1. The Regulatory Assistance Project 110 B Water Street Hallowell, Maine USA 04347 Tel: 207.623.8393 Fax: 207.623.8369 50 State Street, Suite 3 Montpelier, Vermont USA 05602 Tel: 802.223.8199 Fax: 802.223.8172 Website: http://www.raponline.org Perspectives on Renewable Portfolio Standard Authority NARUC Summer 2007 July 17, 2007 Richard Sedano

2. Introduction Regulatory Assistance Project RAP is a non-profit organization, formed in 1992, that provides workshops and education assistance to state government officials on electric utility regulation. RAP is funded by the Energy Foundation, US EPA & US DOE. Richard Sedano was Commissioner of the Vermont Department of Public Service, 1991-2001

3. Renewables Portfolio Standards State Goal ☼ PA: 18%¹ by 2020 ☼ NJ: 22.5% by 2021 CT: 23% by 2020 MA: 4% by 2009 + 1% annual increase WI: requirement varies by utility; 10% by 2015 goal IA: 105 MW MN: 25% by 2025 (Xcel: 30% by 2020) TX: 5,880 MW by 2015 *NM: 20% by 2020 (IOUs) 10% by 2020 (co-ops) ☼ AZ: 15% by 2025 CA: 20% by 2010 ☼ NV: 20% by 2015 ME: 30% by 2000 10% by 2017 goal - new RE State RPS ☼ Minimum solar or customer-sited RE requirement * Increased credit for solar or customer-sited RE ¹PA: 8% Tier I / 10% Tier II (includes non-renewables); SWH is a Tier II resource HI: 20% by 2020 RI: 15% by 2020 ☼ CO: 20% by 2020 (IOUs) *10% by 2020 (co-ops & large munis ) ☼ DC: 11% by 2022 DSIRE: www.dsireusa.org June 2007 ☼ NY: 24% by 2013 MT: 15% by 2015 *DE: 10% by 2019 IL: 8% by 2013 VT: RE meets load growth by 2012 Solar water heating (SWH) eligible *WA: 15% by 2020 ☼ MD: 9.5% in 2022 ☼ NH: 23.8% in 2025 OR: 25% by 2025 (large utilities) 5% - 10% by 2025 for smaller utilities *VA: 12% by 2022 MO: 11% by 2020

4. Some RPS Purposes  Public, structured commitment to selected resources that gets results  Impresses the public  Impresses qualifying resource development teams and inspires their confidence  Takes guess work out of public value of renewables (avoids other sources) for monopoly service and is competitively neutral  Can be part of a coherent clean energy strategy  Market solution (not like PURPA QF contracts)  Targets may stretch out in time ahead of supply

5. (Should we be saying “Clean Energy Standard?”)  Choice of resources: mixed policy considerations (expansive as possible)  Truly renewable in nature  High efficiency DG sources  Tending to be locally available  Addressing other economic development or environmental or political issues  Energy efficiency, demand response

6. A National RPS  Extends purposes to all states applying uniformly to all customers (requirement, not a goal)  Applies to utilities of all ownership structures  Applies consistently to all states, including those without sufficient impetus to adopt a state standard  Would need national tracking system, which may be able to meld current regional systems (A REC is A REC is A REC, no double counting)  What about states that have adopted a standard – will the national standard accommodate or obliterate state standards?

7. It Depends  National RPS can be flexible, accommodating all categories of most states  Some administrative process that is relatively easy to manage will keep the categories fresh  States should be able to qualify what they want for their own standard  National RPS can establish a minimum standard of renewable energy and alternative compliance, states can exceed it

8. State Concerns  Preemption (on resource and cost recovery)  Fed RPS won’t shield states from cost concern  Absence of locally available renewables  Most states have some renewable sources, but as with current regional markets for electricity supply and demand of electricity, a market for RECs can and will form, and some areas will be buyers  Rates (compared with past or future?)  Consistency in definition (states already have tiers) and alternative compliance (sum, state CE funds)

9. Other Concern  Encouraging new renewable sources while crediting existing renewable ones  Underscores the “game” that a portfolio standard creates  Best “bang for buck” of ratepayer dollar focuses on new sources  Existing units use “fairness” argument to win a place in the system  State systems work this out (“tiers” seems best way), no national consistency

10. Other Concern  Deliverability – does power associated with the REC need to be deliverable within the market where the REC is sold?  National program would probably include no requirement for deliverability  Makes market much thicker – renewable rich areas can “mine” RECs for the whole country  May strain credulity of public, or not

11. Why Can’t We All Just Get Along?  Growing consensus on need for alternative, clean generating sources >> imperative?  Question of whether lack of state actions is OK -- does there needs to be a base?  Federalism vs. Commitment  Federal RPS perspective: Measure benefit to climate compared with other solutions

12. The Regulatory Assistance Project  RAP Mission: RAP is committed to fostering regulatory policies for the electric industry that encourage economic efficiency, protect environmental quality, assure system reliability, and allocate system benefits fairly to all customers.