Electricity Markets

House member introduces bill to reform PURPA

Rep. Tim Walberg, R-Mich., on Nov. 29 introduced legislation aimed at reforming the Public Utility Regulatory Policies Act of 1978.

The law requires electric utilities to purchase power from qualifying facilities, or QFs, specifically cogeneration and small power projects, at the utilities' "avoided cost."

The legislation, H.R. 4476, aims to prevent abuse of the Federal Energy Regulatory Commission's “one-mile” rule to ensure that two or more facilities located more than one mile apart are independent, Walberg’s office said.

In addition, the PURPA Modernization Act of 2017 would also lower the 20-megawatt threshold mandatory purchase obligation “to reflect increased competition in electricity markets since PURPA was enacted,” the lawmaker’s office said in a news release.

“Energy markets have changed significantly over the last 40 years, and many challenges of that era no longer exist,” said Walberg in the news release.

“With new innovations and advancements in technology, today’s energy markets are more diverse and domestic energy resources are abundant instead of scarce. It’s time to modernize PURPA with these new realities in mind,” he said.

The American Public Power Association supports the bill.

House hearing examined PURPA

On Sept. 6, the House Energy and Commerce Committee’s Subcommittee on Energy held a hearing where electricity industry stakeholders discussed PURPA, its current effects on consumers, and whether it should be updated by Congress. Walberg is a member of the subcommittee.

At the hearing, Rep. Fred Upton, R-Mich., chairman of the Energy and Commerce Committee, suggested opportunities for revisions to, among other things, the PURPA’s mandatory purchase provision, its “one mile rule,” and avoided cost calculations.

FERC and PURPA reform

In a recent speech, Neil Chatterjee, chairman of FERC, discussed several areas where he believes the Commission can “continue to build and improve” on progress made by FERC through the years. One of those areas, he said, is PURPA reform.

He said that while the fundamental aspects of PURPA are established by the statute, the Commission has discretion to evaluate how it implements the law within the context of evolving energy markets.

To this end, he believes FERC should continue to examine the record developed in a 2016 technical conference to determine whether changes in existing regulations and policies could better align PURPA implementation with modern realities.

“One particular area where many parties have indicated a need for a different approach is the ‘one-mile rule’ for qualifying facilities. Of course, others may exist too, and we owe it to stakeholders to continue taking a hard look at our regulations to identify those opportunities for improvement,” he said.