The Federal Energy Regulatory Commission, which is championing the cause of small alternative energy producers in an appeal to the Supreme Court, wants to impose substantial new fees that critics say could prevent many of them from taking advantage of the new energy technology.
The issue involves small power producers, that is businesses or households that create their own sources of energy, by using, for example, wind, waste or water.
As part of the Reagan administration's drive to force the users of government services to pay their costs, FERC has proposed 13 new and increased fees for its services.
Two of those proposals alarm the supporters of alternative energy sources. One would charge firms or households $2,600 to have their projects certified by FERC, often a necessary step to get financing. The other would charge them at least $6,200 and as much as $57,400 to get FERC to approve the sale of their excess power to a utility -- a process known as interconnection.
Nothing requires a small producer to interconnect with a utility, but that often makes the difference as to whether a project is economically feasible.
Under current law, public utilities are supposed to accept interconnections automatically and pay the small generators' rates based on the "avoided costs of oil." But the utilities have successfully challenged the law in court, both on the prescribed rate and on the requirement forcing them to accept all interconnections from small producers.
While FERC appeals the case to the Supreme Court, it has gone ahead and issued a proposed rule to impose a fee to help cover some of its costs in reviewing interconnection cases, whether it involves two large utilities or a small producer and a utility.
Utilities have generally been reluctant to add small producers to their power grids unless Congress forced them to. Advocates of alternative sources argue that if the court's ruling holds and the new fees go through, the utilities could demand that FERC hold a hearing -- at the $57,400 fee -- when a small producer wants to interconnect, knowing that many wouldn't be able to pay.
"People putting up windmills in the suburbs, in the range of $15,000 to $20,000 projects, just aren't going to be able to foot that bill. . . ," said Alan S. Miller, an attorney for the Natural Resources Defense Council. Miller said FERC's $2,600 review "really doesn't make sure you know what you are doing. There is no technical, engineering or safety review in qualifying a small power system."
An aide to the Senate Energy and Natural Resources subcommittee on energy regulation said, "This user fee could have a negative impact on the development of alternative energy sources." Added Bruce Driver, counsel to the House Energy and Commerce subcommittee on energy conservation and power, "This appears to be just another hassle on the road to the development of this program. The rate issue is the heart of the problem. . . . "
"We are very concerned that the flat rate $2,600 fee will discourage the development of small-scale power producers," said John Wilson, executive director of the Renewable Energy Institute. "And, at the same time, this fee does not truly reflect the cost of preparing those applications."
"The main problem," he said "is that the fee is not scaled according to the size of the project." Thus a single wind machine for a home or business would be charged the same fee as a larger project. "No small power producer can proceed with a $57,000 fee for a small project."
In Friday's Federal Register, FERC explained its proposal: "In the electric rate area, a substantial amount of commission costs are incurred in connection with evidentiary hearings. In addition, the commission currently does not have adequate data which allow allocation of costs among the parties to a hearing."
Rachelle Patterson, a FERC spokesman said, "It is not this commission's position to discourage small power production. . . ." She added that if the Supreme Court rules against the commission, "then there may be some rethinking done in the area of this user fee."
Robert Shapiro, an agency counsel, said, "If we are successful [in the court], as we are trying to be, interconnection user fees will only apply to those which are not . . . small power producers."
The American Gas Association opposes FERC's plans to increase fees in general, but said it had no specific position on the interconnection fee. The Edison Electric Institute, the trade group for the electric utilities, has appointed a subcommittee to study FERC's proposed user fees, but has no comment now. Legislation has been moving through Congress to head off the legal challenge by rewriting the law, but it is not expected to pass in this session.