[Federal Register: January 27, 2006 (Volume 71, Number 18)]
[Proposed Rules]
[Page 4532-4541]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr27ja06-18]
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DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
18 CFR Part 292
[Docket No. RM06-10-000]
New PURPA Section 210(m) Regulations Applicable to Small Power
Production and Cogeneration Facilities
Issued January 19, 2006.
AGENCY: Federal Energy Regulatory Commission, DOE.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Federal Energy Regulatory Commission (Commission) is
proposing to amend its regulations governing small power production and
cogeneration in response to section 1253 of the Energy Policy Act of
2005 (EPAct 2005), which added section 210(m) to the Public Utility
Regulatory Policies Act of 1978 (PURPA). The Commission seeks public
comment on the amended regulations proposed herein.
DATES: Comments are due February 27, 2006. Reply Comments are due March
28, 2006.
ADDRESSES: Comments may be filed electronically via the eFiling link on
the Commission's Web site at http://www.ferc.gov. Commenters unable to
file comments electronically must send an original and 14 copies of
their comments to: Federal Energy Regulatory Commission, Office of the
Secretary, 888 First Street, NE., Washington, DC 20426. Refer to the
Comment Procedures section of the preamble for additional information
on how to file comments.
FOR FURTHER INFORMATION CONTACT:
Deborah Wyrick (Technical Information), Office of Energy Markets and
Reliability, Federal Energy Regulatory Commission, 888 First Street,
NE., Washington, DC 20426, (202) 502-6113.
Marka Shaw (Technical Information), Office of Energy Markets and
Reliability, Federal Energy Regulatory Commission, 888 First Street,
NE., Washington, DC 20426, (202) 502-8641.
Samuel Higginbottom (Legal Information), Office of the General Counsel,
Federal Energy Regulatory Commission, 888 First Street, NE.,
Washington, DC 20426, (202) 502-8561.
Giuseppe Fina (Legal Information), Office of the General Counsel,
Federal Energy Regulatory Commission, 888 First Street, NE.,
Washington, DC 20426, (202) 502-8696.
SUPPLEMENTARY INFORMATION:
Before Commissioners: Joseph T. Kelliher, Chairman; Nora Mead Brownell,
and Suedeen G. Kelly.
I. Introduction
1. On August 8, 2005, the Energy Policy Act of 2005 (EPAct 2005)
\1\ was signed into law. Section 1253(a) of EPAct 2005 adds a new
section 210(m) to the Public Utility Regulatory Policies Act of 1978
(PURPA) \2\ which provides for termination of an electric utility's
obligation to purchase energy and capacity from qualifying cogeneration
facilities and qualifying small power production facilities (QFs), if
the Federal Energy Regulatory Commission (Commission) finds that
certain conditions are met. Section 210(m) \3\: (1) Provides a
procedure for an electric utility to file an application for relief
from the mandatory purchase obligation on a service territory-wide
basis; (2) provides a procedure for any affected entity or person to
apply to the Commission for an order reinstating the electric utility's
obligation to purchase energy; (3) provides for termination of an
electric utility's obligation to sell to QFs energy and capacity if the
Commission finds that certain conditions are met; (4) protects existing
rights and remedies under any contract or obligation in effect or
pending approval involving the purchase of energy or capacity or sale
of energy or capacity to a QF; and (5) allows the Commission to issue
and enforce
[[Page 4533]]
regulations to ensure that an electric utility recovers all prudently
incurred costs associated with the purchase of energy from a QF.
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\1\ Public Law 109-58, Sec. 1253, 119 Stat. 594 (2005).
\2\ 16 U.S.C. 824a-3 (2000).
\3\ We note that the Commission has issued a notice of proposed
rulemaking regarding added section 210(n) in Docket No. RM05-36-000.
That section makes clear that no new qualifying cogeneration
facility can enter into a contract with an electric utility unless
the cogeneration facility satisfies criteria for new qualifying
cogeneration facilities that will be established by the Commission.
Revised Regulations Governing Small Power Production and
Cogeneration Facilities, Notice of Proposed Rulemaking, 70 FR 60,456
(Oct. 18, 2005), FERC Stats. & Regs. ] 32,590 (2005).
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2. The Commission proposes to amend its regulations, specifically
18 CFR 292.303, to implement the requirements in section 210(m).\4\ The
Commission seeks public comment on the regulations proposed herein.
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\4\ We will generally refer to EPAct 2005's added section 210(m)
of PURPA as ``amended section 210.'' All other references to PURPA
section 210 are as it currently exists.
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II. Background
3. When Congress enacted section 210 of PURPA, it required the
Commission to prescribe rules as the Commission determined necessary to
encourage cogeneration and small power production, including rules
requiring electric utilities to offer to purchase electric power from
and sell electric power to QFs. Additionally, section 210 of PURPA
authorized the Commission to exempt QFs from certain federal and state
laws and regulations.
4. Under section 201 of PURPA, cogeneration facilities and small
power production facilities which meet certain standards and which are
not owned by persons primarily engaged in the generation or sale of
electric power \5\ can become QFs, and thus become eligible for the
rates and exemptions pursuant to section 210 of PURPA and found in our
regulations.\6\
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\5\ The ownership requirement was codified in sections 3(17)(A)
and 3(18)(A) of the FPA. Section 1253(b) of EPAct 2005 removed the
ownership requirement from sections 3(17)(A) and 3(18)(A) of the
FPA, and the Commission has proposed to remove the ownership
requirement from its regulations in Docket No. RM05-36-000. Revised
Regulations Governing Small Power Production and Cogeneration
Facilities, Notice of Proposed Rulemaking, 70 FR 60456 (Oct.18,
2005), FERC Stats. & Regs. ] 32,590 (2005).
\6\ 18 CFR Part 292 (2005).
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5. A cogeneration facility is defined in the Federal Power Act
(FPA) \7\ as a facility which produces electric energy and steam or
forms of useful energy (such as heat) which are used for industrial,
commercial, heating, or cooling purposes.\8\ Thus, cogeneration
facilities simultaneously produce two forms of useful energy, namely
electric power and heat. Cogeneration facilities can use significantly
less fuel to produce electricity and steam (or other forms of energy)
than would be needed to produce the two separately.
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\7\ 16 U.S.C. 824 et seq. (2000).
\8\ 16 U.S.C. 796(18) (2000).
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6. Small power production facilities as defined in the FPA use
biomass, waste, or renewable resources, including wind, solar energy
and water, to produce electric power and have a power production
capacity which, together with any other facilities located at the same
site, are not greater than 80 megawatts.\9\ Reliance on these sources
of energy can reduce the need to consume fossil fuels to generate
electric power.
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\9\ 16 U.S.C. 796(17)(A)(i)-(ii) (2000).
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7. Prior to the enactment of PURPA, a cogenerator or small power
producer seeking to establish interconnected operation with a utility
faced three major obstacles. First, utilities were not generally
willing to purchase this electric output or were not willing to pay an
appropriate rate for that output. Second, utilities generally charged
discriminatorily high rates for back-up service to cogenerators and
small power producers. Third, a cogenerator or small power producer
which provided electricity to a utility's grid ran the risk of being
considered a public utility and thus being subjected to extensive state
and federal regulation.
