US Clean Power Plan adopted

Monday, August 3, 2015

President Obama will formally unveil the Clean Power Plan today, a set of regulations by the U.S. Environmental Protection Agency (EPA) to reduce carbon emissions associated with the electric power industry.  A blog post by EPA Administrator Gina McCarthy emphasizes the Clean Power Plan's protection of health and the environment, states' rights to choose their own implementation paths, reduction of future energy costs, and leadership on climate issues.  But some politicians, utilities and states have expressed concern about the regulations' impact, and could launch legal challenges -- or states might refuse to comply.  What's in store for the Clean Power Plan?

It has been just over a year since EPA first released its draft Clean Power Plan in June 2014.  These regulations under Section 111(d) of the Clean Air Act are designed to reduce the carbon intensity of the U.S. electric power sector -- essentially, how many pounds of carbon are emitted per megawatt-hour of electric energy produced.  Under the draft Clean Power Plan, EPA sets carbon intensity limits for each state, collectively designed to reduce carbon emissions by 30% below 2005 levels.  Each state then designs its own compliance plan using any combination of "building blocks": types of measures like improving the efficiency of fossil fuel power plants, switching out coal- and oil-fired power plants in favor of natural gas, and increasing low- and zero-carbon generation.

While the final Clean Power Plan's basic structure remains much the same, EPA has made some modifications in reaction to concerns about the greenhouse gas regulations' costs and impacts to grid reliability.

Changes from the 2014 draft include:
  • Two extra years (until 2022) for states to meet their targets, and greater flexibility for states to form regional pacts to facilitate emissions-cutting projects across state lines, such as the Regional Greenhouse Gas Initiative.
  • A new “safety valve” feature, to let states appeal for extensions and other relief if complying with the regulations causes disruptions to power supply.
  • Increased social justice incentives for utilities to construct renewable energy projects in poorer neighborhoods, reducing pollution-related illness and eventually lowering electricity rates.
  • Energy efficiency is still encouraged, but has been eliminated as one of the rule’s "building blocks” for states to use in building their own carbon-reduction plans.
How will the Clean Power Plan story continue to play out?  Will it be challenged in court?  Will states comply?  What impacts will it have on the U.S. electric power industry?

Regulators release updated energy primer

Friday, July 31, 2015

The Federal Energy Regulatory Commission has released an updated version of its "resource manual",  Energy Primer: A Handbook of Energy Market Basics.

The FERC is an independent federal agency that regulates a variety of aspects of the U.S. energy industry, including the interstate transmission of electricity, natural gas, and oil, proposals to build liquefied natural gas (LNG) terminals and interstate natural gas pipelines, and hydropower projects, as well as engaging in strategic planning.

FERC's Office of Enforcement is charged with encouraging compliance with the Commission’s statutes, rules, and orders.  Within the enforcement office, the Division of Energy Market Oversight is responsible for monitoring and overseeing the nation’s wholesale natural gas and electric power markets.

In 2012, the Division of Energy Market Oversight (or DEMO) issued the first edition of its Energy Primer.  This week, DEMO issued an updated 2015 version of the Energy Primer.  As with the previous edition, the 2015 Energy Primer gives the public a broad overview of the physical wholesale markets for natural gas and electricity and energy-related financial markets.  As FERC has noted, the revised edition reflects some of the changes that have occurred in the industry since 2012, including the growth in natural gas supplies and the expansion of organized electric markets under Independent System Operators (ISO) and Regional Transmission Organizations (RTO).

The 2015 FERC Energy Primer offers a useful introduction to the U.S. energy industry as it is regulated by FERC.  As with the 2012 version, FERC staff states that the 2015 edition is intended to be used as either a text or a reference guide.  FERC's website also notes that the Energy Primer is a product of FERC staff and does not reflect the views of the Commission or any individual Commissioner.  Nevertheless it may offer careful readers insight into how Commission staff view the markets' continuing evolution.

U.S. renewable energy share highest since 1930s

Tuesday, July 21, 2015

In 2014, about 9.8% of the total energy consumed in the U.S. came from renewable energy sources, according to the U.S. Energy Information Administration.  This represents the highest share of total domestic energy supply coming from renewable resources since the 1930s.

Prior to the growth of production and distribution networks for petroleum and other fossil fuels in the early 20th century, many homes used wood for heating as did industry.  This reliance on renewable biomass historically satisfied a significant portion of the total domestic energy demand.  But technological advances and the birth of the electric power industry led to greater use of other fuels.  As a result, the EIA reports that renewable resources' share of total domestic energy supply peaked in the 1930s, then declined.

But recent growth in U.S. renewable energy use has brought the country's energy mix back to nearly 10% renewable.  Indeed, from 2001 to 2014, renewable energy use grew an average of 5% per year, largely through increased use of wind, solar, and biofuels:
  • Wind energy grew from 70 trillion Btu in 2001 to more than 1,700 trillion Btu in 2014.
  • Solar energy (solar thermal and photovoltaic) grew from 64 trillion Btu to 427 trillion Btu.
  • The use of biomass for the production of biofuels grew from 253 trillion Btu to 2,068 trillion Btu.
According to EIA, inn 2014, slightly more than half of all renewable energy was used to generate electricity.  Renewable energy accounted for 13% of energy consumed within the electric power sector, the highest renewable use attributable to any sector.

Maine explores non-transmission alternatives coordinator

Thursday, July 2, 2015

Should Maine designate an entity to coordinate the development of lower-cost alternatives to new electric transmission lines?  The Maine Public Utilities Commission has opened an inquiry to obtain comments on the role of a non-transmission alternative (NTA) coordinator and the parameters for procuring the services of an NTA coordinator.

Modern society counts on electric utilities and power plants to supply consumers with electricity.  As consumer needs and plant economics change over time, utilities have traditionally looked to new infrastructure like transmission lines to meet new needs.  But in some cases, transmission development may not be the cheapest or best way to meet consumer needs; rather, "non-transmission alternatives" such as distributed generation, energy efficiency or microgrids may be able to achieve the same ends for a lower total cost.

Grid modernization -- and the tools needed to manage the process efficiently -- can be controversial.  By order dated May 11, 2015, the Maine Public Utilities Commission declined to designate a "Smart Grid Coordinator" to provide a broad array of services to the state, on the grounds that that the record before it did not support a finding that designate a coordinator to provide all these services was in the public interest.

But the Commission indicated interest in designating someone to provide the services of marketing, implementing, and possibly operating non-transmission alternatives.  To that end, the Commission found "there is the potential for benefits from an entity that has the relevant expertise and a commercial interest in the successful development and implementation of NTAs" -- provided that the entity can deliver its services in a way that provides value to ratepayers.

By a June 30 Notice of Inquiry, the Commission initiated the next phase of its exploration of designating an NTA coordinator.  The Commission requested comment on issues it had previously identified in its May 11 order as requiring further factual development to enable the Commission to determine whether it is in the public interest to designate an NTA coordinator:
  1. What duties should be included in the scope of services offered by an NTA coordinator?
  2. Should T&D utilities be allowed to bid on an NTA RFP and if so should such services be provided through an affiliate? 
  3. If an RFP were seeking proposals for having a non-utility entity operate an NTA in a manner consistent with reliability and cyber security standards, how would the incremental costs to operate the NTA be determined?
  4. What type of pricing structures should be considered in developing the RFP?
  5. What factors should be considered in bid evaluation?
  6. What should be the term of the NTA coordinator contract?
  7. What entities should be the counterparties to the contract?
  8. What enforcement mechanisms should be included in the contract?
  9. What type/amount of financial security should be required?
The Commission also invited comment on any other issues relevant to its consideration of designating an NTA coordinator.  The Commission requests that comments be filed by July 21, 2015.  After comments are received, Commission staff will schedule a meeting to discuss the comments and discuss next steps in the development of a request for proposals.

Supreme Court rules on EPA power plant regulations

Wednesday, July 1, 2015

The Supreme Court of the United States has ruled that the U.S. Environmental Protection Agency acted unreasonably in developing new regulations on hazardous air emissions from power plants without considering the cost impact of those regulations.  This ruling reinjects uncertainty into EPA's "Mercury and Air Toxics Standards" and other efforts to regulate power plant emissions under the Clean Air Act.

