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- Jul 2, 11:18am
- A quick survey of electricity policy analysts pointed to challenges Inslee and his allies will have finding a way to pay for the rate-recovery mechanism. The bill would facilitate cost recovery through a new private -- and independent -- utility organization called "RenewCorps," which would be subject to FERC oversight. Utilities would be reimbursed by this organization for the additional cost of their power purchases, plus all costs associated with interconnection and network upgrades needed to accommodate the new renewable sources.
How all those costs are determined adds layers of complexity to an already complicated legislative proposal. Among the possibilities being tossed around are revenues from auctioning carbon credits in a future carbon cap and trade law.
At the start, Inslee -- who represents Seattle -- had secured three co-sponsors: Rep. William Delahunt (D-MA), James McDermott (D-MA) and Michael Honda (D-CA).
Six states have introduced feed-in tariff legislation for their own purposes: California, Illinois, Michigan, Minnesota, Rhode Island and Hawaii. Eight other states have begun considering some type of feed-in tariff or incentive pricing plan: New York, Massachusetts, Oregon, Wisconsin, Florida, New Jersey, Maine and Vermont. Together, they demonstrate that at least the concept of feed-in tariffs is not going to fade away any time soon and may, in fact, gain support in the next Congress and with the next President.
Under the German feed-in tariff, renewable energy technologies are guaranteed interconnection with the grid and are paid a premium rate that is designed to generate a reasonable profit for investors over a 20-year term. There are different rates for different types of renewables depending on what the law's authors thought were necessary to develop them profitably. Germany's tariffs decrease each year.
Although often linked to the infamous U.S. Public Utilities Regulatory Policy Act (PURPA), Germany's feed-in tariffs do not peg long-term contracts to the cost of avoiding conventional fuels, which was one of PURPA's objectives. As a result, those tariffs have avoided the contentious debate over those "avoided costs," which could differ region by region under PURPA.
Inslee's proposal would differentiate renewable energy payments by technology type, size of the system and the year it was placed in service. Simple and principled enough to lay the foundation for serious consideration in the 111th Congress? Stay tuned.
Jim Pierobon helps renewable energy companies scale up their businesses by seizing opportunities created by the convergence of new policies and market developments. He's based in Silver Spring, Maryland.
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