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August 13, 2024

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NHTSA Proposes 66.4-mpg Fuel Efficiency for Passenger Cars by 2032

The National Highway Traffic Safety Administration (NHTSA) on Friday issued a proposal for a major increase in national fuel efficiency standards for cars, light-duty trucks and some heavy-duty vehicles, aimed at saving drivers money on gasoline while cutting both U.S. greenhouse gas emissions and dependence on foreign oil.

The 696-page Notice of Proposed Rulemaking would require automakers to hit a fleetwide fuel Corporate Average Fuel Efficiency (CAFE) of 66.4 mpg for passenger cars and 54.4 mpg for light-duty trucks for their 2032 models.

The standard for heavy-duty pickups and vans (HDPUVs) — defined as between 8,501 and 14,000 pounds — would taper off from 4.4 gallons needed to drive 100 miles in the 2030 model year to 2.6 gallons in 2035.

However, the NHTSA qualified those numbers by noting “that real-world fuel economy is generally 20 to 30% lower than the estimated required CAFE level.”

The NHTSA requirements for fuel efficiency for 2023 models are 50.5 mpg for passenger cars and 35.8 mpg for light-duty trucks, according to figures from the Department of Energy. According to the NHTSA, passenger cars include sedans, station wagons and two-wheel drive crossovers and SUVs, while the light-duty truck category covers four-wheel-drive SUVs, small pickup trucks, minivans, and passenger and cargo vans.

The proposed standards, covering model years 2027-2032, would push automakers to improve fuel efficiency 2% per year for passenger cars and 4% per year for light-duty pickups. The standards for HDPUVs would tighten 10% per year from 2030 to 2035.

The current standards for passenger cars and light trucks end in 2026. The NHTSA said the 2030 starting date for the HDPUV standard is because of “statutory lead time constraints” but did not provide further details.

Previous CAFE standards have set combined fuel efficiency targets for passenger cars and light trucks. However, the NHTSA said, it was setting different standards for the two categories because “manufacturers have already made substantial progress in technology application to passenger cars, such that the possibility for further fuel economy improvements … is relatively limited.

“The agency believes that there is more room to improve the fuel economy of light trucks, in a cost-effective way, and that the benefits of requiring more improvement from light trucks will be significant given their high usage and the fact that they make up an ever-larger percentage of the overall fleet.”

The combined standard for passenger cars and light trucks would be 57.8 mpg in 2032, the agency said.

The NHTSA estimates that the proposed standards would slash fuel consumption by 88 billion gallons for passenger cars and light-duty trucks and 2.6 billion gallons for HDPUVs through 2050. The resulting reductions in carbon dioxide emissions would be 885 MMT for passenger cars and light-duty trucks and 22 MMT for HDPUVs.

The agency estimates that savings from the proposal would exceed costs by $18 billion but that the savings consumers see at the pump would be more modest. For example, lifetime fuel savings of $1,043 for more efficient passenger cars would be offset by an increased cost of $932, delivering net savings of $111 in the 2032 model year. Lifetime net fuel savings for HDPUVs would be about $300 in the 2038 model year.

The release of the NOPR starts a 60-day comment period, and the NHTSA will hold at least one virtual public hearing during that time.

NHTSA vs. EPA

The NHTSA CAFE standards follow proposed standards for tailpipe emissions that EPA issued in April. (See EPA Issues Emissions Rules Aimed at Boosting EVs.)

EPA estimates those standards would cut emissions from light- and medium-duty vehicles by 7.3 billion MT of CO2 between 2027 and 2055 and projects net benefits of $1.6 trillion. Proposed standards for heavy-duty vehicle rules would save 1.8 billion MT of CO2 and yield $320 billion in benefits.

“I want to make clear that EPA and NHTSA will coordinate to optimize the effectiveness of both agency standards while minimizing compliance costs,” acting NHTSA Administrator Ann Carlson told The Associated Press.

