A crowded docket has delayed several key pieces of New York’s Reforming the Energy Vision, including the Department of Public Service staff’s Track 2 straw proposal on ratemaking and rate design.
That document — originally expected in January and then delayed twice to June 1 and July 1 — is now due on July 28, along with staff-proposed rules governing commission oversight of distributed energy resource suppliers.
The New York Public Service Commission secretary on Tuesday granted extensions to commission staff and a working group that faced July 1 deadlines. “These extension requests are generally premised on the need to address concerns expressed by parties and members of the public for relief from the potential burdens imposed by the simultaneous issuance of four products in this proceeding,” the secretary wrote.
In requesting the delay, commission staff noted the overlap among the proposals, its own workload and the public comment periods for each.
The Market Design and Platform Technology Working Group report is now expected on July 13.
The August 2014 Track 1 straw proposal preceded the first REV order, which created the framework for development of clean and distributed energy resources. That led to the February PSC order that also set the schedule for these four docket items. (See New York PSC Bars Utility Ownership of Distributed Energy Resources.)
“Track 2 will propose specific regulatory reforms to the utility business model, rate-making approaches and rate design to achieve REV policy goals,” according to the Rocky Mountain Institute, an advisor to the PSC.
The Federal Energy Regulatory Commission on Tuesday accepted NYISO’s new method for calculating payments for voltage support services (VSS), which will keep the overall expenditure constant in the near term (ER15-1042).
NYISO derived the $2,592/MVAR compensation rate by dividing the total VSS compensation paid to qualified VSS suppliers in 2012 by the total lagging and leading reactive power capability of all qualified VSS suppliers in 2012.
“This explanation demonstrates that the proposed amendments maintain the approximate total dollar value of the current VSS program in the near term,” FERC wrote.
NYISO used 2012 as the base year for its calculations when it began developing the proposal. From 2014 onward, the payments will be tied to the consumer price index.
“We find that by applying a VSS compensation rate to both leading and lagging reactive power capability, NYISO’s proposal reasonably addresses the failure of the existing rate to address a significant shift in reliability needs, from primarily lagging reactive power support to primarily leading power support,” FERC also wrote.
MISO and its Market Monitor have joined Dynegy in denying allegations of improper conduct in the RTO’s Planning Resource Auction last April, which resulted in a nine-fold price increase in Zone 4.
The filings with the Federal Energy Regulatory Commission were in response to complaints in May by a consumer group and the Illinois Attorney General that Dynegy may have illegally manipulated the auction (EL15-70).
MISO’s 186-page response insists that it followed commission-accepted rules (EL15-70). It also stated that its Independent Market Monitor confirmed that the auction was in compliance “and produced the results it should have produced” despite prices in Zone 4 clearing at $150/MW-day compared with just $16.76 a year earlier.
“Those higher prices are the source of complainants’ discontent. However, MISO conducted the auction exactly as required under its Tariff, and none of the complainants provides any evidence to the contrary. Accordingly, these complaints should be dismissed with prejudice,” MISO told FERC.
MISO’s filing came a day after public service commissions, consumer watchdogs and attorneys general in Illinois, Indiana, Iowa, Michigan, Minnesota and Wisconsin asked FERC to investigate the auction, saying they share concerns that Dynegy “was able to exercise market power” in Zone 4.
“Due to Dynegy’s control of such a significant portion of the capacity available in Zone 4, the capacity market [in the zone] may no longer produce competitive market-based prices for capacity,” the group wrote.
Public Citizen and Illinois Attorney General Lisa Madigan asked FERC on May 28 to investigate whether Dynegy illegally manipulated MISO’s auction through its bidding strategy. Public Citizen also alleged MISO brushed aside recommendations by its staff that Zones 4 and 5 be merged due to their concerns about Dynegy’s growing share of capacity in Zone 4 after the company acquired four generators from Ameren in recent years. (See Public Citizen: Investigate Dynegy Role in MISO Auction.)
Dynegy: We Didn’t Withhold
In a 304-page filing with FERC last week, Dynegy said merging zones wouldn’t have met the requirements of the MISO Tariff. The company said it made no secret of its opposition to merging, meeting at one point with FERC staff to discuss its position.
