Plugged In, NCSL’s State and Federal Energy Newsletter

3/16/2015

Vol. 3 Issue 2 | March 2015

 

SPARKS OF NEWS

  • Transformer Vulnerability: The U.S. Department of Energy has announced that it will examine potential vulnerabilities of large power transformers. The study could lead to a strategy for stockpiling transformers to guard against widespread blackouts and potential threats to the nation's electric grid.
  • Can You Say Global Warming?: Florida environmental regulators and other state officials say that they have been ordered not to use the terms “climate change” or “global warming.” Governor Rick Scott has denied allegations that his administration banned state employees from using these terms.

STATE LEGISLATIVE UPDATES

Transportation-Sector Carbon

As of Jan. 1, 2015 California’s cap-and-trade program requires participation of motor fuels distributors; the first auction of the year sold out of greenhouse gas permits. Allowances sold for $12.21 per carbon ton. Fuels represents the largest source of the state’s emissions at 40 percent. This auction was the second event to include the Canadian province of Quebec. Further north, legislation was sent to the Oregon governor that would allow the state’s low-carbon fuel standard to take effect this year. State legislation established the standard in 2009 to require that reduction of the carbon content in fuel burned in-state by 10 percent by 2025. 

Ending the Ban on Crude Oil Exports

Several states, including North Dakota, New Mexico and Texas, have introduced legislation in 2015 calling for an end to the U.S. ban on crude oil exports. Although U.S. companies can export refined petroleum productions like 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. 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.

Carbon Control in Illinois 

Several bills introduced in Illinois would address the state’s compliance path for the proposed federal regulations for carbon dioxide emissions. Two bills (Senate Bill 1485 and House Bill 2067) would expand the state’s renewable energy and energy efficiency requirements while establishing a carbon marketplace to help the state comply with the pending regulations. Carbon emissions would be capped and auction proceeds would be directed largely to alternative energy sources, with additional funds for low-income energy assistance and other efforts.

Additionally, legislators introduced nuclear towertwo bills (Senate Bill 1585 and House Bill 3293) known as the Illinois Low Carbon Portfolio Standard, designed to help reduce carbon emissions, increase renewable energy and maintain a stable and secure electricity supply in the state. The bill would also help Exelon Corp.'s fleet of six nuclear plants by requiring utilities to buy 70 percent of their power from low-carbon sources of generation including nuclear. The bill comes as Exelon, 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.

Reactor Reaction

Illinois is not the only state introducing legislation supporting nuclear energy. The Washington State Senate approved several bills this month that would support new small modular nuclear reactors and create a nuclear education program. Senate Bill 5113 would require the state Department of Commerce to coordinate and advance the siting and manufacturing of small-scale reactors. Small modular nuclear reactors are about one-third the size of traditional nuclear plants, producing less than 300 megawatts and generating enough electricity to power approximately 230,000 homes. Senate Bill 5093 would establish a nuclear energy education program for students in the eighth through 12th grade. Several other bills are also being considered in the Senate including S.B. 5114 which would provide a tax exemption for the production of small-scale reactors and S.B. 5089 and S.B. 5090 which would modify the state’s renewable energy standard so that nuclear energy from small reactors is included as a compliance option.

Net Metering Rundown

A number of states have introduced or enacted legislation related to net metering, which compensates solar energy system owners for the electricity they send back to the grid. In West Virginia, the governor signed legislation modifying the state’s net metering statutes. The legislation requires a study of net metering policies and establishes a three percent cap on net metering for utilities, with a cap of .5 percent on rooftop solar. The governor originally vetoed a bill that would have repealed net metering statutes. Legislation in Iowa would require certain utilities to develop a system for giving excess solar net metering credits to customers behind in their utility payments, passing solar benefits to low-income customers. Legislation in Indiana that would lower net metering rates and charge a solar energy user fee failed to be scheduled for a floor vote after being approved in committee. Two net metering bills have been introduced in Missouri: one bill would extend the net metering capacity limit up to one megawatt (MW) in size while a second bill would eliminate the net metering capacity limit and allow customers to bank excess credits for up to one year. A report by the Missouri Energy Initiative found the overall effect of net metering to be beneficial to the state. In February, the North Carolina Clean Energy Technology Center released a comprehensive quarterly report of the rapidly-evolving state policy and regulatory landscape for distributed solar in states.

