Commissioner Richard Glick
September 1, 2020
Docket Nos. QF17-454-004, QF17-454-005
I dissent from today’s order denying Broadview Solar LLC’s (Broadview) application for Qualifying Facility (QF) status under the Public Utility Regulatory Policies Act of 1978 (PURPA).[1] Under any fair reading of the statute or Commission precedent, Broadview’s power production capacity is 80 MW, making it eligible for QF status. The Commission’s contrary determination will make QF status turn on the capacity of any one component of the facility, rather than the actual power production capacity of the facility itself. That conclusion finds no support in the statute, our precedent, or common sense.
Broadview’s facility is a hybrid resource that is made up of, among other things, a 160 MW solar array and a 50 MW battery storage resource.[2] Critically, however, the inverters that convert the DC electricity generated by the solar panels into AC electricity that can be delivered to the grid have a net capacity of only 80 MW.[3] That means that Broadview’s facility is physically incapable of producing more than 80 MW of electricity for any subsequent use.[4] Instead of increasing the power production capacity of Broadview’s facility, the large solar array enhances its capacity factor, meaning that the facility will, all else equal, generate a higher fraction of its total 80 MW capacity than it would with a smaller array. That makes the system more efficient—a result I would have thought the Commission would be eager to encourage. In addition, Broadview’s 50 MW battery system cannot “produce” power in any conventional sense of that term.[5] Instead, the electricity discharged by the battery is produced exclusively by the solar array. As with the solar array, the battery increases the capacity factor of the facility, not the facility’s actual power production capacity. The bottom line is that while Broadview’s configuration may allow it to more predictably produce electricity, that configuration does not give it a power production capacity greater than 80 MW.
And that is what matters under PURPA. The statute provides that QF status is available to a “small power production facility,” which is defined as, among other things, a “facility” that produces power from one of a series of enumerated resource types and has a “power production capacity” of not more than 80 MW.[6] It is hard for me to understand how the term “facility” could mean anything other than the power plant as a whole. After all, as used in this context, the term “facility” typically refers to an entire building or structure, not its component parts.[7] For that reason, when someone uses the terms “transportation facilities” or “educational facilities”[8] no one would think those terms refer to the engine of a train or the books in a school, even though they are utterly essential to serving those facilities’ respective purposes. The same goes when it comes to defining the power production capacity of a small power production facility: the term “facility” indicates that QF status should turn on the actual power production capacity of the resource as a whole, not the capacity of its largest individual component part.[9]
Commission precedent is consistent with that common-sense understanding. In order after order, the Commission has conducted a straightforward examination of the power production capacity of the facility as a whole, rather than nitpicking the capability of each component. That approach makes sense for several reasons, including, as the Commission explained in Occidental Geothermal, Inc., the commercial reality that “it is not uncommon for smaller facilities to find it most economic to employ commercially available components some of which have individual capabilities significantly exceeding the overall facility capabilities.”[10] Looking to the size of each component would upset that otherwise straightforward inquiry and cause the Commission to insert itself unnecessarily into commercial decisions that are better made by project developers than federal regulators. Perhaps that is why the Commission has, until today, consistently taken a pragmatic approach to defining the power production capacity[11]—one that is consistent with Congress’s directive that the Commission should “encourage” QF development.[12] Those interpretations have been settled policy for decades at this point.
Nevertheless, in a break from precedent, today’s order denies Broadview’s application for QF status. The Commission concludes that Broadview’s power production capacity exceeds the 80-MW ceiling for qualifying as a QF based entirely on the fact that its solar array is rated at 160 MW. But the Commission makes no effort to explain why it is appropriate to determine a qualifying facility’s power production capacity based on that facility’s component parts rather than looking to the power production capacity of the facility as a whole. As noted above, Broadview’s inverters prevent the facility from ever providing more than 80 MW of electricity to the grid and focusing on that figure—i.e., the potential output of the facility as a whole, not its sub-components—is far more consistent with the PURPA’s text, purpose, and legislative history.[13] The Commission’s failure to wrestle with those arguments is arbitrary and capricious.
