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November 5, 2024

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EPA Awards $20B from Greenhouse Gas Reduction Fund

A heat-pump water heater for a low-income homeowner in DeSoto, Ga. A National Guard Armory renovated with high-efficiency, all-electric heating as a small-business and nonprofit incubator in Owosso, Mich. Solar panels, window and roof upgrades, and aging-in-place upgrades for an affordable senior housing project in Miami.

These projects and thousands more like them, funded through community lending institutions, received a $20 billion boost April 4, as EPA announced the eight organizations it has selected to receive grants from its Greenhouse Gas Reduction Fund (GGRF). Grant amounts range from $400 million to $6.97 billion.

Created by the Inflation Reduction Act, the GGRF aims to “create a national clean financing network for clean energy and climate solutions across sectors, ensuring communities have access to the capital they need to participate and benefit from a cleaner, more sustainable economy,” EPA said. The awards represent “the single largest non-tax investment within the [IRA] to build a clean economy while benefiting communities historically left behind.”

The awardees have committed to use the money for projects that collectively will reduce or avoid 40 million metric tons of greenhouse gas emissions per year, while drawing in nearly $7 in private investment for every $1 of federal funds they receive over the next seven years, according to the announcement. In addition, more than 70% of the GGRF funds will go to low-income and disadvantaged communities, including more than $4 billion for rural communities and nearly $1.5 billion for tribal communities.

The Climate United Fund, which was selected to receive the largest GGRF award, plans to use its $6.97 billion to help finance 1 billion square feet of net-zero building space across residential and commercial sectors, including 188,000 units of multifamily housing. Other targets include deploying 150,000 zero-emission vehicles and more than 11 GW of renewable energy.

The group is a partnership between impact investor Calvert Impact, the Community Preservation Corporation — which invests in affordable housing in low-income neighborhoods — and the Self-Help Credit Union, located in Durham, N.C. The fund plans to invest both in community lending institutions and in specific projects.

“We are not aiming to just deploy more clean energy and green buildings in underserved places; we’re building up local lenders and local businesses that can support enduring, thriving, and equitable clean energy markets and communities,” according to a Climate United fact sheet.

Speaking at a rollout event for the GGRF in Charlotte, N.C., on April 4, Vice President Kamala Harris said the grants will address a key issue in building out a clean energy economy: limited access to capital in low-income and disadvantaged communities.

“In every community in our nation, there are, of course, extraordinary people with talent, ingenuity and the ability to help us take on the climate crisis,” Harris said. “In too many places, too many people with all that talent have still had limited access to capital to do the work they want to do, to start and grow a clean energy business.”

The GGRF awards mark “the first time in history we are providing tens of billions of dollars directly to community lenders to finance local climate projects,” she said. “We have taken this approach because we know we have the capacity … to empower communities to decide what projects they want, that will have the greatest impact from their perspective in the place they call home; and then we can invest in those projects in a way that will actually have value for the people who live there.”

The funds also will be used to provide technical assistance and build capacity among community lenders, to “drive deployment of tens of thousands clean energy projects,” said EPA Administrator Michael Regan, who accompanied Harris to Charlotte. “And the good news is we’re not starting from scratch, because these [awardees] are not new to this work. These experts have already provided capital to families and small businesses across the country.”

EPA Administrator Michael Regan in North Carolina | The White House

Self-Help, for example, has spent several years working with a range of community groups to build 49 energy-efficient homes in Grier Heights, one of Charlotte’s historically black neighborhoods, said Donnetta Collier, financial capabilities manager.

“Our work guarantees that the homes’ heating and cooling bills will be under $48/month,” and all the homes were sold to residents with incomes below 80% of area median income, Collier said.

As part of Climate United, Self-Help hopes to scale its model to build more homes “by infusing billions into community lenders across the country,” she said.

The Awardees

The idea behind the GGRF dates back more than decade, when Sen. Ed Markey (D-Mass.) and then-Rep. Chris Van Hollen (D-Md.) first introduced legislation to create a national climate bank. Markey and Sen. Van Hollen continued to work on the legislation, which was finally incorporated into the IRA as the GGRF.

Quoted in the EPA announcement, Van Hollen hailed the awards as “a pivotal moment in America’s fight to confront the climate crisis while driving inclusive economic growth.”

The IRA provides $27 billion for the fund, divided between three programs, two of which will be funded by the $20 billion announced April 4.

The National Clean Investment Fund (NCIF) will award $14 million to three nonprofit groups, to establish “national clean financing institutions that will deliver accessible, affordable financing for clean technology projects nationwide,” with a particular focus on public-private investing and low-income and disadvantaged communities.

Climate United is one of the NCIF awardees, along with the Coalition for Green Capital ($5 billion) and Power Forward ($2 billion). All three have decades-long experience in funding community-level projects, according to EPA

The Clean Communities Investment Accelerator (CCIA) is investing $6 billion in five nonprofit community development financial institutions (CDFIs) to “establish hubs that provide funding and technical assistance to community lenders working in low-income and disadvantaged communities.”

The CCIA awardees are the Opportunity Finance Network ($2.29 billion), Inclusiv ($1.87 billion), Justice Climate Fund ($940 million), Appalachian Community Capital ($500 million) and Native CDFI Network ($400 million).

CDFIs are specialized lenders that focus on providing basic financial services to low-income and disadvantaged communities that may not have access to mainstream financial institutions, according to the U.S. Treasury Department, which certifies CDFIs.

The U.S. has more than 1,300 CDFIs, which together manage more than $222 billion in funds, according to the  Opportunity Finance Network.

The Native CDFI will use its $400 million grant to help 63 community lenders across tribal lands “to fund renewable energy, energy-efficient upgrades and sustainability projects that will enhance well-being and create employment opportunities for native people,” according to the organization’s website.

