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November 5, 2024

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FERC Approves Removal of RTO Adder for AEP Ohio Cos.

FERC on Thursday approved revised rate schedules for two American Electric Power (NASDAQ:AEP) affiliates in Ohio to remove their RTO participation adders (ER23-855).

The order stems from a complaint filed last year by the Ohio Consumers’ Counsel (OCC) arguing that because state law mandates that transmission owners in the state participate in an RTO, the utilities should not be eligible for the adder. The commission agreed in December, requiring AEP to make a compliance filing recalculating its returns on equity for the affiliates without the RTO adder. (See FERC Orders Two Ohio Utilities Ineligible for RTO Adder.)

Under the new language, AEP affiliates Ohio Power and AEP Ohio Transmission would lower their ROE from 10.35% to 9.85% under the filing and revise the PJM tariff to specify that the adder does not apply to those companies.

The commission also approved a proposal in AEP’s filing to add language to the tariff stating that the companies have the right to receive refunds should federal courts invalidate the Ohio law, noting that there are pending lawsuits challenging the legislation on the grounds that it may pre-empt the Federal Power Act.

The OCC protested the filing, arguing that the notice provision asserting the right to collect refunds should not be approved, arguing it is out of scope, premature, and a violation of the filed-rate doctrine and rule against retroactive ratemaking.

AEP countered that the provision does not violate the filed-rate doctrine because it provides notice of a potential future rate change, which has been upheld by past court rulings. The commission agreed.

“If the commission’s determination in the December order is overturned, the inclusion of the notice provision provides sufficient notice under the filed-rate doctrine to permit Ohio Power and AEP Ohio Transmission to surcharge customers,” FERC wrote.

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NextEra Asks for Rehearing of Canceled Competitive Project

NextEra Energy (NYSE: NEE) is continuing its efforts to salvage the only competitive regional transmission project MISO has recommended in its South region, filing a request last week at FERC to stay the commission’s recent order that formally terminated the project.

NextEra Energy Transmission Midwest (NEET) requested on Monday both a rehearing and a stay of FERC’s March order that allowed MISO to abandon the $115 million, 500-kV Hartburg-Sabine Junction project in East Texas (ER23-865). MISO approved the project in 2017 but determined last year that the project’s benefits faded after recent generation additions in the region. (See FERC Rejects Last-ditch Effort to Save Tx Project.)

NEET said the stay is necessary while it “fully exercises its right to judicial review” of not only the March order but also its pending appeal of Texas right of first refusal legislation that prompted MISO’s re-evaluation of the project.

The 5th U.S. Circuit Court of Appeals last year ruled that the state’s 2019 law giving incumbent transmission companies the first rights to build new power lines is unconstitutional. Texas has petitioned the U.S. Supreme Court to review that decision. (See Texas Petitions SCOTUS to Review ROFR Ruling.)

NEET said it is likely to succeed in the case and maintains that FERC’s cancellation of the project was premature.  

“Absent a stay of the commission’s order, the project will be removed from MISO’s regional transmission planning models and cannot easily be reinstated, regardless of whether NEET Midwest prevails on rehearing or on appeal,” NEET argued. “Granting a stay will avoid imposing these substantial and irreversible consequences on NEET Midwest and will not unduly harm third parties.”

The transmission developer said MISO will likely remove the project from planning models for its interconnection queue and 2024 Transmission Expansion Plan (MTEP) cycle, which will begin later this year.

“Once removed from MISO’s MTEP and generator interconnection planning models, it will be difficult, if not impossible, to reinstate the project, particularly given the disruptions and delays to MISO’s annual transmission planning and interconnection studies that reinstatement will likely cause,” NEET said.

The NextEra subsidiary added that interconnection customers are unlikely to be harmed if the project is kept in planning models because no generation projects currently rely on it for grid access. NEET said scrubbing the project from MISO “prior to final resolution of the legal issues surrounding it” may require customers to pay abandonment costs.

