Since President Trump began appointing commissioners to the Federal Energy Regulatory Commission (FERC), signs have not looked good for clean energy. But even as the commission prepares to investigate subsidies for uncompetitive coal and nuclear generation, it is also easing regulatory burdens for investors in solar projects.
Specifically, FERC issued a declaratory order last week confirming that renewable energy projects no longer need pre-authorization under Section 203 of the Federal Power Act (FPA) of 1935.
In a petition before FERC, renewable energy investors said the oversight inhibited them from raising tax equity financing for projects because FERC often held up deals while the commission investigated the role of passive investors in the project.
Passive investors purchase interests in businesses but hold no power to control the day-to-day running of the operations of those businesses. In the case of renewable energy projects, those entities are most often utilities.
Despite playing no role in the operations of the utilities – i.e. having no voting interests, etc. – FERC had previously required such projects to obtain pre-authorization from the commission before they could go ahead.
Exercising its powers under the FPA, FERC often held up the issuance of securities designed to raise tax equity funding, which in turn would allow renewable energy projects forward under the auspices of those utilities.
Those delays cost investors real money and, the petition before FERC argued, sometimes scuttled entire deals. FERC agreed. In its ruling, the commissioners wrote:
Under FPA section 203, prior Commission authorization is required if “a public utility seeks to sell, lease, or otherwise dispose of jurisdictional
a transmitting utility or an electric utility company. The Commission has held that the “or otherwise dispose” language of section 203(a)(1) includes transfers of control of jurisdictional facilities. However, the Commission has recognized that some investments are passive and do not convey control as regulated by FPA section 203.
FERC’s decision is expected to break a logjam in the renewable energy project pipeline.
The decision is just one of many that the commission should be making in the coming weeks, now that it finally has a quorum. Since the election of President Donald J. Trump, the commission had struggled to issue decisions because of that lack of a quorum.
Staff had been picking up a lot of the day-to-day operations that can now be resumed under the full commission.