[1] PURPA was originally passed with the intention of conserving electric energy, increasing efficiency in facilities and resources used by utility companies, making retail rates for electric consumers more fair, speeding up the creation of hydroelectric energy production at small dams, and conserving natural gas.

[2] The Public Utility Regulatory Policies Act of 1978 (PURPA) encouraged: 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).

These plants are encouraged by the law, on the basis that they harness thermal energy (in the form of usable steam) that would be otherwise wasted if electricity alone was produced.

PURPA also became the basic legislation that enabled renewable energy providers to gain a toehold in the market, particularly in California, where state authorities were more aggressive in their interpretation of the statute.

[citation needed] Another reason for PURPA's reduced significance is that electric deregulation and open access to electricity transportation by utilities has created a vast market for the purchase of energy and State regulatory agencies have therefore stopped forcing utilities to give contracts to developers of non-utility power projects.

However, it is still an important piece of legislation promoting renewable energy because it exempts the developers of such projects from numerous State and Federal regulatory regimes.

Critics of PURPA cited that power producers signed multi-year cost of electricity contracts at a time when energy prices were high.

In October 2018, the National Association of Regulatory Utility Commissioners (NARUC) made suggestions in a report that FERC should modernize PURPA for the energy sector.

NARUC's paper "proposes that FERC exempt from PURPA’s mandatory purchase obligation those utilities which are subject to state competitive solicitation requirements and other best practices that ensure all technologies access to the market.

"[8] In September 2019, the Federal Energy Regulatory Commission (FERC) announced its intention to update certain provisions of the PURPA law, in a process known as a “notice of proposed rulemaking” (NOPR).

When PURPA was originally passed in the late 1970s, many utility companies were “vertically integrated” and did not want to buy power from third-party independent generators.

[9] Investor-owned utility companies, represented by their national association the Edison Electric Institute (EEI), supported FERC’s proposed updates to PURPA.

EEI also stated it more bluntly: PURPA requires its member utilities to buy power it often doesn’t even need at mandatory above-market prices.

[9] A group of opponents, which included eight attorneys general, the FTC, and electric power supply companies, wrote FERC to express their opposition.