Vol. 8: Issue 8 | August 2020
The Massachusetts legislature continues to weigh and amend legislation mapping out a next-generation climate policy that would set a new statewide target of net-zero greenhouse gas emissions by 2050. The bill would also establish interim emissions targets below 1990 levels of 50% by 2030 and 75% by 2040. The policy was last amended on July 31. In Pennsylvania, the legislature recently introduced HB 2778, increasing its Alternative Energy Portfolio Standards to 30% by 2030 and establishing a new carveout for solar energy. The bill would also require the state Public Utility Commission to set new energy storage deployment targets for electric distribution companies
New Jersey is currently considering SB 2804, which requests a cost-benefit analysis to determine whether the state should withdraw from PJM—the nation’s largest wholesale electricity market, covering 13 states and Washington, D.C. The bill specifically asks for recommendations regarding four possibilities—withdrawing from PJM and establishing an independent transmission grid, withdrawing from PJM and joining New York’s grid operator, remaining in PJM, and any other relevant option. The legislation comes in response to the Federal Energy Regulatory Commission's (FERC) December 2019 decision to expand the Minimum Offer Price Rule (MOPR), which requires energy resources that receive state support to offer capacity into the market at higher, predetermined prices, effectively undermining the ability of those resources to compete for an important source of revenue. Opponents argue that MOPR undermines state energy policies, especially those supporting renewable resources and nuclear power.
New York recently passed AB 2655, which classifies waste from oil and natural gas production as hazardous and requires it to be treated, stored and disposed of as such. The measure would prevent out-of-state hydraulic fracturing waste from being disposed of in state landfills. New York has banned hydraulic fracturing in the state since 2015, and a permanent ban is codified in the fiscal year 2021 state budget. New York landfills have received over 638,000 tons and 23,000 barrels of hydraulic fracturing waste from Pennsylvania drilling operations since 2011, according to the nonprofit New York Public Interest Research Group.
In approving rate increases to pay for grid-hardening and storm preparedness, many states are increasingly scrutinizing utility storm response efforts—and they’re looking for results. In one recent example, utilities in Connecticut and New York were questioned about their response to Tropical Storm Isaias, which left millions without power for days, even after significant investments over the past eight years. In response, Connecticut lawmakers announced the development of a bipartisan bill that would force utilities to pay customers for extended outages. Initial discussions centered around payments of $100 per day without power for residential customers with critical needs, and up to $500 per customer for food and medicine that’s lost as a result of outages that last over two days. Connecticut is not alone in considering penalizing utilities to further disincentivize outages. Earlier this session, Michigan lawmakers introduced a bill (HB 5662) that would require utilities to issue credits on customer bills for extended outages. If passed, the bill will establish a credit of around $25 for residential customers who lose power for over 16 hours under normal operating conditions or over 120 hours under catastrophic conditions. Meanwhile, Puerto Rico enacted SB 811, which standardized the information its state-run utility must make available to customers about billing practices during and after events that cause outages longer than 24 hours.
Recent protests over racial injustice have reignited discussions surrounding energy inequities experienced by people of color, who pay disproportionately high energy bills. This issue is particularly severe in the South—with Alabama, Arkansas, Georgia, Mississippi and South Carolina among the top five states with the highest low-income energy burden. COVID-19 has exacerbated these inequities as more people are forced to stay home and rely on residential energy for lighting and cooling. Energy efficiency is an underutilized tool that could help relieve some of these pressures. Unlike bill payment assistance, energy efficiency programs can reduce energy consumption and costs over the long term. But having an efficiency mandate doesn’t guarantee there are policies in place to ensure adequate outreach to underserved communities. Some argue the moment demands states and utilities evaluate energy efficiency programs that may not be reaching the residents who need them most.
