Energy and electricity cooperatives on the rise?

Could energy cooperatives or other alternatives to investor-owned utilities play a larger role in connecting consumers with electricity, heating fuel and other forms of energy? Emerging technologies like microgrids and increased interest in decentralization and local governance could support a growth in consumer-owned utilities or similar cooperative structures.

When used as an adjective, "cooperative" generally means "involving mutual assistance in working toward a common goal."  In its noun form, "cooperative" can mean "a farm, business, or other organization that is owned and run jointly by its members, who share the profits or benefits."  Other definitions arise in the specific contexts of electricity and other forms of energy, but the National Rural Electric Cooperative Association cites seven core principles and values common to all cooperatives: open and voluntary membership; democratic member control; members' economic participation; autonomy and independence; education, training, and information; cooperation among cooperatives; and concern for community.  

Today in the U.S., more than 900 cooperatives in 47 states provide electric service to an estimated 42 million people in 47 states.  According to a trade association, distribution and generation and transmission cooperatives collectively own assets worth $175 billion, invest about $13 billion annually in new plant equipment, and employ 71,000 people in the U.S.  Many cooperatives serve relatively rural areas that were not previously served by other utilities, although some have grown within other utilities' territories.  This local model stands in contrast to investor-owned utilities, many of which are owned by large national or global corporations whose ultimate parent companies are based overseas.

Cooperatives or similar organizations are already part of many sectors of the economy besides electricity, including housing, financial services, agriculture, retail, fisheries, and manufacturing.  Values like local self-determination, inclusion and fair dealing can align well with the cooperative form.  Many states recognize the rights of consumers of various products or services to participate in cooperatives.  For example, a Maine statute allows any 3 or more natural persons to incorporate a consumer cooperative association to "engage in any one or more lawful mode or modes of acquiring, producing, building, operating, manufacturing, furnishing, exchanging or distributing any type or types of property, commodities, goods or services for the primary and mutual benefit of the patrons of the association, or their patrons, if any, as ultimate consumers."  This concept can broadly be applied to electricity, oil, wood, or other forms of energy.

Many states have enacted specific laws adapting electricity generation and distribution to the cooperative model.  For example, Maine law allows the creation of rural electric cooperatives, which are cooperative nonprofit membership corporations established for the purpose of supplying electricity and promoting and extending the use of electricity.  Such a cooperative can have powers including the ability to acquire electric transmission and distribution lines or systems, electric generating plants, dams, or other property determined necessary, convenient or appropriate to accomplish the purpose for which the cooperative is organized.  If it distributes and supplies gas or electric transmission and distribution service, the cooperative may be treated as a public utility under state law.  If another public utility is already furnishing or is authorized to furnish a similar service in or to a municipality, Public Utilities Commission approval would be required before the cooperative may furnish that service.

Cooperatives are already engaged in the utility sector as one form of consumer-owned utility.  Other alternatives to investor-owned utilities exist -- for example, municipal power districts or municipally owned utilities exist in some places such as Massachusetts, or public utility districts in Washington.  Whether under a cooperative or municipal form, these alternatives can be aligned with values like local self-determination and energy sovereignty -- for example, the right to choose one's own mix of energy supply resources, or manage more closely for local values.  In some cases, they can also deliver essential services like heat and power at a lower cost or with improved value (such as enhanced reliability or environmental performance) compared to traditional utility systems.

As communities look to the future, cooperatives or other alternatives to investor-owned utilities may be increasingly attractive by virtue of their alignment with the local interests consuming services like electricity.  If consumers perceive investor-owned utilities as not responsive to consumer needs, the cooperative form could continue to make gains in some areas, for example in the form of energy cooperative microgrids.  The cooperative form has significant potential to continue to expand into the energy sector.

Washington tidal power license surrendered

U.S. hydropower regulators have accepted a Washington public utility district's application to surrender its license for an unconstructed tidal power project.

Public Utility District No. 1 of Snohomish County, Washington was the licensee for the Admiralty Inlet Pilot Tidal Project No. 12690.  The hydrokinetic energy project was to be located on the east side of Admiralty Inlet in Puget Sound, about 0.6 mile west of Whidbey Island. Project works were to consist of two 300-kilowatt OpenHydro tidal turbines, each mounted on a triangular subsea base, adaptable monitoring devices, trunk cables extending from each turbine to an onshore cable termination vault, and transformers and other facilities connecting to Puget Sound Energy’s electrical distribution system.

The Federal Energy Regulatory Commission issued a minor, pilot project license for the Admiralty Island project on March 20, 2014, enabling construction, operation, and maintenance of the project for a period of ten years.

