FERC natural gas pipeline policy under inquiry

U.S. energy infrastructure regulators have launched an inquiry to examine how they review and authorize interstate natural gas transportation facilities under federal law. The process before the Federal Energy Regulatory Commission could lead to changes to the Commission's policies on certification of new natural gas pipelines.

Section 7 of the Natural Gas Act requires any person seeking to construct or operate a facility for the transportation of natural gas in interstate commerce to obtain a certificate of public convenience and necessity from the Commission. The law directs the Commission to issue a certificate to any qualified applicant upon finding that the construction and operation of the proposed project—whether pipeline, storage, or liquefaction facilities—“is or will be required by the present or future public convenience and necessity.” Other laws, such as the National Environmental Policy Act, prescribe additional processes and criteria for environmental review.

The Commission has developed regulations implementing its certification process. In 1999, it issued its current Policy Statement on the topic, “Certification of New Interstate Natural Gas Pipeline Facilities – Statement of Policy” (Docket No. PL99-3-000). As recently described in a statement by Commissioner Chatterjee, "the Certificate Policy Statement has provided a flexible, effective framework for the Commission’s evaluation of natural gas pipeline projects." Proponents cite the value of regulatory predictability, with specific additional benefits including reduced energy prices and increased opportunities in gas production and manufacturing.

But the ensuing 19 years have brought changes to the natural gas industry, as well as increased stakeholder interest in how the Commission reviews proposed new natural gas pipelines. The Commission cites a list of significant changes including "a revolution in natural gas production technology leading to dramatic increases in production"; new areas of major natural gas production and changes in the direction of pipeline system flows; "customers routinely entering into long-term precedent agreements for firm service during the formative stage of potential projects and the use of those precedent agreements as applicants’ principal evidence of the need for their projects"; increased use of natural gas for electric generation; increased concerns about siting and greenhouse gas impacts, and about the Commission's environmental review process.

New commissioners have also taken office. In December 2017, new Chairman McIntyre issued a statement suggesting the Commission would reexamine the 1999 policy statement as part of commitments he made during his Senate confirmation process.

Now, the Commission is following through on that promise. Its April 19, 2018 Notice of Inquiry seeks input on whether, and if so how, the Commission should revise its policies on how it evaluates whether there is a need for a proposed project, and its evaluation of a proposed project's environmental impacts and issues related to eminent domain and landowner interests. Finally, through the inquiry the Commission seeks input on potential procedural improvements to the certification process.

The Commission noted that while the inquiry is pending, the Commission intends to continue processing natural gas facility matters before it consistent with the 1999 policy statement, and to make determinations on the matters raised in those proceedings on a case-by-case basis.

FERC may change natural gas pipeline policy

U.S. energy regulators have signaled potential changes to a decades-old policy on the certification and pricing of new interstate natural gas pipelines.

The Federal Energy Regulatory Commission is charged by the Natural Gas Act with regulating the transmission and sale of natural gas for resale in interstate commerce, and approving the siting and abandonment of interstate natural gas pipelines and storage facilities.

In 1999, the Commission issued a Statement of Policy "to provide the industry with guidance as to how the Commission will evaluate proposals for certificating new construction." The FERC's 1999 policy statement came about at a time when the Commission faced both pressure "to authorize new pipeline capacity to meet an anticipated increase in the demand for natural gas" and "to act with caution to avoid unnecessary rights-of-way and the potential for overbuilding with the consequent effects on existing pipelines and their captive customers." In adopting the 1999 policy statement, the Commission said its publication was intended "to provide more certainty as to how the Commission will analyze certificate applications to balance these concerns."

But the Commission could soon change its policies.  Last month, on December 21, 2017, Commission Chairman Kevin J. McIntyre issued a statement that the Commission will consider changes to the 1999 policy statement, "as part of a pledge he made during his Senate confirmation to take a fresh look at all aspects of the agency’s work."

According to that statement, while next steps will soon be announced and scheduled, "any review of this type would be thorough, and the Commission would invite the views of all stakeholders to ensure that FERC accurately and efficiently assesses the pipeline applications it receives."

Trump executive order on domestic energy policy

U.S. President Donald Trump has signed an executive order affecting domestic energy policy.  His March 28, 2017 Presidential Executive Order on Promoting Energy Independence and Economic Growth includes a variety of directives, generally aimed at reducing federal regulations affecting domestic energy production.  Here's a look at his Executive Order targeting Obama-administration climate regulations and other agency actions that potentially burden the development or use of domestically produced energy resources.

The Executive Order includes 8 operative sections.  One provides policy statements; six call for regulatory reviews that could lead to rule changes or revocations, or directly revoke and rescind Obama-era actions.  The final section includes general provisions.

