[Federal Register Volume 63, Number 186 (Friday, September 25, 1998)]
[Proposed Rules]
[Pages 51310-51312]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-25676]
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DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
18 CFR Part 292
[Docket No. RM88-6-000]
Administrative Determination of Full Avoided Costs, Sales of
Power To Qualifying Facilities, and Interconnection Facilities; Order
Terminating Proceeding
Issued September 21, 1998.
AGENCY: Federal Energy Regulatory Commission.
ACTION: Order Terminating Proceeding.
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SUMMARY: The Federal Energy Regulatory Commission (Commission) is
terminating this proceeding because the matters at issue in this
proceeding have since been overtaken by events.
DATES: This order is withdrawn September 25, 1998.
FOR FURTHER INFORMATION CONTACT: Kimberly D. Bose, Federal Energy
Regulatory Commission, Office of the General Counsel, 888 First Street,
N.E., Washington, D.C. 20426, (202) 208-2284.
SUPPLEMENTARY INFORMATION: In addition to publishing the full text of
this document in the Federal Register, the Commission also provides all
interested persons an opportunity to inspect or copy the contents of
this document during normal business hours in the Public Reference Room
at 888 First Street, N.E., Room 2A, Washington, D.C. 20426.
The Commission Issuance Posting System (CIPS) provides access to
the texts of formal documents issued by the Commission. CIPS can be
accessed via Internet through FERC's Homepage (http://www.ferc.fed.us)
using the CIPS Link or the Energy Information Online icon. The full
text of this document will be available on CIPS in ASCII and
WordPerfect 6.1 format. CIPS is also available through the Commission's
electronic bulletin board service at no charge to the user and may be
accessed using a personal computer with a modem by dialing 202-208-
1397, if dialing locally, or 1-800-856-3920, if dialing long distance.
To access CIPS, set your communications software to 19200, 14400,
12000, 9600, 7200, 4800, 2400, or 1200 bps, full duplex, no parity, 8
data bits and 1 stop bit. User assistance is available at 202-208-2474
or by E-mail to [email protected] fed.us.
This document is also available through the Commission's Records
and
[[Page 51311]]
Information Management System (RIMS), an electronic storage and
retrieval system of documents submitted to and issued by the Commission
after November 16, 1981. Documents from November 1995 to the present
can be viewed and printed. RIMS is available in the Public Reference
Room or remotely via Internet through FERC's Homepage using the RIMS
link or the Energy Information Online icon. User assistance is
available at 202-208-2222, or by E-mail to [email protected] fed.us.
Finally, the complete text on diskette in WordPerfect format may be
purchased from the Commission's copy contractor, RVJ International,
Inc. RVJ International, Inc., is located in the Public Reference Room
at 888 First Street, N.E., Washington, D.C. 20426.
Before Commissioners: James J. Hoecker, Chairman; Vicky A.
Bailey, William L. Massey, Linda Breathitt, and Curt Hebert, Jr.
In 1988, the Commission issued a Notice of Proposed Rulemaking in
this proceeding.1 For the reasons given below, we are
exercising our discretion to terminate this proceeding.
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\1\ Administrative Determination of Full Avoided Costs, Sales to
Qualifying Facilities, and Interconnection Facilities, 53 FR 9331
(1988), FERC Stats. & Regs. para. 32,457 (1988) (ADFAC NOPR).
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Background
In 1980, the Commission implemented rules regarding, among other
things, rates for purchases from qualifying cogeneration and small
power production facilities (QF) pursuant to sections 201 2
and 210 3 of the Public Utility Regulatory Policies Act of
1978 (PURPA).4
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\2\ See 16 U.S.C. Sec. 796.
\3\ See 16 U.S.C. Sec. 824a-3.
