Vol. 5: Issue 2 | May 2017
The Virginia Legislature adjourned its regular session in February, after enacting several energy efficiency measures. House Bill 1565 authorizes localities to create green development zones with 10-year tax incentives to businesses in energy-efficient buildings or manufacturers of environmentally-beneficial products. Another bill, Senate Bill 990, requires annual reporting beginning in 2018 on the state’s energy reduction goal. The goal aims for a 10 percent reduction in retail electricity consumption by 2022, compared to a 2006 baseline. Other enacted legislation includes a sales tax holiday for Energy Star products and permitting cooperative procurement in energy savings performance contracts.
It’s been a busy year for policies that support nuclear power. Illinois and New York approved measures in late 2016 to provide financial support to struggling nuclear power plants—lawsuits contesting those policies had hardly been filed before the conversation moved to other states. The most common policy being considered is Zero Emissions Credits (ZECs) which provide payments based on the amount of carbon-free electricity generated. So far, ZECs bills have been introduced in New Jersey (S.B. 3061 and A.B. 4698) and Ohio (S.B. 128). Connecticut is considering a bill (S.B. 106) that would allow the state’s only nuclear plant to bypass wholesale markets and contract directly with utilities, while bills in New Mexico and Washington would reclassify nuclear power more favorably. Kentucky became the latest state to end its moratorium on nuclear power, and Michigan lawmakers passed a resolution urging state regulators to reject plans to prematurely close the Palisades nuclear plant. The dialogue has also picked up in Pennsylvania with the creation of the first bipartisan, bicameral Nuclear Energy Caucus, with 15 senators and 48 representatives. NCSL staff testified before the caucus’ first meeting and highlighted the new report, “State Options to Keep Nuclear in the Energy Mix.”
Several state legislatures have finalized action on solar energy policies—and while some governors are on the same page, others disagree. Utah enacted legislation, that was signed by Governor Gary Herbert, to phase out the state’s residential rooftop solar tax credit from $2,000 to $0 over four years. However, governors in Minnesota and New Mexico recently vetoed solar energy policies enacted by legislatures. Minnesota legislation would have moved disputes over solar energy fees by electric cooperatives and municipal utilities outside the Public Utility Commission’s jurisdiction. The New Mexico bill would have required the state to adopt rules for and issue requests for proposals for renewable energy installations on state buildings.
Maryland is the latest state to ban hydraulic fracturing after Governor Larry Hogan signed H.B. 1325 in April. Vermont passed a similar measure in 2012 although the state does not have a natural gas shale formation where hydraulic fracturing could take place. New York also has a ban in place, signed by Executive Order in 2015. Maryland’s ban goes into effect on Oct. 1, 2017 and prevents any development of the Marcellus Shale, which underlies part of Maryland as well as neighboring Pennsylvania and West Virginia. The measure comes after the legislature passed a temporary moratorium in 2015 to allow the state to study the impacts.
Lawmakers in Colorado failed to come to an agreement over a bill to reauthorize the state’s Energy Office. The majority of the office’s functions and its 24 person staff will be gone by July 1. Senator Ray Scott introduced S.B. 301, which he said would have expanded the office’s focus from primarily promoting renewable energy sources to one that included fossil fuels as well. However, some legislators expressed concern over the proposed changes. The legislative session ended on May 10 without an agreement over the focus of the office or its reauthorization.
The California Legislature introduced two bills that would increase the use of renewable energy and storage specifically during times of peak demand, consequently reducing the use of fossil fuel peaker plants. The bills would create a clean peak energy standard that builds on California’s existing Renewable Portfolio Standard. This standard would require an increasing proportion of peak demand generation to be supplied by these resources, reducing fossil fuel generation and emissions. The Assembly and the Senate have taken different approaches: Assembly Bill 1405 would require the California Public Utilities Commission (CPUC) to determine a percentage of kilowatt hours from clean peak resources to be delivered by each utility. Senate Bill 338 would mandate that the CPUC and the California Energy Commission work with the California Independent System Operator to develop policies for utilities to use low-carbon technologies and electrical grid management strategies to meet net peak load energy and reliability needs.
The New Mexico Legislature passed a measure in March that would increase the fines that the state imposes for pipeline leaks and spills. S.B. 303 would raise the fines for pipeline safety violations from the current maximum of $25,000 to the same level as federal law allows—currently $77,000. In addition, a recent fatal explosion in a Colorado neighborhood has raised attention over pipeline safety. Investigators found that an abandoned pipeline that was cut off underground, left uncapped and connected to a natural gas well fueled an explosion that killed two people. Most states do not regulate flow lines—low-pressure pipelines found on oil and gas well sites—which is the type of abandoned pipeline to blame for the explosion. Colorado is one of a few states that have rules for flow lines and the state legislature considered a measure that would require companies to provide detailed maps of flow lines. It is unlikely that the late-session measure will pass, but separate to the legislation, the Colorado Oil and Gas Conservation Commission has said that they may also start requiring companies to begin mapping their pipelines.
