Federal Briefs

The American Bird Conservancy is suing the Department of the Interior over an agency regulation that allows wind energy companies to obtain 30-year permits to kill eagles. The group told Interior and the Fish and Wildlife Service that it was going to sue based on what it saw as violations of the National Environmental Policy Act and the Bald and Golden Eagle Protection Act, among other laws.

The current rule replaced an earlier regulation allowing energy companies to kill eagles for five years.

“Eagles are among our nation’s most iconic and cherished birds. They do not have to be sacrificed for the next 30 years for the sake of unconstrained wind energy,” said Michael Hutchins, a conservancy spokesman. “Giving wind companies a 30-year pass to kill bald and golden eagles without knowing how it might affect their populations is a reckless and irresponsible gamble that millions of Americans are unwilling to take.”

More: Wisconsin Gazette

Feds Open 344K Acres Off Jersey to Wind Power

The Department of the Interior and the Bureau of Ocean Energy Management last week announced that more than 344,000 acres of sea floor will be open to commercial wind power. Federal authorities propose to auction off the lots, about seven miles off Atlantic City, in two designated areas. A 60-day public comment period will end Sept. 19, after which the lease sale date will be set. The Bureau of Ocean Energy Management estimates that the two areas could support up to 3.4 GW of wind energy.

More:North American Wind Power

East Coast Area Open To Seismic Testing

Federal regulators approved seismic testing in areas up to 400 miles offshore between Delaware and Florida, in a move hailed by oil and gas exploration proponents. The Department of the Interior announced the move, saying that it was time to update the 40-year-old seismic information on offshore oil and gas reserves. It said steps would be taken to protect marine life during the testing. Estimates based on earlier seismic studies point to 1.9 billion barrels of oil and 21.4 trillion cubic feet of natural gas in the Mid-Atlantic to South Atlantic coasts. Environmentalists are still concerned that seismic testing will disturb or kill marine life.

More: The Baltimore Sun

Louisiana LNG Plant Site Gets Next FERC OK

The Federal Energy Regulatory Commission has cleared the way for Sempra Energy to begin preliminary site clearance work for its proposed LNG facility near Lake Charles, La. The authorization allows preliminary work and equipment storage on the site. Sempra said construction on the $10 billion project is set for this fall. When completed, it will allow for the export of up to 12 million metric tons of LNG per year.

More: The Advocate

U.S. Electric Grid Fails More than Most Others

U.S. electric consumers experience more power interruptions than those in any other developed nation, according to a study by a University of Minnesota professor. Massoud Amin, director of the Technological Leadership Institute at the university, said data from the Department of Energy and the North American Electric Reliability Corp. show that the U.S. grid now loses power 285% more often than it did in 1984.

The interruptions cost businesses approximately $150 billion a year, he said. He said customers in Japan lose power for an average of four minutes per year while those in the American upper Midwest go dark for an average of 92 minutes. The analysis excluded interruptions caused by severe storms or fires.

More: International Business Times

New Energy Dev. Could Eat Up Area of Two Maines

Researchers for the environmental group North America Congress for Conservation Biology estimate that at its current rate, energy development in the U.S. could consume an area twice the size of the state of Maine by 2040.

They said new mines, oil and gas wells and solar and wind farms could consume 175,000 to 250,000 square kilometers, complicating efforts to preserve wildlife habitat. “There is going to be a very large challenge in siting all of this energy infrastructure,” said landscape ecologist Anne Trainor of Yale University.

More: Science Magazine

Energy Growth: 351 GW by 2040

The Department of Energy estimates that 351 GW of new generation will be constructed in the U.S. by 2040. That’s equivalent to 100 plants the size of NRG’s W.A. Parish plant near Houston. But while plants are still being built, the rate is slowing. DOE estimates that 16 GW of generation will be added per year through 2016, slowing to 9 GW per year through 2022, then rising again to 14 GW annually through 2040. Future plants will be 73% natural gas, 24% renewable and 3% nuclear, DOE projects.

More: Houston Chronicle

McCarthy: New Rules are Guides to Energy Investing

Environmental Protection Agency Administrator Gina McCarthy told a group of state regulators that they should see the EPA’s recently announced emissions rules as a guide to energy investment, rather than a set of pollution control rules. “We really wanted this to be an opportunity to look at a short- and long-term investment strategy, not a pollution control strategy,” she told a meeting of the National Associate of Regulatory Utility Commissioners in Dallas. Emissions “can be reduced in the electricity sector in ways that are very far from pollution-control technologies.”

More: E&E Publishing

July 15, 2014

Senate Confirms Bay, LaFleur

WASHINGTON — The Senate today narrowly confirmed Norman Bay to the Federal Energy Regulatory Commission while easily approving a new term for Acting Chair Cheryl LaFleur.

