Energy Policy Act of 1992

Much like the PURPA legislation of 1978, EPAct 92 is seen as a watershed in the evolution of the electric industry. While this landmark federal legislation is still taking hold, through the slow process of federal and state regulation development, its impact has already been quite profound.

A principal goal of EPAct 92 was the infusion of competition into the electric generation market. This is initiated through PUHCA amendments that form a new class of IPPs, the EWGs, that includes non-regulated ventures by electric and gas utilities. Requirements to provide open access to transmission services for all NUGs and for the wheeling of power for the purpose of wholesale sales are other important features.

EPAct 92 addresses several important self-generation and independent power production issues. These include:

• Amendments to PUHCA and FPA that establish the new EWG class. These allow electric and gas utilities to own or operate all or part of one or more EWG without being limited by the restrictions of PUHCA. EWGs can now build, own, and operate electric power plants and sell their electricity anywhere in the country on a wholesale basis.

• Application requirements for EWG status, which must be granted by the FERC. However, unlike QF status, EWG status is not restricted by type of fuel, generation technology, plant size, or proportion of utility ownership. Since EWGs are not fully exempt from the FPA, FERC regulates their wholesale power rates and financial transactions. While, if state laws permit, a QF may engage in retail power sales, an EWG cannot. State PUCs must approve any EWG holding rate-based assets and any utility purchases of wholesale power from EWGs. An existing facility in a utility's rate base may become an eligible facility only with state PUC approval.

• The amendment of several sections by replacing the term "electric utility" with "transmitting utility." The transmission function is isolated by this definition, with provisions to ensure non-prejudicial treatment and equal access to transmission capacity by all generators for the purpose of wholesale sales.

• FERC's authorization to order a utility to provide access to the utility's transmission system, if the order meets the "just and reasonable" pricing criteria of FPA, is in the "public interest," or if the third-party transmission would not unreasonably impair the continued reliability of the transmitting utility system. If a utility refuses a request to wheel power on a voluntary basis, any electric utility, federal power marketing agency, or other wholesale generator may apply to FERC for an order requiring the utility to provide transmission services, including the enlargement of transmission capacity.

• The requirement that electric utility IRP "shall treat demand and supply resources on a consistent and integrated basis." Fundamental to this treatment is the development of avoided costs. Such costs include energy and capacity values, and any other factors deemed applicable to the integrated, or least-cost, resource planning process in a consistent and equal manner.

• The requirement that IRP processes must evaluate the full range of alternatives, including power purchase, cogeneration, conservation, and load management. EPAct 92 strengthens PURPA and places cogenera-tion on an equal footing with other DSM and conservation options. It also requires consideration of the incentives and disincentives caused by existing rate-making policies and practices.

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