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Published:
Last Updated:
19 May 2019

Regulatory Review of Power Purchase Agreements

A Proposed Benchmarking Methodology Author: John Besant Jones, Bernard Tenenbaum, Prasad Tallapragada

The overall purpose of a regulatory review of power purchase agreements (PPAs) is to ensure that the terms of the PPAs are "fair and balanced" to all parties who will be directly and indirectly affected by these transactions. In particular, the prices paid by purchasers of power under the PPAs should be compatible with fair pricing to consumers supplied with power procured under the PPAs. In addition, the prices received by sellers of power (typically an independent power producer (IPP)) under the PPAs should be sufficient to allow the sellers to finance the development and construction of their generation facilities and to earn reasonable returns on capital invested under efficient operation of these facilities.

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