UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

18 CFR Part 292 

(Docket No. RM06-10-000) 

New PURPA Section 210(m) Regulations Applicable to Small Power Production and 

Cogeneration Facilities 

 

(Issued January 19, 2006) 

AGENCY: Federal Energy Regulatory Commission. 

ACTION: Notice of Proposed Rulemaking. 

SUMMARY: The Federal Energy Regulatory Commission (Commission) is proposing 

to amend its regulations governing small power production and cogeneration in 

response to section 1253 of the Energy Policy Act of 2005 (EPAct 2005), which 

added section 210(m) to the Public Utility Regulatory Policies Act of 1978 (PURPA). 

The Commission seeks public comment on the amended regulations proposed herein. 

DATES: Comments are due [insert date thirty days after publication in the 

FEDERAL REGISTER] Reply Comments are due [insert thirty days after comment 

date].

ADDRESSES: Comments may be filed electronically via the eFiling link on the 

Commission's web site at http://www.ferc.gov. Commenters unable to file comments 

electronically must send an original and 14 copies of their comments to: Federal Energy 

Regulatory Commission, Office of the Secretary, 888 First Street, N.E., Washington, 
Docket No. RM06-10-000 - 2 - 

D.C., 20426. Refer to the Comment Procedures section of the preamble for additional 

information on how to file comments. 

FOR FURTHER INFORMATION CONTACT: 

Deborah Wyrick (Technical Information) 

Office of Energy Markets and Reliability 

Federal Energy Regulatory Commission 

888 First Street, N.E. 

Washington, D.C. 20426 

(202) 502-6113 

Marka Shaw (Technical Information) 

Office of Energy Markets and Reliability 

Federal Energy Regulatory Commission 

888 First Street, N.E. 

Washington, D.C. 20426 

(202) 502-8641 

Samuel Higginbottom (Legal Information) 

Office of the General Counsel 

Federal Energy Regulatory Commission 

888 First Street, N.E. 

Washington, D.C. 20426 

(202) 502-8561 

Giuseppe Fina (Legal Information) 

Office of the General Counsel 

Federal Energy Regulatory Commission 

888 First Street, N.E. 

Washington, D.C. 20426 

(202) 502-8696 

SUPPLEMENTARY INFORMATION: 
UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

Before Commissioners: Joseph T. Kelliher, Chairman; 

 Nora Mead Brownell, and Suedeen G. Kelly. 

New PURPA Section 210(m) Regulations Applicable to 

Small Power Production and Cogeneration Facilities 

Docket No. RM06-10-000 

NOTICE OF PROPOSED RULEMAKING 

(Issued January 19, 2006) 

I. Introduction

1. On August 8, 2005, the Energy Policy Act of 2005 (EPAct 2005)1

 was signed into 

law. Section 1253(a) of EPAct 2005 adds a new section 210(m) to the Public Utility 

Regulatory Policies Act of 1978 (PURPA)2

 which provides for termination of an electric 

utility’s obligation to purchase energy and capacity from qualifying cogeneration 

facilities and qualifying small power production facilities (QFs), if the Federal Energy 

Regulatory Commission (Commission) finds that certain conditions are met. Section 

210(m)3

: (1) provides a procedure for an electric utility to file an application for relief 

 1

 Pub. L. No. 109-58, § 1253, 119 Stat. 594 (2005). 

2

 16 U.S.C. 824a-3 (2000). 

3

 We note that the Commission has issued a notice of proposed rulemaking 

regarding added section 210(n) in Docket No. RM05-36-000. That section makes clear 

that no new qualifying cogeneration facility can enter into a contract with an electric 

utility unless the cogeneration facility satisfies criteria for new qualifying cogeneration 

facilities that will be established by the Commission. Revised Regulations Governing 

(continued) 
Docket No. RM06-10-000 - 2 - 

from the mandatory purchase obligation on a service territory-wide basis; (2) provides a 

procedure for any affected entity or person to apply to the Commission for an order 

reinstating the electric utility’s obligation to purchase energy; (3) provides for 

termination of an electric utility’s obligation to sell to QFs energy and capacity if the 

Commission finds that certain conditions are met; (4) protects existing rights and 

remedies under any contract or obligation in effect or pending approval involving the 

purchase of energy or capacity or sale of energy or capacity to a QF; and (5) allows the 

Commission to issue and enforce regulations to ensure that an electric utility recovers all 

prudently incurred costs associated with the purchase of energy from a QF. 

2. The Commission proposes to amend its regulations, specifically 18 CFR 

§ 292.303, to implement the requirements in section 210(m).4

 The Commission seeks 

public comment on the regulations proposed herein. 

II. Background

3. When Congress enacted section 210 of PURPA, it required the Commission to 

prescribe rules as the Commission determined necessary to encourage cogeneration and 

small power production, including rules requiring electric utilities to offer to purchase 

 

Small Power Production and Cogeneration Facilities, Notice of Proposed Rulemaking, 

70 FR 60,456 (Oct. 18, 2005), FERC Stats. & Regs. ¶ 32,590 (2005). 

4

 We will generally refer to EPAct 2005’s added section 210(m) of PURPA as 

“amended section 210.” All other references to PURPA section 210 are as it currently 

exists. 
Docket No. RM06-10-000 - 3 - 

 

electric power from and sell electric power to QFs. Additionally, section 210 of PURPA 

authorized the Commission to exempt QFs from certain federal and state laws and 

regulations. 

4. Under section 201 of PURPA, cogeneration facilities and small power production 

facilities which meet certain standards and which are not owned by persons primarily 

engaged in the generation or sale of electric power5

 can become QFs, and thus become 

eligible for the rates and exemptions pursuant to section 210 of PURPA and found in our 

regulations.6

5. A cogeneration facility is defined in the Federal Power Act (FPA)7

 as a facility 

which produces electric energy and steam or forms of useful energy (such as heat) which 

are used for industrial, commercial, heating, or cooling purposes.8

 Thus, cogeneration 

facilities simultaneously produce two forms of useful energy, namely electric power and 

heat. Cogeneration facilities can use significantly less fuel to produce electricity and 

5

 The ownership requirement was codified in sections 3(17)(A) and 3(18)(A) of 

the FPA. Section 1253(b) of EPAct 2005 removed the ownership requirement from 

sections 3(17)(A) and 3(18)(A) of the FPA, and the Commission has proposed to remove 

the ownership requirement from its regulations in Docket No. RM05-36-000. Revised 

Regulations Governing Small Power Production and Cogeneration Facilities, Notice of 

Proposed Rulemaking, 70 FR 60456 (Oct.18, 2005), FERC Stats. & Regs. ¶ 32,590 

(2005). 

6

 18 CFR Part 292 (2005). 

7

 16 U.S.C. 824 et seq. (2000). 

8

 16 U.S.C. 796(18) (2000). 
Docket No. RM06-10-000 - 4 - 

 

steam (or other forms of energy) than would be needed to produce the two separately. 

6. Small power production facilities as defined in the FPA use biomass, waste, or 

renewable resources, including wind, solar energy and water, to produce electric power 

and have a power production capacity which, together with any other facilities located at 

the same site, are not greater than 80 megawatts.9

 Reliance on these sources of energy 

can reduce the need to consume fossil fuels to generate electric power. 

7. Prior to the enactment of PURPA, a cogenerator or small power producer seeking 

to establish interconnected operation with a utility faced three major obstacles. First, 

utilities were not generally willing to purchase this electric output or were not willing to 

pay an appropriate rate for that output. Second, utilities generally charged 

discriminatorily high rates for back-up service to cogenerators and small power 

producers. Third, a cogenerator or small power producer which provided electricity to a 

utility's grid ran the risk of being considered a public utility and thus being subjected to 

extensive state and federal regulation. 

