The Federal Energy Regulatory Commission last week reiterated its 20 MW threshold regarding purchase obligations from qualifying facilities as the panel’s two Republican members said the commission should rethink its approach.
The commission ruled that PPL Electric Utilities Corp. must purchase excess power from a proposed 18.1 MW combined heat and power plant because the utility failed to prove the QF facility would have “nondiscriminatory” access to PJM’s wholesale markets.
The order reiterated the commission’s 2006 Order 688, in which it said that QFs above 20 MW were presumed to have access to the wholesale markets and those below were presumed to lack that access. For generators below 20 MW, FERC said, the burden of proof falls on the utility in whose territory the facility is located.
The commission said PPL failed to meet that threshold in its dispute with the IPS Power Engineering Inc. cogeneration facility at a beef processing plant in Souderton, Pa.
JBS USA LLC, the meat processor, wants to team with IPS to control its power costs and ensure reliable supply. But the partners say the plant won’t be feasible without a contract to sell at least 10 years of its excess energy and capacity to PPL.
The commission ruled that PPL “attempted to make many of the same generalized showings” that the it rejected in its 2010 Public Service Co. of New Hampshire order (131 FERC ¶ 61,027). “Specifically, PPL Electric alleges that the Souderton QF has nondiscriminatory access to PJM’s markets because PJM’s market rules provide such access, and that the Souderton QF will neither have operational characteristics nor face constraints that would definitionally prevent access to PJM’s markets.”
The commission’s ruling could affect many other utilities within PJM. According to PPL, there are 150 generation projects below 20 MW in PJM’s interconnection queue.
The 1978 Public Utility Regulatory Policies Act (PURPA) requires electric utilities to purchase the output of cogeneration and small power production qualifying facilities at their “avoided costs.” The Energy Policy Act of 2005 amended PURPA to allow termination of QF requirements if FERC finds that the QF has nondiscriminatory access to make market sales.
The commission has never granted any utility relief from the mandatory purchase obligation for a QF of 20 MW or smaller. Nor has it given much guidance regarding what kind of evidence would convince it.
Order 688 said such evidence could include whether the QF has already participated in the market. PPL could not make that showing, the commission acknowledged, because the Souderton QF has not begun operation.
And that, said Commissioners Philip Moeller and Tony Clark, is a problem. Although they acknowledged the order follows FERC precedent they said the commission should provide more guidance.
“While we concur with the overall finding in this order and agree that PPL’s application lacked certain QF-specific information required under the Commission’s regulations, such as a system impact study for the interconnection, we do not agree that the PJM market rules and planning process are irrelevant for purposes of determining QF-specific market access,” they wrote.
They said the standard of proof shouldn’t be “so high as to preclude a utility from successfully making a showing before the QF is fully operational and the utility is obligated to purchase.”
Such a “circular result,” they said, could “[render] meaningless the opportunity to rebut the presumption and obtain PURPA relief.”
