Slide1: Summary of Some Commonly-Referenced Reports on Renewable Generation Developed by the MPUC, August 2005


NY RPS Study, for NY DPS, Feb. 2004: NY RPS Study, for NY DPS, Feb. 2004 Benefits from Renewables Reduced emissions (5%-7% reduction), health Diversity – reduced risk of price fluctuation and supply interruptions (9% reduction in oil/gas generation) Downward pressure on fossil fuel prices Economic impacts (jobs, local product purchases, added revenues to local economies, increased tax revenue) Reduced electric prices in some locations, not in others


NY RPS Study, for NY DPS, Feb. 2004: NY RPS Study, for NY DPS, Feb. 2004 Costs – retail - of increasing NY’s RPS from 20% to 25% Scenarios: - current vs lower gas price - cost-based vs. market clearing price approaches - location (congestion effect)


NY RPS Study, for NY DPS, Feb. 2004: NY RPS Study, for NY DPS, Feb. 2004 Average bill impacts in 2013, depending on scenario On a statewide basis, both gas price scenarios caused modest bill increases and both “approach” scenarios caused modest bill increases. Bill decreases were caused in some locations, by the congestion impact.


NY RPS Study, for NY DPS, Feb. 2004: NY RPS Study, for NY DPS, Feb. 2004 Costs – retail (continued) Scenario Annual 2013 impact cumulative NPV Under higher-gas-price scenarios, statewide cost decreases in yr 1, increases in yr 4, could do either in yr 8 Under lower-gas-price scenarios, statewide cost increases in all years


NY RPS Study, for NY DPS, Feb. 2004: NY RPS Study, for NY DPS, Feb. 2004 Cost – wholesale On a statewide basis, wholesale prices would decrease Scenario Annual 2013 impact


NY RPS Study, for NY DPS, Feb. 2004: NY RPS Study, for NY DPS, Feb. 2004 Observations Study assumed plants would be built if justified by economics No ACM – study assumed supply would keep up with demand New renewables were specific to NY (e.g., upgraded Canadian hydro, upgrades to existing biomass) Renewables’ cost premiums ranged from 0.2¢ to 2.3¢ Large hydro (>30MW) and MSW not eligible


Rhode Island GHG Action Plan Study, Tellus Institute, Feb. 2002: Rhode Island GHG Action Plan Study, Tellus Institute, Feb. 2002 Costs of Future RI RPS: 10% RPS 15% RPS 20% RPS


Rhode Island GHG Action Plan Study, Tellus Institute, Feb. 2002: Rhode Island GHG Action Plan Study, Tellus Institute, Feb. 2002 Benefits Lower gas prices from reduced overall demand: - 10% RPS: 4¢/MMBtu (38¢ on res’l bill) - 20% RPS: 21¢/MMBtu ($2.00 on res’l bill) Emissions reduction, effect on region: - 10% RPS: $ 94 M (20-yr NPV) - 20% RPS: $343 M


Rhode Island GHG Action Plan Study, Tellus Institute, Feb. 2002: Rhode Island GHG Action Plan Study, Tellus Institute, Feb. 2002 Effect of higher or lower natural gas prices has minimal impact on cost of RPS (maximum 0.02¢/kWh) Scenarios: higher and lower gas prices, non-delivered imports allowed


MA RPS: 2002 Cost Analysis Update, Sustainiable Energy Advantage & LaCapra, Dec. 2002: MA RPS: 2002 Cost Analysis Update, Sustainiable Energy Advantage & LaCapra, Dec. 2002 Scenarios varied: - NY import costs - PTC - offshore wind timing - biomass fuel costs - green market development - LMP impact - cost of new facility financing


MA RPS: 2002 Cost Analysis Update, Sustainiable Energy Advantage & LaCapra, Dec. 2002: MA RPS: 2002 Cost Analysis Update, Sustainiable Energy Advantage & LaCapra, Dec. 2002 Costs Bill impacts: 0.20¢ - 0.35¢/kWh in 2003 0.01¢ - 0.45¢/kWh in 2012 Most significant cost drivers: - market price - financing assumptions - PTC - cost to import


Energy Choices Revisited, forMainewatch Institute, Feb. 1994: Energy Choices Revisited, for Mainewatch Institute, Feb. 1994 Benefits from QF and Conservation Policies of late 80s (compared with 3 alternative scenarios) Economic development – new industries created 6,000 jobs Gross State Product – increased as much as $220M annually Air emissions – reduced by 2 – 6 M tons annually ($57M to $202M) Net benefit: $209M - $424M Occurred during economic recession. An upturn would increase benefits, decrease costs


Energy Choices Revisited, forMainewatch Institute, Feb. 1994: Energy Choices Revisited, for Mainewatch Institute, Feb. 1994 Cost of QF and Conservation Policies of late 80s Electric rates higher by 4% - 12% In actuality, electric rates rose 36% Thus, actual rate increases were impacted by economic conditions and other factors more than by the QF/conservation policies


Energy Choices Revisited, forMainewatch Institute, Feb. 1994: Energy Choices Revisited, for Mainewatch Institute, Feb. 1994 Net Impacts by Scenario Revenue Environmental Scenario Impact GSP Cost Net Benefit Scenarios assumed differing amounts of NUG and DSM activity, replaced with differing amounts of Seabrook, Sears Island, and Canadian generation.


