Vol. 5: Issue 3 | August 2017
The California Legislature extended the state’s cap and trade program to 2030 with Assembly Bill 398, signed by the governor on July 25. The program was previously set to expire in 2020. The legislation included several measures to gain bipartisan support, including limits for carbon offsets, a price ceiling, the repeal of a fire prevention tax and expansion of a manufacturing tax credit. The measure passed with a supermajority vote, which is required for any new tax increases. Lawmakers grappled with the possibility that legislation could increase energy costs, as the legislature already approved a gas tax increase this spring that will also effect citizens.
Many states have enacted legislation or policies supporting the installation of smart meters. However, at least 21 states have programs that allow consumers to opt-out of smart meter installation. While the general approach to opt-out programs varies, there are some trends. For example, many states have approved opt-out fees to cover the costs of manually reading the meter every month. However, a few exceptions do exist and there have been a number of bills introduced in state legislatures that seek to ban this type of opt-out fee. And while most states require a customer to request an opt-out, New Hampshire is the only state that requires that customers opt in. Utilities in the state must receive written consent prior to installing smart meters. Several states have considered bills in 2017 including Kentucky’s S.B. 121, which would have required utilities seeking to install smart meters to offer advance notice and the option to opt out to customers. Missouri also considered H.B. 1033, which would have also included a one-time fee not to exceed $100.
Rhode Island Governor Gina Raimondo recently signed a number of bills that support the expansion of renewable energy. Two bills (H.B. 5274 and S.B. 112) extend Rhode Island’s renewable energy growth program for 10 additional years and add 400 megawatts (MW) of solar and wind capacity to the state’s energy mix by 2029. H.B. 5575 and S.B. 562 direct the Rhode Island Office of Energy Resources to establish a streamlined statewide solar permitting application process, while H.B. 5483 and S.B. 637 establish a streamlined process for connecting renewable energy installations to the grid. H.B. 6095 and S.B. 570 allow farmers to install renewable energy systems on their property, provided that the systems cover no more than 20 percent of their total farmland acreage. Finally, H.B. 5618 expands the state’s virtual net metering policy to include educational institutions, hospitals and nonprofits.
North Carolina enacted H.B. 589 that included several solar provisions and an 18-month moratorium on wind development. The bill amends the state’s interpretation of the Public Utility Regulatory Policy Act (PURPA) by lowering the state’s avoided cost rate, while preserving the 20-year length for power purchase agreements. The bill also includes several other provisions related to solar such as authorizing solar leasing, opening a proceeding on the state’s net metering policy and establishing a solar deployment target of 6,800 megawatts (MW) by 2020, among others. The bill underwent a series of changes as it moved through the legislature. Originally, the bill only contained solar provisions. However, the Senate added a four-year moratorium on wind energy development to allow the state to study wind’s impacts on military installations, reflecting concerns that wind projects may threaten the state’s military installations by interfering with operations and communications. The legislature reduced the moratorium to 18 months before passing the bill. Governor Roy Cooper was hard-pressed to choose between vetoing the bill and potentially damaging the fragile compromise that the bill represents, and signing the bill and possibly harming the state’s wind industry. Instead, the Governor took an alternate route: he signed the bill and simultaneously issued an executive order in an attempt to nullify the moratorium. The order directs the Department of Environmental Quality to keep recruiting wind energy investments and to continue with the permitting and application process, allowing wind facilities to come online quickly after the moratorium expires.
Given the renewed interest to reopen Yucca Mountain and the growing discussions over to what to do with the nation’s nuclear waste, some states are considering measures that outline a state’s position. The Nevada legislature recently approved a resolution (Assembly Joint Resolution 10) that makes it clear that the state is not interested or supportive of talks to move forward with Yucca Mountain as a high-level nuclear waste repository. Other high-ranking officials in the state have also spoken out against re-opening the licensing process. A recent Government Accountability Office report outlined what the U.S. Department of Energy and Nuclear Regulatory Commission will need to do in order to rebuild their capacity and restart the process. South Dakota also passed a bill (H.B. 1071) this session that requires the consent of the state legislature before any high-level nuclear waste can be processed or deposited in the state. The bill comes after DOE initiated a process to conduct a field test of deep borehole storage in the state. The field test, which would have drilled a hole more than 3 miles into the surface to test whether the method would work for high level nuclear waste storage, was scrapped after strong local opposition. DOE has recently said it plans to leave deep borehole storage on the shelf for the foreseeable future.
