MARK NAPIER v. PUBLIC SERVICE ELECTRIC AND GAS COMPANY
Annotate this CaseNOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
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SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-4408-15T2
MARK NAPIER,
Petitioner-Appellant,
v.
PUBLIC SERVICE ELECTRIC AND
GAS COMPANY,
Respondent-Respondent.
________________________________
Argued January 23, 2018 – Decided March 14, 2018
Before Judges Yannotti, Carroll and Leone.
On appeal from the New Jersey Board of Public
Utilities, BPU Docket No. EC1311051.
John J. Coughlin argued the cause for
appellant.
Sheree L. Kelly, Assistant General Regulatory
Counsel, argued the cause for respondent PSE&G
(PSE&G Services Corporation Law Department,
attorneys; Sheree L. Kelly, on the brief).
Veronica A. Beke, Deputy Attorney General,
argued the cause for respondent New Jersey
Board of Public Utilities (Gurbir S. Grewal,
Attorney General, attorney; Andrea M.
Silkowitz, Assistant Attorney General, of
counsel; Yao Xiao, Deputy Attorney General,
on the brief).
PER CURIAM
Mark Napier appeals from a final determination of the Board
of Public Utilities (Board), which rejected his challenge to the
methodology by which Public Service Electric and Gas Co. (PSE&G)
receives credit for the power generated by its pole-mounted solar
panels and Solar Renewable Energy Certificates (SRECs). We affirm.
I.
The Electric Discount and Energy Competition Act (EDECA),
N.J.S.A. 48:3-49 to -98.5, was enacted in 1999 to restructure the
electric power industry in New Jersey. In re Ownership of Renewable
Energy Certificates,
389 N.J. Super. 481, 487 (App. Div. 2007).
Among other things, EDECA provides that an electric public utility
may invest in renewable energy programs on a regulated basis,
N.J.S.A. 48:3-98.1(a)(2), and file a petition with the Board for
cost recovery,
N.J.S.A. 48:3-98.1(b).
To further encourage "the development of renewable sources
of electricity and new, cleaner generation technology," the Board
adopted "Renewable Energy Portfolio Standards" (REPS), N.J.A.C.
14:8-1.1 to -2.12, which require suppliers of electricity to retail
customers "to annually increase their reliance on renewable
energy" by generating a predetermined percentage of electricity
2 A-4408-15T2
by means of renewable sources, including solar power.
N.J.S.A.
48:3-87(d); see also N.J.A.C. 14:8-2.1(a); N.J.A.C. 14:8-2.3.
In its regulations, the Board created "Renewable Energy
Certificates" (RECs), and each REC "represents the environmental
benefits or attributes of one megawatt-hour of generated renewable
energy." Renewable Energy,
389 N.J. Super. at 484. A supplier may
satisfy its renewable energy requirements by either generating
renewable energy directly or purchasing an appropriate number of
RECs or SRECs in the case of solar energy, from other energy
producers. Id. at 488; N.J.A.C. 14:8-2.3(c); N.J.A.C. 14:8-
2.8(a)(3).
Through its designee PJM Interconnection, LLC (PJM), the
Board issues SRECs to solar energy producers based on the amount
of solar electricity generated. N.J.A.C. 14:8-2.9(a); N.J.A.C.
14:4-1.2. PJM is a Regional Transmission Organization (RTO) that
coordinates the movement of wholesale electricity in all or parts
of thirteen states, including New Jersey. PJM-Environmental
Information Services (PJM-EIS), a subsidiary of PJM, oversees the
SREC market for New Jersey.
PJM-EIS oversees the issuance, tracking, and sale of SRECs
through the Generation Attribute Tracking System (GATS). PJM-EIS
also issues manuals that provide rules for measuring energy output
and participating in SREC markets. N.J.A.C. 14:8-2.9(a). Energy
3 A-4408-15T2
suppliers who participate in the wholesale PJM markets must comply
with the operating rules for GATS and the PJM Manuals pursuant to
contracts called Wholesale Market Participation Agreements (WMPA).
