Don't miss out on the most important energy news of the past week with the EnerKnol Pulse. In this edition, FERC receives new options for capacity market reform from the nation's largest grid operator as it struggles to tackle price distortions; Virginia reveals its strategic energy vision for the next 10 years; construction on the troubled Mountain Valley pipeline grinds to a halt yet again over inadequate stream crossings. All this and more powered by the EnerKnol Platform.

October 8, 2018


Featured Topics

Climate and Green Energy

Rates and Power Markets

Modernizing the Grid

Fuels and Pipelines


Featured Entities

American Electric Power

Avista

CenterPoint

CMS Energy

ConEdison

Consumers Energy

DTE Electric

Emera Maine

EQT Midstream Partners

Invenergy

Investment

NextEra

PJM

Potomac Electric Power

RGC Midstream

Vectren

WGL Midstream

Top News

PJM Proposes Options to Tackle Price Distortions From Subsidized Resources

PJM Interconnection LLC on Oct. 2 unveiled a proposal addressing a June 29 directive from the Federal Energy Regulatory Commission to revamp the capacity market rules to address price distortion as the participation of sources receiving out-of-market state revenues continues to grow. The plan proposes an expanded minimum offer price rule or MOPR that would apply to existing and new resources regardless of fuel and technology types, along with a unit-specific carve-out option for resources that do not want to be restricted by the MOPR. The “Resource Carve-Out” mechanism would offer an alternative to MOPR allowing subsidized resources to obtain a capacity commitment without having to clear the capacity market. Recognizing that the mechanism would not completely protect market clearing prices from the “trade-off” resulting from uneconomic resources, the grid operator’s plan includes an “Extended Resource Carve-Out” that adds a price adjustment method to restore clearing prices closer to the competitive outcome. PJM said that the proposal would maintain the integrity of the wholesale markets while respecting state policy priorities. In August, the commission granted PJM’s request to delay the next capacity market auction for the 2022-23 delivery year from May to Aug. 14-28, 2019, to allow more time to implement market reforms.

Virginia Unveils 10-Year Energy Plan Including 5 Gigawatt Boost to Renewables

Governor Ralph Northam, a Democrat, released Virginia’s new energy plan which provides a strategic vision for the commonwealth’s energy policy over the next 10 years. The plan is the implementation strategy of the Grid Transformation and Security Act (Senate Bill 966), signed into law earlier this year. Among other things, the legislation includes 3,000 megawatts of solar and onshore wind to be deployed by 2022, 2,000 megawatts of offshore wind to be deployed by 2028, and for Virginia’s utilities to invest $1.1 billion in energy efficiency programs. The plan also includes cost recovery structures for grid modernization projects that boost distributed energy and recommendations to expand the electric vehicle fleet and supporting infrastructure.

U.S. Court Issues Another Halt to Construction of $3-Billion Mountain Valley Natural Gas Pipeline

The U.S. Court of Appeals for the Fourth Circuit on Oct. 2 ordered another halt to construction activity on all portions of the Mountain Valley natural gas pipeline. The court ruled that the Army Corps of Engineers had instituted inadequate requirements for how the pipeline should cross streams in West Virginia, just a few weeks after some sections had resumed construction. In July, the court decided that the U.S. Bureau of Land Management had approved the route across the Jefferson National Forest in southern Virginia without adequate study, and that the U.S. Forest Service improperly concluded that impacts of the pipeline could be mitigated. The troubled pipeline would supply up to two million dekatherms per day of natural gas to markets in the Mid- and South Atlantic regions. 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.

Climate and Green Energy

Washington State Regulator Adopts Requirements for Community Solar Companies to Ensure Customer Protection

The Washington Utilities and Transportation Commission established requirements governing the services of community solar companies – entities other than electric utilities – based on guidelines for other regulated industries, according to the agency’s Oct. 2 press release. The rules create consumer protection measures including written permission to release private consumer information, escrow accounts to refund deposits with interest when subscriptions end, annual meter checks to report accuracy, and procedures to handle complaints. Door-to-door salespersons must undergo criminal background checks and carry proper identification cards. The regulations stem from legislation enacted last year that directed the commission to adopt rules for companies owning up to one megawatt of solar projects and serving more than one paying customer.

