding a competitive bid process creates an incentive for developers to
proceed under the CSG statute.
When Xcel brought the issue of utility-scale producers to the PUC’s attention, it
noted that of the approximately 400 applications it had received, only 75 separate sites
were proposed. Xcel “described these large projects as resembling utility-scale solar
development more than community-scale development, [which] was not consistent with
what the Commission intended when approving the Company’s program” and that
“developers were essentially planning utility-scale solar projects; then, solely for the
purposes of meeting program requirements, designating each one MW portion as a single
garden.” Xcel expressed concern that the “majority of subscribed production capacity
was being marketed to large commercial and industrial customers and that there is
potential for residential or small business customers to be largely excluded from
participation.”
The potential to “lock out” direct individual and community participants—the
consumer base directly targeted by the CSG statute—is another indication that the statute
is intended to allow communities and individuals historically foreclosed from cost-
prohibitive solar energy the opportunity to take advantage of benefits previously
unavailable to them. The PUC’s August 6 order is consistent with the legislature’s intent.
Public Policy
The PUC must ensure that any approved plans both “reasonably allow for the
creation, financing, and accessibility of community solar gardens” and “be consistent
with public interest.” Minn. Stat. § 216B.1641(e)(1), (4). The statute also expressly
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provides that “[t]he [PUC] may approve, disapprove, or modify a community solar
garden.” Minn. Stat. § 216B.1641(e).
In the August 6 order, the PUC determined that the co-location caps were a
“workable solution consistent with the public interest and the statutory intent to create a
solar-garden program that is community-focused.” The PUC shared Xcel’s concern that
non-participating customers would be affected by a rate hike should Xcel be forced to
accommodate unlimited co-location because of current infrastructure constraints. The
PUC heard from many stakeholders in the solar industry at every point in the process and
exercised its authority to modify the program in accordance with statutory requirements
as the program changed in its implementation stages. Its actions are amply supported by
a robust record, especially in light of the fact that the PUC has a statutory duty to provide
a CSG program that is aligned with the public interest.
For these reasons, we conclude that the PUC did not engage in improper
rulemaking2 and did not err in interpreting the statute.
II. DUE-PROCESS RIGHTS
Substantive Due Process
Sunrise argues that its 100 reservation letters represent property interests and serve
as enforceable contracts. It also maintains that it was deprived of its property rights
without just compensation when the PUC implemented co-location caps after Sunrise
2
Because we conclude that the PUC did not engage in rulemaking, we decline to address
the issues of whether the PUC violated MAPA by failing to make findings or failing to
follow MAPA procedures and whether the August 6 order was arbitrary, capricious, or
unsupported by substantial evidence.
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invested large amounts of money into the CSG program. The Minnesota Constitution
provides that “[p]rivate property shall not be taken, destroyed or damaged for public use
without just compensation.” Minn. Const. art. 1, § 13. “It is well established that the
government need not directly appropriate or physically invade private property to
effectuate a taking.” Wensmann Realty, Inc. v. City of Eagan, 734 N.W.2d 623, 632
(Minn. 2007). Under certain limited circumstances, a taking may result through
government regulation. Id. “In the context of government regulation a taking may result
when the government ‘goes ‘too far’ in its regulation, so as to unfairly diminish the value
of the individual’s property, thus causing the individual to bear the burden rightly borne
by the public.’” Id. (quoting Westling v. County of Mille Lacs, 581 N.W.2d 815, 823
(Minn. 1998)).
Sunrise argues that the reservation letters serve as enforceable contracts because
each “reservation letter signals to the developer that it can begin seeking investors and
expending the resources necessary to complete the project.” Thus, Sunrise asserts that
the PUC’s actions on August 6 resulted in a taking of the company’s cognizable property
interests. Xcel counters that the very terms of the reservation letter contradict any
interpretation of it as a legally enforceable contract.
We note that the record contains no signed reservation letters. But an unsigned
sample reservation letter includes language suggesting that a party’s signature and
acceptance of the offer contained in the reservation letter pertains to the rate, not the
entire project, as Sunrise suggests. For instance, the first paragraph addresses the
developer’s ability to lock in a rate on the date the reservation letter is signed. The
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paragraph concludes, “This is contingent upon approval of the completed photovoltaic
project as specified below.” The letter also includes the following language: “If there is
any conflict with this document and the Solar*Rewards community contract, the terms of
the contract control.” The letter concludes, “I hereby confirm and accept this Reservation
Letter to secure the offer[.]”
In a separate order clarifying the CSG application process, the PUC provided the
following feedback on the application process:
Under Xcel’s solar-garden program, developers must
apply to the Company for permission to operate a community
solar garden. The Company processes solar-garden
applications on a “first-ready, first-served” basis to ensure
that priority is given to those projects with the best chance of
succeeding.
The process begins with a developer submitting an
application, including information about itself and the
proposed solar garden, an application fee, a deposit,
engineering documents, and an interconnection application.
Xcel then has 30 days to determine whether the solar-garden
application is complete and forward it for engineering review.
