by Jon Sanders
Research Editor and Senior Fellow, Regulatory Studies, John Locke Foundation
A recent Utility Dive article begins:
A new bill in Congress could take the teeth out of the Public Utility Regulatory Policies Act, delivering a blow to some renewable energy projects.
(The ever-present framing: remove any artificial government prop favoring renewable energy, and you imperil it.)
PURPA has been a key driver in the growth of alternative and renewable energy. It also served as a wedge in opening the door to electric utility deregulation. PURPA’s importance has faded since deregulation, but in the past decade or so, it has found new relevance in states outside of the deregulation sphere.
In states such as Idaho, Montana and North Carolina, PURPA has been key to the growth of renewable energy.
As I explained in my research paper on “Reforming PURPA Energy Contracts“:
Despite no obvious geographical distinctions from the other U.S. states that would explain it, North Carolina is awash in solar energy facilities, more so than every other state except California. That is because the distinctions driving it are political, not geographical. A key reason is how North Carolina implements a four-decades-old law, the Public Utility Regulatory Policies Act of 1978 (PURPA). …
The oft-repeated statistic of “second in solar” owes to favorable state energy policies for the solar energy industry. It is not market-driven — a fact renewable energy advocates readily acknowledge.
The way North Carolina has chosen to implement PURPA regulations is very favorable to solar energy facilities. In fact, North Carolina has several other public policies that are very favorable toward solar energy facilities. Their combined effect is that North Carolina alone is home to 60 percent of all PURPA projects in the entire United States.
Montana recently lowered its PURPA rates (avoided-cost rates) by 40 percent. Last year North Carolina policymakers made major changes to state energy policy. Along with giving solar energy facilities a guaranteed full seat at the table for electricity provision in this state, the new law addressed some of the problems with how North Carolina implements
They did not, however, make any reforms to North Carolina’s exorbitant avoided-cost rates. I argue here how such a reform is all the more necessary because of last year’s restructuring of energy policy.