Maine considers water shortage readiness

In the midst of a regulatory inquiry into Maine water utilities' ability to prepare for and respond to water supply emergencies, agency staff have issued a preliminary recommendation intended to stimulate further discussion and comment -- which could ultimately lead to changes in how Maine regulates water utilities and water supply.

2016 brought drought to much of Maine. According to a Notice of Inquiry issued by the Maine Public Utilities Commission that year, the drought posed special challenges for some of Maine's water systems with limited sources of supply -- especially those with significant seasonal demands, antiquated infrastructure, or high levels of non-revenue water. In response, the Commission opened an inquiry to gather information that will allow it to identify problems and identify collaborative and proactive solutions. The Commission received responsive comments from about a dozen water utilities, and staff conducted additional research on the topic.

On March 5, 2018, the Commission staff issued its Preliminary Recommendation in regard to the Inquiry. The document describes its recommendations as preliminary and “intended to stimulate further discussion and comment on the issues raised in the document”. It says its intended audience “is broader than the usual participants in Commission proceedings and includes entities that may not be familiar with Commission practices and governing statutes.”

Findings in the 36-page Preliminary Recommendation include:

• Maine’s 152 water utilities responded well to the 2016 drought.
• Most of Maine's water utilities should be allowed to make their own decisions regarding water supply emergencies.
• Most Maine water utilities have the ability to adequately prepare for, and respond to, a water supply emergency.
• Water supply emergencies are not amenable to a one-size-fits-all approach because of the wide variety of potential circumstances.
• All Maine water utilities should be required to prepare some sort of Emergency Response Plan, and all that experience a water supply emergency should be required to prepare an after-action report.
• Water utilities need clearly-defined authority to respond to a water supply emergency -- ideally in the utility's Terms and Conditions.
• Various entities can provide help to a water utility that needs assistance preparing for, and responding to, a water supply emergency. Support can come from neighboring systems, membership organizations, and state agencies.
• State agencies should work cooperatively to support water utilities before, during, and after a water supply emergency.
• Effective communication before and during a water supply emergency is critical.
• Some Maine water utilities are more vulnerable to a water supply emergency and may need assistance -- especially those with a limited source of supply, aging infrastructure, high levels of non-revenue/unaccounted-for water, seasonal demands, and lack of metered service. Other challenges include a lack of resources, recalcitrant customers, and local socioeconomic factors, or excessively prioritizing low rates over critical system improvements.

Commission staff has requested written comments by March 30. It said it is considering holding between two and five workshops across Maine to solicit oral comments about the Preliminary Recommendation, after which it will draft a Final Recommendation for the Commission’s review.

Maine utility water supply inquiry

As Maine utility regulators consider how drought and other factors affect water utility supplies, staff at the Maine Public Utilities Commission have again requested comments and information on water supply emergencies and regulatory responses.  The feedback will inform a preliminary staff recommendation to be released in January 2017, which could lead to changes in how Maine regulates water utility supplies.

Drought and water shortage are affecting parts of the U.S., including much of New England.  In October, the Maine Public Utilities Commission issued a Notice of Inquiry (NOI) into water supply issues.  The Commission requested information about water supply problems, potential solutions, and development of plans to address any problems identified.  Specifically, the Commission posed 14 questions about water supply emergencies, plus 9 more questions about how the Commission should respond to water supply emergencies.  The Commission requested responses to these questions by November 4, 2016.

Some Maine water utilities responded to the Commission's water supply Notice of Inquiry, but many did not file a public response.  In a November 28, 2016 Procedural Order, Commission staff expressed a firm belief "that the more input the Commission receives from affected parties, the greater the likelihood that the final outcome in this Inquiry will meet the needs of those affected parties."  Accordingly, the procedural order invites any entity that did not initially respond to the NOI to do so by December 23, 2016.

The November 28 procedural order establishes a schedule for the remainder of the inquiry.  Staff intends to issue a Preliminary Recommendation in January, to which interested persons will be invited to respond during February, whether orally or in writing.  The schedule contemplates that staff would incorporate written and oral comments regarding the Preliminary Recommendation into a Final Recommendation in March, for presentation to the Commissioners during April.

The Commission has docketed the Maine water supply inquiry as Docket No. 2016-000233.

