Three Democrats urge FERC to protect PURPA as key to renewables development

On Feb. 11, three Democratic members of Congress wrote to the Federal Energy Regulatory Commission, urging a balanced discussion of the requirements and implementation of the Public Utility Regulatory Policies Act of 1978 (PURPA) at an upcoming technical conference.

FERC had sent out a Feb. 9 notice that it plans to hold a technical conference on implementation issues under PURPA. The conference will take place on June 29 at the FERC offices in Washington DC. Further information concerning topics and speakers, as well as matters relevant to the organization of the technical conference, will be provided at a later date in supplemental notices.

The three who wrote the Feb 11 letter are: Sen. Maria Cantwell, D-Wash., ranking member of the Senate Energy and Natural Resources Committee; Rep. Frank Pallone, Jr., D-N.J., ranking member of the House Energy and Commerce Committee; and Rep. Bobby Rush, D-Ill., ranking member of the House Subcommittee on Energy and Power.

They wrote to FERC Chairman Norman Bay, pointing out how much electricity policy has evolved since the enactment of PURPA in 1978. Lower technology costs, state renewable portfolio standards, tax credits and net metering programs have encouraged significant investment in renewable energy.

But, they wrote, at the same time, Title II of PURPA remains an important federal backstop for renewable energy investment, especially given the often “tenuous” nature of state electricity policies. The three Democrats warned against narrowing the scope of PURPA further than Congress already did in a 2005 energy bill. They also suggested a list of topics for discussion at the technical conference on this issue.

Said the letter: “To be sure, electricity policy has evolved markedly since 1978 in ways that have often eclipsed PURPA in encouraging investment in renewable energy. In fact, in the Energy Policy Act of 2005, Congress reduced the scope of Title II in recognition of the increasing opportunities to build and integrate renewable generation in regions with competitive wholesale markets. The evolution itself of these markets was initiated in part by Title II and further encouraged by Commission policy and by Congress in the Energy Policy Act of 1992. Congress has also repeatedly authorized federal tax credits for producing and investing in renewable generation, most recently in the Consolidated Appropriations Act, 2016, last month. State policies have also driven the growth in renewable generation.

“Today, over half of states have renewable portfolio standards that go beyond PURPA to directly require construction of renewable resources. Many states also have competitive procurement requirements. Separately, net metering programs in 44 states have supported the expansion of rooftop solar and other distributed generation. As a result of these policies, in many of the states not already substantially exempt by the Commission under section 210(m) from PURPA’s mandatory purchase and sale requirements, PURPA is effectively dormant.

“Yet in light of these many related areas of electricity policy, Title II remains a singular federal backstop to support renewable energy in parts of the country that may otherwise have significant barriers. Title II contemplates a diversity of approaches by different states within the perimeter of a consistent federal requirement to purchase and interconnect independent renewable and cogeneration power production. In the past year, legislators and electricity regulators across the country have rolled back or debated rolling back incentives for renewable energy including renewable portfolio standards, energy efficiency resource standards, and net metering programs.  The tenuous and shifting nature of these state policies suggests that the original objectives of Title II remain as relevant today in some jurisdictions as they were in 1978 and in 2005 when Congress last significantly amended PURPA.

“Until Congress chooses to act again, it would be improper for FERC to narrow the scope of Title II any further. We echo your sentiment that the Commission’s continued implementation of its statutory responsibilities under section 210 of PURPA deserves thoughtful consideration.”

Their suggested topics for the technical conference include:

  • Whether methods currently used by states to calculate avoided costs accurately reflect the full value of all avoided costs provided by qualifying facilities (QFs) including avoided energy, capacity, ancillary service, transmission, and distribution costs;
  • Whether states have used the discretion already authorized under PURPA to remedy perceived oversupplies of proposed QFs, for example through adjusting avoided cost calculations or other practices such as limiting the size of QFs or shortening the maximum lengths of contracts;
  • Whether section 210 appears to be the primary factor driving the development of renewable generation in some states as opposed to the complementary renewable energy policies outlined above;
  • Whether independent state policies, including integrated resource planning, competitive procurement requirements, net metering, and renewable portfolio standards, have generally been stable enough to provide a reliable investment climate for renewable generation;
  • Whether independently-administered, voluntary energy imbalance markets on their own have ever approached the volume and liquidity of the comparable markets contemplated under section 210(m)(1)(C) (as enacted under the Energy Policy Act of 2005) that would send a sufficient market signal to develop independent renewable generation in the absence of a must-purchase requirement; and
  • Whether there are currently technologies or categories of facilities (i.e., battery storage, marine and hydrokinetics, or fuel cells) that may be eligible to certify as qualifying facilities but are not currently being built or certified as such.
About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.