§ 824a-3. — Cogeneration and small power production.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 16USC824a-3]
TITLE 16--CONSERVATION
CHAPTER 12--FEDERAL REGULATION AND DEVELOPMENT OF POWER
SUBCHAPTER II--REGULATION OF ELECTRIC UTILITY COMPANIES ENGAGED IN
INTERSTATE COMMERCE
Sec. 824a-3. Cogeneration and small power production
(a) Cogeneration and small power production rules
Not later than 1 year after November 9, 1978, the Commission shall
prescribe, and from time to time thereafter revise, such rules as it
determines necessary to encourage cogeneration and small power
production, and to encourage geothermal small power production
facilities of not more than 80 megawatts capacity, which rules require
electric utilities to offer to--
(1) sell electric energy to qualifying cogeneration facilities
and qualifying small power production facilities \1\ and
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\1\ So in original. Probably should be followed by a comma.
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(2) purchase electric energy from such facilities.
Such rules shall be prescribed, after consultation with representatives
of Federal and State regulatory agencies having ratemaking authority for
electric utilities, and after public notice and a reasonable opportunity
for interested persons (including State and Federal agencies) to submit
oral as well as written data, views, and arguments. Such rules shall
include provisions respecting minimum reliability of qualifying
cogeneration facilities and qualifying small power production facilities
(including reliability of such facilities during emergencies) and rules
respecting reliability of electric energy service to be available to
such facilities from electric utilities during emergencies. Such rules
may not authorize a qualifying cogeneration facility or qualifying small
power production facility to make any sale for purposes other than
resale.
(b) Rates for purchases by electric utilities
The rules prescribed under subsection (a) of this section shall
insure that, in requiring any electric utility to offer to purchase
electric energy from any qualifying cogeneration facility or qualifying
small power production facility, the rates for such purchase--
(1) shall be just and reasonable to the electric consumers of
the electric utility and in the public interest, and
(2) shall not discriminate against qualifying cogenerators or
qualifying small power producers.
No such rule prescribed under subsection (a) of this section shall
provide for a rate which exceeds the incremental cost to the electric
utility of alternative electric energy.
(c) Rates for sales by utilities
The rules prescribed under subsection (a) of this section shall
insure that, in requiring any electric utility to offer to sell electric
energy to any qualifying cogeneration facility or qualifying small power
production facility, the rates for such sale--
(1) shall be just and reasonable and in the public interest, and
(2) shall not discriminate against the qualifying cogenerators
or qualifying small power producers.
(d) ``Incremental cost of alternative electric energy'' defined
For purposes of this section, the term ``incremental cost of
alternative electric energy'' means, with respect to electric energy
purchased from a qualifying cogenerator or qualifying small power
producer, the cost to the electric utility of the electric energy which,
but for the purchase from such cogenerator or small power producer, such
utility would generate or purchase from another source.
(e) Exemptions
(1) Not later than 1 year after November 9, 1978, and from time to
time thereafter, the Commission shall, after consultation with
representatives of State regulatory authorities, electric utilities,
owners of cogeneration facilities and owners of small power production
facilities, and after public notice and a reasonable opportunity for
interested persons (including State and Federal agencies) to submit oral
as well as written data, views, and arguments, prescribe rules under
which geothermal small power production facilities of not more than 80
megawatts capacity, qualifying cogeneration facilities, and qualifying
small power production facilities are exempted in whole or part from the
Federal Power Act [16 U.S.C. 791a et seq.], from the Public Utility
Holding Company Act [15 U.S.C. 79 et seq.], from State laws and
regulations respecting the rates, or respecting the financial or
organizational regulation, of electric utilities, or from any
combination of the foregoing, if the Commission determines such
exemption is necessary to encourage cogeneration and small power
production.