On February 10, 2009, PSE&G filed with the Board a petition
for approval of a program for investment in solar generation
facilities called the "Solar 4 All Program." As part of the
program, PSE&G proposed a "Neighborhood Solar" plan, in which
forty megawatts (MW) of solar capacity would be produced by pole-
mounted solar panels located in PSE&G's service territory. PSE&G
proposed to install up to 200,000 panels.
In its petition, PSE&G indicated it would meter the solar
energy generated by the panels by using a sampling methodology.
PSE&G noted that "each unit may not be individually metered."
According to PSE&G, the hourly output of the solar systems would
be determined through the use of "a calculated load profile, which
will be created by metering a sample of these systems with interval
meters."
At the Board's direction, a BPU commissioner conducted six
public hearings on PSE&G's petition. Thereafter, PSE&G, the
Board's staff, the Division of Rate Counsel, and several parties
who had intervened in the matter, entered into a Settlement
Agreement (SA) regarding the program, which the Board approved by
order dated August 3, 2009. Among other things, the SA and order
4 A-4408-15T2
recognized that the output from the pole-mounted solar panels
would be metered and verified pursuant to the requirements and
monitoring standards established by PJM.
Thereafter, PSE&G worked with PJM to establish the metering
system for the solar panels. PSE&G entered into a WMPA, which
indicated it would submit to PJM hourly generation data for fifty
groups of pole-mounted panels. Each group includes a sample panel
with a PSE&G revenue-grade meter. PSE&G uses the metering data to
place daily aggregate production information into hourly bins.
PSE&G sends this information to PJM, and the PJM Settlement
Group uses it to issue payments for energy sales for the pole-
mounted units. At the end of each month, the PJM Settlement Group
provides the data to PJM-EIS, which determines the amount of SRECs
that should be issued. By September 24, 2014, PSE&G had installed
approximately 174,366 pole-mounted solar panels.
In January 2013, Napier filed a complaint in the Law Division
against PSE&G. He asserted claims on his own behalf and as
representative of a putative class of persons who had a financial
stake in New Jersey's SREC market from 2009 to 2012. Napier claimed
that in the relevant period, PSE&G had received more SRECs than
it was entitled to receive because it had not complied with certain
energy-reporting requirements.
5 A-4408-15T2
Napier alleged that as a result, the value of "legitimately-
obtained" SRECs had been devalued, causing him and other members
of the putative class to sustain economic losses. Napier sought
damages under theories of unfair competition and unjust
enrichment.
In lieu of an answer, PSE&G filed a motion to dismiss the
complaint pursuant to Rule 4:6-2(e), arguing that Napier failed
to state a claim upon which relief could be granted. The trial
court granted the motion and dismissed the complaint with
prejudice. Napier appealed.
While the appeal was pending, Napier filed a petition with
the Board seeking to bar PSE&G from receiving SRECs for its pole-
mounted solar panels. Napier alleged that PSE&G's panels have not
been metered, as required by the Board's rules and regulations;
and that PSE&G was receiving "far more energy credit" for solar
power than its system was actually producing. Napier asked the
Board to deny PSE&G any SRECs and solar energy credits going back
to 2009, when it approved PSE&G's "Solar 4 All Program." The Board
referred the matter to the Office of Administrative Law (OAL) for
a hearing as a contested case.
On July 15, 2014, we affirmed the trial court's dismissal of
Napier's civil action, but modified the court's order to state
that the dismissal was without prejudice to claims Napier may
6 A-4408-15T2
present to the Board on any viable legal theory and any causes of
action he might in good faith assert. Napier v. Pub. Serv. Elec.
& Gas Co., No. A-4532-12 (App. Div. July 15, 2014) (slip op. at
19).
On October 1, 2014, PSE&G filed a motion in the OAL for
summary decision pursuant to N.J.A.C. 1:1-12.5. PS&G argued that
Napier failed to allege sufficient facts to support his allegations
that PSE&G was not complying with the Board's rules and
regulations, and his claim that PSE&G was not accurately measuring
the solar power generated by the pole-mounted panels. In support
of the motion, PSE&G submitted a certification from Todd Hranicka,
its Director of Solar Energy.
On October 20, 2014, Napier filed a motion to compel
discovery. In the motion, Napier reviewed his discovery requests
and the answers that PSE&G had provided. He asserted it was not
possible to substantiate his allegations without the information
he was seeking from PSE&G. PSE&G opposed the motion for discovery.
