Plugged In | NCSL’s State and Federal Energy Newsletter

9/21/2015

Vol. 3 Issue 4 | September 2015

 

SPARKS OF NEWS

  • Hurricane Risk to Oil Production Decreases: According to a new analysis by the U.S. Energy Information Administration, the U.S. shale boom has made domestic oil production less vulnerable to hurricanes. The Gulf of Mexico produces 16 percent of America’s crude oil, down from 27 percent in 2003.
  • Rooftop Views: Google launched a website,Project Sunroof, which scans rooftops for solar generation potential. The website estimates annual usable sunlight hours, roof area available for solar panels, annual electricity savings and financing options. Currently the website includes data for the greater San Francisco Bay and Boston areas and Fresno, Calif.

STATE LEGISLATIVE UPDATES

The Rundown on Renewable Portfolio Standards

This legislative session, several states significantly modified their renewable portfolio standards, which require utilities to have a specific percentage of renewable energy in their energy mix. California’s recent legislation, sent to the governor, would increase the state’s requirement to 50 percent of sales by 2030, along with a doubling of the state’s energy efficiency standard. Hawaii enacted legislation establishing a goal of 100 percent renewable energy sales by 2045, an increase from the previous requirement of 40 percent of sales by 2030. Kansas’ requirement that 20 percent of a utility’s peak demand capacity to be from renewable energy by 2020, was converted to a non-binding target by legislation that also placed a 10-year cap on a formerly-permanent renewable energy property tax exemption. Vermont altered the state’s non-binding goal into a requirement of 75 percent renewable energy sales by 2032.

Safety Proposals for Crude-by-Rail

crude oil trainEarlier this session, Washington Governor Jay Inslee signed the Oil Transportation Safety Act (House Bill 1449), which gives first responders advance notice of oil shipments passing through the state, requires public disclosure of the amount and type of oil and extends the barrel tax on oil transported by train, which previously was only taxed on boat-transported oil, to help pay for oil spill response efforts. In Pennsylvania, Governor Tom Wolf  laid out recommendations on crude-by-rail safety after commissioning a report from a railroad safety expert. The recommendations go beyond the minimum requirements of the Federal Railroad Administration, calling on rail companies to operate at slower speeds and to reroute trains around major urban areas. The proposal would also require investments from the state, including increased track inspections and wheel impact load detectors, which could cost upwards of $400,000. It appears that New York Governor Andrew Cuomo has taken notice as well. Cuomo’s administration is reviewing the report, although he has yet to take any position. With limited pipeline capacity in the booming Bakken Shale region of North Dakota, companies have increasingly turned to sending oil by rail. However, there is concern over the safety following several major train derailments, including a 2013 accident that killed 47 people in Quebec.

What’s in a Word? Maine Knows

Maine enacted legislation this summer correcting a technical error in previous legislation for the Efficiency Maine Trust, the state’s third party administrator for energy efficiency programs. Legislation enacted in 2013 omitted the word “and” when increasing the program’s funds and setting spending requirements as a percentage of “retail electricity and transmission and distribution sales.” This omission resulted in a budget reduction for the Trust nearing $40 million. Governor Paul LePage vetoed the bill correcting the omission, however the veto was overridden by the legislature.

Net Metering

Legislation enacted in Nevada concerned an ongoing debate about the state’s net metering cap, or the total capacity of distributed generation allowed in the state. The state’s largest utility, NV Energy, reached its net metering cap—three percent of a utility’s peak load—recently and has expressed concerns of how the policy distributes costs to customers. Enacted legislation shifts regulation of net metering caps to the Public Utility Commission and places a new temporary cap of 235 megawatts (MW) of generation. The utility commission is charged with establishing a permanent cap by December 2015. Additionally, in August, the Public Utility Commission voted to continue current net metering rates for the state’s largest utility through the end of the year. A study commissioned by state regulators in 2014 found that costs were not shifted from solar customers to non-solar customers. Nevada hasn't’t been the only state discussing net metering recently: Maryland and Mississippi have been exploring these policies as well. Lastly, the National Renewable Energy Laboratory (NREL) recently released the publication called Value of Solar: Program Design and Implementation Considerations, which explores an alternative to net metering that is being explored in a number of states. The value-of-solar tariff approach looks to compensate rooftop solar owners based on an assessment of the costs and benefits that rooftop solar creates for utilities and electric system.

Crude Oil Exports on the Horizon?

