Stop searching and start discovering with the EnerKnol Pulse, the newsletter highlighting major actions from the North American energy sector. In this edition, federal regulators give the go-ahead for the $14.6 billion Dominion-SCANA merger, New York advances its 2.4-gigawatt offshore wind program and Pennsylvania sets its sights on adding 11 gigawatts of solar by 2030. Make us even better with your feedback at research@enerknol.com

July 16, 2018


Featured Topics

Greening Energy Mix

Electric Vehicles and the Grid

Rates and Power Markets

Nuclear Redevelopment

Fuels and Pipelines


Featured Entities

AEP

Apex Clean Energy

Central Hudson Cloverland Electric

ConEdison

Dominion

Duke

Empire District

Entergy

FirstEnergy

HECO Companies

Independent Power Producers of New York

Kansas City Power and Light

Kansas Gas and Electric

National Grid

New York State Electric & Gas Corporation

Orange and Rockland Utilities

Pepco

Potomac Edison

SCANA

Sunflower Electric Power

WestarXcel

Top News

Dominion, SCANA Win U.S. Approval For $14.6 Billion Merger, Leaving Fate of Deal to States

The Federal Energy Regulatory Commission on July 12 authorized Dominion Energy Inc. to acquire SCANA Corporation in a $7.9-billion all-stock merger and the assumption of SCANA’s debt, valued at $14.6 billion. The companies announced the transaction in January after SCANA subsidiary South Carolina Electric & Gas Co. decided last July to abandon a $9-billion expansion of the V.C. Summer nuclear plant. The deal, which hinges on continuing cost recovery of the aborted project, faces headwinds in South Carolina after lawmakers passed legislation last month to temporarily lower electric rates tied to the failed reactor build out. SCANA filed a lawsuit challenging the bill. The merger application cleared Georgia regulators in March and still needs approval from U.S. Nuclear Regulatory Commission and the South Carolina and North Carolina utility commissions.

New York Launches Phase One Offshore Wind Solicitation to Achieve 2.4-Gigawatt Goal

The New York State Public Service Commission on July 12 established a mechanism to subsidize offshore wind energy projects to support the Clean Energy Standard, which requires half of the state’s electricity to come from renewable energy by 2030. The state will procure the 2.4 gigawatt capacity in two phases, holding initial solicitations in 2018 and 2019 to procure offshore wind credits associated with about 800 megawatts of capacity. Utilities and competitive suppliers must obtain credits equivalent to their share of the load. Distribution companies Central Hudson Gas and Electric Corporation, Consolidated Edison Company of New York Inc., Orange and Rockland Utilities Inc., National Grid, New York State Electric & Gas Corporation, and Rochester Gas and Electric Corporation are authorized to recover the associated costs. They must file tariffs designed to implement the program to be effective September 28.

Pennsylvania Issues Draft Plan for State to Source 10 Percent of Electricity From Solar by 2030

The Pennsylvania Department of Environmental Protection on July 10 issued a draft plan to advance in-state solar development, with a goal for the renewable power source to supply 10 percent of the state’s electricity by 2030. The state would have to install about 11 gigawatts of solar capacity to reach the target, up from the current level of 300 megawatts. The plan seeks to raise the solar requirement under the state’s alternative portfolio standard for 2030 by 4 percent to 8 percent. It calls for strategies to facilitate customer access to capital, including loan guarantees, carbon pricing, uniform siting policies, and tax exemptions that favor solar deployment. Comments on the draft are due by Aug. 20, and the final plan will be released in December.

Greening Energy Mix

South Dakota Regulator Approves Apex Clean Energy's $380-Million Dakota Range Wind Project

The South Dakota Public Utilities Commission approved a permit allowing Apex Clean Energy Inc. to build the 302-megawatt Dakota Range Wind Project, including conditions to address landowner protections, according to the commission’s July 11 press release. The project will be developed on 44,500-acres in Grant and Codington counties and is expected to be complete in 2021. In September 2017, Apex announced the sale of the Dakota Range I & II projects to Xcel Energy Inc. Apex Clean Energy is a subsidiary of Apex Clean Energy Holdings LLC.