8. Section 210 of PURPA was designed to remove these obstacles. Each electric 

utility is required under section 210 to offer to purchase available electric energy from 

cogeneration and small power production facilities which obtain qualifying status. The 

rates for such purchases from QFs must be just and reasonable to the ratepayers of the 

utility, in the public interest, and must not discriminate against cogenerators or small 

9

 16 U.S.C. 796(17)(A)(i)-(ii) (2000). 
Docket No. RM06-10-000 - 5 - 

 

power producers. Rates also must not exceed the incremental cost to the electric utility of 

alternative electric energy (also known as the electric utility’s “avoided costs”). Section 

210 also requires electric utilities to provide electric service to QFs at rates which are just 

and reasonable, in the public interest, and which do not discriminate against cogenerators 

and small power producers. 

9. Since Congress enacted PURPA, electric utilities have complained that their 

obligation to purchase from and sell to QFs, as implemented by the Commission in 

18 CFR 292.303(a)-(b), was not economically beneficial and that they were purchasing 

energy they did not need and selling energy they did not want to sell. In 1995, the 

Commission clarified that in determining the avoided cost rate, the electric utility must 

take into account all alternative sources including third-party suppliers and does not have 

to buy power it does not need.10 In the past decade, with the development of exempt 

wholesale generators (EWGs) introduced by the Energy Policy Act of 1992,11 and 

increasing competition in wholesale electric markets as well as some retail electric 

markets, Congress has debated whether to repeal PURPA altogether, or to revise it. The 

10 Southern California Edison Company and San Diego Gas & Electric Company, 

70 FERC ¶ 61,215 at 61,677-78, reconsideration denied, 71 FERC ¶ 61,269 at 62,078 

(1995) (finding that the determination of avoided cost must take into account “all 

sources”). 

11 Energy Policy Act of 1992, Pub. L. No. 102-486, 106 Stat. 2776, (1993) (EPAct 

1992). EPAct 1992 added a new section 32 to the Public Utility Holding Company Act 

of 1935 (PUHCA) to permit a category of sellers called EWGs to be exempt from 

PUHCA. 
Docket No. RM06-10-000 - 6 - 

result is new section 210(m), which is the subject of this rulemaking, and new section 

210(n), which is being addressed in Docket No. RM05-36-000. New section 210(m) 

requires the Commission to lift the mandatory purchase obligation if it finds, in effect, 

that there is a sufficiently competitive market for the QF to sell its power. While the 

provision permits electric utilities to file applications for relief from the mandatory 

purchase obligation, and requires the Commission to act on such applications within 

90 days, the Commission has determined that it can more appropriately address this issue 

through rulemaking. 

III. Proposed Revisions To Regulations

 A. Obligation to Purchase

10. Section 292.303(a) of the Commission’s regulations, 18 CFR 292.303(a), states 

that: 

Obligation to purchase from qualifying facilities. Each electric utility shall 

purchase, in accordance with § 292.304, any energy and capacity which is 

made available from a qualifying facility: 

 (1) Directly to the electric utility; or 

 (2) Indirectly to the electric utility in accordance with paragraph (d) 

 of this section. 

11. The new PURPA section 210(m)(1) amends the obligation to purchase and 

states that: 

. . . no electric utility shall be required to enter into a new contract or 

obligation to purchase electric energy from a qualifying cogeneration 

facility or a qualifying small power production facility under this section if 

the Commission finds that the qualifying cogeneration facility or qualifying 

small power production facility has nondiscriminatory access to – 
Docket No. RM06-10-000 - 7 - 

(A)(i) independently administered, auction-based day ahead and real time 

wholesale markets for the sale of electric energy; and (ii) wholesale markets for 

long-term sales of capacity and electric energy; or 

(B)(i) transmission and interconnection services that are provided by a 

Commission-approved regional transmission entity and administered pursuant to 

an open access transmission tariff that affords nondiscriminatory treatment to all 

customers; and (ii) competitive wholesale markets that provide a meaningful 

opportunity to sell capacity, including long-term and short-term sales, and electric 

energy, including long-term, short-term and real-time sales, to buyers other than 

the utility to which the qualifying facility is interconnected. In determining 

whether a meaningful opportunity to sell exists, the Commission shall consider, 

among other factors, evidence of transactions within the relevant market; or 

(C) wholesale markets for the sale of capacity and electric energy that are, 

at a minimum, of comparable competitive quality as markets described in 

subparagraphs (A) and (B). 

Section 210(m)(1) thus relieves an electric utility of its obligation to enter into a new 

contract or obligation to purchase QF power upon a Commission finding that certain 

market conditions exist. 

12. As discussed below, the Commission will: (1) discuss its interpretation of the 

criteria for electric utility relief from the purchase obligation; (2) make a preliminary 

finding that QFs interconnected with utilities that are members of Midwest Independent 

Transmission System Operator, Inc. (Midwest ISO), PJM Interconnection, L.L.C. (PJM), 

ISO New England, Inc. (ISO-NE), and New York Independent System Operator 

(NYISO) have nondiscriminatory access to those markets and that those markets satisfy 

the section 210(m)(1)(A) criteria for removing the obligation of those electric utilities to 
Docket No. RM06-10-000 - 8 - 

enter into new contracts or obligations with QFs; and (3) provide guidance on the 

definition of “nondiscriminatory access,” and “new contract or obligation.” 

 1. Meaning of section 210(m)(1)

13. Section 210(m)(1) states that no utility shall be obligated to enter into a new 

contract or obligation if the Commission finds that QFs have nondiscriminatory access to 

one of the three market circumstances described in section 210(m)(1)(A), (B), and (C). 

In effect, Congress has required the Commission to remove the mandatory purchase 

obligation if it finds that there is access to a sufficiently competitive market for QFs to 

sell their power. Based on this statutory language, in this section, we discuss our 

interpretation of what type of markets are required by section 210(m)(1) of PURPA to 

relieve a utility of the mandatory purchase obligation. 

14. Subparagraph (A) waives the purchase obligation if QFs have nondiscriminatory 

access to (i) independently administered, auction-based day-ahead and real-time 

wholesale markets for the sale of electric energy; and (ii) wholesale markets for longterm sales of capacity and electric energy. We conclude that the most reasonable 

interpretation of subsection (A) is that it was crafted to apply in regions in which 

Independent System Operators (ISO) and Regional Transmission Organizations (RTO) 

administer day-ahead and real-time markets, and bilateral long-term contracts for the sale 

of capacity and electric energy are available to participants/QFs in these markets. 

15. We note that the second prong of subparagraph (A) does not require auction-based 

long-term capacity or energy markets and such an interpretation would not be consistent 
Docket No. RM06-10-000 - 9 - 

with the statutory text. First, subparagraph (A)(ii) does not use the terms “organized,” 

“independently administered,” or “competitive” when describing the long term markets. 

As evidenced by subparagraph (B)(ii), discussed below, Congress could have imposed 

such requirements for the long-term wholesale markets, but did not. Therefore, we 

conclude that no such requirement was intended for the long-term markets of section 

210(m)(1)(A)(ii). Second, unlike subparagraph (B)(ii), subparagraph (A)(ii) does not 

require the Commission to consider “evidence of transactions within the relevant market” 

when determining whether QFs have meaningful opportunities to sell into wholesale 

markets outside the host utility. This suggests that Congress presumed there was a 

meaningful opportunity to sell for QFs that have “nondiscriminatory access to” ISO and 

RTO regions with day-ahead and real-time markets. 

16. A reasonable interpretation of subparagraph (B) is that it is intended to apply in 

non-auction-based markets because it waives the mandatory purchase requirement so 

long as there is (i) a Commission-approved regional transmission entity providing 

nondiscriminatory transmission and interconnection services; and (ii) “competitive 

wholesale markets” for short- and long-term energy and capacity sales and real-time 

energy sales. To meet subparagraph (B)(i), QFs must have nondiscriminatory access to 

transmission and interconnection service that is nondiscriminatory, which we interpret to 

mean access pursuant to a Commission-approved open access transmission tariff (OATT) 

and interconnection rules and provided by an entity that is regional in scope. Amended 

section 210 does not contain any express definition, and, therefore, the Commission has 
Docket No. RM06-10-000 - 10 - 

discretion in this context to deem an entity to be “regional” based on factors such as 

sufficient regional scope or configuration or the multiple discrete transmission systems it 

controls. 

