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November 2, 2024

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FERC’s Republicans Irked by Declarations in PURPA Complaint

Republican FERC Commissioners James Danly and Mark Christie issued a partial dissent in an otherwise typical PURPA order Friday, criticizing the Democratic majority for making “unnecessary” declarations on the case.

All five commissioners agreed to not act on a qualifying facility’s petition to enforce a contract between it and the South Carolina Public Service Authority (Santee Cooper), a decision allowing the QF to sue the state-owned utility under the Public Utility Regulatory Policies Act (EL22-29, QF15-850-003).

National Renewable Energy Corp.’s Magnolia Solar negotiated a power purchase agreement under which Santee Cooper would pay an avoided-cost rate, as required by PURPA, for five years for the output of its 42-MW solar project in Orangeburg County.

The dispute arose when Magnolia revised the draft PPA to a 20-year term.

In protest, Santee Cooper argued that “no LEO [legally enforceable obligation] was formed because Magnolia refused to accept Santee Cooper’s five-year term for the LEO, a term that Santee Cooper is entitled to set as a condition.”

FERC’s majority sided with the developer, declaring that “whether a LEO was established depends on the QF’s commitment to sell its output to the utility and not the utility’s actions.

“Magnolia’s demonstrated commitment to develop the QF, and expressed intent to sell its net output to Santee Cooper at an avoided-cost rate, supports the finding that a LEO was formed,” FERC said. “Santee Cooper’s insistence that Magnolia agree to a five-year term as condition precedent to establishing a LEO is inconsistent with commission precedent.”

Such decisions not to act are common.

“FERC typically declines to initiate enforcement actions requested by QFs,” Bracewell wrote in a 2018 blog post. “Instead, if FERC believes such petitions merit discussion, FERC’s practice is to issue a Notice of Intent not to Act and a declaratory order setting forth its position on the issues raised in the petition.”

Such declarations are unnecessary, Danly and Christie said in separate but similar partial dissents.

The Republicans — especially Danly — have been vocal since the beginning of their tenure about the commission being too proactive, preferring that it take a hands-off approach and letting Congress decide matters of policy. In this case, the two said the majority’s statements were superfluous because the commission took no action for which it needed to explain itself.

“While the commission may offer unnecessary declarations on any subject it chooses, I do not believe it should,” Danly wrote. “Responsible adjudication counsels minimalism, and the commission should be more circumspect.”

In a footnote, Danly listed other Notices of Intent not to Act in which “the commission has properly declined to include unnecessary declarations.”

“The declarations in this order will not aid the petitioner in court,” he wrote. “Should an action be initiated, the court has processes by which to adduce evidence; the law has not been changed or clarified by any of the order’s unnecessary declarations; and the precondition for initiating such a proceeding was fully consummated by the Notice of Intent not to Act.”

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Maryland Climate Bills Become Law Without Hogan’s Signature

In a surprise move, Maryland Gov. Larry Hogan (R) allowed two key pieces of climate-related legislation to become law on Friday without his signature.

The Climate Solutions Now Act, Senate Bill 528, resets the state’s emissions-reduction goals to 60% below 2006 levels by 2031 and net zero by 2045, while House Bill 740 requires Maryland’s State Retirement and Pension System to incorporate climate risk into its investment evaluations “to ensure a long-term sustainable portfolio.”

In a letter to the General Assembly announcing his decision to allow the two bills to become law, Hogan called both “example[s] of poor legislative practice and misguided resources resulting from partisan politics.” But, he said, “I will allow them to pass into law in the hopes they will generate future deliberation and discussion on this critically important issue.”

A veto of either bill would likely have faced a quick Democratic override, as did all 10 of the bills Hogan did veto, as reported by Maryland Matters. (See Md. General Assembly Sends Climate Solutions Bill to Hogan.)

In March, Hogan had called SB 528 a “reckless and controversial energy tax,” but in his letter, he said, “I am encouraged by some of the subsequent revisions to the bill that are more in line with my administration’s insistence on ambitious yet achievable climate solutions.”

HB 740 was well intended, he said, but it “sets a worrisome precedent and creates a slippery slope; instead of micromanaging our state retirement system, elected officials should allow our investment experts and professionals to do what they do best.”

Anticipating a veto of SB 528, the Chesapeake Climate Action Network had called for a rally at the Maryland State House in Annapolis on Saturday to support an override and “ensure this vital piece of legislation crosses the finish line.”

Sen. Paul Pinsky (D), SB 528’s chief sponsor, called the bill’s no-signature enactment “a great victory in addressing climate change.” Pinsky had worked to maintain support for the bill in the Senate after amendments approved in the House of Delegates cut or scaled back some of its key provisions, according to local media reports.

