Page 973 – RTO Insider

February 28, 2021

UPDATED: Texas Lawmakers Dig into Power Outages

Operating out of a pair of dueling hearing facilities for two days last week, Texas lawmakers took their first shots at the electric industry as they began to try and grasp the complexities of a system that failed during mid-February’s “unprecedented weather event.”

Some legislators, blessed with a better understanding than others of the grid’s innerworkings, tried hard to understand what went wrong when ERCOT began dumping up to 20 GW of load Feb. 15, pushing much of its grid into blackout conditions as it tried to avoid a total collapse. They dug into the events that led to the load shed and the market’s pricing intricacies.

Others simply gave voice to their constituents’ frustrations, questioning the energy-only market’s wholesale price-indexed rate plans that have led to five-figure bills and why ERCOT’s Board of Directors included out-of-state directors.

“Who’s at fault? I don’t want to hear about systems; I want to know who’s at fault,” Rep. Todd Hunter (R) demanded of Curt Morgan and Mauricio Gutierrez, the respective CEOs of Vistra and NRG Energy, before the House State Affairs and Energy Resources committees on Thursday.

Texas Power Outages — Vistra’s Curt Morgan (left) and NRG’s Maurico Gutierrez address a joint session of the Texas House’s State Affairs and Energy Resources committees. | *Texas House of Representatives*

“I want the public to know who screwed up,” he continued. “That’s what people want to know. I want names and details. Tell me some specifics!”

“I don’t think you can put one thing at fault,” Gutierrez started to explain. Pressed again by Hunter, he then relented by listing ERCOT, the power generators, the transmission and distribution providers, and the Public Utility Commission before being cut off.

On the Senate side, lawmakers grilled ERCOT CEO Bill Magness for five uninterrupted hours that same day. PUC Chair DeAnn Walker followed him in the hot seat before the Senate’s Finance Committee and Business and Commerce Committee, staying there for two and a half hours.

The two then sat together for more than five hours before the House committees. Their “day” finally ended at 12:26 a.m. Friday.

Magness explained the decision-making process that led to the lead shed, repeating some of the same information he shared with his board the day before. (See related story, ERCOT Provides ‘Explanations, not Excuses’.)

Asked by Sen. John Whitmire (D) whether he would have done anything differently, Magness said he wouldn’t.

“Obviously, what you did didn’t work. I think that’s fair to say,” Whitmire said.

Magness disagreed.

“Respectfully, I’d say it worked from keeping us into a blackout that we’d still be in today,” he said. “That’s why we did it. Now, it didn’t work for people’s lives, but it worked to preserve the integrity of the system.”

Sen. Brandon Creighton (R), representing a far northern Houston suburb where an 11-year-old boy died of hypothermia in an unheated mobile home, pressed Magness on why ERCOT wasn’t more upfront with its communication regarding the winter weather and possibility of tight supplies.

Magness said those communications began Feb. 8 with an operating condition notice and included his appearance at a Feb. 13 press conference with Gov. Greg Abbott. Staff issued a press release Feb. 14 urging customer conservation, a message amplified by its Twitter feed.

“We do know lives were lost. In my opinion, rather than the dollars being considered, that’s the ultimate loss,” Creighton said. “It did not resonate with us that we could have very cold conditions coming in. It did not resonate to us that the grid could be at risk from a supply standpoint. Foreseeable or not, that could be a situation that occurs. … It’s very much my opinion that you define those communication protocols immediately.”

Magness nodded in agreement.

Under further questioning, he said staff alerted the generators and transmission providers that cold weather was coming and that it would be a “significant event.”

“Internally, we knew we may need to run the processes that go into load shed and emergency operations,” Magness said. “We try to make those contacts through the PUC. We shared those notices with PUC and the senior staff, and we continued to share those notices.”

“We have to review what happened and ensure it doesn’t happen again,” Walker said later. “It wasn’t just the operational area, but the communication area. Could all of us have done better? Absolutely.”

A number of legislators remained unconvinced by what they had heard.

Sen. Charles Schwertner (R) said he remained unsettled about ERCOT’s preparations for a “once-in-a-generation” storm, managing the crisis and making decisions, and called for the grid operator’s reform “to ensure this doesn’t happen again.”

“I still have great concerns about the entirety of the agency,” he said. “The testimony has not been, on my part, overall encouraging.”

Hunter pointed to Abbott’s Feb. 16 statement, when the governor said, “ERCOT failed to do its job, and Texans were left shivering in their homes without power.”

“He basically indicated … ERCOT failed to do its job and made assurances the Texas infrastructure was prepared for the winter storm, and it wasn’t,” he said. “It’s hard to tell the general public to put a lot of faith in ERCOT. I haven’t heard anything positive, and I see everybody running away.”

Legislators Focus on PUC’s Walker

When the two days of hearings concluded, Walker found herself sitting alongside ERCOT in the ring of incoming fire from lawmakers.

In all, more than a dozen legislators, Democrats and Republicans alike, called for her resignation following the hearings, citing her unwillingness to exert the commission’s oversight responsibility of ERCOT.

Putting on his best Perry Mason, Rep. Rafael Anchía (D) led Walker through more than 30 minutes of testimony, during which she admitted the PUC had “total” control over ERCOT, that the commission could have leveraged its authority in requiring emergency operations plans and weatherization standards, and that she could have been more proactive in warning the public.

“When did you make the clarion call to the public that we had a major problem and people were likely to die?” Anchía asked.

“I don’t remember when. I know we were sending things out Thursday and Friday,” Walker responded.

Eventually, she admitted that “we all made errors. I think I made errors in doing my job.”

“Do you think the public deserves an apology from the PUC?” Anchía questioned.

When Walker paused for four or five seconds, Anchía said, “The fact you’re hesitating is astonishing. It’s astonishing.