Energy Choices Revisited, forMainewatch Institute, Feb. 1994 : Energy Choices Revisited, for Mainewatch Institute, Feb. 1994 Implementation Recommendations Planning and investment is based on long-term projections of costs and demand Forecasts will be wrong Planning should minimize the consequence of error


Climate Action Plan for Maine DEP, 2004 : Climate Action Plan for Maine DEP, 2004 Recommendations Carbon offset requirements. New renewables qualify Cap and trade CO2 emissions SBC to raise funds Emission standards Support biomass generation through PTC Capture methane from landfill gas for generation Revise RPS. Increase percentage over time; limit resources if desired Incent use of biomass feedstock for biomass generation State government purchase electricity from renewables Incent CHP Incent solar water heaters Increase waste to energy generation Buydown for on-site solar PVs


Climate Action Plan for Maine DEP, 2004: Climate Action Plan for Maine DEP, 2004 Benefits from Renewables Reduced emissions; human health Increased security of energy supply Economic development; support for existing business Improved utilization of existing biomass feedstock Improved generation efficiency (CHP) Reduced emissions from landfills


Climate Action Plan for Maine DEP, 2004: Climate Action Plan for Maine DEP, 2004 Costs - measured in $ per Kmt (thousands of metric tons of carbon equivalent) in 2020 Offset Requirement: low cost Cap & Trade: high savings SBC: higher cost Emission standards: higher cost Subsidize biomass: low cost Landfill gas generation: low cost RPS: low cost Biomass feedstock: neutral State green purchase: high cost Incent CHP: high savings Incent solar water ht: moderate cost Waste to energy gen’n: mod-high cost Buydown on-site PVs: not estimated


The Promotion of Renewable Resources, MPUC, Dec. 2003 : The Promotion of Renewable Resources, MPUC, Dec. 2003 Recommendations, assuming Legislature wishes to encourage Revise RPS. Remove cogen, hydro>5MW, QFs; add new-renewables tier; add biomass/MSW tier; add tradable credits; add cost cap. Or: Implement SBC. Include fuels as for RPS. Fund biomass/MSW on per-kWh rate varying with market price. Fund other technologies by competitive bid. ME facilities only. Small generator aggregation, <5MW.


The Promotion of Renewable Resources, MPUC, Dec. 2003: The Promotion of Renewable Resources, MPUC, Dec. 2003 Benefits from Renewables Environmental Resource diversity – reduce over-reliance on fossil fuel; possibly reduce price volitility System reliability – voltage support, line losses, restarts Supply reliability (although unnecessary in short-term) Economic development – multiplier effect in wood products industry. Although, higher electricity prices negative.


The Promotion of Renewable Resources, MPUC, Dec. 2003: The Promotion of Renewable Resources, MPUC, Dec. 2003 Costs $0.025 ACM for new renewables, grow to 4% tier: maximum $11M cost $0.015 ACM for biomass and/or MSW, 10% tier: maximum $17M cost 0.1 mill/kWh SBC to fund small on-site applications: $1.1M


The Promotion of Renewable Resources, MPUC, Dec. 2003: The Promotion of Renewable Resources, MPUC, Dec. 2003 Implementation Recommendations Cost – consider impact on prices Commercial viability – support only resources that cannot compete without it Ratepayer payback – find means to pay back when resources become viable Resources – decide which to support, by fuel type, new vs. existing, established vs emerging


IEPM Presentation Re: LD 1312, April 2003 : IEPM Presentation Re: LD 1312, April 2003 Recommendations Revise RPS. Lower percentage; remove cogen, hydro >30MW, QFs; add new-renewables tier-2; add ACM.


