WASHINGTON, DC - The Subcommittee on Energy, chaired by Rep. Fred Upton (R-MI), today held its third hearing in the committee’s recently announced ‘Powering America ’ series. The ‘Powering America’ series provides members the opportunity to explore the challenges of electricity markets and potentially consider reforms related to the generation, distribution, consumption, and resiliency of electricity.
During today’s #SubEnergy hearing, members examined the Public Utilities Regulatory Policies Act (PURPA), which was enacted in 1978 to promote greater use of domestic energy in response to the Arab oil embargo which exposed the United States’ reliance on foreign oil. However, since PURPA’s implementation the nation’s power generation sector has experienced significant changes in the ways in which electricity is supplied to consumers, particularly as it relates to emerging renewable energy sources.
“During the intervening decades, tremendous changes have occurred in the electricity industry - a point underscored by the DOE Staff Report that was released last week," said Chairman Upton. “The evolution of the industry has occurred in many ways, including the development of electricity markets in the RTO and bilateral regions, the advent of open access transmission policies, and the influences of new, lower-cost technologies. All of these factors have changed how electricity is generated, transmitted, and used by consumers."
Witnesses listen as members deliver opening statements
Frank P. Prager, Vice President of Policy and Federal Affairs at Xcel Energy Inc., suggested potential reforms to PURPA, commenting, “Congress may choose to direct FERC to develop rules to prevent abuses of PURPA. Among other things, PURPA reform legislation should: (1) remove the 20 MW safe harbor for QFs [Qualifying Facilities, which receive special rate and regulatory treatment under the law] under FERC’s rules implementing Section 210(m) under EPAct 2005; (2) require unsolicited QFs to bear the costs of transmission upgrades necessary to deliver their output to load; (3) require QFs to bear the cost of negative pricing wholesale markets; (4) set avoided cost pricing through market forces; and (5) direct FERC to prevent the abuses of the one-mile rule."
Kristine Raper, Commissioner of the Idaho Public Utilities Commission, spoke to the importance of amending the law to grant battery storage QF status under PURPA, commenting, “Serious consideration should be given to whether battery storage qualifies as a renewable resource under the provisions of PURPA. … Neither PURPA nor FERC’s regulations specifically identify battery storage as a renewable resource eligible for QF status and the benefits provided by the Act. … When PURPA was passed in 1978, battery storage on a utility scale was not realistic. This is no longer the case. I urge this Subcommittee and Congress to address whether and to what extent battery storage facilities should be included within the parameter of PURPA."
Todd Glass, Counsel at the Solar Energy Industries Association, discussed the importance of PURPA’s support for independent power generation, stating, “The cost of solar energy production has been coming down rapidly to the point that it is competitive with other forms of electric generation and could allow utilities to displace other higher-priced generation or rely on solar to support new load growth. Ultimately, customers are better off if utilities rely more on the low-priced solar power: less fuel cost and price volatility, greater diversity of resources, and lower cost of energy."
Chairman Walden delivers his opening statement
“This committee understands that many stakeholders in the electricity sector are closely following potential PURPA reforms. In fact, I know that this is true for my constituents in Eastern Oregon, where have more than 100 qualifying facilities operating as a direct result of PURPA," said full committee Chairman Greg Walden (R-OR). “In addressing this topic, we want to make sure that all stakeholders have an opportunity to be heard, which is why we held this hearing today, and why we will continue to engage proactively with all stakeholders going forward."
A background memo, witness testimony, and an archived webcast can be found online HERE.
