FERC Chairman Cheryl LaFleur says the commission is seeking a way for it to help ensure reliability is not threatened by EPA’s carbon plan. “You get on thin jurisdictional ice pretty fast,” she said.
WASHINGTON — Members of the Federal Energy Regulatory Commission said last week they are trying to craft the commission’s role in administering a “safety valve” to ensure reliability is not threatened by the Environmental Protection Agency’s proposed carbon emission rule.
Speaking at the third of four FERC technical conferences on the EPA Clean Power Plan, Commissioner Philip Moeller said he hopes the commission will reach consensus on a “very specific” safety valve proposal to the agency.
Janet McCabe, EPA’s acting Assistant Administrator for the Office of Air and Radiation, repeated her promise — also made at FERC’s first conference Feb. 19 — that the agency’s final regulations this summer will be responsive to criticism of its initial proposal. (See EPA on Carbon Rule: We’re Listening.)
Responding to Moeller, McCabe said that although she couldn’t yet provide specifics on a safety valve, she expected “that we will be able to have a conversation as the rule moves closer to final on how to handle that both within the rule and … as we look at implementation expectations.”
FERC Chairman Cheryl LaFleur said the commission could work with RTOs and the North American Electric Reliability Corp. to “develop a record” on the reliability impact of shuttering individual power plants and the time needed to construct pipelines or transmission.
But she said she had misgivings about the commission having a formal adjudicatory role in disputes between state officials seeking deadline extensions and environmental groups pushing them to do more. “I don’t see us comfortably looking at, ‘How good is your rooftop solar program? Have you really maximized [it]? What are you doing with energy efficiency?’” she said. “… You get on thin jurisdictional ice pretty fast.
“I think we either need to develop a list of questions we’ll answer and stick to those questions and the EPA will, I guess, weigh them, or work out an approach with others such as the states which have their fingers on other parts of it,” she added.
The ISO-RTO Council has said that EPA’s final rule must include provisions for reliability reviews to address problems that may arise during implementation.
“Because of the limited nature of the scenarios we studied — and the fact that the rule itself is not yet final, nor have state plans been developed — we are simply not in a position to make definitive conclusions as to the reliability impacts of the Clean Power Plan on the PJM footprint,” Mike Kormos, PJM executive vice president of operations, said in written testimony. “… The answer to the question, ‘is it reliable?’ is not a ‘once-and-done’ inquiry.”
Ohio Public Utilities Commissioner Asim Haque said he supports the concept of FERC, NERC or RTOs performing a “reliability check” on state implementation plans. But he said the third-party review must be one of “mediation” rather than mandatory.
“If the states cannot [resolve the reliability concerns], then in my mind the [emission] rates need to be adjusted … so that the reliability concern is allayed,” he said.
Gov. Terry Branstad last week shook up the Iowa Utilities Board, demoting Chairman Elizabeth “Libby” Jacobs and removing board member Sheila Tipton.
The unexplained move came after officials of MidAmerican Energy met with the governor to complain about the board’s February ruling requiring the company to refund $2 million annually to consumers over a wind project.
Branstad appointed Iowa Finance Authority official Geri Huser to replace Jacobs, whose term as chair was set to expire next month.
Jacobs, appointed by Branstad in 2011, declined to comment on the reason for the governor’s actions, but she told RTO Insider she plans to complete her term on the three-member board, which runs through April 2017.
“I’ll continue as [Organization of MISO States] president through Dec. 31, 2015, and I’ll also continue to serve [the National Association of Regulatory Utility Commissioners] as the co-vice chair of the Electricity Committee and as a member of the Task Force on Environmental Regulation and Generation,” she said.
Tipton was appointed by Branstad in 2013 to fill an unexpired term ending next month.
In February, the board ordered MidAmerican Energy to return $2 million annually to customers following a review of a $280 million wind turbine project that had been publicly praised by Branstad.
The board said the rewards of the project were “skewed too much towards MidAmerican” without the extra payment. The order modified a settlement that MidAmerican had negotiated with the Office of Consumer Advocate.
MidAmerican has confirmed that it met with Branstad to complain about the board’s decision but insisted it did not press the governor for personnel changes.
Branstad’s spokesman, Jimmy Centers, declined to discuss the speculation. He said Huser, a former state legislator, was chosen by the governor “because he’s been impressed with her career in public service.”
Clearing prices for the latest Regional Greenhouse Gas Initiative CO2 allowances auction rose 4%, continuing a recent upward trend while the number of bidders declined.
The 27th auction, held on Wednesday, showed a clearing price of $5.41/ton for the 15.3 million in allowances offered and sold. The auction netted more than $82 million, putting the total proceeds over the $2 billion mark for the nation’s first cap-and-trade program, which has held quarterly auctions since late 2008.
