PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

FERC Comments on Proposed Rule to Reform PURPA

By at 3 December, 2019, 11:01 am

The Honorable Neil Chatterjee

Chairman

Federal Energy Regulatory Commission

888 First Street, NE

Washington, DC  20426

 

RE: Federal Energy Regulatory Commission’s “Qualifying Facility Rates and Requirements; Implementation Issues Under the Public Utility Regulatory Policies Act of 1978” 84 Federal Register 53246 (October 4, 2019) [Docket Nos. RM19-15-000 and AD16-16-000]

Dear Chairman Chatterjee,

The Small Business and Entrepreneurship Council (SBE Council) is an advocacy, research and education organization dedicated to protecting small business and promoting entrepreneurship.  Our network of supporters, including entrepreneurs and small business owners, state and local business organizations, private-sector partners and associations work with us to strengthen the environment for robust entrepreneurship, investment, innovation and small business growth.

Today, I am writing to express my organization’s strong support for the Federal Energy Regulatory Commission’s (FERC) proposed rule to reform the Public Utility Regulatory Policies Act of 1978 (PURPA).  PURPA – the now forty-year old law enacted in response to the energy crises of the 1970s – does not reflect the reality of today’s energy markets. Instead, PURPA is actively harming American small business interests by causing artificially high electricity prices throughout the country.

As I am sure you are well aware, the cost of electricity is a major expense for many types of small businesses. As SBE Council’s chief economist Raymond Keating notes in his annual “Small Business Policy Index” report: “All businesses use electricity, and for some, electricity costs rank among the highest expenses. High electricity rates due to hefty taxes and heavy-handed, misguided regulations can play a significant part in business decision-making.”

SBE Council’s “Small Business Policy Index 2019” ranks the states on policy measures and costs impacting small business and entrepreneurship, and unrealistic renewable energy mandates can be an impediment to economic growth, investment, business formation and job creation, which is why it is used as a measurement in the Index. As Mr. Keating noted in the report, these mandates “drive up the cost of electricity for entrepreneurs and businesses, as the mandates require the use of higher cost energy sources.”

In the 2019 Index, we summarize that, “When political incentives trump economics, the impact of higher taxes, increased regulation, and much higher levels of government spending and debt simply are ignored.”   Unfortunately, PURPA fits this bill all too well.  The law is inflexible, incentivizes manipulation by certain renewable energy investors, encourages inefficient allocation of capital, and causes other market distortions that negatively impact efficiency, innovation, and costs. The program’s outdated mandates drive electricity costs higher than they would otherwise be.

PURPA is harming small businesses that rely upon affordable electricity prices to operate efficiently and profitably. FERC has made the smart decision to update this law and how it’s implemented. We believe there are several key areas to focus reforms efforts – from the one-mile rule to lowering the 20-Megawatt threshold mandatory purchase obligation.  Moreover, FERC should allow states to change how they calculate avoided cost under PURPA so that contracts between utilities and so-called “qualifying facilities” better reflect market trends and prices.  These common-sense changes, among others, would revitalize the energy marketplace, allowing increased competition and lower costs for all businesses involved.

In its current form, PURPA is stuck in the past, regulating a renewable energy industry that doesn’t need government subsidies and mandates. The law needs to be modified to reflect the realities of today’s competitive electricity marketplace. By lifting the burden of onerous and unnecessary regulation, and unleashing market forces, energy prices will naturally decline. As a result, small businesses, the backbone and innovators of the American economy, will have greater opportunity to flourish throughout the United States and compete on a global scale.

Thank you for the opportunity to comment on this proceeding.

Sincerely,

Karen Kerrigan
President & CEO

 

cc:       Commissioner Richard Glick

Commissioner Bernard L. McNamee

 

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