On November 19, 2015, FERC issued an order confirming that certain qualifying facilities (“QFs”) under the Public Utility Regulatory Policies Act of 1978 (“PURPA”) with market-based rate (“MBR”) authority, generator interconnection facilities, or other jurisdictional assets are exempt from section 203(a)(1) of the Federal Power Act (“FPA”), which requires public utilities to receive Commission authorization before acquiring or disposing of certain jurisdictional facilities.

FERC’s order arose out of a request for a declaratory order filed by Chevron U.S.A. Inc. (“Chevron”).  In its request, Chevron sought a determination that sections 210 of PURPA, and 292.601(c) of FERC’s regulations, exempted Chevron’s QF affiliates with MBR authorization from section 203(a)(1) of the FPA.  Certain small power production QFs have long been exempted from Section 203, but the recent trend of QFs seeking market-based rate authority to make non-QF sales brought that exemption into question.

In granting Chevron’s request for a declaratory order, FERC noted that section 292.601(c) of its PURPA regulations contains an exemption for QFs from other sections of the FPA, except for certain specifically enumerated sections.  Because section 203 of the FPA is not one of the specifically enumerated sections, FERC confirmed that the plain language of its PURPA regulations makes QFs exempt from the FPA section 203(a)(1) filing requirements, even if they obtain MBR authority and/or own generator interconnection facilities.

FERC also clarified that if a public utility would otherwise be jurisdictional because of its ownership or operation of facilities other than those considered part of a QF, then the public utility would be subject to section 203 of the FPA.  In this situation, FERC further indicated that a public utility would be required to report its QF assets, along with its other jurisdictional facilities, as part of any applicable section 203 filing requirement.

FERC’s order also contains a reminder to QFs that, following a transaction that disposes of their MBR authority, the QF should cancel its MBR authorization and file a change in status in accordance with FERC’s regulations.

A copy of FERC’s order can be found here.