In a separate submission, Napier argued that PSE&G's motion for
summary decision should be denied.
After hearing oral argument on the motions, the
Administrative Law Judge (ALJ) issued an initial decision. The ALJ
found that further discovery was not warranted, and that there was
no genuine issue of material fact as to whether PSE&G was
7 A-4408-15T2
authorized to use a sampling methodology to determine the solar
power generated by the pole-mounted panels and the appropriateness
of that methodology. The ALJ therefore concluded that PSE&G's
motion for summary decision must be granted and Napier's petition
dismissed. Napier filed exceptions to the ALJ's initial decision,
and PSE&G filed a response.
On April 27, 2016, the Board issued its final decision and
order dismissing Napier's petition. The Board noted that in its
petition for approval of the "Solar 4 All Program," PSE&G
indicated, among other things, that it planned to use a sampling
methodology to determine the solar power generated by the pole-
mounted panels. The Board stated that it did not reject the use
of a sampling methodology. The Board observed that the WMPA
required PSE&G to use metering equipment for the pole-mounted
panels, and that PSE&G had installed the panels in accordance with
the PJM Manuals.
The Board also noted that PJM had been designated as the
Regional Transmission Authority and, as such, has responsibility
for ensuring the reliability of electric power supply in numerous
states. The Board commented that PJM had accepted the data produced
by sampling PSE&G's pole-mounted panels. PJM also had accepted the
use of modeling algorithms to determine the amount of power
8 A-4408-15T2
generated collectively by all of the solar panels and the amount
of SRECs that should be issued.
The Board accepted the ALJ's finding that there was no genuine
issue of material fact regarding the regulatory authority for
PSE&G's sampling methodology, the sufficiency of that methodology,
and the SRECs created on that basis. The Board therefore concluded
that PSE&G was entitled to summary decision. This appeal followed.
II.
On appeal, Napier argues that the Board erred by granting
PSE&G's motion for summary decision. He contends there were at
least three unresolved issues of material fact that precluded the
grant of PSE&G's motion.
The scope of our review of a final decision of an
administrative agency is limited and we will not reverse such a
decision unless it is "arbitrary, capricious, or unreasonable, or
[] not supported by substantial credible evidence in the record
as a whole." In re Stallworth,
208 N.J. 182, 194 (2011) (citing
Henry v. Rahway State Prison,
81 N.J. 571, 579-80 (1980)). In
making that determination, we consider:
(1) whether the agency's action violates
express or implied legislative policies, that
is, did the agency follow the law; (2) whether
the record contains substantial evidence to
support the findings on which the agency based
its action; and (3) whether in applying the
legislative policies to the facts, the agency
9 A-4408-15T2
clearly erred in reaching a conclusion that
could not reasonably have been made on a
showing of the relevant factors.
[Ibid. (citing In re Carter,
191 N.J. 474,
482–83 (2007)).]
We note, however, that a court is "in no way bound by [an]
agency's interpretation of a statute or its determination of a
strictly legal issue." Carter,
191 N.J. at 483 (quoting Mayflower
Sec. Co. v. Bureau of Sec.,
64 N.J. 85, 93 (1973)). "Because an
agency's determination on summary decision is a legal
determination, [appellate] review [of that decision] is de novo."
L.A. v. Bd. of Educ. of City of Trenton,
221 N.J. 192, 203 (2015)
(citing Contini v. Bd. of Educ. of Newark,
286 N.J. Super. 106,
121–22 (App. Div. 1995); Manalapan Realty, LP v. Twp. Comm.,
140 N.J. 366, 378 (1995)).
The standard for motions for summary decision under N.J.A.C.
1:1-12.5 is "substantially the same as that governing a motion
under Rule 4:46-2 for summary judgment in civil litigation." L.A.,
221 N.J. at 203 (citing Contini,
286 N.J. Super. at 121–22). Thus,
an agency must ascertain "whether the competent evidential
materials presented, when viewed in the light most favorable to
the non-moving party in consideration of the applicable
evidentiary standard, are sufficient to permit a rational
factfinder to resolve the alleged disputed issue in favor of the
10 A-4408-15T2
non-moving party." Id. at 204 (quoting Brill v. Guardian Life Ins.
