lowest grade available which is technically feasible, and capable of being burned consistent with applicable environmental requirements.

(5) Petitioner must comply with any terms and conditions which may be imposed pursuant to environmental requirements of § 503.15(b) of these regulations.

(e) Reporting requirement. ERA will rely upon the schedule of operation submitted with the petition as the permanent schedule for exempt use. The petitioner must notify ERA in advance of any changes to this schedule.

(f) Emergency use. A petition for an emergency exemption may be submitted in addition to a petition for a scheduled equipment outage. Eligibility and evidence requirements of each exemption must be satisfied. If granted, separate reporting requirements will be required for each exemption.

§ 503.44 Product or process requirements. [Reserved]

504.61 504.62

Use of liquefied natural gas.
Scheduled equipment outages.

504.63 Installations served by certain international pipelines.

504.64 Product or process requirements. [Reserved]

APPENDIX I-PROCEDURES FOR THE COMPUTATION OF THE REAL COST OF CAPITAL

AUTHORITY: Dept. of Energy Organization Act, Pub. L. 95-91, 91 Stat. 565 (42 U.S.C. 7101 et seq.); Powerplant and Industrial Fuel Use Act of 1978, Pub. L. 95-620, 92 Stat. 3289 (42 U.S.C. 8301 et seq.); E.O. 12009, 42 FR 46267, Sept. 15, 1977.

SOURCE: 45 FR 53692, Aug. 12, 1980, unless otherwise noted.

Subpart A-Restriction on the Increased Use of Petroleum

§ 504.1

Prohibition against the increased use of petroleum.

(a) Prohibition. No existing electric powerplant, which during 1977 used an alternate fuel as a primary energy source, may use petroleum as a primary energy source in any calendar year in excess of the "base year amount" unless ERA issues a permit authorizing such increased use. The "base year amount" means the quantities of petroleum used in the powerplant as a primary energy source during calendar year 1977.

(b) Policy note. (1) Section 405 of the Act directs ERA by rule to restrain the use of petroleum by powerplants which burned an alternate fuel in 1977. Section 405 also directs ERA to establish, by rule, a procedure whereby powerplants may be permitted increased use of petroleum. Such permit shall be issued where the powerplant cannot comply with the requirements of the Clean Air Act without the permit and the increased use of petroleum is necessary to prevent an impairment of reliability of service. For example, where an electric powerplant requires a reasonably predictable time period to install pollution control equipment before returning to the use of an alternate fuel, ERA may issue a limited duration permit to use more petroleum as necessary to prevent impairment of reliability. In some cases, however, an electric powerplant may be unable to return to the use of an alternate fuel for an indeterminate period of time, or even permanently. Therefore, ERA, in implementing section 405 of the Act, has designed two alternate procedures. Under either procedure the applicant should provide the information necessary to enable EPA, the appropriate State regulatory agency, and ERA to make their decisions.

(2) The Act directs ERA to limit the duration of the permit allowing increased oil consumption above the base year amount to the period it determines is necessary to carry out the statutory mandate. In order to make this determination as to duration,

ERA needs to know when an existing powerplant either will be able to resume the use of an alternate fuel, or will no longer need to use petroleum to avoid impairment of reliability of electric service notwithstanding that it cannot burn an alternate fuel.

(3) ERA encourages applicants to plan for any interruption of alternate fuel use on a schedule that minimizes the need to burn increased amounts of petroleum and invites informal discussion prior to applying for a permit as to the duration of such increased use.

(c) Temporary interruptions necessary to comply with the Clean Air Act and prevent impairment of reliability of service.

NOTE: Examples contemplated under this subsection would include those cases where it is necessary to install pollution control equipment, arrange for the delivery of suitable fuel, or bring other units in the applicant's system on line.

(1) Eligibility. Existing electric powerplants which are subject to the prohibition imposed by this rule, but which will be able to comply after a temporary interruption are eligible for a permit if:

(i) The powerplant used an alternate fuel as a primary energy source during 1977;

(ii) The applicant has applied for a variance or other waiver from EPA or the State air pollution control agency to continue the use of an alternate fuel, and a decision with regard to that application has been rendered;

(iii) EPA or the appropriate State air pollution control agency has certified that: (A) The powerplant cannot comply with the requirements of the Clean Air Act, including any applicable implementation plan as defined in section 110(d) of the Clean Air Act, without issuance of a permit to use petroleum above the base year amount, and (B) the applicant has established the duration of the need for increased petroleum in order to comply;

(iv) The appropriate State regulatory authority has certified that the increased use of petroleum is necessary to prevent impairment of reliability of electric service in that State; and

(v) The powerplant's operation will be in compliance with the prohibition imposed by this rule by the expiration of the permit.

