UPDATE PURPA Act

II 116TH CONGRESS 1ST SESSION S. 1760 To modernize the Public Utility Regulatory Policies Act of 1978, and for other purposes. IN THE SENATE OF THE UNITED STATES JUNE 10, 2019 Mr. BARRASSO (for himself, Mr. RISCH, Mr. CRAMER, and Mr. DAINES) intro- duced the following bill; which was read twice and referred to the Com- mittee on Energy and Natural Resources A BILL To modernize the Public Utility Regulatory Policies Act of 1978, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Updating Purchase 4 Obligations to Deploy Affordable Resources to Energy 5 Markets Under PURPA Act’’ or the ‘‘UPDATE PURPA 6 Act’’. 7 SEC. 2. AMENDMENTS TO PURPA. 8 (a) COGENERATION AND SMALL POWER PRODUC- 9 TION RULES.—Section 210 of the Public Utility Regu- 10 VerDate Sep 11 2014 22:43 Jun 11, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S1760.IS S1760 kjohnson on DSK79L0C42 with BILLS 2 •S 1760 IS latory Policies Act of 1978 (16 U.S.C. 824a–3) is amend- 1 ed by striking subsection (a) and inserting the following: 2 ‘‘(a) COGENERATION AND SMALL POWER PRODUC- 3 TION RULES.— 4 ‘‘(1) IN GENERAL.—Not later than 1 year after 5 the date of enactment of this Act, the Commission 6 shall prescribe, and from time to time thereafter re- 7 vise, rules as the Commission determines necessary 8 to encourage cogeneration and small power produc- 9 tion, and to encourage geothermal small power pro- 10 duction facilities of not more than 80 megawatts ca- 11 pacity. 12 ‘‘(2) REQUIREMENTS.—The rules under para- 13 graph (1)— 14 ‘‘(A) shall require electric utilities to 15 offer— 16 ‘‘(i) to sell electric energy to quali- 17 fying cogeneration facilities and qualifying 18 small power production facilities; and 19 ‘‘(ii) to purchase electric energy from 20 facilities described in clause (i); 21 ‘‘(B) shall be prescribed after consultation 22 with representatives of Federal and State regu- 23 latory agencies having ratemaking authority for 24 electric utilities, and after public notice and a 25 VerDate Sep 11 2014 22:43 Jun 11, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1760.IS S1760 kjohnson on DSK79L0C42 with BILLS 3 •S 1760 IS reasonable opportunity for interested persons 1 (including Federal and State agencies) to sub- 2 mit oral as well as written data, views, and ar- 3 guments; 4 ‘‘(C) shall include provisions requiring— 5 ‘‘(i) minimum reliability of qualifying 6 cogeneration facilities and qualifying small 7 power production facilities (including reli- 8 ability of those facilities during emer- 9 gencies); 10 ‘‘(ii) qualifying facilities to be respon- 11 sible for any costs needed to hold electric 12 utility customers financially indifferent to 13 the cost of enabling the firm delivery capa- 14 bility of the qualifying facility, including 15 the cost of any facilities or network up- 16 grades associated with the interconnection 17 service of the qualifying facility and trans- 18 mission service arrangements of the quali- 19 fying facility to deliver the power of the 20 qualifying facility to electric utility cus- 21 tomers; 22 ‘‘(iii) curtailment of qualifying facili- 23 ties as the Commission determines nec- 24 essary to ensure resource adequacy; and 25 VerDate Sep 11 2014 22:43 Jun 11, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1760.IS S1760 kjohnson on DSK79L0C42 with BILLS 4 •S 1760 IS ‘‘(iv) reliability of electric energy serv- 1 ice to be available to facilities described in 2 clause (i) from electric utilities during 3 emergencies; and 4 ‘‘(D) may not authorize a qualifying cogen- 5 eration facility or qualifying small power pro- 6 duction facility to make any sale for purposes 7 other than resale.’’. 8 (b) RATES FOR PURCHASES BY ELECTRIC UTILI- 9 TIES.—Section 210(b) of the Public Utility Regulatory 10 Policies Act of 1978 (16 U.S.C. 824a–3(b)) is amended— 11 (1) in paragraph (1), by striking ‘‘, and’’ and 12 inserting ‘‘; and’’; 13 (2) by redesignating paragraphs (1) and (2) as 14 subparagraphs (A) and (B), respectively, and indent- 15 ing the subparagraphs appropriately; 16 (3) in the matter preceding subparagraph (A) 17 (as so redesignated), by striking ‘‘The rules pre- 18 scribed under subsection (a) shall insure’’ and in- 19 serting the following: 20 ‘‘(1) IN GENERAL.—Subject to paragraph (2), 21 the rules prescribed under subsection (a) shall en- 22 sure’’; and 23 (4) in the undesignated matter following sub- 24 paragraph (B) of paragraph (1) (as so redesig- 25 VerDate Sep 11 2014 22:43 Jun 11, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S1760.IS S1760 kjohnson on DSK79L0C42 with BILLS 5 •S 1760 IS nated), by striking ‘‘No such rule’’ and inserting the 1 following: 2 ‘‘(2) LIMITATION.—No rule’’. 3 (c) TERMINATION OF MANDATORY PURCHASE RE- 4 QUIREMENTS.