Federal Energy Regulatory Commission

Friday,

June 29, 2007

Part VI

Department of

Energy

Federal Energy Regulatory Commission

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18 CFR Part 292

New PURPA Section 210(m) Regulations

Applicable to Small Power Production

and Cogeneration Facilities; Final Rule

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Order on Rehearing and Clarification

DEPARTMENT OF ENERGY

I. Introduction

Federal Energy Regulatory

Commission

18 CFR Part 292

[Docket No. RM06–10–001; Order No. 688–

A]

New PURPA Section 210(m)

Regulations Applicable to Small Power

Production and Cogeneration Facilities

Issued June 22, 2007.

AGENCY: Federal Energy Regulatory

Commission, DOE.

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ACTION: Final rule; order on rehearing.

SUMMARY: In this order on rehearing, the

Federal Energy Regulatory Commission

(Commission) denies rehearing on most

major issues decided in Order No. 688,

which amended its regulations

governing small power production and

cogeneration in response to section 1253

of the Energy Policy Act of 2005 (EPAct

2005), which added section 210(m) to

the Public Utility Regulatory Policies

Act of 1978 (PURPA). The Commission

also clarifies certain aspects of the rule

and adopts some additional filing

requirements.

DATES: Effective Date: The revisions to

our regulations in this order on

rehearing will become effective July 30,

2007.

FOR FURTHER INFORMATION CONTACT:

Susan G. Pollonais (Technical

Information), Office of Energy Markets

and Reliability, Federal Energy

Regulatory Commission, 888 First

Street, NE., Washington, DC 20426,

(202) 502–6011.

Marka Shaw (Technical Information),

Office of Energy Markets and Reliability,

Federal Energy Regulatory Commission,

888 First Street, NE., Washington, DC

20426, (202) 502–8641.

Samuel Higginbottom (Legal

Information), Office of the General

Counsel, Federal Energy Regulatory

Commission, 888 First Street, NE.,

Washington, DC 20426, (202) 502–8561.

Mason Emnett (Legal Information),

Office of the General Counsel, Federal

Energy Regulatory Commission, 888

First Street, NE., Washington, DC 20426,

(202) 502–6540.

Eric Winterbauer (Legal Information),

Office of the General Counsel, Federal

Energy Regulatory Commission, 888

First Street, NE., Washington, DC 20426,

(202) 502–8329.

SUPPLEMENTARY INFORMATION: Before

Commissioners: Joseph T. Kelliher,

Chairman; Suedeen G. Kelly, Marc

Spitzer, Philip D. Moeller, and Jon

Wellinghoff.

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1. On October 20, 2006, the Federal

Energy Regulatory Commission

(Commission) issued Order No. 688,1 in

which the Commission revised its

regulations governing the purchase

requirement for electric energy

produced by qualifying cogeneration

and small power production facilities

(QFs). This rulemaking proceeding was

initiated to implement section 210(m) of

the Public Utility Regulatory Policies

Act of 1978 (PURPA),2 which mandates

termination of the requirement that an

electric utility enter into a new contract

or obligation to purchase electric energy

from QFs 3 if the Commission finds that

the QF has nondiscriminatory access to

one of three categories of markets

defined in section 210(m)(1)(A), (B), or

(C) of PURPA, as amended.

2. As relevant here, section 210(m)

provides for the following:

(i) Termination of the requirement that an

electric utility enter into a new contract or

obligation to purchase electric energy from a

QF after certain specified findings are made

by the Commission;

(ii) Reinstatement of the purchase

requirement upon a showing that the

conditions for terminating the requirement

are no longer met;

(iii) Termination of the requirement that an

electric utility enter into new contracts to sell

electric energy to QFs after certain specified

findings are made by the Commission;

(iv) Reinstatement of the sale requirement

upon a showing that the conditions for

terminating the requirement are no longer

met; and,

(v) Preservation of existing contracts and

obligations to purchase electric energy or

capacity from, or to sell electric energy or

capacity to, a QF.

The Final Rule amended Part 292 of

the Commission’s regulations,

pertaining to electric utilities’ obligation

to purchase electric energy from or sell

electric energy to a QF, to address these

provisions of section 210(m) and also to

provide a process for applying for the

reinstatement of the requirements to

purchase electric energy from or to sell

electric energy to QFs upon a showing

that the conditions for the removal of

those requirements are no longer met.

1 New PURPA Section 210(m) Regulations

Applicable to Small Power Production and

Cogeneration Facilities, Order No. 688, 71 FR 64342

(Nov. 1, 2006), FERC Stats. & Regs. ¶ 31,233 (2006)

(Final Rule).

2 Section 210(m) was added to PURPA by section

1253 of the Energy Policy Act of 2005 (EPAct 2005).

See Pub. L. 109–58, 1253, 119 Stat. 594, 967 (2005).

3 The requirement that an electric utility enter

into a new contract or obligation to purchase

electric energy from QFs is referred to herein as

either the mandatory purchase obligation or, more

simply, the purchase requirement.

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3. New § 292.309 of the Commission’s

regulations describes the findings that

the Commission must make to justify

relieving an electric utility’s obligation

to enter into new QF purchase contracts.

If the Commission finds that the QF has

nondiscriminatory access to one of three

types of wholesale markets described in

subparagraphs (A), (B), and (C) of

section 210(m)(1), the requirement that

the electric utility enter into new

contracts or obligations is terminated. In

the Final Rule, the Commission

concluded that the four existing ‘‘Day 2’’

markets 4 satisfy the requirements of

subparagraph (A). The Commission

found that the ‘‘Day 1’’ markets 5 satisfy

some, but not all, of the requirements of

subparagraph (B). Finally, the

Commission found that the markets

operated by the Electric Reliability

Council of Texas (ERCOT) satisfy the

requirements of subparagraph (C). All of

these markets are administered by

regional transmission organizations

(RTOs) or independent system operators

(ISOs).

4. With regard to analyzing whether a

QF has nondiscriminatory access to one

of these markets, the Commission

adopted three rebuttable presumptions.

First, the Final Rule concluded that the

existence of an open access

transmission tariff (OATT), or a

reciprocity tariff filed by a non-public

utility pursuant to the Commission’s

open access regulations,6 justified a

rebuttable presumption that QFs have

nondiscriminatory access to the markets

in the transmission provider’s service

territory. Second, the Commission

adopted a rebuttable presumption that

QFs located within one of the four

existing ‘‘Day 2’’ markets also have

nondiscriminatory access to those

markets. Third, the Commission

concluded that QFs with a net capacity

no greater than 20 MW may not have

nondiscriminatory access to any market,

notwithstanding the availability of

service under an OATT or their location

within a ‘‘Day 2’’ market. The

Commission therefore adopted a

rebuttable presumption that such small

4 The four existing ‘‘Day 2’’ markets are those

auction based day-ahead and real-time markets

operated by the Midwest Independent Transmission

System Operator Corp. (MISO), PJM

Interconnection, LLC (PJM), New York Independent

System Operator, Inc. (NYISO), and ISO New

England, Inc. (ISO–NE).

5 The existing ‘‘Day 1’’ markets are those real-time

markets operated by the California Independent

System Operator Corporation (CAISO) and the

Southwest Power Pool (SPP).

6 18 CFR 35.28(e). An OATT provides

interconnection as well as transmission services on

a nondiscriminatory basis.

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QFs do not have nondiscriminatory

access to any market.

5. Requests for rehearing and/or

clarification of these rulings, and the

procedure implementing them, were

received from the American Forest and

Paper Association (American Forest &

Paper) and California Cogeneration

Council (CCC), Central Vermont Public

Service Corporation (Central Vermont),

Cogeneration Association of California

and the Energy Producers and Users

Coalition (Cogeneration Association of

California), the Council of Industrial

Boiler Owners (CIBO), Deere &

Company (Deere), Edison Electric

Institute (EEI), Oklahoma Gas and

Electric Company (OG&E), jointly from

the Electricity Consumers Resource

Council (ELCON), the American Iron

and Steel Institute, the American

Chemistry Council, and the Council of

Industrial Boiler Owners (Industrial

Parties), National Rural Electric

Cooperative Association, (NRECA),

Occidental Chemical Corporation

(Occidental), PacifiCorp, and Public

Interest Organizations (PIOs). Southern

California Edison (SCE) and PJM

Interconnection, Inc. (PJM) filed

answers to the requests for rehearing.

ELCON and Cogeneration Association of

California filed answers those answers.7

6. As discussed below, the

Commission generally denies the

requests for rehearing of the Final Rule.

The Commission continues to believe

that the Final Rule appropriately

implements section 210(m) by

identifying what type of markets satisfy

the requirements of sections

210(m)(1)(A), (B), and (C) and the

criteria that will be used to determine

whether a QF has nondiscriminatory

access to one of those markets. We

therefore do not disturb the basic

implementation structure established in

that order. We do, however, grant

clarification regarding certain specific

matters. The Commission addresses

each of these issues in turn.

7 Rule 713(d) of the Commission’s Rules of

Practice and Procedure, 18 CFR 383.713(d),

provides that the Commission will not permit

answers to requests for rehearing. We will,

accordingly, reject SCE and PJM’s answers to the

requests for rehearing. Rule 213(a)(2) of the

Commission’s Rules of Practice and Procedure, 18

CFR 385.213(a)(2), prohibits an answer to an answer

unless otherwise ordered by the decisional

authority. We are not persuaded to accept the

answers of ELCON and Cogeneration Association of

California and will, therefore, reject them. The

alternative motions to reject of ELCON and

Cogeneration Association of California are rejected

as moot.

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II. Discussion

1. Section 210(m)(1)(A)

A. Three Types of Markets

9. Section 210(m)(1)(A) of PURPA

requires the Commission to terminate an

electric utility’s obligation to purchase

from a QF if the QF has

nondiscriminatory access to (i)

independently administered, auctionbased, day ahead and real time

wholesale markets for the sale of electric

energy; and (ii) wholesale markets for

long-term sales of capacity and electric

energy. In the Final Rule, the

Commission found that the four existing

‘‘Day 2’’ markets, MISO, PJM, ISO–NE

and NYISO, satisfy the first prong of

section 210(m)(1)(A) because the

markets administered by these RTO/

ISOs are, as required by the statute,

independently administered, auctionbased day ahead and real time

wholesale markets for electricity.9 The

Commission further found that the

existence of bilateral long-term contracts

for long-term sales of capacity and

energy in these markets satisfies the

second prong of section 210(m)(1)(A).

Since both of these requirements are

satisfied, the Commission concluded

that a showing of nondiscriminatory

access to any of these ‘‘Day 2’’ markets

would terminate the purchase

requirement.

7. Section 210(m)(1) identifies three

types of markets, nondiscriminatory

access to which will satisfy the findings

the Commission must make to terminate

an electric utility’s purchase

requirement. As the Commission

explained in the Final Rule, the

statutory language of sections

210(m)(1)(A), (B), and (C) requires us to

differentiate among distinct types of

markets when analyzing whether an

electric utility will be relieved of its

purchase obligation. The Commission

must terminate the mandatory purchase

obligation if we find that a QF has

nondiscriminatory access to:

(A) ‘‘independently administered, auctionbased day ahead and real time wholesale

markets for the sale of electric energy’’ and

‘‘wholesale markets for long-term sales of

capacity and electric energy’’;

(B) ‘‘transmission and interconnection

services that are provided by a Commissionapproved regional transmission entity and

administered pursuant to an open access

transmission tariff that affords

nondiscriminatory treatment to all

customers’’ and ‘‘competitive wholesale

markets that provide a meaningful

opportunity to sell capacity, including longterm and short-term sales, and electric

energy, including long-term, short-term and

real-time sales, to buyers other than the

utility to which the [QF] is interconnected’’; 8

or,

(C) ‘‘wholesale markets for the sale of

capacity and electric energy that are, at a

minimum, of comparable competitive quality

as markets described in subparagraphs (A)

and (B).’’

8. In the Final Rule, the Commission

considered the specific criteria set forth

in these statutory provisions and

concluded that certain markets in the

United States satisfied some or all of the

requirements of each. The Commission

rejected proposals to adopt a single

standard for relief, which in effect

would interpret sections 210(m)(1)(A),

(B), and (C) as collectively defining a

single type of market, access to which

would require termination of the

purchase requirement. The Commission

found that the most reasonable

interpretation of section 210(m)(1) is

that Congress, in separately describing

three different types of markets, was

requiring the Commission to

differentiate among each type of market

when determining whether to terminate

the purchase requirement.

8 In determining whether a meaningful

opportunity to sell exists, section 210(m)(1)(B)

directs the Commission to consider, among other

factors, evidence of transactions within the relevant

market.

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Requests for Rehearing

10. No petitioner challenges the

Commission’s determination that the

existing ‘‘Day 2’’ RTO/ISO markets

satisfy the requirements of the first

prong of section 210(m)(1)(A), i.e., that

they are independently administered,

auction-based day ahead and real time

wholesale electricity markets. Requests

for rehearing instead focus on the

second prong, regarding whether a

wholesale market for long-term sales of

capacity and electric energy also exists

in these regions. PIOs argue that the

mere existence of some bilateral longterm contracts does not demonstrate the

existence of a competitive wholesale

market for long-term sales or actual

‘‘meaningful opportunities’’ for QFs to

sell energy or capacity long-term to

multiple buyers. PIOs therefore contend

that the Commission erred in finding

that the ‘‘Day 2’’ markets satisfy the

requirements of section 210(m)(1)(A).

Cogeneration Association of California

agrees that the existence of a ‘‘Day 2’’

9 The Commission stated that any future

determinations of whether a new ‘‘Day 2’’ market

satisfies the requirements of section 210(m)(1)(A)

would be considered on a case-by-case basis, either

in response to an application for termination of the

mandatory purchase obligation or a petition for

declaratory order.

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market does not equate to a long-term

market, arguing that access to a longterm market is essential to provide the

assurance of long-term revenue

necessary to provide incentives for

construction of new resources.

11. American Forest & Paper and CCC

argue that there has never been a time

in the history of the power industry

when some bilateral contracts did not

exist. They contend that there is no

evidentiary basis that shows such

contracts are available to QFs on a

nondiscriminatory basis or that there is

a market for such contracts. They argue

that the word ‘‘market’’ presumes more

than an occasional, isolated transaction.

American Forest & Paper and CCC argue

that in the Final Rule the Commission

not only fails to explain why the

existence of bilateral contracts

constitutes a meaningful competitive

market, but also fails to establish any

standard for what constitutes a ‘‘long

term sale,’’ examine any of the bilateral

contracts it believes exist to determine

if they meet any such standard, or

consider whether bilateral contracts are

in fact available to QFs in any

meaningful sense.

12. Cogeneration Association of

California adds that the insufficiency of

the bilateral markets is also

demonstrated by the lack of meaningful

participation in utility requests for

offers. Cogeneration Association of

California argues that the current

practice of bilateral contracting is not

indicative of a competitive market, nor

is it proof that QFs have a meaningful

opportunity to participate in whatever

markets are there. It argues that there is

significant discrimination against QFs

when they attempt to enter into bilateral

contracts.

13. American Forest & Paper and CCC

also argue that the Final Rule errs as a

matter of law by determining generically

that ‘‘Day 2’’ markets satisfy section

210(m)(1)(A) rather than requiring

utilities to demonstrate, on a case-bycase basis, the factual basis upon which

relief is requested, which they argue is

required by section 210(m)(3). American

Forest & Paper and CCC contend that

the Commission simply presumed

adequate wholesale markets existed in

the ‘‘Day 2’’ markets, rendering the

language of section 210(m)(1)(A)(ii) of

the statute a nullity by not requiring

applicants to set forth the factual basis

on which relief is requested. American

Forest & Paper and CCC complain that

QFs have been denied the opportunity

to challenge the specific findings after

sufficient notice of the factual claims

being made.

14. American Forest & Paper and CCC

cite Alliant Energy Corporate Services

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Inc.10 as support for its belief that

section 210(m)(3) requires notice to each

affected QF prior to the Commission

making a determination under section

210(m)(1). American Forest & Paper and

CCC compare the Commission’s generic

treatment of ‘‘Day 2’’ markets with its

case-by-case procedures for the

reinstatement of the obligation, despite

the almost identical statutory language

in sections 210(m)(3) and 210(m)(4).

American Forest & Paper argues that

‘‘regulations cannot alter the statutory

scheme,’’ 11 stating that the procedural

requirements have been inappropriately

interpreted away in the Final Rule.

