Protesters blocked the entrance to the Federal Energy Regulatory Commission last week, resulting in more than two dozen arrests. (Source: Erik McGregor)
By Michael Brooks
Cheryl LaFleur has won plaudits for her leadership since taking over as acting chair of the Federal Energy Regulatory Commission in November and won 90 votes for her renomination to a second five-year term on Tuesday. But she did it without any help from the Democratic senators from Maryland.
Maryland’s Ben Cardin and Barbara Mikulski were among seven senators to vote against LaFleur, along with New York’s Charles Schumer and Kirsten Gillibrand, Democrat John E. Walsh of Montana and Republicans Jerry Moran and Pat Roberts of Kansas.
LaFleur’s confirmation came the day after more than two dozen opponents of Dominion’s $3.8 billion plan to convert the liquefied natural gas (LNG) import terminal on the Chesapeake Bay into an export terminal were arrested for blocking the entrance to FERC’s headquarters. The sit-in, organized by environmental group Chesapeake Climate Action Network (CCAN), was part of a larger demonstration in D.C. against hydraulic fracturing and the natural gas industry’s push to export LNG. Reuters reported that people held signs calling the agency the “Fracking Expansion Rubberstamp Commission.”
Dominion has said that Cove Point would not depend on fracking for its exported LNG. Those in opposition, including Cardin and Mikulski, disagree.
Environmental Assessment
In May, FERC staff released its environmental assessment (EA) of Dominion’s plans for Cove Point, which said that “approval of the project … would not constitute a major federal action significantly affecting the quality of the human environment.”
FERC accepted public comments at a meeting held in Calvert County, where Cove Point is located.
The senators wrote FERC in March, forwarding the concerns of a number of communities and activist groups. They asked the commission to “go the extra mile” and schedule additional meetings in five Maryland counties that they said could be subject to either fracking or the construction of gas pipelines if Cove Point is approved.
A letter from the Montgomery County Council seconded the request. “Construction of this facility will most likely lead to higher demand for gas recovered from ‘fracking,’ particularly from the Marcellus Shale basin that extends into Maryland,” wrote Council Vice President George Leventhal, who noted that another natural gas reservoir, the “Culpepper Basin,” lies in the county.
LaFleur responded with a letter declining the requests, saying that the commission “gives equal consideration to written comments and comments received at a public meeting” during the requisite 30-day public comment period for an EA.
The senators’ request to extend the comment period by another 30 days was also declined.
“We are extremely disappointed by FERC’s denial of our simple request for an additional 30 days for the public comment period,” they said in a joint press release in June. “It’s unfortunate FERC has denied this request, refusing to respect the needs for Marylanders to have sufficient time to review and understand the contents of the environmental assessment document and provide comment” to FERC.
Foreign Markets
As natural gas supply has boomed in the U.S., domestic prices have dropped sharply, leading producers to seek access to international markets, where prices are higher.
The Obama administration is also under pressure to export natural gas as part of its economic sanctions against Russia for its role in the Ukrainian revolution. Russia controls most of Europe’s natural gas supply and in June began withholding its supply to Ukraine.
Last September, the Department of Energy approved Dominion’s 20-year contracts with two companies – one in India and one in Japan – to export LNG from Cove Point. Dominion needed department approval because the U.S. doesn’t have free-trade agreements with these countries.
Both DOE and FERC have already approved two LNG export facilities in Louisiana. Cheniere Energy expects its Sabine Pass LNG site to begin exporting in late 2015, while Sempra Energy got FERC approval last week for its Cameron LNG site. Construction is expected to begin there in the fall.
FERC’s order for Cove Point is expected as early as the end of this month.
Dominion is confident that, after meeting FERC’s environmental requirements, the project will be approved. Dominion says construction could begin before the end of summer and that the station would be fully operational by late 2017, the Pittsburgh Post-Gazettereported.
WASHINGTON — After a year of political wrangling, the Federal Energy Regulatory Commission finally got its fifth commissioner last week with the confirmation of Norman C. Bay.
But uncertainty will linger for months at the agency due to Bay’s lack of a policy record and the unprecedented compromise that won his confirmation — an agreement that President Obama wouldn’t promote him to the chairmanship for nine months.
In private conversations before FERC’s open meeting Thursday, commission staff, industry attorneys and other stakeholders had no shortage of questions:
How assertive will Acting Chair Cheryl LaFleur be as a lame duck? And will she remain for her five-year term after she has to relinquish the gavel?
With Commissioner John Norris openly musing about his post-FERC future, who will replace him and how soon?
How will Bay resolve the investigation into Powhatan Energy Fund, whose principals have been running a public relations campaign accusing FERC of heavy-handed enforcement tactics?
The biggest question on the minds of many: Who is Norman Bay and what kind of a chairman will he be?
Who is Norman Bay?
A former U.S. attorney who has never been a regulatory commissioner, Bay rarely speaks at commission hearings and is virtually unknown outside FERC’s Office of Enforcement, which he has run as director since 2009.
He has maintained a sphinx-like demeanor throughout the confirmation battle, giving no interviews and speaking publicly only at his Senate confirmation hearing in May. When LaFleur congratulated him on his nomination at the commission’s February meeting, Bay betrayed neither a smile nor any sign of appreciation for the gesture.
LaFleur had called a press conference to lobby for the chairmanship just days before President Obama announced Bay as his pick. So did Bay’s reaction suggest he felt LaFleur was being disingenuous? Bay’s not talking and those close to him won’t say. (When LaFleur offered similar congratulations on his confirmation at last week’s meeting, Bay did allow a thin smile.)
Bay’s seeming aloofness, some staffers suggest, is a product of his cautious approach to surviving the nomination process and his experience as a former federal prosecutor. In private, colleagues say, Bay can be warm, friendly and self-deprecating. He spends some of his spare time attending classical music concerts with his wife, a pianist.
But that’s a side few have seen. Outside of FERC headquarters, there is much speculation.
“The dynamics are going to be very interesting. His personality issues with the other commissioners will determine how the commission is going to be run,” said one veteran member of the energy bar. “He’s seen as kind of [mysterious] right now. Doesn’t seem like a gregarious guy who would be a leader. He seems more like a guy who would implement policy.”
