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Whether Md. community solar program sparks FERC's jurisdiction depends on whom you ask

A potential FERC order granting a complaint regarding aMaryland community solar aggregation program could either dampen innovativestate efforts or provide needed clarity, depending on which stakeholders youbelieve.

At issue is a three-year pilot community solar electricgeneration system, or CSEGS, program developed by the Maryland Public ServiceCommission to comply with a state law. Under the program, if a CSEGS producesmore energy than is needed by its subscribers, the local electric utility must"use" and compensate the CSEGS or its subscribers for that surplusgeneration.

In an Aug. 23 complaint, the and Choptank Electric CooperativeInc. jointly alleged that the only way the utility can use thatgeneration is to sell it to others. Therefore, they said, such sales are atwholesale and subject to the Federal Power Act, or FPA.

The problem, according to the co-ops, is that neither theMaryland statute nor the PSC's regulations require a CSEGS to be a qualifyingfacility, or QF, before it can be compensated by a utility for its excessgeneration under the pilot program. They further complained thatthe PSC's regulations require that the payments for that excess power to bemade at the full retail rate. As such, the co-ops claimed that the PSCregulations violate both the Public Utility Regulatory Policies Act, or PURPA,and the Maryland statute, both of which require such sales to be at theutility's avoided-cost rate.

In recent comments, the Electric Power Supply Associationsaid the matter is asimple one to resolve and urged FERC to resist any attempts to have it opine onbroader distributed energy resource integration issues that are beyond thescope of the proceeding.

EPSA insisted that the sale of any excess power produced bya solar generation facility participating in the CSEGS program is clearly awholesale sale, and therefore it is subject to FERC's exclusive jurisdictionand must be priced at no more than the purchasing utility's avoided cost.

Since CSEGS facilities are, by definition, solar-poweredfacilities, EPSA said they should have little difficulty satisfying therequirements for QF status. Thus, the association added, the PSC could justeasily add a QF status requirement as well as one dictating that any such salemust be at no more than the purchaser's avoided costs.

Also chiming in, the Edison Electric Institute that while designing andimplementing community solar programs is "squarely within the bailiwick ofthe states," those states also must recognize the potential interplay ofthe programs with federal requirements. And here, EEI said, any mandatorypurchase of excess or unsubscribed generation under the CSEGS pilot programmust be priced in accordance with avoided cost standards or risk violatingPURPA.

EEI added that the Maryland state law requiring the pilotprogram reflects that requirement, and therefore the problem is easily remediedbecause it is with the PSC's regulations.

According to the National Association of Regulatory UtilityCommissioners, however, the complaint raises much larger issues. NARUCaccused the twoelectric cooperatives of "trying to undermine the ability of a statecommission to conduct a pilot program by limiting its design options." Italso maintained that granting the petition would infringe on the statecommissions' jurisdiction over retail rates.

"If the commission acts on this complaint, it willimmediately have a chilling effect on State experiments not only in Maryland, butin other jurisdictions as well. And this chilling effect will extinguish FERCand State access to empirical data from ongoing State experiments — dataunavailable elsewhere," NARUC insisted.

Several commenters asserted that the complaint is premature.For instance, the Maryland PSC stressed that its pilot is strictly voluntary, and thetwo co-ops have not yet indicated whether they will participate.

"Since the cooperatives haven't proposed tariffs toallow their customers to participate, there is no indication that issues thatthey raise will in fact arise," the Maryland PSC said. "Having failedto do so, the cooperatives have failed to exhaust their administrative remediesand their petition is — at best — premature."

Moreover, the Maryland PSC stressed that the effect of thefull retail rate bill credit component is unknown and maintained that its pilotis part of the state's existing net metering program, therefore not subject toPURPA's avoided cost standards.

The New York Public Service Commission also that granting thecomplaint could have a stifling impact on the development of communitydistributed generation programs, noting that at least 25 states have createdcommunity solar programs or pilots. New York alone has more than 1,000community distributed generation projects under development, the stateregulator noted.

In addition, the NYPSC said the CSEGS program does notconflict with PURPA or FERC's regulation because it allows electric companiesto file tariffs that set compensation based on avoided cost rates. And becausethe requirements to qualify as a CSEGS are narrower than PURPA's definition ofa QF, the NYPSC said all generators eligible for the CSEGS program willnecessarily be QFs. Thus, requiring CSEGS participants to be QFs is not needed.

SolarCityCorp also wondered what all the controversy is about, noting thatthe Baltimore Gas and ElectricCo., Potomac ElectricPower Co. and PotomacEdison Co. have submitted CSEGS compliance filings to the PSCwithout identifying any FPA or PURPA concerns.

In addition, SolarCity argued that the directive to"use" CSEGS generation as part of a net-metering mechanism does notmake the net-metering transaction a wholesale sale under the FPA. It said the requirementis nothing more than a directive for participating utilities to use the energyto offset certain purchases and not waste the electricity that will be providedunder the pilot program. And "requiring a utility to prioritize the use ofone resource type over another … is well within the state's rights,"SolarCity maintained.

The Coalition for Community Solar Access, the Maryland DCVirginia Solar Energy Industries Association and the Solar Energy IndustriesAssociation similarly argued that the transactions at issue are net meteringtransactions, which are state jurisdictional retail transactions.

And while the CSEGS regulations do not specifically requirea CSEGS facility to certify as a QF, the solar groups said "it isaxiomatic that only QFs are eligible to exercise PURPA rights and receive astate-established rate of compensation for sales for resale." Thus,"it does not follow that the regulations actually compel utilities topurchase from a non-QF in violation of PURPA."

The solar groups further argued that "it isunreasonable for the cooperatives to assume or speculate that a developer of amulti-million dollar solar facility would fail to do its basic due diligenceand put in a few additional hours of administrative work to self-certify inorder to relieve any jurisdictional anxiety." (EL16-107)