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RES Thursday

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The Senate Energy Committee is preparing to debate whether it will beef up the Renewable Energy Objective (requiring utilities to make good faith efforts toward providing x% of their power from renewable technologies) or a Renewable Energy Standard (mandating utilities provide x% of power from renewable energies).

These bills will be discussed in Room 123 of the Capitol at 3:00 on Thursday, 18 Jan, 2007.

According to the Senate Energy Committee schedule they will discuss S.F. 4 and S.F. 74 as well as S.F. 145 and S.F. 129. I have not had a chance to review the 2 latter bills, they appear to be more all-encompassing bills that will establish either a standard or objective while dealing with many other issues as well.

Currently, there are 3 RES/REO-only bills under consideration although 2 of them appear identical to me. I stared at S.F. 4 and S.F. 113 for a good 10 minutes and could not detect any difference between them. Both bills create a RES. The 3rd bill is S.F. 74 and that would beef up the REO.

The Senate bills each change the requirements on small hydro. Previously, hydroelectric generation had to be below 60MW in order to count toward the REO. The new REO or RES would change that to hydroelectric sources below 100MW. The REO and RES both do not count Xcel's mandates from the Prairie Island deals as progress toward the requirement. This remains a signficant additional burden on Xcel which is already the largest purchaser of wind power in the U.S.

The existing statute told the Public Utilities Commission (PUC) to weight different renewable energies (so 2 solar credits might equal 1 wind credit) but that will be scrapped in any impending legislation. The PUC found those instructions cumbersome and lacking proper direction.

The bills revise Minnesota Statute 216B.1691. Let's look the beefed up REO first - S.F. 74.

The new REO requires 5% from eligible sources by 2010. From there, 11% is required by 2013, 15% by 2015, and 25% by 2020.

As before, the PUC has the authority to excuse a utility from meeting the REO if it would cause major problems (like increase rates too much).

The commission must delay or modify the standard for an electric utility if it finds that
compliance with a standard is not in the public interest because compliance will either
produce undesirable impacts on the reliability of the utility's system or on the utility's
ratepayers or if it finds that compliance is not technically feasible.

Subdivision 7 covers the compliance issue:

The commission must regularly investigate whether an
electric utility is in compliance with its standard obligation under subdivision 2a and if
it finds noncompliance must order the electric utility to construct facilities or purchase
credits to achieve compliance. If an electric utility fails to comply with an order under
this subdivision, the commission must impose a financial penalty on the electric utility
in an amount of five cents for each kilowatt hour the electric utility is out of compliance
with its standard obligation.

5 cents per kilowatt hour seems a fairly steep penalty. I could have sworn I heard 5 cents per megawatt hour in an energy committee meeting, but there it is in text. The difference between this new REO and an RES seems minimal given the financial penalty for not meeting. However, there is certainly more room to maneuver under the language of "good faith effort" rather than the RES demands.

The other major bill for consideration is S.F. 4, establishing a Renewable Energy Standard. If I am reading this correctly, it essentially maintains the REO until 2010, then uses the "thou shall" language instead of the "good faith effort" language after that to meet the same goals as above - 11% is required by 2013, 15% by 2015, and 25% by 2020.

As with the REO, the RES ends with a 5 cent per kilowatt hour penalty for each that it is out of compliance.

Given the similarity of the bills, I expect that the debate in the Senate Committee and later on the floor will be over why an RES is necessary when the current REO appears to be working and the new REO will nearly have the same penalties as the RES will.

Update: The RES thread continues with this post.