Vol. 7: Issue 2 | March 2019
Virginia lawmakers and the state’s largest utility, Dominion Energy, have had quite a tussle in the state Capitol, with two contentious bills surfacing this session. The first has been resolved, with the utility eventually backing a bill requiring it to excavate and clean up 27 millions of tons of coal ash from unlined pits at sites across the state. Nearly a year ago, lawmakers delayed a decision on how Dominion ought to proceed regarding the coal ash—a toxic byproduct of burning coal, otherwise known as “coal combustion residuals.” This year, legislators moved a bipartisan compromise measure (Senate Bill 1355) through the General Assembly which allows the utility to recover costs associated with a closure project, and gives the utility no more than 15 years to fulfill its obligations. The governor is expected to sign the bipartisan bill. The second bill, House Bill 1718, could prove problematic for Dominion’s planned Atlantic Coast pipeline project—a proposed 600-mile pipeline to carry natural gas from West Virginia to North Carolina—by limiting what costs can be passed on to ratepayers. Under the bill, which has passed through the House, Dominion would only be able to recover costs for capacity necessary for Virginia-based power plants.
Virginia isn’t the only state reckoning with coal—or coal ash—this session. Michigan’s outgoing governor Rick Snyder signed a bill just before leaving office to strengthen the state’s coal ash remediation program, while an amendment in North Dakota that would allow citizens to file suit to enforce the state’s coal ash program has passed in the House. Meanwhile, Kentucky and Wyoming are working on the issue of coal plant closures. After the Tennessee Valley Authority (TVA) announced plans to shutter several of its coal-fired generation in Kentucky, several politicians stepped in to ask the federal utility to reverse course, including President Donald Trump and Senate Majority Leader Mitch McConnell (R-Ky). The Kentucky legislature passed two resolutions to the effect. However, TVA’s board of directors voted to shut down the units regardless, saying the move will save customers over $1 billion. In Wyoming, state legislators are considering the ramifications of a recent report from the operator of a number of the state’s coal plants, which stated that most of its coal plants are uneconomic and could be closed early. One such measure (Senate Bill 159) would require the operator, PacifiCorp, to search for a buyer prior to closing a plant. The bill has moved through the Senate, and through committee in the House.
There continues to be plenty of state activities surrounding nuclear power. Illinois may have passed the Future Energy Jobs Act (Senate Bill 2814) in 2016 that established a zero-emissions credits program to assist specific struggling nuclear plants in the state, but the issues facing nuclear power in the state seem far from over. Recently, Exelon said that additional Illinois plants—the Dresden, Byron, and Braidwood generating stations—are showing “increased signs of economic distress, which could lead to early retirement.” The Dresden plant and parts of Byron and Braidwood failed to clear the most recent PJM Interconnection capacity auction. In response, two Illinois legislators, Senator Sue Rezin (R) and Representative Dave Welter (R), who represent districts that include these plants, sent a letter to Exelon CEO Chris Cane asking for more information and stressing that the loss of any nuclear power in the state will negatively impact jobs and energy costs. Other states are also discussing whether and how to address struggling nuclear plants. In Pennsylvania, members of the joint Nuclear Energy Caucus from both parties circulated memos inviting members of the House and Senate to sign on to bills that would reward the state’s nuclear plants for generation of carbon-free electricity and prevent the potential early retirements. The bipartisan Nuclear Energy Caucus shared a 42-page report late last year with Governor Tom Wolf and the legislature that recommended several options to assist nuclear power in the state, including a zero emission credit program like those in New York and Illinois, or a carbon pricing program
Consistent with recent years, states have shown great interest in solar energy in the 2019 legislative session. States including California, Florida, Maine, Pennsylvania and South Carolina are considering legislation related to solar energy. Maine House Paper 42 would restore retail rate net metering for all customers, which was ended by the Public Utilities Commission (PUC) in 2017 and replaced by gross net metering. In December 2018, the PUC suspended gross net metering for large and medium electricity users, however, it remains in place for small residential customers. The South Carolina House unanimously advanced House Bill 3659, which, among other provisions, would eliminate the state’s net metering caps and extend net metering for two years while the Public Service Commission determines a net metering successor program. House Bill 3659 would also establish a neighborhood community solar program that would expand solar access to more customers, specifically low-income customers, by allowing them to subscribe to a portion of an off-site solar project and receive credits on their electricity bills for the power produced. Two additional states—Florida (Senate Bill 1156) and Pennsylvania (House Bill 531)—are considering legislation to authorize community solar. The bills emphasize the potential for community solar to expand low- and moderate-income customers’ access to solar. Finally, California introduced a bipartisan bill, Senate Bill 288, that would address some of the major barriers to installing and maintaining solar and other renewable energy systems. The bill focuses on ensuring that all customers have access to the benefits of solar and renewable energy and requires the California Public Utilities Commission, the California Independent System Operator and the boards of publicly-owned utilities to update relevant tariffs to ensure fair compensation of distributed energy resources. The bill would also establish a “Solar Bill of Rights,” that would apply to all renewable energy sources and energy storage, in addition to solar. The “bill of rights” recognizes the right of customers to generate, store and use renewable energy on their property, to interconnect their solar and storage to the grid quickly and to be free from discriminatory fees and charges associated with installing renewable energy and energy storage technologies.
