Comments, Docket No. AD16-16-000, at 7 (Nov. 7, 2016); Southern
Company Comments, Docket No. AD16-16-000, at 9-10 (Nov. 7, 2016);
NARUC Supplemental Comments, Docket No. AD16-16-000, at 3 (Nov. 7,
2016).
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b. Electrical Generating Equipment
    98. Section 292.204(a)(2)(ii) of the PURPA regulations states that,
to measure one mile, ``the distance between facilities shall be
measured from the electrical generating equipment of a facility.''
\145\ The Commission has suggested in orders what is not considered
``electrical generating equipment,'' \146\ but has never defined or
elaborated on what equipment meets the definition of ``electrical
generating equipment.'' For example, wind farms are typically comprised
of multiple wind turbines spread over some geographic area; however,
each wind turbine could be considered ``electrical generating
equipment.''
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    \145\ 18 CFR 292.204(a)(2)(ii) (emphasis added).
    \146\ In Order No. 70, the Commission stated: ``The comments
noted that some facilities may include equipment for gathering
energy to be used in the facility which may extend up to a number of
miles from the generating facility. The Commission believes that the
one-mile limit should be measured from the generating facilities.''
Order No. 70, FERC Stats. & Regs. ] 30,134 at 30,943.
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    99. Similarly, solar facilities can be spread over some geographic
area (albeit likely not as large a footprint as a wind farm),
potentially creating confusion as to whether the one mile is measured
from the edge of the panels at one facility to the edge of the panel at
the next facility, or from the center point of each solar array.
Additionally, the Commission has not specified how to measure the
distance between facilities that have multiple separate sets of
``electrical generating equipment.''
2. Proposed Changes to Subpart B--Qualifying Cogeneration and Small
Power Production Facilities
a. Rebuttable Presumption of Separate Facilities
    100. The Commission proposes to allow entities challenging a QF
certification to rebut the presumption that affiliated facilities
located more than one mile apart are considered to be separate QFs. The
Commission proposes that this change would be effective as of the date
of a final rule, which means that such challenges could only be made to
QF certifications and recertifications that are submitted after the
effective date of the final rule in this proceeding.
    101. The Commission proposes that an entity can seek to rebut the
presumption only for those facilities that are located more than one
mile apart and less than ten miles apart. The Commission believes that,
just as there are some facilities that may be so close that it is
reasonable to irrebuttably treat them as a single facility (those a
mile or less apart), so there are some facilities that are sufficiently
far apart that it is reasonable to treat them as irrebuttably separate
facilities. That latter distance, the Commission believes, is ten miles
or more apart. Thus, if two affiliated facilities are one mile or less
apart they are currently and will continue to be irrebuttably presumed
to be a single facility at a single site. If affiliated facilities are
ten miles or more apart, they will be irrebuttably presumed to be
separate facilities at separate sites.
    102. If affiliated facilities are between one and ten miles apart
(i.e., more than one mile apart and less than ten miles apart) there
will still be a presumption, but it will be a rebuttable presumption,
that they are separate facilities at separate sites. Purchasing
electric utilities and others thus would be able to file a protest
attempting to rebut the presumption for facilities more than one mile
apart and less than ten miles apart, and argue that they should be
treated as a single facility. The Commission may also act sua sponte.
The Commission proposes, as explained below, that self-certifications
will remain effective after a protest has been filed, until such time
as the Commission issues an order revoking the certification.
    103. The Commission proposes allowing an entity seeking QF status
to provide further information in its certification (both self-
certification and Commission certification), to preemptively defend
against rebuttal by asserting factors that affirmatively show that two
facilities are indeed separate facilities at separate sites.\147\
Anyone challenging the QF certification would be allowed to assert
factors to show that the facilities are actually part of the same,
single facility.
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    \147\ While a QF with a net power production capacity of 1 MW or
less is not required to formally certify its QF status (either
through Commission certification or self-certification), if the QF's
status is later challenged the QF would be able to respond by
affirmatively demonstrating that its facilities are not located at
the same site as other affiliated facilities and thus that the QF
does not exceed the 80 MW size limitation.
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    104. The Commission proposes limiting protests challenging QF
status by requiring any entity filing a protest to specify facts that
make a prima facie demonstration that the facility described in the
self-certification, self-recertification, or Commission certification
does not satisfy the requirements for QF status. General allegations or
unsupported assertions would not be a basis for denial of
certification. The Commission further

proposes limiting protests to QF status by requiring that once the
Commission has affirmatively certified an applicant's QF status through
either a Commission certification proceeding or in response to protests
challenging QF status, any later protest to a QF's existing
certification asserting that facilities further than one mile apart are
part of a single QF must demonstrate changed circumstances that call
into question the continued validity of the earlier certification.
    105. The Commission proposes that physical and ownership factors
may be asserted to rebut or defend against rebuttal. Noting that no
single factor would be dispositive, the Commission proposes the factors
listed below:
    (1) Physical characteristics including such common characteristics
as: Infrastructure, property ownership, interconnection agreements,
control facilities, access and easements, interconnection facilities up
to the point of interconnection to the distribution or transmission
system, collector systems or facilities, points of interconnection,
motive force or fuel source, off-take arrangements, property leases,
and connections to the electrical grid; and (2) ownership/other
characteristics, including such characteristics as whether the
facilities in question are: Owned or controlled by the same person(s)
or affiliated persons(s), operated and maintained by the same or
affiliated entity(ies), selling to the same electric utility, using
common debt or equity financing, constructed by the same entity within
12 months, managing a power sales agreement executed within 12 months
of a similar and affiliated facility in the same location, placed into
service within 12 months of an affiliated project's commercial
operation date as specified in the power sales agreement, or sharing
engineering or procurement contracts. The Commission solicits comments
on whether the Commission should rely on some or any of these factors,
or other factors, or whether the various factors should be considered
together and weighed.
    106. Finally, for its PURPA Regulations, the Commission generally
relies on the definition of an ``affiliate'' provided in its
regulations at Sec.  35.36(a)(9). The Commission will continue to rely
on this definition and notes that subsection (iii) of the Commission's
regulation provides that the Commission may determine, after
appropriate notice and opportunity for hearing, that a person stands in
such relation to a specified company that there is likely to be an
absence of arm's-length bargaining in transactions between them as to
make it necessary or appropriate in the public interest or for the
protection of investors or consumers that the person be treated as an
affiliate.\148\ The Commission intends, when applying its rules on
separate facilities, to consider this provision of its regulations,
when entities otherwise would not be deemed affiliates under the other
provisions of the definition, to determine whether a person
nevertheless should be treated as an affiliate. In doing so, the
Commission could take into consideration many of the same factors that
would reasonably be considered in evaluating whether facilities located
over one and less than ten miles apart are a single facility or
separate facilities.
---------------------------------------------------------------------------

    \148\ 18 CFR 35.36(a)(9)(iii).
---------------------------------------------------------------------------

    107. The Commission believes that this change, together with the
proposed definition of ``electrical generating equipment'' and revision
to the FERC Form No. 556 discussed below, would more closely align with
Congress's requirement that QFs seeking to certify as small power
production facilities are in fact below the statutory limit for such
facilities.\149\
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    \149\ See 16 U.S.C. 796(17)(A)(ii) (defining small power
production facility as inter alia ``a facility which is an eligible
solar, wind, waste, or geothermal facility, or a facility which--. .
. has a power production capacity which, together with any other
facilities located at the same site (as determined by the
Commission), is not greater than 80 megawatts.'').
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b. Electrical Generating Equipment
    108. The Commission proposes defining ``electrical generating
equipment'' to refer to all boilers, heat recovery steam generators,
prime movers (any mechanical equipment driving an electric generator),
electrical generators, photovoltaic solar panels and/or inverters, fuel
cell equipment and/or other primary power generation equipment used in
the facility, excluding equipment for gathering energy to be used in
the facility. The Commission expects that each wind turbine on a wind
farm and each solar panel in a solar facility would be considered
``electrical generating equipment'' because each wind turbine and each
solar panel is independently capable of producing electric energy. We
seek comments on this approach, and on what--if not individual wind
turbines and solar panels--should be considered ``electrical generating
equipment'' for wind and solar plants.
    109. The Commission also proposes specifying how to measure the
distance between facilities that have multiple separate sets of
``electrical generating equipment'' such as wind farms and solar
facilities. In this NOPR, the Commission proposes measuring the
distance between the nearest ``electrical generating equipment'' of any
two facilities such that, for the facilities to be considered
irrebuttably separate, all such equipment of one QF must be at least
ten miles away from all such equipment of another QF. We believe this
is the appropriate way to measure the distance between affiliated sets
of ``electrical generating equipment'' because this reflects the
distance between the components directly tied to producing electric
energy.
    110. The Commission seeks comment on this approach, and whether
alternative approaches would be more appropriate. For example, some
parties have suggested in QF certification proceedings that the
Commission could use the geographic center of the plant footprint or a
weighted average of the locations of the individual pieces of
``electrical generating equipment.'' \150\ The Commission is concerned
these approaches may be easily gamed, but seeks comment on whether they
may be constructed in a way that would prevent gaming, and whether such
formulations would be preferable to the approach proposed above.
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    \150\ See Beaver Creek Wind II, LLC, 160 FERC ] 61,052, at P 9
(2017).
---------------------------------------------------------------------------

3. Corresponding Changes to the FERC Form No. 556
    111. If the changes to the evaluation of whether QFs are separate
facilities are implemented as proposed above, the Commission proposes
corresponding changes to the FERC Form No. 556. Currently, item 8a of
Form No. 556 requires that the applicant identify any facilities with
electrical generating equipment within one mile of the instant
facility's electrical generating equipment, as shown below in Figure 1.

[GRAPHIC] [TIFF OMITTED] TP04OC19.005

    112. The Commission proposes adding a new item 8b,\151\ which would
be similar to the current item 8a, except that it would cover
affiliated facilities whose nearest electrical generating equipment is
greater than 1 mile and less than 10 miles from the electrical
generating equipment of the instant facility.
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    \151\ Subsequent items in that section of the form would be
retained, but re-numbered and moved down accordingly.
---------------------------------------------------------------------------

    113. The Commission proposes that the instructions for the new item
8b would also allow applicants with facilities identified under item 8b
(i.e., facilities more than one mile apart and less than ten miles
apart) to, if they choose, explain (in the Miscellaneous section
starting on page 19 of the form) why the facilities identified under
item 8b should be considered separate facilities, considering the
relevant physical and ownership factors. We further propose to provide
reference, in the instructions to the new item 8b, to the paragraphs of
the final rule under this rulemaking which discuss the relevant
physical and ownership factors that may be asserted to defend against
rebuttal.
    114. The Commission seeks comment on whether item 8a (existing)
should be revised and item 8b (as newly proposed) written to require
that the applicant specify the distance from the instant facility to
each affiliated facility listed. We also seek comment on whether items
8a and (new) 8b should require the applicant to document (in the
Miscellaneous section on page 19 of the Form No. 556) how the distances
reported were calculated. Specifically, we seek comment on whether the
applicant should be required to identify the particular electrical
generating equipment and associated geographic coordinates used in
calculating the distance(s) between the facility(ies).
    115. The Commission notes that item 8a currently requires
applicants to list all affiliated ``facilities.'' Under this
requirement, an applicant would have to list all affiliated QFs and
affiliated non-QFs. We request comment on whether such a requirement is
more burdensome than necessary. It is not clear that requiring the
listing of affiliated non-QFs is necessary in monitoring for compliance
with the relevant QF regulations, which are concerned only with the
distance between affiliated QFs. Particularly under the newly proposed
item 8b, where applicants would list facilities located more than one
mile apart but less than ten miles apart, many more facilities are
likely to be listed than are currently listed in the existing item 8a.
As such, we seek comment on whether we should revise item 8a (existing)
and write item 8b (as newly proposed) to require that applicants list
only affiliated QFs, or whether there is reason to continue to require
all affiliated facilities to be listed.
    116. The Commission also seeks comment on whether item 3c
(geographic coordinates) and the Geographic Coordinates instructions on
page 4 of the current Form No. 556 should be modified such that
reporting of geographic coordinates should be required for all
applications, rather than only for applications where there is no
facility street address (as is now the case). We believe such
information may provide more transparency in approximate distances
between facilities, and that such transparency may be useful for both
the public and Commission staff in monitoring compliance with the
Commission's QF regulations.
    117. We note, as we did in Order No. 732,\152\ and as we do in the
general form instructions on page 4 of the Form No. 556, that such
coordinates can be obtained through certain free online map services
(with links and instructions available through the Commission's QF
website); GPS devices (including smartphones, which are now nearly
ubiquitous); Google Earth; property surveys; various engineering or
construction drawings; property deeds; or municipal or county maps
showing property lines. We also note that the Commission has a link on
its QF web page (www.ferc.gov/QF) which provides assistance with
determining geographic coordinates of facilities. As such, we believe
that the burden that would be created by requiring every QF to provide
geographic coordinates would be limited. Even so, we seek comment on
whether the value of the information to the public and the Commission
would outweigh the limited burden.
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    \152\ Revisions to Form, Procedures, and Criteria for
Certification of Qualifying Facility Status for a Small Power
Production or Cogeneration Facility, Order No. 732, 130 FERC ]
61,214, at P 100 (2010).
---------------------------------------------------------------------------

