TRANSCRIPT: First Thursday Update 06: Utility Green Tariff Programs
Hello, I'm Tracy Niro, FEMP Renewable Energy Procurement Program Manager.
Welcome to this First Thursday Update on Utility Green Tariff Programs.
Green tariffs allow Federal agencies and other large utility customers to procure renewable power from utilities through a special tariff from a specific renewable energy project.
Today's Update will explain how these tariffs are structured and cover questions that agencies need to consider when examining a green tariff option. We will also cover emerging green tariff programs.
Before we dive in, here are the learning objectives for today’s update.
Our presenters are nationally recognized experts.
Jenny Heeter is a Senior Energy Analyst at the National Renewable Energy Laboratory in Golden Colorado. She focuses her work on corporate purchases of renewable energy and renewable portfolio standards. She holds a Master of Public Administration in environmental policy from the School of Public and Environmental Affairs at Indiana University-Bloomington and a B.A. in environmental studies and political science from Macalester College.
Letha Tawney is Director of Utility Innovation at the World Resources Institute. She leads WRI's strategy to develop new business and regulatory models for utilities in the electricity sector. She holds an Master of Public Administration from Harvard's Kennedy School and a B.A. in business and computer science from George Fox University.
Before we hear from our experts, I would like to take a moment to introduce our topic. Federal Agencies have a number of options for procuring renewable energy. Today we are going to focus on one way to purchase renewable energy from off-site projects. This strategy is called a utility green tariff and involves purchasing renewable energy from your serving utility.
Now, let’s hear from our first presenter, Jenny Heeter, from NREL, who will discuss the difference between green tariff and green pricing programs, existing green tariff programs, and important considerations when choosing the best fit for your Agency.
Hi everyone, thanks again for having me on this webinar. Again I'm Jenny Heater with the National Renewable Energy Lab, and I'll be discussing green tariffs and helping folks understand what those are and some of the options that are available now, and I'll also walk through key considerations for federal agencies. So first off, let's talk about what green tariffs are. A Utility Green Tariff provides participants a long-term option to source new renewables from within their service territory, and to do this participants generally pay a fee for the renewable generation, and then get some type of credit on their bill for the generation that's produced.
So why might federal agencies be interested in these new green tariffs? There are requirements for federal agencies to procure renewable energy that's under the Federal Energy Policy Act of 2005 and the goal under that target is 7.5% of electric energy in fiscal year 2013 and thereafter. So green tariffs are an option that is emerging that may actually be able to save federal agencies money. So we're going to talk about what considerations federal agencies may have when looking at these different programs.
Utility green pricing programs may be familiar to folks on the line and these have been around for a long time, more than ten years, and these are programs run by utilities where typically the utility is buying the renewables on behalf of the customer. The customer commitment is very short, typically month-to-month, and the there is a price premium for these products. So typically these products run at about a cent and a half to two cents a kilowatt-hour extra for the renewable energy. The way the utilities buy this product the Renewable product for their customers can be through a short medium or long term contract with a renewable generator, the utility may be buying the energy with the RECs or the RECs separately from that energy, and then they are passing along those RECs to the customer typically in a short term agreement.
In contrast to green pricing program utility-grade tariff programs have a couple key distinct components. The first is that the customer may be able to decide what renewable generator, or what renewable resource will be used for their subscription. So some companies who are subscribing they want to have a solar generator or wind generator or make sure that the generator is located in a certain region, or have certain preferences like that. Green tariff programs can allow customers to have some input into what is the renewable resource being used for their supply. The second key distinction is that the time commitment for the customer is typically longer, not in all cases, but in most cases, the time commitment that the customer is signing up for usually matches the contract between the utility and the renewable generator and so these are longer-term commitments and we'll walk through each of those commitments for existing programs as we get further along.
