Today’s lede: Utility-backed ‘reform’ bills introduced in Va. Budding controversy surrounding a 2015 Virginia law that limits the State Corporation Commission’s ability to review earnings and order refunds to customers is driving significant legislative activity. After rejecting utility reform measures twice in the Senate – including one measure that would have restored SCC oversight of utility earnings – lawmakers sympathetic to the state’s leading utility company, Dominion Energy, have introduced a suite of legislative measures to overhaul Virginia’s utility regulatory regime.
The presumably Dominion-backed legislation would have the utility refund to consumers $133 million of the $426 million that SCC staff has estimated Dominion overcollected since the 2015 law took effect. It also would have Dominion forgo a $25 million/year payment for converting coal plants to biomass and would incentivize a 4,000-MW investment in solar energy by Dominion.
News coverage of the legislative package was mixed. Alan Suderman reported for the Associated Press that “the proposals were quickly panned by critics as a massive giveaway to the state’s biggest electric utility and most politically powerful corporation, Dominion Energy.”
“The legislative battle over how to reset the regulatory landscape for Virginia’s two largest electric utilities — nearly three years after the controversial 2015 rate-freeze law that has allowed Dominion Energy and Appalachian Power to keep millions in excess earnings — can now begin in earnest,” pronounced Robert Zullo in his piece for the Richmond Times-Dispatch.
The Washington Post’s story by Gregory Schneider called the bills a “bipartisan” overhaul of the controversial 2015 law. “The legislation would once again subject the state’s largest utility to rate reviews by the Virginia State Corporation Commission, but it would set those reviews every three years instead of every other year, as had been the state’s practice,” Schneider reported, citing legislative sponsors. “This is a major step backwards for consumers, further reduces the authority and independence of the SCC, and provides only pennies on the dollar for the excess profits already earned in 2015 and 2016,” said Steve Haner, lobbyist for the Virginia Poverty Law Center.
In the days leading up to the legislative push, the Virginia Poverty Law Center’s Haner placed an op-ed in the Washington Post complaining, “Virginia officials are letting electric companies rip off customers.” In it, Haner complains about a Virginia Senate panel’s rebuff of a bill aimed at reversing the 2015 law and restoring the SCC’s ratemaking oversight authority, which presumably did not meet with Dominion’s favor. The op-ed also complained about appearances by SCC Chair Judith Jagdmann, related to her bid to obtain another term. At an appearance before the Senate panel overseeing the state’s utilities, two ranking lawmakers sought assurances from Jagdmann that she would take her lead at the commission from pending legislative proposals addressing the 2015 law, Haner said. “The preemptive attack on any potential show of independence by the commission launched by [Senate Democratic leader Richard] Saslaw and [Republican committee chair Frank] Wagner on Monday must be viewed as the first of what will be many brushback pitches in the game just beginning. The outcome Virginia consumers should be hoping for is a return to full SCC authority and an almost immediate rate case to review the earnings during the recent regulatory holiday. It does not sound as though that is the plan the leading senators have in mind,” he wrote, presaging the suite of bills now interoduced.
Southern Co. drops plans for power plant in Va. Southern Co.’s Southern Power affiliate has sent a letter informing the Pittsylvania County, Va., economic director that the company no longer intends to pursue development of a natural gas-fired power plant in the county, Denice Thibodeau reports in the Danville Register & Bee. “After several years of hard work, the current market condition in PJM have limited our ability to execute long-term customer opportunities that align with our business model,” Elizabeth Wash, state and local affairs manager for Southern Power, said in the letter.
Solar tariffs watch. The U.S. solar industry is “on edge” in anticipation of a Trump administration decision in response to a request from two domestic producers for imposition of tariffs on imported solar panels, the Associated Press reports. “Businesses that install solar-power systems are benefiting from a glut of cheaper panels made overseas, mostly in Asia. That has made solar power more competitive with electricity generated from coal and natural gas,” AP reports. “The Solar Energy Industries Association, a trade group for U.S. installers, says tariffs would drive up the cost of installing solar-power systems, leading to a drop in demand.”
Clark County schools weigh exit from NV Energy. The Clark county School District board in Nevada is considering a solar development plan that would entail the large energy user paying an exit fee to NV Energy, Meghin Delaney and Amelia Pak-Harvey report in the Las Vegas Review-Journal. Capital Dynamics, an independent global asset manager, is promising the school district significant economic savings if it moves forward with the plan. Tenaska Power Services would provide energy management services under the proposal. A number of large energy users have already exited NV Energy’s system to purchase competitively priced electricity, including MGM Resorts, Wynn Resorts, Caesars Entertainment, and data center management firm Switch. In 2016, Nevada voters overwhelmingly approved a ballot initiative calling for opening the state’s electricity market to competition. They must vote again on the measure this November before the state’s electricity industry can be restructured.