Bids for the CO2 allowances ranged from $2.05 to $12.50 per allowance. The ratio of bids to initial supply was 2.8, up from 2.5 in the December 2014 auction.
The auction proceeds will fund various programs, including energy efficiency, renewable energy, direct bill assistance and greenhouse gas abatement in the nine Northeastern and Mid-Atlantic states participating.
All of the allowances were purchased by compliance entities — electric generators of 25 MW or larger — and their corporate affiliates. Compliance entities and affiliates have purchased 78% of allowances over the history of the auctions.
Auction 26, which offered 18.2 million allowances, cleared at $5.21/ton, generating $95 million.
The 2015 RGGI cap is 88.7 million tons. The RGGI cap declines by 2.5% annually until 2020.
A regulated power plant must hold CO2 allowances equal to its emissions for each three-year control period. RGGI’s third control period began on Jan. 1, 2015, and extends through Dec. 31, 2017.
FERC accused Maxim Power of overcharging ISO-NE for power from its Pittsfield, Mass., generator in 2010.
Maxim Power says market manipulation allegations by the Federal Energy Regulatory Commission are an attempt to gain leverage for a settlement of charges from subsequent, unrelated cases.
In a 57-page response to FERC’s Order to Show Cause, the Canadian-based generation owner said allegations that it overcharged ISO-NE in 2010 were revived only after later disputes were unresolved (IN15-4).
FERC issued the order last month, accusing the company of billing the RTO for more expensive oil at its 181-MW plant in Pittsfield, Mass., while actually burning cheaper natural gas. The order, on which Commissioner Tony Clark dissented, seeks a $5 million fine. (See FERC Seeks $5M from Maxim Power; Clark Dissents.)
The company said it offered its Pittsfield plant into the day-ahead market on oil due to pipeline restrictions that indicated it would not be able to obtain enough gas if ISO-NE ordered it to run for 24 hours.
When asked by ISO-NE’s Internal Market Monitor, Maxim said it later acknowledged having burned gas. It said the IMM recovered $3 million over the incident but declined to forward the case to FERC for investigation though it was “certainly cognizant of its Tariff obligation to refer manipulative conduct to [Office of Enforcement] staff.”
“This was no fraud, but … a simple hedge against the possible financial exposure associated with a receipt of a day-ahead award,” Maxim said.
In 2013, however, Maxim said FERC Enforcement staff began an unrelated investigation. “In what certainly looks like an effort to gain leverage in that investigation, OE staff decided to resurrect the 2010 fuel-burn issue,” the company wrote. “Then, in late 2014, when Maxim declined to enter into a tolling agreement, OE staff decided to pursue the 2010 issue separately and on a fast track.”
These are apparent references to allegations contained in the Office of Enforcement’s Notice of Alleged Violations issued in November, which accused Maxim of collecting “millions of dollars of inflated make-whole payments” from ISO-NE between 2012 and 2013 by gaming market mitigation rules for generators needed for reliability. The notice did not elaborate on how this was allegedly done.
The November notice also alleged that Maxim collected inflated capacity payments between 2010 and 2013 by using “extraordinary measures” to boost the output of its three New England plants during testing.
February’s Order to Show Cause did not mention either of these allegations.
Maxim called on the commission to terminate the case, saying that if it proceeds, “OE staff will have to present its case before a neutral federal district court judge based on a novel theory, old incomplete facts and an alleged ‘omission’ that allegedly left the wrong ‘impression’ even though Maxim had no duty to disclose what was allegedly omitted and did not hesitate to provide such information when asked! And it will have to explain why the mitigation imposed over four years ago was insufficient.”
In addition to the Pittsfield plant, Maxim operates two other plants in ISO-NE: CDECCA, a 62-MW cogeneration plant in Hartford, Conn., and Pawtucket Power, a 63.5-MW cogeneration plant in Pawtucket, R.I.
The Federal Energy Regulatory Commission should reject Public Service Electric and Gas’ claim that PJM erred in its solicitation of a stability fix for Artificial Island, the RTO said in a March 11 filing (EL15-40).
Barring that, the commission should wait to rule on the matter until PJM has chosen a bidder for the project, which it expects to do “in a matter of months,” it said.
If FERC does find merit in the complaint, PJM asked that it not adopt PSE&G’s “draconian remedy” of reposting the project, which would require the RTO to “throw out two years of PJM work.”
Artificial Island, home to the Salem and Hope Creek nuclear reactors, is the second largest nuclear complex in the country. Historically, special operating procedures have been employed to maintain stability in the area. However, according to PJM, those procedures have become increasingly difficult to implement while respecting the system’s other operational limits.
PJM issued a solicitation for a stability fix — its first competitive transmission project under FERC Order 1000 — in April 2013.
