Revised Regulations Governing Small Power Production and Cogeneration Facilities, 30585-30589 [E6-8204]
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Federal Register / Vol. 71, No. 103 / Tuesday, May 30, 2006 / Rules and Regulations
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part 97), establishes, amends, suspends,
or revokes SIAPs and/or Weather
Takeoff Minimums. The complete
regulatory description of each SIAP
and/or Weather Takeoff Minimums is
contained in official FAA form
documents which are incorporated by
reference in this amendment under 5
U.S.C. 552(a), 1 CFR part 51, and 14
CFR 97.20. The applicable FAA Forms
are identified as FAA Forms 8260–3,
8260–4, 8260–5 and 8260–15A.
Materials incorporated by reference are
available for examination or purchase as
stated above.
The large number of SIAPs and/or
Weather Takeoff Minimums, their
complex nature, and the need for a
special format make their verbatim
publication in the Federal Register
expensive and impractical. Further,
airmen do not use the regulatory text of
the SIAPs and/or Weather Takeoff
Minimums but refer to their depiction
on charts printed by publishers of
aeronautical materials. Thus, the
advantages of incorporation by reference
are realized and publication of the
complete description of each SIAP and/
or Weather Takeoff Minimums
contained in FAA form documents is
unnecessary. The provisions of this
amendment state the affected CFR
sections, with the types and effective
dates of the SIAPs and/or Weather
Takeoff Minimums. This amendment
also identifies the airport, its location,
the procedure identification and the
amendment number.
The Rule
This amendment to 14 CFR part 97 is
effective upon publication of each
separate SIAP and/or Weather Takeoff
Minimums as contained in the
transmittal. Some SIAP and/or Weather
Takeoff Minimums amendments may
have been previously issued by the FAA
in a Flight Data Center (FDC) Notice to
Airmen (NOTAM) as an emergency
action of immediate flight safety relating
directly to published aeronautical
charts. The circumstances which
created the need for some SIAP, and/or
Weather Takeoff Minimums
amendments may require making them
effective in less than 30 days. For the
remaining SIAPs and/or Weather
Takeoff Minimums, an effective date at
least 30 days after publication is
provided.
Further, the SIAPs and/or Weather
Takeoff Minimums contained in this
amendment are based on the criteria
contained in the U.S. Standard for
Terminal Instrument Procedures
(TERPS). In developing these SIAPs
and/or Weather Takeoff Minimums, the
TERPS criteria were applied to the
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conditions existing or anticipated at the
affected airports. Because of the close
and immediate relationship between
these SIAPs and/or Weather Takeoff
Minimums and safety in air commerce,
I find that notice and public procedure
before adopting these SIAPs and/or
Weather Takeoff Minimums are
impracticable and contrary to the public
interest and, where applicable, that
good cause exists for making some
SIAPs and/or Weather Takeoff
Minimums effective in less than 30
days.
Conclusion
The FAA has determined that this
regulation only involves an established
body of technical regulations for which
frequent and routine amendments are
necessary to keep them operationally
current. It, therefore—(1) Is not a
‘‘significant regulatory action’’ under
Executive Order 12866; (2) is not a
‘‘significant rule’’ under DOT
Regulatory Policies and Procedures (44
FR 11034; February 26, 1979); and (3)
does not warrant preparation of a
regulatory evaluation as the anticipated
impact is so minimal. For the same
reason, the FAA certifies that this
amendment will not have a significant
economic impact on a substantial
number of small entities under the
criteria of the Regulatory Flexibility Act.
List of Subjects in 14 CFR Part 97
Air Traffic Control, Airports,
Incorporation by reference, and
Navigation (Air).
Issued in Washington, DC on May 19,
2006.
James J. Ballough,
Director, Flight Standards Service.
Adoption of the Amendment
30585
* * * Effective 06 July 2006
Atlanta, GA, Hartsfield-Jackson Atlanta Intl,
RNAV (GPS) RWY 10, Orig
Atlanta, GA, Hartsfield-Jackson Atlanta Intl,
RNAV (GPS) RWY 28, Orig
Raleigh/Durham, NC, Raleigh-Durham Intl,
ILS OR LOC RWY 23R, Amdt 10, ILS RWY
23R (CAT II) ILS RWY 23R (CAT III)
* * * Effective 03 August 2006
Iliamna, AK, Iliamna, RNAV (GPS) RWY 7,
Amdt 2
Beckwourth, CA, Nervino, RNAV (GPS) Z
RWY 25, Orig
Beckwourth, CA, Nervino, RNAV (GPS) Y
RWY 25, Orig–A
Murrieta/Temecula, CA, French Valley,
RNAV (GPS) RWY 18, Orig
Murrieta/Temecula, CA, French Valley, GPS
RWY 18, Orig–B, CANCELLED
San Diego, CA, Brown Field Muni, RNAV
(GPS) RWY 8L, Orig
San Diego, CA, Brown Field Muni, GPS RWY
8L, Orig, CANCELLED
Grand Junction, CO, Walker Field, Takeoff
Minimums and Textual DP, Amdt 10
Idaho Falls, ID, Idaho Falls Rgnl, VOR RWY
2, Amdt 6B
Idaho Falls, ID, Idaho Falls Rgnl, RNAV
(GPS) RWY 2, Orig
Olathe, KS, Johnson County Executive,
RNAV (GPS) RWY 18, Amdt 1
Olathe, KS, Johnson County Executive,
RNAV (GPS) RWY 36, Amdt 1
Louisville, KY, Louisville Intl-Standiford
Field, RNAV (GPS) RWY 29, Orig
Louisville, KY, Louisville Intl-Standiford
Field, GPS RWY 29, Orig–A, CANCELLED
Detroit, MI, Detroit Metropolitan/Wayne
County, RNAV (GPS) RWY 27L, Amdt 1A
Olean, NY, Cattaraugus County-Olean, RNAV
(GPS) RWY 4, Amdt 1
Olean, NY, Cattaraugus County-Olean, RNAV
(GPS) RWY 22, Amdt 1
Burlington/Mount Vernon, WA, Skagit
Regional, RNAV (GPS) RWY 10, Orig
Burlington/Mount Vernon, WA, Skagit
Regional, GPS RWY 10, Amdt 1A,
CANCELLED
[FR Doc. E6–8290 Filed 5–26–06; 8:45 am]
BILLING CODE 4910–13–P
Accordingly, pursuant to the authority
delegated to me, under Title 14, Code of
Federal Regulations, part 97 (14 CFR
part 97) is amended by establishing,
amending, suspending, or revoking
Standard Instrument Approach
Procedures and Weather Takeoff
Minimums effective at 0901 UTC on the
dates specified, as follows:
I
PART 97—STANDARD INSTRUMENT
APPROACH PROCEDURES
1. The authority citation for part 97
continues to read as follows:
I
DEPARTMENT OF ENERGY
Federal Energy Regulatory
Commission
18 CFR Part 292
[Docket No. RM05–36–001; Order No. 671–
A]
Revised Regulations Governing Small
Power Production and Cogeneration
Facilities
Issued May 22, 2006.
Federal Energy Regulatory
Commission.
ACTION: Final order; order on rehearing.
Authority: 49 U.S.C. 106(g), 40103, 40106,
40113, 40114, 40120, 44502, 44514, 44701,
44719, 44721–44722.
