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Virginia Electric & Power : North Carolina Department of Utilities Commission Issues Order Requiring Response of Fresh Air Energy II, LLC

07/11/2014 | 06:28am US/Eastern

RALEIGH, N.C., July 10 -- The North Carolina Utilities Commission issued the following order:

In the Matter of Fresh Air Energy II, LLC, and Fresh Air Energy X, LLC, Complainants v. Virginia Electric and Power Company, d/b/a Dominion North Carolina Power, Respondent

BY THE CHAIRMAN: On July 3, 2014, Fresh Air Energy II, LLC, and Fresh Air Energy X, LLC, (collectively, FAE), filed a verified Petition for Arbitration in the above-captioned docket. FAE alleges that beginning on or around December 2013 it has had ongoing negotiations with Virginia Electric and Power Company, d/b/a Dominion North Carolina Power (DNCP), concerning long term power purchase agreements (PPAs) for three 20-MW solar photovoltaic electric generating facilities that FAE is building at three locations in DNCP's service territory in North Carolina. FAE states that all three facilities have been issued a certificate of public convenience and necessity (CPCN) by the Commission authorizing construction of each of the facilities. See Orders Issuing Certificate and Accepting Registration of New Renewable Energy Facility, Docket Nos. SP-2665, Subs 10, 13 and 17.

In summary, FAE alleges that FAE and DNCP have exchanged information and engaged in good faith negotiations during the last several months in an effort to agree on the terms for a PPA for each of the three facilities. Nevertheless, several issues regarding avoided cost pricing and other contract terms remain unresolved. FAE states that it is FAE's understanding that the methodology used by DNCP to calculate the avoided cost pricing offered by DNCP for each facility's PPA is the same. Therefore, FAE decided to proceed with a single Petition for Arbitration to address the issues regarding all three facilities.

FAE describes in detail the issues in controversy. These include FAE's position that DNCP has failed to calculate avoided cost capacity and energy credits in accordance with the Commission's Order Establishing Standard Rates and Contract Terms for Qualifying Facilities, issued in Docket No. E-100, Sub 136 on February 21, 2014, and the Public Utility Regulatory Policies Act (PURPA). FAE alleges that as a result of DNCP's improper calculations the avoided cost capacity and energy credits

being offered by DNCP are understated and should not be accepted by the Commission. In addition, FAE questions the propriety of the Regulatory Pricing Adjustment and Refund provision included in the PPAs offered by DNCP. FAE asserts that this provision improperly shifts risks to FAE and, therefore, is preventing FAE from securing financing for the facilities.

The relief requested by FAE is that the Commission serve as an arbitrator pursuant to G.S. 62-40 to resolve the issues between FAE and DNCP, and that the Commission arbitrate the issues between FAE and DNCP and resolve the issues consistent with the position of FAE.

Based on the allegations of the Petition for Arbitration, it appears that FAE and DNCP have a controversy regarding the terms of three PPAs sought to be negotiated by FAE with DNCP. General Statute 62-40 requires that in order for the Commission to serve as an arbitrator all the parties to a controversy must agree in writing to submit the controversy to the Commission as the arbitrator. Otherwise, the Commission will treat the filing as a complaint pursuant to G.S. 62-73 and proceed accordingly.

In order to determine whether the Commission can proceed as the arbitrator under G.S. 62-40 and to refine the issues in controversy, the Chairman finds good cause to direct that DNCP shall either satisfy the demands of FAE and so advise the Commission or file a response to FAE's Petition for Arbitration on or before July 30, 2014. The Commission will proceed as appropriate after DNCP makes its filing.

IT IS, THEREFORE, ORDERED as follows:

1. That DNCP shall either satisfy the demands of Fresh Air Energy II, LLC, and Fresh Air Energy X, LLC, and so advise the Commission, or file a response to the Petition for Arbitration on or before July 30, 2014.

2. That in its response DNCP shall state whether it agrees to submit this controversy to the Commission for the Commission to serve as the arbitrator pursuant to G.S. 62-40.

ISSUED BY ORDER OF THE COMMISSION.

This the _10th day of July, 2014.

NORTH CAROLINA UTILITIES COMMISSION

Gail L. Mount, Chief Clerk

CC AutoTriage15db-140711-30VitinMar-4793531 30VitinMar

(c) 2014 Targeted News Service

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