Senators warn FERC it may be going too far in loosening PURPA

Senators warn FERC it may be going too far in loosening PURPA

Washington (Platts)--30Mar2006

Three US senators have written to the US Federal Energy Regulatory
Commission to express concern that the commission may be going too far in
loosening power purchase obligations created by the Public Utility
Regulatory Policies Act.

Senators Lamar Alexander, Republican-Tennessee; Tom Carper,
Democrat-Delaware; and Susan Collins, Republican-Maine, were reacting to a
notice of proposed rulemaking FERC issued October 11 to revise utility
requirements for purchases from PURPA "qualifying facilities."

That NOPR proposed that utilities in four regional transmission
organizations would be freed of their QF purchase obligations on the grounds
that the RTOs are openly competitive markets. For other areas, the purchase
obligations would continue to exist but would be less strict than existing
obligations. The NOPR has worried industrial companies that their cogeneration
facilities will not receive new contracts in many cases.

"It appears that the NOPR is based on 'expectations' about the
competitive quality of a market without any examination of how well that
market functions for qualifying facilities," the senators said in a letter
dated March 28 and addressed to FERC Chairman Joseph Kelliher.

The senators said they "are also very concerned with the commission's
apparent willingness to shift the burden of proof to QFs in direct
contravention of the requirements of [PURPA] paragraph 210(m)(3)."

"The procedural requirements ... are designed to ensure that any utility
seeking to be relieved of its PURPA obligations has the burden of
demonstrating that the market in question actually operates in an open, fair
and fully competitive manner," the senators said.

The Energy Policy Act of 2005 modified, but did not repeal, PURPA. It
relieved utilities of new QF contract obligations in cases where FERC finds
that the QFs have nondiscriminatory access to competitive markets. The October
11 NOPR represents FERC's attempt to map out the differing degrees of relief
it can grant to utilities, depending on their participation in RTOs or the
effectiveness of their open-access transmission tariffs.

---Alan Kovski, alan_kovski@platts.com

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