Renewable Portfolio Standard
Vermont and Elsewhere
Vermont PSB RPS Collaborative
July 18, 2003
Richard Sedano
The Regulatory Assistance Project
50 State Street, Suite 3
Montpelier, Vermont USA 05602
Tel: 802.223.8199
Fax: 802.223.8172
177 Water St.
Gardiner, Maine USA 04345
Tel: 207.582.1135
Fax: 207.582.1176
Website:
http://www.raponline.org
Experience in Vermont
PURPA and Rule 4.100
Roundtable on Restructuring
Docket 5854 – The Restructuring Docket
S. 62
Subsequent legislation
PURPA and PSB Rule 4.100
 Conform to federal law
 Promote renewable energy, transmission access
 Vermont implementation: 1980s
 Allocate 150 MW
 Aggregate utility obligation thru purchasing agent
 Long run levelized avoided costs available
 20 projects, roughly half of allocated MW built
 Program effectively shelved in early 1990s
 Implementation with long run avoided costs an
expensive bet for consumers
Roundtable on Restructuring
 Stakeholder process convened by PSB and DPS –
1994 - 1995
 Many meetings
 Outcome: principles
 7. A restructured industry must preserve key
public benefits of the current system, including
cost-effective end-use efficiency, research and
development, and the development,
commercialization and use of renewable
resources.
 http://www.state.vt.us/psd/princ.htm
Alternative principle
 7. A restructured industry must preserve key public benefits of
the current system, including cost-effective end-use efficiency,
research and development, and the development,
commercialization and use of renewable resources.
 … (about energy efficiency)
 Clean and renewable energy sources can play a valuable role in
providing fuel diversity, managing risks and reducing
environmental impacts. At least during any transition period,
recovery of investments in the development, commercialization
and use of renewable and low emissions technologies, which are
determined to be cost-effective and approved by regulators,
shall be included in a non- bypassable, non-discriminatory,
appropriately structured charge.
Docket 5854
An investigation into whether Vermont
should initiate retail electric competition,
and if so, how.
1995-1996
PSB concludes that retail competition can
be beneficial, with many conditions,
including RPS
http://www.state.vt.us/psb/restruct.htm
Public Benefits from
Renewable Energy
5854 Report Section X (pg 99)
 Resource Diversity: A generation portfolio made up of plants of varying sizes
and technologies, dispersed throughout the state or region, bears lower risks
associated with unplanned outages and high required reserve margins. This
reduced risk equates to lower costs of power in the long run.
 Reduced Fuel-Price Risk: Perhaps the primary risk offset by the development
of renewable resources is fossil-fuel price volatility. At a time when this
nation is dependent upon foreign markets for more than half of our demand for
oil, renewables offer a great measure of energy security and price stability.
 Environmental Protection: For the most part, renewables provide significant
environmental benefits, largely in the form of reduced emissions of airborne
pollutants.
 Sustainability: Renewable technologies do not rely upon depletable
resources. As such, they do not decrease the stock of "natural capital" passed
on from one generation to the next; nor are they as susceptible as fossil fuels to
price increases resulting from eventual scarcity.
S. 62 (1997)
 Proposed Legislation mostly consistent with
Docket 5854 Report and Order
 § 8020. RENEWABLE ENERGY RESOURCE
STANDARDS AND MONITORING
 (a) The public service board shall prescribe by rule
or order a standard for renewable energy
resources. The standard shall be stated as a
portfolio requirement, by type of energy source,
and shall be applicable to all providers of
electricity to retail consumers in this state.
 http://www.state.vt.us/psd/rstbill.htm
S. 62 as passed by the
Senate - 1997
Findings: (4) Investment in renewable
energy technologies, which over the past 15
years has enabled Vermont to meet all of its
growth in electric demand, is declining. In
recent years, new investment has declined
precipitously, to the detriment of the
system's long-term price-stability,
reliability, and the environment.
S. 62 as passed by the
Senate - 1997
Goals: 6) Renewable energy. Renewable
energy resources shall be developed,
commercialized and used at the existing or
an improved rate, in facilities that are
environmentally sound, and by means of
technologies that are sustainable.
Goal intends to reverse decline in renewable
energy deployment
Renewable, Defined by the
Senate - 1997
 (14) "Renewable technology" means a technology that relies on a resource that is being
consumed at a harvest rate at or below its natural regeneration rate.
 (A) For purposes of this section, methane gas and other flammable gases produced by
the decay of landfill and agricultural wastes shall be considered renewable energy
resources, but no form of solid waste, other than agricultural or silvicultural waste,
shall be considered renewable.
 (B) For purposes of this section, no form of nuclear fuel shall be considered renewable.
 (C) A technology may be deemed to be renewable, even for installations currently using
nonrenewable fuels, if the board finds all of the following:
 (i) that the technology is an emerging technology that holds special promise for enabling
or enhancing the future sustainable use of renewable resources,
 (ii) that the technology is significantly less polluting than existing technologies for using
similar fossil fuels, and as such, warrants special consideration in the public interest,
 (iii) that the technology is not in widespread use for utility applications, will be readily
convertible to renewable fuels, and is significantly less expensive with fossil than
renewable fuels, and
 (iv) that the use of the technology with fossil fuels will accelerate its use with renewable
fuels.
