United States: D.C. Circuit Dismisses PGE Petition For Review Over PURPA Purchase Obligation, Denies Pátu Petition On The Merits

Last Updated: May 9 2017
Article by Russell Kooistra and Christopher Zentz

On April 25, 2017, the U.S. Court of Appeals for the D.C. Circuit ("D.C. Circuit") dismissed Portland General Electric Company's ("PGE") and PáTu Wind Farm LLC's ("PáTu") petitions for review of FERC's orders finding that PGE must purchase all of the power delivered by PáTu pursuant to their power purchase agreement ("PPA") under the Public Utility Regulatory Policies Act ("PURPA"), but that PGE was not required to use dynamic scheduling.  In doing so, the D.C. Circuit held, among other things, that: (1) it lacked jurisdiction to review FERC's resolution of PGE and PáTu's PURPA dispute because the orders were merely declaratory; (2) circuit court review of PURPA section 210(h) enforcement actions occurs on appeal from district courts; and (3) FERC's Federal Power Act ("FPA")-based regulations cited to by PáTu in support of its claim that FERC should require PGE to use dynamic scheduling only apply to the transmission customer-transmission provider relationship, which was unlike PáTu and PGE's relationship.

In December 2011, PáTu filed a complaint with the Oregon Public Utility Commission ("OPUC") alleging that PGE's refusal to pay for all power PáTu delivers to PGE's system violates their PPA and Oregon's PURPA rules.  PáTu, a small power producer that is not connected to PGE's system, delivered its power to PGE's system transmission services from Northern Wasco Public Utility District and Bonneville Power Administration.  Additionally, PáTu's complaint at the OPUC challenged PGE's refusal to utilize dynamic scheduling—a combination of hardware, software, engineering, and other tools to transfer electricity from the balancing authority area in which the electricity is generated to another balancing authority area in real-time.  In 2014, the OPUC issued an order concluding that PGE must purchase all power PáTu generates and delivers, but did not require PGE to use dynamic scheduling to assist PáTu in delivering its power to PGE's system.

PáTu appealed to the Oregon Court of Appeals, which affirmed the OPUC's order.  PáTu then filed a complaint with FERC.  Specifically, PáTu argued that PGE must buy all of its output, including power that PáTu generated but did not schedule, and must utilize dynamic scheduling to accomplish that result.  PáTu's arguments relied on the language of the PPA, FERC's PURPA regulation requiring utilities to purchase any energy and capacity "made available" from a qualifying facility, and FPA regulations prohibiting discrimination in transmission service and implementing transmission provider standards of conduct.  In its orders on the complaint, FERC concluded that the PPA and its PURPA regulations require PGE to accept PáTu's entire net output delivered to PGE.  In addition, FERC rejected PáTu's request for dynamic scheduling, explaining that it does not require utilities to use any particular method to carry out their purchase obligation.  Finally, FERC dismissed PáTu's FPA claims, finding that PáTu is PGE's supplier, not its transmission customer, so FERC's FPA regulations prohibiting discrimination were inapplicable since they only apply to "transmission customers."  In response to FERC's orders, PáTu petitioned the D.C. Circuit for review challenging FERC's rejection of its FPA claims.  PGE also petitioned for review of the PURPA-related aspects of FERC's orders, arguing that FERC lacked jurisdiction to interpret a state-regulated PPA.

In its opinion, the D.C. Circuit first held that it lacked jurisdiction to review FERC's finding that PGE must accept PáTu's entire net output delivered to PGE.  In doing so, the D.C. Circuit held that FERC orders resolving a dispute pursuant to PURPA section 210(h) might be reviewable by the D.C. Circuit if the orders are mandatory, but FERC's orders in this case were merely advisory because—although they appeared to contain mandatory language—they neither set deadlines for compliance nor specified repercussions for non-compliance.  The D.C. Circuit's conclusion was buttressed by FERC's own arguments that its language in it orders was intended to be merely advisory.  The D.C. Circuit emphasized that circuit courts otherwise only have jurisdiction to review FPA section 210(h) enforcement actions on appeal from district courts.

Further, the D.C. Circuit held that PURPA's provision that subjects FERC's PURPA regulations to FERC's FPA enforcement authority (thus permitting the D.C. Circuit to review the rule) did not apply, explaining that this provision only applies when the PURPA regulations involve operations of a utility or qualifying facility that are subject to FERC's jurisdiction under part II of the FPA.  Because PGE is not PáTu's transmission provider, and because FERC's orders focused on the purchase rather than sale of PáTu's power, the D.C. Circuit held that the case did not involve the "operations of an electric utility . . . subject to the jurisdiction of the Commission under part II of the [FPA]."

Regarding PáTu's FPA claims, the D.C. Circuit held, among other things, that the regulations cited by PáTu govern the relationship between transmission customer and provider, whereas PáTu is not PGE's transmission customer.  Accordingly, the D.C. Circuit dismissed both petitions for review.

A copy of the D.C. Circuit's opinion is available here.

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Russell Kooistra
Christopher Zentz
 
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