8. Section 210 of PURPA was designed to remove these obstacles.
Each electric utility is required under section 210 to offer to
purchase available electric energy from cogeneration and small power
production facilities which obtain qualifying status. The rates for
such purchases from QFs must be just and reasonable to the ratepayers
of the utility, in the public interest, and must not discriminate
against cogenerators or small power producers. Rates also must not
exceed the incremental cost to the electric utility of alternative
electric energy (also known as the electric utility's ``avoided
costs''). Section 210 also requires electric utilities to provide
electric service to QFs at rates which are just and reasonable, in the
public interest, and which do not discriminate against cogenerators and
small power producers.
9. Since Congress enacted PURPA, electric utilities have complained
that their obligation to purchase from and sell to QFs, as implemented
by the Commission in 18 CFR 292.303(a)-(b), was not economically
beneficial and that they were purchasing energy they did not need and
selling energy they did not want to sell. In 1995, the Commission
clarified that in determining the avoided cost rate, the electric
utility must take into account all alternative sources including third-
party suppliers and does not have to buy power it does not need.\10\ In
the past decade, with the development of exempt wholesale generators
(EWGs) introduced by the Energy Policy Act of 1992,\11\ and increasing
competition in wholesale electric markets as well as some retail
electric markets, Congress has debated whether to repeal PURPA
altogether, or to revise it. The result is new section 210(m), which is
the subject of this rulemaking, and new section 210(n), which is being
addressed in Docket No. RM05-36-000. New section 210(m) requires the
Commission to lift the mandatory purchase obligation if it finds, in
effect, that there is a sufficiently competitive market for the QF to
sell its power. While the provision permits electric utilities to file
applications for relief from the mandatory purchase obligation, and
requires the Commission to act on such applications within 90 days, the
Commission has determined that it can more appropriately address this
issue through rulemaking.
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\10\ Southern California Edison Company and San Diego Gas &
Electric Company, 70 FERC ] 61,215 at 61,677-78, reconsideration
denied, 71 FERC ] 61,269 at 62,078 (1995) (finding that the
determination of avoided cost must take into account ``all
sources'').
\11\ Energy Policy Act of 1992, Public Law No. 102-486, 106
Stat. 2776, (1993) (EPAct 1992). EPAct 1992 added a new section 32
to the Public Utility Holding Company Act of 1935 (PUHCA) to permit
a category of sellers called EWGs to be exempt from PUHCA.
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III. Proposed Revisions to Regulations
A. Obligation To Purchase
10. Section 292.303(a) of the Commission's regulations, 18 CFR
292.303(a), states that:
Obligation to purchase from qualifying facilities. Each electric
utility shall purchase, in accordance with Sec. 292.304, any energy
and capacity which is made available from a qualifying facility:
(1) Directly to the electric utility; or
(2) Indirectly to the electric utility in accordance with
paragraph (d) of this section.
11. The new PURPA section 210(m)(1) amends the obligation to
purchase and states that:
* * * no electric utility shall be required to enter into a new
contract or obligation to purchase electric energy from a qualifying
cogeneration facility or a qualifying small power production
facility under this section if the Commission finds that the
qualifying cogeneration facility or qualifying small power
production facility has nondiscriminatory access to--
(A)(i) Independently administered, auction-based day ahead and
real time wholesale markets for the sale of electric energy; and
(ii) wholesale markets for long-term sales of capacity and electric
energy; or
(B)(i) Transmission and interconnection services that are
provided by a Commission-approved regional transmission entity and
administered pursuant to an open access transmission tariff that
affords nondiscriminatory treatment to all customers; and (ii)
competitive wholesale markets that provide a meaningful
[[Page 4534]]
opportunity to sell capacity, including long-term and short-term
sales, and electric energy, including long-term, short-term and
real-time sales, to buyers other than the utility to which the
qualifying facility is interconnected. In determining whether a
meaningful opportunity to sell exists, the Commission shall
consider, among other factors, evidence of transactions within the
relevant market; or
(C) Wholesale markets for the sale of capacity and electric
energy that are, at a minimum, of comparable competitive quality as
markets described in subparagraphs (A) and (B).
Section 210(m)(1) thus relieves an electric utility of its obligation
to enter into a new contract or obligation to purchase QF power upon a
Commission finding that certain market conditions exist.
12. As discussed below, the Commission will: (1) Discuss its
interpretation of the criteria for electric utility relief from the
purchase obligation; (2) make a preliminary finding that QFs
interconnected with utilities that are members of Midwest Independent
Transmission System Operator, Inc. (Midwest ISO), PJM Interconnection,
L.L.C. (PJM), ISO New England, Inc. (ISO-NE), and New York Independent
System Operator (NYISO) have nondiscriminatory access to those markets
and that those markets satisfy the section 210(m)(1)(A) criteria for
removing the obligation of those electric utilities to enter into new
contracts or obligations with QFs; and (3) provide guidance on the
definition of ``nondiscriminatory access,'' and ``new contract or
obligation.''
1. Meaning of Section 210(m)(1)
13. Section 210(m)(1) states that no utility shall be obligated to
enter into a new contract or obligation if the Commission finds that
QFs have nondiscriminatory access to one of the three market
circumstances described in section 210(m)(1)(A), (B), and (C). In
effect, Congress has required the Commission to remove the mandatory
purchase obligation if it finds that there is access to a sufficiently
competitive market for QFs to sell their power. Based on this statutory
language, in this section, we discuss our interpretation of what type
of markets are required by section 210(m)(1) of PURPA to relieve a
utility of the mandatory purchase obligation.
14. Subparagraph (A) waives the purchase obligation if QFs have
nondiscriminatory access to (i) independently administered, auction-
based day-ahead and real-time wholesale markets for the sale of
electric energy; and (ii) wholesale markets for long-term sales of
capacity and electric energy. We conclude that the most reasonable
interpretation of subsection (A) is that it was crafted to apply in
regions in which Independent System Operators (ISO) and Regional
Transmission Organizations (RTO) administer day-ahead and real-time
markets, and bilateral long-term contracts for the sale of capacity and
electric energy are available to participants/QFs in these markets.
15. We note that the second prong of subparagraph (A) does not
require auction-based long-term capacity or energy markets and such an
interpretation would not be consistent with the statutory text. First,
subparagraph (A)(ii) does not use the terms ``organized,''
``independently administered,'' or ``competitive'' when describing the
long term markets. As evidenced by subparagraph (B)(ii), discussed
below, Congress could have imposed such requirements for the long-term
wholesale markets, but did not. Therefore, we conclude that no such
requirement was intended for the long-term markets of section
210(m)(1)(A)(ii). Second, unlike subparagraph (B)(ii), subparagraph
(A)(ii) does not require the Commission to consider ``evidence of
transactions within the relevant market'' when determining whether QFs
have meaningful opportunities to sell into wholesale markets outside
the host utility. This suggests that Congress presumed there was a
meaningful opportunity to sell for QFs that have ``nondiscriminatory
access to'' ISO and RTO regions with day-ahead and real-time markets.
16. A reasonable interpretation of subparagraph (B) is that it is
intended to apply in non-auction-based markets because it waives the
mandatory purchase requirement so long as there is (i) a Commission-
approved regional transmission entity providing nondiscriminatory
transmission and interconnection services; and (ii) ``competitive
wholesale markets'' for short- and long-term energy and capacity sales
and real-time energy sales. To meet subparagraph (B)(i), QFs must have
nondiscriminatory access to transmission and interconnection service
that is nondiscriminatory, which we interpret to mean access pursuant
to a Commission-approved open access transmission tariff (OATT) and
interconnection rules and provided by an entity that is regional in
scope. Amended section 210 does not contain any express definition,
and, therefore, the Commission has discretion in this context to deem
an entity to be ``regional'' based on factors such as sufficient
regional scope or configuration or the multiple discrete transmission
systems it controls.
