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Electric Power

FERC urged to deem New Hampshire biomass law preempted

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Commodities | Energy | Electric Power | Emissions | Renewables | Natural Gas | Natural Gas (North American)

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El gas y la energía nuclear impulsan la generación de Iberdrola en España en el segundo trimestre

FERC urged to deem New Hampshire biomass law preempted

Highlights

Ratepayers say law intrudes on FERC's wholesale rate authority

State law to help more than 100 MW of generation stay afloat

State legislature overcame governor's veto to pass measure

Washington — New England ratepayers have asked federal regulators to declare that a New Hampshire law, which seeks to bolster a batch of biomass generators in the state, is preempted by federal law because the state measure sets rates for wholesale sales of energy.

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The request comes amid an ongoing debate about how far states can go to pick their resource mix without running afoul of federal laws.

The New England Ratepayers Association acknowledged this lineage of disputes between state and federal policies, but said this case is clear-cut, according to the petition (EL19-10) to the US Federal Energy Regulatory Commission.

"Recently, the commission and the courts have been presented with cases that raise difficult jurisdictional questions - cases in which the precise line between FERC and state authority must be discerned with respect to new products or novel circumstances," the petition said. "This is not one of those cases."

BIOMASS GENERATORS

The petition targets a New Hampshire state measure, SB 365, which mandates that utilities buy power from six wood-burning biomass-fired generators and one waste-to-energy plant, with a total capacity of 117 MW. The law set the rate at 80% of the retail electricity rate and requires retail customers to pay the difference between this so-called adjusted energy rate and the ISO New England market-clearing price. New Hampshire Governor Christopher Sununu in June vetoed the state legislature's first attempt to pass the law, saying that the measure would cost electric ratepayers $25 million a year and wouldn't guarantee the solvency of the generators. "It harms our most vulnerable ratepayers and our job creators for the benefit of a select few," he said in a veto message for the bill.

The New Hampshire Timberland Owners Association lobbied to overturn the veto, arguing in part that the governor ignored the veto's impact on timberland owners. The group cited a 2016 study that found the six biomass plants support 931 jobs and produce $254.5 million in annual economic activity.

VETO CAST ASIDE

The New Hampshire legislature in September overrode the veto and passed the measure anyway. Noting that New England is heavily dependent upon gas-fired generation, the law said that low gas and energy prices could force local biomass generators to shutter. "Closure of renewable generation can leave the state and region even more dependent on electricity from natural gas-fired generation," the law said.

But NERA said the law intrudes on FERC's jurisdiction to set wholesale rates. "Precedent from the Supreme Court and this commission make clear that whatever the states may do to encourage the use of renewable or fuel-diverse generation, they may not advance those objectives by setting the prices for wholesale sales of electricity," the petition said.

The state law also runs afoul of the Public Utility Regulatory Policies Act because the state legislature did not set the rate at the utilities' avoided cost as required by PURPA, NERA said. The petition asked FERC to declare that SB 365 violates PURPA and is preempted under the Federal Power Act.

-- Kate Winston, kate.winston@spglobal.com

-- Edited by Matt Eversman, newsdesk@spglobal.com