The developer said it’s at a point where it has spent significant money to participate in MISO’s competitive bidding process and to develop the project, but that it may be unable to recover even a portion of its costs.

NEET argued that FERC simply took MISO at its word that keeping the project on its books would distort transmission planning. It said the grid operator’s tariff language triggering a project’s re-examination is more prescriptive and includes “reliability- or service-related issues that may ‘be jeopardized as a result of the delay.’” The developer pointed out that MISO continues to incorporate the unfinished Cardinal-Hickory Creek line in the Midwest that was first recommended in 2011 in its models.

It also said FERC should have more seriously weighed not taking immediate action on the project while the Texas ROFR litigation is pending.

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FERC’s Handling of Environmental Justice Issues Debated in Court

Opponents of a natural gas compressor station made a long-shot bid to close the facility in oral arguments Thursday at the D.C. Circuit Court of Appeals that focused on FERC’s handling of environmental justice concerns.

The compressor is part of Algonquin Gas Transmission’s $627 million Atlantic Bridge Pipeline Project, which expanded capacity into the area.

The commission approved the pipeline expansion, including the compressor, on a peninsula in the city of Weymouth, Mass., in early 2017. In September 2020, the compressor station had two unplanned releases of natural gas, leading a number of groups to ask FERC to reconsider the project.

The commission then took the rare step of asking for briefings on the environmental justice impacts of the compressor after the certificate had been granted and upheld on appeal to the D.C. Circuit.

In an order dealing with those briefings issued in January 2022, FERC let the project keep its certificate. However, then-Chair Richard Glick said he thought the earlier order was likely a mistake, though it could not legally be overturned as the time for rehearing had passed and the D.C. Circuit had upheld that initial decision.

“Although it is cold comfort for the residents near the compressor station, I hope that this proceeding will serve as a turning point for the commission as we work to better consider, address and act on issues of environmental justice,” Glick said during the 2022 briefings.

The attorney for Fore River Residents Against the Compressor Station, Michael Hayden of Morrison Mahoney LLP, told the three-judge panel Thursday that FERC’s decision on the briefings was a “Pyrrhic victory.”

Since then, Glick was denied a nomination hearing before the Senate, which means FERC is more prone to deadlock on such cases with two members from each party, he added.

“I recognize it is a mountainous uphill climb for my clients [to] expect any change to occur before FERC,” Hayden said. “So we don’t expect it to happen voluntarily. It is only going to happen through the influence of the courts.”

The judges asked questions focusing on the same procedural issues that FERC said tied its hands in reviewing the environmental justice concerns. Chief Judge Sri Srinivasan noted that Hayden and his clients were not challenging the 2020 order that authorized an extension of the project’s certificate, but only the order on briefs that also dealt with the rehearing on the extension request.

FERC granted an extension request to the Atlantic Bridge project just 34 minutes after receiving it in the days following Christmas 2018, through an order issued by a staffer. Hayden complained that stopped his clients and others from even having a chance to challenge the firm’s request for an extension.

FERC attorney Jared Fish noted that the staff was in a position to act because it had been monitoring the project’s efforts to get state permits, which were also heavily litigated and delayed. The entire commission later confirmed that order, giving opponents a chance to weigh in on the merits of the extension. But they did not seek rehearing of that order, instead challenging the 2022 order on the briefings.

That 2022 order was an “unusual animal” that constituted a rare third round before the commission, Judge Patricia Millet said. 

“I feel like it’s … a little unfair to put on them not to know how to challenge it,” she said. 

FERC effectively asked the towns and residents to make their case; the commission seemed to agree with them; but then nothing was changed, Millet said. 

“I credit FERC for having done the work and professed its need to change going forward,” Millet said. “But … real people are getting lost in the technicalities of all of this.”

Fish said the problem was that the petitioners asked FERC to reopen its decision granting a certificate, which is not something that it was legally able to do as the 60-day rehearing period had long ended and the court had already upheld the decision.