The federal Clean Air Act was designed to improve environmental quality and human health, among other goals.  It broadly allows federal regulation of air emissions of pollutants of various types and from various sources.

Because certain specific provisions in the Clean Air Act applied specifically to power plants, Congress placed a special restriction on EPA's regulation of power plant emissions under Section 7412(n)(1)(A) of the Clean Air Act.  That provision allows EPA to regulate emissions of hazardous air pollutants from power plants under Section 7412 only if it “finds such regulation is appropriate and necessary.”  In 2000, after a study, EPA concluded that regulating power plants under Section 7412 was "appropriate and necessary."  EPA reaffirmed this finding in 2012, and promulgated standards for emissions from power plants.

Along with those standards, EPA issued a “Regulatory Impact Analysis” estimating that the regulation would force power plants to bear costs of $9.6 billion per year.  That analysis also found that while benefits were hard to fully quantify, estimated benefits were worth $4 to $6 million per year.  Based on this analysis, compliance costs to power plants were thus between 1,600 and 2,400 times as great as the quantifiable benefits from reduced emissions of hazardous air pollutants.  At the same time, EPA argued that it did not have to consider costs in establishing its standards.

Following the issuance of these standards, 23 states sought review of EPA’s rule in the D. C. Circuit Court of Appeals in a series of cases which were later consolidated.  The D.C. Circuit upheld EPA's refusal to consider costs in its decision to regulate, at which point petitioners appealed to the Supreme Court. As my partner Jeff Talbert explains, in a 5-4 decision issued June 29, the Supreme Court held that EPA interpreted §7412(n)(1)(A) unreasonably when it deemed cost irrelevant to the decision to regulate power plants.

So what does the Supreme Court's ruling mean for U.S. power plants?  Uncertainty -- but not necessarily freedom from regulation.  The Supreme Court remanded the case back to the D.C. Circuit for further consideration.  The D.C. Circuit could uphold the rule again (on new grounds, compliant with the Supreme Court's decision) -- or it could invalidate the rule based on the Supreme Court ruling.  If that happens, EPA will likely have to resume the process of developing new regulations for hazardous air emissions from power plants under Section 7412.

New York's 2015 Energy Plan

Tuesday, June 30, 2015

The state of New York has released a sweeping plan for its energy future, featuring strengthened commitments to clean energy over the next four decades.  The 2015 New York State Energy Plan includes reductions in greenhouse gas emissions, increased generation of renewable energy, and improved energy efficiency.

Article 6 of New York's energy law requires the state's energy planning board to develop period state energy plans.  The state released its two-volume 2015 report on June 25, presenting "a comprehensive strategy to create economic opportunities" in New York based on Governor Andrew Cuomo's previously-announced "Reforming the Energy Vision" or REV program.

Among the 2015 plan's elements are a series of clean energy targets, including a 40% reduction in greenhouse gas emissions from 1990 levels; 50% of electricity generation coming from carbon-free renewables; and 600 trillion Btu in energy efficiency gains, which equates to a 23% reduction
from 2012 in energy consumption in buildings.

Whether and how New York will implement its 2015 State Energy Plan remains to be seen.  Notably, the plan was produced by the state's executive branch; it is unclear whether legislators will support or thwart it.  Will the Empire State follow its latest plan?  If so, will it lead to the anticipated economic opportunities?

Maine RGGI report 2015: price impact "relatively modest", programs helpful

Friday, June 12, 2015

For 8 years, states in the Northeastern U.S. have participated in the Regional Greenhouse Gas Initiative.  RGGI, the first market-based greenhouse gas regulatory program in the United States, represents a cooperative effort by participating states to cap and reduce greenhouse gas emissions from the electric power sector, coupled with a market for auctioning and trading emission allowances.  While some groups feared that the RGGI program would increase electricity prices, a recent report by the Maine Public Utilities Commission found that the impact of RGGI on electricity prices in Maine has been relatively modest -- while finding that RGGI-funded programs contribute to economic development and reduce greenhouse gas emissions.

RGGI formed in 2007, when ten states -- Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island and Vermont -- agreed to first cap, and then slowly reduce, the greenhouse gas emissions of their electrical energy sectors by 10% by 2018.  While New Jersey withdrew in 2012, the program has remained strong; in 2014, the remaining states subsequently tightened the RGGI cap for 2014 from 165 million short tons of carbon to 91 million short tons, then further declining 2.5% per year from 2015 to 2020.

While each participating state adopted its own laws implementing RGGI, in general the RGGI laws require certain generators of electricity to track their carbon emissions and acquire an “allowance” for every ton of carbon dioxide or its equivalent that they emit.  States conduct periodic auctions of allowances, and market participants are free to engage in secondary market trades.  Generators must purchase or trade for enough emissions allowances to match the number of tons of CO2-equivalent emitted.  The cost of acquiring these allowances gives generators an incentive to improve their efficiency or switch to fuels with a lower carbon intensity.

Each state also adopted its own laws governing the use of funds raised by state auctions of RGGI allowances.  In Maine, most funds go to the Efficiency Maine Trust for purposes including measures, investments and arrangements that reduce electricity consumption or reduce greenhouse gas emissions and lower energy costs at commercial or industrial facilities, and for investment in measures that lower residential heating energy demand and reduce greenhouse gas emissions.

RGGI has conducted 27 quarterly allowance auctions since September 2008, through which Maine has received a cumulative total of $ 62.22 million in RGGI auction proceeds.  Maine’s auction proceeds in 2014 totaled $11.37 million. According to the Maine Public Utilities Commission's report:
the annual cost to Maine ratepayers of the RGGI program was approximately $0.0024 per kWh. For the average Maine residential customer using 530 kWh per month, the 2014 RGGI program cost was approximately $ 1.27 per month. For a commercial customer using 25,000 kWh per month the 2014 RGGI program cost was approximately $60.00 per month. A large commercial or industrial customer using 500,000 kWh per month would have had a 2014 RGGI program cost of approximately $1,200 per month.
On the benefits side of the ledger, the Commission's report cites a finding that "all RGGI proceeds since 2008 are expected to return more than $2 billion in lifetime energy bill savings to more than 3 million households and more than 12,000 businesses across the eight states taking part in RGGI."  The Commission also cited its July 2014 report to the Legislature quantifying the increases in employment, real personal income, and gross state product expected to occur in Maine as a result of the cap tightening and other changes implemented in 2014.  That report found:
economic impacts for the New England region include a cumulative increase in Gross Regional Product of over $2 billion, a cumulative increase in employment of 38,900 job-years, and a cumulative increase in real personal income of $1.5 billion including a cumulative increase in Maine Gross State Product of $200 million, a cumulative increase in employment of more than 5,000 job-years, and a cumulative increase in real personal income of $100 million.
Based on these observations, the Maine Public Utilities Commission's 2015 report on RGGI concludes that "the impact of RGGI on electricity prices has been relatively modest, while RGGI-funded programs contribute to the gross state product, job growth, and personal income, and also reduce greenhouse gas emissions."

Transmission line for Canadian imports advances

Tuesday, June 9, 2015

A proposed high-voltage direct current transmission line designed to import Canadian power into the New England grid has received a favorable environmental recommendation from the U.S. Department of Energy. 

The New England Clean Power Link is a high-voltage, direct-current transmission project proposed by TDI New England, a subsidiary of private transmission developer Transmission Developers Inc. and ultimately part of the Blackstone Group.

Designed to feed the New England market with up to 1,000 megawatts of electricity, the proposed $1.2 billion New England Clean Power Link project would feature two parallel cables approximately 5” in diameter, operating at a voltage of approximately 300 to 320 kV.  These HVDC lines would run about 154 miles.  Originating at a DC converter station in Quebec, the U.S. portion of the line would start at the international border in Alburgh, Vermont.  It would run beneath the bottom sediments of Lake Champlain for about 98 miles, then turn east and run over land (but underground, mostly under roadway rights-of-way and railway beds) to a terminal converter station in Ludlow, Vermont, where the power could flow onto the New England grid.

