FERC upholds Block Island offshore wind PPA

Federal energy regulators have denied a complaint by a Newport, Rhode Island city councilor against state regulators' approval of a power purchase agreement for an offshore wind project off Block Island.

At issue is Deepwater Wind Block Island, LLC's small-scale 30-megawatt offshore wind project located near Rhode Island's Block Island. The project sells its output to utility Narragansett Electric Company, Inc. d/b/a National Grid (National Grid), pursuant to a power purchase agreement approved by the Rhode Island Public Utilities Commission on August 16, 2010.

On June 7, 2018, Ms. Kathryn E. Leonard filed a complaint to the Federal Energy Regulatory Commission, alleging that the implementation of the power purchase agreement violated various federal laws, including the Federal Power Act, Public Utility Regulatory Policies Act of 1978 (PURPA), and the Supremacy and Interstate Commerce Clauses of the U.S. Constitution.

On April 24, 2019, the Commission issued its order denying Ms. Leonard's complaint. In the seventeen-page order, the Commission noted that the complainant provided no evidence in support of her assertion that the power purchase agreement was entered into pursuant to Rhode Island's implementation of PURPA. Instead, the Commission found that the Rhode Island Public Utilities Commission's approval of the contract was pursuant to state law, not pursuant to its PURPA regulations -- but that even if it were pursuant to PURPA, federal regulations governing sales by qualifying facilities to electric utilities explicitly permit negotiated rates.

The Commission similarly found that the complainant failed to show that the contract or its pricing was unjust and unreasonable under the Federal Power Act, and to provide sufficient support for its constitutional claims. The Commission also distinguished the Block Island PPA from contracts it previously invalidated in another case, Hughes v. Talen, which involved contracts for differences and an explicit requirement of participation in the capacity market. For these reasons, the Commission denied the complaint.

The Block Island project is the first commercially-operating offshore wind project in the United States. A number of other projects are currently under development, and several states in the Northeast have enacted laws requiring utility procurement of offshore wind energy. According to a 2016 analysis by the U.S. Department of Energy, U.S. offshore wind has a technical resource potential of more than 2,000 gigawatts of capacity, or 7,200 terawatt-hours of generation per year -- nearly twice the nation’s current electricity use.

Transportation, heating dominate Maine greenhouse gas emissions

Maine has reduced its total annual emission of greenhouse gases in recent years, thanks largely to the substantial decarbonization of the state's electricity supply -- but transportation and heating remain the largest contributors to Maine's overall carbon dioxide emissions.

According to the Maine Department of Environmental Protection, total estimated annual greenhouse gas emissions in Maine increased from 21.65 million metric tons of carbon dioxide equivalents (MMTCO2e) in 1990 to a peak of 26.97 MMTCO2e in 2002, and then declined to 18.21 MMTCO2e in 2012. This equals a reduction in annual emissions of 15% between 1990 and 2012 (a reduction of 11.7% between 1990 and 2015).

 

Most of Maine’s carbon dioxide emissions -- 53 percent -- came from the state's transportation sector, according to the Maine Department of Environmental Protection. Home heating represents the next largest contributor to statewide greenhouse gas emissions.

Maine’s electric power sector has reduced its annual carbon dioxide emissions by 73 percent since emissions peaked in 2002, largely by replacing high carbon fuels with natural gas. In 2015, Maine’s electric power sector emitted 1.57 MMTCO2 from the combustion of fossil fuels, or 9 percent of the state’s total CO2 emissions.

Meanwhile, the transportation sector’s carbon emissions have increased since 1990, primarily due to an increase in miles traveled. This increase comes despite increases in vehicle fleet efficiency and the addition of carbon-neutral ethanol to gasoline; the transportation sector now accounts for most of Maine's greenhouse gas emissions (at 53 percent of the all-sector total).

These facts and data have implications for Maine's policy efforts to further reduce the state's greenhouse gas emissions. The state's electricity supply has been substantially decarbonized, while transportation emissions have actually increased since 1990, and emissions related to residential heating (primarily with oil) are roughly at the same level they were in 1990. Efforts to address the carbon emissions associated with transportation and heating -- such as through electric vehicles and heat pumps -- could do much to continue reducing Maine's contributions to global carbon emissions.

Kaukauna hydro project relicensed

U.S. hydropower regulators have issued a new license to a Wisconsin municipality to continue operating and maintaining its hydroelectric generation project.

The City of Kaukauna, Wisconsin is located on the Lower Fox River. In 1939, the Federal Power Commission awarded the City an original license for the Kaukauna Hydroelectric Project. That license was replaced after its 1989 expiration with a new license issued by the Federal Energy Regulatory Commission. As licensed, the project consists of facilities including a dam and other structures, as well as two turbine-generators with a total installed capacity of 4.8 megawatts.

