Beleaguered Texas utility CenterPoint Energy has come under fire from the state’s political leadership, lawmakers, regulators and residents over its slow restoration efforts following a Category 1 hurricane.
The heat is only intensifying.
Gov. Greg Abbott (R) has ordered CenterPoint to file a plan with his office by July 31 that outlines how the utility will improve its preparation and response practices before the next hurricane hits. If CenterPoint fails to comply, he threatened to oppose any future rate increases brought to the Public Utility Commission, whose members he appoints.
“CenterPoint Energy has lost the faith and trust of Texans. … Texans deserve better from their electrical companies,” Abbott wrote in a letter to company CEO Jason Wells.
Abbott also directed the PUC to conduct a “rigorous” study to determine the causes of “repeated and ongoing power failures” in the Houston area after severe weather events. A mid-May derecho knocked out power to more than 1 million CenterPoint customers, some for as long as 17 days.
The governor asked the PUC to determine whether the large customer outages are a result of a physical infrastructure or personnel issue. Abbott said the commission must identify why Hurricane Beryl affected millions of Texans when similar events in the recent past did not and file a report to the state legislature by Dec. 1 (56822).
“I think it’s clear from the events of the past week that the quality of their infrastructure, their ability to maintain that infrastructure and their communication with their customers has been called into question,” PUC Chair Thomas Gleeson said during a July 14 news conference.
Lt. Gov. Dan Patrick (R), who said CenterPoint “underestimated” Beryl’s force and direction, created a special committee in the state Senate on hurricane and tropical storm preparedness, recovery and electricity. The committee, charged with reviewing “certain utility companies’” response and establishing why they “appear to have been woefully unprepared for Hurricane Beryl,” will hold its first hearing July 29.
The state House will join the inquisition two days later when its State Affairs Committee conducts an oversight hearing on recent electric industry legislation. It has added an agenda item assessing “utility preparedness, response and recovery protocols” and reviewing performance during severe weather events.
As of July 23, more than 1,600 CenterPoint customers were without service. The utility said it had restored almost 73,000 customers in the previous 24 hours, although not all outages stemmed from Beryl. CenterPoint has not issued a public update since July 17, when it said power to 98% of customers had been restored.
In an email to RTO Insider, CenterPoint said it has restored power to all customers “who are able to receive power.” It said remaining outages are “predominantly isolated instances” in which severe home damage or damage to customer-owned equipment has made restoration difficult.
Entergy Texas, which lost power to more than 252,000 customers when Beryl hit July 8, said July 16 that it expected to restore electricity to all its customers who could safely take power. Its outage count was less than 600 on July 23, according to PowerOutage.us.
It is CenterPoint that has drawn much of the ire from Houston residents. Half of the 22 deaths caused by the storm have been attributed to slow restoration efforts and triple-digit temperatures.
Houston Mayor John Whitmire (D) has threatened to hold CenterPoint accountable by documenting the trouble it has given City Hall.
“I’m pretty fired up at them. They made my job tougher by not doing their job,” Whitmire told the Houston Chronicle.
CenterPoint’s shortcomings will provide plenty of fodder for those investigating the utility.
It was ridiculed nationally for an outage map that was less reliable than a hamburger chain’s app and it has been criticized for its lack of preparation before the storm. Utility representatives told the PUC during a July 11 open meeting they were surprised by the damage Beryl caused in the heavily wooded areas north and east of Houston. (See Texas Utilities: Beryl’s Damage Unlike that of Cat 1s.)
CenterPoint has spent more than $800 million in recent years on 15 32-MW generators and five smaller ones. However, the 15 massive generators are not designed to be mobile and were never used during the storm.
The utility has also come under fire for poor tree trimming and maintenance and its poor communication from the top down. Wells filmed a message to Houstonians from an office setting during which he mentioned he had a generator at home, all while sitting next to a thermostat that read 70 degrees.
In April, CenterPoint filed a $2.3 billion resiliency plan as a result of 2023 legislation. The Texas Consumer Association has asked that the plan be delayed until the probes into the utility have concluded. CenterPoint has already estimated repairing the derecho’s damage will cost about $475 million.
Separately, Entergy has filed a rate increase with the PUC to recover $6 billion in infrastructure investments since 2019.
With Massachusetts’ legislative session ending July 31, lawmakers are on the clock to reach an agreement on a major climate bill centered around clean energy permitting and siting reform.
Culminating over a year-and-a-half of work on a wide range of proposed climate legislation, the Senate passed an omnibus bill in late June (S.2838), and the House of Representatives followed with its own legislation on July 17 (H.4884).
The bills contain closely aligned changes to how the state permits clean energy infrastructure but vary significantly beyond the permitting provisions and have elicited mixed responses from clean energy advocates in the state.
The resulting proposal would streamline and consolidate state and local permitting of clean energy infrastructure. For large projects, the state’s Energy Facilities Siting Board (EFSB) would approve them through consolidated permits that encompass “all municipal, regional and state permits that the large or small clean energy infrastructure facility would otherwise need to obtain individually.”
Municipal permitting would remain under local control but be incorporated into the consolidated EFSB process. For smaller projects, all municipal permits similarly would be consolidated into a single application and approval process.
For large clean energy infrastructure projects — defined as including generation, storage, transmission and distribution infrastructure — the EFSB would be tasked with setting approval timelines that are specific to the infrastructure type, capped at 15 months after an application is deemed complete. Only the final consolidated permit could be appealed to the Massachusetts Supreme Judicial Court.
The approval timelines for small projects would be capped at 12 months. The local permitting decision could be contested with the EFSB, which would have six months to either affirm or overrule the local permitting decision.
The clean energy permitting provisions have received strong support from renewable developers.
“The solar and storage industry is glad to see lawmakers continue to push forward on common-sense reforms to reinforce the commonwealth’s place as a national clean energy leader,” Valessa Souter-Kline, the Solar Energy Industries Association’s Northeast regional director, said in a statement. “The reforms include time limits for permitting decisions, a streamlined appeals process and more predictable interconnection that will provide critical certainty for solar and storage businesses.”
Dan Dolan, president of the New England Power Generators Association, praised the approval time frames and consolidated EFSB process, adding there’s “a meaningful benefit to sending the subjective policy message that there needs to be an ‘all hands on deck’ approach to getting projects sited in the commonwealth.”
The legislation also includes funding that would help community organizations participate in EFSB and Department of Public Utilities proceedings. It would require developers to submit a cumulative impact analysis (CIA) intended “to evaluate and minimize the impacts of large clean energy infrastructure facilities in the context of existing infrastructure and conditions.”
While the CIA requirement has been a key priority of environmental justice advocates in the state, some have expressed concern the language included in the House and Senate bills is inadequate.
