In two orders issued on April 21, 2016, FERC denied a complaint and upheld the Midwest Independent System Operator, Inc. (“MISO”) registration requirements for Entergy qualifying facilities (“QFs”), and also denied rehearing and upheld termination, in part, of Entergy’s mandatory purchase obligation for QFs with access to the MISO market under Section 210(m) of the Public Utility Regulatory Policies Act (“PURPA”).

In the first order, FERC denied a complaint and petition for declaratory order filed by Occidental Chemical Corporation (“Occidental”) against MISO wherein Occidental requested that FERC find that MISO’s treatment of QFs in the Entergy service territories violates the Federal Power Act (“FPA”) and PURPA. MISO’s QF registration rules for QFs located within Entergy’s service territory require QFs to elect one of two options: (1) a behind-the-meter option that only allows the QF to “put” unscheduled, as-available energy onto the QF’s host utility, but does not allow the QF to also participate in the MISO market; or (2) a hybrid option whereby a QF may become a MISO market participant subsequent to Entergy’s integration into MISO and sell up to its full net output in the MISO markets, although the hybrid option prohibits the QF from “putting” any energy onto the incumbent Entergy operating company’s system.

Occidental’s complaint claimed that such registration requirements violate the FPA and PURPA because, according to Occidental, they are unduly discriminatory against QFs and infringe on QFs’ rights to both sell energy to their host utility and to have access to the MISO markets as market participants. FERC disagreed with Occidental’s arguments and upheld the MISO QF registration requirements.

In a second order, FERC denied Occidental’s request for rehearing of FERC’s January 21, 2016, order terminating in part Entergy’s power purchase obligation from QFs with a net capacity in excess of 20 MW and with access to the MISO markets. Under Section 210(m) of PURPA, therefore, FERC terminated Entergy’s purchase obligation for all but a single over-20 MW QF within its service territory that FERC concluded did not have nondiscriminatory access to the MISO markets.

In the prior proceeding, Occidental argued that its QF located in Entergy’s service territory did not have nondiscriminatory access to the MISO market and, therefore, Entergy should remain obligated to purchase its QF’s full net output. However, FERC disagreed and terminated Entergy’s purchase obligation from the Occidental QF.

On rehearing, Occidental argued that FERC erred by ignoring evidence in the record of discrimination against its QF due to the MISO QF registration requirements. Citing the first order described above, FERC rejected these arguments. Occidental also argued that FERC ignored evidence in the record of barriers such as transmission constraints that prohibited its QF from accessing the MISO markets. Again, FERC rejected these arguments and held that it had properly weighed the evidence in the record when determining the Occidental’s QF, on balance, had nondiscriminatory access to the MISO markets.

FERC’s order denying Occidental’s complaint can be found here. FERC’s order denying Occidental’s request for rehearing can be found here.