Puget Sound Energy PURPA Rates Modified

On February 9, 2017, the Washington Utilities and Transportation Commission (Washington Commission) approved new avoided cost rates for Puget Sound Energy (PSE) after PSE abandoned its proposal to stop paying qualifying facilities (QFs) for capacity in certain years, and strongly encouraging PSE to enter into power purchase agreements (PPAs) with projects with delayed negotiations.  

The Public Utility Regulatory Policies Act requires PSE to purchase the net output from certain renewable and cogeneration facilities and pay prices based on its avoided costs. For PSE’s small QFs 5 megawatts and lower, the Washington Commission approves standard rates and contract terms that a QF is supposed to be able to select at its option. Generally, Washington utilities file updated standard rates on an annual basis.

PSE filed lower avoided cost rates and revised form power purchase agreements on November 23, 2016 that: 1) eliminated capacity payments during the 2017-2021 period; and 2) significantly lowered capacity payments from 2022-2032. In addition, concerns were raised that PSE refused to finalize contracts with QFs under the then current rates, and that PSE may have been delaying finalizing the contracts so that they would be paid the lower rates. PSE made a number of changes to its avoided cost rates over the course of a few months while the rates were reviewed by Staff and interested parties, including restoring capacity payments during the 2017-2021 period.

The Renewable Energy Coalition and Renewable Northwest challenged the drop in longer term capacity payments, and raised concerns regarding those QFs with stalled contract negotiations. The Washington Commission approved PSE’s revised rates (with retained capacity payment in early years), and essentially informed PSE that it expected the utility to finalize its contracts at the higher rates.

 

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