Welcome back to the EnerKnol Pulse. In this roundup, New York proposes emission standards that would spell the end for coal plants in the state, while the Trump administration mulls changes to oil and gas safeguards created after the Deepwater Horizon disaster and erases Obama-era energy efficiency regulations. All of this and more made possible by the EnerKnol Platform. We welcome your feedback at research@enerknol.com. The EnerKnol Pulse will publish on Tuesday next week in observance of Memorial Day.

May 21, 2018


Featured Topics

Greening Energy Mix

Setting Rates

Grid and Power Markets

Curbing Emissions

Fossil Fuels and Pipelines


Featured Entities

AEP

Con Edison

Constellation Mystic

Dominion

Duke

EQT Midstream Partners

Eversource

Exelon

Mountain Valley Pipeline

National Coalition for Advanced Transportation

National Grid

NextEra

PSC of Oklahoma

Southwestern Electric

Tesla

Unitil

Xcel

Top News

New York Proposes Emission Standards That Would Close Remaining Coal Plants by 2020

New York’s Department of Environmental Conservation on May 16 issued draft rules that would require all power plants in the state to meet new carbon dioxide emissions limits, the latest in a series of actions by Democratic Governor Andrew Cuomo to phase out fossil fuels in the state. No existing coal-fired sources are expected to continue beyond 2020 as emissions control technology needed for compliance would increase capital and operation costs. The regulations would impact roughly 1,100 megawatts of remaining coal-fired generation in the state. The proposal follows a pledge in Cuomo’s 2016 annual address for the state to go coal-free by 2020. New York also has a goal of slashing carbon dioxide emissions from the energy sector by 40 percent by 2030. Comments are due July 29.

U.S. Interior Department Proposes Rollback of Oil, Gas Safeguards Spawned by Deepwater Horizon Spill

The U.S. Interior Department’s Bureau of Safety and Environmental Enforcement on May 11 proposed revisions to its well control rule, one of the spate of safety regulations implemented in the wake of the 2010 Deepwater Horizon spill that spewed 4.9 million barrels of oil into the Gulf of Mexico over nearly three months. The agency proposes to remove provisions of the 2016 rule to boost oil and gas production in keeping with the administration’s energy dominance agenda. The revisions would impact 59 of the rule’s 342 provisions including loosening real-time monitoring requirements and replacing an agency-approved verification organization with an independent third-party. The agency estimates the changes to save the industry $98.6 million annually over 10 years. The proposal coincides with the administration’s aggressive effort to expand offshore drilling along U.S. coastlines. The proposal opens a 60-day comment period.

Trump Administration Revokes Obama-Era Energy Efficiency Goals, Gives Discretion to Agencies

President Donald Trump signed an executive order on May 17 that provides more flexibility and discretion to federal agencies in deciding how to improve their energy and environmental performance, prioritizing actions that reduce waste, lower cost, and improve the resilience of infrastructure and operations. The order revokes former President Obama’s executive order that set a 2025 goal of reducing the federal government’s emissions by 40 percent, and directed agencies to cut energy use in buildings by 2.5 percent annually, meet 25 percent of their energy needs with clean energy, and reduce water use by 36 percent.The executive order directs the Council on Environmental Quality and Office of Management and Budget to develop the guidance needed to modify or annul complex directives and streamline compliance. The move is the latest in the administration’s action to roll back Obama-era environmental and climate regulations.

Greening Energy Mix

New Hampshire Legislature Passes Bill Expanding Net Metering Eligibility in Push for Larger Projects

The New Hampshire legislature cleared legislation on May 10 that would expand the size of customer-generation facilities able to participate in the state’s net metering program to 5 megawatts, up from one megawatt. Facilities that become operational on or after July 1 will be grandfathered for 12 years, until 2030, to receive the default service rates that are provided under the current net metering program. The bill would allow existing large renewable energy facilities such as hydro, wind, and landfill gas to switch to the current net metering tariff. Lawmakers also passed bills that would extend subsidized rates for a biomass power plant, and require regulated electric distribution utilities to solicit and procure power from biomass and waste-to-energy facilities at 80 percent of the default service rate. (SB 446, SB 577, SB 365)

Oklahoma Rate Advocate, Attorney General Seek Cost Caps on AEP's $4.5-Billion Wind Catcher Project

Oklahoma regulators and the state’s top legal official called for the rejection of American Electric Power Company Inc.’s 2,000-megawatt Wind Catcher Energy Connection, while also asking for a series of measures to protect ratepayers from price hikes tied to the project should it ultimately get approved. A member of Oklahoma Corporation Commission’s Public Utility Division and the attorney general, which dispute the need for the project, asked that AEP be subject to a cost cap on the investment and operating costs of the facility, so that costs above the cap will not be recoverable via retail rates. They require ratepayers to receive the federal production tax credits once the wind facility is complete. The wind farm, to be located in the Oklahoma Panhandle, would send its electrical output via a 350-mile transmission line connected to the Southwest Power Pool. Public Service Company has 30 percent stake in the project and Southwestern Electric Power holds the remainder. The companies are subsidiaries of AEP.

