QF Contract Terms in Oregon

In what it said was its third attempt at clarifying the date from which to measure the contract term of power purchase agreements (PPAs) negotiated by electric utilities and qualifying facilities (QFs), the Oregon Public Utility Commission affirmed that the clock starts running as of the day the QF commences commercial operation.

The commission noted that there seemed to be repeated confusion on the part of an electric utility, Portland General Electric Company (PGE), as to whether the period in which a fixed-price QF contract is in effect is measured from the date the PPA is executed or some other date. The commission noted that PGE was the only electric utility in the state that seemed to misapprehend when the pricing provisions in PPAs take effect. The commission attributed the misunderstanding to the less definitive language used by PGE in its QF contracts compared to those used by the other two electric utilities offering service in Oregon, Idaho Power Company and Pacifi-Corp.

According to the commission, those two companies have included explicit timing terms in the standard contracts offered QFs. The commission remarked that prior to PGE’s complaint, the term applicable to PPAs had never been “a source of controversy or litigation by either a QF or a utility.” The commission deemed it well-settled that the maximum 15-year term of fixed prices payable under a PPA is measured from the date the QF first delivers power to the purchasing utility, not the date the subject contract is consummated. (UM 1805, Order No. 18-079)