Pennsylvania Considers New Extraction Tax

Thirty-four natural gas producing states levee a fee or tax on the severance, production or sale of natural gas. In 2013, more than $16 billion was generated in the United States from severance taxes, and in at least eight states, between 9 percent and 78 percent of total state tax revenue came from severance taxes. Pennsylvania remains the largest natural gas-producing state without a severance tax, but since 2012, the state has imposed an impact fee. That could now change since Governor Tom Wolf has submitted his first budget to the legislature, which includes a 5 percent natural gas extraction tax. It is unclear whether a severance tax will be approved by the state’s General Assembly although several similar severance tax proposals have already been introduced by legislators this session. 

Electricity Markets

California legislation would expand so called “direct transactions” so all non-residential electric customers could directly purchase electricity from non-utility providers. Similarly, a Florida bill would allow utilities to install solar energy systems on businesses and sell the electricity without approval by the Public Service Commission. An Indiana Senate Bill that would modify state energy efficiency policies has moved through the Senate. Indiana repealed its energy efficiency resource standard in 2014 and the pending legislation would allow utilities to recover lost revenue due to efficiency indefinitely, while third parties would review utility company’s energy-efficiency plan before it is sent to the Indiana Utility Regulatory Commission. Legislation in New Hampshire would eliminate funding for energy efficiency programs through the Regional Greenhouse Gas Initiative (RGGI) and return all auction proceeds to ratepayers. RGGI members currently direct 65 percent of auction proceeds to energy efficiency activities. 

Renewable Action

Several states have recently acted on community solar. NRG Energy, an independent power producer, proposed building 8.2 MW of new community solar generation in Colorado, which enacted community solar legislation in 2010. Minnesota’s community solar garden program, which has been taking applications for several months, has more than 432 MW of proposed generation. The program was instituted through legislation passed in 2013. An electric cooperative in Missouri has announced it will begin the state’s first community solar pilot program. Legislation in Michigan would extend the state’s renewable portfolio standard (RPS) beyond 2015, requiring 20 percent of annual retail sales to come from renewables by 2022. Finally, legislation to establish a renewable electricity standard has been introduced in the Vermont House and Senate. The legislation would repeal the current voluntary target and set a new target of 55 percent of annual retail sales by 2017 and 75 percent by 2032; Vermont has no fossil fuel electricity plants.

STATE ENERGY NEWS

Commission Update

The California Public Utility Commission approved a proposal to offer community solar to Pacific Gas and Electric customers, following 2013 legislation. The Idaho Public Utilities Commission has approved more than a dozen solar energy projects this winter and the Louisiana Public Service Commission received a draft report on the costs and benefits of net metering policies in the state. The report found the costs associated with the policy significantly outweigh the benefits in the southern state. Legislation affecting the Corporation Commission and utilities in Virginia has been approved by the governor, although it is opposed by the state attorney general’s office. The bill would suspend regulatory oversight of privately owned utilities in the state for five years, partially to accommodate changes related to the proposed federal regulations for carbon dioxide emissions. 

New York, New Grid

The New York Public Service Commission issued its “track one” in late February as part of the state’s Reforming the Energy Vision (REV) distributed generation strategy. The order states that utilities will not be permitted to own most distributed renewable energy systems, in order to enhance competition and bolster markets for sources such as on-site wind and rooftop solar installations. Utilities will begin to move from the model of several large, centralized generation sources to a more diverse distribution of medium-sized resources. The order also includes new energy efficiency requirements for utilities.

Colorado Consultants Come to a Conclusion

The Colorado Oil and Gas Task Force released its final report on Feb. 27, presenting nine recommendations to Governor John Hickenlooper. The 21 members of the Task Force, which include representatives from the oil and gas industry, local government officials and environmental advocates, was created as part of a compromise that kept several oil and gas initiatives off of the 2014 statewide ballot. The report’s recommendations support additional local involvement in the process and planning for oil and gas wells, request additional state staff to help monitor existing well sites and strengthen current state regulations.

On PACE

The Connecticut Green Bank has proposed reviving the state’s residential Property Assessed Clean Energy (PACE) program. PACE programs allow local governments to provide financing for energy efficiency, renewable energy and water efficiency projects that building owners pay back through property tax assessments. Many states have suspended programs or revised PACE statutes due to the Federal Housing Finance Authority’s statement that PACE assessment’s senior status may jeopardize mortgage loans. Connecticut operates a widely successful commercial PACE program that is administered by the state’s energy bank.

