In This Issue:
| And now for something completely different… |
 As September draws to a close, the intoxicating scent of change hangs heavy in the air. Perhaps it’s the onset of a new season or the upcoming presidential election or the unrelenting transformation of both the energy industry and the legal profession or even my own rocky adjustment to life without my husband -- but it’s no longer possible for me to flip the page on the calendar and resume business as usual as I enter 28th year of energy law practice. And so now for something completely different (H/T - Monty Python): my new venture, PowerUp Legal (beta site).
PowerUp Legal is the premier online, on-demand legal services marketplace focused on the energy industry. Modeled after alternative legal business entities serving business and corporate clients, I founded PowerUp Legal to deliver the same benefits of on-demand expertise and high-quality, flexible legal solutions to in-house groups and law firms in the energy industry.
PowerUp Legal offers three key benefits:
- Flexibility: Pay for quality legal counsel only when needed. With PowerUp attorneys, companies can avoid the cost of full-time hires and small firms can retain larger matters instead of referring them out to other firms.
- Value: PowerUp Legal attorneys are accomplished and experienced regulatory practitioners who have chosen a lifestyle and career path that allows them to provide on-demand service at a value that surpasses traditional law firms.
- Control: PowerUp Legal attorneys function as an integrated part of your team, which means that whether you’re an in-house counsel or a law firm partner,you maintain control over your project or client.
Here’s a short video that summarizes what we do, how we do it and why it benefits in-house groups and firms.
PowerUp Legal has garnered an enthusiastic response so far. We’ve recruited an initial group of attorneys whose collective credentials (to be posted soon on the website) include tenure of five years or more at FERC, state regulatory commissions, AmLaw 200 firms and in-house at energy companies and who boast a wide range of transactional, litigation and compliance competencies. But we still have plenty of room for additional attorneys; send an email cover letter and resume to info@poweruplegal.com if you’d like to join the PowerUp Legal Marketplace.
And now for the BIG news: PowerUpLegal
 launches next week! We’ll have a sponsorship table at the Energy Bar Association conference - please visit our exhibit to learn more and to tell us what your needs are so that we can better serve your company or firm. Finally, there’s great bonus if you stop by: on Wednesday October 5 between 10 a.m. and 3, we’ll have a professional photographer taking FREE head shots (individual or with colleagues or friend) that you can use on your website or social media. I look forward to seeing you there.
Change is like a roller coaster - at once, exhilarating and terrifying - but always better than standing still. What changes will you make this year?
Power On...and Power Up!
Carolyn Elefant
| What’s New At LOCE and What’s Next? |
 In the nine long months since our last newsletter, the Law Offices of Carolyn Elefant (LOCE) has been busy. On the electric side of the practice, recent matters included representing a client in five certificate proceedings for solar projects now pending before the Maryland Public Service Commission, counseling several state commissions, investors and renewable companies on PURPA issues and continued analysis of commerce clause issues related to state renewable energy credits - but which may have broader repercussions depending on the future of the Clean Power Plan.
On the gas side, the firm currently represents several municipalities and landowners in multiple pipeline certificate proceedings before the Commission and in preemption and eminent domain litigation in federal court. Meanwhile, Alex English, the firm’s associate, handles the firm’s Clean Water Act and FOIA matters - two areas where we’ve been able to expand - and also litigates these issues in federal courts on behalf of individual clients.
I spoke at several conferences during this time frame: SEIA’s Solar Southeast Conference, where I presented on PURPA, the Institute for Energy Economics and Financial Analysis, where I spoke about the prospect of pipeline overbuilt and a Rockefeller Foundation sponsored conference where I spoke on eminent domain and utility infrastructure.
So what’s next for LOCE with the launch of PowerUp Legal? The two are completely separate entities - LOCE is a law firm while PowerUp Legal is not (to use an energy industry analogy, my law firm is the regulated utility while PowerUp is the unaffiliated and unregulated, independent spinoff). For the foreseeable future, as PowerUp Legal builds momentum, LOCE will continue to serve existing clients related to the firm's core competencies in power, pipelines and property.
The past months have seen a pick up in focus on PURPA, the Public Utilities Regulatory Policies Act. While I don’t have an extra 86 hours to prepare the kind of comprehensive case summaries that are the hallmark of this newsletter (if you don’t believe me, take a look at past issues) here’s a quick round up of some of the interesting PURPA happenings over the past few months.
