US ocean energy regulators consider NY-NJ offshore transmission line

After receiving a request from a developer of offshore electricity transmission lines for a right-of-way in ocean waters offshore New York and New Jersey, U.S. ocean energy regulators have asked whether any other developers are interested in the same area.

On April 30, 2018, Anbaric Development Partners, LLC (ADP) applied to the federal Bureau of Ocean Energy Management (BOEM) for a right-of-way grant for a proposed project called the New York/New Jersey Ocean Grid. As envisioned by ADP, the project would include a submarine system approximately 185 nautical miles in length. It would also include up to 9 offshore collector platforms which would collect and distribute power generated from existing offshore wind leases, each capable of handling 800 to 1,200 megawatts of offshore wind energy, as well as up to 6 onshore landings at locations from Long Island, New York to Cardiff, New Jersey. On June 22, 2018, BOEM approved ADP's legal, technical, and financial qualifications to acquire and hold a Right of Way Grant on the Outer Continental Shelf.

Under BOEM's regulations, different procedures apply depending on whether the agency is following a competitive lease process or a noncompetitive lease award process. ADP's application was "unsolicited," meaning it was not submitted in response to a BOEM solicitation, Request for Interest, or Call for Information and Nominations. Under BOEM's case-by-case process for considering unsolicited requests, the agency will issue a public notice and solicit comments to determine whether competitive interest exists, before considering the application itself. If BOEM determines that competitive interest exists in the requested lease area, BOEM will proceed with its competitive process; otherwise, BOEM will publish a notice of Determination of No Competitive Interest, and may proceed to review the unsolicited lease request.

On June 17, 2019, BOEM announced that it would publish a Request for Competitive Interest for project; the Notice of Proposed Grant Area and Request for Competitive Interest was published in the Federal Register on June 19, 2019. Indications of interest in acquiring a right-of-way grant for the area ADP requested must be sent by mail, postmarked no later than July 19, 2019, to be considered. Comments or other information may be sent by mail, postmarked by the same date, or may be submitted through the Federal Rulemaking Portal at http://www.regulations.gov.

If BOEM receives indications of competitive interest from qualified entities, the bureau may decide to move forward with the right-of-way grant issuance process using competitive procedures. BOEM will continue to consult with the state task force and partners regarding the proposed transmission project.

As an increasing number of states and utilities are procuring offshore wind, functions that must be provided include collecting the power produced, transmitting it to shore, and integrating it into the onshore grid. Depending on their design and configuration, offshore transmission grids could play these roles, and could also help wheel power along the coastline from one region to another. Questions of cost recovery -- who pays for these systems -- will continue to arise, at the intersection between state policies calling for offshore wind and regional markets rooted in economics.

US EPA proposes Affordable Clean Energy rule

The U.S. Environmental Protection Agency has proposed a new rule addressing greenhouse gas emissions from existing coal-fired electric utility generating units and power plants. EPA's proposed "Affordable Clean Energy Rule" is designed to replace the Clean Power Plan regulations adopted in 2015.

On August 21, 2018, EPA announced the Affordable Clean Energy or ACE Rule. As described by the agency, the rule encompasses four main actions to reduce greenhouse gas emissions:

• Defining the “best system of emission reduction” (BSER) for existing power plants as on-site, heat-rate efficiency improvements;
• Providing states a list of “candidate technologies” that can be used to establish standards of performance and be incorporated into their state plans;
• Updating the New Source Review (NSR) permitting program to further encourage efficiency improvements at existing power plants; and
• Aligning regulations under Clean Air Act section 111(d) to give states adequate time and flexibility to develop their state plans. 

According to EPA's regulatory impact analysis, replacing the Clean Power Plan with the ACE Rule would reduce CO2 emissions from their current level, and "could provide $400 million in annual net benefits," largely in the form of reduced compliance burden on covered power plants. While EPA adopted the Clean Power Plan in 2015, in 2016 the Supreme Court granted opponents stay of the regulations, and they never took full effect.

