I N N OVATI O N SERI ES
PART 1
Part 4: Private Procurement,
Public Benefit: Integrating
Corporate Renewable Energy
Purchases with Utility Resource
Planning
PART 2
December 2016
D. M a n n i n g, J. C o o k , J. C u l k i n , C . E d m o n d s ,
K . H. H o f f e r, J. Ly n g, a n d T. P l a n t
PART 3
PART 4
TableofContents
Introduction................................................................................................................................................................2
HowIsCorporatePurchasingDoneToday?.................................................................................................4
IsthereaBetterWay?.............................................................................................................................................6
LessonsfromutilityDemand-SideManagementprograms..............................................................6
WhyConsiderCorporateRenewableEnergyGoalsDuringtheUtilityPlanningProcess?.......7
ThreePathwaystoPlanforCorporateRenewablePurchases..............................................................8
Pathway1:RegulatoryApproach.............................................................................................................9
IntegratedResourcePlans..................................................................................................................9
Pathway2:LegislativeApproach...........................................................................................................12
Pathway3:ExecutiveAgencyApproach.............................................................................................13
StateEnergyOffice..............................................................................................................................13
StateEconomicDevelopmentAuthority....................................................................................14
Conclusion.................................................................................................................................................................14
AboutThisPaperSeries
Sincethelate1990s,stateRenewablePortfolioStandards(RPS)andEnergyEfficiency
ResourceStandards(EERS)havebeenthelargestdriversoftherenewableenergyand
energyefficiencysectors.Statetargetdatesarequicklyapproaching,however.By2026,29
RPSand11EERSpolicieswillneedtobeextended,orreplaced,inordertomaintain
marketcertainty.Inthispaperseries,theCenterfortheNewEnergyEconomyanalyzes
energyefficiencypolicies(Parts1and2)andrenewableenergypolicies(Parts3and4).
Parts1and3discusstheprospectsforextendingandenhancingEERSandRPSpoliciesand
Parts2and4proposeinnovativeoptionsthatcouldworkwithorwithoutanEERSorRPS.
Introduction
Withagrowinglistofmajorcompaniescommittedtomeetingtheirelectricityneedswith
renewablesources,corporatedemandforcleanenergygoesaboveandbeyondwhatis
offeredinanystate.Fortheselargecorporations,investinginalong-termresourcethat
givesthemstableratherthanfluctuatingenergycostscanbeanattractivefinancialrisk
mitigationstrategyaswellaascorporateresponsibilitycommitment.Thesecompaniesare
someofthelargestconsumersofelectricityinthecountry,andtheirenergychoiceshavea
directimpactonutilityresourceneeds.Thispaperexaminesopportunitiestomakeit
easierforstates,utilities,andrenewableenergydeveloperstoaccommodatecorporate
renewableenergyprocurement.
In2015,renewableenergymadeup13%ofelectricitygeneratedintheUnitedStates,with
leadingstatesIowa,SouthDakota,andKansasgettingatleastone-fifthoftheirelectricity
fromwindandsolar.1Contrastthatwiththe100%renewableenergygoalsthat33U.S.based,mostlyFortune500companieshavecommittedto(seeTable1)anditbecomes
clearthatcorporateambitionscannotbemetthroughcurrentlyavailableresources.In
total,83internationalcompanieshavecommittedto100%renewableenergyaspartofthe
RE100initiative.2
Corporationsaremovingaheadontheirown.Inthepastfouryears,renewableenergy
contractsfornearlysixgigawatts(GW)ofcapacityhavebeenannounced.3Microsoft
recentlycommittedtopurchasing237megawatts(MW)ofwindpowerinKansasand
Wyoming,asoneexample.4By2020,itisestimatedthatthetop50corporatebuyersof
solarandwindpowerintheUnitedStateswilladdmorethan17GWofrenewableenergy.5
Aslargecorporatebuyersinvestinfulfillingtheircorporaterenewableenergygoals,state
policyandutilityplanningmustalsoevolvetotakeadvantageofthistrend,ratherthanbe
challengedbyit.Thispaperchartsthreepathwaystocapitalizeontheleadershipofthese
corporatecitizensbyconsideringcorporaterenewableenergygoalsinstateenergy
1SeeU.S.EnergyInformationAdministration,HowmuchU.S.energyconsumptionandelectricitygeneration
comesfromrenewableenergysources?lastupdatedApr.2016,
http://www.eia.gov/tools/faqs/faq.cfm?id=92&t=4;in2014,Iowa,SouthDakota,andKansasgot28%,21%,
and20%oftheirelectricityfromwindandsolarenergy,respectively;U.S.EnergyInformation
Administration,TableC9.ElectricPowerSectorConsumptionEstimates,2014,
http://www.eia.gov/state/seds/data.cfm?incfile=/state/seds/sep_sum/html/sum_btu_eu.html&sid=US.
2RE100,“TheWorld’sMostInfluentialCompanies,Committedto100%RenewablePower,”RE100,2016,
http://there100.org/re100.
3TheBusinessRenewablesCenter(BRC),“BRCDealTracker,”TheBusinessRenewablesCenter,2016,
http://www.businessrenewables.org/corporate-transactions/.
4MicrosoftNewsCenter,“MicrosoftAnnouncesLargestWindEnergyPurchasetoDate,”Microsoft,last
modifiedNovember14,2016,https://news.microsoft.com/2016/11/14/microsoft-announces-largest-windenergy-purchase-to-date/#sm.00000lt3r2okg5f6wszfryxi093f2.
