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Introduction
On May 8, 2003, Senator Jeff Bingaman, the Ranking Minority Member of the Senate Committee on Energy and Natural Resources, requested an analysis of a nationwide Renewable Portfolio Standard (RPS) program proposed to be amended to energy legislation currently pending before the U.S. Senate1. With his request Sen. Bingaman provided specific information on the program to be analyzed. This analysis was prepared in response to his request and projects the impact of the proposed program on energy supply, demand, prices, and emissions. The analysis is based on the Annual Energy Outlook 2003 (AEO2003) projections of energy supply, demand, and prices through 2025, as updated in May 2003.
The AEO2003 provides a policy-neutral reference case that is used to analyze energy policy initiatives. EIA does not propose, advocate or speculate on future legislative or regulatory changes. Laws and regulations are assumed to remain as currently enacted or in force in the reference case; however, the impacts of emerging regulatory changes, when clearly defined, are reflected.
Key aspects of the program specified by Sen. Bingaman include:
- Extension of the renewable energy production tax credit (PTC) for generation from eligible facilities entering service by December 31, 2006, but no longer indexed to inflation.
- Implementation of an RPS with incremental increases in required renewable generation reaching 10 percent of most sales by 2020 (effectively 8.8 percent of all sales).
- Exemption of small utilities, those generating less than 4,000 billion kilowatt-hours per year, from holding renewable energy credits, plus exemption of all generation from existing hydroelectric and other renewables from the requirement.
- Only renewable facilities commissioned after the enactment of the legislation qualify to produce renewable energy credits.
- The allowance price for renewable energy credits is capped at 1.5 cents per kilowatt-hour, with no indexing for inflation.
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