Co. of Am.,
142 N.J. 520, 523 (1995)).
Here, Napier argues there were at least three unresolved
issues that precluded the Board from granting PSE&G's motion for
summary decision. He contends: (1) the Board never specifically
approved PSE&G's method for determining the solar energy generated
by its pole-mounted panels; (2) the Board's regulations do not
permit PSE&G's sampling methodology; and (3) PSE&G failed to show
there was no genuine issue of material fact and it was entitled
to summary decision as a matter of law.
We note that Napier did not specifically raise the first two
issues before the ALJ and the Board. In his petition, Napier
claimed that PSE&G's panels were not metered as required, and
PSE&G was receiving credit for more solar power than its system
was actually producing. He asked the Board to deny PSE&G credit
for the solar power generated by pole-mounted panels from 2009 to
2015.
Ordinarily, we will not consider issues raised for the first
time on appeal unless the issues are jurisdictional in nature or
have a substantial effect upon the public interest. N.J. Div. of
Youth & Family Servs. v. M.C. III,
201 N.J. 328, 339 (2010). The
issues Napier has raised for the first time on appeal are not
jurisdictional and do not substantially affect the public
11 A-4408-15T2
generally. Nevertheless, we have decided to consider the issues
that Napier has raised.
Napier first argues that the Board never approved the manner
by which PSE&G measures the solar energy generated by the pole-
mounted panels. We disagree.
As we have explained, PSE&G petitioned the Board for approval
of its "Solar 4 All Program," and in its petition, PSE&G indicated
that it planned to measure the solar power generated by the panels
by metering samples of the panels and using modeling algorithms.
As noted, the Board approved PSE&G's petition under the terms and
conditions set forth in the SA.
By approving PSE&G's petition, the Board sanctioned the use
by PSE&G of the sampling and modeling algorithms to measure the
solar power generated collectively by all of the pole-mounted
panels. In its decision on Napier's petition, the Board found that
PSE&G had regulatory authority to use a sampling method and
modeling algorithms to measure the power generated by the pole-
mounted units, and SRECs had been validly issued on that basis.
There is sufficient credible evidence in the record to support the
Board's findings.
Next, Napier argues that PSE&G's sampling methodology is not
permitted by the Board's regulations. In support of this argument,
Napier cites N.J.A.C. 14:8-2.9(c), which states:
12 A-4408-15T2
Beginning December 4, 2012, in measuring
generation to determine the number of RECs or
SRECs to issue, the Board or its designee
shall accept only readings of a meter that
records kilowatt-hour production of
electrical energy, and which meets all
applicable requirements at (c)1 and 2 below.
The readings may be taken or submitted by any
person, but shall be verified by the Board or
its designee:
1. The American National Standards
Institute (ANSI) Standard C12.1-2008,
Electric Meters Code for Electricity
Metering, incorporated herein by
reference, as amended or supplemented;
and
2. Any additional requirements in the
PJM-EIS Generation Attribute Tracking
System Operating Rules, Revision 6,
September 2010; and the PJM-EIS
Generation Attribute Tracking System
Terms of Use, last modified on January
3, 2011; which are incorporated herein
by reference, as amended and
supplemented, and can be found at
www.PJM-EIS.com.
[N.J.A.C. 14:8-2.9(c).]
As we stated previously, by approving PSE&G's "Solar 4 All
Program," the Board recognized that the output from PSE&G's pole-
mounted solar panels would be metered using a sampling methodology
and the data would be verified pursuant to the requirements
established by PJM. The regulation Napier relies upon does not
preclude the use of a sampling methodology. The Board's
interpretation and application of the rule is consistent with its
13 A-4408-15T2
plain language. Moreover, the record shows that PSE&G's sampling
method uses readings from meters that comply with the rule's
requirements.
Napier further argues that PSE&G failed to establish that its
sampling method complies with "the monitoring standards in the PJM
Manuals." However, in his certification, Hranicka stated that
PSE&G worked with PJM to establish an acceptable monitoring system.
Furthermore, Hranicka stated that PJM has accepted PSE&G's
methodology and the data collected to determine hourly output from
all of PSE&G's solar-mounted panels.
