Representative Boucher letter

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Con reee of the Initeb States
~imdlington, ~l~ 20515

OFFle£Or
eXrEk L 4FF4/es
March 2, 2006
The Honorable Joe Kelliher, Chairman
Federal Energy Regulatory Commission
888 First Street, NE
Washington, D.C. 20426

ORIGINAL

RE

Dear Joe:
We are writing regarding the FERC's recently proposed rule to implement the
changes made to Section 210 of the Public Utility Regulatory Policies Act (PURPA) by the
Energy Policy Act of 2005 (EPAet). We led the development of the PURPA language
included in the final enacted law and are concerned that the proposed rule does not fulfill
our intenL
Our purpose in drafting the PURPA provision was to promote the use of
cogeneration and to continue the mandatory purchase and sale requirements in Section 210
of the underlying PURYA statute until such time as there are competitive wholesale and
retail electricity markets which would make those mandates unnecessary by ensuring that
congenerators have ready access to a market from which to buy or sell electricity.
Accordingly, the PURPA provision included in EPAct establishes a test under which a
utility can petition to the FERC for relief from its obligations. The relief would be granted
only if the utility demonstrates that it operates in a fully competitive market as outlined in
EPAct.
Specifically, Section 1253 of EPAct outlines very specific criteria which must be
met before a market is deemed to be competitive for purposes of relieving a utility's
mandatory purchase and sale obligation. The statute explicitly states in detail the minimum
requirements that must be met to ensure that a cogcnerator has nondiscriminatoryaccess to
I) wholesale markets for the sale and purchase of electricity and 2) to transmission and
interconnection services. The test for relief as outlined in EPAct is intended to be highly
market specific and should be determined only upon a weighing of the specifically stated
factors both with respect to the adequacy of the market for power sales and adequacy of the
market for power purchases viewed from the perspective of the PURPA qualified entity.
The proposed rule does not follow this statutory direction because it treats as de
facto competitive any market that is served by a regional transmission organization (RTO)
that the FERC has approved. Giving a blanket exemption from PURPA's mandatory sale
and purchase obligations to all utilities in the four FERC-approved regional transmission
organization markets (ISO-NE, NYISO, PJM and MISO), as proposed by the rule, does not
allow for a thorough examination regarding whether the markets in which a particular

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cogenerator operates are fully competitive as required by the statute. In fact, the statute
specifically states that membership in a FERC approved RTO is only one of the several
requirements which must be met in order to ensure that the cogenerator has access to a
sufficiently competitive market.
The statute also dictates that the cogenerator must have access to a competitive
wholesale market that provides a meaningful opportunity to seU electricity amd capacity,
including long-term and short-term sales to buyers other than the utility to which the
cogenerator is interconnected. Other factors listed in the statute include access to a market
with independently administered, auction-based day ahead and real time wholesale markets
for the sale of electricity and capacity. In addition, the statute expressly states that relief
from a utility's obligation to sell power to a cogenerator may only be relieved if the
cogenerator has access to competing retail suppliers which are willing and able to sell and
deliver electricity to the cogenvrator.
We share the concerns of many cogenerator operators that while some RTO served
markets may meet the criteria we established in EPAct, others clearly do not, and RTO
statusalone is insufficient to determine whether a market meets the competitive standard
necessary for relief from PURPA obligations. While we understand that a rule establishing
general guidelines for utilities seeking relief from PURPA obligations as outlined by EPAet
may be helpful, we believe that it is essential that utilities be obligated to apply for such
relief individuallywith each application judged on its individual merit
We hope that you will consider carefully these concerns as you work to finalize
regulations relating to relief of a ufility's PURPA Section 210 mandatory sale and purchase
obligations as established by EPAct We look forward to hearing from you regarding this
matter.
With kind regards and best wishes, we remain

Sincerely,

Rick Boucher

Sherrod Brown

Cha~'~aip" Pick~g