Competitive choice, not mandates, seen as best for advancing renewables in Ohio. Responding to a letter advocating mandates for renewable energy in Ohio, Greg Lawson, Research Fellow at the Buckeye Institute, maintains that supporting greater customer choice in electricity is a better path forward than mandates.
“All Ohioans can choose an electricity plan from competing providers that uses 100 percent renewable electricity. This market system gives renewable energy companies an incentive to innovate, compete, and create sustainable jobs. Government mandates just give renewable energy companies an incentive to lobby government officials. Mandates in effect subsidize special interests at the expense of all Ohioans,” Lawson writes. “Ohio should open its doors to clean energy by encouraging choice and competition, rolling back restrictive regulations, and eliminating subsidies to any energy company.”
Texas paper’s editorial board critical of former governor. “How terrible was Energy Secretary Rick Perry’s proposed bailout for the coal industry?” the editorial board of the San Antonio Express-News asks. “So terrible the Federal Energy Regulatory Commission unanimously rejected it. No small feat since the five-member commission includes four appointees from President Donald Trump, three of them Republicans.” Perry’s proposed rule to require consumer subsidies for economically struggling coal and nuclear power plants would have been “bad for consumers and bad for competitive electricity markets,” the editorial notes. “If the loser here is the former Texas governor then the winner is agency independence,” the editorial concludes. “The commissioners flexed their independence and followed the best policy for Americans. Perry should think about doing the same.”
More accounting of winners and losers in FERC’s decision. The Federal Energy Regulatory Commission’s ruling rejecting the Trump administration’s power plant subsidy program was a win for consumers and competitive markets and a loss for the coal industry, Tom Sanzillo and Cathy Kunkel of the Institute for Energy Economics and Financial Analysis conclude in an op-ed published by The Hill, a newspaper widely read by congressional staff and lawmakers. “The Energy Department plan ignored the importance of competitive markets,” the due write. They also took heart from another FERC ruling rejecting FirstEnergy’s bid to move a merchant plant into ratebase in West Virginia. “Now that FERC has spoken so clearly, it’s time for the federal government — and the coal industry — to recognize that the transformation of the U.S. electricity sector is well underway.”
Commies! That’s what Pensacola News Journal cartoonist Andy Marlette called state officials who rejected a proposed ballot initiative to allow voters to decide whether to open the state’s electricity market to competition. “It was your rare, glorious, shining opportunity to vote on whether or not you wanted to end Florida’s state-sanctioned monopoly of utility companies and open the Sunshine State’s electricity business to the good old-fashioned forces of free market competition and capitalism.
“But instead, a few big-government-loving members of the Constitution Revision Commission killed it in a lowly committee vote last week. Commies!” Marlette wrote in an op-ed published by the newspaper. Citing an in-depth examination of the disconnect between the adoption of competition in Texas and Florida’s commitment to monopoly regulation, by reporter Joe Baucum, published by the paper last year, he derided as “commies” Florida’s governor and other leading Republicans for failing to “advocate for common-sense conservative values and free-market competition when it comes to utility companies.”
Opponents of the Florida ballot initiative warned of “blackouts, power failures and miscellaneous problems,” Marlette wrote. But “none of those problems have plagued the state of Texas since it shifted to competitive energy,” he noted.
“So throw a yellow rose on the tombstone of ‘Proposal 51.’ It was your lonesome chance to choose for yourself what sort of economic freedom should be allowed here in Florida. And then get mad. And call your local Republican legislator, governor, regulator or attorney general, and ask them why the heck — if they’re such loyal, honest, courageous, free-market conservatives — are you still being forced to surrender a portion of your monthly paychecks to a price-rigged, government-sanctioned monopoly? And if they don’t give you a straight answer, you know what they really are. Commies!”
Utility union officials defend Michigan’s anti-choice energy policies. “Without question, electric deregulation is a failed experiment” of the 1990s, Michigan State Utility Workers Council President Patrick Dillon and James Harrison, senior national representative for the Utility Workers Union of America, declare in an op-ed, “Michigan deserves affordable, reliable energy,” published by The Oakland Press.
“The proponents of electric choice, or deregulation, want customers to forget that this is not a new idea. We have been there and done that. Michigan passed full deregulation in 2000 and it proved to be such a failure that the state had to pull back in less than eight years in 2008 to avoid potentially serious reliability issues,” the two union officials write.
