Public Utility Regulatory Policies Act (PURPA)

The Public Utility Regulatory Policies Act (PURPA) was enacted in 1978 as part of President Carter’s response to the oil embargo. A key purpose of PURPA was to encourage the development of cogeneration and renewable energy facilities in the United States. In addition, as stated in the law, PURPA was to encourage 1) the conservation of energy supplied by electric utilities; 2) optimal efficiency of electric utility facilities and resources, and 3) equitable rates for electric consumers.

The law has been amended several times, notably by the Energy Policy Act of 1992 and the Energy Policy Act of 2005 (EPAct 2005). Most recently, it was amended by the Energy Independence and Security Act (EISA) of 2007. The federal EISA added four standards to PURPA, under which a utility must initiate consideration of the standards before Dec. 19, 2008, and make a determination about whether to adopt the standards by Dec. 19, 2009.

On Nov. 3, 2008, Chelan County PUD's Board of Commissioners held a public hearing to review standards for smart grid investments and for providing information to customers gathered by a smart grid. After considering the two standards, the Commission decided not to adopt them, but directed staff to continue to evaluate possibilities for the future.

On Nov. 16, 2009, the Commission held a public hearing to consider the two remaining PURPA standards: 1) integrated resource planning/energy efficiency; and 2) rate design modifications to promote energy efficiency investments. Due to its related nature, the Commission also considered establishing 10- and two-year conservation targets as required under the Energy Independence Act, codified as RCW Chapter 19.285. More information about the Energy Independence Act is available here.

The two PURPA standards discussed were: 1) Integrated Resource Planning. According to PURPA, each electric utility shall integrate energy efficiency resources into utility, state and regional plans, and adopt policies establishing cost-effective energy efficiency as a priority resource. 2) Rate Design Modifications to Promote Energy Efficiency Investments. According to PURPA, rates allowed to be charged by any electric utility shall align utility incentives with the delivery of cost-effective energy efficiency, and promote energy efficiency investments. The District will consider a variety of programs and considerations to comply with PURPA standards.

Under PURPA, electric utilities with total annual retail sales of 500 million kilowatt hours must consider the new standards (Section 102(a)). However, electric utilities can choose whether it is appropriate to adopt the new standards, in whole or in part, or not adopt the standards. In addition, nothing under PURPA prohibits the Commission from modifying or adopting, or not adopting, a different standard or rule pursuant to state law.

At the Nov. 16, 2009 public hearing, commissioners decided not to adopt the PURPA standards as written but instead to adopt a 10-year conservation plan and two-year conservation targets that identify cost-effective energy efficiency measures appropriate to the District and comply the state Energy Independence Act.