California proposes increase in TREC cap

US - Utilities will be able to use unbundled renewable energy credits to meet up to 40% of California's renewables mandate, under proposals by the state's public utilities commission.

Windhub - one of California's largest substations
The California Public Utilities Commission (CPUC) draft decision envisages increasing the cap on the amount of tradable renewable energy credits (TRECs) that utilities can use to meet the state’s renewable portfolio standard (RPS).

TRECs are credits unbundled from the electricity generation they represent.

This could theoretically make it easier for a utility to meet the RPS using wind farms in neighbouring states.

California’s RPS requires utilities to derive 33% of their retail electric sales from eligible renewable sources by 2020.

In a March 2010 decision, the CPUC authorised the use of TRECs for RPS compliance, but limited their use for the first two years to no more than 25% of utilities’ RPS requirements.

The March decision also set a TREC price cap of $50, set to expire at the end of 2011.

But another CPUC decision in May 2010 placed a temporary moratorium on TREC transactions. The latest draft decision, if approved, would end the moratorium.

The CPUC will vote on the draft decision no earlier than September 25.

View the draft decision on TRECs.