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”).
 

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.
 

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.
 

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:
 

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.
 

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.
 

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.”
 

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.

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:

Brown, Olson & Gould, PC
2 Delta Drive, Suite 301
Concord, NH 03301

rolson@bowlaw.com | (603) 225-9716