119 FERC ¶ 61,305 

UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

18 CFR Part 292 

(Docket No. RM06-10-001; Order No. 688-A) 

New PURPA Section 210(m) Regulations Applicable to Small Power Production and 

Cogeneration Facilities 

(Issued June 22, 2007) 

AGENCY: Federal Energy Regulatory Commission. 

ACTION: Order on Rehearing. 

SUMMARY: In this order on rehearing, the Federal Energy Regulatory Commission 

(Commission) denies rehearing on most major issues decided in Order No. 688, which 

amended its regulations governing small power production and cogeneration in response 

to section 1253 of the Energy Policy Act of 2005 (EPAct 2005), which added section 

210(m) to the Public Utility Regulatory Policies Act of 1978 (PURPA). The Commission 

also clarifies certain aspects of the rule and adopts some additional filing requirements. 

EFFECTIVE DATE: The revisions to our regulations in this order on rehearing will 

become effective [insert date_30_days after publication in the FEDERAL REGISTER]. 

FOR FURTHER INFORMATION CONTACT: 

Susan G. Pollonais (Technical Information) 

Office of Energy Markets and Reliability 

Federal Energy Regulatory Commission 

888 First Street, N.E. 

Washington, D.C. 20426 

(202) 502-6011 
Docket No. RM06-10-001 -2- 

Marka Shaw (Technical Information) 

Office of Energy Markets and Reliability 

Federal Energy Regulatory Commission 

888 First Street, N.E. 

Washington, D.C. 20426 

(202) 502-8641 

Samuel Higginbottom (Legal Information) 

Office of the General Counsel 

Federal Energy Regulatory Commission 

888 First Street, N.E. 

Washington, D.C. 20426 

(202) 502-8561 

Mason Emnett (Legal Information) 

Office of the General Counsel 

Federal Energy Regulatory Commission 

888 First Street, N.E. 

Washington, D.C. 20426 

(202) 502-6540 

Eric Winterbauer (Legal Information) 

Office of the General Counsel 

Federal Energy Regulatory Commission 

888 First Street, N.E. 

Washington, D.C. 20426 

(202) 502-8329 

SUPLEMENTARY INFORMATION: 
UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

Before Commissioners: Joseph T. Kelliher, Chairman; 

 Suedeen G. Kelly, Marc Spitzer, 

 Philip D. Moeller, and Jon Wellinghoff. 

New PURPA 210(m) Regulations Applicable Docket No. RM06-10-001 

To Small Power Production and 

Cogeneration Facilities 

ORDER ON REHEARING AND CLARIFICATION 

(Issued June 22, 2007) 

I. Introduction

1. On October 20, 2006, the Federal Energy Regulatory Commission (Commission) 

issued Order No. 688,1

 in which the Commission revised its regulations governing the 

purchase requirement for electric energy produced by qualifying cogeneration and small 

power production facilities (QFs). This rulemaking proceeding was initiated to 

implement section 210(m) of the Public Utility Regulatory Policies Act of 1978 

(PURPA),2

 which mandates termination of the requirement that an electric utility enter 

into a new contract or obligation to purchase electric energy from QFs3

 if the 

 1

 New PURPA Section 210(m) Regulations Applicable to Small Power Production 

and Cogeneration Facilities, Order No. 688, 71 FR 64342 (Nov. 1, 2006), FERC Stats. & 

Regs. ¶ 31,233 (2006) (Final Rule). 

2

 Section 210(m) was added to PURPA by section 1253 of the Energy Policy Act 

of 2005 (EPAct 2005). See Pub. L. 109-58, 1253, 119 Stat. 594, 967 (2005). 

3

 The requirement that an electric utility enter into a new contract or obligation to 

purchase electric energy from QFs is referred to herein as either the mandatory purchase 

obligation or, more simply, the purchase requirement. 
Docket No. RM06-10-001 - 2 -

Commission finds that the QF has nondiscriminatory access to one of three categories of 

markets defined in section 210(m)(1)(A), (B), or (C) of PURPA, as amended. 

2. As relevant here, section 210(m) provides for the following: 

(i) Termination of the requirement that an electric utility enter into a new 

contract or obligation to purchase electric energy from a QF after certain 

specified findings are made by the Commission; 

(ii) Reinstatement of the purchase requirement upon a showing that the 

conditions for terminating the requirement are no longer met; 

(iii) Termination of the requirement that an electric utility enter into new 

contracts to sell electric energy to QFs after certain specified findings are 

made by the Commission; 

(iv) Reinstatement of the sale requirement upon a showing that the conditions 

for terminating the requirement are no longer met; and, 

(v) Preservation of existing contracts and obligations to purchase electric 

energy or capacity from, or to sell electric energy or capacity to, a QF. 

The Final Rule amended Part 292 of the Commission’s regulations, pertaining to electric 

utilities’ obligation to purchase electric energy from or sell electric energy to a QF, to 

address these provisions of section 210(m) and also to provide a process for applying for 

the reinstatement of the requirements to purchase electric energy from or to sell electric 

energy to QFs upon a showing that the conditions for the removal of those requirements 

are no longer met. 

3. New § 292.309 of the Commission’s regulations describes the findings that the 

Commission must make to justify relieving an electric utility’s obligation to enter into 

new QF purchase contracts. If the Commission finds that the QF has nondiscriminatory 

access to one of three types of wholesale markets described in subparagraphs (A), (B), 
Docket No. RM06-10-001 - 3 -

and (C) of section 210(m)(1), the requirement that the electric utility enter into new 

contracts or obligations is terminated. In the Final Rule, the Commission concluded that 

the four existing “Day 2” markets4

 satisfy the requirements of subparagraph (A). The 

Commission found that the “Day 1” markets5

 satisfy some, but not all, of the 

requirements of subparagraph (B). Finally, the Commission found that the markets 

operated by the Electric Reliability Council of Texas (ERCOT) satisfy the requirements 

of subparagraph (C). All of these markets are administered by regional transmission 

organizations (RTOs) or independent system operators (ISOs). 

4. With regard to analyzing whether a QF has nondiscriminatory access to one of these 

markets, the Commission adopted three rebuttable presumptions. First, the Final Rule 

concluded that the existence of an open access transmission tariff (OATT), or a 

reciprocity tariff filed by a non-public utility pursuant to the Commission’s open access 

regulations,6

 justified a rebuttable presumption that QFs have nondiscriminatory access to 

the markets in the transmission provider’s service territory. Second, the Commission 

adopted a rebuttable presumption that QFs located within one of the four existing “Day 

2” markets also have nondiscriminatory access to those markets. Third, the Commission 

 4

 The four existing “Day 2” markets are those auction based day-ahead and realtime markets operated by the Midwest Independent Transmission System Operator Corp. 

(MISO), PJM Interconnection, LLC (PJM), New York Independent System Operator, 

Inc. (NYISO), and ISO New England, Inc. (ISO-NE). 

5

 The existing “Day 1” markets are those real-time markets operated by the 

California Independent System Operator Corporation (CAISO) and the Southwest Power 

Pool (SPP). 

6

 18 CFR 35.28(e). An OATT provides interconnection as well as transmission 

services on a nondiscriminatory basis. 
Docket No. RM06-10-001 - 4 -

concluded that QFs with a net capacity no greater than 20 MW may not have 

nondiscriminatory access to any market, notwithstanding the availability of service under 

an OATT or their location within a “Day 2” market. The Commission therefore adopted 

a rebuttable presumption that such small QFs do not have nondiscriminatory access to 

any market. 

5. Requests for rehearing and/or clarification of these rulings, and the procedure 

implementing them, were received from the American Forest and Paper Association 

(American Forest & Paper) and California Cogeneration Council (CCC), Central 

Vermont Public Service Corporation (Central Vermont), Cogeneration Association of 

California and the Energy Producers and Users Coalition (Cogeneration Association of 

California ), the Council of Industrial Boiler Owners (CIBO), Deere & Company (Deere), 

Edison Electric Institute (EEI), Oklahoma Gas and Electric Company (OG&E), jointly 

from the Electricity Consumers Resource Council (ELCON), the American Iron and Steel 

Institute, the American Chemistry Council, and the Council of Industrial Boiler Owners 

(Industrial Parties), National Rural Electric Cooperative Association, (NRECA), 

Occidental Chemical Corporation (Occidental), PacifiCorp, and Public Interest 

Organizations (PIOs). Southern California Edison (SCE) and PJM Interconnection, Inc. 

(PJM) filed answers to the requests for rehearing. ELCON and Cogeneration Association 

of California filed answers those answers.7

 7

 Rule 713(d) of the Commission’s Rules of Practice and Procedure, 18 CFR 

383.713(d), provides that the Commission will not permit answers to requests for 

(continued...) 
Docket No. RM06-10-001 - 5 -

6. As discussed below, the Commission generally denies the requests for rehearing of 

the Final Rule. The Commission continues to believe that the Final Rule appropriately 

implements section 210(m) by identifying what type of markets satisfy the requirements 

of sections 210(m)(1)(A), (B), and (C) and the criteria that will be used to determine 

whether a QF has nondiscriminatory access to one of those markets. We therefore do not 

disturb the basic implementation structure established in that order. We do, however, 

grant clarification regarding certain specific matters. The Commission addresses each of 

these issues in turn. 

II. Discussion

A. Three Types of Markets

7. Section 210(m)(1) identifies three types of markets, nondiscriminatory access to 

which will satisfy the findings the Commission must make to terminate an electric 

utility’s purchase requirement. As the Commission explained in the Final Rule, the 

statutory language of sections 210(m)(1)(A), (B), and (C) requires us to differentiate 

among distinct types of markets when analyzing whether an electric utility will be 

relieved of its purchase obligation. The Commission must terminate the mandatory 

purchase obligation if we find that a QF has nondiscriminatory access to: 

 

rehearing. We will, accordingly, reject SCE and PJM’s answers to the requests for 

rehearing. Rule 213(a)(2) of the Commission’s Rules of Practice and Procedure, 18 CFR 

385.213(a)(2), prohibits an answer to an answer unless otherwise ordered by the 

decisional authority. We are not persuaded to accept the answers of ELCON and 

Cogeneration Association of California and will, therefore, reject them. The alternative 

motions to reject of ELCON and Cogeneration Association of California are rejected as 

moot. 
Docket No. RM06-10-001 - 6 -

(A) “independently administered, auction-based day ahead and real time 

wholesale markets for the sale of electric energy” and “wholesale markets 

for long-term sales of capacity and electric energy”; 

(B) “transmission and interconnection services that are provided by a 

Commission-approved regional transmission entity and administered 

pursuant to an open access transmission tariff that affords 

nondiscriminatory treatment to all customers” and “competitive wholesale 

markets that provide a meaningful opportunity to sell capacity, including 

long-term and short-term sales, and electric energy, including long-term, 

short-term and real-time sales, to buyers other than the utility to which the 

[QF] is interconnected”;8

 or, 

(C) “wholesale markets for the sale of capacity and electric energy that are, at a 

minimum, of comparable competitive quality as markets described in 

subparagraphs (A) and (B).” 

8. In the Final Rule, the Commission considered the specific criteria set forth in these 

statutory provisions and concluded that certain markets in the United States satisfied 

some or all of the requirements of each. The Commission rejected proposals to adopt a 

single standard for relief, which in effect would interpret sections 210(m)(1)(A), (B), and 

(C) as collectively defining a single type of market, access to which would require 

termination of the purchase requirement. The Commission found that the most 

reasonable interpretation of section 210(m)(1) is that Congress, in separately describing 

three different types of markets, was requiring the Commission to differentiate among 

each type of market when determining whether to terminate the purchase requirement. 

 8

 In determining whether a meaningful opportunity to sell exists, section 

210(m)(1)(B) directs the Commission to consider, among other factors, evidence of 

transactions within the relevant market. 
Docket No. RM06-10-001 - 7 -

 1. Section 210(m)(1)(A)

9. Section 210(m)(1)(A) of PURPA requires the Commission to terminate an electric 

utility’s obligation to purchase from a QF if the QF has nondiscriminatory access to 

(i) independently administered, auction-based, day ahead and real time wholesale markets 

for the sale of electric energy; and (ii) wholesale markets for long-term sales of capacity 

and electric energy. In the Final Rule, the Commission found that the four existing “Day 

2” markets, MISO, PJM, ISO-NE and NYISO, satisfy the first prong of section 

210(m)(1)(A) because the markets administered by these RTO/ISOs are, as required by 

the statute, independently administered, auction-based day ahead and real time wholesale 

markets for electricity.9

 The Commission further found that the existence of bilateral 

long-term contracts for long-term sales of capacity and energy in these markets satisfies 

the second prong of section 210(m)(1)(A). Since both of these requirements are 

satisfied, the Commission concluded that a showing of nondiscriminatory access to any 

of these “Day 2” markets would terminate the purchase requirement. 

Requests for Rehearing

10. No petitioner challenges the Commission’s determination that the existing “Day 

2” RTO/ISO markets satisfy the requirements of the first prong of section 210(m)(1)(A), 

i.e., that they are independently administered, auction-based day ahead and real time 

 9

 The Commission stated that any future determinations of whether a new “Day 2” 

market satisfies the requirements of section 210(m)(1)(A) would be considered on a caseby-case basis, either in response to an application for termination of the mandatory 

purchase obligation or a petition for declaratory order. 
Docket No. RM06-10-001 - 8 -

wholesale electricity markets. Requests for rehearing instead focus on the second prong, 

regarding whether a wholesale market for long-term sales of capacity and electric energy 

also exists in these regions. PIOs argue that the mere existence of some bilateral longterm contracts does not demonstrate the existence of a competitive wholesale market for 

long-term sales or actual “meaningful opportunities” for QFs to sell energy or capacity 

long-term to multiple buyers. PIOs therefore contend that the Commission erred in 

finding that the “Day 2” markets satisfy the requirements of section 210(m)(1)(A). 

Cogeneration Association of California agrees that the existence of a “Day 2” market 

does not equate to a long-term market, arguing that access to a long-term market is 

essential to provide the assurance of long-term revenue necessary to provide incentives 

for construction of new resources. 

11. American Forest & Paper and CCC argue that there has never been a time in the 

history of the power industry when some bilateral contracts did not exist. They contend 

that there is no evidentiary basis that shows such contracts are available to QFs on a 

nondiscriminatory basis or that there is a market for such contracts. They argue that the 

word “market” presumes more than an occasional, isolated transaction. American Forest 

& Paper and CCC argue that in the Final Rule the Commission not only fails to explain 

why the existence of bilateral contracts constitutes a meaningful competitive market, but 

also fails to establish any standard for what constitutes a “long term sale,” examine any of 

the bilateral contracts it believes exist to determine if they meet any such standard, or 

consider whether bilateral contracts are in fact available to QFs in any meaningful sense. 
Docket No. RM06-10-001 - 9 -

12. Cogeneration Association of California adds that the insufficiency of the bilateral 

markets is also demonstrated by the lack of meaningful participation in utility requests 

for offers. Cogeneration Association of California argues that the current practice of 

bilateral contracting is not indicative of a competitive market, nor is it proof that QFs 

have a meaningful opportunity to participate in whatever markets are there. It argues that 

there is significant discrimination against QFs when they attempt to enter into bilateral 

contracts. 

13. American Forest & Paper and CCC also argue that the Final Rule errs as a matter 

of law by determining generically that “Day 2” markets satisfy section 210(m)(1)(A) 

rather than requiring utilities to demonstrate, on a case-by-case basis, the factual basis 

upon which relief is requested, which they argue is required by section 210(m)(3). 

American Forest & Paper and CCC contend that the Commission simply presumed 

adequate wholesale markets existed in the “Day 2” markets, rendering the language of 

section 210(m)(1)(A)(ii) of the statute a nullity by not requiring applicants to set forth the 

factual basis on which relief is requested. American Forest & Paper and CCC complain 

that QFs have been denied the opportunity to challenge the specific findings after 

sufficient notice of the factual claims being made. 

14. American Forest & Paper and CCC cite Alliant Energy Corporate Services Inc.10

as support for its belief that section 210(m)(3) requires notice to each affected QF prior to 

 

10 113 FERC ¶ 61,024 (2005). 
Docket No. RM06-10-001 - 10 -

the Commission making a determination under section 210(m)(1). American Forest & 

Paper and CCC compare the Commission’s generic treatment of “Day 2” markets with its 

case-by-case procedures for the reinstatement of the obligation, despite the almost 

identical statutory language in sections 210(m)(3) and 210(m)(4). American Forest & 

Paper argues that “regulations cannot alter the statutory scheme,”11 stating that the 

procedural requirements have been inappropriately interpreted away in the Final Rule. 

15. In American Forest & Paper and CCC’s view, Congressional intent to encourage 

QF development supports interpreting section 210(m)(1)(A)(ii) as requiring the 

Commission to find, based on specific evidence, that there is a meaningfully competitive 

market prior to terminating the mandatory purchase obligation. American Forest & Paper 

and CCC note, for example, that EPAct 2005 did not repeal PURPA and provided for 

termination of the purchase requirement only if a very particular demonstration is made. 