“You ask for new evidence, new briefing arguments about events that post-date the facility coming online, but it’s not a reopening?” said Millet. “How is it not a reopening?”

Fish answered that FERC was looking for information to determine whether Algonquin was still in compliance with its certificate based on the unintentional releases of natural gas and other new information such as COVID’s impact on environmental justice communities. The commission ultimately found no credible allegation that Algonquin was out of compliance with its certificate order or other permits, he added. 

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California Bill Would Require Bidirectional Charging in All EVs

A bill that would require all new electric vehicles to have bidirectional charging capabilities for vehicle-to-grid (V2G) or vehicle-to-home uses by 2027 cleared the California State Senate Energy, Utilities and Communications Committee on Tuesday despite opposition from large utilities and automakers.

Senate Bill 233 “will ensure that new EVs are equipped with bidirectional charging so that EV batteries have the ability to power homes or other facilities when electricity demand is at its peak and prices are high,” the bill’s author, Sen. Nancy Skinner, wrote in a statement on the need for the bill. “With bidirectional charging, EVs also have the potential to help power the grid.”

California has a requirement that 100% of new passenger vehicles sold in-state must be zero-emission by 2035, with interim goals of 35% by 2026 and 68% by 2030.

The California Electric Transportation Coalition (CalETC) — a group whose members include Pacific Gas and Electric, Southern California Edison and the Los Angeles Department of Water and Power — said Skinner’s bill could hinder EV adoption and undermine the state’s efforts.

“The ramifications of setting a mandatory deadline requiring EVs and chargers to be bidirectional-capable will be detrimental to the EV market and risks increasing costs at a time when zero-emission technology needs to be more accessible to consumers, especially equity communities,” the group wrote in a letter opposing the measure.

“The V2G and bidirectional charging technology market is still nascent, and it is unclear which use cases justify the costs,” it said. “Further, the lion’s share of benefits to grid stability and resiliency are expected to be realized with managed charging through V1G [unidirectional smart charging] technology in the near to medium term and at much lower cost.”

At Tuesday’s hearing, Skinner noted that all Nissan Leafs have been bidirectional since 2013 and remain among the most affordable on the market. All Tesla models will be bidirectional starting with the next model year, she said.

“We’re already moving in this direction, but we need all of our vehicle manufacturers to move their EVs to bidirectional, so that we have that capability,” she said. Doing so could save ratepayers money and promote grid reliability during times of high demand, she said.

“With the expectation that 8 million EVs will be on the road by 2030, if less than 10% of those EVs were utilized in this way, it would have more gigawatt capacity than Diablo Canyon has today,” she said.

Diablo Canyon, the state’s last operating nuclear power plant and its single largest power source, has a 2.2-GW generating capacity.

Supporters of the bill include the Sierra Club, the Union of Concerned Scientists and community choice aggregator Marin Clean Energy.

In their analysis of the bill, committee staff suggested lawmakers might want to amend the bill to remove its mandates and instead direct the California Energy Commission and Air Resources Board to study the availability of bidirectional EVs and chargers, as well as the costs and benefits of bidirectional EV charging and discharging to the grid.

The Alliance for Automotive Innovation — a group whose members include Ford, General Motors and Toyota — said it would oppose the bill unless the mandates were removed and urged the committee to follow its staff’s suggestions.

Skinner accepted an amendment to remove a mandate that EV charging equipment be bidirectional by 2027 but did not remove the vehicle mandate.

Curt Augustine, head of state affairs for the auto alliance, said he was “perplexed” by the move.

“She is exempting all the utilities, the service providers [and] the charging units but requiring a mandate on the automakers,” he said.

Some committee members expressed concerns with the measure, including its potential effects on EV affordability for low-income residents, but they passed it 12-1. It goes next to the Senate Transportation Committee.

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FERC Approves PJM Variable Maintenance Adder Proposal

FERC on Tuesday approved a PJM proposal to overhaul how generators can represent variable operating and maintenance (VOM) costs in their energy market offers (ER23-1138).

