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The Alternatives

Pressure is building for Oregon to require electric utilities to use substantially more renewable energy, such as wind and solar, to power homes and businesses. But a debate looms over whether such a mandate is needed -- or whether it might drive up monthly utility bills.

Already, 19 states, including Oregon's heavyweight neighbor California, are operating under what are known as renewable portfolio standards, and others are positioning themselves to join the group.

California, with its prodigious appetite for energy, plans to get 20 percent of its electricity from renewables by 2017, and utilities there are surveying the Northwest for purchases.

In Washington state, which consumes roughly half of the Northwest's electricity, an initiative on the November ballot seeks a renewable energy requirement of 15 percent by 2020.

"The handwriting's on the wall," said Jason Eisdorfer, an attorney with the Oregon Citizens' Utility Board, which represents residential ratepayers of the state's largest utilities, Portland General Electric and PacifiCorp. "Politically and philosophically, it's the direction we're going."

Rising oil and natural gas prices, combined with environmental concerns about carbon dioxide emissions from coal- and gas-fired plants, have turned up the heat on the quest for new ways to meet growing demand for electricity.

In Oregon and the Northwest, a green ethic and decades of experience with the granddaddy... more [truncated due to possible copyright]  

Already, 19 states, including Oregon's heavyweight neighbor California, are operating under what are known as renewable portfolio standards, and others are positioning themselves to join the group.

California, with its prodigious appetite for energy, plans to get 20 percent of its electricity from renewables by 2017, and utilities there are surveying the Northwest for purchases.

In Washington state, which consumes roughly half of the Northwest's electricity, an initiative on the November ballot seeks a renewable energy requirement of 15 percent by 2020.

"The handwriting's on the wall," said Jason Eisdorfer, an attorney with the Oregon Citizens' Utility Board, which represents residential ratepayers of the state's largest utilities, Portland General Electric and PacifiCorp. "Politically and philosophically, it's the direction we're going."

Rising oil and natural gas prices, combined with environmental concerns about carbon dioxide emissions from coal- and gas-fired plants, have turned up the heat on the quest for new ways to meet growing demand for electricity.

In Oregon and the Northwest, a green ethic and decades of experience with the granddaddy of renewables, hydropower, could warm the region's embrace of portfolio standards.

Nevertheless, many inside and outside the energy industry are leery of using mandates to promote development. Some business groups and utilities say a government-crafted order could force the building of too many wind farms, solar systems and the like and drive up consumer rates. Progress already is occurring, they say -- witness the wind turbines popping up in the Columbia River Gorge -- as companies respond to market forces.

The debate is all but certain to demand the attention of the 2007 Legislature, say renewable-energy advocates and energy experts, who already have begun exploring what a bill might look like.

If the Legislature doesn't act, an initiative effort probably would arise, they say.

Oregon proposal

Generally, renewable portfolio standards require utilities to add certain percentages of renewable, or easily replenished, power to their mix. Often, the policies call for incremental gains, then a final goal of 4 percent to 20 percent in a decade or so.

Beyond the basics, differences abound. Time frames, penalties for noncompliance, consumer protections all vary. Some standards say only "clean" renewables, such as wind and solar, qualify. Some count existing resources, such as hydropower. Some recognize only new forms of renewables.

In Oregon, Gov. Ted Kulongoski might be the furthest along in defining a portfolio standard for the state. He calls it his "25 x 25 plan." Under the concept, patterned after a national drive, 25 percent of the state's electric energy would come from renewables by 2025.

Details have yet to be drafted, although Kulongoski has said he wouldn't count hydro, which makes up 44 percent of the state's mix today. Non-hydro renewable energy -- wind, geothermal, biomass and solid waste -- contributes 4 percent.

Most states with standards outline shorter time horizons and more modest requirements than Kulongoski proposes.

The governor, a Democrat running for re-election this fall, admits his plan is ambitious, but he said it's necessary, given the threats of fossil-fuel dependency and global warming.

"There's a real need to be bold, to position Oregon as a leader in this," said Charlie Burr, a spokesman for Kulongoski.

Ron Saxton, the Republican challenger to Kulongoski, bluntly characterizes the 25 x 25 plan as "a gimmick." Saxton said he would depend on incentives geared toward further development of renewable energy and related businesses -- Oregon's energy tax credit is an example of the kind of aid he would back -- but not mandates.

