August 16, 1999

Honorable William J. Clinton
President of the United States of America
1600 Pennsylvania Avenue, NW
Washington, DC 20500

RE: EXECUTIVE ORDER DEVELOPING AND PROMOTING BIOBASED PRODUCTS AND BIOENERGY AND FERC DOCKET NO. EL99-81-000

Dear President Clinton:

We welcome your recent executive order to accelerate the development of biomass technologies, with a goal to triple America's use of bioenergy and biobased products by 2010. Our Company, Tennessee Power Company (TPCO), would like to make a contribution toward reaching this goal, but changes will be required for our industry to accelerate its contribution. Hopefully your executive order will bring about these changes.

TPCO specializes in environmentally sensitive, small power production facilities utilizing such fuels as biomass and coalbed methane. Unfortunately, like many others in the small power production business we are caught up in a backlash resulting from bad experiences suffered by some utilities under the Public Utility Regulatory Policies Act of 1978 (PURPA), which requires utilities to interconnect with and purchase power from qualifying facilities. Because of inaccurate planning and forecasting on the part of some utilities, the purchase power rates under some PURPA contracts wound up far exceeding market value, which resulted in embittered attitudes. However, some utilities have undermined and fought PURPA from the beginning and now use the misfortune of others in resisting all small power production facilities, even though they have by and large effectively suppressed any PURPA projects in their area.

There are several biomass projects sitting idle or operating below full capacity, or have been proposed and not constructed, in the State of Tennessee alone because of the policies of the Tennessee Valley Authority (TVA). (See Federal Energy Regulatory Commission (FERC) Docket Nos. EL96-64-000 and EL97-23-000.) But TVA is certainly not alone in this regard, TPCO has had similar experiences in Indiana and Illinois, which would be a good example to consider since TPCO's Illinois Methane Project is still before FERC (Docket EL99-81-000).

Although coalbed methane is not addressed in your executive order, TPCO's Illinois Methane Project is environmentally sensitive in that it will abate greenhouse gases, and the behavior of Ameren in suppressing this project is typical of what TPCO has experienced with biomass projects. Over a year ago TPCO requested in writing that Ameren provide interconnection costs and a draft agreement to interconnect at specific points on its system. After meeting with an Ameren engineer on the sites in southern Illinois and pointing to the lines where we wanted to establish interconnections, and meeting with Ameren engineers at Ameren headquarters in St. Louis, MO, and exchanging correspondence and numerous conversations, Ameren maintains information is missing, information it never requested. (See Answer of Ameren Services Company, On Behalf of AmerenCIPS, Opposing Complaint -- Docket No. EL99-81-000).

The territorial issue raised by Ameren is nothing short of ridiculous, and is the butt of jokes in the offices of the electric cooperative involved. The compensation Ameren is demanding has never been charged to any entity before now and is nothing short of monopoly rents. However, we are concerned that FERC will buy into all of it because Ameren, like many utilities, hire Washington DC law firms we cannot afford that know the legalese FERC likes to hear. We need people at FERC who have gotten their hands dirty in the field trying to get biomass projects up and running, and who have fought the utilities and can see through the deception in their legalese. We have provided Vice President Al Gore a copy of our FERC complaint, and since the Vice President is on FERC's distribution list he should be receiving all copies of submittals on this docket (Docket No. EL99-81-000).

We need someone to convince FERC to take a commonsense, down-to-earth approach when it comes to environmentally sensitive, small power production facilities. FERC needs to realize that utilities employ administrative quagmire, onerous study charges, gold plated interconnection facilities, and monopoly rents in suppressing small projects. It is not likely you will find a single 1,000-megawatt biomass project anywhere, but if small power production facilities are relieved of utility suppression, then 50 new 20-megawatt biomass projects could easily start up throughout America in short order, accompanied by hundreds of biomass projects below 10-megawatts. With a little help, the industry will respond, and you can start with Ameren and FERC Docket No. EL99-81-000. Thank you.

Sincerely,

Michael R. Knauff

cc:

Honorable Al Gore
Vice President
United States of America
1600 Pennsylvania Avenue, NW
Washington, DC 20500

Carol M. Browner
Administrator
Environmental Protection Agency
401 M Street SW
Washington, DC 20460-0003

Dan Glickman
Secretary
US Department of Agriculture
14^th & Independence Ave SW
Washington, DC 20250

Bill Richardson
Secretary
US Department of Energy
Forrestal Building
1000 Independence Ave SW
Washington, DC 20585

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