Berkshire’s PURPA Dreams Evaporate

(BRK.A), (BRK.B)




Berkshire Hathaway’s effort to change the Public Utility Regulatory Policies Act (PURPA) in order to loosen the regulations on power purchases from small generating facilities has met a dead end.

The changes Berkshire has been aggressively lobbying for have been dropped from the U.S. Senate’s energy bill.

Berkshire Makes Its Case

Last week, Berkshire Hathaway Energy Legislative and Regulatory Affairs Vice President Jonathan Weisgall testified before the Senate Energy and Natural Resources Committee pushing a rule change to make electric utilities in California’s new Energy Imbalance Market that are in noncompetitive markets exempt from having to purchase power from small generation assets known as Qualified Facilities (QFs).

Weisgall‘s prepared statement noted that “In many instances, the power produced by QFs is not needed to replace baseload generation or meet decreasing levels of demand.”

He also noted that “Growth of electricity demand has slowed in each decade since the 1950s. Since PURPA’s enactment, electricity markets have developed to allow utilities to purchase replacement power rather than build baseload plants. BHE’s PacifiCorp utility is experiencing a significant increase in PURPA contract requests, despite the fact that its long-range resource plan shows no need for additional generation resources until 2028. It currently has requests for 3,641 MW of new PURPA contracts, in addition to the 1,732 MW of PURPA contracts that are already executed. The number of PURPA contracts may soon equal PacifiCorp’s average retail load. For example, the 5,373 MW of existing and proposed PURPA contracts at their nameplate capacity would be equal to 79% of PacifiCorp’s average retail load and 108% of PacifiCorp’s minimum retail load.”

Senator Cantwell Objects

Berkshire laid out a proposed amendment to PURPA Section 210 16 U.S. Code § 824a–3 – Cogeneration and small power production, but the objections of Sen. Maria Cantwell (D-WA), who laid out her concerns that it could adversely impact the energy market in the Pacific Northwest, effectively killed the amendment.

© 2015 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.