5ChrisMartin,“MicrosoftSignsBiggestWind-powerDealforWyomingDataCenter,”BloombergNewEnergy
Finance,November14,2016,http://www.bloomberg.com/news/articles/2016-11-14/microsoft-signsbiggest-wind-power-deal-for-wyoming-data-center.
2
resourceplanning.Byplanningforthefuturewithcorporaterenewableenergytargetsin
mind,utilitiesandregulatorscanmeettheneedsoftheirentirecustomerbasewhile
openingoptionsforcompaniestopursuethesegoalsinawaythatbestfitstheirindividual
needs.
Companywith
TargetDate
InterimTarget
ProgressToward
100%Renewable
100%Goal
EnergyTarget
Biogen
2014
-
100%
Microsoft
2014
-
100%
Steelcase
2014
-
100%
VoyaFinancial
2015
-
100%
Interface
2020
-
84%
Autodesk
2020
-
40%
Coca-Cola
2020
-
10%
GoldmanSachs
2020
-
14%
WellsFargo
2020
100%viaRECsby2017
-
Vmware
2020
-
-
BankofAmerica
2020
-
-
Bloomberg
2025
35%by2020
21%
VF
2025
-
-
Nike
2025
-
-
Rackspace
2026
-
-
AbbVie
2035
50%by2025
-
Adobe
2035
-
30%
Mars
2040
-
6%
JohnsonandJohnson 2050
35%by2020
3%
GeneralMotors
2050
-
-
AmazonWeb
TBA
50%by2017
40%
Services
Apple
TBA
-
93%
AvonProducts
TBA
-
-
Equinix
TBA
50%by2017
-
Facebook
TBA
50%by2018
35%
hp
TBA
40%by2020
-
IFF
TBA
-
-
Google
TBA
TripleREby2025
-
ProcterandGamble Salesforce
TBA
-
43%
Starbucks
TBA
-
59%
Walmart
TBA
7,000GWhRE/yrby2020 26%
Workday
TBA
-
100%offsetbyRECs
Table1.LargeU.S.Companieswitha100%RenewableEnergyGoal
3
HowIsCorporatePurchasingDoneToday?
Therecurrentlyisnoclearandconsistentpathwayforcompaniestopurchaserenewable
energy,particularlyinstateswithtraditionallyregulatedelectricitymarkets.Inafewcases,
stateshavefoundwaystoaccommodatesomelevelofinvestment,thoughtherehavebeen
manychallengesandnonereallyprovidesareplicablemodel.Inextremecases,utilities
mayexperiencecustomergriddefectionifthecorporatedesiretoprocurerenewable
energyisnotaddressed.Thefollowingexamplesdemonstratetherangeofoutcomesacross
differentstates.
Nevada:OnOctober1,2016,twocasinoowners—MGMResortsandWynnResorts—
chosetoleavetheNVEnergyutilitysystemciting,inpart,thedesiretoincreaserenewable
purchases.6MGMandWynncomprisenearly6%ofNVEnergy’stotalsales.7Thecasinos
willbechargedexitfeestotaling$102million,inadditiontosixyearsofrecurringfees,for
theflexibilitytobuypowerontheopenmarket.8
ItisalsoworthnotingthatseveralNevadacasinosandtechnologycompanieslikeSwitch
andTeslasupportedQuestion3onthestateballotthisNovembertoderegulatetheNevada
market.Voterspassedthemeasurewithawidemargin,althoughitmustpassonthe2018
ballotandwillalsorequirelegislativeactiontobecomelaw.9Whileitistooearlytotellif
thiselectionresultisabarometeroflong-termpublicwill,theoverwhelmingvoteof
supportinNevadamayindicatethatotherstatescouldfaceasimilarchallenge.
Utah:StatessuchasUtahhaveattemptedtomeetcorporatedemandforrenewableenergy
withoutdisruptingtherelationshipbetweenregulatedutilitiesandcorporatecustomers.A
2012bill,SB12,allowedcustomerspurchasingatleast2MWofgridcapacitytobuypower
fromarenewableenergyfacility.10IntheregulatorydocketopenedbyUtah’sPublic
ServiceCommission(PSC)todevelopthetariff,therewasdisagreementoverhowto
structurethedemandcharge.RockyMountainPower(RMP)andtheUtahAssociationof
EnergyUserssubmittedcompetingproposals,andthePSCultimatelyselectedRMP’s
approach.11However,thistariffdoesnothaveanyparticipantstodate,despiteearly
6DanielRothberg,“MGMResorts,WynntoStopPurchasingNVEnergyPowerSaturday,”LasVegasSun,
September30,2016,https://lasvegassun.com/news/2016/sep/30/mgm-resorts-wynn-stop-purchasing-nvenergy-power/.
7MarkChediakandNoahBuhayar,“WarrenBuffett’sDiceyPowerPlay,”BloombergBusiness,June10,2016,
http://www.bloomberg.com/news/articles/2016-06-10/buffett-s-power-play-pits-las-vegas-casinosagainst-energy-unit.
8DanielRothberg,“MGMResorts,WynntoStopPurchasingNVEnergyPowerSaturday,”LasVegasSun,
September30,2016,https://lasvegassun.com/news/2016/sep/30/mgm-resorts-wynn-stop-purchasing-nvenergy-power/.
9NevadaSecretaryofState,“SilverStateElectionNightResults2016,”silverstateelection.com,lastmodified
November15,2016,http://silverstateelection.com/ballot-questions/.
