Public Utility Regulatory Policies Act

The Public Utility Regulatory Policies Act (PURPA, Pub.L. 95–617, 92 Stat. 3117, enacted November 9, 1978) is a United States Act passed as part of the National Energy Act. It was meant to promote energy conservation (reduce demand) and promote greater use of domestic energy and renewable energy (increase supply). The law was created in response to the 1973 energy crisis, and one year in advance of a second energy crisis.

Upon entering the White House, President Jimmy Carter made energy policy a top priority. The law started the energy industry on the road to restructuring.

Law

The Public Utility Regulatory Policies Act of 1978 (PURPA) encouraged

Non-utility power producers

Energy companies were classified as natural monopolies, and for this reason, most were established with vertically integrated structures (that is, they undertook all the functions of generating, transmitting, and distributing electricity to the customer). Utilities became protected as regulated monopolies because it was thought that a company could produce power more efficiently and economically as one company than as several.