Results tagged “PURPA” from GTH Energy & Natural Resources Law Blog

Recent FERC Actions Escalate Western PURPA Litigation War

July 10, 2013

Two recent orders from the Federal Energy Regulatory Commission ("FERC") are likely to ratchet up tensions between that agency and state regulators here in the Northwest over enforcement federal mandatory purchase obligations established in the Public Utility Regulatory Policy Act ("PURPA") of 1978. As we have discussed previously, tensions came to a head earlier this year when FERC, apparently having lost patience with the Idaho Public Utilities Commission ("IPUC"), authorized federal court enforcement action against the IPUC. FERC filed a lawsuit against the IPUC in the U.S. District Court in March, the first time it has ever taken such action directly against a state commission.

FERC continues to add fuel to this fire. First, on June 20, the Commission issued an order in Idaho Wind Partners refusing to modify its holding that Idaho Power's "Schedule 74", which governs purchases of power from PURPA "Qualifying Facilities" ("QFs"), is inconsistent with FERC's regulations. Specifically, Schedule 74 would have allowed Idaho Power to curtail QF purchases if taking power from the QF would require Idaho to dispatch higher-cost resources to serve system load or force base load resources to back down. Idaho Power, with support from the IPUC staff, asserted that this provision is valid in light of FERC's PURPA regulations (18 C.F.R. 292.304(f)(1)), which allow curtailments of QFs in light load hours under certain circumstances.

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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.

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New Front In Western Wind War: FERC Files Suit Against Idaho PUC, Finds Second PURPA Violation

March 28, 2013

Fulfilling a promise made in a November order, the Federal Energy Regulatory Commission ("FERC") on March 22 filed suit against the Idaho Public Utilities Commission ("IPUC"), asserting that the IPUC violated FERC rules under the Public Utility Regulatory Policies Act ("PURPA"). The lawsuit follows on the heels of a March 15 FERC order (Grouse Creek Wind Park LLC, EL13-39-000), in which FERC found another IPUC PURPA violation, meriting a second enforcement action against the IPUC. FERC's actions are extraordinary, marking the first time FERC has exercised its PURPA enforcement authority directly against a state commission.

PURPA, passed in 1978, was the first blow struck against the traditional industry model of regulated, vertically-integrated utility monopolies. Passed in response to the energy crises of the 1970s, PURPA was intended to open the generation market to small, independent producers. Thus, PURPA mandates that utilities purchase power from "Qualifying Facilities" ("QFs") -- generally, smaller, independently-owned renewable generation facilities -- at "avoided cost" rates, equal to the cost of the marginal resource the utility would have to purchase if it did not buy from the QF. This purchase obligation lies at the heart of the FERC-IPUC controversy.

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Western Wind War Widens: FERC Announces Intent to Sue Idaho PUC Over Rejected PURPA Contracts

November 23, 2012

In a major escalation of an ongoing dispute between wind developers and the Idaho Public Utilities Commission ("IPUC"), the Federal Energy Regulatory Commission ("FERC") on November 20 issued an order giving notice that it will take enforcement action directly against the IPUC for violations of the Public Utility Regulatory Policies Act ("PURPA"). The order marks the first time FERC will take action under PURPA directly against a state utility commission.

The order is the latest, and most significant, offensive launched in a battle going back to 2010, when the several utilities filed a petition with the IPUC claiming that wind developers in Idaho were artificially segregating wind projects so that the projects could qualify under the 10 aMW ceiling for PURPA treatment. PURPA, passed in 1978, in most cases requires utilities to purchase power from qualifying small power production facilities at a favorable avoided-cost rate. On February 7, 2011, the IPUC issued an order stating that it would investigate the utilities' claims and would, in the interim, reduce the PURPA eligibility ceiling in Idaho from 10 aMW to 100 kW. Subsequently, the IPUC rejected a number of wind contracts on the ground that the generators exceeded to 100 kW threshold.

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FERC Fires Another Shot In Northwest Wind Wars

September 21, 2012

After a hiatus for its August break, FERC this week leaped back into the fray between Pacific Northwest wind developers and utilities, issuing another ruling addressing the contentious -- and intensely litigated -- issue of whether wind generation can be curtailed during periods of low demand. The order, Idaho Wind Partners 1, LLC, addresses a dispute between the Idaho Public Utility Commission ("IPUC") and wind developers concerning whether Idaho Power Company can curtail production from wind generators. In the Idaho Wind order, FERC concludes that the IPUC's proposal to allow curtailments of purchases from wind generators violates FERC rules.

Idaho Wind involves eleven wind projects that sell to Idaho Power under twenty-year contracts at avoided-cost rates set in accordance with the Public Utility Regulatory Policies Act of 1978 ("PURPA"). Generally considered the first act in the ongoing drama of restructuring the electric utility regulation, PURPA requires utilities to purchase power produced by "Qualifying Facilities" ("QFs") (relatively small, independently-owned generators fired by cogeneration or renewable technologies) at "avoided-cost" rates (the cost the utility would otherwise incur to purchase power from marginal resources).

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