(2) No qualifying small power production facility (other than a
qualifying small power production facility which is an eligible solar,
wind, waste, or geothermal facility as defined in section 3(17)(E) of
the Federal Power Act [16 U.S.C. 796(17)(E)]) which has a power
production capacity which, together with any other facilities located at
the same site (as determined by the Commission), exceeds 30 megawatts,
or 80 megawatts for a qualifying small power production facility using
geothermal energy as the primary energy source, may be exempted under
rules under paragraph (1) from any provision of law or regulation
referred to in paragraph (1), except that any qualifying small power
production facility which produces electric energy solely by the use of
biomass as a primary energy source, may be exempted by the Commission
under such rules from the Public Utility Holding Company Act [15 U.S.C.
79 et seq.] and from State laws and regulations referred to in such
paragraph (1).
(3) No qualifying small power production facility or qualifying
cogeneration facility may be exempted under this subsection from--
(A) any State law or regulation in effect in a State pursuant to
subsection (f) of this section,
(B) the provisions of section 210, 211, or 212 of the Federal
Power Act [16 U.S.C. 824i, 824j, or 824k] or the necessary
authorities for enforcement of any such provision under the Federal
Power Act [16 U.S.C. 791a et seq.], or
(C) any license or permit requirement under part I of the
Federal Power Act [16 U.S.C. 791a et seq.] any provision under such
Act related to such a license or permit requirement, or the
necessary authorities for enforcement of any such requirement.
(f) Implementation of rules for qualifying cogeneration and qualifying
small power production facilities
(1) Beginning on or before the date one year after any rule is
prescribed by the Commission under subsection (a) of this section or
revised under such subsection, each State regulatory authority shall,
after notice and opportunity for public hearing, implement such rule (or
revised rule) for each electric utility for which it has ratemaking
authority.
(2) Beginning on or before the date one year after any rule is
prescribed by the Commission under subsection (a) of this section or
revised under such subsection, each nonregulated electric utility shall,
after notice and opportunity for public hearing, implement such rule (or
revised rule).
(g) Judicial review and enforcement
(1) Judicial review may be obtained respecting any proceeding
conducted by a State regulatory authority or nonregulated electric
utility for purposes of implementing any requirement of a rule under
subsection (a) of this section in the same manner, and under the same
requirements, as judicial review may be obtained under section 2633 of
this title in the case of a proceeding to which section 2633 of this
title applies.
(2) Any person (including the Secretary) may bring an action against
any electric utility, qualifying small power producer, or qualifying
cogenerator to enforce any requirement established by a State regulatory
authority or nonregulated electric utility pursuant to subsection (f) of
this section. Any such action shall be brought only in the manner, and
under the requirements, as provided under section 2633 of this title
with respect to an action to which section 2633 of this title applies.
(h) Commission enforcement
(1) For purposes of enforcement of any rule prescribed by the
Commission under subsection (a) of this section with respect to any
operations of an electric utility, a qualifying cogeneration facility or
a qualifying small power production facility which are subject to the
jurisdiction of the Commission under part II of the Federal Power Act
[16 U.S.C. 824 et seq.], such rule shall be treated as a rule under the
Federal Power Act [16 U.S.C. 791a et seq.]. Nothing in subsection (g) of
this section shall apply to so much of the operations of an electric
utility, a qualifying cogeneration facility or a qualifying small power
production facility as are subject to the jurisdiction of the Commission
under part II of the Federal Power Act.
(2)(A) The Commission may enforce the requirements of subsection (f)
of this section against any State regulatory authority or nonregulated
electric utility. For purposes of any such enforcement, the requirements
of subsection (f)(1) of this section shall be treated as a rule
enforceable under the Federal Power Act [16 U.S.C. 791a et seq.]. For
purposes of any such action, a State regulatory authority or
nonregulated electric utility shall be treated as a person within the
meaning of the Federal Power Act. No enforcement action may be brought
by the Commission under this section other than--
(i) an action against the State regulatory authority or
nonregulated electric utility for failure to comply with the
requirements of subsection (f) of this section \2\ or
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\2\ So in original. Probably should be followed by a comma.
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(ii) an action under paragraph (1).
