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10/16/2011

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Industry wants a federal RPS – they believe it is key to creating a level of certainty in renewable markets

UPI, 7 (Rosalie, Westenskow, United Press International, “Analysis: Nation ripe for a federal RPS,” 6-8-2007,
http://www.upi.com/Energy/Analysis/2007/06/08/analysis_nation_ripe_for_a_federal_rps/4681/) // JMP

Large-scale production of renewable energy induced by a federal RPS could also decrease costs, according to the "Renewable America"
report, which points to wind power as an example.
When the Department of Energy installed its first commercial wind turbines in 1980, wind energy cost about 81 cents per kilowatt-hour. By 2004, when the wind turbine capacity
had increased from a few megawatts to 6,000, the cost fell to 5 cents per kilowatt-hour.
Some utility companies are pushing for a federal RPS precisely because of this rationale, including Alliant Energy, a power company with its
headquarters in Wisconsin.

"We believe that a national RPS would help to create a floor for renewables and give us and the wind turbine industry a
greater level of certainty," said Scott Smith, spokesman for Alliant, which just received approval to build its first wind farm. "Instead of a boom-and-bust
cycle, it will help to solidify the demand which will create a robust market."

A federal RPS benefits utilities – comparatively better than state-based approaches

Dr. Sovacool, & Coooper, 7 – *Senior Research Fellow for the Network for New Energy Choices in New York and Adjunct
Assistant Professor at the Virginia Polytechnic Institute & State University in Blacksburg, VA and ** Executive Director of
the Network for New Energy Choices
(Benjamin K. Sovacool, also a Research Fellow at the Centre for Asia and Globalization at the Lee Kuan Yew School of
Public Policy and Christopher Cooper, Electricity Journal, “Big Is Beautiful: The Case for Federal Leadership on a National
Renewable Portfolio Standard,” May 2007, vol. 48, no. 4, Lexis-Nexis Academic) // JMP

B A national RPS benefits utilities

The U.S. electricity market has evolved into a national commodities market increasingly at odds with the anachronism of
state-based regulation. In 1935, Congress passed the Public Utilities Holding Company Act (PUCHA), which made utility holding companies subject to Security and
Exchange Commission (SEC) regulations and mandated that any entity owning more than 10 percent of a utility had to divest all of its non-utility assets. PUCHA also placed
geographical restrictions on the integration of electricity markets. Holding companies were restricted from owning utilities in non-contiguous service areas without meeting a
number of additional regulatory burdens. Because of PUCHA, the U.S. electricity market was constrained to vertically integrated public utilities where supply, generation,
transmission, and distribution was provided by a single entity overseen by state regulators and servicing a specified franchise area.50
The world of electricity has changed dramatically since 1935. Investor-owned utilities have faced increased pressure from stockholders to
produce per-share profit beyond what they have been able to wring from organic growth alone. In turn, these utilities have
pressured lawmakers to allow greater industry consolidation in order to tap economies of scale.