Republican Rollback Efforts

GGRF’s third program, the $7 billion Solar for All initiative, will “finance clean technology deployment … in low-income and disadvantaged communities,” according to EPA, which said it will be announcing more information on the program later in the spring.

The current awardees were selected through a review process that included “dozens of federal employees — all screened through ethics and conflict-of-interest checks, as well as trained on the program requirements and evaluation criteria,” EPA said.

Following the announcement, the agency will negotiate award agreements with each of the selected organizations, which will set out performance metrics for emission reductions and other goals, according to a senior administration official speaking on background.

Under the IRA, EPA must complete negotiations and finalize agreements to award the funding by Sept. 30, at which point the federal dollars will be officially “obligated” and available to the grantees, the official said.

The House of Representatives on March 22 passed a bill, the Cutting Green Corruption and Taxes Act (H.R. 1023), that would roll back the GGRF. Three days before the 209-204 vote, President Joe Biden issued a statement saying he would veto the bill if it is passed by the Senate.

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DC Budget Woes Threaten District’s Home Electrification Program

The D.C. Council has approved a bill aimed at electrifying 30,000 low-income homes across the district by 2040, but a fight is brewing over funding for the program, which Mayor Muriel Bowser is looking to redirect as part of her efforts to plug holes in her proposed 2025 budget. 

Introduced by Councilmember Charles Allen in February 2023, the Healthy Homes and Residential Electrification Act (B25-119) passed its first reading unanimously during the council’s April 2 meeting. A second reading and final passage could occur at the council’s next regular meeting May 7. 

The bill would establish a “Breathe Easy” program combining district and federal funding to cover all costs for home electrification retrofits for low-income homeowners and for apartment dwellers in buildings with a majority of low-income residents. Partial payments for retrofits also could be provided for moderate-income homeowners on an income-based sliding scale. 

The bill defines home electrification retrofits as “replacement of all appliances or other systems, such as oven, water heater or heating system, that combust fossil fuels on site with appliances and other systems that perform the same function and that are powered exclusively by electricity.” 

Funding for programs to train local contractors in installing and maintaining electric appliances and systems also is included in the bill.

Allen’s original bill set ambitious targets for the program, calling for 5,000 retrofits by the end of 2025, 10,000 by the end of 2030 and 20,000 by the end of 2035. 

However, at a March hearing, the council’s Committee on Transportation and the Environment amended the bill to allow a more gradual ramp-up of the program. The revised goals are to complete 2,500 retrofits by the end of 2027, 10,000 by 2032, 20,000 by 2037 and 30,000 by 2040. 

The committee also stripped the original bill’s provision adding a surcharge to permits for the installation of appliances and systems that burn fossil fuels in both new construction and renovations. 

The council previously authorized full funding for the program last year ― an estimated $25 million ― from the city’s Sustainable Energy Trust Fund (SETF), which is funded from fees residents pay on monthly electric and gas bills. 

But that funding could be slashed according to the proposed 2025 budget Bowser presented to the council April 3. The district is facing a $700 million deficit in 2025 because of a combination of rising costs, slow post-pandemic revenue growth and the expiration of one-time federal funds received from the American Rescue Plan, Bowser said. 

By 2028, the gap could grow to an estimated $1.2 billion, according to city estimates. 

The mayor’s presentation for the council did not mention the Healthy Homes Act or Breathe Easy, but called for $1 billion in program reductions, on top of $493 million in “efficiencies and reductions.” 

In a letter to the council, Bowser also said she would “resist starting new programs that would only add to our longer-term financial pressures.” 

Council staff and clean energy advocates still are combing through the budget’s details, but based on their initial analyses, the mayor intends to use $17.3 million from the SETF to pay utility bills for government facilities, rather than the low-income bill assistance, clean energy and energy efficiency programs it was created to fund. 

Questioned by Allen on April 3, Jenny Reed, director of the Office of Budget and Performance Management, said the need to shift the funds from the SETF was due to D.C.’s own renewable portfolio standard, which requires the district’s utilities to provide 100% clean power by 2032. The district also is working toward a 60% cut in greenhouse gas emissions by 2030 and net-zero by 2040. 

The problem, Reed said, is that the city’s energy demands are decreasing, while its energy bills are increasing as utilities buy renewable power and renewable energy credits to meet mandated levels of clean power. 

To balance the budget, “we looked at areas where programs had not yet started, and where there may be federal funding to offset some of those costs that we were now going to use for other purposes,” she said. 

Getting Creative

Breathe Easy fits that description all too well. 

The district’s Department of Energy and Environment (DOEE) is set to receive $59.4 million from the Inflation Reduction Act to be used for consumer rebates for “whole home” energy upgrades or for individual new electric appliances, such as heat pumps or electric stoves. 

The IRA provides $8.5 billion for home energy upgrades and rebates, with rebate programs being administered by state energy departments and the funding split just about evenly between rebates for whole-home and individual appliance upgrades. 

The rebates were supposed to be available as of Jan. 1, 2023, but the U.S. Department of Energy did not release guidelines for states to apply for the funds until July, and DOEE just now is completing its first applications. (See DOE Opens Applications for $8.5B in IRA Home Efficiency Funds.)

Getting the money is a two-step process, according to Nick Burger, deputy director of DOEE’s Energy Administration. 

“We submit an application to the Department of Energy. They do some initial review,” he said. “They tell us to proceed, and then we have to submit sort of a supplement called the implementation blueprint. That’s got a bit more detail on our program design, and once that piece is approved, then they release the money to us.” 

DOEE is “very close” to submitting its first application, and Burger is hopeful to get it through the Energy Department process by fall, with at least some IRA dollars “flowing to residents … sometime by the end of 2024.” 

But both Burger and Allen said the SETF funds for Breathe Easy are a critical catalyst to maximize the impact of the federal dollars. 