At least 18 states have introduced measures this session that amend or add a special registration fee on certain hybrid and electric vehicles.These fees are in addition to the standard vehicle registration fees. Four states—California, Indiana, South Carolina and Tennessee—passed new fees in 2017. They join 10 other states with similar enacted measures from previous sessions. The fees range from $200 in Georgia to $50 in Wyoming. All but South Carolina are an annual fee. Most commonly these fees are included in larger transportation funding packages, coming alongside increases in motor fuel taxes, vehicle registration fees or other transportation related revenues. The widespread adoption of electric vehicles could result in lower gasoline tax revenues and these measures may help offset that revenue loss. However, with a limited number of EVs registered in many states, these fees are not yet a significant revenue stream. Proponents say this is a move towards equity ensuring all motorists pay for their use of the road.
States are continuing to plot the future of the rapidly changing energy grid. The Ohio Public Utilities Commission is launching its PowerForward initiative to design a path for grid modernization projects, innovative regulations and forward-thinking policies. The Illinois Commerce Commission is undertaking its aptly named NextGrid initiative, which will study ways to leverage smart-grid technology investments as well as the expansion of renewables and energy efficiency that will result from the recently enacted Future Energy Jobs Bill.
The New York Public Service Commission (PSC), which is undertaking one of the most thorough grid overhaul efforts, issued three orders as part of the Reforming the Energy Vision initiative last month, including the Value of Distributed Energy Resources (DER), the Distributed System Implementation Plans (DSIP) and the Interconnection Earnings Adjustment Mechanisms orders. The Value of DER Order establishes a new pricing methodology, called the Value Stack, which is based on the avoided utility cost and incorporates additional metrics such as distribution system values. The order requires utilities to file schedules and work plans within 45 days to develop locational pricing using the Value Stack. Rooftop solar will continue to be eligible for full retail net metering until 2020, when compensation credits will gradually decrease. The DSIP order provides utilities guidance and deadlines on integrating DERs, hosting capacity, interconnection portals, non-wires alternatives and data privacy. In its Interconnection Earnings Adjustment Mechanisms Order, the commission provided guidance for utilities on adopting performance-based incentives for utilities to improve their interconnection processes.
The California Independent System Operator (CAISO) warns that it may have to curtail between six and eight gigawatts of solar this spring due to an excess of renewable energy. California’s wet winter has led to bountiful hydro conditions that, when combined with record installments of solar power, may create grid reliability concerns and drive up energy costs. Hydropower production in California is expected to significantly exceed 2016 levels. Additionally, California reached a major solar power milestone when, for three hours, nearly 40 percent of the electricity was produced by large-scale solar plants. These conditions are expected to magnify the “duck curve,” a phenomenon that occurs during the middle of the day when a large amount of solar electricity is generated and electricity demand is low, creating a sizeable dip in net energy demand that quickly ramps up as solar output declines during peak early evening energy use.
The vast amounts of data produced by smart meters has hardly been tapped in terms of its research potential. So, states like Illinois and New York are considering ways to make that data public, while managing concerns over customer anonymity. The Illinois Commerce Commission has recently approved a plan to allow open access to anonymous usage data from millions of smart meters in Commonwealth Edison’s service territory. ComEd has installed 3 million smart meters in northern Illinois and will have 4 million smart meters installed by 2018. That’s a lot of information for private companies and researchers to digest, and advocates of the policy say it could help companies design new products and services to better serve ratepayers. New York’s Reforming the Energy Vision (REV) docket is also looking to address data-sharing, although privacy concerns remain.
Congressional leaders announced on April 30 that they had reached a $1.017 trillion agreement on federal spending levels for FY 2017. Over the past seven months, the federal government had been funded through a continuing resolution—the federal fiscal year runs from Oct. 1 to Sept. 30. DOE is currently funded at $31.18 billion, roughly $1.4 billion more than FY 2016 levels. Within this total, the measure provides $2.1 billion for DOE's Office of Energy Efficiency and Renewable Energy, a $17.2 million increase over current spending. Funding directed to states and localities includes $228 million for the Weatherization Assistance Program, $13 million over FY 2016 levels, and the State Energy Program Grant which was increased to $70 million, an increase of $20 million, or 40 percent from FY 2016 levels. Both programs were marked for elimination by the administration in its initial FY 2018 proposal. The bill also funds the Office of Science at $5.39 billion, $42 million more than FY 2016. Within the office, Applied Energy Programs would receive $4.3 billion, a $123 million increase from FY 2016, and Fossil Energy Research and Development would get $618 million, $14 million less than FY 2016. Notably, the bill does not mention funding for the Yucca Mountain nuclear waste project, for which the president has proposed $120 million to “restart licensing activities.”
