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October 10, 2024

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FERC Pauses Transmission Upgrade Charges for NE Solar Dev

FERC on Thursday ordered National Grid (NYSE:NGG) subsidiaries New England Power and Narragansett Electric to cease assessing direct assignment facility charges to a solar developer interconnecting four 9.6-MW projects until they properly comply with a provision in ISO-NE’s tariff (EL21-47).

Under the tariff, direct assignment facilities are transmission upgrades or additions constructed for the sole benefit or use of a transmission customer. Their costs are thus not shared and are directly assigned to the customer; in this case, distribution utility Narragansett, which passed the costs of the upgrades necessary to interconnect the projects through to developer Green Development in their interconnection service agreement.

Green Development complained to FERC that transmission owner New England Power had not properly followed ISO-NE’s process for designating the upgrades as direct assignment facilities to Narragansett. It also argued that the upgrades were not for Narragansett’s sole benefit or use

The commission said that Green Development had demonstrated that the upgrades had not been “specified in a separate agreement” from the ISA between the three companies, as required by ISO-NE.

But FERC also said that the developer had not demonstrated the upgrades were not solely for Narragansett.

“Green Development contends that, because the upgrades will allow Green Development to interconnect to Narragansett’s distribution system, the upgrades cannot be considered for the ‘sole use/benefit’ of Narragansett,” the commission wrote said. “Green Development provides no evidence to support this proposition. The direct assignment facilities are upgrades to Narragansett’s transmission system, and Narragansett will be the only transmission customer using the upgrades, which are necessary to ensure that Narragansett can accommodate the interconnection of Green Development’s projects to Narragansett’s system while continuing to reliably serve its existing network loads.”

FERC did find that Green Development met the burden of proof to demonstrate a failure to comply with the second part of the definition of direct assignment facilities that requires them to be “specified in a separate agreement among ISO-NE, the interconnection customer and the transmission customer, as applicable, and the transmission owner whose transmission system is to be modified.”

National Grid admitted that the upgrades had not been specified in a separate agreement but contended that the transmission service agreement among New England Power, Narragansett and ISO-NE stipulate that they are subject to direct assignment facility charges, thus satisfying the RTO’s requirement. The commission disagreed with that argument.

“We find that the Narragansett TSA does not specify the direct assignment facilities that New England Power seeks to assign to Narragansett; rather it merely states that ‘service under this local service agreement shall be subject to the following charges’ and then lists a number of charges including a ‘direct assignment facility charge,’” FERC wrote. “Accordingly, we agree with Green Development that the upgrades have not been specified in a separate agreement as required by the definition of direct assignment facilities.”

The commission ordered that New England Power not to assess direct assignment facility charges to Narragansett for the upgrades “unless and until it complies with this part of the definition.”

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Overheard at the 2021 GCPA Fall Conference

PUC’s Lake, ERCOT’s Jones Focused on More Reliable Grid

The Gulf Coast Power Association had hoped to resume in-person meetings with its annual Fall Conference last week, but it was forced to return to a virtual format with COVID-19’s re-emergence in Texas.

Interim ERCOT CEO Brad Jones | GCPANo matter. Peter Lake, chairman of the Public Utility Commission, and interim ERCOT CEO Brad Jones appeared virtually with separate keynote appearances to get the Sept. 20-22 conference off to a good start.

“We’re starting with a blank sheet of paper,” Lake said, alluding to the PUC’s work to redesign the ERCOT market after it came within minutes of total collapse during February’s devastating winter storm.

Andrew Barlow, the commission’s director of external affairs, noted to Lake that the market is like an airplane sitting on the runway while being built. Lake promptly corrected him.

Texas PUC Chair Peter Lake | GCPA“We’re building an airplane while we’re flying the airplane,” Lake said. “We’re definitely at 35,000 feet while working on it,” Lake said. “I hope that in five years, most Texans don’t even think about the power grid or talk about it. It comes on; it’s affordable; it’s reliable; and it’s not even a topic of conversation at the dinner table.”

During his keynote, Jones said he was asked to bring trust back to ERCOT when he accepted the temporary leadership position after his predecessor was fired.

“No one in the world does wholesale competition and retail competition like we have in Texas,” he said. “The event in February greatly tarnished our reputation, not to mention the horrific impacts on the many people in the state of Texas.”

Jones said ERCOT needs to “swing the pendulum” back to reliability, which he said has been overshadowed by an emphasis on affordable and clean energy.

“Our focus is on making improvements throughout the market,” he said. “The fact we are carrying the majority of the blame for the event is not a place we’re going to dwell upon. We’re going to dwell upon how to we fix this going forward.”

Texas Digs Bitcoin Miners

Bitcoin entrepreneurs, drawn by Texas’ low energy prices and business-friendly environment, are flocking to the Lone Star State. The state’s political leaders have welcomed the bitcoin miners, recognizing blockchain and cryptocurrency in its commercial law this summer.

Bitcoins are a digital currency that only exist and are exchanged online. Bitcoin “mining,” which uses complex calculations to verify transactions, is energy-intensive. It consumes more than 121 TWh/year, according to Cambridge University. The ERCOT market designates theses loads as “controllable load resources.”

