Green Energy & Development Law Blog : Green Building & Development Lawyer & Attorney : Brad N. Mondschein : Pullman & Comley Law Firm

As I reported yesterday, the FERC has ruled that feed-in-tariffs (state mandated tariffs which require a utility to pay above "avoided costs" for renewable energy) are a violation of PURPA and the FPA.  The decision, however, does not affect many incentives that are still available to renewable energy projects.  By reconfiguring statutorily mandated rates into other incentives, States may be able to avoid the clear negative effects of the FERC decision.  Here are some of my ideas:

1.  Projects that did not rely on an above-market rate are clearly not affected.  They can still rely on tax incentives and grants which are broadly available.

2.  Projects that relied on above-market rates can perhaps survive by reconfiguring the incentive.  The idea behind a feed-in-tariff is that the utility will pass along the costs to the ratepayers through absorption of the costs into the rate-base.  Instead of a feed-in-tariff, those same costs can be included in the surcharge on ratepayer bills that support that State clean energy fund or renewable energy projects.  Most states have some type of fund to this effect.  Then, the revenue from such surcharges can be used to give grants (which are still allowed) that are equivalent to the feed-in-tariff incentive.

3.  Increasing tax incentives to offset the lost feed-in-tariff incentive is another means to incentivize renewable energy Projects.  Instead of spreading costs to ratepayers, it will place the burden on tax payers.

4.  Support amended PURPA and the FPA by supporting Congressman Inslee (D-WA) in his quest to improve the nation's renewable energy incentives.

5.  Support PACE legislation by supporting Congressman Israel (D-NY) in his quest to institute nationwide PACE programs and federal loan guarantees.

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I want to thank Kent Jeffreys at the International Council of Shopping Centers for bringing me this post....

From InsideEPA.com’s Carbon Control News:

Coalition Seeks Renewable Energy ‘Feed-In’ Tariffs To Cut GHGs

Posted: July 7, 2010

A coalition of clean energy groups and environmentalists is attempting to spur new interest among lawmakers and regulators in establishing “feed-in” tariffs to bolster renewable energy projects and cut greenhouse gas (GHG) emissions. The tariffs require utilities to purchase renewable power at above-market prices through long-term contracts, providing more certainty for investors to fund new projects.

The coalition is bringing together experts from around the world for a July 12 conference in San Francisco to brainstorm ideas for developing feed-in tariff systems that will at first be designed for state use. Rep. Jay Inslee (D-WA), meanwhile, is preparing a proposal calling for a national feed-in tariff to boost renewable energy, though observers do not expect it to be included in pending energy legislation this year.  (see my post from earlier today regarding Inslee's net metering tariff)

The coalition includes the Center for American Progress (CAP), Sierra Club, Pacific Environment, World Future Council, and Alliance for Renewable Energy. Its initial aim is to convince California officials to pursue feed-in tariffs as a way to at least complement the state’s failing renewable portfolio standard.

“I think California has a real potential to play a leadership role in renewables legislation,” says a source with Pacific Environment. “So we need to reignite and get people on the same page about the potential for what a robust feed-in tariff could mean for California. And one way to do that is to get people from around the world where it has worked together in one room.” The “goal of this conference is to get it right in California first.”

A feed-in tariff essentially requires utilities to buy renewable energy at above-market prices for fixed periods of time under contracts approved by regulators. It represents a subsidy program where owners of renewable energy production systems receive a guaranteed, fixed price from utilities for the purchase of renewable electricity that is fed into the broader electricity grid. The tariff is intended to incentivize renewable energy development by making it more appealing to investors. Several California state lawmakers have introduced a handful of feed-in tariff bills in recent years, but none has advanced.

Sources with the coalition hosting the conference say Vermont and Oregon have already implemented narrow feed-in tariffs that are showing promise. About 10 other states either have proposed feed-in tariffs or are showing interest in pursuing them, the sources say. These include Wisconsin, Minnesota, Washington, Michigan, Indiana, Maine, New York and Nevada, says a Sierra Club source.

A CAP source says 90 percent of the renewable electricity capacity built in the world over the last decade was thanks to feed-in tariffs, because they provide regulatory stability and revenue certainty. Experts are now trying to “figure out a way to make it work in the U.S.”

But one of the chief barriers to domestic feed-in tariffs is that the federal regulatory system is based in part on providing least-cost power, even for renewables, under the Public Utility Regulatory Policies Act (PURPA) of 1978, the CAP source says. For example, utilities must pay the difference between the cost of conventional electricity supplies that are being replaced with more expensive renewable sources. State public utilities commissions are “struggling to justify a rate above” this difference, which is what a feed-in tariff would be, the source says.

European countries have different regulatory goals, focusing on the benefits of renewable energy.

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When I was at the RetailGreen Conference last week in Los Angeles, the conference was buzzing with talk about California's new foray back into deregulation of the energy generation market.  Next year, California will once again allow its electric customers to purchase generation directly from suppliers and bypass the distribution company's standard offer.  When this was attempted years ago, deregulation ended up being blamed for one of the greatest electricity crisis in American history.

In addition to the deregulation of California's energy markets, California is also expanding the requirements of "feed-in" tariffs.  The new law doubles the maximum system size from the current 1.5 megawatts to 3 megawatts and requires long-term agreements that will be in effect for 10 to 20 years.  It also increases the statewide cap for such feed-in tariff agreements to 750 megawatts, up from 500 megawatts. Utilities buying power under the feed-in tariff will be able to take credit for the renewable energy under the state's Renewable Portfolio Standard (RPS), which requires utilities to draw on renewable energy for one third of their power needs by 2020.

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Hawaii's Governor and the Hawaii electric utilities have reached an agreement on transforming Hawaii into one of the most progressive renewable energy states in the country.  The agreement includes the construction of undersea cables that will connect Maui, Moloka'i and Lana'i so that wind generated in Maui can be utilized in Oahu which will add 400 MW of renewable capacity.  Further, the agreement calls for 40% of the state's energy to be renewable by 2030.

The agreement also calls for a mandatory solar roofing requirement and tax credits and rebates to convert homes to solar hot water heaters.  Further, the utility will be responsibel for supplying solar water heaters to any customer and the cost will be shared between the customer and ratepayers.

The utilities are also required to implement a PV Host Program.  The program will allow the utilities to own PV systems and pay rent to property owners and/or provide electricity to property owners.  Further, the program will require a utility to purchase PV generated electricity pursuant to a feed-in tariff with the additional costs being borne by ratepayers.

The utilities have also agreed to implement a "feed-in" tariff system for renewable energy projects which will stabilize the price paid for renewable energy generated and purchased by the utility.

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