15. In American Forest & Paper and

CCC’s view, Congressional intent to

encourage QF development supports

interpreting section 210(m)(1)(A)(ii) as

requiring the Commission to find, based

on specific evidence, that there is a

meaningfully competitive market prior

to terminating the mandatory purchase

obligation. American Forest & Paper and

CCC note, for example, that EPAct 2005

did not repeal PURPA and provided for

termination of the purchase requirement

only if a very particular demonstration

is made.

16. Industrial Parties similarly argue

that the Commission erred in

categorically finding that ‘‘Day 2’’

markets provide QFs with access to

long-term wholesale markets. Industrial

Parties contend that the Commission

has ignored evidence that establishes

that these markets are in their infancy.

While acknowledging that suppliers

will offer QFs a bilateral contract in the

organized markets, Industrial Parties

argue that the rates and terms and

conditions of such contracts typically

are not truly long-term and are

discriminatory. Industrial Parties state

that the long-term markets that exist are

predominantly for resale—generators

selling to load serving entities that in

many cases have divested generation—

and that these contracts are typically for

a period of 6 to 18 months.

17. Industrial Parties also argue that

the Commission incorrectly assumed

that access to short-term ‘‘Day 2’’

markets is equivalent to a finding of

access to long-term markets under

section 210(m)(1)(A)(ii). Industrial

Parties contend that the Commission

must address the definition of ‘‘longterm,’’ arguing that the Commission

appears to view a market in excess of

one year as long-term. Industrial Parties

contend that a long-term market is a

10 113 FERC ¶ 61,024 (2005).

11 American Forest & Paper Request for Rehearing

at 13 (citing P. Gioso & Sons, Inc. v. Occupational

Safety and Health Review Commission, 115 F.3d

100, 105 (1st Cir. 1997)).

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market of several years’ duration or at

least the timeframe for planning a new

generator, which they state is three to

five years for a gas-fired combined cycle

unit. Industrial Parties ask that the

Commission require utility applicants to

present information on the short- and

long-term capacity obligations of loadserving entities in the relevant markets,

their practices for meeting such

obligations, and any barriers to entry

into such markets.

18. Finally, American Forest & Paper

and CCC argue that the Commission’s

interpretation of section 210(m)(1)(A)(ii)

violates rules of statutory construction.

Because subparagraph (C) specifically

refers to markets for the sale of capacity

under both subparagraphs (A) and (B),

defining a third type of market that is

‘‘similar’’ to subparagraphs (A) and (B),

American Forest & Paper and CCC argue

it is nonsensical to conclude that the

markets for capacity referenced in

subparagraphs (A)(ii) and (B)(ii) are not

similar as between themselves.

American Forest & Paper and CCC

therefore argue that the Commission

erred by not interpreting subparagraph

(A)(ii) as imposing qualitative

requirements comparable to those

imposed under subparagraph (B)(ii). In

American Forest & Paper and CCC’s

view, otherwise the inclusion of a

requirement that the Commission

review specific ‘‘evidence of

transactions’’ in subparagraph (B)(ii)

would require the Commission to ignore

evidence of transactions when applying

subparagraph (A)(ii), which the

Commission did not do in the Final

Rule.

Commission Determination

19. The Commission denies rehearing

of the determination that the four

existing ‘‘Day 2’’ markets (MISO, PJM,

NYISO, and ISO–NE) satisfy the

requirements of the second prong of

section 210(m)(1)(A). Petitioners on

rehearing essentially argue that the

Commission should have imposed a

standard higher than what the statutory

language literally requires, i.e.,

nondiscriminatory access to ‘‘wholesale

markets for long-term sales of capacity

and electric energy.’’ The Commission

declined to do so in the Final Rule and

we affirm that determination here.

20. The Commission did not simply

assume the existence of long-term

markets in the ‘‘Day 2’’ markets, as some

petitioners argue. Rather, the

Commission found that the existence of

bilateral long-term contracts for longterm sales of capacity and energy is a

sufficient indication of a market. The

Commission continued that it is

reasonable to conclude that the

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subparagraph (A)(ii) requirement for

long-term markets is met because

bilateral long-term contracts are

available to participants in the

footprints of the MISO, PJM, ISO–NE,

and NYISO. The Commission noted that

long-term contracts were to be expected

in these markets because of the nature

of these markets. In this regard, the

transmission access offered by RTOs

allows suppliers (including QFs) the

opportunity to enter into long-term

bilateral contracts. RTOs have no

incentive to favor one set of suppliers

over others in providing transmission

access. By eliminating pancaked rates,

eliminating problems with internal loop

flows, and improving the reliability of

transmission operations over a broad

multi-utility region, an RTO offers

regional transmission service which

facilitates longer-term contracting

practices. This is because an RTO’s

footprint encompasses many different

wholesale buyers, providing significant

opportunity for a seller to reach many

potential wholesale buyers.

21. In addition, organized markets

operated by an RTO facilitate long-term

bilateral contracts between sellers

(including QFs) and wholesale buyers

by reducing the costs to sellers of

making long-term bilateral supply

commitments. In the event a seller is

unable to produce the energy required

under a bilateral contract (for example,

because of an outage), the seller can

easily acquire replacement energy from

the organized market at a transparent

and competitive price. Even when the

seller is physically capable of producing

its contractually-required energy, the

seller can acquire the energy from the

RTO’s market whenever it is cheaper to

do so. Both of these factors reduce the

cost to a seller of entering into a longterm bilateral contract.12

22. With respect to bilateral long-term

markets in these RTO/ISOs, the

Commission noted that no commenters

argued that long-term contracts do not

exist in these markets or that QFs are

precluded from entering into them with

willing buyers.13 The Commission also

pointed out that electronic quarterly

report (EQR) filings indicate that there

are in fact contracts for long-term sales

of capacity and energy in each of the

‘‘Day 2’’ markets. The Commission

concluded that the existence of these

long-term contracts is a sufficient

indication that long-term wholesale

markets exist in those regions. It is

telling that no petitioner on rehearing

challenges (indeed, several petitioners

concede) that long-term contracts exist

14 The New Oxford English Dictionary Vol. 1 A–

M (1993 ed.).

15 Webster’s New Collegiate Dictionary (1979 ed.).

12 Final Rule at P 120.

13 Final Rule at P 117–20.

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in the ‘‘Day 2’’ markets. Instead,

petitioners argue that existence of such

contracts does not necessarily indicate

that an adequate market for long-term

energy and capacity exists. Yet the very

fact that buyers and sellers of long-term

energy and capacity have found each

other, evidenced by the contracts they

have entered into, demonstrates that a

market for such products does in fact

exist, which is all that the statute

requires.

23. The thrust of many of the

arguments on rehearing is that the

Commission should have considered

whether these long-term markets were

competitive or as robust as QFs would

like. That is not the standard set forth

by Congress in section 210(m)(1)(A)(ii),

which requires only that a long-term

market is present, not that it be

competitive or that it meet the

subjective preferences of all QFs. As the

Commission noted in the Final Rule,

Congress knew how to impose a more

specific level of review regarding the

quality of the relevant long-term market

since, in contrast to the language it used

in section 210(m)(1)(A)(ii), it expressly

used prescriptive language in section

210(m)(1)(B)(ii).

24. Section 210(m)(1)(A)(ii) requires

only that we find access to ‘‘wholesale

markets for long-term sales of capacity

and electric energy.’’ The term ‘‘market’’

is not defined with respect to any

particular number of purchasers or

sellers or the quality of the contracts

available. One definition is ‘‘the action

or business of buying and selling; an

instance of this, a commercial

transaction; a (good or bad) bargain.’’ 14

Another definition is ‘‘a meeting

together of people for the purpose of

trade by private purchase and sales and

usually not by auction.’’ 15 These

standard definitions support the

Commission’s finding that the ability of

QF sellers to reach purchasers and the

existence of long-term contracts for

capacity and energy are sufficient to

determine that ‘‘markets’’ exist for

purposes of section 210(m)(1)(A)(ii). In

contrast to section 210(m)(1)(A)(ii),

section 210(m)(1)(B)(ii) requires us to

find access to ‘‘competitive wholesale

markets that provide a meaningful

opportunity to sell capacity, including

long-term and short-term sales, and

electric energy, including long-term,

short term and real-time sales.’’ Under

this statutory directive, the Commission

must not only find that markets exist,

but it must assess the quality of the

markets and find that they are

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‘‘competitive.’’ Congress chose not to

require a finding of ‘‘competitive’’ longterm markets as a condition of invoking

section 210(m)(1)(A)(ii) and we have

given reasonable meaning to this

difference in language.16

25. Congress’s decision to establish

different standards in subparagraphs (A)

and (B) makes sense in light of the

ultimate question of whether a QF has

nondiscriminatory access to potential

purchasers other than the host utility,

sufficient to justify terminating the

purchase requirement, which is the

overarching theme of section 210(m)(1).

In the ‘‘Day 2’’ markets, which were in

existence when EPAct 2005 was enacted

and of which Congress was aware when

it was considering PURPA reform,

energy sold under bilateral long-term

contracts as well as in the competitive

day-ahead and real-time energy markets

is simply scheduled as a delivery to the

RTO and ISO grid. These market

conditions make it possible for parties

to enter into long-term contracts with

confidence that electric energy sold

pursuant to these contracts will be

delivered. It is reasonable to conclude,

therefore, that Congress considered the

criteria specified for long-term contracts

in section 210(m)(1)(B) unnecessary for

section 210(m)(1)(A). This explains the

distinctions embedded in the standards

set forth in sections 210(m)(1)(A) and

210(m)(1)(B).

26. It is true, as petitioners point out,

that in some ‘‘Day 2’’ markets there is

no formalized market for long-term sales

of energy and capacity. It may also be

true that such long-term markets are

nascent and that the sales that do occur

are predominantly to load serving

entities for resale. All that is required by

section 210(m)(1)(A)(ii), however, is that

there be a market, not that it has

particular market attributes desired by

petitioners. Petitioners have offered no

reasonable alternative to our

interpretation of section 210(m)(1).

27. Petitioners are correct to point out

that the Commission did not expressly

define what length of contract it

considered ‘‘long-term’’ within the

meaning of section 210(m)(1)(A)(ii). The

Commission explained, however, that it

was relying on EQR data to find that

long-term contracts existed in the ‘‘Day

2’’ markets. Long-term contracts are

defined for EQR purposes as having a

16 Some petitioners argue that the Commission’s

reliance on EQR reports to find the existence of a

long-term market in ‘‘Day 2’’ regions is contradicted

by Congress’ reference to ‘‘evidence of transactions’’

in section 210(m)(1)(B), but not in section

210(m)(1)(A). The requirement in subparagraph (B)

for evidence of transactions does not bar the use of

such evidence in subparagraph (A), but merely

indicates that such evidence is not required under

subparagraph (A).

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term of one year or more and, thus, the

Commission’s findings regarding longterm contracts in the Final Rule

incorporated that definition. While

some petitioners argue that a longerterm should have been used, we

continue to believe that contracts of a

year or more are sufficiently long-term

to meet the statutory requirement that

there be ‘‘wholesale markets for longterm sales of capacity and energy’’

within the meaning of section

210(m)(1)(A)(ii).17

28. We note that the Commission has

initiated a proceeding to explore ways

to improve the operation of wholesale

organized electric markets administered

by RTOs and ISOs, including actions the

Commission might take to further

improve opportunities for long-term

contracting in RTO and ISO regions.18

While we disagree with petitioners who

argue that QFs above 20 MW do not

have access to long-term contracting

opportunities in organized markets, or

that section 210(m)(1)(A) requires us to

find ‘‘competitive’’ or ‘‘robust’’

contracting opportunities, we are taking

steps to facilitate additional

opportunities for long-term contracting.

29. The Commission also rejects

arguments that it may not make generic

findings in this rulemaking as to the

‘‘Day 2’’ markets satisfying the

requirements of section 210(m)(1)(A).

The Commission has broad discretion to

adopt generic policy or make generic

findings through the rulemaking process

rather than case-by-case adjudications.19

Establishing generic findings in this

rulemaking provides all parties,

including electric utilities and QFs

alike, a reasonable chance to be heard

on common issues that arise in various

17 Although the statute contrasts real-time, dayahead, and long-term wholesale sales, it provides

no definition of those categories of transactions.

Nevertheless, the terms real-time and day-ahead

markets were well known with respect to ISOs and

RTOs at the time EPAct 2005 was enacted and

definitions of these markets were well understood,

i.e., Congress knew the meaning the terms as used

with respect to ISOs and RTOs existing at the time

of enactment of EPAct 2005. Additionally, the

Commission at the time of enactment of EPAct 2005

had for years defined long-term contracts under the

OATT as one year or longer. Similarly, the

Commission has treated power sales with a contract

term of greater than one year to be ‘‘long-term’’ for

reporting purposes. See, e.g., Revised Public Utility

Filing Requirements, Order No. 2001, 67 FR 31043,

FERC Stats. & Regs. ¶ 31,127 (2002), Order No.

2001–A, 100 FERC ¶ 61,074, reconsideration and

clarification denied, Order No. 2001–B, 100 FERC

¶ 61,342 (2002). We thus believe it is reasonable to

use the convention of treating contracts of a year

or more as ‘‘long-term’’ consistent with our

longstanding practice.

18 Wholesale Competition in Regions with

Organized Electric Markets, 119 FERC ¶ 61,306.

19 Securities and Exchange Comm’n v. Chenery,

332 U.S. 194, 202–03, reh’g denied, 332 U.S. 747

(1947).

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market structures and involving classes

of QFs. Indeed, no party has sought

rehearing of the Commission’s

conclusion that the ‘‘Day 2’’ markets

satisfy the first prong of section

210(m)(1)(A). It is just as appropriate for

the Commission to find generically, in

this rulemaking, that long-term markets

exist in the ‘‘Day 2’’ RTO/ISOs as it is

to find that those RTO/ISOs operate

independently administered, auctionbased day ahead and real time

wholesale markets within the meaning

of section 210(m)(1)(A)(i).

30. These generic findings do not

violate the requirements of section

210(m)(3), as some petitioners argue.

Under section 210(m)(1), the

Commission must terminate the

purchase requirement if it makes certain

findings regarding nondiscriminatory

access to specified markets. That

provision of the statute does not specify

the particular procedural mechanism

the Commission must use in making

those findings and, thus, the

Commission has discretion to act

through a rulemaking, case-by-case

determinations, or some combination

thereof. Section 210(m)(3) does not, as

the petitioners appear to assume,

require the Commission to await an

application from an electric utility in

order to make any of the particular

findings specified in section 210(m)(1).

While the Commission made certain

generic findings in the Final Rule, it

also required electric utilities (including

those in the ‘‘Day 2’’ markets) that seek

relief from the obligation to enter into

new contracts or obligations with QFs to

file an application pursuant to

regulations implementing section

210(m)(3).20 Thus, the Commission has

incorporated the application process

into its implementing regulations,

combining the application procedures

with generic findings and rebuttable

presumptions to streamline the

Commission’s review. The resulting

structure is fully consistent with the

requirements of both sections 210(m)(1)

and 210(m)(3).21

2. Section 210(m)(1)(B)

31. Section 210(m)(1)(B) requires

termination of the purchase obligation if

a QF has nondiscriminatory access to (i)

transmission and interconnection

services provided by a Commission20 Final Rule at P 102.

21 The comparative structures of sections

210(m)(3) and 210(m)(4) do not support a different

outcome. Section 210(m)(4) specifies the procedural

requirements for reinstating the purchase

requirement after the Commission has entered an

order terminating that requirement and, thus, does

not govern the Commission’s initial procedures for

acting to terminate the requirement.

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approved regional transmission entity

pursuant to an open access tariff and (ii)

competitive wholesale markets

providing a meaningful opportunity to

sell long-term and short-term capacity

and electricity to buyers other than the

interconnecting electric utility. The

Commission concluded in the Final

Rule that the CAISO and SPP are

regional transmission entities within the

meaning of the first prong of section

210(m)(1)(B), but made no findings as to

the second prong for any market,

including those operated by CAISO and

SPP. The Commission also stated that

any future determinations of what

transmission providers qualify as a

regional transmission entity within the

meaning of the first prong will be made

on a case-by-case basis. The

Commission provided examples of

factors it may consider in making that

determination, such as sufficient

regional scope or configuration of the

multiple discrete transmission systems

the regional transmission entity

controls.

Requests for Rehearing

32. Occidental argues that the

Commission erred in reserving the

discretion to deem an entity a

‘‘Commission-approved regional

transmission entity’’ in the context of a

section 210(m) proceeding. Because

section 210(m)(1)(B)(i) refers to a

‘‘Commission-approved’’ entity,

Occidental argues that a transmission

provider must have been deemed by the

Commission to be a ‘‘regional

transmission entity’’ prior to the filing

of an application for relief from the

purchase requirement.

