FERC Rejects Proposal to Eliminate Small QF PURPA Purchase Obligation

On October 17, 2013, the Federal Energy Regulatory Commission (FERC) denied PPL Electric Utilities Corporation’s (PPL Electric) request to terminate its mandatory purchase obligation for a qualifying facility (QF) under 20 megawatts (MW). 

Public Utility Regulatory Policies Act (PURPA) requires utilities to purchase power from QFs, unless the utility meets certain requirements.  PURPA requires utilities to purchase renewable electricity from small power production facilities instead of their own generation resources.  Electric utilities can escape from their obligation to purchase power if the QFs have nondiscriminatory access to competitive markets in which they can meaningfully sell their capacity and electric energy output.  QFs below 20 MWs are presumed not to have access to competitive markets, unless the utility can demonstrate that the specific QF has nondiscriminatory access to the market that the utility participates in.  FERC previously had removed PPL Electric’s obligation to purchase electricity from QFs larger than 20 MWs because access to the PJM Interconnection provided the QFs with nondiscriminatory market access.

FERC concluded that PPL Electric had failed to provide documentation that a specific cogeneration facility had nondiscriminatory access to competitive markets.  FERC explained that it was insufficient for PPL Electric to claim that it was not aware of specific market limitations.  Instead, PPL Electric needed to establish that the specific QF has nondiscriminatory market access.  FERC’s order reaffirmed that there is a high standard for utilities to make a showing that QFs below 20 MWs have nondiscriminatory market access and no longer have the right to sell power to their utility.



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