Hurricane Sandy's disruption of petroleum shipments and refining has led Secretary of Homeland Security Janet Napolitano to issue a temporary waiver allowing foreign oil tankers to enter ports in the northeastern United States.
The Jones Act, a federal law enacted as part of the Merchant Marine Act of 1920, limits who may carry on coastal shipping between domestic ports. This so-called cabotage law generally requires that all goods transported by water between U.S. ports be
carried in U.S.-flag ships, constructed in the United States, owned by
U.S. citizens, and crewed by U.S. citizens and U.S. permanent residents.
Hurricane Sandy's impacts to northeastern energy infrastructure included disruption of oil and gasoline supplies in the area near New York City and New Jersey. Between reduced supply and concentrated demand, gasoline is reported to be in shortage conditions. Long lines are reported at gas stations, and demand at some stations has led them to run out of gasoline.
In an attempt to alleviate the shortage, today Secretary of Homeland Security Janet Napolitano issued a temporary, blanket waiver of the Jones Act. The waiver is designed to allow foreign-flagged oil tankers, that would otherwise be barred from the U.S. coastwise trade, to ship petroleum products from the Gulf of Mexico to Northeastern ports. The waiver will remain operative through November 13th.
Energy powers society; society's choices shape energy policy. A blog about our energy resources and the choices they present for society.
Will Michigan vote for renewable energy as a constitutional amendment?
Thursday, November 1, 2012
Voters will decide a broad slate of issues in the upcoming U.S. elections on November 6, including many that address energy policy. Questions range from who will serve as president to the role of government in managing the mix of energy resources used to power society. In several states, voters will decide whether to increase renewable energy mandates. One example of such a question is Michigan Proposal 3, a citizen-initiated ballot measure that would mandate that 25% of the state's electricity must come from renewable resources by 2025.
Under current law, Michigan's renewable portfolio standard requires electric suppliers to procure at least 10 percent of electricity from renewable sources such as wind, solar, hydro and biomass by 2015. If enacted, Proposal 3 would increase this RPS requirement to 25% by 2025, and limit the impact of the requirement on electric rates to no more than a 1% annual increase.
The official text of Proposal 3 reads:
The effort to place this question on the ballot has been led by a group called Michigan Energy, Michigan Jobs. Supporters project that the amendment would help the local economy by creating over 40,000 jobs and attract $10 billion in new investments, as well as promoting public and environmental health. Opponents, including a group called the Clean Affordable Renewable Energy for Michigan Coalition or (CARE) argue both that the increased renewable mandate would cost too much and that such a measure does not belong in the state constitution.
How will Michigan voters respond to this issue? We will find out within the next week.
Under current law, Michigan's renewable portfolio standard requires electric suppliers to procure at least 10 percent of electricity from renewable sources such as wind, solar, hydro and biomass by 2015. If enacted, Proposal 3 would increase this RPS requirement to 25% by 2025, and limit the impact of the requirement on electric rates to no more than a 1% annual increase.
The official text of Proposal 3 reads:
PROPOSAL 12-3
A PROPOSAL TO AMEND THE STATE CONSTITUTION TO ESTABLISH A STANDARD FOR RENEWABLE ENERGY
This proposal would:
Should this proposal be approved?
- Require electric utilities to provide at least 25% of their annual retail sales of electricity from renewable energy sources, which are wind, solar, biomass, and hydropower, by 2025.
- Limit to not more than 1% per year electric utility rate increases charged to consumers only to achieve compliance with the renewable energy standard.
- Allow annual extensions of the deadline to meet the 25% standard in order to prevent rate increases over the 1% limit.
- Require the legislature to enact additional laws to encourage the use of Michigan made equipment and employment of Michigan residents.
YES __
NO ____
The effort to place this question on the ballot has been led by a group called Michigan Energy, Michigan Jobs. Supporters project that the amendment would help the local economy by creating over 40,000 jobs and attract $10 billion in new investments, as well as promoting public and environmental health. Opponents, including a group called the Clean Affordable Renewable Energy for Michigan Coalition or (CARE) argue both that the increased renewable mandate would cost too much and that such a measure does not belong in the state constitution.
How will Michigan voters respond to this issue? We will find out within the next week.