D. PURPA Section 210(m) Rebuttable Presumption of Nondiscriminatory
Access to Markets

    118. In accordance with PURPA section 210(m), the PURPA Regulations
permit an electric utility to file an application with the Commission
requesting relief from the requirement to enter into new contracts or
obligations to purchase electric energy from a QF if the Commission
finds that a QF has nondiscriminatory access to certain markets. As
relevant here, the PURPA Regulations establish a rebuttable presumption
that QFs with a net power production capacity at or below 20 MW lack
nondiscriminatory access to such markets. The Commission now proposes

to revise the PURPA Regulations to reduce the capacity level at which
this presumption attaches for small power production facilities, but
not cogeneration facilities, from 20 MW to 1 MW.\153\
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    \153\ The Commission also proposes to revise the PURPA
Regulations to replace ``Midwest Independent Transmission System
Operator, Inc. (Midwest ISO)'' and ``ISO New England, Inc.'' in 18
CFR 292.309(e), with ``Midcontinent Independent System Operator,
Inc. (MISO)'' and ``ISO New England Inc.,'' respectively.
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1. Background
    119. In 2005, Congress amended PURPA section 210 to add section
210(m), which was intended to reflect the fact that organized electric
markets have been created in RTOs/ISOs that provide alternative markets
for sales by QFs. Section 210(m) provides for termination of the
requirement that an electric utility enter into a new obligation or
contract to purchase from a QF if the QF, in fact, has
nondiscriminatory access to certain defined types of markets.\154\
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    \154\ See 16 U.S.C. 824a-3(m).
---------------------------------------------------------------------------

    120. In Order No. 688, the Commission identified certain specified
markets as qualifying for section 210(m) relief from the PURPA
mandatory purchase obligation, provided that QFs, in fact, have
nondiscriminatory access to such markets.\155\ Because section 210(m)
requires the Commission to make a final determination on applications
to terminate the requirement to enter into new obligations or contracts
to purchase from QFs within 90 days of the application, the Commission
established certain rebuttable presumptions to make the processing of
the applications possible given this 90-day action requirement.
---------------------------------------------------------------------------

    \155\ New PURPA Section 210(m) Regulations Applicable to Small
Power Production and Cogeneration Facilities, Order No. 688, 117
FERC ] 61,078, at PP 9-12 (2006), order on reh'g, Order No. 688-A,
119 FERC ] 61,305 (2007), aff'd sub nom. Am. Forest & Paper Ass'n v.
FERC, 550 F.3d 1179 (D.C. Cir. 2008).
---------------------------------------------------------------------------

    121. As relevant here, one of those rebuttable presumptions,
contained in Sec.  292.309(d)(1) of the PURPA Regulations,\156\ is that
a QF with a net power production capacity at or below 20 MW does not
have nondiscriminatory access to markets. In creating this rebuttable
presumption, the Commission found persuasive arguments that some QFs
may, in practice, not have nondiscriminatory access to markets in light
of their small size.
---------------------------------------------------------------------------

    \156\ 18 CFR 292.309(d)(1).
---------------------------------------------------------------------------

    122. The Commission noted that there was agreement among commenters
representing both QFs and utilities that small size could affect a QF's
ability to access markets.\157\ The Commission explained that smaller
QFs often are interconnected at the distribution level and that QFs
interconnected at the distribution level may, in practice, lack the
same level of access to markets as those connected to transmission
lines.\158\ The Commission also explained that smaller QFs were more
likely to have to overcome obstacles that larger QFs would not have to
overcome, such as jurisdictional differences, pancaked delivery rates,
and administrative burdens to obtaining access to distant buyers.
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    \157\ E.g., Order No. 688, 117 FERC ] 61,078 at PP 72-73; Order
No. 688-A, 119 FERC ] 61,305 at P 103.
    \158\ Order No. 688-A, 119 FERC ] 61,305 at PP 94-103.
---------------------------------------------------------------------------

    123. The Commission found that such difficulties supported a
rebuttable presumption that smaller QFs have ``substantially less
ability to access wholesale markets than do larger QFs.'' \159\ The
Commission further explained that it set this rebuttable presumption at
20 MW, rather than at a much smaller size of one or two MW, to reflect
its understanding of ``the general nature of QFs' interconnection
practices and the relative capabilities of small entities'' to
participate in markets.\160\ The Commission acknowledged that ``[t]here
is no perfect bright line that can be drawn,'' but stated that it
``reasonably exercised [its] discretion in adopting a 20 MW or below
demarcation for purposes of determining which QFs are unlikely to have
nondiscriminatory access to markets.'' \161\
---------------------------------------------------------------------------

    \159\ Id. P 96.
    \160\ Id. P 101.
    \161\ Id. P 95.
---------------------------------------------------------------------------

    124. Order No. 688 placed the burden of proof on the electric
utility to demonstrate that a smaller QF has nondiscriminatory access
to energy markets.\162\ The Commission, in Order No. 688, did not
specify what evidence a utility could set forth to rebut the
presumption, but noted that ``relevant evidence may include the extent
to which the QF has been participating in the market or is owned by, or
is an affiliate of, a[n] entity that has been participating in the
relevant market.'' \163\
---------------------------------------------------------------------------

    \162\ 18 CFR 292.310(d)(2) (to the extent an electric utility
seeks relief from the purchase obligation with respect to a QF 20 MW
or smaller, the electric utility bears burden to prove the QF has
nondiscriminatory access to the wholesale markets).
    \163\ Order No. 688, 117 FERC ] 61,078 at P 78. In saying this,
however, the Commission did not intend to suggest that these two
facts alone would necessarily be a basis for granting relief from
PURPA's mandatory purchase obligation. PPL Elec. Utils. Corp., 145
FERC ] 61,053, at P 23 & n.25 (2013), order denying reh'g, 148 FERC
] 61,207 (2014).
---------------------------------------------------------------------------

    125. The Commission in Order No. 688 stated that ``[t]here is
nothing in section 210(m) of PURPA to suggest that Congress intended to
ensure a QF's commercial viability. Nor does the statute require the
Commission to find that the `economic and technical equivalent to
mandatory purchase is available through a competitive market' before it
terminates the requirement that an electric utility enters into a new
contract or obligation to purchase electric energy from QFs.'' \164\
---------------------------------------------------------------------------

    \164\ Order No. 688, 117 FERC ] 61,078 at P 37.
---------------------------------------------------------------------------

2. Commission Proposal
    126. In 2006, when Order No. 688 was issued, the organized electric
markets had been in existence for only a few years and were not well
understood by all market participants. Now, twelve years later, the
markets are more mature, and the mechanics of participation in such
markets are improved and better understood. Consequently, the
Commission believes that small power production facilities below 20 MW
should be able to participate in such markets under most circumstances.
The Commission therefore proposes to revise Sec.  292.309(d) of the
PURPA Regulations to reduce the net power production capacity level at
which the presumption of nondiscriminatory access to a market attaches
for small power production facilities, but not cogeneration facilities,
from 20 MW to 1 MW.
    127. The Commission believes that, in light of the maturation of
organized electric markets, such a reduction is consistent with
Congress's intent to relieve electric utilities of their obligation to
purchase when a QF has nondiscriminatory access to competitive markets.
Under current market conditions, it is fair to expect that small power
production facilities above 1 MW can acquire the administrative and
technical expertise necessary to obtain nondiscriminatory access to a
market.
    128. The Commission, in establishing the presumption that QFs whose
net power production capacity was 20 MW or below lacked
nondiscriminatory access to markets defined in sections 210(m)(1)(A)-
(C) of PURPA, acknowledged that ``there is no unique and distinct
megawatt size that uniquely determines if a generator is small.'' \165\
In using 20 MW to separate the presumption that large QFs had
nondiscriminatory access and small QFs lacked such access, the
Commission recognized: (1) Order No. 671's exemption for QFs that are
20 MW or smaller from sections 205 and 206 of the FPA; and (2) Order
Nos. 2006 and 2006-

A's setting 20 MW as the demarcation for different interconnection
standards between small and large generators.\166\ While the Commission
has not (and does not here) propose to revise the exemptions for QFs
from sections 205 and 206 of the FPA, the Commission has taken steps to
ease both interconnection and market access for generation resources
with small capacities since it first implemented section 210(m) of
PURPA.
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    \165\ Order No. 688-A, 119 FERC ] 61,305 at P 97.
    \166\ See Order No. 688, 117 FERC ] 61,078 at P 76, order on
reh'g, Order No. 688-A, 119 FERC ] 61,305 at P 97; see also 18 CFR
292.601(c)(1) (``sales of energy or capacity made by qualifying
facilities 20 MW or smaller, or made pursuant to a contract executed
on or before March 17, 2006 or made pursuant to a state regulatory
authority's implementation of section 210, the Public Utility
Regulatory Policies Act of 1978, 16 U.S.C. 824a-1, shall be exempt
from scrutiny under sections 205 and 206''); Revised Regulations
Governing Small Power Production and Cogeneration Facilities, Order
No. 671, 114 FERC ] 61,102, at P 98 (2006), order on reh'g, Order
No. 671-A, 115 FERC ] 61,225 (2006) (establishing exemption for QFs
20 MW or below from 205 and 206 of FPA); Standardization of Small
Generator Interconnection Agreements and Procedures, Order No. 2006,
111 FERC ] 61,220, at P 75, order on reh'g, Order No. 2006-A, 113
FERC ] 61,195 (2005), order granting clarification, Order No. 2006-
B, 116 FERC ] 61,046 (2006).
---------------------------------------------------------------------------

    129. For example, the Commission has required public utilities to
provide a Fast-Track interconnection process for some interconnection
customers whose capacity is up to and including 5 MW (up from the
previous 2 MW threshold),\167\ and has required each RTO/ISO to revise
its tariff to include a participation model for electric storage
resources that establishes a minimum size requirement for participation
in the RTO/ISO markets that does not exceed 100 kW.\168\ While both of
these changes do not apply only to generation types that could become
QFs or to RTOs/ISOs, we believe they generally show that small power
production facilities below 20 MW, specifically those whose capacity
exceeds 1 MW now have greater access to the markets defined in section
210(m)(1) of PURPA than they did when the Commission first established
the presumptions of market access. Under this proposal, like QFs over
20 MW today, small power production facilities over 1 MW would be able
to rebut the presumption of access due to operational characteristics
or transmission constraints.\169\
---------------------------------------------------------------------------

    \167\ Small Generator Interconnection Agreements and Procedures,
Order No. 792, 145 FERC ] 61,159, at P 103 (2013), clarifying, Order
No. 792-A, 146 FERC ] 61,214 (2014).
    \168\ Electric Storage Participation in Markets Operated by
Regional Transmission Organizations and Independent System
Operators, Order No. 841, 162 FERC ] 61,127, at P 265 (2018).
    \169\ See 18 CFR 292.309(c), (e), (f).
---------------------------------------------------------------------------

    130. The Commission does not propose to make the same reduction
applicable to cogeneration facilities. Unlike small power production
facilities, which are constructed solely to produce and sell
electricity, cogeneration facilities seeking QF certification after
February 2, 2006 are statutorily required to show that they are
intended primarily to provide heat for an industrial, commercial,
residential or institutional process rather than fundamentally for sale
to an electric utility.\170\ Consequently, the production and sale of
electricity is a byproduct of these processes, and owners of
cogeneration facilities might not be as familiar with energy markets
and the technical requirements for such sales. Retention of the
existing 20 MW level for the presumption of access to markets therefore
would be appropriate for cogeneration facilities.
---------------------------------------------------------------------------

    \170\ See 16 U.S.C. 824a-3(n); 18 CFR 292.205(d)(3). We
recognize that cogeneration facilities seeking certification 5 MW or
smaller after February 2, 2006 are presumed to satisfy this
requirement. 18 CFR 292.205(d)(4).
---------------------------------------------------------------------------