(B) Any electric utility, qualifying cogenerator, or qualifying
small power producer may petition the Commission to enforce the
requirements of subsection (f) of this section as provided in
subparagraph (A) of this paragraph. If the Commission does not initiate
an enforcement action under subparagraph (A) against a State regulatory
authority or nonregulated electric utility within 60 days following the
date on which a petition is filed under this subparagraph with respect
to such authority, the petitioner may bring an action in the appropriate
United States district court to require such State regulatory authority
or nonregulated electric utility to comply with such requirements, and
such court may issue such injunctive or other relief as may be
appropriate. The Commission may intervene as a matter of right in any
such action.
(i) Federal contracts
No contract between a Federal agency and any electric utility for
the sale of electric energy by such Federal agency for resale which is
entered into after November 9, 1978, may contain any provision which
will have the effect of preventing the implementation of any rule under
this section with respect to such utility. Any provision in any such
contract which has such effect shall be null and void.
(j) New dams and diversions
Except for a hydroelectric project located at a Government dam (as
defined in section 3(10) of the Federal Power Act [16 U.S.C. 796(10)])
at which non-Federal hydroelectric development is permissible, this
section shall not apply to any hydroelectric project which impounds or
diverts the water of a natural watercourse by means of a new dam or
diversion unless the project meets each of the following requirements:
(1) No substantial adverse effects
At the time of issuance of the license or exemption for the
project, the Commission finds that the project will not have
substantial adverse effects on the environment, including recreation
and water quality. Such finding shall be made by the Commission
after taking into consideration terms and conditions imposed under
either paragraph (3) of this subsection or section 10 of the Federal
Power Act [16 U.S.C. 803] (whichever is appropriate as required by
that Act [16 U.S.C. 791a et seq.] or the Electric Consumers
Protection Act of 1986) and compliance with other environmental
requirements applicable to the project.
(2) Protected rivers
At the time the application for a license or exemption for the
project is accepted by the Commission (in accordance with the
Commission's regulations and procedures in effect on January 1,
1986, including those relating to environmental consultation), such
project is not located on either of the following:
(A) Any segment of a natural watercourse which is included
in (or designated for potential inclusion in) a State or
national wild and scenic river system.
(B) Any segment of a natural watercourse which the State has
determined, in accordance with applicable State law, to possess
unique natural, recreational, cultural, or scenic attributes
which would be adversely affected by hydroelectric development.
(3) Fish and wildlife terms and conditions
The project meets the terms and conditions set by fish and
wildlife agencies under the same procedures as provided for under
section 30(c) of the Federal Power Act [16 U.S.C. 823a(c)].
(k) ``New dam or diversion'' defined
For purposes of this section, the term ``new dam or diversion''
means a dam or diversion which requires, for purposes of installing any
hydroelectric power project, any construction, or enlargement of any
impoundment or diversion structure (other than repairs or reconstruction
or the addition of flashboards or similar adjustable devices).
(l) Definitions
For purposes of this section, the terms ``small power production
facility'', ``qualifying small power production facility'', ``qualifying
small power producer'', ``primary energy source'', ``cogeneration
facility'', ``qualifying cogeneration facility'', and ``qualifying
cogenerator'' have the respective meanings provided for such terms under
section 3(17) and (18) of the Federal Power Act [16 U.S.C. 796(17),
(18)].
(Pub. L. 95-617, title II, Sec. 210, Nov. 9, 1978, 92 Stat. 3144; Pub.
L. 96-294, title VI, Sec. 643(b), June 30, 1980, 94 Stat. 770; Pub. L.
99-495, Sec. 8(a), Oct. 16, 1986, 100 Stat. 1249; Pub. L. 101-575,
Sec. 2, Nov. 15, 1990, 104 Stat. 2834.)
References in Text
The Commission, referred to in subsecs. (a), (e)(1), (2), (f), (h),
and (j)(1), (2), means the Federal Energy Regulatory Commission. See
section 2602(3) of this title.
