On March 19, FERC issued a new rule that exempts electric generation facilities with a capacity of 1 MW or less from the requirement to file for QF certification or recertification. FERC adopted the 1 MW exemption because it was concerned about the regulatory filing burden for smaller QFs, citing as an example roof-top solar panels on homes and hospitals. The exemption is universal and is not limited by fuel type.

Moreover, in an order issued on March 18, FERC declined to exempt New York State Electric & Gas from a mandatory obligation to purchase power from a small cogeneration facility operated by Cornell University because its output was temperature-sensitive, highly variable, and because it could not practically schedule its output for sale into the New York Independent System Operator (NYISO) day-ahead energy market without running the risk of significant under-scheduling penalties. The order emphasizes that FERC did not rule that variable weather or variable output are sufficient to preserve a utility’s mandatory purchase obligation; rather, it states that the combination of the high variability in the need for Cornell’s output, coupled with the way NYISO’s markets work, particularly the risk of penalties, supported special treatment for Cornell.

The order shows that owners of renewable and alternative energy projects continue to face complex regulatory issues, including the obligation of the local utility to purchase the power produced by a project. Winston & Strawn professionals work with clients on these issues every day.