PURPA? Is that a Color?

You’ve probably never heard of the Public Utility Regulatory Policies Act of 1978—PURPA—unless you work for the federal government or a local energy company.  Even then, chances are slim that you understand this law and the substantial impact it has on energy prices for Michigan consumers.

PURPA is a complicated law that was, in part, intended to:

PURPA requires energy providers to purchase a certain portion of their energy from private generation sources, including hydro, wind and solar.

This mandated incentive provided crucial resources to help the emerging technologies of the 1970s mature to the point where they could meet consumers’ needs efficiently and cost-effectively.  But while the world, not to mention the energy landscape, has changed dramatically since 1978, PURPA has remained essentially the same.

PURPA’s outdated mandates can lead to unnecessarily higher costs for consumers and undermine the way in which local energy providers plan for Michigan’s energy future.

How PURPA Works (or Doesn’t)

PURPA is a federal law implemented at the state level. In Michigan currently, the Michigan Public Service Commission (MPSC) establishes the guidelines local energy providers must follow.

Depending on how the MPSC interprets the law, PURPA could force local energy providers to purchase energy at significantly higher rates than the true cost of production—even if the energy is not even needed.

This can lead to any number of problems for Michigan consumers:

What’s to Come for PURPA?

We know that this is a complicated issue, that’s why we’ll be breaking down PURPA in multiple blog posts. Stay tuned as we follow this issue and let you know how it impacts consumers across the state. In the meantime, watch for more opportunities to learn about the ins and outs (and ups and downs) of PURPA on the AMP blog.