Our comment on FERC’s proposal to change its PURPA rules -- Repealing the rule guaranteeing Qualifying Facilities (QFs) long-term contracts with fixed energy rates would flout Congress’s instructions and defy judicial precedent. eelp.law.harvard.edu/2019/12/electr…
Background: In 1978, Congress enacted the National Energy Act, a 5-statute package that includes PURPA. Section 210 of PURPA requires FERC to issue rules it “determines necessary to encourage” development of cogenerators and renewable energy generators < 80 MW (aka QFs).
Congress ordered utilities to purchase all energy generated by QFs. Without this rule, utilities would have refused to deal with QFs. Congress also set guidelines for rates utilities had to pay for QF energy. In 1980, FERC issued rules implementing PURPA sec 210.
To encourage QF development, FERC required utilities to offer QFs long-term contracts with fixed energy rates. FERC has never changed this requirement or its determination that long-term fixed price energy contracts are necessary for QF development.
In 2005, Congress eliminated the must-buy rule for QFs that can sell to RTO/ISOs. Today, QFs in market regions can sell to the RTO/ISO for spot auction prices. QFs in non-market regions can still get long-term fixed-price contracts regulated by states. Details vary widely.
In September, FERC proposed a set of reforms that are uniformly biased against QF development. The proposal would effectively expand Congress’s 2005 amendment to non-market regions. All QFs would receive a spot market rate (or a similar price), paid by RTO/ISOs or utilities.
Our Comment: targets FERC’s proposal to repeal the rule that utilities must offer QFs long-term contracts with fixed rates. Repeal would contravene Congress’s mandate to FERC to issue rules it “determines necessary to encourage” QF development.
While FERC may modernize its rules, it must ensure they continue to achieve Congress’s purpose. Repeal cannot be reconciled with the statute’s unambiguous instruction to “encourage” QF development.
FERC suggests that in response to industry changes it may divorce the statute from its plain meaning and issue rules that will restrain QF growth. But Congress’s mandate to FERC is not contingent on industry conditions and does not expire. FERC ignores the law.
Repeal is also arbitrary and capricious: FERC justifies repeal on a skewed summary of the legislative history, FERC assumes w/o evidence that its new rules will encourage QFs, repeal won’t protect consumers, and FERC fails to show that QFs do not need long-term contracts.
What’s at stake? Some states have enacted rules that scale back PURPA’s impact. For instance, Idaho reduced the length of contracts to two years in reaction to what regulators saw as too much QF development. In many states, PURPA wasn't doing much and repeal won't change a thing.
In at least two states (NC and MI), PURPA rollbacks were accompanied by the introduction of competitive procurements for renewables. Utilities were willing to negotiate and ultimately agree to RFPs bc they sought rollbacks of PURPA rules they deemed unfavorable.
Utilities accepted the trade of PURPA rollbacks in exchange for open solicitations. Lowering the federal floor, as FERC proposes, may undermine the potential for parties in other states to reach similar compromises.
Across all non-market regions, PURPA was a backstop -- the only federal law that requires utilities to purchase renewable energy. FERC's proposal would reduce competition in these regions, reinforce utility dominance, and harm innovation.
Our comment includes a 70 page appendix with excerpts from Congressional hearings in 1977 and 2005. Is it the only comment ever filed at FERC to include 70 pages of Congressional testimony? Well, I can’t prove that another such comment exists.
Commissioner Glick said recently that he expects FERC to finalize new PURPA rules by mid-2020. Our comment makes the case that repeal is legally vulnerable. FERC should weigh the litigation risk as it finalizes its PURPA reforms.
If you've made it this far, might I suggest perusing our entire comment (and appendix) - eelp.law.harvard.edu/2019/12/electr…
(by the way, there are some unusual participants in this docket - I'll have a rundown tomorrow)
Right where I want to be in FERC's docket listing - 