The proposed levels were chosen as both technologically and economically feasible, the agency said, noting that by statute, it is not allowed to factor electric vehicles into its efficiency standards, a major difference with the EPA standards, which are aimed at boosting vehicle electrification.

At the same time, automakers can use electric vehicles to meet the standards, the NHTSA said.

Reactions

Sen. Ted Cruz (R-Texas) slammed the proposal as an attack “on affordable gas-powered cars and trucks” and a “de facto EV mandate” that would raise prices and hurt national security.

John Bozzella, CEO of the Alliance for Automotive Innovation, said efforts to align the two standards are “encouraging” but they could still cause problems and extra costs for automakers and consumers.

“Conflicting and overlapping rules are complex and expensive,” Bozzella said in a statement released Friday. “If an automaker complies with EPA’s yet-to-be-finalized greenhouse gas emissions rules, they shouldn’t be at risk of violating CAFE rules and subject to civil penalties that levy costs on consumers and manufacturers — but deliver no corresponding environmental benefits.”

He called for “a single national standard to reduce carbon in transportation — one vehicle fleet and one national standard.”

While earlier raising concerns about penalties for automakers not meeting the NHTSA standards, General Motors released a statement Friday welcoming “the intent to align NHTSA and EPA standards and providing flexibility to industry to achieve these targets.”

The company has committed to selling only all-electric new vehicles by 2035.

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DC Circuit Upholds Tx Cost Allocation for Rhode Island Solar Project

The D.C. Circuit Court of Appeals on Friday denied a pair of petitions by the Rhode Island-based company Green Development over FERC’s approval of transmission charges connected to a proposed solar project. The court determined that Green Development’s four main issues with FERC’s approval lacked merit.

Green Development is the developer of four solar projects totaling about 40 MW in Rhode Island. The company requested to connect the projects to the local distribution system, owned and operated by Narragansett Electric Co., a former subsidiary of National Grid now owned by PPL Electric Utilities under the name Rhode Island Energy.

Narragansett and New England Power, also a subsidiary of National Grid, determined the solar project would require significant upgrades to the distribution and transmission systems, including a new substation, costing about $18 million, with the costs ultimately passed down to Green Development.

FERC denied the bulk of Green Development’s arguments opposed to this cost allocation in orders issued in September 2021 and February 2022. The commission upheld its findings of both orders upon rehearing (EL21-47 and ER22-707).

Green Development’s petition to the D.C. Circuit, argued in March of this year, alleged FERC mischaracterized some of the company’s arguments, failed to justify its jurisdiction over the upgrades, misinterpreted the definition of “direct assignment facilities” in the ISO-NE tariff and that the RTO and New England Power failed to file a new application for transmission service in accordance with the tariff.

In its ruling on Friday, the D.C. Circuit sided with FERC, rejecting all four of these clams.

“Each of Green Development’s four grounds for vacatur lacks merit. Accordingly, we deny the petitions for review,” wrote Circuit Judge Karen L. Henderson.

Green Development declined to comment on the ruling.

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SPP Planning Response After FERC Rejection of Tariff Revision

ST. PAUL, Minn. — SPP legal staff said last week it is evaluating whether to modify and refile a tariff revision to allocate “byway” transmission projects on a case-by-case basis or to seek a rehearing of the order.

Paul Suskie, SPP | © RTO Insider LLC

General Counsel Paul Suskie told the grid operator’s Regional State Committee July 24 that staff is reviewing its options following FERC’s rejection of its proposed methodology. (See FERC Reverses Course on SPP Byway Cost Plan.)

“We will do that in our ordinary course,” Suskie told the committee, composed of SPP’s state regulators. “From a timing perspective, we could probably get a result back from FERC and an approval rather than going through the appeal process.”

Asked whether SPP could work the two paths in parallel, Suskie warned the RSC that doing both at the same time would create ex parte limits when communicating with FERC.

In a July 13 order, FERC unanimously reversed a 2022 decision approving the RTO’s process to allocate byway transmission projects — facilities rated at 100 to 300 kV — after rehearing arguments raised by several SPP members. The commission rejected SPP’s proposed methodology without prejudice and dismissed a November compliance filing as moot (ER22-1846).