Drought and state water utility regulation

As drought affects parts of the U.S., some state regulators have expressed concerns over whether shortages will cause water supply emergencies for water utilities.  A recent Notice of Inquiry issued by the Maine Public Utilities Commission illustrates one approach to regulation of water supply management.

New England is abnormally dry this fall.  According to the U.S. Drought Monitor's National Drought Summary for October 11, 2016, "All areas except extreme northern Maine are now in abnormally dry or drought status. Moderate drought was expanded over eastern New York and Vermont while severe drought was expanded in southern New York and northern New Jersey."

Drought can mean water shortages, both for water utilities and for their customers.  As noted by the Maine Public Utilities Commission in an October 5, 2016 Notice of Inquiry into water supply issues, "Some are as of Maine are currently experiencing the impacts of drought. Some of Maine's water systems, which are located in areas where sources of supply are limited , are particularly challenged during dry conditions. In addition to a limited source of supply, some of these systems may also be disproportionately affected by seasonal demands, antiquated infrastructure, and/or high levels of non-revenue water."

As a result, the Commission opened an inquiry "to gather information that will allow it to identify problems which may exist, solicit input on ways to address any problems that are identified, and work collaboratively and proactively with Maine's water utilities and their customers, as well as other State agencies and interested persons and organizations, to develop a plan for addressing the problems that are identified."  The Commission also indicated interest in challenges other than drought that may significantly constrain a utility's source of supply.

The Commission divided its questions into two primary categories.  The first set seeks information to help the Commission to identify current and potential water supply problems and specific solutions to those problems.  These questions relate to recent water supply problems and their impacts, utility responses like voluntary or mandatory conservation measures, and communications with state agencies.

The Commission's second set of questions seeks input on what procedural steps the Commission should take to best address those problems.  This second set focuses on "the extent to which the Commission should be proactively involved in the development of a plan to deal with water supply emergencies and how the Commission should respond when a water supply emergency occurs."
 
The Commission requested that comments and responses be filed in Docket No. 2016-00233 by November 4, 2016.

Corn, ethanol, drought, and demand

Corn plays an important role in current United States transportation fuel policy - but environmental and economic factors are putting the pinch on corn ethanol producers.

The U.S. Renewable Fuel Standard program requires transportation fuel sold in the United States to contain at least a minimum volume of renewable fuel.  This renewable fuel is generally ethanol, produced by fermenting sugars contained in plant feedstocks like sugar cane and sugar beets, or sugars produced by converting plant-based starches like corn starch.  The program's goals include reducing greenhouse gas emissions from the transportation sector, reducing petroleum imports, and encouraging the development and expansion of the domestic renewable fuels sector.

In the U.S., more than 95 percent of operating ethanol plants reportedly use corn starch as their feedstock.  According to the U.S. Department of Agriculture, U.S. farmers planted 96.4 million acres of corn this year, the highest corn acreage since 1937.  Favorable field conditions this spring led to the quickest planting pace on record, with nearly all of the corn planted by May 20 and plants emerged by June 3.

This summer's high temperatures and widespread drought conditions - with nearly 56% of the area of the 48 contiguous states experiencing drought - have hurt the U.S. corn crop, resulting in reduced estimates for this year's crop.  This anticipated reduction is driving corn prices up, with the commodity trading at over $7 per bushel (contrast a 2007 U.S. Energy Information Administration analysis of transportation biofuels assuming corn prices of about $2 per bushel).  This price increase is cutting into ethanol producers' bottom line.

At the same time, transportation fuel consumers are driving less.  Between increased fleet efficiency prompted by both governmental mandates and a natural desire to cut costs, and the overall slowdown in the national economy, overall demand for ethanol fuel has not grown at the pace previously projected.

According to Reuters, the average ethanol plant operating in Illinois is currently losing 32 cents on every gallon it produces.  As a result, many ethanol plants are running below their production capacity, and several have announced planned closures.  EIA data shows that ethanol production dropped 4% last week to 821,000 barrels per day, the lowest production rate since July 23, 2010.

Proponents of blending ethanol into transportation fuels point to its nature as a renewable biofuel, lower cost than gasoline, and ability to be produced domestically.  Critics question the wisdom of converting a potential food crop into an energy commodity, as well as the economic and environmental consequences of current pro-ethanol policies.  Whatever the ultimate outcome, the climatic and economic conditions affecting the corn ethanol industry may be calling into question the sustainability of the current system.