Federal law requires most infrastructure development for international trade in energy to apply for and receive a Presidential Permit before the project may be built.  TDI New England applied for the presidential permit in May 2014, and applied to the state of Vermont for permits in December 2014.

As part of the Presidential Permit process, the federal National Environmental Policy Act or NEPA requires the U.S. Department of Energy to evaluate the potential environmental impacts in the United Statesof the proposed action and the range of reasonable alternatives.  In this case, the proposed federal action is the issuance of a Presidential permit to the applicant, Champlain VT, LLC, doing business as TDI - New England, to construct, operate, maintain, and connect a new electric transmission line across the U.S.-Canada border in northern Vermont.

On June 3, the Department of Energy released its final draft Environmental Impact Statement or EIS for the New England Clean Power Link.  In that document, the Department found relatively minimal and short-term adverse environmental impacts from project construction, operation and maintenance. 

Once notice of the draft EIS is published in the Federal Register, the public will have 60 days to comment on its analysis.  The Department will also hold public informational meetings in Vermont regarding the project.  According to the EIS, TDI New England expects permitting will continue through mid-2016, with construction and in-service dates as early as 2018 and 2019 respectively.

Meanwhile, TDI is simultaneously pursuing other HVDC transmission lines from Canada into the Northeastern US, most notably the Champlain-Hudson Power Express -- another HVDC line beneath Lake Champlain but continuing on overland and under the Hudson River to a converter station in New York City.   The Champlain-Hudson Power Express won a Presidential Permit in 2014.

NYISO solar study announced

Thursday, June 4, 2015

Solar power is booming in the U.S. -- but how will growth in solar photovoltaic generating capacity affect the electricity grid?  The operator of the state of New York's electric grid has announced a study of the potential for growth in solar power resources to determine their impact on grid operations over the next 15 years.

Solar panels recently developed in a farm field in Massachusetts.
The New York Independent System Operator (NYISO) operates New York State's high-voltage transmission network, runs the state's wholesale electricity markets.  NYISO also evaluates trends in utility infrastructure development and usage, and what changes in these patterns imply for future infrastructure needs.

One such trend is the recent rapid growth in installed solar electric generating capacity.  In New York, a state government initiative known as NY-Sun aims to reduce solar installation costs by stimulating demand and increasing the number of solar PV systems installed in the state.  The NY-Sun program envisions the installation of more than 3,000 megawatts of customer-sited solar capacity by 2023, supported by about $150 million in annual state funding for solar PV projects.  Already, in the first two years of NY-Sun, a total of 316 megawatts of solar electric has been installed or is under contract.

Unlike standalone utility-scale solar development, the solar buildout directly triggered by the NY-Sun program will occur “behind the meter” — that is, on the customer's side of the utility meter, as opposed to a typical power plant sited remotely from customer load.  Nevertheless, increased consumption of power produced by distributed generation might affect NYISO's load forecasts or grid operations.  So too might the collective impacts of many generators with variable but correlated output.

To prepare for this future, NYISO has announced a "solar study" to evaluate the growing impact of sun-powered generation.  The study will focus on the following objectives:
  • Developing solar forecasting tools and preparing 15-year forecasts of solar PV capacity for each of the 11 load zones in New York State
  • Researching how other independent system operators and regional transmission organizations have integrated solar resources into their grids
  • Evaluating solar generation variability and its impact on customer load served by the NYS electric systems.
  • Reviewing operational impacts of various levels of solar and wind resources.

The results of NYISO's solar study are expected to be released in a report later this year.

FERC approves Iberdrola-UIL merger

Tuesday, June 2, 2015

Federal utility regulators have issued an order authorizing transactions the merger of utilities affiliated with Iberdrola, S.A. and UIL Holding Corporation.

Iberdrola is a Spanish-owned utility holding company, owning electricity and natural gas systems and electric generation across four continents.  Its direct wholly owned subsidiary Iberdrola USA holds all of Iberdrola’s energy-related operations in the United States through two intermediate holding companies. Iberdrola USA Networks, Inc., holds transmission owning public utility affiliates, including New York State Electric & Gas Corporation (NYSEG), Rochester Gas and Electric Corporation, Central Maine Power Company, Maine Natural Gas Company, and interests in Maine Electric Power Company. Iberdrola Renewables Holdings, Inc. owns and operates its generation segment in the United States through a number of indirect subsidiaries.

UIL is in the business of ownership of operating regulated utilities in Connecticut and Massachusetts. It owns and controls the United Illuminating Company, a business engaged in purchasing, transmitting, and distributing electric power to customers in southwestern Connecticut. United Illuminating owns a 50 percent equity interest in GCE Holding LLC which in turn owns two companies owning 187.6 MW dual-fuel generating plants in Milford and Middletown, Connecticut. UIL also owns natural gas local distribution companies in central and southern Connecticut and western Massachusetts, as well as Total Peaking Services, LLC which provides liquefied natural gas storage services.

On February 26, 2015, Iberdrola S.A. announced the boards of directors of Iberdrola S.A. and Iberdrola USA had approved a combination of Iberdrola USA with UIL Holdings in a friendly transaction, reportedly for about $3 billion.  On March 25, 2015, Iberdrola and UIL applied to the Federal Energy Regulatory Commission for authorization under section 203(a)(1) and (a)(2) of the Federal Power Act (FPA) for a series of transactions in which UIL will become an indirect wholly owned subsidiary of Iberdrola USA and, in turn, a wholly owned subsidiary of Iberdrola.

In a Section 203 case, the Commission examines a merger’s effect on competition, rates and regulation, and the potential for cross-subsidization.  Applicants must demonstrate that a proposed disposition or acquisition of jurisdictional facilities meets the standards of Section 203.   In the Iberdrola-UIL case, the applicants stated that their subsidiaries' portfolios of generation, transmission, natural gas assets, and other jurisdictional facilities had only de minimis overlap, that the transaction would not adversely affect rates or regulation, or result in cross-subsidization of a nonutility associate company or pledge or encumbrance of utility assets for the benefit of an associate company.

On June 2, 2015, the Commission issued an order finding that the proposed transaction is consistent with the public interest and is authorized, subject to routine conditions.  While other regulatory approvals may be required before the merger can proceed, securing prior authorization under Section 203 is an important milestone for the proposed deal.

According to Iberdrola, the combined company will have a 2014 pro forma EBITDA of approximately $2 billion, net income of $570 million, 3.1 million of points of supply, around 6.7 GW of installed capacity.  Iberdrola anticipates that the company will become the US's second largest wind operator and one of the nation's largest utilities.

Feds settle on final 2011 Southwest blackout penalty

Friday, May 29, 2015

Over four years after a major 2011 power outage in Southern California and parts of the Southwest, federal energy regulators have approved the sixth and final settlement of penalties for violations of law and reliability standards

After the September 8, 2011 blackout left more than 5 million people in Southern California, Arizona and Baja California, Mexico, without power for up to 12 hours, the Federal Energy Regulatory Commission began investigating what had happened.  After conducting that investigation jointly with electric reliability organization North American Electric Reliability Corporation (NERC), in an April 2012 report FERC found that the outage started when a 500-kilovolt transmission line owned by utility Arizona Public Service Company tripped.

The FERC continued its investigation into the 2011 Southwest blackout after its staff report was made public.  It identified six entities believed to have been involved: Arizona Public Service Company, the California Independent System Operator, the Imperial Irrigation District, Southern California Edison, the Western Area Power Administration, and the Western Electricity Coordinating Council Reliability Coordinator.

FERC's enforcement process typically offers the accused an opportunity to agree to a stipulation of facts (for example, that the utility violated a particular reliability standard) and to pay a civil penalty and perform mitigation measures.  In its enforcement actions related to the 2011 Southwest blackout case, all six entities ultimately agreed to stipulations and penalties that were accepted by the Commission.

In July 2014, the FERC accepted Arizona Public Service's stipulation with NERC and FERC's Office of Enforcement, under which APS agreed to pay $3.25 million and improve its system reliability.  In August 2014, California's Imperial Irrigation District agreed to a $12 million fine.  Utility Southern California Edison agreed to a $650,000 fine in October.  In December, FERC settled with federal power marketing agency Western Area Power Administration with no penalty.  Grid operator California ISO agreed to pay $6 million.

