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Vol. 7: Issue 6 | November 2019
Several states in the Great Lakes region are considering legislation aimed at reducing their energy sector carbon footprint. The Minnesota legislature is currently considering a “Clean Energy First” policy that prioritizes clean energy over fossil fuels in new power generation and has garnered broad support from both Democratic and Republican lawmakers. Various versions of the policy were proposed during this most recent legislative session, among them are Senate File 1456 (2019) and Senate File 2431 (2019) both of which would require that utilities demonstrate they are unable to meet energy needs with new clean energy sources, including storage and energy efficiency technologies, before building new fossil fuel generation. Both bills would also help spur clean energy jobs in the state by requiring that utilities prioritize hiring local workers to build resource facilities. Additionally, Michigan lawmakers introduced their own vision for the state’s clean energy future. The legislative package known as “Powering Michigan Forward” puts forth three targeted policies to promote renewable energy and increase solar generation in the state. The first provides for utility customers that generate their own electricity through distributed generation to be compensated at the fair market value for any excess electricity they generate and put back on the grid. The second lifts the cap on the number of distributed energy customers allowed to participate in a utility’s distributed generation program and the third eliminates the tariff for net metering and distributed energy customers. Although Michigan’s clean energy policy has bipartisan support, it is facing pushback from DTE Energy, one of the state’s largest utilities. Meanwhile in Illinois, a suite of clean energy-focused bills is unlikely to advance during the forthcoming veto session, and will likely be sidelined until January. In particular, the Clean Energy Jobs Act would transition the state to 100% renewable energy by 2050 and expand the state’s energy efficiency resource standards, extending electricity savings targets for 2031 through 2040 and setting gas savings targets for the first time for 2020 through 2035. The bill also advances a number of transportation electrification initiatives and focuses on job access and growth in transitioning to a clean energy economy. This and other clean energy legislation is unlikely to be a priority until January 2020.
State legislatures are increasing special registration fees on electric vehicles. Twenty-eight states have adopted new fees, with eight states amending or adding a new fee in 2019. Most recently, Washington state added a “car-tab” fee of $75 for electric vehicle owners that will help fund electric vehicle infrastructure. Many states face declining gas tax revenue—not only because of electric vehicles—forcing state policymakers to consider other ways to pay for the nation’s transportation infrastructure. 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. Opponents contend that high fees will discourage a nascent market without making a meaningful contribution to state transportation infrastructure budgets.
Nevada and Oregon are the latest states to enact measures supporting renewable natural gas (RNG). This legislative session, Nevada passed SB 154 and Oregon enacted SB 98, both of which require the state Public Utilities Commission to adopt rules related to an RNG program. RNG is interchangeable with conventional natural gas, but its greenhouse gas emissions are lower over its lifetime. RNG is made from biogas released by decomposing organic matter. Landfills, waste treatment plants, and the agricultural sector all produce biogas that could be captured and used to create RNG for pipelines or to fuel vehicles.
Cybersecurity for energy infrastructure is one of the most pressing issues facing the energy sector, as media reports continue to highlight the advanced, persistent attacks. In March, the first successful cyberattack to impact system operations hit a utility in the Western U.S., although no outages resulted. The attack is back in the news after a report outlined how preventable the attack was had the right safeguards been put in place. While federal regulators have been working on the issue for some time, state legislators are increasingly passing measures to bolster cybersecurity protections, including commissioning studies, establishing cybersecurity standards and reporting requirements and authorizing governors and state agencies to respond to cyber emergencies. In 2019, at least 14 states considered 46 measures—a 30% increase over the previous year. Texas enacted SB 475, which created the Electric Grid Security Council to mitigate the risk of cyber and physical attacks on the state’s electric system and required the development of “best security practices.” At the same time, Texas SB 936 authorized the state utility commission to contract with an entity to run a Cybersecurity Monitor Program to oversee and work with the state’s electric sector. Arkansas’ S.B. 632 authorized the state Economic Development Commission to create a cyber initiative that will be responsible for mitigating cyber risks to the state through increasing education about threats and defense. In recent years, California established a state cybersecurity integration center to monitor and synthesize threat assessments and increase communication, while Connecticut and Pennsylvania have each enacted cybersecurity planning and reporting requirements for state electric companies.
Pacific Gas & Electric (PG&E) cut power to millions of Californians as a safety precaution during days of high winds the utility feared could result in wildfires from its equipment. The state has authorized utilities to de-energize powerlines in such events and PG&E has done so previously, the latest round of outages eclipsed any of the previous events in scale and duration, affecting over 2 million residents across 29 counties between Oct. 9-13. Compounding issues, PG&E was widely criticized for its handling and implementation of the outages, with the California Public Utilities Commission saying the utility “failed on so many levels” in its coordination and communication. While PG&E defended the outages by saying they prevented a number of wildfires, the utility’s equipment is being investigated for possibly sparking the Kinkade Fire, which has destroyed property and burned over 22,000 acres. All of this comes as California Governor Gavin Newsom signed a series of bills aimed at improving the state’s wildfire prevention, mitigation and response efforts—a total of 22 bills—all resulting from recommendations made by the Governor’s Strike Force to address the issue.