Bay cleared on a 52-45 party-line vote following a deal with the White House that will delay his ascension to the FERC chairmanship for nine months after he joins the panel.

The deal was a concession to those who questioned why Bay — who has served as director of FERC’s Office of Enforcement since 2009 but has never served as a state utility regulator — would be appointed directly to the chairmanship over LaFleur, a former utility executive who has served on the commission since 2010.

The compromise wasn’t enough to win the support of Republicans. Sen. Lisa Murkowski (R-Alaska), ranking member on the Senate Energy and Natural Resources Committee, questioned whether Bay would undermine LaFleur as a “shadow chairman.”

Senator Mary Landrieu — Sen. Mary Landrieu

“FERC is too important a commission … for appointees to be handled like this,” she said.

The Department of Energy Organization Act gives the Senate authority to confirm members of FERC but gives it no say over which one of the commissioners is appointed chair by the president.

Senate Minority Leader Mitch McConnell (R-Ky.) said Bay would be a “rubber stamp for the administration’s anti-coal agenda.”

Energy Committee Chair Mary Landrieu (D-La.) cited former committee chair Pete Domenici’s (R-N.M.) support for Bay, saying it was “very influential” in her own decision to support Bay.

LaFleur had sailed through her confirmation hearing May 20 while Bay was forced to defend his limited policy experience. (See LaFleur Cruises, Bay Bruises in Confirmation Hearing.)

Of the 15 FERC commissioners who have served since 2000, 10 served as commissioners or staffers at state regulatory agencies prior to their appointments. Four of the others worked in energy-related posts in state or federal legislative committees or executive agencies; one was a former utility executive. The last five chairmen served a median of 30 months before becoming chair.

Bay also came under fire for what some energy lawyers and legislators called his heavy-handed running of the commission’s enforcement division.

LaFleur was confirmed today by a 90-7 vote, a bittersweet victory with the knowledge that she will be a lame duck as chair.

“I want to thank President Obama and the Senate for giving me the opportunity to serve another term,” she said in a statement immediately after the vote. “I look forward to continuing to work with my colleagues to maintain a reliable and secure grid and help ensure our energy markets and infrastructure adapt to the nation’s changing resource mix.”

July 15, 2014

Operating Committee Briefs

Commonwealth Edison briefed the Operating Committee on the removal of three special protection schemes (SPS):

An SPS designed to prevent low voltage on the Wolfs Crossing-Sandwich 138-kV line (#14302) is no longer needed because of a new TSS 167 Plano 345/138-kV autotransformer and 138-kV buses. Before reinforcement, an open breaker at TSS 143 Wolfs Crossing made L14302 radial, causing low voltage. The new autotransformer provides an alternate source for L14302. The SPS will be removed after a briefing of the Markets and Reliability Committee July 31.
The Waukegan SPS will be removed in the fourth quarter of 2014 when the bus tie 4-14 circuit breaker is removed. The SPS was initiated to prevent low voltage or transmission-line overloads in case of the loss of a 138-kV line concurrent with an outage at Unit 16 of the Waukegan coal-fired plant. It is triggered when Waukegan units 7 or 8 trip off line. The protection won’t be needed after the addition of two 345/138-kV autotransformers and connection of four 345-kV lines to the generating plant, which will provide redundancy.
The Zion Energy Center SPS will be removed in summer 2015 as the result of a new 345-kV line from Pleasant Prairie (PLPL41). The SPS was initiated to address the instability of the Zion generator for certain faults cleared in delayed time. An analysis determined that the generator will remain stable with the new line.

PJM Seeks Feedback on Website Usability

PJM is seeking volunteers to provide feedback on how it can improve the PJM.com website. In the recent member survey, PJM received numerous complaints that the website was “overwhelming” and “confusing,” and that information was difficult to find.

To address the complaints, PJM plans to conduct confidential interviews via WebEx with members who use the Markets & Operations section of the website. The interviews will not cover PJM’s tools (e.g., eMKT).

PJM’s Tom Zadlo promised any changes will not disrupt data “scraping” feeds companies have developed to automate data collection. “We know we can’t break what’s out there,” he said.

Those interested in participating should contact Melissa Visintin (Melissa.visintin@pjm.com; 610-666-4426).

PJM to Change Reactive Testing to Incorporate NERC Rules

PJM will change its reactive testing procedures to accommodate the North American Electric Reliability Corp.’s new MOD-025-2 reliability standard. The new rules will result in changes to attachment E of Manual 14D, which will be brought before stakeholders beginning in August. Among the changes, individual generators of more than 20 MW connected to the bulk electric system will now be tested (down from a threshold of 70 MW). All hydropower units will also be required to do testing.

