Entergy (NYSE: ETR) said Wednesday that it delivered “another strong quarter” over the summer, despite the electricity grid damage wrought by Hurricane Ida when it made landfall along Louisiana’s Gulf Coast in August.
The company reported third-quarter earnings of $531 million ($2.63/share), compared with $521 million ($2.59/share) a year earlier. That beat an Investing.com’s poll of analysts who had expected earnings of $2.40/share.
Ida was the second most destructive storm to hit Louisiana, after only Katrina in 2005, and inflicted an estimated $2.1 billion to $2.5 billion in damages to Entergy facilities. The company said that resulted in a $75 million to $80 million loss in non-fuel revenue.
Entergy CEO Leo Denault | Entergy
CEO Leo Denault said during a conference call with financial analysts that Entergy had invested about $10 billion over the last five years to strengthen its system. He said the newer infrastructure performed well “under the most challenging situations.”
“The wind damage was almost exclusively to aging structures built prior to the new standards,” Denault said. “The increasing severity of storms is compelling us to take a fresh look at how we can make our system more resilient.”
Entergy’s restoration force of employees, contractors and mutual assistance crews from 41 states numbered about 27,000, its largest ever, Denault said. Customer outages reached 1 million at their peak, he said, but were less than half that in little more than a week.
“We’re committed to minimizing the effect of Ida on customer bills,” he said.
The New Orleans-based company plans to securitize its Ida costs, even as costs from 2008 hurricanes Ike and Gustav are about to roll off.
Entergy narrowed its 2021 adjusted EPS guidance range to $5.90 to $6.10 and said it is on track for EPS growth of 5 to 7% through 2024.
The company’s shares were trading at $103.36 following the market’s close, a 44-cent drop from the previous close.
A petition filed with the California Air Resources Board last week challenges the agency’s inclusion of dairy-manure biomethane as a fuel potentially eligible for credits under the agency’s low-carbon fuel standard.
The petition alleges that the standard’s credit system doesn’t account for emissions throughout the full life cycle of the biomethane, which is generated from the anaerobic digestion of dairy cow and swine manure.
As a result, the credit system overstates the emission reduction benefits of the biomethane, according to the petition, which refers to the biomethane as “factory farm gas.”
In addition, the petition says that the credit system encourages increased manure production and processing. This allegedly has disproportionate environmental and health impacts on low-income communities and communities of color, particularly in the San Joaquin Valley.
The petition was filed on Oct. 27 and signed by representatives of six groups: Public Justice, Food & Water Watch, the Animal Legal Defense Fund, the Association of Irritated Residents, Leadership Counsel for Justice & Accountability, and the Vermont Law School Environmental Justice Clinic.
The petition asks CARB for rulemaking to amend its low-carbon fuel standard (LCFS) to exclude all fuels derived from factory farm gas; or to modify LCFS to account for emissions over the entire lifecycle of the dairy-manure biomethane.
Board Meeting Debate
The petition was filed the day before the CARB board met to review the agency’s Mobile Source Strategy, which is intended to take an integrated approach to reducing emissions from mobile sources ranging from forklifts to cars, trucks and locomotives.
And the petition was the focus of several public comments during the board meeting.
Shayda Azamian, a policy coordinator with Leadership Counsel for Justice and Accountability, said the group has been urging agencies across California to stop permitting dairy digesters, the equipment used to anaerobically digest manure to produce biomethane.
“Dairy digesters do not lead to real emissions reductions in greenhouse gases, short-lived climate pollutants or toxic pollution,” Azamian said. “Dairy digesters are in fact increasing local pollution by incentivizing increased herd sizes by the thousands.”
But others described dairy digesters as a cost-effective strategy for helping the state meet its climate goals.
Michael Boccadoro, executive director of Dairy Cares, a dairy industry coalition, said the California Department of Food and Agriculture dairy digester program has received 2.1% of funds from the state’s climate investment portfolio. But the program accounts for 29% of emission reductions achieved by all investments, he said.
“Dairy digesters are the most cost-effective and successful climate investment being made by the state of California,” Boccadoro said.
The petition is asking CARB “to abandon market-based approaches that are clearly working,” he said. Without those strategies, Boccadoro said, dairy production will shift to other places in the U.S. and the world, and global livestock methane emissions will increase.
Julia Levin, executive director of the Bioenergy Association of California, said the petition’s request to exclude dairy methane from the LCFS would “fly in the face of the science,” which points to the urgency of curbing methane emissions to address climate change.
In addition, Levin said, Senate Bill 1383 includes incentives for reducing dairy biomethane, including incentives under LCFS specifically. The 2016 bill addresses emissions of methane and other short-lived climate pollutants.
“Granting petitioners’ application would contradict the plain language of SB 1383 as well as the science, and the petition should be rejected,” Levin said.
Selling Fuel Credits
The LCFS is a regulation aimed at reducing the carbon intensity of transportation fuel used in California, while providing a greater variety of low-carbon and renewable alternatives. The carbon intensity of a fuel is compared to a benchmark set for each year.
Fuels whose carbon intensity falls under the benchmark generate credits. For those that exceed the carbon-intensity benchmark, credits must be purchased to comply with the regulation. The benchmark will decrease each year through 2030.
