The House Energy and Commerce subcommittee heard from a variety of energy industry stakeholders last week about whether to make changes to a longstanding energy law, which serves as the most important federal protection for independent solar companies seeking to compete with utilities in the Southeast.
Originally created in response to the 1970s energy crisis, the Public Utility Regulatory Policies Act (PURPA) requires utilities to purchase power from independent power producers—like solar farms, and solar-generating homes and businesses—and to pay fair rates based on the utility’s avoided cost, or the cost the utility would have otherwise incurred to meet its power needs.
As technology costs have continued to decline, solar power is now cost-competitive with traditional power plants, and PURPA is finally able to serve its intended purpose—to give affordable clean energy a real chance to compete against monopoly-generated power.
Leveling the energy playing field has played an important role in solar’s growth nationwide; PURPA projects make up about 20 percent of all solar capacity installed across the country in the past year.
Particularly in the Southeast, where powerful monopoly utilities and significant policy barriers block any meaningful access to real competitive energy markets, PURPA is the only mechanism in place to prevent a completely utility-dominated market. Allowing renewables like solar to compete fairly with other energy resources has resulted in enormous opportunities for economic growth in the region.
Some states like North Carolina have successfully implemented PURPA through robust and inclusive avoided cost proceedings and complementary state regulations. As a result, North Carolina is now ranked second in the nation for installed solar capacity. Neighboring South Carolina also has one of the fastest-growing PURPA markets in the country.
But as solar power has become cheaper, utilities in the Southeast are ramping up efforts to dismantle PURPA to protect their monopoly status. Just last month, a group of solar installers in South Carolina filed suit against Duke Energy for violating PURPA by refusing to enter into contracts to purchase power from the independent power producers for longer than five years.
Weakening PURPA’s protections would go against its purpose to encourage local, diverse, clean energy and hinder the ability of fledging renewable energy companies to access fair rates that enable projects to get built.
“This is yet another thinly-veiled attempt by utility interests to squash competition in order to protect their bottom lines,” said Katie Ottenweller, Senior Attorney and leader of SELC’s Solar Initiative. “Independent solar developers are ready and able to deliver affordable clean energy to Southerners—which is what PURPA was designed to do—but monopoly utilities are leaning on the same disingenuous talking points to continue getting special treatment for their own resources. PURPA should be strengthened, not weakened, as it continues to serve the policy goals that Congress intended.”