![[logo] US EPA](http://www.epa.gov/epafiles/images/logo_epaseal.gif){kind=logo}
Applicability of Federal Power Act Section 215 to Qualifying Small Power Production and Cogeneration Facilities
Note: EPA no longer updates this information, but it may be useful as a reference or resource.
[Federal Register: March 27, 2007 (Volume 72, Number 58)]
[Proposed Rules]
[Page 14254-14256]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr27mr07-11]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
18 CFR Part 292
[Docket No. RM07-11-000]
Applicability of Federal Power Act Section 215 to Qualifying
Small Power Production and Cogeneration Facilities
March 16, 2007.
AGENCY: Federal Energy Regulatory Commission, DOE.
ACTION: Notice of Proposed Rulemaking.
-----------------------------------------------------------------------
SUMMARY: The Federal Energy Regulatory Commission (Commission) is
proposing to amend its regulations governing qualifying small power
production and cogeneration facilities, to eliminate the exemption from
the requirements of section 215 of the Federal Power Act. From a
reliability perspective, there does not appear to be a meaningful
distinction between QF and non-QF generators that would warrant
exemption of QFs from mandatory Reliability Standards.
DATES: Comments are due April 17, 2007.
ADDRESSES: You may submit comments, identified by Docket No. RM07-11-
000, by one of the following methods:
? Agency Web site: http://ferc.gov. Follow the instructions
for submitting comments via the eFiling link found in the Comment
Procedures section of the Preamble.
? Mail: Commenters unable to file comments electronically
must mail or hand deliver an original and 14 copies of their comments
to: Federal Energy Regulatory Commission, Secretary of the Commission,
888 First Street, NE., Washington, DC, 20426. Refer to the Comment
Procedures section of the preamble for additional information on how to
file paper comments.
FOR FURTHER INFORMATION CONTACT:
Paul Singh (Technical Information), Office of Energy Markets and
Reliability, Federal Energy Regulatory Commission, 888 First Street,
NE., Washington, DC 20426, (202) 502-8576.
Samuel Higginbottom (Legal Information), Office of the General Counsel,
Federal Energy Regulatory Commission, 888 First Street, NE.,
Washington, DC 20426, (202) 502-8561.
SUPPLEMENTARY INFORMATION:
Introduction
1. The Commission is proposing to amend the exemptions available to
qualifying facilities (QFs) so that they would no longer be exempt from
newly-added section 215 of the Federal Power Act (FPA).\1\ From a
reliability perspective, there does not appear to be a meaningful
distinction between QF and non-QF generators that would warrant
exemption of QFs from mandatory Reliability Standards. The benefit of
this proposal will be increased reliability of the North American Bulk-
Power System.
---------------------------------------------------------------------------
\1\ 16 U.S.C. 824o.
---------------------------------------------------------------------------
Background
2. On August 8, 2005, the Electricity Modernization Act of 2005,
which is Title XII, Subtitle A, of the Energy Policy Act of 2005 (EPAct
2005), was enacted into law.\2\ EPAct 2005 adds a new section 215 to
the Federal Power Act (FPA),\3\ which requires a Commission-certified
Electric Reliability Organization (ERO) to develop mandatory and
enforceable Reliability Standards, which are subject to Commission
review and approval. Once approved, the Reliability Standards may be
enforced by the ERO, subject to Commission oversight.
---------------------------------------------------------------------------
\2\ Energy Policy Act of 2005, Pub. L. No 109-58, Title XII,
Subtitle A, 119 Stat. 594, 941 (2005).
\3\ 16 U.S.C. 824o.
