FERC Addresses Right of Solar Energy Qualified Facilities to Sell Power to Electric Utilities

In a December 15 opinion, the Federal Energy Regulatory Commission (FERC) upheld the right of small power producers such as solar power facilities to sell power to their local utilities under the requirements of the Public Utilities Regulatory Policies Act of 1978 (PURPA).  In a Declaratory Opinion, FERC ruled that a utility cannot require that a facilities study or interconnection agreement be obtained before the utility is required to purchase the power from the small power facility under a legally enforceable obligation. 

FERC regulations require that a utility purchase any energy and capacity made available by a Qualified Facility (QF).  A QF has the unconditional right to choose whether to sell its power “as available” or pursuant to a legally enforceable obligation at a forecasted avoided cost rate determined, at the QF’s option, either at the time of delivery or at the time the obligation is incurred.  FERC has previously ruled that a utility cannot bypass its obligation to purchase energy from a QF by requiring a signed power purchase agreement (PPA) before it will purchase the energy.  The establishment of the utility’s legally enforceable obligation to purchase the energy turns on the QF’s commitment, not the utility’s actions.  By committing itself to sell all or part of its energy to the utility, a QF also commits the utility to buy the energy from the QF.

Because a utility can delay a facilities study and the tendering of an executable interconnection agreement, it is impermissible for the utility to make such items a precondition to its obligation to purchase energy from a QF.

FERC’s decision can be found here FERC decision.  For more information on becoming a QF or selling power from a solar facility, contact Steve O’Day.

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