If Breathe Easy is defunded, “the federal infrastructure funding we’re pairing with this local funding will become next to useless,” Allen said at the April 2 council meeting. “There is a cap on how much you can spend on gas-to-electric home renovation under it, and it’s about half of what the actual renovations cost. 

“If [the mayor’s] budget were allowed to pass, it means that we’re not only going to harm lower-income households in our city, but we’re also just going to walk away from federal money on the table. It would be a wasted opportunity,” he said. 

Burger agreed, noting the IRA sets a $14,000 cap for the total rebates a household can receive for appliance upgrades and pays up to 80% of the costs for whole-home efficiency upgrades. “That’s where D.C. money can be used to unlock federal funding … to cover the full cost for income-qualified households,” he said. 

Allen has estimated a full-home electrification, including heat pumps and other appliances, can run up to $30,000 or more per home. 

D.C. already has ambitious clean energy programs, such as its Solar for All initiative, which has a mandate to install rooftop and community solar projects across the city, with the goal of halving utility bills for 100,000 of the district’s low-income residents by 2032. 

To prepare for the federal funds and Breathe Easy, the council last year appropriated $2 million for DOEE to run a pilot program using Solar for All and other existing energy-efficiency programs to install solar and electric appliances in low-income homes. Burger said 48 homes have been upgraded, primarily in two of the district’s African American neighborhoods, River Terrace and Deanwood. 

DOEE also is sponsoring a Healthy Homes Fair on April 6, to “help equip D.C. residents with the knowledge they need” to plan home efficiency and electrification upgrades, Burger said. “While we would be thrilled to be able to show up … with rebates in hand, we also know that residents are planning their electrification journey,” he said, and the fair is aimed at informing them about the available technologies and, eventually, the federal funding opportunities.

Still, without more local funding, the challenge for DOEE will be “how do we get these benefits, the federal rebates, most effectively, most easily into the hands of low-income households,” which may include both single-family homes and multiunit buildings, he said. The IRA provisions for multiunit buildings are more flexible and could be used to cover the full costs of unit upgrades; so, DOEE may prioritize channeling funding toward such buildings, he said.  

But Burger noted that the council and mayor will be negotiating the budget over the coming weeks, so DOEE will not know what its final budget will be until then. If the Breathe Easy funds are cut, DOEE will start exploring how it can stretch the federal funds, especially for the individual appliance rebates. 

“That’s where we’re going to have to kind of continue to look and get creative,” he said. 

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CISA Seeks Comment on Proposed Cyber Reporting Rules

The Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency (CISA) took another step toward fulfilling an obligation imposed by Congress in 2022 with the release of a notice of proposed rulemaking (NPRM) outlining requirements for critical infrastructure operators to report cyber incidents to the agency. 

CISA’s proposal stems from the Cyber Incident Reporting for Critical Infrastructure Act (CIRCIA), which Congress passed in 2022 as part of an omnibus spending bill. The law requires entities in 16 critical infrastructure sectors defined in Presidential Policy Directive 21, including energy, to report relevant cyber incidents to CISA within 72 hours of occurrence, as well as when they make a ransom payment to the perpetrators of a ransomware attack. (See Budget Mandates Cyber Reporting for Critical Infrastructure.) 

Authority for defining which incidents would be subject to reporting and which additional sectors, if any, the requirements would cover was left to CISA, which solicited input from industry with a request for information in 2022. Respondents to the RFI included NERC and the regional entities, which raised concerns about possible conflict between CISA’s potential final rule and the ERO’s Critical Infrastructure Protection (CIP) standards. (See NERC Calls for Flexibility in CISA Cyber Reporting Rules.) 

CISA acknowledged these concerns in its NPRM, along with similar sentiments expressed by groups with their own reporting requirements, such as the Nuclear Regulatory Commission, Department of Energy and Federal Communications Commission. The agency said it doesn’t intend to use the authority granted by CIRCIA to replace existing regulations but “to fill … key gaps in the current cyber incident reporting landscape” created by the lack of a “comprehensive and coordinated approach” to cyber reporting in critical infrastructure.  

The NPRM includes definitions of key terms such as: 

    • Cyber incident — “an occurrence that actually jeopardizes, without lawful authority, the integrity, confidentiality or availability of information on an information system, or actually jeopardizes, without lawful authority, an information system.” 
    • Covered cyber incident — “a substantial cyber incident experienced by a covered entity.” 
    • CIRCIA report — a report of a covered cyber incident, ransom payment or both; or a supplemental report. 
    • Information system — a “set of information resources organized for the collection, processing, maintenance, use, sharing, dissemination or disposition of information.” This definition is borrowed from the Paperwork Reduction Act of 1980. CISA added that operational technology resources also are explicitly included in the definition. 

More general terms such as “cloud service provider” also are defined, while the term “covered entity” is included but not given a set definition. Instead, CISA said whether an entity is covered by the rule will depend on its size, along with sector-specific criteria. The agency also has proposed allowing third parties such as the E-ISAC or its counterparts in other sectors to submit reports on behalf of covered entities with their authorization. 

Web-based Reporting to be Standard

Regarding the manner of reporting, CISA noted CIRCIA required the agency to provide a web-based form for submission of reports. In addition, CISA said it received multiple comments suggesting such a form “is the preferred manner for submission of CIRCIA reports.” As a result, CISA proposed making a web form the “sole explicitly identified option” for submitting incident reports, though it also suggested the final rule would provide for the agency’s director to approve other forms of reporting, such as by telephone or email or in person. 

The content proposed for CIRCIA reports is, for the most part, explicitly required by the legislation and includes information such as the identity of the covered entity, the type of incident being reported, a detailed description of the incident, vulnerabilities that attackers may have exploited, the entity’s defenses and any mitigation or response measures.  

