FERC on Thursday called for an investigation into four interstate natural gas pipelines that it believes might be charging shippers in PJM, ISO-NE, NYISO and CAISO too much.
The pipelines — Empire Pipeline (RP16-300-000), Iroquois Gas Transmission System (RP16-301-000), Columbia Gulf Transmission (RP16-302-000) and Tuscarora Gas Transmission (RP16-299-000) — have been ordered to file a cost and revenue study within 75 days and appear before an administrative law judge for evidentiary hearings.
The ’ earnings were flagged in a FERC review of annual reports filed by 129 pipeline companies for 2013 and 2014. The analysis found returns on equity for the four pipelines ranged from 15.8% (Empire, 2013) to 24.9% (Tuscarora, 2014). The industry average ROE is a little more than 12%.
“These estimated levels of returns led staff to believe that these four pipelines are over-recovering their costs of service and may be charging rates that are no longer just and reasonable,” James Sarikas, of FERC’s Office of Energy Market Regulation, said in a presentation to the commission. “In addition, none of these pipelines have an existing settlement with its customers that places a currently effective moratorium on existing rates, or requires it to file a new general [Natural Gas Act] Section 4 rate case in the future.”
First Probes Since 2013
The probes are the first in two years to be conducted under Section 5 of the NGA, designed to protect consumers from excessive rates and charges.
Empire Pipeline’s Tioga County Extension Project (Source: National Fuel Gas)
FERC in 2009 began a regular, in-depth review of the cost and revenue information filed by large pipelines and in 2011 expanded its focus to include smaller operations.
In that time, the commission initiated 10 proceedings to determine if the pipelines’ transportation and storage rates might not be just and reasonable. Eight of those investigations ended in settlement agreements, and two were terminated.
Dena Wiggins, president of the Natural Gas Supply Association, which represents gas producers and marketers, said her group was pleased that FERC had opened the investigations, adding that they underscore a need for revisions to Section 5.
“Legislation that reforms Section 5, granting FERC the authority to award refunds to shippers in cases where pipelines are determined to have overcharged, would further enhance consumer protections, since currently FERC can only order an overearning pipeline to lower its rates going forward from the date of the commission’s order,” she said in a statement. “Now that FERC has adopted a new modernization surcharge policy that grants interstate pipelines new opportunities to recover costs outside of a general rate case, Section 5 reform is more important than ever.”
Pipelines Span the Country
FERC’s orders outlined their concerns over the companies’ earnings:
Empire, an affiliate of National Fuel Gas, received authorization in 2011 to construct the Tioga County Extension Project, which enables it to transport natural gas south from Canada and product from the Marcellus shale north from Pennsylvania. It had not filed a rate case since 2006. The commission’s review found Empire earned $24.6 million after income taxes in 2013, an ROE of 15.8%, and $28.6 million (20.2%) the following year.
Iroquois, which owns pipelines from the Canadian border through New York and western Connecticut, has not adjusted its rates since 2004. FERC said it had an after-tax return of $54 million (16.2%) in 2013 and $55.6 million (16.3%) in 2014.
Columbia Gulf operates about 3,400 miles of pipeline located primarily in Louisiana, Mississippi, Tennessee and Kentucky. Its current rates are the result of a 2011 settlement agreement, which barred it from seeking to modify rates before April 1, 2014. The company earned $21.9 million (17.3%) for 2013 and $26.4 million (18.2%) for 2014.
Tuscarora, which operates a 229-mile pipeline in Nevada and northwestern California, had not had a rate examination since a 2012 settlement with the Nevada Public Utilities Commission. FERC’s review indicated earnings of $9.7 million (23.6%) for 2013 and $9.6 million (24.9%) for 2014.
American Transmission Co. won permission from FERC last week for a corporate reorganization that will split its existing transmission assets from its development partnership with Duke Energy.
ATC said the separation was driven by its owners — utilities, co-operatives and municipalities — who were unwilling or unable to take part in projects outside of the company’s 9,500 miles of “existing core transmission” in Wisconsin, Michigan, Illinois and Minnesota.
FERC approved the creation of a new holding company, ATC Holdco LLC, which will assume most of ATC’s 50% share in Duke-American Transmission Co., which is seeking development opportunities in PJM, MISO and SPP (EC16-47).
ATC’s owners can remain invested in the legacy transmission only or exchange their interests for shares in the development arm.
The companies pledged to not pass on any transaction-related costs to customers for five years, but FERC reminded them that the commission doesn’t allow rate recovery to finance transactions.
“Regardless of the terms of applicants’ hold-harmless commitment, we remind applicants that the commission historically has not permitted rate recovery of acquisition premiums,” FERC wrote in the order, issued Wednesday. “If applicants seek recovery of any acquisition premium associated with the transaction, they must be able to demonstrate in a subsequent proceeding … that its acquisition was ‘prudent and provides measurable, demonstrable benefits to ratepayers.’”
No comments were filed opposing the transaction. Wisconsin Electric Power Co. and Wisconsin Public Service Corp. submitted their written support.
Entergy’s operating companies don’t have to sign new purchase power agreements with most qualifying facilities above 20 MW, FERC ruled last week (QM14-3-000).
Because of their membership in MISO, the commission said, the Entergy companies had met their “statutory standard” under a 2006 order in which the commission revised its regulations implementing the Public Utility Regulatory Policies Act.
In a separate order, the commission granted Arkansas Electric Cooperative Corp. (AECC) similar relief based on the 2006 order, which said that QFs with net capacity above 20 MW were presumed to have “nondiscriminatory access” to wholesale markets in RTOs such as MISO.
The commission denied Entergy’s request for relief regarding one QF, Dow Chemical’s Plaquemine facility south of Baton Rouge, La., which it said faced transmission constraints.
