FERC Proposes Changes to Qualifying Facility Rules

On October 15, 2009, the Federal Energy Regulatory Commission ("FERC" or "the Commission") issued a Notice of Proposed Rulemaking to revise the criteria and procedures for existing or proposed small power production or cogeneration facilities seeking Qualifying Facility ("QF") status. The Commission has also proposed to clarify that eligible solar, wind, waste or geothermal facilities that are QFs will be exempt from certain provisions of the Federal Power Act ("FPA") and Public Utility Holding Company Act of 2005 ("PUHCA 2005"), regardless of size.

QFs enjoy certain benefits under Federal law including the right to sell energy or capacity to a utility, the right to purchase certain services from utilities, and relief from certain regulatory burdens. An owner or operator of a generating facility may obtain QF status by either submitting a self-certification or applying for and obtaining a Commission certification of QF status using FERC Form No. 556.

FERC has proposed to clarify that any facility that meets the definition of an "eligible solar, wind, waste or geothermal facility" under section 3(17)(E) of the FPA is exempt from certain provisions of the FPA and PUHCA 2005, regardless of its size. The Commission's rules currently provide for size limitations for eligibility for the exemptions.

The Commission also has proposed revisions to the procedures, standards and criteria for QF status provided in Part 292 of its regulations. Specifically, the Commission has requested comments on the following proposed changes:

1. exemption of generating facilities with net power production capacities of 1 MW or less from the QF certification requirement;
2. codification of the Commission's authority to waive the QF certification requirement for good cause;
3. extension to all applicants for QF certification the requirement to serve a copy of a filed Form No. 556 on the affected utilities and state regulatory authorities (currently applicable only to applicants for self-certification of QF status); and
4. elimination of the requirement for applicants to provide a draft notice for publication in the Federal Register.

FERC also has proposed revisions to Form 556, which is used in the certification of QF status, by making it more interactive and easy to complete. The Commission wants to take advantage of newer technologies, such as new data collection tools.

Comments are due sixty days from publication in the federal register, and the NOPR is available at www.ferc.gov under Docket No. RM09-23.