Michigan Regulator Clears Consumer Energy’s Green Pricing Programs for Voluntary Renewable Electricity Purchases

The Michigan Public Service Commission on Oct. 5 approved Consumers Energy Company’s voluntary green pricing programs that allow customers to meet a portion of their electricity needs from renewable energy resources. The programs stem from legislation enacted in 2016 that requires all electric utilities, including regulated, municipally owned, cooperatives, and alternative suppliers, to give customers the opportunity to buy renewable power. The company will provide two programs – Solar Gardens that will get power from a four-megawatt community project for residential and commercial customers and Large Customer Renewable Energy Program that will provide 155,000 megawatt hours for customer usage. The commission turned down DTE Electric Company’s program citing the need for further review of costs and the lack of options for larger customers. Consumers Energy is a subsidiary of CMS Energy Corp. DTE Electric is a subsidiary of DTE Energy Company.

DOE Approves Nation's First Freshwater Offshore Wind Farm in Ohio, Proposes Funding

The U.S. Department of Energy published a final environmental assessment on Oct. 2 for Lake Erie Energy Development Corporation’s project Icebreaker, a freshwater offshore wind demonstration project located in Lake Erie, near Cleveland, Ohio. The 20.7-megawatt project is being developed by Fred. Olsen Renewables, a Norwegian company, and the nonprofit Lake Erie Energy Development Corporation in cooperation with the U.S. Army Corps of Engineers and the U.S. Coast Guard. The DOE concluded that a broader environmental study is not necessary

Potomac Electric Power Unveils $15 Million Electric Vehicle Program for DC Customers

The Potomac Electric Power Company proposed a transportation electrification program consisting of 13 offerings estimated to cost about $15.2 million, with projected ratepayer costs of about $9.9 million after accounting for participant contributions, revenues from public chargers, and funds from the ”MEDSIS” initiative that aims to modernize the energy delivery system, according to an Oct. 5 notice from the District of Columbia Public Service Commission. The program, which supports the district’s goal of becoming carbon neutral by 2050, provides several business models and allows for different levels of cost sharing between ratepayers, electric vehicle owners, and charging station owners. The company plans to seek cost recovery in its next rate case and estimates a residential bill impact of 14 cents per month. Potomac Electric Power is a subsidiary of Pepco Holdings LLC.

Invenergy Renewables Wins FERC Approval to Sell 160-Megawatt Wind Farm in Michigan

The Federal Energy Regulatory Commission on Oct. 5 authorized Pine River Wind Energy LLC, a subsidiary of Invenergy Renewables LLC, to sell its 161-megawatt wind generation project to DTE Electric Company. The wind facility, which is under construction, will be interconnected to the transmission system controlled by the Midcontinent Independent System Operator Inc.’s market. DTE Electric, which engages in wholesale sales of energy and capacity at market-based rates, owns about 12,618 megawatts of generating capacity in the Midwest power market and also buys about 543 megawatts from several generation facilities under long-term contracts. DTE Electric is a subsidiary of DTE Energy Company. Invenergy Renewables is a partially owned subsidiary of Invenergy Investment Company LLC. They own or control about 590 megawatts of generation in the Midwest market.

Rates and Power Markets

CenterPoint Energy, Vectren Merger Gets FERC Approval

The Federal Energy Regulatory Commission on Oct. 5 authorized CenterPoint Energy Inc. to acquire Vectren Corporation. Indiana-based Vectren’s subsidiaries provide electricity and gas services across Indiana and Ohio. The combined company is expected to have electric and natural gas delivery operations in eight states with assets totaling $29 billion and an enterprise value of $27 billion, according to the applicants. Texas-based CenterPoint serves customers in Arkansas, Louisiana, Minnesota, Mississippi, Oklahoma, and Texas. The companies have filed informational proceedings with Indiana and Ohio although the states do not have approval authority over the merger. The Indiana Utility Regulatory Commission has scheduled a hearing on Oct. 17 to examine the voluntarily-filed information. The transaction is expected to close in the first quarter of 2019.

