Codes, Standards & Legislation 157- Guarantees the cogeneration or small power producer interconnec-
tion with the electric grid and the availability of backup service
from the utility. - Dictates that supplemental power requirements of cogeneration
must be provided at a reasonable cost. - Exempts cogenerations and small power producers from federal
and state utility regulations and associated reporting requirements
of these bodies.
In order to assure a facility the benefits of PURPA, a cogenerator
must become a qualifying facility. To achieve this status, a cogenera-
tor must generate electricity and useful thermal energy from a single
fuel source. In addition, a cogeneration facility must be less than 50%
owned by an electric utility or an electric utility holding company.
Finally, the plant must meet the minimum annual operating efficiency
standard established by the Federal Energy Regulatory Commission
(FERC) when using oil or natural gas as the principal fuel source. The
standard is that the useful electric power output, plus one half of the
useful thermal output of the facility, must be no less than 42.5% of the
total oil or natural gas energy input. The minimum efficiency standard
increases to 45% if the useful thermal energy is less than 15% of the
total energy output of the plant.
Natural Gas Policy Act
The Natural Gas Policy Act created a deregulated natural gas mar-
ket for natural gas. The major objective of this regulation was to create a
deregulated national market for natural gas. It provides for incremental
pricing of higher cost natural gas to fluctuate with the cost of fuel oil. Co-
generators classified as qualifying facilities under PURPA are exempt from
the incremental pricing schedule established for industrial customers.
Public Utility Holding Company Act of 1935
The Public Utility Company Holding Act of 1935 authorized the
Securities and Exchange Commission (SEC) to regulate certain utility
“holding companies” and their subsidiaries in a wide range of corporate
transactions.
The utility industry and would-be owners of utilities lobbied