Court Vacates Final Rule That Set New Waters of the U.S. Definition

September 1, 2021

by Paul Ciampoli
APPA News Director
September 1, 2021

The U.S. District Court for the District of Arizona on Aug. 30 vacated a Trump Administration rule that set a new definition for “waters of the United States” (WOTUS).

At issue in the proceeding is a final rule — the Navigable Waters Protection Rule (NWPR) — announced last year by the Environmental Protection Agency (EPA) and the Army Corps of Engineers.

The NWPR addresses traditional navigable waters and territorial seas but narrowed the extent of federal jurisdiction by excluding isolated water bodies, “ephemeral” waters that form only in response to rain, and most ditches.

The final rule called for four categories of waters are federally regulated: (1) The territorial seas and traditional navigable waters; (2) Perennial and intermittent tributaries to those waters, (3) Certain lakes, ponds, and impoundments, and (4) Wetlands adjacent to jurisdictional waters.

The final rule also detailed 12 categories of exclusions, features that are not WOTUS, such as features that only contain water in direct response to rainfall (e.g., ephemeral features); groundwater; many ditches; prior converted cropland; and waste treatment systems.

The American Public Power Association generally supported the NWRP rule as it provided clarity and certainty over the scope of jurisdictional waters. A clear WOTUS definition is critically important as the electric utility industry transitions its generation fleet to low and non-emitting resources. The association believes that the NWPR provided clear descriptions of exclusions for many water features that traditionally have not been regulated such as waste treatment systems and ditches.

The rule was subsequently challenged in court by Earthjustice and the Pascua Yaqui Tribe, Fond du Lac Band of Lake Superior Chippewa, Tohono O’odham Nation, Menominee Indian Tribe of Wisconsin, Quinault Indian Nation, and Bad River Band of Lake Superior Chippewa.

In May 2021, these parties sought summary judgement in the proceeding.

In lieu of filing a response to the motion for summary judgment, the EPA and Corps of Engineers filed a motion for voluntary remand of the NWPR without “vacatur” (vacating the final rule). The plaintiffs in the case did not oppose remand of the NWPR but argued that remand should include vacatur. 

Details On Court Decision

“The concerns identified by plaintiffs and the agency defendants are not mere procedural errors or problems that could be remedied through further explanation,” the court said in its ruling. “Rather, they involve fundamental, substantive flaws that cannot be cured without revising or replacing the NWPR’s definition of ‘waters of the United States,’” the court said. The order was written by U.S. District Judge Rosemary Marquez.

“Accordingly, this is not a case in which the agency could adopt the same rule on remand by offering ‘better reasoning or…complying with procedural rules,’” wrote Marquez.

Neither is this a case in which vacating the final rule could result in possible environmental harm, the judge went on to say. “To the contrary, remanding without vacatur would risk serious environmental harm,” she said. 

Marquez noted that the two federal agencies have identified indicators of a substantial reduction in waters covered under the NWPR compared to previous rules and practices. The judge noted that between June 22, 2020 and April 15, 2021, the Corps made approved jurisdictional determinations under the NWPR of 40,211 aquatic resources or water features and found that approximately 76% were non-jurisdictional. The agencies have identified 333 projects that would have required Section 404 permitting under the Clean Water Act prior to the NWPR but no longer do, the court said.

Marquez said that the reduction in jurisdiction has been particularly significant in arid states. In New Mexico and Arizona, nearly every one of over 1,500 streams assessed under the NWPR were found to be non-jurisdictional, “a significant shift from the status of streams under both the Clean Water Rule and the pre-2015 regulatory regime,” she wrote.

“The seriousness of the agencies’ errors in enacting the NWPR, the likelihood that the agencies will alter the NWPR’s definition of ‘waters of the United States,’ and the possibility of serious environmental harm if the NWPR remains in place upon remand, all weigh in favor of remand with vacatur,” the order said.