3. Reliance on RFPs and Liquid Market Hubs To Terminate Purchase
Obligation
    131. NARUC has proposed that the Commission allow utilities to rely
on RFPs (in combination with liquid market hubs) to establish
eligibility to terminate a utility's purchase obligation pursuant to
PURPA section 210(m)(1)(C).\171\ After describing generally how such a
proposal might be structured, NARUC suggests that ``[t]he Commission
should create a yardstick of characteristics that describe in detail
how a utility could qualify for an exemption under subparagraph (C).''
\172\
---------------------------------------------------------------------------

    \171\ See NARUC Supplemental Comments, Docket No. AD16-16-000
(Oct. 17, 2018).
    \172\ Id., attach. A at 9.
---------------------------------------------------------------------------

    132. Under the PURPA Regulations, electric utilities already may
seek to terminate their mandatory purchase obligation pursuant to PURPA
section 210(m)(1)(C) by demonstrating that a particular market is of
comparable competitive quality to markets described in PURPA section
210(m)(1)(A) and (B).\173\ The current PURPA Regulations are not
prescriptive about how an electric utility must make such a
demonstration and nothing in the PURPA Regulations or precedent would
bar an electric utility from arguing that RFPs in combination with
liquid market hubs are sufficient to satisfy PURPA section
210(m)(1)(C).
---------------------------------------------------------------------------

    \173\ Order No. 688-A, 119 FERC ] 61,305 at P 43 (``Congress
believed the two types of markets identified in subparagraphs (A)
and (B), while distinct between themselves, contain certain
competitive qualities that justify termination of the purchase
requirement for any QF with nondiscriminatory access to those
markets. Subparagraph (C) directs the Commission to consider these
competitive qualities when analyzing whether there are other markets
that, while not meeting the specific requirements of subparagraphs
(A) and (B), are sufficiently competitive to justify termination of
the purchase requirement.''); cf. Pub. Serv. Co. of N.M., 140 FERC ]
61,191, at PP 29-38 (2012) (denying application to terminate
mandatory purchase obligation on the grounds that the Four Corners
Hub is not of comparable competitive quality to markets in sections
210(m)(1)(A) and (B) of PURPA).
---------------------------------------------------------------------------

    133. The Commission believes that a properly structured proposal
along the lines proposed by NARUC potentially could satisfy the
statutory requirements under PURPA section 210(m)(1)(C) and will
consider such proposals on a case-by-case basis. Although the
Commission does not in this NOPR propose additional criteria a utility
or utilities may rely on to satisfy PURPA section 210(m)(1)(C), the
Commission seeks comments on any specific factors that would be useful
to consider in determining how a utility or utilities may satisfy PURPA
section 210(m)(1)(C).
E. Legally Enforceable Obligation
    134. Section 292.304(d) of the PURPA Regulations provides that a QF
can choose to have its rates based on the avoided cost calculated at
the time of delivery or at the time a LEO is incurred. However, the
PURPA Regulations do not specify when or how a LEO is established.\174\
To date, the Commission has not identified specific criteria that
states must follow in determining when a LEO is established.
---------------------------------------------------------------------------

    \174\ But see, e.g., FLS, 157 FERC ] 61,211 at P 23
(``[R]equiring a QF to tender an executed interconnection agreement
is equally inconsistent with PURPA and our regulations. Such a
requirement allows the utility to control whether and when a legally
enforceable obligation exists--e.g., by delaying the facilities
study or by delaying the tendering by the utility to the QF of an
executable interconnection agreement.''); Memorandum of Agreement
between Idaho Public Utilities Commission and Federal Energy
Regulatory Commission at 2 (Dec. 24, 2013), available at https://www.ferc.gov/legal/mou/mou-idaho-12-2013.pdf (Idaho Commission
acknowledging that ``a legally enforceable obligation may be
incurred prior to the formal memorialization of a contract to
writing'').
---------------------------------------------------------------------------

    135. Although not specifying such criteria, the Commission has
found that certain prerequisites to QFs obtaining a LEO imposed by some
states--such as a utility's execution of an interconnection agreement
or power purchase agreement--are unreasonable.\175\ The

Commission does not propose to overturn this precedent because the
Commission continues to believe that imposition of the prerequisites
addressed in its precedent is unreasonable and does not satisfy PURPA's
requirement that the Commission prescribe rules as necessary to
encourage the development of QFs.
---------------------------------------------------------------------------

    \175\ See, e.g., FLS, 157 FERC ] 61,211 at P 26 (requiring
signed interconnection agreement as prerequisite to legally
enforceable obligation is inconsistent with PURPA Regulations);
Grouse Creek Wind Park, LLC, 142 FERC ] 61,187, at P 40 (2013)
(Grouse Creek) (finding that requiring a QF to file complaint as
prerequisite to a legally enforceable obligation is inconsistent
with PURPA Regulations); Murphy Flat Power, LLC, 141 FERC ] 61,145,
at P 24 (2012) (finding that requiring a signed and executed
contract with an electric utility as a prerequisite to a legally
enforceable obligation is inconsistent with PURPA Regulations);
Rainbow Ranch Wind, LLC, 139 FERC ] 61,077 (2012) (same); Cedar
Creek Wind, LLC, 137 FERC ] 61,006, at P 36 (2011) (Cedar Creek)
(same).
---------------------------------------------------------------------------

    136. As discussed below, however, the Commission proposes to amend
Sec.  292.304(d) of the PURPA Regulations to require that a QF
demonstrate its commercial viability and financial commitment to
construct its facility through objective and reasonable state-
determined criteria before being entitled to a LEO.
1. Background and Need for Reform
    137. The Commission created the concept of a LEO in Order No. 69
``to prevent a utility from circumventing the requirement that provides
capacity credit for an eligible qualifying facility merely by refusing
to enter into a contract with the qualifying facility.'' \176\ The
Commission has held that requiring a fully-executed contract or
executed interconnection agreement as a condition precedent to
obtaining a LEO is inconsistent with PURPA.\177\
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    \176\ Order No. 69, FERC Stats. & Regs. ] 30,128 at 30,880.
    \177\ FLS, 157 FERC ] 61,211 at P 26; Cedar Creek, 137 FERC ]
61,006 at P 35.
---------------------------------------------------------------------------

    138. The record indicates that some QFs believe that informing a
utility that the QF intends to sell energy to that utility at some
point in the future is sufficient to create a LEO and thereby establish
the price for future deliveries, regardless of whether the QF project
being considered ever generates electricity.\178\ This approach, Xcel
explains, puts the electric utility and its customers at risk since the
utility is required to reliably plan its system and resources for a QF
that will not be operational for many years, or not at all, thereby
creating uncertainty for the utility and its consumers.\179\
Conversely, QF developers argue generally that they need the certainty
of a LEO to obtain the financing to build their facilities in the first
place, as QFs do not have the same ability that the electric utilities
have to ``rate base'' their facilities and, thereby, guarantee capital
recovery.\180\
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    \178\ See, e.g., EEI Supplemental Comments, attach. A at 7.
    \179\ See Xcel Comments, Docket No. AD16-16-000, at 15-16 (Nov.
7, 2016) (``If a utility is required to enter into a LEO with a QF,
it will (or may be required to) factor the capacity associated with
that LEO into its resource planning efforts. And if that project
does not materialize--for whatever reason--the utility's resource
plan will need to change. Depending on the amount of capacity
associated with the LEO or LEOs that the utility has pending, the
utility may have to scramble to replace the capacity associated with
the now non-existent LEO(s). Such a scramble would very likely
result in payment of above-market prices for capacity and energy,
again violating the indifference standard. Moreover, additional
capacity over and above the capacity associated with the non-
existent QF might have been procured, at additional cost to
customers, to manage the variability of that anticipated QF. Of
greater concern would be a situation where additional capacity is
simply not available to make up for the capacity that the QF was
expected to provide under the LEO, putting system reliability at
risk and potentially putting the utility at risk of violations of
NERC reliability standards approved by the Commission. Further,
attempting to lock in long-term prices far in advance of the start
date of deliveries under a LEO creates significant potential for
payments in excess of avoided cost rates.'').
    \180\ Compare EEI Supplemental Comments, attach. A at 7 with
Renewable Energy Coalition Comments, Docket No. AD16-16-000, at 11-
12 (Nov. 7, 2016) (``Long-term contracts allow existing QFs to
remain economically viable in times of long resource sufficiency
periods with low avoided cost rates. . . . Unlike utilities, which
can spread the costs of resource acquisition over the entire useful
life of a facility, QFs do not have this option because doing so
could expose ratepayers to unnecessary risk from deviations in
avoided costs.''); and Northwest and Intermountain Power Producers
Coalition Comments, Docket No. AD16-16-000, at 5 (Nov. 4, 2016)
(``To earn a return on investment, there must first be the prospect
of a return on investment. It takes at least 15 years in most cases
involving [Northwest and Intermountain Power Producers Coalition]
members to recover their invested capital and to retire the debt
incurred to build a renewable energy facility. It takes a contract
term of 20 years to earn a justifiable return on that
investment.'').
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    139. While it is up to states to reasonably determine the
circumstances and thus when a legally enforceable obligation
arises,\181\ states may not impose obstacles that make it unreasonably
difficult to obtain a LEO.\182\ Given the significant changes in the
electric industry since PURPA's enactment, as discussed above, the
Commission finds that it now may be appropriate to: (1) Specify the
commercial viability of a QF and financial commitment to construct the
proposed project as the necessary pre-requisites for obtaining a LEO;
and (2) provide guidance for states as to what types of criteria may be
applied to make the necessary demonstration.
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    \181\ W. Penn Power Co., 71 FERC ] 61,153, at 61,495 (1995)
(West Penn) (``It is up to the States, not this Commission, to
determine the specific parameters of individual QF power purchase
agreements, including the date at which a legally enforceable
obligation is incurred under State law. Similarly, whether the
particular facts applicable to an individual QF necessitate
modifications of other terms and conditions of the QF's contract
with the purchasing utility is a matter for the States to determine.
This Commission does not intend to adjudicate the specific
provisions of individual QF contracts.'' (footnotes omitted)).
    \182\ See, e.g., Cedar Creek, 137 FERC ] 61,006 at P 35 & n.57
(citing West Penn, 71 FERC ] 61,153 at 61,495).
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2. Commission Proposal
    140. The Commission proposes to add regulatory text in Sec.
292.304(d)(3) of the PURPA Regulations to require QFs to demonstrate
that a proposed project is commercially viable and the QF has a
financial commitment to construct the proposed project pursuant to
objective, reasonable, state-determined criteria in order to be
eligible for a LEO. The Commission further proposes to provide that,
although a showing of commercial viability and the QF's financial
commitment to construct the project is required, states have
flexibility as to what constitutes an acceptable showing of commercial
viability and financial commitment.
    141. Our objective in requiring a showing of commercial viability
and the QF's financial commitment to construct the project is to ensure
that no electric utility obligation is triggered for those QF projects
that are not sufficiently advanced in their development and, therefore,
for which it would be unreasonable for a utility to include in its
resource planning, while at the same time ensuring that the purchasing
utility does not unilaterally and unreasonably decide when its
obligation arises. States may require a showing, for example, that a QF
has satisfied, or is in the process of undertaking, at least some of
the following prerequisites: (1) Obtaining site control adequate to
commence construction of the project at the proposed location; (2)
filing an interconnection application with the appropriate entity; (3)
securing local permitting and zoning; or (4) other similar, objective,
reasonable criteria that allow a QF to demonstrate its commercial
viability and financial commitment to construct the facilities. These
indicia are not intended to be exhaustive and the Commission seeks
comment on these indicia and others that also might be appropriate for
consideration.
    142. We believe requiring QFs to demonstrate their commercial
viability and financial commitment to construct the facilities based on
such indicia before obtaining a LEO will allow electric utilities to
reliably plan for their systems ensuring resource adequacy.
Additionally, states' development and definition of objective and
reasonable factors to determine commercial viability and financial
commitment to construct a facility encourage the development of QFs by
providing QFs

with more certainty as to when they will obtain a LEO.\183\
---------------------------------------------------------------------------

    \183\ Because QFs already in operation have necessarily
demonstrated a commitment to construct the project, the Commission
does not intend commercial viability and financial commitment
requirements to serve as prerequisites to QFs already in operation
with existing LEOs to obtaining new LEOs.
---------------------------------------------------------------------------

