Yesterday, the Federal Energy Regulatory Commission (FERC) issued Order No. 872 and implemented the largest overhaul to FERC’s regulations affecting Qualifying Facilities (QFs) in more than a decade. The order itself is 491 pages in length and there remain plenty of details to unpack in its implementation (including future proceedings to come at the FERC
Jennifer Mersing, an attorney in Stoel Rives' Energy & Regulatory group, focuses her practice on electric regulatory issues including Federal Energy Regulatory Commission (FERC) and certain state law matters. She advises electric utilities, transmission providers, large industrial consumers of power and energy marketers regarding issues under the US Federal Power Act (FPA), the Public Utility Regulatory Policies Act of 1978 (PURPA), and the Public Utility Holding Company Act (PUHCA).
On Friday, July 10, 2020, the U.S. Court of Appeals for the D.C. Circuit (“D.C. Circuit”) upheld the Federal Energy Regulatory Commission’s (“FERC”) Order Nos. 841 and 841A, which established a framework for electric storage resources’ (“ESRs”) participation in wholesale markets. The D.C. Circuit rejected the petitioners’ arguments that FERC exceeded its jurisdictional boundaries and…
In February 2018, as part of its efforts to remove barriers for electric storage resources, the Federal Energy Regulatory Commission (FERC) issued its final rule on electric storage participation in organized markets (Order No. 841). Order No. 841 directed Regional Transmission Organizations (RTOs) and Independent System Operators (ISOs) to revise their tariffs to establish a…
On July 29, 2019, the Ninth Circuit Court of Appeals affirmed the lower court’s decision in Winding Creek Solar LLC v. Peterman et al., ruling that California’s feed-in tariff for small qualifying facilities (QFs), the Renewable Market Adjusting Tariff (ReMAT), violates the federal Public Utility Regulatory Policies Act (PURPA) (Ninth Circuit Case No. 17-17531). ReMAT provides small QFs of three megawatts (MW) or less with a standard contract for energy offtake, on a first-come, first-served basis. Under ReMAT, rates available to any given generator fluctuate based on the price the developers ahead in the contract queue will accept. The California investor-owned utilities must offer ReMAT contracts up to a program cap of 750 MW, which is proportionately split among the utilities, and then further divided across different types of generation, including baseload and peak/non-peak resources.
The Ninth Circuit ruled that ReMAT violated two tenets of PURPA. Under PURPA, subject to certain exemptions, utilities are required to buy at the avoided cost rate all the power produced by a QF. First, contrary to PURPA’s requirement that a utility buy all of a QF’s output, the Ninth Circuit found that ReMAT limits the amount of energy that utilities are required to purchase from QFs by placing caps on procurement. Second, ReMAT sets a market-based rate for energy from participating QFs, rather than a price based on the utilities’ avoided cost as required under PURPA.
Continue Reading Ninth Circuit Strikes Down California ReMAT in Winding Creek Solar Case
Following up on our recent blog post regarding the Seventh Circuit’s decision to uphold Illinois’ nuclear subsidy program, two weeks later on September 27, 2018, the Second Circuit upheld a district court’s decision finding that New York’s nuclear subsidy program was not preempted by the Federal Power Act (Coalition for Competitive Electricity, et al.
On September 13, 2018, in Electric Power Supply Association v. Star (Case No. 17-2433 and 17-2445), the Seventh Circuit upheld a district court decision finding that Illinois’ zero emissions credit (ZEC) program (i.e., its nuclear subsidy) was not preempted by the Federal Power Act. With this decision, the Seventh Circuit adopted a narrow reading of the Supreme Court’s decision in Hughes v. Talen Energy Marketing, LLC (136 S. Ct. 1288 (2016)) (Hughes) (which struck down a Maryland generation subsidy program that required participation in the PJM capacity auction) and left the door open for states to subsidize generation of their choosing (as long as the state is not directly setting the wholesale market price). Thus, in subsidizing generation, states may achieve indirectly what they are prevented from ordering directly.