But Dynegy spent most of its filing denying the more serious allegations of physical or economic withholding. It said all 6,419 MW of its Zone 4 capacity was “either sold bilaterally or at wholesale, exported or offered into the auction.”
The company also rejected claims of economic withholding, including an affidavit from consultant FTI Consulting Managing Director Susan Pope.
“Because of uncertainty about the quantity of offers into the 2015/16 PRA auction from non-Dynegy parties, at the time it formed its offers for this auction Dynegy would not have known with certainty whether and to what extent its non-zero priced offers would be needed to meet the Zone 4 local clearing requirement,” Pope wrote. “This is because under the MISO PRA market rules, there is substantial uncertainty concerning the quantity of supply offers that will be made into the auction.”
The company also rejected the Illinois attorney general’s claim that Market Monitor David Patton improperly calculated its opportunity costs, saying his $155/MW-day estimate reflected its ability to sell capacity into PJM.
The company said the complainants ignored that PJM’s most recent Incremental Auction cleared at $163/MW-day less than a month before MISO’s auction last April.
Market Monitor’s Response
Patton fired back at the complainants’ premise that Dynegy had an unusually strong market presence in Zone 4 and free rein to commit economic withholding.
Zones with “pivotal” suppliers such as Dynegy “are extremely common,” and that’s one reason that RTOs have market power mitigation measures in place, he said, adding that MISO properly applies such measures in its Tariff.
“Our [monitoring] found no evidence of physical withholding,” Patton said.
Patton also said that despite substantially lower auction prices in Zone 4 in previous years, “the simple fact the price of Zone 4 is higher in this planning year than in previous planning years provides no meaningful evidence in support of the complaint.”
In fact, Patton contends prices in other MISO zones “are unreasonably low.”
Patton has often argued that MISO’s capacity market is flawed because it uses a vertical demand curve, which can result in unstable capacity prices. With a vertical demand curve, the last megawatt of capacity needed to satisfy the minimum requirement has a value equal to the deficiency price, while the first megawatt of surplus has no value.
“This means that as the surplus declines to zero, the market will suddenly start to clear at much higher prices,” Patton said.
He also previously said the need for reform “may become particularly acute” as planning reserve margins decline toward the minimum requirement level with the anticipated retirement of significant amounts of coal-fired capacity as early as the 2015/16 planning years.
The $150/MW-day in Zone 4 “is still relatively low when comparing the cost of building a new unit at $247/MW-day,” Patton added.
He said the Zone 4 clearing price also reflects the convergence between MISO and PJM markets, with more than 1,000 MW of capacity in the zone committed to PJM.
Reasons for Price Jump
In its filing, MISO said the fact that the auction prices vary sharply from one year to the next does not establish that prices are unjust or that they are “the product of any lack of oversight or administration on MISO’s part; or that the price was the product of market manipulation.”
Results can vary by location and by year due to commercial decisions of market participants or the supply of capacity offered into the auction, MISO said. In the most recent auction, higher-priced local resources were needed to meet the local reliability requirement in Zone 4, MISO said, because fewer resources were offered in at zero.
Compared to the prior auction, more price-sensitive offers were submitted and more capacity was procured through the auction than through bilateral contracts, MISO said.
Zones may be affected by differing state procurement rules applied to load-serving utilities.
“Each of these factors resulted in higher prices than in the 2014-2015 PRA and are examples of factors that can raise rates wholly independently of any seller misconduct.”
The complainants failed to provide facts to back their claims and their arguments are speculative, collateral attacks, the RTO said.
“For example, Public Citizen speculates that the rate for Zone 4 ‘may be the result of illegal manipulation and gaming of the auction bidding process’ and that ‘Dynegy may have engaged in intentional capacity withholding.’”
Market Concentration
In their complaints, Public Citizen and Madigan raised concerns about FERC’s approval of Dynegy’s acquisition of generating units from Ameren — questioning the commission’s market power analysis at the time.
