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US FERC takes Idaho PUC to court over wind power qualifying facility contracts

Washington (Platts)–25Mar2013/455 pm EDT/2055 GMT
The US Federal Energy Regulatory Commission is suing the Idaho Public Utilities Commission over the PUC’s 2011 handling of qualifying facility sales contracts between a local utility and two wind generators.

Specifically, FERC claims the PUC violated the Public Utility Regulatory Policies Act when it held that Idaho Power was not obligated to buy from a number of wind generators because the utility did not sign the QF contracts prior to December 14, 2010, which was when the QF qualification threshold dropped to 100 kW from 10 MW.

FERC in November vowed to take the PUC to court over its rejection of 20-year contracts for Idaho Power to buy 30 MW from Murphy Flat.

Also, earlier this month FERC said its court complaint would include the PUC’s similar finding on contracts involving Grouse Creek Wind Park and Grouse Creek Wind Park II, each of which have a nameplate of about 20 MW but produce no more than 10 MW per month on average. The projects are owned by Wasatch Wind Intermountain.
FERC believes that the utility was bound by the agreements even though it did not sign them before the PUC changed the QF threshold, it told the US District Court for the District of Idaho on Friday.

“The Idaho commission’s June 8, 2011, orders invoke a bright line rule holding that a QF cannot incur a legally enforceable obligation in the absence of a fully executed contract,” FERC said.

PURPA and FERC’s related regulations require that electric utilities purchase electricity from qualifying facilities, which are typically small cogeneration and renewable power facilities, at a utility’s full avoided cost of replacing that power with other generation. Except when asked to intervene on a QF’s behalf, FERC has left it to the states to set the avoided-cost rate and address QF contracts.

FERC’s regulations provide QFs the option to sell capacity and energy to utilities under a so-called “legally enforceable obligation” at a rate determined at the time the obligation kicks in, the complaint said. This obligation prevents an electric utility from circumventing the mandatory purchase obligation by refusing to negotiate or enter into a contract, FERC said.

Therefore, a utility’s obligation to buy the power can pre-date the signing of a contract, the complaint said.

The PUC’s “requirement that, in the absence of a fully executed contract, a QF must file a meritorious formal complaint with the Idaho commission in order to security a legally enforceable obligation, is inconsistent with and therefore violates PURPA and FERC’s PURPA regulations,” FERC said.

–Esther Whieldon, esther_whieldon@platts.com
–Edited by Katharine Fraser, katharine_fraser@platts.com

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