Direct Energy Services, LLC v. Public Utilities Regulatory Authority

The Connecticut Supreme Court rejected retail energy suppliers’ dormant Commerce Clause challenges to geographic and marketing restrictions imposed by the Connecticut Public Utilities Regulatory Authority (PURA) on “voluntary renewable offers” (VROs), which are products consisting of renewable energy credits (RECs) bundled with electric supply. Applying an analysis set forth by the Second Circuit in <a href="https://climatecasechart.com/case/allco-finance-ltd-v-klee/">Allco Finance Ltd. v. Klee</a>, the Connecticut Supreme Court concluded that the geographic restriction prohibiting VROs from containing RECs sourced outside designated geographic regions created a VRO product that could only be produced by renewable generators in the designated area to help advance Connecticut’s environmental goals, which included reducing local greenhouse gas emissions. Generators inside and outside the designated area therefore could not be considered similarly situated for purposes of a facial discrimination claim under the Commerce Clause. The court further found that the geographic restriction satisfied dormant Commerce Clause doctrine’s Pike balancing test because the restriction was not “clearly excessive in relation to the putative local benefits,” including local greenhouse gas reductions. The court also found that a marketing restriction requiring that suppliers inform consumers that a VRO backed by RECs is not itself renewable energy did not violate the dormant Commerce Clause. In addition, the court held that the suppliers could not bring free speech and Contract Clause claims that they did not raise before PURA. The court also rejected a claim that administrative proceedings violated the Uniform Administrative Procedure Act.