The Federal Energy Regulatory Commission on Dec. 16 ruled for Pioneer Wind Park I LLC in its battle with PacifiCorp over the terms of a qualifying facility (QF) contract for power from the developer’s 80-MW wind project in Wyoming.
On Oct. 2, Pioneer Wind Park I filed a petition for declaratory order finding that PacifiCorp’s refusal to execute a Power Purchase Agreement (PPA) with Pioneer Wind, unless Pioneer Wind agrees to allow PacifiCorp to curtail the Pioneer Wind Project ahead of other generators, as if it were a non-firm transmission customer, is inconsistent with: PacifiCorp’s mandatory purchase obligation under the Public Utility Regulatory Policies Act of 1978 (PURPA); and Pioneer Wind’s entitlement to Network Resource Interconnection Service under Standard Large Generator Interconnection Agreements (LGIA) with PacifiCorp, as well as the non-discrimination provisions of the LGIAs.
In addition to the relief requested in its petition, Pioneer Wind also asked that the federal commission declare that PacifiCorp’s Oct. 18 amendment filed at the Public Service Commission of Wyoming would be inconsistent with PURPA and the federal commission’s PURPA regulations.
Pioneer Wind is developing the Pioneer Wind Project, an 80-MW facility to be located in Converse County, Wyo. Pioneer Wind states that the Pioneer Wind Project will be a qualifying small power production facility (QF) under PURPA that will be interconnected with the PacifiCorp system under two executed LGIAs.
Pioneer Wind stated that it has sought to negotiate a PPA with PacifiCorp under which PacifiCorp would purchase the output of the Pioneer Wind Project at avoided-cost rates established at the time the legally enforceable obligation was incurred. Pioneer Wind explained, however, that PacifiCorp is refusing to execute this PPA unless Pioneer Wind agrees to include in the PPA a curtailment provision that would allow PacifiCorp to curtail the Pioneer Wind Project ahead of other generators for the period of time before PacifiCorp’s Transmission Energy Gateway Segment D transmission project (which is not required as a Network Upgrade under the LGIA) begins service.
PacifiCorp said curtailment provision was an option, not a mandate
In its answer, PacifiCorp argued that the commission should deny Pioneer Wind’s request for declaratory relief and dismiss the petition because Pioneer Wind’s factual foundation for its claims is untrue. PacifiCorp said that, contrary to Pioneer Wind’s claims that it was required to agree to PacifiCorp’s proposed curtailment provision in order to execute a PPA with PacifiCorp, the curtailment provision included in the draft PPA was offered as an option that would allow Pioneer Wind to receive higher avoided-cost pricing. PacifiCorp maintained that the curtailment provision was not a requirement for any PPA and PacifiCorp has never refused to execute a PPA with Pioneer Wind on the condition that Pioneer Wind agrees to be curtailed ahead of other generators.
PacifiCorp said that the transmission topology in and around the area of Wyoming where Pioneer Wind seeks to site the Pioneer Wind Project is relevant to PacifiCorp’s PPA negotiations with Pioneer Wind and to the avoided-cost rate and curtailment provision PacifiCorp has offered. PacifiCorp said that the electrical system in eastern Wyoming (Wyoming East) is limited to the east, so that most of the energy generated in Wyoming East must flow westward to get to load.
PacifiCorp told FERC that, in recent years, an influx of generating capacity in Wyoming East has placed a significant burden on transmission lines needed to move this energy to load in the west. In order for its transmission lines to stay within scheduling and physical limitations, PacifiCorp stated that it must, at times, back down its Dave Johnston and Wyodak thermal generating projects, as well as various wind projects.
“We find that the proposed section 4.4(b) curtailment provision violates PURPA and the Commission’s PURPA regulations,” said the Dec. 16 ruling. “The Commission’s PURPA regulations permit a purchasing utility to curtail a QF’s output in two circumstances: (1) in system emergencies, pursuant to section 292.307(b) of the Commission’s regulations; or (2) in light load periods, pursuant to section 292.304(f) of the Commission’s regulations, but only if the QF is selling its output on an ‘as available’ basis. It is undisputed here that Pioneer Wind and PacifiCorp intend to enter into a long-term, fixed rate PPA based on avoided costs calculated at the time the obligation is incurred; Pioneer Wind’s sale here is not intended to be on an ‘as available basis.’ Under these circumstances, the Commission’s PURPA regulations only permit PacifiCorp to curtail Pioneer Wind’s QF output during system emergencies, pursuant to section 292.307(b) of the Commission’s regulations.”
For the same reasons that FERC found that the proposed section 4.4(b) curtailment provision in the draft PPA violates PURPA, it similarly found that PacifiCorp’s proposed curtailment provision in the Oct. 18th amendment before the Wyoming commission, which provides a curtailment priority to existing generating resources as compared to QFs, would also violate PURPA and the commission’s PURPA regulations.
“In response to our decision here, we would expect that the proposed section 4.4(b) curtailment provision will be removed from the draft PPA, and that PacifiCorp and Pioneer Wind will be able to negotiate PPA prices reflective of each party’s view as to fluctuations in the value of capacity and energy, and as to the costs avoided by PacifiCorp as a result of the purchase from Pioneer Wind,” FERC added. “We note that it is the state’s responsibility in the first instance to determine an avoided-cost rate consistent with the Commission’s PURPA regulations. Therefore, if Pioneer Wind has concerns regarding the ultimate avoided-cost rates for its QF output, it should first pursue such concerns at the Wyoming Commission, which will review and make a determination concerning those avoided-cost rates. After the Wyoming Commission has made its determination and if Pioneer Wind is dissatisfied with that determination, Pioneer Wind may exercise its rights to file a petition pursuant to sections 210(g) and/or 210(h)(2)(B) of PURPA.”