The pressure paid off. In 2005, Congress finally repealed PUCHA. With its demise came a flurry of announced mergers, including the consolidation of Duke Power in the
Carolinas, Cincinnati Gas & Electric in Ohio, Union Light Heat & Power in Kentucky and PSI Energy in Indiana. In the Pacific Northwest, MidAmerican Holding Company (with
operations in Iowa, Illinois, and South Dakota) merged with PacifiCorp, a subsidiary of ScottishPower servicing customers in Oregon, Utah, Idaho, Washington, Wyoming, and
California.51
By eliminating PUCHA, Congress opened the door to "area hopping." Adam Wenner noted that, "If you can't merge with your neighbors because of market-power issues, you can
hop over them ... a utility's possible map is no longer just three states; it's the whole country."52
However, many state utility commissions are loath to see their authority eroded and will fight to retain it, if provoked. State PUCs have already responded to federal repeal of
PUCHA by increasing their scrutiny of proposed utility mergers. In 2006, Maryland's Public Service Commission rejected the merger of Constellation Energy with Florida Power
and Light and New Jersey's Board of Public Utilities scuttled attempts by Chicago-based Exelon Corporation to acquire PSE&G. While the failure of these transactions may slow
the wave of mergers sparked by PUHCA's repeal, they risk engendering a type of "forum shopping" where utility holding companies flock to states more likely to allow their
consolidation. In fact, some analysts have warned of a possible "balkanization of industry standards that increase the costs of maintaining a holding company or, even worse,
subject a holding company to conflicting standards."53
PUHCA's repeal may have an even more profound affect on the secondary market for wholesale power and natural gas. The elimination of PUHCA's restrictions on asset
ownership may spur more utilities to acquire independent power plants and gas pipelines outside their service territories or encourage large oil and gas companies to purchase
integrated electric companies. London-based National Grid announced in 2006, for instance, that it would acquire Keyspan, the largest distributor of natural gas in New England
and New York State's largest electricity generator.
The consolidation of a national electricity holdings market renders as nonsense the argument that a national RPS would benefit some states at the cost of others. Since a properly
designed national RPS would require all load-serving entities (including publicly owned utilities, municipal utilities, and electric cooperatives) - not individual states - to meet RPS
mandates, the burdens and benefits of a national program are likely to reflect the emerging interstate nature of the U.S. electricity market.
Moreover, with increased consolidation of the electricity market, a federal mandate is far less likely to create inequities than requiring companies to be subject to competing
regulations of any state in which they have holdings. One recent incident illustrates how utilities are becoming caught in the middle of these emerging state conflicts.
In January 2007, the Oregon Public Utilities Commission rejected plans by PacifiCorp to build a coal-fired power plant in Utah by 2012 and another in Wyoming by 2013. Oregon
regulators claimed that the utility had exaggerated projected demand and had not properly considered conservation efforts and renewable resources. The decision was heralded by
Oregon Citizens' Utility Board, a ratepayer group arguing that Oregon should not pay for Utah's dirty power.54
But in Utah, where 95 percent of the state's electricity is already generated by coal, the state's largest electricity consumers strongly supported the new plants. So much so that
Utah's regulators have accused PacifiCorp of not moving fast enough and have warned that delaying the construction of new coal-fired plants could leave Utah ratepayers exposed
to high prices for short-term purchases to make up for demand shortfalls.
The specter of Oregon regulators deciding the fate of electricity generation in Utah highlights an emerging disconnect between the structure of the U.S. electricity market and the
regulations to which it is subject.

In the absence of federal action, U.S. utilities must answer to the whims of state regulators with multiple, often contradictory
perspectives on how and where companies should invest in new generation. A national market subject to federal mandates
expands the universe of available renewable resources and ensures that competition - not artificial geographical restrictions -
determines the price of those resources.

RPS Aff

194

7 Week Juniors – CPHS Lab

A2: States CP – Uncertainty & Cost

States can’t solve – a national commitment is essential to spur a robust renewable market and reduce electricity costs

Dr. Sovacool, & Coooper, 7 – *Senior Research Fellow for the Network for New Energy Choices in New York and Adjunct
Assistant Professor at the Virginia Polytechnic Institute & State University in Blacksburg, VA and ** Executive Director of
the Network for New Energy Choices
(Benjamin K. Sovacool, also a Research Fellow at the Centre for Asia and Globalization at the Lee Kuan Yew School of
Public Policy and Christopher Cooper, Electricity Journal, “Big Is Beautiful: The Case for Federal Leadership on a National
Renewable Portfolio Standard,” May 2007, vol. 48, no. 4, Lexis-Nexis Academic) // JMP