17. As to the second prong, subparagraph (B)(ii) requires that QFs
have access to ``competitive wholesale markets that provide a
meaningful opportunity'' to sell capacity and energy on both a short-
and long-term basis and energy on a real-time basis (emphasis added).
``Meaningful opportunity'' is to be determined by the Commission after
considering, among other factors, ``evidence of transactions within the
relevant market.'' Taken together, the terms ``competitive,''
``meaningful opportunity'' and ``evidence of transactions'' suggest
that Congress intended that waiver occur in a non-auction-based market
only if it could be established that QFs had opportunities to sell
their output into competitive wholesale markets.
18. Subparagraph (C) removes the purchase obligation in wholesale
markets for the sale of capacity and electric energy that are, ``at a
minimum,'' of comparable competitive quality as markets described in
subparagraphs (A) and (B). Although this provision is not clear on its
face, its reference to subparagraphs (A) and (B) requires the
Commission to be mindful, in interpreting the provision, of the two
types of requirements that are embodied in those sections, i.e., (1)
nondiscriminatory access to transmission and interconnection services,
and (2) competitive short-term and long-term markets. These provisions
appear to require a case-by-case approach, but we seek comments on
whether the Commission can make generic findings on these provisions.
19. The Commission's existing OATT, adopted in Order No. 888,\12\
and interconnection rules, adopted in Order Nos. 2003 \13\ and
2006,\14\ are designed to
[[Page 4535]]
eliminate undue discrimination in the provision of transmission and
interconnection services. Although the Commission recently issued a
Notice Of Inquiry regarding changes to the OATT, the OATT has been
considered sufficient to provide non-discriminatory access to
transmission until such time as modified. Accordingly, we conclude that
QFs have non-discriminatory access to transmission and interconnection
if they have access to utilities providing service under an Order No.
888 OATT (or to utilities providing service under a Commission-accepted
reciprocity tariff) and interconnection services pursuant to the
Commission's interconnection rules. However, we seek comment on whether
there are any circumstances in which an OATT should be considered
insufficient for purposes of section 210(m). We also seek comment on
whether a Commission-accepted reciprocity tariff filed by a
nonjurisdictional electric utility has the same effect as an OATT for
purposes of meeting section 210(m)(1)(C). We also seek comment on
whether nonjurisdictional utilities provide nondiscriminatory
interconnection services for purposes of section 210(m)(1)(C) of PURPA.
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\12\ Promoting Wholesale Competition Through Open Access Non-
discriminatory Transmission Services by Public Utilities and
Recovery of Stranded Costs by Public Utilities and Transmitting
Utilities, Order No. 888, FERC Stats. & Regs. Regulations Preambles
January 1991-June 1996 ] 31,036 (1996), Order No. 888-A, FERC Stats.
& Regs., Regulations Preambles July 1996-December 2000 ] 31,048
(1997), order on reh'g, Order No. 888-B, 81 FERC ] 61,248 (1997),
order on reh'g, Order No. 888-C, 82 FERC ] 61,046 (1998), aff'd in
relevant part sub nom. Transmission Access Policy Study Group v.
FERC, 225 F.3d 667 (D.C. Cir. 2000), aff'd sub nom. New York v.
FERC, 535 U.S. 1 (2002).
\13\ Standardization of Generator Interconnection Agreements and
Procedures, Order No. 2003, 68 FR 49,845 (Aug. 19, 2003), FERC
Stats. & Regs. ] 31,146 (2003), order on reh'g, Order No. 2003-A, 69
FR 15,932 (Mar. 26, 2004), FERC Stats. & Regs. ] 31,160 (2004),
order on reh'g, Order No. 2003-B, 70 FR 265 (Jan. 4, 2005), FERC
Stats. & Regs. ] 31,171 (2004), order on reh'g, Order No. 2003-C, 70
FR 37,661 (June 30, 2005), FERC Stats. & Regs. ] 31,190 (2005).
\14\ Standardization of Small Generator Interconnection
Agreements and Procedures, Order No. 2006, 70 FR 34,100 (Jun. 13,
2005), FERC Stats. & Regs. ] 31,180 at 31,406-31,551 (2005), order
on reh'g, Order No. 2006-A, 70 FR 71,760 (Nov. 30, 2005), FERC
Stats. & Regs. ] 31,196 (2005).
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20. We also recognize that small QFs may be in a unique situation
with respect to nondiscriminatory access because they interconnect with
the host utility at a distribution level. For instance, Granite State
has recently filed a petition in Docket No. EL06-26-000 asking the
Commission to initiate a rulemaking implementing section 210(m) of
PURPA and as part of that rulemaking, issue rules retaining the
mandatory purchase obligation for small QFs (those with a nameplate
capacity of 5 MW or less) and creating a rebuttable presumption in
favor of retaining the mandatory purchase obligation for small power
production facilities with a capacity over 5 MW and up to 20 MW.
Granite State suggests that small hydro QFs do not have
nondiscriminatory access to RTO/ISO markets. Therefore, we seek comment
on whether the purchase obligation should be retained for small
renewable projects and, if so, how to define ``small,'' e.g., 5 MWs or
below, 20 MWs or below as proposed by Granite State. In addition, we
seek comment on whether there may be other categories of QFs that lack
nondiscriminatory access to RTO/ISO short-term or long-term wholesale
markets for which we should retain the obligation to purchase.
21. With respect to whether the second prong of section
210(m)(B)(ii) is met in non-ISO/non-RTO markets, i.e., whether QFs in
non-ISO/non-RTO markets have access to wholesale markets for long-term
sales of capacity and electric energy, would that prong be satisfied if
there is a demonstration that an organized power procurement process
exists in which QFs can participate (albeit not an auction-based
process)? We seek comments on ways the prong may be satisfied.
2. Implementation of Section 210(m)(1)
(a) Subparagraph A
22. As we discussed above, the Commission interprets section
210(m)(1)(A) to apply in regions in which ISOs and RTOs administer day-
ahead and real-time markets, and bilateral long-term contracts for the
sale of capacity and electric energy are available to participants/QFs
in these markets. The Commission proposes to find that the Midwest ISO,
PJM, ISO-NE, and NYISO satisfy the requirements of section
210(m)(1)(A).\15\ These entities are Commission approved ISO or RTOs
that provide non-discriminatory open access transmission services and
independently administer auction-based wholesale markets for day-ahead
and real-time energy sales. Additionally, with respect to (A)(ii), the
existence of bilateral long-term contracts for long-term sales of
capacity and energy is an indication of a market. It is reasonable to
conclude that the second prong of subparagraph (A) is met because
bilateral long-term contracts are available to participants in the
footprints of the Midwest ISO, PJM, ISO-NE, and NYISO. Therefore, we
propose to find that electric utilities that are members of the Midwest
ISO, PJM, ISO-NE, and NYISO would meet the requirements for relief from
the mandatory purchase obligation. We describe these markets in more
detail below.
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\15\ While Southwest Power Pool, Inc. (SPP) and the California
Independent System Operator Corporation (Cal ISO), respectively are
a Commission-approved RTO and ISO, they do not satisfy the
requirements of section 210(m)(1)(A) because neither has day-ahead
markets. However, any utility within SPP and Cal ISO may file an
application with the Commission to seek relief from the mandatory
purchase obligation under sections 210(m)(1)(B) or (C), on a case-
by-case basis.
