Qualifying Facilities ("QFs") and the law that established QFs, the Public Utility Regulatory Policies Act of 1978 ("PURPA"), have been at the center of two recent significant developments that may affect the relationship between QFs and the utilities to which they sell their electric output. The first issue concerns the possibility posed by the FERC Chairman that certain generators require compensation for the extra "value" they provide, and the second issue pertains to the ownership of Renewable Energy Certificates ("RECs") attributable to energy produced by QFs. This article provides a concise summary of the issues for the benefit of interested parties that may be impacted by the outcome of these developments.
Compensating Generators for Greater "Value"
At a March 21, 2012 webinar hosted by the American Council on Renewable Energy on the topic of waste energy recovery from industrial processes, FERC Chairman Wellinghoff announced a new initiative pertaining to avoided cost rates under PURPA. The Chairman stated that he has directed FERC lawyers and policy experts to research whether the avoided cost rates utilities pay to QFs should include additional compensation to distributed generation because it offers more value to consumers than centralized generation.
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