“I can’t wait until they arrive,” said Jones, who recently visited a 300-MW facility east of Austin. “What cryptocurrency does for us, or any data center, is allow those loads to participate in the market. They’re able to come off the grid quickly, making them a fantastic load for us to serve because it brings up the valleys of our loads while not increasing our peaks at all.”

Recently, technology firm Lancium broke ground on a bitcoin mining facility near Fort Stockton in West Texas, the first of what it says will be several “clean campuses.” The facility is expected to reach its full capacity of 325 MW by the end of 2022.

Compute North is already operating a mining operation a couple of hours away in Big Spring.

“We think there’s a bigger opportunity that these controllable loads can have a number of applications at one location, but also be flexible at times,” Lancium CEO Michael McNamara said. “I’m not an expert on transmission design, but by moving these loads, we are effectively exporting energy by converting it into a product.”

Renewables Still Viable

Several panelists said the outspoken preference by regulators and legislators for dispatchable or conventional generation over intermittent renewable resources does not mean Texas’ bounty of wind and solar resources will soon be diminished. The renewable developers are still interested in the state — interested, but cautious.

“February threw everyone for a loop in how to invest,” EIG Global Energy Partners’ Shalin Parikh said. “We are seeing a more measured approach to financing of these projects over the last six to eight months. Developers may still see value in renewable projects in ERCOT, but until the market broadly has a better handle on how these hedged contracts are structured going forward against risk, I think we’ll see a little bit of wait-and-see approach.”

Bob Helton, Dynegy | GCPA“Transmission will be the limiting factor for renewables. That’s the challenge for the legislature and the commission and ERCOT,” Dynegy’s Bob Helton said. “We see more of this outside Texas than we do coming in. The rules are going to have to be change, so we can integrate [renewables] better and more appropriately; so that ERCOT can look at them and they can begin providing ancillary services.”

Energy consultant Alison Silverstein, referred to as “The Oracle” by her panel’s moderator, said it might be time for the decision-makers to take alternatives to thermal generation more seriously.

“If there’s anything I’d like to change, it’s attitudes,” she said. “Doing it the way traditional generation has always done it has not been super successful for ERCOT. We’re getting way too many close calls. It’s time, when you’re in a deep hole, to stop digging and try other tools. Let’s look for and exploit every resource.”

Industry Leaders Honored

The GCPA honored the industry’s seasoned veterans and its up-and-coming professionals with a pair of its annual awards.

Darryl Tietjen, who leads the PUC’s Rate Regulation Division, was presented — albeit virtually — with the Pat Wood Power Star Award by its namesake. During his 30 years at the commission, Tietjen has worked on numerous projects and cases involving the transition to a competitive electricity market and filed recommendations on every securitization issue related to the PUC’s financing orders.

“Darryl is viewed by so many as the steady hand and wise oracle for energy policy in our state,” said Wood, who chaired both the PUC and FERC, calling Tietjen an “indispensable part” of ERCOT’s transition to a competitive market. “He knows the first name of the commission is ‘public.’ He understands healthy competition and balanced regulation. He’s one hell of a fun guy to be around, and he has been since I’ve ever known him.”

“I’ve always marveled at the caliber of people in this industry,” Tietjen said. “I’ve had the great fortune to work for and with a stellar set of commissioners, stakeholder groups and folks throughout the industry. That’s one of the reasons I’ve been able to hang around so long. I’m going to embark on a very complex and deep analysis of whether it is feasible for me to work another 30 years, or maybe 40 years.”

ExxonMobil’s (NYSE:XOM) Alexandra Williams was awarded the organization’s emPOWERing Young Professionals Award, presented to an individual younger than 40 who has achieved excellence in the industry, made unique contributions to the market’s success, and served as a role model and leader. Williams was ill and unable to call in.

NERC’s Lauby Sees 3D Transition

Mark Lauby, NERC | GCPAKeynote speaker Mark Lauby, NERC’s chief engineer and a senior vice president, labeled the grid’s transition to clean energy as a “3D transformation”: decarbonized, distributed and digitized.

NERC’s “focus is always on whether we can operate the grid reliably. Will the grid be resilient? Will we be able to respond to events on the grid and restore it?” Lauby said.

He said among the questions that need to be addressed in ensuring a resilient and reliable system is from where the balancing resources will come.

“We have wind and solar, but they’re variable. Right now the transition is being sorted by natural gas,” Lauby said. “Until we get small modular nuclear units and hydrogen [resources], we need to get to that bridge and know how far that bridge is going to be. We’re ending up with a resource mix that is more sensitive to extreme weather.

“We will need to look at other ways to make up for that uncertainty that comes with variable generation,” he said. “The metamorphosis of the bulk power system requires [the ability] to quantify these emerging issues.”

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Oregon GHG Cap Plan Faces Critics from Both Flanks

The Oregon Department of Environmental Quality’s proposal to reduce greenhouse gas emissions from fuel suppliers and large stationary sources would align the state with California’s ambitious targets, but some residents and environmental advocates last week said the rules won’t go far enough or fast enough.

At the same time, representatives from business and agriculture warned the new rules could hobble the state’s economy and transfer production to places with more lax environmental regulations.

