Annual report of the North Carolina Utilities Commission to the Governor of North Carolina, the Environmental Review Commission and the Joint Legislative Utility Review Committee, regarding renewable energy and energy efficiency portfolio standard in North Carolina

              ANNUAL REPORT REGARDING
RENEWABLE ENERGY AND ENERGY EFFICIENCY
PORTFOLIO STANDARD IN NORTH CAROLINA
REQUIRED PURSUANT TO G.S. 62-133.8(j)
DATE DUE: OCTOBER 1, 2011
SUBMITTED: SEPTEMBER 30, 2011
RECEIVED BY
THE GOVERNOR OF NORTH CAROLINA
THE ENVIRONMENTAL REVIEW COMMISSION
AND THE JOINT LEGISLATIVE
COMMISSION ON GOVERNMENTAL OPERATIONS
SUBMITTED BY
THE NORTH CAROLINA UTILITIES COMMISSION
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TABLE OF CONTENTS
EXECUTIVE SUMMARY...................................................................................... 1
BACKGROUND.................................................................................................. 16
2011 LEGISLATION........................................................................................... 17
COMMISSION IMPLEMENTATION ................................................................... 18
Rulemaking Proceeding ............................................................................. 18
Renewable Energy Facilities ...................................................................... 25
North Carolina Renewable Energy Tracking System (NC-RETS) .............. 31
Environmental Impacts ............................................................................... 33
ELECTRIC POWER SUPPLIER COMPLIANCE................................................ 34
Monitoring of Compliance with REPS Requirement ................................... 34
Cost Recovery Rider .................................................................................. 35
Electric Public Utilities ................................................................................ 36
Electric Membership Corporations and Municipally-Owned Electric Utilities......... 43
RECOMMENDATIONS ...................................................................................... 55
CONCLUSIONS ................................................................................................. 55
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APPENDICES
1. Docket No. E-100, Sub 113, In the Matter of Rulemaking
Proceeding to Implement Session Law 2007-397
- Letter from Chairman Edward S. Finley, Jr., North Carolina
Utilities Commission, to Secretary Dee Freeman, North Carolina
Department of Environment and Natural Resources (June 1,
2011)
- Letter from Robin W. Smith, Assistant Secretary for
Environment, North Carolina Department of Environment and
Natural Resources, to Chairman Edward S. Finley, Jr., North
Carolina Utilities Commission (August 22, 2011)
- Order Denying the Use of Thermal RECs to Satisfy Poultry Waste
Set-Aside Requirement (October 8, 2010)
- Order on Cost Recovery of Swine and Poultry Waste
Energy by an Electric Public Utility (November 23, 2010)
- Order Amending Rules R8-64 Through R8-69 and Adopting
Final NC -RETS Operating Procedures (January 31, 2011)
2. Renewable Energy Facility Registrations
- Order Accepting Registration of New Renewable Energy
Facilities Fueled by Co-Firing Biomass, Including Primary
Harvest Whole Trees, Docket No. E-7, Subs 939 and 940
(October 11, 2010)
- Order Declaring Yard Waste, Municipal Solid Waste and the
Percentage of Syngas Derived from Yard Waste and
Municipal Solid Waste to be Renewable Energy Resources,
Docket No. SP-100, Sub 28 (April 18, 2011)
- Order Accepting Registration of a New Renewable Energy
Facility Producing Electricity and Steam from Landfill Gas,
Docket No. SP-100, Sub 9 (July 5, 2011)
- Orders Accepting Registrations of New Renewable Energy
Facilities Producing Solar Thermal Hot Water, Docket
Nos. RET-4, Sub 5 and RET-8, Subs 12, 13 and 14
(August 15, 2011)
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3. Miscellaneous Dockets
- Order Extending Deadline for the Issuance of Historic
RECS, Docket No. E-100, Subs 113 and 121
(December 10, 2010)
- Order Granting Request to Transfer Renewable Energy
Certificates, Docket No. EMP-17, Sub 1 (March 25, 2011)
- Order Revoking Registrations of New Renewable Energy
Facilities, Docket No. E-100, Sub 130 et al. (June 7, 2011
and July 6, 2011)
- Order Granting Request to Transfer Renewable Energy
Certificates, Docket No. E-7, Sub 992 (August 26, 2011)
- Order Approving REPS and REPS EMF Riders, Docket
No. E-2, Sub 974 (November 17, 2010)
- Order Approving REPS and REPS EMF Riders, Docket
No. E-7, Sub 984 (August 23, 2011)
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EXECUTIVE SUMMARY
In August 2007, North Carolina enacted comprehensive energy legislation,
Session Law 2007-397 (Senate Bill 3), which, among other things, established a
Renewable Energy and Energy Efficiency Portfolio Standard (REPS), the first
renewable energy portfolio standard in the Southeast. Under the REPS, all
electric power suppliers in North Carolina must meet an increasing amount of
their retail customers’ energy needs by a combination of renewable energy
resources (such as solar, wind, hydropower, geothermal and biomass) and
reduced energy consumption. Pursuant to G.S. 62-133.8(j), the Commission is
required to report by October 1 of each year to the Governor, the Environmental
Review Commission, and the Joint Legislative Commission on Governmental
Operations on the activities taken by the Commission to implement, and by
electric power suppliers to comply with, the REPS requirement.
2011 Legislation
During the 2011 Session of the General Assembly, the legislature enacted
two amendments to Senate Bill 3.
First, Session Law 2011-55 (Senate Bill 75) amended G.S. 62-133.8(a) by
adding a new subdivision (3a) defining “electricity demand reduction” and adding
G.S. 62-133.8(b)(2)(g) and (c)(2)(g) to include electricity demand reduction as a
means by which an electric power supplier can meet its REPS obligation.
Second, Session Law 2011-309 (Senate Bill 710) amended G.S. 62-133.8(f)
by adding language that allows electric power suppliers to use renewable energy
certificates (RECs) derived from the thermal energy of a combined heat and power
facility that uses poultry waste as a fuel to meet the REPS poultry waste set-aside
requirement.
Commission Implementation
Rulemaking proceeding
Immediately after Senate Bill 3 was signed into law, the Commission
initiated a proceeding in Docket No. E-100, Sub 113 to adopt rules to implement
the REPS and other provisions of the new law. On February 29, 2008, the
Commission issued an Order adopting final rules implementing Senate Bill 3.
Since issuing this Order, the Commission has issued a number of orders
interpreting various REPS provisions, including the following orders issued and
other actions taken since October 1, 2010:
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• On November 23, 2010, in Docket No. E-100, Sub 113, in response to
a Joint Motion by numerous electric power suppliers, the Commission
issued a Declaratory Order on cost recovery for the purchase of
renewable energy by electric public utilities when the purchase of
energy does not include the renewable energy certificates (RECS)
associated with the production of the energy. The Commission held
that an electric public utility can recover through its fuel cost rider the
total delivered cost of the purchase of energy generated by a swine or
poultry waste-to-energy facility where the RECS associated with the
production of the energy are purchased by another North Carolina
electric power supplier to comply with the REPS statewide swine and
poultry waste set-aside requirements.
• On January 31, 2011, in Docket No. E-100, Sub 113, the Commission
issued an Order amending Commission Rule R8-64 through R8-69,
and approving final Operating Procedures for the North Carolina
Renewable Energy Tracking System (NC-RETS).
In addition, on August 24, 2010, in Docket No. E-100, Sub 113, the
Commission issued an Order requesting comments on measurement and
verification (M&V) of the amounts of reduced energy consumption reported and
used for REPS compliance, especially with regard to energy efficiency and
demand-side management activities of electric membership corporations and
municipal power suppliers. Numerous parties filed comments and reply
comments.
Also, on August 25, 2010, in Docket No. E-100, Sub 113, the Commission
issued an Order requesting that the Public Staff convene a working group of
technical experts and other interested stakeholders and make recommendations to
the Commission regarding the appropriate assumptions and methodology for
reasonably estimating the useful thermal energy produced by an unmetered solar
thermal facility and the number of RECs earned by that facility. The Public Staff
has facilitated several meetings of the working group and filed two reports on the
working group’s recommendations.
Renewable energy facilities
Senate Bill 3 defines certain electric generating facilities as “renewable energy
facilities” or “new renewable energy facilities.” RECs associated with electric or
thermal power generated at such facilities may be used by electric power suppliers to
comply with the REPS requirement as provided in G.S. 62-133.8(b) and (c).
In its rulemaking proceeding, the Commission adopted rules providing for
certification or report of proposed construction and registration of renewable
energy facilities and new renewable energy facilities. As of July 27, 2011, the
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Commission has accepted registration statements filed by 337 facilities. A list of
these facilities may be found on the Commission’s website at www.ncuc.net.
The Commission has issued a number of orders since October 1, 2010
addressing issues related to the registration of a facility, such as the definition of
“renewable energy resource,” including the following:
• On October 8, 2010, in Docket No. E-100, Sub 113, the Commission
issued an order denying a request by Peregrine Biomass Development
Company, LLC, to allow thermal RECs to be used to meet the swine
and poultry waste set-aside requirements.
• On October 11, 2010, in Docket Nos. E-7, Subs 939 and 940, the
Commission accepted for registration as renewable energy facilities
Duke Energy Carolinas’ Buck and Lee Steam Stations, and concluded
that primary harvest wood products, including wood chips from whole
trees, are “biomass resources” and “renewable energy resources”
under G.S. 62-133.8(a)(8).
• On April 18, 2011, in Docket No. SP-100, Sub 28, the Commission
issued an Order on Request for Declaratory Ruling concluding that yard
waste and the percentage of refuse-derived fuel (RDF) used by
ReVenture Park Investments I, LLC (ReVenture), as fuel are renewable
energy resources and that the percentage of synthesis gas (Syngas)
produced from yard waste and RDF used by ReVenture as fuel is a
renewable energy resource.
• On July 5, 2011, in Docket Nos. SP-100, Sub 9 and SP-967, Sub 0,
the Commission issued an Order accepting as a new renewable
energy facility the planned addition by Raleigh Steam Producers, LLC,
and Wake Gas Producers, LLC, of three electric generators to produce
combined heat and power from landfill gas.
• On August 15, 2011, in Docket Nos. RET-4, Sub 5 and RET-8, Subs
12, 13 and 14, the Commission issued Orders accepting registration of
residential solar thermal water heating facilities on 1,129 homes at the
U.S. Marine Corps Camp Lejeune in Jacksonville, North Carolina,
allowing a representative sample of the homes to be metered to
determine the number of Btus of thermal energy and metered solar
thermal RECs that will be produced by the 1,129 systems.
North Carolina Renewable Energy Tracking System (NC-RETS)
Pursuant to G.S. 62-133.8(k), enacted in 2009, the Commission was
required to develop, implement, and maintain an online REC tracking system no
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later than July 1, 2010, in order to verify the compliance of electric power
suppliers with the REPS requirements.
On February 2, 2010, after evaluating the bids received in response to a
request for proposals, the Commission signed a Memorandum of Agreement
(MOA) with APX, Inc. (APX), to develop and administer an online REC tracking
system for North Carolina, the North Carolina Renewable Energy Tracking
System (NC-RETS). APX successfully launched NC-RETS on July 1, 2010, and
by letter dated September 3, 2010, the Commission accepted the system and
authorized APX to begin billing users pursuant to the MOA.
RECS have been successfully created by and imported into NC-RETS,
and the electric power suppliers have used the system to demonstrate
compliance with the 2010 REPS solar set-aside requirement.
Environmental impacts
The Commission has not identified, nor has it received from the public or
the North Carolina Department of Environment and Natural Resources (DENR),
any comments regarding direct, secondary, and cumulative environmental
impacts of the implementation of the REPS provisions of Senate Bill 3. DENR
noted that there continues to be interest in the development of renewable energy
resources and the REPS appears to have spurred much of this interest.
Electric Power Supplier Compliance
Pursuant to Senate Bill 3, electric power suppliers are required, beginning
in 2012, to meet an increasing percentage of their retail customers’ energy needs
by a combination of renewable energy resources and energy reductions from the
implementation of energy efficiency and demand-side management measures. In
addition, as of 2010, each electric power supplier must meet a certain
percentage of its retail electric sales with solar RECs from certain solar facilities.
Monitoring compliance with REPS requirement
Monitoring by the Commission of compliance with the REPS requirement
of Senate Bill 3 is accomplished through the annual filing by each electric power
supplier of an REPS compliance plan and an REPS compliance report. Pursuant
to Commission Rule R8-67(b), on or before September 1 of each year, each
electric power supplier is required to file with the Commission an REPS
compliance plan providing specific information regarding its plan for complying
with the REPS requirement of Senate Bill 3. Pursuant to Commission
Rule R8-67(c), each electric power supplier is required to annually file with the
Commission an REPS compliance report. While an REPS compliance plan is a
forward-looking forecast of an electric power supplier’s REPS requirement and its
plan for meeting that requirement, an REPS compliance report is an annual look
back at the RECs earned or purchased and energy savings actually realized
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during the prior calendar year and the electric power supplier’s compliance in
meeting its REPS requirement.
Cost recovery rider
G.S. 62-133.8(h) authorizes each electric power supplier to establish an
annual rider up to an annual cap to recover the incremental costs incurred to
comply with the REPS requirement and to fund certain research. Commission
Rule R8-67(e) establishes a procedure under which the Commission will
consider approval of an REPS rider for each electric public utility. The REPS rider
operates in a manner similar to that employed in connection with the fuel charge
adjustment rider authorized in G.S. 62-133.2 and is subject to an annual true-up.
Electric public utilities
Progress Energy Carolinas, Inc.
