FERC, the Federal entity that regulates electric utilities, announced a Notice of Proposed Rulemaking (NOPR) that will erode the market for small, independent power producers of clean energy. The rules address the Public Utility Regulatory Policy Act (or PURPA), a law enacted by President Reagan in 1978 that allows small independent power producers (projects 80 megawatts and smaller) to contract to sell power the utility. PURPA was enacted specifically to expand competition in energy markets and mitigate the risk of reliance on fossil fuels. In Utah, PURPA is vital to our clean energy market. It has enabled more than 1.5 gigawatts of new solar energy resources in Utah since 2015.
In September, FERC announced plans to make changes to PURPA that would decimate the market for small clean power providers in Utah! Notably, Commissioner Glick disagreed with the changes proposed by the other two commissioners, and issued a dissenting opinion. Most concerning, the changes propose that PURPA projects be paid for the clean energy they deliver to the grid based on spot locational marginal prices, which change on an hourly basis, instead of a fixed long-term contract as is currently the case. Without a fixed, long-term contract, project developers can’t secure financing to build their power projects. Given that regulated utilities are able to recover costs at a fixed rate over a long time period, it is discriminatory to prevent small independent power producers from doing the same.
We anticipate that FERC will issue new rules soon, after which there will be an opportunity to provide comments. If you are interested in learning more, or signing on to comments to support PURPA, contact Kate Bowman, .