Two of the three federal legislative proposals establish a minimum annual percentage of the base quantity of electricity that an electric utility sells to electric consumers; one proposal calls for a minimum of 15% by 2021 and the other calls for a minimum of 25% by 2025. The third proposal does not specify a minimum annual percentage to be achieved. The proposed federal regulations include many of the same kinds of renewable resources as does this rule, e.g., biogas, biomass, solar, and wind.
Two of the proposed federal regulations address the issuance of renewable energy credits (RECs), direct the U.S. Secretary of Energy (Secretary) to establish a means to administer RECs and promulgate regulations regarding the measurement and verification of electricity savings. Under these proposals, the Secretary may delegate REC-tracking to a national, state or local entity. One REC is worth one kilowatt hour under the proposed regulations.
Comparison with rules in adjacent states
Like Wisconsin, Illinois, Michigan and Minnesota have adopted renewable portfolio standard (RPS) mandates. Iowa, however, has not adopted an RPS mandate.
Illinois:
Illinois has promulgated rules addressing compliance with and reporting requirements for its RPS. In Illinois, investor-owned utilities (IOUs) that sell outside their service territories to comply with the RPS1 and alternative retail electric suppliers (ARES) are required to comply with the RPS. Municipal and cooperative utilities are exempt from the RPS. The Illinois RPS requires that renewable resources provide 25% of the overall standard retail electric sales by 2024-2025.
1 Also referred to as ARES in these situations.
For IOUs, wind power must provide a minimum of 75% of the renewable energy and the remaining 25% may come from other eligible renewable resources. ARES must obtain a minimum of 60% of their renewable energy from wind power; the remaining 40% may come from other eligible renewable resources. IOUs and ARES may procure their renewable energy either through energy bundled with renewable energy credits or through the purchase of tradable renewable energy credits on their own. Utilities must retire credits that they use for compliance.
Through 2011, utilities must procure the renewable resources in Illinois. If it is not cost-effective to procure in-state eligible resources, utilities may procure these resources from adjoining states. Utilities may, as a last resort, procure resources from other regions of the country if resources from adjoining states are not cost-effective. After 2011, equal preference is given to in-state resources and adjoining states. IOUs and ARES must submit an annual compliance report by September 1 of each year.
Iowa:
Iowa adopted its alternate energy production (AEP) requirements prior to widespread use of energy-based RPSs in other states. Iowa's AEP differs from an RPS in that the AEP is capacity-based and relates to specific AEP facilities, either owned or contracted by utilities, rather than being an energy-based portfolio requirement. At this time, only two Iowa utilities – Interstate Power and Light Company (IPL) and MidAmerican Energy Company (MidAmerican) – are required by the AEP statutes to own or purchase their share of alternate energy from AEP production facilities or small hydro facilities for a combined total of 105 megawatts. IPL currently fulfills its entire obligation with wind, while MidAmerican fulfills its obligation with wind and a small amount of biogas capacity.
Michigan:
Michigan has an RPS, and while it has not promulgated any rules or issued any technical guidance document outlining the implementation of its mandates, it has begun the process of developing a system to address compliance and REC tracking. The state's renewable energy certification system, MIRECS2, was developed by APX, Inc., which also developed the Midwest Renewable Energy Tracking System (M-RETS) used by Wisconsin. MIRECS will track all relevant information about renewable energy produced and delivered in Michigan. APX, Inc., designed MIRECS so that it would integrate with M-RETS and the North American Renewables Registry to provide for import and export of certificates across renewable energy markets. Additionally, the Michigan Public Service Commission (MPSC) has hired an auditor who will be responsible for performing inspections of renewable energy facilities to ensure compliance.
