FPA – Global Power Law & Policy

FERC Grants Waivers to Exempt Solar Aggregator from Certain QF Requirements

May 03 2019

By William M. Keyser and Toks A. Arowojolu

On April 18, 2019, the Federal Energy Regulatory Commission (“FERC”) issued an order granting a petition for declaratory order filed by Sunrun, Inc. (“Sunrun”) that exempted Sunrun, the nation’s largest residential solar company, from certain qualifying facility (“QF”) filing requirements under the Federal Power Act (“FPA”) and the Public Utilities Holding Company Act (“PUHCA”). The requested waiver would allow Sunrun to avoid significant administrative and regulatory burdens by avoiding potentially hundreds of QF filings as it increases the number of photovoltaic (“PV”) systems it owns on behalf of its customers.

QFs have the right to sell energy or capacity to a utility at an avoided cost rate and receive relief from certain regulatory burdens. To qualify as a QF, eligible facilities (including solar facilities) with power production capacity of greater than 1 MW (1000 kW) must certify their status with the Commission by either submitting a Form 556 self-certification or filing an application. Facilities with net power production of 1 MW or less are exempt from this filing requirement. When determining the size of a QF, FERC applies a “one-mile rule.” Under the “one-mile” rule, QFs located within a mile of another facility that use the same energy source and have the same owner are considered one QF for purposes of determining whether the QF surpasses the 80MW requirement for QF eligibility. FERC also applies the one-mile rule to determine whether a QF is 1 MW or less and therefore exempt from the QF certification filing requirement.

The one-mile rule carries potential consequences for developers of small and distributed rooftop solar systems like Sunrun, particularly when they retain ownership over the individual systems. According to the petition, Sunrun’s customers can choose to have Sunrun finance the PV system with Sunrun initially retaining ownership and continuing to monitor, maintain, and insure the system. Under Sunrun’s system, the homeowner is granted an option to buy the PV system later.

Sunrun filed its petition in September 2018 requesting waivers of two QF certification requirements to support its business model of selling, owning, and maintaining residential solar PV systems. First, Sunrun requested a waiver of the QF certification filing requirement for separately interconnected, individual residential rooftop solar PV systems with a maximum net power production of 20 kw or less that Sunrun provides financing for but which the homeowner has an option to purchase. Because Sunrun could conceivably finance or own many such 20 kW systems within one-mile radius, it would be possible for all such 20 kW systems to aggregate to over 1 MW and trigger QF certification filing requirement. Second, Sunrun also requested that, in a self-certification submitted for a cluster of rooftop PV systems that exceed 20 kW, FERC waive the requirement to include information for the facilities covered by the first waiver request (i.e., 20 kW or less).

Sunrun explained to FERC that its concerns were two fold: (1) while 99.5% of the residential PV systems that Sunrun owns have a nameplate capacity below 20kW, PV systems within close proximity to one another can collectively be deemed to be one QF under the one-mile rule, and (2) without the waivers, Sunrun would have to “monitor the geographic concentration of its PV systems” and file and continuously update a highly burdensome number of filings. With Sunrun’s 202,000 PV systems spread across 22 states, numerous applications would be expected.

FERC granted the requested waivers, finding that Sunrun’s request aligned with the purpose of the 1MW exemption which is “to ease the administrative burden for both the Commission and small scale QFs.” FERC also directed Sunrun to maintain sufficient records of the residential PV portfolio that it owns through “third-party financing arrangements” to ensure that its aggregated solar resources are in compliance with other federal regulations. FERC’s ruling could provide an opportunity for Sunrun and other rooftop solar aggregators to sell solar power into the wholesale markets. However, despite the easing of the administrative and regulatory burden at FERC, solar aggregators are still subject to a host of interconnection and state regulatory requirements that would also need to be addressed. We will continue to monitor the developments of this proceeding and its impacts on the solar PV and wholesale markets.

FERC FINDS CERTAIN PASSIVE INVESTMENTS DO NOT REQUIRE PRIOR APPROVAL FOR TRANSFER

Oct 13 2017

By William M. Keyser, Molly Suda, Elizabeth P. Trinkle and Toks A. Arowojolu

On October 4, 2017, the Federal Energy Regulatory Commission (the “Commission”) issued an order allowing entities with certain passive investments to transfer those interests without receiving prior authorization from the Commission under Section 203 of the Federal Power Act (“FPA”). Specifically, the Commission found that passive tax equity interests in public utilities or public utility holding companies do not constitute voting securities for the purposes of Section 203. Thus, the transfer of these interests does not require Section 203 approval because such transfer does not constitute a transfer of control with respect to the public utility. In addition, the Commission found that the transfer of these passive investments by a holding company qualifies for blanket authorization under FPA Section 203 (a)(2).

FERC Issues Order to Delegate Further Authority to Staff in Absence of Quorum

Feb 06 2017

By Sandra Safro, William Keyser, and Molly Suda

On February 3, 2017, FERC issued an Order Delegating Further Authority to Staff in Absence of Quorum, which provides for further delegations to enable FERC to continue to carry out various obligations under the Natural Gas Act (NGA), Federal Power Act (FPA), and Interstate Commerce Act (ICA). In pertinent part, the delegation order states the following:

Delegations Generally.
- The delegations of authority are effective during the Delegation Period, which starts on February 4, 2017, and continues until 14 days after the date on which a quorum is reestablished.
- Delegations are made to the relevant office director, who may further delegate to his or her designee.
Pre-Existing Delegations. All pre-existing delegations of authority by the Commission to its staff remain effective, including the Secretary’s authority to toll the time for action on rehearing requests (also referred to as tolling orders)and the authority of the Director of Office of Energy Market Regulation (OEMR) authority to accept uncontested tariff or rate schedules that would result in rate increases.
Continuation of Activities Related to Safety. Limited Commission operations can continue, including inspecting and responding to incidents at LNG facilities and jurisdictional hydropower projects, and other activities involving the safety of human life or protection of property.
Further Delegations Regarding Rate Proceedings.
- With respect to contested rate and other filings under Section 4 of the NGA, Section 205 of the FPA, and Section 6(3) of the ICA, the Director of OEMR shall have authority to:
  - Accept and suspend filings and make them effective, subject to refund and further Commission order; or
  - Accept and suspend filings and make them effective, subject to refund, and to set them for hearing or settlement judge procedures.
- With respect to initial rates or rate decreases under Section 205 of the FPA where suspension and refund protection is not available, Commission Staff may institute a proceeding to protect customer interests pursuant to Section 206 of the FPA.
- The Director of OEMR may accept uncontested settlements.
Further Delegation Regarding Uncontested Requests for Waivers. The Director of OEMR may take appropriate action on uncontested filings seeking waivers of the terms and conditions of tariffs, rate schedules, and service agreements (including requests for waiver of capacity release and capacity market rules) made under Section 4 of the NGA, Section 205 of the FPA, and Section 6(3) of the ICA.
Further Delegation Regarding Extensions of Time. Commission Staff may extend the time for action on matters where extension is permitted by statute, including extensions of a 180-day period for applications for prior approval under Section 203 of the FPA.

FERC’s order is intended to prevent filings made to the Commission from going into effect by operation of law after a certain period of time as defined by statute. However, it also creates uncertainty, because any contested rate filings approved by Staff and allowed to go into effect will be subject to refund and further review by a Commission having up to three new members once a quorum is reached. It also may result in more filings being set for hearing and settlement judge proceedings, including potentially all initial rate filings that are contested.

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