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.

Financing obstacle to renewable energy becoming next green bubble

NPR aired a story this morning covering the potential for renewable energy to be the next investment bubble.

According to NPR, "credit is a problem right now for renewable energy developers" and is one obstacle to there being a "green bubble" in the near future. However, the story suggestions that "legislation that would limit greenhouse gas emissions and then turn them into a commodity that can be traded . . .[s]uch a cap-and-trade system might be the seed for creating the credit necessary to get a renewable energy bubble going . . .Some think the investment banks will get into the cap-and-trade business and figure out a way to use that market to create securities that can then be the foundation for an asset price inflation." We will see.

The NPR www site also has some excellent interactive maps worth a look that depict existing and possible future locations for power grid connections, along with wind and solar power capacity.