In its response, MISO said the two complainants did not intervene in the commission proceeding involving Ameren’s application to sell generating units to Dynegy.
MISO said FERC rejected a protest that asserted Dynegy’s proposed acquisition of the Ameren units should be analyzed in a submarket, “finding that the MISO balancing authority area properly defined the geographic market for the purposes of analyzing horizontal market power issues.”
Moreover, MISO said it determined previously that 85% of the capacity for Zone 4 had to be located within the zone. That local clearing requirement was set as a function of local reliability needs, the capacity in the zone and its import capability.
Public Citizen alleged that failing to adjust the local clearing requirement following Dynegy’s acquisition of new generation in the zone may have helped it execute a capacity withholding scheme.
MISO countered that Public Citizen failed to explain how the RTO could set aside the mathematical calculation that its Tariff requires “or how local reliability needs would have been satisfied under its approach given the amount of capacity in Zone 4 and capacity import limits.”
Not ‘Bullied’
One of the more incendiary allegations in the Public Citizen complaint is that MISO rejected recommendations by staff members to merge Zone 4 and Zone 5, given Dynegy’s growing dominance in Zone 4. The alleged motivation: fear that Dynegy would leave MISO for PJM.
Public Citizen cited minutes from a 2014 MISO Loss of Load Expectations Working Group in which a manager of economic studies purportedly stated that staff “are concerned with Dynegy’s offer strategy in the next Planning Resource Auction as they [Dynegy] are now the dominant provider of capacity in the zone.”
Public Citizen alleged the zone merger proposal was swatted down due to “stiff resistance” from Dynegy. The group specifically pointed to Dynegy executive Mark Volpe, who served as vice chair of MISO’s Supply Adequacy Working Group, claiming his role and that of others in the auction design and coordination “do not lend credibility to the auction process and cry out for FERC review of the auction results under Section 206 at least.”
In its response, MISO said there is no basis in fact that Dynegy “bullied it” or threatened to defect to PJM.
MISO said it did study and engage stakeholders in talks about combining Zones 4 and 5 but did not make the change “because additional consideration was warranted based on extensive stakeholder feedback.”
That decision “was made based upon the requirements of the Tariff, overall stakeholder input and MISO’s independent analysis — not based on threats or pressure from Dynegy.”
Discussions about combining zones and other aspects of resource adequacy requirements should continue to be conducted through the stakeholder process, MISO insists, “which will more inclusively engender broad stakeholder and state regulator involvement as compared to settlement judge procedures.”
Connecticut regulators said Tuesday they will reject Iberdrola SA’s acquisition of UIL Holdings without much stronger ratepayer protections, issuing a draft decision in which they blasted the Spanish conglomerate’s management and said they would not approve the deal based on a “leap of faith.”
The Public Utilities Regulatory Authority said Iberdrola failed to reassure it that UIL’s Connecticut ratepayers would be adequately protected from any financial stresses the company may experience from its international operations or other units in the U.S. (15-03-45).
“The authority … questions why the applicants would file a change of control application and not be prepared to provide any evidence that would demonstrate that the transaction is in the public interest,” PURA said. “To not research or provide evidence as to how the transaction would benefit (or harm) ratepayers demonstrates a lack of concern or interest by the applicants in this important area.”
In March, Iberdrola announced it planned to acquire UIL, which has electric and gas distribution companies in Connecticut and Massachusetts, in a cash and stock deal valued at $3 billion. It said it would incorporate UIL’s operations into its U.S. subsidiary, Iberdrola USA. (See Iberdrola Broadens Northeast Footprint in $3B UIL Deal.)
PURA said it would not approve the deal without “ring fencing” provisions to protect UIL’s Connecticut electric and gas distribution companies from bankruptcies by Iberdrola’s other operations.
Regulators also said they “cannot conclude that the applicants will continue to possess the ability to provide safe, adequate and reliable service to the public.” It said Iberdrola’s financial strength and managerial expertise were adequate, but the company did “not possess the requisite suitability and responsibility to acquire UIL Holdings.”
