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When the Vermont Supreme Court in November upheld the water quality requirements for a local utility, environmental advocates cheered the decision. The utility, Morrisville Water and Light, had argued that the stricter limits imposed by the state’s Agency of Natural Resources would threaten the viability of the Green River Dam.
The case marked the first time the state’s highest court weighed in on a hydroelectric utility’s licensing criteria. That’s significant, observers say, because several more dams are facing relicensing deadlines in the coming years — and their operators will no longer be able to argue that regulators should take their financial viability into account.
“It’s a very clear and strong statement that says, no, you don’t consider economics when you’re looking at these issues,” said Jon Groveman, policy and water director for the Vermont Natural Resources Council.
Local utilities say the threat of reducing their hydropower output is especially concerning while the state continues to push for more in-state, renewable energy production. Ken Nolan, general manager of the Vermont Public Power Supply Authority, wrote in a VTDigger commentary earlier this year that the new rules created a “Sophie’s choice” for Morrisville Water and Light.
Nolan said this week that in order to meet the state’s renewable energy requirements, “you’ve now got to find some other location in your community that you’re willing to destroy in some ways, in order to produce the same renewable energy that you would have gotten from that hydro plant.”
The case reveals “a disconnect in state policy,” Nolan said, where the goal of reducing greenhouse gases conflicts with preserving natural resources. “I think we’re on a collision course where those two policies are going to start to really create large scale tensions with each other.”
On this week’s podcast, Groveman and Nolan discuss the long-term ramifications of the high court’s hydro decision. Plus, VTDigger’s Elizabeth Gribkoff describes how it could impact conversations about renewable energy requirements when the Legislature reconvenes.
**Podcast transcript**
This week: a state Supreme Court decision about dam relicensing is being hailed by water quality advocates as a new standard for upholding environmental rules. But it also reveals the tensions behind the state’s ongoing push to get more energy from local renewable resources.
Back in March, the Vermont Supreme Court heard arguments about the water quality permits for three hydroelectric dams that generate power for Morrisville Water & Light – including the dam at the Green River Reservoir, which is a well-known state park.
Elizabeth Gribkoff: The Green River Reservoir is — I mean, it’s absolutely beautiful. It almost has this otherworldly, really quiet feel. There’s loons that nest there.
Elizabeth Gribkoff is VTDigger’s energy and environment reporter.
Elizabeth Gribkoff: Part of it is a state park, so you can paddle around and then camp at these different sites. It’s really a gem.
Have you have you been out on the water there?
Elizabeth Gribkoff: Yeah, I went out on a couple years ago on a canoe, and I remember it being very cold, but it was still — there’s something about the cold, I remember there being mist rising from the water, and hearing that loon call at night. It was pretty magical.
And that whole body of water exists because of that dam.
Elizabeth Gribkoff: Yes. I mean, it’s damning part of the Green River. Obviously there was water there originally. But yeah, the size of it and — it’s kind of unique, it has this multi-pronged shape — that’s all there because there’s a dam.
Got it.
[Supreme Court recording] Good morning your honors. The matter before the court this morning is the case entitled, In re: Morrisville Hydroelectric Project Water Quality Certificate, docket number 2018-339…
What, broadly were the two sides in this Supreme Court hearing — what cases were they trying to make?
Elizabeth Gribkoff: Morrisville Water and Light, which is a utility that serves around 4,000 customers in Lamoille County — they’d applied in 2010 for federal relicensing of three of their hydro dams on the Lamoille and green rivers. And part of that process is that they had to obtain a water quality certification from the state of Vermont. And so in 2016, the state Agency of Natural Resources issued them this water quality certification. Part of it said, they set flow rates at levels that they deemed high enough to protect trout habitat. And then also for the dam that’s at the Green River Reservoir, they set seasonal flow rates and also reservoir elevation requirements.
The Agency of Natural Resources is generally saying, here’s how much water you can push through this dam to make power.
Elizabeth Gribkoff: Basically. So that Agency of Natural Resources permit got pushback on two different fronts. Morrisville Water and Light appealed it, saying basically, you know, we need lower flow rates to make operating these dams financially possible. And then on the other side of the spectrum, Vermont Natural Resources Council and Vermont Trout Unlimited wanted higher flow rates, because they said that that’s what they felt was needed to protect aquatic habitat for these fish. So both of those groups appealed this to the environmental court.