The Secretary, referred to in subsec. (g)(2), means the Secretary of
Energy. See section 2602(14) of this title.
The Federal Power Act, referred to in subsecs. (e), (h), and (j)(1),
is act June 10, 1920, ch. 285, 41 Stat. 1063, as amended, which is
classified generally to this chapter (Sec. 791a et seq.). Part I of the
Federal Power Act is classified generally to subchapter I (Sec. 791a et
seq.) of this chapter. Part II of the Federal Power Act is classified
generally to this subchapter (Sec. 824 et seq.). For complete
classification of this Act to the Code, see section 791a of this title
and Tables.
The Public Utility Holding Company Act, referred to in subsec. (e),
probably means the Public Utility Holding Company Act of 1935, act Aug.
26, 1935, ch. 687, title I, 49 Stat. 838, as amended, which is
classified generally to chapter 2C (Sec. 79 et seq.) of Title 15,
Commerce and Trade. For complete classification of this Act to the Code,
see section 79 of Title 15 and Tables.
The Electric Consumers Protection Act of 1986, referred to in
subsec. (j)(1), is Pub. L. 99-495, Oct. 16, 1986, 100 Stat. 1243. For
complete classification of this Act to the Code, see Short Title of 1986
Amendment note set out under section 791a of this title and Tables.
Codification
Section was enacted as part of the Public Utility Regulatory
Policies Act of 1978, and not as part of the Federal Power Act which
generally comprises this chapter.
Amendments
1990--Subsec. (e)(2). Pub. L. 101-575 inserted ``(other than a
qualifying small power production facility which is an eligible solar,
wind, waste, or geothermal facility as defined in section 3(17)(E) of
the Federal Power Act)'' after first reference to ``facility''.
1986--Subsecs. (j) to (l). Pub. L. 99-495 added subsecs. (j) and (k)
and redesignated former subsec. (j) as (l).
1980--Subsec. (a). Pub. L. 96-294, Sec. 643(b)(1), inserted
provisions relating to encouragement of geothermal small power
production facilities.
Subsec. (e)(1). Pub. L. 96-294, Sec. 643(b)(2), inserted provisions
relating to applicability to geothermal small power production
facilities.
Subsec. (e)(2). Pub. L. 96-294, Sec. 643(b)(3), inserted provisions
respecting a qualifying small power production facility using geothermal
energy as the primary energy source.
Effective Date of 1986 Amendment
Section 8(b) of Pub. L. 99-495 provided that:
``(1) Subsection (j) of section 210 of the Public Utility Regulatory
Policies Act of 1978 (as amended by subsection (a) of this section) [16
U.S.C. 824a-3(j)] shall apply to any project for which benefits under
section 210 of the Public Utility Regulatory Policies Act of 1978 are
sought and for which a license or exemption is issued by the Federal
Energy Regulatory Commission after the enactment of this Act [Oct. 16,
1986], except as otherwise provided in paragraph (2), (3) or (4) of this
subsection.
``(2) Subsection (j) shall not apply to the project if the
application for license or exemption for the project was filed, and
accepted for filing by the Commission, before the enactment of this Act
[Oct. 16, 1986].
``(3) Paragraphs (1) and (3) of such subsection (j) shall not apply
if the application for the license or exemption for the project was
filed before the enactment of this Act [Oct. 16, 1986] and accepted for
filing by the Commission (in accordance with the Commission's
regulations and procedures in effect on January 1, 1986, including those
relating to the requirement for environmental consultation) within 3
years after such enactment.
``(4)(A) Paragraph (3) of subsection (j) shall not apply for
projects where the license or exemption application was filed after
enactment of this Act [Oct. 16, 1986] if, based on a petition filed by
the applicant for such project within 18 months after such enactment,
the Commission determines (after public notice and opportunity for
public comment of at least 45 days) that the applicant has demonstrated
that he had committed (prior to the enactment of this Act) substantial
monetary resources directly related to the development of the project
and to the diligent and timely completion of all requirements of the
Commission for filing an acceptable application for license or
exemption. Such petition shall be publicly available and shall be filed
in such form as the Commission shall require by rule issued within 120
days after the enactment of this Act. The public notice required under
this subparagraph shall include written notice by the petitioner to
affected Federal and State agencies.