33. PacifiCorp argues that evidence of

robust bilateral markets or actual sales

by a QF to wholesale non-PURPA

purchasers should be considered when

the Commission determines whether

QFs have the requisite ‘‘meaningful

opportunity’’ to sell capacity and energy

to other buyers within the meaning of

section 210(m)(1)(B)(ii). PacifiCorp

offers factual examples of QF plans to

participate in wholesale markets,

depending on market prices, although it

acknowledges that the examples it used

are extreme and did not materialize.

PacifiCorp asks the Commission to

establish a rebuttable presumption that

evidence of a robust bilateral market

featuring liquid trading points, or actual

sales by QFs, should be adopted for

purposes of implementing section

210(m)(1)(B)(ii). Alternatively,

PacifiCorp asks the Commission to

provide further guidance as to how the

standards of that section will be

applied.

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34. With regard to the SPP market,

OG&E argues that the Commission erred

in declining to find that utilities

operating in SPP also satisfy the second

prong of section 210(m)(1)(B) or to

provide guidance with respect to the

information required for utilities to

make such a showing. OG&E argues that

its comments on the NOPR adequately

demonstrated that QFs have

nondiscriminatory access to competitive

markets within SPP. If the evidence it

submitted was insufficient, OG&E

claims the Commission erred by failing

to provide guidance as to what type of

information would satisfy the

Commission’s requirements. OG&E

contends that such guidance would

reduce the costs and burdens associated

with preparing an application under

section 210(m).

35. With regard to the CAISO market,

Cogeneration Association of California

argues that the lack of new construction

in California, despite a clear supply

shortage, is evidence that competitive

long-term markets do not exist in that

region. Cogeneration Association of

California also argues that competitive

markets must have price transparency,

including both pricing terms and nonprice terms, contending that there is

virtually no disclosure to any market

participant of prices secured or

approved for capacity or energy

purchased by utilities. Industrial Parties

point to other characteristics of the

California market that, in their view,

would preclude a finding of access to

sufficiently competitive markets, such

as exit fees, the lack of direct access,

and the dominance of utility generation

in an otherwise thinly traded market.

Commission Determination

36. We disagree with Occidental’s

assertion that a transmission entity must

have been deemed by the Commission

to be a ‘‘regional transmission entity’’

prior to the filing of an application for

relief from the purchase requirement. As

we explained in the Final Rule, section

210 does not define regional

transmission entity and, therefore, the

Commission has discretion in

interpreting that term. At the time of

enactment of section 210(m), Congress

was aware of the existence of

Commission-approved RTOs and ISOs

with varying degrees of regional scope

(some spanning many states and some

covering only large individual states), as

well as the continuing voluntary

development of various types of

transmission organizations.22 It is

22 Indeed Congress, in EPAct 2005 incorporated

into the Federal Power Act (FPA) definitions of

RTO and ISO, with the RTO definition specifically

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reasonable to conclude that Congress, by

using the generic term ‘‘regional

transmission entity’’ in section

210(m)(1)(B)(i), intended to leave it to

the Commission’s discretion to

determine on a case-be-case basis

whether or not an entity is regional

within the meaning of the statute.23

37. We also deny rehearing of the

decision not to find in the context of

this rulemaking that the SPP market

satisfies the second prong of section

210(m)(1)(B). While OG&E claims to

have provided in its initial comments

evidence demonstrating the quality of

the SPP market,24 what OG&E provided

was little more than cursory comments

and a description of bidding procedures

that are being adopted in Oklahoma.

Section 210(m)(1)(B)(ii) requires a

showing of ‘‘competitive wholesale

markets that provide a meaningful

opportunity to sell capacity, including

long-term and short-term sales, and

electric energy, including long-term,

short-term and real-time sales, to buyers

other than the utility to which the

qualifying facility is interconnected.’’

This provision also provides that ‘‘[i]n

determining whether a meaningful

opportunity to sell exists the

Commission shall consider, among

other factors, evidence of transactions

within the relevant market.’’ We do not

find OG&E’s cursory submission

sufficient to meet the statutory

requirements. Moreover OG&E did not

include any evidence of transactions in

the SPP market. There was, and

continues to be, an insufficient record in

this proceeding to find that the SPP

market satisfies the second prong of

section 210(m)(1)(B).

38. With regard to OG&E’s and

PacifiCorp’s requests for further

guidance, we believe that the statutory

language requiring that a QF have a

meaningful opportunity to sell capacity

and energy to buyers other than the

interconnected utility means an actual,

and not just theoretical, opportunity.

recognizing that such an entity must be of sufficient

‘‘regional’’ scope, whereas the ISO definition does

not contain a sufficient regional scope element.

Pub. L. 109–58, 1291, 119 Stat. 594, 984 (2005)

(codified at 16 U.S.C. 796(27), (28)). Cf. Pub. L. 109–

58, 1286, 119 Stat. 594, 981 (2005) (adding section

206(a)(2) to the FPA, allowing Commission to order

refunds for certain sales in ‘‘organized’’ markets).

23 Congress in section 210(m) did not use the term

‘‘regional transmission organization’’ and thus

presumably did not intend to limit a ‘‘regional

transmission entity’’ to the regional scope

requirements of Order No. 2000. Regional

Transmission Organizations, Order No. 2000, 65 FR

809 (Jan. 6, 2000), FERC Stats. & Regs. ¶ 31,089

(1999), order on reh’g, Order No. 2000–A, 65 FR

12088 (Mar. 8, 2000), FERC Stats. & Regs. ¶ 31,092

(2000), dismissed sub nom. Pub. Util. Dist. No. 1 of

Snohomish County, Washington v. FERC, 272 F.3d

607 (D.C. Cir. 2001).

24 OG&E Comments at 4–6.

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35877

Concrete evidence of transactions would

further that finding, as the statutory

language implies. To the extent such

evidence is not available, we would

expect at a minimum a petitioning

electric utility to explain any lack of

evidence of transactions and to provide

a reasoned explanation of how the

Commission could find that a

meaningful opportunity to sell to buyers

other than the interconnected utility

exists in the absence of a history of

transactions.25 PacifiCorp’s evidence of

QF proposals that never reached fruition

does not provide an adequate basis for

the Commission to make any

presumptions regarding whether

particular markets satisfy the

requirements of section 210(m)(1)(B)(ii).

We continue to believe that it is best to

address on a case-by-case basis whether

non-RTO/ISOs and RTO/ISOs that do

not have both auction-based real-time

and day-ahead markets satisfy those

statutory requirements.26

39. The claims of Cogeneration

Association of California and the

Industrial Parties regarding the lack of a

sufficiently competitive market in

California can be addressed in any

individual cases concerning California.

We note that the CAISO has been found

only to satisfy section 210(m)(1)(B)(i)

and that a separate finding of

‘‘competitive wholesale markets’’ is

required under section 210(m)(1)(B)(ii).

Thus, if a California utility makes a

filing pursuant to section 210(m)(3) and

§ 292.310 of the Commission’s

regulations, and claims that it satisfies

the section 210(m)(1)(B) criteria for

relief from the purchase obligation, the

issue of whether ‘‘competitive

wholesale markets’’ exist will be an

issue in that proceeding and the burden

will be on the applicant to make the

required demonstration.27

3. A Single Standard of Relief

40. As explained above, the

Commission concluded in the Final

Rule that the most reasonable

interpretation of section 210(m)(1) is

that Congress, in setting forth three

discrete tests for three different types of

markets, was directing the Commission

to differentiate among three different

25 The Commission is aware that certain types of

evidence of transactions may contain information

that an electric utility considers to be confidential.

If information is considered confidential by the

electric utility, procedures exist to maintain its

confidentiality.

26 Final Rule at P 145.

27 The Commission also left open the option of

California utilities seeking a determination that the

California market satisfies section 210(m)(1)(A) by

filing requests for declaratory orders, after there is

a functioning ‘‘Day 2’’ RTO/ISO in California. Final

Rule at P 157.

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markets, access to which would require

termination of the purchase requirement

provided such access is available on a

nondiscriminatory basis. A number of

petitioners had advocated a different

interpretation of section 210(m)(1),

arguing that subparagraphs (A), (B), and

(C), when read together, establish a

single standard for relief from the

purchase requirement. In their view,

these separate provisions together

require electric utilities to demonstrate

that a QF would remain economically

viable or would otherwise have access

to the technical equivalent of the

purchase requirement in order to

terminate the purchase requirement.

The Commission rejected that view by

interpreting section 210(m)(1) as

establishing different standards for each

of the three types of markets identified

in subparagraphs (A), (B), and (C).

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Requests for Rehearing

41. American Forest & Paper and CCC

again challenge the Commission’s

determination that the three standards

of relief described in section 210(m)(1)

were intended to be different in terms

of the organization and competitiveness

of the relevant market or the evidentiary

showings required for each. They argue

that EPAct 2005 did not repeal PURPA

or the Commission’s obligation to

encourage QF development and,

therefore, the Commission’s

interpretation of section 210(m)(1) is

unreasonable. American Forest & Paper

and CCC suggest that section

210(m)(1)(C) clearly requires markets

under subparagraphs (A), (B) and (C) to

be of similar competitive quality since

markets that satisfy subparagraph (C)

must be ‘‘similar’’ to those described in

subparagraphs (A) and (B). American

Forest & Paper and CCC conclude that

the Commission has adopted an

unreasonable statutory construction by

interpreting section 210(m)(1) as

referring to three distinct types of

markets.

Commission Determination

42. The Commission denies requests

for rehearing of the determination not to

adopt a single test to evaluate whether

the requirements of section 210(m)(1)

are met. We continue to believe, as we

found in the Final Rule, that the most

reasonable interpretation of section

210(m)(1) is that Congress, in setting

forth discrete tests for three different

types of markets, was requiring the

Commission to differentiate among

these markets and the differing

circumstances they present in

determining whether a utility is relieved

of the purchase requirement. As

discussed above, this interpretation is

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supported by the different language

Congress used in subparagraphs (A) and

(B) and the consequent need to make

meaningful distinctions in the explicit

statutory language Congress used.

Otherwise, subparagraphs (A) and (B)

presumably would have been collapsed

by Congress into one test.

43. We agree the reference in section

210(m)(1)(C) to markets that are of

‘‘comparable competitive quality as

markets described in subparagraphs (A)

and (B)’’ indicates Congress’ belief that

those two types of markets share a

certain set of competitive qualities. It

does not follow, however, that the

Commission should disregard the

specific statutory tests in each of those

subparagraphs when applying section

210(m)(1). The structure of section

210(m)(1), which separately describes

different types of markets, makes clear

that Congress was establishing a

particular set of tests for the

Commission to apply. In the Final Rule,

the Commission adopted the most

reasonable interpretation of

subparagraph (C)—that Congress

believed the two types of markets

identified in subparagraphs (A) and (B),

while distinct between themselves,

contain certain competitive qualities

that justify termination of the purchase

requirement for any QF with

nondiscriminatory access to those

markets. Subparagraph (C) directs the

Commission to consider these

competitive qualities when analyzing

whether there are other markets that,

while not meeting the specific

requirements of subparagraphs (A) and

(B), are sufficiently competitive to

justify termination of the purchase

requirement.

44. The fact that the markets

identified in subparagraphs (A) and (B)

contain certain competitive qualities

does not mean that they are the same

type of market, or that a single test must

be adopted for determining whether a

particular market satisfies the

requirements of a particular

subparagraph. Such an interpretation

would undermine Congress’s decision

to separately identify the two types of

markets that it believes are sufficiently

competitive to justify termination of the

purchase requirement. It would also

conflict with the particular

determinations to be made under each

of the subparagraphs. Subparagraph (A)

explicitly refers to both ‘‘day ahead and

real time’’ (i.e., ‘‘Day 2’’) organized

markets. RTO/ISO day-ahead and real

time markets are operated pursuant to

Commission tariffs containing market

rules and market mitigation aimed at

preventing exercises of market power. It

is reasonable to conclude that Congress

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assumed these markets to be sufficiently

competitive, in combination with

markets for long-term contracts, to

justify termination of the mandatory

purchase obligation.

45. As we noted in the Final Rule,

‘‘Day 2’’ markets are generally

recognized as providing greater

opportunities for QFs and other

independent generators to make sales to

a large number of buyers than other

markets because the existence of dayahead and real-time energy markets

allows all competing generators to

submit bids to participate on a

nondiscriminatory basis in a market

from which many buyers over a large

area make purchases. While the ‘‘Day 1’’

markets also provide opportunities for

independent generators to compete, the

markets are more limited. It is therefore

not surprising that the factual showing

required under section 210(m)(1)(B) is

more difficult relative to section

210(m)(1)(A), which enjoys the benefit

of the ‘‘Day 2’’ market structures. These

different standards support, rather than

undermine, the Commission’s

interpretation that subparagraphs (A)

and (B) separately identify the particular

markets that Congress has deemed

sufficiently competitive to justify

termination of the purchase

requirement.

46. The Commission’s task under

section 210(m)(1)(C) is, therefore, to

determine the set of competitive

qualities that are shared by markets

satisfying the requirements of

subparagraphs (A) and (B). Recognizing

this task, the Commission declined in

the Final Rule to adopt any bright line

tests when applying subparagraph (C).

Simply put, the common objective of

subparagraphs (A) and (B), and therefore

subparagraph (C), is the identification of

a wholesale marketplace where QFs

have alternatives to their local utility to

sell their electric energy. We believe the

three-tiered structure of section

210(m)(1) indicates a finding by

Congress that two particular market

designs provide those alternatives,

while directing the Commission to

consider whether other market designs

might as well.

47. Congress could have stated a

broad, general finding to be made by the

Commission such as ‘‘workably

competitive markets.’’ Instead, Congress

tailored subparagraphs (A) and (B) to

establish criteria specific to each market

design that, in its view, provide

sufficient sales alternatives for QFs.

Under these circumstances, we believe

it appropriate to use the market designs

identified in subparagraphs (A) and (B)

as guides when analyzing whether an

alternative market design satisfies the

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requirements of subparagraph (C). For

example, the Commission found in the

Final Rule that the markets in ERCOT

satisfy the statutory requirements of

subparagraph (C) because they are of

comparable quality to those described in

subparagraph (A). We continue to

believe that finding is appropriate and

note that no petitioner challenges it on

rehearing.

48. Finally, while it is true that EPAct

2005 did not repeal PURPA or the

Commission’s obligation to encourage

QF development, enactment of section

210(m) of PURPA clearly changed the

rights of QFs under PURPA. The

Commission has no discretion other

than to terminate the purchase

requirement if it finds that a QF has

nondiscriminatory access to any of the

markets described in section

210(m)(1)(A), (B) or (C). It would be

inappropriate for the Commission to

ignore this mandate by implementing

section 210(m)(1) in a way that

undermines the specific standards of

relief Congress chose to establish in the

statute.

B. Nondiscriminatory Access to a

Market

49. The Commission also must

determine that a QF has

nondiscriminatory access to a PURPA

section 210(m)(1) market in order to

terminate the purchase requirement. In

the Final Rule, the Commission adopted

several presumptions to be used in

determining whether access to a

particular market is available on a

nondiscriminatory basis in order to

streamline processing of applications for

termination of the purchase

requirement.

50. First, the Final Rule found that a

QF’s eligibility for service under an

OATT, or a reciprocity tariff filed by a

non-public utility, creates a rebuttable

presumption that the QF has

nondiscriminatory access to the relevant

market. Second, the Commission

adopted a rebuttable presumption that

QFs interconnected with electric utility

members of a ‘‘Day 2’’ RTO/ISO have

nondiscriminatory access to the ‘‘Day 2’’

market. Finally, regardless of available

transfer capability (ATC) under an

OATT or location within a ‘‘Day 2’’

market, the Final Rule establishes an

additional rebuttable presumption that

QFs with a net capacity no greater than

20 MW do not have nondiscriminatory

access to wholesale markets.

51. These rebuttable presumptions

were designed to work together to

facilitate prompt Commission review of

requests to terminate the purchase

requirement within the 90-day time

frame mandated in the statute. Various

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petitioners challenge the adoption of

these presumptions on rehearing, which

we address below.

