Senate Bill 326. Revises provisions relating to the renewable energy portfolio standard

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1 Senate Bill 326 Revises provisions relating to the renewable energy portfolio standard Purpose of Measure Senate Bill 326 requires the Public Utilities Commission of Nevada to authorize an electric service provider to sell excess portfolio energy credits that exceed the amount of electricity necessary to comply with the portfolio standard. The measure also requires the Commission to conduct a study on the benefits of participation in a regional market for the sale of portfolio energy credits. Introductory Remarks Thank you, Chairman Atkinson and members of the Committee. For the record, I am Pat Spearman, representing Senate District No. 1 in Clark County. I am here today to introduce Senate Bill 326 for your consideration. S.B. 326 proposes to revise provisions relating to the renewable energy portfolio standard. Nevada has been a leader in energy efficiency and renewable energy usage for nearly three decades already. In 1997, Nevada was the third state to adopt a renewable portfolio standard (RPS) and

2 was the first state to include energy efficiency as part of this standard. Our beginnings were modest: two-tenths of 1 percent of all electricity consumed in the State had to come from renewables, with 50 percent of that allocated to solar. Thereafter, the RPS was to be increased biannually by two-tenths of 1 percent, until in the aggregate it totaled 1 percent of total annual consumption. By 2001, the Legislature realized Nevada could do much more and it enacted one of the most aggressive renewable portfolio standards in the nation. The program requires that by 2015, the State s electric utilities derive at least 20 percent of the electricity they sell to retail customers from renewable energy resources, 22 percent by 2020, and 25 percent by The Legislature has also established a system of portfolio energy credits (PECs), which we have continued to expand and improve. Beginning in 2003, renewable energy producers could earn PECs, which can then be sold to utilities that are required to meet Nevada s RPS. In addition, energy providers are authorized to buy and sell PECs in order to meet the RPS. 2 G 2

3 NV Energy reported in 2011 it exceeded the 2011 RPS requirement achieving 16.7 percent, which is 1.7 percent above the 15 percent requirement. The company has a surplus of 2011 PECs. Existing law allows NV Energy to carry forward excess PECs generated, acquired, or saved from renewable energy systems or energy efficiency measures to subsequent calendar years, if the provider exceeds the portfolio standard for any calendar year. S.B. 326 would authorize an electric service provider to sell any PECs generated, acquired, or saved by the provider that exceed the amount of electricity necessary to comply with the RPS. By allowing the provider to sell any excess PECs, the proceeds would be credited to the consumer. As many of you know, there are tradable PEC markets, which operate in-state or within regional boundaries, whereby an energy provider may satisfy a portion of its RPS requirements by purchasing these credits from power producers. However, PEC trading to date has been fragmented and limited. While several analyses have found that RPS policies either should, or do, increase renewable energy output, some empirical analyses 3 G 3

4 have noted that, given reasonable assumptions, RPS policies are not associated with an increase in the percentage of renewable energy in a market. I would conclude that RPS policies like Nevada s have had a significant impact on renewable energy development, but we must consider the free trading of PECs and the impact it has on our RPS. Therefore, S.B. 326 also requires the PUCN to conduct a study on the benefits of participating in regional markets for the sale of PECs. It is important that we look at these markets and determine what impact they have on Nevada s RPS and how the State can benefit from them. I would also encourage asking the PUCN to open a docket to gather quantifiable data of this and other initiatives related to the future of energy in our state: This will allow us to pursue an integrated and detailed focus in our approach to Nevada renewable energy policies. I am sure you all understand the need for strategic consistency. The quantifiable data will allow us to take a forensic look at past policies, new initiatives, and other opportunities as they relate to a comprehensive energy policy. 4 G 4

5 Conclusion Energy policy has far-reaching implications for our economy, environment, and political sustainability. There has been consistent bipartisan support for these principles, facilitated by an appropriate balance of environmental and economic initiatives based on practical consideration. There are a large number of legislative energy policy leaders in both parties who are actively engaged in energy issues, including several in key leadership positions. As policy makers, we need to remain on the forefront of initiating innovative goals, programs, and incentives for development and deployment of energy conservation measures and renewable systems. We need to continue adopting measures, such as S.B. 326, that encourage us to revise and improve our current energy policies. This concludes my remarks, Mr. Chair. I will be happy to answer any questions. W G 5