The Federal Energy Regulatory Commission once again is set to consider revamping its rules implementing a 40-year-old law aimed at ensuring that small renewable power generators and cogeneration facilities have a reliable means of selling the electricity they produce.
Chairman Kevin McIntyre made the announcement at the agency's May 17 open monthly meeting, noting that much has changed since an earlier review of the agency's Public Utility Regulatory Policies Act, or PURPA, policies that began in late 2015 stalled during the transition between administrations.
"First, the makeup of the commission is significantly different than it was in 2016, and in recent months we have been focusing on other issues, such as resilience and our review of the commission's gas certificate policy statement," McIntyre said. "Now that we have those two initiatives well underway, I directed our staff to reenergize our review initiative."
While all five commissioners appeared to be on board with renewing the effort, Commissioner Robert Powelson seemed particularly enthusiastic about the idea. Powelson, a former Pennsylvania state regulator, said he believes some issues, such as revamping the agency's "one-mile rule" for determining the size of an entity seeking certification as a small power production, can be addressed "rather quickly."
"I think my big push for you as an impatient state regulator being federalized is we need an expedited review of PURPA," Powelson said.
McIntyre, however, stressed that the review will be used to determine what — if anything — the commission needs to change about how it implements PURPA.
"Personally, I have an open mind on the issue, and by raising the issue I am not foreshadowing that I believe we need to make, or not to make, any changes," McIntyre said.
PURPA was enacted in 1978 to reduce the nation's dependence on foreign oil by promoting the conservation of energy and increasing the production of electricity using renewable and other alternative resources. Under FERC's regulations implementing that law, utilities are required to buy power from qualifying facilities — renewable generators with capacity of 80 MW or less and cogeneration facilities of any size — in their service territories at rates reflecting what would have to pay to buy that same power from other generators or produce it themselves.
The Energy Policy Act of 2005 modified PURPA to essentially eliminate the mandatory purchase requirement with respect to qualifying facilities that have nondiscriminatory access to wholesale markets. FERC then clarified how it will determine when such access exists, but few other changes have been made to the PURPA regime since then, which prompted key Republican lawmakers in November 2015 to ask FERC to take a fresh look at its oversight of the law.
Soon thereafter, FERC's then-Chairman Norman Bay instructed staff to hold a technical conference, which took place in July 2016, to "examine a range of issues" related to PURPA. Following that conference, FERC asked stakeholders to chime in on two specific issues — the "one-mile rule" and the minimum standards for PURPA-purchase contracts.
However, FERC lost the quorum it needs to vote on major initiatives such as PURPA reform relatively soon after those comments were due. That quorum was not reestablished until August 2017 when Commissioner Neil Chatterjee and Powelson joined the lone sitting FERC commissioner, Cheryl LaFleur. They immediately began working their way through the backlog of issues that had accumulated during the no-quorum period and addressing grid resilience concerns raised by the head of the U.S. Department of Energy.
FERC meanwhile has been pressed by various stakeholders to again take up the PURPA review effort. Congress in September 2017 held a hearing on the issue and the National Association of Regulatory Utilities Commissioners recently wrote a letter to the agency expressing hope that the newly reconstituted FERC would make PURPA reform a priority.
During FERC's May 17 meeting, both Chatterjee and Powelson acknowledged that any changes to the fundamental features of PURPA would require congressional action. But Powelson suggested that FERC's responsibility for implementing the act makes the agency "very capable [of providing] expedited treatment of PURPA reform."
Commissioner Richard Glick seemed more circumspect regarding that issue, noting that the only changes FERC can make are those that can be accomplished "from an administrative perspective." He also stressed the importance of FERC addressing concerns raised by developers of qualifying facilities along with those raised by industry.
Reiterating that he believes now is the appropriate time for FERC to resume its PURPA review, McIntyre said, "whether we are able to do it overnight is a separate matter."