(2) Evidence of certification. The application for a permit must include the following in order to make the demonstration required by this section:

(i) A certification from EPA or the appropriate State air pollution control agency stating that the powerplant cannot comply with the requirements of the Clean Air Act, including any applicable implementation plan as defined in section 110(d) of the Clean Air Act, without the issuance of such a permit to use petroleum above the base year amount, and that the applicant has established the duration of need for increased petroleum in order to comply; and

(ii) A certification from the appropriate State regulatory authority stating that the increased use of petroleum by the powerplant is necessary to prevent impairment of reliability of service.

(3) Evidence of duration. The duration of any permit to increase the use of petroleum granted under this subsection shall be the minimum reasonable length of time necessary to comply with the requirements of the Clean Air Act without impairment of reliability of electric service. To assist ERA in determining this period of time, the applicant must submit to ERA along with the application the following statements:

(i) A compliance plan indicating how and in what time period the applicant plans to comply. The compliance plan must include the following:

(A) A specific schedule of milestones for bringing the powerplant back into compliance with the applicable environmental requirements;

(B) What steps will be taken to minimize use of petroleum and duration of such use; and

(C) The quantity of petroleum the applicant estimates is required and an estimate of the rate of use by month.

(ii) A statement of why the powerplant is unable to burn an alternate fuel in compliance with the Clean Air Act;

(iii) A statement showing whether the applicant attempted to get a vari

ance or other waiver from EPA or the State agency from applicable environmental requirements and if that waiver was denied; and

(iv) The basis, to the extent known to the applicant, for the State agency's reliability certification, including the data and analysis considered, the extent to which the State authority considered reliability in the applicant's electric region, and any other factors bearing on reliability which were considered.

(4) Limitation on duration of permit. ERA shall issue the permit for the increased use of petroleum only for the quantity and duration it determines is necessary after review and evaluation of the information set out above. ERA reserves the right to require whatever additional information may be necessary to enable it to make a determination as to duration.

(d) Indeterminate cessations due to inability to comply with environmental requirements and prevent impairment of reliability of electric service.

NOTE: Examples contemplated under this section would include those cases where a financial or physical limitation would preclude a powerplant from coming into compliance for an indeterminate period of time.

(1) Eligibility. In addition to the criteria enumerated in paragraphs (c)(1)(i), (ii), (iii), and (iv) above, existing electric powerplants which are subject to the prohibition imposed by this rule, but which are unable to comply with the Clean Air Act requirements after a temporary interruption, are eligible for a permit if they will be unable for specified reasons set out in paragraph (d)(2)(ii) to comply with the prohibition imposed by this rule for an indeterminate period of time.

(2) Evidence of certification. In addition to the evidence enumerated in paragraphs (c)(2) (i) and (ii) above, an application for a permit must include the following:

(i) A statement to the extent such information is available to the applicant, of the basis for the State agency's certification, including the data and analysis considered and the extent to which it considered the reliability of the applicant's electric region; and

(ii) A showing in accordance with Subparts C, D, and E of this part that the powerplant would qualify for an exemption for reasons relating to its inability to comply with Clean Air Act requirements because of environmental, financial or physical limitations.

(3) Statement. A statement indicating which fuels were presented for consideration to the agency which certified with regard to the Clean Air Act, and to the extent known by the applicant, why they were rejected as a method of compliance.'

(4) Evidence of duration. The duration of any permit to increase the use of petroleum granted under this paragraph shall not exceed the demonstrated need. Such duration shall be for the period the powerplant would qualify for an exemption, up to and including the remaining lifetime of the powerplant, or for the period of time that will be required to eliminate any impairment of reliability of electric service, whichever period is less.

(5) Limitation on duration of permit. ERA may issue a temporary permit under this subsection to enable the applicant to demonstrate it would qualify for an exemption under Title III of FUA for reasons relating to the inability to comply with Clean Air Act requirements. ERA reserves the right to require additional information necessary for a determination of duration.

(e) Environmental Protection Agency procedures. [Reserved]

Subpart B-Prohibitions and System Compliance Option

§ 504.2 Purpose and scope.

