Over the last few months, the future of the popular Missouri solar rebate program has been the subject of ongoing negotiations between the public utilities, the solar industry, state regulators, and large industrial interests.  The end result of these negotiations is, for the first time, a clear indication of the amount of solar rebate funds that remain to be distributed by each utility.  For solar developers in Missouri, this information provides much needed regulatory certainty and has a tremendous impact on when and whenre to focus efforts to capitalize on this lucrative incentive.

Background on the Solar Rebate Program

Since its creation in 2008, the $2/watt Missouri solar rebate program has been an interesting case study on the potential impact of state-level solar incentive programs.  From the perspective of satisfying its intended goal of promoting the wide-scale adoption of small-scale solar panels in the state, the program has been an undeniable success.  Based upon the information disclosed to the MPSC, as of September, 2013 the program has paid out approximately $62.5 million to Missouri residents and businesses to help defray the costs of installing solar panels.  As the chart below (based on public MPSC filings) illustrates, the solar rebate program gained significant momentum in 2012, and continued to grow steadily throughout 2013:

Solar Rebate Applications

 

GMO

KCP&L

Ameren

Total

2011

84

64

226

374

2012

210

100

403

713

 

Solar Rebates Paid

 

GMO

KCP&L

Ameren

Total

2011

$1,351,670

$1,305,290

$2,964,306

$5,621,266

2012

$8,303,022

$4,137,812

$9,056,840

$21,497,674

Aug./Sep., 2013

$16,000,000*

$5,900,000*

$13,500,000**

$35,400,000

*See MPSC Docket No. ET-2014-0059, On-The-Record Presentation Transcript – Volume 1, October, 23, 2013
** See MPSC Docket No. ET-2014-0084, Direct Testimony of Richard Wright, October, 11, 2013

Of course, all of this success comes with a price tag.  In an effort to ensure that these costs are properly managed, the statute implementing the solar rebate program provides that the cost of implementing the state Renewable Portfolio Standard, which includes the solar rebate program, cannot exceed by more than 1% of the cost that would otherwise be paid by ratepayers if the RPS did not exist.  At the time the legislation was passed, no one expected that the solar rebates would cause this 1% “Retail Rate Impact” cap to be triggered, but the program has become far more popular than was originally anticipated.

Recent MPSC Dockets

Earlier this year, Kansas City-based utility KCP&L recognized that the 1% Retail Rate Cap would be triggered in its General Missouri (“GMO”) territory, which includes most of the KCP&L’s customers outside of the Kansas City metro area.  Accordingly, on September 4, 2013, KCP&L filed an application with the Missouri Public Service Commission to suspend the rebate payments for the GMO territory.  In that docket, KCP&L worked with the solar industry and the Commission Staff to negotiate a settlement addressing the payment of the solar rebates through the remaining life of the program.  That settlement agreement, which became the basis for similar agreements with KCP&L’s other territory and with Ameren, contained the following material terms:

  • The utilities will not suspend payment of the rebates in any given year, unless and until the total amount of all rebates paid over the life of the program exceeds a threshold amount ($50 million for GMO, $46.5 million for KCP&L, and $91.9 million for Ameren)
  • When the agreed-upon caps have been met, the utilities will file an application with the Missouri Public Service Commission to end the solar rebate program, and that application will be supported by the Commission Staff, the Office of the Public Counsel, the Missouri Industrial Energy Consumers, and the Missouri Solar Energy Industry Association.
  • To keep the public updates on the progress of the program, the utilities will create a regularly-updated website indicating the number of rebate applications that have been submitted, the number of rebate applications that have been approved, and the amount of solar rebates that have been paid.
  • Solar rebate amounts paid by the utilities will be included in a regulatory asset account to be considered for recovery in rates through either a general rate case or through a rate adjustment mechanism to be proposed by the utilities.

