The bad news for qualifying facilities (QFs) continues. A high-profile project in the District of Columbia appears dead, but developers won a small victory when a federal court refused to stop a suit by the developers against municipal officials for damages connected with the regulatory barriers erected by the city at the behest of concerned citizens. More damaging was the recent decision of the Massachusetts Supreme Court requiring reluctant regulators to review the ceiling price set for QF purchases in a recent bid conducted by Boston Edison Co. The court was impressed by the magnitude of the change in avoided costs and market prices between the time the bid was announced and when the proposals were reviewed.
A U.S. District Court has permitted the developers of a qualifying generation facility (QF) to sue local government officials who had denied applications for building permits based on concerns over the possible health effects of electromagnetic fields (EMF). Dominion Cogen, D.C., Inc., developers of a highly controversial proposal to build a 56-megawatt (MW) QF on the campus of Georgetown University in Washington, DC, had claimed that the city government violated its due process rights by using the EMF issue as part of a "politically motivated and illegitimate" scheme to kill the project. According to the developers, the QF had received all of the necessary permits except a building permit from the D.C. Department of Consumer and Regulatory Affairs, and the EMF issues had been fully investigated by several agencies, including the D.C. Public Service Commission. Rejecting the city government's calls to dismiss the case, the court said the QF developers alleged improprieties serious enough, if proved, to find an actionable violation of their substantive due process rights. Dominion Cogen, D.C., Inc. v. District of Columbia, C.A. No. 93-2267, Mar. 1, 1995 (D.D.C.).
The Massachusetts Supreme Court has ruled that the state Department of Public Utilities (DPU) must review the ceiling price set for purchases of nonutility power by Boston Edison Co. to ensure that ratepayers are not overcharged as a result of unrecognized changes in the utility's avoided costs. Boston Edison had claimed it had no need for the power solicited under a recent state-mandated "Request for Proposals" (RFP), and that its avoided cost had changed between the time the RFP was announced and the time the QF contracts were offered. The RFP resulted in the contested 20-year contract offer for 132-MW of power from JMC Altresco, Inc., developer of a proposed 170-MW gas-fired QF. (Earlier, the court had vacated a decision on the need for the QF plant by the state Energy Facilities Siting Board, finding that the Board had incorrectly relied on DPU approval of the purchased-power agreements.)
In the current case, the court said the DPU erred when it refused to formally review the effect on avoided cost of a recent announcement by the utility that it would defer construction of the 306-MW generating plant used in setting avoided cost for the RFP. While noting that the DPU's judgment is given great weight by the courts, the supreme court said that a mandated purchase of QF power at the rate set by the DPU could cost ratepayers up to $290 million over the life of the contract. The court ordered the DPU to reopen the case to review the utility's avoided costs, finding that it could not rely on an earlier ruling that changes in a purchasing utility's avoided costs are irrelevant once a nonutility generator submits a bid to supply power and a ceiling price is assigned. Boston Edison Co. v. Massachusetts Department of Pub. Utilities, No. SJC06745, Mar. 16, 1995 (Mass.D.P.U.).
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