Page 984 – RTO Insider

February 11, 2021

Order 2222 Testing Planning, Communications

FERC’s directive to open wholesale markets to aggregations of distributed energy resources is forcing states to consider new communication channels and more holistic system planning, and how they respond will be crucial, industry officials say.

“FERC left a lot of power in the state regulators’ hands, and this is really leaving the states in a place to make or break Order 2222,” Marcus Hawkins, executive director of the Organization of MISO States (OMS) said during a panel discussion at the National Association of Regulatory Utility Commissioners (NARUC) Winter Policy Summit on Feb. 9. Illinois Commerce Commission Chair Carrie Zalewski moderated.

FERC Order 2222, issued last September, ordered RTOs and ISOs to open their markets to DER aggregations now largely limited to providing demand response (Order 2222, RM18-9). Although the commission declined to allow local or state regulators to prohibit DERs from participating in the wholesale markets through an opt-out, it said regulators can prevent resources from participating in both retail and wholesale programs. (See FERC Opens RTO Markets to DER Aggregation.)

“What a retail regulator does to shape their programs will have a huge influence over the economics of where DER aggregation can flourish or not,” said Hawkins, who predicted retail programs are likely to provide more revenue to DERs than wholesale markets in the near term. “Also, the ability to condition participation in a retail program is huge. So, if a retail program prohibits wholesale activities … then you really have the final say in where the DER is going to go.”

State regulators will also control spending on distribution system investments, which will determine metering technology and the sort of information that will be available on DERs, Hawkins said.

FERC defines DERs as any resource located on the distribution system, a distribution subsystem or behind a customer meter, including energy and thermal storage, intermittent and distributed generation, energy efficiency and electric vehicles. The order requires RTOs to allow DER aggregators to register as market participants under models that accommodate their physical and operational characteristics.

FERC’s initiative would be threatened, Hawkins said, by “a system where distribution utilities are constantly fighting battles, being accused of being a barrier to participation in wholesale markets, or a place where inefficient planning is being done because not enough data is being shared between the DERs and the wholesale market.”

Hawkins noted that RTOs, which are facing a July 19 deadline for compliance filings, must determine the coordination framework among them, state regulators, distribution utilities and aggregators. “It’s important for [state] commissions to consider whether they want that coordination to be direct — where the aggregator or the RTO has some sort of direct communication with the commission — or indirect through a regulated utility,” he said.

RTOs must also determine how often to review the coordination. “It’s not just set it and forget it,” Hawkins said. “Aggregations might change. So, there might need to be some flexibility in the process.”

Hawkins said OMS has found it challenging to get utility distribution officials involved with MISO. “There’s a lot of what I refer to as MISO watchers, which are the wholesale and transmission planning people at the utilities, but not necessarily the distribution folks,” he said. “Getting those experts — both people who work on DER programs from commissions and also distribution utility experts into the conversation at the RTO is important. … Bringing those voices is the only way we’re going to understand where conflicts exist between retail and wholesale tariffs. … You need to have a lot of eyes on the language to understand what will make those retail programs either work or fail within the larger wholesale context.”

New Lines of Communication

Paul Suskie, SPP’s executive vice president of regulatory policy and general counsel, said the RTO’s territory, which has no capacity market and where all utilities are vertically integrated, is starting to see a bit more interest in DER, “but it’s still very, very small in the aggregate.”

“We’re looking at operational communication challenges [under Order 2222],” he continued. “This will require us to communicate with entities that we don’t historically communicate with. … Because we’re at the wholesale [level] we do not have a lot of communications with even some of our member companies at the retail level. … So, we have some new communication and operational challenges with existing members, let alone new entities that may participate under Order 2222.”

Ted Thomas, chairman of the Arkansas Public Service Commission said the FERC directive “is very challenging. But if we can meet those challenges, I think there’s a great upside.”

Thomas said FERC “left many of the most difficult challenges to be dealt with by the RTOs in their stakeholder processes,” adding that he hopes the commission will grant RTOs an extension on the compliance deadline. (See MISO to Seek Extension on Order 2222 Plan.)

System Planning

Former NYISO official Kelli Joseph, now an adviser to mobile storage company Power Edison, said it was “unfortunate” that FERC did not spell out its system planning requirements “other than saying a coordinated framework could be good.”

Although RTOs conduct separate transmission planning processes for reliability, economic and public policy projects, Joseph said it’s important to ensure “that there’s at least a process within one or more of those transmission planning models that can actually do a comparison between a transmission solution, a generation solution and potentially a DER solution.”

Joseph served on a joint task force of NARUC and the National Association of State Energy Officials that explored how aligned planning could guide the development of the grid in the future. The task force will hold a press conference at 11 a.m. EST on Feb. 11 to discuss the results of its efforts. “Thinking about how to use that … system planning framework could potentially inform some of this market coordination hopefully going forward as well,” Joseph added.

Oregon Public Utility Commissioner Megan Decker said although Order 2222 doesn’t apply in her state because it is not part of an RTO, it nonetheless demonstrated “leadership.”

