Federal CHP Policy

FEDERAL POLICY ACTIVITIES

USCHPA Comments on DOE Strategic Plan

The U.S. Combined Heat and Power Association filed comments with the US Department of Energy on the draft Strategic Plan for 2007. The USCHPA called on DOE to recognize the benefits of CHP and clean distributed generation not only in a revised Strategic Plan, but in revisions to policy that has recently cut funding and programs for work on distributed energy. The USCHPA also asked for an early meeting with Secretary Bodman and his team to discuss the state of the public-private partnership we entered in 2000 (and reaffirmed last year) with DOE and EPA to double the amount of CHP in the U.S. economy, given these recent policy changes.

Review the comments. (PDF 67 KB)

USCHPA Comments on DOE Study of Congested Transmission Corridors

The U.S. Combined Heat and Power Association filed comments in response to the request for comments on the Department of Energy's study of areas in which electricity transmission congestion strongly indicates the need for major new electric transmission lines to be built. The Association suggested that there is significant potential for demand-side measures such as distributed generation, including CHP, to relieve some of the reported congestion, and offered estimates of the potential capacity that could be developed in the areas identified as congested in the study: Southern California and the New York - Maryland corridor.

The Association hopes that the Department of Energy will undertake further analysis before finalizing determinations that could lead to slow, expensive, and controversial new power lines at huge cost to utility ratepayers, when new CHP and other distributed generation projects could offer significant relief that is faster, cheaper, financed privately without increasing utility rates, and of far less land-use impact.

Review the comments. (PDF 36 KB)

Federal Environmental Policy Activity

As an added service to our membership, please find posted to our website summaries of environmental rulemakings, litigation and other environmental matters relevant to USCHPA members. USCHPA's environmental counsel, Thor Ketzback, will continue to periodically provide USCHPA members with updates regarding relevant environmental matters. Please contact Thor Ketzback with any questions at the contact information below:

Thor W. Ketzback
Bell, Boyd & Lloyd, LLC
70 West Madison Street, Suite 3300
Chicago, Illinois 60602-4207
(312) 807-4437
tketzback@bellboyd.com

> Full Document
> Standards of Performance for Stationary Spark Ignition Internal Combustion Engines and National Emissions Standards for Hazardous Air Pollutants for Reciprocating Internal Combustion Engines
> Standards of Performance for Stationary Compression Ignition Internal Combustion Engines
> Revisions to Startup, Shutdown and Malfunction Plans
> Particulate Matter Regulations
> National Emissions Standards for Industrial, Commercial and Institutional Boilers
> Greenhouse Gas Litigation
> New Source Review

Congress and CHP

> Testimony of John W. Jimison, before the Energy and Water Development Subcommittee, Committee on Appropriations, March 16, 2006 (PDF 44 KB)

USCHPA was asked by Chairman W.J. "Billy" Tauzin of the House Energy and Commerce Committee to review the facts of the August 14, 2003 Northeast-Midwest blackout and to advise the Committee about what should be done. View USCHPA Comments (PDF 152 KB).
View USCHPA Policy Alerts to learn more on CHP-related congressional activities.

> Senate Energy and Natural Resources Committee
> House Energy and Commerce Committee
> Thomas (Search Engine for Federal Legislation)

Federal Energy Regulatory Commission (FERC)

INTERCONNECTION: LARGE AND SMALL GENERATOR

On May 12, 2005, the Federal Energy Regulatory Commission issued standard procedures for the interconnection of generators no larger than 20 megawatts. The Commission has designated it as Order No. 2006. This rule is intended to move the country "a step closer to truly non-discriminatory, competitive bulk power markets" and help preserve grid reliability, increase energy supply, and lower wholesale electric costs. The rule applies only to interconnections with facilities already subject to the jurisdiction of the Commission; the Commission emphasized that it does not apply to local distribution facilities. This rule complements the final rule the Commission issued in July 2003 for facilities larger than 20 megawatts (Order No. 2003). The final rule is effective 60 days after its publication in the Federal Register. Regional transmission organizations (RTOs) and independent system operators (ISOs) have an additional 90 days to comply. A press release announcing the order is available at http://www.ferc.gov/press-room/pr-current/05-12-05.asp. A complete copy of the rule is available through http://elibrary.ferc.gov/idmws/search/fercadvsearch.asp (search on Docket #RM02-12, subdocket #000).

