Chesapeake PSR

Is Maryland's renewable energy law working?

Climate Change and EnergyTimothy WhitehouseComment

Maryland ratepayers supported direct rebates to residents of Oberlin, Ohio, on their electricity bills. These transactions highlight why urgent changes are needed to Maryland’s Renewable Portfolio Standard (RPS), and why Chesapeake PSR supports the 100% Clean Renewable Energy and Equity Act.

Here is a brief summary of how Maryland ratepayers came to subsidize the bills of Oberlin residents without producing a single new kilowatt-hour of clean electricity.

According to an article in the Oberlin News-Tribune, Oberlin Municipal Light & Power System (OMLPS) bought renewable energy credits (RECs) when purchasing energy, primarily from landfill gas-to-energy sites.  The utility then sold the RECs at a profit to utilities in Maryland (and other states), who then passed those costs on to their ratepayers.

Because OMLPS is a community-owned, not-for-profit electric utility, the Oberlin City Council voted to rebate $2.2 million to its customers of the money made from selling these RECs to Maryland and the other states.  The Council then voted to put the remaining funds in the utility’s sustainable reserve fund for energy conservation and efficiency programs.

The article in the Oberlin News-Tribune describes RECs as allowing states “to meet stricter pollution standards without reducing pollution.”  Under Maryland’s RPS, utilities can buy electronic or paper credits from out-of-state utilities to meet a large part of their renewable energy requirements without buying the actual energy.

Our review of Public Service Commission Reports indicates that Maryland ratepayers paid an estimated $8.6 million for RECs from electricity produced by landfill gas projects in 11 states from 2008-2016. Only about 17 percent of this money, or about $1.5 million, was spent to buy RECs from facilities in Maryland.

Landfill gas projects involve collecting methane to use as a fuel source to produce electricity that is distributed into the regional, electric utility grid.

Between 2008-2016, Illinois was the biggest recipient of Maryland ratepayer support for energy produced from landfill gas, receiving an estimated $2.6 million from the sale of Illinois-generated RECs to Maryland utilities. Ohio received almost $680,000 during this period.

It is not clear, from our review of Maryland Public Service Commission reports, how much money Oberlin made from the sale of RECs to Maryland utilities. But Public Service Commission reports confirm that Maryland utilities did buy landfill gas RECs from Oberlin’s county dump.

Other states benefiting from Maryland’s purchase of landfill gas RECs are Kentucky, Tennessee, Michigan, North Carolina, New Jersey, Virginia, Pennsylvania, Delaware.

Under Maryland’s RPS law, and under proposals to raise the current RPS to 50 percent, utilities can buy “unbundled RECs” from a geographic area that encompasses about one-third of the U.S. An unbundled REC means the utility buys only the certificate, not the underlying energy.

In 2016, these RECs accounted for up to 80 percent of Maryland’s Renewable Portfolio Standard. Unbundled RECs do little to address the state’s dependence on fossil fuels, impose unnecessary costs on Maryland ratepayers, and are used to make Maryland’s energy mix look greener than it is.

Chesapeake PSR supports efforts to reform Maryland’s RPS to address the problem of “unbundled RECs.”  Maryland ratepayers should not be subsidizing energy production in far away states that does not add new clean energy to our grid.

The 100% Clean Renewable Energy and Equity Act addresses this concern by requiring utilities to enter into long-term power purchase agreements for the actual purchase of clean renewable energy, and by incentivizing investments in local distributed solar and offshore wind.

Chesapeake PSR’s executive director, Tim Whitehouse, wrote a blog on the issue for Maryland Matters, which can be found here.



2008-2016 PSC RPS Reports