Vol. 8: Issue 10 | October 2020
Propelled in part by outages that occurred as a result of Hurricane Isaias, Connecticut lawmakers enacted legislation designed to encourage utilities to prevent service disruptions. Specifically, HB 7006 requires the state’s Public Utility Regulatory Authority to initiate a rulemaking to implement performance-based regulation that may evaluate reliability, safety and emergency response, among other factors. The new law also establishes penalties for “extensive service disruptions,” including customer compensation of $250 for food and medication that expires due to outages that last more than 96 hours. The bill received overwhelming bipartisan support, with only four lawmakers voting against it.
Utah became the latest state to offer financial assistance to hard-hit energy producers following the economic slowdown from the COVID-19 pandemic. With the passage of SB 6004, the Utah legislature provided $5 million toward a grant program for oil, gas and mining companies facing losses due to the pandemic. The legislation also freezes new rulemakings and fee adjustments on fossil fuel producers to provide regulatory certainty. Utah isn’t alone in offering support to fossil fuel companies weathering the pandemic’s slowdown. Louisiana, North Dakota, Oklahoma and Texas have all instituted regulatory or other changes to help these operators, who, in normal times, contribute significantly to state revenues and workforces.
South Carolina recently enacted HB 4940, a joint resolution establishing an electricity market reform measures study committee. The committee will study a range of electricity market reforms and whether changes will benefit customers in the state. Possible reforms include establishing an energy imbalance market, creating a new regional transmission organization or recommending the state join an existing RTO, enabling consumer retail electric service choice, along with many other considerations. The committee is expected to share a report with the General Assembly by Nov. 1, 2021. Similar legislation may also be considered in North Carolina in the next legislative session.
South Carolina isn’t the only state weighing possible electricity market reforms. In the Southeast, talk of establishing an RTO to operate a seven-state energy market has picked up this year. While the pandemic response derailed some early discussions, a recent report revitalized the dialogue by suggesting the region could realize $384 billion in savings over the next two decades through an RTO. The report also suggested that a regional market would decarbonize the region’s grid without necessitating state policies, possibly leading to the retirement of most coal plants and gas peaker plants by 2040, while adding six times the amount of clean resources over that same time frame than would be added under business as usual. At the geographic opposite of the continental U.S., the Pacific Northwest is considering a resource adequacy program—a more formal system for capacity sharing than currently exists—to avoid the rolling blackouts affecting millions of Californians. The move was prompted by concerns over persistent drought conditions in a region heavily reliant on hydropower. The program would allow the region’s states to continue with a vertically integrated regulatory model for its utilities while drawing some of the benefits of more structured regionalization.
The New York Power Authority has entered into an agreement with community groups to study replacing its natural gas peaker plants with lower-emitting alternatives, including renewable energy and storage. Peaker plants emit more pollution than other types of gas-powered generation. Replacing them with lower-emitting alternatives will deliver pollution reduction benefits to the minority and low-income communities living near the plants. The agreement outlines that the scope of work for the study is to be completed by Jan. 1, 2021.
The New Jersey Board of Public Utilities approved Public Service Electric & Gas Co.’s new $1 billion efficiency program, which will move the state toward a new service-based business model. This approach rewards the utility for how well it provides energy efficiency services rather than for selling more electricity or building more infrastructure. Much of the program's funding is directed toward commercial and industrial customers through on-bill repayment, rebates and other programs.The program is part of the state’s efforts to reduce CO2 emissions under its Clean Energy Act, which was passed by the legislature in 2018.
