Green-energy mandate could be on ballot

By Andy Ostmeyer

aostmeyer@joplinglobe.com

Missouri voters can expect to decide in November if the state’s investor-owned utilities should be required to generate or purchase electricity from wind, solar, biomass or small hydro equal to at least 2 percent of their retail sales by 2011.

If passed, the requirement ratchets up to 15 percent by 2021, with at least 2 percent of that coming from solar energy. The proposal also limits the rate impact to 1 percent per year.

More than half of all states now have the so-called Renewable Portfolio Standards, which require utilities to get a certain percentage of their power from renewable sources. Some states have had the mandates in place for more than a decade.

But Southwest Missouri residents will escape the impact of the initiative petition that would require investor-owned utilities in the state to boost their use of green power.

That’s because Empire District Electric Co. already is on its way to meeting the top requirement outlined in the mandate and also was recently exempted from the one piece of the proposal that Empire officials said could have pushed up costs for ratepayers in the area. Empire is the only investor-owned utility in Southwest Missouri. Other area residents are served by cooperatives or municipal power providers, which will not be bound by the mandates.

The push for renewables is being led by Missourians for Cleaner Cheaper Energy, which in May turned in about 170,000 signatures — 90,000 were needed — for the Clean Energy Initiative to the Missouri Secretary of State’s office. That office is verifying signatures, but that isn’t expected to be a stumbling block, said Warren Wood, executive director of the Missouri Energy Development Association, which represents investor-owned utilities in Missouri.

“We think there is a good chance it will go on the ballot and the polling data we’ve seen indicates support for it if it gets on the ballot this fall,” Wood said.

While MEDA is “neutral” on the initiative, Wood said there are concerns. Missouri electric rates are the seventh lowest in the nation, and a requirement from voters that utilities develop more green power could push up costs, even if it is capped at 1 percent per year.

Already there

Still, Wood noted that Empire customers will be spared.

“For Empire, based on where they are right now, I don’t see any impact,” he said.

Empire already has a 20-year contract for energy produced by the Elk River Wind Farm near Beaumont, Kan., and has been purchasing it from that site for nearly three years. That wind farm has the ability to generate about 150 megawatts, or enough electricity to meet the annual needs of about 42,000 homes.

The Elk River Wind Farm can provide about 8 percent of Empire’s needs, although the benefits of the wind are currently resold on the open market as green credits, said Brad Beecher, Empire vice president and chief operating officer for electric services. The credits are sold to utilities in other states that may already have renewable requirements, with the money used to keep rates lower for Empire customers, Beecher said, explaining: “It is a reduction in costs.”

That renewable benefit can be brought online incrementally for all Empire’s customers as the renewable standard creeps up each year and those costs already are built into the existing rates.

And last summer, Empire announced a 20-year agreement to purchase power from the Meridian Way Wind Farm near Concordia, Kan. Empire said that will generate about 105 megawatts annually for its customers, or enough electricity for 25,000 homes. That wind farm is under construction.

Combined, the two wind farms will be able to provide about 15 percent of Empire’s power as early as 2009.

“We were first in getting into wind energy big,” said Beecher.

Empire exemption

Last week, Missouri Gov. Matt Blunt signed Senate Bill 1181 creating the “Show-Me Green Tax Holiday,” making certain energy-efficient appliances exempt from sales taxes on certain days.

That legislation also contained a provision put in at the behest of state Reps. Bryan Stevenson, R-Webb City, and Ed Emery, R-Lamar, Beecher said. It states that any electric company that achieves renewable-energy use equal to or greater than 15 percent by Jan. 20, 2009, “shall be exempt from a requirement to pay an incentive to any customer who installs a solar-energy system and shall also be exempt from meeting mandated solar renewable energy requirements.”

Empire is the only utility in Missouri that fits that exemption, and worked with local legislators to get that provision in the law ahead of the initiative.

“We’re not going to be shoved into solar if it doesn’t make sense,” Beecher said. “Right now, it is more expensive. ... We could meet it but it would add cost.”

Beecher said he supports the goal of 15 percent and thinks it is attainable, but he doesn’t want to see utilities tied down to specific mandates — like the 2 percent for solar — if there is a better alternative.

“Right now, your main option to meet this is wind,” he said.

