FERC Dismisses Petition to Review Jurisdictional Challenges over Net Metering

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On July 16, 2020, the Federal Energy Regulatory Commission (FERC) dismissed the New England Ratepayers Association’s (NERA) petition for a declaratory order. In its petition, NERA asked FERC to (1) declare that there is exclusive federal jurisdiction over wholesale energy sales from generation sources located on the customer side of the retail meter, and (2) order that the rates for such sales be priced in accordance with the Federal Power Act (FPA) or Public Utility Regulatory Policies Act of 1978 (PURPA), as applicable.

Rather than decide the issue on the merits, FERC dismissed NERA’s petition on procedural grounds. FERC’s standard with respect to declaratory orders is that they are issued to terminate a controversy or remove uncertainty. In this case, FERC found that the issues presented in the petition did not warrant a generic statement and thus, FERC exercised its discretion to decline to address the issues raised by NERA. FERC reasoned that NERA did not identify a specific controversy or harm that the Commission should address in a declaratory order.

NERA’s logic is this: FERC has jurisdiction over net metering, with respect to energy sales from rooftop solar facilities and other distributed generation located on the customer side of the retail meter whenever the output of such generators exceeds the customer’s demand or where the energy from such generators is designed to bypass the customer’s load. Under those circumstances, according to NERA’s petition, energy is delivered to the local utility for resale to the utility’s retail customers for compensation. Thus, according to NERA, the transactions are wholesale sales in interstate commerce, which should be priced at either the utility’s avoided cost of energy (if the sale is made pursuant to PURPA) or a just and reasonable wholesale rate (if the sale is made pursuant to the FPA).

Commissioners McNamee and Danly concurred with the majority opinion. While agreeing that the petition should be dismissed on procedural grounds, both Commissioners emphasized that the Order does not address substantive issues underlying NERA’s petition and is not a decision on the merits of the petition.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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