2 MIRECS stands for “Michigan Renewable Energy Certification System."
Under Michigan's RPS, IOUs, rural electric cooperatives, municipal utilities and retail suppliers must have 10% of their electricity come from eligible renewable resources by 2015. As the state's two largest IOUs, Detroit Edison Company (DTC) and Consumers Energy (Consumers) have additional obligations beyond those of other utilities. DTC must procure 300 megawatts of new renewable resources by 2013 and 600 megawatts of new renewable resources by 2015. Consumers must procure 200 megawatts of new renewable resources by 2013 and 500 megawatts of new renewable resources by 2015.
Utilities may achieve compliance with the RPS by purchasing RECs. Up to 50% of the RPS may be met with RECs produced by utility-owned facilities. A REC has a three-year lifetime from the end of the month it was generated. The MPSC requires utilities to submit affidavits and a renewable energy plan to verify compliance on a biennial basis.
Minnesota:
Minnesota has not promulgated any rules or issued any technical guidance document outlining the implementation of its RPS mandates; however, the Minnesota Public Utilities Commission (PUC) has an open docket to address implementation issues that have not been fully addressed in previous dockets or that are due to changes in national, state or M-RETS policies and protocols. Only renewable energy credits (RECs) recorded and tracked by M-RETS may be used for compliance with the RPS. Xcel Energy, public utilities providing electric service, generation and transmission cooperative electric associations, municipal power agencies and power districts operating in the state are subject to the RPS mandates.
Under Minnesota's RPS, the standard for Xcel Energy requires that eligible renewable electricity account for 30% of total retail electricity sales, including sales to retail customers of a distribution utility to which Xcel Energy provides wholesale service, in Minnesota by 2020. Xcel must procure a minimum of 24% of its eligible renewable electricity from wind, solar may contribute up to 1%, and the remaining 5% may be generated from other eligible technologies to meet the 2020 standard. Other utilities must obtain 25% of their electricity from eligible renewable electricity by 2020 to meet the RPS, and are not subject to requirements that specify percentages for particular types of renewable resources.
Presently, Minnesota places the burden on its utilities to carry out the RPS mandates. Utilities must report when they retire their RECs and submit a biennial report to the PUC that provides information on retail sales, REC retirements and REC trading activities.
Effect on Small Business
This rulemaking will not negatively affect small businesses. It may benefit small businesses that own or sell the technologies that this rulemaking makes eligible for renewable resource credits or allow small business who use renewable resources to create RRCs that can then be sold to electric providers.
Initial regulatory flexibility analysis
The proposed rule will have no negative impact on small businesses, as defined in s.
227.11 (1), Stats. The proposed rule may have a beneficial impact for small businesses in either of two ways.
1) The proposed rule establishes new ways for Wisconsin electric providers to create renewable resource credits (RRCs), in addition to all of the existing ways in the current rule. RRCs can be used to comply with Wisconsin's Renewable Portfolio Standards (RPS) mandate. By giving electric providers new options for creating RRCs, but not requiring the use of those options, the costs of complying with the RPS mandate may decrease. Electric providers are authorized to recover their RPS compliance costs in the rates they charge customers and members. Thus, if an electric provider's RPS compliance costs are reduced, their customers or members (including small businesses) may indirectly benefit through reduced electric rates.
2) The proposed rule also makes it possible for a small business (or any other customer or member of an electric provider) to benefit more directly, if the business is using a qualifying technology or resource to produce non-electric energy. In such circumstances, the proposed rule allows the electric provider to create RRCs based on energy produced by the small business, but only with the permission of the small business. A small business could request compensation from the electric provider in exchange for granting permission to create those RRCs.
This rulemaking will affect electric generating utilities (EGUs). Because of Wisconsin's Renewable Portfolio Standards mandate, renewable resources must account for a certain percentage of an EGU's electricity generation. This proposed rule expands the types of renewable resources that may be used to create RRCs, thus making it easier for an EGU to meet the RPS requirements.
Fiscal Estimate
State fiscal effect
No state fiscal effect.
Local fiscal effect
No local government costs.
Fund sources affected
PRO.
