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The Energy Blues
A new issue just cropped up about our sustainable, renewable hydropower. Juneau is proud our local utility is almost 100% fossil fuel-free. It's good for the environment, of course, but it also helps the city and local nonprofits qualify for grants they otherwise might not. It lets Greens Creek Mine tell their investors they contribute less to global climate change when they plug in. The Juneau Carbon Offset Fund can honestly tell people their contributions go to replacing oil-fired heat with renewable hydropower-powered heat pumps (and low-income Alaskans save money on their home heating bills, too!)
That could all get confused. The Alaska Industrial Development & Export Authority has a proposal to sell Renewable Energy Certificates (RECs) based off the energy generated by the Snettisham hydroelectric project.
RECs are weird. They're a thing you can buy that isn't a thing. When a company buys a REC, it pays for the right to say it has the renewable nature of the power. It's tied to a certain number of kilowatt-hours of hydropower (or wind or solar,) but you don't have to actually be plugged in to the renewable source to get the REC from it. You could run a factory off coal power in China and buy RECs tied to hydropower in Juneau, and voila! You can claim your factory is carbon neutral.
The catch is: then Juneau folks couldn't say their electricity is renewable. Someone else would own that characteristic of the kilowatt-hours we actually use here.
(There are also RECs that support brand-new renewable energy sources. I don't have as hard a time with a company claiming credit for helping fund additional renewable power—especially if the renewable project wouldn't have gotten built REC money.)
So why is this an issue now?
A few decades ago, AIDEA issued tax-free bonds so AEL&P could buy the Snettisham hydroproject that produces most of Juneau's power from the feds. It was cheaper for ratepayers that way. AIDEA owns all the generation equipment, but everything that comes off it goes to AEL&P. The utility has to operate and maintain it, while paying AIDEA enough to retire the bonds. The contract is very clear about all that. But it doesn't explicitly say who owns the nature of the power itself.
The authority and the utility are in court sorting that out now. It's an interesting legal issue, with a couple of good arguments on both sides. AEL&P is right that AIDEA was only ever in the deal as a financing conduit and not to make money off of Snettisham or anything coming from it. AIDEA is right that the first proto-version of RECs existed in the world when the contract was drawn up, so it could conceivably have included them in what AEL&P gets. They argue that means AIDEA owns and can sell the renewable characteristics of the power it doesn't own.
The arguments go on beyond that, but I'm not an attorney, and definitely not an expert on how courts read contracts. I got involved in the dispute only to ask that no RECs get sold until a judge decides. Both parties have agreed to that.
We'll all want to keep an eye on this one.
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