“I have been really impressed with the level of dialogue on DER integration that I’ve seen as a result of the FERC order,” she said. “Unlocking the distribution system is something we will need. It’s going to be a pretty long-term transition. Wholesale market access by itself doesn’t necessarily mean the kind of DER explosion in states that aren’t ready for it. State programs right now largely drive DER uptake because of the economics.”

Even in California, which has done much of what is required by the FERC order, Decker said, “the money [to encourage DERs] is not there in the wholesale market.”

February 11, 2021

Wash. EV Bills Spark Concern About Buildout

Infrastructure is the main concern facing two Washington bills that propose to switch the state’s auto market to only electric vehicles by 2030.

Will there be enough generation? Who will install and pay for all the charging stations? Can the Northwest power grid transmit enough energy to handle all those vehicles?

“We’re going to need hundreds of thousands of charging ports for millions of vehicles,” Douglas Warren, a lobbyist for Douglas and Klickitat counties’ public utility districts, said at a Washington House Transportation Committee hearing Feb. 1.

State Rep. Nicole Macri (D) and Sen. Marko Liias (D) introduced similar bills this session to require that the Washington State Transportation Commission adopt regulations by 2025 mandating that all model year 2030 and later passenger and light-duty vehicles sold in the state be EVs. The two bills would require the commission to provide the legislature a plan for developing the regulations by Sept. 1, 2023.

“We’re trying to phase this in. We’re trying to be thoughtful,” Liias said.

This is the second year that Macri has submitted the proposal as a bill. It did not make it out of the House Transportation Committee in 2020. This year, Liias introduced a companion bill in the Senate.

Washington EV Bills — Two new Washington bills would require that all cars sold in the state be electric by 2030. | *Washington Department of Commerce*

“We’re presenting this bill because of the urgent needs of dealing with climate change,” Macri said.

Macri and Liias both pointed to General Motors’ recent announcement that it plans to manufacture mostly electric vehicles by 2035. Macri also cited Volvo and Volkswagen introducing their first electric vehicles in the last few years. The private sector is already beginning a transition to EVs because of pollution concerns, they concluded.

“Transportation is the largest source of emissions in the state. Everyone knows we’re headed this way,” Liias said.

Pierce County Councilor Ryan Mello, speaking on behalf of himself, told the committee that the marketplace has begun to gradually transition to EVs on its own, and that the state government needs to send a strong signal to manufacturers to encourage that change.

‘Wishful Thinking’

At the hearing, several questions addressed the infrastructure issue, which both Macri and Liias acknowledged is a major hurdle.

“No one knows what the fiscal impact of this bill will cost. … There seems to be variables on top of variables on top of variables in this bill,” Rep. Jim Walsh (R) said.

“We need a statewide analysis,” Warren said. Nick Garcia, policy director for the Washington Public Utility Districts Association, said a massive investment in Washington’s power grid will be necessary to sustain EV culture.

Macri contended that having a locked-in date is needed to give the marketplace good information on how to adjust and give the state government a timetable to get infrastructure constructed. “2030 is still a long way off,” she said.

Scott Hazelgrove, representing the Washington State Auto Dealers Association, noted that his organization opposed Macri’s bill last year but is neutral in this session and hopes to work with the representative on the details. A deadline for making changes could be a useful tool in helping his constituents deal with switchovers to EVs, he said.

“A 100% EV rate in Washington approaches wishful thinking,” argued Jessica Spiegel, Northwest regional director for the Western States Petroleum Association.

Rep. Ed Orcutt (R) asked, “What if we get to 2030, and there’s not a big enough supply of EVs, will there be exceptions?”

February 11, 2021

Tx Planning in Boston Collides with Climate Goals

A public meeting held Monday for a planned electrical substation in the East Boston neighborhood shined a light on the juxtaposition of long lead times for transmission planning and new energy transition goals.

Eversource Energy first identified a need for new transmission to accommodate increased demand in the East Boston area in 2014. Two new transmission lines were built between existing substations in the nearby cities of Chelsea and Everett as part of the utility’s Mystic-East Eagle-Chelsea Reliability Project.

But opponents of the new substation argue that renewable resources could meet that demand.

The substation was approved for construction by the Massachusetts Energy Facilities Siting Board (EFSB) in 2017, with the condition that Eversource and the city of Boston consider moving the substation away from a fish processing company and closer to a playground. The board held the meeting to determine whether to approve the change. Opponents of the project called on the board to reconsider the project based on public health and clean energy concerns.

Marcos Luna, a local resident and professor in the Geography and Sustainability Department of Salem State University, said during the meeting that the policies that allow for the approval of the substation “lag reality” given the state’s target for net-zero emissions by 2050.