PJM’s Dave Schweizer, who gave the OC a preview of the changes, said PJM’s rules will be at least as conservative as the NERC standards.

July 15, 2014

Utilities, Solar Industry Square Off in Other States

Disputes between utilities and solar providers aren’t limited to North Carolina. (See story, Solar Industry at Crossroads in N.C.) Among the battlegrounds are Iowa, Wisconsin, Arizona and Missouri.

On Friday, the Iowa Supreme Court came down on the side of solar, ruling that a solar company was not violating state law by selling electricity generated by a rooftop installation to the city of Dubuque. Utilities Alliant Energy and MidAmerican Energy unsuccessfully argued that third-party purchase power agreements such as the one involving Dubuque violate state laws giving them exclusive energy sales rights.

In Wisconsin, We Energies has filed a proposal with state regulators to bar its customers from leasing solar arrays. The company also seeks a surcharge on customers who are generating their own power.

Arizona Public Service Company wants the change the state net metering rules, offsetting a solar credit with a monthly charge, and state lawmakers there are considering a tax on rooftop installation.

In Missouri, Ameren and Kansas City Power & Light are asking the state Public Service Commission to end all solar rebates.

The Wisconsin, Arizona and Missouri cases await resolution.

July 15, 2014

Federal Briefs

The Bureau of Ocean Energy Management will take bids Aug. 19 for the rights to lease nearly 80,000 acres of the Atlantic Ocean off the coast of Maryland for wind energy projects. It will be the sixth commercial offshore wind energy lease awarded by the federal government, after three off of New England and one each off Virginia and Delaware. Sixteen companies have been qualified to bid on the Maryland Wind Energy Area, which could support between 850 MW and 1,450 MW of commercial wind generation. The area is about 10 miles off the coast of Ocean City, Md.

More: Bureau of Ocean Energy Management, The Baltimore Sun

FERC OKs Settlement in 2011 Southwest Blackout

Arizona Public Service Co. will spend $3.25 million in a settlement with the Federal Energy Regulatory Commission over its role in a Sept. 8, 2011 blackout that left more than 5 million people in California, Arizona and Mexico without power for up to 12 hours.

A joint FERC/North American Electric Reliability Corporation (NERC) examination of the incident found that APS violated NERC reliability standards. Since the event, APS has worked with regulatory and industry organizations to make improvements, FERC said.

The company will pay $1 million each to the U.S. Treasury and NERC, and spend $1.25 million on reliability investments. “APS’ reliability enhancements will improve the reliability of the Western Interconnection and are valued at substantially more than the $1.25 million credit granted,” Acting FERC Chairman Cheryl LaFleur said.

More: FERC

SCOTUS Declines to Hear Mo. Cost-Recovery Case

The Supreme Court said it will not consider Kansas City Power & Light Co.’s appeal of a lower court ruling that denied the company federally approved transmission costs.

The company incurred the costs in moving power 500 miles from a natural gas-fired plant in the Mississippi Delta to customers in western Missouri. At issue are transmission costs associated with the Crossroads plant, which was originally built as a merchant generator but was folded into the rate base after KCP&L’s parent company was unable to sell it.

The plant only operates in the summer, but the Missouri Public Service Commission earlier ruled that it had to pay transmission access fees on a year-round basis. The commission approved the purchase of power from the plant but wouldn’t approve the estimated $5 million annual transmission costs, saying they were not just and reasonable.

More: E&E Publishing

House Approves Move to Stop NYISO Capacity Zone

The House passed a bipartisan amendment to block a new capacity zone in the New York ISO last week as part of the 2015 Energy and Water Appropriations Bill.

News of the new zone, which would increase residential energy costs, sparked protests after the Federal Energy Regulatory Commission approved it in January. Republican Rep. Chris Gibson said he and Democratic Rep. Sean Maloney introduced the amendment to protect residential consumers. “We will not relent in our efforts to prevent this agency from doing further damage to families and the economy of the Hudson Valley, where people are already struggling to make ends meet,” Gibson said in a news release. A Senate vote is expected in the fall.

Proponents of the new capacity zone, which went into effect May 1, hope it will spur the construction of new generation below a transmission bottleneck.

More: Register-Star

Nuclear Expert Tapped for DOE Slot

Elizabeth Sherwood-Randall participates in a video conference with President Obama and French President Nicolas Sarkozy in 2012. (Source: White House)

President Obama has nominated Elizabeth Sherwood-Randall, a nuclear proliferation and defense policy official, for Deputy Secretary of Energy. Sherwood-Randall is currently the White House coordinator for defense policy and has also acted as a foreign policy expert. In addition to working on nuclear weapons policy and strategy, she also will be wading into the issues surrounding hydraulic fracturing.