CISA also plans to require entities to state whether they requested assistance from other entities and any engagement they have had with law enforcement agencies related to the ransom payment or attack. The agency said it may add other data to the requirements to keep up with changes in the cybersecurity landscape. 

“CIRCIA is a game changer for the whole cybersecurity community, including everyone invested in protecting our nation’s critical infrastructure,” CISA Director Jen Easterly said in a statement. “It will allow us to better understand the threats we face, spot adversary campaigns earlier and take more coordinated action with our public and private sector partners in response to cyber threats. We look forward to additional feedback from the critical infrastructure community as we move towards developing the final rule.” 

Comments on CISA’s NPRM are due 60 days after its publication in the Federal Register on April 4. 

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Biden Admin Releases Blueprint for Building Decarbonization

The Biden administration released a plan April 2 to decarbonize the country’s building sector, which it says could reduce emissions in the sector by 65% by 2035 and 90% by 2050. 

The Department of Energy worked with the Department of Housing and Urban Development and EPA to write the plan, “Decarbonizing the U.S. Economy by 2050: A National Blueprint for the Buildings Sector.” The blueprint is the first federally developed sectorwide strategy for building decarbonization. 

“America’s building sector accounts for more than a third of the harmful emissions jeopardizing our air and health,” Energy Secretary Jennifer Granholm said. “As part of a whole-of-government approach, DOE is outlining for the first time ever a comprehensive federal plan to reduce energy in our homes, schools and workplaces — lowering utility bills and creating healthier communities while combating the climate crisis.” 

Buildings produce more than one-third of domestic climate pollution, and their owners spend $370 billion on energy annually. The blueprint projects cuts of 90% of greenhouse gas emissions from the sector, which would save consumers $100 billion in annual energy costs and avoid an additional $17 billion in annual health costs. 

The U.S. is home to 130 million buildings, with another 40 million expected to be built by 2050. Buildings account for 74% of electricity demand, while their heating and cooling drives peak demand across multiple sources. 

The blueprint focuses on four key strategies for cutting emissions from the sector: increasing energy efficiency, accelerating on-site emissions cuts, transforming how buildings interact with the grid, and cutting emissions from the materials and process of constructing buildings. It calls for on-site energy use to reach 35% by 2035 and 50% by 2050; cutting on-site emissions by 25% by 2035 and 75% by 2050; tripling demand flexibility on the power grid by 2050; and cutting embodied emissions in building materials 90% by 2050. 

“Although the strategy focuses on federal actions that can drive change, it aligns with several state-level decarbonization roadmaps and notes key opportunities for collaboration among federal, state and local agencies,” the blueprint says. 

Despite major advances in efficiency and carbon-free electricity, the scale and complexity of the building sector means that its decarbonization remains a significant challenge. The nation’s 130 million buildings all use energy differently and produce different levels of GHG pollution. 

“The long lifetimes of buildings and their components mean that today’s buildings will still comprise the majority of the U.S. building stock in 2050,” the report says. “Thus, to achieve this blueprint’s vision, it is critical to accelerate deployment of low-carbon solutions in both new construction and in existing buildings — particularly in disadvantaged communities, where building upgrades are most needed.” 

Recent years have seen advances in efficiency, low-carbon space and water heating, and distributed generation, so it is possible to retrofit existing buildings and construct new ones to be much less carbon intensive, the report says. 

New Better Buildings Initiative for Heat Pumps

DOE on April 3 also announced a new Better Buildings initiative intended to help heat pump manufacturers produce higher-efficiency and more cost-effective rooftop heat pumps for large, commercial buildings. 

“Since 2011, DOE’s Better Buildings Initiative has helped paved the way for cost-effective energy-efficiency and decarbonization solutions across America’s building sector,” Granholm said April 3. “Our new Commercial Building Heat Pump Accelerator builds on more than a decade of public-private partnerships to get cutting-edge clean technologies from lab to market, helping to slash harmful carbon emissions throughout our economy.” 

The heat pump accelerator was developed with major commercial end users including Amazon, IKEA and Target, and includes manufacturers such as AAON, Carrier Global, Lennox International and Rheem Manufacturing. Its goal is to bring affordable, next-generation rooftop heat pumps to market as soon as 2027, halving emissions and energy costs compared to natural gas-fueled heat pumps. 

Deployed at scale, the advanced heat pumps could save commercial customers about $5 billion on utility bills annually. 

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Everett LNG Contracts Face Skepticism in DPU Proceedings

Proposed gas supply agreements between Constellation Energy and Massachusetts gas utilities that would keep the Everett Marine Terminal operating through 2030 are facing significant pushback from environmental organizations and the state Attorney General’s Office in time-constrained proceedings at the Department of Public Utilities. 

Everett is an LNG import facility located just outside of Boston and is the only facility in the region that can directly import and inject LNG into the gas system. The main customer of Everett, the Mystic Generating Station, is set to retire at the end of May at the conclusion of a two-year cost-of-service agreement with ISO-NE, threatening the future of the import facility. 

The impending closure of Mystic has put a looming deadline on finalizing the Everett contracts, which initially were announced in February. (See Constellation Reaches Agreements to Keep Everett LNG Terminal Open.) The gas supply agreements would extend through winter 2030. 

Constellation, the owner of both Everett and Mystic, has said it will be unable to keep the terminal open after the plant closes without the contracts, and it can void the contracts if they are not finalized by May 1.  

This May deadline has led to expedited regulatory proceedings (DPU 24-25, 24-26, 24-27 and 24-28), in which the AGO and several environmental organizations have raised concerns about the cost and environmental impacts of the agreements. 

“Despite taking years to negotiate their gas supply contracts with Constellation, the LDCs [local distribution companies] see … fit to provide the department only two months to conduct a proceeding that would normally take about six months from filing to decision,” the Conservation Law Foundation (CLF) commented in March. 

