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Net-metered Hydro Projects & Energy Law Alert

If you ever wanted to net-meter a hydropower project- keep reading and  take action.

FERC is being asked to relinquish its jurisdiction over licensing on net-metered hydro projects.

This is especially appropriate for conduit exemptions and other low-impact projects. There are 5 states that currently allow group net-metering, and many more that allow net-metering.  If you want to support this please file comments with FERC yourself (see below for instructions)-or more importantly-ask your State or Federal Representatives to file comments with FERC (send them the attachments included in this e-mail to use as templates).

The two attachments are letters to FERC discussing net-metering of hydropower from Oregon Energy Trust and a New York State House representative. The position taken is that FERC should relinquish its jurisdiction over licensing on net-metered hydro projects.

Here is the information to directly submit comments to FERC on this subject:

INSTRUCTIONS FOR COMMENTING:

  • Comments must be submitted in reference to Docket AD09-9-000.

INSTRUCTIONS FOR VIEWING COMMENTS

Go to:  http://www.ferc.gov/docs-filing/elibrary.asp

Select ‘General Search’:

  • For ‘Date Range’ select previous 1 year
  • For ‘Docket Number’ enter:   AD09-9
  • Click the ‘Submit’ button at the bottom of the page

#2) Energy Law Alert

FERC Issues Orders Changing Reporting Requirements for Generator Sites and Exempting Facilities 1 MW or Less from QF Filing Requirements.

March 23, 2010

On March 18 and 19, 2010, the Federal Energy Regulatory Commission (the “Commission”) issued a pair of orders that impact generation developers. In Order No. 697-D, the Commission clarified when sellers with market-based rate authority must notify the Commission that they have acquired sites for new generation capacity development. The Commission also issued Order No. 732, in which it exempted generating facilities 1 MW and smaller from having to file a Form 556 self-certification or application for certification with the Commission to be considered a Qualifying Facility (“QF”). The exemption alleviates a burden that particularly affected developers of distributed generation systems.

Change in Requirements for Reporting Generation Site Control

To obtain market-based rate authority, an applicant must verify that it (including its affiliates) has not erected barriers that will keep other participants from entering the applicant’s market. The Commission has included “inputs to electric power production” in its barriers to entry analysis, and such inputs have been interpreted to include ownership or control of land that could potentially be used for generation development.

In Order No. 697-C, the Commission previously clarified that market-based rate sellers must notify the Commission on a quarterly basis of a seller’s acquisition or control of sites for generation development. In addition, market-based rate sellers were also required to report any land they had acquired, took a leasehold interest in, obtained an option to acquire, or entered into an exclusivity relationship to acquire for purposes of development, but for which site control in the applicable interconnection process had not yet been demonstrated during the prior three years, if such land was reasonably suitable for 100 MW of capacity development. Sellers were to report these lands for which site control had not yet been demonstrated in a yearly January 1 report to the Commission.

In the recently-issued Order No. 697-D, the Commission eliminated the requirement that market-based rate sellers make a yearly January 1 report describing the lands for which a seller has not demonstrated site control in the prior three years but that are reasonably suitable for 100 MW of generation capacity development. In removing this filing requirement, the Commission explained that it may gain the needed information regarding barriers to entry from the filings still required each quarter that describe lands for which site control has been demonstrated in the applicable interconnection process. The Commission did, however, reserve the right to require a seller to provide information in addition to that required in the quarterly filings if the Commission is concerned that a seller is acquiring land for the purpose of preventing new generation capacity from being developed on that land.

In addition to eliminating the yearly January 1 report, the Commission also clarified that a seller need not file a quarterly report if the seller did not obtain site control for any new lands in that quarter. Similar to other change in status filings, the Commission only desires a seller to submit quarterly reports when new lands are put under a seller’s control, i.e., when the seller’s status changes. The Commission also clarified that a seller’s quarterly reports are not cumulative. Only sites not previously reported must be included in a quarterly report.

Exemption from Qualifying Facility Filing Requirements for Facilities 1 MW or Smaller

Among a number of mechanical revisions to the QF filing procedures, the Commission added an exemption for facilities with a net power production capacity of 1 MW or less from the requirement to make a filing with the Commission in order to claim QF status. Thus, facilities 1 MW or less need only meet the technical requirements for QF status, and that status will not be dependent upon the applicant’s having made a filing with the Commission. The Commission did not, however, clarify how the proximity of small QF facilities may affect eligibility for the filing exemption. That is, the Commission’s rules state that affiliated QF facilities within one mile of one another are deemed to be one facility for purposes of calculating a QF’s net capacity. If, for example, a distributed generation developer installs multiple facilities within a mile of one another, it remains unclear whether those facilities will be eligible for the filing exemption established in Order No. 732.

