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The Regulatory Assistance Project110 B Water Street

Hallowell, Maine USA 04347Tel: 207.623.8393

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50 State Street, Suite 3Montpelier, Vermont USA 05602Tel: 802.223.8199Fax: 802.223.8172

Perspectives on Renewable Portfolio Standard

AuthorityNARUC Summer 2007

July 17, 2007Richard Sedano

Introduction

Regulatory Assistance ProjectRAP is a non-profit organization, formed in 1992, that

provides workshops and education assistance to state government officials on electric utility regulation. RAP is funded by the Energy Foundation, US EPA & US DOE.

Richard Sedano was Commissioner of the Vermont Department of Public Service, 1991-2001

Renewables Portfolio Standards

State Goal

☼ PA: 18%¹ by 2020

☼ NJ: 22.5% by 2021

CT: 23% by 2020

MA: 4% by 2009 + 1% annual increase

WI: requirement varies by utility; 10% by 2015 goal

IA: 105 MW

MN: 25% by 2025(Xcel: 30% by 2020)

TX: 5,880 MW by 2015

*NM: 20% by 2020 (IOUs) 10% by 2020 (co-ops)

☼ AZ: 15% by 2025

CA: 20% by 2010

☼ NV: 20% by 2015

ME: 30% by 200010% by 2017 goal - new RE

State RPS

☼ Minimum solar or customer-sited RE requirement* Increased credit for solar or customer-sited RE

¹PA: 8% Tier I / 10% Tier II (includes non-renewables); SWH is a Tier II resource

HI: 20% by 2020

RI: 15% by 2020

☼ CO: 20% by 2020 (IOUs)*10% by 2020 (co-ops & large munis)

☼ DC: 11% by 2022

DSIRE: www.dsireusa.org June 2007

☼ NY: 24% by 2013

MT: 15% by 2015

*DE: 10% by 2019

IL: 8% by 2013

VT: RE meets load growth by 2012

Solar water heating (SWH) eligible

*WA: 15% by 2020

☼ MD: 9.5% in 2022

☼ NH: 23.8% in 2025

OR: 25% by 2025 (large utilities)5% - 10% by 2025 for smaller utilities

*VA: 12% by 2022

MO: 11% by 2020

Some RPS PurposesPublic, structured commitment to selected

resources that gets resultsImpresses the publicImpresses qualifying resource development

teams and inspires their confidenceTakes guess work out of public value of

renewables (avoids other sources) for monopoly service and is competitively neutral

Can be part of a coherent clean energy strategyMarket solution (not like PURPA QF contracts)Targets may stretch out in time ahead of supply

(Should we be saying “Clean Energy Standard?”)

Choice of resources: mixed policy considerations (expansive as possible)Truly renewable in natureHigh efficiency DG sourcesTending to be locally availableAddressing other economic development or

environmental or political issuesEnergy efficiency, demand response

A National RPS Extends purposes to all states applying uniformly

to all customers (requirement, not a goal)Applies to utilities of all ownership structuresApplies consistently to all states, including those

without sufficient impetus to adopt a state standardWould need national tracking system, which may be

able to meld current regional systems (A REC is A REC is A REC, no double counting)

What about states that have adopted a standard – will the national standard accommodate or obliterate state standards?

It DependsNational RPS can be flexible,

accommodating all categories of most statesSome administrative process that is relatively

easy to manage will keep the categories freshStates should be able to qualify what they want

for their own standardNational RPS can establish a minimum

standard of renewable energy and alternative compliance, states can exceed it

State Concerns Preemption (on resource and cost recovery)

Fed RPS won’t shield states from cost concern

Absence of locally available renewablesMost states have some renewable sources, but as with

current regional markets for electricity supply and demand of electricity, a market for RECs can and will form, and some areas will be buyers

Rates (compared with past or future?) Consistency in definition (states already have tiers)

and alternative compliance (sum, state CE funds)

Other ConcernEncouraging new renewable sources while

crediting existing renewable onesUnderscores the “game” that a portfolio

standard createsBest “bang for buck” of ratepayer dollar focuses on

new sourcesExisting units use “fairness” argument to win a

place in the systemState systems work this out (“tiers” seems best

way), no national consistency

Other Concern

Deliverability – does power associated with the REC need to be deliverable within the market where the REC is sold?National program would probably include no

requirement for deliverabilityMakes market much thicker – renewable rich

areas can “mine” RECs for the whole countryMay strain credulity of public, or not

Why Can’t We All Just Get Along?

Growing consensus on need for alternative, clean generating sources >> imperative?

Question of whether lack of state actions is OK -- does there needs to be a base?

Federalism vs. CommitmentFederal RPS perspective: Measure benefit

to climate compared with other solutions

The Regulatory Assistance Project

RAP Mission:

RAP is committed to fostering regulatory policies for the electric industry that encourage economic efficiency, protect environmental quality, assure system reliability, and allocate system benefits fairly to all customers.