Nevada enacted five different efficiency-related bills this session, which included efficiency initiatives for low-income customers (S.B. 150 and Assembly Bill 223) and simplification of the program development process for commercial Property Assessed Clean Energy financing (Assembly Bill 5). Another Nevada bill establishes a Clean Energy Fund, which—similar to a “green” or energy bank—seeks to increase the pace and volume of financing for energy efficiency, renewable energy, demand response and alternative fuel vehicle projects. Nevada also enacted several renewable energy bills, including a bill, signed by Governor Brian Sandoval, restoring net metering credits for rooftop solar customers and granting consumers the right to self-generate. In addition, the legislature passed two bills that were vetoed by Sandoval: a bill that would have increased the state’s renewable portfolio standard to 40 percent by 2030 and would have created new incentives for energy storage, and a bill that would have established a 200-megawatt community solar program by 2023.
This has been a hard summer for big power plant projects. Not only are two nuclear reactor projects hanging in the balance, but regulators in Mississippi directed the owner of the Kemper plant to abandon plans for coal gasification. The decision is a blow to advocates of next-generation coal technologies. The project, which aimed to turn coal into synthetic gas and capture carbon emissions, is five years behind schedule and $4 billion over budget. It will now burn exclusively natural gas. Meanwhile, nuclear projects in Georgia and South Carolina—similarly behind schedule and over budget—led the primary contractor, Westinghouse Electric Co., to file for bankruptcy protection in March. It appeared that the Virgil C. Summer project in South Carolina would be abandoned, until the owners reversed course after facing substantial blowback from policymakers. The fate of the Plant Vogtle project in Georgia is expected to be decided later this month. But the long-term prospects for nuclear and coal projects appear bleak. Even existing power plants are finding it difficult to compete with cheap natural gas. In light of this, Congress is considering whether to expand federal subsidies to help spur the development of new projects—and potentially salvage the ones in danger of failing.
Volkswagen revealed in 2016 that 11 million of its diesel vehicles worldwide (about 500,000 in the U.S.) were equipped with software programmed to skirt clean air rules by only turning on full pollution controls during emissions tests. Volkswagen has agreed to pay $14.7 billion to settle allegations with the money being split into three parts. Ten billion dollars will be used to buy back or modify customers diesel vehicles. The second component requires VW to spend $2 billion to create a National Zero Emission Vehicle (ZEV) Investment Plan, with funding spent on infrastructure and programs aimed at increasing public awareness of zero emission vehicles. California will be receiving $800 million alone. The final component requires VW to invest $2.7 billion in an independently administered environmental mitigation trust, which will fund projects to reduce diesel emissions. Each state and territory may elect to become a beneficiary of these funds. The National Association of State Energy Officials (NASEO) has developed a toolkit and a number of other resources to assist states interested in this process.
There’s been an increased interest in several states around the Public Utility Regulatory Act, or PURPA. PURPA was enacted in 1978 and requires utilities to purchase energy from “qualified facilities” that produce energy at the avoided cost—a cost equal or below what a utility would have to pay for a traditional power plant. Utilities and legislatures in several states, including Idaho, Montana, North Carolina, Oregon, Utah and Wyoming, have proposed changes to PURPA such as new contract lengths, rates and other amendments. One example is Montana, where regulators, utilities and legislators are engaged in an ongoing debate over PURPA. In June 2017, the Montana public service commission (PSC) reduced the rates paid under PURPA by 40 percent. The PSC also reduced contract lengths from 25 years to five years with an option for another five years. In response to this decision, the legislators on Montana’s Energy and Telecommunications Interim Committee drafted a letter to the PSC stating that the new contracts were too short to support renewable energy development.
By 2018, the growth in liquefied natural gas (LNG) exports will make the U.S. a net exporter of natural gas. This is a drastic reversal from previous decades, when the U.S. imported substantial amounts of natural gas from Canada, and LNG from around the world. But the domestic gas glut has led to the development of LNG export terminals, the first of which—the Sabine Pass facility—opened in Louisiana last year, increasing U.S. LNG exports more than 10-fold. Another four export terminals are expected to be completed by 2021, and the combined export capacity will be 9.2 billion cubic feet per day (Bcf/d). The current exports have already flooded the international market, with most headed to Asia and Latin America. Prices for LNG have dropped to nearly a third of where they were at two years ago.