In addition, Napier argues that Hranicka's certification
failed to establish that there was no genuine issue of material
fact and PSE&G was entitled to summary decision. He contends that
in certain respects, statements in the certification are not
consistent with PSE&G's responses to his discovery requests.
We are convinced, however, that Hranicka's certification
provided sufficient facts to support the ALJ's and Board's
decisions that PSE&G was entitled to summary decision. In
responding to PSE&G's motion, Napier had the burden of presenting
evidence that raised a genuine issue of material fact regarding
PSE&G's compliance with the Board's 2009 order, the applicable
regulations, and the PJM monitoring standards. The ALJ and the
Board correctly found that he had not carried that burden.
14 A-4408-15T2
III.
Napier argues that the ALJ erred by failing to refusing to
grant his motion for discovery. He contends the ALJ did not comply
with N.J.A.C. 1:1-10.1, which states, "[i]n considering a
discovery motion, the judge shall weigh the specific need for the
information, the extent to which the information is within the
control of the party and matters of expense, privilege, trade
secret and oppressiveness." Napier argues the ALJ failed to weigh
his specific need for the information he was seeking.
We note that in his motion to compel discovery, Napier asked
the ALJ to order PSE&G to produce: (1) the Smart Energy Platform
information for all metered pole-mounted panels; (2) the full
report of energy output from the panels; (3) the reports for so-
called "aggregators" that reflect production data from 38,000
pole-mounted units; (4) data reported by certain sample meters;
(5) installation information and technical data regarding the
panels; (6) information regarding the location of the panels; (7)
maintenance records regarding panels that were damaged or
inoperable; and (8) evidence showing that PSE&G used competitive
bidding to acquire the panels. In his motion, Napier noted that
PSE&G had provided some of the information he requested, but
claimed its responses were incomplete.
15 A-4408-15T2
We are convinced that the ALJ did not err by refusing to
order further discovery. The ALJ noted that PSE&G had provided
reasonable responses to Napier's discovery requests and further
discovery was not warranted. The Board agreed.
The additional discovery that Napier requested would not
support his claim that PSE&G did not have regulatory authority to
use the sampling method to measure the solar energy generated by
the pole-mounted units. The discovery also would not show that
PSE&G was calculating the solar energy generated by its pole-
mounted units in a manner that was not permitted by the Board or
its regulations. Therefore, the ALJ and the Board did not err by
refusing to grant Napier's motion to compel discovery.
IV.
Napier also argues that we should not defer to the Board's
decision because the Board allegedly did not use its expertise
when it dismissed his petition. He contends PSE&G failed to present
the documentation and information that the ALJ and the Board needed
to make an informed decision on his petition. We disagree.
"The Legislature has endowed the BPU with broad power to
regulate public utilities . . . . [and] considerable discretion
in exercising those powers." In re Public Serv. Elec. & Gas Co.'s
Rate Unbundling,
167 N.J. 377, 384-85 (2001) (quoting In re
Elizabethtown Water Co.,
107 N.J. 440, 449-50 (1987)). The Board's
16 A-4408-15T2
decisions are presumed to be valid "and will not be disturbed
unless [the court] find[s] a lack of 'reasonable support in the
evidence.'" Id. at 385 (quoting In re Jersey Cent. Power & Light
Co.,
85 N.J. 520, 527 (1981)).
In this matter, there is sufficient credible evidence in the
record to support the ALJ and Board's decisions. We reject Napier's
contention that the ALJ and the Board lacked sufficient evidence
to make an informed decision in this matter. We also conclude that
the Board used its regulatory expertise in deciding the issues
before it.
Napier further argues that PSE&G's method for calculating the
solar energy produced by the pole-mounted panels is inconsistent
with the State's policy to increase the production of solar energy.
He contends PSE&G's method of estimating the power generated by
its pole-mounted panels hinders the State's policy by artificially
inflating the market price of solar facilities.
There is, however, no evidence in the record to support these
allegations. The Board determined that PSE&G's metering
methodology is consistent with the Board's 2009 order approving
the "Solar 4 All Program," the applicable regulations, and PJM
requirements. The Board's decision is supported by sufficient
17 A-4408-15T2
credible evidence in the record, and it is not arbitrary,
capricious, or unreasonable.
Affirmed.
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