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United States

Patchwork of portfolio standards falters

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In the past three years the number of states with renewables portfolio standards has nearly doubled from seven to 13, but achieving effective legislation remains problematic. Utility opposition appears to be growing and a federal RPS is as far distant as ever

Patchwork of portfolio standards falters

With the failure of the US Congress to include a federal renewables portfolio standard (RPS) in pending energy policy legislation, the wind industry is left with a patchwork of state mandates to help drive development. While those already in place are expected to lead to thousands of megawatts of renewables capacity, convincing other states to get on board is proving difficult. Right now, 13 states have enacted electricity market laws setting minimum standards for the proportion of renewable energy in supply portfolios. At full fruition, says the Union of Concerned Scientists (UCS), they will account for 12,425 MW of new renewables generation, although not all from wind energy.

The latest state to push an RPS into law was California in September. With a target of 20% by 2017, it is the strongest state standard so far. Since the California success, however, the RPS notion has run into considerable opposition in other state houses. Renewables advocates in Oklahoma, Maryland, Colorado and Washington proposed legislation this year -- and all were defeated. And in New Mexico, an RPS approved by the Public Regulation Commission in 2002 is under fire from utilities and industry trying to weaken its provisions (Windpower Monthly, April 2003).

There is no common theme across all the states that would explain the wholesale defeat of state RPS legislation this year, says Marchant Wentworth of the UCS. But opposition from established utilities seems to be a factor. Wind advocates in Oklahoma, proposing moderate voluntary standards of 1% by 2004 and 8% by 2011, were strongly opposed by utilities complaining of potential higher costs and fearing the standards would eventually become mandatory, says Mike Bergey of the Oklahoma Renewable Energy Foundation. "The utilities did their best to scare legislators by telling them wind power was expensive and unreliable and would cause rates to go up."

Opposition by utilities also killed bills in Maryland and Colorado, as well as an energy portfolio standard, which included standards for energy efficiency, in Washington. In Colorado, public utilities opposed the RPS legislation even though it did not apply to them. Of the two utilities that would have been subject to renewables purchase targets, only Xcel Energy supported the legislation.

Still fighting

The fight in Colorado, however, is not over. A bill targeting Xcel only -- a utility not only willing to accept a renewables mandate, but which also has 58 MW of wind in Colorado and will soon add 161 MW when its Lamar wind farm is completed -- is before a legislative committee. It requires Xcel to raise its renewables portfolio to 400 MW, or about 7%, by 2005 and to 1500 MW, or 25%, by 2020. Separately, the City of Fort Collins, Colorado, a municipal utility, placed a mandate on itself, calling for 17% of the city's energy to come from renewables.

Renewed resistance to electric market restructuring in the US, a fallout from the crisis that struck California because of its poorly designed restructuring law, could be a factor in recent RPS failures. Deregulation, however, is not a prerequisite for a state RPS, which can operate in regulated markets. Five of the 13 states with RPS laws implemented them without restructuring.

Among the 13 portfolio standards in place, says the UCS, there are some common features that distinguish the most successful. The best are large enough to trigger market growth, apply to all electricity providers, have tradable renewable energy credits and contain penalties for non-compliance. The UCS is calling for minimum targets of 5% by 2005 and 10% by 2010 in all states with an RPS.

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