17. As to the second prong, subparagraph (B)(ii) requires that QFs have access to 

"competitive wholesale markets that provide a meaningful opportunity" to sell capacity 

and energy on both a short- and long-term basis and energy on a real-time basis 

(emphasis added). "Meaningful opportunity" is to be determined by the Commission 

after considering, among other factors, "evidence of transactions within the relevant 

market." Taken together, the terms “competitive,” “meaningful opportunity” and 

“evidence of transactions” suggest that Congress intended that waiver occur in a nonauction-based market only if it could be established that QFs had opportunities to sell 

their output into competitive wholesale markets. 

18. Subparagraph (C) removes the purchase obligation in wholesale markets for the 

sale of capacity and electric energy that are, “at a minimum,” of comparable competitive 

quality as markets described in subparagraphs (A) and (B). Although this provision is 

not clear on its face, its reference to subparagraphs (A) and (B) requires the Commission 

to be mindful, in interpreting the provision, of the two types of requirements that are 

embodied in those sections, i.e., (1) nondiscriminatory access to transmission and 

interconnection services, and (2) competitive short-term and long-term markets. These 

provisions appear to require a case-by-case approach, but we seek comments on whether 

the Commission can make generic findings on these provisions. 
Docket No. RM06-10-000 - 11 - 

 

19. The Commission’s existing OATT, adopted in Order No. 888,12 and 

interconnection rules, adopted in Order Nos. 200313 and 2006,14 are designed to 

eliminate undue discrimination in the provision of transmission and interconnection 

services. Although the Commission recently issued a Notice Of Inquiry regarding 

changes to the OATT, the OATT has been considered sufficient to provide nondiscriminatory access to transmission until such time as modified. Accordingly, we 

conclude that QFs have non-discriminatory access to transmission and interconnection if 

they have access to utilities providing service under an Order No. 888 OATT (or to 

utilities providing service under a Commission-accepted reciprocity tariff) and 

12 Promoting Wholesale Competition Through Open Access Non-discriminatory 

Transmission Services by Public Utilities and Recovery of Stranded Costs by Public 

Utilities and Transmitting Utilities, Order No. 888, FERC Stats. & Regs. Regulations 

Preambles January 1991-June 1996 ¶ 31,036 (1996), Order No. 888-A, FERC Stats. & 

Regs., Regulations Preambles July 1996-December 2000 ¶ 31,048 (1997), order on reh'g, 

Order No. 888-B, 81 FERC ¶ 61,248 (1997), order on reh'g, Order No. 888-C, 82 FERC 

¶ 61,046 (1998), aff'd in relevant part sub nom. Transmission Access Policy Study Group 

v. FERC, 225 F.3d 667 (D.C. Cir. 2000), aff’d sub nom. New York v. FERC, 535 U.S. 1 

(2002). 

13 Standardization of Generator Interconnection Agreements and Procedures, 

Order No. 2003, 68 Fed. Reg. 49,845 (Aug. 19, 2003), FERC Stats. & Regs. ¶ 31,146 

(2003), order on reh’g, Order No. 2003-A, 69 Fed. Reg. 15,932 (Mar. 26, 2004), FERC 

Stats. & Regs. ¶ 31,160 (2004), order on reh’g, Order No. 2003-B, 70 Fed. Reg. 265 

(Jan. 4, 2005), FERC Stats. & Regs. ¶ 31,171 (2004), order on reh’g, Order No. 2003-C, 

70 Fed. Reg. 37,661 (June 30, 2005), FERC Stats. & Regs. ¶ 31,190 (2005). 

 

14 Standardization of Small Generator Interconnection Agreements and 

Procedures, Order No. 2006, 70 Fed. Reg. 34,100 (Jun. 13, 2005), FERC Stats. & Regs. 

¶ 31,180 at 31,406-31,551 (2005), order on reh’g, Order No. 2006-A, 70 Fed. Reg. 

71,760 (Nov. 30, 2005), FERC Stats. & Regs. ¶ 31,196 (2005). 
Docket No. RM06-10-000 - 12 - 

interconnection services pursuant to the Commission’s interconnection rules. However, 

we seek comment on whether there are any circumstances in which an OATT should be 

considered insufficient for purposes of section 210(m). We also seek comment on 

whether a Commission-accepted reciprocity tariff filed by a nonjurisdictional electric 

utility has the same effect as an OATT for purposes of meeting section 210(m)(1)(C). 

We also seek comment on whether nonjurisdictional utilities provide nondiscriminatory 

interconnection services for purposes of section 210(m)(1)(C) of PURPA. 

20. We also recognize that small QFs may be in a unique situation with respect to 

nondiscriminatory access because they interconnect with the host utility at a distribution 

level. For instance, Granite State has recently filed a petition in Docket No. 

EL06-26-000 asking the Commission to initiate a rulemaking implementing section 

210(m) of PURPA and as part of that rulemaking, issue rules retaining the mandatory 

purchase obligation for small QFs (those with a nameplate capacity of 5 MW or less) and 

creating a rebuttable presumption in favor of retaining the mandatory purchase obligation 

for small power production facilities with a capacity over 5 MW and up to 20 MW. 

Granite State suggests that small hydro QFs do not have nondiscriminatory access to 

RTO/ISO markets. Therefore, we seek comment on whether the purchase obligation 

should be retained for small renewable projects and, if so, how to define “small,” e.g., 

5 MWs or below, 20 MWs or below as proposed by Granite State. In addition, we seek 

comment on whether there may be other categories of QFs that lack nondiscriminatory 
Docket No. RM06-10-000 - 13 - 

access to RTO/ISO short-term or long-term wholesale markets for which we should 

retain the obligation to purchase. 

21. With respect to whether the second prong of section 210(m)(B)(ii) is met in nonISO/non-RTO markets, i.e., whether QFs in non-ISO/non-RTO markets have access to 

wholesale markets for long-term sales of capacity and electric energy, would that prong 

be satisfied if there is a demonstration that an organized power procurement process 

exists in which QFs can participate (albeit not an auction-based process)? We seek 

comments on ways the prong may be satisfied. 

 2. Implementation of section 210(m)(1)

 (a) Subparagraph A

22. As we discussed above, the Commission interprets section 210(m)(1)(A) to apply 

in regions in which ISOs and RTOs administer day-ahead and real-time markets, and 

bilateral long-term contracts for the sale of capacity and electric energy are available to 

participants/QFs in these markets. The Commission proposes to find that the Midwest 

ISO, PJM, ISO-NE, and NYISO satisfy the requirements of section 210(m)(1)(A).15 

These entities are Commission approved ISO or RTOs that provide non-discriminatory 

 15 While Southwest Power Pool, Inc. (SPP) and the California Independent System 

Operator Corporation (Cal ISO), respectively are a Commission-approved RTO and ISO, 

they do not satisfy the requirements of section 210(m)(1)(A) because neither has dayahead markets. However, any utility within SPP and Cal ISO may file an application 

with the Commission to seek relief from the mandatory purchase obligation under 

sections 210(m)(1)(B) or (C), on a case-by-case basis. 
Docket No. RM06-10-000 - 14 - 

open access transmission services and independently administer auction-based wholesale 

markets for day-ahead and real-time energy sales. Additionally, with respect to (A)(ii), 

the existence of bilateral long-term contracts for long-term sales of capacity and energy is 

an indication of a market. It is reasonable to conclude that the second prong of 

subparagraph (A) is met because bilateral long-term contracts are available to participants 

in the footprints of the Midwest ISO, PJM, ISO-NE, and NYISO. Therefore, we propose 

to find that electric utilities that are members of the Midwest ISO, PJM, ISO-NE, and 

NYISO would meet the requirements for relief from the mandatory purchase obligation. 

