Renewable Energy Credit Double Counting Aired at CEC

By Published On: March 27, 2009

Southern California Edison used power from two large wind projects towards its renewable mandate between 2003 and 2007 although much, or nearly all, of the green attributes of the juice were traded separately by unsuspecting traders and buyers as renewable energy credits. The California Energy Commission and Edison caught the significant error recently. Two commissioners and representatives from Edison and the renewable energy trading community grappled with how to address the improper counting of alternative power supplies during a March 26 commission workshop on verifying renewable portfolio standards data. “We are not interested in casting blame, but in figuring out the equities,” commissioner Julia Levin told Edison’s attorneys. She asked why the utility didn’t know it was improper to count the wind power from a contract it took over from the state Department of Water Resources towards its renewable standard. The other two private utilities, she noted, knew not to count toward their RPS green power received under similar contracts they took over from the state. The state specified that the contracts for wind power from the Mountain View project allowed the separate sale of the green attributes of the power to other entities in the form of renewable energy credits. That would preclude utilities from crediting the power towards their renewable energy mandate under state law. Renewable energy credit advocates warn that allowing double counting of the green attribute of the wind power from the projects would create havoc in the voluntary green tag trading market and undermine the agreements. CEC chair Karen Douglas agreed. “The RPS law must be consistent with contract law,” she said. Edison asserted innocence, insisting it should be allowed to count towards its renewable obligation the energy from the wind deals it inherited from the state department. “We acknowledge that this is a special circumstance and we’re not attempting to set a broad principle,” said Edison attorney Cathy Karlstad. “More than 1 billion kWh and 24 unique marketers” have been involved in buying and selling the Mountain View renewable credits, according to Alex Pennock, Center for Resource Solutions Green-e Energy manager. The same day, the California Public Utilities Commission postponed again its decision to set parameters for the use of RECs for utilities in meeting their renewable mandate. CPUC president Mike Peevey said the item was pulled off the March 26 meeting agenda to give stakeholders time to review “substantial revisions” to the commission proposal. The state department entered into the Mountain View contracts at the height of the 2000-01 energy crisis and they were subsequently assigned to Edison. The contracts “explicitly excluded the associated RECs,” according to the energy commission. In 2004, 193,661,173 kWh of renewable credits from the two Mountain View projects were claimed--with 42 percent traded in the voluntary market. The total number of credits rose to 250,519,157 kWh the next year, with 90 percent sold in the marketplace. In 2006, the associated green credits declined to 225,197,749 kWh, with 99 percent voluntarily traded. The resulting proceeds to green traders from selling the RECs over the years remain unclear. Prices in the voluntary REC market vary by region and project, but generally range between $1.50 to as high as $20/MWh, according to 3Phases. Renewable energy credit purchasers get both contract assurances and annual verifications that the purported green power credit has not been counted toward the renewable portfolio standard. Much of the mix up is attributed to the long chain of project and REC ownership. Among the numerous buyers of RECs was Silicon Valley Power, which purchased 3,604,000 KWh worth of credits in 2006.

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