California Regulator to Revisit 40-Year-Old Law Setting Payouts For Renewable Producers

The California Public Utilities Commission is weighing updates to the rules governing the power purchase contracts utilities must enter into with small producers under the Public Utility Regulatory Policies Act of 1978, or PURPA, to reflect market changes, according to a July 11 proposed decision. The commission intends to adopt a new standard offer contract for facilities that are 20 megawatts or less to sell electricity to utilities, as well as a price payable at the time of delivery if a facility chooses to sell as-available energy. Under PURPA, independent generators that meet certain criteria based on size and technology or efficiency are entitled to sell their output to regulated utilities at the avoided cost, or the cost the utility would spend to generate the electricity or purchase from another source. The rule enabled the first renewable investments in California and has resulted in over 4,000 megawatts of qualifying facilities in the state.

Duke Energy Seeks 680 Megawatts of Renewables in the Carolinas

Duke Energy announced it will solicit bids for renewable projects totaling 680 megawatts capacity under a new competitive solicitation program in North and South Carolina, according to a July 10 press release. Bids for the projects are due Sept. 11 and can be in the form of solar contracts, utility-developed facilities, or asset acquisitions, with facilities being placed in service before Jan. 1, 2021. The company also unveiled a five-year, $62 million solar rebate program for North Carolina customers expected to more than double the number of private customers in the state over the rebate period.

Virginia Attorney General Office Cautions About Conflicting Provisions in Dominion’s Community Solar Proposal

Virginia’s Office of Attorney General, in a July 10 filing with the Virginia State Corporation Commission, said that customers enrolling in Virginia Electric and Power Company’s proposed community pilot solar program would be paying a premium rate over standard customers and should be protected from any statutory framework that could be considered unfair as a result of the conflicting provisions in the proposal. Dominion established the pilot following 2017 legislation that directed investor-owned utilities to design such a program with voluntary subscriptions. The company proposed a voluntary companion tariff that would allow customers to purchase solar from participating facilities in blocks of 100 kilowatt-hours with an initial subscription period of one year. While the law limits participation to 40 megawatts, Dominion has said that it may seek future approval to expand or alter the program and incorporate additional facilities to meet increased customer interest. The office said that voluntary customers should continue to have access to a principal tariff if the program concludes, reaching a point where there are no participating generating facilities to serve the subscribers. Virginia Electric and Power is a subsidiary of Dominion Energy Inc.

Hawaiian Utilities Unveil New Grid Planning Approach to Accelerate Progress Towards Clean Energy Future

Hawaiian Electric Company Inc., Hawaii Electric Light Company Inc., and Maui Electric Company Limited filed an integrated grid planning report that takes a new approach to advance the island’s clean energy goals, according to the Hawaii Public Utilities Commission’s July 12 press release. The report proposes to combine “historically separate planning processes” for generation, transmission, and distribution while integrating competitive procurement. The plan intends to determine grid needs and develop an efficient and cost-effective portfolio of solutions. Integrating the planning process is expected to facilitate diverse distributed and grid-scale resources to provide generation and ancillary services, resulting in customer savings. The companies propose a two-year planning cycle starting 2019 to finalize the first integrated plan by 2020. Comments on the proposal are due by September 14.

Kansas Electric Utilities on Track to Reach 2020 Renewable Goal: Commission Report

Kansas electric utilities have enough capacity to meet the goal of 20 percent renewables by 2020 under the state’s voluntary renewable energy program, according to a July 11 report from the Kansas Corporation Commission staff. The staff said that compliance filings show that reporting utilities have surplus renewable energy credits to meet the 2020 goal ahead of schedule but decided not to apply them to the goal last year. The Empire District Electric Company was the only utility to allocate the 20 percent capacity equivalent toward the 2017 goal. Other utilities that submitted compliance filings are Westar Energy Inc., Kansas Gas and Electric Company, Kansas City Power and Light Company, and Sunflower Electric Power Corporation. Legislation enacted in 2015 replaced the state’s mandatory renewable energy standards with a voluntary goal. Utilities are required to file annual reports if they seek to recover costs incurred for the previous mandatory obligation or as a result of attaining the voluntary goal.