John Walkey, of the environmental justice group GreenRoots, said advocates are concerned the CIA definition will fail to include “a holistic consideration of all the factors that go into how environmental burdens are sited and experienced.”
“As we get ready for the conference committee, the CIA definition is still falling short,” Walkey said. “We hope that in the few opportunities that remain, the language will see the small adjustments needed to bring it in line with established practice.”
Gas utilities would be required to consider “non-pipeline alternatives, the repair or retirement of pipelines, and other alternatives” to minimize costs when evaluating solutions to system needs.
Significant Differences
There are some significant differences between the two versions of the bill, with the Senate taking a more aggressive approach to phasing out gas infrastructure.
In approving requests for gas service, the Senate bill would direct the DPU to review climate impacts and whether there are other viable alternatives to gas heating. It would authorize gas utilities to submit decommissioning proposals for portions of the gas system and terminate gas service to customers along these segments, as long as customers receive “continuous access to safe, reliable and affordable energy services,” shifting their obligation to provide gas service to residents to an obligation to provide thermal energy services.
The bill also would require annual filings from the gas distribution companies “to ensure each gas company is meeting the appropriate pace to preserve and improve public safety, improve infrastructure reliability, minimize the risk of stranded assets and reduce greenhouse gas emissions.”
“The Senate’s provisions on the gas system are really important,” said Kyle Murray of the Acadia Center, adding they would “give the DPU the tools necessary to pursue an ordered transition off of natural gas.”
Caitlin Peale Sloan of the Conservation Law Foundation said the Senate bill includes “important early steps that we could put in place now” to help decarbonize the gas system while limiting long-term costs to ratepayers.
“Nothing in this space happens quickly — ever — so that’s why it’s important to be taking action now,” Sloan said.
Other components of the Senate bill include a ban on third-party competitive electric suppliers in the state, additional funding for electric vehicle rebates, provisions intended to increase access to EV charging and a requirement for the Massachusetts Bay Transportation Authority to fully electrify commuter rail service in the state by 2030.
In contrast, the House bill largely sidesteps the issue of gas system decommissioning and would not ban the practice of competitive residential electricity supply in the state.
Instead, it focuses on promoting energy storage and would direct electric utilities to pursue competitive solicitations for up to 5,000 MW of energy storage, including 750 MW of long-duration storage (between 10 and 24 hours) and 750 MW of multiday storage (greater than 24 hours).
The bill also includes language to promote advanced metering infrastructure, scale up a network of fast EV charging hubs across the state and create a study into the “feasibility of the electric vehicle-only sales mandate, which becomes effective in 2035.”
Both bills also include provisions that would enable additional procurement of clean energy. The House bill would authorize long-term contracts (up to 30 years) for up to 9,450 GWh of clean energy, while the Senate bill would give the Department of Energy Resources broad discretion to procure clean energy as needed to meet the state’s statutory climate targets.
Despite the differences in the bills, top legislators from the House and Senate have indicated they expect to reach some compromise by the end of the session.
“These are long bills; it will be interesting to see what shakes out,” Sloan said. “It’s still just the tip of the iceberg of what needs to be done on climate.”
It was 2018 and the hydropower industry and environmental and tribal advocates had battled themselves to a political stalemate, recalled Kelly Catlett, hydropower reform program director with the nonprofit American Rivers.
The environmental and tribal groups had enough votes in Congress to kill any bill supported by the industry, which likewise had the votes to kill any bills being advanced by the environmental and tribal groups, Catlett said during a July 18 briefing on how the opposing sides came together to find common ground through an “Uncommon Dialogue.”
“We weren’t getting anything done,” Catlett said. “We didn’t have open lines of communication. We didn’t understand each other’s perspective.”
While frequently discounted as renewable energy, hydropower accounts for close to 30% of carbon-free generation in the U.S., and unlike wind and solar, can provide dispatchable, flexible generation. According to the National Hydropower Association (NHA), hydro makes up just over 6% of U.S. power generation but provides 40% of the nation’s black start capacity.
At the same time, hydro comes with a legacy of concerns about its impacts on the environment and tribal land and fishing rights, on top of the usual permitting challenges, all of which have raised multiple obstacles to maintaining and expanding hydro and hydro pumped storage in the U.S.
Convened by Stanford University’s Woods Institute for the Environment, the Uncommon Dialogue on hydro aimed to change the adversarial dynamics of hydropower development, with a series of meetings where industry and environmental groups, government officials and academics could talk and listen to each other and build trust.
Participants included river advocates American Rivers and American Whitewater, the NHA, Natel Energy, a developer of fish-friendly hydropower turbines, and the U.S. Department of Energy, in an observer role.
“Where we [found] common ground is when we started thinking about it as dams,” said Malcolm Woolf, president and CEO of the NHA, noting that only 3% of the more than 90,000 dams in the United States produce electricity. The other 97% were “built for flood control, for irrigation, for water storage, for navigation, sometimes for recreation.
“By focusing on dams … we’re able to talk and make progress, I hope, both on carbon-free generation and river restoration,” he said.
The result, in 2020, was a joint statement from dialogue participants identifying seven areas for ongoing collaboration, including improving hydropower technologies to increase generation efficiency and output, improving dam safety and river restoration and accelerating licensing and relicensing of dams and pumped storage hydro facilities.
Moving forward on those points of collaboration has become increasingly important as a growing number of U.S. hydroelectric dams are up for relicensing ― a long and expensive process ― and many hydro dam operators consider surrendering their licenses, rather than contend with the cost and uncertainties of relicensing, Woolf said.
Either licensing or relicensing can take seven years or, in some cases, decades, he said. “You don’t know how long it’s going to take. You don’t know what’s going to be required, and so every part of the process creates uncertainty and prevents people from investing in modernizing their existing fleet or building more.”
No new dams or pumped storage hydro have been built in 20 years or more, he said, and according to DOE, between 2010 and 2022, 68 hydro projects totaling 322 MW surrendered their licenses.
Bills Supported but Stalled
Given the current deep divisions in Congress, continuing the work of the Uncommon Dialogue also has become essential on the policy front, Catlett said.
A broad range of industry and environmental groups support a set of bills aimed at maintaining and expanding hydro in the U.S. The bills were introduced in Congress last year, with both Democratic and Republican sponsors.
The Maintaining and Enhancing Hydroelectricity and River Restoration Act (S. 2994/H.R. 6653) seeks to provide existing hydro projects with the same kind of tax credits the Inflation Reduction Act offers to new hydro projects and other renewable or carbon-free power. Under the bill, a 30% tax credit would be available for hydroelectric projects that improve safe passage for fish, dam safety, water quality and public uses of and access to public waterways. The tax credit also would be available for projects that add power generation to an existing nonpower dam.
On the permitting side, separate and slightly different bills also were introduced in the House and Senate.