The Future of Missouri Solar Rebates

For solar developers and customers interested in installing solar panels on their homes or businesses, the real question is how long the solar rebate funds can be expected to last.  Fortunately, digging into the various public filings in the MPSC dockets and information released by the utilities, it is possible to put together some rough estimates of the level of solar rebate funds that are still available for each of the utilities:

Estimated Solar Rebate Funds Remaining Per Utility

 

GMO*

KCP&L*

Ameren

Total

Solar Rebate Cap

$50,000,000

$46,500,000

$91,900,000

$188,400,000

Rebates Paid

$24,500,000

$9,500,000

$13,500,000

$47,500,000

Applications Pending

$32,500,000

$9,500,000

$27,700,000

$69,700,000

Rebates Paid + Applications Received

$57,000,000

$19,000,000

$41,200,000

117,200,000

Funds Remaining

-$7,000,000

$27,500,000

$50,700,000

$71,200,000

*Updated as of 12/6/13.  See http://www.kcpl.com/save-energy-and-money/for-business/business-rebates/mo/solar-power-rebate/current-program-spend.

Based on the above estimates, it seems clear that the solar rebates are likely complete for the GMO territories.  In fact, assuming that all applications that have been submitted are approved, approximately $7 million worth of rebates that have already been submitted will be denied for lack of funds.  It is important that customers and solar developers working in this territory take the likely unavailability of the solar rebate into account for any potential installations in the future.

For Ameren’s and KCP&L’s non-GMO territories, however, the solar rebates continue to be available.  It should be noted that, based upon their testimony before the MPSC, Ameren has seen a significant increase in the number of solar rebate applications in the last few months.  Thus, it is likely that they will exhaust their supply of solar rebates more quickly than KCP&L, which has also seen a steady, but slower, increase in applications.

All told, the recent MPSC dockets have shown that approximately 60% of the Missouri solar rebate program funds have been exhausted, including all or close to all of the funds in the GMO service territory.  With that said, however, there is still tremendous opportunity for continued growth in Missouri solar, as approximately $71 million remain to help defray the cost of new systems in the KCP&L and Ameren service territories.  For customers of those utilities, sunny skies remain ahead, at least for a little while longer.

 

 

 

 

 

 

 

 

As one of the final acts of the 2013 legislative session, on May 17th the Missouri legislature approved an amendment that will phase-out the Missouri solar rebate between 2014 and 2020. The approved amendment was based largely upon similar legislation that was supported by the Missouri solar industry trade group, MOSEIA, as well as the Missouri public utilities.

As background, pursuant to Proposition C, the voter intiative implementing Missouri’s Renewable Energy Standard, the state’s public utilities provide a rebate of $2.00 per watt for new or expanded solar systems on customers’ premises, up to a maximum of 25 kW per system (for a maximum total rebate of $50,000 per system), subject to a 1% annual cost cap for the utilities.

This rebate has been viewed as extremely effective in encouraging the development of the Missouri solar industry over the last few years. In light of this success, going into the 2013 legislative session both the solar industry and the public utilities believed that it was necessary to begin planning for the phase-out of the incentive over the next few years. To this end, a number of bills were introduced setting forth proposed phase-out schedules ranging from 4 to 6 years. Though none of the stand-alone bills garnered enough support to pass both chambers prior to the session end on Friday, an amendment to an existing utilities bill which included the phase-out language was successfully proposed and passed on the final day of the session.

As passed, the amendment sets forth the following phase-out schedule for the solar rebate:

  • $2.00/watt before June 30, 2014;
  • $1.50/watt between July 1, 2014 and June 30, 2015;
  • $1.00/watt between July 1, 2015 and June 30, 2016;
  • $0.50/watt between July 1, 2016 and June 30, 2019; and
  • $0.25/watt between July 1, 2019 and June 30, 2020.

In addition to the phase-out, there are a number of other provisions included in the amendment that could potentially impact the Missouri solar industry and the public. If you have any questions about the solar rebate, this legislation, or the potential impacts on the solar industry or your company, please feel free to leave a comment or contact me at lhagedorn@polsinelli.com or (913)234-7416.