Cut entirely from the bill were provisions requiring that from 2023 to 2033, at least one new school in each school district be built to net-zero standards.

The bill’s broader provisions on building performance standards were another casualty. They would have required that new or renovation projects built with at least 25% state funding meet high-performance building standards developed by the Maryland Green Building Council. Emissions-reduction targets for large commercial buildings and multifamily dwellings were also cut, from 50% to 20% in 2030, and a net-zero target for 2035 was completely eliminated.

Instead, the new law calls for “the Public Service Commission and the Building Codes Administration to study and make recommendations on the electrification of buildings in the state.”

The House amendments also rebranded the Maryland Climate Justice Corps in the original Senate version as the Chesapeake Conservation Corps. The goal in both cases is to provide education and job training programs to help develop “green career ladders” for youth and young adults, but with a shift in focus from environmental justice to environmental conservation.

For example, while a primary purpose of the Climate Justice Corp would have been to “promote climate justice and assist the state in achieving its greenhouse gas emissions-reduction targets,” the corresponding goal of the Conservation Corps is to “promote, preserve, protect and sustain the environment.”

Distribution Planning for Climate Goals

Both new laws will go into effect June 1. Additional provisions of SB 528 include:

  • the establishment of a Climate Catalytic Capital Fund that will be used to start a green bond program and help finance and leverage private investment for a range of emission-reduction and clean energy programs. Initial allocations for the fund would be $5 million a year for 2024 to 2026.
  • a $50 million electric school bus pilot program that will allow utilities to test out the use of vehicle-to-grid technologies at times electric buses in the program are not in use.
  • a steady phase-in of EVs in the state’s passenger car fleet, with 100% of all new purchases electric or hybrid by 2028 and 100% of all other light-duty vehicles electric by 2033.

The House amendments to the bill also added a requirement for the PSC to submit a yearly report to the General Assembly on the status of the state’s distribution system and distribution planning processes. The first report is due on or before Dec. 1, 2024. It must cover how distribution planning and implementation is supporting the state’s climate goals, including reducing carbon emissions, improving efficiency and resilience, and increasing the amount of distributed energy resources on the grid.

Hailing the new law, Josh Tulkin, director of the Sierra Club’s Maryland chapter, said, “Climate solutions are good for our environment, our health and our wallets. With gas prices skyrocketing, this is a critical time for Maryland to invest in a clean energy future to help Marylanders reduce their reliance on fossil fuels for heating and cooking.”

HB 740 requires the Board of Trustees of the state pension funds to incorporate climate-risk assessments into its investment policy manual. The board is instructed to look at the climate-risk assessment policies and best practices of other states for possible adaptation in Maryland. The law also calls for a holistic assessment of climate risk, examining “the potential magnitude of the long-term risks and opportunities of multiple scenarios and related regulatory developments across industry sectors, asset classes, and the total portfolio of the several [retirement and pension] systems.”

Va.’s HB 1204

Virginia Gov. Glenn Youngkin (R) signed more than 100 bills in the first week of April, including one climate measure, according to a Friday press release.

HB 1204 seeks to promote the development of renewable energy projects within the state and, in particular, projects located on brownfields or former coal mine sites. Under the new law, the state’s two investor-owned utilities — Dominion Energy and Appalachian Power — will be required to comply with Virginia’s renewable portfolio standard in 2023 and 2024 by prioritizing the procurement of cost-competitive renewable energy credits (RECs) from eligible projects located in the state.

The two utilities will also be required to develop plans for acquiring cost-competitive RECs from in-state projects that are eligible for grants from a state program aimed at locating renewable energy projects on brownfield or former coal mine sites.

The Virginia Clean Economy Act (HB 1526) requires Dominion to decarbonize its power generation by 2045, with Appalachian Power to follow in 2050.

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Counterflow: Stop the Insanity

tesla powerwallSteve Huntoon | Steve Huntoon

Given current events, it should go without saying that sound energy policy is more important than ever.

Here’s a few no-brainers we should be doing: (1) banning “proof of work” cryptocurrencies (like Bitcoin),[1] (2) HVAC (emphasis on AC) interconnections between ERCOT and the rest of the country,[2] (3) unique emergency ratings for interconnection studies,[3] (4) new technologies for increasing capacity of existing transmission lines,[4] (5) LED lighting[5] and, dare we keep saying it, (6) a carbon price/tax.[6]

Instead, new notions get traction that cross into insanity. Like the recent promotion of cryptocurrency mining as something that increases grid reliability.[7] The epicenter of this crackpot idea is Texas, which seems to have learned little from February of last year. Chief cheerleaders include Gov. Greg Abbott[8] and Sen. Ted Cruz.[9]

The crypto claim is that after crypto mining increases electric demand, it can then be curtailed when needed for reliability. Please note the bloody obvious: Increasing electric demand never increases reliability because increased demand can never be curtailed more than the increase. Think of the retailer increasing the list price so that the discount from list price can be bigger. Does the consumer save something?

