On January 19, 2005, the District of Columbia enacted the Renewable Energy Portfolio Standard Act of 2004 (the “Act”), subject to congressional review. The Act requires all “electricity suppliers,” including all persons who generate electricity, sell electricity, or purchase electricity for sale to retail customers, to obtain an amount of “renewable energy credits” issued by the PJM Interconnection regional transmission organization equal to a designated percentage of their total District of Columbia retail sales, with each such credit evidencing one megawatt-hour of electricity derived from specified types of renewable sources located in the PJM Interconnection region or adjacent states, or, if the electricity is delivered into the PJM Interconnection region, located in an adjacent control area. For purposes of satisfying the renewable portfolio standard, renewable energy credits exist for 3 years from the date created.
The required percentage changes from year to year. For2007, the required percentages are 1.5% for “tier one” renewable sources, 2.5% for “tier two” renewable sources, and .005% for solar energy (which also qualifies as a tier one renewable source). The required percentage for tier one renewable sources and solar energy gradually increases each year until 2022; the required percentage for tier two renewable sources remains constant at 2.5% through 2016and then declines gradually to 0% in 2020. In 2022 and later years, the required percentages are 11% for tier one, 0% for tier two, and .386% for solar energy.
In addition to solar energy, tier one energy sources include wind, qualifying biomass, methane, geothermal, and ocean energy sources. Tier two energy sources include hydroelectric power and waste-to-energy energy sources. Tier two requirements may also be satisfied by tier one energy sources.
In computing whether the required percentages are satisfied, certain tier one renewable sources receive more favorable treatment than other tier one sources. On or before December 31, 2006, an electricity supplier receives a 120%credit toward meeting the renewable energy portfolio standard for energy derived from wind or solar sources and a110% credit for energy derived from methane. From December31, 2006, through December 31, 2009, electricity suppliers receive a 110% credit for energy derived from wind, solar, and methane sources. With respect to tier two resources, incineration of solid waste is given less favorable treatment than other tier two resources. Incineration of solid waste may not be relied upon to meet more than 20%of the requirement for tier two sources, and it may not be relied upon at all after December 31, 2012.
Electricity suppliers who fail to produce the required amount of renewable energy credits are required to pay a compliance fee of two and _ cents for each kilowatt-hour of shortfall from required tier one renewable sources, one cent for each kilowatt-hour of shortfall from required tier two renewable sources, and 30 cents for each kilowatt-hour of shortfall from required solar energy sources. Such compliance fee payments are applied to a renewable energy development fund, which is dedicated to making loans and grants to support the creation of new solar energy sources in the District of Columbia.
The Act was transmitted for congressional review on February9, 2005. Absent a prior joint congressional resolution disapproving the Act, the Act will take effect and be published in the District of Columbia Register 30 calendar days after transmittal, excluding weekends, holidays, and certain periods of congressional adjournment. District of Columbia Home Rule Act, D.C. Official Code § 1-206.02(c)(1).The Council of the District of Columbia projects that the Act will take effect on April 14, 2005.