by Paul Ciampoli
APPA News Director
Posted June 17, 2020

The Federal Energy Regulatory Commission should dismiss a petition asking it to find that it has jurisdiction over energy sales from rooftop solar facilities and other distributed generation located on the customer side of the retail meter whenever the output of these resources exceeds the customer’s demand, the American Public Power Association said on June 15.

Granting the petition could jeopardize public power net metering programs and render the distributed generation output of hundreds of thousands of public power utility customers subject to federal regulation, APPA said in its protest (Docket No. EL20-42-000).

Moreover, the petition for a declaratory order submitted by the New England Ratepayers Association (NERA) in April should be dismissed because it does not present an appropriate case for a declaratory ruling, APPA said, noting that FERC’s policy with respect to authority over retail net metering programs has been well-settled for years.

NERA is seeking a declaratory order that there is exclusive federal jurisdiction over energy sales from distributed generation located on the customer side of the retail meter whenever the output exceeds the customer’s demand or the energy from such a generator is designed to bypass the customer’s load.

The petition argues that a wholesale sale occurs when the output from behind-the-meter generation exceeds demand, and the rates for such sales must be priced in accordance with section 210 of the Public Utility Regulatory Policies Act (PURPA), or sections 205 and 206 of the Federal Power Act (FPA), as applicable.

NERA also asks the Commission to “find unlawful, and therefore reject, state net metering laws which assert jurisdiction over such wholesale sales and establish a price in excess of what PURPA or the FPA allows for wholesale sales subject to this Commission’s exclusive jurisdiction.”

Public power net metering programs could be jeopardized

APPA noted hundreds of self-regulated public power utilities across the country accommodate their customers’ behind-the-meter resources through retail net metering programs.

Local control over these programs allows public power utilities to structure retail net metering approaches that respond to the policy preferences of their states and local communities, while seeking to ensure that the costs and benefits associated with distributed generation deployment are appropriately reflected in retail rates.

“Although the petition does not specifically address the use of net metering by public power utilities, the declarations requested by NERA, if granted, could jeopardize public power net metering programs in addition to the state laws that NERA asks the Commission to ‘reject,’” APPA said.

Granting the petition could render the distributed generation output of hundreds of thousands of public power utility customers subject to federal regulation, under the FPA or PURPA, APPA told FERC.

APPA urges FERC to dismiss petition

FERC should dismiss the petition without reaching the merits, APPA argued, saying that the matters on which NERA seeks a declaratory order are neither the source of controversy nor uncertainty.

It pointed out that the Commission’s policy with respect to authority over retail net metering programs has been well-settled for years, and was recently reaffirmed in FERC Order Nos. 841 and 841-A, relating to storage resources.

“Granting the petition and upsetting the regulatory certainty that the Commission has fostered would be a recipe for creating, not terminating, controversy and regulatory uncertainty. The petition is potentially sweeping in scope and broadly applicable, yet it is not grounded in any concrete proposal or specific facts and circumstances, nor does the petition include sufficient information for the Commission to analyze and address the requested declarations,” APPA said.

Referring to criticisms leveled at net metering by the NERA petition, APPA agreed that there are legitimate policy issues associated with the practice, including cost allocation and cross-subsidization concerns arising from net metering’s impact on recovery of a utility’s fixed costs. APPA said it “recognizes that it is important that all distributed generation customers pay a fair share of the costs of keeping the grid operating safely and reliably, recognizing the benefits provided by those customers.” APPA argued, however, that these are issues that state and local regulators can address.

If FERC does not dismiss the petition outright, it should deny the declarations requested by NERA and reaffirm that its jurisdiction under the FPA or PURPA is not implicated when a retail net metering customer is a net consumer of energy over the applicable billing period, APPA said.

“This policy appropriately acknowledges the authority of state and local regulators over the rates, terms and conditions of retail electric service,” APPA argued, adding that D.C. Circuit rulings cited by NERA do not require reconsideration of the Commission’s approach.

Moreover, the Commission’s policy is also in accord with a section of PURPA that requires state and local regulators to consider net metering programs for electric consumers, “a directive that is inconsistent with the notion that retail electricity delivered by the distribution utility cannot be netted against the energy generated by a retail customer’s distributed generation.”

APPA said that even if the Commission conceivably could conclude that retail net metering customers are making wholesale sales subject to federal regulation, “it is an entirely reasonable and legally permissible policy choice for the Commission to conclude that its jurisdiction is not implicated where a retail customer is a net purchaser of retail power over the applicable billing period.”