Final Decision July 17
The companies have until July 7 to provide replies to the 43-page draft. PURA said a final vote on the proposed merger is scheduled for July 17. For the merger to proceed, PURA is also demanding a three-year distribution rate freeze and a seven-year commitment for the headquarters to stay in the state, among other items.
Reaction on Wall Street was swift. UIL stock was trading at about $47.60 throughout the day but immediately dropped to about $45.50 when the draft was released at 3 p.m. It recovered slightly to close Tuesday at $45.82, off $1.71.
UIL CEO James P. Torgerson issued a statement Wednesday saying the company was disappointed in the draft decision but noted that it “provides an opportunity to UIL and Iberdrola to address” regulators’ concerns.
“We look forward to providing clarification and additional information to PURA quickly,” Torgerson said. “We truly believe the proposed transaction can bring significant value to our customers.”
Iberdrola did not respond to requests for comment.
Ring Fencing
In hearings, the state Office of Consumer Counsel said regulators should insist on the type of ring fencing provisions that Exelon has agreed to in its proposed acquisition of Pepco Holdings Inc.
Iberdrola objected, saying the ring fencing conditions were “unprecedented, unnecessary and not within the authority’s jurisdiction.” It agreed to 39 of the 97 conditions proposed by the OCC.
PURA said those conditions were insufficient. “The authority concludes that ring fencing is a necessary condition for this change of control to protect ratepayer interests.”
Iberdrola had separately offered a $400,000 renewable energy integration study, various scholarships worth more than $300,000, charitable giving of at least $2.5 million over four years, a rate credit of $5 million, a $2 million economic development grant and a one-year freeze on electric distribution rates. PURA dismissed the offers — made more than halfway through its 120-day review — as “too little and too late.”
Local Control
Regulators also questioned Iberdrola’s promises that UIL would remain under local control, with the Connecticut management in place, noting the company’s recent history of buying and selling local distribution gas companies.
Iberdrola acquired Connecticut Natural Gas, Southern Connecticut Gas and Berkshire Gas, in Massachusetts, through its 2008 purchase of Energy East Corp., which it rebranded as Iberdrola USA. The company then sold the gas utilities to UIL in 2010. They would be reacquired in the proposed merger.
When Iberdrola first owned CNG and SCG, PURA said, it responded to regulators’ ruling in a 2009 rate case by ordering the gas companies to develop plans that included “austerity measures and work force reductions.”
“The authority is concerned with the applicants’ commitment to local management and whether its management and management practices are suitable for UIL,” PURA wrote.
One issue not raised in the decision is the fate of the defunct English Station generating plant, which sits on a contaminated site in New Haven. Some state officials believe the merger is an opportunity to finally clean up the site, but PURA has already determined it is outside the scope of the merger proceeding. (See Connecticut Officials at Odds over Plant Clean-up, Merger.)
The New England Power Generators Association says ISO-NE should adhere to a planned change to a sloped demand curve in the next Forward Capacity Auction (ER14-1639).
NEPGA has asked the Federal Energy Regulatory Commission to clarify a previous order that directed the RTO to continue the effort to eliminate the need for administrative pricing in zones that are short of generation resources or suffer from transmission constraints.
ISO-NE informed FERC in May that the complexities involved in switching to the sloped demand curve could not be resolved in time to “result in just and reasonable outcomes” in FCA 10, which is scheduled for Feb. 8, 2016. ISO-NE also cited the need to reconfigure the zones within the RTO to resolve transmission constraints identified since the last auction as an impediment to a timely resolution. (See ISO-NE Proposes New Capacity Zones for FCA 10.)
NEPGA suggests that FERC did not explicitly order a sloped zonal demand curve “only because it relied on ISO-NE’s commitment to file sloped zonal demand curves for commission review in advance of FCA 10.”
NEPGA is asking the commission to initiate a Section 206 proceeding and order ISO-NE to file the sloped zonal demand curves developed by the RTO and New England Power Pool stakeholders.
“Market participants have expected for over a year that their participation in FCA 10 would be based on both system-wide and zonal sloped demand curves. Clearing capacity resources on a curve better reflects the incremental value of capacity and leads to a more efficient market outcome,” NEPGA wrote.
