Under the Public Utility Regulatory Policies Act of 1978 (PURPA), Allco Renewable Energy Ltd. and Allco Finance Ltd. on Nov. 9 petitioned the Federal Energy Regulatory Commission to initiate an enforcement action against the Connecticut Department of Energy and Environmental Protection (DEEP) and the Connecticut Public Utilities Regulatory Authority (PURA) over a program to procure new renewable energy projects.
The complaint said these two Connecticut agencies have implemented a state law that empowers the commissioner of the DEEP to compel wholesale energy transactions outside the confines of PURPA. DEEP and PURA, which is an agency within DEEP, are responsible for administering Connecticut’s Renewable Portfolio Standard.
Allco Renewable Energy and Allco Finance own and operate various operating small power production facilities under PURPA. Allco is a “qualifying small power producer” within the meaning of a section of PURPA.
They said that in 2013, Connecticut enacted a statute empowering the DEEP commissioner to solicit proposals for renewable energy, to select winners of the solicitation, and to compel Connecticut’s two electric utilities to enter into wholesale electricity contracts with the winners. In July 2013 the commissioner solicited proposals for renewable energy resources. Allco’s QFs and other QFs responded to the solicitation.
Notwithstanding the Federal Power Act’s prohibition on state regulation of wholesale electricity sales – subject only to the limited exception for sales by QFs under PURPA – in September 2013, the commissioner compelled the Connecticut electric utilities to enter a contract with a generator, Number Nine Wind Farm, which was approximately 250 MW in size, much too large to be a QF, the companies said. As a consequence, the many QFs that also responded to the solicitation, including Allco’s which was next in line, were not selected.
Recently, the commissioner announced his intention to conduct another procurement like the one in 2013. The commissioner has also announced his intention to conduct a procurement under a new section of Connecticut Public Act 15-107 which gives further state law authority to compel more wholesale transactions with generators that are not QFs. This section excludes virtually all QFs from participation from its solicitation due to the requirement that a facility must have a minimum capacity of 20 MW in the case of a Class I renewable resource and 30 MWin the case of a hydroelectric resource, the complaining companies said.
“The Commissioner’s new solicitation also contains other objectionable features,” said the complaint. “The solicitation requires the payment of substantial fees by QFs to participate. Thus the solicitation is placing a significant state regulatory burden on the very specific generators that Congress sought to benefit when it allowed State’s some ability to regulate wholesale sales involving QFs. PURPA not only required that the Commission promulgate implementing rules, but also directed state regulatory agencies to adopt rules that complied with and implemented the Commission’s regulations. While PURPA thereby gives state regulatory agencies some discretion in implementing Commission’s rules, they cannot violate those rules. And, because states’ only authority to regulate wholesale electricity sales is derived from PURPA, any state rule that conflicts with PURPA is necessarily preempted.”
The companies said the move to compel wholesale transactions with non-QFs violates Connecticut’s ongoing obligation to implement PURPA. If FERC does not initiate an enforcement action against the Connecticut agencies within 60 days of the filing of this petition, the companies said they will go to federal court for relief.
“Allco seeks Commission action to enforce PURPA against the Connecticut Agencies to invalidate and permanently enjoin the Connecticut Agencies compulsion of wholesale sales with other than QFs,” the companies said.
The DEEP announced Sept. 3 that it has issued a notice and opportunity for public comment on three separate proceedings to procure energy resources under Public Act 15-107. Public Act 15-107 authorizes DEEP to procure a broad range of resources,, including natural gas, energy efficiency, renewable energy, large-scale hydropower and energy storage. The act authorizes selection of the most cost-effective energy resources through an open and competitive process.
Procurement of these resources is designed to address infrastructure challenges – which are especially severe during winter months – and contribute to higher energy prices. A lack of natural gas pipeline infrastructure is threatening to cause blackouts on the New England electric grid, leading to increased natural gas prices for gas generators during winter months and causing us to rely on dirtier and more expensive coal and oil to generate power during winter months. As a result, the cost of electricity has skyrocketed in recent winters.
DEEP Commissioner Rob Klee said: “Studies show that infrastructure to deliver natural gas to the region’s power plants could be a cost effective solution – but it is not necessarily the only solution. Clean energy resources and energy efficiency projects could also help meet our winter reliability challenges, while also cutting carbon pollution, growing jobs, and lowering energy bills for families and businesses right here in our state.
“What we are doing here is undertaking a bold and innovative effort to build a more prosperous and sustainable future for our state by addressing market shortcomings and procuring the energy resources we need,” said Klee. “We are looking for the best deals for Connecticut ratepayers by letting all resources compete to provide a solution – renewables, hydropower, efficiency, natural gas, LNG and even the cutting edge technology of energy storage.”
In the implementation of Public Act 15-107, the state will be looking to ensure that Connecticut’s procurements are effectively aligned with other energy investments in the region. For example, DEEP is joining with Massachusetts and Rhode Island on a solicitation for clean energy resources, utilizing authority under Public Act 15-107 and other procurement statutes.