More: The New York Times

DOE to Start Cleanup of Hanford’s “Atomic Man” Site

Clay Rowan, a health physics technician, in the McCluskey Room to take radiation readings in June 2005. (Source: Department of Energy)

The site of a 1976 plutonium explosion at the Hanford Nuclear Reservation in Washington state is slated for cleanup this summer. Worker Harold McCluskey was exposed to the highest dose of radiation from the chemical element americium on record — 500 times the safe standard — in the accident. Americium is a byproduct of plutonium.

McCluskey, then 64, became known as the “Atomic Man” after the incident. He was put into an isolation unit, where he stayed for five months. His body’s radiation level fell by 80 percent within a year. He died in 1987 of heart disease, said to be unrelated to the accident. Cleanup of the “McCluskey Room” is expected to be completed by 2016.

More: Prince George Citizen

Missouri Rep. Files Bill to Hobble EPA Rulemaking

Rep. Sam Graves (R-Mo.) last week filed a bill that would halt every Environmental Protection Agency regulation now in the works and mandate the review of all other EPA rules. If passed, the bill would effectively halt EPA action on any of its rules until after the review.

Graves, chairman of the Small Business Committee, is incensed over the EPA’s proposed “Waters of the United States” rule, which would redefine federal jurisdiction over lakes and streams covered by the Clean Water Act. Many of Graves’ constituents are farmers who could be impacted by any change in water laws. Graves’ “Stop the EPA Act,” would also hamstring the EPA’s recent emissions rules covering power plants.

More: The Hill

Senate to Consider Bay, LaFleur

The Senate is scheduled to vote today on the confirmation of Norman Bay to the Federal Energy Regulatory Commission and a new term for Acting Chair Cheryl LaFleur. The Senate Energy and Natural Resources Committee approved Bay’s nomination last month under a deal with the White House that would delay Bay’s ascension to the chairmanship for nine months.

More: LaFleur to Remain Acting FERC Chair for up to 1 Year in Senate Deal with White House

July 15, 2014

Company Briefs

Southern Company’s 25-MW demonstration carbon-capture plant at Alabama Power’s Plant Barry near Mobile, Ala., won the Southeastern Electric Exchange’s 2014 Industry Excellence Chairman’s Award. The project, demonstrating carbon capture and sequestration at a pulverized-coal plant, captures about 150,000 tons of carbon dioxide annually. The carbon dioxide is sent through a 12-mile pipeline to an oil field and injected into a geologic formation 9,500 feet below the surface.

More: Fierce Energy

Exelon’s Oyster Creek Nuke Shut Down Twice in a Week

Two unplanned shutdowns at Exelon Nuclear’s Oyster Creek Generating Station in New Jersey last week prompted the Nuclear Regulatory Commission to change the plant’s performance ranking from “green” to “white.” Both the company and the NRC said there were no immediate safety concerns from either event.

The first shutdown occurred last Monday, when the plant went down to fix safety equipment inside the reactor’s dry well. The second occurred Friday, as the reactor was powering up after the first incident, due to a problem in the plant’s condenser. “It is crucial that during start-up, every system operates flawlessly. If anything is not as expected, operators stop the startup process and address the issue,” company spokeswoman Suzanne D’Ambrosio said. The aging plant is due to shut down permanently in 2019.

More: The Star-Ledger

PSE&G Unveils New Online Outage Management Tool

Public Service Electric & Gas launched a new menu of online tools designed to give customers more information about outages and how long it will take to restore power.

The new tools are a response to the company’s experience during Hurricane Sandy, when millions were left without power and customers complained about being unable to get through to the company or get good information about restoration times. The new tools — at outagecenter.pseg.com — let customers see how many outages there are, and where, down to the neighborhood level. It will also give up-to-date restoration times, the company said. Information on the site will be updated every 15 minutes.

More: NJ.Com

Indiana Michigan Power Plans 16 MW of Solar

Indiana Michigan Power says it will ask state regulators for permission to construct five solar plants in Indiana and Michigan for its Clean Energy Solar Pilot Project. The company hasn’t released information on locations or sizes of the individual plants, but it said they will cost about $38 million to build. The project could be under construction by 2016, depending on how long it takes to get regulatory approval, the company said.

More: Indianapolis Business Journal

Offshore Drill Ship Appears Off Va. Coast

A ship that drills for ocean floor core samples has set up off the coast of Virginia Beach, giving beachgoers their first glimpse of the possible future of offshore wind towers. The 110-foot “offshore construction jackup” ship steamed from the Gulf of Mexico to the Virginia coast and began drilling about 300 yards offshore of Camp Pendleton, where transmission lines would be laid.

