Vol. 7: Issue 3 | May 2019
This session, several states, including Kentucky, Maine and South Carolina, as well as Puerto Rico, have enacted significant solar policy legislation. Maine enacted legislation ending the controversial gross net metering policy and reinstating retail-rate net metering. Three years ago, Maine ended net metering in favor of gross net metering, a policy that compensated customers at a lower rate for the electricity they produced using on-site renewable energy systems. The South Carolina House unanimously passed legislation that would remove the statewide cap on net metering and maintain retail-rate net metering for another two years. The bill would require the Public Service Commission to determine a compensation methodology to replace net metering by 2021. The bill is currently under consideration in the Senate. Puerto Rico enacted an omnibus energy bill that includes provisions to maintain net metering for five years. Senate Bill 1121 also requires automatic interconnection and net metering for renewable energy systems under 25 kW and requires net-metered systems between 25 kW and 5 MW be approved for interconnection within 90 days. In contrast, Kentucky enacted Senate Bill 100 which will eliminate net metering by 2020 and replace it with a new compensation methodology that will be determined by state regulators. Existing customers will be grandfathered under the current net metering policy for 25 years. The bill also increases the system capacity limits from 30 kW to 45 kW and establishes that once net metering reaches 1% of state-wide generation, any net metering policy would be discontinued.
New Mexico, Washington and Puerto Rico have joined California, Hawaii and Washington, D.C., in establishing 100% clean energy requirements. New Mexico enacted Senate Bill 489, which increases the state’s renewable portfolio standard (RPS) to at least 50% by 2030 and 80% by 2040, and establishes a 100% carbon-free electricity standard by 2045. Similarly, Washington enacted legislation requiring a carbon-neutral grid by 2030. Senate Bill 5116 phases out coal by 2025 and requires utilities to procure 80% of their electricity from carbon-free resources by 2030. Utilities will be able to offset the emissions for the remaining 20% of their portfolios by buying renewable energy credits until 2045, at which point 100% of utilities’ electricity sales must come from carbon-free sources. The bill also establishes a $60-per-megawatt-hour penalty for utilities that fail to meet the carbon-free standard. Puerto Rico legislation goes a step further, requiring 100% renewable energy by 2050. Additionally, Senate Bill 1121 creates incremental milestones for 2025 and 2040 and phases out coal by 2028. Nevada also enacted legislation increasing its RPS from 25% by 2025 to 50% by 2030. The bill includes a non-binding 100% carbon-free resources goal by 2050. Several states, including Illinois, Maine, Minnesota, New Jersey, New York and North Carolina, are considering similar measures to establish 100% carbon-free energy standards or goals.
Many states face declining gas tax revenue, which is forcing state policymakers to consider other ways to pay for the nation’s transportation infrastructure. Special fees on certain hybrid and electric vehicles are one new revenue source states are proposing. Alabama, Arkansas, North Dakota and Ohio have enacted new fees this legislative session. North Dakota’s Senate Bill 2061 requires a $120 fee for plug-in electric vehicles and a $50 fee on hybrid cars. The other three state measures enact a $200 annual fee for electric vehicles and $100 for hybrids. Alabama’s House Bill 2 also requires a portion of the revenue collected to be used to pay for new electric vehicle infrastructure. These new special fees on electric vehicles vary across the country from $50 to $200, with Georgia and West Virginia also requiring an annual $200 fee. Including the legislation passed this year, 24 states have fees on certain hybrid or electric vehicles. States have yet to realize significant revenue collections from these special fees since the market share for hybrid and electric vehicles is still so small. Proponents support the fees to bring equity among drivers, attempting to get all drivers to pay for the use of roadways. If forecasted sales growth of hybrid and electric vehicles continues, states could see future revenue streams grow because of electric vehicle adoption and these new registration fees.
