Smarter, faster. That's the goal of the EnerKnol Pulse, through dozens of headlines sourced from the Platform. This week's edition features Maryland's green light for the WGL-AltaGas merger, FERC's approval of the Vistra-Dynegy deal, New Jersey's controversial nuclear package, and the EPA's repeal of Obama-era auto rules. We welcome your feedback at research@enerknol.com

April 9, 2018


Featured Topics

Renewable Policies and Projects

Struggling Nuclear

Developing the Grid

Power Markets and Ratemaking

Electrifying Transport

Fossil Fuels and Pipelines


Featured Entities

AltaGas

DTE Energy

Duke

Dynegy

Enbridge

Energy Transfer Partners

Exelon

Fitchburg Gas & Electric

Galloo Island Wind

Georgia Power

Harbor Cogeneration

HECO

Idaho Power PG&E

Phillips 66 Partners

Powerex

PSEG

Santee Cooper

SCE

SDG&E

Southwest Generation

Texas Eastern Transmission

UNS Electric

Vista Energy

Washington Gas Light

WGL

Top News

Maryland Approves $4.5-Billion WGL-AltaGas Merger Following Inclusion of Customer Protections

The Maryland Public Service Commission announced April 4 that it has conditionally approved WGL Holdings Inc.’s merger into Canada-based AltaGas Ltd. following the addition of dozens of conditions intended to protect or benefit consumers in the state. With the approval, the District of Columbia Public Service Commission remains the sole regulator needed to complete the deal. The conditions include a one-time $50 bill credit for Washington Gas residential heating customers, an $8.8 million bill credit for business customers and investments of more than $30 million to expand the natural gas distribution system. Chairman Kevin Hughes dissented, saying that the credit rating of WGL and Washington Gas will likely drop from AltaGas’ weaker financial standing. WGL Holdings is the parent company of Washington Gas, which provides regulated gas distribution services across Maryland, the District of Columbia, and Virginia.

U.S. Clears Vistra-Dynegy Merger, Putting Deal on Path to Close in Second Quarter

The Federal Energy Regulatory Commission approved Dynegy Inc.’s all-stock merger with Vistra Energy Corp. after it found that the transaction is in the public interest, paving the way for the companies to meet the planned second quarter closing date of the agreement. Under the transaction, for each share of Dynegy, shareholders will receive 0.652 shares of common stock of the surviving company, Vistra Energy, such that Vistra Energy and Dynegy shareholders will own about 79 percent and 21 percent, respectively, of the combined company. Following the merger, Vistra will own about 40 gigawatts of generation, with 84 percent of the capacity in the power markets operated by the Texas, Mid-Atlantic, and New England grid operators. Texas-based Vistra, formerly known as TCEH Corp., emerged from Chapter 11 bankruptcy as a spin off of Energy Future Holdings Corp. and is the parent company of TXU Energy and Luminant. Vistra’s owners include Oaktree Capital Group LLC, with 12 percent, Brookfield Asset Management Inc., with 15.5 percent, and Apollo Management Holdings LP, with 12.4 percent.

New Jersey Advances Controversial $3-Billion Nuclear Rescue Package Bill

New Jersey Assembly and Senate committees cleared legislation April 5 that would provide about $300 million in subsidies annually over 10 years to nuclear plants owned by Public Service Enterprise Group Inc. and Exelon Corp, which provide about 40 percent of the state’s power. Governor Phil Murphy, a Democrat, has expressed support for maintaining nuclear plants as a bridge to a renewable energy-dominant future. New Jersey would be the latest in a string of states to offer aid packages to ailing reactors, following in the path of Connecticut, Illinois and New York. (A3724) (S 2313)

U.S. EPA to Weaken Vehicle Emission Standards After Finding Obama-Era Rules Were Too Strict

The U.S. Environmental Protection Agency announced the withdrawal of Obama-era emission standards for cars and light trucks for model years 2022-2025 after an evaluation of recent data led the agency to conclude the rules are too strict, according to an April 2 press release. Agency Administrator Scott Pruitt said the Obama administration rules, which set a fuel economy goal of over 50 miles per gallon by 2025, were rushed and politically motivated. The agency is also examining a Clean Air Act waiver that permits California to impose vehicle emissions standards that are stronger than federal ones. Advocates for the stronger standards say that the repeal is a setback for efforts to limit greenhouse gas emissions while also threatening to cede the U.S. auto industry’s technological prowess to foreign competitors.