Wellinghoff Era Ends
FERC’s leadership has been in question since May 2013, when then-Chair Jon Wellinghoff announced he would leave the commission after a seven-year tenure including almost five years as chairman — the longest run at the top job in FERC’s nearly 37-year history.
Wellinghoff, a fellow Nevadan and ally of Senate Majority Leader Harry Reid, was a champion of renewable energy, energy efficiency and demand response. As chair, he created new offices to focus on policy and infrastructure security and hired Bay, a law professor and former U.S. Attorney from New Mexico, to run an expanded and increasingly aggressive Office of Enforcement.
In June, Obama nominated former Colorado regulator Ron Binz to fill the seat and — in an unprecedented move — said he would appoint him immediately as chairman. As chair of the Colorado Public Utilities Commission, Binz helped draft a state law that offered utilities incentives for replacing coal-fired power plants with natural gas.
Binz became an immediate target for those angry over the Obama administration’s so-called “war on coal.” When it became clear that he would not win the support of West Virginia Democrat Joe Manchin, Binz withdrew in September.
LaFleur: ‘Keeping the Trains Moving’
Cheryl LaFleur (Source: FERC)
LaFleur was named acting chair in late November, when Wellinghoff resigned from the commission to join a law firm. She has won wide and bipartisan praise for her stewardship. While Bay squeaked by last week’s Senate vote 52-45, with only a single Republican vote (Dean Heller of Nevada), LaFleur was approved 90-7, with only two Republicans in opposition.
“The commission’s continued to move while we’ve been in this,” one industry stakeholder said. “She’s done an outstanding job keeping the trains moving. She’s done a lot of things in her tenure.”
LaFleur moved swiftly to end FERC’s long-running turf battle with the Commodity Futures Trading Commission, completing two Memoranda of Understanding to help clarify jurisdictional questions and increase information sharing between the two agencies.
She also won approval for an order requiring the development of rules to protect the grid against sabotage, with an unusually short 90-day deadline. (See related story, FERC: We’ll Have Last Say on Sabotage Rules.)
LaFleur made her case for the chairmanship and a second term in a press briefing at the end of January. But opposition from Reid doomed her chances for the top spot. Reid acknowledged his antipathy in an interview with The Wall Street Journal in June, complaining that LaFleur was undermining the legacy of Wellinghoff. “She has done some stuff to do away with some of Wellinghoff’s stuff,” Reid said.
In May, LaFleur and Republicans Philip Moeller and Tony Clark rolled back a provision of Order 1000 — one of Wellinghoff’s signature achievements — regarding incumbent transmission owners’ rights of first refusal. Democrat John Norris dissented.
LaFleur’s future was unclear until May 1, when Obama renominated her under pressure from supporters in the Senate. Republicans raised the issue of gender in questioning Obama’s decision to leapfrog the less experienced Bay over LaFleur. Some did so clumsily, suggesting their words were more political than genuine. When Senate Minority Leader Mitch McConnell (R-Ky.) took to the Senate floor Tuesday to denounce Obama as “shameful” for demoting LaFleur, for example, he called her “Shirley.”
Shadow Chairman?
In announcing her vote against Bay on the Senate floor last week, Alaska Sen. Lisa Murkowski, ranking Republican on the Senate Energy and Natural Resources Committee, questioned whether Bay would undermine LaFleur as a “shadow chairman.”
There are limits to LaFleur’s authority in an interim role, observers say. “There’s a concern that it could stall more aggressive, thoughtful policy development,” one industry lobbyist said. “There’s a disappointment that it will take a while to have … someone who’s able to feel comfortable with the full authority of the chairmanship.”
The commission has had an acting general counsel, David Morenoff, since October 2012 and that appears unlikely to change until Bay takes over.
Publicly, at least, LaFleur exhibits no concerns about her mandate. “My understanding is I will be leading the commission for the next nine months with full authority,” she said at a press conference after Thursday’s commission meeting. “I don’t anticipate any broad changes in priority with this extension of my leadership.”
She said she will continue her focus on responding to the changes in the generation-resource mix, environmental regulations and grid security.
“I think I will stand back and say ‘Ok, what can I get done in nine months? Are there things I want to specifically organize?’” LaFleur said. “But I recognize that most of the work at the commission does not take place in blocks. You start things and it continues. And since I’ve just been confirmed for another term I hope to be here to see a lot of these things through.”
But will she really want to stick around to complete her new five-year term after having tasted the power of the chairmanship?
“That’s certainly my plan,” she said last week. “I’ve been asked many times, am I going to stay after nine months? The answer is yes.”
A lawyer and former utility executive, she could easily multiply her salary by joining the energy bar or returning to the industry.
But at least some of those who watch her daily say they believe her. “She really loves her job,” said one.
How Will Norman Bay and Cheryl LaFleur Get Along?
LaFleur’s appetite for remaining may be driven by how much influence she is able to retain once she hands off the gavel.
The Republicans’ hostility toward Bay, and LaFleur’s bipartisan support, means that “Norman can’t go around her as a commissioner,” one observer said. “Her stock has gone up.”
One early signal as to their cooperation will be who LaFleur appoints to replace Bay as head of the enforcement division when Bay is sworn in as commissioner. Will LaFleur appoint Bay’s choice? Bay’s deputy, FERC veteran Larry Gasteiger, is an early favorite to serve in at least an interim role.
Differences over Enforcement
Under Bay, FERC has won more than $670 million in fines and disgorged profits from Morgan Stanley, Constellation Energy, Deutsche Bank and J.P. Morgan since 2011. Barclays is contesting an additional $488 million in levies. LaFleur supported all of the settlements Bay brought to the commission.
But Bay and LaFleur have not always seen eye-to-eye. In response to questions from the Senate, LaFleur detailed seven cases in which she issued separate concurrences or dissented from the majority on matters such as the way the commission applied its penalty guidelines, or when it would share deposition transcripts with investigation targets.
