City of New Orleans - Renewable and Clean Portfolio Standard

On April 15, 2020, the New Orleans City Council adopted a Renewable and Clean Portfolio Standard (RCPS) via Resolution R-20-104, with the goal to eliminate carbon emissions in 2050 and reach net-zero emissions in 2040. Entergy New Orleans must follow the standard.

Eligible Technologies and Resources

RCPS eligibility is broken down into three tiers: Tier 1, Tier 2, and Tier 3 resources.

Tier 1 resources are any renewable energy resources (solar thermal, PV, wind, geothermal, fuel cell using renewable, hydroelectric, ocean wave, ocean thermal, tidal current, any additions/enchantments to such facilities), certain energy storage resources (batteries, flow batteries, fuel cells, pumped storage hydropower, flywheels, and pressurized gas storage systems), zero carbon emissions resources (nuclear, and any other resource that generated electric producing no emissions but does not qualify as a renewable energy resource under the RCPS; this does not include carbon capture utilize and storage (CCUS) on a fossil fuel resource), a distributed energy resource (solar PV, wind, combined heat and power (CHP), demand response, electric vehicles, microgrids, and energy efficiency), directly connected to the utility’s transmission or distribution system. They include the cumulative MWh savings of demand-side management (DSM) programs installed after January 1, 2021. 

Tier 2 resources are any renewable energy resource or zero carbon emissions resources not eligible for Tier 1, but that are in MISO or that are deliverable into the MISO region. 

Tier 3 resources are any qualified measures or EV charging infrastructure directly connected to the utility’s transmission or distribution system. A certified calculation of net carbon emission reduction must be provided to the Council by the utility regarding Tier 3 resources. The utility must propose the annual amount of Clean Energy Credits in MWh associated with the proposed resource for the Council to consider and approve.

Credits

The RSPS allows for both Renewable Energy Credits (RECs) and Clean Energy Credits (CECs), which are multiplied by the applicable tier multiplier (explained below) and combined to equal RCPS Compliance Credits. Energy storage resources may also receive credits, as explained below.

Renewable Energy Credits (RECs)

RECs are tracked through the Midwest Renewable Energy Tracking System (M-RETS) and result from one MWh of electric energy generated from a renewable energy source. For compliance purposes, credits must have been generated in the Midwestern Independent Systems Operator (MISO), the Electric Reliability Council of Texas (ERCOT), or an applicable energy resource that is being delivered to MISO or has been delivered to MISO previously. RECs must be Green-e certified and tracked with M-RETS or an equivalent of such a tracking system and must be tried against the compliance requirements in the applicable compliance year in which they are used. The utility may use RECs produced and Green-e certified in one compliance year for compliance in either of the two subsequent compliance years.

Clean Energy Credits (CECs)

CECs result from each MWh of electricity produced by a zero-carbon emissions resource; each MWh reduction in consumption from DSM installed starting in 2021; or each MWh associated with a Tier 3 resource. CECs associated with Tier 3 resources can be applied as RCPS Compliance Credits until 2040.

Energy Storage Resource Credits

Energy storage resources may be eligible for credits depending on the manner used. The Council must approve any storage resource applicability before its inclusion in the utility’s RCPS compliance. If the utility wants to utilize a storage resource for compliance, it must prove the project and explain how the project serves the RCPS and what kind of compliance credit the project should earn. Energy storage includes batteries, flow batteries, fuel cells, or machine storage resources like pumped hydro, flywheel, and pressure gas storage systems.

Compliance Multipliers

The RCPS contains a tier multiplier for RECs or CECs depending on the year. For the years 2021 through 2040, RECs or CECs from Tier 1 are credited at a multiplier of 1.25; Tier 2 at a multiplier of 1.0; and Tier 3 at a multiplier of 1.0. After 2040, the tier multiplier is 1.0 as default for all tiers, unless the utility can provide support for a different multiplier for a specific measure to be evaluated and approved by the Council. If a resource is eligible for more than one tier, it will receive the highest tier multiplier for which it is eligible as resources are only allowed to receive credits from one tier. 

The Council must evaluate the continued use of a tier multiplier and periodically review the amount. Both RECs and CECs are multiplied by the applicable tier multiplier and then combined to equal RCPS Compliance Credits.

Alternative Compliance Payments

In years where Entergy New Orleans fails to comply with the RCPS, it must pay an alternative compliance payment (ACP) into the city's Clean NOLA Fund. The Fund serves the purpose of fostering emission reduction in Orleans Parish using prioritized projects designed to reduce emissions from existing sources.

The ACP is denied by the Council in its resolution approving Entergy New Orleans RCPS Compliance Plan every three years. The ACP rate is applied for three years and is based on the highest market value of RECs in MISO over the previous three years (multiplied by a 1.15 multiplier). For the years 2023 through 2025, the ACP is at 8.45/MWh. When combined with the RCPS compliance cost incurred in a calendar year, the rate cannot exceed the Customer Protection Cap of 1% of total utility retail sales revenues for a year. The Customer Protection Cap is a mechanism to provide customers protection from unfeasible rate increases.

Standard

The utility must meet a specific percentage of retail compliance load (RCPS compliance credits divided by retail compliance load in MWh), alongside an allowable compliance percentage that can be fulfilled through purchasing unbundled RECs. The retail compliance load begins at 64% in 2022, increasing by 2% every compliance year until reaching 100% in 2040. The allowable compliance percentage through purchased unbundled RECs begins at 25% in 2022 and will decrease by 1% starting in 2026 until reaching 0% in 2050. The chart below illustrates the annual compliance percentages from 2022 to 2050:

Compliance Reporting

Entergy New Orleans must submit a three-year prospective RCPS Compliance Plan after submitting its final IRP every three years. RCPS Compliance Plans are filed in Docket No. UD-19-01, and a Compliance Demonstration Report must be filed by May 1 every calendar year starting in 2022 to track progress.