PROPOSED RULES
COMMISSION
Original Notice.
Preproposal statement of inquiry was filed as WSR 03-09-070.
Title of Rule and Other Identifying Information: Chapter 480-107 WAC, Electric companies -- Purchases of electricity from qualifying facilities and independent power producers and purchases of electrical savings from conservation suppliers. These rules state requirements that electric companies must follow when acquiring new resources.
Hearing Location(s): Commission Hearing Room, Second Floor, Chandler Plaza, 1300 South Evergreen Park Drive S.W., Olympia, WA 98504-7250, on November 9, 2005, at 9:30 a.m.
Date of Intended Adoption: November 9, 2005.
Submit Written Comments to: Carole Washburn, Washington Utilities and Transportation Commission, P.O. Box 47250, Olympia, WA 98504-7250, e-mail records@wutc.wa.gov, fax (360) 586-1150, by October 26, 2005. Please include "Docket No. UE-030423" in your comments.
Assistance for Persons with Disabilities: Contact Mary DeYoung by November 7, 2005, TTY (360) 586-8203 or (360) 664-1133.
Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: The proposal incorporates changes to the existing rules. The chapter has been reorganized and rewritten to improve language clarity.
Affected WACs are chapter 480-107 WAC.
Reasons Supporting Proposal: The proposed rule revisions reflect current and foreseeable needs of utilities, customers, and the broader public, and support the rules' intended purpose to serve the public and to promote the well-being of the citizens of the state.
Statutory Authority for Adoption: RCW 80.01.040 and 80.04.160.
Statute Being Implemented: Not applicable.
Rule is not necessitated by federal law, federal or state court decision.
Name of Proponent: Washington Utilities and Transportation Commission, governmental.
Name of Agency Personnel Responsible for Drafting: Graciela Etchart, 1300 South Evergreen Park Drive S.W., Olympia, WA 98504, (360) 664-1310; Implementation and Enforcement: Carole Washburn, 1300 South Evergreen Park Drive S.W., Olympia, WA 98504, (360) 664-1174.
No small business economic impact statement has been prepared under chapter 19.85 RCW. The proposed corrections and changes to rules will not result in or impose an increase in costs. Because there will not be any increase in costs resulting from the proposed rule changes, a small business economic impact statement is not required under RCW 19.85.030(1).
A cost-benefit analysis is not required under RCW 34.05.328. The proposed rules are not significant legislative rules of the sort referenced in RCW 34.05.328(5).
October 5, 2005
Carole J. Washburn
Executive Secretary
OTS-8402.1
AMENDATORY SECTION(Amending Docket No. A-030832, General
Order No. R-509, filed 10/29/03, effective 11/29/03)
WAC 480-107-001
Purpose and scope.
(1) ((The purpose of
this chapter is to establish rules for determining rates,
terms, and conditions governing the following purchases by
electric utilities: Electricity from qualifying facilities;
the electrical savings associated with eligible conservation
measures pursuant to these rules; electricity from independent
power producers; and, at the utility's election, utility
subsidiaries, and other electric utilities. These rules are
intended to provide an opportunity for conservation and
generating resources to compete on a fair and reasonable basis
to fulfill a utility's new resource needs. It is the
commission's intent that bids under these rules shall include
the costs of compliance by the project with environmental
laws, rules, and regulations in effect at the time of the bid
and those reasonably anticipated to be in effect during the
term of the project.
These)) The rules in this chapter require utilities to solicit bids, rank project proposals, and identify any bidders that meet the minimum selection criteria. The rules in this chapter do not establish the sole procedures utilities must use to acquire new resources. Utilities may construct electric resources, operate conservation programs, purchase power through negotiated contracts, or take other action to satisfy their public service obligations.
(2) The rules in this chapter do not apply to utilities whose integrated resource plan, prepared pursuant to WAC 480-100-238, demonstrates that the utility does not need additional capacity within three years.
(3) The commission will consider the information obtained through these bidding procedures when it evaluates the performance of the utility in rate and other proceedings.
(4) The rules in this chapter are consistent with the
provisions of the Public Utility Regulatory Policies Act of
1978 (PURPA), Title II, sections 201 and 210, and related
regulations promulgated by the Federal Energy Regulatory
Commission (FERC) in 18 C.F.R. Part 292. To the extent of any
conflict between these rules and PURPA, or the related rules
promulgated by FERC in 18 C.F.R. Part 292, PURPA and those
related rules control. Purchase of electric power under these
rules ((shall satisfy an electric)) satisfies a utility's
obligation to purchase power from qualifying facilities under
section 210 of PURPA.