Subjects in four of the cases LaFleur cited were represented by former FERC general counsel William Scherman, who co-authored an Energy Law Journal article in May accusing Bay’s unit of ignoring subjects’ due process rights. Scherman and some other members of the energy bar had been criticizing Bay’s enforcement tactics privately and in industry forums for months.
The criticism became louder in March, when the principals of Powhatan Energy Fund, which had been under investigation by Bay’s unit for three years without being charged, released documents they say prove they have been unfairly hounded. The fund enlisted testimonials from an all-star team, including Susan J. Court, Bay’s predecessor as enforcement chief, Harvard professor William Hogan and John N. Estes III, a prominent defense attorney.
The Powhatan Energy investigation was a case study for critics, including some past and present FERC officials, who say the agency is punishing legitimate, if opportunistic, trading. “I think [enforcement lawyers] could do a better job parsing what’s manipulation and what’s bad market rules,” said one current enforcement staffer who otherwise backs Bay.
Commissioner Moeller also has concerns. While Moeller praised Bay for improving the transparency of the agency’s enforcement through the implementation of settlement guidelines and more explicit enforcement orders that give guidance to traders, Bay hasn’t gone as far as the commissioner would like.
“I want to be sure the legitimate actors do not feel a chill in terms of how they communicate with our Office of Enforcement when they have legitimate questions about whether certain activities are allowed or not,” Moeller said. “We don’t want them to be afraid to ask questions.”
What’s Norman Bay’s Agenda?
At his Senate confirmation hearing in May, Bay articulately defended himself against questions about his energy policy experience and management of the Office of Enforcement. But like all well-coached nominees, he did his best notto make any definitive policy statements.
Wellinghoff became chairman after three years on the commission and announced the creation of a new unit, the Office of Energy Policy and Innovation, at his first meeting with the gavel. In his Colorado post, Binz had called for a new “regulatory compact” and opined on the future of coal and natural gas.
Bay has written extensively on criminal law and national security issues. But his opinions on the major policy issues facing the commission — the role of demand response and renewables, implementing Order 1000 — are unknown, even to the current commissioners.
“Zero,” said one industry lobbyist when asked what he knows of Bay’s policy leanings. “I guess it’s a concern — or an opportunity to educate and work with him. He definitely doesn’t come in with a vision that people will be prepared for. Wellinghoff came in very clear with what he was about.”
“The industry’s worried” because of Bay’s prosecutorial background and because he is a “blank slate” on energy policy, said another veteran FERC watcher.
“He’s got a prosecutor’s mentality and he’s in [his current job] to prosecute,” one FERC analyst said. “But he’s a fast learner. I think he’s flexible enough to have a broader view [once he becomes commissioner]. He’s honest. I don’t think he’s ideological. I think he’s fair.”
Events will Dictate
Some observers say the commission’s path forward in the short term will be dictated by having to respond to the Environmental Protection Agency’s 111(d) carbon emission rule, concerns over physical security of the grid and the recent appellate court decision voiding FERC’s jurisdiction over demand response compensation.
“Those are three huge issues coming at them. They will be extremely time consuming,” one FERC watcher said. “Pulling DR out of the [wholesale] markets will be complicated to say the least.”
Attorney Scott Hempling said FERC’s “highly professional staff” will ensure Bay is prepared. “No commissioner will be lacking for excellent, varied advice on how to proceed,” he said.
Harry Reid’s Role
Commissioner John Norris (Source: FERC)
The commission’s five seats are split between Republicans and Democrats, with the president’s party holding the majority. Unlike some similarly aligned regulatory agencies, the commissioners have rarely split along partisan lines in the last decade. Unanimous votes are the norm.
The recent uncertainty hasn’t affected the day-to-day operations of the commission, such as approving routine tariff filings.
But Commissioner Norris has lamented what he called “dysfunction” at the agency, citing the risk of 2-2 ties and the inability to forge a strategic direction or make major personnel decisions. Norris, who said his own bid for the chairmanship was blocked by Reid, blamed what he called the majority leader’s “politicization” of the commission chairmanship.
Others also have concern that Reid may attempt to influence energy policy, as he did in pushing former Nuclear Regulatory Commission Chair Gregory Jaczko to terminate the Yucca Mountain nuclear waste site in Reid’s state of Nevada. In a June editorial critical of Bay’s handling the prosecution of a Maine paper mill for allegedly gaming demand response rules, The Wall Street Journal went so far as to refer to Bay as “Harry Reid’s personal prosecutor.”
Speaking before the confirmation vote last week, Reid said that he had won assurances from Bay and LaFleur that they will “take a hard look” at the controversial Hudson Valley capacity zone in New York. Reid’s comment was a favor to New York Democrat Charles Schumer, who opposes the zone.
What kind of assurance Reid thought he had won is unclear. The commission rejected a rehearing several weeks ago on the issue. It is now before an appellate court and — unless it is remanded back — out of FERC’s hands. (See related story, New Yorkers Upset over Capacity Zone.)
What else might Reid want from FERC? More transmission to import energy to his state and to deliver renewable energy from it. Nevada ranked second in the nation for geothermal production and third for solar output in 2013. Some 90% of its energy is imported.
FERC’s incentive transmission rates, and Order 1000, which ensured a role for state renewable policies in transmission planning, are intended to accelerate building of new lines.
Future Openings
One fact of life at FERC is that the commissioners’ staggered terms means there is always a commissioner heading into his or her final year. That person is now Republican Moeller, whose term expires next June.
Moeller, who has served since 2006, declined to say yesterday whether he will seek a new term.
“I’ll broach that subject at the beginning of next year,” Moeller said yesterday. “For me personally it’s a huge distraction” to think about.
Meanwhile, Norris, who has served on the commission since 2010, told a conference last month that he will not seek renomination when his term ends in 2017.
“I couldn’t get confirmed if I wanted to,” Norris said, according to an account by SNL Energy. Norris told the forum that industry stakeholders have told him he could not get Senate confirmation even if he was reappointed because he is too “pro-consumer.”