PJM staff initially selected PSE&G as the winning bidder but reopened the process after being widely criticized for its choice by losing applicants and environmentalists.
PSE&G is one of four finalists for the job, along with Transource Energy, Dominion Resources and LS Power. In January, it lodged a complaint with FERC accusing PJM of breaking its own rules in refereeing the competition by allowing contenders to modify their proposals. (See PSE&G: PJM Broke the Rules in Artificial Island Solicitation.)
In its response last week, PJM said the Artificial Island solicitation process began months before the Order 1000 procedures were finalized.
“Because the Artificial Island solicitation commenced prior to the effective date of the Operating Agreement and Tariff provisions that establish PJM’s new competitive solicitation Tariff, PJM was not bound to those provisions in conducting the solicitation,” it said.
“Instead, PJM has been conducting the Artificial Island solicitation consistently with its commission-approved transition for implementing its Order No. 1000 process.”
Even if the Order 1000 provisions were deemed to apply, PJM said, PSE&G “has not shown that PJM has acted inconsistently with its Order No. 1000 process and, similarly, has provided no basis for the drastic and self-serving remedy it seeks.”
PJM also defended its right to combine aspects of various proposals, saying that if PSE&G’s “interpretation of the Tariff were accepted, anytime that PJM cannot conclude that a picture-perfect project has been proposed that is the ‘more efficient or cost-effective’ solution, PJM must repost the violation and accept rebids or, if there is no time to repost and rebid, give a PJM-specified project to an incumbent.”
PSC Commissioner Nominated for Superior Court Judgeship
Jeffrey J. Clark, a Dover attorney and member of the Public Service Commission since 2005, has been nominated to fill a vacancy on the Superior Court, Delaware’s main civil and criminal trial court.
Gov. Jack Markell is expected to nominate a new commissioner for the five-member PSC if the Senate confirms Clark’s nomination. Clark, an Army veteran, received his bachelor’s degree from the U.S. Military Academy at West Point and his law degree from Widener University School of Law.
Cleanup Continues Following Fiery Oil Train Derailment
The U.S. Environmental Protection Agency is supervising an elaborate cleanup of wetlands after a BNSF freight train hauling 103 tanker cars carrying crude oil from North Dakota derailed March 5 near the riverfront town of Galena and burst into flames, prompting an evacuation.
Twenty-one tanker cars left the track, seven ruptured, and five caught fire. Firefighters were unable at first to put out the flames and concentrated on keeping the fire from spreading. No injuries were reported.
The site is near where the Galena River meets the Mississippi and the historic home of President Ulysses S. Grant.
The accident was the latest fiery derailment of a train hauling oil from mid-continental shale fields, which are underserved by pipelines.
IPL Seeking Charges Not Recoverable in Basic Rate Case, Customers Argue
The Indiana Office of Utility Consumer Counselor objects to an Indianapolis Power & Light proposal to add three rate adjustment mechanisms and new accounting treatment, which the consumer advocate says are outside the scope of a basic rate case IPL filed in December (44576).
IPL’s proposals include an “RTO adjustment.” IPL said it is being allocated $15.9 million in MISO-related MTEP 13 project costs through 2019. IPL also said in filings with the Indiana Utility Regulatory Commission that it expects to be allocated $91.7 million in Schedule 26A multi-value project costs in that time period. Among other mechanisms, IPL seeks to create a “major storm damage reserve” account.
But the OUCC, along with industrial and consumer ratepayer groups, told the Indiana commission that such mechanisms and accounting treatment are not changes to IPL’s “basic rates and charges” and should not be included in the rate case proceeding. IPL could be forgiven for perhaps being a little rusty — it hasn’t filed a basic rate case for 20 years, not since 1995. The utility seeks an annual increase in revenues of nearly $68 million, an overall jump of 5.6%.
IPL is in the midst of several major capital projects. It’s adding $511 million in new pollution controls at its coal-fired plants. It’s building a new, natural gas-fired generating station in Morgan County. IPL also is converting some of its coal-powered units at its Harding Street station, south of downtown Indianapolis, to natural gas.
Study Cheers Anti-Net Metering Crowd, Outrages Solar Industry Proponents
A draft economic study that questions the value of residential solar tax credits is eliciting howls of protest from the state’s solar supporters.
The report, prepared by David Dismukes, a Louisiana State University economist, concludes that the state’s 50% home-solar installation tax credit cost Louisiana $89 million more than the benefits it brought. Solar advocates say the study did not consider impacts on transmission and production costs and focused only on the tax credits.