“No further questions,” he said, cutting off any further responses.

Anchía later issued a statement calling for Walker’s immediate resignation for “failing to perform required oversight duties of ERCOT.”

“After two days of testimony, it is clear to me that there was a dereliction of duty and that the people of Texas deserve nothing less than for Commissioner Walker to resign immediately,” he wrote. “Her inability to even muster an apology to Texans who endured freezing temperatures without heat or power and resulted in loss of life is inexcusable.”

Rep. Abel Herrero (D), vice chair of the Energy Resources Committee, noted that Abbott had praised the resignations of several of ERCOT’s board members. (See ERCOT Chair, 4 Directors to Resign.) He asked Walker if the governor, who appoints the PUC’s commissioners, had asked for her resignation.

“He has not,” she said.

The PUC on Friday tweeted it had opened two new projects related to the winter storm: a rulemaking on weatherization standards (51840) and a review of electric service emergency operations (51841). However, that was too late for some legislators.

Anchía, Herrero and six other lawmakers sent a letter to Walker on Friday asking for her resignation, alleging she had failed in the PUC’s mission to “protect customers.”

Saying that they had “lost all confidence that you can, or even care to, do your job,” the representatives wrote that, “at no time during your tenure as [PUC chair] have you taken accountability measures against ERCOT. There is little indication that you enforce, or are even aware of, some of the most critical functions of your agency.”

Rep. Jeff Leach (R) said Magness and Walker’s fellow commissioners, Abbott appointees Arthur D’Andrea and Shelly Botkin, should resign as well. He said it was “his strong belief” the long-term outages and the misery they caused could have been avoided.

Their resignations are “a necessary step so we and our constituents can be confident the right leadership is in place to ensure this never happens again in Texas,” Leach tweeted.

ERCOT Board Loses 2 More Directors

By the time Magness testified before the House committees, word had already leaked out that ERCOT had lost another director from its board. He acknowledged that an unnamed director had resigned (some quick online sleuthing revealed it was Brazos Electric Power CEO Clifton Karnei) and implied the decision had to do with financial issues at his cooperative.

“I hear board members are jumping ship like rats on a sinking ship,” Herrero said to Magness.

“I think they saw a desire to have Texas residents involved and said, ‘We may not be the best people for the board,’” Magness replied.

“My problem as a lawmaker is we’ve had five non-Texans bail on this state,” Hunter said. “When the heat came on, they bailed. I don’t know if that’s a preview of coming attractions or what.”

The non-Texans serving on the board had drawn much of the politicians’ and public’s ire, but Karnei, a Texas university system graduate, had served on the board since at least 2001 and represented the cooperative segment. He joined the five out-of-staters who submitted their resignations Feb. 23. A sixth non-Texan withdrew his nomination for a board seat.

But the names keep disappearing from the board’s webpage. Karnei’s departure was followed on Saturday by that of Austin Energy General Manager Jackie Sargent, who represented the municipal segment. Sargent has been critical of ERCOT’s actions in anticipating and responding to the blackouts.

“The system we have, requiring a utility to force over 30% of our customers to be without power for such an extended period of time, is unacceptable,” she told the Senate committee hearing on Friday.

The departures leave the 16-person board with eight confirmed directors. The five independent director positions unaffiliated with ERCOT market participants and three of the eight market segment positions are vacant, though all but one of the segment alternates remain.

Magness, Walker and Lori Cobos, CEO of the Office of Public Utility Counsel, round out the board. Walker is the only non-voting member.

The grid operator’s bylaws under the state’s Public Utility Regulatory Act require 50% of the seated directors be present to reach quorum, with quorum being three when the number of seated directors is less than six and not less than three. Quorum is not possible with two seated directors. The board’s next scheduled meeting is April 13.

The board’s independent directors are nominated for three-year terms by the board following a search process, and then approved by ERCOT members and, finally, the PUC. The chair and vice chair positions are required to be filled by independent directors.

Segment directors are nominated for single-year terms by their segment representation.

Magness told the House committees the unaffiliated directors were added because “if you had an all-industry board, you need nonbiased, non-industry folks on the board to round it out.”

Asked whether there should be more consumer representation on the board, Magness said, “Y’all pretty much made us, so you can change us.”

Rep. Will Metcalf (R) indicated that very well may happen.

“I want the best CEO running my company. I want to make sure we’ve got the best leader. I don’t want board members from outside Texas,” he said. “Going forward, I want the best person running the show, and I want board members from Texas.”

Vistra’s Morgan: ‘Lack of Urgency’

Vistra’s Morgan said he was frustrated by what he saw as a “lack of urgency” from others as the winter storm approach.

Morgan told the House committees on Thursday that the company’s meteorologist saw the same incoming weather that ERCOT did but thought it would create more demand that the grid operator was seeing. He said Vistra was projecting nearly 75 GW of demand, while, at the same time, ERCOT was expecting to break its winter peak of 65.9 GW. (See ERCOT Bracing for Winter Storm, Record Demand.)

The meteorologist “said we didn’t have enough generation on the ground,” Morgan said. “We did what we normally do: We reached out to some of you here. We were very concerned. I was surprised about the lack of urgency I got from some of the officials in the agencies. The level of urgency was just not there.

“We do know [ERCOT] moved the demand forecast up. Even with perfect execution, I thought we were short, but nothing like what happened,” he said.

Pressed on his comments, Morgan said of ERCOT staff, “It’s wrong to say they didn’t do anything. They do what they normally do. I don’t think there was a broader communication to the public that we were running into a problem. There was not this broad communication that said, ‘Hey, we could be into rolling blackouts on Monday.’”

Magness said he didn’t have any conversations with Dallas-based Vistra about differences in demand forecasts, but he did say his staff had discussions with the company’s representatives.