But in September 2014, the licensee was notified that it would not receive additional funding to proceed with the development of the project. Unable to locate alternative funding sources, the licensee determined that the project was no longer financially feasible. The licensee therefore requested to surrender its license.

On December 4, 2015, the licensee filed an application to surrender its license. Two entities filed motions to intervene in support of the license surrender.

On March 21, 2016, the Commission issued its order accepting the Admiralty Inlet tidal project's license surrender. In that order, the Commission noted that no construction or ground-disturbing activity has occurred, that the project site remains unaltered, and that surrendering the license would not affect any environmental resources.  The Commission therefore approved the licensee’s application to surrender its license without condition.

As a result of the order, the license for the proposed Admiralty Inlet Pilot Tidal Project No. 12690 is surrendered, effective at the close of business on March 21, 2016.  The site could still be developed as a tidal power resource, if a future application for development is granted.

Washington tidal energy project cancelled

A tidal energy project proposed off the Washington coast will be scrapped due to cost overruns, according to the project developer.

Public Utility District No. 1 of Snohomish County's proposed Admiralty Inlet Pilot Tidal Project was envisioned as a temporary, experimental project to evaluate the commercial viability of tidal energy development in Puget Sound.  The 600-kilowatt hydrokinetic project would have generated electricity from the force of water moving through turbines mounted in tidal currents.  Earlier this year, the project won a pilot license from the Federal Energy Regulatory Commission, making it among the first tidal projects to qualify for the Commission's pilot licensure program.

But the estimated costs of the project were significant relative to its projected energy output.  Since it was first proposed in 2006, the Public Utility District estimated that the project would cost $20 million to build.  Based on these numbers, the Commission estimated that the levelized annual cost of operating the project would be about $1,848,294.  Dividing this by the project's expected production of energy, the power could cost $7,574.98 per megawatt-hour of energy generated -- an amount over 250 times higher than the estimated $30/MWh cost of alternative power.

Nevertheless, the PUD had designed the project's finances to avoid the need for ratepayer financing.  Rather, the project relied on funding from federal grants and in-kind contributions from project partners, as well as some money from the sale of excess renewable energy credits from the District's wind power projects.  To date, the District has invested about $3.5 million in the effort, over the past 8 years.

With the FERC license in hand, the District moved forward to solicit bids for project engineering and construction.  When those bids came in, the District realized the project would likely cost closer to $37 million, or $17 million more than previously expected.  According to a September 30 announcement by the Public Utility District, the District tried to seek more funding for the project from the U.S. Department of Energy and other project partners, but did not succeed.  As a result, the District has announced that it will not move forward with the project.

While the District is no longer actively pursuing the Admiralty Inlet Pilot Tidal Project, some other developer may try to pick up where the District left off.  Indeed, the District's announcement notes that the project "remains worthwhile to pursue on behalf of the nation to further the potential development of marine renewable energy."  Will another developer seek to advance the Admiralty Inlet Pilot Tidal Project?  Will other tidal current and marine hydrokinetic projects be developed given the challenges of ocean energy project economics?

Hydrokinetic energy projects in 2014

Hydrokinetic energy projects generate electricity from moving water, capturing the power embodied in tides, waves, and currents without the use of dams.  Hydrokinetic energy resources are estimated to have a tremendous power potential -- according to one U.S. Department of Energy study, approximately 1,420 terawatt-hours per year, or approximately one-third of the nation's total annual electricity usage.  The technologies required are relatively new, do not have decades of operational experience, and remain relatively expensive.  Nevertheless, federal records show growth in hydrokinetic project development.

The Federal Energy Regulatory Commission regulates most hydrokinetic energy projects under its hydropower jurisdiction pursuant to the Federal Power Act.  Project developers may seek preliminary permits granting the right to study a particular site and priority to apply for a project license. 

Relatively few projects have received licenses to date.  In 2012, the Commission issued a pilot project license for the Roosevelt Island Tidal Energy project in the East River near New York City.  Last month, the Commission issued a pilot project license to the Public Utility District No. 1 of Snohomish County for a 600 kilowatt tidal project in Puget Sound, Washington.

As of last month, six projects have been issued preliminary permits that remain in effect:

• Ecosponsible, Inc.'s Niagara Community project, a 1.25 megawatt inland project proposed for the Niagara River in New York
• Ecosponsible, Inc.'s Niagara Community #2 project, a similar 1.25 megawatt inland project proposed for the Niagara River in New York
• Iguigig Village Council's Iguigig RISEC project, a 40 kilowatt inland project proposed for the Kvichak River in Alaska
• The Town of Edgartown, Massachusetts's Muskeget Channel Tidal Energy project, a 4.94 megawatt project proposed for the Muskeget Channel off the island of Martha's Vineyard
• Turnagain Arm Tidal Energy's Turnagain Arm Tidal project, a 240 megawatt tidal project proposed for Cook Inlet, Alaska
• Resolute Marine Energy, Inc.'s Yakutat project, a 750 kilowatt wave project proposed in the Gulf of Alaska

 As of March, another 15 applications for preliminary permits were pending before the Commission.

