News October-December 2005
News Release: October 11, 2005 | View Printable PDF Version |
Docket Number: RM05-36-000 |
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. By ensuring
that new qualifying cogeneration facilities use thermal output
in a productive manner, and that the electrical, thermal, chemical
and mechanical output of new qualifying cogeneration facilities
is used for industrial, commercial and institutional purposes,
the Commission's proposal would blunt development of facilities
that are not truly designed to save energy.
Under the Commission's current regulations, a qualifying cogeneration
facility is a generating facility that produces electricity and
another form of useful thermal energy (such as heat or steam)
for industrial, commercial, heating, or cooling purposes.
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.
To ensure continuing progress in development of efficient electric
energy technology, the Commission proposes to expand its efficiency
standards to coal-fired facilities. At present, the Commission's
efficiency standard regulations apply only to oil and natural
gas-fired facilities.
Reflecting the recently enacted Energy Policy Act, the Commission
proposes to eliminate the ownership limitations for qualifying
cogeneration and small power production facilities (qualifying
facilities or QFs). When the Public Utility Regulatory Policies
Act (PURPA) was enacted in 1978, ownership of QFs was limited
to persons not primarily engaged in the generation or sale of
electric power. As a result of these changes, a QF may now be
largely or wholly owned by traditional utilities.
Today's proposal also would amend the number of exemptions from
the Federal Power Act. The Commission proposes to eliminate the
exemption from the rate filing provisions of the Federal Power
Act (sections 205 and 206) for sales that are not made pursuant
to a state regulatory authority's avoided-cost regime. The Commission
will consider retaining the exemption for smaller QFs - those
under 5 megawatts.
To reflect the criteria for new qualifying cogeneration facilities
today's proposal would also amend Form No. 556 - the application
for certification of a QF.
Comments on the proposed rule, Revised Regulations Governing Small
Power Production and Cogeneration Facilities, are due 21 days
after the NOPR's publication in the Federal Register (www.gpoaccess.gov).
R-05-66
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