Inconsistent Federal Payments Discourage Public Renewable Power
Federal energy law requires payment to public utilities of 1.5 cents per kilowatt-hour (adjusted for inflation) for renewable energy generation developed by those utilities. This "Renewable Energy Production Incentive" (REPI) was initially enacted in 1992 as the public counterpart to the private production tax credit (PTC). However, inconsistent payment from the feds has discouraged many public utilities from pursuing renewable projects on their own because they can't compete financially with private developers who benefit from the PTC. Also, the Bush Administration has reduced the REPI appropriation to zero in FY 2009.
Most recently, Energy Northwest put its 50 MW Reardan Twin Buttes Wind Project west of Spokane, WA up for sale, citing inconsistent REPI payments. The Washington legislature is considering taking up the slack, but any bill will be a stopgap solution and will of course only apply in Washington. With a change in administrations in Washington, D.C., hopefully we will see a renewed commitment to renewable energy development on a national scale, not only by fully funding the REPI but also by providing a long-term extension of the PTC. The need is great enough and the opportunities are broad enough that all who seek to develop renewable power, public or private, should be encouraged to do so.
Posted by David J. Petersen, partner practicing in the Sustainability and Real Estate & Land Use Practice Groups.
