Energy, Project Development & Finance

Yesterday, FERC issued an order, in Docket Nos. QF11-235-001 and QF12-99-001, granting the applications of two wind facilities for Commission certification as qualifying small power production facilities (“QFs”) over the objections of the local utility. The applications were filed by DeWind Novus, LLC for a facility with a maximum gross power production capacity of 80 MW and by DeWind Novus II, LLC for a facility with a maximum gross power production capacity of 40 MW.

Xcel Energy Services Inc. (“XES”) protested the applications, arguing that the two projects should be treated as one that exceeded the 80 MW size limit for QF status contained in section 292.204(a) of the Commission’s regulations and in the Public Utility Regulatory Policies Act of 1978 (“PURPA”). Under section 292.204(a)(1), the 80 MW maximum size includes the capacity of any other small power production facilities that use the same energy resource, that is located at the same site, and that is owned by the same person or its affiliates. Under 292.204(a)(2)(i), facilities are considered to be located on the same site if they are located within one mile of each other.

At the heart of XES’ protest was its argument that a review of the geographic location, operational characteristics and public statements made in connection with the facilities showed that the two DeWind projects were really just one. XES acknowledged that in Northern Laramie Range Alliance (“Northern Laramie”), issued March 15, 2012, the Commission declined to allow a utility to rebut the one-mile rule, but XES urged the Commission to reconsider the interpretation of the one-mile rule set forth in that decision. XES also argued that the collector system for a wind turbine is part of the bus that connects the generator to the step-up transformer and should be considered part of the generating facility, which could have the effect of shortening the distance between facilities.

FERC rejected XES’ arguments and refused to overturn Northern Laramie, explaining:

[I]t is well-established that: (1) the one-mile rule for determining whether small power generation facilities are “at the same site” is a rule and not a rebuttable presumption; and (2) the distance between facilities is measured from the electrical generating equipment, and not other equipment associated with the generating facilities.

FERC said that when it acts on an application for certification of QF status, it acts on the information presented in the application and in responsive pleadings, and noted that the applications before it were for as-yet unbuilt facilities. It granted QF certification for each facility as described in the respective application, noting that if the facts or representations which form the basis of the certification change, self-recertification or Commission re-certification would be necessary at that time to assure QF status.