Dominion’s Proposal to Terminate Contracts Presents Major Implications for North Carolina’s QFs

On October 31, 2014, Dominion North Carolina Power (“Dominion”) filed an application requesting a Federal Energy Regulatory Commission (“FERC”) determination to not require Dominion to enter into new contracts to purchase electric energy and capacity from nine North Carolina qualifying facilities (“QFs”).

Collectively, the nine QFs filed a complaint at the NC Utilities Commission to assert that Dominion incurred a legally enforceable obligation (“LEO”) to purchase the energy and capacity from each QF at the fixed, long-term avoided costs rates approved in the Commission’s last biennial proceeding prior to Dominion’s filing at FERC. Dominion and the QFs will address separately in their briefs whether each QF has established an LEO and what the date of the LEO is. The NC Sustainable Energy Association (“NCSEA”) believes the debate over the LEO raises a larger legal/policy issue that has significant implications for North Carolina’s QFs and the implementation of PURPA by this Commission, namely: Does an LEO arise when a QF commits to sell its output or when a particular department within the relevant utility actually receives notice of the QF’s commitment to sell its output?

The Commission’s Phase 1 order contained the following language in Ordering Paragraph 17,

That [Dominion’s] proposal for a simple form to be used to determine the date of the commitment of a QF, along with how it should be implemented shall be approved with the details and implementation to be considered in the next phase of this proceeding and the parties are directed to address it in their filings.

Order Setting Avoided Cost Input Parameters, p. 67, Commission Docket No. E-100, Sub 140 (31 December 2014).

In its FERC Application, Dominion argues that the nine QFs have nondiscriminatory access to the PJM markets and are not impeded by an “interconnection issues” from participating in the PJM markets. NCSEA submits that an inefficient interconnection process – regardless of cause – can constitute a transmission constraint because it can cause a particular QF to have neither physical nor financial access to markets. NCSEA believes the “compromised” efficiency of Dominion’s processing of interconnection requests, including Dominion’s undisputed “extended interconnection study timeframes,” presents an effective barrier to nondiscriminatory access to any market that might otherwise exist and Dominion’s Application should be denied.

FERC has not ruled on the Application; however, NCSEA believes that FERC’s approval could open the door for Dominion to file future applications to terminate its purchase obligation with potentially-affected QFs.

To read NCSEA’s comments in Commission Docket No. E-22, Sub 518, click here.

To read NCSEA’s comments in FERC Docket No. QM15-1-00, click here.