Electric Vehicles and the Grid

Pepco Seeks to Advance $850-Million Grid Modernization Plan For Nation's Capital

Potomac Electric Power Company filed a “notice of construction” asking the Public Service Commission of the District of Columbia to approve its proposed Capital Grid Project, a long-term grid modernization plan scheduled to run from February 2019 through June 2026, according to the commission’s July 6 notice. The plan would address distribution system needs including aging infrastructure and demand growth. The project is also designed to harden the system against storm impacts, enable the deployment of zero-carbon technologies, and accommodate the growing penetration of distributed energy generation. Comments and reply comments are due within 90 days and 120 days, respectively. Pepco is a unit of Exelon Corp.

Vermont Regulator Launches Proceeding to Promote Electric Vehicle Adoption, Reduce Emissions

The Vermont Public Utility Commission on July 9 opened an investigation to evaluate electric vehicle charging issues in the state following legislation enacted in May that directed the commission to conduct a study and file a report by July 1, 2019. The proceeding seeks to analyze the role of electric utilities in addressing barriers to electric vehicle charging, such as using time-of-use rates to prevent shifting costs to ratepayers who don’t operate electric vehicles. The commission is also exploring how utilities can deploy and operate charging stations, reap the benefits of charging infrastructure to the transmission and distribution system, include charging in their planning processes, and develop rate designs. The proceeding will also examine issues related to charging stations owned or operated by individuals or entities other than distribution utilities. Decarbonizing the transportation sector, which accounts for 47 percent of Vermont’s emissions, is key to achieve the state’s goal of reducing emissions by 50 percent by January 1, 2028. Currently, only 5 percent of energy consumed in the state’s transportation sector is from renewables resources.

New York Announces First Electric Vehicle Model County Under Pilot Program to Build EV Ecosystems

The New York State Energy Research and Development Authority announced that Tompkins County installed 11 electric vehicle charging stations under a pilot program launched in 2017 to help municipalities become models for electric vehicle use, according to a July 9 press release. In the next phase of the pilot, the county will engage in local partnerships to increase awareness about electric vehicles and discussions to advance favorable policies. The pilot is part of the state’s clean transportation strategy to cut emissions and supports the Charge NY 2.0 initiative that seeks to install 10,000 charging stations by 2021. Electric vehicles play a vital role in reaching the state’s goal of reducing emissions 40 percent by 2030 as the transportation sector is among the largest contributors to the state’s emissions.

Rates and Power Markets

FERC Denies Cloverland’s Request For Relief From Power Purchase Rule Due to Lack of Market Membership

The Federal Energy Regulatory Commission, in a July 9 order, ruled that Cloverland Electric Cooperative cannot be exempted from mandatory purchase obligations under the Public Utility Regulatory Policies Act because it is not a member of a regional transmission organization or independent system operator as required under commission regulations. In April, the utility asked the commission to cancel its requirement to enter into new contracts to purchase energy and capacity from independent power producers that have a net capacity greater than 20 megawatts under commission rules that allow relief if sellers have nondiscriminatory access to wholesale markets. The utility argued that it purchases transmission service from American Transmission Company LLC, which is a member of the Midcontinent Independent System Operator Inc., and hence qualifying facilities in Cloverland’s territory have non-discriminatory access to the Midwest power market. But, the commission said that only members of the regional market are entitled to the exemption. Cloverland Electric is a Michigan nonprofit cooperative corporation that provides retail service.

