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In the long-awaited Broadview Order, FERC reinforced PURPA’s statutory limit for small power production qualifying facilities (SPP QFs) to a “power production capacity” of not more than 80 MW. SPP QFs can not evade this statutory limit by restraining the ability of much large facilities to actually “send out” more than 80 MW through the use of limited inverters.  The Commission attempted to dodge the question that the industry was actually awaiting, regarding how storage charged from an SPP QF should be counted with regard to the 80 MW limit, stating that it “did not need to address whether the associated battery storage system is a separate facility or whether and how the battery storage system should be considered in determining the facility’s power production capacity.” Instead, the ruling was based on the 160 MW of solar capacity at the site. But, the ruling provided no indication that if the facility had consisted of 80 MW of solar and 80 MW of battery storage that the outcome would not have been identical.

The order is prospective and does not affect SPP QFs that have self-certified or have been granted Commission certification prior to September 1, 2020. Until December 31, 2020, the effective date of Order No. 872, any challenge to a Form 556 filing for an over 80 MW SPP QF would have to be through a Petition for Declaratory Order, rather than a protest.
Continue Reading The Commission Takes a Narrow View of Broadview

On July 10, 2020, the D.C. Circuit issued its opinion on various Petitioners’ appeals of Order No. 841. As predicted, the Court denied Petitioners’ claim that FERC lacks the authority to prohibit States from barring electric storage resources (ESRs) located on utility distribution systems from participating in wholesale power markets. Given the EPSA Supreme Court decision involved the sale of a product – demand response – that is not even FERC-jurisdictional, this case – involving sales by ESRs of clearly FERC-jurisdictional products – made the decision a slam dunk. Indeed, Petitioners would be hard-pressed to obtain either a rehearing en banc or a writ of certiorari.

The D.C. Circuit applied a test found in EPSA in rejecting most of the Petitioners’ claims. The court examined: 1) whether the challenged practice at issue – FERC’s prohibition of State-imposed distributed ESRs participation bans – directly affects wholesale rates; 2) whether FERC had regulated State-regulated facilities; and, 3) whether the court’s determinations would conflict with the FPA’s core purposes of curbing prices and enhancing reliability in the wholesale electricity market. The first and third prongs were so easily met that the court barely touched on them. The court found “swiftly” as to the first prong that FERC’s prohibition of State-imposed participation bans directly affects wholesale rates. Indeed, it noted that “If ‘directly affecting’ wholesale rates were a target, this program hits the bullseye.” As to the third prong, the court found that the “challenged Orders do nothing more than regulate matters concerning federal transactions – and reiterate ordinary principles of federal preemption – they do not facially exceed FERC’s jurisdiction under the Act. Our decision today does not foreclose judicial review should conflict arise between a particular state law or policy and FERC’s authority to regulate the participation of ESRs in the federal markets.”

As to the second prong, the court relied heavily on the Supremacy Clause of the Constitution to reject claims that States can close off access to wholesale markets. The court explained that “because FERC has the exclusive authority to determine who may participate in the wholesale markets, the Supremacy Clause – not Order No. 841 – requires that States not interfere.”…
Continue Reading The Lesson of the Appeal of Order No. 841 – Be Careful What You Ask For

Although there were tempting things to write about in last few months, client considerations meant not writing about certain “hot” topics such as net metering. The Order No. 841 oral argument at the D.C. Circuit, however, demanded an article. The only challenge to Order No. 841 involved distributed storage and its participation in wholesale markets. The oral argument already has been summarized by many and although a close call on whether the case will be dismissed for lack of injury or upheld on the “affects” clause, a victory for distributed storage is fairly likely. The oral argument proved to be interesting not so much for the future of Order No. 841, but for the future of FERC regulation of wholesale distribution service, a service that it has regulated for decades. It seems no one involved in the oral argument remembered that the D.C. Circuit once stated: “FERC’s assertion of jurisdiction over all wholesale transmissions, regardless of the nature of the facility, is clearly within the scope of its statutory authority.” That is, TAPS v. FERC gave FERC a seal of approval to regulate “wholesale distribution service,” as it is a form of transmission service in interstate commerce. FERC counsel’s decision not to mention this decision was puzzling and whether FERC will return to embracing it, if a DER Aggregation Final Rule is issued, will be interesting to watch.
Continue Reading Order No. 841 Oral Argument Analysis: Has Everyone Forgotten TAPS v. FERC?

The jurisdictional discussion in Order No. 841-A was lengthy. It could have been very short.

This blog today takes a personal turn as I relate the tale of FERC’s jurisdiction over energy storage resources (ESRs) connecting to a public utility’s distribution system to sell wholesale power. There is only reason that the tale is long…