Enron, Connecticut and FuelCell Energy seeking ,
 PROJECTS 
CONN. FUEL CELL PROJECT MAY FALTER ON DETAILS OF STATE FUNDING RULES 

May. 24, 2001 
Utility Environment Report 
Page 11 
(Copyright 2001 McGraw-Hill, Inc.) 

Enron Corp., FuelCell Energy and a state agency are seeking to convince 
Connecticut regulators to devote about $124-million over five years to a 
26-MW fuel cell project. But some observers doubt the project will win 
approval because the proposal does not meet state funding requirements and 
was not filed properly. Under a proposal to the Connecticut Dept. of Public 
Utility Control, the Connecticut Resource Recovery Authority, a quasi-public 
waste agency, would tap the state's conservation fund, set up under electric 
restructuring, to buy 12 fuel cell units from Enron North America, which 
distributes FuelCell Energy's equipment. CRRA would schedule the output from 
the fuel cell farms into the NEPOOL power grid and make the power available 
to market participants. If funding is granted, the project could be finished 
by the end of 2004, the proposal states. 

``This multi-year market transformation initiative will provide a Class I 
renewable energy source which will assist electric suppliers in meeting the 
Connecticut renewable energy portfolio standard, promote economic development 
within the State, provide energy in an environmentally responsible manner, 
diversify the State's energy supply mix, and promote the development of a 
truly competitive retail electricity market,'' the CRRA proposal states.

Under Connecticut's restructuring rules, starting July 2002, 1% of 
Connecticut's load or 58 MW must be supplied by Class I renewables, which 
include solar power, wind power, fuel cells, landfill methane gas and biomass 
facilities. By 2009, 6% of the state's load or 348 MW must be made of Class I 
renewables. The requirements, however, have been deferred because there is 
not currently enough Class I capacity in the state to meet the requirements.

The Enron project faces perhaps insurmountable hurdles, said Daniel Sosland, 
executive director of Environment Northeast and a member of the Energy 
Conservation Management Board, which oversees the conservation fund. The 
$85-million conservation fund is intended for consumer-side efficiency 
efforts, not to buy generation, Sosland said. The proposal faces significant 
legal hurdles, he said.

The ECMB asked the DPUC in a March 27 letter to direct entities, like the 
CRRA, who didn't submit funding proposals to the board to do so before filing 
them with the department. It also asked the DPUC to clarify that the fund's 
purpose is to improve energy efficiency and electric use at the customers' 
premises and to clarify that proposals are screened for cost effectiveness.

Current installed costs of fuel cells range between $5,000 and $6,000 per kW, 
according to the CRRA proposal. Fuel cell manufacturers have not been able to 
achieve economic commercialization due to the high capital expenditures 
required to build up their manufacturing processes, according to the 
proposal. ``This 26 MW order sufficiently supports the manufacturing 
investment required to automate and develop economies of scale associated 
with volume manufacturing and to begin the commercialization of fuel cells as 
a viable and economical power supply,'' the CRRA proposal states. ``The 
average installed cost for all 12 units in this 26-MW installation is 
approximately $4,150 per kilowatt.'' Connecticut's $15-million Clean Energy 
Fund, which invests in renewable technologies, previously turned down the 
proposed project, Sosland said.

The CRRA will present its proposal to the DPUC during hearings on funding for 
conservation programs. The DPUC is set to make a final decision on the 
``Conservation and Load Management Programs and Budget for 2001'' by June 6.
tom.chapman@enron.com, marchris.robinson@enron.com, bill.moore@enron.com, 