In a July 2, 2020 Order, FERC declined to answer a question in a Petition for Declaratory Order (PDO) concerning whether a set of off-system QFs could deliver power to a utility at a Point of Delivery (POD) that was constrained. This question is important because if answered affirmatively, it could result in the utility’s ratepayers having to pay upgrade costs to ensure that all firm transmission service reservations can be accommodated in addition to paying for power from a QF at an avoided cost rate. In the Blue Marmots case, the QFs sought two findings from FERC:
to declare that transmission congestion on the purchasing utility’s system does not relieve the electric utility of its mandatory obligation to purchase from a QF under PURPA, where all other predicates to the creation of a LEO have been established.
… to declare that the Commission’s direction in section 292.306 of the Commission’s regulations that QFs are obligated to pay such interconnection costs as are assessed by state regulatory authorities extends only to the physical interconnection between the QF and the utility system to which it is directly interconnected, not to other aspects of transmission service over which the Commission retains authority.
The first request was probably unnecessary, as the PURPA purchase obligation is relatively absolute in FERC’s view. The only issue is one of price, i.e., who has to pay to relieve the congestion; the answer to the second question thus may determine whether the QF chooses to sell to this utility. The QF still can sell, if the deciding body decides it must the pay to relieve congestion; it remains the QF’s choice. It is the second issue thus that is far more relevant and has not been addressed by FERC. And, it still has not.
Several entities argued that utility ratepayers should not bear the added costs associated with an off-system QF delivering to a constrained POD. While FERC was pondering the question, the Oregon PUC ruled that:
We cannot agree that FERC would require utilities to accept delivery from QFs regardless of physical or legal constraints, or irrespective of reasonable management of legitimate competing uses for scarce transmission capacity. FERC precedent demands that utilities provide non-discriminatory access to QFs, but we do not understand FERC to have established that utilities must advantage QFs over other existing uses for transmission capacity.
The Oregon PUC also found that, as to most of the QFs at issue, the utility had delayed far too long in informing the QFs of the congestion issue and ordered the utility to accept deliveries at the constrained POD. This Oregon PUC order was lodged with FERC in November 2019 with a mention that the parties were discussing the matter.
In its July 2, 2020 order, FERC found that the QFs notified it of the “Oregon Commission Order but did not indicate its effects on the issues raised in its Petition, and in particular, whether any issues remained in need of a Commission declaration.” Such silence proved deadly to the QFs’ request. FERC found that the purpose of the PDO was to remove uncertainty in the Oregon proceeding, which had since been decided. Of course, the Oregon PUC largely guessed at what FERC’s position was on the very issue presented to FERC, admitting that it was acting “[i]n the absence of guidance from FERC.” But, it appears the Oregon PUC’s own view of FERC’s position will stand.