16. Industrial Parties similarly argue that the Commission erred in categorically 

finding that “Day 2” markets provide QFs with access to long-term wholesale markets. 

Industrial Parties contend that the Commission has ignored evidence that establishes that 

these markets are in their infancy. While acknowledging that suppliers will offer QFs a 

bilateral contract in the organized markets, Industrial Parties argue that the rates and 

terms and conditions of such contracts typically are not truly long-term and are 

discriminatory. Industrial Parties state that the long-term markets that exist are 

 11 American Forest & Paper Request for Rehearing at 13 (citing P. Gioso & Sons, 

Inc. v. Occupational Safety and Health Review Commission, 115 F.3d 100, 105 (1st Cir. 

1997)). 
Docket No. RM06-10-001 - 11 -

predominantly for resale – generators selling to load serving entities that in many cases 

have divested generation – and that these contracts are typically for a period of 6 to 18 

months. 

17. Industrial Parties also argue that the Commission incorrectly assumed that access 

to short-term “Day 2” markets is equivalent to a finding of access to long-term markets 

under section 210(m)(1)(A)(ii). Industrial Parties contend that the Commission must 

address the definition of “long-term,” arguing that the Commission appears to view a 

market in excess of one year as long-term. Industrial Parties contend that a long-term 

market is a market of several years’ duration or at least the timeframe for planning a new 

generator, which they state is three to five years for a gas-fired combined cycle unit. 

Industrial Parties ask that the Commission require utility applicants to present 

information on the short- and long-term capacity obligations of load-serving entities in 

the relevant markets, their practices for meeting such obligations, and any barriers to 

entry into such markets. 

18. Finally, American Forest & Paper and CCC argue that the Commission’s 

interpretation of section 210(m)(1)(A)(ii) violates rules of statutory construction. 

Because subparagraph (C) specifically refers to markets for the sale of capacity under 

both subparagraphs (A) and (B), defining a third type of market that is “similar” to 

subparagraphs (A) and (B), American Forest & Paper and CCC argue it is nonsensical to 

conclude that the markets for capacity referenced in subparagraphs (A)(ii) and (B)(ii) are 

not similar as between themselves. American Forest & Paper and CCC therefore argue 
Docket No. RM06-10-001 - 12 -

that the Commission erred by not interpreting subparagraph (A)(ii) as imposing 

qualitative requirements comparable to those imposed under subparagraph (B)(ii). In 

American Forest & Paper and CCC’s view, otherwise the inclusion of a requirement that 

the Commission review specific “evidence of transactions” in subparagraph (B)(ii) would 

require the Commission to ignore evidence of transactions when applying subparagraph 

(A)(ii), which the Commission did not do in the Final Rule. 

Commission Determination

19. The Commission denies rehearing of the determination that the four existing “Day 

2” markets (MISO, PJM, NYISO, and ISO-NE) satisfy the requirements of the second 

prong of section 210(m)(1)(A). Petitioners on rehearing essentially argue that the 

Commission should have imposed a standard higher than what the statutory language 

literally requires, i.e., nondiscriminatory access to “wholesale markets for long-term sales 

of capacity and electric energy.” The Commission declined to do so in the Final Rule 

and we affirm that determination here. 

20. The Commission did not simply assume the existence of long-term markets in the 

“Day 2” markets, as some petitioners argue. Rather, the Commission found that the 

existence of bilateral long-term contracts for long-term sales of capacity and energy is a 

sufficient indication of a market. The Commission continued that it is reasonable to 

conclude that the subparagraph (A)(ii) requirement for long-term markets is met because 

bilateral long-term contracts are available to participants in the footprints of the MISO, 

PJM, ISO-NE, and NYISO. The Commission noted that long-term contracts were to be 
Docket No. RM06-10-001 - 13 -

expected in these markets because of the nature of these markets. In this regard, the 

transmission access offered by RTOs allows suppliers (including QFs) the opportunity to 

enter into long-term bilateral contracts. RTOs have no incentive to favor one set of 

suppliers over others in providing transmission access. By eliminating pancaked rates, 

eliminating problems with internal loop flows, and improving the reliability of 

transmission operations over a broad multi-utility region, an RTO offers regional 

transmission service which facilitates longer-term contracting practices. This is because 

an RTO’s footprint encompasses many different wholesale buyers, providing significant 

opportunity for a seller to reach many potential wholesale buyers. 

21. In addition, organized markets operated by an RTO facilitate long-term bilateral 

contracts between sellers (including QFs) and wholesale buyers by reducing the costs to 

sellers of making long-term bilateral supply commitments. In the event a seller is unable 

to produce the energy required under a bilateral contract (for example, because of an 

outage), the seller can easily acquire replacement energy from the organized market at a 

transparent and competitive price. Even when the seller is physically capable of 

producing its contractually-required energy, the seller can acquire the energy from the 

RTO’s market whenever it is cheaper to do so. Both of these factors reduce the cost to a 

seller of entering into a long-term bilateral contract.12

 12 Final Rule at P 120. 
Docket No. RM06-10-001 - 14 -

22. With respect to bilateral long-term markets in these RTO/ISOs, the Commission 

noted that no commenters argued that long-term contracts do not exist in these markets or 

that QFs are precluded from entering into them with willing buyers13 The Commission 

also pointed out that electronic quarterly report (EQR) filings indicate that there are in 

fact contracts for long-term sales of capacity and energy in each of the “Day 2” markets. 

The Commission concluded that the existence of these long-term contracts is a sufficient 

indication that long-term wholesale markets exist in those regions. It is telling that no 

petitioner on rehearing challenges (indeed, several petitioners concede) that long-term 

contracts exist in the “Day 2” markets. Instead, petitioners argue that existence of such 

contracts does not necessarily indicate that an adequate market for long-term energy and 

capacity exists. Yet the very fact that buyers and sellers of long-term energy and capacity 

have found each other, evidenced by the contracts they have entered into, demonstrates 

that a market for such products does in fact exist, which is all that the statute requires. 

23. The thrust of many of the arguments on rehearing is that the Commission should 

have considered whether these long-term markets were competitive or as robust as QFs 

would like. That is not the standard set forth by Congress in section 210(m)(1)(A)(ii), 

which requires only that a long-term market is present, not that it be competitive or that it 

meet the subjective preferences of all QFs. As the Commission noted in the Final Rule, 

Congress knew how to impose a more specific level of review regarding the quality of 

 13 Final Rule at P 117-20. 
Docket No. RM06-10-001 - 15 -

the relevant long-term market since, in contrast to the language it used in section 

210(m)(1)(A)(ii), it expressly used prescriptive language in section 210(m)(1)(B)(ii). 

24. Section 210(m)(1)(A)(ii) requires only that we find access to “wholesale markets 

for long-term sales of capacity and electric energy.” The term “market” is not defined 

with respect to any particular number of purchasers or sellers or the quality of the 

contracts available. One definition is “the action or business of buying and selling; an 

instance of this, a commercial transaction; a (good or bad) bargain.”14 Another definition 

is “a meeting together of people for the purpose of trade by private purchase and sales 

and usually not by auction.”15 These standard definitions support the Commission’s 

finding that the ability of QF sellers to reach purchasers and the existence of long-term 

contracts for capacity and energy are sufficient to determine that “markets” exist for 

purposes of section 210(m)(1)(A)(ii). In contrast to section 210(m)(1)(A)(ii), section 

210(m)(1)(B)(ii) requires us to find access to “competitive wholesale markets that 

provide a meaningful opportunity to sell capacity, including long-term and short-term 

sales, and electric energy, including long-term, short term and real-time sales.” Under 

this statutory directive, the Commission must not only find that markets exist, but it must 

assess the quality of the markets and find that they are “competitive.” Congress chose 

not to require a finding of “competitive” long-term markets as a condition of invoking 

 14 The New Oxford English Dictionary Vol. 1 A-M (1993 ed.). 

15 Webster’s New Collegiate Dictionary (1979 ed.). 
Docket No. RM06-10-001 - 16 -

section 210(m)(1)(A)(ii) and we have given reasonable meaning to this difference in 

language.16 

25. Congress’s decision to establish different standards in subparagraphs (A) and (B) 

makes sense in light of the ultimate question of whether a QF has nondiscriminatory 

access to potential purchasers other than the host utility, sufficient to justify terminating 

the purchase requirement, which is the overarching theme of section 210(m)(1). In the 

“Day 2” markets, which were in existence when EPAct 2005 was enacted and of which 

Congress was aware when it was considering PURPA reform, energy sold under bilateral 

long-term contracts as well as in the competitive day-ahead and real-time energy markets 

is simply scheduled as a delivery to the RTO and ISO grid. These market conditions 

make it possible for parties to enter into long-term contracts with confidence that electric 

energy sold pursuant to these contracts will be delivered. It is reasonable to conclude, 

therefore, that Congress considered the criteria specified for long-term contracts in 

section 210(m)(1)(B) unnecessary for section 210(m)(1)(A). This explains the 

distinctions embedded in the standards set forth in sections 210(m)(1)(A) and 

210(m)(1)(B). 

 16 Some petitioners argue that the Commission’s reliance on EQR reports to find 

the existence of a long-term market in “Day 2” regions is contradicted by Congress’ 

reference to “evidence of transactions” in section 210(m)(1)(B), but not in section 

210(m)(1)(A). The requirement in subparagraph (B) for evidence of transactions does 

not bar the use of such evidence in subparagraph (A), but merely indicates that such 

evidence is not required under subparagraph (A). 
Docket No. RM06-10-001 - 17 -

26. It is true, as petitioners point out, that in some “Day 2” markets there is no 

formalized market for long-term sales of energy and capacity. It may also be true that 

such long-term markets are nascent and that the sales that do occur are predominantly to 

load serving entities for resale. All that is required by section 210(m)(1)(A)(ii), however, 

is that there be a market, not that it has particular market attributes desired by petitioners. 

Petitioners have offered no reasonable alternative to our interpretation of section 

210(m)(1). 

27. Petitioners are correct to point out that the Commission did not expressly define 

what length of contract it considered “long-term” within the meaning of section 

210(m)(1)(A)(ii). The Commission explained, however, that it was relying on EQR data 

to find that long-term contracts existed in the “Day 2” markets. Long-term contracts are 

defined for EQR purposes as having a term of one year or more and, thus, the 

Commission’s findings regarding long-term contracts in the Final Rule incorporated that 

definition. While some petitioners argue that a longer-term should have been used, we 

continue to believe that contracts of a year or more are sufficiently long-term to meet the 

statutory requirement that there be “wholesale markets for long-term sales of capacity 

and energy” within the meaning of section 210(m)(1)(A)(ii).17

 17 Although the statute contrasts real-time, day-ahead, and long-term wholesale 

sales, it provides no definition of those categories of transactions. Nevertheless, the 

terms real-time and day-ahead markets were well known with respect to ISOs and RTOs 

at the time EPAct 2005 was enacted and definitions of these markets were well 

understood, i.e., Congress knew the meaning the terms as used with respect to ISOs and 

RTOs existing at the time of enactment of EPAct 2005. Additionally, the Commission at 

(continued...) 
Docket No. RM06-10-001 - 18 -

28. We note that the Commission has initiated a proceeding to explore ways to 

improve the operation of wholesale organized electric markets administered by RTOs and 

ISOs, including actions the Commission might take to further improve opportunities for 

long-term contracting in RTO and ISO regions.18 While we disagree with petitioners 

who argue that QFs above 20 MW do not have access to long-term contracting 

opportunities in organized markets, or that section 210(m)(1)(A) requires us to find 

“competitive” or “robust” contracting opportunities, we are taking steps to facilitate 

additional opportunities for long-term contracting. 

29. The Commission also rejects arguments that it may not make generic findings in 

this rulemaking as to the “Day 2” markets satisfying the requirements of section 

210(m)(1)(A). The Commission has broad discretion to adopt generic policy or make 

generic findings through the rulemaking process rather than case-by-case adjudications.19 

Establishing generic findings in this rulemaking provides all parties, including electric 

 

the time of enactment of EPAct 2005 had for years defined long-term contracts under the 

OATT as one year or longer. Similarly, the Commission has treated power sales with a 

contract term of greater than one year to be “long-term” for reporting purposes. See, e.g., 

Revised Public Utility Filing Requirements, Order No. 2001, 67 FR 31043, FERC Stats. 

& Regs. ¶ 31,127 (2002), Order No. 2001-A, 100 FERC ¶ 61,074, reconsideration and 

clarification denied, Order No. 2001-B, 100 FERC ¶ 61,342 (2002). We thus believe it is 

reasonable to use the convention of treating contracts of a year or more as “long-term” 

consistent with our longstanding practice. 

18 Wholesale Competition in Regions with Organized Electric Markets, 119 FERC 

¶ 61,306. 

19 Securities and Exchange Comm’n v. Chenery, 332 U.S. 194, 202-03, reh’g 

denied, 332 U.S. 747 (1947). 
Docket No. RM06-10-001 - 19 -

utilities and QFs alike, a reasonable chance to be heard on common issues that arise in 

various market structures and involving classes of QFs. Indeed, no party has sought 

rehearing of the Commission’s conclusion that the “Day 2” markets satisfy the first prong 

of section 210(m)(1)(A). It is just as appropriate for the Commission to find generically, 

in this rulemaking, that long-term markets exist in the “Day 2” RTO/ISOs as it is to find 

that those RTO/ISOs operate independently administered, auction-based day ahead and 

real time wholesale markets within the meaning of section 210(m)(1)(A)(i). 

30. These generic findings do not violate the requirements of section 210(m)(3), as 

some petitioners argue. Under section 210(m)(1), the Commission must terminate the 

purchase requirement if it makes certain findings regarding nondiscriminatory access to 

specified markets. That provision of the statute does not specify the particular procedural 

mechanism the Commission must use in making those findings and, thus, the 

Commission has discretion to act through a rulemaking, case-by-case determinations, or 

some combination thereof. Section 210(m)(3) does not, as the petitioners appear to 

assume, require the Commission to await an application from an electric utility in order 

to make any of the particular findings specified in section 210(m)(1). While the 

Commission made certain generic findings in the Final Rule, it also required electric 

utilities (including those in the “Day 2” markets) that seek relief from the obligation to 

enter into new contracts or obligations with QFs to file an application pursuant to 
Docket No. RM06-10-001 - 20 -

regulations implementing section 210(m)(3).20 Thus, the Commission has incorporated 

the application process into its implementing regulations, combining the application 

procedures with generic findings and rebuttable presumptions to streamline the 

Commission’s review. The resulting structure is fully consistent with the requirements of 

both sections 210(m)(1) and 210(m)(3).21 

 2. Section 210(m)(1)(B)

31. Section 210(m)(1)(B) requires termination of the purchase obligation if a QF has 

nondiscriminatory access to (i) transmission and interconnection services provided by a 

Commission-approved regional transmission entity pursuant to an open access tariff and 

(ii) competitive wholesale markets providing a meaningful opportunity to sell long-term 

and short-term capacity and electricity to buyers other than the interconnecting electric 

utility. The Commission concluded in the Final Rule that the CAISO and SPP are 

regional transmission entities within the meaning of the first prong of section 

210(m)(1)(B), but made no findings as to the second prong for any market, including 

those operated by CAISO and SPP. The Commission also stated that any future 

determinations of what transmission providers qualify as a regional transmission entity 

within the meaning of the first prong will be made on a case-by-case basis. The 

 20 Final Rule at P 102. 

21 The comparative structures of sections 210(m)(3) and 210(m)(4) do not support 

a different outcome. Section 210(m)(4) specifies the procedural requirements for 

reinstating the purchase requirement after the Commission has entered an order 

terminating that requirement and, thus, does not govern the Commission’s initial 

procedures for acting to terminate the requirement. 
Docket No. RM06-10-001 - 21 -

Commission provided examples of factors it may consider in making that determination, 

such as sufficient regional scope or configuration of the multiple discrete transmission 

systems the regional transmission entity controls.

Requests for Rehearing 

32. Occidental argues that the Commission erred in reserving the discretion to deem 

an entity a “Commission-approved regional transmission entity” in the context of a 

section 210(m) proceeding. Because section 210(m)(1)(B)(i) refers to a “Commissionapproved” entity, Occidental argues that a transmission provider must have been deemed 

by the Commission to be a “regional transmission entity” prior to the filing of an 

application for relief from the purchase requirement.

