FERC Proposes Changes to PURPA Regulations to Increase State Flexibility, Modify the Mandatory Purchase Obligation, and Reform the "One-Mile Rule"

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FERC Proposes Changes to PURPA Regulations to Increase State Flexibility, Modify the Mandatory Purchase Obligation, and Reform the "One-Mile Rule"

By District Energy posted 09-25-2019 21:54

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The National Law Review

Summary

On September 19, 2019, the Federal Energy Regulatory Commission (FERC) issued a notice of proposed rulemaking (NOPR) to revise its regulations implementing the Public Utility Regulatory Policies Act of 1978 (PURPA). The NOPR proposes to grant state regulatory authorities more flexibility in setting the avoided cost rates utilities must pay to small power production—which includes renewables—and cogeneration qualifying facilities (QFs). States would also establish criteria that QFs must meet prior to obtaining a contract or other legally enforceable obligation (LEO) for the sale of power to utilities. In addition, the NOPR proposes revisions to the mandatory purchase obligation from small power production QFs under 20 MW, the “one-mile rule” used to determine whether small power production QFs meet the 80 MW size limit and other thresholds, and the process for challenging a QF self-certification.

The proposed changes are likely to have significant implications for utilities required to purchase the output of QFs and for developers and generators that rely on PURPA rates and obligations for the commercial viability of their projects. Comments on the NOPR are due 60 days after publication in the Federal Register.