Then the final key distinction is that with utility green tariff programs customers are getting a charge on their bill for the renewable generation but then they're also getting a credit, so that if there is some potential for these programs to be on-par with existing utility rates. So just to recap, some of the key distinctions between utility green pricing and utility green tariff options: Utility green pricing programs are typically around one and a half cents premium per kilowatt hour for renewable energy above your existing utility bill, whereas green tariff programs have the potential of cost savings over the term of the agreement. In terms of price stability with green pricing there really is no price stability component, because these are short-term agreements, month-to-month, that you're paying there's no price stability over the long term, whereas that is possible under a green tariff program. When we look at contract lengths for green pricing they're typically month-to-month programs, for green tariffs were seeing longer-term agreements 10 to 20 years, although some of the newer contracts that Leathy will be speaking about do have options for shorter terms than that.
In terms of joining this can be an issue for federal agencies, the complexity of joining a new program. Green pricing typically is a shorter, simpler, signup process because there is a known product that you're signing up for and no negotiation between the agency and the subscriber and the utility. For green tariffs we do see that there is a longer contracting period and these options are you know not available all the time so that can make joining more complex. Then finally, the last component is just the choice of the renewable resource so with green pricing programs we see that the utility has typically already decided which resources it will source from and the customer signs up for whatever the utility has already under contract, whereas with green tariff programs the customer may be able to decide what types of resources or what facilities are used for their supply.
When we talk about green tariffs we do know that they are expanding pretty rapidly and the programs are only available currently in six states but this is changing all the time. As of April there were development in at least three other states, so we do know that this is a landscape that is changing. These programs I will also mention are available only in states that are traditionally regulated. So you'll see the states here that are shaded in gray those are states where customers already have retail choice, and you could switch suppliers to one that has a renewable mix, but in regulated States you do need to purchase through your utility so that is why we see some utilities starting to offer these new options.
I'm going to provide a summary of approved utility green tariff programs, and following this Leatha will discuss some of the emerging tariffs. And these emerging tariffs are coming online all the time so and we wanted to make sure to highlight some key considerations for federal agencies and others as you are evaluating these new programs.
So I'll walk through six considerations, and the first is who can participate. So often utilities are restricting participation and green tariffs to typically larger customers and sometimes customers that have new load in their service territory. The second piece is what are the rate components and the net cost? So when we're looking at the cost to participate we want to look at what cost for the renewables there are, and then what credit subscribers receive on their bill. And the third component is the length of contract, and this can be an issue for federal agencies some contracts are shorter term, but some contracts that have been signed by private corporations have been 15 or 20-year agreements.
The next component is when must customers enroll. So sometimes these programs are having windows throughout the year where the programs are open for a subscription, sometimes they'll open and then closed if they hit their cap or things like that. So it's important to think about: is this program available to me when I would like to subscribe? Similarly some programs do have limits either on the amount of capacity that can be subscribed, or things like pilot programs where the program may only be open for two or three years and then be revised based on the learning from that period. And then finally a consideration is who owns the RECs. So RECs are the attributes that allow you to make a renewable claim, and those are required in order to meet the federal agency renewable targets. And so it's important to think about REC ownership and make sure that if you're buying a renewable product the RECs are retired on your behalf or otherwise transferred to you in some manner.
The first program I wanted to highlight is NV Energy's program and for each of these programs I'll walk through where their service territory is the existing capacity that has been signed as well as the key components that I just discussed.
So NV energy, they are in Nevada and they have quite a bit of existing capacity signed. Not all these projects may come online but these are contracts and participation that has been approved. So for Apple there's been 20 megawatts of solar as well as another 50 megawatts of solar signed of capacity. And for Switch they have 180 megawatts, and the city of Las Vegas has a share of a large 100-megawatt solar facility. So in Nevada you see a lot of large solar dominating the landscape, and you see private corporations participating as well as city government.
