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United States

Portfolio standard and benefits fund

Wisconsin has become the first US state to create a renewables portfolio standard without deregulating its retail market. The RPS could result in up to 400 MW of wind by 2011. Approved by the legislature and signed into the budget by the governor last month, "Reliability 2000" consists of the RPS, a public benefits fund and an independent transmission company. All are pieces of a puzzle usually found in electric industry restructuring legislation.

The legislation, driven by summer peak shortages, flagging demand side management and a rising demand for electricity, was sponsored by Wisconsin Governor Tommy Thompson and supported by a coalition of Customers First Coalition, the Union of Concerned Scientists (UCS), Wisconsin's Environmental Decade, RENEW Wisconsin, Madison Gas & Electric, and Wisconsin Public Power.

As well as the RPS, the bill requires utilities to collect $80 million a year for a public benefits fund that will pay for energy efficiency measures, renewable energy in customers' homes and businesses, and environmental R&D. The funds will be administered by the state, not by the utilities as has been customary in Wisconsin and other states where the industry remains regulated. Wisconsin is the twelfth US state to set up such a fund.

Any opposition to the bill from big business or other investor owned utilities (IOUs) died when a key trade-off was added that raised the asset cap for utilities. The cap is an existing state law that restricts how much utilities can invest in non-utility activities.

The renewables portfolio standard requires the state's utilities to increase generation from renewables other than hydro. "What this bill does is cap most of the existing source of renewables, which is hydro, and essentially raises the percentage contribution of other renewables 1.6 per cent over the next ten years," says Michael Vickerman of RENEW. "The RPS is a ten year commitment and we expect it to draw the renewables industry to Wisconsin," he adds. According to Vickerman, by 2011, 6.6% of customers' power will come from renewables, with sales increasing, from 3 billion kWh today to 4 billion kWh in 2011.

According to UCS, renewables developed under Reliability 2000 will power 204,000 homes. Vickerman says this could equal up to 400 MW of wind at a 25% capacity factor, which is typical of Wisconsin wind. But, resources don't have to be built in Wisconsin, so the development could play out differently.

"There is a high population density in Wisconsin and at some point we will run out of good locations for wind," Vickerman says. That point might not be far off to judge by recent opposition (previous stories). Over the border in Iowa and Minnesota, however, wind has met with support and Vickerman points out that some of the Reliability 2000 development could occur there, where there are higher capacity factors, or contracts might go to biomass, solar or landfill gas, instead. "If I had to guess, though, it would be wind," he says.

Steve Dryden, who developed the 42 MW Clear Lake wind farm in Iowa for FPL Energy, agrees that Iowa and Minnesota could host the Reliability 2000 renewables. "I think it will come from those areas, but mostly because of economics," he says. "You'll get stronger winds in other states and hopefully be able to wheel it." But only if the transmission market allows it.

Freeing transmission

Although seven other states have an RPS, all of them came about as part of electricity deregulation and giving customers a choice of supplier. Wisconsin has moved towards deregulation, but it has not taken the final leap that would open its retail market to competition.

"The legislature and the governor put together a package last year that essentially deregulated generation," Vickerman said. "This bill completes it for transmission and it adds public benefits and environmental safeguards." Reliability 2000 requires utilities serving eastern Wisconsin to divest themselves of transmission assets and form an independent transmission company. Western Wisconsin utilities were required to do so last year.

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