In its 2011 REPS compliance plan, PEC stated that its overall compliance
strategy is to meet the REPS requirement with the most cost-effective and
reliable renewable energy resources available. PEC has adopted a competitive
bidding process for the purchase of energy or RECs from renewable energy
facilities whereby market participants have an opportunity to propose projects on
a continuous basis. Through this RFP, PEC has executed fifty (50) contracts for
solar, hydro, biomass, landfill gas, and wind RECs. In addition, PEC and other
participants in a state-wide collaborative have executed two contracts for swine
waste-to-energy RECs and continue to negotiate with other potential suppliers,
PEC stated that it is committed to taking all actions necessary to comply with the
swine and poultry waste set-aside requirements. However, PEC stated that it is
doubtful that there will be sufficient energy derived from swine waste within the
state to enable PEC to meet the 2012 swine waste set-aside requirement.
Similarly, although PEC has executed one contract for poultry waste RECs, PEC
cautions that it uncertain whether there will be sufficient poultry waste facilities in
operation to enable PEC to meet the 2012 obligation.
In its 2010 REPS compliance report, filed on June 3, 2011, in Docket
No. E-2, Sub 1000, PEC indicated that it acquired sufficient solar RECs to meet
the 2010 requirement of 0.02% of its 2009 retail sales. Further, PEC stated that
counting banked RECs, energy efficiency projections, contracted future
purchases, and the ability to use 25% out-of-state RECs each year, it expects to
have sufficient RECs to achieve REPS compliance through 2014.
On November 15, 2010, the Commission issued an Order approving
PEC’s Residential Service SunSense Solar Rebate Rider SSR-1 (SunSense).
SunSense is an experimental solar photovoltaic (PV) rebate program under
which residential customers who install rooftop solar PV generating systems will
receive a one-time participation payment of $1,000 per kW of installed capacity
and monthly bill credits based on the RECs produced by their system. The solar
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RECs will be the property of PEC. The Commission previously approved a
similar SunSense PV program for commercial customers. PEC implemented the
commercial PV program in July 2009 with a target of adding 5 MW of grid-tied
solar PV per year and a standard offer to purchase commercial solar hot water
RECs to promote development of this technology.
On November 17, 2010, the Commission issued an Order in Docket
No. E-2, Sub 974 approving an REPS charge of $0.58 per month for residential
customers, $2.90 per month for commercial customers, and $28.93 per month for
industrial customers, each of which is below the incremental cost cap established
in G.S. 62-133.8(h). In addition, the Commission approved PEC’s 2009 REPS
compliance report. A hearing was held on PEC’s 2010 REPS compliance report
and 2011 REPS cost recovery rider on September 27, 2011. A final decision is
pending before the Commission.
Duke Energy Carolinas, LLC
In its 2011 REPS compliance plan, Duke stated that it is building a diverse
portfolio of cost-effective renewable energy and energy efficiency resources.
Specifically, the key components of Duke’s plan include: (1) direct investment in
renewable energy resources at existing or new Duke-owned facilities;
(2) partnerships with third-party renewable resource suppliers through power
purchase agreements; (3) purchases of unbundled RECs from both in-state and
out-of-state suppliers; and (4) utilization of cost-effective energy efficiency
savings. Duke believes that implementation of these strategies will yield a
balanced and prudent portfolio of qualifying resources and a flexible mechanism
for REPS compliance. Further, Duke stated that it is confident that it will meet its
solar set-aside requirement under its 2011 REPS obligation by pursuing a
number of strategies, including: (1) Duke-owned solar photovoltaic distributed
generation program; (2) power purchase agreements for solar generation; and
(3) purchase of in-state and out-of-state unbundled solar RECs, including RECs
from solar thermal facilities. With regard to the swine and poultry waste set-aside
requirement, Duke’s primary strategy is to jointly procure swine waste-to-energy
resources with PEC and other electric power suppliers. Duke has entered into
four long-term REC purchase agreements with developers of swine waste-to-energy
facilities in North Carolina. However, the production dates and projected
production estimates for the facilities have materially changed and Duke now
believes that compliance with the 2012 swine waste set-aside requirement is
unlikely.
On March 10, 2011, in Docket No. E-7, Sub 984, Duke filed its 2010
REPS compliance report and an application for approval of an REPS rider. On
August 23, 2011, the Commission issued an Order approving an REPS charge of
$0.49 per month for residential customers, $2.44 per month for commercial
customers, and $26.97 per month for industrial customers, each of which is
below the incremental cost cap established in G.S. 62-133.8(h). In addition, the
Commission approved Duke’s 2010 REPS compliance report, including a finding
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that Duke acquired sufficient solar RECs to meet the 2010 requirement of 0.02%
of its 2009 retail sales.
Dominion North Carolina Power
In its 2011 REPS compliance plan, Dominion stated that it intends to meet
its REPS requirement through the use of new renewable energy, energy
efficiency, and unbundled RECs. Dominion plans to use unbundled solar RECs
to meet its 2011 and beyond solar requirements and has entered into contracts
to purchase sufficient RECs through 2013. As determined in the Commission’s
September 22, 2009 Order, Dominion is exempt from the 25% limit on the use of
out-of-state RECs for REPS compliance found in G.S. 62-133.8(b)(2)(e).
Dominion stated that it has purchased solar RECs for REPS compliance from
out-of-state to minimize compliance costs. In addition, Dominion has entered into
long term contracts with five companies for the purchase of swine waste-to-energy
RECs. Dominion further noted that on February 22, 2011, the
Commission issued Orders approving four Dominion energy efficiency programs.
On July 9, 2010, Dominion filed its 2009 REPS compliance report. On
June 22, 2011, the Commission issued an Order requesting that the Public Staff
file comments on Dominion’s 2009 compliance report by September 1, 2011. In
particular, the Commission requested the Public Staff to assess whether
Dominion is likely to meet its future REPS obligations without exceeding the cost
caps established under G.S. 62-133.8(h). On August 30, 2011, the Public Staff
filed comments concluding that Dominion will be able to meet its REPS obligation
for the foreseeable future without exceeding the cost caps and that Dominion’s
2009 REPS compliance report should be approved by the Commission.
On August 25, 2011, Dominion filed its 2010 REPS compliance report.
Dominion stated that it met its 2010 REPS solar set-aside obligation by
purchasing unbundled out-of-state solar RECs. Dominion again elected not to file
an application for an REPS rider in 2011.
EMCs and municipally-owned electric utilities
There are thirty-one (31) electric membership corporations (EMCs)
serving customers in North Carolina, including twenty-six (26) that are
headquartered in the state. Twenty-five of the EMCs are members of North
Carolina Electric Membership Corporation (NCEMC), a generation and
transmission (G&T) services cooperative that provides wholesale power and
other services to its members. In addition, there are seventy-four (74) municipal
and university-owned electric distribution systems serving customers in North
Carolina. Fifty-one of the North Carolina municipalities are participants in either
North Carolina Eastern Municipal Power Agency (NCEMPA), or North Carolina
Municipal Power Agency Number 1 (NCMPA1), municipal power agencies that
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provide wholesale power to their members. The remaining municipally-owned
electric utilities purchase their electric power from wholesale electric suppliers.
By Orders issued August 27, 2008, the Commission allowed twenty-three
(23) EMCs to file their REPS compliance plans on an aggregated basis through
GreenCo Solutions, Inc. (GreenCo),1
GreenCo
and the fifty-one (51) municipal members of
the power agencies to file through NCEMPA and NCMPA1.
On May 3, 2011, the Commission issued an Order approving GreenCo’s
2008 REPs compliance report, with a brief discussion noting that the energy
efficiency RECs reported therein are subject to measurement and verification
(M&V) based on the submission of further M&V data and the resolution of M&V
issues pending in Docket No. E-100, Sub 113 with regard to reduced energy
consumption.
On September 1, 2010, GreenCo filed its 2009 REPS compliance report
stating that it had secured adequate resources to meet its members’ solar set-aside
obligation for 2010. On January 24, 2011, the Commission held a public
hearing on the 2010 Integrated Resource Plans (IRP) and REPS compliance
reports filed by the public utilities and cooperatives. On August 30, 2011, the
Public Staff filed comments on GreenCo’s 2009 REPS compliance report stating
that it found no violations of the REPS statute or Commission’s rules in the report
or the compliance efforts of GreenCo and recommending that the Commission
approve the GreenCo report.
On September 19, 2011, in Docket No. E-100, Sub 128, GreenCo filed its
2011 REPS compliance plan and 2010 REPS compliance report with the
Commission on behalf of its member EMCs, as well as Mecklenburg Electric
Cooperative and Broad River Electric Cooperative. GreenCo stated that it intends
to use its members’ allocations from SEPA, RECs purchased from both in-State
and out-of-state renewable energy facilities, and energy efficiency savings from
eleven recently approved energy efficiency programs to meet its members’
REPS obligations. In addition, GreenCo is continuing to work with the
collaborative of other electric power suppliers to meet the swine and poultry set-aside
requirements. In its 2010 REPS compliance report, GreenCo stated that it
secured adequate resources to meet the solar set-aside obligation for 2010, as
well as the 2012 and 2013 solar requirement. Lastly, for 2010, the REPS
incremental costs incurred by GreenCo’s members were significantly less than
the costs allowed under the per-account cost cap in G.S. 62-133.8(h).
1 Effective May 1, 2010, Blue Ridge Electric Membership Corporation is no longer a member of
GreenCo.
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EnergyUnited Electric Membership Corporation
On August 27, 2010, in response to an Order by the Commission,
EnergyUnited Electric Membership Corporation (EnergyUnited) filed revised
2008 and 2009 REPS compliance reports together with its 2010 IRP. On
August 30, 2011, the Public Staff filed comments on EnergyUnited’s 2008 and
2009 REPS compliance reports stating that it found no violations of the REPS
statute or Commission’s rules in the reports or the compliance efforts of
EnergyUnited and recommending that the Commission approve EnergyUnited’s
reports.
On August 30, 2011, EnergyUnited filed its 2011 IRP and REPS
compliance plan and 2010 REPS compliance report. In its report, EnergyUnited
stated that it met its 2010 solar set-aside requirement by purchasing solar RECs.
In its 2011 compliance plan, EnergyUnited stated that it has purchased enough
solar RECs to meet its 2011 obligation. Over the next two years, EnergyUnited
plans to begin evaluating options to fulfill the remainder of its solar needs. In
addition, EnergyUnited plans to use landfill gas generation along with RECs from
SEPA and others to begin to meet its general REPS obligation in 2012 and
beyond.
Tennessee Valley Authority
On November 12, 2010, Tennessee Valley Authority (TVA) filed an
aggregated 2010 REPS compliance plan and 2009 REPS compliance report on
behalf of its four wholesale customers serving retail customers in North Carolina:
Blue Ridge Mountain Electric Membership Corporation, Mountain Electric Coop,
Inc., Tri-State Electric Membership Corporation, and Murphy Power Board. TVA
stated that its 2010 solar set-aside requirement was 116 MWh and its plan for
meeting the requirement was to purchase solar RECs. For 2011, the solar set-aside
requirement is projected to be 117 MWh and TVA’s plan for meeting the
requirement is to generate the energy at its facilities and/or purchase solar
RECs. For the general 2012 REPS goal of 3%, TVA projected its cooperatives’
requirement to be 18,000 MWh. In addition to the swine and solar set-aside
portion, this requirement will be met by a combination of wind RECs, hydro
generation, demand-side management and energy efficiency.
On August 30, 2011, the Public Staff filed comments on TVA’s 2009
REPS compliance report. The Public Staff stated that TVA did not obtain any
RECs for the four cooperatives to whom TVA sells electricity and did not impose
any incremental costs on the cooperatives. The Public Staff recommended that
the Commission approve TVA’s report.
On August 31, 2011, TVA filed its 2011 REPS compliance plan and 2010
compliance report. TVA reiterated that it plans to meet its cooperatives’ solar set-aside
obligation by generating solar energy at its facilities and facilities owned by
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others, and/or purchasing solar RECs. For the general 2012 REPS goal of 3%,
TVA will meet this requirement by a combination of wind RECs, hydro
generation, demand-side management and energy efficiency. TVA met its
cooperatives’ 2010 solar set-aside requirement by purchasing solar RECs.
Halifax Electric Membership Corporation
On October 15, 2010, Halifax Electric Membership Corporation (Halifax)
filed its 2010 REPS compliance plan and 2009 REPS compliance report.
Halifax’s 2010 REPS compliance plan stated that its 2010 solar set-aside
requirement was 38,740 kWh and its plan for meeting the requirement was to
purchase solar RECs. For 2011, Halifax’s solar set-aside requirement is
projected to be 39,097 kWh, and Halifax’s plan for meeting the requirement is to
generate the energy at its 98.56 kW solar PV facility to be completed in the later
part of 2010 and/or purchase solar RECs. For the general 2012 REPS goal of
3%, Halifax projected its requirement to be 5.9 MWh. In addition to the swine and
solar set-aside portion, this requirement will be met by a combination of SEPA
energy entitlements, wind RECs, and energy efficiency.
On May 3, 2011, the Commission issued an Order concluding that
Halifax’s 2008 REPS compliance report did not comply with the requirements of
G.S. 62-133.8 and Commission Rule R8-67, mainly because Halifax had
allocated the costs of demand-side management (DSM) and energy efficiency
(EE) programs that pre-dated Senate Bill 3 as incremental REPS compliance
costs. The Commission held, among other things, that energy savings from
existing EE programs can be counted toward the REPS requirement, but the
costs of existing programs are not incremental costs under G.S. 62-133.8(h). The
Commission ordered Halifax to file revised 2008 and 2009 REPS compliance
reports consistent with the Commission’s Order by September 1, 2011. On
August 29, 2011, Halifax filed updates to its 2008 and 2009 REPS compliance
reports. Halifax’s revised reports included, among other information, adjustments
to the cost of some energy efficiency programs and REC balances.
