SEIA pulls their Federal Energy Regulatory Commission (FERC) Feed-in Tariff (FiT) ruling press release.
Vote Solar believes the FERC decision reaffirms already identified options to move forward under existing law.
After reading Solar Biz: Lack of Permits for Solar on Federal Land “Is Disturbing” by Josie Garthwaite at Earth2Tech, I was drawn to the Solar Energy Industries Association (SEIA) website to root into their latest utility scale mischief. In the Press Release section, I stumbled upon “FERC Ruling Invalidates California Feed-in Tariffs” (cached, Greenjobs.com) which I tweeted:
The FERC decision relates to the California Public Utilities Commission (CPUC) implementation of AB 1613 establishing a Feed-in Tariff program for Combined Heat and Power (CHP) Distributed Generation systems sized up to 20 MW (MegaWatts). AB 1613 required Investor-Owned Electric Utilities to purchase electricity from the CHP generators delivered to the grid at a price set by the CPUC.
Per the FERC “California feed-in tariff petitions” (E-1-FACT07-15-10.DOC) summary:
The first petition addressed in FERC’s order, filed by the CPUC, asked that FERC find that sections of the Federal Power Act (FPA) and the Public Utility Regulatory Policies Act (PURPA) do not preempt a CPUC decision on feed-in tariffs issued pursuant to AB 1613. The second petition, filed by three investor-owned California utilities (Pacific Gas and Electric Company, San Diego Gas & Electric Company, and Southern California Edison Company), asked FERC to find the CPUC decision is preempted by the FPA.
FERC affirmed in its order that its authority under the FPA includes the exclusive jurisdiction to regulate the rates, terms and conditions of sales for resale of electric energy in interstate commerce by public utilities. FERC also explained that the role of States in setting wholesale rates is limited to determining “avoided cost” rates for qualifying facilities pursuant to PURPA. FERC thus found that the CPUC’s decision under AB 1613, including the CPUC-set price, would be consistent with these federal laws as long as it satisfies certain requirements:
- The CHP generators must be QFs pursuant to PURPA.
- The CPUC-set price must not exceed the avoided cost of the purchasing utility.
According to Vote Solar, the FERC decision reaffirms Feed-in Tariff approaches outlined in “On the legality of feed-in tariffs in the US” by Adam Browning at Grist in July 2009. Per the Vote Solar Blog:
The options are:
- Set a price at utilities’ avoided cost
- Establish a more targeted requirement (say, PV systems from 1-10 MW) and let the market set the price
- Set a price at avoided cost, and cover the marginal gap to a workable price with tax or REC from a public benefit fund.
“State-Level Feed-In Tariffs for Renewable Energy: Comments on FERC’s California Decision” by National Regulatory Research Institute (NRRI) Executive Director Scott Hempling, Esq. also describes the legal background and decision in a succinct four (4) pages. Mr. Hempling co-authored the “Renewable Energy Prices in State-Level Feed-in Tariffs: Federal Law Constraints and Possible Solutions” report published in January 2010 for the National Renewable Energy Laboratory (NREL).
In “California proposes new program for 1 GW of renewables”, Vote Solar advocates the Renewable Auction Mechanism (RAM) proposed by the CPUC and the subject of my California Reversal of Feed-in Tariff Auction Proposal post. The RAM is not expected to run afoul of FERC’s electricity regulatory responsibilities since it doesn’t set a Feed-in Tariff price but a requirement for utilities to purchase Distributed Generation renewable electricity from developers who bid via a reverse auction process.
Enacted in 2009, SB 32 expands on the first option above by directing the CPUC to consider the “valuable attributes like reducing emissions, reducing the need for adding new transmission lines, and generating electricity during hours of peak demand” when determining the avoided cost for renewable electricity standard contracts or Feed-in Tariffs. Per the California Solar Energy Industries Association (CALSEIA) study, “IMPLEMENTING THE FEED IN TARIFF FOR SMALL-SCALE SOLAR PHOTOVOLTAICS IN CALIFORNIA AS AUTHORIZED BY SB 32 (2009, NEGRETE-MCLEOD, D-CHINO)”:
the value of electricity from renewable generation is higher than the value of generation from a natural gas power plant. Depending on the location of the renewable generation, the value of electricity is between 5 and 12 cents higher than electricity from natural gas generation. This study shows that the value, per kilowatt-hour (kWh) for renewable generation is between 17 and 24 cents per kWh.
I was planning to Blog about the SEIA Utility Scale Solar (Concentrating Solar Power) Financing Teleconference until I noticed another press release, “State and Regional Solar Industry Associations Call for Broad Adoption of Feed-in Tariffs in U.S.”. As a Feed-in Tariff theme emerged, I checked back to the SEIA website, and the “FERC Ruling Invalidates California Feed-in Tariffs” release was gone! I don’t think the action was the result of my tweet but complaints from SEIA members and partner organizations. I think that was the first time “Feed-in Tariffs” were mentioned on the SEIA website? Thus far, the SEIA has not responded to my questions about the removal. I imagine the SEIA is busy trying to salvage the solar policy agenda outlined in “Solar Industry Calls on Senate to Include Bipartisan Solar Provisions in Energy Bill” (sans FiTs?) after the death of the climate bill.
The fourth and most flexible Feed-in Tariff option is for the U.S. Congress to amend PURPA and the FPA to grant states authority to craft their own Renewable Energy policies including Feed-in Tariffs without FERC intervention.
The SEIA was working on this and in the pulled press release said:
Many States, including California, are taking the steps necessary to decrease our use of polluting energy sources and these efforts should not be frustrated by federal regulation. We will continue to work with Congress to clarify that states have the authority to establish a feed-in tariff to help deploy more clean, safe solar energy.
We are pleased that the comprehensive climate and energy bill passed by the House last year, H.R.2454, includes a provision authored by Representatives Kathy Castor (D-11th FL) and Jay Inslee (D-1st WA) that We are working with the Senate to include such a provision in S.1462, the Senate energy bill. We also encourage FERC to reconsider its ruling should an appropriate and timely request for rehearing be filed with the Commission.
Who opposes European style Feed-in Tariffs (FiT) more, Investor Owned Utilities, climate deniers, or fossil fuel lobbyists?
In California, the shocking answer is incumbent photovoltaic system installers and independent power producers such as Recurrent Energy, SunEdison, and, as I heard at Intersolar North America, Tioga Energy. Other photovoltaic manufacturers and system installers are known to oppose Feed-in Tariffs but only in private, off the record conversations. In my opinion, their opposition is based on the desire to maintain the status quo and leverage their existing development expertise to win distributed utility photovoltaic projects. Classic Feed-in Tariffs lower barriers to market entry and act to increase project competition.
Background on FPA, PURPA, FERC, and Feed-in Tariffs
Back in March 2010, Vote Solar hosted a webinar on Feed-in Tariff Pricing in the US: Practical Approaches to Establishing Wholesale Programs at the State Level and posted all the resources including the recording, presentation, references, and Frequently Asked Questions at “Follow-up on IREC/VSI webinar on jurisdictional issues and feed-in tariffs”. All these resources should help motivated parties understand the Federal Power Act (FPA), Public Utility Regulatory Policies Act (PURPA), and the role of FERC in regulating state Feed-in Tariff program design.
“What Is an Effective Feed-In Tariff for Your State? A Design Guide” from NRRI also looks useful for policy makers.