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<title>April 2004: Connecticut Regulators Rule In Utility's Favor On Ownership
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<p align="left"><strong><small><font face="Arial">About The Author:</font></small></strong></p>
<p align="left"><font face="Arial" style="font-size: 9pt">Robert A. Olson is a partner in the law firm of
Brown, Olson & Gould, P.C. which maintains a nationwide practice in energy law,
public utility law and related commercial transactions.</font></p>
<p><small><font face="Arial"><font style="font-size: 9pt">He can be reached at:</font><br>
<br>
<b><font color="#0000FF">Brown, Olson & Gould, PC</font></b><br>
2 Delta Drive<br>
Suite 301<br>
Concord, NH 03301<br>
<a href="mailto:[email protected]">[email protected]</a><br>
(603) 225-9716<br>
<a href="mailto:[email protected]"></a></font></small></p>
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<p ALIGN="left"><u><b>April 2004</b></u><font size="6"><b><br>
Connecticut Regulators Rule In Utility's
Favor On Ownership Of GIS Certificates</b></font><strong><br>
by Robert Olson -- Brown, Olson and Wilson, P.C.<br>
</strong><font face="Arial" size="2">(<em>originally published by PMA OnLine Magazine:
200</em>4/</font><font size="2">05/03)</font></p>
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<p align="left">The Connecticut Department of Public Utility Control (the
“Department”) recently found in favor of a utility (the “Utility”) in a
dispute between the Utility and a generator of renewable electricity (the
“Generator”) concerning ownership of Generation Information System (“GIS”)
Certificates, evidencing the environmental attributes of the electricity
which the utility purchased from the generator. Application of Minnesota
Methane, LLC Regarding the Sale of Electricity Generated at the Hartford
Landfill to the Connecticut Light and Power Company, Docket No. 96-07-21RE01
(March 19, 2004) (the “Decision”).<br>
</p>
<p align="left">GIS Certificates are issued by the New England Power Pool (“NEPOOL”)
to electricity generators to evidence the environmental attributes of
electricity. GIS Certificates are valuable because they can be used in some
states to satisfy renewable energy requirements. The laws of such states
require that utilities and other sellers of electricity file GIS
Certificates (or other renewable energy certificates) with state regulators
to evidence the production of a minimum amount of electricity generated
using renewable sources of energy such as wind power, solar power, and
biomass. As a result, a market exists for the purchase of GIS Certificates,
which can be transferred separately from the electricity itself.<br>
</p>
<p align="left">The electricity in this case was generated from landfill
gas, a source of renewable energy. The Generator and Utility disagreed over
whether, under their contract (the “Agreement”), the Utility had purchased
the environmental attribute's of the electricity such that it would be
entitled to the associated GIS Certificates. In ruling in favor of the
Utility,the Department considered both the language of the Agreement and the
circumstances under which the Department had originally approved the
Agreement.<br>
</p>
<p align="left">The Agreement at issue was a form agreement approved by the
Department in 1991 and approved for use by the Generator and Utility in
1996. The contract contained the following language:<br>
</p>
<blockquote>
<p align="left">The Utility, in order to benefit from the capacity
provided by the Facility, may periodically need to obtain recognition of
any credit for the capability of the Facility from [NEPOOL] or other
associations or entities to which the Utility has contractual
responsibilities for providing electrical capacity.<br>
</p>
</blockquote>
<p align="left">The Department reasoned that “capacity” and “capability”
must refer to different concepts or the contract would otherwise have used
the same words. Based on this distinction, the Department concluded that the
contract entitled the Utility to the GIS Certificates issued for the
facility.<br>
</p>
<p align="left">The Department also pointed out that, but for the fact that
the Generator’s facility qualified as a “renewable resource project,” the
Department would never have approved the contract. Because the facility
qualified as a renewable resource project, the Generator was relieved of
certain regulatory requirements, including a requirement that the Department
first determine that a need for new capacity exists before approving the
Agreement. In its earlier decision approving the Agreement, the Department
indicated that exemption from this requirement was a necessary condition for
the approval. Thus, the Department concluded, for the Generator “now to
claim that the renewable attributes of its fuel are not part of the
Department’s approval and therefore not specifically contemplated by the
Agreement is disingenuous and cannot withstand the clear words of the
[earlier] [d]ecision or logical scrutiny.”<br>
</p>
<p align="left">Under the Decision, the generator is required to transfer to
the utility (1) all existing and future Generation Information system
(“GIS”) Certificates for electricity issued for.</p>
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<blockquote>
<p align="left"><font face="Arial">
<small>Robert A. Olson is a partner in the law firm of Brown, Olson &
Gould P.C.
which maintains a nationwide practice in energy law, public utility law and related
commercial transactions. He can be reached at:</small></font><p align="center">
<font face="Arial"><small><font color="#0000FF"><b>Brown, Olson & Gould, PC</b></font><br>
2 Delta Drive, Suite 301<br>
Concord, NH 03301 <br>
<br>
<a href="mailto:[email protected]">[email protected]</a> | (603) 225-9716<a href="mailto:[email protected]"></a></small></font>
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