	Background

		The RPS Mechanism

Under a renewable energy portfolio standard (RPS), retail electricity suppliers (electric utilities) must either provide a minimum amount of electricity from renewable energy resources or purchase tradable credits that represent an equivalent amount of renewable energy production. The minimum requirement is often set as a percentage share of retail electricity sales, which is usually expressed in terms of kilowatt-hours (kwh). However, most targets range from 10% to 20% and are scheduled to be reached between 2010 and 2025. Tradable Credits

Many states have created tradable credits as a way to lower costs and facilitate compliance. In Senate floor action on H.R. 1537 proposed a 15% RPS. The proposal triggered a lively debate, but was ultimately ruled non-germane. 6 , which proposed a 15% national RPS requirement. Resource Availability and Electricity Price Impacts

In the Senate RPS debate, opponents argued that regional differences in availability, amount, and types of renewable energy resources could make a federal RPS unfair. Proponents counterargued that a national system of tradable credits would enable retail suppliers in states with less abundant resources to comply at the least cost by purchasing credits from organizations in states with a surplus of low-cost production. Perhaps most importantly, RPS proponents countered by citing a study prepared by the Department of Energy's Energy Information Administration (EIA). The report examined the potential impacts of the 15% RPS proposed in S.Amdt. 1537 . Regarding resource availability, the report found that:
Biomass generation, both from dedicated biomass plants and existing coal plants co-firing with biomass fuel, grows the most by 2030, more than tripling from 102 billion kilowatt-hours (kwh) in the reference case to 318 billion kwh with the RPS policy. In a follow-up fact sheet to that study, EIA noted that "the South has significant biomass potential." EIA estimated that, relative to its base case projections for retail electricity prices, the 15% RPS would likely raise retail prices by slightly less than 1% over the 2005 to 2030 period. Further, the report estimated that relative to its base case projections for retail natural gas prices, the RPS would likely cause retail natural gas prices to fall slightly over the 2005 to 2030 period. House RPS Debate (H.Amdt. 3221)

In House floor action on H.R. 3221 , an RPS amendment ( H.Amdt. 748 ) was added by a vote of 220 to 190. The bill subsequently passed the House by a vote of 241 to 172. The RPS amendment would set a 15% target for 2020, and would allow up to 4 percentage points of the requirement to be met with energy efficiency measures. Informal House-Senate Negotiations

After the House completed action on H.R. 3221 continues to be key issue. On December 1, 2007, the Ranking Member of the Senate Committee on Energy and Natural Resources stated that the House Leadership's intent to include an RPS led him to cease negotiations. Further, on December 3, 2007, the White House reportedly announced that it may veto the negotiated bill, if it includes an RPS and certain other provisions.
Under a renewable energy portfolio standard (RPS), retail electricity suppliers (electric utilities) must provide a minimum amount of electricity from renewable energy resources or purchase tradable credits that represent an equivalent amount of renewable energy production. The minimum requirement is often set as a percentage share of retail electricity sales. More than 20 states have established an RPS, with most targets ranging from 10% to 20% and most target deadlines ranging from 2010 to 2025. Most states have established tradable credits as a way to lower costs and facilitate compliance. State RPS action has provided an experience base for the design of a possible national requirement.
RPS proponents contend that a national system of tradable credits would enable retail suppliers in states with fewer resources to comply at the least cost by purchasing credits from organizations in states with a surplus of low-cost production. Opponents counter that regional differences in availability, amount, and types of renewable energy resources would make a federal RPS unfair and costly.
In Senate floor action on H.R. 6 in the 110th Congress, S.Amdt. 1537 proposed a 15% RPS target. The proposal triggered a lively debate, but was ultimately ruled non-germane. In that debate, opponents argued that a national RPS would disadvantage certain regions of the country, particularly the Southeastern states. They contended that the South lacks a sufficient amount of renewable energy resources to meet a 15% renewables requirement. They further concluded that an RPS would cause retail electricity prices to rise for many consumers.
RPS proponents countered by citing a study by the Energy Information Administration (EIA). The report examined the potential impacts of the 15% RPS proposed in S.Amdt. 1537. It indicated that the South has sufficient biomass generation, both from dedicated biomass plants and existing coal plants co-firing with biomass fuel, to meet a 15% RPS. EIA noted further that the estimated net RPS requirement for the South would not make it "unusually dependent" on other regions and was in fact "below the national average requirement...." Regarding electricity prices, EIA estimated that the 15% RPS would likely raise retail prices by slightly less than 1% over the 2005 to 2030 period. Further, the RPS would likely cause retail natural gas prices to fall slightly over that period.
In House floor action on an RPS amendment (H.Amdt. 748) to H.R. 3221, key points and counterpoints of the Senate RPS debate were repeated. The RPS was added (220 to 190), and the bill passed the House (241 to 172). The RPS amendment would set a 15% target for 2020, and would allow up to 4 percentage points of the requirement to be met with energy efficiency measures. After House action, informal bipartisan House-Senate negotiations began. The House RPS provision (§9006) continues to be key issue. On December 1, 2007, the Ranking Member of the Senate Energy and Natural Resources Committee stated that the House Leadership's intent to include an RPS led him to cease negotiations. Further, the White House has reportedly announced that it would veto the bill if it includes an RPS.