Docket No. EL21-64-000
We agree with the determination of the Commission not to bring an enforcement action. We concur to express our concern that the Alabama Public Service Commission may be violating the Commission’s PURPA regulations, undermining the statute’s purpose of encouraging Qualifying Facilities.[1]
Petitioners have presented a strong case that the Alabama Commission failed to adhere to the regulations set forth in FERC Order No. 69, violating the requirements of PURPA Section 210. Section 210(c) of PURPA requires that the rates for utility sales to qualifying facilities (QFs) be “just and reasonable and in the public interest” and “not discriminate” against QFs.[2] Order No. 69 implements these requirements. In Order No. 69, the Commission recognized that partial requirements QFs are “likely to have the same characteristics as the load of other nongenerating customers of the utility,” in which case “the appropriate rate for sales to such a facility is the rate that would be charged to a comparable customer.”[3] To charge a different rate consistent with Order No. 69, the rate must (1) be “based on accurate data”; (2) be established using “consistent system wide costing principles”; and (3) “apply to the utility’s other customers with similar load or other cost-related characteristics.”[4] While a demonstration that the Alabama Commission had violated any single prong of these rules in establishing Rate Rider RBG Tariff would be enough to show that it failed to adhere to Order No. 69, Petitioners present arguments that none of these prongs may have been met.
Most significantly, Petitioners argue that Alabama Power did not apply the Rate Rider RBG, or back-up service charge, to its “other customers with similar load or other cost-related characteristics.”[5] The Alabama Commission and Alabama Power justify the charge as non-discriminatory because a QF customer, as compared to a customer without on-site generation, may have lower volumetric usage but comparable peak usage that requires Alabama Power to have an adequate power supply ready for peak times.[6] However, neither sufficiently demonstrates that QF customer load profiles are in fact different from those of customers without on-site generation (who are not required to pay the Rate Rider RBG charge).[7] If QF customer usage patterns are comparable to those of customers without on-site generation who reduce volumetric consumption through other means,[8] the current application of the Rate Rider RBG charge may be discriminatory.
Petitioners also raise significant questions regarding the accuracy of the data used in formulating Rate Rider RBG, and whether it was based on a method that complies with cost of service principles. Petitioners explain that Alabama Power justified its charges using a methodology that combined apples and oranges.[9] Alabama Power developed and assessed the Rate Rider RBG for QF customers with on-site generation based on a difference in customer usage profiles before and after the installation of a theoretical solar array. Specifically, Alabama Power assessed customers’ usage profiles prior to installing solar arrays by looking at actual customer usage data, but assessed customer usage after installation by looking to a generic projection of solar production rather than metered usage data.[10] Alabama Power contends that Order No. 69 does not require a utility to collect actual metered usage from QFs to design a back-up charge, pointing out that the Order provides states with “great latitude in determining the manner of implementation of the Commission’s rules.”[11] But while Order No. 69 provides flexibility for a variety of approaches given the different regulatory contexts across states and non-regulated utilities, it makes clear that “the manner chosen” must be “reasonably designed to implement” PURPA’s requirement that avoided cost rates be just and reasonable and non-discriminatory.[12] No reasonable explanation has been offered by Alabama Power or the Alabama Commission for the lack of consistency in measurement techniques before and after solar installation by a customer.[13]
For these reasons, we concur.
[1] See 16 U.S.C. § 824a-3(a) (authorizing the Commission to promulgate “such rules as it determines necessary to encourage [qualifying facilities]”); American Paper Institute v. American Electric Power Service Corp., 461 U.S. 402, 404 (1983) (“Section 210 of the Public Utility Regulatory Policies Act of 1978 (PURPA) was designed to encourage the development of cogeneration and small power production facilities and to reduce the demand for fossil fuels.”).
[2] 16 U.S.C. § 824a–3(c).
[3] Small Power Production and Cogeneration Facilities; Regulations Implementing Section 210 of the Public Utility Regulatory Policies Act of 1978, Order No. 69, FERC Stats. & Regs. ¶ 30,128, at 30,888, order on reh’g sub nom. Order No. 69-A, FERC Stats. & Regs. ¶ 30,160 (1980), aff’d in part & vacated in part sub nom. Am. Elec. Power Serv. Corp. v. FERC, 675 F.2d 1226 (D.C. Cir. 1982), rev’d in part sub nom. Am. Paper Inst. v. Am. Elec. Power Serv. Corp., 461 U.S. 402 (1983).
[4] 18 C.F.R. § 292.305(a)(2).
[5] Petition at 24-25.
[6] See Alabama Commission Protest and Answer at 14; Motion to Intervene and Protest of Alabama Power Co. at 11-12, 15.
[7] See Petition at 24.
[8] Id.
[9] Id. at 11-12, 20.
[10] Alabama Commission Protest at 6-7; see Petition at 20.
[11] Motion to Intervene and Protest of Alabama Power Co. at 14 (quoting Order No. 69, FERC Stats. & Regs. ¶ 30,128 at 30,892).
[12] Order No. 69, FERC Stats. & Regs. ¶ 30,128 at 30,892.
[13] The Alabama Commission appears to contend that the projection was necessary to isolate the amount of production from the solar array (given that the meter data readily available to Alabama Power measured only Alabama Power’s service to customers and not the amount self-served via solar production). Alabama Commission Protest at 15-16. But the cost of serving customers depended not on solar production but rather on the amount of load served by Alabama Power. Thus, Alabama Power’s own metered usage data was the relevant measurement point both before and after solar installation.