The DEQ this month floated its proposal for the Climate Protection Program (CPP) in response to Gov. Kate Brown’s Executive Order 20-04, which directed each state agency to develop measures that help reduce Oregon’s GHG emissions to 45% below 1990 levels by 2035 and to 80% below by 2050.

The CPP would cover the state’s natural gas utilities and suppliers of gasoline, diesel, kerosene and propane. It would also apply initially to stationary facilities that emit at least 200,000 metric tons (MT) carbon dioxide equivalent (CO2e) a year, with that threshold falling to 25,000 MT by the end of the decade. In its current draft form, the rules exempt emissions from the state’s gas-fired power plants, which are already subject to other regulations.

If approved by the state’s Environmental Quality Commission (EQC), the new rules would go into effect next year, setting an initial cap of 28.2 million metric tons (MMT) of emissions for covered entities, which is based on average 2017-2019 emissions. That cap would decrease to 16.9 MMT in 2035 and 6 MMT in 2050, representing an overall cut of 80%.

Under the program, the DEQ would issue covered entities compliance instruments in amounts equivalent to each year’s cap. Participating entities would be allowed trade unused instruments or bank them for future use.

“This both incentivizes early emission reductions and provides flexibility for covered fossil fuel suppliers, allowing them collectively to find the lowest-cost emission reductions,” the DEQ said.

The program would require covered entities to submit a compliance instrument or community climate investment credit (CCI) for every metric ton of CO2e. Participants could earn CCIs by contributing funds to third parties that develop GHG-reduction projects in Oregon. The DEQ would initially set the CCI contribution value at $81, increasing it over time. At the outset of the program, covered entities would be eligible to use CCIs to meet 10% of their compliance obligation, eventually rising to 20%.

‘Things are Changing Fast’

Testifying Wednesday at a virtual public hearing hosted by the DEQ, several Oregon residents criticized the agency’s plan for not being ambitious enough in the face of alarming changes in the state’s climate.

Oregon has experienced massive wildfires during the past two summers, and like much of the West, it is suffering from “extreme” or “exceptional” drought in most areas, according to the U.S. Drought Monitor. A June heat wave saw temperatures across the state shatter previous records, with Portland hitting a high of 116 degrees Fahrenheit.

Melanie Plaut, a retired Portland-area OB/GYN physician, said she was testifying out of concern for her granddaughter and all the babies she delivered during her career.

“The U.N. has recently said that we have this decade to make a difference — and I emphasize this decade,” Plaut said. “So, I’m going to ask that you put a more stringent cap on emissions: The CPP should decrease emissions 50% by 2030. The work we do now is much more valuable than action delayed, which is essentially the equivalent of climate denial.”

Plaut also said the plan must take a more serious approach to methane emissions, noting that the state’s six largest stationary polluters are gas-fired power plants that burn fracked natural gas.

“Although I understand the rationale behind avoiding double regulations, this loophole is way too large, and not only gives these larger polluters a loose rein, it ignores the upstream climate effects from methane leakage and the local pollution effects whose burden falls heavily on the communities surrounding the plants,” Plaut said.

Linda Kelley echoed Plaut’s concern about the CPP’s exclusion of gas-fired generators, saying the plants should be brought under the cap. “There’s no other way to have any hope of reaching climate stability,” she said.

Kelley said she worked for seven years in the source testing lab of the Bay Area Air Quality Management District and understood the challenges of regulating polluters after developing relationships with people in industry.

“That said, the natural gas industry must pivot quickly. They will likely try to hang on, fight and scare people into believing we cannot live without natural gas. We actually cannot live with it anymore,” Kelley said. “Their business model is an existential threat to us. We have the sun above us and a stable heat source in geothermal below us. We have solutions to our dilemma. We just need to stop the harm.”

Deborah McGee, a former teacher and co-founder of climate justice group 350 Eugene, said “things are changing fast” on the forested land where she has lived for 37 years outside the city of Eugene. McGee pointed to the death of Douglas firs from drought, an unusually heavy snowfall that collapsed her greenhouse and the destruction of subsistence crops from June’s heat wave.

“And today I sit with 150 feet of fire hose outside my door, hooked up to a 25,000-gallon water tank, waiting for the fire to come; if not this summer, then next. I am frightened of these fires,” McGee said.

Allie Rosenbluth, campaigns director for Rogue Climate, recounted that a year ago, she was just returning to her home in the city of Talent after evacuating from the “climate-fueled” Almeda Fire, which destroyed hundreds of homes in her community. Despite serving on the advisory committee that helped draft the CPP, Rosenbluth said the rules do not fulfill Gov. Brown’s directive and “represent a missed opportunity to take the swift and aggressive action necessary to avoid the worst impacts of climate change.”

“DEQ must revise the program to ensure real pollution reduction in frontline communities,” she said. “This means ending exemptions for the largest polluters and eliminating or limiting offsets, banking and trading, ensuring that the CCI program is prioritized for and is accessible for tribes and other frontline communities, reducing thresholds [and] increasing greenhouse gas-reduction goals to science-based targets.”

Another participant in the draft rulemaking process, Pat DeLaquil with the Metro Climate Action Team, agreed with other speakers that the proposal does not go far enough.

