Renewables Rules: Fear of the Unknown

While the ground rules for investor-owned utility renewables bids and contracts are still under contemplation, resulting uncertainties are leaving many in the renewable power community on pins and needles. Still to be finalized are regulations over official prices for solicitations under the renewables portfolio standard (RPS) law, the adequacy of public-goods funds to cover more expensive projects, and contract terms. ?There is uncertainty over power sales and uncertainty over whether we will get any contracts,? said Trond Aschehoug, general manager for a landfill gas company, Minnesota Methane. ?We are struggling to understand what is or isn?t happening,? added John White, Center for Energy Efficiency and Renewable Technologies (CEERT) executive director. There is also much talk in the renewables community about the size of the California Energy Commission?s public-goods pot set aside to cover the cost of new green power supplies that exceed the standard, a.k.a. market referent, price. Some, including Aschehoug, contend the pot is underfunded, but others say it is too early to know given that a renewables benchmark price has not been set by the California Public Utilities Commission. The tentative referent price is 5.37 cents/kWh, based on the price of power from combined-cycle gas plants. Utilities are pushing for a lower price and renewables developers for a higher benchmark. If the final price is reduced, then the CEC?s new renewables account, totaling $314 million at the end of last year, will shrink considerably faster because that money will be used to make up the difference. If the CPUC sets the renewables benchmark price at 5.37 cents/kWh, many expect the energy commission?s new renewables account to meet green power deal needs over the next few years. There are, however, questions about fund shortages in later years and whether lawmakers will siphon away public-goods-fund money again. ?A much bigger threat to the supplemental energy program is whether the legislature or governor will continue to raid the fund,? said Matt Freedman, an attorney for The Utility Reform Network. Governor Gray Davis took a $150 million ?loan? out of the account, sending it to the general fund. Another $8.9 million was borrowed by the California Power Authority, $1 million of which has been paid back to date. Although the $150 million diversion to the general fund is called a loan, there are no repayment terms, said CEC spokesperson Percy Della. The CPUC is developing regulations to implement the renewables law, which requires private utilities to increase their renewables supplies to one-fifth of their power sources. The rules will include bid criteria for investor-owned utilities, a benchmark price for renewables, and green power contract terms. CPUC president Michael Peevey said the commission hoped to make way for San Diego Gas & Electric to solicit bids this June?a launch date many say is overly optimistic given all the work ahead. ?I am not holding my breath for June,? said Steven Kelly, Independent Energy Producers policy director. Many of the questions about the RPS regulation criteria will be answered once a solicitation happens, which Kelly would prefer to be sooner rather than later. ?Time is slipping away,? CEERT?s White added. Others are not concerned by the pace at the CPUC, creating an analysis-versus-paralysis debate between renewables advocates. A ?summer or fall [solicitation] is not the issue; it is getting consistent movement and nailing down the rules,? Freedman said. In addition to the benchmark and new renewables account, many eyes are on what the RPS contract terms will be. Small renewables developers with little clout want standardized terms to protect them. ?Contract terms can artificially drive up prices,? which includes unfairly shifting risks to project developers that are not under their control, said Nancy Rader, director of the California Wind Energy Association. Utilities, independent producers, TURN, and CEERT insist only some of the terms should be fixed to allow for flexibility. ?We don?t have blanket opposition to contract standards,? said Southern California Edison spokesperson Gil Alexander. Also unclear is just how much green power the investor-owned utilities will be required to buy to meet the RPS?s 20 percent threshold. Assuming the 20 percent requirement must be met by 2010 under the Energy Action Plan adopted by the CPUC, in place of the year 2017 under the RPS law, there will be more opportunities for renewables producers. Edison has said its renewables supplies would constitute one-fifth of its power portfolio by the middle of this year. According to Freedman, the increase does not factor in load growth. Alexander replied the utility beats the RPS law?s annual requirement, adding, ?It is hard to imagine why anyone familiar with [Edison] would raise that question.? At any rate, expiring long-term qualifying facilities? contracts could create additional opportunities, depending on whether Edison renews those deals or enters into new contracts. San Diego Gas & Electric signed several deals that will allow it to meet the annual mandate for the next seven years but is expected to move ahead with renewables bids. Pacific Gas & Electric is expected this year to require between 110 MW and 300 MW of new green power, depending on the supplies capacity factor, which causes the amount to fluctuate. The energy commission is developing a system to track investor-owned utilities? renewables levels, among other things, but the verification program is not expected to be complete until 2005.

Over 11K Stories!

| Independently Powered Energy News

Renewables Rules: Fear of the Unknown

vdharadmin

Related Posts

Op-Ed: Before and After Net Energy Metering 3, A Thought Experiment

Auld Lang Zine

CPUC Chops Solar Rooftop Payments & Adds Battery Incentives, Few are Happy

FERC Denies CAISO Penalty Authority, Holds Out for Board Change