``(B) In the case of any petition referred to in subparagraph (A),
if the applicant had a preliminary permit and had completed
environmental consultations (required by Commission regulations and
procedures in effect on January 1, 1986) prior to enactment, there shall
be a rebuttable presumption that such applicant had committed
substantial monetary resources prior to enactment.
``(C) The applicant for a license or exemption for a project
described in subparagraph (A) may petition the Commission for an initial
determination under paragraph (1) of section 210(j) of the Public
Utility Regulatory Policies Act of 1978 [16 U.S.C. 824a-3(j)(1)] prior
to the time the license or exemption is issued. If the Commission
initially finds that the project will have substantial adverse effects
on the environment within the meaning of such paragraph (1), prior to
making a final finding under that paragraph the Commission shall afford
the applicant a reasonable opportunity to provide for mitigation of such
adverse effects. The Commission shall make a final finding under such
paragraph (1) at the time the license or exemption is issued. If the
Federal Energy Regulatory Commission has notified the State of its
initial finding and the State has not taken any action described in
paragraph (2) of section 210(j) before such final finding, the failure
to take such action shall be the basis for a rebuttable presumption that
there is not a substantial adverse effect on the environment related to
natural, recreational, cultural, or scenic attributes for purposes of
such finding.
``(D) If a petition under subparagraph (A) is denied, all provisions
of section 210(j) of the Public Utility Regulatory Policies Act of 1978
[16 U.S.C. 824a-3(j)] shall apply to the project regardless of when the
license or exemption is issued.''
Amendment by Pub. L. 99-495 effective with respect to each license,
permit, or exemption issued under this chapter after Oct. 16, 1986, see
section 18 of Pub. L. 99-495, set out as a note under section 797 of
this title.
Calculation of Avoided Cost
Pub. L. 102-486, title XIII, Sec. 1335, Oct. 24, 1992, 106 Stat.
2984, provided that: ``Nothing in section 210 of the Public Utility
Regulatory Policies Act of 1978 (Public Law 95-617) [16 U.S.C. 824a-3]
requires a State regulatory authority or nonregulated electric utility
to treat a cost reasonably identified to be incurred or to have been
incurred in the construction or operation of a facility or a project
which has been selected by the Department of Energy and provided Federal
funding pursuant to the Clean Coal Program authorized by Public Law 98-
473 [see Tables for classification] as an incremental cost of
alternative electric energy.''
Applicability of 1980 Amendment to Facilities Using Solar Energy as
Primary Energy Source
Pub. L. 100-202, Sec. 101(d) [title III, Sec. 310], Dec. 22, 1987,
101 Stat. 1329-104, 1329-126, provided that:
``(a) The amendments made by section 643(b) of the Energy Security
Act (Public Law 96-294) [amending this section] and any regulations
issued to implement such amendment shall apply to qualifying small power
production facilities (as such term is defined in the Federal Power Act
[16 U.S.C. 791a et seq.]) using solar energy as the primary energy
source to the same extent such amendments and regulations apply to
qualifying small power production facilities using geothermal energy as
the primary energy source, except that nothing in this Act [see Tables
for classification] shall preclude the Federal Energy Regulatory
Commission from revising its regulations to limit the availability of
exemptions authorized under this Act as it determines to be required in
the public interest and consistent with its obligations and duties under
section 210 of the Public Utility Regulatory Policies Act of 1978 [this
section].
``(b) The provisions of subsection (a) shall apply to a facility
using solar energy as the primary energy source only if either of the
following is submitted to the Federal Energy Regulatory Commission
during the two-year period beginning on the date of enactment of this
Act [Dec. 22, 1987]:
``(1) An application for certification of the facility as a
qualifying small power production facility.
