On March 18, 2010, FERC granted the application of New York State Electric & Gas Corporation and Rochester Gas and Electric Corporation to terminate the obligation to enter into new contracts to purchase electric energy from QFs larger than 20 MW, with the exception of one QF owned by Cornell University. FERC found that given the high variability in its electric output due to its variable useful thermal output, and given that NYISO's markets tie participation to power offered into the market the day before, in conjunction with penalties for under-generation and no compensation for over-generation for QFs like Cornell, Cornell is effectively denied nondiscriminatory access to NYISO's markets. FERC emphasized that its decision was only limited to Cornell and that it was not making a generic finding that variable weather or even variable electric output warrants a denial of relief from the mandatory purchase obligation. In addition, FERC stated that the regulations do not provide that the mandatory purchase obligation will be lifted so long as a QF can operate as a merchant generator instead. To the contrary, the regulations contemplate that the mandatory purchase obligation be lifted only if QFs, while still continuing to be QFs, have nondiscriminatory access to the markets with a rebuttable presumption.

It is important to note that this is the first case that applies the Commission's regulation giving QFs larger than 20 MW the opportunity to rebut the presumption of access to NYISO's markets.

Click here to read the order in its entirety.