Opponents of Clean Line Energy’s proposed Plains & Eastern transmission line are asking for public hearings and a way to intervene on the project, which would span 720 miles from Oklahoma to Tennessee.
A group called BLOCK Plains & Eastern Clean Line: Arkansas and Oklahoma filed petitions with the Federal Energy Regulatory Commission and the Energy Department’s Office of Electricity Delivery and Energy Reliability on June 16, asking them to conduct a rulemaking for implementing Section 1222 of the Energy Policy Act of 2005.
The Plains & Eastern is the first transmission project being developed with the department under Section 1222, which authorizes the Southwestern and Western Area Power Administrations to participate in transmission projects with third parties in states where they operate if the department determines that they are necessary to reduce congestion or meet demand.
Section 1222 does not allow financial participation by those agencies, but it does authorize the Energy Department to facilitate private sector participation in transmission development by accepting and using third-party funds.
“There is no ‘normal process’ [for Section 1222],” Carol Overland, attorney for BLOCK Plains, said in an interview. “It’s not something ever used before and DOE has not established rules for Section 1222, so we have asked for a rulemaking.”
FERC rejected BLOCK Plains’ petition last week, saying Section 1222 “does not give the commission rulemaking or other authority regarding these matters and is therefore outside of the commission’s jurisdiction” (RM15-22).
Overland said BLOCK Plains has yet to hear from the Energy Department. However, the department has extended the public comment period to July 13, saying it is “accepting comments on whether the proposed project meets the statutory criteria listed in Section 1222 … as well as all factors included in DOE’s 2010 request for proposals.”
The department selected the Plains & Eastern project in 2012 under the RFP. Clean Line hopes to partner with the Southwestern Power Administration, which owns transmission lines and facilities in Texas, Oklahoma, Missouri, Louisiana and Arkansas. (See Clean Line Starts Online Petition for DOE Tx Approval.)
BLOCK Plains, which says its represents Arkansas and Oklahoma landowners, contends the department has improperly conducted reviews on the environmental impact of the project, its need and routing options without first creating a rulemaking process for Section 1222.
Due Process
“The process chosen by the department raises due process issues because there are no established rules, the department’s process severely limits public participation and transparency [and] restricts access to information, and thus far the department offers no opportunity for public hearings or intervention in a contested case,” the group said in its petitions. “The process chosen by the department also severely limits building a record that would support any decision by the department. There is no justification for operating without rules.”
The Plains & Eastern project would deliver more than 3,500 MW of energy from wind farms in the Oklahoma Panhandle to the southeastern U.S. The DC line would connect with the Tennessee Valley Authority.
The department has closed comments on a draft environmental impact statement for the project and is now preparing a final EIS. Clean Line hopes to begin construction on the Plains & Eastern project in 2016, with commercial operation as early as 2018.
New York’s Green Bank has generated so much interest from clean energy and energy efficiency developers that it is asking to borrow from the private markets as well as revise allocations from its state sponsor.
In a report filed with the New York Public Service Commission on Thursday, the bank’s sponsor, the New York State Energy Research and Development Authority (NYSERDA), said its schedule to capitalize the bank with $1 billion over five years is inadequate for its potential project portfolio.
It is asking the PSC for permission “to obtain an external borrowing facility to provide the necessary liquidity and the certainty of sufficient available capital that is critical for private sector engagement” (14-M-0094). The bank was initially funded with $200 million last year and has received requests for $734 million through mid-June.
In its annual business plan filed on June 19, the bank said it has received funding applications that could be leveraged into more than $3 billion worth of clean energy projects statewide.
‘Pillar’ of REV
The bank is one of four initiatives of New York’s Clean Energy Fund, which NYSERDA calls a “key pillar” of the state’s Reforming the Energy Vision program. The fund also includes the $1 billion NY-Sun initiative to build solar projects throughout New York. (See New York PSC Bars Utility Ownership of Distributed Energy Resources.)
The bank’s business model is predicated on projects receiving $3 from the financial markets for every $1 in publicly backed funds.