The organization initially was granted “limited intervenor” status in the proceeding by the DPU, allowing it to examine impacts on low-income customers, the consideration of alternatives and environmental justice effects. The status also potentially enabled the organization to eventually appeal the results of the proceeding. 

However, the DPU rescinded this status April 1 following a protest from the utilities, which argued that giving CLF the ability to appeal any decision would mean “effectively vesting CLF with the ability to negate or veto a department decision approving the proposed contracts.” 

The DPU responded by downgrading CLF to “limited participant” status, which would prevent the organization from appealing the results. Environmental advocates expressed disappointment with the decision and dismissed concerns about a “dilatory appeal.” 

A CLF appeal had the potential to threaten the contracts only if the state Supreme Judicial Court (SJC) thought the issues stated in the appeal merited a hearing by the full court, said Joe LaRusso, senior advocate at the Acadia Center. “What the DPU denial of CLF’s intervenor status prevents, then, is CLF filing a meritorious appeal to the SJC and a potential direct challenge to DPU approval of the contracts.”

Cost Concerns

The contracts at issue likely will come at a hefty price for ratepayers; according to Brattle Group consultants hired by the AGO, the contracts would cost a combined $946 million, which ultimately would be passed on to ratepayers. 

Brattle estimated $375 million would go to covering Everett’s operating costs, while charges associated with procuring LNG would amount to about $489 million and a third group of charges tied to how much gas actually is delivered to the utilities would be about $81 million. 

The latter two charges are indexed and will vary over the course of the contract, but most of the costs (an estimated $864 million) must be paid regardless of how much LNG ultimately is needed. 

“The agreements result in very high prices and, therefore, will be costly to Massachusetts ratepayers,” the consultants wrote in testimony submitted by the AGO. 

The consultants specifically expressed concerns about the LNG supply costs included in the agreements, noting they “do not provide any transparency into Constellation’s upstream LNG supply costs, which means Constellation may have the ability to build in a markup above its own cost of procuring and transporting LNG cargoes to Everett.” 

“The agreements have a pricing formula with poorly explained adders and multipliers that result in significant premiums,” the consultants noted. “The LDCs claim that these adders and multipliers cover the (unknown) costs of LNG procurement and (unexplained) risks faced by Constellation that would accompany its procurement obligations, though they do not know whether this is true and have no way to verify it.” 

Climate Consequences

Throughout the proceedings, the utilities have emphasized the agreements are a temporary solution to preserve the reliability of the gas network, which is threatened by the region’s pipeline constraints. 

In a statement, an Eversource Energy spokesperson called the contracts “a temporary and necessary solution to maintain reliability during the coldest times of the year and serve as a bridge to the clean energy future.” They also noted the agreements will increase system reliability without requiring any new gas infrastructure or pipeline expansions. 

However, environmental advocates in the state are worried the agreements ultimately could function as a bridge to an expanded gas network, instead of decreased gas demand.  

National Grid and Eversource, the two largest gas utilities in the state, project natural gas demand to continue to grow in the leadup to 2030. A recent DPU order and state climate laws passed in recent years are intended to reverse this trend. (See Massachusetts Moves to Limit New Gas Infrastructure.) 

National Grid’s contract with Constellation would authorize the utility to purchase increasing quantities of gas through 2030, with the maximum seasonal quantity more than quadrupling between the winter of 2024/25 and the winter of 2029/30. 

“I would suggest these contracts are not some stopgap measure but a continuation of the gas industry’s playbook to ensure a transition off gas does not happen in our commonwealth,” Cathy Kristofferson, secretary and treasurer of the Pipe Line Awareness Network for the Northeast, said at a public hearing. 

In September, Enbridge announced a new project to significantly increase the capacity of its Algonquin Gas Transmission Pipeline network from New York to Massachusetts with an in-service date of late 2029. (See Enbridge Announces Project to Increase Northeast Pipeline Capacity.) Eversource has confirmed it offered a bid for capacity in the open season for the project, while National Grid has not responded to multiple inquiries into whether it also bid into the open season. 

“It is not lost on some of us that the six-year contract length sought in these proceedings coincides with the six-year in-service time frame forecast by Enbridge for their Project Maple” expansion, Kristofferson added. 

Enbridge submitted comments in favor of the Everett agreements, writing that “New England continues to be underserved by natural gas.” 

“The New England region requires additional natural gas infrastructure to maintain reliability, deliver energy affordability and help the region achieve its policy goals with respect to greenhouse gas emission reductions,” the company added. 

Priya Gandbhir, senior attorney at CLF, said a prolonged reliance on natural gas is “not an acceptable path forward” and echoed concerns about Enbridge’s capacity expansion proposal. 

“If these contracts are going to be approved, it needs to be on the way to our clean energy future,” Gandbhir said, adding that the proceeding underscores the need for holistic energy planning in the state. “I remain very skeptical that the intent of the LDCs is to use this as a bridge to clean energy.” 

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Stakeholder Soapbox: The Greatest Machine Needs a Tune-up

The U.S. electricity grid is often described as one of the greatest and most complex machines ever built. Hundreds of thousands of miles of wires connect our nation’s homes and businesses to our domestic energy resources, helping drive American prosperity and security over the last century. 

But like any aging machine — particularly one designed to meet 20th century needs — some of its components are no longer operating efficiently. And these inefficiencies are costing American consumers on their utility bills and threatening access to reliable electricity. 

Nora Mead Brownell |

Existing connections between grid regions are simply not utilized as well as they should be. 

The power grid is generally broken up into regions. Regional grid operators rely primarily on power plants in their service areas to generate enough electricity for homes, schools, hospitals and businesses. The supply of power must meet demand at any given time to maintain grid stability and to keep the lights on. 

