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Renewable Electricity Standard

Eligibility 
Investor-Owned Utility
Savings Category 
Fuel Cells using Renewable Fuels
Photovoltaics
Program Info
State 
Missouri
Program Type 
Renewables Portfolio Standard
Provider 
Missouri Public Service Commission

In November 2008, voters in Missouri enacted Proposition C, a ballot initiative that repealed the state’s existing voluntary renewable energy and energy efficiency objective and replaced it with an expanded, mandatory renewable electricity standard of 15% by 2021. The standard also contains a solar electricity carve-out of 2% of each interim portfolio requirement meaning that by 2021, 0.3% of retail electricity sales must be derived from solar electricity.

Like the prior voluntary objective, the new standard applies only to the state’s investor-owned utilities* and does not place any requirements on municipal utilities or electric cooperatives. Energy efficiency measures are no longer eligible to be counted towards compliance with the standard, although sections directing state policy to “encourage” energy consumption reduction remain in effect.

The definition of eligible renewables was revised in July 2010 (S.B. 795) to include additional resources. Eligible renewables are now defined as electricity produced using solar photovoltaics; solar thermal; wind; small hydropower; biogas from agricultural operations, landfills and wastewater treatment plants; pyrolysis and thermal depolymerization of waste materials; various forms of biomass; fuel cells using hydrogen from renewable resources; and other renewable-energy resources approved by the Missouri Department of Natural Resources (DNR). Waste materials are defined as materials "specifically segregated materials from a waste stream for the purposes of producing energy or that are capable of producing energy." It is important to note that this definition does not include all municipal solid waste (MSW) technologies, though some MSW technologies may be eligible if powered by waste materials as defined in the administrative rules. Eligible hydropower facilities must have a generator nameplate rating of 10 megawatts (MW) or less and not require new water diversions or impoundments. Cofiring is permitted, but only the percentage of electricity generated by an eligible renewable resource can be counted towards a utility's renewable energy obligation. Pumped storage hydropower and nuclear energy are specifically identified as ineligible.

The standard sets the following minimum benchmarks for electric utilities based on annual electricity sales:

  • 2% from 2011 to 2013 (0.04% solar)
  • 5% from 2014 to 2017 (0.1% solar)
  • 10% from 2018 to 2020 (0.2% solar)
  • 15% for 2021 and thereafter (0.3% solar)

Compliance with the objective can be achieved through the procurement of renewable energy or renewable energy credits (RECs). A REC may be used for compliance with the standard for up to 3 years after the date it is generated. RECs can be used for compliance for the calendar year in which it expired as long as it was valid during some portion of the year. Solar renewable energy certificates (SRECs) may be used to comply with the solar standard, or with the portion of the standard not specifically devoted to solar resources. A utility is permitted to retire RECs for compliance with standard for up to three months after the end of the compliance year (i.e., the calendar year). However, no more than 10% of the compliance obligation may be met in this way and the RECs retired must have been generated prior to the end of the compliance year. In-state renewable energy generation receives a multiplier of 1.25 compared to out-of-state generation (i.e., in-state generation is worth 25% more for compliance purposes). The revised rules contain no geographic or electricity delivery requirements for eligible resources. Owners of net-metered systems retain title to RECs derived from energy produced by the system unless they choose to transfer them.In January 2012, the PSC [http://pre.psc.mo.gov/orders/2012/012512255.htm opened Case EW-2012-0255] to review the rules for the standard.

The law requires utilities with renewable energy obligations under the standard to offer rebates of at least $2 per watt for customer-sited solar electric systems of 25 kilowatts (kW) or less beginning in 2010. Systems of 100 kW or less qualify for rebates on the first 25 kW of installed capacity. Beginning in June 2014, the rebate will decrease annually until the rebates are phased out on June 30, 2020. Utilities own the RECs of any system that receives a rebate.

Utilities are also permitted, but not required, to offer standard offer contracts for the purchase of SRECs produced by a customer-generator system. Any SRECs purchased through standard offer contracts may not be sold or traded but may be used to comply with the standard.

Under the statute the PSC, in consultation with the DNR, was required to select an REC tracking and verification program within one year of the standard’s enactment. In January 2010 Missouri selected the [http://narenewables.apx.com/ North American Renewables Registry] for this purpose. Utilities must use this system for REC accounting purposes unless they apply for and receive a waiver from the PSC for "good cause shown". Utilities may be excused from their obligation by the PSC for events beyond their control or if the cost of compliance with the standard increases retail electricity rates by more than 1% in any year. If the 1% cap is exceeded, the annual renewable energy obligation will be adjusted downward to a point where the cap is not violated.

Utilities are required to file compliance plans by April 15th each year describing how they will meet the standard for the current year and the two subsequent years. Utilities are also required to file annual reports demonstrating compliance with the standard by April 15 after the most recently completed year. The 2011 Compliance Reports are available [http://psc.mo.gov/electric/renewable-energy-standard-reports/renewabe-en... here]. Utilities that do not meet their renewable and solar portfolio obligations under the standard are subject to penalties of at least twice the market value of RECs or SRECs. The revenue associated with such penalties will be used by the DNR to purchase RECs or SRECs to offset the shortfall, with any excess revenue used to fund renewable energy and energy efficiency projects. Costs associated with non-compliance penalties may not be recovered from ratepayers.

'''History'''
In June 2007 Missouri enacted [http://www.senate.mo.gov/07info/pdf-bill/tat/SB54.pdf S.B. 54], creating a voluntary renewable energy and energy-efficiency objective for the state's investor-owned utilities. The objective required each utility to make a "good-faith effort" to generate or procure renewable electricity equivalent to 4% of total retail electric sales by 2012, 8% by 2015, and to 11% by 2020. Utilities could also receive credit towards the objective for verifiable reductions in energy consumption resulting from measures implemented by utilities and electricity consumers.

''*Prior to Proposition C ballot initiative, in July 2008 the Missouri legislature enacted legislation ([http://www.senate.mo.gov/08info/pdf-bill/tat/SB1181.pdf S.B. 1181]) providing an exemption from the (yet to be enacted) solar energy standard and solar rebate offer requirement for any utility that had achieved eligible renewable energy technology nameplate capacity equal to or greater than 15% of the utility's total owned fossil-fired generating capacity by January 20, 2009. Empire District Electric, one of Missouri's four investor-owned utilities, has indicated that it qualifies for this exemption. The 1% retail cost cap for the standard was also contained in this legislation.''