PURPA presents interesting issues regarding how state commissions may deal with “transmission costs” caused by qualifying facilities (QFs), particularly when QFs are wheeling to a utility to which they are not interconnected. FERC previously has stated that a QF only has to deliver power to a point of interconnection with the purchasing utility in Pioneer Wind Park I. But in the same case, FERC also stated that “implicit in the Commission’s regulations, transmission or distribution costs directly related to installation and maintenance of the physical facilities necessary to permit interconnected operations may be accounted for in the determination of avoided costs if they have not been separately assessed as interconnection costs.” This statement, while located in a footnote, should not be overlooked. Several years ago, the Montana Public Service Commission affirmed its importance in Decision 7560a, ruling that transmission service upgrade costs associated with the a QF project may be accounted for in the determination of avoided costs, but then found the utility at issue had to provided adequate evidence of transmission costs.
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