FERC Declines to Address Net Metering Petition

Introduction

In a perfunctory ruling on July 16, 2020 (Order),¹ dismissing a petition filed by the New England Ratepayer's Association (NERA), the Federal Energy Regulatory Commission (FERC or Commission) declined to assert jurisdiction over net metering. NERA requested that FERC confirm that certain power sales from solar and other distributed resources should be priced at a rate governed by the Public Utility Regulatory Policies Act of 1978 (PURPA)² or a reasonable wholesale rate if the sale is made pursuant to the Federal Power Act (FPA).³

NERA's Petition

NERA asserted that FERC's jurisdiction under either PURPA or the FPA should attach to two specific forms of net metering:

• (a) When a distributed generator's output exceeds the requirements of the host customer over a certain billing period; and
• (b) Where energy from a distributed generator is designed to bypass the customer's load and is not used to serve the host customer's demand behind the meter.⁴

NERA argued that in the above circumstances, the electricity is being delivered to the local utility to resale to the utility's retail customers and, hence, constitutes a wholesale sale in interstate commerce.

Given FERC's exclusive jurisdiction over wholesale sales of energy under the FPA, NERA maintained that such sales should be priced at the applicable FERC jurisdictional rate, either under PURPA or the FPA. In NERA's view, however, most Net Energy Metering arrangements involve PURPA QFs. Excess power flowing through the meter to the local utility from those facilities is compensated at the bundled retail rate, which NERA claims is often higher than the PURPA-required "avoided cost rate."⁵

FERC's Analysis

FERC dismissed NERA's petition on procedural grounds, asserting that declaratory orders "to terminate a controversy or remove uncertainty are discretionary."⁶ In FERC's view, NERA did not raise issues that warranted a generic statement from the Commission.

While the NERA petition made "general assertions" that Net Energy Metering policies adopted by certain states intruded on FERC's authority under PURPA and the FPA, the petition did not "identify a specific controversy or harm that the Commission should address in a declaratory order to terminate a controversy or to remove uncertainty."⁷ Finally, FERC ruled that, to the extent NERA argued that Net Energy Metering arrangements violated PURPA's pricing restrictions, NERA did not meet the requirements for asking FERC to enforce PURPA.⁸

Implications

In the face of widespread opposition to the NERA petition from state regulators, environmental groups, and other parties, all four FERC Commissioners exercised their discretion to decline to address the issues in the NERA petition. Two of the Commissioners made it clear, however, that the scope of FERC's jurisdiction over Net Energy Metering is likely to be revisited in the future.

In a concurring opinion, Commissioner Danly observed that the petition raised difficult legal questions involving the rate treatment for excess generation and the boundary between federal and state jurisdiction, stating: "I am certain that these are questions of profound importance and the Commission will eventually have to address them."⁹

In a separate concurrence, Commissioner McNamee also indicated that the issues raised in the petition are important, and concluded that such issues would be better addressed in the context of a specific set of facts in a complaint or a rulemaking proceeding.

FOOTNOTES

1 New England Ratepayers Association, 172 FERC ¶ 61,042 (2020).
2 16 U.S.C. § 824a-3 (2018). Rates for purchases of power from a PURPA-qualified generator or “QF” cannot exceed the purchasing utility’s “avoided cost.”
3 16 U.S.C. § 824, et seq. (2018).
4 We will refer to these arrangements together as “Net Energy Metering” in keeping with how FERC characterized these arrangements in the Order.
5 Order at P 9.
6 Order at P 35.
7 Order at P 36.
8 Order at P 37, citing to Section 210(h) of PURPA.
9 Order (Danly, Comm’r, concurring at P 3).