The Hydropower Clean Energy Future Act (H.R. 4045) officially defines hydro as renewable energy “for purposes of all Federal programs” and allows FERC on a case-by-case basis to exempt small hydro projects of less than 40 MW from some or all licensing requirements.
The bill also would give FERC a two-year cap on licensing for any hydropower or pumped storage projects deploying “next-generation” hydro technologies, for example, run-of-river hydro or technologies that “protect, mitigate, or enhance environmental resources, that [are] not in widespread, utility-scale use in the United States.”
In the Senate, the Community and Hydropower Improvement Act (S. 1521) puts a two-year cap on permitting for the addition of hydropower to existing dams and a three-year limit for licensing of closed-loop or off-stream pumped storage projects. The bill includes provisions that make engagement with tribal governments mandatory for hydro or pumped storage projects located on tribal lands and create a pathway for tribes to submit recommendations to FERC on the protection of fish and wildlife habitats.
While H.R. 4045 has been voted out of committee to the House floor, the other bills have not moved forward since their introduction last year.
Pivotal role
The U.S. Energy Association sponsored the July 18 event, and Woolf, a fervent proselytizer for hydro, came armed with facts and figures about the pivotal role NHA sees hydro playing in the energy transition.
Hydro generation powers 30 million American homes and businesses, while also providing flexible, dispatchable power for grid support services. Hydro pumped storage makes up 96% of the nation’s long-duration energy storage.
“It’s 80 GW of hydropower capacity and another 22 GW of pumped storage; so, it’s over 100 GW of largely dispatchable, flexible, carbon-free generation, and that’s in the United States,” Woolf said. Globally, hydropower produces more energy than all other renewables combined, he said.
Hydropower capacity in the U.S. has expanded slowly in recent years, due primarily to upgrades at existing projects or the addition of power generation to previously nonpower dams, according to the Department of Energy’s 2023 Hydropower Market Report.
From 2010 to 2022, about 2.1 GW of new hydro capacity came online, 75% of which was nonpower dam retrofits. New projects, however promising, move slowly.
At the end of 2022, the U.S. had 117 new hydro facilities in the development pipeline, but only eight were under construction, and 95% of the projects were nonpower dam retrofits, according to DOE. The pumped storage pipeline included 96 projects, only 10 of which have advanced beyond basic feasibility studies. Three had received permits from FERC; none were under construction.
The two Cushman dams in Washington state provide a case study on the challenges of hydropower relicensing, said Mary Pavel, a partner at Sonosky, Chambers, Sachse, Endreson & Perry LLP and a member of the Skokomish Tribe. When the dams originally were permitted back in the 1920s, her tribe’s fishing rights largely were ignored, and tribal access to the Skokomish River and fishery essentially were wiped out, Pavel said.
Sockeye salmon disappeared from the river for decades, which she called “an act of genocide.” Dams like the Cushman are “stealing” energy, Pavel said. “You’re stealing energy that’s necessary for my fishery resource, my wildlife resources or my cultural resources or my aquatic resources. That energy is there for a reason.”
Relicensing the dams took over 30 years and ended with a settlement between the tribe and Tacoma Public Utilities, which included a $50 million project to return salmon to the river, along with the return of tribal lands and cash payments totaling about $35 million, according to local media reports.
Both Catlett and Woolf agreed the era of building large dams is over, in part because the best sites already are developed. But Catlett said intensive community engagement will be critical to ensuring the mistakes of the past are not repeated.
“We need to be designing projects to avoid aquatic ecosystem impacts and impacts to the communities in which they are situated and think a little deeper about these projects and the way they are going to interact with the communities around them,” she said.
In a test of New Jersey’s new environmental justice law, the state Department of Environmental Protection (DEP) has concluded that a controversial proposal to build a gas–fueled generating plant in Newark can move forward, despite the high density of other emissions-generating plants in the area.
The agency, in a decision released July 18, said the plant’s originators, Passaic Valley Sewerage Commission (PVSC), had agreed to include in its plan measures to curb emissions and use limits that would allow the plant to operate only 288 hours a year for testing and maintenance, unless an emergency forced its use.
Because the DEP’s decision requires the sewerage commission, if it goes ahead with the plan as expected, to install pollution controls on existing equipment at the facility, the state’s action “will result in a net overall reduction of air pollutant emissions,” said Commissioner Shawn M. LaTourette at a briefing as the DEP released the decision.
“This is a precedent-setting action,” he said, referring to the way the law was used to cut emissions across the facility. “We believe that this is the kind of result that our environmental justice law was intended to achieve. It’s one that not only avoids casting more pollution upon an overburdened community, but also improves upon the existing conditions by reducing pollution that our neighbors are already experiencing.”
Yet the DEP’s action immediately triggered vigorous pushback from environmentalists and local lawmakers, who have been fighting to stop the project for years.
Food and Water Watch NJ called it an “absolute betrayal to Newark residents” and said the decision “completely undermines” Democratic Gov. Phil Murphy’s “own commitment to protect environmental justice communities and take meaningful climate action.”
“Toxic air pollution from power plants and congestion have plagued our communities for decades, resulting in higher instances of asthma, cancer, cardiovascular disease and developmental disorders,” said state Sen. Renee C. Burgess (D), in a release put out by six legislators. “Just when we thought there was marked progress in combating the new development of these harmful facilities, DEP fails us.”
Competing Goals
The debate underscores the difficulties of the state’s efforts to aggressively cut emissions while ensuring the state has access to enough electricity to meet its needs. In this case, the DEP also sought to balance competing public health concerns: those of the local community that would be affected by emissions from the plant and the threat if the lack of electricity during a disaster meant untreated sewage ran into area waterways.
PVSC, which handles sewage from 48 municipalities and is the sixth-largest waste handling agency in the nation, conceived of the plant after Superstorm Sandy severely flooded the agency’s plant. The emergency shut down the main and backup power sources needed to treat wastewater and triggered the release of 840 million gallons of raw sewage into the nearby Passaic River and Newark Bay.
In response, PVSC seeks to build an on-site emergency standby power generating facility (SPGF) with three 24-MW natural gas combustion turbine generators (CTGs) that is intended to provide power in case of a similar emergency.
The commission’s application said the plant would be used only 3.5 hours a day or 1,285 hours a year. The commission predicted it would use the combustion turbine generators (CTGs) 480 hours a year for storm preparation, 300 hours a year for testing and maintenance, and 24 hours a year for “demand response” during peak hours to offset load. The DEP said PVSC had explored using electricity provided by solar, wind and battery systems to provide emergency backup, but found it would not be feasible, due mainly to onsite space limits.
The DEP’s decision does not grant permission for the plant, but it does specify conditions in the project as it now advances through the DEP’s environmental permitting process. As part of the process, which is expected to take six months, the DEP will compile a draft permit for review by the federal government prior to the state making a final permit decision.