Last September, Norris said Reid had opposed his elevation to chairman because the majority leader thought he was “too pro-coal” during his time on the Iowa Utilities Board. Reid was said to prefer a chair like himself and Wellinghoff from the southwest.
Since last year, Norris has increasingly forged his own path. After issuing 11 dissents or concurring statements in 2010, and 11 in 2011, he issued 19 last year and 11 through the first six months of 2014.
There is speculation that Norris and his wife Jackie might prefer to return to their home state of Iowa in time for the 2016 elections. Norris was chief of staff to former Iowa Gov. Tom Vilsack. Jackie ran the 2008 Obama campaign in Iowa and briefly served as Michelle Obama’s chief of staff; she is now executive director of the Points of Light Corporate Institute, an organization that helps companies develop employee-volunteer programs, in Washington.
Norris denied a press report earlier this year that his departure was imminent; he declined to comment on his plans yesterday.
Tony Clark Emerges
Commissioner Tony Clark (Source: FERC)
If Moeller is not reappointed, Commissioner Tony Clark would become the senior Republican member on the panel — perhaps putting him in line for the chairmanship if the GOP takes over the White House in 2016.
Currently the junior member of the panel, Clark is the last called on to speak at commission meetings. In his first year, Clark often had little to say at the sessions.
Recently, Clark has seemed more sure of his footing. In a speech at PJM’s annual meeting in May, he said FERC may need to rethink its fuel-agnostic policies to preserve coal and nuclear generation threatened by environmental rules and market forces.
Earlier this month, a law journal published an article he co-wrote that defended FERC’s enforcement and called on companies to be proactive in developing internal compliance organizations. Last week, he issued a statement defending the commission’s approval of physical security reliability standards while calling for additional work to improve the rule.
Communication on the 11th Floor
Commissioner Philip Moeller (Source: FERC)
Communication will be essential to the functioning of the agency during the continued uncertainty, Moeller said.
“We have to keep the communication channels [open] on the 11th floor [where the commissioners’ offices are located], really work hard to keep them open,” Moeller said in an interview last month at a meeting of the Mid-Atlantic Conference of Regulatory Utilities Commissioners (MACRUC). “That’s when we have problems — when there’s a lack of communication about what priorities are.”
Moeller said LaFleur has “really worked at opening the communication channels” since she replaced Wellinghoff. Still he said, the continued uncertainty is “awkward” for FERC’s senior staff. “We have some folks who could retire any day, who have put in 35, 30 years of valuable experience. What does that mean for them in terms of leaving or staying, or mentoring their replacements? It’s a challenge. It’s not insurmountable, but … it’s a pretty unique situation.”
State officials know when large shipments of potentially explosive Bakken crude are shipped by rail to a refinery in the state but won’t release that information to the public because of security concerns, The News Journal reported.
CSX Corp. and Norfolk Southern Corp. have begun reporting oil train shipments in compliance with an emergency order issued in May by the U.S. Department of Transportation. Delaware safety officials, however, signed confidentiality agreements to share the information only with state and local emergency management agencies. Other states, including Oklahoma and Pennsylvania, also keep quiet about crude oil shipping details.
At an investor meeting in the spring, a PBF Energy official said its Delaware City refinery receives about 102,400 barrels of crude via rail shipments daily. A Sierra Club of Delaware member has resorted to compiling a map of oil shipments in Delaware based on reports she receives from volunteer observers in order to inform the public. Last July, 47 people were killed and much of a small town in Quebec was destroyed when a train carrying crude derailed.
A Newark city councilman said the University of Delaware could have saved everybody a lot of time and trouble had it vetted a data center and power plant plan better earlier in the process. Noting that the 279-MW power plant that was part of the data center plan was what ultimately doomed the project, Councilman Stu Markham said the university could have reached the “no” point long before the city and other groups invested so much time in investigating the plan.
A university official said the plan looked like a good fit at first, but it later became apparent that the data center, with the large power plant, didn’t fit in with the university’s plans. The site is still open for development, but any power plant built there will be smaller, university officials have said.
The city council last week confirmed new Public Service Commission member Willie L. Phillips and reconfirmed Betty Ann Kane as chairman. The confirmations mean that for the first time since December, all three commission seats are filled.
Kane was first named to the commission in 2007 and became chairman in 2009.
Phillips, an attorney, comes to the commission with a background in utility regulation and compliance enforcement. He was previously assistant general counsel for the North American Electric Reliability Corp.
Alternative Suppliers Provide Savings 3 Years Running
The state Commerce Commission’s Office of Retail Market Development issued its annual report, saying that retail electric competition continues to provide savings for residential customers. The report said ComEd residential customers saved an estimated $39 million between June 2013 and May 2014. Residential switching continued in the last year, but at a slower rate than the previous two years, according to the report.
IURC Nominating Committee Gets 8 Names to Consider
The nominating committee of the state Utility Regulatory Commission has identified eight candidates to replace Commissioner James Atterholt and will interview them July 30. Nominated were: James L. Adams, Marline R. Breece, Karen E. Caswelch, Carole Sparks Drake, Eric M. Hand, Robert L. Hartley, James F. Huston and David R. Johnston. Atterholt’s seat opened up when Gov. Mike Pence tapped him as his chief of staff. Pence will be presented with three finalists following the interview.
A group of landowners and a coal industry group sued in federal court to block plans by the Tennessee Valley Authority to shutter a coal-fired generating plant. The TVA announced last year that it was going to close the two-unit Paradise Fossil Plant in Muhlenberg County and replace it with a new gas-fired generator.
This month, the Kentucky Coal Association filed suit in U.S. District Court in Owensboro arguing that the TVA didn’t follow federal rules in closing the plants. A group of landowners joined the suit, protesting the planned installation of a 24-inch natural gas pipeline to the proposed new generator. The TVA has said that it followed proper procedures, and the decision to convert to natural gas was designed to meet emissions guidelines.
The Somerset County Commission asked county planners to review a draft ordinance aimed at regulating commercial wind farm development in anticipation of a vote by the commissioners this fall.
