Michael Giberson
FERC has issued a new proposed rule that would revise regulations governing ?Qualifying Facilities? (QF). QFs are small renewable energy generators or cogeneration facilities that, under the Public Utility Regulatory Policies Act of 1978, gained the right to sell power to public utilities at the utilities? ?avoided cost.? This right to sell power, and other benefits gained by qualifying as a QF, are sufficient encouragement to raise concerns about so-called sham cogeneration units. The new regulations appear to get FERC more closely involved in determining whether a cogen QF really is using the thermal output in a ?productive manner.?
Traditionally the federal government has deferred to the states on many PURPA implementation issues. I wonder whether we need the Feds to be more involved here. I guess my real question is whether, overall, the Energy Policy Act will be a good thing for cogeneration or not. I couldn?t tell after reading the FERC press release concerning the new proposed rule, but thought that maybe one of KP?s readers could provide me with an informed opinion.
Here is a piece of the FERC press release:
New criteria proposed for cogeneration facilities, QF ownership restrictions would be eliminated
Acting under an Energy Policy Act of 2005 mandate, the Federal Energy Regulatory Commission today proposed to revise its regulations for small power production and cogeneration facilities. The Commission proposes to eliminate ownership restrictions and to ensure that thermal output of facilities is utilized productively and beneficially.
The proposed rule would amend Commission regulations to effectively end its ?presumptively useful? standard in determining whether a cogeneration facility?s thermal output is useful. [?]
In the future, the proposal states, the Commission ?will scrutinize the use a cogeneration facility makes of its thermal output to assure that the use is not a ?sham? and the thermal output is used in a ?productive and beneficial manner?.? The Commission will consider the uses to which the product produced by the thermal output is put, including factors such as whether the product is needed and whether there is a market. The Commission said that it will more closely scrutinize facilities that only satisfy ?minimal? operating standards. [?]
Section 1253 of the Energy Policy Act also amends PURPA by terminating the mandatory purchase and sale obligations in certain circumstances. The Commission will address this provision in a separate rulemaking proposal in the near future.
More background on PURPA is available from the Energy Information Administration.