The U.S. House of Representatives is set to consider legislation (H.R. 702) in the coming weeks that would end the ban on the U.S. export of crude oil. Additionally, Senate Majority Leader Mitch McConnell (R-Ky.) recently announced that he supports removing the federal ban although he did not specify when the Senate would consider legislation. The U.S. Commerce Department has already approved limited oil export trading with Mexico. In the trade deal, Mexico’s state-run oil company will trade its heavier crude for the lighter U.S. crude.  Although U.S. companies can export refined petroleum productions such as diesel or gasoline, exporting crude oil has been prohibited since the 1970s when the oil embargo strained the U.S. economy and greatly increased global oil prices. Several states, including North Dakota, New Mexico and Texas, have also introduced legislation in 2015 calling for an end to the U.S. ban on crude oil exports. Supporters of these state measures argue that lifting the ban would help lessen the impacts from the current downturn in crude oil prices and better align the U.S. with the global market. However, some critics assert that shipping crude oversees threatens U.S. energy security and could result in higher gasoline prices.

Storage Mandate

The Oregon legislature enacted a bill this summer establishing a mandate for energy storage technology. The legislation directs utilities to procure at least five megawatt-hours of energy storage capacity by 2020, providing the acquisitions are approved by the Public Utility Commission. Utilities cannot procure more than one percent of their peak load in 2014. The legislation also allows utilities to collaborate in meeting this requirement to reduce costs and share benefits. The Public Utility Commission is charged with adopting guidelines for utility energy storage proposals by January 2017.

Tesla’s Retail Sales Showdown

A number of states have introduced bills enabling or prohibiting Tesla Motors from selling cars in each state. At issue is whether Tesla or any other auto manufacturer can sell cars directly to the consumer, bypassing the traditional franchise model. In Texas, House Bill 1653 and Senate Bill 639 both failed this session. Each would have allowed auto manufacturers that have never previously sold their cars through independent dealerships in the state—like Tesla—to operate up to 12 stores. The legislation was similar to bills in other states including Maryland, New York, Ohio, Pennsylvania and Washington that now allow the company to open stores and sell electric vehicles. Connecticut also considered a bill this session (House Bill 6682), which would have permitted Tesla to open up to three retails stores, allowing the company to sell vehicles directly to Connecticut residents. The bill passed the House in May, but died in the Senate after time ran out on this legislative session. Although some states have introduced bills that allow for Tesla’s unique car sales model, other states are less supportive. In West Virginia, Gov. Earl Ray Tomblin signed Senate Bill 453 that bans the direct-sales approach practiced by Tesla Motors.

Life Is a Peach

Solar energy is on the rise in Georgia due to a significant policy change in the state. Legislation enacted this year authorized third-party financing for small-scale solar energy projects beginning July 1. This activity helped the state add 2,870 new solar-related jobs in the first quarter of 2015—the highest number of any state. Beyond third party entities, the state’s largest utility, Georgia Power, has announced it will offer rooftop solar in the state through sales and installation services, but is not providing financing. The utility will provide solar consultations to customers and is using an unregulated entity to conduct sales.

STATE ENERGY NEWS

Growing (Solar) Gardens

solar-wind energyThe Minnesota Public Utilities Commission, Xcel Energy and solar developers reached an agreement regarding the state’s community solar garden policy. Minnesota enacted legislation in 2013 authorizing community solar gardens up to 1 megawatt (MW) in size. The June decision by the Commission would allow solar gardens to be co-located together. Proposals that have been deemed complete will be allowed to co-locate systems up to 10 MW. Those that submit proposals within 90 days will be allowed to co-locate solar gardens up to 5 MW in size and all other systems must be no greater than 1 MW. The Commission also determined subscriber requirements and rates for the gardens.

Microgrids Gain Ground

The Department of Defense, in coordination with the Department of Energy and Department of Homeland Security have developed microgrids to ensure the nation’s critical military facilities maintain operations in the event of natural disasters, accidents and physical or cyber threats. The microgrid project, known as SPIDERS (Smart Power Infrastructure Demonstration for Energy Reliability and Security), has seen several military bases, including two in Hawaii and one in Colorado, develop a series of backup power sources, including solar, diesel generators and batteries, which could be used in the event of a major outage. The program can eventually be applied to non-military critical infrastructure. The military is not alone in seeking energy independence. In New York, preliminary plans for 83 community microgrids have been approved, many of which are in Brooklyn. The move comes as memories of the extended blackouts following Hurricane Sandy are still fresh. Plans call for a combination of solar, battery storage and small wind turbines, and the state has budgeted around $40 million to support the effort. Microgrid capacity could more than double in the coming years, according to some estimates—from 1.2 megawatts today, to as much as 2.8 megawatts in five years.

