In an 87-page filing with the Wyoming Public Service Commission (PSC), Rocky Mountain Power (RMP) laid out an extensive case about why the Public Utility Regulatory Policies Act of 1978 (PURPA) should be kneecapped in the state by eviscerating reimbursement rates under the law by more than 38%.
PURPA was passed at the height of the 1978-1979 oil crisis that saw the nations of the Organization of the Petroleum Exporting Countries (OPEC) raise oil prices significantly, causing Western nations like the United States to try reducing their dependence on fossil fuels by promoting energy efficiency and renewable energy. It effectively broke the utilities’ monopoly on owning electric-generating plants and created a market for independent power producers (IPPs) which according to the Union of Concerned Scientists accounts for 7% of the country’s power.
It has been the driving force behind solar growth in several states. Most notably, North Carolina’s solar industry, whose installed solar capacity is second in the country behind only California, plays host to the most PURPA-related projects in the country, according to Duke Energy.
But RMP argues in the filing that plummeting prices for solar and natural gas make the current prices they are required to pay IPPs – in Wyoming, those costs are currently $52/MWh – are far too high. The rates were set by the PSC in August 2015. RMP’s petition this year is to comply with the PSC rule that “requires system data from which avoided costs may be derived to be filed not less often than every two years.” The petition asks the PSC to reduce the rate to nearly $32/MWh.
“The lower avoided cost reflected in this Application is primarily due to 4 the March 31, 2017 Official Forward Price Curve that includes lower wholesale power and natural gas market prices,” RMP says in the application. “In addition to the updated Official Forward Price Curve, the Company used the wind and solar integration costs, the capacity contributions for both wind and solar resources, and the resource sufficiency and deficiency periods that relate to capacity contribution costs consistent with the 2017 Integrated Resource Plan that was submitted on April 4, 2017.”
If the rates are not reduced, RMP argues, it will have grave consequences for non-solar customers, who will have to pay higher rates as the utility raises rates to cover the lost revenues.
RMP is owned by Warren Buffet’s Berkshire Hathaway who, through his utility portfolio, is waging a covert war to undermine PURPA in other states, with little success – so far. Last year, RMP picked a fight in Utah over the length of PURPA contract, asking the Utah Public Services Commission to cut the contracts with qualifying facilities (QFs) to 15 years from 20. It lost that battle.
Duke Energy is also currently asking North Carolina’s PUC to change PURPA requirements so severely as to potentially cripple PURPA in the state.