South Coast Solar

After rejecting the idea in 2005 because of cost concerns, the state’s Public Service Commission decided in January to re-examine the feasibility of mandating power companies reach a certain level of renewable generation.

At this point in the process, the PSC has not outlined any specific proposal. But a draft plan authored by the New Orleans-based Alliance for Affordable Energy calls for a target of 5 percent renewable energy by 2010 with a 1 percent increase every following year to reach 20 percent by 2025.

It’s a relatively conservative plan as renewable energy standards go. New York, for example, has a target of 25 percent renewable power by 2013.

Louisiana gets roughly 2 percent of its electricity from renewable sources, according to the federal Energy Information Administration, and observers say even a modest renewable requirement could spur significant changes to the state’s existing energy landscape and investment in alternative power generation.

The PSC last week held its second conference on the issue, one in a series of hearings at which a task force led by utility consulting firm J. Kennedy and Associates will weigh factors such as the availability of renewable resources in the state, transmission challenges and overall costs of increasing reliance on renewable power.

It’s an idea whose time has come, said PSC Chairman Lambert Boissiere III, who introduced the proposal calling for a new another look at a state renewable energy standard.

Boissiere said a shift is under way throughout the country toward producing energy “in a smarter, greener way.”

“The nation and the world are moving toward smarter ways of producing electricity, and I think Louisiana shouldn’t sit on the sidelines but be a participant in the process,” Boissiere said.

Ecological benefits aside, the commissioner said increased reliance on renewable energy sources could have economic benefits. A diversified fuel mix, he said, could hedge against volatile fossil fuel prices and spur the creation of new energy industries in Louisiana.

But Boissiere conceded that the cost to ratepayers would factor significantly in the PSC’s decision on whether to implement a renewable requirement.

Among the foremost arguments against renewable power is the cost, which is higher than electricity generated from fossil fuels.

A 2005 PSC report said the 10 largest green energy programs nationwide cost ratepayers on average 35 cents more per kilowatt-hour than conventionally generated power, or an extra $5 per month for a home using 1,500 kilowatt-hours of electricity.

Proponents counter that renewable portfolio standards guarantee demand for renewable energy that ultimately will reduce the risk for investors in renewable technology and the cost of generation over the long run.

But it’s not clear whether a majority of PSC members will buy that argument.

Boissiere said he hasn’t encountered any immediate opposition to a renewable energy standard, “but we’re a little early.”

Jesse George, a legal adviser for the Alliance for Affordable Energy, said he was once encouraged about the chances for a renewable portfolio standard in Louisiana, but his optimism is waning.

George said he senses ambivalence among some commissioners, several of whom have expressed skepticism about any environmental argument for increased renewable energy reliance.

“They’re really more interested in seeing how much it’s going to cost ratepayers,” he said, “which pretty much ignores the purpose (of setting renewable standards). … None of us are going to pretend that renewables are currently cost competitive with fossil fuel generation, but that’s why you implement these policies, to level the playing field.”

A decision on renewable power might not be left solely to state regulators. President Barack Obama has expressed support for a federal renewable power standard, an idea included in a discussion draft of energy legislation Congress will consider.•

Energy cost impact on industry uncertain

The head of the Louisiana Public Service Commission and the state’s top economic development official are at odds over whether energy costs are affecting the state’s bottom line.

That Louisiana relies largely on natural gas to generate electricity isn’t hindering the state’s ability to attract or retain business, said PSC Chairman Lambert Boissiere III.

But when German steel giant ThyssenKrupp opted to build its $2.9 billion steel mill in Alabama instead of Louisiana, Louisiana Economic Development Secretary Stephen Moret said higher utility costs were the primary reason.

ThyssenKrupp spokesman Christian Koenig said the company, after narrowing its choices to Alabama and Louisiana in February 2007, selected Alabama after evaluating factors such as “logistical considerations of the company’s supply chain from Brazil to our projected customers; operating costs such as electricity and labor; and site specific capital expenditures.”

The PSC, which regulates the state’s utilities, understands utility costs are a significant factor of where a business is going to locate, Boissiere said.

“We’re fairly competitive with the Gulf South states with our (state) competitors with the same businesses,” Boissiere said.

Natural gas is the fuel source for the majority of Louisiana’s power companies. Although natural gas prices spiked in 2004 and 2005, which led utilities to increase their rates, Boissiere said some of the lowest natural gas prices in decades make Louisiana very competitive. The state’s edge could grow if Congress passes President Obama’s proposed cap and trade legislation to limit carbon dioxide emissions.

“Neighboring states have a lot more solid fuel … coal-type plants, which are subject to the likelihood of a tax or a cap and trade type event because of carbon emitted through solid fuel,” Boissiere said. “We don’t feel like that would be a problem in Louisiana because of our heavy reliance on natural gas.”

Boissiere said natural gas prices can only go up but he expects any increases to be minimal based on data experts have provided him on the country’s natural gas reserves.

Karen Wimpleberg with the Alliance for Affordable Energy said Louisiana is competitive when it comes to providing power for industrial users. One example she cites is the Louisiana Energy Users Group, a consortium of large industrial companies, which works to achieve lower fuel prices by negotiating with utilities.

—Jaime Guillet

Offshore wind turbines, such as these off the Wales coast, may be explored as a renewable energy option for Louisiana. (Photo courtesy Vestas)

Source: New Orleans City Business