FERC issued two notable orders this spring in Irradiant Partners, LP (Docket No. EL22-8-000) and Dalreed Solar (Docket No. QF20-1037-002) that provide further guidance on qualifying facility (QF) certifications. Here are the key takeaways:
- QF Re-Certifications Should Be Filed Before or At the Time of a Material Change: FERC’s regulations do not contain specific guidance on when QF re-certifications need to be filed, but FERC Staff’s informal guidance has previously been that they should be filed within 30 days of a change. In its March 24, 2022, order in Irradiant Partners, LP, the Commission explained that the qualifying status of a facility “may no longer be relied upon” once the QF fails to conform with any material facts or representations. The Commission noted that the re-certification can be filed in advance if the material change and date of the change can be reasonably anticipated. Based on FERC’s guidance, QFs should be making re-certification filings prior to or immediately after a material change and be aware that prior certifications cannot be relied upon once they are inaccurate.
- Each QF Re-Certification Must Be Made Individually: The Commission’s order in Irradiant Partners, LP stemmed from a request for a waiver of the requirement to file a recertification for each of the 185 QFs in a portfolio in which Irradiant had acquired a greater than 10% interest. The Commission rejected the waiver request, emphasizing that the “filing requirement is a substantive and important criterion for QF status” that “must be followed.” This is consistent with the informal guidance we have received from FERC Staff in the past. The Commission explained that “it considers a change in ownership in which an owner increases its equity interest by at least 10% from the equity interest previously reported to be a material change [necessitating a re-certification], as would be the addition of an owner not previously reported that holds an equity interest of 10% or more.”
- QF Status Is Not Grandfathered Under Pre-Order No. 872 Rules Where a Facility Makes a Substantive Change: In an order issued May 13, 2022, in Dalreed Solar LLC, the Commission confirmed that when a facility re-certifies and makes a substantive change from its existing certification, such as a change in its net power production capacity, it is subject to the new rules established in Order No. 872 (including the rebuttable presumption that affiliated, same-energy resource facilities greater than one mile apart but within ten miles of each other are separate sites). This is consistent with the guidance the Commission provided in Order No. 872. The Commission’s order in Dalreed Solar appears to be the first time the Commission has applied the 10-mile aggregation factors to revoke a facility’s QF status. In its order determining that the facilities should be considered the same site, the Commission specifically noted that the facilities at issue had the same owner, same operator, shared a common off-taking utility, shared a common interconnection request, shared common interconnection facilities (including shared busses, step-up transformers, and relays), planned to share a common interconnection point, were located on land owned by the same landowner, and had or were in negotiations with the same offtaker for PPAs. The Commission declined to consider the history of the project’s interconnection negotiations that the developer alleged led to some of the common attributes.
- QF Status Is Dependent Upon the Facts at the Time of Filing: Dalreed Solar also argued that the Commission should consider in the 10-mile analysis that the upstream owner would likely change prior to commercial operation, and that aggregation should not occur until then. In response, the Commission declined to consider the possibility of such future changes and stated that “[u]pon submitting Form No. 556, a small power production facility at that time either meets the requirements to qualify as a QF under PURPA and the Commission’s regulations or it does not.” As a result, QF certifications should be submitted with current information and developers should expect that their QF facilities will be subject to aggregation rules as of the date of certification (or re-certification, in this case), even prior to energization or commercial operation.
- QF Aggregation Is Not Forever: The Commission in Dalreed Solar noted that if the circumstances underlying the Commission’s findings change such that Dalreed is no longer affiliated with the other affiliated solar QFs within 10 miles, the facility could seek to re-file for QF status.