FERC Requires Refunds for Late QF Recertification

On February 19, 2026, the Federal Energy Regulatory Commission (FERC) issued Branch Street Solar Partners, LLC et al., 194 FERC ¶ 61,124 (2026) rejecting the refund reports filed in connection with the late filing of recertifications of qualifying facility (QF) status by certain affiliated companies to reflect a change in upstream ownership. FERC’s rearticulation of QF recertification timing requirements and consequences for late QF recertifications has broad and substantial implications for all QF owners. 

Among other things, QF status provides various exemptions from Federal Power Act (FPA) requirements, including, importantly, certain exemptions from the requirement to have a rate on file for wholesale sales of power under FPA § 205. QF status, however, is premised on the QF obtaining and maintaining QF status. FERC has previously found that material changes to information reported in a QF certification triggers recertification. The QFs at issue in the order here filed their recertifications six to 12 months after the change in ownership that triggered the need for a QF recertification. The QF applicants argued that under FERC precedent, once a QF is certified, it does not lose QF status due to an untimely recertification and therefore its QFs maintained FPA exemptions during the period between the change in ownership and the QF recertification filing date (delay period).

In rejecting this argument, FERC clarified that a plain reading of its QF regulations and its decision in Irradiant Partners, LP, 178 FERC ¶ 61,215 (2022) demonstrate that a QF failing to conform with material facts in its most recent QF certification — including changes in ownership — may no longer rely on such certification and must recertify to maintain its QF status. FERC found that the QFs did not have QF status during the delay period and therefore could not rely on an FPA § 205 exemption for their wholesale power sales.

Because the QFs did not have FPA § 205 authority for their wholesale power sales during the delay period, FERC required the QFs to pay time-value refunds to customers for revenues collected during the delay period, which includes interest compounded quarterly through the date on which the refund payments are made. 

The order has far-reaching implications for any QF that experiences a material change from its currently effective QF certification. A material change includes, among other things, additional affiliated facilities located one mile or less from the QF’s electrical generating equipment, changes to net power production capacity, and ownership changes. FERC reasserted and clarified that it does not consider a QF to have QF status from the date of a material change until the QF recertifies its QF status. The order’s impact is particularly far-reaching. During a period when QF status is not maintained, a QF is not only subject to making substantial refunds to its customer, but it also could be in violation of other aspects of the FPA, including for example, civil penalties — which are currently up to approximately $1.6 million/day/violation — if it did not obtain approval under FPA § 203 for a transaction that occurs during such period. QFs with contractual obligations to maintain QF status face potential risk of a contractual default and associated repercussions.

Given the potential and substantial consequences, QFs should be vigilant in looking ahead to changes in their QF status and be prepared to recertify before or on the same day as a material change occurs.