We describe these markets in more detail below. 

 (1) Midwest ISO

23. On December 20, 2001, the Commission found that the Midwest ISO satisfied the 

requirements, including independence from market participants, of Order No. 2000, and 

thus granted the Midwest ISO RTO status.16 Thus, we believe that the Midwest ISO 

“independently administers” auction-based real-time markets. With respect to 

subparagraph (1)(A)(i), the Commission approved the Midwest ISO’s proposed 

Transmission and Energy Markets Tariff (TEMT), which allowed the Midwest ISO to 

initiate Day 2 operations in its 15-state region.17 The Midwest ISO’s Day 2 operations 

 16 See Midwest Independent Transmission System Operator, Inc., 97 FERC 

¶ 61,326 (2001) order on reh’g, 103 FERC ¶ 61,169 (2003). 

17 See Midwest Independent Transmission System Operator, Inc., 108 FERC 

¶ 61,163 (Midwest ISO, FERC Electric Tariff, Third Revised Volume No. 1, Module C), 

(continued) 
Docket No. RM06-10-000 - 15 - 

include, among other things, day-ahead and real-time energy markets and a Financial 

Transmission Rights (FTR) market for transmission capacity. The Midwest ISO began 

Day 2 operations on April 1, 2005. Since market participants have access to the Midwest 

ISO’s day-ahead and real-time energy markets to sell their electric energy, a QF that has 

“non-discriminatory access” would have the same opportunity. Also, bilateral contracts 

exist in the Midwest ISO for the long-term sales of capacity and energy. Accordingly, 

we would expect that such long-term sales would be available to all participants in the 

Midwest ISO’s footprint. Based on the foregoing, we propose to find that the Midwest 

ISO meets the conditions of subparagraph (A). 

 (2) PJM

24. PJM received Commission approval as an independent regional transmission 

organization on July 12, 2001.18 Since independence from market participants is one of 

four characteristics that PJM had shown for Commission approval to operate as an RTO, 

PJM satisfies the “independently administered” condition. Second, since 1997, PJM has 

operated auction-based, day-ahead and real-time wholesale energy markets pursuant to its 

 

order on reh'g, 109 FERC ¶ 61,157 (2004), order on reh'g, 111 FERC ¶ 61,043 (2005).

18 PJM Interconnection, L.L.C., 96 FERC ¶ 61,061 (2001). On December 20, 

2002, in PJM Interconnection, L.L.C., 101 FERC ¶ 61,345 (2002), PJM was granted full, 

rather than provisional, RTO status. Independence was one of the matters considered in 

the 2002 Order. 
Docket No. RM06-10-000 - 16 - 

OATT and Operating Agreement.19 Because PJM’s market participants have access to 

auction-based day ahead and real time wholesale energy markets, a QF would have the 

same opportunity as other generators to sell energy in that market. Also, there are 

bilateral contracts in PJM for the long-term sales of capacity and energy. Accordingly, 

we would expect that such long-term sales would be available to all participants in PJM’s 

footprint. Therefore, we propose to find that PJM meets the conditions of subparagraph 

(A). 

 (3) ISO-NE

25. ISO-NE received Commission approval as an independent regional transmission 

operator on March 24, 2004, by having satisfied the Commission’s criterion of 

independence from market participants.20 Due to ISO-NE’s status as an RTO, we believe 

that the ISO-NE satisfies the “independently administered” condition of subparagraph 

(A)(i). With respect to the second condition of subparagraph (A)(i), ISO-NE, pursuant to 

Market Rule 1 of its OATT, commenced operation of its auction-based energy markets 

on March 1, 2003. Since ISO-NE’s market participants have access to auction-based day 

ahead and real time wholesale energy markets, a QF would have the same opportunity. 

Also, there are bilateral contracts in ISO-NE for the long-term sales of capacity and 

 19 PJM Interconnection, L.L.C., FERC Electric Tariff, Sixth Revised Volume No. 

1.

20 ISO New England, Inc., 106 FERC 61,280 (2004). 
Docket No. RM06-10-000 - 17 - 

energy. Accordingly, we would expect that such long-term sales would be available to 

all participants in ISO-NE’s footprint. Therefore we propose to find that ISO-NE meets 

the conditions of subparagraph (A). 

 (4) NYISO

26. The NYISO received Commission authorization to operate as an independent 

transmission operator on June 30, 1998 after showing that it is independent of market 

participants.21 On November 18, 1999, the NYISO commenced operation of its 

auction-based energy markets. Under the ISO Market Administration and Control Area 

Services Tariff, NYISO’s market participants have access to auction-based day ahead and 

real time wholesale energy markets,22 and a QF would have the same opportunity as 

other generators within NYISO to sell energy into NYISO’s auction-based day ahead and 

real time wholesale energy markets. Also, there are bilateral contracts in NYISO for the 

long-term sales of capacity and energy. Accordingly, we would expect that such longterm sales would be available to all participants in NYISO’s footprint. Therefore we 

propose to find that NYISO meets the conditions of subparagraph (A). 

 (5) Conclusion

27. The Commission thus proposes to find in this rulemaking proceeding that QFs 

 21 Central Hudson Gas & Electric Co., 83 FERC ¶ 61,352 (1998), order on reh'g, 

87 FERC ¶ 61,135 (1999). 

22 New York Independent System Operator, Inc., FERC Electric Tariff Original 

Volume No. 2. 
Docket No. RM06-10-000 - 18 - 

interconnected with electric utilities that are members of Midwest ISO, PJM, ISO-NE, 

and NYISO have nondiscriminatory access to those markets and those markets meet the 

section 210(m)(1)(A) criteria for removing the obligation of those electric utilities to 

enter into new contracts or obligations with the QFs. We seek comments, including 

specific evidence, which either support or refute this preliminary finding Finally, as 

noted previously, we seek comment on whether the obligation to purchase should be 

retained in these markets for “small” QFs. 

28. Under our proposed regulations, to claim relief from the purchase obligation, 

electric utilities that are members of Midwest ISO, PJM, ISO-NE, and NYISO will need 

to make compliance filings pursuant to section 210(m)(3). This compliance filing is 

discussed in more detail in our discussion of section 210(m)(3). 

 (b) Subparagraphs B and C

29. The Commission proposes to determine on a case-by-case basis23 whether a 

utility has met the requirements of sections 210(m)(1)(B) and 210(m)(1)(C) for relief 

from its purchase obligation. An electric utility filing an application claiming to meet the 

requirements of section 210(m)(1)(B) or section 210(m)(1)(C) of PURPA must 

demonstrate the “factual basis upon which relief is requested.” Applicants should 

 23 We will allow joint applications to be filed by a number of utilities in a region if 

the applications for relief from the purchase obligation present common issues of law and 

fact. We would expect common issues of law and fact to exist where one or more 

utilities operate within the same market. 
Docket No. RM06-10-000 - 19 - 

provide, among other evidence, actual sales data for (1) long-term and short-term 

capacity and (2) long-term, short-term, and real-time electric energy as well as evidence 

that the utility operates in a competitive wholesale market. Accordingly, to be relieved of 

their mandatory purchase obligations, electric utilities that are not members of Midwest 

ISO, PJM, ISO-NE, and NYISO would be required to file such applications with the 

Commission pursuant to section 210(m)(3) of PURPA. 

30. We propose that other markets, i.e., both non-auction-based markets and non-RTO 

markets, as well as new auction-based markets, and utility-specific markets would be 

addressed on a case-by-case basis, pursuant to section 210(m)(3) discussed below. In 

addition, subsequent changes to market conditions in all markets would be handled on a 

case-by-case basis, pursuant to section 210(m)(4) discussed below. 