The ship will also drill at the proposed wind farm site about 24 miles offshore. Drilling will be completed by July 20, according to Dominion Virginia Power, the company that plans to build the offshore wind farm.

More: Daily Press

July 15, 2014

PJM Sets Sub-Zonal Pricing Interface for Demand Response at New Castle

PJM has created a closed loop interface to capture the pricing of demand response in a transmission sub-zone spanning the Pennsylvania-Ohio border near New Castle, Pa. The interface, which took effect July 1, will be used in real-time when load management is deployed in the area, part of the ATSI zone.

PJM officials said DR may be necessary during outages anticipated with the construction of system upgrades. The upgrades, a result of plant retirements in the area, are expected to be completed in spring 2015.

The interface won’t be used in Financial Transmission Rights auctions or other modeling.

Difficult to Forecast

PJM’s Rebecca Carroll told the Operating Committee that operators will attempt to model the interface in the day-ahead market when possible. “But being able to forecast that is going to be very difficult,” she said, noting that operators generally don’t know whether they will be dispatching DR until a few hours before it is needed.

PJM’s Joe Ciabbatoni said PJM now has a formally documented process for establishing pricing interfaces. “`There should be more of these [interfaces] bubbling up” in the future, he said.

Mike Bryson, executive director of system operations, said that based on the lessons of the unexpected September 2013 heat wave, PJM will be more “proactive” in identifying areas where it may declare subzones for pricing DR. PJM created a closed loop interface in ATSI to capture DR prices that hit the maximum of $1,800/MWh on Sept. 10, when the RTO found itself unprepared for a late summer heat wave that pushed demand over 144,000 MW. (See PJM Surprised by September Heat Wave.)

Bryson said officials also will consider recalling and rescheduling planned outages related to the New Castle upgrades when it anticipates high load days.

In May, the Federal Energy Regulatory Commission rejected PJM’s call for sub-zonal dispatch inside an operating day, saying the RTO had failed to prove the change would not result in “prohibitive costs” to DR providers. Bryson said the order allows sub-zonal dispatch ordered the day before and voluntary compliance with in-day dispatches.

On July 8, the commission said it will take another look at the issue after DR providers Comverge and EnergyConnect contended even next-day sub-zonal dispatch would be a hardship.

Notification Process Sought

At the Market Implementation Committee Wednesday, Bruce Bleiweis of DC Energy and Barry Trayers of Citigroup Energy asked PJM to provide more lead time and transparency when it considers new pricing interfaces.

Bleiweis said PJM should post a public notice when it identifies an issue that may result in an interface. “We feel that’s a superior process to not knowing there was an issue internally discussed,” he said.

Trayers suggested a formal notification process similar to that for creation of special protection schemes.

July 15, 2014

Growing Solar Industry at Crossroads in N.C.

RALEIGH, N.C. — Far from the sunny Southwest, North Carolina has unexpectedly become one of the fastest-growing destinations for solar energy developers in the nation. But a battle pitting the state’s largest utilities against environmentalists could stop that growth in its tracks.

At stake is the way solar energy is sold in the state. The state Utilities Commission currently requires Duke Energy, Duke Energy Progress and Dominion Power North Carolina to enter into 15-year contracts with solar producers of any project 5 MW or smaller. Duke and Dominion have asked the commission to cut the length of the contracts to five years and reduce the size of qualifying facilities to 100 kW — 2% of the current size.

Solar power companies and environmentalists countered by asking that plants producing up to 10 MW be included and that the contract term be lengthened to 20 years.

How North Carolina Got Bright

The contracts for such qualifying facilities (QFs) are priced at avoided costs, currently set at about 6.5 cents per kWh.

The commission meets every two years to set the rates. At the most recent proceeding in February, the commission asked all parties to reexamine the contract rules to determine if they should be adjusted.

The current rules were set when the solar industry was just getting on its feet. It was designed to provide a ready market for the nascent industry by encouraging utilities to add renewable energy to their portfolios.

At 750 MW, North Carolina ranks fourth among states with installed solar capacity, behind only California, Arizona and New Jersey, according to the Solar Energy Industries Association (SEIA). The state added 335 MW last year, ranking third in the U.S.

In 2007, North Carolina enacted a renewable portfolio standard that called for utilities to obtain 12.5% of their electricity from renewables by 2021. The state has also subsidized renewables through a tax credit.

Growing Clout

Solar also grew as a result of North Carolina’s efforts to lure energy-gobbling data centers to the state. Apple’s data center in Maiden came with its own 20-MW solar farm. Google and other companies pressed Duke to win approval of a Green Source Rider allowing companies to pay the utility a slightly higher rate in return for renewable energy.

