A newly devised state self-generation incentive program can proceed, including waste heat capture (cogeneration), pressure-reduction turbines, advanced energy storage, combined heat-power (CHP) gas turbines, micro-turbines and internal combustion engines.

The last of a long line of lawsuits dating back years was settled recently to clear the way for natural gas-driven cogeneration applications in California that should boost a program the major utilities have agreed to help expand.

Clearing a last piece of litigation allows the state’s major utilities and industrial operators to begin implementing a new state law (SB 412), under which state regulators revised the incentive program for on-site power generation, allowing up to 25% of the awards to go to nonrenewable combined heat and power (CHP) self generation, which includes natural gas-fired cogeneration (see Daily GPI, Sept. 12).

At the California Public Utilities Commission (CPUC) business meeting Thursday, the CPUC General Counsel Frank Lindh reported on the settled litigation, noting that it was the outgrowth of a major settlement approved a year earlier by the state regulatory commission involving the CHP sector. The cogenerators, CPUC staff and major consumer groups were all part of the deal (see Power Market Today, Dec. 10, 2010).

The legislative and CPUC actions created a whole new program for CHP and gas-fired cogeneration, Lindh said. “It cleared away a lot of the underbrush and eliminated a lot of uncertainty from the investors’ perspective,” he said. “After all, these are investors who we want to induce into investing in CHP in California, and we eliminated the uncertainty by getting rid of all that pending litigation.

“Under the new program, each of the major utilities [Pacific Gas and Electric Co., Southern California Edison Co. and Sempra Energy’s San Diego Gas and Electric Co.] have agreed to embark on acquisition programs to add increments of CHP resources to their portfolios [adding to their renewable portfolio standard goal].”

With a recent decision by community choice aggregation operators to drop some legal appeals, a final, nonappealable version of the CPUC’s order a year ago has been achieved as of Nov. 23, Lindh told the five CPUC commissioners. The entire new cogeneration/CHP program can now move forward, he said.

Lindh said the Federal Energy Regulatory Commission also had to approve an aspect of the state’s CHP program and it has done so.

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