Electricity Markets

McIntyre directs FERC staff to ‘reenergize’ PURPA review efforts

Federal Energy Regulatory Commission Chairman Kevin McIntyre on May 17 said that he has directed Commission staff to “reenergize” FERC’s Public Utility Regulatory Policies Act of 1978 review initiative.

“As many of you know, the Commission initiated a review of PURPA policies in the 2015, 2016 timeframe and held a technical conference in 2016 on certain PURPA issues,” he noted at the agency’s monthly open meeting.

“Much has changed since then,” McIntyre pointed out. For example, the makeup of FERC is significantly different than it was in 2016 and in recent months the Commission has been focusing on other key issues such resilience and FERC’s review of its gas certificate policy statement.

“Now that we have those two initiatives well underway, I have directed our FERC staff to reenergize our PURPA review initiative,” he said. “The reinvigorated review will take a look at the issues involved in PURPA so that the Commission may determine what, if anything, we need to do to improve and update our PURPA policies.”

McIntyre said he is still talking with his FERC colleagues on the format, scope and timing of the PURPA review “and I expect that the review will build on the record that has already been developed, as referenced.”

He said the process will allow for robust stakeholder input. “Personally, I have an open mind on the issue and by raising the issue I am not foreshadowing that I believe that we need to make or not make any changes.”

Commissioner Neil Chatterjee said that “this is an issue that has been top of mind for me since coming to the Commission and in fact one that I spoke about in detail at a recent hearing before the House Energy Subcommittee.”

The current energy landscape “is profoundly different than that of the late ‘70s when PURPA was enacted and because of this many have rightly voiced their desire for a fresh look at existing policy to better align PURPA with the realities we face today,” Chatterjee said.

At the same time, he underscored the point that changes to the fundamental features of PURPA require congressional action.

“But having said that, I agree with the chairman that we at the Commission can also play a role here by examining the existing regulations to ensure that they fulfill PURPA’s mandate of fostering the development of renewable resources and cogeneration, while protecting customers and competition.”

Commissioner Robert Powelson said that “we need an expedited review of PURPA,” noting the 2016 technical conference record that has been developed.

He said that FERC’s “long-standing approach to PURPA is an area that is ripe for examination.”

Powelson said it is important for the Commission to take “a hard look at its long-standing policies as we did more recently with our 1999 policy statement on gas certification.”

He said that “we want to ensure that we remain relevant and involved with the times,” noting that there are a number of “changing dynamics in our evolving grid.”

Commissioner Richard Glick said that “it certainly makes sense for us to consider whether we can improve how the statute is administered.”

PURPA has “and continues to play an important role in promoting competition within the utility sector” and ensuring that qualifying facilities have access to the market, he said.

Glick said that if FERC decides that “changes to our regulations are in order, then I think we must address the concerns raised not only by industry, but also qualifying facility developers – and there were quite a few concerns that were raised during that 2016 technical conference.”

He doesn’t think that FERC, as an administrative body, has the authority “to actually make major changes to the statute.” Major issues tied to PURPA “need to be decided by Congress, not this Commission.”

Senators John Barrasso, R-Wyoming, and James Risch, R-Idaho, earlier this month introduced legislation to modernize PURPA.

Barrasso’s office said that the “Updating Purchase Obligations to Deploy Affordable Resources to Energy Markets Under PURPA Act” (or the UPDATE PURPA Act) makes the following reforms to PURPA:

• Protects electricity customers from having to pay for unnecessary PURPA costs.
• Empowers state public utility commissions and nonregulated utilities to waive PURPA’s mandatory purchase obligation if additional power is not required to meet customers’ electricity needs.
• Ensures a level playing field for energy resources by requiring more PURPA resources to participate in energy markets.
• Prevents abuse of FERC’s one-mile rule.

U.S. Representative Tim Walberg, R-Mich., introduced the companion bill (H.R. 4476) in November 2017.

The American Public Power Association supports Walberg's bill and is reviewing the Barrasso-Risch bill.