April 29, 2004
Website: www.puc.state.id.us
PUC says “green tag” issue not ripe for judgment
Boise
– The Idaho Public Utilities Commission has denied an Idaho Power Co. request
to issue an order declaring who owns the
“green tags,” associated with renewable power projects that qualify for
federal PURPA* provisions.
Green
tags, or “renewable energy credits,” are a currency that can be traded to
individuals and entities wishing to support renewable energy. They are becoming
more valuable as a growing number of states are starting to require their
regulated utilities to buy or generate a certain amount of power from renewable
sources. Because green tags are created by the states, their ownership is not
addressed by the federal PURPA legislation.
Idaho
Power asked the commission to determine who owns the green tags: PURPA project
owners or the utility that contracts to buy the power from the project owners.
Idaho Power proposed that the commission allow project owners to retain
ownership of the green tags because that would encourage development of green
resources. However, Idaho Power proposed to retain the “right of first refusal”
to purchase the tags before project owners offer them to another buyer.
The
commission’s order says the matter is “not ripe for declaratory judgment.” The
Idaho Legislature has not enacted renewable portfolio standards, has not
created a green tag program and has not established a trading market for green
tags.
Idaho
Power has contracts with about 70 PURPA projects.
Since
PURPA was enacted, regional organizations, such as the Bonneville Environmental
Foundation, have been created to certify projects as “green energy compliant.”
Power projects found to be compliant are issued green tags that can be traded.
Idaho’s
other large electric utilities, PacifiCorp and Avista Utilities, filed comments
in the case stating that the green tags are the property of the purchasing
utility. The Bonneville Environmental Foundation, Northwest Energy Coalition
and the Advocates for the West asked the commission to confirm that project
owners own the green tags. Commission staff and other small power producers who
filed comments intervened in the case said the commission had no jurisdiction
or authority to decide the issue.
Idaho
Power claimed the tags represented a value to the utility because they have
monetary value separate from the actual energy produced. Idaho Power claimed
that if it were granted ownership rights to the green tags, the revenue from
them could be used to lower energy costs to Idaho Power customers or be
reinvested in the development of additional renewable resources in the state.
PURPA
project owners contended keeping ownership of the tags benefits the state
because the ability to sell green tags provides incentive for more renewable
development. It also compensates owners for their projects’ environmental
attributes and rewards them for the risk they take to invest in and operate a
renewable energy plant.
While
the commission’s order does not allow Idaho Power to include a right of first
refusal provision in PURPA contracts, it does not preclude parties from
voluntarily negotiating the sale and purchase of green tags. However, the price
a regulated utility would pay for the green tags is not a PURPA cost that the
utility can recover from ratepayers, the commission said. “Recovery of those
expenses will be reviewed as all other non-PURPA costs,” the commission said.
A full text of the commission’s order, along with other documents related to this case, are available on the commission’s Web site at www.puc.state.id.us. Click on “File Room” and then on “Electric Cases” and scroll down to Case No. IPC-E-04-2.
END
*PURPA - The Public Utilities Regulatory Policies Act or PURPA,
passed during the energy crisis in the late 1970s, requires utilities to buy
energy from qualifying small power producers that generate power from sources
other than fossil fuels. The Public Utilities Commission sets the rate the
utilities must pay small power producers. The rate, called an avoided cost
rate, is based on the cost the utility avoids if it would have had to generate
the power itself or purchase it from another source.