For Nevada's Green Energy Rider it's called participation is restricted to large customers, so you would need to check and see what rate your own currently, but for customers in Northern Nevada, if you're on a GS2 or larger you also need to have to 50-500 kilowatts demand or monthly usage that's more than 10,000 kilowatt hours. In Southern Nevada it's a little bit simpler, it's just customers on the LGS-1 and larger schedules. In terms of what you pay to participate in this program you do you pay the existing rate schedule, you pay the cost for the renewables, and then the credit actually is negotiated with the utility. So those negotiations can determine how that credit is set, and purchasers can have some input into that process.
NV Energy Green Rider it's called has a program where the length of the contract can be negotiated with the utility, but it does need to be at least 2 years in length. There is no specific enrollment period but the program does have caps, to how much can be subscribed the subscription limit is 250,000 megawatt hours for Northern Nevada as well as Southern Nevada, but the utility can choose to exclude certain contracts if it sees fit. For REC ownership the program is structured a little bit differently for some of the other green tariffs we've seen. So this program the RECs for the customer share of the RPS are retired first. So for example if the RPS is 20% those RECs would be retired first and then the remaining RECs for the contract would be retired for the customer, so that would allow the customer to make a renewable claim for that remaining piece.
The next program I wanted to talk about is Duke Energy's program in North Carolina. This program is being revised right now because it did run the length of its pilot, but I think it's important to highlight some of the key components of this program and we'll see how it evolves in the future. So the existing capacity so far is 61 megawatts of solar that was signed by Google, and they have three other customers that have not been disclosed, but we do know that there are three other customers participating in this program.
So Duke Energy's Green Source Rider does restrict participation to larger customers who also have added new load of at least one megawatt since June 31th 2012 and the existing rate structure that you pay will be continued to pay under this structure, you'll pay the renewable costs as well as some administrative charges which are $500 a month as well as $0.02 per kilowatt hour. The credit that you receive is based on the avoid capacity and energy expense during which the renewables was delivered to Duke, and they do note that the credit cannot exceed the renewable cost. So you will under the structure be paying at least what you were paying before you purchase during levels but potentially more just depending on the other cost components.
Under the Green Source Rider program the contract link can be from 3 to 15 years but it must be the same at length as the Duke and Renewable supplier agreement contracts length. So for example the Google agreement is for 15 years, which matches the length of the contract between Duke and the Renewable supplier.
For enrollment as I mentioned this custom this program is currently closed, but Duke is working on a new version of the program and so stay tuned and if you are in Duke service territory, be on the lookout for opportunities to enroll in a new version of this program. The program was limited to a three-year period following Commission approval, and that is quite common that Commission's want to cap enrollment, or test this out for a few years before deciding to move forward with potentially a new structure based on lessons learned. RECs for this program were retired on behalf of the customer in the North Carolina Renewable Energy tracking system, that's NC RETs is the tracking system for North Carolina for RPS compliance as well as about voluntary RECs retirements.
The next program I wanted to highlight is Rocky Mountain Power in Utah, and you can see a map of their service territory there in red. They do not have any existing capacity currently signed up, but this program was negotiated with Facebook, as Facebook was deciding where to locate a new data center and although Facebook did not ultimately end up deciding to locate there, it did result in the creation of this new tariff that other companies could use. So I wanted to highlight that, and also mention that I will not be talking about a new program through Public Service of New Mexico, that Facebook has negotiated primarily because that's not a great fit for federal agencies. It does require a new load of 10 megawatts, which is quite large new load, but some other, you know private sector customers may find that contract structure more appealing or be able to participate in that. So for those of you on the line who are not federal agencies and they have new load of 10 megawatts and check out Public Service of New Mexico they do have a Green Energy Rider program.
For Rocky Mountain Powers Program it's called Schedule 34 and it is limited to participation by customers on schedule 6, 8, 9 and the contract must be for at least 2 megawatts but it cannot exceed the customer's' peak demand. The costs for this program are determined on a contract-by-contract basis, but will include some administrative fees.
