[Federal Register Volume 62, Number 111 (Tuesday, June 10, 1997)]
[Proposed Rules]
[Pages 31524-31526]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-15106]


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DEPARTMENT OF ENERGY

Office of Energy Efficiency and Renewable Energy

10 CFR Part 451

[Docket No. EE-NOI-97-301]


Renewable Energy Production Incentive Program

AGENCY: Department of Energy.

ACTION: Notice of Inquiry and public meeting and request for public 
comment.

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SUMMARY: The Department of Energy (DOE) is publishing this Notice of 
Inquiry (NOI) to obtain information on possible changes to the 
Renewable Energy Production Incentive (REPI) program that will improve 
its

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effectiveness as a financial incentive for the development of new 
qualifying renewable energy generation facilities.

DATES: Written comments (7 copies) will be considered if received at 
the address provided below no later than July 31, 1997. A public 
meeting will be held on July 15, 1997, beginning at 9:30 a.m., at the 
address listed below. Requests to speak must by received by the 
Department on or before July 11, 1997.

ADDRESSES: All written comments (7 copies) as well as requests to speak 
at the public meeting are to be submitted to: U.S. Department of 
Energy, Office of Energy Efficiency and Renewable Energy, EE-10, Docket 
No. EE-NOI-97-301, 1000 Independence Avenue, SW., Washington, DC 20585, 
(202) 586-3012. FAX comments will not be accepted. The comment and the 
envelope in which the required number of copies is mailed should be 
marked ``Notice of Inquiry, Docket EE-NOI-97-301.'' The public meeting 
will be held at U.S. Department of Energy, Forrestal Building, Room 1E-
245, 1000 Independence Avenue, SW., Washington, DC 20585. Copies of the 
transcript of the public meeting and public comments received may be 
read at the DOE Freedom of Information Reading Room, U.S. Department of 
Energy, Forrestal Building, Room 1E-190, 1000 Independence Avenue, SW., 
Washington, DC 20585, (202) 586-6020, between the hours of 9 a.m. and 4 
p.m., Monday through Friday, except Federal holidays.

FOR FURTHER INFORMATION CONTACT: Robert H. Brewer, Office of Energy 
Efficiency and Renewable Energy, EE-10, U.S. Department of Energy, 1000 
Independence Avenue, SW., Room 5H-021, Washington, DC 20585, (202) 586-
2206. For information concerning the public meeting and submission of 
comments, contact Andi Kasarsky, (202) 586-3012.

SUPPLEMENTARY INFORMATION:

Background

    In this NOI, the DOE requests information on possible changes to 
the REPI program to improve its incentive value. The REPI program, 
which was established by the Energy Policy Act of 1992, is designed to 
provide a 10-year production incentive payment of 1.5 cents per 
kilowatt-hour (kWh), adjusted for inflation and subject to the 
availability of annual appropriations, to States or subdivisions of 
States or non-profit electric cooperatives, herein referred to as 
public power organizations, that own new or newly converted qualifying 
renewable energy generation facilities. Since the incentive payments 
depend on the availability of annual appropriations, potential owners 
of qualifying renewable energy facilities are uncertain that future 
production incentive payments will be made. This uncertainty reduces 
the incentive value of the production incentive payments when decisions 
are being made concerning development of new renewable energy 
generation facilities.
    To implement the REPI program, the Department issued a proposed 
rule on May 13, 1994 (59 FR 24982), and published a final rule on July 
19, 1995 (60 FR 36959). This process has resulted in regulations 
codified at 10 CFR Part 451 (1997), which govern the implementation of 
the REPI program. In accordance with these regulations, the Department 
makes determinations on the eligibility of owners and facilities 
concerning incentive payments. The Department also reviews qualified 
applicants' annual submissions of net electricity produced from 
qualified facilities. Annual payments are made for this electric 
production, subject to the availability of annual appropriations. If 
there are insufficient appropriations to make full incentive payments, 
some or all applicants may receive either no payment or payment for 
only a portion of the net electricity produced by their facility, with 
the remainder designated as (unpaid) accrued energy. An applicant may 
submit a request for payment based on accrued energy in subsequent 
years within the allowed ten-fiscal year period for that facility.
    Congressional appropriations have been sufficient to fully pay 
production incentives for net electricity produced by qualified 
facilities in fiscal year 1994 (payments of $693,120) and in fiscal 
year 1995 (payments of $2,398,472). Based on a review of applications 
for net electricity produced in fiscal year 1996, appropriations are 
insufficient to fully pay all qualifying applicants for the net 
electricity that their facility produced ($2,490,893 is available for 
these payments). When appropriated funds are insufficient to fully pay 
all qualified applicants, a two-tier payment process, as described in 
10 CFR Section 451.9(e) (1997), is used. Applications for payment have 
grown from seven for fiscal year 1994 production to eleven for fiscal 
year 1995 production to eighteen for fiscal year 1996 production.
    The intended purpose of the REPI program is to provide a 10-year 
production incentive payment to public power organizations that would 
be fully considered in their decision to potentially select an eligible 
type of renewable energy generation system. However, public comment and 
subsequent stakeholder feedback reveal that the REPI production 
incentive payments are either not valued or are undervalued during the 
decision-making process, since they are dependent upon annual 
appropriations. The following excerpt is from the discussion of 
comments in the final rule for the REPI program: ``Several of the 
commenters who recommended a 10-year escrow account argued that 
potential investors in new renewable energy facilities are unlikely to 
take account of payments under this program in assessing an investment 
without assurances, at the time of investment, that the full schedule 
of payments would be made. DOE believes this argument has merit. 
However, additional work by DOE and its stakeholders is needed to 
develop a payout approach that will maximize the effectiveness of the 
program as an incentive for promoting incremental investment in new 
renewable energy facilities. DOE intends to publish a notice in the 
near future that invites suggestions from interested persons regarding 
possible program modifications, including possible statutory or 
regulatory changes, that can increase the incentive value of this 
effort.'' 60 FR 36963 (1995). This NOI is that notice.
    Representatives of public power organizations have stated that an 
effective REPI program can become the single most important incentive 
mechanism available to them for encouraging investment in new renewable 
energy generation facilities. Various commenters have suggested a few 
options that they believe would lead to the full valuation of the 10-
year REPI production incentive payments in the decisions by public 
power organizations to acquire and operate new renewable energy 
generation facilities. These suggested changes would require either 
regulatory or statutory change. One suggestion, which would require 
changing the existing regulations, is the use of annual REPI 
appropriations to establish a ``10-year escrow account'' to fully fund 
the incentive payments for the estimated amount of net generation over 
the eligible ten-year period. Because of the ten-year commitment, fewer 
qualified facilities would receive funding for a given year's 
appropriation, which might necessitate a prioritization procedure to 
fully fund qualified facilities. Possible priority procedures for 
funding qualified facilities could be based on either the facility 
startup date or the date an application for the facility is received. 
Another suggestion, which would require statutory change, is the