IEPM Presentation Re: LD 1312, April 2003: IEPM Presentation Re: LD 1312, April 2003 Benefits from Renewables Economic benefits of in-state plants – jobs, secondary effects Economic benefits of wood products industry tied to biomass plants Reliable, environmentally benign way to dispose of mill residue and waste wood Ash bi-product used for farming Grid stability, voltage support Lower landfill volume Hydro highly regulated, with costs and controls (fish controls costly) Recreational benefits from hydro Generating facilities contribute to property tax revenue Biomass, MSW plants get DEP permits Reduction in slag, ash, CO2, SO2, NOx, particulates, hydrochloric acid Hedge against fossil fuel and nuclear prices


IEPM Presentation Re: LD 1312, April 2003: IEPM Presentation Re: LD 1312, April 2003 Quantified Benefits from Renewables (among IEPM members) 412 employees $13M local taxes paid 3.6M tons CO2 avoided 13,000 tons SO2 avoided 3,000 tons NOX avoided 3M tons wood residue consumed 9.6M barrels oil avoided


IEPM Presentation Re: LD 1312, April 2003: IEPM Presentation Re: LD 1312, April 2003 Costs Recommend: 2¢ tier 1 ACM; 3.5¢ tier 2 ACM. If RECs trade at 25% of ACM: average res’l bill increase = 80¢/month (for 1% tier 2) Locational marginal pricing savings (projected by MPUC): ave res’l bill savings = $2.00 to $2.80


Energy for Maine’s Future NRCM, MECEP, Mainewatch Institute, 2002 : Energy for Maine’s Future NRCM, MECEP, Mainewatch Institute, 2002 Recommendations State leadership - Governor develop a renewable energy plan and means of coordinating energy policy and activities. State lead by example. PUC promote renewables. Revise RPS – target clean, renewable, sustainable energy. Promote both existing and new facilities. Develop green power choice for consumers. Establish siting guidelines and improved regulations for wind development. Support regional and national activities.


Energy for Maine’s Future NRCM, MECEP, Mainewatch Institute, 2002: Energy for Maine’s Future NRCM, MECEP, Mainewatch Institute, 2002 Benefits from Renewables Health benefits from reduced pollution Political instability in the Middle East - economic and security crises Global warming


State Initiatives for Clean Energy Development for Mainewatch Institute, 2001 : State Initiatives for Clean Energy Development for Mainewatch Institute, 2001 Recommendations Revise RPS. Remove cogen, MSW, hydro>30MW; retain biomass, landfill gas, digester gas; only in-state facilities if legal; add new-renewables tier; add tradable credits; add cost cap. Establish customer- or marketer-credits. Fund through 3-2-1 tax. Establish tax incentives for small facilities. E.g. property tax, BETR, sales tax, PTC. Fund through 3-2-1 tax. Reform regional transmission pricing. E.g. remove wheeling charges, exempt from congestion charges, allow renewables advocates a voice.


State Initiatives for Clean Energy Development for Mainewatch Institute, 2001 : State Initiatives for Clean Energy Development for Mainewatch Institute, 2001 Benefits from Renewables Employment benefits – supports 6,000 jobs in ME Economic benefits – millions of dollars impact Environmental benefits – air emissions Diversification as a hedge – reduce vulnerability from fluctuating gas prices Protection against supply disruptions


State Initiatives for Clean Energy Development for Mainewatch Institute, 2001: State Initiatives for Clean Energy Development for Mainewatch Institute, 2001 Costs Current RPS: 1 – 5 mils (early PUC estimate) Cost of a revised RPS unknowable in advance SBC of 1 mil (typical of other states): $12M 3-2-1 tax, 1999 ME generation mix: $12M revenue Customer credit for renewable gen’n, 1¢/kWh, 1% mkt penetration: $1.2M Customer credit for renewable gen’n, $150/customer, 1% mkt penetration: $1.1M


The Real Story about Purchased Power in Maine, Alliance for a Renewable Maine Economy, March 1994: The Real Story about Purchased Power in Maine, Alliance for a Renewable Maine Economy, March 1994 Benefits from Renewables and Cogeneration CMP pursued cogen/small power to: - reduce risks associated with large facilities - ensure diversity - ensure stability (domestic control) - obtain reliable energy at the lowest possible cost


The Real Story about Purchased Power in Maine, Alliance for a Renewable Maine Economy, March 1994: The Real Story about Purchased Power in Maine, Alliance for a Renewable Maine Economy, March 1994 Benefits from Renewables: Stabilizing price impact of QFs vs the alternatives (CMP) Many alternatives are now cancelled (Seabrook, Pilgrim, Sears Island, Hydro-Quebec): $31M Nuclear risk resulted in ratings downgrades: millions of dollars in higher interest QF rates increased 14% between ’88 and ’94, while total rate increased 40%. QF rates were stable in early 90’s (8.9¢), predicted to fall from 8.9¢ to 7.3¢ between 1993 and 2000 (many front-end loaded; early contracts most costly and will expire earliest) Adjusted for inflation, QF rates predicted to fall 50% between 1993 and 2000.


