Dive Brief:
- Three Republican lawmakers have sent a letter to the Federal Energy Regulatory Commission (FERC), asking the agency to schedule a technical conference to examine the Public Utility Regulatory Policies Act (PURPA) of 1978 and to consider changes based on changes in the market in the last 40 years, Bloomberg reports.
- U.S. Sen. Lisa Murkowski (R-AK) and U.S. Reps. Fred Upton (R-MI) and Ed Whitfield (R-KY) are the legislators calling for changes to PURPA, which mandates utilities purchase energy from small renewable sources.
- The lawmakers say the rule is no longer necessary after decades of market evolution and advancements in renewable energy, and could be costing consumers billions of dollars.
Dive Insight:
The chairs of three energy committees or subcommittees are petitioning FERC to take a closer look at rules originally written to level the playing field for small renewable sources, but which they now believe is an outdated policy that is costing consumers money.
Murkowski chairs the Senate Energy and Natural Resources Committee; Upton leads the House Energy and Commerce Committee; and Whitfield is chairman of the House Energy and Power Subcommittee. The three sent their letter last week to FERC Chair Norman Bay.
Earlier this year, Warren Buffett's Berkshire Hathaway Energy (BHE) was lobbying to revamp PURPA in an effort to eliminate requirements that utilities purchase power from small renewable and cogeneration units. But changes like those will require a fight, as the law still has many staunch supporters. Sen. Maria Cantwell (D-WA) pushed back on BHE's proposal saying it would allow it too much market power in the Pacific Northwest, where it also owns rail lines and generators.
Buffett's company owns PacifiCorp, which says it is locked into PURPA contracts that are more than 40% higher than market prices, forcing customers to pay an incremental $1.1 billion over the next 10 years.
"In light of these developments, we urge the Commission to take a comprehensive look at PURPA," the three lawmakers said in their letter. Among the points they want to focus on: determining if mandatory purchase obligations remain appropriate; methods used by states to estsablish avoided costs; and the treatment of voluntary imbalance markets, similar to the new Energy Imbalance Market out West.
There may be the opportunity for states to address the issue as well. Over the summer, the Idaho Public Utilities Commission granted a request made by the state's major utilities to reduce the length of negotiated renewable energy contracts covered by PURPA. The decision reduced the length of contracts from 20 years to two years after regulators found longer contracts led to customers paying higher costs for renewable power.
