Want to sell your electricity to a utility? Go ahead

Whether you are a homeowner with a windmill on your roof or the operator of a large industrial plant, your local utility now must buy electricity from you at a favorable rate.

This is one outcome of the 1978 Public Utility Regulatory Policies Act (PURPA) now being phased into effect. Some see this as the beginning of a significant new direction in the course of electric power production.

The act was designed to encourage small power producers and cogenerators. (Cogeneration is the production of electricity together with other energy such as heat, a process that can be much more efficient.)

In its draft environmental impact statement, the Federal Energy Regulatory Commission (FERC), which administers the new law, estimated it will result in an additional 12,000 megawatts of new electrical capacity by the end of the decade. This is the equivalent of 12 large nuclear- or coal-fired power plants.

In the immediate future, "No one has any idea how many small power producers and cogenerators are out there," says Herbert I. Blinder of the American Public Power Association, coordinator of a workshop on PURPA held here last week.

The attitudes of utilities and the state agencies that regulate them toward small generators and cogenerators vary from enthusiastic to hostile. California utilities have been aggressively searching out independent generators to feed their systems. Pacific Gas & Electric Company, in particular, is seeking small generators and cogenerators because the California Public Utility Commission (PUC) has withheld $7 million from a Pacific rate increase, then offered to give it back if the company would add a certain amount of cogeneration to its system. Similarly, New Hampshire's PUC has set the highest rate for small generators in the nation -- 7.8 to 8.2 cents per kilowatt-hour.

On the other hand, Consolidated Edison of New York publicly has opposed all cogenerations and even persuaded the city that cogeneration equipment should be taxed at a higher rate. And Virginia Power & Electric Company has proposed rates with a number of charges and disincentives to small generators.

Still, faced with a shortage of capital and soaring fuel and interest costs, utilities are looking at nontraditional sources of power with greater interest.

"Except for a few cases where specific utilities have financial reasons for opposing it, the industry is very interested in cogeneration," contends Bruce Edelston of the Edison Electric Institute.

Even if they weren't, PURPA would be pressuring them to be.

In essence, the new law has attempted to remove the major obstacles that independent power producers have faced. The greatest of these, explains Adam Wenner of the FERC, is that under previous law any business or individual selling power to a utility was classed as a utility itself and forced to comply with a host of federal and state laws.

The act applies to small generators that use alternative fuels such as wind and biomass and to cogenerators that can operate at a total efficiency of 30 to 50 percent higher than an electric utility.

Of course, the utility industry is not totally happy with PURPA. Small utilities are worried about all the statistics they are required to keep. Investor-owned utilities complain that the law prohibits them from the benefits of ownership of cogeneration facilities and that their investors and customers are "subsidizing" independent power producers.