"Just yelling and demanding something doesn't make it happen," he said.

Regardless, plenty of discussions are under way. A working group assembled at Kulongoski's request is charged with crafting a proposal to present to the Legislature.

Members include representatives of utilities, consumer groups, the energy industry, the environmental community and industrial businesses.

Details, details

Support for a portfolio standard within the group ranges from enthusiastic to tepid. The discussion's defining characteristic is a long list of questions about details.

"Renewable portfolio standards are harder than simply saying 'x percent,' " said Eisdorfer of the Citizens' Utility Board (CUB). "They can get very complex."

Generally, local experts say, renewable energy refers to such sources as wind, solar, geothermal, landfill gas and wave or tidal power. But caveats abound.

Take hydropower.

Clearly, water is a renewable energy source. But most advocates of an Oregon standard, including CUB and Kulongoski, say any requirement should apply only to new renewables, not to those that the state has relied on for years.

Otherwise, they argue, the state would need a much higher standard to aggressively nudge utilities away from fossil fuels. Coal- and natural gas-fired power plants produce almost half of the electricity the state consumes.

While more dams aren't an option, given environmental concerns, many utilities are contemplating improvements to existing facilities. Should these upgrades count if they increase production? So far, there's no consensus.

Arguments crop up too over biomass -- organic materials burned to produce electricity -- because some fuels are considered environmentally tainted. Questions arise, for example, over whether wood from roadless areas or old-growth forests should count.

Then there are questions about whether portfolio standards should limit renewable energy purchases to Oregon or the Northwest, or whether broader boundaries should rule.

And what about renewable energy certificates, or green tags, which represent purchases of renewable energy and companies can trade? Would their use thwart development of local projects?

Even the method for measuring electricity is open to debate.

Many experts say electricity consumed on an annual basis, expressed in "average megawatts," should be the foundation for any requirements. Others say capacity -- the maximum power that a state's electrical system can produce -- is a better yardstick.

California factor

Advocates in Oregon pay particular attention to the 14 states interconnected by the West's electricity grid, known as the Western Systems Coordinating Council.

They have their eyes especially on California and the Northwest states, where electricity routinely flows among utilities, marketers and traders.

Some worry about the might of California, where lawmakers established a comparatively aggressive standard in 2001. Pacific Gas & Electric, which serves most of Northern California, recently began looking for a new round of renewable energy purchases -- its fourth since the portfolio standard was put into place. For the first time, it's seeking sites for development of its own projects, most likely wind.

If Oregon doesn't establish its own requirements, advocates argue, it might find its southern neighbor snapping up the best wind-power projects, leaving little for locals.

"We don't want to become California's energy park," said Troy Gagliano, an analyst with the Renewable Northwest Project and a member of Kulongoski's working group.

If Washington voters pass a portfolio standard in November, the pressures could mount, he warned.

"Oregon's caught in between," he said. "On both sides, they're looking to see what we've got."

Rate debate

Arguments over whether Oregon needs to play defense with a renewable energy requirement of its own are certain to escalate. But the biggest battle most likely will rage over whether mandates mean higher utility bills.

Dick Adams, executive director of PNUCC (Pacific Northwest Utilities Conference Committee), a group of investor-owned and public utilities, is among those worried about rising electricity costs.

"When you have a mandate to develop particular resources, what does that do to price?" said Adams, also a member of the governor's working group. "It drives it up."

The rate debate threatens to pit business groups against environmental advocates and big utilities against small.

PGE and PacifiCorp, which together serve 70 percent of Oregon's electricity consumers, say they might agree to a standard, if designed correctly and applied to all utilities in the state. But smaller public utilities worry that a requirement could force costly purchases, eroding the advantages of the cheap hydropower those utilities receive from federal power marketer Bonneville Power Administration.

Those who support portfolio standards say they're ready to refute any arguments about costs. Wind energy, destined to play a major role in the pursuit of more renewables, already is priced competitively with natural gas or coal, particularly if the environmental costs of fossil fuels are worked into the equation, they contend.

"We see a renewable portfolio standard as a way of building a market that will cause a big influx of development, and with that competition, it will drive prices down," said Marc Krasnowsky, communications director of NW Energy Coalition, one of the sponsors of the Washington initiative.

Gail Kinsey Hill: 503-221-8590, gailhill@news.oregonian.com

 


Source: http://www.oregonlive.com/b...

AUG 13 2006
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