By John McClaughry
Last Thursday, the Federal Energy Regulatory Commission finalized its updates to the Public Utility Regulatory Policies Act (PURPA), in what the majority called an effort to “preserve competition” and give states more “flexibility” in implementing the federal rule.
Changes include allowing states to set the rates paid to qualifying facilities (solar installations) at a variable wholesale rate rather than a fixed cost, reducing the size of a project that is subject to such rates from 20 megawatts to 5 megawatts, and modifying the 1-mile spacing rule to prevent aggregation.
So what? Solar PV supporters say the new rule could hurt the ability of small solar projects to secure the financing they need, while utility groups said the changes would prevent customers from paying excess costs to make up for the utility paying way above market prices for solar electricity.
A utility association spokesman said:
For years, electricity customers have been paying billions of dollars in excess energy costs as a result of PURPA provisions enacted in the 1970s that allowed well-financed big developers to lock in guaranteed long-term, inflexible contracts at the expense of other more-competitive and cost-efficient renewable energy projects. By updating these rules, FERC has helped to ensure that renewable energy can continue to grow without forcing electricity customers to pay a premium to the developers that learned how to game the system.
One likely result: less contributions to VPIRG from Vermont’s solar barons.
John McClaughry is vice president of the Ethan Allen Institute. Reprinted with permission from the Ethan Allen Institute Blog.