“Given the ever increasing cost of climate impacts, DEQ must enact targets in line with the best available science, which requires an emission-reduction target of 50% by 2030 and 100% by 2050,” DeLaquil said. He called for greater public review of the program’s best available emission-reduction process for stationary sources, saying that it must “require long-term emission reductions in line with the technical potential for that particular industry subsector.”

‘Negative’ Impacts

Defending the perspective of the natural gas sector was Mary Moerlins, director of environmental policy and corporate responsibility for NW Natural and another participant in the committee that drafted the rules.

Moerlins said Oregon’s largest gas utility is “pleased that our voluntary goal of carbon emission reduction is directionally aligned with the state’s target within the Climate Protection Plan. We know we want to decarbonize, and we know that we will, and that’s a good place to start.”

But, she said, NW is concerned that the CPP “breaks with all other established carbon regulation policies” because it lacks “instruments for cost controls or off-ramps” in the case of high costs related to meeting targets. The company also seeks more clarity on the CCI concept to get a better understanding of the potential supply of projects.

Sharla Moffett, director of energy, environment, natural resources and infrastructure with Oregon Business & Industry, said the GHG policy must balance environmental and economic considerations to prevent the state’s businesses from being “placed at a competitive disadvantage either nationally of globally.”

“The proposal does not accomplish these objectives and should be modified to address the cost of compliance, consider the global impacts of transferring emissions elsewhere, [and] ensure that the program produces actual verifiable certifiable reductions of greenhouse gas emissions,” Moffett said.

Although the rules would not cover agriculture, representatives from that sector warned about their indirect impact on farmers.

Citing recent closures and restrictions affecting the state’s breweries and brewpubs, Michelle Palacios, executive director of the Oregon Hop Growers Association, said the CPP “would greatly increase the cost of natural gas for local hop growers at a time we can least afford it.” Once the second largest hop-growing state in the country, Oregon has been displaced from that rank by Idaho, which has cheaper energy and land, Palacios said.

“Most Oregon hop growers use efficient natural gas burners to drive pumps during harvest in August and September. We prefer natural gas because it’s currently the cleanest fuel option,” she said, adding that reduced access to and higher prices for natural gas will “negatively affect” the state’s $6.6 billion beer industry.

Angi Bailey, president of the Oregon Farm Bureau, said higher natural gas prices will prevent family-scale farms from investing in needed climate resilience measures. She complained that farmers are not able to estimate the impact of expected fuel-price increases because the DEQ has not even modeled them.

“While [the CPP is being done] under the premise of climate change, I must point out that climate change is a global issue that requires a global solution. This program will do nothing to stop climate change, but [it] will have very real impact on rural Oregonians, many of whom are already struggling to make ends meet,” Bailey said.

The EQC will hold a second public hearing on the draft CPP rules this Thursday, and comments are due to the DEQ by Oct. 4. The department expects to issue final proposed rules to the EQC in November.

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SERC Board of Directors Briefs: Sept. 23, 2021

Awareness of Risk from Extreme Weather

Extreme weather poses a significant risk in the SERC Reliability region, according to a presentation from Maria Haney, the regional entity’s manager of situational awareness and events analysis, who provided an update on Hurricane Ida and an overview of the bulk power system.

Ida, which struck Louisiana as a Category 4 hurricane on Aug. 29, caused 210 transmission line outages and left 1.184 million customers without power in Louisiana, Mississippi and Alabama.

“We recognize that these storms have devastating impacts on the power system and the community,” Haney said. “During extreme weather events, we know it is critical for the industry — from government agencies to the ERO Enterprise to registered entities within our [footprint] — to coordinate with the impacted entities throughout the days of restoration.”

Haney said that SERC is working with stakeholders to promote awareness by offering forums on extreme weather events, discussing trends and lessons learned, and offering resources such as checklists that show best practices.

“Although we are at the peak of the hurricane season,” Haney said, SERC is promoting winter weather readiness. It has already held several webinars in August and September, and NERC had an alert to survey agencies to prepare for the upcoming season.

“We’ve seen an increase in cold weather events over the last several years. So we plan to have that be an ongoing activity in our program,” Haney said. “We do plan to modify cold weather standards that will come out, including the release of the February cold weather inquiry report [from FERC and NERC] in November.” (See related story, FERC, NERC Share Findings on February Winter Storm.)

Erixton Nominated to Board

The board approved the nomination of Ricky Erixton, vice president of electric systems for the Jacksonville Electric Authority in Florida, to a two-year term as a municipal sector representative.

Erixton replaces Robert McGarrah, general manager of the city of Tallahassee’s electric and gas utility, who retired in June before the end of his term. Erixton was the only nominee to replace McGarrah, so the sector election was able to be conducted by email ballot. He was approved by a majority of the municipal sector, and there was no opposition.

Upcoming Meeting Schedule

The next board meeting is scheduled for Dec. 15, and it will be a hybrid event, with both WebEx and in-person attendance in Charlotte, N.C.

SERC President and CEO Jason Blake said he wants to be “optimistic” about the in-person component. However, if the mask mandate for indoor spaces in Mecklenburg County, where Charlotte is located, is still in effect come December, Blake added that SERC would “probably revisit” the in-person meeting and go completely virtual.