\4\ See Small Power Production and Cogeneration Facilities;
Regulations Implementing Section 210 of the Public Utility
Regulatory Policies Act of 1978, Order No. 69, 45 FR 12214 (1980),
FERC Stats. & Regs., Regulations Preambles 1977-1981 para. 30,128
(1980) and Small Power Production and Cogeneration Facilities--
Qualifying Status, Order No. 70, 45 FR 17,959 (1980), FERC Stats. &
Regs., Regulations Preambles 1977-1981 para. 30,134 (1980), order on
reh'g, Order Nos. 69-A and 70-A, 45 FR 33958 (1980), FERC Stat. &
Regs., Regulations Preambles 1977-1981 para. 30,160 (1980), aff'd in
part and vacated in part, American Electric Power Service
Corporation v. FERC, 675 F.2d 1226 (D.C. Cir. 1982), rev'd in part,
American Paper Institute, Inc. v. American Electric Power Service
Corporation, 461 U.S. 402 (1983).
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In 1987, the Commission held a series of regional conferences and
solicited written comments concerning the Commission's QF program. The
Commission sought input concerning, inter alia, the so-called avoided
cost rule and the implementation of that rule by state commissions and
others.5 After reviewing the information received in the
regional conferences and in the written comments, the Commission issued
the ADFAC NOPR.6
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\5\See FERC Stats. & Regs. at 32,158; accord, Cogeneration;
Small Power Production--Notice of Pubic Conference and Request for
Comments, 64 FERC para. 61,364 at 63,489-90 n.2 (1993).
\6\ The Commission also issued three other notices of proposed
rulemakings. Regulations Governing Independent Power Producers, 53
FR 9327 (1988), FERC Stats. & Regs. para. 32,456 (1988); Regulations
Governing Bidding Program, 53 FR 9324 (1988), FERC Stats. & Regs.
para. 32,455 (1988); Regulations Governing the Public Utility
Regulatory Policies Act of 1978, 53 FR 31021 (1988), FERC Stats. &
Reg. para. 32,465 (1988). On September 29, 1993, these proceedings
were terminated because the matters at issue had been overtaken by
events. 64 FERC at 63,491-92.
All four of the proceedings, including the ADFAC NOPR, arose out
of concerns expressed to the Commission that the Commission's QF
regulations required revision and also that the Commission draft
regulations to deal with newly-developing independent power
producers. See generally id. at 63,490.
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The ADFAC NOPR
The Commission's regulations define avoided cost as the incremental
cost to an electric utility of electric capacity or energy, or both,
which but for the purchase from the QF the utility would generate
itself or purchase from another source.7 The regulations
also provide that, if the rate paid by an electric utility to a QF for
power and energy is equal to avoided cost, the rate is considered just
and reasonable, non-discriminatory, and in the public
interest.8 Finally, the regulations further provide a list
of factors that, to the extent practicable, must be taken into account
in determining avoided cost.9
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\7\ 18 CFR 292.101(b)(6).
\8\ 18 CFR 292.304(a)(1), 292.304(b)(2).
\9\ 18 CFR 292.304(e).
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The ADFAC NOPR, among other things, proposed amending the
Commission's regulations to more precisely define the guidelines and
criteria to be used by state commissions and others in administratively
determining avoided cost.10 The ADFAC NOPR also acknowledged
the difficulty of administratively determining avoided cost and setting
avoided cost rates, and noted particularly that bidding was an
alternative that promised greater efficiency in setting avoided cost
rates.11
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\10\ FERC Stats. & Regs. at 32,157, 32,162-74.
\11\ FERC Stats. & Regs. at 32,164, 32,167.
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Comments were filed in May 1988, reply comments were filed in July
1988, and a public hearing was held on July 21-22, 1988. A number of
commenters supported the proposed rules, but often with qualifications
and proposed changes. Many commenters, however, including public
utilities and state commissions, opposed the proposed rules. Some urged
the issuance of a policy statement rather than a rulemaking. Many state
commissions, in particular, deemed the proposed rules an intrusion on
state authority, unnecessary or impractical. Representatives of the QF
industry urged major revisions of various particular proposals. Various
parties representing consumer and utility interests also opposed the
proposed rules.