III Conclusion: Call in the Feds
For a brief time in the late 1950s, Minnesotans could not agree on whether to adopt daylight savings time. State legislators
passed a bill that allowed some counties to adopt their own rules. An alliance of movie theater owners sued and convinced the
state's Supreme Court to issue a ruling that barred the counties from adopting a different time from the rest of the state. Then,
Attorney General Miles Lord declared that the high court's action had no effect on the counties.
The result was that some parts of the state were on a different time than others - including within the state Capitol, where the
Governor's office adopted daylight savings time while the Legislature and Supreme Court remained on standard time. Tired
of the hodgepodge of time zones dividing the nation, in 1966 Congress passed a law that pre-empted the states and made
daylight savings time uniform across the country.
While the value of renewable portfolio standards may not be as uniformly recognized as daylight savings time, it should be.
There exists widespread consensus on the financial, environmental, and security benefits that stem from diversifying the
nation's electricity fuels by investing in clean, renewable energy - so much so that 21 states have already mandated that
utilities use more of these fuels. The real debate is over how best to do it.
There is a time for tolerating the quirks and foibles of state experimentation and there is a time - as with the daylight savings
time dispute - for federal intervention. The tangle of inconsistent state RPS mandates is deterring significant investments in
renewable energy generation and hampering the development of a coherent national renewable energy strategy. Ambiguous
and conflicting standards are wasting policymakers' time and stakeholders' money. Uncertainties over the stability and
longevity of state policies is delaying progress and inflating the cost of renewable energy projects.
These arguments are not merely "academic," nor are they voiced only by staunch renewable energy advocates. Even
executives from Constellation Energy - a utility serving 1.2 million customers in Baltimore and more than 10,000 commercial
and industrial customers in 34 states - told the State of New York Public Service Commission that many state RPS programs
"unnecessarily burden interstate commerce, raise the cost of compliance, invite retaliatory discrimination, potentially violate
the Commerce Clause, reduce the availability of imports, and are 'impractical' given the inability to track electrons."67
The real debate is whether a federal standard is more advantageous than a medley of competing state statutes. Federal
legislation establishing a clear and uniform national RPS would not only resolve many of the discrepancies that have arisen
from the confusing disorder of state-based RPS policies, it would also signal a national commitment to renewable energy
generation that is certain to help stimulate a more robust market for renewable energy technologies. By allowing renewable
energy to compete directly with older technologies, a national RPS would decrease the cost of electricity and distribute the
benefits of renewable generation more justly. Rather than relying on a handful of states to shoulder the burdens of all, a
national RPS would expand competition in ways that benefit consumers in all states. There are times when we are 50 small
states and there are times when we are one big country. In this case, the answer is clear: big is truly beautiful.

RPS Aff

195

7 Week Juniors – CPHS Lab

A2: States CP – Uncertainty & Cost

Federal action is key – it is necessary to alleviate uncertainties and reduce the cost of renewables

Kozloff, 4 – senior associate at the World Resources Institute
(Keith Lee, Environment, “Renewable energy technology: An urgent need, a hard sell,” November 2004, vol. 36, no. 9,
OCLC First Search) // JMP

Other policy initiatives and reforms need to be evaluated in light of changing electricity markets. For example, utilities--which can often integrate
intermittent capacity by changing how other generating units are dispatched or exploiting portfolio effects--have less incentive to do so when they are not
investing in the capacity themselves. Independent developers cannot take advantage of the systemwide opportunities for integrating intermittent renewables
that would be available to the purchasing utility. Regulatory changes may be needed to help independent developers offer firm capacity by bundling projects
in a range of locations to sell power to one or more utilities, or by using renewables with fossil fuel or other back-up capacity located elsewhere. Such
options would allow them to compete with nonrenewable power producers for utility solicitations limited to dispatchable power.(26) In addition to
prohibiting dispatchability requirements in power purchases, regulators should require utility planners to fully evaluate measures for integrating intermittent
renewables from independent developers. A critical task for a national strategy is to reduce the cost per kilowatt-hour of electricity
from renewable technologies to enhance their competitiveness. To address the chicken-or-egg dilemma in marketing
renewables, one must alleviate the uncertainties facing renewable equipment producers regarding future demand. Costs for
several technologies would fall if the federal government coordinated regional and national programs to aggregate renewable
equipment needs of individual utilities into a predictable stream of orders (see Table 1 on this page). (Table 1 omitted)
Need for a National Strategy

Restructuring trends underscore the urgency of developing a national strategy for advancing renewable energy that
coordinates public and private efforts and targets the barriers facing certain technologies. The strategy must be national
because some of renewable energy's benefits--such as the creation of jobs--accrue to states, whereas others--such as slowing
climate change and reducing air pollution--affect much larger areas and groups of people. A national strategy could help
balance the costs and benefits of commercializing and deploying renewable energy technologies at different geographic
scales. Visible and consistent national leadership would guide the development of states' electricity industry policies. Without
federal leadership, state policies on electric utility competition, rate design environmental protection, and demand
management are less likely to benefit the nation as a whole.

