PSB Standard Offer Docket No. 7523 - Update

As we explained last week, the Vermont Public Service Board (PSB) opened Docket No. 7523 to review the interim "standard offer" contract prices for small scale renewable generators established under the Vermont Renewable Energy and Efficiency Act of 2009 (which was the subject of one of our prior posts). The PSB must complete this review by September 15, 2009.

In Docket 7253, the PSB is required to 1) assess whether interim prices stated in the statute constitute "a reasonable approximation" of the final prices the PSB will establish applying the statutory criteria, and 2) adjust any price found not to constitute such an approximation.

On June 29, 2009, the PSB issued opened Docket No. 7533, an investigation is intended to build upon the record developed in Docket 7523, resolve all necessary implementation issues not addressed in that docket, and reevaluate the prices for SPEED projects set out in the statute.

The PSB also created a web site where it has posted relevant information to both dockets, including comments posted by parties. A hearing is scheduled for Friday, July 10, 2009 at 9:30 AM in Room 10 of the Vermont State House in Montpelier.

More Studies on Green Jobs

Following on the heels of a study from the Pew Charitable Trusts we reported on last week at the Vermont Environmental and Land Use Law blog, two more reports from think tanks and environmental groups suggest that clean-energy investments have the potential to kick-start the economy, employ millions of workers nationwide, especially those at the lower end of the economic scale.

The Political Economy Research Institute (PERI) and the Center for American Progress provide state-based information of where jobs are most likely to be generated.

According to the report for Vermont:

Investments in a clean-energy economy will generate major employment benefits for Vermont and the rest of the U.S. economy. Our research finds that Vermont could see a net increase of about $300 million in investment revenue and 4,000 jobs based on its share of a total of $150 billion in clean-energy investments annually across the country. This is even after assuming a reduction in fossil fuel spending equivalent to the increase in clean energy investments.

Adding 4,000 jobs to the Vermont labor market in 2008 would have brought the state’s unemployment rate down to 3.6 percent from its actual 2008 level of 4.8 percent.

Here is the link to the other report released today, Green Prosperity: How Clean-Energy Policies Can Fight Poverty and Raise Living Standards in the United States.

Image Source: Richard Masoner.

Vermont Public Service Board Opens Docket 7523 to Review Vermont Renewable Energy and Efficiency Act of 2009 Interim Standard Offer Contract Prices

The Vermont Public Service Board (PSB) has opened Docket No. 7523 to review the interim "standard offer" contract prices for small scale renewable generators established under the Vermont Renewable Energy and Efficiency Act of 2009 (which was the subject of one of our prior posts). The PSB must complete this review by September 15, 2009.

In Docket 7253, the PSB is required to 1) assess whether interim prices stated in the statute constitute "a reasonable approximation" of the final prices the PSB will establish applying the statutory criteria, and 2) adjust any price found not to constitute such an approximation.

The statutory interim prices will apply pending the PSB's final determination of standard offer prices, which must take place no later than January 15, 2010. The statute directs the PSB to set final prices based on the cost of each type of renewable energy, and allowing for a rate of return on equity not less than the highest rate received by a Vermont investor-owned electric utility. It also, however, allows the PSB substantial flexiblity to adjust prices as it deems necessary to provide "sufficient incentive for the rapid development and commissioning of plants."

On June 19, 2009, PSB staff held a prehearing conference and workshop at which participants discussed the scope of the docket and identified an extensive list of substantive and procedural issues relating to contract pricing as well as other aspects of standard offer program eligibility and implementation. Subgroups were established to address Standard Contract Terms and Wheeling. Board staff plan to hold a second workshop, most likely an all-day event, in early July.

The PSB intends to establish a website for Docket 7253, where it will post relevant documents. We will provide a link once the PSB website is available.

IRS guidance on claiming investment tax credits for wind, biomass, geothermal, and other PTC facilities

The 2009 Stimulus legislation (ARRA) permits owners of PTC facilities, such as wind, biomass, and others, to elect a 30-percent tax credit, based on the cost of the facility, at the time the project is placed in service, rather than the 10-year PTC, which is calculated based on sales of electricity. Last week, the IRS issued Notice 2009-52, which explains the process for making this election.

The election to claim the ITC in lieu of the PTC applies to the following types of renewable energy facilities:

*Wind;
*Biomass (both closed- and open-loop);
*Geothermal;
*Landfill gas;
*Trash facilities;
*Qualified hydropower; and

*Marine and hydrokinetic.

To qualify, a taxpayer must claim the ITC with respect to qualified property that is an integral part of the facility on a completed Form 3468. Form 3468 must be filed with the taxpayer’s income tax return for the year in which the property is placed in service.

A separate election must be made for each qualifying facility. At this time; however, there is no guidance on how to define a "qualifying facility."

