FERC rejects rehearing request over Saguaro’s QF compliance issues

The members of the Federal Energy Regulatory Commission on Dec. 15 rejected a rehearing request over their Sept. 30 order partially denying Saguaro Power Company, A Limited Partnership’s (Saguaro) request for waiver of the cogeneration qualifying facility (QF) operating and efficiency standards of the commission’s regulations for calendar years 2016 and 2017.

The September order denied Saguaro the waiver insofar as it would have provided an exemption from rate regulation under sections 205 and 206 of the Federal Power Act (FPA), pursuant to section 292.601 of the Commission’s regulations and thus required Saguaro to abide by the reduced rate provision it had agreed to in ta power purchase agreement (PPA) between Saguaro and Nevada Power.

Saguaro sought rehearing of the September order, arguing that the commission erred in partially denying its requested waiver of the commission’s cogeneration operating and efficiency standards. “As explained below, we disagree and deny Saguaro’s request for rehearing,” said the Dec. 15 FERC order.

Saguaro owns and operates a 105 MW topping-cycle cogeneration facility near Henderson, Nevada. It has operated as a QF since 1990. Saguaro also has authority to sell electric energy, capacity and ancillary services at market-based rates.

In its original petition, Saguaro stated that, as the result of losing its primary steam host (the chlor alkali processing operations of Saguaro’s unaffiliated thermal host, Pioneer Americas LLC d/b/a Olin Chlor Alkali Products), it would be unable to meet the commission’s operating and efficiency standards for cogeneration QFs. Saguaro further stated that, prior to 2016, the amount of steam that Olin purchased had been sufficient for Saguaro to continuously meet the operating and efficiency standards for 25 years.

Olin permanently shut down its chlor alkali facility on March 31, 2016, and Olin stopped taking steam from Saguaro on April 22, 2016. Saguaro noted that it also sells steam to Ocean Spray Cranberries Inc. However, Saguaro stated that the amount of steam purchased by Ocean Spray is insufficient for Saguaro to meet the commission’s operating and efficiency standards. Under the PPA between Saguaro and Nevada Power, if Saguaro loses its QF status, its energy and capacity rates are to be reduced to 80% of the otherwise applicable contract rate.

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.