The Commission noted that the filing exemption for facilities 1 MW or less will not weaken its role in overseeing QF program participation. Although facilities 1 MW or less account for approximately 48% of all QF filings, these facilities only represent about one-half of 1 percent of the QF capacity certified. Nevertheless, a purchasing utility may file a petition of revocation if it believes a QF claiming the exemption from filing does not meet the requirements for QF status. A purchasing utility may also ask a QF that has not filed with the Commission for an attestation that the QF meets the requirements for QF status.

Lori Barg, Community Hydro, Plainfield, VT • 802-454-1874 www.communityhydro.biz

2 comments to Net-metered Hydro Projects & Energy Law Alert

  • I am writing to ask your support to extend NET METERING FOR ALL RENEWABLE ENERGY SOURCES UNDER 50KW. This would encourage the development and re-development of many small hydro power sources throughout the state. Water power was the primary source of electricity in the early part of the 20th century. Most small scale hydro power was abandoned as oil became plentiful and cheap. Now with increasing oil prices many abandoned sites will become economically viable again. Many more sites will be economically restorable if HYDRO POWER is included in the NET METERING law. I am an electronics engineer with many years of hydro power experience. Within a 10 mile radius of my home in Cuddebackville, NY there are half a dozen sites, that would become viable for restoration or development, with the extension of NET METERING to hydro power.
    Aside from encouraging development of small scale hydro, NET METERING would have the immediate effect of increasing the States total renewable energy portfolio because some sites now operate autonomously, off the grid, and waste excess energy because of the obstacles imposed by the power companies to connect small hydro to the grid. The NET METERING LAW applied to small scale hydro power would help to remove these obstacles. Furthermore, allowing METER AGGREGATION would also remove obstacles to connect renewable resources to the grid. For a specific example see: http://EnergyIndependence-rob.blogspot.com/

    Thank You

    Robert J Honders Sr
    Honderosa Valley Consulting
    129 Kennel Rd.
    Cuddebackville NY 12729

  • John Meyer

    I have been involved with large scale wind development, as well as having a personal interest in developing small scale energy generation via net-metering, and may well take advantage of this option in the near future. My opinion about net-metering however has never changed, regardless of whether I am in a position of supplying power to the wholesale market OR privately as an individual. It has a place, BUT…. it is a very, very bad idea for our utilities to be required to bear the cost of all the transmission installation, PLUS provide a reliable, basically UNLIMITED supply of electricity to the grid FOR EVERYONE WHO WANTS IT, and then to force them to purchase “excess” power from multiple small “distributed generation” sites within their network, when they can more easily purchase the same electricity at wholesale costs. This is just bad… very bad… for our economy as a whole. Sure, the small net-metering generator feels good… he can much more quickly justify his input costs more easily because he can sell “as much as he can generate” at full retail! But that means that he is using the utility’s distribution lines for free, and we as consumers are buying his electricity through our utility at full retail, (i.e.: the utility is doing a lot of distribution line work for FREE instead of making a margin on electricity generation/purchase costs), when our utility could more easily have generated it at wholesale and produced a profit, which helps to cover their distribution costs. It will inevitably drive UP the cost of the electricity that we purchase, because it makes it harder for the utility to meet the requirements of their own bottom line, and those costs are ALWAYS passed on to the consumer in the form of higher energy prices.

    I believe in “net-metering” though, right up until the producer’s own energy usage (which required those expensive transmission lines to be run to his property in the first place) is exceeded. At that point, he should be allowed to continue to feed his excess energy into the grid, utilizing the utilities transmission lines, but he should only receive a pre-agreed upon WHOLESALE rate for those excess KW from his supplying utility. This “net-metering wholesale rate” should be set annually within each state (as some areas of the nation are heavily supplied by hydro-power, while some areas use coal production or gas produced sources, etc.), either by the legislature, or by a process whereby all interested parties including the legislature work out an acceptable wholesale rate.

    I expect that rate should be about, or perhaps only minimally above, what it costs all of the utilities of the state, in general and as an average composite, to generate electricity from all the sources they use, with this cost broken down specific for each utility, and weighted appropriately to reflect the amounts that they generate from each source… (i.e.: average wholesale cost per MW for coal fired, nuclear, gas fired, wind, solar, etc., merged as a whole in the proportions that they produce from each source, and then average all these averages from each utility of the state together).

    This wholesale price could be fixed on an annual basis from the preceding years utility production costs.

    Another alternative could be for net-metering suppliers to form a statewide COOP, and for the COOP to negotiate a contract with the various utilities. This has the downside that because of their position of power in the negotiating process, the utilities could quite easily take advantage of the COOP’s producers by simply refusing any offers unless they were well below actual commercial wholesale production costs… this is why it will likely require legislative or PUC regulation and oversight.

    In a system like this however, everyone receives the benefits of “distributed generation”, and alternative/renewable generation is encouraged through competition, at a “reasonable” cost, instead of being artificially supported by retail rather than wholesale pricing to supply to the grid.

    Thank you.

    John Meyer

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