From: howard.smith@spacebbs.com (Howard Smith) 
Newsgroups: sci.energy
Subject: Wind Energy Weekly
Date: 4 Jan 93 08:54:00 GMT
Distribution: world
Organization: SPACE BBS - Menlo Park, CA - 10 Lines + 4gB - 415-323-4193
Reply-To: howard.smith@spacebbs.com (Howard Smith) 

STATE POLICIES SPUR
RENEWABLE SUCCESS

A "supportive [policy] environment . . . for renewable energy
development" has been a key ingredient in the growth of renewable
energy technologies in many states, according to a preliminary
report commissioned by the National Association of Regulatory
Utility Commissioners (NARUC).

Jan Hamrin of the San Francisco-based consulting firm Hansen,
McQuat, Hamrin & Rohde, Inc., authored the summary of the "NARUC
White Paper on Renewable Energy in State Regulatory Processes,"
prepared for a NARUC conference on integrated resource planning in
Burlington, VT, September 13-16.

States which today lead the country in renewable resource electric
capacity, Hamrin said, fall into two general categories:
"(1) Those that developed implementation policies to promote the
intent of [the federal Public Utility Regulatory Policies Act of
1978].  These include, most notably, California and Maine, as well
as Connecticut, Florida, Idaho, Massachusetts, Michigan, Nevada,
New York, New Hampshire, North Carolina, and Vermont; and

"(2) Those that simply had abundant renewable resources of the more
conventional type (wood and hydro) that large industries were able
to develop exclusively or primarily for their own use.  In some
cases, these facilities arranged to sell excess power to local
utilities under the federal PURPA law without any particular . . .
policies or programs.  These states include Alabama, Hawaii,
Georgia, and Virginia."

Policies enacted in the first group of states, Hamrin said, include
the following:

o    Standard contracts which set forth the terms and conditions
     for the sale of power from non-utility generators to
     utilities:  "This greatly reduced the expense and delay of
     negotiations, . . . transaction costs and the time required to
     obtain a financeable contract."

o    A long-term contract price to be paid by utilities for power,
     based on avoided utility plants:  "Many utilities offer
     contracts based on short-term energy and capacity, even when
     the utility has plans [to add] base or intermediate resources.
     Long-term contracts based on the cost of new resources are
     more likely to provide a sufficient revenue base for
     [renewable energy] development."

o    A requirement that utilities pay for both energy and capacity:
     "Renewable projects cannot generally recover costs unless they
     receive some payment for their capacity value.  Even if a
     utility does not need new capacity to meet demand, added
     capacity always has some value because it increases the
     reliability of the utility system."

o    A fixed or predictable payment stream:  "This is critical for
     any non-utility developer to obtain financing."

o    Levelized or front-loaded payments for power.  Levelized or
     front-loaded payments anticipate an increase in generation
     costs over a number of years (e.g., 20 or 30 years) and
     provide extra funds to a developer in a project's early years
     in exchange for low payments later on.  "This allows
     developers of capital-intensive renewable energy projects to
     pay debt service on the loan, which is generally 10 to 15
     years."  Although such payments have occasionally been the
     focus of controversy, Hamrin notes that in no case did they
     equal or exceed standard utility revenue requirements.

o    No dispatchability or minimum capacity factor requirement:
     "This meant that intermittent/low-capacity-factor renewable
     resources (hydro, wind, solar) and non-dispatchable resources
     (geothermal) could participate."

o    Special rates for renewable energy facilities.

[ed. note:  The NARUC White Paper summary goes on to discuss some
promising new policy options for states seeking to encourage
renewable energy development.  These will be the subject of a
future Wind Energy Weekly article.]
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