1. The OATT

52. The Commission first established

a rebuttable presumption that a QF has

nondiscriminatory access to a market if

it is eligible for service under a

Commission-approved OATT, or

Commission-filed reciprocity tariff, and

Commission-approved interconnection

rules.28 If the Commission determines

that a particular market meets the

criteria of section 210(m)(1)(A), (B), or

(C), and a QF in that market is eligible

for service under an OATT or

reciprocity tariff, a QF may seek to rebut

the presumption of access to the market

by providing specific and credible

evidence that the QF does not have

nondiscriminatory access due to

operational characteristics or

transmission constraints. If the QF is

unable to make this demonstration, the

purchase requirement will be

terminated.

53. In the Final Rule, the Commission

determined that only issues other than

issues related to the provision of open

access transmission under the OATT

would be considered when analyzing

whether the presumption of

nondiscriminatory access to markets has

been rebutted. The Commission rejected

requests to allow a QF to litigate open

access implementation issues in the

context of these 90-day applications,

concluding that complaint proceedings

are the appropriate forum for such

disputes. The Commission also rejected

arguments that it is unreasonable to rely

on a presumption that a Commissionapproved OATT provides

nondiscriminatory access to markets in

light of the then-pending NOPR in the

OATT reform rulemaking, Docket Nos.

RM05–17, et al., in which reforms to the

pro forma OATT had been proposed.

Requests for Rehearing

54. Occidental challenges the

Commission’s reliance on an OATT to

create a rebuttable presumption that

QFs have nondiscriminatory access to

the relevant wholesale markets.

Occidental argues that the

Commission’s actions in the OATT

reform rulemaking have demonstrated

that, notwithstanding the existence of

an OATT, there remain continuing

opportunities for undue discrimination

by transmission entities. Occidental

contends that the Commission’s

statement in the Final Rule that it had

28 Transmission providers are required to provide

interconnection as well as transmission services on

a nondiscriminatory basis under their OATTs.

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not found actual discrimination in the

OATT reform rulemaking is inconsistent

with findings in the OATT reform

NOPR that deficiencies in the OATT

needed to be addressed. In Occidental’s

view, the Commission’s determination

in the OATT reform NOPR that there are

remaining opportunities for undue

discrimination bear directly on the

finding that the Commission must make

under section 210(m) that a utility is

administering its OATT in a

nondiscriminatory manner.

55. Occidental argues that the

Commission’s determination that only

issues not related to the provision of

open access transmission under the

OATT may be raised to rebut the

presumption of nondiscriminatory

access is inconsistent with the statutory

language of section 210(m) and is a

violation of due process. Industrial

Parties assert that the Commission must

consider evidence of discrimination

when analyzing whether the

presumption has been rebutted. Failure

to do so would, in their view, violate the

Commission’s statutory obligation to

eradicate discrimination.

56. Occidental further argues that the

Commission should clarify that QFs

under section 210(m)(1)(B) and (C) have

the same opportunity to rebut the

presumption of nondiscriminatory

access as QFs under section

210(m)(1)(A). Occidental notes that the

Commission lists several factors in the

Final Rule as a possible rebuttal to a

finding of nondiscriminatory access to

the markets set forth in subparagraph

(A), but that it is not clear if the factors

are also relevant to the question of

whether the purchase obligation should

be terminated under subparagraphs (B)

and (C). If the Commission does not

grant clarification, Occidental requests

rehearing on this issue.

57. Cogeneration Association of

California argues that existence of an

OATT is insufficient to guarantee

nondiscriminatory access since it may

not provide physical transmission

rights. Because QFs generate electricity

as a necessary by-product of their

service to their thermal hosts,

Cogeneration Association of California

contends that a cogenerator must have

a physical location to deliver the

electricity. Cogeneration Association of

California argues that this requires

physical transmission rights that

recognize the operating requirements of

cogeneration operations. In its view, the

lack of physical delivery rights places a

cogeneration QF in the untenable

situation of either ceasing operation or

violating ISO tariff and scheduling

protocols, thereby incurring penalties or

sanctions. Cogeneration Association of

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California goes on to illustrate its

concern using the California market

redesign effort as an example. Because

the congestion revenue rights are

allocated first to load-serving entities,

and the remainder are auctioned to

other market participants, Cogeneration

Association of California fears that

existing QFs would be unable to hedge

congestion and that new projects would

be unable to obtain long-term rights

necessary to support long-term contacts,

a prerequisite for financing.

58. Occidental adds that, if the

Commission does not reject the OATT

presumption on rehearing, it should

require applicants to submit at a

minimum additional information such

as clear and specific definitions and

descriptions of each real-time, shortand long-term market the utility claims

in its section 210(m) application that the

QF is able to access on a

nondiscriminatory basis.

59. Multiple petitioners argue that the

Commission erred by establishing any

form of rebuttable presumption.

Industrial Parties contend that the

Administrative Procedure Act requires

that the applicant for relief—in this case

an electric utility—has the burden of

proof.29 Industrial Parties argue that an

agency may not use a presumption to

shift the burden of proof if the result is

not in keeping with the statutory

purpose and, in their view, it runs

counter to section 210(m) to impose on

QFs the burden to prove a lack of

nondiscriminatory access to markets

since the relevant information

concerning transmission and access to

markets is most likely in the possession

of the utility rather than the QF.

60. PIOs argues that creating

rebuttable presumptions that electric

utilities meet section 210(m)

requirements is contrary to the plain

language of section 210(m)(3). PIOs

argues that, when a utility seeks relief

from the mandatory purchase

obligation, the Commission is required

by section 210(m)(3) to consider

evidence of the assertion that the

required access and markets are actually

available to QFs in the utility’s service

territory, including a utility in an RTO.

In PIOs’ view, the Commission is not

authorized to permit utilities to escape

the obligation to set forth facts that

demonstrate that the conditions

provided in section 210(m)(1)(A), (B) or

(C) have been met for the QFs in its

territory.

61. American Forest & Paper and CCC

agree, citing NICOR Exploration Co. v.

FERC 30 for the proposition that the

Commission incorrectly shifts the

burden of proof away from electric

utilities through adoption of rebuttable

presumptions. American Forest & Paper

and CCC state that NICOR found that

the Commission erred by shifting the

burden for a natural gas producer to

prove that an area rate clause authorized

incentive based rates.31 American Forest

& Paper and CCC argue that that

situation is directly analogous to the

issue in this proceeding, where the

Commission has relieved electric

utilities of proving that QFs have nondiscriminatory access to wholesale

markets and, instead, forced QFs to

prove the absence of such access.

29 Industrial Parties Request for Rehearing at 7

(citing Hi-Tech Furnace Sys. v. FCC, 224 F. 3d 781

(D.C. Cir. 2000); Pub. Serv. Comm’n of New York

v. FERC, 866 F.2d 487 (D.C. Cir. 1989)).

30 NICOR Exploration Co. v. FERC, 50 F.3d 1341

(5th Cir. 1995) (NICOR).

31 American Forest & Paper and CCC Request for

Rehearing at 25.

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Commission Determination

62. The Commission denies rehearing

of the adoption of a rebuttable

presumption that eligibility for service

under a Commission-approved OATT,

or Commission-filed reciprocity tariff,

provides nondiscriminatory access to

the market. We first address arguments

against the use of any form of rebuttable

presumption and then turn to arguments

against relying on the OATT in

particular.

63. The Commission denies rehearing

regarding the use of rebuttable

presumptions in processing requests to

terminate the purchase requirement. As

discussed in paragraph 30 above, under

the plain language of section 210(m)(1),

it is the Commission’s responsibility to

find that there is nondiscriminatory

access to certain specified markets prior

to terminating the purchase

requirement. The use of rebuttable

presumptions serves to identify, in

advance, the Commission’s preliminary

analysis, subject to future evidentiary

submissions, thereby streamlining the

application review process. The

Commission believes this will facilitate

prompt processing of applications under

section 210(m), which is required by

section 210(m)(3), and ultimately

benefit QFs and electric utilities alike by

providing advance notice of how the

Commission will consider certain

issues. Abandoning the use of rebuttable

presumptions, as some petitioners

advocate, would unduly complicate the

application process and impair the

Commission’s ability to act within the

90-day timeframe required by section

210(m)(3). Moreover, these rebuttable

presumptions were not created in a

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vacuum. They are based on the

Commission’s experience in

implementing non-discriminatory open

access transmission over the past 11

years, its experience with QF issues

(including interconnection issues) over

the past 29 years, and its experience

with RTO/ISO markets over almost 10

years.

64. The cases cited by petitioners,

which taken together stand for the

proposition that the proponent of a rate

change bears the burden of proving that

change satisfies the relevant statutory or

regulatory requirements, are therefore

inapposite.32 The rebuttable

presumptions do not relieve the

Commission of its ultimate

responsibility to make findings under

section 210(m)(1) prior to relieving an

electric utility of the purchase

requirement. Instead, they simply

provide advance notice of how the

Commission will carry out that

responsibility.

65. The rebuttable presumptions are

also consistent with the requirements of

section 210(m)(3), which establishes the

procedures to be followed when an

electric utility requests that the

Commission make the finding of

nondiscriminatory access to a market

identified in section 210(m)(1)(A), (B),

or (C). As required in section 210(m)(3),

the regulations promulgated in the Final

Rule clearly require a petitioning

electric utility to state the factual basis

on which it relies and describe why the

conditions set forth in subparagraphs

(A), (B), or (C) are met.33 That factual

basis could include the factual

determinations made in the Final Rule

regarding certain markets satisfying the

criteria of those subparagraphs, the

presumptions adopted in the Final Rule

regarding nondiscriminatory access, or

any other factor the electric utility

considers relevant to the determination

the Commission must make under

section 210(m)(1). There is no conflict

between the use of rebuttable

presumptions and the procedural

requirements of section 210(m)(3).

66. We reiterate that the rebuttable

presumptions adopted in the Final

Rule—some of which are presumptions

in favor of the electric utility and some

of which are in favor of the QF—are not

final determinations. Each of these

presumptions is expressly rebuttable.

Electric utilities and QFs alike will have

the opportunity to present case-specific

evidence in support of or against

32 See Hi-Tech Furnace Sys. v. FCC, 224 F.3d 781

(D.C. Cir. 2000); Pub. Serv. Comm’n of New York

v. FERC, 866 F.2d 487 (D.C. Cir. 1989); NICOR

Exploration Co. v. FERC, 50 F.3d 1341 (5th Cir.

1995).

33 See 18 CFR 292.310.

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application of the presumption on

review of a request to terminate the

purchase requirement. For example,

regarding the OATT presumption in

particular, there may be circumstances

unique to a particular QF that interfere

with that QF’s nondiscriminatory access

notwithstanding its eligibility for

service under an OATT. The QF might

have operational characteristics that

effectively prevent its participation in a

market. The QF might lack access to a

mechanism to schedule transmission

service or make advance sales on a

consistent basis. Each QF will be in the

best position to have knowledge of the

particular circumstances that interfere

with its ability to access the market

through the OATT and, thus, requiring

the QF to submit evidence of its lack of

nondiscriminatory access is entirely

reasonable. The Commission clarifies

that the ability to rebut the presumption

of nondiscriminatory access applies

regardless of the market in which the

QF is located.

67. The Commission was nonetheless

sensitive to the QFs’ potential need for

information relevant to rebutting the

presumption of nondiscriminatory

access. The Commission therefore

required petitioning electric utilities to

submit information regarding

transmission constraints, levels of

congestion, and interconnections in

order to give potentially affected QFs

data that may be relevant to rebutting

the presumption that they have access

to the market. With these informational

safeguards in place, we believe that

reliance on a rebuttable presumption

regarding nondiscriminatory access to

the market is reasonable.

68. We also reject arguments on

rehearing that the Commission failed to

justify reliance on the OATT in

particular when formulating its

rebuttable presumptions. Since issuance

of the Final Rule, the Commission has

issued Order No. 890, adopting reforms

to the OATT to ensure that transmission

customers continue to have

nondiscriminatory access to

transmission service.34 The

Commission’s findings in Order No. 890

do not, however, conflict with the

rebuttable presumption adopted in this

proceeding, as petitioners claim. The

Commission did not find in Order No.

890 that any transmission provider

actually discriminated against a

particular customer and, instead, found

that there remained opportunities for

such discrimination that needed to be

34 Preventing Undue Discrimination and

Preference in Transmission Service, Order No. 890,

72 FR 12266 (Mar. 15, 2007), FERC Stats. & Regs.

¶ 31,241 at P 443 (2007).

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remedied.35 The fact that opportunities

remained for discrimination in the

provision of transmission service

(which, we add, we have now

addressed) would conflict with an

irrebuttable presumption of

nondiscriminatory access, not a

rebuttable presumption. The rebuttable

nature of the presumption

acknowledges that a QF may not

actually have nondiscriminatory access

and leaves that determination for caseby-case review by the Commission.

69. At the same time, the underlying

structure of the OATT, even before the

reforms adopted in Order No. 890 are

implemented, and certainly after,

counsels in favor of the rebuttable

presumption that eligibility for service

under an OATT provides

nondiscriminatory access to markets.

Under the OATT, transmission

providers must make transmission

capacity available to all customers on a

nondiscriminatory basis, thereby

ensuring a level playing field for all

market participants attempting to access

supplies. That requirement by definition

satisfies the nondiscriminatory access

criteria of section 210(m). To the extent

a QF believes that it in fact is not

receiving nondiscriminatory access to

the market, however, it can make that

demonstration in response to an electric

utility’s application to terminate the

purchase requirement.

70. In response to arguments by

Cogeneration Association of California

that the existence of an OATT is

insufficient to guarantee

nondiscriminatory access because it

may not provide physical rights, we

note that in organized markets which

offer financial transmission rights, these

financial rights are in addition to, not in

place of, physical rights. In essence, the

Cogeneration Association of California

is arguing that the Commission should

provide a QF with transmission services

superior to those available to other

generators in the organized markets.

However, section 210(m)(1) requires

that a QF have nondiscriminatory access

to one of the markets specified in

section 210(m)(1)(A), (B), or (C); it does

not guarantee a QF preferential access to

transmission service. To the extent that

Cogeneration Association of California

also argues that a QF that has

contractual obligations to thermal hosts

does not have the flexibility to

participate in markets where the access

is provided by financial, rather than

physical, transmission rights, the

Commission in its regulations has

provided each QF the opportunity to

argue that its operational characteristics

35 Id. at P 42.

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35881

prevent the qualifying facility’s

participation in a market. Thus any QF

that believes it does not have

nondiscriminatory access to the market

(regardless of whether access is

provided by physical or financial rights)

has the right to rebut the OATT

presumption of access in response to an

electric utility filing seeking termination

of the mandatory purchase obligation.

71. The Commission also declines to

adopt Occidental’s recommendation to

require additional information from

electric utilities relying on the OATT

presumption. The filing requirements of

§ 292.310 of the Commission’s

regulations, as modified below, are

sufficient to provide the Commission

with the information necessary to

promptly process applications for

termination of the purchase

requirement.

72. Finally, the Commission grants

clarification of its determination in the

Final Rule that only issues other than

issues related to the provision of open

access transmission under the OATT

will be considered when analyzing

whether the presumption of

nondiscriminatory access to markets has

been rebutted. The Commission

continues to believe that complaint

proceedings are the appropriate forum

for such disputes. However, where there

are pending complaints raising credible

issues concerning a transmission

provider’s implementation or

administration of its OATT, the

Commission will also consider that fact,

as appropriate, when evaluating

whether a QF does in fact have

nondiscriminatory access to the market.

2. ‘‘Day 2’’ Markets

73. The Final Rule provided for a

second rebuttable presumption specific

to QFs operating in a ‘‘Day 2’’ market.

Because members of the ‘‘Day 2’’ RTO/

ISOs have turned over the operation of

their transmission facilities to an

independent entity that has no stake in

the marketplace and that ensures all

users of the transmission system are

treated on a nondiscriminatory basis

and are provided access to their

markets, the Commission established a

rebuttable presumption that QFs

interconnected with electric utility

members of a ‘‘Day 2’’ RTO/ISO have

nondiscriminatory access to that ‘‘Day

2’’ market. Since the Commission found

that the existing ‘‘Day 2’’ markets

satisfied the requirements of section

210(m)(1)(A), this creates a rebuttable

presumption that electric utility

members of the existing ‘‘Day 2’’ RTO/

ISOs are relieved of the purchase

requirement.

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74. The Commission declined to

apply this presumption of

nondiscriminatory access to entities that

are not members of the ‘‘Day 2’’ RTO/

ISOs. In order for such entities to obtain

relief of the purchase requirement, the

Commission stated that they must file

an application pursuant to either section

210(m)(1)(B) or (C), to be reviewed on a

case-by-case basis by the Commission.

