On January 31, 2020, FERC granted Xcel Energy Services Inc.’s application to terminate Southwestern Public Service Company’s (“SPS”) mandatory purchase obligation under Public Utility Regulatory Policies Act of 1978 (“PURPA”). In its order, FERC specifically found that (i) SPS, as a member of Southwest Power Pool, Inc. (“SPP”), is entitled to the presumption that qualifying cogeneration or small power production facilities (“QFs”) within SPS’s footprint have nondiscriminatory access to markets, and (ii) the protestors failed to adequately rebut this presumption. Accordingly, SPS is relieved of its obligation to enter into new contracts to purchase QF electric energy. FERC granted the application effective September 5, 2019.

In 2006, the Commission issued Order No. 688, which implements PURPA section 210(m) and provides that an electric utility is exempt from the requirement to purchase energy from QFs if FERC finds that the QFs have nondiscriminatory access to one of three categories of wholesale markets. FERC previously established a rebuttable presumption that a QF with a net capacity greater than 20 MW interconnected with an SPP member electric utility has nondiscriminatory access to the markets, consistent with the requirements set forth in PURPA section 210(m).

In 2007, relying on this rebuttable presumption, Xcel filed a joint application on behalf of SPS and three other applicants to terminate their respective PURPA obligations to purchase electric energy and capacity from QFs that have a net capacity greater than 20 MW. At that time, FERC denied SPS’s request without prejudice, but granted the other requests, finding that the protestors provided evidence of transmission constraints in SPS that was sufficient to rebut the presumption of nondiscriminatory access to the markets.

In its September 5, 2019 filing, SPS renewed its request to terminate its obligation to purchase electric energy and capacity from QFs with a net capacity greater than 20 MW, relying again on the rebuttable presumption flowing from its membership in SPP. SPS also explained that since the prior order was issued: (i) SPS invested $2.1 billion in the its transmission facilities subject to SPP’s OATT, and (ii) SPP’s transmission owning members, including SPS, have invested over $8.3 billion in transmission facilities subject to the SPP OATT. As a result, congestion on the SPS transmission system has been significantly reduced such that there are no Frequently Constrained Areas on the SPS system, and QFs located in SPS’s service territory have nondiscriminatory access to SPP’s markets.

In opposition to Xcel’s filing, GlidePath Development LLC, Golden Spread Electric Cooperative, Inc., Leeward Renewable Energy, LLC, and Western Farmers Electric Cooperative (collectively, “Protestors”) filed timely motions to intervene and protest. On review, the Commission determined that the Protesters failed to adequately rebut the presumption that QFs in SPP have nondiscriminatory access to a market that satisfies the requirements of section 210(m) of PURPA.

Specifically, FERC found the Protestors’ argument that the transmission constraints that were present during SPS’s initial filing persist today unpersuasive, noting the multi-billion-dollar investments made to both SPS’s and SPP’s transmission facilities over the past decade.

Click here to read the order.