Assessing Hurricane Sandy's energy impacts
Tuesday, October 30, 2012
Yesterday Hurricane Sandy made landfall in New Jersey, but the magnitude of the storm meant that heavy winds, strong rains, and a powerful coastal storm surge affected a broad swath of the mid-Atlantic and northeastern parts of the United States.
One consequence of the storm is widespread power outages. As of 8:00 AM yesterday, about 36,000 electricity customers had lost power in Connecticut, Delaware, New Jersey, New York, North Carolina, Rhode Island, and Virginia. By 2:00 PM yesterday, outages were up to over 316,000, in the states listed above as well as in Maryland, Massachusetts, New Hampshire, and Pennsylvania. At that time, New York had the most outages (105,089 customers, or about 1%), but New Hampshire was the hardest hit in terms of percentage affected (18,190 customers, or about 3%). These reported outages came six hours before the storm officially made landfall, making outage numbers much higher today -- some reports indicating 8 million customers without power.
[Update: as of 9:00 AM this morning, the Department of Energy reports 8.1 million customers without electricity, including 62% of New Jersey, 31% of Connecticut, and 23% of Rhode Island.]
In addition to these power outages, some electricity generating facilities have shut down. The U.S. Nuclear Regulatory Commission (NRC) reports three nuclear power units in the Northeastern United States had to shut down and two units reduced as a result of impacts from Hurricane Sandy. Reasons range from water pump failure to encroaching high water to problems on the external power grid.
Another consequence of the storm is disruption to oil refineries. By 1:00 PM yesterday, two mid-Atlantic refineries had closed, with four more shutting down part of their production. In total, 1.1 million barrels per day of refining capacity had been disrupted due to the storm.
Today, as the storm has moved inland, crews are working hard to recover from the storm. It is still early to assess the total damage from the storm, as well as whether its disruption to energy infrastructure will be temporary or longer-lasting.
One consequence of the storm is widespread power outages. As of 8:00 AM yesterday, about 36,000 electricity customers had lost power in Connecticut, Delaware, New Jersey, New York, North Carolina, Rhode Island, and Virginia. By 2:00 PM yesterday, outages were up to over 316,000, in the states listed above as well as in Maryland, Massachusetts, New Hampshire, and Pennsylvania. At that time, New York had the most outages (105,089 customers, or about 1%), but New Hampshire was the hardest hit in terms of percentage affected (18,190 customers, or about 3%). These reported outages came six hours before the storm officially made landfall, making outage numbers much higher today -- some reports indicating 8 million customers without power.
[Update: as of 9:00 AM this morning, the Department of Energy reports 8.1 million customers without electricity, including 62% of New Jersey, 31% of Connecticut, and 23% of Rhode Island.]
In addition to these power outages, some electricity generating facilities have shut down. The U.S. Nuclear Regulatory Commission (NRC) reports three nuclear power units in the Northeastern United States had to shut down and two units reduced as a result of impacts from Hurricane Sandy. Reasons range from water pump failure to encroaching high water to problems on the external power grid.
Another consequence of the storm is disruption to oil refineries. By 1:00 PM yesterday, two mid-Atlantic refineries had closed, with four more shutting down part of their production. In total, 1.1 million barrels per day of refining capacity had been disrupted due to the storm.
Today, as the storm has moved inland, crews are working hard to recover from the storm. It is still early to assess the total damage from the storm, as well as whether its disruption to energy infrastructure will be temporary or longer-lasting.
Hurricane Sandy's effects on energy
Monday, October 29, 2012
Hurricane Sandy is expected to make landfall near the southern coast of New Jersey this evening. The storm has already dealt damage to Cuba, Jamaica, and Haiti, and is expected to carry significant storm energy northward into the mid-Atlantic and northeastern United States. Power outages are already being reported, but many more are expected: according to a Johns Hopkins engineering model, up to 10 million people may lose electricity in the mid-Atlantic over the next week. Utilities are already staffing up and hiring external contractors to assist in the storm recovery efforts. State governors are declaring a state of emergency to waive limits on how many hours utility workers can drive and work, to allow workers from other states and Canadian provinces to assist.
