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C&I Ratepayers Are Driving Green Tariff Development in Regulated Markets

October 28, 2016 By Cheryl Kaften

U.S. utilities increasingly are offering large-scale renewable energy purchasing programs, called “green tariffs,” according to a report by the World Resources Institute (WRI), a global research organization based in the District of Columbia, released on October 27.

By using green tariffs, customers – especially commercial and industrial ratepayers– are able to source up to 100 percent of their electricity from renewable resources at a fixed rate.

WRI’s updated issue brief, Emerging Green Tariffs in U.S. Regulated Electricity Markets, finds that, as of September, traditional utilities in the United States had created 10 green tariff options in eight states– twice the number that existed at the end of 2015. 

Utilities that offer these large-scale renewable energy purchasing programs include some of the nation’s largest shareholder-owned utilities – among them, Xcel Energy and Duke Energy.

The 10 green tariff options available or proposed today increase access to renewable energy in eight states and create the opportunity for large buyers like corporations and manufacturers to pursue hundreds of megawatts of new, renewable energy.

Over the past three years, the report finds, green tariffs have taken various forms:

  • Tariffs & Riders: Tariffs replace the standard electricity rate customers are charged on their bills with the cost of the renewable energy. Riders, on the other hand, are added on top of the standard rates. Riders usually comprise the total of the cost of the renewable energy and a credit for the fossil-fueled power the customer replaced. Generally speaking, both tariffs and riders serve a larger load by enabling a power purchase agreement (PPA).
  • Subscriber Programs: Under these programs allow customers to subscribe to very small amounts of energy from a larger renewable energy project and replace the standard charge for fossil-fueled power on their bill. The utility aggregates these smaller customers to make a single, larger project more cost-effective.

The report finds that a rising number of utilities are seeking out products, such as green tariffs, that meet customers’ needs. In some states, utilities have created more than one green tariff option. Public utility commissions also have grown more familiar with successful green tariff elements and more comfortable that they will not  adversely impact other customers.

As a result, the WRI said, regulators have been approving green tariffs quickly, with more expected in the coming months.

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