At issue in the petition is how the carbon intensity of dairy-manure biomethane is calculated. For example, according to the petition, LCFS does not require an analysis of factory farm gas emissions to include emissions from digestate, the material that’s left over after the anaerobic digestion of manure.
Composting the digestate or spreading it over the land produces nitrous oxide, the petition claims, and storing it in open-air lagoons may release methane.
In addition, the petition said that factory farms have been allowed to “double dip” by using public funds to help pay for manure digesters and then also receiving money from selling LCFS credits.
Groups filing the petition said that CARB’s Mobile Source Strategy “counts on increased production of factory farm gas without consideration of its air, water, and climate impacts, especially in lower income communities and communities of color.”
Following the CARB board’s review of the Mobile Source Strategy last week, the strategy will be submitted to the legislature as required by state law.
Republican Glenn Youngkin’s victory in the Virginia gubernatorial race Tuesday and GOP gains in the legislature showed that predictions that the commonwealth had become a reliably blue state were incorrect and raise questions about its commitment to reaching 100% carbon-free electricity by 2050.
Energy policy was not a central issue in Youngkin’s campaign against Democrat Terry McAuliffe, who served as governor from 2014 to 2018. Youngkin instead campaigned on divisive education issues and courted Donald Trump supporters while keeping the former president himself at arm’s length.
But the two candidates also differed sharply on the 2020 Virginia Clean Economy Act, with McAuliffe calling for eliminating fossil fuel power by 2035, while Youngkin said even the law’s 2050 target is unrealistic.
The VCEA, signed into law by Gov. Ralph Northam (D) in April 2020, requires Dominion Energy Virginia to be 100% carbon-free by 2045 and Appalachian Power by 2050. It also calls for closing most of the state’s remaining coal-fired generation by 2024. (See Va. 1st Southern State with 100% Clean Energy Target.)
Although Youngkin’s campaign website contained no detailed energy policy proposals, the former private equity executive was critical of the state’s policy in interviews and debate appearances, saying he wouldn’t have signed the VCEA.
“The Virginia Clean Economy Act has taken us in the wrong direction,” Youngkin said during a radio interview, saying it “doesn’t allow Virginia to actually meet the power demands [of] the rip-roaring economy that I’m going to build.
“Yes, we can have more wind and solar. Yes, we need more natural gas. Yes, we need to innovate and find ways to actually use coal resources cleanly,” he added.
“I’ve spoken to the heads of the utilities,” he said during a debate in September. “They don’t even know how to [reach the VCEA’s goals.] We’re going to turn Virginia into California. … Get ready: Brownouts and blackouts are coming.”
Youngkin, who is from Hampton Roads, acknowledged the state is facing rising sea levels from climate change. (Voters in Virginia Beach voted overwhelmingly Tuesday in favor of a referendum authorizing the city to issue up to $567.5 million in debt for flood mitigation projects.)
Although he said he “wholly support[s]” Dominion’s offshore wind project, Youngkin also criticized state officials for their negotiations. “All of the supply chain is not in America and not in Virginia. We should have negotiated American content, Virginian content, in that,” he said.
McAuliffe, who predicted the Portsmouth Marine Terminal will become a “green energy manufacturing hub” for offshore wind, said Youngkin’s criticism was “a crazy talking point” because the U.S. is just beginning to develop an OSW supply chain. (See Virginia Builds out OSW Supply Chain with Turbine Blade Plant.)
Chances for Change
The VCEA was a stunning turnaround for Virginia’s energy policy, spurred by Democrats’ takeover of the House of Delegates and Senate in November 2019. Among other things, it committed Virginia to joining the Regional Greenhouse Gas Initiative (RGGI) and made the state’s voluntary renewable portfolio standard program mandatory. It also established 5,200 MW of offshore wind as “in the public interest,” up from 16 MW.
It’s unclear whether Youngkin, who will begin his four-year term in January, will be able to win changes to the bill any time soon.
The bill passed on a near-party line vote in the House, where Democrats held a 55-45 majority going into the 2021 elections. Tuesday’s results left Republicans with at least a 50-50 tie in the House — and a 51-49 edge, if one close race is resolved in their favor.
But Democrats retain a 21-19 majority in the Senate, where members will not face re-election until 2023.
Republicans could attempt to put their stamp on the State Corporation Commission (SCC) in January, when the seat held by Angela Navarro will expire. Navarro, who served in both the Northam and McAuliffe administrations, replaced former Chair Mark Christie when he joined FERC.
The SCC is charged with implementing parts of the VCEA, including Dominion and Appalachian’s integrated resource plans and RPS programs, according to spokesman Ken Schrad. He also noted that the “bulk of” Dominion’s OSW project has not yet been filed with the commission.
Schrad declined to speculate on how the election might affect the commission’s work. The commission “will apply the law as it is now,” he said.
Dominion Campaign Money Questioned
Although energy policy was not a major issue during the campaign, Dominion’s ties to McAuliffe did come under scrutiny.