In this era of fiscal austerity, the old axiom that there is no free lunch must be taken seriously. The chronic federal budget crisis makes new initiatives that
cost money a hard sell. Many policies recommended here entail only minor government spending, but others can be costly. The need for cost-effectiveness
should underpin all program decisions. Even if one utility engages in a successful collaborative demonstration project with the renewable energy industry,
for example, other utilities in the region may not be interested. The federal government should therefore sponsor such cost-shared projects only in states
where the market and policy environment is conducive to replication--for instance, where the PUC requires utilities to fully account for the attributes of
renewables in resource planning and acquisition.
Policy tools should be designed and implemented to push renewables toward commercial maturity. Accordingly, the implementation period should be ample
and predictable, and any necessary subsidies designed to buffer emerging technologies from extreme market swings without insulating them from all
competition. At the same time, the performance of various strategies must be tracked so that future policymakers and program managers are not in the dark.
With relatively low fossil fuel prices, market forces in the United States are less auspicious for renewable energy development now than they were during the
1970s, Only with a concerted push from high-ranking officials in state and federal government and under the aegis of a
national strategy can the nation ever fully harness the enormous potential of renewable energy.

A Federal RPS is needed to set a clear target for industry research, development and market growth

Kammen, 1 – Professor of Energy and Society Director at the Renewable and Appropriate Energy Laboratory Energy and
Resources Group
(Daniel, FDCH Congressional Testimony, “Energy Tax Incentives,” 7-11-2001, Lexis-Nexis Universe) // JMP

Energy Policy and Financial Recommendations (continued) A Federal Renewable Portfolio Standard (RPS) to Help Build
Renewable Energy Markets
I support a 20 percent RPS by 2020. A number of studies indicate that this would result in renewable energy development in
every region of the country with most coming from wind, biomass, and geothermal sources. A clear and properly constructed
federal standard is needed to set a clear target for industry research, development, and market growth. I recommend a
renewable energy component of 2 percent in 2002, growing to 10 percent in 2010 and 20 percent by 2020 that would include
wind, biomass, geothermal, solar, and landfill gas. This standard is similar to the one proposed by Senators Jeffords and
Lieberman in the 106th congress (S. 1369).

RPS Aff

196

7 Week Juniors – CPHS Lab

A2: States CP – Key to Effective REC

A national RPS is key to the most efficient trading of renewables

Nogee et. al., 7 – energy analyst and advocate for UCS (Alan Nogee, Jeff Deyette, Steve Clemmer, The Electricity Journal,
“The Projected Impacts of a National Renewable Portfolio Standard,” May 2007, lexis-nexis) // AMK

Finally, a national RPS would establish uniform rules for the most efficient trading of renewable energy credits (RECs). This
uniformity could further reduce renewable energy technology costs by creating economies of scale and a national market for
the most cost-effective resources; inducing renewable energy development in the regions of the country where they are the
most cost-effective; and reducing transaction costs, by enabling suppliers to buy credits and avoid having to negotiate many
small contracts with individual renewable energy projects.

National RPS key to effective and efficient REC trading systems

Endrud, 8 – J.D. Candidate at Harvard Law School, Class of ‘08
(Nathan E., Harvard Journal of Legislation, “STATE RENEWABLE PORTFOLIO STANDARDS: THEIR CONTINUED
VALIDITY AND RELEVANCE IN LIGHT OF THE DORMANT COMMERCE CLAUSE, THE SUPREMACY CLAUSE,
AND POSSIBLE FEDERAL LEGISLATION,” Winter 2008, 45 Harv. J. on Legis. 259) // JMP

As Congress considers calls for federal legislation on climate change, one benefit of a national RPS program that it should recognize, besides an increase in the
environmental and energy security benefits that state programs already provide, is the overall efficiency gains that could be provided by the adoption
of a federal program that included a national REC trading system. Such a system would reduce the entry barriers states
considering the implementation of new RPS programs that make use of RECs currently face, reduce the collective overall
costs of state RPS programs through economies of scale, and improve the integrity of REC trading systems by reducing or
eliminating the possibility of intentional or inadvertent double-counting of credits. n148 In fact, given the benefits of consolidation and the
number of states that have already adopted their own RPS programs with tradable credits, n149 Congress should consider establishing a national REC trading system even if it
never establishes federal RPS obligations. Along the same lines, as long as such a federal system seems far off, states should seriously consider developing regional credit trading
systems; existing environmental regional programs, such as the Regional Greenhouse Gas Initiative ("RGGI") cap- [*283] and-trade program for carbon emissions that ten
northeastern and Mid-Atlantic states recently adopted, could provide suitable models. n150