10“EnergyAmendments,”SenateBill12,StateofUtahGeneralSession,2012,
http://le.utah.gov/~2012/bills/sbillint/sb0012s01.pdf.
11SeeUtahPSCDocketNumber14-035-T02,ReportandOrder,issuedMarch20,2015,
http://psc.utah.gov/utilities/electric/elecindx/2014/documents/26466414035T02rao.pdf,at14.
4
corporatesupportforSB12,mostnotablyfromeBay.Thestructureofthedemandcharge
mayhavediscouragedcorporateparticipationbyprovidinglittleornocreditforcapacity
providedfromcertainrenewableenergyresources,anoutcomethatcouldhavebeen
avoidedwithgreatercorporateengagementinprogramdesign.12
NorthCarolina:AnotherexampleoftheimpactofpolicydesignisNorthCarolina’sGreen
SourceRider.GoogleagreedtobethefirstcompanytoenrollinDukeEnergy’sprogramto
supplyitsexpandeddatacenterinthecityofLenoir.Undertheprogram,DukeEnergyand
Googleagreedtocoverthefullcostsoftheprojectsuchthatnoadditionalcostswouldbe
incurredbynon-participatingratepayers.13Whiletheprogramiscappedat1,000,000
MWhannually,Googleplanstouseonlyasmallfractionofthat.Theprogramisonly
availablefornewload,andparticipationhasbeenrelativelylowdueinparttothedesignof
theriderandthelimitationthatallprojectsmustbenegotiatedthroughtheutility.14
NewMexico:Stateshaveasignificantopportunitytoattractinvestmentiftheyare
responsivetocorporategoals,asthecompetitionforanewFacebookdatacentershows.In
July2016,theNewMexicoPublicRegulationCommissionopenedadockettoapprovea
powerpurchaseagreement(PPA)toenablethePublicServiceCompanyofNewMexicoto
sellrenewableenergytosupplytheprospectivedatacenter.15Thecommission’s
AccountingBureauChiefnotedthatthePPAwouldpromote“economicdevelopmentand
renewableenergyresourcedevelopment.”16
12SeeWorldResourcesInstituteandWorldWildlifeFund,CorporateRenewableStrategyMap,
http://buyersprinciples.org/corporate-re-strategy-map/;seealso,WorldResourcesInstitute,EmergingGreen
TariffsinU.S.RegulatedElectricityMarkets:RockyMountainPower—Utah,http://buyersprinciples.org/wpcontent/uploads/15_IB_GreenTarrif_Rocky_Mountain_Power-1.pdf.
13Theprogramhasanumberofeligibilitycriteria:Theprojectmustbenewloadatabillingmeter,
customersmustbeservedunderadesignatedrateschedule,enrollmentiscappedat1,000,000MWh/year,
andDukeretiresRECsonbehalfofthecustomer.Thefeesarea$2,000applicationfee,a$500/month
administrationfee,anda$.20/MWhRECretirementfee.Formoreinformation,seeWorldResources
Institute,EmergingGreenTariffsinU.S.RegulatedElectricityMarkets:NorthCarolina—DukeEnergy,,
http://buyersprinciples.org/wp-content/uploads/Emerging-Green-Tariffs-September-16-North-CarolinaDuke.pdf.
14GaryDemasi,“CreatingNewPathwaysforBuyingRenewableEnergy,”GoogleGreenBlog,November24,
2015,https://googlegreenblog.blogspot.in/2015/11/buying-renewable-energy.html.
15SeeNewMexicoPublicRegulationCommission,Docket16-00191-UT,,(finalorderAug.17,2016),
http://powersuite.aee.net/dockets/nm-16-00191-ut?docket_search_id=164369.
16JoeCardillo,“RacetoLureFacebookDataCenterHeatingUp,”AlbuquerqueBusinessFirst,onTheBusiness
Journals,August4,2016,http://www.bizjournals.com/albuquerque/news/2016/08/04/race-to-lurefacebook-data-center-heating-up.html.
5
IsthereaBetterWay?
Asthelistofcompaniesseekingrenewableenergygrows,thereisanopportunityto
improveuponthemixedresultsexperiencedtodate.Specifically,consideringcorporate
renewableenergycommitmentsduringtheresourceplanningprocesswouldgiveutilities
andpublicutilitycommissionerstheinformationneededtomeettheneedsofallcustomers
whilealsoensuringthatcorporatecustomerswithrenewableenergytargetscanfollow
throughonthesecommitments.Thisapproachwouldcomplementthemandateof
regulatedutilitiestoprovidelow-costelectricitytoallratepayers,andwouldalsoreduce
uncertaintyforcompanies.Importantly,therewouldbenoneedtolimitcompaniestoany
particularprogramormechanismtopurchaserenewableenergy,socompanieswouldbe
allowedtomeettheirgoalsinawaythatfitstheirindividualneeds.Whilenostateshave
yettakenaforward-lookingapproachtoplanningaroundcorporaterenewableenergy
targets,theexperienceunderutilitydemand-sidemanagementprogramsprovidesaclose
analogueandausefulmodel.