Under the Illinois program, certain nuclear generators in Illinois (i.e., Exelon’s Quad Cities and Clinton nuclear facilities) receive ZECs (initially priced at $16.50 per MWh) for each MWh of electric energy they produce. The price of a ZEC will drop if an Illinois-set market-price index (based on the annual average energy prices in the PJM auction and two of the state’s regional energy markets) exceeds $31.40 per MWh. The Illinois program does not require that the nuclear facilities participate in the PJM capacity auction (although it is acknowledged that the nuclear generators will very likely be participating in the PJM capacity auction). Illinois’ nuclear subsidy program was challenged by an association representing electricity producers and several municipalities.
Jurisdiction over the power sector is divided between the federal government and the states. The Federal Energy Regulatory Commission (FERC) has jurisdiction over wholesale power sales in interstate commerce, while the states have jurisdiction over retail power sales and generation facilities. State regulation of whole power sales would be preempted by the Federal Power Act, but the courts are still deciding where exactly the line between federal and state jurisdiction lies.
Continue Reading Seventh Circuit Upholds Illinois’ ZEC Program and Leaves the Door Open for State Subsidization of Generation
Is a co-located storage facility and wind or solar facility considered to be one qualifying facility (“QF”) under the Public Utility Regulatory Policies Act (“PURPA”)? Or multiple QFs? How will the aggregate capacity of such storage plus wind/solar QF(s) be measured? If the storage will only be charged from the co-located…
The Federal Energy Regulatory Commission’s (“FERC”) long-awaited Order 845 (Reform of Generator Interconnection Procedures and Agreements) was issued on April 19 after over two years of consideration of the issues. Order 845 is the first grid-wide major reform of FERC’s Generator Interconnection Procedures and Agreements since Order 2003 was issued 15 years ago. Order 845 adopts reforms that are designed to address three goals: (1) improving certainty for interconnection customers, (2) promoting more informed interconnection decisions, and (3) enhancing the interconnection process.
Order 845 revises FERC’s pro forma Large Generator Interconnection Procedures (“LGIP”) and Large Generator Interconnection Agreement (“LGIA”) to recognize the changing landscape of technology and is intended to provide interconnection customers with new opportunities to interconnect their projects faster and more cost-effectively. For example, transmission providers must now allow interconnection customers (at the interconnection customer’s option) to build the needed transmission owner interconnection facilities and stand-alone network upgrades in all cases. Previously, interconnection customers only had this option if the transmission owner could not meet the dates proposed by the interconnection customer. Thus, an interconnection customer has newly granted flexibility in the construction of the transmission owner interconnection facilities and stand-alone network upgrades. If the transmission owner returns a high cost estimate, then the interconnection customer can manage the construction of the transmission owner interconnection facilities. On the other hand, if the transmission owner cost estimate is reasonable, the interconnection customer can choose to leave the construction responsibilities for the transmission owner interconnection facilities and stand-alone network upgrade with the transmission owner. Interconnection customers can now make these decisions based on both timing and cost considerations.Continue Reading Helping the Hook-Up: FERC’s Generator Interconnection Procedures Reform Seeks to Improve Information Flow, Recognizes Changing Technology and Opens Further Opportunities for Storage
For the first time in almost 30 years, the Michigan Public Service Commission (MPSC) is overhauling its implementation of PURPA. The last time the MPSC evaluated Consumers Energy Company’s (Consumers) avoided cost methodology, the Midcontinent Independent System Operator (MISO) had not been created and the generation market was vastly different than it is today. The…
Or so Secretary Rick Perry and the DOE would have us believe. Approximately three weeks ago, the DOE made its pitch to FERC and the energy industry that a lack of “resiliency” threatens the U.S. power grid. The responses are in. And the shock and bewilderment that immediately followed the release of the Secretary’s surprising…