Snohomish tidal project wins FERC pilot license

Federal regulators have issued a pilot license for a proposed tidal energy project in Washington.

Tidal waters off the Maine coast.

Yesterday, the Federal Energy Regulatory Commission issued a 10-year pilot license to Public Utility District No. 1 of Snohomish County for the proposed Admiralty Inlet Pilot Tidal Project.  The 600-kilowatt hydrokinetic project, to be located in Puget Sound in the state of Washington, is designed as a temporary, experimental project to evaluate the commercial viability of tidal energy development in Puget Sound.

According to the Commission's Order Issuing Pilot Project License (85-page PDF), the proposed project features two tidal turbines to be manufactured by OpenHydro, each measuring 6 meters in diameter, secured to the seabed by the turbines' 414-ton weight.  Peak tidal currents at the site exceed 3 meters per second.  The Public Utility District plans to connect the project to the mainland grid via subsea cables connecting to District-leased land south of the Coupeville Ferry Terminal.

In granting the pilot license, the Commission considered a range of possible resource impacts from the project.  The site lies near key shipping lanes to the ports of Seattle, Tacoma, Olympia, and Everett, and is near a key trans-oceanic fiber optic cable connecting North America to Japan.  To address concerns over impacts to these resources, the Commission imposed conditions and monitoring requirements on the project.

The Commission's pilot licensure program differs somewhat from its general licensing of hydropower projects.  As described in a whitepaper on the pilot project licensing process prepared by Commission staff, pilot projects should be (1) small; (2) short term; (3) located in non-sensitive areas based on the Commission’s review of the record; (4) removable and able to be shut down on short notice; (5) removed, with the site restored, before the end of the license term (unless a new license is granted); and (6) initiated by a draft application in a form sufficient to support environmental analysis. Projects meeting these criteria enjoy a streamlined regulatory review process.

With the pilot license in hand, the Public Utility District may prepare for project development.  But if the project goes forward, the District may have to justify its costs.  As noted in the Commission’s order, the project has relatively high capital, operation, and maintenance costs with respect to the amount of power produced.  According to the Commission’s order, the levelized annual cost of operating the project will be about $1,848,294, or $7,574.98 per megawatt-hour of energy generated -- significantly higher than the estimated $30/MWh cost of alternative power.  Based on an estimated average annual generation of 244,000 kilowatt-hours as licensed, Commission staff projects that in the first year of operation, the project power will cost $1,840,974 more than the cost of alternative power.

Admittedly, the Snohomish project is designed as an experiment -- a pilot project to test technology and project feasibility.  The Snohomish project is among the first hydrokinetic projects in the country to receive a FERC license.  The first pilot project issued for a tidal project, the Roosevelt Island Tidal Energy Project, similarly faces projected above-market energy costs.  Like the Roosevelt Island project, the Snohomish project will be relatively small.  But given its financial picture, will the Snohomish project go forward?

Oregon coal export plans stopped

The United States is one of the world’s top coal producers and exporters, but recent plans to add coal export capacity in the Pacific Northwest have not been fulfilled, as several proposed export terminals have been withdrawn.  Plans for yet another terminal have been scrapped, as yesterday Kinder Morgan Energy Partners LP canceled its proposed Clatskanie, Oregon project.  What does this mean for U.S. coal exports and for domestic pricing?

Kinder Morgan Energy Partners is a publicly traded master-limited partnership,or MLP, focused on pipeline infrastructure.  Along with fellow Kinder Morgan family companies Kinder Morgan, Inc., Kinder Morgan Management, LLC, and El Paso Pipeline Partners, Kinder Morgan claims to be the largest midstream and the third largest energy company (based on combined enterprise value) in North America.  The company owns or operates about 80,000 miles of pipelines and 180 terminals handling products like natural gas, refined petroleum products, crude oil, and carbon dioxide, as well as gasoline, jet fuel, ethanol, coal, petroleum coke and steel. It boasts of operating primarily “like a giant toll road”, and seeks to avoid commodity price risk through a fee-for-service model.

