Feed in Tariffs and Federal Preemption

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Feed in Tariffs and Federal Preemption

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Federal Preemption

• Retail Sales
• (sale to end user)
• States (PUCs)
• set rates

• Wholesale Sales
• (sale to utility)
• Federal (FERC)
• sets rates
• (exceptions exist)

3
Federal Regulation of Wholesale Transactions

• FPA
• FERC governs rates
• (Exclusive jurisdiction)

• PURPA
• States determine avoided costs
• (FERC maintains final jurisdiction)

4
State FIT Design Option 1

• Municipal Utility FIT
• Rates for sales at wholesale to municipal
  utilities and other public power entities are not
  regulated by the Federal Power Act.

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State FIT Design Option 2

• PURPA -- Avoided Cost Rates
• Under PURPA, FIT rate may be based on the
  avoided cost of the electricity.

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State FIT Design Option 2(a)

• Avoided Costs
• If state law requires utilities to purchase
  electricity from differentiated technologies,
  differentiated avoided costs may be set.

7
California Public Utilities Commission, 133 FERC
61,059 (2010) (October 21 Order)

• Where a state requires a utility to procure
  a certain percentage of energy from generators
  with certain characteristics, generators with
  those characteristics constitute the sources that
  are relevant to the determination of the
  utilitys avoided cost for that procurement
  requirement. 133 FERC 61,059, para. 27.

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State FIT Design Option 2(b)

• Avoided Costs REC
• The rate may include a separate payment for the
  associated REC (if state law permits).

9
American Ref-Fuel Company, 105 FERC 61,004
(October, 2003)

• RECs are created by the States. They exist
  outside the confines of PURPA. PURPA thus does
  not address the ownership of RECs. . . . States,
  in creating RECs, have the power to determine who
  owns the REC in the initial instance, and how
  they may be sold or traded it is not an issue
  controlled by PURPA.

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State FIT Design Option 3

• Any utility may voluntarily implement a FIT.
• May be question about whether the PUC will
  allow the utility to include the cost in its rate
  recovery.

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State FIT Design Option 4

• State may set the rates and seek FERC approval
  of the rates.
• Unclear what the process might be for seeking
  this rate approval.

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More Information

• Renewable Energy Prices in State-Level Feed-in
  Tariffs Federal Law Constraints and Possible
  Solutions, the National Renewable Energy
  Laboratory (NREL) (January 2010)
• Note this was published before recent FERC
  decisions on these issues.