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(1) Midwest ISO
23. On December 20, 2001, the Commission found that the Midwest ISO
satisfied the requirements, including independence from market
participants, of Order No. 2000, and thus granted the Midwest ISO RTO
status.\16\ Thus, we believe that the Midwest ISO ``independently
administers'' auction-based real-time markets. With respect to
subparagraph (1)(A)(i), the Commission approved the Midwest ISO's
proposed Transmission and Energy Markets Tariff (TEMT), which allowed
the Midwest ISO to initiate Day 2 operations in its 15-state
region.\17\ The Midwest ISO's Day 2 operations include, among other
things, day-ahead and real-time energy markets and a Financial
Transmission Rights (FTR) market for transmission capacity. The Midwest
ISO began Day 2 operations on April 1, 2005. Since market participants
have access to the Midwest ISO's day-ahead and real-time energy markets
to sell their electric energy, a QF that has ``non-discriminatory
access'' would have the same opportunity. Also, bilateral contracts
exist in the Midwest ISO for the long-term sales of capacity and
energy. Accordingly, we would expect that such long-term sales would be
available to all participants in the Midwest ISO's footprint. Based on
the foregoing, we propose to find that the Midwest ISO meets the
conditions of subparagraph (A).
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\16\ See Midwest Independent Transmission System Operator, Inc.,
97 FERC ] 61,326 (2001) order on reh'g, 103 FERC ] 61,169 (2003).
\17\ See Midwest Independent Transmission System Operator, Inc.,
108 FERC ] 61,163 (Midwest ISO, FERC Electric Tariff, Third Revised
Volume No. 1, Module C), order on reh'g, 109 FERC ] 61,157 (2004),
order on reh'g, 111 FERC ] 61,043 (2005).
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(2) PJM
24. PJM received Commission approval as an independent regional
transmission organization on July 12, 2001.\18\ Since independence from
market participants is one of four characteristics that PJM had shown
for Commission approval to operate as an RTO, PJM satisfies the
``independently administered'' condition. Second, since 1997, PJM has
operated auction-based, day-ahead and real-time wholesale energy
markets pursuant to its OATT and Operating Agreement.\19\ Because PJM's
market participants have access to auction-based day ahead and real
time wholesale energy markets, a QF would have the same opportunity as
other generators to sell energy in that market. Also, there are
bilateral contracts in PJM for the long-term sales of capacity and
[[Page 4536]]
energy. Accordingly, we would expect that such long-term sales would be
available to all participants in PJM's footprint. Therefore, we propose
to find that PJM meets the conditions of subparagraph (A).
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\18\ PJM Interconnection, L.L.C., 96 FERC ] 61,061 (2001). On
December 20, 2002, in PJM Interconnection, L.L.C., 101 FERC ] 61,345
(2002), PJM was granted full, rather than provisional, RTO status.
Independence was one of the matters considered in the 2002 Order.
\19\ PJM Interconnection, L.L.C., FERC Electric Tariff, Sixth
Revised Volume No. 1.
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(3) ISO-NE
25. ISO-NE received Commission approval as an independent regional
transmission operator on March 24, 2004, by having satisfied the
Commission's criterion of independence from market participants.\20\
Due to ISO-NE's status as an RTO, we believe that the ISO-NE satisfies
the ``independently administered'' condition of subparagraph (A)(i).
With respect to the second condition of subparagraph (A)(i), ISO-NE,
pursuant to Market Rule 1 of its OATT, commenced operation of its
auction-based energy markets on March 1, 2003. Since ISO-NE's market
participants have access to auction-based day ahead and real time
wholesale energy markets, a QF would have the same opportunity. Also,
there are bilateral contracts in ISO-NE for the long-term sales of
capacity and energy. Accordingly, we would expect that such long-term
sales would be available to all participants in ISO-NE's footprint.
Therefore we propose to find that ISO-NE meets the conditions of
subparagraph (A).
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\20\ ISO New England, Inc., 106 FERC 61,280 (2004).
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(4) NYISO
26. The NYISO received Commission authorization to operate as an
independent transmission operator on June 30, 1998 after showing that
it is independent of market participants.\21\ On November 18, 1999, the
NYISO commenced operation of its auction-based energy markets. Under
the ISO Market Administration and Control Area Services Tariff, NYISO's
market participants have access to auction-based day ahead and real
time wholesale energy markets,\22\ and a QF would have the same
opportunity as other generators within NYISO to sell energy into
NYISO's auction-based day ahead and real time wholesale energy markets.
Also, there are bilateral contracts in NYISO for the long-term sales of
capacity and energy. Accordingly, we would expect that such long-term
sales would be available to all participants in NYISO's footprint.
Therefore we propose to find that NYISO meets the conditions of
subparagraph (A).
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\21\ Central Hudson Gas & Electric Co., 83 FERC ] 61,352 (1998),
order on reh'g, 87 FERC ] 61,135 (1999).
\22\ New York Independent System Operator, Inc., FERC Electric
Tariff Original Volume No. 2.
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(5) Conclusion
27. The Commission thus proposes to find in this rulemaking
proceeding that QFs interconnected with electric utilities that are
members of Midwest ISO, PJM, ISO-NE, and NYISO have nondiscriminatory
access to those markets and those markets meet the section 210(m)(1)(A)
criteria for removing the obligation of those electric utilities to
enter into new contracts or obligations with the QFs. We seek comments,
including specific evidence, which either support or refute this
preliminary finding Finally, as noted previously, we seek comment on
whether the obligation to purchase should be retained in these markets
for ``small'' QFs.
28. Under our proposed regulations, to claim relief from the
purchase obligation, electric utilities that are members of Midwest
ISO, PJM, ISO-NE, and NYISO will need to make compliance filings
pursuant to section 210(m)(3). This compliance filing is discussed in
more detail in our discussion of section 210(m)(3).
(b) Subparagraphs B and C
29. The Commission proposes to determine on a case-by-case basis
\23\ whether a utility has met the requirements of sections
210(m)(1)(B) and 210(m)(1)(C) for relief from its purchase obligation.
An electric utility filing an application claiming to meet the
requirements of section 210(m)(1)(B) or section 210(m)(1)(C) of PURPA
must demonstrate the ``factual basis upon which relief is requested.''
Applicants should provide, among other evidence, actual sales data for
(1) long-term and short-term capacity and (2) long-term, short-term,
and real-time electric energy as well as evidence that the utility
operates in a competitive wholesale market. Accordingly, to be relieved
of their mandatory purchase obligations, electric utilities that are
not members of Midwest ISO, PJM, ISO-NE, and NYISO would be required to
file such applications with the Commission pursuant to section
210(m)(3) of PURPA.
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\23\ We will allow joint applications to be filed by a number of
utilities in a region if the applications for relief from the
purchase obligation present common issues of law and fact. We would
expect common issues of law and fact to exist where one or more
utilities operate within the same market.
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30. We propose that other markets, i.e., both non-auction-based
markets and non-RTO markets, as well as new auction-based markets, and
utility-specific markets would be addressed on a case-by-case basis,
pursuant to section 210(m)(3) discussed below. In addition, subsequent
changes to market conditions in all markets would be handled on a case-
by-case basis, pursuant to section 210(m)(4) discussed below.