Virginia Governor Ralph Northam recently signed Executive Order 43 (2019) committing to an electricity sector that’s powered by 30% renewables by 2030 and is carbon-free by 2050. Additionally, the executive order mandates that 30% of the electricity procured by the state come from renewable sources by 2022. However, the future of renewables in some other states is less certain. Debate continues in South Carolina about how best to integrate renewables, and solar energy in particular, as the state considers how best to implement the recently enacted Energy Freedom Act aimed at increasing deployment of renewables through standard-offer contracts. Such contracts hinge on avoided cost calculations, or the amount a utility would pay for electricity had the utility built a traditional power generating source to supply the energy. The state Public Service Commission (PSC) is currently considering various avoided cost proposals. Some of those with knowledge of the issue argue the PSC’s determination will shape the future of South Carolina’s solar industry. And in Louisiana, regulators voted to roll back the state’s net metering policy. Under the recent order, new solar users will be provided a significantly lower avoided cost credit for power sent back to the grid. Existing users with interconnection requested or installed by the end of 2019 are credited at the current full retail rate for energy sold back to the grid for 15 years until the end of 2034, at which time they’ll be credited at the new avoided cost rate. Opponents argue that the decision will have a chilling effect on the solar industry.
Managers of the Palo Verde Nuclear Generating Station in Arizona, which has been producing energy since the 1980s, are considering using surplus electricity from the station to create hydrogen gas from water. The gas could be used for fuel cell cars and trucks or to generate electricity when demand is higher. The question of how to use the excess electricity has arisen due to the increased production of solar power, which means some of the nuclear plant’s power is not needed during the fall and spring seasons when businesses and homes consume less electricity for cooling or heating.
North Carolina’s new Clean Energy Plan puts forth recommendations for decarbonizing the state’s power sector. As directed by Executive Order 80 (2018), the state Department of Environmental Quality released a plan identifying clean energy and grid modernization strategies aimed at reducing power sector emissions by 70% below 2005 levels by 2030 and achieving carbon neutrality by 2050. The power sector is North Carolina’s leading source of greenhouse gas (GHG) emissions and was responsible for 35% of the state’s total GHG emissions in 2017. To achieve 2030 and 2050 targets, the plan recommends accelerating coal retirements and increasing deployment of renewables. In particular, the plan calls for updates to the state’s renewable energy and energy efficiency standards, which would require legislative action.
Oregon, Illinois and Hawaii are among the states that are disrupting the traditional utility cost-of-service business model to promote innovation and better align utility goals with those of policymakers and ratepayers. Utilities may lack in innovation due to their low investments in research and development (R&D)—while the average company spends 5% on R&D, utilities spend less than 1%. These three states are seeking to remove the regulatory barriers that hamper innovation while reducing risks for innovators, investors and early adopters. Hawaii is doing this through performance-based regulation, which will focus on enhancing the customer experience, improving utility performance and advancing public policy goals. The approach is aimed at reducing ratepayer costs and barriers to innovation. Arizona, meanwhile, is seeking to remake utility planning by revising its integrated resource planning process, which hasn’t included an independent evaluation of need when it comes to resource buildout. The new process will require that all resources be considered equally when it comes to meeting needs and that proposed solutions be "technology-neutral, location-neutral and size neutral." The plans will also need to be reviewed by the Arizona Corporation Commission. The goal is to allow consideration of lower-cost solutions—such as demand-side management resources, customer-owned solar and other non-traditional resources—on even footing with traditional supply-side solutions.
Secretary of Energy Rick Perry announced his resignation, effective later this year, in an Oct. 17 letter to President Donald Trump. Perry was nominated in December 2016 and was confirmed by a 62-37 senate vote on March 2, 2017. Despite making comments in 2011 that he would abolish the Department of Energy (DOE), under Perry’s tenure, the DOE budget expanded almost 25% while the United States’ production of fossil fuels, particularly liquified natural gas, increased sharply. Perry was criticized for efforts to help the struggling coal industry, and his plan to provide new subsidies to coal and nuclear power plants was rejected by the Federal Energy Regulatory Commission. Perry also supported initiatives to restart the licensing of the Yucca Mountain nuclear waste storage project in Nevada, and vowed to “make nuclear cool again.” President Trump has nominated Deputy Secretary Dan Brouillette to succeed Perry.
The bipartisan-supported Better Energy Storage Technology (BEST) Act was advanced by the Senate Energy and Natural Resources Committee as part of a package that includes language from a number of additional storage-related measures. The main thrust of the BEST Act is to require federal government support and investment in energy storage research projects. In particular, the bill would require that the Department of Energy establish a research and development program focused on lowering costs and increasing storage duration. With the attached bills, the BEST Act would also direct the Federal Energy Regulatory Commission (FERC) to develop rules standardizing the process for utilities to recover costs through FERC rate-making proceedings. Initially introduced by Senator Susanne Collins, R-Maine, the revised package was crafted by a number of senators on both sides of the aisle including Senator Lisa Murkowski (R-Alaska) and Senator Debbie Stabenow, (D-Mich.).