Responding to a Jan. 5 op-ed by state Rep. John Reilly, they attack customer choice in electricity as a threat to reliability. They deem it unfair that the 10 percent of Michigan load allowed to shop for electricity don’t support utility power plants that contribute to reliability. They also maintain that rates in deregulated states are 25 percent higher than in those with monopoly regulation.
“Michigan is poised to be a national leader in shaping energy policy. It is going to require the type of planning, investment and innovation that deregulation has proven to be incapable of providing. No matter how they dress it up or manipulate the data, choice is old news that has failed wherever it has been tried,” the op-ed concludes.
Audit finds utility bankruptcy unlikely if S.C. consumers stop paying for failed nuclear project. An audit by the South Carolina Office of Regulatory Staff concluded it is unlikely that SCANA’s South Carolina Electric & Gas utility will go bankrupt if it is denied cost recovery from customers for its failed nuclear development effort and those costs are instead borne by investors denied dividend payments, Thad Moore writes in the Charleston Post and Courier. “I have not been convinced that SCANA would go to go into bankruptcy,” S.C. Senate President Pro Tem Hugh Leatherman said.
S.C. utility seeks reimbursement for parts diverted to Chinese nuke project. Westinghouse promised South Carolina Electric & Gas that it would replace the reactor coolant pump it was diverting to a nuclear project in China. Then the company entered bankruptcy. Now the South Carolina utility wants the $14.5 million it paid for the item returned. Another avenue the utility is pursuing to reduce its costs for the failed project rests with overtures from Georgia Power to divert reactor parts from the V.C. Summer project to the ongoing Vogtle plant project under construction by the Southern Co. affiliate, Sammy Fretwell reports in The State.
More pipeline capacity not the only answer, ISO New England analysis finds. Building additional pipeline capacity to bring greater natural gas supply into New England is just one of nearly two dozen scenarios ISO New England considers in its recently released fuel security analysis, David Brooks writes in the Concord Monitor. “It examined 23 scenarios involving different mixes of fuel supplies – for example, if more liquefied natural gas is brought in by ship – and different power needs, such as if more energy efficiency requirements are imposed. It also added various obstacles to the mix, some as extreme as the assumed shutdown of a nuclear power plant or the closing of one of the region’s five major gas pipelines for the entire winter. Then it estimated what would happen in each case. Of the scenarios, 19 say that with rolling blackouts pipes would likely be necessary during a severe winter, while four of the scenarios avoid that problem without any gas pipelines,” Brooks reports. One scenario that determined blackouts could be averted assumed a large influx of offshore wind power and distributed solar power, along with 1,000 megawatts of imported electricity, such as might be realized by the controversial Northern Pass project.
Court rejects generators’ challenge to ISO New England’s security pricing mechanism. The D.C. Circuit U.S. Court of Appeals has rebuffed a challenge to two Federal Energy Regulatory Commission orders approving ISO New England’s security pricing mechanism. The pricing mechanism kicks in when supply in the real-time market is scarce. When insufficient energy is being produced or energy prices become excessive, the price in the real-time market is set based on so-called Reserve Constraint Penalty Factors. The scarcity rates produce higher real-time energy prices under stressed market conditions. The New England Power Generators Association and various merchant generator members of NEPGA challenged the FERC orders, citing an inability to square the real-time scarcity pricing mechanism with the longer-term capacity market. In rejecting the generators’ challenges, the court found they’d failed to prove FERC’s orders were arbitrary and/or capricious.
FERC decides which co-op should interconnect with wind project. The Federal Energy Regulatory Commission affirmed the right of Umatilla Electric Cooperative to build a transmission interconnection line for the Wheatridge Wind Energy project, a 292-turbine, 500-MW wind energy project. The order rejected a competing claim by Columbia Basin Electric Cooperative that the Umatilla co-op’s line would encroach on its exclusive service territory granted under state law, Jade McDowell writes in the East Oregonian.