New York Senate Passes Bill to Establish 2030 Energy Storage Goal

The New York Senate approved legislation on May 14 setting an end-of-year deadline for regulators to establish a target for the installation of energy storage by 2030. The measure would build off the current goal by Governor Andrew Cuomo, a Democrat, for New York to deploy 1,500 megawatts of energy storage by 2025. The policy would consider the role of energy storage in supporting the integration of variable energy resources, lowering emissions, easing peak demand, and improving reliability in transmission and distribution systems. (S 7318A)

California Regulator Adopts Programs to Support Solar Installations in Low-Income Communities

The California Public Utilities Commission on May 15 adopted two programs designed to make the installation of rooftop solar panels more affordable for low-income customers, in what marks the latest step by the state to expand deployment of the renewable energy source. The “Single-family Solar Homes” program allows homeowners in low-income communities to get up-front financial incentives for solar installations, lowering capital requirements and the credit needed to finance the solar installation. The “Green Tariff” program extends a 20 percent discount on current rates for low income residents, providing clean energy options without participants having to own their home and without the cost of installing their own distributed generation systems.

Connecticut Faces Lawsuit For Diverting Clean Energy Program Funds to Fill Budget Gap

A coalition of energy efficiency contractors, and consumer and environmental advocates filed a lawsuit with the U.S. District Court for the District of Connecticut alleging that the state of Connecticut illegally used $155 million from ratepayer-funded energy conservation programs to help plug the state’s budget deficit. The petitioners said that the budget bill passed last October diverted money from the Green Bank, Energy Efficiency Fund and Regional Greenhouse Gas Initiative. These ratepayer funded programs are intended to reduce peak demand, lower energy costs, reduce emissions, and support low-cost efficiency improvements. In the current legislative session that ended May 9, the state restored $10 million for fiscal year 2019 to just one of the impacted programs. (2:18-cv-00817)

U.S. Energy Department to Invest $72 Million to Advance Concentrating Solar Power Technology

The U.S. Energy Department announced May 15 that it will provide funding for new concentrating solar power projects as the agency looks to boost the efficiency of the technology and trim costs. Concentrating solar power plants use mirrors to direct sunlight onto a focused area, with the light converted into thermal energy that can be stored and used to produce electricity. The agency seeks to develop systems that can reach operating temperatures of 700 degrees Celsius, up from the current limit of 565 degrees, and lower system costs by about $0.02 per kilowatt-hour.

Setting Rates

Idaho Power, Avista Seek Over $50 Million in Rate Cuts Tied to Federal Tax Reforms

Idaho Power Company asked for approval with the Idaho Public Utilities Commission to lower rates by about $33.9 million, or $2.15 on the typical residential customer’s electric bill, to account for savings under the federal tax reforms that were enacted this year, according to a May 14 press release from the agency. Avista Utilities proposed to cut rates by $13.7 million for electric customers and $2.6 million for natural gas customers, lowering the average monthly power and gas bills by $4.85 and $2.24, respectively. In January the commission directed utilities to propose rate changes to reflect the lower 21 percent corporate income tax rates, slashed from 35 percent. Idaho Power is a subsidiary of IDACORP Inc. Avista Utilities is a division of Avista Corp.

Minnesota Senate Passes Bill That Would Ease Cost Recovery for Xcel Nuclear Plants

The Minnesota Senate passed legislation on May 14 that would allow utilities to petition the state utility commission annually for a “carbon reduction rider” that would allow the recovery of nuclear power plant operational costs outside of a general rate case. Consumer advocate Citizens Utility Board said that the bill would shift the risk of cost-overruns to ratepayers for Xcel Energy Inc.’s Monticello and Prairie Island nuclear plants. States from Illinois to Connecticut have enacted rate-payer funded measures to keep financially struggling nuclear plants afloat as regulators seek to preserve the power plants that are prized for their zero greenhouse gas emissions and economic benefits. (SF 3504)

Grid and Power Markets

U.S. Energy Regulator Rejects Grid Operator's Plan to Stamp Out Speculation in Capacity Supply Market

The Federal Energy Regulatory Commission rejected a proposal by PJM Interconnection LLC to use price setting to curtail speculative bidding in the incremental capacity auction, calling the plan flawed and citing a lack of evidence of such behavior. PJM said that market participants are bidding into the base residual markets without any expectation of providing physical delivery of capacity and then procuring replacement capacity in the incremental auction and profiting from the difference. The commission said that the replacement purchases don’t necessarily indicate speculative behavior. The commission rejected similar proposals in 2009 and 2014 that sought a pre-determined price for sell-back offers rather than a market price.