 3. Other Issues

31. Section 210(m)(1) states that no electric utility shall be obligated to purchase from 

a QF if the Commission finds that the QF has nondiscriminatory access to the market 

conditions identified in each subparagraph. We propose that there be a rebuttable 

presumption that a utility provides nondiscriminatory access if it has an open access 

transmission tariff in compliance with our pro forma OATT (or a Commission-approved 

reciprocity tariff).24 We also propose that QFs or any other affected party should be 

 24 In Docket No. RM05-25-000, the Commission is currently reviewing the 

adequacy and sufficiency of the pro forma OATT to ensure that it prevents undue 

discrimination in the provision of transmission service. 
Docket No. RM06-10-000 - 20 - 

allowed to rebut that presumption, for example, by providing specific and credible 

evidence that the QF does not have non-discriminatory access to wholesale markets. 

However, the presumption cannot be rebutted by an argument that the utility has not 

properly implemented or administered its OATT. Improper implementation of an OATT 

is more properly the subject of a complaint and the Commission will take appropriate 

steps in response to a complaint to ensure that the OATT is properly implemented. 

32. Section 210(m)(1) also states that no electric utility “shall be required to enter into 

a new contract or obligation” to purchase electric energy from a QF if the Commission 

makes the required finding. The Commission proposes to find that when a contract 

terminates by its own accord, an electric utility is not compelled to enter into a new, 

successor contract with the QF if the Commission has found that the QF has 

nondiscriminatory access to markets that satisfy the criteria of section 210(m)(1). Some 

have alleged that the grant of QF status means that electric utilities have an “obligation” 

to purchase from that QF in perpetuity. We disagree. That a facility has QF status does 

not mean that an electric utility has an “obligation” to purchase from the QF in 

perpetuity, or, conversely, that the QF has the right to demand that the utility purchase at 

avoided-cost rates in perpetuity. The Commission proposes to find that if a contract is 

entered into after August 8, 2005, the date of enactment, but before the Commission has 

determined that an electric utility is entitled to relief from the obligation to purchase from 

a QF, the contract already entered into will be treated as though it was in effect on August 

8, 2005 for purposes of section 210(m)(1). 
Docket No. RM06-10-000 - 21 - 

 B. Purchase and Sale Obligations for New Cogeneration Facilities

33. Section 210(m)(2)(A) of PURPA reads: 

REVISED PURCHASE AND SALE OBLIGATIONS FOR NEW 

FACILITIES – (A) After the date of enactment of this subsection, no 

electric utility shall be required pursuant to this section to enter into a new 

contract or obligation to purchase from or sell electric energy to a facility 

that is not an existing qualifying cogeneration facility unless the facility 

meets the criteria for qualifying cogeneration facilities established by the 

Commission pursuant to the rulemaking required by subsection (n). 

34. This provision reinforces the requirement that new qualifying cogeneration 

facilities must satisfy the section 210(n) criteria for new qualifying cogeneration 

facilities, which the Commission is implementing in pending Docket No. RM05-36-000. 

The Commission proposes to make this clarification in section 292.309(d) of its 

regulations. 

35. Section 210(m)(2)(B) defines the term “existing qualifying cogeneration facility” 

to mean a facility that: (i) was a qualifying cogeneration facility on the date of enactment 

of subsection (m), or (ii) had filed with the Commission a notice of self-certification, selfrecertification or an application for Commission certification under 18 CFR 292.207 prior 

to the date on which the Commission issues the final rule required by subsection 210(n). 

The Commission proposes to adopt this definition in new section 292.309(b)(1) of its 

regulations. 

C. Application for Relief

36. Section 210(m)(3) of PURPA states: 
Docket No. RM06-10-000 - 22 - 

COMMISSION REVIEW- Any electric utility may file an application with 

the Commission for relief from the mandatory purchase obligation pursuant 

to this subsection on a service territory-wide basis. Such application shall 

set forth the factual basis upon which relief is requested and describe why 

the conditions set forth in subparagraphs (A), (B) or (C) of paragraph (1) of 

this subsection have been met. After notice, including sufficient notice to 

potentially affected qualifying cogeneration facilities and qualifying small 

power production facilities, and an opportunity for comment, the 

Commission shall make a final determination within 90 days of such 

application regarding whether the conditions set forth in subparagraphs (A), 

(B) or (C) of paragraph (1) have been met. 

37. The Commission proposes to include in new section 292.310 the language of 

section 210(m)(3) of PURPA. Since the enactment of EPAct 2005, two applications for 

relief from the mandatory purchase obligation have been filed with the Commission.25 In 

Alliant, the Commission explained that, in order to meet the express statutory 

requirement of “notice,” including “sufficient notice to potentially affected qualifying 

cogeneration facilities and qualifying small power production facilities,” contained in 

section 210(m)(3) of PURPA, it would require that an applicant identify all potentially 

affected QFs in any application for relief filed pursuant to section 210(m)(3).26 The 

Commission then described which facilities constitute “all potentially affected QFs.”27

 25 See Alliant Energy Corporate Services, Inc., 113 FERC ¶ 61,024 (2005) 

(Alliant); Montana-Dakota Utilities Co., 113 FERC ¶ 61,045 (2005) (Montana-Dakota). 

In both instances, the Commission dismissed petitions for declaratory orders pursuant to 

section 210(m)(3) of PURPA requesting relief from the mandatory purchase obligation 

on the grounds of insufficient notice. 

26 Alliant, 113 FERC ¶ 61,024 at P 18. 

27 Id. at P 19-20. 
Docket No. RM06-10-000 - 23 - 

38. Consistent with Alliant and Montana-Dakota, before the Commission will 

consider an application filed pursuant to section 210(m)(3) of PURPA, an applicant must 

first identify in the application all potentially affected QFs (with their names and current 

addresses) – including: (1) those QFs that have existing power purchase contracts with 

the applicant; (2) other QFs that sell their output to the applicant or that have pending 

requests for the applicant to purchase their output; (3) any developer of generating 

facilities with whom the applicant has agreed to enter into power purchase contracts or is 

discussing power purchase contacts; (4) the developers of facilities that have pending 

state avoided cost proceedings; and (5) any other QFs that the applicant reasonably 

believes to be affected by its petition. This will ensure that the statutory obligation is met 

to provide notice and an opportunity to comment to all potentially affected QFs. The 

Commission proposes to incorporate this interpretation of “sufficient notice” and “all 

potentially affected QFs” in new section 292.310(b) and (c). 

39. We point out that under section 210(m)(3) the Commission must make a finding

regarding an application for relief of the purchase obligation and that the finding must be 

made within 90 days of the date of such application. The Commission, accordingly, will 

expect an application for relief to be fully supported by documentation upon which the 

required finding can be made, i.e., a case in chief. For those not in one of the 

Commission-certified markets, such documentation should include, but is not limited to: 

(1) prepared testimony; (2) affidavits; (3) exhibits; and (4) any other evidence. Given the 
Docket No. RM06-10-000 - 24 - 

 

statutory 90-day time limit for finding, we stress that the burden will be on the applicant 

to provide a fully-supported application in the first instance. 

40. With regard to applications filed by electric utilities that are members of Midwest 

ISO, PJM, NYISO, or ISO-NE, an electric utility need only submit a compliance filing 

showing that: (1) it is a member of one of these RTOs/ISOs; (2) the Commission has 

made a final finding that the RTO/ISO that it is a member of provides QFs with 

nondiscriminatory access;28 (3) a list of all potentially affected QFs; and (4) the QFs have 

the right to request service under an OATT or OATTs (or reciprocity tariffs) on file. 

Once a final rule issues and the Commission has acted on rehearing of the final rule, the 

Commission will not reevaluate its decision on specific markets made in the instant 

proceeding, absent changed circumstances. The Commission seeks comments on 

whether there are any QFs within the service territories of members of the Midwest ISO, 

PJM, ISO-NE, and NYISO that, although they have access to an OATT or OATTs 

(or reciprocal tariffs), nonetheless do not have nondiscriminatory access to those markets. 