“Everyone, especially in North Texas, kept getting concerned. They were right in the middle of the worst part of the storm,” he said. “We understand those concerns. We felt the same way. We were getting our concerns out to the industry.”

ERCOT did issue a press release at 8:50 a.m. Feb. 14, warning of potential rolling blackouts. It later set a new winter demand peak at 69.2 GW several hours before generation fell off the grid.

Winterization to be Reckoned With

Winterization has emerged as the primary area of focus in preventing a reoccurrence of the rolling blackouts. Abbott has called to “mandate and fund” winterization and several legislators took up that call.

However, the same thing happened during the winter of 2011, when 14 GW of generation were knocked offline and forced ERCOT to call for rolling blackouts. The state fared much better during a 2018 winter storm, when only about 4 GW of generation was lost.

Winterization, recommended after 2012, has never been enforced.

“We’re not regulators, and we don’t have the [enforcement] authority, so we’re trying to assist generators in ERCOT [in getting] better from learning what we have learned and what others have learned,” Magness said.

Magness and several generation owners reminded the legislators that Texas’ energy infrastructure is built for the 100-plus-degree heat of July and August. Following the same winterization protections as in the northern states by encasing turbines with walls would lead to overheating and reduced efficiency during the heat of summer.

ERCOT joins with the Texas Reliability Entity to host an annual workshop on winterization practices. Generators are required to file their winterization plans with ERCOT, which in turn files a report with the PUC.

NRG’s Gutierrez said that in the end, the winterization efforts may not have mattered. Temperatures in the ERCOT footprint were much colder for longer than in 2011. The Dallas-Fort Worth metroplex saw a low of -2 degrees Fahrenheit and spent 140 hours below freezing. In 2011, those numbers were 13 and 101, respectively. Austin’s low was 6 F and Houston’s 13 F.

“Did we winterize? Yes,” he said. “Did we secure fuel supply? Yes. Did we bring as much capacity as we could? Yes. Did we bring critical supplies? Yes. Did we put all human resources? Yes. It was not enough, not enough.”

February 28, 2021

Texas Grid Troubles Inform NY Strategic Planning

New York State agencies and experts are monitoring the aftermath of the prolonged power outages in Texas earlier this month to determine what actions, if any, New York should take to maintain a resilient grid, New York State Energy Research and Development Authority (NYSERDA) Interim CEO Doreen Harris said Friday.

“Clearly the full situation and resultant analysis is still evolving,” Harris, who cochairs the New York Climate Action Council (CAC), said during a CAC meeting Friday. “With respect to planning, in a New York context, we have certainly planned for weather extremes, particularly cold weather protections for our generators.”

New York grid — The New York Climate Action Council met on Feb. 26. | *NYDPS*

She said, however, that the situation in Texas raises questions about whether additional oversight of New York power generators might be necessary in the future and whether the state would benefit from understanding how its grid could be “even more flexible and resilient.”

Harris said she was speaking for NYSERDA and other state agencies after consulting former Public Service Commission Chair John B. Rhodes, NYISO CEO Rich Dewey and state experts. Rhodes’ term with the PSC expired on Friday. Gov. Andrew Cuomo designated John Howard as the Interim PSC chair.

“From a grid perspective, it is important to note that we certainly do have ties to external systems to be able to import power from neighboring control areas during times of need, as well as clearly significant investments in our own grid,” Harris said. “From a market perspective, we certainly have a market that is designed and managed differently, and importantly, from a planning perspective, we have a reserve margin requirement with capacity resources facing penalties for failure to deliver energy.”

Rhodes said that, while New York’s grid is “well positioned,” it is still necessary for planners to know how to get resources on the system that provide reliability and resilience at all levels.

Planners will need to make tight planning and operational rules to avoid having out-of-date scenarios about what could happen if something goes wrong and “provide consumer protections against outrageous pricing, especially for our most vulnerable,” Rhodes said. (See NY Climate Officials Keep Decarbonization Equity in Mind.)

State officials believe that New York has a robust planning and market process in place, but the state is also planning for an uncertain future under the impacts of climate change, Harris said.

“From a consumer impact perspective, we do have markets, regulations and system structures here in New York that would prevent the worst of extreme pricing and the impacts to consumers, as well as a hedging approach that would dampen the extraordinary consumer bills that Texans are experiencing,” she said.

NYISO has studied electricity resilience, notably through its climate study. In addition, studies have informed reliability and resilience rules that may be considered this year, some of which are born from the state’s experience with Hurricane Sandy in 2012, Harris said.

The 22-member CAC is working to complete a scoping plan by autumn for achieving the state’s energy and climate goals under the Climate Leadership and Community Protection Act, which mandates switching to 100% zero-emission electricity by 2040 and reducing greenhouse gas emissions 85% below 1990 levels by 2050.

February 28, 2021

Pa. Seeking to Boost EV Sales

The Pennsylvania Department of Environmental Protection (DEP) is drafting a proposed rulemaking to require automakers to include light-duty electric vehicles as a percentage of their model offerings and make EVs more commonly available at car dealerships.

Officials said the proposed amendment to the state Clean Vehicles Program would make Pennsylvania the ninth state in the Northeast and Mid-Atlantic regions to adopt a light-duty zero-emissions vehicle (ZEV) percentage requirement. DEP said the revision would ensure that automakers make available in Pennsylvania new ZEVs that otherwise would be offered in surrounding states with such a requirement.

Officials expect DEP’s Bureau of Air Quality to present the proposed rule for consideration to the Environmental Quality Board in the fall.

During a recent budget hearing, state Rep. Tim O’Neal (R) asked DEP Secretary Patrick McDonnell if he was in favor of banning the sale of gasoline powered vehicles, and McDonnell said “no.”

O’Neal said he was concerned the proposed rule and program development would be too similar to regulations coming out of California and could lead to the banning of the sale of new gasoline vehicles. O’Neal asked if a California policy for EVs is appropriate for Pennsylvania.