—Section 210(m)(1) of the Public Utility 5 Regulatory Policies Act of 1978 (16 U.S.C. 824a– 6 3(m)(1)) is amended— 7 (1) in subparagraph (B)(ii), by striking ‘‘or’’ at 8 the end; and 9 (2) by striking subparagraph (C) and inserting 10 the following: 11 ‘‘(C) any independently administered, vol- 12 untary, auction-based energy market (including 13 an energy imbalance market), regardless of 14 whether— 15 ‘‘(i) an applicable electric utility par- 16 ticipating in such a market is a member of 17 a regional transmission organization or an 18 independent system operator; or 19 ‘‘(ii) such a market has a governance 20 structure and operation that is wholly sep- 21 arate and autonomous from a regional 22 transmission organization or an inde- 23 pendent system operator; or 24 VerDate Sep 11 2014 22:43 Jun 11, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S1760.IS S1760 kjohnson on DSK79L0C42 with BILLS 6 •S 1760 IS ‘‘(D) wholesale markets that are of com- 1 parable competitive quality to markets de- 2 scribed in subparagraph (A), (B), or (C).’’. 3 (d) NONDISCRIMINATORY ACCESS.—Section 210(m) 4 of the Public Utility Regulatory Policies Act of 1978 (16 5 U.S.C. 824a–3(m)) is amended by adding at the end the 6 following: 7 ‘‘(8) NONDISCRIMINATORY ACCESS.— 8 ‘‘(A) IN GENERAL.—For purposes of this 9 subsection, a qualifying small power production 10 facility with an installed generation capacity of 11 2.5 megawatts or greater is presumed to have 12 nondiscriminatory access to the transmission 13 and interconnection services and wholesale mar- 14 kets described in subparagraphs (A), (B), (C), 15 and (D) of paragraph (1). 16 ‘‘(B) EXCEPTION.—Subparagraph (A) 17 shall not apply with respect to a qualifying 18 small power production facility that, as of the 19 date of enactment of this paragraph— 20 ‘‘(i) produces both electric energy and 21 useful thermal energy; and 22 ‘‘(ii) on a million-British-thermal-unit 23 basis, uses not less than 80 percent of the 24 total annual aggregate net output of elec- 25 VerDate Sep 11 2014 22:43 Jun 11, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S1760.IS S1760 kjohnson on DSK79L0C42 with BILLS 7 •S 1760 IS tric energy and useful thermal energy of 1 the qualifying small power production facil- 2 ity for onsite industrial, commercial, or in- 3 stitutional purposes, rather than for sale.’’. 4 (e) RECOGNITION OF STATE OR LOCAL DETERMINA- 5 TIONS.—Section 210(m) of the Public Utility Regulatory 6 Policies Act of 1978 (16 U.S.C. 824a–3(m)) (as amended 7 by subsection (d)) is amended by adding at the end the 8 following: 9 ‘‘(9) STATE OR LOCAL DETERMINATION.—Ef- 10 fective beginning on the date of enactment of this 11 paragraph, no electric utility shall be required to 12 enter into a new contract or obligation to purchase 13 electric energy under this section from a qualifying 14 small power production facility that is not a quali- 15 fying small power production facility described in 16 paragraph (8)(B), if the appropriate State regu- 17 latory agency or non-regulated electric utility deter- 18 mines that— 19 ‘‘(A) the electric utility has no need to pur- 20 chase electric energy from the qualifying small 21 power production facility in the quantities of- 22 fered within the timeframe proposed by the 23 qualifying small power production facility to 24 meet any obligation to serve a customer, con- 25 VerDate Sep 11 2014 22:43 Jun 11, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S1760.IS S1760 kjohnson on DSK79L0C42 with BILLS 8 •S 1760 IS sistent with the needs for electric energy and 1 the timeframe for those needs, as specified in 2 the integrated resource plan of, or other appli- 3 cable demonstration of need by, the electric util- 4 ity; or 5 ‘‘(B) the electric utility employs integrated 6 resource planning or another applicable dem- 7 onstration of need and conducts a competitive 8 resource procurement process for long-term en- 9 ergy resources that provides an opportunity for 10 qualifying small power production facilities to 11 supply electric energy to the electric utility in 12 accordance with the integrated resource plan of, 13 or other applicable demonstration of need by, 14 the electric utility.’’. 15 (f) TECHNICAL CORRECTIONS.—Section 210 of the 16 Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 17 824a–3) is amended— 18 (1) in subsection (h)(2)(A)(i), by striking ‘‘sub- 19 section (f) or’’ and inserting ‘‘subsection (f); or’’; 20 and 21 (2) in subsection (k), by adding a period at the 22 end. 23 VerDate Sep 11 2014 22:43 Jun 11, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S1760.IS S1760 kjohnson on DSK79L0C42 with BILLS 9 •S 1760 IS SEC. 3. FEDERAL ENERGY REGULATORY COMMISSION REG- 1 ULATIONS. 2 (a) REQUIRED AMENDMENTS RELATING TO LOCA- 3 TION OF SMALL POWER PRODUCTION FACILITIES.— 4 (1) IN GENERAL.