More than half of the current funding requests — in both the number of projects and their financing needs — has come from energy efficiency programs. The rest is divided among wind, solar, bioenergy and other projects.
The $734 million in funding requests are in various stages of the bank’s pipeline. As of June 12, the Green Bank had $338 million of projects in its “active portfolio,” meaning they had passed advanced stages of review by its scoring committee. About $500,000 in transactions have closed.
The bank started in 2014 with plans to be capitalized with $1 billion in public funding over five years. Last year it received $165 million in ratepayer funds through the system benefits charge (SBC) and another $45 million from New York’s share of money from the cap-and-trade program of the Regional Greenhouse Gas Initiative.
Seeking Advance
NYSERDA says it appears the bank’s current funding levels will be unable to keep up with the amount of projects seeking aid.
The bank is seeking an advance of $150 million now to keep momentum going in the project pipeline. It would then draw funds from NYSERDA over a total of 10 years instead of five, with lower annual allocations over the extended time frame. It said the private credit facility it is seeking “would be put in place at the point it is needed, sized to ensure that the available amount would not itself become the constraint on [the bank’s] ability to run and grow its business.”
Without the $150 million, NYSERDA said, the bank will lose $1.5 billion in private investment over the next decade.
The bank’s aim is to become self-sustaining within a few years as loans are repaid and that money is recycled to fund future projects. The bank anticipates it will reach a “steady state” of annual commitments of about $200 million.
The bank was formed to leverage investment in clean energy technologies and energy efficiency programs that may not attract private capital on their own.
But the bank’s report says its expertise was also crucial in assisting two upstate clean energy projects that ultimately were financed through private sources. It cited a 60-MW biomass energy project at the U.S. Army’s Fort Drum, for which the bank was originally committed to purchase $10 million of its debt.
It also said its consultations with private banks helped familiarize them with an ongoing project to install solar arrays at several Finger Lakes region vineyards.
A merchant transmission developer last week accused several PJM transmission owners of inflating the costs of upgrades necessary to approve three auction revenue rights requests.
TransSource LLC asked the Federal Energy Regulatory Commission to order PJM to provide it with data showing how the RTO calculated the almost $1.7 billion in upgrade costs in its system impact studies (SIS) for the requests. TransSource said the RTO has repeatedly refused to release the data, in violation of its Tariff (EL15-79).
The company also requested fast-track processing of its complaint and asked that FERC suspend a July 12 deadline to execute facilities study agreements in order for the requests to retain their positions in the ARR queue.
TransSource — not to be confused with Transource Energy, a joint venture of American Electric Power and Great Plains Energy — said that if it misses the deadline and forfeits its queue positions, it could lose $6 million per month in incremental ARR revenues.
PJM estimated the requests, identified by their queue position numbers Z2-053, Z2-069 and Z2-072, to be worth, respectively, 156.1 MW, 105 MW and 204.6 MW in incremental ARRs. It estimated $376.5 million, $783.8 million and $586.8 million in upgrade costs.
TransSource alleges that the transmission owners whose lines would require upgrades necessary to award the ARRs “intentionally assigned to those queue positions a scope of mitigation that is materially too broad in an effort to defeat TransSource’s network upgrade request.”
Z2-053 and Z2-069 are both sourced in Bridgewater, N.J., and sink in Hoboken and South River, respectively. Z2-072’s source is the Indian River power plant in Delaware, and its sink is New Church, Va., on the Delmarva Peninsula. The ARRs require upgrades on lines owned by Public Service Electric and Gas, PPL, Jersey Central Power & Light and Delmarva Power & Light.
“On 12 occasions TransSource has asked PJM to explain how it determined the scope of mitigation used in its SIS and has requested access to the underlying data inputs, assumptions that the PJM TOs submitted to PJM and that PJM used to determine the SIS scope of mitigation and costs. Each time, PJM has refused,” TransSource said. PJM told TransSource that it had no right the data, according to the company.
TransSource pointed to the section in the PJM Tariff that requires the RTO to “provide a copy of the system impact study and, to the extent consistent with the Office of the Interconnection’s confidentiality obligations in … the Operating Agreement, related work papers to all new service customers that had new service requests evaluated in the study and to the affected transmission owner(s).”