Boston Climate Goals — Residents in Boston are questioning the justification for a local substation project that Eversource says is important for maintaining reliability among increasing electrification. | *Famartin, CC-BY-SA-4.0 via Wikimedia Commons*

An analysis led by the Union of Concerned Scientists (UCS) found that installing rooftop solar panels in the East Boston neighborhood could meet increased electricity demand in the area while cutting customers’ electric bills and reducing emissions.

UCS conducted the study with GreenRoots, a local environmental justice organization, and found that deploying rooftop solar on a third of triple-decker buildings in the area could provide close to 10 MW of solar capacity and that the households identified in the study could save $60 to $120/month on their electricity bills.

Pairing those solar systems with a typical battery system could add more than 9 MWh of energy storage, the study said. Furthermore, the systems in aggregate could cost 40% less than the $50 million Eversource proposal.

The study also found that the solar systems could reduce emissions from electricity consumption in the buildings by 40% compared to using power generated by fossil fuels. With energy storage batteries, the solar could reduce emissions by 70%.

Demand Concerns

Patrick Woodcock, commissioner of the Massachusetts Department of Energy Resources, told attendees of the EFSB meeting that increasing electrification of buildings and transportation will drive up load, particularly for heating.

“We are increasingly seeing electrification as our long-term, upcoming plan” for reducing emissions in the state, he said, necessitating additional transmission infrastructure.

He noted that adding that solar and energy efficiency standards are also driving load down, but there is not a consensus on how that trend will manifest in the area around the planned substation.

Bryndis Woods, a senior researcher at the nonprofit consulting group Applied Economics Clinic, said that Eversource has not presented sufficient evidence for the need of the planned substation. The company is basing its load increase forecast on a 2015 ISO-NE Capacity, Energy, Loads and Transmission report, which predicted a 1% increase in load per year.

Woods testified that local load has only been growing by 0.4%/year, and load growth in the area is forecasted to be flat to negative.

Bob Clarke, director of transmission and citing for Eversource, told RTO Insider that while the utility does not expect load to increase as much as it originally predicted in East Boston, the Chelsea substation’s load will exceed system capacity by 2022, and there is no room to expand that substation.

Eversource’s forecasting is different from ISO-NE’s, said David Rosenzweig, the attorney representing the utility before the EFSB. Logan Airport, which is in East Boston, is expecting a 10-MW increase in demand because of expansion, and new planned development in the area will consist of 10.5 million square feet of mixed-use building space to be constructed over the next 20 years, Rosenzweig said.

With these significant load increases, East Boston is “in great vulnerability” of supply shortages or even outages if the substation is not built, he said.

February 11, 2021

Lawmakers Chase Affordability in Energy Transition in Maine

Maine legislators and officials gave a preview of their work this year in implementing the state’s energy policies while keeping costs to consumers low.

Following a surge of new climate-related legislation passed in Maine last year, state legislators are now trying to balance the need to meet mandates without burdening ratepayers.

Understanding the financial ramifications of energy-related policies “is constantly my No. 1 priority,” Sen. Trey Stewart (R) said Wednesday during a preview of the joint Energy, Utilities and Technology (EUT) Committee’s work this legislative session.

Stewart called Maine’s new climate laws “admirable,” but he said the costs of achieving them “will become a problem at some point.” Last year the Legislature passed legislation relating to, among other things, the state’s emissions and renewable portfolio standard; net metering; offshore wind; heating; electric vehicles; and transmission alternatives.

This year’s legislative session will give lawmakers a chance to adjust the bills passed last year, Dan Burgess, director of Maine’s Energy Office, said during the webinar, hosted by E2Tech.

“I think [this session] is an opportunity to continue the progress that we’ve made in order to create economic opportunities within the energy space and to ensure that we’re keeping affordability in mind,” he said.

Maine Energy Transition — Maine lawmakers are looking at ways to make the state’s climate goals, such as putting 41,000 electric vehicles on the road by 2025, affordable for ratepayers. | *Chevrolet*

Rep. Nicole Grohoski (D) said that her priority for this session is to make sure that the energy transition is affordable and equitable for residents. She said the EUT Committee will consider a group of bills that deal with financing and accessing lower-cost capital.

Those bills address, for example, commercial property-assessed clean energy (C-PACE) financing, heat pump incentives and even a green bank, she said. In addition, there are legislative efforts related to creating a consumer-owned utility to unlock access to revenue bonding and low-cost capital for a large-scale grid buildout to support electrification of major sectors.

Grohoski said that she is sponsoring a bill this year to create a generation authority in the state that would also provide nontaxable low-cost capital through revenue bonds for local clean energy developers.

New Reports

Burgess said that the Energy Office will release information soon related to progress of the Maine Climate Council’s strategic initiative to create a clean transportation roadmap for the state. Initial estimates from the council show that the state needs to have 41,000 light-duty EVs on the road by 2025 to meet its emissions goal for 2030.

The roadmap, Burgess said, will help identify issues that must be addressed to advance clean transportation across all EV classes and public transportation.

The Energy Office also is preparing to release a report about the Climate Council’s call for modernizing Maine’s buildings. Burgess said the report will identify the current state of building efficiencies and opportunities for advancing home weatherization programs, appliance standards and C-PACE programs.