The study was released in an email blast by a pro-utility member of the Public Service Commission, Eric Skrmetta, whose re-election was strongly opposed by solar advocates. “This study is a blatant attempt to undermine the rights of Louisiana residents and to prevent the growth of the solar industry,” said Barry Goldwater Jr., former congressman, son of the 1964 GOP presidential nominee and solar advocate.
A House committee defeated legislation Friday that would have prohibited electric utilities from removing trees on private property unless they were considered hazardous and the property owner had consented. The bill also would have required utilities to comply with the International Society of Arboriculture’s “Best Management Practices for Utility Pruning of Trees.”
After the House Economic Matters defeated the proposal, the sponsor of a similar Senate bill withdrew his version of the legislation.
The bills were filed after homeowners unsuccessfully sought an injunction last fall to bar Pepco Holdings Inc. from removing trees from their properties. Pepco has defended its tree-trimming practices as an effort to comply with the state’s 2011 electric reliability law.
Lansing Joining With Developer on 20-MW Solar Project
The Lansing Board of Water and Light quadrupled the size of a proposed solar project after reviewing proposals to build a photovoltaic system on the grounds of a former GM plant.
The utility chose Vermont-based groSolar to construct the 20-MW solar farm, which initially was envisioned as a 5-MW project. “We got a whole lot of bids, there was a lot of interest,” said George Stojic, the utility’s director. “It just made sense to scale this thing up.”
The project would be built on the former Verlinden plant in Lansing.
“We are a summer-peaking utility,” Stojic said. Solar fits into that very well for two reasons, he said: “It’s there in the summertime if we need it, and it helps offset transmission costs.”
Michigan currently has 23 MW of solar generation online, none larger than 1.5 MW.
Supreme Court Rules CapX2020 Tx Builders Must Buy Whole Farm
The builders of the CapX2020 transmission line – which would run from South Dakota to Minnesota – must buy an entire farm owned by recalcitrant landowners rather than simply acquiring an easement, according to the state Supreme Court.
The court ruled that a 1977 “Buy the Farm” law that requires utilities to offer to purchase entire farms when traversing properties for power lines applied to the Great River Energy project.
Landowners Dale and Janet Tauer balked at granting permission to build the transmission line through their property and argued that Great River should be forced to buy the entire farm.
Former Gov. Haley Barbour, now working for an economic development firm, said Mississippi Power’s costly Kemper gasification and carbon capture plant eventually will be a valuable asset to the region.
Barbour compared the project, already years behind schedule and nearly $4 billion over budget, to the Grand Gulf nuclear generating station, which he said was delivered late and over budget but has become an economic source of base load generation. “There has been a couple of billion dollars in cost overruns,” Barbour said, “but the stockholders of the Southern Co. paid every dime of that.”
The State Supreme Court recently ordered Mississippi Power, a Southern Company subsidiary, to refund more than $200 million of a rate increase related to the Kemper project because it was improperly approved by the state Public Service Commission.
Senator Writing Bill to Save Colstrip Plants from Closing
A state senator is preparing a bill that would exact a penalty from power plants near the Colstrip coal mines if they shut down, a response to legislative efforts in neighboring states to curtail the consumption of fossil fuels.
Sen. Duane Ankney, whose district borders four power plants fueled by Colstrip coal, is crafting a bill mandating the owners of a power plant that closes prematurely to pay “impact fees” for up to 20 years. “If they want to close Colstrip, then they’re going to pay,” he said. “Pay to play.”
Ankney’s proposal is a response to legislation pending in Washington state aimed at replacing fossil-fueled plants with renewable energy. Many of the Colstrip power plants are owned by utilities in the Pacific Northwest. Puget Sound Energy in Washington state denied that it planned to retire its Colstrip plant. The other owners of Colstrip plants include PPL Montana, NorthWestern Energy, Portland General Electric, Avista and PacifiCorp.
Wind Power Sets New Record at 1,524 MW, 7% of NYISO Load
Wind generators in the state set a record on March 2 when they churned out 1,524 MW, about 7% of NYISO’s 20,894-MW load. The previous record was 1,513 MW on Nov. 18, 2014.
“Wind power continues to grow as a power resource, and the NYISO continues to optimize our electric system’s use of renewable power,” said NYISO President and CEO Stephen G. Whitely.
NYISO enhances its wind management system by letting wind generators submit offer prices, the first RTO in the nation to use a competitive bid process in this way. There currently is 1,744 MW of wind generation in New York, up from 48 MW in 2005. Another 2,000 MW in proposed projects is under review.
Duke Wants to Pay Solar Producers 15% Less on Projects 5 MW or Smaller
Duke Energy is asking the Utilities Commission to allow it to pay 15% less for the electricity it buys back from solar producers. The commission sets the price for solar every two years.
