On November 6, 2015, the chairmen of several congressional energy committees and subcommittees sent a letter to the Federal Energy Regulatory Commission (FERC or “Commission”) requesting that FERC convene a technical conference to review the implementation of the Public Utility Regulatory Policies Act of 1978 (PURPA). PURPA, a product of the energy crisis of the 1970s, sought to encourage alternate forms of energy production in what was, at the time, an industry dominated by natural monopoly electric utilities. The law requires utilities to buy power from “Qualifying Facilities,” or “QFs,” which are small, renewable generation facilities and cogeneration facilities that meet certain operating and efficiency standards.
The letter suggests that FERC’s implementation of the Carter-era law needs a comprehensive reevaluation due to the significant developments in the industry over the last few decades. These developments include the maturation of organized wholesale power markets, open access transmission requirements, decreasing prices for natural gas and renewable energy technologies, environmental regulations, integrated resource planning, federal tax credits, renewable portfolio standards and the proliferation of distributed energy resources. The authors of the letter hope that the technical conference can identify necessary regulatory or legislative reforms that recognize the modern electricity marketplace.
The authors—Sen. Lisa Murkowski (R-AK) and Reps. Fred Upton (R-MI) and Ed Whitfield (R-KY) — pointed to concerns about certain PURPA requirements that stakeholders raised in recent testimony before the Senate Energy and Natural Resources Committee and House Energy and Commerce Committee.1 The chairmen specifically cited the testimony of Jonathan M. Weisgall of Berkshire Hathaway Energy, who discussed the risks imposed by long-term, fixed-price contracts mandated by PURPA, many of which Weisgall claimed to be priced well above market.2
The letter requested that the FERC technical conference address several issues, including:
- whether FERC’s one-mile rule to determine whether facilities are “located at the same site” for determining QF status for small power production facilities has been subject to abuse
- the treatment of energy imbalance markets as comparable markets for purposes of implementing PURPA’s mandatory purchase requirement
- the rebuttable presumption that a QF with a capacity at or below 20 MW does not have nondiscriminatory access to the market
- whether imposing a mandatory purchase obligation is appropriate if an electric utility does not need to acquire capacity from a QF to meet its service obligation
- whether imposing a mandatory purchase obligation is appropriate if the utility is subject to a state-required integrated resource planning process and a competitive resource procurement process
- the methods used by states to establish avoided cost rates.