Excluding the Dow facility, FERC said MISO provides all “over-20 QFs” in Entergy’s territories “nondiscriminatory access to independently administered, auction-based day-ahead and real-time wholesale markets for the sale of electric energy and to wholesale markets for long-term sales of capacity and electric energy.”
Entergy’s request was supported by the Louisiana Public Service Commission but protested by several industrial customers with QFs.
The Louisiana PSC said QFs in Entergy’s service territory have nondiscriminatory access to MISO’s markets and noted the company’s request “was made in part to satisfy the Louisiana commission’s requirements — which included removing the PURPA ‘put’ obligation — in approving MISO membership for Entergy Gulf States Louisiana and Entergy Louisiana.”
Justice Department Investigation
Protests by Occidental Chemical and Formosa Plastics cited an open Department of Justice antitrust investigation into Entergy’s transmission practices. Formosa said FERC should deny Entergy’s application pending a resolution of the investigation, noting that the department sought to have Entergy divest its transmission system. Occidental said that MISO had not approved transmission improvements to relieve the Amite South load pocket.
The commission said that because Amite South is import constrained, Occidental’s Taft QF was not prevented from selling energy outside the load pocket, and noted that LMPs at the plant are higher than average LMPs in MISO.
“Moreover, as Entergy points out, any energy which the Taft QF sells to load-serving entities outside the Amite South load pocket, including through the sub-regional power balance constraint to load-serving entities in MISO Midwest would, therefore, most often relieve congestion caused by the constraint, rather than be barred by it, and would instead receive congestion credits,” FERC said.
In contrast, FERC said, Dow’s 1,491-MW Plaquemine QF is located in a generation pocket, which is export constrained and subject to lower LMPs than the rest of MISO.
Entergy told FERC that transmission upgrades are scheduled to go in service around the Dow facility in December 2018. FERC said Entergy will be able to file for termination of its obligation to the Dow QF once the upgrades are completed.
The commission emphasized that granting Entergy’s application “does not relieve Entergy of its obligation to abide by its existing agreements.”
Entergy told FERC it would honor existing contracts “pending satisfaction of applicable contract termination requirements” and said it would not “seek to terminate any existing agreements effective prior to 120 days” after its request was accepted. FERC’s order was effective Oct. 23, 2015, the date of Entergy’s filing.
AECC Request Approved
In a related order, FERC also granted AECC’s request to terminate its PURPA obligations for “over-20” QFs in MISO (QM15-3-000).
AECC made the request in April on behalf of itself and its 17 members, 14 of which are in MISO, but later amended the application so that it applied solely to the cooperative. The commission agreed with AECC that it relies on Entergy Arkansas’ transmission system to serve its members’ load.
FERC last week denied a request by two energy companies to declare they were not affiliates of the investment management wing of Fidelity Investments (EL15-96).
The companies, Backyard Farms Energy and Devonshire Energy, are indirect subsidiaries of Fidelity parent company FMR.
Devonshire was formed to purchase wholesale power for FMR’s multiple operating companies; Backyard Farms Energy purchases wholesale energy for use by an affiliated greenhouse grower of tomatoes in Maine.
The two energy companies argued that the mutual fund accounts managed by subsidiary Fidelity Management & Research are not owned by the parent company itself but by shareholders and institutions.
Backyard and Devonshire said they made the request for a declaratory order because they were concerned that they would be required to file a change of status if their affiliates acquired more than 10% of another energy company.
FERC said that its regulations classify the companies as affiliates of Fidelity Management because they are under the common control of FMR.
“Regardless of the ownership of the Fidelity accounts themselves, the fact remains that the Fidelity advisers manage and control the investments that the Fidelity accounts make and also exercise voting rights for the Fidelity funds in some circumstances,” the commission said.
WASHINGTON — The Supreme Court on Monday upheld FERC’s jurisdiction over demand response, reversing the D.C. Circuit Court of Appeals in a 6-2 ruling.
“The [Federal Power Act] provides FERC with the authority to regulate wholesale market operators’ compensation of demand response bids,” wrote Justice Elena Kagan in an opinion joined by Chief Justice John Roberts and Justices Anthony Kennedy, Ruth Bader Ginsburg, Stephen Breyer and Sonia Sotomayor. (FERC v. Electric Power Supply Association, 14-840, 14-841).
The decision upheld FERC Order 745, which required grid operators to pay DR providers LMPs — equal to generation.
“This decision means that consumers will continue to see the significant benefits of demand response, which enhances competition in the markets, reduces wholesale prices and helps makes the grid more reliable,” FERC Chairman Norman Bay said in a statement.
The Electric Power Supply Association, which filed the lawsuit challenging Order 745, did not respond to requests for comment.
Justice Clarence Thomas joined Justice Antonin Scalia’s dissent. Justice Samuel Alito recused himself in the case, reportedly because he owns stock in Johnson Controls, parent company of DR provider EnergyConnect.
In May 2014, the D.C. Circuit vacated Order 745 in a 2-1 ruling, saying DR is a retail product and thus subject to state, not federal, jurisdiction. It also said FERC’s requirement that DR receive LMPs was “arbitrary and capricious.”
The Supreme Court majority disagreed on both counts.
Growing Importance
FERC sought Supreme Court review because of the growing importance of DR. While the D.C. Circuit ruling explicitly addressed only DR participation in wholesale energy markets, FERC said the ruling also threatened its participation in wholesale capacity markets.
That could have created an upheaval in markets such as PJM, where capacity auctions represent about 95% of total DR revenue. After some uncertainty, PJM decided to include DR in the 2018/19 Base Residual Auction last August.
PJM issued a statement saying it was pleased with the ruling. “Certainty and continuity are important in markets. Demand response brings value to competitive wholesale markets and is a vital component of electric system reliability.”