Affected Chapter
20 Appropriations
20.155 (g)
Assumptions used in arriving at fiscal estimate
State Fiscal Effects
There are no estimated state fiscal effects from the proposed changes to the Renewable Resource Credit Trading Program rule (PSC 118).
The proposed changes to PSC 118 mainly implement changes to state statute enacted under
2009 Wisconsin Act 406. The proposed rule revises the definition of a renewable resource credit to allow electric providers to use additional credits to meet minimum renewable percentage requirements under 196.378 (2) (a). The proposed rule allows electric providers to create renewable resource credits from the electric providers' use and/or their customers' or members' use of solar energy, geothermal energy, biomass, biogas, synthetic gas created by the plasma gasification of waste, densified fuel pellets, and fuel produced by pyrolysis of organic or waste material, if these sources displace electricity from conventional energy sources, as per Act 406. The revised rule specifies how these new sources will be certified by the Commission, how credits from these sources will be calculated, and that displacement of conventional energy by these sources could be verified through an audit. Verification of displacement through a potential audit is consistent with the verification processes in existing rule for existing renewable sources.
In addition to revisions relating to Act 406, revisions to PSC 118 allow the Commission to collaborate with other states to purchase, as a group, program administrator services for tracking renewable resource credits. The proposed rule provides the Commission the option to either contract for a program administrator through a standard competitive procurement, or to access program administration services through participation in a regional renewable energy tracking system group, such as Midwest Renewable Energy Tracking System, Inc. Additional revisions to PSC 118 clarify existing code language where ambiguity or unintended consequences in the original language have been identified.
The revised rule is not anticipated to have a state fiscal effect because revisions to PSC 118 are not anticipated to change state staff workload or program administrator costs. State staff workload does not change due to the revised rule because the rule does not add program requirements above those established under Act 406. Program administrator costs are not anticipated to change because the new option of accessing program administration services through participation in a regional group is not anticipated to decrease program costs. The complexity needed in a contract to administer either a statewide renewable resource credit trading program or a regional program is unlikely to reduce any one state's share of administration costs under a group. The rule also allows the Commission to procure for administrative services through a competitive procurement; so if costs for administrative services under the group are more costly than those anticipated through a standard procurement, the Commission has the option to use the standard procurement and avoid additional costs. Therefore, the revised rule is not anticipated to have a state fiscal effect.
Local Fiscal Effects
There are no estimated local fiscal effects from the proposed changes to PSC 118. Local governments can be electric providers and are subject to the rule, but the rule does not establish new requirements; it only provides direction to operators on how to comply with current state statutes. Therefore, the revised rule is not estimated to have a local fiscal effect.
Fiscal Effect for Electric Providers and Small Businesses
There is no estimated fiscal effect for electric providers. Electric providers are already subject to the state statutes the proposed rule implements. The rule does not add requirements; it only provides direction to operators on how to comply with current state statutes. Small Businesses are also unlikely to experience a fiscal effect under this rule as it is consistent with state statutes. The rule does not change the opportunities provided under Act 406 for small businesses to sell renewable resource credits to utilities. Therefore, the revised rule is not estimated to have a fiscal effect to electric providers or small businesses.
Long-range fiscal implications
Costs to administer a renewable resource credit trading program could be reduced in the long term, under this rule, because it includes an option allowing the Commission to contract for administrative services through a regional renewable resource credit trading program group. If the regional group can implement a regional renewable resource credit trading program that is more streamlined than the current Wisconsin system, and if the Commission can pool its contracting resources with other states in the group, then it is possible that, by contracting through the group for a more streamlined program, administrative service costs will decrease.
Text of Proposed Rule
SECTION 1. PSC 118.02 (1) is renumbered 118.02 (1r) and amended to read:
PSC 118.02 (1r) “Certified renewable facility" means an electric generating facility that the commission certifies
has met the definition of a renewable facility under s. PSC 118.05.