The crypto rejoinder is that crypto demand incents new capacity so curtailment at peak actually could be beneficial. But as Berkeley professor Severin Borenstein points out: “Increasing demand at times when capacity is not scarce does not raise long-run investment in capacity. … Even if it increases price during off-peak times, that just leads to substitution of baseload for peaker capacity, but not more capacity”[10] (emphasis added).

Mic drop.

Another bit of crypto sophistry is the claim that crypto mining uses relatively more renewable energy than other electricity uses.[11] Beyond the problem that this claim relies on industry self-reports (and what bad guy self-reports?),[12] it misses the fundamental point that if this renewable energy wasn’t being used for crypto mining it would be displacing nonrenewable energy sources. Duh.

Here’s another howler from a congressional hearing on crypto and the grid: “Computing is a better battery.”[13] Come on, computing is no more battery than a poultry plant.

Need more insanity data points? In Miami, the new “MiamiCoin” is 95% off its high, and the mayor is having second thoughts on whether it can be relied on to fund the city and abolish taxes.[14] Who would have thought?

Farther south, the president of El Salvador — self-styled “coolest dictator in the world” — wants to build the world’s first “Bitcoin city” at the base of the Conchagua volcano.[15] What could possibly go wrong?

Bottom line: Let’s advance no-brainers and stop the insanity.

Columnist Steve Huntoon, principal of Energy Counsel LLP, and a former president of the Energy Bar Association, has been practicing energy law for more than 30 years.

[6] “’If we don’t put that price of carbon on the system, I don’t see how anything could work,’ Harvard economist William Hogan said in the last session of the daylong conference.” https://www.rtoinsider.com/articles/29867-epsa-members-renew-call-carbon-price

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PacifiCorp Utah Program Takes Read on EV Driver Needs

After spearheading an electric vehicle charging program that created two “electric highways” in Utah, PacifiCorp is using lessons learned to expand the project into six Western states, speakers said during a webinar last week.

PacifiCorp’s WestSmartEV program ran from 2017 to 2020. It involved installation of DC fast-chargers at 79 sites along I-15 and I-80. The program also included incentives for workplace installation of Level 2 chargers, a partnership with ride-share drivers, an EV car-share program for low-income residents and an electric bus project.

A second phase of the project, called WestSmart EV@Scale, is now underway. It will coordinate efforts to electrify over 42,000 miles of regional interstate and state highways in Utah, Washington, Oregon, Idaho, Nevada, Wyoming and Arizona.

The program’s focus includes underserved regions, urban mobility, freight and port electrification, and community and workplace charging.

Both programs received funding from the Department of Energy: $4 million for WestSmartEV and $6.6 million for WestSmart EV@Scale.

What Drivers Want

The webinar on Thursday was hosted by the National Renewable Energy Laboratory. James Campbell, PacifiCorp’s lead for the two programs, discussed lessons learned so far. Campbell is based at PacifiCorp’s Utah subsidiary, Rocky Mountain Power.

When deciding where to install DC fast chargers along I-15 and I-80, Campbell said it wasn’t quite as simple as drawing dots on a map every 50 miles.

Instead, he said, it was important to identify sites where drivers want to stop. For example, drivers weren’t that interested in a charging station in St. George, a retirement community near the Arizona border. Instead, they wanted to stop and charge in nearby Cedar City, a scenic highway access point.

And in a National Park component of the program, planners realized that many drivers travel from park to park on scenic highways rather than hopping on the interstate.

Co-location Benefits

Campbell said co-location of EV charging was a successful approach used in the programs.

One example is an electric-bus charging site in Park City, where there’s also charging for electric bikes and a few DC fast-charging stations. The co-location allowed infrastructure costs to be shared, Campbell said.

Uber and Lyft drivers also found the fast-charging stations, located about a mile off I-80, to be a convenient option on runs from the airport to Park City, one of their most lucrative routes.

Another way the approach can be used is through co-location of electric bus and train charging, Campbell said. As a train moves through the station and draws power, electricity to the buses can be turned down and then turned up again after the train has gone.

“That way you’re not creating these large peaks or these large demands,” Campbell said.

Unique Opportunity

Campbell described Utah as a unique opportunity for launching an EV charging program. When the first program started in 2017, the state had a very low EV adoption rate. But Campbell said there seemed to be latent demand as residents grew concerned about poor air quality, such as that seen in Salt Lake City in the winter.

The number of plug-in EVs registered in the state grew from 2,485 in 2017 to 12,522 in 2020, according to the final technical report on WestSmartEV.