There are also power lines that connect these regional networks, so a home in Cleveland may receive electricity generated by a wind farm outside Des Moines. This is especially beneficial for the Ohio homeowner if that wind farm is producing the cheapest power at that time. And this interregional connection is even more important if a winter storm forces several power plants in Ohio to stop operating. That transmission line will carry critical electricity needed to keep the heat and lights on in homes hundreds of miles away. 

The value of interregional transmission capacity was especially evident during the deadly cold snap in February 2021 that slammed the central U.S. While Texas’s isolated grid was forced to shut off power to millions of people, grid operators in the Midwest and Great Plains avoided widespread outages by importing 15 times more electricity than Texas through interregional lines. 

But the U.S. has few of these interregional power lines. And we are not using the existing capacity very efficiently. While new electricity-carrying lines are needed, they often can take up to a decade to plan and build because of complex siting and planning processes. As a result, it’s important to maximize the use of the existing system. 

Regional grid operators have a clear opportunity to optimize the existing interties they share with neighboring regions. In fact, for nearly two decades, the oversight bodies that monitor Eastern regional grid operators have recommended that they do just that. It’s now well documented that the inefficient use of these connections continues to increase system costs and reduce reliability. 

At times, despite the cost of power being significantly higher in one region than the other, electricity will flow from the more expensive market to the lower-priced market, raising system costs. In the Mid-Atlantic, this costly phenomenon occurred 48% of the time in 2022, according to the PJM Market Monitor. In the Midwest, MISO’s Monitor determined that more than 40% of transactions between its neighboring regions were “ultimately unprofitable” in 2021.

But some U.S. grid regions are using these interregional connections more efficiently. In the West, markets have optimized their interties, saving more than $4 billion since the inception of system changes almost a decade ago. 

Optimizing the use of existing or new interregional transmission capability between grid operators in the Midwest, Plains and Mid-Atlantic would provide approximately $50 million to $60 million annually for every 1,000 MW of intertie capacity, according to recent analysis by the Brattle Group. 

The failure to optimize interties means existing power infrastructure is underutilized, and the benefits of interregional transmission are not fully realized. Thus, there is less of an incentive to build the future interregional transmission lines our country desperately needs to ensure consumers can access clean, affordable power at all hours. Recent studies have shown that the U.S. needs to dramatically hasten the pace of interregional transmission line deployment to meet future electricity demand. 

There are several paths FERC can take to improve the efficiency of the existing interregional system. FERC can require intertie optimization under existing federal law or act on a request from a regional grid operator. Given the well-documented savings that improving current inefficiencies would generate, the commission is well within its authority to require grid operators to optimize their interties. 

We’re long overdue to optimize the capacity currently available. Doing so will enhance the grid today and help ensure that future investment efficiently powers America through the 21st century.   

Nora Mead Brownell served on the Federal Energy Regulatory Commission from 2001 to 2006 and now serves as a Venture Partner at Clean Energy Venture Group. 

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Feb. Market Ops Prove no Trouble for MISO

February held no operational surprises, MISO reported this week in a monthly market review.  

The grid operator said there were “no notable events” to wrap up winter. MISO experienced an 80-GW average peak over the month, with an 88-GW peak occurring Feb. 19.  

Real-time locational marginal prices averaged $22/MWh, about in line with February 2023’s $23/MWh but a far cry from 2021’s $61/MWh. The reduction is predicated on the return of $2/MMBtu natural gas.  

MISO’s coal use this February, 11.2 TWh, was nearly halved compared to February 2021’s nearly 22 TWh. Natural gas and wind generation compensated for the drop in coal generation.  

MISO’s growing solar fleet again registered record production Feb. 24 when it briefly supplied 7% of load at 4.6 GW. MISO has been setting solar generation records nearly every month as members add installations at a record clip.  

Daily generation outages were up year-on-year, with MISO reporting a 43-GW average outage rate over the month, higher than last year’s 32-GW average for the same period.  

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MISO Chooses Ameren for 3rd Long-range Tx Project

MISO has selected Ameren Transmission Co. of Illinois (ATXI) to build a third transmission project stemming from the RTO’s long-range transmission portfolio. 

ATXI will oversee construction of the $273 million Denny-Zachary-Thomas Hill-Maywood (DZTM) 345-kV project in Missouri, part of MISO’s first, $10 billion long-range transmission plan (LRTP) portfolio. It’s the most expensive project MISO has evaluated for competitive selection. 

It’s the third time MISO has opted for ATXI after LRTP project solicitations. In December, MISO decided Ameren’s transmission arm will build a $23 million, 345-kV line segment from the Iowa-Illinois border to the Ipava substation in Illinois. (See MISO Selects Ameren, Dairyland to Build 3rd and 4th LRTP Competitive Projects.) 

Last year, MISO also awarded ATXI construction rights on the $84 million, 345-kV Fairport-Denny project, which extends to the Iowa-Missouri state border and links up with the DZTM project. (See MISO Selects Ameren to Build 2nd Competitive LRTP Project.)  

MISO’s DZTM selection announcement marks the final time MISO will compare bids on a competitive project from the first LRTP portfolio. Only five of the 18 projects were up for competitive solicitation. 

MISO said ATXI “conducted the most engineering and surveying of any developer, and its routes had the least environmental impact.”  

“It also more clearly detailed its construction activities and access plans, and showed how it could modify construction activities based on the in-service date of Denny substation,” MISO wrote in the selection report.  

MISO said it received six proposals from four developers, including two from ATXI and the remainder from LS Power, NextEra Energy Transmission Midwest and Transource Energy, with implementation costs ranging from $265 million to $486 million. MISO originally estimated project costs would exceed $500 million. ATXI was the only developer that offered to cap project costs, MISO said.  