In recent years, states have shown increased interest in policies to limit carbon emissions, including emissions reductions requirements and carbon pricing policies, and this session is no exception. Although many states have introduced legislation related to carbon emissions, the measures have had mixed results. Before ending its session in early May, Colorado enacted legislation that commits the state to achieve a 25% reduction in carbon emissions by 2025, formalizing a goal set by former Governor John Hickenlooper (D) in a 2017 executive order. The bill also establishes a requirement for the state to reduce emissions by 50% by 2030 and by 90% by 2050. By contrast, Virginia enacted its state budget bill that included provisions preventing the state from joining the Regional Greenhouse Gas Initiative (RGGI), a multi-state cap-and-trade program. Governor Ralph Northam (D) declined to veto the language in the budget bill to restrict state participation in RGGI, because Northam did not believe that he had the legal authority to veto the language without vetoing the entire budget. Northam had previously required the Virginia Air Pollution Control Board to establish new rules to reduce and cap carbon emissions, an important first step for the state to participate in RGGI. However, to move forward with Virginia’s participation in RGGI, Northam would have had to veto the language in the budget. Oregon legislators are considering a bill (House Bill 2020) to establish an economy-wide cap-and-trade program to regulate greenhouse gas emissions in the state. Legislators recently unveiled a new version of the bill with provisions to address opposition raised by business and agricultural groups. Beginning in 2021, the bill would establish an overall limit on emissions and would require entities emitting more than 25,000 metric tons of carbon dioxide equivalent—approximately 100 companies—to purchase carbon allowances for each ton emitted annually. Overtime, the cap and the number of allowances would decrease to allow the state to achieve its 2035 and 2050 carbon emissions benchmarks. At least half of the revenues generated from the sale of allowances would be invested in rural and low-income communities, with 10% earmarked for federally recognized tribes. Portions of the revenues would also go to clean energy job training, wildfire prevention, a program to fund green transportation projects and toward a gasoline refund program to help low-income residents adjust to potential increases in gas prices. If the measure is passed, Oregon would be the second state in the country, after California, to implement an economy-wide cap-and-trade program.
Electrical wires are vulnerable to the elements. They traverse vast distances, cross mountains, rivers and forests, get pummeled by wind and rain, and struck by fallen trees. The recent trend in extreme weather has laid bare how vulnerable the electric grid is to wind and wildfire. But increasingly state legislatures are considering policies to make the grid more resilient, and putting electric lines underground seems to be a popular solution. In early May, the Florida legislature easily passed Senate Bill 796, which requires electric utilities in the state to establish 10-year plans to strengthen electric infrastructure and underground electrical lines to make the system more resilient to future hurricanes. State regulators will review and approve the plans, and the costs of hardening the grid will be passed on to customers through a separate item tacked onto their bills. The bill’s passage comes after Virginia passed a measure (Senate Bill 1473) in late 2017 to place trouble-prone portions of the grid underground. That bill required the undergrounding of lines with an elevated history of outage events over the past 10 years through cost-recovery. Virginia hasn’t stopped there. With the passage of Senate Bill 1759 this year, the state allows local governments to request that electric utilities place electric lines underground along with new transportation projects. Other states are also considering undergrounding electrical infrastructure—including California, Illinois and New Jersey—but the high costs of doing so have often derailed similar efforts in the past.
The “Green New Deal” may have stalled in Congress, but that’s not the end of the conversation for some states. Legislatures in at least two states—Illinois and Minnesota—have introduced their own Green New Deal legislation that is focused on creating sweeping plans to reduce emissions and transition the state to a green economy. Minnesota House File 2836 borrows from the federal Green New Deal legislation. It sets a goal for the utility sector of 100% carbon-free electricity by 2030 and calls for significant reductions in carbon emissions in the transportation and agricultural sectors, with a goal of reaching net-zero emissions by 2030. The bill also includes several goals around fair wages, union rights and programs for workers transitioning to renewable energy jobs. Like the federal legislation, Minnesota’s bill is predominately aspirational in nature, lacking concrete steps to achieve the goals laid out in the bill. Building on the state’s 2016 Future Energy Jobs Act, Illinois’ proposed legislation (House Bill 3624 and Senate Bill 2132) seeks to eliminate carbon emissions from the power sector by increasing the state’s RPS to 50% and setting a 100% renewable energy goal by 2050. The bills would also direct the Illinois Environmental Protection Agency to regulate carbon emissions from the power sector starting in 2020 by establishing annual caps, which would decrease annually over the next decade. Additionally, the bills aim to remove the equivalent of one million gasoline and diesel-powered vehicles from the state’s roadways by 2030, partly through incentivizing electric vehicles. Like the federal Green New Deal, Illinois’ legislation goes beyond the energy sector and includes several economic and social components.
