The Rules Implementing Sections 201 and 210 of the Public Utility Regulatory Policies Act of 1978: A Regulatory History
NASA Technical Reports Server page:
Digital copy of NASA microfiche copy:
I recently discovered (May 2020) that my first book is on-line through ResearchGate and NASA’s Technical Reports Server Page (links below). It is a book of little relevance today, but was a standard reference work for state and local governments trying to create a massive, world-wide renewable resources and cogeneration industry from virtually nothing between 1980 and 2005. Since implementation of this law and its regulations in every state and over 120 countries, renewable resources and cogeneration have grown by thousands of percent. And will need to grow by that amount again in the future to have any chance of reducing human impacts on climate change.
The events the book documents are, by a wide margin, the most important in the history of alternative energy – especially wind, solar, cogeneration, energy conservation, energy independence, air pollution control technology, and alternative fuels.
This law and regulation is called PURPA – the Public Utility Regulatory Policy Act of 1978.
It is worth noting how different the political climate was then. The PURPA and the Clean Air Act both passed unanimously, something that would seem impossible today.
Jet Propulsion Lab/Cal-Tech was acutely aware of the importance of PURPA. From around 1975 to 1979 JPL/Cal-Tech was the “Lead Center” for the United States for all alternative energy technology. Around 1980 that responsibility was shifted to National Laboratories like the National Renewable Energy Laboratory (then known as the Solar Energy Research Institute) in Golden, Colorado; and, the Southwest Research Institute in Austin, Texas; and many other universities and institutions.
JPL established the National Solar Energy Legislative database with the Franklin Research Institute of Philadelphia. and were one of the first users of the the world-wide web (then known as Arapanet) for civilian purposes.
JPL gave me a budget of around $500,000, plus authority to employ 16 full-time equivalent analysts from JPL/Cal-Tech Systems Analysis section to attend and document the many public hearings held around the U.S., and to interview Committee Chairs (Senator Bob Dole and Congressman Paul Tsongas), as well as their staff, and staff from the Federal Energy Regulatory Commission and the Congressional Research Service. The goal was to produce a book where policymakers could look up the laws, how the draft regulations evolved into the final ones, and the public statements of every public, academic, non-profit, corporate and individual entity involved.
With the benefit of 40 years hindsight, it was the latter “the public statements of every public, academic, non-profit, corporate and individual entity involved” that had the most impact. People developing alternative energy policies were able to look in one place to find the views of the full range of stakeholders who might support or oppose the policies they were developing. It helped them make their own judgements about what might work in their region, and what they needed to do get policies actually to accomplish the intended purpose.
PURPA was essential because it was designed to, and actually did solve several major problems that were considered insurmountable to that point:
1) Electric utilities routinely denied generators connection to the grid for very real safety reasons, many important economic reasons (and more than a few dubious ones).
2) The laws governing anyone who generated electricity and delivered it to the Utility grid required legal and accounting departments to comply with highly complex reporting requirements to at least 2 Federal and 2 State agencies, all of whom had different methods of calculating important things like energy use and production, and even required different methods of measuring. For example, it was not uncommon for large utility powerplants to measure fuel use with dipsticks, and all of the powerplants in Los Angeles owned by Southern California Edison (combined) had exactly one gas meter. No one actually knew how much energy it took to produce one unit of electricity within 9%.
3) PURPA required standard contracts to be offered to renewable resources and cogeneration. This threat brought electric utilities to the negotiating table where they, by and large, negotiated in good faith to develop win-win solutions. Or at least things both sides thought would prove to be win-win. In fact, the one comment JPL made on the draft regulations was to encourage the legality of custom negotiated contracts. In subsequent years, it was the “best practices” from these specially-negotiated contracts that became the basis of the “Standard Offers” from the 1990’s to today.
In this sense, PURPA “made a market” for renewable energy and cogeneration that from the beginning of public utilities to 1978 did not exist. And, for future researchers, in my opinion, what made it work was economic neutrality. Utilities were required to pay only their “avoided cost,” not to subsidize these technologies – just pay what it would have cost them to generate the power themselves. Although some states did eventually require utilities to pay more for certain renewables, the guiding principal in the early years was economic neutrality – the Public Utility would be neither penalized or rewarded, it would just pay what it costs them to do the same thing.
The first Public Utility to sort out what this meant was Southern California Edison (SCE), with Pacific Gas and Electric close behind. Mike Vogeler of SCE was put in charge of figuring it out. I was a consultant, but the ideas were his. And he divided “avoided cost” into two parts: 1) avoided energy cost (how much fuel did it take to generate one kilowatt-hour of energy); and, 2) avoided capital cost (how much did it cost SCE to build a powerplant).
In 1980, for fuel, SCE (and PG&E)’s best plants were around 30% efficient. By 1995 a pretty average cogeneration plant is over 60% efficient, and there are now gas turbine powerplants that can generate electricity at above 60%. Not to mention the solar, wind and other renewables that in 2020 are on track, for the first time in history to generate more electricity than coal. This is the main reason the environmental impact of PURPA became by far the largest environmental and energy conservation impact in the history of the world.
On the capital cost side, SCE’s powerplants cost around $1,000 per kilowatt to build. By 1995 those same plants could be built for less than $300 per kilowatt.
Make no mistake, many places and people have paid a heavy price for this progress. Many are still paying. My heart goes out to them. Entire regions that were dependent on coal for jobs – the people in them – have been terribly hurt. To achieve the level of greenhouse gas emissions reductions hoped for, the lessons from this experience need to be learned and a better job done.