The Daily Reporter – WI Construction News & Bids Wisconsin's Construction Authority
The former Gilbert Paper Co. in Menasha. (AP Photo, Kristyna Wentz-Graff, The Post-Crescent)
A bill before lawmakers Thursday would eliminate a legal wrinkle that has prevented paper mills and other manufacturers from reaping the economic benefits of producing renewable energy.
But even while speaking in favor of Assembly Bill 596, supporters wondered whether the aid they were providing, at least without further legislative changes, would be too little, too late. The bill, which received a public hearing Thursday before a joint session of the state Assembly and Senate’s energy committees, would allow utility customers to receive renewable-energy credits for power they obtain from plants that were built before June 3, 2010.
That is the date a law took effect mandating that Wisconsin public utilities derive an additional 6 percentage points of their total sales from renewable energy by 2015, said R. J. Pirlot, executive assistant to the Public Service Commission chairman. Officials at the PSC, which oversees public utilities, interpreted the requirement as applying only to new power plants, he said.
That decision meant that dozens of paper mills and other companies could not receive renewable-energy credits for the hydroelectric, biomass and landfill-gas generators some of them had been using for decades, Pirlot said. Those credits, one of which is provided for each megawatt hour of electricity produced, can be traded on the market in transactions that allow sellers to make money and buyers to meet the state’s renewable-energy requirements without building new generation systems.
The only trouble for supporters of the bill Thursday is that Wisconsin public utilities are well on their way to fulfilling the state’s renewable-energy requirement, Pirlot acknowledged. Without those companies’ needing to take further steps to come into compliance, he said, the current demand for renewable-energy credits is likely tepid.
“The reality is,” he said, “that I think these credits have very little value.”
Andrew Kell, a PSC policy analyst, estimated that 6 million renewable-energy credits have been generated in Wisconsin since June 3, 2010. He said letting them accrue to older plants would add hundreds or, at the most, thousands more to the market. The credits now sell for about $4 each, Kell said.
Skeptics of AB 596 said the legislation would give utilities no incentive to build further renewable-energy projects and that state lawmakers have an easy means of stoking demand. They could simply increase Wisconsin’s renewable energy requirement, forcing utilities to either build new renewable-energy plants or buy more renewable-energy credits, said Don Wichert, who serves on the board of the environmental group Renew Wisconsin.
But a spokesman for the author of the Senate version of the same bill, state Sen. Rob Cowles, R- Green Bay, said there is little desire among lawmakers to take such a step. Ryan Smith, chief of staff for Cowles, said Wisconsin utilities already have the ability to generate more power than is now being used.
For that reason, Smith said, Cowles and many of his colleagues would be reluctant to pass a law that could cause utilities to further add to the oversupply by building renewable-energy projects that eventually will be paid for by ratepayers. He said holders of the credits, though, should take hope from the state’s renewable-energy requirement being set as a percentage of energy sales.
As the economy recovers from the latest recession and customers begin to buy more power, that link will place utilities under pressure to either build more renewable-energy projects or buy more credits.
“These things,” he said, “are all cyclical.”
Barry McNulty, a spokesman for Wisconsin Energy Corp., said his employer has met the state’s renewable-energy requirement both through generating power using renewable sources and through buying the credits. He agreed that increasing utility sales could increase the demand for the credits in the future.
Dennis Meyer, energy and fuels buyer for Expera Specialty Solutions LLC, which owns four paper mills in Wisconsin, said his company can sell the renewable-energy credits generated by its hydroelectric and biomass generators in other states, but not in Wisconsin. He said having the ability to trade the credits in state would not only give Expera an incentive to keep those plants running, but to take on new renewable-energy projects.
Pirlot said state lawmakers are not the only officials who can, or are likely to, fuel the fire of demand. The federal government, through the adoption of stricter standards governing the release of greenhouse gases, also might give a boost to the value of renewable-energy credits, which also can serve as indicators of a reduced reliance on fossil fuels.
“If we begin to live in a more carbon-constrained world,” Pirlot said, “these credits would have more value.”
