FERC reforms PURPA of 1978

The Federal Energy Regulatory Commission (FERC) has recently voted to reform outdated rules and regulations implementing the Public Utility Regulatory Policies Act of 1978 (PURPA). The action will benefit electricity customers while further driving growth in renewable energy.

The Federal Energy Regulatory Commission (FERC) has recently voted to reform outdated rules and regulations implementing the Public Utility Regulatory Policies Act of 1978 (PURPA). The action will benefit electricity customers while further driving growth in renewable energy.

Lauding the initiative, the President of Edison Electric Institute (EEI), Tom Kuhn said, “We applaud FERC Chairman (Neil) Chatterjee for his leadership and commitment to reforming PURPA. For years, electricity customers have been paying billions of dollars in excess energy costs as a result of PURPA provisions enacted in the 1970s that allowed well-financed big developers to lock in guaranteed long-term, inflexible contracts at the expense of other more-competitive and cost-efficient renewable energy projects. By updating these rules, FERC has helped ensure that renewable energy can continue to grow without forcing electricity customers to pay a premium to the developers that learned how to game the system.”

PURPA was enacted more than 40 years ago during a national oil crisis to promote increased energy conservation, efficiency and the growth of renewable energy. The energy mix and marketplace have changed significantly since then. There has been substantial growth in the use of renewable resources, as well as new and improved renewable technologies, and the cost of renewables continues to fall.

Echoing the tone of appreciation, Jim Matheson, CEO, National Rural Electric Cooperative Association (NRECA), said, “The decision is a pivotal step that enables electric cooperatives to continue developing renewable resources with a focus on their consumer-members instead of an outdated policy. I applaud FERC for taking this action which rightfully prioritizes innovation, affordability, and reliability. The Commission has struck the right balance between supporting alternative energy development and acknowledging the importance of flexible implementation by state and local regulatory authorities.”

The 1978 law requires investor-owned electric companies, public power utilities, and electric cooperatives to purchase energy from Qualifying Facilities (QFs) at prices that often exceed the market. Today’s actions address this outdated requirement.

Commenting on the reform, Joy Ditto, American Public Power Association (APPA) President and CEO, said, “The energy industry landscape looks quite different now than when PURPA was first enacted. We’ve seen fundamental changes to how electricity is generated – especially pertaining to the growth of renewable resources and the emergence of new technologies. And we’ve also seen greater reliance – especially for public power utilities – on competitive wholesale markets. FERC appropriately recognizes the need to modernize PURPA to reflect these changes.”

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