Section 504.3, below, sets forth the statutory prohibitions imposed by the Act upon existing powerplants. The prohibitions in this subpart apply to all existing electric powerplants as defined by § 500.2, unless, and to the extent that, ERA has either granted a temporary or permanent exemption, or approved a system compliance plan under Title V of the Act. Any person

'ERA encourages the applicant to request a pre-permit conference be held with EPA and ERA to discuss alternate fuel use strategies and to decide which fuels may be feasible.

(a) Section 301(a)(1) of the Act prohibits the use of natural gas as a primary energy source by an existing electric powerplant on or after January 1, 1990, unless, and to the extent that, ERA has either granted a temporary or permanent exemption or approved a system compliance plan under Title V of the Act.

(b) Section 301(a)(2) of the Act prohibits the use of natural gas as a primary energy source in any existing electric powerplant before January 1, 1990, unless it used natural gas as a primary energy source any time during calendar year 1977, unless, and to the extent that, ERA has either granted a temporary or permanent exemption, or approved a system compliance plan under Title V of the Act.

(c) Section 301(a)(3) of the Act prohibits the use of natural gas as a primary energy source by any existing electric powerplant, in any calendar year before 1990, in greater proportion than the average yearly proportion of natural gas which:

(1) The powerplant used as a primary energy source in calendar year 1974 through 1976; or

(2) If the powerplant began operations on or after January 1, 1974, the powerplant used as a primary energy source during the first two calendar years of its operation, unless, and to the extent that, ERA has either granted a temporary or permanent exemption from the prohibition or approved a system compliance plan under Title V of the Act.

(d) Any prohibition against the use of natural gas on or after January 1, 1990, will be stayed while any petition filed for an exemption is resolved. The stay will include the time required for judicial review. Such petition for exemption may be filed at any time after May 8, 1979, the effective date of FUA, but it must be filed at least one

year before the date the prohibition is first to take effect.

§ 504.4 Electric utility system compliance option.

(a) General. Section 501 of the Act provides for an electric utility system compliance option. An existing powerplant will be considered in compliance with any prohibition under Title III of the Act relating to the use of natural gas if ERA has issued an order approving a system compliance plan including such powerplant. No exemption, except an emergency exemption, for use of natural gas will be available for those powerplants which are covered or which have ever been covered by an approved plan.

(b) Requirements for approval. To qualify, the utility operating the existing powerplant must provide the information requested and demonstrate to the satisfaction of ERA its commitment to the following terms.

(1) Identification of all powerplants owned or operated by the utility, and an indication of those which would or could be subject to prohibitions under Title III (Existing Facilities) of the Act relating to the use of natural gas if a plan for the utility system were not approved;

(2) Identification of those powerplants covered in paragraph (b)(1) of this section that the utility believes would be likely to be entitled to an exemption if a plan were not approved;

(3) A commitment that if a plan is approved the utility will not thereafter use natural gas or petroleum as a primary energy source in any new baseload powerplant;

(4) A commitment that if a plan is approved, the utility will not use natural gas on and after January 1, 1990, in excess of: (i) 20 percent of the base period usage of natural gas adjusted for emergency or peakload purposes, if applicable, or, if lower (ii) the utility's minimum peakload requirement adjusted for emergency or peakload purposes, if applicable;

(5) A commitment that if a plan is approved, the utility will not on or after January 1, 1995, use natural gas except in peakload or intermediate load powerplants identified in paragraph (b)(1) above and the volumes of

(7) A commitment hat up al of the system complianc utility will obtain natural p the system only ur fer the of: (i) A contract which the ecuted prior to November other than under a extens newal of the contrt on or vember 9, 1978; (ii the utility execute vember 9, 1978, bi tract has been ap (iii) an extension o on or after Novemb tract entered into 1978, but only if t newal has been app

i cont. on or only i ved b enew

9, 1970 Tore No. exten. ved by i (8) A 10-year for ast, to i and extended an ally, wi vides support for a nclusion that the commitm is in th compliance plan wi be met. cast should include demand tricity, constructio.ians an cial plan; and

(9) A plan for u of fuel tion measures that will mini utility system's natural gas a leum consumption.

(c) Deadline for submissi period for submissin of the system compliance plan exp August 1, 1980.

(d) Calculations of 1990 nai volumes for § 504.4(b)(4)(i). For poses of § 504.4(b)(4)(i), volu. natural gas are the sum of the f ing:

(1) Twenty percent of the na gas used in calendar year 1976 b utility's powerplants that were pl in service on or before January 1, 1

(2) Ten percent of the natural used in the first 24 months of ser by the utility's powerplants which were placed in service after Januar. 1, 1976, and before May 8, 1979;

(3) Natural gas volumes for emergency purposes within the meaning of