The report also detailed results of the workplace charging project, which resulted in installation of 1,953 Level 2 chargers in the Salt Lake City area. A case study of EV charging at one company found that peak charging was between 7 and 10 a.m. Most charging was finished by 2 p.m., before the utility’s summer peak hours of 3 to 8 p.m.

“As a result, workplace charging is a preferred mode of charging for utilities,” the report concluded.

Another webinar speaker was Margaret Smith, technology manager in the DOE’s Vehicle Technologies Office. Smith said information gleaned from the projects would help states prepare for EV project funding opportunities from the federal Infrastructure Investment and Jobs Act.

“The insights and lessons learned from these projects are more relevant now than ever before,” Smith said.

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Connecticut City Pitches Model for Spokes in Northeast H2Hub

The City of Bridgeport wants to be an equity-focused spoke in a proposed Northeast Regional Clean Hydrogen Hub (H2Hub), community leaders told the Connecticut Department of Energy and Environmental Protection (DEEP) Wednesday.

“We are very interested in looking at what the supply chain is going to be for this hydrogen project and how our community fits into that,” said Adrienne Houël, CEO of Greater Bridgeport Community Enterprises.

In the process of preparing for an H2Hub, she said, Connecticut must consider the Biden administration’s Justice40 initiative and environmental justice principles when working with hydrogen partners.

The governors of Connecticut, New York, New Jersey and Massachusetts announced March 24 that they will work together, along with 40 hydrogen economy partners, to submit a proposal to the U.S. Department of Energy (DOE) for one of the H2Hub designations called for in the Infrastructure Investment and Jobs Act. A hub, as defined by the act, is a network of hydrogen producers, consumers and connected infrastructure in close proximity to one other.

DEEP held a public listening session Wednesday to gain insights on hydrogen opportunities in the state, including the H2Hub collaboration, for the 2022 update of Connecticut’s Comprehensive Energy Strategy.

In Bridgeport, a state-designated environmental justice community, 40 individuals and organizations representing different segments of the city’s communities formed a regional energy partnership last year. The group is building on the city’s 14-year sustainability journey with a mission to ensure that the benefits of energy development, such as an H2Hub, extend to energy-burdened communities, said Jefferey Leichtman, a consultant speaking on behalf of the Bridgeport Regional Business Council.

Development of a hub, Leichtman said, needs to ensure residents understand the benefits of any new technologies sited in their communities and that those benefits are well-documented.

Houël sees the Bridgeport regional partnership as a model that can be adapted for other communities in the Northeast if a H2Hub develops there.

The partnership “is structured around the idea that you want to get all components of the community involved and get them to focus on what the community needs are,” she said. To advance its mission of early education, the group is already planning a hydrogen economy briefing at the end of April.

“We can’t expect people, on our say so, to accept all of the different safety and environmental issues around clean energy production,” Leichtman said.

Hub Proposals

The four states participating in the Northeast H2Hub coalition have agreed to develop a hub proposal in collaboration with the New York State Energy Research and Development Authority. Individual state entities will be responsible for ensuring the proposal aligns with environmental justice and state-level climate goals. The New York Power Authority and Empire State Development will provide additional strategic direction to the coalition partners throughout the proposal development process.

Several other state partnerships are also underway.

Colorado, Wyoming, Utah and New Mexico announced plans in February to create the Western Inter-States Hydrogen Hub, and the governors of Oklahoma, Louisiana and Arkansas jointly announced their decision in mid-March to coordinate on a hub proposal. (See Mountain States Partner to Secure Hydrogen Hub.)

In the Midwest, a business alliance that includes Equinor and GE Gas Power said it will work with regional stakeholders on a “shared vision” for a hub in Ohio, Pennsylvania and West Virginia.

In Washington, lawmakers moved a bill quickly through the legislature that is designed to improve the state’s chances of receiving a hub designation. Gov. Jay Inslee signed the bill March 31. (See Green Hydrogen Bill Passes Wash. Legislature.)

Each hub designated by the DOE will demonstrate a “complete ecosystem of hydrogen,” including “production, processing, delivery, storage and end use,” said Brian Hunter, technology manager at the DOE Hydrogen and Fuel Cell Technologies Office. To ensure feedstock diversity, one hub must produce hydrogen from fossil fuel, one from nuclear power and one from renewable energy, but Hunter said DOE anticipates hub proposals will have a mix of the three technologies.

The agency received more than 300 responses to its H2Hub request for information, but there are still opportunities to provide input on the hydrogen funding opportunities, he said. (See DOE Gets Hydrogen Hub Advice from Industry and Others.)

Earlier this year, DOE launched H2 Matchmaker, a voluntary online tool to facilitate hydrogen team formation.

