Rocky Mountain Power seeks to shorten Utah PURPA contracts

Dive Brief:

Rocky Mountain Power is seeking to shorten the 20-year contract length for qualified facilities (QFs) under the federal Public Utility Regulatory Policy Act to 2 or 3 years, the Salt Lake Tribune reports.
The utility's parent company, PacifiCorp, said it has seen an uptick in requests for PURPA projects across its 6-state territory as wind and solar prices drop, and said the costs of long term, fixed contracts will fall on ratepayers' shoulders.
Critics say shorten PURPA contracts will tamp down on efforts to develop Utah's renewable potential, describing it as a "radical shift in policy."

Dive Insight:

The push to shorten PURPA contract lengths in the West has appeared to gain momentum after Idaho's utility regulators approved a request by the state's major utilities to shorten the 20-year contract lengths down to 2-years. PacifiCorp, operating as Rocky Mountain Power in that area, was one of the utilities. The utility has also aimed to shorten contracts in Oregon as well.

Now RMP has turned its sights on Utah where it said it has 40 requests for PURPA contracts lined up, totaling 2,253 megawatts of generating capacity. The Salt Lake Tribune reports that its parent company, PacifiCorp, is already contracted to pay $2.9 billion to PURPA-qualified facilities (QFs) over the next 10 years, with about $170.5 million in 2015 alone.

"The company has no need for resources for the next decade," Paul Clements, RMP's director of commercial services, wrote to the Utah Public Service Commission in testimony. "Failure to implement the modification to contract terms proposed by the company in this case may result in significant irreversible harm to customers."

Clements said the 3,300 new megawatts of recently-finished generation and those in the pipeline will eclipse the utility's expected retail load, the Salt Lake Tribune reports.

But Utah's environmental adocate group HEAL Utah and Utah's Office of Consumer Service (OCS) say their proposal will hurt new QFs in the state.

"This extreme change may discourage all new QF development," wrote Bela Vastag, an analyst with the OCS. "This would be contrary to federal and state laws which were enacted specifically to encourage the development of small power producers or QFs."

PURPA was initially signed in 1978 to ensure a more diverse source of energy resources, and opened the door to more renewable energy. While federal regulators have set the standard for the size of QFs, state regulators have the authority to set rates and sign off on contracts.

This year, PURPA has come under increasing scrutiny with three Republican members of the U.S. Congress writing a letter to the Federal Energy Regulatory Commission asking that they schedule a technical conference to examine PURPA and to consider changes based on changes in the market in the last 40 years.

Berkshire-Hathaway has also pushed for changes to the law on the federal level, lobbying for the inclusion of a proposal to exempt many utilities from PURPA purchases in a broad energy bill unveiled by the House earlier this year. Lawmakers removed the proposal along with language aimed at curbing FERC's regulation of hydro power.