CLC To AG & DPU None of Your Business

July 3, 2014

To: All Interested Parties

Re: Cape Light Compact's Response to the Attorney General's Motion to Compel Testimony in DPU Hearings on CLC's Revised Aggregation Plan (DPU 14-69)

Here is where things currently stand in the "dust up" between the Cape Light Compact, the Attorney General and the Department of Public Utilities:

1. On May 30, 2014, the Attorney General requested some basic information from the Cape Light Compact (CLC) in its initial set of Information Requests, including a copy of CLC's mission statement and information relating to CLC's collection and use of funds.

2. On June 13, 2014, CLC refused to provide the information to the Attorney General in the context of the DPU hearings to evaluate CLC's Revised Aggregation Plan, saying that this information had no bearing on CLC's petition for approval of the Plan.  CLC offered, instead, to meet privately with the Attorney General -- which would have the effect of having the DPU disregard all of the information that CLC requested and -- equally important -- keeping all of this information out of the public domain.  If the AG accepted CLC's offer, the AG would essentially be agreeing that CLC is not accountable to the DPU -- or anyone -- regarding the collection and use of ratepayer funds through the "mil adder" surcharge, including the dedication of $3.9 million in ratepayer funds to support the Cape & Vineyard Electric Cooperative (CVEC).

3. On June 20, 2014, the AG responded with a Motion to Compel testimony from CLC, stating that it requested the information from the Cape Light Compact because, in the opinion of the AG, there was a very strong likelihood that the information would support a finding that CLC has imposed an "illegal tax" -- rather than a permissible fee -- on CLC ratepayers through the application of the "mil adder."  Additionally, the AG's motion stated that the information it believed that the information that it requested would demonstrate that CLC had failed to provide an "equitable distribution" of benefits to all classes of CLC ratepayers.  Finally, from a purely procedural perspective, the AG noted that CLC's refusal to provide meeting minutes and other documents directly made it impossible for the AG or the DPU to authenticate the information in question, since CLC had declined to provide the information and merely referred the AG to CLC's website.

4. On June 27, 2014, attorneys for CLC opposed the AG's Motion to Compel with a bitter Response saying, essentially, that CLC's collection and use of the mil adder funds is not subject to review by the DPU and none of the AG's business -- certainly not with respect to CLC's administration of its Aggregation Plan.  CLC also angrily asserted that the DPU had previously declined to consider the question as to whether the imposition of a surcharge on ratepayers in the aggregation constituted an "illegal tax" (in similar, but not identical, proceedings) and that, therefore, the AG had no business raising the issue again.  CLC disputed the AG's contention that CLC has been collecting an "illegal tax" or that it has failed to provide an "equitable distribution" of benefits to all ratepayers. 

But CLC is adamant that neither the DPU nor the AG should be allowed to examine, or consider, CLC's use of the mil adder funds -- including the transfer of millions of dollars to CVEC for the exclusive benefit of the CVEC member municipalities -- to determine the legality of this practice. 

According to CLC: "Based upon Department precedent, matters concerning a municipal aggregator’s rates, revenues and expenses are outside the Department’s authority...." 

In CLC's interpretation: "The Attorney General continues to seek an expansion of the Department’s scope of review....  Absent the expansion of the Department’s scope of review, the Attorney General’s inquiries are objectionable and outside the scope of this proceeding...."

CLC is outraged that "the Attorney General inexplicably refuses to accept that the scope of the Department’s review does not include a review of a municipal aggregator’s rate structure and operational expenses. She continues to believe that she is entitled to this information despite multiple orders to the contrary."

In other words, according to CLC, the DPU and the AG should simply accept at face value the Cape Light Compact's insistence -- notwithstanding the AG's concerns about the propriety of CLC's collection and use of these funds -- that the use of the funds is legal and proper and that it should be left to CLC to determine this point, at its sole discretion. 

The Cape Light Compact notes again that if it is successful at excluding this information from consideration by the DPU and keeping it out of the public domain, it will gladly provide the AG with any information that it seeks on a confidential basis -- after the AG agrees that the DPU not be allowed to consider any of it in evaluating the merits of CLC's Revised Aggregation Plan. 

CLC isn't hiding anything: it just doesn't want to disclose the information to the public or allow any third party to rule on it.

All should agree, according to the Cape Light Compact, that no one should examine CLC's practice of imposing the mil adder; or regulate CLC's use of these funds; or evaluate whether the application of the mil adder funds at the CLC Board's sole discretion provides "equitable treatment" to all classes of CLC ratepayers; or, God forbid, compel CLC to be transparent on this issue or to certify the accuracy of its records.

CLC is perfectly happy to regulate itself, thank you very much, without any help from the Department of Public Utilities or the Attorney General.

As always, CLC inexplicably believes that its arguments are entirely reasonable and that, naturally, it continues to occupy the high moral ground in this debate as it opposes any detailed examination of the legality or propriety of its collection and use of public funds.

The laws that created, and govern, municipal aggregations such as CLC (and municipal electric cooperatives, such as CVEC) are skeletal, at best, providing almost no specific instructions to the DPU regarding their regulation. 

The AG argues that since the law does not provide much specificity, that the DPU has an obligation to use its own best judgement to do whatever is logically necessary to protect the interests of all electric ratepayers, including members of the Cape Light Compact, under its overarching mandate to this effect.

CLC, conversely, maintains that absent any specific -- and non-existent -- provisions in the law, no one, including the DPU, has any authority to regulate their activities.

The Cape Light Compact has tried valiantly to paint this "dust up" as a "turf war" between the AG and the DPU, but, in fact, this is false. 

The real turf war is between the Cape Light Compact and the rest of the world -- including the DPU, the AG and any members of the public who believe that CLC should have any responsibility to be open, transparent or accountable to anyone other than the CLC Governing Board regarding its collection and use of public funds.

Eric Bibler

(All documents in this proceeding available by typing in the DPU docket number 14-69 here: http://web1.env.state.ma.us/DPU/FileRoom/dockets/bynumber ).