Youngkin ran commercials in the closing days of the race criticizing McAuliffe for signing legislation that restricted the SCC’s ability to review the company’s electricity rates. The law is one of several that SCC staff concluded allowed the company to earn about $1.1 billion in excess profits from 2017 to 2020. “Dominion bought Terry McAuliffe for $280,000,” one ad said.
The commercial aired after Axios reported last month that although McAuliffe said he would not accept any contributions from the utility in this year’s race, the company nonetheless gave $200,000 to a political action committee tied to top Democrats that attacked Youngkin from the right in social media ads questioning why he had not been endorsed by the National Rifle Association. Dominion CEO Robert Blue said the company hadn’t properly vetted the PAC and had asked for its money back.
Dominion had donated $75,000 to McAuliffe’s campaign in 2013 and gave another $50,000 to his inaugural committee, Axios reported.
Dems Anxious
Republicans’ strong showing in Virginia and New Jersey left Democrats anxious about their prospects in the congressional midterm elections next year. Though New Jersey Gov. Phil Murphy became the first Democrat to win re-election since 1977, the race was not called until Wednesday evening, with Murphy leading by about 19,000 votes as of press time.
The results also increased the pressure for congressional Democrats to pass a bipartisan infrastructure bill and a Democrat-only reconciliation bill that includes $550 billion in climate spending.
“The No. 1 concern voters have raised with me over the last several weeks has been inability of Congress and government in general to get things done at a time of great need for the country,” Rep. Tom Malinowski (D-N.J.) toldThe New York Times. “So the best thing we can do in Congress is to pass these damned bills, immediately,” referring to the budget reconciliation and infrastructure bills.
U.S. Treasury Secretary Janet Yellen on Wednesday said the U.S. is backing the Climate Investment Funds’ (CIF) initiative to issue investment-grade bonds and raise new finance for clean energy in developing countries.
“I am pleased to join the U.K. in announcing that the U.S. intends to fully support the CIF Capital Markets Mechanism,” Yellen said in a finance day keynote at the United Nations Climate Change Conference (COP26). “Through an innovative leveraging structure, this initiative will help attract significant new private climate finance and provide $500 million per year for the CIF’s programming, including the … Accelerating Coal Transition investment program.”
The new mechanism, which is part of CIF’s Clean Technology Fund, could lead to $50 billion in investments over 10 years, CIF said. It represents what CIF says is the first time a multilateral climate fund will leverage its assets to issue bonds in the capital markets.
Multilateral development banks will disburse the bond proceeds as equity and debt, among other options, according to CIF.
Nine sovereign sponsors, including the U.S. and U.K., helped establish the $5.8 billion Clean Technology Fund in 2008.
“Consistent with CIF’s innovative mission, we’re trailblazing a capital mobilization model that is scalable, replicable and game-changing,” CEO Mafalda Duarte said in a statement.
Financing Net Zero
Speaking during a session later Wednesday on delivering finance for emerging markets, Yellen said she is the first U.S. treasury secretary to attend a Conference of the Parties.
“The reason I’m here is because climate change is not just an environmental issue,” she said. “It is not just an energy issue. It is an economic, development and market-destabilizing issue, and I would not be doing my job if I did not treat it with the seriousness warranted.”
Yellen’s presence at COP26 shows that the world is “in a point of inflection,” according to Uruguay Minister of Economy and Finance Azucena Arbeleche.
“I would say it’s a historical time for ministers of finance,” she said during a panel on supporting a financial system for a net-zero future. “Finance in general has a very important role to play if you really want to make progress.”
Arbeleche urged investors, financial institutions and sovereigns to align their incentives and objectives to help move from pledges to concrete actions.
Uruguay, she said, has set key performance indicators that are related to the climate pledges the country made in its Nationally Determined Contributions.
“We’re working specifically on the implementation of a financial instrument, a bond, where the cost of borrowing is related to this NDC goal,” she said.
Bonds or loans from the private sector must be linked to environmental indicators that are measurable, according to Arbeleche.
“If investors really are interested in the environment, then they should be willing to put their money into these kinds of financial instruments,” she said.
The clear and accelerated commitments from governments on net-zero targets is critical for investors, financial providers, shareholders, insurance companies and banks to make low-carbon investments with confidence, according to Alison Rose, CEO of British bank NatWest Group.
NatWest is a founding member of the Glasgow Financial Alliance for Net Zero, which said Wednesday that its financial sector participants’ commitments exceed $130 trillion.
“Very bluntly, the money is here, the money is committed, and the money is starting to mobilize,” Rose said during the panel discussion. “I think this is a very significant demonstration of the collaboration with so many different financial organizations, who so often are competing but are now working together and united behind a common goal.”
But despite an accelerated rally behind clean energy and net-zero goals, financing is not consistently flowing in that direction, according to Mathias Cormann, secretary-general of the Organization for Economic Co-operation and Development (OECD).
“Governments should be removing the distortions that divert investment away from the transition to net zero,” Cormann said. “Too many policies still encourage emissions-intensive investment, production and consumption.”
About 10% of COVID-19 recovery spending of OECD partner countries, for example, will have a “mixed or even negative impact on the environment,” he said.
To combat the problem, OECD recently announced that it will align development assistance with the Paris agreement.