It’s been a busy few months here at RELI, with major projects taking up a substantial amount of my time.  Hopefully, I’ll be able to provide some details on that work in the next few days, but for the time being I wanted to pass along an article that I wrote for the March edition of the Missouri Municipal League‘s publication The Review.  Enjoy!

______________________________________________________________

There can be no doubt about it.  Electric vehicles are on the way.  In his 2011 State ofUnionaddress, President Obama put forth a firm challenge for theU.S.automotive industry when he called for theUnited Statesto “become the first country to have a million electric vehicles on the road by 2015.” 

Though President Obama’s goal of 1 million electric vehicles (“EVs”) by 2015 is probably overly optimistic, there are signs that the EV market in theUnitedStateis gaining momentum.  In the span of one year, the market for EVs tripled from approximately 17,500 EVs sold in 2011, to approximately 53,000 new EVs in 2012.  This growth is particularly impressive when you consider that even the most mainstream EV offerings such as the Chevrolet Volt, Nissan Leaf, and Toyota Prius Plug-in Hybrid have often only been available in limited quantities in major markets.  Additionally, it is unlikely that the market penetration of EVs will continue to grow at a slow, incremental pace.  Instead, it is likely that the number of EVs on the nation’s highways will increase dramatically as consumers become more exposed to EV technology and manufacturers release a broader selection of makes and models of EVs that appeal to a wider range of consumers.

Being the “Show-Me” State, it is perhaps unsurprising that many Missouricommunities have delayed planning the local infrastructure and procedural processes that will be necessary to support wide-spread EV adoption.  Fortunately, in 2011 the U.S. Department of Energy awarded a grant to the MetropolitanEnergyCenterin Kansas City, MOto produce a regional plan that can be implemented by municipalities in Kansasand Missourito prepare public resources and secure the economic and environmental benefits of EVs.  This plan, which will be accessible at www.electrifyheartland.org, compiles expert analysis from EV industry participants, local communities, public utilities, and subject matter experts such as Black & Veatch and the law firm of Polsinelli Shughart to provide guidance to communities that are seeking to lay the foundation for widespread EV adoption. 

Among the numerous findings detailed in the plan,Missouricommunities should perhaps benefit the most from the discussion of the unique planning and regulatory efforts that will likely be required to accommodate EV adoption.  While at face value EV usage may not appear to require much attention, local governments should strongly consider taking the following steps before EVs start appearing on city streets: 

  • First, an estimate should be prepared of exactly how many EVs might be purchased in the community in order to get a sense of the scope and timing of the planning efforts that should be undertaken. 
  • Second, the municipality should examine its existing building codes to determine what standards should be applied to the installation of EV charging stations in residential and non-residential settings. 
  • Third, the municipality should examine its current electrical permitting and inspection process to determine how it will ensure that EV charging stations installations are conducted in a safe and reliable manner without unduly burdening either the installers or the permitting office.
  • Finally, the municipality should examine its existing parking and signage ordinances to determine how it will treat parking spots with electrical vehicle charging stations.

Projections for Missouri EV Adoption

When talking about long-term national goals, it can be easy to lose perspective on local impacts.  If theUnited Stateswere to reach its goal of 1 million EVs on the road, how many EVs could be expected in the average community inMissouri? 

Based upon motor vehicle registration data gathered by the U.S. Federal Highway Administration,Missourihad a total of just over 5 million vehicles registered in the state in 2011, or roughly 8 vehicles for every 10 people in the state.  As Figure 1 below illustrates, assuming that the 1,000,000 nation-wide EVs are distributed proportionally with population among the states, Missouri could expect a total of just over 20,500 EVs, or about one EV for every 300 people in the state. For a community of 10,000 people, this equals roughly 34 EVs, or roughly 340 EVs for a community of 100,000.

Of course, the real challenge for municipal governments lies not in the vehicles themselves, but with the infrastructure necessary to charge the vehicles, known as Electric Vehicle Supply Equipment (“EVSE”) or simply as “charging stations.” 