---------------------------------------------------------------------------
3. On February 3, 2006, the Commission issued Order No. 672, which
implements newly-added section 215 and provides specific processes for
the certification of an entity as the ERO, the development and approval
of mandatory Reliability Standards, and the compliance with and
enforcement of approved Reliability Standards.\4\ On April 4, 2006,
North American Electric Reliability Corporation (NERC) made two
filings: (1) An application for certification of NERC as the ERO; and
(2) a petition for Commission approval of Reliability Standards, with
eight regional differences and a glossary of terms. On July 20, 2006,
the Commission issued an order certifying NERC as the ERO.\5\ On
October 20, 2006, the Commission issued a Notice of Proposed Rulemaking
proposing to approve 83 of 107 proposed Reliability Standards.\6\
---------------------------------------------------------------------------
\4\ Rules Concerning Certification of the Electric Reliability
Organization; Procedures for the Establishment, Approval and
Enforcement of Electric Reliability Standards, Order No. 672, 71 FR
8662 (Feb. 17, 2006), FERC Stats. & Regs. ] 31,204 (2006), order on
reh'g, Order No. 672-A, 71 FR 19814 (Apr. 18, 2006), FERC Stats. &
Regs. ] 31,212 (2006).
\5\ North American Electric Reliability Corporation, 116 FERC ]
61,062 (2006).
\6\ Mandatory Reliability Standards for the Bulk-Power Market,
72 FR 64770 (Oct. 20, 2006), FERC Stats. & Regs. ] 32,608 (2006)
(Reliability NOPR).
---------------------------------------------------------------------------
4. In response to the Reliability NOPR, Cogeneration Association of
California and the Energy Producers and Users Coalition (CAC/EPUC)
filed comments pointing out that QFs are exempt from section 215 by
virtue of section 292.601(c) of the Commission's regulations.\7\ CAC/
EPUC suggest that the Commission intentionally exempted QFs from
section 215. CAC/EPUC explain that in Order No. 671 issued on February
2, 2006,\8\ the Commission stated that it saw no reason to exempt QFs
from the newly added FPA sections 220, 221 and 222,\9\ and explicitly
excluded those sections of the FPA from the QF exemptions contained in
section 292.601 of its regulations, while making no similar mention of
section 215.
---------------------------------------------------------------------------
\7\ 18 CFR 292.601(c).
\8\ Revised Regulations Governing Small Power Production and
Cogeneration Facilities, Order No. 671, 71 FR 7852 (Feb. 2, 2006),
FERC Stats. & Regs. ] 31,203 (2006), order on rehearing, Order No.
771-A, 71 FERC 30583 (May 22, 2006), FERC Stats. & Regs. ]
31.219 (2006).
\9\ 16 U.S.C. 824t-v.
---------------------------------------------------------------------------
5. Section 215(b) grants the Commission jurisdiction over ``all
users, owners, and operators of the bulk-power system'' for ``purposes
of approving
[[Page 14255]]
reliability standards. . . . and enforcing compliance with [section
215]'', and further provides that ``[a]ll users, owners and operators
of the bulk-power system shall comply with reliability standards that
take effect under this section.'' \10\ Given the statutory directive
that all users, owners and operators of the bulk-power system must
comply with the reliability standards that take effect under section
215, it may no longer be appropriate to allow QFs a continued exemption
from compliance with the newly-adopted mandatory and enforceable
Reliability Standards that apply to generator owners and operators.\11\
Moreover, from a reliability perspective, there would seem to be no
meaningful distinction between QF and non-QF generators that would
warrant exemption of QFs from the newly-adopted mandatory Reliability
Standards. Indeed, QF generators would seem to affect the reliability
of the Bulk-Power System as much as non-QF generators, and so QF
generators should be subject to the newly-adopted mandatory Reliability
Standards. In this regard, we note that while many QFs are small
facilities, others are quite large. We see no justification for large
facilities to be exempt from the newly-adopted mandatory and
enforceable Reliability Standards. Accordingly, we are proposing to
amend Sec. 292.601(c)(3) to add section 215 to the list of FPA
sections from which QFs are not exempt.