The interactive map contains details on self-reported producers, consumers and potential providers and operators, as well as other key entities and stakeholders, Hunter said.

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NEPOOL Participants Committee Briefs: April 7, 2022

Board of Directors Elections

ISO-NE and NEPOOL are getting ready to set up elections for two spots on the grid operator’s Board of Directors.

Board Chair Cheryl LaFleur is up for re-election, and she took questions from stakeholders at the NEPOOL Participants Committee meeting on Thursday.

There’s also a vacant seat on the board. The Nominating and Governance Committee — made up of current board members, NEPOOL sector chairs and a representative chosen by the New England Conference of Public Utilities Commissioners — has chosen a candidate, although it’s keeping the name confidential.

“Maintaining the confidentiality of prospective director candidates is done to protect their privacy, as most candidates do not wish to have their identities publicly revealed in the early stages of the process,” RTO spokesperson Matt Kakley said. “Search firms have advised that this confidentiality is necessary to attract highly qualified candidates.”

The secrecy of the RTO’s board elections have been criticized in the past by the states and others. (See ISO-NE, States Seek to Build on ‘Alignment’ Efforts.)

Winter’s Over, Now Get Ready for Winter

After successfully navigating potentially tricky grid conditions during the 2021/2022 winter, ISO-NE isn’t taking any time to rest on its laurels.

The grid operator is diving back in to prepare for next winter, when many of the same worries will remain about pipeline constraints and fuel availability colliding with potentially extreme conditions.

“The winter weather forecast will continue to be a critical factor for the operational outlook and will be closely monitored,” COO Vamsi Chadalavada said in a presentation to the PC.

In keeping an eye on cold weather, the RTO is planning for some tactics old and new. Like in 2021, officials are going to perform a 90-day forward-looking energy analysis ahead of next winter, looking at different scenarios to try to better understand risk.

But they’re also trying something fresh: a tabletop exercise along with transmission and distribution owners to try to “evaluate existing operational processes and communication protocols that would be used during an energy emergency.”

The exercise will include a simulated energy emergency leading to multiple days of shortages, giving the RTO and TOs a chance to practice rotating load shed to manage the energy deficiencies.

Work Plan Updates

Chadalavada also presented changes to ISO-NE’s work plan for 2022.

Most notably, the RTO is changing its approach for resource capacity accreditation, a hot-button project linked to the removal of the minimum offer price rule. Rather than splitting the project into two separate stages for FCAs 18 and 19, the grid operator is going to move forward with it as one for just the latter.

ISO-NE is planning to begin discussions this summer, with a “detailed design” presented by the end of the year and a FERC filing at some point in 2023.

Also newly included in the work plan is ISO-NE’s adoption of a project to develop a way for retired resources to return to service in more circumstances and to enhance the flexibility of retirement delist bids, which has been working its way through the NEPOOL process but hadn’t been accepted by the RTO yet as part of its yearly plan.

Consent Agenda

The PC voted to approve changes to tariff schedules 18 (MTF; MTF Service) and 24 (Incorporation by Reference of NAESB Standards) to comply with the requirements of FERC Order 676-J, as recommended by the Transmission Committee at its March 23 meeting.

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Ann Arbor Using Federal Funds for Solar Panels

Ann Arbor, Michigan, officials voted to use the largest portion of the city’s $24 million federal stimulus money to place solar panels on as many as 18 municipal buildings.

When completed, the project should generate 4 MW of electricity, enough to power 550 houses, said Missy Stults, Ann Arbor’s sustainability and innovation director.

City council voted 10-1 this week to use $4.5 million of the $24 million in federal monies for the solar project.

Stults said the initial designs for the solar panel projects are competed and that she is working on final pricing.  Stults said she plans to present the council with a proposed contract at its May 2 meeting, break ground on construction in June and have all the projects completed by winter.

At least 17 buildings will get solar panels, Stults said, though she hoped pricing would allow 18 to get the panels. Ironically, one building that will not get the panels is Ann Arbor’s City Hall, though panels will go on a nearby parking garage. “We have a crowded roof,” Stults said.

Panels will be installed on every major park facility, the city’s water and sewage treatment plants and at its airport. All the buildings will still have utility hookups.

Stults also said decisions are being made on locating EV chargers at the sites.  One building that will likely get EV chargers is the downtown farmer’s market, which is an open space with a roof structure.

A spokesperson for the Michigan Municipal League said the organization is encouraging communities to include sustainability projects in their projected spending of federal funds, but he did not know whether any other city in the state had plans for projects.

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SEC’s Proposed Climate Rule: ‘Materiality’ is the Question

The U.S. Securities and Exchange Commission’s proposed rule issued March 21 to require standardized disclosure by public corporations of the impact of their practices on the environment follows a dramatic increase in the demand for such disclosure from investors, a former commissioner said.

