West Virginia electric utilities offer discount for new or expanding businesses

Two electric utilities serving customers in West Virginia have announced a new discounted "incentive rate" to attract new businesses and grow existing businesses.

Appalachian Power Company and Wheeling Power Company announced on February 14, 2019, that they are are offering discounted rates for electric service to new or expanding businesses meeting defined standards. The discount reduces qualifying customers' incremental billing demand by 40% for a 5-year term. The utilities are offering this new rate to new or existing customers who establish at least 500 kilowatts of new demand for electricity and meet criteria including creating at least 10 jobs or investing at least $2.5 million in an expansion in West Virginia.

The announcement follows a January 29, 2019 decision by the Public Service Commission of West Virginia to approve the companies' "Economic Development Rider" tariff proposed by the utilities in a November 28, 2018 filing. According to the Commission, the discounted rate is "experimental in nature" and is limited in size to an aggregate of 250 megawatts for the companies. As approved by the Commission, the rate will impose no incremental rate burden on any of the companies' West Virginia retail customers, and should result in a net contribution to defray the companies' fixed costs.

According to the Commission's order, the discounted rate will not be available in instances where there is "simply a change in ownership of existing customer operations", where operations are merely relocated within the companies' services territories, or where increases in demand result from the resumption of normal operations following abnormal operating conditions. The rate is also unavailable to "business facilities engaged in the retail sale to the average customer of consumer or final goods" due to concerns that adding new customers engaged in competitive retail sales of consumer goods would increase the "likelihood that the new load will displace an existing load with the net result being zero benefits."

The Commission noted the companies' expectation that the rate "will serve as an inducement for economic development in the West Virginia service territories of the Companies" and that "the resulting economic development will be beneficial to the West Virginia retail ratepayers of the Companies and to the economy of West Virginia."

Appalachian Power and Wheeling Power are subsidiaries of American Electric Power. AEP Appalachian Power has 1 million customers in Virginia, West Virginia and Tennessee.

Maine enacts biomass energy support

Maine has adopted a new law to support the state's biomass energy industry.  Governor Paul LePage has signed LD 1676, An Act To Establish a Process for the Procurement of Biomass Resources, as emergency legislation.  As a result, the bill has been enacted into law as Public Law, Chapter 483, from the 127th Maine Legislature.

The Maine State House.

The bill directs the Maine Public Utilities Commission to initiate a competitive solicitation as soon as practicable.  That solicitation will ask for proposals for 2-year contracts for up to 80 megawatts of biomass resources.  To qualify, a biomass resource must be a source of electrical generation fueled by wood, wood waste or landfill gas that produces energy that may be physically delivered to the ISO New England or Northern Maine Independent System Administrator markets.  A resource must also operate at least at a 50% capacity for 60 days prior to the initiation of a competitive solicitation and continues to operate at that capacity except for planned and forced outages.

The law gives the Commission some direction on how to select proposals for contracting.  It requires the Commission to seek to ensure, "to the maximum extent possible" that a contract provides benefits to ratepayers as well as in-state economic development benefits, reduces greenhouse gas emissions, promotes fuel diversity, and supports or improves grid reliability.

The costs of the contracts, other than above-market costs, and all direct financial benefits from the contracts must be allocated to ratepayers according to Maine's statute on allocation of costs and benefits of long-term energy contracts.  Above-market costs will be paid for from a cost recovery fund created by the new law, which allocates up to $13.4 million from the unappropriated surplus of the state's General Fund. 

Maine RGGI report 2015: price impact "relatively modest", programs helpful

For 8 years, states in the Northeastern U.S. have participated in the Regional Greenhouse Gas Initiative.  RGGI, the first market-based greenhouse gas regulatory program in the United States, represents a cooperative effort by participating states to cap and reduce greenhouse gas emissions from the electric power sector, coupled with a market for auctioning and trading emission allowances.  While some groups feared that the RGGI program would increase electricity prices, a recent report by the Maine Public Utilities Commission found that the impact of RGGI on electricity prices in Maine has been relatively modest -- while finding that RGGI-funded programs contribute to economic development and reduce greenhouse gas emissions.

