Rezachek & Associates'
Energy & Environmental Resources

Utility Integration of Renewables

Set Asides/Portfolio Standards/System Benefits Charges

Electricity Journal Article Highlights Renewables Portfolio Standard The Renewables Portfolio Standard (RPS), a proposed policy under which states could achieve a desired level of electric power generation from renewable energy sources by requiring power suppliers to obtain tradable renewable energy credits, is the most economically efficient policy option for encouraging renewables development in a restructured utility industry, according to an article in the July 1996 issue of the Electricity Journal.

Energy Wise Options for State and Local Governments An excellent summary of a number of utility regulatory options which could facilitate renewable energy development. These include: (1) Cost-Effective Distributed Applications; (2) Set-Asides of New Generating Capacity; (3) Discriminatory Bidding Criteria; (4) Net Billing ; (5) Standard Utility Contracts; (6) Recalculation of Avoided Cost Payments; (7) Integrated Resource Portfolio Selection Model (IRPSM); (8) Mandated Utility Funding of Renewable Energy; and (9) Renewable Energy Pilot Projects. A more detailed and comprehensive report is available here.

EPA's Conservation and Renewable Energy Reserve EPA's Conservation and Renewable Energy Reserve is a special bonus pool of 300,000 allowances set aside to reward new renewable energy initiatives. For every 500,000 kiloWatt-hours (kWh) of electricity generated through solar energy, a utility earns one allowance from the reserve. The extent to which the Clean Air Act incentives affect the financial outlook of solar energy systems depend upon each utility's own circumstances.

System Benefits Charge Cost-effective electricity conservation, the development of renewable resources, programs for low-income electric customers and supportive research and development have been an integral part of the services delivered by most electric utilities. Without some mechanism to preserve these desirable features of the current electric utility system, they are becoming inadvertent casualties of the uncertainty of the future of the industry. A system benefits charge may be the best way to fund these services both now and in any competitive future that may arise.

System Benefits Charge Case Studies

System Benefits Charges: Nonbypassable and Non-Preempted? States are considering system benefit charges. The design of the charge should satisfy two criteria: (a) it should be nonbypassable, and (b) it should not be preempted by the Federal Power.

The Federal Constitution and State Implementation of Renewables Portfolio Standards: An Analysis of Commerce Claus Issues The Renewables Portfolio Standard (RPS) is a market-based strategy to ensure that renewable energy constitutes a certain percentage of California's total energy consumption. The RPS was originally conceptualized by the American Wind Energy Association (AWEA). Recently, the California Public Utilities Commission adopted the general concept as part of a broader decision regarding the restructuring of its electric utility industry.

The Renewables Portfolio Standard in California As Envisioned by the American Wind Energy Association By Nancy Rader, Consultant to AWEA. The American Wind Energy Association (AWEA) conceived of and developed the "Renewables Portfolio Standard" (RPS) concept as a way to address many predictable shortcomings of competitive electricity markets that are likely to hinder the commercial success of renewable energy resources.[1] Adopting an RPS as part of industry restructuring will ensure that a minimum quantity of renewables is included in the energy portfolio serving the state, while relying entirely on private market actors for its implementation. This will encourage maximum efficiency and innovation in achieving policy goals. On December 20, 1995, the California Public Utilities Commission adopted a renewables policy that is consistent with our conception of the RPS, though it does not address many of the implementation details.