QF payment bill dropped

By CMTA Staff

Capitol Update, May 26, 2006 Share this on FacebookTweet thisEmail this to a friend

Senator Christine Kehoe (D-San Diego) has dropped her bill, SB 1833, relating to Section 390 of the California Public Utilities Code and how energy prices are paid to Qualifying Facilities (QFs).

QFs include industrial combined heat and power (CHP), also known as cogeneration, where heat that would otherwise be wasted is used to generate electricity, and renewable resources such as biomass, wind and geothermal.  

QFs provide power to the electric grid through contracts with the state’s investor owned utilities.  Pursuant to the Federal Public Utility Regulatory Policies Act (PURPA), QFs are entitled to be paid the utility's avoided cost (i.e., what the utility would have charged to generate power to serve incremental load absent the availability of the QF).  Section 390, enacted more than a decade ago, established a formula for determining the amount to be paid a QF for energy delivered to the utility, pursuant to PURPA.

SB 1833, as amended, states the intent of the Legislature to review Section 390 and to enact legislation prescribing how energy prices are paid to QFs.  The original version of the bill, introduced on February 24, would have repealed Section 390.

QFs represent about 30 percent of California’s energy supply, thus enhancing the reliability of the state’s electric grid.  CHP provides an important environmental benefit as well, by reducing greenhouse gas emissions, as noted in the state Integrated Energy Policy Report. 
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