Re: Petition for Appeal of GDF SUEZ Gas NA LLC D.P.U

Transcription

1 Seaport West 155 Seaport Boulevard Boston, MA main fax Thaddeus Heuer direct October 22, 2015 VIA HAND DELIVERY AND ELECTRONIC MAIL Mark D. Marini, Secretary Department of Public Utilities One South Station, 2nd Floor Boston, Mass Re: Petition for Appeal of GDF SUEZ Gas NA LLC D.P.U Dear Mr. Marini: Pursuant to G.L. c. 25, 5, enclosed for filing please find three (3) copies of a timely Petition for Appeal of GDF SUEZ Gas NA LLC from the October 2, 2015 Order of the Department of Public Utilities in D.P.U Appended thereto is a Certificate of Service. In the absence of a complete service list in this proceeding, this Petition is being served by first class mail upon commenters who provided mailing addresses in the comments they submitted in this proceeding. This Petition is also being served by upon those individuals to whom the Department ed its October 2, 2015 Order. Further pursuant to G.L. c. 25, 5, GDF SUEZ formally requests that the record on appeal include one copy of all exhibits and documents introduced in the proceeding, including all orders and all initial and reply comments. Please date stamp the enclosed copy of this letter to acknowledge receipt, and return it to our courier. Thank you for your attention to this matter. Sincerely, Thaddeus Heuer Cc: David Gold, Hearing Officer Encl. ATTORNEYS AT LAW BOSTON NEW YORK PARIS WASHINGTON FOLEYHOAG.COM B

2 COMMONWEALTH OF MASSACHUSETTS SUFFOLK, SS. SUPREME JUDICIAL COURT No. GDF SUEZ GAS NA LLC, ) ) Plaintiff-Appellant, ) ) v. ) ) DEPARTMENT OF PUBLIC UTILITIES, ) ) Defendant-Appellee. ) PETITION FOR APPEAL BY GDF SUEZ GAS NA LLC D.P.U On October 2, 2015, the Massachusetts Department of Public Utilities (the Department ) issued an Order Determining Department Authority Under G.L. C. 164, 94A (the Final Order ) in the proceeding docketed as D.P.U The proceeding was initiated by the Department on its own motion on April 27, 2015 (the Initial Order ), and captioned Investigation by the Department of Public Utilities on its own Motion into the means by which new natural gas delivery capacity may be added to the New England Market, including actions to be taken by the electric distribution companies. Initial Order at Section IV of the Initial Order, entitled NEXT STEP IN PROCESS, invited all interested parties to participate in this investigation, set deadlines for the submission of

3 written initial comments and written reply comments, and promised that the Department will establish a further procedural schedule that may provide for technical conferences and/or panel hearings based on comments received. Initial Order at 6. The Department subsequently extended those submission deadlines for all parties. 4. GDF SUEZ Gas NA LLC ( GDF SUEZ ) participated in the investigation by submitting notices of appearance via its counsel, by submitting timely initial comments to the Department in D.P.U on June 15, 2015, and by submitting timely reply comments to the Department on July 6, The proceeding in D.P.U was not an adjudicatory proceeding, as that term is defined either in G.L. c. 30A, 1 or 220 CMR The October 2, 2015 Order is a final order of the Department. 7. The Final Order makes findings of fact, renders conclusions of law, and establishes new prospective procedures of the Department. 1 Per G.L. c. 25, 5, these comments (and those submitted by others) will be included in the Record Appendix to be compiled by the Department upon receipt of this Petition

4 8. The Final Order contains requirements of general application and future effect adopted by the Department to implement or interpret the law enforced or administered by it. 9. GDF SUEZ is an interested party, by virtue of its participation in this proceeding at the invitation of the Department (as acknowledged by the Department in the Final Order (Final Order at B-2)) and its participation in the Massachusetts natural gas supply market. 10. GDF SUEZ is aggrieved by the rulings of the Department in the Final Order. 11. GDF SUEZ hereby appeals the Final Order and respectfully requests that the ruling be set aside in its entirety because it is based upon errors of law, exceeds the jurisdiction of the Department under G.L. c. 164, 94A, G.L. c. 30A, 220 C.M.R. 2.00, and Chapter 164 of the Acts of 1997, and is arbitrary, capricious, and constitutes an abuse of discretion. Jurisdiction 12. The Supreme Judicial Court for Suffolk County has jurisdiction over the subject matter of this action, and authority to order the relief requested, pursuant to G.L. c. 25,