Section 1 includes five policy statements, such as that "is in the national interest to promote clean and safe development of our Nation's vast energy resources, while at the same time avoiding regulatory burdens that unnecessarily encumber energy production, constrain economic growth, and prevent job creation."  It also sets a federal policy "that executive departments and agencies (agencies) immediately review existing regulations that potentially burden the development or use of domestically produced energy resources and appropriately suspend, revise, or rescind those that unduly burden the development of domestic energy resources beyond the degree necessary to protect the public interest or otherwise comply with the law."

Section 2 calls for an immediate review of all agency actions that potentially burden the safe, efficient development of domestic energy resources, "with particular attention to oil, natural gas, coal, and nuclear energy resources."  It directs agency heads to submit a memorandum to the Office of Management and Budget detailing such potentially burdensome actions, and including "specific recommendations that, to the extent permitted by law, could alleviate or eliminate aspects of agency actions that burden domestic energy production."  With respect to actions targeted with specific recommendations in a final report, agency heads are directed to "as soon as practicable, suspend, revise, or rescind, or publish for notice and comment proposed rules suspending, revising, or rescinding, those actions, as appropriate and consistent with law."

Section 3 rescinds or revokes a variety of Presidential actions and reports, including several of President Obama's executive orders regarding climate change, the President's 2013 Climate Action Plan, and the Council on Environmental Quality's 2016 final guidance for federal agencies on consideration of greenhouse gas and climate issues in performing reviews of agency actions under the National Environmental Policy Act.

Section 4 calls for the Administrator of the Environmental Protection Agency to "immediately take all steps necessary to review" the Clean Power Plan governing electricity-sector emissions and related rules "for consistency with the policy set forth in section 1 of this order and, if appropriate, shall, as soon as practicable, suspend, revise, or rescind the guidance, or publish for notice and comment proposed rules suspending, revising, or rescinding those rules."

Section 5 disbands a working group on the social cost of greenhouse gas emissions, and restricts the ways agencies may account for the monetary value of changes in greenhouse gas emissions resulting from regulations.

Section 6 calls for the Secretary of Interior to lift moratoria on federal land coal leasing activities imposed under a 2015 order, and to commence federal coal leasing activities.

Section 7 calls for review of federal regulations affecting emissions from the oil and gas sector, including 2016 emissions standards for new, reconstructed and modified sources, and a 2015 rule governing hydraulic fracturing on federal and Indian lands, among others.

Section 8 includes general provisions, generally similar to those found in other executive orders.

FERC considers hydro license term policy

U.S. hydropower regulators have requested public comments on whether to revise a policy setting the length of license terms for hydroelectric projects.  The Federal Energy Regulatory Commission's notice of inquiry could lead to changes in how the Commission sets license terms.

Under Section 6 of the Federal Power Act, the Commission may issue hydropower licenses for a term not to exceed 50 years.  Original licenses have no minimum license term.  Section 15(e) of the Federal Power Act provides that any new license (i.e. relicense) shall be for a term that the Commission determines to be in the public interest, but not less than 30 years or more than 50 years.

Within these statutory bounds, the Commission has discretion to set its own policy governing the term length of hydropower licenses.  At present, the Commission policy is to set a 50-year term for licenses issued for projects located at federal dams. For projects located at non-federal dams, the Commission’s current policy is to set a 30-year term where there is little or no authorized redevelopment, new construction, or environmental mitigation and enhancement; a 40-year term for a license involving a moderate amount of these activities; and a 50- year term where there is an extensive amount of such activity.

The Commission has described the purpose of this policy as "to ease the economic impact of new costs, promote balanced and comprehensive development of renewable power generating resources, and encourage licensees to be better environmental stewards."  But the lengths of new licenses have been contested in several recent relicensing proceedings, in which parties have argued that the Commission should have considered or given more weight to other factors.  These other factors proposed for consideration include capacity-related investments or environmental enhancements made by the licensee during the current license and before issuance of the new license; total cost of the relicensing process; losses in generation value related to environmental measures; the license terms of projects that the licensee states are similarly situated to its project; and the license term provided for in settlement agreements.

In a November 17, 2016 notice of inquiry, the Commission outlined five potential options that Commission staff has identified for establishing license terms:

(1) retain the existing license term policy; (2) add to the existing license term policy the consideration of measures implemented under the prior license; (3) replace the existing license term policy with a 50- year default license term unless the Commission determines that a lesser license term would be in the public interest (f or example, to better coordinate, to the extent feasible, the license terms for projects in the same river basin for future consideration of cumulative impacts); (4) add a more quantitative cost- based analysis to the existing license term policy ; and (5) alter current policy to accept the longer license term agreed upon in an applicable settlement agreement, when appropriate. 

