The Federal Energy Regulatory Commission on April 16 rejected a request by Virginia Electric and Power to get out of its obligation to offer qualifying facility (QF) power purchase agreements to nine small solar projects in North Carolina being developed by Community Energy Solar LLC.
On Oct. 31, 2014, Virginia Electric and Power (VEPCO) filed an application under the Public Utility Regulatory Policies Act of 1978 (PURPA) and a section of the commission’s regulations, requesting to be relieved of its requirement to enter into new contracts or obligations to purchase electric energy with respect to nine QFs, with each having a net capacity of 4.99 MW, located in North Carolina and owned by Community Energy Solar. “In this order, we deny VEPCO’s request to terminate its mandatory purchase obligation for the Community Energy QFs,” said the April 16 ruling, issued by the FERC members.
In 2008, the commission terminated VEPCO’s mandatory purchase obligation to purchase capacity and energy from QFs larger than 20 MW in its service territory within PJM Interconnection. The termination was based on a finding that the PJM markets qualify as markets that warrant termination of the mandatory purchase obligation and on a rebuttable presumption that QFs larger than 20 MW have nondiscriminatory access to the PJM markets. Notwithstanding that, the commission in Order No. 688 also created another rebuttable presumption; that QFs with a net capacity of 20 MW or below do not have nondiscriminatory access to markets sufficient to warrant termination of the mandatory purchase obligation.
In creating this rebuttable presumption the commission found persuasive arguments that some QFs may, in practice, not have nondiscriminatory access to markets in light of their small size. To overcome this rebuttable presumption that smaller QFs lack nondiscriminatory access to markets, the electric utility seeking termination of its purchase obligation must make additional showings to demonstrate on a QF by QF basis, that each small QF, in fact, has nondiscriminatory access to the relevant wholesale markets. Additionally, Order No. 688 placed the burden of proof on the electric utility to demonstrate that a small QF has nondiscriminatory access to the markets of which the electric utility is a member (i.e., in this case, PJM).
VEPCO said these nine QFs have that nondiscriminatory access and are “sophisticated market participants,” but FERC didn’t agree. Said the FERC ruling in part: “[W]e find that the nine Community Energy QFs established legally enforceable obligations under PURPA prior to VEPCO’s filing of its application to terminate its mandatory purchase obligation for those QFs, and we therefore deny VEPCO’s application.”
VEPCO, which does business in North Carolina as Dominion North Carolina Power, is a unit of Dominion Resources (NYSE: D).
The involved project companies are: 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.