Commission Initiatives

The Maine Public Utilities Commission is working to overcome significant technical challenges related to clean energy mandates put in place by the Legislature, while also acknowledging the importance of minimizing costs for consumers and businesses.

Chairman Philip Bartlett said the commission currently has a working stakeholder group of industry and utility representatives to examine the interconnection of distributed energy resources. The working group issued a notice Tuesday seeking input on the review process for small DER projects. Bartlett said that some small projects are subject to a higher level of review than others, causing “significant delay and added expense.”

As part of that inquiry, he said, the group will consider penalties for utilities if they do not meet interconnection requirements.

The PUC also will be opening a proceeding to looking into Central Main Power’s (CMP) recent claim that it needs to complete upgrades at more than 100 substations to connect new DERs to the grid.

“It’s important to consider the timeline with respect to when CMP became aware of this problem … and how projects are being impacted,” Bartlett said.

To ensure that Maine can interconnect high levels of DERs in the future, the commission will open a separate proceeding to consider distribution system design changes. The proceeding also will work to improve data collection and transparency.

“It is important to assess what is needed for the grid of the future, and we cannot minimize costs without good information to help drive decision-making,” Bartlett said.

February 11, 2021February 5, 2025

Calif. Governor Fills Seats on CAISO, CPUC, CEC

Gov. Gavin Newsom named new members Tuesday to the three bodies that govern California energy policy — CAISO, the Public Utilities Commission and the Energy Commission — and reappointed a sitting member of the ISO’s Board of Governors.

Newsom appointed former NERC Trustee Jan Schori to fill a seat on the CAISO board left vacant when former Chair David Olsen decided to retire at the end of November.

In a rare move, the governor named an Energy Commission staff member, Deputy Director Siva Gunda, to the panel of five commissioners. Former Commissioner Janea Scott left in January to take a top post at the U.S. Department of the Interior under the Biden Administration.

Gov. Gavin Newsom filled vacancies on the boards of CAISO, the CPUC and the Energy Commission on Feb. 9. | © RTO Insider

Newsom selected the Energy Commission’s general counsel, Darcie Houck, to fill an open spot on the CPUC dais. In December he picked former Commissioner Liane Randolph to head the California Air Resources Board, leaving a vacancy.

And the governor reappointed Mary Leslie to a seat she has held on the CAISO board since 2019.

During Tuesday’s CEC meeting, commissioners welcomed their new colleague, Gunda, and wished Houck well in her next role. Chair David Hochschild noted that the CEC and CPUC must work together to predict energy use and procure resources. The additional connection between the two entities will be helpful, he said.

Darcie Houck, chief counsel to the California Energy Commission, will fill a vacant seat on the California Public Utilities Commission. | California Energy Commission

“The collaboration between the CPUC and the Energy Commission is so fundamental to our success, and so, knowing the strong bond the two of you have with each other is another reason we should all be excited,” he told Houck and Gunda.

Working with CAISO, the commissions are trying to head off energy shortfalls this summer and in the next few years, as the state transitions from fossil fuels to renewables. Last summer’s energy emergencies and rolling blackouts led to calls for better synchronization among the three entities. (See New CAISO CEO Vows Urgency on Resource Adequacy.)

“It’s just clear California will not succeed and will not have an effective resource adequacy framework if the ISO and the CPUC and the CEC do not have that shared sense of tremendous urgency and focus and collaboration,” CAISO CEO Elliot Mainzer said in an interview last year. “We have to work well together.”

Schori’s appointment followed her service as a NERC trustee for 12 years, the maximum allowed. She was termed out earlier this year.

Former NERC Trustee and SMUD CEO Jan Schori will become a CAISO board member. | © RTO Insider

From 1984 to 2008, Schori worked for the Sacramento Municipal Utility District, one of the nation’s largest municipal utilities, including as its CEO and general manager, general counsel and staff attorney. She graduated from the University of California Davis School of Law.

Leslie, whom Newsom named to the CAISO board two years ago, was the longtime president of the Los Angeles Business Council, a one-time deputy mayor of Los Angeles and a former commissioner at the Los Angeles Department of Water and Power.

Houck, another UC Davis graduate, has been chief counsel at the CEC since 2019. She was an administrative law judge at the CPUC from 2016 to 2019 and staff counsel at the CEC from 2000 to 2005. She worked in a private law firm between her stints of government service.

Siva Gunda, a deputy director at the Energy Commission, was named a CEC commissioner. | California Energy Commission

Gunda served as deputy director of the Energy Assessments Division at the CEC since 2018 and was office manager of the commission’s Demand Analysis Office in 2017-2018. He previously worked at the UC Davis Energy and Efficiency Institute, including as director of research for two years and as a program manager for four years prior. Gunda holds a master’s degree in mechanical and aeronautical engineering from Utah State University.