41. We anticipate that the compliance filings of the electric utilities that are members 

of the Midwest ISO, PJM, NYISO, or ISO-NE and seeking relief from the purchase 

obligation will be essentially ministerial; we do not expect the findings made in this 

28 The final rule in this proceeding must have become effective before an electric 

utility may rely upon it. As a result, any electric utilities that file early and seek to rely 

on the preliminary findings with respect to Midwest ISO, PJM, NYISO or ISO-NE in this 

NOPR will not be permitted to do so. 
Docket No. RM06-10-000 - 25 - 

rulemaking to be re-litigated in the compliance filing proceeding. In this regard, we 

conclude that the existence of a filed OATT ( or reciprocity tariff) will be construed to 

provide nondiscriminatory access. If a QF believes that the administration or 

implementation of the OATT denies it access to markets, it is not an issue for the 

compliance filing proceeding; instead the QF may file a complaint challenging the 

implementation or administration of an OATT. 

 D. Reinstatement of Obligation to Purchase

42. Section 210(m)(4) provides: 

REINSTATEMENT OF OBLIGATION TO PURCHASE. At any time 

after the Commission makes a finding under paragraph (3) relieving an 

electric utility of its obligation to purchase electric energy, a qualifying 

cogeneration facility, a qualifying small power production facility, a State 

agency, or any other affected person may apply to the Commission for an 

order reinstating the electric utility's obligation to purchase electric energy 

under this section. Such application shall set forth the factual basis upon 

which the application is based and describe why the conditions set forth in 

subparagraphs (A), (B) or (C) of paragraph (1) of this subsection are no 

longer met. After notice, including sufficient notice to potentially affected 

utilities, and opportunity for comment, the Commission shall issue an order 

within 90 days of such application reinstating the electric utility's obligation 

to purchase electric energy under this section if the Commission finds that 

the conditions set forth in subparagraphs (A), (B) or (C) of paragraph (1) 

which relieved the obligation to purchase, are no longer met. 

43. The Commission views this section as an opportunity for a QF, a state agency, or 

any affected person to seek to reinstate the purchase obligation should there be a material 

change in the circumstances under which the Commission granted relief. We note that 

the applicant bears the burden to “set forth the factual basis” upon which the application 

is based. The requirement for a “factual basis” indicates that allegations of a change in 
Docket No. RM06-10-000 - 26 - 

the conditions upon which relief was granted must be supported with evidence. The 

Commission proposes to consider these applications on a case-by-case basis. 

44. Consistent with our interpretation of “notice” under section 210(m)(3), the 

Commission will require an applicant to identify all potentially affected utilities in the 

application so that the Commission will be able to meet its statutory requirement to 

provide sufficient notice and an opportunity for comment. 

 E. Obligation to Sell

45. Section 292.303(b) of the Commission’s regulations, 18 CFR 292.303(b), states 

that: “Each electric utility shall sell to any qualifying facility, in accordance with 

§ 292.305, any energy and capacity requested by the qualifying facility.” Under new 

section 210(m)(5), this mandatory obligation to sell can be terminated if the Commission 

finds that: “competing retail electric suppliers are willing and able to sell and deliver 

electric energy to the qualifying cogeneration facility or qualifying small power 

production facility; and the electric utility is not required by State law to sell electric 

energy in its service territory.” 

46. The Commission proposes to incorporate the language of section 210(m)(5) of 

PURPA in new section 292.312 of the Commission’s regulations. The Commission 

proposes to interpret the phrase “new contract or obligation” contained in section 
Docket No. RM06-10-000 - 27 - 

210(m)(3) consistently with its interpretation of the same words contained in section 

210(m)(1) of PURPA.29 

47. The Commission is also proposing to include a provision, section 292.313, 

allowing a QF, State agency, or any other affected person to apply to the Commission for 

an order reinstating the electric utility’s obligation to sell electric energy if the factual 

predicate for the determination that the obligation to purchase should be terminated no 

longer exists. 

 F. Section 210(m)(6)

48. Section 210(m)(6) of PURPA requires that: 

Nothing in this subsection affects the rights or remedies of any party under 

any contract or obligation, in effect or pending approval before the 

appropriate State regulatory authority or non-regulated electric utility on the 

date of enactment of this subsection, to purchase electric energy or capacity 

from or to sell electric energy or capacity to a qualifying cogeneration 

facility or qualifying small power production facility under this Act 

(including the right to recover costs of purchasing electric energy or 

capacity). 

49. We propose to implement section 210(m)(6) of PURPA by adopting the language 

of the statute in section 292.314. In addition, the Commission will clarify that the stage 

of the construction of a facility has no bearing on whether the protections of section 

210(m)(6) are triggered. The Commission interprets section 210(m)(6) to protect the 

rights and remedies under a contract or obligation in effect or pending approval before 

 29 See P 29 supra.
Docket No. RM06-10-000 - 28 - 

the state regulatory authority, regardless of the construction stage of the facility that may 

be the subject of the contract or obligation. We solicit comments on whether further or 

different language and/or clarifications other than those proposed here should be 

incorporated into our regulations. 

 G. Section 210(m)(7)

50. Section 210(m)(7) of PURPA requires that: 

(A) The Commission shall issue and enforce such regulations as are 

necessary to ensure that an electric utility that purchases electric energy or 

capacity from a qualifying cogeneration facility or qualifying small power 

production facility in accordance with any legally enforceable obligation 

entered into or imposed under this section recovers all prudently incurred 

costs associated with the purchase. (B) A regulation under subparagraph 

(A) shall be enforceable in accordance with the provisions of law applicable 

to enforcement of regulations under the Federal Power Act (16 U.S.C. 791a 

et seq.). 

51. The Commission does not believe that regulations are necessary at this time; this 

is a matter that the Commission can address on a case-by-case basis. However, the 

Commission will consider a regulation under this section in the future if a need becomes 

apparent. 

52. We solicit comments on whether there is a need for the Commission to consider a 

regulation, and if so what that regulation should state, to ensure that an electric utility that 

purchases electric energy or capacity from a cogeneration QF or qualifying small power 

production facility in accordance with any legally enforceable obligation entered into or 

imposed under section 210(m)(7) recovers all prudently incurred costs associated with 

the purchase. 
Docket No. RM06-10-000 - 29 - 

IV. Information Collection Statement

53. The Commission is submitting the following collection of information contained 

in this proposed rulemaking to the Office of Management and Budget (OMB) for review 

under Section 3507(d) of the Paperwork Reduction Act of 1995.30 The Commission 

identifies the information provided for under Part 292 as FERC-556. These collections of 

information are specifically mandated by statute. 

54. The Commission solicits comments on the Commission’s need for this 

information, whether the information will have practical utility, the accuracy of the 

provided burden estimates, ways to enhance the quality and clarity of the information that 

the Commission will collect, and any suggested methods for minimizing the respondent’s 

burden, including the use of information techniques. The burden estimates for complying 

with this proposed rule are as follows: 

Data Collection 

FERC-556 

Number of 

Respondents 

Number of 

Responses 

Hours Per 

Response 

Total Annual 

Hours 

§292.310 230 1 2 460 

§292.312 230 1 2 460 

§292.413 630 1 3 1,890 

Totals 860 1 2,810 

Total Annual Hours for the Collection: (reporting + recordkeeping if appropriate) 

 30 44 U.S.C. 3507(d) (2000). 
Docket No. RM06-10-000 - 30 - 

Information Collection Costs: Because of the regional differences and the various 

staffing levels that will be involved in preparing the documentation (legal, technical and 

support) the Commission is using an hourly rate of $150 to estimate the costs for filing 

and other administrative processes (reviewing instructions, searching data sources, 

completing and transmitting the collection of information). The estimated cost is 

anticipated to be $421,500. 