EPA will take comment on the ACE Rule proposal for 60 days after publication in the Federal Register and will hold a public hearing.

US Atlantic offshore wind leasing plan up for comment

U.S. ocean energy regulators have extended a deadline for public comment on a proposed path forward for offshore renewable energy leasing on the Atlantic Outer Continental Shelf. The Bureau of Ocean Energy Management's "Proposed Path Forward for Future Offshore Renewable Energy Leasing on the Atlantic Outer Continental Shelf" lists factors the agency proposes to consider in identifying areas for possible future offshore wind leasing.

BOEM is an agency of the Department of the Interior, charged with advancing the responsible development of offshore energy and marine mineral resources covering over 1.7 billion acres of the Outer Continental Shelf. As of May 2018, BOEM has held seven competitive lease sales, yielding over $68 million in high bids for almost 1.4 million acres in federal waters. BOEM now has 13 offshore wind energy leases, capable of supporting 17 gigawatts of generating capacity, covering every state from Massachusetts to North Carolina (Cape Cod to Cape Hatteras).

On April 6, 2018, BOEM published a Request for Feedback in the Federal Register, presenting the agency's "Proposed Path Forward for Future Offshore Renewable Energy Leasing on the Atlantic Outer Continental Shelf." In that notice, the agency said it is conducting a high-level assessment of all waters offshore the United States Atlantic Coast for potential future offshore wind lease locations, and proposes to rely on specific factors to help it assess which geographic areas along the Atlantic are the most likely to have highest potential for successful offshore wind development in the next three to five years.

BOEM said its intent in publishing the Notice was "to start a conversation surrounding its approach to future renewable energy leasing on the Atlantic OCS." Its proposed factors for identifying offshore wind forecast areas include exclusionary factors (which create "no-go" areas for offshore wind) and positive factors (increasing the likelihood that location would fall within a forecast area). Under BOEM's proposal, exclusionary factors would include areas prohibited by the Outer Continental Shelf Lands Act for leasing, Department of Defense conflict areas, and charted marine vessel traffic routes. Positive factors for an areas include that it has not previously been removed, is greater than 10 nautical miles from shore, is shallower than 60 meters in depth, is adjacent to states with offshore wind economic incentives or with an interest in identifying additional lease areas, or where industry has expressed interest.

Comments on BOEM's proposed path forward for offshore renewable energy leasing on the Atlantic were slated to be due on May 21, but on May 18, 2018, the Bureau of Ocean Energy Management announced that it would accept comments through July 5, 2018.

BOEM says this "Atlantic assessment is intended to inform future area identification processes, not replace them" -- so after reviewing comments it receives, BOEM will coordinate with its intergovernmental renewable energy task forces and conduct additional stakeholder outreach.

FERC ends DOE resilience rulemaking, opens new proceeding

U.S. energy regulators have terminated a fast-tracked proceeding opened last fall to consider rules proposed by the Department of Energy that would have compensated certain electric generating plants for reliability and resilience values; instead, the Federal Energy Regulatory Commission has opened a broader case to examine the resilience of the bulk power system.

On September 29, 2017, Secretary of Energy Rick Perry directed the Commission to consider a proposed rulemaking to ensure that "traditional baseload resources, such as coal and nuclear" are rewarded for their reliability and resilience attributes. As proposed, the rule would have required grid operators to set rates for compensation paid to certain "grid reliability and resiliency resources" with a 90-day fuel supply on site and capable of providing "essential energy and ancillary reliability services, including but not limited to voltage support, frequency services, operating reserves, and reactive power."

The request under Section 403 of the Department of Energy Organization Act bore an expedited timeline. The Commission solicited public comments on the proposed rulemaking, and Commission staff issued a series of questions to frame the discussion. Many comments expressed concerns that rapid changes to wholesale markets could have harmful or perverse effects, and prior to yesterday's most seated Commissioners had publicly expressed reservations.