Avoiding a Nuclear (Facility) Meltdown

Exelon Corp., the nation’s largest owner of nuclear power plants, has received a lifeline that would keep one of its western Illinois nuclear plants in operation—at least for a while longer. Exelon had been vocal about the struggling Quad Cities plant—one of 11 nuclear plants which the company operates in Illinois—and had been considering its closure. However, the state’s grid operator recently chose the plant in a capacity auction, which requires Exelon to keep the plant ready to run until at least mid-2018. At the same time, two bills (Senate Bill 1585 and House Bill 3293) known as the Illinois Low Carbon Portfolio Standard are still up for debate. Exelon has supported the legislation, which would require the state’s utilities to purchase 70 percent of their power from low-carbon sources, like nuclear.

Home Energy Ratings

Connecticut has successfully launched the first statewide Home Energy Score program. The Home Energy Score was developed by the U.S. Department of Energy to help homeowners understand their home’s energy usage and possible energy efficiency improvements. The score serves as an equivalent to a “miles-per-gallon” rating. Connecticut’s Home Energy Solutions program, offered through EnergizeCT’s, will create consistency across the state and place future homeowners in a better position to understand the true cost of living in a home.

In the Pipeline

Georgia state regulators appear receptive to an $8 billion natural gas mega-deal. Southern Co. has announced its intent to purchase AGL Resources, the nation’s largest “pipes only” company. Southern Company has suffered from a lack of natural gas infrastructure, and its merger with the natural gas distributor would give the company access to 80,000 miles of natural gas pipelines. In addition, the move is expected to double the customer base for both of the Atlanta-based corporations. Meanwhile, across the U.S., several pipeline plans are up in the air. The Minnesota court of appeals ruled that the proposed Sandpiper pipeline will need to undergo a full-scale environmental review. The decision will send the project back before the state Public Utilities Commission (PUC) and will likely delay the $2.6 billion project, which seeks to build a 610-mile pipeline to carry crude oil from North Dakota to Superior, Wis. Elsewhere, the New Hampshire PUC has endorsed the proposed Kinder Morgan Northeast Energy Direct pipeline as the best way to drive down high winter energy costs. The 350-mile natural gas pipeline would travel from Pennsylvania through New York, Massachusetts and New Hampshire.

REVing It Up

New York Governor Cuomo unveiled a new state energy plan as part of the initiative Reforming the Energy Vision (REV). The plan proposes to reduce greenhouse gas emissions 80 percent by 2050. An interim target for 2030 includes a 40 percent reduction of greenhouse gas emissions from 1990 levels, a 23 percent decrease in building energy consumption from 2012 levels and a 50 percent renewable energy standard. The state will leverage private sector investments and expertise and focus on affordability, the environment, reliability, resiliency, regulatory reform, environmental justice, and clean, reliable transportation. In addition to the state energy plan, the Public Service Commission and the New York State Energy Research and Development Authority are significant actors in the REV process.

Oil-Producing States Upset over Water

A new rule under the Clean Water Act will not go into effect in the 13 states that sued over the issue. A federal judge upheld an injunction after 13 states, led by North Dakota, sought to fight the new ruling that would bring more streams, tributaries and wetlands under federal jurisdiction. Many of the states are big oil- and gas-producers, and their attorneys argued that the new rule would adversely affect their economies, bringing chaos and delays to the industry. 

FEDERAL ENERGY NEWS

Final Clean Power Plan Released

President Obama unveiled the final version of the Clean Power Plan, which regulates the amount of carbon dioxide emissions from both future and existing power plants. The rule was proposed in June 2014. Under the final rule, the U.S. Environmental Protection Agency (EPA) assigned each state a unique emission reduction target that it must meet based on a specific formula, resulting in an overall reduction target of 32 percent nationwide by 2030. States also need to reach interim emission reduction targets between 2022 and 2030. A state can choose to reduce its emissions however it sees fit, and has the option to comply individually or as part of a multi-state plan. If a state fails to submit a plan or if EPA determines that a state plan is insufficient, a Federal Implementation Plan (FIP) will be imposed by the EPA.  Though a final FIP has not been issued, EPA proposed two different plans on Aug. 3. One would assign a cap on emissions and allow for the trading of emission credits and the other would require a state to meet an average emissions rate across its power generation units. For more information on the Clean Power Plan and state responses to it, see our website.

New Methane Rules

EPA proposed a number of new draft rules for the oil and natural gas industry aimed at combating climate change and reducing air pollution. The rules are intended to reduce methane and volatile organic chemicals emissions from new hydraulically fractured wells as well as to find and repair leaks. The rules also attempt to reduce such emissions by covering “downstream” equipment associated with the distribution of natural gas. EPA will take comment on the proposal for 60 days after it is published in the Federal Register. For more details see NCSL’s Info Alert.

One Billion Dollars!

President Obama announced $1 billion in federal loan guarantees to help grow small-scale clean energy projects and reduce electricity-related greenhouse gas emissions. The loans are for projects related to the expansion of rooftop solar, energy storage, capturing methane gas from wells and smart grids to improve energy efficiency.

