The Public Utility Commission (PUC) of Texas has issued proposed rules to encourage the development of renewable resources other than wind, through a "carve-out" in the state's Renewable Portfolio Standard (RPS). The carve-out would essentially require retail electric providers to meet a minimum percentage of their sales using non-wind-based renewable resources, such as solar, geothermal, and biomass power.
The PUC's draft, officially called a proposal for publication, does not represent set policy at this time. It will be subject to a formal comment period over the next several months where stakeholders and the public can give their viewpoints on it. The Commission has indicated that it won't act on the proposal until after the upcoming Texas legislative session, where non-wind RPS bills are likely to be introduced (as they have been in past years). However, with both redistricting and a Sunset Commission review of the PUC dominating this upcoming legislative session, it's not clear if lawmakers will have time for other bills such as a non-wind RPS.
The PUC's proposal is intended to answer a prior legislative "target" for 500 MW of renewable power from resources other than wind. PUC Commissioners are still debating whether, since the 500 MW goal is a "target" and not a "mandate," whether the PUC can order retail electric providers to procure specific renewable resources such as solar.
Texas' competitive energy market leads the nation in wind capacity, with costs of complying with the current RPS relatively economic thanks to the plentiful wind resources of West Texas. However, development of other, currently more costly, renewable resources has been slower, partially due to the ability of retail electric providers to meet their renewable obligations with economical wind power, rather than buying solar energy.
The proposal for publication would start setting aside non-wind compliance obligations for retail electric providers in 2014, mandating that retail electric providers, collectively, must serve 5 MW of the state's aggregate load through solar resources, and another 10 MW through biomass or geothermal resources. Compliance obligations for individual retail electric providers would be determined by their share of total sales.
These carve-outs would gradually increase to 167 MW for solar and 333 MW for biomass/geothermal in 2019 and every year thereafter.
Retail electric providers failing to meet these mandates would be subject to an "alternative compliance payment" of $120 per megawatt-hour (MWh) for a deficiency in solar resources, and $60 per megawatt-hour for a deficiency in biomass/geothermal resources. There is concern among some on the Commission that the alternative compliance payment will essentially be a "tax" of $120/MWh on retail electric sales, since solar capacity may not be able to ramp up that quickly in Texas to meet the new RPS.
Retail electric providers must either meet their RPS obligations through buying renewable energy or renewable energy credits, or by paying the applicable alternative compliance payment. Retail electric providers then incorporate these costs into their price per kilowatt-hour charged to their retail electric customers.
Certain large Texas customers, such as those taking service at transmission-level voltage, may "opt-out" of the RPS program, and their retail electric providers need not include their load when complying with the RPS, thereby reducing electric rates for these large customers.