FERC okays termination of Entergy QF obligations for projects over 20 MW

The Federal Energy Regulatory Commission on Jan. 21 approved a September 2014 application from Entergy Services Inc., on behalf of the Entergy Operating Companies, under the Public Utility Regulatory Policies Act of 1978 (PURPA) and section 292.310 of the commission’s regulations.

Entergy sought to terminate, on a service territory-wide basis, the requirement imposed on the Entergy Operating Companies under section 292.303(a) of the commission’s regulations to enter into new power purchase obligations or contracts to purchase electric energy and capacity from qualifying cogeneration or small power production facilities (QF) with a net capacity in excess of 20 MW.

Said the Jan. 21 FERC order: “In this order, with the exception of the purchase obligations for the Dow Chemical Company and Union Carbide Corporation (jointly, Dow) over-20 MW Plaquemine QF, we find that Entergy has met the statutory standard. Accordingly, we grant Entergy’s Application, in part, to terminate the requirement that it enter into new obligations or contracts with QFs with net capacity in excess of 20 MW, effective October 23, 2015, the date of Entergy’s completed application, and deny, Entergy’s Application, in part, with respect to Dow’s over-20 MW Plaquemine QF.”

Entergy had amended its application in December 2014, March 2015 and October 2015 in response to deficiency letters issued by the commission. The Entergy Operating Companies are Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi and Entergy New Orleans.

Entergy had argued that the Entergy Operating Companies are transmission-owning members of the Midcontinent ISO. Entergy relied on the rebuttable presumption in section 292.309(e) of the commission’s regulations that over-20 MW QFs have nondiscriminatory access to the MISO markets. Entergy stated that the Entergy Operating Companies therefore satisfy the criteria in PURPA section 210(m)(1)(A) and section 292.309(a)(1) of the commission’s regulations for termination of their PURPA mandatory purchase obligation with respect to over-20 MW QFs in the areas that they serve.

Entergy stated that the scope and impact of the requested relief is limited. Entergy asserted that the relief requested does not affect the ability of a QF to generate power to serve host load requirements, nor does it affect the ability of a QF to register with MISO as a Market Participant, or retain the services of a Market Participant to act as its agent, and sell directly in the MISO Day 2 markets or enter into physical bilateral sales.

Entergy said that it does not seek commission approval to terminate specific QF power purchase contracts, and that it will continue to abide by the power purchase contracts with over-20 MW QFs pending satisfaction of applicable contract termination requirements. The FERC ordered emphasized that no such existing contracts can be terminated.

Dow stated that it owns a QF with a capacity of 1,491 MW located in Plaquemine, Louisiana, straddling Iberville and West Baton Rouge parishes (Plaquemine QF). Dow said its subsidiary Union Carbide also owns a QF located in Hahnville, in St. Charles Parish, Louisiana with a capacity of 353 MW. Dow argued that congestion in the area of its Plaquemine QF adversely affects the ability of the Plaquemine QF to make sales into MISO markets. Dow asserted that it is “well-documented that much of the Entergy transmission system is severely under-built, resulting in persistent transmission constraints and congestion in various locations throughout the system.” Dow argued that “[s]uch constraints and persistent congestion severely compromise Dow’s access to the MISO market by, among other things, limiting the amount of energy that Dow may sell into the MISO market and subjecting Dow to exceedingly low (and sometimes negative) nodal prices for extended periods while congestion persists.”

Entergy asserted that Dow has failed to demonstrate that its Plaquemine facility lacks access to the markets and that planned upgrades will alleviate Dow’s asserted concerns regarding transmission congestion. Specifically, Entergy responded that upgrades in the vicinity of Dow’s Plaquemine QF that are expected to go into service in December 2018 will alleviate the congestion affecting that QF.

Said the FERC order: “While, in its November 21, 2014 answer, Entergy responds that upgrades in the vicinity of Dow’s Plaquemine QF are expected to go into service in December 2018, until such time as the planned transmission upgrades go into service, Dow has demonstrated that its Plaquemine QF is located in an area where persistent transmission constraints in effect cause the QF not to have access to markets outside the persistently congested area. … Here, Dow has presented evidence of congestion currently preventing the Plaquemine QF from reaching the MISO market and the planned projects in this proceeding are not expected to relieve that congestion until at least December 2018. This rebuts the presumption that the Plaquemine QF currently has access to the MISO market. Therefore, we will deny Entergy’s requested relief only to Dow’s Plaquemine QF. Accordingly, we find that Dow’s Plaquemine QF, which is located in a generation pocket where the transmission capacity out of the pocket is constrained, has rebutted the presumption of nondiscriminatory access. We therefore deny the Application with respect to Dow, without prejudice to Entergy refiling to seek termination of the obligation with respect to Dow, upon completion of upgrades that remedy the existing congestion and constraints.”

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.