THE POWER PLANTS OF AT LEAST FIVE UTILITIES IN NEW England and California get swapped this year for more than $5.3 billion. And happily, those holding bonds on the plants will be given cash for...
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QF Fails to Raise Avoided Cost Rates
The West Virginia Public Service Commission (PSC) has ruled that it is preempted by federal law from modifying the avoided-cost rate in a purchased-power agreement implemented under the Public Utility Regulatory Policies Act of 1978 (PURPA).
The developers of a qualifying cogeneration facility (QF), Bituminous Power Partners, L.P., had asked the PSC to raise the contract rate for avoided energy in its purchased-power contract with Monongahela Power Co. Complaining of substantial operating losses and cash flow problems due to lower-than-forecasted energy costs for the utility as well as higher-than-forecasted operating expenses for the cogeneration plant, Bituminous asked the PSC to raise the current payments under the contract from 1.455 cents per kilowatt-hour (¢/Kwh), the utility's current actual avoided energy rate, to 1.9¢/Kwh.
According to the PSC, PURPA was designed to "preserve the benefit of the bargain in QF contracts for both utilities and project developers." Once state commissions approve power-purchase agreements under PURPA, "they are generally without jurisdiction to modify the terms of the agreement." American Bituminous Power Partners, L.P. v. Monongahela Power Co., Case No. 87-669-E-C, Mar. 29, 1996 (W.Va.P.S.C.).
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