For perspective, he said, development assistance from donor countries in 2020 reached US$161 billion.
“That is a sizeable amount of aid that, as of COP26, will now be fully aligned to the Paris objectives,” he said.
Voters in Maine and New York showed up at the polls on election day to support ballot measures that would conserve vast woodlands, clean air and clean water.
In Maine, voters approved a measure to halt construction of the New England Clean Energy Connect (NECEC) transmission line under development by Central Maine Power (CMP) by a 60% to 40% vote, as of Wednesday. The line would funnel 1,200 MW of hydropower from Canada through Maine to Massachusetts.
Construction of the line has already begun, but “the time has come for CMP to respect the will of Maine people by stopping this project immediately,” Pete Didisheim, advocacy director at Natural Resources Council of Maine, said in a statement.
If the company refuses, the Department of Environmental Protection “should move quickly to suspend the permit and require that CMP begin restoring areas of Western Maine that have already been damaged,” Didisheim said.
“We also call on Massachusetts to honor this electoral outcome by selecting an alternative option for meeting its climate goals without imposing significant environmental harm on another New England state,” he said.
CMP parent company Avangrid (NYSE: AGR) filed a lawsuit Wednesday in the Maine Superior Court challenging the constitutionality of the referendum to limit the construction of high-voltage transmission lines in the forests of Western Maine.
“While the outcome of this election is disappointing, it is not the end of the road, and we will continue to advocate for this historic and important clean energy project,” the company said in a statement.
Avangrid asked the Superior Court for an immediate injunction preventing retroactive enforcement of the initiative against the project, “so that ongoing time-sensitive and essential construction is not disrupted while this lawsuit proceeds before the courts,” the company said.
Avangrid expects the court to rule on the injunction request promptly.
Right to Clean Air, Water
In New York, just over 60% of voters approved a measure to create a constitutional right to clean air and water in the state’s bill of rights.
“In these otherwise polarizing times, a healthy environment, breathing clear air and drinking clean water are values that bring people together,” Peter Iwanowicz, executive director of Environmental Advocates New York, said in a statement.
The measure will allow environmental justice communities experiencing pollution to fight for their rights in court, potentially accelerating the clean energy transition, according to the organization.
[EDITOR’S NOTE: A previous version of this story incorrectly stated that Travis Stewart is with the Coalition of MISO Transmission Customers; he is with the Coalition of Midwest Power Producers.]
MISO Stakeholders on the Resource Adequacy Subcommittee are chafing at the RTO’s new slimmed-down meeting schedule that calls for eight “super weeks” of in-person meetings.
Stakeholders pushed back on MISO’s plan to group all stakeholder meetings of its main parent entities into eight separate weeks during the year. That would mean five all-day meetings will be packed into a single week. (See MISO Wants Abridged Stakeholder Meeting Schedule.)
The grid operator has promised that while it is reducing the number of meetings, the amount of information it conveys will remain the same. The Market Subcommittee, Reliability Subcommittee, Resource Adequacy Subcommittee, Planning Advisory Committee, and Regional Expansion Criteria and Benefits Working Group are all affected.
RASC Chair Chris Plante said stakeholders have “relevant” concerns about how information that used to be delivered monthly will be communicated just eight times per year.
“I’m very interested in hearing from stakeholders how these gaps might occur,” Plante said.
Travis Stewart, representing the Coalition of Midwest Power Producers, said he and his customers found monthly RASC meetings helpful during the leadup to the April Planning Resource Auction. He asked staff to devise a way to update stakeholders on capacity auction deadlines and developments.
WPPI Energy’s Joe Greene asked that meeting dates, which have not yet been set, be finalized as quickly as possible.
“I personally don’t see this proposal as coming from the stakeholders,” Customized Energy Solutions’ Ted Kuhn said. He said he had not heard stakeholders asking for fewer or shorter meetings and said the new seasonal auction design is evidence that monthly meetups may still be required.
Plante said the RASC “has the prerogative to establish its own meeting schedule” per the Stakeholder Governance Guide and could add more meetings to the calendar. He said the subcommittee could “pencil in” monthly meetings, noting it’s easier to scratch plans than try to organize a last-minute meeting.
“We can always cancel the meeting if there’s nothing to talk about,” he told stakeholders. “In some respects, this is being driven by the Advisory Committee, so I would encourage all of you to approach your sector representatives.”
Consumers Energy’s Mary Long said the new schedule’s uncertainty is disrupting business travel plans and snarling stakeholders’ vacation plans.
“I think this is perhaps convenient for MISO employees, but it’s not convenient for stakeholders,” she said. “What I’ve heard is stakeholder committees have the power to determine the cadence and content of the meetings, rather than MISO forcing a cadence.”
Cleco Cajun’s Tia Elliott said MISO should have held a stakeholder discussion to gather feedback rather than announcing the schedule change through an email to committee chairs.
Bob Kuzman, the RTO’s customer affairs director, said the move doesn’t have to be permanent, but it does represent the grid operator’s return to in-person meetings as the COVID-19 pandemic eases up.
He said the new schedule will give MISO staff and stakeholders a breather between monthly meetings to prepare discussions.
