Federal Court Rejects California Renewable Energy Tariff

Published February 9, 2018

The U.S. District Court for the Northern District of California rejected the California Public Utilities Commission’s (CPUC) Renewable Market Adjusting Tariff (Re-MAT) for small renewable electricity projects.

The court found CPUC’s tariff violated the federal Public Utility Regulatory Policies Act (PURPA).

Wrong Price

The case began in 2013 when Winding Creek Solar LLC sued the CPUC over its Re-MAT program which sets the prices utilities pay for renewable energy delivered by facilities under three megawatts.

Winding Creek had planned a small solar project in California’s Central Valley. The lawsuit claimed the tariff set under Re-MAT was illegal because it was calculated based on bimonthly auctions rather than the cost the utility, Pacific Gas and Electric, would have incurred by purchasing the electricity from another source, known as “avoided costs,” as required for utility rates under PURPA.

Winding Creek also challenged the program’s 750 MW cap, arguing PURPA requires utilities to buy any and all energy generated from small qualifying facilities like Winding Creek’s proposed one-MW plant.

Though the court ruled Re-MAT violated PURPA on both counts, it declined to grant Winding Creek’s request for a contract with PG&E at the highest Re-MAT tariff, sending it back to the parties to negotiate a price reflecting avoided costs.

District Court Judge James Donato wrote in his December 6, 2017 ruling, “Despite the complex regulatory and factual background here, the key legal issues turned out to be straightforward, and the scope of the parties’ actual dispute quite narrow.”

‘Sad Yet Amusing’

James Taylor, president of the Spark of Freedom Foundation and a senior fellow at The Heartland Institute, which publishes Environment & Climate News, says it is telling Winding Creek sought to be paid $89 per megawatt-hour, more than double the average wholesale price for electricity.

“Winding Creek’s desired price comes on top of the massive and disproportionate federal and state subsidies for solar power,” Taylor said. “Solar power advocates attempt to mislead policymakers and the general public to believe solar power is economically competitive with conventional power sources, yet real-world price data show the opposite.

“It is sad yet amusing an industry lavished with so many special-interest subsidies and market-share guarantees turns around and sues its most generous state benefactor, California, rather than expressing gratitude for all of the special favors it receives at taxpayer and consumer expense,” said Taylor.

Taylor says the Winding Creek case should provide a lesson for lawmakers: There is no limit to the support renewable energy companies will demand.

“This should be an object lesson for policymakers throughout the nation, that no matter how many special favors policymakers give to the renewable power industry, it will never be enough for them,” Taylor said.

Kenneth Artz ([email protected]) writes from Dallas, Texas.