Electricity Markets

NARUC urges FERC to pursue reform of PURPA

The National Association of Regulatory Utility Commissioners on Dec. 18 sent a letter to the Federal Energy Regulatory Commission urging FERC to pursue reform of the Public Utility Regulatory Policies Act of 1978. In its letter, NARUC outlines three ways to reform PURPA.

The letter was sent by NARUC President John Betkoski, who also serves as vice chairman of the Connecticut Public Utilities Regulatory Authority, to all five FERC commissioners.

Betkoski said that NARUC was pleased that FERC Commissioner Neil Chatterjee has said that FERC will be actively pursuing reform of PURPA regulations.

In a recent speech in Washington, D.C., Chatterjee discussed several areas where he believes the Commission can “continue to build and improve” on progress made by FERC through the years including PURPA reform. At the time of the speech, which was made in October, Chatterjee was serving as chairman of FERC.

The chairman’s gavel has since been handed over to Kevin McIntyre, who was sworn in on Dec. 7 as chairman of FERC.

“As the primary point of responsibility for PURPA’s on-the-ground implementation, the states have a strong interest in the reform of PURPA’s associated federal administrative regulations and we hope this reform will continue to be a priority under the leadership of Chairman McIntyre,” wrote Betkoski.

“Much has changed since PURPA was originally enacted in the late 1970s,” the NARUC letter said.

NARUC describes what it said are four significant changes since the original PURPA enactment: (1) the creation of wholesale markets; (2) the widespread adoption of qualifying facilities technologies as sources of power; (3) the open-access regulation of the transmission system; and (4) the use of competitive methods to select projects throughout the states, “all of which suggest that PURPA’s administrative regulations should be aligned to these developments, instead of obstructing them,” NARUC said in a news release related to the letter.

Three proposals for PURPA reform

NARUC’s letter outlines three ways to reform PURPA, structured around the following propositions:

  • FERC should adopt regulations that move away from the use of administratively determined avoided costs, and encourage the use of competitive solicitations for PURPA compliance and project selection;
  • Lower or eliminate the 20 MW threshold for the rebuttable presumption that qualifying facilities with a capacity at or below that size do not have nondiscriminatory access to the market, which NARUC said would increase competition and reduce transaction costs to state commissions;
  • Address the disaggregation problem “where qualifying facilities have gamed state and federal regulation by making changes to the ‘one-mile rule’ and other related reforms.”

“We appreciate the Commission turning its attention to PURPA reform amidst all the other issues that are before the Commission,” NARUC said in the letter. “The reforms we have proposed are important and necessary at this time and we respectfully request that the Commission carefully consider them as it develops changes to the regulations.  We look forward to working with you on advancing these measures because they will help FERC achieve its goal of better aligning PURPA implementation with modern realities. “

House lawmaker introduced PURPA reform bill

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

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.