UBS Securities Monday reiterated its prediction that one-quarter of the DR that bid in to the PJM 2018/19 capacity auction as base product will leave the market when it transitions to 100% Capacity Performance for 2020/21, raising the price by about $14/MW-day.
Three-Part Analysis
Kagan broke the court’s analysis into three parts. “First, the practices at issue directly affect wholesale rates. Second, FERC has not regulated retail sales. Taken together, these conclusions establish that [Order 745] complies with the FPA’s plain terms. Third, the contrary view would conflict with the FPA’s core purposes.”
“The FPA has delegated to FERC the authority — and, indeed, the duty — to ensure that rules or practices ‘affecting’ wholesale rates are just and reasonable. To prevent the statute from assuming near-infinite breadth, this court adopts the D. C. Circuit’s common-sense construction limiting FERC’s ‘affecting’ jurisdiction to rules or practices that ‘directly affect the [wholesale] rate.’ That standard is easily met here. Wholesale demand response is all about reducing wholesale rates; so too the rules and practices that determine how those programs operate. That is particularly true here, as the formula for compensating demand response necessarily lowers wholesale electricity prices by displacing higher-priced generation bids.”
Not Retail
Kagan said Order 745 did not regulate retail electricity sales that are under state jurisdiction.
“A FERC regulation does not run afoul of [the FPA’s] proscription just because it affects the quantity or terms of retail sales. Transactions occurring on the wholesale market have natural consequences at the retail level, and so too, of necessity, will FERC’s regulation of those wholesale matters. That is of no legal consequence.
“When FERC regulates what takes place on the wholesale market, as part of carrying out its charge to improve how that market runs, then no matter the effect on retail rates, [the FPA] imposes no bar. Here, every aspect of FERC’s regulatory plan happens exclusively on the wholesale market and governs exclusively that market’s rules.”
The court said EPSA’s position would “subvert the FPA” and leave DR without any agency able to regulate it.
“EPSA’s arguments suggest that the entire practice of wholesale demand response falls outside what FERC can regulate, and EPSA concedes that states also lack that authority. But under the FPA, wholesale demand response programs could not go forward if no entity had jurisdiction to regulate them. That outcome would flout the FPA’s core purposes of protecting ‘against excessive prices’ and ensuring effective transmission of electric power.
“The FPA should not be read, against its clear terms, to halt a practice that so evidently enables FERC to fulfill its statutory duties of holding down prices and enhancing reliability in the wholesale energy market.”
LMP for DR also Upheld
The court also rejected complaints that FERC was overcompensating DR by requiring LMPs. “This court’s important but limited role is to ensure that FERC engaged in reasoned decision making — that it weighed competing views, selected a compensation formula with adequate support in the record and intelligibly explained the reasons for making that decision. Here, FERC provided a detailed explanation of its choice of LMP and responded at length to contrary views. FERC’s serious and careful discussion of the issue satisfies the arbitrary and capricious standard.”
Reaction
The ruling was celebrated by environmental groups, the White House and DR investors.
EnerNOC, the only publicly traded pure-play DR provider, saw its shares jump more than 70% on the news, rising from $4.09/share to close at $7.03/share.
Shares of independent power producers fell sharply, with Dynegy down 11.55%, NRG Energy off 9.5%, Calpine dropping almost 8% and Talen Energy losing 6%. Utilities in PJM also had a poor day, with Exelon (-3%), Public Service Enterprise Group (-2.2%), and American Electric Power (-1.33%) all showing losses, along with FirstEnergy (-1.4%), which had filed a FERC challenge seeking to bar DR from PJM capacity auctions following the D.C. Circuit ruling. The PJM Power Providers (P3) Group, whose members include Dynegy, Calpine and NRG, had no immediate comment.
“We are extremely proud of our involvement in this seminal case that ensures an important role for demand-side resources in our nation’s wholesale electricity markets,” EnerNOC CEO Tim Healy said in a statement. “Today’s decision is a tremendous win for all energy consumers, for the economy and for the environment.”
“This decision allows us to continue realizing billions in annual savings from innovative incentives and business models that ensure we use our electricity system efficiently,” said White House spokesman Frank Benenati, who called the ruling “good news for consumers, clean energy, reliability and the overall economy.”
“It’s going to make consumers an equal participant in the market in a way they never were before,” Jon Wellinghoff, who chaired FERC when it issued Order 745, told Greentech Media. “That was the intention of Order 745, and that has been vindicated.”
Also happy was the Environmental Defense Fund: “Today’s Supreme Court decision is a victory for all Americans who want greater choice and value broader customer access to clean, low-cost energy,” said President Fred Krupp. “Demand response is helping millions of Americans get low-cost, clean and reliable electricity. Today’s court ruling will help expand customer choice, and solidify demand response as a crucial part of our clean energy future.”
Exelon praised the ruling, saying DR is “a valuable tool for our customers to manage their energy costs, and we believe it should play a role in our nation’s energy mix.”
The libertarian Competitive Enterprise Institute was critical. “The Supreme Court sends a clear message by ruling in favor of FERC’s power demand rule: Energy politics are a game that ignores both the rule of law and states’ constitutional authority. The effects of this decision trickle down to each individual consumer,” said Myron Ebell, director of the institute’s Center for Energy and Environment.
NARUC: Coordination is Key
Travis Kavulla, president of the National Association of Regulatory Utility Commissioners, said the ruling’s holding that energy conservation measures can be valued in both a retail and wholesale context “may serve to blur the already fuzzy line between state and federal jurisdiction.”
Kavulla cited a 2010 NARUC resolution on the jurisdictional overlap, which said “the coordination of federal and state initiatives offers the best way to assure the full benefits of demand response are delivered to customers.”