Because that license was set to expire in March 2019, in 2017 the City applied to the Commission for a new license for the project. No party opposed issuance of a new license. On March 29, 2019, the Commission issued the City a new license, authorizing continued operation of the project with some additional conditions required such as plans for items like managing operational compliance and debris and controlling invasive species of vegetation.

The licensing order also provides data on some of the project's costs and benefits. It notes that the project’s average annual generation is approximately 29,704 megawatt-hours. Including the cost of additional Commission staff measures imposed by the new license, the order states that the levelized annual cost of operating the project is $541,801, or about $18.24 per megawatt-hour. Multiplying the project's expected average annual energy generation by the alternative power cost of $42.04 per megawatt-hour, the order asserts that the total annual value of the project’s power is $1,248,756, in 2018 dollars, and that in the next year of project operation, it would save the City utility $706,955, or $23.80 per megawatt-hour compared to the likely alternative cost of power.

NESCOE Annual Report 2018 features market tensions

An organization representing the interests of the six New England states on electricity matters has issued its 2018 annual report, highlighting increasing tension between the region's wholesale competitive markets and a growing number of "out of market" mechanisms adopted to satisfy emerging state and regional needs. Through the report, the New England States Committee on Electricity (NESCOE) calls for regional discussion of possible market reforms to integrate state policies while protecting consumers from increased costs.

NESCOE is a not-for-profit entity organized under various state and federal laws. NESCOE is governed by a board of managers appointed by the Governors of the six New England States, and seeks to advance "the New England states’ common interest in the provision of electricity to consumers at the lowest possible price over the long-term, consistent with maintaining reliable service and environmental quality."

On April 2, 2019, NESCOE released its 2018 annual report. The report notes that for over 20 years, "New England has generally relied on competitive wholesale markets to select resources to serve electricity consumers at the lowest cost without regard to resource type or fuel source." As described by the report, the wholesale markets operated by ISO New England Inc. were "designed to provide reliable system operations, attract investment, drive down wholesale prices, and increase generation fleet efficiency—all for the ultimate benefit of consumers."

But "in more recent years, ISO New England and some states have also turned to different means to satisfy evolving needs, including 'energy security' and state energy and environmental law compliance," according to NESCOE's report. As examples of these "non-wholesale market alternatives," NESCOE cites extraordinary measures taken by ISO-NE to retain the Mystic generating units outside Boston through a cost-of-service agreement, further ISO-NE energy security initiatives, as well as state and utility procurements of substantial volumes of renewable energy through long-term contracting.

NESCOE notes fundamental challenges to integrating state policy with the wholesale markets, including "complex jurisdictional questions, ensuring that consumers pay the cost of their own state’s laws and not others’, and achieving state law compliance at the lowest possible cost to consumers." In light of the region's increasing reliance on out-of-market solutions, NESCOE calls for "a rethink of what we are asking markets to do now and a fresh look at whether and what elements of the decades’ old wholesale market objectives stand up to current circumstances and law."

ISO-NE energy security improvements paper

Regional transmission organization ISO New England Inc. has released a "discussion paper" on the region's energy security, presenting "the ISO’s current perspective on underlying problems, root causes, and longer-term market solutions."

The 77-page paper notes that the region's electric power system "is undergoing a major transition" as nuclear, coal, and oil-fired power plants are retiring and being replaced by newer, more efficient natural-gas fired generation and renewable technologies like solar and wind. It expresses the ISO's concern that these replacement resources rely on the "just-in-time" delivery of their energy sources -- and that weather variations and capacity constraints on interstate natural gas pipelines mean these resources present greater fuel security challenges.

The paper concludes that "in many situations" the ISO-administered wholesale electricity markets do not provide adequate financial incentives for resource owners to make additional investments in supply arrangements that would be cost-effective and benefit the power system at times of heightened risk. It notes that while customers would benefit from reduced electricity prices if generators delayed their use of limited fuel stocks to the most critical period (which might not come for days), present market designs do not offer a generator a clear incentive to stockpile and maximize the value of their fuels.

But, ISO-NE says, "these challenges have sensible solutions," including "additional sources of energy supply (or reductions in demand) when gas pipelines are most constrained, renewable resources experience adverse weather, or both." The paper presents three core components of a solution: a multi-day-ahead market, new ancillary services in the day-ahead market, and a seasonal forward market.

The grid operator has taken a number of short- and medium-term steps toward addressing these challenges through market reforms, and has been tasked by the Federal Energy Regulatory Commission with developing a long-term solution by this fall.