PennEast pipeline gets FERC nod. The controversial PennEast natural gas pipeline, which would bring Pennsylvania shale gas to New Jersey, obtained Federal Energy Regulatory Commission approval, much to the chagrin of environmental activists who had waged a stiff campaign against it. In a 4-1 vote, the five-member panel found PennEast had “sufficiently demonstrated that there is market demand for the project” and that “end users will generally benefit from the project because it would develop gas infrastructure that will serve to ensure future domestic energy supplies and enhance the pipeline grid by providing additional transportation capacity connecting sources of natural gas to markets in Pennsylvania and New Jersey.” Commissioner Rich Glick cast the opposing vote, saying the pipeline had not demonstrated its need. Opponents have now set their sights on further regulatory approvals the project must obtain, including a water-quality permit from the New Jersey Department of Environmental Protection. This may be fertile ground for the opposition, as New Jersey’s new Democrat governor, Phil Murphy, has clearly staked out his intention to establish his environmental bona fides. “To the extent that any state approvals remain outstanding, we will ensure that consumers and our environment are protected,” Politico quotes Murphy spokesman Dan Bryan saying. “We don’t see any way this pipeline can be built and meet those standards,” said Tom Gillbert, campaign director of ReThink Energy NJ and the New Jersey Conservation Foundation, in reporting by NJSpotlight’s Tom Johnson. Gilbert noted the proposed project route crosses 38 “C-1 streams,” the most pristine in the state. “If they enforce regulations, this project won’t pass muster,” Gilbert declared.
Blogwatch: EDF continues gushing about competitive market in Texas. The competitive market in Texas “is driving the clean energy economy forward,” Sarah Ryan writes in a new Environmental Defense Fund blog post that cites recent clean energy investment decisions. “Solar and wind power are more common and affordable than ever, and Texas cities, businesses, and schools are spreading the message. With economics on our side, Texas can build a brighter, more affordable energy future.” Ryan concludes.
NEI defections seen as barometer of the industry. Jim Pierobon in Southeast Energy News takes stock of the decision by NextEra Energy and Entergy to drop out of the Nuclear Energy Institute. “The withdrawals are the latest sign of nuclear energy’s murky future as costs to safely operate reactors continue to rise and new types of reactors are met with growing skepticism about their ability to compete with natural gas, solar and wind,” the former Houston Chronicle reporter turned renewables advocate writes.
Consider distributed resources as part of distribution grid planning, SEIA advocates. A new white paper from the Solar Energy Industries Association, Getting more granular: How value of location and time may change compensation for Distributed Energy Resources, looks at efforts under way in California and New York to combine solar and energy storage, Andy Colthorpe reports in Energy Storage News. “Essentially, to reduce operating costs, add resiliency to power supplies and enable the spread of distributed, clean energy without conferring high capital costs of investment, distributed energy resources should be considered in the planning of a distribution grid, SEIA argues.”
Former Boulder mayor second guesses municipalization effort. Will Toor, Boulder’s former mayor, is expressing reservations about the city’s long-standing effort to carve out a municipal utility from Xcel’s system. Toor was mayor when the city first decided that creating a city-owned utility system offered a better path forward for meeting Boulder’s clean energy goals. In hindsight, Toor now sees this “ambitious” and “idealistic” move as a mistake, Nathanael Johnson relates in Grist.
“Boulder has spent the better part of the past decade pursuing this split, but success is still probably years away. In the meantime, the utility, Xcel, has shown that it’s happy to close coal plants and scale-up renewables,” Johnson writes in “Clean Energy Battlegrounds; Lessons from Boulder’s bad breakup.” The story of Boulder’s struggle provides a valuable lesson for people taking climate action locally, he says.
Meanwhile, imagining a shining muni on the hill. The potential savings from establishing a municipal utility outweigh the very significant costs, Steve Andrews and Susan Perkins , members of Pueblo’s Energy Future, a group advocating for a municipal utility in Pueblo, Colo., write in and op-ed, “Imagine a great electric utility for Pueblo,” published in The Pueblo Chieftan. “Imagine that David beats Goliath after a mammoth struggle. Imagine that Pueblo actually breaks away from Black Hills Energy and sets up a new electric utility in 2021. This isn’t an idle thought experiment since the appointments to Pueblo’s Electric Utility Commission were recently finalized,” the duo write. “Set your skepticism aside; this is doable financially, just not guaranteed. And please realize that customers of municipal electric utilities nationwide pay on average 15 percent lower electricity rates than customers of investor-owned utilities.”
Eastern Colo. officials shill for Xcel’s energy plan. Developing the energy potential of Colorado’s eastern plains region could be the economic equivalent of landing the much-coveted second headquarters of Amazon, the economic development directors for Logan, Yuma and Phillips counties write in the Denver Post. Trae Miller, Maggie Metzler and Trisha Herman cite a study showing that in 2015, eastern Colorado counties had over 4,000 jobs in more than 220 advanced energy businesses. “Eastern Colorado needs more of that,” they say, voicing support for Xcel’s Colorado Energy Plan to develop wind and solar resources in the region, currently awaiting approval by the Colorado Public Utilities Commission. “We hope the PUC approves Xcel’s request and we hope the projects submitted to Xcel lead to more wind, and more solar across a broad range of the counties in eastern Colorado.”