In order to protect things like fish habitats, the dam can’t generate as much power. So they’re not going to make as much money, and that’s an issue for them.
Elizabeth Gribkoff: Yes.
Got it.
Elizabeth Gribkoff: So last year, the environmental court Judge Tom Walsh, in some ways, sided with the utility in rejecting the state’s flow rates for dams on the Lamoille River. But then he also upheld some of the state’s requirements for the Green River Dam. The utility claimed that these Agency of Natural Resources requirements would basically make operating that dam uneconomical and possibly even unsafe. So both the state Agency of Natural Resources and Morrisville Water and Light appeal the environmental court’s decision, obviously for different reasons, and argued that the court didn’t adequately take into account some of the water quality standards that they were using.
[Supreme Court recording] There are two questions court needs to decide in this case, and they are centered on the important obligation this 401 certification presents to restore the waters at issue.
Elizabeth Gribkoff: Meanwhile, the utility argued that the court had erred by not taking into account social and economic issues enough when the water quality certificate was issued in the way they’ve approached this case.
[Supreme Court recording] ANR, the way they’ve interpreted their own regulations and application of the water quality standards is to almost ignore the fact that this is a dam, that this is a hydro facility that creates renewable energy that under ANR procedures, which is — I’m referring to the stream flow procedure — is beneficial for the state of Vermont. That it’s actually one of the policy goals of the state of Vermont to encourage and to increase the use of renewable energy.
Elizabeth Gribkoff: So in the decision which came out last month, the Supreme Court basically sided with the state Agency of Natural Resources and said, you know, economic and social factors should not be a part of a water quality permit. That permit’s about water quality, and so that needs to be what we’re looking at here.
They basically said when you’re relicensing a dam, the operator of that dam has to meet whatever regulations the state says they have to meet.
Elizabeth Gribkoff: Right. And especially for this, the water quality certification is just one part of this bigger relicensing process. And the Supreme Court basically agreed with ANR that to obtain a water quality certificate, that’s really focused on: will the flow rates, will our operations allow water quality standards to be met? And that needs to be the main thing that is looked at. You know, economic and social concerns aren’t really a part of that process.
Got it. So for Morrisville Water & Light to say, this is going to make it really hard for us to make money, and maybe even keep operating, they’re basically saying: that’s not our problem.
Elizabeth Gribkoff: Yeah, exactly.
Got it.
You’ve talked to some folks about what the broader repercussions of this Supreme Court decision might be. Can you tell me what they said about how this might affect water quality and utility issues in Vermont in general?
Elizabeth Gribkoff: Yeah, so one of the people we talked to is Jon Groveman, and he’s the policy and water director for the Vermont Natural Resources Council.
Jon Groveman: We’re an environmental group based in Vermont. Been here for 50 years. And we work on a range of environmental issues, water and forest and climate, energy and sustainable communities.
Elizabeth Gribkoff: They became involved in this case because they were one of the groups that had appealed the state Agency of Natural Resources water quality certificate for this dam. And they were arguing that the flow rates set by that certificate were too low to protect trout habitat.
Jon Groveman: Obviously, the dams are never natural, right? So the dam is not a natural condition. They’re created, these impoundments and these reservoirs. So there’s case law that cuts both ways on this. On one hand, there’s case law that says that when you come up for relicensing, we’re not going to say you can’t have your impoundment because you have to go back to a river system because that’s natural. We’ll allow you to have the impoundment. But we’re going to say that you need to, in operating the dam for the river part of the system, you need to basically come as close as possible to mimicking sort of natural conditions in taking out water to make power, but not in a way that’s going to not provide water for those basic functions: fishing, swimming, and and boating, you know, and a healthy aquatic ecosystem.
They see these water quality issues as potentially having a huge impact. Like that if these requirements don’t get tightened a little bit, and if this utility isn’t forced to meet them, that can be really damaging to the environment and habitat there.
