Energy/Utilities

NH Lawmakers Back Bipartisan Reforms to State’s Renewable Portfolio Standards Law

A Win-Win for State's Ratepayers, Economy and Environment

July 2012

By Heidi L. Kroll, Market and Policy Analyst

In the 2012 legislative session, New Hampshire legislators were divided on many issues, but when it comes to the state’s Renewable Portfolio Standards (RPS) law, lawmakers from both sides of the aisle were able to agree on important reforms. The strong bipartisan support for NH Senate Bill 218 (SB 218) stems from the fact that the bill is a win-win for New Hampshire’s ratepayers, economy, and environment. SB 218 gained the support of republicans and democrats alike and ultimately passed the Senate 23-0 and the House 292-52. Governor John Lynch signed the bill into law on June 19th, and the bill took effect upon passage.

A Brief History of Renewable Energy Portfolio Law

Compliance with New Hampshire’s RPS law began in 2008. The law requires each supplier of electricity (both regulated electric companies and competitive suppliers) to obtain Renewable Energy Certificates (RECs) for a certain percentage of the power they sell to New Hampshire customers. A REC represents the renewable attributes associated with one megawatt-hour of power generated by a renewable facility. The revenue from the sale of RECs goes to the owner of the renewable power plant. In lieu of purchasing a REC, an electricity supplier can make an Alternative Compliance Payment (ACP) into a state-run fund dedicated to supporting renewable energy initiatives in New Hampshire. During the 3-year period 2008-2010, the cost to comply with New Hampshire’s RPS averaged 0.15 cents per kilowatt-hour, or approximately $0.75 per household per month.

After several years of experience with NH’s RPS law, stakeholders identified practical improvements to make the law work even better. SB 218 included many of these changes, to the benefit of ratepayers, the economy and the environment. Overall, the bill improved the markets for RECs by lifting restrictions and increasing supply in three of the four renewable classes (Classes I, III, and IV). New supplies of RECs will allow for more cost-effective compliance with the RPS law – which will save ratepayers money. The bill also added flexibility and options for utilities and competitive suppliers purchasing RECs, and these operational savings are expected to lower RPS costs as well.

Furthermore, the changes made by SB 218 provide greater opportunities for local renewable resources and industries to maintain and expand their business. The state’s existing small-scale hydro facilities, existing biomass plants, and new renewable projects produce significant economic benefits, tax revenues, and jobs for New Hampshire. It is estimated that they provide more than $111 million of annual economic activity to the state, including approximately $4.5 million in local and statewide property taxes, $28 million in payroll, and $75 million in local purchases and payments to local businesses.

Added to the ratepayer savings and economic benefits of SB 218 are environmental benefits. The revised law keeps the state on-track to maintain and increase its use of renewable power and reap the benefits from producing energy using local indigenous resources. Hydro, biomass, wind, and solar power help to lower emissions and increase sustainability, diversity, and reliability.

Key Changes Benefit Small-Scale Hydro, Biomass, and Timber Operations

SB 218 made changes to New Hampshire’s RPS law that adjust eligibility criteria, percentage requirements, alternative compliance payments, and timing provisions. Several specific changes will be key in providing greater opportunities for local small-scale hydro facilities, biomass plants, and the timber harvesting industry to maintain and grow their business, while also advancing NH’s RPS goals and the overall economy. Three of the key changes are:

  • The loosening of eligibility restrictions on small-scale hydro facilities. Under SB 218, small hydro facilities of 1 megawatt or less that are in compliance with applicable fish restoration requirements and are interconnected with a New Hampshire electric distribution system are now eligible to produce NH Class IV RECs.
  • The expansion of compliance options for existing biomass plants. Under SB 218, existing biomass facilities that were not previously allowed to participate in NH’s RPS are given greater flexibility in how they meet the law’s rigorous emissions requirements.
  • The inclusion of “useful thermal energy.” Under SB 218, a set percentage of the Class I requirement must now be met with RECs from qualified renewable technologies that produce useful thermal energy. For example, direct heat, steam, or hot water that is used for heating, cooling, or a manufacturing process qualifies. This provision in SB 218 puts New Hampshire at the forefront of including thermal energy in state energy policies.

With the important changes enacted under SB 218, New Hampshire’s RPS law is poised for even greater success, which should mean greater benefits for the state’s ratepayers, economy, and environment.

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Heidi Kroll
You may contact
Heidi Kroll at 603-545-3710.