Word of the Day: PURPA

April 10, 2015 by Alexandra Aznar

Many federal, state, and local policies have supported and continue to support the deployment of renewable energy onto the grid. One foundational federal policy was the Public Utilities Regulatory Policy Act of 1978, which is known as PURPA.

One of PURPA’s main goals was to increase energy efficient and renewable energy generation. PURPA mandates that electric utilities purchase power from qualifying facilities at the “avoided cost” rate of energy when they need additional power. The avoided cost of energy is the cost a utility incurs for producing an additional unit of energy. By setting the rate at a utility’s avoided cost, PURPA favors energy producers and thereby expands energy efficient and renewable energy generation.