Elizabeth Gribkoff: Yeah. I mean, I think Jon made kind of an interesting point when we were talking with him, which is that a lot of people, I think, we do think about water quality issues, we think about pollution and things, you know, bad things running off into the water. But he was saying, flow of a stream and there being enough water there is obviously fundamental to water quality and to habitat protection as well. Because that’s kind of like the basis of how rivers work and how streams work, is you need to have enough water there to even have a stream or a river. Right?
Jon Groveman: It’s kind of funny, I was talking to somebody about that, and they’re like, well, I understand pollution, adding pollution to the water. But why is the water itself important? And it was kind of funny, like — I’ve been doing this maybe for too long. I’m like, it’s all about the water. Number one is you need the water. There’s a natural system that has water in it. And you know, the Clean Water Act and the Vermont water pollution control laws — about the waters of the US, the waters of Vermont — it’s about those natural water systems. And if you take water out of those systems that is not part of the natural cycle — yes, we go through droughts, yes, we have flood events, those are natural cycles that happen — but if you’re just, on a regular basis, going to be taking water out of these systems, you’re just not going to be able to provide the habitat for healthy fisheries, which we care about in Vermont, but also for swimming and boating. You need a certain amount of water at different points in time. Those are the natural states of the water, and you’ve got to have that baseline of water in rivers and streams, you know, in order to basically be able to protect them from then pollution discharges, right?
So they’re just different sorts of pollution, if you look at it. But I understand that people see it very differently than like a pipe, you know, for wastewater or storm water that’s coming out.
Elizabeth Gribkoff: Jon was saying that, you know, this isn’t the first time that in a dam relicensing process there’s been maybe some tensions around balancing economics and then water quality standards. But this had never really been decided by the higher court. The Supreme Court had never looked at it before.
Jon Groveman: The issue was still arguable. And as you can see, to the point where this applicant, Morrisville Water and Light said, we’re going to take this argument. So yeah, there’s this Water Resources Board case. Yeah, this is how the agency has articulated policy in this area. But we don’t see the law as so buttoned up that we can’t challenge this notion that we’re going to balance economics and water equality.
Now we’re pretty locked in. I mean, the Supreme Court decision, one of the reasons it’s such an important decision — it’s a really clear and strong decision. It’s a very clear and strong statement that says, no, you don’t consider economics when you’re looking at these issues. For this part of the review, it’s about water quality. In this case, the court really said, you know, when you’re issuing, when the state’s issuing a water quality certificate for one of these dams, it really needs to be focused on, you know, not degrading streams and protecting water quality. And it’s not really balancing that with economic concerns.
So I hope that — I think that — this case is going to say to the hydroelectric industry that these are the rules. This is not up for debate anymore. We can debate the studies in terms of what’s necessary to meet how much water do we need to leave in the river systems, but we’re not going to argue about economics. And we’re not going to say then, you have to protect our facilities, you know, as a use of water and balance that against water needed for fish or swimming or boating. So I think it’s very much important to have that strong articulation.
And when researching this case, there wasn’t a lot of clear statements around the country. This is going to be one of the clearer, stronger statements on these issues, which are issues everywhere.
Elizabeth Gribkoff: At this point now, people can cite the Supreme Court case and say, well, no, the court said you have to, in issuing a water quality certificate, you have to really squarely focus on water quality standards and, you know, protecting habitat, and not be balancing that with these other concerns that utilities might have.
On the other side, you’ve got — Morrisville Water and Light is one of these municipal utilities. Can you explain a little bit about, what is a company like Morrisville Water and Light, what kind of position are they in here?
Elizabeth Gribkoff: Yeah, so Vermont has I think it’s 12 or 13 of these municipal utilities. And it’s interesting, if you look at a map, which I certainly have done, of, say, Green Mountain Power’s member territory, you’ll see these little pockets where these municipal utilities are still operating. It’s almost like a holdover from days past. And for some of these utilities, hydro is a really important part of their power supply. Like I think Swanton Electric, which is up in northern Franklin County, gets almost all of their electricity from one large hydro dam. And these municipal utilities, obviously, are operating on pretty thin margins.
Why is that? Is that just because they’re on a smaller scale?
