Vol. 3 Issue 1 | February 2015
A number of states began their legislative sessions with bills concerning state renewable portfolio standards, which require utilities to sell a specific percentage of electricity from renewable energy. Legislation to reduce or repeal state requirements has been introduced in Colorado (S.B. 44 and S.B. 46) and West Virginia (H.B. 2001 and S.B. 1). Legislation to modify existing standards has been introduced in a number of states: Colorado, Minnesota (House File 95 and Senate File 69) and Montana would modify hydropower provisions; another bill in Montana would remove community renewable energy projects from the state renewable energy requirement; a New Hampshire bill would remove the renewable energy class system; and legislation in Virginia (H.B. 1913 and H.B. 2075) modifies renewable energy credits. Legislation in Rhode Island would extend the RPS beyond 2019 to 2035. Additionally, California Governor Jerry Brown called for an increase in the state’s renewable energy use to 50 percent of electricity sales by 2030.
Electric vehicle sales are on the rise in Georgia, with Atlanta taking over the number one spot for electric vehicle sales in 2013. The state offers a diverse set of incentives—including up to $5,000 in tax credits— that have been credited for the boost in electric vehicle sales over the past couple of years. In 2015, these tax credits are expected to cost the state about $50 million, prompting Georgia’s legislature to consider whether these tax credits are still needed to boost electric vehicle adoption. Representative Chuck Martin has introduced H.B. 122 designed to end the current tax credit on July 1, 2015. “Georgia can’t afford to subsidize auto manufacturers indefinitely,” Martin said. Additionally, Rep. Ben Harbin is preparing alternative legislation that would reduce the credits over time and phase them out entirely in 2019.
Legislation in Virginia would modify the state’s renewable energy requirement to include an energy efficiency provision. The bill would require utilities to implement energy efficiency and demand-side management programs to reduce retail electricity consumption by 10 percent by 2022, compared to 2006 energy consumption levels. The bill does not include penalties if this goal is not met. Legislation has been introduced in a number of states to increase efficiency in state buildings, provide tax incentives for purchasing energy efficient technology or appliances, and increase financing for energy efficiency retrofits.
A bill introduced in Washington state would seek to add a new definition to net metering statutes. Legislation would define a “prosumer” as a customer generator, or an entity who is both an electricity producer and consumer. Additionally, the legislation would authorize an electric utility to adopt an alternative to net metering after the cumulative generating capacity of a utility’s net metering systems reaches half or more of a utility’s peak demand in 1996.
The Massachusetts Senate released a report on climate change on the last official day of the 2013-2014 session. The report recommends that the state adopt new clean fuel standards, enforce the state’s Global Warming Solutions Act, encourage more energy efficiency and provide smart meter incentives. Additionally, the state announced more than $18 million in awards for 13 projects designed to increase resiliency for critical facilities through combined heat and power, battery storage and microgrids.
Concerns over earthquakes in states with oil and gas drilling have prompted studies examining whether there is a direct link between seismic activity and the wells used to dispose of waste water from the hydraulic fracturing process. State legislatures are also considering bills to address concerns surrounding induced seismicity. Texas lawmakers are considering an almost $2.5 million plan to fund a seismic monitoring program, designed to more precisely detect and locate earthquakes. The state House has also formed a subcommittee on seismic activity and the Texas Railroad Commission hired a seismologist and approved rules last years that require companies to submit more information before drilling disposal wells. Neighboring Oklahoma has also taken recent action—Governor Mary Fallon announced the creation of a Coordinating Council on Seismic Activity in September 2014. The new council is designed to connect legislators with researchers to examine the relationship between seismicity and hydraulic fracturing.
The price of oil has dropped by almost 60 percent since June of 2014, falling to a five-year low of under $50 a barrel. Oil producing states like Alaska, Louisiana, North Dakota, Oklahoma and Texas could see large decreases in state oil and gas revenue, leaving state budget analysts scrambling to adjust fiscal projections that had assumed higher oil prices. These states have become accustomed to the revenue from oil and gas taxes, increased jobs and stable rainy-day funds. In Alaska, for example, almost 80 percent of the state government is funded through oil revenue. The falling oil prices have already increased the state’s budget deficit and could force a large cut in capital spending for infrastructure projects.
As state legislatures have been busy in January, state utility commissions have released a number of findings. The Arizona Corporation Commission voted “no objection” or approved two utilities’ proposals for utility-owned residential solar programs. Both utilities will have to prove the program’s investments are “prudent” before recouping costs through rates. The Illinois Commerce Commission approved a solar procurement plan initiated by 2014 legislation to increase solar development in the state. The Kentucky Public Service Commission approved the state’s first utility-scale and the largest solar array in the state in December. The Rhode Island Public Utility Commission is reviewing a solar distributed generation program that has been approved by the state Distributed Generation Board.
Cape Wind—what was potentially the nation’s first offshore wind farm—received a setback in January when two utilities announced they will pull out of power purchase agreements signed in 2012. The 468 megawatt proposed project failed to complete financing deadlines by Dec. 31, 2014. The project has experienced a number of legal challenges but courts have previously ruled in the project’s favor. Meanwhile further south in North Carolina, the U.S. Department of the Interior announced an environmental assessment of 3,000 acres for offshore wind development.
