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Green Tariffs

Review Key Program Terms: Benefits and Risks

Review Key Program Terms: Benefits and Risks

Learning about the structure and components of a green tariff program will help you evaluate potential benefits, costs, and challenges of participation for your city.

There are three main categories of green tariff structures:

  • Physical PPAs, contracted via the Utility (or Sleeved PPAs), which grant customers access to individual renewable energy projects via physical PPAs facilitated by the utility; 
  • Subscriber programs, which grant participating customers access to portions of a larger renewable energy project or a blend of resources; and,
  • Market-based rate programs, which allow a city to participate in a wholesale market transaction through their utility. Under this structure, the customer enters a separate transaction for renewable energy from an off-site project, and the rate on the bill aims to closely reflect that market pricing.

The table below identifies the key considerations and specific examples for each type of structure.

Structure
Key Considerations
Examples
Physical PPAs via the Utility
(or Sleeved PPAs)

Key Considerations

- A customer's energy charge will likely be fixed and based on the PPA

- The transaction will likely be limited to one customer per project

- Customers have the potential to influence the resource procured

Examples

- Utah, Rocky Mountain Power, Schedule 34

- Nevada, NV Energy, Green Energy Rider
Subscriber

Key Considerations

- A customer's energy charge will likely be fixed and based on the PPA

- Multiple customers can access one project, which will likely be secured by the utility

Examples

- Oregon, Portland General Electric, Green Energy Affinity Rider (GEAR)

- Washington, Puget Sound Energy, Green Direct
Market-based Rate

Key Considerations

- A customer's energy charge will vary based on market conditions

- Customers have the potential to influence the resource procured within the wholesale market

- A customer may need to arrange additional or independent REC management

Examples

- Virginia, Dominion Energy, Schedule MBR

- Nebraska, Omaha Public Power District, Schedule No. 261 M

Once you understand what types of green tariff are available, you can evaluate key components of the programs, noting the benefits and risks.

Common tariff components include:

  • Program Size/Period of Availability

    The program may have a limited amount of generating capacity (the total number of megawatts) available or may only be available for a limited time. For example, customers are allowed to enroll in Consumers Energy Company’s Voluntary Large Customer Renewable Energy Pilot Program for three years on a first come, first serve basis. In contrast, Dominion Energy’s Schedule RG caps participation at 50 customers.

  • Customer Eligibility

    Eligibility to participate in a program may be a factor in electability. Utility criteria could include:

    • customer’s type (e.g., residential, nonresidential, municipal),
    • customer’s participation in specific rate schedules or tariffs,
    • whether a customer is increasing demand for electricity by building new facilities.
    • customer’s potential need to meet minimum size thresholds related to peak demand (megawatts) or a minimum contract amount (megawatt-hours).

    Even if your city meets these requirements, the total amount of renewable energy (megawatt-hours) you can purchase may be limited.

  • Aggregation of Customer Facility Demand

    Customers may be permitted to aggregate accounts to reach minimum participation threshold requirements.

  • Customer Cost Structure

    Green tariffs may involve various pricing components and credit mechanisms. These issues are discussed in detail in “Identify Financial Impacts”.

  • Contract Length Commitment

    Programs may offer several contract lengths, ranging from a single month to 30-years, with the price varying for each. For example, Xcel Energy’s Renewable*Connect program in Colorado allowed participants to purchase solar on a month-to-month basis or sign up for a 5- or 10-year contract; signing a longer contract allowed participants to lower their kilowatt-hour charge.

  • Procurement Lead

    A customer may be able to take the lead on selecting or providing input on the renewable energy resource (i.e. wind or solar)

  • Impact on Net Metering

    Utilizing a green tariff may prevent a city from taking advantage of net metering. For example, in Dominion Virginia Power’s Renewable Energy Supply Service, Schedule RG, customers cannot participate in the green tariff and also net meter

  • Renewable Energy Facility Limitations/Eligibility

    Resources that will serve the program may be limited by factors such as but not limited to: technology type, size, location, and whether the project consists of new or existing resources.

    For more information on the example green tariffs listed above and more insight into potential structures and key program components, see the Renewable Energy Buyer’s Alliance’s (REBA’s) Emerging Green Tariffs in US Regulated Electricity Markets Green tariff program components:
    the Emerging Green Tariffs in US Regulated Electricity Markets publication provides details on existing green tariff program structures and design. The publication was originally developed by WRI, but ownership of this work has since been transferred to the Renewable Energy Buyers Alliance (REBA). REBA is an independent organization that arose from a collaboration between WRI, RMI, BSR, and WWF.
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