IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

STATE OF DELAWARE, )
DEPARTMENT OF NATURAL )
RESOURCES & ENVIRONMENTAL )
CONTROL, and SHAWN M. GARVIN, )
SECRETARY OF THE DEPARTMENT )
OF NATURAL RESOURCES & )
ENVIRONMENTAL CONTROL, and )
DAYNA COBB, DIRECTOR OF THE )
DIVISION OF CLIMATE, COASTAL )
AND ENERGY, )
)
Appellants, ) Case No.:
)
v. ) Notice of Appeal from
) the Decision of the
DELAWARE PUBLIC SERVICE ) Public Service Commission
COMMISSION, )
) Decision Date: April 22, 2020
Appellee. )

NOTICE OF APPEAL

TO: Prothonotary
Superior Court
New Castle County Courthouse
500 N. King Street
Wilmington, DE 19801

Aaron R. Goldstein, Esq.

State Solicitor
Delaware Department of Justice
820 N. French St., 6th Floor
Wilmington, DE 19801
 Raj Barua, PhD Thomas Walsh, Esq.
Executive Director Deputy Attorney General
Delaware Public Service Commission Delaware Department of Justice
861 Silver Lake Blvd., Suite 100 820 N. French St., 6th Floor
Dover, DE 19904 Wilmington, DE 19801

Andrew C. Slater Regina A. Iorii, Esq.

Delaware Public Advocate Deputy Attorney General
Division of the Public Advocate Delaware Department of Justice
29 South State Street 820 N. French St., 6th Floor
Dover, DE 19904 Wilmington, DE 19801

PLEASE TAKE NOTICE that pursuant to Rule 72 of the Delaware Superior

Court Rules of Civil Procedure, 29 Del. C. § 10142 and 26 Del. C. § 510, the State

of Delaware, Department of Natural Resources & Environmental Control

(“DNREC”) , Secretary of DNREC Shawn M. Garvin,1 and Dayna Cobb, Director

of the Division of Climate, Coastal and Energy, who is by statute also the State

Energy Coordinator and head of the Delaware Energy Office 2 (hereinafter the

1
Among other responsibilities and authorities relevant to this Appeal, the
Secretary is responsible to appoint the State Energy Coordinator and has ultimate
responsibility for the State Energy Office. 29 Del. C. §§ 8003(2)(i), 8003(16).
2
29 Del. C. § 8003(2)(i) (“A Director of the Division of Energy and
Climate, who shall be known as the Director of Energy and Climate, who shall
serve as the State Energy Coordinator and who shall be qualified by training and
experience to perform the duties of the office.”); 29 Del. C. § 8053 (“The Director
of the Division of Energy and Climate is the administrator and head of the State
Energy Office and is the State Energy Coordinator”); 29 Del. C. § 8030 (“The
Division of Energy and Climate shall have the power to perform and shall be
responsible for the performance of all the powers, duties and functions heretofore
vested in the Delaware Energy Office, also referred to as the ‘Energy Office,’
2
“Director”), appeal to the Superior Court of the State of Delaware from Order No.

9578 (the “Order”), entered by the Delaware Public Service Commission

(“Commission”) on April 22, 2020, in Regulation Docket No. 56. (Ex. A.). Order

No. 9578 was issued in Regulation Docket No. 56, in which DNREC participated

extensively as an intervening party and raised its objections throughout the

proceedings both as to the issuance of Order No. 9578 specifically, and to the legal

flaws inherent in Order No. 9578 and the Regulations pursuant to which Order No.

9578 was issued. Order No. 9578 is the first time the Commission has applied the

Regulations to enact a freeze, and therefore the first time since DNREC’s pre-

enforcement challenge of the Regulations, which was dismissed on standing, to seek

judicial review of the Commission’s actions.