“We get in the cycle of present, get ready for meetings, present, get ready for meetings,” Kuzman said. “What I ask for is patience at this time to look, evaluate … and see if this works. If it doesn’t, we’re happy to reassess.”
Customized Energy Solutions’ David Sapper said the new meeting schedule might again put the onus on stakeholders to prepare discussions and presentations. He said stakeholders have lately been relying on staff to come up with all discussion points.
NEWPORT, R.I. — When a winter storm hit Texas in February, followed by devastatingly low temperatures, it set off an unmitigated catastrophe on its power grid that could have been alleviated by effective grid modernization, said Travis Kavulla, vice president of regulatory affairs for NRG Energy, one of the largest providers in Texas.
It led to a situation of haves and have nots in terms of who was in the dark when more than 20,000 MW of demand went unserved, Kavulla, a former Montana Public Service Commissioner, said during a panel Friday on grid modernization that closed the 73rd New England Conference of Public Utilities Commissioners.
“If people were able to rotate outages 12 hours at a time over the length of the event, I think it’s safe to say that we would not have seen the fatalities that we did; even if it would have been an enormous inconvenience, a huge failure in the industry all the same, but it would not have had the catastrophic consequences on human life.”
Texas is more advanced than New England in the deployment of smart meters, but Kavulla said they were not “operationalized at all” during the February storm. “You can use those smart meters to automatically disconnect customers; that’s functionality that they are deployed for in Texas today.”
Utilities, however, were not in a position to do that and turn them back on instead of “simply dropping entire circuits altogether,” Kavulla added. “What happened was if you got a critical customer on a particular circuit, that circuit could not be shed, and neighboring circuits had to be shed. That led to this have-or-have-not situation.”
NRG gathered 40 years of usage data on 5,000 residential customers in Texas. During the winter storm, these customers did not lose power but used double the electricity than when the temperature was higher than 90 degrees Fahrenheit.
“What happened in Texas was a huge surge in demand. If all the demand has been served in the state of Texas, it would have set an all-time peak record in the winter, but across all years and seasons in a state that often thinks of itself for a good reason as summer-peaking,” Kavulla said. “This demonstrates that if you could cycle electric heat effectively through the deployment of smart thermostats, you would have been able to keep more customers online and keep their homes if not toasty then at least livable.”
Angela Amos, director of market development and regulatory innovation for Uplight, said customers should not have an antagonistic relationship toward their utility or the deployed technology inside their home.
“The way that you can improve that process is to help people understand what options are available to them, what they can install in an affordable way, of course, so that they are pre-emptively prepared to participate before things go wrong,” Amos said.
Theresa Gilbert, vice president of external affairs for software company Utilidata, said that baseline expectations need to be reframed by utilities. Gilbert said the current utility infrastructure was built predominantly using hardware.
“I think we need to look at the dynamic of now what is the combination of hardware and software solutions,” Gilbert said. “There’s a lot we can do in terms of using real-time data to manage that load before you get to a point where you need to upgrade a transformer.”
Kavulla said New England has set up a retail market to drive competitive suppliers to build a commodity and not do a lot of innovation. In contrast, different retail market designs leverage the innovation of the competitive market, he said.
“Candidly, one of the ironies is that I talk to a lot of state regulators about wholesale market design, [but] it sometimes feels like state regulators spend more of their time talking about wholesale market design that they don’t regulate, and not enough time talking about the retail market design over which they have exclusive jurisdiction,” Kavulla said.
U.K. Prime Minister Boris Johnson called on world leaders at the United Nations Climate Conference in Glasgow to phase out gasoline-powered cars by 2035 and end the use of coal-fired power plants by 2040 in the developing world and 2030 in richer economies.
Brianna Fruean, a young climate activist from Samoa, reminded leaders that “climate action can be vastly different from climate justice” and challenged them to summon the “political will to do the right thing, to wield the right words and to follow it up with long overdue action.”
President Joe Biden | COP26
U.S. President Joe Biden announced the launch of the Global Methane Pledge — a U.S.-European Union initiative — to cut methane emissions 30% from 2020 levels by 2030. He also pledged the U.S. to make contributions to climate finance for developing nations and called on others to do the same. “Right now, we’re still falling short. There’s no more time to hang back or sit on the fence or argue amongst ourselves.”
The voices coming out of the World Leaders Summit at the UN 26th Conference of the Participants (COP26) on Monday were uniformly urgent and compelling, raising alarms and rallying the world community to immediate action to limit the earth’s warming to 1.5 degrees Celsius — the goal set by the Paris climate accords at COP21 in 2015.
“The six years since the Paris climate agreement have been the six hottest years on record,” said UN Secretary-General António Guterres, speaking at the summit’s opening plenary. “Recent climate action announcements might give the impression that we are on track to turn things around. This is an illusion.”
The UN’s most recent report on existing pledges to climate action — called “nationally determined contributions” — “still condemn the world to a calamitous 2.7-degree increase,” he said. “If commitments fall short by the end of the COP, countries must revisit their national climate plans and policies not every five years, [but] every year, every moment until keeping to 1.5 degrees is assured, until subsidies to fossil fuels end and until there is a price on carbon and coal is phased out.”