Kagan noted that the “statutory division generates a steady flow of jurisdictional disputes because — in point of fact if not of law — the wholesale and retail markets in electricity are inextricably linked.”
Indeed, the court will deal with another jurisdictional dispute next month. It has scheduled oral arguments for Feb. 24 on two cases pitting New Jersey and Maryland regulators against FERC. The court will consider orders by the 3rd and 4th U.S. Circuit Courts of Appeals that upheld lower court rulings throwing out contracts in which generation developers won state-issued subsidies to build plants in the two states. (See SCOTUS Agrees to Hear Md., NJ-FERC Subsidy Case.)
Wide Margin of Victory
The margin of FERC’s victory was a bit of a surprise. At oral arguments in October, the court’s liberal wing indicated support for FERC’s jurisdiction, but the commission faced harsh questions from Roberts, Kennedy and Scalia. (See FERC Jurisdiction over DR in Peril as Supreme Court Splits.)
In his dissent, Scalia said the majority’s opinion “inverts the proper inquiry.”
“Paying someone not to conclude a [retail purchase of power] that otherwise would without a doubt have been concluded is most assuredly a regulation of that transaction,” he wrote.
“While the majority would find every sale of electric energy to be within FERC’s authority to regulate unless the transaction is demonstrably a retail sale, the statute actually excludes from FERC’s jurisdiction all sales of electric energy except those that are demonstrably sales at wholesale.”
Scalia said the FPA defined the “sale of electric energy at wholesale” as “a sale of electric energy to any person for resale.”
“No matter how many times the majority incants and italicizes the word ‘wholesale’ … nothing can change the fact that the vast majority of (and likely all) demand response participants — ‘[a]ggregators of multiple users of electricity, as well as large-scale individual users like factories or big-box stores’— do not resell electric energy; they consume it themselves. FERC’s own definition of demand response is aimed at energy consumers, not resellers.”
ALBANY, N.Y. — The New York Public Service Commission on Thursday approved a 10-year, $5.3 billion Clean Energy Fund, a centerpiece of Gov. Andrew Cuomo’s Reforming the Energy Vision initiative to shift the state to resources that will fight climate change and provide more resilience.
NYPSC Chair Audrey Zibelman said the commission’s action was a milestone in the nearly two-year effort. “I really feel like we’re turning the chapter to the next stage of REV,” she said.
New York set a new windpower record last Tuesday, generating 1,571 MW at 5 p.m. — 9% of the state’s electric generation and 90% of the 1,746 MW of installed wind capacity.
The commission also advanced the docket for the creation of a Clean Energy Standard that would mandate 50% of New York’s electricity come from “clean” energy sources by 2030. The NYPSC is under a Cuomo mandate to create the regulatory framework for the CES by June. Part of that mandate includes creation of financial incentives to keep New York’s upstate nuclear power plants viable until the renewable resources reach their target in 14 years. (See related story, New York Would Require Nuclear Power Mandate, Subsidy.)
Leaders of the Republican-controlled state Senate asked the commission to delay action on the initiatives, saying that while they support the goals of the fund, it should be considered as part of the 2015-2016 budget.
The Clean Energy Fund will advance solar, wind, energy efficiency and other clean tech industries to spur economic development and reduce carbon emissions, officials said. Cuomo said the $5 billion investment will leverage more than $29 billion in private sector funding.
The fund will be administered by the New York State Energy Research and Development Authority and financed through the systems benefit charge paid by ratepayers. It will receive $585 million this year and will be phased down annually, finally reaching zero after a decade.
Goals
In addition to the $29 billion in private investment, the 10-year goals include: 10.6 million MWh and 13.4 million MMBtu of energy efficiency; 88 million MWh of renewable energy; 133 million tons of CO2 reduction; and $39 billion in customer bill savings.
The order says the traditional method of ratepayer-funded grants and rebates is too limited to effect the changes needed to meet New York’s climate and energy goals.
“The state’s greenhouse gas reduction goals demand that we achieve significantly more than is practical to achieve through current ratepayer-funded direct payment programs,” the orders states. “The status quo must evolve to a model that recognizes the appropriate use of targeted programs combined with spurring private sector involvement to reach the level of scale needed to realize our objectives. Transitioning from predominately government-directed resource acquisition approaches to market-based initiatives that intrinsically recognize the value of clean resources requires careful planning, along with a long-term commitment to the market.”
The projected $39 billion in customer bill savings will come from “innovative projects and private-public partnerships focused on reducing greenhouse gas emissions, making energy more affordable through energy efficiency and renewable energy, and mobilizing private-sector capital,” according to the governor.
Businesses are expected to see lower costs of $1.5 billion over the next 10 years, including an immediate reduction of $91 million from 2016 electric and gas system benefits charges compared to 2015.
The fund includes:
Market Development ($2.7 billion): NYSERDA initiatives are intended to stimulate consumer demand for clean energy alternatives and energy efficiency while helping to build clean energy supply chains. At least $234.5 million must be invested in low-to-moderate income initiatives during the first three years.
NY-Sun ($961 million): The fund finalizes the state’s commitment announced in 2014 for growing solar electricity by supporting rapid and continued cost reduction.
NY Green Bank ($782 million): The fund will complete the capitalization of the bank, which leverages private capital for clean energy projects. The fund will increase the NY Green Bank’s total investment to $1 billion and is expected to leverage an estimated $8 billion in private investment. (See Project Interest Overwhelms New York’s Green Bank.)
Innovation and Research ($717 million): Research and technology development is intended to drive clean-tech business growth and job creation while providing more energy choices.
Other REV Orders
The commission also approved several orders related to the REV proceeding.
