About a decade ago, FERC opened the door to state commissions setting different avoided cost rates and adopting different standard contracts for different types of QFs. Although the ultimate legality of so-called “tiered avoided cost pricing” remains to be tested in court, a decision from the United States Court for the District of Idaho teaches an important lesson in how state commissions should and should not issue rulings categorizing QFs as fitting within a particular tier, if such tiers exist. In Franklin Energy Storage, the court decided that a state commission order finding that a particular type of QF was only eligible for the avoided cost rate and contract for solar and wind facilities was in error because the state commission actually was ruling on whether the facilities were or were not QFs. Despite the fact that all the parties to the case agreed that QF status was a matter exclusively within FERC’s jurisdiction, as supported by the IEP v. CPUC precedent, the court still read the Idaho commission’s action as a ruling on the merits of QF status.
The QFs at issue consisted of battery storage devices that would receive 100% of their energy input from a combination of renewable energy sources such as wind, solar, biogas, biomass. The purchasing utility obtained an order from the Idaho commission that that storage facility QFs such as the plaintiffs’ were subject to the same treatment and rates as wind and solar QFs rather than the treatment of “other QFs.” The plaintiffs challenged this order, which would have resulted in less favorable contracts. The court found that the Idaho Commissioners made their own determination of QF status, despite their concession that only FERC could make such determination. It appears that it was the specific wording of the Idaho commission’s order that caused this result.