The company said the scope of work outlined in the studies is “badly inflated and intended to defeat the TransSource network upgrades … making it difficult, if not impossible, for TransSource to secure the financing required for its network upgrades.”
TransSource added that its queue positions “directly affect numerous PJM Order 1000 Regional Transmission Expansion Projects, several of which stand to be rendered unnecessary if TransSource’s projects are completed and become operational.”
The complaint was filed by TransSource Manager Adam Rousselle, who did not return a request for comment.
The House on Wednesday voted 247-180 to weaken the Environmental Protection Agency’s Clean Power Plan. The bill would delay implementation of the carbon emissions rules for power plants and would allow states to opt out of the rules.
“The bill’s effects would be felt hardest by those most at risk from the impacts of air pollution and climate change, such as the elderly, the infirm, children, native and tribal groups, and low-income populations,” the White House said in a letter to lawmakers. It promised that President Obama would veto the bill if it reached his desk.
Senate Republicans have introduced a similar bill that would go even further to weaken the rule and impair the EPA’s ability to set carbon rules for power plants.
Federal Judge in Wyoming Grants Temporary Stop to Fracking Rules
Skavdahl
A district court judge in Wyoming last week granted a request to temporarily stop new federal rules governing hydraulic fracturing on public lands.
Judge Scott Skavdahl granted a reprieve until July 22, acting on a request from the oil and gas industry, which said the rules represent an “arbitrary and unnecessary” burden on drillers. Industry was joined by state governments in Colorado, Wyoming, North Dakota and Utah in stopping the new rules.
The rules would require companies to disclose chemicals used in fracking on federal land and to implement new practices to curb oil and gas leaks.
DOE Approves Sabine Pass LNG Export Expansion Plan
The Department of Energy on Friday approved Cheniere Energy’s plan to expand its Sabine Pass liquefied natural gas terminal in Louisiana to export LNG to countries that do not have free trade agreements with the U.S. Cheniere already has four production facilities nearing completion at the terminal. The approval authorizes it to build two more.
The government’s approval came two days after the Federal Energy Regulatory Commission declined a request by the Sierra Club to reconsider its approval of the expansion plans.
The development of new domestic gas fields has transformed the nation’s energy outlook, allowing the industry to promote exports where a decade ago it had been planning to increase imports of LNG to buttress U.S. supplies. The Sabine Pass terminal will be the first large-scale plant in decades to ship LNG from the continental U.S.
FERC Denies Request to Extend Public Comment Period on Mountain Valley
The Federal Energy Regulatory Commission has turned down a request to expand the public comment session for a proposed natural gas pipeline that would run through central Virginia. Lawmakers and other officials asked for an extension of the comment period, but FERC Chairman Norman Bay declared the session ended.
The 300-mile Mountain Valley pipeline would transport natural gas from Wetzel County, W.Va., to Pittsylvania County, Va.
NRC Steps up Oversight at Talen’s Susquehanna Site
The Nuclear Regulatory Commission will increase its oversight of Talen Energy’s Susquehanna nuclear station in Pennsylvania after a recent inspection during an emergency drill identified weaknesses with the plant’s response. Talen Energy was formed by the recent spinoff of PPL’s generation assets.
The problem involves the plant’s interpretation of when to start a 15-minute clock for an emergency assessment of a radioactive leak. Plant personnel thought the clock started when it was determined that crews were unable to stop a leak. But NRC rules say the clock starts when a leak is first detected.
“It’s important during an emergency situation that state, county and local officials are provided with information in a timely manner to assess the situation and implement protective actions, if warranted,” NRC Region I Administrator Dan Dorman said in a news release. “While the probability of an event of this magnitude is extremely low, this finding points to a weakness in that area that the company will need to address.”
DOE Study Finds Canadian Oil Sands Give off Increased Greenhouse Gases
A study funded by the U.S. Department of Energy found that petroleum extracted from Canadian oil sands produces 20% more greenhouse gases than conventional crude. The findings are consistent with long-held assumptions about oil sands production, which requires more energy to extract than conventional oil.