LessonsfromutilityDemand-SideManagementprograms
Utilitydemand-sidemanagement(DSM)programsmayprovidesomeperspectiveforhow
corporaterenewableenergygoalscouldbefactoredintoutilityplanningprocesses.Most
largerutilityDSMprogramshaveprogrammanagerswhoareresponsiblefordeliveringa
certainamountofannualsavingsfromaspecificprogram(e.g.,10GWh/yearfrom
industrialefficiency).Thesemanagersareinfrequentcommunicationwithlargeindustrial
andcommercialcustomersregardingwhatlevelofsavingstheymaybeabletorecoverina
givenyear.Manyoftheselargecustomersmayalsohaveaseparate“keyaccount
representative”attheutility—apersonresponsibleforfieldinganyconcernsrangingfrom
questionsaboutbillingtodiscussionsaboutwhichDSMprogramswouldprovidethe
greatestbenefit.ThekeyaccountrepresentativesandDSMprogrammanagersarguably
knowlargecustomersintheirserviceterritorybetterthananyone.Thesamekeyaccount
representativesandprogrammanagerscouldarguablyperformasimilarfunctionin
documentingtheambitionsoflargecorporatecustomerstoinstallorbuyrenewable
energy,andsystematicallyreportthatinformationtotheutilityresourceplanners.
InananalysisofindustrialenergyefficiencyprogramsinthesouthwesternUnitedStates,
theSouthwestEnergyEfficiencyProjectnotesthatsomeutilitieshaveconductedboth
“technical”and“economic”energyefficiencymarketpotentialstudiesintheindustrial
sector,whichhelpidentifyavailablesavingsopportunities.17Buildingonthisexample,a
PUCcouldinstructutilitiestoconductsimilarstudiesamongcorporationswithrenewable
energytargets.
Self-directedenergyefficiencyprogramsalsoprovideamodelforgivingindividual
industrialcustomersflexibilitytoachievetheirowngoals.Industrialcustomersretain
significantcontrolofprogramimplementation,whilethesavingstheyobtainbytheirself
17NeilKolwey,“SouthwestUtilityIndustrialEnergyEfficiencyPrograms:HighlightsandBestPractices,”The
SouthwestEnergyEfficiencyProject,June2012,
http://www.swenergy.org/data/sites/1/media/documents/publications/documents/Southwest_Industrial_
EE_%20Programs.pdf.
6
directedprogramareaggregatedintoawiderportfolioofsavingsbytheutility.Asimilar
processcouldbeappliedtorenewableenergyprocurementbyindustrialcustomers.18Itis
worthnotingthatDSMprogramsaretypicallyoverseenthrougharegulatoryproceeding
separatefrom,andtypicallyjustpriorto,autilityIRP.Inkeepingwiththisexample,aPUC
couldrequestaCorporateRenewableEnergyGoaldocketaheadofanIRPtoinformthe
levelofnewresources,eithercustomer-sitedorutility-sited,thatareneeded.Similarto
self-directedenergyefficiencyprograms,companiesinterestedinpurchasingrenewable
energycouldstillbegivenfullflexibilitytomeettheirgoalsaccordingtotheirindividual
needs.
WhyConsiderCorporateRenewableEnergyGoalsDuringthe
UtilityPlanningProcess?
Theburdenofprooftochangeaprocess,especiallyautilityregulatoryprocess,canbe
significant.Butfactoringcorporaterenewableenergytargetsinstateresourceand
infrastructureplanningwillbenefitawiderangeofstakeholders,includingcorporate
buyers,electricutilities,renewableenergydevelopers,utilitiescommissioners,consumer
advocates,legislators,Governor’soffices,andeconomicdevelopmentagencies.Each
stakeholderhasuniqueresponsibilities,andtheprocessimprovementsinthispaperwill
benefitthemall.
Wenotethefollowingreasonswhystatedecisionmakersshouldtakeactiononthisissue:
1. Minimizerisktocorporatepurchasersandotherratepayers
Thoughtfulstateplanningforcorporaterenewableenergyprocurementcanminimizerisks
forcorporations,utilities,andratepayers,bettermatchingautility’sloadwiththe
generationmixdesiredbytheratepayers.Inaddition,amoreintegratedplanningprocess
wouldinformthedevelopmentofutilitycorporatepurchasingprograms,whichoften
imposehighratesandfees.Inanefforttoavoidanyundueimpactonnon-participating
ratepayers,thesecostsareoftensetconservativelysuchthatcorporatepurchasersare,
somewouldargue,unfairlyover-chargedfortheirparticipation,therebydampening
demand.
2. Spureconomicdevelopment
Atransparentandforward-lookingplanningprocessforcorporaterenewableenergy
procurementwillspureconomicdevelopmentbygivingbothrenewableenergydevelopers
andcompaniesseekingtopurchaserenewableenergyaclearpictureoftheopportunities
inthestate.Renewabledevelopmentalsogeneratesnewsalestaxrevenue,jobs,local
propertytaxrevenue,anddiversifiesthestate’seconomy.
3. Deferratepayerinvestments
Utilitieswillbenefitalso.Privatecapitaldeployedtodeveloprenewableenergyassetscan
defertheneedforutilitiestobuildorbuynewgenerationthemselves.Byreducingtheneed
18AmericanCouncilforanEnergy-EfficientEconomy,“OverviewofLarge-CustomerSelf-DirectOptionsfor
EnergyEfficiencyPrograms,”AmericanCouncilforanEnergy-EfficientEconomy,August2015,
http://aceee.org/sites/default/files/self-direct.pdf.
7
forutilitiestorelyonexistingornewemittingresources,theseprojectswouldalso
indirectlyhelputilitiesandstatestocomplywithstateandfederalenvironmental
regulations,evenwhentheenvironmentalattributesareretiredbythecorporate
purchaser.
