Minnesota PUC Settles Longstanding Dispute over REC Ownership
Last week, the Minnesota Public Utilities Commission resolved a longstanding dispute over who owns Renewable Energy Credits (RECs) when the Power Purchase Agreement (PPA) is silent. Following the establishment of an REC tracking system for Minnesota, Xcel Energy asked the Commission to clarify ownership of RECs associated with 46 wind, biomass, hydro, and landfill gas facilities totaling 467.5 MW. These PPAs were written before the concept of RECs existed.
On August 17, 2010, the Commission resolved the dispute partially in favor of Xcel and partially in favor of the generators. The Commission divided the disputed PPAs into two categories: 1) PPAs signed under 1978 federal Public Utilities Regulatory Policy Act (PURPA) and 2) PPAs signed under Minnesota’s 1994 wind and biomass mandates (Minn. Stat. §§216B.2423 and 216B.2424).
For the PURPA contracts, the Commission decided that the generators are the rightful owners of RECs because they had only been paid avoided cost with no premium for the electricity being from renewable sources.
For the wind and biomass mandate PPAs, the Commission favored Xcel and decided that the utility had acquired ownership of the RECs, unless the generator can make a showing that the PPA is not silent on REC ownership. For this category, the Commission reasoned that Xcel had contracted to buy electricity that would meet specific renewable mandates. Without the RECs, the electricity would not satisfy the renewable mandates.
The Commission exempted two PPAs close to being privately settled from its decision as well as 13 PPAs that were already privately settled.
Filings related to the "silent PPAs" dispute can be found by searching for Docket No. E-002/08-440 in Minnesota’s eDocket system.
Rhode Island PUC Rejects Offshore Wind PPA
Last week, the Rhode Island Public Utilities Commission rejected a power purchase agreement (PPA) between Deepwater Wind and National Grid, the state's largest utility, stating that the deal’s projected cost of electricity did not qualify as “commercially reasonable” under a test required by state law. Deepwater would have charged National Grid 24.4 cents per kilowatt-hour in 2013, the first year of the contract. Prices would increase 3.5 percent per year after that.
The state previously passed legislation requiring National Grid to purchase the energy output from an offshore wind project. The PPA that was ultimately signed was for the output of a 28.8 MW project near Block Island.
The news of the PUC rejection comes shortly after receipt of $23.3 million in stimulus funds by the Quonset Business Park to improve piers, roads and rails and to install a crane in preparation for offshore wind development. Deepwater Wind has signed an agreement to lease 117 acres in the Quonset Business Park to store and assemble components, and ultimately create 800 jobs, as projected by Deepwater.
Public Service Commission of Utah Investigates Third-Party Power Purchase Agreements For Renewable Energy Generation
On October 12, 2009, the Public Service Commission of Utah ("PSC") joined the ranks of several other states in the west, including Oregon, when it established a docket to investigate whether, and the extent to which, certain third-party arrangements for renewable energy generation are subject to the PSC's jurisdiction. www.psc.utah.gov/utilities/misc/miscindx/0999912indx.html, Pursuant to the notice, the PSC may consider the following issues:
- Whether the third-party is a public utility under Utah law;
- Whether the third-party is a public utility under Utah law when arrangements are entered into primarily as a financing mechanism for distributed renewable energy generation systems whereby a third-party owns the renewable generation equipment, which is installed on a utility customer's premises, there is a long-term contract with the customer to supply a portion of that customer's electricity use, and payments are based on kilowatt-hours;
- Whether the third-party is a public utility under Utah law when (i) there is a single relationship between the third-party owner of the generation and a customer or (ii) there are multiple customers taking power from the same third party;
- Whether the third-party is a public utility under Utah law when arrangements involve the leasing of distributed generation equipment from non-utility lessors to lessees that are also retail customers of utilities.
Comments and/or legal briefs regarding the above issues must be filed with the PSC by November 16, 2009. A technical conference to discuss the specific terms and conditions surrounding third-party financing arrangements and other issues will be held on November 23, 2009, at 1:30 p.m. to 4:00 p.m., Fourth Floor Hearing Room Room 401, Heber M. Wells State Office Building, 160 East 300 South, Salt Lake City, Utah.