Renewable Policies and Projects

New York Plans Makeover For $1-Billion Solar Incentive Program, Responding to Changing Market

The New York State Energy Research and Development Authority said that it’s planning to redesign its NY-Sun program in the second quarter, responding to changing market conditions and to reflect the transition to the new “value stack” solar compensation. The agency plans to add more capacity to “rest of state” commercial and industrial blocks; add incentives for solar installations on brownfields, landfills and affordable housing rooftops; accelerate payouts of performance-based awards to lower project finance costs; and increase the incentive cap on small commercial projects to 750 kilowatts, from 200 kilowatts. Under the NY-Sun program, the state seeks to promote the installation of 3 gigawatts of solar by 2023 and strives to build a self-sustaining solar market.

Illinois Greenlights Ambitious Plan to Achieve 25 Percent Renewable Energy by 2025

The Illinois Commerce Commission has approved the Long-Term Renewable Resources Procurement Plan, which outlines the path for Illinois to acquire a quarter of its energy from renewable sources by 2025, according to the April 3 order. The plan includes the procurement of about 700 megawatts of community and distributed solar, and lays out the purchase requirements for the state’s utilities, Ameren Corp., ComEd Co., and MidAmerican Energy Co.

DTE Energy Unveils $1.7-Billion Plan to Double Renewable Energy Supplies by Early 2020s

DTE Energy Co. announced March 30 that it’s seeking approval from the Michigan Public Service Commission for its 2018 Renewable Energy Plan that would add 1,000 megawatts of wind and solar generation in the state by 2022, or enough power to serve more than 450,000 homes. The plan calls for the roll out of a pilot energy storage program as well as a voluntary renewable energy program for large businesses. DTE said that the plan amounts to a significant step toward meeting its goal to cut carbon emissions by more than 80 percent by 2050, and builds off $2.5 billion in renewable investments over the last 10 years.

Duke Wins Green Light for $62-Million North Carolina Solar Rebate Program

The North Carolina Utility Commission approved Duke Energy’s solar rebate program, which will award a rebate of 60 cents per watt for residential solar energy systems that are 10 kilowatts or less, according to an April 3 order. Non-residential customers will be eligible for 50 cents per watt and non-profit organizations, such as schools and churches, will be eligible for a rebate of 75 cents per watt for systems up to 100 kW. The programs are part of the state’s Competitive Energy Solutions law. Duke Energy Progress LLC and Duke Energy Carolinas LLC are subsidiaries of Duke Energy.

New England Grid Operator Sees Waning Energy Demand Over Decade as Efficiency, Solar Power Grow

The ISO New England Inc. projects that annual energy consumption in the six-state regional market will slip by just under 1 percent per year, falling from 124,252 gigawatt-hours in 2018 to 114,981 gigawatts in 2027, according to its preliminary long-term forecast issued March 28. The lower demand follows continued deployment of energy efficiency as well as behind-the-meter solar generation, which is expected to grow by about 3440 megawatts over the period.Generators in the region have had to endure falling electricity sales and a glut of supplies, most recently reflected in the New England’s supply auction, which saw capacity prices slump to a five-year low.

Apex Clean Energy Seeks New York Regulator’s Approval for 109-Megawatt Utility-Scale Wind Farm

Apex Clean Energy seeks approval with the New York State Public Service Commission to construct the 109-megawatt Galloo Island Wind Project in Jefferson County, according to an April 2 filing. The proposal includes a 30-mile, 145-kilovolt, alternating current underwater electric transmission cable to deliver electricity to the New York State electric grid. New York seeks to cut greenhouse gas emissions by 40 percent by 2030 and increase renewable generation to 50 percent by 2030.