Electric and gas utilities were directed to develop new energy efficiency programs, which included budgets and targets over the next three years (15-M-0252).
An earlier program based on rebates and subsidies expired at the end of 2015, but the REV initiative directed the utilities to develop flexible approaches that aligned with the state’s climate and energy goals.
“The commission directed that with this flexibility, utilities should develop programs that are market-based and include market mechanisms that combine resource acquisition with third-party activities to drive greater value for customers, achieve greater market-wide efficiency savings, target specific system needs and depend less on direct ratepayer support,” the order states.
The NYPSC also established a benefit-cost analysis for evaluating new energy proposals to determine whether they meet REV goals (14-M-0101).
The framework was included in the original REV order last year. Appendix C of Thursday’s order spells out the framework in detail. Utilities were directed to file “Benefit Cost Analysis Handbooks” by June 30.
The commission also expanded the scope of its large-scale renewable energy proceeding to bring it in alignment with the state’s Clean Energy Plan (15-E-0302). The LSR docket is the vehicle in which financial incentives for nuclear plants will be released and public comments gathered.
The Clean Energy Plan was released in December and first laid out the 50% renewable energy goal. The concurrent Clean Energy Standard proceeding formalizes that goal as state policy.
ALBANY, N.Y. — Upstate nuclear power plants would earn extra payments for emissions-free energy under a New York Public Service Commission staff proposal announced Thursday.
The proposal was previewed at the conclusion of the regular commission meeting, ahead of a planned staff white paper on Gov. Andrew Cuomo’s proposed Clean Energy Standard
Cuomo gave the PSC a June deadline to provide the regulatory framework for New York to derive 50% of its electricity from “clean” sources by 2030. (See Cuomo: 50% Renewables by 2030, Keep Nukes Going.)
Zero Emission Credits
Under a broad outline, nuclear plants would be eligible to earn Zero Emission Credits (ZECs), similar to renewable energy credits (RECs) earned by wind and solar generators.
Like RECs, ZECs will be tradable, but the two would not be interchangeable under the plan.
“The staff proposal is to establish a requirement for all load-serving entities to procure a pro rata share of Zero Emission Credits … to produce an emission-free value for energy produced by nuclear power plants,” said Scott Weiner, director for markets and innovation.
Weiner referred to the plan as a “nuclear power bridge to a renewables future.”
FitzPatrick Nuclear Plant (Source Entergy)
It would also provide a lifeline to western New York’s financially stressed nuclear plants. The R.E. Ginna nuclear plant is seeking ratepayer subsidies after a reliability need was determined. The James A. FitzPatrick plant announced its closure due to low energy prices, and a third plant, Nine Mile Point, is under financial pressure. (See Entergy Rebuffs Cuomo Offer; FitzPatrick Closing Unchanged.)
Cuomo wants to close the state’s fourth nuclear plant, Entergy’s Indian Point facility, because of its proximity to New York City.
Officials declined to discuss specific details of the CES, which would also include revisions to the way New York procures and credits renewable energy.
New York’s most recent renewable portfolio standard expired in 2014. State regulators have been discussing a revised RPS for months in a so-called large renewables proceeding. Nuclear generation has now been added to the proceeding.
‘Drama’
The meeting started with “drama,” as PSC Chair Audrey Zibelman put it, when the Republican-led state Senate hand-delivered a letter to the commission seeking a delay in action on the CES and the creation of a $5.3 billion Clean Energy Fund.
The letter, signed by Majority Leader John Flanagan, his deputy and the head of the energy committee, said action was “premature” on the CEF, another order that’s part of the state’s Reforming the Energy Vision proceeding. (See related story, NYPSC OKs $5.3B Clean Energy Fund.)
“The CEF is a major fiscal initiative and has the potential to be even larger when taking into account the CES,” they wrote. “While we do not believe the commission is taking the fiscal implications of these initiatives lightly, it is the position of the conference that these proceedings would be strengthened by a real cost-benefit analysis and genuine opportunity for public input.”
The commission held a 38-minute executive session to discuss the letter but decided to proceed. Zibelman was particularly pointed in saying the letter failed to demonstrate any reason for the commission to delay action.
“This petition was filed in 2014 and there has been considerable opportunity for public commentary both in terms of the number of public statements, hearings and meetings … as well as the process before us,” she said. “There’s no question that we have in front of us a very robust record.”
For administrative ease, Zibelman said, the CES has been rolled into the existing proceeding for large-scale renewables (15-E-0302) rather than a new docket.
WASHINGTON — The D.C. Circuit Court of Appeals on Thursday rejected a request to stay the implementation of EPA’s Clean Power Plan while legal challenges are decided.
The decision was not unexpected. The petitioners, PPL’s Louisville Gas & Electric and Kentucky Utilities, had to convince the court both that they were likely to prevail in the challenge and that they would suffer irreparable harm without a stay.
“Petitioners have not satisfied the stringent requirements for a stay pending court review,” a three-judge panel ruled (15-1363).
The judges also rejected a motion in a related case (15-1418) to sever certain issues and hold them in abeyance.
The court ordered the parties to submit a proposed format for briefing of all the issues in the cases by Jan. 27, with initial briefs filed by April 15 and final briefs by April 22.
Oral argument is scheduled for 9:30 a.m. June 2 and could continue into June 3, the court said.
Opponents Hopeful
West Virginia Attorney General Patrick Morrisey said he is considering asking the U.S. Supreme Court to consider the stay request.
“We are disappointed in today’s decision, but believe we will ultimately prevail in court,” Morrisey said in a press release. “The court did not issue a ruling on the merits and we remain confident that our arguments will prevail as the case continues. We are pleased, however, that the court has agreed to expedite hearing the case.”