NH approves utility demand reduction initiative

New Hampshire utility regulators have approved an initiative by two electric distribution companies to incentivize customers to reduce their energy use during times of peak demand on the grid. If successful, the Commercial and Industrial Demand Reduction Initiative could yield savings for all consumers.

Earlier this year, electric utilities Public Service Company of New Hampshire d/b/a Eversource Energy and Unitil Energy Systems, Inc. proposed the Initiative to reduce demand at the time of the regional peak demand on the ISO New England Inc. system. As proposed, the utilities would provide incentives to large commercial and industrial customers to curtail their energy use during times of projected peak demand during the summer of 2019.

The utilities would pay "curtailment service providers" or CSPs $35 per kilowatt of actual curtailed load. CSPs would attract and enroll commercial and industrial customers, and would schedule their curtailments during times of possible peak system demand -- according to the utilities, the CSPs would request curtailments about 10 times per summer, each for about two to four hours duration. Curtailment performance would be measured relative to an established baseline load.

The program is relatively small, with Eversource seeking to curtail 5 megawatts and proposing a $250,000 budget, and Unitil another 1.8 megawatts for a budget of $93,795. The utilities will recover the costs of this initiative through a System Benefit Charge approved by the New Hampshire Public Utilities Commission.

In an order dated April 5, 2019, the New Hampshire Public Utilities Commission approved the Commercial and Industrial Demand Reduction Initiative. According to the Commission, reducing demand at the time of the ISO-NE system peak will result in savings not just for participating customers, but for all ratepayers, primarily in the form of avoided capacity costs and possibly reduced transmission costs. The Commission noted that the peak load reduction initiative aligns with the statewide energy efficiency plan for 2018 through 2020.

The value of the savings -- and by extension the benefit/cost ratio -- vary depending on the degree to which the curtailments coincide with the time of system peak. But according to the Commission, "The Initiative is predicted to achieve capacity and possibly transmission savings far in excess of program costs. If the Utilities are successful at curtailing their targeted loads of 5 MW for Eversource and 1.8 MW for Unitil, then the benefits are projected to exceed the costs of the program by almost a factor of five. Even at significantly lower coincidence factors, the Initiative is projected to produce savings that will exceed program costs.."

Maine considers energy, climate planning

Here's a roundup of some of the proposed Maine legislation calling for changes to how the state plans for its future with respect to energy and climate matters.

• LD 658, Resolve, To Direct a Plan for Energy Independence for Maine: This resolve directs the Governor's Energy Office to adopt a 10-year energy independence plan, including conservation and renewable energy strategies, for the State to become a net exporter of energy by 2030.
• LD 797, An Act To Limit Greenhouse Gas Pollution and Effectively Use Maine's Natural Resources: This bill would require Maine to reduce its net annual greenhouse gas emissions to at least 80% below the 1990 net annual greenhouse gas emissions level, by January 1, 2050. It directs the Department of Environmental Protection to update Maine's climate action plan and to evaluate Maine's progress toward these emissions reductions.
• LD 818, An Act To Reduce Greenhouse Gas Emissions: This bill provides Maine to reduce net annual greenhouse gas emissions to at least 80% below the 1990 net annual greenhouse gas emissions level, by January 1, 2030. It directs the Department of Environmental Protection to establish interim net annual emissions levels and to monitor and report on gross and net annual greenhouse gas emissions, and to update the State's climate action plan and evaluate the State's progress toward meeting the reduction levels. It requires the Board of Environmental Protection to establish greenhouse gas emission standards for individual sources or categories of sources. 
• LD 893, An Act To Create an Updated Unified Maine Climate Action Plan: This bill requires the Department of Environmental Protection, working with the Maine Interagency Climate Adaptation Work Group and the University of Maine, to update the Maine Climate Action Plan developed in 2004 by the department. It requires the department and the work group to convene stakeholders to evaluate and include in the updated plan mitigation and adaptation strategies.
• LD 950, An Act To Develop a State Energy Plan To Provide a Pathway to an Energy Portfolio Free of Fossil Fuels: This bill proposes to develop an energy plan to provide a pathway to an energy portfolio free of fossil fuels.
• LD 1282, An Act To Establish a Green New Deal for Maine: Among other measures, this bill would create a task force charged with creating a plan to advance environmental sustainability, renewable energy and economic growth for Maine. The bill would require the plan to include a renewable resources strategy to achieve 80% reliance on renewable resources for electricity supply by 2040; a job training strategy, including a training program to prepare workers for green jobs; and a residential energy strategy that provides incentives for installation of solar energy systems and heat pumps.