In February 2008, South Dakota enacted legislation (H.B. 1123) establishing an objective that 10% of all retail electricity sales in the state be obtained from renewable and recycled energy by 2015. In March 2009, this policy was modified by allowing “conserved energy” to meet the objective. The objective applies to all retail providers of electricity in the state. However, as a voluntary objective (as opposed to a mandatory standard), there are no penalties or sanctions for retail providers that fail to meet the goal. Final rules related to renewable energy certificates (RECs), energy conservation measurements, and reporting requirements (Docket No. RM11-001) were adopted in December 2011, effective January 2012.
Qualifying electricity includes that produced from wind, solar, hydroelectric, biomass* and geothermal resources, and electricity generated from currently unused waste heat from combustion or another process that does not use an additional combustion process and that is not the result of a system whose primary purpose is the generation of electricity. Hydrogen generated by any of the preceding resources is eligible.
For renewable and recycled energy, the objective is measured by qualifying megawatt-hours (MWh) delivered at retail or by certificates representing credits purchased and retired to offset non-qualifying retail sales. In the case of conserved energy, the objective will be measured by methods established by the South Dakota Public Utilities Commission (PUC). In addition to meeting the technology eligibility criteria, electricity must also meet the PUC’s rules for tracking, recording and verifying RECs. Both in-state and out-of-state facilities are eligible to generate qualifying RECs.
Cost Mitigation Measures
For the purpose of calculating the amount of electricity needed to meet the objective, retail providers may deduct from their baseline retail sales the proportion of electricity obtained from hydroelectric facilities with an in-service date before July 1, 2008. Municipal and cooperative utilities that receive wholesale electricity through a municipal power agency or generation and transmission cooperative may aggregate their resources to meet the objective. Before using any renewable, recycled, or conserved energy after July 1, 2008 to meet the objective, retail providers or their generation suppliers must evaluate whether the use of new renewable and recycled energy is cost-effective and reasonable, considering "other electricity alternatives."
Public Service Commission Reports
Beginning July 1, 2009, retail providers must report annually to the PUC on their attainment status, steps taken to meet the objective, and any challenges or barriers they have encountered. This report must include (1) information regarding qualifying electricity delivered and renewable and recycled energy certificates purchased and retired as a percentage of annual retail sales, (2) the amount of conserved energy as a percentage of annual retail sales, and (3) a brief narrative report that describes steps taken to meet the state renewable, recycled, and conserved energy objective over time and identifies any challenges or barriers encountered in meeting the objective. Reporting is required through 2017.
* Eligible biomass includes the following resources: agricultural crops, wastes, and residues; wood and wood wastes; animal and other degradable organic wastes; municipal solid waste; and landfill gas.