This week the FERC announced a settlement with Western Electricity Coordinating Council.  WECC promotes grid reliability in the Western Interconnection, a broad area of the western United States.  According to the FERC order, FERC enforcement staff and NERC determined that WECC as the Reliability Coordinator violated nine requirements of the Interconnection Reliability Operations and Coordination (IRO) and the Facilities Design, Connection and Maintenance (FAC) groups of Reliability Standards.  Enforcement staff and NERC concluded that WECC failed to identify and prevent violations of system operating limits and Interconnection Reliability Operating Limits and was unaware of the impact of protection systems, and used an inadequate system operating limit methodology that exposed its area to cascading outages.

As a result, the settlement calls for WECC to pay a $16 million civil penalty.  $3 million of this will be split evenly between the U.S. Treasury and NERC, and $13 million will be invested in reliability enhancement measures that go above and beyond mitigation of the violations and the requirements of the Reliability Standards.  WECC and its successor as Reliability Coordinator, Peak Reliability, also agreed to mitigation and reliability activities and to submit to compliance monitoring.

FERC has described the WECC settlement as marking "final resolution" of the investigation by FERC Enforcement staff and NERC into the 2011 Southwest blackout.

Vermont resets renewable energy program

Tuesday, May 26, 2015

The Vermont legislature has voted to create the state's first renewable energy standards for electric utilities.  The bill, H.40, changes the way Vermont encourages the generation and use of renewably derived electricity.

Like most states, Vermont law has encouraged renewable energy development for over a decade.  In 2005 the state legislature created the Sustainably Priced Energy Enterprise Development, or SPEED, program to promote renewable energy development.  Under SPEED, the state encouraged its 18 utilities to enter into long-term contracts for power from renewable energy sources, with a goal that utilities source 20% of their supply from qualifying SPEED resources by 2017.  The SPEED program's goal has been to promote the development of in-state energy sources which use renewable fuels to ensure that to the greatest extent possible the economic benefits of these new energy sources flow to the Vermont economy in general and to the rate paying citizens of the state in particular.

But between recent controversy over possible "double counting" of renewable energy attributes produced and sold by Vermont utilities, and perennial interest in refining state energy policy, this year the Vermont legislature pursued H.40 as an attempt to fix Vermont's renewable energy programs.  H.40 will replace the SPEED goals with a Renewable Energy Standard and Energy Transformation, or RESET, program.  The RESET program includes a renewable portfolio standard requiring that 55 percent of a utility’s electricity come from renewables, including large-scale hydro power, by 2017, increasing 4 percentage points every three years until reaching 75% by 2032.

The bill also gives utilities an entrance into financing thermal efficiency for heating and cooling.  It will require utilities to offer incentives and on-bill financing for projects like weatherization and heat pumps.  To monitor and protect against impacts to customer rates, H.40 requires annual reports starting in 2018 on the RESET program's impact on electric rates, including 10-year forward projections.  It also allows utilities to seek waivers if they can show that compliance would increase electric rates.
Previous efforts to institute a mandatory renewable energy standard in Vermont were not successful, but this year versions of H.40 have now been approved by both chambers of the state legislature.  The Vermont House of Representatives passed H.40 on March 10, and the Senate approved an amended version on May 15.

Coal power plants retiring in 2015

Thursday, May 21, 2015

The U.S. portfolio of electric power plants will continue to shift in 2015, according to a federal assessment projecting that nearly 16 gigawatts (GW) of generating capacity will retire in 2015.  Most of the capacity to be retired this year is coal-fired generation.  This continues a multi-year trend away from coal, and toward natural gas and renewable resources.

According to the U.S. Energy Information Administration, nearly 16 GW of generating capacity is expected to retire in 2015.  Of this, 81% (12.9 GW) is coal-fired generation.  Generator retirements are heavily composed of coal-fired generation, split between bituminous coal (10.2 GW) and subbituminous coal (2.8 GW).  Most of this retiring coal capacity is found in the Appalachian region, with slightly more than 8 GW combined in Ohio, West Virginia, Kentucky, Virginia, and Indiana.

New environmental regulations and struggles to remain cost-competitive explain most of these retirements.  This year, the Environmental Protection Agency's Mercury and Air Toxics Standards (MATS) take effect.  MATS requires existing large coal- and oil-fired electric generators to meet stricter emissions standards by retrofitting the units with new emissions control technologies.  While some units have been granted extensions to operate through April 2016, some power plant operators are choosing to retire units instead of making cost-prohibitive investments in pollution control.

Most of the coal-fired units slated for retirement are smaller and operate at a lower capacity factor than average coal-fired units in the United States.  According to EIA, the to-be-retired units have an average summer nameplate capacity of 158 MW, just 60% as big as the 261 MW average for other coal-fired units.  In 2014, the average capacity factor for all coal units was 61%, but the subset of coal units retiring in 2015 had an average capacity factor of just 36%.  The relatively small size and low capacity factor of these power plants make it harder for them to compete economically against other generation sources.  This competition is especially difficult if sufficient natural gas-fired generating capacity is available, as the cost of natural gas has fallen to levels not seen since 2012.

The coal capacity retiring in 2015 accounted for 1.6% of total U.S. generation during 2014.  At the same time, electric generating companies expect to add more than 20 GW of utility-scale generating capacity to the power grid.  This new capacity is dominated by wind (9.8 GW), natural gas (6.3 GW), and solar (2.2 GW), which together compose 91% of expected new capacity in 2015.

House subcommittee considers reliability draft

Tuesday, May 19, 2015

A congressional committee is considering legislation to assure reliability and security of the U.S. electricity grid.  The House Subcommittee on Energy and Power's discussion draft includes a series of provisions designed to harden the grid against disturbance.

To understand the discussion draft, you must first understand its context.  2015 is a time of great change for the U.S. electricity system.  The grid continues to shift away from coal-fired generation and towards use of natural gas and renewable energy sources.  New environmental regulations affecting power plants are taking effect.  Smart grid technology now enables real-time communication and coordination between supply and demand for electricity, but creates millions of potential access points for hackers to target the grid.  Meanwhile utilities plan to invest more than $60 billion in transmission infrastructure over the next decade. 

Faced with these shifts, the House Subcommittee on Energy and Power held a hearing today on a "discussion draft" of proposed measures to strengthen grid reliability, security and readiness to survive disturbance.  The discussion draft includes measures that would:
  • Resolve conflicts between choosing whether to comply with an emergency order from the Department of Energy or violate environmental obligations;
  • Require the Federal Energy Regulatory Commission to complete an independent reliability analysis of any proposed or final major federal rule that affects electric generating units;
  • Direct the Secretary of Energy to develop and adopt procedures to enhance communication and coordination between governmental entities and the private sector to improve emergency response and recovery;
  • Give the Secretary of Energy powers to address grid security emergencies, and facilitate information sharing;
  • Require the Energy Department to submit a plan to Congress evaluating the feasibility of establishing a Strategic Transformer Reserve for the storage, in strategically-located facilities, of spare large power transformers in sufficient numbers to temporarily replace critically damaged large power transformers;
  • Direct DOE to create a voluntary Cyber Sense program to identify cyber-secure products and technologies intended for use in the bulk-power system, like controls and SCADA systems;
  • Directs state public utility commissions and utilities to improve grid resilience and promote investments in energy analytics technology to increase efficiencies and lower costs for ratepayers while strengthening reliability and security; and
  • Require FERC to work with each regional transmission organization to encourage a diverse generation portfolio, long-term reliability and price certainty for customers, and enhanced performance assurance during peak period.
As noted in the opening statements of Chairmen Ed Whitfield and Fred Upton, elements from this discussion draft may be included in a bipartisan energy bill expected to emerge from the House committee later this session.

FERC proposes geomagnetic disturbance reliability standard

Thursday, May 14, 2015

Is the U.S. electric grid ready for solar storms and other geomagnetic disturbances?  Today the Federal Energy Regulatory Commission proposed approving a new reliability standard for the grid to address its vulnerability to these hazards.

A utility substation near Treasureton in southeast Idaho.

