The Ohio Public Utilities Commission (PUC) has proposed regulations to allow electric utilities to use fuel-cost clauses to recover gains or losses from trading Clean Air Act emission allowances....
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Illinois Avoided Cost Statute in Line with PURPA
The Federal Energy Regulatory Commission (FERC) has ruled that an Illinois statute did not require rates above avoided cost for wholesale sales by qualifying facilities (QFs), and so did not violate the Public Utility Regulatory Policies Act (PURPA) (Docket No. EL95-27-000).
The statute at issue requires a utility to buy power from qualifying solid-waste energy facilities at the utility's retail rate. But the statute includes an offsetting monthly tax credit, which prevents a utility from paying more than its avoided costs. A QF, CGE Fulton, had asked the FERC to rule on whether the statute violated the avoided-cost requirement. Although the FERC in Connecticut Light & Power Co., 70 FERC 61, 012 (1995), reh'g. pending, preempted state jurisdiction where states impose rates in excess of avoided cost for QF wholesale sales, Fulton contended that the holding did not apply to the Illinois statute. The QF argued that the tax credit acted as an offset, resulting in a rate equivalent to avoided cost.
The FERC found that despite some similarity to the statute at issue in Connecticut Light & Power, the Illinois statute did not contain a fatal flaw. It ruled unequivocally that a state can provide tax credits (em or even direct cash subsidies (em without violating PURPA. The critical question, according to the FERC, is whether the mechanism used to flow the tax benefit to QFs, in conjunction with the charge provided by statute, results in a QF rate that violates section 210 of PURPA. By providing a tax credit to the purchasing utility, the Illinois legislature in effect capped the rate paid at avoided cost, while providing additional taxpayer-funded benefits to a category of QFs. Under the Illinois scheme, the FERC explained, amounts above avoided costs are paid by taxpayers in general, not ratepayers as a class.
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