F. QF Certification Process

1. Background and Need for Reform
    143. The Commission provides two paths for an entity to obtain QF
status: self-certification and Commission certification.\184\ Self-
certification, the procedures for which are contained in Sec.
292.207(a) of the PURPA Regulations,\185\ is the more common method of
certification. When an applicant self-certifies (or self-recertifies),
it certifies that its facility satisfies the requirements for QF
status. Under the self-certification (or self-recertification) approach
a QF is assigned a docket number, and Commission staff reviews the
filing to discern that the information required in Form No. 556 appears
to have been included, but a notice of the self-certification typically
is not published in the Federal Register and Commission staff does not
otherwise evaluate whether the applicant meets the requirements for QF
status.
---------------------------------------------------------------------------

    \184\ There is no fee for a self-certification; there is,
however, a fee for Commission certification. 18 CFR 381.505. For
2018, an application for Commission certification requires a filing
fee of $23,330 for small power production facilities and $26,410 for
cogeneration facilities. In recent years, the Commission has
received approximately 5 applications per year for Commission-
certification, with the remaining applicants (approximately 3,400
per year) filing for self-certification of their facilities. See
Commission Information Collection Activities, Notice of information
Collection and Request for Comments, Docket No. IC19-16-000, 84 FR
9317, 9318 (Mar. 7, 2019). The Commission will not issue notice of
nor process an application for Commission certification without
receipt of the applicable fee.
    \185\ 18 CFR 292.207(a).
---------------------------------------------------------------------------

    144. The Commission recognized that the self-certification process
may not always satisfy the needs of certain stakeholders or interested
entities. Accordingly, the Commission established, in Sec.  292.207(b)
of the PURPA Regulations,\186\ what is called the ``optional
procedure'' for QF status. Under the optional procedure, an entity may
file an application for a determination by the Commission that a
facility meets the requirements for QF status. The application is
noticed in the Federal Register, the Commission decides whether the
applicant meets the requirements for QF status, and then issues an
order either granting or denying the requested certification.
---------------------------------------------------------------------------

    \186\ 18 CFR 292.207(b).
---------------------------------------------------------------------------

    145. After the enactment of EPAct 2005, which imposed new
requirements for QF status for ``new'' cogeneration facilities,\187\
the Commission issued Order No. 671,\188\ which implemented new
requirements for QF status including a formal filing requirement for
all QFs claiming QF status whether through self-certification or
Commission certification.\189\ As part of that implementation, for the
first time, notices of some (but not all) self-certifications were
required to be published in the Federal Register. Specifically, Sec.
292.207(a)(iv) provides that self-certifications or self-
recertifications, other than for ``new'' cogeneration facilities, would
not be published in the Federal Register. In 2010, in Order No. 732,
the Commission adopted an exemption from the filing requirement for
generating facilities with net power production capacities of 1 MW or
less.\190\
---------------------------------------------------------------------------

    \187\ ``New'' cogeneration facilities are defined as any
cogeneration facility that was either not certified a qualifying
cogeneration facility on or before August 8, 2005, or that had not
filed a notice of self-certification, self-recertification or an
application for Commission certification or Commission
recertification as a qualifying cogeneration facility prior to
February 2, 2006. 18 CFR 292.205(d)(1).
    \188\ Order No. 671, 114 FERC ] 61,102, order on reh'g, Order
No. 671-A, 115 FERC ] 61,225 (2006).
    \189\ See 18 CFR 292.203(a)(3), (b)(2).
    \190\ Revisions to Form, Procedures, and Criteria for
Certification of Qualifying Facility Status for a Small Power
Production or Cogeneration Facility, Order No. 732, 130 FERC ]
61,214 (2010).
---------------------------------------------------------------------------

    146. The Commission has explained that, to challenge the self-
certification of a QF, an entity must file a petition for declaratory
order and pay the associated filing fee, which currently is $28,990.
The Commission in Chugach Electric Association, Inc. explained that
Order No. 671 did not create a right for a challenging entity to submit
a motion for revocation in response to a notice of self-certification.
Rather, the Commission explained that QF self-certification is
effective upon filing, and therefore challenging a self-certification
requires a separate petition for declaratory order asking that the
Commission revoke QF status.\191\
---------------------------------------------------------------------------

    \191\ Chugach Elec. Assoc., Inc., 121 FERC ] 61,287, at PP 51-54
(2007); see also Hydro Investors, Inc. v. Trafalgar Power, Inc., 94
FERC ] 61,207, at 61,780, reh'g denied, 95 FERC ] 61,120 (2001).
---------------------------------------------------------------------------

    147. A concern with the existing procedures with respect to self-
certification is whether protestors should bear the burden of filing a
separate petition for declaratory order and paying the associated
filing fee for a declaratory order to object to a questionable self-
certification.\192\
---------------------------------------------------------------------------

    \192\ EEI Supplemental Comments, attach. A at 16.
---------------------------------------------------------------------------

2. Commission Proposal
    148. The Commission proposes to change Sec.  292.207(a) of the
PURPA Regulations to allow a party to intervene and to file a protest
of a self-certification or self-recertification of a facility without
the necessity of filing a separate petition for declaratory order and
without having to pay the filing fee required for a declaratory order.
Because an applicant for self-certification or self-recertification is
required to serve a copy of its submission on interested electric
utilities (principally those it is interconnected with and those it
will be selling to) as well as the relevant state regulatory
authorities, the Commission will allow interested persons 30 days from
the date of filing at the Commission to intervene and/or to file a
protest (without paying a filing fee).\193\
---------------------------------------------------------------------------

    \193\ 18 CFR 292.207(c)(1).
---------------------------------------------------------------------------

    149. Any party submitting a protest would have the burden of
specifying facts that make a prima facie demonstration that the
facility described in the self-certification or self-recertification
does not satisfy the requirements for QF status.\194\ General
allegations that the facility is not a QF without reference to the
specific regulatory provision that has not been satisfied (and without
an explanation why the provision has not been satisfied), or
unsupported assertions that the self-certification does not satisfy an
aspect of the PURPA Regulations, would not satisfy this burden and
would not be a basis for denial of certification. However, if this
prima facie burden is met, then the burden would shift to the applicant
submitting the self-certification or self-recertification to
demonstrate that the claims raised in the protest are incorrect and
that certification is, in fact, warranted.
---------------------------------------------------------------------------

    \194\ See 18 CFR 385.211.
---------------------------------------------------------------------------

    150. As explained above, QF self-certification is effective upon
filing, and remains effective if a protest is filed, until such time as
the Commission rules that certification is revoked. The Commission
proposes that it would issue an order within 90 days of the date the
protest is filed. The Commission also reserves the right to request
more information from the protester, the entity seeking QF status, or
both.\195\ If

the Commission requests more information, the time period for the
Commission order would be extended to 60 days from the filing of a
complete answer to the information request.
---------------------------------------------------------------------------

    \195\ Such information requests could be issued by the
Commission or by staff under any applicable delegated authority. For
example, the Director of the Office of Energy Market Regulation is
authorized under 18 CFR 375.307(b)(3)(ii) to ``[i]ssue and sign
requests for additional information regarding applications, filings,
reports and data processed by the Office of Energy Market
Regulation.''
---------------------------------------------------------------------------

    151. There may be instances, however, when the Commission needs
additional time to review the record in light of the nature of the
protests. In those cases, the Commission proposes that, in addition to
any extension resulting from a request for information, the Commission
also may toll the 90-day period during which the Commission commits to
act for one additional 60-day period. The Commission proposes to
delegate to the Commission's Secretary, or the Secretary's designee,
the authority to toll the 90-day period for this purpose.
    152. The Commission believes these procedures will allow for timely
but thorough review of protested self-certifications and re-
certifications. The Commission seeks comment on whether these
procedures impose an undue burden on the QF even though the QF remains
certified pending the review.

III. Information Collection Statement

    153. The Paperwork Reduction Act \196\ requires each federal agency
to seek and obtain the Office of Management and Budget's (OMB) approval
before undertaking a collection of information (including reporting,
record keeping, and public disclosure requirements) directed to ten or
more persons or contained in a rule of general applicability. OMB
regulations require approval of certain information collection
requirements contemplated by proposed rules (including deletion,
revision, or implementation of new requirements).\197\ Upon approval of
a collection of information, OMB will assign an OMB control number and
an expiration date. Respondents subject to the filing requirements of a
rule will not be penalized for failing to respond to the collection of
information unless the collection of information displays a valid OMB
control number.
---------------------------------------------------------------------------

    \196\ 44 U.S.C. 3501-21.
    \197\ See 5 CFR 1320.11.
---------------------------------------------------------------------------

    Public Reporting Burden: In this NOPR, the Commission proposes to
revise its regulations implementing PURPA. The principal changes that
affect information collection, i.e., the Form No. 556, are as follows:
first, the Commission proposes to change its current ``one-mile rule''
for determining whether generation facilities should be considered to
be part of a single facility for purposes of determining qualification
as a qualifying small power production facility, by allowing electric
utilities, state regulatory authorities, or other interested parties to
show that facilities over one and less than ten miles apart actually
are a single facility; and second, to allow a party to protest a self-
certification or self-recertification of a facility without a fee.
    The estimated changes to the burden and cost \198\ of the
information collection affected by this NOPR, i.e., Form No. 556,
follow.
---------------------------------------------------------------------------

    \198\ The burden costs are based on FERC's 2018 average annual
salary plus benefits of $164,820 (or $79/hour). The Commission
believes that industry is similarly situated in terms of staff costs
and skill sets.
    \199\ Not required to file.

                                                          FERC-556, as Modified by the NOPR in Docket Nos. RM19-15-000 and AD16-16-000
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                            Annual  number of                          Average  burden
          Facility type               Filing type          Number of          responses per       Total  number of    hours  & cost per      Total annual burden hours  &          Cost per
                                                          respondents           respondent           responses             response               total annual  cost           respondent  ($)
                                  ..................  (1)................  (2)................  (1) * (2) = (3)....  (4)................  (3) * (4) = (5)..................  (5) / (1)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Cogeneration Facility > 1 MW....  Self-certification  10.................  1.25...............  12.5...............  8 hrs.; $632.......  100 hrs.; $7,900.................  $790.
Cogeneration Facility > 1 MW....  Application for     1..................  1.25...............  1.25...............  55 hrs.; $4,345....  68.75 hrs.; $5,431.25............  $5,431.25.
                                   FERC
                                   certification.
Small Power Production Facility   Self-certification  20.................  1.25...............  25.................  8 hrs.; $632.......  200 hrs.; $15,800................  $790.
 > 1 MW, > 1 Mile, < 10 Miles
 from Affiliated Facility.
Small Power Production Facility   Application for     1..................  1.25...............  1.25...............  55 hrs.; $4,345....  68.75 hrs.; $5,431.25............  $5,431.25.
 > 1 MW, > 1 Mile, < 10 Miles      FERC
 from Affiliated Facility.         certification.
Cogeneration and Small Power      Self-certification  312................  1.25...............  390................  4 hrs.; $316.......  1,560 hrs.; $123,240.............  $395.
 Production Facility <= 1 MW
 (Self-Certification) \199\.
Small Power Production Facility   Self-certification  no change..........  no change..........  no change..........  no change..........  no change........................  no change.
 > 1 MW, <= 1 Mile from
 Affiliated Facility.
Small Power Production Facility   Application for     1..................  1.25...............  1.25...............  55 hrs.; $4,345....  68.75 hrs.; $5,431.25............  $5,431.25.
 > 1 MW, <= 1 Mile from            FERC
 Affiliated Facility.              certification.
Small Power Production Facility   Self-certification  1,980..............  1.25...............  2,475..............  8 hrs.; $632.......  19,800 hrs.; $1,564,200..........  $790.
 > 1 MW, >= 10 Miles from
 Affiliated Facility.
Small Power Production Facility   Application for     no change..........  no change..........  no change..........  no change..........  no change........................  no change.
 > 1 MW, >= 10 Miles from          FERC
 Affiliated Facility.              certification.
                                                                                -----------------------------------
    Total.......................  ..................  ...................  ...................  ...................  ...................  22,235 hrs.; $1,727,433.75.......  ...................
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

    Title: FERC-556, Certification of Qualifying Facility (QF) Status
for a Small Power Production or Cogeneration Facility.
    Action: Revisions to existing collection FERC-556.
    OMB Control No.: 1902-0075.
    Respondents: Facilities that are self-certifying their status as a
cogenerator or small power producer or that are submitting an
application for Commission certification of their status as a
cogenerator or small power producer; and electric utilities, state
regulatory authorities, or other entities submitting comments on, or
protests to, the self-certification or application for Commission
certification.
    Frequency of Information: Ongoing.
    Necessity of Information: The Commission proposes the changes in
this NOPR in order to revise its implementation of PURPA in light of
changes in the electric industry since the enactment of PURPA in 1978.
    Internal Review: The Commission has reviewed the proposed changes
and has determined that such changes are necessary. These requirements
conform to the Commission's need for efficient information collection,
communication, and management within the energy industry.
    Interested persons may obtain information on the reporting
requirements by contacting the Federal Energy Regulatory Commission,
888 First Street NE, Washington, DC 20426 [Attention: Ellen Brown,
Office of the Executive Director], by email to<EMAIL_ADDRESS>
by phone<PHONE_NUMBER>, or by fax<PHONE_NUMBER>.
    Comments concerning the collection of information and the
associated burden estimate may also be sent to: Office of Information
and Regulatory Affairs, Office of Management and Budget, 725 17th
Street NW, Washington, DC 20503 [Attention: Desk Officer for the
Federal Energy Regulatory Commission]. Due to security concerns,
comments should be sent electronically to the following email address:
<EMAIL_ADDRESS>Comments submitted to OMB should refer to
FERC-556 and OMB Control No. 1902-0075.

