Western Governors AssociationWestern Governors AssociationRenewable Energy CertificatesRenewable Energy Certificates

Initiative for the WestInitiative for the West

WRAP Board MeetingWRAP Board Meeting

October 15, 2003October 15, 2003Salt Lake City, UtahSalt Lake City, Utah

A REC by any other name…A REC by any other name…Renewable Energy CertificatesRenewable Energy CertificatesGreen TagsGreen TagsGreen TicketsGreen TicketsRenewable CertificatesRenewable CertificatesTRC (Tradable Renewable Certificates)TRC (Tradable Renewable Certificates) Typically MWh Typically MWh == 1 REC 1 REC

What are RECs?What are RECs?

Production ofElectricity from

Renewable Energy

Environmental Attributes

Commodity Electricity

Growing recognition that electricity generated from renewable Growing recognition that electricity generated from renewable energy sources comprises two distinct tradable commodities – energy sources comprises two distinct tradable commodities – the underlying electricity and the “green” attributes. the underlying electricity and the “green” attributes.

RECs TransactionRECs Transaction

PowerPower

GreenGreenAttributes-Attributes-(REC)(REC)

Green Tag Green Tag 2¢/kWh2¢/kWh

UtilityUtility

PowerPower10¢/kWh10¢/kWh

Power10¢/kWh

CustomersCustomers

Power PoolPower Pool(Transmission System)(Transmission System)

Power

PowerPower

Why are RECs an Important Why are RECs an Important Policy for WRAP?Policy for WRAP?

Improves economics of western renewable energy Improves economics of western renewable energy sources.sources.

309 SIP accounting of renewable energy generation.309 SIP accounting of renewable energy generation. Accounting of emissions displacement from Accounting of emissions displacement from

renewable energy under section 308.renewable energy under section 308. Efficient verification of compliance with state and Efficient verification of compliance with state and

tribal renewable regulatory policies.tribal renewable regulatory policies.

Western States with RPSWestern States with RPS

.

RPS recently consideredRPS recently considered RPS passedRPS passed

States with Tax Incentives for States with Tax Incentives for RenewablesRenewables

.

States with “States with “Green PricingGreen Pricing” ” ProgramsPrograms

.

Certificates-based Certificates-based Other Other

States with Labeling and States with Labeling and Disclosure RulesDisclosure Rules

.

•Full DisclosureFull Disclosure•Partial DisclosurePartial Disclosure•ProposedProposed

WRAP Policy:WRAP Policy: Renewable Energy Certificates Renewable Energy Certificates

““Some policies are more effective if implemented on Some policies are more effective if implemented on a regional scale. States, tribes and regional energy a regional scale. States, tribes and regional energy organizations should act in concert to: establish a organizations should act in concert to: establish a regional institution for issuing and trading regional institution for issuing and trading renewable energy certificates; institute a regional renewable energy certificates; institute a regional generation tracking system…..”generation tracking system…..”

(WRAP Policy: Renewable Energy and Energy Efficiency as Pollution Prevention (WRAP Policy: Renewable Energy and Energy Efficiency as Pollution Prevention Strategies for Regional Haze; pg. 2; April 24, 2003)Strategies for Regional Haze; pg. 2; April 24, 2003)

WRAP Management Directive: WRAP Management Directive: Renewable Energy CertificatesRenewable Energy Certificates

““Assist the efforts of Western states and Assist the efforts of Western states and tribes to establish a single institution in the tribes to establish a single institution in the WRAP region that will register, certify, WRAP region that will register, certify, issue, track and oversee trading of renewable issue, track and oversee trading of renewable energy certificates in the west.”energy certificates in the west.”

(WRAP Policy: Renewable Energy and Energy Efficiency as Pollution Prevention Strategies for Regional Haze; pg. 3; April 24, 2003)

WGA RECs ResolutionWGA RECs Resolution

Western Governors supportWestern Governors support:: Creation of an independent, regional generation tracking Creation of an independent, regional generation tracking

system to support verification, tracking and trading of system to support verification, tracking and trading of RECs.RECs.

Establishment of a single institution in the West that will Establishment of a single institution in the West that will issue, track and oversee REC trading,issue, track and oversee REC trading,

Development of a standard set of market design and Development of a standard set of market design and operating guidelines for trading RECs within the Western operating guidelines for trading RECs within the Western Interconnection, andInterconnection, and

WGA Management DirectiveWGA Management Directive

“Western Governors direct WGA to seek Western Governors direct WGA to seek funding and convene a regional meeting of funding and convene a regional meeting of stakeholders to define an institutional stakeholders to define an institutional structure, design operating guidelines and structure, design operating guidelines and identify information needed to establish a identify information needed to establish a market for trading of RECs in the western market for trading of RECs in the western interconnected system.”interconnected system.”