A year and a half after Hurricane Maria, the power is back for all of Puerto Rico’s electrical customers. The Puerto Rico Electric Power Authority (PREPA) re-activated the underground cable connected to the island of Culebra, off Puerto Rico’s eastern coast, which had been powered by gasoline-fueled generators since Maria hit. While PREPA has been working to restore the grid, the Puerto Rico legislature has been working to establish policies that will make the island’s electric grid more resilient—not only to natural disasters but to mismanagement and corruption. In March, the legislature enacted Senate Bill 1121, setting a 100% renewable portfolio standard (RPS) by 2050 that will accelerate the transition to a more distributed generation portfolio. Since the storm, the island has witnessed a massive solar-plus-storage buildout and regulators have finalized rules to facilitate microgrid integration. In addition, lawmakers have decided to take on PREPA’s mismanagement and corruption by taking the state-owned utility private—offering it up for sale. It holds more than $9 billion in debt, and last year legislators passed House Bill 1481 to move forward with the privatization of the utility’s transmission and distribution system. Earlier this year, the government announced four bidders for the assets: Duke Energy Corp., Exelon Corp., PSEG Services Corp., and a consortium of three smaller companies.
Maine Governor Janet Mills (D) signed an executive order ending a moratorium on issuing wind turbine permits, which was imposed by her predecessor, former Governor Paul LePage (R) more than a year ago. LePage’s executive order established a ban on issuing new wind turbine permits and created the Maine Wind Energy Advisory Commission to conduct studies on the impacts of wind turbines on the state’s economy and propose policies regarding future deployment of wind energy facilities. In addition to reinstating the authority of state agencies to issue wind energy permits and work with stakeholders to determine the future deployment of projects, Mills’ order also dissolved the Wind Energy Advisory Commission.
Regulators in Hawaii and Kansas recently issued important decisions related to advanced metering infrastructure and grid modernization efforts. Hawaii regulators approved the first phase of Hawaiian Electric’s (HECO) four-year, $86.3 million grid modernization plan. The approved plan will allow HECO to deploy advanced meters for customers with rooftop solar and variable electricity rates, enabling the utility to develop a dynamic platform that can provide real-time data on two-way power streams. HECO’s grid modernization plan will also help the utility expand the amount of customer-sited solar, utilize more storage and advanced inverters, and incorporate sophisticated energy management tools, including demand response. The Kansas Corporation Commission recently concluded its investigation of smart meter opt-out programs, ultimately deciding not to require utilities to establish programs to provide customers with an alternate electricity meter in place of a smart meter. The commission ruled that implementing opt-out programs would be difficult and costly for utilities.
The Federal Energy Regulatory Commission (FERC) voted 3-to-1 in approving the Calcasieu Pass liquefied natural gas (LNG) export facility in Louisiana, a move that could signal more LNG facilities are on their way. There are around a dozen other LNG export facilities awaiting the commission’s action, and some analysts suggested this could provide a template for moving those projects forward. The issue had been held up for more than two years over how to calculate the climate impacts of the facility, with Democratic Commissioner Cheryl LaFleur eventually joining two Republican counterparts after emissions calculations were included in the order. The final order for Calcasieu Pass included estimates for the project’s direct greenhouse gas emissions—a national level increase of 0.07% over 2016 levels, according to the order.
It appears the controversial state programs to keep at-risk nuclear plants in operation have cleared the final legal hurdle—or avoided it altogether. In April, the U.S. Supreme Court decided not to hear challenges to the Zero Emissions Credits (ZECs) programs established by Illinois and New York in 2016. ZECs were designed to provide a payment to certain nuclear power plants for the avoidance of carbon emissions—“environmental attributes payments,” as New York described them—and were modeled on longstanding state Renewable Energy Credits programs. From the beginning, the legality of the ZECs programs had been a matter of debate, but each program has been upheld separately in federal courts. The U.S. Supreme Court decided to pass on the case, leaving the policies intact. But the implications spill beyond the borders of Illinois and New York. Last year, the New Jersey legislature passed and state regulators recently voted to move forward with a ZECs-style program, while lawmakers in Pennsylvania and Ohio are considering similar policies this session.
Trump’s proposed budget for 2020 that was released in March contains several provisions related to energy. The proposed budget cuts funding to the Department of Energy (DOE) to $31.7 billion—11% lower than the 2019 budget Congress approved—including a $1 billion reduction for the Office of Energy Efficiency and Renewable Energy. The budget would also eliminate DOE loan programs as well as the Advanced Research Programs Agency-Energy (ARPA-E), a proposal that Congress rejected the past two years. However, the budget highlights energy and national security along with investments in research and development, especially for new nuclear and fossil technologies. Trump’s budget boosts funding for the Office of Cybersecurity, Energy Security and Emergency Response to $157 million, $37 million more than last year’s budget. Lastly, the budget proposes $116 million to restart the licensing process for a permanent nuclear waste repository at Yucca Mountain and to initiate an interim storage program, which Congress has rejected in past budgets.
