Renewable Energy Credit Act Exposed

The Renewable Energy Credit Act was adopted by ALEC's Energy, Environment and Agriculture Task Force at the 2013 Annual Meeting. (Accessed January 6, 2017).

ALEC Bill Text

Summary: This act promotes the full use of voluntary markets to satisfy existing Renewable Portfolio Standards (RPS) requirements, while maintaining the existing structure and operation of the state’s electricity market and relationships with regional and national organizations. It removes the limitation on electricity providers restricting the amount of renewable energy credits (RECs) that can be used to comply with a state based annual renewable energy mandate and allows unlimited banking of credits to be used for future requirements. The bill also provides an avenue for RECs to fully satisfy RPS compliance schedules before their sunset year dates.

Section 1. Intent

1. The legislature finds that the state has an interest in balancing affordable and reliable energy for its citizens and businesses with environmentally responsible energy generation. Oil, coal, natural gas, nuclear, and renewables are all resources that can provide these benefits.

2. The regulated electricity market in this state is providing benefits from previously established policies to enable the development and utilization of these resources under the authority of the regulatory commission, environmental, energy and economic development agencies in the state. In the case of renewables, these policies include but are not limited to: integrated resource planning, renewable portfolio standard mandates, green tariffs, and a market for renewable energy credits are produced by qualified generating facilities.

3. The legislature finds that the cost of renewable energy under the mandate established by this body is paid by all state citizens, including those who already struggle to pay the cost of electricity.

4. The legislature also finds that markets exist for citizens, businesses, and electricity providers in this state to voluntarily purchase and sell credits for renewable energy. However, these markets may not be fully utilized by electricity providers to comply with obligations they may have under the RPS. Furthermore, accurate accounting for all credits is needed.

5. The legislature further finds that it has acted to establish access to national and regional voluntary markets according to public wishes to have the freedom to purchase and sell credits for renewable energy. However, compared to many other states that have established access and encouraged participation in these voluntary markets, it recognizes that more can be done to increase the attractiveness and awareness of such opportunities for its citizens and businesses.

6. The legislature finds that it is in the public interest to promote full use of voluntary markets to increase the amount of credits for renewable energy, while maintaining the existing structure and operation of the state’s electricity market and relationships with regional and national organizations.

Section 2. Definitions

“Nonpower attributes” means all environmentally related characteristics, exclusive of energy, capacity reliability, and other electrical power service attributes, that are associated with the generation of electricity from a renewable resource, including but not limited to the facility’s fuel type, geographic location, vintage, qualification as an eligible renewable resource, and avoided emissions of pollutants to the air, soil, or water, and avoided emissions of carbon dioxide and other greenhouse gases.

“Renewable energy credit” means a tradable certificate of proof of at least one megawatt-hour of a renewable resource, the certificate includes all of the nonpower attributes associated with that one megawatt-hour of electricity. Any credit certified by the North American Renewables Registry or one of the regional registries, including ERCOT, MIRECS, M-RETS, NC-RETS, NEPOOL, PJM-EIS or WREGIS, is eligible to be included in the registry.

Section 3. Treatment of renewable energy credits in the state’s RPS; amendments to the RPS provisions in section [xx.xx] of the [state] revised code

1. To remove the limitation on electricity providers obligated to comply with the state’s RPS to use only renewable energy credits created by their own investments to build or purchase power from renewable electricity generating facilities, section [xxx.xx] is amended to expand the ability of those electricity providers to purchase renewable energy credits unbundled from the energy itself from any party including but not limited to private citizens, businesses, and merchant renewable electricity producers.

2. To remove the limitation on electricity providers restricting the amount of renewable energy credits that can be used to comply with the RPS, section [xx.x] is hereby amended to allow renewable energy credits to be purchased to satisfy annual obligations in any year and to be applied towards future year compliance (i.e., unlimited banking of RECs).

3. To allow electricity providers to fully meet their total RPS obligations with the use of renewable energy credits, section [xx.x] is hereby amended by to allow for purchased RECs to satisfy the total requirements for the full term of the RPS.

Section 4. Accounting for renewable energy credits used for RPS compliance

1. Accurate accounting for energy credits will be facilitated as follows.

a. The {state} public utility commission/public service commission will assess the transparency and effectiveness of existing national and regional registries of organizations for tracking the sale and purchase in this state of certified renewable energy credits to be able to sum up the credits for this state. Any organization selling certified renewable energy credits is eligible to participate, including utilities and independent power producers, businesses and private citizens.

b. If the {state} regulatory public utility commission/ public service commission finds that more transparency and additional information below is needed than currently exists to track and sum the credits from the state, it will create an online gateway listing all certified REC sellers including information about the credits. The gateway must include updated information provided by the seller, including:

i. Name and contact information of the selling entity

ii. Price

iii. Nonpower attributes

c. It is not the intention of this act to create a separate state voluntary market for renewable energy credits that replaces current national and regional markets that are working well.

2. Electricity providers will annually report the total number of kilowatt hours of renewable energy credits purchased to the regulatory commission which will certify that the provider is in full compliance with that year’s RPS obligation and future year obligations depending upon the number of energy credits purchased.

3. A fee of $0.xx shall be charged to each energy credit sold by the seller to be used by the regulatory commission to establish and operate the accounting system.

Section 5. Cost Recovery

1. This act recognizes certain contracts and investments for renewable energy supplies and energy credits already approved, or planned for development in order to comply with the RPS. The provisions of this act will not become effective until the regulatory commission establishes that it will approve all costs incurred by electricity providers to comply with this act including but not limited to recovery of all of those stranded assets and costs by the electricity provider should any occur.

Section 6. Increasing participation in voluntary renewable energy credit markets.

a. Each utility will evaluate new and existing options for citizens and businesses to participate in voluntary markets for renewable energy credits such as but not limited to renewable energy certificates and green pricing programs to determine if actions such as increased advertising would increase participation levels.

b. In the event that the utility finds such actions are warranted, it will develop a plan with a schedule of costs and activities and submit it to the regulatory agency for approval of the plan and recovery of costs.