JD Wind petitions for enforcement of rules on wind and solar power purchases

Boston, October 20, 2009 — The Public Utility Commission of Texas recently issued an order denying a complaint by the JD Wind Companies and interpreting the Public Utilities Regulatory Policies Act of 1978 to prohibit wind and solar-powered qualifying facilities from selling output under contracts with rates based on avoided costs.

The commission held that under the act, wind-powered facilities are prohibited from establishing such contracts—and secure rates based on avoided costs—because wind generation is an intermittent resource, and therefore cannot provide “firm power.”

The commission’s prohibition of qualifying facilities sales apparently would apply equally to wind, solar and all other intermittent renewable power generating facilities.

On September 24, 2009, JD Wind Companies filed a petition with the Federal Energy Regulatory Commission for enforcement and a declaratory order to overturn the order.

JD Wind argues that the decision is contrary to the act and FERC’s regulations, which provide every qualifying facility, including renewable wind and solar-powered generating facilities, with the option to sell their output to an electric utility either as the facility determines such energy to be available or pursuant to a legally enforceable obligation.

The JD Wind Companies request that FERC take enforcement action against the commission or, in the alternative, issue a declaratory order finding that the decision does not implement the act and FERC’s rules and therefore is preempted by federal law.

The petition argues that FERC’s regulations do not on their face exclude wind, solar and other renewable-powered qualifying facilities from creating legally enforceable obligations to sell energy to the utility.

Under the act, each state regulatory authority is required to implement FERC’s regulation. The decision, according to the petitioners, jeopardizes the development of wind and solar qualifying facilities in every region still subject to the act.

The decision could lead other states to revise their regulations to eliminate such contracts for wind and solar qualifying facilities.

The JD Wind Companies seek an order no later than December 18, 2009. Comments are due October 22, 2009, on the petition.

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