PRIOR PRINTER'S NOS. 2842, 2956 PRINTER'S NO. 3076
No. 2099 Session of 1984
INTRODUCED BY SWEET, RYAN, J. L. WRIGHT, MANDERINO,
R. C. WRIGHT, FREIND, MICHLOVIC, D. R. WRIGHT, ARTY,
L. E. SMITH, BURNS, BELFANTI, EVANS, DALEY, FLICK, KOSINSKI,
GANNON, DURHAM, PIEVSKY, WACHOB, SAURMAN, HOEFFEL, KLINGAMAN,
OLASZ, CARN, BURD, HALUSKA, WILLIAMS, RICHARDSON AND IRVIS,
APRIL 30, 1984
AS AMENDED ON THIRD CONSIDERATION, HOUSE OF REPRESENTATIVES,
MAY 30, 1984
AN ACT
1 Amending Title 66 (Public Utilities) of the Pennsylvania
2 Consolidated Statutes, providing for industrial cogeneration
3 and small power production.
4 It is hereby declared to be the policy of the Commonwealth
5 that it is in the public interest to help preserve jobs in
6 energy-intensive industries located in this Commonwealth, as
7 well as to promote the efficient use of Pennsylvania's
8 indigenous energy resources, by encouraging investment in
9 industrial cogeneration and small power production.
10 The General Assembly of the Commonwealth of Pennsylvania
11 hereby enacts as follows:
12 Section 1. Part II of Title 66 of the Pennsylvania
13 Consolidated Statutes is amended by adding a chapter to read:
14 PART II
15 OTHER PROVISIONS
16 [(Reserved)]
1 CHAPTER 51
2 POWER COGENERATION
3 Sec.
4 5101. Short title of chapter.
5 5102. Definitions.
6 5103. Interconnection contracts.
7 5104. Status of qualifying facility.
8 5105. Rate for purchase of energy.
9 5106. Rate for purchases of energy and capacity.
10 5107. Eligibility for capacity payments. <--
11 5108 5107. Backup, maintenance and supplementary power. <--
12 5109 5108. Data. <--
13 5110 5109. Authority of commission. <--
14 § 5101. Short title of chapter.
15 This chapter shall be known and may be cited as the
16 Cogeneration, SMALL POWER PRODUCTION and Jobs Development Act. <--
17 § 5102. Definitions.
18 (a) In general.--The following words and phrases when used
19 in this chapter shall have the meanings given to them in this
20 section unless the context clearly indicates otherwise:
21 "Commission." The Pennsylvania Public Utility Commission.
22 "Electric utility" or "utility." A public utility, as
23 defined in section 102 (relating to definitions), which is
24 producing, generating, transmitting, distributing or furnishing
25 electricity for the production of light, heat or power to or for
26 the public for compensation, OTHER THAN ELECTRICITY SOLELY FROM <--
27 A QUALIFYING FACILITY.
28 (b) In relation to Federal law.--Unless the context clearly
29 indicates otherwise, the definitions given in the Federal Public <--
30 Utility Regulatory Policies Act of 1978 (Public Law 95-617, 92 <--
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1 Stat. 3117) (PURPA) (16 U.S.C. §§ 796 AND 824A-3) and the <--
2 definitions given in 18 CFR Part 292 shall apply to this
3 chapter.
4 § 5103. Interconnection contracts.
