FERC to tackle PURPA reform

Source: Rod Kuckro, E&E News reporter • Posted: Saturday, May 19, 2018

The Federal Energy Regulatory Commission is responding to the clamor of members of Congress and large electric utilities asking the regulator to re-examine an arcane 1978 law in light of today’s vastly different power market conditions.

A long-standing debate over the law’s continued usefulness has pitted state regulators, utilities and their customers against an array of interests representing industrial co-generators, independent power producers, and solar and wind developers.

FERC Chairman Kevin McIntyre announced the review Thursday at the commission’s monthly meeting. FERC has been mulling what to do about the Public Utility Regulatory Policies Act (PURPA) for a while, having hosted a technical conference in June 2016 on a law originally established in response to an energy crisis (Energywire, June 29, 2016).

PURPA was enacted after oil prices skyrocketed during the 1973 Arab oil embargo. The statute aimed to encourage conservation, more reliance on domestic energy sources and, in particular, developing renewable energy technologies.

A bipartisan group of lawmakers from the House Energy and Commerce Committee last year asked FERC to amend PURPA’s rules concerning small power producers to prevent project developers from “gaming” the law’s intent and driving up consumer costs for electricity (Energywire, Nov. 3, 2017). The committee has a bill pending that would make some fundamental changes to the 40-year-old law.

A controversial aspect of the law is a provision allowing developers to build small power projects — known as qualifying facilities (QFs) — without the consent of the utility or regulator in a given state. Then the utility has to enter into a long-term contract to buy that power whether it is needed or not, and those costs are borne by the utility’s customers.

“[The] makeup of the commission is significantly different than it was in 2016,” McIntyre said. “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 progress on those issues opens the door to an examination of PURPA and what options FERC has for updating regulations tied to the law. He said he is still talking with the other commissioners “on the format, scope and timing of this review.”

Commissioner Rob Powelson, a former Pennsylvania state regulator, expressed his impatience with the lack of reform to date and urged that the commission review be “expedited.”

“There are things we know full well from the 1-mile rule to QF reform we can address quickly,” Powelson said, relying on the record from the technical conference.

The 1-mile rule in PURPA controls how close, for example, turbines in a wind farm need to be to receive QF treatment.

Summer power demand

FERC staff members yesterday also reported their projections on summer electricity demand.

Most of the country will have more than enough power to meet demand this summer, FERC analysts said in their summer market assessment, even as government forecasters call for a warmer-than-average season across the country.

Net demand is expected to be about the same as summer 2017, with the lack of growth “mainly attributable to the higher implementation of demand response in certain areas, and an increase in behind-the-meter distributed energy resources,” FERC said.

Natural gas will be plentiful and may provide a record amount of fuel for power generation, the report said, as gas production “will climb to near record highs.”

The Electric Reliability Council of Texas, which runs the state’s grid, is an exception in the forecast, which could have less electricity available than needed, although ERCOT “has mapped out procedures to maintain grid reliability,” FERC said.

In the West, a low snowpack could lead to lower-than-average hydroelectric production, and that could “create challenges” as gas-fired generation may be “limited due to reduced gas storage capacity and local pipelines outages.”

NOAA forecasts an above-normal chance for higher-than-average temperatures for the West, South and East for June, July and August. The expectation for higher-than-average temperatures is greatest in New England and along a band running from West Texas through the Pacific Northwest.