The Duke request, filed with the commission last week, is the utility’s latest effort to curb the amounts it pays solar producers. Duke pressured the commission to reduce the size of eligible projects from 5 MW to 100 kW, a proposal the commission rejected in January.
Duke Fined Another $25 Million for Power Plant Ash Contamination
The state environmental agency assessed a record $25 million fine against Duke Energy for allowing coal ash ponds and dumps to contaminate groundwater for years.
The Department of Environment and Natural Resources sued Duke in 2013, a year before the company’s massive coal ash spill into the Dan River. That suit alleged that Duke allowed coal ash at its power plants to contaminate groundwater and waterways. Those suits remain undecided.
But the company acknowledged in late 2013 that it allowed coal ash from its Sutton plant to contaminate wells in the area, and agreed to pay up to $1.8 million for a water line to a nearby low-income community.
The water line and the fine, however, do little to ease the minds of others who may be in the path of the spreading plume of contaminated groundwater. “Until the state actually forces Duke to clean up the mess that people are sitting in right next to that plant, $25 million doesn’t mean anything to them,” said Kemp Burdette of the environmental group Cape Fear Riverkeeper.
Legislators have introduced two bills to regulate “gathering lines” that collect oil, gas and wastewater from well sites after a ruptured pipe discharged 2.2 million gallons of salty wastewater into a creek for 12 days.
The bills call for future gathering lines to be installed with leak monitoring systems and to be secured by bonds. Gathering lines are not regulated by any state agency, nor the U.S. Pipeline and Hazardous Materials Safety Administration.
The leak of the Meadowlark Midstream pipeline near Williston contaminated a creek and two rivers before it was stopped Jan. 6. Officials say the spill doesn’t pose a health threat, and no water wells were impacted. The North Dakota Department of Health estimates it will take at least five years to clean up. The state Department of Mineral Resources is investigating why the company wasn’t using an automated leak detection system.
PUCO Approves Two 138-kV Lines for AEP Improvement Plan
The Power Siting Board of the Public Utilities Commission of Ohio approved two 138-kV transmission lines as part of a reliability improvement plan proposed by American Electric Power.
A 17.3-mile line in Ross County will connect to a new substation at Biers Run. The second project, a 19-mile line, will connect the Biers Run sub to an existing substation in Circleville. The projects are designed to improve reliability in the Chillicothe and Circleville areas.
Sunoco Withdraws Petition to Have Pipeline Declared Public Utility
Sunoco Logistics Partners LP has withdrawn the last of its petitions before the Public Utilities Commission seeking exemption from local zoning ordinances for its 300-mile Mariner East pipeline, which will carry natural gas liquids from the Marcellus Shale region.
Sunoco had sought to use its public utility status to bypass local zoning laws to build structures around 31 pump stations and valve stations on the pipeline route, which prompted a backlash from some municipalities and anti-fossil fuel activists. Now, Sunoco says it has negotiated zoning approvals or is modifying its plans to comply with local zoning regulations and no longer needs the exemptions.
Some opponents said the news represents a victory. Sunoco began pumping propane through the pipeline in December and says it is on schedule to install the pumping capacity to deliver 70,000 barrels of ethane, propane and butane later this year.
PUC Approves PPL’s Spinoff of Generating Units to Form Talen
The Pennsylvania Public Utility Commission approved the spinoff of PPL Corp.’s generation and pipeline assets.
The greenlight resolves one regulatory impediment to the move, which involves the combination of PPL’s assets with those of Riverstone Holdings LLC into a new publicly traded entity, Talen Energy Corp. PPL shareholders will own 65 percent of Talen.
PPL Electric Utilities, which provides electric distribution service to approximately 1.4 million customers in Pennsylvania, is not affected by the transaction.
Dominion Slammed for Trying to Shield Information from Audits
State officials turned down a request from Dominion Virginia Power to keep some financial information secret during an upcoming public review.
Dominion made the request just weeks after the General Assembly took away the State Corporation Commission’s authority to order customer rate cuts or refunds through 2022. Opponents said that Dominion’s request reinforced their fears that that the utility would use the legislation to hide certain financial information, despite a vow from the company that its filings would be transparent.
The SCC ruled against Dominion’s request and ordered the company to submit a complete financial filing in time for its 2015 review. Dominion said it would comply.
Gov. Signs Bill Giving Legislature Final Say in Clean Power Plan
Tomblin
West Virginia is coming up with its own plan to meet emissions reductions proposed by the Environmental Protection Agency’s Clean Power Plan. But the state Legislature, not state environmental regulators, will have the final say.
Gov. Earl Ray Tomblin last week signed H.B. 2004, taking away the rule-making role from the state Department of Environmental Protection.
