Easy Legal Decision In Stonyfield Yogurt/PSNH Case; Hard Practical Decision
In the end it was a easy legal decision for the Court to make. As I wrote about in my recent article Stonyfield Throws Yogurt On The Face Of New Hampshire Electric Company, a group of New Hampshire corporate rate payers banded together to fight the installation of a $457M mercury scrubber in a large coal power plant. For the group of ratepayers, spending close to 1/2 a billion dollars on an antiquated coal plant was unacceptable because of financial and ethical reasons. Financially they argued that the scrubber would cause their rates to unduly increase.
This is ultimately why the decision is a legal no-brainier for the Court. The scrubber had not yet caused rates to increase and the scrubber was mandated by the Legislature. The court basically said to Stonyfield ‘your beef is with the Legislature and not with the Public Utility Commission.’
The Merrimack Station Plant is New Hampshire’s largest coal fired power plant servicing 189,000 commercial and industrial clients. In 2006, the NH Legislature mandated that the operator of the plant, PSNH, install “the best known commercially available technology” to remove the mercury from the plant’s coal emissions. The legislation was very specific in requiring “at a minimum, 80 percent of the aggregated mercury content of the coal burned at these plants from being emitted into the air by no later than the year 2013.”
The price tag for this project was originally estimated to be $250M but it ballooned to $457M. Stonyfield Yogurt and other large corporate rate payers including, electro-optical equipment maker H&L Instruments and the Common Man restaurants thought that the price tag was too high. It wasn’t that they were against the idea of scrubbing mercury from the emissions; everyone seemed to be in favor of this. The petitioners didn’t think that investing $457M into a plant that spews 20% of the state Co2 emissions was a wise social investment.
The real motive behind the lawsuit was that the large ratepayers believe that PSNH is sinking more money into an environmental clunker when for similar money they could get a shinny new high low CO2 model.
PSNH argued that their hands were tied by the legislator. Essentially, in its decision the NH Supreme Court agreed:
To have standing to appeal an administrative agency decision to this court, a party must demonstrate that his rights “may be directly affected by the decision, or in other words, that he has suffered or will suffer an injury in fact.”
Stonyfield’s petition that they would be financially harmed is not the same as being financially harmed. PSNH has not yet sought to add the cost of the scrubber into the rate base analysis so there is no present tangible harm. When they do, the ratepayers will have standing to challenge the amount that rates should be allowed to increase.
For Stonyfield and the other large rate payers to ultimately prevail they would need to convince the Legislature to roll back the law. Since the scrubber project has begun, this is a long shot. That would ultimately leave the ratepayer with mercury in the emissions and high rates.
The Legislature ultimately thought they were doing something that everyone would agree was a good (albeit expensive) thing in scrubbing mercury from the power plant. The truth is a little murkier. PSNH gets to incorporate a $457M project into the rate base which makes them more money and forces consumers to pay more. This basically is a question of could the $457M be spent in a way that gives everyone more bang for their environmental buck. This was not the legal question that the Court had jurisdiction to decide.
This article was written with significant help from Manchester, NH attorney Francis Murphy.
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EcoEquilibrium 
I respectfully suggest reconsideration of your assessment that this decision was a “legal no-brainer.” Consider that the effect of the court’s decision is to leave certain decisions of the PUC essentially unchallengable by anyone. Specifically, such decision are (1) favorable to an affected electric utility, and (2) those that concern projects and other expenditures that trigger in guaranteed rate recovery for the utility. The Court did not seem to understand that RSA 369-B:3-a, and principles of utility law generally, require the PUC to allow PSNH to recover the cost of the scrubber project in full. Thus, in the rate proceeding the court posited as the opportunity for Stonyfield Farm et alia to raise issues of rate effects, there would, in reality, be no such opportunity.
Moreover, the Court could have but did not limit the breadth of its holding by applying it only to individual customers as opposed to the consumer advocate, which is charged with representing essentially everyone (actually, residential ratepayers, of which every citizen who uses electricity is presumably one). I would have been much more comfortable if the court had explicitly left open the possibility that the consumer advocate might have standing to raise the kind of broad challenge these appellants raised. Since the consumer advocate was a party to the appeal, the holding arguably applies to that office as well.
During my tenure as general counsel at the NH PUC, I trained myself to avoid assigning undisclosed motives to parties appearing before the commission; it is an approach I recommend to you as well. If one were inclined to indulge in such speculation, one could also plausibly posit that the court disposed of the case on procedural grounds because the merits of the case might well have favored Stonyfield Farm, with inconvenient practical consequences.
PSNH essentially argued it received carte blanche from the Legislature to proceed with the scrubber project regardless of cost. This might be acceptable to most New Hampshire citizens when the cost of the project is double the original estimate of $250 million — but what if the pricetag had ballooned to $7 billion? On an order-of-magnitude basis, that’s what happened to the original estimates for the cost of the Seabrook nuclear power plant.
You posit two alternatives — spending the $457 million or living with unacceptably high mercury emissions — but ignore the obvious third alternative, which results in zero mercury emissions: closing Merrimack Station altogether. Depending on the cost of replacement power, and whether you think Congress really will pass carbon cap-and-trade legislation, closure might well be the least-cost option. In the ordinary course, the least-cost option is what PUC regulation is supposed to yield. A decision that deviates from this principle, and arguably turns the notion of public participation in PUC proceedings on its head, is anything but a “no brainer” from a legal standpoint.
Since my friends at PSNH are likely to read these comments, allow me to stress that I intend them no disrespect. PSNH is a very well-run utility, the arguments they presented to the PUC and to the Court were colorable as well as honorable, and I wish them well as the only utility in New England that is committed to a future of coal power.