On September 1, 2011, Halifax filed its 2011 REPS compliance plan and
2010 REPS compliance report. Halifax stated that it intends to meet its REPS
requirement with a combination of SEPA energy entitlements, EE programs,
solar energy production, solar and wind RECs and additional resources to be
determined on an ongoing basis. Further, Halifax noted that it is a participant in
the collaborative effort of electric power suppliers to meet the swine and poultry
waste set-aside requirements. With regard to its 2010 solar set-aside obligation,
Halifax met that requirement by generating solar energy on its 98.56 kW solar PV
system and purchasing solar RECs.
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North Carolina Eastern Municipal Power Agency
On May 3, 2011, the Commission issued an Order concluding that
NCEMPA’s 2008 REPS compliance report did not comply with the requirements
of G.S. 62-133.8 and Commission Rule R8-67 for several reasons, including:
(1) NCEMPA allocated the costs of DSM and EE programs that pre-dated Senate
Bill 3 as incremental REPS compliance costs; (2) NCEMPA included net lost
revenues as a cost of REPS compliance; and (3) NCEMPA relied on its
wholesale power provider’s REPS compliance to satisfy a portion of NCEMPA’s
REPS obligation. The Commission ordered NCEMPA to file revised 2008 and
2009 REPS compliance reports consistent with the Commission’s Order by
September 1, 2011.
On August 31, 2011, the Commission received the 2011 REPS
compliance plan and 2010 REPS compliance report filed by NCEMPA on behalf
of its members, along with revised 2008 and 2009 REPS compliance reports. In
its 2011 REPS compliance plan, NCEMPA stated that its members will meet their
REPS requirements by purchasing RECs, as well as utilizing SEPA allocations
and EE and DSM savings. NCEMPA identified a number of demand-side
management and energy efficiency programs that its members may implement to
produce energy savings for REPS compliance. NCEMPA stated that it has
entered into contracts to purchase various types of RECs and will continue to
investigate the market for unbundled RECs as a cost-effective means of REPS
compliance. NCEMPA reiterated that it is prohibited from purchasing power to
meet the REPS set-aside requirement, including its solar set-aside requirement.
However, it met its 2010 solar set-aside requirement by purchasing solar RECs.
In addition, NCEMPA has executed contracts to purchase sufficient solar RECs
to meet its requirements through 2013. In addition, NCEMPA is participating
jointly with other electric power suppliers to meet the aggregate swine and
poultry waste set-aside requirements beginning in 2012. Finally, NCEMPA
estimates that its incremental costs for REPS compliance will be less than its
per-account cost cap in 2011 through 2013.
North Carolina Municipal Power Agency No. 1
On May 3, 2011, the Commission issued an Order concluding that
NCMPA1’s 2008 REPS compliance report did not comply with the requirements
of G.S. 62-133.8 and Commission Rule R8-67, mainly because NCMPA1 did not
allocate the costs of acquiring RECs in 2008 to NCMPA1’s 2008 REPS costs.
Rather, NCMPA1 asserted that it had no REPS obligation in 2008 and, therefore,
should defer its allocation of the RECs costs until the RECs are retired for
compliance with G.S. 62-133.8. The Commission disagreed, holding that
NCMPA1’s obligation to meet the general 3% REPS target beginning in 2012
necessitated that NCMPA1 plan for compliance with its REPS obligation by
purchasing and banking REPS in 2008 through 2011, and the cost of those 2008
RECs should be allocated in 2008. The Commission ordered NCMPA1 to file
12
revised 2008 and 2009 REPS compliance reports consistent with the
Commission’s Order by September 1, 2011.
On August 31, 2011, the Commission received the 2011 REPS compliance
plan and 2010 REPS compliance report filed by NCMPA1 on behalf of its
members, along with revised 2008 and 2009 REPS compliance reports. In its 2011
compliance plan, NCMPA1 stated that, in addition to the implementation of
demand-side management and energy efficiency programs by its members,
NCMPA1 intends to investigate and develop new renewable energy facilities;
review proposals for renewable resources, including biomass, hydro, solar and
wind; and negotiate and execute agreements for cost-effective resources.
NCMPA1 intends to continue to investigate local, regional, and national markets
for cost-effective RECs and may consider issuing an RFP for RECs. NCMPA1 and
its members do not anticipate entering into any wholesale power purchase
agreements that would meet the requirements of G.S. 62-133.8(c)(2)(e). NCMPA1
met its 2010 REPS solar set-aside requirement by a combination of purchases of
energy from solar facilities and purchases of solar RECs. In addition, it has
contracts for the acquisition of sufficient solar RECs to meet its requirements
through 2012 and issued an RFP for additional solar resources in July 2011.
Further, NCMPA1 intends to identify development opportunities for additional solar
facilities to be located within its members’ service areas or at municipal customer
locations and investigate various other regional supply-side options. NCMPA1 is
participating jointly with other electric power suppliers to meet the swine and
poultry waste set-aside requirement beginning in 2012. NCMPA1 has entered into
agreements for the purchase of both in-state and out-of-state unbundled swine
RECs sufficient to meet its REPS obligation in 2013 through 2017. However,
because of delays in development of the swine waste-to-energy facilities the 2012
goal will not be met. NCMPA1 has entered into agreements to purchase
combination biomass and poultry waste in-state RECs and poultry out-of-state
RECs sufficient to meet the 2012 poultry set-aside requirement. NCMPA1 is
pursuing the procurement of other poultry RECs to meet its 2013 requirement.
Finally, NCMPA1 estimates that its incremental costs for REPS compliance will be
less than its per-account cost cap in 2011 through 2013.
Fayetteville Public Works Commission, Winterville and Oak City
On October 15, 2010, Fayetteville Public Works Commission (FPWC) filed
its 2009 REPS compliance report. The report stated that FPWC has engaged in
several activities that resulted in FPWC’s receipt of RECs to be carried forward
for use in complying with FPWC’s REPS obligations in 2010 and beyond.
Examples discussed in the report include the distribution of free compact
fluorescent light bulbs (CFLs) to FPWC’s customers in 2008 and 2009, the
$martWorks pilot program that has yielded reductions in energy use by 100
customers, and FPWC’s 2009 Southeastern Power Administration (SEPA)
allocation. In addition, FPWC noted that it completed work on its LEED-certified
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customer service center in late November 2009, and anticipates that the energy
savings at this facility will be significant in 2010 and later years.
On October 13, 2010, the towns of Winterville and Oak City filed their
2009 REPS compliance reports. Winterville stated that in 2009 it earned a total of
33 RECs by operation of the town’s CFL and energy savings kit programs. These
RECs will be carried forward for use in meeting Winterville’s future REPS
obligations.
Oak City’s report stated that the town did not purchase or produce any
RECs in 2009. In a corresponding 2010 REPS compliance plan filed on
October 13, 2010, Oak City stated that it is studying various REPS compliance
strategies and expects that the town’s primary strategy will involve energy
efficiency programs.
On August 30, 2011, the Public Staff filed comments on the 2009 REPS
compliance reports of Winterville, Oak City and FPWC. The Public Staff
recommended that the Commission approve the Winterville and Oak City reports
as filed. With regard to FPWC’s report, the Public Staff noted FPWC’s request to
rely on REPS compliance by its wholesale power supplier, Progress Energy
Carolinas, and FPWC’s inclusion of lost retail sales in its REPS costs were
inconsistent with Commission decisions, noting that after FPWC filed its 2009
report the Commission decided in Docket E-48, Sub 6 that as a general rule
neither a cooperative or municipal electric supplier can rely on its wholesale
provider’s REPS compliance, and that it is not acceptable for a cooperative or
municipal supplier to include lost retail revenues as a cost of REPS compliance.
After noting two additional exceptions, the Public Staff recommended that the
Commission approve FPWC’s 2009 compliance report.
On August 31, 2011, Winterville filed its 2011 REPS compliance plan and
2010 REPS compliance report. Winterville stated that it continues to implement
existing energy efficiency programs and investigate the potential for
implementing new programs. In addition, the town plans to purchase solar RECs
to meet its 2011 through 2013 solar set-aside requirement. Winterville’s 2010
REPS compliance report stated that it met its 2010 solar set-aside obligation by
purchasing solar RECs.
On September 1, FPWC and Winterville filed their 2011 REPS compliance
plans and 2010 REPS compliance reports. FPWC’s 2011 compliance plan stated
it has continued several efforts resulting in FPWC’s receipt of RECs to be carried
forward for use in complying with FPWC’s REPS obligations in 2011 and beyond.
Examples include the $martWorks pilot program that has yielded reductions in
energy use by customers, and FPWC’s SEPA allocations. In addition, FPWC
noted the energy savings produced by its LEED-certified customer service
center, as well as plans to implement building modification programs expected to
yield energy efficiency RECs in 2011 and later years. FPWC is participating
14
jointly with other electric power suppliers to meet the aggregate swine and
poultry waste set-aside requirements beginning in 2012. In addition, FPWC plans
to purchase sufficient solar RECs to meet its requirements through 2012. For
2013, FPWC intends to facilitate the development of a solar facility that will
provide a portion of its RECs and purchase the remaining portion on the open
market. In its 2010 REPS compliance report, FPWC stated that it met its 2010
solar set-aside requirement by purchasing solar RECs.
In its 2011 REPS compliance plan, Winterville stated that it continues to
implement existing energy efficiency programs and investigate the potential for
implementing new programs. Winterville stated that it has earned RECs by
operation of the town’s energy savings programs and these will be carried
forward for use in meeting Winterville’s future REPS obligations. In addition, the
town plans to purchase solar RECs to meet its 2011 through 2013 solar set-aside
requirement. Winterville’s compliance report stated that it met its 2010 solar set-aside
obligation by purchasing solar RECs.
On September 2, 2011, Oak City filed its 2011 REPS compliance plan and
2010 REPS compliance report. Oak City’s compliance plan stated that it will
continue to consider energy efficiency options, but will need to purchase RECs to
meet its requirements during the next few years. Oak City’s compliance report
stated that it acquired one REC to meet the 2010 solar set-aside requirement.
Town of Fountain
The Town of Fountain did not file a REPS compliance report for 2008 or
2009 or a REPS compliance plan in 2008, 2009 or 2010. On June 22, 2011, the
Commission issued an Order requiring Fountain to file its 2008, 2009 and 2010
REPS compliance reports, as well as its 2010 and 2011 REPS compliance plans
by September 1, 2011. On September 20, 2011, the Commission received a
letter from Fountain’s attorney stating that the Town had assumed that REPS
reports on its behalf were being filed by the Town’s electric supplier, Pitt-Greene
EMC. However, the Town recently learned that this was not the case. The letter
stated that the Town is working on the REPS reports and will submit them no
later than December 31, 2011.
Wholesale Providers Meeting REPS Requirements
PEC, as the wholesale provider, has agreed to meet the REPS
requirements for the towns of Black Creek, Lucama, Stantonsburg, and
Waynesville. Similarly, Duke has agreed to meet the REPS requirements for Blue
Ridge EMC, Rutherford EMC, the towns of Dallas and Forest City, and the cities
of Concord, Highlands and Kings Mountain, and Dominion has agreed to meet
the REPS requirements for the Town of Windsor. The towns of Macclesfield,
Pinetops, and Walstonburg have previously filed letters stating that the City of
Wilson, as their wholesale provider, has agreed to include their loads with its own
15
for reporting to NCEMPA for REPS compliance. Halifax has agreed to meet the
REPS requirement for the Town of Enfield.
Recommendation
The Commission recommends that G.S. 62-300 be amended to add a
$25.00 filing fee for applications for registration of renewable energy facilities.
The Commission has received more than 1,300 reports of proposed construction
and registration applications since the implementation of Senate Bill 3. A
reasonable fee for registration applications will help defray the cost of processing
the applications and issuing orders of registration.
Conclusions
All of the electric power suppliers except for the Town of Fountain appear
to have met the 2010 solar set-aside requirement of Senate Bill 3. However, as
stated in the 2010 Report and as highlighted again in this report, numerous
issues continue to arise in the implementation of Senate Bill 3 that have required
interpretation by the Commission of the statutory language: e.g., the definition of
biomass, the electric power suppliers’ obligations under the set-aside provisions,
the eligibility of renewable energy facilities and resources to meet the set-aside
provisions, etc. If the plain language of the statute was ambiguous, the
Commission attempted to discern the intent of the General Assembly in reaching
its decision on the proper interpretation of the statute.
16
BACKGROUND
In August 2007, North Carolina enacted comprehensive energy legislation,
Session Law 2007-397 (Senate Bill 3), which, among other things, established a
Renewable Energy and Energy Efficiency Portfolio Standard (REPS), the first
renewable energy portfolio standard in the Southeast. Under the REPS, all electric
power suppliers in North Carolina must meet an increasing amount of their retail
customers’ energy needs by a combination of renewable energy resources (such
as solar, wind, hydropower, geothermal and biomass) and reduced energy
consumption. Beginning at 3% of retail electricity sales in 2012, the REPS
requirement ultimately increases to 10% of retail sales beginning in 2018 for the
State’s electric membership corporations and municipally-owned electric providers
and 12.5% of retail sales beginning in 2021 for the State’s electric public utilities.
In G.S. 62-133.8(j), the General Assembly required the Commission to
make the following annual report:
No later than October 1 of each year, the Commission shall submit a
report on the activities taken by the Commission to implement, and
by electric power suppliers to comply with, the requirements of this
section to the Governor, the Environmental Review Commission,
and the Joint Legislative Commission on Governmental Operations.
