On March 11, the California Public Utilities Commission (CPUC) authorized the use of tradable renewable energy credits (TRECs) for use in the state’s Renewables Portfolio standard (RPS) program. This program, one of the most ambitious renewable energy standards in the country, requires investor-owned utilities, energy service providers, and community choice aggregators operating in California to obtain 20 percent of their retail sales from renewable energy sources by 2010. The ability to sell RECs associated with distributed generation will provide incentives for greater rooftop solar and other distributed generation.
Previously, utilities were required to procure exclusively “bundled” renewable contracts, for both energy and RECs together. The framework implemented in this decision allows utilities to also buy RECs separately.
The rules create a market in which the use of tradable RECs for RPS compliance is, until the end of 2011, limited to 25% of a given investor-owned utility’s annual procurement obligation. In order to sell RECs, participants must meet the requirements set forth by the CPUC for REC trading, as well the requirements of the Western Renewable Generation Information System (WREGIS), the system through which all California RPS-eligible RECs must be tracked, as well as the eligibility rules of the California Energy Commission. The framework includes an interim price cap of $50/MWh on RECs used for RPS compliance by investor-owned utilities. Like the usage cap, the price cap will sunset at the end of 2011 unless action to retain or modify it is taken by the CPUC.