Other speakers at the plenary — a mix of world leaders and young climate activists — laid out major themes and pathways for action coming out of Glasgow.
Echoing Guterres, Britain’s Prince Charles called for a carbon tax and “making carbon capture solutions more economical.” Private sector involvement and investment would also be essential, he said.
Barbados Prime Minster Mia Mottley | COP26“We need to bring together global industries to map out in very practical terms what it would take to make the transition” from coal to clean energy, he said. “Second … we need to align private investment behind these industry strategies. If we can develop a pipeline of many more sustainable, bankable projects at a sufficient scale, it will attract greater investment.”
Mia Mottley, prime minister of Barbados, pushed Western, developed economies to live up to their Paris commitments to provide $100 billion annually to help developing nations transition to clean energy and split the costs of climate adaption 50/50.
“Failing to provide the critical finance … is measured, my friends, in lives and livelihoods in our communities. This is immoral and unjust,” Mottley said. “Are we really going to leave Scotland without the result and the ambition that is sorely needed to save lives and to save our planet?”
U.S. Commitments
Biden’s moment on the COP26 stage came during the first plenary session in which national leaders made their new nationally determined commitments, citing the climate investments and clean energy tax credits in the still-to-be-passed budget reconciliation package and bipartisan infrastructure bill — and the jobs these measures would create.
He also talked up the U.S.-EU Global Methane Pledge, calling methane reduction a simple and “most effective strategy we have to slow global warming in the near-term.” Seventy nations so far have signed on to reduce their methane emissions 30% by 2030, Biden said, while encouraging others to join.
In addition to the U.S. commitment to cutting greenhouse gas emissions 50 to 52% by 2030, Biden also pledged a new level of support for climate finance and adaptation for developing nations — a proposed $3 billion per year. Biden will work with Congress to begin the payments in 2024, according to the new President’s Emergency Plan for Adaptation and Resilience (PREPARE), released by the White House on Monday.
Biden also announced a new report on U.S. long-term strategies for reaching the country’s 2030 and 2050 climate goals, laying out an approach that provides multiple pathways for achieving a 100% decarbonized grid and net-zero economy. Key components range from grid decarbonization and transportation electrification, to a ramp-up of carbon-removal technologies and cutting energy waste so that new technologies can “use less energy to provide the same or better service. The report envisions a changing balance of the core strategies, depending on market and other variables.
“We’re planning for both a short-term sprint to 2030 that will keep 1.5 degrees Celsius in reach and for a marathon that will take us to the finish line and transform the largest economy in the world into a thriving, innovative, equitable and just clean energy engine,” Biden said. The strategy “reinforces the absolutely critical nature of taking bold action within the decisive decade,” he said.
The Republican reaction to the president’s speech was swift and predictable. In an email statement, Sen. John Barrasso (R-Wyo.), ranking member of the Senate Energy and Natural Resource Committee, said the long-term plan would “kill abundant and affordable U.S. energy sources like oil, natural gas and coal that Americans depend on. The White House’s plan is a recipe for disaster. It will result in skyrocketing power bills, less reliable energy and fewer jobs for the American people.”
‘Things Remain Unchanged or Get Worse’
The urgency of the message at COP26 was echoed in the climate communique coming out of the summit of the world’s 20 largest economies in Rome on Sunday. The G20 countries agreed to limit global warming to 1.5 degrees “with immediate action and mid-term commitments,” Italian Prime Minister Mario Draghi said during the group’s closing press conference Sunday. (See COP26 Opens as G20 Finalizes Climate Communique.)
For the first time, Draghi said, the G20 countries recognized the scientific validity of a 1.5-degree target and indicated that carbon neutrality should be met by 2050. In addition, he said, the G20 agreed to phase out global public funding and support for non-abated coal-fired plants after the end of this year.
But speaking at COP26, Draghi said more is needed — “a quantum leap” in climate action, particularly in climate finance. “We must bring together the public and the private sector in new ways,” he said. “We need first and foremost all multilateral development banks and especially the World Bank [to] co-share with the private sector risk that the private sector alone cannot bear.”
UN Secretary-General António Guterres | COP26
President Juan Orlando Hernández of Honduras, however, remained skeptical that the strong words of G20 leaders would result in the kind of solid financial help his country needs. Between 2014 and 2021, drought in Honduras “generated annual economic losses of $453 million, which is 1.7% of our GDP, which has given rise to food insecurity and nutritional insecurity,” Hernández said.
Still, Honduras is investing about $2 billion per year in climate action, “only 5% of which comes from loans or grants” he said. “And what is most frustrating is to come to these summits and many others and to see things remain either unchanged or get worse.”
“Even with scaled-up global climate action, it will not be possible to avoid and to reduce all loss and damage from the impacts of climate change,” President Uhuru Kenyatta of Kenya said. “By 2030, economic costs of loss and damage in developing countries is expected to be between $290 billion and $580 million throughout Africa as the most vulnerable continent to the impacts of climate change.”
Kenyatta voiced disappointment that the “special needs and circumstance of Africa” were not included in the official COP26 agenda. “With climate impacts increasing, provisions to help the most vulnerable to adapt, including through increased financial support, should be strengthened,” he said.