AGENCY:
2. Part 97 is amended to read as
follows:
SUMMARY: In this order on rehearing, the
Federal Energy Regulatory Commission
I
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Federal Register / Vol. 71, No. 103 / Tuesday, May 30, 2006 / Rules and Regulations
(Commission) reaffirms its
determinations and grants clarification
in part of Order No. 671, which
amended the Commission’s regulations
governing small power production and
cogeneration facilities.
DATES: Effective Date: The final rule and
order on rehearing will become effective
June 29, 2006.
FOR FURTHER INFORMATION CONTACT:
Paul Singh (Technical Information),
Office of Energy Markets and Rates,
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.
Eric D. Winterbauer (Legal Information),
Office of the General Counsel, Federal
Energy Regulatory Commission, 888
First Street, NE., Washington, DC
20426. (202) 502–8329.
SUPPLEMENTARY INFORMATION:
Before Commissioners: Joseph T.
Kelliher, Chairman; Nora Mead
Brownell, and Suedeen G. Kelly.
1. On February 2, 2006, the Federal
Energy Regulatory Commission
(Commission) issued Order No. 671,1 in
which the Commission revised its
regulations governing qualifying small
power production and cogeneration
facilities. Specifically, the Commission,
among other things, eliminated certain
exemptions from rate regulation that
were previously available to qualifying
facilities (QFs). Several parties have
requested rehearing or clarification. For
the reasons discussed below, we deny
the requests for rehearing and grant
clarification in part.
Introduction
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2. Order No. 671 was issued in
response to the Energy Policy Act of
2005 (EPAct 2005),2 which modified in
relevant part section 210 of the Public
Utility Regulatory Policies Act of 1978
(PURPA). Specifically, Order No. 671
sought to: (1) Ensure that new qualifying
cogeneration facilities are using their
thermal output in a productive and
beneficial manner; that the electrical,
thermal, chemical and mechanical
output of new qualifying cogeneration
facilities is used fundamentally for
1 Revised Regulations Governing Small Power
Production and Cogeneration Facilities, Order No.
671, 71 FR 7852 (February 15, 2006), FERC Stats.
& Regs. ¶ 31,203 (2006).
2 Energy Policy Act of 2005, Public Law No. 109–
58, 119 Stat. 594 (2005).
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industrial, commercial, residential or
institutional purposes; and that there is
continuing progress in the development
of efficient electric energy generating
technology; (2) amend Form 556 3 to
reflect the criteria for new qualifying
cogeneration facilities; (3) eliminate
ownership limitations for qualifying
cogeneration and small power
production facilities; and (4) amend the
exemptions available to QFs from the
requirements of the Federal Power Act
(FPA) 4 and the Public Utility Holding
Company Act of 1935 (PUHCA 1935).5
ARIPPA,6 the National Rural Electric
Cooperative Association (NRECA) and
the Non-Utility QF Group have
requested rehearing.
Exemption of QFs From FPA Section
205/206 Authority
Background
3. In Order No. 671, the Commission
stated that in light of significant changes
that have occurred in the industry since
the first QF facilities were introduced
and in light of changing electric markets
and resulting market power issues that
have arisen in recent years, it was no
longer necessary or appropriate to
completely exempt QFs from sections
205 and 206 of the FPA.7 However, the
Commission clarified that QFs would
continue to have an exemption from
sections 205 and 206 of the FPA when
a sale is made pursuant to a state
regulatory authority’s implementation of
PURPA. In addition, to avoid creating
the hardship that removal of exemptions
might cause for smaller QFs, the
Commission provided that facilities 20
MW or smaller would remain exempt
from sections 205 and 206 of the FPA.
Requests for Rehearing
4. ARIPPA argues against the
imposition of rate regulation on QFs
that are not owned by electric utilities.
It argues that the rule change is a ‘‘baitand-switch,’’ in that it would impose
rate regulation on QF owners who had
been induced to invest in and develop
QFs by the exemption from the state and
Federal rate regulation.
5. ARIPPA points to the Commission’s
statement that ‘‘a complete exemption is
not necessary to encourage the
3 18
CFR 131.80.
U.S.C. 824 et seq.
5 15 U.S.C. 79; See Public Law No. 109–58, 1261–
77, 119 Stat. 594, 972–78 (2005).
6 ARIPPA, formerly known as the Anthracite
Region Independent Power Producers Association,
states that it is a not-for-profit association
comprising fourteen independent power producers
in Pennsylvania that generate approximately 1,346
MW of electrical power buring coal mining refuse.
7 16 U.S.C. 824d, 824e.
4 16
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development’’ of cogeneration.8 It
emphasizes the word ‘‘development,’’
noting that this might be a reasonable
basis for a rule that newly-built QFs
would not enjoy exemptions from rate
regulation, but argues that the statement
does not address the issue of the
Commission’s treatment of those who
invested in such facilities in the past in
reliance on the exemption from rate
regulation. It argues that the
Commission’s statement that QF’s had
no reasonable expectation that the rules
would not be amended is wrong. It
argues that that was the inducement for
developers to invest.
6. ARIPPA argues that the
Commission cites to no record for its
assertion that non-QF sales by QFs
could potentially have a significant
market effect. It argues that the
Commission did not cite to a single
indication that one or more non-utility
QFs under common ownership and
control have achieved or could achieve
market power. It argues that
Commission’s assertion is mere
speculation.
7. ARIPPA argues that the exception
for QFs selling pursuant to a state
avoided-cost regime is inconsistent with
other parts of the existing rule. It argues
that it is vague and that the uncertainty
it will create will stymie future
development, despite Congress’
continuing charge to the Commission to
continue to encourage development. It
contends that it is unclear how much
variance from a state avoided-cost
regime is tolerable and how much
crosses the line and would cause the QF
to lose its exemption from Federal rate
regulation. It questions whether
investors will be willing to initiate
development knowing that the process
may be affected by such uncertainties. It
also questions whether it is in the
public interest for the Commission to set
up what is sees as barriers and
disincentives to settlement of disputes
arising during contract negotiations
between utilities and QFs.
8. NRECA, on the other side, argues
that all power sales by QFs owned by
Commission-regulated public utilities
should be subject to sections 205 and
206 even if the sales were made
pursuant to a state’s implementation of
PURPA.9 It states that Order No. 671
continues to exempt from sections 205
and 206 any sales made pursuant to a
state PURPA implementation plan, even
8 Id.
at 6 (citing Order No. 671 at P 96).
Request for Rehearing at 5.
9 NRECA
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if the QF is owned by a public utility.10
It argues that there is no policy reason
why such wholesale sales of power from
QFs owned by public utilities should be
exempt from Commission review under
sections 205 and 206, while all other
wholesale sales by such public utilities
(i.e., from resources other than QFs) are
subject to such review.
9. NRECA argues that all sales by QFs
owned by public utilities should be
subject to the Commission’s rate
authority, whether such sales are
pursuant to an avoided cost rate or not.
NRECA also states that the filing of
avoided cost contracts with the
Commission will enhance oversight and
transparency, while not requiring filing
creates a risk of market power abuse.
