Tag Archives: ratepayers

California’s Climate Credit is Worth Watching

April 17, 2014 |

 

This month, many Californians will see something new on their electricity bills: The first bi-annual Climate Credit, a payout to customers of investor-owned utilities like PG&E and SCE through California’s Cap and Trade program. The Climate Credit is worth around $30-$40 and will recur every April and October for most customers. However, for customers of some small utilities it will reach nearly $200, while certain small businesses, schools, and hospitals will receive their credit every month.

National and international climate communities are already keeping a close eye on California’s AB32 Global Warming Solutions Act, which includes the Cap and Trade Program as part of a package of policies aimed at cost-effectively reducing California’s emissions. The impact of the Climate Credit — the first of its kind — is worth watching to determine if similar mechanisms could be used successfully elsewhere. In particular, the Credit’s impact on both energy efficiency and public support for the Cap and Trade program will be especially interesting to follow.

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Renewable portfolio standards – the high cost of insuring against high costs

December 17, 2012 |

 

State-level renewable portfolio standards (RPS) are a critical part of the U.S. renewable energy policy landscape. 29 states and Washington DC have enacted mandatory RPS policies. Taken together, they require that nearly 10% of U.S. electricity comes from RPS-eligible renewable energy sources by 2020.

But state policy makers have expressed concern about the potential cost of these policies. Over 20 states have included some form of cost limit in their policy. These cost limits are intended to protect electricity consumers from unacceptably high costs, and mitigating this risk can help increase political and public support for the policy. But depending on how they are designed and implemented, these cost limits can have unintended effects: They can increase the cost of deploying renewable energy, make RPS policies more complicated and less certain, and sometimes do not even limit costs as intended.

States have taken a wide range of approaches to limiting costs. Common approaches include:

  • Alternative compliance payments – ACPs let electricity suppliers meet their renewable energy requirements by making a payments rather than purchasing renewable energy credits or contracting with renewable energy projects. These payments are often used to fund complementary clean energy or energy efficiency programs. The ACP level is usually set by a regulator, and in practice, creates a maximum price for renewable energy credits.
  • Rate impact caps – Some states put a limit on how much renewable energy policy can increase electricity rates. These mechanisms vary significantly from state to state in terms of which renewable energy costs are included, how they are calculated, and the time period that they apply to.
  • Per-customer cost caps – A handful of states place a limit on the dollar amount any particular customer’s bill can increase because of the RPS.
  • Contract price caps – A couple of states have applied limits on the price that a renewable energy generator can contract to sell power to a utility.
  • Funding limits – Several states have created limits to the amount of funding that can be used to cover the costs of renewable energy.

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