WASHINGTON — Electric transmission providers are pinning their hopes for long-sought-after changes on FERC’s Advance Notice of Proposed Rulemaking, a sweeping inquiry into the commission’s rules on transmission planning, cost allocation and generator interconnection (RM21-17).
Attendees of transmission trade association WIRES’ Fall Conference on Thursday peppered FERC Commissioner Allison Clements at the Willard InterContinental Washington hotel, just blocks from the White House, with questions about the ongoing proceeding, which drew hundreds of comments last month. (See FERC Tx Inquiry: Consensus on Need for Change, Discord over Solutions.)
The organization also drew four former FERC commissioners to the event to give advice for commission staff working on the proceeding, as well as recount their experiences working on the commission’s landmark transmission orders.
There seemed to be an expectation among panelists and attendees alike that whatever comes out of the ANOPR will be significant.
“You understand the pace of regulatory change,” Clements told attendees in a keynote speech opening the conference. “You understand that this is our bite at the apple. And that’s why I think we do need to go big.” She cited concerns about recent extreme weather events and preventing severe climate change. “It’s really an important moment to think about big ideas, creative ideas, and we’re looking for those in the record. … This is the chance to pivot the ship.”
But what exactly that action is and what form it will take is still guesswork. Many speakers cautioned that it will likely take at least a year before the commission reaches any final rule, as it asked hundreds of questions and received so many comments. It’s also possible that the commission issues several orders, each taking on specific issues, rather than a massive, holistic one, they said.
They also noted that while the ANOPR’s issuance was unanimous among the four sitting commissioners, Republicans James Danly and Mark Christie issued separate concurrences expressing their individual concerns; Clements and Chair Richard Glick issued a joint concurrence. (See FERC Goes Back to the Drawing Board on Tx Planning, Cost Allocation.)
Joseph T. Kelliher, former FERC chair under President George W. Bush, said the proceeding looks more like a Notice of Inquiry at this point than the form of a preliminary proposal that an ANOPR usually takes. “The ANOPR asks [some] extremely high-level, 50,000-foot[-high] questions,” he said. “There are some proposals in there, but because of the concurrences, it’s hard to say that those are commission proposals. … There is much more division among the commissioners than was true for [Order] 890, Order 1000 and Order 2003.”
Kelliher said “the worst possible outcome would be to slap together a NOPR that’s rushed and then issue a final rule that’s also [rushed] under the logic of, ‘Well, we’ll fix it on rehearing.’ That’s an expression at FERC that I hate. … I would hope that they’re not driven by an arbitrary deadline because it’s so much better to spend the time and sweat the details to get out a really good proposed rule, and perhaps the final rule could be issued relatively quickly.”
He and the other former commissioners also advised that FERC focus any proposed rulemakings on specific, solvable problems.
“Keep it focused on concrete things that are squarely within the commission’s jurisdiction and that you have a very good grasp on,” said Tony Clark, a senior adviser for Wilkinson Barker Knauer. “To the degree that orders start to push the bounds of that and get into controversial or nebulous areas, you’re increasing the chances of dissenting votes.”
“The more focused the rulemaking is, the easier it is,” said Suedeen Kelly, a partner with Jenner & Block and co-chair of its energy practice. “This is not a focused rulemaking; however, the less focused it is, the more important it is to go through the rulemaking process — and the harder it is. … This one is going to be a big burden” for staff.
Marc Spitzer, partner with Steptoe & Johnson, counseled being mindful of changed circumstances and unintended consequences. He recalled that Order 1000, issued in 2011, was partially in response to the 2008 elections, in which Democrats won control over both houses of Congress and the White House.
The status quo in 2008, in which transmission was built by vertically integrated utilities within their own jurisdictions in reaction to new generation projects, “worked pretty well,” he said. But Spitzer expected Democrats to pass cap-and-trade legislation, “which would radically change the transmission grid [and] fuel mix. … So that was the problem we were trying to solve with Order 1000. And of course, circumstances change.” The Waxman-Markey Bill, which would have set up such a cap-and-trade system, failed, and many new technologies, notably distributed energy resources, became more prominent as FERC worked on the rule, Spitzer said.
Spitzer, a Republican, also urged the commission to work toward consensus. He noted that he voted for Order 1000 with the majority, breaking with his Republican colleague Phil Moeller, who issued a partial dissent. Spitzer had offered amendments that the majority agreed to work into the order. A former Arizona state legislator and regulator, he said “if you’re going to offer an amendment, you have to vote for the bill. Would you rather get 50% of something, or 100% of nothing?”
Addressing the audience, Kelly said, “If I were your lawyer, what I would say is that you should not only use the comments as a way to effectively advocate your position, but you should go talk to staff, because they’re going to have a lot of comments to read and sift through and create a record around, and it’s going to be hard to get all those into one collective mind, but even harder to decide what are the most important things.”
Back in the Room
Many attendees could be overheard during coffee breaks and meals expressing wonderment over being in the same room again and their fatigue with virtual meetings. For many, it was their first time being at a gathering since the onset of the COVID-19 pandemic early last year, which led to event cancellations, restricted travel and social distancing.
