On February 14, 2023, the United States Court of Appeals for the D.C. Circuit upheld the Federal Energy Regulatory Commission's (FERC) policy of assessing net energy output to the electricity grid, rather than total energy production, in deciding whether a company meets the definition of a “small power production facility” and thus as a “qualifying facilit[y]” or “QF” under federal law, i.e., under the Public Utility Regulatory Policies Act of 1978 (“PURPA”). The case is Solar Energies Industry Assoc. v. Federal Energy Regulatory Commission, No. 21-1126 (D.C. Cir. Feb. 14, 2023).
The case arose out of the application of Broadview Solar in Montana to become a QF under PURPA. Broadview’s facility consists of a 160 megawatt (MW) solar array and a 50 MW battery storage system that produce or store direct current (DC) power. The grid runs on alternating current (AC). So, the Broadview system has “inverters” to convert AC power into AC. The facility has inverters with a net capacity of 80 MW.
In 2020, FERC initially denied Broadview’s application on the ground that the facility’s solar array exceeded the maximum capacity under the statute of 80 MW, rejecting the argument that the test turned on the 80 MW conversion limit of the inverters. FERC acknowledged it was departing from its prior approach.
In 2021, FERC voted to issue a new order with the opposite result, finding PURPA to be ambiguous and determining that FERC’s prior approach was the best interpretation. FERC reached the same result on rehearing.
The D.C. Circuit affirmed FERC’s 2021 decisions, finding them consistent with PURPA and its legislative history. The three-Judge panel voted 2-1.