Pennsylvania EV — Electric vehicle charging stations located outside the Pennsylvania State Capitol complex in Harrisburg | *Pa. DEP*

McDonnell said the proposal is still being developed and that the exact percentages of offerings have yet to be determined.

“This is about improving consumer choice and meeting consumer demand within the Commonwealth of Pennsylvania for electric vehicles,” McDonnell said.

According to a recent study by the American Council for an Energy-Efficient Economy, Pennsylvania ranks 17th among the 50 states and Washington, D.C. in transitioning from gas-fueled vehicles to EVs.

The D.C.-based nonprofit rated the states on their efforts to reduce greenhouse gas emissions and improve access to EVs. The study found the easiest ways states can promote EVs are to install more charging stations, offer rebates, tax credits and grants for the purchase of electric cars and buses and to develop utility programs offering lower costs for EV owners.

Charging Infrastructure Expansion

On Feb. 19, DEP announced more than $900,000 in funding for the installation of fast chargers in high-traffic areas as part of its Driving PA Forward program, using proceeds from Pennsylvania’s share of Volkswagen’s settlement for falsifying EPA emission tests.

The DEP awarded $750,000 to EVgo Services of California for the addition of 14 fast chargers at three locations: a shopping plaza in Philadelphia, located within a half-mile of Interstate 76 and three miles of Interstate 95; a market in Delaware County within two miles of I-95 and I-476; and a gas station in Allegheny County, less than a mile from the Pittsburgh International Airport and four miles from I-376.

The DEP also awarded EV Build of Kansas $186,619 to install two fast-charging plugs in a mall parking lot in Bucks County along high-traffic Route 309 and within four miles of I-476.

Officials said the projects increase the number of locations in a network of highway segments that DEP and PennDOT are helping to develop into electric vehicle corridors for long distance EV drivers. The corridors are expected to have EV chargers every 50 miles along highway routes and no more than five miles from the roadway.

Driving PA Forward has funded 40 fast chargers since the program launched two years ago, officials said, and more than 1,300 level 2 EV chargers have been installed or are in development by companies, local governments and travel organizations around the state.

The DEP Energy Programs Office recently released an update to the state’s Electric Vehicle Roadmap to provide information on driving and purchasing EVs. The booklet is designed to present an overview of the benefits and basics of EVs, a look at current EV use in Pennsylvania and tips for consumers.

February 28, 2021November 2, 2023

Hawaii Bill to Fund Small Landowner Carbon Efforts

A bill to make carbon offset projects affordable for small landowners is making its way through the Hawaii legislature.

Senate Bill 493 would establish an “agriculture and forest carbon-positive incentive program” to encourage small agricultural producers to reduce emissions by helping them pay for carbon sequestration efforts and clean energy use. Part of the state’s effort to reach carbon neutrality by 2045, the program is intended to create jobs and stabilize the food and water supply for a state almost entirely dependent on shipped goods.

The text of SB493 notes that “while carbon offset credits pay for carbon-positive actions, certification is cost prohibitive to small landowners. Incentivizing carbon-positive actions through a payment of services program would allow small farmers, ranchers and landowners to be compensated for taking actions to help Hawaii reach its climate-positive goal.”

The incentive program would be broken into two phases. Phase I activities would help farmers, ranchers and landowners implement a regenerative annual cropping system; improve pastureland, including growing trees and shrubs around pastures (agroforestry); engage in reforestation; protect land from disturbance; institute rotational grazing; and improve foraging.

Phase II activities would focus on energy creation and consumption. The program would cover, “but is not limited to,” biofuel production, methane capture, improved forest management, grazing intensity, mixed production systems, and efficient nutrient and waste management.

Details of SB493 are being debated, including how the incentives would be funded. The current bill proposes to create a special fund to be financed, in part, by revenue from the state’s Environmental Response, Energy and Food Security Tax. That tax was established in 2010 to discourage fossil fuel use and fund energy and food-security initiatives by adding $1.05/barrel tax to all petroleum products except aviation fuel. The bill also calls for unspecified funding from the state’s general revenue.

Various state agencies would have a hand in the program. Hawaii’s Department of Agriculture and Department of Land and Natural Resources (LNR) would establish compensation rates and contract terms for the program, with terms ranging from one to 30 years. The Hawaii Green Infrastructure Authority (HGIA) would establish and chair a committee to review applications, with participation from Agriculture and LNR. Eligibility would be determined at the point of application.

General administration of the program would fall to the HGIA and the state’s Greenhouse Gas Sequestration Task Force (GHGSTF), which was established in 2018 under the auspices of the Office of Planning (OP) to harmonize the state’s climate initiative goals with its clean energy and carbon sequestration efforts. The GHGSTF would be required to identify a number of program co-benefits, such as job creation; food security and agriculture for local consumption; water security; increased biodiversity; soil health; and invasive species reduction and removal.

Who’s in Charge?

The GHGSTF addressed SB493 during a Feb. 16 meeting, in which members also discussed various reports and plans pertaining to Hawaii’s broader 2045 carbon-neutral goal. During the meeting, OP Director and GHGSTF Chair Mary Alice Evans expressed concern that the task force does not have enough funding to meet its goal of providing state lawmakers with key reports.

“We weren’t able to get additional funding due to the pandemic, so we will have to make do with the vast expertise of our members to be able to meet at least the interim report and hope that by the time we get to the interim report that there are funds available to finish up the final report to the legislature,” Evans said.

In its Feb. 5 testimony on the bill, the GHGSTF explained that its role of identifying and prioritizing carbon-positive activities is jeopardized by a chronic lack of funding. Evans said, “The OP has struggled providing administrative support to the Greenhouse Gas Sequestration Task Force. Since 2018, the OP has noted this need for additional staffing and funding to support the task force’s work.” The GHGSTF’s Feb. 16 meeting was being held after “a yearlong hiatus because of these significant funding and staffing challenges,” Evans said.

