On October 29, 2018, the Oregon Public Utility Commission (Oregon Commission) issued modifications to its rules governing a utility’s purchase of power from qualifying facilities (QFs) under Oregon’s implementation of the Public Utility Regulatory Policies Act of 1978 (PURPA). These rules were codified in the Oregon Commission’s rules after they were published by the Oregon Secretary of State on November 2, 2018. The final rules are the culmination of a three-year old Petition for Rulemaking filed by Obsidian Renewables, LLC in November 2015.
Why a Rulemaking?
Obsidian Renewables asked the Oregon Commission to initiate the rulemaking to clarify and modify a number of aspects of the Oregon Commission’s implementation of PURPA, particularly regarding the terms and conditions of PURPA contracts and rates. The Oregon Commission previously had used an adjudicatory (case contested case) procedure to implement PURPA contract terms and conditions. This procedure looked more like a court proceeding and resulted in commission orders (similar to court orders). In its Petition for Rulemaking, Obsidian Renewables pointed out that the Oregon Commission only has the authority to establish “by rule” the terms and conditions of PURPA contracts. Thus, Obsidian Renewables wanted the Oregon Commission to implement PURPA through a rulemaking (more like a legislative process), instead of the investigative process. A rulemaking results in codified rules that are easier to access and understand than the orders that result from its adjudicative process.
The Oregon Commission granted the rulemaking petition, but kept this rulemaking narrow. It essentially decided to codify the orders it had issued in prior investigations, and declined to amend the rules beyond what it decided in its previous orders. Another broader rulemaking proceeding is expected that will further explore new rules or changes to the rules.
Notable Rule Changes
Despite the limited scope of the new rules, there were some particular things to note in the final rules include changes to the Oregon Commission’s process for utilities to update their avoided costs prices:
- Post-Integrated Resource Plan (IRP) Update: A utility must file an avoided cost price update 30 days after its IRP is acknowledged, and those prices will become effective 30 days after filing.
- Annual Update: A utility must file an avoided cost price update annually on May 1 each year, and those prices will become effective within 60 days of filing (they may become effective earlier than 60 days).
- Out-of-Cycle Update: A utility may (but is not required to) file an avoided cost price update upon a “significant change in circumstances,” such as after acquisition of new resources or completion of a competitive bidding process, and those prices will become effective within 90 days of filing (they may become effective earlier than 90 days).
As can be seen, there is some inconsistency regarding the timing of when an avoided cost price update will become effective. The annual and out-of-cycle updates place a deadline by which the prices will become effective (within 60 or 90 days), but do not provide any certainty that the prices won’t become effective immediately. This is especially a concern when the utilities request early or immediate relief. On the other hand, a post-IRP update will become effective 30 days after the filing. Notably, the Commission can waive these rules and has done so in the past, so these rules should be considered more like “guidelines” than rules.
Other important changes or clarifications included:
- Avoided Cost Definition: Maintained the current definition, which reflects the Oregon Commission’s “long-standing policy to include the interconnection costs associated with a proxy resource in the calculation of avoided cost prices”.
- Firm Energy: Clarified “that in Oregon, intermittent resources have always been afforded the full opportunity to participate in our PURPA regime, and we have never questioned their firm resource status.”
- Requirement to Offer Renewable Avoided Cost Rates: Continued to “require that electric companies complying with Oregon’s renewable portfolio standard (RPS) offer renewable avoided cost rates.”
- Jurisdiction. Declined “ to remove the rule language speaking to jurisdictional issues”.
- Resource type. Continue to allow “electric companies to set avoided cost rates according to specific resource performance profiles”, but not requiring “that a specific rate be established for each type of facility” and not making any “changes to the current standards used to derive capacity contribution values.”
- Commercial On-line Date. Require “a power purchase agreement (PPA) to specify a commercial on-line date that is either anytime within three years of the date of the agreement execution or anytime later than three years after the agreement execution if reasonable and agreed to by the electric company for standard contracts.”
- Large QF Negotiation Guidelines. Declined to include all large QF guidelines in the rules.
Sanger Law represented the Renewable Energy Coalition in the rulemaking, which is an organization that advocates for reasonable PURPA policies on behalf of renewable QFs.
The Commission’s order can be read Here.
Disclaimer
These materials are intended to as informational and are not to be considered legal advice or legal opinion, nor do they create a lawyer-client relationship. Information included about previous case results does not assure a similar future result.