33. PacifiCorp argues that evidence of robust bilateral markets or actual sales by a QF 

to wholesale non-PURPA purchasers should be considered when the Commission 

determines whether QFs have the requisite “meaningful opportunity” to sell capacity and 

energy to other buyers within the meaning of section 210(m)(1)(B)(ii). PacifiCorp offers 

factual examples of QF plans to participate in wholesale markets, depending on market 

prices, although it acknowledges that the examples it used are extreme and did not 

materialize. PacifiCorp asks the Commission to establish a rebuttable presumption that 

evidence of a robust bilateral market featuring liquid trading points, or actual sales by 

QFs, should be adopted for purposes of implementing section 210(m)(1)(B)(ii). 

Alternatively, PacifiCorp asks the Commission to provide further guidance as to how the 

standards of that section will be applied.
Docket No. RM06-10-001 - 22 -

34. With regard to the SPP market, OG&E argues that the Commission erred in 

declining to find that utilities operating in SPP also satisfy the second prong of section 

210(m)(1)(B) or to provide guidance with respect to the information required for utilities 

to make such a showing. OG&E argues that its comments on the NOPR adequately 

demonstrated that QFs have nondiscriminatory access to competitive markets within SPP. 

If the evidence it submitted was insufficient, OG&E claims the Commission erred by 

failing to provide guidance as to what type of information would satisfy the 

Commission’s requirements. OG&E contends that such guidance would reduce the costs 

and burdens associated with preparing an application under section 210(m). 

35. With regard to the CAISO market, Cogeneration Association of California argues 

that the lack of new construction in California, despite a clear supply shortage, is 

evidence that competitive long-term markets do not exist in that region. Cogeneration 

Association of California also argues that competitive markets must have price 

transparency, including both pricing terms and non-price terms, contending that there is 

virtually no disclosure to any market participant of prices secured or approved for 

capacity or energy purchased by utilities. Industrial Parties point to other characteristics 

of the California market that, in their view, would preclude a finding of access to 

sufficiently competitive markets, such as exit fees, the lack of direct access, and the 

dominance of utility generation in an otherwise thinly traded market.
Docket No. RM06-10-001 - 23 -

Commission Determination

36. We disagree with Occidental’s assertion that a transmission entity must have been 

deemed by the Commission to be a “regional transmission entity” prior to the filing of an 

application for relief from the purchase requirement. As we explained in the Final Rule, 

section 210 does not define regional transmission entity and, therefore, the Commission 

has discretion in interpreting that term. At the time of enactment of section 210(m), 

Congress was aware of the existence of Commission-approved RTOs and ISOs with 

varying degrees of regional scope (some spanning many states and some covering only 

large individual states), as well as the continuing voluntary development of various types 

of transmission organizations.22 It is reasonable to conclude that Congress, by using the 

generic term “regional transmission entity” in section 210(m)(1)(B)(i), intended to leave 

it to the Commission’s discretion to determine on a case-be-case basis whether or not an 

entity is regional within the meaning of the statute.23 

 22 Indeed Congress, in EPAct 2005 incorporated into the Federal Power Act (FPA) 

definitions of RTO and ISO, with the RTO definition specifically recognizing that such 

an entity must be of sufficient “regional” scope, whereas the ISO definition does not 

contain a sufficient regional scope element. Pub. L. 109-58, 1291, 119 Stat. 594, 984 

(2005) (codified at 16 USC 796(27), (28)). Cf. Pub. L. 109-58, 1286, 119 Stat. 594, 981 

(2005) (adding section 206(a)(2) to the FPA, allowing Commission to order refunds for 

certain sales in “organized” markets). 

23 Congress in section 210(m) did not use the term “regional transmission 

organization” and thus presumably did not intend to limit a “regional transmission entity” 

to the regional scope requirements of Order No. 2000. Regional Transmission 

Organizations, Order No. 2000, 65 FR 809 (Jan. 6, 2000), FERC Stats. & Regs. ¶ 31,089 

(continued...) 
Docket No. RM06-10-001 - 24 -

37. We also deny rehearing of the decision not to find in the context of this 

rulemaking that the SPP market satisfies the second prong of section 210(m)(1)(B). 

While OG&E claims to have provided in its initial comments evidence demonstrating the 

quality of the SPP market, 24 what OG&E provided was little more than cursory 

comments and a description of bidding procedures that are being adopted in Oklahoma. 

Section 210(m)(1)(B)(ii) requires a showing of “competitive wholesale markets that 

provide a meaningful opportunity to sell capacity, including long-term and short-term 

sales, and electric energy, including long-term, short-term and real-time sales, to buyers 

other than the utility to which the qualifying facility is interconnected.” This provision 

also provides that “[i]n determining whether a meaningful opportunity to sell exists the 

Commission shall consider, among other factors, evidence of transactions within the 

relevant market.” We do not find OG&E’s cursory submission sufficient to meet the 

statutory requirements. Moreover OG&E did not include any evidence of transactions in 

the SPP market. There was, and continues to be, an insufficient record in this proceeding 

to find that the SPP market satisfies the second prong of section 210(m)(1)(B). 

38. With regard to OG&E’s and PacifiCorp’s requests for further guidance, we believe 

that the statutory language requiring that a QF have a meaningful opportunity to sell 

capacity and energy to buyers other than the interconnected utility means an actual, and 

 

(1999), order on reh'g, Order No. 2000-A, 65 FR 12088 (Mar. 8, 2000), FERC Stats. & 

Regs. ¶ 31,092 (2000), dismissed sub nom. Pub. Util. Dist. No. 1 of Snohomish County, 

Washington v. FERC, 272 F.3d 607 (D.C. Cir. 2001). 

 

24 OG&E Comments at 4-6. 
Docket No. RM06-10-001 - 25 -

not just theoretical, opportunity. Concrete evidence of transactions would further that 

finding, as the statutory language implies. To the extent such evidence is not available, 

we would expect at a minimum a petitioning electric utility to explain any lack of 

evidence of transactions and to provide a reasoned explanation of how the Commission 

could find that a meaningful opportunity to sell to buyers other than the interconnected 

utility exists in the absence of a history of transactions.25 PacifiCorp’s evidence of QF 

proposals that never reached fruition does not provide an adequate basis for the 

Commission to make any presumptions regarding whether particular markets satisfy the 

requirements of section 210(m)(1)(B)(ii). We continue to believe that it is best to address 

on a case-by-case basis whether non-RTO/ISOs and RTO/ISOs that do not have both 

auction-based real-time and day-ahead markets satisfy those statutory requirements.26 

39. The claims of Cogeneration Association of California and the Industrial Parties 

regarding the lack of a sufficiently competitive market in California can be addressed in 

any individual cases concerning California. We note that the CAISO has been found 

only to satisfy section 210(m)(1)(B)(i) and that a separate finding of “competitive 

wholesale markets” is required under section 210(m)(1)(B)(ii). Thus, if a California 

utility makes a filing pursuant to section 210(m)(3) and § 292.310 of the Commission’s 

 25 The Commission is aware that certain types of evidence of transactions may 

contain information that an electric utility considers to be confidential. If information is 

considered confidential by the electric utility, procedures exist to maintain its 

confidentiality. 

26 Final Rule at P 145. 
Docket No. RM06-10-001 - 26 -

regulations, and claims that it satisfies the section 210(m)(1)(B) criteria for relief from 

the purchase obligation, the issue of whether “competitive wholesale markets” exist will 

be an issue in that proceeding and the burden will be on the applicant to make the 

required demonstration.27

 3. A Single Standard of Relief

40. As explained above, the Commission concluded in the Final Rule that the most 

reasonable interpretation of section 210(m)(1) is that Congress, in setting forth three 

discrete tests for three different types of markets, was directing the Commission to 

differentiate among three different markets, access to which would require termination of 

the purchase requirement provided such access is available on a nondiscriminatory basis. 

A number of petitioners had advocated a different interpretation of section 210(m)(1), 

arguing that subparagraphs (A), (B), and (C), when read together, establish a single 

standard for relief from the purchase requirement. In their view, these separate 

provisions together require electric utilities to demonstrate that a QF would remain 

economically viable or would otherwise have access to the technical equivalent of the 

purchase requirement in order to terminate the purchase requirement. The Commission 

rejected that view by interpreting section 210(m)(1) as establishing different standards for 

each of the three types of markets identified in subparagraphs (A), (B), and (C). 

 27 The Commission also left open the option of California utilities seeking a 

determination that the California market satisfies section 210(m)(1)(A) by filing requests 

for declaratory orders, after there is a functioning “Day 2” RTO/ISO in California. Final 

Rule at P 157. 
Docket No. RM06-10-001 - 27 -

Requests for Rehearing

41. American Forest & Paper and CCC again challenge the Commission’s 

determination that the three standards of relief described in section 210(m)(1) were 

intended to be different in terms of the organization and competitiveness of the relevant 

market or the evidentiary showings required for each. They argue that EPAct 2005 did 

not repeal PURPA or the Commission’s obligation to encourage QF development and, 

therefore, the Commission’s interpretation of section 210(m)(1) is unreasonable. 

American Forest & Paper and CCC suggest that section 210(m)(1)(C) clearly requires 

markets under subparagraphs (A), (B) and (C) to be of similar competitive quality since 

markets that satisfy subparagraph (C) must be “similar” to those described in 

subparagraphs (A) and (B). American Forest & Paper and CCC conclude that the 

Commission has adopted an unreasonable statutory construction by interpreting section 

210(m)(1) as referring to three distinct types of markets. 

Commission Determination

42. The Commission denies requests for rehearing of the determination not to adopt a 

single test to evaluate whether the requirements of section 210(m)(1) are met. We 

continue to believe, as we found in the Final Rule, that the most reasonable interpretation 

of section 210(m)(1) is that Congress, in setting forth discrete tests for three different 

types of markets, was requiring the Commission to differentiate among these markets and 

the differing circumstances they present in determining whether a utility is relieved of the 

purchase requirement. As discussed above, this interpretation is supported by the 
Docket No. RM06-10-001 - 28 -

different language Congress used in subparagraphs (A) and (B) and the consequent need 

to make meaningful distinctions in the explicit statutory language Congress used. 

Otherwise, subparagraphs (A) and (B) presumably would have been collapsed by 

Congress into one test. 

43. We agree the reference in section 210(m)(1)(C) to markets that are of “comparable 

competitive quality as markets described in subparagraphs (A) and (B)” indicates 

Congress’ belief that those two types of markets share a certain set of competitive 

qualities. It does not follow, however, that the Commission should disregard the specific 

statutory tests in each of those subparagraphs when applying section 210(m)(1). The 

structure of section 210(m)(1), which separately describes different types of markets, 

makes clear that Congress was establishing a particular set of tests for the Commission to 

apply. In the Final Rule, the Commission adopted the most reasonable interpretation of 

subparagraph (C) – that Congress believed the two types of markets identified in 

subparagraphs (A) and (B), while distinct between themselves, contain certain 

competitive qualities that justify termination of the purchase requirement for any QF with 

nondiscriminatory access to those markets. Subparagraph (C) directs the Commission to 

consider these competitive qualities when analyzing whether there are other markets that, 

while not meeting the specific requirements of subparagraphs (A) and (B), are 

sufficiently competitive to justify termination of the purchase requirement. 

44. The fact that the markets identified in subparagraphs (A) and (B) contain certain 

competitive qualities does not mean that they are the same type of market, or that a single 
Docket No. RM06-10-001 - 29 -

test must be adopted for determining whether a particular market satisfies the 

requirements of a particular subparagraph. Such an interpretation would undermine 

Congress’s decision to separately identify the two types of markets that it believes are 

sufficiently competitive to justify termination of the purchase requirement. It would also 

conflict with the particular determinations to be made under each of the subparagraphs. 

Subparagraph (A) explicitly refers to both “day ahead and real time" (i.e., ”Day 2”) 

organized markets. RTO/ISO day-ahead and real time markets are operated pursuant to 

Commission tariffs containing market rules and market mitigation aimed at preventing 

exercises of market power. It is reasonable to conclude that Congress assumed these 

markets to be sufficiently competitive, in combination with markets for long-term 

contracts, to justify termination of the mandatory purchase obligation. 

45. As we noted in the Final Rule, “Day 2” markets are generally recognized as 

providing greater opportunities for QFs and other independent generators to make sales to 

a large number of buyers than other markets because the existence of day-ahead and realtime energy markets allows all competing generators to submit bids to participate on a 

nondiscriminatory basis in a market from which many buyers over a large area make 

purchases. While the “Day 1” markets also provide opportunities for independent 

generators to compete, the markets are more limited. It is therefore not surprising that the 

factual showing required under section 210(m)(1)(B) is more difficult relative to section 

210(m)(1)(A), which enjoys the benefit of the “Day 2” market structures. These different 

standards support, rather than undermine, the Commission’s interpretation that 
Docket No. RM06-10-001 - 30 -

subparagraphs (A) and (B) separately identify the particular markets that Congress has 

deemed sufficiently competitive to justify termination of the purchase requirement. 

46. The Commission’s task under section 210(m)(1)(C) is, therefore, to determine the 

set of competitive qualities that are shared by markets satisfying the requirements of 

subparagraphs (A) and (B). Recognizing this task, the Commission declined in the Final 

Rule to adopt any bright line tests when applying subparagraph (C). Simply put, the 

common objective of subparagraphs (A) and (B), and therefore subparagraph (C), is the 

identification of a wholesale marketplace where QFs have alternatives to their local 

utility to sell their electric energy. We believe the three-tiered structure of section 

210(m)(1) indicates a finding by Congress that two particular market designs provide 

those alternatives, while directing the Commission to consider whether other market 

designs might as well. 

47. Congress could have stated a broad, general finding to be made by the 

Commission such as “workably competitive markets.” Instead, Congress tailored 

subparagraphs (A) and (B) to establish criteria specific to each market design that, in its 

view, provide sufficient sales alternatives for QFs. Under these circumstances, we 

believe it appropriate to use the market designs identified in subparagraphs (A) and (B) as 

guides when analyzing whether an alternative market design satisfies the requirements of 

subparagraph (C). For example, the Commission found in the Final Rule that the markets 

in ERCOT satisfy the statutory requirements of subparagraph (C) because they are of 
Docket No. RM06-10-001 - 31 -

comparable quality to those described in subparagraph (A). We continue to believe that 

finding is appropriate and note that no petitioner challenges it on rehearing. 

48. Finally, while it is true that EPAct 2005 did not repeal PURPA or the 

Commission’s obligation to encourage QF development, enactment of section 210(m) of 

PURPA clearly changed the rights of QFs under PURPA. The Commission has no 

discretion other than to terminate the purchase requirement if it finds that a QF has 

nondiscriminatory access to any of the markets described in section 210(m)(1)(A), (B) or 

(C). It would be inappropriate for the Commission to ignore this mandate by 

implementing section 210(m)(1) in a way that undermines the specific standards of relief 

Congress chose to establish in the statute. 

B. Nondiscriminatory Access to a Market

49. The Commission also must determine that a QF has nondiscriminatory access to a 

PURPA section 210(m)(1) market in order to terminate the purchase requirement. In the 

Final Rule, the Commission adopted several presumptions to be used in determining 

whether access to a particular market is available on a nondiscriminatory basis in order to 

streamline processing of applications for termination of the purchase requirement. 

50. First, the Final Rule found that a QF’s eligibility for service under an OATT, or a 

reciprocity tariff filed by a non-public utility, creates a rebuttable presumption that the 

QF has nondiscriminatory access to the relevant market. Second, the Commission 

adopted a rebuttable presumption that QFs interconnected with electric utility members 

of a “Day 2” RTO/ISO have nondiscriminatory access to the “Day 2” market. Finally, 
Docket No. RM06-10-001 - 32 -

regardless of available transfer capability (ATC) under an OATT or location within a 

“Day 2” market, the Final Rule establishes an additional rebuttable presumption that QFs 

with a net capacity no greater than 20 MW do not have nondiscriminatory access to 

wholesale markets. 

51. These rebuttable presumptions were designed to work together to facilitate prompt 

Commission review of requests to terminate the purchase requirement within the 90-day 

time frame mandated in the statute. Various petitioners challenge the adoption of these 

presumptions on rehearing, which we address below. 

1. The OATT

52. The Commission first established a rebuttable presumption that a QF has 

nondiscriminatory access to a market if it is eligible for service under a Commissionapproved OATT, or Commission-filed reciprocity tariff, and Commission-approved 

interconnection rules.28 If the Commission determines that a particular market meets the 

criteria of section 210(m)(1)(A), (B), or (C), and a QF in that market is eligible for 

service under an OATT or reciprocity tariff, a QF may seek to rebut the presumption of 

access to the market by providing specific and credible evidence that the QF does not 

have nondiscriminatory access due to operational characteristics or transmission 

constraints. If the QF is unable to make this demonstration, the purchase requirement 

will be terminated. 

