Last week, the National Association of Regulatory Utility Commissioners (NARUC) and a group of public interest organizations* filed comments at FERC that reveal divergent perspectives on how FERC should go about its reform of the Public Utility Regulatory Policies Act of 1978 (PURPA). These comments follow former Chairman McIntyre’s announcement during FERC’s May 2018 meeting that the Commission would be “reenergizing” its PURPA review initiative.
In a proposal entitled Aligning PURPA with the Modern Energy Landscape (Attachment A to the comments), NARUC argued that FERC should exempt from PURPA’s mandatory purchase obligation “those utilities which are subject to state competitive solicitation requirements and other best practices that ensure all technologies access to the market.” NARUC concludes that FERC should create a “yardstick of characteristics” as a guide to determine whether a utility that does not participate in a regional transmission organization (RTO) could nonetheless qualify for exemption of the must-purchase obligation under PURPA section 210(m)(1)(C):
EPAct ’05 permits FERC to exempt utilities from the requirements of PURPA if [qualifying facilities (QFs)] . . . have access to wholesale markets. Sec. 210(m)(1) described two types of markets in subparagraphs (A) and (B), which FERC has interpreted to apply to six of the seven RTOs/[independent system operators (ISOs)]. For the seventh RTO/ISO, FERC found that ERCOT met the requirements of . . . subparagraph (C). But subparagraph (C) is much broader than that; it could and should be applied to non-RTOs that have a sufficient measure of competitive access to QF technologies.
NARUC states that its proposal will allow competitive mechanisms rather than administrative proceedings to arrive at the least-cost procurement of energy resources for consumers.
By contrast, public interest organizations argued that in many regions without RTOs, QFs lack adequate markets in which to sell their energy and capacity, and that competitive solicitation in non-RTO states is not sufficient to provide QFs access to a nondiscriminatory market. Public interest organizations argued that competitive solicitation is not required in many states and pointed out that many states don’t regularly hold competitive solicitations or make them open to all QFs. In addition, these organizations argued that competitive solicitation “can be overly burdensome and costly for smaller facilities, depriving them of an opportunity to compete on equal terms because the administrative costs of participating in such a solicitation represent a higher percentage of the facility’s costs than for larger facilities.”
The public interest organizations concluded that FERC’s review of its PURPA regulations should include a 50-state survey of PURPA implementation by state regulatory authorities and nonregulated electric utilities in order to: determine where PURPA implementation does and does not comply with FERC’s regulations, investigate existing barriers in wholesale markets that prevent non-discriminatory access for QFs, and evaluate opportunities to strengthen PURPA’s implementation.
There is no clear timeline for FERC to respond to NARUC’s and the public interest organizations’ comments.
*The public interest organizations included the Southern Environmental Law Center, Environmental Law and Policy Center, Vote Solar, Pace Energy and Climate Center, North Carolina Sustainable Energy Association, Climate + Energy Project, Center for Biological Diversity, and the Sierra Club.