Vermont Renewable Energy and Energy Efficiency Act of 2009 to become law

Governor Douglas did not veto the Renewable Energy and Energy Efficiency Act passed by the legislature and so it will become law. We tracked this bill as it worked its way through the House and Senate. According to Renewable Energy Vermont, the statute's components, include:

• a standard offer price for certain types of renewable energy;
• clarification that thermal energy fits within the purview of the Clean Energy Development Fund (CEDF);
• regulatory incentives ensuring utilities can recover permitting costs for renewable energy;
• a requirement that ANR reconsider its policy prohibiting wind on State lands;
• improvements to residential and commercial-building standards;
• pilot downtown-community renewable-energy projects in Montpelier and Randolph (combined heat and power facilities);
  
• clean energy assessment districts that would allow towns, cities, and incorporated villages to use municipal bonds to finance residential renewable-energy or energy-efficiency projects; and
  
• limitations on the power of municipalities and deeds to prohibit residential installation of renewable-energy and energy-efficiency devices, such as solar panels and residential wind turbines
  

One of the more controversial aspects of the statute pertains to the inclusion of a so-called "standard offer" - which establishes a minimum price to be paid by consumers for certain types of renewable energy. In Governor Douglas' letter summarizing his concerns about the statute, he compares the standard offer to PURPA, the 1978 statute that required utilities to purchase power from independent power producers under long-term fixed contracts. As an interesting aside, some proposals for a national renewable portfolio standard use amendments to PURPA as the legislative vehicle.

The standard offer applies to renewable energy facilities with a plant capacity of 2.2 MW or less and will be available until at least 50 MW of qualifying capacity comes online in Vermont. For most renewable energy sources, the contracts would range from 10-20 years, but solar contracts must range from 10-25 years.

The statute requires the Public Service Board (PSB) to set minimum standard offer contract prices by January 15, 2010. In setting prices, the Board is directed to 1) calculate a generic cost of each form of renewable energy, and 2) allow a rate of return on equity comparable to the highest rate of return received by a Vermont investor-owned utility. The statute gives the PSB broad discretion to make "adjustments" to the factors above to "ensure that the price provides sufficient incentive for the rapid development and commissioning" of the new renewable facilities.

The statute also establishes "interim" standard offer prices that will apply pending the Board's determination of prices by January 15, 2010. The interim prices stated in the statute are the following:

• $0.12 per kWh for a plant using methane from a landfill or agriculture operation;
• $0.20 per kWh for wind power facilities up to 15 kW;
• $0.30 per kWh for solar power;
• for hydropower facilities, wind facilities between 15 kW - 2.2 MW, and certain biomass facilities, the price is equal to the average residential rate per kWh charged by all in-state retail electricity providers weighted in accordance with each such provider's share of the state's load at the time the plant first comes on line.

The statute directs the PSB to review the above interim prices in a noncontested case docket to determine whether they constitute "a reasonable approximation" of the prices the PSB will establish by January 15, 2010 in consideration of the statutory criteria. The Board is directed to adjust any price found not to constitute such an approximation. The PSB must complete this review by September 15, 2009.

VT announces $22 milion for Renenewable Energy Grants and Loans

Vermont confirmed today that $22 million in additional funds will be available through the American Recovery and Reinvestment Act (ARRA) - also called the stimulus package. The funds will be added to $7 million dollars of State funds available to the Clean Energy Development Fund (CEDF). The CEDF provides grants and loans for renewable energy projects such as solar photovoltaic, wind turbines, methane digesters (cow power), and other biomass. See our April 8th, 2009 post for more background. According to Recovery.gov, the www site that tracks ARRA allocations, $43 billion has been allocated nationwide to energy investment.

The Economic Development legislation passed by the House and Senate (the Governor has not yet agreed to sign), changes the governance of the CEDF. Currently the Board consists of the commissioner of public service and the chairs of the house and senate committees on natural resources and energy. The new legislation, if signed into law, would create a Board of nine including: (A) Three at-large directors appointed by the Speaker of the House; (B) Three at-large directors appointed by the President Pro Tempore of the Senate (C) Two at-large directors appointed by the Governor (D) The State Treasurer, ex-officio. The new law puts in place more transparency and financial accountability, moves the fund manager from the Department of Public Service to the Treasurer's Office, and gives the Board authority to use the CEDF for loss reserves for related bonding.

EPA's proposed RFS-2 under fire

Biodiesel manufacturers are lodging concerns against EPA's proposed rules for the Renewables Fuels Standard(RFS-2).

The RFS-2 program as enacted by Congress for the first time requires the displacement of petroleum diesel fuel with low carbon renewable fuels. The program also requires renewable fuels to meet certain greenhouse gas (ghg) emission eduction targets.

The E.P.A.’s proposed rule, released on Tuesday, finds that biodiesel made from soybeans (the predominant feedstock in this country) produces, under one scenario, 22 percent fewer emissions than petroleum. This is well short of the 50 percent reduction required by the 2007 legislation. The biodiesel manufacturers believe the estimate is wrong because of flaws in how EPA's accounted for indirect ghg emissions resulting from land use changes.

As the NYT's explains, "the idea is that growing soybeans in the United States to make biodiesel could displace cropland for growing food. Crops for food would then theoretically relocate to places like Indonesia, where clearing the land to make way for the crops might involve cutting down the carbon-digesting forests."

To some this concern my sound familiar to concerns raised about ethanol and the subject of a 1996 decision by the D.C. Court of Appeals involving Art. III standing in Florida Audubon Society v. Bentsen.