FERC Pitches Controversial PURPA Reforms

By Published On: September 19, 2019

Two of the three federal energy regulators Sept. 19 voted out a proposed rulemaking to change the federal law protecting small renewable projects and cogeneration facilities. The dissenting commissioner warned the move would gut the 1978 Public Utility Regulatory Policies Act.

The Federal Energy Regulatory Commission’s Notice of Proposed Rulemaking to reform the law is to address market changes, including those created by the abundance of natural gas, in contrast to the energy landscape when PURPA was enacted. Significant changes to the law include giving states more authority to alter the energy pricing of renewable and combined heat and power projects under contract.

“We have seen tremendous technological advancements in renewables, increasing sophistication in competitive electric power markets, and abundant supplies of domestic natural gas,” said FERC Chair Neil Chatterjee, a Republican. He said the reform, a top priority of his, reflects today’s market and protects consumers.

Commissioner Richard Glick, a Democrat, warned that a number of the proposed reforms are an “administrative gutting of the statute,” and unauthorized by PURPA.

“Some reform makes sense but we are not allowed to get in the way of Congress’s thinking,” Glick insisted. He noted the numerous times Congress has been unable to change PURPA and objected to doing an end run around it.

The draft rulemaking would give state regulators the authority to alter energy rates—not capacity rates—in qualifying facility agreements pursuant to a utility’s avoided costs at the time energy is delivered. State regulators also would be allowed to vary rates during the life of these cleaner power resources, including setting “as available” rates based on market factors.

Chatterjee said that giving states the authority to set variable rates in contracts in place of fixed rates in long-term qualifying facility contracts may “assist financing” of projects.

House Energy & Commerce Committee Frank Pallone (D-NJ) called FERC’s said the approval of the proposed rule was a “party-line vote.” He said, “FERC has proposed making qualifying facilities nonfinanceable, throwing up an insurmountable barrier of entry for clean energy generation across the country.” He also questioned FERC’s authority to take this action, “– questions for which I intend to get answers.”

The proposed PURPA rulemaking also would include following:

  • Reduce the rebuttable presumption threshold for qualifying small renewable facilities from 20 MW to 1 MW. The 20 MW presumption would remain for co-generation plants.
  • Treats facilities one mile or less apart as the same facility, while facilities more than one mile but less than 10 miles apart would be presumed to be different facilities, which is rebuttatable; and:
  • Clarify that a QF is entitled to a contract when it demonstrates commercial viability and a financial commitment to construct its facility pursuant to reasonable criteria set by state regulators.

In other news, Commissioner Glick protested his two fellow commissioners’ approval of gas projects that continue to fail to address the greenhouse gas emissions impacts.

“There is a systematic scrubbing of greenhouse gas emission impacts from the orders,” in violation of the Natural Gas Act and National Environmental Policy Act, Glick said.

Commissioner Bernhard McNamee, a Republican, insisted FERC lacked the statutory authority to incorporate emission impacts in their analyses of fossil fuel projects. “Congress tried 23 times to establish a carbon tax,” McNamee said. “It is not in our purview to come up with a new process for doing so.”

Glick said that the majority was treating greenhouse gas impacts differently from other environmental harm, noting FERC’s broad authority under the Natural Gas Act.

The public has 60 days to comment on the Notice of Proposed Rulemaking after it is published in the Federal Register.

Elizabeth McCarthy


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