 28 Transmission providers are required to provide interconnection as well as 

transmission services on a nondiscriminatory basis under their OATTs. 
Docket No. RM06-10-001 - 33 -

53. In the Final Rule, the Commission determined that only issues other than issues 

related to the provision of open access transmission under the OATT would be 

considered when analyzing whether the presumption of nondiscriminatory access to 

markets has been rebutted. The Commission rejected requests to allow a QF to litigate 

open access implementation issues in the context of these 90-day applications, 

concluding that complaint proceedings are the appropriate forum for such disputes. The 

Commission also rejected arguments that it is unreasonable to rely on a presumption that 

a Commission-approved OATT provides nondiscriminatory access to markets in light of 

the then-pending NOPR in the OATT reform rulemaking, Docket Nos. RM05-17, et al., 

in which reforms to the pro forma OATT had been proposed. 

Requests for Rehearing

54. Occidental challenges the Commission’s reliance on an OATT to create a 

rebuttable presumption that QFs have nondiscriminatory access to the relevant wholesale 

markets. Occidental argues that the Commission’s actions in the OATT reform 

rulemaking have demonstrated that, notwithstanding the existence of an OATT, there 

remain continuing opportunities for undue discrimination by transmission entities. 

Occidental contends that the Commission’s statement in the Final Rule that it had not 

found actual discrimination in the OATT reform rulemaking is inconsistent with findings 

in the OATT reform NOPR that deficiencies in the OATT needed to be addressed. In 

Occidental’s view, the Commission’s determination in the OATT reform NOPR that 

there are remaining opportunities for undue discrimination bear directly on the finding 
Docket No. RM06-10-001 - 34 -

that the Commission must make under section 210(m) that a utility is administering its 

OATT in a nondiscriminatory manner. 

55. Occidental argues that the Commission’s determination that only issues not related 

to the provision of open access transmission under the OATT may be raised to rebut the 

presumption of nondiscriminatory access is inconsistent with the statutory language of 

section 210(m) and is a violation of due process. Industrial Parties assert that the 

Commission must consider evidence of discrimination when analyzing whether the 

presumption has been rebutted. Failure to do so would, in their view, violate the 

Commission’s statutory obligation to eradicate discrimination. 

56. Occidental further argues that the Commission should clarify that QFs under 

section 210(m)(1)(B) and (C) have the same opportunity to rebut the presumption of 

nondiscriminatory access as QFs under section 210(m)(1)(A). Occidental notes that the 

Commission lists several factors in the Final Rule as a possible rebuttal to a finding of 

nondiscriminatory access to the markets set forth in subparagraph (A), but that it is not 

clear if the factors are also relevant to the question of whether the purchase obligation 

should be terminated under subparagraphs (B) and (C). If the Commission does not grant 

clarification, Occidental requests rehearing on this issue. 

57. Cogeneration Association of California argues that existence of an OATT is 

insufficient to guarantee nondiscriminatory access since it may not provide physical 

transmission rights. Because QFs generate electricity as a necessary by-product of their 

service to their thermal hosts, Cogeneration Association of California contends that a 
Docket No. RM06-10-001 - 35 -

cogenerator must have a physical location to deliver the electricity. Cogeneration 

Association of California argues that this requires physical transmission rights that 

recognize the operating requirements of cogeneration operations. In its view, the lack of 

physical delivery rights places a cogeneration QF in the untenable situation of either 

ceasing operation or violating ISO tariff and scheduling protocols, thereby incurring 

penalties or sanctions. Cogeneration Association of California goes on to illustrate its 

concern using the California market redesign effort as an example. Because the 

congestion revenue rights are allocated first to load-serving entities, and the remainder 

are auctioned to other market participants, Cogeneration Association of California fears 

that existing QFs would be unable to hedge congestion and that new projects would be 

unable to obtain long-term rights necessary to support long-term contacts, a prerequisite 

for financing. 

58. Occidental adds that, if the Commission does not reject the OATT presumption on 

rehearing, it should require applicants to submit at a minimum additional information 

such as clear and specific definitions and descriptions of each real-time, short- and longterm market the utility claims in its section 210(m) application that the QF is able to 

access on a nondiscriminatory basis. 

59. Multiple petitioners argue that the Commission erred by establishing any form of 

rebuttable presumption. Industrial Parties contend that the Administrative Procedure Act 

requires that the applicant for relief – in this case an electric utility – has the burden of 
Docket No. RM06-10-001 - 36 -

proof.29 Industrial Parties argue that an agency may not use a presumption to shift the 

burden of proof if the result is not in keeping with the statutory purpose and, in their 

view, it runs counter to section 210(m) to impose on QFs the burden to prove a lack of 

nondiscriminatory access to markets since the relevant information concerning 

transmission and access to markets is most likely in the possession of the utility rather 

than the QF. 

60. PIOs argues that creating rebuttable presumptions that electric utilities meet 

section 210(m) requirements is contrary to the plain language of section 210(m)(3). PIOs 

argues that, when a utility seeks relief from the mandatory purchase obligation, the 

Commission is required by section 210(m)(3) to consider evidence of the assertion that 

the required access and markets are actually available to QFs in the utility’s service 

territory, including a utility in an RTO. In PIOs’ view, the Commission is not authorized 

to permit utilities to escape the obligation to set forth facts that demonstrate that the 

conditions provided in section 210(m)(1)(A), (B) or (C) have been met for the QFs in its 

territory. 

61. American Forest & Paper and CCC agree, citing NICOR Exploration Co. v. 

FERC30 for the proposition that the Commission incorrectly shifts the burden of proof 

away from electric utilities through adoption of rebuttable presumptions. American 

 29 Industrial Parties Request for Rehearing at 7 (citing Hi-Tech Furnace Sys. v. 

FCC, 224 F. 3d 781 (D.C. Cir. 2000); Pub. Serv. Comm’n of New York v. FERC, 866 

F.2d 487 (D.C. Cir. 1989)). 

30 NICOR Exploration Co. v. FERC, 50 F.3d 1341 (5th Cir. 1995) (NICOR). 
Docket No. RM06-10-001 - 37 -

Forest & Paper and CCC state that NICOR found that the Commission erred by shifting 

the burden for a natural gas producer to prove that an area rate clause authorized 

incentive based rates.31 American Forest & Paper and CCC argue that that situation is 

directly analogous to the issue in this proceeding, where the Commission has relieved 

electric utilities of proving that QFs have non-discriminatory access to wholesale markets 

and, instead, forced QFs to prove the absence of such access. 

Commission Determination

62. The Commission denies rehearing of the adoption of a rebuttable presumption that 

eligibility for service under a Commission-approved OATT, or Commission-filed 

reciprocity tariff, provides nondiscriminatory access to the market. We first address 

arguments against the use of any form of rebuttable presumption and then turn to 

arguments against relying on the OATT in particular. 

63. The Commission denies rehearing regarding the use of rebuttable presumptions in 

processing requests to terminate the purchase requirement. As discussed in paragraph 30 

above, under the plain language of section 210(m)(1), it is the Commission’s 

responsibility to find that there is nondiscriminatory access to certain specified markets 

prior to terminating the purchase requirement. The use of rebuttable presumptions serves 

to identify, in advance, the Commission’s preliminary analysis, subject to future 

evidentiary submissions, thereby streamlining the application review process. The 

Commission believes this will facilitate prompt processing of applications under section 

 31 American Forest & Paper and CCC Request for Rehearing at 25. 
Docket No. RM06-10-001 - 38 -

210(m), which is required by section 210(m)(3), and ultimately benefit QFs and electric 

utilities alike by providing advance notice of how the Commission will consider certain 

issues. Abandoning the use of rebuttable presumptions, as some petitioners advocate, 

would unduly complicate the application process and impair the Commission’s ability to 

act within the 90-day timeframe required by section 210(m)(3). Moreover, these 

rebuttable presumptions were not created in a vacuum. They are based on the 

Commission’s experience in implementing non-discriminatory open access transmission 

over the past 11 years, its experience with QF issues (including interconnection issues) 

over the past 29 years, and its experience with RTO/ISO markets over almost 10 years. 

64. The cases cited by petitioners, which taken together stand for the proposition that 

the proponent of a rate change bears the burden of proving that change satisfies the 

relevant statutory or regulatory requirements, are therefore inapposite.32 The rebuttable 

presumptions do not relieve the Commission of its ultimate responsibility to make 

findings under section 210(m)(1) prior to relieving an electric utility of the purchase 

requirement. Instead, they simply provide advance notice of how the Commission will 

carry out that responsibility. 

65. The rebuttable presumptions are also consistent with the requirements of section 

210(m)(3), which establishes the procedures to be followed when an electric utility 

requests that the Commission make the finding of nondiscriminatory access to a market 

 32 See Hi-Tech Furnace Sys. V. FCC, 224 F. 3d 781 (D.C. Cir. 2000); Pub. Serv.

Comm’n of New York v. FERC, 866 F.2d 487 (D.C. Cir. 1989); NICOR Exploration Co. 

v. FERC, 50 F.3d 1341 (5th Cir. 1995).
Docket No. RM06-10-001 - 39 -

identified in section 210(m)(1)(A), (B), or (C). As required in section 210(m)(3), the 

regulations promulgated in the Final Rule clearly require a petitioning electric utility to 

state the factual basis on which it relies and describe why the conditions set forth in 

subparagraphs (A), (B), or (C) are met.33 That factual basis could include the factual 

determinations made in the Final Rule regarding certain markets satisfying the criteria of 

those subparagraphs, the presumptions adopted in the Final Rule regarding 

nondiscriminatory access, or any other factor the electric utility considers relevant to the 

determination the Commission must make under section 210(m)(1). There is no conflict 

between the use of rebuttable presumptions and the procedural requirements of section 

210(m)(3). 

66. We reiterate that the rebuttable presumptions adopted in the Final Rule – some of 

which are presumptions in favor of the electric utility and some of which are in favor of 

the QF -- are not final determinations. Each of these presumptions is expressly 

rebuttable. Electric utilities and QFs alike will have the opportunity to present casespecific evidence in support of or against application of the presumption on review of a 

request to terminate the purchase requirement. For example, regarding the OATT 

presumption in particular, there may be circumstances unique to a particular QF that 

interfere with that QF’s nondiscriminatory access notwithstanding its eligibility for 

service under an OATT. The QF might have operational characteristics that effectively 

prevent its participation in a market. The QF might lack access to a mechanism to 

 33 See 18 CFR 292.310. 
Docket No. RM06-10-001 - 40 -

schedule transmission service or make advance sales on a consistent basis. Each QF will 

be in the best position to have knowledge of the particular circumstances that interfere 

with its ability to access the market through the OATT and, thus, requiring the QF to 

submit evidence of its lack of nondiscriminatory access is entirely reasonable. The 

Commission clarifies that the ability to rebut the presumption of nondiscriminatory 

access applies regardless of the market in which the QF is located. 

67. The Commission was nonetheless sensitive to the QFs’ potential need for 

information relevant to rebutting the presumption of nondiscriminatory access. The 

Commission therefore required petitioning electric utilities to submit information 

regarding transmission constraints, levels of congestion, and interconnections in order to 

give potentially affected QFs data that may be relevant to rebutting the presumption that 

they have access to the market. With these informational safeguards in place, we believe 

that reliance on a rebuttable presumption regarding nondiscriminatory access to the 

market is reasonable. 

68. We also reject arguments on rehearing that the Commission failed to justify 

reliance on the OATT in particular when formulating its rebuttable presumptions. Since 

issuance of the Final Rule, the Commission has issued Order No. 890, adopting reforms 

to the OATT to ensure that transmission customers continue to have nondiscriminatory 
Docket No. RM06-10-001 - 41 -

access to transmission service.34 The Commission’s findings in Order No. 890 do not, 

however, conflict with the rebuttable presumption adopted in this proceeding, as 

petitioners claim. The Commission did not find in Order No. 890 that any transmission 

provider actually discriminated against a particular customer and, instead, found that 

there remained opportunities for such discrimination that needed to be remedied.35 The 

fact that opportunities remained for discrimination in the provision of transmission 

service (which, we add, we have now addressed) would conflict with an irrebuttable 

presumption of nondiscriminatory access, not a rebuttable presumption. The rebuttable 

nature of the presumption acknowledges that a QF may not actually have 

nondiscriminatory access and leaves that determination for case-by-case review by the 

Commission. 

69. At the same time, the underlying structure of the OATT, even before the reforms 

adopted in Order No. 890 are implemented, and certainly after, counsels in favor of the 

rebuttable presumption that eligibility for service under an OATT provides 

nondiscriminatory access to markets. Under the OATT, transmission providers must 

make transmission capacity available to all customers on a nondiscriminatory basis, 

thereby ensuring a level playing field for all market participants attempting to access 

supplies. That requirement by definition satisfies the nondiscriminatory access criteria of 

 34 Preventing Undue Discrimination and Preference in Transmission Service, 

Order No. 890, 72 FR 12266 (Mar. 15, 2007), FERC Stats. & Regs. ¶ 31,241 at P 443 

(2007). 

35 Id. at P 42. 
Docket No. RM06-10-001 - 42 -

section 210(m). To the extent a QF believes that it in fact is not receiving 

nondiscriminatory access to the market, however, it can make that demonstration in 

response to an electric utility’s application to terminate the purchase requirement. 

70. In response to arguments by Cogeneration Association of California that the 

existence of an OATT is insufficient to guarantee nondiscriminatory access because it 

may not provide physical rights, we note that in organized markets which offer financial 

transmission rights, these financial rights are in addition to, not in place of, physical 

rights. In essence, the Cogeneration Association of California is arguing that the 

Commission should provide a QF with transmission services superior to those available 

to other generators in the organized markets. However, section 210(m)(1) requires that a 

QF have nondiscriminatory access to one of the markets specified in section 

210(m)(1)(A), (B), or (C); it does not guarantee a QF preferential access to transmission 

service. To the extent that Cogeneration Association of California also argues that a QF 

that has contractual obligations to thermal hosts does not have the flexibility to 

participate in markets where the access is provided by financial, rather than physical, 

transmission rights, the Commission in its regulations has provided each QF the 

opportunity to argue that its operational characteristics prevent the qualifying facility’s 

participation in a market. Thus any QF that believes it does not have nondiscriminatory 

access to the market (regardless of whether access is provided by physical or financial 

rights) has the right to rebut the OATT presumption of access in response to an electric 

utility filing seeking termination of the mandatory purchase obligation. 
Docket No. RM06-10-001 - 43 -

71. The Commission also declines to adopt Occidental’s recommendation to require 

additional information from electric utilities relying on the OATT presumption. The 

filing requirements of § 292.310 of the Commission’s regulations, as modified below, are 

sufficient to provide the Commission with the information necessary to promptly process 

applications for termination of the purchase requirement. 

72. Finally, the Commission grants clarification of its determination in the Final Rule 

that only issues other than issues related to the provision of open access transmission 

under the OATT will be considered when analyzing whether the presumption of 

nondiscriminatory access to markets has been rebutted. The Commission continues to 

believe that complaint proceedings are the appropriate forum for such disputes. 

However, where there are pending complaints raising credible issues concerning a 

transmission provider’s implementation or administration of its OATT, the Commission 

will also consider that fact, as appropriate, when evaluating whether a QF does in fact 

have nondiscriminatory access to the market. 

2. “Day 2” Markets

73. The Final Rule provided for a second rebuttable presumption specific to QFs 

operating in a “Day 2” market. Because members of the “Day 2” RTO/ISOs have turned 

over the operation of their transmission facilities to an independent entity that has no 

stake in the marketplace and that ensures all users of the transmission system are treated 

on a nondiscriminatory basis and are provided access to their markets, the Commission 

established a rebuttable presumption that QFs interconnected with electric utility 
Docket No. RM06-10-001 - 44 -

members of a “Day 2” RTO/ISO have nondiscriminatory access to that “Day 2” market. 

Since the Commission found that the existing “Day 2” markets satisfied the requirements 

of section 210(m)(1)(A), this creates a rebuttable presumption that electric utility 

members of the existing “Day 2” RTO/ISOs are relieved of the purchase requirement. 

74. The Commission declined to apply this presumption of nondiscriminatory access 

to entities that are not members of the “Day 2” RTO/ISOs. In order for such entities to 

obtain relief of the purchase requirement, the Commission stated that they must file an 

application pursuant to either section 210(m)(1)(B) or (C), to be reviewed on a case-bycase basis by the Commission. 

Requests for Rehearing

75. Industrial Parties argue that the Commission does not have sufficient experience to 

impose a presumption of access in the “Day 2” markets. In their view, these markets are 

nascent and the Commission does not have the ability to determine whether QFs have 

sufficient access to competitive alternatives to justify relieving electric utilities within 

those markets of the mandatory purchase obligation. 

76. NRECA, on the other hand, argues that it is arbitrary and capricious to deny to 

non-member utilities within or adjacent to the footprint of a “Day 2” RTO/ISO the same 

presumption accorded to RTO/ISO members. NRECA contends that there is no basis for 

denying non-RTO member utilities adjacent to an RTO the same presumption where the 

non-RTO member utilities have a Commission-approved OATT or reciprocity tariff. 