The meetings for 2022 are scheduled to be in-person gatherings, for now:

  • March 30 in Savannah, Ga.
  • June 23 in Charlotte
  • Sept. 22 in Charlotte
  • Dec. 14 in Charlotte
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Boston City Council Approves Enforceable Building Emissions Standard

The Boston City Council on Wednesday unanimously passed an amendment to its buildings ordinance that establishes an enforceable emissions performance standard.

“We are going to decarbonize our large buildings over the next 25 years, full stop,” acting council President Matt O’Malley said during the council’s meeting. “Beginning in 2025, and following every five years thereafter, through this ordinance we’ll be setting aggressive but achievable metrics … for buildings to reach a substantial cut in their greenhouse gas emissions.”

The Building Energy Reporting and Disclosure amendment (BERDO 2.0) updates the city’s original reporting ordinance from 2013 by expanding the number of covered buildings and setting fines for noncompliance of $150 to $300/day, depending on building size.

“We’re going to work to make sure that all of the work is centered around equity, equality, addressing environmental justice communities and working with the institutions to get it right,” O’Malley said.

BERDO 2.0 establishes an Emissions Review Board, two-thirds of which will comprise members nominated by community groups. It also establishes an Equitable Investment Fund for emission-reduction projects that benefit environmental justice populations in Boston.

The Massachusetts Sierra Club applauded the council’s decision.

“It’s past due time for the biggest buildings in Boston to be held accountable for their pollution and required to take significant action to reduce their impact,” Michele Brooks, Boston community organizer for Sierra Club, said in a statement.

O’Malley said during the meeting that he expects acting Mayor Kim Janey to sign the ordinance.

“We are going to begin cutting 37 million metric tons of GHG emissions over the next 30 years,” he said. “This ordinance affects 4% of our total building stock; that’s 3,500 buildings, yet those 4% of buildings account for nearly 60% of all building emissions.”

Emissions

Under the new standard, buildings will have to comply with emissions standards on an annual basis according to their classification and measured in metric tons of carbon dioxide equivalent (CO2e) emissions per square foot.

Manufacturing and industrial buildings, for example, must not exceed 23.9 kg of CO2e/square foot/year through 2029, and the allowance reduces gradually to 3.2 kg for 2045-2049. All covered buildings must reach zero emissions by 2050.

Buildings equal to or greater than 20,000 square feet, 15 units but less than 35,000 square feet or 35 units do not have to comply with the standards until 2031. Buildings under 20,000 square feet are not covered by the ordinance.

Owners can mitigate emissions by purchasing renewable energy certificates and securing renewable energy power purchase agreements. They also will have the option of making a compliance payment that the ordinance initially sets at $234/kg CO2e. The compliance payment amount will be reviewed every five years.

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Southwest Gas Facing Regulatory Hurdles in Securing RNG

Southwest Gas is facing regulatory barriers to increasing its renewable natural gas purchasing despite a goal set by the Nevada legislature to raise the amount of RNG in public utility portfolios.

Southwest Gas, which is a major gas provider in the state, is asking the Public Utilities Commission of Nevada (PUCN) for authority to buy renewable natural gas without going to the commission for approval of each individual RNG purchase.

But PUCN staff have recommended that the commission deny the application. The RNG market is still in its early stages, and Southwest Gas could become locked into a long-term contract with fixed or escalating prices, PUCN staff said.

“The proposed purchase authority could not only negatively impact the company’s financials, but also harm its ratepayers,” Yasuji Otsuka, manager of the Resource and Market Analysis Division for the PUCN, said in written testimony.

PUCN staff have recommended that the commission require Southwest Gas to seek approval for any RNG contract of three years or longer.

In addition, staff recommended that Southwest Gas be required to file a report by the end of 2023 regarding the company’s RNG activity as well as the status of the RNG market in Nevada and elsewhere.

PUCN held a hearing on the Southwest Gas proposal on Sept. 13. The next step is for PUCN staff to write a proposed order regarding the application, which the full commission could vote on. A date for full commission review has not been set.

Flexibility Sought

Southwest Gas said the purchasing authority is needed to give the company flexibility as it tries to meet a goal of 3% RNG in its portfolio by January 2035.

Nevada’s 2019 Senate Bill 154 set the 3% RNG target for natural gas utilities, with interim targets of at least 1% by January 2025 and 2% by January 2030.

Southwest Gas is seeking purchasing authority for up to 3% of its projected 2035 sales; under the company’s proposal, it would need to return to the commission for approval of any RNG purchases above that amount.

Southwest Gas said some RNG facilities produce relatively small amounts of renewable gas each day. Therefore, the company may need to make many small purchases of RNG to meet the targets.

“Obtaining the commission’s approval for short-term agreements, which can take up to 180 days after filing of the company’s application, is inefficient and will likely lead to RNG suppliers being unwilling to sell RNG to Southwest Gas because of the lengthy approval process,” John Olenick, director of gas supply at Southwest Gas, said in written testimony.

In other cases, Southwest Gas might be working on an agreement with an RNG provider that hasn’t yet built production facilities. Those suppliers would also be looking for a speedy purchase commitment so they could move forward with financing and construction.

If Southwest Gas is granted RNG purchasing authority without the need for PUCN review of individual purchases, costs and prudency of the purchases would instead be reviewed during annual rate proceedings.