((These rules do not preclude electric utilities from
constructing electric resources, operating conservation
programs, purchasing power through negotiated purchase
contracts, or otherwise taking action to satisfy their public
service obligations. Information about the price and
availability of electric power obtained through the bidding
procedures described in these rules may be used, in
conjunction with other evidence, in general rate cases and
other cost recovery proceedings pertaining to resources not
acquired through these bidding procedures.
(2) The provisions of this chapter shall apply to any electric utility which has submitted to the commission a least-cost plan as provided in WAC 480-100-238 (Least cost planning).))
[Statutory Authority: RCW 80.01.040, 80.04.160, 81.04.160, and 34.05.353. 03-22-046 (Docket No. A-030832, General Order No. R-509), § 480-107-001, filed 10/29/03, effective 11/29/03. Statutory Authority: RCW 80.01.040 and 80.04.160. 89-15-043 (Order R-304, Docket No. U-89-2814-R), § 480-107-001, filed 7/18/89.]
(2) Any affected person may ask the commission to review the interpretation of these rules by a utility or customer by making an informal complaint under WAC 480-07-910, Informal complaints, or by filing a formal complaint under WAC 480-07-370, Pleading -- General.
(3) No exception from the provisions of any rule in this chapter is permitted without prior written authorization by the commission. Such exceptions may be granted only if consistent with the public interest, the purposes underlying regulation, and applicable statutes. Any deviation from the provisions of any rule in this chapter without prior commission authorization will be subject to penalties as provided by law.
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(2) The commission retains its authority to impose additional or different requirements on any utility in appropriate circumstances, consistent with the requirements of law.
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"Avoided costs" means the incremental costs to a utility of electric energy, electric capacity, or both, that the utility would generate itself or purchase from another source, but for purchases to be made under these rules. Avoided cost is identified as the minimum project proposal that meets the criteria specified in the request for proposal, or is estimated from data in the utility's most recent integrated resource plan.
"Back-up power" means electric energy or capacity supplied by a utility to replace energy ordinarily supplied by utility-owned generation or purchased through contracts that is unavailable due to an unscheduled outage.
"Commission" means the Washington utilities and transportation commission.
"Conservation" means any reduction in electric power consumption that results from increases in the efficiency of energy use, production, or distribution.
"Conservation supplier" means a third party supplier or utility affiliate that provides equipment or services that save capacity or energy.
"Demand side management" (DSM) means the same as "conservation."
"Economic dispatch" means, within contractually specified limits, modifying the scheduling of power purchases from a generating facility to minimize the costs of delivering electricity.
"Electrical savings contract" means the same as "conservation contract."
"Generating facilities" means plant and other equipment used to generate electricity purchased through contracts entered into under these rules.
"Independent power producers" means generating facilities or portions thereof that are not recognized in the retail rates of any electric utility and that are not qualifying facilities as defined in this section.
"Integrated resource plan" or "IRP" means the filing made every two years by a utility in accordance with WAC 480-100-238, Integrated resource planning.
"Interruptible power" means electric energy or capacity supplied to a utility by a generating facility, the availability of which may be interrupted under certain conditions.
"Long-term avoided costs" means the fixed and variable costs of electricity available from the marketplace for long-term firm electricity or from a utility acquiring its own resource, which ever is least cost.
"Maintenance power" means electric energy or capacity supplied by a utility during scheduled outages of a generating facility.
"Project developer" means an individual, association, corporation, or other legal entity that can enter into a power or conservation contract with the utility.
"Project proposal" means a project developer's document containing a description of a project and other information responsive to the requirements set forth in a request for proposal, also known as a bid.
"Qualifying facilities" means generating facilities that meet the criteria specified by the FERC in 18 C.F.R. Part 292 Subpart B.
"Request for proposals" or "RFPs" means the documents describing a utility's solicitation of bids for delivering electric capacity, energy, or capacity and energy, or conservation.
"Resource block" means the deficit of capacity and associated energy that the IRP shows for the near term.
"Short-term avoided cost" means the cost of energy available in forward markets for near-term electricity.