West Virginia is among 26 states that have joined in the legal challenges, which were filed immediately after EPA published its final rule in the Federal Register in October. (See Legal Debate over Clean Power Plan Takes Center Stage.)
Some observers have suggested the rule’s fortunes in the D.C. Circuit would depend on which three judges were picked to hear the case. It is widely expected, however, that the case will ultimately be decided by the Supreme Court.
Two of the three judges on the panel were appointed by Democrats.
Judge Karen Lecraft Henderson was appointed to the appellate court in 1990 by President George H. W. Bush after about four years as a U.S. District Court judge in South Carolina. Before joining the bench, she served in the South Carolina attorney general’s office after working in private practice in Chapel Hill, N.C.
Judge Judith W. Rogers was appointed to the D.C. Circuit in 1994 by President Bill Clinton to replace Clarence Thomas when he joined the Supreme Court. She formerly worked as an assistant U.S. attorney in D.C. and as the district’s corporation counsel.
Judge Sri Srinivasan was appointed by President Obama in 2013. He is a former law clerk to Supreme Court Justice Sandra Day O’Connor and also worked in the U.S. Solicitor General’s office. Srinivasan also worked on Democrat Al Gore’s legal team during the disputed 2000 presidential election.
32% Reduction
The EPA rule seeks to cut the power sector’s carbon emissions by 32% by 2030, compared with 2005 levels.
The Supreme Court ruled in 2007 that EPA had authority to regulate carbon dioxide. At issue is how the agency defined the “best system of emission reduction (BSER),” the standard set in Section 111(d) of the Clean Air Act. Critics contend that the Clean Power Plan is based on a novel — and improper — interpretation.
Other critics question whether EPA can regulate CO2 under 111(d) because it is also regulated under Section 112 through the Mercury and Air Toxics Standards.
WASHINGTON — FERC Commissioner Tony Clark announced Thursday he will not seek reappointment when his term expires in June.
“After discussing with my family over the holidays we have decided to not seek another term on the commission,” he said at the opening of the commission’s monthly meeting. “It has been a wonderful run here and I’ve enjoyed the 12 years prior to this on the North Dakota [Public Service] Commission and a number of years prior to that in state government. I’ve enjoyed it a lot, but there comes a time when you just feel like it’s time to do a little something else.”
Commissioner Tony Clark (Source: FERC)
Clark, 44, was elected to the North Dakota legislature at age 23. “So I’ve been in government a long time,” he said.
With the departure of Commissioner Philip Moeller in October, Clark became the lone Republican on the commission. He said he may serve beyond the end of his term if a replacement has not yet been confirmed.
Clark said he wanted to announce his plans now to give notice to his staff and those who may be interested in replacing him. “So I thought I would announce today rather than play coy for the next six months or so.”
Chairman Norman Bay said he was sorry to lose Clark, promising to celebrate and “roast” him at a future meeting. “You’ve been just an amazing colleague,” he said.
On Thursday, he commented on the repeated interruptions of the commission meetings by protesters opposed to the commission’s approval of natural gas pipelines. “I find it rather ironic, he said, “that just 24 hours before a very major winter storm on the East Coast, we have people protesting the very infrastructure that will keep them alive over the next 72 hours.”
State Auditor Tom Wagner says an energy efficiency project involving state buildings in the capital would cost taxpayers $8 million over 20 years but yield energy savings of only $2.7 million. “The possibility of the state breaking even on this agreement is looking bleak,” he said.
The project to upgrade the Legislative Mall buildings in Dover is part of a broader $67.4 million conservation effort undertaken by the Sustainable Energy Utility, a quasi-public agency established in 2007 to reduce energy consumption.
Tony DePrima, the SEU’s executive director, said the auditor’s report was unfounded. “These are fairly complex energy efficiency projects,” he said. “I don’t think they understand the protocols or standards being used, especially since they didn’t consult with any experts in the field of energy engineering.”
Activists Concerned Utilities Connecting Wind Tx Line to Coal Plants
Environmentalists are concerned that two proposed transmission lines that Northern Indiana Public Service Co. is touting to deliver wind power will actually be used to transmit excess electricity from coal-fired plants.
Kerwin Olson, executive director of Indianapolis’ Citizens Action Coalition, said the lines could connect to several coal-fired generators belonging to Duke Energy and American Electric Power. Duke Energy and AEP jointly own Pioneer Energy, which is a partner with NIPSCO on the 65-mile project.
“We have utility companies who are continuing to invest billions of dollars in aging coal plants that really should be retired and replaced with clean energy, so Indiana isn’t doing so well,” Olson said. “We seem to be doing everything in our power to maintain our addiction to coal.”
Rock Island Clean Line Process Request Turned Down Again
State regulators again turned down Clean Line Energy Partners’ request to consider the necessity of its transmission line proposal without requiring it to first acquire the rights of way for the power line. Clean Line said it may not proceed with the Rock Island Clean Line project if the Utilities Board continues to require full right-of-way approval before the project’s route or need are determined.
The IUB on Monday rejected Clean Line’s third request to separate the proceedings, saying both state law and board regulations call for a single proceeding to determine all those issues.
Senate Majority Leader Arlan Meekhof, in his first year leading the Republican-dominated chamber, said that making the state’s electricity markets more competitive is a priority in 2016.
Meekhof said lawmakers are considering whether to allow competitive bidding for new electric generation to reduce reliance on the state’s two dominant electric utilities, DTE Energy and Consumers Energy. He said the process could encourage independent power producers to propose alternatives to replace retiring coal generators.
“Some of the discussion around it is it can’t just be the big two,” he said. “There may be other people who have smaller generating things that might be able to add on at a relatively inexpensive cost and then generate more energy and incrementally bring up the amount of energy we need as the demand is there — as opposed to building [a] 500-, 600-, 700-MW plant one time.”