After Xcel determines initial application completeness,
the developer must submit additional evidence of project
readiness, including evidence that the developer has arranged
for insurance, evidence that the developer has control of the
solar-garden site, projected subscription at the time of
construction, and signed operation and interconnection
agreements. The developer has 24 months from when Xcel
finds its application complete to finish the project, subject to
possible extension for interconnection delays.
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We conclude that the PUC’s interpretation of the application process is consistent with
the terms of the reservation letter and that the reservation letter cannot serve as an
enforceable contract.
Sunrise maintains that, in the alternative, it should be provided relief under the
theory of promissory estoppel because it proceeded in the CSG program with an
understanding that the PUC would permit unlimited co-location. Under Minnesota law,
the elements of promissory estoppel are (1) a clear and definite promise; (2) the promisor
intended to induce reliance and such reliance occurred; and (3) the promise must be
enforced to prevent injustice. Ruud v. Great Plains Supply, Inc., 526 N.W.2d 369, 372
(Minn. 1995). “[T]he doctrine of promissory estoppel only applies where no contract
exists.” Banbury v. Omnitrition Int’l, Inc., 533 N.W.2d 876, 881 (Minn. App. 1995).
It is undisputed that a developer must take further actions after signing and
uploading a reservation letter but before the final approval of the CSG project. Some of
these actions are bound to result in cost to the developer. But the reservation letters did
not serve to promise anything except a locked-in rate and a favorable position in the
interconnection queue. Further, Sunrise cannot succeed under this theory absent a
conclusion that the PUC engaged in rulemaking. Because we conclude that the PUC did
not issue a rule but rather used its express statutory authority to modify Xcel’s CSG
program in its implementation stages, Sunrise cannot bind the PUC to its statements in
order to succeed under a theory of promissory estoppel.
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Procedural Due Process
Sunrise argues that the commission violated Minnesota’s open-meeting law on
June 25, 2015, when it took a ten-minute break before returning to the public forum to
make a decision. The open-meeting law requires, with limited exception, that all
meetings of public bodies, including the commission, be open to the public. Minn. Stat.
§ 13D.01, subd. 1(a)(3) (2014). It is undisputed that the commission was subject to the
open-meeting law on that date—it was a “gathering[] of a quorum or more members of
the . . . commission thereof, at which members discuss, decide, or receive information as
a group on issues relating to the official business of that governing body.” Moberg v.
Indep. Sch. Dist. No. 281, 336 N.W.2d 510, 518 (Minn. 1983). This court must decide
(1) whether the commission violated the open-meeting law and, if so, (2) whether a
certiorari appeal is the proper vehicle for redress.
During the full-day hearing, the commissioners took several breaks. Immediately
before taking its final break, the commission chair stated:
I suggest we just take a break for ten minutes so that
we have a chance to talk to the staff and see whether we can
come to any clarity about whether we’re going to proceed
today or not.
....
. . . So we’ll take ten minutes, give the Commissioners
a chance to confer with staff, and we’ll decide whether we’re
going today or we’re not.
Sunrise takes issue with this because the commissioners returned and immediately voted
to adopt the partial settlement’s temporary co-location cap after expressing hesitation
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about limitations earlier in the day. The party alleging a violation of the open-meeting
law bears the burden of proving that a “group consensus” was formed outside of the
public space. Franzwa v. City of Hackensack, 567 F. Supp. 2d 1097, 1115 (D. Minn.
2008); Moberg, 336 N.W.2d at 519.
Here, the only evidence proffered by Sunrise that the commissioners violated the
open-meeting law is that the commission adopted the co-location cap after the break
despite some members expressing concerns about it before the break. This is not
evidence that the commissioners conducted a closed “meeting” for purposes of the
statute. Immediately before taking the break, the commissioners agreed that a change
needed to be implemented but were “a little torn between 5 and 10 (MW’s),” noting that
“if we go with 5 we’re going to have the divestiture argument big time. And if we go
with 10, I’m not sure the ratepayer impact isn’t too great.” The chair suggested they
break for ten minutes, noting that “the choices are difficult. . . . [A]re we insufficiently
well informed today to make a decision or is it just that we have a hard choice to make?
That’s what I think we have to try to figure out in the next ten minutes.” Another
commissioner stated, “No, I agree. That’s what I have to know. If I have all the
information I can get, I’m ready to make a decision, but I want to know I have the
information I need.” The chair responded, “All right, so we’ll take ten minutes, give the
Commissioners a chance to confer with staff, and we’ll decide whether we’re going today
or we’re not.”
From this, Sunrise asserts that the commissioners arrived at a back-door decision
to adopt Xcel’s partial settlement terms with regard to the cap. This is not enough
16
evidence to support a conclusion that the commission inappropriately formed a “group
consensus” outside the presence of the public. Further, a meeting between a member of a
governing body and a non-member generally is not subject to the open-meeting law. See
Minn. Educ. Ass’n v. Bennett, 321 N.W.2d 395, 398 (Minn. 1982) (holding that a
telephone conversation between school superintendent and board member did not violate
open-meeting law because superintendent was not entitled to vote and was not member of
governing body). Thus, the fact that the commissioners broke with the express purpose
of conferring with staff did not violate the open-meeting law, as staff are not voting
members of the commission.