3. Other Issues
31. Section 210(m)(1) states that no electric utility shall be
obligated to purchase from a QF if the Commission finds that the QF has
nondiscriminatory access to the market conditions identified in each
subparagraph. We propose that there be a rebuttable presumption that a
utility provides nondiscriminatory access if it has an open access
transmission tariff in compliance with our pro forma OATT (or a
Commission-approved reciprocity tariff).\24\ We also propose that QFs
or any other affected party should be allowed to rebut that
presumption, for example, by providing specific and credible evidence
that the QF does not have non-discriminatory access to wholesale
markets. However, the presumption cannot be rebutted by an argument
that the utility has not properly implemented or administered its OATT.
Improper implementation of an OATT is more properly the subject of a
complaint and the Commission will take appropriate steps in response to
a complaint to ensure that the OATT is properly implemented.
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\24\ In Docket No. RM05-25-000, the Commission is currently
reviewing the adequacy and sufficiency of the pro forma OATT to
ensure that it prevents undue discrimination in the provision of
transmission service.
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32. Section 210(m)(1) also states that no electric utility ``shall
be required to enter into a new contract or obligation'' to purchase
electric energy from a QF if the Commission makes the required finding.
The Commission proposes to find that when a contract terminates by its
own accord, an electric utility is not compelled to enter into a new,
successor contract with the QF if the Commission has found that the QF
has nondiscriminatory access to markets that satisfy the criteria of
section 210(m)(1). Some have alleged that the grant of QF status means
that electric utilities have an ``obligation'' to purchase from that QF
in perpetuity. We disagree. That a facility has QF status does not mean
that an electric utility has an ``obligation'' to purchase from the QF
in perpetuity, or, conversely, that the QF has the right to demand that
the utility purchase at avoided-cost rates in perpetuity. The
Commission proposes to find that if a contract is entered into after
August 8, 2005, the date of enactment, but before the
[[Page 4537]]
Commission has determined that an electric utility is entitled to
relief from the obligation to purchase from a QF, the contract already
entered into will be treated as though it was in effect on August 8,
2005 for purposes of section 210(m)(1).
B. Purchase and Sale Obligations for New Cogeneration Facilities
33. Section 210(m)(2)(A) of PURPA reads:
REVISED PURCHASE AND SALE OBLIGATIONS FOR NEW FACILITIES--(A)
After the date of enactment of this subsection, no electric utility
shall be required pursuant to this section to enter into a new
contract or obligation to purchase from or sell electric energy to a
facility that is not an existing qualifying cogeneration facility
unless the facility meets the criteria for qualifying cogeneration
facilities established by the Commission pursuant to the rulemaking
required by subsection (n).
34. This provision reinforces the requirement that new qualifying
cogeneration facilities must satisfy the section 210(n) criteria for
new qualifying cogeneration facilities, which the Commission is
implementing in pending Docket No. RM05-36-000. The Commission proposes
to make this clarification in section 292.309(d) of its regulations.
35. Section 210(m)(2)(B) defines the term ``existing qualifying
cogeneration facility'' to mean a facility that: (i) Was a qualifying
cogeneration facility on the date of enactment of subsection (m), or
(ii) had filed with the Commission a notice of self-certification,
self-recertification or an application for Commission certification
under 18 CFR 292.207 prior to the date on which the Commission issues
the final rule required by subsection 210(n). The Commission proposes
to adopt this definition in new section 292.309(b)(1) of its
regulations.
C. Application for Relief
36. Section 210(m)(3) of PURPA states:
COMMISSION REVIEW--Any electric utility may file an application
with the Commission for relief from the mandatory purchase
obligation pursuant to this subsection on a service territory-wide
basis. Such application shall set forth the factual basis upon which
relief is requested and describe why the conditions set forth in
subparagraphs (A), (B) or (C) of paragraph (1) of this subsection
have been met. After notice, including sufficient notice to
potentially affected qualifying cogeneration facilities and
qualifying small power production facilities, and an opportunity for
comment, the Commission shall make a final determination within 90
days of such application regarding whether the conditions set forth
in subparagraphs (A), (B) or (C) of paragraph (1) have been met.
37. The Commission proposes to include in new section 292.310 the
language of section 210(m)(3) of PURPA. Since the enactment of EPAct
2005, two applications for relief from the mandatory purchase
obligation have been filed with the Commission.\25\ In Alliant, the
Commission explained that, in order to meet the express statutory
requirement of ``notice,'' including ``sufficient notice to potentially
affected qualifying cogeneration facilities and qualifying small power
production facilities,'' contained in section 210(m)(3) of PURPA, it
would require that an applicant identify all potentially affected QFs
in any application for relief filed pursuant to section 210(m)(3).\26\
The Commission then described which facilities constitute ``all
potentially affected QFs.'' \27\
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\25\ See Alliant Energy Corporate Services, Inc., 113 FERC ]
61,024 (2005) (Alliant); Montana-Dakota Utilities Co., 113 FERC ]
61,045 (2005) (Montana-Dakota). In both instances, the Commission
dismissed petitions for declaratory orders pursuant to section
210(m)(3) of PURPA requesting relief from the mandatory purchase
obligation on the grounds of insufficient notice.
\26\ Alliant, 113 FERC ] 61,024 at P 18.
\27\ Id. at P 19-20.
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38. Consistent with Alliant and Montana-Dakota, before the
Commission will consider an application filed pursuant to section
210(m)(3) of PURPA, an applicant must first identify in the application
all potentially affected QFs (with their names and current addresses)--
including: (1) Those QFs that have existing power purchase contracts
with the applicant; (2) other QFs that sell their output to the
applicant or that have pending requests for the applicant to purchase
their output; (3) any developer of generating facilities with whom the
applicant has agreed to enter into power purchase contracts or is
discussing power purchase contacts; (4) the developers of facilities
that have pending state avoided cost proceedings; and (5) any other QFs
that the applicant reasonably believes to be affected by its petition.
This will ensure that the statutory obligation is met to provide notice
and an opportunity to comment to all potentially affected QFs. The
Commission proposes to incorporate this interpretation of ``sufficient
notice'' and ``all potentially affected QFs'' in new section 292.310(b)
and (c).
39. We point out that under section 210(m)(3) the Commission must
make a finding regarding an application for relief of the purchase
obligation and that the finding must be made within 90 days of the date
of such application. The Commission, accordingly, will expect an
application for relief to be fully supported by documentation upon
which the required finding can be made, i.e., a case in chief. For
those not in one of the Commission-certified markets, such
documentation should include, but is not limited to: (1) Prepared
testimony; (2) affidavits; (3) exhibits; and (4) any other evidence.
Given the statutory 90-day time limit for finding, we stress that the
burden will be on the applicant to provide a fully-supported
application in the first instance.
40. With regard to applications filed by electric utilities that
are members of Midwest ISO, PJM, NYISO, or ISO-NE, an electric utility
need only submit a compliance filing showing that: (1) It is a member
of one of these RTOs/ISOs; (2) the Commission has made a final finding
that the RTO/ISO that it is a member of provides QFs with
nondiscriminatory access;\28\ (3) a list of all potentially affected
QFs; and (4) the QFs have the right to request service under an OATT or
OATTs (or reciprocity tariffs) on file. Once a final rule issues and
the Commission has acted on rehearing of the final rule, the Commission
will not reevaluate its decision on specific markets made in the
instant proceeding, absent changed circumstances. The Commission seeks
comments on whether there are any QFs within the service territories of
members of the Midwest ISO, PJM, ISO-NE, and NYISO that, although they
have access to an OATT or OATTs (or reciprocal tariffs), nonetheless do
not have nondiscriminatory access to those markets.
