On January 8, 2016, FERC declined to initiate an enforcement action under the Public Utility Regulatory Policies Act of 1978 (PURPA) in a matter involving a solar developer’s access to Connecticut’s renewable energy procurement program. Allco Renewable Energy Limited (Allco) argued that the Connecticut Department of Energy and Environmental Protection and the Connecticut Public Utilities Regulatory Authority’s implementation of the state’s renewable energy procurement law violated FERC’s exclusive authority to regulate wholesale electricity sales. Under PURPA, states are allowed to regulate sales that involve small-scale generation projects known as Qualifying Facilities (QFs). However, Allco argued that the Connecticut agencies compelled Connecticut utilities to enter into contracts with a 250-megawatt wind farm, too large to be considered a QF, and prevented QFs like Allco from being selected. Allco also contended that Connecticut is planning another procurement under a new state law setting a minimum 20-megawatt size for generation, virtually excluding all QFs from participation.
Connecticut argued that because the renewable procurement law is not implemented under PURPA, PURPA cannot be violated. Connecticut noted that PURPA does not prohibit state renewables programs that are different than, or supplemental to, a state-compliant PURPA program. Connecticut also argued that it had not acted in any way that would intrude on FERC’s wholesale authority. Connecticut asserted that its renewables program is permissible because (i) the utilities purchase their proportionate share of actual output from the renewable generator; (ii) the agreements do not require the renewable resource to participate in the regional capacity market; and (iii) it provides for the creation of renewable energy certificates to be used for compliance with state requirements.
While Connecticut requested both a favorable ruling and substantive guidance from FERC, such as a declaratory order, FERC simply issued a notice declining to initiate any action. Additionally, FERC stated that its decision does not preclude Allco from bringing its own action against the Connecticut agencies. Allco has since stated that it intends to file an enforcement action in federal court, ensuring that this issue will remain unresolved for the foreseeable future.