Clean energy is a growing and competitive industry, and regulating of the industry requires careful balancing of multiple factors. Among these factors is the need to protect consumers, as well as the need to encourage growth and innovation.
The current regulatory scheme involves various requirements under the Public Utility Regulatory Policies Act, a federal law passed in 1978 to help encourage energy conservation and to promote renewable energy development. Among other things, the law established a free energy market for non-utility energy developers, and several requirements to protect them in the bidding process. In the decades since it has passed, PURPA has grown less important, but non-utility renewable energy developers still find it useful since it exempts them from regulatory requirements at both the state and federal level.
One of the requirements of PURPA is that publicly-regulated utilities purchase power from small independent producers at the “avoided cost,” which is the same rate they would spend to produce the power themselves. The standard offer required under the law entitles energy developers to a 15-year contract. A bill currently under consideration in the North Carolina legislature, however, would largely do away with the PURPA scheme, retaining some of its provisions only for very small projects, and would put Duke Energy in charge of handling the bidding process for clean energy development projects going forward.
Obviously, the bill is supported by Duke, but it is opposed by alternative energy developers, particularly solar developers, whom Duke has increasingly denied new projects. Opponents of the bill feel it would give Duke too much control of clean energy development and that it will seriously slow down the pace of renewable energy development.
In our next post, we’ll say a bit more about this topic, and the importance of working with an experienced attorney in the contract negotiation process leading up to energy transactions.