Hurricane Sandy's effects on energy are not limited to electric infrastructure. Petroleum refineries - and by extension oil and gas markets - will also be impacted by the storm. According to a situation report released this morning by the U.S. Department of Energy's Office of Electricity Delivery & Energy Reliability, at least one petroleum refinery has already shut down. Phillips 66's Linden, NJ refinery has shut down its production; the Linden refinery is capable of producing 238,000 barrels per day.
The report also cites trade press reports indicating reduced production at two other mid-Atlantic oil refineries, Philadelphia Energy Solutions’ Philadelphia, PA refinery (335,000 b/d capacity) and PBF Energy’s Delaware City refinery (182,200 b/d capacity). Hurricane Sandy's impacts to refineries are not limited to those processing crude oil; the report also cites reduced production rates at Hess Corporation’s Port Reading, NJ facility (70,000 b/d capacity), which processes gas oils to produce petroleum products.
Collectively, these refineries do not account for a significant portion of the nation's refining capacity. However, the impacted facilities' concentration in the mid-Atlantic may temporarily raise gasoline prices in the mid-Atlantic and northeastern U.S. A key factor affecting the extent of this price bump will be how quickly the refineries can return to full production.
When tomorrow morning comes, the storm's direct impacts will be well underway, as will restoration efforts. Last year's October storm, Hurricane Irene, left many electric utility customers without power for over a week. How will Sandy compare to Irene?
Hurricane Sandy's effects on energy are not limited to electric infrastructure. Petroleum refineries - and by extension oil and gas markets - will also be impacted by the storm. According to a situation report released this morning by the U.S. Department of Energy's Office of Electricity Delivery & Energy Reliability, at least one petroleum refinery has already shut down. Phillips 66's Linden, NJ refinery has shut down its production; the Linden refinery is capable of producing 238,000 barrels per day.
The report also cites trade press reports indicating reduced production at two other mid-Atlantic oil refineries, Philadelphia Energy Solutions’ Philadelphia, PA refinery (335,000 b/d capacity) and PBF Energy’s Delaware City refinery (182,200 b/d capacity). Hurricane Sandy's impacts to refineries are not limited to those processing crude oil; the report also cites reduced production rates at Hess Corporation’s Port Reading, NJ facility (70,000 b/d capacity), which processes gas oils to produce petroleum products.
Collectively, these refineries do not account for a significant portion of the nation's refining capacity. However, the impacted facilities' concentration in the mid-Atlantic may temporarily raise gasoline prices in the mid-Atlantic and northeastern U.S. A key factor affecting the extent of this price bump will be how quickly the refineries can return to full production.
When tomorrow morning comes, the storm's direct impacts will be well underway, as will restoration efforts. Last year's October storm, Hurricane Irene, left many electric utility customers without power for over a week. How will Sandy compare to Irene?
NY releases Energy Highway Blueprint
Friday, October 26, 2012
This week New York Governor Cuomo released the New York Energy Highway Blueprint (12 megabyte PDF), the state’s plan to “rebuild and rejuvenate New York State’s electric power system and enable the state to meet the needs of a 21st century economy and society.”
The Blueprint outlines 13 recommended actions in four focus areas, including:
One likely result is significant transmission development. If this happens, the new transmission lines could enhance reliability and create opportunities for energy produced upstate or in rural areas to be transmitted to load centers like New York City. Transmission line development typically involves significant construction work and related employment, but can be expensive. How this transmission development will be paid for remains to be seen, and may not be resolved for several years.
Another area of interest involves the development of reliability contingency plans for power plant retirements. The Indian Point nuclear plant, located about 30 miles north of NYC, is currently undergoing a relicensing proceeding before the Nuclear Regulatory Commission. It is unclear whether either or both of the two reactors at Indian Point will be relicensed, meaning New York may need to secure replacement power by 2016 (or sooner). The Blueprint recommends that contingency plans for partial or full retirement of the Indian Point plant include energy efficiency and demand response.
The Blueprint also includes plans to increase the availability of natural gas, including for the purpose of switching customers from oil to gas. The NY Department of Public Service is slated to issue a notice on natural gas expansion policies by the end of 2012. It is unclear how the program will split its focus between residential, commercial, and industrial customers, but it could help reduce the cost and environmental impacts of oil use in New York.
