Wyoming Commission Declines to Modify PURPA Contracts

On June 23, 2016, the Wyoming Public Service Commission (Wyoming Commission) denied a request from PacifiCorp, dba Rocky Mountain Power, for authority to modify its Public Utility Regulatory Policies Act (PURPA) contracts with qualifying facilities (QF). PacifiCorp attempted to reduce the maximum contract term of prospective power purchase agreements (PPA) from 20 to three years and to modify its avoided cost calculation method to include all active QF projects in its pricing queue. The Wyoming Commission determined that PacifiCorp failed to meet its burden to show its proposed modifications were reasonable, would solve the alleged problems, and were in the public interest of Wyoming customers.  

Under PURPA, QFs have the legal right to sell electricity to utilities under “long-term” contracts, which in Wyoming has been a term up to twenty years. PacifiCorp argued that the twenty-year term artificially inflates avoided cost prices, which violates PURPA’s “ratepayer indifference” standard, and that a three-year term would protect ratepayers by ensuring more “current” pricing. The Company claimed a recent spike in QF pricing requests received in 2014 and 2015 would subject Wyoming ratepayers to long-term price increases. The Wyoming Commission noted that this modification would amount to an 85% reduction in the maximum term of its Wyoming PPA contract. Moreover, only 6.5% of PacifiCorp’s recent surge in QF activity occurred within Wyoming. Thus, the Wyoming Commission expressed reluctance to take such sever action to address what it characterized as a system-wide problem knowing that doing so might discourage QF development in Wyoming.

On calculating avoided costs, PacifiCorp argued that including its entire queue of proposed QF projects as “indicative pricing” would more accurately reflect the avoided cost of displaced resources. PacifiCorp reasoned that because FERC policy allows QFs to establish a legally enforceable obligation (LEO) before a contract is signed, QF projects should likewise be included in the avoided cost calculation prior to execution. However, PacifiCorp acknowledged that no Wyoming developer has actually asserted a LEO, on average only 10% of proposed QFs in the pricing queue are successful, and that the proposed changes would reduce QF pricing by approximately 11%. The Wyoming Commission declined this request as well.

However, the Wyoming Commission acknowledged that recent revisions to PacifiCorp’s QF process in Idaho and Utah were inconsistent with those of Wyoming. As such, the Wyoming Commission directed PacifiCorp to initiate a collaborative process with its stakeholders to address procedural and substantive reform of Wyoming’s PPA process and avoided cost methodology. This collaborative process will address other contracting and tariff interpretation issues, including how to calculate the eligibility for standard rates.

 

 

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