The draft was developed in 2012 but never voted on. Now, some landowners and others are taking a second look at it and suggesting revisions, including larger setbacks between proposed facilities and homes, schools and roads. Pioneer Green, a company with a proposal in the pipeline to develop a 50-turbine plant in the county, is urging the county to finalize the ordinance.
A state judge ruled last week that the bid-rigging case against Chesapeake Energy will go to trial. Judge Maria Barton of Cheboygan County District Court ruled that there was enough evidence of alleged bid rigging between Chesapeake Energy and Encana Corp. at a 2010 land-lease auction. Barton cited emails between an Encana executive and a man bidding on the company’s behalf that said, in part, “This is a Chesapeake area and we will not be bidding.” Encana settled anti-trust charges against it with a $5 million civil payment to the state in May.
Planned Nuclear Co. Gets $260 Million in Tax Breaks
Camden Waterfront skyline
A company with plans to build nuclear reactors and related equipment at a future plant on the Camden Waterfront was given $260 million in tax credits and other economic subsidies in what is being described as the third-largest subsidy in state history. The state Economic Development Authority awarded the incentives to Holtec International based on its promises to create 235 new jobs and relocate 160 other jobs from other parts of the state.
Once the operation is set up it will get $26 million a year for 10 years. Holtec was also eyeing Charleston, S.C., as a location. It plans a 600,000-square-foot plant to build the reactors.
The award to Holtec, whose board includes Democratic powerbroker George Norcross, was decried by numerous lawmakers, with one calling it “crony capitalism.”
Chilicothe Prison Cells to be Warmed with Solar Heating
A $1.7 million solar-power system will heat cells and hot water in a state prison in southern Ohio, saving taxpayers about $245,000 a year. The system uses 400 panels installed on the roof of Ross Correctional Institution. Solar energy is used to heat an antifreeze-like liquid, which is then used to heat eight cell blocks at the prison, according to the Department of Rehabilitation and Correction. The system also produces hot water for prisoners. Ross was opened in 1987 and holds about 2,100 inmates.
A state appellate court last week upheld a ruling that gave towns the right to regulate some oil and gas development. The court threw out an argument that the state Public Utility Commission has the authority to overrule local governmental action in regulating where well sites and other facilities can be located.
With its ruling, the court upheld an earlier decision by the state Supreme Court. That decision was challenged by state regulators who saw it as a challenge to their authority. “Local zoning matters will now be determined by the procedures set forth under the [Municipalities Planning Code] and challenges to local ordinances that carry out a municipality’s constitutional environmental obligations,” President Judge Dan Pellegrini wrote in the opinion.
Delegate Appeals for Fed Help Against AEP Rate-Hike Plan
State Delegate Clif Moore thinks Appalachian Power’s recent request to raise rates 17% is too much, and he is reaching out to federal officials for relief. “Please be advised this correspondence respectfully transmits my utter disdain, shock and amazement with American Electric Power in their quest to seek a 17% increase in already unaffordable electric costs,” Moore wrote. “It is, in my humble opinion, imperative for state and federal regulators to verify that current rates are within legal limits.” He has called on the Federal Trade Commission to intervene. Appalachian, an AEP subsidiary, filed the base rate request with the Public Service Commission, seeking a $226 million increase to go into effect in April 2015.
Overhead shot of Pacific Gas and Electric’s Metcalf substation, which came under attack last year.
The Federal Energy Regulatory Commission tentatively approved a rule to protect the grid against physical threats last week after ordering changes to allow the commission to overrule transmission operators’ definition of “critical” facilities.
The Notice of Proposed Rulemaking (RM14-15) said the North American Electric Reliability Corp.’s draft “largely satisfies” the commission’s March 7 order, which called for developing the standard in an unusually short three months. The order, which was issued under pressure from members of Congress alarmed by the 2013 sabotage of a Pacific Gas and Electric substation.
It will require transmission owners and operators to provide protection for “critical” substations, but it allows each utility to determine what substations are critical.
Veto Rights
The commission ordered NERC to change the rules to allow “applicable governmental authorities” — including FERC, other federal agencies and Canadian provinces — to add or subtract facilities from an entity’s list of critical facilities. “It’s not something we expect to happen frequently but it’s authority that we thought we should have,” acting FERC Chair Cheryl LaFleur said Thursday.
Transmission operators will be required to have their critical facility lists reviewed by third parties; TOs that reject third-party recommendations would be noncompliant unless they provide a “written, technically justifiable” reason for doing so.
The commission also ordered NERC to eliminate references to “widespread” instability, saying the phrase “could, depending on the meaning of `widespread,’ narrow the scope [and number] of identified critical facilities under the proposed Reliability Standard beyond what was contemplated in the March 7 Order.”
It ordered NERC to submit an informational filing after one year evaluating resiliency measures for recovering from a loss of critical facilities.
The commission accepted NERC’s justification for excluding generator owners and operators from the rule, agreeing that a generation facility “does not have the same critical functionality as certain transmission stations and transmission substations due to the limited size of generating plants, the availability of other generation capacity connected to the grid and planned resilience of the transmission system to react to the loss of a generation facility.”
However, it required NERC to do a second informational filing to address whether “high impact” control centers for generators and other non-transmission entities should be covered by the rule.
Reliability Standard CIP-006-5 (Cyber Security—Physical Security of BES Cyber Systems) already requires primary and backup control centers of reliability coordinators, balancing authorities and generator operators to implement some physical security protections, including restrictions on physical access. But the commission said the existing rule “may not be sufficient to `deter, detect, delay, assess, communicate and respond to potential threats and vulnerabilities’” and does not require an unaffiliated third-party review as in the proposed standard.
Commissioner Tony Clark acknowledged the criticism Thursday but said the standard was “a very solid first step” and that rejecting it was not an option.
“Some have noted that the proposed standard would not provide enough visibility across the interconnection given that the identification of facilities would be done as a `bottom-up’ exercise. I believe there is a grain of truth in those concerns,” he said in a statement issued after the commission meeting.
“I encourage all stakeholders to view this as an iterative process that will continue to be improved. I view our proposed modifications and informational filings as avenues for further discussion and development to ensure that total grid awareness is considered when selecting assets to be further protected by enhanced physical security.”
