Power & Pipes

FERC, CFTC, and State Energy Law Developments

FERC granted a partial waiver requested by a generation and transmission service cooperative (Petitioner) of certain obligations under FERC’s regulations implementing Section 210 of the Public Utility Regulatory Act of 1978 (PURPA), which mandates the purchase of power from qualifying facilities (QFs). Petitioner filed on behalf of itself and six distribution cooperative member-owners (Participating Members) for waiver of the Participating Members’ obligations to purchase energy and capacity directly from QFs and waiver of Petitioner’s obligation to sell energy and capacity directly to QFs. The order is an example of jurisdictional entities’ ability to swap certain of their obligations under FERC’s regulations in limited situations so long as the intent of the relevant laws is fulfilled.

Petitioner provides wholesale service to its Participating Members pursuant to Commission-approved market-based rate authority, and the Participating Members provide retail service to approximately 70,000 retail electric customers in five states. In support of the requested waivers, Petitioner proposed, and the Participating Members agreed, that Petitioner would assume the obligations of its Participating Members to make purchases from QFs. Petitioner also proposed that the Participating Members—not Petitioner—would provide interconnection and retail service for QFs, including supplementary, backup, and maintenance power to QFs as requested, on either a firm or an interruptible basis.

The parties’ proposed role substitution arrangement will be governed by a joint implementation plan regarding QF interconnections. Under the proposed arrangement, Petitioner will purchase capacity and energy from QFs at Petitioner’s avoided cost rate and each Participating Member will sell supplementary, backup, and maintenance power to QFs at rates that comply with PURPA. Importantly, no QF will be subject to duplicative charges for interconnection or wheeling as a result of selling to Petitioner and purchasing from a Participating Member.

In short, Petitioner and the Participating Members proposed to stand in each other’s shoes with respect to services to and from QFs. FERC recognized that the intent of PURPA to encourage power production by QFs remained fulfilled under Petitioner’s proposal, and that the relevant QFs will “remain in essentially the same position as they [stood] . . . because no QF will be deprived of an avoided cost sale of its power and each QF will receive the full avoided cost rate.”