All attendees were required to present either proof of vaccination or a negative COVID test with the past 72 hours. They were also required to wear masks when walking in the hotel’s hallways, and all but a few continued to wear them as they listened to speakers and panelists. But during the post-event lunch, there was a sense of optimism about future in-person events.
“There is no substitute for personal interaction,” Spitzer told moderator Larry Gasteiger, executive director for WIRES. “We’re in an unprecedented time of polarization” in government. “I don’t know if the drivers of the polarization will abate, but the tone and tenor of the discussion is better when you look people in the eye.”
This optimism also led to a bit more humor among panelists than at your average energy conference, especially among the former commissioners.
Kelliher joked that early in his tenure at FERC, Kelly told him the commission needed to work on “the queue,” meaning backlogged generator interconnection queues. He did not know what she was talking about, joking that perhaps she was referencing Q, a mysterious, mischievous alien character in “Star Trek.”
Speaking about the challenges of siting interstate transmission, Spitzer recalled meeting in 2007 with the superintendent of the Gettysburg Battlefield, which lay in the Department of Energy’s recently announced Mid-Atlantic Area National Corridor. The superintendent warned that if a transmission line were built through the battlefield, it would be worse than the carnage from the battle itself.
FirstEnergy (NYSE:FE) is close to a deal with “quality investors” to sell a minority interest in its profitable transmission company, officials said Friday during the company’s third quarter earnings call.
“Currently, we are engaged in a process to sell a minority interest in our transmission holding company, FirstEnergy Transmission,” CFO Jon Taylor told analysts. FET owns American Transmission Systems Inc., Mid-Atlantic Interstate Transmission and Trans-Allegheny Interstate Line.
“The interest is very strong, and preliminary indications are very supportive of our financial plan and targets. But given where we are in the process, we can’t comment any further on the details,” he said.
When pressed later in the call for more detail, Taylor declined to give specifics but described the investors potential buyers as “top-notch quality firms.
“And they’re very supportive of the business plan and very supportive of future transmission opportunities,” he added.
Published reports since the company’s second quarter earnings call in August when the sale of a minority interest came up have estimated FirstEnergy could sell nearly a 20% interest in the transmission company for as much as $2.5 billion.
The company broached the idea in April, telling analysts during the first quarter earnings call that selling a minority interest in one of its subsidiaries — as Duke Energy sold 19.9% interest in its Indiana subsidiary — was something it might consider as a way to raise cash without issuing common equity.
Rating agencies downgraded FirstEnergy credit ratings to “junk status” in November 2020 after some of its subsidiaries borrowed $2 billion from a revolving credit facility.
The company last month completed a reorganization of the credit facility, prompting an S&P rating uptick back to investment status for the corporation’s 10 utilities and three transmission companies. S&P kept a “credit watch” on the companies, however.
“The 2021 credit facilities provide for aggregate commitments of $4.5 billion and are available until October of 2026,” Taylor said.
“While we’re glad to return to investment grade ratings for these companies with all three rating agencies, we remain committed to improving our balance sheet and the overall credit profile at the parent company,” Taylor said.
Key to that is achieving a 13% ratio of funds from operations (FFO) to debt, and the company will do that, he said.
“During the fourth quarter, we expect to provide you with 2022 guidance and a detailed capital plan along with the runway of our FFO to debt target, longer term capital forecasts and targeted rate base and earnings growth rates,” Taylor said.
The Numbers
FirstEnergy reported third quarter earnings of $463 million ($0.85/share) on revenue of $3.1 billion.
In the third quarter of 2020, the company earned $454 million ($0.84/share) on revenue of $3 billion.
Excluding the impact of one-time or special charges or credits, the company earned $0.82/share — exceeding the top end of the company’s guidance. In the third quarter of 2020, operating earnings were $0.84/share.
FirstEnergy updated its full-year 2021 earnings forecast range to $1.17 billion to $1.22 billion ($2.14 to $2.24/share).
The company expects cash from operations for the year of about $2.8 billion. That total includes expenses such as the $230 million fine the company paid the Justice Department in a plea deal to avoid prosecution in the $61 million bribery probe, which the DOJ has continued.
FirstEnergy announced Monday after the close of business that it had agreed to settle a yearslong battle with the Ohio Consumers’ Council, the Northeast Ohio Public Energy Council and eight other consumer and business groups over extra charges levied since 2013.
The company filed a negotiated stipulation settling 10 separate cases pending before the Ohio Public Utilities Commission. The agreement, which must be approved by the commission, calls for FirstEnergy to refund $306 million, some of that in immediate cash refunds.
The deal, supported by the staff analysts at the PUC, calls for FirstEnergy’s Ohio utilities to refund $96 million (which includes interest) related to the utilities’ 2017-2019 annual excessive earnings review.
Residential customers would receive a one-time bill credit of about $27. Commercial and industrial customers would be given a credit of about $2.60/MWh used over six months. The remaining $210 million would be refunded as bill credits from 2022 through 2025.
Entergy CEO Leo Denault | Entergy
FirstEnergy (NYSE:FE) is close to a deal with “quality investors” to sell a minority interest in its profitable transmission company, officials said Friday during the company’s third quarter earnings call.