The motion for voluntary remand made by EPA and the Army Corps of Engineers was therefore granted to the extent it seeks voluntary remand of the NWPR. At the same time, Marquez said that the NWPR is vacated and remanded for reconsideration to the EPA and the Army Corps of Engineers.

The vacatur means the test to determine which waters are jurisdictional will revert pre-2015 WOTUS regulations. However, legal experts disagree on whether a district court can vacate a rule nationally, meaning the pre-2015 test might apply only on a narrower scale, such as on land controlled by the six plaintiff tribes.

Biden Administration Action

Prior to the court’s order, EPA Administrator Michael Regan in June announced that the EPA and the Army Corps of Engineers would formally revise the definition of WOTUS.

The 2020 NWPR was identified in President Biden’s Executive Order 13990, which directs federal agencies to review all existing regulations, orders, guidance documents, policies, and any other similar agency actions promulgated, issued, or adopted between January 20, 2017, and January 20, 2021.

Upon review of the NWPR, the two agencies determined that the rule is significantly reducing clean water protections based on a review of the 333 projects they said would have required § 404 permits before the NWPR, but no longer do because of the narrower scope of jurisdiction under the NWPR. However, industry stakeholders contend the Agencies have not disclose all the data necessary to review the list of projects. For those jurisdictional determinations (JDs) found online, there are no prior JDs, therefore how can the Agencies determine that certain water features would have required a permit but no longer do under the NWPR.

The Department of Justice on June 9 filed a motion requesting remand of the NWPR rule.

The action reflects the agencies’ intent to initiate a new rulemaking process that restores the protections in place prior to the 2015 WOTUS implementation and anticipates developing a new rule that defines WOTUS “and is informed by a robust engagement process as well as the experience of implementing the pre-2015 rule, the Obama-era Clean Water Rule, and the Trump-era Navigable Waters Protection Rule,” EPA noted in a news release.

Subsequently EPA issued a notice, announcing public meetings and a solicitation for pre-proposal feedback on a new WOTUS definition. APPA plans to submit comments September 3 articulating the key principals any new WOTUS definition should include considering the recent court decision.

Public Power Crews Continue Restoration Work as Ida Shifts to Tropical Depression

August 31, 2021

by Paul Ciampoli
APPA News Director
August 31, 2021

In the wake of Hurricane Ida, which made landfall in Louisiana over the weekend as a Category 4 hurricane, public power utility crews continued to assist with power restoration efforts in the Southeast as Ida shifted to a Tropical Depression.

The Department of Energy (DOE) in an update said that as of 7:00 a.m. EDT on August 31, there were approximately 1.1 million customer outages due to Ida, with approximately 1 million outages in Louisiana.

DOE said that as of 5:00 a.m. EDT on Aug. 31, Tropical Depression Ida was 185 miles southwest of Nashville, Tennessee, moving northeast at 12 MPH, with maximum sustained winds of 30 MPH.

“Considerable heavy rain and flooding threats will continue to spread from the Tennessee and Ohio Valleys into the central and southern Appalachians and Mid Atlantic through Wednesday,” DOE said.

DOE noted that utilities are conducting damage assessments and restoration efforts as conditions permit. Damage assessments are expected to take three days and estimated restoration times will be established once damage assessments are complete, the federal agency said.

Utilities in the impacted area pre-staged crews, equipment, and materials and mutual assistance networks have been activated to support restoration efforts as needed. A large number of public power utilities from several states sent crews to Louisiana prior to the arrival of Ida.

Many of those crews were set to assist Louisiana public power Lafayette Utilities System (LUS) in its recovery efforts. For example, mutual aid crews from the City of Tallahassee, Fla., deployed Saturday to arrive in Lafayette Sunday morning before the storm to assist LUS. With LUS receiving little to no impacts from Ida, the City of Tallahassee was redeployed to the City of Houma, La.