U.S. Senators Tammy Duckworth, (D-Ill.), and Cory Booker (D-N.J.), the leaders of the Senate Environmental Justice Caucus, recently introduced legislation to make solar energy more affordable for low-income families. If passed, the Low Income Solar Energy Act would: expand the low-income housing energy assistance program to include up to 25% solar; direct the Department of Energy (DOE) to create financing programs to help low-income families access solar; allow public housing authorities to enter into third-party agreements with solar companies; provide section 8 homeowners interest-free loans to install solar energy; update U.S. Housing and Urban Development rules on utility allowances; and require the DOE to create a solar workforce program to invest in underrepresented groups in the solar industry, including women, veterans, unemployed energy workers, and formerly incarcerated individuals. Similar legislation was also recently introduced in the U.S. House of Representatives.
NCSL hosted a Natural Gas Policy Institute in Chicago on Aug. 28-29. This one-and-a-half-day meeting brought together state legislators and commissioners to examine the economic and regulatory issues related to the production, distribution and resulting end use of natural gas resources. Additionally, attendees visited the research and development facilities at the Gas Technology Institute. A full agenda and all presentations are online.
More states are finding that non-wires solutions—approaches that use efficiency, demand response or distributed energy resources to avoid costly infrastructure upgrades—can meet customers' energy needs at a lower cost than traditional capital-intensive solutions. This webinar explores non-wires case studies and the role that state legislators can play in overcoming barriers to these cost-saving solutions. Click here to view the recording or download presentations.
In recent years several states have been actively updating their Energy Efficiency Resource Standards (EERS), which establish energy savings targets utilities must meet based on the amount of electricity or natural gas sold in the state. Such long-term energy efficiency goals reduce energy consumption and promote the deployment of efficient technologies. They are also a low-cost approach to reducing greenhouse gas emissions and other air pollution associated with energy generation and use. NCSL has developed a new web brief that provides a comprehensive analysis of existing state EERS policies, including state actions to create new targets and those that amend existing requirements.
NCSL’s Task Force on Energy Supply met Oct. 9-10 in Waikiki, Hawaii. The task force visited several energy facilities on Oahu, including Hawaii Gas’ renewable natural gas facility and Hawaiian Electric. Additionally, members discussed energy issues particular to Hawaii, including Oahu’s rapidly changing energy systems, renewable energy siting and concerns raised near military bases, new utility rate-making designs, and creating more resilient energy systems. The agenda and speaker presentations are available online.
When it comes to state energy policy, state legislatures and public utility commissions are two sides of the same coin. While state legislators create the policies, establish requirements and set goals, it’s up to public utility commissions to implement those policies on the ground—to take the law and establish regulations to achieve policy objectives. In order to promote dialogue between the two-state bodies, NCSL teamed up with the National Association of Regulatory Utility Commissioners to develop a mini-guide filled with real-world examples of effective collaboration through interviews with legislators and commissioners from Minnesota, Vermont and Washington. The new report, “Engagement Between Public Utility Commissions and State Legislatures,” offers background on the history and diversity of utility commissions across the U.S., along with suggestions for how to improve communication and collaboration.
This Oct. 31 NCSL Podcast explores grid modernization, highlighting how new energy technologies are driving public policy and the actions states are taking to update the energy system. It is based on NCSL’s soon-to-be released report, “Modernizing the Electric Grid: State Role and Policy Options,” which will be posted on the energy program webpage.
The Legislative Energy Horizon Institute (LEHI)—a partnership between NCSL, the Pacific Northwest Economic Region, the University of Idaho, and the Department of Energy—hosted the second part of an annual course for state policymakers on Oct. 24-26 in Washington, DC. LEHI is designed to educate state legislators on the North American energy infrastructure and delivery system. To date, nearly 300 legislators have graduated from the program.
The American Council for an Energy-Efficient Economy (ACEEE) released its 13th edition of the State Energy Efficiency Scorecard on Oct. 1. The scorecard details state policies and programs that save energy while producing environmental and economic benefits and ranks states in six categories – utility programs, transportation, building energy codes, combined heat and power, state initiatives, and appliance standards. According to the scorecard, utilities spent approximately $8 billion on efficiency programs that saved 27.1 million MWh of electricity in 2018.
The New York Independent System Operator (NYISO) released an October report putting a price on CO2 emissions. According to the report, a carbon price could boost renewable energy development and provide savings for consumers of between $605 million and $3.25 billion from 2022 to 2036, among other benefits. The report’s implementation hinges on support from New York Governor Andrew Cuomo, the New York State Department of Public Service and the New York Power Authority. Additionally, because the report functions as a proposed change to NYISO’s tariff, final approval must be given by the Federal Energy Regulatory Commission.