EL87-53-003). The new rule comes as part of a case in which Connecticut Light and Power Co. (CL&P) challenged a state law requiring it to pay the same rate to purchase electricity from a municipal waste disposal QF as it charged the municipality for power.
The FERC said it could find no legal precedent for giving states independent authority to prescribe rates for bulk-power sales by QFs that exceed the avoided-cost cap contained in the Public Utilities Regulatory Policies Act (PURPA). The FERC added that mandating rates above avoided costs for a certain class of power suppliers runs counter to current policies in Congress and at the FERC that strongly favor competition among all bulk-power suppliers.
According to the FERC, wholesale QF rates cannot both be capped by full avoided cost (the federal statute) and exceed the avoided-cost cap in rates set at the state level. But the FERC will not entertain requests to overturn all state-imposed QF rates that exceed the federal cap. Utilities must have raised the issue at the time the contract was signed, not several years into a contract that has been satisfactory to both parties. (CL&P's complaint stemmed from 1987.) In the future, however, the FERC said it will treat new, nonconforming contracts as void ab initio.