July 1, 2001
L.A. Loves a Loophole
There's no getting around it...
According to the solar industry, a U.S. appeals court decisionand a Southern California Edison petition pending at the FERCmight put them out of business.
"If Edison were to prevail in this , it would have hugely negative implications for the solar operators."
That was Les Nelson, executive director of the California Solar Energy Industries Association, referring to Southern California Edison's June 30 petition for declaratory order asking the Federal Energy Regulatory Commission to apply to all small power production facilities (SPPFs) a 1999 federal appeals court decision involving a landfill SPPF. That decision disallowed the SPPF from burning natural gas to improve the efficiency of its "essential fixed assets" and still enjoy qualifying facility status under the Public Utility Regulatory Policies Act of 1978, thus calling into question FERC policy in place since the mid-'80s that had endorsed natural gas use for such purposes.
While Edison contends that in asking for across-the-board application of the decision it is not intending to fatally harm an entire segment of small power producers currently enjoying QF status, it nevertheless appeared braced for an onslaught of protest upon filing its petition. "SCE recognizes that this Petition is likely to be contested vigorously by those entities that have taken advantage of the Commission's essential fixed assets standard," it said in its original filing.
Pernicious Power Play
SCE got just what it had anticipated. The California Solar Energy Industries Association, for example, fired back that applying the Laidlaw decision in the manner proposed by SCE would "cripple" solar facilities. And the language from the solar side got stronger and even accusatory.
In short, SCE says that the solar facilities are cheating the system, burning natural gas simply to boost output and augment revenues. "The simple question posed by [SCE's] Petition É is whether small power producer QFs should be able, routinely and indefinitely, to continue using unlawful amounts of natural gas to generate power for which they collect a PURPA rate intended to foster development of non-fossil generation," Edison says in its Aug. 28 response to the intervenors' protests.
But according to Sunray Energy Inc., SCE's petition is purely a power play. Sunray says in its motion to intervene that nine of the solar facilities "targeted" by SCE make up almost 90 percent of the world's large-scale, solar generating capacity. "If Edison's request were granted, these projects would be severely harmed, imperiling an entire industry," it argues.
Sunray and other intervenors' accusations go beyond mere suspicion of SCE's motives, which, they point out, have shifted during the last decade. SCE, Sunray notes, until now never questioned the FERC's allowance of natural gas use by the facilities in question. SCE even worked with the owners to develop the projects, way back in the days before competition, Sunray says. And yet, "It is only now, almost two decades later, when Edison apparently wants to break these QF contracts in order to serve its own purposes and, perhaps, benefit its own affiliated generation, that Edison seeks to challenge these long closed cases."
Sunray, pointing to Edison's