ANALYSIS OF MARCH 29, 2018 SUPREME COURT OPINION
(Posted March 29, 2018) Today is one of the high holy days on the Emmert calendar. This afternoon and evening, all across America, we’ll hear one of the two sweetest two-word phrases in all of sports: “Play ball!” (The other is “Game Seven.”)
In case anyone has forgotten, the reigning National League champions play their home games in a place called Chavez Ravine. Here’s hoping that we’ll see late-October baseball there again this year.
Let’s dive into today’s sole opinion from the justices, VEPCO v. SCC. It explores the interplay between two fairly obscure subsections in a statute governing electricity purchases. In the end, this opinion is about a familiar subject: how to interpret a statute.
About ten years ago, the General Assembly passed the Virginia Electric Utility Regulation Act. The act included provisions for the purchase of electricity from companies other than the 800-pound energy gorilla in Virginia, VEPCO. As you can imagine, it is very, very expensive to start a power company, so we have something just short of a monopolistic framework within VEPCO’s service area. Unlike lemonade stands, there are very few companies that possess the wherewithal to jump into this market. But it’s not zero.
Two parallel provisions of the act, both in Code §56-577, are at the heart of this appeal. Subsection A(3) allows large customers – those who use five megawatts a year – to buy from competing electricity providers instead of from VEPCO. There’s a key limitation: if you move over to that competitor and decide that you’re unhappy, you have to give five years’ notice before switching back. This was likely designed to prevent bargain shopping on an annual basis, something that can play havoc with VEPCO’s planning.
The second subsection, A(5), allows anyone – not just the huge customers – to buy electricity from competing companies that generate all of their power from renewable sources. This is an unambiguous effort to stimulate growth in renewable energy. There is no five-year-notice provision when you want to switch back to VEPCO after test-driving one of these companies.
This appeal is about the intersection of these two subsections: What happens when a mega-consumer wants to buy from a green-energy company? Does that switch trigger the five-years-notice requirement, or not?
The litigation started with a declaratory-judgment petition, filed in the SCC by a green-energy company, Direct Energy Services. It sought a declaration that Direct Energy could sell electricity to customers of any size without the notification problem. VEPCO responded that the mega-customer provision was narrower, so it controlled over the broader conflicting language of subsection A(5). An advocacy group named Appalachian Voices chimed in on the side of Direct Energy.
The SCC considered the parties’ arguments over the meaning of the statute and sided with Direct Energy. It ruled that the two subsections don’t conflict at all; they deal with different circumstances. And since subsection A(3) says that it’s “subject to” A(5), that means that the latter provision controls where the two intersect.
VEPCO appealed, and as with all SCC appeals, it didn’t have to make a pit stop at writ panels; all SCC appeals are of-right. Today the justices unanimously affirm, basically on the reasoning of the SCC. The Supreme Court agrees that the language of the statute isn’t ambiguous and the two subsections don’t conflict with each other. I don’t have any figures on how many green-energy providers are selling how much juice to how many customers in Virginia, or how much this will affect VEPCO’s bottom line; but this is clearly a win for those who seek greater competition in this field.