FERC Picks Up on PURPA
Goaded by a letter from Alaska Senator Murkowski in November 2015 asking the Commission to take a comprehensive look at its implementation of PURPA in light of new developments in the energy market, the Commission held a technical conference on PURPA in June 2016. The conference addressed a variety of issues such as the continued role of PURPA in new markets, whether PURPA should be enhanced to further drive renewable development or cut back in light of past abuses, encroachment on state authority and rate impacts on consumers. Apparently, the Commission is still pondering these issues; on September 6, 2016, it issued a Notice seeking comment on two narrow points: (1) the use of the “one-mile rule” to determine the size of an entity seeking certification as a small power production qualifying facility (QF); and (2) minimum standards for PURPA-purchase contracts. Comments are due on or before November 7, 2016, Docket AD16-16.
Massachusetts PURPA Price Rules Invalidated!
Allco, a renewable energy company with lots of matters pending across the country, recently won a victory in Massachusetts in Allco v. Massachusetts Electric and Mass. DPU (September 23, 2016), when a Massachusetts federal district court invalidated the Massachusetts DPU pricing rules under PURPA. Basically, the Massachusetts avoided cost regulations establish the spot market price for wholesale energy in NE ISO as the only contract rate available. Trouble is, argued Allco, a spot market rate is by definition calculated at the time of delivery, while PURPA gives QFs the right to demand a rate as of the date of its contractual obligation to supply power is incurred. (See 18 C.F.R. sec. 292.304). The court agreed, finding that the plain language of the FERC regulations make clear that QFs have the option of either selling on an “as available” basis or pursuant to a legally enforceable obligation and therefore, have a right to rates based on their preferred choice of sale.
The Massachusetts decision will have long-range repercussions. Several other states also set avoided cost rates with reference to spot market prices and in the aftermath of this case, those programs may be vulnerable to challenge.
As an aside, the Massachusetts court also suggested that the Fifth Circuit’s controversial decision in Exelon Wind v. Nelson (5th Cir. 2014) was wrongly decided. In Exelon, a wind company challenged Texas PUC rules that barred QFs from obtaining more than an “as available” price if it couldn’t guarantee firm delivery. The Commission had previously determined that the Texas regulations were inconsistent with PURPA but declined to bring an enforcement action. Ignoring FERC’s interpretation, the Fifth Circuit and instead, relied on the Texas PUC’s defense of its program and found that it was not unreasonable for the Texas PUC to decide that that only those Qualifying Facilities capable of providing reliable and predictable power may enter into such contractual arrangements under PURPA.
Wasting no time, Allco also filed enforcement action at FERC challenging Connecticut’s pricing scheme (which is similar to Massachusetts), urging the FERC to bring a federal enforcement action so that the “Exelon virus will not spread to other states." Definitely a decision to watch.
PURPA Challenge to Maryland Community Solar Programs
Last month, a group of electric cooperatives filed a PURPA enforcement action at FERC, challenging certain aspects of Maryland’s new community solar program. The Maryland program allows for virtual net metering, with participating customers credited at the retail rate for all power that they use. For excess power above the customer’s use, the utility is required to “use” the power and pay the customer rates prescribed by the Maryland regulation. It is this provision that is the focus of the Coop challenge.
The Coop’s argue that the requirement that utilities “use” the excess power above customers’ use essentially forces a wholesale sale which is subject to federal price regulation not state or, if the customers are QFs, the prices are subject to PURPA and must be set at avoided cost. The Coops also propose that only QFs be permitted to participate in the net metering program though that seems unnecessarily complicated.
So what’s the solution? How about a little sanity? Sure, I get that FERC’s power over wholesale rates preempts the field (yada, yada, yada...) and as such, prohibits state subsidies that impact wholesale markets as ruled by the Supreme Court in Hughes v. Talen . Even so, between FERC’s broad authority over wholesale rates and the state’s unquestioned power over resource procurement and distributed and retail sales, surely there must be a principled basis by which a state to reserve control over the tiny slivers (in this case, sale-backs of excess power) that fall outside the confines of state power. Perhaps the solution involves defining use of excess power as a “non-sale” that automatically falls outside of federal control. Or perhaps there's a way to argue that the sale-backs are so integrally connected to the state action that they don't interfere with interstate commerce and can be removed from the scope of FERC jurisdiction.
Though I've only skimmed the Coops' motion, my expertise and gut tells me that they are largely right on the law. It's just that their proposed remedy seems overly complicated and may weigh down a promising program before it even has a chance to get off the ground.
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