5 Parties 13. GDF SUEZ Gas NA LLC ( GDF SUEZ ) is a Delaware limited liability corporation with a principal place of business at 20 City Square, Suite 3, Charlestown, Mass GDF SUEZ imports liquefied natural gas ( LNG ) and sells this product in natural gas vapor or LNG liquid form for customers in New England. Its customers include local gas distribution companies, electric generating facilities, natural gas marketers, and industrial end-users. The LNG facility owned by GDF SUEZ s affiliate, Distrigas of Massachusetts LLC, is a major supplier of LNG liquid, with 22 percent of the total LNG storage capacity and a quarter of the LNG liquid delivery capacity of LNG facilities in New England. 14. The Department is an agency of the Commonwealth of Massachusetts, established pursuant to G.L. c. 25, 1, having its offices at One South Station, Boston, Massachusetts. Facts and Background 15. The Department opened the proceeding in D.P.U to investigate whether: - 4 -

6 (1) there is an innovative mechanism for EDCs [Electric Distribution Companies] or other parties to secure new natural gas capacity into the region to benefit electric ratepayers; (2) it is appropriate for the Department to review for cost-recovery EDC contracts for natural gas capacity under G.L. c. 164, 94A ( Section 94A ); and (3) the Department s established standard of review under Section 94A should be different for these contracts. Final Order at The Initial Order requested comments on the question of whether there is any legal impediment to the Department accepting and considering natural gas capacity contracts by EDCs under Section 94A and, if approved, providing reasonable assurance of cost recovery[.] Initial Order at In the Final Order, the Department declared that Section 94A is clear and unambiguous, and that its plain language... provides the Department with the statutory authority to approve gas capacity contracts entered into by EDCs. Final Order at The Initial Order stated that [b]ased on comments received, the Department will establish a further - 5 -

7 procedural schedule that may provide for technical conferences and/or panel hearings. Id. 19. The Final Order did not establish a further procedural schedule. The sole order in the Final Order was that any electric company filing a contract for natural gas capacity with the Department for review and approval pursuant to G.L. c. 164, 94A shall comply with all directives contained in this Order. Final Order at GDF SUEZ, in reliance on the statement of the Initial Order, had a good faith expectation that further proceedings allowing public input as to the need for additional gas capacity would occur prior to the issuance of a final order in D.P.U , and anticipated participating actively in those further proceedings (to understand any actions proposed by the Department and to obtain answers to questions raised by GDF SUEZ in its initial and reply comments) based on the Department s express promise of a further procedural schedule. 21. The Department made no finding in the Final Order as to definitive proof of any market failure. 22. The Department made no finding in the Final Order as to imminent reliability concerns. 23. The Department stated in its Initial Order that the proceeding in D.P.U will investigate issues - 6 -

8 associated with implementation of any policy initiative [the Department] may adopt in this proceeding Initial Order at The Department states in the Final Order that it finds... that innovative solutions are required to alleviate gas capacity constraints, and that [t]herefore, the Department will proceed to evaluate whether it has the requisite authority to approve EDC contracts for acquisition of new natural gas capacity.... Final Order at The Department asserts that the Final Order has established a framework for Massachusetts EDCs to procure new pipeline capacity to benefit electric ratepayers in Massachusetts. Final Order at The Department asserts that the Final Order establishes a standard of review for [contracts filed by EDCs for pipeline capacity]. Final Order at The Department states that because of the different regulatory treatment of LDCs and EDCs... modifications to the existing standard of review under section 94A are necessary for review of an EDC gas capacity contract, and the Department therefore established a new standard of review for this purpose. Final Order at

9 28. The Final Order establishes extensive minimum requirements for the contents of an EDC filing with the Department for gas capacity, including a complete description of and justification for the type, size, and timing of the contracted resource(s), a complete description of the contract, including eleven specific informational elements, demonstrations of adequate procurement processes, alternatives analyses with detail for all assumptions, strategies for maximizing ratepayer benefits, demonstrations of pricing benefits based on a quantitative analysis of the benefits and costs associated with the contracted resource(s) and descriptions of cost recovery proposals. Final Order at The minimum requirements established in the Final Order apply to any EDC seeking to file a contract to procure new pipeline capacity ( Pursuant to this Order, an EDC may file such a contract with details on the proposed transaction and the terms and conditions of the contract. ) Final Order at The Department acknowledges that at the time of the Final Order there was no actual proposed contract that sets forth the rights and obligations of the signatories pending before the Department. Final Order at

