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...
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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