On March 19, 2021, FERC set aside a September 1, 2020 order (“September Order”) that had upended 40 years’ worth of FERC precedent regarding how to determine the 80MW threshold for small power production qualifying facilities (“QFs”) under the Public Utility Regulatory Policies Act of 1978 (“PURPA”). Specifically, FERC rejected the September Order’s denial of QF status to a hybrid photovoltaic solar and storage facility owned by Broadview Solar LLC (“Broadview”) as a result of the facility’s 160 MW gross capacity, as opposed to the facility’s 80 MW maximum net output or “send out.” After further consideration, FERC explained that it had erred by departing from and overturning its longstanding “send out” precedent. Commissioner Danly dissented, arguing that the September Order correctly applied PURPA in relying on gross power production capacity.
In the September Order, FERC denied Broadview’s QF certification for its hybrid solar-plus-storage facility, and in so doing overturned Occidental Geothermal, Inc., 17 FERC ¶ 61,231 (1981) (“Occidental”) and other longstanding precedent determining QF eligibility by the facility’s “send out” to the point of interconnection, as opposed to the maximum nameplate capacity of each of its components (see September 10, 2020 edition of the WER). At the time, FERC reasoned that, while Broadview’s inverters may impose a conversion or output limit of 80MW, Broadview could not rely on the inverters to meet the statutory size limit for “power production capacity” because other components in the facility could generate twice the statutory limit. In its request for rehearing, Broadview argued that FERC failed to provide a principled explanation for overturning nearly 40 years’ reliance on the “send out” test as established in Occidental and other cases.
In setting aside the September Order, FERC found that it erred by departing from and overturning its longstanding precedent. FERC went on to explain that PURPA is ambiguous as to how FERC is to measure “power production capacity,” and that the term “facility” is best read to include all components rather than any of its individual parts. According to FERC, “the best interpretation of the 80-MW limit on a facility’s power production capacity is as a limit on the facility’s net output to the electric utility (i.e., at the point of interconnection), taking into account all components necessary to produce electric energy in a form useful to an interconnected entity.” As applied to Broadview, FERC determined that although the unique hybrid configuration would effectively increase Broadview’s capacity factor by allowing it to more consistently deliver a higher share of the 80 MW power production capacity, the Broadview facility as a whole (including DC converters limiting the output to 80MW of AC) was not capable of providing more than 80 MW to the point of interconnection at any one point in time. Thus, in light of FERC’s revival of the “send out” test, Broadview’s hybrid facility appropriately qualified as a small power production QF.
Commissioner Danly dissented, criticizing the Commission for unconvincingly manufacturing ambiguity to circumnavigate plain statutory language. According to Commissioner Danly, the order creates a “for-delivery-to-the-utility” standard that is inconsistent with PURPA’s 80 MW size requirement. Commissioner Danly argued that maximum production capability could appropriately be reduced consistent with the methodology set forth in Form 556, but that the “send out” cases do not hold that a facility capable of generating more than 80 MW can satisfy the statutory size limit with a configuration that converts no more than 80 MW of the output into AC energy for delivery. Commissioner Danly also found the “increase” in capacity factor entirely illusory and only achieved by pretending that the facility can produce no more than 80 MW, when in fact it is capable of producing and delivering 160 MW, some of which is simply delivered at a different time than if all 160 MW were delivered as it was produced.
A copy of the order is available here.