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<title>December 2005: Maine and Connecticut: Renewable Portfolio Standard Update</title>
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<p align="left"><strong><small><font face="Arial">About The Author:</font></small></strong></p>
<p align="left"><font face="Arial" style="font-size: 9pt">Robert A. Olson is a partner in the law firm of
Brown, Olson & Gould, P.C. which maintains a nationwide practice in energy law,
public utility law and related commercial transactions.</font></p>
<p><small><font face="Arial"><font style="font-size: 9pt">He can be reached at:</font><br>
<br>
<b><font color="#0000FF">Brown, Olson & Gould, PC</font></b><br>
2 Delta Drive<br>
Suite 301<br>
Concord, NH 03301<br>
<a href="mailto:[email protected]">[email protected]</a><br>
(603) 225-9716<br>
<a href="mailto:[email protected]"></a></font></small></p>
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<p ALIGN="left"><b><u><br>
<br>
</u></b><u><b>December 2005</b></u><font size="6"><b><br>
Maine and Connecticut: Renewable Portfolio Standard Update<br>
</b></font><strong>by Robert Olson and
</strong><b>David J. Shulock</b><strong> -- Brown, Olson and Wilson, P.C.<br>
</strong><font face="Arial" size="2">(<em>originally published by PMA OnLine Magazine:
2006</em>/01/14)<br>
</font></p>
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<p ALIGN="JUSTIFY"><b>Maine Revisits Its RPS Requirement<br>
</b>On December 12, 2005, the Maine Renewable Resources Stakeholder Group ("RSG")
issued a draft report regarding the promotion of renewable power generation
to the Maine State Legislature’s Joint Standing Committee on Utilities and
Energy. The RSG was formed and the report prepared at the committee’s
request.</p>
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<p ALIGN="JUSTIFY"></p>
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<p ALIGN="JUSTIFY">Although Maine’s RPS requirement of 30% energy from
renewable resources is the highest RPS requirement in the country, the
eligibility requirements in Maine’s RPS are generous, and nearly 40% of the
energy produced in Maine is already RPS-eligible. This has lead to
relatively low renewable energy certificate ("REC") prices and a widespread
perception that Maine’s RPS is ineffective at either maintaining existing or
spurring new renewable generation in the state.</p>
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<p ALIGN="JUSTIFY">The RSG believes that the state should increase renewable
generation and usage in Maine by 10% by 2017. To reach this goal, the RSG
considered recommendations in three areas: long term contracting, the
definition of "eligible renewable resources," and the promotion of voluntary
markets for renewable resources. </p>
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<p ALIGN="JUSTIFY"></p>
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<p ALIGN="JUSTIFY">With regard to long-term contracting, the RSC recommends
that the legislature consider one of two methods. The first method is better
defined by the report and would use contracts as a hedge against price
volatility while promoting the development of new renewable resources. Long
term contracts would be solicited by the Maine Public Utilities Commission
on a periodic basis for 20% of the state’s annual usage at a price not to
exceed the current market price. Contracts would have terms of 3 to 20
years. Under the second method, large commercial and industrial customers
would enter into long-term contracts with generators, and ratepayers would
act as a "credit backstop" if a large commercial or industrial customer were
to default on its obligations.</p>
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<p ALIGN="JUSTIFY"></p>
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<p ALIGN="JUSTIFY">The second area studied by the RSG, the definition of
"eligible renewable resources," did not lead to consensus or firm
recommendations to the Utilities and Energy Committee. The RSG was unable to
resolve issues relating to eligibility of out-of-state generation, hydro and
biomass eligibility requirements, the eligibility of municipal solid waste
as a fuel source, the baseline year and other qualifications for defining
"new" generation, and whether certain generation should be given extra
weighting.</p>
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<p ALIGN="JUSTIFY">Lastly, the RSG recommends providing marketing
information on clean electricity in the mailings containing transmission and
distribution customers’ bills. The RSG also believes that active competition
should be promoted to reduce the price of clean energy.</p>
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<p ALIGN="JUSTIFY"></p>
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<p ALIGN="JUSTIFY">Submission of the report fulfills the RSG’s mandate. Next
steps relating to the RPS are at the discretion of the Joint Standing
Committee on Utilities and Energy. </p>
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<p ALIGN="JUSTIFY"></p>
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<p ALIGN="JUSTIFY"><b>Connecticut DPUC Working on Class III Implementation<br>
</b>Connecticut’s "Act Concerning Energy Independence," passed by the
Connecticut legislature earlier this year, called for the establishment of a
third class of renewables that ratepayers will be required to support under
Connecticut’s RPS program. Class III renewable energy sources are now
defined in statute as "electricity output from combined heat and power
systems with an operating efficiency level of no less than fifty per cent
that are part of customer-side distributed resources developed at commercial
and industrial facilities in [Connecticut] on or after January 1, 2006, or
the electricity savings created at commercial and industrial facilities in
[Connecticut] from conservation and load management programs begun on or
after January 1, 2006." Conn. Gen. Stat. Ann. �16-1(44). Electric
distribution companies and electric suppliers must provide 1% of their load
from Class III sources by January 1, 2007. This requirement increases by 1%
per year to a total of 4% by January 1, 2010. The Connecticut Department of
Public Utility Control ("DPUC") is authorized to collect a deficiency charge
of up to 5.5 cents per kwh if the requirements are not met.</p>
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<p align="left">The DPUC has been active in the implementation of the Class
III standard. The DPUC opened a docket in July 2005, and issued a notice on
November 21 seeking comments from interested parties by December 5, 2005.
The DPUC sought comments on how it should measure conservation and load
management savings, how it should measure electricity output from combined
heat and power systems, how it should verify the accuracy of energy
efficiency, conservation and customer-side distributed resource credits, how
it should allocate credits between customers and the Energy Conservation and
Load Management Fund, and how it should manage the trading of credits.
Comments were filed by Connecticut Light & Power (CL&P) and United
Illuminating Company ("UI"), the state’s two distribution utilities, among
others. In their comments, both CL&P and UI recommended that the measurement
and verification of conservation and load management savings should utilize
the same methodologies that are currently used by these companies in
implementing Connecticut’s existing Energy Conservation and Load Management
Fund programs. CL&P recognized that this method would require the
aggregation of savings generated by all customers using conservation and
load management and that there may be some difficulty in devising a process
to allocate credits to individual customers. The companies recommended that
metering standards be developed for combined heat and power systems through
a collaborative process and that metering be a prerequisite for program
eligibility. The DPUC is expected to evaluate the parties’ comments and file
a report on Class III standards with the legislature by February 2006.</p>
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<p align="left"><font face="Arial">
<small>Robert A. Olson is a partner in the law firm of Brown, Olson &
Gould P.C.
which maintains a nationwide practice in energy law, public utility law and related
commercial transactions. He can be reached at:</small></font><p align="center">
<font face="Arial"><small><font color="#0000FF"><b>Brown, Olson & Gould, PC</b></font><br>
2 Delta Drive, Suite 301<br>
Concord, NH 03301 <br>
<br>
<a href="mailto:[email protected]">[email protected]</a> | (603) 225-9716<a href="mailto:[email protected]"></a></small></font>
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