A 40-year-old law that\u2019s been key to the growth of renewable energy in the U.S. may be due for an overhaul.<\/p>\n
Much has changed since the Public Utility Regulatory Policies Act, called Purpa, was established in response to the Arab oil embargo of the early 1970s. Concerned about energy shortages, Congress wrote the law in part to encourage alternative energy. But that era of scarcity has since been replaced by one of abundance. And utilities say that Purpa should change with the times.<\/p>\n
“Changes to the market need to be reflected in the law,” said Adam L. Benshoff, executive director for regulatory affairs at the\u00a0Edison Electric Institute, an industry association. “We\u2019re certainly missing an opportunity to reduce costs for customers.”<\/p>\n
They may get their wish. Neil Chatterjee, the new chairman of the Federal Energy Regulatory Commission, which oversees U.S. power markets, has\u00a0indicated\u00a0that his agency should take a look at the law. But he hasn\u2019t outlined a timeline or scope of that effort.<\/p>\n
As it\u2019s written, Purpa requires utilities to purchase power from renewable energy projects under certain circumstances. If a developer can build a project for less than a utility can build a new power plant, then they can request a contract to sell power to the utility.<\/p>\n \n<\/div>\n<\/div>\n<\/figure>\n But utilities argue that developers have figured how to take advantage of the system. They\u2019re asking for immediate fixes to prevent market abuses, and curb instances in which developers break up their projects into smaller ones to qualify for higher rates, according to the Edison Electric Institute. Reducing the threshold for mandatory purchases could also be looked at.<\/p>\n \u201cWe\u2019re asking for Purpa to be modified in a way that more truly reflects avoided cost and stops some of the gaming,\u201d said Benshoff.<\/p>\n Purpa proponents, including solar and wind developers, reject the notion that it\u2019s outdated, saying it\u2019s essential to giving renewables a leg up in states that aren\u2019t traditionally green leaning.<\/p>\n \u201cPurpa has been a backdoor option to get some renewable projects to states that have few other policy levers that are incentivizing renewable energy,\u201d said Timothy Fox, vice president at ClearView Energy Partners LLC. \u201cIf the implementation of Purpa is reformed, we could see a slowdown in some of the states with more conventional resources,\u201d he said.<\/p>\n About 15 percent of U.S. solar capacity and 3 percent of wind planned to come online in the next few years may rely on Purpa, according to Bloomberg Intelligence.<\/p>\n The solar industry argues that any changes should be focused on making sure the law is enforced.<\/p>\nPurpa Power<\/h3>\n
Still Relevant<\/h3>\n