10. NRECA further argues that all QFs
that make non-PURPA sales should be
subject to sections 205 and 206, no
matter how small. It states that it is
sensitive to the needs of smaller QFs,
but that a QF as small as 5 MW could
have a substantial impact upon a small
distribution cooperative. NRECA states
that small QFs that believe they are too
small to handle public utility regulation
may continue to make sales pursuant to
a state PURPA implementation plan,
and continue to be exempt from section
205 and 206 (unless they are owned by
a public utility). NRECA adds that, on
the other hand, if small QFs want the
flexibility available to utilities with
market-based rates and feel that they are
large enough and sophisticated enough
to sell at market-based rates, they
should be subject to sections 205 and
206, like any other public utility that
sells power at market-based rates.
11. NRECA argues that, under Order
No. 671, if a large public utility owned
a 20 MW QF, it could make power sales
from that QF without any Commission
review. It further argues that, if the
facility were not a QF, the public utility
would not be able to make such a sale
without the Commission’s express
approval. It argues that this underscores
the potential for market power abuse
and affiliate transaction abuse that
could occur if Order No. 671 is not
changed.
12. The Non-Utility QF Group argues
that the Commission should increase
the threshold for exemption from
sections 205 and 206 of the FPA from
20 MW to 30 MW. First, it argues that
the change would simplify Commission
regulation by maintaining a consistent
30 MW threshold for all FPA
exemptions as they apply to qualifying
small power production facilities.
Second, it argues that, in PURPA,
Congress determined that 30 MW was a
10 Id.
(citing Order No. 671 at P 99).
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critical threshold for small power
production facilities, and notes that
Congress did not disturb that threshold
in EPAct 2005. Thus, it argues, the
Commission already has a ready
statutory reference for a 30 MW
threshold, while the 20 MW threshold is
more arbitrary. Third, it argues that the
total installed generation capacity for all
qualifying cogeneration plants under 30
MW, combined with the total installed
generation capacity of all qualifying
small power production facilities under
30 MW, totals a mere 7,095.5 MW.11 It
argues that this represents less than 0.7
percent of the total installed generation
capacity in the U.S. in 2004. It argues
that, accordingly, exemptions for QFs
less than 30 MW would not detract from
the purposes of sections 205 and 206 of
the FPA, and would serve both
administrative efficiency and
Congressional mandates to avoid utilitytype regulation of entities having de
minimis market presence.
Commission Determination
13. We disagree that any original
‘‘bargain’’ has been reneged on, or that
the Commission has engaged in what
ARIPPA refers to as a ‘‘bait and switch.’’
The Commission granted very broad
exemptions from the FPA (and state
laws) in order to remove the
disincentive of utility-type regulation
from QFs. Exemptions from FPA
sections 205 and 206 rate regulation
were necessary to encourage the
development of QFs. However, at that
time the Commission had no way to
predict how markets would develop in
the decades to follow. When the
Commission first granted the
exemptions from sections 205 and 206
of the FPA in 1980, there was no market
for electric energy produced by nontraditional generators and thus such
generators were rare. However,
prompted originally by PURPA, markets
for electric energy produced by nontraditional generators have developed.
Now that these markets are in existence
and provide a forum for sales of electric
energy produced by non-traditional
generators, the same level of
encouragement for QFs is no longer
necessary; access to these markets
provides encouragement. Accordingly,
it is no longer necessary to completely
exempt QFs from sections 205 and 206
of the FPA in order to encourage
development of QFs.
14. Moreover, given these changes to
energy markets, there will be times
when Commission oversight of QF sales
11 Non-Utility QF Group Request for Rehearing at
4–5 (citing U.S. Department of Energy Annual
Electric Generator Report (2004)).
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30587
is appropriate and necessary under
section 205 and 206 of the FPA. The
passage and implementation of EPAct
2005 has provided us an opportunity to
now provide for such oversight.
15. We remain unpersuaded that
eliminating exemptions will upset the
legitimate expectations of QF owners,
lenders and investors. As we stated in
Order No. 671, the exemptions
previously granted were always subject
to revision and QFs had no justifiable
expectations that, no matter the changes
in circumstances, changes in the
regulatory regime would not occur. In
addition, the Commission has already
taken significant steps to ease any
adverse impact. Specifically, the
Commission recognized that
expectations reflected in current
contracts should be protected, and did
so by grandfathering the exemption
from sections 205 and 206 of the FPA
for existing contracts.12 However, on a
prospective basis, the need for oversight
of QF sales is a compelling reason to
subject new contracts to rate regulation
under section 205 and 206 of the FPA.
16. ARIPPA’s argument that Order No.
671’s changes to the exemptions from
sections 205 and 206 of the FPA will
discourage future development of nontraditional generation is misplaced. The
large number of non-QF independent
generators that have developed in recent
years, addressed in the many orders
granting them market-based rate
authority under section 205 of the FPA,
indicate that the exemptions from
sections 205 and 206 are not necessary
to promote non-traditional generation.
17. We find unpersuasive the
arguments made by NRECA that even
sales made by utility-owned QFs that
are subject to a state’s PURPA
implementation plan should
nevertheless be subject to section 205
and 206 regulation. Our goal in part was
and is to close the gap that had
developed in the regulatory regime that
allowed some QF sales to avoid any rate
regulation.13 We believe that having QF
sales regulated at the state level is
sufficient, and will allow us to close the
regulatory gap while not dramatically or
inappropriately increasing the
regulatory burden on QFs.
18. Likewise, we find unpersuasive
the arguments of the Non-Utility QF
Group and NRECA to change the
threshold for section 205/206
exemptions. The Non-Utility QF Group
argues that the threshold should be
increased to 30 MW; NRECA argues that
all non-PURPA sales should be
regulated no matter how small the QF.
12 Order
13 Id.
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No. 671 at P 97.
at P 95–96.
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In Order No. 671, we attempted to strike
a balance by ensuring that QF sales are
regulated by either the states or the
Commission while at the same time
easing the burden on the smallest
facilities.14 In the NOPR, the
Commission originally suggested that
the exemptions should remain in effect
for QFs under 5 MW. Most commenters
supported the exemption for QFs under
5 MW, while some suggested a higher
figure.15 In response to those comments,
the Commission raised the threshold to
20 MW.16 The 20 MW threshold strikes
a reasonable balance by protecting the
smallest facilities while ensuring that
sales by larger QFs are subject to
Commission oversight.17 The arguments
presented by the Non-Utility QF Group
are simply not compelling enough to
persuade us to raise the threshold
further. In addition, we reject arguments
by NRECA to make all non-PURPA sales
subject to rate regulation, no matter how
small the QF. We believe that an
exemption from regulation is still
appropriate to ease the regulatory
burden for the smallest QFs.
Self-Certification
Background
19. In Opinion No. 671, the
Commission retained the option to selfcertify for new cogeneration facilities.
The Commission also stated that selfcertifications and self-recertifications of
new cogeneration facilities would now
be noticed in the Federal Register, in
order to enhance the visibility of selfcertifications for interested parties. The
Commission further stated that a facility
should not be able to claim QF status
without having made any filing with the
Commission. Accordingly, the
Commission amended its regulations to
expressly require that a facility claiming
QF status must file either a notice of
self-certification or an application for
Commission certification.18
Requests for Rehearing
20. NRECA argues that the
Commission should not permit new
cogeneration facilities to self-certify. It
states that the ‘‘fundamental use’’ and
‘‘presumptively useful’’ standards are
14 Id.
at P 98.
at P 87.