FERC said SPP failed to prove its proposal to regionally allocate 100% of a byway facility’s costs on a postage-stamp basis would result in outcomes that are just and reasonable and not unduly discriminatory or preferential.

The grid operator currently allocates one-third of byway projects’ cost to the RTO footprint, with customers in the transmission pricing zone where the project is built being allocated the rest. “Highway” projects — those larger than 300 kV — are allocated RTO-wide.

RSC and its Cost Allocation Working Group have been working on the issue since 2017. It was one of 21 initiatives developed by the Holistic Integrated Tariff Team before the COVID-19 pandemic. Stakeholders and staff have produced reports and white papers that led to an earlier tariff revision being rejected by FERC in 2021.

“It’s probably an understatement to say I’m disappointed to see the FERC action,” said RSC President Andrew French, with the Kansas Corporation Commission. “I do think we have an opportunity here to see if maybe there’s a better approach, maybe even an approach that could address some of the concerns in our stakeholder process and hopefully we come up with something better. This is something that we have developed an extensive record on.”

Dana Shelton, legal counsel to the Louisiana Public Service Commission, pointed out that the agency, along with those of New Mexico, Oklahoma and Texas, opposed the revision request when it came before the CAWG in December 2021. FERC Commissioner Mark Christie noted the lack of “uniform” state support for the proposal in a concurrence to the order.

“It was on what we view as illegitimate cost-allocation principle … and an unjust and unreasonable rate allocation,” Shelton said. “We do continue to have concerns along those lines. I would ask that SPP and all concerned keep that in mind.”

“It was an issue of cost allocation and equitable treatment for utilities,” Texas Commissioner Will McAdams said. “Texas shared those concerns and would stand on that position.”

McAdams Elected RSC’s Vice President

RSC members elected McAdams as their vice president. He replaces Geri Huser, who stepped down from the Iowa Utilities Board in May, four years short of her term’s expiration.

Minnesota’s John Tuma was elected to replace McAdams as the committee’s secretary and treasurer.

SPP CEO Barbara Sugg recognized McAdams during her president’s report to the board for his “exceptional leadership” of the stakeholder group addressing the RTO’s resource adequacy issues. (See SPP REAL Team Endorses Winter Resource Requirement.)

“I have heard nothing but accolades for your leadership,” she said. “I’m just so impressed with the joint nature of that group and the value that they are going to bring to the RSC, to the board, to the Members Committee, really to all SPP stakeholders.”

The RSC also approved South Dakota’s Kristie Fiegen to chair the nomination committee that will select officers for 2024. Arkansas’ Justin Tate and Oklahoma’s Todd Hiett will serve with Fiegen.

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Down Day: Xcel, AEP, CenterPoint Shares Slide After Earnings

Xcel Energy highlighted a busy day for utility earnings calls Thursday with weaker results the company blamed on inflationary pressures and a lower-than-expected return on equity from a rate case in its home state of Minnesota.

The Minnesota Public Utility Commission in June approved a $306 million, or 9%, rate increase over three years for Xcel, below recommendations from the state’s Department of Commerce and an administrative law judge. Xcel initially requested a $677 million, or 21%, increase before dropping its ask to $498 million and then $400 million.

The Minneapolis-based company reported earnings of $288 million ($0.52/share) for the quarter, down from $328 million ($0.60/share) from a year earlier.

CEO Bob Frenzel said the company is working to offset the effects of the headwinds and is continuing to “lead the nation’s clean energy transition.”

In June, the PUC also approved Xcel’s plan to construct a multi-day energy storage system that will test Form Energy’s 10-MW/1,000-MWh iron-air battery system at the utility’s 710-MW Sherco solar site. The battery is expected to come online in 2025. (See “Long-duration Storage is Key,” Overheard at EEI 2023.)