The proposal sought to divide generators’ maintenance adders into “major” and “minor” buckets and allow the owners to opt for newly created default values for minor maintenance. The proposal also would create default values for operating expenses, which — like minor maintenance — have a tendency to be fairly uniform year-over-year, PJM said. (See “MRC Approves VOM Package,” PJM MRC Briefs: Nov. 16, 2022.)

The April 18 order said the proposal streamlines the process for approving maintenance and operating costs, while retaining market power protections. The order granted PJM’s requested June 1 effective date.

“PJM’s proposal offers market sellers flexibility while maintaining essential safeguards to mitigate opportunities for market sellers to exercise market power,” the commission said.

Under the status quo rules, generators are required to submit documentation of any maintenance and operating expenses they’re seeking to include in their cost-based offers, which the filing said causes “significant administrative burdens for both market sellers and PJM.”

The maintenance history used to calculate corresponding adders includes costs going back 10 to 20 years, which results in time spent reviewing and approving those costs each year, PJM said. The proposal allows expenses for major maintenance to be approved with an “expiration date,” after which costs must be resubmitted.

Major maintenance expenses would also be required to be resubmitted if they are no longer accurate due to expenses rolling off the 10- or 20-year historical period.

Generators would still have the option to submit unit specific costs for minor maintenance and operating expenses. However, PJM argued that the process of submitting, reviewing and approving expenses typically takes several months on behalf of sellers, RTO staff and the Independent Market Monitor.

Default adders would not be created for nuclear and hydroelectric resources, which PJM said lack the historical data being used to create the adders for other resource types, nor for wind and solar, which the filing said typically don’t submit maintenance adders. PJM may seek to create those adders in the future.

The proposal defines major maintenance as “overhauls, repairs, or refurbishments that require disassembly to complete of boiler, reactor, heat recovery steam generator, steam turbine, gas turbine, hydro turbine, generator, or engine.” Minor maintenance is described as “typically performed when there is a component failure or prior to a component failure due to limited remaining component life” and that can be completed while the generator is operating or during short shutdowns.

Monitor Protests Inclusion of Avoidable Costs

The Monitor argued that PJM’s proposal incorrectly allows maintenance costs that are avoidable costs and should be included in capacity offers to be instead submitted as short-run marginal costs in the energy market.

The issue arises from a vague definition of maintenance costs, the protest states, allowing all costs “directly related to electricity production” to be included in energy offers.

To support its position that maintenance costs should be included in capacity offers, the Monitor pointed to a filing to allow the Indian River 4 coal-fired unit to provide service after its deactivation request, in which it seeks to receive a lump-sum payment for its maintenance-related investments rather than recovering those expenses through the energy market. The protest also states that 53% of marginal units in the energy market included maintenance costs in their 2022 energy market offers.

PJM responded that its proposal doesn’t seek to change the existing requirement that maintenance adders can only be recovered in the energy market and through the avoidable cost rate (ACR) in the energy market. It also argues that the Monitor’s objections have been raised in past dockets and constitutes a collateral attack on the commission’s 2019 order approving PJM’s maintenance adders revisions (EL19-8).

In this week’s order, the commission noted that it had addressed the concerns raised by the Monitor in 2019.

“The wear and tear of operating a resource is typically based on the number of starts or run hours, and the maintenance intervals can be influenced by resource output levels. As such, it is reasonable to assume that some maintenance costs are incurred as the result of operating the resource, even if such costs are not incurred immediately at the time of production,” the commission said in its 2019 order, cited in the recent finding.

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FERC Issues Cyber Incentives Order

FERC took the final step on Thursday in fulfilling its obligation to encourage voluntary investments in cybersecurity by electric utilities, as directed by Congress two years ago (RM22-19).

Congress ordered FERC to develop its cyber incentive plan in the Infrastructure Investment and Jobs Act of 2021, which mandated that the commission establish financial incentives for public utilities to invest in “advanced cybersecurity technology” and participate in cybersecurity threat information-sharing programs.

