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As we have discussed in earlier posts,  the Federal Energy Regulatory Commission (FERC) recently gave states a green light to develop strong renewable energy programs known as feed-in tariffs (FITs).  A lot of people have been asking us how a state can design a strong FIT program without worrying about federal preemption. With generous support from the Alliance for Renewable Energy (ARE) (using funds provided by the Eleventh Hour Project), ELAW has published two documents to help renewable energy advocates understand and navigate federal and state jurisdiction as it relates to FITs.  I hope you find these documents useful and that you will share your thoughts with us.  I intend to continually replace these documents with fresh versions as we hear from more people interested in these issues.

Please read Adopting State Feed-in Tariff Laws without Federal Preemption  and Available Paths for Designing Strong State Feed-in Tariffs and send us your comments!

Jen Gleason
Staff Attorney

The Federal Energy Regulatory Commission (FERC) has issued another order making it clear that states can move forward with strong renewable energy policies. California Public Utilities Commission, order denying rehearing, 134 FERC 61,044 (January 20, 2011)

By Dirk Ingo Franke (via Wikimedia Commons)

On October 21, 2010, FERC issued an order making it clear that states have the authority to implement a strong feed-in tariff (FIT) by setting rates for renewable energy purchases under the Public Utility Regulatory Policies Act (PURPA).  (Read our previous blog post). California’s investor-owned utilities challenged that order, asking FERC to clarify or reconsider its decision.  FERC denied the request and issued an Order that should remove any doubt.  In its Order, FERC recognizes the changing landscape of electricity regulation and notes that “[p]reviously, states did not mandate particular purchases, e.g., from renewables, and so there was no need to differentiate among generation sources and no need for tiering [rates]; all generation sources were essentially fungible . . . . That is increasingly not the case; states are now looking to draw distinctions in what they will allow.  The orders issued to date in this proceeding, and this order, reflect this change in circumstances.” Id. at fn. 66.

“[W]here a state requires a utility to procure energy from generators with certain characteristics,” the state may set the wholesale rate (known as ‘avoided cost’) for that specific type of energy.  Id. at para. 30. Therefore, a state can require utilities to purchase electricity generated from differentiated technologies (wind, solar, wave, etc.) and set the rate for purchases from each of these generators.

This should be FERC’s final word on this issue for now.  The order could be challenged in federal court, but let’s hope we’re done with this discussion and states can move forward boldly!

Jen Gleason
Staff Attorney

Good news for renewable energy! Yesterday, the Federal Energy Regulatory Commission (FERC) issued an order that will help states implement strong renewable energy policies known as feed-in tariffs (FITs). ELAW Staff Attorney Jen Gleason has been working to promote FITs in the U.S. and around the world for years, so she was thrilled to get the order and dive into the details.

 

If you know the complex world of energy policy, you might enjoy Jen’s report below on the FERC order.

Bern Johnson
Executive Director

Jen reports:   FERC’s order issued yesterday creates another way for states to design strong feed-in tariff programs for electricity generated from renewable sources. States have been constrained in adopting an avoided cost that would adequately cover the costs of generating electricity from renewables. In California Public Utilities Commission, 133 FERC 61,059 (2010) (October 21 Order), FERC issues an order clarifying its July 15, 2010 order addressing the California Public Utilities Commission’s (CPUC) program adopted under California’s Waste Heath and Carbon Emissions Reduction Act.

In yesterday’s order, FERC clarified and overruled parts of an earlier FERC decision to make it clear that if states require utilities to purchase power from specific sources of electricity, the state may set avoided cost for that specific resource. FERC states: “[W]here a state requires a utility to procure a certain percentage of energy from generators with certain characteristics, generators with those characteristics constitute the sources that are relevant to the determination of the utility’s avoided cost for that procurement requirement.” 133 FERC 61,059, para. 27. In a footnote FERC explains, “a state may appropriately recognize procurement segmentation by making separate avoided cost calculations.” Id. at fn. 53. For the first time, FERC said, “the concept of a multi-tiered avoided cost rate structure can be consistent with the avoided cost rate requirements set forth in PURPA and our regulations.” Id. at para. 26.

Thus, if a state requires utilities to purchase 30 MW of electricity generated on PV systems with a total capacity of 10 kW or less; 100 MW of electricity from PV systems between 10 kW and 50 kW; 100 MW from PV systems between 50 and 100 kW (etc. — with potential of designing a system requiring purchases from systems up to the maximum size allowed for QFs) the state should be able to set separate avoided costs for each of these categories and require utilities to purchase the electricity at that rate.

If these avoided cost rates will not themselves be enough to create a strong FIT program, FERC made it perfectly clear that “a state may separately provide additional compensation for environmental externalities . . . in addition to the PURPA avoided cost rate, through the creation of renewable energy credits (RECs). Id. at para. 31.

 Renewable Energy Sculpure in front of Houston Public Library. From Flickr - by ANVAR - RUSSIANTEXAN © GONE WITH THE WIND

Renewable Energy Sculpture in front of Houston Public Library. From Flickr - by ANVAR - RUSSIANTEXAN © GONE WITH THE WIND

For years, ELAW has been evaluating renewable energy policies from around the world and helping partners around the world develop strong laws. Policies known as feed-in tariffs (FITs) have proven very successful in Europe.  ELAW Staff Attorney Jen Gleason worked with colleagues in the United Kingdom and Germany to determine what made some FITs more effective than others.  Studies show that FITs are the most effective and efficient way to promote the rapid generation of electricity from renewable sources.  A good FIT will guarantee that a generator of qualified electricity will be able to connect to the grid and sell all the electricity generated to the local utility at a price that ensures a reasonable profit.  Germany has far surpassed its goals for generating power from renewable sources.  ELAW has been working to bring lessons from these successful models back to Oregon.

A year ago, the World Future Council brought together people from the United States and Canada who have been studying FITs for an all-day workshop.  At the end of the workshop a new organization was created to promote FITs in North America – the Alliance for Renewable Energy (ARE).  Jen is an ARE steering committee member.  ARE members keep each other informed about efforts to adopt FITs.

A focus on promoting renewable energy is one of the best ways known to combat climate change, and ELAW is working around the world to ensure that the best renewable energy policies are adopted and replicated.

Read other takes on climate change:  www.blogactionday.org

Solar Panels on Tamarack Wellness Center in Eugene

Solar Panels on Tamarack Wellness Center in Eugene

I think Oregon is on the verge of adopting a law that will allow Oregonians to put solar panels on their rooftops and sell all of the electricity they generate to their local utility at a fair price. I’ve been in Salem, Oregon several times over the past few months – witnessing and participating in “sausage making.”

The Oregon House of Representatives passed HB 3039 to the Senate with a 47-11 vote.  The current version of the bill includes many features — some of which are good and some that are not so good. The bill contains a pilot project for distributed solar generation, which means individuals can generate electricity and sell it back to their utility.  As the bill moves to the Senate, ELAW will be working to bring home lessons learned in Europe and make sure Oregon creates a strong pilot project, modeled on Germany’s successful renewable energy program.

Jennifer Gleason, Staff Attorney

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