Update: State Developments In LFG Recovery

Freddi L. Greenberg

Across the nation, states are considering utility restructuring to meet consumer demands.

For example, California adopted Assembly Bill 1890 in late 1996, allowing competition in the retail electric industry. Creating a $540 million fund to support renewable generating technologies, this bill allows owners of renewable fueled electric generating facilities to use up to 25 percent of a non-renewable fuel annually without losing their designation as renewable resources.

Retail competition also has begun in Massachusetts, and utilities from New Hampshire to Illinois have started experimental retail wheeling programs.Already, these programs have reduced electric costs.

The California Energy Commission is developing a plan where a maximum incentive payment of one and one-half cents per kilowatt hour would be used by existing biomass facilities to achieve a target price of five cents per kilowatt hour. To further encourage renewable fueled generation, AB 1890 gives customers immediate access to retail wheeling at least 50 percent of their electric load is obtained from renewable resources.

As the California example shows, there is continuing interest in renewable resources. Under deregulation, this interest will be balanced against competitive factors. Since renewable fuel generation must compete at market-based rates, the state of Illinois, for example, has required that utilities buy LFG power at pricess above avoided cost, giving them tax credits equal to payments above avoided cost for electricity purchased from LFG to electricity projects.

The landfill gas industry should take advantage of electric restructuring by working to influence energy policies such as:

* Retention of the June 1998 in-service date under Section 29 of the Internal Revenue Code.

* Grandfathering of existing powersale contracts in the event of a Public Utility Regulatory Policies Act of 1978 (PURPA) repeal.

* Retention of the PURPA utility purchase obligation for renewable technologies.

* Provisions in federal law that allow the states to encourage renewable technologies through a variety of methods.

* Renewable power set aside under federal and state law.

* Early availability of retail wheeling for renewable fueled generation.

* Inclusion of LFG within the definition of biomass for purposes of all federal and state renewable energy programs Evanston, Ill.