RGGI formed in 2007, when ten states -- Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island and Vermont -- agreed to first cap, and then slowly reduce, the greenhouse gas emissions of their electrical energy sectors by 10% by 2018.  While New Jersey withdrew in 2012, the program has remained strong; in 2014, the remaining states subsequently tightened the RGGI cap for 2014 from 165 million short tons of carbon to 91 million short tons, then further declining 2.5% per year from 2015 to 2020.

While each participating state adopted its own laws implementing RGGI, in general the RGGI laws require certain generators of electricity to track their carbon emissions and acquire an “allowance” for every ton of carbon dioxide or its equivalent that they emit.  States conduct periodic auctions of allowances, and market participants are free to engage in secondary market trades.  Generators must purchase or trade for enough emissions allowances to match the number of tons of CO2-equivalent emitted.  The cost of acquiring these allowances gives generators an incentive to improve their efficiency or switch to fuels with a lower carbon intensity.

Each state also adopted its own laws governing the use of funds raised by state auctions of RGGI allowances.  In Maine, most funds go to the Efficiency Maine Trust for purposes including measures, investments and arrangements that reduce electricity consumption or reduce greenhouse gas emissions and lower energy costs at commercial or industrial facilities, and for investment in measures that lower residential heating energy demand and reduce greenhouse gas emissions.

RGGI has conducted 27 quarterly allowance auctions since September 2008, through which Maine has received a cumulative total of $ 62.22 million in RGGI auction proceeds.  Maine’s auction proceeds in 2014 totaled $11.37 million. According to the Maine Public Utilities Commission's report:

the annual cost to Maine ratepayers of the RGGI program was approximately $0.0024 per kWh. For the average Maine residential customer using 530 kWh per month, the 2014 RGGI program cost was approximately $ 1.27 per month. For a commercial customer using 25,000 kWh per month the 2014 RGGI program cost was approximately $60.00 per month. A large commercial or industrial customer using 500,000 kWh per month would have had a 2014 RGGI program cost of approximately $1,200 per month.

On the benefits side of the ledger, the Commission's report cites a finding that "all RGGI proceeds since 2008 are expected to return more than $2 billion in lifetime energy bill savings to more than 3 million households and more than 12,000 businesses across the eight states taking part in RGGI."  The Commission also cited its July 2014 report to the Legislature quantifying the increases in employment, real personal income, and gross state product expected to occur in Maine as a result of the cap tightening and other changes implemented in 2014.  That report found:

economic impacts for the New England region include a cumulative increase in Gross Regional Product of over $2 billion, a cumulative increase in employment of 38,900 job-years, and a cumulative increase in real personal income of $1.5 billion including a cumulative increase in Maine Gross State Product of $200 million, a cumulative increase in employment of more than 5,000 job-years, and a cumulative increase in real personal income of $100 million.

Based on these observations, the Maine Public Utilities Commission's 2015 report on RGGI concludes that "the impact of RGGI on electricity prices has been relatively modest, while RGGI-funded programs contribute to the gross state product, job growth, and personal income, and also reduce greenhouse gas emissions."

Developer applies to VT for Clean Power Link transmission line

A proposed electric transmission line from Quebec into New England took a step forward this week, as the developer of the New England Clean Power Link applied to Vermont regulators for key project approvals.

Transmission Developers Inc. subsidiary TDI New England has proposed the New England Clean Power Link to bring Canadian hydropower and other electricity to the renewable-hungry New England market.  With an estimated project cost of $1.2 billion, the 1000-megawatt high-voltage direct-current transmission line would run under Lake Champlain and underground to a converter station in Ludlow, Vermont, near where it would connect to the existing electric grid owned by Vermont Electric Power Company (VELCO).

Under Vermont law, the state Public Service Board regulates many aspects of the electric grid.  Section 248 of Title 30 of Vermont's statutes requires companies to obtain approval from the Board before beginning site preparation or construction of electric transmission facilities, electric generation facilities and certain gas pipelines within Vermont.  For facilities like the proposed transmission line, that Board approval comes in the form of a Certificate of Public Good. 