“It is important to recognize and to acknowledge the amount of progress that businesses have already made on this front, that this rulemaking takes place against what is a dramatic increase in climate-related disclosures that companies, facing interest and pressure from various stakeholders, have chosen to disclose,” former SEC Commissioner Troy Paredes said in a discussion Thursday at the Bipartisan Policy Center.

“And that actually is exactly what ‘market discipline’ and private ordering would predict,” he added in a discussion with BPC senior adviser Tim Doyle about the role of the SEC and its relationship with corporations as well as investors. “I think that’s an important backdrop, worth taking some note of.

“It’s important to recognize that there are shifts in terms of market expectations of one type or another. There are different stakeholders demanding different information for one reason or another.”

But this climate-related rule comes at a time when President Biden has made addressing climate change a whole-of-government issue with his January 2021 executive order, Doyle noted.

And “in May of 2021, he issued an executive order dealing with climate-related financial risk. I think you could make a pretty good argument that this rule has at least some connection with [the executive order], especially given the language that is in that executive order about a consistent, clear, comparable and accurate disclosure of climate financial risks,” he said.

Paredes, an appointee of President George W. Bush who served on the SEC from 2008 to 2013, said the climate issue is not new and that the market is already further along in the process than otherwise might be expected.

“From a company’s perspective, it strikes me that this rulemaking is extraordinarily consequential,” he added.

The question of “materiality” — that is, what to report — is at the heart of controversy about the SEC proposal, Paredes and Doyle agreed.

They also agreed that deciding what’s material has been an issue without a concrete definition since Congress created the SEC in 1934 in response to the stock market crash of 1929. The issue evolved gradually over time, except when Congress passed new legislation from time to time setting out specific requirements.

“The way it gets articulated … is investor protection; fair, orderly and efficient markets; and facilitating capital formation. They are often times identified as three separate parts to the SEC mission,” Paredes said. “The fact of the matter is that they intersect, and they support one another, but there may be instances where they can come into some tension,” he added in reference to the growing controversy over the rule, approved by a 3-1 vote. The rule will become effective in December unless challenged in court and could cost corporations billions of dollars to comply.

“I think there’s widespread agreement that the SEC’s core operating tool is disclosure,” Paredes said, “to get investor information in the hands of investors so that investors can make better informed decisions about how to allocate their capital. And the focus there in particular has been historically on material information.”

The proposal could require a company to disclose not only the impact of its operations on the environment but also the environmental impact of its products, if any, and the impact of its suppliers — requirements sure to be debated in the coming months.

To that coming battle, Paredes pointed out that historically, the SEC’s rules have leaned toward allowing the market, rather than the government, to decide.

“Go back to the founding of the SEC, [and there has been] a recognition that it’s better to allow the marketplace to decide how capital is going to be allocated as compared to the government making the decisions around capital allocation. And again, the means to facilitate that is to give information to investors so they can make those decisions in an informed way but still in lieu of the government making those decisions.”

Doyle agreed, adding that the tension between a hard and fast rule and giving companies the ability within a framework to disclose information has been at the heart of many of the commission’s corporate requirements.

Paredes added that even when Congress ordered the SEC to issue new rules in a particular area, over subsequent years “everything has always been a bit of a blend” of rules and reasonable practice. He said requirements that started out as guidance sometimes become a bit more rule-like over decades of interpretation.

“The demarcation sometimes can be a bit a bit blurry. But I do think it comes down as a practical matter in some respects, to how much discretion does the board [or] management team have in fashioning disclosures versus how much of that is going to be dictated more prescriptively by the regulator,” he said.

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Enviro Groups Push Wisconsin DNR to Scrutinize Cardinal-Hickory Creek Line

Attorneys for conservation groups have asked Wisconsin’s Department of Natural Resources (DNR) to revoke wetlands and waterway permits for the embattled Cardinal-Hickory Creek transmission line.

The Environmental Law & Policy Center — representing the Wisconsin Wildlife Federation, Driftless Area Land Conservancy, Defenders of Wildlife and the National Wildlife Refuge Association — last month sent a letter to the DNR asking it to halt construction of the 101-mile, 345-kV line until the agency and the Wisconsin Public Service Commission conduct a new environmental review.

“Wisconsin DNR has the obligation and duty under Wisconsin law to stop this orchestrated trainwreck, pause the construction spree, and provide for the proper environmental process to take its course without the specter of a rushed construction process and a forced decision leading to wasteful costs and unnecessary environmental harms and property damages,” lead attorney Howard Learner wrote.

The letter is the latest step in the conservation groups’ ongoing battle against Cardinal-Hickory Creek’s construction.

