NC dismisses PURPA complaint

Focusing on form over substance, North Carolina utility regulators have dismissed a hydroelectric generator's claims that it is entitled to sell the Yadkin River projects' hydroelectricity to local utilities at specified prices.

Cube Yadkin Generation, LLC owns hydroelectric facilities located on the Yadkin River in North Carolina. The company acquired the former Alcoa Corp. dams in 2016. Prior to that purchase, Cube had some discussions with local utilities Duke Energy Progress, LLC and Duke Energy Carolinas, LLC, regarding the sale of power from the hydro projects to the utilities under the federal Public Utility Regulatory Policies Act (PURPA).

PURPA allows certain small or renewable independent power producers meeting defined criteria to self-certify as "qualifying facilities" entitled to special rate and regulatory treatment. These benefits can include the right to sell energy and capacity to the generator's local host utility, usually at either at the utility's avoided cost or at a negotiated rate. Federal regulations generally give QFs the option to sell energy "as-available," or under a long-term contract or other legally enforceable obligation for delivery of energy or capacity over a specified term.

After Cube Yadkin acquired the dams, the utility ultimately refused to buy hydropower from three of the dams on Cube's terms. In March 2018, the generator complained to the North Carolina Utilities Commission. In its complaint, the company asked for a declaratory ruling that the utilities are obligated to purchase the projects' output at rates established under PURPA, as well as other relief including a requirement that the utilities enter into power purchase agreements with Cube for a term of not less than 10 years.

In a July 16, 2018 order, the North Carolina Utilities Commission dismissed the company's complaint. In that order, a majority of the Commission found that the generator had not submitted a "Notice of Commitment" form to the utility, which the majority said was required under North Carolina's implementation of PURPA if a generator wished to establish a legally enforceable obligation that the utility purchase its power. Noting that Cube hadn't submitted the Notice of Commitment form, and therefore that Cube hadn't established a legally enforceable obligation, the Commission denied Cube's request for declaratory ruling.

The Commission next considered whether Cube should be granted a waiver of the requirement to use the Notice of Commitment form. After recapping its view of the purpose of establishing a legally enforceable obligation, and how the Commission had developed its requirements for establishing a legally enforceable obligation, the Commission rejected Cube's request for waiver of the required use of the Notice of Commitment form. As a result of these conclusions, the Commission granted the utilities' motion to dismiss.

Two Commissioners dissented from the majority decision, noting that the majority opinion dismissed the case without allowing the full development of the record or a hearing on the merits.