It is probably safe to assume that every person who purchases an EV will also purchase a charging station for their home, so they will be able to charge their vehicles overnight.  Additional charging stations will likely be installed by local businesses, by potential third-party suppliers of electricity, and by the municipalities themselves.  Taking these additional charging stations into account, it can be estimated that roughly 1.5 charging stations will need to be permitted, installed and inspected for every EV located within a community.  Figure 2 below extrapolates this estimate across the state to show the projected number of charging stations that will be required.

Updating Building Codes to Address Charging Stations

Once local planners have a sense of how many EVs can be expected in their jurisdiction, the question raised is what changes should be made in the local ordinances and policies to accommodate this influx of new vehicles and charging stations.  Because there is no state-wide authority for building codes inMissouri, it will be necessary for local communities to review their building codes to ensure that EV charging stations will be safely integrated into new and existing structures.  As with any revisions of building codes, the main goal of the process is to incorporate as much flexibility as possible while still maintaining the highest level of safety for installers and citizens.

Specifically, there are a number of revisions that communities can make to their building codes that will significantly improve the processing time and effectiveness of their planning efforts for EV charging stations, a few of which are described below:

  • To ensure safe and up-to-date practices are utilized during installations, adopt the most current version of the National Electrical Code (“NEC”), or at least Article 625 of the NEC which includes best practices for wiring methods, equipment construction, control and protection, and equipment locations for EV charging stations.
  • Require all new, reconstruction and renovation building projects to ensure that the electrical room and all conduits leading to the electrical room in new multi-unit, commercial or industrial developments are appropriately sized to accommodate future electrical equipment necessary for charging stations, as well as the voltage and amperage capabilities of the accompanying infrastructure.
  • Require that all newly permitted construction or renovation projects install sufficient conduits, junction boxes, wall space, electrical panels and circuitry capacity in locations that could potentially serve EVSE sites in the future, such as garages and parking facilities.

Update Electric Permitting Ordinances to Address Charging Station Installations

For most municipalities acrossMissouri, the primary logistical hurdle for EV adoption is how to design a permitting and inspection process for EV charging stations that will allow for safe and reliable installations without unduly burdening their administrative staff.  Currently, when faced with an electrical permit for the installation of an EV charging station, most municipalities default position is to either follow the pre-established procedure for miscellaneous electrical permits, or fail to permit the installations at all.  Both scenarios present unsatisfactory results and fail to consider the particular complexities of installing an EV charger.  This puts the public confidence in EVs and EVSE at risk unnecessarily.

When designing these inspection programs, one of the easiest ways to minimize the administrative burden while efficiently allocating resources is to recognize the fact that communities will face a wide spectrum of potential scenarios for charging station permits, and there is no single permitting process that would be appropriate for all occasions.  For example, significantly less regulatory scrutiny will be needed for installation of a small charging system in a residence than would be required for a large commercial entity that wants to install numerous charging stations for use by customers and employees. As discussed more thoroughly below, in order to accommodate these different needs and allocate resources appropriately, many communities across the country are adopting a multi-tiered process that applies different levels of scrutiny to projects based upon the project’s complexity. 

Single-Family Residential Installations

By far the easiest EV charging alternative for most consumers is to utilize an existing 120-volt outlet located in the garage.  Obviously, in these cases an electrical upgrade is not required, so no permit is needed.  In cases where a dedicated 120V or 240V receptacle and circuit is desired for a charging station, a minor electrical permit likely needs to be issued, though it can easily be handled under the city’s existing permitting requirements. 

However, in cases where the resident’s existing electrical panel cannot safely meet the increased electricity needs, then an additional permit will be required in order to either upgrade the electrical panel or install a new panel and meter.  In order to gather all of the information needed to properly assess the safety of the installation, many municipalities across the country are adopting a stand-alone permitting form for these installations.  Often, these permits are based in large part upon a form permit application that has been prepared by the U.S. Department of Energy’s Alternative Fuels and Advanced Vehicles Data Center, available at http://www.afdc.energy.gov/pdfs/EV_charging_template.pdf.

