Electricity Markets

Association backs request that FERC review PURPA rules

The American Public Power Association and the National Rural Electric Cooperative Association are supporting a recent motion filed by the Edison Electric Institute (EEI) that asks the Federal Energy Regulatory Commission to revisit its rules and regulations implementing the Public Utility Regulatory Policies Act of 1978 (PURPA).

“The energy industry has undergone significant changes since PURPA was enacted in 1978, driven in no small part by the Commission’s implementation of policies to promote open access transmission, and the development of organized wholesale electricity markets,” the Association and NRECA said in their Feb. 19 answer to EEI’s filing (Docket No. AD16-16).

“There has been a meaningful evolution in the generation resource mix, including significant growth in renewable resources and use of new and improved technologies,” the Association and NRECA went on to say.

In its Feb. 4 motion to lodge, EEI asked FERC to undertake “a holistic review of its rules and regulations” implementing PURPA. EEI encouraged the Commission to “institute broader reforms to ensure that PURPA’s implementation is aligned with today’s energy landscape.” The Association and NRECA said they support these requests.

NRECA and the Association said that implementation of PURPA’s mandatory purchase obligation is of particular concern to public power and electric cooperative utilities, as it can require these utilities to buy power from qualifying facilities they do not need, at rates that may be higher than what can be obtained from the market. 

The mandatory purchase obligation also impacts long-term generation capacity planning when electric utilities are unexpectedly required to purchase power not accounted for in their integrated resource plans, the two trade groups said. 

The Association and NRECA said they recognize that the mandatory purchase obligation is a statutory requirement. “As EEI observes, however, the Commission retains significant discretion in adopting regulations to implement this and other PURPA provisions.”

Updating the Commission’s rules on matters such as calculation of avoided costs, implementation of PURPA section 210(m), and small power production QF qualification criteria -- including the “one mile” rule -- could result in more reasonable outcomes for electric utilities and their customers without contravening PURPA’s statutory requirements, the Association and NRECA went on to say.

The one-mile rule is the way that FERC determines how it defines what a single QF is and therefore whether or not the 80-MW small power production facility size limit is met. FERC also applies the one-mile rule to determine what constitutes a single QF for purposes of applying its presumption that QFs larger than 20-MW have non-discriminatory access to organized markets under PURPA section 210(m).

FERC held technical conference in 2016

FERC held a technical conference in 2016 to investigate certain of its PURPA implementation policies. 

Nothing came of the conference at the time, but in early 2018, then-FERC Chairman Kevin McIntyre directed Commission staff to reenergize FERC’s PURPA review initiative. (McIntyre relinquished his role as FERC chairman in October 2018 to focus on health-related issues and passed away in early January).

FERC Chairman Neil Chatterjee has said that aligning PURPA with the modern energy landscape should be a FERC priority, but the Commission has not taken any generic action on PURPA matters since 2016, when it convened the technical conference.

APPA and NRECA said that they support EEI’s request that the Commission undertake a holistic review of its PURPA’s rules and regulations, “and we share the view that the Commission should ‘institute broader reforms to ensure that PURPA’s implementation is aligned with today’s energy landscape.’”