FirstEnergy Seeks FERC Approval to Sell Power to Affiliate After Winning Bids to Supply Maryland Customers

FirstEnergy Solutions Corp. on July 11 asked the Federal Energy Regulatory Commission to authorize a transaction to sell electricity to its affiliate Potomac Edison Company to serve customers in Potomac Edison’s Maryland service territory. Last month, FirstEnergy Solutions won bids in a competitive solicitation held by Potomac Edison to procure supplies for its standard service customers. The solicitation stems from Maryland law that opened retail electric competition in 2000, but required utilities to offer standard services to customers that don’t choose a competitive supplier, obtaining supplies through competitive bids. The state allows Potomac Edison’s affiliates to participate in the solicitation and selects winners on the basis of price rather than affiliation with a utility. FirstEnergy Solutions and Potomac Edison are subsidiaries of FirstEnergy Corp.

AES Objects to Host Customers Bearing Risks When Distribution Companies Bid Net Metered Facilities Into Capacity Markets

AES Distributed Energy Inc. said that if electric distribution companies assert titles to net metering facilities and bid them into the capacity market, then it would be unfair to require host customers to share the costs of performance penalties as it would create a barrier for development by increasing costs, according to a July 9 filing with the Massachusetts Department of Public Utilities. The department is examining the application of net metering rules related to the participation of certain facilities in the New England grid operator’s forward capacity market. AES said that if the distribution company is the entity that decides to participate in the market, it should bear the benefits and risks. AES Distributed Energy is a subsidiary of AES Corporation.

Power Producers, Consumers Urge New York Regulator to Prevent Double Payments From Carbon Pricing Regime

Independent Power Producers of New York Inc. along with a coalition of 60 large industrial, commercial and institutional energy consumers asked the Public Service Commission to take speedy action to protect consumers from having to pay twice for the zero-carbon attributes of renewable generation if carbon pricing is incorporated into the wholesale energy markets, according to a July 9 petition. Petitioners argue that a carbon pricing regime has the potential to create double payments for suppliers whose non-emitting attributes are already compensated under the Clean Energy Standard and value stack tariff. Consumers bear the costs of renewable energy credits that utilities must procure under the Clean Energy Standard, as well as the environmental value component of the value stack structure. The state is also considering a new offshore wind program that would implement offshore wind credits. While the purpose of incorporating a carbon price is to address artificial price suppression resulting from resources that are receiving out-of-market payments, double payment would aggravate the harm, according to the petition.

Nuclear Redevelopment

New York Explores Opportunities for Redevelopment After Indian Point Reactor Closure: Report

The New York State Indian Point Closure Task Force on July 9 released the first of six annual reports to be issued through 2023 to assess the next steps as Entergy Corporation prepares to close the Indian Point nuclear power plant. The report documents progress in the areas of local taxes, employment, and energy reliability in transitioning to a future without the plant and also identifies opportunities for redevelopment post decommissioning. The task force said that the state expanded the “electric generation facility cessation” program to ensure funding assistance to affected taxing jurisdictions and enacted law creating a reserve fund for the Hendrick Hudson School District to smooth out revenue reductions. The report includes a reuse study that identifies land that could be considered for redevelopment in the near future alongside the decommissioning process. Last January, Entergy entered into an agreement with the state to close the Indian Point Unit 2 in April 2020 and Unit 3 in April 2021, 14 years earlier than anticipated under federal re-licensing terms, due to safety concerns. The New York grid operator found that the deactivation in 2021 would not impact reliability.

U.S. Energy Department Awards $20 Million For Second Group of Projects Under Advanced Nuclear Program

The U.S. Energy Department on July 10 announced the selection of nine projects for cost-shared research and development of innovative nuclear technologies. The projects make the second batch of recipients under the department’s advanced nuclear technology funding opportunity. The first batch selected in April received $64 million. Quarterly selection processes will occur over the next five years and the department plans to provide about $30 million of additional fiscal year 2018 funding for innovative proposals in the next quarterly cycle. The department also selected two companies for cost-shared technical voucher awards under the Gateway for Accelerated Innovation in Nuclear or GAIN initiative, which seeks to enable the industrial community to commercialize new or advanced nuclear technologies. The department said that the awards will emphasize advanced reactor design for existing projects facing technical and licensing risks, improve commercialization potential of advanced designs, and resolve regulatory issues to obtain licensing for the designs.

