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<title>January 2007: California and Florida Adopt New Measures to Promote
Renewable Energy Generation</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>January 2007</b></u><font size="6"><b><br>
</b></font></p><b>
<font size="6">
<p class="MsoNormal" align="center" style="text-align:center">CALIFORNIA AND
FLORIDA ADOPT NEW MEASURES TO PROMOTE RENEWABLE ENERGY GENERATION</p>
</font>
<p class="MsoNormal" align="center" style="text-align: left">By Robert A.
Olson, Esq. and E. Maria Reinemann, Esq.<strong> -- Brown, Olson and Wilson, P.C.<font size="6"><br>
</font>
</strong>
</b><font size="6"><font face="Arial" size="2">(<em>originally published by PMA OnLine Magazine:
2008/01/19</em>)</font></p>
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<p class="MsoNormal" align="left">The California Public Utilities Commission
ruled on January 11, 2007, that renewable distributed generation facility
owners own the Renewable Energy Credits (RECs) associated with their
facilities. This reverses the Commission’s November 2006 proposed decision
that would have granted the RECs to utilities. The utilities alleged that
they needed the RECs from distributed generators ownership to fulfill their
renewable energy procurement obligations under California’s Renewable
Portfolio Standard (RPS). The state’s solar industry disagreed, arguing
that the utilities had no right to claim ownership of a customer’s generated
clean power. Allowing owners of solar distributed generation systems to
retain ownership of RECs produced by their facilities supports the
California Solar Initiative’s goal of making the solar industry self
sufficient. The Commission agreed with the solar industry, holding that
allowing generators to retain ownership of RECs will help the economics of
solar and other renewable distributed generation facilities, and will
hopefully spur further development of renewable generation. Under the
decision, generation owners may choose to retire their RECs to back their
own environmental claims or to sell their RECs to provide an additional
revenue stream. Currently, the sale of RECs occurs on a voluntary basis and
pursuant to compliance markets, but when and if the Commission allows
utilities to apply unbundled RECs toward their RPS obligations, generation
owners would be able to sell their RECs to utilities. </p>
<p class="MsoNormal" align="left">Additionally, the California legislature
is considering Assembly Bill 94 which, if passed, would require retail
sellers of electricity to provide 33 percent of their retail sales from
renewable power by 2020. The existing RPS requires retail sellers to
provide 20% of their sales from renewables by 2010. Municipal utilities and
irrigation districts, which administer their own renewables goals, are
exempt from these requirements. According to a report by the California
Energy Commission, the state does not appear to be on course to meet the 20%
RPS goal for 2010. </p>
<p class="MsoNormal" style="text-autospace: none">On January 9, 2007, the
Florida Public Service Commission adopted new rules to promote the
development of renewable energy generation in the state. The rules, Rule
25-17.200 to Rule 25-17.310, F.A.C., will provide developers of renewable
energy with a greater variety of pricing options when entering into
agreements to sell energy to the state’s investor-owned utilities.
Qualifying renewable generating facilities are those that meet the criteria
established in the Federal Energy Regulatory Commission’s Rules at 18 C.F.R.
Sections 292.101 through 292.207 which define small power producers and
cogenerators.</p>
<p class="MsoNormal" style="text-autospace: none">In addition to existing
requirements, the new rules require investor-owned utilities to provide
continuous standard offer contracts based upon a multi-unit portfolio of
avoidable fossil-fueled generating units planned by investor-owned utilities
in their ten-year site plans. The new rules also provide options within
each standard offer for a renewable generator to select: (a) the term of
contract, ranging from ten years to life of the avoided unit; (2) the
starting date for capacity and fixed energy payments, where applicable,
starting as early as the in-service date of the renewable generating
facility; and (3) the annual/monthly level of capacity and fixed energy
payments, where applicable, over the life of the contract.</p>
<p class="MsoNormal" align="left">The new rules also clarify that RECs
remain the exclusive property of the renewable generator. A requirement for
reopening contracts is included in the event new environmental or other
government standards to control carbon emission from power plants are
adopted. All electric utilities, including municipal utilities and rural
electric companies, must report on the level of renewable generation in
their service area on an annual basis. </p>
<p class="MsoNormal" align="left">The greater flexibility provided by the
Florida Commission’s new rules should assist in financing new projects and
strengthen the position of existing facilities. </p>
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<blockquote>
<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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