An update from Marcus Wood, Jennifer Martin & Jason Johns:
The Federal Energy Regulatory Commission’s (FERC) regulations provide that, for purposes of calculating a qualifying facility’s net capacity, generating facilities are considered together as a single qualifying facility if they are located within one mile of each other, use the same energy resource, and are owned by the same persons or their affiliates. In recent years, landowners and energy purchasers have disputed whether the location of generating facilities more than one mile apart is a "safe harbor," ensuring that the facilities will be treated as separate qualifying facilities, or is instead a rebuttable presumption that may be challenged. In its Order Denying Rehearing, issued June 8, 2012 in Docket Nos. EL11-51-001, QF10-649-002, and QF10-687-001, FERC reaffirmed that the one-mile separation standard provides a safe harbor for establishing separate qualifying facilities.
In this docket, a project developer’s self-certification of two wind generation facilities as separate qualifying facilities was challenged both by a local landowner and by Xcel, Inc. Protestants claimed that the two facilities should be viewed as a single larger facility, notwithstanding their more-than-one-mile separation, and that the separate certifications were not made in "good faith." While the two facilities were connected to a common substation, the generation equipment of each was separated by more than one mile from the generation equipment of the other. The landowner sought a evidentiary hearing on its challenge, which if granted would have substantially delayed the developer.
FERC affirmed an earlier ruling it made on March 15, 2012 in favor of the developer. In holdings that may be important to other qualifying facility developers, FERC held that Congress intended to encourage the development of cogeneration and small power production to reduce American dependence on fossil fuels by promoting increased energy efficiency. FERC then held that its regulation defining generating facilities as separate qualifying facilities if more than one mile apart does not create a rebuttable presumption; instead, the one-mile rule constitutes a safe harbor that the developer is entitled to rely on. While the developer can rebut the one mile presumption under certain circumstances to establish separate qualifying facilities that are less than one mile apart, the separate qualifying facility status of generating facilities more than one mile apart is fixed by FERC’s rule.
FERC also affirmed that the one-mile separation rule applies to the separation between electrical generation equipment. FERC rejected claims that "collector" lines or common interconnection facilities constitute generation equipment for purposes of measuring the one-mile separation. Therefore, FERC concluded, the developer’s wind turbine separation governed, even though its two qualifying facilities had collector facilities located within one mile of each other and had common interconnection facilities.
Stoel Rives LLP represented the successful developer in this FERC challenge.