SEC. 1253. COGENERATION AND SMALL POWER PRODUCTION PURCHASE AND
(a) Termination of Mandatory Purchase and Sale Requirements- Section 210
of the Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 824a-3) is
amended by adding at the end the following:
`(m) Termination of Mandatory Purchase and
`(1) OBLIGATION TO PURCHASE- After the date of enactment of this
subsection, no electric utility shall be required to enter into a new contract
or obligation to purchase electric energy from a qualifying cogeneration
facility or a qualifying small power production facility under this section if
the Commission finds that the qualifying cogeneration facility or qualifying
small power production facility has nondiscriminatory access to--
`(A)(i) independently administered, auction-based day ahead and real
time wholesale markets for the sale of electric energy; and (ii) wholesale
markets for long-term sales of capacity and electric energy; or
`(B)(i) transmission and interconnection services that are provided by a
Commission-approved regional transmission entity and administered pursuant to
an open access transmission tariff that affords nondiscriminatory treatment to
all customers; and (ii) competitive wholesale markets that provide a meaningful
opportunity to sell capacity, including long-term and short-term sales, and
electric energy, including long-term, short-term and real-time sales, to buyers
other than the utility to which the qualifying facility is interconnected. In
determining whether a meaningful opportunity to sell exists, the Commission
shall consider, among other factors, evidence of transactions within the
relevant market; or
`(C) wholesale markets for the sale of capacity and electric energy that
are, at a minimum, of comparable competitive quality as markets described in
subparagraphs (A) and (B).
`(2) REVISED PURCHASE AND SALE OBLIGATION FOR NEW FACILITIES- (A) After
the date of enactment of this subsection, no electric utility shall be required
pursuant to this section to enter into a new contract or obligation to purchase
from or sell electric energy to a facility that is not an existing qualifying
cogeneration facility unless the facility meets the criteria for qualifying
cogeneration facilities established by the Commission pursuant to the
rulemaking required by subsection (n).
`(B) For the purposes of this paragraph, the term `existing qualifying
cogeneration facility' means a facility that--
`(i) was a qualifying cogeneration facility on the date of enactment of
subsection (m); or
`(ii) had filed with the Commission a notice of self-certification, self
recertification or an application for Commission certification under 18 CFR
292.207 prior to the date on which the Commission issues the final rule
required by subsection (n).
`(3) COMMISSION REVIEW- Any electric utility may file an application
with the Commission for relief from the mandatory purchase obligation pursuant
to this subsection on a service territory-wide basis. Such application shall
set forth the factual basis upon which relief is requested and describe why the
conditions set forth in subparagraph (A), (B), or (C) of paragraph (1) of this
subsection have been met. After notice, including sufficient notice to
potentially affected qualifying cogeneration facilities and qualifying small
power production facilities, and an opportunity for comment, the Commission
shall make a final determination within 90 days of such application regarding
whether the conditions set forth in subparagraph (A), (B), or (C) of paragraph
(1) have been met.
`(4) REINSTATEMENT OF OBLIGATION TO PURCHASE- At any time after the
Commission makes a finding under paragraph (3) relieving an electric utility of
its obligation to purchase electric energy, a qualifying cogeneration facility,
a qualifying small power production facility, a State agency, or any other
affected person may apply to the Commission for an order reinstating the
electric utility's obligation to purchase electric energy under this section. Such
application shall set forth the factual basis upon which the application is
based and describe why the conditions set forth in subparagraph (A), (B), or
(C) of paragraph (1) of this subsection are no longer met. After notice,
including sufficient notice to potentially affected utilities, and opportunity
for comment, the Commission shall issue an order within 90 days of such
application reinstating the electric utility's obligation to purchase electric
energy under this section if the Commission finds that the conditions set forth
in subparagraphs (A), (B) or (C) of paragraph (1) which relieved the obligation
to purchase, are no longer met.
`(5) OBLIGATION TO SELL- After the date of enactment of this subsection,
no electric utility shall be required to enter into a new contract or
obligation to sell electric energy to a qualifying cogeneration facility or a
qualifying small power production facility under this section if the Commission
finds that--
`(A) competing retail electric suppliers are willing and able to sell
and deliver electric energy to the qualifying cogeneration facility or
qualifying small power production facility; and
`(B) the electric utility is not required by State law to sell electric
energy in its service territory.
`(6) NO EFFECT ON EXISTING RIGHTS AND REMEDIES- Nothing in this
subsection affects the rights or remedies of any party under any contract or
obligation, in effect or pending approval before the appropriate State
regulatory authority or non-regulated electric utility on the date of enactment
of this subsection, to purchase electric energy or capacity from or to sell
electric energy or capacity to a qualifying cogeneration facility or qualifying
small power production facility under this Act (including the right to recover
costs of purchasing electric energy or capacity).
`(7) RECOVERY OF COSTS- (A) The Commission shall issue and enforce such
regulations as are necessary to ensure that an electric utility that purchases
electric energy or capacity from a qualifying cogeneration facility or
qualifying small power production facility in accordance with any legally
enforceable obligation entered into or imposed under this section recovers all
prudently incurred costs associated with the purchase.
`(B) A regulation under subparagraph (A) shall be enforceable in
accordance with the provisions of law applicable to enforcement of regulations
under the Federal Power Act (16 U.S.C. 791a et seq.).