—Not later than 180 days 5 after the date of enactment of this Act, the Federal 6 Energy Regulatory Commission (referred to in this 7 section as the ‘‘Commission’’) shall publish in the 8 Federal Register a final rule to amend, in accord- 9 ance with this section, the regulations of the Com- 10 mission promulgated to carry out section 11 3(17)(A)(ii) of the Federal Power Act (16 U.S.C. 12 796(17)(A)(ii)) relating to the method used by the 13 Commission to determine whether a facility is con- 14 sidered to be located at the same site as a facility 15 for which qualification is sought for the purpose of 16 calculating power production capacity. 17 (2) REBUTTABLE PRESUMPTION.— 18 (A) IN GENERAL.—The amendments to 19 regulations required by paragraph (1) shall es- 20 tablish a rebuttable presumption that— 21 (i) facilities separated by a distance of 22 1 mile or more shall not be considered to 23 be located at the same site; and 24 VerDate Sep 11 2014 22:43 Jun 11, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S1760.IS S1760 kjohnson on DSK79L0C42 with BILLS 10 •S 1760 IS (ii) facilities separated by a distance 1 of less than 1 mile shall be considered to 2 be located at the same site. 3 (B) REBUTTING PRESUMPTION.—The 4 Commission shall allow any person (as defined 5 in section 385.102 of title 18, Code of Federal 6 Regulations (as in effect on the date of enact- 7 ment of this Act)) to rebut the presumption de- 8 scribed in subparagraph (A). 9 (3) FACTORS FOR CONSIDERATION.— 10 (A) IN GENERAL.—The amendments to 11 regulations required by paragraph (1) shall re- 12 quire that, in determining whether a facility is 13 considered to be located at the same site as a 14 facility for which qualification is sought, the 15 Commission shall take into consideration, to the 16 maximum extent practicable, the following fac- 17 tors: 18 (i) The extent to which the owners or 19 operators of the facilities are— 20 (I) affiliates or associate compa- 21 nies (as those terms are defined in 22 section 1262 of the Public Utility 23 Holding Company Act of 2005 (42 24 U.S.C. 16451)); or 25 VerDate Sep 11 2014 22:43 Jun 11, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S1760.IS S1760 kjohnson on DSK79L0C42 with BILLS 11 •S 1760 IS (II) under the control of the 1 same person, subject to subparagraph 2 (B). 3 (ii) The extent to which the facilities 4 have been treated as a single project for 5 purposes of other regulatory filings or ap- 6 plications. 7 (iii) Whether the facilities use the 8 same energy resource. 9 (iv) Whether the facilities— 10 (I) have a common generator 11 lead line; or 12 (II) connect at the same or near- 13 by interconnection points or sub- 14 stations. 15 (v) The extent to which the owners or 16 operators of the facilities have a common 17 land lease or land rights with respect to 18 land on which the facilities are located. 19 (vi) The extent to which there is com- 20 mon financing with respect to the facilities. 21 (vii) The extent to which the facilities 22 are part of a common development plan or 23 permitting effort, regardless of whether the 24 VerDate Sep 11 2014 22:43 Jun 11, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S1760.IS S1760 kjohnson on DSK79L0C42 with BILLS 12 •S 1760 IS interconnection of the facilities occurs at 1 separate points. 2 (B) CONTROL.—For purposes of subpara- 3 graph (A)(i)(II), the Commission shall consider 4 the owner or operator of a facility to be under 5 the control of a person if— 6 (i) the person directly or indirectly 7 owns, controls, or holds, with power to 8 vote, 10 percent or more of the out- 9 standing voting securities of the owner or 10 operator; or 11 (ii) the Commission determines, after 12 notice and opportunity for hearing, that 13 the person exercises, directly or indirectly 14 (alone or pursuant to an arrangement or 15 understanding with 1 or more persons), a 16 controlling influence over the management 17 of the owner or operator. 18 (4) EXCEPTION.—Paragraphs (2) and (3) shall 19 not apply with respect to a facility that, as of the 20 date of enactment of this Act— 21 (A) produces both electric energy and use- 22 ful thermal energy; and 23 (B) on a million-British-thermal-unit basis, 24 uses not less than 80 percent of the total an- 25 VerDate Sep 11 2014 22:43 Jun 11, 2019 Jkt 089200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S1760.IS S1760 kjohnson on DSK79L0C42 with BILLS 13 •S 1760 IS nual aggregate net output of electric energy and 1 useful thermal energy of the facility for onsite 2 industrial, commercial, or institutional pur- 3 poses, rather than for sale. 4 (b) PROHIBITION ON REQUIRING MINIMUM TERM 5 FOR CERTAIN CONTRACTS.—The Commission shall not 6 issue any regulation, guidance, or order that requires a 7 minimum contract term for any power purchase contract 8 between— 9 (1) an electric utility (as de [Text truncated for display. 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