On March 19, 2010, the Federal Energy Regulatory Commission (“FERC” or the “Commission”) issued an order in which it made several changes to its regulations regarding qualifying facility (“QF”) certifications (“Order 732”).  The Commission exempted QFs with a net power production capacity of less than 1MW from the requirement to self-certify or request FERC certification of QF status.  Order No. 732, combined with the Commission’s recent decision in Sun Edison LLC (1) indicates that the Commission will not exercise its authority over small power producers with only a de minimis amount of activity.  While this may ultimately lessen the administrative burden for some small power producers, such as solar developers, those involved in QF projects (or potential QF projects) must nevertheless remain vigilant to ensure that FERC’s regulations are properly observed and that FERC’s regulations are met regarding the calculation of each facilities’ net power production capacity.  

It should be noted that the Commission did not specifically define “net power production” in Order 732.  Previous FERC cases indicate that net power production is not merely a generator’s name plate capacity.  A small power producer must thus determine what comprises its net power production, as defined by the Commission.  If the facility’s nameplate rating minus its station load (i.e., the energy used to power the lights, etc. that are at the generator) is less than 1MW, then a small power producer may qualify for exemption from filing a notice of self-certification.

The 1MW exemption signals that FERC is lightening even further the regulatory burdens on very small renewable facilities, or facilities that do not sell power to the grid.  In Sun Edison, LLC, the Commission considered whether or not to assert jurisdiction when an end-use customer received credit from a net-metering program.  In that case, the Commission stated that net metering is a “method of measuring sales of electricity” and when there is no net sale over the applicable billing period, the Commission does not have jurisdiction.(2)  The Commission stated that it would not exercise authority over small power producers unless they make a net sale.  The Commission discussed at length the determination of an applicable billing period in order to find if the generating facility engaged in a net sale.(3)  The determination of an applicable billing period requires additional analysis on a case- by- case basis.

Order No. 732’s exemption for QFs with less than 1MW, together with the net sale analysis in Sun Edison indicate that the Commission wishes to streamline regulation of small power producers, such as rooftop solar facilities.  Nevertheless, small power producers must analyze whether they fall into either the “no net sale” or “less than 1MW net production capacity” category, in order to accurately determine whether they may refrain from filing a QF notice of self-certification.

CONTACT

Craig M. Kline
212.704.6150

Clifford Sikora
202.274.2966