RENEW Wisconsin filed testimony with the Wisconsin Public Service Commission on September 18, 2006 calling for implementation of Advanced Renewable Tariffs in the state by January 1, 2008.
The move is the first formal action by a non-governmental organization in the US to urge adoption of the policy mechanism used in Germany, France, and other countries to successfully spur rapid development of renewable energy.
Michael Vickerman, RENEW Wisconsin’s executive director, submitted testimony to the PSC in two separate proceedings challenging the commission’s buy-back rates for distributed generation. He testified that RENEW favors setting fixed rates or tariffs for distributed generation based on the cost of production of each renewable technology and does not support basing tariffs on the wholesale price of electricity.
RENEW Wisconsin’s position that renewable tariffs should be based on the cost of generation is a significant departure from the position of most American NGOs involved in utility rate cases and puts RENEW in line with its continental European colleagues.
Until RENEW’s action, most if not all renewable advocates in the US went to great lengths to define the “value” of renewable generation and demand rates reflecting these values. Thus, Vickerman’s testimony marks a significant break from this approach by arguing that tariffs should be calculated on what it “costs” to make investments in renewable energy profitable.
Though a small step in itself, Vickerman’s PSC testimony could be precedent setting in the US, more so since it indicates RENEW Wisconsin has committed itself to a campaign for Advanced Renewable Tariffs in America’s heartland.
RENEW also submitted an exhibit outlining detailed categories of tariffs for each technology and a manner in which the specific tariffs can be determined. According to RENEW’s filing, the rates would have the following attributes:
- Simple, Comprehensible, & Transparent
- Fixed Prices Sufficient to Drive Development
- Lengths Sufficient for Profitability
- Prices Differentiated by Technology
These are the principle elements of Advanced Renewable Tariffs as used in France and Germany.
RENEW proposed that the tariffs be limited to customer-sited generation with caps on the project size of each technology.
- Solar Electric: 1 MW
- Biogas/Biomass: 1 MW
- Wind: 2 MW
The proposal also limits total program size to only 10 MW. This contrasts with that in Ontario, Canada where project size is limited to 10 MW and there are no program caps.
Vickerman testified that, “The rates would be set in accordance with the expected production costs associated with each technology and as well the size of the installation. In our view, fixed rates have shown to be singularly effective in giving prospective distributed generators the confidence they need to invest in socially desirable generating technologies that yield modest annual returns over a long period of time. Feed-in tariffs have been the driving force behind the extraordinary penetration of solar, wind and biogas installations in nations like Germany and Spain.”
Currently WE Energies is the only Wisconsin utility that has a renewable tariff for solar photovoltaics and it is the only utility in the country with a true renewable tariff. WE Energies pays US$0.225/kWh (€0.117/kWh) for solar-generated electricity for a period of 10 years. As in the German and French programs, the utility only pays for the export of electricity. There is no net metering.
Some program’s elsewhere in the US pay an incentive based on the production of solar electricity but rely on net metering for the program to function. Washington state will pay as much as US$0.54/kWh for solar electricity from equipment manufactured in the state and will do so for 8 years. The incentive is in addition to net metering.
Vickerman’s testimony called on the PSC to convene a hearing docket specifically to investigate Advanced Renewable Tariffs. Doing so, said Vickerman, would produce a hearing record sufficient to develop policies based on the evidence provided. He noted, however, that a formal proceeding may be too unwieldy to produce the policies needed in the two-year time frame proposed. Vickerman suggested as an alternative that the PSC organize a technical conference on the topic to examine the details in a less formal manner.
RENEW’s filing explains that the key features of a Wisconsin feed law that need to be defined are
- Duration of Tariff Payments (10 year minimum),
- Specific Tariffs by Technology and Project Size,
- Provisions for Adjusting the Tariffs Over Time,
- Maximum Project Size (Project Caps), and
- Maximum Subscription Levels (Program Caps).
Though other states have privately and publicly discussed implementing a feed law for distributed generation, notably Oregon, RENEW Wisconsin’s filing is the first formal announcement of a campaign for such a program in the United States.
- RENEW Wisconsin’s Surrebuttal Testimony
- RENEW Wisconsin’s Proposal for Wisconsin DG Buyback Rates (Exhibit)