Dominion, solar developers put into arbitration in N.C.

The North Carolina Utilities Commission on Aug. 5 ordered a dispute between Dominion North Carolina Power and two affiliated solar power developers into a commission-overseen arbitration proceeding.

On July 3, Fresh Air Energy II LLC and Fresh Air Energy X LLC (collectively called “FAE”) filed a petition for arbitration. FAE alleges that beginning on or around December 2013 it has had ongoing negotiations with Virginia Electric and Power d/b/a Dominion North Carolina Power (DNCP) concerning long term power purchase agreements (PPAs) for three 20-MW solar photovoltaic facilities that FAE is building at three locations in DNCP’s service territory. All three facilities have been issued a certificate of public convenience and necessity by the commission.

On July 30, DNCP filed a response stating that it has and will continue to engage in free, open and good faith negotiations with FAE regarding a PPA that meets the requirements of the Public Utility Regulatory Policies Act of 1978 (PURPA), and the commission’s guidelines and orders regarding qualifying facilities (QFs).

DNCP summarized its position on the issues as follows:

  • FAE is not eligible to receive DNCP’s Schedule 19-FP rates and terms because each of FAE’s facilities is larger than 5 MW;
  • the cost of land should not be included in DNCP’s avoided capacity rates because DNCP’s next peaking unit will be built on brownfield sites already owned by DNCP;
  • PURPA does not require to pay a QF for capacity that is not in fact avoided;
  • DNCP’s methodology for calculating avoided cost energy rates appropriately reflects the energy costs avoided by DNCP when it purchases energy from solar QFs;
  • DNCP will not realize fuel hedging benefits associated with its purchases of energy from FAE’s facilities; and
  • DNCP has been authorized by the commission to include a Regulatory Disallowance Provision in its non-Schedule 19 PPAs.

Further, DNCP contends that the avoided cost rates it has offered FAE are consistent with DNCP’s obligation under PURPA to purchase the output of the facilities at avoided costs that are calculated as of the date of each facility’s legally enforceable obligation. In conclusion, DNCP stated that it agrees to submit the issues to the commission to serve as the arbitrator in this proceeding.

“This proceeding has its origin in the language of various Commission orders implementing the provisions of PURPA,” said the Aug. 5 order putting the case into arbitration. “The Commission conducts biennial proceedings pursuant to PURPA to establish the avoided cost rates that electric utilities are required to pay for the purchase of electric energy and capacity from QFs. For many years, the Commission has set standard rates for certain QFs and provided for QFs not eligible for the standard rates to participate in a competitive bidding process, if the utility has one underway at the time; to sell energy only at a variable energy rate; or to negotiate contract rates and terms with the utility.”

The commission will arbitrate the controversy between FAE and DNCP. On or before Aug. 29, FAE and DNCP will each file with the commission a statement and any necessary exhibits verified by a person or persons who would be qualified to present expert testimony, setting forth its position as to the appropriate avoided cost rates and related terms for PPAs for the capacity and energy produced at FAE’s facilities.

The commission’s Public Staff is requested to participate and file a verified statement of its own position and recommendation on or before Sept. 15. On Oct. 21, the commission will holding a hearing to allow the parties to present their positions and to respond to questions from the commission.

The petitioning companies are both wholly owned subsidiaries of Ecoplexus Inc., a California corporation and developer of solar facilities in the U.S. and abroad.

  • Fresh Air Energy X plans to develop a solar photovoltaic (PV) facility to be located in Currituck County adjacent to Shawboro Road with a nameplate capacity of 20 MW (ac) (called the “Shawboro” project).
  • Fresh Air Energy II plans to develop two PV facilities to be located: in Nash County at 16825 Watson Seed Farm Road at North Whitakers (called “Watson Seed Farm”) with a nameplate capacity of 20 MW (ac); and in Martin County at 1245 Meadows Road at Williamston (the “Meadows” project) with a nameplate capacity of 20 MW (ac).
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.