On January 8, 2018, the Commission issued its Order Terminating Rulemaking Proceeding, Initiating New Proceeding, and Establishing Additional Procedures.  In doing so, it recognized "that we must remain vigilant with respect to resilience challenges, because affordable and reliable electricity is vital to the country’s economic and national security." The order recites a history of the evolution of the electric power industry and the Commission's efforts to help ensure bulk power system resilience, including the adoption of NERC reliability standards, reforms to capacity markets and gas-electric coordination.

But the Commission found that neither the Department of Energy's proposed rulemaking nor the record in the case satisfied a key legal standard for Commission action under Section 206 of the Federal Power Act. Specifically, it concluded that the existing tariffs had not been demonstrated to be unjust, unreasonable, unduly discriminatory or preferential.

The Commission also noted potential problems with the proposed rule. For example, it said that allowing all eligible resources to receive a cost-of -service rate regardless of need or cost to the system had not been demonstrated to be just and reasonable, and that the proposed rule's on-site 90-day fuel supply requirement hadn't been shown not to be unduly discriminatory or preferential -- but that it would exclude some resources with resilience attributes.

At the same time, the order states, "The resilience of the bulk power system will remain a priority of this Commission." It continued, "Although the Proposed Rule failed to satisfy the fundamental legal requirements of section 206 of the FPA, the Proposed Rule and the record developed to date have shed additional light on resilience more generally and on the need for further examination by the Commission and market participants of the risks that the bulk power system faces and possible ways to address those risks in the changing electric markets." Noting "a variety of economic, environmental, and policy drivers that are changing the way electricity is procured and used," the Commission said these changes "present new opportunities and challenges regarding the reliability, affordability, and environmental profile of each region’s electric system."

To address these changes, the Commission initiated a new proceeding, Docket No. AD18- 7-000, to take additional steps to explore resilience issues in organized wholesale electricity markets. According to the order, the goal of this proceeding is: "(1) to develop a common understanding among the Commission, industry, and others of what resilience of the bulk power system means and requires; (2) to understand how each RTO and ISO assesses resilience in its geographic footprint; and (3) to use this information to evaluate whether additional Commission action regarding resilience is appropriate at this time."

The Commission directed six regional transmission organizations and independent system operators to respond within 60 days with comments on the definition of resilience, plus how they assess and mitigate threats to resilience. The Commission also solicited public comment within 30 days of the grid operators' due date.

FERC invites comment on grid reliability and resilience pricing proposal

U.S. electricity regulators have invited public comment on a draft rule proposed by the Secretary of Energy that would require some grid operators to buy electricity from certain generators at rates that allow the generators to recover their costs and a return on equity.  The Secretary has set the grid resiliency pricing rulemaking proceeding on a fast track -- but some energy industry associations have asked regulators to allow more time for public participation before finalizing "a proposed rule that could affect electricity prices paid by hundreds of millions of consumers and hundreds of thousands of businesses, as well as entire industries and their tens of thousands of workers."

On September 28, Secretary Perry directed the Federal Energy Regulatory Commission to open an expedited rulemaking proceeding to consider a proposed rule affecting the compensation paid to certain "grid reliability and resiliency resources" with a 90-day fuel supply on site and capable of providing "essential energy and ancillary reliability services, including but not limited to voltage support, frequency services, operating reserves, and reactive power."

Acting under Section 403 of the Department of Energy Organization Act, Secretary Perry directed the Commission to consider and complete final action on his proposed rule proposed within 60 days.  But he also suggested that circumstances warrant faster action -- such as issuing the proposed rule as an interim final rule, effective immediately, with provision for later modifications after consideration of public comments.
 
On October 2, the Commission issued a Notice Inviting Comments in Docket No. RM18-1-000.  That notice invited interested persons to submit comments regarding the proposal on or before October 23, 2017, with reply comments due on or before November 7, 2017.

