Well, that was fun.
Many thanks to all those that participated in this morning’s webinar on the jurisdictional issues with feed-in tariff pricing. We were particularly pleased to have Karlynn Cory of the National Renewable Energy Lab drop in for a star turn.
We promised some follow-up resources:
A recording of the entire presentation is available here (wmv file).
Kevin Fox’s Powerpoint presentation can be found here (pdf).
Kevin referenced several documents:
- The National Renewable Energy Lab’s report on the subject: Renewable Energy Prices in State-Level Feed-in Tariffs: Federal Law Constraints and Possible Solutions can be found here (pdf).
- The staff comments of the Oregon Public Utilities Commission (OR PUC Docket No. AR 538 and UM 1452, filed December 19, 2009) can be found here (pdf).
- The California Attorney General’s Response to ALJ’s Request for Briefs Regarding Jurisdiction to Set Prices for A Feed-in Tariff, CA PUC Docket No R-08-08-009 (June 25, 2009) can be found here (pdf).
We received numerous additional questions–we’ve take a shot at answering them (below).
If you have any additional questions, feel free to post them in the comments.
Definitions:
Question: What does QF stand for?
Answer: Qualifying Facilities (QF) are a class of generating facilities created under PURPA
Question: What is avoided cost?
Answer: Avoided cost as used in the Public Utility Regulatory Policies Act refers the price a utility would pay to procure power from other resources or generate that power itself. There are a number of different ways to determine a utility’s avoided cost.
Question: What are RECs?
Answer: Renewable Energy Credit
General jurisdiction questions:
Question: Can a Community Solar Group organize and make solar energy for themselves?
Answer: In most cases, regulatory rules and/or modifications to state laws will be needed to enable community solar programs. However, “Community Solar” is a broad category and what is needed (be it regulatory or legislative) will depend on the type of community solar program you have in mind. Under one type of program, community participants receive credits for the solar energy production that effectively lowers their electric bills. Under another type of community solar programs, the solar output may be sold to the utility at a wholesale rate and today’s discussion of jurisdiction would apply here.
keywords: community solar
Question: Is this applicable to government-owned utilities as well as investor-owned?
Answer: Publicly-owned utilities generally operate under different rules, and have substantially more freedom.
Question: Is there any authority to support the NREL suggestion that a state may set a price for a REC which is equal to the difference in cost between the avoided cost and a set amount that recognizes the cost of generation and an amount of profit, regardless of what any market price of a REC might actually be.
Answer: We are not aware of any such authority.
Question: Please explain more about the RECs and the CA situation.
Answer: States may determine what happens to the RECs from QF power and whether RECs are transferred to utilities as part of an avoided cost sale.
PURPA questions:
Question: What kind of changes in law would be required to take advantage of the 20 MW PURPA exemption?
Answer: For a further explanation, please refer to the NREL Paper.
Question: Under PURPA, if QF pricing cannot be technology specific then on what legal basis, are advocates seeking technology-specific FIT rates?”
Answer: This, of course, is an evolving area of understanding…
FERC questions:
Question: Are the FERC wholesale market sale parameters written down somewhere I can read?
Answer: http://www.ferc.gov/industries/electric/gen-info/mbr.asp
Question: What would need to happen with FERC so states could require a simple FIT? Could they establish a new rule to open the door? Challenged in court?
Answer: FERC could clarify its precedent and allow states to set feed-in tariff prices for QFs that exceed avoided cost pursuant to state law mandate. This could be challenged in court.
Question: Are tax incentives such as SBC/PBF funds viewed by FERC as out of its jurisdiction?
Answer: Yes
Question: Does the Google Decision from FERC license Google to sell wholesale to their own uses?
Answer: FERC’s market-based rate authority provides sellers with authorization to sell power to wholesale purchasers. It does not grant sellers authority to sell power to retail users of electricity. Retail sales are regulated by the states.
Question: Can you discuss in more detail your statement that states can set prices or create feed in tariffs for government or publicly-owned utilities (you mentioned Gainesville and SMUD in the discussion).
Answer: Because contracts with government wholesale purchasers are not subject to FERC’s Federal Power Act jurisdiction, a state, for example California, could compel a municipal utility, for example the Sacramento Municipal Utility District, to buy power at specific prices without regard to potential FERC preemption.
Question: Are public schools, universities and libraries considered government entities for purposes of a state setting wholesale prices?
Answer: No, these types of entities are considered retail customers, and don’t play a role in setting wholesale electricity prices.
Vermont FiT questions:
Questions: How was Vermont’s feed in tariff structured to avoid FERC preemption?
Answer: There did not appear to be any preemption concerns raised during Vermont’s feed-in tariff implementation.
Question: How did Vermont structure its feed-in tariffs?
Answer: Preemption concerns do not appear to have been raised during implementation of Vermont’s feed-in tariff program.
Question: It seems to me that the Vermont scheme evades FERC by having an (unregulated) public agency BUY the power from the developer, and the same (unregulated) public agency make the sale to the utilities, thereby “washing” the transaction through the public agency exemption to FPA. Is that reasonably accurate?
Answer: That is the structure of the transaction. Whether this creates a public agency exemption to PURPA may be an open question.
Other questions:
Question: Can you give an example of how a solar contractor or developer would step by step create a wholesale project and proceed to market from a business model approach? what are the economics and barriers?
Answer: This of course varies by location. Each utility, as guided by the rules and regulations of the jurisdiction, has its own process for acquiring wholesale energy resources. Check local listings.
Question: Under the “voluntary or utility proposed” option, what happens when, say, industrial customers complain that the purchase rate is not just and reasonable? Answer: Utility commissions and municipal utility governing boards generally take the reasonableness of wholesale power costs into consideration when determining whether to enter or approve wholesale contracts.
The discussion was very helpful.
I had a follow-up question to Kerwin Olson’s (who is also a Citizen Action Coalition staffer).
He asked about whether public schools, universities, museums etc would be exempt from FERC jurisdiction. What I wanted to ask is this: Are government entities exempt as both sellers and buyers of renewable power in the context of feed-in tariffs? In other words, can a state mandate a public utility to buy power from government entities by means of a feed-in tariff without worrying about jurisdictional issues?
Thanks.
Thanks for your question Grant. No, public institutions that buy power from an investor-owned utility are not exempt. The jurisdictional exemption applies to power sales from publicly-owned utilities, e.g. rural cooperatives and municipal utilities such as Sacramento Municipal Utility District or Gainesville Regional Utility.
I have a question about a statement that I might not have heard correctly. It relates to how a solar lease (like is offered in a few states by SolarCity) might be viewed as a sale for purposes of classifying it like a PPA because the power is consumed? WOuld this assumption mean that if a company owns the solar equipment but leases the equipment to the landowner, that this arrangement would be seen as a sale of electricity? HOpe this question makes sense. Thanks.
Kurt Reinhold
Madison, Wisconsin