4. Alignprivatesectorambitionswithpublicpolicyobjectives
Governors’offices,theirstaff,andstatelegislaturesareincreasinglytaskedwithbalancing
theirenvironmentalresources,publichealth,andeconomiccompetitiveness.By
encouragingstateagenciesandutilitiestoworkwithcorporatebuyers,decisionmakers
canpromoteeconomicgrowthwhileensuringaffordablerates.Likeotherpublic/private
partnerships,streamliningrenewableprocurementcanmakestatesmorecompetitivein
attractingnewbusinesses,especiallyasthelistofcompaniesdemandingrenewableenergy
continuestogrow.
ThreePathwaystoPlanforCorporateRenewablePurchases
Themostdirectapproachtoimplementthistypeofprocesschangeisverylikelythrougha
PublicUtilitiesCommission,butitcouldalsobeginwithexecutiveorlegislativeaction.In
thepagesthatfollow,wediscussallthreepathways:aregulatory,alegislativeandan
executiveagencyapproach(seeFigure1).Theultimategoalshouldbetoinstitutionalizea
processbywhichmajorcorporaterenewableenergyinvestmentsandgoalsaretakeninto
accountinfutureassessmentsofpublicnecessityfornewgenerationresources.
Figure1.PathwaystoIntegratingCorporateGoalsWithUtilityResourcePlanning
Itisworthnotingthatpolicymakersalonganyofthesethreepathwayscanpursueother
actionstofacilitatecorporaterenewableenergypurchasing,suchasestablishinga
8
renewableenergytarifforpassinglawsorregulationstoenableonsiterenewableenergy
generation.19Whilespecificpurchasingmechanismsarebeyondthescopeofthispaper,
theycangohand-in-handwithaprocesstobetterintegratecorporatecommitmentsinto
theutilityresourceplanningprocess.Infact,theprocessdescribedheremayhelpidentify
opportunitiestodevelopnewtariffsorprogramstofacilitatetheactualtransactionsthat
companieswillpursuetomeettheirgoals.
Pathway1:RegulatoryApproach
StatePublicUtilitiesCommissions(PUCs),ortheirequivalent,generallyhavetheorganic
authoritytoconsidercorporaterenewableenergygoalsduringtheresourceplanning
process.Furthermore,mostPUCsundergosomeformofperiodicresourceplanningsuchas
anIntegratedResourcePlan(IRP).Inotherwords,newauthorityandnewplanning
processesaregenerallynotrequiredinordertobringcorporaterenewableenergytargets
intotheplanningfold.
IntegratedResourcePlans
IntegratedResourcePlanningisaprocessbywhichutilitiescreatelong-termplans,
typicallylookingout20years,whichareupdatedregularlyeverytwotofouryears(see
Figure2).Tomeetforecasteddemandwithsomeestablishedreservemargin,utilitiesneed
toplanforacombinationofsupply-anddemand-sideresourcesthatminimizefuturecosts
andrisks.20IRPsprovidethemeansbywhichutilities,regulators,andthepublicanalyzean
increasinglycomplexfuturethatrequirestheconsiderationofshort-termcosts,long-term
regulatoryobjectives,possiblefuelandsupplyinterruptions,andchangesinloadforecasts
andpeak-loadrequirements.21
TheimplementationandenforcementofIRPsvariesbystate.Therearedifferencesin
planninghorizons,frequencyofupdates,resourcesandfutureregulatorychangestobe
considered,andstakeholderinvolvementinthedevelopmentandreviewofanIRP.While
PUCauthorityinsomestatesislimitedtoreviewingandacknowledgingtheplan,
commissionsinotherstateshavediscretiontoacceptorrejecttheplan.22
19AdvancedEnergyEconomyInstitute(AEEInstitute)commissionedMeisterConsultantsGrouptoidentify
andassesspolicyoptionstoexpandcorporateaccesstoadvancedenergy,includingutilityrenewableenergy
tariffs,utility“sleeved”PPAs,directaccesstariffs,onsitethird-partyownership,andsharedrenewableenergy
projects.SeeMeisterConsultantsGroup,“OpportunitiestoIncreaseCorporateAccesstoAdvancedEnergy:A
NationalBrief,”August2016,https://www.aee.net/articles/report-top-11-states-for-corp-access-torenewables-policies-to-meet-sustainability-goals.
20RachelWilsonandBruceBiewald,“BestPracticesinElectricUtilityIntegratedResourcePlanning:
ExamplesofStateRegulationsandRecentUtilityPlans,”SynapseEnergyEconomicsfortheRegulatory
AssistanceProject,June2013,http://www.synapse-energy.com/Downloads/SynapseReport.201306.RAP.Best-Practices-in-IRP.13-038.pdf.
21InaraScott,“TeachinganOldDogNewTricks:AdaptingPublicUtilityCommissionstoMeetTwenty-First
CenturyClimateChallenges,”HarvardEnvironmentalLawReview38,no.2(2014):371.
