In light of recent litigation challenging its implementation of the Public Utility Regulatory Policies Act (PURPA), the California Public Utilities Commission (CPUC) has opened a new rulemaking proceeding (R.18-07-017) to examine and revise California’s standard offer PURPA contracts.
For the past 40 years, PURPA has provided a federal mandate for investor-owned utilities to purchase electricity at their avoided cost from qualifying facilities (QFs), independently-owned cogeneration (combined heat and power) and renewable energy generation facilities that meet established standards for location, ownership and efficiency. In 2017 a QF (Winding Creek Solar, LLC) successfully challenged a California renewable feed-in tariff program for failure to comply with PURPA’s contracting and avoided cost requirements. That decision is currently under appeal in the Ninth Circuit, but on August 1, 2018 the CPUC issued Rulemaking 18-07-017 to address the deficiencies identified in the lower court’s decision.
The main issues to be addressed in this PURPA rulemaking are:
1. What is the appropriate avoided cost for energy where a QF elects to be paid a price determined at the time of contract execution?
2. What is the appropriate avoided cost for capacity where a QF elects to be paid a price determined at the time of contract execution?
3. What is the appropriate avoided cost for energy where a QF elects to be paid a price determined at the time of delivery?
4. What is the appropriate avoided cost for capacity where a QF elects to be paid a price determined at the time of contract delivery?
5. What is the appropriate avoided cost calculated at the time of delivery for as-available energy sold by a QF to the utility without a contract?
6. Does PURPA require that any of the non-price terms of the CPUC’s current Standard Contract for QFs 20 MW or Less be modified before they are incorporated into the New QF Standard Offer Contract?
7. Are there any other issues that the CPUC must address to adopt a New QF Standard Offer Contract that complies with PURPA?
The rulemaking includes a Staff Pricing Proposal and seeks comments on whether it meets PURPA requirements. Opening comments from interested parties are due August 31, 2018.
Ellison Schneider Harris & Donlan attorneys have decades of experience working with clients on PURPA issues, and are monitoring this proceeding. For more information on the new PURPA rulemaking, PURPA, or contracting for energy generated by QF facilities, contact attorneys Andy Brown, Jed Gibson, or Lynn Haug at 916-447-2166.