QF

The U.S. Court of Appeals for the Third Circuit has ruled that the New Jersey Board of Public Utilities (BPU) is preempted under the federal Public Utility Regulatory Policies Act (PURPA) from ordering a qualifying facility (QF) and an electric utility to renegotiate or settle on a buy out of a previously approved purchased-power agreement. The QF, Freehold Cogeneration Associates, L.P. had refused to alter its contract with Jersey Central Power & Light Co.

This fight is for the heart and soul of regulation everywhere. The Federal Energy Regulatory Commission (FERC) won the first round on February 22, but I think there's more to come.

The fight involves incentives for nonutility generators (NUGs). It also touches on PURPA (em the Public Utility Regulatory Policies Act of 1978 (em which guarantees a market to cogenerators or power producers (QFs) who qualify. But more important, this battle involves regulatory philosophy.

(A.G.A.) forecasts a 3.4-percent increase in natural gas use for 1995, to 22.5 quadrillion British thermal units (quads) from 21.7 quads in 1994. "Such an increase would continue an eight-year trend that has seen natural gas consumption rise nearly 30 percent since 1986," Michael Baly, A.G.A. president, noted in a presentation to New York securities analysts.

EL87-53-003). The new rule comes as part of a case in which Connecticut Light and Power Co.

In the United States, the Federal Energy Regulatory Commission (FERC) has undertaken the task of guiding the electric power industry from regulation to competition. But unless the FERC develops a plan to consider all facets of electric deregulation at the same time, we may end up driving on the wrong side of the road.

Last October the FERC issued its policy statement on electric transmission pricing. See, Inquiry Concern. Pricing Policy for Trans. Servs.

The New York Public Service Commission (PSC) has turned down a request to create a special rate for backup service to qualifying facilities (QFs) with dispatchable contracts. The PSC made the ruling while reviewing a request by Niagara Mohawk Power Corp. for permission to increase its rates for backup services provided to customers with onsite generation, primarily QFs. The utility had withdrawn the proposed rates, but only after the parties to the case claimed that the rate proposal was designed to kill competition, especially from smaller QF projects.

The Idaho Public Utilities Commission (PUC) has approved a Utah Power & Light Co. proposal to buy out a QF contract with Firth Cogeneration Partners Ltd., which the PUC found cost-efficient less than eight months ago. The utility said that the grandfathered avoided-cost contract rates were too high, and that lower-cost supplies were available from other sources.

While granting authority for the buyout, the PUC denied approval for accounting treatment and rate recovery of $4.4 million in cancellation fees suggested by the utility.

Pacific Gas and Electric Co. (PG&E) and Destec Energy Inc. have entered into the nation's first comprehensive transmission and services agreement between a utility and a power marketer. The deal will allow Destec's power marketing subsidiary, Destec Power Services Inc. (DPS), to pool electricity and wholesale it directly using PG&E's transmission lines. A request for plan approval was filed at the Federal Energy Regulatory Commission on December 6.