Unitil Subsidiary Seeks Approval for 1.3 Megawatt Massachusetts Solar Plant

Fitchburg Gas and Electric Light Company Inc. asked for authorization from the Massachusetts Department of Public Utilities for an annual revenue requirement of $308,000 to cover its investment in a 1.3-megawatt solar generation facility at Sawyer Passway, Fitchburg, according to the company’s April 2 filing. The company requests approval for rates to take effect on June 1. The department approved the construction of the facility and the associated cost recovery, called a solar cost adjustment tariff, in October 2016 as part of a settlement with the attorney general. The settlement capped the construction costs at about $3 million.

Struggling Nuclear

Georgia Regulator Adds Another $330 Million to Customer Refunds Following Tax Cut, Vogtle Reactor Decision

The Georgia Public Service Commission has approved $330 million in refunds to Georgia Power Company customers over the next three years as a result of the lower corporate tax rate under the Tax Cuts and Jobs Act, according to an April 3 press release. This order follows a unanimous decision last month to cut the fees collected from Georgia Power customers to finance an expansion of the Vogtle nuclear plant, a project that’s been long delayed and over budget. The latest round brings the total amount of refunds over the next three years to $482.6 million. Georgia Power Company is a subsidiary of Southern Company.

South Carolina House Passes Bill to Review Sale of Santee Cooper to Pay Off Reactor Project Debt

The South Carolina House passed legislation on April 4 that would create a nine-member committee to explore the sale of the state-owned Santee Cooper to help pay off billions in debt accumulated from the abandonment of a project to add reactors at the V.C. Summer Nuclear plant. SCANA subsidiary South Carolina Electric & Gas Co. and Santee Cooper scrapped the project last July after spending about $9 billion. (H 4376)

Developing the Grid

Michigan Commission Orders Utilities to Report Cyber Attacks as Threats Proliferate

The Michigan Public Service Commission announced new rules ordering utilities to issue timely notifications of cyber attacks and to provide annual reports on programs and training to guard against future incidents, according to a March 29 press release. The agency is accepting public input on the draft regulations through May 29. Cybersecurity has emerged as a top priority for regulators as the expansion of digital access points in the modernized grid raise the risk of service disruptions or a breach of customer data from network attacks.

Massachusetts Governor Wants to Score Efficiency of Homes, Make Assessments Public

Republican Governor Charlie Baker introduced legislation on April 3 that would score the energy efficiency of homes, in the latest of the administration’s ongoing efforts to drive emissions reductions in the energy-intensive residential building sector, a source of over a quarter of the state’s greenhouse gasses. The bill would require that residential energy assessments include an estimate of annual energy use; an estimate of energy costs based on the home’s lighting, insulation and heating equipment; and recommendations for efficiency improvements. The bill would require the energy performance ratings be made available to homebuyers starting in 2021. Massachusetts has topped the American Council for an Energy Efficient Economy’s state energy efficiency scorecard for the past seven years.

California Lawmaker Proposes Bill to Boost Utility Procurement of Energy Storage

California state Senator Henry Stern, a Democrat, introduced legislation on April 4 that would direct the public utilities commission to determine whether it should require the state’s three large electric corporations to procure more energy storage to maintain long-term reliability. Each corporation would own up to half its procurement share and recover the costs of procurement from retail customers. Current law requires the commission to determine the targets and require the corporations to devise programs to accelerate distributed storage deployment. (SB 1347)

Power Markets and Ratemaking

Electric Power Suppliers Seek Speedy Action to Prevent Subsidies from Distorting New York Power Markets

The Electric Power Supply Association, in an April 5 filing with the Federal Energy Regulatory Commission, asked for prompt action to address distorted prices in the New York grid operator’s capacity market, arguing that every month thousands of megawatts of subsidized generation are offered at prices much lower than the actual going forward costs. The group said that “market-crushing subsidies” continue to influence the bidding behavior of owners of the subsidized resources, underscoring that the commission acknowledged the market threat three years ago. Of particular concern to the coalition is New York State Energy Research and Development Authority’s payments for zero-emissions credits for ailing nuclear power plants and the possible subsidies to repower the Dunkirk Generating Station.