Discussion
Over a decade has passed since the ADFAC NOPR was issued. During
those ten years, conditions which directly or indirectly affect QFs
have changed significantly. One significant development was the passage
of the Energy Policy Act of 1992, Pub L. No. 102-486, 106 Stat. 2776
(1992) (codified in, among other places, 16 U.S.C.), which, among other
things, created a new category of non-traditional power producers,
exempt wholesale generators (EWGs), that, like most QFs, are exempt
from the requirements of the Public Utility Holding Company Act of 1935
(PUHCA).12 In fact, many of the entities that could qualify
as QFs can also meet the criteria for EWG status and so need not be QFs
in order to obtain exemption from PUHCA. Likewise, other non-
traditional power producers that may be competitors of QFs, but may
themselves not be QFs, can also qualify as EWGs.
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\12\ 15 U.S.C. Secs. 79a et seq.; compare 15 U.S.C. Sec. 79z-
5a(e) with 18 CFR 292.601-02.
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The Energy Policy Act also expanded the Commission's authority to
order transmission for, among others, QFs as well as certain
EWGs.13 Additionally in this regard, the Commission in 1996
issued Order No. 888,14 in which the Commission directed
that all public utilities that own, control or operate facilities used
for the transmission of electric energy in interstate commerce file
open access, non-discriminatory transmission tariffs with minimum terms
and conditions of non-
[[Page 51312]]
discriminatory service.15 The sellers eligible for such
service expressly include QFs.16
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\13 \See 16 U.S.C. Secs. 824j, 824k.
\14 \Promoting Wholesale Competition Through Open Access Non-
discriminatory Transmission Services by Public Utilities; Recovery
of Stranded Costs by Public Utilities and Transmitting Utilities,
Order No. 888, 61 FR 21540 (1996), FERC Stats. & Regs. para. 31,036
(1996), order on reh'g, Order No. 888-A, 62 FR 12274 (1997), FERC
Stats. & Regs. para. 31,048, order on reh'g, Order No. 888-B, 81
FERC para. 61,248 (1997), order on reh'g, Order No. 888-C, 82 FERC
para. 61,046 (1998), accord, Public Service Company of New Hampshire
v. New Hampshire Electric Cooperative, Inc., 83 FERC para. 61,224 at
61,999 (1998)(``The regulatory context is now quite different from
that which existed'' when the QF regulations first were promulgated,
with the requirement that public utilities now provide open access
transmission service to, among other entities, QFs), reh'g pending
(PSNH).
\15 \E.g., Order No. 888, FERC Stats. & Regs. at 31,635-36.
\16 \E.g., id. at 31,688.
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In addition, as stated above, the ADFAC NOPR acknowledged the
difficulty of administratively setting avoided cost rates, and
particularly recognized that competitive bidding was a viable
alternative to determining avoided cost. Since 1988, in fact,
substantial experience has been gained by state commissions, electric
utilities and QFs themselves regarding competitive bidding. While few
states allowed competitive bidding at the time of the ADFAC NOPR, well
over half the states now use competitive bidding to one degree or
another in setting avoided cost rates.17 Indeed, in a number
of cases, the Commission itself has considered rates resulting from
competitive bidding and negotiation in which QFs were active
participants.18 Accordingly, the industry itself appears to
have made substantial progress regarding the determination of avoided
cost and the setting of avoided cost rates.
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\17 \64 FERC at 63,491; accord, Order No. 888, FERC Stats. &
Regs. at 31,651; National Independent Energy Producers, Competing
for Power: A Survey on Competitive Procurement Systems and Blueprint
for the Future 5-6 (July 1991).
\18 \E.g., PSNH, 83 FERC at 62,000-01 (``parties to QF purchases
are free to negotiate purchase rates'' and a ``more competitive
environment is expected to foster such outcomes''); accord, id. at
61,995-96, 62,001 n.20 (noting the use of competitive bidding by the
applicant to establish an avoided cost rate); Enron Power Enterprise
Corporation, 52 FERC para. 61,193 (1990) (involving multi-source,
including QF, competitive bidding); Doswell Limited Partnership, 50
FERC para. 61,251 (1990) (involving QF competitive bidding); see
also Southern California Edison Company, 70 FERC para. 61,215 at
61,675-76, 61,677, order on reconsid. 71 FERC para. 61,269 at
62,078-80 (1995); cf. Jersey Central Power & Light Company, 73 FERC
para. 61,092 at 61,297 & n.5, reh'g denied, 73 FERC para. 61,333
(1995); Metropolitan Edison Company, 72 FERC para. 61,015 at 61,049
& n.6, reh'g denied, 72 FERC para. 61,269 at 62,184 (1995).
