[Federal Register Volume 72, Number 153 (Thursday, August 9, 2007)]
[Notices]
[Pages 44910-44913]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-15563]


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TENNESSEE VALLEY AUTHORITY


Notice of Determinations on the PURPA Standards Set Forth in the 
Energy Policy Act of 2005

SUMMARY: At its meeting on August 1, 2007, in Knoxville, Tennessee, the 
TVA Board made its determinations on the PURPA Standards set forth in 
the Public Utility Regulatory Policies Act of 1978 (Pub. L. 95-617) as 
amended by the Energy Policy Act of 2005 (Pub. L. 109-58) (EPAct 2005). 
The standards considered are listed in subsections 111(d)(11)-(14) of 
PURPA as amended by EPAct 2005. The TVA Board considered the standards 
in accordance with PURPA and the objectives and requirements of the 
Tennessee Valley Authority Act of 1933 (TVA Act), 48 Stat. 58, as 
amended, 16 U.S.C. 831-831dd (2007).

FOR FURTHER INFORMATION CONTACT: Carl Seigenthaler, Tennessee Valley 
Authority, 1 Century Place, 26 Century Boulevard, Nashville, TN 37214, 
(615) 232-6629.

SUPPLEMENTARY INFORMATION: The Public Utility Regulatory Policies Act 
of 1978 (Pub. L. 95-617) (PURPA), as amended by the Energy Policy Act 
of 2005 (Pub. L. 109-58) (EPAct 2005), requires TVA to consider 
adopting for itself and the distributors of TVA power five new PURPA 
standards. These five standards are identified as Net Metering, Fuel 
Sources, Fossil Fuel Generation Efficiency, Time-based Metering and 
Communications (or Smart Metering), and Interconnection. The TVA Board 
was charged with considering and making determinations on whether or 
not it is appropriate to implement each standard.
    Data, views, and comments were requested from the public as to the 
need and desirability of adopting the standards. Open house 
informational sessions were conducted at 5 locations throughout the 
Valley. In addition to posting notices in the Federal Register on 
August 17, 2006 (71 FR 475567), and January 22, 2007 (72 FR 2721) , 
which described the standards and solicited public input on the 
standards, TVA also provided a PURPA Web site (http://www.tva.com/purpa) for purposes of educating the public on the standards and 
soliciting public input. All public input received on the standards was 
submitted to the official record and made available to the public 
through the Web site.
    TVA's process for considering and making determinations on the new 
PURPA standards was carried out pursuant to the provisions of (a) 
PURPA, under which TVA is identified

[[Page 44911]]

as the regulatory authority for electric utilities over which TVA has 
ratemaking authority, and (b) the TVA Act. After consideration of the 
comments and materials received, TVA staff developed recommendations on 
each of the standards. These staff recommendations also were made a 
part of the official record and made available to the public through 
the Web site.
    The TVA Board considered these standards on the basis of the PURPA 
purposes, which are the (1) conservation of energy, (2) efficient use 
of facilities and resources, and (3) equity among electric consumers, 
and the objectives and requirements of the TVA Act. In addition, the 
Smart Metering standard was considered in light of whether the benefits 
to the electric utility and its consumers were likely to exceed the 
costs of new metering and communications. The Board took into account 
these considerations as well as the official record developed during 
the consideration process in reaching the determinations below.
    The Board's determinations follow.

Standard 11: Net Metering

I. Standard Under Consideration

    Each electric utility shall make available upon request net 
metering service to any electric consumer that the electric utility 
serves. For purposes of this paragraph, the term ``net metering 
service'' means service to an electric consumer under which electric 
energy generated by that electric consumer from an eligible on-site 
generating facility and delivered to the local distribution facilities 
may be used to offset electric energy provided by the electric utility 
to the electric consumer during the applicable billing period.