LUS on Aug. 31 reported that a team from LUS is in Houma doing damage assessment as well as line and tree trimming crews from Tallahassee, North Carolina’s Greeneville Utilities Commission, the City of Statesville, N.C., the City of High Point, N.C., the City of Wilson, N.C., Oklahoma’s Grand River Dam Authority, Nebraska’s Lincoln Electric System, the Town Tarboro, N.C., and North Carolina’s Wake Forest Power that pre-staged in Lafayette for Ida.

 

Crews from Thomasville, Ga., were deployed to St. Martinsville, La., initially, released Aug. 31 and then asked to assist Houma.

Brandon Wylie with Electric Cities of Georgia (ECG) has been assisting in Morgan City, while ECG Training and Safety Specialist Calvin Vallee has been helping out in St. Martinsville. On Sept. 1, they both will be traveling to Houma. Wylie is Director of Safety and Training at ECG.

Crews from the Georgia public power communities of Griffin and Calhoun were deployed to Morgan City, La.

ECG is a non-profit organization providing strategic and technical services to 52 public power communities with utility operations. Calhoun and Griffin are members of ECG.

Meanwhile, Nebraska’s Omaha Public Power District on Aug. 31 said it was sending 15 employees to Baton Rouge, La., to help with power restoration in the aftermath of Ida.

OPPD’s team – including four, three-person line crews, two transportation mechanics, and one field supervisor – left Monday at noon and are expected to arrive in Baton Rouge this evening. They will work with investor-owned Entergy Louisiana.

“Our linemen are happy for the opportunity to provide mutual aid support,” said OPPD Papillion Center Manager Eli Schiessler, who is overseeing the effort. “It’s particularly gratifying to be able to help another community, given the level of support we have received from other utilities this year in our service territory.”

Meanwhile, a 16-man contingent of line technicians and supervisory staff from Nebraska Public Power District (NPPD) will be hitting the road on Tuesday, journeying to Baton Rouge to provide mutual aid and restore power.

The contingent from NPPD will be utilizing a variety of equipment used in restoration efforts, with a commitment for two weeks to assist in restoring power for Entergy.

NPPD crews were expected to arrive Thursday to begin assistance.

Meanwhile, the City of New Smyrna Beach, Fla., and Fort Pierce Utilities Authority sent mutual aid crews to assist utilities personnel in the City of Plaquemine, Louisiana. The Florida public power utility teams were set to deploy on Sunday to arrive in Plaquemine Monday to begin restoring power once the storm passes. Plaquemine said that as of 6 pm, Aug. 30, power had been restored to almost all of the city’s utility customers.

Crews from the following Florida public power utilities were released and are on their way back to Florida: JEA, Lakeland, Orlando, Kissimmee.

Meanwhile, a caravan of Missouri-based public power utility crews headed to Mississippi to help Southwestern Electric Cooperative to get the power back on.

The effort involves 32 lineworkers from seven Missouri Public Utility Alliance (MPUA) towns — crews from Missouri cities of Carthage, Higginsville, Independence, Lebanon, Nixa, Palmyra, and Poplar Bluff.

Ashburnham, Massachusetts, Utility Using DEP Grant To Install Downtown EV Charging Station

August 31, 2021

by Peter Maloney
APPA News
August 31, 2021

Ashburnham Municipal Light Plant (AMLP) plans to install an electric vehicle (EV) charging station using funds from the Massachusetts Department of Environmental Protection (DEP).

The charging station will have four charging ports and is scheduled to be installed at Town Hall on Ashburnham’s Main Street before the end of 2021. The $28,158 grant comes from the Public Access Charging Program within the DEP’s Electric Vehicle Incentive Program.

AMLP applied for the grant with its joint action agency, the Massachusetts Municipal Wholesale Electric Company (MMWEC).

“This is a good thing for Ashburnham because receiving the grant allows additional capital planning to be earmarked for future EV installations,” Kevin Sullivan, AMLP’s general manager, said in a statement.