U.S. Energy Department Unveils Cybersecurity Plan as Attacks Escalate to 'Disruption and Destruction'

The U.S. Energy Department released a report on May 14 identifying goals to pursue its two-fold cybersecurity strategy of strengthening energy delivery systems and developing “game-changing solutions” to create self-defending systems. The strategy centers on strengthening energy sector preparedness, coordinating cyber-incident response and recovery, and accelerating innovation for resilient systems. The report notes that attackers have moved from “exploitation to disruption and destruction,” and that the integration of advanced digital technologies and automation has left the system more exposed to cyber-attacks.

Massachusetts Regulators Reject Utilities’ Advanced Metering Amid Uncertain Customer Benefits

The Massachusetts Department of Public Utilities refused to preauthorize customer-facing investments in the grid modernization plans of investor-owned utilities National Grid, Eversource Energy and Unitil, finding that it needs to re-examine the strategies of advanced metering deployment to ensure benefits for ratepayers, according to the department’s May 10 order. Customers would have to shift from basic service to dynamic pricing programs in the competitive supply market to reap the benefits of reduced peak usage. The department said that the benefits such as reduced demand, capacity savings, and participation in dynamic pricing do not justify the costs. The department also noted issues faced by competitive suppliers in offering such pricing products, such as access to customer data, billing restrictions, and inherent risk of customer choice.

Exelon Seeks Grid Payouts to Prop Up Money-Losing Boston Gas Plant Said Needed for Reliability

A unit of Exelon Corp. asked the Federal Energy Regulatory Commission to approve its agreement with ISO New England Inc. for cost-of-service compensation to maintain operations of the Mystic 8 and 9 natural gas-fired generating units, according to a May 16 filing. Following Exelon’s bids to retire the money-losing plant in 2022, the grid operator asked the commission for waivers to maintain the units to ensure fuel security for the New England region for the period of June 1, 2022 to May 31, 2024. The grid operator said that the closure of the two combined cycle generators would deprive the system of 1,700 megawatts of winter generating capacity with on-site fuel, while also jeopardizing the future of Distrigas liquefied natural gas terminal, which serves the plant. Observers argue that New England has failed to add sufficient pipeline capacity to meet the region’s growing reliance on natural gas for power generation, putting the grid in a precarious position during the winter months when supplies are often strained by demand for the fuel to heat homes and businesses.

Curbing Emissions

Tesla, Utilities Launch Court Challenge Against U.S. Rollback of Vehicle Emission Standards

The National Coalition for Advanced Transportation on May 4 filed a petition asking the U.S. Court of Appeals for the District of Columbia Circuit to review the U.S. Environmental Protection Agency’s move to relax Obama-era emission standards for cars and light trucks for model years 2022-2025. In April, the agency announced it would withdraw the standards, which set a fuel economy goal of over 50 miles per gallon by 2025, saying that evaluation of recent data show that the rules are too strict and were rushed. The coalition represents electric vehicle manufacturers and utilities including Tesla Inc. The case is National Coalition for Advanced Transportation v. EPA (18-1118)

U.S. House Passes Bill to Revive Yucca Mountain Nuclear Waste Storage Project Amid Opposition From Nevada

The U.S. House of Representatives passed legislation on May 10 that would restart the licensing process for the U.S. Energy Department’s application for the Yucca Mountain nuclear waste repository, which was halted after federal funding ended in 2011. The bill would authorize an interim storage facility to move forward until Yucca Mountain is fully licensed. The project faces strong state and local opposition. (H.R.3053)

Fossil Fuels and Pipelines

Court Rules Federal Regulators Failed to Set Environmental Protections for $5-Billion Atlantic Coast Gas Line

The U.S. Court of Appeals for the Fourth Circuit issued a ruling on May 15 that would affect construction of the Atlantic Coast Pipeline in areas covered by the Endangered Species Act after finding that the U.S. Fish and Wildlife Service did not set clear limits to protect endangered species from the pipeline project. Dominion Energy said that the court decision only impacts activities in certain areas along the route and that the developers will ensure full compliance as the project construction continues. The project is a $5 billion, 604-mile natural gas pipeline that would extend from West Virginia into Virginia and North Carolina. The project is a joint proposal by Dominion Energy, Duke Energy, Piedmont Natural Gas, and Southern Company Gas. It received federal approval last October. The case is Sierra Club v. National Park Service (18-1082)

EQT's $3-Billion Gas Line Faces Court Fight from Landowners as Project Construction Starts

Landowner groups Bold Education Fund and Bold Alliance asked the U.S. Court of Appeals for the Fourth Circuit to review a decision by the Federal Energy Regulatory Commission authorizing developers to move forward with the construction of the $3-billion Mountain Valley natural gas pipeline even as challenges with the agency remain pending, according to a May 11 filing. Petitioners argued that allowing construction to proceed while requests for rehearing are unresolved violates due process and forecloses the possibility of any relief. Commissioner Cheryl LaFleur dissented from FERC’s approval of the project in October, finding that the project is not in the public interest. The $3-billion project is a joint venture of EQT Midstream Partners LP, NextEra US Gas Assets LLC, Con Edison Transmission Inc., WGL Midstream and RGC Midstream LLC.