By entering the Order, the Commission abrogated appellants’ statutory

authority, as provided in the Renewable Energy Portfolio Standards Act (“REPSA”),

26 Del. C. §§ 351-364, by unilaterally ordering a freeze of the Renewable Energy

Portfolio Standards (“RPS”) after the Commission, not the State Energy

Coordinator, calculated the total cost of compliance with the RPS. REPSA provides

for annual increases of the percentage of electricity in the State that must come from

‘State Energy Office,’ ‘DEO’ and ‘State Energy Coordinator,’ pursuant to: Chapter
76 of Title 16; Chapters 1, 10 and 15 of Title 26; this chapter; and Chapter 64 of
this title”).
3
renewable energy, by establishing a minimum cumulative solar photovoltaics

requirement and a minimum cumulative eligible energy resources requirement for

regulated utilities, which requirements increase each year until 2025 (hereinafter

collectively referred to as the “RPS requirement”). The Order is the culmination of

an extended dispute between DNREC and the Commission over the correct statutory

interpretation of REPSA, and in particular 26 Del. C. §§354(i), (j), which provide

discretion for a “freeze” of the RPS requirement if the total cost of complying with

the RPS requirements for solar and for all renewables during a compliance year

exceeds 1% or 3%, respectively, of the total retail cost of electricity for retail

electricity suppliers during the same compliance year (hereinafter the “freeze

threshold”). DNREC asserts that those statutory provisions are plain on their face

that they provide discretionary authority to DNREC to determine a freeze: “The

State Energy Coordinator in consultation with the Commission, may freeze the

minimum [renewables and solar] requirement for regulated utilities if the Delaware

Energy Office determines….” 3 More fundamental to the Commission’s Order,

however, the statute does not provide the Commission with authority to unilaterally

freeze the RPS requirement. As a result, the Order cannot be found to be “free of

error of law and not arbitrary or capricious” and must be reversed. Instead, the

3
26 Del. C. §§354(i), (j).
4
Commission relied on its unlawful Rules and Procedures to Implement the

Renewable Energy Portfolio Standard (“Regulations”)4 when it calculated the total

cost of complying with the RPS and declared a freeze of the RPS. These

Regulations, which purport to allow the Commission to make a unilateral freeze

determination over the State Energy Coordinator’s (DNREC’s) objection, are in

conflict with the plain language of the statute and are unlawful.

DNREC’s grounds for appeal are:

1. That by entering Order No. 9578, and by promulgating the Regulations,

the Commission erred as a matter of law by interpreting 26 Del. C. §§354(i), (j) to

give the Commission unilateral authority to freeze the RPS requirement. The

Commission did so in contravention of the plain statutory language of 26 Del. C. §§

354(i), (j) that “[t]he State Energy Coordinator in consultation with the Commission,

may freeze….” Despite the plain language of the statute, the Commission

unilaterally ordered a freeze of the RPS requirement. In doing so the Commission

not only ignored the Director’s statutory discretion, but in fact the Director’s explicit

objection, to a freeze of the RPS requirement. Order No. 9578, and the freeze of

the RPS requirement it purports to order, are therefore not “free of error of law and

not arbitrary or capricious,” 26 Del. C. § 510, and must be reversed.

4
26 Del. Admin. C. § 3008.
5
 2. That by entering Order No. 9578, and by promulgating the Regulations,

the Commission erred as a matter of law by infringing on DNREC’s authority and

the Director’s authority, including without limitation under the Delaware Energy

Act, and instead unilaterally ordering a freeze of the RPS requirement. DNREC and

the Director have special authority on issues of environmental concern, climate

change, energy policy, and renewable energy policy in particular. These statutes

include not only REPSA, but also, without limitation:

a. The Delaware Energy Act includes among its purposes “[t]o reduce,

to the maximum extent possible, the environmental consequences of

energy generation and use in the State.” 5 The General Assembly

explicitly found that “[t]he State must provide for the development

of a comprehensive state energy policy which will ensure an

adequate, reliable and continuous supply of energy and which is

protective of public health and the environment and which promotes

our general welfare and economic well-being” and that “[t]he

establishment of the State Energy Office is in the public interest and

will promote the general welfare by assuring coordinated and

efficient management of state energy policy.”6 The General

5
29 Del. C. § 8051(c)(5).
6
29 Del. C. §§ 8051(b)(5)-(6).
6
 Assembly therefore established the State Energy Office within