IV. Environmental Analysis

    154. The Commission is required to prepare an Environmental
Assessment (EA) or an Environmental Impact Statement (EIS) for any
action that may have a significant adverse effect on the quality of the
human environment.\200\ Whether and how the revisions proposed here,
however, would affect QF development and the environment is
speculative.
---------------------------------------------------------------------------

    \200\ Regulations Implementing the National Environmental Policy
Act, Order No. 486, FERC Stats. & Regs. ] 30,783 (1987) (cross-
referenced at 41 FERC ] 61,284).
---------------------------------------------------------------------------

    155. The proposed changes to the PURPA Regulations do not authorize
or fund particular QFs, nor do they license QFs or issue permits for
QFs to operate. They do not authorize or prohibit a generator's use of
any particular technologies or fuels, nor do they mandate or limit
where QFs should or should not be built. They do not exempt QFs from
any Federal, state or local environmental, siting, or other similar
laws or regulatory requirements. And while the Commission establishes
factors that are to be taken into account by the states in setting QF
rates, it is the states and not the Commission that set QF rates. It is
impossible to know what actions the states may take in response to the
revisions proposed here, and how any such actions would, on balance,
impact QF development and the environment going forward--especially
given that QFs include not only renewable resources such as solar and
wind resources but also renewable resources that, per Congress'
directive, depend on waste (such as waste coal) as an energy input
\201\ and cogeneration that often depends on fossil fuels as an energy
input.\202\ Moreover, as explained above, PURPA requires that the
Commission must prescribe, and from time to time thereafter revise,
such rules as the Commission determines necessary to encourage
QFs,\203\ and the Commission's rules as revised as proposed here would
continue to encourage QFs. Given these facts any environmental impacts
analysis of the revisions proposed here would be speculative and not
meaningfully inform the Commission or the public of the revisions'
impact on QF development or, correspondingly, of any associated
potential impacts on the environment; there are, in short, no
reasonably foreseeable environmental impacts for the Commission to
consider.\204\ Therefore, the Commission will not prepare an
environmental document.
---------------------------------------------------------------------------

    \201\ 16 U.S.C. 796(17); 18 CFR 292.202(b), 292.204(b).
    \202\ 16 U.S.C. 796(18); 18 CFR 292.205.
    \203\ 16 U.S.C. 824a-3(a).
    \204\ While courts have held that NEPA requires ``reasonable
forecasting,'' an agency is not required ``to engage in speculative
analysis'' or ``to do the impractical, if not enough information is
available to permit meaningful consideration.'' N. Plains Res.
Council v. Surface Transp. Board, 668 F.3d 1067, 1078 (9th Cir.
2011).
---------------------------------------------------------------------------

V. Regulatory Flexibility Act Certification

    156. The Regulatory Flexibility Act of 1980 (RFA) \205\ generally
requires a description and analysis of proposed rules that will have
significant economic impact on a substantial number of small entities.
In lieu of preparing a regulatory flexibility analysis, an agency may
certify that a proposed rule will not have a significant economic
impact on a substantial number of small entities.\206\
---------------------------------------------------------------------------

    \205\ 5 U.S.C. 601-12.
    \206\ 5 U.S.C. 605(b).
---------------------------------------------------------------------------

    157. The Small Business Administration's (SBA) Office of Size
Standards develops the numerical definition of a small business.\207\
The SBA size standard for electric utilities is based on the number of
employees, including affiliates.\208\ Under SBA's current size
standards, the threshold for a small entity (including its affiliates)
is 250 employees for cogeneration and small power production applicants
in the following NAICS \209\ categories:
---------------------------------------------------------------------------

    \207\ 13 CFR 121.101.
    \208\ SBA Final Rule on ``Small Business Size Standards:
Utilities,'' 78 FR 77,343 (Dec. 23, 2013).
    \209\ The North American Industry Classification System (NAICS)
is an industry classification system that Federal statistical
agencies use to categorize businesses for the purpose of collecting,
analyzing, and publishing statistical data related to the U.S.
economy. United States Census Bureau, North American Industry
Classification System, https://www.census.gov/eos/www/naics/
(accessed April 11, 2018).
---------------------------------------------------------------------------

 NAICS code 221114 for Solar Electric Power Generation
 NAICS code 221115 for Wind Electric Power Generation
 NAICS code 221116 for Geothermal Electric Power Generation
 NAICS code 221117 for Biomass Electric Power Generation
 NAICS code 221118 for Other Electric Power Generation

    The threshold for a small entity (including its affiliates) is 500
employees for NAICS code 221111 for Hydroelectric Power Generation.
    This proposed rule directly affects QFs, the majority of which the
Commission estimates are small businesses. But, as reflected in the
burden and cost estimates provided above, the Commission does not
anticipate that any additional reporting burden or cost imposed on QFs,
regardless of their status as a small or large business, would be
significant.\210\ The proposed revisions may result in additional
information being submitted

by some small power production QF applicants and self-certifiers (those
with affiliated small power production facilities using the same fuel
source located over one and less than ten miles away, and with a
combined total capacity greater than 80 MW). The Commission estimates
that less than ten percent of QF applications and self-certifications
meet these criteria.
---------------------------------------------------------------------------

    \210\ The average cost per response is estimated to be $594.39
(or $1,727,433.75/2,906.25 responses).
---------------------------------------------------------------------------

    158. Accordingly, pursuant to section 605(b) of the RFA, the
Commission certifies that this proposed rule will not have a
significant economic impact on a substantial number of small entities.

VI. Comment Procedures

    159. The Commission invites interested persons to submit comments
on the matters and issues proposed in this notice to be adopted,
including any related matters or alternative proposals that commenters
may wish to discuss. Comments are due December 3, 2019. Comments must
refer to Docket No. RM19-15-000 and AD16-16-000, and must include the
commenter's name, the organization they represent, if applicable, and
their address in their comments.
    160. The Commission encourages comments to be filed electronically
via the eFiling link on the Commission's website at http://www.ferc.gov. The Commission accepts most standard word processing
formats. Documents created electronically using word processing
software should be filed in native applications or print-to-PDF format
and not in a scanned format. Commenters filing electronically do not
need to make a paper filing.
    161. Commenters that are not able to file comments electronically
must send an original of their comments to: Federal Energy Regulatory
Commission, Secretary of the Commission, 888 First Street NE,
Washington, DC 20426.
    162. All comments will be placed in the Commission's public files
and may be viewed, printed, or downloaded remotely as described in the
Document Availability section below. Commenters on this proposal are
not required to serve copies of their comments on other commenters.

VII. Document Availability

    163. In addition to publishing the full text of this document in
the Federal Register, the Commission provides all interested persons an
opportunity to view and/or print the contents of this document via the
internet through the Commission's Home Page (http://www.ferc.gov) and
in the Commission's Public Reference Room during normal business hours
(8:30 a.m. to 5:00 p.m. Eastern time) at 888 First Street NE, Room 2A,
Washington, DC 20426.
    164. From the Commission's Home Page on the internet, this
information is available on eLibrary. The full text of this document is
available on eLibrary in PDF and Microsoft Word format for viewing,
printing, and/or downloading. To access this document in eLibrary, type
the docket number excluding the last three digits of this document in
the docket number field.
    165. User assistance is available for eLibrary and the Commission's
website during normal business hours from the Commission's Online
Support at<PHONE_NUMBER> (toll free at 1-866-208-3676) or email at
<EMAIL_ADDRESS>or the Public Reference Room at (202) 502-
8371, TTY<PHONE_NUMBER>. Email the Public Reference Room at
<EMAIL_ADDRESS>
List of Subjects in 18 CFR Part 292

    Electric power; Electric power plants; Electric utilities.

    By direction of the Commission. Commissioner Glick is dissent in
part with a separate statement attached.

    Issued: September 19, 2019.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
    In consideration of the foregoing, the Commission proposes to amend
Parts 292 and 375, Chapter I, Title 18, Code of Federal Regulations, as
follows.

PART 292--REGULATIONS UNDER SECTIONS 201 AND 210 OF THE PUBLIC
UTILITY REGULATORY POLICIES ACT OF 1978 WITH REGARD TO SMALL POWER
PRODUCTION AND COGENERATION

0
1. The authority citation for part 292 continues to read as follows:

     Authority:  16 U.S.C. 791a-825r, 2601-2645; 31 U.S.C. 9701; 42
U.S.C. 7101-7352.

0
2. Amend Sec.  292.101 by adding paragraphs (b)(12) through (16) to
read as follows:

Sec.  292.101  Definitions.

* * * * *
    (b) * * *
    (12) Locational marginal price means the price for energy at a
particular location as determined in a market defined in Sec.
292.309(e), (f), or (g).
    (13) Competitive Price means a Market Hub Price or a Combined Cycle
Price.
    (14) Market Hub Price means a price for as-delivered energy
determined pursuant to Sec.  292.304(b)(7)(i).
    (15) Combined Cycle Price means a price for as-delivered energy
determined pursuant to Sec.  292.304(b)(7)(ii).
    (16) Competitive Solicitation Price means a price for energy and/or
capacity determined pursuant to Sec.  292.304(b)(8).
0
3. Amend Sec.  292.202 by adding paragraph (t) to read as follows:

Sec.  292.202  Definitions.

* * * * *
    (t) Electrical generating equipment means all boilers, heat
recovery steam generators, prime movers (any mechanical equipment
driving an electric generator), electrical generators, photovoltaic
solar panels and/or inverters, fuel cell equipment and/or other primary
power generation equipment used in the facility, excluding equipment
for gathering energy to be used in the facility.
0
4. Amend Sec.  292.204 by revising paragraph (a) to read as follows:

Sec.  292.204  Criteria for qualifying small power production
facilities.

    (a) Size of the facility--(1) Maximum size. Except as provided in
paragraph (a)(4) of this section, the power production capacity of a
facility for which qualification is sought, together with the power
production capacity of any other small power production facilities that
use the same energy resource, are owned by the same person(s) or its
affiliates, and are located at the same site, may not exceed 80
megawatts.
    (2) Method of calculation. (i)(A) For purposes of this paragraph
(a)(2)(i)(A), there is an irrebuttable presumption that facilities
located one mile or less from the facility for which qualification is
sought are located at the same site as the facility for which
qualification is sought.
    (B) For purposes of this paragraph (a)(2)(i)(B), for facilities for
which qualification is filed on or after [DATE 60 DAYS AFTER DATE OF
PUBLICATION OF THE FINAL RULE IN THE FEDERAL REGISTER], there is an
irrebuttable presumption that facilities located ten miles or more from
the facility for which qualification is sought are facilities located
at separate sites from the facility for which qualification is sought.
    (C) For purposes of this paragraph (a)(2)(i)(C), for facilities for
which qualification is filed on or after [DATE 60 DAYS AFTER DATE OF
PUBLICATION OF THE FINAL RULE IN THE FEDERAL REGISTER], there is a
rebuttable presumption that facilities located over one and less than
ten miles from the facility for which qualification is sought are
facilities located at separate sites from the facility for which
qualification is sought.

