The Ratepayer Fairness Act would add an additional “states must-consider” standard to the Public Utility Regulatory Policies Act of 1978 (PURPA), requiring state regulatory authorities and nonregulated utilities to examine policies leading to the cross-subsidization of certain technologies that only benefit a few customers (e.g., electric vehicle charging stations and rooftop solar net metering). Specifically, state regulatory authorities and non-regulated boards would be required to examine whether new policies would:
Result in benefits only enjoyed by a few customers who use the technology;
Shift costs to customers that do not use the technology;
Negatively affect resource utilization, fuel diversity, grid reliability, or grid security; Provide an unfair competitive advantage to market the technology; and
Be necessary to fulfill an obligation to serve electric consumers.
The results of the analysis would then be available to the public before the state regulatory authority or a non- regulated board considers new policies that would cross-subsidize customer technology.
In 1978 Congress enacted PURPA as part of President Carter’s energy plan. Among its provisions, PURPA established a “states must-consider” provision that requires state public utility commissions and nonregulated utilities to undertake regulatory proceedings that determine whether to adopt specific standards set forth in PURPA section 111(d). Initially, Congress established six PURPA standards: cost of service; declining block rates; time-of-day rates; seasonal rates; interruptible rates; and load management. Congress added additional requirements over the years, including five new standards in the EPAct 2005 and four new standards in EISA 2007.
THE CURRENT DEBATE
The issue of cross-subsidization and whether it is prudent is the subject of significant debate, making it ripe for state-level review. Here are a few examples:
“The issue of rooftop solar has led to extreme rhetoric on all sides, but the issue is not pro-solar or anti- solar, it’s about equitable cost allocation among all customers. For customers who want to generate their own power, the issue is how to accommodate them in the most cost-effective manner that is fair to them and to other customers who do not and cannot generate their own power.” Jonathan Weisgall, Berkshire Hathaway Energy, Testimony before the Senate Energy and Natural Resources Committee (May 15, 2015) (emphasis added).
“The typical residential NEM customer was subsidizing the price of electricity for other customers (i.e., either low-income customers or low-usage customers) before installing rooftop solar. Rather than creating a new subsidy, rooftop solar merely reverses the direction of a subsidy that was designed into rates in the wake of the 2001 electricity crisis.” William Pentland, Why the net metering fight is a red herring for utilities, Utility Dive (Sept. 11, 2014).