The Public Utility Regulatory Policies Act of 1978 ("PURPA") requires investor-owned utilities (IOUs) to interconnect with and purchase power from Qualifying Facilities (QFs) at rates that do not exceed the IOU’s avoided cost. In California, the avoided cost is the amount the utility would have paid to build new gas-fired generation but for the existence of the QF.
Qualifying facilities are a distinct class of energy producer which consists of either small-scale producers of commercial energy who normally self-generate energy for their own needs but may have occasional or frequent surplus energy, or producers who happen to generate electric energy as a byproduct of other activities, for example a cogeneration or combined heat and power facility. When a facility of this type meets the Federal Energy Regulatory Commission's requirements for ownership, size and efficiency, utility companies are obliged to purchase energy from these facilities at avoided cost rates, which are set time to time by the CPUC.
The purpose of the Qualifying Facility program is to increase the amount of environmentally beneficial and efficient generation on California’s grid. Currently, approximately 20% of California’s energy capacity is served by QFs. There is no specific QF goal or metric for the state, but utilities are required to purchase power from QFs so long as the utility has the need for additional capacity and energy.
For a current listing and status of Qualifying Facilities, please see the Semi-Annual Qualifying Facilitiy Report located on the individual Utilities' websites: