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United States

Guidance manual available for designing a Renewables Portfolio Standard

Guidance for policy makers on how to design a Renewables Portfolio Standard (RPS) is now available in a report sponsored by the National Association of Regulatory Utility Commissioners. The RPS is a way of creating public policy that requires utilities to include renewables in their resource portfolios, whether they own the generation or buy from a wholesaler. "The Renewables Portfolio Standard: A Practical Guide," written by Nancy Rader and Scott Hempling, does not prescribe what approach a state should take when designing an RPS, but instead offers a recipe approach starting with basic ingredients and adding ingredients important to the state. One way a utility could choose to meet the RPS obligation under one of the rules is to buy tradable credits showing that someone else generated the renewable energy. Policy makers must make some basic rules to guide the RPS implementation, such as defining the overall renewables goal, the types of renewable energy eligible under the RPS and determine the amount of energy each retailer must contribute. They should also try to design an RPS that maximises reliance on the market (tradable credits is one way), creates a structure to increase the quantity of renewables in the state's utility system over a long period of time, and implements penalties for those who do not comply. This is what distinguishes an RPS from tax credits and government subsidies, the report says. The report is available on the NARUC web site at www.naruc.org.

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