    (D) For hydroelectric facilities, facilities are considered to be
located at the same site as the facility for which qualification is
sought if they are located within one mile of the facility for which
qualification is sought and use water from the same impoundment for
power generation.
    (ii) For purposes of making the determination in clause (i), the
distance between facilities shall be measured from the electrical
generating equipment of the facility for which qualification is sought
and the nearest electrical generating equipment of the other facility
using the same energy resource and owned by the same person(s) or its
affiliates.
    (3) Rebuttal. (i) Filing a Protest. Any person who opposes either a
self-certification submitted pursuant to Sec.  292.207(a) or a
Commission certification filed pursuant to Sec.  292.207(b) may submit
a protest attempting to rebut the presumption that facilities located
over one mile and less than ten miles from the facility for which
qualification is sought are separate facilities at separate sites from
the facility for which qualification is sought.
    (ii) Limitations on rebuttal. Once the Commission has affirmatively
certified an applicant's QF status either in response to a protest
opposing a self-certification or in a Commission certification
proceeding, any later challenge to a QF's certification asserting that
facilities more than one mile and less than ten miles apart are located
at the same site must demonstrate a material change in the relevant
circumstances that calls into question the continued validity of the
certification.
    (4) Waiver. The Commission may modify the application of paragraph
(a)(2) of this section, for good cause.
    (5) Exception. Facilities meeting the criteria in section 3(17)(E)
of the Federal Power Act (16 U.S.C. 796(17)(E)) have no maximum size,
and the power production capacity of such facilities shall be excluded
from consideration when determining the maximum size of other small
power production facilities less than ten miles of such facilities.
* * * * *
0
5. Amend Sec.  292.207 by revising paragraphs (a) and (b) to read as
follows:

Sec.  292.207  Procedures for obtaining qualifying status.

    (a) Self-certification. (1) Form No. 556. The qualifying facility
status of an existing or a proposed facility that meets the
requirements of Sec.  292.203 may be self-certified by the owner or
operator of the facility or its representative by properly completing a
Form No. 556 and filing that form with the Commission, pursuant to
Sec.  131.80 of this chapter, and complying with paragraph (c) of this
section.
    (2) Factors. For small power production facilities pursuant to
Sec.  292.204, the owner or operator of the facility or its
representative may, when completing the Form No. 556, provide
information asserting factors showing that the facility for which
qualification is sought is at a separate site from other facilities
using the same energy resource and owned by the same person(s) or its
affiliates.
    (3) Protests and Interventions. Any protest to and any intervention
in a self-certification must be filed in accordance with Sec. Sec.
385.211 and 385.214 of this chapter, on or before 30 days from the date
the self-certification is filed. Any protest must provide evidence to
substantiate the claims in the protest.
    (4) Commission action. Self-certification is effective upon filing.
If no protests are timely filed, no further action by the Commission is
required for a self-certification to be effective. If protests are
timely filed, a self-certification will remain effective until the
Commission issues an order revoking QF certification. The Commission
will act on the protest within 90 days from the date the protest is
filed; provided that, if the Commission requests more information from
the protester, the entity seeking QF certification, or both, the time
for the Commission to act will be extended to 60 days from the filing
of a complete answer to the information request. In addition to any
extension resulting from a request for information, the Commission also
may toll the 90-day period for one additional 60-day period if so
required to rule on a protest. Authority to toll the 90-day period for
this purpose is delegated to the Secretary or the Secretary's designee.
    (b) Optional procedure--Commission certification. (1) Application
for Commission certification. In lieu of the self-certification
procedures in paragraph (a) of this section, an owner or operator of an
existing or a proposed facility, or its representative, may file with
the Commission an application for Commission certification that the
facility is a qualifying facility. The application must be accompanied
by the fee prescribed by part 381 of this chapter, and the applicant
for Commission certification must comply with paragraph (c) of this
section.
    (2) General contents of application. The application must include a
properly completed Form No. 556 pursuant to Sec.  131.80 of this
chapter. For small power production facilities pursuant to Sec.
292.204, the owner or operator of the facility or its representative
may, when completing the Form No. 556, provide information asserting
factors showing that the facility for which qualification is sought is
at a separate site from other facilities using the same energy resource
and owned by the same person(s) or its affiliates.
* * * * *
0
6. Section 292.303 is revised to read:

Sec.  292.303  Electric utility obligations under this subpart.

    (a) Obligation to purchase from qualifying facilities. Subject to
paragraph (b) of this section, each electric utility shall purchase, in
accordance with Sec.  292.304, unless exempted by Sec.  292.309 and
Sec.  292.310, any energy and capacity which is made available from a
qualifying facility:
    (1) Directly to the electric utility; or
    (2) Indirectly to the electric utility in accordance with paragraph
(e) of this section.
    (b) Reduction in purchase obligation. The obligation of an electric
utility to purchase from a qualifying facility may be reduced to the
extent that a purchasing electric utility's supply obligation has been
reduced by a state's retail choice program.
    (c) Obligation to sell to qualifying facilities. Each electric
utility shall sell to any qualifying facility, in accordance with Sec.
292.305, unless exempted by Sec.  292.312, energy and capacity
requested by the qualifying facility.
    (d) Obligation to interconnect.
    (1) Subject to paragraph (d)(2) of this section, any electric
utility shall make such interconnection with any qualifying facility as
may be necessary to accomplish purchases or sales under this subpart.
The obligation to pay for any interconnection costs shall be determined
in accordance with Sec.  292.306.
    (2) No electric utility is required to interconnect with any
qualifying facility if, solely by reason of purchases or sales over the
interconnection, the electric utility would become subject to
regulation as a public utility under part II of the Federal Power Act.
    (e) Transmission to other electric utilities. If a qualifying
facility agrees, an electric utility which would otherwise be obligated
to purchase energy or capacity from such qualifying facility may
transmit the energy or capacity to any other electric utility. Any
electric utility to which such energy or capacity is transmitted shall
purchase such energy or capacity under this subpart as if the
qualifying facility were supplying energy or capacity directly to such

electric utility. The rate for purchase by the electric utility to
which such energy is transmitted shall be adjusted up or down to
reflect line losses pursuant to Sec.  292.304(e)(4) and shall not
include any charges for transmission.
    (f) Parallel operation. Each electric utility shall offer to
operate in parallel with a qualifying facility, provided that the
qualifying facility complies with any applicable standards established
in accordance with Sec.  292.308.
0
7. Amend Sec.  292.304 by
0
a. Adding paragraphs (b)(6), (b)(7), (b)(8); and
0
b. Revising paragraphs (d), and (e).
    The addition and revisions read as follows:

Sec.  292.304   Rates for purchases.

* * * * *
    (b) * * *
    (6) Locational Marginal Price. A state regulatory authority or
nonregulated electric utility may use a locational marginal price as a
rate for as-available qualifying facility energy sales to purchasing
utilities located in a market operated defined in Sec.  292.309(e),
(f), or (g).
    (7) Competitive Price. A state regulatory authority or nonregulated
electric utility may use a Competitive Price as a rate for as-available
qualifying facility energy sales to purchasing electric utilities
located outside a market defined in Sec.  292.309(e), (f), or (g). A
Competitive Price may be either a Market Hub Price or a Combined Cycle
Price, determined as follows:
    (i) A Market Hub Price is a price established at a liquid market
hub to which a state regulatory authority or nonregulated electric
utility determines the purchasing electric utility has reasonable
access, based on its evaluation of the relevant factors, including but
not limited to the following:
    (A) Whether the hub is sufficiently liquid that prices at the hub
represent a competitive price;
    (B) Whether prices developed at the hub are sufficiently
transparent;
    (C) Whether the purchasing electric utility has the ability to
deliver power from such hub to its load, even if its load is not
directly connected to the hub; and
    (D) Whether the hub represents an appropriate market to derive an
energy price for the purchasing electric utility's purchases from the
relevant QFs given the electric utility's physical proximity to the hub
or other factors.
    (ii) A Combined Cycle Price is a price determined pursuant to a
formula established by a state regulatory authority or nonregulated
electric utility using published natural gas price indices and a proxy
heat rate for an efficient natural gas combined-cycle generating
facility. Before establishing such a formula rate, a state regulatory
authority or nonregulated electric utility must determine that the
resulting Combined Cycle Price represents an appropriate approximation
of the purchasing electric utility's avoided cost, based on its
evaluation of the relevant factors, including but not limited to the
following:
    (A) Whether the cost of energy from an efficient natural gas
combined cycle generating facility represents a reasonable
approximation of a competitive price in the purchasing electric
utility's region;
    (B) Whether natural gas priced pursuant to particular proposed
natural gas price indices would be available in the relevant market;
    (C) Whether there should be an adjustment to the natural gas price
to appropriately reflect the cost of transporting natural gas to the
relevant market; and
    (D) Whether the proxy heat rate used in the formula should be
updated regularly to reflect improvements in generation technology.
    (8) Competitive Solicitation Price. A state regulatory authority or
nonregulated electric utility may use a price determined pursuant to a
competitive solicitation process to establish qualifying facility
energy and/or capacity rates for sales to purchasing electric
utilities, provided that such competitive solicitation process is
conducted pursuant to procedures ensuring the solicitation is conducted
in a transparent and non-discriminatory manner including, but not
limited to, the following:
    (i) The solicitation process is an open and transparent process;
    (ii) Solicitations should be open to all sources, to satisfy that
purchasing electric utility's capacity needs, taking into account the
required operating characteristics of the needed capacity;
    (iii) Solicitations are conducted at regular intervals;
    (iv) Solicitations are subject to oversight by an independent
administrator; and
    (v) Solicitations are certified as fulfilling the above criteria by
the relevant state regulatory authority or nonregulated electric
utility.
* * * * *
    (d) Purchases ``as available'' or pursuant to a legally enforceable
obligation. (1) Each qualifying facility shall have the option either:
    (i) To provide energy as the qualifying facility determines such
energy to be available for such purchases, in which case the rates for
such purchases shall be based on the purchasing electric utility's
avoided costs calculated at the time of delivery; or
    (ii) To provide energy or capacity pursuant to a legally
enforceable obligation for the delivery of energy or capacity over a
specified term, in which case the rates for such purchases shall,
except as provided in subsection (d)(2) below, be based on either:
    (A) The avoided costs calculated at the time of delivery; or
    (B) The avoided costs calculated at the time the obligation is
incurred.
    (iii) The rate for delivery of energy calculated at the time the
obligation is incurred may be based on estimates of the present value
of the stream of revenue flows of future locational marginal prices, or
Competitive Prices during the anticipated period of delivery.
    (2) Notwithstanding paragraph (d)(1)(ii)(B) of this section, a
state regulatory authority or nonregulated electric utility may require
that rates for purchases of energy from a qualifying facility pursuant
to a legally enforceable obligation to vary through the life of the
obligation, and to be set at the as-available energy price applicable
to the purchasing electric utility determined at the time of delivery.
    (3) Obtaining a legally enforceable obligation. A qualifying
facility must demonstrate commercial viability and financial commitment
to construct its facility pursuant to criteria determined by the state
regulatory authority or nonregulated electric utility as a prerequisite
to a qualifying facility obtaining a legally enforceable obligation.
Such criteria must be objective and reasonable.
    (e) Factors affecting rates for purchases. (1) A state regulatory
authority or nonregulated electric utility may establish rates for
purchases of energy from a qualifying facility based on a purchasing
electric utility's locational marginal price calculated by the
applicable market defined in Sec.  292.309(e), (f), or (g), or the
purchasing electric utility's applicable Competitive Price.
Alternatively, a state regulatory authority or nonregulated electric
utility may establish rates for purchases of energy and/or capacity
from a qualifying facility based on a Competitive Solicitation Price.
To the extent that capacity rates are not set pursuant to this section,
capacity rates shall be set pursuant to subsection (2).
    (2) To the extent that a state regulatory authority or nonregulated
electric utility does not to set energy and/or capacity rates pursuant
to

paragraph (e)(1) of this section, the following factors shall, to the
extent practicable, be taken into account in determining rates for
purchases from a qualifying facility:
    (i) The data provided pursuant to Sec.  292.302(b), (c), or (d),
including State review of any such data;
    (ii) The availability of capacity or energy from a qualifying
facility during the system daily and seasonal peak periods, including:
    (A) The ability of the electric utility to dispatch the qualifying
facility;
    (B) The expected or demonstrated reliability of the qualifying
facility;
    (C) The terms of any contract or other legally enforceable
obligation, including the duration of the obligation, termination
notice requirement and sanctions for non-compliance;
    (D) The extent to which scheduled outages of the qualifying
facility can be usefully coordinated with scheduled outages of the
electric utility's facilities;
    (E) The usefulness of energy and capacity supplied from a
qualifying facility during system emergencies, including its ability to
separate its load from its generation;
    (F) The individual and aggregate value of energy and capacity from
qualifying facilities on the electric utility's system; and
    (G) The smaller capacity increments and the shorter lead times
available with additions of capacity from qualifying facilities; and
    (iii) The relationship of the availability of energy or capacity
from the qualifying facility as derived in paragraph (e)(2)(ii) of this
section, to the ability of the electric utility to avoid costs,
including the deferral of capacity additions and the reduction of
fossil fuel use; and
    (iv) The costs or savings resulting from variations in line losses
from those that would have existed in the absence of purchases from a
qualifying facility, if the purchasing electric utility generated an
equivalent amount of energy itself or purchased an equivalent amount of
electric energy or capacity.
0
8. Amend Sec.  292.309 by revising paragraphs (d), (e), and (f) to read
as follows:

Sec.  292.309  Termination of obligation to purchase from qualifying
facilities.