16 Id. at P 98.
17 The 20 MW threshold adopted in Order No.
671 is also consistent with the 20 MW size limit for
small generating facilities found in Order No. 2006.
Standardization of Small Generator Interconnection
Agreements and Procedures, Order No. 2006, 70 FR
34100 (June 13, 2005), FERC Stats. & Regs. ¶ 31,180
at P 75 (2005), order on reh’g, Order No. 2006–A,
70 FR 71760 (November 30, 2005), FERC Stats. &
Regs. ¶ 31,196 (2005).
18 Id. at P 78–83.
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15 Id.
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subjective and that there are no
guidelines established yet on how the
standard will be applied. It contends
that, although the Commission has
stated that these factors will require a
case-by-case review, self-certification
will be meaningless if the Commission
accepts a new cogeneration facility’s
unsupported representation in a selfcertification that it satisfies subjective
standards. It argues that, consequently,
new cogeneration facilities should at the
present time be required to submit an
application and obtain a Commission
determination as to its QF status.19
21. NRECA further argues that the
Commission’s proposal in Order No.
671 to notice self-certifications and selfrecertifications in the Federal Register
is insufficient to ensure that new
cogeneration facilities satisfy the new
standards for QF status, given the
inherently subjective and case-by-case
nature of the application of such new
standards. It contends that, because QFs
frequently file self-certifications before
they have approached an electric utility
for interconnection or power sales,
electric utilities would be compelled to
monitor every self-certification filing in
order to determine whether the QF is
planning to locate in the electric
utility’s service territory. It further
argues that, until the new standards are
better developed, it will be unclear on
what basis an electric utility could
challenge a QF’s qualifying status. It
contends that only electric utilities with
significant litigation resources will be in
position to protect themselves from
inappropriate self-certifications, and
that small cooperatives will be at a
disadvantage.
Commission Determination
22. We deny rehearing. We find the
processes and safeguards included in
Order No. 671 to be sufficient. As we
noted in Order No. 671, the Commission
has the authority to review a selfcertification.20 With this authority, the
Commission is able to review the selfcertifications of new cogeneration
facilities to ensure their compliance
with the new standards. NRECA argues
that, for the first self-certifications, there
will be no prior cases that provide
guidelines on how to satisfy the
standards. We think EPAct 2005’s
statutory language and the newlyadopted regulations provide a sufficient
starting point, and we also expect such
case law to develop quickly so that QFs
and electric utilities will have further
19 NRECA
20 Order
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guidance on what is necessary to meet
the new standards.
23. In addition, we disagree with
NRECA’s argument that publication of
notice in the Federal Register will not
help to ensure that prospective QFs
comply with the new standards.
Publication of such notices will enhance
the visibility of self-certifications and
self-recertifications for interested
parties. We expect that such visibility
will allow attempted self-certifications
and self-recertifications of new
cogeneration facilities that fail to meet
the new standards set forth in Order No.
671 to be spotted quickly, and so help
to ensure that such facilities satisfy the
new standards in Order No. 671.
PUHCA Clarification
Background
24. In Order No. 671, the Commission
stated that it interprets PURPA to permit
it to exempt QFs from the Public Utility
Holding Company Act of 2005 (PUHCA
2005) 21 in 18 CFR 292.602. The
Commission stated that, accordingly,
revised 18 CFR 292.602 would now
provide that a QF shall not be
considered an ‘‘electric utility
company’’ as defined by PUHCA 2005.
We also stated in Order No. 671 that,
consistent with recent actions on FPA
section 203,22 QFs would be considered
‘‘electric utility companies’’ for
purposes of section 203(a)(2) of the
FPA.23
Requests for Rehearing
25. The Non-Utility QF Group argues
that there is a tension between Order
No. 671 and Order No. 669 24 in how the
two orders relate to transactions
involving entities that only own QFs
and exempt wholesale generators
(EWGs) for purposes of section 203(a)(2)
of the FPA. It states that, in Order No.
669, the Commission explained that,
regardless of their status under PUHCA
2005, QFs (and EWGs) will be regarded
as ‘‘electric utility companies’’ for
purposes of section 203(a)(2), which
addresses the acquisition of securities
by ‘‘holding companies’’ as defined in
PUHCA 2005.25 It notes that the
Commission also stated that, while most
QFs themselves remain exempt from
section 203, holding companies will
21 Public Law No. 109–58, 1261–77, 119 Stat. 594,
972–78 (2005).
22 16 U.S.C. 824b.
23 Order No. 671 at P 102.
24 Transactions Subject to FPA Section 203, Order
No. 669, 70 FR 58636 (October 7, 2005), FERC Stats.
& Regs. ¶ 31,200 (2005), order on reh’g, Order No.
669–A, 71 FR 28,422 (May 16, 2006), FERC Stats.
& Regs. ¶ 31,214 (2006).
25 See Non-Utility QF Group Request for
Rehearing at 5.
E:\FR\FM\30MYR1.SGM
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Federal Register / Vol. 71, No. 103 / Tuesday, May 30, 2006 / Rules and Regulations
require Commission approval pursuant
to section 203 in order to acquire an
interest in a QF or an EWG.26 Finally,
it notes that the Commission in Order
No. 669 stated that this would hold true
even if the holding company were a
holding company solely by reason of its
ownership interest in QFs, EWGs and
foreign utility companies (FUCOs).
26. The Non-Utility QF Group states
that, while it understands why the
Commission would want some review
of acquisitions of large QFs by holding
companies having real generation or
transmission market power, it disagrees
with the Commission’s suggestion in
Order No. 669 that holding companies
otherwise exempted by Congress from
PUHCA 2005, i.e., owners only of QFs,
EWGs and FUCOs, should be subject to
section 203 requirements. It argues that
this assertion represents a potential
dramatic increase in regulatory
oversight over independent companies
that own precisely the types of smaller,
non-traditional generating plants that
Congress has long sought to encourage.
It argues that it is ‘‘silly’’ to require
every 500 KW landfill gas or
hydroelectric plant to be subject to
section 203 just because it is being
acquired by the owner of another small
QF.
27. The Non-Utility QF Group argues
that a better balance is provided by
Order No. 671. It argues that, by
exempting QFs from PUHCA 2005’s
definition of ‘‘electric utility company,’’
a QF would not be an ‘‘electric utility
company’’ under PUHCA 2005, and
therefore its upstream 10 percent
owners would not be ‘‘holding
companies’’ under PUHCA 2005—and
therefore would not be ‘‘holding
companies’’ for purposes of section
203(a)(2) of the FPA.27
Commission Determination
28. The Non-Utility QF Group is
correct that there was an inconsistency
in the treatment of QFs with regards to
their status under PUHCA 2005.
However, the Commission has corrected
this inconsistency in its order on
rehearing of Order No. 667,28 the final
rule which amended the Commission’s
regulations to implement the repeal of
PUHCA 1935 and the enactment of
PUHCA 2005. In that order on
rehearing, the Commission clarified that
26 Id.
(citing Order No. 669 at P 59–60 and 70).
at 6 (citing Order No. 671 at P 92–94).
28 Repeal of the Public Utility Holding Company
Act of 1935 and Enactment of the Public Utility
Holding Company Act of 2005, Order No. 667, 70
FR 75,592 (December 20, 2005), FERC Stats. & Regs.
