What Is The Public Utility Regulatory Policies Act (PURPA) Of 1978?
The Public Utility Regulatory Policies Act (PURPA) of 1978 was enacted as part of the National Energy Conservation Policy Act. It was a response to the energy crisis of the 1970s.
PURPA requires electric utilities to purchase electricity from qualifying facilities (QF), which include cogeneration, small hydro, and wind power plants. The law was intended to encourage the development of these alternative energy sources.
PURPA is credited with jumpstarting the renewable energy industry in the United States.
It has been estimated that PURPA has led to the development of nearly 30,000 megawatts (MW) of renewable energy capacity.
This is equivalent to about 5% of U.S. electric generating capacity.
PURPA has two main provisions:
1. Mandatory Purchase Requirements - Electric utilities must purchase electricity from qualifying facilities (QF) at a rate that is equal to the "avoided cost" of the utility.
The avoided cost is the cost of generating electricity plus the cost of purchasing power on the open market, minus any benefits from using the QF power.
2. QF Rate - Qualifying facilities are paid a rate for their electricity that is equal to the "avoided cost" of the utility.How It Works and Why It Matters
The PURPA law was designed to promote energy efficiency and the development of renewable energy sources.
PURPA requires utilities to purchase power from qualifying cogeneration, small hydro, and wind power facilities at a rate equal to the utility's avoided cost.
QFs are guaranteed a market for their electricity, and utilities are assured of a reliable and diversified power supply.
PURPA has helped to create a more diverse and robust electricity generation mix in the United States.
It has also been credited with spurring technological innovation in the renewable energy sector.
PURPA is one of the key laws that has helped to make renewable energy a viable option for utilities and consumers.
List of Covered Electric Utilities
Under Title 1, Sec. 102 (c) of PURPA, the U.S. Department of Energy must publish the covered electric utility list.
Pros and Cons of the Public Utility Regulatory Policies Act (PURPA)
Just like any law, there are pros and cons to PURPA. Here are some of the critical arguments for and against the law.
Pros:
- PURPA has helped to promote energy efficiency and the development of renewable energy sources.
- The law has spurred technological innovation in the renewable energy sector.
- PURPA has helped to create a more diverse and robust electricity generation mix in the United States.
Cons:
- Some argue that PURPA is no longer needed now that renewable energy is more established.
- PURPA has been criticized for giving QFs an unfair advantage over other power plants.
- The law has been blamed for driving up electricity rates in some states.
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The Bottom Line
PURPA is a fundamental law that has helped to promote energy efficiency and the development of renewable energy sources.
The law has spurred technological innovation in the renewable energy sector. While PURPA has its critics, the law has helped to create a more diverse and robust electricity generation mix in the United States.
FAQs
1. What is PURPA?
PURPA is the Public Utility Regulatory Policies Act of 1978. The law was enacted as part of the National Energy Conservation Policy Act. It was a response to the energy crisis of the 1970s.
2. What does PURPA do?
PURPA requires electric utilities to purchase electricity from qualifying facilities (QF) at a rate that is equal to the "avoided cost" of the utility. The avoided cost is the cost of generating electricity plus the cost of purchasing power on the open market, minus any benefits from using the QF power.
3. Who does PURPA apply to?
PURPA applies to electric utilities that are "load-serving entities." This includes investor-owned utilities, electric cooperatives, and municipal utilities.
4. What are the benefits of PURPA?
PURPA has helped to promote energy efficiency and the development of renewable energy sources. The law has spurred technological innovation in the renewable energy sector. PURPA has helped to create a more diverse and robust electricity generation mix in the United States.
5. Are there any drawbacks to PURPA?
Some argue that PURPA is no longer needed now that renewable energy is more established. PURPA has been criticized for giving QFs an unfair advantage over other power plants. The law has been blamed for driving up electricity rates in some states.