U.S. District Judge William Conley last month issued a final ruling forbidding the line from running through a protected wildlife refuge in southwestern Wisconsin’s Driftless Area. He agreed with the groups and overturned the line’s environmental impact statement (EIS), prepared by the U.S. Department of Agriculture’s Rural Utilities Service. The EIS didn’t adequately consider line alternatives and failed to comply with the National Environmental Policy Act, the judge ruled. (See Federal Judge: Tx Line Can’t Cross Wildlife Refuge.)

The line’s co-owners — American Transmission Co., ITC Midwest and Dairyland Power Cooperative — have asked a federal appeals court to suspend the decision until an appeals panel decides the case. They argue the project will be able to cut through the refuge.

Learner told the DNR that ATC, ITC and Dairyland are “aggressively continuing to build two costly and environmentally destructive high-voltage transmission line segments in Wisconsin and in Iowa with no legally permissible connection through the protected Upper Mississippi River National Wildlife and Fish Refuge.” He said the companies are deliberately “pushing forward with construction despite their lack of a lawful path to completion so they can create maximum leverage … while passing on costs and risks to the captive utility ratepayers.”

Learner said a new, “lawful” environmental review is in order, especially because the DNR’s 2019 wetlands and waterway permits rely on the now-invalid EIS. The DNR must “divorce itself from the transmission companies’ bulldozing and bullying,” Learner added.

The nearly $500 million line is the last of MISO’s $6.7 billion, 17-project Multi-Value Project portfolio approved in 2011. MISO has since moved on to another long-range planning effort. (See MISO Updates Stakeholders on $10B Long-range Tx Package.)

Some MISO stakeholders have asked the RTO to omit the project from system modeling it performs for transmission planning, saying its completion is no longer a foregone conclusion.

ATC, ITC and Dairyland have so far spent $161 million on the project. Construction began last fall, and the line currently has a December 2023 in-service date.

ATC spokesperson Alissa Braatz said the developers disagree with both Conley’s ruling barring passage through the wildlife refuge and the argument that the original EIS requires changes. Although “legal proceedings continue, [the utilities] have the regulatory authorization to move forward with construction activities, and project construction will continue in areas outside of the refuge,” she said.

“Renewable generation developers and distribution utilities are depending on the Cardinal-Hickory Creek project to facilitate our region’s transition from fossil fuels,” Braatz said in an email to RTO Insider. “The critical role of this project in meeting our region’s energy needs compels us to ensure it is built for the benefit of electricity consumers by the scheduled in-service date.”

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Senate Democrats, Republicans Find Common Ground on Critical Minerals

The witnesses before the Senate Energy and Natural Resources Committee on Thursday were unanimous.

The ability of the U.S. to meet President Biden’s clean energy goals will depend on how quickly the country can stand up a domestic supply chain for the critical minerals — such as lithium, cobalt and nickel — that are essential to the manufacture of a range of clean technologies.

But while the need for a domestic supply chain “is now firmly embedded in the mindset of policymakers … the urgency of the situation is still not understood by many,” Duncan Wood, vice president for strategy and new initiatives at the Woodrow Wilson International Center for Scholars, told the committee. “Policymakers must embrace the painful truth that the highly worthy targets set for the energy transition can only be met by a combination of public policy incentives and massive investment now by the private sector, here in the United States and abroad, in new mining activities.

“What is needed today is a whole-of-society approach that incorporates all levels of government, private sector, research and educational institutions, and end users of critical minerals,” Wood said. “This means adopting a holistic, open-minded approach to the issue, embracing the development of new resources, new forms of extraction and processing, new technologies, energy efficiency models, and recycling and waste reduction. Ignoring any one of these elements makes it impossible to build a new energy model and maintain it.”

Unlike Biden’s clean energy targets ― a 100% clean grid by 2035 and a net-zero economy by 2050 ― the critical mineral supply chain is an issue on which the often adversarial Democrat and Republican members of the committee appeared to find common ground Thursday. The demand for these minerals and other rare-earth elements is massive, and the U.S. is largely dependent on China for much of its clean energy supply chain, both Committee Chair Joe Manchin (D-W.Va.) and Ranking Member John Barrasso (R-Wyo.) stressed in their opening statements.

Barrasso pointed to reports from the International Energy Agency and the World Bank predicting exponential increases in critical mineral demand. For example, he said, the IEA report estimates the demand for lithium could grow more than 4,000% by 2040.

Manchin expressed “grave concerns about moving too quickly towards an [electric vehicle]-only future when it comes to the EV battery supply chain. China is responsible for 80% of the world’s battery-material processing, 60% of the world’s cathode production, 80% of the world’s anode production and 75% of the world’s lithium-ion battery cell production,” he said, citing figures from Securing America’s Future Energy. “With numbers like these, it is frustrating to hear calls for a swifter transition to electrify transportation to reduce our dependence on foreign oil. We cannot replace one unreliable foreign supply chain with another and think it’s going to solve our problems.”