Periodic activity on the Sun's surface sends powerful waves of energetic particles toward the Earth.  These solar events can distort the Earth's magnetic field, affecting the flow of electricity on Earth.  While serious geomagnetic disturbances are expected to be infrequent, they can cause blackouts and damage key utility infrastructure.

The Federal Energy Regulatory Commission has jurisdiction over the reliability of the U.S.'s bulk electric power system.  To this end, it has designated the North American Electric Reliability Corporation (NERC) as the nation's electric reliability organization.  In May 2013, FERC directed NERC to develop and submit new standards for protecting the grid against geomagnetic disturbances (Order No. 779)

FERC and NERC have proceeded in a two-stage process.  First, in June 2014 FERC approved a standard on implementation of operating plans, procedures and processes to mitigate effects of geomagnetic disturbances (Order No. 797).

Reserved for the second stage were further requirements that transmission planners and owners assess the vulnerability of their systems to a theoretical benchmark event.  NERC subsequently proposed such a standard, calling for an evaluation of what would happen in a “one-in-100-year” benchmark event.

In a Notice of Proposed Rulemaking issued today, the FERC proposes to largely adopt NERC’s proposed second-stage standard.  The standard would require covered entities to have system models needed to complete vulnerability assessments, to have criteria for acceptable steady state voltage performance during a benchmark event, and to complete a vulnerability assessment once every 60 calendar months. If the assessment indicates that a system does not meet the performance requirements, the entity would have to develop a corrective action plan addressing how the requirements will be met.

The proposed rulemaking would direct NERC to further modify its standard to require that the study and benchmarking of geomagnetic disturbance events is based on a more complete set of data and a reasonable scientific and engineering approach.

Comments on today’s Notice of Proposed Rulemaking are due 60 days after its publication in the Federal Register.

Geomagnetic disturbances, and their impacts to the grid, are a hot topic in energy regulation at the present. States are considering laws regulating utility readiness for and response to geomagnetic disturbances; for example, next week the Maine Legislature’s Joint Standing Committee on Energy, Utilities, and Technology will consider LD 1363, An Act To Secure the Maine Electrical Grid from Long-term Blackouts.

ISO-NE projects slow growth in electricity demand

Wednesday, May 13, 2015

New England's electric grid operator predicts slow growth in annual energy usage in the region over the next decade, with slightly quicker growth in peak demand.

A Maine power plant -- the ecomaine Waste-to-Energy plant in Portland, Maine.

ISO New England, Inc. develops an annual long-term load forecast using factors including state and regional economic forecasts and 40 years of weather history.  Its most recent baseline forecast projects a compound annual growth rate of 1.0% in total energy usage in New England from 2015 to 2024.  For 2015, ISO-NE projects 138,745 gigawatt-hours (GWh) of load, growing to 152,280 GWh in 2024.

ISO-NE's forecast also projects future peak demand, a measure of the highest amount of electricity used in a single hour in New England.  Often, peak demand drives the need for constructing and maintaining power plants and transmission lines (and energy efficiency investments).  According to the latest ISO-NE forecast, New England's peak electricity demand is projected to rise by a compound annual growth rate of 1.3%, from 28,395 MW this year to 31,905 MW in 2024.

These baseline projections for future peak demand and energy usage take into account load reductions that can be expected from future installations of distributed solar photovoltaic facilities.  ISO-NE has prepared a separate Distributed Generation Forecast to estimate the load-reducing effects of distributed solar facilities developed as a result of state policy goals.

ISO-NE's baseline projections do not account for significant energy-efficiency savings, neither those committed through the region’s three-year Forward Capacity Market (FCM) nor future savings that can be expected beyond the FCM timeframe.

Report on Maine renewable portfolio standard in 2013

Wednesday, May 6, 2015

The Maine Public Utilities Commission has issued a report on Maine's use of renewable electricity in 2013.  The report shows the impact of Maine's renewable portfolio standard, a state law requiring electricity suppliers to source specified percentages of their electricity from “new” renewable resources.

Since 2000, Maine law has required electricity suppliers to include renewable energy in their portfolio of supply sources.  Maine’s original electric industry restructuring legislation included a 30% eligible resource portfolio requirement. The eligible resource portfolio requirement, now referred to as Class II, mandated that each retail competitive electricity supplier meet at least 30% of its retail load in Maine from “eligible resources.”  Eligible resources are defined in statute as either renewable resources or efficient resources.  Renewable resources are defined in statute as fuel cells, tidal power, solar arrays, wind power, geothermal installations, hydroelectric generators, biomass generators, and municipal solid waste facilities. Renewable resources may not exceed a production capacity of 100 megawatts. “Efficient” resources are cogeneration facilities that were constructed prior to 1997, meet a statutory efficient standard and may be fueled by fossil fuels.

During its 2007 session, the Maine Legislature enacted an Act to Stimulate Demand for Renewable Energy.  This Act established a new "Class I" standard, requiring Maine electricity suppliers to source specified percentages of their electricity from “new” renewable resources.  Generally, new renewable resources are renewable facilities that have an in-service date, resumed operation or were refurbished after September 1, 2005.  The Act set the initial renewable percentage requirement at 1% in 2008, increasing in annual one percentage point increments to 10% in 2017.  Pursuant to the Act, the renewable requirement will remain at 10% thereafter, unless the Commission suspends the requirement.

The Commission's March 31, 2015 report, Annual Report on New Renewable Resource Portfolio Requirement, reports on renewable portfolio standard compliance activity in calendar year 2013.  This lag between the study period and the report's issuance is driven by the timing of the most recently filed Competitive Electricity Provider (CEP) annual compliance reports, which were filed in July 2014 for calendar year 2013.  In 2013, the Act required suppliers to source 5% of their power from new renewable resources.  Suppliers can comply either by acquiring sufficient renewable energy certificates or RECs to cover their compliance obligation, or by paying an "alternative compliance payment".

According to the report, in 2013 suppliers purchased 727,291 Class I RECs from 21 certified generating facilities to meet the portfolio requirement.  Nearly 97% of these RECs came from biomass facilities located in Maine.  According to the report, 17 of the 21 facilities are biomass, three are hydro, and one is a wind facility.  18 of the 21 facilities are located in Maine, one is located in Connecticut, one is located in Massachusetts and one is located in Vermont.

The Commission's report also documents the cost of compliance in 2013.  During 2013, the cost of RECs used for compliance with the Class I requirement ranged from approximately $1.50 per MWh to $60 per MWh, with an average cost of $19. 8 7 per MWh and a total cost of $14, 292,438.  As noted in the report, the cost of Maine Class I RECs has dropped substantially since 2013, with the report citing a current trading range of $3.00 to $5.00.  With minor use of the alternative compliance mechanism by two suppliers, the total cost to ratepayers during 2013 was $14,296,249, which the Commission's report translates into an average rate impact of about 0.12 cents per kWh (about 60 to 65 cents monthly for a typical residential bill, or a residential customer bill impact of about 1%).

The report also documents the 2013 costs of RECs used to satisfy the "Class II" eligible resource portfolio requirement as ranging from $0.00 per MWh (some RECs were included as part of an energy transaction at no specified extra cost) to $1.00 per MWh, with an average cost of $0.16 per MWh and a total cost of $589,386. This translates into less than three cents per month on a typical residential bill.

Champlain Hudson Power Express gets Army Corps permit

Monday, May 4, 2015

The Champlain Hudson Power Express, an electric transmission line proposed from Quebec to New York, has completed its federal permitting process according to project developer Transmission Developers Inc.

Project developer TDI is a Blackstone portfolio company, with an apparent focus on HVDC lines.  First proposed in 2008, the current incarnation of the Champlain Hudson Power Express is a 333-mile high voltage direct current (HVDC) transmission line to be installed underground and underwater, from the U.S.-Canada border to New York City, running down Lake Champlain and parts of the Hudson River.  The line is slated to be able to import up to 1,000 megawatts of power from Canada to the U.S. 

In a press release issued last month, TDI announced that the U.S. Army Corps of Engineers has issued a permit that allows the Champlain Hudson Power Express project to be placed in waters of the United States along its proposed route.  The permit authorizes TDI to construct the project pursuant to Section 10 of the Rivers and Harbors Act and Section 404 of the Clean Water Act.

