By Kimberly Frank, Buck Endemann, Abraham Johns
On July 16, 2020, the Federal Energy Regulatory Commission (“FERC” or “the Commission”) issued two noteworthy electric power orders: the first is a final rule (“Order No. 872”) that updates regulations implementing the Public Utility Regulatory Policies Act of 1978 (“PURPA”);[1] the second dismisses the New England Ratepayer Association’s (“NERA”) petition for a declaratory order on FERC’s jurisdiction over net energy metering sales.[2]
Final Rule on PURPA Update
In September 2019, FERC issued of a Notice of Proposed Rulemaking (“NOPR”) to significantly change how it implements PURPA, a law that applies to small power producers.[3] In Order No. 872, FERC largely adopted the NOPR’s proposed revisions to the Commission’s regulations implementing PURPA sections 201 and 210. Notable changes to the PURPA regulations include: (1) providing additional flexibility to set “avoided cost” rates for qualifying facilities (“QFs”) sales; (2) modifying the “one-mile rule” to allow for consideration that affiliated QFs more than one mile but less than ten miles apart may be at the same site ; (3) revising procedures to challenge initial QF certification and re-certification; (4) revising the threshold from 20 megawatts (“MW”) to 5 MW at which a utility may petition to terminate its obligation to purchase from certain QFs; and (5) requiring states to develop criteria that must be met for a QF to be entitled to a contract or legally enforceable obligation (“LEO”).
Changes included in Order No. 872 will be effective 120 days from publication in the Federal Register. When effective, Order No. 872 will not affect existing contracts, LEOs, or existing certifications for facilities, but will be prospective, applying to new contracts or LEOs, and certifications or recertifications for facilities filed after the order’s effective date.
Dismissal of NERA Petition for Declaratory Order
On April 14, 2020, NERA filed a petition for declaratory order, seeking FERC’s declaration that FERC holds exclusive jurisdiction over wholesale energy sales from behind-the-meter generation[4] and requiring that the rates for such sales be priced pursuant to the Federal Power Act (“FPA”) or PURPA, when applicable. Specifically, NERA asked FERC to declare jurisdiction over energy sales of rooftop solar and other distributed energy resources on the customer side whenever the output exceeds the customer’s demand, or the energy is meant to bypass customer load. NERA characterized “full net metering,” as “a practice through which an electricity consumer produces electric energy from a generation source (most often solar panels) that is located on the same side of the retail meter as the customer’s load.”[5] Historically, the Commission sees such transactions as retail in nature and regulated by the states. NERA argued, however, that the energy exceeding customer demand or bypassing customer load is sold to a utility for resale to customers, making them wholesale sales, and therefore, subject to FERC’s jurisdiction.[6]
The Commission began its analysis with a reminder: “Declaratory orders to terminate a controversy or remove uncertainty are discretionary.”[7] The Commission then used its discretion not to address the issues presented, as they did not “warrant a generic statement” from FERC.[8] The Commission found that NERA never identified “a specific controversy or harm” to be addressed.[9] Further, the Commission found that to the extent NERA is concerned that certain New England state regulatory authorities are not pricing QF sales in accordance with PURPA, the petition did not meet PURPA’s requirements for enforcement.
[1] Qualifying Facility Rates and Requirements Implementation Issues Under the Public Utility Regulatory Policies Act of 1978, 172 FERC ¶ 61,041 (2020).
[2] New England Ratepayers Ass’n, 172 FERC ¶ 61,042 (2020) (“NERA Order”).
[3] Qualifying Facility Rates and Requirements Implementation Issues Under the Public Utility Regulatory Policies Act of 1978, 168 FERC ¶ 61,184 (2019) (“NOPR”).
[4] Behind-the-meter generation refers to energy generated from the customer side of the retail meter.
[5] NERA Order at P 3.
[6] NERA Order at P 4.
[7] NERA Order at P 35.
[8] NERA Order at P 35.
[9] NERA Order at P 36-37.