22RachelWilsonandBruceBiewald,“BestPracticesinElectricUtilityIntegratedResourcePlanning:
ExamplesofStateRegulationsandRecentUtilityPlans,”SynapseEnergyEconomicsfortheRegulatory
9
Figure2.IntegratedResourceandLong-TermPlanning,byState
SomestateIRPrequirementsareinlegislation,otherscodifiedinstateadministrativecode
orrules,andsomethroughacombination.Asof2016,32statesrequireutilitiestosubmit
anIRP.23Manyoftheserequirements,whichweredevelopedduringthelate1980sand
early1990s,wererepealedorsetasideinthe1990sand2000sduringtheperiodof
electricutilityrestructuring.Today,somestateshaveupdatedtheirIRPrequirementsand
otherseitheruseanalternativelong-termplanningprocessordonotactuallyrequirelongtermplansfromutilities(Figure2).24Ofthestatesthathaveupdatedtheirrequirements,
somestatessuchasColoradoandOregonrequireutilityplanstoconsiderresourcesthat
havenotbeentraditionallyconsidered.25
Certainly,therearenumberofissuesthatmustbeaddressedbyPUCstosatisfythe
financialconcernsthatutilitiesmayhavewithregardtocorporateprocurementof
renewableenergy.Byintegratingthemechanismforaddressingtheseconcernsintothe
establishedsystemofresourceplanning,thePUCcancraftanIRPthatwillworkfor
customers,renewableenergydevelopers,andutilitiesandtheirinvestors.
AssistanceProject,June2013,http://www.synapse-energy.com/Downloads/SynapseReport.201306.RAP.Best-Practices-in-IRP.13-038.pdf.
InaraScott,“TeachinganOldDogNewTricks:AdaptingPublicUtilityCommissionstoMeetTwenty-First
CenturyClimateChallenges,”HarvardEnvironmentalLawReview38,no.2(2014):371.
23AsdirectedbySenateBill350,enactedin2015,California’sPublicUtilitiesCommissionisdevelopingan
IRPrule.See:http://www.cpuc.ca.gov/ltpp/.
24RachelWilsonandBruceBiewald,“BestPracticesinElectricUtilityIntegratedResourcePlanning:
ExamplesofStateRegulationsandRecentUtilityPlans,”SynapseEnergyEconomicsfortheRegulatory
AssistanceProject,June2013,http://www.synapse-energy.com/Downloads/SynapseReport.201306.RAP.Best-Practices-in-IRP.13-038.pdf.
25Ibid.
10
Someofthechallengesthatcanberesolvedthroughanintegratedplanningprocess
include:
•
•
•
•
•
HowdoesthePUCpreventspreadingcoststotheremainingratebasewhenlarge
corporatecustomerspursuenewrenewableenergyprojectsandnolongerrelyon
existingutilityresources?Bytakingintoaccountcorporaterenewableenergy
commitments,statescanbetterplanforchangesincustomerneedsovertimeto
reducetheriskofstrandedassets(assetsthathavebeenpurchasedbytheratebase
butarenolongerneededpriortobeingfullypaidfor).Atthesametime,PUCscan
alsocalculatereasonablefeesforcustomersthatarenolongerrelyingonutility
assetstoavoidimpactsontheremainingratebase.
Howdoestheutilityearnmoneywhileallowingcustomerstopursuetheirown
renewableenergygoals?PUCsmaywanttoconsideratariffoncorporaterenewable
energypurchasestoaccountfortheutility’searningsonrevenuebasedontheir
managementofresourcesandgridinfrastructureinvestments.Along-term
planningprocesscanbeusedtosetareasonableratethataccuratelycharges
corporatecustomersfortheservicesprovidedbytheutility.
IfcorporatepurchaserschoosetoaccessrenewableenergythroughaPPAsignedby
theirregulatedutility,whatwouldhappenintheeventthecompanyleavesthestate,is
soldorfails?WhiletheseprinciplescanbeincludedinthePPAcontractsapproved
bythePUC,addressingthisriskthroughalong-termplanningprocesswouldhelp
identifymeanstomitigatethepotentialimpactonnon-participatingratepayers.
Howdoestheutilitymanagethecostsassociatedwithalargecustomerdeparting
fromtheutilitysystem?ThisisoneofthecriticalrolesofthePUCandisoneofthe
mostimportantreasonsthisprocessshouldbeintegratedwithintheresource
planningprocess.Theseconditionswillbedifferentineachstatedependingupon
theirratesofpopulationandloadgrowth,theirresourcemix,thestateof
transmissioncapacity,aswellastheexistenceofanenergyimbalancemarket.
HowdoesthePUCrespecttheconfidentialityneedsofcompaniesduringtheir
negotiationprocess?Companiesbuildingnewloadoftenkeepplansconfidentialin
anefforttonegotiatesuperiorrates.PUCsmustbeabletoprovideaconfidential
venueandcompromiseonwhatisdisclosed.
Byaddressingthesechallenges,theintegratedplanningprocesswouldminimizemanyof
therisksandaddressupfronttheprimarychallengesthathavemadecorporaterenewable
energyprocurementsodifficultintraditionallyregulatedstates.
Inmoststates,thisprocesswillalreadyfallwithinPUCauthority,evenundertherather
narrowinterpretationofthatauthorityasaneconomicmandatetoensuretheprovisionof
low-costandreliableelectricity.Whilemeetingcustomerdemandforcleanerenergydoes
notrequirethePUCtohaveamandatetoconsiderenvironmentalconcerns,itmaybe
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helpfultonotethatPUCauthoritycanalsobeinterpretedmorebroadlytoinclude
environmentalconcerns.Thisistrueforstateswherestatutemakesthelinkbetween
economicandenvironmentalissuesclear,andthisbroaderauthorityisimplicitinPUC
authoritytoaddressfacilitysiting,emissionsregulations,resourceplanning,andthe
generalchargetoservethepublicgood.26Instateswhereauthoritytoconsider
environmentalissuesisprovided,andinstateswhereauthorityexistsbutwhereutilities
commissionshavenottraditionallyconsideredenvironmentalconcerns,resourceplanning
processesmayprovidethebestavenueforintegratingenvironmentalandeconomic
concerns.27
Pathway2:LegislativeApproach
WhileincorporatingcompanyrenewableenergyprocurementgoalsintoanIRPplanning
processwillultimatelyfalltotheutilitiescommissiontoimplement,statelegislaturesand
executivebranchofficescanplayacrucialroleininitiatingthisprocess.Inparticular,while
stateutilityregulatorsplaybothquasi-judicialandquasi-policyroles,somePUCsleanmore
heavilyonthejudicialsideanddefertostatelegislaturestoprovideclearpolicyguidance
tothecommission.Infact,mostregulatorsderivetheirauthorityfromstatestatutesand
manylooktolegislatorstoprovidethemwithexplicitauthoritywhenitcomesto
implementingnewpolicyinitiatives.
