Allco complaint against Massachusetts agencies over QF issues rejected by FERC

With no clarifying comment, the members of the Federal Energy Regulatory Commission on Dec. 15 rejected an Oct. 19 request from Allco Renewable Energy Ltd. and Allco Finance Ltd. that the commission initiate an enforcement action under the Public Utility Regulatory Policies Act of 1978 (PURPA) against the Massachusetts Department of Public Utilities (Massachusetts Commission) and the Massachusetts Department of Energy Resources (collectively called the “Massachusetts Agencies”).

Allco argued that the Massachusetts Agencies’ implementation of state law Section 83A violates the Federal Power Act and PURPA.

Said the Dec. 15 FERC order: “Notice is hereby given that the Commission declines to initiate an enforcement action pursuant to section 210(h)(2)(A) of PURPA. Our decision not to initiate an enforcement action means that Allco may itself bring an enforcement action against the Massachusetts Commission in the appropriate court.”

The Allco companies had said the Massachusetts Agencies have implemented a state law, Section 83A, that requires the three regulated utilities in Massachusetts—Fitchburg Gas and Electric Light d/b/a Unitil, Massachusetts Electric and Nantucket Electric d/b/a National Grid, and NSTAR Electric and Western Massachusetts Electric d/b/a Eversource Energy—to enter into long-term contracts for wholesale electricity transactions with renewable energy generators that do not meet the design requirements to be a qualifying facility (QF). The law also requires QFs to engage in a bidding process in order to obtain a long-term contract.

Said the rejected Allco complaint: “Section 83A is part of Massachusetts’ overall regulation of wholesale sales that disregards a QF’s rights under section 210 of PURPA. Just last month, the Federal District Court in Massachusetts declared unlawful the MDPU’s regulation banning QFs from obtaining the long-term rate required by 18 C.F.R. §292.304(d)(2)(ii). That decision is just one part of Allco’s struggle in Massachusetts since 2011, when Allco first brought its complaint to the Commission, see docket EL12-12, to have the energy and capacity from its solar projects purchased by National Grid.”

Allco added: “This case is a paradigm of why section 210 is not working as Congress planned. From 2011 to the time of the Federal District Court’s decision in Allco, National Grid conceded that it had a legally enforceable obligation to purchase energy and capacity from Allco’s solar projects, but maintained that the existence of the MDPU regulation banning the long-term rate of 18 CFR §292.304(d)(2)(ii) prohibited it from entering into a contract with Allco. Now that the MDPU ban has been invalidated, National Grid has no reason to not enter a contract, yet it still refuses. States like Massachusetts cannot be permitted to pursue their own market constructs, such as Section 83A, while at the same time violating PURPA.

“Section 83A violates the FPA and PURPA in two distinct ways. First, it is a regulation of wholesale sales with non-QFs, which States have no authority to engage in. Second, with respect to non-QFs, it requires QFs to participate in a bidding process in order to obtain a long-term contract, something the Commission has consistently declared unlawful.

“Massachusetts simply seeks to unilaterally remake regional interstate wholesale energy markets, retroactively abrogate the federal government’s policy of promoting renewable energy QF generation, and upset settled, investment-backed expectations after private industry has already committed to its investments.”

Allco Renewable Energy is the owner and operator of various operating small power production facilities within the meaning of Section 210(l) of PURPA. Allco is a “qualifying small power producer” within the meaning of Section 210(h)(2)(B) of PURPA.

A company contact is: Thomas Melone, President, Allco Renewable Energy Limited, 14 Wall Street, 20th Floor, New York, NY 10005, Phone: (212) 681-1120, Thomas.Melone@AllcoUS.com.

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.