Opinion for Connecticut General Statutes (CGS) § 4-181a (b) Proceeding

On November 17, 2005, the Connecticut Siting Council (Council) reopened this docket pursuant to Connecticut General Statues (Conn. Gen. Stat.) § 4-181a (b), which permits an agency to consider whether changed conditions exist, and then consider whether such changes, if any, justify reversing or modifying the Council’s original decision granting a Certificate of Environmental Compatibility and Public Need (Certificate) to Towantic Energy LLC dated June 23, 1999. Conn. Gen. Stat. § 4-181a(b) provides:

Conn. Gen. Stat. § 4-181a(b) (emphasis added).

This reopening was prompted by the Certificate Holder’s (Towantic Energy, LLC) request to relieve the condition of dual fuel capability and establish a construction deadline dependent on a power purchase agreement. The Certificate Holder believed if these two conditions of the Certificate were reversed or modified, the open market would view the project in a more favorable light for financing.

Accordingly, the Council believed that the best course of action was to consider allegations of any changed conditions, with the opportunity of due process, from both supporters and opponents of the Certificate. Thus the Council denied the Certificate Holder’s request and reopened this docket, under its own motion.

The Council’s public notice to reopen this docket was for the purpose to hear evidence to determine if conditions have changed that would justify consideration of whether the Council’s original decision should be reversed or modified. Specifically, the Council considered the following alleged changed conditions:

• "Whether changes in financing and market conditions for power purchases either undermine the issued certificate or compel or make desirable an extension of the issued certificate,
• Certificate banking (whether the certificate holder has a sincere desire to build the plant or is merely holding the certificate as an asset),
• Traffic impact (whether it has worsened since initial certificate approval),
• Natural gas supply and cost,
• Status of air emission permits,
• Condition of buy-out with the Town of Oxford,
• Financial support of the Pomperaug River Watershed Coalition,
• Whether changed conditions require or make desirable elimination of dual fuel capability,
• Vertical exhaust plume affects on aviation in light of any changes in the Waterbury/Oxford Airport, and changes in Federal Aviation Administration (FAA) requirements and permits and studies since the initial issuance of the certificate,
• Waterbury/Oxford Airport Noise Study,
• Whether changed conditions require or make desirable extension of the construction schedule,
• Regional Greenhouse Gas Initiative, and the
• Federal Energy Regulatory Commission approved "Forward Power" auction for New England."

Although the Council approved a Development and Management Plan for the construction of the facility in 2001, the Certificate Holder has not begun construction. The Certificate Holder has been hindered due to lack of financing and court litigation. Also, it is clear that the Certificate Holder did not expect the Department of Environmental Protection (DEP) air emission permit process would take over four years to complete, concluding with the issuance of the permits on December 7, 2004. These factors have led the Certificate Holder to request that the Council extend the construction schedule in light of the lengthy DEP permit process, its appeal, and lack of available funds to develop the project.

Of the issues identified and investigated by the Council, the Council finds that the need for the facility, extension of time for the Certificate, open-ended deadline to complete construction, air emission permits, traffic, noise, land use, and water issues do not constitute changed conditions. Issues the Council considered to be changed conditions but were not sufficient to cause this Council to modify or revoke its decision in 1999, consist of natural gas supply and cost including duel fuel capability and vertical exhaust plume affects on aviation. Lastly, issues pertaining to so-called "Certificate banking," the status of possible business transaction(s) involving the Town of Oxford, the Regional Greenhouse Gas Initiative, and the FERC having approved a "Forward Power" auction for New England were not contended to be changes that would support a modification or denial of the Certificate and thus the Council dismisses these issues.

Since restructuring of the electric generating industry in the State of Connecticut, this Council has approved seven facilities totaling 3,682 megawatts. Four facilities, [Bridgeport Energy, Milford Power, Lake Road Generating, and PPL Wallingford] comprising 2,106 MW or 60 percent of the electric capacity approved, are operating. The remaining three facilities, [NRG Northeast Generating, Towantic Energy, and Kleen Energy Systems] comprising 1,576 MW or 40 percent of the electric generating capacity, have not materialized.

The Council’s 2005 and 2006 Ten-Year Forecasts of Loads and Resources of Connecticut Electric Utilities concluded that supplies are expected to meet demand under normal weather conditions in the near term, assuming no losses of generation due to retirement. These reports further note that much of the local capacity in the state is relatively old, inefficient, more polluting and is becoming increasingly obsolete. However, under the more stringent ISO-NE "90/10" forecast, Connecticut faces a significant shortage of capacity; even including the three approved generating facilities not yet constructed and/or completed of which Towantic Energy is one.

