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United States

Legislative help grows at state and federal level

With electric utility restructuring proceeding apace in the United States at both federal and state level, legislators and regulators are so far smiling on renewable energy. Efforts to give renewables a helping hand in the emerging new markets could result in several hundred megawatts of new wind power. Governments seem to be settling on the Renewables Portfolio Standard, an explicit set-aside for renewables, and the System Benefits Charge, a transmission fee designed to support public interest programs.

At federal level, most of the major utility restructuring bills contain a version of the Renewables Portfolio Standard, an idea devised and actively promoted by the American Wind Energy Association (AWEA). The Clinton administration's bill, released March 25, includes an RPS of 5.5% of generation by 2010. It gives states the option to start retail competition by 2003 (story page 26).

Meantime, six states have created a mandate for renewables; if proposals move forward in another four, the total new market thus created in these ten states could rise to almost 1500 MW by 2010. Funds created in eight states add up to over $200 million in direct subsidies and research support for renewables and energy efficiency, though not all of these have been part of restructuring bills.

Along with programs offering consumers the option to receive green power at a premium price, being launched in states with retail competition, a picture is now beginning to emerge of where the new markets are likely to be for wind power in the US.

The federal ante for renewables, first made in 1996 by Representative Dan Schaefer, has been upped by more recent proposals. The 4% set aside for renewables by 2010 in Schaefer's Renewables Portfolio Standard is modest compared to bills introduced by Representative Ed Markey, Senator Jim Jeffords and Senator Dale Bumpers. These three bills include a 10% target by 2010, with Jeffords' rising to 20% by 2020. Non-hydro renewables currently contribute about 2% of US power needs.

Another provision with important impacts on wind power is the Public Benefits Trust Fund. The Trust Fund has been included in the Jeffords bill, and in a bill introduced by Rep. Peter DeFazio. Both bills would set up a national transmission access fee, not to exceed $0.002/kWh, to provide federal funds for a state-federal matching grant program. Renewables would share this money with low income and energy efficiency programs, with portions and activities left up to program administrators.

Jaime Steve, AWEA's Washington lobbyist, sees Schaefer's bill as the first to make progress, with legislative progress possible as soon as this month. AWEA supports the bill for moving quickly on competition, but would like to see higher numbers in the renewables provisions. On the other hand, since Schaefer, chair of the House Energy and Power Subcommittee, has announced his retirement from Congress, others see a dim future for his bill. "No one's really sure," says Steve. He acknowledges that federal restructuring bills are still at an early stage. "The whole process is not going to happen this year, or next year," he says. "It took ten years for the Clean Air Act and for telecommunications deregulation to pass."

Charlie Higley, a lobbyist with the Critical Mass Energy Project, is not as optimistic about the RPS. "We think its vulnerable," he says. "Were really concerned its going to get chopped out." A counter proposal by Senator Frank Murkowski would create a "non-carbon portfolio standard" similar to the Non Fossil Fuel Obligation legislation in England. "But if nukes were included," warns Higley, "not only would they be subsidised to run, but they would swamp renewables."

If federal progress is slow and contentious, activity at state level has been much faster. As well as the 1500 MW of mandated new capacity either announced or in the pipeline, four states have adopted funding mechanisms for direct subsidies, infrastructure support and research and development instead of going for specific capacity mandates. Between the eight states identified as helping renewables (table left), total funding comes to $238 million a year, some of which will be split with energy efficiency programs.

The biggest success has come in Massachusetts, with a new law containing both measures: a 4% renewables mandate by 2009 and a Renewable Energy Trust Fund of as much as $58 million a year. Nevada, Arizona and Maine have also set specific mandates for renewables, and a number of other legislatures are considering measures.

True RPS awaits

Despite this support, no state has implemented a true Renewables Portfolio Standard, as envisioned by AWEA. The pure RPS involves a credit trading scheme similar to that of the sulphur dioxide emissions credit trading system set up by the Clean Air Act. The Massachusetts law calls for an implementation study of credit trading by the state energy office, while a bill passed by the Vermont senate would include tradable credits. Such "renewables" credits can be achieved by one utility, yet sold to another.

A prominent setback for the RPS came in the summer of 1996 in California, when the legislature cut it from its deregulation bill, despite a favourable recommendation from the Public Utility Commission. Instead, the law creates a fund of $540 million for the next four years, paid directly to producers and to marketers of green power. The blame for the demise of the RPS in California may lie at the door of renewables lobby groups, which disagreed on how best to proceed. The Coalition for Energy Efficiency and Renewable Technology (CEERT), of Sacramento, and the Environmental Defense Fund of Oakland supported the direct subsidy approach, while the Union of Concerned Scientists and AWEA supported the portfolio standard (Windpower Monthly, April 1997).

In an unexpected twist to restructuring, consumer groups in California and Massachusetts are trying to recall parts of the restructuring laws, especially bailouts for "stranded investments." In Massachusetts, organisers with the Campaign for Fair Electric Rates, led by Cambridge businessman John O'Connor, collected 44,136 certified signatures in a petition drive, enough to get a recall initiative on the fall ballot.

In California, The Utility Reform Network (TURN) and Consumers against Utility Taxes (CUT) are organising a drive that would repeal the rate reduction bond that was included in the restructuring law, providing a $28 billion bail out for nuclear investments. The repeal is written so as not to affect cost recovery of Qualified Facility contracts, such as those which many of the state's wind plant operate under. The advocate groups need to collect 433,000 valid signatures by May.

Not all good news

Not all interest in renewables has been part of restructuring legislation. Minnesota is seeing some legislative interest in renewables, though no laws have yet been enacted. A bill that would study utility restructuring, with specific consideration of the RPS, System Benefits Charge and green marketing, is likely to pass this year. Bills have also been introduced that would create a renewables development fund and create rules for green pricing programs, but these were put off until next year.

Arizona, whose utility board ordered the first Renewables Portfolio Standard in the country, has a bill in the legislature that would repeal the rule. The bill was successful in a House committee, but even if it passes, it may not be legal under the state's constitution, which gives broad authority to the utility. The rule, if it survives, could result in 150 MW of solar thermal and photovoltaic power.

In response to power shortages in the upper Midwest last summer, the Wisconsin legislature is working on a bill to mandate new generation in the state, including a set-aside for 50 MW of renewables. Although the bill was introduced by a coalition of environmental groups, municipalities and small utilities, it was recently adopted by Conservative Republican Governor Tom Thompson as the administration bill, raising its chances for success appreciably. A more comprehensive bill, containing a Public Benefits Fund and an RPS, may have to wait until next session.

The New York state utility commission has transferred all ratepayer funding for energy efficiency, low income support and renewables R&D from the utilities to the State Energy Research and Development Authority. It will have funding for three years, with a possible extension (see also story page 8).

Rhode Island has already put some public benefits funds to work, funding a study by CT Donovan Associates on the potential for renewables in RI and Massachusetts. The study found that 314 MW of renewables are in place now (mostly small scale hydro), with the potential for 613 MW of new generation by 2002 and 1575 MW more by 2017. Wind is the largest contributor, adding 150 MW by 2002 and another 550 MW in the next 15 years. The study identifies a cost of $0.05/kWh now at a 10 MW wind farm, falling to $0.04/kWh in 2002, not including tax credits -- the lowest cost option among renewables except for landfill gas. The Rhode Island fund is also supporting a wind project and a residential PV project, picked from a pool of 14 responses to a request for proposals.

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