by Melissa Dorn

The Federal Energy Regulatory Commission (FERC) ruled in September that Idaho Power Company’s (Idaho Power) proposed curtailment policy for purchases from qualifying facilities (QF) violates the Public Utility Regulatory Policies Act of 1978 (PURPA) because it allows the utility to curtail its wind power purchases under previously negotiated power purchase agreements when demand is low.

The Idaho Public Utilities Commission (PUC) had directed Idaho Power to lodge with the PUC a new curtailment policy allowing Idaho Power to halt purchases from QFs that it was otherwise contractually obligated to make when demand for power was low, such as during off-peak periods.  The state proceeding is ongoing.  In response to the filed proposal, Idaho Wind Partners 1, LLC (Idaho Wind) petitioned FERC for an order declaring the new policy to violate section 210 of PURPA.  Certain FERC regulations that implement PURPA require electric utilities to purchase energy and capacity made available to the utility from QFs.

While there are allowances in PURPA for curtailment under certain operational circumstances that cause purchases from QFs to result in higher costs, FERC’s determination turned on the interpretation of when the exception in § 304(f) of the Commission’s PURPA regulations applies.  Idaho Power argued that § 304(f) applied to QF contracts generally — fixed avoided-cost contract and those whose avoided-cost rate is determined at the time of delivery — thus it possessed the authority to curtail unilaterally QF purchases under any QF power purchase agreement. To the contrary, Idaho Wind argued that § 304(f) does not apply to fixed avoided-cost contracts, pursuant to which the parties had already accounted for variability and operational challenges.  Consequently, Idaho Power should not be able unilaterally to curtail a fixed avoided-cost purchase based on economic or operational circumstances.

In granting Idaho Wind’s petition, FERC instructed that the purpose of § 304(f) was to preserve, not override, contractual or other legally enforceable obligations that a utility incurs to purchase from a QF.  Therefore, the PUC could not authorize Idaho Power to curtail unilaterally its QF purchases.

Idaho Power has announced its intention to appeal FERC’s order rejecting the proposed new curtailment policy.