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Momentum on PURPA reform may slow in new US Congress

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Momentum on PURPA reform may slow in new US Congress

Efforts to update an over 40-year-old law requiring electric utilities to buy power from small renewable energy facilities may hit resistance in the new U.S. Congress that kicked off in early January.

Critics of the Public Utility Regulatory Policies Act of 1978, known as PURPA, want Congress to change the law to prevent alleged gaming by project developers and make larger new renewable plants more competitive. Those complaints spurred hearings and GOP-backed proposals last Congress that sought to ease PURPA's mandatory power purchase obligations.

But Democrats' takeover of the U.S. House of Representatives in the 2018 midterm elections could dim prospects for reform.

A bill last Congress from U.S. Rep. Tim Walberg, R-Mich., dubbed the PURPA Modernization Act of 2017, sought to restrict the size of renewable energy facilities from which utilities are obligated to buy power. Currently, renewable generators must have 80 MW or less of capacity to qualify as a PURPA facility. In addition, facilities with less than 20 MW of capacity are presumed to lack the non-discriminatory access to wholesale markets needed for their host utilities to terminate their mandatory purchase obligation under the law.

To ease those obligations, Walberg's bill would lower the 20-MW rebuttable presumption threshold to 2.5 MW or less. The legislation also would require the Federal Energy Regulatory Commission to alter its rule defining what facilities qualify as separate plants under PURPA.

For the purpose of determining PURPA eligibility, FERC considers multiple small power production units to be a single facility only if they are located within one mile of each other, share the same energy resource, and are owned by one company or by affiliates. Walberg's bill would convert FERC's one-mile rule to a rebuttable presumption, thereby allowing stakeholders to challenge developers they believe are abusing the law by breaking a large project into several smaller ones in order to qualify as PURPA facilities.

Despite support for the bill from some lawmakers and large utilities, the House Energy and Commerce Committee never voted on the measure last Congress and looks less likely to do so in the 116th Congress that began on Jan. 3, given that the panel's incoming chairman previously opposed the legislation.

U.S. Rep. Frank Pallone Jr., D-N.J., who became the Energy and Commerce Committee chairman after Democrats reclaimed the House, called Walberg's bill a "direct assault on PURPA," a law he said has saved consumers money while expanding the generation of cleaner electricity. In addition, Pallone and other House Democrats want to focus more in the new Congress on climate change and oversight of the Trump administration's efforts to roll back environmental regulations from the energy sector, priorities that could eclipse PURPA updates.

Nevertheless, Walberg plans to reintroduce his bill in the new Congress and expects a companion proposal from the U.S. Senate, Walberg spokesperson Dan Kotman said. The legislation will be a "slightly modified version" of the bill from last Congress, according to Kotman, who did not provide further details on possible changes.

U.S. Sen. John Barrasso, R-Wyo., introduced a companion bill to the PURPA Modernization Act in April 2018, but the Senate Energy and Natural Resources Committee did not vote on the legislation in the prior Congress.

FERC still may act

Proponents of PURPA reform say FERC can make some changes to the law on its own, including with respect to how states calculate the avoided cost of buying power from PURPA facilities rather than building new generation or procuring electricity from other sources — a key figure in setting rates for PURPA plants.

Although commission members have emphasized that Congress must make any big revisions to the law, possible updates to PURPA are among FERC's priorities for the new year. In December 2018, FERC Chairman Neil Chatterjee said one of the agency's main initiatives in 2019 will be "better aligning PURPA with our modern energy landscape."

But that work will compete with other priorities. Chatterjee said FERC also wants to focus in 2019 on its ongoing grid resilience proceeding, pipeline policy statement review, transmission incentive policies, formation of a final rule on how distributed energy resources can participate in wholesale markets, and potential changes to the commission's Order 1000 transmission planning mandate. The recent passing of FERC commissioner Kevin McIntyre also could slow work at the agency, as the commission now is split between two Republican and two Democratic members.