Village Council— RECs could generate $183K
- Published: March 5, 2020
In a policy shift, the Village of Yellow Springs will be selling its existing Renewable Energy Certificates, or RECs, which are tied to its purchase of energy from renewable sources. Yellow Springs had previously retained its RECs, a form of currency in green energy markets.
At its Feb. 18 meeting, Council passed a resolution 3–2 authorizing Village Manager Josué Salmerón to sell half of the Village’s REC portfolio for profit, and sell the other half to purchase more RECs at a lower cost.
Council Vice President Marianne MacQueen and Council President Brian Housh voted “no,” preferring that the Village sell all its RECs for profit.
“I’d just say sell them all and see if we can lower electric rates,” MacQueen stated.
The resolution authorizes a one-time sale, and does not commit the Village to a new policy in the future.
The sale could raise about $183,000 in revenue for the Village, according to figures presented by Manager Salmerón at the meeting. Had the Village resolved to sell all its RECs without repurchasing a portion, it could have realized about $423,000.
Proceeds could be used to invest in the Village’s electric infrastructure, fund new solar projects, fund energy-saving initiatives or fund another iteration of the Village’s Utility Round Up program, according to a presentation by Salmerón.
The purpose of the sale is to raise revenue for the Village, Salmerón clarified this week to the News. The use of that revenue remains to be determined.
In response to a suggestion from MacQueen at the meeting that the sale proceeds be used to lower Village electric rates, Salmerón countered that such a move would have limited effect.
“It’s reducing it in the immediate future, but the liability of the rate continues,” he said. “At some point the cash runs out, and the utility rate has to go up.”
The resolution as it was passed reflected a motion by Lisa Kreeger that half of the Village’s RECs be sold outright and the other half “flipped” through a sale and repurchase of new RECs at a lower cost. Council member Kevin Stokes spoke in favor of a similar move during Council’s discussion.
The motion was a hybrid of two of the four options presented by Salmerón. In his presentation, Salmerón recommended that the Village sell just half its portfolio, retaining the other RECs. Under that recommendation, “we sell all excess credits and we can still claim to be a green community,” Salmerón explained.
The issue of retaining RECs relates to the way green energy is counted and brokered nationally. Organizations receive one REC, also called a renewable energy credit, for each megawatt-hour of green energy they purchase. These RECs have a monetary value, and can be sold in one of two markets, a compliance market and a voluntary market, to offset other organizations’ energy use. RECs depreciate over time, and expire after five years.
In the case of Yellow Springs, the Village currently holds 60,000 RECs, which derive from the 83% of the Village energy portfolio that is purchased from renewable energy sources, mostly hydro and some landfill gas sources. Some of these RECs date back to 2016, and are near expiration.
The Village also purchases solar energy from the operator of the solar field on Village land, but that energy is not part of the Village REC portfolio.
According to figures presented by Salmerón at the meeting, Yellow Springs as a whole consumed 38,070 MWh of energy in 2019. With 60,000 RECs in its portfolio, Yellow Springs currently more than offsets its energy use. By selling 30,000 credits and repurchasing cheaper RECs with the remaining 30,000 credits, the Village can still claim to be — mostly — green.
“I don’t think we lose our bragging rights,” Housh said at the meeting.
Council member Laura Curliss also stressed the importance of buying back some of the RECs in order to retain “bragging rights.”
“We really should no longer say we’re green if we sell [all our] RECs,” she said. “That’s the argument for buying them back cheap.”
In response to a question from the floor, Curliss also touched on the ethics of the sale of RECs, which could be used to offset other organizations’ continuing fossil fuel use.
“You’re enabling polluters to keep polluting,” Curliss said. “They don’t have to change their behavior, they’ve bought your behavior.”
Despite that argument, Council members seemed to agree that Yellow Springs was pursuing an ethical course in purchasing most of its energy from renewable sources, and was justified in benefiting financially from the sale of its RECs.
“We have an incredible renewable energy portfolio. We’re doing the right thing as a community, so we should be able to benefit … and do whatever we can for our residents,” Housh said.
