Renewables

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On April 18, 2019, FERC granted Sunrun, Inc.’s petition for declaratory order and request for waiver of the Public Utility Regulatory Policies Act (“PURPA”) Qualified Facility (“QF”) certification requirements for certain of its residential solar photovoltaic (“PV”) systems.  Specifically, FERC granted Sunrun limited waivers of: (1) the QF certification requirement for Sunrun-financed residential rooftop solar PV systems under 20 kW where such systems, though separately interconnected, may aggregate to over 1 MW within a one-mile radius; and (2) the requirement in Item 8a of the QF self-certification Form No. 556 to identify related PV systems of 20 kW or less located within a one mile radius.  FERC’s order noted its intention to ease administrative burdens on both Sunrun and itself, and affirmed that certain certification filing exemptions available to QFs under 1 MW can persist as Sunrun expands and its financed PV systems aggregate to over 1 MW within a one-mile radius.

On March 21, 2019, the Commission issued a proposed order directing two wind energy generators, Cedar Creek Wind Energy, LLC (“Cedar Creek”) and Cedar Creek II, LLC (“Cedar Creek II”) (collectively the “Cedar Creek Entities”) to provide interconnection and transmission service to a proposed wind project, Mountain Breeze Wind, LLC (“Mountain Breeze”) across jointly-owned interconnection customer facilities (“ICIF”) to the Public Service Company of Colorado (“PSCo”) transmission system.  Although Cedar Creek II sought to dismiss the matter as an impermissible attempt by Mountain Breeze to acquire an ownership interest in the ICIF outside of a Federal Power Act (“FPA”) Section 203 or Section 205 proceeding, FERC rejected this characterization and instead found narrowly that Mountain Breeze had properly filed an application for Commission-ordered service under FPA Sections 210 and 211.  FERC directed the parties to attempt to reach an agreement on the terms and conditions for interconnection and transmission service, or a separate order prescribing such terms and conditions would be issued.

On March 6, 2019, the New Hampshire Public Utilities Commission (“PUC”) declined to reconsider an earlier order refusing to enforce a newly-enacted mandatory biomass power purchase obligation, and associated subsidy scheme. Although the New Hampshire PUC ruled narrowly in both decisions, the law subsidizing state biomass generators at above-market rates is the latest in a series of recent state actions pushing the jurisdictional line between FERC and state authority (see, e.g., April 27, 2016 edition of the WER; September 25, 2018 edition of the WER; October 3, 2018 edition of the WER).  As of this writing, challenges to the law remain pending at FERC.

On January 29, FERC issued an order accepting revisions to ISO New England Inc.’s (“ISO-NE”) Competitive Auctions with Sponsored Policy Resources (“CASPR”) program, the ISO-NE’s mechanism to integrate state-sponsored generation resources (“Sponsored Policy Resources”) that might otherwise suppress prices in its Forward Capacity Market.  The order addressed the contested test price mechanism in detail, ultimately accepting it as a just and reasonable modification to ISO-NE’s Forward Capacity Auction (“FCA”) design.  In so doing, FERC’s order permits ISO-NE to bar capacity resources from participating in the FCA secondary auction if those resources bid capacity into the FCA primary action at a price below the ISO-NE’s assessment of their going-forward costs.  FERC’s order drew a dissent from Commissioner Glick, who argued that the test price mechanism had not been shown to be just and reasonable.

On November 6, 2018, clean energy ballot initiatives failed in several states.  In particular, voters rejected Arizona’s 50 percent renewable energy mandate, Washington’s fee on carbon emissions, Colorado’s limits on oil and gas drilling and Nevada’s retail choice initiative.  However, voters passed Nevada’s 50 percent renewable energy portfolio.

On November 5, 2018, the American Wind Energy Association and the Wind Coalition (together, the “Wind Developers”) filed a complaint against Southwest Power Pool, Inc. (“SPP”) regarding SPP’s Bylaws and Membership Agreement.  Specifically, the Wind Developers object to the sections of the Bylaws and Membership Agreement which impose financial obligations (“exit fees”) on independent power producers (“IPPs”), other comparable non-transmission owners (“non-TOs”), and non-load-serving entities (“non-LSEs”).  The Wind Developers argue that the exit fee violates cost causation principles, may pose a barrier to entry into SPP to vote on critical issues, directly affects jurisdictional rates, and that therefore, the exit fee is unjust, unreasonable, and unduly discriminatory.

Three recent FERC staff decisions (“Decisions”) confirm that, for purposes of establishing the mandatory licensing requirements under the Federal Power Act (“FPA”), groundwater is not a “non-navigable Commerce Clause stream.”  Thus, a hydropower project—and particularly a closed-loop pumped storage project—that uses only groundwater as its water source will not require FERC licensing if the project does not trigger other jurisdictional tests under the FPA.

In two orders concurrently issued on April 17, 2018, FERC reaffirmed its jurisdiction over the participation of energy efficiency resources (“EERs”) in wholesale electricity markets and accepted an EER-related tariff filing from PJM Interconnection, L.L.C. (“PJM”).  In one order, FERC denied rehearing and granted clarification of a December 1, 2017 order (“Declaratory Order”) asserting jurisdiction over EERs, rejecting claims that FERC had overstepped its “directly affects” jurisdiction under the Federal Power Act (“FPA”), and in the second order, FERC applied that understanding to find PJM’s proposal to integrate EERs into PJM’s wholesale markets just and reasonable.

On April 2, 2018, FERC denied a complaint alleging that the interconnection process under Midcontinent Independent System Operator, Inc.’s (“MISO”) tariff was unjust and unreasonable because certain wind generators were experiencing delays in the process, such that those customers would not receive a Generator Interconnection Agreement (“GIA”) in time to receive Federal Production Tax Credit (“PTC”) benefits.  In doing so, FERC found that there was no evidence that MISO was not making reasonable efforts to meet interconnection deadlines, as required by its tariff.  FERC added that prior precedent does not require MISO to ensure wind generators receive their GIA in time to receive full PTC benefits.

On March 9, 2018, a divided FERC approved the Competitive Auctions with Sponsored Policy Resources (“CASPR”) proposal submitted by the ISO New England Inc. (“ISO-NE”). Developed through an extensive stakeholder process that began in 2016, CASPR was promoted by ISO-NE as a mechanism to integrate out-of-market state resource policies that might otherwise suppress capacity market prices in ISO-NE’s capacity market. A divided FERC approved the proposal as a just and reasonable accommodation of state policies, with Commissioner Powelson dissenting, arguing that the proposal dilutes market signals and “threatens the viability” of ISO-NE’s capacity market. Commissioners LaFleur and Glick concurred with the outcome, but criticized the order’s guidance on adapting markets to state energy policies, and reliance on minimum offer pricing rules (“MOPRs”) as the “standard solution” to achieve that end.