Requests for Rehearing

75. Industrial Parties argue that the

Commission does not have sufficient

experience to impose a presumption of

access in the ‘‘Day 2’’ markets. In their

view, these markets are nascent and the

Commission does not have the ability to

determine whether QFs have sufficient

access to competitive alternatives to

justify relieving electric utilities within

those markets of the mandatory

purchase obligation.

76. NRECA, on the other hand, argues

that it is arbitrary and capricious to

deny to non-member utilities within or

adjacent to the footprint of a ‘‘Day 2’’

RTO/ISO the same presumption

accorded to RTO/ISO members. NRECA

contends that there is no basis for

denying non-RTO member utilities

adjacent to an RTO the same

presumption where the non-RTO

member utilities have a Commissionapproved OATT or reciprocity tariff.

NRECA also argues that the Final Rule

appears inconsistent as to which

standard a non-RTO member within a

‘‘Day 2’’ RTO footprint must satisfy in

order to obtain a waiver from the

purchase requirement. Although the

Final Rule provides that non-RTO

members, if they are located within or

adjacent to the footprint of a ‘‘Day 2’’

RTO, must satisfy the section

210(m)(1)(B) or (C) standards in order to

remove the purchase obligation, NRECA

notes that the Final Rule also states that

any electric utility may file an

application for relief from the purchase

requirement by showing

nondiscriminatory access to any of the

section 210(m)(1)(A), (B) or (C)

markets.36

77. NRECA also argues the Final Rule

effectively allows QFs interconnected to

an RTO member that has had its

purchase requirement terminated to

have the option of participating in that

RTO market or requesting wheeling

service to whichever non-member

utility within or adjacent to the RTO’s

footprint has the highest avoided cost.

NRECA expresses concern that the QF

in this circumstance could seek to

consummate a mandatory purchase

36 NRECA Request for Rehearing at 8 (citing Final

Rule at P 125, 151).

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agreement with a distant utility,

notwithstanding termination of the

purchase obligation for its

interconnected utility. NRECA therefore

asks the Commission to address this

unintended consequence on rehearing.

78. Even if Congress assumed that

QFs in RTO regions have access to

nondiscriminatory transmission

services, as well as meaningful

opportunities to sell long-term capacity/

energy in competitive markets, PIOs

argues that it does not follow that

Congress intended to permit utilities in

those regions to bypass section

210(m)(3) requirements or to authorize

the Commission not to consider

evidence of actual QF access to required

services and markets when utilities in

those regions seek to end their PURPA

obligations.

Commission Determination

79. The Commission denies rehearing

of its decision to adopt a rebuttable

presumption that QFs interconnected

with electric utility members of a ‘‘Day

2’’ market have nondiscriminatory

access to that ‘‘Day 2’’ market.

Arguments that the ‘‘Day 2’’ markets do

not provide QFs sufficient competitive

alternatives are rejected above.37 The

Commission has sufficient experience

with the four ‘‘Day 2’’ markets to

determine that QFs have

nondiscriminatory access to those

markets. Industrial Cogenerators offers

no reason to depart from the statutory

language and impose a more rigorous

standard.

80. The Commission also denies

rehearing of its decision to limit

application of the ‘‘Day 2’’ presumption

only to member utilities of the

particular ‘‘Day 2’’ RTO/ISO. Member

utilities have turned over control of

their transmission to the regional

organization. As a result, QFs

interconnected with a member utility

may offer their energy into the RTO/ISO

day ahead and real time energy markets

without any additional concerns about

securing transmission capacity. These

QFs face few, if any, barriers to be able

to sell energy and capacity to any

willing purchaser within the RTO/ISO

region, subject to the purchaser’s

willingness to pay any relevant

congestion charges.

81. In contrast, non-member utilities

have retained control over their

transmission facilities and, thus, control

the only access interconnected QFs have

to the market. While an OATT or

reciprocity tariff will provide a QF

interconnected with a non-member

utility with access to the market within

37 See supra P 19–30, 41–48.

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that particular utility’s subregion, the

QF must compete with the non-member

utility to secure transmission service in

order to access the nearby regional

market. Issues may arise concerning

ATC and a range of other open access,

commercial, and coordination (with the

RTO or ISO) matters that are more

appropriately examined on a casespecific basis.38 Accordingly, it is

reasonable for the Commission to limit

application of the rebuttable

presumption that the four RTO/ISOs

meet the statutory standards under

PURPA 210(m)(1)(A) only to member

utilities of those regional organizations.

Non-member utilities remain free,

though, to seek termination of the

obligation to purchase from QFs in

individual cases.

82. NRECA is correct that any electric

utility may file an application for relief

of the purchase obligation under any

subparagraph of section 210(m)(1). We

clarify that the Commission’s

conclusion not to apply a presumption

of nondiscriminatory access to nonmember utilities of a ‘‘Day 2’’ RTO/ISOs

does not preclude such utilities from

seeking to satisfy the requirements of

subparagraphs (A), (B), or (C), as the

regulations in Part 292 of the

Commission’s regulations expressly

provide.

83. In response to NRECA’s concern

that a QF interconnected with a member

utility of a ‘‘Day 2’’ market will seek

PURPA contracts with adjacent utilities,

using QF wheeling rights, we do not

interpret section 210(m) to permit this.

Section 210(m)(1) provides that ‘‘no

electric utility’’ shall be subject to the

purchase requirement if the

Commission finds that the QF has

nondiscriminatory access to one of the

specified markets. Thus, once the

Commission makes a finding that a

particular QF has nondiscriminatory

access to one of the specified markets,

no electric utility shall be required to

enter into a new contract or obligation

with that QF. The QF would therefore

no longer be able to impose the

purchase requirement on any electric

utility. If a QF that has been found to

have nondiscriminatory access to one of

the specified markets pursuant to the

request of a particular electric utility

seeks to enforce the purchase obligation

against another electric utility, the

38 For example, QFs interconnected with member

utilities would not experience rate pancaking for

transmission service to access the market,

additional risks and costs of possible curtailment

outside of the locational marginal price (LMP)

managed market, or increased scheduling burdens

associated with taking service over an intervening

transmission system under the OATT (in

comparison to directly scheduling energy deliveries

in the day-ahead and real-time LMP markets).

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second electric utility may file an

application to terminate its purchase

obligation with respect to that QF, and

the Commission would consider its

findings in the first proceeding to be

determinative, absent a showing by the

QF that circumstances, either

nondiscriminatory access or the state of

the markets, have changed.

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3. Small Size

84. Notwithstanding the presumption

of nondiscriminatory access afforded by

the OATT or the structure of the ‘‘Day

2’’ markets, the Commission concluded

in the Final Rule that certain QFs may

nonetheless have difficulty accessing

the market due to their small size. The

Commission, therefore, adopted an

additional rebuttable presumption that

small QFs do not have

nondiscriminatory access to the market,

regardless of whether the QF is an

eligible customer under an OATT or

interconnected with a member utility of

a ‘‘Day 2’’ RTO/ISO. Although the

Commission did not specify in the Final

Rule what evidence would be sufficient

to rebut this presumption, it did note

that relevant evidence could include the

extent to which the small QF has been

participating in the market or is owned

by, or is an affiliate of, an entity that has

been participating in the relevant

market. The Commission also found that

a reasonable and administratively

workable definition of ‘‘small’’ is 20

MW net capacity or smaller.

Requests for Rehearing

85. On rehearing, petitioners raise

several issues regarding the rebuttable

presumption for small QFs. Some

utilities argue that there should be no

special treatment of small QFs and that

the rebuttable presumption is an

impermissible waiver of section 210(m).

Some QFs, however, argue that small

QFs should be completely exempt from

termination of the mandatory purchase

obligation. Various petitioners argue

that the Commission should set the

threshold for ‘‘small’’ lower or higher.

86. Central Vermont argues that

making exceptions for certain QFs

because of their small size goes against

the plain language of the statute,

contending that the statute says nothing

about allowing the Commission to

consider whether it is practical or

economical for the QF to reach the

wholesale market in question. Central

Vermont argues that the Commission’s

findings with respect to QFs

interconnected with member utilities of

the ‘‘Day 2’’ RTO/ISO should apply

equally to all QFs regardless of size.

NRECA similarly argues that Congress

did not establish exceptions for size,

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characterizing the Commission’s

standards for overcoming this

presumption as insurmountable and,

therefore, arbitrary and capricious.

87. Deere argues, however, that the

purchase requirement for small QFs

should be retained in full in any market

in which that obligation is otherwise

lifted for large generators. Otherwise,

Deere contends, the rebuttable

presumption will be an invitation for

expensive litigation. Deere argues that

the Commission should treat small QFs

in a manner that prevents the costs of

defending the rebuttable presumption

from becoming a discouragement to the

development of small renewable

projects.

88. CIBO argues that the Commission

should expand the size presumption to

apply to QFs with a net capacity of 80

MW or less. CIBO contends such

treatment would be consistent with the

Commission’s obligation under EPAct

2005 to issue a rule that ensures

continuing progress in the development

of efficient electric energy generating

technology. CIBO argues that Congress

defined ‘‘small’’ in PURPA as 80 MW

for small biomass, waste, renewable

resources and geothermal resource

power generation and, therefore, the

Commission’s defining of small QFs at

20 MW contravenes Congress’s

longstanding support of QFs, creates

obstacles for some but not all small QFs

and upsets capital investment. CIBO

argues that the Commission makes no

attempt to explain how 20 MW QFs

differ from 80 MW QFs and that any

differentiation for purposes of unequal

statutory treatment must have a rational

basis.

89. CIBO further argues that the

orders cited by the Commission in favor

of a 20 MW threshold, such as Order

No. 671 39 and Order No. 2006,40 do not

address the operational limits or

difficulties that larger QFs have in

accessing ‘‘Day 2’’ markets, such as

widely fluctuating steam-host demand,

siting issues and transmission versus

distribution interconnection access

issues. Without guaranteed access to

markets, CIBO contends that many QFs

in the 20–80 MW range will simply stop

39 Revised Regulations Governing Small Power

Production and Cogeneration Facilities, Order No.

671, 71 FR 7852 (Feb. 15, 2006), FERC Stats. & Regs.

¶ 31,203 (2006), order on reh’g, Order No. 671–A,

71 FR 30585 (May 30, 2006), FERC Stats. & Regs.

¶ 31,219 (2006).

40 Standardization of Small Generator

Interconnection Agreements and Procedures, Order

No. 2006, 70 FR 34189 (June 13, 2005), FERC Stats.

& Regs. ¶ 31,180 (2005), order on reh’g, Order No.

2006–A, 70 FR 71760 (Nov. 30, 2005), FERC Stats.

& Regs. ¶ 31,196 (2005).

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cogenerating and new industrial

cogeneration will not be developed.

90. Finally, CIBO argues that

increasing the threshold to 80 MW adds

a very small number of QFs and would

add little to the amount of capacity

compared to total nationwide capacity.

In CIBO’s view, the Final Rule already

requires utilities to purchase power

from QFs that are less than 20 MW and,

thus, there would not be any material

increase in administrative burden for

electric utilities to use an 80 MW

threshold.

91. Industrial Parties argue that the

Commission should expand the small

size presumption to include any QF that

is unable to sell power in 50 MW

blocks, regardless of the particular

capacity of the facility. Industrial Parties

contend that certain over the counter

bilateral contracts stipulate a minimum

lot increment of 50 MW, which can be

a problem for larger QFs (i.e., above the

20 MW threshold) because their

intermittent production of surplus

power cannot always or easily be

packaged in 50 MW x 16 hour

increments. Industrial Parties state that

QFs that cannot sell 50 MW blocks have

only very limited access to financial

markets, at disadvantageous terms.

92. NRECA argues that the

Commission’s 20 MW threshold is too

generous. NRECA states there is

evidence in the record that RTOs are

capable of transacting with generators

with capacities as small as one or two

MW depending on the RTO. NRECA

contends that no party has

demonstrated that the existing RTO

processes for utilities between one and

20 MW are ineffective, unduly

complicated or overly burdensome.

NRECA also suggests that the

Commission’s earlier decision to

simplify interconnection for generators

with capacities of less than 20 MW is

unrelated to the question of whether

QFs have access to markets or, if related,

demonstrates that they have such

access.

93. With regard to how the

Commission measures the size of a QF

for purposes of applying the rebuttable

presumption, the Cogeneration

Association of California requests the

Commission to clarify it is by reference

to capacity delivered to the grid. The

Cogeneration Association of California

state that cogenerators often supply

electricity to on-site load and only

supply a portion of their maximum

electrical output to the grid. In its view,

electricity used to supply on-site load

should not be counted for purposes of

applying the size presumption.

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Commission Determination

94. The Commission denies the

requests for rehearing regarding the

rebuttable presumption that small QFs

do not have nondiscriminatory access to

the market. We continue to believe it is

appropriate to adopt a rebuttable

presumption that certain QFs do not

have nondiscriminatory access to

markets because of their small size. The

purchase requirement will therefore

remain in effect, in all markets, for all

QFs with a net capacity of 20 MW or

smaller, although electric utilities will

have the opportunity to rebut the

presumption by showing that a small

QF does in fact have nondiscriminatory

access to the relevant market.

95. We share CIBO’s goal of

continuing progress in the development

of efficient electric generating

technology, but disagree with CIBO and

other petitioners that we have

unreasonably differentiated ‘‘small’’

from ‘‘large’’ QFs. There is no perfect

bright line that can be drawn and we

have reasonably exercised our

discretion in adopting a 20 MW or

below demarcation for purposes of

determining which QFs are unlikely to

have nondiscriminatory access to

markets. Moreover, any QF above 20

MW is permitted to demonstrate an

inability to access the markets, and any

electric utility is permitted to

demonstrate that a QF 20 MW or smaller

is able to access the markets. The

Commission’s development of

rebuttable presumptions is based on its

experience with QFs, transmission

interconnections and related market

issues, and is designed to provide a

reasoned and fair approach for

processing applications within the 90day time frame dictated by the statute.

96. While the Final Rule does not

make a generic finding that QFs

interconnected at a distribution level

lack nondiscriminatory access to

markets, we believe that it is reasonable

to conclude that some, perhaps most,

small QFs at or below the 20 MW level

can be distinguished from larger QFs by

the type of delivery facilities to which

they typically interconnect. Most QFs

larger than 20 MW are interconnected to

higher voltage lines, typically

considered to be transmission lines,

while smaller QFs tend to be

interconnected to lower voltage radial

lines, frequently considered to be

distribution.41 Many lower voltage

41 See, e.g., Standardization of Small Generator

Interconnection Agreements and Procedures, Order

No. 2006–A, 70 FR 71760 (Nov. 30, 2005), FERC

Stats. & Regs. 31,196 at P 105 (2005), (‘‘We expect

the vast majority of small generator

interconnections will be with state interconnection

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facilities are radial systems designed to

carry power from the high-voltage grid

downstream to loads, and there may be

technical enhancements required to

move power injected into such facilities

upstream to the transmission grid to

access the broader wholesale market.

Smaller QFs are also more likely to have

to overcome other obstacles, such as

jurisdictional differences, pancaked

delivery rates, and perhaps additional

administrative procedures, to obtain

access to distant buyers.42 Taken

together, these factors support a

rebuttable presumption that smaller QFs

have substantially less ability to access

wholesale markets than do larger QFs.

97. Although there is no unique and

distinct megawatt size that uniquely

determines if a generator is small, in

other contexts the Commission has used

20 MW, based on similar considerations

to those presented here, to determine

the applicability of its rules and

policies. Indicative of this is the

Commission’s reliance in the Final Rule

on its findings in Order No. 671, where

the Commission retained exemptions for

QFs that are 20 MW or smaller from

sections 205 and 206 of the FPA, and

Order Nos. 2006 and 2006–A, where the

Commission recognized that generators

20 MW or smaller should have different

standards for interconnection than large

generators. We continue to believe that

20 MW is the appropriate level at which

to apply this rebuttable presumption.

98. We disagree with CIBO that the

Commission’s small QF threshold of 20

MW contradicts Congress’s 80 MW

definition of small power producers in

PURPA section 210(a).43 The 80 MW

threshold in section 210(a) of PURPA

defines the qualification of small power

producers eligible for the rights,

privileges and protections of QFs. The

use of 20 MW in the Commission’s

implementation of section 210(m) of

PURPA serves a fundamentally different

purpose. The Commission is

distinguishing between small and large

facilities to reflect the ability of

particular QFs to access markets.

Categorically applying the presumption

to all small power production facilities,

through adoption of a 80 MW threshold,

would not appropriately take into

programs.’’); Id. at P 102 (‘‘a QF selling at retail is

not eligible to interconnect under either Order No.