According to TDI, the Army Corps permit represents the final federal or state permit necessary to begin construction.  According to the permit, the work authorized must be completed by December 30, 2019.

More hydropower relicensure expected

Thursday, April 16, 2015

Many U.S. hydropower projects face relicensure by the Federal Energy Regulatory Commission within the next 3 years, making hydro project relicensing a hot topic.

The FERC is the nation's primary federal regulator of hydropower facilities.  Under Part I of the Federal Power Act, the Commission's responsibilities over hydropower include issuing licenses for the construction of new projects, relicensing for the continuance of existing projects, and oversight of all ongoing project operations, including dam safety inspections and environmental monitoring.

According to the Commission, about 1,023 issued licenses were active as of April 1, 2015.  Licenses are typically effective for up to 50 years, largely because dams and hydroelectric power facilities are typically long-lived assets and because the regulatory process for licensure is extensive (and expensive for project developers or owners).  Nevertheless, as time marches on, even a 50-year license will ultimately expire, so owners of FERC-licensed hydropower projects must eventually evaluate relicensure

Federal law and regulations, including Section 15(b)(1) of the Federal Power Act and 18 C.F.R. §5.5 of the Commission’s regulations, govern the relicensure process.  Between 5 and 5.5 years before an existing license expires, the licensee must notify the Commission whether or not it intends to file an application for a new license.  This filing is known as a Notice of Intent or NOI.  At the same time, the licensee seeking relicensure must also file a Pre-Application Document (PAD).  The PAD must include: (1) a process plan and schedule; (2) a description of the project’s location, facilities, and operation; (3) a description of the existing environment at the project and its resource impacts; (4) a preliminary list of issues and proposed studies; and (5) a list of contacts.  A licensee must also distribute the PAD to appropriate federal, state, and interstate resource agencies, Indian tribes, local governments, and members of the public likely to be interested in the project’s relicensing.

The Commission has noted an anticipated uptick in the rate of relicensure applications.  From October 1, 2010 through September 30, 2014, the Commission has received an annual average of about 12 Notices of Intent to relicense hydroelectric projects.  According to the FERC, 47 licensed projects were in the relicensure process as of April 1.  But even more projects face relicensure in the next 3 years.  According to an April 1 notice issued by the Commission, about 100 FERC-licensed hydropower projects will begin the relicensing process between October 1, 2016, and September 30, 2018.  The Commission thus anticipates the annual average number of Notices of Intent to increase to about 34.

Owners of FERC-licensed hydropower projects nearing the end of their license terms must plan ahead to prepare for relicensure.  Given the expected increase in hydroelectric project relicensure, Commission staff reasonably expects an increase in their workload.  While most existing projects have historically been able to win new licenses, in some cases hydropower project relicensing can become controversial.  Expect the next several years to bring increased relicensing activity.

Maine considers nuclear energy law change

Monday, April 13, 2015

The Maine legislature is considering a proposal to amend state laws regarding the siting and construction of new nuclear power plants. The bill known as LD 1313, "An Act To Amend the Laws Regarding Nuclear Power Generating Facilities", is listed as a "Governor's Bill", indicating its origin from Maine Governor Paul LePage. What might LD 1313 mean for Maine?

Maine is not currently home to any operating nuclear power plants.  From 1972 to 1996, the Maine Yankee Nuclear Power Plant operated a 900 megawatt reactor in Wiscasset.  While it operated, Maine Yankee was the state's largest generator of electricity.  But a Nuclear Regulatory Commission investigation launched in 1995 identified safety and other problems that ultimately rendered continued plant operation uneconomic; the site was decommissioned from 1997 through 2005, with spent fuel remaining on site to date.

Maine Yankee was controversial from its inception, with significant opposition to its construction from anti-nuclear groups and others.  Partially in response to this controversy, in 1987 Maine enacted a law "to provide for citizen participation in any decision to construct a nuclear power plant within the State."  As part of that law (as amended in 1999), the Legislature enacted a finding "that construction of a nuclear power plant is a major financial investment, which will have consequences for consumers for years to come."  The law also included a finding that, "In the recent past, investments in nuclear power plants have caused severe financial strain on consumers."  In addition, the law required a statewide voter referendum prior to the construction of any nuclear power plant in Maine, and prohibited construction of a nuclear power plant without this voter approval.

Governor LePage's proposal would amend those two sections of existing law relating to the process for siting nuclear power plants.  First, LD 1313 would delete the legislative finding that "In the recent past, investments in nuclear power plants have caused severe financial strain on consumers." Second, LD 1313 would limit the referendum requirement to nuclear power plants "with capacity greater than 500 megawatts."

LD 1313 would appear to encourage the construction of relatively small nuclear power plants in Maine -- that is, those with capacity of 500 megawatts or smaller, roughly half of Maine Yankee's size.  But of the approximately 100 nuclear power plants in commercial operation in the U.S. today, nearly all can generate more than 500 megawatts of power.  The Omaha Public Power District's Fort Calhoun plant in Nebraska is rated at 476 megawatts, and is one of the only commercial reactors in the U.S. smaller than 500 megawatts.  The technical and security aspects of nuclear power have traditionally pushed utilities to develop relatively large nuclear power plants, making the development of small but traditional nuclear power in Maine relatively unlikely.

Perhaps more likely to benefit if LD 1313 is enacted would be the development of small modular nuclear reactors.  According to the U.S. Department of Energy, small modular reactors offer the advantage of lower initial capital investment, scalability, and siting flexibility at locations unable to accommodate more traditional larger reactors.  They also have the potential for enhanced safety and security.  The Department of Energy has expressed interest in advancing small modular reactor technology.  If LD 1313 is enacted, it could eliminate the requirement of statewide voter approval of the construction of a nuclear power plant using small modular reactor technology.

But whether LD 1313's enactment would actually lead to the construction of small modular reactors in Maine is unclear.  Is the voter referendum requirement really the chief obstacle to small modular reactor construction in Maine?  Or can Maine's lack of small modular reactors be explained by other limitations -- like technology, financing, or safety regulations?

LD 1313 has been referred to the Maine State Legislature's Joint Standing Committee on Energy, Utilities and Technology.  To date, no public hearing has been scheduled.

Energy Department to fund low-impact hydropower R&D

Friday, April 10, 2015

The U.S. Department of Energy has announced $7 million in funding for the research and development of advanced low-impact hydropower systems.  The Energy Department's competitive solicitation is designed to fund projects that help advance hydropower drivetrains -- the systems passing turbines' rotational energy along to their attached generators -- and structural foundations enabling low environmental impacts and reduced lifetime operating and maintaining costs.

The funding is available from the Energy Department's Office of Energy Efficiency and Renewable Energy.  This office, known as EERE, runs programs designed to speed up the development and deployment of energy efficiency and renewable energy technologies and market-based solutions.  hydropower manufacturing. 

This funding opportunity is designed to attract innovations that enable rapidly built, removable, and replaceable hydropower systems.  It solicits proposals to develop alternative hydropower systems with low civil infrastructure development costs, deployable within 2 years with relatively low environmental impacts, and which can be removed or replaced after their intended life is completed.  According to the funding opportunity announcement, these concepts and systems will be able to operate at a cost that is competitive with traditional sources of generation.

The complete funding opportunity announcement -- DE-FOA-0001286: RESEARCH AND DEVELOPMENT OF INNOVATIVE TECHNOLOGIES FOR LOW IMPACT HYDROPOWER DEVELOPMENT -- is available through the Office of Energy Efficiency and Renewable Energy's Funding Opportunity Exchange.

While this funding opportunity supports a wide variety of technological innovations for new hydropower development, specific areas of interest include:
  • New, rapidly deployable and removable hydropower technologies, such as innovative prefabricated structures, water impoundment structures, and water conveyance systems.
  • Innovative methods and materials for the construction of conventional hydropower facilities, including, but not limited to, concrete alternatives, in-water construction, and innovative advanced tunneling methods.
  • Design and lab testing of innovative conventional hydropower powertrain and generator components, such as advanced composite materials and replaceable blade technologies for turbine runners, new generator technologies, and materials and coatings for powertrain components.
The Energy Department will hold a webinar on this funding opportunity announcement on Tuesday, April 21, 2015 at 3:00 pm (ET).  Applicants must first submit a concept paper (currently due no later than 5:00 PM (ET) on May 7), with full applications currently due by 5:00 PM (ET) on June 15, 2015.