Sullivan also noted that the grant would help the public power utility align with Massachusetts’ carbon dioxide emission reduction goals. “This grant continues to move Ashburnham in the direction of carbon reduction by providing the impetus for electric vehicle purchases and expanding the EV infrastructure in town,” he said.

AMLP installed a Level 2 electric vehicle charging station at the town’s library in January 2020. The station was funded by a grant from Massachusetts’ Green Communities program, with additional financial support by AMLP and Ashburnham’s Economic Development Committee.

When the new charging station is installed at the Town Hall, Ashburnham will have six charging ports.

Massachusetts’ Global Warming Solutions Act of 2008 requires a 25 percent reduction in greenhouse gas emissions from all sectors of the economy below the 1990 baseline emission level in 2020 and at least an 80 percent reduction in 2050.

The Massachusetts DEP’s Public Access Charging Program provides funding to property owners to cover a portion of the cost of electric vehicle charging stations accessible to the general public. There is $1.5 million allocated to the program, and applications are considered on a first-come, first-served basis until the funds are exhausted.

The Public Access Charging Program provides up to 80 percent of the cost of a charging station installed at non-government owned properties and up to 100 percent of the cost of installing a charger at a government owned property.

Applicants must commit to providing funds to cover any remaining costs of a charging station or its installation and all the operating and maintenance costs for three consecutive years after the charging station is in operation.

The American Public Power Association’s Public Power EV Activities Tracker summarizes key efforts undertaken by members — including incentives, electric vehicle deployment, charging infrastructure investments, rate design, pilot programs, and more. Click here for additional details.

Public Power Mutual Aid Crews Deploy In Advance Of Hurricane Ida

August 30, 2021

by Paul Ciampoli
APPA News Director
August 30, 2021

Public power utility crews from nine states deployed to Louisiana in the days leading up to the arrival of Hurricane Ida, which made landfall in Louisiana on Sunday, August 29 as a category 4 hurricane resulting in widespread power outages in the state.

According to Poweroutage.us, Louisiana had just over one million customers without power as of the morning of Monday, Aug. 30. Ida knocked out power to New Orleans. The city reported on Aug. 29 that all eight transmission lines that deliver power into the New Orleans area were currently out of service. When this occurred, it caused a load imbalance in the area and resulted in generation in the area coming offline. The city is served by investor-owned utility Entergy.

Public power utilities deployed 65 crews and 300 personnel to Louisiana from the following states:

• Missouri
• Florida
• North Carolina
• South Carolina
• Tennessee
• Oklahoma
• Georgia
• Nebraska
• Kentucky

Public Power Crews Deployed Prior To Ida’s Arrival

On Friday, Aug. 27, utility electric line crews from Missouri public power communities started preparations to leave for Louisiana. Organized by the Missouri Public Utility Alliance (MPUA), lineworker crews from Missouri cities were traveling to Alexandria, La., to be ready for power restoration after the storm passes. Preparedness coordinators for the City of Alexandria issued a call on Thursday to MPUA for mutual aid assistance, and the crews departed for Louisiana the morning of Saturday, August 28.

The combined response of 32 lineworkers involves crews from the seven Missouri cities of Carthage, Higginsville, Independence, Lebanon, Nixa, Palmyra, and Poplar Bluff.

The workers will stage in Alexandria, La., equipped with eight bucket trucks, four digger/derrick trucks, and 11 other utility vehicles and machines, ready to restore power to Alexandria’s municipal utility after the storm passes.

Mutual aid crews from Missouri public power utilities assisted Alexandria and other area utilities twice in storm recoveries last year, repairing damage caused by Hurricane Laura (August 2020) and Hurricane Delta (October 2020).

Missouri’s utility mutual aid response is coordinated through MPUA’s mutual aid network. Assisting cities are reimbursed by the municipal utilities receiving assistance.

MPUA’s mutual aid network is part of a national public power mutual aid network coordinated by the American Public Power Association (APPA).

