Maine Revisits Its RPS Requirement
On December 12, 2005, the Maine Renewable Resources Stakeholder Group ("RSG") issued a draft report regarding the promotion of renewable power generation to the Maine State Legislature’s Joint Standing Committee on Utilities and Energy. The RSG was formed and the report prepared at the committee’s request.

Although Maine’s RPS requirement of 30% energy from renewable resources is the highest RPS requirement in the country, the eligibility requirements in Maine’s RPS are generous, and nearly 40% of the energy produced in Maine is already RPS-eligible. This has lead to relatively low renewable energy certificate ("REC") prices and a widespread perception that Maine’s RPS is ineffective at either maintaining existing or spurring new renewable generation in the state.

The RSG believes that the state should increase renewable generation and usage in Maine by 10% by 2017. To reach this goal, the RSG considered recommendations in three areas: long term contracting, the definition of "eligible renewable resources," and the promotion of voluntary markets for renewable resources.

With regard to long-term contracting, the RSC recommends that the legislature consider one of two methods. The first method is better defined by the report and would use contracts as a hedge against price volatility while promoting the development of new renewable resources. Long term contracts would be solicited by the Maine Public Utilities Commission on a periodic basis for 20% of the state’s annual usage at a price not to exceed the current market price. Contracts would have terms of 3 to 20 years. Under the second method, large commercial and industrial customers would enter into long-term contracts with generators, and ratepayers would act as a "credit backstop" if a large commercial or industrial customer were to default on its obligations.

The second area studied by the RSG, the definition of "eligible renewable resources," did not lead to consensus or firm recommendations to the Utilities and Energy Committee. The RSG was unable to resolve issues relating to eligibility of out-of-state generation, hydro and biomass eligibility requirements, the eligibility of municipal solid waste as a fuel source, the baseline year and other qualifications for defining "new" generation, and whether certain generation should be given extra weighting.

Lastly, the RSG recommends providing marketing information on clean electricity in the mailings containing transmission and distribution customers’ bills. The RSG also believes that active competition should be promoted to reduce the price of clean energy.

Submission of the report fulfills the RSG’s mandate. Next steps relating to the RPS are at the discretion of the Joint Standing Committee on Utilities and Energy.

Connecticut DPUC Working on Class III Implementation
Connecticut’s "Act Concerning Energy Independence," passed by the Connecticut legislature earlier this year, called for the establishment of a third class of renewables that ratepayers will be required to support under Connecticut’s RPS program. Class III renewable energy sources are now defined in statute as "electricity output from combined heat and power systems with an operating efficiency level of no less than fifty per cent that are part of customer-side distributed resources developed at commercial and industrial facilities in [Connecticut] on or after January 1, 2006, or the electricity savings created at commercial and industrial facilities in [Connecticut] from conservation and load management programs begun on or after January 1, 2006." Conn. Gen. Stat. Ann. §16-1(44). Electric distribution companies and electric suppliers must provide 1% of their load from Class III sources by January 1, 2007. This requirement increases by 1% per year to a total of 4% by January 1, 2010. The Connecticut Department of Public Utility Control ("DPUC") is authorized to collect a deficiency charge of up to 5.5 cents per kwh if the requirements are not met.

The DPUC has been active in the implementation of the Class III standard. The DPUC opened a docket in July 2005, and issued a notice on November 21 seeking comments from interested parties by December 5, 2005. The DPUC sought comments on how it should measure conservation and load management savings, how it should measure electricity output from combined heat and power systems, how it should verify the accuracy of energy efficiency, conservation and customer-side distributed resource credits, how it should allocate credits between customers and the Energy Conservation and Load Management Fund, and how it should manage the trading of credits. Comments were filed by Connecticut Light & Power (CL&P) and United Illuminating Company ("UI"), the state’s two distribution utilities, among others. In their comments, both CL&P and UI recommended that the measurement and verification of conservation and load management savings should utilize the same methodologies that are currently used by these companies in implementing Connecticut’s existing Energy Conservation and Load Management Fund programs. CL&P recognized that this method would require the aggregation of savings generated by all customers using conservation and load management and that there may be some difficulty in devising a process to allocate credits to individual customers. The companies recommended that metering standards be developed for combined heat and power systems through a collaborative process and that metering be a prerequisite for program eligibility. The DPUC is expected to evaluate the parties’ comments and file a report on Class III standards with the legislature by February 2006.