The move was lauded by the coal industry. “This law will ensure West Virginia’s elected officials have a say in the regulations that ultimately impact their state’s families and businesses,” said Mike Duncan, president and CEO of the American Coalition for Clean Coal Electricity. “Legislation like H.B. 2004, as well as similar actions by other state Legislatures, underscores broad opposition across the country to EPA’s overzealous and illegal proposal.”
Eversource Energy will sell its New Hampshire power plants to satisfy regulators’ divestiture demands and resolve a long-standing dispute over how much it should recover from ratepayers for pollution controls on its largest coal-fired generator.
Under an agreement announced Thursday, Eversource’s subsidiary, formerly “Public Service of New Hampshire,” will seek to sell three fossil fuel plants and nine hydroelectric stations, exiting the power generation market in the state. Eversource said it will join the state’s other utilities in purchasing energy on the open market.
Legislation enacted last year directed the state Public Utilities Commission to investigate ways to expedite the company’s sale of its electric generation as a means to develop energy markets and save consumers money.
An April report by the PUC said that the plants had a book value of $660 million but could only expect to bring in $225 million in any sale.
Eversource and state negotiators said the agreement will save consumers $300 million over the next five years due to securitization of those stranded costs. Realizing the savings will require legislation approving low-cost bond financing.
The settlement also resolves the long-standing issue over pollution upgrades made to the 439-MW Merrimack Station in Bow. Eversource agreed to forgo recovery of $25 million of the $422 million it spent on a scrubber on the 55-year-old generator.
The PUC in 2011 authorized a temporary charge of $0.98/kWh while the case remained on its docket, but the charge was insufficient to cover the entire cost of the scrubber. The PUC late last year was prepared to enter an order determining how the costs would finally be split when legislators and the company requested a delay to continue negotiations. The PUC agreed to the delay but denied a PSNH request to stay the divestiture proceeding.
“This agreement represents an opportunity to create real savings for PSNH customers, avoids protracted litigation with uncertain outcomes for all parties and moves the operation of PSNH generating plants to competitive markets rather than remaining an ongoing ratepayer obligation,” said Senate Majority Leader Jeb Bradley, who led the negotiations with the company.
In addition to Merrimack, the sale includes the 400-MW oil-gas Newington Station, built in 1974, and the 63-year-old 150-MW Schiller Station in Portsmouth, which burns coal, oil and biomass. The nine hydroelectric plants total 69 MW.
The agreement also includes a freeze on distribution rates through July 2017, and requires the plant buyers to honor current collective bargaining agreements and to keep the plants in operation for 18 months.
The agreement also calls for three years of property tax stabilization payments if a plant sells for less than its assessed value.
Eversource shareholders will also provide $5 million to capitalize a clean energy fund, which will target investments in energy efficiency and distributed generation projects.
The deal disappointed the New Hampshire Sierra Club, which sought the closure of Merrimack. Marc Brown, president of the New England Ratepayers Association, said he feared savings from the plants’ sale would be short-lived and that prices will rise as the state becomes more reliant on natural gas-fired generation.
A week after a Michigan lawmaker introduced a bill that would end electric deregulation, fellow Republican and Gov. Rick Snyder unveiled an energy plan of his own that would continue the state’s limited customer choice.
Michigan’s current plan allows up to 10% of an electric utility’s retail load to purchase power from alternative suppliers. Last year, 13 alternative suppliers provided 2,354 MW statewide.
DTE Energy and Consumers Energy have complained that the choice plan makes capacity planning difficult, especially as they retire coal-fired plants and try to gauge how much replacement they’ll need.
On March 5, state Rep. Aric Nesbitt, chairman of the House Committee on Energy Policy, introduced a package of bills that included elimination of electric choice.
“Retail customers currently purchasing electric generation service from an alternative electric supplier must return to receiving electric service from the incumbent electric utility when the primary term of their existing agreement with the alternative electric supplier expires,” reads Nesbitt’s House Bill 4298.
On Friday, Snyder proposed a plan that would retain the 10% customer choice cap and increase the state’s renewable energy goal to 19% by 2025, up from the current 9%. The governor’s plan also calls for reducing energy waste to meet another 21% of Michigan’s energy needs, up from 6%.
Capacity Concerns
Snyder would require that alternative electricity suppliers submit plans to the state Public Service Commission on a rolling, five-year basis that demonstrate that they have adequate capacity and reliability.
(Source: Governor Rick Snyder)
“If you want to play, you have to carry your weight as far as being an alternative provider,” Snyder said, speaking at the Detroit Electric Industry Training Center in Warren.
A lack of adequate capacity has been a concern for Michigan regulators as well as MISO. The RTO forecasts that its Zone 7, which includes most of Michigan’s Lower Peninsula, will be 3,000 MW short of its reserve margin in 2016.