The legal and financial tolls on Pacific Gas & Electric (PG&E) from California’s past two wildfire seasons have been widely documented. The utility recently filed for bankruptcy protection as its liability in connection with the fires continues to rise—up to a potential $30 billion in damages. It faces over 750 lawsuits from fire victims and could face many more in connection to the nearly 20 wildfires for which it has been deemed responsible since 2017. Now, the concern over what is happening to PG&E has spread to the state’s other utilities, with the credit ratings downgraded for San Diego Gas & Electric and Southern California Edison. The issue centers around the state’s inverse condemnation legal standard, under which utilities can be found liable for any fires caused by their equipment—even if they followed every safety rule and planning requirement placed on them by state regulators. PG&E has tried to argue that climate change has intensified the problem, making blazes more destructive and harder to prevent, and there is concern that the state’s other two utilities could easily find themselves in the same position. While state legislators passed legislation last year to manage the issue in the short-term, the inverse condemnation standard cannot be changed without a constitutional amendment. That would require support from two-thirds of each legislative chamber, followed by a voter referendum. However, the issue has become critical given the events of recent years, and the legislature has set up a five-member commission to investigate the issue and deliver a solution. California Governor Gavin Newsom has pushed the commission and the legislature to act on the issue before the start of wildfire season in June.
State regulators in Arizona have extended a partial moratorium on new natural gas-fired plants through August. The decision made by the Arizona Corporation Commission will give the commissioners more time to consider the Energy Modernization plan proposal, which would mandate 80 percent zero-carbon resources by 2050 and put in place a 3,000 megawatts (MW) storage target for 2030. The proposal is led by Republican Commissioner Andy Tobin. In addition, the city of Los Angeles has decided to scrap plans to rebuild three coastal gas-fired power plants and instead focus on energy storage and clean energy technologies as the state pursues a 100 percent renewables goal by 2045. But it’s not all bad news for natural gas plants, as every state but Vermont has at least one natural gas-fired plant. According to the U.S. Energy Information Administration, natural gas provided 35 percent of total U.S. electricity generation in 2018, up from 24 percent in 2010.
Massachusetts and New York recently issued orders approving new energy efficiency targets and plans. The Massachusetts Department of Public Utilities issued an order approving the state’s 2019-2021 energy efficiency plan, which directs utilities to focus on beneficial electrification and peak demand reduction over the next three years. The plan calls for utilities to design demand reduction programs that will integrate with the state’s new Clean Peak Standard that was established through 2018 legislation (House Bill 4857). For the first time, Massachusetts will offer incentives for fuel switching, which are designed to reduce the number of homes heating with oil and propane and encourage a shift to more efficient and affordable heating fuels and technologies, such as heat pumps. The plan also contains options for other efficiency efforts, including setting out a framework for home energy scorecards, providing incentives for the construction of passive homes and enhancing efforts to reach renters, moderate-income customers and other demographics. Massachusetts’ new electric and gas efficiency plans are estimated to save customers roughly $8 billion. The New York Public Service Commission approved an order establishing a new energy efficiency target for the state’s investor-owned utilities, which will more than double energy efficiency achievement by 2025. The new target requires a reduction of 185 trillion British thermal units (Btu) by 2025. The PSC’s order included additional targets that are designed to help the state achieve this new requirement, such as an incremental target of 31 trillion Btu of reductions by the state’s utilities, a subsidiary target of an annual reduction of 3 percent in electricity sales by 2025, and a subsidiary target of at least 5 trillion Btu in reductions through the deployment of heat pumps.