The report shall include any public comments received regarding
direct, secondary, and cumulative environmental impacts of the
implementation of the requirements of this section. In developing the
report, the Commission shall consult with the Department of
Environment and Natural Resources.2
On October 1, 2008, the Commission made its first annual report pursuant to
G.S. 62-133.8(j),3 and last year, on October 1, 2010, the Commission made its third
annual report.4
2 G.S. 62-133.8(j) was amended by Session Law 2011-291 to require that the annual REPS Report be
submitted to the Joint Legislative Commission on Governmental Operations, rather than the Joint
Legislative Utility Review Committee.
The remaining sections of this report detail, as required by the General
Assembly, developments related to Senate Bill 3, activities undertaken by the
Commission during the past year to implement Senate Bill 3, and actions by the electric
power suppliers to comply with G.S. 62-133.8, the REPS provisions of Senate Bill 3.
3 Annual Report of the North Carolina Utilities Commission to the Governor of North Carolina, the
Environmental Review Commission and the Joint Legislative Utility Review Committee Regarding
Energy and Energy Efficiency Portfolio Standard, October 1, 2008 (2008 REPS Report).
4 Annual Report of the North Carolina Utilities Commission to the Governor of North Carolina, the
Environmental Review Commission and the Joint Legislative Utility Review Committee Regarding
Energy and Energy Efficiency Portfolio Standard, October 1, 2010 (2010 REPS Report).
17
2011 LEGISLATION
During the 2011 Session of the General Assembly, the legislature enacted
two amendments to Senate Bill 3.
First, Session Law 2011-55 (Senate Bill 75) was ratified by the General
Assembly on April 21, 2011, and signed by the Governor on April 28, 2011. It was
effective on April 28, 2011. In Sec. 1, Senate Bill 75 amended G.S. 62-133.8(a) by
adding a new subdivision (3a), which states:
“Electricity demand reduction” means a measurable reduction in the
electricity demand of a retail electric customer that is voluntary, under the
real-time control of both the electric power supplier and the retail electric
customer, and measured in real time, using two-way communications
devices that communicate on the basis of standards.
In Secs. 2 and 3, Senate Bill 75 amended G.S. 62-133.8(b)(2) and (c)(2),
respectively, by adding new subdivisions (g) to state that electricity demand
reduction is a means by which electric public utilities, electric membership
corporations and municipalities can meet their REPS requirements.
Second, Session Law 2011-309 (Senate Bill 710) was ratified by the
General Assembly on June 18, 2011, and signed by the Governor on June 27,
2011. It was effective on June 27, 2011. Section 1 of Senate Bill 710 made
several findings regarding the need to allow the use of renewable energy
certificates (RECs) derived from the thermal energy of a combined heat and
power facility that uses poultry waste as a fuel to meet the REPS poultry waste
set-aside requirement. Among the reasons cited in Sec. 1 are the difficulty that
electric power suppliers have experienced in procuring electricity derived from
poultry waste at a reasonable cost, the benefit of diversifying the State’s viable
options for generating electricity from renewable energy resources, and the
benefits derived by improving the State’s air quality. Section 2 of Senate Bill 710
amended G.S. 62-133.8(f) by adding the phrase “or an equivalent amount of
energy,” as follows (in pertinent part):
For calendar year 2014 and for each calendar year thereafter, at least
900,000 megawatt hours of the total electric power sold to retail electric
customers in the State or an equivalent amount of energy shall be
supplied, or contracted for supply in each year, by poultry waste combined
with wood shavings, straw, rice hulls, or other bedding material.
This amendment to G.S. 62-133.8(f) was in response to the Commission’s
decision in Docket No. E-100, Sub 113, as more fully discussed below, that
thermal RECs could not be used to meet the poultry set-aside requirement.
18
COMMISSION IMPLEMENTATION
Rulemaking Proceeding
As detailed in the Commission’s 2008 REPS Report, after Senate Bill 3
was signed into law the Commission initiated a proceeding in Docket No. E-100,
Sub 113 to adopt rules to implement the REPS and other provisions of the new
law. On February 29, 2008, the Commission issued an Order adopting final rules
implementing Senate Bill 3. The rules, in part, require each electric power
supplier to file an annual REPS compliance plan and an annual REPS
compliance report to demonstrate, respectively, reasonable plans for and actual
compliance with the REPS requirement.
In its 2010 REPS Report, the Commission noted that it had issued a
number of orders interpreting various provisions of Senate Bill 3, in which it made
the following conclusions:
• Tennessee Valley Authority’s (TVA) distributors making retail sales in
North Carolina and electric membership corporations (EMCs)
headquartered outside of North Carolina that serve retail electric
customers within the State must comply with the REPS requirement of
Senate Bill 3, but that the university-owned electric suppliers, Western
Carolina University and New River Light & Power Company, are not
subject to the REPS requirement.
• Each electric power supplier’s REPS obligation, both the set-aside
requirements and the overall REPS requirements, should be based on
its prior year’s actual North Carolina retail sales.
• An electric public utility cannot use existing utility-owned hydroelectric
generation for REPS compliance, but may use power generated from
new small (10 MW or less) increments of utility-owned hydroelectric
generating capacity.
• The solar, swine waste, and poultry waste set-aside requirements
should have priority over the general REPS requirement where both
cannot be met without exceeding the per-account cost cap established
in G.S. 62-133.8(h).
• The set-aside requirements may be met through the generation of
power, purchase of power, or purchase of unbundled RECs.
19
• The 25% limitation on the use of out-of-state RECs applies to the
general REPS obligation and each of the individual set-aside
provisions.
• The electric power suppliers are charged with collectively meeting the
aggregate swine and poultry waste set-aside requirements and may
agree among themselves how to collectively satisfy those
requirements.
• RECs associated with the electric power generated at a biomass-fueled
combined heat and power facility located in South Carolina and
purchased by an electric public utility in North Carolina would be
considered as in-State pursuant to G.S. 62-133.8(b)(2)(d), but that
RECs associated with out-of-state renewable generation not delivered
to and purchased by an electric public utility in North Carolina and
RECs associated with out-of-state thermal energy would not be
considered to be “in-State” RECs pursuant to G.S. 62-133.8(b)(2)(d).
• Consistent with prior Commission decisions, only RECs associated
with the percentage of electric generation that results from methane
gas that was actually produced by poultry or swine waste may be
credited toward meeting the poultry and swine waste set-aside
requirements. Thus, not all of the methane gas produced by the
anaerobic digestion of swine or poultry waste, as well as “other organic
biodegradable material,” would qualify toward the set-aside
requirements because the other material described as mixed with the
poultry or swine waste is responsible for some percentage of the
resulting methane gas.
• In response to a joint motion filed by Progress Energy Carolinas, Inc.
(PEC), Duke Energy Carolinas, LLC (Duke), Dominion North Carolina
Power (Dominion), North Carolina Electric Membership Corporation
(NCEMC), North Carolina Eastern Municipal Power Agency
(NCEMPA), and North Carolina Municipal Power Agency Number 1
(NCMPA1) (jointly, the Electric Suppliers), in Docket No. E-100,
Sub 113, the Commission concluded that issuance of a joint request for
proposals (RFP) by the Electric Suppliers is a reasonable means for
the Electric Suppliers to work together collectively to meet the swine
waste resource set-aside requirement.
• In response to a motion filed in Docket No. E-100, Sub 113 by PEC on
behalf of Dominion, Duke, NCEMC, GreenCo Solutions, Inc., North
Carolina Sustainable Energy Association, North Carolina Pork Council,
Fibrowatt LLC, Green Energy Solutions NV, Inc., Attorney General and
Public Staff, the Commission approved a Pro Rata Mechanism (PRM)
as a reasonable and appropriate means for the State’s electric power
20
suppliers to meet the aggregate swine and poultry waste set-aside
obligations of G.S. 62-133.8(e) and (f). The PRM provides that (1) the
statewide aggregate swine and poultry waste set-aside requirements
should be allocated among all of the electric power suppliers based
upon the ratio of each electric power supplier’s prior year’s retail sales
to the State’s total retail sales; (2) an electric power supplier shall be
deemed to be in compliance with the swine or poultry waste set-aside
requirement once it has satisfied its allocated share of the statewide
aggregate requirement or has reached its incremental cost cap
pursuant to G.S. 62-133.8(h); (3) no electric power supplier shall be
obligated to satisfy more than its allocated share of the statewide
aggregate swine or poultry waste set-aside requirement; and
(4) electric power suppliers may jointly procure renewable energy
resources in order to satisfy their individual allocated shares of the
statewide aggregate swine or poultry waste set-aside requirements. In
response to arguments by NCEMPA and NCMPA1, the Commission
reiterated its earlier holding that the set-aside requirements, as
demonstrated by the specificity of their express inclusion in the
legislation, have priority over other methods of compliance with the
general REPS percentage obligation where the general REPS
percentage obligation cannot be met because of the incremental cost
cap.
• As it had earlier done with regard to the aggregate swine waste set-aside
requirement, the Commission approved the joint procurement of
RECS from energy produced by poultry waste, the sharing of poultry
waste generation bids among electric suppliers, and other collaborative
efforts proposed by PEC, Dominion, NCEMC, NCEMPA, NCMPA1,
EnergyUnited Electric Membership Corporation, Halifax Electric
Membership Corporation, GreenCo Solutions, Inc. and the Fayetteville
Public Works Commission as a reasonable means for the State’s
electric suppliers to work together to meet the poultry waste set-aside
requirement.
• The Commission found that the term “allocations made by the
Southeastern Power Administration” (SEPA), is used as a term of art in
G.S. 62-133.8(c)(2)(c). The Commission, therefore, concluded that a
municipal electric power supplier or electric membership corporation
(EMC) will be permitted to use the total annual amount of energy
supplied by SEPA to that municipality or EMC to comply with its
respective REPS requirement, subject to the thirty percent limitation
provided in G.S. 62-133.8(c)(2)(c).
Since October 1, 2010, the Commission has issued a number of additional
orders interpreting various provisions of Senate Bill 3 and seeking additional
information to aid the Commission in future interpretations, as described below.
21
Order Denying the Use of Thermal RECs to Satisfy Poultry Waste
Set-Aside Requirement, Docket No. E-100, Sub 113 (October 8, 2010)
On August 10, 2010, Peregrine Biomass Development Company, LLC
(Peregrine), filed a Petition in Docket No. E-100, Sub 113 requesting that the
Commission exercise its discretionary authority pursuant to G.S. 62-133.8(i)(2)
(the off-ramp) to allow renewable energy certificates (RECs) associated with the
thermal energy output of a combined heat and power (CHP) facility which uses
poultry waste as a fuel to meet the poultry waste set-aside requirement under
G.S. 62-133.8(f).
Previously, in Docket No. SP-578, Sub 0, Green Energy Solutions NV, Inc.
(GES), the owner of another CHP facility that uses, in part, poultry waste as fuel,
filed a Motion for Clarification seeking an interpretation by the Commission that
the statute allows the use of both RECs associated with electric power and
thermal energy to meet the poultry waste set-aside requirement. In response to
the Commission’s June 21, 2010 Order Requesting Comments, the Public Staff
argued that thermal RECs may not be used to satisfy the poultry waste set-aside
requirement: “under G.S. 62-133.8(f), RECs may satisfy the poultry waste set-aside
only if they result from the actual generation of electric power from poultry
waste.” The Public Staff further noted that the Commission may be able to
determine that it is in the public interest to modify the poultry waste set-aside
requirement to include thermal RECs if requested to do so under the off-ramp
provision. On July 21, 2010, GES withdrew its Motion.
By Order dated August 25, 2010, the Commission requested that the
Public Staff and other interested parties file comments and reply comments on
the relief requested by Peregrine in its Petition: whether the Commission should
invoke the off-ramp provision to allow thermal RECs to be used to satisfy the
poultry waste set-aside requirement. In addition, the Commission requested that
the Public Staff and other interested parties address in their comments and reply
comments the issue initially raised by GES in its Motion for Clarification: whether
it is necessary to invoke the off-ramp to allow thermal RECs to be used to satisfy
the poultry waste set-aside requirement. Comments and reply comments were
filed in September, 2010.
On October 8, 2010, the Commission issued an Order denying
Peregrine’s request to allow RECs associated with the thermal heat output of a
CHP facility that uses poultry waste as fuel to meet the poultry waste set-aside
requirement. The Commission compared the language in G.S. 62-133.8(d), the
solar set-aside statute, with the language in G.S. 62-133.8(f), the poultry waste
set-aside statute. The Commission reasoned that the legislature’s inclusion of the
phrases “or an equivalent amount of energy” and “new metered solar thermal
energy facilities” in subsection (d), coupled with the lack of similar express
language in subsection (f), demonstrated a clear legislative intent to allow solar
thermal RECs to meet the solar set-aside requirement, but not to allow thermal
22
RECs to meet the poultry waste set-aside requirement. In addition, the
Commission concluded that good cause had not been shown to invoke the
Commission’s discretion to modify the poultry waste set-aside provision to delay
the requirement, noting that the electric power suppliers had recently issued a
joint RFP to acquire poultry waste derived energy and that it would be premature
to invoke the REPS modification provision, given that compliance with the poultry
waste set-aside provision is not required until 2012. Finally, the Commission
suggested that Peregrine and parties supporting Peregrine’s position could seek
an amendment to G.S. 62-133.8(f) by the General Assembly.5
Order on Cost Recovery of Swine and Poultry Waste Energy by an
Electric Public Utility, Docket No. E-100, Sub 113 (November 23, 2010)
On September 14, 2010, PEC, Duke, Dominion, NCEMC, NCEMPA,
NCMPA1 and GreenCo Solutions, Inc. (collectively, Movants), filed a joint motion
in Docket No. E-100, Sub 113 requesting a declaratory ruling that an electric
public utility is entitled to recover through G.S. 62-133.2(a1)(6) the total delivered
cost of all megawatt-hours purchased from renewable energy facilities and new
renewable energy facilities using swine and poultry waste to generate electricity,
regardless of whether the electric public utility purchases the renewable energy
certificate (REC) associated with the purchased renewable energy.
