Users contract electricity sales to utilities above PSC rates

Long-term contracts between industrial users and cogenerators may have higher short-term rates than those established by state commissions in order to encourage cogeneration and finance cogenerating equipment. The Public Utility Regulatory Policies Act requires utilities to pay full avoided costs to cogenerators for their excess power, but these costs fluctuate according to variations in load demand and fuel costs. The uncertainty of short-term fluctuations has encouraged innovative project financing arrangements on a long-term basis. Several cogenerators and utilities explain their financing agreements. (DCK)