[Federal Register Volume 62, Number 128 (Thursday, July 3, 1997)]
[Proposed Rules]
[Pages 36025-36027]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-17347]


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DEPARTMENT OF ENERGY

Office of Energy Efficiency and Renewable Energy

10 CFR Part 451


Renewable Energy Production Incentives

AGENCY: Office of Energy Efficiency and Renewable Energy, DOE

ACTION: Interpretations and request for comments.

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SUMMARY: The Office of Energy Efficiency and Renewable Energy in the 
Department of Energy today is publishing ``Questions and Answers 
Regarding Renewable Energy Production Incentives,'' to provide 
clarification to owners or operators of renewable energy facilities who 
would like to apply for renewable production incentive payments. The 
intent of these Questions and Answers is to assist applicants and 
potential applicants in their understanding of requirements that must 
be met to receive incentive payments under the program and of program 
procedures.

DATES: Public comment is invited on a continuing basis.

ADDRESSES: Questions and comments may be sent to James Spaeth, U.S. 
Department of Energy, Golden Field Office, 1617 Cole Boulevard, Golden, 
CO 80401.

FOR FURTHER INFORMATION CONTACT: James Spaeth, U.S. Department of 
Energy, Golden Field Office, 1617 Cole Boulevard, Golden, CO 80401, 
(303) 275-4706.

SUPPLEMENTARY INFORMATION:

Background

    Section 1212 of the Energy Policy Act of 1992, 42 U.S.C. 13317, 
requires the Department of Energy (DOE), subject to the availability of 
appropriations, to make incentive payments to the owners or operators 
of qualified renewable energy facilities for the production and sale of 
electric energy from certain renewable energy sources. DOE promulgated 
implementing regulations on July 19, 1995 (60 FR 36959), which 
subsequently were codified in 10 CFR Part 451. Although the renewable 
energy production incentive (REPI) program generally has operated 
smoothly, DOE staff is frequently asked questions by the public about 
eligibility for production incentives and administrative details of the 
program. DOE staff has prepared this set of Questions and Answers to 
address topics that are frequently the subject of questions, and to 
provide informal guidance on program administration to prospective 
applicants for renewable energy production incentives. DOE will revise 
the Questions and Answers from time to time if further experience under 
the program or public comments show the need for such revision.

Format of the Questions and Answers

    Questions and answers are grouped by the provision of the REPI 
regulations that they explicate and are presented in the same order as 
the regulatory provisions.
    The text of the Questions and Answers follows:

Questions and Answers Regarding Renewable Energy Production Incentives

Questions About 10 CFR 451.2  Definitions
    Q1. Who is the ``DOE Deciding Official'' responsible for acting on 
applications for REPI payments?
    A1. Section 451.2 defines ``Deciding Official'' to mean ``the 
Assistant Secretary for Energy Efficiency and Renewable Energy (or any 
DOE official to whom the authority of the Assistant Secretary may be 
redelegated by the Secretary of Energy).'' On July 26, 1996, the 
Secretary of Energy delegated the authority of the Deciding Official to 
the Manager, Golden Field Office, Golden, Colorado (Delegation Order 
No. 0204-159). This delegation places full responsibility for 
administering the REPI Program with the Golden Field Office. However, 
this delegation does not affect the non-delegable responsibility of the 
Assistant Secretary for Energy Efficiency and Renewable Energy, under 
Section 451.9(e), to determine the extent to which appropriated funds 
are available for obligation under this program for each fiscal year.
    Q2. What constitutes a ``renewable energy facility'' for purposes 
of establishing eligibility for REPI payments?
    A2. Any owner of a qualified renewable energy facility, or any 
operator of such facility with the owner's written consent, may apply 
for REPI payments for net electric energy generated for sale from a 
renewable energy source. Section 451.2 defines ``renewable energy 
facility'' to mean a