On December 8, 2014, TDI subsidiary Champlain VT, LLC d/b/a TDI New England applied to the Board for a Certificate of Public Good for the project.  TDI's petition notes that the project "would contribute to meeting State and regional energy and sustainability goals and result in millions of tons/year in reduced greenhouse gas emissions by replacing electricity generated by fossil fuels," and that running cables under the lake and underground avoids adverse impacts from above-ground installations.  Other benefits touted by TDI include economic development (with about $1.5 billion in claimed economic benefits to Vermont and the entire region over the project's 40-year life), improved electric reliability and fuel diversity, and help in mitigating the impacts of the anticipated loss of the Vermont Yankee nuclear station and other major power plants.

TDI's proposal includes components specifically designed to yield local community benefits and thus to cultivate local support for the project.  These components include creating $122 million in funds to improve Lake Champlain's water quality, habitat, and recreational values, plus another $40 million for Vermont's Clean Energy Development Fund.

TDI's project now comes before the Vermont Public Service Board for review.  The project also needs a presidential permit issued by the U.S. Department of Energy to cross the international boundary, as well as a U.S. Army Corps of Engineers permit for impacts to water resources.

At the same time, another transmission line has been proposed under Lake Champlain, namely the $2.2 billion Champlain Hudson Power Express meant to connect Quebec to New York City.

Oil sands: an "unconventional" oil resource

New technologies enable the production of petroleum from unconventional oil resources such as "tar sands" and oil shale.  While traditional oil wells have been drilled for over 2,000 years, unconventional resources offer the opportunity to develop new petroleum sources - and by extension, to shift the balance of power and economics away from traditional sources.  At the same time, producing oil from oil sands may have environmental impacts that are different from traditional wells.  What are tar sands or oil sands?

Oil sands, also known as bituminous sands, are loose sand or partially consolidated sandstone saturated with a dense and viscous form of petroleum technically referred to as bitumen.  Oil sands are often called "tar sands" due to bitumen's sticky, dark nature.  ("Tar" technically refers to a product made by distilling pitch from the wood and roots of pine trees, and was historically used to describe the sticky black residue left behind when distilling coal gas.) 

Bitumen is so viscous that it cannot be pumped directly from the ground through traditional wells.  Oil sand deposits are typically mined using open pits or strip mining.  The mined material is mixed with water at an extraction plant, where the bitumen can be separated from the remaining minerals, sand, and water.  The bitumen can then be transported for upgrading or conversion into synthetic crude oil.

Alternatively, bitumen can be extracted by heating the raw sands in place.  In-situ production methods include injecting steam or solvents, or piping in oxygen and igniting some of the bitumen.  These methods rely on the use of large amounts of water and energy.

According to the U.S. government's 2012 oil shale and tar sands programmatic environmental impact statement, about two tons of tar sands can produce one barrel of oil.  Extraction and processing typically require several barrels of water for each barrel of oil produced.  Some of this water can be recycled.
About three-quarters of the bitumen can be extracted from the raw material.  Spent sand and other materials are typically returned to the mine after processing.

Producing oil from bitumen derived from tar sands can have significant environmental impacts.  The mining and upgrading processes are energy-intensive and result in emissions of greenhouse gases and air pollutants.  Mine sites are typically significantly disturbed, and impacts to water may be both local and throughout the downriver watershed.  The association between the proposed Keystone XL pipeline and oil sand resources in Alberta, Canada led to environmental opposition to that pipeline.

Producing oil from oil sands may be controversial, but Canada possesses the world's largest known resources and is developing them rapidly.  Canada points to environmental regulations and controls, as well as economic development benefits.  Developing oil sand resources creates jobs and economic growth, and mine sites are typically in rural areas eager for opportunity.  If the U.S. does not approve the Keystone XL pipeline, Canadian producers may push for an alternative route to refineries or export terminals in British Columbia, obviating the need for U.S. approval.

Economically, synthetic crude oil produced from oil sands bitumen can be cost-effective if the price of oil produced from traditional wells is high.  On the other hand, if oil from wells or other unconventional resources like oil shales can be produced cheaply, oil sands may not be economically competitive.  The significant capital investment required to produce bitumen from oil sands means that producers must often make long-term investments that risk losing money in some years.  Producers may also face the risk of tighter environmental standards, the cost of compliance, and any penalties for noncompliance.

Energy, environment, and the 2013 inauguration

This week U.S. President Barack Obama took the oath of office for his second term. The 57th presidential inauguration was celebrated in Washington, D.C. on January 21, 2013.  In his inaugural address, President Obama delivered calls for action on issues ranging from the federal budget to social policy.  His speech also offered a platform on environmental and energy issues.  What did the 2013 inaugural address say about environmental and energy policies?