Most coal export capacity in the U.S. is located in the Midatlantic and Gulf Coast regions.  While Asia dominates the world coal import market, major markets for U.S. coal exports include Canada, Brazil, the Netherlands, and the European Union.  The principal West Coast coal export port is Los Angeles/Long Beach, with virtually no export capacity in the Pacific Northwest.  Kinder Morgan had proposed a terminal to be built at the Port Westward industrial park on the Columbia River near Clatskanie.  Yesterday project partner Port of St. Helens stated that Kinder Morgan had announced that it would not be pursuing the project.

Up to six Pacific Northwest coal export terminates have been proposed in recent years, but to date none have been built.  The Kinder Morgan proposal joins a series of other canceled Pacific Northwest coal export plans.  RailAmerica Inc. announced last year that it would not pursue a coal storage and export facility at Washington’s Port of Grays Harbor.  Earlier this year, the Oregon International Port of Coos Bay announced the end of its exclusive negotiating agreement between with Metropolitan Stevedoring Company (Metro Ports) to build a thermal coal and biomass export facility.  With the Kinder Morgan project gone, three potential terminals remain:  Australian  company Ambre Energy’s barge-loading operation at the port of Morrow and Port Westward, Millennium Bulk Terminals’ proposed $643 million dock west of Longview, and SSA Marine’s proposed $600 million coal terminal at Cherry Point.

Whether a coal export terminal will be developed in the Pacific Northwest is uncertain.  If not, it will continue to be difficult for coal produced in the western U.S. to reach the world’s largest demands for coal imports.  China, Japan, South Korea, India, and even the relatively small Chinese Taipei have led the demand for coal imports in recent years.  This opens significant economic activity. At the same time, environmentalists argue that new export projects would contribute to global pollution and greenhouse gas emissions.  Combined with the pressures of the commodity market for coal and other fuels, these dynamics may continue to block expanded West Coast export plans.  As is being argued over the issue of liquefied natural gas exports, whether coal exports are expanded could also have impacts for U.S. coal pricing.

Hydropower Regulatory Efficiency Act of 2012

Last week the U.S. House of Representatives unanimously passed H.R. 5892, the Hydropower Regulatory Efficiency Act of 2012. The bill, introduced by Rep. Cathy McMorris Rodgers of Washington, is designed to implement a variety of measures promoting the production of electricity from small and conduit hydropower projects.

The bill opens with a series of Congressional findings regarding hydropower in the U.S.:

Congress finds that--

(1) the hydropower industry currently employs approximately 300,000 workers across the United States;

(2) hydropower is the largest source of clean, renewable electricity in the United States;

(3) as of the date of enactment of this Act, hydropower resources, including pumped storage facilities, provide--
(A) nearly 7 percent of the electricity generated in the United States; and
(B) approximately 100,000 megawatts of electric capacity in the United States;

(4) only 3 percent of the 80,000 dams in the United States generate electricity, so there is substantial potential for adding hydropower generation to nonpowered dams; and

(5) according to one study, by utilizing currently untapped resources, the United States could add approximately 60,000 megawatts of new hydropower capacity by 2025, which could create 700,000 new jobs over the next 13 years.

The bill goes on to implement a series of regulatory changes, including:

• Increasing the maximum size of hydro projects eligible for exemption from licensing from 5 MW to 10 MW 
• Promoting conduit hydropower – projects involving adding generation to existing pipes and canals
• Allowing FERC to extend a 3-year preliminary permit by up to 2 more years if the permittee worked diligently and in good faith
• Requiring FERC to investigate the development of a 2-year licensure process for developing hydropower at currently-unpowered dams and closed-loop pumped storage projects, and if feasible test the shortened process on one or more pilot projects
• Requiring the U.S. Department of Energy to study the potential of pumped storage to back up intermittent renewables and provide reliability, and to produce new hydropower from existing conduits

H.R. 5892 is now before the Senate for its consideration.

Removing WA's Condit dam, recap

A major dam removal project is underway on the White Salmon River in the state of Washington.  Video footage of its breach (made available by National Geographic) shows something few living humans have seen but which is already recur in the near future: the removal of a major dam and associated dewatering of its impoundment.

In 1913, the Northwestern Electric Company built the Condit Hydroelectric Project to provide electricity to a nearby paper company and even to feed Portland, Oregon.  The dam was rated at 14.7 MW of nameplate capacity - a far cry from the Hoover Dam (2080 MW) or Grand Coulee Dam (6809 MW), but nevertheless a major dam in terms of its power production and significance.

In 1996, increasing pressure on dam owner PacifiCorp to install fish ladders and perform modifications for environmental compliance led PacifiCorp to seek the dam's decommissioning and removal.  In 2010, the Federal Energy Regulatory Commission approved the removal of the Condit Dam.  In late 2011, contractors breached the dam, draining the upstream impoundment.