While nuclear advocates have supported state action to help existing and new generation reactors, some recent news out of Washington, D.C., could have some hoping for a resurgence in federal policy. Congress is considering several bills that could offer support to new and existing nuclear generators. In addition to supporting a Trump administration proposal to establish a national uranium reserve, a bill from Senator John Barrasso (R-Wyo.) would offer financial support to struggling nuclear plants through a program led by the U.S. Environmental Protection Agency (EPA) that would reward qualifying plants with financial credits for every megawatt-hour of carbon-free power produced—described in the bill as an “emissions avoidance program.” Democrats have indicated they would be willing to work with Barrasso on the bill. Meanwhile, in the House, a bipartisan proposal from Representatives David McKinley (R-W.Va.) and Kurt Schrader (D-Ore.) would establish a national clean energy standard that would require incentives for nuclear and renewables—including an extension of the nuclear investment tax credit—in addition to investments in carbon capture technologies. The bill would call for an 80% reduction in carbon emissions by 2050. Federal agencies also recently acted in support of nuclear. The U.S. Department of Energy (DOE) selected two advanced reactor companies to receive $160 million in initial funding under the Advanced Reactor Demonstration Program, part of the department’s partnership initiatives to speed up the development of advanced reactors. Meanwhile, the U.S. Nuclear Regulatory Commission approved a new, streamlined and more predictable licensing process for advanced reactors—a move nuclear advocates have been seeking to expedite the commercialization and development of those technologies—and issued a final safety evaluation for the first small modular reactor design.
President Donald Trump signed a series of memorandums announcing the imposition of a ban, until 2032, on new energy leasing, applicable to both fossil and renewable energy, off the coasts of Florida (Atlantic and Gulf), Georgia, North Carolina, South Carolina and Virginia reversing the administration’s earlier pledges to open those waters to exploration. The decision is also likely to curtail an expansion of offshore wind production. Existing offshore energy leases are not set to be affected by the orders, including existing wind farm rights off the coasts of Virginia and North Carolina. Prior to this action, there was only a 10-year ban in the eastern Gulf of Mexico, which is set to expire in 2022.
The Federal Energy Regulatory Commission (FERC) issued a proposed policy saying it has the authority to incorporate a carbon tax into its rate structures and is willing to consider potential grid operators’ requests to do so. Further, if finalized, the policy statement is likely to provide states with the confidence that FERC would not deny state-led efforts to price carbon. The draft policy statement comes after the commission hosted a technical conference on the issue of pricing carbon emissions. The meeting saw general agreement among participants on the need for a price on carbon dioxide emissions. Some participants wanted FERC to establish a single national price on carbon emissions to avoid creating different prices for power plants in the various geographic markets, while other participants were open to customizing pricing plans based on each market's characteristics. Attendees also agreed the regulator has the authority to approve market rules that include a carbon price under the Federal Power Act.
The DOE announced a settlement with the state of South Carolina concerning the cleanup of weapons-grade plutonium stored in the state near the Savannah River. As part of the settlement South Carolina will receive an up-front payment of $600 million in return for agreeing not to pursue additional litigation on the matter for several years. A previous agreement between the state and DOE included a commitment from the agency to clean up more than 11 million tons of radioactive material by 2016 or pay the state $100 million in penalties. The new agreement follows a settlement reached between Nevada and DOE in June. As part of the settlement the U.S. government committed to removing 0.5 metric tons of plutonium it stored in the state by the end of 2026, and to canceling shipment of another batch it had planned to store in the state.
Last month, DOE announced the reopening of the Arctic Energy Office, which was established 2001 but never received sufficient funding to operate. According to DOE, the office will “drive coordination and collaboration on DOE’s many activities in the Arctic region including: international cooperation on Arctic issues, research on methane hydrates, and development of advanced microgrids and nuclear power systems, such as small modular reactors.”
If you haven’t heard, NCSL’s energy program publishes a quarterly newsletter, “The News Reactor,” dedicated to all things nuclear, from the latest state action related to nuclear power to timely updates on the cleanup of the nuclear weapons complex. If you’d like to subscribe to this or any other NCSL newsletter, visit the NCSL subscription webpage.
The American Council for an Energy-Efficient Economy recently released a new white paper examining utility energy efficiency programs. According to the report, the low natural gas market prices of the past few years have created challenges, but there are still opportunities for cost-effective natural gas energy efficiency programs.
The “Renewable Energy Policy Pathways Report,” released by the REBA Institute, is an analytical report that evaluates policy pathways to expand access to and decrease the costs of renewable energy procurement across the United States. The report discusses how procurement opportunities for the next generation of motivated buyers remain limited by electricity market structures and utility offerings. It is intended to serve as a road map of options for policymakers, utilities and other stakeholders to unlock the marketplace for cost-effective, customer-driven and expedient renewable electricity.