On July 23, 2003, FERC announced it has set new generator interconnection standards, proposed expedited procedures for small generators and that these actions will facilitate infrastructure development. View FERC News Release. (Docket Nos. RM02-1-000 and RM02-12-000). More history of the process follows.

In August 2002, FERC acted on issues of small-generator interconnection policy. The Commission issued a decision by notation creating a new proceeding to adopt interconnection rules for generators of 20 megawatts or less.

The Commission's Advance Notice of Proposed Rulemaking (ANOPR) (Docket RM02-12-000) severed small generation issues from the rulemaking it is already conducting on interconnection policy (RM02-1-000) in which USCHPA filed comments on June 17, 2002.

USCHPA was very pleased that FERC's substantive policy as proposed in the ANOPR was adopted directly and verbatim from the USCHPA proposals attached to our comments on the Interconnection NOPR for units from 2 to 20 megawatts. FERC found that our suggested proposals were reasonable and based on working standards in PJM and ERCOT regions, and has directed all parties to start from our recommended policy in looking for consensus. The burden is effectively placed on opponents of small generator interconnection as we proposed it be done to demonstrate why FERC should not adopt our substantive policy. This can only be seen as a significant victory for USCHPA in its efforts to promote appropriate policy, but the launching of a new consensus-seeking process means that there is much more to be done to assure ultimate success. View the USCHPA News Bulletin including this FERC information. (PDF 98 KB)

For background on FERC efforts in 2002, visit the USCHPA Policy Alerts archive.

The Administration and CHP

In May 2001, the President's National Energy Policy (NEP) was released (PDF 3.04 MB). The NEP expressed support for increased CHP on a variety of fronts. Learn more about CHP in the NEP.

Unfortunately, this pro-CHP language did not follow through to the Administration's clean air proposal, "Clear Skies." First released in summer 2002, the President's Clear Skies initiative fails to follow through on the Administration's own express recognition of the benefits of output-based emissions policies as articulated in the President's energy plan. Instead, the proposal would grandfather existing sources, develop cap-and-trade programs for emissions based on the input energy values, and thereby fail to reward CHP practitioners for the emissions efficiency they achieve. The USCHPA has been working with Congress, EPA, and others over the past year to assure that any plan enacted at a minimum corrects this design flaw.

Clear Skies was again introduced in the 108th Congress.

> Visit the USCHPA Environmental Initiatives page for more on our clean air efforts.

> Visit the NEMW site on multi-pollutant legislation.

CHP Efficiency Levels for Policy-Makers

Due to their capture of useful energy both as electricity and thermal output (heating, cooling, steam, hot water, dehumidification, etc.), CHP systems should always be able to exceed the total fuel efficiency of even the best central power plants, dividing the energy content of the fuel inputs into the delivered energy content of the total useful output, and taking average transmission and distribution line losses into account. A state-of-the-art central plant (a combined cycle combustion turbine using natural gas) offers a maximum system fuel efficiency for delivered power in the range of 55-60%. At this efficiency level, CHP systems will effectively double the central electric system's average delivered fuel-use efficiency of about 30%. However, under common circumstances, CHP systems will achieve efficiencies exceeding 70%. CHP systems achieving efficiencies exceeding 80% are frequent, and some systems have been shown to reach levels in excess of 90%.

For these reasons, while USCHPA seeks policies to recognize and provide incentive for any CHP systems that can reduce energy waste compared to the current central system power production, USCHPA is willing to accept a requirement that CHP systems qualify for incentives only when they can demonstrate efficiency exceeding the best of the central-station power plants on a delivered power basis; i.e., achieve a useful energy output representing at least 60% of the gross energy input into the CHP system's prime mover.

To learn more about the issue of efficiency, please reference a report by Neal Elliott (ACEEE) and Mark Spurr (IDEA), Combined Heat and Power: Capturing Wasted Energy.

POLICY ALERTS

Policy Alerts (updated February 2006)

Photograph taken by James Tkatch

Mr. James L. Connaughton (on left), Chairman White House Council of Environmental Quality discusses policy matters with Richard Brent, Director Government Affairs, Solar Turbines Inc, and with John Jimison, Executive Director and General Counsel, United States Combined Heat and Power Association (USCHPA).