`(n) Rulemaking for New Qualifying Facilities- (1)(A) Not later than 180
days after the date of enactment of this section, the Commission shall issue a
rule revising the criteria in 18 CFR 292.205 for new qualifying cogeneration
facilities seeking to sell electric energy pursuant to section 210 of this Act
to ensure--
`(i) that the thermal energy output of a new qualifying cogeneration
facility is used in a productive and beneficial manner;
`(ii) the electrical, thermal, and chemical output of the cogeneration
facility is used fundamentally for industrial, commercial, or institutional
purposes and is not intended fundamentally for sale to an electric utility,
taking into account technological, efficiency, economic, and variable thermal
energy requirements, as well as State laws applicable to sales of electric
energy from a qualifying facility to its host facility; and
`(iii) continuing progress in the development of efficient electric
energy generating technology.
`(B) The rule issued pursuant to paragraph (1)(A) of this subsection
shall be applicable only to facilities that seek to sell electric energy pursuant
to section 210 of this Act. For all other purposes, except as specifically
provided in subsection (m)(2)(A), qualifying facility status shall be
determined in accordance with the rules and regulations of this Act.
`(2) Notwithstanding rule revisions under paragraph (1), the
Commission's criteria for qualifying cogeneration facilities in effect prior to
the date on which the Commission issues the final rule required by paragraph
(1) shall continue to apply to any cogeneration facility that--
`(A) was a qualifying cogeneration facility on the date of enactment of
subsection (m), or
`(B) had filed with the Commission a notice of self-certification,
self-recertification or an application for Commission certification under 18
CFR 292.207 prior to the date on which the Commission issues the final rule
required by paragraph (1).'.
(b) Elimination of Ownership Limitations-
(1) QUALIFYING SMALL POWER PRODUCTION FACILITY- Section 3(17)(C) of the
Federal Power Act (16 U.S.C. 796(17)(C)) is amended to read as follows:
`(C) `qualifying small power production facility' means a small power
production facility that the Commission determines, by rule, meets such
requirements (including requirements respecting fuel use, fuel efficiency, and
reliability) as the Commission may, by rule, prescribe;'.
(2) QUALIFYING COGENERATION FACILITY- Section 3(18)(B) of the Federal
Power Act (16 U.S.C. 796(18)(B)) is amended to read as follows:
`(B) `qualifying cogeneration facility' means a cogeneration facility that
the Commission determines, by rule, meets such requirements (including
requirements respecting minimum size, fuel use, and fuel efficiency) as the
Commission may, by rule, prescribe;'.
SEC. 1254. INTERCONNECTION.
(a) Adoption of Standards- Section 111(d) of the Public Utility
Regulatory Policies Act of 1978 (16 U.S.C. 2621(d)) is amended by adding at the
end the following:
`(15) INTERCONNECTION- Each electric utility shall make available, upon
request, interconnection service to any electric consumer that the electric
utility serves. For purposes of this paragraph, the term `interconnection
service' means service to an electric consumer under which an on-site
generating facility on the consumer's premises shall be connected to the local
distribution facilities. Interconnection services shall be offered based upon
the standards developed by the
(b) Compliance-
(1) TIME LIMITATIONS- Section 112(b) of the Public Utility Regulatory
Policies Act of 1978 (16 U.S.C. 2622(b)) is amended by adding at the end the
following:
`(5)(A) Not later than 1 year after the enactment of this paragraph,
each State regulatory authority (with respect to each electric utility for
which it has ratemaking authority) and each nonregulated utility shall commence
the consideration referred to in section 111, or set a hearing date for
consideration, with respect to the standard established by paragraph (15) of
section 111(d).
`(B) Not later than two years after the date of the enactment of the
this paragraph, each State regulatory authority (with respect to each electric
utility for which it has ratemaking authority), and each nonregulated electric
utility, shall complete the consideration, and shall make the determination,
referred to in section 111 with respect to each standard established by
paragraph (15) of section 111(d).'.
(2) FAILURE TO COMPLY- Section 112(d) of the Public Utility Regulatory
Policies Act of 1978 (16 U.S.C. 2622(c)) is amended by adding at the end the
following: `In the case of the standard established by paragraph (15), the
reference contained in this subsection to the date of enactment of this Act
shall be deemed to be a reference to the date of enactment of paragraph (15).'.
(3) PRIOR STATE ACTIONS-
(A) IN GENERAL- Section 112 of the Public Utility Regulatory Policies
Act of 1978 (16 U.S.C. 2622) is amended by adding at the end the following:
`(f) Prior State Actions- Subsections (b) and (c) of this section shall
not apply to the standard established by paragraph (15) of section 111(d) in
the case of any electric utility in a State if, before the enactment of this
subsection--
`(1) the State has implemented for such utility the standard concerned
(or a comparable standard);
`(2) the State regulatory authority for such State or relevant
nonregulated electric utility has conducted a proceeding to consider
implementation of the standard concerned (or a comparable standard) for such
utility; or
`(3) the State legislature has voted on the implementation of such
standard (or a comparable standard) for such utility.'.
(B) CROSS REFERENCE- Section 124 of such Act (16 U.S.C. 2634) is amended
by adding the following at the end thereof: `In the case of each standard
established by paragraph (15) of section 111(d), the reference contained in
this subsection to the date of enactment of the Act shall be deemed to be a
reference to the date of enactment of paragraph (15).'.
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