What is PURPA?

PURPA is the Public Utilities Regulatory Policy Act of 1978. PURPA, which was passed as part of the National Energy Act, was intended to encourage the conservation and efficient use of energy resources and to encourage the development of alternative power supplies capable of displacing the inefficient use of oil and natural gas by electric utilities. PURPA requires electric utilities, when they need power, to purchase power from QFs at the utilities' avoided cost, provide back-up power to QFs, interconnect with QFs, and operate with QFs under reasonable terms and conditions.