Air Pollution Prevention Forum: Meetings & Calls

Venue

The AP2 Forum met in San Diego, California on January 31-February 1. This was the third full meeting of the Forum.

Attendees

Joining co-chairs Hap Boyd (Enron Wind Corporation) and Jeff Burks (UT-DNR) at the meeting were the following Forum members: Bill Becker (DOE Denver Regional Office); Alan Davis (MT DEQ); Rich Ferguson (CEERT); Trisha Frank (Manzanita EPA Air Quality Project) Van Jamison (Jamison Consulting); Rose Mckinney-James (CSTRR); John Nielsen (LAW Fund); Terry O'Connor (Arch Coal); Amanda Ormond (AZ Energy Office); Barrett Stambler (PacifiCorp); and Chris Wentz (NM Energy Dept.).

Also in attendance were Doug Larson and Dale DeCesare of the Western Interstate Energy Board who are providing technical support to the Forum. Others attending and participating in the meeting included Steve Sargent and Cathy Ghandehari of the DOE Denver Regional Office; Phil Carver (via speaker-phone) from the Oregon Office of Energy; Blair Swezey and Brian Parsons from the National Renewable Energy Laboratory; Patrick Cummins from the Western Governors' Association; Bill Grantham from the National Tribal Environmental Council; and Pat Murdo from the WRAP Communications Committee.

Forum Actions

Forum members and staff committed to completing the following actions by February 25. Thereafter, staff will integrate the pieces into the first draft of the Forum's renewables report.

Section A

• Staff was directed to add to Section A of the renewables report a discussion of the size in megawatts and megawatt-hours of the 10/20 goals (using current load information) and to present the data separately for the nine states (AZ, CA, CO, ID, NV, NM, OR, UT,WY) which are covered by Section 309 of the haze rule and to add similar information for the other three states in the WRAP region (WA, MT, ND).

• John Nielsen agreed to work with WIEB staff in developing a recommendation for the Forum's renewables report to apportion credits for emissions reductions between states that have an incentive program to promote the production of renewable energy and states where the consumers are demanding the renewable energy. Staff will also provide this recommendation to Patrick Cummins (WGA) who will seek input from EPA prior to the March meeting.

Section B

• With regard to refining the Forum's definition of "renewable energy" in Section B of the draft renewables report: Chris Wentz and Steve Sargent will work on refining the biomass footnote. Wentz agreed to contact the Center for Resource Solutions to find out more information on a set of regional "low-impact" biomass criteria that has been developed in New England. These criteria would provide guidance with regard to acceptable forms of biomass energy similar to the guidance the American Rivers' low-impact hydro criteria provides for hydropower projects. With regard to refining the Forum's use of the American Rivers' low-impact hydropower criteria, Barrett Stambler agreed to talk with AP2 Forum member Rachel Shimshak to: 1) discuss the inclusion in the definition of potential incremental gains from "re-winding" existing hydropower facilities; and 2) determine how the Forum may apply the American Rivers criteria differently considering the fact that the criteria do not apply to new hydroelectric facilities. Staff will also seek to determine if any major addition to a hydro facility triggers a license review by the Federal Energy Regulatory Commission. The Forum also agreed to insert the phrase "non-fossil" into the renewable energy definition, which currently only specifies "non-nuclear." In addition, the Forum agreed that the Goal Work Group will consult with Stambler and pull the above information together in order to properly modify the definition regarding hydro. Bill Becker will take John Nielsen's place on the workgroup, which will now consist of Terry O'Connor (Chair), Chris Wentz, and Bill Becker. The Goal Work Group was also instructed to consider clarifying that large-scale hydro is not to be included in the Forum's definition of "renewable energy."

Section C - Actions to Improve Market Efficiencies

• The Forum agreed to split the green marketing/green pricing paper prepared by Rich Ferguson into two papers. Blair Swezey and Alan Davis agreed to develop the two papers with input from Ferguson. The Forum also agreed not to attempt to recommend one policy option over the other (i.e., to recommend that states restructure their electric power industry). Swezey and Davis will also flesh out options within the papers to implement the principle that "states should ensure that every electricity consumer has the opportunity to provide voluntary financial support for grid-connected renewable generation through a viable green market or green pricing program."

• Staff will revise the transmission paper to address the need that protocols adopted by system operators not unnecessarily penalize renewable resources. The Forum also agreed to reference the IEEE transmission standards for distributed generation.

• Staff will incorporate the following recommendation in Section D dealing with a cap-and-trade system: (1) The AP2 Forum supports an SO2 cap-and-trade program. (2) The SO2 cap-and-trade program should include an allocation of emission allowances for new electricity generators, including renewables. Allowances for renewable energy generation should be issued at the rate of 2.5 tons per megawatt of capacity. (3) There should be an allocation of emission credits from renewable generation projects coming on-line after the year 2000 but before the triggering of the cap-and-trade. Staff will contact Dick Devlazio at NREL for information on the IEEE transmission standards.

