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Clearing Up / Bearing Down

[September 7, 2018 / No. 1867]

Coming to a Ballot Near You—The Renewed RPS Fight

SUMMARY: Arizona voters will be considering a ballot proposal this fall to hike mandated levels of renewables in the state's energy portfolio. Coming on the heels of California's legislative move to raise that state's renewables requirement, the Arizona ballot measure campaign is one the utility sector should watch to discern the direction and future of such laws for the rest of the country.

California lawmakers have passed and sent to the governor a bill that would commit the Golden State to deriving all of its electricity supply from non-fossil-fuel sources by 2045.

That would match Hawaii's target, described by the National Council of State Legislatures as the nation's most aggressive renewable portfolio standard.

And as California goes . . .

Maybe goes Arizona, where the state Supreme Court has cleared the way for Proposition 127 to appear on the Nov. 6 ballot.

Prop. 127 would set a 50-percent renewables goal to be reached by 2030. The measure includes "solar, wind, small-scale hydropower, and other sources that are replaced rapidly by a natural, ongoing process," and mandates that "distributed renewable energy sources, like rooftop solar, must comprise at least 10 percent of utilities' annual retail sales of electricity by 2030."

But maybe not goes Pennsylvania. The Keystone State's Alternative Energy Portfolio Standard is a relatively modest (compared with other venues) 18 percent by 2021.

Within that are provisions for how much of that comes from various sources: 8 percent from Tier I sources including photovoltaic, 10 percent from Tier II alternatives including waste coal distributed generation, large-scale hydropower and municipal solid waste. Now there's a debate about increasing the target for solar specifically, and how much of solar's share should come from utility-scale projects or distributed sources.

And maybe not in other states. A quick tour of the internet reveals multiple instances in which legislators have debated repealing or weakening (making the targets voluntary rather than mandatory) renewable portfolio standards. West Virginia got rid of its renewable standard. Kansas downgraded. The council says three states—Maryland, Montana and New Hampshire—enacted legislation last year to study the costs and benefits of their RPS policies.

RPS policies have been controversial throughout their existence. Proponents laud them for spurring the move to ditch fossil fuels and adapt renewables, as a strategy for combatting climate change. Opponents contend they represent one more subsidy to an industry that can't make it on its own, for little to no gain and considerable detriment. Assertions about whether such policies create or cost jobs and raise or lower customer bills continue, as the Arizona initiative campaigns for and against are expensively demonstrating.

Research on the topic by the National Conference of State Legislatures makes for illuminating background on the subject, especially the interactive map of the states detailing the status of renewable-energy-portfolio rules.

State-level analysis is necessary because the rules are all over the map—literally and figuratively—as to effective dates, targets, whether those targets and mandatory or voluntary, how compliance is calculated, whether the rule applies to IOUs, municipals or everybody, cost caps for utilities attempting to comply and just what counts as a renewable, and how much. Even the names of the programs tend to vary by state.

For example, Oregon's RPS sets a number of goals varying by date and utility size. While the immediate-term overall goal is 15 percent by 2020, utilities with 3 percent or more of the state's load are to be at 25 percent by 2025 and 50 percent by 2040. Those with 1.5-to-3 percent of the state's load are to be at 10 percent by 2025; those under that are to be at 5 percent by 2025. The rules apply to investor-owned utilities, municipals, cooperatives and retail suppliers. Other provisions include a cost cap, a carve-out for photovoltaics for the IOUs, and a requirement that by 2025 "at least 8 percent of aggregate electrical capacity must come from small-scale community renewable energy projects with a capacity of 20 MW or less."

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Washington, meanwhile, has a 15-percent target by 2020. It's applicable to all utilities that serve more than 25,000 customers, the council says, and includes cost-effective conservation measures in its definition. Montana's target of 15 percent has been static since 2015.

And then there are states like Idaho and Alaska without a mandatory or voluntary RPS. The council says Alaska's Legislature did pass a bill in the 2009-2010 session with the goal that "the state receive 50 percent of its electrical generation from renewable energy sources by 2025," but also notes "this language does not appear in codified statutes."

According to the council, 29 states, the District of Columbia, and three territories have adopted an RPS, while eight states and one territory have set renewable energy goals. States with no RPS or voluntary goal can be found in two contiguous blocs, one including Idaho, Wyoming and Nebraska, the other much larger geographically, stretching from West Virginia and Kentucky south to the Gulf Coast (and, of course, Alaska, off by its lonesome). A scattering of states including Utah, the Dakotas, Kansas, Oklahoma, Indiana, Virginia and South Carolina have voluntary goals.

Arizona already has a 15-percent-by-2025 standard in place. Given the differences in its political profile versus California's, the vote on Proposition 127 will make for an interesting case study on the trend line on renewable standards, whether proposals making them much tougher are strictly a Left Coast deal or they can get some traction in the rest of the country.

Washington's vote this fall on the carbon-tax initiative, win or lose, also has ramifications for where the Northwest goes on the issue. (Does passage of a carbon tax lessen the importance of a portfolio standard? Does failure mean advocates regroup by going after a tougher RPS?)

It'll be a crowded ballot locally, regionally and nationally with offices and issues clamoring for attention. Arizona's is one the energy-and-utility crowd needs to keep an eye on. If you could convert the heated rhetoric, and the money spent to influence the outcome, on just that one issue into a sustainable energy source, the West might never have to install another watt of generating capacity. [Bill Virgin]


Bearing Down is excerpted from NewsData's Clearing Up publication. If you aren't a current subscriber, see for yourself how NewsData reporters put events in an accurate and meaningful context -- request a sample of Clearing Up.



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