¶ 31,197 (2005), order on reh’g, Order No. 667–A,
71 FR 28,446 (May 16, 2006), FERC Stats. & Regs.
¶ 31,213 (2006).
rmajette on PROD1PC67 with RULES1
27 Id.
VerDate Aug<31>2005
14:16 May 26, 2006
Jkt 208001
QFs will not be excluded from the
definition of ‘‘electric utility company’’
but added that the Commission intends
nevertheless to exempt QFs from
PUHCA 2005 and most FPA
requirements pursuant to the
Commission’s PURPA authority to grant
such exemptions.29 Accordingly, we
will on rehearing here revise 18 CFR
292.602 to remove the statement that a
QF is not an ‘‘electric utility company’’
within the meaning of PUHCA 2005,
and to provide an exemption from
PUHCA 2005. As to FPA section 203,
the definition of ‘‘electric utility
company’’ in that context was addressed
in Order No. 669–A.30
The Commission orders:
Rehearing is hereby denied and
clarification is hereby granted in part, as
discussed in the body of this order.
List of Subjects in 18 CFR Part 292
Electric Power Plants, Electric
utilities, Natural gas, Reporting and
recordkeeping requirements.
By the Commission.
Magalie R. Salas,
Secretary.
In consideration of the foregoing,
under the authority of EPAct 2005, the
Commission is amending part 292 in
Chapter I of Title 18 of the Code of
Federal Regulations, as set forth below:
I
PART 292—[AMENDED]
1. The authority citation for part 292
continues to read as follows:
I
Authority: 16 U.S.C. 791a–825r, 2601–
2645; 31 U.S.C. 9701; 42 U.S.C. 7101–7352.
2. In § 292.602, paragraph (b) is
revised to read as follows.
I
§ 292.602 Exemption of qualifying facilities
from the Public Utility Holding Company
Act of 2005 and certain State law and
regulation.
*
*
*
*
*
(b) Exemption from the Public Utility
Holding Company Act of 2005. A
qualifying facility described in
paragraph (a) of this section or a utility
geothermal small power production
facility shall be exempt from the Public
Utility Holding Company Act of 2005,
42 U.S.C. 16,451–63.
*
*
*
*
*
[FR Doc. E6–8204 Filed 5–26–06; 8:45 am]
BILLING CODE 6717–01–P
29 See
Order No. 667 at P 14 n. 31.
No. 669–A at P 41–54.
30 Order
PO 00000
Frm 00029
Fmt 4700
Sfmt 4700
30589
DEPARTMENT OF STATE
22 CFR Part 41
[Public Notice 5422]
RIN 1400–AC06
Visas: Documentation of
Nonimmigrants Under the Immigration
and Nationality Act, as Amended
State Department.
Final rule.
AGENCY:
ACTION:
SUMMARY: This rule amends the
Department of State’s regulations to
require the presentation of Mexican
Federal passports as a necessary
condition for Mexican citizens applying
for combined Border Crossing Cards
(BCC) and B–1/B–2 visas (laser visas). It
also removes the conditions under
which certain beneficiaries of
Immigration and Nationality Act
212(d)(3)(A) waivers of ineligibility
could receive laser visas.
DATES: Effective Date: This rule is
effective on May 30, 2006.
FOR FURTHER INFORMATION CONTACT:
Charles E. Robertson, Legislation and
Regulations Division, Visa Services,
Department of State, Washington, DC
20520–0106. Phone: 202–663–3969. Email: robertsonce3@state.gov.
SUPPLEMENTARY INFORMATION:
What Is a Laser Visa?
The biometric border-crossing card
(BCC/B–1/B–2 NIV) is a laminated,
credit card-style document with many
security features. It has a ten-year
validity period. The card is commonly
called a ‘‘laser visa.’’ Most Mexican
visitors to the U.S., whether traveling to
the border region or beyond, receive a
laser visa.
Who Has Authority Over the Issuance
of Laser Visas?
The Department of State and the
Bureau of Citizenship and Immigration
Services (BCIS) in the Department of
Homeland Security jointly administer
the laser visa program. The Department
of State issues the BCC/B–1⁄2 as it
possesses exclusive authority over visa
issuance.
How Was This Authority Derived?
In 1996, Congress established new
procedures for issuing a more secure
border-crossing document (Section 104
of the Illegal Immigration Reform and
Immigrant Responsibility Act of 1996
(IIRIRA) Pub. L. 104–208, 110 Stat.
3546). The law required every border
crossing identification card issued after
April 1, 1998 to contain a biometric
identifier such as a fingerprint, and be
E:\FR\FM\30MYR1.SGM
30MYR1
]]>Agencies
[Federal Register Volume 71, Number 103 (Tuesday, May 30, 2006)]
[Rules and Regulations]
[Pages 30585-30589]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-8204]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
18 CFR Part 292
[Docket No. RM05-36-001; Order No. 671-A]
Revised Regulations Governing Small Power Production and
Cogeneration Facilities
Issued May 22, 2006.
AGENCY: Federal Energy Regulatory Commission.
ACTION: Final order; order on rehearing.
-----------------------------------------------------------------------
SUMMARY: In this order on rehearing, the Federal Energy Regulatory
Commission
[[Page 30586]]
(Commission) reaffirms its determinations and grants clarification in
part of Order No. 671, which amended the Commission's regulations
governing small power production and cogeneration facilities.
DATES: Effective Date: The final rule and order on rehearing will
become effective June 29, 2006.
FOR FURTHER INFORMATION CONTACT:
Paul Singh (Technical Information), Office of Energy Markets and Rates,
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.
Eric D. Winterbauer (Legal Information), Office of the General Counsel,
Federal Energy Regulatory Commission, 888 First Street, NE.,
Washington, DC 20426. (202) 502-8329.
SUPPLEMENTARY INFORMATION:
Before Commissioners: Joseph T. Kelliher, Chairman; Nora Mead Brownell,
and Suedeen G. Kelly.
1. On February 2, 2006, the Federal Energy Regulatory Commission
(Commission) issued Order No. 671,\1\ in which the Commission revised
its regulations governing qualifying small power production and
cogeneration facilities. Specifically, the Commission, among other
things, eliminated certain exemptions from rate regulation that were
previously available to qualifying facilities (QFs). Several parties
have requested rehearing or clarification. For the reasons discussed
below, we deny the requests for rehearing and grant clarification in
part.
---------------------------------------------------------------------------
\1\ Revised Regulations Governing Small Power Production and
Cogeneration Facilities, Order No. 671, 71 FR 7852 (February 15,
2006), FERC Stats. & Regs. ] 31,203 (2006).
---------------------------------------------------------------------------
Introduction
2. Order No. 671 was issued in response to the Energy Policy Act of
2005 (EPAct 2005),\2\ which modified in relevant part section 210 of
the Public Utility Regulatory Policies Act of 1978 (PURPA).