• Van Jamison agreed to revise his paper "Renewable Energy Facility Siting Issues." The revisions are to reflect the Forum's discussions, including adding "affected stakeholders" to the list of parties which renewable energy developers should work with in the siting process. The Forum also discussed the fact that: 1) States and tribes need to discuss how they will work together to avoid disagreements; 2) delays in siting projects on public lands are discouraging the siting of renewable projects; and 3) there are different siting issues involved with the siting of various renewable technologies. Jamison also agreed to incorporate into his paper the distinction between transportable and non-transportable fuels. Based on the Forum's discussions, staff will write draft recommendations on siting issues for Section D of the renewables report and include the recommendation that processes should be developed to enable governmental decision-makers in a jurisdiction which has considered a renewable energy facility siting application to share their experiences with other jurisdictions which are considering applications for approval of similar projects

• The Forum agreed that a new "distributed generation" topic area be established. Barrett Stambler agreed to write the new two-page overview paper for Section C of the report on distributed renewable energy generation issues. In addition, Stambler will develop a "principle" for distributed generation as well as a set of recommendations to operationalize this principle. Brian Parsons and Jeff Burks agreed to assist Stambler in preparing the distributed generation paper, principle and recommendations. The paper will also address issues surrounding interconnection requirements and their impact on renewables. The paper will reference IEEE interconnection standards that are under development which may affect distributed generation. The paper will incorporate the issues discussed in the original net metering paper (which is being abandoned) and the following observations by the Forum in San Diego: 1) In the short-run, net metering may have little impact on the production of renewable energy, but in the long-run it may become a more important policy tool; 2) Net metering issues are different in a retail competition environment than in a vertically-integrated monopoly environment. For example, in a retail competition environment the "net" production should not be credited against the distribution company, which is only a wires company. Additionally, in a retail competition environment the time at which the electricity is produced will be important in determining the value of the power; and 3) There is a need to quantify the transmission and distribution benefits of distributed renewable generation so that those values can be reflected in the market place. Such quantification will permit tradeoffs between investment in new generation and investment in transmission/distribution.

Section C - Actions to Provide Financial Incentives

• Terry O'Connor will draft a minority report regarding the potential for states to utilize the language contained in the "Western Interconnection Version 2.5 Model Rule on Consumer Disclosure in Connection with Electricity Sales."

• Rich Ferguson will work with staff to divide his two page paper "State Policy Options to Provide Incentives for Renewable Resource Development" into three separate papers: 1) a paper on renewable portfolio standards; 2) a paper on system benefits charges; and 3) and a a paper on tax incentives. The RPS paper should include a discussion of a tradeable allowance system to drive down costs, as well as potential options to improve access to capital necessary for renewable energy programs and projects. The paper will include more detail on each incentive option and the experience to date with such option. The Forum discussed the fact that there are already certain government programs such as the SBIC which can be taken advantage of in order to access capital markets.

• Staff will make modifications to the two-page paper on government purchases of renewable power to reflect the Forum's discussion on the potential benefits of aggregating renewable energy purchases amongst various units of government including the local level. Information may also be added regarding current energy usage at federal government facilities and opportunities to involve the federal government more in requiring purchases of renewable energy. Staff will incorporate the following recommendations in Section D:
  • State/federal/tribal agencies should set a goal of purchasing no less that10/20 percent of their electricity needs from renewable resources with an option for local governments to join in such purchases.
  • State procurement procedures should explicitly link energy savings from efficiency investments with funds available to pay for incremental costs of renewable power.

• Regarding the section on "unique opportunities" in the WRAP region to promote the development of renewables, Bill Becker agreed to put together a two page issue paper on the extent to which renewables offer economic development opportunities in the West. Such opportunities include the creation of new jobs in the region.

Section D - Additional Assignments

• The Forum decided that it did not yet have sufficient information on the cost and impact of various financial incentives in order to appropriately recommend the proper package of incentives (RPS, SBC, tax incentives) in Section D of its renewables report. The Forum therefore formed a workgroup including Blair Swezey, Alan Davis, Rich Ferguson and John Nielsen to develop a recommendation on the type of economic analysis that will be needed to estimate the impact on renewable energy development of different policy measures and to develop "back of the envelope calculations" as to the potential costs of each of the financial incentive measures and the potential contributions which those measures can make towards the 10/20 goals.

• Staff will draft Section D to include all the financial incentive options in the meeting handout titled "Potential Staff Instructions on Section D" and instructions provided at the Forum meeting in San Diego.

• Staff will attempt to graphically illustrate the linkages between complementary policies.
  

Other Items Discussed

• The Forum received a briefing from Brian Parsons of the National Renewable Energy Laboratory on DOE's Wind Powering America Initiative. Parsons outlined Wind Powering America's major goals including doubling the number of states with at least 20 megawatts of wind power installed by 2005, and the production of five percent of the nation's electricity from wind by 2020. Parsons indicated that a significant renewable portfolio standard would be the most effective policy option in promoting wind energy at the current time. He also stated that his rough estimate of the current cost of wind power is 4-7 cents per kilowatt hour, but that next generation wind machines are targeted to generate power at approximately 2.5 cents per kilowatt hour. To view Parson's presentation slides, please click here.

• The Forum also received an update on the Tribal and Rural Issues Work Group from Bill Grantham of the National Tribal Environmental Council. Grantham reported that the tribes have received $70,000 in funding from EPA (through the WRAP) to use in preparing the tribal section of the renewables report. The Forum agreed to adopt Forum member Julie Simpson's request to drop rural issues from the report and to remove "Rural" from the name of the Tribal and Rural Issues Work Group. In addition, in keeping with the Forum's Work Plan, Grantham stated that the tribes will be seeking additional funding sources to complete papers on economic efficiency and economic development. Grantham distributed several handouts at the meeting including: 1) a handout on AP2 Forum and Tribal Issues Work Group deliverable dates; 2) a Work Plan for the Tribal Group; and 3) a list of discussion items for the meeting.

• The Forum discussed holding its next meeting in March on the 13-14th in Portland, Oregon. At the meeting, the Forum plans to review a full draft of the renewables report. The Forum also discussed conducting a brief (approximately 45 minute) brainstorming session at the March meeting on energy efficiency issues. Recommendations on programs and policies that will increase the efficiency with which energy is used are required under the Forum's Work Plan. The Forum also agreed to discuss at the March meeting the issue of seeking outside peer and public review of the Forum's draft renewables report.

Meeting summary prepared by Dale DeCesare, Western Interstate Energy Board.