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RES Draft Bill

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I have been meaning to post about last week's RES discussions in the Senate Energy Committee. My home internet has been broken for a week and Comcast has proven uninterested in fixing the problem. At any rate, I will now continue my continuing coverage of renewable energy legislation in the Minnesota Senate.

The time is ripe and the Committee appears poised to vote on the resolution on Thursday, Feb 1. These notes come from the Committee meeting on Thursday, Jan 25 (Real media video, Windos Media Video, and mp3 audio).

The Senate Committee will be voting on (and approving) S.F. 4. Behind the scenes, the committee has convened stakeholder meetings to work out a compromise bill that the committee will then pass. I have a draft from last week's agreement but it has undoubtedly been refined since. I think we have a basic idea of what the committee will pass though.

If all goes to plan, the bill will be S.F. 4, but don't bother reading the text of that bill now because the committee will adopt a "delete all" amendment that rewrites the entire bill with language selected to assure passage and broad agreement.

It will be a 25% standard, requiring all utilities in Minnesota to generate 25% of the electricity they sell in the year 2020 from renewable resources.

At this point, it still looks like they will remove the biomass set asides although there are some people that are still fighting such action. Under the current REO, utilities must use biomass for part of their generation. This has proved difficult and costly without enough of a benefit to justify keeping it. It is also hobbled by the way it is written - though intended to be .5% of all energy sold, it actually requires utilities to generate .5% of 10% of their sales. Whoops. No Senator has yet appeared willing to keep this biomass language.

The standard targets are 11% by 2013, 15% by 2015, and 25% by 2020. Utilities may bank excess renewable generation in one year to use for future years.

The draft I have still disallows old hydro (put into service before 1975) - which will apparently take 200MW of Xcel hydro from being allowed to being disallowed. This provision is justified by supporters because the point of the RES is to create new, carbon-neutral generation sources rather than reward old generation facilities.

There is an interested provision on technologies based upon fuel combustion that says it can only count toward the standard if it was constructed with new source performance standards or uses best available control technology for that type of facility. This limits co-generation units to those which are least polluting.

The RES bill will offer substantially more offramp provisions than the Senator Anderson's original proposal. There is a section that gives the PUC power to decide if it needs to modify or delay a standard if it is in the public interest to do so (for reasons of reliability, technical concerns, or major rate impact) if there are significant reasons to do so.

It then includes language which says "the commission shall modify or delay" obligations if there are issues beyond the utilities' control. Note that the PUC has not choice in this matter, it must grant a delay or modification if this situation arises. The reasons are

  1. delays in acquiring sites or routes or due to rejection of necessary siting or other permitting approvals;
  2. delays, cancellations, or nondelivery of necessary equipment for construction or commercial operation of an eligible energy facility; or
  3. transmission constraints preventing delivery of service.

I am guessing that these clear offramps were needed to ensure broad approval of the ambitious 25% by 2020 standard. While some are worried about the increased offramps, I really don't think they matter in the long run. Whaaaa? Well...

The point of the RES is to force utilities to invest in carbon-neutral electricity generation. Just by passing this legislation, the state sends a message to the market that Minnesota is committed to the wind market. Utilities will know what is expected of them. If they are not meeting their obligations in 5-7 years, when the consensus will be even stronger that carbon emissions are a problem, they will incur the wrath of the legislature and public.

The compliance penalty will have a ceiling of the cost of complying with the standard. I thought this was odd, but commenter Jesse reminded me that this penalty will levied against the company whereas the cost of complying with the standard can be recovered from ratepayers. Additionally, the PUC can first order the utility to construct facilities or buy credits. Ideally, the penalties will never be required anyway.

The bill then deals with transmission, saying that utilites must work with MISO to develop a plan to ensure the grid can handle the coming load from so much wind generation.

The final provision deleted green pricing. This bothers me becuase I like having the option of forcing utilities to deliver 100% green power to customers willing to pay extra. But this is most likely a worthwhile tradeoff given the strong standard.

Once the committee sends this bill out of committee, we'll see what happens in the full Senate. I hope to follow the House deliberations on their RES closely as well in order to see how closely the two agree.

Again, this discussion is based on a draft bill. I look forward to the final wrap-up after the vote on Thursday.

The new RES will require all electric utilities to participate in the PUC approved credit tracking system (MRETS). This is an important step for an effective tracking program.

The committee will next be dealing with C-BED (Community-Based Economic Development) issues and the CIPs (Conservation Improvement Programs).