While the Waxman-Markey energy bill would impose a renewable source standard on electric utilities, the standard, as written, is broad and flexible. It is designed to reduce emissions of carbon dioxide, the most common greenhouse gas, rather than specifically to promote renewable fuels.
Conservation by a utility’s customers, for example, would count against the renewable requirement. The renewable requirement would not apply to electricity generated by a nuclear reactor built after the bill is enacted, or by hydropower, or by a coal-fired plant that captures and sequesters its emissions.
The House Energy and Commerce Committee approved the bill on May 21.
As renewable sources, it lists, among others, wind, solar, and geothermal energy, as well as energy from biomass, landfill gas, coal mine methane, wastewater treatment gas and certain types of waste.
The renewables standard would go into effect in 2012, when each utility would have to cover 6 percent of its total output—with the exceptions as noted—either with renewable sources or conservation. The standard would gradually rise to 20 percent in 2020.
A utility would be allowed to cover up to one-fourth of its requirement by conservation, a fraction that could be raised to two-fifths at the request of the governor of the state in which it operates. Utilities could buy conservation credits from other generators, or from distributors or third parties such as conservation organizations.
A utility that failed to meet the requirement would have to pay for the shortfall at a rate of 2.5 cents per kilowatt hour. The average price of electricity delivered to a residential customer is currently just over 11 cents per kilowatt hour.