SECTION 2. PSC 118.02 (1) and (1g) are created to read:
118.02 (1) “Biogas" means a gas created by the anaerobic digestion or fermentation of biomass, food processing waste or discarded food.
(1g) “Certified non-electric facility" means a non-electric facility that the commission certifies under s.
PSC 118.055.
SECTION 3. PSC 118.02 (2) is amended to read:
PSC 118.02 (2) “Compliance period" means a calendar year, beginning January 1, during which an electric provider is required to deliver achieve a renewable energy percentage under
SECTION 4. PSC 118.02 (3m) is created to read:
PSC 118.02 (3m) “Densified fuel pellets" means pellets made from waste material that does not include garbage, as defined in s.
289.01 (9), Stats., and that contains no more than 30 percent fixed carbon.
SECTION 5. PSC 118.02 (4) is amended to read:
PSC 118.02 (4) “Designated representative" means the person authorized by the electric provider to register a renewable facility or non-electric facility with the program administrator, or to purchase or sell RRCs.
SECTION 6. PSC 118.02 (5), (5g) and (5r) are created to read:
PSC 118.02 (5) “Displaced conventional electricity" means electricity derived from conventional resources that an electric provider or a customer or member of the electric provider would have used except that the person used instead a certified non-electric facility that meets the requirements of ss.
PSC 118.03 and
118.04.
(5g) “Division administrator" means the administrator of the commission's gas and energy division.
(5r) “Geothermal heating and cooling installation" means a ground source heat pump.
SECTION 7. PSC 118.02 (6) is amended to read:
PSC 118.02 (6) “MWh" means megawatt-hour of electricity.
SECTION 8. PSC 118.02 (6m) and (7m) are created to read:
PSC 118.02 (6m) “Non-electric facility" means any of the following when used by an electric provider or by a customer or member of the electric provider:
(a) A solar water heater.
(b) A solar light pipe.
(c) A geothermal heating and cooling installation.
(d) An installation generating thermal output from biomass, biogas, synthetic gas, densified fuel pellets, or fuel produced by pyrolysis.
(e) Any other installation specified by the commission.
(7m) “Pyrolysis" means an industrial process that heats organic or waste material under pressure in an oxygen-starved environment to break the material down into gases, liquid and solid residues.
SECTION 9. PSC 118.02 (10) is renumbered 118.02 (10) (intro.), and amended to read:
PSC 118.02 (10) (intro.) “Renewable resource credit" means one MWh of renewable energy from a certified renewable facility that is physically metered with the net generation measured at the certified renewable facility's bus bar, that is delivered to a retail customer with the retail sale measured at the customer's meter, that ignores the transmission and distribution losses between the bus bar and the customer's meter, that exceeds the minimum percentage requirement specified in s. 196.378 (2) (a), Stats., and that meets the requirements of ss. PSC 118.03 and 118.04. either of the following:
SECTION 10. PSC 118.02 (10) (a) and (b) are created to read:
PSC 118.02 (10) (a) One MWh of renewable energy from a certified renewable facility that meets each of the following requirements:
1. It is physically metered with the net generation measured at the certified renewable facility's bus bar.
2. It is delivered to a retail customer with the retail sale measured at the customer's meter.
3. It ignores the transmission and distribution losses between the bus bar and the customer's meter.
4. It exceeds the minimum percentage requirement specified in s.
196.378 (2) (a), Stats.
(b) One MWh of displaced conventional electricity, as calculated under s.
PSC 118.09.
SECTION 11. PSC 118.02 (14) to (16) are created to read:
PSC 118.02 (14) “Solar light pipe" means a device that concentrates and transmits sunlight through a roof to an interior space, employing highly-reflective material inside the device to focus and direct the maximum available sunlight to the interior space.
(15) “Solar water heater" means a device that concentrates and collects solar radiation to heat water for domestic use, pool heating, space heating, or ventilation air heating.
(16) “Synthetic gas" means gas created by the plasma gasification of waste.