“We’ve always been focused on new technology, new research, development and deployment of new technologies to achieve our 100% goal,” Frenzel said, referring to the company’s first-in-the-nation commitment to 100% carbon-free electricity. “Long duration energy storage is a critical part of the energy future. A 100-megawatt-hour battery … [is] a nice asset class as we think about periods when the wind doesn’t blow and the sun doesn’t shine.”

Frenzel also addressed a recent report following an investigation by the Boulder County (Colo.) Sheriff’s Office into a 2021 wildfire that caused about $2 billion in property losses. The report found Xcel subsidiary Public Service Company of Colorado (PSCo) responsible for one of two ignitions. Xcel disclosed the report in its earnings release and said that if PSCo is found liable and is required to pay damages, the amounts could exceed insurance coverage of approximately $500 million.

“Because of the pending litigation that has been filed, we’re not in a position to discuss the fire in more detail at this time,” Frenzel said. “We will vigorously defend ourselves and move forward to presenting our position in court.”

Xcel’s share price dropped $2.18 (3.35%) during a down day on Wall Street, closing at $62.87. The Dow Jones Industrial Average lost 237 points, ending a historic streak of 13 straight gains.

AEP Continues with Asset Sales

American Electric Power said Thursday that the “de-risking” and “simplification” of its business continues to pick up speed with two non-core transmission ventures being put up for sale.

CEO Julie Sloat told financial analysts during the company’s quarterly earnings call that AEP will soon launch the sale of its interests in the Prairie Wind and Pioneer transmission projects. The former are 345-kV facilities in Oklahoma and the latter 765-kV facilities in Indiana.

AEP could also soon put its share of Transource Energy, a competitive transmission developer, on the block once it completes a strategic review.

AEP also plans to close the sale of its 1.37-GW unregulated renewables portfolio to IRG Acquisition Holdings in August and is on track with other transactions involving its AEP Energy retail and AEP OnSite Partners distributed resources businesses and its 50% share in the New Mexico Renewable Development joint venture.

“Our ongoing active management of the company strengthens our ability to prioritize investments in our regulated businesses,” Sloat said.

The Columbus, Ohio-based company delivered second-quarter earnings of $521 million ($1.01/share), compared with earnings of $525 million ($1.02/share) for the same period a year ago.

During the quarter, AEP received regulatory approval to add nearly 2 GW of new wind and solar generation in Oklahoma, Arkansas and Louisiana. It also has approvals in place for $5.2 billion of its five-year, $8.6 billion regulated renewables capital plan and has filed for approval of $1.7 billion in additional renewable projects.

AEP’s share price closed Thursday at $85.26, a drop of $2.35 (2.6%) on the day.

CenterPoint Energy Takes $74M Hit

CenterPoint Energy (NYSE: CNP) also reported quarterly financial results on Thursday, delivering earnings of $106 million ($0.17/diluted share) that included a loss and expense of $74 million ($0.12/share) related to the divestiture of Energy Systems Group (ESG).

The Houston utility earned $179 million ($0.28/diluted share) during the second quarter a year ago.

CenterPoint sold its interest in ESG for about $157 million to EEG Holdings in May. ESG offers energy efficiency and sustainable energy solutions.

The utility’s share price closed at $30.36 Thursday, an 85-cent loss.

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NJ BPU Backs Building Decarbonization Plan Despite Opposition

New Jersey’s Board of Public Utilities (BPU) agreed Wednesday to vigorously promote a statewide shift from fossil-fuel space and water heating systems to electric appliances as part of a three-year energy efficiency program.

The board voted 4-0 to approve the Triennium II proposal to cut building emissions through the use of demand-response programs and voluntary electrification backed by incentives as the state seeks to reach 100% clean energy by 2035.

A key element of the framework, which will be in effect from July 1, 2024, to June 30, 2027, is a series of building decarbonization (BD) “startup” program plans designed to encourage customers of all kinds — but especially residential and multifamily dwelling customers — to switch from fossil-fuel water and space heaters to electric appliances.