NRECA also argues that the Final Rule appears inconsistent as to which standard a non-
Docket No. RM06-10-001 - 45 -

RTO member within a “Day 2” RTO footprint must satisfy in order to obtain a waiver 

from the purchase requirement. Although the Final Rule provides that non-RTO 

members, if they are located within or adjacent to the footprint of a “Day 2” RTO, must 

satisfy the section 210(m)(1)(B) or (C) standards in order to remove the purchase 

obligation, NRECA notes that the Final Rule also states that any electric utility may file 

an application for relief from the purchase requirement by showing nondiscriminatory 

access to any of the section 210(m)(1)(A), (B) or (C) markets.36 

77. NRECA also argues the Final Rule effectively allows QFs interconnected to an 

RTO member that has had its purchase requirement terminated to have the option of 

participating in that RTO market or requesting wheeling service to whichever nonmember utility within or adjacent to the RTO’s footprint has the highest avoided cost. 

NRECA expresses concern that the QF in this circumstance could seek to consummate a 

mandatory purchase agreement with a distant utility, notwithstanding termination of the 

purchase obligation for its interconnected utility. NRECA therefore asks the Commission 

to address this unintended consequence on rehearing. 

78. Even if Congress assumed that QFs in RTO regions have access to 

nondiscriminatory transmission services, as well as meaningful opportunities to sell longterm capacity/energy in competitive markets, PIOs argues that it does not follow that 

Congress intended to permit utilities in those regions to bypass section 210(m)(3) 

requirements or to authorize the Commission not to consider evidence of actual QF 

 36 NRECA Request for Rehearing at 8 (citing Final Rule at P 125, 151). 
Docket No. RM06-10-001 - 46 -

access to required services and markets when utilities in those regions seek to end their 

PURPA obligations. 

 Commission Determination

79. The Commission denies rehearing of its decision to adopt a rebuttable 

presumption that QFs interconnected with electric utility members of a “Day 2” market 

have nondiscriminatory access to that “Day 2” market. Arguments that the “Day 2” 

markets do not provide QFs sufficient competitive alternatives are rejected above. 37 The 

Commission has sufficient experience with the four “Day 2” markets to determine that 

QFs have nondiscriminatory access to those markets. Industrial Cogenerators offers no 

reason to depart from the statutory language and impose a more rigorous standard. 

80. The Commission also denies rehearing of its decision to limit application of the 

“Day 2” presumption only to member utilities of the particular “Day 2” RTO/ISO. 

Member utilities have turned over control of their transmission to the regional 

organization. As a result, QFs interconnected with a member utility may offer their 

energy into the RTO/ISO day ahead and real time energy markets without any additional 

concerns about securing transmission capacity. These QFs face few, if any, barriers to be 

able to sell energy and capacity to any willing purchaser within the RTO/ISO region, 

subject to the purchaser’s willingness to pay any relevant congestion charges. 

 37 See supra P 19-30, 41-48. 
Docket No. RM06-10-001 - 47 -

81. In contrast, non-member utilities have retained control over their transmission 

facilities and, thus, control the only access interconnected QFs have to the market. While 

an OATT or reciprocity tariff will provide a QF interconnected with a non-member utility 

with access to the market within that particular utility’s subregion, the QF must compete 

with the non-member utility to secure transmission service in order to access the nearby 

regional market. Issues may arise concerning ATC and a range of other open access, 

commercial, and coordination (with the RTO or ISO) matters that are more appropriately 

examined on a case-specific basis.38 Accordingly, it is reasonable for the Commission to 

limit application of the rebuttable presumption that the four RTO/ISOs meet the statutory 

standards under PURPA 210(m)(1)(A) only to member utilities of those regional 

organizations. Non-member utilities remain free, though, to seek termination of the 

obligation to purchase from QFs in individual cases. 

82. NRECA is correct that any electric utility may file an application for relief of the 

purchase obligation under any subparagraph of section 210(m)(1). We clarify that the 

Commission’s conclusion not to apply a presumption of nondiscriminatory access to nonmember utilities of a “Day 2” RTO/ISOs does not preclude such utilities from seeking to 

 38 For example, QFs interconnected with member utilities would not experience 

rate pancaking for transmission service to access the market, additional risks and costs of 

possible curtailment outside of the locational marginal price (LMP) managed market, or 

increased scheduling burdens associated with taking service over an intervening 

transmission system under the OATT (in comparison to directly scheduling energy 

deliveries in the day-ahead and real-time LMP markets). 
Docket No. RM06-10-001 - 48 -

satisfy the requirements of subparagraphs (A), (B), or (C), as the regulations in Part 292 

of the Commission’s regulations expressly provide. 

83. In response to NRECA’s concern that a QF interconnected with a member utility 

of a “Day 2” market will seek PURPA contracts with adjacent utilities, using QF 

wheeling rights, we do not interpret section 210(m) to permit this. Section 210(m)(1) 

provides that “no electric utility” shall be subject to the purchase requirement if the 

Commission finds that the QF has nondiscriminatory access to one of the specified 

markets. Thus, once the Commission makes a finding that a particular QF has 

nondiscriminatory access to one of the specified markets, no electric utility shall be 

required to enter into a new contract or obligation with that QF. The QF would therefore 

no longer be able to impose the purchase requirement on any electric utility. If a QF that 

has been found to have nondiscriminatory access to one of the specified markets pursuant 

to the request of a particular electric utility seeks to enforce the purchase obligation 

against another electric utility, the second electric utility may file an application to 

terminate its purchase obligation with respect to that QF, and the Commission would 

consider its findings in the first proceeding to be determinative, absent a showing by the 

QF that circumstances, either nondiscriminatory access or the state of the markets, have 

changed. 

3. Small Size

84. Notwithstanding the presumption of nondiscriminatory access afforded by the 

OATT or the structure of the “Day 2” markets, the Commission concluded in the Final 
Docket No. RM06-10-001 - 49 -

Rule that certain QFs may nonetheless have difficulty accessing the market due to their 

small size. The Commission, therefore, adopted an additional rebuttable presumption 

that small QFs do not have nondiscriminatory access to the market, regardless of whether 

the QF is an eligible customer under an OATT or interconnected with a member utility of 

a “Day 2” RTO/ISO. Although the Commission did not specify in the Final Rule what 

evidence would be sufficient to rebut this presumption, it did note that relevant evidence 

could include the extent to which the small QF has been participating in the market or is 

owned by, or is an affiliate of, an entity that has been participating in the relevant market. 

The Commission also found that a reasonable and administratively workable definition of 

“small” is 20 MW net capacity or smaller. 

Requests for Rehearing

85. On rehearing, petitioners raise several issues regarding the rebuttable presumption 

for small QFs. Some utilities argue that there should be no special treatment of small 

QFs and that the rebuttable presumption is an impermissible waiver of section 210(m). 

Some QFs, however, argue that small QFs should be completely exempt from termination 

of the mandatory purchase obligation. Various petitioners argue that the Commission 

should set the threshold for “small” lower or higher. 

86. Central Vermont argues that making exceptions for certain QFs because of their 

small size goes against the plain language of the statute, contending that the statute says 

nothing about allowing the Commission to consider whether it is practical or economical 

for the QF to reach the wholesale market in question. Central Vermont argues that the 
Docket No. RM06-10-001 - 50 -

Commission’s findings with respect to QFs interconnected with member utilities of the 

“Day 2” RTO/ISO should apply equally to all QFs regardless of size. NRECA similarly 

argues that Congress did not establish exceptions for size, characterizing the 

Commission’s standards for overcoming this presumption as insurmountable and, 

therefore, arbitrary and capricious. 

87. Deere argues, however, that the purchase requirement for small QFs should be 

retained in full in any market in which that obligation is otherwise lifted for large 

generators. Otherwise, Deere contends, the rebuttable presumption will be an invitation 

for expensive litigation. Deere argues that the Commission should treat small QFs in a 

manner that prevents the costs of defending the rebuttable presumption from becoming a 

discouragement to the development of small renewable projects. 

88. CIBO argues that the Commission should expand the size presumption to apply to 

QFs with a net capacity of 80 MW or less. CIBO contends such treatment would be 

consistent with the Commission’s obligation under EPAct 2005 to issue a rule that 

ensures continuing progress in the development of efficient electric energy generating 

technology. CIBO argues that Congress defined “small” in PURPA as 80 MW for small 

biomass, waste, renewable resources and geothermal resource power generation and, 

therefore, the Commission’s defining of small QFs at 20 MW contravenes Congress’s 

longstanding support of QFs, creates obstacles for some but not all small QFs and upsets 

capital investment. CIBO argues that the Commission makes no attempt to explain how 
Docket No. RM06-10-001 - 51 -

20 MW QFs differ from 80 MW QFs and that any differentiation for purposes of unequal 

statutory treatment must have a rational basis. 

89. CIBO further argues that the orders cited by the Commission in favor of a 20 MW 

threshold, such as Order No. 67139 and Order No. 2006,40 do not address the operational 

limits or difficulties that larger QFs have in accessing “Day 2” markets, such as widely 

fluctuating steam-host demand, siting issues and transmission versus distribution 

interconnection access issues. Without guaranteed access to markets, CIBO contends 

that many QFs in the 20-80 MW range will simply stop cogenerating and new industrial 

cogeneration will not be developed. 

90. Finally, CIBO argues that increasing the threshold to 80 MW adds a very small 

number of QFs and would add little to the amount of capacity compared to total 

nationwide capacity. In CIBO’s view, the Final Rule already requires utilities to 

purchase power from QFs that are less than 20 MW and, thus, there would not be any 

material increase in administrative burden for electric utilities to use an 80 MW 

threshold. 

 39 Revised Regulations Governing Small Power Production and Cogeneration 

Facilities, Order No. 671, 71 FR 7852 (Feb. 15, 2006), FERC Stats. & Regs. ¶ 31,203 

(2006), order on reh’g, Order No. 671-A, 71 FR 30585 (May 30, 2006), FERC Stats. & 

Regs. ¶ 31,219 (2006). 

40 Standardization of Small Generator Interconnection Agreements and 

Procedures, Order No. 2006, 70 FR 34189 (June 13, 2005), FERC Stats. & Regs. ¶ 

31,180 (2005), order on reh’g, Order No. 2006-A, 70 FR 71760 (Nov. 30, 2005), FERC 

Stats. & Regs. ¶ 31,196 (2005). 
Docket No. RM06-10-001 - 52 -

91. Industrial Parties argue that the Commission should expand the small size 

presumption to include any QF that is unable to sell power in 50 MW blocks, regardless 

of the particular capacity of the facility. Industrial Parties contend that certain over the 

counter bilateral contracts stipulate a minimum lot increment of 50 MW, which can be a 

problem for larger QFs (i.e., above the 20 MW threshold) because their intermittent 

production of surplus power cannot always or easily be packaged in 50 MW x 16 hour 

increments. Industrial Parties state that QFs that cannot sell 50 MW blocks have only 

very limited access to financial markets, at disadvantageous terms. 

92. NRECA argues that the Commission’s 20 MW threshold is too generous. 

NRECA states there is evidence in the record that RTOs are capable of transacting with 

generators with capacities as small as one or two MW depending on the RTO. NRECA 

contends that no party has demonstrated that the existing RTO processes for utilities 

between one and 20 MW are ineffective, unduly complicated or overly burdensome. 

NRECA also suggests that the Commission’s earlier decision to simplify interconnection 

for generators with capacities of less than 20 MW is unrelated to the question of whether 

QFs have access to markets or, if related, demonstrates that they have such access. 

93. With regard to how the Commission measures the size of a QF for purposes of 

applying the rebuttable presumption, the Cogeneration Association of California requests 

the Commission to clarify it is by reference to capacity delivered to the grid. The 

Cogeneration Association of California state that cogenerators often supply electricity to 

on-site load and only supply a portion of their maximum electrical output to the grid. In 
Docket No. RM06-10-001 - 53 -

its view, electricity used to supply on-site load should not be counted for purposes of 

applying the size presumption. 

Commission Determination

94. The Commission denies the requests for rehearing regarding the rebuttable 

presumption that small QFs do not have nondiscriminatory access to the market. We 

continue to believe it is appropriate to adopt a rebuttable presumption that certain QFs do 

not have nondiscriminatory access to markets because of their small size. The purchase 

requirement will therefore remain in effect, in all markets, for all QFs with a net capacity 

of 20 MW or smaller, although electric utilities will have the opportunity to rebut the 

presumption by showing that a small QF does in fact have nondiscriminatory access to 

the relevant market. 

95. We share CIBO’s goal of continuing progress in the development of efficient 

electric generating technology, but disagree with CIBO and other petitioners that we have 

unreasonably differentiated “small” from “large” QFs. There is no perfect bright line that 

can be drawn and we have reasonably exercised our discretion in adopting a 20 MW or 

below demarcation for purposes of determining which QFs are unlikely to have 

nondiscriminatory access to markets. Moreover, any QF above 20 MW is permitted to 

demonstrate an inability to access the markets, and any electric utility is permitted to 

demonstrate that a QF 20 MW or smaller is able to access the markets. The 

Commission’s development of rebuttable presumptions is based on its experience with 

QFs, transmission interconnections and related market issues, and is designed to provide 
Docket No. RM06-10-001 - 54 -

a reasoned and fair approach for processing applications within the 90-day time frame 

dictated by the statute. 

96. While the Final Rule does not make a generic finding that QFs interconnected at a 

distribution level lack nondiscriminatory access to markets, we believe that it is 

reasonable to conclude that some, perhaps most, small QFs at or below the 20 MW level 

can be distinguished from larger QFs by the type of delivery facilities to which they 

typically interconnect. Most QFs larger than 20 MW are interconnected to higher voltage 

lines, typically considered to be transmission lines, while smaller QFs tend to be 

interconnected to lower voltage radial lines, frequently considered to be distribution.41 

Many lower voltage facilities are radial systems designed to carry power from the highvoltage grid downstream to loads, and there may be technical enhancements required to 

move power injected into such facilities upstream to the transmission grid to access the 

broader wholesale market. Smaller QFs are also more likely to have to overcome other 

obstacles, such as jurisdictional differences, pancaked delivery rates, and perhaps 

 41 See, e.g., Standardization of Small Generator Interconnection Agreements and 

Procedures, Order No. 2006-A, 70 FR 71760 (Nov. 30, 2005), FERC Stats. & Regs. 

¶ 31,196 at P 105 (2005), (“We expect the vast majority of small generator 

interconnections will be with state interconnection programs.”); Id. at P 102 (“a QF 

selling at retail is not eligible to interconnect under either Order No. 2003 or Order 

No. 2006. Under the Public Utility Regulatory Policies Act of 1978, such 

interconnections are governed by state law.”) (citations omitted). 
Docket No. RM06-10-001 - 55 -

additional administrative procedures, to obtain access to distant buyers.42 Taken together, 

these factors support a rebuttable presumption that smaller QFs have substantially less 

ability to access wholesale markets than do larger QFs. 

97. Although there is no unique and distinct megawatt size that uniquely determines if 

a generator is small, in other contexts the Commission has used 20 MW, based on similar 

considerations to those presented here, to determine the applicability of its rules and 

policies. Indicative of this is the Commission’s reliance in the Final Rule on its findings 

in Order No. 671, where the Commission retained exemptions for QFs that are 20 MW or 

smaller from sections 205 and 206 of the FPA, and Order Nos. 2006 and 2006-A, where 

the Commission recognized that generators 20 MW or smaller should have different 

standards for interconnection than large generators. We continue to believe that 20 MW 

is the appropriate level at which to apply this rebuttable presumption. 

98. We disagree with CIBO that the Commission’s small QF threshold of 20 MW 

contradicts Congress’s 80 MW definition of small power producers in PURPA section 

210(a).43 The 80 MW threshold in section 210(a) of PURPA defines the qualification of 

small power producers eligible for the rights, privileges and protections of QFs. The use 

of 20 MW in the Commission’s implementation of section 210(m) of PURPA serves a 

fundamentally different purpose. The Commission is distinguishing between small and 

 42 See, e.g., Standardization of Small Generator Interconnection Agreements and 

Procedures, Notice of Proposed Rulemaking, 68 FR 49974 (Aug. 19, 2003), FERC Stats. 

& Regs. ¶ 32,572 (2003) at P 23-25. 

43 16 U.S.C. 796(17)(A)(ii).
Docket No. RM06-10-001 - 56 -

large facilities to reflect the ability of particular QFs to access markets. Categorically 

applying the presumption to all small power production facilities, through adoption of a 

80 MW threshold, would not appropriately take into account the different considerations 

that affect a QF’s ability to access markets. 

99. We also disagree that use of a 20 MW threshold defeats Congressional intent to 

foster small power production. The purchase requirement remains in place for small 

power producers that do not have nondiscriminatory access to one of the markets 

identified in section 210(m)(1)(A), (B), or (C). The purchase requirement can be 

terminated only if the Commission finds nondiscriminatory access to such markets, 

which in turn means the small power producers will have the ability to sell their energy 

and capacity into the wholesale marketplace. 