This could result in rate proceedings that are “unnecessarily complicated and contentious,” Otsuka said.

The proposed RNG purchase authority “provides only alleged but not proven benefits and may result in more RNG purchases than necessary while involving speculative activities,” Otsuka said.

In addition, Otsuka said, Southwest Gas is proposing to skip the 1% and 2% milestones set by the legislature for RNG procurement and “leap” to the 3% target set for 2035.

That’s in contrast to the legislature’s “gradual and stepwise approach,” which was possibly a recognition of “the nascent stage of the RNG industry and market,” he said.

Second Attempt

Southwest Gas first filed its request for RNG purchasing authority in January. The commission rejected the proposal, saying the company hadn’t shown that the RNG purchases would have environmental benefits as required by SB154.

The company filed a revised application in May, proposing to buy only RNG that is eligible for D3 or D5 credits under the federal renewable fuels standard program.

The program classifies fuels based on their feedstock. D3 fuels are considered “cellulosic,” and feedstocks include corn stover, wood chips and biogas, according to the Environmental Protection Agency. D5 is the “advanced biofuel” category, with feedstocks including sugarcane, biobutanol and bionaptha.

The categories also include a minimum reduction in greenhouse gas emissions over the lifecycle of the fuel. The reductions for D3 and D5 fuels are at least 60% and 50%, respectively.

With its commitment to buy only D3- or D5-eligible RNG, “the company’s proposed RNG activity could provide environmental benefits relative to fossil fuel alternatives to the state,” Otsuka said.

Environmental groups remain unconvinced that RNG purchased by Southwest Gas would have environmental benefits.

Dylan Sullivan, a senior scientist with the Natural Resources Defense Council, said that the EPA classification system for biofuels does not require that RNG produced at specific facilities be analyzed on an ongoing basis for amounts of GHG reduction.

And the federal program assesses greenhouse gas emissions of biofuels relative to gasoline, Sullivan said in written testimony on behalf of NRDC, the Sierra Club and Western Resource Advocates.

“‘Sixty percent better than gasoline’ is insufficient given Nevada’s policy of reducing methane emissions and reaching zero or near-zero GHG emissions by 2050,” he said.

Arizona Attempt

Southwest Gas applied to the Arizona Corporation Commission for approval of a similar RNG program, with a 1% RNG target in 2025, 2% in 2030, and 3% in 2035. In a December order, the ACC denied the request.

“We find that there are too many unknown variables associated with RNG to support the adoption of the proposed RNG program at this time,” the commission said in its decision. “We note that the proposed RNG program involves a high-risk, speculative activity, and we do not believe it would be appropriate to pass the associated risks and costs on to ratepayers.”

The commission also ordered staff to open a generic docket on the role of RNG in Arizona and schedule at least one workshop on the topic. ACC held an RNG workshop in May.

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Overheard at the NECA Fuels Conference

Oil and gas companies are turning to renewable gas, green hydrogen and biofuel as a pathway to cutting emissions in the transportation and building sectors while retaining existing infrastructure.

But deep energy efficiency retrofits coupled with building electrification via heat pump and induction cooktops is the central solution to decarbonizing buildings, said Ben Butterworth, senior manager of climate and energy analysis at the Acadia Center. He spoke at the Northeast Energy and Commerce Association’s (NECA) Fuels Conference on Sept. 22.

The conference brought together policy experts from stakeholder organizations, such as Acadia, oil and gas companies Enbridge and Shell Oil, and utilities Eversource and National Grid, to discuss the benefits and challenges of green hydrogen.

Zeyneb Magavi, co-executive director of the Home Energy Efficiency Team (HEET), presented the alternative of using geothermal heat pump networks for clean home heating and cooling.

Following is some of what we overheard at the event.

New England utilities, such as Eversource and National Grid, are in the process of approving and siting locations to test HEET’s geothermal energy technology. Companies such as Enbridge and Shell Oil are investing in renewable natural gas or green hydrogen to reduce emissions while using existing natural gas infrastructure.

Green hydrogen is created by splitting water into hydrogen and oxygen in an electrolyser using electricity powered by renewable energy.

“It’s going to take multiple pathways to achieve decarbonization,” said Steve Elliott, director of business development for Enbridge. “I think we really need to consider leveraging the best attributes of molecule-based energy like gas.”

However, green hydrogen faces steep challenges, which inhibits a widescale rollout. There is a 20% to 40% energy loss in the electrolysis process and green hydrogen-based, low-temperature heating systems consume 500% to 600% more electricity than heat pumps, making it much less cost-effective, Butterworth said.

Pure hydrogen is a five times more potent greenhouse gas than carbon dioxide when it is released directly into the atmosphere via leaks, and it leaks out of pipes more easily than natural gas because the molecules are smaller, Butterworth said.

“We don’t have time for the green hydrogen economy to develop,” he said. “We need action now.”

As an alternative to hydrogen, Magavi’s GeoBlock concept, also known as a geothermal district, could use existing natural gas rights-of-way to heat and cool buildings. The GeoBlock is a system of networked ground-source heat pumps with a shared ambient temperature loop that delivers cooled or heated water to customer buildings. A heat pump in the building pulls heating or cooling off the supply loop, and geothermal boreholes in the right-of-way maintain the temperature of the system.