Nissan enters UK’s home energy market. Japanese car manufacturer Nissan has launched a residential energy package featuring solar panels, batteries and an energy-management system, PV Magazine reports. How long before they enter the U.S. market?
Ga. Supreme Court weighs challenge to sales taxes on nuclear construction. The Georgia Supreme Court heard arguments in a case in which plaintiffs are challenging Georgia Power’s collection of sales taxes on nuclear construction and municipal franchise fees. The suit also alleges the utility improperly calculated the municipal fees. Georgia Power has appealed a lower court ruling allowing the case to move forward.
Encinitas looks to Community Choice Energy for ‘100% clean electricity.’ Encinitas became the fifth city in San Diego County to commit to a 100 percent “clean energy future,” the Encinitas Patch reports. The Encinitas City Council voted unanimously to pass a “gold-standard Climate Action Plan.” The city will engage with Community Choice Energy to meet the clean-energy goal. “It is our moral and political imperative to do our part to fight against climate change and leave the planet better than we found it. I am proud of our ambitious yet attainable climate action plan with a commitment to 100% renewables, focus on greater energy efficiency and reducing mobile sources of pollution,” said Councilmember Tasha Horvath-Smith.
Camarillo joins Los Angeles muni aggregation program. The Camarillo City Council voted unanimously to join Thousand Oaks, Ojai, Oxnard and the unincorporated areas of Ventura County in the Los Angeles Community Choice Energy program, Cameron Kiszla reports in the Camarillo Acorn. “The bottom line for me is that this is an opportunity to provide more options to our ratepayers,” Councilmember Kevin Kildee said.
San Jacinto muni aggregation project moves forward. The San Jacinto City Council adopted measures to move forward with the San Jacinto Power community choice aggregation program, Kyle Selby reports in The Valley Chronicle. The city expects to save customers 3 percent on their electricity bills. (CA) SJ approves lower electricity rates.
Newspaper editorial board vexed by San Onofre shutdown deal. The San Onofre shutdown deal remains dogged by too many questions, the San Diego Union-Tribune editorial board opines. “It’s been nearly three years since the jaw-dropping revelation the framework for the California Public Utilities Commission’s plan to have ratepayers cover 70 percent of the $4.7 billion cost of shuttering the failed San Onofre nuclear power plant was shaped in a secret meeting in March 2013 between then-CPUC President Michael Peevey and an Edison executive at a hotel room in Warsaw, Poland,” the editorial notes. “While a new settlement of how to cover San Onofre closing costs appears imminent — presumably on terms more favorable to ratepayers — there are plenty of reasons for Californians to be bothered, even angry, about the state’s handling of the scandal. The Public Utilities Commission continues to stonewall attempts to get highly relevant evidence — with its lawyers even taking the extraordinary position that there was nothing wrong with Peevey’s surreptitious meeting in Poland.”
Creditors to see $1.5 billion in Westinghouse sale. A wide range of creditors wthat have filed claims against Westinghouse Electric Co. in the company’s pending bankruptcy proceeding will receive $1.15 billion from the company’s $4.6 billion sale to the Canadian asset management firm, Brookfield Business Partners , Any Litvak reports in the Pittsburgh Post-Gazette regarding an agreement a group of stakeholders has presented to the judge overseeing the proceeding. Another $100 million is earmarked for Westinghouse’s employee pension fund — Westinghouse froze contributions to that fund last year and $800 million will go toward bankruptcy financing debt. “The remainder, likely more than $2 billion, will go to a group of hedge funds led by the Baupost Group. Boston-based Baupost already has an interest in the bankruptcy. It has been accumulating claims against Westinghouse at a discount.”
Utilities must adapt, RMI says. “Renewable energy is rapidly changing the electric grid, and utilities need to adapt or face still greater disruption in their industry.” So concludes a new Rocky Mountain Institute report, Reimagining the Utility, Mark Anderson reports in IEEE Spectrum. The report looks at various transformative efforts in New York and California, and issues a caution regarding market-based reforms. “Market forces and incentives can shape electric utilities and infrastructure in productive ways… up to a point,” Anderson writes. “But market forces can also run amok and leave many consumers literally in the dark, as the 2001 collapse of Enron exemplifies.” [Editor’s note: Enron’s “collapse” had little to do with California’s failed industry restructuring effort, and everything to do with the company’s dishonest and corrupt accounting practices.]