Roy McCoy

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Roy McCoy Manager, Congestion and Renewable
Credits www.texasrenewables.com
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Renewable Energy Credit (REC) Program

• Purpose
• To meet the SB7 goal to develop 2000 MWs of NEW
  renewable capacity in TX by 2009 (in addition to
  880 MWs already in place)
• REC defined
• A tradable instrument that represents all of the
  renewable attributes associated with one MWh of
  production from a certified renewable generator.
  RECs may be traded separately from energy.
• Good for 3 Compliance Periods.
• Kickoff
• Full Program began on January 1, 2002

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Renewable Energy Technology

• EXCLUSIVELY relies on an energy source that is
  naturally regenerated
• SUN
• WIND
• GEOTHERMAL
• HYDRO-ELECTRIC
• WAVE (Tidal Activity)
• BIOMASS OR
• BIOMASS WASTE PRODUCTS
• Not derived from fossil fuels, waste products
  from fossil fuels, or waste products from
  inorganic sources.

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New Capacity Targets
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REC Program Overview

• Parties Involved
• Competitive Retailers (REPs and opt-in entities)
• Renewable Resource Generators
• Munis and Coops
• Public Utility Commission
• ERCOT (Program Administrator)
• General Public
• Texas-wide (includes non-ERCOT areas)

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Competitive Retailer Responsibilities and
Activities

• Register with ERCOT
• Retire RECs annually to comply with annual REC
  requirements
• Report MWh Load to ERCOT via ERCOT EPS Meter Data
  or Manual Input
• May qualify for REC Offsets (PUCT Subst. R.
  25.173(i))

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Generator Responsibilities

• Register with the Commission and be certified as
  a REC Generator
• Register with ERCOT
• Produce electricity that qualifies to earn RECs
• Produce electricity to retain Allocated Offsets
• Report MWh Production to ERCOT via ERCOT EPS
  Meter Data or Manual Input

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REC Offsets

• A REC Offset represents one MWh of renewable
  energy from an existing renewable generation
  facility (in place prior to 9/1/99) that may be
  used by a Competitive Retailer in place of a REC
  to meet a renewable energy requirement. REC
  offsets may not be traded.
• To qualify for REC offsets in the REC Program,
  participants (REPs, Munis and Coops) must have
  applied with the Commission by June 1, 2001.
• Generators must generate electricity to retain
  Allocated Offsets
• Long term contracts must remain in effect

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Muni Coop Activities

• May have qualified for REC Offsets even though
  they have not yet opted into competition.
• Qualifying Munis and Coops, once opted in (and
  required to participate in the REC Program as
  Competitive Retailers), may use REC Offsets to
  satisfy all or part of their annual REC
  requirement.

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Commission Activities

• Certification of REC Generators and Retail
  Electricity Providers as Competitive Retailers
• Approval of offset credits for qualifying
  Generation entities and their member Competitive
  Retailers
• Develop equations to determine the MWh of
  renewable energy produced by generation-offset
  technologies) and other renewable generators that
  are not interval metered (e.g. landfill gas)

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ERCOT Responsibilities

• Register and create accounts for REC Generators,
  REC Offset Generators, Competitive Retailers and
  other participating entities.
• Assign RECs to generator REC accounts on a
  quarterly basis
• Determine the annual REC requirement for each
  Competitive Retailer (taking into account any REC
  Offsets)
• Report annually (April 15) to the Commission on
  the status of the REC Program and compliance with
  REC requirements.
• Retire RECs as directed or as they expire
• Maintain REC Program web site with required
  information.

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Capacity Target vs. ActualThrough October, 2004
1187
1186
989
842
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REC Accounts As Of October, 2004
68
50
37
32 23
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Renewable Resources by Type, added since REC
Program initiatedMW Capacity in 2004
1140 10.3 5.4 30.7 .02
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Calculation Acronyms - Definitions

• REC Renewable Energy Credit
• CCF Capacity Conversion Factor
• PRR Preliminary REC Requirement
• SRR Statewide REC Requirement
• CRS Competitive Retailer Sales
• TCS Total Texas Competitive Sales
• ARR Adjusted REC Requirement
• AO Allocated Offsets
• TUO Total Usable Offsets
• SARR Sum of Adjusted REC Requirements
• FRR Final REC Requirement

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Statewide REC Requirement Calculation

• Target MW Capacity for the year
• x 8,760 Hours in the year
• x Current Capacity Conversion Factor

Example for 2004 2004 Target Capacity 850 MW x
Hours In Year 8,760 x Current CCF
35 REC Requirement 2,606,100 RECs
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Capacity Conversion Factor Calculation

• For Each Competitive Retailer
• Find their maximum possible output level
• Capacity x Total Hours in the year
• Ex. 150 MW capacity x 8,760 Hours 1,314,000
  MWh
• Then Divide their Actual Output by this maximum
  capability
• Ex. 450,000 MWh actual production / 1,314,000
• 34 CCF
• Get the Weighted Average of all CRs CCFs for a
  Program CCF.

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The REC Requirement Calculation

• Annual REC Requirement
• PRR SRR x (CRS / TCS)
• ARR PRR AO (not lt 0)
• TUO SRR SARR
• FRR ARR (TUO x (CRS / TCS))
• /- (CARRYOVERS/ADJUSTMENTS)
• ERCOT is required to recalculate the FRR for
  the previous compliance period.

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REC Requirement Calculation Example

• Using example Load of 13,000,000 MWh and
• 15,000 Allocated Offsets

PRR 2,606,100 x (13,000,000 / 239,500,000)
141,459 ARR 141,459 15,000 126,459
TUO 2,606,100 2,591,100 15,000 FRR
126,459 (15,000 x (13,000,000/239,500,000))
127,273
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• QUESTIONS?

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