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Public Utility Regulatory Policies Act
PURPA is a federal law enacted in 1978 in reaction to an energy crisis and implemented by state public service commissions for rate-regulated electric utilities. PURPA's goals are to encourage competition, conservation, reliability and efficiency in generating and delivering electricity. One of the ways PURPA was set up to accomplish its goals was by establishing a new class of power generation facilities -known as qualifying facilities (QFs) -which would receive a special rate for selling their electricity back to the local electric utility and related regulatory treatment. PURPA imposed an obligation on local ("host") utilities to purchase power from QFs in an effort to promote competition and achieve the other policy goals embodied in the federal law. Federal rules require state public service commissions and non-regulated utilities (primarily rural cooperatives and municipalities not regulated by state commissions) to set rates for the host utility to buy power from a QF.
The Commission issued its third Report on the Implementation of the Public Utility Regulatory Policies Act of 1978 (PURPA) on April 20, 2022, as required by Section 6v of PA 341 of 2016. This report describes the status of QFs in the state, the current status of power purchase agreements for each QF, and the Commission's efforts to comply with the requirements of PURPA.
To learn more, please see the MPSC's PURPA Issue Brief.
The Commission established separately docketed cases for all rate-regulated utilities and directed them to make avoided cost calculation filings in June 2016. Links to each docket are provided below.
The Commission issued an order in Docket U-20095 to address issues related to the avoided cost rates for capacity. Interested parties may file written or electronic comments on the determination of utility capacity requirements over a 10-year planning horizon and the criteria for evaluating a legally enforceable obligation. The final order was issued on October 5, 2018.
The Commission has ordered many utilities to include the biennial PURPA review in the Integrated Resource Plan (IRP) filing. Consumers Energy has updated PURPA avoided costs in its IRP Case No. U-20165. An Order on June 7, 2019, approves a contested settlement in this case. Upper Peninsula Power Company has updated PURPA avoided costs in its IRP Case No. U-20350. An Order on February 6, 2020, approves a settlement in this case.
Consumers Energy filed an Application for Approval of a Settlement Agreement to Resolve Rights and Obligations Under PURPA in Case No. U-20615.
On September 19, 2019, FERC issued a notice of proposed rulemaking (NOPR) proposing to modify its PURPA regulations. On July 16, 2020, FERC Order No. 872 was issued in response to the NOPR and comments received in response to it. FERC also issued FERC Order No. 872-A on November 19, 2020 to address arguments raised on rehearing and to clarify its prior order.
In light of the FERC Orders, the Commission initiated a comment docket in Case No. U-20905 on October 29, 2020. The docket requested comments from interested parties about matters addressed in FERC Order No. 872. An initial order was issued on January 21, 2021. A final Order was issued on July 2, 2021. The Commission shall utilize a legally enforceable obligation review proceeding to review claims pertaining to the establishment of a legally enforceable obligation, as described in this order. An LEO Review Request Form has been posted to initiate an expedited LEO review process.