Resilient Microgrid Awards

The California Energy Commission announced more than $27 million in awards last month to 10 microgrid and electric vehicle charging projects. Microgrids, self-sustaining subsystems that can operate independently of the larger electric grid, can support a more resilient power grid. Most of the awarded funds will go towards microgrid projects in the state. The largest single award, to Humboldt State University, will develop a resilient power microgrid for Blue Lake Rancheria, a federally recognized Native American Tribe located in northwestern California. The microgrid will incorporate a new photovoltaic array, a Tesla lithium ion battery storage system, a combined heat and power system already under construction and an existing diesel generator.

FEDERAL ENERGY NEWS

President Vetoes Keystone XL

pipelinePresident Obama vetoed a bill, which passed Congress on Feb. 11, that would have immediately authorized the construction and operation of the Keystone XL pipeline. The President cited that the bill conflicts with the authority of the president and prevents the thorough consideration of complex security, safety and environmental concerns. The Senate will hold a procedural vote to see if the body will be able to override the president’s veto, a process that requires two-thirds affirmative vote in each Chamber. 

Store, Baby, Store

According to the Energy Information Administration (EIA) crude oil storage in the United States is at an 80-year high. 

The Future of Energy…in the House

Chairman of the House Energy and Commerce Committee Fred Upton (R-Mich.) released a framework to guide comprehensive energy legislation he plans to work on this session. The Architecture of Abundance framework focuses on “modernizing infrastructure, a 21st century energy workforce, energy diplomacy, and efficiency.”

CCS Project Loses Support

The Department of Energy (DOE) announced it is ending federal support for the FutureGen carbon capture and storage project in Illinois. The project will not be able to meet a deadline to use $1 billion in stimulus funding and was unable to secure enough private financing to continue.

Shhh! Secret Science

As of March 4, the U.S. House of Representatives was preparing to vote on the Secret Science Reform Act, a bill that would require the Environmental Protection Agency only use publicly available, reproducible data when writing regulations. The White House has issued a veto threat for the bill, stating that while the administration supports regulatory transparency the bill would impose “arbitrary, unnecessary and expensive requirements.” The House will also vote on a bill to reform the membership and procedures of the agency’s science advisory panels, which the White House has threatened to veto as well. 

Relying on FERC

The Federal Energy Regulatory Commission (FERC) began a suite of technical conferences across the states on Feb. 19 with a daylong meeting in Washington D.C. to discuss EPA’s greenhouse gas emission rules for existing power plants and their possible effect on electricity reliability in the country. Attendees heard from federal representatives, state agencies, associations and utilities. FERC held three more conferences on specific regional issues tied to the rules in Denver, Colo., St. Louis, Mo. and Washington D.C. throughout February and March. 

NEW NCSL ENERGY RESOURCES & UPCOMING EVENTS

Webinar Resources | The Future of the Electric Grid: Energy Consumer as Energy Producer

Commercial, industrial and residential consumers are investing in technologies to increase energy efficiency, generate their own energy and shape energy demand. While these efforts can be beneficial for utilities and their customers, the rapid growth of these technologies introduces new challenges by increasing variability in the system and creating two-way energy flows. This March 5 webinar explored these transactive energy systems and what they mean for customers, utilities and state policymakers. Access a recording of the webinar and presentation slides here.

Webinar Resources | Hot Issues in Energy and Transportation

On Feb. 27, NCSL hosted a webinar on several key policies related to energy and transportation. Access a recording of the webinar to hear more about some of these hot topics:

  • States are experimenting with innovative ideas to fund transportation projects. Find out how these projects are helping states leverage their money and partner with the private sector.
  • Hydraulic fracturing and the use of horizontal drilling have dramatically increased domestic oil and natural gas production. Find out how states are tapping the expansive economic potential while ensuring that the practice is well-regulated and protects public health and the environment.
  • Pending EPA greenhouse gas regulations may require serious changes to energy production in many states. Explore the challenges presented by the rule and see what actions states are taking.

Webinar Resources | Growing Efficient Economies: Removing Utility Disincentives for Energy Efficiency

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 explored these efforts and other policy solutions. Access a recording of the webinar and presentation slides here.