NRECA applauded action by the Federal Energy Regulatory Commission to update the Public Utility Regulatory Policies Act of 1978, saying the reforms will save electric co-ops money and give them flexibility in how they deliver renewable energy and efficiency to their consumer-members.
NRECA backed proposed improvements to PURPA last December and sent comments to FERC, saying reform is needed to ensure that PURPA’s implementing regulations reflect how energy markets have changed over the past 40 years.
The reforms, approved by the commission on July 16, “prioritize innovation, affordability, and reliability,” said NRECA CEO Jim Matheson.
“Today’s 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electric cooperatives to continue developing renewable resources with a focus on their consumer-members instead of an outdated policy,” Matheson said. “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.”
PURPA requires utilities to buy power from and interconnect with small power generators and cogeneration facilities as a means to spur domestic renewable and alternative energy generation. These “qualifying facilities” (QFs) receive special rates and regulatory treatment.
But PURPA rules have driven up co-op costs by compelling them to buy higher-priced generation from QFs rather than buy it in the electricity market or produce their own power. PURPA requirements also have stifled co-ops’ ability to be creative in offering renewables and efficiency options to their members.
Under the newly approved reforms, utilities can now set energy rates for QF power based on the utilities’ variable, projected energy costs. In addition, FERC’s “one-mile rule” for determining the size threshold for small power QFs has been modified. And utilities may establish criteria for when a QF can claim a “legally enforceable obligation” for a co-op to buy its generation.