Clean Energy Portfolio Standard

In May 2011, Indiana enacted S.B. 251, creating the Clean Energy Portfolio Standard (CPS), also known as the Comprehensive Hoosier Option to Incentivize Cleaner Energy (CHOICE) program. The program sets a voluntary goal of 10% clean energy by 2025, based on the amount of electricity supplied by the utility in 2010. Indiana's participating utilities receive an incentive to increase the amount of renewable energy sources in their portfolio.

Eligible Technologies

Indiana's CPS includes renewable energy technologies, but also conventional energy sources like nuclear, coal, and natural gas. Specifically, there are 21 eligible "clean" energy technologies: solar energy; photovoltaic cells and panels; dedicated crops grown for energy production; organic waste biomass, including agricultural crops, agricultural wastes and residues, wood residues, forest thinnings, mill residue wood, animal wastes, animal byproducts, aquatic plants and algae; hydropower; fuel cells; hydrogen; energy from waste to energy facilities, including energy derived from advanced solid waste conversion technologies; energy storage systems or technologies; geothermal energy; coal bed methane; industrial byproduct technologies that use fuel or energy that is a byproduct of an industrial process; waste heat recovery from capturing and reusing the waste heat in industrial processes for heating or for generating mechanical or electrical work; landfill methane recovery; demand side management or energy efficiency initiatives; a clean energy project described in the statute; nuclear energy; distributed generation connected to the grid; combined heat and power; electricity that is generated from natural gas at a facility constructed in Indiana after July 1, 2011 which displaces electricity generation from an existing coal fired generation facility.
Up to 30% of the goal may be met with nuclear energy; combined heat and power systems; natural gas that displaces electricity from coal; clean coal technology; and net-metered distributed generation facilities. Thermal energy used for heating, cooling, or mechanical work is eligible for the goal. In order to measure thermal energy for the purpose of goal compliance, it may be measured directly through a meter, calculated using an equation set forth in IAC 17.1, or a utility may seek approval from the commission to use an alternative equation.
Carve-out
Fifty percent of qualifying energy obtained by Indiana utilities participating in the CPS must come from within the state.   Requirements   In order to participate in the program, electric utilities must apply directly to the Indiana Utility Regulatory Commission (IURC) no later than 2 years after the beginning of Goal Periods I or II, as outlined below. Only public utilities may participate in the program; municipally-owned utilities, rural electric cooperatives or electric cooperatives with at least one rural electric cooperative member may not participate in the program. Applications must include a plan to meet the goals, including a detailed business plan and the identification of specific projects and resources.   Participating utilities must meet the following goals in order to stay in the program and continue receiving incentives:

• Goal Period I:  January 1, 2013 - December 31, 2018, an average of at least 4% of electricity supplied must be from clean energy.
• Goal Period II: January 1, 2019 - December 31, 2024, an average of at least 7% of electricity supplied must be from clean energy.
• Goal Period III: January 1, 2025 - December 31, 2025, an average of at least 10% of electricity supplied must be from clean energy.

Utilities that participate in the program and meet the program goals are eligible for incentives which are used to pay for the compliance projects. A utility may apply to the commission to increase its Return on Equity by as much as 50 basis points over its current rate of return, or request a periodic rate adjustment mechanism. Applications to receive incentives must be filed no later than 6 months after the end of each Goal Period.

Compliance

Utilities may purchase, sell, or trade Clean Energy Credits, which are defined as 1 MWh of clean energy (as defined above) or 3,412,000 BTUs. Any excess amounts of clean energy supplied during a specific goal period or any Clean Energy Credits purchased from another supplier may be counted toward the next goal period. Other than this exception all clean energy sources must be in service, purchased or contracted for by the effective dates of the CPS program goals.

Reporting

Program reports from each participating utility are due annually on March 1 beginning in 2014. Reports must include a detailed explanation and supporting documentation of any requests for rate adjustments for cost recovery associated with the CPS program.