Title: FERC-556 Small Power Production and Cogeneration Facilities 

Action: Proposed Data Collections 

OMB Control Nos. 1902-0075 

Upon approval of a collection of information, OMB will assign an OMB control 

number and an expiration date. Respondents subject to the filing requirements of this 

rule will not be penalized for failing to respond to these collections of information unless 

the collections of information display a valid OMB control number or the Commission 

has provided justification as to why the control number should not be displayed. 

Respondents: Businesses or other for profit, state, local or tribal government. 

Necessity of the Information: The Commission proposes amending its regulations to 

implement section 210(m) of PURPA which was enacted in section 1253 of the EPAct 

2005; specifically, its regulations governing purchases of electric energy from and sales 

of electric energy to qualifying small power production and cogeneration facilities 

 These requirements conform to the Commission’s plan for efficient information 

collection, communication, and management within the energy industry. The 
Docket No. RM06-10-000 - 31 - 

Commission has assured itself, by means of internal review, that there is specific, 

objective support for the burden estimates associated with the information requirements. 

 Interested persons may obtain information on the reporting requirements by 

contacting the following: Federal Energy Regulatory Commission, 888 First Street, NE, 

Washington, D.C. 20426 [Attention: Michael Miller, Office of the Executive Director, 

Phone: (202)502-8415, fax: (202)273-0873, e-mail: michael.miller@ferc.gov] 

55. For submitting comments concerning the collection(s) of information and the 

associated burden estimate(s), please send your comments to the contact listed above and 

to the Office of Management and Budget, Office of Information and Regulatory Affairs, 

Washington, D.C. 20503, [Attention: Desk Officer for the Federal Energy Regulatory 

Commission, phone: (202)395-4650, fax: (202)395-7285, e-mail: 

oira_submission@omb.eop.gov. 

V. Environmental Analysis

56. The Commission is required to prepare an Environmental Assessment or an 

Environmental Impact Statement for any action that may have a significant adverse effect 

on the human environment. The Commission has categorically excluded certain actions 

from this requirement as not having a significant effect on the human environment. As 

explained above, this proposed rule is clarifying in nature. It interprets several 

amendments made to PURPA by EPAct 2005, and clarifies the applicability of these 

amendments to electric utilities and QFs; it does not substantially change the effect of the 

legislation. Accordingly, no environmental consideration is necessary. 
Docket No. RM06-10-000 - 32 - 

VI. Regulatory Flexibility Act Analysis

57. The Regulatory Flexibility Act of 1980 (RFA)31 generally requires a description 

and analysis of rules that will have significant economic impact on a substantial number 

of small entities and where notice and comment rulemaking is required. Certain rules are 

exempt from notice and comment from the RFA requirements; exempt rules include 

interpretative rules, general statements of policy, or rules of agency organization 

procedure or practice.32 Interpretative rules “generally interpret the intent expressed by 

Congress, where an agency does not insert its own judgments or interpretations in 

implementing a rule and simply regurgitates statutory language.”33 The rule we are 

proposing in this docket is an interpretative rule. Accordingly, no regulatory flexibility 

analysis is required. 

VII. Comment Procedures

58. The Commission invites interested persons to submit comments on the matters and 

issues proposed in this notice to be adopted, including any related matters or alternative 

proposals that commenters may wish to discuss. Comments are due [insert date _30__ 

days after publication in the FEDERAL REGISTER]. Reply comments are due [insert 

date 30 days after comment date]. Comments and reply comments must refer to Docket 

 31 5 U.S.C. 601-12. 

32 5 U.S.C. 553(b)(A) 

33 “How to Comply with the Regulatory Flexibility Act: A Guide for Government 

Agencies”, Small Business Administration, Office of Advocacy, P.5, May 2003. 
Docket No. RM06-10-000 - 33 - 

No. RM06-10-000, and must include the commenters’ names, the organizations they 

represent, if applicable, and their address in their comments. Comments and reply 

comments may be filed either in electronic or paper format. 

59. Comments and reply comments may be filed electronically via the eFiling link on 

the Commission's web site at http://www.ferc.gov. The Commission accepts most 

standard word processing formats and commenters may attach additional files with 

supporting information in certain other file formats. Commenters filing electronically do 

not need to make paper filings. Commenters that are not able to file comments and reply 

comments electronically must send an original and 14 copies of their comments to: 

Federal Energy Regulatory Commission, Office of the Secretary, 888 First Street, N.E., 

Washington, D.C. 20426. 

60. All comments and reply comments will be placed in the Commission's public files 

and may be viewed, printed, or downloaded remotely as described in the Document 

Availability section below. Commenters on this proposal are not required to serve copies 

of their comments and reply comments on other commenters. 

VIII. Document Availability

61. In addition to publishing the full text of this document in the Federal Register, the 

Commission provides all interested persons an opportunity to view and/or print the 

contents of this document via the Internet through the Commission’s Home Page 

(http://www.ferc.gov) and in the Commission’s Public Reference Room during normal 
Docket No. RM06-10-000 - 34 - 

business hours (8:30 a.m. to 5:00 p.m. Eastern time) at 888 First Street, N.E., Room 2A, 

Washington, D.C. 20426. 

62. From the Commission's Home Page on the Internet, this information is available in 

the Commission’s document management system, eLibrary. The full text of this 

document is available on eLibrary in PDF and Microsoft Word format for viewing, 

printing, and/or downloading. To access this document in eLibrary, type the docket 

number excluding the last three digits of this document in the docket number field. 

63. User assistance is available for eLibrary and the Commission's website during 

normal business hours. For assistance, please contact FERC Online Support at 

1-866-208-3676 (toll free) or (202) 502-8222 (e-mail at 

FERCOnlineSupport@FERC.gov), or the Public Reference Room at (202) 502-8371, 

TTY (202) 502-8659 (e-mail at public.referenceroom@ferc.gov ). 

List of subjects in 18 CFR Part 292

64. Electricity, Electric power plants, Electric utilities, Natural gas, Reporting and 

recordkeeping requirements. 

By direction of the Commission. 

( S E A L ) 

 Magalie R. Salas, 

 Secretary. 
Docket No. RM06-10-000 - 35 - 

 In consideration of the foregoing, the Commission proposes to amend Part 292, 

Chapter I, Title 18, Code of Federal Regulations, as follows 

* * * * * 

PART 292 – REGULATIONS UNDER SECTIONS 201 AND 210 OF THE PUBLIC 

UTILITY REGULATORY POLICIES ACT OF 1978 WITH REGARD TO 

SMALL POWER PRODUCTION AND COGENERATION

1. The authority citation for part 292 continues to read as follows: 

 Authority: 16 U.S.C. 791a-825r, 2601-2645; 31 U.S.C. 9701; 42 U.S.C. 7101-7352. 

2. Section 292.303 is revised to read: 

§ 292.303 Electric utility obligations under this subpart.

 (a) Obligation to purchase from qualifying facilities. Each electric utility shall 

purchase, in accordance with § 292.304 of this chapter, unless exempted by § 292.309 of 

this chapter, any energy and capacity which is generated from a qualifying facility 

(1) Directly to the electric utility; or 

(2) Indirectly to the electric utility in accordance with paragraph (d) of this section. 

 (b) Obligation to sell to qualifying facilities. Each electric utility shall sell to any 

qualifying facility, in accordance with § 292.305of this chapter, unless exempted by 

§ 292.312 of this chapter, energy and capacity requested by the qualifying facility. 

* * * * * 
Docket No. RM06-10-000 - 36 - 

3. Sections 292.309 through 292.314 are added to read as follows: 

§ 292.309 Termination of obligation to purchase from qualifying facilities. 

