MPUC Adopts Safe Harbor for Determination of “Discrete Electric Generating Facilities,” a Qualification for Net Energy Billing and Distributed Generation Programs

Yesterday, all three Maine Public Utilities Commission Commissioners agreed to adopt a new standard for the determination of what facilities qualify as “discrete electric generating facilities” under the MPUC’s Distributed Generation and Net Energy Billing rules. This has been an issue of significant concern among developers given the ambiguity associated with the definition. The Commission considered three requests for advisory rulings related to this topic, Borrego’s, TurningPoint’s, and Clean Energy Collective’s.

In short, to provide greater clarity and certainty, Commissioner Davis proposed a new safe harbor standard that would apply to facilities with a combined size of 5MW or greater that are operated by the same entity, affiliates, partnerships, etc., or those that have a shared financial interest. The proposed safe harbor is an overlay to the existing multi-factor test that the MPUC applies to the analysis.

Under the proposed safe harbor:

• Facilities more than 5 miles apart, measured at the closest point, would be presumed to be discrete facilities
• Facilities less than 1 mile apart, measured at the closest point, would not be discrete facilities
• Facilities between 1 and 5 miles apart, measured at the closest point, must meet all of the following criteria to be considered discrete facilities:
  • No sharing of development resources, EPC etc., unless it is proved that there are no economies of scope or scale result from the sharing
  • The DEP has not determined that the facilities will be considered under the “common scheme of development” standard
  • No common interconnection point, or interconnection costs
  • No common permanent financing, except that early financing associated with site control and permitting is permissible
  • The balance of system elements/costs may not be shared
  • No common access point/right of way

Commissioner Davis also proposed that as part of the Distributed Generation procurement, bidders would have to provide an affidavit related to these factors. Moreover, Commissioner Davis proposed that any transfer of ownership must prohibit common long-term investment or financing.

Commissioner Davis then explained that Borrego’s projects A & B, and C & D would not meet either the existing multi-factor test, or the new test; TurningPoint’s projects G & H, would not meet either test, and TurningPoint’s projects E & F would not meet the multi-factor test, but would qualify for the new safe harbor. Commissioner Davis further elaborated that if the Commission adopted the new safe harbor it should not adopt the “parcel policy” suggested by others (Longroad, BlueWave, Clean Energy Collective).

Chair Bartlett generally agreed with Commissioner Davis, except the he would not adopt the automatic exclusion of projects located less than one mile apart. He explained that two projects could be 0.98 miles apart, and otherwise meet all of the factors in the multi-factor test, so those should not be automatically excluded. Instead, the multi-factor test should be applied to reach a conclusion.

Commissioner Williamson agreed with Chair Bartlett, and Commissioner Davis ultimately agreed as well.

No doubt there will be winners and losers under this test, but it should provide greater certainty to developers. A written order has not yet been issued.