PURPA and the future of avoided cost rates.
Bruce W. Radford is publisher of Public Utilities Fortnightly. Contact him at firstname.lastname@example.org.
A few months back the Federal Energy Regulatory Commission (FERC) filed a complaint in federal district court in Idaho, accusing the state’s public utility commission (PUC) of violating the nation’s 1978 PURPA law and asking the judge to “direct the Idaho commission” to bring its practices into compliance.
This complaint, filed in March, came after the Idaho PUC in four separate cases had rejected power purchase agreements (PPA) between between host utilities Idaho Power and PacifiCorp, and various wind-powered QFs. The PUC had ruled the contracts weren’t formally signed by all parties until a few days after the state’s PURPA rules had changed governing the rates for which the projects were eligible. But FERC had found, in each case, that the PUC had misapplied federal regulations that define how and when a simple sales offer by a PURPA-certified qualifying facility becomes binding on the purchasing host utility, and creates a legally enforceable obligation (LEO) – even if contracts remain unsigned – that will entitle the QF to earn advantageous pricing through a long-term, forecasted avoided cost rate.
Even the regulatory staff at the Idaho commission eventually conceded (in an appellate brief) that FERC was right, and the state wrong.