June 21, 2005

Mark Friedrichs, Esq.

PI-40

Office of Policy and International Affairs

US Department of Energy

Room 1E190

1000 Independence Avenue, SW

Washington, DC 20585

Via email: <1605bguidelines.comments@hq.doe.gov>

Re: Comments of US Combined Heat & Power Association on 10 CFR Part 300
Revised General Guidelines for Voluntary Greenhouse Gas Reporting;
Interim Final Rule, 70 Fed. Reg. 15169-15192 (March 24, 2005)

Dear Mr. Friedrichs:

The US Combined Heat and Power Association (USCHPA) appreciates this
opportunity to comment on the proposed Department of Energy (DOE)
Revised General Guidelines (Guidelines) for Section 1605(b) Voluntary
Reporting under the Energy Policy Act.

The USCHPA is a private, non-profit association, formed in 1999 to
promote the merits of locating on-site generation systems at customer
locations so that both electricity and other products from the resulting
waste heat can be used for the greatest energy efficiency. The
Association brings together diverse market participants to promote the
growth of clean, efficient CHP in the United States for various sound
policy reasons, including economic development, multiple pollutant
emission reductions and energy infrastructure support.

Our member companies have a long history of participating in voluntary
programs with the DOE and EPA. We have and continue to support President
Bush's program for addressing climate change, including the goal to
reduce CO2 emissions intensity of the United States by 18 percent by the
year 2012, the Climate VISION program, and the efforts to improve the
Energy Policy Act 1605(b) greenhouse gas database and reporting
guidelines.

# COMMENTS

1\. [Ability to register only post-2002 emissions
reductions.]{.underline}

USCHPA understands DOE's desire to focus the 1605(b) greenhouse gas
(GHG) emissions reductions registration program on post-2002 reductions
in order to track progress towards meeting the Presidents goal of
reducing GHG emissions intensity of the US economy by 18 percent between
2002 and 2012. However, it is our position that reporting entities
should be allowed to register all reductions after the statutory base
year of 1990 provided the reporting entities can satisfy all the
reporting requirements set forth by the Guidelines.

Many reporting entities have committed significant resources in
achieving and reporting emissions reductions since inception of the
program. DOE should recognize these efforts by allowing reporting
entities to register all reductions that meet the requirements set forth
by the Guidelines. Failure of a voluntary program to allow early
registration of emissions reductions would be counterproductive to
achieving progress.

With respect to the President's objective of reducing GHG emissions
intensity by 18 percent by 2012, it would be appropriate to count only
those reductions registered after 2002 toward the President's objective.
Other reductions, those being prior to 2002, should be eligible for
registration but not count towards the President's objective.

2\. [Reporting Consistency Amongst Existing Reporting
Programs.]{.underline}

Achieving accounting harmony amongst existing reporting programs is an
expressed intent of the 1605(b) program. This is a very important goal
since the 1605(b) program is expected to serve as the emissions
reduction database for the various federal reporting programs.
Accounting harmony will allow reporting entities to submit a single
emissions inventory to the multiple reporting programs.

US CHPA recognizes that the DOE has made significant progress towards
accounting harmony. However, as currently written, the Guidelines do not
reconcile differences in base year, tracking reductions and certifying
avoided emissions. Therefore, additional work is needed to achieve
accounting harmony.

See specific comments for USCHPA's position relative to these issues.

3\. [Registration Rights for GHG Emission Reductions.]{.underline}

The Guidelines presume that the primary basis for GHG emissions
reduction registration is financial control, although reporting entities
are able to use other approaches by mutual agreement. Provided such
agreements are documented and reported in the entity statement to avoid
potential double-counting concerns. USCHPA supports this approach.
Further, it is their primary concern that reductions are registered and
that proper credit is given.

4\. [Registration of Avoided Emissions, the Result of Beneficial
Investments and Purchase Power Agreements.]{.underline}

The Guidelines need to detail how a company installing a CHP energy
system can register projects - whether replacing existing equipment or
building a new energy system. The proposal correctly uses the financial
control presumption unless otherwise specified in a contract agreement
(e.g., purchase of power by a utility)

Operating system investments (such as CHP - demand side management and
purchase power agreements) are a common form of emissions reduction for
electric generators. A reporting entity should be allowed to register
energy/emissions reduction investments and purchased power agreements
that improve their GHG emissions footprint. For example, if a utility
purchases power from a clean, efficient CHP project under a firm
purchase power agreement, the registration of the GHG benefit of
purchasing the clean, efficient power should be guided by the
contractual terms. This in effect creates an incentive for the
development of third party CHP projects that reduce GHG intensity. The
utility purchasing the power would become the reporting entity based on
contractual agreement(s) with the supplier(s).

Likewise the same principals should be applied to address third party
developer (e.g., engineering firms and engine manufactures) interests at
non-host sites. GHG emissions reduction registration would track with
financial control presumptions unless otherwise addressed in a contract
agreement assigning emissions reduction registration. In this case, a
third party would become the reporting entity subject to all the
reporting requirements set forth by the Guidelines.

As currently written, a reporting entity wishing to register emissions
reductions resulting from beneficial investments and purchased power
agreements would be faced with onerous reporting requirements.
Specifically, reporting entities would be required to act as an
aggregator supplying pertinent information necessary to satisfy
Guideline reporting requirements for potentially thousands of end users
and/or suppliers as appropriate. This would be in addition to preparing
its Entity Statement, Certification Statement, and Emissions Inventory.

It is the USCHPA's position that the impracticality of this requirement
would discourage companies from participating in the program rather than
promoting it. This would make it impractical for reporting entities to
achieve recognition for voluntary reduction efforts, potentially placing
the President's reduction goal at risk.

The USCHPA appreciates this opportunity to provide comments to the
Guidelines. If the DOE has any questions regarding these comments do not
hesitate to contact Allison Berkowitz at (219) 647-5264 or
<aberkowitz@nisource.com>.

Sincerely,

Arthur E. Smith, Jr

Chair, Environmental Issues Committee

United States Combined Heat and Power Association