The United States Capitol after the inauguration ceremonies on Martin Luther King Day, January 21, 2013.

Climate change featured prominently in President Obama's second inaugural address.  Drawing on the official transcript of the address provided by the White House:

We, the people, still believe that our obligations as Americans are not just to ourselves, but to all posterity. We will respond to the threat of climate change, knowing that the failure to do so would betray our children and future generations. (Applause.) Some may still deny the overwhelming judgment of science, but none can avoid the devastating impact of raging fires and crippling drought and more powerful storms.  

Exactly how he plans to address climate change remains to be seen.  Likely measures include further Environmental Protection Agency regulations covering emissions from coal plants, greater military use of renewable and alternative fuels and energy sources, and an emphasis on energy efficiency.

President Obama also advocated for greater use of sustainable energy resources:

The path towards sustainable energy sources will be long and sometimes difficult.  But America cannot resist this transition, we must lead it. We cannot cede to other nations the technology that will power new jobs and new industries, we must claim its promise. That’s how we will maintain our economic vitality and our national treasure -- our forests and waterways, our crop lands and snow-capped peaks. That is how we will preserve our planet, commanded to our care by God. That’s what will lend meaning to the creed our fathers once declared.

Because this paragraph immediately followed his remarks about the climate and natural disasters, the speech suggested greater reliance on renewable or sustainable energy as another response to climate change.  President Obama emphasized both the environmental and economic value of these alternative energy resources.

Left unsaid were the details on the path towards sustainable energy.  Will President Obama suggest a national program requiring the use of renewable electricity?  Congress enacted a renewable biofuels standard as part of the Energy Policy Act of 2005, and most states have enacted laws requiring utilities to source electricity from renewable sources.  To date, no proposed federal electric renewable portfolio standard has found traction in Congress.  What about federal tax credits and incentives for renewable energy, such as the renewable electricity production tax credit and investment tax credit?  Last year President Obama called for making the production tax credit permanent and refundable, meaning taxpayers would not need to have any income tax liability to benefit from the credit.

Based on President Obama's 2013 inaugural address, he will push for solutions with enthusiasm and vigor.  The ultimate proposals, and the paths towards their execution, may affect their chances of success.  Exactly what measures surface -- and which can either pass through Congress or, in the case of agency action, survive legal challenge -- will be revealed over the next four years. 

Maine tidal PPA terms for ORPC

Last month, the Maine Public Utilities Commission approved the terms of a 20-year power purchase agreement between three utilities and Ocean Renewable Power Company.  Projected for initial development later this year, ORPC's Maine Tidal Energy Project would ultimately include a series of hydrokinetic turbine generator units spread across three project sites and phases.

Acting under a 2010 state law, the Maine PUC held a request for proposals for long-term contracts for deep-water offshore wind pilot projects and tidal energy demonstration projects.  The law required applicants to demonstrate that their project will provide tangible economic benefits to the state, as well as a commitment to invest in related manufacturing facilities in Maine.

ORPC responded to the RFP, and was ultimately selected by the PUC for a contract.  While some details of the final power purchase agreement remain to be negotiated, last month PUC approved a term sheet specifying pricing terms and a variety of non-pricing terms.

Under the term sheet, ORPC will sell the utilities energy and capacity from the Maine project.  The price of energy will start at 21.5 cents per kilowatt-hour in the first year, escalating at 2% per year over the 20-year contract term.  If ORPC can qualify the project for capacity payments in the New England market - another energy-related product - it will receive the prevailing market price, although the grid operator has recently denied capacity payments to other renewable resources in eastern and northern Maine.  The deal does not include any renewable energy credits the project earns, which ORPC could retain or sell separately.

The term sheet approved by the Commission also include a series non-pricing terms intended to ensure that the state realizes the economic development benefits required by statute.  These terms include a variety of commitments by ORPC, including:

• to maintain or establish manufacturing, assembly, and testing operations in Maine
• to continue partnerships with entities in the downeast Washington County region
• to upgrade local distribution lines in Lubec, as needed to connect the project's power to the mainland grid
• to create and/or retain at least 80 direct full-time equivalent jobs in Maine during the development, construction and installation of the project
• to create and/or retain at least 12 direct full-time equivalent jobs in Maine during the operation and maintenance phase of the project
• to use commercially reasonable efforts to expend at least 50% of the project's capital investments and 50% of the operating expenditures in Maine

In approving the term sheet with these terms, the Commission found that the project would yield economic benefits including direct wage growth in Maine, direct investment in Maine, improved general economic conditions in the state, and the development of intellectual capital and an expert workforce capable of supporting long-term growth.