Willie Phillips (FERC) FI.jpgFERC Chair Willie Phillips | FERC

“In today’s highly interconnected world, our nation’s security and economic wellbeing depend on reliable and cyber-resilient energy infrastructure,” FERC Chair Willie Phillips said in a statement. “We must continue to build upon the mandatory framework of our cybersecurity reliability standards with efforts such as this to encourage utilities to proactively make additional cybersecurity investments in their systems.”

The final rule approved Thursday is largely similar to the Notice of Proposed Rulemaking that FERC issued last September. (See FERC Reluctantly Proposes Cybersecurity Incentives.) It sets three ways utilities may qualify for the incentives:

  • any investment included in a prequalified list of cybersecurity expenditures with a rebuttable presumption of eligibility;
  • investments needed to establish compliance with NERC’s mandatory Critical Infrastructure Protection (CIP) standards that are not yet enforceable; and
  • investments not included in either of these categories but “tailored to their specific situations” and approved by FERC on a case-by-case basis.

The first qualification was already given in last year’s NOPR; the latter two were added for the final rule. Eligible investments must be for technology that “materially improves” a utility’s cybersecurity posture and is not already mandated by law or the CIP standards. Expenses for participating in threat information-sharing programs would also qualify for reimbursement.

Also included from the NOPR is the proposal to allow deferred cost recovery for eligible investments, through which utilities may add the unamortized portion of the expenses to their rate base.

An alternative means of compensation that would have provided a return on equity adder of 200 basis points was not adopted in the final rule. Commissioner Mark Christie criticized the idea as “FERC candy” when it was brought up in September, saying it was “pretty sour for consumers” who would end up paying utilities significantly more for doing what they “ought to do anyway.”

Incentives will remain in effect for up to five years from the date the expenses are incurred, with some exceptions, as long as the investments remain voluntary.

The only dissenting vote on the measure came from Commissioner James Danly, who said at Thursday’s meeting that despite the “unambiguous declarations of Congress and [their] clear purpose [of] directing us to incentivize certain types of investments,” FERC had chosen an “insufficient” path for fulfilling its mandate.

“We can quibble all we like about whether or not [the law] was the right way to do it; it doesn’t matter,” Danly said. “We’ve been given our marching orders by Congress, and it has been a matter of continuous interest to any number of policymakers that we take more aggressive stances on cybersecurity. This rule fails to encompass a sufficient quantity of the entire electric system, and it demands certain levels of materiality that I think are simply not appropriate given the statutory language.”

Danly tempered his criticism with praise for Phillips’ “enthusiastic and unflagging … support for ensuring that the NERC reliability standards are up to scratch.”

The final rule will take effect 60 days following its publication in the Federal Register. FERC had not published its order approving the rule as of press time.

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California Hits 1.5M EVs Well Ahead of Target

More than 1.5 million light-duty electric vehicles have now been sold in California, beating by two years the target set by a governor’s executive order in 2012.

The state reached the 1.5-million EV milestone during the first quarter of this year, according to data released Thursday by the California Energy Commission. And 21% of new cars sold in California in the first quarter were electric. The EV data include battery electric vehicles, plug-in hybrids and hydrogen fuel cell EVs.

In March 2012, Gov. Jerry Brown issued executive order B-16-2012, calling for 1.5 million zero-emission vehicles on California roads by 2025.

At the time, many viewed the target as a “moonshot,” or aspirational goal, state officials said during a media briefing on Thursday. At the end of 2011, only 6,743 EVs had been sold in the state.

“When Gov. Brown set this goal, people across the state and around the nation said it couldn’t be done,” said Lauren Sanchez, senior climate adviser to Gov. Gavin Newsom. “But here in California, we make the future happen. We don’t just set goals, we achieve them.”

California Air Resources Board Chair Liane Randolph credited the state’s zero-emission vehicle (ZEV) regulations for spurring ZEV technology and manufacturing.