Also on October 2, a coalition of energy industry associations filed a joint motion asking the Commission to take more time in its consideration of the proposed grid resiliency pricing proposed rule or "NOPR".  In that joint motion, the associations note that no emergency or other circumstance exists which justifies the use of an interim final rule.  They cite the "importance and potential implications of the NOPR for Commission-jurisdictional markets," calling it "one of the most significant proposed rules in decades related to the energy industry."  The associations argue that because the time limits set by the Secretary are "unreasonable," so the Commission should set its own timeline allowing more time for participation.

The energy industry associations who filed the joint motion represent a fairly broad slice of the energy sector.  Participating associations include Advanced Energy Economy, American Council on Renewable Energy, American Petroleum Institute, American Wind Energy Association, American Public Power Association, Electric Power Supply Association, Electricity Consumers Resource Council, Interstate Natural Gas Association of America, National Rural Electric Cooperative Association, Natural Gas Supply Association, and Solar Energy Industries Association.

The grid resiliency pricing rule proceeding continues before the Commission.

RGGI states comment on Clean Power Plan

The nine Northeastern and Mid-Atlantic states participating in the Regional Greenhouse Gas Initiative (RGGI) have submitted joint comments to the United States Environmental Protection Agency in connection with its Clean Power Plan rule.

RGGI is a cooperative effort among the states of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont to cap and reduce carbon dioxide emissions from the electric power sector.  The program establishes a regional cap on the amount of carbon dioxide that power plants can emit through the issuance of a limited number of tradable allowances.  RGGI's first three-year compliance period began on January 1, 2009, making it the nation’s first market-based emissions trading program to reduce greenhouse gas pollution.

On August 3, 2015, the EPA announced its "Clean Power Plan," new regulations limiting power plant carbon emissions under Section 111(d) of the Clean Air Act.  While states are free to build their own compliance plans, the rule establishes emission guidelines for states to follow in developing plans to reduce greenhouse gas emissions from existing fossil fuel-fired electric generating units.  The rule also encourages states and regions to work together in developing compliance plans.

States are now tasked with developing their compliance plans.  The Clean Power Plan gives states until September 6, 2016, to either submit a final carbon-cutting plan or to submit an initial plan along with a two-year extension request.  Many observers have noted that for states already participating in RGGI, that program may be able to serve as a mechanism for Clean Power Plan compliance.  This prospect is natural, as RGGI and the Clean Power Plan share some common goals and features.

This week, the nine RGGI states submitted joint comments to the EPA on the Federal Plan (FP) and Model Rules (MR) proposed as part of the Clean Power Plan.  In those comments, the RGGI states "welcome EPA's continued recognition that well-designed multi-state, market-based programs like RGGI can deliver cost-effective emissions reductions."

In an accompanying press release, the RGGI states note their own "track record of success."  As cited in the joint comments, the "RGGI states have seen benefits to the economy and public health, as well as consumer savings, experiencing 8 percent GDP growth across the region while reducing power sector carbon pollution by more than 40 percent since 2005," while maintaining electric reliability.

Based on this experience, the RGGI states encouraged EPA to select mass-based approaches as the most cost-effective, transparent, and reliable way to achieve emission reductions.  (Mass-based approaches set limits on the total mass of carbon allowed to be emitted -- like 100 million tons.  By contrast, rate-based approaches might limit the rate of carbon emissions per unit of useful electric energy.)

Recognizing that trading platforms can play an important role in markets, increasing participation, access, and liquidity, the RGGI states urged EPA to "adopt a trading platform that is flexible and customizable to encourage broader trading markets."

The RGGI states also asked EPA to encourage auctioning of carbon allowances, and reinvestment of the auction proceeds.  In so doing, the RGGI states pointed to their own reinvestment of RGGI auction proceeds in efficiency and consumer relief.