The Maryland Public Service Commission (PSC) approved financing in mid-May for the largest offshore wind developments planned in the U.S. Although regulators were slated to approve financing for only one company, both US Wind Inc. and Skipjack Offshore Energy LLC—a subsidiary of Deepwater Wind—were awarded financing, in the form of authorization to sell renewable energy credits. US Wind has proposed a 248-megawatt (MW), 62-turbine development and Skipjack Offshore Energy has planned a 120-MW, 15-turbine project. The regulators’ decision was based on the investment, jobs and tax income the wind developments are expected to create. As part of the agreement, the developers committed to investing $76 million at a steel fabrication plant and nearly $40 million in upgrades to a shipyard, both located near Baltimore. In addition, the regulators’ decision reflects a goal of positioning Maryland as a leader in the offshore wind industry. Maryland’s renewable portfolio standard (RPS) requires 25 percent renewable energy by 2020 and allows for up to 2.5 percent to come from offshore wind.
California regulators have approved the re-opening of the Aliso Canyon natural gas storage facility, which leaked nearly 100,000 metric tons of methane and forced thousands of residents to evacuate their homes over the span of several months, starting in late 2015. The facility is located outside Los Angeles, where it supplies a number of natural gas power plants. The facility’s emergency closure highlighted reliability concerns, and prompted the state to push through expedited energy storage projects. And while there are still concerns over the re-opening—and a law suit filed by Los Angeles County—state regulators maintain that the facility is safe. Around 60 percent of the wells have been taken out of service and isolated, in addition to new safety protocols being put in place, the state said, while adding the facility is needed to “prevent an energy shortage in Southern California.”
The Department of Energy Released its policy report on Aug. 23, detailing the reliability and resilience of the nation’s electric grids and systems and providing an overview of the evolution of electricity markets. The study, requested by DOE Secretary Rick Perry in April, found that sustained low natural gas prices and low demand—and not competition from renewable resources as some had suggested—are making baseload power sources, such as coal and nuclear, uneconomic. The study also contains a series of recommendations, some of which support coal and nuclear generators, remove certain regulations, and reduce costs for permitting and licensing energy infrastructure.
A Section 201 trade petition before the International Trade Commission (ITC) has divided the solar industry. Suniva, a solar manufacturer that has filed for bankruptcy, filed the petition against imported crystalline silicon photovoltaic solar cells last spring. Another manufacturer, SolarWorld, joined the petition. Crystalline silicon photovoltaic cells, the most common form of solar panels, from Asia have flooded the market and reduced installation costs for many consumers. Suniva asserts however that these lower costs have caused “serious injury” (the legal standard required for action) to domestic manufacturers. Many industry stakeholders, including the Solar Energy Industries Association and the Heritage Foundation, are opposed to the suggested $0.40/Watt tariff and a proposed price floor on imported solar cells, claiming the increase in costs will jeopardize the U.S. solar market. The ITC heard arguments on Aug. 15 and a determination is expected in September. Depending on the ITC’s determination, the commission may issue a “remedy” that President Donald Trump would have to accept, change or reject.
After six months spent two commissioners shy of a quorum, the U.S. Senate approved two nominees to the Federal Energy Regulatory Commission (FERC) in early August. The nominees, Neil Chatterjee and Robert Powelson, were confirmed by unanimous consent, and sworn in to join the five-member commission. Chatterjee was an aide to Senate Majority Leader Mitch McConnell (R-Ky.), while Powelson served on the Pennsylvania Public Utility Commission. Chatterjee will serve as FERC chairman, taking the reins from Cheryl LaFleur, who led FERC over much of the past year following two departures. While FERC staff continued work on a number of fronts, the lack of quorum meant the body was effectively paralyzed by an inability to issue decision. Two other nominations, for Richard Glick and Kevin McIntyre, are being considered.
A federal appeals court ruled in July that the U.S. Environmental Protection Agency cannot freeze Obama-era regulations that require oil and gas companies to address methane leaks in wells and transfer stations. EPA Administrator Scott Pruitt issued a stay of the rule in June, but the federal appeals court ruled the agency does not have the authority to halt the rule, as it amounts to an amendment or revocation of the rule.
In the event of a significant cyberattack on the U.S. power grid, utilities and grid operators need to be able to restore power without the advanced computer-based systems and communication technologies used in day-to-day operations, according to a new report. The analysis by FERC and the North American Electric Reliability Corp. outlines the vulnerabilities to these systems in the event of a cyberattack or natural disaster, and describes how reverting to manual protocols may be the best way to restore power. The report notes that the old-fashioned approach would take time and extra personnel, given that many of the automated and computerized systems have reduced the workforce, but determined that these manual backups need to be printed and practiced in the event of system failure.