The parties are now negotiating the final details of the contract.  Expect the PUC to deliberate on a final contract later this year.

May 23, 2011 - Maine considers RPS changes

The Maine Legislature is considering changes to Maine's renewable portfolio standard.  Since 2007, Maine law has required electricity suppliers to source an increasing portion of their energy from qualified new renewable resources.  This portion of new renewable power is scheduled to increase 1% annually, reaching 10% by 2017.  Proponents point to this long-term state commitment to renewable power as essential to securing financing for new renewable projects in Maine.

The rotunda in the Maine State House.

LD 1570, developed by Governor LePage, proposes to freeze this commitment at the current year's 4%.

You can find the original text of LD 1570 here.  This proposal is generating significant debate over the cost of energy, whether or how much Maine's renewables law increases consumer costs, and the economic development value of siting renewable projects in Maine.

The Portland Press Herald has published an editorial arguing that the Governor has not made the case for freezing the renewable portfolio standard.  The Bangor Daily News ran a similar editorial, noting that the Governor's bill would not make a dent in electricity costs, but would stifle economic growth.

The bill is scheduled for further committee work on Wednesday.

May 5, 2011 - North Carolina offshore wind legislation

Here's a quick pointer to an article I wrote for the Offshore Wind Wire on proposed offshore wind legislation in North Carolina. Senate Bill 747 calls for long-term contracts between utilities and 2,500 megawatts of offshore wind capacity in the next decade, and posits that the net economic benefits of developing offshore wind (and siting supply chain jobs onshore) should exceed the costs.

A National Electrical Manufacturers Association sign promoting fluorescent lightbulb recycling, recently spotted outside Boston.

Meanwhile, the Maine legislature is considering a slate of bills about land-based wind energy.  Last week the Joint Standing Committee on Energy, Utilities and Technology held public hearings on the bills; today, the committee is holding work sessions on 14 pieces of legislation affecting wind projects.

March 22, 2011 - Maine wind news roundup

Today, a quick roundup of recent news about Maine wind energy projects and policies:

The Bangor Daily News ran an editorial in support of renewable energy -- including wind, solar, and tidal power -- arguing that the Fukushima I nuclear disaster in Japan highlights the need for less harmful ways to power our society.  The editorial concludes, "The developed world will face either an apocalyptic, painful end to its reliance on fossil fuels — wars, shortages, famine — or it will embrace the new paradigm willingly. But the new technology must be jump-started with investment, much of it public funds."  Thus in the editorial board's view, society should support renewable projects with public dollars, at least to prime the pump to bring renewables to a more cost-competitive level.

The BDN also ran a letter to the editor from wind developer TransCanada's operations manager for the Kibby Project.  Writer Greg Shelton told his story of how the development of wind projects in Maine enabled him to return to his family from out of state, where he had traveled to find work.  Mr. Shelton described the value of renewable power development in creating jobs and economic development.

Meanwhile, Portsmouth, New Hampshire-based Eolian Renewable Energy has proposed a 10 megawatt wind project in the Maine town of Frankfort.  The $25 million wind project would entail four to six turbines atop Mount Waldo.  Eolian described its strategy as developing projects that fit better into communities and landscapes by siting smaller wind energy projects in areas with existing infrastructure like radio towers (Mount Waldo sports three such towers already) and roads.  To promote its cause, Eolian points to the potential tax benefits to a host community, suggesting that a 10-megawatt project might generate $100,000 in annual local tax revenue.

January 28, 2011 - Utah power prices

Earlier this month, I noted that low power prices in Utah are attracting development and jobs to that state.  For example, the National Security Agency chose Utah to site a new 1 million square foot data center that may consume up to 65 megawatts of power - electricity that is generally cheaper in Utah than in many other states.  (The EIA reports that the September 2010 average all-sector electricity price in Utah was just 7.42 cents per kWh, significantly below the U.S. average of 10.24 cents per kWh for that time period.)

