The initial comment period is now closed on the Public Utilities Commission of Ohio’s (PUCO) draft rules for implementation of the Alternative and Renewable Energy Requirements. The PUCO received hundreds of pages of comments from a wide variety of perspectives: Utilities, Renewable Energy Developers, Industrial Customers, Environmental Groups, Clean Coal Technology Providers, and Consumer Groups.

The rules were set in motion by passage of Ohio’s comprehensive Energy Legislation (SB 221) which includes provisions designed to promote alternative and renewable energy development.  The legislation includes both an Advanced Energy Portfolio Standard (AEPS) and a more traditional Renewable Energy Portfolio Standard (RPS). 

While the Legislation was very complex, major policy issues were left to be sort out through rule promulgated by the PUCO.  The comments received on the first draft of the rules for implementation of the AEPS and RPS reveal significant differences of opinion over critical issues.

Here is my critical issue list.  The rules must address squarely these issues to determine the direction of Ohio’s energy policy.

  1. What are "advanced energy"  resources and projects and how best to promote it?  For example, right now the rules contain no standards for what qualifies as clean coal.  Comments I submitted pointed out that a simple reduction of a few pounds from a 500 mw source that emits a 1,000 tons of pollution could still be considered a "clean coal" source.  Worse yet, the entire generation could qualify toward meeting the AEPS.  Without modification the AEPS could be rendered effectively meaningless.
  2. Double counting environmental attributes- It appears from the comments that Ohio doesn’t recognize this debate has been going on nationally for some time.  Many of the 26 or so states that have had RPS standards have been sorting this type of issue out.  The standard practice emerging nationally is not to allow CO2 emission reduction credits to be separated from a Renewable Energy Credit (REC).  Allowing otherwise distorts the voluntary CO2 and REC markets.
  3. How much teeth does the RPS have?  Many comments were submitted that the rules would grant the PUCO too much discretion to waive compliance with the RPS standard based upon a "act of god" (force majeure).  Also, SB 221 allowed compliance with RPS benchmarks to be waived if electric rates rise as a result of the RPS by more than 3%.  But how you measure the 3% increase is critical to determining whether there truly will be a RPS requirement in Ohio.  It seems the rules have to answer the question-are we serious about having an RPS standard in Ohio?

 (a summary of the major comments on the AEPS and RPS by clicking on "continue reading" below)

(photo: Kevin Dooley/everystockphoto.com)

Promoting Advanced Energy Technologies

  • Clean Coal Resources- Is it limited to technologies that only reduce CO2 or should include demonstrated reductions in other pollutants?
  • CO2 Reduction Technologies- Multiple comments were filed pointing out SB 221 mandates identification of standards for C02 reduction to qualify as advanced energy resources. The rules fail to include any such standards or a process to establish the standards.
  • Off-shore Wind- Proponents of off-shore wind want additional incentives to develop resources on Lake Erie. They advocate for award four times the amount of credit towards the RPS for these resources versus any other renewable energy resource.

Determining Which Generation Capacity Can Count Toward the AEPS

  • Modifications and Upgrades to Existing Facilities- A major loophole was identified by multiple parties commenting. If an existing 500 mw facility adopts a technology that reduces CO2 or other pollutants, what portion of generation should be credited toward compliance with the AEPS? The current rules could allow the entire 500 mw generation capacity which would certainly not drive development of advanced energy resources.
  • Out of State Delivery of Renewable Generation- Comments questioned the standard for which resources outside Ohio could be counted toward meeting the RPS benchmarks. Should it be just sources in neighboring states or any source that can show delivery is possible?

Waiving Compliance with the RPS Benchmarks

  • When can the Commission waive compliance with the AEPS? A wide divergence emerged as to how much discretion the Commission should have to waive compliance.
  • All or nothing-If the 3% cost cap is exceeded does the Commission waive compliance with the entire renewable energy benchmark or just an increment?
  • Reasonable or Impossible- Whether waiving compliance with a renewable benchmark should be based on the “reasonableness” of compliance or only if its deemed “impossible”?
  • What amounts to a 3% price increase? Based only on the cost of meeting the benchmark or by looking at price increase as compared to all generation?
  • Act of God- Some commented the Rules give too much discretion to invoke the Force Majeur exception to complying with the RPS.

Double Counting the Energy and Environmental Attributes of Advanced Energy Resources

  • Should a single project be able to count toward meeting both the AEPS and the Energy Efficiency Standards
  • Whether the CO2 attributes of Renewable Projects can be unbundled from the REC and used on voluntary compliance or future mandatory reduction requirements?