Montana Commission Issues Final Rule on Legally Enforceable Obligations

On July 10, 2018, the Montana Public Service Commission issued a final rule establishing the criteria for forming a legally enforceable obligation (LEO) under the Public Utility Regulatory Policy Act of 1978 (PURPA).  

Under PURPA, a LEO is formed when a qualifying facility (QF) makes a commitment to sell to the utility or otherwise “legally obligates” itself to sell to the utility. That commitment triggers the utility’s obligation to purchase power under PURPA. LEOs may be formed even without a contract so long as the QF has made the necessary commitment. Each state has the authority to set its own LEO standard but there is some guidance in PURPA, the federal rules, FERC orders, and case law that places limitations on state implementation.

In Montana, the final LEO rule would require all of the following to form a LEO:
1. That the QF unilaterally sign and tender a PPA containing a standard price term or non-standard price term that was calculated within 14 days;
2. That the QF establish site control for the length of the LEO, all required land use and environmental permits, and permission to construct the facility;
3. That the QF has submitted an interconnection request; and
4. That the QF has executed and returned a system impact study agreement with deposit and all technical data necessary to complete the study, unless the interconnection request has been submitted but the utility has not provided a system impact study within 38 days (for small generators) or 60 days (for large generators). This second part is meant to prevent utility delay and makes clear that the QF must also not have “waived” the timeline, otherwise they must wait until their agreed-upon timeline has lapsed.

More information can be found in the Commission’s Docket No. N2018.3.15.

Sanger Law represented the Renewable Energy Coalition, which advocates for reasonable PURPA policies on behalf of renewable QFs located in in Oregon, Idaho, Montana, Washington, Utah, and Wyoming.



These materials are intended to as informational and are not to be considered legal advice or legal opinion, nor do they create a lawyer-client relationship. Information included about previous case results does not assure a similar future result.