* * * * *
    (d)(1) For purposes of Sec.  292.309(a)(1), (2), and (3), there is
a rebuttable presumption that a qualifying cogeneration facility with a
capacity at or below 20 megawatts does not have nondiscriminatory
access to the market.
    (2) For purposes of Sec.  292.309(a)(1), (2), and (3), there is a
rebuttable presumption that a qualifying small power production
facility with a capacity at or below 1 megawatt does not have
nondiscriminatory access to the market.
    (3) For purposes of implementing paragraphs (d)(1) and (d)(2) of
this section, the Commission will not be bound by the standards set
forth in Sec.  292.204(a)(2).
    (e) Midcontinent Independent System Operator, Inc. (MISO), PJM
Interconnection, L.L.C. (PJM), ISO New England Inc. (ISO-NE), and New
York Independent System Operator, Inc. (NYISO) qualify as markets
described in Sec.  292.309(a)(1)(i) and (ii), and there is a rebuttable
presumption that small power production facilities with a capacity
greater than one megawatt and cogeneration facilities with a capacity
greater than 20 megawatts have nondiscriminatory access to those
markets through Commission-approved open access transmission tariffs
and interconnection rules, and that electric utilities that are members
of such regional transmission organizations or independent system
operators (RTO/ISOs) should be relieved of the obligation to purchase
electric energy from the qualifying facilities. A qualifying facility
may seek to rebut this presumption by demonstrating, inter alia, that:
    (1) The qualifying facility has certain operational characteristics
that effectively prevent the qualifying facility's participation in a
market; or
    (2) The qualifying facility lacks access to markets due to
transmission constraints. The qualifying facility may show that it is
located in an area where persistent transmission constraints in effect
cause the qualifying facility not to have access to markets outside a
persistently congested area to sell the qualifying facility output or
capacity.
    (f) The Electric Reliability Council of Texas (ERCOT) qualifies as
a market described in Sec.  292.309(a)(3), and there is a rebuttable
presumption that small power production facilities with a capacity
greater than one megawatt and cogeneration facilities with a capacity
greater than 20 megawatts have nondiscriminatory access to that market
through Public Utility Commission of Texas (PUCT) approved open access
protocols, and that electric utilities that operate within ERCOT should
be relieved of the obligation to purchase electric energy from the
qualifying facilities. A qualifying facility may seek to rebut this
presumption by demonstrating, inter alia, that:
    (1) The qualifying facility has certain operational characteristics
that effectively prevent the qualifying facility's participation in a
market; or
    (2) The qualifying facility lacks access to markets due to
transmission constraints. The qualifying facility may show that it is
located in an area where persistent transmission constraints in effect
cause the qualifying facility not to have access to markets outside a
persistently congested area to sell the qualifying facility output or
capacity.
* * * * *

PART 375--THE COMMISSION

0
1. The authority citation for part 375 continues to read as follows:

    Authority:  5 U.S.C. 551-557; 15 U.S.C. 717-717w, 3301-3432; 16
U.S.C. 791-825r, 2601-2645; 42 U.S.C. 7101-7352.

0
2. Section 375.302(v) is revised to read:

Sec.  375.302  Delegations to the Secretary.

* * * * *
    (v) Toll the time for action on requests for rehearing, and toll
the time for action on protested self-certifications and self-
recertifications of qualifying facilities.
    The following will not appear in the Code of Federal Regulations:

                  Federal Energy Regulatory Commission
------------------------------------------------------------------------
                                                           Docket Nos.
------------------------------------------------------------------------
Qualifying Facility Rates and Requirements............       RM19-15-000
Implementation Issues Under the Public Utility               AD16-16-000
 Regulatory Policies Act of 1978......................
------------------------------------------------------------------------

(Issued September 19, 2019)

GLICK, Commissioner, dissenting in part:
    1. I dissent in part from today's notice of proposed rulemaking
(NOPR) because it would effectively gut the Public Utility
Regulatory Policies Act (PURPA).\1\ Our basic

responsibilities under PURPA are three-fold: (1) To encourage the
development of qualifying facilities (QFs); (2) to prevent
discrimination against QFs by incumbent utilities; and (3) to ensure
that the resulting rates paid by electricity customers remain just
and reasonable and in the public interest.\2\ As discussed further
below, it is not clear from the record or the discussion in today's
NOPR that many of the proposed changes will satisfy those
requirements. Although the record developed in response to this NOPR
will give us a basis to address those issues, I am deeply concerned
that the Commission has failed so far to show that certain aspects
of its proposal satisfy our basic responsibilities under the law.
---------------------------------------------------------------------------

    \1\ Public Law 95-617, 92 Stat. 3117 (1978).
    \2\ See 16 U.S.C. 824a-3 (2018).
---------------------------------------------------------------------------

    2. It appears that the Commission no longer believes that PURPA
is necessary. I disagree. I believe that the goals of PURPA--
including the need to expand competition and reduce our reliance on
fossil fuels \3\--remain as relevant now as ever. But our apparent
disagreement is beside the point. Whether PURPA's goals remain
relevant is a decision for Congress, not an administrative agency.
The Commission should not be seizing the reins from Congress in
order to isolate an important debate about national energy policy
within an independent regulatory agency.
---------------------------------------------------------------------------

    \3\ See Am. Paper Inst., Inc. v. Am. Elec. Power Serv. Corp.,
461 U.S. 402, 405 (1983) (describing Congress's intent in enacting
PURPA).
---------------------------------------------------------------------------

I. PURPA's Continuing Relevance Is an Issue for Congress To Decide

    3. A fundamental reform to a major energy statute, particularly
one that Congress has been debated for decades, ought to come from
Congress, not an independent regulatory agency. For more than forty
years, the Commission has rather consistently interpreted Congress's
directives in PURPA. During that time, Congress has repeatedly
considered legislation to amend the statute, in some cases to expand
its reach and in others to pare it back. Indeed, almost from the
moment PURPA was passed, Congress began to hear many of the
arguments being used today to justify scaling the law back. Yet
Congress only on one occasion--in 2005--significantly amended the
statute. After a lengthy debate, which included proposals to repeal
PURPA, Congress adopted the Energy Policy Act of 2005 (EPAct 2005),
which left in place PURPA's basic framework but added a series of
provisions that relieved utilities of their requirements in regions
of the country with robust wholesale energy markets.\4\ Over the
course of the last fourteen years, Congress has continued to
consider a wide range of proposals to reform PURPA, some of which
would have enacted into law many of the proposals advanced in this
NOPR. But Congress did not enact any of these reforms.
---------------------------------------------------------------------------

    \4\ Public Law 109-58, 119 Stat. 594 (2005).
---------------------------------------------------------------------------

    4. Today's NOPR flips that dynamic on its head. It removes an
important debate from the halls of Congress and isolates it within
the Commission. That may help to achieve certain stakeholders'
objectives and, no doubt, some Members of Congress that have
unsuccessfully sought to further reform PURPA will applaud this
outcome. But what should concern all of us is that resolving these
sorts of questions by regulatory edict rather than congressional
legislation is neither a durable nor desirable approach for
developing energy policy.
    5. With those concerns in mind, the Commission's explanation of
the purported need for reform rings hollow. The majority recites
statistics to show that the energy landscape has changed over the
last 40 years. And there is no doubt that it has. Renewables are
growing rapidly and, in some parts of the country, are being
financed in large numbers without PURPA's protections.\5\ Natural
gas production has increased in similarly dramatic fashion and
recently surpassed coal as the country's principal source of fuel
for generating electricity.\6\ But reams of statistics do not make a
law irrelevant. The majority and I might disagree about PURPA and
the importance of its objectives, but that is not a dispute that we,
as Commissioners, should resolve. A policy debate about the
continuing relevance of PURPA--which, make no mistake, is what this
NOPR is really about--is an issue for Congress to resolve.
---------------------------------------------------------------------------

    \5\ See Qualifying Facility Rates and Requirements;
Implementation Issues Under the Public Utility Regulatory Policies
Act of 1978, 168 FERC ] 61,184, at PP 19-21 (2019) (NOPR).
    \6\ U.S. Energy Info. Admin., What is U.S. electricity
generation by energy source?, https://www.eia.gov/tools/faqs/faq.php?id=427&t=3 (last visited Sept. 19, 2019).
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II. Certain Proposed Revisions Are Inconsistent With Our Statutory
Obligations

    6. In addition to my general concerns about the direction and
intent of today's NOPR, I have a number of more discrete objections
regarding aspects of the Commission's proposal. I raise these
concerns in particular because I believe that neither the record
established to date nor the rationale articulated in today's NOPR
suggest that these changes are consistent with our obligations under
PURPA. Accordingly, I am especially interested in reviewing the
record developed in response to these elements of the proposed rule
and I encourage parties to address these issues in detail in their
comments.

A. Avoided Cost

    7. No issue has consumed as much attention in the debates over
PURPA as how to set avoided cost. Following PURPA's enactment in
1978, the Commission introduced a framework for setting ``avoided
cost'' that allows each individual state to consider a wide range of
factors in identifying the ``full'' costs that are avoided when a
utility purchases energy and capacity from a QF.\7\ The basic idea
is that the avoided cost figure should reflect the full cost that
the utility would incur but for the purchase of the QF output of
energy or capacity, with each individual state enjoying considerable
flexibility in implementing that concept.\8\ The Commission's
regulations also provide states the flexibility to accommodate
Congress's intent that the rates paid to QFs ``look beyond'' just
``instantaneous cost savings'' in order to consider savings over a
longer time horizon.\9\
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    \7\ See 18 CFR 292.304(e) (2019).
    \8\ Small Power Production and Cogeneration Facilities;
Regulations Implementing Section 210 of the Public Utility
Regulatory Policies Act of 1978, Order No. 69, FERC Stats. & Regs. ]
30,128, at 30,865 (cross-referenced 10 FERC ] 61,150), order on
reh'g, Order No. 69-A, FERC Stats. & Regs. ] 30,160 (1980) (cross-
referenced at 11 FERC ] 61,166), aff'd in part & vacated in part sub
nom. Am. Elec. Power Serv. Corp. v. FERC, 675 F.2d 1226 (D.C. Cir.
1982), rev'd in part sub nom. Am. Paper Inst. v. Am. Elec. Power
Serv. Corp., 461 U.S. 402 (1983) (API).
    \9\ H.R. Rep. 95-1750, at 98-99 (1978) (Conf. Rep.) (``In
interpreting the incremental cost of alternative energy, the
Conferees expect that the Commission and the states may look beyond
the costs of alternative sources which are instantaneously available
to the utility. Rather the Commission and states should look to the
reliability of that power and the cost savings to the utility which
may result at some later date by reasons of supply to the utility at
that time of power from the cogenerate or small power producers.'').
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    8. The NOPR proposes two fundamental changes to how avoided cost
is calculated and applied to QFs. First, it proposes to eliminate
the requirement that a utility must afford a QF the option to enter
a contract at an avoided cost energy rate that is fixed or known for
the duration of the contract.\10\ As things stand now, a QF
generally has two options for selling its output to a utility. Under
the first option, the QF can sell its energy on an as-available
basis and receive an avoided cost rate calculated at the time of
delivery. This is generally known as the as-available option. Under
the second option, a QF can enter into a fixed duration contract at
an avoided cost rate that is fixed either at the time the QF
establishes a legally enforceable obligation or at the time of
delivery. This is generally known as the contract option. The
ability to choose between both types sale options has played an
important role in fostering the development of a variety of QFs. For
example, the as-available option provides a way for QFs whose
principal business is not generating electricity, such as industrial
cogeneration facilities, to monetize their excess electricity
generation. The contract option, by contrast, provides QFs who are
principally in the business of generating electricity, such as small
renewable electricity generators, a relatively stable option that
will allow them to secure financing. Together, the presence of these
two options have allowed the Commission to satisfy its statutory
mandate to encourage the development of QFs and ensure that the
rates they receive are non-discriminatory.
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    \10\ The NOPR proposes to eliminate the contract option for the
energy component, keeping the long-term contract requirement in
place for capacity. That sounds more reasonable than it will often
be in practice. The NOPR later clarifies that the fixed capacity
value may be zero if the state determines that the electric utility
does not have a need for additional capacity resources. See NOPR,
168 FERC ] 61,184 at P 67. That would also mean that, in some
instances, there would be no fixed element in an avoided cost
contract, which would seem inconsistent with the Commission's
rationale justifying variable energy price contracts. See id. P 70.
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    9. I am concerned that the Commission's proposal to allow
utilities to eliminate the