For schedule 34 the contract length can vary, and but again it must be the same as the Rocky Mountain Power and Renewable supplier agreement contract length. There's no specific timing when customers may enroll, and there are no program limits, and the program does retire RECs on behalf of the customer.
Next up is Dominion Virginia Powers Program in Virginia you can see them shaded in the sort of maroon color there on the map. They have existing participation by Amazon Web Services, AWS that are supporting about 180 megawatts of solar. So Dominion Virginia Power actually is structured a little bit differently, in terms of how they're green tariff works.
It's not a traditional green tariff what they call it is the market-based rate, and this is a structure that allows Dominion customers to be charged market-based rates instead of the standard Dominion tariff rates. So then customers can sign a separate agreement for renewables with a developer, and that developer could then sell into the market. So they created this unique structure and has enabled 180 megawatts of solar already, but it is a structure where the contracts with the utility are not for renewables, it's just to be put on this market-based rate.
This rate is for large customers GS3 and GS4 and they must have had a peak demand of at least 5 megawatts and an average load capacity factor of at least 85%. The key components for the rate structure and net cost under this program are slightly different because you're not contracting for renewables with the utility, but what this tariff attempts to do is mimic the PJM market. So the cost components are structured around generation capacity charges, energy charges, and PJMs ancillary service charge, administrative fees, and then a margin charge. So customers can sign up for this rate and have it mimic what the market rates are and then sign up separately for a solar contract, have that solar contractor sell energy into the market, so that ideally you're getting a pretty good hedge for your investment.
For a schedule MBR, which is the market-based rate, you must sign up for at least three years. Now you must enroll before November 1st 2019 of so still a little bit of time to sign up. The program is capped at 200 megawatts of subscription and the RECs for the structure are really don't apply because that Renewable contract will be signed separately with the generator.
The last program I want to highlight is Puget Sound Energy's Program in Washington, which you can see their service territory there in yellow. Their program is structured not on megawatt hours, but on average megawatts. So an average megawatt is the amount of electricity produced by the continuous production of 1 megawatt over a year so 8760 hours, and that's just the way that they have reported their subscriptions, and how they have structured this. So there are 25 average megawatts that are subscribed already, and then interestingly a lot of that, 17 megawatts average are subscribed by local governments. Then an additional and 3.5 are subscribed by one State University. So we do see a lot of participation by public sector in this program.
Like other programs, this program does have participation restricted to certain rate classes, with a minimum aggregate load of 10 million kilowatt hours annually, but they also have a sort of an exemption and say that you can be on one of those rate structures and minimum load, or you can be a municipal county, state, or federal institution. So that may allow some smaller federal agencies to participate in this program. You do need to subscribe a hundred percent of the load at each service address for the program if you choose to subscribe. The costs for this program are detailed in some of the links below, but generally you pay the existing rate structure you pay their renewable cost, which does vary depending on the contract length that you sign. Then you get a credit for the energy related cost component of the bill. So we do see some numbers for 2019 that do see a slight net premium, although those premiums could change over time.
So as I mentioned there is an option for different contract lengths under this program, they have 10, 15 and 20-year options available. There is an open enrollment season for this product, which starting this year runs May 1st through July 31st and the program is capped at 75 megawatts. So when those are subscribed they'll be re-evaluating the program potentially changing it and coming up with a different structure. The RECs are retired for the customer they may be retired by Puget Sound on the customer’s behalf or transferred directly to that customer for them to retire in Regis, which is Western Renewable Energy Generation information system.
Finally I want to walk through just some of the key considerations and how they vary depending on the program that we're looking at. So for eligible participants these programs are all typically required that large customers are the participant, sometimes there are exceptions to this for federal agencies as we saw with the Puget Sound Energy Program. And sometimes the participation is restricted to customers with new load, so that was the case with Duke Energy's program as well as the Public Service of New Mexico program, that I did not highlight here. In terms of potential cost savings this is really dependent on the cost of the renewable resource, how the cost savings are structured in terms of how the credits are given, and how those credits are determined for the customer, as well as any administrative fees that may be assessed.