DNREC and appointed the Director as the State Energy

Coordinator.7

b. DNREC’s enabling statute confirms the particular role in energy

policy, and renewable energy in particular, granted to it by the

General Assembly. DNREC’s “Secretary shall be responsible for

the administration and operation of the State Energy Office, and

shall supervise all the required and discretionary programs currently

underway within the State Energy Office…. In addition, the State

Energy Office shall work in cooperation with the State Public

Service Commission and other State agencies and departments in

the promotion of renewable fuels and energy supplies, improving

the adequacy and reliability of energy supplies in Delaware and

assessing the environmental consequences of energy usage in

Delaware.8

c. Other statutes within DNREC’s authority similarly emphasize the

urgent nature of climate change and the need to address it, including

through renewable energy. “Climate change poses serious potential

7
29 Del. C. §§ 8051, 8053.
8
29 Del. C. § 8003(16)a.
7
 risks to human health and terrestrial and aquatic ecosystems

globally, regionally and in the State.” 9 Deployment of renewable

energy resources is identified by the General Assembly as a

necessary action to reduce greenhouse gas emissions such as carbon

dioxide (C02).10 Reducing C02 emissions “is in the interest of the

State to protect human health and terrestrial and aquatic

ecosystems.” 11

Yet by issuing Order No. 9578, by rejecting DNREC’s input in the crafting of

Regulations to implement REPSA despite DNREC’s explicit statutory authority

within REPSA, and adopting Regulations which purport to give the Commission

ultimate control over a freeze of the RPS requirement, the Commission has

attempted to expand the Commission’s authority and in the process infringed on

DNREC’s and the Director’s authority in the particular area of renewable energy

policy in Delaware. Order No. 9578, and the freeze of the RPS requirement it

purports to order, are therefore not “free of error of law and not arbitrary or

capricious,” 26 Del. C. § 510, and must be reversed.

9
7 Del. C. § 6043(a)(2).
10
7 Del. C. § 6043(a)(5).
11
7 Del. C. § 6043(a)(4).
8
 3. That by entering Order No. 9578, and promulgating the Regulations,

the Commission erred as a matter of law by interpreting 26 Del. C. §§354(i), (j) to

give the Commission unilateral authority to calculate the freeze threshold, in

contravention of the plain statutory language of 26 Del. C. §§ 354(i), (j), which

provides that a freeze may occur “if the Delaware Energy Office determines that the

total cost of complying with this requirement during a compliance year exceeds” the

statutory percentages. Despite the plain language of the statute, the Commission

directed its Staff to perform the calculations and thereafter issued a unilateral freeze

of the RPS requirement. By relying on a calculation performed by its staff, in

contravention of the plain statutory language of 26 Del. C. §§ 354(i), (j), Order No.

9578, and the freeze of the RPS requirement it purports to order, are therefore not

“free of error of law and not arbitrary or capricious,” 26 Del. C. § 510, and must be

reversed.

