- The Federal Energy Regulatory Commission (FERC) released the Entergy Operating Companies (Entergy) from the obligation under the Public Utility Regulatory Policies Act (PURPA) to contract with most qualifying facilities (QFs) of 20 MW or larger, RTO Insider reports.
- PURPA, passed in 1978, obligates utilities to buy generation from certain QFs to ensure they have "nondiscriminatory access" to power markets. But in its ruling (QM14-3-000), FERC decided that the QFs of 20 MW or larger can achieve that market access through the Midcontinent Independent System Operator (MISO), of which Entergy is a member.
- The commission decided access to MISO’s market for QFs in Entergy territories meets the “statutory standard” established in FERC’s 2006 order revising PURPA regulations. FERC decided similarly in a separate ruling (QM15-3-000) on QFs in the Arkansas Electric Cooperative territory.
PURPA was enacted in 1978 in response to oil shortages that drove unprecedented power price spikes and threatened the U.S. economy. It was intended to ensure vertically-integrated utilities did not freeze IPPs out of the market and allow for a more diverse fuel mix. Utilities were required by the law to buy independently developed generation if its price was less than the utilities’ avoided cost, which is the cost to those utilities to generate their own power.
PURPA has been, according to the Union of Concerned Scientists (UCS), “the most effective single measure in promoting renewable energy.”
FERC’s 2006 ruling was to make PURPA more compatible with the rise of competitive power markets driven by the Energy Policy Act of 1992. The rise of organized markets like MISO and PJM has allowed for more market access for IPPs, but in markets where both regulated utilities and IPPs generate power — like MISO — PURPA's backers say it still provides important market access protections for non-utility generators.
In the Entergy ruling, FERC said that all QFs over 20 MW in MISO's territory were afforded "nondiscriminatory access to independently administered, auction-based day-ahead and real-time wholesale markets for the sale of electric energy and to wholesale markets for long-term sales of capacity and electric energy,” according to RTO Insider. The one exception was a QF in Baton Rouge, Louisiana — Down Chemical's Plaquemine facility — which FERC said faced transmission constraints.
The FERC ruling on PURPA comes as some large utilities in the Western U.S. are pushing for changes to the landmark power sector law. Pacificorp — owned Warren Buffett's Berkshire Hathaway — and its subsidiaries have been the most vocal, petitioning regulators in multiple states and lawmakers on Capitol Hill for shortened contract lengths and other loosened requirements.
Last August, Idaho regulators cut PURPA contract lengths from 20 to two years after prompting from Idaho Power and Utah regulators slimmed the contracts to 15 years earlier this month. Pacific Power, a Pacificorp subsidiary, is currently pushing for similar reforms in Oregon.
Correction: An earlier version of this article stated that Idaho Power is a Pacificorp utility. That is incorrect. It is independently owned.