After he was sworn in Tuesday morning, Gunda — who, commissioners said, is known for giving credit to others — thanked his fellow staff members at the CEC for their “collective success” and hard work pursuing the state’s clean energy goals and helping determine the causes of last year’s rolling blackouts. (See CAISO Issues Final Report on August Blackouts.) Their joint efforts culminated in his appointment, he said.

“The staff at the Energy Commission are one of the most passionate, committed and intellectually honest group of people that I’ve ever met,” Gunda said after he was sworn in Tuesday morning. “It’s been an absolute honor and pleasure.”

February 11, 2021

NARUC: More Opportunities than Challenges in Drones

Drones have the potential to revolutionize utilities’ information gathering and grid resilience, far outweighing the time and expense of adopting the new technology, according to speakers at the National Association of Regulatory Utility Commissioners’ Winter Policy Summit on Tuesday.

“This technology is a game changer. … The time and ease and even the cost [of inspection] is much improved using the [drone] technology at our disposal,” Duquesne Light Co. COO Kevin Walker told a panel on “Emerging Technologies for a Resilient Grid.”

NARUC Drones — Clockwise from top left: D.C. PSC Chair Willie Phillips; Andy Abranches, PG&E; Kevin Walker, Duquesne Light Co.; and Drew McGuire, EPRI | *NARUC*

Drones Capture ‘Impossible’ Shots

Duquesne has been using drones since 2018, and their benefits are already obvious, according to Walker. He described the unmanned aerial vehicles creating topographical maps of landslides to assist in recovery planning. The maps they develop can tell operators whether vehicles will be able to access the affected locations.

The utility has also sent drones on inspection trips into unstable tunnels where workers can’t be sent for fear of collapse, and to take photos of conduits on the underside of bridges that would be “nearly impossible to get with normal, conventional methods.”

The devices have become just as valuable in California, according to Andy Abranches, senior director of special projects at Pacific Gas and Electric. Abranches recalled the utility’s efforts to inspect the entire transmission system in the wake of 2018’s Camp Fire, which investors said began with equipment that PG&E had made little effort to inspect and repair for nearly 90 years. (See “Reduced Inspections,” Ancient C Hook, Financial Manipulation Caused Camp Fire.)

To aid in the massive inspection effort, PG&E turned to aerial photography from both helicopters and drones. This gave inspectors a wealth of information, which turned out to create its own problems.

“The field of view and the angles that you get from using helicopter aerials, as well as drones, really enriches the inspection process. But all of that comes at a pretty significant cost [of] a huge volume of inspection photos,” Abranches said. “Just in a two-year period, we got over 4 million inspection photos … and [when] we have someone in the back office … reviewing that information, [it’s] very cumbersome.”

Humans Always Needed

PG&E’s solution was an internal project called the Sherlock Suite, which combines a repository for images with a set of models designed to automatically sort them into searchable categories. Similar images can be grouped together for mass inspection, and pictures of a particular location can also be viewed on a timeline so that when a problem is found, inspectors can cycle back through earlier photos to discover when it first emerged.

Building this tool has taken more than two years, and while Abranches said the team has made a strong product, “training” the artificial intelligence to recognize and sort the images reliably is likely to take far longer. The Sherlock Suite is expected to improve over time thanks to its machine-learning capabilities, but panelists agreed that humans always need to be in the loop. Ideally, the system’s organic and technological components will build on each other’s strengths.

“Any superpower can be overplayed. … Nothing can be 100% accurate all the time, and there [are] embedded biases … in our technology,” Walker said. “So we have to create that check and balance. … That’s why we have people like data scientists coming into our industry in more numbers than we ever have before, because they know how to analyze that data and [detect] anomalies that the naked eye … can’t see.”

Asked about security for these databases — which could include images of people who were unaware their pictures were being taken — participants acknowledged that this issue has to be a priority. Drew McGuire, senior program manager of distribution for the Electric Power Research Institute, recommended that planners follow their instincts for caution and never assume any system is invulnerable.

“When we design a system, when we design a distribution line, we don’t know exactly what’s going to happen … but we know eventually this line will be stressed,” McGuire said. “We can think of cyber in kind of a similar approach. We may not know the exact vector that’s going to be used … [but] eventually there’s a potential that they’re going to be stressed. And we need to … design them in that kind of way, where you assume that at some point you’re going to have to respond and react.”

February 10, 2021January 21, 2024

CCAs Team Up to Buy Clean Energy, Storage Capacity

Eight of California’s community choice aggregators said Monday they will join forces to create one of the state’s largest procurement entities to buy renewable energy and storage capacity.

Together the CCAs in Northern and Central California represent 2.6 million customer accounts with load equivalent to about 40% of Pacific Gas and Electric, the state’s largest utility.

PG&E has 5.1 million customers, slightly more than the state’s second largest utility, Southern California Edison. San Diego Gas and Electric, the state’s third largest utility, has 1.4 million electric customers.

“Overcoming our climate crisis and making our grid clean and reliable will require the kind of strength in numbers that these eight CCAs are showcasing,” Peninsula Clean Energy CEO Jan Pepper said in a statement.

