Monday, February 18, 2019

FERC Denies Cloverland PURPA Exemption

By Amanda Durish Cook

FERC on Monday denied Cloverland Electric Cooperative’s request for relief from its mandatory purchase obligation under the Public Utility Regulatory Policies Act (PURPA), citing the co-op’s lack of RTO membership as a primary reason (QM1811).

Cloverland, which serves customers in Michigan’s Upper Peninsula, filed in April to terminate its PURPA obligation to buy power from qualifying facilities (QFs) over 20 MW, arguing that, as a transmission-dependent utility that purchases transmission service from American Transmission Co. (ATC), QFs over 20 MW could not “safely interconnect” to the co-op’s distribution system “even with significant upgrades.”

ferc purpa cloverland electric cooperative mandatory purchase obligation

Cloverland’s hydroelectric plant | Cloverland

Cloverland argued “the only practical way” for a QF over 20 MW to sell its input to the co-op would be to interconnect to ATC’s transmission system. It also contended that, although it doesn’t participate in MISO, ATC is a member of the RTO, where QFs have nondiscriminatory market access. The co-op said QFs within its service territory could utilize ATC’s transmission system to gain nondiscriminatory access, a prerequisite for utilities seeking relief from PURPA purchase obligations.

A utility can be exempted from its PURPA energy and capacity purchase obligations if it can demonstrate a need for relief and is a member of an RTO/ISO market.

But FERC said Cloverland could not use ATC’s MISO membership as a proxy for securing its own RTO/ISO membership.

“In essence, Cloverland, while not itself a MISO member, is seeking to claim the benefit of ATC’s MISO membership in requesting relief from the mandatory purchase obligation under PURPA … We are not persuaded to grant Cloverland’s application,” FERC said.

FERC determined that, because Cloverland is not a member of MISO, it is not entitled to relief from the purchase obligation despites its claim that nearby QFs nevertheless have access to MISO’s markets.

“We are not persuaded to change our position on the reach of PURPA … Membership in an RTO/ISO remains a requirement for claiming an exemption under PURPA … ” FERC said. “ … Accordingly, since Cloverland is not itself a member of MISO, it is not entitled to relief.”