"Subsidiary" means any company in which the utility owns directly or indirectly five percent or more of the voting securities, and that may enter a power or conservation contract with that electric utility. A company is not a subsidiary if the utility can demonstrate that it does not control that company.
"Supplementary power" means electric energy or capacity supplied by a utility that is regularly used by a generating facility in addition to that which the facility generates itself.
"Utility" means an electric utility as defined by RCW 80.04.010. Any public service company engaged in the generation, distribution, sale, or furnishing of electricity, and that is subject to the jurisdiction of the commission.
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(a) Any owner of a generating facility, developer of a potential generating facility, or provider of energy savings may participate in the RFP process. Bidders may propose a variety of energy resources: Electrical savings associated with conservation; electricity from qualifying facilities; electricity from independent power producers; and, at the utility's election, electricity from utility subsidiaries, and other electric utilities, whether or not such electricity includes ownership of property. Qualifying facility producers with a generation capacity of one megawatt or less may choose to participate in the utilities' standard tariffs without filing a bid.
(b) A utility may allow an affiliated generating subsidiary to participate in the bidding process as a power supplier, on conditions described in WAC 480-107-135, Conditions for purchase of electrical power or savings from a utility's subsidiary or affiliated interest. Such a decision must be explained in the utility's RFP submittal.
(2) Timing of the solicitation process.
(a) A utility must submit to the commission a proposed request for proposals and accompanying documentation no later than ninety days after the utility's integrated resource plan is due to be filed with the commission. Interested persons will have sixty days from the RFP's filing date with the commission to submit written comments to the commission on the RFP. The commission will approve or suspend the RFP within thirty days after the close of the comment period.
(b) A utility must solicit bids for electric power and electrical savings within thirty days of a commission order approving the RFP.
(c) All bids will remain sealed until expiration of the solicitation period specified in the RFP.
(3) In addition to the solicitation process required by these rules, a utility may, at its own discretion, issue an RFP that limits project proposals to resources with specific characteristics. In addition, a utility, at its own discretion, may issue RFPs more frequently than required by this rule.
(4) Persons interested in receiving commission notice of a specific utility's RFP filings can request the commission to place their names on a mailing list for notification of future RFP filings by that utility.
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(2) The RFP must identify a resource block consisting of the overall amount and duration of power the utility is soliciting through the bidding process. The RFP must document that the size of the resource block is consistent with the range of estimated new resource needs identified in the utility's integrated resource plan.
(3) The RFP must explain general evaluation and ranking procedures the utility will use in accordance with WAC 480-107-035, Project ranking procedure. The RFP must also specify any minimum criteria that bidders must satisfy to be eligible for consideration in the ranking procedure.
(4) The RFP must specify the timing of process including the solicitation period, the ranking period, and the expected selection period.
(5) The RFP must identify all security requirements and the rationale for them.
(6) Utilities are encouraged to consult with commission staff during the development of the RFP. Utilities may, at their own discretion, submit draft RFPs for staff review prior to formally submitting an RFP to the commission.
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(2) At a minimum, the ranking criteria must recognize resource cost, market-volatility risks, demand-side resource uncertainties, resource dispatchability, resource effect on system operation, credit and financial risks to the utility, the risks imposed on ratepayers, public policies regarding resource preference adopted by Washington state or the federal government and environmental effects including those associated with resources that emit carbon dioxide. The ranking criteria must recognize differences in relative amounts of risk inherent among different technologies, fuel sources, financing arrangements, and contract provisions. The ranking process must complement power acquisition goals identified in the utility's integrated resource plan.
(3) After the project proposals have been opened for ranking, the utility must make available for public inspection at the utility's designated place of business a summary of each project proposal and a final ranking of all proposed projects.
(4) The utility may reject any project proposal that does not specify, as part of the price bid, the costs of complying with environmental laws, rules, and regulations in effect at the time of the bid.
(5) The utility may reject all project proposals if it finds that no proposal adequately serves ratepayers' interests. The commission will review, as appropriate, such a finding together with evidence filed in support of any acquisition in the utility's next general rate case.
(6) When the utility, the utility's subsidiary or an affiliated interest submits a bid in response to an RFP, a competing bidder may request the commission to appoint an independent third party to assist commission staff in its review of the bid. Should the commission grant such a request, the fees charged by the independent third party will be paid by the party requesting the independent review.