The competitive market created for electric generation spawned numerous electric generating projects in 1998 and 1999. The Council recognizes that inasmuch as market forces have largely become unfavorable since the restructuring of the electric industry in Connecticut, this change alone might be viewed as a changed condition.

The Connecticut legislature has charged the Council with the responsibility to consider public benefit of projects like Towantic Energy in comparison to the potential adverse environmental effects that might arise from the project. A public benefit exists if such a facility is necessary for the reliability of the electric power supply of the state or for the development of a competitive market for electricity. This facility could further add to the electric supply of the state, increase reliability and promote a competitive market for electricity. These policy criterion, which caused this Council to initially approve this plant, have not changed in any manner to affect this Council to contemplate a modification or reversal of its initial approval.

Regarding the extensions of time, it should be noted that during the course of these reopened proceedings, several of the parties opposing the proposed power plant, including the Town of Middlebury, Mr. Raymond Pietrorazio, Citizens for the Defense of Oxford, Ms. Mira Schachne, and Mr. William Stowell (hereinafter "Petitioners"), represented by Paulann H. Sheets, Esq., filed a Petition for Declaratory Ruling (hereinafter "Petition") to the Council raised issues concerning the extensions of time. While the Council has issued a separate decision in response to the separate Petition for Declaratory Ruling under Conn. Gen. Stat. § 4-176, because that Petition asserts that the instant Certificate is void, the Council will also reiterate its response in this Opinion.

The Council’s Decision and Order, issued in June of 1999, contained the following language:

Paragraph 9 of the Decision and Order.

The Council, relying upon the language "Unless otherwise approved by the Council", extended the construction period of the Certificate multiple times without either amending the Docket No. 192 Decision pursuant to Conn. Gen. Stat. § 16-50k(c) and Conn. Gen. Stat. § 16-50l(d), or modifying the decision pursuant to Conn. Gen. Stat. § 4-181a(b), the changed conditions provision. The Petitioners requested that the Council rule that its prior extensions are void and that, since the power plant has still not yet been built, the Certificate has expired. In our Decision on the Petition for Declaratory Ruling, the Council respectfully disagrees with this contention.

There is no language in Chapter 277a of the Connecticut General Statutes (the Public Utility Environmental Standards Act or "PUESA"), the chapter governing the Council, that expressly governs the duration of certificates issued by the Council. Conn. Gen. Stat. § 16-50p (a) (1) does, however, state:

Conn. Gen. Stat. § 16-50p(a)(1).

In interpreting statutes, courts will consider the legislative policy the statute was designed to implement. Of course, where the language of the statute is plain and unambiguous, Courts will not look beyond the statutory language. Southern New England Telephone Co. v. Department of Public Utility Control, 64 Conn. App. 134, 138, 779 A.2d 817 (2001), appeal dismissed, 260 Conn. 180, 779 A.2d 294 (2002). The plain language of the statute gives the Council very broad discretion to insert time conditions in its charge to balance environmental concerns with public need and benefit. Clearly, there is no conflict between the legislative policy behind the PUESA as stated in Conn. Gen. Stat. § 16-50g and the plain language of Conn. Gen. Stat. § 16-50p. While we have found no case law interpreting the limits of the above language, the Council believes that granting approvals without time limits can cause havoc with energy and telecommunications infrastructure planning if approved projects languish without limitation. At the same time, the Council must have flexibility to evaluate and extend such deadlines without creating a new contested case with subsequent appeals each time an extension is needed. The Council sees nothing in the PUESA or the Uniform Administrative Procedure Act (UAPA) that prohibits the insertion of the language in its decisions that was used in the Decision and Order in this Docket.

The key question, then, is whether, by using the phrase, "Unless otherwise approved by the Council", the Council reserved onto itself the power to extend the time limitation short of using the amendment procedure or the changed conditions procedure. While the Petitioners have discussed court cases showing that state agencies have the authority to set time limits on approvals, and have discussed different language used by the Council in various decisions, they have not cited any court cases rejecting an agency reserving onto itself the power to extend a time limit without utilizing the PUESA amendment process or the UAPA changed conditions process. Clearly, had the Council not used the phrase "Unless otherwise approved by the Council", extensions of time could still be obtained through the amendment process or changed conditions process. If, however, even with the phrase "Unless otherwise approved by the Council" in the Docket No. 192 Decision, the only paths to extending the time are through the amendment process or the changed conditions process, then the phrase "Unless otherwise approved by the Council" is mere surplusage, adding no meaning to the Docket No. 192 Decision. In Vibert v. Board of Education, 260 Conn. 167, 793 A.2d 1076 (2002), the Connecticut Supreme Court reiterated that in interpreting statutes, "Every word and phrase is presumed to have meaning, and we do not construe statutes so as to render certain words and phrases surplusage." Id., 260 Conn. at 176. Applying this principle to the Docket No 192 Decision, the Council clearly intended to reserve onto itself the power to extend the deadline without amending or modifying the Certificate and Decision and Order. The broad language of Conn. Gen. Stat. § 16-50p(a)(1) appears to give the Council the power to make such a time limit with such a reservation a condition of a certificate.

