For purposes of this rule, "electric utility" or "utility"
means a rate-regulated electric utility.
(1)
Rates for purchases.
Rates for purchases shall:
a. Be just and
reasonable to the electric consumer of the electric utility and in the public
interest; and
b. Not discriminate
against qualifying cogeneration and small power production facilities. Nothing
in these rules requires any electric utility to pay more than the avoided
costs, as set forth in these rules, for purchases.
(2)
Relationship to avoided
costs. For purposes of this subrule, "new capacity" means any purchase
from capacity of a qualifying facility, construction of which was commenced on
or after November 9, 1978.
A rate for purchases satisfies the requirements of this rule
if the rate equals the avoided costs determined after consideration of the
factors set forth in subrule 15.5(6); except that a rate for purchases other
than from new capacity may be less than the avoided cost if the board
determines that a lower rate is consistent with subrule 15.5(1) and is
sufficient to encourage cogeneration and small power production.
Unless the qualifying facility and the utility agree
otherwise, rates for purchases shall conform to the requirements of this rule
regardless of whether the electric utility making purchases is simultaneously
making sales to the qualifying facility.
In the case in which the rates for purchases are based upon
estimates of avoided costs over the specific term of the contract or other
legally enforceable obligation, the rates for purchases do not violate this
rule if the rates for the purchases differ from avoided costs at the time of
delivery.
(3)
Standard rates for purchases. Each electric utility shall file
and maintain with the board tariffs specifying standard rates for purchases
from qualifying facilities with a design capacity of 100 kilowatts or less.
These tariffs may differentiate between qualifying facilities using various
technologies on the basis of the supply characteristics of the different
technologies. All utilities shall include a seasonal differential in these
rates for purchases to the extent avoided costs vary by season. All utilities
shall make available time of day rates for those facilities with a design
capacity of 100 kilowatts or less, provided that the qualifying facility shall
pay, in addition to the interconnection costs set forth in these rules, all
additional costs associated with the time of day metering.
The standard rates set forth in this rule shall indicate what
portion of the rate is attributable to payments for the utility's avoided
energy costs, and what portion of the rate, if any, is attributable to payments
for capacity costs avoided by the utility. If no capacity credit is provided in
the standard tariff, a qualifying facility may petition the board for an
allowance of the capacity credit. The petition shall be handled by the board as
a contested case proceeding, and the burden of proof shall be on the qualifying
facility to demonstrate that capacity credit is warranted in the case in
question.
The board may require utilities interconnected with
qualifying facilities to provide metering and other equipment necessary for the
collection test and monitoring of information concerning the time and
conditions under which energy and capacity are available from the qualifying
facility. The costs of such metering shall be treated by the utility in the
same manner as any other research expenditure.
(4)
Other purchases. Rates
for purchases from qualifying facilities with a design capacity of greater than
100 kilowatts shall be determined in contested case proceedings before the
board, unless the rates are otherwise agreed upon by the qualifying facility
and the utility involved.
(5)
Purchases "as available" or pursuant to a legally enforceable
obligation. Each qualifying facility shall have the option either:
a. To provide energy as the qualifying
facility determines the energy to be available for the purchases, in which case
the rates for the purchases shall be based on the purchasing utility's avoided
costs calculated at the time of delivery; or
b. To provide energy or capacity pursuant to
a legally enforceable obligation for the delivery of energy or capacity over a
specified term, in which case the rates for the purchases shall, at the option
of the qualifying facility exercised prior to the beginning of the specified
term, be based on either: The avoided costs calculated at the time of delivery;
or the avoided costs calculated at the time the obligation is
incurred.
(6)
Factors affecting rates for purchases. In determining avoided
costs, the following factors shall, to the extent practicable, be taken into
account:
a. The prevailing rates for capacity
or energy on any interstate power grid with which the utility is
interconnected.
b. The incremental
energy costs or capacity costs of the utility itself or utilities in the
interstate power grid with which the utility is interconnected.
c. The time of day or season during which
capacity or energy is available, including:
(1) The ability of the utility to dispatch
the qualifying facility;
(2) The
expected or demonstrated reliability of the qualifying facility;
(3) The terms of any contract or other
legally enforceable obligation, including the duration of the obligation,
termination notice requirement and sanctions for noncompliance;
(4) The extent to which scheduled outages of
the qualifying facility can be usefully coordinated with scheduled outages of
the utility's facilities;
(5) The
usefulness of energy and capacity supplied from a qualifying facility during
system emergencies, including its ability to separate its load from its
generation; and
(6) The individual
and aggregate value of energy and capacity from qualifying facilities on the
electric utility's system.
d. The costs or savings resulting from
variations in line losses from those that would have existed in the absence of
purchases from the qualifying facility, if the purchasing electric utility
generated an equivalent amount of energy itself.
(7)
Periods during which purchases
not required. Any electric utility will not be required to purchase
electric energy or capacity during any period during which, due to operational
circumstances, purchases from qualifying facilities will result in costs
greater than those which the utility would incur if it did not make the
purchases, but instead generated an equivalent amount of energy itself;
provided, however, that any electric utility seeking to invoke this subrule
must notify each affected qualifying facility within a reasonable amount of
time to allow the qualifying facility to cease the delivery of energy or
capacity to the electric utility.
a. Any
electric utility which fails to comply with the provisions of this subrule will
be required to pay the usual rate for the purchase of energy or capacity from
the facility.
b. A claim by an
electric utility that such a period has occurred or will occur is subject to
verification by the board.
