Arlington Valley Solar Energy II LLC (AVSE) filed refund report on Aug. 22 at the Federal Energy Regulatory Commission related to a 125-MW solar project that has lately been in the testing phase and is about to go commercial.
AVSE is currently constructing a 125-MW solar photovoltaic facility in Maricopa County, Ariz., with full commercial operations expected to begin by December 2013. The entire output of the project is committed to San Diego Gas & Electric (SDG&E) under a long-term power purchase agreement (PPA).
AVSE started preliminary pre-commercial testing of an initial portion of the project on April 9, and inadvertently delivered test power to the grid during this testing without prior commission authorization. Accordingly, AVSE requested waiver of the 60-day prior notice filing requirement in order to permit its market-based rate tariff to become effective on May 7.
In a July 5 order, the commission denied AVSE’s request for waiver of the 60-day prior notice requirement and accepted AVSE’s tariff for filing effective July 6. The commission directed AVSE to refund to its customers the time-value of the gross revenues collected for the entire period that the rate was collected without commission authorization, as well as the difference, if any, between the market-based rate and the cost-justified rate.
During the refund period – from April 9 to July 5 – AVSE’s sole customer was SDG&E. The amount owed to AVSE for sales made to SDG&E during the refund period ($4,704,123) exceeds the cost-based rate for such sales ($3,341,869) by $1,362,254 ($4,704,123 – $3,341,869). No time-value refunds are owed because AVSE said it did not collect any revenues from SDG&E for sales made prior to July 6, until after AVSE’s tariff became effective.
AVSE has not paid any refunds to SDG&E because AVSE did not collect any revenues for sales to SDG&E during the refund period. Instead, on Aug. 2, AVSE notified SDG&E that it was entitled to a credit of $1,362,253.29,7 and provided its refund calculations to SDG&E. SDG&E informed AVSE that it agreed with its refund calculation. AVSE requested that SDG&E apply such credit to the outstanding amounts due to AVSE under the PPA and SDG&E agreed with that approach.
Arlington Valley is an affiliate of LS Power Development LLC, which develops, owns, and operates independent power projects in the United States. GE Energy Financial Services is participating in Arlington Valley as a tax equity investor.