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Federal Policy and Distributed Generation

Federal Policy and Distributed Generation. Mark Spurr Legislative Director, International District Energy Association Vice President, FVB Energy Inc. Combined Heat and Power in the Pacific Northwest Seattle, October 15, 2002. Agenda. Administration energy policy Energy legislation FERC

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Federal Policy and Distributed Generation

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  1. Federal Policy and Distributed Generation Mark Spurr Legislative Director, International District Energy Association Vice President, FVB Energy Inc. Combined Heat and Power in the Pacific Northwest Seattle, October 15, 2002

  2. Agenda • Administration energy policy • Energy legislation • FERC • Multi-pollutant legislation

  3. Bush Policy Address • President Bush gets “an early look at the future” • Cites District Energy “model of efficiency, diversity, affordability” • Raises visibility of combined heat and power (CHP)

  4. Administration Energy Policy • Treasury to encourage CHP through shortened depreciation or investment tax credit (ITC) • EPA to develop guidance on air quality permitting of CHP • Shorten time to obtain permit • Provide certainty to industry by ensuring consistent implementation • Encourage use of CHP • EPA to work with local and state governments to promote use of CHP at brownfield sites

  5. Energy Legislation • Struggle in energy bill (HR 4) conference committee • Electricity restructuring • Renewable portfolio standard • Standard market design • Ethanol • Investment tax credits • CHP and fuel cell ITC in both bills • Microturbines in Senate bill

  6. Energy Legislation • Repeal of PURPA Section 210 (mandatory buy/sell for Qualifying Facilities) • Nothing in House bill • Rep. Barton (HR 3406) has proposed repeal • Senate bill has provision for repeal in competitive markets only • Interconnection • Nothing in House bill • Rep. Barton (HR 3406) has proposed language • Senate bill has provision for interconnection and net metering for small distributed generation

  7. FERC Interconnection • Interconnection NOPR (April) • USCHPA/IDEA recommendations for Small Generators (20 MW and under) • Interconnection ANOPR (August) • Severs rulemaking for Small Generators from larger process • FERC facilitating hoped-for consensus • Comments due by Nov. 4 • Uses USCHPA/IDEA recommendations as default position • Proposed rules end of year, final in March

  8. FERC Standard Market Design • SMD NOPR published July • Concern is that current tariffs and patchwork of rules allows discrimination and price manipulation • Single transmission tariff – “Network Access Service” • Standard rules for spot markets for transmission, energy and ancillary services • Locational Marginal Pricing (LMP) to manage congestion • Day-ahead and real-time markets

  9. FERC Standard Market Design • Tradable “Congestion Revenue Rights” for hedging congestion charges • Requires Independent Transmission Provider (ITP) that is independent of market players • Recognizes demand-side responses as important part of market • Comments due Nov. 15 • Opposition to FERC SMD • States rights issues • Utility opposition • Efforts to kill it legislatively

  10. Multi-Pollutant Legislation • Cap-and-trade program for SO2, NOx and mercury (plus CO2?) • Bills introduced • Clear Skies Act of 2002 (HR 5266) • Clean Power Act of 2001 (Sen. Jeffords, S 556) • Clear Skies Act • Input-based, grandfathered allocations • No allocations for new sources • Barriers to opt-in • No credit for thermal production with CHP

  11. Combined Heat and Power • Potential to provide significant benefits: • Increase power supply reliability • Relieve power transmission constraints • Reduce environmental impacts • Constrained by informational, institutional and regulatory barriers • Federal efforts under way • Regional and local action is essential

  12. Thanks for your attention!Questions?Mark SpurrPhone 612-607-4544mspurr@fvbenergy.com

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