“If we are going to meet our emissions mandates, and do it without raising customer bills,” the GeoBlock is a solution that is “ready to do that now,” she said.

Thermal energy can be deposited in bedrock for storage and removed, in part, a year later, helping to make geothermal energy distribution systems highly cost-effective, Magavi said. European installations of similar shared loop systems without boreholes report 30% to 40% energy savings because they allow the utility to move excess or waste thermal energy across space and reuse it, according to HEET.

Adding boreholes to the shared loop allows the utility to store excess or waste thermal energy for reuse, whether it’s wind energy at night that is used the next day or heat in the summer used the next winter.

“If installed by a utility and amortized over time as gas pipes are, the GeoBlock is projected to deliver heating at a lower cost than gas,” Magavi said.

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Concerned Massachusetts Farmers Speak Out Against Dual-use Solar

The agricultural commission in Northampton, Mass., a town with prime farmland in the Connecticut River Valley, opposes a new bill that would open up agricultural lands for solar incentives.

Solar development would be allowed on those lands under the bill (S590), as long the area continues to be used for agricultural purposes.

Fred Beddall, a full-time commercial farmer for 24 years in Northampton, said during a Sept. 22 hearing on the bill that a nearby town’s dual-use solar experiment didn’t work, and he doesn’t want to see the approach continue across the state through the bill.

The town of Northfield approved a 3-acre dual-use sheep farm on prime farmland, “and this is what we don’t want to see happen in Northampton because sheep pasture in general is a very low-value use of farmland,” Beddall said. But the farms were forced to convert to sheep pastureland because the plants did not grow productively under solar panels that were mounted 8 feet off the ground.

The amount of money farmers would make is about $15,000 in sales per year, Beddall testified. The rich soil is more profitable for farmers to grow crops, with a half-million dollars coming from about 80 acres of land, he said.

Already, thousands of acres of Massachusetts forests and farmlands have been developed for ground-mounted solar arrays. A Mass Audubon study found that almost a quarter of the land developed in the state over the past few years has been turned into solar farms, and meeting the state’s renewable energy targets could require clearing up to an additional 150,000 acres.

Climate scientists have recently pointed to the fact that undeveloped land and farmland have helped reduce global warming as carbon sinks, but if they continue to be developed, the atmosphere will warm faster than current climate modeling accounts for.

Turning farmland into sheep pasture also destroys local food systems and the jobs that go with it, Beddall said. People who benefit the Supplemental Nutrition Assistance Program in Massachusetts also rely on locally grown food in the state as part of their assistance.

“We think the whole dual-use policy needs to be seriously re-examined,” Beddall said. “It’s making a big mistake to take prime farmland and turn it into low-value sheep pasture.”

Pine Gate Renewables is also testing the use of solar panels on cranberry bogs as well as irrigation ponds in Carver, Mass.

Another bill (S571) under consideration in the Massachusetts legislature would create a commission to determine how farms can be best used to combat climate change, such as through composting.

“Composting benefits the climate in a few different ways, including by reducing GHGs at landfills by promoting the uptake of carbon dioxide in the leafy vegetation,” said the bill’s sponsor, Sen. Ed Kennedy (D), at the legislative hearing.

Composting diverts organic materials from landfills, where they could break down and be admitted into the atmosphere as methane, and puts it to use as fertilizer to promote healthier soil and growth of plants on the farms.

“This legislation would examine the roles our farms, and farmers can play in helping to keep carbon levels low and slow the impact of climate change in the state,” Kennedy said.

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New York City Unveils 15-year, $191M OSW Plan

New York City Mayor Bill de Blasio on Thursday announced a 15-year, $191 million plan to make the city a manufacturing and staging center for the offshore wind industry.

The city’s Economic Development Corporation (EDC) developed the Offshore Wind Vision plan to help meet the state’s goals of 100% clean electricity by 2040 and carbon neutrality by 2050, hoping to create more than 13,000 jobs and generate $1.3 billion in average annual investment.

“New York City is stepping up to confront the climate crisis with bold action,” de Blasio said in a statement. “Investing in our offshore wind industry isn’t only a win for our planet, it also means thousands of new jobs and affordable, clean power for New Yorkers. This plan will have a dramatic impact on our fight against climate change and will help set us on the path towards a clean energy future.”

The plan focuses on sites and infrastructure, business and workforce, and research and innovation. The city committed to developing infrastructure to support construction and operation of offshore wind farms, and promoting efforts to build, stage, install and maintain wind turbines.

In addition, the EDC will make offshore wind a priority public-private investment area through its Public-Private Impact Initiative Request for Expressions of Interest (RFEI), and it will launch an offshore wind–focused accelerator, according to the plan.

The plan will “reduce emissions while creating good green jobs,” said U.S. Senate Majority Leader Charles Schumer (D-NY). “The mayor has long understood the way transforming our energy system will drive our economy to new heights.”

The South Brooklyn Marine Terminal (SBMT) is being transformed into a world-class OSW port to be operated by Equinor, developer of the 1,260-MW Empire Wind project. Equinor will establish a $5 million fund to ensure that low-income communities, people of color, and New Yorkers from environmental justice communities reap benefits from the new investment. (See NY Builds OSW Ports in Brooklyn, Albany, Long Island.)