Consumers Extends Biomass Plant’s Power Purchase Agreement
Consumers Energy has extended a power purchase agreement with Hillman Power’s 20-MW wood-burning plant for another 17 months.
The agreement’s termination now coincides with the Public Service Commission’s timeframe to review federal laws that oversee contracts between regulated utilities and smaller, renewable electricity generators.
The power plant, which is owned by Fortistar, said the contract extension saved about 100 direct and indirect jobs. The power plant employs about 20 people and spends about $3.5 million a year to buy local wood.
The city of Scandia, population 3,936, is embracing a $12.5 million community solar garden that private investors are building on a former 59-acre gravel pit. Scandia Mayor Randall Simonson said he wants the facility to be a showcase for other communities.
“It shows people as soon as they cross the border into Scandia, ‘Hey, look at what they’ve got here,’” Simonson said.
SolarStone Partners is slated to begin construction of the 5-MW project this spring. Subscribers will receive credits to lower their Xcel Energy bills.
An administrative law judge has sanctioned most of the route on Minnesota Power’s proposed 220-mile Great Northern Transmission Line, which would import power from Manitoba Hydro.
Judge Ann O’Reilly concluded that the 500-kV line’s route largely satisfied permit criteria, except for a segment in Itasca County.
The Public Utilities Commission is expected to vote on the project in March. The U.S. Department of Energy would then decide whether to grant Minnesota Power a permit to build the line. Minnesota Power says the line will cost up to $710 million.
A deal to keep an underground coal mine running includes a confidential secret side agreement between the owner and an environmental group that had argued state officials failed to properly examine the long-term groundwater impacts of expanding the mine.
The Board of Environmental Review on Jan. 12 approved the agreement between Signal Peak Energy, the Montana Environmental Information Center and the state Department of Environmental Quality. The deal gives the DEQ six months to revise its environmental analysis to correct problems the board found when the agency previously approved the expansion of Bull Mountain Mine.
The agreement includes a paragraph that says the Montana Environmental Information Center and Signal Peak reached a separate, confidential agreement that includes other “material terms.” Neither the mine owner nor the environmental group said they could discuss the terms of their truce.
Site Evaluation Committee Hearings on Northern Pass Begin
The Site Evaluation Committee held its first county hearing on the controversial Northern Pass transmission line project. The session was held in Franklin, whose mayor has enthusiastically embraced the $1.6 billion project that would deliver Canadian hydropower to New England.
A crowd of 250 people heard project representatives say Northern Pass is the best alternative to bring energy into New England. They said a substation in Franklin would pay about $7 million annually in property taxes. The money would be used to improve city services, Mayor Ken Merrifield said.
Several in the audience wore orange “Trees Not Towers” shirts in opposition to the project and applauded questioners who said the visual impact of the project could not be justified.
Gov. Andrew Cuomo has proposed creating a $19 million fund to help local communities cope with the loss of property taxes after the closure of the coal-fired Huntley power plant. Cuomo has pledged the closure all coal generation in the state by 2020.
The Town of Tonawanda and Ken-Ton School District will lose $5 million in annual revenue after the plant closes in March. “Based on what I’ve heard and what I’ve read, it looks like we’re going to be eligible for that pot of money and we’re going to be aggressively seeking it,” Town Supervisor Joseph H. Emminger said.
The Just Transition Coalition, composed of the Clean Air Coalition, labor unions and teachers associations, has been lobbying to secure money to make up the expected loss of revenue for the town on the Niagara River, north of Buffalo.
Commissioner Withdraws from Dakota Access Pipeline Process
Christmann
One of three members of the Public Service Commission has recused himself from voting on a proposed pipeline that would transport crude oil from the state’s Bakken Formation to out-of-state markets.
Commissioner Randy Christmann said that the Dakota Access Pipeline’s revised proposed route would cut across the property of his mother-in-law, who is currently negotiating an easement. The remaining two members of the commission are expected to vote on the matter Jan. 20.
The 1,134-mile pipeline would deliver 450,000 barrels of crude oil per day from the state to Patoka, Ill. Dakota Access has negotiated voluntary easements for 95% of its state route.
Duke Customers Entitled to Payout Under Class Action Suit
About a million customers of Duke Energy in the state have until April 13 to file a claim to be included in an $81 million class-action settlement, which resolved claims that the utility illegally paid rebates to large commercial and industrial customers at the expense of smaller customers.
Plaintiffs in the federal case alleged that Duke paid rebates from 2005 to 2008 to large customers including General Electric, Procter & Gamble and AK Steel in violation of antitrust laws. Duke, while denying wrongdoing, agreed to settle the suit.
Under the settlement, residential customers could receive from $40 to $400 each, while commercial customers could be entitled to as much as $6,000. About $8 million of the settlement will be set aside to improve energy efficiency programs. A federal judge in Columbus is expected to give final approval in April.
Regulators Order Wastewater Injection Reduction in Wake of Earthquakes
The Corporation Commission has ordered the operators of 27 wastewater disposal wells to reduce wastewater injections after a swarm of earthquakes unsettled residents northwest of Oklahoma City.
The order comes about a week after a series of earthquakes jarred the Fairview region. None of the recent temblors caused damage or injuries, but commission members are listening to experts who have drawn a connection between wastewater injections and the increase in the seismic activity.
The Oklahoma Geological Survey has said it is “very likely” the quakes are being triggered by the injection of wastewater produced from oil and gas wells, which has increased dramatically in volume because of the growth of shale drilling.
Asst. AG Criticizes PSO’s Smart Meter Opt-Out Plan
The attorney general’s office has taken issue with a plan by Public Service Company of Oklahoma to charge customers who decline to allow a smart meter to be installed.