When we look at contract terms typically they are longer-term contracts sometimes they're open for a negotiation with the utility but often they have to be matched at the same length of term to another contract that the utility has with the Renewable developer. When we look at REC treatment these programs because they are being developed for customers who want to make a renewable claim, typically allocate the recs to the customer, they may retire the RECs on behalf of the customer in a regional tracking system, or convey the RECs to the customer in some other manner. And then for the enrollment period again I would highlight that the Duke Energy contract is currently expired, so that program is not open but other programs are open and available for customers to start inquiring about how to participate. Some of the programs are capped, as I mentioned, and you know after those programs are capped there may be discussions about what to do next, and if we should revise those programs going forward.
So that's all I have on existing utility green tariffs and considerations for federal agencies and I did list my contact information here please let me know if there are any questions you have after the webinar airs, I'd be happy to answer questions about green tariffs or green pricing or anything else related to purchasing for federal agencies, thanks again.
Thanks, Jenny. That was an excellent summary. Now, to build on that presentation, we will learn about corporate demand for renewables and some green tariff programs in development. Here's Letha Tawney of the World Resources Institute to tell us more.
Hello, I’m Leathy Tawney, the Director for Utility Innovation at the World Resources Institute, and I'm looking forward to talking today about a scale of the large buyer trend and some of the emerging green tariffs that we see utilities offering across the country. I lead the work at WRI with large buyers collaborating with their utilities to accomplish their renewable energy goals, and we've seen a real uptick in activity across the country that's exciting.
In 2014 Power Forward 2.0 documented that about 60% of the Fortune 500 had set GHG or renewable energy or energy efficiency targets in their sustainability reports and even 43% of the Fortune 500 had set targets. Now really points to how reducing emissions and improving energy usage was already becoming mainstream in corporate America.
By 2016 the advanced energy economy to report on corporate energy commitments documented that 71% of the Fortune 500 had set renewable energy or climate goals or both. So the growth of focusing on clean energy had only expanded among the Fortune 100.
So heading into the climate negotiations in Paris, the corporate sustainability movement began to try to make that goal of renewable energy and energy efficiency more visible to the larger marketplace, and the RE100 campaign was born.
As of April 2017, 89 major global brands had committed to powering their operations with 100% renewable energy. And you'll notice that the trend goes far beyond the IT sector, sort of the typical suspects that we always see, Google, and Apple, Facebook, Microsoft, and now you see manufacturers, you see BMW and General Motors, you see Big Pharma, you see consumers goods like Procter & Gamble, Nestle also represented. Now their goals range from 100% by 2025 to 100% by 2050, but regardless of the timeframe, the trajectory is very clear globally these brands are pursuing a 100% renewable energy.
In the U.S 65 of these companies have signed the Corporate Renewable Energy Buyers Principles, co-convened by WRI and the World Wildlife Fund. Now these companies may not all have a 100% renewable energy commitment, but they have all made some commitment to add renewable energy to their corporate footprint and that total demand in the US by 2020 is 48 million megawatt hours more renewable energy than is on the grid today.
And the principles are essentially an RFP to the marketplace, if you have a product that needs some or all of these six features, the neath buyers are your market. It's trying to articulate what it is they'd like to buy. What the corporate buyers need in the U.S is more closely aligned with what the public sector buyers need that most people often assume. These buyers want more choice about what they can buy, they want access to affordable renewable energy, and they don't want to pay a premium if they can avoid it. They want to pay a fair price given the actual cost and benefits of the renewable resource. They want to push power and fuel price volatility out of their portfolio, but on a 7 to 15 year term not a 20 to 30 year term that a utility usually would pursue. They want new projects, they want to preserve their own capital for their core business, their capital should go into building new stores or establishing new distribution centers, not into new energy generation equipment. And they want to work with their utilities they don't like having to go around their utilities to get the resources that they want, they would prefer if their utilities would offer them a product that they're looking for. So coming out of two or three years of the Corporate Renewable-Energy Buyers Principles in the marketplace, I think buyers can take away the purchasing renewable energy and partnership with your utility is a proven strategy that the Fortune 100 are pursuing, it's not the case of experimentation any longer. And that's because there's a very strong business case, but it's a good use of budget dollars in pursuing these deals.