Elizabeth Gribkoff: Yeah. And, you think about, they don’t necessarily have tons of out of state investors. They’re like a department of the town, kind of. So another person we talked to was Ken Nolan, and he’s the general manager of VPPSA, which stands for Vermont Public Power Supply Authority.
Ken Nolan: VPPSA is an organization that was created in 1979 by the Legislature to help small municipal utilities in the state — we have 11 members right now — to help them really get economies of scale and be able to operate much like a larger utility.
Elizabeth Gribkoff: They kind of help these smaller utilities plan. Help them, you know, with power supply contracts, just kind of all these complex things that would be really hard for the small utilities to go out and do on their own.
Ken Nolan: So half of the members, so six of our members have hydroelectric facilities that they’ve owned and operated, most of them for over 100 years.
These are just dams in their towns?
Ken Nolan: Small dams in their communities, that — in many cases, that is what the catalyst was to create the municipal utility in the first place. They had maybe a grist mill or something in the town that was using the river to produce power. When electricity became available, that was a natural place to build an electric plant. And then the towns would use that for street lighting and so on. And just naturally grew into a municipal utility over time.
So under federal law, those generators, because they’re on waterways that are owned by the state and the federal government, they’re community resources. Those plants have to go through a relicensing process anywhere from every 30 to 50 years. It depends on the plant and when it was last permitted, and what the conditions were. But most of the members that have hydroelectric plants are finding themselves starting that process. Now, Morrisville was the first of the members to have to go through that, but we’ve got four others now that are in the process in some form or other.
Elizabeth Gribkoff: There’s definitely some other members that also have a hydro dam. So I think they’re a bit concerned about what this case means for these other dams when they go up for relicensing.
Ken Nolan: And so when Morrisville started to realize what the Agency of Natural Resources was going to propose, they reached out to us more from the aspect of, what’s the financial impact if we have to change operation of this hydro plant? If we have to reduce the amount of electricity that is producing, that has an impact on how much power we need to buy from elsewhere, has an impact on the economics of running the generating plant. Can we get enough money to afford to keep operating and do the maintenance that’s required?
And so as we started looking at it from that aspect for them, and then applying that to other members, saying, well, if Agency of Natural Resources is going to require these changes in Morrisville, it’s likely that similar changes are going to have to be applied to the other members. And when we started looking at the impacts across all six, we saw some pretty significant dollar impacts involved.
They’re coming at this with a total focus on the financial bottom line for these utilities. You know, anything that could be a threat to the business operations of one of these companies is an issue for them?
Elizabeth Gribkoff: Yeah, I think that’s definitely one of their main areas of focus. I think there’s also a broader concern with the state’s renewable energy standard: utilities now have to get, by 2030, to 75% of their power has to be renewable. VPPSA’s very aware of this and trying to help their members plan for all of this, and comply with state statute. So I think that there is a concern that, okay, if operating this hydro facility becomes uneconomical — you know, I imagine they’re counting, obviously, some of that toward their state requirements. So, okay, what do we do now? We have to figure out another way to get renewable energy.
Ken Nolan: To me, it’s almost like peeling an onion. I think Vermonters in general, the vast majority of Vermonters, agree we’re in a climate crisis now. And the state is putting policies in place really to electrify our economy, reduce the carbon emissions. So across the utility sector, they’re suggesting that utilities now should be buying more renewable power. And really focusing on installing solar and wind — and biomass to some degree — but, non-carbon emitting resources. The hydro plants that we’re talking about have — they’re non-carbon emitting. They’re existing resources. And they’ve been in existence for, as I said, 100 years, some of them.
Sure.
Ken Nolan: So we’re really talking about: well, if you reduce the output, reduce the amount of energy that those plants can produce, that needs to be made up from somewhere else. And under Vermont policy, that somewhere else is likely to be a new solar project or a small scale energy resource that’s renewable. Well, that means we’re actually developing on new property. We’re having to build a solar project on a farm field somewhere. Or we’re having to build a wind project on a ridgeline somewhere.
Back in February, Ken wrote a commentary for VTDigger about this case. He said this pressure from the state created a Sophie’s choice for the utility. We asked him what he meant by that.
