The Federal Energy Regulatory Commission on Jan. 8 turned down a November 2015 request from Allco Renewable Energy Ltd. and Allco Finance Ltd. for enforcement under the Public Utility Regulatory Policies Act of 1978 (PURPA) against the Connecticut Department of Energy and Environmental Protection (DEEP) and the Connecticut Public Utilities Regulatory Authority (PURA).
“Notice is hereby given that the Commission declines to initiate an enforcement action under section 210(h)(2) of PURPA,” said the brief FERC notice. “Our decision not to initiate an enforcement action means that Allco may themselves bring an enforcement action against the Connecticut Commission and DEEP in the appropriate court.”
The Allco companies 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. 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 MW in 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 Nov. 9 petition, the companies said they will go to federal court for relief. The Jan. 8 FERC decision leaves them with that course of action.