Commission Ditches Green Tag Deals

By Published On: May 1, 2014

The California Public Utilities Commission May 1 rejected three Pacific Gas & Electric 10-year contracts for renewable energy credits worth $1.1 million on a 3-2 vote. The three bilateral agreements were viewed as potentially curbing renewable development. Concerns also arose about cost-effectiveness, and carbon emissions. “The contracts mitigate ratepayer costs” while helping PG&E meet its 33 percent renewable mandate obligation, argued Mike Peevey, commission president. He promoted the defeated resolution to allow PG&E to recover from ratepayers the cost of the 1 million MWh of unbundled green energy credits that were to be supplied by Sterling Energy, Iberdrola, and NextEra. Commissioner Carla Peterman and Mike Florio, who voted against the resolution, noted the cost to ratepayers was relatively low today but may not be in hindsight. “The cost is not zero,” said Peterman. “It misses the larger purpose of longer-term contracts that get steel in the ground.” Peevey balked. He said, “The ability to use unbundled [renewable energy credits] is already highly constrained.” No more than a quarter of utilities’ 33 percent renewable energy obligation can be satisfied with renewable credits. That level drops to 10 percent in 2017. The credits represent the non-fossil attribute of generation. But, no actual supply of energy is involved. They can be traded on the market. Florio, Peterman and commissioner Catherine Sandoval also pointed out that the projects attached to the credits generated power in 2012 and thus there would be no greenhouse gas reductions going forward. Commissioner Mike Picker, who cast the other supporting vote, said that renewable energy credits “help build confidence in the market.” He added that the deals’ “tortured path” was partly due to the commission’s lack of clarity on long-term renewable contract terms. He urged the Energy Division to clarify the issue. Under the three contracts submitted to the commission via advice letters, with the prices not revealed, the utility sought: • 400,000 MWh from NextEra from unspecified projects in 2012, and 5,000 MWh each year over the next nine years; • 455,000 MWh of renewable credits from unidentified Sterling projects in 2012 and 5,000 MWh each year for the next nine years; and • 136,000 MWh of unspecified green tags from Iberdrola the first year and 1,500 MWh annually the next nine years.

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