Beyond adopting a specialized stand-alone permit, there are other steps that a community can take to streamline the permitting process.  For example, if the non-minor permit application has been submitted by a certified electrician that has received training in the installation of EV charging stations from an nationally-recognized training program, the local government can have some comfort that the installation is safe and therefore can adopt less stringent inspection processes, such as inspecting one out of ten installations or foregoing inspections altogether.  Where the installation was conducted by an electrician that has not been trained in EVSE, then many local governments have made it a priority to inspect the projects as soon as possible.  For example, many municipalities across the country have committed to conducting inspections within 24 hours of the installation of the charging station equipment.

Large Single-Family Residential, Multi-Family Residential and Commercial Installations

While small single-family residence installations likely present relatively few safety risks, charger installations in larger settings can be significantly more complex and thus require more significant oversight from local permitting bodies.  As an example, compare the installation of a new 120V / 1.8 kilowatt outlet in a residential garage to the installation of ten quick-charge stations outside of a movie theatre or grocery store, each of which are capable of handling 240V and up to 20 kilowatts of electricity.  For these more complex projects, communities should consider requiring applicants to fill-out a specialized permit and provide significantly more scrutiny to these types of installations.

EV Signage and Parking Marking Plans

Though we seldom stop and think about their impact, street signs can serve three important functions to facilitate the adoption of EVs in a community. First and most obviously, they can direct EV drivers to the nearest public charging stations.  Second, they serve to educate non-EV drivers about the availability of charging stations, and thus promote confidence that, should they decide to purchase an EV, there will always be a charging station readily-available.  Finally, they can publicize premium reserved parking spots, should the government choose to utilize the parking locations as an incentive for EV drivers.

Given the potential importance of signage to the public’s perception of EVs, it is perhaps not suprising that a significant amount of debate has occurred at the national level regarding the adoption of a uniform standard for EV charging station signs.  Currently, roadway signage is regulated by the U.S. Department of Transportation, Federal Highway Administration (“FHWA”).  Specifically, approved signage requirements are contained within the Manual of Uniform Traffic Control Devices (“MUTCD”).

In its current form, the MUTCD does not contain any requirements for EVSE signage.  However, there is a process by which state transportation agencies may submit a request for so-called “experimental” signage.  If approved, the experimental signs may be used within the state subject to certain requirements and restrictions.  By way of example, in 2011, the Departments of Transportation for the States of Washington andOregonsubmitted a request for the FHWA to consider an EV Charging General Service symbol, displayed as Figure 3 below. The FHWA granted those states an interim approval to use the signs to designate charging station locations.

In order to promote consistency,Missouricommunities should seriously consider adopting this FHWA-approved signage, and encourage the Missouri Department of Transportation to submit a request and obtain approval from the FHWA to utilize the symbols in the State.  These symbols have already been thoroughly evaluated by the FHWA and were found to be highly visible and comprehensible by a large segment of the population.  Additionally, adopting a symbol that is being utilized in other jurisdictions across the country increases the effectiveness of the symbols by promoting uniformity and recognizability.

While the FHWA approval process is being pursued, local communities can also begin to present this signage as an option for local businesses to utilize on private property, similar to what many businesses use currently for “Pregnant Mother” parking spaces.  Of course, such signage would be unofficial and entirely without the force of law, but its adoption would signal that the business recognizes and supports the needs of its EV-driving clientele.

Incentives or Penalties for EV Charging Station Parking

 

Finally, once the stations are installed and the signs are put up, public and private parking facility owners will need to determine whether, and to what extent, such signs will be enforced. 

InMissouri, the enforcement of street signs on public property is currently a prerogative of local governments, and thus each community will need to determine the level of enforcement that is appropriate for its populace.  However, when setting these enforcement policies, it is important that communities carefully weigh several competing interests.  First, during the early years of EV adoption, parking spots with EV charging stations may be vacant for large periods of time.  It is possible that a negative sentiment could develop if these spots are located in high-traffic areas and parking by non-EVs is prohibited and strictly enforced.   On the other hand, the availability of these charging locations is critically important for fostering range confidence for EV drivers.