Although the BPU initially floated a budget of about $150 million over three years for the building decarbonization programs, the latest version sets out a more “robust” estimate of $84 million in the first year, $120 million in the second and $144 million in the third, for a total close of $348 million. The final figure, however, will be determined by the utilities in the state working with the BPU board, the order says (QO19010040, QO23030150, QO17091004).

Contentious Issues

The Triennium is one of several initiatives begun by Gov. Phil Murphy (D) to decarbonize buildings by reducing fossil fuel use and increasing electricity use. In February, Murphy said the state should have 400,000 additional dwelling units and 20,000 additional commercial spaces “made ready” for electrification by the end of 2030 (Executive Order No. 316).

Some electrification supporters say the plans are too timid. Opponents argue that switching to electrical space and water heating systems is expensive and decry what they see as a “mandate” by the Murphy administration to make the shift. (See NJ Building Decarb Plan Garners Support, Criticism.)

BPU President Joseph L. Fiordaliso said the framework, approved 4-0, “without a doubt … kickstarts to the next generation of energy efficiency in New Jersey.”

“It will deliver significant emissions reductions through critical investments in efficiency,” he said. “That importantly, will help save ratepayers money.”

He criticized “fear mongering” and “misinformation” about the program, particularly the suggestion that the state is forcing people to switch to electricity.

“Let’s be clear: We are not mandating anyone to give up their gas stove,” he said. “This program is about giving people more choices and more chances to create a more sustainable and more affordable energy future.”

Shifting The Burden

But Ray Cantor, deputy chief government affairs officer for the New Jersey Business and Industry Association, one of the state’s largest business groups, said the program “shifts the cost of an ineffective building electrification policy onto the backs of ratepayers who already pay some of the highest electric rates in the nation.”

“A 100% building electrification policy is not the best approach,” he said. “There has been no comprehensive planning or investment in either the transmission or generation systems adequate to support a massive building electrification policy. … It is irresponsible for the state to move ahead with new sources of demand and hope that the grid and generation capacities will be there.”

In addition, he said, “there are other, and perhaps less costly and more efficient options, to decarbonize our building sector.”

Adopting Heat Pumps

The Triennium II framework, which follows an earlier three-year plan in place until June 30, 2024, includes goals, targets, performance incentive mechanisms and other strategies to improve the state’s energy efficiency efforts and make them accessible throughout the state, especially to low- and moderate-income customers. The BPU drafted the final version after two lengthy public hearings on the proposal in June. (See NJ BPU Outlines $150M Building Decarbonization Plan.)

Startup programs proposed in the Triennium include providing customer incentives to persuade customers to switch from fossil fuels to electricity. The program places a high priority on consumer adoption of heat pumps, which the BPU’s order says generate two to four times more energy than they consume — compared to regular appliances that generate less energy than they consume.

The programs should be created by the electric distribution companies and should “prioritize customer incentives for electric space and water heating in the residential and multifamily sectors, focusing on switching from delivered fuels to electric heat pumps,” the framework said. Programs also should enable gas distribution companies to propose hybrid solutions to their customers, such as switching from gas to electric air conditioning but maintaining a gas-powered heat furnace.

The plans also call for the implementation of demand response programs in which customers receive a signal urging them to reduce their energy consumption when demand is high and the grid stressed, such as in especially hot or cold weather. The BPU is looking to utilities to design the programs so they are easy for customers to use and rely on smart meters and thermostats.

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FERC Rejects Call for CIP Standard Updates

FERC on Thursday denied a petition from the Secure-the-Grid Coalition calling for new reliability standards to meet the growing threat of physical violence against the electric grid, saying the proposal was unnecessary in light of other work serving the same goal (EL23-69).

The coalition filed its petition in May, after NERC submitted a report on potential changes to CIP-014-3 (physical security) to the commission. (See NERC Says Changes Coming to Physical Security Standards.) FERC had ordered the report in response to physical security incidents last year, primarily the Dec. 3 gunfire attack on two substations in North Carolina that left 45,000 customers without power for as long as four days.