The state’s QF program became an unexpectedly large contributor to the industry’s growth, according to Ivan Urlaub, executive director of the North Carolina Sustainable Energy Association (NCSEA), an umbrella group of sustainable energy providers. “Those small regulatory rules, combined with a renewable energy tax credit, were sufficient to take what was otherwise a small market and carve out a space for entrepreneurs to jump in and compete on price and quality,” Urlaub told Slate.

The state now has 570 green energy firms employing 18,400 people, according to Urlaub. The SEIA says $787 million was invested in solar plants in the state last year.

That growth has given the industry the clout to be a credible opponent to utilities. A bill that would have repealed the state’s renewable portfolio standard died in committee last year.

Duke Hearts Solar?

NC WARN's ad attacking Duke's position on solar power. Note: not actually clickable on our site. — NC WARN’s ad attacking Duke’s position on solar power. Note: not actually clickable on our site.

In the run up to four days of hearings on the contract issue last week, combatants filed expert testimony and the environmental group NC WARN launched a state-wide ad campaign.

“Why does Duke Energy Hate Solar?” its website and full-page ads asked. “Duke actually likes solar — just not for North Carolina solar companies.”

In an interview, NC WARN Executive Director Jim Warren explained his organization’s support for the solar groups’ position. “We think it’s good for the community, the solar industry — and even for the utilities, since they’re facing a corporate death spiral if they don’t adapt to the fast shift toward distributed energy,” he said.

“More solar installations added to the grid would further reduce the need for Duke to build new power plants and raise rates. So, while more solar on the grid has tremendous benefits to all customers, it is an existential threat to Duke Energy’s business model and profits.”

Duke spokesman Randy Wheeless insisted the company doesn’t hate solar. In fact, he said, Duke has been a major proponent of solar energy all along, and continues to be. The company owns 140 MW of solar at 20 sites in eight states, about 3% of its 49,626 MW of generation capacity.

“Duke and Duke Progress were in the top 10 [nationally] in bringing on new solar” projects in 2013, he said. “Duke Energy has wind and solar [facilities] in 12 states. When you add all those facts together, it’s hard to say Duke is anti-solar or trying to kill solar. I think Duke has a pretty good story to tell.”

Wheeless noted that most of the solar projects in North Carolina were 5 MW or lower “because the standard offer is the most attractive one” for producers. He said the utilities’ sought to decrease the QF size to allow them the “flexibility to negotiate the contracts.”

Pass Through to Consumers

Shortening the length of purchase power agreements with solar producers will benefit consumers, Wheeless said. “We basically say, ‘Look, the PPA is a pass through to consumers.’ When you throw a contract out 15 years to 20 years, and you look at that curve, we think most of the risk is being borne by the customers. The odds are better that over the course of the longer contract, the customers will pay more, not less. We feel [customers] would benefit if they were 10 years. Customers would be less likely to overpay.”

Betsy McCorkle, government affairs director for the NCSEA, declined to be interviewed on the issue Friday.

But the NCSEA lined up experts to file written testimony. R.T. Beach, an energy consultant from California, filed a lengthy response with the commission outlining why solar projects benefit both utilities and customers.

Lumpy Additions

“Most of the QFs in North Carolina are 5 MW or smaller. In contrast, typical utility additions of capacity are in increments of at least 100 MW, and often more, as shown by the utilities’ current resource plans,” Beach wrote. “These large central station units require significantly longer time to develop, permit and build.

“As a result of the long lead times and the large, ‘lumpy’ nature of utility capacity additions, new utility plants must be sized to provide much more than the amount of capacity [that] the utility needs in the year in which the new plant enters service. The result is that ratepayers may have to pay for years of excess capacity until demand ‘catches up’ to the last major addition,” Beach wrote.

Off Switch

NCSEA witnesses and other solar proponents say that decreasing the QF size and PPA length would pose an existential threat to the solar generation industry. Beach said the change would press an “‘off switch’ that would be likely to significantly slow, if not halt, QF development.”

Banks would be less likely to finance larger projects if they were not QF-rated, and shorter PPAs would also result in more difficulty obtaining financing. It has already happened in other markets, solar proponents say.

Beach cited Idaho regulators’ decision to allow Idaho Power to reduce its standard contract size to 100 kW from 10 MW. “The practical result of this order has been to halt further wind development in Idaho, even though wind QFs are entitled to negotiate with the Idaho utilities,” he said. (See related story, Utilities, Solar Industry Square Off in Other States.)

Consumer Response

The battle has captured the attention of North Carolina residents. The docket includes dozens of emails and letters from consumers.

“Duke Energy’s claims of sensitivity to environmental concerns must be viewed with skepticism, given their recent and historical performance in environmental protection,” wrote Sharon Fortner of Winston-Salem. “This regulated monopoly will have to be forced to treat solar generation fairly; it will not do it on its own.”