Comments on the standard will be due 45 days after publication in the Federal Register, with reply comments due 15 days after that.
“I just would plead with folks to be rational,” said Commissioner John Norris, who had expressed concern that the expedited deadline and the commission’s ex-parte rules would inhibit the development of intelligent rules. (See FERC Orders Rules on Grid’s Physical Security.) “We can’t barricade our way out of this.”
Other Standards OK’d
The commission also gave preliminary approval to the Protection System Maintenance Reliability Standard (RM14-8), which requires applicable entities to include certain autoreclosing relays as part of their protection system maintenance programs.
The NOPR requires NERC to submit a report in two years based on actual performance data and simulated system conditions from planning assessments to recommend whether the standard is covering all relays necessary to ensure reliability. It also requires NERC to amend the standard to include maintenance and testing of supervisory devices associated with applicable relays.
FERC also gave final approval to the Generator Relay Loadability reliability standard and revisions to the Transmission Relay Loadability standards (RM13-19-000 and RM14-3-000). The commission said the generator relay standard will reduce the likelihood of premature or unnecessary tripping of generators during system disturbances. The commission ordered revisions to the current standard governing transmission relay loadability to prevent “compliance overlap” by eliminating potential inconsistencies between the two standards.
The American Bird Conservancy is suing the Department of the Interior over an agency regulation that allows wind energy companies to obtain 30-year permits to kill eagles. The group told Interior and the Fish and Wildlife Service that it was going to sue based on what it saw as violations of the National Environmental Policy Act and the Bald and Golden Eagle Protection Act, among other laws.
The current rule replaced an earlier regulation allowing energy companies to kill eagles for five years.
“Eagles are among our nation’s most iconic and cherished birds. They do not have to be sacrificed for the next 30 years for the sake of unconstrained wind energy,” said Michael Hutchins, a conservancy spokesman. “Giving wind companies a 30-year pass to kill bald and golden eagles without knowing how it might affect their populations is a reckless and irresponsible gamble that millions of Americans are unwilling to take.”
The Department of the Interior and the Bureau of Ocean Energy Management last week announced that more than 344,000 acres of sea floor will be open to commercial wind power. Federal authorities propose to auction off the lots, about seven miles off Atlantic City, in two designated areas. A 60-day public comment period will end Sept. 19, after which the lease sale date will be set. The Bureau of Ocean Energy Management estimates that the two areas could support up to 3.4 GW of wind energy.
Federal regulators approved seismic testing in areas up to 400 miles offshore between Delaware and Florida, in a move hailed by oil and gas exploration proponents. The Department of the Interior announced the move, saying that it was time to update the 40-year-old seismic information on offshore oil and gas reserves. It said steps would be taken to protect marine life during the testing. Estimates based on earlier seismic studies point to 1.9 billion barrels of oil and 21.4 trillion cubic feet of natural gas in the Mid-Atlantic to South Atlantic coasts. Environmentalists are still concerned that seismic testing will disturb or kill marine life.
The Federal Energy Regulatory Commission has cleared the way for Sempra Energy to begin preliminary site clearance work for its proposed LNG facility near Lake Charles, La. The authorization allows preliminary work and equipment storage on the site. Sempra said construction on the $10 billion project is set for this fall. When completed, it will allow for the export of up to 12 million metric tons of LNG per year.
U.S. electric consumers experience more power interruptions than those in any other developed nation, according to a study by a University of Minnesota professor. Massoud Amin, director of the Technological Leadership Institute at the university, said data from the Department of Energy and the North American Electric Reliability Corp. show that the U.S. grid now loses power 285% more often than it did in 1984.
The interruptions cost businesses approximately $150 billion a year, he said. He said customers in Japan lose power for an average of four minutes per year while those in the American upper Midwest go dark for an average of 92 minutes. The analysis excluded interruptions caused by severe storms or fires.
Researchers for the environmental group North America Congress for Conservation Biology estimate that at its current rate, energy development in the U.S. could consume an area twice the size of the state of Maine by 2040.
They said new mines, oil and gas wells and solar and wind farms could consume 175,000 to 250,000 square kilometers, complicating efforts to preserve wildlife habitat. “There is going to be a very large challenge in siting all of this energy infrastructure,” said landscape ecologist Anne Trainor of Yale University.
The Department of Energy estimates that 351 GW of new generation will be constructed in the U.S. by 2040. That’s equivalent to 100 plants the size of NRG’s W.A. Parish plant near Houston. But while plants are still being built, the rate is slowing. DOE estimates that 16 GW of generation will be added per year through 2016, slowing to 9 GW per year through 2022, then rising again to 14 GW annually through 2040. Future plants will be 73% natural gas, 24% renewable and 3% nuclear, DOE projects.
McCarthy: New Rules are Guides to Energy Investing
Gina McCarthy
Environmental Protection Agency Administrator Gina McCarthy told a group of state regulators that they should see the EPA’s recently announced emissions rules as a guide to energy investment, rather than a set of pollution control rules. “We really wanted this to be an opportunity to look at a short- and long-term investment strategy, not a pollution control strategy,” she told a meeting of the National Associate of Regulatory Utility Commissioners in Dallas. Emissions “can be reduced in the electricity sector in ways that are very far from pollution-control technologies.”
WASHINGTON — The Senate today narrowly confirmed Norman Bay to the Federal Energy Regulatory Commission while easily approving a new term for Acting Chair Cheryl LaFleur.
Bay cleared on a 52-45 party-line vote following a deal with the White House that will delay his ascension to the FERC chairmanship for nine months after he joins the panel.
The deal was a concession to those who questioned why Bay — who has served as director of FERC’s Office of Enforcement since 2009 but has never served as a state utility regulator — would be appointed directly to the chairmanship over LaFleur, a former utility executive who has served on the commission since 2010.
The compromise wasn’t enough to win the support of Republicans. Sen. Lisa Murkowski (R-Alaska), ranking member on the Senate Energy and Natural Resources Committee, questioned whether Bay would undermine LaFleur as a “shadow chairman.”