Even if the commission did violate the open-meeting law, Minnesota courts have
held that such impropriety does not justify invalidation of the commission’s actions either
partially or in entirety. See, e.g., Sullivan v. Credit River Township, 299 Minn. 170, 176-
77, 217 N.W.2d 502, 507 (1974); In re Petitions of D & A Truck Line, Inc., 524 N.W.2d
1, 6 (Minn. App. 1994). The sole remedy available in this case is a $300 civil penalty
against individual commissioners found to be in violation of the open-meeting law.
Minn. Stat. § 13D.06, subd. 1 (2014) (“Any person who intentionally violates this chapter
shall be subject to personal liability in the form of a civil penalty in an amount not to
exceed $300 for a single occurrence, which may not be paid by the public body.”).
Sunrise urges this court to vacate the PUC’s order, arguing that the “violation of
Minnesota’s Open Meeting Law renders the PUC’s August 6, 2015 Order unlawful and
invalid under Minn. Stat. § 14.69.” Even if this court were to conclude that the PUC
17
violated the open-meeting law, the solution Sunrise seeks is not one this court is
authorized to implement.
III. INTERCONNECTION RIGHTS
Sunrise argues that the PUC violated the Public Utility Regulatory Policies Act of
1978 (PURPA) by allowing Xcel to refuse interconnection based on upgrade needs if the
costs exceed $1 million. PURPA was enacted in late 1978 to address a nationwide
energy crisis. Fed. Energy Regulatory Comm’n v. Mississippi, 456 U.S. 742, 745, 102
S. Ct. 2126, 2130 (1982). PURPA promotes the development of new generating facilities
and the conservation of fossil fuels. New York v. Fed. Energy Regulatory Comm’n, 535
U.S. 1, 9, 122 S. Ct. 1012, 1019 (2002). The purpose of the act is to “encourage
(1) conservation of energy supplied by electric utilities; (2) the optimization of the
efficiency of use of facilities and resources by electric utilities; and (3) equitable rates to
electric consumers.” 16 U.S.C. § 2611 (2012). Congress granted the Federal Energy
Regulatory Commission (FERC) exclusive jurisdiction over the regulation and sale of
electric power at wholesale cost in interstate commerce. Occidental Chem. Corp. v. La.
Pub. Serv. Comm’n, 494 F. Supp. 2d 401, 406 (M.D. La. 2007). “[T]he FERC . . .
promulgate[s] rules to encourage cogeneration and small power production, including
rules requiring electric utilities to purchase electricity from, and sell electricity to, QF’s.”
Id. PURPA was codified in Minnesota under Minn. Stat. § 216B.164, which enables the
PUC to regulate the energy industry and implement PURPA’s provisions.
Sunrise maintains that PURPA and Minnesota’s implementing statutes do not
permit caps as a basis to refuse interconnection. See 16 U.S.C. § 2621(d)(15) (2012)
18
(“Each electric utility shall make available, upon request, interconnection service to any
electric consumer that the electric utility serves.”); Minn. Stat. § 216B.164. Because of
this mandatory language, Sunrise argues that the PUC’s $1 million interconnection cap as
a basis for refusal is per se unlawful. Respondents assert that Sunrise’s argument is
misplaced because (1) the retail rate that developers would receive under the CSG statute
is higher than what they would receive under the other solar-production statute for large-
scale utility developments, (2) the CSG program forbids a developer from continuing
under the statute if it would require Xcel to make a “material upgrade,” and (3) the CSG
program is an alternative to the section 10 tariff, which allows solar projects to be
completed with an aggregate production of 10-MW.
The entirety of Sunrise’s PURPA argument rests on the contention that PURPA
controls and, therefore, prohibits Xcel from denying a project on the basis of
interconnection costs. But the CSG is an alternative program to the section 10 tariff that
governs larger utility-scale projects because Minn. Stat. § 216B.164 already offers
developers a vehicle for solar development.
We find it persuasive that the FERC recently addressed this question in another
jurisdiction. Winding Creek Solar LLC filed a petition for enforcement against the
California Public Utilities Commission, arguing that California’s alternative-energy
program is inconsistent with PURPA because of statewide caps on the obligation of
utility companies under the statute. Winding Creek Solar LLC, 151 FERC ¶ 61,103 at *1
(2015). The FERC held that
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as long as a state provides QFs the opportunity to enter into
long-term legally enforceable obligations at avoided cost
rates, a state may also have alternative programs that QFs and
electric utilities may agree to participate in; such alternative
programs may limit how many QFs, or the total capacity of
QFs, that may participate in the program.
Id. at *3. Here, Sunrise provides no evidence that it elected to be governed by PURPA
instead of under the CSG statute, and this is likely due to the difference in rates that
Sunrise would be subjected to under the different statutes. Sunrise would benefit
economically by participating in this state’s solar-power initiative through the CSG
program rather than through the traditional competitive-bid process. Because the CSG
program is an alternative to the statute governing the solar-power competitive-bid
process, the PUC may lawfully place limitations on participation, including on
interconnection costs, without violating state and federal law.
Affirmed.
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