On September 16, 2010, the Commission issued an Order requesting
comments and reply comments. Comments were filed by the Movants and the
Public Staff, as well as other parties.
On November 23, 2010, the Commission issued an Order holding that an
electric public utility can recover through its fuel cost rider the total delivered cost
of the purchase of energy generated by a swine or poultry waste-to-energy
facility where the RECS associated with the production of the energy are
purchased by another North Carolina electric power supplier to comply with the
REPS statewide aggregate swine and poultry waste set-aside requirements. The
Commission compared the provisions and interplay of G.S. 62-133.2, the fuel
and fuel-related cost adjustment statute, with G.S. 62-133.8, the REPS statute.
The Commission reasoned that neither of these statutes requires that the
purchases of power and the associated RECs be bundled in order to recover the
cost of the purchased electricity under G.S. 62-133.2(a1)(6) so long as the RECs
were used by another electric power supplier to meet its set-aside requirement.
Further, the Commission discussed its previous rulings approving mechanisms
by the State’s electric power suppliers to aggregate purchases of swine and
poultry energy and RECs in order to meet the set-aside requirements for those
5 As noted above under 2011 Legislation, in Senate Bill 710 the General Assembly amended
G.S. 62-133.8(f) by adding the phrase “or an equivalent amount of energy” to allow thermal energy
from a CHP facility fueled by poultry waste to now be eligible to meet the poultry waste set-aside
requirement.
23
technologies, and the fact that such mechanisms could result in an electric public
utility purchasing the electricity but not the RECs associated with swine or poultry
waste-to-energy. In that regard, the Commission opined that the General
Assembly did not intend for the electric public utility to be denied recovery of the
full delivered cost of the purchased electricity under the utility’s fuel cost rider, or
to be relegated to recovery of that cost by filing a general rate case.
Order Amending Rules R8-64 Through R8-69 and Adopting Final
NC-RETS Operating Procedures, Docket No. E-100, Subs 113 and 121
(January 31, 2011)
On September 4, 2009, the Commission issued an Order in Docket
No. E-100, Sub 113 allowing electric power suppliers and other interested parties
an opportunity to propose specific amendments to the Commission’s procedural
rules, Rules R8-64 through R8-69, that would streamline the Commission’s
administration of G.S. 62-133.8 and 62-133.9. Numerous extensions of time were
granted to the parties in an effort to reach consensus on the issues being
discussed among the parties. Written comments were filed on March 1, 2010,
and reply comments were filed on April 1, 2010.
On January 27, 2010, the Commission issued an Order in Docket
No. E-100, Subs 113 and 121 requesting comments on proposed amendments to
Rule R8-67 regarding the participation of electric power suppliers and renewable
energy facilities in the North Carolina Renewable Energy Tracking System
(NC-RETS). Written comments were filed by several parties on March 9, 2010.
On July 1, 2010, the Commission issued an Order in Docket No. E-100,
Sub 121 adopting Interim Operating Procedures for the NC-RETS REC tracking
system detailing the circumstances under which the NC-RETS Administrator is
authorized to issue RECs. The Commission noted that proposed rule changes
regarding implementation of Senate Bill 3 were pending and stated that it
anticipated issuing an order regarding those rules and allowing parties to
comment as to whether there are any conflicts or inconsistencies between the
proposed revised rules and the Interim Operating Procedures for NC-RETS. The
Commission further anticipated issuing final Operating Procedures for NC-RETS
following receipt of comments on the proposed revised rules.
By Order dated August 3, 2010, the Commission proposed amendments
to Rules R8-64 through R8-69 based, in part, on the comments received and
invited comments on the proposed amendments and the NC-RETS Interim
Operating Procedures. In addition, to encourage renewable energy facilities to
register promptly with NC-RETS and to have RECs issued as soon as possible
following the production of the energy associated with the RECs, the
Commission established that, beginning January 1, 2011, renewable energy
facilities that participate in NC-RETS are only eligible for historic REC issuances
24
for energy production going back two years. Comments were filed with the
Commission by several parties in October and November 2010.
On January 31, 2011, the Commission issued an Order amending Rule
R8-64 through R8-69, adopting final NC-RETS Operating Procedures and
approving an application form for use by owners of renewable energy facilities in
obtaining registration of a facility under Rule R8-66. The amendments to Rule
R8-64 through R8-69 clarify and streamline the application procedures,
registration, record keeping and other requirements for renewable energy
facilities.
Order Requesting Comments on Measurement and Verification of
Reduced Energy Consumption, Docket No. E-100, Sub 113
(August 24, 2010)
On August 24, 2010, the Commission issued an Order in Docket
No. E-100, Sub 113 expressing concerns that the Commission’s current rules
might prove inadequate to ensure the credibility of the reduced energy
consumption amounts reported and used for REPS compliance, especially in
regard to energy efficiency (EE) and/or demand-side management (DSM)
activities of electric membership corporations and municipal power suppliers. The
Commission requested comments on the following issues: (1) what kind of
measurement and verification (M&V) documentation should be filed and/or made
available for audit by each type electric power supplier that uses EE/DSM
program achievements toward its general REPS compliance obligation;
(2) whether and in what proceeding, if any, the Commission should review such
M&V documentation in order to establish the savings from EE/DSM programs
that may then be used by each electric power supplier to comply with REPS;
(3) the appropriate method for determining the energy savings achieved by a
DSM measure or program by an electric membership corporation or municipal
power supplier; and (4) whether electric membership corporations should be
required to include an M&V reporting plan in their EE/DSM program applications
similar to the plans required of electric public utilities. Numerous parties filed
comments and reply comments in October and November 2010.
Order Convening Working Group on Unmetered Solar Thermal RECs,
Docket No. E-100, Sub 113 (August 25, 2010)
Pursuant to G.S. 62-133.8(a)(7), a renewable energy facility includes a
solar thermal facility. As such, a solar thermal facility is eligible to earn RECs that
may be sold to an electric power supplier for REPS compliance. However,
pursuant to G.S. 62-133.8(a)(6), a REC is equal to one megawatt-hour of
electricity or equivalent energy “supplied by” a renewable energy facility or new
renewable energy facility. Therefore, the proper metric for determining the
number of RECs earned by a solar thermal facility is the amount of thermal
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energy actually used in heating water (or other solar thermal process) and not
simply the system’s capacity for doing so.
On August 25, 2010, the Commission issued an Order in Docket
No. E-100, Sub 113 noting that solar industry developers were proposing to use
a computer software model to calculate the number of thermal RECs generated
by an unmetered solar thermal facility. The Commission expressed concern,
however, that the software model may only estimate the capacity of the solar
thermal facility to generate thermal energy and potentially overestimate the
amount of thermal energy generated by the facility that was actually used in a
solar thermal application. The Commission, therefore, requested that the Public
Staff convene a working group of technical experts and other interested
stakeholders to make recommendations to the Commission within three months
regarding the appropriate assumptions and methodology for reasonably estimating
the useful thermal energy produced by an unmetered solar thermal facility and the
number of RECs earned by that facility. The Public Staff has facilitated several
meetings of the working group and filed two reports on the working group’s
recommendations.
Renewable Energy Facilities
Senate Bill 3 defines certain electric generating facilities as renewable
energy facilities or new renewable energy facilities. RECs associated with electric
or thermal power generated at such facilities may be used by electric power
suppliers for compliance with the REPS requirement as provided in
G.S. 62-133.8(b) and (c). In its rulemaking proceeding, the Commission adopted
rules providing for a report of proposed construction, certification or registration
of renewable energy facilities and new renewable energy facilities.
Pursuant to G.S. 62-110.1(a), no person, including any electric power
supplier, may begin construction of an electric generating facility in North Carolina
without first obtaining from the Commission a certificate of public convenience and
necessity (CPCN). Two exemptions from this certification requirement are
provided in G.S. 62-110.1(g): (1) self-generation, and (2) nonutility-owned
renewable generation under 2 megawatts (MW). Any person exempt from the
certification requirement must, nevertheless, file a report of proposed construction
with the Commission pursuant to Rule R8-65.
To ensure that each renewable energy facility from which electric power or
RECs are used for REPS compliance meets the particular requirements of
Senate Bill 3, the Commission adopted Rule R8-66 to require that the owner,
including an electric power supplier, of each renewable energy facility or new
renewable energy facility register with the Commission if it intends for RECs it
earns to be eligible for use by an electric power supplier for REPS compliance.
This registration requirement applies to both in-State and out-of-state facilities.
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As of July 27, 2011, the Commission has accepted registration statements filed
by 337 facilities.
As detailed in the 2010 REPS Report, the Commission has issued a
number of orders addressing issues related to the registration of a facility,
including the definition of “renewable energy resource,” as summarized below.
• Accepted registration as a new renewable energy facility a 1.628 MW
electric generating facility to be located near Clinton in Sampson
County, North Carolina, and fueled by methane gas produced from
anaerobic digestion of organic wastes from a Sampson County pork
packaging facility and from a local swine farm.
• Issued a declaratory ruling that (1) the percentage of refuse-derived fuel
(RDF) that is determined by testing to be biomass, and the synthesis gas
(Syngas) produced from that RDF is a “renewable energy resource” as
defined in G.S. 62-133.8(a)(8); (2) the applicant’s delivery of Syngas from
a co-located gasifier to an electric utility boiler would not make the
company a “public utility” as defined in G.S. 62-3(23); and (3) the
applicant’s construction of a co-located gasifier and the piping connection
from the gasifier to an existing electric utility boiler would not require a
certificate of public convenience and necessity under G.S. 62-110(a) or
under G.S. 62-110.1(a).
• Accepted registration as a new renewable energy facility a biomass-fueled
2.4 kW electric generating facility to be located at the applicant’s
home in Wake County, North Carolina, and fueled by ethanol derived
from 100% renewable organic materials.
• Issued an Order amending existing certificates of public convenience
and necessity for two electric generating facilities in Southport and
Roxboro, North Carolina, that were being converted to burn a fuel mix
of coal, wood waste, and tire-derived fuel (TDF). The Commission
concluded that the portion of TDF derived from natural rubber, an
organic material, meets the definition of biomass, and is eligible to earn
RECs, but required the applicant to submit additional information to
demonstrate the percentage of TDF that is derived from natural rubber.
In addition, the Commission accepted registration of the two facilities
as new renewable energy facilities.
• Accepted registration as a new renewable energy facility a 1.628 MW
combined heat and power (CHP) facility to be located in Darlington
County, South Carolina, that will generate electricity using methane gas
produced via anaerobic digestion of poultry litter from a chicken farm
mixed with other organic, biodegradable materials, and use the waste
heat from the electric generators to provide temperature control for the
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methane-producing anaerobic digester as well as the chicken houses.
The Commission concluded that the thermal energy that is used as an
input back into the anaerobic digestion process effectively increases
the efficiency of the electric production from the facility; is not used to
directly produce electricity or useful, measureable thermal or
mechanical energy at a retail electric customer’s facility pursuant to
G.S. 62-133.8(a)(1); and is not eligible for RECs. However, the thermal
energy that is used to heat the chicken houses is eligible to earn
RECs. In a prior order, the Commission had clarified that only that
portion of the energy generated from the biogas that is derived from
poultry waste is eligible to earn RECs that may be used to meet the
REPS poultry waste set-aside requirement.
• Issued a declaratory ruling that (1) biosolids, the organic material
remaining after treatment of domestic sewage and combusted at the
applicant’s wastewater treatment plant, are a “renewable energy
resource” as defined by G.S. 62-133.8(a)(8); and (2) the applicant, a
county water and sewer authority organized in 1992 pursuant to the
North Carolina Water and Sewer Authorities Act, is specifically exempt
from regulation as a public utility pursuant to G.S. 62-3(23)(d).
• Accepted for registration as a new renewable energy facility a solar
thermal hot water heating facility located in Mecklenburg County, North
Carolina, used to heat two commercial swimming pools. The
Commission concluded, however, that as an unmetered solar thermal
facility, RECs earned based on the capacity of the solar panels are not
eligible to meet the solar set-aside requirement of G.S. 62-133.8(d).
However, the Commission allowed the applicant to earn general
thermal RECs based upon an engineering analysis of the energy from
the unmetered solar thermal system actually required to heat the
pools, which was determined to be substantially less than the capacity
of the solar thermal panels.
Since October 1, 2010, the Commission has issued a number of additional
orders interpreting provisions of Senate Bill 3 regarding applications for
registration of renewable energy facilities, as described below.
Order Accepting Registration of New Renewable Energy Facilities
Fueled by Co-Firing Biomass, Including Primary Harvest Whole
Trees, Docket No. E-7, Subs 939 and 940 (October 11, 2010)
On March 1, 2010, Duke Energy Carolinas, LLC (Duke), filed applications in
Docket Nos. E-7, Sub 939 and Sub 940 to register Buck Steam Station, Units 5 and
6, and Lee Steam Station, Units 1, 2 and 3, respectively, as new renewable energy
facilities pursuant to G.S. 62-133.8 and Commission Rule R8-66. In its registration
applications, Duke stated that biomass co-firing test burns were conducted at each
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facility using sawdust and/or whole tree wood chips. Several environmental groups
intervened and requested that the Commission deny or stay Duke’s registrations,
arguing that the whole tree wood biomass Duke sought to register is not wood waste
and is not a renewable energy resource under Senate Bill 3.