Activities at SBMT will include a 30% participation goal for minority- and women-owned business enterprises (M/WBE), and any future site development will also contain a goal of at least 30%, according to the plan. To further support M/WBEs, the city will invest in a program that provides education, networking and resource support to businesses with an interest in offshore wind.

“We have the infrastructure in place to create wind manufacturing hubs right here in Brooklyn, such as South Brooklyn Marine Terminal, the Brooklyn Navy Yard, and the Red Hook Container Terminal,” Brooklyn Borough President Eric Adams said in a statement.

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PJM MRC/MC Preview: Sept. 29, 2021

Below is a summary of the issues scheduled to be brought to a vote at the PJM Markets and Reliability Committee and Members Committee meetings on Wednesday. Each item is listed by agenda number, description and projected time of discussion, followed by a summary of the issue and links to prior coverage in RTO Insider.

Markets and Reliability Committee

Consent Agenda (9:05-9:10)

B. Stakeholders will be asked to endorse revisions to the Regional Transmission and Energy Scheduling Practices document. The document was endorsed at the Market Implementation Committee meeting Sept. 9. (See “Energy Scheduling Practices Revisions Endorsed,” PJM MIC Briefs: Sept. 9, 2021.)

Endorsements/Approvals (9:10-10:40)

1. Energy Price Formation Charter (9:10-9:25)

Members will be asked to approve revisions to the Energy Price Formation Senior Task Force (EPFSTF) charter. Votes will be taken on the original proposal and a second with proposed amendments from Exelon.

2. Natural Gas and Electric Markets Issue Charge (9:25-9:40)

The committee will be asked to approve the proposed issue charge and review the problem statement related to natural gas and electric market coordination. Dominion Energy said the problem statement and issue charge were the result of continued concerns over the misalignment between the natural gas and electric markets. (See “Natural Gas and Electric Markets Issue Charge,” PJM MRC Briefs: Aug. 25, 2021.)

3. Market Suspension (9:40-10)

Stakeholders will be asked to endorse the proposed solution and Operating Agreement revisions to address rules related to market suspension. PJM said the revisions are designed to provide clear business rules in the RTO’s markets to account for a market suspension where it cannot clear or produce market results. (See “Market Suspension,” PJM MRC Briefs: Aug. 25, 2021.)

4. Initial Margining Solution (10-10:40)

Members will be asked to endorse a proposed solution and tariff revisions from work done in the Financial Risk Mitigation Senior Task Force (FRMSTF) to address rules related to initial margining. The work is one of the last significant changes resulting from the GreenHat Energy default. Upon endorsement of a proposed solution, the committee will also be asked to approve the sunset of the FRMSTF in an additional vote. (See “Initial Margining Solution,” PJM MRC Briefs: Aug. 25, 2021.)

Members Committee

Consent Agenda (1:40-1:45)

B. The committee will be asked to approve proposed revisions to Manual 34: PJM Stakeholder Process addressing photography in meetings and media guidelines. The changes resulted from feedback by members and discussions at the Stakeholder Process Forum. (See “Manual 34 Revisions,” PJM MRC/MC Briefs: July 28, 2021.)

C. Stakeholders will be asked to endorse proposed revisions from the Governing Document Enhancement and Clarification Subcommittee (GDECS) addressing administrative changes and clarifications in the tariff and OA. PJM said the revisions were found to be “simple and noncontroversial enough” that they were reviewed one time at the GDECS, receiving unanimous stakeholder support. (See “Consent Agenda Manual Endorsements,” PJM MRC/MC Briefs: July 28, 2021.)

D. Members will be asked to endorse proposed revisions to address making cure periods uniform across the tariff and OA. PJM said appropriate cure periods defined in section 15.1.5 of the OA were originally updated in that document, but not in section 7.3 of the tariff, which involves provisions limited to transmission service customers. (See “‘Know Your Customer’ Tariff Changes,” PJM MRC Briefs: Aug. 25, 2021.)

E. The committee will be asked to endorse proposed revisions to address making the definitions of working credit limits uniform across the tariff. The revisions eliminate duplicative definitions of “working capital limit” and leave it only in the definitions section of the tariff.

Endorsements (1:45-2:15)

1. PJM Administrative Rates (1:45-2)

Stakeholders will be asked to endorse the proposed solution and tariff revisions related to PJM administrative rates. The RTO is asking for endorsement after a first read to conduct a rate filing to FERC by Thursday and have a target effective date of Jan. 1, 2022.

2. Nominating Committee Elections (2-2:15)

Members will be asked to elect the sector representative nominees for the 2021-2022 Nominating Committee. The nominees include: Brian Vayda, executive director of the New Jersey Public Power Authority (Electric Distributors); Mike Gahimer of the Indiana Office of Utility Consumer Counselor (End-Use Customers); John Brodbeck, senior manager of transmission at EDP Renewables North America (Generation Owners); Bruce Bleiweis of DC Energy (Other Suppliers); and Jim Davis, regulatory and market policy strategic adviser for Dominion Energy (Transmission Owners).