By Rich Heidorn Jr.

FERC will review how it enforces the 1978 Public Utility Regulatory Policies Act, with the commission’s treatment of the 1-mile rule a likely focus, commissioners said Thursday.

Speaking at FERC’s open meeting, Chairman Kevin McIntyre announced FERC would “re-energize” the review it began in 2016 in response to pressure from state regulators and congressional Republicans.

McIntyre noted that the makeup of the commission has changed since its June 2016 technical conference on the law, when Democrats held the majority on the panel. (See FERC Conference Debates PURPA Costs, Purchase Obligations.)

Republicans now hold a 3-2 edge with the additions of McIntyre and Commissioners Neil Chatterjee and Robert Powelson.

McIntyre insisted he has “an open mind” on the need for change. He said the “format, scope and timing” of the review are to be determined and that “the process will allow for robust stakeholder input.”

Eager to Act

But Chatterjee and Powelson made clear they are eager to act.

Powelson called for an “expedited” review, noting the record the commission compiled in the technical conference and the post-conference comments on the 1-mile rule — the presumption that generators beyond 1 mile of each other are separate facilities.

In its request for comments following the technical conference, FERC asked for input on whether the 1-mile presumption should be made rebuttable and whether the burden of proof should fall on the interconnecting utility or the qualifying facility. It also asked whether it should set minimum contract length or other provisions in PURPA purchase contracts (AD16-16). Despite continued grumbling by Congress and state regulators, the commission made no rule changes following the inquiry.

“There are things we know full well — from the 1-mile rule to QF reform — that we can address rather quickly,” said Powelson, who noted his background as a former “impatient” Pennsylvania regulator.

“This is an issue that has been top of mind to me since coming to the commission,” Chatterjee said. “Today’s energy landscape is profoundly different from that of the late 70s when PURPA was enacted. And because of this, many have rightly voiced their desire for a fresh look at existing policy.”

Still Important for Developers

Democratic Commissioner Richard Glick said he was open to the review but insisted the law is still needed, despite the growth in renewable generation.

“PURPA has, and continues to play, an important role in promoting competition within the utility sector in ensuring the qualifying facilities have access to the market,” he said. “If we do decide changes to our regulations are in order, we must address the concerns raised not only by industry but also by qualifying facility developers — and there were quite a few concerns that were raised during that 2016 tech conference.”

Democrat Cheryl LaFleur, the only commissioner who remains from the beginning of the commission’s review, gave no indication of her leaning on the topic, saying only that the review is “very timely.”

2005 Amendments, Order 688

The commissioners noted that fundamental changes to the law would require congressional action.

Congress amended PURPA in the 2005 Energy Policy Act, allowing utilities to be relieved of PURPA’s mandatory purchase obligation upon FERC’s finding that QFs have nondiscriminatory access to transmission and energy and capacity markets.

In response, the commission amended its regulations in Order 688 in 2006. The order found that MISO, PJM, ISO-NE and NYISO provided markets that meet the law’s criteria for relief from the purchase obligation. It also established a rebuttable presumption that QFs above 20 MW have nondiscriminatory access to those markets.

In other regions, the commission established a rebuttable presumption that QFs of 20 MW and above have nondiscriminatory access to markets if they are eligible for service under a commission-approved open access transmission tariff.

To prevent gaming of the 20-MW threshold, the commission said it would look beyond the 1-mile rule. “If parties are concerned that a QF has engaged in such gaming with regard to the certification or siting of a particular facility, we encourage those parties to bring their concerns to our attention. In any such proceeding, we will consider all relevant factors, including, but not limited to, ownership, proximity of facilities and whether facilities share a point of interconnection,” the commission said.

Since then, the commission has repeatedly relieved utilities of must-purchase obligations from QFs above the 20-MW threshold.

Complaints Continue

But that did not end complaints over the law. In November 2015, Republican congressional leaders called on FERC to hold a technical conference to “identify any potential administrative or legislative reforms that may be necessary,” noting the falling prices of natural gas and renewable energy since the 2005 amendments. They cited congressional testimony from Berkshire Hathaway Energy complaining that it was required to sign a PURPA contract at rates that are 43% above market prices, costing customers an extra $1.1 billion over 10 years.

Travis Kavulla, vice chairman of the Montana Public Service Commission, told the technical conference that PURPA issues consume more than one-quarter of his commission’s time on electric utility regulation.

Democrats responded to FERC’s notice of the technical conference with a letter to the commission saying the act “remains a singular federal backstop to support renewable energy in parts of the country that may otherwise have significant barriers.”

In December 2017, the National Association of Regulatory Utility Commissioners called on the commission to “align” its interpretation of the act “with modern realities.” NARUC called for new criteria for determining whether a single project has been disaggregated to create multiple QFs under the 20-MW threshold. (See NARUC Calls for PURPA Reforms, Outlines Proposed Changes.)