Policy Drivers For Renewable Energy Development

Dustin T. TillMarten Lawwww.martenlaw.com503.243.2200

The Future of Oregon’s Water Supply & Management Portland, Oregon – March 17, 2011

Revenue Streams for Small Hydro Projects

• Electricity – PURPAo Requires utilities to purchase power if the

cost is less than the utilities avoided cost of generation or acquisition

• Renewable Energy Credits (RECs) Commodity of Renewable Portfolio Standards

(RPSs) / Clean Energy Standards (CESs)

Discussion Points

Federal Climate Change Policy

Regional Cap-and-Trade Programs

Renewable Portfolio Standards / Clean Energy Standards

Treatment of Hydro Under West Coast RPSs

Federal Climate Policy – Cap and Trade is Dead

American Clean Energy & Security Act

• Narrowly Passed House in June 2009

• Large Industrial Sources – 25,000 MtCO2e

• 17% Reduction in GHG Emissions by 2020

• Majority of Allowances Distributed for Free

• 15% RES

Companion Bills in Senate

• Kerry - Lieberman

What Cap and Trade Looks LikeCourtesy of U.S. Chamber of Commerce

Federal Direct Regulation of GHGs

EPA’s Clean Air Act Regulations• Massachusetts v. EPA, 127 S. Ct. 1438 (2007) • Endangerment Finding• Mobile Source Emission Standards• Clean Air Act Tailoring Rule

Legal Challenges Congressional Challenges

Regional Climate Policy –Long Live Cap and Trade

• 23 states and four Canadian providences are participating in some capacity in the three regional GHG trading programs

• Account for over half of the United States’ GDP and over 37 percent of the United States’ GHG

• Regional Greenhouse Gas Initiative

Only operative cap-and-trade program in U.S.

Applies to electric utilities

2009-2014 – stabilize emissions

2014-2018 – reduce emissions by 2.5% per year

Allowances trading at $1.89

Western Climate Initiative

7 States and 4 Provinces 15% below 2005 by 2020 All economic sectors 25,000 MtCO2 Threshold

WCI – California and New Mexico

Only 2 states ready to implement WCI in 2012 California

• AB-32• CARB Rules• 25,000 MtCO2e threshold

New Mexico• Participation Contingent on California

Renewable Portfolio Standards

Principal driver of renewable energy development

30 states binding RPS requirements

7 States with RPS “goals” Market-based compliance RECs and TRECs

Renewable Portfolio Standards- Federal

Currently, No Federal RPS

President Obama’s CES

• 80% by 2035

• Would include traditional renewable resources, and “clean” energy resources like clean coal, nuclear, and natural gas

• Consumer Price Protections & Regional Equity

Prior Legislative Proposals

• ACES

• ACELA

• PECPA

Renewable Portfolio Standards-States

30 States with Mandatory RPS / 7 with RPS “Goals”

Oregon

• PGE, PacifiCorp, & EWEB

5% 2011; 15% by 2015; 20% by 2020; 25% by 2025

• Other Utilities – 5% or 10% in 2020 (depending on size)

• Goal – 8% of RPS Compliance from Small-Scale Projects (<20 MW) by 2025

Oregon RPS (con’t)

What Resources Qualify as “Renewable”?

• Wind, Solar, Tidal / Ocean, Geothermal, Some Biomass, Some Hydro

Compliance

• 20% through TRECs (50% for large COUs through 2020)

California RPS

Primary Driver of Western Renewable Energy Markets

2 RPS Standards

Legislative – 20% by 2010 (IOUs Only)

Regulatory – 33% by 2020 (IOUs and COUs)

Treatment of TRECS

CPUC Lifted Moratorium on Use of TRECs In January 2011

25% of Compliance Obligation

Legislative Proposals

Expand RPS to 33% and Incorporate COUs (Senate Bill 2X)

Treatment of Hydro

Oregon

• Pre-1995 Facilities

Efficiency upgrades made after Jan. 1, 1995

Certified Low-Impact Hydro (50 aMW per year)

• Post-1995 Facilities

Located outside of certain state, federal, or NW Power & Conservation Council protected areas

Treatment of Hydro, con’t

California• Small Hydro

Pre-2006: <30 MW, located in-state or satisfies out-of-state RPS standards

Post-2006: <30 MW, cannot “cause an adverse impact on instream beneficial uses or a change in the volume or timing of streamflow.”

• Separate standards for conduit and efficiency upgrades

• Proposal – run-of-river hydro projects in B.C.

Treatment of Hydro, con’t

Washington• Limited to efficiency upgrades without increased diversions

and impoundments• New hydro facilities are not currently included in the

Washington RPS

Questions?

Thank you for attending.For additional information on today’s topic, please contact:

Dustin T. Till503.241.2641

dtill@martenlaw.comwww.martenlaw.com