The QF cost dilemma: PURPA enforcement and deregulation

Journal Article · Sat Mar 01 04:00:00 EST 1997 · Electricity Journal

DOI:https://doi.org/10.1016/S1040-6190(97)80351-X· OSTI ID:518443

Ferrey, S

While utilities have often launched frontal onslaughts to alter or abrogate QF contracts--with uniform lack of success--the forest may be lost for the trees. Within these contracts there are often genuine issues over enforcement, the resolution of which can be vitally important to utilities, their customers and non-utility power producers. Qualifying facilities are victims of their own successes. Success by QFs spawned a movement for competitive deregulation of the power industry that now threatens to devour its own progenitor, the Public Utility Regulatory Policies Act. Across the land today many QFs are nervously looking over their shoulders to see if the local utility is gaining on them. In the doorstep of deregulation, there are heightened tensions between QFs and the utilities to which they sell power. Utilities see their existing longterm QF obligations as an unnecessary burden as they enter the supposedly level playing field of competition and deregulation. Utilities want to `unbundle` their QF contracts if they unbundle their integrated services. More than 1,000 QFs, and their lenders and vendors, invested tens of billions of dollars in facilities that depend long-term on contractual revenue streams from utility buyers. Disruption of these commitments would raise complex legal, practical, and financial complications. In the discussion of stranded cost recovery, utilities have moved long-term QF contract costs to the top of the agenda. QF contracts are up to 40 percent of the power supply base of some utilities. In fact, one electric utility was so encumbered by unrecovered QF costs that it liquidated the company. What to `do` with existing QF power purchase obligations--some of which run up to 30 more years--remains a persistent issue in deregulation at both the federal and state levels. This article analyzes the legality of altering existing QF contracts without the consent of the QF.

• OSTI ID: 518443
• Journal Information: Electricity Journal, Journal Name: Electricity Journal Journal Issue: 2 Vol. 10; ISSN ELEJE4; ISSN 1040-6190
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
COMPETITION
CONTRACTS
DEREGULATION
ELECTRIC POWER INDUSTRY
ENFORCEMENT
LEGAL ASPECTS
US PUBLIC UTILITY REGULATORY POLICIES ACT