Industrial Trade Associations Oppose Federal Proposal to Change PURPA

PURPA industrial trade associations
Cogeneration facilities in Kern County, California. Credit: David Seibold, Flickr Creative Commons

More than a dozen large trade associations including the Industrial Energy Consumers of America, the American Forest & Paper Association, and the Iron Mining Association sent a letter opposing proposed federal legislation to change the Public Utility Regulatory Policies Act (PURPA) of 1978.

The letter was addressed to the sponsor of HR 4476 also known as the “PURPA Modernization Act of 2017,” Republican Congressman Tim Walberg. The associations argue that PURPA currently encourages increased industrial efficiency and competitiveness by making use of cogeneration technology — also known as combined heat and power — and waste heat to power.

“For the industrial sector, PURPA is as important today as it was in 1978,” the letter reads. “Industrial qualifying facilities (QFs) are not in the business of generating and selling power, an important distinction.”

In December, PV Magazine’s Frank Andorka called attention to HR 4476, writing that the bill would gut PURPA. He wrote that the“most potentially damaging provisions” of the bill include allowing states to waive “must-purchase” provisions from PURPA, in essence releasing utilities from being obligated to purchase a certain percentage of electrical production from renewables. In addition, the proposed legislation would lower the capacity of facilities subject to PURPA from 20 MW to just 2.5 MW.

Another provision in the bill would alter PURPA’s “one-mile rule” separating qualifying facilities. Last fall, electric utilities and a state regulator testified before the US House Representatives that large renewable energy suppliers are abusing the rule, defying the spirit of a law intended to support small energy suppliers, Utility Dive’s Gavin Bade reported at the time.

“In recent years, PURPA has spurred renewable energy technologies, giving wind and solar a foothold in nascent markets,” Bade wrote. “As their penetrations grew, utilities complained that long contract lengths and the obligation to purchase power from QFs were raising power prices for their customers.”

The industrial trade associations that signed the letter to Congressman Walberg say industrial qualifying facilities are not party to the one-mile rule controversy. “The associations signing below support action by the Federal Energy Regulatory Commission to provide guidance to stop the abuse,” they wrote.

Their main concern is that the proposed legislation would negatively affect industrial qualifying facilities certified as small power producers under FERC regulations. “Industrial PURPA QFs are not causing the specific market problems that have prompted the legislation,” the letter reads. “Instead, industrial QFs contribute to grid stability, produce power at energy efficiency rates that are more than twice that of utility generation, reduce substantial amounts of GHG and criteria air pollutants, and are critical to the competitiveness of many industrial facilities and high-paying manufacturing jobs.”

The letter was signed by:

  • American Chemistry Council
  • American Forest & Paper Association
  • Association of Businesses Advocating Tariff Equity
  • Chemical Industry Council of Illinois
  • Council of Industrial Boiler Owners
  • The Fertilizer Institute
  • Heat is Power Association
  • Industrial Energy Consumers of America
  • International District Energy Association
  • Iron Mining Association
  • Michigan Chemistry Council
  • Midwest Cogeneration Association
  • Utah Association of Energy Users
  • Wisconsin Industrial Energy Group

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