RM19-15 & AD16-16, News Release on final rule

FERC Modernizes PURPA Rules to Ensure Compliance, Reflect Today’s Markets | Feder... Page 1 of 3

NEWS RELEASES

FERC Modernizes PURPA Rules to
Ensure Compliance, Reflect Today’s
Markets
July 16, 2020

News Release: July 16, 2020 
Docket Nos. RM19-15-000, AD16-16-000
Order No. 872
Item No. E-1
Staff Presentation | Fact Sheet 
The Federal Energy Regulatory Commission (FERC) today revised its regulations
governing qualifying small power producers and cogenerators under the Public
Utility Regulatory Policies Act of 1978 (PURPA) to address the significant changes that
have taken place in the nation’s energy markets since those rules first took effect.
“I am extremely pleased that we are issuing today’s final rule to modernize the
Commission’s implementation of PURPA,” FERC Chairman Neil Chatterjee said.
“While PURPA laid the foundation for the competitive wholesale power markets that
we have today, the energy landscape in this country has changed drastically since the
Commission implemented these regulations four decades ago.”
Congress enacted PURPA to encourage development of small power producers and
cogenerators, called qualifying facilities (QFs), and to reduce demand for traditional
fossil fuels that were considered to be in short supply. FERC’s regulations were
enacted in 1980 and, with limited changes over the ensuing years, remain in effect
today.
“It’s been my view from the start that FERC should modernize our regulations in ways
that not only meet our statutory obligations, but also protect consumers and
preserve competition,” Chatterjee said. “Today’s rule accomplishes those goals. We

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will continue to encourage QF development while addressing concerns about how
PURPA works in today’s electric markets.”
The final rule grants additional flexibility to state regulatory authorities in
establishing avoided cost rates for QF sales inside and outside of the organized
electric markets. The final rule also grants states the ability to require energy rates
(but not capacity rates) to vary during the life of a QF contract.
FERC also modified the “one-mile rule” and reduced the rebuttable presumption for
nondiscriminatory access to power markets, from 20 megawatts to 5 megawatts, for
small power production, but not cogeneration, facilities. Finally, in order for a QF to
establish a legally enforceable obligation, the final rule requires that the QFs must
demonstrate commercial viability and financial commitment to build under objective
and reasonable state-determined criteria.
The final rule does not change other elements to the Commission’s existing PURPA
regulations that encourage QF development, including those requiring electric
utilities to provide backup electric energy to QFs on a non-discriminatory basis and at
just and reasonable rates; requiring electric utilities to interconnect with QFs; and
providing exemptions to QFs from many provisions of the Federal Power Act and
state laws governing utility rates and financial organization.
The rule takes effect 120 days after publication in the Federal Register.
R-20-32

(30)

Contact Information
Craig Cano
Telephone: 202-502-8680
Email: [email protected]

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