---------------------------------------------------------------------------
\28\ The final rule in this proceeding must have become
effective before an electric utility may rely upon it. As a result,
any electric utilities that file early and seek to rely on the
preliminary findings with respect to Midwest ISO, PJM, NYISO or ISO-
NE in this NOPR will not be permitted to do so.
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41. We anticipate that the compliance filings of the electric
utilities that are members of the Midwest ISO, PJM, NYISO, or ISO-NE
and seeking relief from the purchase obligation will be essentially
ministerial; we do not expect the findings made in this rulemaking to
be re-litigated in the compliance filing proceeding. In this regard, we
conclude that the existence of a filed OATT ( or reciprocity tariff)
will be construed to provide nondiscriminatory access. If a QF believes
that the administration or implementation of the OATT denies it access
to markets, it is not an issue for the compliance filing proceeding;
instead the QF may file a complaint challenging the implementation or
administration of an OATT.
[[Page 4538]]
D. Reinstatement of Obligation To Purchase
42. Section 210(m)(4) provides:
REINSTATEMENT OF OBLIGATION TO PURCHASE. At any time after the
Commission makes a finding under paragraph (3) relieving an electric
utility of its obligation to purchase electric energy, a qualifying
cogeneration facility, a qualifying small power production facility,
a State agency, or any other affected person may apply to the
Commission for an order reinstating the electric utility's
obligation to purchase electric energy under this section. Such
application shall set forth the factual basis upon which the
application is based and describe why the conditions set forth in
subparagraphs (A), (B) or (C) of paragraph (1) of this subsection
are no longer met. After notice, including sufficient notice to
potentially affected utilities, and opportunity for comment, the
Commission shall issue an order within 90 days of such application
reinstating the electric utility's obligation to purchase electric
energy under this section if the Commission finds that the
conditions set forth in subparagraphs (A), (B) or (C) of paragraph
(1) which relieved the obligation to purchase, are no longer met.
43. The Commission views this section as an opportunity for a QF, a
state agency, or any affected person to seek to reinstate the purchase
obligation should there be a material change in the circumstances under
which the Commission granted relief. We note that the applicant bears
the burden to ``set forth the factual basis'' upon which the
application is based. The requirement for a ``factual basis'' indicates
that allegations of a change in the conditions upon which relief was
granted must be supported with evidence. The Commission proposes to
consider these applications on a case-by-case basis.
44. Consistent with our interpretation of ``notice'' under section
210(m)(3), the Commission will require an applicant to identify all
potentially affected utilities in the application so that the
Commission will be able to meet its statutory requirement to provide
sufficient notice and an opportunity for comment.
E. Obligation To Sell
45. Section 292.303(b) of the Commission's regulations, 18 CFR
292.303(b), states that: ``Each electric utility shall sell to any
qualifying facility, in accordance with Sec. 292.305, any energy and
capacity requested by the qualifying facility.'' Under new section
210(m)(5), this mandatory obligation to sell can be terminated if the
Commission finds that: ``Competing retail electric suppliers are
willing and able to sell and deliver electric energy to the qualifying
cogeneration facility or qualifying small power production facility;
and the electric utility is not required by State law to sell electric
energy in its service territory.''
46. The Commission proposes to incorporate the language of section
210(m)(5) of PURPA in new section 292.312 of the Commission's
regulations. The Commission proposes to interpret the phrase ``new
contract or obligation'' contained in section 210(m)(3) consistently
with its interpretation of the same words contained in section
210(m)(1) of PURPA.\29\
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\29\ See P 29 supra.
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47. The Commission is also proposing to include a provision,
section 292.313, allowing a QF, State agency, or any other affected
person to apply to the Commission for an order reinstating the electric
utility's obligation to sell electric energy if the factual predicate
for the determination that the obligation to purchase should be
terminated no longer exists.
F. Section 210(m)(6)
48. Section 210(m)(6) of PURPA requires that:
Nothing in this subsection affects the rights or remedies of any
party under any contract or obligation, in effect or pending
approval before the appropriate State regulatory authority or non-
regulated electric utility on the date of enactment of this
subsection, to purchase electric energy or capacity from or to sell
electric energy or capacity to a qualifying cogeneration facility or
qualifying small power production facility under this Act (including
the right to recover costs of purchasing electric energy or
capacity).
49. We propose to implement section 210(m)(6) of PURPA by adopting
the language of the statute in section 292.314. In addition, the
Commission will clarify that the stage of the construction of a
facility has no bearing on whether the protections of section 210(m)(6)
are triggered. The Commission interprets section 210(m)(6) to protect
the rights and remedies under a contract or obligation in effect or
pending approval before the state regulatory authority, regardless of
the construction stage of the facility that may be the subject of the
contract or obligation. We solicit comments on whether further or
different language and/or clarifications other than those proposed here
should be incorporated into our regulations.
G. Section 210(m)(7)
50. Section 210(m)(7) of PURPA requires that:
(A) The Commission shall issue and enforce such regulations as
are necessary to ensure that an electric utility that purchases
electric energy or capacity from a qualifying cogeneration facility
or qualifying small power production facility in accordance with any
legally enforceable obligation entered into or imposed under this
section recovers all prudently incurred costs associated with the
purchase. (B) A regulation under subparagraph (A) shall be
enforceable in accordance with the provisions of law applicable to
enforcement of regulations under the Federal Power Act (16 U.S.C.
791a et seq.).
51. The Commission does not believe that regulations are necessary
at this time; this is a matter that the Commission can address on a
case-by-case basis. However, the Commission will consider a regulation
under this section in the future if a need becomes apparent.
52. We solicit comments on whether there is a need for the
Commission to consider a regulation, and if so what that regulation
should state, to ensure that an electric utility that purchases
electric energy or capacity from a cogeneration QF or qualifying small
power production facility in accordance with any legally enforceable
obligation entered into or imposed under section 210(m)(7) recovers all
prudently incurred costs associated with the purchase.
IV. Information Collection Statement
53. The Commission is submitting the following collection of
information contained in this proposed rulemaking to the Office of
Management and Budget (OMB) for review under section 3507(d) of the
Paperwork Reduction Act of 1995.\30\ The Commission identifies the
information provided for under part 292 as FERC-556. These collections
of information are specifically mandated by statute.
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\30\ 44 U.S.C. 3507(d) (2000).
---------------------------------------------------------------------------
54. The Commission solicits comments on the Commission's need for
this information, whether the information will have practical utility,
the accuracy of the provided burden estimates, ways to enhance the
quality and clarity of the information that the Commission will
collect, and any suggested methods for minimizing the respondent's
burden, including the use of information techniques. The burden
estimates for complying with this proposed rule are as follows:
[[Page 4539]]
----------------------------------------------------------------------------------------------------------------
Number of Number of Hour per Total annual
Data collection FERC-556 respondents responses response hours
----------------------------------------------------------------------------------------------------------------
Sec. 292.310.................................. 230 1 2 460
Sec. 292.312.................................. 230 1 2 460
Sec. 292.413.................................. 630 1 3 1,890
-----------------
Totals...................................... 860 1 .............. 2,810
----------------------------------------------------------------------------------------------------------------
Total Annual Hours for the Collection: (reporting + recordkeeping
if appropriate)
Information Collection Costs: Because of the regional differences
and the various staffing levels that will be involved in preparing the
documentation (legal, technical and support) the Commission is using an
hourly rate of $150 to estimate the costs for filing and other
administrative processes (reviewing instructions, searching data
sources, completing and transmitting the collection of information).