100. We reject the request that the Commission expand the small size presumption to 

include any QF that is unable to sell power in 50 MW blocks, regardless of the particular 

capacity of the facility. While it may be true that certain over-the-counter bilateral 

contracts stipulate a minimum lot increment of 50 MW, and while also it may be true that 

such a contractual requirement may be a problem for some QFs that are larger than 20 

MW because of their intermittent production of surplus power, the Commission has 

provided these larger QFs the opportunity to rebut the presumption of access to the “Day 

2” market by showing, among other things, operational characteristics that effectively 

prevent the QF’s participation in a market or that the QF has no access to a mechanism to 

schedule transmission service or make sales in advance on a consistent basis because of 
Docket No. RM06-10-001 - 57 -

variability of the QF’s electric energy production or because of market rules that prevent 

the QF from scheduling transmission service or participating in organized markets 44 The 

effect of needing to sell in 50 MW blocks may therefore be presented to the Commission 

in the context of a particular request to terminate the purchase requirement. Expansion of 

the small size rebuttable presumption to reflect this concern, which may not be relevant 

in all cases, is thus neither necessary nor appropriate. 

101. The Commission rejects requests to apply the small size presumption only to much 

smaller QFs, such as those with a net capacity of one or two MW. We set the rebuttable 

presumption at an appropriate level, reflecting our understanding of the general nature of 

QFs’ interconnection practices and the relative capabilities of small entities. However, we 

again stress that the presumption is rebuttable. Electric utilities are free to argue that 

smaller entities have nondiscriminatory access to qualifying markets. We believe that the 

best place to consider such arguments is in the individual cases that electric utilities bring 

to the Commission. 

102. Petitioners arguing that the Commission has inappropriately waived the effects of 

section 210(m) for small QFs mischaracterize the Final Rule. The Commission made 

clear in the Final Rule that no class of QFs had been shown to uniformly lack 

nondiscriminatory access based on a single factor and, as such, no justification existed for 

exempting any category of QFs from any future orders which may terminate a utility’s 

 44 Final Rule at P 82-84; 18 CFR 292.309(e)(1). 
Docket No. RM06-10-001 - 58 -

purchase requirement. The Commission did, however, create a rebuttable presumption 

that small QFs may not have nondiscriminatory access to markets because of their small 

size. As we explain above, the use of such rebuttable presumptions is fully consistent 

with the Commission’s obligation under section 210(m) and the Commission’s need to 

identify ways to expedite processing of applications. 

103. To be clear, the use of a rebuttable presumption does not prevent a utility from 

seeking to terminate the obligation to purchase power from small QFs, as would be the 

case if the Commission implemented a waiver. Instead, the use of the rebuttable 

presumption simply leaves the burden on the utility to show that these smaller entities 

indeed have nondiscriminatory access. This approach recognizes that, more often than 

not, a small QF will have greater difficulty obtaining nondiscriminatory access to 

markets due to the tendency for small QFs to be interconnected to lower voltage radial 

lines, and the consequent need to overcome other potential obstacles to nondiscriminatory 

access, such as local distribution access rules that are not within the Commission’s 

jurisdiction, pancaked delivery rates and additional administrative burdens to obtain 

access to buyers other than the interconnected utility. It is therefore appropriate in the 

first instance to place on the electric utility the burden of demonstrating that a small QF 

does in fact have nondiscriminatory access to the types of markets identified in sections 

210(m)(1)(A), (B) or (C). Similarly, the rebuttable presumption that QFs above 20 MWs 

do have nondiscriminatory access to markets does not prevent a QF from providing 

evidence to the contrary. 
Docket No. RM06-10-001 - 59 -

104. With regard to the request to clarify how the 20 MW threshold will be measured, 

the Commission explained in the Final Rule that a QF is required to state its size in terms 

of “net capacity” when certifying its status as a QF.45 Net capacity is the maximum 

amount of power that the facility is able to produce (gross capacity) less any auxiliary 

load for devices that are necessary and integral to the power production process (station 

power). Any power consumed by on-site load at the location of the QF for purposes 

unrelated to the power production process should not be subtracted from gross capacity 

for purposes of reporting net capacity. Whether the facility is a Commission-certified 

facility or a self-certified facility, both are certified at net capacity. Therefore, a QF’s 

Commission-certified (or self-certified) net capacity would determine whether the QF 

qualifies for the “small size” rebuttable presumption. 

C. Filing Requirements

105. In the Final Rule, the Commission found that a utility electing to file for relief 

from the purchase requirement must submit an application with the Commission 

providing certain information, including transmission constraints within its service 

territory in order to give potentially affected QFs information that may be useful in 

rebutting the presumption that they have access to all aspects of the applicable “Day 2” 

 45 Final Rule at P 72, n.41. 
Docket No. RM06-10-001 - 60 -

markets.46 The filing requirements are contained in new § 292.310(d) of the 

Commission’s regulations. 

Requests for Rehearing

106. Industrial Parties contend that the Commission is not sufficiently prescriptive as to 

the level of detail on transmission availability that utilities should provide in their 

applications. Industrial Parties argue that the Commission should require the same 

information on transmission access as in UniSource Energy Corporation.

47 Industrial 

Parties also argue that to enable effective input by QFs and other interested parties, any 

information provided to support an electric utility’s application to terminate its purchase 

obligation must be provided to all affected QFs at the time of filing. Industrial Parties 

continue that if a QF later seeks to reinstate the purchase obligation, the electric utility 

needs to provide current data, and not rely on the data it used to justify termination of the 

purchase obligation. 

107. EEI, however, believes the filing requirements in § 292.310(d)(3) of the 

Commission’s regulations are unduly broad and potentially burdensome. EEI urges the 

Commission to exempt utilities operating within the footprint of Commission-approved 

RTO/ISOs that have financial, rather than physical, transmission rights models and 

 46 Final Rule at P 102. 

47 UniSource Energy Corporation, 109 FERC ¶ 61,047 (2004) (UniSource) 

(reviewing a market monitoring plan submitted in support of a request for Commission 

authorization of the disposition of jurisdictional facilities for purposes of identifying 

anticompetitive conduct). 
Docket No. RM06-10-001 - 61 -

ERCOT (which likewise operates under a financial transmission rights model) from the 

information submission requirements in § 292.310(d)(3). Since a QF has the right to 

interconnect to transmission within an RTO/ISO that operates under a financial 

transmission rights model, EEI contends that the QF has access to that market regardless 

of whether a physical path exists for electric sales. As a result, EEI argues that 

interconnection and other transmission constraint and congestion studies are of little 

relevance in determining whether a QF has nondiscriminatory access to transmission in 

any market with a financial rights transmission model. 

108. EEI argues that even in markets without financial transmission rights, all new QFs 

have nondiscriminatory access if they are willing to fund on an up-front basis the 

transmission upgrades necessary to receive network resource status, i.e., if they are 

willing to comply with Order Nos. 2003 and 2006. Despite the fact that any upgrade 

costs for firm transmission service are typically rolled into rates, EEI contends that the 

Commission’s transmission pricing policy could require that existing QFs bear the 

incremental cost of upgrades if firm transmission service is not available and the costs of 

the upgrades exceed the rolled-in rate. As a result, EEI argues that the only grounds for 

rebuttal of the presumption of nondiscriminatory access when OATT service is available 

should be related to unique operational characteristics of the specific QF or in the rare 

circumstance in which there is not a sufficient opportunity to relieve a transmission 

constraint because of unique factors, such as the inability to secure regulatory approval 

for upgrades or otherwise to remedy physical system limitations. EEI therefore asks the 
Docket No. RM06-10-001 - 62 -

Commission to limit the informational filing requirements to those particular 

circumstances. 

109. In addition, EEI requests the Commission to clarify what is intended by 

“[r]elevant system impact studies for the generation interconnections, already completed” 

for both non-RTO/ISO and RTO/ISO regions. EEI states that it is unclear what studies, 

and what time frames, are contemplated by this requirement and whether this language is 

intended to refer to the interconnection studies for existing QFs or for all generator 

interconnections. EEI requests clarification that “relevant” studies will be limited to 

studies that are the most recent regarding the QF’s impact on the system or the most 

recent generic studies of the applicable control area. EEI states that, for the last several 

decades, interconnection studies for QFs not selling to the market have been performed 

under state oversight. EEI requests that the Commission clarify whether the equivalent of 

system impact studies performed for QFs pursuant to state regulation should be provided. 

110. Lastly, if the Commission chooses to maintain the requirements in § 292.310(d)(3) 

of the Commission’s regulations, EEI requests that the requirements identified in 

paragraph (iii) of § 292.310(d)(3), regarding system impact studies for generator 

interconnections, be clarified to require all Commission-approved RTO/ISOs to identify 

and make available to their member transmission owners confidential and public versions 

of each interconnection study it performs for submission to the Commission. They argue 

that it is not clear how electric utilities that have transferred operational control of their 

transmission to RTO/ISOs could fulfill the requirement to provide “relevant system 
Docket No. RM06-10-001 - 63 -

impact studies” without imposing certain requirements on the RTO/ISO. EEI urges the 

Commission to clarify that submitting studies conducted by the RTO/ISO will be 

sufficient to meet the informational requirements. 

Commission Determination 

111. In order to ensure that a potentially affected QF has an adequate opportunity to 

evaluate potential obstacles to nondiscriminatory access, despite the existence of an 

OATT or the QF’s location in a “Day 2” market, the Commission will maintain the 

requirement for applicants to submit transmission-related information relevant to a QF’s 

evaluation of this question. Information about the applicant's long-term transmission 

plan, the location of transmission constraints, levels of congestion, system impact studies, 

and links to applicant's Open Access Same Time Information System (OASIS) for ATC 

information will allow a potentially affected QF to detect whether it might be located on 

a portion of a utility’s system where limited transfer capability may constrain its ability to 

transfer power into the wholesale market. In response to Industrial Parties’ concerns that 

QFs be provided any information used to support an electric utility’s application, our 

rules currently provide that an electric utility must identify with names and addresses all 

potentially affected QFs.48 Electric utilities serve potentially affected QFs with a copy of 

the application. In addition, the Commission by letter provides notice of the application 

to the potentially affected QFs and explains comment procedures and how the QFs can 

 48 18 CFR 292.310. 
Docket No. RM06-10-001 - 64 -

access the electric utility’s filings.49 An interested potentially affected QF should 

intervene in the proceeding and would then receive any subsequent information provided 

by an electric utility. 

112. We disagree with EEI that the filing requirements are unduly broad or 

burdensome. It is reasonable to place those obligations on the petitioning electric utility, 

the party requesting the Commission to make the findings required by section 210(m)(1) 

of PURPA. These filing requirements will facilitate timely processing of the application 

by the Commission, while also providing QFs with the information necessary for their 

own evaluation of nondiscriminatory access to wholesale markets. We find that EEI’s 

claim of burden is overstated, since we do not require anything which has not already 

been developed. It is our experience that most of this documentation is in electronic 

format and available through online resources.50 We clarify, moreover, that an applicant 

can provide a hyperlink to the relevant studies, if available, rather than submitting 

 49 In the unlikely event a potentially affected QF is intentionally or unintentionally 

omitted by the electric utility and not served notice of an application, the Commission 

will take remedial steps as appropriate. 

50 We note that the following public and non-public sources contain transmission 

information: RTO websites for links to publicly available regional transmission plans; 

OASIS websites for system impact studies including various transmission service 

requests, available through confidentiality agreements; OASIS websites for posted ATC 

values, available through an OASIS certificate; and, FERC Form 715 for the Annual 

Transmission Planning and Evaluation Report submitted to the Commission, available on 

the FERC website through the Critical Energy Infrastructure Information (CEII) process. 
Docket No. RM06-10-001 - 65 -

complete studies and reports.51 We therefore believe that the burden on a utility of 

providing existing information is minimal and that the benefits to the QFs and the 

Commission of providing this information readily in one filing will outweigh any such 

minimal burdens. 

113. We deny EEI's request to exempt utilities operating within the footprint of a 

Commission-approved RTO/ISOs from submitting the information to the extent it is 

otherwise available from or provided by the RTO or ISO. The fact that electric utilities 

in RTO/ISO regions may be able to access information required in those filings on an 

equal basis as other parties, i.e., through the RTO/ISO website or databases, does not 

eliminate the Commission’s underlying need for the information to process the 

application in a timely manner. Furthermore, we emphasize that § 202.310(d)(3) of the 

Commission’s regulations requires the submission of non-publicly available information 

to the extent it is the only relevant available resource responsive to this requirement. Any 

need to maintain confidentiality can be addressed in the context of the particular 

application. 

114. We also disagree that the information required in § 292.310(d)(3) is not necessary 

in RTO/ISO markets with financial transmission rights models. This information is 

relevant even in the context of financial RTO markets as it will help potentially affected 

 51 The filing should identify the relevance of the material in the hyperlink. And to 

the extent that the filing discusses particular portions of such studies and reports, the 

electric utility should clearly identify those portions by page, paragraph, or similar 

reference. 
Docket No. RM06-10-001 - 66 -

QFs understand the transmission market circumstances they would face if the 

Commission approves the utility’s application. The filing requirements will, in this 

regard, therefore not be changed for any electric utility seeking termination of the 

purchase requirement. 

115. As to the argument that transmission-related information is unnecessary since new 

QFs have nondiscriminatory access if they fund transmission upgrades necessary to 

receive network resource status, we disagree. Information about transmission system 

constraints will allow a potentially affected QF to evaluate the impact of a utility’s 

request on the QF. Transmission constraints also provide valuable information about the 

scope and geographic reach of the market a potentially affected QF may reach as an 

alternative to selling to the local utility. 

116. With regard to EEI’s request to explain the phrase “[r]elevant system impact 

studies for the generation interconnections, already completed," we clarify that the 

studies we consider relevant are the most recent system impact studies, already 

completed, that analyze the generation interconnection to the applicant's transmission 

substation that is "electrically close" to the QF's substation.52 With respect to EEI's 

question whether the equivalent of system impact studies performed for QFs pursuant to 

 52By “electrically close” we mean any interconnection to the same substation 

where the QF is connected or to any adjacent substation or interconnection point where 

power injection to the transmission system has the same or similar impact on the 

transmission facilities' loadings, as the QF's power injection. 
Docket No. RM06-10-001 - 67 -

state regulation should be provided, we clarify that these studies must be submitted if 

they provide responsive information relevant to the filing requirements. 

117. We also clarify, as requested by EEI, that submitting studies conducted by an 

RTO/ISO will be sufficient to meet the informational requirements, provided the 

submission is complete, i.e., the applicant submits every study required (or hyperlinks to 

the relevant studies) and all related information listed in § 292.310(d). However, we 

deny EEI's request that the Commission require RTO/ISOs to identify and make available 

confidential and public versions of each interconnection study it performs. We believe 

this request is unnecessary. It is our understanding that the current practice within the 

RTO/ISOs is that the electric utility receives the confidential version of the study from 

the RTO/ISO, and likely has participated at least in an advisory role in the performance 

of the study. Therefore, we expect that these studies would already be in the applicant’s 

possession or could be made available to them without placing any extra requirements or 

burdens on the RTO/ISOs. It is the utility who is filing an application seeking relief from 

the purchase requirement and, therefore, we believe it is their responsibility to gather and 

submit the information to the Commission. Additionally, while the publicly available 

reports are available through the OASIS websites, an applicant still needs to identify 

those studies that are relevant, and provide them (either physically or by hyperlink) with 

the filing.53 

 53 See supra note 51. 
Docket No. RM06-10-001 - 68 -

118. In response to the Industrial Parties’ argument that the Commission is not 

sufficiently prescriptive as to the level of detail regarding transmission availability 

required under the Commission’s regulations, we deny rehearing in part. As a general 

matter, we believe the information identified in § 292.310(d)(3) is sufficient to give 

potentially affected QFs information relevant to evaluate whether there is adequate 

transmission available for new selling arrangements, subsequent to termination of the 

utility's purchase requirement.54 In addition, the information on processes to be followed 

to access the markets, identified in § 292.310(d)(4) and (5), is sufficient to give affected 

QFs information relevant to evaluating nondiscriminatory access to the markets described 

in section 210(m)(1) of PURPA. The relevant transmission information referred to by 

Industrial Parties in the UniSource proceeding is thus embedded in the studies we require 

to be filed. We do not agree that the other elements offered by UniSource in the market 

monitoring plan for its proposed merger are either relevant or necessary to evaluating 

nondiscriminatory access in this context. 