Finally, the RGGI states encouraged EPA to prevent "leakage" of carbon emissions from existing sources to new sources, by including new sources in a mass-based program or some other equally effective alternative method of allocation.

With states now working to develop Clean Power Plan compliance strategies, how will the RGGI experience shape state plans to comply with the Clean Power Plan?

Maine long-term contracting for electricity

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.

North Carolina offshore wind environmental assessment

The U.S. Department of the Interior's Bureau of Ocean Energy Management has released an environmental assessment of the impacts of leasing sites off the North Carolina coast for offshore wind projects.  This milestone supports the Obama administration's plan to offer site leases on the outer continental shelf for renewable energy projects.

Since 2012, BOEM has solicited public comment on the prospect of leasing about 307,590 acres off North Carolina for potential offshore wind development.  BOEM has identified three Wind Energy Areas offshore North Carolina:

• the Kitty Hawk Wind Energy Area (about 122,405 acres), beginning about 24 nautical miles (nm) from shore and extends approximately 25.7 nm in a general southeast direction;
• the Wilmington West Wind Energy Area (about 51,595 acres), beginning about 10 nm from shore and extends approximately 12.3 nm in an east-west direction at its widest point; and
• the Wilmington East Wind Energy Area (about 133,590 acres), beginning about 15 nm from Bald Head Island at its closest point and extends approximately 18 nm in the southeast direction at its widest point.

BOEM's map of North Carolina Wind Energy Areas.

On January 22, 2015, BOEM announced the availability of an environmental assessment for public review and comment.  Under the National Environmental Policy Act or NEPA, an environmental assessment or EA considers the potential impacts of proposed federal action and analyzes reasonable alternatives to the proposed action.  In this case, the action proposed is BOEM's issuance of commercial wind leases and allowing of site characterization and assessment activities on the Atlantic Outer Continental Shelf offshore North Carolina.

BOEM's environmental assessment for North Carolina offshore wind leasing provides the framework for potential federal lease auctions for North Carolina offshore wind sites.  The environmental assessment is available for public comment through February 23, 2015. 

Massachusetts to develop wind energy siting guidance

As interest continues to grow in the generation electricity from wind energy, the siting of wind projects is an important issue.  While producing power from wind energy avoids the use of fossil fuel along with the emission of carbon dioxide and other pollutants, society has an interest in ensuring that wind projects are developed responsibly and in appropriate locations.  Regulation of sites for wind energy development generally occurs at the state and local levels, and some observers - both wind developers and opponents of specific wind projects - have complained of bad results from a patchwork of regulations, some of which are not based on good science.

Wind turbines in Ipswich, MA, visible across Plum Island Sound from the Parker River National Wildlife Refuge.

In Massachusetts, the state Department of Public Utilities has launched an initiative to remedy this defect.  On October 31, 2013, the Department opened an investgation into best practices for the siting of land-based wind energy facilities.  According to the Department's notice:

The investigation will result in the development of wind energy facility siting guidance based on sound scientific, technical, and policy information. Specifically, the Department will examine the following topics related to land-based wind energy facilities: design, environmental and human health, safety, construction impacts, socio-economic impacts, decommissioning, and the review process for wind projects.

The Department has docketed this case as D.P.U. 13-165, Investigation into Best Practices for Siting of Land-Based Wind Energy Facilities, and has solicited public comment by December 6. Following receipt and review of the comments, the Department anticipates holding public hearings beginning in January.

The guidelines developed through this process will shape the siting and development of land-based wind projects in Massachusetts.  Massachusetts has a strong commitment to renewable energy, as evidenced in the Green Commnities Act, its renewable portfolio standard, and in public sentiment.  That said, to date most wind power consumed in Massachusetts comes in the form of renewable energy certificates representing power generated from wind facilities in Maine and other states, largely due to the relative difficulty of siting a wind energy project in Massachusetts.  Will this process lead to more wind energy development in Massachusetts?