5 (a) Requirement for interconnection.--At the request of the
6 owner or operator of any qualifying facility, the utility in
7 whose service territory the qualifying facility is located OR TO <--
8 WHICH DELIVERY OF THE QUALIFYING FACILITY'S ENERGY IS MADE,
9 shall interconnect its facilities with the qualifying facility
10 and enter into a contract requiring the utility to purchase and
11 pay for all of the electric energy, or electric energy and
12 capacity, which is produced and offered for sale by the
13 qualifying facility at a price which is equivalent to the
14 avoided costs of the utility as defined in sections 5105
15 (relating to rate for purchase of energy) and 5106 (relating to
16 rates for purchases of energy and capacity). Such a contract
17 may, at the option of the qualifying facility, be on a year-to-
18 year basis, or for a term of years up to the estimated useful <--
19 life of the qualifying facility. TEN YEARS OR A MUTUALLY AGREED <--
20 TERM, WHICHEVER IS LONGER. The qualifying facility may elect to
21 purchase all or any portion of its requirements of electric
22 service from the utility in whose service territory the
23 qualifying facility is located while simultaneously selling all
24 or some portion of the electric power output of the qualifying
25 facility. Nothing in this chapter shall be construed to preclude
26 the qualifying facility from entering into a contract with the
27 utility for the purchase of energy or energy and capacity from
28 the qualifying facility at a rate which is less than OR UNDER <--
29 TERMS WHICH DIFFER FROM the avoided costs of the utility.
30 (b) Costs of interconnection.--Any costs incurred by the
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1 utility to interconnect with the qualifying facility shall be
2 payable by the qualifying facility in a one-time payment or over
3 a period of years, as determined by the commission by
4 regulation, to the extent that such costs are in addition to the
5 costs of interconnection facilities required to serve the
6 qualifying facility as a customer.
7 § 5104. Status of qualifying facility.
8 A qualifying facility shall not be deemed to be a public <--
9 utility under the laws of this Commonwealth and shall not be
10 subject to control or regulation by the commission, except as
11 provided in this chapter.
12 A QUALIFYING FACILITY IS A COGENERATION FACILITY OR A SMALL <--
13 POWER PRODUCER WHICH MEETS THE CRITERIA CONTAINED IN 18 CFR PART
14 202. SUCH QUALIFYING FACILITY SHALL NOT BE SUBJECT TO CONTROL OR
15 REGULATION BY THE COMMISSION, EXCEPT AS PROVIDED IN THIS
16 CHAPTER, AS PROVIDED IN COMMISSION REGULATIONS AT 52 PA. CODE §
17 57.31, ET SEQ., OR AS REQUIRED BY FEDERAL LAW INSOFAR AS IT
18 MAKES SALES TO AN ELECTRIC UTILITY OR USES ENERGY ITSELF. IF
19 SUCH QUALIFYING FACILITY MAKES SALES OF ENERGY, ENERGY AND
20 CAPACITY OR THERMAL ENERGY TO ANY NONUTILITY CUSTOMER, THE
21 COMMISSION SHALL DETERMINE, BY RULE FOR CLASS OF CASES OR ON A
22 CASE-BY-CASE BASIS, WHETHER SUCH SALES CONSTITUTE PUBLIC UTILITY
23 SERVICE SUBJECTING THE QUALIFYING FACILITY TO COMMISSION
24 JURISDICTION UNDER THIS TITLE.
25 § 5105. Rate for purchase of energy.
26 (a) General rule.--The rate paid by an electric utility for <--
27 energy purchased from a qualifying facility shall equal the
28 avoided costs for energy and shall MAY consider the highest cost <--
29 sources of energy purchased or produced by the utility for each
30 hour of the year. Calculation of the highest cost sources of
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1 energy produced by the utility shall include the cost of fuel,
2 variable operating and maintenance costs and any other VARIABLE <--
3 costs associated with that generation. The avoided energy costs
4 shall MAY also take into account the avoidance of line losses as <--
5 well as differences in utility energy costs between peak and
6 nonpeak periods.
7 (b) Incentive payment.--In the case of purchases of energy <--
8 from a qualifying facility which utilizes Pennsylvania coal as
9 its primary fuel, an incentive payment shall be added to the
10 rate to be paid by an electric utility for such energy in the
11 amount of 5% of the rate which is calculated in accordance with
12 subsection (a).
13 § 5106. Rate for purchases of energy and capacity.
14 (a) General rule.--The rate paid by an electric utility for
15 energy and capacity purchased from a qualifying facility shall
16 equal the avoided costs of the utility for energy and capacity.
17 The calculation of avoided energy and capacity costs shall
18 consider all of the following factors:
19 (1) The anticipated reliability of the qualifying
20 facility in comparison to the reliability of other generating
21 units supplying electricity to the utility.