II. Observations

    In fiscal year 2003, TVA initiated the Generation Partners[reg] 
pilot program as a response to requests for a net metering program in 
the TVA service area. After consultation with the Tennessee Valley 
Public Power Association (TVPPA) and individual power distributors, TVA 
adopted a dual-meter design under which TVA buys all electricity from 
eligible consumer-owned renewable generation systems primarily for the 
Green Power Switch[reg] program. All output of the generator is 
purchased, and usage by the consumer is billed at the applicable retail 
rate by the power distributor. Upon adoption of a Net Metering 
standard, TVA would phaseout the Generation Partners pilot program and 
offer a program based on the adopted standard.
    The primary issues raised with regard to this standard are safety 
and pricing. The safety requirements of the current Generation Partners 
design were developed with the input of power distributor advisors and 
have been well received by participating power distributors. However, 
some installers and renewable energy advocates view these requirements 
as unnecessarily expensive and overly redundant. Going forward, TVA 
will work with renewable energy advocates, contractors, and power 
distributors in an effort to modify the installation guidelines to 
reduce cost while continuing to maintain adequate safety.
    The second issue is the price per kWh that TVA pays for the 
generation. The current purchase price under the Generation Partners 
pilot program is $0.15/kWh, which TVA established as a premium price 
guaranteed for ten years for the pilot program to promote and acquire 
onsite, renewable generation. For a Net Metering program, TVA staff 
(supported by TVPPA) is recommending that new customers be paid at a 
rate equal to the Green Power Switch[supreg] sales rate, which is 
approximately $0.10/kWh. Rather than a price based on operational 
economics, the Southern Alliance for Clean Energy advocates a higher 
purchase price, which it sees as more consistent with TVA's Strategic 
Plan that supports renewable energy.
    Additionally, TVA's full-requirements contractual arrangements with 
its individual power distributors make a power distributor's purchase 
of electricity from a supplier other than TVA problematic. Accordingly, 
a dual-metering program with continued purchase by TVA at a uniform 
price is most appropriate and desirable in the TVA region.

III. Determination by the TVA Board

    The standard under consideration is revised and adopted as follows:
    TVA will make available to distributors of TVA power upon request 
the option to participate in a dual-metering purchase program modeled 
after TVA's current Generation Partners pilot program. Under this dual-
metering purchase program, TVA will purchase all electric energy 
generated by an electric consumer from an eligible on-site generating 
facility and delivered to the local distribution facilities, and 
accordingly, two meters will be used to separately measure electricity 
usage and electricity production.

Standard 12: Fuel Sources

I. Standard Under Consideration

    Each electric utility shall develop a plan to minimize dependence 
on one fuel source and to ensure that the electric energy it sells to 
consumers is generated using a diverse range of fuels and technologies, 
including renewable technologies.

II. Observations

    TVA's current resource planning process determines the proper mix 
of supply and demand side resources to achieve an optimal capacity and 
generation portfolio. In order to meet its growing load and reserve 
requirements, TVA must construct, purchase, or acquire capacity. 
Numerous proven technologies and diverse fuel resources, including 
renewable technologies, are considered in TVA's capacity and generation 
expansion alternatives. Detailed least-cost, risk-adjusted operational 
and financial analyses are performed to determine the most optimal 
expansion portfolio. Fuel and technology diversity, regulatory 
developments, and prospective current asset retirements, additions, and 
changes are also considered. Accordingly, TVA's current resource 
planning process satisfies the Fuel Sources Standard regarding 
maintaining fuel diversity and is examined regularly to ensure that it 
continues to maintain fuel diversity.

III. Determination by the TVA Board

    The standard under consideration is adopted as written.

Standard 13: Fossil Fuel Generation Efficiency

I. Standard Under Consideration

    Each electric utility shall develop and implement a 10-year plan to 
increase the efficiency of its fossil fuel generation.

II. Observations

    As a part of TVA's ongoing efforts to improve the operations of its 
fossil fuel generation, efforts are under way to maintain and improve 
the efficiency of its heat rate at several facilities. Heat rate 
improvements come in the form of eliminating thermal losses (steam 
leaks, missing or damaged insulation, turbine wear, etc.) and 
identifying opportunities to install more energy efficient equipment 
(primarily improved turbine-generator components.) Fossil fuel plants 
with significant deviations from their expected heat rates have begun 
programs to systematically troubleshoot plant equipment to identify and 
eliminate losses. Methods are being

[[Page 44912]]

standardized through a collaboration of TVA fossil fuel plant 
engineering managers to share and implement projects throughout TVA 
that have been demonstrated to be successful at specific plants.
    The evolution of efficiency-improving technology, the current plan 
for deployment of additional clean air equipment, and the potential for 
significant regulatory increases, however, make it impractical and 
inappropriate to implement a 10-year plan for fossil fuel generation 
efficiency. The Fossil Fuel Generation Efficiency Standard otherwise 
provides for sound business practices.

