The Federal Energy Regulatory Commission (FERC) has denied a Jersey Central Power & Light Co. (JCPL) request that it invalidate the procedures used by the New Jersey Board of Public Utilities (BPU) to implement the Public Utility Regulatory Policies Act of 1978 (PURPA) (Docket No. EL95-36-000).
JCPL claimed that state procedures required it to enter into a purchase agreement with a qualifying facility, Freehold Cogeneration Associates, L.P., for 100 megawatts of power at rates that exceeded JCPL's avoided cost at the time of contract execution and approval. JCPL argued that the requirement violated the avoided-cost cap on utility purchases under PURPA, as construed by the FERC. The U.S. Court of Appeals for the Third Circuit had ruled that a 1989 BPU order exempting Freehold from newly established competitive bidding guidelines, and a 1992 order approving the contract rates, were final and nonappealable [Freehold Cogeneration Associates, L.P. v. N.J. Board of Regulatory Commissioners, 44 F.3d 1178 (3d Cir.1995), cert. denied (U.S. October 4, 1995)].
The FERC disagreed that the BPU's 1992 approval of the contract, when the contract reflected higher 1988 avoided-cost estimates, violated the PURPA price cap. The FERC also found no basis for second-guessing or invalidating the BPU's findings, noting that it is up to the states to determine the specific parameters of QF power-purchase contracts, including the date that an obligation becomes legally enforceable. t
Inside Washington items were written by Lori A. Burkhart, an associate legal editor of PUBLIC UTILITIES FORTNIGHTLY.