Michigan’s commission said that “there appears to be a gap in the planning and procurement of adequate resources for the long-term for customers served under the customer choice program.”
That’s the result of “ambiguity” in responsibility among Michigan’s utilities and alternative suppliers for providing long-term planning reserves and associated cost allocation issues, the commission said.
Utilities say these are trying times for fleet planning, due to the Environmental Protection Agency’s Mercury and Air Toxics Standards (MATS), which take effect this year, and its proposed carbon emission rule.
“We’re expecting the retirements of about 60% of the state’s coal-fired plants in the next 10 to 15 years,” DTE spokesman Scott Simons said. “With the shortfall, we’re planning capacity without that 10%” of customers who buy power from alternative suppliers.
Consumers Energy said it supports Nesbitt’s proposal to return to a fully regulated environment.
“The evidence and historical record is clear that customers benefit the most from the fairness, stability, affordability and investment provided by full state regulation,” the company said in a statement.
Less Choice, Higher Prices
Energy Choice Now, a group pushing for additional deregulation, expressed its appreciation for Snyder’s stance but would have liked the governor to expand customer choice further. “Since 2008, Michigan lawmakers have imposed a system of winners and losers in this state, with 90% of us being the losers,” Executive Director Wayne Kuipers said in a statement shortly after Snyder rolled out his proposal.
Michigan once had “a very successful electricity choice program,” Theodore Bolema, senior policy editor at the Mercatus Center at George Mason University, wrote in a report two years ago for the Michigan-based Mackinac Center for Public Policy.
According to the report, before competition began in the state, in 2002, Michigan’s rates were well above the national and Great Lakes state average. Two years after competition was introduced, rates fell below the national average. But after the 10% cap and other changes in 2008, rates increased rapidly. By the end of 2012, rates were 18% above the national average.
Michigan electric customers have paid $10.5 billion above market rates since 2009, claims Energy Choice Now.
Kuipers noted that there’s a backlog of electric customers who want to join the choice program but cannot because of the 10% cap.
Almost 6,500 customers participated in the electric choice program as of last December, with about 11,000 customers waiting in the queue, according to the PSC.
That doesn’t count other customers who are interested in joining the program but haven’t applied because of the waiting line, Energy Choice Now spokeswoman Maureen McNulty Saxton said.
The choice program is dominated by commercial and industrial customers and public institutions such as school districts. There are virtually no residential customers participating.
MISO Flexible
All MISO states excluding Michigan and Illinois operate under traditional regulated monopolies.
“MISO’s view is that we can work with either regulatory framework,” MISO spokesman Andy Schonert said. “Through the stakeholder process we try to develop an approach that accounts for differences on a state-by-state basis. The resource adequacy requirement and OMS Survey are ways to help give that region-wide view for the regulators and load-serving entities responsible for ensuring resource adequacy.”
WASHINGTON — Witnesses from the Southeast generally expressed far more concern than their counterparts in the Northeast during the Federal Energy Regulatory Commission’s technical conference on the Environmental Protection Agency’s Clean Power Plan on Wednesday.
Mary Salmon Walker, chief operating officer for the Georgia Environmental Protection Division, said the proposed rule fails to give her state credit for previous CO2 emission reductions or for Georgia Power’s Vogtle nuclear units 3 and 4, now under construction.
She also said EPA’s assumption that the state can obtain 10% of its energy from renewables by 2030 is unrealistic and should be reduced to 7.5%.
Georgia also opposes an alternative method for calculating state goals that EPA included in its Notice of Data Availability in October. The state says it would force an 83% reduction in fossil fuel generation from 2012 levels. (See EPA Signals Flexibility on Interim Carbon Targets, Coal-Gas Shift.)
Too Much, Too Soon
Paul Newton, North Carolina president of Duke Energy, said the EPA proposal is “too much too soon” and that the proposed interim targets would require North Carolina and Florida to meet more than three-quarters of their 2030 emission reduction requirements by 2020, resulting in billions in stranded assets.
The company said it has invested more than $7 billion on SO2 scrubbers and selective catalytic reduction technology that controls NOx emissions to bring its coal-fired generators into compliance with EPA regulations. “The EPA modeling of its proposed ‘preferred option’ shows a number of Duke Energy coal units shutting down by 2020. Duke Energy currently has no plan to retire the units the EPA modeling shows retiring,” Newton said.
Duke said EPA should eliminate the interim compliance period targets and allow states to develop their own “glide paths” to meet the 2030 targets. The North American Electric Reliability Corp. or its delegates should evaluate state implementation plans to help identify possible reliability problems before submitting them to EPA, the company said.
John Trawick, Southern Co.’s senior vice president for commercial operations and planning, said the company will have to negotiate four sets of state regulators, legislatures and environmental departments as Georgia, Alabama, Mississippi and Florida develop their implementation plans. “It’s a very challenging thing to deal with,” he said.