Other testimony submitted Feb. 5 showed strong support for the bill, including from the LNR Department, the HGIA, the Sierra Club and the Environmental Caucus of the Democratic Party of Hawaii, along with smaller groups and individuals.

The Tax Foundation of Hawaii acknowledged the potential benefits of carbon sequestration but questioned whether they “justify grabbing a pot of barrel tax money without going through the normal budgeting process that also considers sweltering primary schools, underfunded state pensions, or disaster relief for rain-flooded or lava-burnt counties, as well as the economic decimation wrought by COVID-19.”

The group suggested that “a direct appropriation of general funds would be preferable” and that “earmarking revenues from any tax type for a particular purpose decreases transparency and accountability.” It also contended that Hawaii State Energy Office or Department of Agriculture would be better suited to administer the program than the HGIA.

The Agriculture Department testified that “the measure assigns extensive and unfamiliar responsibilities to the Department of Agriculture and the Department of Land and Natural Resources. … The department will need substantial assistance to acquire the appropriate expertise to develop compensation rates and carbon incentives contract terms, estimate sequestration rates for priority sequestration activities, develop the technical underpinning of compensation rates for sequestration activities, and conduct landowner outreach.” The agency also wondered what program beneficiaries would consider to be “fair compensation.”

Questioned about the probability of the bill passing, Evans told NetZero Insider that “the 2021 legislative session ends on April 29, and we often don’t know the fate of specific bills until the session adjourns.”

February 28, 2021

Mass. EV Subsidy ‘Isn’t Enough,’ Energy Office Says

If Massachusetts is going to achieve its plan to have entirely electric new car sales in 2035, it needs to take a “hard look” at what low- and moderate-income households can afford in the electric vehicle transition, Daniel Gatti, director of clean transportation policy for the Massachusetts Executive Office of Energy and Environmental Affairs, said Thursday.

The state offers a $2,500 subsidy for an EV purchase, but that is not enough to make the transition financially feasible for people with an annual income of less than $75,000, Gatti said during an EV webinar presented by Green Energy Consumers Alliance.

EVs currently make up less than 5% of new vehicle sales in Massachusetts, according to Gatti. A disproportionately large number of EV sale rebates under the state’s MOR-EV subsidy program are going to Tesla buyers, according to the Center for Sustainable Energy. The program data show that from March 2020 to February 2021, 47% of MOR-EV rebates were for Teslas, which MotorTrend estimates range in price from $39,000 to $81,000.

Massachusetts EV Subsidy — Expansion of publicly available charging infrastructure, as seen here, could make it easier for renters in Massachusetts to switch to EVs. | *Shutterstock*

Janelle London, co-executive director of the West Coast nonprofit Coltura, said that state EV subsidies focus on the purchase of new vehicles and do not “change the fundamentals of car ownership.”

Typically in the U.S., Coltura said, wealthier people buy new vehicles and everyone else buys used vehicles. Policies that call for all new car sales to be EVs do not change that model and instead encourage automakers to compete for business in the EV market, she said.

Last December, Massachusetts joined Connecticut, Rhode Island and Washington, D.C., in the Transportation and Climate Initiative Program, a regional cap and invest program to cut emissions from gasoline and diesel fuel by 26% before 2032. A minimum of 35% of program funds is set aside to benefit overburdened and underserved environmental justice communities. In addition, Gatti estimated that the program will provide up to $300 million for transportation infrastructure upgrades to support EVs.

Last month, the Massachusetts Department of Environmental Protection announced a new initiative to help install publicly available direct current fast charging stations, along with a program to encourage apartment buildings to install charging stations for residents.

“These investments will make it easier for tenants and Massachusetts residents who do not have access to off-street parking to make the jump to an electric vehicle,” Gatti said.

The EV transition, however, has the state energy office thinking carefully about what changes will be necessary for the power grid.

“It is going to require a really modern grid that is capable of doing more complex things than our grid is doing right now,” he said.

February 26, 2021

New PG&E CEO Promises ‘Hometown Experience’

During a conference call Thursday, new PG&E Corp. CEO Patti Poppe said she toured the devastation in the town of Paradise, Calif., on her first day in office. The Camp Fire, ignited by utility subsidiary Pacific Gas and Electric’s equipment, killed 85 people and destroyed more than 14,000 homes there in November 2018.

“I met with my coworkers who live in the community, whose own lives were forever impacted by the Camp Fire,” Poppe said as part of her first earnings report. “We’re so grateful to those who have the strength and the courage to represent PG&E through the rebuilding effort.”

Later, she said, she visited the city of San Bruno, where a PG&E gas pipeline exploded in 2010, killing eight, leveling part of a suburban neighborhood and shooting a fireball 1,000 feet in the air.

Catastrophic fires in 2017, 2019 and 2020 compounded PG&E’s safety problems. The company emerged from bankruptcy in June after paying billions of dollars to fire victims and insurers and pleading guilty to 84 counts of involuntary manslaughter in the Camp Fire. (See PG&E Sentenced; Bankruptcy Plan Approved.)

Poppe, the former CEO of Michigan-based CMS Energy, became PG&E’s fifth acting or permanent CEO in the past four years in January. (See Struggling PG&E Nabs CMS Energy’s CEO.)

Like those before her, Poppe vowed change as she laid out her vision for the state’s largest utility, which reported GAAP losses of $1.05/share for 2020 and earnings of 9 cents/share for the fourth quarter, compared to losses of $14.50/share and $6.84/share, respectively, in 2019.

Poppe said that a “triple-bottom-line mindset” would guide the utility’s performance this year and beyond. Known as “TBL” in economics circles, the philosophy holds that companies will do better if they focus on social and environmental responsibility along with profits.

