Fight over tradeable energy credits pits utilities against Idaho industries
Rocky Barker, voices.idahostatesman.com 6 March 2012
Rocky Barker, voices.idahostatesman.com 6 March 2012
The sponsor of a bill that would require renewable energy credits to go to public utilities, said a new bill will be introduced Wednesday in the Senate State Affairs Committee.
The bill, which Idaho Power Co., Avista and Rocky Mountain Power Co are pushing, has prompted strong opposition from some of the states largest companies, forest landowners, farmers and dairies. The legislation would shift the ownership of the credits and other environmental attributes like carbon credits, worth in some cases millions, to the utilities.
State Affairs Committee Chairman Curt McKenzie, a Nampa Republican, said he will introduce a new, replacement bill Wednesday that would leave the ownership decision up to the Idaho Public Utilities Commission. But that doesn’t appear to satisfy some of the companies including Clearwater Paper, which employs more than 1,300 people in Lewiston.
“We believe that any and all environmental attributes associated with a company’s investment in green power generation is the private property of that party–the party that invested in the creation and maintenance of the generating facility,” said Clearwater Paper spokesman Matt Van Vleet. “Any effort to legislate who owns those valuable and marketable green credit products other than the developer is a “taking.”
Idaho Power vice president of public affairs Jeff Malmen says Van Vleet is wrong. Clearwater Paper is in negotiations with Avista for a new contract for the power from its co-generation plant, but the issue is the same stateide.
“This issue of a taking is inaccurate since we are not forcing them to sell to us,” Malmen said. “They may sell to whomever they choose.”
The issue is complicated. Renewable energy credits,or RECS, also called green tags, are tradable, certificates that prove that one megawatt hour of electric power was generated from a eligible renewable energy source.
Markets have been set up in 29 states that have laws requiring that utilities generate a certain percentage of their power with renewable energy sources. Utilities either by renewable power or they can buy renewable energy credits from a third party already generating renewable energy.
But Idaho doesn’t require its utilities to have a portfolio of renewable energy. So they aren’t in the market here. Idaho Power does have to have to meet Oregon’s Renewable Portfolio Standard of 15 percent renewable power by 2015 and 20 percent by 2025.
Companies like Clearwater Paper, which operates a 40 megawatt co-generation biomass plant at its paper mill in Lewiston, sells its RECs to utilities in other states to meet their standards. It generates about $3 million annually to the company’s bottom line.
These renewable energy credit markets were created to help defray the costs of developing renewable energy projects. They have flourished in the wake of worldwide efforts to reduce fossil fuel burning that has created the highest levels of carbon dioxide in the atmosphere for 700,000 years or more. This has led to rapid climate change, according to the National Academy of Science.
Without them, most renewable projects would not be viable, renewable developers say.
But the utilities have been feuding with primarily wind energy developers over an earlier law designed to encourage renewables, the Public Utility Regulatory Policies Act of 1978 – PURPA. It was passed by Congress to encourage small, sustainable power production and assures these companies a market and a set rate for their electricity. Public utilities like Idaho Power are required to purchase the power. Since they are a regulated monopoly, the law was designed to provide competition.
For the utilities that is the crux of the matter.
“If we are forced to buy the renewable power the customer ought to get some benefit from it, which they do not today,” Malmen said.
Since PURPA was in place before RECs, the Federal Energy Regulatory Commission, which enforces PURPA has not made a clear statement on who gets them. It allows states to carry out the law, which is up to the Idaho Public Utilities Commission.
Malmen still prefers the earlier version of the law giving the utilities the renewable credits so they can sell them to reduce their customers’ electric rates. And if the federal government establishes Renewable Portfolio Standards in the future, the utilities will hold the credits to meet that standard.
Otherwise, rates could skyrocket as they scramble to meet the standard, even though they have considerable renewable power on their system.
Of course if Idaho had passed a Renewable Energy Portfolio Standard law itself five years ago, Idaho Power would own all of the credits and have more than 20 percent of its portfolio from wind and solar power. I wouldn’t be surprised if executives aren’t kicked themselves for missing that opportunity, though they aren’t pushing for such a law today.
In negotiated PURPA contracts, Idaho Power has been splitting the credits with developers recently.
Clearwater is currently in negotiations with Avista to renew its contract and would be forced to give up its RECs under the initial bill. The RECs weren’t an issue when the company signed its first PURPA contract because they hadn’t been invented.
But while it might be technically possible for Avista and others to sell their power to other utilities, they would have to pay for the transmission costs, which would dramatically reduce the value. Still, some wind developers are proposing turbines in Idaho for sale to Idaho Power in Oregon to take advance of its higher avoided cost price.
Paul Kjellander, a Idaho Public Utilities Commissioner, told the House, Energy, Environment and Technology Committee earlier this year that lawmakers could clarify the PUC authority and resolve some legal issues if it passed a bill.
McKenzie’s new bill is expected to take this path. But that’s not expected to be enough for the new Coalition for Fairness in Energy Policy that has quickly formed to fight for the credits. Clearwater is one of the members.
Dover Republican Rep. George Eskridge, wants to send the bill to an energy interim committee for more work. The initial bill did not just give renewable energy credits to the utilities but other environmental attributes like carbon credits and certificates of avoided emissions of other pollutants.
“I think this needs a full public airing of the costs and the impacts on rates,” Eskridge said. “It’s not just the RECs but all the environmental attributes.”
URL to article: https://www.wind-watch.org/news/2012/03/06/fight-over-tradeable-energy-credits-pits-utilities-against-idaho-industries/