Sky is Not Falling
John D. Wilson, research director of the Southern Alliance for Clean Energy, offered a much sunnier picture. “I’m ‘the sky is not falling’ person here today,” he told the commission.
Wilson said the size of Duke, Southern and the Tennessee Valley Authority means they can meet the EPA requirements with “relatively modest” steps — increasing solar and wind power and improving planning and operational tools the utilities already use.
“EPA’s proposed Clean Power Plan will be flexible and, frankly, not challenging enough to merit alarm,” Wilson said.
The alliance cited studies that it says concluded an 18% renewable energy portfolio and state energy efficiency targets of at least 15% — rather than the roughly 10% savings assumed by EPA — are feasible.
“Wind- and solar-power market-development opportunities in the Southeast are at least 15 to 20% of total generation, several times greater than the 0 to 10% considered by EPA,” Wilson said. “Wind resources are available in-region; proposed HVDC transmission provides access to on-peak wind resources that will complement solar.”
Wilson conceded that compliance will be more difficult for smaller utilities with limited generation diversity. To help them comply, state regulators should support the establishment of credit or allowance markets, he said.
One of those smaller utilities is the Seminole Electric Coop., which supplies nine distribution cooperatives in 42 Florida counties.
James Frauen, vice president of technical services and development for Seminole, said the 38% carbon reduction EPA set for Florida would require retirement of more than 90% of the state’s coal-fired generation — including the 1,300-MW Seminole Generating Station, which generates 50% of the co-op’s power — most of them by 2020.
The co-op has invested more than $500 million on the plant, funded by long-term loans that represent more than three-quarters of its outstanding debt. It says it planned to run the plant, which it calls “one of the cleanest in the nation,” until at least 2045.
“None of the options are particularly good. It’s going to cost more,” said Frauen, who noted that the co-op’s rates are already higher than average because of its low population density. “We can get there, but certainly not by 2020.”
Florida’s Challenges
Florida has firm transmission to import only 2,800 MW of generation to serve its 52,000 MW of load. It also has no natural gas reserves, nor the geological formations to economically store gas underground.
“A substantial amount of coal-fired electric generation must remain in Florida to ensure some level of fuel diversity and the resulting reliability benefits,” Frauen said. “To remove more than 90% of coal capacity from Florida would obligate Florida to rely solely on ‘just in time’ inventory for nearly all of its fuel supply, with reliability consequences for any disruptions in the supply chain.”
Sen. Jim Inhofe (R-Okla.) opened a hearing last week by displaying a map identifying the 32 states he said are opposing EPA’s proposed carbon emission rule, which he called a “selfish power grab.” The Natural Resources Defense Council said Inhofe’s map “radically overstates state opposition.”
There’s no mistaking where Sen. Jim Inhofe (R-Okla.) stands on global warming and the Environmental Protection Agency’s plans for addressing it.
In February, the chairman of the U.S. Senate Environment and Public Works Committee brought a snowball onto the Senate floor to underscore his skepticism of climate science. Last week, he kicked off a committee hearing by displaying a map identifying the 32 states he said are opposing EPA’s proposed carbon emission rule, which he called a “selfish power grab.”
“The proposal undermines the longstanding concept of cooperative federalism and the Clean Air Act, where the federal government is meant to work in partnership with the states to achieve the underlying goals,” Inhofe said. “Instead, the rule forces states to redesign the way they generate, manage and use electricity in a manner that satisfies President Obama’s extreme climate agenda.”
In a two-hour hearing, the committee heard from officials from Wyoming, Wisconsin and Indiana, who said the rule would harm their states’ economies, and representatives from California and New York, who insisted it is necessary and achievable.
“You can significantly reduce these emissions in a way that grows your economy,” said Michael J. Myers, chair of the litigation section of New York’s Environmental Protection Bureau. “The time is now for state leadership. So take the wheel.”
Todd Parfitt, director of the Wyoming Department of Environmental Quality, said EPA’s “timelines are problematic if not unrealistic.” A major problem for his state and others in the Midwest, he said, is that EPA would give credit for wind power to consuming states rather than producers. He said that 85% of wind energy generated in Wyoming is consumed outside the state.
Under the Clean Power Plan, states will first be asked to come up with their own ways to implement the emissions reductions rules, but the federal government would step in and impose rules if they don’t.
The Natural Resources Defense Council said after the hearing that Inhofe’s map “radically overstates state opposition” by including any state where a state official or agency has raised concerns.
Indiana is among the 12 states that are challenging EPA’s authority to issue and enforce the carbon rule. Oral arguments in the case are scheduled for next month before the D.C. Circuit Court of Appeals.
