On July 16, 2020, FERC dismissed a petition for declaratory order by the New England Ratepayers Association (“NERA”) that asked FERC to assert jurisdiction over net metering, finding that the petition failed to identify a specific controversy or harm that warranted a generic response from FERC. NERA’s petition had requested that FERC declare: (1) that all flows of electricity from behind-the-meter generators under state net metering programs back to the interconnected utility are wholesale sales subject to FERC’s exclusive jurisdiction, and (2) such sales should be priced in accordance with the requirements of the Federal Power Act (“FPA”) or the Public Utility Regulatory Policies Act (“PURPA”). Commissioners Bernard L. McNamee and James Danly issued separate concurring opinions, noting that though NERA’s petition was procedurally unsound, the issues raised could be addressed on the merits in a different proceeding.

Currently, FERC precedent provides that flows of excess output from behind-the-meter distributed generation back to the utility in exchange for bill credits are not considered wholesale sales, so long as the generator is a net buyer from the utility over the applicable netting or billing period under the state net metering program. In its petition, NERA asserted that FERC should overturn this precedent and declare exclusive jurisdiction over wholesale energy sales from behind-the-meter generators (a) whenever the generator’s output exceeds the customer’s demand or (b) where the generator’s energy is designed to bypass the customer’s load and is not used to serve demand behind the customer’s meter. NERA further argued that when such distributed generation energy is delivered to the local utilities for resale to the utility’s retail customers for compensation, such transactions are wholesale sales in interstate commerce, and should be priced at the utility’s avoided cost of energy if the sale is made pursuant to PURPA, or a just and reasonable wholesale rate if the sale is made pursuant to the FPA. Net energy metering transactions are currently treated like retail transactions governed by various state regulations.

In its order, FERC noted that declaratory orders are discretionary as to whether to terminate a controversy or remove uncertainty. FERC explained that it addresses petitions for declaratory orders based on the “specific facts and circumstances” presented to it. With respect to NERA’s petition, FERC found that NERA failed to identify a specific controversy or harm that warranted a “generic statement” from FERC in a declaratory order. FERC further noted that if NERA is concerned that certain state regulatory authorities in New England are not pricing sales from qualifying facilities in accordance with PURPA, NERA’s petition also failed to meet the requirements for enforcement under PURPA section 210(h).

In his concurring opinion, Commissioner Danly stated that though the procedural dismissal was proper, questions around rate treatment and jurisdictional boundaries are of “profound importance” and FERC will eventually have to address these issues. Commissioner Danly also expressed concern that the dismissal could result in NERA’s question being raised at the federal district court level, which could result in a “patchwork quilt of conflicting decisions.” Commissioner McNamee noted, in his concurring opinion, that though the procedural dismissal was proper, his concurring opinion is drafted to make clear that the dismissal does not address any of the important substantive issues underlying the petition.

Click here to read the order.