“We will embrace the triple-bottom-line mindset of serving people, our planet and California’s prosperity,” Poppe said. “This mindset will find an intersection between the need to safely deliver energy and meet the clean energy aspirations of Californians. I’m optimistic that there is a bright path forward with a triple bottom line enabled by a laser-like focus on performance.

“Priorities to get us moving in 2021,” she said, include writing what she called a “clear sky playbook.”

“We have a best-in-class emergency response playbook, and we’re going to complement that by writing the PG&E clear-sky playbook so we can predictably deliver every day, not just during and after a crisis,” Poppe said. “I’m putting together a team of senior leaders that’s developing that clear-sky playbook, underpinned by a lean operating system, to predictably deliver us on our commitments and outcomes. We’re bringing the best of a functional organizational design — standards, processes and scale — to deliver a regionalized hometown experience for the communities and customers we serve.”

One of PG&E’s proposed reforms involves “regionalization” by establishing a number of semiautonomous management units around the state.

PG&E’s system requires substantial capital investments, and customers deserve more disciplined cost performance, Poppe said.

“Our work will deliver for our customers and investors,” she said.

The Camp Fire tore through Paradise, Calif., on Nov. 8, 2018, killing 85 people. | *Tanner Hembree/USDA Forest Service*

PG&E has continued to attract negative publicity and harsh criticism, just before and during Poppe’s tenure.

In November, California Public Utilities Commission President Marybel Batjer told PG&E that it could face a stricter regimen of oversight and enforcement because of concerns about its line maintenance. A proposal in the matter was issued Thursday, with a vote scheduled April 15. (See PG&E Faces ‘Enhanced Oversight’ by CPUC.)

On Feb. 3, federal Judge William Alsup, who is overseeing PG&E’s criminal probation stemming from the San Bruno explosion, said he would likely impose new probation terms, requiring the company to improve its vegetation management and public safety power shutoff (PSPS) practices, following the Zogg Fire in September.

Alsup said he believed the fire — which killed four people, including a mother and her 8-year-old daughter who died fleeing the flames — was started by a tree falling on a PG&E power line in rural Northern California. (See PG&E Files Wildfire Plan Under Intense Scrutiny.)

Poppe said Thursday that PG&E would continue to use PSPS to prevent fires in high-risk areas.

On Wednesday, John Trotter, a retired state appellate court justice and the trustee of a wildfire victims trust established during PG&E’s bankruptcy, sued 23 of the utility’s former executives and officers for causing the Camp Fire and the October 2017 wine country fires.

The fires “were the outgrowth of separate and distinct wrongful acts and omissions by the defendants in breach of the defendants’ fiduciary duties of care and loyalty to the company,” the lawsuit said.

The trust, valued at $13.5 billion when the bankruptcy concluded, owns a 22% equity stake in PG&E and represents approximately 80,000 fire victims.

February 26, 2021

Granholm Confirmed by Bipartisan Vote

The Senate on Thursday voted 64-35 to confirm former Michigan Gov. Jennifer Granholm as the 16th secretary of energy.

Later in the evening Granholm was sworn into office by Vice President Kamala Harris.

Fourteen Republican senators, including Minority Leader Mitch McConnell (Ky.) and former Energy and Natural Resources Committee Chair Lisa Murkowski (Alaska), joined every Democrat in supporting Granholm’s nomination. Sen. Dan Sullivan (R-Alaska) did not vote.

The ENR Committee on Feb. 3 voted 13-4 to advance Granholm’s nomination, but only three other Republican members of the committee joined Murkowski in voting “aye” on the Senate floor: Steve Daines (Mont.), John Hoeven (N.D.) and James Risch (Idaho). (See “Granholm Approved for Senate Floor Vote,” EPA Nominee Regan Receives Bipartisan Support.)

Before Thursday’s vote, the committee’s ranking member, Sen. John Barrasso (R-Wyo.), repeated his criticism of President Biden’s energy-related executive orders, including his ban on new oil and gas drilling leases on federal lands, saying he could not “in good conscience” vote for Granholm. Still, he praised her personally and expressed confidence in her ability to run the Energy Department.

The Senate on Wednesday had voted 67-32 to invoke cloture on the nomination, setting up Thursday’s vote.

Granholm “has the leadership skills, the vision and the compassion for people that we need at the helm of the Department of Energy to face the climate challenge,” ENR Chair Joe Manchin (D-W.Va.) said before the vote. “I believe she is extremely well-qualified to lead the Department of Energy.”

The American Clean Power Association “congratulates Secretary Granholm on taking the helm of the Department of Energy,” CEO Heather Zichal said in a statement. “Having worked on energy policy with Secretary Granholm, I know that she is committed to the Biden administration’s interlinked goals of boosting the U.S. economy and combating climate change.”

“We look forward to working with her and other leaders across the administration to build on the existing partnership that has enabled the electric power industry to respond quickly and decisively to all manners of threats to the grid,” the Electricity Subsector Coordinating Council said.

“There are a great many challenges and opportunities facing the energy sector as we transition to the grid of the future and confront climate change,” FERC Chairman Richard Glick tweeted. “I know you will do an outstanding job leading the Department of Energy!”

February 26, 2021February 2, 2024

RIPUC Rejects Program for Low-income Customers

The Rhode Island Public Utilities Commission last week unanimously rejected a proposal from National Grid to remove barriers for low-income customers to access the benefits of clean energy.

“At best, this is a poorly developed concept, and taken at its worst, it’s a gimmick and a thinly veiled attempt by the utility to increase their profits from the Renewable Energy Growth Program, while claiming to be doing it in the name of equity,” Commissioner Abigail Anthony said at a Feb. 18 PUC meeting.