The estimated cost is anticipated to be $421,500.
Title: FERC-556 Small Power Production and Cogeneration Facilities.
Action: Proposed Data Collections.
OMB Control Nos.: 1902-0075.
Upon approval of a collection of information, OMB will assign an
OMB control number and an expiration date. Respondents subject to the
filing requirements of this rule will not be penalized for failing to
respond to these collections of information unless the collections of
information display a valid OMB control number or the Commission has
provided justification as to why the control number should not be
displayed.
Respondents: Businesses or other for profit, state, local or tribal
government.
Necessity of the Information: The Commission proposes amending its
regulations to implement section 210(m) of PURPA which was enacted in
section 1253 of the EPAct 2005; specifically, its regulations governing
purchases of electric energy from and sales of electric energy to
qualifying small power production and cogeneration facilities
These requirements conform to the Commission's plan for efficient
information collection, communication, and management within the energy
industry. The Commission has assured itself, by means of internal
review, that there is specific, objective support for the burden
estimates associated with the information requirements.
Interested persons may obtain information on the reporting
requirements by contacting the following: Federal Energy Regulatory
Commission, 888 First Street, NE., Washington, DC 20426 [Attention:
Michael Miller, Office of the Executive Director, Phone: (202) 502-
8415, fax: (202) 273-0873, e-mail: michael.miller@ferc.gov].
55. For submitting comments concerning the collection(s) of
information and the associated burden estimate(s), please send your
comments to the contact listed above and to the Office of Management
and Budget, Office of Information and Regulatory Affairs, Washington,
DC 20503, [Attention: Desk Officer for the Federal Energy Regulatory
Commission, phone: (202) 395-4650, fax: (202) 395-7285, e-mail:
oira_submission@omb.eop.gov.
V. Environmental Analysis
56. The Commission is required to prepare an Environmental
Assessment or an Environmental Impact Statement for any action that may
have a significant adverse effect on the human environment. The
Commission has categorically excluded certain actions from this
requirement as not having a significant effect on the human
environment. As explained above, this proposed rule is clarifying in
nature. It interprets several amendments made to PURPA by EPAct 2005,
and clarifies the applicability of these amendments to electric
utilities and QFs; it does not substantially change the effect of the
legislation. Accordingly, no environmental consideration is necessary.
VI. Regulatory Flexibility Act Analysis
57. The Regulatory Flexibility Act of 1980 (RFA) \31\ generally
requires a description and analysis of rules that will have significant
economic impact on a substantial number of small entities and where
notice and comment rulemaking is required. Certain rules are exempt
from notice and comment from the RFA requirements; exempt rules include
interpretative rules, general statements of policy, or rules of agency
organization procedure or practice.\32\ Interpretative rules
``generally interpret the intent expressed by Congress, where an agency
does not insert its own judgments or interpretations in implementing a
rule and simply regurgitates statutory language.'' \33\ The rule we are
proposing in this docket is an interpretative rule. Accordingly, no
regulatory flexibility analysis is required.
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\31\ 5 U.S.C. 601-12.
\32\ 5 U.S.C. 553(b)(A).
\33\ ``How to Comply with the Regulatory Flexibility Act: A
Guide for Government Agencies'', Small Business Administration,
Office of Advocacy, P.5, May 2003.
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VII. Comment Procedures
58. The Commission invites interested persons to submit comments on
the matters and issues proposed in this notice to be adopted, including
any related matters or alternative proposals that commenters may wish
to discuss. Comments are due February 27, 2006. Reply comments are due
March 28, 2006. Comments and reply comments must refer to Docket No.
RM06-10-000, and must include the commenters' names, the organizations
they represent, if applicable, and their address in their comments.
Comments and reply comments may be filed either in electronic or paper
format.
59. Comments and reply comments may be filed electronically via the
eFiling link on the Commission's Web site at http://www.ferc.gov. The
Commission accepts most standard word processing formats and commenters
may attach additional files with supporting information in certain
other file formats. Commenters filing electronically do not need to
make paper filings. Commenters that are not able to file comments and
reply comments electronically must send an original and 14 copies of
their comments to: Federal Energy Regulatory Commission, Office of the
Secretary, 888 First Street, NE., Washington, DC 20426.
60. All comments and reply comments will be placed in the
Commission's public files and may be viewed, printed, or downloaded
remotely as described in the Document Availability section below.
Commenters on this proposal are not required to serve copies of their
comments and reply comments on other commenters.
VIII. Document Availability
61. In addition to publishing the full text of this document in the
Federal Register, the Commission provides all
[[Page 4540]]
interested persons an opportunity to view and/or print the contents of
this document via the Internet through the Commission's Home Page
(http://www.ferc.gov) and in the Commission's Public Reference Room
during normal business hours (8:30 a.m. to 5 p.m. Eastern time) at 888
First Street, NE., Room 2A, Washington, DC 20426.
62. From the Commission's Home Page on the Internet, this
information is available in the Commission's document management
system, eLibrary. The full text of this document is available on
eLibrary in PDF and Microsoft Word format for viewing, printing, and/or
downloading. To access this document in eLibrary, type the docket
number excluding the last three digits of this document in the docket
number field.
63. User assistance is available for eLibrary and the Commission's
Web site during normal business hours. For assistance, please contact
FERC Online Support at 1-866-208-3676 (toll free) or (202) 502-8222 (e-
mail at FERCOnlineSupport@FERC.gov), or the Public Reference Room at
(202) 502-8371, TTY (202) 502-8659 (e-mail at
public.referenceroom@ferc.gov).
List of Subjects in 18 CFR Part 292
Electricity, Electric power plants, Electric utilities, Natural
gas, Reporting and recordkeeping requirements.
By direction of the Commission.
Magalie R. Salas,
Secretary.
In consideration of the foregoing, the Commission proposes to amend
part 292, Chapter I, Title 18, Code of Federal Regulations, as follows:
PART 292--REGULATIONS UNDER SECTIONS 201 AND 210 OF THE PUBLIC
UTILITY REGULATORY POLICIES ACT OF 1978 WITH REGARD TO SMALL POWER
PRODUCTION AND COGENERATION
1. The authority citation for part 292 continues to read as
follows:
Authority: 16 U.S.C. 791a-825r, 2601-2645; 31 U.S.C. 9701; 42
U.S.C. 7101-7352.
2. Section 292.303 is amended by revising paragraphs (a) and (b) to
read as follows:
Sec. 292.303 Electric utility obligations under this subpart.
(a) Obligation to purchase from qualifying facilities. Each
electric utility shall purchase, in accordance with Sec. 292.304,
unless exempted by Sec. 292.309, any energy and capacity which is
generated from a qualifying facility
(1) Directly to the electric utility; or
(2) Indirectly to the electric utility in accordance with paragraph
(d) of this section.
(b) Obligation to sell to qualifying facilities. Each electric
utility shall sell to any qualifying facility, in accordance with Sec.
292.305, unless exempted by Sec. 292.312 of this chapter, energy and
capacity requested by the qualifying facility.
* * * * *
3. Sections 292.309 through 292.314 are added to read as follows:
Sec. 292.309 Termination of obligation to purchase from qualifying
facilities.
