FERC Clarifies California Feed-In-Tariff Procedures

The Federal Energy Regulatory Commission (FERC) has clarified for California how the state can encourage development of new electricity generation resources in a way that does not conflict with federal laws and regulations.

FERC further clarified for the California Public Utilities Commission (CPUC) and the state's three investor-owned utilities its July order that outlined how the state could implement its feed-in tariff (FIT).

California adopted a FIT by enacting the California Waste Heat and Carbon Emissions Reduction Act. That state law requires investor-owned electric utilities to purchase, at a price set by the CPUC, electricity generated by eligible combined heat and power generators.

In the ruling, FERC says a proposal to employ a multi-tiered resource approach for determining avoided costs – which would set different levels of avoided costs and, thus, different avoided-cost rate caps for different types of resources – could comply with the Public Utility Regulatory Policies Act and FERC regulations.

The FIT Coalition, a California-based group that advocates adoption of FITs, applauded the ruling, saying that FERC has provided a clear legal roadmap to apply worldwide best practices to state-level FIT design.

‘With national clean energy policy stalled, the states must be allowed to move forward with programs that boost local renewable sources,’ says James Woolsey, former director of the CIA and a member of the FIT Coalition board of advisors. ‘The FERC has taken a major step here in allowing states to realize the tremendous economic and environmental benefits of feed-in tariffs.’

The FERC order also clarifies that states have full authority to include the value of renewable energy certificates within the compensation paid to clean energy generators. States thus have complete flexibility to set FIT prices at precisely the level needed to attract private investment in clean energy.

SOURCES: Federal Energy Regulatory Commission, FIT Coalition

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