Meanwhile, a crew from Oklahoma’s Grand River Dam Authority (GRDA) headed to Lafayette, La., to help repair any damage Ida may cause to that city’s electric system.

The GRDA crew of 20 volunteers, including powerline maintenance and vegetation management personnel, mechanics and law enforcement, left Pryor at 6 a.m. Saturday morning to make the nearly 600-mile drive to the Lafayette area. The crew planned to be staged on Sunday and ready to move in for any possible repair work as soon as Ida passes through the area.

The trip is a familiar one, as GRDA also provided aid to Lafayette Utilities Systems (LUS) in October 2020, after Hurricane Delta made landfall, GRDA noted.

Along with Hurricane Delta and now Ida, GRDA has also helped restore power and provide water rescue assistance following Hurricanes Rita, Irma, Matthew, and Harvey. Over the years, GRDA personnel have responded to Florida, North Carolina, Louisiana, and Texas to offer that aid.

GRDA is lending a hand in Louisiana as part of the nationwide APPA mutual aid effort.

South Carolina’s Santee Cooper also sent crews to help LUS. Santee Cooper, the state-owned public power utility, sent two crews to Louisiana.

From neighboring North Carolina, the following public power communities sent crews to help LUS: Greeneville, Wilson, Statesville, High Point, Tarboro and Wake Forest.

Florida Public Power Utilities Deploy

On Aug. 27, the Florida Municipal Electric Association (FMEA) said that it had assembled public power crews from across the state to aid with power restoration efforts in Louisiana following Ida.

FMEA, the mutual aid coordinator for Florida’s 33 public power utilities, said that nearly 85 personnel from seven Florida public power utilities would arrive in Louisiana through Monday to assist affected communities.

Mutual aid crews from the City of Tallahassee deployed Saturday to arrive in Lafayette, Louisiana, Sunday morning before the storm to assist LUS.

Additional mutual assistance line crews and other field personnel from JEA in Jacksonville, Orlando Utilities Commission (OUC), Kissimmee Utility Authority and Lakeland Electric were set to arrive in Lafayette on Monday to restore power.

Meanwhile, the City of New Smyrna Beach, Fla., and Fort Pierce Utilities Authority are sending mutual aid crews to assist utilities personnel in the City of Plaquemine, Louisiana. The Florida public power utility teams were set to deploy on Sunday to arrive in Plaquemine Monday to begin restoring power once the storm passes.

“Yesterday was Florida Lineworker Appreciation Day and we couldn’t be more thankful for the public power lineworkers and crew members who leave behind the comforts of home and their own families to help restore power in other communities that are impacted by such major natural disasters,” said Amy Zubaly, FMEA Executive Director. “Florida has many times been the recipient of mutual aid assistance when we have faced down hurricanes and other severe storms. It is always a great honor to return the favor.”

Lincoln Electric System

Nebraska-based Lincoln Electric System (LES) deployed staff and vehicles to help utilities in Louisiana with anticipated power restoration efforts due to Hurricane Ida.

Three crews comprised of 14 LES employees were sent to Lafayette, La. LES crews deployed as the sun rose on Saturday morning, Aug. 28, and were expected to arrive in Lafayette Sunday.

Georgia Public Power Utilities Also Send Crews

Crews from the following public power communities in Georgia have also been deployed to various communities in Louisiana to assist with Ida restoration efforts:

• LaGrange
• Acworth
• Griffin
• Calhoun
• East Point
• Covington
• Thomasville
• Cairo
• ECG

Crews From Kentucky, Tennessee Deployed To Help LUS

Crews from Kentucky public power utility Paducah Power System and the City of Paris, Tenn., and Greeneville, Tenn., also deployed to assist LUS with recovery efforts.

LUS Helps Customers Prepare For Ida

Prior to Ida’s arrival, LUS took a number of steps to help its customers prepare.

For example, the utility leveraged social media to provide customers with telephone numbers to call should they experience power outages or experience any water/wastewater issues or to report downed power lines.