In the West, wildfires are raging again. Dry and hot conditions in California—in some areas reaching close to 110 degrees—have led the state’s grid operator, Cal ISO, to declare a Stage 3 emergency. With high temperatures driving up electricity usage, Cal ISO asked residents to conserve electricity from 3 p.m. to 10 p.m. Residents are experiencing rolling blackouts as a result, with utilities rotating power outages across service territories. The state is battling nearly 30 wildfires, including some caused by lightning strikes, which have prompted mandatory evacuations. California Governor Gavin Newsom declared a state of emergency in mid-August in response to the heatwave and wildfires, calling on users and utilities to deploy backup power sources during peak times to limit the rolling blackouts. Meanwhile, arid and hot conditions have contributed to at least 12 other wildfires that are active across the West, with four major fires in Colorado having consumed over 100,000 acres combined with minimum containment achieved.
State officials in Connecticut, New Jersey and New York were not happy with utility responses to Tropical Storm Isaias, with some state regulators opening investigations into the matter. The storm—downgraded from hurricane status—swept through the area on Aug. 3. Three days later, around 1.5 million customers were still without power, while over 350,000 remained without power after nearly a week. Officials were most critical of the perceived lack of preparedness, even after millions of dollars were funneled to storm-hardening and preparedness initiatives in the aftermath of Superstorm Sandy in 2012. One utility in Connecticut received approval for around $425 million in rate increases since 2013 to fund resiliency, while a number of others in the region also received significant funding. In Florida, state officials approved billions of dollars in spending toward enhanced storm-hardening initiatives—which are largely seen as having paid dividends in recent years. State lawmakers ordered utilities to harden infrastructure and place the most vulnerable electric lines underground with the passage of SB 796 last year. State regulators recently approved the first of these decade-long plans. Florida Power & Light proposed spending over $500 million each year to move between 300 and 700 neighborhood power lines underground, while Duke Energy Florida has planned around $6.5 billion and TECO has planned just under $1 billion in hardening and grid optimization over the coming decade. However, as utility representatives point out, grid-hardening is only one aspect of storm preparedness—and power restoration relies on comprehensive planning and mutual assistance agreements working effectively.
Xcel Energy is going all-in on electric vehicles (EVs). The utility recently announced plans to deliver charging services to 1.5 million EVs in its service territories by 2030. The proposed plan would invest $300 million in Colorado, Minnesota, New Mexico and Wisconsin toward smart charging, residential EV rate programs, infrastructure for fleets and public charging initiatives. In addition to broadly supporting a shift toward electrifying the transportation sector, Xcel will electrify its own fleet, with 2030 targets for its sedans, light-duty cars, and medium- and heavy-duty vehicles. The utility projects that its plan will save customers $1 billion in annual fuel costs.
Reports by GlobalData and BloombergNEF found that power purchase agreements (PPAs) fell by 30% to 40% in the U.S. due to COVID-19. While the number of PPAs has declined, the demand for renewable-energy-specific PPAs has grown, with at least 21 companies committing to 100% renewable energy so far in 2020. The rise in demand has far surpassed the developers’ ability to build new renewables projects. States are also showing continued interest in deploying solar technologies on farmland and researchers are actively looking for ways to allow farming and solar panels to co-locate and coexist. These efforts, called agrivoltaics, are picking up momentum in states across the nation and are proving that grazing livestock among solar panels can be far less expensive than traditional vegetation management. In some cases, grazing has proven to cost 75% less than traditional mowing.
Federal Energy Regulatory Commissioner Bernard McNamee announced that his last day on the job will be Sept. 4. Shortly after McNamee’s announcement, the president announced that he planned to nominate two new commissioners, Mark Christie and Allison Clements, both of whom would require Senate confirmation. Mark Christie is the chairman of the Virginia State Corporation Commission and is one of the longest-serving state utility regulators, having served for 16 years. Christie would assume the seat currently occupied by McNamee. Clements, of Ohio, would fill a seat left vacant in August 2019 with the departure of former Commissioner Cheryl LaFleur. Relatedly, the Senate confirmed (79-16), Deputy Energy Secretary Mark Menezes. Menezes, currently a top Department of Energy (DOE) adviser on energy policies and technologies and a former House and Senate staffer, would take the No. 2 position at the department. The Senate confirmed Menezes as undersecretary for Energy by voice vote in November 2017.
