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SB 251 (2011)

Frequently Asked Questions (FAQ) about SB 251 as it passed the Indiana Senate on Feb. 22, 2011

Q:           What is SB 251 and what does it do?

A:            SB 251 provides a variety of financial incentives to electric utilities for so-called “clean energy projects” under a voluntary clean energy portfolio standard program.

Q:           Does SB 251 include other bills introduced?

A:            SB 251 inserts the language of another bill, SB 102 Utility recovery of federally mandated costs, which was heard earlier this session.

Q:           What does SB 251 say about nuclear power?

A:            SB 251 states that it is the official policy of the State of Indiana to encourage nuclear energy and carbon dioxide capture. It further states that nuclear energy production is encouraged at the same time as are new coal fired and other fossil fuel based energy production or generating facilities.

Q:           Does SB 251 only encourage new nuclear energy development?

A:            No, SB 251 also addresses the expansion, power uprate or life cycle management of a nuclear energy production or generating facility.

Q:           What is a nuclear power uprate?

A:            A nuclear power uprate refers to a process where the production capacity of an existing nuclear power plant is increased above the level it was originally licensed by the federal government.

Q:           Who wants to do a nuclear power uprate?

A:            American Electric Power (AEP) who owns the Cook Nuclear Plant in Michigan which is operated by their subsidiary Indiana Michigan Power Company (I&M) is proposing a 2 unit uprate of 400 MW to their existing 2155 MW Cook Nuclear Plant located in Michigan.

Q:           Why does SB 251 still focus on developing nuclear power for Indiana after the earthquake and tsunami in Japan?

A:            The Indiana Senate passed SB 251 on 2/22/2011 before the earthquake and tsunami in Japan which created problems with their nuclear power plants.

Q:           Could SB 251 be amended to remove nuclear power?

A:            Yes, SB 251 could be amended in the House Committee or on Second Reading to remove references to nuclear power.

Q:           How does SB 251 change the definition of “renewable energy resources”?

A:            It changes the list of renewable energy resources at IC 8-1-8.8-10 which “true” renewables,  renames it “clean energy resources” and adds clean coal, nuclear, combined heat & power, etc.

Q:           Does SB 251 say anything about the state of Indiana’s policy to promote or develop “real” or true renewable energy resources such as wind and solar?

A:            No, SB 251 rolls out the red carpet for nuclear power and coal by stating it is in the public interest to encourage these resources; then tells “true” renewable energy resources to use the back door.

Q:           Does SB 251 promote true renewable energy resources through a Renewable Portfolio Standard (RPS) or Renewable Energy Standard (RES) adopted by more than half of the states in the US?

A:            No, SB 251 creates a new voluntary program called the “Clean Energy Portfolio Standard Program”?

Q:           How does SB 251 compare to other state’s voluntary RPS or RES programs?

A:            SB 251 goal of 10% by 2025 is anemic and totally inadequate compared to the voluntary state RPS goals of ND & SD: 10% by 2015; OK 15% BY 2015; UT & VT: 20% by 2015; and WV: 25% by 2025.

Q:           How does this Clean Energy Portfolio Standard Program work?

 

A:            SB 251 creates  a three-tier “clean portfolio standard goal” or CPS goal that if met by investor owned electric utilities in Indiana will provide a “carrot” or financial incentive allowing the Indiana Utility Regulatory Commission (IURC) to award an increased rate of return on equity (ROE) to shareholders if they have “clean energy resources” in their generating mix.

Q:           What are the three tiers?

A:            CPS Goal I: For the calendar years 2013 thru 2018 an average of at least 4 %.

                CPS Goal II: For the calendar years 2019 thru 2024 an average of 7%

                CPS Goal III: For the calendar year ending 2025 at least 10%.

Q:           What is a “clean energy resource”?

A:            SB 251 creates a new term called “clean energy resource” by adding clean coal technology, carbon capture and storage projects and nuclear energy to the laundry list of “true” renewable energy resources such as wind, solar, biomass, hydro, geothermal, etc.

Q:           Are there any requirements or rules about the generation mix the utility must meet to achieve the CPS goal and qualify for the ROE incentive?

A:            Yes, but the only restriction is that a utility may not use more than 30% to meet the CPS goal from the following: clean coal technology, nuclear energy, net metering, combined heat and power, electricity generated from natural gas after 7/1/11 which displaces existing coal fired generation or

                industrial byproduct technologies that use fuel that is a byproduct of an industrial product.

Q:           Does SB 251 encourage or reward clean energy resources developed in Indiana?

A:            The bill provides more “clean energy credits” or CEC’s for each one (1) megawatt (MW) of clean energy that is NOT generated by a facility located in Indiana and 1.25 MW’s of clean energy if it is generated by a facility located in Indiana.

Q:           Does SB 251 encourage or reward “true” renewable energy systems manufactured in Indiana?

A:            SB 251 does nothing to incentivize “true” renewable energy systems such as solar and wind to revitalize Indiana’s manufacturing sector.

Q:           Does SB 251 offer a reasonable compromise or balance of the interests of utility shareholders and utility ratepayers?

A:            No. The provisions now in SB 251 are very one-sided to the benefit of utility shareholders. It does not offer benefits such as clean, affordable energy to ratepayers without huge benefits to shareholders.

Q:           What incentives does SB 251 provide to the renewable energy and distributed generation industry, i.e. where’s the carrot for anyone other than investor owned electric utilities?

A:            None.

Q:           Are there other ways to promote renewable energy and distributed generation development that benefits utility ratepayers, the renewable energy industry and economic development in Indiana?

A:            Feed-in tariffs currently voluntarily offered by Indianapolis Power and Light (IPL) and proposed by Northern Indiana Public Service Commission (NIPSCO). These feed-in tariff rates pay other ratepayers and developers for investing and installing “true” renewable energy systems only after and if they are producing electricity. SB 251 provides Construction Work in Progress (CWIP) for traditional electric power generation before and if it never benefits consumers.

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