If you haven't seen a dam breach before, or if you are simply impressed by the immense power of moving water, you may appreciate the National Geographic video footage of the Condit Dam's breach and the resulting rush of water and sediment.

Now that the Condit Dam has been removed, remediation and restoration efforts are under way.  You can track those efforts on the Washington State Department of Ecology's website, as well as on PacifiCorp's website.

June 7, 2011 - Washington dam removal in process

While state and federal governments pursue policies supporting the development of new renewable energy resources, existing hydroelectric dams are being removed.  Last year, I noted the plan to remove the Elwha and Glines Canyon Dams on the Elwha River on Washington's Olympic Peninsula.  That plan is moving forward; last week, after 99 years of producing renewable power, the dams' electricity-generating turbines have now been turned off.

The Elwha River restoration project will be the largest dam removal in U.S. history.  All told, the dam removal project is projected to cost $324.7 million.

The Elwha project is made more interesting by its factual context, including land conservation, fish impacts, and sedimentation.  Much of the river's 45-mile course runs through Olympic National Park, making power generation a use some feel is incongruous with the watershed's protected status.

The Elwha River was formerly home to impressive runs of anadromous fish, including salmon, which have been an important part of local native Americans' culture.  In 1910, the river produced approximately 390,000 wild salmon and sea-run trout, but that number dropped more than 99% to only about 3,000 wild native salmonids in 2005.  The dams are believed to have played a part in this decimation of that fish stock.

Thanks to the glacier-fed nature of the watershed, massive amounts of sediment have built up behind the dams -- perhaps as much as 24 million cubic yards, or enough sediment to cover almost 15,000 acres one foot deep.

Dam demolition and removal itself is scheduled to begin September 17, 2011. 

September 3, 2010 - Elwha dam removal; Northwest Passage

Hydroelectricity: I'm continuing to follow the removal of two dams on the Elwha River in Washington.

Here is a map I created showing the two dam sites.

Here is the Bureau of Reclamation's information on sedimentation behind the Elwha River dams: nearly 18 million cubic yards of sediment behind Glines Canyon Dam and Elwha Dam.  The Bureau gives this history:

Private companies constructed two large dams on the Elwha River during the early 1900’s. Elwha Dam, constructed during the period 1910-13, is a 105-foot high concrete gravity dam that forms Lake Aldwell 8 miles upstream from the river's mouth. Glines Canyon Dam, built in 1927, is a 210-foot high concrete arch dam that forms Lake Mills 13 miles upstream from the river's mouth. When the dams were first built, they were significant producers of electricity on the Olympic Peninsula. Today, the dams are operated in a run-of-the river mode and generate about 40 percent of the electricity needs for the Diashowa America paper mill in Port Angeles, Washington.

The Bureau also has interesting information on erosion after drawdown.  As we've seen before, drawdown can be done to minimize harms but can also cause serious problems if the newly exposed slopes of the impoundment or riverbank are unstable.




Meanwhile, in Maine, a graphic example of how business climate can make a difference: an entire lumber mill, closed for the past four years, is up for sale and might be moved piece by piece to Siberia.  People often talk about how jobs move overseas; here, not only the (already lost) jobs but the workplace may move.
The situation on the Sebasticook River continues to brew after the Fort Halifax dam removal; now, town officials are considering a renewed investigation into erosion of the riverbanks after drawdown and dam breach.

An interesting bit of fisheries news: Native Americans from the Passamaquoddy Tribe continue to fish federal waters, despite being cited for lack of permits and certain mandatory safety gear during a scallop fishing trip off Nantucket.  The natives point to their indigenous fishing rights.

Arctic news: I have a special interest in the Canadian Arctic, including the fabled Northwest Passage.  Today comes news that a fuel tanker has run aground along that shipping route on a sandbar near Gjoa Haven.

August 31, 2010 - dam removal; biodiesel

Seen on the road: this soda distribution truck is "powered by BIODIESEL".

I'm following the dam removal projects on the Elwha River on the Olympics Peninsula in Washington.  One component of the $351 million river restoration project is the removal of two dams for about $40 million to $60 million: Elwha Dam (108' tall) and Glines Canyon Dam (210' tall).  Glines Canyon Dam is located within the boundaries of Olympic National Park.  This will be the nation's largest dam removal project to date.

Here's the National Park Service's website about the Elwha River Restoration project.


Dam removal is a hot topic.  Arguments in favor of dam removal typically include safety, fish passage, and water quality problems caused by some dams.  On the other side, arguments for keeping dams in place include mandates to generate local renewable power and flood control.