By Order dated April 27, 2010, the Commission consolidated these two
dockets and scheduled an evidentiary hearing and oral argument to consider the
contested factual and legal issues. The evidentiary hearing and oral arguments
convened, as scheduled, on July 14, 2010. Proposed orders and briefs were filed
on September 15, 2010.
On October 11, 2010, the Commission issued an Order accepting for
registration as renewable energy facilities Duke’s Buck and Lee Steam Stations,
concluding that primary harvest wood products, including wood chips from whole
trees, are “biomass resources” and “renewable energy resources” under
G.S. 62-133.8(a)(8). The Commission reasoned that the General Assembly, by
including several specific examples of biomass in the statute, did not intend to
limit the scope of the term to those examples. Rather, the term “biomass”
encompasses a broad category of resources and should not be limited absent
express intent to do so. As further support for this interpretation, the Commission
noted that the General Assembly expressly excluded peat, a form of biomass,
from the definition of “renewable energy resource,” and could have done likewise
for whole trees if it had intended that they be excluded from the definition of
“renewable energy resource.” Finally, the Commission stated that it was satisfied
from Duke’s testimony that Duke will use primary harvest wood products in an
economic and sustainable manner.
The Environmental Defense Fund and North Carolina Sustainable Energy
Association appealed the Commission’s Order to the North Carolina Court of
Appeals. On August 2, 2011, the Court of Appeals issued a decision affirming the
Commission’s Order. The Court held that the Commission had properly applied
the principles of statutory construction in holding that the General Assembly’s
inclusion of several examples of biomass in the statute was not intended to limit
the scope of the terms “biomass” or “renewable energy resource” to those
examples.
Order Declaring Yard Waste, Municipal Solid Waste and the
Percentage of Syngas Derived from Yard Waste and Municipal Solid
Waste to be Renewable Energy Resources, Docket No. SP-100,
Sub 28 (April 18, 2011)
On March 15, 2011, ReVenture Park Investments I, LLC (ReVenture), filed
a request for a declaratory ruling regarding a proposed 20-MW biomass-to-energy
facility that it plans to develop on a 667-acre tract along the Catawba
River that was an industrial site. ReVenture requested that the Commission
declare, among other points, that (1) yard waste, including leaves, brush, grass
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clippings and tree limbs, is a renewable energy resource; (2) municipal solid
waste (MSW) that is not recycled, including certain types of paper, cardboard,
packaging materials and small wood items, is a type of refuse-derived fuel (RDF)
that is a renewable energy resource; (3) the percentage of synthesis gas
(Syngas) produced from yard waste and RDF, but not including that portion
produced with certain non-renewable materials, is a renewable energy resource;
and (4) the RECS attributable to ReVenture’s biomass generating facility will be
entitled to triple credits because ReVenture’s facility qualifies as a cleanfields
renewable energy demonstration park under Section 4 of Session Law 2010-195
(Senate Bill 886).
On April 18, 2011, the Commission issued an Order declaring, among
other things, that yard waste and the percentage of RDF used by ReVenture as
fuel are renewable energy resources, and that the percentage of Syngas
produced from yard waste and RDF used by ReVenture as fuel is a renewable
energy resource. The Commission first noted that it previously rendered such a
declaratory ruling with regard to RDF and Syngas in Docket No. SP-100, Sub 23,
and could find no reason to reach a different conclusion in this docket. The
Commission further opined that yard waste is an organic material having a
constantly replenished supply, and is thus a renewable resource under
G.S. 62-133.8(a)(8). In addition, the Commission concluded that if ReVenture’s
facility is certified as a cleanfields renewable energy demonstration park under
Senate Bill 886, then ReVenture will be entitled to triple credit for the RECs
associated with the renewable energy produced by the facility. Finally, the
Commission made rulings on several details regarding the triple crediting and
retirement of RECs by ReVenture with NC-RETS.
Order Accepting Registration of a New Renewable Energy Facility
Producing Electricity and Steam from Landfill Gas, Docket
No. SP-100, Sub 9 (July 5, 2011)
On January 7, 2011, Raleigh Steam Producers, LLC (RSP), and Wake
Gas Producers, LLC (WGP) (collectively, Petitioners), filed a Petition for
Supplemental Declaratory Rulings in Docket No. SP-100, Sub 9. Concurrently, in
Docket No. SP-967, Sub 0, RSP filed a report of proposed construction and a
registration statement for a new renewable energy facility to be located in
northern Wake County. RSP currently operates two boilers providing steam to
Covidien-Mallinckrodt (Mallinckrodt) at its industrial plant. The larger of the two
boilers is fired primarily by landfill gas collected by WGP at the North Wake
County Landfill. WGP sells the landfill gas to RSP.
RSP described the new facility as a 2.8-MW landfill gas-fueled new
renewable combined heat and power (CHP) facility to be built in two stages. RSP
stated that the first phase of construction, consisting of a 750-kW low pressure
dual steam generator using steam from an existing boiler to produce electricity and
process steam, is expected to become operational in late 2011. Subsequent
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additions will include a new boiler and 790-kW turbine generator and a 1.6 MW
landfill gas-fueled engine/generator set with heat recovery equipment. Both boilers
will be fired primarily by approximately 90% landfill gas and 10% natural gas.
Petitioners requested a declaratory ruling, among other things, that the
facility will not be a “public utility” under G.S. 62-3(23(a), will be eligible for
registration as a new CHP facility and will earn RECs for all of the waste steam
produced by the turbine generators that is returned to a boiler for use in
generating additional electric power.
By Order dated July 5, 2011, the Commission accepted registration of the
facility as a new renewable CHP facility and concluded that the proposed changes
in the Petitioners’ operations will not cause either of them to become a public
utility. With regard to the electricity, steam and thermal energy to be produced by
the facility, the Commission concluded that the portion of electricity produced by
landfill gas will be eligible to earn RECs, and the portion of waste steam
produced from the electric turbines that is used as an input for Mallinckrodt’s
manufacturing process will be eligible to earn thermal RECs. However, the
Commission concluded that steam that bypasses the turbine generators and
waste heat being used to pre-heat the feedwater for the boilers will not be used
to directly produce electricity or useful, measureable thermal or mechanical
energy at a retail electric customer’s facility pursuant to G.S. 62-133.8(a)(1), and,
therefore, will not be eligible to earn RECs.
Orders Accepting Registrations of New Renewable Energy Facilities
Producing Solar Thermal Hot Water, Docket Nos. RET-4, Sub 5 and
RET-8, Subs 12, 13 and 14 (August 15, 2011)
On July 28, 2010, in Docket No. RET-4, Sub 5, FLS YK Farm, LLC (FLS),
filed a registration statement for a new renewable energy facility being installed
at the U.S. Marine Corps Camp Lejeune in Jacksonville, North Carolina,
consisting of solar thermal hot water heaters on 108 residences. On February 11,
2011, in Docket No. RET-8, Subs 12, 13 and 14, FLS Owner II, LLC (FLS), filed
registration statements for new renewable energy facilities being installed at
Camp Lejeune, consisting of solar thermal hot water heaters on a total of 1,021
residences. FLS requested that it be allowed to install meters on a representative
sample of the homes, rather than on each home, and assign to the unmetered
homes the thermal heat measures recorded on the metered homes.
On August 15, 2011, the Commission issued Orders accepting registration
of residential solar thermal water heating facilities on the 1,129 homes with a
representative sample of the homes being metered to determine the number of
Btus of thermal energy that will be produced and on which RECs will be earned
by the 1,129 systems.
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North Carolina Renewable Energy Tracking System (NC-RETS)
In its February 29, 2008 Order in Docket No. E-100, Sub 113, the
Commission concluded that REPS compliance would be determined by tracking
RECs associated with renewable energy and energy efficiency. In its Order, the
Commission further concluded that a “third-party REC tracking system would be
beneficial in assisting the Commission and stakeholders in tracking the creation,
retirement and ownership of RECs for compliance with Senate Bill 3” and stated
that “[t]he Commission will begin immediately to identify an appropriate REC
tracking system for North Carolina.” Pursuant to G.S. 133.8(k), enacted in 2009,
the Commission was required to develop, implement, and maintain an online
REC tracking system no later than July 1, 2010, in order to verify the compliance
of electric power suppliers with the REPS requirements.
On September 4, 2008, the Commission issued an Order in Docket
No. E-100, Sub 121 initiating a new proceeding to define the requirements for a
third-party REC tracking system, or registry, and to select an administrator. The
Commission established a stakeholder process to finalize a Requirements
Document for the tracking system.
After issuing a request for proposals and evaluating the bids received, the
Commission signed a Memorandum of Agreement (MOA) with APX, Inc. (APX),
on February 2, 2010, to develop and administer the North Carolina Renewable
Energy Tracking System, NC-RETS. Pursuant to the MOA, on July 1, 2010, APX
successfully launched NC-RETS. By letter dated September 3, 2010, the
Commission informed APX that, to the best of its knowledge, NC-RETS has
performed in substantial conformance with the MOA and has no material defects.
The Commission, therefore, authorized APX to begin billing North Carolina electric
power suppliers and other users the fees that were established in the MOA.
Funding for NC-RETS is provided directly to APX by the electric power
suppliers in North Carolina that are subject to the REPS requirements of Senate
Bill 3 and recovered from the suppliers’ customers through the REPS incremental
cost rider. Owners of renewable energy facilities and other NC-RETS users do
not incur charges to open accounts, register projects, and create and transfer
RECs, but will incur nominal fees to export RECs to other tracking systems or to
retire RECs other than for REPS compliance.
At the end of 2010, each electric power supplier was required to place the
solar RECs that it acquired to meet its 2010 REPS solar set-aside obligation into
a 2010 compliance account where the RECs are available for audit. When the
Commission concludes its review of each electric power suppliers’ 2010 REPS
compliance report, the associated RECs will be permanently retired.
Since October 1, 2010, the Commission has issued several orders
addressing issues pertaining to RECs credits, including the following:
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• On December 10, 2010, in Docket No. E-100, Subs 113 and 121, the
Commission issued an Order extending the deadline for the issuance
of historic RECS from January 1, 2011 to June 1, 2011. As in previous
orders, the Commission reiterated its purpose to encourage the
issuance of RECs as soon as possible following the production of the
energy associated with the RECs. The Commission further stated that
the extension of the deadline for the issuance of historic RECS was
intended to ensure that all renewable energy facilities have an
adequate opportunity to obtain credit for eligible energy production that
predated the Commission’s registration system and NC-RETS.
• On March 25, 2011, in Docket No. EMP-17, Sub 1, the Commission
issued an Order approving a request by EnergyUnited Electric
Membership Corporation (EnergyUnited) to transfer into NC-RETS
from the Electric Reliability Council of Texas, Inc. (ERCOT) REC
tracking system 150,000 RECS. The energy associated with the
ERCOT RECs was produced by a Texas wind turbine facility in 2009,
and the RECs were retired for the benefit of EnergyUnited in June
2009, prior to the operation of NC-RETS.
• On June 7, 2011, and July 6, 2011, in Docket Nos. E-100, Sub 130, et
al., the Commission issued Orders revoking the registrations of a total
of twenty (20) renewable energy facilities for failure to file annual
certifications required by Commission Rule R8-66(b).
• On August 26, 2011, in Docket No. E-7, Sub 992, the Commission
issued an Order approving a request by Duke Energy Carolinas, LLC
(Duke), to transfer into NC-RETS from the ERCOT REC tracking
system 250,000 RECS. The energy associated with the ERCOT RECs
was produced by a Texas wind turbine facility in 2008, and the RECs
were retired for the benefit of Duke in 2008, prior to the operation of
NC-RETS.
Members of the public can access the NC-RETS web site at
www.ncrets.org. The site’s “Resources” tab provides extensive information
regarding REPS activities and NC-RETS account holders. NC-RETS also
provides an electronic bulletin board where RECs can be offered for purchase.
As of December 31, 2010:
• NC-RETS had issued 4,285,506 renewable energy certificates and
252,607 energy efficiency certificates. These numbers could increase
because renewable energy generators are allowed to enter historic
production data for up to two years.
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• 172 organizations, including electric power suppliers and owners of
renewable energy facilities, had established accounts in NC-RETS.
• Approximately 306 renewable energy facilities had been established as
NC-RETS projects, enabling the issuance of RECs based on their
energy production data.
Pursuant to the MOA, APX has been working with other registries in the
United States, such as ERCOT, to establish procedures whereby RECs that
were issued in those registries may be transferred to NC-RETS. To date, such
arrangements have been established with four (4) such registries. Lastly, the
Commission has established an on-going NC-RETS stakeholder group, providing
a forum for resolution of issues and discussion of system improvements.
Environmental Impacts
Pursuant to G.S. 62-133.8(j), the Commission was directed to consult with
the North Carolina Department of Environment and Natural Resources (DENR) in
preparing its report and to include any public comments received regarding
direct, secondary, and cumulative environmental impacts of the implementation
of the REPS requirements of Senate Bill 3. The Commission has not identified,
nor has it received from the public or DENR, any comments regarding direct,
secondary, and cumulative environmental impacts of the implementation of the
REPS provision of Senate Bill 3. DENR stated that there continues to be interest
in the development of renewable energy resources and the REPS appears to
have spurred much of this interest. In addition, DENR specifically noted the
development of three biomass projects in North Carolina, two of which involve
swine waste.
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ELECTRIC POWER SUPPLIER COMPLIANCE
Pursuant to Senate Bill 3, electric power suppliers are required, beginning
in 2012, to meet an increasing percentage of their retail customers’ energy needs
by a combination of renewable energy resources and energy reductions from the
implementation of energy efficiency and demand-side management measures. In
addition, beginning in 2010 each electric power supplier was required to meet
0.02% of its 2009 retail electric sales “by a combination of new solar electric
facilities and new metered solar thermal energy facilities that use one or more of
the following applications: solar hot water, solar absorption cooling, solar
dehumidification, solar thermally driven refrigeration, and solar industrial process
heat.” G.S. 62-133.8(d). An electric power supplier is defined as “a public utility,
an electric membership corporation, or a municipality that sells electric power to
retail electric power customers in the State.” G.S. 62-133.8(a)(3). Described
below are the REPS requirements for the various electric power suppliers and, to
the extent reported to the Commission, the efforts of each toward REPS
compliance.
