As part of the Oregon Renewable Energy Act of 2007 ([http://www.leg.state.or.us/07reg/measpdf/sb0800.dir/sb0838.en.pdf Senate Bill 838]), the state of Oregon established a renewable portfolio standard (RPS) for electric utilities and retail electricity suppliers. Different RPS targets apply depending on a utility's size. Electricity service suppliers must meet the requirements applicable to the electric utilities that serve the territories in which the electricity service supplier sells electricity to retail consumers.
Large utilities -- those with 3% or more of the state's load -- must ensure that a percentage of the electricity sold to retail customers in-state be derived from newer eligible renewable energy resources according to the following schedule:
* 5% by 2011
* 15% by 2015
* 20% by 2020
* 25% by 2025
Eligible “newer” resources are primarily those placed in service on or after January 1, 1995, as discussed further below.
Smaller utilities are subject to lower standards. Utilities with less than 1.5% of state load must meet a 5% RPS by 2025. Utilities with more than 1.5%, but less than 3% of state load must meet a 10% RPS by 2025. However, utilities that buy into a new coal plant or sign a new contract specifically for new coal power and publicly-owned utilities that annex investor-owned utility territory without consent are subject to the “large utility” standards.
The legislation also established a ''goal'' that by 2025 at least 8% of Oregon's retail electrical load comes from small-scale, community renewable energy projects with a capacity of 20 megawatts (MW) or less. In fact, the legislation modified [http://dsireusa.org/incentives/incentive.cfm?Incentive_Code=OR05R&re=1&ee=1 Oregon's public purpose charge] for renewable resources to focus on smaller projects of 20 MW or less and extended the sunset date on the public purpose charge through 2025.
Eligible renewable resources include electricity generated from solar, wind, hydropower, ocean thermal, wave, and tidal power, geothermal, hydrogen using anhydrous ammonia derived from certain renewable sources, municipal solid waste, and biomass, including biogas. Initially, incineration facilities using municipal solid waste were not eligible, but with the passage of HB 3674 in March 2010, municipal solid waste facilities are eligible. Only 11 MW of municipal solid waste can count towards the RPS each year. Incineration facilities using chemically-treated wood are not eligible. Eligible resources must be located within Western Electricity Coordinating Council (WECC) territory or must be designated environmentally preferable by the Bonneville Power Administration (BPA).
To qualify as an eligible renewable resource, electricity must be generated by a facility that becomes operational on or after January 1, 1995. Electricity from facilities operational before January 1, 1995, attributable to efficiency or, for non-hydropower facilities, capacity upgrades, on or after January 1, 1995 is a qualifying resource. A limited amount of hydropower from facilities operational before 1995 can qualify as an eligible resource under certain conditions. 50 average MW of utility-owned, pre-1995, low-impact hydropower can be used for compliance; 40 average MW of non-utility owned, pre-1995, low-impact hydropower can be used for compliance. HB 3674 (2010) allowed pre-1995 biomass and municipal solid waste facilities to be eligible for RPS compliance beginning in 2026. Renewable energy certificates from these facilities can be purchased prior to 2026, but cannot be used for compliance until 2026. Additionally, with the passage of HB 2622 (2011), electricity generated by facilities that burn coal as a fuel source, but stop burning coal completely and convert to renewable energy after January 1, 2012, can be used to comply with the RPS.
A matrix detailing eligible resources, targets by utility size, and affected utilities is available on the program web site above.
RPS compliance must be demonstrated through the purchase of renewable energy credits (RECs) through the Western Renewable Energy Generation Information System (WREGIS). RECs may be either bundled with, or purchased separately from, electricity contracts. Unbundled RECs can only meet 20% of a large utility's compliance obligation and 50% of a large consumer-owned utility's obligation. RECs procured before March 31 of a given year may be used for a previous year's compliance, and RECs may be banked and carried forward indefinitely for future compliance. Note that bundled RECs must come from a facility in the U.S. portion of the WECC.
RECs cannot be counted toward compliance with both Oregon's RPS and an RPS of another state or use in voluntary “green power” programs. However, RECs can be counted toward both Oregon's RPS and a federal RPS should one be enacted.
In July 2009, [http://www.leg.state.or.us/09reg/measpdf/hb3000.dir/hb3039.en.pdf HB 3039] created a multiplier for RECs generated by certain solar photovoltaic (PV) systems. This legislation requires electric utilities (excluding municipal electric utilities, public utility districts, and electric co-operatives) to develop 20 MW-AC of solar PV by January 1, 2020. Individual PV systems used to meet this target must have a capacity of 500 kilowatts to 5 MW. Systems installed to meet this target that are operational prior to January 1, 2016, will be credited for two kilowatt-hours (kWh) for each kWh generated, with respect to RPS compliance.
There are two mechanisms that serve as cost protections for Oregon consumers -- an alternative compliance payment (ACP) mechanism and an overarching “cost cap” on utility RPS expenditures. In lieu of procuring renewable resources, utilities can pay an ACP to be placed in a holding account to be spent on energy conservation programs or procuring eligible resources. The Oregon Public Utilities Commission (PUC) established the ACP rate of $50 per megawatt-hour (MWh) for 2011 and will establish the rate for each investor-owned utility and electricity supplier by October 1 of each even numbered year for the next even numbered year and the following odd year. The governing body will establish an ACP rate for consumer-owned utilities. Electric utilities are not required to fully comply with a renewable portfolio standard during a compliance year to the extent that compliance costs exceed 4% of the utility's annual revenue requirement for the compliance year.
Utilities are also exempt from RPS compliance requirements if the purchase of electricity from eligible sources would:
* exceed a utility's projected load requirements;
* require the utility to substitute eligible renewable electricity for sources other than coal, natural gas or petroleum;
* require the utility to substitute eligible renewable electricity from existing large hydropower located on the Columbia River; or
* reduce a consumer-owned utility's purchase of the lowest price electricity from the BPA.
Investor-owned utilities are allowed to recover all of their prudently-incurred costs, including above-market costs, associated with RPS compliance in electricity rates.
Investor-owned utilities and electricity service suppliers must submit a [http://www.oregon-rps.org/energy/RENEW/RPS/Pages/RPS_Compliance.aspx compliance report] annually to the PUC. Consumer-owned utilities must submit the report to the members or customers of the utility. The PUC can impose penalties against investor-owned utilities or suppliers that fail to comply with the RPS in an amount the PUC determines -- in addition to any alternative compliance payment. Payments will be transmitted to the Oregon Energy Trust to support renewable energy and energy efficiency programs.
In addition to the RPS, utilities are required to offer a voluntary green power program whose subscriptions cannot be counted towards RPS compliance, as noted above.