22 (2) The anticipated availability of the electricity
23 provided by the qualifying facility during on-peak as well as
24 off-peak periods.
25 (3) The term of the contract.
26 (4) The amount of advance notice that the utility
27 receives that the qualifying facility will be coming on line.
28 (5) The estimated future costs to the utility of
29 constructing or purchasing capacity.
30 (6) The ability of the qualifying facility to schedule
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1 maintenance during seasonal off-peak periods of the utility
2 system.
3 (7) The ability of the utility to include the energy and
4 capacity from the qualifying facility in its system dispatch.
5 (8) The degree to which the capacity made available by
6 the qualifying facility enables the utility to meet power
7 pool capacity requirements.
8 (9) The degree to which the availability of energy and
9 capacity from the qualifying facility enables the utility to
10 sell or make available for sale all or portions of its
11 planned capacity additions.
12 (10) The operating, maintenance, and other expenses, as
13 well as capital additions, associated with the construction
14 or purchase of planned capacity additions.
15 (11) The factors included in section 5105 (relating to
16 rate for purchase of energy).
17 (12) The cost of energy and expected capacity factor
18 associated with any planned capacity addition.
19 (b) Minimum capacity CAPACITY value.--In addition to the <--
20 factors cited in subsection (a), the following minimum standards <--
21 shall apply to CALCULATION OF the avoided cost value of energy <--
22 and capacity for any qualifying facility which can be reasonably
23 expected to meet all reasonable standards of availability and
24 reliability established by the commission AND SHALL BE AS <--
25 PRESCRIBED BY THE COMMISSION BY REGULATION OR ON A CASE-BY-CASE
26 BASIS: Provided, That the qualifying facility enters into a
27 contract in which it can be assessed penalties established by
28 the commission if it falls below standards as set forth in this <--
29 section: REGULATIONS PROMULGATED BY THE COMMISSION. <--
30 (1) The value of capacity from such a qualifying <--
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1 facility shall never be zero or negative.
2 (2) The value of energy and capacity from such a
3 qualifying facility pursuant to a legally binding contract of
4 not less than five years but less than ten years shall be set
5 at not less than the cost of energy as developed pursuant to
6 section 5105, plus five mills per kilowatt hour sold.
7 (3) The value of energy and capacity from such a
8 qualifying facility pursuant to a legally binding contract of
9 not less than ten years but less than 15 years shall be set
10 at not less than the cost of energy as developed pursuant to
11 section 5105, plus ten mills per kilowatt hour sold.
12 (4) The value of energy and capacity from such a
13 qualifying facility pursuant to a legally binding contract of
14 not less than 15 years but less than 20 years shall be set at
15 not less than the cost of energy as developed pursuant to
16 section 5105, plus 15 mills per kilowatt hour sold.
17 (5) The value of energy and capacity from such a
18 qualifying facility pursuant to a legally binding contract of
19 20 years or more shall be set at not less than the cost of
20 energy as developed pursuant to section 5105, plus 20 mills
21 per kilowatt hour sold. In addition, the qualifying facility
22 may later receive avoided cost prices as established by the
23 commission for qualifying facilities that may exceed the
24 minimum fixed prices as set forth in this subsection.
25 (c) Levelized rate.--At the option of the qualifying
26 facility, the rate set under this section for energy and
27 capacity may be set at a levelized value such that the rate paid
28 in the early years of a contract is higher than the avoided cost
29 during those years so long as the present value of all rates
30 paid over the term of the contract is no greater than the
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1 present value of the total avoided costs of the utility.
2 § 5107. Eligibility for capacity payments. <--
3 If the qualifying facility meets all reasonable reliability
4 standards established by the commission, all of its sales to the
5 utility shall be considered to include both energy and capacity,
6 even though the qualifying facility chooses not to sell all of
7 its energy and capacity to the utility, so long as all of the
8 energy and capacity of the qualifying facility is committed to
9 satisfying electrical load which would otherwise be supplied by
10 the utility's system.