The DEP reviewed PVSC’s plan under an environmental justice law that took effect in June 2023 triggered largely by concerns that communities — especially with a proportion of low-income residents, and those of color — were not being heard in decisions over environmental issues and were, as a result, heavily burdened by polluting facilities.
Murphy, in backing the law, called it a “historic step” that made the state “home to the strongest environmental justice law in the nation.” The law requires applicants seeking to build potentially polluting facilities to dig deeper into the density, history and emissions of other facilities into the area and identify stressors on the community from any proposed facility and the impact on residents.
The PVSC project is the last of three gas-generating plants that until recently were proposed for North Jersey. In October, Competitive Power Ventures (CPV) withdrew its plans for a 630-MW gas-fired generating plant Woodbridge, and in January, NJ Transit dropped plans for a 140-MW emergency resilience gas generator in Kearny. (See New Jersey Abandons Controversial Gas Generation Plant.)
Special Requirements
The DEP’s 16-page decision allowing the PVSC project to “proceed with its proposed permit modification” says the agency’s environmental justice review “has ensured the imposition of special conditions that result in a net overall reduction of facility-wide emissions of air pollutants under regular operating conditions.”
“I don’t expect anyone to praise this outcome,” LaTourette said. “That’s not the business we’re in. … But (it’s) rather to achieve a result that best protects public health and the environment.”
The EJ law enabled the DEP to look “beyond the single source of pollution …. and to look broader at the facility as a whole, to achieve facility-wide reductions in pollution,” LaTourette said. “That additional oversight and authority has resulted in multiple new requirements for PVSC to reduce its existing pollution.”
The requirements, which must be adhered to in the permitting process, included:
limiting the plant’s use — to 48 hours before a storm, to no more than 10 times a year, to emergency “act of God”-type events, and to once a month for maintenance and testing
air pollution control measures — PVSC must remove several existing gas boilers and install state-of-the-art pollution control equipment on four sludge boilers
solar — the agency must install at least 5 MW of solar panels at the facility by the end of 2026
storage — the agency must install at least 5 MW of battery storage capacity at the facility
alternative fuels — the agency must “initiate the transition” of the burners to natural gas or green hydrogen in the near future.
Community Impact
Lawmakers who represent districts that would be impacted by plant emissions demanded a reversal of the decision and highlighted the state’s history of putting polluting facilities in the Newark area. The city is already home to four electricity-generating plants, and pollution levels are elevated by truck traffic on several highways, much of it serving the Port of New York and New Jersey, which also is in Newark.
State Sen. M. Teresa Ruiz (D) called the decision “an indefensible and hypocritical decision that blatantly violates New Jersey’s environmental justice law.”
“It disregards the well-being of Newark residents who have long borne the brunt of toxic air pollution and negative health outcomes from nearby power plants built in their communities to shield more affluent areas from its harmful effects,” she said. “The administration cannot pat itself on the back for pioneering environmental justice policies and promoting environmental education in schools while continuing to harm the environment and the health of its most vulnerable residents.”
Pennsylvania will use its $396.1 million Climate Pollution Reduction Grant (CPRG) on a statewide initiative to cut greenhouse gas emissions from industrial buildings through incentives for energy efficiency and emission-reduction technologies.
Montana’s plan for its $49.7 million CPRG will focus on improving forest management across the state, expanding urban and community forests, mitigating wildfires and coal seam fires, and reducing pollution from agriculture.
And in Connecticut, New Haven will get $9.4 million to build a networked geothermal system that will provide clean power and heat to Union Station, the city’s transit hub, with carbon-free electricity also going to a neighboring mixed-income housing development.
EPA on July 22 announced these and 22 other projects that have been selected to receive more than $4.3 billion in CPRG funds from the Inflation Reduction Act, all aimed at reducing emissions, promoting clean energy and creating jobs.
Announcing the grant awards at a concrete and asphalt plant in Pittsburgh, EPA Administrator Michael Regan said the federal dollars will “fund investment-ready projects targeting climate pollution from transportation, the electric power sector, commercial and residential buildings, industry, agriculture, natural lands, [and] waste and materials management. … These investments are going to change lives.”
Combined, the 25 projects could reduce U.S. GHG emissions by 971 MMT by 2050, which, according to EPA, is the equivalent of the emissions from the energy used by 5 million average U.S. homes per year for more than 25 years.
The IRA funds will “empower local ownership … and local solutions to help solve a global problem,” John Podesta, White House senior adviser on climate innovation and implementation, said during an advance press call July 19. “The climate crisis looks different in every community, from Colorado to Connecticut to Lincoln, Nebraska. More bike lanes and public transit may be the best way for one city to reduce emissions, and making a local steel plant more energy efficient might be the best path for another.”
Lincoln Mayor Leirion Gaylor Baird agreed. “Local initiatives, when combined with federal funding, can transform ideas into tangible solutions,” she said.
“Here in Lincoln, the planning phase of this grant program showed us that some of the greatest opportunities for emission reductions lie in enhancing the energy efficiency of homes and commercial buildings. Our analysis indicates that investing in energy efficiency and electrification could reduce Lincoln’s emissions by a whopping 77% from our baseline metrics by the year 2050.”
The money also will be used for “critical home repairs for low-income members of our community” as part of the city’s efficiency and electrification efforts, she said.
Lincoln’s programs are just one element of Nebraska’s plans for its $307 million in CPRG funding. The money also will go toward accelerating the adoption of climate-smart and precision agricultural practices and reducing agricultural waste from livestock.
Precision agriculture uses digital tools and automation to improve farming efficiency and crop yields.
EPA received nearly 300 applications for the grants, with funding requests totaling $33 billion, Regan said July 19. The 25 awardees were “the cream of the crop,” with projects offering “maximum penetration of greenhouse gas pollution reduction. But also, we wanted to be sure we saw the diversity across various industries, whether it be transportation, building, agriculture [or] the power sector.”
Community benefits and job creation were additional priorities in evaluating applications, he said. “We have a very stringent program. These recipients also have demonstrated that not only could they identify the pollution reduction targets, but they could put metrics in place to prove it.”
The CPRG funding contains an additional $300 million for emission-reduction projects submitted by tribes and territories, to be announced this year.
Asked if the grants announced July 22 could be affected by a change in administration, Regan said all the funds would be “obligated” to the awardees by early fall, once all legal and administrative requirements are met.
“We know these recipients are ready to receive these dollars and will be off to the races immediately,” he said.
State Climate Plans
The grant announcements are the second phase of the CPRG program, which began last year, when EPA awarded $250 million in noncompetitive IRA funds to help state, city and tribal governments develop climate plans. Individual grants ranged from $1 million to $3 million.
Plans were due March 1 for states and cities and April 1 for tribes and territories.
