Solar developers argue at FERC with Dominion over QF rights

Community Energy Solar LLC, Community Energy Renewables LLC and nine affiliated entities, locked in a dispute over QF rights with Virginia Electric and Power, on Feb. 20 filed with the Federal Energy Regulatory Commission their response to the Feb. 11 arguments from the utility.

Virginia Electric and Power d/b/a Dominion Virginia Power (DVP) is disputing whether nine solar projects of around 5-MW apiece can under the Public Utility Regulatory Policies Act of 1978 (PURPA) be deemed qualifying facilties (QF), which would require the utility to buy power from them.

Said the development companies in their Feb. 20 brief: “Congress requires the Commission to rule within 90 days on applications under PURPA Section 210(m). Recognizing the ‘very compressed 90-day time frame’ in which parties may provide record support, the Commission prescribed the rebuttable presumption that small QFs lack nondiscriminatory access to ISO/RTO markets and required utility-applicants to meet their ‘full burden’ of production by submitting in their applications all pertinent project specific transmission and interconnection information from which it could be determined that a specific QF does ‘in fact’ not face burdens and obstacles in accessing ISO/RTO markets. These procedural requirements protect QF projects in the development phase from prolonged uncertainty brought about by a utility’s filing to terminate its mandatory purchase obligation.

“DVP has now twice restarted the 90-day period, substantially prejudicing the Solar QFs and potentially rewarding DVP for the serial deficiencies in its Application. The most recent restart results from DVP’s untimely introduction of new information in its February 11 Answer in an attempt to rectify the patent evidentiary deficiencies in its original Application. One deficiency of the original Application, but not the only one, was its disregard of the significance to the Solar QFs’ project economics of qualifying for North Carolina’s investment tax credit, with a nominal value equal to 35% of the project cost, which expires after December 31, 2015, unless a project has commenced commercial operation by that date.

“In the original Application, DVP erroneously presumed there would be no economic detriment to the Solar QFs if they were forced to seek interconnection under PJM rules, rather than under North Carolina’s Interconnection Standards, even though the PJM interconnection process would necessarily be completed too late for the Solar QF projects to complete financing and construction in time to meet the expiration deadline of the state investment tax credit. DVP’s February 11 Answer abandons this erroneous presumption by recognizing that the Solar QFs’ eligibility for the state investment tax credit is essential to project economics and would be imperiled if the Solar QFs were forced to rely solely on interconnection with and access to PJM. Therefore, DVP now offers new and vague commitments to enter into provisional IAs and PPAs with the Solar QFs under North Carolina’s PURPA framework for DVP’s mandatory purchase obligation.”

Said Dominion in its Feb. 11 brief: “The Commission should find that the Community Energy Answer does not adequately refute the prima facie case established by Dominion that the Community Energy qualifying facilities (‘QFs’) have nondiscriminatory access to the PJM Interconnection, L.L.C. (‘PJM’) markets. Furthermore, recognizing Community Energy’s concerns with the logistics associated with selling into the PJM markets, Dominion commits to enter into all necessary agreements with each of the Community Energy QFs to allow the QFs to sell their power to Dominion up until the date that the Commission grants Dominion’s application to terminate its purchase obligation and the QFs have the physical and contractual ability to participate in the PJM market. Accordingly, the Commission should grant Dominion’s application to terminate its obligation to purchase energy and capacity from the Community Energy QFs.”

James “Ronnie” Bailey, Manager–Planning and Strategic Initiatives in the Electric Transmission Department of Dominion North Carolina Power (Virginia Electric’s doing business as name in North Carolina, where these projects are actually located), wrote in attached testimony: “In order for the Community Energy qualifying facilities (‘QFs’) at issue in this proceeding to sell into the PJM market, both Dominion and PJM will need to study these interconnection requests in detail. Because each QF is below 20 MW, PJM will use an expedited study process, which would take approximately six months after the queue closes. Furthermore, PJM’s default capacity value for solar generation is 38% of nameplate capacity. Thus the PJM default capacity for each of the nine 4.99 MW Community Energy solar projects is 2 MW. Even if Community Energy can show that the capacity value for its proposed solar projects is greater than the PJM default capacity value, that value will be less than 100% of the 4.99 MW nameplate capacity for each of the solar projects. Based on a high-level review of the transmission system configuration in this area, and given that these projects will be interconnected at the nine separate locations and involve small solar MWs, it is highly unlikely that the PJM studies will require additional upgrades as the result of any planning assessment.” 

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.