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The Texas Renewable Energy Program

The Texas Renewable Energy Program. National Governors Association Scottsdale, Arizona April 29, 2004. Overview of Renewable Energy Program. Comprehensive retail competition legislation enacted in 1999 Fixed goal for renewable energy Market-based mechanism to support efficient deployment

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The Texas Renewable Energy Program

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  1. The Texas Renewable Energy Program National Governors AssociationScottsdale, ArizonaApril 29, 2004

  2. Overview of Renewable Energy Program • Comprehensive retail competition legislation enacted in 1999 • Fixed goal for renewable energy • Market-based mechanism to support efficient deployment • Transmission policies support renewable energy • Results: emission reductions and economic development

  3. 1999 Retail Customer Choice Legislation • Customer choice for investor-owned utilities begins January 1, 2002 • Neutral organization responsible for reliability, transmission access, and settlement of wholesale market • Recovery of stranded costs • Price protections for residential and small commercial customers

  4. Other Legislative Issues • Cleaner air • Renewable resources • Energy efficiency • Retrofit older power plants • Broad customer protection rules • Slamming • Cramming • Single bill • Clear information for comparison of offers

  5. Texas Electric Competition PGCs Transmission and Distribution Generation Retailer End User REP REP Regulated Open Access CompetitiveProduction Competitive Sales

  6. Renewable Energy • Additional 2,000 MW of generating capacity from renewable energy technologies by 2009 • Renewable energy credit (REC) trading program • Solar, wind, hydro, geothermal, wave, tidal, biomass, landfill gas

  7. Renewable Energy Credits Generation Retailer End User Power and RECs REP Purchase Price of Power and RECs Earn RECs for Production Required to Retire RECs

  8. Transmission Policies • Regional postage-stamp rate • Distance not a factor in rate • Multiple utilities do not charge multiple rates • Standard interconnection agreement • Transmission upgrades rolled into regional rates • Neutral planning organization

  9. Results • 1350 Mw of new capacity • Wind 1300 • Landfill gas 30 • Hydro 10 • 3 million Mwh of electric energy • RECs retired in 2002 : • 1.2 million for compliance • 240,000 for renewable energy sales • 300,000 Mwh of energy saved through energy efficiency programs

  10. Customer Impact • Residential default rates have been about 10 cents/kwh • Annual electric bill for residential customer about $1500 • Mandatory REC ratio of about 1.5% • Annual cost of required RECs about $3.00

  11. Environmental Impact Based on emissions profile for gas generating facilities in 2000, renewable resources reduced emissions: • 5.7 million pounds of NOx • 147,000 pounds of SO2 • 3.4 billion pounds of CO2

  12. Environmental Impact of All Measures Generating fleet in Texas got cleaner from 1998 to 2002: • 14% reduction in NOx rate • 22% reduction in SO2 rate Additional improvement after 2000: • State Implementation Plans • Statutory mandate to reduce NOx and SO2emissions • New, cleaner generating plants

  13. Economic Impact • $12 M in taxes for 10 rural school districts • 14% increase in Pecos County tax base • 1200 construction jobs in 2001 • 1200 jobs in service, manufacturing, transportation • $2.5 M in royalties to landowners

  14. Consequences of REC Approach • Competitive producers decide what and where to build • Projects typically have been located where resource has an advantage • Producers have emphasized large wind projects and landfill gas • Insufficient incentive for high-cost technologies, such as solar • RECs support competitive offers of renewable energy products

  15. Consequences of Transmission Policy • Easy to interconnect new generation • Distance not a factor in competitiveness of generators • Projects typically located where resource has an advantage • Over-building of wind generation in favorable areas led to congestion • Meeting statutory goal will require significant transmission investment

  16. Amarillo Dallas Abilene El Paso Austin Houston San Antonio Corpus Christi SPP New Electric Generating Plants in Texas Since 1995 6 47 Tarrant and Dallas Counties Kiowa, OK 58 96 133 135 136 118 125 Wind site Undetermined (ERCOT) 22 112 21 95 137 SPP 93 72 32 75 77 122 11 107 132 Ellis County 106 98 63 39 65 57 24 49 52 44 3 59 7 10 66 34 85 102 104 83 M1 115 134 89 18 103 28 38 110 51 121 9 ERCOT 29 80 WECC 79 8 86 46 113 62 35 45 SERC 33 23 97 124 1 67 94 117 101 43 Jefferson County 31 100 15 54 131 53 37 74 71 48 123 60 50 26 16 127 99 92 130 78 68 Harris County 64 81 5 20 36 116 126 Brazoria County 25 40 41 56 68 projects completed 29,375 MW 4 12 27 14 19 61 70 73 82 84 91 55 6 projects under construction 2,483 MW 119 120 76 88 90 14 projects announced 7,108 MW 109 105 111 Travis County 114 128 129 15 projects delayed 8,212 MW 30 69 42 108 87 138 13 11 projects cancelled 7,349 MW 17 04-15-04 2 24 facilities: 7,296 MW mothballed; 1,211 MW retired

  17. For More Information • REC administrator--ERCOT • www.texasrenewables.com • PUC • Statute—PURA 2003 §39.904 • www.puc.state.tx.us/rules/statutes/index.cfm • Regulations—Subst. Rule 25.173 • www.puc.state.tx.us/rules/index.cfm

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