Asaresult,statelegislaturescanplayacriticalroleingivingdirectiontotheregulatory
process.Asrepresentativesofthepublic,legislatorsareabletoconsiderawidevarietyof
factorsthatmaybeperceivedasbeyondthePUC’sauthorityindeterminingwhethersucha
programisinthepublicinterest.Thesefactorsmayincludeeconomicvitality,jobcreation,
climatemitigation,andenvironmentalpriorities,amongothers.Thelegislature,usingthis
authority,cansetclearprogramparametersforthecommissionthatwillstrengthenthe
objectivesoftheprogramandpromoterenewableenergydevelopment.
Forexample,thelegislaturecouldrequireutilitiestoapproachcompaniestodetermine
firmrenewableenergyprocurementcommitmentsonanannualbasis.Thelegislature
couldalsodirectthecommissiontoopenadockettoinvestigatehowthelistoffirm
commitmentscanbeleveragedtobenefitoverallresourceplanning.Statelegislatures
couldalsorequireutilitiestoincludefirmcorporaterenewableenergygoalswhenever
theyevaluatetheneedfornewgenerationtoensurethatutilitiesareminimizingthefuture
riskofstrandedassets.Thelegislaturealsohastheauthoritytoprovideparticipating
companieswithincentivestoparticipateintheprogram(taxcreditsorotherfinancial
incentives)andtofollowthroughwiththeircommitments.
26MichaelDworkin,DavidFarnsworth,andJasonRich,“TheEnvironmentalDutiesofPublicUtilities
Commissions,”PaceEnvironmentalLawReview18,no.2(2001):325.And:MichaelDworkin,David
Farnsworth,JasonRich,andJasonSalmiKlotz,“RevisitingTheEnvironmentalDutiesofPublicUtility
Commissions,”VermontJournalofEnvironmentalLaw7,no.1(2006):1.
27InaraScott,“TeachinganOldDogNewTricks:AdaptingPublicUtilityCommissionstoMeetTwenty-First
CenturyClimateChallenges,”HarvardEnvironmentalLawReview38,no.2(2014):371.
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Additionally,thelegislaturecouldpassabilldirectingthecommissiontosetupataskforce
thatincludeslargecorporaterenewableenergybuyers.Thetaskforcecouldbeinstructed
todevelopaproposedprogrambasedonitsresearchanddeliberationsandreportbackto
thelegislaturewithrecommendations.
Finally,statelegislatureshaveanexpandedauthoritybeyondthoseentitiestypically
governedbythepublicutilitiescommissions,includingmunicipalutilitiesandruralelectric
cooperatives.Asaresult,statelegislaturesmaychoosetoestablishtheintegrationof
corporaterenewableenergyprocurementgoalsasamatterofstatewideimportance,28not
limitedtothoseutilitiesgovernedbythestateutilitycommission.
Itwillbeimportantforthelegislaturetoprovideaclearandexplicitdirectivetoensure
thatcostsaredistributedfairly,whilealsomakingcorporateparticipationappealing.Such
alegislativedirectivecanprovideaninitialpushtointegratecorporategoalsintoresource
planning,supportingtheeffortswithstatutoryauthority.
Pathway3:ExecutiveAgencyApproach
Theexecutivebranchcancatalyze,motivate,anddirecteffortstomaximizethevalueof
meetingcorporaterenewableenergygoalsforarangeofpublicpurposesbycoordinating
actionwithinvariousexecutiveoffices.AnyGovernor’sofficecoulddirectstateagencies,
suchasaStateEnergyOffice,OfficeofEconomicDevelopment,ortheirequivalent,to
undertakeadocumentationexercisetodeterminethescopeofrenewableenergy
commitmentamongprivatesectorcompaniesintheirstate.
StateEnergyOffice
BarringactionbyaPUCorastatelegislature,StateEnergyOfficescouldalsoinitiatethis
processbyissuingaRequestforInformation(RFI)directedatlargeprivatesector
companies.Thepurposeofthisexercisewouldbetocollectinformationontheircurrent
investments,theirgoals,andtheirtimelinesforprocurement.Aformalstateprocessgives
thesegoalsmorevaliditybecauseitputstheresponsibilityontheprivatesectorto
considertheirfirmcommitmentsonastate-by-statebasis,whichishowourenergysystem
isbuiltandfinanced.Fromhere,theofficecouldthensubmitthisinformationtoaPUCfor
considerationinthenextIRP.