The Environmental Protection Agency (EPA) unveiled final rules significantly revising the 2012 and 2016 rules restricting the emissions of heat-trapping methane—a potent greenhouse gas—from oil and gas wells. In 2018, the administration proposed reducing the frequency of monitoring methane emissions of oil and gas wells and compressor stations that help transport natural gas. And in 2019, it proposed eliminating requirements for oil and gas companies to install technology for monitoring methane emissions from pipelines, wells and facilities. The finalized rules replace the previous standards for new petroleum infrastructure with less stringent requirements for monitoring and performing repairs to prevent leaks. They also eliminate restrictions on direct federal methane emissions that target volatile organic compounds—a precursor to smog. The administration did not ultimately reduce the inspection frequency of wells or compressor stations, as outlined in its 2018 proposal. The two final rules are estimated to increase methane emissions by 400,000 and 450,000 tons, respectively, over a 10-year period, with a projected net economic benefit of between $750 million and $850 million. EPA Administrator Andrew Wheeler defended the agency’s actions, stating, “[the]regulatory changes remove redundant paperwork, align with the Clean Air Act, and allow companies the flexibility to satisfy leak-control requirements by complying with equivalent state rules.” Several companies, including Shell, BP and ExxonMobil have expressed opposition to the changes, or support for direct methane regulations. The action is guaranteed to face litigation from environmental organizations.
The Senate passed, by unanimous consent, S. 2299, otherwise known as the Protecting our Infrastructure of Pipelines and Enhancing Safety Act, to reauthorize the Pipeline and Hazardous Materials Safety Agency (PHMSA) and enact a number of changes to pipeline safety laws. The legislation focuses on liquefied natural gas facilities and pipelines related to a 2018 explosion in Massachusetts. It also requires companies to use leak detection technology and develop plans for minimizing releases, though PHMSA may also develop rules on the issue. It remains unclear whether Congress will pass a reauthorization. The bill passed by the House, H 3432, which also focuses on methane releases, is opposed by Republicans and the energy industry. Meanwhile, a new report from the Government Accountability Office concluded that several federal agencies, including PHMSA, FERC and the Coast Guard, have outdated liquefied natural gas safety regulations that were potentially hampering safety. The report explained, "without processes to conduct a standards-specific review of regulations every three to five years, the agencies cannot be assured that the regulations remain effective at ensuring safety."
President Donald Trump announced there would be no oil and gas drilling in the eastern Gulf of Mexico, even beyond when the current moratorium expires in 2022. Although there has not yet been an official order removing any new federal waters from the federal government’s offshore drilling activities, Trump recently indicated he would not open the area to drilling. Northwest Florida Daily News recently reported that in response to a line of questioning from a Spectrum News reporter regarding drilling in the eastern gulf, Trump responded, “Well, we're not gonna be drilling." The majority of offshore oil and gas development in the United States occurs in the western Gulf of Mexico. In spring 2019, the administration paused the next five-year drilling plan.
The U.S. Energy Information Administration (EIA) reported U.S. energy consumption plummeted to its lowest level in more than 30 years this spring as a result of COVID-19. Overall U.S. energy consumption dropped 14% during April compared to the same time last year—the lowest monthly level since 1989 and the largest decrease ever recorded in data collected since 1973. The largest drop previously seen was in December 2001, after the Sept. 11 attacks shocked the economy and a mild winter depressed electricity demand.
For a year unlike any other, you need a plan unlike any other. Welcome to NCSL Base Camp 2020, where national thought leaders and policy experts join with states to map the way forward. Join us for this interactive discussion to learn about electricity markets, how recent federal decisions could impact state energy policies and what lies ahead for the U.S. energy mix.
DOE has released its vision for the Energy Storage Grand Challenge, which is designed to create and sustain global leadership in energy storage use and exports. It is also focused on developing a secure domestic manufacturing and supply chain that can operate without relying on foreign sources of critical materials. The Draft Roadmap focuses on key challenges around innovation, manufacturing and deploying energy storage in the U.S., with the goal of sustaining global leadership in energy storage.