Renewable Portfolio Standards

Renewable Portfolio Standards

September 10, 2015 | By Keith Martin in Washington, DC

Renewable portfolio standards survived a court challenge.

A US appeals court said in July that a Colorado statute requiring utilities in the state to deliver at least 20% of their electricity from renewable sources does not violate the part of the US constitution that forbids states from enacting laws that interfere with interstate commerce.

A lower court had come to the same conclusion earlier. The state RPS target is scheduled to increase to 30% in 2020.

The Energy and Environment Legal Institute sued the members of the Colorado Public Utilities Commission to block implementation of the state RPS statute.

The group said that the Colorado statute harms a coal company in another state that is a member of the law institute because coal-fired power plants in other states will lose business in Colorado, leading to less demand for coal. It argued that the Colorado statute regulates conduct outside Colorado in violation of the US constitution.

The court said the problem with this argument is that it would require courts to strike down all state laws that regulate health or safety by requiring manufacturers who want to do business in the state to alter their designs or labels. It said it can see how a state statute that discriminates against out-of-state rivals goes too far. An example is a state law requiring all milk sold in New York to be purchased from New York dairy farmers. However, requiring Colorado utilities to supply a certain percentage of electricity from renewable sources confers no special advantage on Colorado power producers.

The decision was in a case called Energy and Environment Law Institute v. Epel et al.

The law institute is waiting for a decision in another case in Minnesota before deciding whether to appeal. In that case, North Dakota and various electric cooperatives sued to block enforcement of a “Next Generation Energy Act” that Minnesota enacted in 2007 that bars construction of new power plants of 50 megawatts or more in the state that contribute to carbon dioxide emissions unless an offset project is undertaken at the same time to reduce emissions by the same amount. The statute also bars electricity from being imported into Minnesota from such power plants in other states.

The Minnesota statute complicates life for electric cooperatives that cross state lines. For example, the Dairyland Power Cooperative in Wisconsin provides electricity from a coal-fired power plant in Wisconsin that Minnesota views as a new power plant. About 16% of the electricity goes to members of the cooperative in Minnesota. The Basin Electric Cooperative in North Dakota supplies power to 135 rural electric system members in nine states, including 12 members in Minnesota. The members share the costs. Basin Electric buys a lot of electricity through requests for proposals.

A federal district court held in April 2014 that the Minnesota statute violates the US constitution because it requires coops in other states effectively to seek approval from Minnesota before undertaking a transaction in another state. The case is North Dakota v. Heydinger. It is now before a US appeals court.