By Kennedy Maize
Solar developers have won big in a long-running dispute with legacy investor-owned utilities at the U.S. Court of Appeals for the D.C. Circuit.
The court on Sept. 9 in the case – Solar Energy Industries Association, et al. v. FERC – upheld the Federal Energy Regulatory Commission’s definition of how solar plus storage of direct current power, inverted to alternating current, can comply with the terms of the seminal 1978 Public Utility Regulatory Policies Act.
PURPA set the stage for the revolution that overturned the long-held conventional wisdom, now discarded, that making, moving, and selling electricity is a “natural monopoly.” That business model resulted in vertically integrated monopolies controlling the entire operation of the businesses.
Under PURPA, a “small project” producing less than 80 megawatts of power – a “qualifying facility” – has a right to sell capacity or energy to a conventional utility.
The dispute involves a project by Broadview Solar that combines solar photovoltaic generation of 160 MW in direct current with 50 MW DC of storage, coupled to inverters limiting the amount of alternating current that can be delivered to the grid to 80 MW. The Montana project would connect to NorthWestern Energy’s transmission system.
The Broadview Solar dispute is over five years old and is a “flasher.” It has been up and down and up again at FERC and in the courts, including a trip to the U.S. Supreme Court. The D.C. Circuit decision came on remand from the SCOTUS.
In September 2019, Broadview Solar asked FERC to certify its project as a QF. NorthWestern and the Edison Electric Institute, the Washington lobbying group for the investor-owned utility industry, intervened opposing Broadview.
A year later, FERC rejected Broadview’s application, concluding that PURPA’s 80 MW limit applies to the gross generation of the project, the argument NorthWestern and EEI made, not just to what enters the grid,. The vote was 3-1, with Republican chairman Neil Chatterjee and Republican commissioners Bernard Namee and James Danly in the majority and Democrat Richard Glick dissenting.
In his dissent, Glick said the commission’s action “will make QF status turn on the capacity of any one component of the facility, rather than the actual power production capacity of the facility itself. That conclusion finds no support in the statute, our precedent, or common sense.”
The Solar Energy Industries Association filed for rehearing. In March 2021, with Glick now the FERC chairman, FERC reversed the 2020 Broadview Solar ruling,.
Glick said, “Today’s order restores a common-sense understanding that QF status should turn on the power production capacity of a facility as a whole, not the capacity of any individual component part. The primary benefit of QF status afforded under PURPA is the right to sell power to a chosen utility, so the amount of power that a QF can actually transmit to the utility should be the touchstone of our analysis.”
The parties, including SEIA, requested a rehearing of that order. In June 2021, FERC upheld its March order. Danly dissented, arguing, “As I explained in my dissent to the March 2021 Order, not a single word of the Commission’s ‘for-delivery-to-the-utility’ standard, which was adopted in the March 2021 Order, appears anywhere in the text of the Public Utility Regulatory Policies Act of 1978 (PURPA) establishing the 80 MW power production capacity limit.”
In April 2022, NorthWestern asked the D.C. Circuit to overturn FERC’s March 2021 order approving QF status for Broadview Solar. The appeals court upheld FERC in 2023, citing the Chevron doctrine, which held that courts should give deference to federal agencies on technical issues.
EEI took the D.C. Circuit decision to the Supreme Court, where the court essentially punted in September of 2023. In a 20-page ruling, the court noted that it was considering a challenge to the 1984 Chevron decision, in a case called Loper Bright Enterprises. So, the court said, “The petition for a writ of certiorari should be held pending the Court’s decision in Loper Bright Enterprises v. Raimondo, No. 22-451, and then disposed of as appropriate in light of that decision.”
When the court overturned Chevron in June 2024, the Broadview Solar case was remanded to the D.C. appeals court. This time, the appeals court upheld FERC on the merits. Writing for the 2-1 majority, Judge Cornelia Pillard, echoing Glick, said, “On remand from the Supreme Court, we apply the statute without deference under Loper Bright and conclude that the maximum ‘power production capacity of the ‘facility’ is best read to refer to the amount of AC power that the facility can send out to the grid. That reading accounts for all the facility’s 4 components working together, not just the maximum capacity of one subcomponent, and it appropriately focuses on grid usable AC power.”
Judge Gregory Katsas agreed with Pillard and Judge Justin Walker dissented. Walker argued, “Because Broadview can send 80 megawatts to the grid while it simultaneously sends 50 megawatts to its battery before later sending those 50 megawatts to the grid, Broadview’s facility is capable of producing more than 80 megawatts of power — which makes Broadview too large to be a ‘small facility.’” Walker had dissented in the 2023 D.C. appeals court decision. Pillard is an Obama appointee. Trump appointed Katsas and Walker.
Commenting on the case, the National Law Journal lawyers from the firm Foley & Lardner LLP wrote that “thoughtful sizing strategies consistent with FERC’s most recent Broadview order and this decision remain viable tools to optimize capacity factors and project economics, with the comfort that QF status and PURPA benefits will remain available for projects that qualify.”
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