QF Owner Asks FERC to Stop Idaho PUC from Allocating Renewable Energy Credits to Utility

QF Owner Asks FERC to Stop Idaho PUC from Allocating Renewable Energy Credits to Utility

On September 20, 2013, Clearwater Paper Corporation (“Clearwater”) filed with FERC a petition for enforcement pursuant to section 210(H) of the Public Utility Regulatory Policies Act of 1978 (“PURPA”) against the Idaho Public Utilities Commission (“Idaho PUC”). The petition alleges that the Idaho PUC impermissibly moved to allocate, without compensation to a Qualifying Facility (“QF”), one half of all Renewable Energy Credits (“RECs”) created through that facility’s PURPA QF contracts within Idaho to the utility purchasing the QF’s power under a PURPA contract. Clearwater argues that the QF’s ability to sell to a utility at full avoided cost rates applies to energy and capacity alone; such rates do not also capture the value of the renewable attributes of the generation. Clearwater asserts that the Idaho PUC’s orders allocating half of the generated RECs to utilities (1) incorrectly rely on PURPA in the absence of state REC regulation, (2) discriminate against QFs, (3) impose a condition on QFs’ right to receive avoided costs rates, and (4) function as an unconstitutional taking of the QFs’ property. Clearwater asks FERC to initiate an enforcement action against the Idaho PUC or, in the alternative, asks the Commission declare that the Idaho PUC Orders are inconsistent with PURPA.

The petition is only the most recent of requests for FERC intervention into Idaho PUC activities. Previously, FERC granted two separate petitions for enforcement against the Idaho PUC. It also announced that it will take the Idaho PUC to court for failure to adhere to PURPA and FERC’s PURPA regulations and precedent. Those cases arose out of petitions for enforcement filed by Murphy Flat Power, LLC, and by Grouse Creek Wind Park, LLC and Grouse Creek Wind Park II, LLC. Both petitions had requested that FERC require the Idaho PUC to honor power purchase agreements. The Idaho PUC had previously rejected the agreements on the grounds that they were executed after the effective date of an Idaho PUC ruling that lowered the quantity of certain QF power eligible for avoided cost rates, even though negotiations had commenced earlier (see December 3, 2012 and March 25, 2013 editions of the WER).

Additionally, FERC recently reaffirmed its September 20, 2012 Declaratory Order regarding Idaho Power Company’s proposed Schedule 74 which would have permitted Idaho Power to curtail its purchases from QFs with 10 MW or more of nameplate capacity “if, due to operational circumstances, purchases from the Applicable QF would require [Idaho Power] to dispatch higher cost, less efficient resources to serve load or to make Base Load Resources unavailable for serving the next anticipated load.” On rehearing, FERC reiterated that if Idaho Power’s proposal were to be approved by the Idaho PUC, it would be inconsistent with PURPA and FERC’s regulations. FERC asserted that all power purchase agreements incorporating avoided-cost rates that are calculated at the time the legally enforceable obligations are incurred have inherently incorporated fluctuations in the rate, including operational circumstances during light loading periods (see June 21, 2013 edition of the WER).

Read more at Renewable Energy Insights by Troutman Sanders LLP.

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