2003 or Order No. 2006. Under the Public Utility

Regulatory Policies Act of 1978, such

interconnections are governed by state law.’’)

(citations omitted).

42 See, e.g., Standardization of Small Generator

Interconnection Agreements and Procedures, Notice

of Proposed Rulemaking, 68 FR 49974 (Aug. 19,

2003), FERC Stats. & Regs. ¶ 32,572 (2003) at P 23–

25.

43 16 U.S.C. 796(17)(A)(ii).

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account the different considerations that

affect a QF’s ability to access markets.

99. We also disagree that use of a 20

MW threshold defeats Congressional

intent to foster small power production.

The purchase requirement remains in

place for small power producers that do

not have nondiscriminatory access to

one of the markets identified in section

210(m)(1)(A), (B), or (C). The purchase

requirement can be terminated only if

the Commission finds

nondiscriminatory access to such

markets, which in turn means the small

power producers will have the ability to

sell their energy and capacity into the

wholesale marketplace.

100. We reject the request that the

Commission expand the small size

presumption to include any QF that is

unable to sell power in 50 MW blocks,

regardless of the particular capacity of

the facility. While it may be true that

certain over-the-counter bilateral

contracts stipulate a minimum lot

increment of 50 MW, and while also it

may be true that such a contractual

requirement may be a problem for some

QFs that are larger than 20 MW because

of their intermittent production of

surplus power, the Commission has

provided these larger QFs the

opportunity to rebut the presumption of

access to the ‘‘Day 2’’ market by

showing, among other things,

operational characteristics that

effectively prevent the QF’s

participation in a market or that the QF

has no access to a mechanism to

schedule transmission service or make

sales in advance on a consistent basis

because of variability of the QF’s

electric energy production or because of

market rules that prevent the QF from

scheduling transmission service or

participating in organized markets.44

The effect of needing to sell in 50 MW

blocks may therefore be presented to the

Commission in the context of a

particular request to terminate the

purchase requirement. Expansion of the

small size rebuttable presumption to

reflect this concern, which may not be

relevant in all cases, is thus neither

necessary nor appropriate.

101. The Commission rejects requests

to apply the small size presumption

only to much smaller QFs, such as those

with a net capacity of one or two MW.

We set the rebuttable presumption at an

appropriate level, reflecting our

understanding of the general nature of

QFs’ interconnection practices and the

relative capabilities of small entities.

However, we again stress that the

presumption is rebuttable. Electric

utilities are free to argue that smaller

44 Final Rule at P 82–84; 18 CFR 292.309(e)(1).

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entities have nondiscriminatory access

to qualifying markets. We believe that

the best place to consider such

arguments is in the individual cases that

electric utilities bring to the

Commission.

102. Petitioners arguing that the

Commission has inappropriately waived

the effects of section 210(m) for small

QFs mischaracterize the Final Rule. The

Commission made clear in the Final

Rule that no class of QFs had been

shown to uniformly lack

nondiscriminatory access based on a

single factor and, as such, no

justification existed for exempting any

category of QFs from any future orders

which may terminate a utility’s

purchase requirement. The Commission

did, however, create a rebuttable

presumption that small QFs may not

have nondiscriminatory access to

markets because of their small size. As

we explain above, the use of such

rebuttable presumptions is fully

consistent with the Commission’s

obligation under section 210(m) and the

Commission’s need to identify ways to

expedite processing of applications.

103. To be clear, the use of a

rebuttable presumption does not

prevent a utility from seeking to

terminate the obligation to purchase

power from small QFs, as would be the

case if the Commission implemented a

waiver. Instead, the use of the rebuttable

presumption simply leaves the burden

on the utility to show that these smaller

entities indeed have nondiscriminatory

access. This approach recognizes that,

more often than not, a small QF will

have greater difficulty obtaining

nondiscriminatory access to markets

due to the tendency for small QFs to be

interconnected to lower voltage radial

lines, and the consequent need to

overcome other potential obstacles to

nondiscriminatory access, such as local

distribution access rules that are not

within the Commission’s jurisdiction,

pancaked delivery rates and additional

administrative burdens to obtain access

to buyers other than the interconnected

utility. It is therefore appropriate in the

first instance to place on the electric

utility the burden of demonstrating that

a small QF does in fact have

nondiscriminatory access to the types of

markets identified in sections

210(m)(1)(A), (B) or (C). Similarly, the

rebuttable presumption that QFs above

20 MWs do have nondiscriminatory

access to markets does not prevent a QF

from providing evidence to the contrary.

104. With regard to the request to

clarify how the 20 MW threshold will be

measured, the Commission explained in

the Final Rule that a QF is required to

state its size in terms of ‘‘net capacity’’

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when certifying its status as a QF.45 Net

capacity is the maximum amount of

power that the facility is able to produce

(gross capacity) less any auxiliary load

for devices that are necessary and

integral to the power production process

(station power). Any power consumed

by on-site load at the location of the QF

for purposes unrelated to the power

production process should not be

subtracted from gross capacity for

purposes of reporting net capacity.

Whether the facility is a Commissioncertified facility or a self-certified

facility, both are certified at net

capacity. Therefore, a QF’s Commissioncertified (or self-certified) net capacity

would determine whether the QF

qualifies for the ‘‘small size’’ rebuttable

presumption.

C. Filing Requirements

105. In the Final Rule, the

Commission found that a utility electing

to file for relief from the purchase

requirement must submit an application

with the Commission providing certain

information, including transmission

constraints within its service territory in

order to give potentially affected QFs

information that may be useful in

rebutting the presumption that they

have access to all aspects of the

applicable ‘‘Day 2’’ markets.46 The filing

requirements are contained in new

§ 292.310(d) of the Commission’s

regulations.

Requests for Rehearing

106. Industrial Parties contend that

the Commission is not sufficiently

prescriptive as to the level of detail on

transmission availability that utilities

should provide in their applications.

Industrial Parties argue that the

Commission should require the same

information on transmission access as in

UniSource Energy Corporation.47

Industrial Parties also argue that to

enable effective input by QFs and other

interested parties, any information

provided to support an electric utility’s

application to terminate its purchase

obligation must be provided to all

affected QFs at the time of filing.

Industrial Parties continue that if a QF

later seeks to reinstate the purchase

obligation, the electric utility needs to

provide current data, and not rely on the

45 Final Rule at P 72, n.41.

46 Final Rule at P 102.

47 UniSource Energy Corporation, 109 FERC

¶ 61,047 (2004) (UniSource) (reviewing a market

monitoring plan submitted in support of a request

for Commission authorization of the disposition of

jurisdictional facilities for purposes of identifying

anticompetitive conduct).

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data it used to justify termination of the

purchase obligation.

107. EEI, however, believes the filing

requirements in § 292.310(d)(3) of the

Commission’s regulations are unduly

broad and potentially burdensome. EEI

urges the Commission to exempt

utilities operating within the footprint

of Commission-approved RTO/ISOs that

have financial, rather than physical,

transmission rights models and ERCOT

(which likewise operates under a

financial transmission rights model)

from the information submission

requirements in § 292.310(d)(3). Since a

QF has the right to interconnect to

transmission within an RTO/ISO that

operates under a financial transmission

rights model, EEI contends that the QF

has access to that market regardless of

whether a physical path exists for

electric sales. As a result, EEI argues

that interconnection and other

transmission constraint and congestion

studies are of little relevance in

determining whether a QF has

nondiscriminatory access to

transmission in any market with a

financial rights transmission model.

108. EEI argues that even in markets

without financial transmission rights,

all new QFs have nondiscriminatory

access if they are willing to fund on an

up-front basis the transmission upgrades

necessary to receive network resource

status, i.e., if they are willing to comply

with Order Nos. 2003 and 2006. Despite

the fact that any upgrade costs for firm

transmission service are typically rolled

into rates, EEI contends that the

Commission’s transmission pricing

policy could require that existing QFs

bear the incremental cost of upgrades if

firm transmission service is not

available and the costs of the upgrades

exceed the rolled-in rate. As a result,

EEI argues that the only grounds for

rebuttal of the presumption of

nondiscriminatory access when OATT

service is available should be related to

unique operational characteristics of the

specific QF or in the rare circumstance

in which there is not a sufficient

opportunity to relieve a transmission

constraint because of unique factors,

such as the inability to secure regulatory

approval for upgrades or otherwise to

remedy physical system limitations. EEI

therefore asks the Commission to limit

the informational filing requirements to

those particular circumstances.

109. In addition, EEI requests the

Commission to clarify what is intended

by ‘‘[r]elevant system impact studies for

the generation interconnections, already

completed’’ for both non-RTO/ISO and

RTO/ISO regions. EEI states that it is

unclear what studies, and what time

frames, are contemplated by this

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requirement and whether this language

is intended to refer to the

interconnection studies for existing QFs

or for all generator interconnections. EEI

requests clarification that ‘‘relevant’’

studies will be limited to studies that

are the most recent regarding the QF’s

impact on the system or the most recent

generic studies of the applicable control

area. EEI states that, for the last several

decades, interconnection studies for

QFs not selling to the market have been

performed under state oversight. EEI

requests that the Commission clarify

whether the equivalent of system impact

studies performed for QFs pursuant to

state regulation should be provided.

110. Lastly, if the Commission

chooses to maintain the requirements in

§ 292.310(d)(3) of the Commission’s

regulations, EEI requests that the

requirements identified in paragraph

(iii) of § 292.310(d)(3), regarding system

impact studies for generator

interconnections, be clarified to require

all Commission-approved RTO/ISOs to

identify and make available to their

member transmission owners

confidential and public versions of each

interconnection study it performs for

submission to the Commission. They

argue that it is not clear how electric

utilities that have transferred

operational control of their transmission

to RTO/ISOs could fulfill the

requirement to provide ‘‘relevant system

impact studies’’ without imposing

certain requirements on the RTO/ISO.

EEI urges the Commission to clarify that

submitting studies conducted by the

RTO/ISO will be sufficient to meet the

informational requirements.

Commission Determination

111. In order to ensure that a

potentially affected QF has an adequate

opportunity to evaluate potential

obstacles to nondiscriminatory access,

despite the existence of an OATT or the

QF’s location in a ‘‘Day 2’’ market, the

Commission will maintain the

requirement for applicants to submit

transmission-related information

relevant to a QF’s evaluation of this

question. Information about the

applicant’s long-term transmission plan,

the location of transmission constraints,

levels of congestion, system impact

studies, and links to applicant’s Open

Access Same Time Information System

(OASIS) for ATC information will allow

a potentially affected QF to detect

whether it might be located on a portion

of a utility’s system where limited

transfer capability may constrain its

ability to transfer power into the

wholesale market. In response to

Industrial Parties’ concerns that QFs be

provided any information used to

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support an electric utility’s application,

our rules currently provide that an

electric utility must identify with names

and addresses all potentially affected

QFs.48 Electric utilities serve potentially

affected QFs with a copy of the

application. In addition, the

Commission by letter provides notice of

the application to the potentially

affected QFs and explains comment

procedures and how the QFs can access

the electric utility’s filings.49 An

interested potentially affected QF

should intervene in the proceeding and

would then receive any subsequent

information provided by an electric

utility.

112. We disagree with EEI that the

filing requirements are unduly broad or

burdensome. It is reasonable to place

those obligations on the petitioning

electric utility, the party requesting the

Commission to make the findings

required by section 210(m)(1) of

PURPA. These filing requirements will

facilitate timely processing of the

application by the Commission, while

also providing QFs with the information

necessary for their own evaluation of

nondiscriminatory access to wholesale

markets. We find that EEI’s claim of

burden is overstated, since we do not

require anything which has not already

been developed. It is our experience that

most of this documentation is in

electronic format and available through

online resources.50 We clarify,

moreover, that an applicant can provide

a hyperlink to the relevant studies, if

available, rather than submitting

complete studies and reports.51 We

therefore believe that the burden on a

utility of providing existing information

is minimal and that the benefits to the

QFs and the Commission of providing

this information readily in one filing

48 18 CFR 292.310.

49 In the unlikely event a potentially affected QF

is intentionally or unintentionally omitted by the

electric utility and not served notice of an

application, the Commission will take remedial

steps as appropriate.

50 We note that the following public and nonpublic sources contain transmission information:

RTO websites for links to publicly available

regional transmission plans; OASIS websites for

system impact studies including various

transmission service requests, available through

confidentiality agreements; OASIS websites for

posted ATC values, available through an OASIS

certificate; and, FERC Form 715 for the Annual

Transmission Planning and Evaluation Report

submitted to the Commission, available on the

FERC website through the Critical Energy

Infrastructure Information (CEII) process.

51 The filing should identify the relevance of the

material in the hyperlink. And to the extent that the

filing discusses particular portions of such studies

and reports, the electric utility should clearly

identify those portions by page, paragraph, or

similar reference.

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will outweigh any such minimal

burdens.

113. We deny EEI’s request to exempt

utilities operating within the footprint

of a Commission-approved RTO/ISOs

from submitting the information to the

extent it is otherwise available from or

provided by the RTO or ISO. The fact

that electric utilities in RTO/ISO regions

may be able to access information

required in those filings on an equal

basis as other parties, i.e., through the

RTO/ISO website or databases, does not

eliminate the Commission’s underlying

need for the information to process the

application in a timely manner.

Furthermore, we emphasize that

§ 202.310(d)(3) of the Commission’s

regulations requires the submission of

non-publicly available information to

the extent it is the only relevant

available resource responsive to this

requirement. Any need to maintain

confidentiality can be addressed in the

context of the particular application.

114. We also disagree that the

information required in § 292.310(d)(3)

is not necessary in RTO/ISO markets

with financial transmission rights

models. This information is relevant

even in the context of financial RTO

markets as it will help potentially

affected QFs understand the

transmission market circumstances they

would face if the Commission approves

the utility’s application. The filing

requirements will, in this regard,

therefore not be changed for any electric

utility seeking termination of the

purchase requirement.

115. As to the argument that

transmission-related information is

unnecessary since new QFs have

nondiscriminatory access if they fund

transmission upgrades necessary to

receive network resource status, we

disagree. Information about

transmission system constraints will

allow a potentially affected QF to

evaluate the impact of a utility’s request

on the QF. Transmission constraints

also provide valuable information about

the scope and geographic reach of the

market a potentially affected QF may

reach as an alternative to selling to the

local utility.

116. With regard to EEI’s request to

explain the phrase ‘‘[r]elevant system

impact studies for the generation

interconnections, already completed,’’

we clarify that the studies we consider

relevant are the most recent system

impact studies, already completed, that

analyze the generation interconnection

to the applicant’s transmission

substation that is ‘‘electrically close’’ to

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the QF’s substation.52 With respect to

EEI’s question whether the equivalent of

system impact studies performed for

QFs pursuant to state regulation should

be provided, we clarify that these

studies must be submitted if they

provide responsive information relevant

to the filing requirements.

117. We also clarify, as requested by

EEI, that submitting studies conducted

by an RTO/ISO will be sufficient to

meet the informational requirements,

provided the submission is complete,

i.e., the applicant submits every study

required (or hyperlinks to the relevant

studies) and all related information

listed in § 292.310(d). However, we

deny EEI’s request that the Commission

require RTO/ISOs to identify and make

available confidential and public

versions of each interconnection study

it performs. We believe this request is

unnecessary. It is our understanding

that the current practice within the

RTO/ISOs is that the electric utility

receives the confidential version of the

study from the RTO/ISO, and likely has

participated at least in an advisory role

in the performance of the study.

Therefore, we expect that these studies

would already be in the applicant’s

possession or could be made available

to them without placing any extra

requirements or burdens on the RTO/

ISOs. It is the utility who is filing an

application seeking relief from the

purchase requirement and, therefore, we

believe it is their responsibility to gather

and submit the information to the

Commission. Additionally, while the

publicly available reports are available

through the OASIS websites, an

applicant still needs to identify those

studies that are relevant, and provide

them (either physically or by hyperlink)

with the filing.53

118. In response to the Industrial

Parties’ argument that the Commission

is not sufficiently prescriptive as to the

level of detail regarding transmission

availability required under the

Commission’s regulations, we deny

rehearing in part. As a general matter,

we believe the information identified in

§ 292.310(d)(3) is sufficient to give

potentially affected QFs information

relevant to evaluate whether there is

adequate transmission available for new

selling arrangements, subsequent to

termination of the utility’s purchase

52 By ‘‘electrically close’’ we mean any

interconnection to the same substation where the

QF is connected or to any adjacent substation or

interconnection point where power injection to the

transmission system has the same or similar impact

on the transmission facilities’ loadings, as the QF’s

power injection.