The U.S. Department of Energy’s Solar in Your Community Challenge is hosting several events this fall. The challenge—with $5 million in prizes—aims to expand solar energy access to low- and moderate-income households, non-profit organizations, and state, local and tribal governments. The 170 teams selected have 18 months to “demonstrate innovative, scalable business and financial models that open up new solar markets benefiting these underserved communities.” Interested individuals and teams can participate in two upcoming workshops in Las Vegas and Denver, Colo.
Thank you to all who attended the 2017 NCSL Legislative Summit in Boston. We hope you found the range of energy sessions interesting and informative. Did you miss an energy session? Do you want to revisit a presenter's slides? Check out the Legislative Summit resources, including all presentations from the Task Force on Energy Supply and Energy Policy Summit.
NCSL recently released a new solar publication, “Here Comes the Sun: A State Policy Handbook for Distributed Solar Energy,” written in collaboration with the National Association of State Energy Officials. This handbook covers the many options and innovative approaches that states have implemented or considered when it comes to rate design, incentives, integration, financing, regulation and workforce development for distributed solar energy.
Many states have considered policies this legislative session that seek to retain the current U.S. nuclear fleet. As a follow up to the January report, State Options to Keep Nuclear in the Energy Mix,” NCSL published an addendum in May detailing state activity in Connecticut, New Jersey, Ohio and Pennsylvania. Please see the addendum to the report on the existing webpage for more recent state action.
Soft Costs”—such as installation, permitting and inspection—make up 64 percent of solar photovoltaic system costs. NCSL’s “Tackling Solar Energy’s ‘Soft Costs’” LegisBrief provides an overview of solar soft costs and discusses policies that states have employed to address soft costs.
NCSL and the National Association of State Energy Officials hosted the Solar Workshop & Lab in San Antonio, Texas on June 9-10. This workshop, sponsored in part by the U.S. Department of Energy, offered legislators, legislative staff and state energy officials an opportunity to increase their knowledge of current and emerging solar technologies and policies. Visit the Solar Workshop & Lab webpage to access meeting resources.
Buildings account for nearly half of a state’s energy consumption, which can make energy costs a major portion of state operations budgets. Programs that leverage the market to improve building and outdoor lighting efficiency can help states reduce operational costs while inducing economic development, freeing up state money for other uses. This webinar explored how states can support innovative financing and public-private partnerships to drive efficiency upgrades in publicly owned buildings and street lighting—specifically highlighting two DOE Accelerators on outdoor lighting and energy savings performance contracts.
NCSL's Natural Resources and Infrastructure Committee hosted its annual Spring Webinar Series this April through June. Energy-specific webinars included the May 18 “Protecting Pipelines: Efforts to Reduce Excavation Damage” and “Baseload Electricity vs. Energy Markets: Policy Considerations” on June 1. Recordings of the webinars are available here.
As more energy customers become energy producers—implementing rooftop solar, energy storage, and smart devices to manage their energy use—the distribution grid is rapidly becoming insufficient, as are the policies that govern it. Electric utilities and public utilities commissions are beginning to focus their attention on distribution grid planning, which is critical to maintaining reliability while taking advantage of the many benefits these new energy technologies can offer. Please join us on September 14 at 3 pm ET/noon PT for NCSL's webinar, "Planning for the Evolving Electric Grid." Presenters will discuss why distribution grid planning is needed and explore state efforts to implement planning and policies that support a modern energy grid.
A new report from the State and Local Energy Efficiency Action Network (SEE Action) offers state and local policymakers, state utility regulators, program administrators, financial institutions, consumer advocates and other low- and moderate-income (LMI) stakeholders with an understanding of 1) the relationship between LMI communities and financing for energy efficiency, including consumer protections, 2) the larger programmatic context of grant-based assistance and other related resources supporting LMI household energy efficiency, 3) lessons learned from existing energy efficiency financing programs serving LMI households and 4) financing products used by these programs and their relative advantages and disadvantages in addressing barriers to financing or to energy efficiency uptake for LMI households.
DOE released the first study of economic electric and energy efficiency potential across the country, listed at the state level. The new multi-sector analysis finds that 741,000 gigawatt-hours of cost-effective energy efficiency potential is available from 2016 to 2035—equal to about 16 percent of electricity projected to be consumed in the United States. In addition to a cross-sector analysis, DOE has developed state-level energy efficiency potential estimates for four high-value opportunities: upgrading residential, single-family homes, improving industrial (manufacturing) efficiency, adopting building energy codes for new and renovated residential and commercial buildings, and installing combined heat and power at appropriate buildings and facilities.