The Federal Energy Regulatory Commission is beginning a review of a 1970s law to examine if it needs to be updated, as the electric grid increasingly uses renewable energy.
The law, called the Public Utility Regulatory Policies Act of 1978, was created under President Jimmy Carter in response to the 1970s energy crisis to encourage energy conservation and support domestic renewable energy.
The grid back then was less fuel diverse, and the law was intended to promote energy conservation by bringing smaller, distributed electricity generators into the market. Distributed energy systems can generate clean electricity on site and are disconnected from the centralized grid.
There were no competitive power markets when the law was enacted.
The law imposed mandatory purchase requirements to allow renewable developers the opportunity to get favorable long-term contracts from utilities.
But solar and wind energy were expensive, so they did not benefit much from the law. That has changed in recent years, and the law, known as PURPA, has been a key factor boosting renewable energy. Utilities have complained about the law for years, saying it imposes high costs them and their customers. Renewables today can better compete with natural gas and other energy sources in the open markets, utilities say.
FERC Chairman Kevin McIntyre, at FERC’s monthly public meeting Thursday, did not announce a format or timeline for the review, saying he has an “open mind” on whether changes are needed.
Other commissioners support the review.
“Today’s energy landscape is profoundly different from late ‘70s, and because of this, many have rightly voiced a desire for a fresh look at the existing policy to better align PURPA with the needs we have today,” said Neil Chatterjee, a Republican FERC commissioner.
Commissioner Robert Powelson, also a Republican, said a review is necessary so “we remain relevant with the times,” noting that the energy system has moved from a “scarcity environment” to “energy dominance or independence” with “skyrocketing” renewables.
Richard Glick, a Democratic commissioner, also supports the review, but noted FERC has limited authority to change the law.
“Major changes need to be decided by Congress, not this commission,” Glick said.
FERC hosted a technology conference on PURPA in 2016 to discuss the status of the law, so the commission already has a robust record to consider potential changes.
Timothy Fox, vice president at Clearview Energy Partners, who studies renewable energy, said he expects FERC to consider changes to how the law is implemented, similar to what some state regulators have done in recent years.
Fox said FERC could look to limit the renewable projects that can benefit from mandatory purchase contracts.
“FERC could close the opportunities renewable projects currently rely on to elbow their way into markets that may already have adequate [fuel] supply,” Fox told the Washington Examiner. “FERC’s reform could close a window in which some renewable power developers may be trying to game the intent of PURPA.”