Renewable Tiers Defined
 (22) "Tier one renewable technology" means any renewable and sustainable
electric generation technology employed at a specific generating facility that
has a capacity under 80 megawatts and, in the case of a hydroelectric facility:
 (A) possesses and operates in compliance with a Federal Energy Regulatory
Commission operating license and a water quality certification from each
applicable state, or
 (B) in case of a Vermont hydroelectric facility that is not required to obtain
water quality certification, has complied with the Vermont water quality
standards and all other applicable provisions of Vermont law, and taken any
actions required under 10 V.S.A. § 1003.
 (23) "Tier two renewable technology" means a technology that has been found
by the board to be a renewable, sustainable and emerging electric generating
technology and that is employed at a specific generating facility that entered
commercial service (or, for self-generation, began regular production of
electricity) for the first time after January 1, 1998, or that was built by
construction that commenced after July 1, 1997.
The RPS in S. 62
 § 8026. RENEWABLE ENERGY RESOURCE STANDARDS AND
MONITORING
 (a) No company shall sell or otherwise provide or offer to sell or provide
electricity in the state of Vermont without ownership of sufficient tradeable
renewable energy credits as provided for by the renewable energy portfolio
standards to be established pursuant to this section.
 (b) The public service board shall prescribe by rule or order, and may from
time to time amend, a standard for renewable energy resources, as well as
requirements for implementation of that standard and compliance with that
standard. The standard shall include a two-part portfolio requirement that
shall be applicable to all providers of electricity to retail consumers in this
state. The first part shall require that a percentage of each provider’s sales in
Vermont shall be generated by tier one renewable technologies, and the second
part shall require that an additional percentage of each provider’s sales in
Vermont shall be generated by tier two renewable technologies, each as
defined in this section and the standard established by the board. The standard
shall establish required levels of renewable resources under each part of the
standard. The required level for part one shall be at least equal to that
proportion of the retail electric consumption and associated transmission and
distribution losses in 1995 in Vermont that met the standard for part one. The
required level for part two shall increase each year, beginning in 1998, and in
the year 2007 shall be at least equal to four percent of Vermont retail electric
consumption and associated transmission and distribution losses in that year.
 (c) Renewable energy facilities that qualify for tradeable renewable energy credits shall
be sustainable, environmentally sound facilities and shall be determined by factors
which include the following:
 (1) Fuel type, which may include wind, solar, biomass other than municipal solid waste,
and other nondepletable fuels identified by rule or order of the board, subject to the
criteria established in subdivision (3) of this subsection;
 (2) Technology, which may include renewable fuel conversion technologies such as
solar-thermal, photovoltaics, fuel cells, biomass gasification, biomass combustion and
other technologies that may be approved by rule or order of the board, subject to the
criteria established in subdivision (3) of this subsection;
 (3) Environmental impacts of the facility. Renewable energy facilities eligible for tier
one or tier two renewable energy credits shall not result in undue adverse air, water or
land use impacts, including impacts associated with the gathering of generation
feedstocks. The board may, by rule or order, establish a certification process, or may
otherwise provide for certification through other entities selected by the board, to
ascertain whether a particular facility has met these criteria and has such impacts, and
is otherwise eligible to obtain tier one or tier two renewable energy credits. Until the
board has established such a certification process, the board may grant temporary
certification. For the purpose of such temporary certification, evidence that a facility
has obtained and is in compliance with all applicable state, local and federal siting and
environmental permits shall create a rebuttable presumption that it does not have those
adverse impacts. Determination of eligibility for purposes of this section shall be made
by the public service board by order or rule of general applicability or case-by-case, as
determined by the board.
 (d) For each tier, the board shall establish a system of tradeable credits that may be
earned by electric generation qualifying for one of the parts of the standard. Under
the system, the owner of a facility may apply for a certificate entitling the facility to
earn tradeable credits based on its electric energy production.
 (1) These certificates shall be issued to the specific facility, shall establish any
necessary conditions for the certificate to continue in force, and shall be for a stated
period of time no longer than the economic life of the facility.
 (2) Certificates for tier two tradeable credits shall be for no more than 10 years, but
may be renewed for a period determined by the board, if the board finds that the
facility’s technology remains eligible for tier two credits.
 (3) A certificate for tier two credits may be converted to a tier one certificate, if
eligible.
 (4) Owners of self-generation and customer-producers may apply for and may be
awarded certificates upon meeting all other applicable conditions.
 (5) The standard may provide for the issuance of a certificate entitling a facility to
earn tradeable credits, in addition to those that it would normally earn under this
standard, if that facility employs a tier two fuel type or technology that the board has
found requires special incentives to promote orderly, sustained commercialization.