Specifically, Order No. 671 sought to: (1) Ensure that new qualifying
cogeneration facilities are using their thermal output in a productive
and beneficial manner; that the electrical, thermal, chemical and
mechanical output of new qualifying cogeneration facilities is used
fundamentally for industrial, commercial, residential or institutional
purposes; and that there is continuing progress in the development of
efficient electric energy generating technology; (2) amend Form 556 \3\
to reflect the criteria for new qualifying cogeneration facilities; (3)
eliminate ownership limitations for qualifying cogeneration and small
power production facilities; and (4) amend the exemptions available to
QFs from the requirements of the Federal Power Act (FPA) \4\ and the
Public Utility Holding Company Act of 1935 (PUHCA 1935).\5\ ARIPPA,\6\
the National Rural Electric Cooperative Association (NRECA) and the
Non-Utility QF Group have requested rehearing.
---------------------------------------------------------------------------
\2\ Energy Policy Act of 2005, Public Law No. 109-58, 119 Stat.
594 (2005).
\3\ 18 CFR 131.80.
\4\ 16 U.S.C. 824 et seq.
\5\ 15 U.S.C. 79; See Public Law No. 109-58, 1261-77, 119 Stat.
594, 972-78 (2005).
\6\ ARIPPA, formerly known as the Anthracite Region Independent
Power Producers Association, states that it is a not-for-profit
association comprising fourteen independent power producers in
Pennsylvania that generate approximately 1,346 MW of electrical
power buring coal mining refuse.
---------------------------------------------------------------------------
Exemption of QFs From FPA Section 205/206 Authority
Background
3. In Order No. 671, the Commission stated that in light of
significant changes that have occurred in the industry since the first
QF facilities were introduced and in light of changing electric markets
and resulting market power issues that have arisen in recent years, it
was no longer necessary or appropriate to completely exempt QFs from
sections 205 and 206 of the FPA.\7\ However, the Commission clarified
that QFs would continue to have an exemption from sections 205 and 206
of the FPA when a sale is made pursuant to a state regulatory
authority's implementation of PURPA. In addition, to avoid creating the
hardship that removal of exemptions might cause for smaller QFs, the
Commission provided that facilities 20 MW or smaller would remain
exempt from sections 205 and 206 of the FPA.
---------------------------------------------------------------------------
\7\ 16 U.S.C. 824d, 824e.
---------------------------------------------------------------------------
Requests for Rehearing
4. ARIPPA argues against the imposition of rate regulation on QFs
that are not owned by electric utilities. It argues that the rule
change is a ``bait-and-switch,'' in that it would impose rate
regulation on QF owners who had been induced to invest in and develop
QFs by the exemption from the state and Federal rate regulation.
5. ARIPPA points to the Commission's statement that ``a complete
exemption is not necessary to encourage the development'' of
cogeneration.\8\ It emphasizes the word ``development,'' noting that
this might be a reasonable basis for a rule that newly-built QFs would
not enjoy exemptions from rate regulation, but argues that the
statement does not address the issue of the Commission's treatment of
those who invested in such facilities in the past in reliance on the
exemption from rate regulation. It argues that the Commission's
statement that QF's had no reasonable expectation that the rules would
not be amended is wrong. It argues that that was the inducement for
developers to invest.
---------------------------------------------------------------------------
\8\ Id. at 6 (citing Order No. 671 at P 96).
---------------------------------------------------------------------------
6. ARIPPA argues that the Commission cites to no record for its
assertion that non-QF sales by QFs could potentially have a significant
market effect. It argues that the Commission did not cite to a single
indication that one or more non-utility QFs under common ownership and
control have achieved or could achieve market power. It argues that
Commission's assertion is mere speculation.
7. ARIPPA argues that the exception for QFs selling pursuant to a
state avoided-cost regime is inconsistent with other parts of the
existing rule. It argues that it is vague and that the uncertainty it
will create will stymie future development, despite Congress'
continuing charge to the Commission to continue to encourage
development. It contends that it is unclear how much variance from a
state avoided-cost regime is tolerable and how much crosses the line
and would cause the QF to lose its exemption from Federal rate
regulation. It questions whether investors will be willing to initiate
development knowing that the process may be affected by such
uncertainties. It also questions whether it is in the public interest
for the Commission to set up what is sees as barriers and disincentives
to settlement of disputes arising during contract negotiations between
utilities and QFs.
8. NRECA, on the other side, argues that all power sales by QFs
owned by Commission-regulated public utilities should be subject to
sections 205 and 206 even if the sales were made pursuant to a state's
implementation of PURPA.\9\ It states that Order No. 671 continues to
exempt from sections 205 and 206 any sales made pursuant to a state
PURPA implementation plan, even
[[Page 30587]]
if the QF is owned by a public utility.\10\ It argues that there is no
policy reason why such wholesale sales of power from QFs owned by
public utilities should be exempt from Commission review under sections
205 and 206, while all other wholesale sales by such public utilities
(i.e., from resources other than QFs) are subject to such review.
---------------------------------------------------------------------------
\9\ NRECA Request for Rehearing at 5.
\10\ Id. (citing Order No. 671 at P 99).
---------------------------------------------------------------------------
9. NRECA argues that all sales by QFs owned by public utilities
should be subject to the Commission's rate authority, whether such
sales are pursuant to an avoided cost rate or not. NRECA also states
that the filing of avoided cost contracts with the Commission will
enhance oversight and transparency, while not requiring filing creates
a risk of market power abuse.
10. NRECA further argues that all QFs that make non-PURPA sales
should be subject to sections 205 and 206, no matter how small. It
states that it is sensitive to the needs of smaller QFs, but that a QF
as small as 5 MW could have a substantial impact upon a small
distribution cooperative. NRECA states that small QFs that believe they
are too small to handle public utility regulation may continue to make
sales pursuant to a state PURPA implementation plan, and continue to be
exempt from section 205 and 206 (unless they are owned by a public
utility). NRECA adds that, on the other hand, if small QFs want the
flexibility available to utilities with market-based rates and feel
that they are large enough and sophisticated enough to sell at market-
based rates, they should be subject to sections 205 and 206, like any
other public utility that sells power at market-based rates.
11. NRECA argues that, under Order No. 671, if a large public
utility owned a 20 MW QF, it could make power sales from that QF
without any Commission review. It further argues that, if the facility
were not a QF, the public utility would not be able to make such a sale
without the Commission's express approval. It argues that this
underscores the potential for market power abuse and affiliate
transaction abuse that could occur if Order No. 671 is not changed.
12. The Non-Utility QF Group argues that the Commission should
increase the threshold for exemption from sections 205 and 206 of the
FPA from 20 MW to 30 MW. First, it argues that the change would
simplify Commission regulation by maintaining a consistent 30 MW
threshold for all FPA exemptions as they apply to qualifying small
power production facilities. Second, it argues that, in PURPA, Congress
determined that 30 MW was a critical threshold for small power
production facilities, and notes that Congress did not disturb that
threshold in EPAct 2005. Thus, it argues, the Commission already has a
ready statutory reference for a 30 MW threshold, while the 20 MW
threshold is more arbitrary. Third, it argues that the total installed
generation capacity for all qualifying cogeneration plants under 30 MW,
combined with the total installed generation capacity of all qualifying
small power production facilities under 30 MW, totals a mere 7,095.5
MW.\11\ It argues that this represents less than 0.7 percent of the
total installed generation capacity in the U.S. in 2004. It argues
that, accordingly, exemptions for QFs less than 30 MW would not detract
from the purposes of sections 205 and 206 of the FPA, and would serve
both administrative efficiency and Congressional mandates to avoid
utility-type regulation of entities having de minimis market presence.