In a Nut-Shell

The federal government gave final approval to the Royal Dutch Shell oil company to drill below the ocean floor for oil in the Arctic Ocean off Alaska’s coast. The final approval came after the company added a piece of equipment that is designed to prevent well blowouts. The Bureau of Safety and Environmental Enforcement, the agency with oversight into these matters, previously approved Shell to begin drilling only the top sections of the two wells in that area of the Arctic until the equipment needed to protect from blowouts was repaired and added to the rigs. Exploratory drilling in this area has not occurred since 1991.

Comprehensive Energy Bill Moves

The U.S. Senate Energy and Natural Resources Committee passed a bipartisan comprehensive energy bill, the Energy Policy Modernization Act. The bill would reauthorize a number of energy programs that assist states and provide a loan guarantee program for states to promote energy development. The legislation includes amendments related to permitting and approving the exportation of liquefied natural gas.

Be Careful What You Waste

The EPA will release a final rule by the end of April that will prevent companies from discharging wastewater from shale drilling into publicly owned water treatment plants. EPA first proposed the rules in 2011, and on March 30 the Office of Management and Budget completed its review of the rule, the last hurdle before the final rule is published.

NEW NCSL ENERGY RESOURCES and UPCOMING EVENTS

Legislative Summit Resources

View presentations and resources from energy-related sessions held at Legislative Summit in Seattle, Aug. 2-6 as part of the Energy Supply Task Force, the Energy Policy Summit and the Natural Resources and Infrastructure Standing Committee. Session topics included federal regulations for power plant emissions, waste-to-energy, distributed generation, the electric grid, risk and critical infrastructure, and exporting coal, oil and natural gas. View our Summit Resources page for presentations and resources.

The Legislative Role in Potential Interstate Collaboration on the Clean Power Plan

power linesThis brief explores a range of existing state policies that could be used in promoting multistate compliance approaches for EPA proposed Clean Power Plan. It examines the role played by state legislatures and provides a checklist that can be used by policymakers seeking interstate coordination. This document provides examples of language in different state statutes that could assist policymakers interested in exploring the potential for interstate collaboration. Visit our web page to view this report.

Reducing Methane Emissions

Methane, the second most prevalent greenhouse gas emitted in the United States, contains more than 20 times the heat-trapping potential of carbon dioxide, although it remains in the atmosphere for a much shorter time. In June 2013, President Barack Obama unveiled a multi-pronged effort to reduce greenhouse gas emissions and several states have adopted rules to reduce fugitive methane emissions that escape into the atmosphere during the production of natural gas. View this NCSL LegisBrief for more information.

Webinar: Alternative Fuel Tools and Resources for State Decision-Makers

webinarRegister for our upcoming Sept. 23 webinar, hosted by Clean Cities and in cooperation with the National Renewable Energy Laboratory (NREL), the National Association of State Energy Officials (NASEO), the National Governors Association (NGA) and NCSL. This webinar will feature valuable tools and resources on alternative fuels and advanced vehicles available for state policymakers through the Alternative Fuel Data Center’s revamped State Information pages. This webinar will highlight the state resources on alternative fuels, including information about laws, incentives, fueling stations, fuel prices, and more.

Economies of Shale

North America’s energy outlook has significantly changed over the last decade. With the widespread use of hydraulic fracturing and horizontal drilling, oil and natural gas resources are no longer as expensive to develop. Read this State Legislatures magazine article to learn more about the state legislation introduced this year related to hydraulic fracturing.

NRI Committee Spring Energy Webinars

NCSL’s Natural Resources and Infrastructure Committee hosted a Spring Webinar Series that featured a number of energy-themed webinars, including state options and responses to greenhouse gas emissions regulations, the impact of falling oil prices on state budgets, natural gas pipeline safety, the Renewable Fuel Standard and more. Visit our web page to view recordings and presentation from these webinars.

State Policies for Power Purchase Agreements

Power purchase agreements, or PPAs, are contracts between a provider—typically an independent electricity generator or system owner—and a buyer that are used to finance and implement renewable energy installations. These agreements also assist in utility scale projects by ensuring stable, long-term revenue streams that are critical to financing renewable energy projects. Although a majority of states have statutes mentioning or defining PPAs, 15 have enacted substantive legislation to authorize and regulate these agreements. View this web brief to learn more.

Legislative Approval of Clean Air Act State Implementation Plans

To comply with section 110 of the Clean Air Act, states must create a State Implementation Plan, or SIP, which consists of control measures that will be taken to ensure the state will meet National Ambient Air Quality Standards (NAAQS). A number of states have statutes that require the legislature to approve or review section 110 SIPs before they are submitted to the U.S. Environmental Protection Agency for approval. Visit our web page for more information.