Renewable Portfolio Standard

LFDA Editor

In Brief:

  • The Renewable Portfolio Standard requires utility companies operating in NH to obtain a certain percentage of electricity from renewable energy sources every year, peaking at 25% in 2025.
  • Utilities may purchase renewable energy certificates from renewable energy providers as a means of making up their share of the quota.
  • If a utility fails to generate or purchase certificates for its share of the renewable requirements, it must make penalty payments into a fund for renewable energy projects.
  • Pro: The RPS helps lower carbon emissions and encourages the development of more affordable and efficient renewable energy technology.
  • Con: The RPS distorts the energy market and causes electricity consumers to pay higher costs since renewable energy sources are more expensive than traditional energy sources.

Issue Facts:

In 2007 New Hampshire passed the Renewable Energy Act, which established the Renewable Portfolio Standard (RPS).  Under New Hampshire’s RPS, electricity providers must obtain a certain percentage of electricity from renewable energy sources each year, peaking at 25% in 2025.  Eligible renewable sources include:

  • Wind power
  • Geothermal
  • Solar
  • Methane gas
  • Biomass
  • Hydroelectric
  • Tidal or ocean thermal

Compliance with the quotas set out by the RPS is measured by way of renewable energy certificates (RECs). RECs represent one megawatt hour (1,000 kWh) of energy generated by an eligible renewable source, and utilities may acquire them in two ways:

The New Hampshire Public Utilities Commission (PUC) decides which renewable energy generation facilities can earn and sell RECs.  The PUC also decides what rate utilities can charge to consumers to cover the costs of electricity from renewable and traditional energy sources.

If an electricity provider cannot or chooses not to buy a sufficient amount of RECs, the provider must pay alternative compliance payments (ACPs).  Those ACPs go to the Renewable Energy Fund, which is spent on grants and rebates for individuals and businesses working on renewable energy projects.   The fund is administered by the PUC.

In the last fiscal year for which data is available (ending June 30, 2016), New Hampshire electricity distributors and suppliers paid a total of $4,224,339 in ACPs. 

The PUC has distributed grants and rebates to UNH, Monadnock Paper Mills, the Claremont Fire Department, and many more. 

Related Issues:

Regional Greenhouse Gas Initiative

Northern Pass

Wind Power Restrictions

Residential Solar Power

PROS & CONS

"For" Position

By LFDA Editor

“NH should maintain the renewable portfolio standard.”

  • The program is necessary to encourage the research and development of renewable energy sources, which in turn are necessary to provide cheap, reliable energy in the decades to come. 
  • The price of fossil fuels will likely continue to rise.  By subsidizing renewable energy projects now, the people are therefore investing in less expensive energy down the road. 
  • Research and development of renewable energy also creates new green jobs, lowers pollution, and decreases the reliance on fossil fuels from foreign nations. 
  • Fossil fuel power plants are responsible for one-third of emissions that contribute to global warming, while renewable energy sources produce little to no carbon emissions.
  • A 2012 Berkley Lab study which analyzed the costs of RECs and ACPs found that on average, RPS only increased the cost of a state’s electricity by roughly 1% on average from 2010 to 2012.  

"Against" Position

By LFDA Editor

“NH should eliminate the renewable portfolio standard.”

  • A study by the Institute for Energy Research which compared average energy prices in states with and without RPS found that states with RPS have 39% higher electricity costs. 
  • Renewable energy is simply more expensive than traditional energy, so RPS forces utilities and thereby consumers to pay for more expensive electricity. 
  • The government should not make renewable energy sources artificially competitive by forcing utilities to buy electricity from renewable sources, as this hurts the ability of economic competition to lower energy prices.
  • The money from RPS is not always spent on renewable energy projects, but in the past has sometimes been diverted into the general fund.
  • Renewable energy sources such as solar and wind are not always a consistent source of power, which means that fossil fuel power plants must be available to step in and meet demand when the electricity from renewable sources flags.  This means that even as renewables expand, traditional energy sources must be maintained. 

LEGISLATIVE HISTORY

In Committee

Reduces the percentage of electricity that must come from class I sources by 2025, under the renewable portfolio standards. Class I sources include wind, geothermal, biomass, tidal, methane, and solar energy.

In Committee

Allows hydropower to fulfill up to 5% of class I renewable energy required under the renewable portfolio standards. Class I sources include wind, geothermal, biomass, tidal, methane, and solar energy.

Tabled in the House

Broadens the renewable portfolio standards to include all hydroelectric power sources in class IV renewable energy sources.

Passed House

Repeals the electric renewable portfolio standard. The bill was amended to instead modify the annual reporting requirements for electricity providers related to the electric renewable portfolio standard.

Signed by Governor

Establishes a committee to study subsidies for energy projects provided by the renewable portfolio standard.

Law Without Signature

Makes various changes to the Renewable Portfolio Energy Standard and associated Renewable Energy Fund, particularly related to low-moderate income community solar projects. For example, the bill requires at least 15% of funds from the Renewable Energy Fund benefit low-moderate income residential customers. This bill also increases the share of solar and biomass energy required in the Renewable Portfolio Standard.

Killed in the House

Allows electricity providers to use more hydroelectric power to satisfy requirements of the Renewable Portfolio Standard.

Killed in the House

Makes various changes to the Renewable Portfolio Standard.

Killed in the House

Requires moneys paid into the Renewable Energy Fund to be rebated to ratepayers, rather than spent on other renewable energy projects.

Signed by Governor

Adds biodiesel to electric renewable energy classes.

Killed in the House

Deletes renewable energy "classes" from the Renewable Portfolio Standard, instead grouping all renewable energy sources together. This would give utilities more choice in terms of which renewable energy sources they buy electricity from, which in turn would likely increasing the amount of electricity in New Hampshire coming from hydropower, and potentially decrease the amount of electricity utilities buy from other renewable sources.

Tabled in the House

Repeals the electric Renewable Portfolio Standard, which requires utilities to purchase certain amounts of electricity from renewable sources.

Killed in the Senate

Suspends all renewable energy rebate and grant programs, instead sending those funds to a low-income weatherization program. According to the Public Utilities Commission, "by redirecting renewable energy funds away from renewable energy projects to non-renewable projects, electricity costs will increase by an indeterminable amount for ratepayers, including state, county and local governments."

Should NH maintain the renewable portfolio standard for NH public utilities?

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Issue Status

A move by Rep. Bart Fromuth to repeal the RPS altogether (HB 225) was heavily amended to instead modify reporting requirements for electricity providers. It then passed the House. SB 129, which makes various changes to the RPS and to how the renewable energy fund can be used, passed the Senate. 

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