“The industry has responded incredibly rapidly to the confluence of market pressures, consumer demands and regulatory requirements,” Randolph said during the briefing.

In 2012, CARB adopted its initial Advanced Clean Cars regulation, which requires an increasing percentage of zero-emission cars to be sold each year. In August, the agency adopted Advanced Clean Cars II, which requires all new cars sold in the state to be zero-emission or plug-in hybrid by 2035. (See Calif. Adopts Rule Banning Gas-powered Car Sales in 2035.)

ZEV adoption in California also has been boosted by nearly $2 billion in purchase incentives, officials said.

“California is setting the bar for climate action,” Newsom said in a statement. “And we’re achieving our goals years ahead of schedule thanks to unprecedented investments secured in partnership with the Legislature.”

The 1.52 million light-duty EVs sold in California through the end of the first quarter of 2023 represent 42% of the 3.61 million EVs sold in the U.S.

“The transition to ZEVs is here, and it’s happening quickly,” California Energy Commission member Patty Monahan said during Thursday’s media briefing.

The CEC is playing a lead role in ensuring enough charging infrastructure and hydrogen-fueling stations are built to support the growing number of EVs. A 2021 analysis found that the state will need 1.2 million public and shared private charging ports to support 8 million plug-in electric passenger vehicles in 2030, Monahan said. The CEC expects to release this year an updated analysis of EV charger demand.

According to figures released Thursday, California had 87,707 EV chargers and 63 hydrogen-fueling stations at the end of the first quarter.

Monahan said efforts are also underway to improve the reliability of public chargers. Drivers often find that chargers don’t work at the public stations, or there’s a glitch in using their credit cards, she said. CEC is developing reporting requirements for the reliability of publicly funded chargers and will publish a report on the reliability of the state’s EV charging network.

In addition, Monahan said, EVs must be “good citizens of the grid.” An analysis found that EVs will account for less than 5% of peak load in 2030. But that demand must be managed wisely, she added.

“With the right incentives, vehicles could shift charging from peak times to the middle of the day,” Monahan said. “You could literally run your vehicle on sunshine, and we wouldn’t have to curtail renewable energy.”

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Sally Talberg Joins NYISO Board of Directors

NYISO on Tuesday announced that veteran energy regulator Sally Talberg had joined its Board of Directors as its ninth member.

Talberg has 25 years of experience in energy and environmental regulation and has served in multiple top-level capacities.

She was appointed by Michigan Gov. Rick Snyder (R) to the Public Service Commission in 2013, serving as its chair from 2016 to 2020. During that time, she was a member of both the National Association of Regulatory Utility Commissioners and the U.S. Department of Energy’s State Energy Advisory Board. In 2016, Talberg served as president of the Organization of MISO States.

Sally Talberg (Michigan Public Service Commission) Content.jpgSally Talberg | Michigan Public Service Commission

Talberg left the Michigan PSC near the end of 2020 to join ERCOT’s Board of Directors, first as an independent director for the first month of 2021 and then as its chair beginning in February — just before Winter Storm Uri hit and nearly caused the collapse of the Texas Interconnection. She, along with three other independent directors of the board, resigned later that month after fierce criticism from state residents about ERCOT’s out-of-state leadership in the aftermath of the storm. (See ERCOT Chair, 4 Directors to Resign.)

Talberg did, however, begin her career in Texas, after graduating from Michigan State University. She worked at the Lower Colorado River Authority while pursuing her master’s in public affairs from the Lyndon B. Johnson School of Public Affairs at the University of Texas at Austin. She went on to work at the Texas Public Utility Commission as an electric policy analyst.

“As a former state commissioner and former adviser to commissioners at the Texas and Michigan commissions, she has a unique appreciation for the importance of market design, infrastructure planning, pragmatic regulation and stakeholder engagement,” NYISO said.

Currently, she runs her own consultancy, Talberg Policy Solutions, and serves as a senior policy fellow at Public Sector Consultants.

