[BETA] Fortnightly

The beleaguered Public Utilities Regulatory Policies Act of 1978 (PURPA) has a new assailant (em U.S. Rep. Cliff Stearns (R-FL). Stearns's bipartisan legislation, H.R. 2562, the "Ratepayer Protection Act," proposes repeal of section 210 of PURPA, which requires electric utilities to purchase power at avoided costs. Contracts in place before October 31, 1995, would stand, but no electric utility would be obliged to enter into any new contracts after that date.

Stearns is against PURPA's substitution of government intervention where the market should dictate. He argues that PURPA caused many consumers to pay exorbitant rates for electricity, and points out that the Energy Policy Act of 1992 (EPAct) gives nonregulated electric producers additional access to the wholesale electric market through transmission access and exemption from the Public Utility Holding Company Act. The competitive wholesale market created by EPAct thus makes section 210 of PURPA redundant.

Stearns hopes that the PURPA reform legislation will precipitate a much larger debate on deregulation, which he favors. He notes that House Energy and Power Subcommittee chairman Dan Schaefer

(R-CO) has begun a series of hearings on electric deregulation and reform, and says he looks forward to Congress's comprehensive examination of the electric industry.

"This bill by Congressman Stearns, together with legislation introduced by Sen. Don Nickles (R-OK), gives both the House and the Senate responsible vehicles to correct the most anticompetitive and anticonsumer provisions of PURPA's mandatory purchase obligation," said Arthur W. Adelberg, chairman of the PURPA Reform Group and vice president of Central Maine Power Co. (The Nickles bill, S. 708, which is similar to the Stearns bill, was introduced in the Senate earlier this year.)

The PURPA Reform Group points out that the Edison Electric Institute estimates the PURPA tab at about $38 billion over present market prices. Of five bills signed into law by President Jimmy Carter during the energy crisis of the late 1970s, PURPA is the only one that remains intact; the other four either have been repealed or significantly scaled back (Energy Tax Act, Fuel Use Act, Energy Conservation Policy Act, and Natural Gas Policy Act).

PURPA partisans are not taking the assault lying down. National Independent Energy Producers (NIEP) argues that the Stearns bill would return the electric industry to a government-created and -maintained monopoly, undermining two decades of progress toward competition. While she cautions against PURPA repeal, Merribel Ayers, NIEP executive director, gives Stearns credit for recognizing the need for a comprehensive debate on the regulation of the electric industry.

The Electric Generation Association (EGA) criticizes the Stearns bill for failing to take a comprehensive approach to the intertwined issues. EGA executive director Peggy Welsh calls the Stearns legislation a "narrow, anticompetitive bill masquerading as a comprehensive, procompetitive vehicle." Welsh says that EGA will only consider legislative changes to PURPA if new legislation keeps the market competitive: "At a minimum, [legislation] must include requiring nondiscrimination in the purchase of power, reforming existing laws to permit all generators to compete for new opportunities to provide power, and protecting existing contracts."

But whether PURPA repeal will be combined with some