Now, PacifiCorp, operating as Rocky Mountain Power in Utah, has requested permission from the Public Service Commission of Utah to increase prices by an overall average of 13.7 percent. Rocky Mountain Power describes this price request as "necessary to serve our Utah customers’ growing electricity needs and to comply with environmental requirements".  In a 4-page PDF, Rocky Mountain Power points to increasing demand in Utah, and forecasts continued increases in demand based on forecasts of economic growth.  (As I noted last year, energy consumption has traditionally been viewed as directly correlated to GDP.)   Rocky Mountain Power states that building new facilities (generation and transmission) is more expensive than older facilities: "Our newest power plants are primarily natural gas and wind projects. While among the lowest cost options today, either one is about twice as expensive as the generating plants built in the 1970s and early 1980s."  Finally, Rocky Mountain Power points out, "Compared with our largest industrial customers, the company’s returns are modest and in line with other electricity providers."

The Public Service Commission of Utah will now consider Rocky Mountain Power's request.

June 10, 2010 - tidal power in Maine in the 1930s

I've been reading the 1937 Federal Writers' Project book Maine - A Guide 'Down East' in the past days. I was first drawn to the description of my home territory, including the tide mill at Winnegance. This reading in turn pointed me at the grand Passamaquoddy Power Project.

It is interesting to see how writers in 1937 viewed the linkage between tidal energy development and economic development and growth . Take, for example, the Guide's description of Lubec:

LUBEC (alt. 80, Lubec Town, pop. 2983), 11 m., has had greatly increased activity since the beginning of the Passamaquoddy Power Project (see Tour 1N). It is a picturesque seaside village with beautiful views of surrounding bays and coves.

At the time, Maine was viewed as having vast mineral resources, needing only affordable energy to develop:

The clays that form enormous deposits around Passamaquoddy and Penobscot Bays and elsewhere are particularly rich and promising sources of bauxite, the only ore of aluminum now in commercial use. The existence of cheap power, which the completed tide-harnessing project at Quoddy would supply, should make the development of this important resource economically possible.

Maine - A Guide 'Down East' at 10.

The description of the Passamaquoddy Project echoes these values:

The electricity generated at Quoddy would be greater than the combined capacity of all existing power stations in the State, and would supply cheap power to farms throughout Maine and to industries which might be encouraged to enter the region. It was hoped by advocates of the project that the newly created opportunities for manufacturing would bring about the development of the State's mineral deposits.

You probably don't think of Maine as a hub of mining and refining powered by tidal power.  The Passamaquoddy Power Project was never completed.   Lubec and Quoddy were hives of activity for several brief years in the mid-1930s, as hundreds of men and women descended on the area to construct a number of dams for the project.  Dams were built between several key points and islands, including tidal dikes built between Treat Island and Dudley Island and from the Pleasant Point Passamaquoddy Reservation to Carlow Island, and then connecting to Moose Island, which makes up the bulk of Eastport.

After all this excitement and activity, the project was ultimately canceled.  Congressional support was pulled.  In the ensuing 70 years, the government has renewed its interest in the tidal power of Passamaquoddy Bay several times, although the lack of consistent support and direction may be responsible for the lack of any completed projects.  I'll look at why this may be in the coming days.

May 28, 2010 - National Grid unveils 1 MW rooftop solar in MA

National Grid now operates the largest solar site in Massachusetts, having completed its 1 MW solar generation facility in Whitinsville. Conveniently, National Grid already owned a suitable location: the flat roof of its own New England Distribution Center warehouse.

The development was made possible in part by the 2008 Massachusetts Green Communities Act, which allows utilities to own up to 50 megawatts of solar generation. The National Grid project is the first utility-owned solar project under this new law. National Grid plans several more projects in the coming year, totaling about 5 MW. The cost? Less than $6.5 million, says National Grid; the utility projects that the Whitinsville project will cost an average residential Massachusetts customer approximately one cent per month over the 20-year life of the project.

How about economic development through renewable power? The utility says the project created more than 50 green jobs in Massachusetts. For example, the solar panels themselves were manufactured by Evergreen Solar of Marlborough, and other local vendors and contractors were used where possible.