B. Jeanine Hull
President, Electric Generation Association
Vice President & General Counsel, LG&E Power Inc.
PURPA is not the issue; competition is. PURPA has introduced competition by demonstrating that the generation of electricity is not a natural monopoly. PURPA's faith in competition has proven itself in the form of lower-priced electricity for ratepayers. PURPA has also promoted fuel diversity by creating incentives for utilities to consider renewable fuel options for portions of their capacity needs.
I strongly disagree with the notion that we have already reached a world of perfect competition, and thus no longer need PURPA. Competition is neither perfect nor inevitable. Policymakers must continue to aggressively pursue a competitive agenda. Repealing the mandatory purchase provision of PURPA is to step away from competition, because it removes an effective check on a utility's market power.
If steps are taken to create a fully competitive generation market, then EGA would not be opposed to considering the repeal of PURPA. At a minimum, such steps must include requiring nondiscrimination in the purchase of power, and reforming federal and state laws to permit all generators to compete for new opportunities to provide service.
The independent power industry is contract-based. Any consideration of repealing or reforming PURPA must include affirmative language stating that existing contracts, commitments, and obligations must be honored or bilaterally renegotiated.