On August 3, 2011, the Public Utilities Commission of Ohio (PUCO) granted FirstEnergy’s “force majeure” application to reduce its 2010 in-state solar requirement under Ohio's renewable portfolio standard (“RPS”). The PUCO reduced FirstEnergy’s solar requirement from the 3,206 solar renewable energy credits (“SRECs”) required by law to the 1,629 in-state SRECs that FirstEnergy actually acquired. At the same time, however, the PUCO followed precedent from previous force majeure cases and increased FirstEnergy’s 2011 solar requirement by the amount of its 2010 shortfall. The full order is available on the PUCO website.

Under Ohio’s RPS, the state’s utilities can file a force majeure application if they are unable to procure renewable resources required by state law despite a good-faith effort. In its application, FirstEnergy argued that it was unable to meet its 2010 requirement for SRECs produced inside the state (which also included a shortfall from 2009) because Ohio’s solar market remains underdeveloped.

In granting FirstEnergy’s request, the PUCO rejected the arguments of their staff, the solar industry, and several other intervening parties regarding FirstEnergy’s efforts to procure the required SRECs. Those parties had argued that FirstEnergy did not exhibit a good-faith attempt to procure in-state SRECs because it did not enter long-term contracts with SREC suppliers or construct its own solar-generation facilities.

The solar industry argued that Ohio’s RPS was designed to drive new renewable energy investment and development in the state. Allowing a waiver for FirstEnergy because of a “lack of existing solar generation” in Ohio defeats the very purpose of the RPS. Other parties also noted that all of the other Ohio investor-owned utilities fully complied with the solar requirement.

The PUCO noted that it recently approved in a separate case FirstEnergy’s application to conduct a request for proposal (“RFP”) to purchase RECs through ten-year contracts, which may help FirstEnergy meet part of its 2010 shortfall. The PUCO also recognized that FirstEnergy conducted four short-term RFPs, contacted SREC brokers and participated in SREC auctions. Taking those considerations into account, the PUCO concluded FirstEnergy demonstrated a good-faith effort to meet its in-state solar requirement.

The PUCO’s order is subject to application for rehearing filed by parties to the case or other affected individuals. Barring an application for rehearing, the focus will shift to FirstEnergy’s long-term RFP and its success meeting its increased solar requirements for 2011 and beyond.