FERC Chairman Willie Phillips | FERC

The commission had asked NERC whether the assessments that CIP-014-3 required of transmission owners (TO) to evaluate the vulnerability of their facilities were adequate to identify facilities in need of strengthening. In its report, the ERO said this was the case, and that expanding the criteria for TOs to check would not identify any additional critical facilities.

Secure-the-Grid felt the response was not sufficient and urged the commission to order NERC to revise the standard. Its petition argued that the standard should “require industry to establish new metrics for risk assessments” beyond the frequency and consequence of attacks. Suggested metrics included “known vulnerabilities, attacker capabilities and attacker intentions.”

The coalition also pointed out that the applicability of CIP-014-3 is determined by definitions of the grid and critical assets in CIP-002-5.1a (cyber security — BES cyber system categorization). Therefore, Secure-the-Grid argued, those definitions must be expanded, requiring revisions to the latter standard as well.

ERO Says Needed Work Already Underway

NERC and several electric industry trade groups pushed back hard on the coalition’s claims last month in separate filings. (See NERC, Trade Groups Oppose Call for Quick Fix on CIP Standards.) The ERO said it plans to review CIP-014-3, both in an Aug. 10 joint technical conference with FERC and two standards development projects, one of which will also examine CIP-002-5.1a. A new directive from FERC would only interfere with these efforts, which are the “appropriate public processes” for considering the coalition’s concerns, NERC said.

The American Public Power Association, Edison Electric Institute, Large Public Power Council, National Rural Electric Cooperative Association and Transmission Access Policy Study Group raised similar concerns with Secure-the-Grid’s petition. They added that the coalition’s sole justification for calling for revisions to the standards was the growing frequency of physical security incidents on the grid, but said the group failed to prove that a new or revised standard was an appropriate response.

In its decision Thursday, FERC agreed with NERC that the joint conference and standards projects “provide the appropriate forums for addressing the petitioner’s concerns.” While the commission acknowledged Secure-the-Grid’s concerns and said that “the physical security of the [grid] is of paramount importance,” it also said the work already underway is “adequate” for addressing the grid’s physical security needs.

FERC Clarifies Cyber Incentives

The commission also provided clarification on an order it issued earlier this year establishing financial incentives for voluntary cybersecurity investments by electric utilities, fulfilling a request submitted by NRECA (RM22-19).

NRECA filed a request for clarification or rehearing of FERC Order 893 in May. The trade group took issue with the part of FERC’s final rule providing that utilities may qualify for incentives through investments needed to establish compliance with NERC’s Critical Infrastructure Protection (CIP) standards that are not yet enforceable. (See FERC Issues Cyber Incentives Order.)

Specifically, NRECA claimed that the term “effective date” appeared in FERC’s order referring to both the date that the commission issues an order approving a new standard and the date that the standard becomes enforceable. It asked that the commission clarify whether a utility:

    • Must demonstrate full compliance with the relevant CIP standard to be eligible for the incentive;
    • May receive the incentive for investments made before the date NERC submits a proposed standard to the commission or the date FERC issues an order approving the standard; and
    • Faces any requirement concerning how long before the effective date of the standard an investment must be made in order to qualify for the incentive.

FERC explained in its response that the new rule requires utilities to demonstrate that they will make their investments after the effective date of approval of the appropriate standard, but before its enforceable date. It said that a utility attempting to claim the incentive “must achieve compliance” with the standard to satisfy the requirement.

In addition, FERC affirmed that the only time requirement regarding the cyber incentives was that the investments be made after the approval of the standard and before its effective date, meaning there is no minimum time requirement before the effective date for investments to qualify for the incentive.

NRECA also asked FERC to clarify whether utilities that sell energy, capacity or ancillary services at market-based rates may also sell at separate cost-based rates that account for the cybersecurity investment incentives. The commission said its order “does not preclude” such sales.

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NYPA Taking to the Skies with Expanded Drone Fleet

The New York Power Authority is going all-in on drones, launching a $37.2 million program to expand their use for inspections as a safety, efficiency and economy measure.

