FERC Filings

EPSA's Motion to Intervene and Comment in Support of Complaint of Michigan QFS

Executive Summary

The Michigan QFs have long-term power purchase agreements in which the avoided costs were based on the capacity and energy costs of a high sulfur bituminous coal-fired generating plant, as fixed in numerous proceedings before the Michigan Public Service Commission when the various contracts were executed in the 1980s and early 1990s with Consumers Energy Company. Consumers now asserts that the appropriate proxy for the QF energy payments is less expensive, low sulfur western or sub-bituminous coal. Consumers may not unilaterally re-determine the avoided costs of a QF contract based on changes in market-prices and avoided costs that occurred after the QF elected to be paid under Part 292 of the Commission’s regulations.

The Commission’s regulations implementing PURPA:

specifically allow rates for the purchase of QF energy or capacity pursuant to a contract over a specified terms to be based on avoided costs calculated, at the option of the QF, at the time of delivery or at the time the obligation is incurred. Furthermore, the regulations make clear that, if rates are based on avoided cost estimates at the time the obligation is incurred, the rates are consistent with PURPA’s requirements even if they differ from avoided costs at the time of delivery.

The Commission has continued to uphold the sanctity of power purchase agreements with QFs and has not allowed unilateral modification, even when the utility purchaser entered an RTO.

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