(a) An electric utility shall no longer be required to enter into a
new contract or obligation to purchase electric energy from a
qualifying cogeneration facility or a qualifying small power production
facility if the Commission finds that the qualifying cogeneration
facility or qualifying small power production facility has
nondiscriminatory access to:
(1)(i) Independently administered, auction-based day ahead and real
time wholesale markets for the sale of electric energy; and
(ii) Wholesale markets for long-term sales of capacity and electric
energy; or
(2)(i) Transmission and interconnection services that are provided
by a Commission-approved regional transmission entity and administered
pursuant to an open access transmission tariff that affords
nondiscriminatory treatment to all customers; and
(ii) Competitive wholesale markets that provide a meaningful
opportunity to sell capacity, including long-term and short-term sales,
and electric energy, including long-term, short-term and real-time
sales, to buyers other than the utility to which the qualifying
facility is interconnected; in determining whether a meaningful
opportunity to sell exists within the meaning of Sec.
292.309(a)(2)(ii), the Commission shall consider, among other factors,
evidence of transactions within the relevant market; or
(3) Wholesale markets for the sale of capacity and electric energy
that are, at a minimum, of comparable competitive quality as markets
described in paragraphs (a)(1) and (a)(2) of this section.
(b) Definitions. (1) For purposes of this section, an ``existing
qualifying cogeneration facility'' is a facility that:
(i) Was a qualifying cogeneration facility before or on August 8,
2005; or
(ii) Had filed with the Commission a notice of self-certification,
self-recertification or an application for Commission certification
under Sec. 292.207 prior to [the date the Commission issues a final
rule].
(2) For the purposes of this section, a ``new qualifying
cogeneration facility'' is a facility that satisfies the criteria for
qualifying cogeneration facilities under Sec. 292.205.
(3) For the purposes of this section, a renewal of a contract that
expires by its own terms is a ``new contract or obligation.''
(c) For the purposes of this section, there is a rebuttable
presumption that there is ``non-discriminatory access'' to wholesale
markets when a qualifying facility is provided transmission services
pursuant to a Commission-approved open access transmission tariff or
reciprocity tariff, and interconnection services pursuant to
Commission-approved interconnection rules.
(d) No electric utility shall be required to enter into a new
contract or obligation to purchase from or sell electric energy to a
facility that is not an existing qualifying cogeneration facility
unless the facility meets the criteria for new qualifying cogeneration
facilities established by the Commission in Sec. 292.205.
Sec. 292.310 Procedures for utilities requesting termination of
obligation to purchase from qualifying facilities.
(a) Any electric utility may file an application with the
Commission for relief from the mandatory purchase obligation in Sec.
292.303(a) pursuant to this section on a service territory-wide basis.
Such application shall set forth the factual basis upon which relief is
requested and describe why the conditions set forth in Sec.
292.309(a)(1), (2) or (3) have been met. After notice, including
sufficient notice to potentially affected qualifying cogeneration
facilities and qualifying small power production facilities, and an
opportunity for comment, the Commission shall make a final
determination within 90 days of such application regarding whether the
conditions set forth in Sec. 292.309(a)(1), (2) or (3) have been met;
provided, however, that if the Commission has made a determination
pursuant to notice and comment rulemaking or order that a particular
market meets the criteria for relief in Sec. 292.309(a)(1), (2) or
(3), an applicant may make a ministerial application under this section
and the application will be treated as a compliance filing.
(b) Sufficient notice shall mean that an electric utility must
identify with names and addresses all potentially affected qualifying
facilities in an
[[Page 4541]]
application filed pursuant to paragraph (a) of this section.
(c) All potentially affected qualifying facilities shall include:
(1) Those qualifying facilities that have existing power purchase
contracts with the applicant;
(2) Other qualifying facilities that sell their output to the
applicant or that have pending self-certification or Commission
certification with the Commission for qualifying facility status
whereby the applicant will be the purchaser of the qualifying
facility's output;
(3) Any developer of generating facilities with whom the applicant
has agreed to enter into power purchase contracts or are in discussion
with regard to power purchase contacts;
(4) The developers of facilities that have pending state avoided
cost proceedings; and
(5) Any other qualifying facilities that the applicant reasonably
believes to be affected by its application filed pursuant to paragraph
(a) of this section.
Sec. 292.311 Reinstatement of obligation to purchase.
At any time after the Commission makes a finding under Sec.
292.310 relieving an electric utility of its obligation to purchase
electric energy, a qualifying cogeneration facility, a qualifying small
power production facility, a State agency, or any other affected person
may apply to the Commission for an order reinstating the electric
utility's obligation to purchase electric energy under this section, if
there has been a change in the conditions upon which the Commission
based its finding. Such application shall set forth the factual basis
upon which the application is based and describe why the conditions set
forth in Sec. 292.309 (a)(1), (2) or (3) are no longer met. After
notice, including sufficient notice to potentially affected utilities,
and opportunity for comment, the Commission shall issue an order within
90 days of such application reinstating the electric utility's
obligation to purchase electric energy under this section if the
Commission finds that the conditions set forth in Sec. 292.309 (a)(1),
(2), or (3) which relieved the obligation to purchase, are no longer
met.
Sec. 292.312 Procedures for utilities requesting termination of
obligation to sell to qualifying facilities.
(a) An electric utility shall not be required to enter into a new
contract or obligation to sell electric energy to a qualifying small
power production facility, an existing qualifying cogeneration
qualifying facility, or a new qualifying cogeneration facility if the
Commission has found that:
(1) Competing retail electric suppliers are willing and able to
sell and deliver electric energy to the qualifying cogeneration
facility or qualifying small power production facility; and
(2) The electric utility is not required by State law to sell
electric energy in its service territory.
(b) Any electric utility may file an application with this
Commission for relief from the mandatory obligation to sell under this
paragraph on a service territory-wide basis or a single qualifying
facility basis. Such application shall set forth the factual basis upon
which relief is requested and describe why the conditions set forth in
paragraphs (a)(1) and (a)(2) of this section have been met. After
notice, including sufficient notice to potentially affected qualifying
facilities, and an opportunity for comment, the Commission shall make a
final determination within 90 days of such application regarding
whether the conditions set forth in paragraphs (a)(1) and (a)(2) of
this section have been met.
Sec. 292.313 Reinstatement of obligation to sell.
At any time after the Commission makes a finding under Sec.
292.312 relieving an electric utility of its obligation to sell
electric energy, a qualifying cogeneration facility, a qualifying small
power production facility, a State agency, or any other affected person
may apply to the Commission for an order reinstating the electric
utility's obligation to sell electric energy under this section, if
there has been a change in the conditions upon which the Commission
based its finding. Such application shall set forth the factual basis
upon which the application is based and describe why the conditions set
forth in Sec. 292.312 (a)(1) and (a)(2) are no longer met. After
notice, including sufficient notice to potentially affected utilities,
and opportunity for comment, the Commission shall issue an order within
90 days of such application reinstating the electric utility's
obligation to sell electric energy under this section if the Commission
finds that the conditions set forth in Sec. 292.312 (a)(1) and (a)(2)
are no longer met.
Sec. 292.314 Existing rights and remedies.
Nothing in this Sec. Sec. 292.303 through 292.314 affects the
rights or remedies of any party under any contract or obligation, in
effect or pending approval before the appropriate State regulatory
authority or non-regulated electric utility on or before August 8,
2005, to purchase electric energy or capacity from or to sell electric
energy or capacity to a qualifying cogeneration facility or qualifying
small power production facility (including the right to recover costs
of purchasing electric energy or capacity).
[FR Doc. E6-940 Filed 1-26-06; 8:45 am]
BILLING CODE 6717-01-P