53 See supra note 51.

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requirement.54 In addition, the

information on processes to be followed

to access the markets, identified in

§ 292.310(d)(4) and (5), is sufficient to

give affected QFs information relevant

to evaluating nondiscriminatory access

to the markets described in section

210(m)(1) of PURPA. The relevant

transmission information referred to by

Industrial Parties in the UniSource

proceeding is thus embedded in the

studies we require to be filed. We do not

agree that the other elements offered by

UniSource in the market monitoring

plan for its proposed merger are either

relevant or necessary to evaluating

nondiscriminatory access in this

context.

119. We do, however, believe that

§ 292.310 of the Commission’s

regulations lacks certain information

that will facilitate the Commission’s

processing of section 210(m)

applications. The Commission has

processed applications in Docket Nos.

QM07–2–000 and QM07–4–000 and as

a result of its experience in those

dockets finds that additional

information from electric utilities would

help avoid the need to issue

‘‘deficiency’’ letters or send additional

information requests, ultimately slowing

down the processing of requests for

relief. The Commission therefore

amends its regulations to require that

the following additional information be

submitted: the docket number assigned

to each potentially affected QF if it filed

for self-certification of QF status or an

application for Commission-certification

of QF status; the net capacity of each

potentially affected QF; the location of

each potentially affected QF depicted by

state and county and the name and

location of the substation where each

potentially affected QF is

interconnected; the interconnection

status of each potentially affected QF

including whether the QF is

interconnected as an energy or a

network resource; and the expiration

date of the energy and/or capacity

agreement between the applicant utility

and each potentially affected QF. The

introductory paragraph of § 292.310(c) is

thus amended to read as follows:

54 However, we note, in order for a QF to evaluate

potential ATC on an applicant’s OASIS, the QF will

need to determine the type, firmness and duration

of transmission service that the affected QF will

need for the power it intends to sell on a

prospective basis. While this information will

provide a potentially affected QF with information

about current ATC, it is no guarantee that service

from a particular source to a particular load can be

provided on a firm basis. Only submission of a

request and subsequent reservation of transmission

service can provide that level of certainty to any

prospective customer.

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35887

(c) An electric utility must submit with its

application for each potentially affected

qualifying facility: the docket number

assigned if a qualifying facility filed for selfcertification or an application for

Commission certification of qualifying

facility status; the net capacity of the

qualifying facility; the location of the

qualifying facility depicted by state and

county, and the name and location of the

substation where each qualifying facility is

interconnected; the interconnection status of

each potentially affected qualifying facility

including whether the qualifying facility is

interconnected as an energy or a network

resource; and, the expiration date of the

energy and/or capacity agreement between

the applicant utility and each potentially

affected qualifying facility. All potentially

affected qualifying facilities shall include:

*

*

*

*

*

120. Additionally, in reviewing the

regulations adopted in the Final Rule,

we have discovered a mistake in

§ 292.310(d)(3) that we will correct here.

The applicant’s ‘‘long-term transmission

plan’’ referred to in § 292.310(d)(3) was

intended to be information required to

be filed with an application. Therefore

the applicant’s ‘‘long-term transmission

plan’’ is redesignated as

§ 292.310(d)(3)(i). Also, in

§ 292.310(d)(3)(vi), the term ‘‘available

transmission capacity (ATC)’’ will be

corrected to state ‘‘available transfer

capability (ATC).’’ The new

§ 292.310(d)(3) is amended to read as

follows:

(3) Transmission Studies and related

information, including:

(i) The applicant’s long-term transmission

plan, conducted by applicant, or the RTO,

ISO or other relevant entity;

(ii) Transmission constraints by path,

element or other level of comparable detail

that have occurred and/or are known and

expected to occur, and any proposed

mitigation including transmission

construction plans;

(iii) Levels of congestion, if available;

(iv) Relevant system impact studies for the

generation interconnections, already

completed;

(v) Other information pertinent to showing

whether transfer capability is available; and

(vi) The appropriate link to applicant’s

OASIS, if any, from which a qualifying

facility may obtain applicant’s available

transfer capability (ATC) information.

121. Finally, Industrial Parties asks us

to clarify that if a QF later seeks to

reinstate the purchase obligation

pursuant to § 292.311, the electric

utility, if it chooses to answer the QF’s

petition to reinstate, needs to provide

current data, and not rely on the data it

used to originally justify termination of

the mandatory purchase obligation. We

decline to make a generic determination

here on this matter. If an electric utility

answers the QF’s petition, it is free to

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decide what information to file so as to

present its best arguments, based on the

content of the QF’s filing, the amount of

time since the prior proceeding and any

indications of changed circumstances in

the interim. Our decision on whether to

reinstate the purchase obligation will be

based on all of the information

presented.

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D. Obligation To Sell

122. Section 210(m)(5) of PURPA

removes the requirement that an electric

utility sell electric energy to any QF if

the Commission finds that: ‘‘Competing

retail electric suppliers are willing and

able to sell and deliver electric energy

to the qualifying cogeneration facility or

qualifying small power production

facility; and the electric utility is not

required by State law to sell electric

energy in its service territory.’’

123. In the Final Rule, the

Commission clarified that lifting the

obligation from a particular utility to

purchase electric energy from a QF did

not relieve such utility of its obligation

to sell supplemental, backup, standby

and maintenance power to the QF. The

Commission explained that any finding

under section 210(m)(5) would be made

under a separate standard and in a

separate proceeding pursuant to

§ 292.312 of the Commission’s

regulations. The Commission

emphasized that it would strictly

interpret the statutory language in such

proceedings, noting in particular the

reference to ‘‘competing retail electric

providers’’ in section 210(m)(5). The

Commission concluded that the

reference required a finding that the QF

has available at least two competing

suppliers who are not affiliated with the

interconnecting utility.

Requests for Rehearing

124. Industrial Parties request that the

Commission condition releasing electric

suppliers from their obligation to sell

standby and backup power on a finding

that a competitive market for power

exists. Although utilities in the

organized markets may assert that there

are multiple retail providers, Industrial

Parties contend that in many cases the

providers have little capacity to serve

the QF profile or would attach a large

premium to the price given their interest

in serving a stable load. They argue that

some utility or other supplier being

willing to sell a QF power at some

exorbitant price does not satisfy the

Commission’s duty under PURPA to see

that QFs are not exploited and under the

FPA to ensure that rates are just and

reasonable rates. Industrial Parties also

assert one or two suppliers do not make

a competitive market and that rates paid

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Jkt 211001

by QFs cannot be just and reasonable

unless the Commission finds that

market power cannot be exercised by

those suppliers.55

Commission Determination

125. We deny Industrial Parties’

request to condition termination of the

sales obligation on the existence of a

competitive market for replacement

power. We continue to believe a strict

interpretation of section 210(m)(5) is

appropriate in response to requests to

terminate the obligation to sell standby

and backup power to QFs. All the

statute requires is a finding that

‘‘competing retail electric suppliers are

willing and able to sell and deliver

electric energy to’’ the QF. Competing

retail electric suppliers implies two or

more sellers, and the word competing

suggests some level of competition

between them. The requirement that the

suppliers be willing and able to deliver

also appears to require sufficient

capacity to actually make sales.

126. In proceedings on applications

requesting termination of the sales

obligation under § 292.312 of the

Commission’s regulations, QFs

opposing termination of an electric

utility’s obligation to sell may certainly

argue that current practices in a

particular market may provide a basis

for the Commission to find that there are

no ‘‘competing retail electric suppliers’’

in some instances. We will decline to

rule generically on such issues in this

rulemaking.

127. We also reject the Industrial

Parties’ request to condition relief under

section 210(m)(5) on a finding that rates

for replacement power are reasonable.

We affirm our decision in the Final Rule

that the rates for retail service are

beyond the Commission’s jurisdiction.

The Industrial Parties are simply wrong

to imply that the Commission must first

find a competitive retail market before

terminating an electric utility’s

obligation to sell power to a QF. That

argument is based on the same false

premise that this Commission is

responsible for setting retail rates.

Section 210(m) does not shift

responsibility for setting or maintaining

appropriate retail rates from the States

to this Commission. Rather, section

210(m)(5) requires the Commission,

before it terminates an electric utility’s

obligation to sell electric energy to a QF,

to find that ‘‘competing retail electric

suppliers are willing and able to sell

and deliver electric energy to the’’ QF,

and that ‘‘the electric utility is not

required by State law to sell electric

energy in its service territory.’’ Section

55 Industrial Parties at P 19–20.

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210(m)(5) does not require this

Commission to pass judgment on Stateapproved retail rates.

E. Existing Rights and Remedies

Background

128. Section 210(m)(6) of PURPA

protects the rights and remedies under

a contract or obligation in effect or

pending approval before a state

regulatory authority. In the Final Rule,

the Commission interpreted the term

‘‘obligation’’ as a ‘‘legally enforceable

obligation,’’ which is established

through a state’s implementation of

PURPA. The Commission stated that a

QF that had initiated, prior to date of

enactment of section 210(m) (i.e.,

August 8, 2005), a state PURPA

proceeding that may result in a contract

or legally enforceable obligation would

be considered to have triggered an

‘‘obligation’’ with an electric utility

regarding section 210(m)(6).

129. The Commission found that,

when a QF contract terminates by its

own accord, an electric utility would

not be compelled to enter into a new,

successor contract with the QF if the

purchase requirement has been

terminated for the QF. As long as there

is mutual agreement between a QF and

the electric utility to terminate a

contract, the electric utility is not

compelled to enter into another contract

with the QF. The Commission stated

that nothing in the Final Rule was

intended to abrogate existing contracts.

The Commission noted, however, that

there may be contracts containing

provisions that provide that legislation

such as EPAct 2005, or a Final Rule

such as this one, trigger termination of

the contract. To the extent the parties to

a contract cannot agree whether a

termination clause has been triggered,

the Commission determined that the

issue would be best determined in an

individual case-specific proceeding in

which the particulars of the contract can

be examined.

Requests for Rehearing

130. Deere argues that clarification is

required to preserve state law processes

as creating legally enforceable

obligations in the context of section

210(m)(1). Deere contends that language

in paragraph 213 of the Final Rule

indicates that an obligation is triggered

prior to the utility applying for relief of

the PURPA purchase requirement if a

QF ‘‘has initiated a state’s PURPA

proceeding that may result in a contract

or legally enforceable contract or

obligation.’’ Deere argues that the phrase

‘‘state’s PURPA proceeding’’ is too

narrow and should be broadened

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because it does not recognize that a

‘‘legally enforceable obligation’’ can be

created under state law processes which

do not involve a docketed state

proceeding, such as issuance of

regulations.

131. Deere also notes that some states

have adopted PURPA implementation

approaches that require QFs to first start

construction, if not complete it, before

an obligation is created in connection

with section 210(m). Deere argues that

the Commission should therefore clarify

that a QF located in a ‘‘build first’’ state

triggers a legally enforceable obligation

if, prior to the time of the utility PURPA

relief application, it has already begun

construction. Deere argues that

otherwise, QFs that are nearly complete

in the construction will be unfairly

penalized and the significant capital

resources they have committed will be

impaired.

132. OG&E asks the Commission to

clarify that it is not prejudging when—

or if—a QF’s state PURPA application

gives rise to a legally enforceable

obligation under PURPA. OG&E

contends that the Commission has

consistently held that it is for the states,

not the Commission, to determine ‘‘the

specific parameters of individual QF

power purchase agreements, including

the date at which a legally enforceable

obligation is incurred under state

law.’’ 56 OG&E states that presuming that

a section 210(m)(1) ‘‘obligation’’ exists

as of the date a QF files a state

application that ‘‘may’’ lead to a legally

enforceable obligation is inconsistent

with how many states address this

issue. OG&E adds that the Commission

should also clarify that it is not dictating

what factors the states can consider

when evaluating whether a QF has

established a legally enforceable

obligation.

133. OG&E asks that the Commission

clarify that a utility has the opportunity

to respond to a purported legally

enforceable obligation by making a

section 210(m) filing particularly if the

state legally enforceable obligation filing

was made between August 8, 2005 and

the effective date of the Final Rule, as

may be revised on rehearing. OG&E

contends that the utility should be able

to respond by filing a section 210(m)(1)

application with the Commission.

134. OG&E also asks that the

Commission establish a formal process

that allows section 210(m)(1) issues to

be evaluated in response to a state

PURPA ‘‘obligation’’ filing. It argues that

a QF attempting to establish a legally

enforceable obligation should be

required to provide the utility with

formal notice of such a filing, and that

within sixty days of such notice, the

utility must file the necessary

application to satisfy the market criteria.

OG&E argues that this opportunity to

rebut an obligation is essential where a

QF seeks to establish a state-mandated

obligation between January 19, 2006 and

the effective date of the Final Rule.

OG&E states that the Commission made

clear in the NOPR that a utility would

not be able to submit a section 210(m)

application until after a final rule in this

rulemaking. OG&E contends that it is

therefore unreasonable for the

Commission to require utilities to delay

submitting section 210(m)(1)

applications, and then hold that it is too

late to avoid obligations purportedly

incurred during the Commissionmandated delay.

135. With regard to termination of

contracts with a QF, Industrial Parties

note that many utility contracts have a

change-in-law clause that allows them

to terminate current contracts. To the

extent that the parties to a contract

cannot agree whether a termination

clause has been triggered, the Industrial

Parties agree that the issue will be best

determined in an individual casespecific proceeding in which the

particulars of the contract can be

examined. Industrial Parties argue,

however, that the Commission should

clarify that utilities may not use such

clauses to terminate their purchase

obligation without obtaining a

Commission determination pursuant to

the processes set out in the Final Rule.

Commission Determination

136. Section 210(m)(6) provides:

NO EFFECT ON EXISTING RIGHTS AND

REMEDIES.—Nothing in this subpart affects

the rights or remedies of any party under any

contract or obligation, in effect or pending

approval before the appropriate State

regulatory authority or non-regulated electric

utility on the date of enactment of this

subsection, to purchase electric energy or

capacity from or to sell electric energy or

capacity to a qualifying cogeneration facility

or qualifying small power production facility

under this Act (including the right to recover

costs of purchasing electric energy or

capacity).

In the Final Rule, the Commission

adopted the statutory language into its

regulations 57 and pointed out that it

had previously addressed the meaning

of section 210(m)(6) in Midwest

Renewable Energy Projects, LLC.58 In

Midwest Renewable, we rejected the

35889

notion that ‘‘contract’’ and ‘‘obligation’’

are synonymous terms. When a utility

refuses to enter into a contract with a

QF, and the QF seeks state regulatory

authority assistance to enforce its

PURPA regulations, a non-contractual

but still legally enforceable obligation

may be created pursuant to the state’s

implementation of PURPA. The

Commission explained in the Final Rule

that such obligations do not necessarily

involve a single writing containing all

material terms and that how QFs may

initiate the process varies from state to

state. As a result, narrowly defining an

‘‘obligation’’ to encompass only a

specific legal arrangement with all the

relevant and material rates, terms and

conditions established could be at odds

with a state’s implementation of

PURPA. The Commission therefore

concluded in the Final Rule that the

term ‘‘obligation’’ means a ‘‘legally

enforceable obligation’’ which is

established through a state’s

implementation of PURPA.59 We affirm

the Commission’s determination in the

Final Rule that a QF that initiated, prior

to August 8, 2005, a state PURPA

proceeding that may result in a contract

or legally enforceable obligation would

be considered to have triggered an

‘‘obligation’’ with the electric utility

subject to section 210(m)(6) pending the

state’s determination of whether an

enforceable obligation exists. If the state

determines that no enforceable

obligation exists, then relief from the

utility’s purchase obligation with

respect to that QF may be granted.

137. The Commission clarifies that

the date when an ‘‘obligation’’ under

PURPA is established is the date such

obligation is established by each state

regulatory authority or nonregulated

utility. In the Final Rule, the

Commission noted that the statute

grandfathered contracts and obligations

entered into before the effective date of

EPAct 2005 in section 210(m)(6) of

PURPA, but that section 210(m)(1) of

PURPA only gives the Commission

authority to terminate the obligation to

enter into new contracts or obligations.

The Commission determined that a QF

that has initiated a state PURPA

proceeding that may result in a legally

enforceable contract or obligation prior

to the applicable electric utility filing its

petition for relief pursuant to § 292.310

of the Commission’s regulations will be

entitled to have any contract or

obligation that may be established by

state law grandfathered.60 We see no

59 Final Rule at P 211–13.

56 OG&E Request for Rehearing at 5 (citing

Metropolitan Edison Co., 72 FERC ¶ 61,015 at

61,050 (1995)).

