In light of the pending FERC PURPA NOPR, some states have stayed or delayed ruling on pending cases involving PURPA contracts and avoided cost rate, particularly where a standard contract or rate is involved. In two states, however, December 9, 2019 saw significant decisions on PURPA contracts and rates. Although too detailed to fully recap here, the orders reflect the fact that PURPA rates and contracts raise innumerable and complex issues, particularly when utilities claim renewable QFs cause integration costs and developers of hybrid (paired) QFs seek compensation associated with the benefits of adding battery storage to renewable QFs. On January 3, 2020, however, one of the orders, was altered on reconsideration, as arguments that the rates adopted were too low were found to be persuasive.
In Caithness Beaver Creek, LLC, which is pending reconsideration, the Montana PSC -re-examined numerous policies on avoided costs and other issues such as contract length after Caithness and NorthWestern could not negotiate a PURPA contract. Perhaps the most interesting ruling came on the methodology for calculating an avoided cost for energy, as the Montana PSC found good cause to depart from its prior methodology. As the current FERC PURPA regulations still require a fixed price for energy, the Montana PSC decided to adopt a forecasted rate based on hourly modeling and marginal costs to serve load so that avoided energy costs would equate to the running cost of NorthWestern’s highest-cost resource needed to serve load in each hour: $0 if load is served with must-take or intermittent resources with no variable costs (solar, wind, hydro); the variable costs of the marginal generating resource if load is served with NorthWestern-dispatched generation; or the market price if load is served by market energy purchases.