The Hawaii Public Utilities Commission (PUC) proposed performance-based regulations in mid-February in accordance with 2018 legislation. Last year, the Hawaii Legislature enacted Senate Bill 2939 to transition to performance-based rates, making it the first state to create a legislative mandate to separate utility revenues form capital expenditures. Under the PUC’s proposed framework, utility revenues would include a target level, additional revenues for meeting performance targets and an earnings sharing mechanism. The proposal ensures financial integrity for utilities by allowing the framework to include more utility revenues tied to performance. The proposal is currently in the comment phase, after which the PUC will issue a Phase 1 decision to adopt or refine the framework. Once the Phase 1 decision is issued, interested parties will address specific details of the framework, such as performance incentive mechanisms, appropriate metrics and target levels and amounts for financial awards and penalties.
More than 1 million fans visited Atlanta for the 2019 National Football League (NFL) championship game between the Los Angeles Rams and the New England Patriots. Together, Rocky Mountain Institute (RMI), a Colorado-based environmental nonprofit, and Budweiser purchased enough clean energy certificates to fuel the game and offset the greenhouse gas emissions linked to fans’ travel to the host city. RMI struck a deal with Atlanta’s Hartsfield-Jackson Airport to offset 18,000 metric tons of carbon emissions created by air travel to the game, using renewable energy certificates (RECs) generated by two Georgia-based landfill gas plants. Anheuser-Busch, Budweiser’s parent company, donated clean energy certificates to the city of Atlanta to cover the energy use tied to the Super Bowl. For more than a decade, the NFL has purchased RECs to cover the energy footprint associated with the host stadium, convention center, teams, hotels and other items, which averages 4,000-megawatt hours of energy.
For all the concern over the cybersecurity vulnerabilities of the power grid, there has been little regulatory enforcement to speak of. Or at least that was the case. Then came a $10 million fine on Duke Energy, a penalty more than three times the previous record. In January, the North American Electric Reliability Corporation—the organization tasked with overseeing cybersecurity for the bulk power grid—issued the notice of penalty with federal regulators for more than 120 security violations related to critical infrastructure over a three-year span. The utility has agreed to pay the fine and to implement training, management and oversight changes to avoid continued violations.
The U.S. Environmental Protection Agency (EPA) announced plans to reconsider the Mercury and Air Toxics Standard (MATS) after determining that it was not “appropriate or necessary” because it placed an undue burden on industry. The regulation was established in 2011 and targets chemicals such as mercury, a neurotoxin. According to EPA, the rule saves around 17,000 lives per year and has reduced mercury emissions by over 80 percent since going into effect. However, EPA has argued that the costs to industry outweigh the benefits realized. It calculated that the costs of compliance are between $7.4 billion and $9.6 billion each year, while the health and safety benefits are between $4 million and $6 million annually. The benefits calculation differs greatly with the agency’s prior calculations when issuing the rule, which estimated the realized benefits would be between $36 billion and $80 billion. The difference is what’s factored into the equation. The current estimate—up to $6 million—only considers the narrow scope of the chemicals targeted by the regulation. However, the regulation also realized significant co-benefits, such as significant reduction in the emissions of particulate matter. While those were not the focus of the regulation, they were a side benefit—one of several factored into the prior calculations. EPA has opened a 60-day public comment period, which will end April 8.
Congress passed three nuclear energy bills recently with a common theme of “innovation.” Two of the bills aim to propel the commercialization of advanced nuclear technologies by establishing greater collaboration between the private sector, U.S. Department of Energy (DOE) and its national laboratories. The third seeks to streamline the U.S. Nuclear Regulatory Commission (NRC) to help emerging technologies navigate their way to commercialization. The Nuclear Energy Innovation and Modernization Act would require the NRC to develop regulations for advanced nuclear technologies that would provide greater licensing certainty, in addition to making changes to the commission’s budget and fee programs. The Nuclear Energy Innovation Capabilities Act became law in September and amends the Energy Policy Act of 2005 to ensure that the DOE emphasizes research, development, demonstration and commercialization of new nuclear technologies through partnerships between the national labs, academia and private initiatives. Essentially, it mandates greater collaboration between the public and private sectors. Finally, the Department of Energy Research and Innovation Act directs DOE’s national labs to carry out early stage and pre-commercial technology demonstrations to showcase potential commercial applications of research and technologies that come out of the labs.
The U.S. Department of Transportation recently issued a final rule requiring railroads to develop and submit oil spill response plans for certain trains carrying oil. The rule applies to High Hazard Flammable Trains “that are transporting petroleum oil in a block of 20 or more loaded tank cars and trains that have a total of 35 loaded petroleum oil tank cars.”
