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Merchant Power: Promise or Reality?

Fortnightly Magazine - January 1 1999

(Cal. Energy Comm'n).

But is the matter settled?

The Commission appears to have second thoughts. It has stated that its Energy Facility Siting Committee should "immediately move to examine the propriety and necessity of modifications to the NOI exemption process and offer recommendations to the Commission as appropriate." Further, the Commission emphasizes that its decision does not establish a presumption that all merchant plants are automatically exempt. Instead, each request should be reviewed on a case-by-case basis.

Dissenting Commissioner Michael Moore saw value in the NOI process and suggested it should remain: "Neither the Legislature nor the Commission has yet determined that the NOI process is unnecessary; yet, for all intents and purposes, that will be the result of this decision for natural gas-fired power plants."

Moore is particularly concerned that, with the exemption, decision-makers lose the opportunity to compare project sites with alternative sites. The NOI requires that alternative sites be selected. Moore also claims that many of the applications from projects that have received exemptions "face uncertainties" because they are trying to perform two steps at once. - C.J.L.

1 The Massachusetts procedure is described in detail in the recent decision by a hearing officer of the state's Energy Facilities Siting Board approving construction of a 350-MW, gas-fired, combined-cycle cogeneration plant proposed by Cabot Power Corp.

The board requires proof of five elements: (1) need for additional energy; (2) project superiority over alternative approaches, in terms of cost, environmental impact and reliability; (3) site superiority over alternative sites, on the same basis as test no. 2, above; (4) viability; and (5) minimization of environmental impacts to achieve an "appropriate" balance among environmental impacts, costs and reliability of supply. See Cabot Power Corp., EFSB 91-101A, Hearing Office Decision, Oct. 9, 1998 (Mass. Energy Facilities Siting Bd.).

However, as to need for power, it is not sufficient for the applicant simply to show that additional energy resources are needed for purposes of reliability. Instead, the energy must be necessary for consumption. See City of New Bedford v. Energy Facilities Siting Council, 413 Mass. 482 (1992).

In the Cabot Power case, the Siting Board explained how it interprets the state law test requiring a need for energy for actual consumption: "[C]onsideration of regional need must be a central part of any need analysis for a power generation project not linked to individual utilities by power purchase agreements." It notes that the state legislature clearly foresaw a need for "cooperation and joint participation in developing and implementing a regional bulk power supply of electricity."

2 According to the EPSA and other sources, these states include: Arizona, California, Colorado, Connecticut, Florida, Georgia, Indiana, Illinois, Massachusetts, Maine, Michigan, Missouri, Mississippi, Montana, North Carolina, New Hampshire, New Jersey, New Mexico, Nevada, New York, Ohio, Oregon, Pennsylvania, Rhode Island, Tennessee, Texas, Virginia, Washington, Wisconsin, West Virginia and Wyoming.

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