Fuels and Pipelines

U.S. Natural Gas Power Generation Poised to Approach Record High This Summer as Capacity Additions Surge: EIA

Natural gas is expected to account for 37 percent of U.S. electricity generation this summer — June through August – close to the record-high share reached in the summer of 2016, according to a July 11 report from the U.S. Energy Information Administration. The agency said that 5.4 gigawatts of new natural gas-fired generating capacity were added from January through March and an additional 15 gigawatts are scheduled to come online this year, marking the largest increase since 2004. Coal continues to decline with over 10 gigawatts of coal-fired capacity retired over the 12-month period ending April 2018. The Midwest census region’s gas-power generation is expected to reach 20 percent this summer, up from 15 percent last summer. However, renewables have a bigger role in the West census region where generation from non-hydro renewables is projected to reach 16 percent, up from 14 percent last summer. The share of natural gas in U.S. electricity generation has been on the rise for over a decade due to low gas prices, increases in gas-fired capacity, and coal plant retirements.

Con Edison Wins New York Approval For Natural Gas Efficiency Program to Mitigate Peak Day Demand

The New York State Public Service Commission on July 12 approved Consolidated Edison Company of New York Inc.’s natural gas efficiency program as part of the utility’s Smart Solutions strategy that aims to reduce gas usage and procure alternative resources to address a projected growing shortfall of peak gas day pipeline capacity. The “Enhanced Gas EE” program is expected to double the company’s energy efficiency goals for the three years starting 2018, alleviating peak day demand while contributing to the state’s climate goals. The utility said that weather-adjusted peak day demand in its service area grew by more than 30 percent over the six-year period starting 2011, and is expected to grow by another 20 percent over the next 20 years. The commission said that the approval begins a comprehensive approach to explore alternatives to the traditional business model to meet customer needs. The utility is a subsidiary of Consolidated Edison Inc.

China Becomes Key Destination For U.S. Energy Exports Due to Declining Production, Inventory Stockpiling: EIA

China, the world’s largest net importer of petroleum and liquid fuels since 2013, is becoming a chief destination for U.S. exports of crude oil, propane, and liquefied natural gas, according to a July 10 report from the U.S. Energy Information Administration. Last year, China surpassed the U.S. as the world’s largest gross crude oil importer, and became the second largest destination for U.S. crude oil exports, next only to Canada. Over half of U.S. propane exports went to Asian countries for chemical and plastic manufacturing, with China being the third largest destination, behind Japan and Mexico. China was also the third largest importer of U.S. LNG behind Mexico and South Korea. About three percent of U.S. coal exports went to China last year to supply steel production. The country also receives other petroleum products like coke and butane from the U.S. The agency attributed the increase in China’s imports to declining domestic production, combined with stockpiling inventories of strategic petroleum reserves, and recent refining sector reforms that eased restrictions on imports.

Florida Regulator Allows Cost Recovery For Duke Energy’s 1,640-Megawatt Natural Gas Power Plant

The Florida Public Service Commission approved an estimated revenue requirement of $200 million for Duke Energy Florida LLC’s 1,640-megawatt Citrus County natural gas power plant, according to the commission’s July 10 news release. The plant will be placed in service in two phases in October and December. Once the gas plant starts operations, Duke said it will close its Crystal River coal-fired units 1 and 2, which constitute half of the company’s coal fleet in Florida. The approval will result in a combined rate increase of $5.84 in monthly residential electricity bills. Duke Energy Florida is a subsidiary of Duke Energy.