119. We do, however, believe that § 292.310 of the Commission’s regulations lacks 

certain information that will facilitate the Commission’s processing of section 210(m) 

 54 However, we note, in order for a QF to evaluate potential ATC on an applicant's 

OASIS, the QF will need to determine the type, firmness and duration of transmission 

service that the affected QF will need for the power it intends to sell on a prospective 

basis. While this information will provide a potentially affected QF with information 

about current ATC, it is no guarantee that service from a particular source to a particular 

load can be provided on a firm basis. Only submission of a request and subsequent 

reservation of transmission service can provide that level of certainty to any prospective 

customer. 
Docket No. RM06-10-001 - 69 -

applications. The Commission has processed applications in Docket Nos. QM07-2-000 

and QM07-4-000 and as a result of its experience in those dockets finds that additional 

information from electric utilities would help avoid the need to issue “deficiency” letters 

or send additional information requests, ultimately slowing down the processing of 

requests for relief. The Commission therefore amends its regulations to require that the 

following additional information be submitted: the docket number assigned to each 

potentially affected QF if it filed for self-certification of QF status or an application for 

Commission-certification of QF status; the net capacity of each potentially affected QF; 

the location of each potentially affected QF depicted by state and county and the name 

and location of the substation where each potentially affected QF is interconnected; the 

interconnection status of each potentially affected QF including whether the QF is 

interconnected as an energy or a network resource; and the expiration date of the energy 

and/or capacity agreement between the applicant utility and each potentially affected QF. 

The introductory paragraph of § 292.310(c) is thus amended to read as follows: 

(c) An electric utility must submit with its application for each 

potentially affected qualifying facility: the docket number assigned if a 

qualifying facility filed for self-certification or an application for Commission 

certification of qualifying facility status; the net capacity of the qualifying facility; 

the location of the qualifying facility depicted by state and county, and the name 

and location of the substation where each qualifying facility is interconnected; 

the interconnection status of each potentially affected qualifying facility including 

whether the qualifying facility is interconnected as an energy or a network 

resource; and, the expiration date of the energy and/or capacity agreement 

between the applicant utility and each potentially affected qualifying facility. All 

potentially affected qualifying facilities shall include: 

 * * * * * 
Docket No. RM06-10-001 - 70 -

120. Additionally, in reviewing the regulations adopted in the Final Rule, we have 

discovered a mistake in § 292.310(d)(3) that we will correct here. The applicant’s "longterm transmission plan" referred to in § 292.310(d)(3) was intended to be information 

required to be filed with an application. Therefore the applicant’s "long-term 

transmission plan" is redesignated as § 292.310(d)(3)(i). Also, in § 292.310(d)(3)(vi), the 

term "available transmission capacity (ATC)" will be corrected to state "available transfer 

capability (ATC)." The new § 292.310(d)(3) is amended to read as follows: 

(3) Transmission Studies and related information, including: 

 (i) The applicant’s long-term transmission plan, conducted by applicant, 

or the RTO, ISO or other relevant entity; 

 (ii) Transmission constraints by path, element or other level of 

comparable detail that have occurred and/or are known and expected to occur, and 

any proposed mitigation including transmission construction plans; 

 (iii) Levels of congestion, if available; 

 (iv) Relevant system impact studies for the generation interconnections, 

already completed; 

 (v) Other information pertinent to showing whether transfer capability is 

available; and 

 (vi) The appropriate link to applicant’s OASIS, if any, from which a 

qualifying facility may obtain applicant’s available transfer capability (ATC) 

information. 

121. Finally, Industrial Parties asks us to clarify that if a QF later seeks to reinstate 

the purchase obligation pursuant to § 292.311, the electric utility, if it chooses to answer 

the QF’s petition to reinstate, needs to provide current data, and not rely on the data it 

used to originally justify termination of the mandatory purchase obligation. We decline 

to make a generic determination here on this matter. If an electric utility answers the 
Docket No. RM06-10-001 - 71 -

QF’s petition, it is free to decide what information to file so as to present its best 

arguments, based on the content of the QF’s filing, the amount of time since the prior 

proceeding and any indications of changed circumstances in the interim. Our decision on 

whether to reinstate the purchase obligation will be based on all of the information 

presented. 

D. Obligation to Sell

122. Section 210(m)(5) of PURPA removes the requirement that an electric utility sell 

electric energy to any QF if the Commission finds that: “competing retail electric 

suppliers are willing and able to sell and deliver electric energy to the qualifying 

cogeneration facility or qualifying small power production facility; and the electric utility 

is not required by State law to sell electric energy in its service territory.” 

123. In the Final Rule, the Commission clarified that lifting the obligation from a 

particular utility to purchase electric energy from a QF did not relieve such utility of its 

obligation to sell supplemental, backup, standby and maintenance power to the QF. The 

Commission explained that any finding under section 210(m)(5) would be made under a 

separate standard and in a separate proceeding pursuant to § 292.312 of the 

Commission’s regulations. The Commission emphasized that it would strictly interpret 

the statutory language in such proceedings, noting in particular the reference to 

“competing retail electric providers” in section 210(m)(5). The Commission concluded 

that the reference required a finding that the QF has available at least two competing 

suppliers who are not affiliated with the interconnecting utility. 
Docket No. RM06-10-001 - 72 -

Requests for Rehearing

124. Industrial Parties request that the Commission condition releasing electric 

suppliers from their obligation to sell standby and backup power on a finding that a 

competitive market for power exists. Although utilities in the organized markets may 

assert that there are multiple retail providers, Industrial Parties contend that in many cases 

the providers have little capacity to serve the QF profile or would attach a large premium 

to the price given their interest in serving a stable load. They argue that some utility or 

other supplier being willing to sell a QF power at some exorbitant price does not satisfy 

the Commission’s duty under PURPA to see that QFs are not exploited and under the 

FPA to ensure that rates are just and reasonable rates. Industrial Parties also assert one or 

two suppliers do not make a competitive market and that rates paid by QFs cannot be just 

and reasonable unless the Commission finds that market power cannot be exercised by 

those suppliers.55 

Commission Determination

125. We deny Industrial Parties’ request to condition termination of the sales obligation 

on the existence of a competitive market for replacement power. We continue to believe 

a strict interpretation of section 210(m)(5) is appropriate in response to requests to 

terminate the obligation to sell standby and backup power to QFs. All the statute requires 

is a finding that “competing retail electric suppliers are willing and able to sell and 

 55 Industrial Parties at P 19-20. 
Docket No. RM06-10-001 - 73 -

deliver electric energy to” the QF. Competing retail electric suppliers implies two or 

more sellers, and the word competing suggests some level of competition between them. 

The requirement that the suppliers be willing and able to deliver also appears to require 

sufficient capacity to actually make sales. 

126. In proceedings on applications requesting termination of the sales obligation under 

§ 292.312 of the Commission’s regulations, QFs opposing termination of an electric 

utility's obligation to sell may certainly argue that current practices in a particular market 

may provide a basis for the Commission to find that there are no "competing retail 

electric suppliers" in some instances. We will decline to rule generically on such issues 

in this rulemaking. 

127. We also reject the Industrial Parties’ request to condition relief under section 

210(m)(5) on a finding that rates for replacement power are reasonable. We affirm our 

decision in the Final Rule that the rates for retail service are beyond the Commission’s 

jurisdiction. The Industrial Parties are simply wrong to imply that the Commission must 

first find a competitive retail market before terminating an electric utility's obligation to 

sell power to a QF. That argument is based on the same false premise that this 

Commission is responsible for setting retail rates. Section 210(m) does not shift 

responsibility for setting or maintaining appropriate retail rates from the States to this 

Commission. Rather, section 210(m)(5) requires the Commission, before it terminates an 

electric utility’s obligation to sell electric energy to a QF, to find that “competing retail 

electric suppliers are willing and able to sell and deliver electric energy to the” QF, and 
Docket No. RM06-10-001 - 74 -

that “the electric utility is not required by State law to sell electric energy in its service 

territory.” Section 210(m)(5) does not require this Commission to pass judgment on 

State-approved retail rates. 

E. Existing Rights and Remedies

 Background

128. Section 210(m)(6) of PURPA protects the rights and remedies under a contract or 

obligation in effect or pending approval before a state regulatory authority. In the Final 

Rule, the Commission interpreted the term “obligation” as a “legally enforceable 

obligation,” which is established through a state’s implementation of PURPA. The 

Commission stated that a QF that had initiated, prior to date of enactment of section 

210(m) (i.e., August 8, 2005), a state PURPA proceeding that may result in a contract or 

legally enforceable obligation would be considered to have triggered an “obligation” with 

an electric utility regarding section 210(m)(6). 

129. The Commission found that, when a QF contract terminates by its own accord, an 

electric utility would not be compelled to enter into a new, successor contract with the QF 

if the purchase requirement has been terminated for the QF. As long as there is mutual 

agreement between a QF and the electric utility to terminate a contract, the electric utility 

is not compelled to enter into another contract with the QF. The Commission stated that 

nothing in the Final Rule was intended to abrogate existing contracts. The Commission 

noted, however, that there may be contracts containing provisions that provide that 

legislation such as EPAct 2005, or a Final Rule such as this one, trigger termination of 
Docket No. RM06-10-001 - 75 -

the contract. To the extent the parties to a contract cannot agree whether a termination 

clause has been triggered, the Commission determined that the issue would be best 

determined in an individual case-specific proceeding in which the particulars of the 

contract can be examined.

Requests for Rehearing

130. Deere argues that clarification is required to preserve state law processes as 

creating legally enforceable obligations in the context of section 210(m)(1). Deere 

contends that language in paragraph 213 of the Final Rule indicates that an obligation is 

triggered prior to the utility applying for relief of the PURPA purchase requirement if a 

QF “has initiated a state’s PURPA proceeding that may result in a contract or legally 

enforceable contract or obligation.” Deere argues that the phrase “state’s PURPA 

proceeding” is too narrow and should be broadened because it does not recognize that a 

“legally enforceable obligation” can be created under state law processes which do not 

involve a docketed state proceeding, such as issuance of regulations. 

131. Deere also notes that some states have adopted PURPA implementation 

approaches that require QFs to first start construction, if not complete it, before an 

obligation is created in connection with section 210(m). Deere argues that the 

Commission should therefore clarify that a QF located in a “build first” state triggers a 

legally enforceable obligation if, prior to the time of the utility PURPA relief application, 

it has already begun construction. Deere argues that otherwise, QFs that are nearly 
Docket No. RM06-10-001 - 76 -

complete in the construction will be unfairly penalized and the significant capital 

resources they have committed will be impaired. 

132. OG&E asks the Commission to clarify that it is not prejudging when – or if – a 

QF’s state PURPA application gives rise to a legally enforceable obligation under 

PURPA. OG&E contends that the Commission has consistently held that it is for the 

states, not the Commission, to determine “the specific parameters of individual QF power 

purchase agreements, including the date at which a legally enforceable obligation is 

incurred under state law.”56 OG&E states that presuming that a section 210(m)(1) 

“obligation” exists as of the date a QF files a state application that “may” lead to a legally 

enforceable obligation is inconsistent with how many states address this issue. OG&E 

adds that the Commission should also clarify that it is not dictating what factors the states 

can consider when evaluating whether a QF has established a legally enforceable 

obligation. 

133. OG&E asks that the Commission clarify that a utility has the opportunity to 

respond to a purported legally enforceable obligation by making a section 210(m) filing 

particularly if the state legally enforceable obligation filing was made between August 8, 

2005 and the effective date of the Final Rule, as may be revised on rehearing. OG&E 

contends that the utility should be able to respond by filing a section 210(m)(1) 

application with the Commission. 

 56 OG&E Request for Rehearing at 5 (citing Metropolitan Edison Co., 72 FERC 

¶ 61,015 at 61,050 (1995)). 
Docket No. RM06-10-001 - 77 -

134. OG&E also asks that the Commission establish a formal process that allows 

section 210(m)(1) issues to be evaluated in response to a state PURPA “obligation” 

filing. It argues that a QF attempting to establish a legally enforceable obligation should 

be required to provide the utility with formal notice of such a filing, and that within sixty 

days of such notice, the utility must file the necessary application to satisfy the market 

criteria. OG&E argues that this opportunity to rebut an obligation is essential where a QF 

seeks to establish a state-mandated obligation between January 19, 2006 and the effective 

date of the Final Rule. OG&E states that the Commission made clear in the NOPR that a 

utility would not be able to submit a section 210(m) application until after a final rule in 

this rulemaking. OG&E contends that it is therefore unreasonable for the Commission to 

require utilities to delay submitting section 210(m)(1) applications, and then hold that it is 

too late to avoid obligations purportedly incurred during the Commission-mandated 

delay. 

135. With regard to termination of contracts with a QF, Industrial Parties note that 

many utility contracts have a change-in-law clause that allows them to terminate current 

contracts. To the extent that the parties to a contract cannot agree whether a termination 

clause has been triggered, the Industrial Parties agree that the issue will be best 

determined in an individual case-specific proceeding in which the particulars of the 

contract can be examined. Industrial Parties argue, however, that the Commission should 

clarify that utilities may not use such clauses to terminate their purchase obligation 
Docket No. RM06-10-001 - 78 -

without obtaining a Commission determination pursuant to the processes set out in the 

Final Rule.

 Commission Determination

136. Section 210(m)(6) provides: 

NO EFFECT ON EXISTING RIGHTS AND REMEDIES.— 

Nothing in this subpart affects the rights or remedies of any party under any 

contract or obligation, in effect or pending approval before the appropriate 

State regulatory authority or non-regulated electric utility on the date of 

enactment of this subsection, to purchase electric energy or capacity from 

or to sell electric energy or capacity to a qualifying cogeneration facility or 

qualifying small power production facility under this Act (including the 

right to recover costs of purchasing electric energy or capacity). 

In the Final Rule, the Commission adopted the statutory language into its regulations57

and pointed out that it had previously addressed the meaning of section 210(m)(6) in 

Midwest Renewable Energy Projects, LLC.

58 In Midwest Renewable, we rejected the 

notion that “contract” and “obligation” are synonymous terms. When a utility refuses to 

enter into a contract with a QF, and the QF seeks state regulatory authority assistance to 

enforce its PURPA regulations, a non-contractual but still legally enforceable obligation 

may be created pursuant to the state’s implementation of PURPA. The Commission 

explained in the Final Rule that such obligations do not necessarily involve a single 

writing containing all material terms and that how QFs may initiate the process varies 

from state to state. As a result, narrowly defining an “obligation” to encompass only a 

 57 Final Rule at P 210-11. 

58 Midwest Renewable Energy Projects, LLC, 116 FERC ¶ 61,017 (2006) 

(Midwest Renewable). 
Docket No. RM06-10-001 - 79 -

specific legal arrangement with all the relevant and material rates, terms and conditions 

established could be at odds with a state’s implementation of PURPA. The Commission 

therefore concluded in the Final Rule that the term “obligation” means a “legally 

enforceable obligation” which is established through a state’s implementation of 

PURPA.59 We affirm the Commission’s determination in the Final Rule that a QF that 

initiated, prior to August 8, 2005, a state PURPA proceeding that may result in a contract 

or legally enforceable obligation would be considered to have triggered an “obligation” 

with the electric utility subject to section 210(m)(6) pending the state's determination of 

whether an enforceable obligation exists. If the state determines that no enforceable 

obligation exists, then relief from the utility’s purchase obligation with respect to that QF 

may be granted. 

137. The Commission clarifies that the date when an “obligation” under PURPA is 

established is the date such obligation is established by each state regulatory authority or 

nonregulated utility. In the Final Rule, the Commission noted that the statute 

grandfathered contracts and obligations entered into before the effective date of EPAct 

2005 in section 210(m)(6) of PURPA, but that section 210(m)(1) of PURPA only gives 

the Commission authority to terminate the obligation to enter into new contracts or 

obligations. The Commission determined that a QF that has initiated a state PURPA 

proceeding that may result in a legally enforceable contract or obligation prior to the 

 59 Final Rule at P 211-13. 
Docket No. RM06-10-001 - 80 -

applicable electric utility filing its petition for relief pursuant to § 292.310 of the 

Commission’s regulations will be entitled to have any contract or obligation that may be 

established by state law grandfathered.60 We see no reason to change this determination, 

as the grandfathering of only pre-August 8, 2005 contracts or obligations would 

undermine any subsequent QF investments. 

138. We do note, however, that if a QF argues that any contract or obligation was 

“pending approval before the appropriate State regulatory authority or non-regulated 

electric utility,” and thus argues that the utility’s obligation to purchase from the QF 

ought not be terminated pursuant to a § 292.310 proceeding, the Commission will 

consider those claims in the individual proceedings as they arise. Whether a contract or 

obligation exists would depend on state law. What we do not expect to see is a race to 

make filings either to be grandfathered, or to negate a potential obligation filed after 

August 8, 2005, but prior to a utility’s filing for relief from the obligation to enter new 

contracts or obligations. 