The study, conducted by the department’s Argonne National Laboratory, Stanford University and the University of California, noted that oil sands production is expected to double in the next 15 years, and that half of that crude could end up in the United States.
The findings are expected to fuel debate on the Keystone XL Pipeline, which is designed to transport Canadian crude to oil refineries in the Gulf of Mexico region. Final approval of the pipeline has not yet been granted.
FERC to Prepare Impact Statement for Port Arthur LNG Project
The Federal Energy Regulatory Commission has issued a notice of intent to draw up an environmental impact statement for the proposed Port Arthur Liquefaction Project in Texas, as well as an associated pipeline project.
Port Arthur LNG, an affiliate of Sempra LNG, and Port Arthur Pipeline, a subsidiary of Sempra US Gas and Power, are planning to construct and operate interrelated LNG terminal and natural gas infrastructure projects along the Sabine-Neches Ship Channel in Jefferson County, Texas.
The Port Arthur Pipeline Project includes 35 miles of pipeline to supply the export terminal. Part of an existing state highway and as many as five existing pipelines will need to be relocated as part of the project.
WILLIAMSBURG, Va. — Dominion Resources CEO Tom Farrell spoke of the challenges of social media, the promise of utility-scale solar and the dangers of “magical thinking” in remarks to the 20th annual Education Conference of the Mid-Atlantic Conference of Regulatory Utility Commissioners last week.
Farrell
“Transitioning from more than three decades of public policy centered on the notion of energy scarcity to energy abundance is a very good problem to have, but nevertheless it’s a problem,” Farrell said. Making the transition, he said, will require new gas and electric infrastructure and a rational response to environmental regulations.
“The combined effect of the proposed climate change, air quality, water quality, ash disposal and many other [energy-related] regulations on customer costs and reliability is a great cause for concern … But wishing away regulations we might differ with is not an option,” he said.
“We must avoid magical thinking in the public policy arena — the type of thinking that bypasses the laws of physics, the limits of technology and the realities of human nature in pursuit of ideological goals. Just as we have long recognized that hope is not a business plan, so we must accept that ideology is not an energy policy.”
Farrell said he expects utility-scale solar to be part of the response to the Environmental Protection Agency’s Clean Power Plan. “Although much of the public policy debate and all of the publicity tends to focus on distributed solar, the real story has been the explosive growth in utility–scale solar, by far the most cost-effective … and useful complement to traditional generation,” he said.
Farrell praised Federal Energy Regulatory Commission Chairman Norman Bay’s suggestion earlier in the conference that states create “energy corridors” for siting both electric and gas lines.
Meeting future environmental rules, Farrell said, will require utilities to overcome obstacles from both infrastructure opponents and federal agencies responsible for approving siting of new lines.
“Social media … accelerates the flow of information — and misinformation — on the Web. In the hands of those who oppose new energy infrastructure, social media gone viral can erode industry’s credibility and make our job of communicating facts much harder. But communicate we must. Our industry has not always been on the cutting edge in the use of social media tools. But we’re going to have to learn how to do it and we’re going to have to learn how to respond.”
Farrell said utilities are facing an unusual alliance of “environmental groups who don’t want any fossil fuels used at all” and Tea Party-type activists who “say I’m happy to use gas or electricity, but I don’t want you doing it on my property.”
“When you put those two together that’s a very interesting coalition,” he said. “I think you’re going to see … that grow exponentially over the next five years.”
He expressed frustration with what he said were seemingly contradictory directives from federal agencies, citing the difficulty Dominion has had in winning federal approval for a transmission line across Virginia’s James River. The line is needed because of the loss of coal-fired generation shuttered due to environmental rules. “We still don’t have all the permits and we’ve been working on it for six years,” he said.
“We would do well to acknowledge that energy issues are highly complex, that there are tradeoffs and opportunity costs embedded in every single policy decision made. There is no silver bullet solution that’s going to solve all the problems and do it reliably and inexpensively,” he said. “In essence this means more hard work on energy policy and less attention paid to energy soundbites coming from the fringes on either side.”
