WASHINGTON, D.C. —U.S. Senators John Barrasso (R-WY) and James Risch (R-ID) introduced legislation to modernize the Public Utility Regulatory Policies Act of 1978 (PURPA) and protect American families from inflated electricity costs.
“Energy markets in 2018 are drastically different than when the Public Utility Regulatory Policies Act (PURPA) was enacted in 1978. Nearly half of all new power added to the grid last year came from renewable energy resources. PURPA needs to be modernized to ensure that electricity consumers in Wyoming and across the country do not foot the bill for outdated rules and regulations” said Barrasso. “Our legislation makes commonsense reforms to PURPA to protect consumers while continuing to encourage the development of all sources of American energy—including renewables.”
“When PURPA was created in 1978, our country was in the midst of an energy crisis—times have changed,” said Risch. “It is time to update our energy laws to reflect the energy renaissance occurring in Idaho and all across our country. Our legislation is a commonsense bill that will protect consumers from unnecessary costs, allowing Idaho families to keep more of their hard-earned money, and empowers states to make the best decisions for their constituents.”
“Reform of the antiquated 1970’s PURPA law has been a long time coming. The rural electric cooperatives of Wyoming very much appreciate Senator Barrasso’s efforts in bringing this consumer protection legislation forward,” said Wyoming Rural Electric Association Executive Director Shawn Taylor. “While we hope and support the passage of the bill by Congress we also realize that this is an important step in starting a conversation in Congress, with federal and state regulators and quite frankly back home in the Wyoming legislature, who have been looking at this issue for several years.”
“We applaud Senators Barrasso and Risch for their leadership in working to reform the Public Utility Regulatory Policies Act (PURPA) so that electricity customers are not forced to pay billions of dollars in higher energy costs because of an outdated 40-year-old statute,” said Edison Electric Institute President Tom Kuhn. “Senators Barrasso and Risch understand the importance of modernizing PURPA to benefit electricity customers, and we look forward to working with them to advance this legislation.”
“PURPA is outdated and drives up the cost of electricity by imposing needless regulatory and financial burdens on electric cooperatives,” said National Rural Electric Cooperative Association CEO Jim Matheson. “This 40-year-old statute does not reflect today’s electricity market. We applaud Sen. Barrasso for championing this legislation to modernize PURPA, putting the needs of consumers first.”
PURPA is a 40-year-old law that requires all electric utilities to purchase all power produced by wind and solar generation facilities of 80 megawatts or less. PURPA requires utilities to pay these small renewable facilities an administratively-set “avoided cost” rate for their power that is much higher than the market rates paid to all other generation resources. PURPA also requires utilities to purchase this power even when it is not needed to serve their customers.
In originally passing this law, Congress’ intent was to reduce the amount of oil used in power generation in the U.S. and diversify the generation fleet. In these respects, PURPA has succeeded. In 1978, wind and solar generation was virtually nonexistent and oil-fired generation accounted for 17 percent of power on the grid. Today, oil-fired generation accounts for less than 1 percent of U.S. power generation, and wind and solar account for about 9 percent.
PURPA is no longer a driver of renewable energy. Competitive energy markets, open access to transmission, financial incentives, and renewable portfolio standards have created an environment where renewable energy is commonplace. In 2017 nearly half of all energy added to the grid came from renewable resources. Despite these changes, the outdated and harmful PURPA rules remain in place.
Barrasso’s and Risch’s “Updating Purchase Obligations to Deploy Affordable Resources to Energy Markets Under PURPA Act” (or the UPDATE PURPA Act) makes the following commonsense reforms to PURPA:
• Protects electricity customers from having to pay for unnecessary PURPA costs.
• Empowers state public utility commissions and nonregulated utilities to waive PURPA’s mandatory purchase obligation if additional power is not required to meet customers’ electricity needs.
• Ensures a level playing field for energy resources by requiring more PURPA resources to participate in energy markets.
• Prevents abuse of the Federal Energy Regulatory Commission's one-mile rule.
U.S. Representative Tim Walberg (MI-07) introduced the companion bill (H.R. 4476) on Nov. 29, 2017.