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Given these facts, as well as the continuing development of
competitive power markets generally,19 the Commission does
not believe it appropriate to adopt revisions proposed a decade ago.
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\19\ See Order No. 888, FERC Stats. & Regs. at 31,639-52;
accord, Order No. 888-A, FERC Stats. & Regs. at 30,183-85; see also
70 FERC at 61,675-76.
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Additionally, we note that certain of the issues addressed in the
ADFAC NOPR were the subject of other proceedings: for example, allowing
QFs to construct and own transmission lines and interconnection
equipment.20 Likewise, the issue of whether states can
require that rates for QF sales at wholesale be set above avoided cost,
which was added to the ADFAC NOPR proceeding after the ADFAC NOPR was
originally issued,21 has since been addressed in another
proceeding.22
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\20\ See Streamlining of Regulations Pertaining to Parts II and
III of the Federal Power Act and the Public Utility Regulatory
Policies Act of 1978, Notice of Proposed Rulemaking, 57 FR 55176
(1992), FERC Stats. & Regs. para. 32,489 at 32,643-44, 32,647
(1992), regulation adopted, Order No. 575, 60 FR 4831 (1995), FERC
Stats. & Regs. para. 30,014 at 31,279-81 (1995), order on reh'g, 71
FERC para. 61,121 (1995).
\21\ See Administrative Determination of Full Avoided Costs, 53
FR 24099 (1988), FERC Stats. & Regs. para. 32,462 (1988); cf. Orange
and Rockland Utilities, Inc., 70 FERC para. 61,014, reconsideration
denied, 71 FERC para. 61,034 (1995).
\22\ See Connecticut Light & Power Company, 70 FERC para.
61,012, reconsideration denied, 71 FERC para. 61,035 (1995).
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Accordingly, because the revisions to the Commission's regulations
proposed in the ADFAC NOPR have been overtaken by subsequent events,
the Commission will exercise its discretion to terminate this
proceeding.23
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\23\ See, e.g., Professional Drivers Council v. Bureau of Motor
Safety, 706 F.2d 1216, 1220-21 (D.C. Cir. 1983) (discussing agency's
decision not to promulgate new rules in an area already subject to
agency regulation).
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Administrative Findings and Effective Date
The Administrative Procedure Act (APA) 24 requires a
notice of proposed rulemaking to be published in the Federal Register.
The APA also mandates that an opportunity for comments be provided when
an agency proposes to promulgate regulations. The Commission finds that
notice and comment are unnecessary when terminating this proceeding.
The express language of the APA requires such notice and comment only
when promulgating new regulations and not when the agency is, as in
this case, terminating a proceeding that proposed amending pre-existing
regulations.25 Moreover, notice and comment are not required
under the APA when the agency for good cause finds that notice and
public procedure thereon are impracticable, unnecessary, or contrary to
the public interest.26 As explained above, this order merely
removes from consideration proposed regulations that were never adopted
and have since been overtaken by events, and thus are no longer
necessary.
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\24\ 5 U.S.C. 553(b), (c).
\25\ See, e.g., Kennecott Utah Copper Corporation v. United
States Department of Interior, 88 F.3d 1191, 1207-09 (D.C. Cir.
1996) (discussing challenges to withdrawal of draft final
regulations without notice and comment); accord, ICORE, Inc. V. FCC,
985 F.2d 1075, 1082 (D.C. Cir. 1993) (not modifying a rule is not
same as rulemaking).
\26\ 5 U.S.C. 553(b).
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The Commission will make the termination of this proceeding
effective on September 25, 1998.
List of Subjects in 18 CFR Part 292
Electric power plants, electric utilities, natural gas, reporting
and recordkeeping requirements.
The Commission Orders
Docket No. RM88-6-000 is hereby terminated.
By the Commission.
David P. Boergers,
Secretary.
[FR Doc. 98-25676 Filed 9-24-98; 8:45 am]
BILLING CODE 6717-01-P