Two local residents offered brief comments and questions during the discussion, but no citizens addressed the issue during the citizen comment period.
Council had previously discussed the possible sale of Village RECs at its Jan. 21 meeting. Prior to that meeting, Housh had asked Village staff to look into the matter and present data to Council.
In other Council business:
• Council deferred passing a resolution regarding its 2020 goals, with members stating that a work session was needed to further hone and clarify the goals.
“It’s more than wordsmithing this document,” Kreeger said, referring to a spreadsheet of goals and values that Council had discussed at previous meetings and at its January retreat.
The goals listed in that document include overall village affordability and diversity, affordable housing, infrastructure development, avoiding a budget deficit, economic development and other areas.
Kreeger and others pointed out that many of the goals intersect, and needed to be considered in relation to each other. In a memo on the goals discussion included in the Feb. 18 Council packet, Kreeger also stated her belief that Village goal-setting and budgeting needed to more closely align.
“I propose that we think about how we can better align our budget with our goals,” she wrote.
“We have to think about how to reduce the tax burden on residents,” she added during the discussion.
A framework for a goals work session will be proposed at Council’s next meeting.
• As part of the goals discussion, MacQueen raised the possibility of developing a Village fund, perhaps in collaboration with the Yellow Springs Community Foundation, to facilitate donations from community members to support specific Village projects, such as building a dog park or funding the Utility Round Up program.
Manager Salmerón stated that the Village budget is already set up to receive and track such donations.
• Following an initial discussion and vote Feb. 3, Council passed a formal resolution 3–2 granting a tap fee waiver to Home, Inc. for its planned 54-unit affordable senior apartment building on Xenia Avenue. The one-time waiver is for an amount of up to $40,500 in water, sewer and electric tap-in fees.
Kreeger and Curliss voted “no” out of concern for overall affordability issues.
One citizen, Mitzie Miller, urged Council to consider a lower amount.
“I ask you to put Village infrastructure and villagers first,” she said.
Noting that Village fee waivers and grants for Home, Inc. projects have been controversial among some villagers, Housh voiced the view that “the narrative has been off for a while” regarding the Village’s support of the local affordable housing land trust.
“Home, Inc. is not a special interest group; it’s part of the Village,” he stated, referring to its establishment in the 1990s by several local elected leaders.
The Village’s relationship with Home, Inc. also came up as part of Council’s goals discussion. Kreeger stated her view that if the Village is going to rely on Home, Inc. as its main affordable housing arm, the two organizations need to collaborate more closely so that “there are not surprises, and we can budget for it.”
Housh later affirmed that the Village and Home, Inc. are “working on formalizing the relationship.”
Regarding where the $40,500 for the tap fee waiver would come from, Housh suggested taking the amount from lodging tax revenues, which last year totaled $58,000. These revenues reside in the general fund and are able to be transferred out to enterprise funds, Salmerón clarified, referring to a previous discussion in which this issue was unresolved.
“I can’t imagine a more responsible way to balance everybody’s interests,” Housh said.
• Highlighting a few items from his Manager’s report, Salmerón noted that the Village has been criticized by some residents for its recent tree-trimming activities. Tree-trimming in local rights-of-way, provided by Gray’s Tree Service, is necessary for safety, he stated.
Salmerón also noted that the Village plans to remove two trees from Village-owned property: the large callery pear near the entrance to the Bryan Center parking lot, and the large hackberry on the edge of Kieth’s Alley parking lot. The YS Tree Committee has signed off on both trees’ removal.
Regarding a motorist crash into a power pole on Corry Street on Jan. 25, Salmerón noted that the Village has submitted an invoice for $28,150 in damages.
And on the matter of the Village’s Utility Round Up program, he indicated that there were zero applications for assistance in January.
•Planning Commission Chair Frank Doden provided a brief overview of the planning board’s activities in 2019. Among other items, he noted that a total of 181 zoning permits were issued, an increase of nearly one-quarter over 2018.
•Finally, Council agreed to consider the matter of a potential ban on roosters at some later date, but not as a priority issue. Such a ban was recommended by Planning Commission.