On November 13, 2017, the U.S. Court of Appeals for the 1st Circuit held in Allco Renewable Energy Ltd. v. Mass. Elec. Co.1 that a Qualifying Facility (QF) does not have a private right of action against a utility company under the Public Utility Regulatory Policies Act of 1978 (PURPA). Although the court’s finding is no surprise, it helps clarify PURPA’s complex enforcement mechanism.
On October 4, 2017, in a decision with significant implications for the energy project finance community, the Federal Energy Regulatory Commission (FERC or the “Commission”) granted a petition for declaratory order filed by the Ad Hoc Renewable Energy Financing Group (“Petitioners”)1 and held that certain non-managing (i.e., passive) “tax equity” interests in public utilities are not “voting securities” for purposes of Section 203 of the Federal Power Act (FPA).2 For that reason, FERC held that (1) the “issuance or transfer of such interests does not constitute a transfer of control with respect to the public utility and does not require” prior FERC authorization under Section 203(a)(1); and (2) “the acquisition of such interests by a holding company qualifies” under Section 203(a)(2) for the blanket authorization in Section 33.1(c)(2)(i) of FERC’s regulations.3 The decision expressly extends to Section 203 FERC’s precedent from the Section 205 context regarding whether certain tax equity interests are voting securities, a welcome outcome for sponsors of, and passive investors in, renewable energy projects.
On September 27, 2017, Sens. James M. Inhofe (R-OK) and Martin T. Heinrich (D-NM) introduced S. 1860, the Parity Across Reviews Act (“PARs Act”), which, if enacted, would add a $10 million value threshold to the requirement in Section 203(a)(1)(B) of the Federal Power Act1 for prior Federal Energy Regulatory Commission (FERC or “Commission”) authorization for transactions involving the merger or consolidation of FERC-jurisdictional facilities. The PARs Act also would require FERC to establish a 30-day postclosing notification requirement for such transactions involving facilities worth more than $1 million but less than $10 million. The PARs Act is identical to H.R. 1109, which passed in the House of Representatives on June 12, 2017.2
On September 19, 2017, the Court of Appeals of North Carolina (“Court”) held that companies that install solar panels on customer rooftops are “public utilities” under state law, at least when they retain ownership of the panel and sell the output to the customer. The ruling represents a blow to potential solar providers, and a victory for North Carolina’s franchised utilities, which believe that rooftop solar will undermine their rate base, increasing expenses for other customers.
On August 28, 2017, the Federal Energy Regulatory Commission (FERC or the “Commission”) approved a Stipulation and Consent Agreement between FERC’s Office of Enforcement (OE) and American Transmission Company, LLC (ATC) to resolve an OE investigation of numerous violations by ATC of Sections 203 and 205 of the Federal Power Act (FPA). ATC identified the violations during an internal compliance review precipitated by a March 2014 settlement between OE and certain subsidiaries of ITC Holdings Corp. regarding similar violations, as described here.
On August 21, 2017, Power Africa published its 2017 Annual Report highlighting more than 80 Power Africa transactions closed and more than $14.5 billion in financings since its inception. Overall, it has facilitated the financial close of power transactions expected to generate more than 7,200 MW of power in sub-Saharan Africa and generated more than $500 million in U.S. exports. The report demonstrates how Power Africa, and the recently passed Electrify Africa Act, continues to create opportunities for American businesses in Africa as it proceeds toward its goals of increasing installed generation capacity by 30,000 MW and adding 60 million new electricity connections by 2030 on the continent. These developments are important, since interested investors continue to seek access to the $300 billion energy market in sub-Saharan Africa and tap into the demand for an additional 20,000 megawatts in the region.
On July 14, 2017, and July 25, 2017, the U.S. District Court for the Northern District of Illinois and the U.S. District Court for the Southern District of New York, respectively, dismissed challenges to the Illinois and New York Zero-Emissions Credits (ZECs) programs for nuclear generators.1 In doing so, the courts reaffirmed states’ rights to prioritize specific types of generation resources or resource attributes. Relying, in part, on the Supreme Court’s 2016 Hughes2 decision invalidating a Maryland power plant subsidy program, the courts rejected claims that the ZEC programs (i) encroach on the Federal Energy Regulatory Commission’s (FERC or the “Commission”) exclusive authority under the Federal Power Act (FPA) to regulate wholesale sales of electricity by directly affecting prices in the wholesale power markets and (ii) violate the dormant Commerce Clause by discriminating against out-of-state, non-nuclear generators.
On June 9, 2017, Beaver Creek Wind II, LLC and Beaver Creek Wind III, LLC (together, “Beaver Creek”) responded to a deficiency letter from the Federal Energy Regulatory Commission (FERC or the “Commission”) staff seeking further information on Beaver Creek’s calculation of the “one-mile” rule in its applications for certification as qualifying small power production facilities (QFs). At issue is Beaver Creek’s proposed “weighted geographic center” methodology used to calculate the distance between wind projects consisting of multiple pieces of geographically dispersed electric generating equipment (i.e., wind turbines) for the purposes of applying the one-mile rule under the Public Utility Regulatory Policies Act of 1978 (PURPA). With a potential FERC quorum on the horizon, the instant case provides the new FERC commissioners with an opportunity to establish a preferred methodology, if any, for measuring one mile for purposes of PURPA. As such, the outcome could have immediate impacts for renewable energy project developers, particularly those developing wind projects, as they perform due diligence on property selection and equipment siting when planning multiple projects.