[Federal Register Volume 62, Number 111 (Tuesday, June 10, 1997)]
[Proposed Rules]
[Pages 31524-31526]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-15106]
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DEPARTMENT OF ENERGY
Office of Energy Efficiency and Renewable Energy
10 CFR Part 451
[Docket No. EE-NOI-97-301]
Renewable Energy Production Incentive Program
AGENCY: Department of Energy.
ACTION: Notice of Inquiry and public meeting and request for public
comment.
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SUMMARY: The Department of Energy (DOE) is publishing this Notice of
Inquiry (NOI) to obtain information on possible changes to the
Renewable Energy Production Incentive (REPI) program that will improve
its
[[Page 31525]]
effectiveness as a financial incentive for the development of new
qualifying renewable energy generation facilities.
DATES: Written comments (7 copies) will be considered if received at
the address provided below no later than July 31, 1997. A public
meeting will be held on July 15, 1997, beginning at 9:30 a.m., at the
address listed below. Requests to speak must by received by the
Department on or before July 11, 1997.
ADDRESSES: All written comments (7 copies) as well as requests to speak
at the public meeting are to be submitted to: U.S. Department of
Energy, Office of Energy Efficiency and Renewable Energy, EE-10, Docket
No. EE-NOI-97-301, 1000 Independence Avenue, SW., Washington, DC 20585,
(202) 586-3012. FAX comments will not be accepted. The comment and the
envelope in which the required number of copies is mailed should be
marked ``Notice of Inquiry, Docket EE-NOI-97-301.'' The public meeting
will be held at U.S. Department of Energy, Forrestal Building, Room 1E-
245, 1000 Independence Avenue, SW., Washington, DC 20585. Copies of the
transcript of the public meeting and public comments received may be
read at the DOE Freedom of Information Reading Room, U.S. Department of
Energy, Forrestal Building, Room 1E-190, 1000 Independence Avenue, SW.,
Washington, DC 20585, (202) 586-6020, between the hours of 9 a.m. and 4
p.m., Monday through Friday, except Federal holidays.
FOR FURTHER INFORMATION CONTACT: Robert H. Brewer, Office of Energy
Efficiency and Renewable Energy, EE-10, U.S. Department of Energy, 1000
Independence Avenue, SW., Room 5H-021, Washington, DC 20585, (202) 586-
2206. For information concerning the public meeting and submission of
comments, contact Andi Kasarsky, (202) 586-3012.
SUPPLEMENTARY INFORMATION:
Background
In this NOI, the DOE requests information on possible changes to
the REPI program to improve its incentive value. The REPI program,
which was established by the Energy Policy Act of 1992, is designed to
provide a 10-year production incentive payment of 1.5 cents per
kilowatt-hour (kWh), adjusted for inflation and subject to the
availability of annual appropriations, to States or subdivisions of
States or non-profit electric cooperatives, herein referred to as
public power organizations, that own new or newly converted qualifying
renewable energy generation facilities. Since the incentive payments
depend on the availability of annual appropriations, potential owners
of qualifying renewable energy facilities are uncertain that future
production incentive payments will be made. This uncertainty reduces
the incentive value of the production incentive payments when decisions
are being made concerning development of new renewable energy
generation facilities.
To implement the REPI program, the Department issued a proposed
rule on May 13, 1994 (59 FR 24982), and published a final rule on July
19, 1995 (60 FR 36959). This process has resulted in regulations
codified at 10 CFR Part 451 (1997), which govern the implementation of
the REPI program. In accordance with these regulations, the Department
makes determinations on the eligibility of owners and facilities
concerning incentive payments. The Department also reviews qualified
applicants' annual submissions of net electricity produced from
qualified facilities. Annual payments are made for this electric
production, subject to the availability of annual appropriations. If
there are insufficient appropriations to make full incentive payments,
some or all applicants may receive either no payment or payment for
only a portion of the net electricity produced by their facility, with
the remainder designated as (unpaid) accrued energy. An applicant may
submit a request for payment based on accrued energy in subsequent
years within the allowed ten-fiscal year period for that facility.
Congressional appropriations have been sufficient to fully pay
production incentives for net electricity produced by qualified
facilities in fiscal year 1994 (payments of $693,120) and in fiscal
year 1995 (payments of $2,398,472). Based on a review of applications
for net electricity produced in fiscal year 1996, appropriations are
insufficient to fully pay all qualifying applicants for the net
electricity that their facility produced ($2,490,893 is available for
these payments). When appropriated funds are insufficient to fully pay
all qualified applicants, a two-tier payment process, as described in
10 CFR Section 451.9(e) (1997), is used. Applications for payment have
grown from seven for fiscal year 1994 production to eleven for fiscal
year 1995 production to eighteen for fiscal year 1996 production.