139. Deere requests that we clarify that a legally enforceable obligation may be created 

not just by a state PURPA proceeding, but also by other means such as by a state issuing 

regulations or taking other action reasonably designed to give effect to the Commission’s 

 60 As we noted above, once the Commission has made a finding that a particular 

QF has nondiscriminatory access to one of the specified markets, this conclusion would 

be binding in proceedings involving the same QF and other electric utilities, absent a 

showing of changed circumstances. Accordingly, as of the date of the first electric 

utility’s filing seeking termination of the obligation to purchase from a particular QF, any 

subsequent state filing that a QF makes will not result in a grandfathered obligation. 
Docket No. RM06-10-001 - 81 -

rules. We find that the language “or pending approval” in section 210(m)(6) implies that 

there has been a filing before a state regulatory authority. As we stated in Midwest 

Renewable, “the phrase ‘or pending approval’ [is] quite significant, as it ensures that 

contracts or obligations that had not yet been entered into but were being pursued in the 

context of the state commission proceedings that were pending on the date of enactment 

of EPAct 2005 will fall within the savings clause.”61 We therefore find that, under most 

circumstances, there must be some sort of filing before a state regulatory authority for a 

QF to be “pending approval.” Even under these circumstances, we emphasize, however, 

that in the division of responsibilities of administering PURPA between this Commission 

and state regulatory authorities (and non-regulated utilities), it is the state regulatory 

authorities (or non-regulated utilities) that determine whether and when a legally 

enforceable obligation is created, and the procedures for obtaining approval of such an 

obligation. QFs that believe that some other sort of state proceeding has created a legally 

enforceable obligation under state law may argue their claim before the Commission, and 

we will make such determinations on a case-by-case basis based on state law. 

140. Accordingly, while we agree with Deere that QFs that have begun but not yet 

completed physical construction, and therefore that have not been able to complete the 

process for creating a legally enforceable obligation under a “build first” state law, may 

have utilized a particular state’s implementation of PURPA in a way that results in a 

legally enforceable obligation, such a determination would need to be made on a case-

 61 Midwest Renewable at P 14 (emphasis added). 
Docket No. RM06-10-001 - 82 -

specific basis. Whether the state regulatory authority’s process for creating a legally 

enforceable obligation has begun, and thus there is a contract or obligation pending, 

depends on state law. A QF may argue that an obligation or contract is pending approval 

as provided by state law in any proceedings seeking termination of the purchase 

obligation, or pursuant to a petition for declaratory order. 

141. The Commission denies OG&E’s request to establish a new process by which a 

utility could use a section 210(m) application to nullify a state proceeding to establish a 

new QF purchase obligation. OG&E complains that the Commission prevented utility 

section 210(m) filings from January 19, 2006, when the NOPR issued, until issuance of 

the Final Rule, and should not now find that QFs initiating state “obligation” proceedings 

during that interim period, or thereafter, are grandfathered under section 210(m)(6) of 

PURPA. Under OG&E’s proposal, a QF seeking a new state “obligation” determination 

would be required to notify the utility and the utility would have 60 days to file a section 

210(m) application with the Commission; this application would be addressed in a final 

determination within 90 days. This final determination could then be taken into account 

by the state in deciding whether to grant the QF’s application to create a new “obligation” 

for the local utility to purchase power from the QF. 

142. We decline to create the new process requested by OG&E. We continue to 

believe that the Commission’s determination to adopt the language of section 210(m)(6) 

and to look to state law to determine whether a contract or obligation is pending approval 

provides a sufficient balance between the rights of the electric utilities seeking relief from 
Docket No. RM06-10-001 - 83 -

the obligation to enter into new contracts or obligations, and the rights of QFs under 

existing contracts or obligations. 

143. We will grant clarification with regard to the termination of existing contracts. 

Industrial Parties’ request is consistent with our other findings with regard to contract 

termination in the Final Rule. In the Final Rule, in response to comments by AEP, we 

stated that an electric utility will not be compelled to enter into a new contract as long as 

there is mutual agreement between a QF and the electric utility to terminate the existing 

contract. We made clear, however, that “a QF contract is to remain in effect until it 

terminates by mutual agreement or by its own terms.”62 The Commission also 

recognized that some contracts contain clauses stating that legislation, such as EPAct 

2005, or a Commission action, such as the Final Rule in this docket, may be grounds for 

termination of the contract. If an electric utility and a QF disagree as to the meaning of a 

termination clause, either the electric utility or the QF may seek a determination 

regarding its rights under the termination clause in the appropriate state forum since the 

issue of whether a QF has a continuing right to sell is a matter of contract interpretation. 

 F. Implementation Procedures

144. Section 210(m)(3) of PURPA provides in part that “[a]ny electric utility may file 

an application with the Commission for relief from the mandatory purchase obligation 

pursuant to this subsection on a service territory-wide basis.” The Commission 

essentially incorporated this language into § 292.310 of its regulations. The Commission 

 62 Final Rule at P 219. 
Docket No. RM06-10-001 - 84 -

also determined that an electric utility’s mandatory purchase obligation would be 

suspended upon the filing of its PURPA petition. When an electric utility files its 

PURPA petition, that electric utility will not be obligated to enter into new contracts or 

obligations with QFs as of the date its PURPA petition is filed. If the Commission finds 

that the requirements of section 210(m)(1) of PURPA have been met, then the purchase 

requirement for that electric utility ends as of the date of the PURPA petition. However, 

if the Commission finds that the requirements of section 210(m)(1) have not been met, 

then the electric utility’s obligation to enter into new contracts or obligations is reinstated 

as of the date of the Commission order. 

Requests for Rehearing

145. PacifiCorp and EEI argue that the Commission should clarify the procedures for 

utilities requesting termination of the mandatory purchase obligation on a "service 

territory-wide" basis. PacifiCorp notes that the term "service territory-wide" is not 

defined in PURPA or in the Final Rule and could refer to a portion of a utility's electric 

infrastructure located in a specific state or could be understood to be synonymous with 

the control area operated by the applicant. PacifiCorp argues that a single entity (such as 

PacifiCorp) owning transmission facilities and operates multiple control areas should be 

able to file separate applications for each control area. PacifiCorp and EEI argue that 

such clarification would facilitate the processing of applications by the Commission 

within the time limitations established by Congress. PacifiCorp and EEI request that the 

Commission clarify that it will interpret "service territory" to be the particular control 
Docket No. RM06-10-001 - 85 -

area or areas identified in the application when the applicant operates multiple control 

areas spanning several states. 

146. If the Commission retains the small QF rebuttable presumption, Deere requests 

that the Commission grant rehearing of its decision to temporarily suspend a utility’s 

PURPA obligation once a request for relief has been filed. Deere argues that the 

Commission should instead apply the utility’s PURPA relief to small QFs only after the 

Commission makes the required findings with regard to the small QF issue. Deere 

contends that this would protect small QFs who, at the time of the utility’s PURPA relief 

application, have already begun preliminary development work but have not yet been 

able to begin utilization of the applicable state law process for creating a legally 

enforceable obligation. 

Commission Determination

147. We clarify that an electric utility may specify in its application the territory within 

which it seeks to have its purchase obligation terminated. 

148. We grant Deere’s request to distinguish between particular types of QFs for 

purpose of suspending the mandatory purchase obligation once an application for relief 

has been filed under section 210(m)(3). The rebuttable presumption that small QFs do not 

have access to markets will remain in effect and, thus, it is reasonable to retain the 

mandatory purchase obligation from small QFs pending consideration a PURPA petition. 

We clarify that to the extent that an electric utility seeks to be relieved of the obligation to 

purchase from a small QF, the electric utility must rebut the presumption that the small 
Docket No. RM06-10-001 - 86 -

QF does not have nondiscriminatory access to the applicable market prior to the 

termination of the purchase requirement as applied to that QF, and that the purchase 

obligation remains in effect until, and if, the Commission makes the finding that the small 

QF does have nondiscriminatory access to markets that warrant termination of the 

purchase obligation. 

III. Information Collection Statement

149. The regulations of the Office of Management and Budget (OMB)63 require that 

OMB approve certain information requirements imposed by an agency. OMB has 

approved the information requirements contained in Order No. 688. Specifically, OMB 

approved the following information collections and assigned the corresponding OMB 

control numbers: Small Power Production and Cogeneration Facilities (FERC-556) 

(1902-0075). 

150. On rehearing EEI argues that the filing requirements in § 292.310(d)(3) are unduly 

broad and burdensome. We have addressed those arguments elsewhere in this order.64

151. This order on rehearing adopts a change. Specifically, we are requiring electric 

utilities filing an application with the Commission for relief from the mandatory purchase 

requirement to provide more information about the potentially affected QFs, including 

the docket number assigned if the QF filed for self-certification or Commission 

certification of qualifying facility status, the location of the QF depicted by state and 

 63 5 CFR 1320.12. 

64 See supra P 112-17. 
Docket No. RM06-10-001 - 87 -

county, and by the name and location of the substation where the QF is interconnected, 

and whether the QF is interconnected as an energy or network resource. We do not 

anticipate that this new requirement to provide additional information about the 

potentially affected QFs will impose a significant additional burden on electric utilities; 

the additional information we are requiring is readily available to electric utilities. 

Accordingly, we will allow the original projected burden estimates expressed in Order 

No. 688 to stand. 

Interested persons may obtain information on the reporting requirements by 

contacting the following: Federal Energy Regulatory Commission, 888 First Street, NE, 

Washington, D.C. 20426 [Attention: Michael Miller, Office of the Executive Director, 

Phone (202)502-8415, fax: (202)273-0873, e-mail: michael.miller@ferc.gov ] 

152. To submit comments concerning the collection of information(s) and the 

associated burden estimates, please send your comments to the contact listed above and 

to the Office of Management and Budget, Office of Information and Regulatory Affairs, 

Washington, D.C. 20503, Attention: Desk Officer for the Federal Energy Regulatory 

Commission; Phone: (202)395-4650, fax: (202)395-7285. 

IV. Document Availability

153. In addition to publishing the full text of this document in the Federal Register, the 

Commission provides all interested persons an opportunity to view and/or print the 

contents of this document via the Internet through FERC's Home Page 

(http://www.ferc.gov) and in FERC's Public Reference Room during normal business 
Docket No. RM06-10-001 - 88 -

hours (8:30 a.m. to 5:00 p.m. Eastern time) at 888 First Street, N.E., Room 2A, 

Washington D.C. 20426. 

154. From FERC's Home Page on the Internet, this information is available on 

eLibrary. The full text of this document is available on eLibrary in PDF and Microsoft 

Word format for viewing, printing, and/or downloading. To access this document in 

eLibrary, type the docket number excluding the last three digits of this document in the 

docket number field. 

155. User assistance is available for eLibrary and the FERC's website during normal 

business hours from our FERC Online Support at 202-502-6652 (toll-free at 1-866-208-

3676) or email at ferconlinesupport@ferc.gov, or the Public Reference Room at (202) 

502-8371 Press 0, TTY (202)502-8659. E-Mail the Public Reference Room at 

public.referenceroom@ferc.gov. 

V. Effective Date 

156. These revisions in this order on rehearing are effective [insert date 30 days after 

publication in the FEDERAL REGISTER]. 

By the Commission. Commissioner Kelly concurring with a separate statement attached. 

( S E A L ) 

 Kimberly D. Bose, 

 Secretary. 
Docket No. RM06-10-001 - 89 -

 In consideration of the foregoing, the Commission amends part 292, Chapter I, 

Title 18, Code of Federal Regulations, as follows: 

PART 292 – REGULATIONS UNDER SECTIONS 201 AND 210 OF THE PUBLIC 

UTILITY REGULATORY POLICIES ACT OF 1978 WITH REGARD TO 

SMALL POWER PRODUCTION AND COGENERATION

1. The authority citation for part 292 continues to read as follows: 

 Authority: 16 U.S.C. 791a-825r, 2601-2645; 31 U.S.C. 9701; 42 U.S.C. 7101-7352. 

2. In § 292.310, paragraphs (c) introductory text and (d)(3) are revised to read as 

follows: 

§ 292.310 Procedures for utilities requesting termination of obligation to purchase 

from qualifying facilities.

* * * * *

 (c) An electric utility must submit with its application for each potentially 

affected qualifying facility: the docket number assigned if the qualifying facility filed for 

self-certification or an application for Commission certification of qualifying facility 

status; the net capacity of the qualifying facility; the location of the qualifying facility 

depicted by state and county, and the name and location of the substation where the 

qualifying facility is interconnected; the interconnection status of each potentially 

affected qualifying facility including whether the qualifying facility is interconnected as 
Docket No. RM06-10-001 - 90 -

an energy or a network resource; and the expiration date of the energy and/or capacity 

agreement between the applicant utility and each potentially affected qualifying facility. 

All potentially affected qualifying facilities shall include: 

 * * * * * 

 (d) * * * 

 (3) Transmission Studies and related information, including: 

 (i) The applicant’s long-term transmission plan, conducted by applicant, or the 

RTO, ISO or other relevant entity; 

 (ii) Transmission constraints by path, element or other level of comparable detail 

that have occurred and/or are known and expected to occur, and any proposed mitigation 

including transmission construction plans; 

 (iii) Levels of congestion, if available; 

 (iv) Relevant system impact studies for the generation interconnections, already 

completed; 

 (v) Other information pertinent to showing whether transfer capability is available; 

and 

 (vi) The appropriate link to applicant’s OASIS, if any, from which a qualifying 

facility may obtain applicant’s available transfer capability (ATC) information. 

 * * * * * 
UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

New PURPA Section 210(m) Regulations Docket Nos. RM06-10-001 

 Applicable to Small Power Production and 

 Cogeneration Facilities 

(Issued June 22, 2007) 

KELLY, Commissioner, concurring: 

 Under PURPA section 210(m)(1)(A), no electric utility shall be required to enter 

into a new contract or obligation to purchase electric energy from a QF under section 

210(m) if the Commission finds that the QF has nondiscriminatory access to: “(i) 

independently administered, auction-based day ahead and real time wholesale markets 

for the sale of electric energy; and (ii) wholesale markets for long-term sales of capacity 

and electric energy.” This order affirms the finding in Order No. 688 that the four “Day 

2” markets (MISO, PJM, NYISO and ISO-NE) satisfy both requirements of section 

210(m)(1)(A). 

By contrast to section 210(m)(1)(A)(ii), section 210(m)(1)(B)(ii) requires that a 

QF have nondiscriminatory access to “competitive wholesale markets that provide a 

meaningful opportunity to sell capacity, including long-term and short-term sales, and 

electric energy, including long-term, short-term and real-time sales, to buyers other than 

the utility to which the qualifying facility is interconnected.” Section 210(m)(1)(B)(ii) 

also provides that “[i]n determining whether a meaningful opportunity to sell exists, the 

Commission shall consider, among other factors, evidence of transactions within the 

relevant market.” In Order No. 688, the Commission interpreted the use of the terms 

“competitive,” “meaningful opportunity” and “evidence of transactions” in section 

210(m)(1)(B)(ii) to mean that Congress intended for termination of the purchase 

requirement in a “Day 1” market, such as CAISO and SPP, only if it could be 

demonstrated that QFs had opportunities to make long-term and short-term sales of 

capacity and long-term, short-term and real-time sales of energy into competitive 

wholesale markets. This order clarifies that, based on the specific language contained 

in section 210(m)(1)(B)(ii), a petitioning electric utility located in a “Day 1” market 

must demonstrate an actual, not just theoretical, opportunity to meet this requirement. 

Accordingly, this order affirms Order No. 688 in finding that the “Day 1” markets, SPP 

and CAISO, have not been shown to meet the requirements of section 210(m)(1)(B)(ii). 

On rehearing, petitioners dispute the Commission’s finding in Order No. 688 

that the four “Day 2” markets meet the second prong of section 210(m)(1)(A). They 

argue that the mere existence of long-term bilateral contracts for sales of capacity and 

energy in these markets is not sufficient to demonstrate that there is a competitive 
Docket No. RM06-10-001 - 2 - 

market for capacity and energy sales or meaningful opportunities for QFs to sell energy 

or capacity long-term to multiple buyers. 

I sympathize with petitioners’ argument, and in fact I believe that section 

210(m)(1)(A)(ii) logically should have required a demonstration of a competitive longterm market that provides a meaningful opportunity for QFs to sell energy or capacity 

long-term to buyers other than the utility to which the QF is interconnected, as is 

required under section 210(m)(1)(B)(ii). However, the less specific language in section 

210(m)(1)(A)(ii) used to describe the quality of the relevant long-term market that 

would satisfy this requirement indicates that either this was not Congress’s intent, or 

that perhaps there was a drafting oversight. In any event, we must look to the plain 

language of the statute. Thus, in my view, the Commission has reasonably interpreted 

section 210(m)(1)(A)(ii) to require only that there be a “market” for long-term sales of 

capacity and energy with respect to electric utilities located in “Day 2” markets. 

Accordingly, I concur with this order. 

 ______________________________ 

 Suedeen G. Kelly