WASHINGTON, D.C. — Today, U.S. Senator John Barrasso (R-WY) was joined by Senators James Risch (R-ID), Kevin Cramer (R-ND), and Steve Daines (R-MT) in introducing legislation to modernize the Public Utility Regulatory Policies Act of 1978 (PURPA) and protect American families from inflated electricity costs.
“When the Public Utility Regulatory Policies Act (PURPA) was enacted in 1978, energy markets were drastically different. Today, a significant amount of all new power added to the grid comes from renewable energy resources. It’s critical that we modernize PURPA as soon as possible. Electricity consumers in Wyoming and across the country should not have to foot the bill for outdated rules and regulations,” said Barrasso. “Our bill updates PURPA in a way that protects consumers while encouraging the development of all sources of American energy—including renewables.”
“The nation’s energy outlook is very different today than it was when PURPA was created forty years ago,” said Risch. “It is time to bring the law into the 21st century to reflect the energy renaissance occurring in Idaho and all across our country. The UPDATE PURPA Act makes commonsense reforms that will put hard-earned dollars back into the pockets of Idahoans, while empowering states and driving our energy sector forward.”
“I support modernizing energy incentive programs while protecting consumers’ pocketbooks and empowering local regulators who know the needs of their constituents best,” said Cramer, a former public utilities regulator in North Dakota. “This bill acknowledges the reality that energy markets have significantly changed since the 1970s and brings PURPA into the 21st century.”
“Updating PURPA will create high-paying Montana energy jobs and keep energy costs low for Montanans,” said Daines. “From existing coal generation to new hydro and wind generation, it is important that the rules reflect the changes in the market.”
“The decades-old PURPA law is long overdue for reform. I appreciate Senator Barrasso’s efforts to bring much needed modernization to the forefront,” said Wyoming Rural Electric Association Executive Director Shawn Taylor. “Wyoming’s rural electric cooperatives continue to support this bill, and we look forward to continuing this conversation in Congress and at home with the Wyoming state legislature.”
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. Between 2008 and 2018, renewable electricity generation doubled in the United States. Renewable energy consumption continues to rise, and reached a record high in 2018. Despite these changes, the outdated and harmful PURPA rules remain in place.
The “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 similar legislation, H.R.1502, the “PURPA Modernization Act of 2019,” on March 5, 2019.