FERC won’t rehear its September 2012 decision over wind curtailments

The Federal Energy Regulatory Commission on June 20 declined to rehear its September 2012 decision in a dispute involving Idaho Wind Partners 1 LLC, Idaho Power and the Idaho Public Utilities Commission.

On Sept. 20, 2012, the commission granted Idaho Wind’s petition for declaratory order. In that order, FERC found that a proposed tariff filed by Idaho Power before the Idaho Public Utilities Commission would be inconsistent with the Public Utility Regulatory Policies Act of 1978 (PURPA) and the federal commission’s regulations. In October 2012, Idaho Power requested rehearing or reconsideration of the commission’s Sept. 20 order. That same day, PacifiCorp also requested clarification or rehearing of the same order. In the June 20 order, the federal commission denied rehearing, reconsideration, and clarification.

Idaho Power and Idaho Wind, a parent company of several qualifying facilities (QF), had signed several QF power purchase agreements (PPA) that were approved by the Idaho commission. In January 2012, Idaho Power filed Schedule 74 with the Idaho commission. Schedule 74 would permit Idaho Power to curtail its purchases from QFs with 10 MW or more of nameplate capacity “if, due to operational circumstances, purchases from the Applicable QF would require [Idaho Power] to dispatch higher cost, less efficient resources to serve system load or to make Base Load Resources unavailable for serving the next anticipated load.”

Idaho Power and the Idaho commission staff claimed that Schedule 74 was valid under FERC regulations and precedent, which allow curtailment of QF purchases during light loading periods under certain conditions.

In June 2012, Idaho Wind asked the federal commission to declare Schedule 74 inconsistent with PURPA and FERC’s regulations. Idaho Wind argued that certain federal regulations do not apply where a utility’s legally enforceable obligation to purchase from QFs is made under a contract with fixed avoided-cost rates established at the time that the legally enforceable obligation is incurred.

In the Sept. 20 order, the federal commission granted Idaho Wind’s petition for declaratory order. It found that Schedule 74, if approved, would be inconsistent with PURPA and the FERC’s regulations. FERC held that Idaho Power, a utility that is party to PPAs with QFs whose long-term avoided-cost rates were determined at the time legally enforceable obligations were incurred, may not curtail during light loading periods.

FERC further found a lack of factual dispute over whether fluctuations in the value of electric energy were taken into account when the Idaho Wind PPAs were signed. It found that, as a matter of law, changes over time, such as light loading periods, are considered in the calculation of avoided cost rates in a long-term bilateral PPA that provides for an avoided-cost rate determined at the time the legally enforceable obligation is incurred.

Idaho Power raised three issues with Sept. 20 decision

Idaho Power raised three specifications of error that it believes warrant rehearing or reconsideration of the Sept. 20 order.

  • First, Idaho Power construes the order as a commission enforcement action against the Idaho commission pursuant to section 210 of PURPA. Idaho Power argued that such an enforcement action, before the Idaho commission acted on Schedule 74, was an improper usurpation of the role and flexibility of the Idaho commission in the PURPA process.
  • Second, Idaho Power states that the federal commission was wrong to find that fixed avoided- cost rates in long-term PPAs per se account for light loading periods and associated additional costs envisioned by federal regulations. Idaho Power argued that whether such costs are built into any PPA is a factual issue to be determined by the Idaho commission and that there is no basis in the record for FERC to have concluded that these costs were taken into account in the PPAs signed by Idaho Wind and Idaho Power.
  • Third, Idaho Power asserted that the Sept. 20 order improperly favors QFs at the expense of ratepayers because it forces utilities and their ratepayers to purchase QF power pursuant to PPAs where light loading periods were not considered.

PacifiCorp echoed Idaho Power’s concern that the Sept. 20 order has no basis to find that all long-term fixed avoided-cost rate PPAs necessarily account for electricity price fluctuations caused by light loading periods. PacifiCorp asked FERC to clarify whether the Sept. 20 order deems all long-term fixed avoided-cost rate PPAs as presumed to have considered the fluctuation in electricity prices.

FERC ruled in part in the June 20 decision: “Idaho Power’s suggestion that our September 20 Order prematurely ‘enforces’ the Commission’s regulations ignores the nature of our September 20 Order. In that order, we expressly stated that Idaho Wind did not ask for, and thus we did not grant, any enforcement petition. The September 20 Order was simply a declaratory order, evincing no intent by the Commission to bring an enforcement action at that time due to the fact that the Idaho Commission had not yet acted on Schedule 74.”

FERC added: “We reject Idaho Power’s notion that the Commission’s interpretation of the validity of Schedule 74 somehow supplanted the Idaho Commission’s role in the PURPA process by moving against the Idaho Commission before it acted. Rather,
 the Commission issued a declaratory order, intended ‘to terminate a controversy or remove uncertainty.’ Consistent with the Administrative Procedure Act and the Commission’s Rules of Practice and Procedure, and pursuant to our ‘sound discretion,’ the September 20 Order served ‘to remove uncertainty’ regarding the direction the Commission would take in the event it would be presented with an enforcement petition. This was hardly an arbitrary, capricious, or unsound exercise of that discretion.”

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.