III. Determination by the TVA Board

    The standard under consideration is revised and adopted as follows:
    TVA shall develop and implement a 5-year plan to increase the 
efficiency of its fossil fuel generation.

Standard 14: Time-Based Metering and Communication

I. Standard Under Consideration

    (A) Not later than 18 months after August 8, 2005, each electric 
utility shall offer each of its customer classes, and provide 
individual customers upon customer request, a time-based rate schedule 
under which the rate charged by the electric utility varies during 
different time periods and reflects the variance, if any, in the 
utility's costs of generating and purchasing electricity at the 
wholesale level. The time-based rate schedule shall enable the electric 
consumer to manage energy use and cost through advanced metering and 
communications technology.
    (B) The types of time-based rate schedules that may be offered 
under the schedule referred to in subparagraph (A) include, among 
others--
    (i) Time-of-use pricing whereby electricity prices are set for a 
specific time period on an advance or forward basis, typically not 
changing more often than twice a year, based on the utility's cost of 
generating and/or purchasing such electricity at the wholesale level 
for the benefit of the consumer. Prices paid for energy consumed during 
these periods shall be pre-established and known to consumers in 
advance of such consumption, allowing them to vary their demand and 
usage in response to such prices and manage their energy costs by 
shifting usage to a lower cost period or reducing their consumption 
overall;
    (ii) Critical peak pricing whereby time-of-use prices are in effect 
except for certain peak days, when prices may reflect the costs of 
generating and/or purchasing electricity at the wholesale level and 
when consumers may receive additional discounts for reducing peak 
period energy consumption;
    (iii) Real-time pricing whereby electricity prices are set for a 
specific time period on an advanced or forward basis, reflecting the 
utility's cost of generating and/or purchasing electricity at the 
wholesale level, and may change as often as hourly; and
    (iv) Credits for consumers with large loads who enter into pre-
established peak load reduction agreements that reduce a utility's 
planned capacity obligations.
    (C) Each electric utility subject to subparagraph (A) shall provide 
each customer requesting a time-based rate with a time-based meter 
capable of enabling the utility and customer to offer and receive such 
rate, respectively,
    (D) For purposes of implementing this paragraph, any reference 
contained in this section to the date of enactment of the Public 
Utility Regulatory Policies Act of 1978 shall be deemed to be a 
reference to August 8, 2005.
    (E) In a State that permits third-party marketers to sell electric 
energy to retail electric consumer, such consumers shall be entitled to 
receive the same time-based metering and communications device and 
service as a retail electric consumer of the electric utility.
    (F) Notwithstanding subsections (b) and (c) of 16 U.S.C. 2622, each 
State regulatory authority shall, not later than 18 months after August 
8, 2005, conduct an investigation in accordance with 16 U.S.C. 2625(i) 
and issue a decision whether it is appropriate to implement the 
standards set out in subparagraphs (A) and (C).

II. Observations

    At the present time, TVA and the distributors of TVA power 
generally serve customers at ``flat'' (non-time differentiated) rates. 
An optional time-of-day rate for large customers (greater than 5,000 
kW) is offered upon request. Customer participation is currently very 
low.
    The Smart Metering Standard consists of the implementation of two 
components--the time-based rate structure and the installation of 
advanced metering and communications technology. The objective of the 
standard is to provide the consumer with the capability to manage 
energy usage. The standard does not mandate a particular type of time-
based rate structure, but it does suggest several alternatives that 
could be considered. Additionally, this standard recognizes the need 
for utilities to assess the costs and benefits to the system.
    The benefits to TVA of expanding the application of time-based 
rates include the benefits to the TVA region from prices reflecting 
more accurately the actual cost of power. Some of the benefits come 
from the savings to the customers when they respond to time-based 
pricing structures. Other benefits can come on the supply side, where 
customer response can help reduce the need for generation transmission 
capacity and for fuel, which can help reduce environmental emissions.
    TVA has surveyed other utilities that have implemented rates and 
programs like those in the Smart Metering Standard. TVA is also 
currently pursuing a critical peak pricing pilot program approved by 
the Board. Further, TVA is open to market tests of other time-based 
rate structures that TVA and distributors may want to investigate.
    However, because of the importance of working with the distributors 
of TVA power to test certain time-based rate structures to determine 
their effectiveness in the TVA region and because the wholesale power 
contract between TVA and the distributors sets forth a rate change 
process that governs the process by which a change in the current rate 
structure may be implemented, TVA has committed to its distributors 
that it will abide by these provisions in considering any change in 
rate structure based on the determination of this standard. 
Accordingly, only by taking this process into account is it appropriate 
to implement this standard.