Developing clean hydrogen as an alternative fuel should also be pursued, he said.

‘Heading Toward a Cliff Edge’

Joe Britton, executive director of the Zero Emission Transportation Association (ZETA), a trade group representing companies across the EV supply chain, acknowledged the complexity of the challenge, “but turning away in the face of these obstacles only means conceding to foreign commercial interests.”

“American companies are working hard to onshore their supply chains, but they need federal support through predictable permitting, battery, vehicle and charging tax incentives and a whole-of-government approach to drive transportation electrification,” Britton said.

He noted that a number of ZETA members are developing lithium and cobalt production facilities in the U.S., such as Lithium Americas’ Thacker Pass strip mining project in Nevada and Jervois’ Idaho cobalt project.

At the other end of the supply chain, J.B. Straubel, founder and CEO of Redwood Materials, said his company is developing recycling processes that will create “a fully closed-loop domestic supply chain for lithium-ion batteries.” At present, the company is receiving and recycling enough end-of-life batteries to manufacture 60,000 EVs, he said.

Straubel, who was formerly chief technology officer at Tesla, estimated that building out a complete domestic supply chain for EVs could take five to 10 years, while David Howell, acting director of the Department of Energy’s Office of Manufacturing and Energy Supply Chains, projected a 2040-2050 time frame.

Wood argued that any estimate would be unrealistic. “We’re heading toward a cliff edge,” he said. “When you look at just the amount of materials that are going to be needed to reach 50% of the vehicle fleet being electric in the next decade or so, there just aren’t enough being produced globally.”

Part of the challenge, he said, is that “whereas traditional hydrocarbon-based energy generation systems are fuel-intensive, renewable energy systems are material- and, specifically, mineral-intensive. To give one example, an onshore wind block requires nine times more mineral resources than a gas-fired power plant.”

Sen. Catherine Cortez Masto (D-Nev.) countered that the clean energy transition is America’s current “moonshot.”

“It’s important for the administration to stake a goal for all of us to marshal our resources,” she said. “Whether we achieve that goal can always be in question, but at least we are moving in the same direction. … Now we can sit here and armchair quarterback everything about it, but without an administration and a focus, we will never get there.”

Straubel also chimed in, noting that the comparison of petroleum and lithium is skewed because unlike the fossil fuels used to power a generator or a car, lithium-ion batteries are not consumed. “We refine it; we put it into inventory in the fleet; and it’s there for many decades,” he said. “It’s essentially infinitely reusable. … We can refine it back to new quality every single time.”

A National Battery Reserve

Thursday’s hearing was the second of two the committee has held on critical mineral supply chains and the urgent need for federal action to develop domestic sources in the wake of delays and price increases triggered by the combined impacts of the COVID-19 pandemic and the war in Ukraine. Beyond oil and gas, Russia is a major supplier of nickel.

Both Democrats and Republicans on the committee had previously called for President Biden to invoke the Defense Production Act (DPA), which he did March 31, even as the committee held its first critical mineral hearing.

Originally passed in 1950 as part of a federal effort to ramp up production of key materials needed for the Korean War, the DPA was most previously invoked by Biden to increase manufacturing of medical supplies during the pandemic. To increase production of critical minerals, Biden called on Defense Secretary Lloyd Austin to “create, maintain, protect, expand or restore sustainable and responsible domestic production capabilities of such strategic and critical materials.” (See Biden Invokes the Defense Production Act for Critical Minerals.)

Howell pointed to a recent memorandum of agreement between DOE and the departments of State and Defense to create “a critical mineral stockpile process to support the U.S. transition to clean energy and national security needs.” The three departments will partner on acquiring and recycling “selected materials for technologies that range from grid-scale batteries to wind turbines,” he said.

But building critical mineral supply chains and reserves often depends on demand, Britton said. The U.S. did not previously develop critical mineral processing “because there wasn’t a critical mass of battery cell production,” he said. “So, there’s a through-line where we are creating these products here; we’re building these battery cells and building these vehicles. It then has follow-on impacts where we’re justifying additional investment and processing.

“Every vehicle that we bring to America or that we make here and manufacture, it becomes part of a national battery reserve,” he said.

Wood also stressed the need for both urgent action and a long-term strategy. Biden’s invoking of the DPA was only a first step, he said. Building a critical mineral supply chain “is not something that we’re going to resolve with a one-and-done solution. … It’s not an either/or; it’s an all-of-the-above. The fact is we need recycling; we need new resources; we need tax credits. We need massive investment in human capital.

“The danger here is that if we take our eyes off the prize because we’ve done something, then we miss ultimately achieving that goal,” he said.