Changing Resources, Changing Market: The Impact of a National Renewable Portfolio Standard on the U.S. Energy Industry

Abstract

The U.S. Congress recently passed a new energy bill that, until that last minute, included provisions that would have established a national renewable portfolio standard (RPS). The RPS would have required electric utilities to procure a certain percentage of their electricity from renewable resources or purchase renewable energy credits from other sources to meet the standard. The recent energy bill is just the latest of repeated, and thus far failed, efforts to impose a national RPS. As such, there has been much debate about the potential merits and hazards of a national RPS, and more is sure to follow. Rather than joining this part of the policy debate, this Article considers the effects implementing a national RPS would have on the operation of the energy industry. More specifically, the Article considers what a national RPS would mean for electric utilities, regulators (state and federal), and consumers. The Article begins with an introduction to the most recent national RPS proposal, including a brief summary of both the program's goals and major criticisms of the proposal. This introduction also includes an overview of the current and pending state-level RPS standards. The Article then discusses the primary issues a national RPS would raise for key stakeholders. First, the Article considers what a national RPS would mean for electric utilities - focusing on necessary compliance activities and the possible effects on short- and long-term investment decisions - including infrastructure and RPS compliance sources. Next, the Article discusses the impacts on state and federal regulators, focusing on the development of a renewable energy credit tracking system, the enforcement of the national RPS, and the role regulators at each level will have in the process. Finally, the Article considers the impacts a national RPS could have on consumers with regard to short- and long-term electricity costs. The Article concludes that, although the implementation of any major policy initiative takes significant resources, the biggest hurdle facing a national RPS is political, not technological or economic.

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