Furthermore,bypoolingindividualcorporaterenewablegoals,astateenergyofficemaybe
abletolowercostsforallparticipantsthroughtherequestforproposal(RFP)process,
resultinginthedevelopmentoffewerlargesystemsratherthannumeroussmallsystems.29
Thismaybeparticularlyrelevantforsmallercompaniesthatwouldprefertosubscribetoa
renewableenergypurchasingprogramratherthannegotiatelargeindividualcontracts.In
itsstateclimateorenergyplan,theenergyofficecouldidentifywaystoexplorethe
28Theterm“issueofstatewideimportance”mayberequiredinsome“homerule”statestoexercisestate
legislativesupremacyoverentitiesgivenconstitutionalindependencefromstatestatute.
29Formoreinformationsee:JohnSterlingandTedDavidovitch,“UtilityScaleSolar:ThePathtoHighValue,
Cost-CompetitiveProjects,TheSmartElectricPowerAssociation,2016,
http://www.sepapower.org/media/453731/highvalue-costcompetitive-projects.pdf.
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developmentofnewrenewableopportunities,includingdistributedenergyresourcesand
communitysolaraggregation.Theestablishmentofasharedrenewableprojectthrough
thisprocessmayalsoopenanopportunityforenergyofficestocombinethesharesin
renewableresourceswiththestate’slow-incomeweatherizationprogram—lowering
energycoststhroughefficiencyupgradeswhilealsoloweringriskbyminimizingthecosts
associatedwithfluctuatingfuelcosts.
MostStateEnergyOfficescurrentlyarerequiredtoformallypetitionforparticipationina
regulatoryproceeding.WhilePUCsgenerallygrantpetitionsfromtheirStateEnergy
Offices,thepetitionprocesslimitstheabilityofenergyofficestocommentonandtakepart
inproceedingsthathavealreadybegun.Instateswheretheenergyofficehasintervener
authority,ordoesnothavetogothroughapetitionprocess,theagenciesareallowedto
commentonongoingproceedings,therebyincreasingtheirabilitytobeapartofanystage
ofaproceeding.ThisisimportantbecausethetimingofanRFIandpartystatuswouldneed
tohappenaheadofanIRPforStateEnergyOfficesthatdonothaveautomaticintervenor
status.
StateEconomicDevelopmentAuthority
Iftheabovepathwaysarenotpossible,astateeconomicdevelopmentauthorityorits
equivalentcouldengageinaverysimilarprocesstotheonedescribedabovefortheState
EnergyOffice.Aneconomicdevelopmentofficewouldnecessarilyputamuchgreater
emphasisonmetricsgermanetoitsmission:jobcreation,businessattractionand
retention,etc.Themotivationforaneconomicdevelopmentofficewouldlikelybetouse
innovativerenewableenergypolicyasameansofattractingnewbusinesses,i.e.,“Cometo
ourstatebecausewehavetheprocessandpolicesinplacetohelpyourcompanyachieveits
cleanenergyorsustainabilitycommitments.”Manystateshaveseenfirst-handhowanRPS
oranEERSincreasestheirchancesofattractingacleanenergymanufacturer,installeror
laboratory.Whenincentivedollarsarescarce,anyopportunitytoattractnewcompaniesto
astatedeservesconsideration.Armedwithdataonwhichcompaniesaremotivatedto
purchasemorerenewableenergy,aneconomicdevelopmentauthoritywouldmakea
strongcasetoaregulatorybodyoralegislatureforwhycorporatetargetsneedtobe
formallyconsideredinthestateenergyplanningprocess.Thismayalsosparkdiscussion
andactiononspecificpurchasingoptions,suchasarenewableenergytariff,tofacilitate
thesepurchases.
Conclusion
Corporateprocurementofrenewableenergyhasthepotentialtosubstantiallycontribute
toastate’seconomyandelectricpowersystemifitisfullyintegratedwithutilityresource
planning.Largecorporatecustomersbringsignificantcapitaltothetableastheyseekto
meettheirrenewablegoals,andwhilethatcapitalwillbydefinitionbeusedtoservethe
company’sprivateinterests,itcandosoinawaythatservesthepublicinterestaswell.By
workingwithcompaniestoconsidercorporateprocurementplansduringtheresource
planningprocess,utilitiesandutilitycommissionscanreduceconcernsandremove
barriersassociatedwithcorporateprocurementwhileensuringthatnewcorporate
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renewableenergyprojectscomplementtheneedsofthegridoverall.Thelegislaturecan
supportthisprocessthroughcleardirectivestotheutilitiescommission,andtheexecutive
branchcanworktoensurethatthestateonthewholebenefitsfromthefulfillmentof
corporaterenewablegoals.
Ifdevelopedandimplementedcarefullyanddeliberately,programsthatenablecorporate
procurementofrenewableenergycanbenefitawiderangeofstakeholders.Ifastate
positionsitselftoworkwithcorporationspursuingrenewableenergygoals,itcanmake
itselfmorecompetitiveandhelpretainandattractcorporateinvestment.Atthesametime,
ratepayersbenefitascorporatecapitalgoestobuildinggeneratingcapacitythatdiversifies
thegridmix,therebysupplementingautility’straditionalplanningprocess.Utilitiesbenefit
astheyunlocknewchoicesfortheirbiggestcustomerswhilestillmeetingtheneedsof
theirsmallestcustomers.Finally,corporatepurchasersbenefitfromreducedbarriersand
accesstonewoptionstopurchaserenewableenergyaccordingtotheirindividualneeds.
Withwidestakeholderparticipationinprogramdesignanddevelopment,statescan
harnessandfullycapitalizeontheexpandingmarketdrivenbycorporaterenewable
energygoals.
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