Electric-bill increases go hand in hand with RPS targets

R.J. Lyman, a Boston, Mass.-based partner at Goodwin Procter, is no stranger when it comes to helping his clients navigate renewable portfolio standards (RPS).

He told the Cleantech Group there’s likely to be a rapid deployment of projects from renewable resources once regulators, utilities and political leaders are honest with the consequences: It’s going to mean hikes on electricity bills.

But currently, he said, he’s not seeing enough being done to meet the RPS initiatives.

Lyman is a member of the firm’s Clean Tech Incubator Group, which brings together a bi-coastal group of experts with more than 40 partners focused on cleantech and energy clients.

He represents clients in various aspects of commercial real estate and renewable energy project development, including site acquisition, project permitting, debt and equity financing, and property disposition.

Lyman started his career as a project manager at a consulting engineering firm representing independent power producers and other energy and commercial developers. He has also served as assistant environmental secretary under the former Massachusetts Gov. William Weld.

He shared details with the Cleantech Group about current RPS targets, how U.S. utilities are trying to meet them and some of the associated hurdles. Here are excerpts:

What is an RPS, and what do you think about it?

RPS exist in 28 of the 50 states and the District of Columbia; they require a specified amount of total power generation to be bought by utilities from renewable sources. The quantity of power that needs to be produced from renewable sources and the date by which that needs to occur varies from state to state.

The concept is usually called the RPS, but in the Waxman-Markey bill that passed in the U.S. House of Representatives and may become law, it’s called the national renewable energy standard (see New paper advocates U.S. carbon tax shift and Rice calls carbon cap-and-trade 'ridiculous').

California’s standard requires all utilities in the state to be 20-percent renewable-powered by 2010, and 33 percent renewable-powered by 2020 (see PG&E to meet renewable energy requirements - sort of). The number is at 20 percent for some states and 10 or 15 percent for others. The way people typically blend those together is to say that 20 percent is really the aggregate, and 2020 or 2025 is the time frame we’re talking about.

It is an essential goal from a global perspective, from a national perspective and from an economic perspective. From a global perspective, because the burning of fossil fuels is an indisputable contributor to global warming … and this is a way to provide for the powering of our electric supply, with less dependence on fossil fuels; from a national perspective, because, if we continue and accelerate technology development and component manufacture, this is a way to stop our borrowing money from China to buy oil from the Middle East; and from an economic perspective, because it allows the revival and enhancement of our electric power supply, and this is an essential component of our public infrastructure to support private economic development.

Is the RPS a mandate? What happens if the utilities don’t meet it, and who is leading at meeting it?

It's different state to state. The consequences are typically financial. The utilities under most state mandates have what are known as alternative compliance payments (ACP), which is a way of financing the buying of renewable power from some other source when they haven’t bought it directly themselves.

If the pricing is too low or the ACP requirement doesn't apply, then the RPS is nothing more than a guideline. In making progress, California is indisputably the leader, although the Pacific northwestern states have substantial production and in the southwest, Arizona and New Mexico are doing well, in part because they have excellent natural resources. New Jersey has a particularly well thought through RPS and corresponding set of financial incentives.

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