Federal action is critical to enhance the efficiency of State renewable energy credit trading programs

Endrud, 8 – J.D. Candidate at Harvard Law School, Class of ‘08
(Nathan E., Harvard Journal of Legislation, “STATE RENEWABLE PORTFOLIO STANDARDS: THEIR CONTINUED
VALIDITY AND RELEVANCE IN LIGHT OF THE DORMANT COMMERCE CLAUSE, THE SUPREMACY CLAUSE,
AND POSSIBLE FEDERAL LEGISLATION,” Winter 2008, 45 Harv. J. on Legis. 259) // JMP

However, state RPS programs would still provide states with a significant means of providing local environmental benefits beyond the amelioration of global warming. States can
improve the chances of their RPS programs surviving preemption if they tailor them to highlight the provision of such benefits. Congress should consider explicit
authorization of the existence of state RPS programs alongside any federal RPS program or GHG cap that it enacts. In addition, Congress
[*286] should consider establishing a national REC trading system, either as part of a federal RPS program or as an adjunct to a GHG cap-and-trade
system, that could accommodate trading of RECs for state programs' purposes and thus enhance those programs' efficiencies.

RPS Aff

197

7 Week Juniors – CPHS Lab

A2: States CP – Key to Effective REC

Different State definitions of “renewable energy” will prevent an effective interstate renewable energy credit trading
regime

Dr. Sovacool, & Coooper, 7 – *Senior Research Fellow for the Network for New Energy Choices in New York and Adjunct
Assistant Professor at the Virginia Polytechnic Institute & State University in Blacksburg, VA and ** Executive Director of
the Network for New Energy Choices
(Benjamin K. Sovacool, also a Research Fellow at the Centre for Asia and Globalization at the Lee Kuan Yew School of
Public Policy and Christopher Cooper, Electricity Journal, “Big Is Beautiful: The Case for Federal Leadership on a National
Renewable Portfolio Standard,” May 2007, vol. 48, no. 4, Lexis-Nexis Academic) // JMP

C Third sin: Hampering interstate trade

Contradictory and imprecise definitions of "renewable energy" in state RPS mandates make deciding what qualifies as a
"renewable energy credit" exceedingly difficult. State-by-state differences and restrictions have splintered the national
renewable energy market into regional and state markets with conflicting rules on the treatment and value of RECs. The state-by-
state approach to RPS is also creating unanticipated difficulties to the expansion of distributed generation technologies.
In just the Northeast, for example, the electricity wholesale market is controlled by three independent system operators - ISO-NE (New England), NYISO (New York), and PJM
(13 mid-Atlantic states). In August 2005, PJM launched its Generation Attribute Tracking System (GATS) to monitor RECs between
PJM member-states. While GATS will help facilitate a robust REC trading market between PJM members, its convoluted rules hamper REC trading
outside of its geographically defined service area.

Generators external to PJM, for instance, are allowed to trade RECs in the GATS market, but must qualify for one of the RPS policies of a PJM member state and must be
physically located adjacent to PJM geographical boundaries. However, some PJM member states (Delaware, Maryland, and DC) impose an additional requirement that the
electricity from renewable generators outside of PJM be imported into the territory in order for external generators to freely trade RECs within their states.20
PJM member states also differ conspicuously in their treatment of RECs from generators within the service area. In Maryland and Pennsylvania, generators are allowed to bank
their RECs for up to two years after the year of generation. But in Rhode Island, generators may only bank up to 30 percent of their compliance total (and then only if the banked
RECs are in excess of the compliance total in the year of generation).
Contributing to the complexity, ISO-NE has its own REC trading market supported by the Generation Information System (GIS). GIS sets stringent limits on who can trade within
the ISO-NE region, regardless of the individual state RPS policies. GIS also requires that generators operate in control areas that are directly adjacent to ISO-NE, further distorting
the REC trading market. Generators in NYISO, for example, can trade RECs in Massachusetts, but generators in PJM cannot. Connecticut further restricts REC trading to
generators actually within ISO-NE, but, to complicate matters even more, that restriction may expire in 2010.

RPS Aff

198

7 Week Juniors – CPHS Lab

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