Overall, the Blueprint could result in the addition of up to 3,200 megawatts of additional electric generation and transmission capacity through up to $5.7 billion in private investments. Over the upcoming months, state agencies and the New York legislature will consider the Blueprint, and whether and how it can be implemented. At the same time, businesses are evaluating the Blueprint to see if it can help them develop renewable and traditional generation, transmission lines, energy efficiency, demand response, and other energy projects.
The Blueprint outlines 13 recommended actions in four focus areas, including:
- Expand and Strengthen the Energy Highway: building $1 billion of new electric transmission totaling over 1,000 MW of capacity, develop reliability contingency plans for power plant retirements (including energy efficiency and demand response), and support flexibility in public power authority contracting
- Accelerate Construction and Repair: advance up to $800 million of investments in electric generation, transmission, and distribution, and advance up to $500 million of investments in natural gas distribution to reduce costs to customers and enhance reliability, safety, and emission reductions
- Support Clean Energy: execute new contracts for up to $250 million within the next year with renewable energy developers under the Renewable Portfolio Standard to leverage an additional $425 million in private-sector investment to build up to 270 MW, study NY’s Atlantic offshore wind resource, and repower 750 MW of inefficient power plants on Long Island
- Drive Technology Innovation: facilitate smart grid initiatives with the investment of up to $250 million
One likely result is significant transmission development. If this happens, the new transmission lines could enhance reliability and create opportunities for energy produced upstate or in rural areas to be transmitted to load centers like New York City. Transmission line development typically involves significant construction work and related employment, but can be expensive. How this transmission development will be paid for remains to be seen, and may not be resolved for several years.
Another area of interest involves the development of reliability contingency plans for power plant retirements. The Indian Point nuclear plant, located about 30 miles north of NYC, is currently undergoing a relicensing proceeding before the Nuclear Regulatory Commission. It is unclear whether either or both of the two reactors at Indian Point will be relicensed, meaning New York may need to secure replacement power by 2016 (or sooner). The Blueprint recommends that contingency plans for partial or full retirement of the Indian Point plant include energy efficiency and demand response.
The Blueprint also includes plans to increase the availability of natural gas, including for the purpose of switching customers from oil to gas. The NY Department of Public Service is slated to issue a notice on natural gas expansion policies by the end of 2012. It is unclear how the program will split its focus between residential, commercial, and industrial customers, but it could help reduce the cost and environmental impacts of oil use in New York.
Overall, the Blueprint could result in the addition of up to 3,200 megawatts of additional electric generation and transmission capacity through up to $5.7 billion in private investments. Over the upcoming months, state agencies and the New York legislature will consider the Blueprint, and whether and how it can be implemented. At the same time, businesses are evaluating the Blueprint to see if it can help them develop renewable and traditional generation, transmission lines, energy efficiency, demand response, and other energy projects.
Renewables dominate new electric generating capacity
Wednesday, October 24, 2012
In September 2012, the United States added 433 megawatts of new utility-scale electric generating capacity - and according to a federal report, it all came from renewable resources.
The Federal Energy Regulatory Commission's September 2012 energy infrastructure update provides a summary of recent developments of natural gas, hydropower, electric generation, and electric transmission facilities. For electric generation, the report provides a breakdown of newly installed capacity by resource type.
According to the report, 5 wind projects came online in September, totaling 300 megawatts of capacity:
The Federal Energy Regulatory Commission's September 2012 energy infrastructure update provides a summary of recent developments of natural gas, hydropower, electric generation, and electric transmission facilities. For electric generation, the report provides a breakdown of newly installed capacity by resource type.
According to the report, 5 wind projects came online in September, totaling 300 megawatts of capacity:
- EDF Group’s 140 MW Phase 1 Pacific Wind in Kern County, California
- Forsyth Street Advisor LLC’s 57.6 MW Phase 1 Horse Butt Wind Farm in Bonneville County, Idaho
- KODE Novus I LLC’s 80 MW Phase 1 Novus Wind Farm in Texas County, Oklahoma
- Fire Island Wind LLC’s 17.6 MW Phase 1 Fire Island Wind Project in Anchorage Borough, Alaska
- Kodiak Electric Association’s 4.5 MW Phase 2 Pillar Mountain Wind project expansion in Kodiak Island Borough, Alaska
- NRG Energy & MidAmerican Renewables, LLC’s 50 MW Phase 5 Aqua Caliente Solar Project expansion in Yuma County, Arizona came online. The expansion brings the Aqua Caliente Project's operational photovoltaic capacity to 250 MW, making it currently the largest photovoltaic facility in the country.