To successfully balance these concerns, local communities might consider promoting the placement of EVSE in locations that are convenient and accessible, but not necessarily in the most desired or prominent parking locations.  Additionally, if the community is considering adopting punitive actions for non-EVs parked in an EV spot, the community might consider foregoing enforcement of those penalties until the level of EV adoption in the community is strong enough to ensure that the spots are filled a significant amount of the time.

Proper Planning Will Lead to a Smooth Transition to EVs

There can be no doubt about it, EVs are on the way.  By taking a few relatively minor steps to prepare for this influx of new vehicles and the infrastructure needed to support those vehicles, local communities will be able to minimize logistical and administrative burdens and ensure that local residents across the state are able to enjoy their new vehicles safely.

Literally and figuratively, Kansas and Missouri stand at the crossroads of the United State’s quest for an “all-of-the-above” energy policy. Located in the heartland of the United States, these states enjoy abundant access to traditional and renewable energy resources. Just as importantly, the central location of Kansas and Missouri place these states in a critical segment of the national infrastructure that is needed to transport those resources to population centers across the country. With proper planning, these critical investments create an excellent opportunity to create jobs and bolster the economies of communities throughout the region.

Generation and Production

Renewables

With the second best wind resource in the United States, the State of Kansas has made great strides in developing a robust wind industry over the last few years. In 2011 in particular, Kansas boasts eight major wind projects under construction, is set to nearly double its installed capacity in the span of a single year and leads the country in wind project construction.

In Missouri, the most recent successes involve solar energy. Based in large part on a solar carve-out in the state Renewable Energy Standard and a $2.00 per kilowatt rebate for net-metered solar installations, both of which were introduced as part of an overwhelmingly approved 2008 voter ballot initiative, Missouri has enjoyed a recent surge in small to mid-sized solar projects over the last year.

Oil & Gas

As with renewables, the Midwest region is ideally located to reap tremendous benefits from its access to traditional fuel resources. In particular, due to its prime location on the Mississippian Lime Play, Kansas has enjoyed a surge in oil and gas developments across the state. From March to July of 2012 alone, the Kansas Corporation Commission approved roughly 3,000 Notice of Intent to Drill filings.

Transmission & Pipeline Infrastructure

Regardless of whether it is moving north, south, east or west across the country, a significant amount of the electricity, oil, natural gas, or coal produced in the United States will pass through Kansas or Missouri at some point. As a result, it is vital that both Kansas and Missouri adopt well-reasoned policies to ensure that the states can enjoy the economic benefits that come with this infrastructure, and to avoid any bottlenecking of these valuable resources.

Transmission

It is no surprise that the renewable energy being generated in remote locations across the Midwest is only useful if it can be transported to consumers. Fortunately, there are a number of companies currently constructing transmission lines that create a modern, robust electricity grid across the region. These projects include Clean Line Energy’s 700-mile Grain Belt Express Clean Line, Kansas City Power & Light’s and the Omaha Public Power District’s proposed 190-mile Missouri to Nebraska line, ITC Great Plain’s 225-mile KETA Project, and the 122-mile “V-Plan” line being built by ITC Great Plains and Prairie Wind Transmission, a joint venture of Westar Energy and Electric Transmission America.

Pipelines

Just as with the electricity transmission lines, the influx of new oil and natural gas projects across the Midwest have dramatically increased demand for a strong pipeline infrastructure. Both Kansas and Missouri have made great strides in this regard recently. For example, Missouri hosts portions twelve interstate natural gas pipelines, including the largest state-to-state pipeline in the region, the Southern Star Central Gas Pipeline Company’s line. Other notable interstate pipelines include those developed by ANR Pipeline Co., Centerpoint Energy Gas Transmission Co., Mississippi River Transmission Corp., Panhandle Eastern Pipeline Co., and Texas Eastern Transmission Corp.

