Louisiana’s large electricity customers will be allowed to purchase up to 500 MW of renewable power through a new type of agreement with renewable project owners.
The Louisiana Public Service Commission has issued a rule giving large commercial and industrial customers in the state a new way to access up to 500 MW of renewable power, stating that customers need renewable power “in order to remain competitive.”
Louisiana currently has 600 MW of solar power, providing less than 1% of the state’s electricity, according to the national solar trade group Solar Energy Industries Association.
The member companies of the Gulf States Renewable Energy Industries Association “are greatly encouraged by this consumer-driven demand for renewable energy expansion,” said Monika Gerhart, the group’s executive director. GSREIA and many other parties intervened, or participated, in the four-year regulatory proceeding that led to the rule.
Under the rule, a large electricity customer may notify the utility that provides its electric service of its intent to seek a “sleeved” power purchase agreement (PPA). A sleeved PPA, the rule says, is an agreement for the capacity, energy and renewable attributes of a renewable generator that is negotiated between the customer and the generator’s owner, and then executed by those parties and the customer’s utility.
The rule provides an additional option for procuring renewable energy beyond the standard PPA option. For example, McDonalds has two PPAs with Lightsource bp to purchase solar power from Louisiana projects, one for the entire output of a 180 MW project and another, alongside eBay, to purchase part of the output of a 345 MW project.
After a customer notifies a Louisiana utility of its intent to seek a sleeved PPA, the utility must within 60 days design a rate schedule and propose it to state regulators. Regulators then have 90 days to approve or deny the rate schedule.
The utility must state in the rate schedule the customer charges and credits for a sleeved PPA and how they will be determined. Typically included will be a credit for the accredited capacity provided by the renewable generator.
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For each utility, the rule limits the maximum amount of renewable capacity eligible for sleeved PPAs to 5% of the utility’s peak summer demand. Entergy Louisiana, the state’s largest utility, recently had a peak summer demand of almost 10,000 MW, so for that utility alone, 500 MW of renewable capacity (5% of 10,000 MW) would be eligible for sleeved PPAs.
The Louisiana rule is available on pages 29-37 of this document.
