Oregon Public Utility Commission

Rule Rule 860-029-0130
Nonstandard Power Purchase Agreements


(1)

Each public utility must offer nonstandard avoided cost rates and nonstandard power purchase agreements to all qualifying facilities directly or indirectly interconnected with the public utility.

(2)

Qualifying facilities have the unilateral right to select a purchase term of up to 20 years for a power purchase agreement. Qualifying facilities electing to sell firm output at fixed prices have the unilateral right to a fixed-price term of up to 15 years.

(3)

A qualifying facility may specify a scheduled commercial on-line date consistent with the following:

(a)

Anytime within three years from the date of agreement execution;

(b)

Anytime later than three years after the date of agreement execution if the qualifying facility establishes to the utility that a later scheduled commercial on-line date is reasonable and necessary and the utility agrees.

(4)

The qualifying facility will be determined to be providing firm energy or capacity if the contract requires delivery of a specified amount of energy or capacity over a specified term and includes sanctions for noncompliance under a legally enforceable obligation. For a qualifying facility providing firm energy or capacity:

(a)

The utility and the qualifying facility should negotiate the time periods when the qualifying facility may schedule outages and the advance notification requirement for such outages, using provisions in the utility’s partial requirements tariffs as guidance.

(b)

The qualifying facility should be required to make best efforts to meet its capacity obligations during the utility system emergencies.

(c)

The utility and the qualifying facility should negotiate security, default, damage and termination provisions that keep the utility and its ratepayers whole in the event the qualifying facility fails to meet its obligations under the contract.

(d)

Delay of commercial operation should not be a cause of termination if the utility determines at the time of contract execution that it will be resource sufficient as of the qualifying facility scheduled commercial operation date specified in the power purchase agreement. The utility may impose damages.

(e)

Lack of notice force testing to prove commercial operation should not be the cause of termination.

(5)

An “as-available” obligation for delivery of energy, including deliveries in excess of nameplate rating or the amount committed in the power purchase agreement should be treated as a non-firm commitment. Non-firm commitment should not be subject to minimum delivery requirements, default damages for construction delay or under-delivery, default damages for the qualifying facility choosing to terminate the power purchase agreement early, or default security for these purposes.

(6)

For qualifying facilities unable to establish creditworthiness, the utility must at a minimum allow the qualifying facility to choose either a letter of credit or cash escrow for providing default security. When determining security requirements, the utility should take into account the risk associated with the qualifying facility based on such factors such as its size and type of supply commitments. Default security methodologies specified in the utility’s standard power purchase agreements are a useful starting point for negotiations for nonstandard power purchase agreements.

(7)

Qualifying facilities may either contract with the purchasing utility for a “surplus sale” or for a “simultaneous purchase and sale” provided, however, that the qualifying facility’s selection of either contractual arrangement is not inconsistent with any retail tariff provision of the purchasing utility then in effect or any agreement between the qualifying facility and the purchasing utility.

(a)

Contracts for surplus sale and for simultaneous purchase and sale will be available to qualifying facilities regardless of whether they qualify for standard power purchase agreements and rates or non-standard power purchase agreements and rates. However, the “simultaneous purchase and sale” is not available to qualifying facilities not directly connected to the purchasing utility’s electrical system.

(b)

The negotiation parameters and guidelines should be the same for both surplus sale and simultaneous purchase and sale contracts.

(c)

The avoided cost calculations by utilities do not require adjustment solely as a result of the selection of either surplus sale or simultaneous purchase and sale arrangements.
Source

Last accessed
Jun. 8, 2021