11 § 5108 5107. Backup, maintenance and supplementary power. <--
12 Each electric utility shall make available to each qualifying
13 facility backup power, maintenance power and supplementary power
14 on a firm (noninterruptible) basis, as well as on an
15 interruptible basis, at rates and under terms and conditions
16 which help achieve the purpose of this chapter, are just and
17 reasonable and which do not discriminate against qualifying
18 facilities and which are based upon the cost of providing
19 service to the qualifying facility. The commission shall, upon
20 the filing of a petition by a qualifying facility or utility so
21 requesting, establish reasonable rates for backup power and
22 maintenance power, and in such case the commission will take
23 into account the qualifying facility's anticipated availability
24 and reliability and shall not assume that forced outages will
25 occur simultaneously among qualifying facilities or during
26 system peaks. In no case shall the rates for backup or <--
27 maintenance power for a qualifying facility which can be
28 reasonably expected to meet all reasonable standards of
29 availability and reliability established by the commission
30 include a minimum monthly charge based upon the qualifying
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1 facility's highest single demand during a prior period. If a
2 qualifying facility is willing to accept backup or maintenance
3 power on an interruptible basis, any demand charges included in
4 the rates for such service shall be prorated on a daily basis.
5 § 5109 5108. Data. <--
6 The electric utility and the qualifying facility shall make
7 available upon request by the other whatever data may be
8 reasonably necessary in order to implement this chapter.
9 § 5110 5109. Authority of commission. <--
10 The commission shall, after notice and opportunity for
11 hearing, and within 120 days of the effective date of this <--
12 section take whatever steps may be necessary to implement this
13 chapter, including, but not limited to, the promulgation of
14 rules and regulations. WITHIN NINE MONTHS FROM THE DATE OF <--
15 ENACTMENT OF THIS CHAPTER, THE COMMISSION SHALL PROMULGATE
16 AMENDED REGULATIONS WHICH IMPLEMENT THE PROVISIONS OF THIS
17 CHAPTER. PRIOR TO ISSUANCE OF SUCH AMENDED REGULATIONS, THE
18 EXISTING COMMISSION REGULATIONS AT 52 PA. CODE §§ 57.31-57.39
19 SHALL BE IN EFFECT. The commission may also require utilities to
20 develop and implement standards and rates for the wheeling of <--
21 power from a qualifying facility to any other utility in the
22 Commonwealth with which it is physically possible. FILE <--
23 STANDARDS AND RATES FOR THE WHEELING OF POWER FROM A QUALIFYING
24 FACILITY TO ANY OTHER UTILITY IN THE COMMONWEALTH TO WHICH
25 WHEELING IS PHYSICALLY POSSIBLE. SUCH STANDARDS AND RATES SHALL
26 APPLY WHEN THE WHEELING UTILITIES AND QUALIFYING FACILITY AGREE
27 TO WHEELING, OR WHEN THE UTILITY IS REQUIRED TO WHEEL POWER
28 UNDER FEDERAL LAW. Any qualifying facility or electric utility
29 may petition the commission to resolve controversies and for
30 other appropriate relief under this chapter and the commission
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1 shall resolve any such petition within 120 days. Any qualifying
2 facility or electric utility may petition the commission for
3 approval of a contract between them, which approval shall be <--
4 granted within 60 days of the petition. WITHIN A PERIOD OF 60 <--
5 DAYS OF RECEIPT OF THE PETITION, WHICH PERIOD MAY BE EXTENDED AN
6 ADDITIONAL 60 DAYS AS THE COMMISSION DEEMS NECESSARY, SUCH
7 APPROVAL SHALL BE GRANTED if the contract is found to be in the
8 public interest and the rates set forth in the contract are
9 found to be just and reasonable. Rates charged to ratepayers may <--
10 not reflect payments that would result in higher rates to
11 customers in any one year than would result in the absence of
12 purchases from the qualifying facility.
13 Section 2. The provisions of this act are severable. If any
14 provision of this act or its application to any person or
15 circumstance is held invalid, the invalidity shall not affect
16 other provisions or applications of this act which can be given
17 effect without the invalid provision or application.
18 Section 3. This act shall take effect immediately.
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