TeachMeFinance.com - explain Public Utility Regulatory Policies Act (PURPA)
Public Utility Regulatory Policies Act (PURPA) The term 'Public Utility Regulatory Policies Act (PURPA)' as it applies to the area of reclamation can be defined as 'One of five bills signed into law on November 8, 1978, as the National Energy Act. PURPA is a broad statute aimed at expanding the use of cogeneration and renewable energy resources. PURPA created a new class of power producers called Qualifying Facilities (QFs). PURPA requires electric utilities to buy power from non-utility generators who qualify under PURPA's criteria. Utilities must purchase this power, regardless of whether they need it, at a price equal to the incremental cost they would incur to produce power itself equivalent to the amount of power purchased from cogenerators or small power producers. This is called the utilities' 'avoided cost.' Some states set the avoided cost rate above true avoided cost in order to encourage QF development. It has been estimated that, between the years 1994 and 2005, electric consumers will pay roughly $38 billion above utilities'current avoided costs for power purchased under PURPA's requirements'.
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