Texas PUC Defends Decision that Wind Developer Cannot Provide Firm Power

On October 22, 2009, the Public Utility Commission of Texas ("PUCT" or "Texas Commission") asked the Federal Energy Regulatory Commission ("FERC" or the "Commission") to dismiss an enforcement petition from six wind power developers, stating that the developers mischaracterized the PUCT's decision not to allow the developers to sell output from their qualifying facilities ("QF") at avoided cost rates.

The PUCT recently issued an order denying a request by six wind developers (subsidiaries of John Deere Renewables LLC) to require Southwestern Public Service Company to purchase output from their wind QFs at avoided-cost rates over a specified term. The Texas Commission denied their request after finding that the wind developers did not have firm power and, therefore, under the Public Utilities Regulatory Policies Act of 1978 ("PURPA") cannot establish a legally enforceable obligation for Southwestern Public Service Company to purchase their output over a specified term.

On September 24, 2009, the wind developers filed a petition for enforcement under Section 210(h)(2) of PURPA alleging that the Texas Commission's order violated PURPA by ruling that the wind developers' power was non-firm. The wind developers alleged that the PUCT ruling is contrary to FERC's regulations implementing PURPA. They argued that PURPA provides every QF, regardless of its generation type or fuel source, with the option of selling its output either on an "as available" basis or pursuant to a legally enforceable obligation over a specified term. Moreover, because only resources that establish legally enforceable obligations to sell the output are permitted to charge forecast avoided-cost rates, the wind developers said the PUCT's decision also effectively and unfairly precludes them from choosing the avoided-cost pricing option.

The PUCT disputes the allegations, stating that the wind developers misrepresented its decision as a blanket prohibition on wind-powered facilities being able to supply firm power. Instead the PUCT claims their holding was very narrow and that it does not state that all wind or other intermittent power is non-firm, or that wind generators can never establish a legally enforceable obligation. In fact, the PUCT noted, its final order specifically stated that some wind power could be "readily available" and therefore considered firm power subject to the creation of a legally enforceable obligation.

Both JD Wind Companies and the PUCT petitions are available at www.ferc.gov under docket number EL09-77.