Idaho Power, Powerex Finalize Link to Western Energy Imbalance Market

Idaho Power Company and Powerex Corp., of Vancouver, Canada, successfully joined the western Energy Imbalance Market, extending the reach of the market to over half of the western U.S. grid, according to an April 4 announcement by California Independent System Operator Corp. The market’s eight participants now serve more than 42 million consumers and address energy imbalances within about 55 percent of the load in the Western Interconnection. The western Energy Imbalance Market is a real-time, bulk-power trading market that uses advanced systems to optimize the delivery of low-cost electricity across eight states, that reduces costs by enabling utilities to pool energy reserves, and that improves the integration of renewable energy. Idaho Power is a subsidiary of IDACORP Inc., and Powerex is the electricity marketing subsidiary of BC Hydro, Canada’s third largest electric utility.

U.S. Energy Regulator Approves Mid-Atlantic Grid Operator’s Revisions to Energy Offer Cap

The Federal Energy Regulatory Commission, on April 2, accepted PJM Interconnection LLC’s revisions to its energy offer cap in compliance with the commission’s November 2016 order that required grid operators to cap incremental energy offers at the higher of $1,000 per megawatt-hour or a verified cost-based offer, and set a hard cap of $2,000. Offer cap reforms were intended reduce the suppression of price below the marginal cost of production to ensure that generators receive fair compensation.

U.S. Electricity Sales Last Year Saw Largest Drop Since Recession Amid Mild Weather: EIA

U.S. retail electricity sales last year fell by 2 percent, or 80 billion kilowatt-hours, posting the largest drop since the recession in 2009, as a cooler summer and a warmer winter cut demand for air-conditioning and heating, according to the U.S. Energy Information Administration. Retail power sales in 2017 reached 3,682 billion kilowatt-hours, about the same as the levels seen in 2006.

UNS Electric Seeks to Trim Payouts for Arizona Customer's Excess Power in Latest Net Metering Attack

UNS Electric Inc. asked for approval from the Arizona Corporation Commission to cut the rate used to calculate payouts for surplus generation from net metered customers to $0.025121 per kilowatt-hour, down from the rate of $0.0262112 per kilowatt authorized in August, according to a March 30 filing. The utility said it seeks to update the rates to reflect anticipated costs and asks for a June 1 start date. UNS Electric is a subsidiary of Unisource Energy Services Inc.

Electrifying Transport

California Commission Wants $600 Million for Electric Vehicle Charging Programs, Slashing Utilities' Request

The California Public Utilities Commission proposed a budget of $589 million for four projects to expand the deployment of electric vehicles to cut greenhouse gas emissions and meet clean air goals, down from the $1 billion requested by the state’s investor-owned utilities. Funds for San Diego Gas & Electric Company would go toward rebates for residential customers to install up to 60,000 at-home charging stations. Funds for Pacific Gas and Electric Company and Southern California Edison Company would go toward make-ready installations at a minimum of 700 sites each, to support electrification of at least 13,000 vehicles. Southern California would also create three time-of-use rates for commercial customers with electric vehicles. The proposal may be voted on by the commission on May 10 at the earliest. More than 350,000 electric vehicles are in use in California, making up about half of the electric vehicles sold across the nation.

For Hawaii's Excess Renewable Supply Conundrum, Island Utility Gets Helping Hand from Electric Vehicles

The Hawaiian Electric Companies found that charging electric vehicles, trucks, buses, and heavy equipment serve a key role in balancing the state’s renewable-heavy grid, siphoning off excess power when supplies from rooftop solar panels and grid-scale wind projects surge beyond the system’s capacity. The electric vehicles helped Hawaiian Electric Companies accommodate about 200,000 new rooftop solar panels and multiple grid-scale renewable projects since the start of the year, and will be key for the island chain to achieve the state’s goal to transition to a 100-percent renewable energy grid by 2045. The conclusions were drawn in the company’s long-term transportation electrification plan submitted to the Hawaii Public Utilities Commission, and also outlined measures to accelerate adoption of the autos. The state has about 7,000 electric vehicles.

California Regulator Finds Lagging Use of Electric Vehicles by Uber and Lyft Threatens 'Clean' Car Goals

Electric vehicles accounted for about one percent of the fleet of on-demand ride-hailing services like Uber and Lyft last fall, according to a report by the California Public Utilities Commission, prompting the agency to consider setting rules requiring higher adoption in the sector. The agency’s report also found that the industry’s limited use of EVs may jeopardize a state goal announced in January to deploy five million electric cars by 2030. California’s transportation sector makes up the largest source of greenhouse gases in the state, accounting for about 40 percent of its overall emissions in 2015, the commission said.