NYPA’s Board of Trustees on Thursday approved an initial $9.6 million allocation to launch the five-year Unmanned Aerial System program.

Drones have been gaining favor for years as a tool to inspect transmission lines. It is much slower to have a line person climb up for a visual check and much more expensive to fly over in a helicopter. And with both of those options, the implications of an accident are much worse.

Even a substation inspection is safer with a drone, as it does not put anyone close to high voltage.

The nation’s largest state-owned utility operates 1,400 circuit-miles of transmission lines. But it also has bridges, dams, waterways, fossil fuel generating stations and conventional and pumped hydropower facilities to monitor and maintain.

NYPA’s drones are equipped with high-resolution cameras and sensors that can detect flaws not visible to the human eye. The authority plans to make as much use of them as it can.

“By bringing more drones into our day-to-day operations, we can better harness the benefit of automation, safety and consistency across our assets while reducing costs and insuring a more reliable power supply,” NYPA Robotics Program Manager Peter Kalaitzidis said in a news release. “Inspections can be improved and expanded to include other areas and assets. With use of drone technology, we can more easily capture the real-world state of our operations to support real-time decision-making.”

NYPA has trained nearly 100 pilots and has been getting its drones out to its operating units to allow them to figure out their own best uses for the technology.

The goal now is to buy more hardware and software; expand and improve training; standardize policies and procedures; and develop a platform from which to gather and make the best use of data recorded on each flight.

The authority is keeping its regulatory compliance up to date as well. Earlier this year it received its first waiver from the Federal Aviation Administration to operate drones beyond the pilot’s line of sight. NYPA said this will be useful at its Blenheim-Gilboa Pumped Storage Power Project, which sprawls more than 2 miles across very rugged terrain.

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CCAs Challenge California PUC on RA Ruling

A group representing California’s community choice aggregators is asking regulators to reconsider a decision that blocks CCAs from expanding if they have had resource adequacy deficiencies in the past two years.

The California Public Utilities Commission on July 5 issued the decision, which adopts local capacity obligations for 2024 to 2026 and refines the commission’s resource adequacy program.

The California Community Choice Association (CalCCA) filed a rehearing request Wednesday, saying the decision contained numerous “legal errors.”

CalCCA argues that the CPUC exceeded its jurisdiction over CCA implementation plans and impaired customers’ right to aggregate their loads with a CCA. The commission failed to act in a nondiscriminatory manner by prohibiting expansion of CCAs and electric service providers, but not investor-owned utilities, CalCCA said.

“The CPUC has given itself new unauthorized powers to needlessly discriminate against CCAs and prevent their growth,” CalCCA Executive Director Beth Vaughan said in a statement. “The decision literally blocks communities from exercising their legal right to aggregate and provide customers with a choice of energy providers.”

California has 25 CCA programs in operation, serving more than 14 million customers. The CCAs buy electricity for participating communities, in place of investor-owned utilities, with an emphasis on clean energy.

RA Obligations

The CPUC said in its decision that load-serving entities (LSEs) have been failing to meet resource adequacy obligations. The decision said seven LSEs had month-ahead deficiencies in 2021 and five in 2022. Some LSEs have repeatedly failed to meet their RA obligations, the decision said.

“Even more concerning, some LSEs submitted implementation plans to expand their customer load by increasing their service territory, even as they have been unable to secure sufficient capacity to meet their RA obligations and serve their existing customers,” the decision said.

Under the decision, an LSE isn’t allowed to expand its service territory if it hasn’t complied with RA requirements in the previous two calendar years. A deficiency doesn’t count toward the expansion ban if it’s less than 1% of the LSE’s requirements.

The restriction applies to a CCA’s expansion of its service territory, not to growth within its existing territory.

The CPUC decision addresses the nondiscrimination issue by noting that investor-owned utilities are providers of last resort and therefore legally distinct from other LSEs.

CalCCA said the CPUC may or may not rule on its rehearing request. If there’s no ruling by Sept. 26, the request is considered denied. The group said it would then decide whether to take the issue to a state appeals court.

