Today’s lede: Colorado co-op votes to buy out coal-heavy long-term contract to obtain cheaper green energy supply. Electric cooperative G&T provider Tri-State Generation & Transmission is facing multiple customer defections with co-ops increasingly looking to obtain less-expensive clean energy supplies as an alternative to Tri-State’s coal-heavy supply mix. The latest defection comes as Delta-Montrose Electric Association in Western Colorado voted to issue stock to raise enough money to buy out its Tri-State supply contract.
Bill Patterson, the co-op’s board president, said the decision boiled down to dollars and cents as renewables and natural gas offer a more cost-effective electricity supply than coal. “You can politicize it all you want, but in the end economics is really what drives it,” Patterson told High Country News.
The defection trend started in 2016 when Taos, N.M.-based Kit Carson Electric Cooperative paid $37 million to buy out its Tri-State contract and obtain a cheaper renewable energy supply from Guzman Energy.
Colorado’s La Plata Electric Association is another co-op champing at the bit to obtain a cheaper, greener energy supply than Tri-State’s. The co-op is reaching the 5 percent limit for alternative supply in its Tri-State contract, and is exploring its options to get around that limitation under a contract that does not expire until 2050.
Also in Colorado, the Poudre Valley Rural Electric Association board of directors adopted a resolution last month calling for Tri-State to “work expeditiously in a transparent process to determine if significant cost savings are achievable by adjusting Tri-State’s fuel mix and provide the findings to Tri-State’s members by the end of calendar year 2018.”
Tri-State serves 43 rural co-ops in four states.
Chatterjee replaces McIntyre as FERC chairman. As expected, President Trump last night named Neil Chatterjee chairman of the Federal Energy Regulatory Commission after Kevin McIntyre stepped aside for health reasons. It marks Chatterjee’s second stint as chairman. For the first two-thirds of 2017, the normally five-member FERC had just one commissioner, Democrat Cheryl LaFleur. Chatterjee was named interim chairman after he was confirmed by the Senate in August of last year. McIntyre became chairman when he joined FERC last December. McIntyre joined FERC after being treated for a brain tumor earlier in the year.
“After surgery and subsequent treatment, I was able to hit the ground running as Chairman and Commissioner upon taking office,” McIntyre said in an Oct. 22 letter to President Trump. “However, I very recently experienced a more serious health setback, leaving me currently unable to perform the duties of Chairman with the level of focus that the position demands and that FERC and the American people deserve. I therefore propose to step aside from the position of Chairman and its additional duties so that I can commit myself fully to my work as Commissioner, while undergoing the treatment necessary to address my health issues.”
Chatterjee and his two Democratic FERC colleagues issued statements wishing McIntyre well as he battles his unidentified health problems. “It is with a heavy heart that I step into this role while my friend and colleague, Kevin McIntyre, focuses on what’s most important: his recovery and his family,” Chatterjee said in his statement. “I am confident that the Commission will continue to benefit from his consummate knowledge of the law and of energy policy through his service as Commissioner.”
“I also look forward to continuing to work with Chairman Chatterjee in his new role,” LaFleur said in her statement. “This is a time for close cooperation among everyone at the Commission, and I will work as hard as I can to keep our work moving forward. We have experienced a lot of change and transition during my time at the Commission. I know that our wonderful employees will stay strongly focused on their important work and the mission of the organization during leadership changes, as they have in the past. We are very lucky to have such a strong team in place across the Commission.”
“I will continue to work with my colleagues on the Commission’s important responsibilities,” Glick said in his statement. “FERC rightly has a reputation and tradition of being a non-partisan decisionmaking body. In the coming weeks, let us reaffirm our commitment to consensus building and to maintaining the agency’s independence as we engage the nation’s energy business.”
The Senate Energy and Natural Resources Committee has scheduled a Nov. 15 hearing to consider the nomination of DOE’s Bernard McNamee to fill the fifth commissioner slot at FERC, which has been vacant since former Pennsylvania utility regulatory Rob Powelson left in August to take a position in the private sector.
