Oregon Solar Bill Raises Questions about Utility Ownership of RECs

A REC is the environmental value of every megawatt-hour of renewable electricity produced. Utilities in many states must purchase the credits to prove compliance with renewable portfolio standard obligations.

Utilities often support guaranteed ownership of RECs, saying that it reduces the cost of reaching RPS targets and therefore reduces the cost of the program to ratepayers. Solar industry professionals claim that such moves reduce the options for customers and strip away rightful ownership of the environmental benefits of their solar energy system.

HB 3039, now in committee, may soon be considered by the Oregon House. The two part bill first sets up a program for developing 20 MW of large-scale projects sized between 500 kilowatts (kW) and 5 MW. The requirement for utilities can potentially be raised to 100 MW, depending on program performance. This program offers a hybrid “net metering then feed-in-tariff” payback program for electric company customers.

The second part of the bill sets up a pilot 25-MW program through 2015 that offers a 15-year feed-in tariff (FIT) for smaller-scale systems. Three quarters of the targets will be achieved by installing systems below 50 kW.

There is also a separate bill, HB 2021 that sets up a FIT for smaller projects and does not include the 20-100 MW program.

Under any of these programs, utilities would get full ownership of all RECs generated by customers. The large-scale program designed for large scale systems would offer a “multiplier,” meaning utilities would get two RECs for every one REC generated.

Supporters say it gives the utility more incentive to participate. Detractors say that it waters down the program, effectively cutting the environmental impact of the clean electricity in half.

In 2006, the California Public Utilities Commission (CPUC) issued a proposed decision that would have given all solar RECs from customers to established power providers. The CPUC eventually reversed the decision because of overwhelming opposition from industry professionals who said it would reduce payback options for solar system owners.

If and when the U.S. Congress passes a carbon cap and trade system and federal RPS, RECs will certainly become much more valuable. This latest question about utility ownership of RECs is likely to stir up debate in Oregon about who should reap that value.