Ohio Regulator Slashes AEP’s Rates by $607 Million to Reflect Federal Tax Cut Savings

The Public Utilities Commission of Ohio approved a settlement that will lower residential bills for American Electric Power Company Inc.’s customers by $3.65 per month as a result of reconciling rates to pass on savings from the federal tax law that slashed the federal income tax rate to 21 percent from 35 percent, according to the agency’s Oct. 3 press release. The company will return normalized accumulated deferred income tax balance of about $278 million over 25 years and non-normalized excess deferred income tax of about $177.6 million over six years. Customers will receive $20.4 million in annual credits until new rates take effect after a rate case scheduled for filing in June 2020. The agency has also authorized $66 million in rate cuts through several riders.

Michigan Regulator Lifts Suspension on Consumers Energy’s Avoided Costs Paid to Small Renewable Power Producers

The Michigan Public Service Commission on Oct. 5 ruled that avoided costs set for Consumers Energy Co. last November can take effect, dismissing contentions that the utility has no capacity need for the next 10 years. The commission ruled that the integrated resource plan will be used to determine annual capacity requirements and that capacity prices will be reset only after reviewing changes to the utility’s 10-year forecast. Last year, the commission established an avoided capacity cost of $117,203 per megawatt year or $140,505 per zonal resource credit year in its first update to the avoided cost terms in almost 30 years, but suspended implementation after the utility sought to freeze its purchase obligations because it didn’t project a shortfall of supplies for the next decade. The avoided cost is what a utility would pay for energy and capacity to a qualified facility instead of generating that energy and capacity itself. Public Utility Regulatory Policies Act gives states the authority to set how much a utility is obligated to pay the owners of a cogeneration or small renewable energy generating facility for the electricity that it produces. Consumers Energy Co. is a subsidiary of CMS Energy Corp.

Avista’s Cost Adjustments Slash Electric Rates by 5.5 Percent for Idaho Customers

The Idaho Public Utilities Commission approved changes to Avista Corporation’s annual rate adjustments that will lower residential electric bills by $4.85 per month, according to the agency’s Oct. 2 press release. The fixed cost adjustment, a mechanism that allows customers to receive a rebate when the utility’s revenue surpasses costs and incur a surcharge when expenses are higher, accounts for $4.16 of the decrease. The company said that the fixed cost change is due largely to higher energy use last year. The power cost adjustment, which reflects differences between costs included in customer rates and actual costs incurred to procure power for customers, contributed to the rate cut due to low power prices in the wholesale market. The third adjustment is a result of a credit provided to customers to share the benefits of the Columbia River hydropower system.

Maine Regulator Launches Probe to Ascertain Federal Tax Cut Impacts on Emera’s Revenue Requirements

The Maine Public Utilities Commission opened an investigation on Oct. 3 to determine the impact of certain aspects of the federal tax law on Emera Maine’s revenue requirements including excess deferred income taxes, savings associated with the time period from Jan. 1 to June. 30, and whether these savings can be used to offset storm restoration costs. The investigation will also consider the recovery of the company’s vegetation management deferral. In June, the commission authorized a rate increase of about $4.45 million as of July 1, down from the company’s request of about 10 million to reflect the tax reforms that slashed the federal corporate income tax rate to 21 percent from 35 percent. Emera Maine is a subsidiary of Emera Inc.

Modernizing the Grid

New York Governor Announces $173 Million to Modernize Ageing State Power Grid, Improve Resilience

Governor Andrew Cuomo, a Democrat, announced on Oct. 5 that two new initiatives, funded by the New York Power Authority at a total of $173 million, will help the New York Power Authority collect data more quickly and accurately through the installation of advanced sensors at facilities across the state, enabling the public power organization to have near real-time information enabling a faster response time to outages and other power grid issues. The Authority’s Sensor Deployment Program and Communications Backbone Program will support New York’s Reforming the Energy Vision strategy for creating a more resilient energy system.