National Grid proposed to expand on the state’s Community Remote Distributed Generation (CRDG) incentive program.

“Developers enrolled in the [existing] program get paid by ratepayers an amount that is up to 15% higher than the price needed to build a similarly sized solar facility without the CRDG special features,” PUC Chairman Ronald Gerwatowksi said during the meeting. The project owner would then enroll National Grid’s customers for that facility’s incentive and distributes the extra funds as a bill credit.

Solar facility in Middletown, R.I. | Newport Renewables

National Grid, according to its filing on the proposed program changes, found that low-income customers were underrepresented in the existing program. The utility proposed an increase in the existing rate enhancement by an additional 3 cents/kWh. To qualify for that adder, project owners would have had to subscribe at least 20% of the project’s capacity to low-income customers.

“The purpose of the proposed adder was to increase enrollment of low-income customers in CRDG solar projects in a manner similar to other states’ renewable energy programs,” a National Grid spokesperson told RTO Insider in an email. “The company is committed to addressing low-income customer issues in fulfilling its clean energy goals and will consider alternatives, as the commission recommends.”

Low-income customers enrolled in the proposed program would realize an average annual bill savings of $200, according to National Grid’s filing.

Gerwatowksi said that the intentions of the proposal were good, but the means for accomplishing its objectives “raised questions.”

“We have tens of thousands of customers struggling to pay their bills, and we’re going to be facing mountains of debt when the [pandemic-related] moratorium ends and efforts to increase affordability need to meet the scale of the problem,” Anthony said. “This proposal was a distraction from the work the company should be doing to identify and eliminate all of the inconsistencies in their programs and policies that are causing the electric system to cost more than it needs to.”

The commissioners said they were open to discussing ways to improve on the proposal.

“I think this proposal did identify an opportunity to deliver the benefits of enrolling low-income customers in CRDG but … in a way that doesn’t have added costs,” Anthony said.

February 26, 2021

Calif. Worries High Rates Could Hurt Climate Efforts

California’s energy policy leaders came together Wednesday to weigh the potential impact of the state’s sharply rising electricity rates on its carbon reduction and electrification goals.

The heads of CAISO, the state Public Utilities and Energy commissions, and the legislative committees that oversee energy heard from CPUC staff and academic experts in a virtual hearing on how escalating rates could exacerbate the state’s division between rich and poor and undermine its ambitious programs to fight climate change.

“We begin this work because we understand that meeting our state’s decarbonization and electrification goals will depend on maintaining electricity rates that are affordable for customers,” CPUC President Marybel Batjer said.

Those goals include serving retail customers with 100% carbon-free energy by 2045 and requiring that all new cars sold in the state be zero-emissions vehicles by 2035. (See Calif. Governor Proposes $1.5 Billion for ZEVs.)

In the next decade, however, rates charged by the state’s three big investor-owned utilities will outstrip inflation by a wide margin, CPUC staff said. Ratepayers will have to cover the costs of billions of dollars in wildfire mitigation strategies and transmission and distribution upgrades.

The result: Southern California Edison’s rates will rise by 3.5% annually through 2030; Pacific Gas and Electric’s rates are projected to climb by 3.7% a year; and San Diego Gas and Electric’s rates will increase 4.7% every year for the next decade. Annual inflation, meanwhile, is anticipated to be about 1.9%. And PG&E and SDG&E’s annual rate increases have been twice the rate of inflation since 2013, commissioners said.

California Electricity Rates — Projections show PG&E rates compared with inflation through 2030 | *CPUC*

Electricity costs outpacing inflation by such a wide margin is a “very troubling finding,” Batjer said. Though not as dramatic as some had feared, the increases are more likely to hurt lower-income households that are sensitive to even small increases in monthly bills, she added.

The state must figure out how to maintain affordability and reliability while continuing to fight climate change, she said.

Batjer and the other CPUC commissioners were joined on the virtual dais by CAISO CEO Elliot Mainzer and members of CAISO’s Board of Governors, the state’s energy commissioners, and the chairs of the Senate and Assembly energy committees.

CPUC Commissioner Genevieve Shiroma called the unusual gathering a “who’s who of California energy.”

Shiroma led the effort that produced the draft white paper that formed the basis for the hearing and future efforts. She said it wasn’t fair to keep saddling ratepayers, regardless of income, with fixed costs for infrastructure upgrades.

“We as a commission cannot continue to approve larger and larger revenue requirements,” she said. “We need to do a better job of considering the cumulative impact of the rate increases we approve … and we need to be diligent in ensuring that … we approve [increases] only for programs where we have strong evidence that the benefits will outweigh the costs.”

A primary concern is that rising electricity rates will prevent the adoption of electric vehicles and the replacement of gas furnaces and water heaters with electric units.

California is among the states with the highest retail electricity prices , averaging 20.45 cents/kWh in December versus the national average of 12.8 cents/kWh, according to the U.S. Energy Information Administration.

That could thwart the electrification of transportation, a major policy goal in California, with about 800,000 electric vehicles currently on the road and millions more anticipated. The movement to electrify buildings has been rapidly gaining momentum, with dozens of cities and counties adopting electrification ordinances that exceed state building codes in recent years.

“Higher bills make meeting our policy goals much harder,” CPUC Energy Division Director Ed Randolph said.

The white paper describes the problem but does not provide immediate solutions, Randolph said. Among the issues lacking ready alternatives is the state’s need to prevent catastrophic wildfires sparked by utility equipment, such as those in 2017-2020, and rolling blackouts like those in August.

“Once we looked at the drivers of the increases and the ways we could reduce utility costs, it was hard to pinpoint places where we should cut back on spending,” he said. “The biggest drivers of bill increases are wildfire mitigation spending and transmission buildout. While we can look at ways to be more efficient in these investments, I don’t believe we can recommend not making [them]. They are critical to reducing wildfires, maintaining reliability and avoiding outages such as the ones that happened last summer in California and just happened in Texas.

