United States: FERC Updates Agenda For June Technical Conference On PURPA Implementation Issues

According to the updated agenda, the technical conference will focus on two principal issues:  (1) mandatory purchase obligations under PURPA; and (2) the calculation of utilities' avoided costs for such purchases.

Two panels are slated to address these issues, and include representatives of investor-owned utilities, rural electric cooperatives, independent power producers, state public utility commissions, renewable and clean energy groups, and large industrial customers.  The first panel will address FERC's regulations implementing PURPA's mandatory purchase obligation for power produced by certain "qualifying facilities" (QFs), including issues such as:

• application of the Commission's "one-mile rule" for determining whether facilities are "located at the same site" for determining QF status for small power production QFs, including implications of the "one-mile rule" on electricity markets and for utilities' long-range resource planning efforts
• the Commission's rebuttable presumption that QFs 20 MW and smaller do not have nondiscriminatory access to competitive organized wholesale markets, and the barriers to access to such markets encountered by such QFs
• curtailment of QFs
• the impact of utility contracting and interconnection practices on QF transactions
• the obligation to purchase "as available" power from QFs
• the obligation of utilities to sell supplemental, standby, backup and maintenance power to QFs
• the obligation to purchase power from QFs pursuant to legally enforceable obligations.

The second panel will address the various methods for calculating a utility's avoided cost for power purchases from QFs, including specific issues such as:

• assumptions and analyses used to develop avoided costs
• whether and how various pricing methodologies are consistent with PURPA
• the strengths and weaknesses of different avoided cost pricing methodologies
• potential improvements to current pricing methodologies
• whether an avoided cost methodology reflects the locational or time value of

QF output

• the role of wholesale market revenues in developing avoided cost calculations
• methodologies for determining avoided costs for capacity and for long- and short-term arrangements.

As noted above, several of these issues were raised in the congressional Republicans' November 2015 request to FERC.  Congressional Democrats responded to that request in February 2016, sending their own letter to FERC suggesting additional topics that should be considered at the technical conference.  Noting their view that Title II of PURPA "remains a singular federal backstop to support renewable energy in parts of the country that may otherwise have significant barriers," their letter asks FERC to examine a number of issues, including:

• whether methods to calculate avoided costs accurately reflect the full value of costs avoided by QFs, including energy, capacity, ancillary service, transmission and distribution costs
• whether states have used tools available under PURPA, such as adjusting avoided costs, limiting the size of QFs, or shortening the maximum length of contracts, to address "perceived oversupplies" of QF power
• whether there are technologies or categories of facilities, such as energy storage, marine and hydrokinetic generation, or fuel cells, which may be eligible to become QFs, but are not currently being built or certified as QFs
• whether FERC is effectively enforcing PURPA, including imposing penalties on QFs that have not properly certified and remedying improper implementation of the law by some states.

While these issues are not reflected as directly in FERC's updated agenda, they may nonetheless be discussed at the technical conference. Written comments from the panelists are due June 7, 2016, and will be published on the Commission's website before the conference.  FERC is likely to seek comments from the general public following the technical conference.

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