The members of the new joint powers authority (JPA), called California Community Power, are Peninsula, Central Coast Community Energy, East Bay Community Energy, MCE (formerly Marin Clean Energy), Redwood Coast Energy Authority, San Jose Clean Energy, Silicon Valley Clean Energy and Sonoma Clean Power. A ninth CCA, CleanPowerSF, is pursuing membership.

The JPA, an organization of public entities representing separate jurisdictions, will have greater negotiating power and be able to procure larger amounts of renewable and storage resources than individual CCAs, members said.

“Over the years, as the CCA movement has grown, there has been an increase of CCA joint procurement efforts for large-scale renewables and energy storage projects,” Beth Vaughan, executive director of the California Community Choice Association (CalCCA), said.

One combined effort involves procuring 500 MW of long-duration storage in a 10-year contract. The request for offers was issued in October and the CCAs are evaluating proposals, with a final decision expected by July.

CCAs have spread rapidly in the past decade, drawing ratepayers from the state’s three large investor-owned utilities, and now serve roughly 11 million customers in 190 cities and counties, according to CalCCA. Many have more aggressive clean energy goals than California’s mandate, under Senate Bill 100, that load-serving entities (LSEs) provide retail customers with 100% clean energy by 2045.

Divisions remain, however, with some lawmakers and state regulators concerned about whether CCAs can procure sufficient resources to meet demand. (See Calif. Lawmakers Revea l Growing Divisions over CCAs.)

In June, the California Public Utilities Commission named PG&E and Southern California Edison, the state’s two biggest investor-owned utilities, as central buyers to procure resources for LSEs in their service territories, including CCAs, that are unable to meet demand. (See California PUC Approves Microgrids, Fire Plans.)

Whether the formation of the JPA alleviates concerns about CCAs resource adequacy remains to be seen.

February 10, 2021

Congress Urged to Codify Clinton Order on Enviro Justice

President Biden’s early directives on environmental justice do not go far enough, Kerene Tayloe, director of legislative affairs for WE ACT for Environmental Justice, told a U.S. House of Representatives subcommittee Tuesday.

Rather than just receiving a update from Biden, Tayloe said, President Bill Clinton’s 27-year-old Executive Order 12898 should be codified.

“Depending on the president in office at the time, [EO 12898] doesn’t always get the attention and federal support that we need, so in addition to updating and strengthening the executive order, we also think it’s critical to codify that order,” she told members of the House Energy and Commerce Subcommittee on Environment and Climate Change.

| <em>Raul654, <a href="https://commons.wikimedia.org/wiki/Category:CC-BY-SA-3.0-migrated">CC-BY-SA-3.0-migrated</a> via Wikimedia Commons</em> — Members of the House Subcommittee on Environment and Climate Change heard from witnesses Tuesday on federal climate leadership and the role of environmental justice. | *Raul654, CC-BY-SA-3.0-migrated via Wikimedia Commons*

Biden signed an executive order on Jan. 27 that established the Environmental Justice Interagency Council and Environmental Justice Advisory Council within the White House. He directed those bodies to advise the administration on ways to update EO 12898.

The original purpose of Clinton’s order was to bring attention to how federal actions affect the environmental and human health of minority and low-income communities. That order also established an Interagency Working Group, but Tayloe said the order could be strengthened by ensuring there is a focus on environmental justice across government agencies.

Rep. Raul Ruiz (D-Calif.) said during Tuesday’s hearing that he will reintroduce legislation that would, among other things, codify parts of EO 12898. Called the Environmental Justice Act, the bill was introduced last year and passed the House as part of the Clean Economy and Jobs Innovation Act.

“I’m hoping it will get signed into law this Congress because codifying the order will strengthen compliance and protection,” Ruiz said.

Justice40

In her testimony, Tayloe outlined ways that communities of color can be part of the work the Biden administration has initiated on climate and environmental justice.

environmental justice — Kerene Tayloe, director of legislative affairs for WE ACT, speaks during a virtual hearing of the House Energy and Commerce Subcommittee on Environment and Climate Change | *U.S. House Energy and Commerce Committee*

She applauded Biden’s Justice40 initiative, which seeks to deliver 40% of the benefits of federal climate investments to disadvantaged communities, but she also urged inclusiveness in that process.

“I think it would be critical to have very strong engagement with communities for us to articulate how we would like to see that 40% [realized],” she said, adding that workforce development and transportation are among the ways WE ACT might like to see funds allocated.

Tayloe said prioritizing communities of color for Justice40 recognizes that those communities have been disproportionately affected by climate change.

“While we all are experiencing extreme heat and storms, unfortunately our communities get the brunt of that, and unfortunately there hasn’t always been the same level of support in helping [those communities] recover from these major climate experiences,” she said.

She said Justice40 needs to ensure that environmental justice organizations “be at the table.”

