Public Utility Regulatory Policies Act (PURPA)

What is PURPA?

Posted in: Business Continuity

What is PUPRA?

The Public Utility Regulatory Policies Act (PURPA) was passed in 1978 by the U.S. Congress as one part of the National Energy Act. The legislation was enacted in the midst of an energy crisis in the industrial world to encourage the production and integration of renewable energy and electricity conservation.

For fear of the price of oil rising, Congress tried to lessen dependence on foreign oil by promoting energy efficiency and alternative energy sources. PURPA requires electric utilities to purchase electric energy from cogeneration facilities and smaller production facilities (known as qualified facilities or QF). Additionally, PURPA enabled non-utility generators to generate energy by breaking the monopolies that held control of it.

PUPRA Reform

PURPA remained unchanged for 35 years until it was amended under the Energy Policy Act of 2005. The amendments require that each electric utility service make net metering service available upon request to any electric consumer it serves. Additionally, each electric utility must develop a plan to minimize dependence on one fuel source and to increase the efficiency of its fossil fuel generation.

Next, the PURPA Modernization Act of 2017 was introduced to help lower utility bills for American families. Due to the increased competition in electricity markets since the original PURPA was enacted in 1978, this Act lowered the 20 Megawatt threshold mandatory purchase obligation. Electric utilities were relieved of the obligation to purchase power from QFs.

In September 2019, the Federal Energy Regulatory Commission (FERC) proposed to reduce the rebuttable presumption threshold for small power production facilities from 20 MW to one MW. Currently, FERC presumes that QFs smaller than 20 MW do not have sufficient market access to justify the waiver of the purchase obligation.

Today, solar groups worry that more change proposals for flexibility to PURPA’s regulations will keep smaller facilities at a disadvantage, rather than fostering competition among electric utilities.

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