Connecticut Valley Electric Co. v. Federal Energy Regulatory Commission

208 F.3d 1037, 341 U.S. App. D.C. 68, 2000 U.S. App. LEXIS 6776, 2000 WL 347453
CourtCourt of Appeals for the D.C. Circuit
DecidedApril 14, 2000
Docket98-1294
StatusPublished
Cited by18 cases

This text of 208 F.3d 1037 (Connecticut Valley Electric Co. v. Federal Energy Regulatory Commission) is published on Counsel Stack Legal Research, covering Court of Appeals for the D.C. Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Connecticut Valley Electric Co. v. Federal Energy Regulatory Commission, 208 F.3d 1037, 341 U.S. App. D.C. 68, 2000 U.S. App. LEXIS 6776, 2000 WL 347453 (D.C. Cir. 2000).

Opinion

Opinion for the Court filed by Circuit Judge GINSBURG.

GINSBURG, Circuit Judge:

Connecticut Valley Electric Company, a local distribution company serving some 10,000 customers in New Hampshire and Vermont, petitions for review of two orders of the Federal Energy Regulatory Commission denying Connecticut Valley any relief against a power producing facility that violated § 3(17)(C)(ii) of the Federal Power Act (FPA). Connecticut Valley claims the Commission’s orders violate § 210 of the Public Utility Regulatory Policies Act of 1978 (PURPA), and that the Commission is required by § 3(17)(C)(ii) of the FPA to revoke the facility’s status as a “Qualifying Facility” (QF), or alternatively that the Commission’s refusal to revoke the facility’s QF status or to provide any other relief is an abuse of the agency’s remedial discretion.

We hold that we are without jurisdiction to address Connecticut Valley’s claim arising under § 210 of the PURPA. We reject Connecticut Valley’s claim that § 3(17)(C)(ii) of the FPA requires the Commission to revoke the facility’s QF status, and we conclude that the Commission’s decision to deny any relief was a valid exercise of its remedial discretion. We therefore deny the petition for review.

I. Background

The Congress enacted Title II of the PURPA, Pub.L. No. 96-617, 92 Stat. 3117, 3134 (1978), in an effort to encourage the development of cogeneration and small power production facilities. A “cogeneration facility” produces both electric energy and steam or some other form of usable energy, 16 U.S.C. § 796(18)(A); a “small power production facility” produces less than 80 megawatts of electricity using biomass, waste, renewable resources, or geothermal resources as the primary energy source, id. § 796(17)(A). The Supreme Court described § 210 of the PURPA in FERC v. Mississippi, 456 U.S. 742, 750-51, 102 S.Ct. 2126, 72 L.Ed.2d 532 (1982) (citations omitted):

... [Congress] felt that two problems impeded the development of nontradi *1040 tional generating facilities: (1) traditional electricity utilities were reluctant to purchase power from, and to sell power to, the nontraditional facilities, and (2) the regulation of these alternative energy sources by state and federal utility authorities imposed financial burdens upon the nontraditional facilities and thus discouraged their development.
In order to overcome the first of these perceived problems, § 210(a) directs FERC ... to promulgate ... rules requiring utilities to offer to sell electricity to, and purchase electricity from, qualifying cogeneration and small power production facilities....
To solve the second problem perceived by Congress, § 210(e), 16 U.S.C. § 824a-3(e), directs FERC to prescribe rules exempting the favored cogeneration and small power facilities from certain state and federal laws governing electricity utilities.

In order to secure these benefits to qualifying cogeneration and small power production facilities — so-called Qualifying Facilities, or QFs — the Commission has promulgated the following regulations, respectively: 18 C.F.R. §§ 292.303-305, which require an electric utility to sell to a QF electricity for use in its operations at regulated tariff rates and to buy the QF’s output at the utility’s “avoided cost”; * and 18 C.F.R. §§ 292.601-602, which exempt a QF from the Public Utility Holding Company Act of 1935, 15 U.S.C. § 79 et seq., most state regulation as a public utility, and much of the FPA. A small power producer (SPP) is a QF only if it (1) meets various Commission requirements respecting fuel use, fuel efficiency, and reliability, 16 U.S.C. § 796(17)(C)(i) and (2) “is ... not primarily engaged in the generation or sale of electric power (other than electric power solely from cogeneration facilities or small power production facilities),” id. § 796(17)(C)(ii).

A. Regulatory Background: Gross Versus Net Output

There are two ways of measuring the power production capacity of a QF: one looks to gross output, which is all electricity produced by the facility, the other to net output, which is gross output less the electricity used in the QF’s own operations. The distinction is important because many QFs purchase their internal operating needs at tariffed rates from the electric utility to which they sell their output, which the utility is required to buy at the utility’s full avoided cost. If the QF were allowed to sell its gross output to the electric utility at full avoided cost, then it would in effect be selling back at a significant markup the quantum of electricity it purchased from the utility for its internal operating needs.

In 1991, the Commission for the first time addressed whether a facility that sold its gross output would lose its status as a QF because it would no longer be, as required by § 3(17)(C)(ii), * “not primarily *1041 engaged in the generation or sale of electric power (other than electric power solely from cogeneration facilities or small power production facilities).” Turners Falls Ltd. Partnership, 55 FERC ¶ 61,487, 1991 WL 501859. The Commission began by recognizing that § 3(17)(C)(ii) is ambiguous: If a utility provides a QF with power for its operations through one line, and the QF provides its gross output back to the utility through a separate line, then in one sense (namely, the physical) the QF is selling only electricity “solely from cogeneration or small power production facilities” and the requirement of § 3(17)(C)(ii) is satisfied; in another (namely, the economic) sense, however, the QF is selling back to the utility electricity that was generated by the utility, in violation of that section. See id. at 62,668.

In light of this ambiguity and the broad discretion the Congress granted the Commission in § 3 of the FPA to determine the requirements for QF certification, the Commission concluded that it could lawfully interpret the statute either to allow or to preclude a QF’s sale of its gross output. See id. at 62,669. In the end, however, the Commission decided that the policies of the PURPA are served better if the statute is read to say that a facility that sells its gross output is not a QF. See id. at 62,671.

B. Procedural Background: Petition to Revoke Claremont’s QF Status

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208 F.3d 1037, 341 U.S. App. D.C. 68, 2000 U.S. App. LEXIS 6776, 2000 WL 347453, Counsel Stack Legal Research, https://law.counselstack.com/opinion/connecticut-valley-electric-co-v-federal-energy-regulatory-commission-cadc-2000.