The intended purpose of the REPI program is to provide a 10-year
production incentive payment to public power organizations that would
be fully considered in their decision to potentially select an eligible
type of renewable energy generation system. However, public comment and
subsequent stakeholder feedback reveal that the REPI production
incentive payments are either not valued or are undervalued during the
decision-making process, since they are dependent upon annual
appropriations. The following excerpt is from the discussion of
comments in the final rule for the REPI program: ``Several of the
commenters who recommended a 10-year escrow account argued that
potential investors in new renewable energy facilities are unlikely to
take account of payments under this program in assessing an investment
without assurances, at the time of investment, that the full schedule
of payments would be made. DOE believes this argument has merit.
However, additional work by DOE and its stakeholders is needed to
develop a payout approach that will maximize the effectiveness of the
program as an incentive for promoting incremental investment in new
renewable energy facilities. DOE intends to publish a notice in the
near future that invites suggestions from interested persons regarding
possible program modifications, including possible statutory or
regulatory changes, that can increase the incentive value of this
effort.'' 60 FR 36963 (1995). This NOI is that notice.
Representatives of public power organizations have stated that an
effective REPI program can become the single most important incentive
mechanism available to them for encouraging investment in new renewable
energy generation facilities. Various commenters have suggested a few
options that they believe would lead to the full valuation of the 10-
year REPI production incentive payments in the decisions by public
power organizations to acquire and operate new renewable energy
generation facilities. These suggested changes would require either
regulatory or statutory change. One suggestion, which would require
changing the existing regulations, is the use of annual REPI
appropriations to establish a ``10-year escrow account'' to fully fund
the incentive payments for the estimated amount of net generation over
the eligible ten-year period. Because of the ten-year commitment, fewer
qualified facilities would receive funding for a given year's
appropriation, which might necessitate a prioritization procedure to
fully fund qualified facilities. Possible priority procedures for
funding qualified facilities could be based on either the facility
startup date or the date an application for the facility is received.
Another suggestion, which would require statutory change, is the
[[Page 31526]]
establishment of a trust fund account for REPI payments that would be
funded by accelerated appropriations, other revenue sources (such as a
line charge or wire charge), or a combination of both. The third
suggestion, which would also require statutory change, is to allow
public power entities to pass on the incentive payment over the 10-year
payment period as a tax credit to customers who agree to purchase,
potentially under a separate rate schedule, the electricity from a
qualified renewable energy facility. In this NOI, DOE seeks comment on
these options and other appropriate options that may improve the
incentive value of the REPI program.
Issues for Public Comment
With respect to potential changes to the REPI program that would
enhance the incentive effect of REPI payments in the decision-making of
public power organizations concerning development of new renewable
energy generation facilities, DOE seeks the following information:
(1) Recommendations regarding changes to the REPI program that
would enhance the value of the production incentive payments in
development decisions. Please specify what regulatory or statutory
changes, if any, would be required for each recommendation.
(2) Discussion of how these changes would enhance the value of
production incentive payments in development decisions.
(3) To the extent meaningful information can be provided, estimates
of the amount of additional renewable energy generation (in megawatts
capacity installed) that might begin operation by September 30, 2003,
if these recommended changes are implemented.
Opportunities for Public Comment
A. Written Comment Procedures
Interested persons are invited to respond to this notice by
submitting their ideas and views concerning options for modifying the
REPI program so that the full value of its 10-year production incentive
payments is considered in the decisions by public power organizations
to acquire and operate new renewable energy generation facilities.
Seven copies of each comment should be submitted to the Office of
Energy Efficiency and Renewable Energy in compliance with the
instructions set forth above in the Dates and Addresses section of this
notice.
B. Public Meeting
A public meeting on the NOI will be held at the time and place
indicated in the DATES and ADDRESSES Section of this notice. To request
an opportunity to speak at the public meeting, please use the phone
number indicated at the beginning of this notice. The person should
provide a phone number where he or she may be reached during the day.
Each potential speaker will be notified by DOE as to the approximate
time they will be speaking. Seven copies of the speaker's statement
should be submitted at the beginning of the meeting. In the event any
person wishing to speak cannot meet this requirement, alternative
arrangements can be made in advance with DOE.
A transcript of the meeting will be made by DOE. It will be on file
for inspection at the DOE Freedom of Information Reading Room at the
address indicated at the beginning of this notice.
If DOE must cancel the public meeting, DOE will make every effort
to publish an advance notice of such cancellation in the Federal
Register. Actual notice of cancellation will also be given to all
persons scheduled to speak. The meeting date may be canceled in the
event no member of the public requests the opportunity to make an oral
presentation.
Issued in Washington, DC, on June 4, 1997.
Joseph J. Romm,
Acting Assistant Secretary, Energy Efficiency and Renewable Energy.
[FR Doc. 97-15106 Filed 6-9-97; 8:45 am]
BILLING CODE 6450-01-P
