FERC Affirms Open Access Rights for QFs in Complaint Against the Oregon PUC

June 18, 2013

In a June 14 decision substantially clarifying and expanding federal open access transmission rights, the Federal Energy Regulatory Commission ("FERC") ruled that open access transmission rights cannot be limited to Points of Delivery ("PODs") established for scheduling purposes, but must allow third-party shippers to deliver power across the entire system of a regulated transmitting utility. The decision also reaffirms the right of PURPA "Qualifying Facilities" ("QFs") to transmit power to remote sellers rather than selling to the utility with which the QF directly interconnects.

The June 14 decision (Kootenai Electric Cooperative, Inc., 143 FERC P 61,232 (2013)) addresses one skirmish in a broader regional conflict pitting regional investor-owned utilities, especially Idaho Power Company, and state utility commissions against regional renewable energy producers seeking to enforce the obligations of utilities to purchase output from QFs under the 1978 Public Utility Regulatory Policies Act ("PURPA"). The June 14 decision arises from the efforts of Kooentai Electric Cooperative ("KEC") to sell output from its 3.2-MW Fighting Creek Landfill Gas Project, which is certified QF. After failing to reach terms to sell Fighting Creek output directly to its neighboring utility, Avista, KEC determined that it could instead sell power indirectly to Idaho Power at relatively favorable PURPA rates established by the OPUC for sales into Idaho Power's Eastern Oregon service territory.

In order to deliver the power into Oregon, KEC exercised its rights under Avista's Open Access Transmission Tariff to obtain wheeling rights on the Lolo-Oxbow transmission line, which runs from Lewiston, Idaho, to Oxbow, Oregon. Avista owns the northern half of the line and Idaho Power owns the southern half, with ownership changing at a point near the small town of Imnaha in Eastern Oregon. KEC contended that its open-access rights allow it to deliver power all the way across Avista's system to Imnaha. Idaho Power, on the other hand, contended that the delivery from KEC ends at its Lolo Substation, near Lewiston, Idaho, which is the point of interchange between Avista's Balancing Authority Area ("BAA") and Idaho Power's BAA, and is also the designated POD for scheduling purposes for deliveries from Avista to Idaho Power.

In a February 26, 2013, decision, the OPUC sided with Idaho Power, concluding that power transmitted from the Fighting Creek facility was delivered to the Lolo Substation POD, not to Imnaha, Oregon. Because the power was not delivered into Oregon, the OPUC reasoned, KEC was not eligible to receive the OPUC-approved PURPA rate for QF power delivered to Idaho Power's Oregon service territory.

KEC then filed a complaint at FERC, arguing that the OPUC decision is inconsistent with both FERC's open access requirements and with established FERC precedent under PURPA. In the June 14 decision, FERC agreed, declaring that the OPUC's February 26 order incorrectly interpreted both KEC's open access rights and KEC's rights under PURPA. While FERC recognized that the Lolo Substation is the boundary between the Avista and Idaho Power BAAs, and that schedulers use the "LOLO POD" when scheduling power to be delivered across the Avista-Idaho Power BAA interface, FERC concluded that these scheduling conventions do not constrain KEC's open access rights. Rather, KEC has the right to deliver power across the entire Avista transmission system to the point of physical interconnection between the Avista and Idaho Power at Imnaha, Oregon. Because KEC can deliver power in Oregon, FERC concludes, KEC is entitled to the Oregon PURPA rate.

The June 14 decision is important because it reaffirms the right of QFs to wheel power in order to obtain more favorable rates through sales to utilities that do not directly interconnect with the QF. The decision is also important because it clarifies that transmission rights under FERC's open access regime allow rights holders to deliver power across the entire physical transmission system of the transmission provider. Open access rights are not constrained by PODs and other scheduling conventions.

KEC was successfully represented in its FERC complaint proceeding by GTH partner Eric Christensen along with co-counsel Peter Richardson and Greg Adams of the Boise law firm Richardson & O'Leary. If you have any questions about the FERC decision discussed in this post, PURPA, the utility industry, renewable energy development, or electric transmission, please contact a member of GTH's Energy, Telecommunications, and Utilities practice group.