Working Group

Federal action on climate change, Tayloe said, also would benefit from a climate justice working group similar to one established in New York state under the Climate Leadership and Community Protection Act (CLCPA).

The New York working group includes community stakeholders, such as WE ACT, and government experts to guide clean energy investment.

“We’re really proud of the work that we did around CLCPA to get that passed,” she said. “For New York to lead the country in creation of such important climate policy shows what we can also duplicate it at the federal level, and having a working group for communities to be a part of is critical.”

February 10, 2021

Wash. House Tackles Bill to Cut Vehicle Emissions

A bill to trim carbon emissions from motor vehicles appears headed to the full Washington House of Representatives for a floor vote.

“I definitely feel this has a good chance of passing,” said state Rep. Joe Fitzgibbon (D), chairman of the House Environment and Energy Committee and the sponsor of House Bill 1091.

Bill opponent Rep. Mary Dye, ranking Republican on that committee, said because the pandemic prevents legislators from eating and mingling together, it is difficult to get a grasp of the bill’s chances of passage.

If passed, the bill would mandate that carbon emissions from gasoline and diesel fuel sold in Washington be cut by 10% below 2017 levels by 2028 and by 20% by 2035. It excludes emissions from fuel that is exported out of state or used by water vessels, railroad locomotives and aircraft. The goals apply to overall vehicle emissions in the state and not to individual types of fuels; Northwestern Washington has five oil refineries. It would go into effect Jan. 1, 2023.

On Jan. 21, the House Energy committee recommended passing the bill 7-5, with one abstention, along party lines. Rep. Sharon Shewmake (D), whose swing district holds most of the refineries, abstained. The bill is currently awaiting a vote in the House Appropriations Committee before going to the full House and then the Senate — both controlled by Democrats. Gov. Jay Inslee, who requested the bill be introduced, will likely sign it.

Nearly 1,500 people signed up to testify against the bill at a hearing Thursday before the Appropriations Committee, compared to about 600 people in favor. Only a tiny fraction actually testified.

“It’s a costly and ineffectual mandate,” Jessica Spiegel, Northwest regional director of the Western States Petroleum Association, said at a hearing before the committee in January. Port of Seattle Commissioner Fred Felleman, countered: “It’ll be good for the economy.”

The bill builds on a 2008 law that directed the state to reduce its overall CO₂ emissions to 90.5 million metric tons, the level in 1990, by 2020.

A recent Washington Department of Ecology report shows that the state’s CO₂ emissions dropped to 91.2 million metric tons by 2012 before growing back to 95.7 million metric tons in 2017 and 99.57 million metric tons in 2018. The 2020 level has not yet been calculated.

Washington Emissions — BP’s Cherry Point refinery is one of five Washington oil refineries that would be affected by HB 1091. | *BP America*

In an email, Andrew Wineke, the department’s spokesperson, said the state government expects carbon emissions to shrink in 2020 because of the COVID-19 pandemic. In addition, the state stopped consuming power from Montana’s Colstrip coal-fired power plant at the beginning of last year. Washington has one coal-fired power plant, operated by TransAlta, in Centralia. Under a carbon-reduction agreement with the state, TransAlta closed one unit at the 1,340-MW plant in December 2020 and plans to close the other in 2025.

The same 2008 law sets carbon-reduction targets of 45% below 1990 levels by 2030, 70% by 2040 and 95% by 2050.

Fitzgibbon said 42% of Washington’s carbon emissions comes from motor vehicles.

A major issue for those against the bill is how much decarbonized motor fuel will cost at the pump.

Mike Ennis of the Association of Washington Business argued that decarbonization will add 20 to 60 cents/gallon to gasoline prices. Dan Coyne, representing using Food Northwest, a coalition of food processors and their suppliers, cited a figure of 57 cents.

In contrast, Stu Clark, special assistant in Ecology Department, said California’s fuel decarbonization efforts resulted in a 1% increase in gas prices, while Oregon’s efforts resulted in a 2% change. “There will be a cost impact,” he argued.

‘A Tax on Everything We Do’

HB 1091 would require the Ecology Department to hire an independent consultant by Dec. 1 to create a publicly available forecast of costs or savings under the law beginning in 2025.

Opponents of the bill testified that claims of improving air quality are exaggerated, saying it would cost jobs and send business out of the state. They also contended that proposed standards would hit poor people hard and cause the trucking industry to add surcharges to shipments. Some said low-carbon fuels should be included in the legislature’s upcoming package of bills and appropriations addressing transportation and not be addressed separately.

Rep. Dye said a gasoline tax increase is likely in the transportation package of bills, and fuel cost increases would be an extra burden on drivers.

“The low-carbon standard is a tax on everything we do,” Yakima County farmer Frank Lyall said.

Proponents argued that carbon pollution has harmful health effects and disproportionately affects low-income communities as well. They added that there is great potential in Washington to grow the low-carbon fuels industry and that a clean fuels program should try to include rebates to buyers of electric vehicles.