FEDERAL POLICY ACTIVITIES USCHPA Comments on DOE Strategic Plan The U.S. Combined Heat and Power Association filed comments with the US Department of Energy on the draft Strategic Plan for 2007. The USCHPA called on DOE to recognize the benefits of CHP and clean distributed generation not only in a revised Strategic Plan, but in revisions to policy that has recently cut funding and programs for work on distributed energy. The USCHPA also asked for an early meeting with Secretary Bodman and his team to discuss the state of the public-private partnership we entered in 2000 (and reaffirmed last year) with DOE and EPA to double the amount of CHP in the U.S. economy, given these recent policy changes. Review the comments. (PDF 67 KB) USCHPA Comments on DOE Study of Congested Transmission Corridors The U.S. Combined Heat and Power Association filed comments in response to the request for comments on the Department of Energy's study of areas in which electricity transmission congestion strongly indicates the need for major new electric transmission lines to be built. The Association suggested that there is significant potential for demand-side measures such as distributed generation, including CHP, to relieve some of the reported congestion, and offered estimates of the potential capacity that could be developed in the areas identified as congested in the study: Southern California and the New York - Maryland corridor. The Association hopes that the Department of Energy will undertake further analysis before finalizing determinations that could lead to slow, expensive, and controversial new power lines at huge cost to utility ratepayers, when new CHP and other distributed generation projects could offer significant relief that is faster, cheaper, financed privately without increasing utility rates, and of far less land-use impact. Review the comments. (PDF 36 KB) Federal Environmental Policy Activity As an added service to our membership, please find posted to our website summaries of environmental rulemakings, litigation and other environmental matters relevant to USCHPA members. USCHPA's environmental counsel, Thor Ketzback, will continue to periodically provide USCHPA members with updates regarding relevant environmental matters. Please contact Thor Ketzback with any questions at the contact information below: Thor W. Ketzback Bell, Boyd & Lloyd, LLC 70 West Madison Street, Suite 3300 Chicago, Illinois 60602-4207 (312) 807-4437 tketzback@bellboyd.com > Full Document > Standards of Performance for Stationary Spark Ignition Internal Combustion Engines and National Emissions Standards for Hazardous Air Pollutants for Reciprocating Internal Combustion Engines > Standards of Performance for Stationary Compression Ignition Internal Combustion Engines > Revisions to Startup, Shutdown and Malfunction Plans > Particulate Matter Regulations > National Emissions Standards for Industrial, Commercial and Institutional Boilers > Greenhouse Gas Litigation > New Source Review Congress and CHP > Testimony of John W. Jimison, before the Energy and Water Development Subcommittee, Committee on Appropriations, March 16, 2006 (PDF 44 KB) USCHPA was asked by Chairman W.J. "Billy" Tauzin of the House Energy and Commerce Committee to review the facts of the August 14, 2003 Northeast-Midwest blackout and to advise the Committee about what should be done. View USCHPA Comments (PDF 152 KB). View USCHPA Policy Alerts to learn more on CHP-related congressional activities. > Senate Energy and Natural Resources Committee > House Energy and Commerce Committee > Thomas (Search Engine for Federal Legislation) Federal Energy Regulatory Commission (FERC) INTERCONNECTION: LARGE AND SMALL GENERATOR On May 12, 2005, the Federal Energy Regulatory Commission issued standard procedures for the interconnection of generators no larger than 20 megawatts. The Commission has designated it as Order No. 2006. This rule is intended to move the country "a step closer to truly non-discriminatory, competitive bulk power markets" and help preserve grid reliability, increase energy supply, and lower wholesale electric costs. The rule applies only to interconnections with facilities already subject to the jurisdiction of the Commission; the Commission emphasized that it does not apply to local distribution facilities. This rule complements the final rule the Commission issued in July 2003 for facilities larger than 20 megawatts (Order No. 2003). The final rule is effective 60 days after its publication in the Federal Register. Regional transmission organizations (RTOs) and independent system operators (ISOs) have an additional 90 days to comply. A press release announcing the order is available at http://www.ferc.gov/press-room/pr-current/05-12-05.asp. A complete copy of the rule is available through http://elibrary.ferc.gov/idmws/search/fercadvsearch.asp (search on Docket #RM02-12, subdocket #000). On July 23, 2003, FERC announced