Trump recently signed an executive order aimed at improving national resilience and response to electromagnetic pulses (EMPs), which are bursts of electromagnetic energy that have the potential to disrupt technology and create widespread blackouts. To protect the nation’s critical infrastructure from EMPs, Trump’s order calls for a government-wide policy to improve understanding of EMPs’ potential effects, strengthen critical infrastructure and improve national response plans. The order also clarifies federal agency roles and responsibilities, takes steps to improve information sharing between government and private industry, and directs federal agencies to coordinate in preparation for EMP events. Additionally, the order encourages public-private coordination and federal research to improve EMP resiliency.
Lawmakers introduced more than 2,000 energy-related measures in 2018 and of those, more than 400 bills were enacted. Energy storage, resiliency, evolving electricity markets, financing clean energy and renewable energy were just a few of the topics addressed by state legislatures. Read NCSL’s latest white paper to learn more about the trending energy policies considered by state legislatures across the country.
While energy efficiency offers multiple benefits, it also faces significant barriers, some of the largest of which are regulatory barriers. This new NCSL webpage explores state policy options to overcome these barriers and promote cost-effective utility investments in energy efficiency, including decoupling mechanisms, lost revenue adjustment mechanisms and performance incentives.
NCSL’s Natural Resources and Infrastructure Committee’s annual Spring Webinar Series kicked off in April and runs through June. This year’s webinar series examines issues ranging from carbon capture storage to new transportation technology, grid modernization efforts, and much more. Check out the website to register or to view recordings from previous webinars.
In April, NCSL interviewed Neil Chatterjee, chairman of the Federal Energy Regulatory Commission, as part of NCSL’s podcast series "Our American States." Chatterjee discusses the complex responsibilities of FERC, the need for energy security, the evolving U.S. energy mix, and much more. Listen to the podcast or view the transcript.
NCSL staff testified before the Pennsylvania Senate Consumer Protection & Professional Licensure Committee on April 10. The hearing explored several bills under consideration in the state to support struggling nuclear plants. See more about the hearing, including NCSL’s testimony.
Water and electricity generation are intimately connected, with electricity generation accounting for nearly 45% of U.S. water withdrawals. Finding ways to decrease water use for energy can help create a resilient electric grid while freeing up water for agricultural and other uses. A new NCSL white paper, “Water for Energy: Addressing the Nexus Between Electricity Generation and Water Resources,” explores the energy-water nexus and provides state lawmakers, energy officials and other stakeholders with options they may wish to consider as they work to ensure that water resources will meet energy and other societal needs far into the future.
A new report from Bloomberg New Energy Finance summarizes its latest research on the levelized cost of electricity (LCOE) for a number of clean energy technologies. Most notably, the report shows significant decreases in the LCOE for lithium-ion batteries, which has fallen by 35% since the first half of 2018. Since 2012, the report found that the cost of batteries has decreased by more than 75%, making renewable energy combined with battery storage increasingly cost competitive with coal and natural gas generation. Bloomberg’s report also notes continued decreases in LCOE for solar photovoltaics and both onshore and offshore wind.
Two recent reports summarize employment trends in the energy sector. According to the 2019 U.S. Energy and Employment Report, released by Energy Futures Initiative and the National Association of State Energy Officials, traditional energy and energy efficiency sectors added more than 150,000 jobs in 2018. The fuels sector showed the largest growth, increasing employment by nearly 5%. The Solar Foundation also released its National Solar Jobs Census, which reports the solar industry employed more than 242,000 workers last year. Although solar employment declined by nearly 8,000 jobs or 3.2%, last year, the report notes that overall, the solar workforce has grown 159% since 2010.
In a new report, the Brattle Group explores electrification and the significant investments in the electric transmission grid that it will drive. The study discusses how the electrification of transportation, space heating and other sectors will lead to a large jump in electricity generation, potentially increasing U.S. annual energy demand by up to 15% by 2030 and by up to 85% by 2050. To accommodate this increase in generation, Brattle estimates that from $30 billion to $90 billion of incremental transmission investments will be necessary by 2030, and an additional $200 billion to $600 billion will be required by 2050.