There have been decades of hard work by Texans to create the foundation that enabled renewable energy to flourish. This section features developments that played a significant role in the Texas success.

Deliberative Polls (1996-1998) – a watershed for public input that strongly influenced utility decision makers in Texas

Renewable Energy Tariff (1998) – established in an effort to ensure that Texas consumers had access to quality programs

Texas Renewable Portfolio Standard (1999) – clear rules + meaningful penalties = unprecedented results

Renewable Energy Credits (2000) – the first comprehensive statewide system for tradable RECs in the country

Texas Policy Model Reference Documents – provides language from select rules as well as independent assessments of policies throughout the U.S.

Deliberative Polls™ – Texas customers speak out

From 1995 through 1999, Texas' utility industry was governed by integrated resource planning, which required public input by customers to assist in future utility planning. During that period practically all of the major utilities in Texas conducted Deliberative Polls. These Polls enlightened utility executives and utility regulators regarding the preference of customers, showing that 80% of Texans wanted their energy to come from cleaner sources. These results, quite frankly, changed everything in Texas.

TABLE 1. TEXAS UTILITY CUSTOMER POLL RESULTS (Based on Deliberative PollsTM at 8 largest investor-owned utilities, representing 67% of customers in Texas)

The table above is an excerpt from the full results found in the following PDF:

“What Texans Want from their Electric Utility”

Renewable Energy Tariff Rule
Prior to the electric restructuring legislation and the implementation of Texas' Renewable Portfolio Standard, Texas implemented a pro–consumer renewable energy rule to ensure Texans receive new renewable energy at reasonable prices. To some, Texas' “Green Pricing” rule was a failure, since virtually no renewable energy was sold to Texas consumers under these rules. However, it played a major role in the quality of Texas' current renewable energy program.

First, it prevented fraudulent green power products from being sold to eager customers. Second, it set a high standard for renewable energy use in Texas – much higher in fact than the Green-e standards in all other states. Retailers in Texas have continued to adhere to these high standards for new renewable content; most green products in Texas are based on 100% new renewable energy. Third, it served as a template for the fuel use and emissions labeling rules later adopted in Texas.

Texas Renewable Portfolio Standard

The Texas Renewable Portfolio Standard is a model other states and the U.S. government  have emulated as they develop incentives for increasing clean energy. What is the Texas RPS?

The Renewables Portfolio Standard in Texas: An Early Assessment

The RPS results produced benefits to Texas beyond cleaner energy. With the rising cost of natural gas, wind power has become a lower cost alternative. Going forward, many factors contribute to lasting success of Texas's success as a renewable energy leader, such as federal incentives and transmission constraints, as described here.

What Renewable Energy Means to Texas

Texas Renewable Energy Credits

Renewable Energy Credits (RECs) are tradable instruments that represent all the renewable attributes of certified renewable generation in Texas. Created to facilitate Texas' 1999 goal to develop 2,000 MW of new renewables, Texas RECs are a leading example of an international trend to capture the desirable attributes of renewable generation in a transferable certificate that can be decoupled and tracked distinctly from transactions for commodity electricity.

The law requires 5,000 MW of new renewable energy to be installed in Texas by 2015, and sets intermediate targets. The innovative REC program was structured to create a new market where incentives drive production in the most efficient and economical manner, prescribe clean energy generation and satisfy the public demand for use of renewable resources.

One REC is issued for each MWh of renewable energy produced and may trade separately from the energy. Responsibility for meeting the mandate rests on the retail electric providers based on their percentage share of state-wide retail energy sales. Renewable energy generators earn RECs which electric retailers must acquire. The innovation of tradable RECs allows electricity retailers from any part of the state to find the lowest cost resources without having to take physical delivery of the electricity.

For an overview of the Texas REC program, click here:

Renewable Energy Credits: A Success in Texas – Environmental Finance, April 2001

For individuals and companies keenly interested in the Texas REC market, Virtus Energy can develop customized REC price forecasts and consulting. For more information, click here.

The Texas Policy Model

Texas has demonstrated unexpected success with its well-crafted package of renewable energy development policies and sound overall electric market structure. While the system will continue to be tweaked for years to come, the package of Texas renewable energy rules have been praised broadly for their simplicity and effectiveness and are serving as a model in many places throughout the U.S. and globally.

• Includes a mandate for 5,000 MW of new renewables;
• Enables a tradable credits program;
• Creates a regime for constructing needed transmission infrastructure;
• Prescribes an emissions and fuel use labeling system that accommodates RECs;
• and Includes an efficiency incentive program for which small renewables qualify.

Specific language governing Texas Renewable Program (RPS & RECs) are included below for convenience:

Texas RPS Law (PURA 904)

Texas RPS Rule (PUC , 25.173)

Detailed Protocols for REC Program (ERCOT, Sec. 14)

Other major rules governing Efficiency programs and fuel labeling are also provided:

Texas Efficiency Rule (25.181)

Texas Emissions and Fuel labeling Rule (Labeling Rule)

For those interested in the broader context from which the Texas policies are excerpted, please refer to the comprehensive references in the links below:

Texas Electric Industry Restructuring Law from 1999

SB7

PUC Substantive Rules

25.173, Goal for Renewable Energy

ERCOT Protocols

ERCOT Section 14 November 2001 Protocols