A decision is expected before the end of the year.

July 15, 2014

Report: PSEG, AEP, FE at Risk under New Returns on Equity Rates

Public Service Enterprise Group, American Electric Power and FirstEnergy are among the utilities with the greatest risk of seeing their transmission rates decline as a result of the Federal Energy Regulatory Commission’s new formula for determining returns on equity, according to a new study.

Despite the new FERC methodology, however, transmission utilities still remain attractive investments with a “wide economic moat” similar to those for oil and gas pipelines, according to the study by Morningstar Institutional Equity Research.

Zone of Reasonableness

Last month, FERC changed the way it sets return on equity (ROE) rates for electric utilities, moving to a process it has long used for natural gas and oil pipelines. Ruling in a case involving New England transmission owners, it tentatively set the “zone of reasonableness” at 7.03% to 11.74%. The commission set the TOs’ base rate at 10.57%, a reduction from the previous 11.14%. (See FERC Splits over ROE.)

Utilities with FERC-approved returns on equity in the upper half of the zone could face reduced returns if Section 206 complaints are filed against them, Morningstar said. Such complaints are currently pending against Florida Power Corp., Duke Energy Florida and Southwestern Public Service Co.

Others vulnerable to rate cuts include ITC (currently earning rates of 12.38% to 13.88%) and PSEG (11.68% to 12.93%), according to the report.

Rate cuts could also be in the future for AEP and FirstEnergy, which have base ROEs above 10.57%, but the impact will be limited because their FERC-regulated transmission represents a small portion of their rate base.

By contrast, Edison International, Pacific Gas & Electric and Xcel Energy have FERC-allowed returns on equity near or below the base ROE for New England and might win increases, Morningstar said.

Wide Moat

Even after the reductions, FERC’s ROEs will exceed the average state-allowed ROEs, the report says.

The report cites several reasons why electric transmission is the “only regulated utility business with a wide economic moat”: Its impact on reliability and access to cheap generation; environmental rules encouraging remote renewable energy resources; and the certainty of cost recovery under FERC rules, which lowers utilities’ cost of capital.

“Transmission remains heavily regulated and faces some imminent competitive threats, but its efficient-scale competitive advantage is so strong that we expect returns on utilities’ transmission investments will continue to exceed costs of capital for many years,” the report says.

July 15, 2014

State Briefs

Data Center, Power Plant Plan Dies After UD Says No

A controversial plan to build a data center and a 279-MW power plant at the University of Delaware came to a halt last week, as the university terminated the lease agreement with the proposed developer, The Data Center LLC. A university working group decided the project didn’t fit in with the university’s plans for the site, a former Chrysler assembly plant that is now home to the university’s Science & Technology Advanced Research Campus.

The working group of faculty and administrators said the scale of the power plant raised doubt about Data Center’s claims of energy efficiency. The plan was “not consistent with a high-quality development and first-class science and technology campus,” the group said in a report. Gene Kern, president of the development company, said he disagrees with UD that the lease can be terminated for the reasons stated and is examining its legal options.

More: The News Journal

PSC Sets Hearing Schedule for Exelon, Pepco Deal

The Public Service Commission will hold three public hearings in September to gather comments regarding Exelon’s acquisition of Pepco Holdings Inc. The proposed $6.8 billion merger was announced in April.

The commission has said it will issue a final order on the merger by January. It will have a full slate of commissioners to do so, now that the state Senate has confirmed Wilmington’s former economic development director, Harold Gray, for a seat on the panel. Gray assumes the seat vacated by former commission member Arnetta McRae, who left the PSC in 2011 to take a job in the District of Columbia.

The merger needs the approval of state regulators in Delaware, Maryland, New Jersey and Virginia, as well as regulators in D.C. Federal regulatory approval is also needed. Pepco shareholders are expected to vote on the merger in August.

More: The News Journal

ILLINOIS

AG: Ratepayers Funding Com-Ed Bonuses

Illinois Attorney General Lisa Madigan slammed Commonwealth Edison for seeking ratepayer contributions to pay for $88 million in bonuses to employees. Madigan said she discovered the company’s request to have customers pay for the bonuses while examining ComEd’s rate request, now before the state Commerce Commission. In a complaint filed last week, Madigan said the company included in its request to recover $275 million in costs. She told the ICC that state law does not allow “incentive compensation expense that is based on net income or an affiliate’s earnings per share” to be funded by customer-borne rates.

More: The Chicago Tribune

INDIANA

State Looking for New IURC Member

The state is in the process of finding a new member of the Indiana Utility Regulatory Commission. The slot opened when Commission Chairman Jim Atterholt accepted a position as Gov. Mike Pence’s chief of staff. The application deadline closed July 11, and the nomination committee is scheduled to have a public meeting July 30 to interview candidates. The committee will then send three names to Pence, who will select the replacement.