An Energy Policy for the Future

Whether you look at renewable resources or traditional fuel resources, it is clear that Kansas and Missouri are ideally located to play a national role as both a producer and courier for our nation’s future energy supply. All that is required is a well-reasoned set of policies that ensure that these industries can develop at their full potential, and that local communities that host these developments receive appropriate economic rewards. Standing at this crossroads in our nation’s energy policy, the key question is which paths these states will choose to best secure their place as a key player in the United State’s energy future.

Despite the doom and gloom that seems to be dominating the renewable energy headlines of late, I’ve noticed an interesting trend that should bode very well for the continued development of renewable energy in the United States.  While the Federal Government’s lack of action on the 1603 grant has cast serious uncertainty about the future of federal tax incentives for renewables, many state governments have quietly introduced legislation to increase their Renewable Energy Standards (“RESs”) or Renewable Energy Portfolios (“REPs”).

I’ve provided an overview of these very important policies before, but as a quick refresher RES programs are essentially state legislative initiatives that require a certain threshold percentage of a utility’s total energy portfolio be generated from renewable sources (such as wind, solar, biomass, geothermal or other sources) by a certain date in the future.

For states that are trying to incentivize their public utilities to invest in renewable technologies, RES programs provide a relatively straight-forward way to achieve their goals.  However, RES programs are only effective for as long as it takes the utilities to build enough renewable generation or purchase enough Renewable Energy Credits (“RECs”) to meet the thresholds.  Encouragingly, many states that have set RES thresholds have seen their utilities quickly obtain sufficient renewable generation to satisfy the RES for years into the future.  However, once those projects have been developed, the utilities then have no further incentive to continue investing, so development of renewable projects unsurprisingly begins to languish.

This leads us to the good news.  Presented with undeniable evidence that RES programs do in fact lead to increased development of renewable projects, many states are now seeking to either implement RES programs for the first time, or increase the amount of renewable energy that is required.  Below are a few examples…

  • Kentucky: Legislation introduced by State Rep. Mary Lou Marzian, D-District 34, calls for the establishment of a RES which would require utilities to obtain 12.5% of their electricity from renewable energy by 2022.  (Source: NA Windpower)
  • MissouriRenew Missouri, a group formed several years ago to support the state’s first RES, is introducing a new ballot initiative to close existing loopholes that have delayed implementation and increase the thresholds to 25% by 2025.  Jeffrey Tomich of the St. Louis Post Dispatch recently wrote an excellent article summarizing the issue.
  • Illinois: A ballot initiative is being considered which would increase the state’s current 10% by 2015 mandate to 25% by 2025.
  • New Jersey: Though ultimately struck down by Gov. Christie, legislation sponsored by State Sen. Bob Smith and Assembly Member Upendra J. Chivukula sought to more than double the solar output from utilities by 2014.  Jessica Lillian of Solar Industry Magazine provides this overview.
  • Vermont:  Legislation proposed in Vermont seeks to adopt very aggressive RES thresholds, amounting to 40% from existing renewable resources, plus 10% more from new resources by 2013, and adding an additional 40% from new renewable resources by 2025.

I would be remiss if I didn’t also mention a wonderful defense of Renewable Energy Standards written by Peter Fox Penner, Principal and Chairman of the Brattle Group, on Think Progress.  The article is packed full of great information, but among my favorite facts is the following:

In the midst of the worst economy since the great depression, the worldwide market for renewable energy continues to provide jobs and investment. And states are recognizing these economic benefits when setting energy and environmental policies.  The nonpartisan Brookings Institution recently studied employment trends in the clean energy sector and found that, “though modest in size, the clean economy [in the U.S., which according to the study includes many sectors other than renewable energy] employs more workers than the fossil fuel industry and bulks larger than bioscience.” The study also found that the renewable energy sectors “added jobs at a torrid pace.”

With the state and federal legislatures out of session, it has been a relatively slow couple of weeks in the world of renewable energy law.  Fortunately for you, what may seem like a lack of significant new developments is actually an excellent opportunity for me to highlight a few of the significant stories that I wasn’t able to cover the first time around.