LUS also provided a link to its hurricane handbook, which provides information for customers to refer to before, during, and after a storm.

LUS also utilized its social media channels to say thanks to all of the public crews that arrived in advance of Ida to assist with restoration efforts.

APPA Resources

Along with its role as a mutual aid coordinator during events such as Ida, APPA also provides a number of disaster planning and response resources including a Restoration Best Practices Guidebook and All-Hazards Guidebook.

Additional details is available here.

Tracey LeBeau Named Administrator And CEO Of Western Area Power Administration

August 27, 2021

by Paul Ciampoli
APPA News Director
August 27, 2021

U.S. Secretary of Energy Jennifer Granholm on Aug. 26 announced Tracey LeBeau as Administrator and CEO of Western Area Power Administration (WAPA).

LeBeau has served as Acting Administrator since March and has been a member of the WAPA senior executive team for more than seven years, leading operational and administrative enterprise and regional functions. LeBeau’s appointment is effective August 29, 2021. 

LeBeau has more than 20 years of executive experience in management, clean energy and infrastructure development, public-private partnerships, utility business operations, and federal program leadership and policy.

LeBeau joined WAPA in 2014 as the organization’s Transmission Infrastructure Program manager where she oversaw the operations and management of WAPA’s $3.25 billion borrowing authority to support and finance critical infrastructure in WAPA’s territory. 

LeBeau will be the first woman and, as a member of the Cheyenne River Sioux Tribe, the first Native American to lead the organization. 

In this role, LeBeau is responsible for managing DOE’s largest power marketing administration, which markets an average of 25,000 gigawatt-hours of carbon-free hydropower from 57 hydroelectric dams across a 15-state footprint.

WAPA also owns, operates, and maintains a more than 17,000 circuit-mile, high-voltage transmission system that delivers hydropower and other sources of energy to cities and towns, rural electric cooperatives, irrigation districts, Native American tribes, and federal and state agencies, among others. 

Government, Power Sector Have Made Major Strides Tied To Infrastructure Cybersecurity Initiative

August 27, 2021

by Paul Ciampoli
APPA News Director
August 27, 2021

Key federal government agencies and the electricity industry have made significant strides in support of White House goals   aimed at boosting the cybersecurity of critical infrastructure in the U.S., the Department of Energy (DOE) recently reported.

In April 2021, the Biden Administration launched an Industrial Control Systems (ICS) Cybersecurity Initiative to meet its goal of strengthening the cybersecurity of the critical infrastructure across the country.

The initiative was kicked off with a 100-day action plan for the U.S. electricity subsector led by the DOE’s Office of Cybersecurity, Energy Security, and Emergency Response (CESER) in close coordination with the U.S. Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency (CISA), and the Electricity Subsector Coordinating Council (ESCC).

On July 28, 2021, President Biden further emphasized the importance of this initiative and broader cybersecurity efforts through his National Security Memorandum on Improving Cybersecurity for Critical Infrastructure Control Systems.

The electricity subsector action plan is the first in a series of sector-by-sector efforts to protect the country’s critical infrastructure from cyber threats and leverages the important public-private partnerships established by Sector Risk Management Agencies, such as DOE for the energy sector, and CISA, DOE said.

Since the launch, CESER, CISA, and the electricity industry have made significant strides in support of the initiative, DOE said.

At least 150 electric utilities have adopted or committed to adopting technologies to further improve the security of the operational technologies (OT) and ICS that manage the nation’s electric systems, by enhancing the visibility, detection, and monitoring of these critical networks. The American Public Power Association (APPA) continues to reach out to members regarding participation in the initiative.   

DOE said that in furtherance of the initiative, control system cybersecurity experts at CESER, CISA, and the National Security Agency’s Cyber Directorate developed a set of ICS monitoring technology evaluation considerations for reference by the electricity subsector. These evaluation considerations, as recently updated, can be found here.

