Texas QF generation shut-in; QFs file complaint at FERC

Ann de Rouffignac
OGJ Online

HOUSTON, Jan. 25 -- Texas cogenerators known as qualifying facilities asked federal regulators to enforce a federal law governing electricity sales from the facilities in a emergency complaint Wednesday.

The companies claimed in a petition filed with the Federal Energy Regulatory Commission that the Texas Public Utility Commission is violating a May order, which required the PUC to enforce provisions of the Public Utility Regulatory Policies Act(PURPA), governing QFs sales to electric utilities.

As a result, some have quit producing power. I know a lot of [QF]capacity is shut in now," said Marianne Carroll, attorney with Carroll & Gross LLP who represents QFs before state regulators. "Somebody is going to have to make a decision about this."

Texas QFs said they have struggled to operate since Jan. 1 because utilities aren't paying them rates required by tariffs. They said they are only getting between 0.9?/kw-hr and 2.1?/kw-hr. At other times it is zero or negative, the QFs said in a FERC filing.

The price offered by utilities since the first of the year is below the QFs average costs of production, the filing said. QFs have 3,000-4,000 Mw available to sell in the Electric Reliability Council of Texas (ERCOT) market. Complainants include Cogen Lyondell Inc., Dynegy Power Corp., Baytown Energy Center, Calpine Corp., Pasadena Cogeneration, Clear Lake Cogeneration, and others.

After Jan. 1, all integrated regulated utilities in Texas split up into three distinct companies--transmission and distribution, generation, and retail sales-- casting doubt over which of those companies would have the federal obligation to purchase power from QFs at the integrated utility's "avoided" costs. Avoided costs are the costs of producing power, which a utility would have incurred if it built a power plant.

Because the PUC failed to pass a new rule for QFs before the market opened, the successor companies to the old regulated utilities decided to "self-implement" PURPA and use ERCOT's imbalance energy price to pay the QFs.

The imbalance price is often zero or negative. It represents an ERCOT purchasing mechanism to balance system frequency and is not a market price nor indicative of the utility's avoided costs, the filing said. They complained the resulting low prices have forced facilities to shut down or cycle inefficiently.

"Since the ERCOT energy imbalance price is often negative, the Texas utilities may seek to force the QFs to pay them to take energy," the filing said. "This has caused the QFs to operate in a significantly less efficient manner, back their units down, and cease making as-available sales to the utilities."

Last spring Texas utilities and the PUC petitioned FERC for a "waiver" in Texas of the federal law PURPA in anticipation of the market opening in 2002.

"FERC responded swiftly, with an order that reminded Texas officials that PURPA was still in effect and Congress had not repealed it yet," Carroll said at a Gulf Coast Power Association meeting in Houston.

FERC said retail and generating companies that resulted from splitting up the integrated utilities would remain "electric utilities " as defined by PURPA and be required to purchase QF electricity. FERC also said Texas utilities must continue to use the approved and filed tariff rather than the ERCOT imbalance energy price to pay for QF power.

Related Articles

EPA approves Magellan’s Corpus Christi splitter project

12/12/2014 The US Environmental Protection Agency has issued a final greenhouse gas prevention of significant deterioration construction permit to Magellan Pr...

US needs more data before ending crude export ban, House panel told

12/11/2014 Much more environmental impact information is needed before the US can reasonably remove crude oil export limits, a witness told a House Energy and...

BOEM raises offshore oil spill liability limit to $134 million

12/11/2014 The US Bureau of Ocean Energy Management increased the liability limit for oil-spill related damages from offshore operations to $134 million from ...

Rosneft, Essar sign terms of oil supply agreement

12/11/2014 OAO Rosneft and Essar Energy PLC have signed key terms of an oil supply agreement in New Delhi. Rosneft said shipments to India may begin in 2015.

Barton introduces bill to remove US crude export limits

12/11/2014

US Rep. Joe Barton (R-Tex.) introduced legislation that would remove US crude oil export limits that have been in place for nearly 40 years.

North Dakota producers face new vapor pressure standards

12/10/2014 North Dakota has approved new rail transportation safety standards for crude oil that stipulate operating standards for oil-conditioning equipment ...

Chevron, ONGC among companies awarded 15 exploration permits by New Zealand

12/09/2014 New Zealand’s government has awarded six onshore permits across the Taranaki, West Coast, and East Coast basins, and nine offshore permits across t...

Small subset of wells accounts for most methane emissions, researchers say

12/09/2014 A small subset of natural gas wells are responsible for most methane emissions from US natural gas production, said a study from the University of ...

Methane controls just part of complete climate strategy, speakers say

12/08/2014 Reducing oil and gas operations’ methane emissions is an essential, but far from the only, part of a comprehensive climate strategy, speakers at a ...

White Papers

AVEVA NET Accesses and Manages the Digital Asset

Global demand for new process plants, power plants and infrastructure is increasing steadily with the ...
Sponsored by

AVEVA’s Approach for the Digital Asset

To meet the requirements for leaner project execution and more efficient operations while transferring...
Sponsored by

Diversification - the technology aspects

In tough times, businesses seek to diversify into adjacent markets or to apply their skills and resour...
Sponsored by

Engineering & Design for Lean Construction

Modern marketing rhetoric claims that, in order to cut out expensive costs and reduce risks during the...
Sponsored by

Object Lessons - Why control of engineering design at the object level is essential for efficient project execution

Whatever the task, there is usually only one way to do it right and many more to do it wrong. In the c...
Sponsored by

Plant Design for Lean Construction - at your fingertips

One area which can provide improvements to the adoption of Lean principles is the application of mobil...
Sponsored by

How to Keep Your Mud System Vibrator Hose from Getting Hammered to Death

To prevent the vibrating hoses on your oilfield mud circulation systems from failing, you must examine...
Sponsored by

Duty of Care

Good corporate social responsibility means implementing effective workplace health and safety measures...
Sponsored by

Available Webcasts


On Demand

Optimizing your asset management practices to mitigate the effects of a down market

Thu, Dec 11, 2014

The oil and gas market is in constant flux, and as the price of BOE (Barrel of Oil Equivalent) goes down it is increasingly important to optimize your asset management strategy to stay afloat.  Attend this webinar to learn how developing a solid asset management plan can help your company mitigate costs in any market.

register:WEBCAST


Parylene Conformal Coatings for the Oil & Gas Industry

Thu, Nov 20, 2014

In this concise 30-minute webinar, participants have an opportunity to learn more about how Parylene coatings are applied, their features, and the value they add to devices and components.

register:WEBCAST


Utilizing Predictive Analytics to Optimize Productivity in Oil & Gas Operations

Tue, Nov 18, 2014

Join IBM on Tuesday, November 18 @ 1pm CST to explore how Predictive Analytics can help your organization maximize productivity, operational performance & associated processes to drive enterprise wide productivity and profitability.

register:WEBCAST


US HYDROCARBON EXPORTS Part 3 — LNG

Fri, Nov 14, 2014

US LNG Exports, the third in a trilogy of webcasts focusing on the broad topic of US Hydrocarbon Exports.

A discussion of the problems and potential for the export of US-produced liquefied natural gas.

These and other topics will be discussed, with the latest thoughts on U.S. LNG export policy.

register:WEBCAST


Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected