A New PURPA for Green Schools?

by Buz Barclay, Dickstein Shapiro LLP

A potentially powerful and highly motivated coalition is pressing for changes in state and federal utility regulation to enable private investment in renewable energy and efficiency in the U.S. educational system. This broad group of environmental advocates and educators wants a national energy policy for schools, the specific elements of which share foundations with rights established under the Public Utility Regulatory Policies Act of 1978 (PURPA). Depending on how it is imposed, however, the new policy might compromise some segments of lines that traditionally divide state and federal utility regulation.

Through rules prescribed by the Federal Energy Regulatory Commission (FERC), PURPA attempted to overcome barriers to private investment in distributed generation, including renewable energy. These barriers variously included burdensome utility-type state or federal regulation, punitive utility rates for backup, supplementary and interruptible power, a utility’s refusal to connect with nonutility generators under reasonable terms and its refusal to purchase excess energy from customer-generators at reasonable prices, or to purchase it at all.

Thirty years ago, industrial manufacturers and independent power developers worked to implement FERC’s regulations in each state, as PURPA required. Their successes were sufficient to alter the utility industry’s traditional business model in a score of states. That impact eventually led to fundamental changes in the business of electric transmission nationally, and even to the repeal of a foundational, federal regulatory statute that was thought to impede modernization of and investment in the power industry. Through this progress, private investors brought online hundreds of billions of dollars in efficient, new, nonutility generating capacity.

Despite PURPA’s successes, it has become increasingly apparent to an important group of utility customers—our nation’s schools—that earlier, state-by-state efforts to enforce FERC’s remedial prescriptions were insufficient. Too many of the old barriers still frustrate private investment in renewable energy for schools. This savvy group of retail ratepayers possesses two attributes that the industrial manufacturers and independent power developers of the 1980s did not: moral authority and political clout.

At the time of this writing, the -Say Yes to Green Schools petition is working its way across the Internet, endorsed by a growing number of schools and renewable advocates. The petition will be presented to President Barack Obama after its adoption by the American Council on Renewable Energy during the RETECH 2009 conference in Las Vegas. Originally promoted by Michigan-based not-for-profit Partners GREEN (Group for a Renewable Energy Efficient Nation), the petition demands that Congress enact federal law to:

  1. Eliminate burdensome charges for standby and similar utility services for schools that purchase or generate energy from renewable resources for their own use,
  2. Require utilities to offer to interconnect on federally mandated terms with schools that have renewable generation inside the meter,
  3. Permit schools to net meter up to 2 MW of renewable generating capacity per meter, and
  4. Require every state to exempt from utility-type regulation all third-party sales to schools from renewable energy projects inside the meter.

When Clark County School District in Las Vegas discovered that Nevada law prohibited the district from purchasing power from a private investor who wanted to build renewable energy projects on school property at the investor’s expense, it took the cause to the state legislature and Public Utilities Commission of Nevada. In 2008, Nevada schools won the essential rights that the -Say Yes to Green Schools petition asks the federal government to assure to schools everywhere. Lessons learned by Clark County are now informing school districts and sustainability leaders in other states.

To achieve the real change sought by President Obama’s policies, it might be necessary to reconsider even the most venerable jurisdictional precepts. If Congress is persuaded that limited encroachment on the states’ retail regulation prerogative would open an otherwise inaccessible avenue for significant private investment in renewable technologies while promoting investment in the educational infrastructure that communities and states want but cannot afford themselves, I like the schools’ chances.

On the Net: not-for-profit Partners GREEN site: http://PartnersGREEN.org


Buz Barclay is a partner in Dickstein Shapiro LLP’s energy practice. For more than 25 years, he has advised clients in the U.S. electric and natural gas industries on energy- and infrastructure-related matters. He may be reached at barclayb@dicksteinshapiro.com.

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