In effort to promote local green energy resources, some states are enacting policies that tread on federal authority. Restrictions on power imports to satisfy RPS requirements might violate the...
Renewables attract utility investment dollars.
FPL, for example, put three solar energy plants totaling 110 MW into its rate base after the legislature passed a bill specifically giving the company full cost recovery for that amount of solar capacity. But if pending legislation becomes law, the state’s utilities wouldn’t need such special treatment to rate-base their renewable investments. Two committees in the Florida senate recently approved a bill (SB 1154) that would create a clean energy standard—promoting not only renewables but also nuclear and coal plants that sequester carbon dioxide emissions. The bill also would direct the PSC to provide rate recovery on the same terms as environmental compliance costs for up to 110 MW of new renewable investments—such as FPL’s announced 75-MW PV installation at Babcock Ranch.
In other states, unbundling policies prevent utilities from investing significantly in renewable assets. In New York, for example, some investor-owned utilities may own certain micro-scale renewable generators, but in most cases utilities that own transmission and distribution (T&D) assets in New York can’t own significant generating assets in the same market. This provision emerged as a significant factor affecting Iberdrola’s acquisition of Energy East, because Iberdrola Renewables wants to develop major wind generation projects in New York. Some utilities now find this situation unacceptable, and are lobbying the state government to include exceptions in New York’s new state energy plan that would allow T&D utilities to develop renewable power assets.
“Public policy makers must realize that New York’s investor-owned utilities possess the singular ability to both construct renewable-source generation and equitably spread the expense of these large projects into the future,” stated a Central Hudson Gas & Electric position paper. “Utilities have existing facilities, rights-of-way, and relationships within their long-established, regulated service territories. New York’s electric utilities, when provided the opportunity to earn a reasonable rate of return, offer the answer through their ability to plan, finance and construct these projects to benefit their customers.”
As the U.S. electric power industry turns its attention toward renewable energy, utility companies are reassessing their roles. To better understand how utilities are approaching the opportunities and challenges, Fortnightly spoke with five executives who are advancing their companies’ renewable investment strategies: Andrew Dickson , vice president of wind energy at Duke Energy Generation Services; Owen Smith , managing director of regulated renewable energy and carbon strategy at Duke Energy; Jesse Langston , vice president of utility commercial operations for Oklahoma Gas & Electric; Roy Kuga , vice president of energy supply with Pacific Gas & Electric; and Mark Stoering , Xcel Energy’s vice president of portfolio strategy and business development.
Fortnightly: What’s the status of investments in renewable power facilities at your company? What investments have you made recently, and what investments are planned?
Smith, Duke: We’re pursuing a lot of things, but we haven’t built a lot of our own renewable assets, apart from hydro. Renewable standards are very new in the five states in which we operate. North Carolina passed an RPS in 2007 with the first requirements taking effect in 2010, and Ohio enacted an RPS in 2008 with