Monday, February 18, 2019

Western States to Tackle Wildfires, Renewables, EIM Told

By Hudson Sangree

PHOENIX — California legislators will struggle with wildfire liability and prevention in 2019, while lawmakers in Washington and Nevada could debate clean energy and utility-choice plans after voters in those states rejected related ballot measures, panelists told the Western Energy Imbalance Market’s Regional Issues Forum (RIF) on Wednesday.

Panelists at the Western EIM’s Regional Issues Forum in Phoenix on Nov. 28 talked about the response to California wildfires and the failure of state ballot measures on renewables in 2018. How lawmakers may respond in 2019 was a major topic of discussion. | © RTO Insider

In California, “it’s fair to say the legislative session will be dominated by the wildfire issue,” Sacramento utility attorney Tony Braun said as part of a panel on state policy developments and impacts on markets. “The wildfire issues, which are energy issues, are going to take all the air out of the room.”

California lawmakers were sworn in Monday, when bills can also be introduced for the start of the 2019/20 legislative session. Already there’s been talk of bills that could either help Pacific Gas and Electric remain solvent or break it up after the devastation of the Camp Fire in Butte County, the state’s deadliest wildfire. (See Camp Fire Prompts Talk of PG&E Bailout or Breakup.)

State Assemblyman Chris Holden (D), chairman of the Assembly Utilities and Energy Committee, has indicated he may introduce a bill as early as this week that would fix last year’s wildfire measure, SB 901, to allow PG&E to issues bonds to pay for wildfire damage. (See California Wildfire Bill Goes to Governor.) State Sen. Jerry Hill (D) has said he’s looking into a measure that would break up the state’s investor-owned utilities or make them public.

PG&E has become a prime suspect in the Camp Fire following its report to the California Public Utilities Commission of equipment failures near the fire’s ignition points. It potentially faces billions of dollars in liability for the fire that has killed at least 88 and destroyed the town of Paradise, Calif., population 27,000.

One question, Braun noted, is where Governor-elect Gavin Newsom stands on wildfire issues. “Little has been revealed,” Braun told the audience, but he said he expects Newsom to remain on a “similar trajectory” as outgoing Gov. Jerry Brown, who supported efforts to provide liability relief for PG&E.

Washington and Oregon

In Washington state, a ballot measure failed in November that would have placed a fee on the state’s carbon emissions, with the revenues used to fund environmental programs. I-1631 went down with 56% voting against it after a costly fight between petroleum interests and environmentalists. (See High Failure Rate for Western Ballot Measures.)

Therese Hampton, chairwoman of the Regional Issues Forum and executive director of the Public Generating Pool, moderated a panel on state policy developments. | © RTO Insider

Lawmakers have shown little interest in trying to legislate a similar plan, said Therese Hampton, RIF chair and executive director of the Public Generating Pool, which represents 10 consumer-owned utilities in Washington and Oregon. Hampton briefed the RIF meeting Wednesday on Washington’s policy plans.

After November’s election, she said, Democrats will hold larger majorities in both houses of the State Legislature and are likely to pursue ambitious carbon-free energy goals. “We fully expect they will pursue a 100% clean-energy standard” like that adopted in California last year, Hampton said.

Elysia Treanor, with Portland General Electric, said Democrats in Oregon now hold a supermajority in both houses and Democratic Gov. Kate Brown will return to office. The coming legislative session will be six months long, giving lawmakers time to negotiate and possibly pass a cap-and-trade bill, she said.

A similar bill failed in 2018, when lawmakers met for only 35 days and didn’t have time to work out such a complex issue, she said.

“In [20]19, it’s now a priority,” Treanor told the RIF.

Arizona and Nevada

Clean-energy measures in the desert Southwest played out differently in 2018 and will likely do so again in 2019, panelists said.

In Arizona, voters overwhelmingly rejected Proposition 127 in November. The measure would have required the state’s power providers to generate at least half their annual electricity sales from renewable resources by 2030.

The Western EIM’s Regional Issues Forum heard briefings on state policy developments and CAISO’s 2019 policy initiatives at its Nov. 29 meeting in Phoenix. Members included (left to right): Carl Linvill, Valerie Fong, John Prescott and Kristine Schmidt. | © RTO Insider

The race became a high-priced battle between competing interests. California billionaire Tom Steyer, whose environmental advocacy group NextGen America backed the proposal, and Arizona utilities, including Arizona Public Service, spent more than $50 million in the fight.

Nevada voters went the opposite direction from their Arizona neighbors by approving new renewable energy mandates in the form of Question 6 by a vote of 59% to 41%.

The measure, also backed by Steyer and NextGen, would amend the state constitution to require utilities that sell electricity to retail customers source at least 50% of their energy from renewables by 2030.

Constitutional amendments in Nevada must be voted on in two consecutive elections, so the ballot measure will be taken up again in 2020.

With regard to another ballot measure, Question 3, Nevadans allowed NV Energy to keep its electricity monopoly in the state by 67% to 33%.

The measure would have required the legislature to provide for the “establishment of an open, competitive retail electric energy market that prohibits the granting of monopolies and exclusive franchises for the generation of electricity.” It would have allowed customers to exit NV Energy and obtain electricity from others without paying an exit fee.

Las Vegas casinos, which have had to pay hefty exit fees, helped finance the measure.

Question 3 was approved by 72% of voters in 2016, when NV Energy didn’t contribute. But this time the utility, owned by billionaire Warren Buffett, reportedly spent $63 million to defeat the measure, while supporters doled out $21 million. That made it the most expensive ballot measure in state history, with a combined $100 million in contributions over two election cycles.

Question 3 supporters vowed to continue their efforts to let Nevadans choose their energy provider.

David Rubin, a senior attorney with NV Energy, told the RIF meeting audience that he wouldn’t be surprised to see that happen.

“It’s certainly possible those proponents of Question 3 will seek to revisit legislatively what failed on the initiative side” when the legislature reconvenes in February, Rubin said.

He said a major difference between Arizona and Nevada regarding renewable standards is that Nevada doesn’t have any nuclear generation, while Arizona is home to the nation’s largest nuclear power plant, the Palo Verde Generating Station.

Opponents of Prop. 127 in Arizona argued that passing the renewable standards ballot measure would have threatened the economic viability of Palo Verde. The opposition was led by Palo Verde co-owner APS, which spent millions to defeat the measure while arguing Arizonans could pursue clean energy plans that weren’t forced on them by a California billionaire.

“We’ve said throughout this campaign there is a better way to create a clean energy future for Arizona that is also affordable and reliable,” Donald Brandt, CEO of APS’ parent company Pinnacle West Capital, said after Prop. 127’s defeat.

“As the nation’s largest producer of reliable emission-free energy, Palo Verde is the anchor of Arizona’s clean energy future,” Brandt said. “Any serious plan to reduce carbon emissions has to include nuclear energy and Palo Verde.”

Where Arizona will go with those plans remains to be seen.