FERC Protects Small Renewable Generators’ Access to Buyers

This blog was written by Taylor Jones, Legal Intern

In a victory for clean energy, the Federal Energy Regulatory Commission (FERC) denied a request from a transmission and generation cooperative, Tri-State, to levy additional charges on one of its member cooperative utilities, Delta Montrose, which is trying to purchase energy from a small hydropower facility.

Under the Public Utility Regulatory Policies Act of 1978 (PURPA), utilities are required to purchase power from certain small renewable generators known as Qualifying Facilities (QFs).  In this case, Tri-State asked FERC‘s permission to charge member utilities like Delta Montrose an additional fee whenever the members purchase power from QFs instead of from Tri-State directly. Underlying this request is the contractual arrangement between Tri-State and its member utilities, which requires member utilities to purchase 95 percent of their power needs from Tri-State. In filing its request, Tri-State argued that that when member utilities purchase power from QFs and fail to meet that contractual minimum, it harms Tri-State’s bottom line.

Several members of the Sustainable FERC Project coalition followed Southern Environmental Law Center’s lead to register concern with FERC that Tri-State’s proposed fee is effectively a penalty that will threaten the ability of member utilities, like Delta Montrose, to purchase power from QFs. The penalty would undermine PURPA’s intent by stifling small renewable energy development.

In denying Tri-State’s request, FERC found that Tri-State’s plan to impose additional fees on members that purchase more than 5 percent of their power from QFs would place a financial burden on utilities like Delta-Montrose and discourage them from purchasing the clean power QFs provide. This decision demonstrates FERC’s commitment to upholding Congress’s intent in PURPA and ensuring that QFs can rely on the opportunity to access markets.