4. DNREC asserts that the Regulations promulgated by the Commission

are contrary to the statute, and therefore cannot stand. However, assuming arguendo

that the Regulations are enforceable, the Commission violated its own Regulations

in issuing Order No. 9578 by: (i) disregarding even the limited (in contrast to the

broad discretion provided by statute) authorities and discretions of DNREC

established in the Regulations; (ii) having Commission Staff perform the calculation,

in violation of 26 Del. Admin. C. § 3008-3.2.21.5, which provides that DNREC

9
perform the calculation; (iii) providing no calculations “in writing,” as set forth in in

26 Del. Admin. C. § 3008-3.2.21.5; (iv) orally ordering a freeze on the same day as

Commission Staff orally presented the calculation results, February 19, 2020, in

violation of 26 Del. Admin. C. § 3008-3.2.21.6, which provides for a period of “no

fewer than 10 days nor more than 30 days” and a further period of “[W]ithin 20

days” after which, “[a]t the next regularly-scheduled Commission meeting the

Commission shall consider the determination and issue an Order”; and (v) neither

receiving nor soliciting any public comment, beyond parties intervening and

participating in the pre-existing regulatory docket, prior to making its oral ruling,

subsequently established in Order No. 9578, in disregard of the expectations of

public participation of the Commission’s statute and rules. Order No. 9578, and the

freeze of the RPS requirement it purports to order, are therefore not “supported by

sufficient evidence, free of error of law and not arbitrary or capricious,” 26 Del. C.

§ 510, and must be reversed.

5. That by entering Order No. 9578, and promulgating the Regulations,

the Commission erred as a matter of law by defining the term “the total retail cost of

electricity” as the “total costs paid by Non-Exempt Customers of the Commission-

regulated electric company for the supply and transmission of retail electricity,

10
including costs paid to third party suppliers, during a respective Compliance Year.”12

The Regulations unlawfully remove the necessary retail costs, such as distribution

costs, that are borne by electric customers, and thereby materially alter the Director’s

RPS freeze determination. The Order in which the Commission usurped the

Director’s authority to perform the calculation of the freeze threshold is based on

this unlawful definition of the “total retail cost of electricity.” Order No. 9578, and

the freeze of the RPS requirement it purports to order, are therefore not “free of error

of law and not arbitrary or capricious,” 26 Del. C. § 510, and must be reversed.

6. That by entering Order No. 9578, and promulgating the Regulations

that were in turn relied on in the Order, the Commission erred as a matter of law by

including the cost of qualified fuel cell provider projects (“QFCPP”) be included in

the calculation of the freeze threshold. The statute provides that the Director “may

freeze the minimum cumulative solar photovoltaics [or eligible energy resources]

requirement for regulated utilities if the Delaware Energy Office determines that the

total cost of complying with this requirement,” which must necessarily refer to the

solar photovoltaics and eligible energy resources requirements.13 The statute defines

“solar photovoltaics” as “energy technologies that employ solar radiation to produce

12
26 Del. Admin. C. § 3008-1.0.
13
26 Del. C. §§ 354(i), (j) (emphasis added).
11
electricity.” 14 The statute further defines “eligible energy resource” (EER), which

includes fuel cells only if “powered by renewable fuels.” 15 “Renewable fuel” is

further defined by statute to explicitly exclude “fossil fuel or a waste product from a

fossil fuel source.”16 The existing QFCPP projects utilize natural gas as the fuel for

the fuel cells, and therefore cannot be eligible energy resources, let alone solar

photovoltaic resources. Furthermore, the statute explicitly provides that

“compliance shall include the costs associated with any ratepayer funded state

renewable energy rebate program, REC purchases, and alternative compliance

payments.”17 The definition of “REC” is likewise provided by statute as:

“‘Renewable energy credit’ (‘REC’): means a tradable instrument that is equal to 1

megawatt-hour of retail electricity sales in the State that is derived from eligible

energy resources and that is used to track and verify compliance with the provisions

of this subchapter.”18 As noted, QFCPP projects in Delaware cannot meet that

definition and thus their costs cannot be included in the calculations required by 26

Del. C. §§ 354(i), (j). Order No. 9578, and the freeze of the RPS requirement it

purports to order, are therefore not “free of error of law and not arbitrary or

14
26 Del. C. §§ 352(6)a.
15
26 Del. C. §§ 352(6).
16
26 Del. C. §§ 352(20).
17
26 Del. C. §§ 354(i), (j).
18
26 Del. C. §§ 352(18)(emphasis added).
12
capricious,” 26 Del. C. § 510, and must be reversed.