CEC Renewable’s CEC Renewable’s Committee DirectiveCommittee Directive

““The Committee recommends that Energy The Committee recommends that Energy Commission staff work with the WGA to Commission staff work with the WGA to develop a regional electronic accounting develop a regional electronic accounting system…for RECs” system…for RECs”

PNSC

CAISOWAPA-

Loveland

SEC. CTR.

SPP

Southern

TVADuke

FP&L

VP

PJM

NYPP

NEPOOL

OH

HQ MARITIMES

MAPP

MAIN

ECAR

AEP

MECS

APS

Security CoordinatorInterregional Security Network Node

WesternInterconnection

ERCOTInterconnection

EasternInterconnection

Western GeographyWestern Geography

WGA/CEC RECs Project GoalsWGA/CEC RECs Project Goals1.1. Create an independent, regional generation tracking Create an independent, regional generation tracking

system (WREGIS) to support accounting, verification, system (WREGIS) to support accounting, verification, tracking and trading of RECs.tracking and trading of RECs.

2.2. Develop of a standard market design and operating Develop of a standard market design and operating guidelines for tracking and trading RECs within the guidelines for tracking and trading RECs within the Western Interconnection, andWestern Interconnection, and

3.3. Establish of a single institution in the West that will track Establish of a single institution in the West that will track renewable energy generation, and issue, register and renewable energy generation, and issue, register and track RECstrack RECs..

Project TeamProject Team Western Governors Association staffWestern Governors Association staff CEC staffCEC staff Center for Resource Solutions (tech consultant)Center for Resource Solutions (tech consultant) Stakeholder Committees:Stakeholder Committees:

Executive Executive Needs AssessmentNeeds Assessment System Design and Functional RequirementsSystem Design and Functional Requirements Institutional and Governance IssuesInstitutional and Governance Issues

Stakeholder ParticipationStakeholder Participation Renewable Energy Tracking and Certificates Work Group Renewable Energy Tracking and Certificates Work Group

(RETAC) formed to explore needs, design system (RETAC) formed to explore needs, design system architecture and recommend institutional structure for architecture and recommend institutional structure for WREGIS. WREGIS. Tribal and state utility and environmental regulatorsTribal and state utility and environmental regulators Electric utilitiesElectric utilities Renewable energy developersRenewable energy developers Environmental advocatesEnvironmental advocates Marketers and brokers Marketers and brokers WRAP IOC membersWRAP IOC members State energy agenciesState energy agencies

Current ActivitiesCurrent ActivitiesWebsite developmentWebsite developmentPreparation of work planPreparation of work planNeeds Assessment CommitteeNeeds Assessment Committee

Conduct Needs Assessment Survey (Aug-Sept)Conduct Needs Assessment Survey (Aug-Sept)Draft report on WREGIS Needs Assessment (Oct.)Draft report on WREGIS Needs Assessment (Oct.)Conduct regional stakeholder meetings (Oct-Nov)Conduct regional stakeholder meetings (Oct-Nov)Final Report issued (Nov-Dec)Final Report issued (Nov-Dec)

Executive CommitteeExecutive Committee

Develop work plans and budgetsDevelop work plans and budgetsStrategic oversight over implementation of Strategic oversight over implementation of

WREGIS processWREGIS processEstablish Committees for special tasksEstablish Committees for special tasksCommunicate activities & progress to Communicate activities & progress to

interested stakeholders.interested stakeholders.Facilitate regional stakeholder meetingsFacilitate regional stakeholder meetings

System Design and Requirements System Design and Requirements

CommitteeCommittee Prepare functional requirements Prepare functional requirements Coordinate state interface software requirements Coordinate state interface software requirements RFP for tracking software and system operationRFP for tracking software and system operation Issue RFP March 2004Issue RFP March 2004Select Contractor April 2004 Select Contractor April 2004 Software and systems development June – Software and systems development June –

December 2004December 2004

Institutional CommitteeInstitutional Committee Legal requirements needed to establish Legal requirements needed to establish

WREGISWREGIS

Institutional home Institutional home

How will WREGIS be governedHow will WREGIS be governed

Operating Rules and GuidelinesOperating Rules and Guidelines

Institutional Issues Report January 2004Institutional Issues Report January 2004

WGA/CEC Project Goal….WGA/CEC Project Goal….

WREGIS operational by January 2005WREGIS operational by January 2005