[[Page 36026]]

single module or unit, or an aggregation of such units, that generates 
electric energy which is independently metered and which results from 
the utilization of a renewable energy source. In the notice of proposed 
rulemaking for Part 451, DOE proposed defining ``renewable energy 
facility'' to mean the systems or components of facilities generating 
electricity from renewable energy sources (59 FR 24982 (May 13,1994)). 
In the preamble for that notice, DOE stated that it interpreted the 
term to include mostly equipment, and not the land on which the 
facility is located or, in the case of geothermal facilities, the 
geothermal field. In response to public comment, DOE modified the 
definition to clarify that a single module or unit of a larger facility 
(e.g., a wind turbine and its tower and supporting pad) could 
constitute a ``renewable energy facility'' under the REPI program. 
Although the list of systems or components for various types of 
renewable energy facilities was omitted in the final definition, DOE 
did not intend by that change to alter its view that ``renewable energy 
facility'' includes mostly equipment that is used to produce electric 
energy from a renewable energy source. The following guidance is 
consistent with these previous interpretations:
     DOE does not consider the land on which the facility is 
located to be part of the renewable energy facility.
     For geothermal facilities, DOE does not consider the wells 
and associated equipment normally required to extract heat energy from 
the earth to be part of the facility.
     For facilities based on closed loop biomass, agricultural 
waste, or animal waste, DOE does not consider the biomass farm or 
forest and associated growing biomass or animals to be part of the 
facility.
     For landfill gas facilities, DOE does not consider the 
landfill and the gas collection and distribution system to be part of 
the facility.
    Q3. Could a renewable energy capacity addition to an existing 
qualified facility ever constitute a separate qualified ``renewable 
energy facility''?
    A3. Yes. The definition of ``renewable energy facility'' in Section 
451.2 does not explicitly address whether a capacity addition made to a 
qualified renewable energy facility that is already generating 
electricity for sale is eligible for annual REPI payments. The 
Department will permit an owner or operator of a qualified renewable 
energy facility to submit a separate annual application for a renewable 
energy capacity addition if it meets all of the criteria in the 
definition of ``renewable energy facility,'' i.e., it consists of a 
module or unit, or aggregation of such units, that generates 
electricity which is independently metered and sold, and which results 
from the utilization of a renewable energy source. Each year's 
renewable energy capacity addition to an existing facility for which 
the owner or operator elects to submit a separate application will be 
allowed a 10-year eligibility period for REPI payment. The first year 
of energy qualification for such payment will begin with the fiscal 
year in which the new capacity addition first begins to generate 
electricity for sale.
Question About 10 CFR 451.4  What is a Qualified Renewable Energy 
Facility?
    Q1. How does DOE interpret the statutory phrase ``for sale in, or 
affecting, interstate commerce'' in determining whether electricity 
generated and sold by a renewable energy facility qualifies for REPI 
payments?
    A1. Section 1212 of the Energy Policy Act requires a qualified 
renewable energy facility to generate electric energy for sale in, or 
affecting, interstate commerce (42 U.S.C. 13317(b)). DOE has 