Making matters worse, in order to reach its preferred outcome, the Commission throws overboard Occidental, a 40-year old precedent.[14] Occidental focused the QF determination on a facility’s “send out” capacity, expressly rejecting the component-by-component approach adopted in today’s order.[15] The Commission justifies its abandonment of that precedent by asserting that focusing on “send out” capacity might allow a facility whose power production capacity exceeds 80 MW to qualify as a QF.[16]
But that just takes us back to square one. The problem that purportedly justifies jettisoning Occidental arises only as a result of the Commission’s misguided component-by-component approach to determining power production capacity. If the Commission were to instead continue to look to the power production capacity of a facility as a whole, as advocated for above, its stated concerns about Occidental would evaporate. Finally, on a broader level, I cannot help but express my concern that so casually upending settled precedent creates unnecessary uncertainty, making it hard for developers to know which precedents they can count on and which they cannot.
For these reasons, I respectfully dissent.
[1] Pub. L. No. 95-617, 92 Stat. 3117 (1978).
[2] Broadview Solar, LLC, 172 FERC ¶ 61,194, at P 2 (2020) (Order).
[3] Broadview states that the 20 inverters would be capable of converting only 82.5 MW of capacity from DC to AC power, with a maximum net capacity of 80 MW after accounting for on-site parasitic load of 2.5 MW. Broadview October 17, 2019 Answer at 4 (“[P]ower generated by the Solar PV Arrays or discharged from the [battery energy storage system] must be converted by inverters from dc to ac power before being sent out for injection into the ac transmission grid.”).
[4] Lending further support to that conclusion, the interconnection studies executed by NorthWestern Corporation, the interconnecting utility, identify Broadview’s summer and winter output as 80 MW, and the interconnection agreement, provides that the total size of the “Project will be 80 MW based on the max output of the inverters.” Id. at 4.
[5] Although today’s order does not address the battery storage resource because it disqualifies Broadview on the basis of its solar array alone, see Order, 172 FERC ¶ 61,194 at n.57, I must address the battery as part of my reasoning for why Broadview qualifies as a QF.
[6] 16 U.S.C. § 796(17).
[7] See, e.g., facility, Merriam Webster Dictionary, https://www.merriam-webster.com/dictionary/facility (last visited Sept. 1, 2020) (defining a facility, for these purposes, as “something (such as a hospital) that is built, installed, or established to serve a particular purpose”).
[8] Both are listed as examples of a facility. See facility, Dictionary.com, https://www.dictionary.com/browse/facility (last visited Sept. 1, 2020).
[9] And there is every reason to believe that is what Congress had in mind. The conference report accompanying PURPA describes a small power production facility by referring to, for example, “solar electric systems.” H.R. Rep. No. 95-1750, at 89 (1978). As with facility, “system” would seem to contemplate the power plant as a whole, not just its photovoltaic panels. That understanding is also consistent with contemporary terminology: The North American Electric Reliability Corporation’s definition of bulk power system equipment describes solar “power producing resources” as, together, the photovoltaic panels and the associated inverters. See N. Am. Elec. Reliability Corp., Bulk Electric System Definition Reference Document at 18-20 (Aug. 2018), available at www.nerc.com/pa/Stand/2018%20Bulk%20Electric% 20System%20Definition%20Reference/BES_Reference_Doc_08_08_2018_Clean_for_Posting.pdf.
[10] 17 FERC ¶ 61,231, 61,445 (1981) (expressly rejecting the idea that a facility’s “power production capacity” should be “determined by the nominal rating of even a key component of the facility”).
[11] See, e.g., American Ref-Fuel Co., 54 FERC ¶ 61,287, 61,816-17 (1991) (finding that a waste-to-energy facility’s power production capacity was 80 MW because it had a control system that would restore net generation to an average of no more than 80 MW over any 60-minute span measured at any point in time, even though the installed nameplate capacity of the facility exceeded 80 MW and the minute-to-minute output might vary with the energy content of the waste being burned); Malacha Power Project, Inc., 41 FERC ¶ 61,350 (1987) (finding that “electric power production capacity of the facility is the capacity that the electric power production equipment delivers to the point of interconnection with the purchasing electric utility’s transmission system”); Occidental, 17 FERC ¶ 61,231 at 61,444 (looking to the power production capacity of a facility as a whole rather than any single component).
[12] 16 U.S.C. § 824a–3(a).
[13] See supra PP 3-4.
[14] Order, 172 FERC ¶ 61,194 at PP 22-23.
[15] Supra P 4 & n.10.
[16] Order, 172 FERC ¶ 61,194 at P 23.