The Real Story about Purchased Power in Maine, Alliance for a Renewable Maine Economy, March 1994: The Real Story about Purchased Power in Maine, Alliance for a Renewable Maine Economy, March 1994 Benefits from Renewables Stabilizing impact of QFs vs the alternatives (CMP) cont. Ave NUG contracts: 8.9¢ CMP hydro <3¢ Maine Yankee, Wyman, other 80s plants: 3-9¢ 80s and cancelled plants: 18¢


Viability of Wind Power Development in Maine, MPUC, Jan. 2005 : Viability of Wind Power Development in Maine, MPUC, Jan. 2005 Recommendations, assuming Legislature wishes to encourage Revise RPS - Separate wind tier; alternative cap mechanism; consumer payback. Would not help in obtaining financing Or: Implement SBC - Fund through competitive bid. ME facilities only. Would help obtain financing FAME financing – guarantee price; Full project financing too costly. Would help obtain financing Investigate coordinating DEP and LURC processes Public promotion of benefits of wind


Viability of Wind Power Development in Maine, MPUC, Jan. 2005: Viability of Wind Power Development in Maine, MPUC, Jan. 2005 Costs Quoted LaCapra assertions that demand from MA and CT RPSs will outstrip supply for near term. In longer term, need NY wind or offshore wind to meet demand. Thus, MA and CT RPS price impacts: 3.5¢ – 5 ¢/kWh; to continue for some time (sale of RECs)


Viability of Wind Power Development in Maine, MPUC, Jan. 2005: Viability of Wind Power Development in Maine, MPUC, Jan. 2005 Implementation Recommendations Incentive should use competitive processes to minimize cost


Maine Energy Policy Overview and Opportunities for Improvement, Energy Advisors for ERC, Dec. 2003: Maine Energy Policy Overview and Opportunities for Improvement, Energy Advisors for ERC, Dec. 2003 Recommendations Revise RPS Green standard offer Multi year standard offer SBC, tax benefits, other direct support Purchases by State Mandate disclosure of biomass CO2 neutrality Eliminate point-to-point local transmission charge Promote distributed generation Support emerging technologies, consumer awareness Have MTI manage state renewable fund


Maine Energy Policy Overview and Opportunities for Improvement, Energy Advisors for ERC, Dec. 2003: Maine Energy Policy Overview and Opportunities for Improvement, Energy Advisors for ERC, Dec. 2003 Implementation Issues – Consider: Addresses a major issued: Substantial, measurable benefit? Can win public support? Symbolic or other value?


NY Study – Effects of Integrating Wind on Grid, for NY DPS, Mar. 2005: NY Study – Effects of Integrating Wind on Grid, for NY DPS, Mar. 2005 Studied impact of increasing wind generation by 10% of NY peak load. Findings Only needed changes to existing rules are: - consider entire wind farm a contingency event; loss of all wind in state would not happen - require voltage regulation, low-voltage ride-through, monitoring, power curtailment capability Day-ahead forecasting will have slightly higher error; current processes can accommodate Current contingency approach provides adequate spinning reserve for intermittent wind Transmission not congested upstate- to downstate, so congestion not a problem


Summary: Summary Benefits from Renewables – Recurring Themes Reduced air emissions – health, environment Local economic benefits – jobs, taxes, synergies Diversity as electricity price hedge - Dampening effect on overall gas prices - Protection from fluctuating gas prices - Protection against gas supply shortage


Summary: Summary Quantified Benefits from Renewables ME policy in the 80s: GSP: $120M - $220M Reduced air emissions: $57M - $202M annually ME future RPS (IEPM estimate): Res’l bill decrease from LMP exceeds increase from price by up to $2.00 per month NY future RPS: Bill decreases in some zones: Up to 3% Two Climate Action Plan generation options have positive net $ benefit RI 20% RPS: Reduced emissions: $94M - $343M in region over 20 yrs


Summary: Summary Quantified Costs of Encouraging Renewables NY future res’l bill impacts in certain zones: 0 - 2% in 2013 NY future C/I bill impacts in certain zones: 0 - 4% in 2013 ME late-80s policy, bill impacts: 4 - 12% overall RI future RPS res’l bill impacts: 1 - 4% in 2020 MA future RPS bill impacts: 0.01¢ - 0.45¢/kWh in 2012 (probably 0-4%) ME future RPS bill impacts: 0 – 1% (@ max. $11M) Most Climate Action Plan generation options have net $ cost


Summary: Summary Some Observations: Quantification of benefits and costs relies upon assumptions of hypothetical alternatives – e.g., gas prices, capital cost of new generation, mix of fuels, renewables price premium. Thus, quantification is inherently uncertain.