Monitoring of Compliance with REPS Requirement
Monitoring of electric power supplier compliance with the REPS
requirement of Senate Bill 3 is accomplished through annual filings with the
Commission. The rules adopted by the Commission require each electric power
supplier to file an annual REPS compliance plan and REPS compliance report to
demonstrate reasonable plans for and actual compliance with the REPS
requirement.
Compliance plan
Pursuant to Commission Rule R8-67(b), on or before September 1 of each
year, each electric power supplier is required to file with the Commission an
REPS compliance plan providing, for at least the current and following two
calendar years, specific information regarding its plan for complying with the
REPS requirement of Senate Bill 3. The information required to be filed includes,
for example, forecasted retail sales, RECs earned or purchased, energy
efficiency measures implemented and projected impacts, avoided costs,
incremental costs, and a comparison of projected costs to the annual cost caps.
Compliance report
Pursuant to Commission Rule R8-67(c), each electric power supplier is
required to annually file with the Commission an REPS compliance report. While
an REPS compliance plan is a forward-looking forecast of an electric power
supplier’s REPS requirement and its plan for meeting that requirement, an REPS
35
compliance report is an annual look back at the RECs earned or purchased and
energy savings actually realized during the prior calendar year and the electric
power supplier’s actual progress toward meeting its REPS requirement. Thus, as
part of this annual REPS compliance report, each electric power supplier is
required to provide specific information regarding its experience during the prior
calendar year, including, for example, RECs actually earned or purchased, retail
sales, avoided costs, compliance costs, status of compliance with its REPS
requirement, and RECs to be carried forward to future REPS compliance years.
An electric power supplier must file with its REPS compliance report any
supporting documentation as well as the direct testimony and exhibits of expert
witnesses. The Commission will schedule a hearing to consider the REPS
compliance report filed by each electric power supplier.
For each electric public utility, the Commission will consider the REPS
compliance report and determine the extent of compliance with the REPS
requirement at the same time as it considers cost recovery pursuant to the REPS
incremental cost rider authorized in G.S. 62-133.8(h). Each EMC and
municipally-owned electric utility, over which the Commission does not exercise
ratemaking authority, is required to file its REPS compliance report on or before
September 1 of each year.
Cost Recovery Rider
G.S. 62-133.8(h) authorizes each electric power supplier to establish an
annual rider to recover the incremental costs incurred to comply with the REPS
requirement and to fund certain research. The annual rider, however, may not
exceed the following per-account annual charges:
Customer Class 2008-2011 2012-2014 2015 and thereafter
Residential per account $10.00 $12.00 $34.00
Commercial per account $50.00 $150.00 $150.00
Industrial per account $500.00 $1,000.00 $1,000.00
Commission Rule R8-67(e) establishes a procedure under which the
Commission will consider approval of an REPS rider for each electric public
utility. The REPS rider operates similar to the fuel charge adjustment rider
authorized in G.S. 62-133.2. Each electric public utility is required to file its
request for an REPS rider at the same time as it files the information required in
its annual fuel charge adjustment proceeding, which varies for each utility. The
test periods for both the REPS rider and the fuel charge adjustment rider are the
same for each utility, as are the deadlines for publication of notice, intervention,
and filing of testimony and exhibits. A hearing on the REPS rider will be
scheduled to begin as soon as practicable after the hearing held by the
Commission for the purpose of determining the utility’s fuel charge adjustment
rider. The burden of proof as to whether the REPS costs were reasonable and
prudently incurred shall be on the electric public utility. Like the fuel charge
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adjustment rider, the REPS rider is subject to an annual true-up, with the
difference between reasonable and prudently incurred incremental costs and the
revenues that were actually realized during the test period under the REPS rider
then in effect reflected in an REPS experience modification factor (REPS EMF)
rider. Pursuant to G.S. 62-130(e), any over-collection under the REPS rider shall
be refunded to a utility’s customers with interest through operation of the REPS
EMF rider.
Electric Public Utilities
There are three electric public utilities operating in North Carolina subject
to the jurisdiction of the Commission: Carolina Power & Light Company, doing
business as Progress Energy Carolinas, Inc. (PEC); Duke Energy Carolinas, LLC
(Duke); and Virginia Electric and Power Company, doing business in North
Carolina as Dominion North Carolina Power (Dominion).
REPS requirement
G.S. 62-133.8(b) provides that each electric public utility in the State –
Duke, PEC and Dominion – shall be subject to an REPS according to the
following schedule:
Calendar Year REPS Requirement
2012 3% of prior year’s North Carolina retail sales
2015 6% of prior year’s North Carolina retail sales
2018 10% of prior year’s North Carolina retail sales
2021 and thereafter 12.5% of prior year’s North Carolina retail sales
An electric public utility may meet the REPS requirement by any one or more of
the following:
• Generate electric power at a new renewable energy facility.
• Use a renewable energy resource to generate electric power at a
generating facility other than the generation of electric power from
waste heat derived from the combustion of fossil fuel.
• Reduce energy consumption through the implementation of an
energy efficiency measure; provided, however, an electric public
utility subject to the provisions of this subsection may meet up to
twenty-five percent (25%) of the requirements of this section
through savings due to implementation of energy efficiency
measures. Beginning in calendar year 2021 and each year
thereafter, an electric public utility may meet up to forty percent
(40%) of the requirements of this section through savings due to
implementation of energy efficiency measures.
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• Purchase electric power from a new renewable energy facility.
Electric power purchased from a new renewable energy facility
located outside the geographic boundaries of the State shall meet
the requirements of this section if the electric power is delivered to
a public utility that provides electric power to retail electric
customers in the State; provided, however, the electric public utility
shall not sell the renewable energy certificates created pursuant to
this paragraph to another electric public utility.
• Purchase renewable energy certificates derived from in-State or
out-of-state new renewable energy facilities. Certificates derived
from out-of-state new renewable energy facilities shall not be used
to meet more than twenty-five percent (25%) of the requirements of
this section, provided that this limitation shall not apply to Dominion.
• Use electric power that is supplied by a new renewable energy
facility or saved due to the implementation of an energy efficiency
measure that exceeds the requirements of this section for any
calendar year as a credit towards the requirements of this section in
the following calendar year or sell the associated renewable energy
certificates.
• Reduce energy consumption through “electricity demand
reduction,” which is a voluntary reduction in the demand of a retail
customer achieved by two-way communications devices that are
under the real time control of the customer and the electric public
utility.6
Progress Energy Carolinas
On September 1, 2011, PEC filed its 2011 REPS compliance plan in
Docket No. E-100, Sub 128 as part of its 2011 Integrated Resource Plan (IRP).
In its plan, PEC indicated that its overall compliance strategy is to meet the
REPS requirements with the most cost-effective and reliable renewable energy
resources available. PEC has agreed to provide REPS compliance services for
the following wholesale customers, as allowed under G.S. 62-133.8(c)(2)(e): the
towns of Black Creek, Lucama, Sharpsburg, Stantonsburg, and Waynesville.
PEC has adopted a competitive bidding process for the purchase of energy
or RECs from renewable energy facilities whereby market participants have an
opportunity to propose projects on a continuous basis. Through this RFP, PEC has
executed fifty (50) contracts for solar, hydro, biomass, landfill gas, and wind RECs.
Also, PEC maintains an open RFP for 10 MW or less of non-solar renewable
6 Sec. 1 of Senate Bill 75, amended G.S. 62-133.8(a) by adding a definition of “electricity demand
reduction,” and Sec. 2 amended G.S. 62-133.8(b)(2) by adding a new subsection (g) making
electricity demand reduction a REPS resource, effective April 28, 2011.
38
resources. In June 2011 PEC issued solar and wind-specific RFPs. PEC stated
that it does not currently own or operate new renewable energy facilities. A
decision to engage in future direct or partial ownership will be based on cost-effectiveness
and portfolio requirements.
PEC engages in ongoing research regarding the use of alternative fuels
meeting the definition of renewable energy resources at its existing generation
facilities. However, introducing alternative fuels in traditional power plants must be
proven technically feasible, reliable, and cost-effective prior to implementation. To
the extent PEC determines the use of alternative fuels is appropriate and fits within
the framework of Senate Bill 3, these measures would be included in future
compliance plan filings.
To meet the initial 0.02% solar set-aside requirement in 2010, PEC
prioritized solar bids within its November 2007 renewable RFP and subsequent
planning periods. ln addition to the renewable RFP, PEC has maintained a
commercial solar photovoltaic (PV) program since July 2009 with a target of
adding 5 MW of grid-tied solar PV per year and a standard offer to purchase
commercial solar hot water RECs to promote development of this technology.
On July 1, 2010, In Docket No. E-2, Sub 979, PEC filed for Commission
approval of its Residential Service SunSense Solar Rebate Rider SSR-1
(SunSense). SunSense is an experimental solar PV rebate program aimed at
adding 1 MW per year of distributed solar generation. Residential customers who
install rooftop solar PV generating systems will receive a one-time participation
payment of $1,000 per kW of installed capacity and monthly bill credits based on
the RECs produced by their system. The solar RECs will be the property of PEC.
SunSense is limited to 1,000 kW of installed capacity in a calendar year and will
be available through December 2015. On November 15, 2010, the Commission
issued an Order approving SunSense and granting the participants waivers from
several reporting requirements of Commission Rule R8-66 to allow PEC to be the
aggregator for information gathering and reporting to the Commission and
NC-RETS. PEC initiated SunSense on January 1, 2011.
In its 2011 REPS compliance plan, PEC stated that it is committed to
taking all actions necessary to comply with the swine waste set-aside
requirements. The state’s electric power suppliers issued a joint RFP for swine
waste generation on February 15, 2010, and have engaged in negotiations with
multiple parties in a joint effort to procure swine waste resources in the state. As
a result of the RFP, PEC and other participants in the collaborative have
executed two contracts for approximately 20,000 RECs per year once the
facilities are fully operative. Although the collaborative continues to negotiate with
other potential suppliers, PEC stated that it is doubtful that there will be sufficient
energy derived from swine waste within the state to enable PEC to meet the
2012 swine waste set-aside requirement.
39
PEC is also participating in collective efforts to procure poultry waste
derived energy. In April 2011, PEC executed a contract to purchase RECs and
energy from a 36 MW poultry waste-to-energy facility. However, PEC cautions
that issues similar to those stated for producing sufficient energy derived from
swine waste make it uncertain whether PEC will be able to meet the 2012 poultry
waste set-aside obligation. In particular, it is uncertain whether there will be
sufficient poultry waste facilities in operation to enable PEC to meet the 2012
obligation.
PEC also intends to comply with a portion of the REPS requirement by
energy savings from PEC’s EE measures. PEC has received approval for a number
of EE programs and has begun implementation. PEC forecasts that, with the
allowed banking, its EE savings will exceed the limitation imposed in each year for
REPS compliance under G.S. 62-133.8(b)(2)(c).
Based on its current contracts, energy efficiency programs and banked
RECs, PEC believes that it has procured sufficient resources to meet its general
REPS obligation through 2013.
On May 18, 2010, in Docket No. E-2, Sub 974, PEC filed its annual REPS
compliance report for the calendar year 2009. On June 4, 2010, PEC filed an
application in the same docket for approval of an REPS rider effective
December 1, 2010. On November 17, 2010, the Commission issued an Order
approving an REPS charge of $0.58 per month for residential customers,
$2.90 per month for commercial customers, and $28.93 per month for industrial
customers, each of which is below the incremental cost cap established in
G.S. 62-133.8(h). These charges are effective December 1, 2010 through
November 30, 2011. In addition, the Commission approved PEC’s 2009 REPS
compliance report, with a brief discussion noting that the 24,930 EE RECs
reported therein are subject to measurement and verification (M&V) based on the
submission of further M&V data and the resolution of M&V issues pending in
Docket No. E-100, Sub 113 with regard to reduced energy consumption.
On June 3, 2011, PEC filed its 2010 REPS compliance report in Docket
No. E-2, Sub 1000. Also on June 3, 2011, PEC filed an application in the same
docket seeking to increase its REPS rider to $0.63 per month for residential
customers, $7.61 per month for commercial customers, and $51.54 per month for
industrial customers. In its 2010 REPS compliance report, PEC indicated that it
acquired sufficient solar RECs to meet the 2010 requirement of 0.02% of its 2009
retail sales. In addition, PEC stated that counting banked RECs, EE projections,
contracted future purchases, and the ability to use 25% out-of-state RECs each
year, it expects to have sufficient RECs to achieve REPS compliance through
2014. A hearing was held on PEC’s 2010 REPS compliance report and 2011
REPS cost recovery rider on September 27, 2011. A final decision is pending
before the Commission.
40
Duke Energy Carolinas
On September 1, 2011, Duke filed its 2011 REPS compliance plan in
Docket No. E-100, Sub 128 as part of its 2011 IRP. In its plan, Duke stated that it
is pursuing REPS compliance by building a diverse portfolio of cost-effective
renewable energy and energy efficiency resources. The key components of
Duke’s plan include: (1) direct investment in renewable energy resources at
existing or new Duke-owned assets; (2) partnership with third-party renewable
resource suppliers through power purchase agreements; (3) purchases of
unbundled RECs from both in-state and out-of-state suppliers; and (4) utilization
of cost-effective EE savings. Duke believes that the implementation of these
strategies will yield a balanced and prudent portfolio of qualifying resources and
a flexible mechanism for REPS compliance. Duke has agreed to provide REPS
compliance services for the following wholesale customers, as allowed under
G.S. 62-133.8(c)(2)(e): Rutherford EMC; Blue Ridge EMC; the cities of Concord,
Highlands, and Kings Mountain; and the towns of Dallas and Forest City.
