About The Author:
Robert A. Olson is a partner in the law firm of
Brown, Olson & Gould, P.C. which maintains a nationwide practice in energy law,
public utility law and related commercial transactions.
He can be reached at:
Brown, Olson & Gould, PC
2 Delta Drive
Concord, NH 03301
New York Public Service
Commission Authorizes Monitoring Of QF Qualifying Facility Status
by Robert Olson -- Brown, Olson and Wilson, P.C.
(originally published by PMA OnLine Magazine:
On January 9, 1997, the New York Public Service
Commission (PSC) reaffirmed its prior decision that the monitoring of qualifying facility
(QF) status by public utilities does not violate the Public Utility Regulatory Policies
Act (PURPA). In addition, the PSC ordered the states utilities to monitor QF status
on an annual basis. The monitoring program approved by the PSC involves acquisition of
information similar to that contained in FERC Form 556, which is the form used by QFs for
self-certification under the Federal Energy Regulatory Commission (FERC) regulations.
On August 30, 1996, the PSC initially ruled that utilities were authorized to institute
monitoring programs to insure that QFs complied with the PURPA standards. Several QF
developers filed rehearing motions, asserting that the PSC was not authorized to implement
such a program. One QF asserted that the PSCs power to implement PURPA ended with
the formation of the power contract between the utility and the QF and that the
utilitys rights to information were limited to the contract terms. In addition, a QF
asserted that the monitoring program constituted utility-type regulation expressly
prohibited by the PURPA regulations.
The utilities responded to the rehearing petitions by asserting that the authority for the
monitoring program emanates from PURPA. In addition, the utilities noted that a QF
monitoring program would not impair any of the QF power contracts because the contracts
are premised on the assumption that the individual QFs will maintain their QF status.
In its January order, the PSC denied the rehearing requests concluding that a monitoring
program does not constitute utility-type regulation because such a program is designed to
elicit information regarding a QFs compliance with the QF standards. The PSC also reasoned
that PURPA authorizes the individual states to take any actions necessary to implement
PURPA and that implementing a monitoring program is within this grant of authority. The
PSC also stated that the monitoring program would not impair a power contract between QF
and a utility because PURPA contemplates QF compliance with the PURPA regulations.
Regarding the specific terms of the monitoring programs, the PSC ordered that a QF should
provide the purchasing utility on an annual basis with information sufficient to satisfy
the self-certification requirements contained in FERC Form 556. The PSC also ruled that if
the information provided to the utility raises concerns about compliance with, or if a
utility has reasonable grounds to believe a QF does not meet the QF standards, then the QF
must submit detailed backup information to determine whether QF compliance has actually
been achieved. The PSC recognized that this backup information could contain commercially
sensitive information and therefore ruled that the information would either be provided to
the purchasing utility pursuant to a confidentiality agreement or that the QF could
provide such information to an independent auditor, approved by the utility. In cases
where this confidential information is provided to the auditor, the auditors report
must aggregate or otherwise disguise this confidential information so that the report is
as complete as possible and the commercially sensitive nature of the information is
protected. The PSC denied a utility's request that it be permitted to design its own
monitoring program, ruling that all QF monitoring programs must be uniform. The PSC also
ruled that the monitoring requirement would begin as of January 1, 1994. Among the reasons
cited by the PSC for beginning the monitoring program in 1994 was that it balanced the
interests of the QF in avoiding the burden of submitting data for prior years and that the
PSC had rejected a similar monitoring program in 1993.
The PSC also stated that the monitoring program would not include insuring compliance with
the 80 MW output limitation because this issue is the subject of an ongoing proceeding.
Robert A. Olson is a partner in the law firm of Brown, Olson &
which maintains a nationwide practice in energy law, public utility law and related
commercial transactions. He can be reached at:
Brown, Olson & Gould, PC
2 Delta Drive, Suite 301
Concord, NH 03301
firstname.lastname@example.org | (603) 225-9716