interpreted the statutory phrase to mean that ``the net electric energy 
generated by the renewable energy facility must be sold to another 
entity for consideration.'' DOE interprets Section 451.4c to allow a 
transaction between related parties to satisfy this requirement.
Question About 10 CFR 451.5  Where and When to Apply
    Q1. Would a public utility organization planning to construct or 
acquire a renewable electric generation facility obtain any benefits 
from submitting a pre-application to DOE as provided in its rules?
    A1. Section 451.5(a)(1) creates a voluntary pre-application process 
which organizations contemplating the construction or acquisition of a 
renewable electric generation facility may use to obtain from DOE a 
written preliminary and conditional determination on: (1) whether the 
contemplated project would be eligible to receive a REPI payment and 
(2) whether the project would qualify as a facility using technologies 
as defined in Section 451.9(e)(1), that is solar, wind, geothermal, or 
closed-loop biomass technologies, or as a facility using technologies 
defined in Section 451.9(e)(2), i.e., all other qualified renewable 
energy technologies. The technology distinction is used for purposes of 
priority in receiving incentive payments if funds are not available to 
make full payments for all approved applications in any year. This 
preliminary determination can reduce uncertainty regarding project 
qualification and, if available in the early stages of decision making, 
will allow an organization to make more informed decisions. Although 
few pre-applications have been received to date, the Department 
believes the pre-application process can benefit an organization 
considering the construction or acquisition of a renewable electric 
generation facility. A pre-application may be submitted at any time and 
must contain the information described in Section 451.8 (a) through 
(e). DOE will request an organization submitting a pre-application to 
include an estimate of the facility's expected annual electricity 
generation in kilowatt-hours (kWh). The estimate will be used by DOE to 
forecast the REPI funds that would be needed if the project were 
implemented.
    Q2. Should a public utility organization which has decided to 
construct a renewable electric generation facility voluntarily notify 
DOE of its decision?
    A2. Section 451.5(a)(2) establishes a voluntary notification 
process to assist DOE in developing its annual REPI program budget 
requests. A notification is a one-time notice to the Department that a 
prospective owner or operator has decided to construct a facility. The 
notification alerts the Department that a new facility is expected to 
begin to produce energy at a future date and that the output energy is 
likely to qualify for REPI payments. The notification should include 
the information described in Section 451.8(a) through (e) and an 
estimate of the facility's expected annual electric generation in 
kilowatt-hours (kWh). Although few REPI program participants have 
provided voluntary notification, the Department encourages its use 
because the notification, together with the pre-application, will 
provide the Department a sounder basis for projecting funding 
requirements and seeking annual appropriations for the program.
Question About 10 CFR 451.6  Duration of Incentive Payments
    Q1. What constitutes the 10-year REPI payment period specified in 
the Energy Policy Act?
    A1. Consistent with section 1212 of the Energy Policy Act, Section 
451.6 states that DOE shall make incentive payments for 10 fiscal 
years, subject to the availability of appropriated funds. A REPI 
payment is made for the net generation and sale of electricity from a

