Section 69-09-07-09 - Rates for purchases1. Rates for purchases must: 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. 2. Relationship to avoided costs. a. For purposes of this subsection, "new capacity" means any purchase from capacity of a qualifying facility, construction of which began on or after November 9, 1978. b. Subject to subdivision c of this subsection and subdivision a of subsection 3, a rate for purchases satisfies the requirements of subsection 1 if the rate equals the avoided costs determined after consideration of the factors set forth in subsections 5 and 6. c. A rate for purchases (other than from new capacity) may be less than the avoided cost if the commission determines a lower rate is consistent with subsection 1, and is sufficient to encourage cogeneration and small power production. d. Rates for purchases from new capacity must be in accordance with subdivision b, regardless of whether the electric utility making the purchase is simultaneously making sales to the qualifying facility. e. When rates for purchases are based on estimates of avoided costs over the term of a contract or other legally enforceable obligation, the rates for the purchases do not violate this chapter if the rates for the purchases differ from avoided costs at the time of delivery. 3. Standard rates for purchases. a. Qualifying facilities with a design capacity of one hundred kilowatts or less are entitled to net energy billing where the output from the qualifying facility reverses the electric meter used to measure sales from the electric utility to the qualifying facility. For each qualifying facility opting for net energy billing: (1) The purchasing electric utility shall file an annual report of total monthly energy produced with the commission. (2) The purchasing electric utility may recover metering costs associated with production monitoring from the qualifying facility. b. Each electric utility must have standard offer contracts for capacity payments, when required by subsection 6, to qualifying facilities operating as peaking units with a design capacity of one megawatt or less. These standard offer contracts: (1) Must base payments for avoided capacity on the projected cost per kilowatt of a new peaking facility, and adjust the amount of payment to reflect the length of contract overlap into the projected lifetime of the new facility. (2) Must be accompanied by an annually updated table of capacity payment per kilowatt as a function of contract length. (3) Must be dependant upon the following capacity factor adjustment for determining capacity payment amounts: Payment = (Qualifying facility's capacity factor) (Projected capacity factor of the facility to be avoided) (Contracted capacity payment price)
"Capacity factor" means the average on peak period metered capacity delivered to the utility for the billing period divided by the greatest fifteen-minute metered capacity delivered for the on peak period of the same billing period.
c. Each electric utility may have standard rates for purchases from qualifying facilities with a design capacity greater than in subdivisions a and b. d. The standard rates for purchases under subdivisions b and c of this subsection: (1) Must be consistent with subsections 1, 5, and 6; and (2) May differ based on the supply characteristics of various technologies. 4. Purchases "as available" or under a legally enforceable obligation. Each qualifying facility may either: a. Provide energy the qualifying facility determines to be available, 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. Provide energy or capacity under a legally enforceable obligation for the delivery of energy or capacity over a specified term, in which case the rates for the purchases must, at the option of the qualifying facility exercised prior to the beginning of the specified term, be based on either: (1) The avoided costs calculated at the time of delivery; or (2) The avoided costs calculated at the time the obligation is incurred. 5. Factors affecting rates for purchases. In determining avoided costs, the following factors shall, to the extent practicable, be taken into account: a. The data provided under 18 CFR 292.302, including commission review of the data; b. The availability of capacity or energy from a qualifying facility during the system daily and seasonal peak periods, 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 requirements 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; (6) The individual and aggregate value of energy and capacity from qualifying facilities on the electric utility's system; and (7) The smaller capacity increments and the shorter lead times available with additions of capacity from qualifying facilities. c. The relationship of the availability of energy or capacity from the qualifying facility, as derived in subdivision b, to the ability of the electric utility to avoid costs, including the deferral of capacity additions and the reduction of fossil fuel use; d. The costs or savings resulting from variations in line losses from those that would have existed in the absence of purchases from a qualifying facility, if the purchasing electric utility generated an equivalent amount of energy itself or purchased an equivalent amount of electric energy or capacity; and e. The costs or savings resulting from variations in total air polluting emissions from those that would have existed in the absence of purchases from a qualifying facility. 6. Qualifying facilities are entitled to payment for avoided capacity when utility load forecasts project capacity deficits within ten years and the qualifying facility has entered into a power supply contract with the utility that extends into projected deficit period. 7. Periods during which purchases not required. a. Any electric utility which gives notice under subdivision b 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 such purchases, but instead generated an equivalent amount of energy itself. b. Any electric utility seeking to invoke subdivision a of this subsection must notify, in writing, each affected qualifying facility in time for the qualifying facility to cease the delivery of energy or capacity to the electric utility, and must also send a copy of the notice to the commission. c. Any electric utility which fails to comply with the provisions of subdivision b will be required to pay the same rate for such purchase of energy or capacity as would be required had the period described in subdivision a not occurred. d. A claim by an electric utility that such a period has occurred or will occur is subject to verification the commission determines appropriate, either before or after the occurrence. e. This subsection does not apply to purchases made under subdivision a of subsection 3. OBJECTION
THE LEGISLATIVE COUNCIL'S COMMITTEE ON ADMINISTRATIVE RULES OBJECTS TO CHANGES TO NORTH DAKOTA ADMINISTRATIVE CODE SECTION 69-09-07-09 ADOPTED BY THE PUBLIC SERVICE COMMISSION EFFECTIVE MAY 1991 RELATING TO THE RATES THAT ELECTRIC UTILITIES MUST PAY FOR POWER PURCHASED FROM QUALIFYING FACILITIES.
The committee objects to this rule because:
1. North Dakota Administrative Code Section 69-09-07-09 establishes rates that investor-owned utilities must pay for power purchased from qualified facilities and requires net energy billing. 2. 1991 Senate Bill No. 2463, which would have required net energy billing for sales involving investor-owned utilities and rural cooperatives, failed to pass the Senate on a vote of 6 to 43. 3. It is clearly a violation of legislative intent for the Public Service Commission to adopt rules requiring net energy billing by investor-owned utilities when the 1991 Legislative Assembly defeated a bill that would have required the same. Section 28-32-03.3 provides that after the filing of a committee objection, the burden of persuasion is upon the agency in any action for judicial review or for enforcement of the rule to establish that the whole or portion thereof objected to is within the procedural and substantive authority delegated to the agency. If the agency fails to meet its burden of persuasion, the court shall declare the whole or portion of the rule objected to invalid and judgment shall be rendered against the agency for court costs.
History: Effective August 9, 1991.
General Authority: NDCC 28-32-03.3
N.D. Admin Code 69-09-07-09
Effective June 1, 1981; amended effective May 1, 1991.General Authority: NDCC 49-02-02
Law Implemented: NDCC 49-02-02