Ken Nolan: All of the members really are Vermont villages. And the managers of the electric department are typically the village manager. So they’re in a position where they’re already trying to weigh all of the various impacts on a community and try to make it as vibrant as possible. And when I say it’s a Sophie’s Choice, I mean you’re saying, well, we’re going to remove the viability of an existing resource that you’ve had in place for decades. And in order to replace that, you’ve now got to find some other location in your community that you’re willing to destroy in some ways, in order to produce the same renewable energy that you would have gotten from the hydro plant. And it doesn’t make a whole lot of sense to me, as a lifelong Vermonter, to say we’re basically going to remove one resource in order to put in another one.
One thing about this that I find really interesting is that this idea that, you know, protecting a natural area and habitat and the environment there would be in conflict with something like pushing for more renewable energy — and making it easier to develop new renewable energy sources, or to kind of revamp and relicense an existing one like a hydro dam — the idea that those two things would be conflict, I just find really interesting. Because they seem like they’re both related to environmental goals. And everybody’s kind of on the same page that we need to do certain things, take certain actions, to protect the environment. But then you run into a situation like this where it’s not quite clear which course of action is best going to do that.
Elizabeth Gribkoff: I mean, I think with energy in general, obviously, there’s some sources of energy that have really clear, terrible environmental impacts. But I think if you’re siting a large solar field, or if you’re putting a dam on a river, that, you know, that’s going to have an impact. Even if it seems better than, I don’t know, drilling for natural gas or something.
Ken Nolan: I think we’re seeing a real disconnect in state policy. And I think the Supreme Court ruling reinforces that disconnect. The one of the concerning things as a utility person is we have a really strong, aggressive policy for dealing with greenhouse gas reductions. And that is pushing the utilities more and more towards these renewable general generators. But we’re also seeing, at the same time, the focus in Vermont on preserving the natural landscape, really locking down where development can occur. And I think we’re on a collision course where those two policies are going to start to really create large scale tensions with each other.
We’re finding it more and more difficult to find locations for generation at the same time that the requirements to have them in-state is is really ramping up significantly. And at some point, you know, the state’s going to have to start getting together and deciding, well, what’s more important here? We’re going to have to give on one or two of our criteria for the greater goal that we have. And I don’t think they’ve really been forced to have that conversation yet.
What do you expect this coming session in terms of this conversation about renewables? And how does something like this case fit into it?
Elizabeth Gribkoff: Well, I know that there’s going to be this push to kind of bump up the renewable requirements under state statute, so that utilities would ultimately have to get 100% of their power from renewable sources — and actually have 20% of that come from newer in-state renewables. How this case fits into that: I think the main way it fits into it is that because some of these utilities would be counting — like Swanton Electric, for instance, which right now is one of the few utilities in the state that’s 100% renewable, and that’s pretty much exclusively because of this large dam that they operate — and yet a lot of these utilities, hydro is an important part of their power supply. It’s an important part of what they count as renewable. So if it’s harder for them to operate these dams there, they’re going to have to figure out another way to get renewable power.
It could look like, you know, building more solar fields in state. But that can be pretty expensive. And it also could look like buying more of these renewable energy credits, which can be somewhat controversial.
I guess it just puts decision makers in kind of a unique position to try and figure out, to what degree do you impose requirements one way or another?
Elizabeth Gribkoff: Yeah, and I think with any kind of energy source, there’s going to be some tension with other environmental values. I mean, we saw in Vermont a few years ago, the pretty intense conflict between people who wanted to develop wind energy on ridgelines, and people who want to protect those habitats and argued that we shouldn’t have wind turbines up there. I think that really highlighted that kind of tension.
I guess it’s always in the details of how these things get worked out that they have to kind of strike that balance.
Elizabeth Gribkoff: Yeah, definitely. And then, I think also, it’s challenging to do it in a way: okay, how do you make sure you’re protecting natural resources, but also not imposing so many requirements that would be impossible for someone to put up a solar array or to operate one of these dams? But I think that this case really argued that, if you’re looking at what you have to do to protect water quality standards in a river, you need to look at the science and riparian ecology, and you can’t be looking at these economic interests.
Got it. Thanks, Elizabeth.
Elizabeth Gribkoff: Thank you.
