Oregon Commission Denies Pre-Operational QF Capacity Changes

On August 2, 2018, the Oregon Public Utility Commission (Commission) issued an order denying three qualifying facilities (QFs) under the Public Utility Regulatory Policy Act of 1978 (PURPA) the ability to change their nameplate capacity after contract execution but prior to commencing commercial operations. The Commission interpreted the language in Portland General Electric Company’s (PGE’s) standard power purchase agreement as prohibitive of either an increase or decrease to nameplate capacity prior to commercial operation.  

The provision in question read as follows:

Section 4.3. Upon completion of construction of the Facility, Seller shall provide PGE an As-built Supplement to specify the actual Facility as built. Seller shall not increase the Nameplate Capacity Rating above that specified in Exhibit A or increase the ability of the Facility to deliver Net Output in quantities in excess of the Net Dependable Capacity, or the Maximum Net Output as described in Section 3 .1.11 above, through any means including, but not limited to, replacement, modification, or addition of existing equipment, except with prior written notice to PGE. In the event Seller increases the Nameplate Capacity Rating of the Facility to no more than 10,000 kW pursuant to this section, PGE shall pay the Contract Price for the additional delivered Net Output. In the event Seller increases the Nameplate Capacity Rating to greater than 10,000 kW, then Seller shall be required to enter into a new power purchase agreement for all delivered Net Output proportionally related to the increase of Nameplate Capacity above 10,000 kW.

The Commission found that the first sentence limited increases to nameplate capacity to only those that occur after the project is already constructed. The Commission also indicated that it contemplated increases only where the increases were upgrades to existing operations. The Commission also noted that its interpretation is consistent with two other sections of the contract where the QF warrants its net dependable capacity and maximum annual output, noting that a violation of either provision would mean the QF is in default under the contract. As such, the Commission concluded that the power purchase agreement does not permit pre-operational increases or decreases to nameplate capacity.

On August 13, 2018, the QFs filed for rehearing, reconsideration, and or clarification of the Commission’s order to, among other things, understand exactly whether the Commission’s language regarding “upgrades” to existing operations needs to be read into the contract and what constitutes an upgrade. The Commission is required to issue an order on the rehearing request within 60 days or by October 12, 2018. More information can be found in the Commission’s Docket No. UM 1894.

 

 

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