Public Utility Regulatory Policies Act

Definition

The Public Utility Regulatory Policies Act (PURPA) is a law requiring public utility companies to buy onsite-generated electricity from private power producers.

Purpose

The purpose of PURPA is to promote energy conservation and the development of renewable energy by ensuring that private power producers can sell their electricity to public utilities at fair rates.

Examples of Use

• Small solar farms and wind turbine installations sell excess electricity to the grid under PURPA.
• Industrial facilities with cogeneration plants use PURPA to sell surplus power to utility companies.
• Homeowners with solar panels benefit from PURPA by receiving compensation for the electricity they generate and do not use.

Related Terms

• Net Metering: A system that credits solar energy system owners for the electricity they add to the grid.
• Renewable Energy: Energy from sources that are naturally replenishing, such as solar and wind.
• Cogeneration: The simultaneous production of electricity and useful heat from the same energy source.

Notes

PURPA has been instrumental in encouraging the growth of decentralized energy production and increasing the share of renewable energy in the overall energy mix.