[[Page 36027]]

qualified renewable energy facility that occurred in the previous 
fiscal year. The first year in which electricity is generated for sale 
from this facility and the 9 subsequent fiscal years constitute the 10 
fiscal years of net electric generation and sale that are eligible for 
a REPI payment. Another provision of the Department's regulations, 
Section 451.5(b)(3), provides that failure to file an application 
within the first quarter (October 1 through December 31) of any fiscal 
year for payment of net energy generated and sold in the prior fiscal 
year will result in the loss of eligibility for a REPI payment for 
energy generated and sold in that prior fiscal year.
Questions About 10 CFR 451.8  Application Content Requirements
    Q1. Will DOE require an applicant for REPI payments to describe the 
specific components of the renewable energy facility for which it 
requests payment?
    A1. Yes. An applicant is required to explain how it satisfies the 
requirements of a qualified renewable energy facility, and a 
``renewable energy facility'' is defined to mean a single module or 
unit, or an aggregation of such units, that generate electricity which 
is independently metered and which results from the utilization of a 
renewable energy source. The Department will require applicants to 
include, as part of the application statement, a brief description of 
the key renewable energy system components (including component 
manufacturer) used to convert the renewable resource to electricity.
    Q2. What steps must an applicant take to prepare a statement of the 
annual and monthly metered net electric energy generated and sold 
during the prior fiscal year by the qualified renewable energy 
facility?
    A2. Section 451.8(f) requires that applications contain a statement 
of the annual and monthly metered net electric energy generated and 
sold during the prior fiscal year by the qualified renewable energy 
facility for which an incentive payment is requested. To reduce the 
need for supplemental submissions, and the resulting delay in payments, 
DOE will expect applicants to follow these procedures for obtaining 
monthly and annual meter readings:
    (1) Meter readings should be taken on the last calendar day of each 
month, if feasible.
    (2) When it is not feasible to take readings on the last calendar 
day of the month, DOE will permit the use of other intervals of 
approximately 30 days, provided the applicant includes the date of each 
meter reading and the net electric energy generated and sold during the 
period between meter readings.
    (3) If a meter reading is not obtained on the first and last days 
of a fiscal year for which incentive payments are requested, the 
applicant must document the method it used to calculate the electric 
energy claimed for payment in the first and last months of that fiscal 
year.
    Q3. Can DOE make REPI payments by issuing a check to the applicant?
    A3. No. Although Section 451.8(j) includes payment by check as a 
preferred payment method, that payment option is no longer available to 
DOE. Public Law 104-134 requires that virtually all Federal payments be 
made via electronic funds transfer beginning on July 26, 1996. 
Applicants should include transfer instructions with REPI applications 
or complete OMB Form SF-3881, Automated Clearance House (ACH) Vendor/
Miscellaneous Payment Enrollment, available from the Department of 
Energy Golden Field Office.
Question About 10 CFR 451.9  Procedures for Processing Applications
    Q1. How will DOE handle applications for REPI payments if available 
appropriated funds are insufficient to make full payments for all 
approved applications for a specific year?
    A1. Section 451.9(e) contains the procedures that DOE will 
implement if available appropriated funds are insufficient to make full 
payments for all approved applications for a specific year. 
Insufficient funds may result in some qualified applicants receiving 
either no incentive payment or a partial incentive payment on a pro 
rata basis. If a qualified applicant receives no incentive payment due 
to insufficient funds, then all of the net electricity produced for 
sale in kilowatt-hours would be considered accrued energy. If a 
qualified applicant receives a partial incentive payment on a pro rata 
basis, an associated portion of the net electricity produced for sale 
in kilowatt-hours would be considered to have received a full incentive 
payment and the remainder of the net electricity produced for sale in 
kilowatt-hours would be considered to be accrued energy. For example, 
if a qualified applicant's net electric production for sale for the 
year was 1,000,000 kilowatt hours and due to insufficient funds only 80 
percent of the incentive payment could be paid on a pro rata basis, 
then 800,000 kilowatt-hours would receive a full incentive payment and 
200,000 kilowatt-hours would be considered to be accrued energy. If an 
applicant seeks an incentive payment for accrued energy in a subsequent 
year, the applicant needs to specifically request payment for this 
amount of accrued energy in the subsequent year's application. If an 
applicant fails to specifically request payment for this amount of 
accrued energy in a subsequent year's application, the accrued energy 
will not be considered for payment that year. Accrued energy 
(quantified in kilowatt-hours) that is submitted in a subsequent year's 
application will be added to and treated in the same manner as the 
subsequent year's net electricity that is being submitted by the 
applicant for an incentive payment. Using the same example, if 
1,000,000 kilowatt-hours of net electricity was also produced for sale 
in the next year by the applicant and the applicant's application also 
contained a request for an incentive payment for the 200,000 kilowatt-
hours of accrued energy from the previous year, then a total of 
1,200,000 kilowatt-hours of electricity would be considered for 
incentive payment for the applicant in the next year. Section 1212 of 
the Energy Policy Act of 1992 (42 U.S.C. 13317(d)) states that a 
qualified renewable energy facility may receive payments for a 10-
fiscal year period. This means that no REPI payments can be made for 
either net electric production or accrued energy after the annual REPI 
payment is made that applies to the tenth fiscal year of production for 
a qualified facility.

    Issued in Washington, DC, on June 25, 1997.
Joseph J. Romm,
Acting Assistant Secretary, Energy Efficiency and Renewable Energy.
[FR Doc. 97-17347 Filed 7-2-97; 8:45 am]
BILLING CODE 6450-01-P