fixed-price contract option will make it more difficult--or in some
cases impossible--for QFs to obtain financing. The option to enter a
contract with a fixed or known price has played in essential role in
encouraging QF development.\11\ In addition, those contracts have
played an important role in ensuring that QFs receive non-
discriminatory rates, especially in areas of the country with
vertically integrated utilities that are guaranteed to recover the
costs of their prudently incurred investments through retail
rates.\12\ Neither the record nor the rationale in this NOPR
addresses these concerns in a manner that is even remotely
convincing.
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    \11\ See, e.g., June 29, 2016 Technical Conf. Tr. at 26-27
(Solar Energy Industries Association) (``The Power Purchase
Agreement is the single most important contract of the development
and financing of an energy project that's not owned by a utility.
Without the long-term commitment to buy the output of that agreement
at a fixed price, there is no predictable stream of revenue. Without
a predictable stream of revenues, there is no financing. Without any
financing, there is no project.'').
    \12\ See Statement of Travis Kavulla, Docket No. AD16-16-000, at
2 (June 29, 2016) (``Whether compensation for a QF is a matter of
market clearing prices or of administrative decision-making is
largely a reflection of how larger or utility-owned generation is
compensated.'').
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    10. Second, I am concerned about the implications of the
Commission's proposal to determine that a locational marginal price
(LMP) is a per se reasonable measure of an as-available avoided cost
for energy and to preliminarily advance several other ``Competitive
Prices'' that would also be sufficient.\13\ Current regulations
require states to consider factors, including reliability and when
the QF is available, when calculating the avoided cost rate. Today's
NOPR proposes to allow states to ignore these factors and, instead,
rely entirely on LMP or a price set at a ``liquid market hub.'' That
rule would apply across the country, irrespective of whether the QF
has access non-discriminatory access to competitive markets.\14\
That is notwithstanding the fact that the evidence the Commission
relies on to justify this proposal comes overwhelmingly from regions
with sophisticated RTO and ISO markets and/or restructured
utilities.
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    \13\ NOPR, 168 FERC ] 61,184 at PP 50, 55-60.
    \14\ The NOPR proposes to allow states or utilities to use this
liquid market price only for the ``as-available'' energy sales rate,
not the capacity rate or for QFs that choose the contract option.
But given that the Commission is also proposing to allow utilities
to eliminate the fixed-price contract option for energy sales, QFs
may have no choice but to rely on the ``as-available'' option for
sales of energy.
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    11. As an initial matter, I support introducing more competition
into the Commission's implementation of PURPA. Liquid price signals
can be useful and transparent inputs that are worthy of considering
as part of the overall calculation of an appropriate avoided cost
number that includes both the short-term and long-term costs avoided
by the utility's purchases from QFs. But referencing the words
``competitive'' and ``market'' over and over again is not the same
thing as proof that there is sufficient market competition. Many
regions of the country--often the same regions where the debates
about PURPA are most heated--have not established competitive
markets, let alone non-discriminatory access to those markets for
independent generators, even if there are liquid market hubs for
spot energy purchases. When combined with the Commission's proposal
to allow utilities to eliminate the contract option, discussed
above, QFs may be reduced to relying solely on some synthetic
measure of what spot prices would be in a competitive market based
on gas prices and heat rates. I am not persuaded that this will
satisfy our obligation to encourage QFs.
    12. Nor am I confident that this proposal will not result in
discriminatory rates. In regions of the country with vertically
integrated utilities (including some parts of RTO/ISO markets) the
relevant utility will almost always receive guaranteed cost-recovery
on its generation investments. Indeed, state regulators will often
effectively pre-approve certain incumbent utility investments
through those utilities' integrated resource plans, making it highly
unlikely that the utility investments will ultimately be disallowed
as imprudent. Under those circumstances, it is not clear to me how a
rule that conclusively presumes that LMP--let alone some other
measure of price--is a non-discriminatory rate in those regions.
    13. I recognize that in some regions of the country--such as the
RTOs and ISOs with developed real-time and day-ahead markets and
largely restructured utilities--this may be an appropriate approach
for calculating the as-available rate for energy, at least for
relatively large QFs. But the NOPR's proposed revisions are not
limited to those regions and are not even predicated on utilities
themselves actually relying on LMP, liquid market hubs, or other
calculations of ``Competitive Prices.'' In any case, neither the
record nor the rationale in this NOPR addresses these concerns in a
convincing manner.

B. Reducing the 20 MW Rebuttable Presumption

    14. The Commission is also proposing to reduce the threshold for
the rebuttable presumption of non-discriminatory access to
competitive wholesale markets within RTOs and ISOs from 20 MW to 1
MW. This proposal would, in essence, relieve most utilities within
RTOs and ISOs from the must-purchase obligation for any resource
greater than 1 MW based on the theory that those resources have non-
discriminatory access to the RTO and ISO markets.\15\
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    \15\ This issue, as much as any other, has been subject to
vigorous debate in Congress. See supra at 3.
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    15. The Commission created the rebuttable presumption framework
in response to Congress's enactment of section 210(m) in EPAct 2005.
The Commission explained that QFs smaller than 20 MW often face more
challenges than larger QFs in accessing competitive wholesale
markets and therefore presumptively do not have non-discriminatory
access.\16\ The challenges it identified included issues such as
interconnection at the distribution level, jurisdictional
differences, pancaked delivery rates, and administrative burdens to
obtaining access to distant buyers.\17\
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    \16\ New PURPA Section 210(m) Regulations Applicable to Small
Power Production and Cogeneration Facilities, Order No. 688, 117
FERC ] 61,078, at PP 9-12 (2006), order on reh'g, Order No. 688-A,
119 FERC ] 61,305 (2007), aff'd sub nom. Am. Forest & Paper Ass'n v.
FERC, 550 F.3d 1179 (D.C. Cir. 2008).
    \17\ NOPR, 168 FERC ] 61,184 at P 121.
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    16. Today's NOPR contains precious little justification to
support that change and does not cite a single piece of record
evidence supporting its proposal.\18\ That may be because it seems a
stretch to suggest that a 1 MW resource can generally access and
compete in markets as sophisticated and complex as, for example, PJM
Interconnection, L.L.C., on a similar footing as the resources in
the portfolio of a large vertically integrated utility or merchant
power generator.
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    \18\ To the contrary, the Commission has found that QFs less
than 20 MW may not have non-discriminatory access, even within RTO/
ISO markets. In just the last few years, the Commission has
explained that barriers such as transmission constraints are the
very ``circumstances explained in Order No. 688 that gave rise to
the rebuttable presumption that smaller QFs lack nondiscriminatory
access to markets.'' N. States Power Co., 151 FERC ] 61,110, at P 34
(2015). Today's NOPR fails to provide any explanation for the
departure from the Commission's existing policy.
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    17. These are among the most important issues presented in this
NOPR. I hope that the parties will assemble a correspondingly robust
record that allows to us to dig into them in detail and evaluate
whether the Commission's proposals are consistent with our
obligations under the statute.

III. PURPA Should Be Revised To Create More Competition, Not Less

    18. Insofar as I can tell, the Commission interprets the success
of PURPA since 1978 as evidence that the law is no longer needed and
that the Commission should revise its regulations so that they do
less to encourage QFs. I draw a slightly different conclusion from
the same evidence. I view PURPA's success in deploying gigawatts of
relatively low-cost electricity as proof of the benefits of
introducing competition into the bulk power system.
    19. Several proposals in the record would do just that. For
example, the National Association of Regulatory Commissioners
(NARUC) submitted a proposal for how the Commission might implement
section 210(m)(1), which was added by the Energy Policy Act of 2005.
The new provision provided three bases for FERC to terminate a
utility's must-purchase obligation under PURPA, all of which hinged
on QFs' access to competitive wholesale electricity markets.\19\ The
NARUC proposal urged the

Commission to give meaning to section 210m(1)(C) of the Federal
Power Act by establishing criteria by which a vertically integrated
utility outside of an RTO or ISO could apply to terminate the must-
purchase obligation if it conducts sufficiently competitive auctions
or RFPs for energy and capacity.\20\ In other words, it would use
the pathway established by Congress's amendments to PURPA to create
more opportunity and competition in areas where, for non-incumbent
utilities, PURPA is often the only game in town.
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    \19\ Section 210m(1) provides:
    (A)(i) Independently administered, auction-based day ahead and
real-time wholesale markets for the sale of electric energy; and
(ii) wholesale markets for long-term sales of capacity and electric
energy; or
    (B)(i) transmission and interconnection services that are
provided by a Commission approved regional transmission entity and
administered pursuant to an open access transmission tariff that
affords nondiscriminatory treatment to all customers; and (ii)
competitive wholesale markets that provide a meaningful opportunity
to sell capacity, including long-term and short-term sales, and
electric energy, including long-term, short-term, and real-time
sales, to buyers other than the utility to which the qualifying
facility is interconnected. In determining whether a meaningful
opportunity to sell exists, the Commission shall consider, among
other factors, evidence of transactions within the relevant market;
or
    (C) wholesale markets for the sale of capacity and electric
energy that are, at a minimum, of comparable competitive quality as
markets described in subparagraphs (A) and (B).
    16 U.S.C. 824a-3(m)(1) (2018)
    \20\ National Association of Regulatory Utility Commissioners
Supplemental Comments, Docket No. AD16-16-00 (Oct. 17, 2018),
Attachment A at 8; id. (proposing the Commission's Edgar-Allegheny
criteria as a basis for evaluating whether a proposal was adequately
competitive).
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    20. The NARUC proposal was a whitepaper, not a detailed NOPR. It
would surely require more development before we could determine
whether it satisfies PURPA's statutory requirements. Nevertheless it
represented a step in the right direction that would have been
consistent with PURPA's pro-competitive purposes. It was also an
idea that we could have--and should have--amply explored through a
technical conference or other proceeding since the Chairman
indicated his intent to go forward with revisions to PURPA.
    21. The Solar Energy Industries Association also put forward a
pro-competitive proposal of the type that I would like to have
explored in more detail in this NOPR.\21\ The proposal would address
competitive solicitations as a means of procuring energy and
capacity from all new generation resources, including QFs. It also
discussed the potential for these competitive solicitations to set
avoided cost under certain circumstances. As with the NARUC
proposal, this proposal would revise PURPA to include more genuine
competition rather simply revising the regulations to do less to
encourage QFs.
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    \21\ Solar Energy Industries Association Supplemental Comments,
Docket No. AD16-16-000 (Aug. 28, 2019).
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    22. Rather than seeking to expand competition, the majority is
instead using the success of competition in certain parts of the
country as a reason to scale back PURPA throughout the country. In
some areas of the country, particularly those with developed RTO and
ISO markets and with few, if any, vertically integrated utilities,
competition is the norm and PURPA may not be necessary, at least for
generators that are sufficiently large and sophisticated to
participate on an equal footing with other market participants. But
it does not necessarily follow that the healthy competition we see
in those regions means that PURPA does not continue to play a vital
role in other parts of the country, including those without RTO and
ISO markets or where vertically integrated utilities dominate. To
put it bluntly, the success that a QF might have in selling its
energy and capacity within ISO New England Inc. tells you very
little about the success a similar resource might have in the
Southeast or the West, at least without PURPA. I worry that applying
lessons learned in the truly competitive regions of the country to
the less competitive regions will actually result in less
competition and, ultimately, higher prices for consumers.
    23. I support certain aspects of this NOPR that I believe are
consistent with the Commission's proper role in administering PURPA
and are supported by the record developed so far. First and
foremost, I agree that it is time to address the ``one-mile'' rule,
which currently provides an irrebuttable presumption that resources
located more than a mile apart are separate QFs.\22\ There is
evidence compiled as part of the Commission's 2016 technical
conference on PURPA that suggests that this rule is susceptible to
gaming and that some developers are splitting what should fairly be
considered one project into a series of discrete projects spread
separated by a mile each.\23\ I do not believe that is what Congress
had in mind when it set out to promote small power production
facilities in PURPA. The NOPR proposes what I believe is a