 (a) An electric utility shall no longer be required to enter into a new contract or 

obligation to purchase electric energy from a qualifying cogeneration facility or a 

qualifying small power production facility if the Commission finds that the qualifying 

cogeneration facility or qualifying small power production facility has nondiscriminatory 

access to: 

 (1)(i) Independently administered, auction-based day ahead and real time 

wholesale markets for the sale of electric energy; and 

 (ii) Wholesale markets for long-term sales of capacity and electric energy; or 

 (2)(i) Transmission and interconnection services that are provided by a 

Commission-approved regional transmission entity and administered pursuant to an open 

access transmission tariff that affords nondiscriminatory treatment to all customers; and 

 (ii) Competitive wholesale markets that provide a meaningful opportunity to sell 

capacity, including long-term and short-term sales, and electric energy, including longterm, short-term and real-time sales, to buyers other than the utility to which the 

qualifying facility is interconnected; in determining whether a meaningful opportunity to 

sell exists within the meaning of § 309(a)(2)(ii), the Commission shall consider, among 

other factors, evidence of transactions within the relevant market; or 

 (3) Wholesale markets for the sale of capacity and electric energy that are, at a 
Docket No. RM06-10-000 - 37 - 

minimum, of comparable competitive quality as markets described in paragraphs (a)(1) 

and (a)(2) of this section. 

 (b) Definitions

 (1) For purposes of this section, an “existing qualifying cogeneration facility” is a 

facility that 

 (i) Was a qualifying cogeneration facility before or on August 8, 2005; or 

 (ii) Had filed with the Commission a notice of self-certification, selfrecertification or an application for Commission certification under § 292.207 prior to 

[insert the date the Commission issues a final rule]. 

 (2) For the purposes of this section, a “new qualifying cogeneration facility” is a 

facility that satisfies the criteria for qualifying cogeneration facilities under § 292.205 of 

this chapter. 

 (3) For the purposes of this section, a renewal of a contract that expires by its own 

terms is a “new contract or obligation.” 

 (c) For the purposes of this section, there is a rebuttable presumption that there is 

“non-discriminatory access” to wholesale markets when a qualifying facility is provided 

transmission services pursuant to a Commission-approved open access transmission tariff 

or reciprocity tariff, and interconnection services pursuant to Commission-approved 

interconnection rules. 

 (d) No electric utility shall be required to enter into a new contract or obligation to 

purchase from or sell electric energy to a facility that is not an existing qualifying 
Docket No. RM06-10-000 - 38 - 

cogeneration facility unless the facility meets the criteria for new qualifying cogeneration 

facilities established by the Commission in § 292.205 of this chapter.

§ 292.310 Procedures for utilities requesting termination of obligation to purchase from 

qualifying facilities.

 (a) Any electric utility may file an application with the Commission for relief from 

the mandatory purchase obligation in § 292.303(a) of this chapter pursuant to this section 

on a service territory-wide basis. Such application shall set forth the factual basis upon 

which relief is requested and describe why the conditions set forth in § 292.309(a)(1), (2) 

or (3) of this chapter have been met. After notice, including sufficient notice to 

potentially affected qualifying cogeneration facilities and qualifying small power 

production facilities, and an opportunity for comment, the Commission shall make a final 

determination within 90 days of such application regarding whether the conditions set 

forth in § 292.309(a)(1), (2) or (3) of this section have been met; provided, however, that 

if the Commission has made a determination pursuant to notice and comment rulemaking 

or order that a particular market meets the criteria for relief in § 292.309(a)(1), (2) or (3), 

an applicant may make a ministerial application under this section and the application 

will be treated as a compliance filing. 

 (b) Sufficient notice shall mean that an electric utility must identify with names 

and addresses all potentially affected qualifying facilities in an application filed pursuant 

to paragraph (a). 

 (c) All potentially affected qualifying facilities shall include: 
Docket No. RM06-10-000 - 39 - 

 (1) Those qualifying facilities that have existing power purchase contracts with the 

applicant; 

 (2) Other qualifying facilities that sell their output to the applicant or that have 

pending self-certification or Commission certification with the Commission for 

qualifying facility status whereby the applicant will be the purchaser of the qualifying 

facility’s output; 

 (3) Any developer of generating facilities with whom the applicant has agreed to 

enter into power purchase contracts or are in discussion with regard to power purchase 

contacts; 

 (4) The developers of facilities that have pending state avoided cost proceedings; 

and 

 (5) Any other qualifying facilities that the applicant reasonably believes to be 

affected by its application filed pursuant to paragraph (a). 

§ 292.311 Reinstatement of obligation to purchase. 

 At any time after the Commission makes a finding under § 292.310 of this chapter 

relieving an electric utility of its obligation to purchase electric energy, a qualifying 

cogeneration facility, a qualifying small power production facility, a State agency, or any 

other affected person may apply to the Commission for an order reinstating the electric 

utility's obligation to purchase electric energy under this section, if there has been a 

change in the conditions upon which the Commission based its finding. Such application 

shall set forth the factual basis upon which the application is based and describe why the 
Docket No. RM06-10-000 - 40 - 

conditions set forth in § 292.309 (a)(1), (2) or (3) of this chapter are no longer met. After 

notice, including sufficient notice to potentially affected utilities, and opportunity for 

comment, the Commission shall issue an order within 90 days of such application 

reinstating the electric utility's obligation to purchase electric energy under this section if 

the Commission finds that the conditions set forth in § 292.309 (a)(1), (2), or (3) of this 

chapter which relieved the obligation to purchase, are no longer met. 

§ 292.312 Procedures for utilities requesting termination of obligation to sell to 

qualifying facilities. 

(a) An electric utility shall not be required to enter into a new contract or 

obligation to sell electric energy to a qualifying small power production facility, an 

existing qualifying cogeneration qualifying facility, or a new qualifying cogeneration 

facility if the Commission has found that: 

(1) Competing retail electric suppliers are willing and able to sell and deliver 

electric energy to the qualifying cogeneration facility or qualifying small power 

production facility; and 

(2) The electric utility is not required by State law to sell electric energy in its 

service territory. 

(b) Any electric utility may file an application with this Commission for relief 

from the mandatory obligation to sell under this paragraph on a service territory-wide 

basis or a single qualifying facility basis. Such application shall set forth the factual basis 

upon which relief is requested and describe why the conditions set forth in paragraphs 
Docket No. RM06-10-000 - 41 - 

(a)(1) and (a)(2) of this section have been met. After notice, including sufficient notice to 

potentially affected qualifying facilities, and an opportunity for comment, the 

Commission shall make a final determination within 90 days of such application 

regarding whether the conditions set forth in paragraphs (a)(1) and (a)(2) of this section 

have been met. 

§ 292.313 Reinstatement of obligation to sell. 

 At any time after the Commission makes a finding under § 292.312 of this chapter 

relieving an electric utility of its obligation to sell electric energy, a qualifying 

cogeneration facility, a qualifying small power production facility, a State agency, or any 

other affected person may apply to the Commission for an order reinstating the electric 

utility’s obligation to sell electric energy under this section, if there has been a change in 

the conditions upon which the Commission based its finding. Such application shall set 

forth the factual basis upon which the application is based and describe why the 

conditions set forth in § 292.312 (a)(1) and (a)(2i) of this chapter are no longer met. 

After notice, including sufficient notice to potentially affected utilities, and opportunity 

for comment, the Commission shall issue an order within 90 days of such application 

reinstating the electric utility’s obligation to sell electric energy under this section if the 

Commission finds that the conditions set forth in § 292.312 (a)(1) and (a)(2) of this 

chapter are no longer met. 

§ 292.314 Existing rights and remedies

 Nothing in this §§292.303 through 292.314 of this chapter affects the rights or 
Docket No. RM06-10-000 - 42 - 

remedies of any party under any contract or obligation, in effect or pending approval 

before the appropriate State regulatory authority or non-regulated electric utility on or 

before August 8, 2005, to purchase electric energy or capacity from or to sell electric 

energy or capacity to a qualifying cogeneration facility or qualifying small power 

production facility (including the right to recover costs of purchasing electric energy or 

capacity).