Thus, the Council concluded that the prior extensions of time were valid and that the instant Certificate is currently valid, and that no finding of changed conditions (nor invocation of the amendment process) is required for the Council to consider any further request for extension of time of the Certificate, if and when such request should be filed.

Originally, Towantic requested to extend the construction schedule fixed to a power purchase agreement is, rather that a fixed date. Towantic since withdrew this request. Had this request not been withdrawn, the Council notes that the request was in effect, an open-ended deadline and thus not a legitimate deadline for the Council to prescribe. The Council understands market forces will dictate if and when electric generation is a commodity that is in demand. Thus, the Council has before it a resource which this state is likely to need in the near future. On that basis, to simply let the Certificate lapse without serious deliberations would be bad public policy and not in the best interests of the State of Connecticut. Moreover, because the Council has the latitude to adjust Certificate deadlines, and has done so in many instances, it will continue to reserve such right and will therefore not issue an open-ended deadline.

The DEP’s permit had a construction deadline of June 26, 2006, with a condition that if construction was not complete the turbine engines would be subject to an updated Best Available Control Technology (BACT) analysis. The Certificate Holder has submitted such an updated BACT analysis. However, an appeal on the DEP air emission permits is pending before the Connecticut Supreme Court. The Council is advised that action on this appeal is subject to an automatic stay of a bankruptcy filing submitted by Calpine, the Certificate Holder’s parent company. Regardless of bankruptcy proceedings, outstanding appeals, or required additional BACT analyses, the Council does not believe that the DEP permit process, known and contemplated during the original approval process, constitutes changed conditions.

Claims of increased traffic have been cited as significant changes by opponents of the facility. The Council considered traffic in its initial issuance of the Certificate and is cognizant that traffic will increase as land uses become further developed. This issue was further substantiated by evidence provided by the Citizens for the Defense of Oxford that many residential subdivisions are being developed. With regard to this issue, a 2006 traffic study undertaken for the Town of Oxford found no significant impact is expected in connection with the development of the Woodruff Hills Light Industrial Park. Much of the vehicular activity related to the roads identified in the report is found to be no different than what was identified during the Certificate proceeding in 1999. Therefore, the Council concludes that the traffic issues presented to the Council do not constitute changed conditions under Conn. Gen. Stat. § 4-181a (b).

Noise issues were considered in the initial Certification proceeding. The Council determined that the projected noise levels, including ambient noise conditions, would be within state noise regulations. If noise levels exceed existing noise levels at the property boundary, the Certificate Holder will be bound by state regulations. Noise associated with the Waterbury/Oxford Airport is analyzed by the Department of Transportation (DOT) and the FAA, and the impacts of any future activity to adjacent land uses would be directly governed by the DOT and FAA. Thus, the Council does not consider noise issues constituted a changed condition from the time they were considered during the original proceeding.

A residential/golf community remains under development. However this project falls completely within the confines of the Town of Oxford planning and zoning regulations – as are the developments approved by the Town of Middlebury. The Towantic facility is proposed on land zoned industrial and the Council finds that this use is consistent with the designated zone. The development of such projects was foreseeable during the original proceedings and do not constitute changed conditions.

The facility would use significant amounts of water during operation on fuel oil. In 1999, the Heritage Water Company (HWC) predicted that it would exceed its daily water supply by 2020. Development of the Towantic Energy project alters this projection to 2016. Inasmuch as HWC would need additional water supply, an interconnection with the American Water Company was proposed that is expected to be completed in 2007. This interconnection would provide for the company’s water needs for approximately 50 years. The Council required that the Certificate Holder provide two stream gauge stations for the Pomperaug River, develop and implement a water conservation plan, and support a study of the Pomperaug River aquifer. No significant changes were raised related to these water supply issues, and thus the Council’s 1999 views in connection with these matters remain unchanged.