- Zongyi Solar America’s 20 MW Tinton Falls Solar in Monmouth County, New Jersey, the largest photovoltaic project in New Jersey
- Southern Sky Renewable Energy LLC’s 5.6 MW Canton Landfill Solar Project in Canton County, Massachusetts, the largest solar facility in New England
Wisconsin nuclear plant closing as gas boom cuts electricity prices
Tuesday, October 23, 2012
A Wisconsin nuclear power plant is slated for closure early next year, as electricity prices have fallen due to the proliferation of low-cost natural gas.
Dominion Resources Inc. announced yesterday that it will close its Kewaunee Power Station, a 556-megawatt nuclear power plant in Carlton, Wisconsin. Located on Lake Michigan about 35 miles southeast of Green Bay, the Kewaunee plant features one Westinghouse pressurized water reactor. The station began commercial operation in 1974, and was acquired by Dominion in July 2005.
Despite being relicensed by the Nuclear Regulatory Commission in 2011 for a new term through 2033, according to Dominion's most recent Form 10-K, Dominion faced a $66 million loss ($39 million after-tax) from operations of the Kewaunee plant. Part of Dominion's problems likely arose from the relatively low price it could get for power produced from the plant. While Dominion has cost-of-service-based contracts to sell the plant's output to two Wisconsin utilities - Wisconsin Public Service Corp. and Wisconsin Power and Light Co. - those contracts expire in 2013.
Meanwhile, the development of natural gas supplies from shale resources though hydraulic fracturing or fracking has led to significant decreases in the price of natural gas. Since natural gas plays a significant role in the energy mix used to generate electricity, shale gas has led to decreases in the price of power. This in turn has put pressure on electric generators powered by fuels other than gas. Some of these generators have announced closures, while others are being converted to gas-fired generation.
Dominion had been trying to sell the plant since last year. Between the lack of economies of scale resulting from the company's inability to grow its Midwest nuclear fleet, projected low wholesale power prices in the region, and no buyer for Kewaunee, Dominion now plans to decommission the plant in 2013. If that happens, it will be the first permanent closure of a nuclear power plant since 1998.
Dominion Resources Inc. announced yesterday that it will close its Kewaunee Power Station, a 556-megawatt nuclear power plant in Carlton, Wisconsin. Located on Lake Michigan about 35 miles southeast of Green Bay, the Kewaunee plant features one Westinghouse pressurized water reactor. The station began commercial operation in 1974, and was acquired by Dominion in July 2005.
Despite being relicensed by the Nuclear Regulatory Commission in 2011 for a new term through 2033, according to Dominion's most recent Form 10-K, Dominion faced a $66 million loss ($39 million after-tax) from operations of the Kewaunee plant. Part of Dominion's problems likely arose from the relatively low price it could get for power produced from the plant. While Dominion has cost-of-service-based contracts to sell the plant's output to two Wisconsin utilities - Wisconsin Public Service Corp. and Wisconsin Power and Light Co. - those contracts expire in 2013.
Meanwhile, the development of natural gas supplies from shale resources though hydraulic fracturing or fracking has led to significant decreases in the price of natural gas. Since natural gas plays a significant role in the energy mix used to generate electricity, shale gas has led to decreases in the price of power. This in turn has put pressure on electric generators powered by fuels other than gas. Some of these generators have announced closures, while others are being converted to gas-fired generation.
Dominion had been trying to sell the plant since last year. Between the lack of economies of scale resulting from the company's inability to grow its Midwest nuclear fleet, projected low wholesale power prices in the region, and no buyer for Kewaunee, Dominion now plans to decommission the plant in 2013. If that happens, it will be the first permanent closure of a nuclear power plant since 1998.
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