Contract negotiations under PURPA and the impact of recent developments on transactions between electric utilities and cogeneration and small power-production facilities

The court of appeals' decision in the American Electric Power Service Corp. v. Federal Regulatory Commission (FERC) has made the development of cogeneration and small power production facilities uncertain until the Supreme Court reviews the case and while Congress considers amendments to the Public Utility Regulatory Policies Act (PURPA). This article begins by analyzing the FERC rules which were challenged in the AEP case and which are likely to have the greatest impact on the structuring of transactions between electric utilities and cogenerators and small power producers. It concludes that parties must be cognizant of current developments in the regulatory area and take into account that further changes are inevitable. 134 references.