Peace for the Renewable Energy Standard?

Over the past several months, we have talked about a real threat to Oregon’s Renewable Energy Standard. As a result of their load growth issues, Umatilla Electric Cooperative sees they may become a “large utility” under the standard and be subject to the full requirement of meeting 25% of their load through renewable energy rather than the 10% requirement they currently have as a “small utility.”

Their solution over the past three years has been to propose various ways to exempt themselves from the standard. Another part of their efforts has been to support a ballot measure that would allow energy from all hydropower facilities to count toward the Renewable Energy Standard. This would mean that all of Oregon’s share of the federal hydropower system could be used to meet the standard. While hydropower is a recognized renewable resource, counting all “historic hydropower” would mean that we would not need to build any new renewable resources – no more new wind, no more new solar, no more new biomass - no more new renewables, period. Instead, there would be more pressure to meet our energy needs with fossil fuels.

After the 2013 legislative session, Gov. John Kitzhaber and state Rep. Greg Smith convened a task force to look at the issue and determine if the Renewable Energy Standard needed changes. The task force first convened in September 2013 and continued its work through this month. As a result of the task force’s discussions, a small change was proposed for electric cooperatives that experience load growth which threatens to move them into the large utility category. That proposal is currently making its way through the legislature.

A cooperative in such circumstances could use any of the existing tools in the law to manage impact of the standard on their system or their ratepayers. Or, if HB 4126 passes, they could use renewable energy certificates (RECs) in a slightly different way than they can do now. They would be able to use RECs to meet 100% of their obligations under the standard at the 10% benchmark (meeting 10% of their load with renewables), 75% of their obligation between the 15 – 25% benchmarks, and 20% on an ongoing basis once they meet the full 25% benchmark.

This means that electric cooperatives don’t have to build their own new renewable resources up front, but can help ensure advancement of new renewables by purchasing RECs from developers of the projects. They can use RECs in the beginning of their obligations, but will have to either buy long-term contracts based on renewable resources, or build their own resources to maintain their 25% requirement in the long term. The deal is a fair one and ensures some peace around the issue for the foreseeable future, especially since one of the requirements is the withdrawal of the proposed ballot initiative.

Another part of HB 4126 proposes to provide private utilities the ability to offer so-called “green tariffs” to their large commercial and industrial customers. This would involve offering special contracts for renewable energy products above and beyond the Renewable Energy Standard. While CUB was very troubled by the process that lead to the green tariff portion of the bill, we believe that residential customers are protected from potential cost-shifts that could result from these special contracts. But the issue will move to the Public Utility Commission where we will need to take a much longer time to determine how the green tariff offerings might work.

CUB was also very troubled by the fact that we seemed to be doing energy policy in a piecemeal fashion. Oregon has a serious issue regarding available funds for energy efficiency projects by industrial customers. These customers will soon be at the upper limits of their allocated funds for efficiency projects. There is little sense in helping these same customers acquire more expensive resources (even those they may be renewable) when there is a danger that efficiency savings – the cheapest resource – might be left on the table.

We were hoping to get some assurances from the utilities that they were willing to work as hard with their large customers to ensure that all energy efficiency savings are acquired as they were to develop the possibility of green tariffs. But it appears as though the utilities are picking and choosing the issues they want to address with their large customers.

CUB will be pushing hard to ensure that residential customers are protected, even if the utilities and large customers are willing to leave low-cost efficiency behind. This will be one of the most important issues we’ll face in 2014 and we’ll need our members’ help to succeed. So stay tuned for more updates!

For more information about Oregon’s Renewable Portfolio Standard and issues around Renewable Resources in Oregon, check out the following articles:

• Renewable Energy 101
• Renewables 102: Renewable Energy Credits
• Renewables info series from 2011: Wave Power in Oregon, Geothermal Power in Oregon, and Burning Biomass

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