Legally Enforceable Obligations: An Update on Great Divide

Updating the Year in Review on Legally Enforceable Obligations (LEO), FERC issued an Intent Not to Act on New Mexico Public Regulation Commission’s (NMPRC) LEO standard, which was challenged by a QF’s (Great Divide) Petition for Enforcement under PURPA.  It is not remarkable that FERC decided not to bring an enforcement action against the NMPRC LEO standard, which provides that a QF must demonstrate that it is ready to interconnect and deliver energy before a LEO is recognized.  (A similar LEO standard in Texas has already been upheld by the Fifth Circuit.)  What is interesting about the FERC order is the lengths that the FERC went to in explain that its failure to act was “meaningless.”  FERC explained that:

Notices of Intent Not to Act in the absence of an associated declaratory order cannot be read to mean that the Commission has accepted or agreed with (or alternatively, rejected or disagreed with) any argument made by any party, or with any substantive determination by a state regulatory authority or unregulated electric utility described in the petition for enforcement. The Commission’s silence is not evidence of a Commission determination on the merits of the parties’ arguments.  That is, the Commission has not ruled on the issues, and such issues may not be considered as having been so decided as to constitute precedents.  In sum, a Notice of Intent Not to Act, without an associated declaratory order, does not mean anything other than what it says – that the Commission declines to initiate an enforcement action under PURPA in response to the petition for enforcement.

What drove this rather strong addition to the FERC order? Although speculating, the answer is likely a split (2-2) among FERC Commissioners.  The NMPRC LEO standard is rather strict, and the only PURPA Enforcement action taken by FERC was against Idaho’s “utility must sign a PPA” LEO standard.  There may well have been two votes to bring an Enforcement Action and two votes against.  Those that that opposed this LEO standard may have insisted on the above wording to try and prevent a court “deferring” to FERC’s inaction.