Forty-five states and dozens of cities and tribes ― covering 96% of the U.S. population ― now have plans in place, according to EPA. While five states ― Florida, Iowa, Kentucky, South Dakota and Wyoming ― did not submit plans, cities in those states did. Rapid City, S.D., and Cheyenne, Wyo., submitted plans, as did Des Moines, Cedar Rapids and Iowa City in Iowa.
Updated, comprehensive plans will be due around the middle of 2025, according to EPA.
The second-phase grants are intended to help a small group of states and cities implement those plans and provide models that other states, cities and businesses can replicate.
Pennsylvania Gov. Josh Shapiro, joining Regan in Pittsburgh, said the state’s $396.1 million CPRG is the second-largest federal grant in its history and will be used for its Reducing Industrial Sector Emissions in Pennsylvania (RISE-PA) program.
Administered by the state’s Department of Environmental Protection, RISE-PA will issue grants “to manufacturing companies across this commonwealth,” Shapiro said. “These grants can be used for … improving energy efficiency, reducing emissions, implementing carbon capture … and replacing equipment with electric power options,” such as swapping out coal-powered smelters used to make steel for electric smelters.
“I have always said we have got to reject the false choice between protecting our planet and protecting our jobs,” Shapiro said. “We can and we must do both.”
Multistate and Regional Projects
Other award winners included several multistate and regional projects.
Maine, New Hampshire, Connecticut, Massachusetts and Rhode Island are partnering on a New England Heat Pump Accelerator, which snagged $450 million, one of the largest grants announced. In states heavily dependent on winter heating oil, the project aims to install cold-climate air-source heat pumps, heat pump water heaters and ground-source heat pumps in 500,000 single-family and multiunit homes.
New Jersey, Connecticut, Delaware and Maryland have formed the Clean Corridor Coalition, which will receive $248.9 million to install electric charging stations for medium- and heavy-duty trucks along Interstate 95, a major East Coast freight route.
Maryland also is part of the Atlantic Conservation Coalition, joining Virginia and the Carolinas for a $421.2 million grant to be used to restore coastal habitats and peatlands, plant trees and improve forest management in Appalachia.
The state’s slice of the two projects will total about $130 million, according to a press release from Gov. Wes Moore (D).
“It isn’t enough to ask people to see themselves in the consequences of climate change — they also need to see themselves in the progress of climate action,” Moore said. “By moving in partnership with leaders at the local, state and federal levels, we are creating new green jobs, driving economic growth and building new pathways to prosperity for all, while protecting our planet.”
PJM presented its Planning Committee with revisions to the 2023 Reserve Requirement Study (RRS) to reflect the marginal effective load-carrying capability (ELCC) analysis approach the RTO uses for most resource accreditation.
During the July 16 special meeting, PJM’s Patricio Rocha Garrido said the results of the reanalysis recommend increasing the installed reserve margin (IRM), which sets the targeted capacity level above expected loads, to 18.6%, up from the 17.6% stakeholders endorsed in the original study last year. The forecast pool requirement (FPR), which accounts for generator accreditation, would decrease from 11.65% to 9.37%. (See “Stakeholders Endorse Reserve Requirement Study Values,” PJM PC/TEAC Briefs: Oct. 3, 2023.)
The majority of resource classes saw a relatively minor change between their 2025/26 ELCC ratings and the 2026/27 target year for the 2023 RRS, with most increasing or decreasing within 2%. Gas combustion turbines saw the largest change, increasing 6% due to the number of CTs that have announced their deactivation. The overall impetus for rating changes across resource types was a small shift toward risk being concentrated in the winter.
The new values are being brought to the July 24 Markets and Reliability Committee and Members Committee meetings for a same-day first read and endorsement vote.
The marginal ELCC approach was one of several capacity market redesigns drafted through the Critical Issue Fast Path (CIFP) process last year and approved by FERC in January 2024. (See FERC Approves 1st PJM Proposal out of CIFP.)
The CIFP filing also revised three formulas central to the RRS analysis, including:
calculating the IRM by reducing total installed capacity (ICAP) by the capacity benefit of ties (CBOT);
determining the FPR by multiplying the IRM by the pool-wide average accredited unforced capacity (UCAP) factor, rather than forced outage rates; and
making the average accredited unforced capacity (UCAP) factor the ratio of UCAP to installed capacity (ICAP).
Stakeholders endorsed an earlier round of revisions to the RRS to reflect the impact of those design changes earlier this year. (See “Revised Reserve Requirement Study Values Endorsed,” PJM MRC/MC Briefs: March 20, 2024.)
Garrido said PJM also updated the assumed resource mix to include planned resources that submitted a notice of intent to offer into the 2026/27 Base Residual Auction. Gas generators that submitted dual fuel attestations were sorted into the corresponding ELCC classes, and resources that are scheduled to deactivate prior to the start of the delivery year were removed from the analysis. Generators expected to operate on reliability-must-run (RMR) contracts through the delivery year were included in the resource mix.
Paul Sotkiewicz, president of E-Cubed Policy Associates, said some RMR contracts do not require the generator to respond to PJM capacity deployments and should not be included in the resource mix.
“I think we’re actually overstating the amount of capacity that’s going to be there,” he said, adding it would distort market signals.
Sotkiewicz also questioned the assumption that outside capacity could be available for import during emergencies, saying that PJM has been exporting consistently during “emergency events and high load days.”
Garrido said PJM aims to model the system as it’s expected to exist in the target delivery year and that RMR resources should be included if they’re contracted to remain in operation. He stated any impact on the reliability requirement would be small.
NERC has submitted its final performance assessment to FERC, reviewing a turbulent five years in which NERC managed “significant collaboration” among the ERO Enterprise, stakeholder groups and government authorities that “resulted in high and improving grid performance.”
The performance assessment covers the years 2019 to 2023, a period that saw the outbreak of the COVID-19 pandemic, several major severe weather incidents, the emergence of serious cybersecurity threats to multiple aspects of the electric grid and the ongoing shift from traditional thermal generation to renewable resources.
In the report, NERC sought to highlight “the continued viability and effectiveness of the ERO model” at using “broad technical expertise across diverse stakeholder groups and [ensuring] the independence and agility required to advance reliability in a changing world.”
FERC regulations require NERC to file an assessment of its performance every five years as a prerequisite to recertifying it as the ERO, and the commission approved the last assessment in 2020. (See NERC Wins Another 5 Years as ERO.) Three years ago, FERC floated a proposal to shorten this timeline to three years, but the commission withdrew the proceeding this year after NERC and the regional entities warned that a three-year assessment cycle might not allow it to conduct the same level of review that the current schedule allows.
NERC posted a draft of this report in April, seeking stakeholder comments. (See NERC Makes Case for Recertification in Performance Assessment.) The finished assessment, filed July 19, “reflects feedback from [regional entities], industry stakeholders and commission staff,” NERC said, along with input gathered from stakeholders throughout the assessment period.