U.S. Energy Department Awards $28 Million to Enhance Energy Infrastructure Cybersecurity

The U.S. Energy Department announced the funding to support research partnerships that will facilitate next-generation technologies to advance cybersecurity and resilience of the electric grid and oil and natural gas infrastructure, according to an Oct. 1 press release. The projects will take innovative approaches such as redesigning existing architecture that makes the grid vulnerable to cyber threats to ensure that delivery systems are equipped to detect attacks and adapt to survive. Awarded projects will pursue cybersecurity activities in coordination with the department’s offices, federal agencies, energy operators, and private sector stakeholders. The department said that the Cybersecurity for Energy Delivery Systems division has developed 35 technologies to date in collaboration with industry, cybersecurity vendors, academia, and national labs.

Fuels and Pipelines

California Strengthens Transportation Fuel Standard Amid Trump Administration's Rollback

The California Air Resources Board extended its low-carbon fuel standard, mandating a 20 percent cut in the carbon intensity of transportation fuels by 2030, compared with the current requirement of 10 percent by 2020, according to the agency’s Sept. 27 press release. The requirement, “the most stringent in the nation,” aligns with the state’s 2030 goal of lowering emissions by 40 percent relative to 1990 levels, the agency said. The standard, adopted in 2009, aims to foster low-carbon transportation fuels such as hydrogen, electricity, and biodiesel. Under the program, producers of cleaner fuels generate tradable credits that can be sold to other fuel producers to meet the declining carbon-reduction targets. The revisions will allow proceeds from utility credits – based on charging of zero emission vehicles – to be used to increase rebates to drivers who buy electric vehicles. By restructuring utility rebate programs into a single pool, the revisions facilitate uniformity in application and processing across all utilities. The changes follow the Trump administration’s proposal in August to withdraw a 2013 waiver that permits California to impose more stringent emissions standards.

U.S. LNG Exports Rose by 58 Percent in First Half of 2018 as Export Facilities Expand: EIA

U.S. net natural gas exports averaged 0.87 billion cubic feet per day during the first six months of this year, more than double the amount during all of 2017, which marked the first time the U.S. became a net exporter in almost 60 years, according to an Oct. 1 report from the U.S. Energy Information Administration. Exports surpassed imports during the first half of the year, except January when prolonged low temperatures led to record gas demand. The agency attributed the trend to the addition of new liquefied natural gas facilities, with LNG exports rising by 58 percent during the first half of 2018 compared to the same period last year. The Sabine Pass LNG facility in Louisiana has an export capacity of 2.8 billion cubic feet per day, with a fourth train completed recently, while the Cove Point LNG in Maryland with an export capacity of 0.8 billion cubic feet per day began full commercial service in April. Four more LNG facilities are expected to come online by the end of 2019, boosting the export capacity to 9.6 billion cubic feet per day. The agency expects net exports to continue rising through the year end as LNG export capacity increases and Mexico puts more gas infrastructure into service.

U.S. Uranium Production Hits Historic Lows as Nuclear Plants Retire: EIA

Uranium purchases by U.S. commercial nuclear power plants totaled 43 million pounds of triuranium octoxide last year, 15 percent lower than 2016 and the lowest since 1998, according to an Oct. 3 report from the U.S. Energy Information Administration. Triuranium octoxide, called yellow cake, represents the first step in nuclear fuel production. The agency attributed the change to increasing nuclear plant retirements and rising inventories held by operators, although purchases tend to vary from year to year. Canada, Australia, Russia, Kazakhstan, and Uzbekistan accounted for 84 percent of uranium purchases last year, while the U.S. supplied seven percent. During the first half of this year, uranium concentrate production totaled 592,000 pounds, almost half the production over the same period in 2017. This year’s production is expected to see the lowest levels since the upward trend in the early 1950s. The closure of New Jersey’s Oyster Creek in September marks the sixth reactor to retire in five years, and 12 more have announced planned retirements in the next seven years. Plant operators in competitive markets have cut back purchase plans in anticipation of retirements, the agency said.