10 31. On information and belief, the Department did not file a notice of its proposed actions with the state secretary. 32. On information and belief, the Department did not file a small business impact statement pertaining to its proposed actions with the state secretary. 33. The Initial Order did not provide the complete text of the Department s proposed actions or criteria, or state the express terms or describe the substance of the proposed actions that were ultimately taken by the Department via the Final Order. 34. On information and belief, the Department did not file attested copies of its final action, or citation of the law by authority of the same purport to have been issued, with the state secretary. 35. GDF SUEZ, a major supplier of LNG to Massachusetts, is thus individually and specifically aggrieved by the Final Order, which places GDF SUEZ in the untenable position of either expending significant resources to participate in proceedings brought by EDCs that GDF SUEZ believes will ultimately need to be restarted as a result of the jurisdictional deficiencies of the Department s Final Order, or abstaining from participating in those proceedings and thus placing itself at a competitive disadvantage

11 Legal Claims 36. The Final Order is based upon errors of law, and is arbitrary, capricious, and constitutes an abuse of discretion, as its conclusion that the Department has the legal authority review and approve contracts entered into by EDCs for gas pipeline capacity exceeds the statutory jurisdiction of the Department under G.L. c. 164, 94A, and is ultra vires. 37. The Final Order is based upon errors of law, and is arbitrary, capricious, and constitutes an abuse of discretion, as its conclusion that the Department has the legal authority review and approve contracts entered into by EDCs for gas pipeline capacity is contrary to Chapter 164 of the Acts of 1997 (the Restructuring Act ) and the Legislature s express directives therein. These directives require the Department (among other obligations) to interpret and implement the Restructuring Act in a manner consistent with guard[ing] against the exercise of vertical market power and the accumulation of horizontal market power and ensuring an expedient and orderly transition from regulation to competition in the generation sector consisting of... the functional separation of generation services from transmission and distribution services

12 38. The Final Order is arbitrary, capricious, and constitutes an abuse of discretion as it is a final order of the Department, despite the Department having committed to interested parties in the Initial Order that based on comments received, the Department will establish a further procedural schedule, thus denying GDF SUEZ the expectation of further proceedings in this docket and the opportunity to respond to any proposed actions of the Department prior to the implementation of such actions, a commitment upon which GDF SUEZ reasonably relied to its detriment. 39. The Final Order is based upon errors of law, and is arbitrary, capricious, and constitutes an abuse of discretion as it contravenes the precedent established by the Department in D.P.U , that the Department will abstain from taking actions that would unnecessarily and unduly disrupt the wholesale marketplace and shift the risks associated with generation development from developers, who are best positioned to manage such risks, back to consumers absent definitive proof of a market failure and imminent reliability concerns. 40. The Final Order is based upon errors of law, and is arbitrary, capricious, and constitutes an abuse of discretion, and violates G.L. c. 30A and the Department s own regulations for the adoption of regulations at

13 C.M.R. 2.00, as the Department, inter alia, (a) established a framework for Massachusetts EDCs to procure new pipeline capacity to benefit electric ratepayers in Massachusetts, Final Order at 35, by means of establishing detailed prospective filing requirements for EDCs seeking Department review and approval of gas contracts, and (b) established a standard of review to apply to the Department s evaluation of an EDC s pipeline capacity contract based on some modifications to the existing standard of review under section 94A, Final Order at 43-43, but did so without statutory authorization or providing proper notice, and has in both substance and effect exercised its rulemaking authority without following the procedures required by G.L. c. 30A and 220 C.M.R Prayer for Relief WHEREFORE, GDF SUEZ requests that this Court: 1. Set aside and reverse the Final Order; or in the alternative 2. Remand this case to the Department and direct the Department to revisit its Final Order in light of the rulings of this Court on proper interpretation of the applicable law, including G.L. c. 94A, G.L. c. 30A,

14 C.M.R. 2.00, Chapter 164 of the Acts of 1997, and other laws as appropriate; and 3. Grant such other relief as the Court deems appropriate and proper. Respectfully submitted, GDF SUEZ GAS NA LLC By its attorneys, Thaddeus Heuer, Esq. (BBO ) Mary Beth Gentleman, Esq. (BBO ) Adam P. Kahn, Esq. (BBO ) FOLEY HOAG LLP 155 Seaport Blvd. Boston, MA (617) Dated: October 22, 2015 CERTIFICATE OF SERVICE I certify that on October 22, 2015, this petition was served upon the Department of Public Utilities in accordance with the requirements of G.L. c. 25, 5 and, in the absence of a complete service list in the proceeding, served via firstclass mail upon those commenters who provided mailing addresses in the comments they submitted in this proceeding. Thaddeus Heuer