At the request of H.B. 1146 (2014), four Illinois state agencies released a report in January addressing issues pertaining to the premature closures of the state’s nuclear power plants. The report comes as Exelon, based in Chicago and the largest owner of nuclear power plants in the country, has issued warnings about potential shutdowns of several plants in the state, unless Illinois develops new policies to make the stations more profitable. The report details the potential costs to the state if the plants retired and the agencies recommend several programs and taxes for the state including a carbon tax and a cap and trade program. The legislature is expected to review the report’s findings and consider legislation later this year.
State regulators in Florida approved a proposal in December to allow Florida Power & Light (FPL), the state’s largest utility, to charge its customers for investments in natural gas exploration. The request to the Public Service Commission (PSC) would allow the utility to invest $191 million in a joint venture with PetroQuest Energy, Inc. for natural gas exploration in Oklahoma. FPL argues that the request will help stabilize fuel costs, while opponents argue that the decision puts all the risk on customers. The PSC ruling could lead to similar requests by other utilities. Duke Energy is also considering asking permission to charge customers for hydraulic fracturing exploration.
The New York State Energy Research and Development Authority (NYSERDA) announced a $14.5 million pilot program for projects that reduce greenhouse gas emissions at power plants through market-ready technology. Individual projects can be funded up to $2 million; partners must fund at least half of the project costs. Possible projects include advanced controls for plants, boiler controls, advanced burners, turbine retrofits, waste-heat recovery, or in-facility electrical load reduction and efficiency improvements. Solicitations for projects end in March 2015.
Five communities along Lake Michigan’s coastline have been working with a non-profit, Resilient Michigan, to account for climate change in their master plans. The organization has been working to integrate climate change adaptation plans within existing master plans to create a greater impact. Several of the communities have been affected by fluctuating water levels, harsh winter weather and flooding.
On Jan. 6, members of the 114th session of Congress gaveled in to start a new session. With the most recent election, party control of the U.S. Senate switched from Democrat to Republican, giving Republicans control of both chambers of Congress. NCSL staff has highlighted a few areas in the energy realm that will likely be on the agenda of the 114th Congress.
The Environmental Protection Agency (EPA) announced it will delay finalizing the Clean Power Plan— regulations on carbon dioxide emissions from existing power plants—until mid-summer 2015. The agency will also finalize standards for new and modified power plants at the same time, as part of a “suite of regulations.” Along with the delayed finalization notice, EPA announced it will develop a federal implementation model for the regulations that states can look to as they finalize their implementation plans. For more details see NCSL’s Info Alert.
The EPA issued its final regulations for disposing coal combustion residuals, the by-product of burning coal by electric utilities. The regulations would designate coal ash as a non-hazardous substance, and power plants would have to meet certain requirements for landfills and disposal ponds, including monitoring leaks and inspecting impoundment sites regularly. See NCSL’s Info Alert for more details.
The Department of Energy’s $1.2 billion loan guarantee to Spanish firm Abengoa resulted in the successful opening of a solar plant in Barstow, California. The plant uses parabolic mirrors to heat fluid and produce steam.
President Obama announced plans to reduce 45 percent of methane emissions from the oil and natural gas sector by 2025. The EPA will issue such proposed regulations this summer, and plans to have final regulations out by 2016. According to the administration the initial rules are aimed only at new and modified oil and gas systems.
The Bureau of Ocean Energy Management (BOEM) unveiled its offshore drilling plans for 2017-2022. According to the plans, the federal government will begin to open up certain coastal areas, including in the Atlantic, for natural gas drilling leases. This will be the first time these federal areas have been open for lease to the natural gas industry. The five year drilling plan will be open for public comment before being finalized.
Regulatory models in many states discourage utility efficiency investments. The results are an increase in the amount that consumers spend on energy and slower economic growth. Many states have adjusted their regulatory structure so that utilities will benefit if they pursue cost-effective energy efficiency. This Feb. 12 webinar will explore these efforts and other policy solutions. Register here.
In the 2014 session, legislatures in at least 37 states and Washington, D.C., enacted more than 100 bills related to energy efficiency, including building energy codes; energy use in publicly owned or operated buildings; efficient building initiatives for new construction or retrofits; state energy efficiency policies; financing energy efficiency; education and outreach; and additional policy areas. View this document for summaries of enacted legislation.
Community choice aggregation policies enable local entities to aggregate electricity contracts within a specific jurisdiction to procure electricity as a group, rather than individuals. States may consider aggregation to reduce electricity costs, provide power from local sources or purchase energy from renewable sources. Read this NCSL web page for more information.
States are exploring energy banks as a way to promote energy efficiency, renewable energy and resiliency. Energy banks combine public sector funds with private sector financing to lower the cost of renewable or energy efficient technology investments. Five states have established energy banks or bank-like structures and one state enacted study legislation for an energy bank in 2014. View this NCSL LegisBrief for more information.