The NREL report was written principally by Scott Hempling with the National Regulatory Research Institute (NRRI) under contract to NREL, and covers an issue that others have covered before.
Opponents have long argued that feed-in tariffs (FiTs) are illegal in the US and this latest NREL report certainly supports the view that the European or Canadian approach of directly setting specific tariffs would not comply with current federal law or its interpretation. Hempling says, in essence, that states cannot set specific tariffs above "avoided cost" under the Public Utility Regulatory Policies Act (PURPA) of 1978.
However, Hempling goes on to chart a path to implementing FiTs that avoids the regulatory minefield under PURPA and the Federal Power Act. Hempling describes how states can set total payments, or equivalent FiTs, above avoided cost in compliance with federal law. The path may appear more circuitous, in comparison to that in other countries, but it is, nevertheless, clear.
To paraphrase a 68-page legal opinion: "Yes, we can implement feed-in tariffs in the US under existing law, we just have to do it differently than everywhere else in the world".
While Hempling offers a solution to legally establishing FiTs in the US, the bigger question of whether US law will continue to treat renewable energy as a burdensome addition to the existing utility system still remains. Unless these legal precedents are clarified or revised, the US' competitive position will continue to erode in comparison to countries such as China, India, Germany, and Japan that look at renewable energy differently, the report warns.
For now though, the Hempling points states that want to act in the direction they need to go to meet FERC's constraints, while, for those states that do not want to act or are afraid of doing so, the report gives them sufficient legal cover to avoid taking the steps necessary.
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