States are beginning to understand that this can be an economic development tool, but they can draw more businesses if they are friendlier to that procurement that businesses want to do. So last fall we saw an index released by Clean Edge and a couple of industry associations, really trying to evaluate how states were doing, and you can see Iowa, a monopoly utility state, topped the list and that's because of the scale of the wind contracts that Mid-American one of the utilities there, has signed with data centers. So it's not a given the only one style of utility can really deliver this value to its customers.
As this idea of the corporate buyers procuring renewable energy has spread, so have green tariffs you've heard about many of the existing green tariffs that have been developed. In 2012 nobody really understood that a corporate buyer might want to buy something more than the Renewable Energy Certificate. Separate from the energy that has been generated when the REC was generated.
By 2013 three states had made an offer to their customers Nevada, North Carolina, and Virginia.
In 2014 there was no further action everyone was waiting to see who might use these tariffs, besides the first initial deal between Apple and NV Energy.
By 2015 we saw legislation in Utah deliver a green tariffs with Rocky Mountain Power, and we saw Minnesota tickets first step Xcel offering a new green tariff to their Commission for approval.
In 2016 we saw an explosion of green tariffs across the country. Colorado joined, New Mexico joined, Utah added a new green tariff, in addition to the original one they have, Washington State proposed green tariff, Puget Sound Energy and Virginia offered a Dominion offered a second green tariff.
By 2017 all of those proposed green tariffs have been approved and a new slew of green tariffs have been proposed.
There's now been 100 megawatts of contracts signed under green tariffs, and this is out of more than about 5 gigawatts total signed contracts with corporate buyers. So about 20% but it's a steadily increasing number and we know that there are hundreds of megawatts more under negotiation today that just hasn't signed yet. So as this trend expands I think green tariffs are likely to be more and more dominant as an option for corporate buyers and others who want to meet their renewable energy goals. Now beyond these totals have been a range of special contract between customers and utilities to give a particular customer access, and those totals aren't captured here but add several hundred megawatts more to the overall trend.
And to walk through the map carefully you can see the purple states, are states where retail choice is an option. These are states where large buyers can, with a relative ease, go out to the marketplace and procure renewables or any other energy from the supplier of their choice. The light blue states are states where the utility has done, or a utility of the state has done a one on one contract with a large buyer. So for example in Alabama, Alabama Power and Wal-Mart have worked together around a 79 megawatt solar facility, there's a little bit of that facility that's set aside for other buyers to pursue but the overall deal is a single one offs opportunity for Alabama Power. And the same in Iowa, Mid-American has been put forward to tariff, but they have done special contracts with a range of large data centers based on the wind that Mid-American owns already, and the min that they'd like to build.
I think you should take the blue states of an indication of willingness by a utility and a state commission to consider how to deliver renewables to large buyers who are interested. Now the light green states are states where a renewable energy tariff, the green tariff has been approved but hasn't been utilized yet. And it may not have been utilized for a variety of reasons, it may not be easy to use or it may just be new and they haven't had an opportunity to sign contracts under yet. I see on here for example things are moving so quickly that Washington State should be dark green in here but they signed their contract just two weeks ago, and so there's been very little time to update the information. And finally dark green states are the states where the green tariffs have been used, and you heard about many of those deals in the earlier segment.
But to focus on some of the emerging green tariffs, some of the green tariffs that haven't even hit the map yet let's walk through several of those. Let's talk about some of the emerging green tariffs that haven't been used by deals yet I want to walk you through Xcel two offerings in Minnesota and Colorado they've been approved but haven't been made it all the way to contracting yet.