More: Newsbug

MICHIGAN

LED Streetlight Count Hits 10K in Detroit

Detroit installed its 10,000^th light emitting diode (LED) streetlight on July 1 and plans to have 65,000 in place by the end of 2016. The new lights are more energy efficient and attractive, the city says, and will help reduce crime.

The Michigan Public Service Commission recently initiated a subsidy for LED streetlights. “This order itself wasn’t anything earth-shattering,” MPSC energy efficiency manager Rob Ozar said. “What is earth-shattering is that LED street lighting is taking the state by storm. We expect LED lighting to take 80% of the market share.”

The program allows rebates of $47 per bulb, Ozar said, which covers about half of the cost difference between an LED bulb and a typical bulb.

More: Midwest Energy News

NEW JERSEY

BPU Mulling Rules to Fight Fraud

The Board of Public Utilities is considering a proposal to prohibit third-party suppliers from making false or misleading statements to residential customers, and barring such companies from contacting customers if they don’t already do business with them. The move, which will be discussed in a July 17 hearing, is in response to a spate of complaints from customers dissatisfied after switching suppliers. Among the changes being considered are defining “guaranteed savings” from third-party suppliers, especially in connection with variable-price contracts.

More: NJ Spotlight

Town Unhappy with JCP&L Tx Line Plan

Leaders in a town that could be the site of a number of Jersey Central Power & Light transmission line expansions are unhappy with the way the proposed power line projects are being explained to them. Montville Township Mayor Dan Kostka said he and others noticed that the map JCP&L showed them of the proposed expansion didn’t match those showed to neighboring towns. JCP&L is considering updating a transmission line that could bring 100-foot towers and 230-kV lines to the town.

“Some of the routes that have been planned or proposed have not been presented to this governing body,” Borough Attorney Fred Semrau said. He is drafting a letter of objection to the Board of Public Utilities questioning whether JCP&L has been transparent during the process, he said.

More: The Morris County Citizen

OHIO

University of Dayton to Divest Fossil Fuel Holdings

The University of Dayton announced last week that it will divest all coal and fossil fuel investments from its $670 million investment pool, making it the first Catholic university to join the ranks of colleges and universities making similar decisions. The university said the move was made with an eye toward slowing climate change. “As a Catholic university, it’s our responsibility to serve as good stewards of the Earth. So we cannot ignore the negative consequences of climate change,” President Daniel J. Curran said. The move will affect about $35 million in investments, he said.

More: Dayton Daily News

PENNSYLVANIA

Another Town Objects to Sunoco NG Line

West Bradford Township supervisors announced last week they will officially oppose Sunoco Logistics’ effort to get public utility status for a proposed natural gas line that would pass through the town. Sunoco decided to seek public utility status for the Mariner East project in order to bypass local authorization after other towns balked at the plan.

Sunoco wants to build the line in order to bring gas extracted in western Pennsylvania to a refinery on the Delaware River. Marcus Hook Borough and several trade groups have announced support for the project.

More: The Daily Local

PPL Wants Customers to Pay for New Meters

PPL last week asked the Public Utility Commission to pass through to consumers $450 million in costs to install smart meters. PPL plans to replace its 1.4 million meters between 2017 and 2019.

The company said the program would boost customer bills by 58 cents per month in 2015, rising to $4.50 in 2020 and falling to $2.79 after 2021.

More: The York Dispatch

Met-Ed Finishing Tx Line in Berks County

Met-Ed is completing a $9.2 million project that rebuilt four miles of a 69-kV line and added five miles to the circuit. The project used more than 80 new poles and included new circuit breakers at substations. Both lines should be in service by the end of July, the company said. Met-Ed, a subsidiary of FirstEnergy, services 560,000 customers in 15 Pennsylvania counties.

More: PennEnergy

FirstEnergy Completes New Line in Armstrong County

FirstEnergy finished a $31 million project that included a new 345-kV substation and 1.6 miles of transmission line that will improve reliability in the Armstrong County area, the company said. A large transformer was built next to FirstEnergy’s deactivated Armstrong Power Plant, and a new control room was built to house controls that had been at the plant.

More: Renew Grid Magazine

WEST VIRGINIA

AEP Companies File for Rate Increase

AEP subsidiaries Appalachian Power and Wheeling Power have filed a request to increase revenue by $226 million, which would boost electricity rates by about 17%. The companies say the rate increase is needed to maintain transmission and distribution lines and to run its generating plants. The request cites costs resulting from two storms in 2012. Customer rates in West Virginia haven’t increased since 2011.

More: Coal Valley News