20090330ICIP Brief on Reconsideration.pdf

Peter J. Richardson ISB 3195
RICHARSON & O'LEARY PLLC
515 N. 27th Street
PO Box 7218
Boise, Idaho 83700
Telephone: [phone]
Fax: [phone]
peter~richrdsonandoleary .com
Attorneys for the Industrial Customers of Idaho Power
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2U09 MAR 30 PM~: 18
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF)
IDAHO POWER FOR AN ORDER )
AUTHORIZING THE RETIREMENT OF ITS )
GREEN TAGS )
)
)
)
)
)
CASE NO. IPC-E-08-24
BRIEF ON RECONSIDERATION OF
THE INDUSTRIAL CUSTOMERS OF
IDAHO POWER
COMES NOW, the Industrial Customers of Idaho Power ("ICIP") by and through its
attorney of record, Peter J. Richardson, and pursuant to Order No. 30743 issued in the above
captioned docket hereby lodges its Brief on Reconsideration.
I INTRODUCTION
The Commission's order granting reconsideration asked the parties to address six discreet
issues. Each is addressed below. First, some background may be helpful to the Commission in
understanding green tag markets. Green Tags are also known as Renewable Energy Certificates,
Tradable Renewable Certificates or Renewable Energy Credits. Green tags are a tradable
environmental commodity with represent proof that one megawatt hour of electricity was
irneratpil from an elii!Ihlp r.newahle. enemv resurce. The-lhaser of a Green Tag has
"triet on"ReconsiäeratlOrfffñe Ihdilstrià1 Custon1ts ot Idaho Power lJ'C-E-UlFl4
1
purchased nothing more than the right to publically assert that it has purchased renewable energy
attributes. Green Tags have no physical properties - they are essentially bragging rights.
There are two distinct markets for Green Tags. The first market is the voluntary market.
The voluntary market may be broken down into two categories, verified and unverified. A
purchaser of an unverified Green Tag has no assurance that it is paying for the generation of a
megawatt of renewable energy. Therefore there is essentially no market for unverified Green
Tags - an unverified green tag can be likened to blue sky in a securities sense. The volunta
verified Green Tag market does exist. For example if a coffee shop or chain of book stores
whishes to advertise it is buying green power it will purchase a Green Tag that has been
independently certified or verified by someone other than the seller. The leading entity for
certification of voluntay Green Tags is known as Green-e.
The second market for Green Tags is the Mandatory market. This market is created by a
state mandate that requires an electric utility to meet a Renewable Portfolio Stadard (RPS). An
RPS is a mandate that a utility achieve a certin amount of generation capacity from renewable
resources by a date certin. All states that have an RPS permit the utilities to meet that standard
by building and owning renewable generating resources. Most states also allow the utility
subject to an RPS to meet that standard by buying Green Tags from third party generators.
When a utility buys a Green Tag from a third part generator in order. to comply with its RPS, it
is paricipating in the mandatory Green Tag market. See the map attached as Exhibit 1 for a list
of states with RPS requirements and the percentage of each utility's load that must be met with
renewable energy.
Each state that has created an RPS has its own unique standards that must be met. For
example, the way hydro electric power is treated varies - with some states allowing small hydro
Brief on Reconsideration of the Industrial Customers ofIdaho Power IPC-E-08-24
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and other states excluding hydro power from counting towards meeting that state's RPS. Each
state also specifies the method that compliance with the RPS though the purchase of a Green Tag
is accomplished.
II
SHELF LIFE OF A GREEN TAG
The Commission's first issue:
. The concept of "shelf life" for a Green Tag that is neither retired or sold
The issue identified as "shelf life" of a Green Tag is also known as Green Tag "baning."
Baning is not allowed by Green-e. That is, there is a distinct shelflife ofthe green attibute
after which Green-e wil no longer certify the environmental attibute ofthe Green Tag - making
its value equate to a non-verified Green Tag which is essentially zero. See Green-e Energy
National Stadard Version 1.5 Rule III B "Vintage of Eligible Renewables" which provides:
A Green-e certifed product may include only renewables that are generated in the
calendar year in which the product is sold, the first three months of the following calendar year,
or the last six months of the prior calendar year.
In the mandatory marketplace, the issue is less clear cut because the mandatory market is,
in reality 28 unique markets. That is because the standards and specifications for each state RPS
may be quite different. Looking at the largest market, however it is clear that banng is
prohibited. The California PUC issued rulemaking last year that limited the baning of a Green
Tags to three years, after which no utility in California would be able to purchase it to satisfy its
RPS. See Docket No. 06-08-012 "Order Instituting Rulemakng to Develop Additional Methods
to Implement the California Renewables Portfolio Standard Program." WREGIS, the
mandatory tracking entity for Green Tag sales in Californa, will not certify a Green Tag for
Brief on Reconsideration ofthe Industrial Customers ofIdaho Power IPC-E-08-24
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meeting California's RPS that is more than three years old. One should be aware that a four year
old Green Tag stil "exists"; it is just that it can't be sold to satisfy the Californa mandatory
Green Tag market.