Duke stated that it is confident that it will meet its solar set-aside
requirement under its 2011 REPS obligation, including for those wholesale
customers for which it provides REPS compliance services. Duke has elected to
pursue the following courses of action to acquire solar resources for compliance:
(1) Duke-owned solar photovoltaic distributed generation program; (2) power
purchase agreements for solar generation; and (3) purchase of in-state and out-of-
state unbundled solar RECs, including RECs from solar thermal facilities. With
respect to utility-owned solar resources, Duke received approval from the
Commission in 2009 to build, own and operate up to 10 MW of solar photovoltaic
projects on customer sites and/or utility-owned property. Duke began
construction in the fourth quarter of 2009 and the program was fully implemented
in the first quarter of 2011, with the exception of 50 kW. However, a fire at one of
the rooftop installations in April 2011 caused Duke to shut down all the facilities
in the program. Duke believes that it has determined the cause of the fire and will
be able to institute safeguards to prevent such occurrences. Thus, it anticipates
placing the facilities back into operation by the fourth quarter of 2011.
ln 2008, Duke signed a twenty-year power purchase agreement with
SunEdison for the purchase of all electricity generated from a 15.5 MW (AC)
solar farm in Davidson County, North Carolina, which is fully operational. Duke
has also entered into long-term agreements with FLS Energy and Vanir Energy
to purchase solar RECs from water heating installations. As a result of this
agreement, FLS and Vanir have installed solar water heating systems at
residences, hotels, universities, and commercial sites across North Carolina.
Lastly, having found out-of-state solar RECs to be cost-effective when compared
to in-state resources, Duke has entered into agreements to procure out-of-state
solar RECs up to the 25% out-of-state limitation of this resource. Based on all of
its solar resources, Duke is confident that it will meet its solar set-aside obligation
through 2013.
41
Duke’s primary strategy for compliance with the swine waste set-aside
requirement is to jointly procure energy derived from swine waste resources with
PEC and other electric power suppliers. Duke has entered into four long-term
REC purchase agreements with developers of swine waste facilities in North
Carolina. However, the production dates and projected production estimates for
the facilities have materially changed and Duke now believes that compliance
with the 2012 swine waste set-aside requirement is unlikely. Duke also has
partnered with Duke University to fund a pilot-scale, on-farm, swine waste-to-energy
development at Loyd Ray Farm in Booneville, North Carolina. This project
is operational and could serve as a model for other hog farms seeking to manage
waste while also developing on-farm renewable generation. Duke will receive all
of the RECs generated from this project for a period of ten years.
Duke noted that several regulatory and legislative developments during
the last two years have materially impacted its efforts to meet the 2012 poultry
set-aside requirement. In response, Duke issued an RFP in July 2011 to
capitalize on the expanded definition of poultry resources, and has received
many compelling proposals. In addition, Duke continues pursuing the purchase
of poultry waste derived energy and/or unbundled RECs. To that end, Duke has
continued to meet with potential suppliers; reviewed proposals from third-party
developers; identified, contacted, and encouraged animal waste-to-energy
developers in other states to develop projects in North Carolina; and initiated
negotiation with all known, suppliers of resources that qualify for the poultry
waste set-aside requirement. While Duke has not reached agreement with any
particular supplier of resources that meet the energy derived from poultry waste
requirement, it stated that it will continue to make all reasonable efforts to meet
the poultry set-aside requirement in 2012.
Aside from the solar, swine waste, and poultry waste set-aside
requirements, Duke intends to meet the general REPS requirement beginning in
2012 with EE savings, hydroelectric power, biomass resources, and out-of-state
wind RECs. Duke projects that, in concert with its customers, it will achieve more
EE savings than can be utilized under REPS for the foreseeable future. Duke
plans to use hydroelectric power from three sources to meet the general REPS
requirement: (1) small Duke-owned hydroelectric stations; (2) wholesale
customers’ SEPA allocation; and (3) small hydroelectric facilities that are not
owned by Duke. Duke has purchased RECs from twenty-two (22) small
hydroelectric power facilities in North and South Carolina which qualify as new
renewable energy facilities. Duke stated that it is evaluating a variety of biomass
proposals, including landfill gas, wood biomass combustion, biomass
gasification, and biomass anaerobic digestion.
As noted previously in this Report, the Commission issued an Order on
October 11, 2010, in Docket No. E-7, Subs 339 and 340 accepting registration of
Duke’s Buck and Lee Steam Stations as renewable energy facilities, and
concluding that primary harvest wood products, including wood chips from whole
42
trees, are “biomass resources” and “renewable energy resources” under
G.S. 62-133.8(a)(8). Thus, Duke also intends to self-supply a portion of its
biomass portfolio through the co-firing and/or re-powering of Buck and Lee, and
perhaps other existing coal stations, with renewable fuel.
Lastly, Duke stated that it continues to investigate the procurement of wind
resources for use in meeting the general REPS requirement, including out-of-state
wind RECs, delivery of bundled land-based wind energy to its control area,
and development of off-shore wind.
Based on its current contracts, self-owned generation, EE programs and
banked RECs, Duke stated that it has procured sufficient resources to meet its
general REPS obligation through 2013.
On March 10, 2011, in Docket No. E-7, Sub 984, Duke filed its 2010
REPS compliance report and an application for approval of an REPS rider to be
effective September 1, 2011. A hearing was held on June 8, 2011, and on
August 23, 2011 the Commission issued an Order approving an REPS charge of
$0.49 per month for residential customers, $2.44 per month for commercial
customers, and $26.97 per month for industrial customers, each of which is
below the incremental cost cap established in G.S. 62-133.8(h). In addition, the
Commission approved Duke’s 2010 REPS compliance report, including a finding
that Duke acquired sufficient solar RECs to meet the 2010 requirement of 0.02%
of its 2009 retail sales.
Dominion North Carolina Power
On July 9, 2010, Dominion filed its 2009 REPs compliance report. The
report stated that Dominion had not produced or purchased any RECs in 2009, but
intended to use unbundled solar RECs to meet its 2010 and 2011 solar set-aside
requirements. On June 22, 2011, the Commission issued an Order requesting that
the Public Staff file comments on Dominion’s 2009 compliance report by
September 1, 2011. In particular, the Commission requested the Public Staff to
assess whether Dominion is likely to meet its future REPS obligations without
exceeding the cost caps established under G.S. 62-133.8(h). On August 30, 2011,
the Public Staff filed comments concluding that Dominion will be able to meet its
REPS obligations for the foreseeable future without exceeding the costs caps and
that Dominion’s 2009 REPS compliance report should be approved by the
Commission.
On August 25, 2011, in Docket No. E-22, Sub 475, Dominion filed its 2010
REPS compliance report. Dominion has agreed to provide REPS compliance
services for the Town of Windsor, as allowed under G.S. 62-133.8(c)(2)(e).
Dominion stated that it met its 2010 REPS solar set-aside obligation by
purchasing unbundled out-of-state solar RECs. For the Town of Windsor’s
43
obligation, at least 75% of the RECs purchased were in-state RECs, as required
by G.S. 62-133.8(b)(2)(e).
On September 1, 2010, in Docket No. E-22, Subs 463, 467, 468, and 469,
Dominion filed four EE programs for approval by the Commission. Dominion
projects EE savings of 4,720 MWh in 2011 and 6,119 MWh in 2012 from these
programs. On February 22, 2011, the Commission issued Orders approving the
four EE programs.
On September 1, 2011, in Docket No. E-100, Sub 128, Dominion filed its
2011 REPS compliance plan as part of its 2011 IRP. In its plan, Dominion stated
that it intends to meet its REPS requirements through the use of new renewable
energy, EE, and unbundled RECs. Dominion plans to use unbundled solar RECs
to meet its 2011 and beyond solar requirements and has entered into contracts
to purchase sufficient RECs through 2013. As determined in the Commission’s
September 22, 2009 Order, Dominion is exempt from the 25% limit on the use of
out-of-state RECs for REPS compliance found in G.S. 62-133.8(b)(2)(e).
Dominion stated that it had purchased solar RECs for REPS compliance from
out-of-state to minimize compliance costs. In addition, Dominion is participating
with other electric power suppliers to evaluate proposals from swine and poultry
waste energy suppliers to meet the swine and poultry waste set-aside
requirements. Dominion has entered into long term contracts with five companies
for the purchase of swine waste-to-energy RECs.
Dominion again elected not to file an application for an REPS rider in 2011.
Electric Membership Corporations and Municipally-Owned Electric
Utilities
There are thirty-one (31) electric membership corporations (EMCs)
serving customers in North Carolina, including twenty-six (26) that are
headquartered in the state. Twenty-five of the EMCs are members of North
Carolina Electric Membership Corporation (NCEMC), a generation and
transmission (G&T) services cooperative that provides wholesale power and
other services to its members.
In addition, there are seventy-four (74) municipal and university-owned
electric distribution systems serving customers in North Carolina. These systems
are members of ElectriCities of North Carolina, Inc. (ElectriCities), an umbrella
service organization. ElectriCities is a non-profit organization that provides many
of the technical, administrative, and management services required by its
municipally-owned electric utility members in North Carolina, South Carolina, and
Virginia. ElectriCities is a service organization for its members, not a power
supplier. Fifty-one of the North Carolina municipalities are participants in either
NCEMPA or NCMPA1, municipal power agencies that provide wholesale power
to their members. The remaining municipally-owned electric utilities generate
44
their own electric power or purchase electric power from wholesale electric
suppliers.
By Orders issued August 27, 2008, the Commission allowed twenty-three
(23) EMCs to file their REPS compliance plans on an aggregated basis through
GreenCo Solutions, Inc. (GreenCo),7
REPS requirement
and the fifty-one (51) municipal members of
the power agencies to file through NCEMPA and NCMPA1. On September 7,
2010, the Commission similarly allowed Tennessee Valley Authority to file annual
REPS compliance plans and reports on behalf of its four wholesale customers
that provide retail service to customers in North Carolina.
G.S. 62-133.8(c) provides that each EMC or municipality that sells electric
power to retail electric power customers in the State shall be subject to an REPS
according to the following schedule:
Calendar Year REPS Requirement
2012 3% of prior year’s North Carolina retail sales
2015 6% of prior year’s North Carolina retail sales
2018 and thereafter 10% of prior year’s North Carolina retail sales
Compliance with the REPS requirement is slightly different for an EMC or
municipality than for an electric public utility. An EMC or municipality may meet
the REPS requirement by any one or more of the following:
• Generate electric power at a new renewable energy facility.
• Reduce energy consumption through the implementation of
demand-side management or energy efficiency measures.
• Purchase electric power from a renewable energy facility or a
hydroelectric power facility, provided that no more than thirty
percent (30%) of the requirements of this section may be met with
hydroelectric power, including allocations made by the Southeastern
Power Administration.
• Purchase renewable energy certificates derived from in-State or
out-of-state renewable energy facilities. An electric power supplier
subject to the requirements of this subsection may use certificates
derived from out-of-state renewable energy facilities to meet no
more than twenty-five percent (25%) of the requirements of this
section.
7 Effective May 1, 2010, Blue Ridge Electric Membership Corporation is no longer a member of
GreenCo.
45
• Acquire all or part of its electric power through a wholesale
purchase power agreement with a wholesale supplier of electric
power whose portfolio of supply and demand options meet the
requirements of this section.
• Use electric power that is supplied by a new renewable energy
facility or saved due to the implementation of demand-side
management or energy efficiency measures that exceeds the
requirements of this section for any calendar year as a credit
towards the requirements of this section in the following calendar
year or sell the associated renewable energy certificates.
• Reduce energy consumption through “electricity demand
reduction,” which is a voluntary reduction in the demand of a retail
customer achieved by two-way communications devices that are
under the real time control of the customer and electric power
supplier.8
Electric membership corporations
GreenCo
On September 1, 2009, in Docket No. E -100, Sub 124, GreenCo filed its
2008 REPS compliance report for the twenty-three (23) EMC members that
GreenCo served during 2008.9
8 Sec. 1 of Senate Bill 75, amended G.S. 62-133.8(a) by adding a definition of “electricity demand
reduction,” and Sec. 2 amended G.S. 62-133.8(c)(2) by adding a new subsection (g) making electricity
demand reduction a REPS resource, effective April 28, 2011.
On May 11, 2010, the Commission established
Docket No. EC-83, Sub 1 and issued an Order scheduling a hearing on
GreenCo’s 2008 REPS report and directed GreenCo to file a copy of its 2008
REPS compliance report. The Commission held a hearing on August 24, 2010
and allowed the parties to file briefs and proposed orders by October 21, 2010.
On May 3, 2011, the Commission issued an Order approving GreenCo’s 2008
REPs compliance report, with a brief discussion noting that the EE RECs
reported therein are subject to measurement and verification (M&V) based on the
submission of further M&V data and the resolution of M&V issues pending in
Docket No. E-100, Sub 113 with regard to reduced energy consumption.
9 The following EMCs are members of GreenCo: Albemarle EMC, Brunswick EMC, Cape Hatteras
EMC, Carteret-Craven EMC, Central EMC, Edgecombe-Martin County EMC, Four County EMC,
French Broad EMC, Haywood EMC, Jones-Onslow EMC, Lumbee River EMC, Pee Dee EMC,
Piedmont EMC, Pitt & Greene EMC