---------------------------------------------------------------------------
\10\ 16 U.S.C. 824o(b). Section 215(b) also states that entities
described in section 201(f), entities that are otherwise exempt from
Part II of the FPA unless a provision is specifically applicable to
those entities, are subject to section 215. Id.
\11\ Mandatory Reliability Standards for the Bulk-Power System,
Order No. 693, FERC Stats. & Regs. ] 31,242 (2007) (issued
concurrently with this NOPR).
---------------------------------------------------------------------------
6. The threshold for applicability of the Reliability Standards to
generating units is 20 MVA (gross nameplate rating) for an individual
generating unit, or 75 MVA (gross nameplate rating) in aggregate for a
generating plant.\12\ In addition, the Reliability Standards are
applicable to: any generator, regardless of size that is a blackstart
unit material to and designated as part of a transmission operator
entity's restoration plan; or any generator, regardless of size, that
is material to the reliability of the bulk-power system; the
determination to include an otherwise exempt facility would be made on
a facility-by-facility basis by the ERO or Regional Entity. However, an
entity that disagrees with NERC's determination to place it in the
compliance registry may submit a challenge in writing to NERC and, if
still not satisfied, may lodge an appeal with the Commission.
Therefore, a small entity may appeal to the Commission if it believes
it should not be required to comply with the Reliability Standards.
According to the Energy Information Administration (EIA), the total
universe of qualifying facilities is 3,265 entities. Of these, 2,423
entities are below 20 MW (which, as noted above, roughly corresponds to
the 20 MVA standard for applicability of the reliability standards),
which leaves 842 entities that could be potentially impacted by the
reliability standards. Of these 842 entities, only 745 are listed by
EIA as being interconnected to the grid. Thus, out of a total of 3265
QFs, only 745, or 23 percent of all QFs would meet the generally
applicable threshold of 20 MVA (although some other QFs may be
specified as either blackstart units material to and designated as part
of a transmission operator entity's restoration plan or as generators
material to the reliability of the bulk-power system). In sum, while
there would seem to be no basis to exempt all QFs from the mandatory
and enforceable Reliability Standards, as a result of the threshold for
applicability of the Reliability Standards to generating units, and
based on EIA data, it appears that less than a quarter of all QFs will,
in fact, be affected by our proposal to eliminate the QF exemption from
the requirements of section 215 of the FPA.
---------------------------------------------------------------------------
\12\ Id. A 20 MVA threshold corresponds to 20 MW, if a unit is
operating at a unity power factor.
---------------------------------------------------------------------------
Information Collection Statement
7. The Paperwork Reduction Act (PRA) \13\ requires each Federal
agency to seek and obtain OMB approval before undertaking a collection
of information directed to ten or more persons, or continuing a
collection for which the Office of Management and Budget (OMB) approval
and validity of the control number are about to expire.\14\ The PRA
defines the phrase ``collection of information'' to be the ``obtaining,
causing to be obtained, soliciting, or requiring the disclosure to
third parties or the public, of facts or opinions by or for an agency,
regardless of form or format, calling for either--(i) answers to
identical questions posed to, or identical reporting or recordkeeping
requirements imposed on ten or more persons, other than agencies,
instrumentalities, or employees of the United States; or (ii) answers
to questions posed to agencies, instrumentalities, or employees of the
United States which are to be used for general statistical purposes.''
\15\ OMB regulations require approval of certain information collection
requirements imposed by agency rules.\16\
---------------------------------------------------------------------------
\13\ 44 U.S.C. 3501-3520.
\14\ 44 U.S.C. 3502(3)(A)(i), 44 U.S.C. 3507(a)(3).
\15\ 44 U.S.C. 3502(3)(A).
\16\ 5 CFR 1320.11.
---------------------------------------------------------------------------
8. As noted above, the Commission is proposing to amend the
exemption available to qualifying facilities from the requirements of
section 215 of the FPA. Because the Commission is not proposing
information collections in this rulemaking, it is not subject to OMB
review under the PRA. However, the Commission will submit for
informational purposes only a copy of this rulemaking to OMB.
