The PURPA Predicament
The law in question is the federal Public Utility Regulatory Policies Act (PURPA) of 1978. Designed to increase the supply of domestic and renewable energy and reduce overall demand, PURPA mandates that utilities purchase any power generated by qualifying renewable energy sources in their area. Under PURPA, the terms of facility qualification, prices and length of contract are predetermined at the state level, and regardless of market need.
These terms are still in effect throughout the southeastern United States, making the region desirable for solar developers; however, the fact that the NCUC offered a policy that was highly favorable to large-capacity facility developers made North Carolina even more enticing. Generous terms included the highest avoided-cost rates and the longest fixed-rate contracts for any state in the Southeast.
As a result, utilities throughout the state were inundated with applications, amounting to several gigawatts, from developers requesting to interconnect their solar facilities to the grid.