Renewable Portfolio Standard (RPS)

Policy Issue

Should the Emerald PUD Board support the Governor’s proposed RPS?

Discussion

An RPS is a law that sets goals for electric utilities of how much of their electric load should be provided through renewable resources.  22 states and the District of Columbia currently require electric utilities to generate a portion of their electricity from renewable sources.  By doing this, states can develop an emerging market for renewable resources, lower the environmental impacts of electricity generation, and bolster economic developments.  In the November 2006 election, Washington voters approved an RPS - Initiative Measure No. 937 (I-937), with 52% of the vote.  I-937 establishes renewable energy targets starting at 3% of a qualifying utility's load by 2012 and escalating to 15% by 2020. Qualifying utilities are those public and private utilities serving more than 25,000 customers located in the State of Washington. Of Washington's 62 utilities, 17 would be considered qualifying utilities representing about 84% of Washington's load.  Targets must be achieved through the use of electricity generated from eligible renewable resources by acquiring equivalent renewable energy credits (RECs), or a combination of both.

In Oregon, Governor Kulongoski has proposed a similar law.  The Oregon RPS would require those utilities that are responsible for one percent (1%) or greater of the total electric sales in the state must comply.  The end target is 25% in 2025, with interim targets of 5% by 2011, 15% in by 2015, and 20% by 2020. Smaller utilities (less than 1% of the state’s total electric load would have to meet a secondary target of 60% of their load growth by 2025, with interim targets of 20% of their load growth by 2015, and 40% by 2020.  Failure to meet the targets will result in a penalty, the proceeds of which will be used to secure more renewable energy projects.

Emerald is currently about 0.93% of the state’s total electric load, and will likely, eventually, have to meet the larger utility standard of 25% of our load from renewables by 2025.

Qualifying renewable resources include:  wind, solar PV, solar thermal generation, wave or tidal power, geothermal, biogas from organic sources or wastewater treatments plants or landfills, some biomass, incremental output from efficiency improvements form existing hydro dams, some new hydro, and hydrogen from non-fossil fuel sources.  Facilities in operation after January 1, 1995 would qualify.  Voluntary contributions from utility green power programs would NOT qualify.  Consumer-owned utilities, like Emerald PUD, would be guaranteed not to have to give-up their rights to the cheap BPA hydro power.

Board of Director's Position

The Board of Directors supports the proposed Renewable Portfolio Standard with the following modifications:

1. Date of Eligibility – The eligibility criteria should be that Emerald’s early renewable energy project, the Short Mountain Landfill Gas to Electricity Plant, is included.  The currently proposed date of January 1, 1995 should be moved to January 1, 1992.  Moving the date back to this date would only add 3 renewable energy projects to the long list of eligible projects.  As well, there is a 3 year gap before the next resources would become eligible, so this seems like a logical break point.  The 1995 date is arbitrary in the first place and there is no really significant difference between a 1995 and 1992 cut-off date – both are more than a decade in the past.  It doesn’t make sense to penalize those that provided the early leadership to the renewables movement, were early adopters of the theory behind an RPS, and took the risk to develop renewable energy projects.
2. Secondary RPS Standard Targets – Emerald believes that the current standard of 60% of load growth for small utilities should be increased to 100%, and the interim targets should also be modified.  There does not appear to be an over-riding reason for lowering the target to 60% of load growth.  As well, using load growth as the target allows a small utility to meet all of its load growth through conservation, or a mix of conservation and renewables.  Using this standard for the Primary utilities would also be appropriate in establishing their targets.
3. Voluntary Renewable Energy Tariff Programs – It does not make sense to Emerald to not allow the renewable energy purchases from customers on a voluntary basis, while also requiring the utility to offer such a program.  These voluntary programs are stable sources of renewable project acquisitions or REC acquisitions.  Since these voluntary programs will directly compete with the other utility efforts to meet their targets; it seems like a great way to ensure that these programs will always be maintained at the lowest minimal viable level required by the law.
4. Firm FBS Power Exemption – We agree that it is essential that the RPS guarantee no public utility will lose its access to the cheap federal BPA hydro-power (or the Federal Base System – FBS), but we fail to see the need to remove the guarantee for non-firm power.  This could result in the sale of cheap non-firm renewable power to California while more expensive power is purchased and used in Oregon.  The exemption should be extended to include non-firm power used to serve load.
5. Renewable Energy Certificates – The proposal stipulates that no more than 20% of the a primary utility’s compliance portfolio can come from RECs, and at least 75% of those RECs must come from contracts with a duration of 10 years or more.  Emerald feels this is too prescriptive and this requirement should be eliminated.

Related Links

For a full outline of the proposed RPS

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