Environmental Analysis
9. 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.\17\ 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 carries out the
intent of legislation, specifically section 215 of the FPA. It lifts an
exemption and thus makes section 215 of the FPA applicable to QFs; it
does not substantially change the effect of the legislation.
Accordingly, no environmental consideration is necessary.\18\
---------------------------------------------------------------------------
\17\ Regulations Implementing the National Environmental Policy
Act, Order No. 486, 52 FR 47897 (Dec. 17, 1987), FERC Stats. & Regs.
] 30,783 (1987).
\18\ 18 CFR 380.4(a)(2)(ii).
---------------------------------------------------------------------------
Regulatory Flexibility Act Analysis
10. The Regulatory Flexibility Act of 1980 (RFA) \19\ generally
requires a description and analysis of rules that will have significant
economic impact on a substantial number of small entities. The total
universe of qualifying facilities is 3,265 entities. Of these, 2,423
entities are below 20 MW (the threshold for applicability of the
Reliability Standards is 20 MVA for an individual generating unit, or
75 MVA in aggregate for a generating plant \20\) which leaves 842
entities that could be potentially impacted by the reliability
standards. Of these 842 entities, only 745 are listed as being
interconnected to the grid. Accordingly, we estimate that out of a
total of 3265 QFs, only 745, or 23 per cent of all QFs would likely be
affected by the change in regulations proposed here. Thus, most, if not
all, QFs affected by this rule do not fall
[[Page 14256]]
within the definition of small entities,\21\ nor do they meet the
threshold criteria for applicability of the RFA to electric utilities
established by the Small Business Administration, which is based on a
size standard of 4 million MWh.\22\
---------------------------------------------------------------------------
\19\ 5 U.S.C. 601-12.
\20\ The 20 MVA threshold corresponds to 20 MW, if a unit is
operating at a unity power factor.
\21\ The RFA definition of ``small entity'' refers to the
definition provided in the Small Business Act, which defines a
``small business concern'' as a business that is independently owned
and operated and that is not dominant in its field of operation. See
15 U.S.C. 632.
\22\ The Small Business Size Standard component of the North
American Industry Classification System (NAICS) defines a small
utility as one that, including its affiliates, is primarily engaged
in generation, transmission, and/or distribution of electric energy
for sale and whose total electric output for the preceding fiscal
years did not exceed 4 million MWh. 13 CFR 121.201.
---------------------------------------------------------------------------
Comment Procedures
11. The Commission invites interested persons to submit comments on
the change proposed in this notice to be adopted, including any related
matters or alternative proposals that commenters may wish to discuss.
Comments are due April 16, 2007. Comments must refer to Docket No.
RM07-11-000, and must include the commenter's name, the organization
they represent, if applicable, and their address in their comments.
Comments and reply comments may be filed either in electronic or paper
format.
12. 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 a paper filing. 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, Secretary of
the Commission, 888 First Street, NE., Washington, DC, 20426.
13. 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.
Document Availability
14. In addition to publishing the full text of this document in the
Federal Register, the Commission provides all 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.
15. 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.
16. 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
Electric power, Electric power plants, Electric utilities, Natural
gas, Reporting and recordkeeping requirements.
By direction of the Commission.
Philis J. Posey,
Acting Secretary.
In consideration of the foregoing, the Commission proposes to amend
part 292, Chapter I, Title 18, Code of Federal Regulations, to read 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. In Sec. 292.601 paragraph (c)(3) is revised to read as follows:
Sec. 292.601 Exemption to qualifying facilities from the Federal
Power Act.
* * * * *
(c) * * *
(3) Sections 202(c), 210, 211, 212, 213, 214, 215, 220, 221 and 222;
* * * * *
[FR Doc. E7-5285 Filed 3-26-07; 8:45 am]
BILLING CODE 6717-01-P