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(2) The project proposal's price, pricing structure, and terms are subject to negotiation. If a qualifying facility or other generating facility agrees to be operated under economic dispatch, then the utility will adjust the price by operating performance adjustments, such as the project's equivalent availability factor. The methodology for such performance adjustments must be explained in the utility's RFP.
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(2) Avoided cost schedules required within twelve months after an RFP is filed will be based directly on the project proposals received pursuant to that RFP.
(3) Avoided cost schedules required more than twelve months after an RFP is filed will be based on estimates included in the utility's current integrated resource plan filed pursuant to WAC 480-100-238 and the results of the most recent bidding process. The utility must file documentation supporting its estimated avoided cost schedule.
(4) Utilities may revise an avoided cost schedule at any time. Such revisions must be filed with the commission and are subject to commission approval.
(5) The avoided cost schedule provides only general information to potential bidders about the costs of new power supplies. It does not provide a guaranteed contract price for electricity.
(6) For projects rated at one megawatt capacity or less, the avoided costs specified in the current approved tariff will be the basis for prices offered.
(7) For projects in excess of one megawatt, the avoided cost will be the lowest bid among the project proposals with an acceptable evaluation.
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(2) All conservation measures included in a project proposal must:
(a) Produce electrical savings over a time period greater than five years, or a longer period if specified in the utility's RFP. A measure with an expected life that is shorter than the contract term must include replacements through the contract term;
(b) Be consistent with the utility's integrated resource plan; and
(c) Produce savings that can be reliably measured or estimated with accepted engineering methods.
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(2) Any project bidder and utility may negotiate changes to the selected project proposal for the purpose of finalizing a particular contract consistent with the provisions of this chapter.
(3) The utility may sign contracts for any appropriate time period specified in a selected project proposal for up to a twenty-year term. The utility may sign longer-term contracts if such provisions are specified in the utility's RFP.
(4) If material changes are made to the project proposal after project ranking, including material price changes, the utility must suspend contract finalization with that party and rerank projects according to the revised project proposal. If the material changes cause the revised project proposal to rank lower than projects not originally selected, the utility must dismiss the project proposal from further consideration and replace it with next ranked project.
(5) A project developer must provide evidence that the developer has obtained or will obtain a generation site (e.g., letter of intent) before signing a contract with the purchasing utility.
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(a) The owner or operator will construct and operate all interconnected generating facilities in accordance with all applicable federal, state, and local laws and regulations to ensure system safety and reliability of interconnected operations;
(b) The generating facility will furnish, install, operate, and maintain in good order and repair, and without cost to the utility, such relays, locks and seals, breakers, automatic synchronizers, and other control and protective apparatus as shown by the utility to be reasonably necessary for the operation of the generating facility in parallel with the utility's system; and
(c) At all times, the utility will be able to gain access to all switching equipment capable of isolating the generating facility from the utility's system.
(2) The utility may choose to operate the switching equipment described in subsection (1)(c) of this section if, in the sole opinion of the utility, continued operation of the customer's generating facility in connection with the utility's system may create or contribute to a system emergency. Such a decision by the utility is subject to commission verification in accordance with WAC 480-107-115, System emergencies. The utility must endeavor to minimize any adverse effects of such operation on the customer.
(3) Any agreement between a generating facility and a utility must state the extent to which the generating facility will assume responsibility for the safe operation of the interconnection facilities. The generating facility may not be required to assume responsibility for negligent acts of the utility.
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(2) A utility must sell to any qualifying facilities, in accordance with WAC 480-107-105, Rates for sales to qualifying facilities, any energy and capacity requested by the qualifying facilities on the same basis as available to other customers of the utility in the same class.
(3) Any utility must make all the necessary interconnections with any qualifying facilities to accomplish purchases or sales under this section. The obligation to pay for any interconnection costs will be determined in accordance with WAC 480-107-125, Interconnection costs.
(4) At the request of a qualifying facility, a utility that would otherwise be obligated to purchase energy or capacity from such qualifying facility may transmit energy or capacity to any other utility at the option of the utilities involved. Nothing in this section obligates the utility connected with the qualifying facility to transmit to other utilities. Nothing in this section obligates other utilities to purchase from the qualifying facility.
(5) Each utility may offer to operate in parallel with a qualifying facility if the qualifying facility complies with all applicable standards established in WAC 480-107-095, Obligations of generating facilities to electric utilities.