Obama links climate and health

Thursday, April 9, 2015

President Obama has issued a Presidential Proclamation declaring this week, April 6-12, 2015, as National Public Health Week.  Climate change, and its impacts on human and environmental health, figure prominently in his proclamation.

The Obama administration has focused on climate change since taking office in 2009.  In 2013, President Obama released his administration's Climate Action Plan, calling for reductions in U.S. emissions of carbon and greenhouse gases, adoption of mitigation and adaptation measures, and global action.  He has also addressed climate change in his State of the Union speeches to Congress, and the U.S. Environmental Protection Agency has issued its proposed Clean Power Plan to reduce the carbon intensity of the nation's electric power sector.

While interest in addressing climate change arises from a broad range of factors, health plays an important role in the Obama administration's action on climate issues.  In this week's Presidential Proclamation on health, President Obama noted the interdependence of climate, environment, and human health:
America's public health is deeply tied to the health of our environment. As our planet becomes more interconnected and our climate continues to warm, we face new threats to our safety and well-being. In the past three decades, the percentage of Americans with asthma has more than doubled, and climate change is putting these individuals and many other vulnerable populations at greater risk of landing in the hospital. Rising temperatures can lead to more smog, longer allergy seasons, and an increased incidence of extreme-weather-related injuries and illnesses.

My Administration is dedicated to combating the health impacts of climate change. As part of my Climate Action Plan, we have proposed the first-ever carbon pollution limits for existing power plants -- standards that would help Americans live longer, healthier lives. And as we continue to ensure the resilience of our health care system, we are working to prepare our health care facilities to handle the effects of a changing planet. Climate change is no longer a distant threat. Its effects are felt today, and its costs can be measured in human lives. Every person, every community, and every nation has a duty to protect the health of all our children and grandchildren, and my Administration is committed to leading this effort.
This week the Obama administration announced further actions to protect communities against the impacts of climate change.  These actions include convening stakeholders to prepare for a White House Climate Change and Health Summit later this spring that will feature the Surgeon General, and an Adaptation in Action Report by the Centers for Disease Control and Prevention (CDC).

The Obama administration also announced an expansion of its Climate Data Initiative to include more than 150 health-relevant datasets on  President Obama unveiled the Climate Data Initiative in 2014 to host data related to climate change that can help inform and prepare businesses and citizens for the impacts of extreme weather.  The newly released datasets are designed to help the public answer questions, including:
  • In what ways does the changing climate affect public health where I live?
  • What risk factors make individuals or communities more vulnerable to climate-related health effects?
  • How can public health agencies, communities, and individuals plan for uncertain future conditions?

Maine long-term contracting for electricity

Tuesday, April 7, 2015

Maine energy regulators have asked for public comment on the goals and objectives for a decade-old program supporting long-term contracts between utilities and independent power producers.  At stake is the future of Maine's long-term contracting program for electricity resources.

In 2006, the Maine State Legislature enacted an Act to Enhance Maine’s Energy Independence and Security, P.L. 2005, ch. 677.  Part C of that Act (codified at 35-A M.R.S. § 3210-C) authorizes the Maine Public Utilities Commission to direct transmission and distribution utilities to enter into long-term contracts for capacity and energy.  The statute directs the Commission to conduct a competitive solicitation for contracts at least every three years, and specifies the framework that the Commission must use in selectingcapacity resources for contracting, including a stated priority list of types of resources and a duty to select lowest price offers.

Since the Act's enactment, the Commission has conducted five solicitations under this program (including the current solicitation, under which proposals are due by May 1, 2015).  In each case, the Commission has hired an outside consultant to forecast relevant markets for energy, capacity, and renewable energy credits to be used in evaluating the value of the market products offered in responsive bids.

Today, the Commission issued a Notice of Inquiry into the goals and objectives for long-term contracting under the Act.  In the notice, the Commission asks for public comment on how long-term contracts can most effectively be used to support the development of increased generation from renewable resources, and reduce price volatility and greenhouse gas emissions; how the Commission should evaluate proposals' price reduction benefits; and how to best structure transactions.

The Commission also asked for comment on relatively novel potential uses of the program, including leveraging federal support for energy programs to benefit Maine ratepayers, increasing in-state generation capacity such that Maine would “separate” from the rest of New England in the regional forward capacity market to yield reduced in-state prices for capacity, and "geo-targeting" capacity resources to avoid transmission and distribution costs more effectively.

Finally, the Commission requested feedback on its long-term contracting process.  Should the Commission issue requests for proposal on a set schedule (e.g. every two years), or should it retain discretion as to when to issue an RFP?  Should the process include fixed dates for key milestones like submission of final bids or Commission decisions, or should it remain flexible and unfixed?

Comments are due to the Maine Public Utilities Commission by May 6, 2015.

Virginia offshore wind research lease

Friday, April 3, 2015

The U.S. federal agency responsible for leasing offshore wind sites on the outer continental shelf has executed its first wind energy research lease, giving Virginia's state energy agency the right to pursue the Virginia Offshore Wind Technology Advancement Project (VOWTAP), a 12-megawatt offshore wind test facility to be located in federal ocean waters.

Offshore wind energy offers the potential to generate large amounts of electricity from a renewable resource, but to date no commercial grid-tied U.S. offshore wind projects are operating.  The U.S. Bureau of Ocean Energy Management is responsible for leasing sites on the outer continental shelf for energy projects, including offshore wind and other renewable energy developments.  BOEM has auctioned off sites for offshore wind projects off several East Coast states, including Virginia, but had not previously issued a research lease.

On March 24, BOEM announced the execution of a wind energy research lease with the Commonwealth of Virginia’s Department of Mines, Minerals and Energy (DMME).  Under research lease OCS-A 0497 (35 pages), the Virginia agency proposes to design, develop and demonstrate a grid-connected, 12-megawatt offshore wind test facility on the Outer Continental Shelf off the coast of Virginia, in partnership with a local utility affiliated with Dominion Resources, Inc.

The 30-year lease covers approximately 2,135 acres of sea space east of Virginia Beach, adjacent to the Wind Energy Area leased to Virginia Electric and Power Company (dba Dominion Virginia Power) for commercial development since 2013.  The lease describes the project as "a research project to generate energy using wind turbine generators and conduct any associated resource assessment activities, as well as install associated offshore substation platforms, inter-array cables, and subsea export cables."  As a research lease, the Virginia agreement does not include any fees payable from DMME to BOEM "for the purpose of ensuring a fair return for the use of this lease area."

As is standard for BOEM's offshore wind site leases, the lease itself does not give the lessee the right to build or operate an offshore wind project.  Rather, the lease gives the Virginia DMME the exclusive right to submit to BOEM for approval a Site Assessment Plan and a Research Activities Plan, and then to allow a designated operator to conduct whatever activities are described in those plans once they are approved by BOEM. 

In this case, DMME has designated Dominion subsidiary Virginia Electric and Power Company as the lease operator.  Dominion's partnership with DMME on offshore wind dates back at least to 2012, when the U.S. Department of Energy announced funding awards for seven proposed Offshore Wind Advanced Technology Demonstration Projects.  Dominion won one of these 2012 awards, and partnered with DMME and others to establish VOWTAP.  VOWTAP won a second funding award from DOE in 2014 for deployment activities.

Dominion and DMME have already filed a Research Activities Plan for VOWTAP.  With the research lease in hand, the path forward includes approval of that plan and a Site Assessment Plan by BOEM.  If the VOWTAP project is built, the data obtained and lessons learned from this project will be made publicly available and inform the future production of renewable energy within the adjacent commercial Wind Energy Area leased to Dominion.

Texas small hydro project loses exemption

Wednesday, March 25, 2015

What happens to a proposed hydroelectric project takes longer than anticipated to be built, due to difficulties with project financing and severe flooding?  As the developer of a proposed project in Texas recently found out, federal regulators can be lenient up to a point -- but under some circumstances the developer can lose its federal authorization to develop and operate the project.

