Nice Little Regulatory System You’ve Got Here, It’d Be a Shame if Anything Happened To It

Hey, it’s time for an update on the latest bit of corporate extortion from our buddies at GlobalFoundries, the biggest private sector employer in Chittenden County. Throughout its tenure — and before it, through much of IBM’s residency at the Essex Junction facility — the companies have used their heft to get various benefits from the state government, each time hinting to pull up stakes and leave for more corporate-friendly climes if it didn’t get its way.

This time there’s a double threat. GF is seeking to set up its own private utility so it can buy power on the regional market free of various state regulations, including renewable energy and greenhouse gas standards. It’s seeking Public Utility Commission approval for the move — and threatening to go ahead with or without PUC approval.

GF makes a, shall we say, interesting argument. In essence, it argues that it doesn’t need PUC approval, but it’s applying to the PUC anyway in order to preserve Vermont’s regulatory framework. Yup, the company says it’s acting to preserve a regulatory system by seeking to essentially opt out of the system. That’s a funny way to support a system, no?

But a question has arisen over whether or not the PUC can even consider the case. The Conservation Law Foundation and AllEarth Renewables say the PUC has no jurisdiction over the request because state law doesn’t make any provision for anything like private utilities.

Last month, the parties submitted legal arguments and counter-arguments for the Commission to ponder. Wednesday 12/8 is the deadline for any additional filings on the issue; after that, presumably the PUC will schedule a hearing. All documents, public comments, schedules, etc., can be accessed on this page in the PUC website.

So where do the parties stand? I’ll give you a simplified (and hopefully reasonably accurate) version after the jump.

First of all, just so the lines of battle are clear, the Scott administration is fully on GlobalFoundries’ side. The Public Service Department has filed a brief endorsing GF’s bid and dismissing the arguments made by CLF and AER. (The PSD advises the PUC on regulatory issues; its views are influential but not final.)

In their filings CLF and AER rely on a plain reading of state law, which includes no provision for such a thing as a private utility. They say that the PUC’s authority is described and limited by state law, so it “cannot grant GlobalFoundries’ petition without exceeding its jurisdiction and authority.” That is, unless the Legislature rewrites the law.

GF says if the PUC doesn’t say yes, the company could simply go ahead with the plan under federal regulations. That would seem to be a simpler course, but the company contends that it is voluntarily seeking PUC approval out of consideration for Vermont’s regulatory framework.

A framework whose rules GF seeks to evade. It’s kind of a funny argument, not funny ha-ha but funny uh-oh. And it reflects the infinite creativity of the corporate attorney.

Who happens, in this case, to be none other than lawyer and former House Speaker Shap Smith. Hourly fees make strange bedfellows, y’know.

CLV and AER have focused much attention on GF’s desire to avoid the state’s Renewable Energy Standards and the emissions targets in the Global Warming Solutions Act. Since GF consumes 8% of all electricity used in Vermont, that’s a big exemption. It would mean everybody else would have to work harder to achieve our clean-energy goals.

GF has an interesting argument there, too. It has promised a “broader, more innovative approach to achieving reductions in greenhouse gas emissions” across its entire operation, not just in electricity. It says the potential savings in manufacturing are much more impactful than complying with RES and GWSA could be.

Okay, sure. But GF would be under no legal obligation to make those reductions if it gets its way. Also, GF manufacturing savings would not apply to clean-energy standards for the state’s utilities. We’d still be behind the 8-ball for meeting those targets, whether or not GF cuts emissions from its factory.

Besides, isn’t GF going to pursue those efficiencies anyway? They’d save money, wouldn’t they? I’d argue that the manufacturing argument is a red herring.

A separate, parallel process has been underway between the Scott administration and GF. They had produced a letter of intent to agree on voluntary emissions targets for GF, based on the notion that the private utility would be established and GF would be exempt from targets in the law. That letter was a step toward a formal, binding Memorandum of Understanding.

The PUC had asked for the MOU to be submitted by November 15. That did not happen. On November 12, GF notified the PUC that they would not be filing an MOU; it said there had been “productive discussion” but no agreement.

That’s probably for the best; the letter of intent was a real stinker, imposing very limited standards while giving GF a bunch of get-out-of-jail-free cards. The fact that the administration couldn’t get GF to agree to minimal standards would seem to be a bad sign for GF’s dedication to fighting climate change.

There is one exception to the Public Service Department’s adherence to GF’s viewpoint. In its filing, it said that GF’s private utility would have to meet a standard of “public good.” That is, the PUC must determine that the plan is in the public interest before it can issue the mandatory Certificate of Public Good.

According to the PSD, “the public good standard could be satisfied only if a separate, meaningful condition is imposed on GlobalFoundries” to cut greenhouse gas emissions. That’s what the MOU was supposed to provide.

Now it looks like maybe no MOU? Not sure where that leaves the PSD’s argument, although I have great faith in its ability to find justifications for a pro-corporate stance.

So there we are. Well, there’s lots of other details (such as the question of whether GF is a “landlord” which I won’t bore you with), but that’s the main thread. A couple months ago, the administration and GF were hoping this plan would sail through by the end of the year. That seems impossible now, considering that the PUC would have to rule on jurisdiction and then settle the actual case. The Commission doesn’t move that fast.

If indeed the issue is still hanging fire come January, I wouldn’t be surprised if GF asks the Legislature to “clarify” state law in a way that would clear a path for the private utility plan. Many Democratic lawmakers hail from Chittenden County and they wouldn’t want to risk losing all those high-tech jobs. I’d expect a fairly friendly reception if it goes down that path.

But for now, we’re in a familiar position for PUC watchers: Waiting for filings and for further hearings to be scheduled. Stay tuned.


6 thoughts on “Nice Little Regulatory System You’ve Got Here, It’d Be a Shame if Anything Happened To It

  1. Annette Smith

    Since you are recently focused on the PUC, you might want to watch Wednesday’s evidentiary hearing on the investigation into the Vermont Gas Pipeline that Gov. Shumlin pushed through. Starts at 9:30 a.m. on Dec. 8, link to log in here

    Regarding this post about GF, you say the Department of Public Service advises the PUC. Sort of. DPS represents the administration, whatever it is. With Shumlin, DPS pushed gas and wind, both environmentally destructive and seemingly contradictory in terms of addressing climate change. In reality they are both useless or worse as they exacerbate the problem with methane releases and reducing the ability to mitigate the effects of climate change.

    Previous Chairs of the PUC were known to communicate directly with the governor’s office (this is not rumor, it has been admitted to but I have yet to find any written admission). The current Chair of the PUC has high integrity and cannot be politically influenced, regardless of what you may believe.

  2. H. Jay Eshelman

    Nice regulatory system, indeed. Keep in mind that Margaret Cheney, one of only three PUC Commissioners, (current Term: 2013 – 2025), is Peter Welch’s wife. Conflict of interest?

      1. John S. Walters Post author

        If you want to open that particular door, then Vermont is absolutely riddled with conflicts of interest. So many power couples. So many people involved in businesses they play a part in overseeing. Precious little transparency in campaign finance and personal financial disclosure. So little ethics enforcement. We’re basically counting on “Vermonters are fundamentally good” to prevent any wrongdoing.

    1. Annette Smith

      The best example of possible conflict of interest is Congressman Welch’s relationship with PUC-regulated David Blittersdorf’s AllEarth renewables. Welch at AllEarth: AllEarth hires Welch staffer:

      That said, Margaret Cheney has been on PUC investigations into Blittersdorf’s regulated activities and at least $10,000 in fines were issued that she signed. I can point to no evidence that Margaret Cheney has been anything other than ethical in her role on the PUC.


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