The Commission now seeks comment on issues relating to license terms, due within 60 days from the Notice of Inquiry's November 25 publication in the Federal Register.

Maine biomass commission first meeting

A special commission formed by the Maine Legislature to study the economic, environmental and energy benefits of the state's biomass industry holds its first meeting this week.

The Maine State House, where the 2016 biomass resolve was enacted.

This spring, the Maine legislature enacted a resolve establishing the Commission to Study the Economic, Environmental and Energy Benefits of the Maine Biomass Industry. Known as Resolve 2015, chapter 85, the legislation established a study commission to examine the state's biomass energy resources, as well as public policy and economic proposals to create and maintain a sustainable future for the industry.

The Commission to Study the Economic, Environmental and Energy Benefits of the Maine Biomass Industry holds its first meeting tomorrow.  According to the agenda published for the first meeting, following introductions and a review of the resolve itself, the group will hear presentations from and hold discussion with a variety of people interested in biomass.  Presenters on the agenda include a Commissioner of the Maine Public Utilities Commission, the state's Public Advocate, and the executive director of the Efficiency Maine Trust.  Other speakers represent loggers, the wood pellet fuel industry, users of biomass energy fuels, the pulp and paper industry, and woodlot owners.  The agenda states that the meeting will also include a public comment period.

According to the agenda, possible future meeting dates for the Maine biomass commission include August 16 and August 30, 2016.

Vermont issues updated energy plan

Vermont energy regulators have completed an update of key energy and electricity plans for that state. The Vermont Department of Public Service has updated the Vermont Comprehensive Energy Plan (CEP) and Electric Plan, two plans required by law to be complete and adopted by January 1, 2016, and updated every six years thereafter. 

The updated Comprehensive Energy Plan reaffirms Vermont's overall goal of achieving 90 percent of its total energy needs from renewable sources by 2050, adds interim goals (including reaffirming the statutory goal of 25% by 2025), and provides greater detail on Vermont’s pathways towards achieving these goals.  In particular, the plan includes the following new and more detailed goals:

• Reduce total energy consumption per capita by 15% by 2025, and by more than one third by 2050.
• Meet 25% of the remaining energy need from renewable sources by 2025, 40% by 2 035, and 90% by 2050.
• Three end-use sector goals for 2025: 10% renewable transportation, 30% renewable buildings, and 67% renewable electric power.
• Greenhouse gas reduction goals include: 40% reduction below 1990 levels by 2030, and 80% to 95% reduction below 1990 levels by 2050.

Conversion of heat and transportation applications to "highly efficient electric technologies, such as heat pumps and electric vehicles," is one strategy highlighted in the plan.  The plan also includes a 20-year electric plan, based on the principles of least-cost planning, that serves as a basis for Vermont electricity policy.

June 1, 2010 - market theory of policy, and the madness of crowds; FPL's 75 MW solar thermal

BP shares are taking a hit today. One estimate suggests BP has lost $50 billion in market value based on share price. Meanwhile, another estimate suggests the true cost to BP of the massive oil release from its Deepwater Horizon well is on the order of $20 billion.

From the policy level, it's interesting to observe the market perform its assessment of BP's liabilities. If the large-cap stock market is the product of the "madness of crowds", what is the gap between share price and true value? How does the size of this gap vary with time and conditions?

This inquiry has implications for the policy world as well. What is the absolute value, in economic or preferential terms, of a given policy outcome -- for example, affordable electricity, or reduced CO2 emissions? How does society value that policy outcome? What is the size of the gap between the value we place on an outcome, and its true value? What choices should we as a society be making that we don't find "worth it", but that are truly the lowest-cost and best path forward?



More grid-scale solar: FPL is building a massive solar thermal plant near Lake Okeechobee, Florida. At up to 75 MW, FPL's Martin Next Generation Solar Energy Center is on track to be the second-largest solar plant in the world. This solar thermal plant has a unique design. The plant will use mirrors to concentrate the sunlight 80 times, and then heat water up to 700 degrees. To get over the limitations of Florida's humid and often cloudy weather, the Martin facility is unique because it is co-located with an energy campus that already has 13 oil and gas-fueled generators. The heat exhaust steam from four natural-gas generators will be combined with the solar plant's steam to spin an existing generator. This saves the significant capital cost of installing a new generator, and seems like an efficient use of existing untapped capacity.

What's the cost? About $420 million, or about 16 cents a month to the average FPL residential bill.