ICC Staff, Utilities, Suppliers Call ALJ Treatment of RECs in Procurement Plan Inconsistent with Statute

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December 2, 2010

A proposed order from an Illinois ALJ which would find that the Illinois Power Agency is compelled to purchase physical renewable energy under the Illinois Power Agency Act contravenes definitions in the statute itself as well as Illinois Commerce Commission precedent, ICC Staff, Commonwealth Edison, Ameren, and retail suppliers said in separately filed briefs on exceptions (Docket 10-0563).

As only noted in Matters, the ALJ's proposed order concluded that the Illinois Power Agency Act requires the procurement of physical renewable energy supply, and not just RECs.  As such, the ALJ recommended adoption of a proposal from Iberdrola Renewables for long-term, physical renewable contracts (11/24).

However, several intervenors noted that the Act expressly includes RECs within the definition of "renewable energy resources" to be procured by the Illinois Power Agency under the required procurement plan.  Staff, the utilities, and retail suppliers faulted the ALJ's strained interpretation which ignores this explicit definition.

"In effect, the ALJPO creates its own definition for the term renewable energy resource, despite the fact that the term is defined already under the IPA Act," Staff noted.  Specifically, the definition of renewable energy resource contained in the act defines the term as including, "energy and its associated renewable energy credit or renewable energy credits from wind, solar ... [and going to list several other fuels]."

The proposed order's conclusion on physical renewable energy, "is in complete contradiction of the IPA Act," Staff said.

The Illinois Competitive Energy Association further noted that another subsection upon which the ALJ relies for ordering long-term contracts is in reference to the Illinois Power Agency Renewable Energy Resources Fund, which is separate and distinct from the procurement plan for default service.  The Act's preference for long-term REC contracts only applies to the Illinois Power Agency Renewable Energy Resources Fund, which is the vehicle by which the Illinois Power Agency collects and disburses the Alternative Compliance Payment from suppliers, ICEA noted, and does not apply to the utilities' procurement plan.

Aside from the incorrect statutory interpretation, ComEd took exception to the proposed long-term renewable contracting because none of the parties supporting such contracting presented any "data or other detailed analyses" in support of their positions, as they are required to do under the Public Utilities Act in order for their recommendations to be adopted.

"The Public Utilities Act only authorizes the Commission to approve a proposed plan if: 'the Commission determines that [the plan] will ensure adequate, reliable, affordable, efficient, and environmentally sustainable electric service at the lowest total cost over time, taking into account price stability," ComEd noted.

Despite this clear requirement for lowest total cost over time, ComEd said that the proposed order, "appears to adopt the view that more expensive methods of meeting renewable energy resource requirements can be adopted as long as their cost does not exceed the [cost] cap."

However, ComEd argued that the Commission can only approve plans with the lowest total cost over time, not plans that have "reasonable" costs, or even of plans that have "low" costs.  Additionally, ComEd noted that, "there is a significant premium associated with the procurement of longer term renewables, potentially reaching as high as $50 per megawatt-hour."

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