Assistant Attorney General Dara Derryberry criticized an administrative law judge’s report favoring the opt-out charges. PSO wants to charge a one-time fee of $183 and a monthly charge of $28 to customers who opt out of its smart meter program. The utility says that it will need to manually read the meters of customers who decline the wireless devices.
Derryberry said the proposed fees were excessive when compared to opt-out fees in 11 other states and in a recent proposal by Oklahoma Gas and Electric. Derryberry said the Corporation Commission should defer a decision on opt-out fees until PSO finishes installing the devices in September.
PUC Plans Hearing to Study Alternative Ratemaking Methods
The Public Utility Commission will hold a hearing March 3 focused on alternative ratemaking methods for the state’s natural gas and electric utilities.
The hearing is part of the commission’s effort to promote energy efficiency and conservation programs.
Forum topics will include revenue decoupling and whether such rate mechanisms are fair to consumers.
State regulators have rebuffed an attempt by the Conservation Law Foundation to stall Invenergy’s application for its 1,000-MW Clear River Energy Center because of the proposed gas-fired power plant’s climate impacts.
CLF had argued the application was incomplete because it failed to fully outline the projected climate effects of the plant under the Resilient Rhode Island Act, a 2014 law that calls for a reduction in greenhouse gas emissions. The Energy Facility Siting Board agreed on the importance of the act, but it ruled that more information on emissions could be submitted later.
Invenergy estimates the new plant would reduce emissions across New England by about 1% because the power plant would displace older fossil fuel-fired power generators.
Environmental Agency Plans CPP Extension Request with EPA
The Department of Environment and Natural Resources is taking a two-pronged approach as it prepares to respond to EPA’s Clean Power Plan, which seeks to reduce carbon emissions from power plants.
The DENR is participating in a lawsuit with 24 states opposing the CPP. At the same time, it plans to develop a state compliance proposal, should the lawsuit fail. The department will seek public input in the coming months, request a two-year extension from EPA by the Sept. 6 deadline and then finalize a state CPP for submittal to EPA by Sept. 6, 2018.
PUC Urged to Reject Oncor Sale on Ratepayer Concerns
The chief executive of Oncor told state regulators last week that the plan to sell the company out of bankruptcy to Dallas billionaire Ray L. Hunt is not in the public interest.
Oncor CEO Bob Shapard’s testimony adds to a chorus of concerns raised by consumer advocates who asked the Public Utility Commission to reject the sale, arguing it will enrich Hunt and his group of private investors at the expense of ratepayers.
The sale of Oncor, the transmission arm of Energy Future Holdings, is the linchpin in the parent company’s plan to emerge from bankruptcy proceedings and reduce $42 billion in debt. The sale to Hunt Consolidated needs the blessing of utility commissioners, who are not expected to decide before March.
State Board Approves Dominion Coal Ash Drainage Plan
The state Water Control Board has approved a plan allowing Dominion Virginia Power to start draining its coal ash ponds into the James and Potomac rivers, overriding vocal opposition from citizen and environmental groups.
Dominion, in its application, said its plans to drain the coal ash ponds at the Bremo Power Station on the James River and the Possum Point Power Station on the Potomac River met all state and federal laws, including a rule last year setting new discharge limits on power plants. “This approach complies with all current federal and state regulations, including the newly promulgated EPA rule,” said Cathy Taylor, Dominion’s director of electric environmental services.
The James River Association and the Southern Environmental Law Center had filed opposition to the plans. The water board’s final hearing was attended by more than 100 opponents.
The State Assembly last week voted to lift a moratorium on developing nuclear generation, sending the bill to the State Senate for consideration. The Republican-backed bill would lift a state law blocking new nuclear generation without the formation of a national repository for nuclear waste.
The measure also does away with a requirement that any new nuclear plant would not burden ratepayers. Democrats in the Republican-controlled Assembly voted against the measure.
The state is home to a single nuclear generating station, Point Beach, owned and operated by NextEra Energy Resources. The Kewaunee Power Station, another nuclear station in the state, was retired by Dominion Resources in 2013.
State regulators again turned down Clean Line Energy Partners’ request to consider the necessity of its transmission line proposal without requiring it to first acquire the rights of way for the power line. Clean Line said it may not proceed with the Rock Island Clean Line project if the Utilities Board continues to require full right-of-way approval before the project’s route or need are determined.
Consumers Energy has extended a power purchase agreement with Hillman Power’s 20-MW wood-burning plant for another 17 months.
The city of Scandia, population 3,936, is embracing a $12.5 million community solar garden that private investors are building on a former 59-acre gravel pit. Scandia Mayor Randall Simonson said he wants the facility to be a showcase for other communities.
A deal to keep an underground coal mine running includes a confidential secret side agreement between the owner and an environmental group that had argued state officials failed to properly examine the long-term groundwater impacts of expanding the mine.
A new 10-MW hydroelectric power plant is being proposed for Lock C1 on the Champlain Canal in Waterford, north of Albany.
About a million customers of Duke Energy in the state have until April 13 to file a claim to be included in an $81 million class-action settlement, which resolved claims that the utility illegally paid rebates to large commercial and industrial customers at the expense of smaller customers.
The Corporation Commission has ordered the operators of 27 wastewater disposal wells to reduce wastewater injections after a swarm of earthquakes unsettled residents northwest of Oklahoma City.
State regulators have rebuffed an attempt by the Conservation Law Foundation to stall Invenergy’s application for its 1,000-MW Clear River Energy Center because of the proposed gas-fired power plant’s climate impacts.
The Department of Environment and Natural Resources is taking a two-pronged approach as it prepares to respond to EPA’s Clean Power Plan, which seeks to reduce carbon emissions from power plants.