``(2) Notice that the facility meets the requirements for
qualification.''
Study and Report to Congressional Committees on Application of
Provisions Relating to Cogeneration, Small Power Production, and
Interconnection Authority to Hydroelectric Power Facilities
Section 8(d) of Pub. L. 99-495 provided that:
``(1) The Commission shall conduct a study (in accordance with
section 102(2)(C) of the National Environmental Policy Act of 1969 [42
U.S.C. 4332(2)(C)]) of whether the benefits of section 210 of the Public
Utility Regulatory Policies Act of 1978 [16 U.S.C. 824a-3] and section
210 of the Federal Power Act [16 U.S.C. 824i] should be applied to
hydroelectric power facilities utilizing new dams or diversions (within
the meaning of section 210(k) of the Public Utility Regulatory Policies
Act of 1978).
``(2) The study under this subsection shall take into consideration
the need for such new dams or diversions for power purposes, the
environmental impacts of such new dams and diversions (both with and
without the application of the amendments made by this Act to sections
4, 10, and 30 of the Federal Power Act [16 U.S.C. 797, 803, 823a] and
section 210 of the Public Utility Regulatory Policies Act of 1978 [16
U.S.C. 824a-3]), the environmental effects of such facilities alone and
in combination with other existing or proposed dams or diversions on the
same waterway, the intent of Congress to encourage and give priority to
the application of section 210 of Public Utility Regulatory Policies Act
of 1978 to existing dams and diversions rather than such new dams or
diversions, and the impact of such section 210 on the rates paid by
electric power consumers.
``(3) The study under this subsection shall be initiated within 3
months after enactment of this Act [Oct. 16, 1986] and completed as
promptly as practicable.
``(4) A report containing the results of the study conducted under
this subsection shall be submitted to the Committee on Energy and
Commerce of the United States House of Representatives and the Committee
on Energy and Natural Resources of the United States Senate while both
Houses are in session.
``(5) The report submitted under paragraph (4) shall include a
determination (and the basis thereof) by the Commission, based on the
study and a public hearing and subject to review under section 313(b) of
the Federal Power Act [16 U.S.C. 825l(b)], whether any of the benefits
referred to in paragraph (1) should be available for such facilities and
whether applications for preliminary permits (or licenses where no
preliminary permit has been issued) for such small power production
facilities utilizing new dams or diversions should be accepted by the
Commission after the moratorium period specified in subsection (e). The
report shall include such other administrative and legislative
recommendations as the Commission deems appropriate.
``(6) If the study under this subsection has not been completed
within 18 months after its initiation, the Commission shall notify the
Committees referred to in paragraph (4) of the reasons for the delay and
specify a date when it will be completed and a report submitted.''
Moratorium on Application of This Section to New Dams
Section 8(e) of Pub. L. 99-495 provided that: ``Notwithstanding the
amendments made by subsection (a) of this section [amending section
824a-3 of this title], in the case of a project for which a license or
exemption is issued after the enactment of this Act [Oct. 16, 1986],
section 210 of the Public Utility Regulatory Policies Act of 1978 [16
U.S.C. 824a-3] shall not apply during the moratorium period if the
project utilizes a new dam or diversion (as defined in section 210(k) of
such Act) unless the project is either--
``(1) a project located at a Government dam (as defined in
section 3(10) of the Federal Power Act [16 U.S.C. 796(10)]) at which
non-Federal hydroelectric development is permissible, or
``(2) a project described in paragraphs (2), (3), or (4) of
subsection (b) [set out as a note above].
For purposes of this subsection, the term `moratorium period' means the
period beginning on the date of the enactment of this Act and ending at
the expiration of the first full session of Congress after the session
during which the report under subsection (d) [set out as a note above]
has been submitted to the Congress.''
Section Referred to in Other Sections
This section is referred to in title 26 section 136; title 42
section 6807.