Sen. Mary Landrieu
“FERC is too important a commission … for appointees to be handled like this,” she said.
The Department of Energy Organization Act gives the Senate authority to confirm members of FERC but gives it no say over which one of the commissioners is appointed chair by the president.
Senate Minority Leader Mitch McConnell (R-Ky.) said Bay would be a “rubber stamp for the administration’s anti-coal agenda.”
Energy Committee Chair Mary Landrieu (D-La.) cited former committee chair Pete Domenici’s (R-N.M.) support for Bay, saying it was “very influential” in her own decision to support Bay.
Of the 15 FERC commissioners who have served since 2000, 10 served as commissioners or staffers at state regulatory agencies prior to their appointments. Four of the others worked in energy-related posts in state or federal legislative committees or executive agencies; one was a former utility executive. The last five chairmen served a median of 30 months before becoming chair.
Bay also came under fire for what some energy lawyers and legislators called his heavy-handed running of the commission’s enforcement division.
LaFleur was confirmed today by a 90-7 vote, a bittersweet victory with the knowledge that she will be a lame duck as chair.
“I want to thank President Obama and the Senate for giving me the opportunity to serve another term,” she said in a statement immediately after the vote. “I look forward to continuing to work with my colleagues to maintain a reliable and secure grid and help ensure our energy markets and infrastructure adapt to the nation’s changing resource mix.”
Commonwealth Edison briefed the Operating Committee on the removal of three special protection schemes (SPS):
An SPS designed to prevent low voltage on the Wolfs Crossing-Sandwich 138-kV line (#14302) is no longer needed because of a new TSS 167 Plano 345/138-kV autotransformer and 138-kV buses. Before reinforcement, an open breaker at TSS 143 Wolfs Crossing made L14302 radial, causing low voltage. The new autotransformer provides an alternate source for L14302. The SPS will be removed after a briefing of the Markets and Reliability Committee July 31.
The Waukegan SPS will be removed in the fourth quarter of 2014 when the bus tie 4-14 circuit breaker is removed. The SPS was initiated to prevent low voltage or transmission-line overloads in case of the loss of a 138-kV line concurrent with an outage at Unit 16 of the Waukegan coal-fired plant. It is triggered when Waukegan units 7 or 8 trip off line. The protection won’t be needed after the addition of two 345/138-kV autotransformers and connection of four 345-kV lines to the generating plant, which will provide redundancy.
The Zion Energy Center SPS will be removed in summer 2015 as the result of a new 345-kV line from Pleasant Prairie (PLPL41). The SPS was initiated to address the instability of the Zion generator for certain faults cleared in delayed time. An analysis determined that the generator will remain stable with the new line.
PJM Seeks Feedback on Website Usability
PJM is seeking volunteers to provide feedback on how it can improve the PJM.com website. In the recent member survey, PJM received numerous complaints that the website was “overwhelming” and “confusing,” and that information was difficult to find.
To address the complaints, PJM plans to conduct confidential interviews via WebEx with members who use the Markets & Operations section of the website. The interviews will not cover PJM’s tools (e.g., eMKT).
PJM’s Tom Zadlo promised any changes will not disrupt data “scraping” feeds companies have developed to automate data collection. “We know we can’t break what’s out there,” he said.
Those interested in participating should contact Melissa Visintin (Melissa.visintin@pjm.com; 610-666-4426).
PJM to Change Reactive Testing to Incorporate NERC Rules
PJM will change its reactive testing procedures to accommodate the North American Electric Reliability Corp.’s new MOD-025-2 reliability standard. The new rules will result in changes to attachment E of Manual 14D, which will be brought before stakeholders beginning in August. Among the changes, individual generators of more than 20 MW connected to the bulk electric system will now be tested (down from a threshold of 70 MW). All hydropower units will also be required to do testing.
PJM’s Dave Schweizer, who gave the OC a preview of the changes, said PJM’s rules will be at least as conservative as the NERC standards.
Disputes between utilities and solar providers aren’t limited to North Carolina. (See story, Solar Industry at Crossroads in N.C.) Among the battlegrounds are Iowa, Wisconsin, Arizona and Missouri.
On Friday, the Iowa Supreme Court came down on the side of solar, ruling that a solar company was not violating state law by selling electricity generated by a rooftop installation to the city of Dubuque. Utilities Alliant Energy and MidAmerican Energy unsuccessfully argued that third-party purchase power agreements such as the one involving Dubuque violate state laws giving them exclusive energy sales rights.
In Wisconsin, We Energies has filed a proposal with state regulators to bar its customers from leasing solar arrays. The company also seeks a surcharge on customers who are generating their own power.
Arizona Public Service Company wants the change the state net metering rules, offsetting a solar credit with a monthly charge, and state lawmakers there are considering a tax on rooftop installation.
In Missouri, Ameren and Kansas City Power & Light are asking the state Public Service Commission to end all solar rebates.
The Wisconsin, Arizona and Missouri cases await resolution.
The Bureau of Ocean Energy Management will take bids Aug. 19 for the rights to lease nearly 80,000 acres of the Atlantic Ocean off the coast of Maryland for wind energy projects. It will be the sixth commercial offshore wind energy lease awarded by the federal government, after three off of New England and one each off Virginia and Delaware. Sixteen companies have been qualified to bid on the Maryland Wind Energy Area, which could support between 850 MW and 1,450 MW of commercial wind generation. The area is about 10 miles off the coast of Ocean City, Md.
Arizona Public Service Co. will spend $3.25 million in a settlement with the Federal Energy Regulatory Commission over its role in a Sept. 8, 2011 blackout that left more than 5 million people in California, Arizona and Mexico without power for up to 12 hours.
A joint FERC/North American Electric Reliability Corporation (NERC) examination of the incident found that APS violated NERC reliability standards. Since the event, APS has worked with regulatory and industry organizations to make improvements, FERC said.
The company will pay $1 million each to the U.S. Treasury and NERC, and spend $1.25 million on reliability investments. “APS’ reliability enhancements will improve the reliability of the Western Interconnection and are valued at substantially more than the $1.25 million credit granted,” Acting FERC Chairman Cheryl LaFleur said.