it has set new generator interconnection standards, proposed expedited procedures for small generators and that these actions will facilitate infrastructure development. View FERC News Release. (Docket Nos. RM02-1-000 and RM02-12-000). More history of the process follows. In August 2002, FERC acted on issues of small-generator interconnection policy. The Commission issued a decision by notation creating a new proceeding to adopt interconnection rules for generators of 20 megawatts or less. The Commission's Advance Notice of Proposed Rulemaking (ANOPR) (Docket RM02-12-000) severed small generation issues from the rulemaking it is already conducting on interconnection policy (RM02-1-000) in which USCHPA filed comments on June 17, 2002. USCHPA was very pleased that FERC's substantive policy as proposed in the ANOPR was adopted directly and verbatim from the USCHPA proposals attached to our comments on the Interconnection NOPR for units from 2 to 20 megawatts. FERC found that our suggested proposals were reasonable and based on working standards in PJM and ERCOT regions, and has directed all parties to start from our recommended policy in looking for consensus. The burden is effectively placed on opponents of small generator interconnection as we proposed it be done to demonstrate why FERC should not adopt our substantive policy. This can only be seen as a significant victory for USCHPA in its efforts to promote appropriate policy, but the launching of a new consensus-seeking process means that there is much more to be done to assure ultimate success. View the USCHPA News Bulletin including this FERC information. (PDF 98 KB) For background on FERC efforts in 2002, visit the USCHPA Policy Alerts archive. The Administration and CHP In May 2001, the President's National Energy Policy (NEP) was released (PDF 3.04 MB). The NEP expressed support for increased CHP on a variety of fronts. Learn more about CHP in the NEP. Unfortunately, this pro-CHP language did not follow through to the Administration's clean air proposal, "Clear Skies." First released in summer 2002, the President's Clear Skies initiative fails to follow through on the Administration's own express recognition of the benefits of output-based emissions policies as articulated in the President's energy plan. Instead, the proposal would grandfather existing sources, develop cap-and-trade programs for emissions based on the input energy values, and thereby fail to reward CHP practitioners for the emissions efficiency they achieve. The USCHPA has been working with Congress, EPA, and others over the past year to assure that any plan enacted at a minimum corrects this design flaw. Clear Skies was again introduced in the 108th Congress. > Visit the USCHPA Environmental Initiatives page for more on our clean air efforts. > Visit the NEMW site on multi-pollutant legislation. CHP Efficiency Levels for Policy-Makers Due to their capture of useful energy both as electricity and thermal output (heating, cooling, steam, hot water, dehumidification, etc.), CHP systems should always be able to exceed the total fuel efficiency of even the best central power plants, dividing the energy content of the fuel inputs into the delivered energy content of the total useful output, and taking average transmission and distribution line losses into account. A state-of-the-art central plant (a combined cycle combustion turbine using natural gas) offers a maximum system fuel efficiency for delivered power in the range of 55-60%. At this efficiency level, CHP systems will effectively double the central electric system's average delivered fuel-use efficiency of about 30%. However, under common circumstances, CHP systems will achieve efficiencies exceeding 70%. CHP systems achieving efficiencies exceeding 80% are frequent, and some systems have been shown to reach levels in excess of 90%. For these reasons, while USCHPA seeks policies to recognize and provide incentive for any CHP systems that can reduce energy waste compared to the current central system power production, USCHPA is willing to accept a requirement that CHP systems qualify for incentives only when they can demonstrate efficiency exceeding the best of the central-station power plants on a delivered power basis; i.e., achieve a useful energy output representing at least 60% of the gross energy input into the CHP system's prime mover. To learn more about the issue of efficiency, please reference a report by Neal Elliott (ACEEE) and Mark Spurr (IDEA), Combined Heat and Power: Capturing Wasted Energy.			POLICY ALERTS Policy Alerts (updated February 2006) Photograph taken by James Tkatch Mr. James L. Connaughton (on left), Chairman White House Council of Environmental Quality discusses policy matters with Richard Brent, Director Government Affairs, Solar Turbines Inc, and with John Jimison, Executive Director and General Counsel, United States Combined Heat and Power Association (USCHPA).