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57 Final Rule at P 210–11.

58 Midwest Renewable Energy Projects, LLC, 116

60 As we noted above, once the Commission has

made a finding that a particular QF has

FERC ¶ 61,017 (2006) (Midwest Renewable).

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mstockstill on PROD1PC66 with RULES3

reason to change this determination, as

the grandfathering of only pre-August 8,

2005 contracts or obligations would

undermine any subsequent QF

investments.

138. We do note, however, that if a QF

argues that any contract or obligation

was ‘‘pending approval before the

appropriate State regulatory authority or

non-regulated electric utility,’’ and thus

argues that the utility’s obligation to

purchase from the QF ought not be

terminated pursuant to a § 292.310

proceeding, the Commission will

consider those claims in the individual

proceedings as they arise. Whether a

contract or obligation exists would

depend on state law. What we do not

expect to see is a race to make filings

either to be grandfathered, or to negate

a potential obligation filed after August

8, 2005, but prior to a utility’s filing for

relief from the obligation to enter new

contracts or obligations.

139. Deere requests that we clarify

that a legally enforceable obligation may

be created not just by a state PURPA

proceeding, but also by other means

such as by a state issuing regulations or

taking other action reasonably designed

to give effect to the Commission’s rules.

We find that the language ‘‘or pending

approval’’ in section 210(m)(6) implies

that there has been a filing before a state

regulatory authority. As we stated in

Midwest Renewable, ‘‘the phrase ‘or

pending approval’ [is] quite significant,

as it ensures that contracts or

obligations that had not yet been

entered into but were being pursued in

the context of the state commission

proceedings that were pending on the

date of enactment of EPAct 2005 will

fall within the savings clause.’’ 61 We

therefore find that, under most

circumstances, there must be some sort

of filing before a state regulatory

authority for a QF to be ‘‘pending

approval.’’ Even under these

circumstances, we emphasize, however,

that in the division of responsibilities of

administering PURPA between this

Commission and state regulatory

authorities (and non-regulated utilities),

it is the state regulatory authorities (or

non-regulated utilities) that determine

whether and when a legally enforceable

obligation is created, and the procedures

for obtaining approval of such an

nondiscriminatory access to one of the specified

markets, this conclusion would be binding in

proceedings involving the same QF and other

electric utilities, absent a showing of changed

circumstances. Accordingly, as of the date of the

first electric utility’s filing seeking termination of

the obligation to purchase from a particular QF, any

subsequent state filing that a QF makes will not

result in a grandfathered obligation.

61 Midwest Renewable at P 14 (emphasis added).

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obligation. QFs that believe that some

other sort of state proceeding has

created a legally enforceable obligation

under state law may argue their claim

before the Commission, and we will

make such determinations on a case-bycase basis based on state law.

140. Accordingly, while we agree

with Deere that QFs that have begun but

not yet completed physical

construction, and therefore that have

not been able to complete the process

for creating a legally enforceable

obligation under a ‘‘build first’’ state

law, may have utilized a particular

state’s implementation of PURPA in a

way that results in a legally enforceable

obligation, such a determination would

need to be made on a case-specific basis.

Whether the state regulatory authority’s

process for creating a legally enforceable

obligation has begun, and thus there is

a contract or obligation pending,

depends on state law. A QF may argue

that an obligation or contract is pending

approval as provided by state law in any

proceedings seeking termination of the

purchase obligation, or pursuant to a

petition for declaratory order.

141. The Commission denies OG&E’s

request to establish a new process by

which a utility could use a section

210(m) application to nullify a state

proceeding to establish a new QF

purchase obligation. OG&E complains

that the Commission prevented utility

section 210(m) filings from January 19,

2006, when the NOPR issued, until

issuance of the Final Rule, and should

not now find that QFs initiating state

‘‘obligation’’ proceedings during that

interim period, or thereafter, are

grandfathered under section 210(m)(6)

of PURPA. Under OG&E’s proposal, a

QF seeking a new state ‘‘obligation’’

determination would be required to

notify the utility and the utility would

have 60 days to file a section 210(m)

application with the Commission; this

application would be addressed in a

final determination within 90 days. This

final determination could then be taken

into account by the state in deciding

whether to grant the QF’s application to

create a new ‘‘obligation’’ for the local

utility to purchase power from the QF.

142. We decline to create the new

process requested by OG&E. We

continue to believe that the

Commission’s determination to adopt

the language of section 210(m)(6) and to

look to state law to determine whether

a contract or obligation is pending

approval provides a sufficient balance

between the rights of the electric

utilities seeking relief from the

obligation to enter into new contracts or

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obligations, and the rights of QFs under

existing contracts or obligations.

143. We will grant clarification with

regard to the termination of existing

contracts. Industrial Parties’ request is

consistent with our other findings with

regard to contract termination in the

Final Rule. In the Final Rule, in

response to comments by AEP, we

stated that an electric utility will not be

compelled to enter into a new contract

as long as there is mutual agreement

between a QF and the electric utility to

terminate the existing contract. We

made clear, however, that ‘‘a QF

contract is to remain in effect until it

terminates by mutual agreement or by

its own terms.’’ 62 The Commission also

recognized that some contracts contain

clauses stating that legislation, such as

EPAct 2005, or a Commission action,

such as the Final Rule in this docket,

may be grounds for termination of the

contract. If an electric utility and a QF

disagree as to the meaning of a

termination clause, either the electric

utility or the QF may seek a

determination regarding its rights under

the termination clause in the

appropriate state forum since the issue

of whether a QF has a continuing right

to sell is a matter of contract

interpretation.

F. Implementation Procedures

144. Section 210(m)(3) of PURPA

provides in part that ‘‘[a]ny electric

utility may file an application with the

Commission for relief from the

mandatory purchase obligation pursuant

to this subsection on a service territorywide basis.’’ The Commission

essentially incorporated this language

into § 292.310 of its regulations. The

Commission also determined that an

electric utility’s mandatory purchase

obligation would be suspended upon

the filing of its PURPA petition. When

an electric utility files its PURPA

petition, that electric utility will not be

obligated to enter into new contracts or

obligations with QFs as of the date its

PURPA petition is filed. If the

Commission finds that the requirements

of section 210(m)(1) of PURPA have

been met, then the purchase

requirement for that electric utility ends

as of the date of the PURPA petition.

However, if the Commission finds that

the requirements of section 210(m)(1)

have not been met, then the electric

utility’s obligation to enter into new

contracts or obligations is reinstated as

of the date of the Commission order.

62 Final Rule at P 219.

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Requests for Rehearing

145. PacifiCorp and EEI argue that the

Commission should clarify the

procedures for utilities requesting

termination of the mandatory purchase

obligation on a ‘‘service territory-wide’’

basis. PacifiCorp notes that the term

‘‘service territory-wide’’ is not defined

in PURPA or in the Final Rule and

could refer to a portion of a utility’s

electric infrastructure located in a

specific state or could be understood to

be synonymous with the control area

operated by the applicant. PacifiCorp

argues that a single entity (such as

PacifiCorp) owning transmission

facilities and operates multiple control

areas should be able to file separate

applications for each control area.

PacifiCorp and EEI argue that such

clarification would facilitate the

processing of applications by the

Commission within the time limitations

established by Congress. PacifiCorp and

EEI request that the Commission clarify

that it will interpret ‘‘service territory’’

to be the particular control area or areas

identified in the application when the

applicant operates multiple control

areas spanning several states.

146. If the Commission retains the

small QF rebuttable presumption, Deere

requests that the Commission grant

rehearing of its decision to temporarily

suspend a utility’s PURPA obligation

once a request for relief has been filed.

Deere argues that the Commission

should instead apply the utility’s

PURPA relief to small QFs only after the

Commission makes the required

findings with regard to the small QF

issue. Deere contends that this would

protect small QFs who, at the time of

the utility’s PURPA relief application,

have already begun preliminary

development work but have not yet

been able to begin utilization of the

applicable state law process for creating

a legally enforceable obligation.

mstockstill on PROD1PC66 with RULES3

Commission Determination

147. We clarify that an electric utility

may specify in its application the

territory within which it seeks to have

its purchase obligation terminated.

148. We grant Deere’s request to

distinguish between particular types of

QFs for purpose of suspending the

mandatory purchase obligation once an

application for relief has been filed

under section 210(m)(3). The rebuttable

presumption that small QFs do not have

access to markets will remain in effect

and, thus, it is reasonable to retain the

mandatory purchase obligation from

small QFs pending consideration a

PURPA petition. We clarify that to the

extent that an electric utility seeks to be

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relieved of the obligation to purchase

from a small QF, the electric utility

must rebut the presumption that the

small QF does not have

nondiscriminatory access to the

applicable market prior to the

termination of the purchase requirement

as applied to that QF, and that the

purchase obligation remains in effect

until, and if, the Commission makes the

finding that the small QF does have

nondiscriminatory access to markets

that warrant termination of the purchase

obligation.

III. Information Collection Statement

149. The regulations of the Office of

Management and Budget (OMB) 63

require that OMB approve certain

information requirements imposed by

an agency. OMB has approved the

information requirements contained in

Order No. 688. Specifically, OMB

approved the following information

collections and assigned the

corresponding OMB control numbers:

Small Power Production and

Cogeneration Facilities (FERC–556)

(1902–0075).

150. On rehearing EEI argues that the

filing requirements in § 292.310(d)(3)

are unduly broad and burdensome. We

have addressed those arguments

elsewhere in this order.64

151. This order on rehearing adopts a

change. Specifically, we are requiring

electric utilities filing an application

with the Commission for relief from the

mandatory purchase requirement to

provide more information about the

potentially affected QFs, including the

docket number assigned if the QF filed

for self-certification or Commission

certification of qualifying facility status,

the location of the QF depicted by state

and county, and by the name and

location of the substation where the QF

is interconnected, and whether the QF

is interconnected as an energy or

network resource. We do not anticipate

that this new requirement to provide

additional information about the

potentially affected QFs will impose a

significant additional burden on electric

utilities; the additional information we

are requiring is readily available to

electric utilities. Accordingly, we will

allow the original projected burden

estimates expressed in Order No. 688 to

stand.

Interested persons may obtain

information on the reporting

requirements by contacting the

following: Federal Energy Regulatory

Commission, 888 First Street, NE.,

Washington, DC 20426 [Attention:

63 5 CFR 1320.12.

Michael Miller, Office of the Executive

Director, Phone (202) 502–8415, fax:

(202) 273–0873, e-mail:

michael.miller@ferc.gov]

152. To submit comments concerning

the collection of information(s) and the

associated burden estimates, please

send your comments to the contact

listed above and to the Office of

Management and Budget, Office of

Information and Regulatory Affairs,

Washington, DC 20503, Attention: Desk

Officer for the Federal Energy

Regulatory Commission; Phone: (202)

395–4650, fax: (202) 395–7285.

IV. Document Availability

153. In addition to publishing the full

text of this document in the Federal

Register, the Commission provides all

interested persons an opportunity to

view and/or print the contents of this

document via the Internet through

FERC’s Home Page (http://www.ferc.gov)

and in FERC’s Public Reference Room

during normal business hours (8:30 a.m.

to 5 p.m. Eastern time) at 888 First

Street, NE., Room 2A, Washington, DC

20426.

154. From FERC’s Home Page on the

Internet, this information is available on

eLibrary. The full text of this document

is available on eLibrary in PDF and

Microsoft Word format for viewing,

printing, and/or downloading. To access

this document in eLibrary, type the

docket number excluding the last three

digits of this document in the docket

number field.

155. User assistance is available for

eLibrary and the FERC’s Web site during

normal business hours from our FERC

Online Support at 202–502–6652 (tollfree at 1–866–208–3676) or e-mail at

ferconlinesupport@ferc.gov, or the

Public Reference Room at (202) 502–

8371 Press 0, TTY (202) 502–8659. EMail the Public Reference Room at

public.referenceroom @ferc.gov.

V. Effective Date

156. These revisions in this order on

rehearing are effective July 30, 2007.

By the Commission.

Commissioner Kelly concurring with a

separate statement attached.

Kimberly D. Bose,

Secretary.

■ In consideration of the foregoing, the

Commission amends part 292, Chapter I,

Title 18, Code of Federal Regulations, as

follows:

64 See supra P 112–17.

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Federal Register / Vol. 72, No. 125 / Friday, June 29, 2007 / Rules and Regulations

PART 292—REGULATIONS UNDER

SECTIONS 201 AND 210 OF THE

PUBLIC UTILITY REGULATORY

POLICIES ACT OF 1978 WITH REGARD

TO SMALL POWER PRODUCTION AND

COGENERATION

■ 1. The authority citation for part 292

continues to read as follows:

Authority: 16 U.S.C. 791a–825r, 2601–

2645; 31 U.S.C. 9701; 42 U.S.C. 7101–7352.

■ 2. In § 292.310, paragraphs (c)

introductory text and (d)(3) are revised

to read as follows:

§ 292.310 Procedures for utilities

requesting termination of obligation to

purchase from qualifying facilities.

*

*

*

*

(c) An electric utility must submit

with its application for each potentially

affected qualifying facility: The docket

number assigned if the qualifying

facility filed for self-certification or an

application for Commission certification

of qualifying facility status; the net

capacity of the qualifying facility; the

location of the qualifying facility

depicted by state and county, and the

name and location of the substation

where the qualifying facility is

interconnected; the interconnection

status of each potentially affected

qualifying facility including whether the

qualifying facility is interconnected as

an energy or a network resource; and the

expiration date of the energy and/or

capacity agreement between the

applicant utility and each potentially

affected qualifying facility. All

potentially affected qualifying facilities

shall include:

*

*

*

*

*

(d) * * *

(3) Transmission Studies and related

information, including:

(i) The applicant’s long-term

transmission plan, conducted by

applicant, or the RTO, ISO or other

relevant entity;

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*

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(ii) Transmission constraints by path,

element or other level of comparable

detail that have occurred and/or are

known and expected to occur, and any

proposed mitigation including

transmission construction plans;

(iii) Levels of congestion, if available;

(iv) Relevant system impact studies

for the generation interconnections,

already completed;

(v) Other information pertinent to

showing whether transfer capability is

available; and

(vi) The appropriate link to

applicant’s OASIS, if any, from which a

qualifying facility may obtain

applicant’s available transfer capability

(ATC) information.

*

*

*

*

*

KELLY, Commissioner, concurring:

Under PURPA section 210(m)(1)(A), no

electric utility shall be required to enter into

a new contract or obligation to purchase

electric energy from a QF under section

210(m) if the Commission finds that the QF

has nondiscriminatory access to: ‘‘(i)

independently administered, auction-based

day ahead and real time wholesale markets

for the sale of electric energy; and (ii)

wholesale markets for long-term sales of

capacity and electric energy.’’ This order

affirms the finding in Order No. 688 that the

four ‘‘Day 2’’ markets (MISO, PJM, NYISO

and ISO-NE) satisfy both requirements of

section 210(m)(1)(A).

By contrast to section 210(m)(1)(A)(ii),

section 210(m)(1)(B)(ii) requires that a QF

have nondiscriminatory access to

‘‘competitive wholesale markets that provide

a meaningful opportunity to sell capacity,

including long-term and short-term sales, and

electric energy, including long-term, shortterm and real-time sales, to buyers other than

the utility to which the qualifying facility is

interconnected.’’ Section 210(m)(1)(B)(ii) also

provides that ‘‘[i]n determining whether a

meaningful opportunity to sell exists, the

Commission shall consider, among other

factors, evidence of transactions within the

relevant market.’’ In Order No. 688, the

Commission interpreted the use of the terms

‘‘competitive,’’ ‘‘meaningful opportunity’’

and ‘‘evidence of transactions’’ in section

210(m)(1)(B)(ii) to mean that Congress

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intended for termination of the purchase

requirement in a ‘‘Day 1’’ market, such as

CAISO and SPP, only if it could be

demonstrated that QFs had opportunities to

make long-term and short-term sales of

capacity and long-term, short-term and realtime sales of energy into competitive

wholesale markets. This order clarifies that,

based on the specific language contained in

section 210(m)(1)(B)(ii), a petitioning electric

utility located in a ‘‘Day 1’’ market must

demonstrate an actual, not just theoretical,

opportunity to meet this requirement.

Accordingly, this order affirms Order No. 688

in finding that the ‘‘Day 1’’ markets, SPP

This text is long and has been trimmed here. Open the source document for the complete record.