---------------------------------------------------------------------------
\11\ Non-Utility QF Group Request for Rehearing at 4-5 (citing
U.S. Department of Energy Annual Electric Generator Report (2004)).
---------------------------------------------------------------------------
Commission Determination
13. We disagree that any original ``bargain'' has been reneged on,
or that the Commission has engaged in what ARIPPA refers to as a ``bait
and switch.'' The Commission granted very broad exemptions from the FPA
(and state laws) in order to remove the disincentive of utility-type
regulation from QFs. Exemptions from FPA sections 205 and 206 rate
regulation were necessary to encourage the development of QFs. However,
at that time the Commission had no way to predict how markets would
develop in the decades to follow. When the Commission first granted the
exemptions from sections 205 and 206 of the FPA in 1980, there was no
market for electric energy produced by non-traditional generators and
thus such generators were rare. However, prompted originally by PURPA,
markets for electric energy produced by non-traditional generators have
developed. Now that these markets are in existence and provide a forum
for sales of electric energy produced by non-traditional generators,
the same level of encouragement for QFs is no longer necessary; access
to these markets provides encouragement. Accordingly, it is no longer
necessary to completely exempt QFs from sections 205 and 206 of the FPA
in order to encourage development of QFs.
14. Moreover, given these changes to energy markets, there will be
times when Commission oversight of QF sales is appropriate and
necessary under section 205 and 206 of the FPA. The passage and
implementation of EPAct 2005 has provided us an opportunity to now
provide for such oversight.
15. We remain unpersuaded that eliminating exemptions will upset
the legitimate expectations of QF owners, lenders and investors. As we
stated in Order No. 671, the exemptions previously granted were always
subject to revision and QFs had no justifiable expectations that, no
matter the changes in circumstances, changes in the regulatory regime
would not occur. In addition, the Commission has already taken
significant steps to ease any adverse impact. Specifically, the
Commission recognized that expectations reflected in current contracts
should be protected, and did so by grandfathering the exemption from
sections 205 and 206 of the FPA for existing contracts.\12\ However, on
a prospective basis, the need for oversight of QF sales is a compelling
reason to subject new contracts to rate regulation under section 205
and 206 of the FPA.
---------------------------------------------------------------------------
\12\ Order No. 671 at P 97.
---------------------------------------------------------------------------
16. ARIPPA's argument that Order No. 671's changes to the
exemptions from sections 205 and 206 of the FPA will discourage future
development of non-traditional generation is misplaced. The large
number of non-QF independent generators that have developed in recent
years, addressed in the many orders granting them market-based rate
authority under section 205 of the FPA, indicate that the exemptions
from sections 205 and 206 are not necessary to promote non-traditional
generation.
17. We find unpersuasive the arguments made by NRECA that even
sales made by utility-owned QFs that are subject to a state's PURPA
implementation plan should nevertheless be subject to section 205 and
206 regulation. Our goal in part was and is to close the gap that had
developed in the regulatory regime that allowed some QF sales to avoid
any rate regulation.\13\ We believe that having QF sales regulated at
the state level is sufficient, and will allow us to close the
regulatory gap while not dramatically or inappropriately increasing the
regulatory burden on QFs.
---------------------------------------------------------------------------
\13\ Id. at P 95-96.
---------------------------------------------------------------------------
18. Likewise, we find unpersuasive the arguments of the Non-Utility
QF Group and NRECA to change the threshold for section 205/206
exemptions. The Non-Utility QF Group argues that the threshold should
be increased to 30 MW; NRECA argues that all non-PURPA sales should be
regulated no matter how small the QF.
[[Page 30588]]
In Order No. 671, we attempted to strike a balance by ensuring that QF
sales are regulated by either the states or the Commission while at the
same time easing the burden on the smallest facilities.\14\ In the
NOPR, the Commission originally suggested that the exemptions should
remain in effect for QFs under 5 MW. Most commenters supported the
exemption for QFs under 5 MW, while some suggested a higher figure.\15\
In response to those comments, the Commission raised the threshold to
20 MW.\16\ The 20 MW threshold strikes a reasonable balance by
protecting the smallest facilities while ensuring that sales by larger
QFs are subject to Commission oversight.\17\ The arguments presented by
the Non-Utility QF Group are simply not compelling enough to persuade
us to raise the threshold further. In addition, we reject arguments by
NRECA to make all non-PURPA sales subject to rate regulation, no matter
how small the QF. We believe that an exemption from regulation is still
appropriate to ease the regulatory burden for the smallest QFs.
---------------------------------------------------------------------------
\14\ Id. at P 98.
\15\ Id. at P 87.
\16\ Id. at P 98.
\17\ The 20 MW threshold adopted in Order No. 671 is also
consistent with the 20 MW size limit for small generating facilities
found in Order No. 2006. Standardization of Small Generator
Interconnection Agreements and Procedures, Order No. 2006, 70 FR
34100 (June 13, 2005), FERC Stats. & Regs. ] 31,180 at P 75 (2005),
order on reh'g, Order No. 2006-A, 70 FR 71760 (November 30, 2005),
FERC Stats. & Regs. ] 31,196 (2005).
---------------------------------------------------------------------------
Self-Certification
Background
19. In Opinion No. 671, the Commission retained the option to self-
certify for new cogeneration facilities. The Commission also stated
that self-certifications and self-recertifications of new cogeneration
facilities would now be noticed in the Federal Register, in order to
enhance the visibility of self-certifications for interested parties.
The Commission further stated that a facility should not be able to
claim QF status without having made any filing with the Commission.
Accordingly, the Commission amended its regulations to expressly
require that a facility claiming QF status must file either a notice of
self-certification or an application for Commission certification.\18\
---------------------------------------------------------------------------
\18\ Id. at P 78-83.
---------------------------------------------------------------------------
Requests for Rehearing
20. NRECA argues that the Commission should not permit new
cogeneration facilities to self-certify. It states that the
``fundamental use'' and ``presumptively useful'' standards are
subjective and that there are no guidelines established yet on how the
standard will be applied. It contends that, although the Commission has
stated that these factors will require a case-by-case review, self-
certification will be meaningless if the Commission accepts a new
cogeneration facility's unsupported representation in a self-
certification that it satisfies subjective standards. It argues that,
consequently, new cogeneration facilities should at the present time be
required to submit an application and obtain a Commission determination
as to its QF status.\19\
---------------------------------------------------------------------------
\19\ NRECA Request for Rehearing at 8.
---------------------------------------------------------------------------
21. NRECA further argues that the Commission's proposal in Order
No. 671 to notice self-certifications and self-recertifications in the
Federal Register is insufficient to ensure that new cogeneration
facilities satisfy the new standards for QF status, given the
inherently subjective and case-by-case nature of the application of
such new standards. It contends that, because QFs frequently file self-
certifications before they have approached an electric utility for
interconnection or power sales, electric utilities would be compelled
to monitor every self-certification filing in order to determine
whether the QF is planning to locate in the electric utility's service
territory. It further argues that, until the new standards are better
developed, it will be unclear on what basis an electric utility could
challenge a QF's qualifying status. It contends that only electric
utilities with significant litigation resources will be in position to
protect themselves from inappropriate self-certifications, and that
small cooperatives will be at a disadvantage.
