QFs get mixed signals

For the QFs, the FERC giveth and the bankruptcy court taketh away

In a move that is sure to increase the tension between Sacramento and Washington, D.C., the Federal Energy Regulatory Commission (FERC) gave its blessing last week to alternative energy providers trying to get out of their contracts with the major utilities to sell their power on the open market, at prices far above what they are getting now.

The FERC decision was a rebuff of Davis’ petition to get federal regulators to intervene and require hundreds of “qualifying facilities” (QFs)—mostly gas-fired cogeneration and renewable energy facilities—to go on selling their power to the utilities, despite prices that many generators claim could put them out of business.

A handful of generators has received court approval to get out of the contracts, and dozens more have been considering a jump into the spot market. The QFs make up about one-fourth of the state’s generating capacity, and their entrance into the spot market would surely cost the state millions of dollars above the billions already being paid for electricity purchases.

Many of the 300 generators who do business with PG&E are struggling because they are owed nearly $60 million in back-debt by the floundering utility.

“Today’s action is another classic bait and switch by the FERC,” said Davis last Thursday, adding that he has already persuaded most of the state’s QFs to come back on-line.

Yet the FERC’s decision was somewhat muted by the judge overseeing PG&E’s bankruptcy proceedings.

On the same day that the FERC was giving the nod to QFs to jump ship, U.S. bankruptcy Judge Dennis Montali said he was not likely to allow alternative energy providers to break their contracts with that utility. Montali will make a final decision on QFs on May 24.

The PG&E case won’t affect hundreds of QFs in Southern California that do business with Southern California Edison and who have also shown an interest in breaking their contracts.