“The selected proposal had a substantially lower cost than that of the next-closest developer,” Jeremiah Doner, MISO’s director of cost allocation and competitive transmission, said in a press release. “ATXI’s proposal also features strong cost containment, sound design, and robust operations and maintenance plans.” 

The DZTM project encompasses two new single-circuit 345-kV transmission lines at 162 miles and a new, 42-mile 345-kV conductor-only circuit that will share structures with an existing 161-kV line. The project will connect four substations. 

As with its Fairport-Denny project, ATXI’s DZTM proposal includes a partnership with The Missouri Joint Municipal Electric Utility Commission. ATXI plans to sell 49% of the project to the state utility agency before the project is placed into service. 

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SPP’s Proposed Capacity Accreditation Methods Draw Protests at FERC

SPP’s effort to impose new capacity accreditation methodologies for thermal and renewable resources has drawn protests from public-interest and clean-energy groups at FERC. 

On March 29, the Sierra Club, Natural Resources Defense Council and Sustainable FERC Project challenged SPP’s proposed performance-based accreditation (PBA) for thermal resources, arguing it would threaten reliability by ignoring fossil-fired resources’ underperformance and renewables’ overperformance when power is needed most (ER24-1317). 

The groups also filed a complaint under Federal Power Act Section 206 over existing accreditation methodologies for the resources SPP is trying to replace. They said the RTO’s current and proposed capacity accreditations create a competitive disadvantage for wind and solar and will increase prices for ratepayers as utilities are “artificially incentivized to overbuild gas resources and delay coal retirements.” 

“Regulators at the federal and regional level must make sure that critical resource assessments are made based on the facts and that all resources are evaluated on a level playing field,” said Natalie McIntire, senior advocate at the Sustainable FERC Project and a member of SPP’s Members Committee. “Accurate accreditation will help ensure a reliable and more affordable grid and allow renewable resources to contribute to a clean, reliable and resilient electrical system.” 

The Sierra Club said clean energy advocates have been pushing SPP to fix its accreditation methodologies, which it calls discriminatory and outdated, since at least 2021. It said the parallel filings were intended to avoid a return to the status quo and SPP’s flawed stakeholder process. 

Separately, the American Clean Power Association, Solar Energy Industries Association, Advanced Energy United and Advanced Power Alliance also filed a protest urging the commission to reject the proposal. They said SPP’s filing included unjust and unreasonable design features, missed crucial information in violation of FERC’s rule of reason and unduly discriminated against IBRs. 

SPP filed its proposed tariff revisions at FERC in February. They included an effective load-carrying capability (ELCC) methodology for wind, solar and energy storage resources. The grid operator also laid out the calculation to determine the metrics, a variant of the equivalent forced outage rate method. 

The RTO’s proposal to use a different calculation for thermal resources is an “improvement on the status quo,” the renewable interests said. “However, this change alone (and taken in concert with SPP’s ELCC proposal) cannot meet SPP’s statutory burden to ensure that its filing is just and reasonable, and not unduly discriminatory.” 

SPP said that accrediting resources is “critical” to its resource adequacy program, which FERC approved in 2018. 

“It is not enough to have sufficient nameplate generation installed; the region needs assurance that such capacity will deliver at an expected output when the output is needed most,” SPP said, noting that grid operators have established accreditation methods valuing the resource adequacy contributions of different resource types. 

SPP asked that FERC issue an order by May 23 and set an effective date of Oct. 1, 2025, for the methodologies’ implementation. 

The RTO’s membership, regulators and Board of Directors approved the ELCC and PBA methodologies in October after months of discussion. (See “Members Endorse PBA, ELCC, Rejecting Compromise Position,” (SPP Markets and Operations Policy Committee Briefs: Oct. 16-17, 2023 and SPP ‘All Over’ Addressing Resource Adequacy.) 

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ERCOT Technical Advisory Committee Briefs: March 27, 2024

Members Endorse Controversial IBR Rule over ERCOT’s Objections

AUSTIN, Texas — ERCOT stakeholders overrode the ISO’s objections to push through a potential rule change on inverter-based resource (IBR) ride-through requirements after months of negotiations failed to bring a compromise. 

The action sets up a likely appeal from ERCOT and further discussion on the controversial measure when the ISO’s Board of Directors meets April 22-23. 

The Technical Advisory Committee endorsed the Nodal Operating Guide revision request (NOGRR245) during its March 27 meeting with amended language from joint commenters.  

The language was “carefully crafted” to “reach a solution that properly balances risk mitigation with economic, technological and operational realities,” the commenters said. “Requirements that are technically infeasible or impracticable to meet (particularly for existing resources) do not benefit Texas consumers or the ERCOT market and do not improve grid reliability.” 

The NOGRR is intended to align the grid operator’s rules with NERC reliability guidelines and the most relevant parts of the Institute of Electrical and Electronics Engineers’ standard for IBRs interconnecting with the grid. Two IBR-related voltage disturbances in West Texas in 2021 and 2022, dubbed Odessa Disturbances I and II, have added urgency to the measure’s eventual passage. (See NERC Repeats IBR Warnings After Second Odessa Event.) 

Stakeholders have proposed software changes to fix the issues NERC and ERCOT have identified. They have said ERCOT’s proposals, if approved, “will implement the nation’s most aggressive ride-through performance requirements to date.” 

The NOGRR passed in an 18-8 vote (69%), with three members abstaining. Two previous attempts to pass motions by stakeholders and then ERCOT failed.

“Thankfully, TAC rolled its sleeves up and refused to keep going without a compromise they could actually carry a motion on,” Arushi Sharma Frank, Tesla’s U.S. energy markets counsel and policy lead, posted on X. 

The breakthrough followed hours of discussion during the meeting, a sidebar between staff and stakeholders during lunch and then an additional tweak of the stakeholders’ initial proposed revision to the motion. 