In the final assessment, NERC focused on its accomplishments through four key areas:
Energy: addressing challenges arising from the changing resource mix, providing sufficient energy and essential reliability services, improving system performance during extreme weather and adding transfer capability;
Security: addressing cyber and physical security risks;
Agility: becoming nimbler in risk identification and standards development; and
Sustainability: investing in automation, eliminating single points of failure, and strengthening the ERO Enterprise’s long-term stability and success.
The organization devoted a significant part of the report to its internal development and efforts to modernize and streamline its committee structure. These include the creation of the Reliability and Security Technical Committee in 2020 through the combination of several existing committees and the Regulatory Oversight Committee in 2023 to give NERC’s Board of Trustees “committee-level oversight of standards development.”
NERC also discussed its efforts to improve cyber and physical security across the ERO Enterprise. It said that during the assessment period, it “zeroed in on structural cybersecurity challenges” to the grid, including supply chain vulnerabilities and information technology and operational technology system monitoring.
In addition, the ERO highlighted its work developing the Energy Information Sharing and Analysis Center (E-ISAC), which “continues to play a vital role in securing the [grid] through sharing information on cyber and physical security threats and vulnerabilities with industry members, the vendor community, and government and cross-sector partners.”
NERC received a single comment from the Edison Electric Institute, which it posted as an appendix to the assessment. EEI suggested that “it would be helpful if the [final] assessment explored the use and value of [self-certification and spot checks as] alternatives to full on-site audit engagements.” In response, the ERO asserted that it “has increased its use of self-certification and spot checks to support compliance monitoring and intends to continue to significantly leverage those methods.”
NERC said that during the first quarter of this year, only 15% of its compliance monitoring engagements used full on-site audits. Among such engagements, 77% used self-certifications, while 8% used spot checks. NERC pledged to “continue coordinating across the ERO Enterprise to support consistent rationale in tool selection through its risk-based approach to” compliance monitoring and enforcement.
Sens. Joe Manchin (I-W.Va.) and John Barrasso (R-Wyo.) on July 22 introduced long-planned legislation on energy project permitting that would increase FERC’s power to approve new electric transmission.
The two senators are chairman and ranking member, respectively, of the Senate Energy and Natural Resources Committee, and their Energy Permitting Reform Act of 2024 is meant to accelerate the permitting process for critical energy and mineral projects of all types.
“The United States of America is blessed with abundant natural resources that have powered our nation to greatness and allow us to help our friends and allies around the world,” Manchin said. “Unfortunately, today our outdated permitting system is stifling our economic growth, geopolitical strength and ability to reduce emissions.”
Manchin said that after more than a year of hearings and negotiations, he and Barrasso put together a bill that is meant to provide more certainty for energy and mineral projects going through the permitting process without bypassing protections for the environment and impacted communities.
“For far too long, Washington’s disastrous permitting system has shackled American energy production and punished families in Wyoming and across our country,” Barrasso said. “Congress must step in and fix this process. Our bipartisan bill secures future access to oil and gas resources on federal lands and waters.”
On electric transmission, it would reform the existing backstop siting authority for interstate transmission lines and require interregional transmission planning.
The law would also let transmission developers ask FERC for permission to site lines that are in the national interest, in a process similar to how the commission sites natural gas pipelines. The lines have to be used in “interstate commerce,” which includes connecting offshore wind on the outer continental shelf to a state. States still would get one year to respond to siting applications before firms can go to FERC for siting.
FERC would have to find that such transmission lines are in the public interest, would cut congestion, benefit consumers and provide improved reliability. The transmission lines FERC sites would have to be consistent with national energy policy and enhance energy independence.
States, tribes, private property owners and other interested parties would have to have a reasonable opportunity to present their views and recommendations on transmission siting before FERC, the bill said.
FERC also would have to approve proposals for allocating the costs of such lines to beneficiaries of the resulting improved reliability, lower congestion, lower power losses, greater carrying capacity, reduced operating reserve requirements and improved access to cheaper generation. Customers who get no benefits from transmission lines cannot be allocated any of their costs.
FERC would be able to approve utility compensation to communities where transmission lines are located. The commission would have to prioritize using existing rights-of-way and the use of advanced conductors.
Interregional Planning Requirement
The bill also would require interregional transmission planning between neighboring transmission planning regions, including RTOs/ISOs and those set up to comply with FERC Order 1000’s regional requirements. The neighboring regions would need to use a common set of input assumptions and models on consistent timelines to pick projects based on a list of benefits around reliability and affordability.
Interregional plans would have to be submitted to FERC within two years of the process’ enactment and then every four years.
The bill specifically exempts ERCOT from the interregional planning and siting requirements.
Beyond the transmission provisions, it would require FERC and NERC to assess any future federal regulations that impact reliability and file comments with the agency working on them.
The Secretary of the Interior would be required to hold one offshore wind lease sale and one oil and gas lease sale per year from 2025 to 2029, which would not happen under current law.
The bill shortens the timelines before, during and after litigation for all federal authorizations on energy and mineral projects. Opponents would have to file lawsuits within 150 days after final agency action, courts would be required to expedite such cases, and agencies would have a 180-day deadline to deal with any remands from the courts.
Industry Groups Support Permitting Legislation
Americans for a Clean Energy Grid welcomed the permitting legislation, with Executive Director Christina Hayes saying it would bolster grid reliability by allowing for the timely deployment of transmission infrastructure.
“Of particular importance, FERC gaining plenary authority for transmission siting — just like it has for natural gas — would represent an important change in how the federal government permits transmission infrastructure in a timely and transparent manner,” Hayes said in a statement. “In combination with Order No. 1920 and the commission’s responsibility for ensuring reliability for customers, FERC is well positioned to center our nation’s efforts to build out the energy grid.”
Advanced Energy United also wants to see Congress move permitting legislation based on the Manchin-Barrasso bill.
“It has long been too difficult to build some of the critical energy infrastructure America needs, and this bipartisan proposal provides a good foundation on which to build a comprehensive package of legislative reforms,” AEU Managing Director Harry Godfrey said in a statement. “Both parties agree that unreasonable timetables and fragmented planning processes are making it too difficult to invest and build, providing Congress a unique opportunity to pass legislation that unlocks America’s innovative industries and improves grid reliability and energy costs for households and businesses.”
TULSA, Okla. — SPP’s Markets and Operations Policy Committee endorsed recommended revision requests from two stakeholder groups as part of the RTO’s effort to strengthen resource adequacy.
A fuel assurance policy (RR621) that further emphasizes conventional resources’ performance during a season’s most critical hours and reduces the socialization of the planning reserve margin’s capacity allocation passed easily with 92% approval during the July 16-17 meeting.
