Section 451.9 (Procedures for processing applications) \[[with emphasis
added]{.underline}\]

1.  In a general sense, Energy Northwest opposes the philosophy that new
    REPI program participants should receive equitable benefit at the
    expense of participants who have already received REPI payments. In
    the spirit of the legislation that originally formed the REPI
    program, every effort should be made by DOE to see that existing
    [qualified REPI participants receive the established rate for the
    incentive through appropriate levels of requested funding in the
    annual budget, and should have priority for the available
    funding.]{.underline} Energy Northwest understands the risk
    associated with the annual appropriations process, however, existing
    qualified REPI program participants gained eligibility via a
    codified program for a 10-year period. Energy Northwest contends
    that it had a reasonable expectation that DOE would not add to the
    annual appropriations uncertainty by also changing the distribution
    rules in mid-stream. This violates the spirit of the incentive
    program, which was designed to encourage commercial scale renewable
    development by public entities on a par with the Production Tax
    Credit for private developers. Energy Northwest and its participants
    in the Nine Canyon wind project accepted the appropriation risk in
    deciding to proceed with construction, but did not anticipate such a
    rule change. DOE has a fiduciary responsibility to exhaust all
    reasonable efforts to fund the REPI program and distribute the
    incentives consistent with its original REPI program intent.

2.  Regarding REPI program funding, DOE's failure to request adequate
    appropriations to fully fund the REPI program should not inhibit
    qualified program participants from receiving the established rate
    for the incentive or in any other way diminish their rights. By
    virtue of this historical underfunding pattern, DOE is in essence
    dictating a reduced rate that program participants receive for their
    qualified production, contrary to the rate established in 10 CFR
    Part 451. The overarching intent of the REPI program was to
    encourage tax-exempt and not-for-profit utilities to develop
    renewable energy projects on an equitable basis with the private
    sector. For DOE to continue its philosophy in this respect in effect
    discriminates against tax-exempt and not-for-profit projects and is
    counter to the intent of the REPI program by discouraging future
    development. Changing this program for the previously qualified
    participants removes any vestige of financial certainty associated
    with the REPI incentive. In contrast, taxable project owners receive
    the full rate of the tax credit with absolute certainty with no
    limit on the number of recipients nor the aggregate amount.

3.  The proposed rule applies the 60:40 ratio to all projects, both
    previously qualified participants as well as any new projects. [DOE
    should instead grandfather the projects that were qualified prior to
    the effective date of the new program as being exempt from the 60:40
    ratio requirement]{.underline}, consistent with comment #1. Such
    projects should continue to receive their incentive consistent with
    the administrative process in effect at that time, until their
    qualification expires in 2013. These projects should have priority
    for the available funding with the only preference being Tier 1
    versus Tier 2, with accruals handled by a second set of calculations
    if funding is available. New program participants should not receive
    any funding until the previously qualified projects have been made
    whole consistent with their right to receive the established rate
    for the incentive. DOE is obligated to meet the basic tenet for the
    intent of the REPI program, which was to offer tax-exempt and
    not-for-profit utilities an equivalent incentive to the production
    tax credit, subject only to Congressional appropriation of funds. It
    would be unconscionable for the administration to start another
    decade of the REPI program and continue to legislate the rate
    another set of new program participants receive by compounding the
    problems of the past, and doing so at the expense of the previously
    qualified projects.

4.  The proposed rule establishes that accrued energy be administered by
    a second set of calculations after Tier 1 and 2 past year production
    has been allocated. This policy in effect relegates Tier 1 priority
    for their accrued, un-rebated energy below Tier 2. [DOE should
    instead maintain the policy of treating the accrued energy as second
    only to the past year production for each respective
    Tier]{.underline}, consistent with preceding comments. In this
    manner, the priority for allocating the incentive should be for
    previously qualified Tier 1 first, followed by Tier 1 accrued, then
    Tier 2, followed by Tier 2 accrued. If funding is still available,
    then this process should be repeated for the new program
    participants.

5.  DOE has stated that justification for the changes in the proposed
    rulemaking are found in the EPACT 2005. While the concept for the
    60:40 allocation of Tier 1 and Tier 2 funding can be attributed to
    the wording of the Act, there is no literal mandate to apply it
    retroactively to those that qualified for the current program in
    good faith prior to the Act. [It is completely inappropriate for DOE
    to simply state there is such a mandate for retroactive treatment of
    the 60:40 allocation without:]{.underline}

    a.  [Clear substantiation based on language in the act;
        and]{.underline}

    b.  [Evaluation and justification for the financial impact on
        existing projects that depended on the REPI program as it
        existed when the decision to proceed with construction was made,
        and]{.underline}

    c.  [Evaluation and justification of the chilling effect this
        retroactive rule change will have on future public renewable
        project development.]{.underline} The chilling effect results
        from the demonstrated behavior by DOE that not only is the
        annual funding request completely inadequate to meet the
        legitimate requests from qualifying projects, but even the rules
        of administration of the REPI program are undependable. There is
        no such uncertainty associated with the PTC program for the
        private development sector. Therefore Energy Northwest would
        propose that rather than EPACT 2005 mandating this change, the
        original REPI legislation demands that it not be made, and that
        reasonable parity with the private sector incentives is the
        higher mandate.

Energy Northwest requests that DOE provide specific responses to our
comments prior to making the proposed rule change.