Industry officials say a recent decision by the California Public Utilities Commission could have wide-reaching impacts on renewable energy development in Montana and throughout the West.
The California commission, or CPUC, on Jan. 13 limits the number of renewable energy credits the state may purchase from generators outside the Golden State to meet its Renewables Portfolio Standard, or RPS.
That means California’s three large utilities may only purchase those credits from generators outside the state to meet no more than 25 percent of its RPS.
And some industry officials question whether that portion may already be spoken for through existing contracts and partnerships.
The decision could have implications for renewable energy developers in Montana, where NorthWestern Energy is proposing a new 500kv line between Townsend and Midpoint, Idaho, says John Vincent of the Montana Public Service Commission.
Vincent questions whether the California decision will leave investors and developers reluctant to invest in new transmission.
“That puts a big question mark over whether it’s worthy of the investment,” he said. “Every article that I’ve read about it has essentially said in one way or the other that this is bad news for Washington, Oregon and Montana wind. It has got to almost change the paradigm.”
Claudia Rapkoch of NorthWestern Energy said the utility is reviewing the California decision, but she does not see immediate impact on the MSTI line.
She said the company’s main concern is permitting the MSTI project.
Van Jamison, vice president for strategic operations with wind developer Gaelectric in Helena, said it’s too early to know, however, just what impacts the California decision will have in the coming years.
“It certainly changes market dynamics in the West,” he said.
But for developers like Jamison, the potential transmission costs to send generation to market from Montana on a line like MSTI are more of a concern than the California decision.
And, Jamison says, at least his company will continue working to develop Montana wind power with a belief that renewable energy will have a place in any future market.
“It’s just one new restriction,” he said. “Is it a killer? Well, maybe to some it is, but maybe to others it’s not… Things will resolve themselves as they always do in a fairly orderly way.”
He added that California utilities are still seeking to purchase new credits from outside the state, with Pacific, Gas and Electric, buying from Alberta as recently as last week.
“All electricity is headed toward California; you just pick off an electron or two on its way to California,” Jamison said. “That’s the big flow.”
Vincent believes the decision is in part motivated by an effort to create jobs in California with the construction of new generating facilities within that state.
The PUC decision could be extended after 2013, and California lawmakers also are studying California’s renewable energy future.
“If California moves ahead as I think they will, they are going to be producing enough electricity to ship it out of state,” including markets targeted by NorthWestern Energy’s proposed Mountain States Transmission Intertie, or MSTI, Vincent said.
Vincent says the “target market” is Phoenix, Las Vegas and Southern California, and he believes the state could supply the needed power in the coming years with its aggressive renewable agenda.
“They can essentially do it themselves,” he said.
Or can they? That’s been a topic of debate among Californians for years.
And companies competing to build new renewable generation facilities to meet California’s RPS goals have been left “stymied” and “confused” about where and when to build new plants, says Jan Smutny-Jones, executive director of the Sacramento-based Independent Energy Producers Association.
“On one hand, policies articulated in proposed decisions emanating from your office offer only a limited role for out-of-state renewable projects,” Smutny-Jones wrote the CPUC recently. “On the other hand, recently filed lawsuits block significant progress on major in-state projects.”
He questions how the Golden State plans to meet its renewable portfolio goals when “those who attempt to develop projects to meet those goals are caught in this legal and regulatory crossfire?”
Smutny-Jones said the groups arguing strongly in favor of in-state development are often the same ones blocking new projects.
He says it will be impossible for California to meet its renewable goals without a combination of both more in-state development and a “vigorous” program that allows the state to purchase credits from outside its borders.
Smutny-Jones said his organization, and others, are in the process of objecting to the CPUC decision.
“The door’s not shut, but I wouldn’t describe the door as wide open either; it sort of creaks back and forth,” he said during a telephone interview. “This continues to be a live issue.”
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