Because Cornell’s facility serves steam load,
which is highly sensitive to the variable
weather conditions in central New York
State, the amount of electricity available
for sales to the market is both variable and
unpredictable, leaving Cornell vulnerable
to penalties imposed by NYISO for over- or
under-generation. To demonstrate that it
does not have nondiscriminatory access
to NYISO markets, Cornell highlighted the
fact that these NYISO penalties are waived
for other intermittent resources.
Given the high variability
in the need for its thermal
output and given how NYISO’s
markets operate, Cornell
does not effectively have
to NYISO’s markets.
NYSEG answered Cornell’s protest.
Although it recognized the variable nature
of the QF’s operations, NYSEG argued that
Cornell failed to quantify that variability.
NYSEG also refuted the unique operating
conditions of Cornell’s facility, arguing that
Cornell’s steam generation did not necessarily dictate its available electric output.
In the end, FERC sided with Cornell.
FERC noted that a mere showing that
electric output was dependent on variable weather conditions would not have
sufficed. Rather, in upholding NYSEG’s
obligation to purchase from Cornell, FERC
focused on the highly variable demands
of Cornell’s steam load and the resulting unpredictable electric output available
for sale into NYISO markets. That fact,
coupled with the discriminatory nature of
the NYISO penalties for under-generation,
satisfied FERC that Cornell lacked nondiscriminatory access to the NYISO markets.
What This Decision Means
for IDEA Members
This case is significant because it
shows FERC’s willingness to consider the
variable nature of steam load in the con-
text of PURPA purchase obligations. The
key in these cases is being able to show
how a particular wholesale market operates in a manner that does not accommodate district energy systems.
Cornell’s successful challenge
provides a road map for other IDEA
members that may be facing similar
termination threats. That said, it is not
always easy to predict how a regulatory
agency like FERC is going to rule. Only
two years ago, FERC denied a QF challenge that was similarly based on the
variable nature of a QF’s available output
due to the needs of its thermal host. 3 In
that case, FERC cited a lack of detail and
actual data of past experiences – information that it did not seem to require
from Cornell. This shows the fact-specific
nature of these cases. FERC examines
QF challenges on a case-by-case basis.
Nevertheless, by examining both past
victories and failures, IDEA members can
increase their chance of success in challenging a utility’s termination request.
Utilities are required to notify all
QFs in their region when they file a ter-
mination application. If you receive such
notification and believe the continuation
of a mandatory purchase requirement is
beneficial, the Cornell case offers the fol-
lowing lessons in preparing a challenge:
• Show up. Cornell’s efforts demonstrate
that it is possible to ward off termina-
tion of PURPA’s mandatory purchase
obligation. But that can only happen if
you participate in the process. Cornell
was the only QF to file a protest against
NYSEG’s application, and it is the only
QF from which NYSEG is still required to
purchase energy. FERC granted NYSEG’s
termination request for all other QFs in
the NYSEG service territory.
• Know your market. These challenges
turn on whether the QF has nondis-
criminatory access to wholesale markets.
Whether due to transmission constraints,
scheduling issues or your own operational
limitations, your challenge to a termina-
tion application must identify the specific
obstacles that prevent you from reaching
the market. This means explaining your
own operations in the context of your
particular RTO’s market rules and identify-
ing the impact of any market failures.
is an energy lawyer
with Jennings Strouss
& Salmon PLC in
Washington, D.C. Her
practice focuses on the
electric and natural gas
sectors of the energy
industry. She represents municipal
utilities, rural cooperatives and end
users before the Federal Energy
Regulatory Commission and advises
clients on electric industry restructuring,
renewable energy development, power
supply arrangements and transmission
issues. Teuwen can be reached at
1 New York State Electric & Gas Corporation and
Rochester Gas and Electric Corporation, 130 FERC ¶
2 The protest was prepared by Leonard Singer from
the law firm of Couch White.
3 Virginia Electric and Power Company, 124 FERC ¶
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