BOSTON (CN) - Massachusetts' refusal to accept renewable energy credits from states outside the Northeast is an unconstitutional tariff on commerce, a solar power company claims in court.
Allco Renewable Energy sued Massachusetts Electric Co. dba National Grid, the state's Department of Public Utilities and its energy commissioner, on Oct. 6 in Federal Court.
Allco, which generates renewable energy credits in Georgia, claims that under Massachusetts law, utilities in the state must purchase or generate renewable energy credits every year, but only from certain states, such as any state in New England, New York or parts of Canada, including Quebec.
However, "The dormant Commerce Clause prohibits a state from using its regulatory power to discriminate against out-of-state businesses," Allco says in the lawsuit.
"It is inconsistent with the concept of the federal union for a state to establish a preferential trade region and regulate a vital portion of interstate commerce under a discriminatory regime that boycotts disfavors states."
Allco claims that Massachusetts' regionalized approach to renewable energy credits is exactly what the dormant Commerce Clause is meant to prevent.
"Creating economic regions among states that would band together and prohibit commerce, ban products or impose tariffs on commerce from states outside the region is equally offensive to the economic balkanization that the Commerce Clause was intended to prohibit," the complaint states.
Allco claims that state regulation keeps National Grid from purchasing energy credits at Allco's rates, in violation of the Public Utility Regulatory Policies Act requirement that the rate for energy credits match the value saved by utilities that do not have to generate the energy they buy.
"Under federal regulations, an electric utility must purchase any electricity made available to it by a qualifying facility, such as plaintiff's solar projects," the complaint states. "An electric utility also must pay a particular price for those purchases - the utility's 'avoided costs,' that is, the amount the utility otherwise would have spent to buy or produce the electricity that it is required to purchase form the qualifying facility."
Allco filed similar lawsuits in Connecticut and California, according to Ari Peskoe, senior fellow in electricity law at Harvard Law School.
Connecticut is fighting the case, filed in May this year, but a decision has not yet been rendered.
In California, the Federal Energy Regulatory Commission has sought dismissal of Allco's claims, to which Allco responded by asking the California court to ignore the FERC order.
The National Grid and The Massachusetts Department of Public utilities did not respond to requests for comment.
Allco is represented by Thomas Melone.
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