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PSC Washes Hands of QF Contract Dispute

Fortnightly Magazine - May 1 1995

The Florida Public Service Commission (PSC) has refused to settle a dispute between Florida Power Corp., an electric utility, and numerous qualified cogenerating facilities (QFs) over pricing terms contained in negotiated purchased-power agreements previously approved as cost-effective. The PSC ruled that interpretation of provisions in negotiated, as opposed to approved standard-offer, contracts between utilities and QFs was a matter for the courts and rejected allegations that review and approval gave the PSC continuing jurisdiction to interpret the contracts. The PSC dismissed the utility's petition for a ruling in support of its interpretation of a contract provision setting out a method to determine when QFs are entitled to receive firm energy payments. The PSC said that PURPA (Public Utility Regulatory Policies Act) and Federal Energy Regulatory Commission regulations were not designed to "open the door" to state regulation of wholesale power transactions, and that its limited role in encouraging cogeneration did not encompass continuing control of the fruits of the negotiation process. Re Florida Power Corp., Docket No. 940771-EQ, Order No. PSC-95-0210-FOF-EQ, Feb. 15, 1995.

In a separate case, however, the PSC rejected a motion by several QFs to dismiss Florida Power Corp.'s request for approval of specific post-contract actions taken by the utility under approved QF contracts, including: 1) assignments; 2) extensions in QF construction or operation deadlines due to delays in obtaining regulatory approvals, force majeure events, and interconnection delays; 3) changes in facility locations; 4) changes in committed capacity; and 5) curtailment agreements. According to the PSC, the request for approval of contractual changes applied to cost recovery only, a matter clearly within its authority. Review was necessary to ensure that the contracts remained cost-effective for ratepayers and did not represent the broadening of PSC authority over the QF contracting process alleged by the QFs. Re Florida Power Corp., Docket No. 940797-EQ, Order No. PSC-95-0218-FOF-EQ, Feb. 16, 1995.

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