The A.H. Smith Dam on the San Marcos River in Martindale, Texas was originally constructed in about 1894 to provide mechanical power a cotton gin; later, electric generation was installed, but power production ceased in the 1940s when low wholesale energy prices made operation uneconomic.  Modern hydropower facilities rated at 150 kilowatts were installed in 1984, but were ultimately abandoned.

In 2005, developer Hydraco Power, Inc. applied to the Federal Energy Regulatory Commission for an exemption from the licensing requirements of Part I of the Federal Power Act for its proposed A.H. Smith Dam Project.  Hydraco's project included refurbishing and restoring the operation of the existing turbine located at the dam's powerhouse, installing a new buried transmission line and a water surface elevation gate in the headpond.

On June 2, 2006, the Commission granted Hydraco an exemption for the project.  As a standard condition of exemptions, the Commission retained the right to revoke the exemption if any term or condition was violated.  Among the terms was a requirement that Hydraco file within 120 days a
plan and schedule to install the new transmission line and restore the powerhouse, turbine, and trash racks to operating condition, as well as notice that the Commission could terminate the exemption if actual construction of any proposed or required facility had not begun within two years or had not been completed within four years of the date of issuance of the exemption.

Over the next 8 years, Hydraco filed a series of construction plans and schedules, but never completed the project despite obtaining repeated extensions of key deadlines.  After multiple prompts by Commission staff to file a revised plan and schedule for restoring project operation or an application to surrender the exemption, the Commission noted that Hydraco either failed to respond or responded by stating that it could not estimate a schedule for restoring project operation because project construction, including major component repairs, was on hold due to lack of funds.

After the Commission issued a public notice in August 2014 stating its intent to terminate the project exemption "due to Hydraco’s longstanding violation of exemption Article 10 and its failure to provide a timeframe for restoring project generation", on November 20, 2014, the Commission issued an Order Terminating Exemption. That order found that "Hydraco has only performed minimal work at the project since obtaining its exemption in 2006 and that it lacks the funding to proceed with the necessary component repairs, including construction of the powerhouse interior and generating unit."

Hydraco filed a request for rehearing of the Order Terminating Exemption.  On rehearing, Hydraco asserted that it had reached a financing agreement with a new investor and, consequently, it is ready to perform the work needed to comply with its exemption. Hydraco also objected to the findings that project construction was at a standstill and that Hydraco intended to abandon the project, noting that the Commission should excuse construction delays caused by severe flooding.

Last week, the Commission issued an Order Denying Rehearing in the case.  It first noted that Hydraco had not demonstrated that it now has the money needed to bring the project on line.  Not only did Hydraco not show evidence of a final financing agreement, but the documents showed a source of only half of the funding needed for project restoration.  Second, the Commission noted that Hydraco's recent activities -- regularly inspecting the dam and removing debris from its spillway, trashracks, and grates, securing the site against vandalism and installing lighting, and repairing damage caused by a flood -- are "either maintenance or repair, not project development."  Finally, the Commission articulated its "doctrine of implied surrender", which it applies where the entity responsible for the project has, by action or inaction, clearly indicated its intent to abandon the project, but has not filed a surrender application.

With the exemption terminated and Hydraco's request for rehearing denied, the A.H. Smith Dam project faces an uncertain future.  On the one hand, the site presumably still offers many of the same values that Hydraco hoped to capture -- use an existing dam, with existing generation facilities, to generate renewable electricity.  However, the loss of the FERC exemption means that Hydraco (or any other developer) will have to start the federal hydropower process over if it hopes to redevelop the dam as a hydroelectric generating site.

The case of the A.H. Smith Dam project illustrates a number of themes: interest in restoring existing hydropower infrastructure to generate renewable energy with relatively less environmental impact than newly-built dams, the challenge of securing financing for small hydropower projects -- and perhaps most importantly the value of compliance with FERC hydropower rules.

FERC 2014 State of the Markets report

Monday, March 23, 2015

U.S. energy markets overseen by the Federal Energy Regulatory Commission in 2014 were impacted by extreme weather and changes in the mix of electric generation resources, according to a report by Commission staff.

The 2014 State of the Markets report issued on March 19 by FERC's Office of Enforcement’s Division of Energy Market Oversight presents Commission's staff’s assessment of recent developments in natural gas, electric, and other energy markets.

Extreme cold temperatures in the first quarter of 2014 affected natural gas infrastructure and power markets across the country.  The price of natural gas in the U.S. reached record high levels, driving corresponding spikes in the price of electricity.  For example, the price of natural gas at the Transco Zone 6 Non-NY pricing point hit $123/MMBtu in January -- about 33 times higher than the average 2013 U.S. price.  Largely due to these price spikes, the spot natural gas price at the Henry Hub pricing point averaged $4.32/MMBtu in 2014, a 16% increase over 2013.

Meanwhile, natural gas and renewable resources continued to displace coal as a fuel for electric power generation.  Total U.S. generating capacity increased 10.8 GW in 2014, with natural gas and renewable projects representing the bulk of new capacity.  At the same time, utilities retired coal-fired power plants, continuing a trend that started in 2012.  Commission staff projects continued coal retirements in 2015, particularly after the April effective date of additional air emissions regulations imposed by the Environmental Protection Agency's Mercury and Air Toxics Standards.

FERC's 2014 State of the Markets report also provides a quick look at 2015 year-to-date market performance.  Wholesale electricity prices rose again this winter, although not as sharply as in the first quarter of 2014.  FERC staff's report suggests factors helping to moderate winter prices included better cold-weather preparation of assets, programs like ISO New England's Winter Reliability Program, better coordination between operators of electric transmission and natural gas pipelines, record high levels of natural gas production, the development of new pipeline infrastructure, and low oil prices.

More solar faster, predicts New England grid operator

Tuesday, March 17, 2015

New England will likely see even more solar photovoltaic energy projects over the next decade than was previously projected, according to the latest draft forecast by the operator of New England's electric grid.

Solar photovoltaic panels on the roof of a Massachusetts home.

To help plan for future needs, grid operator ISO New England, Inc. is developing an updated forecast of solar photovoltaic project development in New England.  In 2014, ISO New England developed its first multistate forecast of PV capacity growth.  It based its 2014 PV forecast heavily on development goals articulated as policies in the six New England states.

ISO New England is now updating that forecast for 2015.  Its draft 2015 Solar PV Forecast, released on February 27, notes that PV development is happening more rapidly than was previously projected.  Using updated historical data, it acknowledges that through 2014, 40% more solar capacity was developed in the region than it previously estimated.  As a result of this faster-than-expected growth, the draft now predicts a higher level of cumulative photovoltaic project development through 2023.

Perhaps more significantly for the solar boom, ISO-NE's draft 2015 forecast also frontloads more new project capacity into 2015 and 2016, while decreasing the amount predicted to be newly developed in later years.  While last year's forecast also predicts more incremental solar capacity will be developed in each of the next three years than in later years, the frontloading is more prominent in the draft 2015 forecast.

The draft 2015 forecast projects that 2,138.8 megawatts of solar photovoltaic projects will be developed in New England by 2024.  This capacity is stated as an alternating current nameplate rating, even though photovoltaic cells essentially generate direct current electricity.  The study derates direct current capacity to alternating current with an 83% array-to-inverter ratio, so this implies an even higher number of megawatts if stated as direct current capacity, as most solar projects are described.

The draft 2015 forecast projects that these solar photovoltaic projects will give rise to a summer seasonal claimed capability of 748.6 megawatts.

ISO New England did not include in its draft 2015 PV forecast any update to its forecast of how much energy these projects would produce.  Instead it suggests that it must first finalize its forecast of installed photovoltaic capacity, and can then estimate the energy production associated with the forecast.  The report does repeat 2014's forecast of energy as illustrative, keeping in mind that actual amounts of energy generated from solar photovoltaic capacity in New England will likely be higher if capacity forecasts are revised upward as is proposed in this draft.

The 2015 draft PV report is now under review by ISO New England's Distributed Generation Forecast Working Group.  That group next meets on April 14, where the final draft forecast will be presented.