 (6) Tradeable credits of independent power producers that are defined as qualifying
facilities under board rule shall be assigned to distribution utilities pro rata, based
on their energy purchases from these facilities.
 (e) To assist the public service board in determining environmental
sustainability, the department of public service, the agency of natural
resources, and the environmental board shall conduct a public process and
prepare a report assessing windpower development potential throughout
Vermont, and shall present an interim report to the general assembly by
January 15, 1999. The report shall include an analysis of potential sites,
projected energy production, environmental impacts, including aesthetics,
and an analysis of effects on Vermont’s tourism and recreation economy.
The report shall develop wind-siting criteria based upon this analysis, and
make appropriate recommendations for implementation.
 (f) To assist the public service board in determining environmental
sustainability, the agency of natural resources and the department of
public service shall conduct a public process, shall prepare a report
assessing additional biomass generation development throughout Vermont,
and shall present an interim report to the general assembly by January 15,
1999. The report shall include an analysis of estimated sustainable harvest
rates, energy production, environmental impacts, including forest health,
aesthetics, and biodiversity, and an analysis of effects on Vermont’s
tourism and recreation economy. The report shall include recommended
forest practices requirements to assure protection of wildlife habitat,
biodiversity, water quality, and wetlands.
Subsequent Legislation
Legislative proposals in 2001, 2002
Attempts failed primarily due to concern
about cost of compliance and effect on retail
rates
2003: Act 69
§ 8004. RENEWABLE PORTFOLIO STANDARDS FOR SALES OF
ELECTRIC ENERGY
(a) The public service board shall design a proposed renewable portfolio standard
in the form of draft legislation. The standard shall be developed with the aid of a
renewable portfolio standard collaborative. The renewable portfolio standard
collaborative, composed of representatives from the electric utilities, industry,
renewable energy industry, ratepayers, environmental and consumer groups, the
department of public service, and other stakeholders identified by the board, shall aid in
the development of a renewable portfolio standard for renewable energy resources, as
well as requirements for implementation of and compliance with that standard. The
proposed renewable portfolio standard shall be applicable to all providers of
electricity to retail consumers in this state. The proposed renewable portfolio standard
developed by the board will be presented to the house committee on commerce, the
house and senate committees on natural resources and energy, and the senate committee
on finance in the form of draft legislation for consideration in January 2004.
(b) In developing the renewable portfolio standard, the board shall consider the
following goals, which shall be afforded equal weight in formulating the standard:
(1) increase the use of renewable energy in Vermont in order to capture the
benefits of renewable energy generation for Vermont ratepayers and citizens.
(2) maintain or reduce the rates of electricity being paid by Vermont ratepayers
and lessen the price risk and volatility for future ratepayers.
RPS Elsewhere
 Arizona, California, Connecticut, Hawaii (goal),
Illinois (goal), Iowa, Maine, Massachusetts,
Minnesota (has one RPS and one RP Goal),
Nevada, New Jersey (increasing), New Mexico,
Pennsylvania (PECO only), Texas, Wisconsin
 New York under development, other states are
considering an RPS: WA, UT, CO, MD, RI, VT
 http://www.ies.ncsu.edu/dsire/library/includes/typ
e.cfm?Type=RPS&Back=regtab&CurrentPageID=
7&Search=TableType
States with a Renewable Portfolio Standard
Arizona, California, Connecticut, Hawaii, Illinois, Iowa,
Maine, Massachusetts, Minnesota (has one RPS and
one RP Goal), Nevada, New Jersey, New Mexico,
Pennsylvania, Texas, Wisconsin
State has a Renewable Portfolio
Standard
State has a Renewable Portfolio Goal
Source: Database of State Incentives for Renewable Energy (DSIRE)
RPS in brief
 AZ – solar emphasis,
escalating 1.1% in 2007
 CA – 20% by 2017
 CT – 2 tier, escalating;
13% by 2009
 HI – goal; existing + new;
escalating to 9% by 2011
 IL – goal w/ incentives;
15% by 2020
 IA – applies to IOU; a
MW requirement
 ME – existing + new; 30%
RPS << existing (50%)
 MA – new, escalating to
4% in 2009
 MN – esc. goal w/ MW
mandate XCEL
 NV – esc. 15% in 2013
 NJ – 2 tiers + 6.5% in
2008; 20% in 2020
 NM – 10% in 2011
 TX – 2000 MW by 2009
 WI – 2.2% by 2011
RPS Experience
Benefits and Costs
 Improve Environment
 Diversity, Domestic
 Price Stability (gas),
lower clearing prices
 Economic Developm’t
 Prompt, co-ordinate
other policy actions
 Possible higher cost
 Intermittence
 Transmission (remote)
 Degrade environment
RPS Experience
Some Other Issues
 Credible
 Enforceable
 Fair and Consistent
 Permanence
 Favor specific fuels
 Behind the Meter
 Near/long term targets
 Alternative
Compliance Cost
 Geography
 Long term contracts
 Relation to “green
pricing”