The NYISO board consists of 10 members; Talberg’s appointment leaves just one vacancy.

“It is a privilege to welcome Sally to the NYISO’s Board of Directors. Her extensive experience will be invaluable as the board guides the NYISO during this historic period of industry change,” Chair Daniel Hill said in a statement. “We look forward to Sally’s contributions as we work to meet the state’s climate mandates, ensure grid reliability and competitive wholesale markets during the grid in transition.”

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AES, FirstEnergy Ask to End PPA for Warrior Run Coal Plant

AES (NYSE:AES) and FirstEnergy (NYSE:FE) announced an agreement Tuesday to terminate their power purchase agreement for the 205-MW Warrior Run coal-fired power plant almost six years early, with plans to shutter the western Maryland plant by 2025.

FirstEnergy subsidiary Potomac Edison has been buying the output of the plant for decades under the Public Utility Regulatory Policies Act (PURPA) and bidding its output into PJM. The utility’s ratepayers will be on the hook for another $357 million if the deal is approved by the Public Service Commission, but that would save them $80 million over the next seven years while helping Maryland reach its decarbonization goals.

The PPA, which obligated Potomac Edison to purchase up to 180 MW/hour through Feb. 10, 2030, would terminate at the end of May 2024 under the utility’s petition (ML# 302441).

“This agreement is another milestone in our journey toward decarbonization,” AES CEO Andrés Gluski said in a statement. “Following the contract termination, we see interesting opportunities to repurpose the Warrior Run site for low carbon solutions that continue to serve local communities.” No details were provided on those plans.

The plant would keep operating through at least May 2024 — the end of PJM delivery year 2023/24 — which is in line with AES’ corporate goal of exiting the coal generation business by 2025, FirstEnergy told the PSC.

Potomac Edison has been buying the plant’s output under PURPA since the state restructured in 1999 and has been selling its output into PJM’s market since 2008, which is the most cost-effective way of generating income for the plant. Through 2022, the utility has paid AES $1.3 billion in excess of its wholesale power revenues, FirstEnergy told the PSC.

That money has been recovered from customers under a surcharge that varies significantly depending on wholesale prices, but has made up as much as 15% of the average customer’s bill when wholesale prices are low, the utility told the PSC.

Even with recent wholesale market volatility, the two firms expect the early termination fees to be cheaper than what Potomac Edison would have to pay under the remainder of the contract.

The wholesale volatility has not all been to the benefit of the plant. During the winter storm in December 2022, it underperformed on one day and owes $2 million in capacity performance payments to PJM.

“While the events of December 23 and 24, 2022, are uncommon and excessive compared to normal conditions, removing these operational risks along with the market volatility risk can provide significant benefit and protection to PE’s customers,” the PSC filing said.

The firms asked the PSC to decide on their request to retire the plant early by June 30. If it is approved later, the consumer benefits will be lower as they will have to renegotiate, the companies said.

AES said it would work with the plant’s employees to manage a responsible transition and will maintain full operational control over the site after it is decommissioned.

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Michigan Dems Seek to End Coal-fired Plants by 2030

LANSING, Mich. — Democrats introduced a package of seven energy and climate bills Wednesday that would end coal-fired electric generation in the state by 2030 and mandate 100% renewable electric production by 2035.

SB 276, introduced by Sen. Rosemary Bayer (D), calls for the state’s coal-fired power plants to be phased out by 2030, putting it at odds with DTE Energy (NYSE:DTE), which operates a 3,280-MW coal plant near Monroe.

DTE’s integrated resource plan calls for it to shut down Monroe Units 3 and 4 in 2028 and retire Units 1 and 2 in 2035. (See DTE Unveils Renewable Energy Plan, Speeds Up Ending Coal Use.) DTE spokesman Peter Ternes said the company had no comment on the legislation.

According to the Sierra Club’s Beyond Coal campaign, the only other plant that might be affected by the bill is the 70-MW TES Filer City Station, which is owned in part by CMS Energy (NYSE:CMS).

