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Nevada Legislature introduces FIT bill

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  • Bob Tregilus
    Hi all - They introduced our (their) FIT bill today. I only got tosee it on Friday. It has lots of problems. They used theVermont FIT as a model. I d be
    Message 1 of 1 , Feb 22 1:06 PM
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      Hi all -

      They introduced our (their) FIT bill today. I only got to
      see it on Friday. It has lots of problems. They used the
      Vermont FIT as a model.

      I'd be interested in everyone's thoughts and comments, as
      now we move from getting a bill introduced to either
      fixing it, or opposing it.

      Here's what I sent them early Monday as suggested
      corrections before introduction (it was too late to
      include any):

      I see the drafters used Vermont's SPEED legislation (Vermont Energy Act of 2009) as a model. BDR229 needs a lot of work before it will give proper direction to the PUCN to create a feed-in tariff (FIT) while avoiding many of the known pitfalls.


      In any case, before BDR229 is introduced on Tuesday, two things really should be changed:


      1) In Section 14 §1, a contract should be transferable one time only (to a financial institution for example). This is necessary because there are people who will do nothing but trade contracts and never build any systems. This transferability issue has caused all sorts of problems with FIT programs around the world and was especially bad in the Spanish FIT (coupled with lots governmental corruption as well in that case). So either Sect. 14 §1 should be dropped and the issue addressed during rulemaking or changed to restrict transferability to a single instance.


      2) Also, you really need to exchange the phrases "Standard Offer Contacts" (SOC) and "Standard Offer" (SO) with either of the following alternatives or something else (I'd prefer simply FITs, but whatever, explanation follows):


      a) In lieu of SOC: "Renewable Energy Payment Contracts" or "CLEAN Contracts." (CLEAN means "Clean Local Energy Accessible Now," I'll explain below about this term, it's new.)


      b) In lieu of SO: "Renewable Energy Payment Offer" or "CLEAN Contract Offer." 


      c) Or, at the very least, "Standard Offer" should be replaced with "Standard Contract."



      Here are the reasons:


      Standard Offer Contacts were proto-FITs, and is an archaic term that is a throwback to the 1980s and the Public Utilities Regulatory Act (PURPA). There are many examples of countries starting their RE programs with a SOC and after a decade of two of adjustments, the SOCs eventually morph into a FIT which is anything but "standard." Also, SOC's are often associated with the early policy disasters of PURPA as well (particularly in NY and CA). 


      I realize that SOC is often used today, as in Vermont's FIT, but it does not properly describe what a FIT really is and is actually improperly used in both SPEED and BDR229.


      A definition of "standard" implies that all renewable energy technologies are treated equally. That, of course, is the antithesis of a FIT where all technologies are highly differentiated by a variety of variables to assure people are paid a fair price for the energy they generate. Thus, SOC and SO was appropriate usage under PURPA because there was no differentiation whatsoever, which is not the case for a FIT -- a policy that seeks non-standardization with respect to the technology used, resource quality, project size, and location. So, "Standard Offer" is certainly incorrect, but "Standard Contract" would be acceptable as FITs require that the contracts not only be super simple (not PPAs!) but also standard. Thus, FITs are "non-standard offers" ensured by "standard contracts." But we really need to lose the 1980s lingo all together, IMHO.



      CLEAN Contracts


      I don't like this term much (actually I think we should use FIT ), but CLEAN Contract is the bright shinny new name for FITs. It was recently coined in a January 2011 white paper by the Center for American Progress (CAP). Just two weeks ago I was on a conference call hosted by the Rockefeller Brothers Foundation and CAP with a number of high-level federal and NGO officials present, ranging from the DOE to the Energy Foundation regarding CLEAN Contracts. So if Nevada wants to be on the cutting edge in this matter "CLEAN Contract" would be a good replacement for SOC and SO.


      I suspect "CLEAN" is somehow trickle down branding from the Obama Administration. Of course, "Clean Energy" means nuclear, natural gas, & clean coal as well as renewables. But apparently, we're told, the word "renewable" scores lower in focus groups than the word "clean." Whatever.


      Thus, using the term "Standard Offer Contract" makes BDR229 sounds like it is pitching for a Ford Edsel, whereas, "Renewable Energy Payment Contracts" or "CLEAN Contract" would make it sound like we want the Telsa Motors Roadster of renewable energy policies.



      Other matters


      It would take me a week to really go through this but in a couple of reads the following are major oversights that I see:


      1) There is no requirement of guaranteed grid access for the system owner. This is THE cornerstone of a FIT, and one of the failures of PURPA. This oversight of a must take provision can have all sorts of negative cost impacts on ratepayers as the energy from the FIT is not prioritized onto the grid.


      2) Cost differentiation based on "resource quality" and "location" are missing from Sect. 13 §6(a).


      3) Providers of electric service should be allowed to participate in the FIT program, just like everyone else, but at a lower rate given their expertise and access to capital.


      4) Rate of return on systems should not equal that of NV Energy (isn't it like 13 to 15 percent!) but should fall within ~6 to 10 percent, Sect. 13 §6(b). FITs are not about making people rich, but rather economic development.


      5) Sect. 13 §6, should be 20 years. Twenty-five years is considered too long by most analysts.


      6) The PUCN should likely determine who gets the PECs in Sect. 14 §4. Different tariff tables can provide for energy with or w/o PECs -- give the operator the option as this is wholesale energy, not retail. (Read as: This isn't net-metering.)


      Finally, I hear they are tweaking the Vermont legislation as we speak. I'll try to find out what's going on and get the information to you.

      Be well,
      Bob Tregilus
      775 826-4514

      Feed-in Tariffs for Nevada

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