Other electric industry news items of interest:
Shelk to step down as EPSA chief effective mid-2019. Electric Power Supply Association President and CEO John Shelk announced he will retire in mid-2019 when his current contract ends. “On behalf of EPSA’s Board of Directors, I want to thank John for his many years of excellent service,” said EPSA Chair Mauricio Gutierrez, President and CEO of NRG Energy. “EPSA is fortunate to have a strong staff team working with its members to promote competitive power markets. EPSA members have reaffirmed their strong support for the organization, which continues to grow and effectively advocate for competitive market policies.” The EPSA board has retained the global organizational consulting firm Korn Ferry to assist it in the search for EPSA’s next leader.
New Michigan law provides reduced electricity rates to certain industrial customers. Large industrial manufacturing companies that meet certain criteria can apply to receive a reduced electricity rate under legislation signed today by Gov. Rick Snyder. “The availability of this new long-term industrial load rate will allow companies with high energy costs to continue expanding in Michigan, providing opportunities for economic growth and more jobs for Michiganders,” Snyder said. House Bill 5902, now Public Act 348 of 2018, gives the Public Service Commission authority to allow customized electricity rates for companies meeting certain criteria. Current law requires electricity rates to be based on cost of service. This bill authorizes the commission to make an exception, providing that certain requirements are met.
SDG&E withdraws counterproposal to community choice aggregation in San Diego. With a decision pending on whether the city of San Diego should adopt a government-run power program, San Diego Gas & Electric has notified city officials it is withdrawing from putting together a counterproposal to what is called Community Choice Aggregation. For the past two years, SDG&E has worked with city officials to create a program that would contract for increasing amounts of renewable energy to reach the city’s Climate Action Plan goal of 100 percent renewable sources by 2035. But in a letter to the city Monday, SDG&E’s vice president of energy supply, Kendall Helm, said “there is no clear scenario” to develop an all-renewables plan that would leave the city free of financial or legal liabilities when it came to procuring energy contracts. The utility also doubted whether the California Public Utilities Commission, or CPUC, would approve such a proposal if a scenario developed in which customers who did not take part in the program saw an increase in their costs. The CPUC would have concerns about approving a program in which one set of customers bore the costs attributed to another set of customers, SDG&E officials said. “I’m a little surprised that this is (SDG&E’s) response but not entirely shocked, given the ambitious goals of the Climate Action Plan,” said San Diego City Councilman David Alvarez. “In order to accomplish the (100 percent renewable goals), it’s going to take a lot of work … I can only assume their math led them to that decision.”
New Yorker reports on 50 percent RPS ballot initiative battle in Arizona. Billionaire Tom Steyer, whose year-long effort to pass Proposition 127, an amendment to Arizona’s constitution that would require power companies to generate fifty per cent of their electricity from renewable sources by 2030, has faced aggressive opposition from the state’s largest utility, Arizona Public Service. In Arizona, where a recent poll found that three-fourths of the electorate wanted more solar energy, APS has spent close to $22 million campaigning against Prop 127. “You’d think we were proposing something truly harmful and dangerous,” Steyer said.
SCANA releases latest financial report in wake of nuclear fiasco. SCANA, the struggling South Carolina power company staggered by last year’s failed nuclear construction project, announced a better financial picture Thursday than it has in recent months. The company said its earnings for the third quarter of this year were $67 million, or 47 cents per share, compared to earnings of $34 million, or 24 cents per share, for the third quarter of 2017. Last year, the company was dealing with an impairment loss of $132 million associated with the V.C. Summer nuclear project, SCANA said in a news release. But overall, the company continues to struggle. SCANA’s earnings for the first nine months of 2018 were $82 million less than in the first nine months of last year.
Bartlett, Texas, voters to decide proposal to privatize municipal utility. “We get nothing for our money but high bills, high electric,” said Paul Mathis. “Trees are literally up into the lines. The transformers are old and going out left and right. Some of these polls, if you just look around, the polls are at a 45-degree angle,” said City of Bartlett Mayor Landry Pack. For almost two years, the city has been working to sell the utility company, until Pack was elected mayor in May. “I just fought as hard as I could, you know tooth and nail, that to at least have the citizens say so,” said Pack. On November’s ballot, citizens can vote to keep or sell their city-owned utility company.
