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<title>Bill Proposed in North Carolina to Streamline Merchant Power Plant
Approval Process</title>
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<p align="left"><strong><small><font face="Arial">About The Author:</font></small></strong></p>
<p align="left"><font face="Arial" style="font-size: 9pt">Robert A. Olson is a partner in the law firm of
Brown, Olson & Gould, P.C. which maintains a nationwide practice in energy law,
public utility law and related commercial transactions.</font></p>
<p><small><font face="Arial"><font style="font-size: 9pt">He can be reached at:</font><br>
<br>
<b><font color="#0000FF">Brown, Olson & Gould, PC</font></b><br>
2 Delta Drive<br>
Suite 301<br>
Concord, NH 03301<br>
<a href="mailto:[email protected]">[email protected]</a><br>
(603) 225-9716<br>
<a href="mailto:[email protected]"></a></font></small></p>
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<img src="../images/statelin.gif" alt="STATELINE by Robert Olson" border="0" width="375" height="75"><p><b><u><br>
January 2001</u><br>
<font face="Arial" size="6" color="#000000">Bill Proposed
in North Carolina to Streamline Merchant Power Plant Approval Process<br>
</font>
</b><strong>By Robert Olson -- Brown, Olson and Wilson, P.C.<br>
</strong><font face="Arial" size="2">(<em>originally published by PMA OnLine Magazine:
200</em>1/02/04)</font></p><center>
<p ALIGN="JUSTIFY"><font face="Arial">The co-chairs of an electric service study
committee in the North Carolina legislature, Senator David Hoyle and
Representative Ronald Smith, have proposed a draft bill that will streamline the
approval process for merchant power plants. The bill eliminates certain
reporting requirements for merchant plants applying for approval to build
facilities and modifies the standard used to review merchant plant applications
and thereby stream-lines the development process for generation facilities.</font></p>
<p ALIGN="JUSTIFY"><font face="Arial">North Carolina law currently requires any
entity intending to construct an electric generation facility to first obtain
from the North Carolina Utilities Commission (the "Commission") a
certificate of public convenience and necessity. Anyone constructing an
electricity generating facility to be used primarily for the constructor’s own
use and not primarily for sale to or for the public is exempt from this
requirement. Despite being exempt, such self-generators must notify the
Commission of the construction of the facility prior to the commencement of
construction.</font></p>
<p ALIGN="JUSTIFY"><font face="Arial">Also under current North Carolina law, the
Commission must apply a certain criteria when examining any application for a
certificate of public convenience and necessity. Before issuing a certificate,
the Commission must determine that the public convenience and necessity require,
or will require, the construction of the proposed electric generation facility.
To make this determination, the Commission must develop a plan addressing the
long-range needs for electric generation facility expansion in North Carolina.
When presented with an application for a certificate, the Commission must find
that construction of the new facility is consistent with this plan.</font></p>
<p ALIGN="JUSTIFY"><font face="Arial">The current North Carolina law further
requires that, when acting upon an application for a certificate of public
convenience and necessity, the Commission must consider the applicant’s power
transfer arrangements and certain other criteria. Specifically, the Commission
is required to consider arrangements between the applicant and other electric
utilities for interchange of power, the pooling of plant, and power purchases.
The Commission must also consider "other methods for providing reliable,
efficient and economical electric service." In addition, the Commission
must approve estimated construction costs for the facility and conduct an
on-going review of the construction.</font></p>
<p ALIGN="JUSTIFY"><font face="Arial">The proposed legislation would establish
the application of different criteria for electric generation facilities not
subject to rate-setting by the Commission. The draft bill leaves in place the
existing criteria for non-merchant power plants. Under the proposed legislation,
merchant plants are not subject to the requirement that the proposed plant be
consistent with the electric generation expansion plan. Under the draft bill,
however, if the Commission determines that consideration of the electric
generation expansion plan "is in the public interest," the plan may
nonetheless apply. Moreover, the draft bill specifies that the requirement to
demonstrate the need for a merchant plant "need not be demonstrated by a
specific local need or contract to supply electricity," but rather states
the "need for such a generating facility may be demonstrated by expected
regional growth in the use of electricity."</font></p>
<p ALIGN="JUSTIFY"><font face="Arial">Under the draft bill, merchant plants are
not subject to the provision of the existing law requiring the Commission to
consider the power transfer arrangements for the facility in acting on the
application for a certificate of public convenience and necessity. The draft
bill also eliminates the requirement that the Commission evaluate the
reliability, efficiency, and economical nature of the facility. The requirement
for the commission to conduct an ongoing review of construction and of the
developer to submit construction cost estimates, construction progress reports,
and revisions of construction cost estimates is also eliminated for merchant
plants under the proposed legislation. The draft bill also eliminates the
requirement for a public hearing on the merchant plant’s application. While
the proposed legislation initially exempts merchant plants from each of these
requirements, the Commission may nonetheless apply these requirements if it
finds that "the application of those subsections is in the public
interest."</font></p>
<p ALIGN="JUSTIFY"><font face="Arial">The study committee is expected to meet on
January 23rd to consider the proposed legislation.</font></p>
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<blockquote>
<p align="left"><font face="Arial">
<small>Robert A. Olson is a partner in the law firm of Brown, Olson &
Gould P.C.
which maintains a nationwide practice in energy law, public utility law and related
commercial transactions. He can be reached at:</small></font><p align="center">
<font face="Arial"><small><font color="#0000FF"><b>Brown, Olson & Gould, PC</b></font><br>
2 Delta Drive, Suite 301<br>
Concord, NH 03301 <br>
<br>
<a href="mailto:[email protected]">[email protected]</a> | (603) 225-9716<a href="mailto:[email protected]"></a></small></font>
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