PSC Sets Renewable Standard Favored by Enviros

January 9, 2009

By KEITH LAING- THE NEWS SERVICE OF FLORIDA

TALLAHASSEE - In the tussle over how soon power companies should drastically increase the amount of electricity they produce using renewable energy, the Florida Public Service Commission ultimately sided with environmentalists.

After months of contentious debate, the PSC voted unanimously Friday to recommend that the Legislature require the state's publicly-regulated utilities to increase the amount of renewable energy they use by 20 percent by the end of the year 2020, the deadline favored by Gov. Charlie Crist and a wide variety of clean energy advocates.

To reach that goal, the commission decided to adopt a schedule that begins at the end of 2012, when utilities would be required to have increased the amount of renewable energy they use by at least 7 percent. The requirement would then increase to 12 percent by the end of 2015 and rise again to 18 percent by the end of 2018 before reaching 20 percent by the end of 2020.

Despite the PSC's repudiation of the alternative deadline of 2041 recommended by the commission's staff, chairman Matthew Carter said the staff was going out of its to keep electricity costs low.

"If a more aggressive approach is called for, then it is our job as appointed officials to say so," Carter told the commission before they reached their conclusion. "I say today that I believe we must embrace more ambitious goals than those set forth by our staff. I also believe that such an aggressive standard must be tempered by appropriate revenue caps that are both protective of the ratepayer and cognizant of the challenges that will be faced by very different utilities."

Commissioner Lisa Edgar agreed that 2020 was the appropriate deadline, but acknowledged it was an ambitious target.

"I see it is a stretch goal, but I also see it as part of the purpose," Edgar said.

Also at issue throughout the months of hearings and workshops was whether the state should favor particular renewable energy types - wind and solar - in its investment and whether spending should be capped if electricity prices rise.

Utilities and consumers groups were in favor of low caps and did not support set-asides for any technology, preferring instead to invest in whichever method proved most cost effective. Environmentalists are argued that those technologies that had the most long-term growth potential should receive the most funding and they argued for more lenient cost caps.

Additional discussion centered on how the state should enforce any standard it adopted, whether or not utilities should be allowed to make their own renewable energy for compliance or buy energy produced in other states, and whether clean technologies that are not obviously renewable, such as nuclear, should be counted. The commission also considered whether it should send one proposal to the Legislature or provide them options, leaving key decisions up to elected officials.

The commission decided to leave the nuclear decision up the Legislature, which will act on its recommendation in the spring.

On the rest of the issues though, the PSC split the difference between the competing interests of environmentalists, power companies and consumers. The commission approved the carve outs for wind and solar and also voted to recommend on adjustable investment cap that would start at 2 percent, saying the state should stop investing in a particular technology if consumers bills increase by that amount, but leaving itself flexibility to reconsider the breaking point later.

The initial cap the commission decided on was higher than the 1 percent cut off point originally recommended by its staff and supported by consumer advocacy groups like AARP.

The 2 percent starting point was as acknowledgment of concerns from the environmental lobby about cutting off clean technologies at the knees before they can fully develop. But the decision to implement a rate cap at all was a nod to the argument from utility and consumer groups that the long term benefit of renewable energy investment could not achieved without short term billing pain.

PSC Commissioner Nancy Argenziano said the panel had no choice but to walk that fine line.

"People are saying the lowest costs are very important at a time when people are losing their homes," Argenziano said during the commission's debate on the standard.. "We all know it is, but how do you uphold the mandate to improve environmental conditions if the lowest cost may not get you to...a cleaner environment. You have to weigh these things."

That's why Argenziano said the commission should not base its decision solely on costs

"While I'm very concerned with cost, if there's a proposal that invites the lowest cost at all expenses than we are not sticking to the mandate that we have," Argenziano said.

But that explanation was not enough to prevent consumer advocacy groups from disliking the PSC's decisions. Going with the 2 percent investment cap instead of 1 will cost customers $190 million a year, said AARP lawyer Mike Twomey. The senior citizens advocacy group is weighing in on the issue on behalf of its members.

"We wanted as small an economic hit to ratepayers as possible in a time of economic collapse," Twomey said. "The impact on the customer in a time when there are record disconnections and foreclosures will now be twice as much."

Twomey said AARP also took issue with the PSC's decision to include the solar and wind set-asides in their recommendation to the Legislature, preferring instead to let the various technology types to compete for state investment.

Prior to reaching their decision, the PSC had considered sending two proposals to the Legislature. Argenziano repeated her call for sending alternative proposals to the Capitol to allow elected officials to decide the technicalities of the standard.

"Some said that sending only one (rule) is what we should do because that's what the Legislature mandated us to do," Argenziano said. "That is not how I see that. I see we come up with a framework. What we've done...is create thought provoking provisions that need to be considered by the policymakers."

But environmentalists argued for one standard.
"The Legislature didn't ask for recommendations," said George Cavros, an attorney for the Southern Alliance for Clean Energy. "They asked for a rule. It wasn't plural, it was singular."

The PSC's vote followed endless back and forth between environmentalists, who said the PSC staff's proposal of not requiring the increase until 2041 was too timid, and power companies and consumer advocacy groups, who said the number concern about renewable energy should the cost to customers.

Prior to Friday's vote, environmentalists said they expected its outcome. Their optimism was in part buoyed by a feasibility study that the PSC requested from a consulting firm, which showed utilities could increase the amount of renewable energy they produce by 20 percent by the year 2020 without breaking the bank. With that knowledge, the PSC seemed poised to come down closer to the former deadline than the later, advocates said.

The PSC vote was the second large victory for environmentalists in as many months. In December, advocates successfully lobbied the Environmental Regulation Commission to make Florida's auto emission standards among the nation's strongest by recommending the Legislature boost state requirements to match standards enforced in California since the 1990s.

Despite the environmentalists' victory before the PSC, the battle over renewable energy standards for power companies and cars is far from over. The debates will now move to the Legislature, which will take them up in its regular session.