III. Determination by the TVA Board

    The standard under consideration is revised and adopted as follows:
    TVA will initiate a rate change in accordance with the provisions 
of its wholesale power contract with the distributors of TVA power to 
assess in detail (1) the benefits and cost of implementing a mandatory 
time-based rate schedule for large retail customers, under which the 
retail rates reflect seasonal and time-of-day variations in the costs 
of generating and purchasing electricity, (2) the benefits and cost of 
implementing advanced metering and communications technology to help 
the electric consumer manage energy use and costs, and (3) other 
factors affecting the implementation of such structures as soon as 
feasible.

Standard 15: Interconnection

I. Standard Under Consideration

    Each electric utility shall make available, upon request, 
interconnection service to any electric consumer that the

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electric utility serves. For purposes of this paragraph, the term 
``interconnection service'' means service to an electric consumer under 
which an on-site generating facility on the consumer's premises shall 
be connected to the local distribution facilities. Interconnection 
services shall be offered based upon the standards developed by the 
Institute of Electrical and Electronics Engineers: IEEE Standard 1547 
for Interconnecting Distributed Resources with Electric Power Systems, 
as they may be amended from time to time. In addition, agreements and 
procedures shall be established whereby the services offered shall 
promote current best practices of interconnection for distributed 
generation, including but not limited to practices stipulated in model 
codes adopted by associations of state regulatory agencies. All such 
agreements and procedures shall be just and reasonable, and not unduly 
discriminatory or preferential.

II. Observations

    Under the intent of the Interconnection Standard interconnection 
services are to be offered by utilities based upon certain industry 
standards and procedures established whereby the services offered shall 
promote current best practices of interconnection for distributed 
generation. TVA has developed procedures and provides interconnection 
service for generators with output of greater than 20 MW. TVA staff has 
developed procedures and plans to provide, upon request, 
interconnection service for generators of 20 MW or less. Since 
generators of 20 MW or less are more likely to connect to a 
distributor's system than TVA's transmission system, each distributor 
will need to implement comparable procedures and interconnection 
service addressing distributor-specific requirements. TVA will work 
with distributors in developing and implementing such comparable 
procedures. Accordingly, it is appropriate at this time to implement 
the Interconnection Standard with modifications.

III. Determination by the TVA Board

    The standard under consideration is revised and adopted as follows:
    TVA shall make available, upon request, interconnection service for 
generators with output of 20 MW or less to any electric consumer that 
it serves. For purposes of this paragraph, the term ``interconnection 
service'' means service to an electric consumer under which an on-site 
generating facility on the consumer's premises shall be connected to 
the local distribution facilities.
    TVA shall make such interconnection service available based upon 
codes and standards to be specified in small generator interconnection 
procedures, which procedures shall include the standards developed by 
the Institute of Electric and Electronics Engineers: IEEE Standard 1547 
for Interconnecting Distributed Resources with Electric Power Systems, 
as they may be amended from time to time.
    Power distributors served by TVA shall also make available, upon 
request, such small generator interconnection services to any electric 
consumers that the power distributor serves. In providing such service, 
the power distributor may at its option adopt procedures comparable to 
the TVA procedures discussed above, or other, comparable procedures 
which address distributor-specific safety, reliability, operating, and 
cost-recovery requirements.
    In addition, agreements and procedures shall be established whereby 
such interconnection services offered by TVA and the distributors of 
TVA power shall promote current best practices of interconnection for 
distributed generation. All such agreements and procedures shall be 
just and reasonable, and not unduly discriminatory or preferential.

    Dated: August 2, 2007.
Maureen H. Dunn,
Executive Vice President & General Counsel.
[FR Doc. E7-15563 Filed 8-8-07; 8:45 am]
BILLING CODE 8120-08-P