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establishment of a trust fund account for REPI payments that would be 
funded by accelerated appropriations, other revenue sources (such as a 
line charge or wire charge), or a combination of both. The third 
suggestion, which would also require statutory change, is to allow 
public power entities to pass on the incentive payment over the 10-year 
payment period as a tax credit to customers who agree to purchase, 
potentially under a separate rate schedule, the electricity from a 
qualified renewable energy facility. In this NOI, DOE seeks comment on 
these options and other appropriate options that may improve the 
incentive value of the REPI program.

Issues for Public Comment

    With respect to potential changes to the REPI program that would 
enhance the incentive effect of REPI payments in the decision-making of 
public power organizations concerning development of new renewable 
energy generation facilities, DOE seeks the following information:
    (1) Recommendations regarding changes to the REPI program that 
would enhance the value of the production incentive payments in 
development decisions. Please specify what regulatory or statutory 
changes, if any, would be required for each recommendation.
    (2) Discussion of how these changes would enhance the value of 
production incentive payments in development decisions.
    (3) To the extent meaningful information can be provided, estimates 
of the amount of additional renewable energy generation (in megawatts 
capacity installed) that might begin operation by September 30, 2003, 
if these recommended changes are implemented.

Opportunities for Public Comment

A. Written Comment Procedures

    Interested persons are invited to respond to this notice by 
submitting their ideas and views concerning options for modifying the 
REPI program so that the full value of its 10-year production incentive 
payments is considered in the decisions by public power organizations 
to acquire and operate new renewable energy generation facilities. 
Seven copies of each comment should be submitted to the Office of 
Energy Efficiency and Renewable Energy in compliance with the 
instructions set forth above in the Dates and Addresses section of this 
notice.

B. Public Meeting

    A public meeting on the NOI will be held at the time and place 
indicated in the DATES and ADDRESSES Section of this notice. To request 
an opportunity to speak at the public meeting, please use the phone 
number indicated at the beginning of this notice. The person should 
provide a phone number where he or she may be reached during the day. 
Each potential speaker will be notified by DOE as to the approximate 
time they will be speaking. Seven copies of the speaker's statement 
should be submitted at the beginning of the meeting. In the event any 
person wishing to speak cannot meet this requirement, alternative 
arrangements can be made in advance with DOE.
    A transcript of the meeting will be made by DOE. It will be on file 
for inspection at the DOE Freedom of Information Reading Room at the 
address indicated at the beginning of this notice.
    If DOE must cancel the public meeting, DOE will make every effort 
to publish an advance notice of such cancellation in the Federal 
Register. Actual notice of cancellation will also be given to all 
persons scheduled to speak. The meeting date may be canceled in the 
event no member of the public requests the opportunity to make an oral 
presentation.

    Issued in Washington, DC, on June 4, 1997.
Joseph J. Romm,
Acting Assistant Secretary, Energy Efficiency and Renewable Energy.
[FR Doc. 97-15106 Filed 6-9-97; 8:45 am]
BILLING CODE 6450-01-P