FERC Clarifies that Its Jurisdiction over QF Interconnection Agreement Attaches When QF Has the Right to Sell Power to Third Parties

I. Summary

The Federal Energy Regulatory Commission, on November 3, 2010, issued an order addressing a petition for declaratory order filed by Florida Power & Light Company (“FPL”) concerning when a Qualifying Facility (“QF”) interconnection agreement becomes subject to FERC jurisdiction.  133 FERC ¶ 61,121.  In its order, FERC held that its jurisdiction over an interconnection agreement with a QF attaches when the QF is provided the express right to sell its output to third parties.  The Commission rejected FPL’s argument that FERC jurisdiction over a QF interconnection agreement attached only when the QF actually began making power sales to third parties.

II. Analysis of the Order

FPL had three QF interconnection agreements, entered into in 1989, 1991 and 1997, under which the QF sold its full power output to FPL.  None of the QFs had given any indication that they intended to sell power to a third party.  Since it purchased all of the power from each QF, FPL had not filed interconnection agreements with FERC.  Subsequent to FPL entering into the three interconnection agreements, FERC issued orders addressing the scope of its QF interconnection jurisdiction.[1] In the Niagara Mohawk decisions, FERC, clarifying Order No. 2003, stated that its jurisdiction over QF interconnections was determined by whether a QF had the right to sell power to a third party, not whether it was actually making such sales.

FPL filed its petition for declaratory, asking the Commission to reverse Niagara Mohawk and hold that a QF interconnection agreement does not have to be filed with FERC as long as the host utility purchases all of the QF power, even if there is no firm contract in place with the host utility.  FPL contended that Niagara Mohawk was a reversal of Order No. 2003, in which the Commission held that when a QF makes sales to a host utility, the interconnection agreement is subject to state jurisdiction.  FPL also argued that FERC had no jurisdiction if there were no actual wholesale sales occurring.

FERC rejected the arguments of FPL (and the supporting arguments submitted by Niagara Mohawk, EEI and the Florida Public Service Commission) that its jurisdiction over QF interconnection agreements attached only when the QF actually made power sales to third parties.  FERC agrees that if a QF is selling its full output to a host utility, even on an “as available” basis, then the transaction, including the interconnection agreement, remains subject to state, not FERC jurisdiction.  Also, when a purchase power agreement with the host utility terminates, or the purchase power agreement or interconnection agreement is silent on the right of the QF to sell power to a third party, FERC will not assume third-party sales are occurring or will occur.

The Commission clarifies that its jurisdiction over QF interconnection agreements does attach (and the interconnection agreement must be filed with FERC) as soon as the QF has the express right to make sales to third parties.  Thus, if the purchase power agreement between the QF and host provides that the QF may make sales of power to a third party, the host utility must file an interconnection agreement with FERC.  This is so even if the QF is not actually making such sales.

To access the order, please click here.

For more information, please contact Peter Matt at This e-mail address is being protected from spambots. You need JavaScript enabled to view it or 202-296-1500.