What a Difference Two Years Make

About two years ago, CUB reported on the results of the 2007 Oregon legislative session which passed the landmark Renewable Energy Standard and increased incentives for building renewable energy generating resources.

However, as the 2009 legislative session winds down, it is looks like the legislature may back away from its commitment to renewable energy. Rather than pass legislation that makes additional progress towards development of clean energy, the 2009 legislature could be poised to weaken the requirements that Oregon has already put in place.

The Oregon’s Renewable Energy Standard is seen as a model nationally because we didn’t credit ourselves too much for existing resources (i.e. large-scale hydropower and old biomass) and made sure that the standard we set would result in real kilowatts from new renewable generation resources. The goal has always been to push development of new renewable resources, not to pat ourselves on the back for resources that were developed in the past.

Several bills propose to take us off that course we plotted two years ago. Here’s how:

HB 2940: This bill proposes to add existing biomass generation built before 1995 to the standard. What’s so important about 1995? That is the year that marks the line between resources that can count for the Renewable Energy Standard and those that cannot. We accounted for some existing resources to acknowledge early action to build clean energy resources before it was “cool” but we focused on the fact that the standard’s purpose was to influence what kind of resources were to be built to meet future load growth. And we wanted to make sure that a solid portion of that new generation was met by renewable resources.

So the biomass resources under consideration must have just missed the cut-off date, right? Well, no. In fact, most of the generating capacity of the biomass generation was built between 1938 and 1961. The “newest” of these resources came on in the mid-1980s. Adding these proposed biomass resources reduces the amount of kilowatt hours of new renewable generation (including new, more efficient biomass facilities) that is required. In other words, this so-called “biomass bill” actually is designed to increase the amount of fossil fuels that can be used to generate electricity.

And where are the utilities on all this? Portland General Electric has been pretty quiet. Pacific Power is supportive of this effort to water down the Renewable Energy Standard.

The bill is currently in the Senate Rules Committee.

HB 3039: This bill is particularly saddening because there are some good things in it. At its root, it would establish a pilot solar feed-in tariff, which would pay individuals and businesses for the energy produced by newly installed solar energy systems. It’s an approach that has worked well in other countries and some local utilities in this country have started to explore its possibilities here. But very few states have looked at adopting the policy (Vermont just did) so Oregon would again be a leader.

However, during the legislative process, the bill was loaded down with two troublesome policies. A requirement was added to build large “utility-scale” solar projects with these projects being credited 2-for-1 against the Renewable Energy Standard. That means every kilowatt hour of these “utility-scale” projects in the bill counts as two kilowatt hours of renewable power in meeting the standard.

Shouldn’t we be providing incentives for solar? Sure, we should. And we do (more on that in a moment). But when we try to provide incentives for solar, we should do it in a way that ensures that 1) customers get full value of the new generation and 2) the incentives don’t lead to more dirty resources being built. And HB 3039 fails on both counts.

First, if these “utility-scale” solar resources are being counted 2-for-1, it means that there are megawatts being counted that don’t actually exist. Put another way, if we gave you five dollars but said count it as ten, it wouldn’t mean that you actually had ten dollars. You and anyone else could see that you only had five.

Second, the 2-for-1 counting means that the Renewable Energy Standard won’t actually be producing as much clean energy as advertised. If we get to double count this solar, then it means that every kilowatt hour of “utility-scale” solar will replace two kilowatt hours of renewable power. But because we still need the 2 kilowatt hours of power, the other kilowatt hour will come from a non-renewable source, such as natural gas. So, not only are we not getting as much solar, we’re giving solar a carbon footprint by replacing the made-up green energy megawatts with brown megawatts.

So, how do we actually push for more solar? By doing exactly what we’ve been doing: focusing the public purpose charge on small resources, which primarily benefits solar; by requiring that 1.5% of public construction budgets be dedicated to including solar in public buildings; by having strong tax credits that reward installing new solar projects; oh, and by having a solar feed-in tariff.

Who benefits from this 2-for-1 credit against the Renewable Energy Standard? Well, ratepayers don’t because we get less renewable energy and may end up paying increased rates, as the utilities buy expensive solar resources. The solar industry doesn’t benefit because it means that less solar needs to be built to meet the standard. How about the utilities? Ah ha. With a 2-for-1 credit against the standard, they have to build or buy fewer renewable resources. And what are the utilities’ positions on the 2-for-1 credit against the standard? Both PGE and Pacific Power are supportive.

HB 3039 passed the House this morning (June 24) and will be up for a vote in the Senate in the next day or two.

HB 2472: This bill would essentially make Oregon less competitive in attracting new wind generating resources to the state by drastically reducing the tax credits available for developing these wind projects. Using both the state budget crunch and a feeling that “wind is a mature technology,” legislators are proposing to scale way back on the tax credits used to push these projects, a mere two years after significantly increasing them. Now, those tax credits approved in 2007 have been effective, but not so much that new wind resources no longer needs them.

While there is widespread recognition that everyone needs to scale back a little to help the state budget, we also don’t want to scale back on these clean energy tax credits so much that we deny ourselves not only the clean output of these wind projects but also of the economic benefits we get from them, particularly in rural Oregon. Also, the state gets back more in tax income from these projects than it spends in the tax credits.

The House yesterday did not agree with the Senate’s version of HB 2472. A conference committee will meet in an attempt to reach a compromise. At the moment, it is unclear what will happen with the incentives for Oregon’s wind industry.

The growth of the renewable energy industry in Oregon has been fueled by the powerful mix of policies like the Renewable Energy Standard and incentives like tax credits. We want that success to continue. Bills like HB 2940, HB 3039 and HB 2472 make it very difficult to do that.

There will certainly be some good energy bills coming out of the 2009 session. But it’s hard to call it leadership when any steps forward are canceled out by steps taking us backward. And that’s what the bills discussed here will do: whittle away at the progress we made in 2007.

Want to help keep us moving forward? Contact your state senator and state representative!

Tell both your state representative and state senator to vote NO on HB 2940. Tell your state senator (since it’s already passed the House) to vote NO on HB 3039 and preserve the efficacy of the Renewable Portfolio Standard.

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