7. That by entering Order No. 9578, and promulgating the Regulations

that were in turn relied on in the Order, the Commission erred as a matter of law by

including QFCPPs in the calculation of the freeze threshold according to 26 Del. C.

§§ 354(i), (j). The Regulations are unlawful not only because QFCPPs do not

generate RECs, but also because QFCPP output is the subject of a special tariff as

authorized by §364(d) of REPSA, and as such, the Commission does not have the

statutory authority to freeze QFCPP costs. Any freeze that results from Order No.

9578 will thus apply only to solar and other eligible energy resources, not to QFCPP

output, and thus will benefit non-renewable power generation over renewable power

generation explicitly and directly undermining the specific statutory purpose of

REPSA, which includes, without limitation, to provide the benefits of renewable

energy to Delawareans, to establish and grow a market for renewable energy in

Delaware, and to reach the goal of 25% of energy production from eligible energy

resources by 2025.19 Order No. 9578, and the freeze of the RPS requirement it

purports to order, are therefore not “free of error of law and not arbitrary or

capricious,” 26 Del. C. § 510, and must be reversed.

8. That by entering Order No. 9578, and promulgating the Regulations,

19
26 Del. C. §§ 351(b), 354(a), (c), (d).
13
the Commission erred as a matter of law by vesting the Commission with the sole

authority to lift a freeze of the RPS requirement, 20 ignoring the statutory requirement

that the freeze of the RPS shall be lifted upon the Director’s finding, in consultation

with the Commission, that the total cost of compliance can reasonably be expected

to be under the freeze threshold of 26 Del. C. §§ 354(i), (j). Order No. 9578 is

therefore not “free of error of law and not arbitrary or capricious,” 26 Del. C. § 510,

and must be reversed.

9. That by entering Order No. 9578, and promulgating the Regulations,

the Commission erred as a matter of law by issuing Order No. 9578 in a regulation

docket, where said Order does not amend the Regulations and should not have been

issued under a regulation docket. Instead, Order No. 9578 implements a freeze of

the RPS requirement, the process of which is provided by Section 354(i), (j) of

REPSA. The Commission’s own procedural regulations require that the

Commission open a new docket and further provide that the Commission can only

act upon a complaint, made formally or informally, that alleges that a “person subject

to the jurisdiction of the Commission has violated a statute, rule, regulation, or order

20
Order No. 9578, ¶¶ 2 (“the Commission will lift the freeze…), 3 (“the
Commission may revisit the findings in this Order…”); see also 26 Del. Admin. C.
3008-3.2.21.9.2 (if the Director determines that a freeze should be lifted, “the
Commission shall consider the determination and issue an Order…”).
14
within the Commission’s authority to enforce.” 21 The Commission has no

enforcement authority over DNREC, a sister agency. Order No. 9578 is therefore

not “free of error of law and not arbitrary or capricious,” 26 Del. C. § 510, and must

be reversed.

10. That by entering Order No. 9578, and promulgating the Regulations

that were in turn relied on in the Order, the Commission erred as a matter of law by

creating a right to judicial review of the Director’s determination as to whether to

freeze the RPS. Under REPSA, the Director is vested with the authority and

discretion to perform specific duties. Nowhere in REPSA, however, did the General

Assembly provide a right to judicial review of any action taken by the Director, nor

did the legislature grant the Commission with the authority to create such a right to

judicial review of any action taken by the Director. In contravention of its enabling

statute and REPSA, the Regulations purport to unlawfully create a right to judicial

review of the Director’s determination to freeze the RPS requirement by giving the

Commission the power to decide whether to institute a freeze and memorializing its

action through an order of the Commission. Order No. 9578, and the freeze of the

RPS requirement it purports to order, are therefore not “free of error of law and not

arbitrary or capricious,” 26 Del. C. § 510, and must be reversed.

