Avoided-Cost Rates in Louisiana

Although determining that there was no need to amend its existing rules governing avoided-cost rates for power purchases executed pursuant to the Public Utility Regulatory Policies Act of 1978 (PURPA), the Louisiana Public Service Commission nevertheless has added clarifying language to the rules to underscore that the rules come into play only if and when a jurisdictional electric utility is subject to an independent PURPA obligation to procure energy or capacity from a qualifying facility (QF).

The review of the state commission’s avoided-cost regulations had been prompted by a series of decisions issued by the Federal Energy Regulatory Commission (FERC) in 2016, which relieved Entergy Louisiana of any obligation to enter into new power purchase agreements with any QF having a nameplate rating greater than 20 megawatts (MW). A question was then raised as to whether the Louisiana commission’s avoided-cost rules should be modified in order to effectuate the FERC decisions.

After soliciting input on the matter and taking responsive comments under consideration, the Louisiana commission concluded that it was not necessary to change any provisions in its existing avoided-cost directives. But, it said, out of an abundance of caution it had decided to add certain terms so as to make absolutely clear that the state rules create no independent obligation on the part of electric utilities to purchase power from QFs separate and apart from federally prescribed PURPA requirements. That is, the commission reiterated, its avoidedcost rules apply only if or when a Louisiana utility is required by the FERC to obtain capacity or energy from a QF under PURPA’s terms.

The commission confirmed that as presently constituted, Entergy Louisiana is under no obligation to purchase power from any QF with a capacity exceeding 20 MW, except for a previously ordered purchase from a QF facility owned by Dow in Plaquemine. (Docket No. R-34366)