Washington UTC Will Revise PURPA Policy

Agency Issues Notice It Will Consider Revisions To Its Policy Implementing
The Public Utility Regulatory Policies Act (“PURPA”),
A Key for Expansion of Renewable Power

            On March 16, the Washington Utilities and Transportation Commission (“UTC”) issued a notice that it will consider changes to its regulations implementing the Public Utility Regulatory Policies Act (“PURPA”).  PURPA has been a mainstay for development of independent renewable energy resources in many other states, and has engendered considerable controversy, but has been largely an afterthought in Washington.  Substantial revisions to the UTC’s implementation regulations could change this.  The UTC has requested comments on changes to its PURPA regulations by April 17, 2017, and has scheduled a workshop for May 17, 2017.

            PURPA, which was adopted as part of a package of legislation to address the energy crises of the 1970s, requires utilities to purchase power from “Qualifying Facilities” at avoided cost rates.  “Qualifying Facilities” include renewable generation facilities with less than 80 MW of capacity and co-generation facilities, which capture waste heat from industrial processes  to produce power.   Avoided cost is the cost a utility would incur to obtain power from another source if it did not purchase the power from the Qualifying Facility.  Under PURPA’s model of “cooperative federalism,” the Federal Energy Regulatory Commission (“FERC”) has adopted general rules governing how a generator can become a Qualifying Facility and how avoided costs are to be calculated, but the primary responsibility for implementing PURPA lies with the state utility commissions (and, in the case of consumer-owned utilities, with the elected boards governing those consumer-owned utilities).

            The UTC regulations that are now under review were adopted by the UTC to fulfill its obligation to implement PURPA in Washington and were last amended in 2006.  The review arises out of the UTC’s ongoing proceeding examining its Integrated Resource Planning (“IRP”) rules, which are closely related to PURPA because the IRP process has become the primary vehicle for identifying utility avoided costs and resource needs.   Originally, the UTC indicated that it would not be reviewing its PURPA rules as part of the IRP docket, but the March 16 notice indicates that the UTC changed course after hearing a good deal about avoided cost in the IRP hearing process.

            The notice indicates that the UTC intends to review its PURPA regulations comprehensively, and has sought comments on a broad range of topics, including avoided cost methodology, whether it should require standard-offer contracts for small projects and the appropriate threshold for those projects, whether it should require a specific contract term, and whether it should issue rules governing when a “legally enforceable obligation” has been created that obligates the utility to purchase under PURPA even if it has not yet executed a contract.