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In the last year, two decisions from judges sitting on the bench of the United States Court for the District of New Mexico have opined that PURPA claims made by plaintiffs were “as applied” rather than “implementation” claims and thus could not be heard in federal court. The first decision, in Great Divide I, was a close call and provided an in-depth discussion of the “as applied” versus “implementation” precedent. There, had the case been pled more broadly, as an attack on the legally enforceable obligation (“LEO”) standard established by the New Mexico commission, the court said it would have heard the case on its merits. Indeed, the issue of whether a LEO standard meets PURPA’s requirements had been heard recently by the Montana federal court system. The Great Divide I court invited a better-styled complaint, indicating the complaint could be transformed into an implementation claim.

The plaintiffs filed such an amended complaint, and the court did review the merits of the case, issuing an order on the merits in Great Divide II (2019 WL 5847060) last November. The court found that the New Mexico LEO standard did not violate PURPA, especially given FERC’s silence on appropriate prerequisites which gave the New Mexico Commissioners “the wiggle room” to implement a prerequisite. This decision has been appealed and may be mooted by FERC’s PURPA Final Rule. Now, the newest decision from New Mexico District Court – Vote Solar, – indicates that at least one judge in New Mexico would not have entertained any attempt by the Great Divide I plaintiffs to replead their case.
Continue Reading A New Mexico Federal District Court Tries to Slam Shut the PURPA “Implementation” Claims Window

The Legally Enforceable Obligation (LEO) concept is a construct of FERC that is used in one of FERC’s avoided cost pricing regulations, i.e., 18 CFR § 292.304(d)(2)(ii).  The date a LEO is formed is the date a QF is entitled to have its avoided cost rate determined, if it so elects.  Through the decades, state utility commissions have adopted a quite broad array of standards for when a QF has established a LEO with a purchasing electric utility.  In providing non-binding guidance on the topic, FERC has had relatively little to say about the LEO standard other than that the purchasing utility cannot control LEO formation by its own action or inaction, such as a refusal to sign a contract.  For example, FERC has opined that the LEO standard cannot depend on the willingness of the purchasing utility executing a contract with the QF, whether it be a power purchase agreement.  In 2016, FERC expanded on that view, opining that a state may not require that a purchasing utility sign an interconnection agreement before a LEO is formed.  In 2018, several states examined their LEO standards.

Early in the year, the Vermont Public Utility Commission upheld its rule that a LEO cannot be formed until regulatory approval of a proposed power purchase agreement by the Vermont PUC.

As a result of various legal actions, the Colorado Public Service Commission eventually changed its regulations to ensure that a QF could obtain a LEO without winning a competitive solicitation.

In a case before the Minnesota Public Utilities Commission, the state commission looked for a QF to have made a “substantial commitment” and found that one had been made (and a LEO formed) when a QF:  (1) had paid for the Facility Study, which established how interconnection could be achieved, (2) had executed a Land Lease and Wind Easement, (3) had obtained necessary approvals from government entities, (4) had wind study results, (5) had reserved equipment, and (6) had filed the Complaint with the Commission.
Continue Reading The Formation of Legally Enforceable Obligations: The Year in Review (2018)

As the industry continues to await action from FERC on PURPA in Docket AD16-16 or through a new rulemaking, various parties have submitted comments or pleadings in that docket and in other cases, that effectively take the position that QFs should not be accountable for knowing the laws and regulations to which they are subject. This same mindset may repeat itself when FERC adopts a Final Rule DER aggregation

As to PURPA, in August 2018 comments submitted by North American BioFuels (BioFuels), the company proposed making it a requirement that the purchasing utility to have received a copy of the Form 556 (or the equivalent) before the utility starts purchasing power from a QF.  That is, BioFuels proposes to shift the burden to the utility to ensure that a QF is in compliance with the law before buying power.  And, BioFuels seeks an amnesty period for QFs currently not in compliance with FERC’s requirements.  In October 2018, BioFuels enhanced its proposal with a legal paper suggesting that FERC has acted unlawfully in applying its standard time-value refund penalty for late-filed tariffs and agreements to QF-eligible entities who fail to timely file their self-certification form.  In a similar vein, QFs continue to argue to FERC in individual cases that the time-value refund penalty should not be imposed on them.  FERC generally has held steady in rejecting such pleas for relief in cases such as IGS ORIX Solar I.  Some QFs, such as York Haven, are taking these arguments further, arguing that QFs should be able to recover all of their fixed costs, thus effectively eliminating the time-value refund penalty.

Given that FERC provided notice to the QF community by issuing a rulemaking in 2005, these “remedies” are hardly necessary.  FERC has no broader way to communicate to the public than a rulemaking.  The time between the rulemaking being issued and the Final Rule (Order No. 671) being made effective that adopted the QF self-certification approach was about six months, plenty of time for a compliance process that BioFuels admits for renewable QFs is as “easy as pie” and takes only about 30 minutes.  Moreover, in the cases imposing the time-value refund penalties, FERC otherwise has excused late-filing QFs from the myriad other burdens of acting as public utilities for what has in some cases been years (i.e., MBR Tariff filing, EQR, etc.).  The “It should not be a QF’s responsibility to read FERC rulemakings” attitude reflects is troubling.  “Ignorance of the law IS an excuse!” is a very poor policy when it comes to electricity, which, although a product that provides light, is a product that cannot be taken lightly.  When laws and regulations concerning electricity are not followed, the results can be lethal.
Continue Reading QF & DERs: Ignorance of the Law Is No Excuse

With comments having been filed in response to two dockets focused on DERs, this blog will examine comments filed in the rulemaking docket (Participation of Distributed Energy Resource Aggregation in Markets Operated by Regional Transmission Organizations and Independent System Operators), Dkt. No. RM18-9 and (1) identify the key takeaways from differing sets of stakeholders (including…