Louisiana rural electric cooperatives seek to keep executive compensation private. Angered by the lucrative and largely unknown perks, Louisiana utility regulators last month demanded rural electric cooperatives give them an accounting of pay, insurance and other benefits for board members and executives of the nonprofits. And cooperatives have supplied that data to the Louisiana Public Service Commission. But most of the co-ops did so under a seal that keeps the information out of the public. “That really makes me sick,” said PSC Commissioner Foster Campbell, adding that the whole point was transparency because so few consumers or regulators know what is going on in the small and little-noticed cooperatives. “I’ll address that,” Campbell said. “How come they don’t want to tell their members how much they pay their people? I don’t like the way that smells.”
Washington State regulators scrutinize Avista Corp. acquisition by Hydro One Ltd. The proposed sale of a Spokane-based utility to a Canadian company came under intense scrutiny from Washington regulators this week. The state Utilities and Transportation Commission held a lengthy hearing in Olympia on Tuesday, with members asking how they could protect Northwest customers from bad decisions by the Ontario government.
Solar developer faces NIMBY opposition in Vermont. The developers behind the Babcock Solar Project seek to limit the scope of what its neighbors can raise concerns about, meanwhile the state has laid out a schedule for future proceedings including the date of a site visit and public hearing. Babcock Solar Farm LLC, backed by Conti Solar, of Edison, New Jersey, seeks to build a 2.2-megawatt solar facility near the intersection of Park Street Extension and 21 Country Club Road. To do so, it needs a “certificate of public good” from the state Public Utility Commission. Since announcing the project, Babcock Solar has received a fair amount of backlash from the project’s neighbors, town officials and regional planners.
A closer look at Vermont gubernatorial candidate’s record as electric co-op CEO. In her telling, Christine Hallquist transformed an antiquated organization on the brink of bankruptcy into one of the most innovative utilities in the country. She empowered employees, modernized equipment and implemented cutting-edge programs. Hallquist, now the Democratic candidate for governor, cites her 12 years as chief executive officer at Vermont Electric Coop to make the case that she’s qualified to lead the state. The Hyde Park executive, who stepped down as CEO in February to run for office, is widely credited with bringing stability to VEC. Under her watch, the co-op strengthened its finances, professionalized workplace policies, embraced new technology, reduced outages and sourced more power from renewable energy sources. Nevertheless, the version of events Hallquist has told on the campaign trail has sometimes been exaggerated and inaccurate. Public documents, regulators, customers and employees tell a less dramatic and more nuanced story about her time at VEC.
Former Pittsburgh councilor decries Aqua America-Peoples Gas proposed merger. On Tuesday, the Bryn Mawr-based water utility, Aqua America, announced plans to acquire Pittsburgh-based Peoples Gas for $4.275 billion. The all-cash deal encompasses the gas utility’s subsidiaries – including Peoples Natural Gas Company LLC, Peoples Gas Company LLC, and Delta Natural Gas Company Inc. – and the assumption of approximately $1.3 billion of Peoples’ debt. Peoples is the state’s largest natural gas provider, and the deal took many by surprise. The announcement comes just months after Peoples made an unsolicited proposal to partner with the Pittsburgh Water and Sewer Authority, the public utility that provides drinking water for Pittsburgh residents. That proposal outlined a private-public partnership that foresaw Peoples footing the bill for the city’s lead line replacement and building a brand new water treatment plant, among other things. Former Pittsburgh councilor and Food & Water Watch Western Pennsylvania Outreach Liaison, Doug Shields, believes the acquisition is an orchestrated move by Peoples and Aqua to privatize the PWSA. “I don’t think anybody should be approving this merger at all,” says Shields.
Australian electricity retailers warn that default price will threaten smaller players. Energy retailers are warning that the government’s move to set a “default” tariff for household electricity starting in mid-2019 will act as a cap on prices that could squeeze smaller suppliers out of the market and choke competition. Suppliers both big and small voiced concern on Tuesday that the “safety net”-style tariff represents a return to the regulation of power prices and will stifle innovation and deter needed investment in new plants.