Omaha Public Powers put forward a new green tariffs and through that has won a new data center. Madison Gas and Electric put further renewable energy rider and Appalachian Power Company, APCO, is considering a rider, they're in the middle of Commission proceedings on that now.
Let's start with Xcel in Minnesota the black service territory there in the middle of the map. They've put forward a subscription product, so one single resource serving many customers. They're utilizing some of the low-cost wind Power Purchase Agreements they already have on their books, to serve any size meter. And one of the main off-takes is expected to be the state of Minnesota itself for their facilities.
So this term is interesting because it's available to any commercial, or residential, or industrial customer who's already paying the fuel clause charge. And the way they set this up is they're replacing the fuel clause with a cost of the renewable energy, and they're evaluating that cost, they're arriving at that cost by looking at the actual PPA price providing a bit of a credit because the wind has some capacity value in that region. A neutrality adjustment to deal with any cost shifting concerns, and a small administrative cost. Some of those costs will vary over the contract length, but the resource cost won't, and now the cost for the customer is based on this charge, as opposed to the fuel clause that they would have paid otherwise.
Another interesting innovation in what Xcels put forward both in in Minnesota and in Colorado, is the length of the contract to be signed so rather than requiring customers to sign a contract with a full length of the Power Purchase Agreement or resource that underlies the Green Tariff, Excel is allowing customers to choose higher cost month-to-month options so you can come in and out of the program, a lower-cost five-year commitment, or final lowest cost ten-year commitment. There will be a 30-day open enrollment period that will be closing May 24th of 2017 for the first tranche, we anticipate that that will sell out quite quickly, and so there may be additional tranches in the future. And while this product will start at a premium and because the customers no longer pay to fuel clause charge the anticipation is that not if you'll cause charge rises over time customers could do better than standard customers on brown power. The RECs will be retired on the customer's behalf by Excel.
Excel Colorado is very similar it's also a subscription set product also available to any size meter set up quite similarly in terms of the terms of the contract it's likely solar will underlies this, they've completed their RFP and will bring it back to customers shortly, with final pricing. So later in the summer that we expect this product to be open for its first tranche as well. And we know that the first tranche isn't sufficient to meet the overall corporate demand in Colorado and Xcel service territory, so we anticipate more purchases, tranches for this tariff as well.
You can see that this tariff is very similarly constructed to the one in Minnesota, very similar setup and boundaries.
And finally in Colorado just like in Minnesota we anticipate the RECs to be retired on the customer's behalf, and we expect us to be a quite popular product. Although we'll see is these are experiments, these are some of the first subscriber products aside from Puget Sound energy to reach the market, and it will be interesting to see what the appetite is.
Omaha Public Power has really tried to innovate on what Dominion did in a market-based rate with Amazon, and offer access to the wholesale market to the large data centers in their region through new tariffs in their service territory. This is new both because it's Public Powers first foray into green tariffs and because of the innovations they've made on the MBR rate to include capacity more explicitly, by putting this term together OPPD was able to win a Facebook data center citing in their region, and it's anticipated, if the pricing works out, Yahoo may expand their existing data center. So it's become a real economic development story for the Omaha Public Power District service territory.
This tariff is really limited to very large customers, you need to be taking service at 161,000 volts or 345,000 volts, so it's meant for very large individual loads as opposed to the subscriber products.
But it gives you access for your energy charge directly to Southwest Power Pool in any product to you can purchase off that SPP market. That can be very attractive for a large buyer like a data center.
Madison Gas and Electric, they're in the middle of Wisconsin, has also put forward a green tariffs. They have not laid out a lot of detail in the actual filing instead it very negotiable, and I think that's an indication from the utility to come and talk with them about what customers are looking for. They're in the process of seeking approval from their commission and that continues to move forward. So by this summer they may have something to offer formally.