Commission Determination
22. We deny rehearing. We find the processes and safeguards
included in Order No. 671 to be sufficient. As we noted in Order No.
671, the Commission has the authority to review a self-
certification.\20\ With this authority, the Commission is able to
review the self-certifications of new cogeneration facilities to ensure
their compliance with the new standards. NRECA argues that, for the
first self-certifications, there will be no prior cases that provide
guidelines on how to satisfy the standards. We think EPAct 2005's
statutory language and the newly-adopted regulations provide a
sufficient starting point, and we also expect such case law to develop
quickly so that QFs and electric utilities will have further guidance
on what is necessary to meet the new standards.
---------------------------------------------------------------------------
\20\ Order No. 671 at P 78.
---------------------------------------------------------------------------
23. In addition, we disagree with NRECA's argument that publication
of notice in the Federal Register will not help to ensure that
prospective QFs comply with the new standards. Publication of such
notices will enhance the visibility of self-certifications and self-
recertifications for interested parties. We expect that such visibility
will allow attempted self-certifications and self-recertifications of
new cogeneration facilities that fail to meet the new standards set
forth in Order No. 671 to be spotted quickly, and so help to ensure
that such facilities satisfy the new standards in Order No. 671.
PUHCA Clarification
Background
24. In Order No. 671, the Commission stated that it interprets
PURPA to permit it to exempt QFs from the Public Utility Holding
Company Act of 2005 (PUHCA 2005) \21\ in 18 CFR 292.602. The Commission
stated that, accordingly, revised 18 CFR 292.602 would now provide that
a QF shall not be considered an ``electric utility company'' as defined
by PUHCA 2005. We also stated in Order No. 671 that, consistent with
recent actions on FPA section 203,\22\ QFs would be considered
``electric utility companies'' for purposes of section 203(a)(2) of the
FPA.\23\
---------------------------------------------------------------------------
\21\ Public Law No. 109-58, 1261-77, 119 Stat. 594, 972-78
(2005).
\22\ 16 U.S.C. 824b.
\23\ Order No. 671 at P 102.
---------------------------------------------------------------------------
Requests for Rehearing
25. The Non-Utility QF Group argues that there is a tension between
Order No. 671 and Order No. 669 \24\ in how the two orders relate to
transactions involving entities that only own QFs and exempt wholesale
generators (EWGs) for purposes of section 203(a)(2) of the FPA. It
states that, in Order No. 669, the Commission explained that,
regardless of their status under PUHCA 2005, QFs (and EWGs) will be
regarded as ``electric utility companies'' for purposes of section
203(a)(2), which addresses the acquisition of securities by ``holding
companies'' as defined in PUHCA 2005.\25\ It notes that the Commission
also stated that, while most QFs themselves remain exempt from section
203, holding companies will
[[Page 30589]]
require Commission approval pursuant to section 203 in order to acquire
an interest in a QF or an EWG.\26\ Finally, it notes that the
Commission in Order No. 669 stated that this would hold true even if
the holding company were a holding company solely by reason of its
ownership interest in QFs, EWGs and foreign utility companies (FUCOs).
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\24\ Transactions Subject to FPA Section 203, Order No. 669, 70
FR 58636 (October 7, 2005), FERC Stats. & Regs. ] 31,200 (2005),
order on reh'g, Order No. 669-A, 71 FR 28,422 (May 16, 2006), FERC
Stats. & Regs. ] 31,214 (2006).
\25\ See Non-Utility QF Group Request for Rehearing at 5.
\26\ Id. (citing Order No. 669 at P 59-60 and 70).
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26. The Non-Utility QF Group states that, while it understands why
the Commission would want some review of acquisitions of large QFs by
holding companies having real generation or transmission market power,
it disagrees with the Commission's suggestion in Order No. 669 that
holding companies otherwise exempted by Congress from PUHCA 2005, i.e.,
owners only of QFs, EWGs and FUCOs, should be subject to section 203
requirements. It argues that this assertion represents a potential
dramatic increase in regulatory oversight over independent companies
that own precisely the types of smaller, non-traditional generating
plants that Congress has long sought to encourage. It argues that it is
``silly'' to require every 500 KW landfill gas or hydroelectric plant
to be subject to section 203 just because it is being acquired by the
owner of another small QF.
27. The Non-Utility QF Group argues that a better balance is
provided by Order No. 671. It argues that, by exempting QFs from PUHCA
2005's definition of ``electric utility company,'' a QF would not be an
``electric utility company'' under PUHCA 2005, and therefore its
upstream 10 percent owners would not be ``holding companies'' under
PUHCA 2005--and therefore would not be ``holding companies'' for
purposes of section 203(a)(2) of the FPA.\27\
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\27\ Id. at 6 (citing Order No. 671 at P 92-94).
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Commission Determination
28. The Non-Utility QF Group is correct that there was an
inconsistency in the treatment of QFs with regards to their status
under PUHCA 2005. However, the Commission has corrected this
inconsistency in its order on rehearing of Order No. 667,\28\ the final
rule which amended the Commission's regulations to implement the repeal
of PUHCA 1935 and the enactment of PUHCA 2005. In that order on
rehearing, the Commission clarified that QFs will not be excluded from
the definition of ``electric utility company'' but added that the
Commission intends nevertheless to exempt QFs from PUHCA 2005 and most
FPA requirements pursuant to the Commission's PURPA authority to grant
such exemptions.\29\ Accordingly, we will on rehearing here revise 18
CFR 292.602 to remove the statement that a QF is not an ``electric
utility company'' within the meaning of PUHCA 2005, and to provide an
exemption from PUHCA 2005. As to FPA section 203, the definition of
``electric utility company'' in that context was addressed in Order No.
669-A.\30\
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\28\ Repeal of the Public Utility Holding Company Act of 1935
and Enactment of the Public Utility Holding Company Act of 2005,
Order No. 667, 70 FR 75,592 (December 20, 2005), FERC Stats. & Regs.
] 31,197 (2005), order on reh'g, Order No. 667-A, 71 FR 28,446 (May
16, 2006), FERC Stats. & Regs. ] 31,213 (2006).
\29\ See Order No. 667 at P 14 n. 31.
\30\ Order No. 669-A at P 41-54.
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The Commission orders:
Rehearing is hereby denied and clarification is hereby granted in
part, as discussed in the body of this order.
List of Subjects in 18 CFR Part 292
Electric Power Plants, Electric utilities, Natural gas, Reporting
and recordkeeping requirements.
By the Commission.
Magalie R. Salas,
Secretary.
0
In consideration of the foregoing, under the authority of EPAct 2005,
the Commission is amending part 292 in Chapter I of Title 18 of the
Code of Federal Regulations, as set forth below:
PART 292--[AMENDED]
0
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.
0
2. In Sec. 292.602, paragraph (b) is revised to read as follows.
Sec. 292.602 Exemption of qualifying facilities from the Public
Utility Holding Company Act of 2005 and certain State law and
regulation.
* * * * *
(b) Exemption from the Public Utility Holding Company Act of 2005.
A qualifying facility described in paragraph (a) of this section or a
utility geothermal small power production facility shall be exempt from
the Public Utility Holding Company Act of 2005, 42 U.S.C. 16,451-63.
* * * * *
[FR Doc. E6-8204 Filed 5-26-06; 8:45 am]
BILLING CODE 6717-01-P