However, a second revision request (RR622) that establishes base planning reserve margins (PRMs) for summer 2026 summer and winter 2026-27 passed with three-fourths approval, but only after MOPC rejected an amendment to the motion that would have set the winter PRM at 36% instead of 33 (ironically, with only 33% approval). The summer PRM would be raised to 16% from 15.
During its June meeting, the Resource Energy and Adequacy Leadership (REAL) Team approved a 36% PRM over stakeholders’ concerns that the requirement was too soon and unrealistic to meet. (See SPP’s REAL Team Approves Base PRMs, Sufficiency Value Curve.)
SPP staff pointed out that the 33% PRM brought forward by the Supply Adequacy Working Group (SAWG) technically meets a 1-in-10 reliability standard; they intend to bring both PRMs to state regulators and the RTO’s board during their August meetings.
Omaha Public Power District’s Colton Kennedy, the SAWG’s chair, said the PRM’s requirement is intended to ensure that load-responsible entities are appropriately planning for capacity in both seasons. SPP’s 2023 loss-of-load study was the first in which staff directly analyzed seasonal risk beyond summer; it found a 15% PRM would not meet a 1-in-10 LOLE in either season.
“The complexity, the scope and the extent of questions by SAWG members by far surpassed all previous studies,” Kennedy said. “We didn’t previously have that in the historical [record] with an [LOLE] model. The inclusion of correlated outages, the inclusion of winter peak variability are the driving factors and are very reasonably supported. Very demonstrable, very objective in the work that we’re doing.”
He said SPP staff was very consistent with the 36% winter PRM recommendation, which created debate and discussion within SAWG related to the transition to a higher PRM by entities without sufficient capacity.
“They’re concerned about the generation interconnection process and being able to study resources and get them through this process [quickly],” Kennedy said.
Regardless of the final number, individual entities will have to step up, said Bill Grant, formerly with Southwestern Public Service and back on MOPC as a representative for XO Energy.
“The resources are out there. That doesn’t mean that there’s not some entities that have to scramble to meet this requirement,” Grant said. “Remember, if you approve these numbers, you are impacting utilities’ ability to get generation connected before any individual changes. There is an impact, and it’s kind of hidden.”
“For a regulated investor-owned utility, there’s not enough time to get new generation in,” Oklahoma Gas & Electric’s Brad Cochran said.
The fuel assurance policy stems from the 2021 winter storm, when SPP was forced to shed load for the first time in its 83-year history. Casey Cathey, the grid operator’s engineering vice president, said several heavily vetted approaches to fuel assurance failed before stakeholders coalesced around what he said is effectively “somewhat of a weight towards conventional resources during capacity critical hours in the winter season, in particular.”
Under the policy, an “after-the-fact” weighting will be applied to performance-based accreditation resources, based on critical system periods. The mechanism is designed to encourage increased performance by those conventional, or thermal, resources by quantifying their contributions to system reliability.
Noting that there can be a 100-degree differential between the northern and southern states in SPP’s footprint, Cathey said one thought holds that nonperforming resources should be targeted for their failures rather than raising the PRM.
“This revision request and this policy [help] directly address that socialization of planning reserve margin,” he said. “So rather than kind of go down this path of potentially having separate zonal planning reserve margins … this particular revision request and policy [help] to address that in a different way such that the northern resources that may already have winterization during extreme conditions and perform during those types of extreme conditions do not necessarily have to carry additional planning reserve margin accredited capacity beyond where the regional risk is.”
DISIS Waivers Endorsed
The committee endorsed staff’s proposal to file waiver requests with FERC that delay the start of the 2024 generator interconnection (GI) study’s first phase and pause the opening of the 2025 study cluster, easing conflicts with the RTO’s effort to clear the GI queue’s backlog and transition to a new planning process.
SPP staff said delaying the 2024 definitive interconnection system impact study (DISIS) cluster’s first phase will save customers up to $3 million by avoiding additional studies and will allow more accurate information for customer decisions. The 2024 DISIS first phase would begin after the 2023 DISIS second phase’s restudy is completed and posted in August 2025; without the waiver, it would start before the second phase of the 2022 and 2023 clusters and likely lead to unplanned restudies, staff said.
Natasha Henderson, senior director of grid asset use for SPP, said that if the 2024 DISIS Phase 1 began on schedule, it would assume $35 billion of transmission upgrades would be built from previous studies. “We know that’s not likely,” she said.
SPP’s current timetable for transition to a consolidated planning process | SPP
Pausing the 2025 DISIS’ open window will allow “additional optionality” for the grid operator’s transition to the consolidated planning process (CPP), scheduled to begin in late 2026 after a transition period. SPP said opening the 2025 DISIS would mean the cluster’s generation would “significantly” overlap with the CPP’s transition study and first annual assessment.
Golden Spread Electric Cooperative’s Mike Wise, who arrived for the MOPC meeting from the NARUC Summer Policy Summit, said FERC Chair Willie Phillips’ comments made it apparent he favors quickly connecting generation and building out transmission to support the new resources. Wise said words such as “delay” and “waiver” send the wrong message and could make commission approval difficult.
Staff said they believe they have agreed on messaging that should gain FERC’s signoff if the waivers are submitted as a package. They are also planning to schedule a meeting with commission staff.
“I think it’s going to be important that we convey the fact that this is not a pause,” Cathey said. “The message here is we can do things a little bit more efficiently. We’re not asking to pause the DISIS … it’s to try to accelerate and actually reduce the churn of the restudies.”
MOPC Chair Alan Myers struggled to get a second for the waiver requests from members who had previously expressed concerns about not having enough time to consider the proposal. Eventually, Evergy’s Derek Brown bravely raised his name tent to second the motion. It passed with 80.6% approval.
FERC’s approval of the waivers would enable the timely completion of backlog studies and allow time to further develop CPP. SPP in June posted its second study of the DISIS 2017-002 cluster, clearing the way for the 2018 DISIS’ second restudy.
The grid operator has 416 requests in the GI queue totaling about 84 GW in proposed capacity. That’s down from the original backlog of 1,139 requests for 221 GW of capacity. The backlog will be cleared when the 2023 cluster’s second restudy is posted in September 2025.
MOPC in April approved a task force’s recommended policy for the CPP’s entry fee. A transition study to the new process, comprised of SPP’s current 20-year assessment and the first annual CPP analysis, is slated to begin this year and will set the first $/MW entry fee. The study is intended to align technical assumptions and scopes, yielding a “more robust” cost-sharing model that sets a specific frequency to avoid late charges.
SPP Adds Context on April Event
SPP told MOPC members that it is recommending several changes to its operational procedures following an April emergency event in Southwestern Public Service’s (SPS) New Mexico region that resulted in a 150-MW load shed lasting about two hours. (See “SPP, SPS Reviewing April Outage,” SPP Board of Directors/MC Briefs: May 7, 2024.)