The Madison Gas and Electric tariff is a rider, it's open to just about any commercial customer and the cost structure takes the cost of the renewable energy resource and deducts the fuel surcharges that no longer apply because the renewable resources replace some fossil based resource.
Many of the limitations and boundaries on this tariff were mean to be set, so we don't know yet what customers will need to do to enroll, or what the final terms will be. The goal will be for MGE to retire the RECs on customer’s behalf, but we'll have to see what the final tariff and pricing look like.
Appalachian Power Company in Virginia has also put forward a green tariff. It's a premium product at this point, although they expect that premium to decline. They're beginning with existing renewable resources and with interesting about this tariff is that they're really aiming to match as closely as they can, in an hourly basis, the actual loads that they're serving by blending hydro solar and wind together into a package. Because it includes some older contracts for existing resources that makes the price a bit higher at this point, as new contracts are signed the expectation is that that price will fall. Although the potential to save money is an open question.
This tariff is really meant to be broadly available tariff, so it's open to any customer taking service from APCO, but with the premium I think that will probably limit the scope of the customers interested.
Still it goes beyond being a RECs only product, and delivers the actual cost the renewable resource to the customers receiving that product. APCO still in the midst of its regulatory proceeding and so there are some details we don't know yet about how customers should enroll. The RECs will be retained, retired on the customer’s behalf. So it should follow all the best practice in that regard.
So we've seen some real innovation and development in green tariffs over 2016 and into 2017. We're really looking forward to seeing how Xcel subscriber products follow on Puget Sound Energy in Minnesota at Colorado. If they're strong customer interest and they can really drive down the cost of the tariff overall, I think there will be some demand to go beyond and build next tranches into the product.
OPPD has innovated on what Dominion and Amazon have done together with the market-based rate by bringing capacity more explicitly into OPPD's purview, so that there's less negative swinging out of SPP. And the Madison Gas and Electric and Appalachian Power I think are both examples of utilities picking up this idea and really trying to apply it to their own service territory and to what their own commissioners are interested in seeing. And we'll see if more utility through 2017 do the same. I expect more green tariffs to emerge across the country. OPPD is a real vanguard in Public Power and I think we should expect to see more Public Power step up, either with special contracts, or with green sheriff offering more broadly. And I think the success of Puget Sound Energy is green tariff and the pending success we'll see of Xcels could drive a real expansion of subscriber style products that could be much easier for customers to sign on to.
Thanks so much, and I hope this has been a useful overview of emerging green tariffs in the United States. You can follow WRIs work on green tariffs at our website WRI.org. We have a map where we're tracking green tariffs as they emerge and as deals get signed and contracted under those tariffs. So check it out and if you hear of a great green tariffs or another deal being done, do reach out on let us know and we'll take a look at it and see if we need to add it to our map. Thanks so much.
Thanks, Letha. Now I am going to take a moment to talk about the easiest way to participate in a green tariff program, if one is available to you, it is through the General Services Administration, or GSA, Areawide Contract with your serving utility.
In many jurisdictions, the GSA has negotiated areawide contracts with the local serving utility. These contracts were designed to streamline utility acquisitions for Federal Agencies. Follow the steps outlined in the slide to determine whether you can use the areawide contract to sign up for a utility green tariff program.
Please visit these links for additional information on GSA Areawide Contracts or feel free to reach out to me or the points of contact listed on the slide.
At FEMP, we want to make sure you have all the information you need to make informed renewable energy procurement decisions. You are never working alone. We have the, tools, training, and assistance to help you make good choices about your renewable energy projects and purchases.
I hope you found today’s First Thursday Update valuable. Please feel free to contact me or the other team members listed here.
FEMP is always a great place to start when you have questions about your renewable energy options.
Thanks to our presenters, Jenny Heeter and Letha Tawney, as well as the FEMP training team. But most important, thank you for taking the time to learn more about utility green tariff programs today.
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