With this in mind, it is time once again to continue our series of state-by-state updates of some of the most signficant renewable energy stories.  Today, we will focus on Missouri. 

Ranked 13th in the nation for wind capacity, 24th in the nation for solar resource, and first in our hearts, the Show-Me State is currently facing a critical juncture in its renewable energy development due to uncertainty surrounding the state’s Renewable Portfolio Standard.  With this background in mind, let’s take a look at what has been going on in the Missouri…

Missouri Public Service Commission Announces New Chairman 

Missouri Governor Jay Nixon recently appointed Kevin Gunn as the new chairman of the Missouri Public Service Commission. Chairman Gunn will replace Robert M. Clayton III, who will remain on the Commission. 

Chairman Gunn was appointed to the Commission in 2008 to a six-year term. Prior to that appointment, Chairman Gunn was an attorney in St. Louis. He received his bachelor’s degree from American University and his law degree from Saint Louis University School of Law.

In commenting on the appointment, Governor Nixon stated that

Kevin Gunn has experience and vision that will be invaluable as we formulate Missouri’s energy policy for the coming decades. A key part of that will be wise investment in renewable energy sources, and Kevin will give us strong leadership on that issue. I appreciate Commissioner Robert Clayton’s service as chairman of the PSC for the past two years in standing up for the fair treatment of Missouri energy consumers, and look forward to his continued good work on the commission.

Missouri RES Provisions Still in Flux

As I briefly mentioned above, in 2008, Missouri voters approved ballot initiative Proposition C by 66% of the vote. Proposition C requires electric utilities to obtain 15% of their electricity from renewable sources by 2021, and includes a cost cap that limited the increase to retail rates resulting from compliance with the mandate to an average annual 1%. However, the language of the ballot measure was ambiguous, and a controversy over the voters’ intent continues to be debated by legislators as they work to clarify the statute.

There are a number of issues at the heart of this debate, but perhaps the most contentious is whether the renewable energy has to be generated in or delivered to Missouri, as opposed to allowing a Missouri utility to buy a REC (renewable energy credit) from another location in order to meet the RES requirement. 

I have discussed the importance of geographic sourcing requirements before, and this is yet another excellent example of how important the issue can be in practice.  Public utilities justifiably want to purchase RECs from projects located in other states, because those RECs are almost always cheaper than building their own generation or buying RECs from projects within Missouri.  Nonetheless, allowing for the purchase of out of state RECs effectively destroys the incentive to develop renewable projects within the states, as there is no longer any guarantee for project developers that the energy that they generate will be purchased by the utilities.

To address the contentious issues surrounding the RES, the Missouri Speaker of the House formed a Special Committee on Renewable Energy and appointed Representative Jason Holsman, a Democrat from Jackson County, to chair the Committee.  Rep. Holsman, a supporter of renewable energy, filed legislation (HB 613) to address the Prop C issues.   Among other things, this legislation specified that utilities can only satisfy their RES requirement with energy that is generated within the state, or energy that can serve Missouri customers. 

To complicate the political dynamics on this issue, a nuclear cost recovery bill was also proposed that, in many peoples’ eyes, may have hindered passage of HB 613. Through this bill, Ameren and the other regulated electric utilities, the electric cooperatives, and the municipal utilities proposed allowing Ameren to recover the costs of obtaining an early site permit from ratepayers for the construction of a new nuclear plant. There was strong opposition to the bill from certain members of the Senate and all efforts to move the bill forward were stalled. Though the two bills were unrelated on their face, the nuclear bill and the renewable energy bill have been indirectly associated with one another, and a loss of momentum for the nuclear bill harmed the chances of any success for the Proposition C revisions.

Ultimately, it will still be a while longer before we know the fate of Missouri’s Renewable Energy Standard.  The Missouri legislative session concluded on May 13, 2011, and no progress was made on either of the bills prior to the conclusion of the session.