FERC opts against siding with solar developer FLS Energy in Montana complaint

The members of the Federal Energy Regulatory Commission on Dec. 15 rejected an Oct. 17 petition from FLS Energy Inc. for the commission to initiate an enforcement action under the Public Utility Regulatory Policies Act of 1978 (PURPA) against the Montana Public Service Commission and NorthWestern Corp.

FLS argued that the Montana Commission and NorthWestern failed to implement PURPA in a manner consistent with the statute and the commission’s regulations.

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 FLS may itself bring an enforcement action against the Montana Commission and NorthWestern in the appropriate court. While we have chosen not to initiate an enforcement action, we also find it appropriate to further comment on the matters at issue.”

FLS stated that in June of this year the Montana Commission granted a motion for emergency suspension (Emergency Motion) of NorthWestern’s obligations to pay the QF-1 Tariff Option 1(a) Standard Rate for any new solar qualifying facilities (QFs) greater than 100 kW pending the issuance of a final order by the Montana Commission. FLS also noted that the Montana Commission used the legally enforceable obligation standard it had created in a 2010 order, Whitehall Wind, to provide an exemption from the suspension for solar QFs with a nameplate capacity between 100 kW and three MWs, if, prior to June 16, 2016, the solar QF had both tendered a signed power purchase agreement (PPA) and executed an interconnection agreement.

FLS asserted that, during the last year, FLS has been working to develop a portfolio of solar QFs in Montana, and that in May 2016, FLS and NorthWestern reached an agreement on all material terms of a standard form QF-1 PPA intended for use on all FLS standard-offer projects seeking to contract with NorthWestern. FLS said that fourteen FLS QFs had tendered PPAs to NorthWestern prior to the Montana Commission’s June 2016 decision, but have not received interconnection agreements from NorthWestern. FLS further contended that six of the fourteen QFs had requested executable interconnection agreements from NorthWestern and, pursuant to the terms of its Open Access Transmission Tariff (OATT), were entitled to receive interconnection agreements before the Montana Commission held a June 2016 hearing.

FLS argued that, if NorthWestern had not violated the terms of its OATT, these six projects would have qualified under the Montana Commission’s legally enforceable obligation standard. FLS asserted that, as a result of the QF-1 Tariff Option 1(a) Standard Rate suspension, FLS has been precluded from continuing the development of its QFs and faces the loss of more than $750,000.

FLS had requested that the commission issue an order finding: that the Montana Commission’s legally enforceable obligation standard originally established in Whitehall Wind, and adopted here, violates PURPA; and that the Montana Commission violated PURPA by improperly suspending the QF-1 Tariff Option 1(a) Standard Rate for solar QFs between 100 kW and 3 MW.

Additionally, FLS requested that the commission issue an order finding that NorthWestern has improperly refused to comply with the timelines and study procedures set forth in section 3.5.7 of Attachment N (Small Generation Interconnection Procedures) to its OATT and refused to issue interconnection agreements to small solar QFs that have satisfied all the requirements of NorthWestern’s Small Generator Interconnection Procedures.

FERC did find for FLS in one respect, writing: “We find that, just as requiring a QF to have a utility-executed contract, such as a PPA, in order to have a legally enforceable obligation is inconsistent with PURPA and our regulations, requiring a QF to tender an executed interconnection agreement is equally inconsistent with PURPA and our regulations. Such a requirement allows the utility to control whether and when a legally enforceable obligation exists – e.g., by delaying the facilities study or by delaying the tendering by the utility to the QF of an executable interconnection agreement. Thus, the Montana Commission’s legally enforceable obligation standard is inconsistent with PURPA and our regulations under PURPA.” 

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.