Dominion North Carolina Power argues solar QF obligation issues

Virginia Electric and Power d/b/a Dominion North Carolina Power filed Feb. 16 arguments at the North Carolina Utilities Commission in response to a complaint from several solar power developers.

This proceeding involves the Dec. 30 complaint of Tarboro Solar LLC, Aulander Solar LLC, Woodland Solar LLC, Winton Solar LLC, Garysburg Solar LLC, Gaston Solar LLC, Seaboard Solar LLC, Jamesville Solar LLC and Weldon Solar LLC (called the “Solar QFs”), and Community Energy Solar LLC.

A Feb. 9 commission procedural order directed the parties to address the following two questions: whether each of the Solar QFs have established a legally enforceable obligation (LEO); and if each of the Solar QFs have established a LEO, what is the date of each Solar QF’s LEO. A LEO arises when: the QF has received a CPCN for the construction of the facility; and the QF makes a written commitment to sell its output to the utility.

“It is axiomatic that a QF’s commitment to sell must be made, not to Company personnel who deal exclusively with interconnection agreements but, rather, to the personnel of the Energy Supply, Power Contracts department (‘Power Contracts Department’) — the department of the Company with the role, duty, authority and responsibility for the negotiation and preparation of power purchase agreements and implementation of the Company’s obligations under PURPA and Schedule 19-FP,” the utility noted. “Accordingly, applying the two-pronged LEO test, each of the Solar QFs established a LEO as of November 12, 2014, which is the earliest date that each of the Solar QFs had received a CPCN and committed in writing to sell the output of their respective facilities to the Company’s Power Contracts Department.”

In October 2014, Dominion North Carolina Power filed an application with the Federal Energy Regulatory Commission to terminate its purchase obligations with respect to the Solar QFs. On Nov. 25, 2014, FERC issued a deficiency letter to Dominion that required the company to provide additional information on QFs (other than the Solar QFs) that are potentially affected by the company’s petition and to provide notice of the petition to such QFs. On Dec. 19, 2014, Dominion filed its response to the FERC Deficiency Letter. On Dec. 30, 2014, the solar companies filed this complaint at the North Carolina Utilities Commission that: requested that the commission enter an order directing Dominion to enter into Schedule 19-FP power purchase agreements (PPAs) with the Solar QFs; and requested that the commission enter a declaratory judgment holding that the Solar QFs had established legally enforceable obligations with respect to the sale of energy and capacity to Dominion prior to Dominion’s filing of its Oct. 31 petition with FERC. The FERC action is still pending.

Dominion contended in the Feb. 16 filing in the conclusion of its arguments: “It would be inequitable for a QF to be permitted to establish a LEO simply by sending a letter to anyone at a utility to which it wishes to sell its output; there would be no restriction on, for example, such communication being mailed to a utility with no name or department indicated at all, and yet being relied on to establish the date of the QF’s LEO. It would be even more unfair to allow experienced and sophisticated QFs, that have very recent experience with the Company’s process for entering into a contract under Schedule 19-FP, to create a binding commitment to sell in this manner. The Solar QFs had experience providing a written commitment to sell to the Company to the appropriate person and department, and therefore should have known the appropriate steps to communicating such commitments to sell. It would be inequitable to permit a LEO to be established based on the expected receipt date of a communication of commitment to sell that was directed from an experienced and sophisticated party such as Complainants to the inappropriate person and department at the utility.”

Each QF facility will have a rating of either 5 MW or 4.99 MW. Project development of each of the facilities is being conducted by Community Energy Solar, pursuant to a Development Services Agreement with its affiliate, Community Energy Renewables.

The Solar QFs filed their own Feb. 16 brief with the North Carolina commission that outlines the contacts that they made with Dominion in 2013 and 2014 at first about project interconnections and then about QF matters.

The North Carolina Sustainable Energy Assn., an advocate for renewable energy, filed a Feb. 16 request to intervene, and said about the issues at hand: “Despite Dominion’s proposed Offer and Request form and Dominion’s representation to this Commission that the issuance by a QF of an Offer and Request would create an LEO, and without notifying the Commission or the QF community that its position had changed, Dominion now seeks to disavow the very process that it proposed would bring the utility clarity with respect to creation of an LEO.

“Dominion’s Response in this proceeding indicates Dominion now believes the phrase ‘commit to sell’ should be construed by the Commission such that, where a QF’s CPCN has already been secured, an LEO arises only after a QF has committed itself to sell its output and a particular department within the relevant utility has actually received the commitment in writing. In short, Dominion seeks to append an ‘actual receipt’ requirement to the test already articulated by the Commission and to further require that such receipt be by a specific department within the company. Dominion’s ‘actual receipt’ position in this proceeding is remarkable in that it is a marked departure from the position it took in the 2014 biennial avoided cost proceeding less than six months ago.”

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.