Jay Manning, representing the environmental organization Puget Sound Partnership, noted that carbon emissions have been linked to the increased acidification of waters in Puget Sound and off the Washington and Oregon coasts, harming the struggling orca population. Reviving three struggling orca pods has been a popular and high-profile effort in Washington.

While the Western States Petroleum Association opposes the bill, BP is more neutral.

Tom Wolf, BP’s external affairs director, testified that his company agrees with the state’s goal of trying to reach zero emissions by 2050, believing that target will ultimately be beneficial to the company’s shareholders. However, he asked for caps on fuel prices if decarbonization increases those costs.

“We’ll respond to the market, and I think the other companies will do as well,” Wolf said.

February 10, 2021March 9, 2025

Soapbox: An Efficient ‘Energy Markets Cascade’

Eric Gimon | Energy Innovation Policy & Technology

By Eric Gimon

President Biden’s goal of 100% clean electricity by 2035 would supercharge America’s clean energy industry, create hundreds of thousands of jobs and help prevent the worst consequences of climate change. Multiple states have already required 100% clean electricity by midcentury, and many utilities are voluntarily adopting these goals. But realizing these goals requires market designs capable of efficiently integrating a high fraction of renewables, leaving policymakers with important unanswered questions.

Policymakers must determine how wholesale markets built around short-term marginal cost pricing are supposed to work when large fractions of electricity are generated at zero marginal cost? And how can we secure rapid investment in new clean resources and rapidly retire fossil fuel generation if prices paid to these new resources keep falling, even with the most supportive policy?

Answering these questions is easier if we expand consideration of wholesale electricity markets to the entire “energy markets cascade,” a concept describing the flow of contractual agreements for electricity from long-term markets, power purchase agreements, and hedges to year-, month-, day- and hour-ahead commitments, to real-time spot markets. This course connects long-term resource investment to the day-to-day running of spot markets. Capital will flow efficiently along this path if the energy markets cascade follows three design principles.

First, the cascade should trade in only one underlying commodity: delivered megawatt-hours of electricity. Just as a cascade is one current flowing from pool to pool, the markets in our cascade best align if they all trade the same product. Any market in this sequence could experience changing conditions and forecast errors, but if they are all trading in megawatt-hours, the next market down can account for shifting situations by trading or adjusting given commitments.

Consider a wind developer with long-term contracts in place to secure financing. As their electric output delivery approaches, the developer often anticipates real-time market excess or shortfall from what they promised. To minimize the gap between financial commitment and physical delivery, developers can use a market with the most appropriate time frame depending on expectations, always keeping risk at acceptable levels.

Second, participation in the longer-duration markets should be voluntary. In a compulsory long-term market, participants cannot act just on volume and price expectations: A central authority provides targets, fixing demand irrespective of price. Voluntary markets, on the other hand, can balance diverse future outlooks.

For example, an electricity customer that deems current long-term prices too high might not commit to buy what they need until closer to delivery. This behavior lowers demand — and therefore prices — higher up the cascade and raises prices lower down, realigning prices across all markets.

Finally, markets in the cascade should be equal-access, transparent and liquid. Nondiscriminatory access fosters diverse and independent participation in the energy markets cascade, creating more potential buyers and sellers. This drives efficient capital allocation, because participants can more easily trade to adjust their positions according to need, developing a common basis for the current value of electricity contracts.

Efficient capital allocation also requires transparency and liquidity. Transparent public prices and information of trading volumes sharpens common understanding. Liquidity improves with a standard set of energy markets cascade products diverse enough to address different stakeholder needs yet limited in number so that sufficient trading volumes exist to value products at regular intervals.

Market Reforms for a Safe Climate Future

Today’s markets are failing to meet these three principles each in their own way. PJM, NYISO and ISO-NE have mandatory, not voluntary, capacity markets and stand accused of bias toward legacy resources. In MISO, SPP and CAISO, utilities hold the upper hand on information about what the market and new technology can offer, confidently asserting primacy over the integrated resource plans that shape procurement. This chokehold risks ignoring potential savings from inconvenient (for the utility) retirements, inertia in seeking new solutions (e.g., batteries over peakers), and persistent bias against demand-side resource participation or competition from distributed energy resources.

We must design wholesale markets to support long-term investment in variable renewables and complementary resources through better risk management tools. Legislators, regulators and market operators who want a fully decarbonized grid should look beyond the spot markets to consider the entire energy markets cascade and enact reforms to better align these with core principles. Furthermore, investigating new concepts, like organized long-term markets, that seek to meet investor risk and return expectations would allow policymakers to deliver a least-cost, clean, reliable grid — without a heavy regulatory hand.

Eric Gimon is a senior fellow with Energy Innovation Policy & Technology, a nonpartisan energy policy firm that “works with national and regional decision-makers to develop policies that will manage the grid’s transition to a cleaner, lower-carbon resource mix.” Eric holds a B.S. and M.S. from Stanford University in mathematics and physics, and a Ph.D. in physics from UC Santa Barbara.