Whether certain qualifying facilities (QFs) should be considered in total, or individually, is a key to an ongoing dispute at the Federal Energy Regulatory Commission between units of Entergy Corp. (NYSE: ETR) and tiremaker Goodyear.
Entergy Services Inc. (ESI), on behalf of itself and Entergy Texas Inc. (ETI), on Sept. 8 filed an answer to an Aug. 9 complaint of The Goodyear Tire & Rubber Co. In the complaint, Goodyear challenges ETI’s notice to terminate an agreement for purchase of energy from Qualifying Facilities between Goodyear and ETI (called the “QF PPA”).
According to Goodyear, the QF that is the subject to ETI’s notice of termination has a net capacity less than 20 MW. Goodyear asserts that the commission’s Jan. 21 order granting ETI and the other Entergy Operating Companies relief pursuant to Section 210(m) of the Public Utility Regulatory Policies Act of 1978 (PURPA) from the obligation to purchase energy from QFs greater than 20 MW does not apply. But ESI claims that Goodyear’s generating units constitute a single QF with net capacity greater than 20 MW for purposes of the FERc order.
Goodyear owns five generating units at the site of its chemical plant in Beaumont, Texas. Goodyear constructed one of those units in 1987, and four in 1999. The total certified net capacity of those generating units exceeds 20 MW, though the net capacities are below 20 MW if Goodyear’s units are aggregated separately based on Goodyear’s QF self-certifications. The issue here thus is whether, for purposes of the FERC order, the net capacity of all five generating units should be aggregated.
Entergy’s position is that the issue raised by Goodyear’s complaint should turn on whether or not for purposes of accessing wholesale markets Goodyear’s five generating units are a single resource. “The facts here show that they are,” ESI said in the Sept. 8 brief. It said that among other things:
- All of the generating units at issue here are owned by the same corporate entity, Goodyear;
- The generating units are located on one site, at most less than half a mile apart from one another.
- When all five generating units are operational and the output exceeds the plant’s load, energy produced by those units (including the 1987 unit) is commingled prior to being delivered to the grid, for sale to ETI or a third party.
- Energy delivered between the ETI transmission system and Goodyear’s facilities is delivered through a single substation, i.e., there is a single point of interconnection.
- Goodyear’s generating facilities are interconnected to 69-kV transmission facilities owned by ETI, not low voltage local distribution facilities.
Based on these facts, ETI concluded that Goodyear is subject to the FERC order, the same as other similarly situated QFs with a net capacity over 20 MW. ETI therefore provided Goodyear notice of termination that was consistent with the terms of the QF PPA and that allowed sufficient time for Goodyear to register as a Market Participant with the Midcontinent Independent System Operator (MISO).
Goodyear argues it should not be subject to the same requirements that apply to other Over 20 MW QFs. One of Goodyear’s arguments – that it does not sell at wholesale from its 1987 generating unit and that the QF PPA does not apply to that unit – is factually wrong, said ETI. It is inconsistent with Goodyear’s own self-certification of the 1999 generating units and the QF PPA, which provide for sales from all of Goodyear’s generating units, it added. Even if the QF PPA applied only to the 1999 units, however, the fact is that any future wholesale sales made by Goodyear into wholesale markets will be made from all of the generating units at the Beaumont site. For purposes of Section 210(m) of PURPA, those generating units thus should be considered one QF, Entergy said.
Goodyear’s other arguments – that it certified its generating units separately, that it certified those units prior to Order No. 688, and that its units rely on different sequential uses of steam – fare no better, said Entergy They have no bearing on the purpose of the 20 MW threshold (nondiscriminatory access to markets), and again do not change the fact that Goodyear’s five generating units access wholesale markets as a single resource, it added.
Goodyear’s QF is comprised of five generating units that were constructed at two different times. Goodyear built the first unit in 1987, at the site of its chemical plant in Beaumont, Texas. As Goodyear described in a QF self-certification it filed in 1987, that portion of the facility is a natural gas-fired steam turbine with a maximum output of 13 MW, ETI noted. The 1987 unit offset some of the host load at Goodyear’s chemical plant at the Beaumont site served by ETI, but Goodyear remained a net purchaser of capacity and energy from ETI. Goodyear constructed the remaining four generating units in 1999, when it added an eastern expansion to its chemical plant. As Goodyear described in a QF self-certification if filed in 1999, that portion of the facility consists of four gas turbine generators with heat recovery steam generators, with a total maximum output of 18.835 MW.
Said Goodyear in its Aug. 9 complaint: “ETI’s ‘understanding’ of the net capacity of the relevant Goodyear QF is in error and ETI remains subject to the must-purchase obligation with respect to the Goodyear facility. The Application filed on behalf of ETI clearly acknowledged the relevant, potentially affected QF is less than 20 MW. Moreover, as explained by Goodyear in its April 27, 2016, letter and demonstrated in the 1999 Beaumont/East QF Self-certification, the 1999 Beaumont/East QF has a net capacity of less than 20 MW. Accordingly, ETI’s notice of termination is inconsistent with the plain language of the January 21 Order, ETI’s representations in the Application, and ETI’s continuing obligations pursuant to Section 292.303 of the Commission’s regulations. Goodyear respectfully requests that the Commission process this Complaint using Rule 206(h) Fast Track procedures, grant this Complaint and the relief requested herein, and find that ETI’s proposed termination of the PPA is contrary to the January 21 Order and ETI’s obligation to purchase energy and capacity from Goodyear pursuant to Section 292.303 of Commission’s regulations.”