Fossil Fuels and Pipelines

Enbridge Objects to Considering New Information in Minnesota Regulator’s Assessment of Line 3 Oil Pipeline

Enbridge Energy LP said that it objected to the addition of facts that may be taken as evidence in the Minnesota Public Utilities Commission’s assessment of the Line 3 oil pipeline project, arguing that the information fails to meet the “generally-accepted standard.” In a March 29 order, an administrative law judge presented certain facts, including the company’s property tax appeal and land rights disputes for part of Enbridge’s mainline, which may be taken into judicial notice. Enbridge has faced stiff opposition from environmental groups in its bid for regulatory approval of its Line 3 project, which is designed to fully replace 1,031 miles of pipeline between Hardisty, Alberta, and Superior, Wisconsin.

State Lawmakers Back Pipeline Companies in Fight Against Project Foes

Pipeline companies are getting help from state lawmakers to wage the latest offensive against opponents of their energy projects amid intensifying protests. A coalition of state legislators in the Louisiana House floated a bill on March 26 that would designate oil and gas pipelines as critical infrastructure and would subject trespassers, saboteurs and conspirators to stricter prison sentences and higher fines. That comes on the heels of a similar bill introduced by Minnesota state lawmakers that would impose a felony offense against conspirators. Both states are home to controversial projects including Enbridge Inc.’s $7-billion Line 3 oil pipeline in Minnesota, and the $750-million Bayou Bridge oil pipeline in Louisiana. Bayou Bridge is a joint venture of Energy Transfer Partners and Phillips 66 Partners LP, a subsidiary of Phillips 66 Project Development Inc. (HB 727, HF 3693)

Iowa Legislature Advances Bill to Criminalize Oil, Gas Pipeline Protests as Opposition Heats Up

The Iowa legislature passed legislation on April 3 that would punish saboteurs of oil and gas pipelines and other critical infrastructure with prison sentences and stiffer fines. The legislation comes as opponents ramp up protests against Energy Transfer Partners’ controversial Dakota Access Pipeline. The bill awaits approval by Governor Kim Reynolds, a Republican. (SF 2235)

U.S. Regulator to Review Enbridge’s Texas-Louisiana Gas Expansion Project to Serve Gulf Coast Demand

The Federal Energy Regulatory Commission on April 5 announced it will conduct an environmental review for Texas Eastern Transmission LP’s proposed Texas – Louisiana Markets Project, which includes upgrades to the Gillis Compressor Station in Louisiana. The expansion would add 157,500 dekatherms per day of firm capacity for customers from receipt points in Louisiana to delivery points in Louisiana and Texas. The environmental review is scheduled for May 31, after which the commission has 90 days to reach a decision on authorizing the project. Texas Eastern Transmission is a subsidiary of Enbridge Inc.

Southwest Generation Cleared by U.S. to Sell 200-Megawatts of Natural Gas Fired Generation in California

Southwest Generation Operating Company LLC won approval from the Federal Energy Regulatory Commission on March 30 to sell its 107-megawatt Harbor generator in Los Angeles County and its 90-megawatt Colton generator in Colton, to Clarion Energy LLC, a unit of Linger Trust. Southwest Generation is a privately held energy company based in Denver with additional power plants in New Mexico and Colorado, according to the company website.

U.S. Drillers Seen Extending Oil Production Records Through 2019, Toppling Four-Decade High: EIA

The nation’s crude oil production is poised to reach a record annual average of 10.7 million barrels per day this year and 11.3 million barrels in 2019, breaking the last all-time high set in 1970 of 9.6 million, according to the U.S. Energy Information Administration’s latest oil supply report. Drillers are poised to build off surging production last year, which jumped to 9.3 million barrels per day, a gain of 5 percent from the prior year. Supplies from prolific tight-rock shale formations now account for just over half of the nation’s total production, up from less than 10 percent about a decade ago, thanks to the advent of advanced drilling techniques, particularly fracking and horizontal drilling, which have cut extraction costs.