MI greenhouse gas emissions (MI Healthy Climate Plan) Content.jpgMichigan greenhouse gas emissions by source | MI Healthy Climate Plan

“TES has a planned retirement date of 2025, according to [the Energy Information Administration], but Sierra Club has not counted it because their contract with Consumers Energy ends in 2025, and they haven’t made any solid plans for the future, which means theoretically they could sign an agreement with another power purchaser, retire or convert to gas,” the Sierra Club said.

CMS has announced it would close all three units at the J.H. Campbell coal plant in West Olive in 2025 in addition to two units at the D.E. Karn coal plant in 2023. (See Mich. PSC OKs CMS Plan to End Coal Use by 2025.)

Senate Democrats announced their legislative plans last week as some 600 people met in Detroit at the state’s first Healthy Climate Conference.

The other bills are:

  • SB 271, introduced by Sen. Erika Geiss, would mandate 100% renewable electric production by 2035.
  • SB 272, introduced by Sen. Sue Shink, would give the Public Service Commission authority to consider climate, public health, social equity and price affordability issues in integrated resource plans by regulated utilities.
  • SB 273, introduced by Sen. Sam Singh, would require municipally owned and cooperative utilities to continue participating in energy-efficiency programs (eliminating a 2021 sunset provision).
  • SB 274, introduced by Shink, would require the development of a plan to reduce greenhouse gas emissions from buildings, including a zero-emission standard for new construction after 2026.
  • SB 275, introduced by Singh, is intended to reduce the carbon intensity of transportation fuels to 25% below a 2019 baseline by the end of 2035. The bill, which would also establish a market for trading carbon intensity credits, would exempt aviation fuels from the clean fuels standard, although sustainable aviation fuel would be eligible to generate credits.
  • SB 277, introduced by Sen. Kristin McDonald Rivet, would allow farms enrolled in Michigan’s farmland preservation program to lease out land for solar energy projects.

None of the bills in the package are tie-barred, meaning if some bills are blocked from passage, the others could still take effect.

Lisa Wozniak, executive director of the Michigan League of Conservation Voters, praised the proposals, saying recent polling showed most Michigan residents want the state to take greater action to fight climate warming. “This legislation will set Michigan on a path toward cleaner air, good-paying jobs, lower costs and a healthy, livable future,” she said.

Singh said the bills will help the state meet the goals of the MI Healthy Climate Plan. Adopted by the administration of Gov. Gretchen Whitmer (D) in 2022, the plan calls for the state to build the infrastructure for 2 million electric vehicles by 2030 and achieve carbon-neutral status by 2050.

If approved, the bill package would be the most significant action Michigan’s legislature has taken on climate issues since 2016, when the Republican-controlled state government enacted a bill requiring utilities to produce at least 15% of electricity by renewables by the end of 2021.

Now, following the 2022 election, the governor’s office and the legislature is under Democratic control, albeit with Democrats holding narrow majorities in both the House of Representatives and Senate. Under Michigan’s constitution, bills passed this year with less than two-thirds approval would not take effect until March 31, 2024.

While Democrats’ legislative package matches proposals urged by environmental groups at the start of the climate change conference, Whitmer did not call for any specific plan of action in her keynote address to the conference. Instead she praised the progress the state has made thus far, noting it has increased its renewable capacity from 17 MW in 2009, to 3,554 MW in 2022.

Whitmer last week also promoted a plan in her proposed 2023/24 budget to exempt EVs from Michigan’s 6% sales tax for two years. That proposal could save motorists up to $2,400 on a $40,000 EV, while costing state coffers some $48 million.

DTE Opens 225-MW Wind Farm

Adding to the state’s renewable fleet, DTE on Tuesday announced that it has officially opened the state’s largest wind farm, a 225-MW project spanning sections of Saginaw and Midland counties. (There is actually one larger wind project in the state, also owned by DTE in Isabelle County, generating 383 MW, but it is split into two separate farms.)