21
Rules of Practice and Procedure of the Delaware Public Service
Commission, 26 Del. Admin. C. § 1001.
15
 WHEREFORE, DNREC respectfully requests that the Court:

1. Reverse the Order, find that the Regulations on which they are based

are unlawful, and find that Commission does not have the unilateral authority to

order a freeze of the RPS requirement, particularly where the State Energy

Coordinator, has specifically objected to the Commission’s freeze. Instead, the State

Energy Coordinator, in consultation with the Commission, has the discretion to

freeze the RPS requirement pursuant to 26 Del. C. §§ 354(i), (j).

2. Reverse the Order, find that the Regulations on which they are based

are unlawful, and find that Commission, through its Regulations and Order, which

purport to place the PSC as the ultimate decision maker over a freeze of renewable

energy under REPSA, has infringed on DNREC’s and the Director’s particular

statutory role, including both through REPSA and other statutes adopted by the

General Assembly, to address renewable energy policy in Delaware.

3. Reverse the Order, find that the Regulations on which they are based

are unlawful, and find that the State Energy Coordinator, not the Commission, has

the authority to calculate the freeze threshold pursuant to 26 Del. C. §§ 354(i), (j).

4. Reverse the Order and find that the Commission failed to follow even

its own Regulations in performing the freeze threshold calculation and ruling on the

freeze of the RPS requirement.

16
 5. Reverse the Order and find that Regulations on which they are based

unlawfully define the term “the total retail cost of electricity” as the “total costs paid

by Non-Exempt Customers of the Commission-regulated electric company for the

supply and transmission of retail electricity, including costs paid to third party

suppliers, during a respective Compliance Year.”22 The Regulations unlawfully

remove the necessary retail costs, such as distribution costs, that are borne by electric

customers, and thereby purport to materially alter the Director’s freeze threshold

calculation and the RPS requirement freeze determination.

6. Reverse the Order and find that Regulations on which they are based

unlawfully include QFCPPs in the calculation of the freeze threshold of the RPS

requirement according to 26 Del. C. §§ 354(j).

7. Reverse the Order and find that Regulations on which they are based

unlawfully include QFCPP within the freeze threshold calculation where QFCPP

output is the subject of a special tariff, and as such, the Commission does not have

the statutory authority to freeze QFCPP costs. Any freeze that results from Order

No. 9578 will thus apply only to solar and other eligible energy resources, not to

QFCPP output, directly undermining the specific statutory purpose of REPSA.

22
26 Del. Admin. C. § 3008-1.0.
17
 8. Reverse the Order and find that Regulations on which they are based

unlawfully purported to vest the Commission with the sole authority to lift a freeze

of the RPS requirement, ignoring the statutory requirement that the freeze of the RPS

shall be lifted upon the Director’s finding, in consultation with the Commission, that

the total cost of compliance can reasonably be expected to be under the freeze

threshold of 26 Del. C. §§ 354(i), (j).

9. Reverse Order No. 9578 as improperly issued in a regulation docket, in

violation of the Commission’s own procedural regulations.

10. Reverse the Order and find that Regulations on which they are based

unlawfully create a right to judicial review of the Director’s determination as to

whether to freeze the RPS that is exceeds the scope of the statutory authority vested

to the Commission by the General Assembly, and is contrary to the statutory

language of REPSA.

18
 STATE OF DELAWARE
DEPARTMENT OF JUSTICE

/s/ Devera B. Scott

Devera B. Scott, Bar I.D. No. 4756
Jameson A.L. Tweedie, Bar I.D. No. 4927
Deputy Attorneys General
102 West Water Street
Dover, DE 19904
(302) 257-3218
Devera.Scott@delaware.gov
Jameson.Tweedie@delaware.gov

Attorneys for Appellants

Dated: April 27, 2020

19