Agencies Say Stay Of New Order Prohibiting Retail Suppliers From Marketing REC-Based Products As "Renewable Energy" Being Negotiated, As Suppliers File Appeal

The Connecticut Department of Energy and Environmental Protection and the Connecticut Office of Consumer Counsel said in a regulatory filing with the Connecticut PURA that they understand that certain parties are negotiating a stay of PURA's recent order on the marketing of voluntary renewable energy offers (VROs), as retail suppliers have appealed PURA's decision.

PURA defines the term VRO to include supplier products which include energy plus the RECs claimed by suppliers in excess of the RPS, creating a bundled product (REC-based product)

As first reported by EnergyChoiceMatters.com, PURA in a recent decision prohibited the use of the term "renewable energy" to market a REC-based product. Under the order, a supplier may not market the product as "renewable energy" unless the offer is supported by an ownership interest in or PPA for a renewable resource used to serve the contract.

The PURA order also contained other limitations on RECs, such as geographic restrictions, as fully discussed in our prior story

Direct Energy, CleanChoice Energy, and the Retail Energy Supply Association have appealed PURA's decision in Connecticut Superior Court (discussed further below).

In a filing with PURA, DEEP and OCC stated, "It is DEEP’s and OCC’s understanding that a voluntary stay of the proceeding is under negotiation or has been agreed to by the parties to the appeal."

DEEP and OCC were providing an update on a disclosure label working group (DLWG) in light of the appeal and the stay

"DEEP and OCC further understand that the work of the DLWG is directly implicated by the claims on appeal and therefore within the scope of the voluntary stay. Accordingly, after consultation with the entities participating in the DLWG, the DLWG intends to pause its activities at this time pending resolution of the issues implicating the disclosure labels on appeal, absent further guidance from the Authority. This will help to ensure that the recommendations made by the DLWG can be applied consistently across all of the labels," DEEP and OCC said

In the appeal the supplier parties raised arguments previously raised in the PURA proceeding.

Among other things, the supplier parties alleged that by imposing the marketing restrictions, PURA has violated the suppliers' rights under the United States and Connecticut Constitutions to engage in free speech, because electric suppliers are prohibited from marketing REC-only based VROs as containing "renewable energy."

The suppliers argued that, "Describing REC-supported VROs as containing 'renewable energy' is consistent with federal law and the law of other states."

The suppliers further alleged, "The Marketing Restrictions impose a disproportionate burden on interstate commerce because they create marketing requirements that are in substantial conflict with a common regulatory scheme."

The suppliers alleged that the geographic restrictions in PURA's order violate the Commerce Clause of the United States Constitution

"The Geographic Restrictions discriminate against interstate commerce facially because they deny generators located outside the permitted control areas access to Connecticut’s voluntary renewable market, while allowing generating facilities located in those areas, access to this market," the suppliers alleged.

The suppliers also alleged that PURA's decision was arbitrary, capricious, and an unwarranted exercise of discretion; lacked statutory authority; violated due process; and suffered from other procedural deficiencies

Appeal: Direct Energy Services, LLC, et al. v. Pub. Util. Regulatory Auth., Docket No. HHB-CV21-6063122-S (Conn. Super. Ct.).

PURA Docket: Docket No. 16-12-29 – PURA Development of Voluntary Renewable Options Program