Nor does Beecher like the idea that only investor-owned utilities are being held to the proposed standards, but not municipal power companies, such as those serving the communities of Carthage, Monett and Springfield, for example. Cooperatives also are not included.

“If it is good for Missouri, it ought to apply to all,” Beecher said.

Carve-outs

Asked why cooperatives are excluded, Erin Noble, energy policy and outreach coordinator for the Missouri Coalition for the Environment, said: “There would have been some big opposition.”

While cooperatives in Missouri have not opposed the petition, Noble noted that groups representing cooperatives have opposed any federal mandate for renewable standards.

P.J. Wilson, treasurer for Missourians for Cleaner Cheaper Energy and executive director of Renew Missouri, which crafted the petition language and initiated the volunteer signature drive, said the Missouri initiative is based on Colorado’s, which initially excluded cooperatives, although they were added later. Of the 26 states with renewable standards, half exclude municipal power providers and nine exclude cooperatives.

Wilson said the proposal in Missouri is “feasible and noncontroversial. ... That policy, the way it is crafted, is the best policy in Missouri right now.”

He also noted that investor-owned utilities serve the bulk of the state, providing between 70 and 75 percent of Missourians with power.

As for the solar requirement, Wilson and Noble said the inclusion is not extreme. Investor-owned utilities would need 2 percent of their power to come from renewable sources in 2011 and 2 percent of that would be from solar, or a total of .004 percent. Twelve states have solar “carve-outs” with some as high as 4 percent, they said.

Noble said the petition also includes a requirement that utilities offer a $2-per-watt solar rebate to help homeowners and small business lower the cost of installing their own solar systems.

Mandating solar also creates a market for it, said Wilson. “We still need policies that make solar cheaper.”

Asked about the exemption for solar that was built into Missouri legislation for Empire, Wilson first praised Empire for its aggressive pursuit of wind power: “I really do commend them for where they are at.”

But, he also said: “Empire is the only utility in the state that wanted to see that ... it all did happen at the last minute.”

If voters endorse the petition in the fall, with the solar mandate, he said that “will speak more loudly than the actions of a couple of lobbyists and a couple of elected officials in the last 24 hours of the session.”

“It’s really the utility’s customers who will end up paying for the rebate for the people who put the solar in,” Beecher said.

He also noted that capital costs for commercial solar run about $8,000 per kilowatt, compared to $2,000 for coal and $2,000 for wind. Solar also can be utilized 40 percent of the time, compared to 15 to 20 percent for solar, meaning, according to Beecher, that solar is four times as expensive as wind but produces half the energy.

No blowback

As for the impact on rates, Wilson said the initiative will ensure that investor-owned utilities have more diversified portfolios, which means they will be subject to less volatility, which is better for ratepayers.

“A more diverse portfolio is a more secure portfolio. ... We predict this will make rates go down. Wind is on par with natural-gas plants right now,” he said.

But once the wind farms are online there is no cost for the fuel as there is with coal or natural gas. There also are other costs, such as damage to the environment and to health, that aren’t built into the cost of coal, for example.

Some states that have adopted renewable standards found they can do it with little impact on rates.

Terry Dote, of the Colorado Public Utility Commission, said the first standard — 10 percent by 2015 — was adopted in 2004 following a petition process. In 2006, the legislature doubled that to 20 percent by 2020 and set a 2 percent cap to protect ratepayers and brought in the municipal companies and cooperatives but at a lower level.

In 2007, customers received a rate increase for the renewable mandate that amounted to six-tenths of a percent; this year it is 1.4 percent, Dote said.

But Jim Greenwood, director of the Colorado Office of Consumer Counsel, which represents residential and other small ratepayers, said they should expect the maximum increase allowed each year.

Still, he said, there hasn’t been any fallout from the rate hikes.

“To my knowledge, there is no particular blowback at this point,” he said.

Greenwood thinks the 1 percent cap proposed for Missouri “probably is doable ... simply because there is so much low-hanging fruit out there,” he said, referring to wind.

Edward Garvey, director of the office of Energy Security in Minnesota, which has a standard for all utilities of 25 percent by 2025, also said utility customers have been on board with rate increases to pay for the renewable energy.

“The fuel is free and it is carbon free,” he said. “It has not caused rate shock because they come on gradually by themselves.”

Coal driven

Missouri obtains 85 percent of its electricity from coal.

Source: Missouri Coalition for the Environment

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