Implications of Energy Policy Act of 2005

No need to break out the leisure suits and disco balls yet, but many provisions of the Energy Policy Act of 2005 will seem like a return to the 1970’s for electric utilities – particularly those areas of the Act which directly impact distribution cooperatives.  Yes, there are incentives for innovative technologies, particularly those related to generation, that result in cleaner air or are simply new and improved compared to current technology.  Coal gasification, fuel cells, renewables and nuclear energy all get a boost from incentives.  Sections with significant impact on cooperatives, though, are in the Titles covering electricity and energy efficiency. 

The electricity provisions of the Act are wide-ranging.  They give the federal government broader authority (including, in some cases, over cooperatives) and responsibility over reliability standards and transmission siting; mandate transmission rate reforms to encourage investment in and maintenance of transmission infrastructure; and require open transmission access to be granted by some entities not previously subject to FERC regulation. 

Key provisions for distribution cooperatives are amendments to PURPA (our return to the 70’s) requiring consideration of several areas of standards by state regulators AND unregulated electric utilities.  Key among these is net metering, which encourages on-site generation by allowing the customer to avoid the full retail energy charge of the utility.   

More back-to-the-future provisions, under the heading of “smart metering”, require regulators and nonregulated utilities to determine whether time-based rate schedules are appropriate.  The Act uses a broad-based definition of time-based rates, including such structures as traditional TOU rates, real time pricing and commercial/industrial curtailable rates.  The determination of appropriateness is to be made by comparing the long run benefits with the costs of implementing such programs.  

The energy efficiency provisions of the act seemingly offer something for everyone, covering low income energy assistance, efficient appliance rebates, weatherization assistance, modifications to the Energy Star Program, and tighter equipment efficiency standards.   

With over 500 pages in the Act itself and thousands more pages of enacting regulations likely to come, keeping up with the requirements of the Act presents a real challenge to cooperative management.  You need to know how the Act will affect you, though, so you may prepare for the impacts and take advantage of provisions that will benefit your members – or about which they will ask.  As an example, one seemingly small item in the Act will have a real impact on many cooperatives:  the Act prohibits the manufacture or import of mercury vapor lamp ballasts after January 1, 2008. 

We will be hearing much more about the Act as federal agencies interpret Congress’ develop implementing regulations. 

For more information on the Energy Policy Act and how it may impact electric cooperatives, contact Nelson Hawk at nelson.hawk@enervision-inc.com or 770-270-7470.