Renewable Portfolio Standards in Pennsylvania:
Frequently Asked Questions (FAQ)

What is a Renewable Portfolio Standard (RPS)?

A Renewable Portfolio Standard (RPS) is a policy that requires companies that sell electricity to have a certain percentage of "renewable" power in their mix. These policies often start around 1-5% in the first year and require an increasing percentage of renewables in each energy supplier's mix, often aiming for a goal of 4-20% in about 10 years. RPS policies typically involve a credit trading mechanism so that companies with extra renewable power can sell the extra "credits" to suppliers who haven't met their RPS requirement. Electric suppliers who don't meet their renewable energy requirements must pay a penalty fee, which goes into a clean energy fund to promote renewable energy development.

RPS policies vary in many ways, including differences in which technologies are considered to be renewable. Some focus on promoting newly-built renewables while others allow existing renewables to qualify. With the exception of Pennsylvania's Senate Bill 962, RPS policies tend to have fairly dirty definitions of renewables. Some have more consumer protections than others.

You can view a comparison of the RPS legislation proposed in Pennsylvania by Incentives / Mechanisms or by which Fuels / Technologies are included.

RPS policies are a far more effective way of promoting the development of clean, renewable energy than voluntary purchasing of green energy products.

Isn't there already an RPS requirement in PA?

There is currently no renewable or clean energy statute enacted in PA. There are RPS-like arrangements in certain power company territories, resulting from settlements of lawsuits that challenged electric utility mergers. Some of the agreements require any energy supplier who successfully bids for customers in a competitive bidding process to have a percentage of its generation be from renewable sources. The only case thus far where a bidding process has occurred is in the PECO service territory, where the winning bidder was required to have 2% of its generation portfolio come from "renewable" sources.

What other states have an RPS?

As of September 2004, there are 13 states that have mandatory renewable energy laws (AZ, CA, CT, IA, MA, MD, ME, NJ, NM, NV, RI, TX, WI), and 3 states have voluntary renewable energy goals or RPS-type legislation without enforcement provisions (HI, IL and MN).

Will RPS increase costs for electric customers?

A U.S. Department of Energy study of the impact of a 10% federal RPS was done for Republican Senator Murkowski from Alaska. The study indicated that "[T]he RPS is projected to lead to a fall in natural gas prices that just about offsets the higher costs of the new renewables."

A more recent study by the Department of Energy examined a proposed 10% national RPS and found an insignificant increase in cost: "The RPS causes a small increase in electricity prices and industry costs, which is partially offset by reduced natural gas prices for all consumers. In 2025, the RPS increases total end-use expenditures for electricity and natural gas by two-tenths of 1 percent."

Other studies have shown that the addition of clean energy can off-set enough natural gas use during times of peak power use that it drags down the overall cost of electricity enough to completely (or more than) offset the cost of the new renewables.

How will the RPS affect jobs in the state?

If the RPS is passed, it could create many jobs if it's designed well. The major factors will be whether the legislation promotes the contruction of new facilities over existing generation and whether large, centralized combustion technologies (like waste coal) are allowed to compete with small-scale, distributed technologies like wind, solar and energy efficiency. The smaller, distributed technologies create far more jobs. See the Union of Concerned Scientists' report on the jobs and economic impacts of a 10% national RPS would be on Pennsylvania: Renewing Pennsylvania's Economy.

Will the RPS put people at existing power stations out of work?

No. The annual increase in electric demand in Pennsylvania (and nationally) is about 1.5 to 2 percent each year. This is greater than the RPS targets, so no existing generation is likely to be displaced by the RPS. The RPS will simply ensure that most of the new generation built is renewable (or non-renewable waste coal burning, if that is included in the final legislation).

What is the Clean Energy Portfolio Standards bill (Senate Bill 962)?

Pennsylvania Senate Bill 962, entitled the "Clean Energy Portfolio Standard" was written by the Energy Justice Network for Citizen Power and is the cleanest and strongest RPS policy in the nation. It was introduced into the Pennsylvania State Senate in early November 2003 and is the first Renewable Portfolio Standard (RPS) bill to be introduced in Pennsylvania. We analyzed all the RPS legislation enacted in the US to-date and customized the language of SB 962 to meet the energy needs of Pennsylvania. SB 962 requires a percentage of all electricity sold in PA to come from renewable energy sources, focusing on NEW, CLEAN resources and reaching a total of 9% above current levels by 2015. Read more about how SB 962 works.

Why do the other bills have such different names?

Senate Bill 1030 and the draft bill put forth by the Rendell administration use new terms to enable non-renewable energy sources to qualify. Primarily, they focus on enabling the burning of waste coal, a fuel even dirtier than normal coal. They use terms like "environmentally-beneficial resources" and "advanced energy" to describe these non-renewable, polluting technologies.

What are tiers?

Senate Bill 1030 and the draft bill put forth by the Rendell administration use what is called a two-tier structure. This type of RPS has been adopted in other states, such as Maryland, New Jersey and Connecticut. These types of RPS policies include very dirty technologies, such as trash incineration (in MD, NJ and CT) or waste coal burning (like some of the proposals in PA). These dirty technologies are included in the legislation because the respective industries have enough political power to influence state legislators, despite the lack of support for these technologies in the general public and in the environmental community. In order to minimize the role that these very dirty technologies play in the RPS, a second "tier" is created, which classifies the dirtiest technologies differently, so that a limit can be placed on the proportion of the RPS that these technologies can fill. In the proposals in Pennsylvania, waste coal is likely to be limited to a second tier, where they can only fill up to 30% of the RPS requirements.

How much (%) of the electricity sold in PA comes from renewable sources now?

The latest statistics from the Department of Energy's Energy Information Administration are below, representing Pennsylvania electric generation for January through May 2004. The amount of "renewable" generation depends on the definitions of renewable. See the technologies comparison chart to see how the definitions vary between the proposed RPS bills.

FuelNet Generation
(megawatthours)
Percentage
Coal45,348,82650.64%
Nuclear31,634,50135.33%
Waste Coal4,085,1744.56%
Natural Gas3,687,4284.12%
Residual Fuel Oil1,775,0841.98%
Hydroelectric1,292,1601.44%
Trash Incineration629,7730.70%
Distillate Fuel Oil338,7230.38%
Petroleum Coke255,0570.28%
Black Liquor177,4530.20%
Landfill Gas164,7720.18%
Blast Furnace Gas142,8970.16%
Other Gas (Fossil)111,1430.12%
Wood Waste104,2270.12%
Wind29,9400.03%
Other17,9690.02%
Sludge Waste3,8250.00%
Tires7390.00%
Propane7140.00%
Digester Gas3100.00%
Hydro (Pumped Storage)-254,385-0.28%
Total89,546,330100.00%



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