In late March, President Donald Trump issued an Executive Order entitled “Promoting Energy Independence and Economic Growth,” many of the actions described in the order either begin a formal administrative process to review and potentially revise regulations, or rescind climate related actions taken by President Barack Obama. The order directs EPA to review the Clean Power Plan Final Rule, and a similar rule which sets standards for new power plants. The order lifts a moratorium on new coal leases, directs the Bureau of Land Management to review both its 2015 hydraulic fracturing final rule, and its 2016 methane venting and flaring rule and directs the Environmental Protection Agency (EPA) to review a 2016 final rule that set new emission standards for the oil and gas sector for new, reconstructed and modified sources. For more information, see NCSL’s Info Alert and blog post.
The Federal Energy Regulatory Commission (FERC) has found itself in the position of trying to address growing fissures between state policies and wholesale power markets. A combination of low natural gas prices and out-of-market subsidies to support specific technologies—initially renewables, but lately nuclear—has led gradually to depressed power prices, until suddenly the situation seems unsustainable. A number of companies are looking to exit competitive markets entirely. The president and CEO of the nation’s largest supplier of independent generation, NRG Energy, Inc., called the current model “obsolete” after informing investors that the company lost almost $900 million in 2016. Meanwhile, states have expressed their frustration with market structures through policy, leaving market operators frustrated over perceived market intrusions. In an attempt to begin to reconcile some of these issues, FERC called a technical conference for May 1-2, which included testimony from state regulators, grid operators and economists. The long-term implications could be significant, with FERC Chairwoman Cheryl LaFleur recently noting, “The markets only exist with the buy-in of the states.”
NCSL's Natural Resources and Infrastructure Committee will host its annual Spring Webinar Series this April through June. Energy-specific webinars include May 18 “Protecting Pipelines: Efforts to Reduce Excavation Damage” on May 18 and “Baseload Electricity vs. Energy Markets: Policy Considerations” on June 1. Registration for webinars in the series is available here.
Register today for the NCSL Legislative Summit, Aug. 6-9, in Boston. Discover fresh ideas, learn from policy innovators and industry pioneers, connect with hundreds of state legislative colleagues and take home solutions that work. Register today. In addition, the Task force on Energy Supply will meet on Aug. 5 followed by the annual half-day Energy Policy Summit on Aug. 6. Sessions will explore a range of topics including energy storage, hydrogen fuel cell advancements, grid infrastructure challenges and advancements, the risks posed by declining baseload resources and much more. Please contact Kristy Hartman for more information.
Shared renewable energy programs provide access to renewable energy for customers who are unable or unwilling to install distributed generation systems on their homes or businesses. Through these programs, customers invest in a medium-sized renewable energy facility and directly benefit from the energy produced. NCSL’s new web brief, State Policies for Shared Renewable Energy, features an in-depth exploration of this emerging topic and a comprehensive overview of state legislative action around shared renewables.
Excavation work is among the leading causes of pipeline damage, which can result in injuries and damage to property. Read NCSL’s complete web brief, which includes a new interactive map that compares various aspects of one-call laws across the country. In addition, view NCSL’s May Legisbrief, which summarizes recent state and federal action.
Home operating expenses play a major role in consumer purchasing decisions. There are no easy-to-read energy labels when it comes to one of the largest economic decisions people make—buying or renting a home. Some states and localities are creating a more transparent market through home energy rating and labeling programs. View a recording and presentation slides from this April 6 webinar to learn about home energy labeling.
PJM Interconnection—the electric grid operator for 13 Mid-Atlantic and Midwestern states and Washington, D.C.—released a report in late March finding that its electric grid can operate reliably on minimal fuel diversity. The report was prepared in the context to reliability concerns due to an increase in natural gas, wind and solar power and a decrease in coal and possibly nuclear power. Results indicated that reliability could be maintained if the system contained up to 86 percent natural gas or up to 20 percent wind and solar.
The National Association of State Energy Officials (NASEO) Energy Efficiency Pathway Templates, developed with U.S. Department of Energy support, are designed to help State Energy Offices engage state air quality regulators on opportunities for efficiency programs to help states attain air quality management objectives, such as meeting National Ambient Air Quality Standards (NAAQS), Regional Haze Rule requirements, and state and local greenhouse gas targets.
NASEO also released a Volkswagen Settlement Beneficiary Mitigation Plan Toolkit to support state agencies as they develop their beneficiary mitigation plans under the Volkswagen settlement's environmental mitigation trust. According to the settlement, states that have been designated beneficiaries must develop a "beneficiary mitigation plan" that provides a high-level summary of how they intend to spend their allocated funds. The report provides an overview of the portions of the settlement that are relevant to states; highlights plan considerations for beneficiaries, various repower and replacement options, and tools that states can use to calculate NOx and other emissions reductions and summarizes each eligible mitigation action, provides estimates of expected NOx reductions, and showcases successful implementation of technologies.