It is plausible, but highly unlikely, that a four year old Green Tag could be sold on the
voluntar market - even if it is certified by WREGIS. For ilustration sake, I have attached as
Exhibit 2 a Green Tag price sheet published by a Green Tag brokerage house for last Thursday.
According to the price sheet, baned green tags in the volunta market would only have value to
this brokerage house if they are no older that the "back haW' of 2007 - which I take to mean the
last six months of2007. Note also that none of the quoted market prices in the mandatory
("compliance") market are quoted that are older than 2008.
III
FEDERAL AND STATE STANDARDS
The second issue the Commission asked to be addressed is:
. Federal and/or state guidelines regarding shelf life
As noted above, the California PUC has promulgated a rule prohibiting baning of Green
Tags for more than three years. The State of Oregon curently has a rulemaking docket open in
which the question of banking will be resolved. The Oregon Staffs proposed rules would
prohibit baning Green Tags for more than one year. See In the Matter of a Rulemakng to
Implement SB 838 Relating to Renewable Portfolio Standard, Docket No. AR 518. Although
there is a curent rulemaking on the issue in Oregon, it should be noted that that State's RPS does
not, at this time, impose a restriction on Green Tag "baning". Washington State places a one
year limit on banng. Montaa has a two year limit on baning. In summar, it is clear that the
Brief on Reconsideration ofthe Industrial Customers ofIdaho Power IPC-E-08-24
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value to the marketplace diminishes the older a Green Tag becomes. In order to prudently
maximize the sales prices a Green Tag should be sold not be held for long before it is marketed.
IV
VALUE OF TODA Y'S GREEN TAGS
According to the attched brokerage price sheet the monetay value of a WECC Green-e
Certifiable Wind Green Tag would have had the following values as of March 26,2008:
Back Half 2007
Front Half 2008
Back Half 2008
Front Half 2009
Back Half 2009
0.70 to 1.50
0.80 to 1.50
4.75 to 5.75
5.75 to 8.25
6.25 to 9.25
The estimate in Idaho Power's application appears to be on target - around $5.00 a Green
Tag for 2008 generated Green Tags. However, it appears there is also a market for 2009 Green
Tags that is much more robust - which validates the observation noted above that as a Green Tag
ages it loses its value.
V
IMPACT ON CUSTOMERS' BILLS
The next issue the Commssion asked to be briefed is:
. The differential that such value would have if credited back to each
ratepayers' bil (i.e., what difference an individual ratepayer would see in his
or her bil if the Green Tags were sold and credited back to the ratepayers)
and the amount of time that such credit would be in place
Dr. Reading did a calculation at the request of the industrial customers to quantify the
reduction in retail rates the customers ofIdaho Power would enjoy if the Green Tags were sold
using Idaho Power's estimate in its Application. The rate reduction would be approximately
thee tenths of one percent. The ICIP recommend that Idaho Power be ordered to manage its
Green Tag portfolio to maximize its value to the ratepayers for as long as a market for Green
Brief on Reconsideration of the Industrial Customers ofIdaho Power IPC-E-08-24
5
Tags exists or until it is mandated to acquire and retire said Green Tags in order to comply with a
mandatory RPS.
VI
IMAGE ADVERTISING
As argued in the ICIP's Petition for Reconsideration, it is the position of the ICIP that
retiring Green Tags so that the Company can promote itself as a green utilty is, indeed, image
advertising. Idaho Power did not file an answer to the ICIP's Petition and the ICIP has not
changed its position since the date it file its Petition for reconsideration. No other pary
responded to the ICIP's position and therefore the ICIP hereby reasserts and incorporates by
reference its arguments made it its Petition for Reconsideration on this issue.
Respectfully submitted this 30th day of March, 2009.
RICHARDSON & O'LEARY PLLC.:"W rBY~.
Peter J. Richardson
Attorneys for the Industrial Customers of
Idaho Power
Brief on Reconsideration of the Industrial Customers ofIdaho Power IPC-E-08-24
6
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CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the30th day of March, 2009, a tre and correct copy of the
within and foregoing BRIEF ON RECONSIDERATION OF THE INDUSTRIAL CUSTOMERS OF IDAHO
POWER, was served in the maner shown to:
Ms. Jean Jewell
Commssion Secreta
Idao Public Utilities Commssion
POBox 83720
Boise, il 83720-0074
X Hand Delivery
_ U.S. Mail, postage pre-paid
Facsimile
Electronic Mail
Lisa Nordstrom
Baron L. Kline
Idaho Power Company
PO Box 70
Boise, Idaho 83707-0070
lnordstrom(ßidahopower .com
bkline(ßidahopower .com
X- Hand Delivery
_U.S. Mail, postage pre-paid
Facsimile
Electronic Mail
Mark Stokes
Karl Bokenkamp
Idaho Power Company
PO Box 70
Boise, Idaho 83707-0070
mstokes(ßidahopower .com
kbokenkamp(ßidahopower.com
L Hand Delivery
_U.S. Mail, postage pre-paid
Facsimile
Electronic Mail
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Administrative Assistant