TVA, Southeast Score Largest Exemptions from House RES

This blog was written by John D. Wilson, former Deputy Director for Regulatory Policy at the Southern Alliance for Clean Energy.

Guest Blog | May 26, 2009 | Energy Efficiency, Energy Policy

Some bloggers are anxious about the renewable electricity portfolio standard in the latest version of the Waxman-Markey energy bill. Jim DiPeso writes, “The renewable portfolio standard as currently written may be worse than doing nothing.”

I think that goes too far, and encourage you to take action and support this legislation, but there are some pretty remarkable changes to the bill language. One little-noted provision is the higher threshold for regulation under the standard. In fact, the provision is so expansive that although the Tennessee Valley Authority is arguably the largest utility system in the country, public or private, the bill would exempt 50% of the Tennessee Valley Authority system from the renewable electricity standard (RES).

The revised RES includes a requirement that certain utilities provide 12-15% renewable energy and 5-8% energy efficiency by 2020. Utilities with annual electricity sales greater than 4 million megawatt hours (MWh) are required to meet this standard.

The TVA’s large exemption drives the Southeast’s generally above-average exemption. Southeast states with little or no TVA presence tend to have lower exemption rates than those with a large TVA presence. Looking at an eight-state region, utilities representing 26% of electricity sales in 2007 would be exempted from the RES, compared with an average national exemption of 20%.

Other notable exemptions resulting from this language include the entire state of Alaska, most of the utilities serving Vermont, and most of the utilities serving the upper Plains states.

For the TVA, this means that rather than 12-15% renewable energy, and 5-8% energy efficiency, it will only have to deliver 6-7.5% renewable energy and 2.5-4% energy efficiency. Also notably, only the TVA itself and its six largest distribution utilities will be subject to the act; 153 of its distribution utilities are exempt.

This estimate does not take into account that existing hydroelectric and other resources are exempt from the baseline. Considering those effects, the renewable energy requirement for the TVA will be even lower. I will update the analysis soon to include the hydroelectric effect.

Unfortunately, since the Energy Efficiency Resource Standard (EERS) portion of the Waxman-Markey bill is now incorporated into the RES, the same utilities with exemptions from the RES are also exempt from energy efficiency standards.

Exemption from proposed RES varies widely

State 2007 Electric Sales (GWh)
Utilities > 4 million MWh (GWh)
Percent of Load Exempt
TVA
170,686
85,313
50%
Tennessee106,00156,47747%
Mississippi48,15326,48045%
Georgia137,45395,32031%
Southeast
939,918 698,608 26%
Alabama91,82868,39526%
North Carolina131,88199,01025%
South Carolina81,94862,48224%
USA
3,739,785 2,981,265 20%
Florida231,085193,97716%
Virginia111,56896,46714%

Methods:

These estimates are based on 2007 EIA Form 861 data. Utilities are considered non-exempt from the RES if their total sales are greater than 4 million MWh. For investor-owned utilities, SACE has assembled a nationwide database of utility holding companies; all of the utilities owned by a single holding company are considered non-exempt if their cumulative sales are 4 million MWh or greater.

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