Staff said they saw contingencies begin to develop April 28 as wind dropped from 16 GW to nearly 5 GW and load began to increase. Derek Hawkins, the RTO’s director of system operations, said that shortly after 7 p.m., an exceedance occurred on an SPP-SPS tie line.
Hawkins said his operators exhausted all available options within the constrained time frame in trying to address potential instability and were forced to shed load because of “immediate circumstances” and “evolving conditions.” SPP directed SPS to drop 150 MW of load at 7:43 p.m. to mitigate the unsolved contingencies. Load was restored by 9:41 p.m.
Hawkins said a post-event analysis revealed the importance of clear communication, robust coordination agreements and improved data integrity practices. He said operators were rebuffed twice when requesting energy from switchable units with ERCOT, which was dealing with its own tight conditions.
The recommendations include emphasizing timely and clear communications, evaluating improvements to operating procedures with ERCOT, and discussing coordination plans with neighboring entities.
SPS’ Jarred Cooley, director of strategic planning, said his own conversations with Hawkins and C.J. Brown, SPP’s senior director of system operations, policy and performance support, were beneficial and useful for the entire RTO footprint.
“We’ve met multiple times, had pointed, real in-depth discussions, and those were really useful for where we are with the recommendations,” Cooley said. “Obviously, it’s up to all of us to help support staff to have the tools that they need in real time so they act appropriately and that we can ensure good reliability for the system.”
Storage Self-charging Change
Members approved a pair of tariff revisions recommended by the Market Working Group related to storage and system dispatch.
RR635 would ensure market storage resources’ self-charging is identified and charged appropriately. The MWG said the change will increase alignment with FERC Order 841’s requirements for identifying and charging equitably for self-charging and will ensure that MSRs are subject to unreserved use when self-charging.
The FERC order found that energy storage resources should not be charged transmission costs when providing a market service. SPP currently dispatches MSRs based on economics and resource parameters; if the MSR is providing a market service, no transmission service is required.
RR628 would dispatch the system based on the system’s true obligation and price by removing load shed and emergency purchases. It would restore the load shed amount’s requested congestion prices from each forecast area to reduce the effects.
The RR635 and RR628 passed with 90 and 95% approval, respectively.
The unanimously approved consent agenda included nine other tariff changes that, if necessitating approval from the Board of Directors, would:
RR595: Allow make-whole payments for instructed real-time incremental energy costs for day-ahead market committed and self-committed resources for offers under FERC Order 831 (adds changes after original MOPC approval in April 2024).
RR602: Add process structure, tracking and improved criteria for evaluating potential transmission reconfigurations.
RR610: Allow third-party cost estimate information and/or engineering judgment when creating a conceptual cost estimate to be used during a project study.
RR615: Changes the RTO’s credit policy to introduce a portfolio-level mark-to-auction mechanism within the transmission congestion rights collateral requirement, thus mitigating default risk by updating collateral requirements to reflect the portfolio’s most recent valuation.
RR619: Add application programming interfaces as an acceptable submittal process.
RR623: Deploy a compensation mechanism to incentivize continued operation of resources whose studied retirements have identified one or more network upgrades as necessary to address reliability impacts that are unable to be completed prior to the projected retirement date. A unique contract will be developed for each retiring resource that details the eligible costs and a new schedule will be created detailing the allocation of the contract costs.
RR627: Clarify that the turnaround ramp rate factor applies to energy and contingency reserve.
RR631: Ensure consistent governing language and address corrections to previously published settlement calculations in RR613, RR556, RR578 and RR596.
RR633: Clarify how SPP recalculates real-time balancing market outages and extends the repricing notifications.
The consent agenda also included the retirement of a remedial action scheme near Rapid City, S.D., upgrades to terminal equipment at one 115-kV and two 345-kV substations, and cost increases for a Western Farmers’ and an Omaha Public Power District’s projects.
FERC on July 19 approved granting voting rights to a member of American Electric Power’s board of directors who was appointed by investment firm Icahn Group (EC24-60).
The commission is required by Federal Power Act Section 203 to approve appointments of investment company officers to public utilities’ boards. AEP told FERC it had agreed in February to add Hunter Gary, Icahn senior managing director, to its board, but he was unable to vote until the commission gave its approval. Icahn, founded and controlled by investor Carl Icahn, also was able to appoint a new independent director and a non-voting observer to the board under the deal.
The commission found the arrangement met its rules around mergers; would not have any impact on competition, rates or regulation; and would not result in cross-subsidization.
Public Citizen filed a protest against the deal, arguing the non-voting board members already had forced a change of control at AEP with their role in the “involuntary termination” of former CEO and board Chair Julie Sloat. (See Interim CEO Fowke Explains AEP Leadership Change.) The consumer group argued FERC should find that the deal and subsequent firing of Sloat violated Section 203, which also requires public utilities to seek commission approval before any attempted change in control.
AEP argued it met FERC’s public interest requirements, and that Public Citizen’s “inflammatory and unsupported allegations” should be dismissed. Icahn Group itself did not execute the removal of Sloat, which was in compliance with the law and the company’s bylaws, AEP said.
FERC agreed with AEP, saying the issues Public Citizen raised “do not impact the factors addressed by the commission in evaluating” such deals. “Public Citizen does not present other evidence that the proposed transaction fails to satisfy our public interest criteria,” it said.
But the commission did chide AEP for its late request, filed March 15, after Gary already had been appointed.
“Contrary to the requirements of FPA Section 203, AEP failed to file a timely request for approval of the appointment of the Icahn Group designee to the AEP board,” FERC said. “AEP is reminded that it must submit required filings on a timely basis or face possible sanctions by the commission.”
The order drew a concurrence from Commissioner Mark Christie, who agreed the application met FERC’s policies and regulations, but that investors’ impact on public utilities is a growing area of concern that might warrant some changes in those rules.
Christie has said in other proceedings that utilities are not typical for-profit, shareholder-owned companies, and it is essential for regulators to ensure investors’ interests do not conflict with utilities’ public service obligations.
“Where there is the potential for a conflict — and there always is — it is the commission’s responsibility, under Section 203, to ensure that transactions are consistent with the public interest,” Christie said. “In my view, this must involve balancing consumer protection and potential impacts to reliability with the interests of investors in addition to evaluating traditional market power concerns.”
Christie argued that the only reason investors seek board seats on public companies is to exert influence on their decision-making and actions. Even directors “independent” of firms like Icahn take actions to benefit utility shareholders, including those who got them the position, he said.
“Investor influence on public utilities and public utility holding companies continues to grow, and in ways that may conflict with public utility service obligations. It is incumbent on the commission to account for and address this influence,” Christie said. “These issues are ripe for action, and I look forward to continued consideration of them with my colleagues.”
Commissioners Lindsay See and Judy Chang, who recently joined FERC, did not participate in the order.