Stephen Solis, ERCOT | © RTO Insider LLC

ERCOT’s Stephen Solis, a principal for system operations improvement, said the modification to NOGRR245 only made things worse. Solis frequently emphasized the risks to reliability during the day’s discussion. In comments filed in January, ERCOT expressed concerns about implementing “technically infeasible” requirements that could force retirement of too much IBR capacity. 

“This worsens reliability from even where we’re at today, because at least today, with the current ride-through requirements, [if] you fail, you have to go to the [Public Utility Commission]. You have to mitigate it. You have to fix it,” he said. “We are putting in a construct that reduces [the requirement]. That is worsening reliability, from ERCOT’s perspective.” 

Solis said ERCOT’s comments were ignored during the sidebar discussions with stakeholders. 

“[NOGRR245] is moving forward with a concept that because we went into a room with them, that somehow this has ERCOT’s input. ERCOT’s input was to make other modifications, which they denied to make right now,” he said. “This has not changed anything. They have basically thrown a bone about language that is in ERCOT’s current proposed language that they already had agreed to in the [stakeholder] discussions that we had, but they didn’t include it.” 

Eric Goff, Goff Consulting | © RTO Insider LLC

Consultant Eric Goff, representing consumers and the joint commenters, said he didn’t want to get into a “back and forth” with ERCOT. He said stakeholder comments were based on ERCOT comments filed in January but not those filed March 26, given the lack of time. However, Goff said he was open to beginning a conversation with the joint commenters to see whether they could improve their comments by working off ERCOT’s latest filing. 

“The goal here is to strike some type of balance. I understand that balance isn’t completely acceptable to ERCOT, but I think it’s important for the stakeholders’ voice to be heard,” Reliant Energy Retail Services’ Bill Barnes said. “I share a lot of concerns with ERCOT on the risk to reliability, just as much as the impact to existing resources is a very heavy issue the board needs to weigh in on.” 

The NOGRR was drafted by ERCOT last year and granted urgent status in September. After working its way through the stakeholder process and reaching TAC, it was tabled in January when the ISO’s staff and stakeholders failed to reach consensus. The parties have been involved in negotiations since then. (See “Stakeholders Continue Discussion of IBR Reliability Requirements,” Technical Advisory Committee Briefs: Jan. 24, 2024.) 

“I do think that that is in everyone’s best interest to continue to work together with ERCOT to potentially avoid an appeal. I don’t think it’s a good look to have two appeals go to the ERCOT board,” Barnes said. “I value the stakeholders’ opinion enough to get over the hangups that [Reliant] has so we can send a version to [the board] for its consideration and ERCOT can present their appeal if they wish to do so.” 

“I’m less concerned with the optics on how it looks to [the board] than getting everybody’s actual position on record,” Jupiter Power’s Caitlin Smith said, speaking for her company and not in her role as TAC’s chair. “I’d hate to say we voted X way or Y way because we didn’t like the way two appeals would look to them than not get everybody’s real point of view on paper.” 

“I think that the outcome of the two appeals presents more of a divided view than I think really exists, at least from our company’s point of view,” Barnes said. 

ERCOT Reviews Price Corrections

Staff told the committee they will ask the board to approve two price corrections to real-time prices during its April meeting. An analysis of the errors’ effect on the market met the criteria for review when any single counterparty’s absolute value effect is either 2% and greater than $20,000 or 20% and greater than $2,000. 

In January, ERCOT’s energy management system (EMS) retained outdated transmission line data during the weekly model builds, affecting three operating days. Staff fixed the software to ensure correct static ratings were used in the models. 

The issue resulted in $1.64 million in additional payments to market participants and a $2.84 million impact on counterparties. 

During routine maintenance Feb. 28, the process that exports constraint data from the EMS to the market management system sent incorrect constraint data for generic transmission constraints to the dispatch process. The second correction will return $277,930 to ERCOT. 

Ögelman Extends ERCOT Service

Kenan Ögelman, ERCOT’s vice president of commercial operations, has extended his retirement date by a month and now will step away from the ISO at the end of April. (See “Ögelman to Retire from ERCOT,” ERCOT Board of Directors Briefs: Feb. 26-27.) 

“I have not seen the [reliability must-run] determination for Kenan’s retirement,” Barnes joked. 

Rhythm Ops’ Jennifer Schmitt pleads for compromise as Reliant Energy Retail Services’ Bill Barnes consults his notes during the NOGRR245 discussion. | © RTO Insider LLC

Smith teasingly suggested discussing Ögelman’s final appearance before TAC during its April 15 meeting, leading Ögelman to fire back. 

“You might need a [must-run alternative] for that,” he said, referring to ERCOT nomenclature for replacing a retiring resource’s capacity. 

Indeed. Ögelman has scheduled a trans-Pacific Ocean trip a couple of days after he steps away from ERCOT. 

TAC Passes Rule Changes

Members endorsed a nodal protocol revision request (NPRR1197) that enables resources to separately meter and settle loads located behind the ERCOT-polled settlement meters at their points of interconnection. South Texas Electric Cooperative voting against the measure over concerns it codifies into protocols the metering situation it had attempted to prohibit in the recently rejected NPRR1194. 

They also endorsed a change to the Retail Market Guide (RMGRR177) that clarifies a customer’s lease agreement option when a competitive retailer tries to remove a switch hold applied to a premise it is seeking to enroll. The Office of Public Utility Counsel (OPUC) and residential customers abstained from the vote. 

The consent agenda included goals for the Reliability and Operations and Wholesale Market subcommittees and NPRR1205 that, if approved by the board and the PUC, would “strengthen ERCOT’s market entry eligibility and continued participation requirements counterparties by clarifying minimum credit quality qualifications for banks that issue letters of credit on behalf of market participants and insurance companies that issue surety bonds on behalf of market participants.”