“We also know that investments in clean energy infrastructure are absolutely necessary to meet our state policies, and analysis shows that these investments have minimal impact on bills or could even save Californians money over time” by reducing rates because of increased demand, he said.

The CPUC and its sister agencies, utilities and stakeholders must find ways to minimize costs and keep electricity affordable, Randolph said.

“Hopefully this en banc [hearing] is a start of that joint effort,” he said.

‘A Tale of Two States’

Paul Phillips, CPUC manager of retail rates, said the rate dilemma highlighted the often extreme income equality in California.

“It really has become a tale of two states,” Phillips said, while presenting the white paper’s findings. “We have wealthier coastal homeowners who tend to invest in distributed energy resources,” mainly rooftop solar, and have a better sense of how to lower their own electric costs. Inland communities of lower-income workers don’t have those resources, he said.

In an afternoon session, Severin Borenstein, a CAISO board member and University of California, Berkeley professor, echoed the theme. He presented the results of a study he and two colleagues from the Energy Institute at UC Berkeley’s Haas School of Business authored, titled, “Designing Electricity Rates for An Equitable Energy Transition.” Nonprofit think tank Next 10 commissioned the study.

The report said California’s strategy of recovering fixed utility and social program costs from lower-income ratepayers is “a headwind in the state’s efforts to combat climate change through electrifying transportation and buildings, which many see as critical steps to a low-carbon future.”

“The state’s three large investor-owned electric utilities recover substantial fixed costs through increased per-kilowatt hour (‘volumetric’) prices,” it said. “With nearly all fixed and sunk costs recovered through such volumetric prices, the price customers pay when they turn their lights on for an extra hour is now two to three times what it actually costs to provide that extra electricity — even when including the societal cost of pollution.

“This massive gap between retail price and marginal cost creates incentives that inefficiently discourage electricity consumption, even though greater electrification will reduce pollution and greenhouse gas emissions,” the report said.

Between 66 and 77% of the costs that California IOUs recover from ratepayers are “associated with fixed costs of operation that do not change when a customer increases consumption,” it said. “This includes much of the costs of generation, transmission and distribution of electricity, as well as subsidies for low-income household and public purpose programs, such as energy efficiency assistance.”

The shift to behind-the-meter solar generation has disproportionately shifted cost recovery onto customers who do not have rooftop solar, the report said. More affluent homeowners now consume “modestly” more energy than low-income households, it said.

The study recommended changing the way utility infrastructure and social programs are financed. One approach, it said, would be to raise revenue from sales or income taxes, “ensuring that higher-income households pay a higher share of the costs.”

That might not sit well with voters, it acknowledged.

“A more politically feasible option could be rate reform — moving utilities to an income-based fixed charge that would allow recovery of long-term capital costs, while ensuring all those who use the system contribute to it,” the report said.

“In this model, wealthier households would pay a higher monthly fee in line with their income.”

In his presentation, Borenstein said the state’s Franchise Tax Board could either provide refunds to low-income ratepayers or disclose customers’ income brackets to the utilities that collect the fees.

“We’ve thought about enforcement issues, and we think there are ways to do it,” Borenstein said. “It would be a lift, but the alternative is not only, I think, going to undermine decarbonization but, also, we’re basically balancing the costs of all of the carbon-reduction programs on the backs of the people who are least able to pay for it.”

February 26, 2021

Cold Weather Standards Team Sticking to Year-end Target

The team modifying NERC’s standards for cold weather preparedness confirmed in a webinar Thursday that the joint inquiry by the ERO and FERC into the recent power outages in Texas and neighboring states will not affect its schedule for completing Project 2019-06, which remains on track to be finished “by the end of the year.” (See Anger Rises over Texas Power Restoration.)

However, NERC Senior Standards Developer Jordan Mallory also acknowledged that the effort “is a high-priority project” for the organization. She said the standard drafting team (SDT) has been actively conducting industry outreach and is confident that “we will only need one more ballot” after the current formal comment period, which ends on March 3.

NERC Panel Delays Action on Cold Weather Prep.)

Team Credits Industry Feedback for Improved Product

Industry reaction to previous postings have been lukewarm at best, as noted at September’s meeting of NERC’s Standards Committee, where the standard authorization request (SAR) was approved. (See “Cold Weather SAR Approved,” Gen Operators Cool to Winter Preparedness Standard.)

cold weather preparedness standards — NERC’s Jordan Mallory (left) and SPP’s Matthew Harward | © *ERO Insider*

SPP’s Matthew Harward, chair of the SDT, said at Thursday’s webinar that the constructive criticism had helped the team create a proposal that would be acceptable to more stakeholders. He emphasized that the team is aware that “a one-size-fits-all approach will not be the most efficient way” to address the issue, and that it had focused on giving generator owners “flexibility … to make many determinations based on their own situations.”

The proposal currently out for comment involves three updated standards: EOP-011-2 (Emergency preparedness), IRO-010-4 (Reliability coordinator data specification and collection) and TOP-003-5 (Operational reliability data).

Changes to EOP-011-2 include adding new requirements for cold weather preparedness plans on the part of generator owners, along with data specifications and collections for balancing authorities and annual maintenance and inspection requirements. IRO-010-4 would be modified to include data specification requirements and cold weather parameters for reliability coordinators, while updates to TOP-003-5 would include those requirements for transmission operators.

The team is also seeking comment on the implementation plan, which would see all new requirements take effect one year after the new standards are accepted by FERC. Harward emphasized that despite the team’s confidence in their work, they still welcome feedback from stakeholders to make sure they are on the right track.

If “you have a suggestion — another standard or new standard … where these requirements should go — please submit comments, because those are very valuable to the drafting team to help us navigate where to place the standards,” Harward said.