As mentioned previously, the Public Utility Regulatory Policies Act (PURPA) was enacted in 1978 and allowed certain nonutilities to enter the wholesale market. It was one of five statutes of the National Energy Act which was aimed at reducing our Nation's dependence on foreign oil. PURPA was designed to encourage the efficient use of fossil fuels in electric power production through cogenerators and the use of renewable resources through small power producers.
Cogenerators Cogenerators are generators that sequentially or simultaneously produce electric energy and another form of energy (such as heat or steam) using the same fuel source. Cogeneration technologies are classified as "topping-cycle" and "bottoming-cycle" systems. In a typical topping-cycle system, high-temperature high-pressure steam from a boiler is used to drive a turbine to generate electricity. The waste heat or steam exhausted from the turbine is then used as a source of heat for an industrial or commercial process. In a typical bottoming-cycle system, high-temperature thermal energy is produced first for applications such as reheat furnaces, glass kilns, or aluminum metal furnaces, and heat is then extracted from the hot exhaust steam of the primary application and used to drive a turbine. Bottoming-cycle systems are generally used in industrial processes that require very high-temperature heat. For a nonutility to be classified as a cogenerator qualified under PURPA, it must meet certain ownership, operating, and efficiency criteria established by FERC. The operating requirements stipulate the proportion (applicable to oil-fired facilities) of output energy that must be thermal energy, and the efficiency requirements stipulate the maximum ratio of input energy to output energy. Renewable ResourcesA renewable resource is an energy source that is regenerative or virtually inexhaustible. Renewable energy includes solar, wind, biomass, geothermal, and water (hydroelectric).