CPUC Allows IOUs To Use Tradable RECs

Michael Bates
Written by Michael Bates
on January 14, 2011 No Comments
Categories : Policy Watch

The California Public Utilities Commission (CPUC) has ruled that the state's investor-owned utilities (IOUs) can use tradable renewable energy credits (RECs) to comply with California's renewable portfolio standard (RPS).

The decision changes how California utilities can meet RPS requirements. Previously, utilities needed to purchase renewable energy and RECs together, on a bundled basis. The CPUC decision allows companies to purchase or trade renewable energy and the respective credits separately.

‘Tradable renewable energy credits can play an important role in increasing the liquidity of the renewable market,’ says Michael R. Peevey, president of the CPUC. ‘However, this needs to be balanced with a deliberate approach to ensure that the use of renewable energy credits is not at odds with the intended goals of the RPS program.’

The commission notes that the ability to resell RECs apart from the associated energy provides flexibility in the renewable energy market. This flexibility can ‘reduce stranded-cost risk and create new revenue streams for customer-side renewable facilities,’ the CPUC says.

The commission's first formal decision related to tradable RECs was delivered in March 2010 and was subsequently stayed when the state's largest IOUs asked the CPUC to revisit the issue.

This week's decision affirms the CPUC's original position. Until Dec. 31, 2013, a temporary limit on the use of tradable RECs will be in play. During this time, investor-owned utilities can use tradable RECs to meet no more than 25% of their annual RPS targets.

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