The U.S. Department of Energy recently released a plan to rescind lightbulb standards and a rule to overhaul its energy efficiency standards program. DOE’s plan regarding lightbulb standards would nullify Obama-era rules that would expand the types of lighting covered by the efficiency standards, and require commonly used lightbulbs including cone-shaped and three-way bulbs, reflector lights and other types of bulbs, to meet minimum efficiency standards beginning in January 2020. According to Lawrence Berkeley National Laboratory, the Obama-era standards would save about 27 quadrillion British thermal units (quads) of energy over 30 years. DOE will hold a meeting on the process rule proposal in late March, and a rule would not be finalized until after a comment period. DOE also released a process rule that outlines how it updates and issues efficiency standards. The rule would make several changes to DOE’s current procedures, including setting an energy-savings “threshold” that updated or new rules must meet, and calling for the use of industry-set test procedures for appliances. According to the rule, an efficiency standard is not considered “significant” unless it would save 0.5 quads of energy over three decades. Opponents of the new rule hold that it would give too much control to industry, while supporters say that the rule allows DOE to better prioritize its resources and bring increased transparency and consistency to the efficiency standards program.
New York Representative Alexandria Ocasio-Cortez (D) and Massachusetts Senator Ed Markey (D) released the Green New Deal legislation in early February, which some have touted as the most notable piece of climate legislation debated on the national stage in recent years. The non-binding resolution calls for large public investment in renewable energy and the power grid to decarbonize the U.S. electricity sector within the next 12 years. Specifically, the resolution calls for the U.S. to meet all electricity demand with clean, renewable and zero-emissions sources, and for investment in the electric grid, transportation electrification and clean manufacturing technologies that will allow the U.S. to achieve a goal of net zero carbon emissions by midcentury. The Green New Deal also calls for upgrading all existing buildings for maximum energy efficiency, deploying distributed smart grids, updating infrastructure and building resiliency, and increasing affordable public transportation and infrastructure, as well as manufacturing for zero-emissions vehicles. The legislation addresses how to reduce emissions in sectors where electrification is more difficult, such as manufacturing and agriculture. The Green New Deal includes provisions to address “systemic injustices” for communities that are disproportionately affected by environmental issues and economic inequality and calls for greater access to healthcare, affordable housing and higher education. However, the resolution does not address the issue of cost or how to pay for the public investments that it calls for.
Renewable Portfolio Standards (RPS) require utilities, municipalities and electric cooperatives to sell a specified percentage or amount of renewable electricity. In recent years, states have been increasingly active on RPS policies and considered more than 100 RPS related bills during the 2018 legislative session. Check out this new LegisBrief for an update on recent state RPS activity and legislative trends.
The amount of potential wind power available in U.S. waters is nearly twice the capacity of current U.S. electric power plants and enough energy to power roughly 1.6 billion homes. With offshore wind costs falling significantly in recent years, more states are looking to harness the clean energy and economic development opportunities presented by offshore wind. On Thursday, Feb. 21, NCSL hosted a webinar exploring the U.S. offshore wind market and state action around offshore wind. Speakers from the American Wind Energy Association and Massachusetts Clean Energy Center discussed state policies, incentives and financing structures to encourage and support the development of the U.S. offshore wind industry. Click here to access a recording of the webinar and speaker presentations.
The National Association of State Energy Officials recently released a new report, “Beneath the Surface: Opportunities and Strategies for States to Improve the Energy Performance of Water Conveyance, Treatment and Irrigations Systems,” which provides information and best practices to state energy directors as they work to address the interactions between energy and water use around state water infrastructure. The report is one of a series of three reports authored by NASEO and NCSL examining various facets of the energy-water nexus.
At least 47 states and Washington, D.C., took more than 260 actions on solar energy in 2018, according to a new report from the North Carolina Clean Energy Technology Center (NC CETC). The recently released 50 States of Solar Q4 2018 Update and Annual Review provides a summary of state activity around solar energy. The report discusses changes to net metering laws and rules, updates to statewide community solar policies and actions related to rate design and compensation for solar customers.
The U.S. Department of Energy published a nuclear power primer in January that outlines the facts behind the nuclear energy industry in the U.S. The 16-page document, “The Ultimate Fast Facts Guide to Nuclear Energy,” provides basic facts about how nuclear power works, how much power it provides, its role in emissions reduction and grid reliability—even corrects several misconceptions about nuclear that resulted from the hit cartoon “The Simpsons.”
Retired Representative Tom Sloan of Kansas is featured in the February issue of Public Utilities Fortnightly (PUF). His article examines how innovative technologies can be used to address energy and public policy needs. A snapshot of the article is available online. If you’re a state legislator or legislative staff and you’re interested in receiving a free subscription to PUF’s monthly magazine, please send an email to email@example.com.