Penalty System

The CPUC sets resource adequacy obligations for LSEs that are enforced through citations and fines.

In a previous decision, the CPUC added a point accrual system to the program’s penalty structure to increase penalties when an LSE repeatedly falls short of RA obligations.

CalCCA said newer market entrants such as community choice aggregators and direct access providers are hardest hit by resource shortages. In contrast, investor-owned utilities have “legacy” supplies, the group said in a resource adequacy section on its website.

CalCCA said the CPUC should do more to address the RA problem.

“RA penalties for LSEs unable to secure supply in a deficient market do nothing to get new resources in the ground, and they unnecessarily add to customer costs and indirectly increase the cost of supply,” CalCCA said.

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DTE Earnings Focus on Faster Clean Energy Transition

DTE Energy touted the recently approved settlement on its 20-year resource plan in its second-quarter earnings call.

The Michigan Public Service Commission on Wednesday accepted DTE Energy’s negotiated integrated resource plan that accelerates renewable energy additions, hastens the closure of its last coal plant from 2035 to 2032 and sets a path for the utility to reduce carbon by 85% from 2005 levels within nine years. (See DTE, Activists Announce Agreement to Exit Coal by 2032.)

“Our CleanVision integrated resource plan outlines our investment in Michigan’s future, and we are grateful to the 21 organizations from across Michigan for their diligent work on this settlement agreement,” DTE Energy CEO Jerry Norcia said in an earnings press release. “From ending the use of coal in 2032 to reducing future costs of our clean energy transformation by $2.5 billion, this plan is a road map to cleaner, more reliable and affordable energy for our customers.”

Speaking during a July 27 earnings teleconference, Norcia said DTE conducted analyses and outreach to come up with a “balanced and diversified” approach to the future energy mix. He said over the next decade, DTE Energy will invest more than $11 billion in the clean energy transition. He also said by 2042, the utility will add 15 GW of renewable energy and nearly 2 GW of energy storage.

Norcia said the IRP settlement demonstrates the “constructive nature” of the regulatory environment in Michigan.

DTE Energy reported $206 million ($0.99/share) of earnings in the second quarter. That compares to the $171 million ($0.88/share) DTE earned this time in 2022.

DTE Energy said it invested $1.5 billion over the first half of the year on electric reliability improvements and cleaner energy generation. Norcia noted that during the quarter, it placed Michigan’s largest wind park — the 225-MW Meridian Wind Park — into service.

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FERC Calls for More Info on Order 881 Compliance Timelines

FERC issued another set of rulings on Order 881 compliance filings Thursday, ordering seven transmission providers to give more information on their timelines for calculating or submitting ambient-adjusted ratings (AARs). The commission accepted the other aspects of the transmission providers’ filings.

The affected transmission providers are GridLiance Heartland (ER22-2355), GridLiance High Plains (ER22-2354), Florida Power & Light (ER22-2353), Cube Yadkin Transmission (ER22-2466), Versant Power (ER22-2358), Nevada Power Co. (ER22-2304) and Cheyenne Light, Fuel and Power (ER22-2307).

The filing parties have until Nov. 12, 2024, to submit their timeline information, eight months before the July 2025 Order 881 implementation date. FERC said this extended due date accounts for the fact that it may be easier for transmission providers to submit AAR timelines closer to the 2025 implementation date.

This ruling is similar to previous FERC findings in April and June of this year. (See FERC Approves Batch of Line Ratings Compliance Filings and Order 881 Timelines Need Explaining, FERC Says.)

Order 881 requires transmission owners and operators to implement AARs — essentially real-time transmission line ratings — for short-term transmission requests on lines affected by air temperature, while requiring seasonal ratings for long-term service (RM20-16). FERC has said that existing static ratings based on worst-case weather assumptions limit the available transmission capacity and that the changes mandated by Order 881 will help free up a significant amount of capacity on the grid. (See FERC Orders End to Static Tx Line Ratings.)