Washington UTC Proposes New PURPA Rules Laying Groundwork for Significant Growth of Renewables
November 20, 2018 posted by Eric Christensen
WASHINGTON UTC PROPOSES NEW PURPA RULES
LAYING GROUNDWORK FOR SIGNIFICANT GROWTH OF RENEWABLES
COMMENTS DUE DECEMBER 14, 2018
On November 14, the Washington UTC issued long-awaited updates to its rules implementing Section 210 of the Public Utility Regulatory Policies Act of 1978 (“PURPA”), which requires utilities to purchase electricity generated by “Qualifying Facilities,” that is, small renewable generators and cogeneration facilities. The existing rules, which are skeletal, have rendered PURPA largely a dead letter in Washington. The revised rules are a substantial improvement and, if adopted, will create significant opportunities in Washington for independent developers of renewable energy. Comments on the proposed rules are due on December 14, 2018.
The proposed rules are the latest development in a lengthy proceeding in which the UTC comprehensively reviewed its rules governing utility acquisition of new resources, including its rules governing integrated resource planning, competitive bidding and PURPA. The proposed rules arose from a settlement between Puget Sound Energy and Northwest independent power and renewable energy interests.
The proposed rules contain several features that are likely to substantially enhance the use of PURPA in Washington. Perhaps most significantly, the rules increase the standard term for contracts from five years to fifteen. Because new resources can reasonably be capitalized over a fifteen-year term, but not over a five-year term, this change greatly increases the utility of Washington’s PURPA program.
The proposed rules also require Washington’s regulated utilities to publish standard avoided cost rates for both energy and capacity, and also require the utilities to provide standardized contracts for generators with 5 MW of capacity or less. The avoided cost rates may differentiate between different generation technologies so that avoided cost rates for solar or wind may be different from the rates for other types of generators. For larger generators, the rules provide specific guidance for negotiating PURPA contracts. In addition, the rules contain a detailed definition of “Legally Enforceable Obligation,” which should avoid the controversies that have arisen in other states over the question of when a utility’s obligation to purchase from a PURPA Qualifying Facility begins. These features should reduce the barriers commonly encountered by prospective PURPA sellers, who often get bogged down in the process of negotiating avoided cost rates and contract terms.
If adopted, the UTC’s rules will create significant new opportunities for renewable energy development that have languished in Washington even as PURPA has proved to be a major force promoting renewable energy development in surrounding states.