California’s ReMAT Program Was Scorched, So What’s Next for PURPA?

By: Danielle Powers, Senior Vice President

Forty years after the Public Utilities Regulatory Policy Act (PURPA) was enacted, the controversy over implementation at the state level and the larger issue of compatibility with the current energy landscape continues to swirl.  On July 29, 2019, the Ninth Circuit Court of Appeals affirmed a lower court’s decision in Winding Creek Solar LLC v. Peterman that a Renewable Market Adjusting Tariff (Re-MAT) established by the California Public Utilities Commission (CPUC) violates two basic tenants of PURPA:

The Ninth Circuit Court also rejected the QF standard contract, finding that the standard contract also violated PURPA.  Under PURPA, QFs have the option of choosing an avoided cost rate as calculated either at the time of contracting or at the time of delivery.  According to the Ninth Circuit, since the standard contract only has one formula for calculating avoided costs, and that formula relies on variables that are unknown at the time of contracting, the standard contract does not provide QFs with the required option to calculate an avoided cost rate at the time of contracting.

Without guidance at the federal level, states continue to grapple with how to comply with PURPA, and developers of QF facilities and utilities have continued to disagree on the letter and intent of PURPA.

The issues with PURPA are likely to be amplified in the future.  Beyond the traditional legal arguments around contract terms and pricing, the role of new technologies will likely lead to a whole new class of disputes.  For example, battery storage is becoming both a technologically and financially feasible energy resource, which raises a number of questions in relation to PURPA:

The challenge of interconnecting and purchasing from increasing numbers of QFs dates back to the 1990s when utilities began to use competitive bidding to manage the number of QFs on their system.  While it may have been manageable to have QFs rationed by price when QFs bore some resemblance to utility-avoided generation, lower-cost renewable QFs have shifted the balance among the parties. PURPA reform is the only resolution that will bring clarity to these problems.

Want to learn more about the current state of PURPA reform and the implications for your organization?  Please contact info@ceadvisors.com to schedule a consultation with Danielle Powers.

Newsletter Sign Up
 
Search
 
Follow