The Supreme Court said it will not consider Kansas City Power & Light Co.’s appeal of a lower court ruling that denied the company federally approved transmission costs.
The company incurred the costs in moving power 500 miles from a natural gas-fired plant in the Mississippi Delta to customers in western Missouri. At issue are transmission costs associated with the Crossroads plant, which was originally built as a merchant generator but was folded into the rate base after KCP&L’s parent company was unable to sell it.
The plant only operates in the summer, but the Missouri Public Service Commission earlier ruled that it had to pay transmission access fees on a year-round basis. The commission approved the purchase of power from the plant but wouldn’t approve the estimated $5 million annual transmission costs, saying they were not just and reasonable.
The House passed a bipartisan amendment to block a new capacity zone in the New York ISO last week as part of the 2015 Energy and Water Appropriations Bill.
News of the new zone, which would increase residential energy costs, sparked protests after the Federal Energy Regulatory Commission approved it in January. Republican Rep. Chris Gibson said he and Democratic Rep. Sean Maloney introduced the amendment to protect residential consumers. “We will not relent in our efforts to prevent this agency from doing further damage to families and the economy of the Hudson Valley, where people are already struggling to make ends meet,” Gibson said in a news release. A Senate vote is expected in the fall.
Proponents of the new capacity zone, which went into effect May 1, hope it will spur the construction of new generation below a transmission bottleneck.
Elizabeth Sherwood-Randall participates in a video conference with President Obama and French President Nicolas Sarkozy in 2012. (Source: White House)
President Obama has nominated Elizabeth Sherwood-Randall, a nuclear proliferation and defense policy official, for Deputy Secretary of Energy. Sherwood-Randall is currently the White House coordinator for defense policy and has also acted as a foreign policy expert. In addition to working on nuclear weapons policy and strategy, she also will be wading into the issues surrounding hydraulic fracturing.
DOE to Start Cleanup of Hanford’s “Atomic Man” Site
Clay Rowan, a health physics technician, in the McCluskey Room to take radiation readings in June 2005. (Source: Department of Energy)
The site of a 1976 plutonium explosion at the Hanford Nuclear Reservation in Washington state is slated for cleanup this summer. Worker Harold McCluskey was exposed to the highest dose of radiation from the chemical element americium on record — 500 times the safe standard — in the accident. Americium is a byproduct of plutonium.
McCluskey, then 64, became known as the “Atomic Man” after the incident. He was put into an isolation unit, where he stayed for five months. His body’s radiation level fell by 80 percent within a year. He died in 1987 of heart disease, said to be unrelated to the accident. Cleanup of the “McCluskey Room” is expected to be completed by 2016.
Rep. Sam Graves (R-Mo.) last week filed a bill that would halt every Environmental Protection Agency regulation now in the works and mandate the review of all other EPA rules. If passed, the bill would effectively halt EPA action on any of its rules until after the review.
Graves, chairman of the Small Business Committee, is incensed over the EPA’s proposed “Waters of the United States” rule, which would redefine federal jurisdiction over lakes and streams covered by the Clean Water Act. Many of Graves’ constituents are farmers who could be impacted by any change in water laws. Graves’ “Stop the EPA Act,” would also hamstring the EPA’s recent emissions rules covering power plants.
The Senate is scheduled to vote today on the confirmation of Norman Bay to the Federal Energy Regulatory Commission and a new term for Acting Chair Cheryl LaFleur. The Senate Energy and Natural Resources Committee approved Bay’s nomination last month under a deal with the White House that would delay Bay’s ascension to the chairmanship for nine months.
Southern Company’s 25-MW demonstration carbon-capture plant at Alabama Power’s Plant Barry near Mobile, Ala., won the Southeastern Electric Exchange’s 2014 Industry Excellence Chairman’s Award. The project, demonstrating carbon capture and sequestration at a pulverized-coal plant, captures about 150,000 tons of carbon dioxide annually. The carbon dioxide is sent through a 12-mile pipeline to an oil field and injected into a geologic formation 9,500 feet below the surface.
Exelon’s Oyster Creek Nuke Shut Down Twice in a Week
Two unplanned shutdowns at Exelon Nuclear’s Oyster Creek Generating Station in New Jersey last week prompted the Nuclear Regulatory Commission to change the plant’s performance ranking from “green” to “white.” Both the company and the NRC said there were no immediate safety concerns from either event.
The first shutdown occurred last Monday, when the plant went down to fix safety equipment inside the reactor’s dry well. The second occurred Friday, as the reactor was powering up after the first incident, due to a problem in the plant’s condenser. “It is crucial that during start-up, every system operates flawlessly. If anything is not as expected, operators stop the startup process and address the issue,” company spokeswoman Suzanne D’Ambrosio said. The aging plant is due to shut down permanently in 2019.
Public Service Electric & Gas launched a new menu of online tools designed to give customers more information about outages and how long it will take to restore power.
The new tools are a response to the company’s experience during Hurricane Sandy, when millions were left without power and customers complained about being unable to get through to the company or get good information about restoration times. The new tools — at outagecenter.pseg.com — let customers see how many outages there are, and where, down to the neighborhood level. It will also give up-to-date restoration times, the company said. Information on the site will be updated every 15 minutes.
Indiana Michigan Power says it will ask state regulators for permission to construct five solar plants in Indiana and Michigan for its Clean Energy Solar Pilot Project. The company hasn’t released information on locations or sizes of the individual plants, but it said they will cost about $38 million to build. The project could be under construction by 2016, depending on how long it takes to get regulatory approval, the company said.
A ship that drills for ocean floor core samples has set up off the coast of Virginia Beach, giving beachgoers their first glimpse of the possible future of offshore wind towers. The 110-foot “offshore construction jackup” ship steamed from the Gulf of Mexico to the Virginia coast and began drilling about 300 yards offshore of Camp Pendleton, where transmission lines would be laid.
The ship will also drill at the proposed wind farm site about 24 miles offshore. Drilling will be completed by July 20, according to Dominion Virginia Power, the company that plans to build the offshore wind farm.
