Vermont Sees No Conflict between Feed-in Tariffs and Federal Law

By Paul Gipe


In a big win for Vermont’s nascent feed-in tariff program, the state’s Public Service Board (PSB) ruled today that they see no conflict between the state’s program and the federal government.

A challenge by Vermont’s Department of Public Service (DPS) had jeopardized several megawatts of solar PV projects that were awaiting financing and threatened to derail Vermont’s precedent-setting program.

DPS is a part of the executive branch of Vermont’s government that is led by Republican Governor Jim Douglas. Though Governor Douglas opposed Vermont’s feed-in tariff program, he let the policy become law without his signature.

The state agency argued that a recent FERC decision ruling that a California program had violated Federal law “could potentially affect” Vermont’s program as well, and that the Vermont “Standard Offer Program” should be suspended.

The PSB, Vermont’s highest regulatory authority, ruled that it will not seek clarification from the Federal Energy Regulatory Commission (FERC), thus ending the debate for the Green Mountain state.

Jennifer Gleason, an attorney with the Environmental Law Alliance, said she was “thrilled to see that the Public Service Board found that “no party has demonstrated that [Vermont’s] standard-offer program violates federal law.” Gleason has been active in the feed-in tariff campaign in the US and has been besieged with requests for assistance since FERC’s ruling on California’s so-called feed-in tariff.

In North America, the term “standard offer” is used interchangeably with the more commonly used expression “feed-in tariffs”. To further confuse matters, Vermont’s feed-in tariffs are part of the state’s Sustainably Priced Energy Development Program, dubbed SPEED.

Defense of Vermont’s SPEED program was led by Renewable Energy Vermont (REV). The advocacy group successfully argued that the PSB has no authority to rule whether the program violates Federal law. REV further argued that FERC’s California decision had little “legal significance” beyond that specific case. REV also noted that FERC has ruled previously that it will not void contracts that were not challenged during the state’s rate-setting process. No contracts have been challenged in Vermont.

The PSB, the regulatory authority, ruled that no challenger, including DPS, had “demonstrated that the standard offer program is invalid”. Under Vermont law, the PSB has the “obligation to implement statutes passed by the legislature,” it said, and, thus, it was their duty to do so if the law is valid.

Some challengers suggested that the PSB suspend the program while it seeks clarification from FERC. The PSB ruled definitively saying that to seek clarification from FERC; the PSB would be making a determination that the program is invalid. The program is valid, says the PSB, therefore there’s no need to seek clarification.

Vermont’s SPEED program is the most sophisticated in the US. Tariffs are differentiated by technology and, for wind energy, also by size. Though Vemont’s feed-in tariff program pales in comparison to that in Ontario, Canada, it has rejuvenated the renewable energy industry in Vermont.

REV led the campaign for feed-in tariffs in Vermont and recently held its largest annual conference ever. As evidence of the organization’s growing political clout, Vermont’s two US Senators were in attendance.

While the PSB’s decision will not end the debate about Federal pre-emption of feed-in tariffs in the US, it clearly sends a signal to other states that they can set feed-in tariff policy that avoids overt conflicts with the Federal government.

Parties in PSB Docekt No 7533, Federal Pre-emption Issue, October 8, 2010