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(a) Rates must be just and reasonable, and in the public interest; and
(b) Rates must not discriminate between qualifying facilities and other customers served by the utility.
(2) Rates for sales that are based on accurate data and consistent system-wide costing principles will not be considered to discriminate against any qualifying facilities if those rates apply to the utility's other customers with similar load or other cost-related characteristics.
(3) Additional services to be provided to qualifying facilities:
(a) Upon request by a qualifying facility, each utility will provide:
(i) Supplementary power;
(ii) Back-up power;
(iii) Maintenance power; and
(iv) Interruptible power.
(b) The commission may waive any requirement of (a) of this subsection if the utility demonstrates and the commission finds, after notice in the area served by the utility and after opportunity for public comment, that compliance with such requirement will:
(i) Impair the utility's ability to render adequate service to its customers; or
(ii) Place an undue burden on the utility.
(4) The rate for sale of back-up power or maintenance power:
(a) Unless otherwise supported by factual data, may not be based on an assumption that forced outages or other reductions in electric output by all qualifying facilities on a utility's system will occur simultaneously, or during the system peak, or both; and
(b) Must take into account the extent to which scheduled outages of the qualifying facilities can be coordinated with scheduled outages of the utility's facilities.
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(a) Provided by agreement between such generating facility and utility; or
(b) Ordered under section 202(c) of the Federal Power Act.
(2) During any system emergency, a utility may discontinue or curtail:
(a) Purchases from a generating facility if such purchases would contribute to such emergency; and
(b) Sales to a generating facility, if such discontinuance or curtailment:
(i) Does not discriminate against a generating facility; and (ii) Takes into account the degree to which purchases from the generating facility would offset the need to discontinue or curtail sales to the generating facility.
(3) System emergencies resulting in utility action under this chapter are subject to verification by the commission upon request by either party.
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(2) Reimbursement of interconnection costs. The generating facility must reimburse the utility for any reasonable interconnection costs the utility may incur. Such reimbursement may be over an agreed period of time, but not greater than the length of any contract between the utility and the generating facility.
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(2) As part of its RFP, a utility must include specific notice that the utility intends to allow its subsidiaries and affiliated interests to participate in its bidding process. The utility must indicate in its RFP submittal how it will ensure that its subsidiary or affiliated interests will not gain an unfair advantage through association with the utility over potential nonaffiliated competitors. Specifically, disclosure by a utility to its subsidiary or affiliated interests of the contents of an RFP or competing project proposals prior to any public availability of such information will be construed to constitute an unfair advantage.
(3) The commission may deny in full or in part rate recovery of costs associated with the subsidiary's or affiliated interest's project(s), upon a showing that any unfair advantage was given to the subsidiary or any other bidder.
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(2) The utility must file with the commission and maintain on file for inspection at its place of business the current rates, prices, and charges established in accordance with this chapter.
(3) If a project developer is damaged by an action of a utility acting in accordance with these rules, the developer may petition the commission to investigate such action. The commission, at its discretion, may open an investigation and hold public hearings regarding any such petition.
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The following sections of the Washington Administrative Code are repealed:
| WAC 480-107-005 | Definitions. |
| WAC 480-107-010 | Filing requirements for prototype contracts. |
| WAC 480-107-020 | Eligibility for long-run generating facility purchase rates. |
| WAC 480-107-030 | Eligibility for long-run conservation purchase rates. |
| WAC 480-107-040 | Size of resource block. |
| WAC 480-107-050 | Avoided cost schedules. |
| WAC 480-107-060 | The solicitation process. |
| WAC 480-107-070 | Project ranking procedure. |
| WAC 480-107-080 | Pricing and contracting procedures. |
| WAC 480-107-090 | Security considerations. |
| WAC 480-107-100 | Contract finalization. |
| WAC 480-107-110 | Obligations of generating facilities to electric utility. |
| WAC 480-107-120 | Obligations of electric utility to qualifying facilities. |
| WAC 480-107-130 | Rates for sales to qualifying facilities. |
| WAC 480-107-140 | System emergencies. |
| WAC 480-107-150 | Interconnection costs. |
| WAC 480-107-160 | Special conditions for purchase of electrical power or savings from a utility subsidiary. |
| WAC 480-107-170 | Filings -- Investigations -- Exceptions. |