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Proposed Amendment to the Methane Capture Jobs and Security Act

January 11th, 2010

Claire McCarthy

Masako Chen

Maura Duffy

Victoria Stulgis


Section VI: The Amendment

Methane Capture Jobs and Security Act (Introduced in Senate)

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SEC. 101. GUARANTEED POWER PURCHASE AGREEMENTS.

Public Utilities Regulated Under the Clean Energy Jobs and American Power Act is amended by adding the following new section after section 101 (as added by this Act ):

`SEC. 101B. METHANE CAPTURE PAYMENTS.

`(a) Definitions- For the purposes of this section:

(1) METHANE CAPTURE FACILITIES:

`(A) methane collection at active underground coal mines;

`(B) methane collection at landfills;

`(C) non-landfill methane collection involving organic waste streams that would have otherwise emitted methane in the atmosphere, including manure management and biogas capture;

`(b) Methane Capture Payment Rules- Not later than 2 years after the date of enactment of the Renewable Energy Jobs and Security Act , the Commission shall prescribe, and from time-to-time thereafter revise, such rules as it determines necessary to encourage the purchase of electric energy by public utilities from methane capture sources. The rules shall require public utilities to offer to purchase electric energy from methane capture energy facilities in accordance with this section at uniform national rates established pursuant to this section. Each such public utility shall provide access to the grid and purchase electricity from methane capture energy facilities on a priority basis, and each transmitting utility (as defined in the Clean Energy Jobs and American Power Act) shall transmit such energy on a priority basis. Such rules shall be prescribed, after consideration of recommendations made in reports under section 101 of the Clean Energy Jobs and American Power Act, after consultation with representatives of State regulatory agencies having ratemaking authority for electric utilities, and after public notice and a reasonable opportunity for interested persons (and State agencies) to submit data, views, and arguments. Such rules may not authorize a methane capture energy facility to make any sale for purposes other than resale.

`(c) Effective Date- The rules under this section shall apply only to contracts for the purchase and sale of electric energy from methane capture energy facilities entered into after the effective date of such rules and before the date 20 years after such effective date.

`(d) Methane Capture Energy Payment Rates for Purchase of Power-

`(1) PURPOSES- The purposes of this subsection are to–

`(A) reduce methane emissions by methane capture and biogas generation to mitigate climate change

`(B) promote widespread (both local and industrial) use of methane capture technologies to generate electricity.

`(C) prevent excessive profits for methane capture generators;

`(D) prevent excessive profits for electricity suppliers;

`(E) prevent unnecessary costs to ratepayers.

`(2) UNIFORM NATIONAL RATES- Except as otherwise specified in this section, the rates paid for the purchase of electric energy from methane capture facilities under contracts entered into under this section shall be established on a uniform national basis by the Commission by rule. Such rates shall be–

`(A) fixed throughout the duration of a contract extending for a period of at least 20 years;

`(B) no less than the amount needed for development plus a reasonable profit, with consideration to–

`(i) the technology used;

`(ii) the year the installation is placed into service;

`(iii) the size of the methane capture facility;

`(iv) the industry from which the methane is derived. Such industries shall (1) exclude those facilitating the recapture of fugitive methane emissions from natural gas pipelines (2) shall include but shall not be limited to those involved in —

`(a) Animal Husbandry

`(b) Human and agricultural liquid waste

`(c) Landfill solid waste

`(d) Coalmine ventilation

`(3) RATES OF RETURN- Such rates shall be set to provide a nominal, post-tax project internal rate of return of not less than 10 percent after recovery of all operating and maintenance costs for projects sited in locations with favorable methane capture energy resource potential, consistent with the purposes of this subsection.

`(4) PERIODIC ADJUSTMENT- The Commission shall review the rates under this subsection every 2 years and adjust those rates applicable to prospective contracts in accordance with paragraph (2) and in a manner that is consistent with the purposes of this subsection.

`(5) DEGRESSION RATES- For new facilities commencing construction in each year after the first year for which tariffs under this section applied to any facility, the tariffs rates paid under this standard under this section may be reduced relative to the previous year in accordance with annual tariff degression rates. Such degression rate shall be specific to each technology and methane source.

`(6) PRIORITY- The rules under the standard under this subsection shall require each public utility to purchase and each transmitting utility to transmit electric energy from methane capture facilities on a priority basis. Such requirement shall not apply if the public utility or transmitting utility is already committed through long-term contracts to full capacity of its load and such utility has no ability to transmit any new generation from methane capture energy facilities to a neighboring utility.

`(e) Standard Contracts- The Commission shall approve a standard contract to be used in all power purchase agreements under this section that are subject to the jurisdiction of the Commission under this part. The contract shall include the prices paid for each kilowatt hour generated, the duration of the contract, and terms of access to the grid. The Commission shall provide public utilities subject to the jurisdiction of the Commission with standard contracts within 18 months of the date of enactment of this subsection.

`(f) Public Reporting Requirements- After enactment of this act, each public utility shall submit an annual public report to the Energy Information Administration the following information recorded during the previous calendar year:

`(2) The total quantity of electricity and the total amounts paid to methane capture facility operators in accordance with compliance with the rules under this section.

`(3) The total quantity of electricity delivered to by the public utility.

`(4) The total number of methane capture facilities in the area in which the public utility supplies electric energy.

`(5) For each technology and application, the amount of growth in capacity installed relative to the number of new interconnections in the area in which the public utility supplies electric energy.

`(6) The total amount of electricity (in kWh) generated by methane capture facilities in the area in which the public utility supplies electric energy.

`(7) The location of new renewable energy facility development relative to population density in the area in which the public utility supplies electric energy.

`(g) Reports by the Energy Information Administration- In each of the first 2 years and every 2 years thereafter after the enactment of this section, the Secretary of Energy, acting through the Energy Information Administration, shall make public and submit to Congress a report that shall include the number of new methane capture facilities in each State and the environmental benefits and effects of the addition of those generators. There are authorized to be appropriated to the Secretary of Energy such sums as may be necessary to carry out this subsection.

`(h) Federal Contracts- No contract between a Federal agency and any electric utility for the sale of electric energy by such Federal agency for resale which is entered into after the date of the enactment of this Act may contain any provision which will have the effect of preventing the implementation of any rule under this section with respect to such utility. Any provision in any such contract which has such effect shall be null and void.

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