Report on Maine renewable portfolio standard in 2013

by PretiFlaherty
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The Maine Public Utilities Commission has issued a report on Maine's use of renewable electricity in 2013.  The report shows the impact of Maine's renewable portfolio standard, a state law requiring electricity suppliers to source specified percentages of their electricity from “new” renewable resources.

Since 2000, Maine law has required electricity suppliers to include renewable energy in their portfolio of supply sources.  Maine’s original electric industry restructuring legislation included a 30% eligible resource portfolio requirement. The eligible resource portfolio requirement, now referred to as Class II, mandated that each retail competitive electricity supplier meet at least 30% of its retail load in Maine from “eligible resources.”  Eligible resources are defined in statute as either renewable resources or efficient resources.  Renewable resources are defined in statute as fuel cells, tidal power, solar arrays, wind power, geothermal installations, hydroelectric generators, biomass generators, and municipal solid waste facilities. Renewable resources may not exceed a production capacity of 100 megawatts. “Efficient” resources are cogeneration facilities that were constructed prior to 1997, meet a statutory efficient standard and may be fueled by fossil fuels.

During its 2007 session, the Maine Legislature enacted an Act to Stimulate Demand for Renewable Energy.  This Act established a new "Class I" standard, requiring Maine electricity suppliers to source specified percentages of their electricity from “new” renewable resources.  Generally, new renewable resources are renewable facilities that have an in-service date, resumed operation or were refurbished after September 1, 2005.  The Act set the initial renewable percentage requirement at 1% in 2008, increasing in annual one percentage point increments to 10% in 2017.  Pursuant to the Act, the renewable requirement will remain at 10% thereafter, unless the Commission suspends the requirement.

The Commission's March 31, 2015 report, Annual Report on New Renewable Resource Portfolio Requirement, reports on renewable portfolio standard compliance activity in calendar year 2013.  This lag between the study period and the report's issuance is driven by the timing of the most recently filed Competitive Electricity Provider (CEP) annual compliance reports, which were filed in July 2014 for calendar year 2013.  In 2013, the Act required suppliers to source 5% of their power from new renewable resources.  Suppliers can comply either by acquiring sufficient renewable energy certificates or RECs to cover their compliance obligation, or by paying an "alternative compliance payment".

According to the report, in 2013 suppliers purchased 727,291 Class I RECs from 21 certified generating facilities to meet the portfolio requirement.  Nearly 97% of these RECs came from biomass facilities located in Maine.  According to the report, 17 of the 21 facilities are biomass, three are hydro, and one is a wind facility.  18 of the 21 facilities are located in Maine, one is located in Connecticut, one is located in Massachusetts and one is located in Vermont.

The Commission's report also documents the cost of compliance in 2013.  During 2013, the cost of RECs used for compliance with the Class I requirement ranged from approximately $1.50 per MWh to $60 per MWh, with an average cost of $19. 8 7 per MWh and a total cost of $14, 292,438.  As noted in the report, the cost of Maine Class I RECs has dropped substantially since 2013, with the report citing a current trading range of $3.00 to $5.00.  With minor use of the alternative compliance mechanism by two suppliers, the total cost to ratepayers during 2013 was $14,296,249, which the Commission's report translates into an average rate impact of about 0.12 cents per kWh (about 60 to 65 cents monthly for a typical residential bill, or a residential customer bill impact of about 1%).

The report also documents the 2013 costs of RECs used to satisfy the "Class II" eligible resource portfolio requirement as ranging from $0.00 per MWh (some RECs were prov ided for free as part of an energy transaction) to $1.00 per MWh, with an average cost of $0.16 per MWh and a total cost of $589,386. This translates into less than three cents per month on a typical residential bill.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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