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RES Thursday

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.

Iowa and California

Jeff, from sustainablog has featured incoming Iowegian Governor Culver and his energy plan on the treehugger blog. Governor Pawlenty may have his work cut out for him if he wants Minnesota to beat Iowa for renewable energy innovation.

Newspapers around the state of Iowa on Sunday were reporting on or editorializing about governor-elect Chet Culver's proposed Iowa Power Fund, a $100 million investment by the state in renewable energy development. Culver proposed the Fund during his campaign, and made it one of the pillars of his economic development plan. Legislators on both sides of the aisle are considering Culver's proposal, but support for renewables seems solid across the board.

Energy issues appeared to be Culver's #1 focus in his campaign.

As Governor, I will make Iowa a national leader in job creation and new technology research and development with a, $100 million Iowa Power Fund ... Over the next four years, My Iowa Power Fund will attract more than three times this $100 million investment in new private sector funding for renewable and alternative energy industries in Iowa.

This will make the Iowa Power Fund the largest of its kind in the nation and will put Iowa on the map for the “Next Generation” power and fuel investors and entrepreneurs. The Iowa Power Fund will require that that the jobs created provide good wages and good benefits and that any company that misuses Iowa Power Funds or doesn’t provide the jobs promised will have to pay taxpayers back with penalties and interest.

In trend-setting California, the governer has signed an executive order mandating less GHG intensity from vehicle fuels.

California Governor Arnold Schwarzenegger is establishing by Executive Order a Low Carbon Fuel Standard (LCFS) that requires, as an initial goal, a 10% reduction in the greenhouse gas emissions (GHG) intensity of all passenger vehicle fuels sold in California by 2020.

This is rather interesting proposal. I was confused about it until I saw this:

The LCFS will use market-based mechanisms that allow providers to choose how they reduce emissions while responding to consumer demand. For example, providers may purchase and blend more lower-carbon ethanol (e.g., cellulosic ethanol rather than corn ethanol) into gasoline products, purchase credits from electric utilities supplying low-carbon electrons to electric passenger vehicles, diversify into low-carbon hydrogen as a product and more, including new strategies yet to be developed.

Watthead noted that this takes some of the responsibility for meeting the AB 32 targets away from the auto industry. This effectively undercuts their legal challenge that AB 32 (now more properly known as the Global Warming Solutions Act of 2006) is effectively a fuel efficiency requirement rather than a measure to reduce pollution. This act mandates all cars emit fewer GHGs per mile traveled ... there is a specific schedule somewhere with targets, but I cannot find it just this minute.

At any rate, I hope this will help California's case in the courts if the Supreme Court rules that the EPA cannot regulate carbon dioxide as a Clean Air Act pollutant. That ruling is expected in the next 6 months. I believe the challenge against California's Global Warming Solutions Act of 2006 is in a holding pattern until that ruling (but I could be wrong).

As for the other states, I hope to get more up here later. Until then, sustainablog has a roundup of some other states that are working on renewable issues as well.

Senate Energy Committee Meets

The Minnesota Senate Energy Committee (technically, Energy, Utilities, Technology and Communications Committee) met on Thursday for the first time. It will regularly meet on Tuesdays and Thursdays from 3:00 - 4:30 in Room 123 of Capitol.

The new chair is Yvonne Prettner Solon (DFL 07). Ellen Anderson, the previous DFL chair has moved to chair the Finance - Environment, Energy and Natural Resources Budget Division Committee. The meeting started with the requisite round of introductions. Several members admitted to being science geeks - something I was rather surprised by. Have we computer geeks so normalized 'geekhood'?

Chair Prettner Solon started with a number of the questions she expected to deal with in the future. The one I found most interesting was the question of the ideal amount of renewable generation we want in the system. I have focused for so long on getting more, I never really gave much thought to how much is enough...