Natural gas supply and cost is an adjunct to financing and open-market paradigms. Prices for natural gas, including fuel oil, have dramatically increased since 1999 which naturally affects the cost of electricity. Electric generators entering the market at the time that this project was certified had ample supplies of natural gas available to them. However, forces outside of Connecticut have impacted the supply and delivery infrastructure.

New England is positioned "at the end of the pipeline," thereby creating difficulties in operating exclusively natural gas-fired electric generation simultaneously during cold periods when demand for natural gas for heating is the priority. Recently, ISO-New England conducted a study of the availability of natural gas and the pipeline infrastructure. The findings of this study revealed that sufficient supplies of natural gas are available but must travel significant distances to serve New England. Further, once natural gas reaches New England, undersized pipelines or lack of pipelines altogether affect the delivery of supplies to meet the need for electric generation.

Still, new electric generation projects often propose using natural gas as the primary fuel source, given that natural gas has a cleaner emission profile compared to coal or fuel oil. It is important to note that FERC has jurisdiction of the construction over new natural gas pipelines. Such infrastructure is built to meet known, demonstrable demand rather than to speculations that could serve the public in the future. If capacity to serve Towantic is lacking, there is a rational, well established procedure through FERC to correct the situation. Therefore, although the Council recognizes and acknowledges that changes have occurred to natural gas supply and its marketplace costs, the Council also notes that these changes are a direct reflection of a competitive market.

Near the start of this reopened proceeding the issue of eliminating the requirement that this project be built with dual-fuel capability (the ability to operate on either natural gas or distillate fuel oil) was raised and discussed. This requirement by the Council has not changed and has, in fact, been reinforced by ISO-New England stating that electric generators should have an alternative back-up fuel. The Council believes that this functional capability is important to fuel diversity and advances the interests of increased reliability and economy of electric generation for consumers.

Vertical exhaust plumes were claimed by opponents to this project to potentially affect aviation. However, the FAA issued a safety study report titled Safety Risk Analysis of Aircraft Overflight of Industrial Exhaust Plumes, dated January 2006. This study was not earlier available and thus its availability for consideration during this reopened proceeding is a change which is taken seriously by this Council. The study concluded that the "risk associated with plumes is deemed acceptable without restriction, limitation, or further mitigation." However, the FAA recommended that communications, avoidance tactics, and operational techniques would further minimize risk.

Prior to construction, Towantic Energy is required to provide the Council an FAA Notice of Proposed Construction or Alteration. This notice of proposed construction is reviewed by the FAA to ensure the safe and efficient use of navigable airspace. It is understood that an FAA determination of proposed construction or alteration, in and of itself, should not be construed as an approval or disapproval of a proposed project. Rather, specific mechanisms to conduct studies and notify pertinent entities provides for due process for a notice of proposed construction. Once a determination is issued it may be challenged for further review.

Numerous challenges of vertical plumes versus aircraft have been raised and dismissed by the DEP during its air emission permit proceeding and through a petition for declaratory ruling with the DOT on this specific project, which the DOT denied. Also, opponents have the right to challenge the FAA notice of proposed construction when and if a determination is made. The Council’s order in this matter is irrespective of any other process that would appropriately permit opponents and proponents an arena at the FAA to argue the potential risk of vertical plumes to aircraft. Nevertheless, without such an FAA determination in support of the project, the project would not be in compliance with the Council’s Certificate.

Alleged changed conditions pertaining to so-called "Certificate banking," the status of possible business transaction(s) involving the Town of Oxford, the Regional Greenhouse Gas Initiative, and the FERC having approved a "Forward Power" auction for New England were argued to be changes that would support a modification or denial of the Certificate. Nevertheless, the Council recognizes that little or no evidence to substantiate the alleged changed conditions were presented and thus the Council dismisses these issues.

The Council recognizes that changes of various conditions and in different forms, over a period of several years, are to be expected. However, such expectations of changed conditions are a subjective assessment. The Towantic Energy project has been challenged at many different levels. The Council considers this project to be one that has withstood intense scrutiny and has nevertheless survived regulatory and court review. Consequently, any future electric generation facility on the same parcel may face three to five years of review prior to a two or more year construction period. This being said, the Council determines that the stated changed conditions, as outlined in the Council’s hearing notice, alone or cumulatively, are not sufficient to modify or otherwise reverse the Council’s 1999 final decision granting the Certificate. The Council will not conduct further proceedings to consider modifying or reversing its 1999 final decision at this time.