At any rate, Chair Prettner Solon outlined a rough schedule for passing an REO or RES. Two bills are scheduled to be discussed on Thursday, 18 January. They will discuss S.F. 4 and S.F. 74. Both relate the RES/REO. If no one else checks them out in depth, I will do so before Thursday. Chair Prettner Solon hopes to vote on the bills by 25 January or earlier if possible.

The PUC representatives announced that the M-RETS (Midwest Renewable Energy Tracking System) request for proposals is due today and they hope to have the renewable credit tracking program running by July. As a software geek, I wish them well but never expect software to be delivered on time.

There was some talk about the recent WindLogics study of integrating wind power into the grid. While the costs are remarkably low for integrating up to 25%, the study did not include any costs resulting from increasing transmission capacity. Thus, the study is still good news for wind, but hard work remains.

Assistant Commissioner Mike Bull from the Department of Commerce reported on the current status of the renewable energy objective (REO) in Minnesota. Overall, the news is good but his study is incomplete. The DoC will release a report on 16 Jan that has the full results of who is complying.

The news on the REO is quite good overall as Bull reported that the utilities that provide more than 90% of power in Minnesota have been found to be in compliance and an additional 7% are in review. He also noted that there is a misconception that the REO is voluntary. He said it is required but also noted that some utilities have more difficulty that others based upon their changing demand (rate of increase or decrease).

Update: Loon Commons has a post discussing MEP's view on the Committee

House Energy Committee Meets

The Minnesota House Energy Finance and Policy Division Committee met for the first time on Wednesday, 10 Jan. The minutes are not posted yet, but I attended the meeting and had a few notes.

Representative Hilty (DFL 08A) chairs the committee and suggested the committee will be meeting on promptly on time whether he is there or not. After a brief round of introductions, a man from House Research presented the recent history of energy legislation in Minnesota. I did not catch his name and it is not yet on the Committee website.

Deputy Commissioner Garvey from the Department of Commerce (of the combined Energy and Telecommunications Division) and Assistant Deputy Mike Bull then presented Governor Pawlenty's energy plan. They are making efficiency a cornerstone of the plan.

There are 3 broad parts of the plan. I tried to follow as best I could between the presentation and the questions but I may have confused a point or two.

The efficiency proposals include a 15% reduction in fossil fuel usage in Minnesota by 2015. After a question on how this would be measured, Deputy Commissioner Garvey suggested it would be measured on a per capita basis (rather than taking 15% off the fossil fuels we used this year).

I poked around a bit and I think the Minnesota population is expected to grow by about 500,000 people in that time. From what I can tell, this means we will be absolutely decreasing the amount of fossil fuels used by 2015 (if we meet the goal), but not by as much as we would expect from the 15% figure.

They want to change the CIP program (currently requiring utilities to spend x% on increased efficiency and load management) to requiring a 1.5% reduction in growth each year. I expect this will be quite difficult for the utilities operating in the sub and exurbs around the Twin Cities where growth is rapid. This cannot be popular among many utilities.

The third piece of efficiency is a massive increase in the number of energy star buildings in Minnesota.

Garvey went on to discuss the "Less Carbon" aspects of the Governor's plan. It includes working with other Governors in the region to achieve reductions, joining the Chicago Climate Exchange (or similar registry), requiring offsets for new fossil fuel generation facilities, and having the Center for Climate Strategies (I believe Garvey misidentified this group, saying it was from D.C., they are actually out of PA) develop a strategy. They have helped other governments create similar plans.

Finally, Mike Bull presented the Governor's proposal on strengthening the REO (Renewable Energy Objective - asks utilities to generate x% of their energy from renewable sources). The Governor wants to put a financial penalty into the REO and increase it to 25% by 2025.

The proposed financial penalty was 5 cents/MWhour if the utility does not make a good faith effort toward meeeting the REO. I may have missed some of the details here because I'm not sure if that penalty was per day or not.

The Governor remains opposed to a more stringent Renewable Energy Standard (RES or RPS depending on who you ask). They fear it could hurt the economy and therefore want an REO with more flexibility.

Mike Bull suggested the DoC will be releasing a report next week that details the progress of utilities under the current REO.

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