In addition to accelerating the deployment of OT/ICS cyber monitoring technologies, the initiative has also sparked a range of activities in the electricity subsector like incentivizing cybersecurity investments and discussing the value of cyber insurance, according to DOE.

DOE said that it is committed to continue working with the ESCC in support of this initiative and broader cybersecurity efforts.

DOE is also providing technical and analytical support to some of the smaller utilities in the U.S., municipal and rural cooperative electric utilities, through collaborations with APPA and the National Rural Electric Cooperative Association. “These collaborations will provide financial support to ensure that those utilities can deploy OT/ICS monitoring capabilities, perform risk assessments and architectural reviews, and provide training to utility workers using the technologies,” DOE said.

Meanwhile, DOE also recently issued an updated version of the Cybersecurity Capability Maturity Model (C2M2) to help utilities assess and improve the cybersecurity of their information and operational technology systems. DOE is encouraging all electric utilities to leverage C2M2 to assess the cybersecurity posture of their organizations to help make informed cybersecurity investment decisions.

Salt River Project To Expand Gas-Fired Plant to Integrate More Renewables, Boost Reliability

August 25, 2021

APPA News
August 25, 2021

Arizona public power utility Salt River Project (SRP) is seeking board approval to expand its Coolidge Generating Station, a quick-start natural gas power plant located in Arizona’s Southeast Valley.

The expansion will help SRP integrate more renewable energy resources into the power grid and allow SRP to provide reliable power to its rapidly growing customer base during times of peak electricity demand, including some of the hottest days in Arizona’s summer season, it noted in an Aug. 24 news release.

The Phoenix metropolitan area is experiencing population growth more than three times the national average and SRP is projecting significantly increased, near-term residential and commercial energy needs. This demand is rising especially as large industrial customers develop new and existing local operations.

If approved by the SRP Board, the expansion of the Coolidge Generating Station would add 820 megawatts (MW) of capacity produced by 16 natural gas turbines capable of ramping up to full production within 10 minutes.

“With the West facing power capacity constraints and lacking available power generation during peak energy usage periods, the proposed expansion of Coolidge Generating Station will help SRP reliably and safely serve energy at times of highest demand,” SRP said.

It will also steadily facilitate the addition of more renewable energy resources like solar and wind which can produce intermittent and varying power output. Added natural gas turbines will provide SRP customers quick-start, dependable energy that is available when renewable resources have fluctuations in output or are not producing power, and when battery systems are charging.

Because the proposed new gas turbines at Coolidge Generating Station can start quickly and will run in times of peak demand or when there is reduced renewable output, the added natural gas generation would not impact SRP’s ability to meet its sustainability goals, the utility noted.

SRP has committed to reducing carbon intensity by more than 65 percent in 2035 and by 90 percent in 2050 from 2005 levels. SRP’s sustainability commitments also include an increased pledge to add 2,025 MW of utility-scale solar energy by 2025. In addition, SRP plans to add 1,600 megawatt-hours of battery storage by 2023.

Rebates From Anaheim Public Utilities Help School District With EV Charging Infrastructure

August 25, 2021

by Paul Ciampoli
APPA News Director
August 25, 2021

The Anaheim Elementary School District in California recently dedicated four new electric school buses along with 14 electric vehicle (EV) chargers at its district office. Four additional buses are expected to arrive later this year.

The buses and a portion of the chargers were funded through a grant from the California Energy Commission and rebates from Anaheim Public Utilities assisted with EV charging infrastructure.

Replacing diesel buses with electric buses is an important goal for the school district, which serves 18,000 students, due to its many benefits – slashing gas emissions by up to 54,000 pounds per bus a year, significantly improving air quality inside and outside of the bus, and reducing operation and maintenance costs by 60%.

The dedication event, which took place in July, was hosted by the school district and included school board trustees, city officials, and state agencies.

Electric buses are part of a larger partnership with Anaheim Public Utilities. Two campuses have solar shade parking structures that provides renewable energy to the local grid. The school district has expressed interest in pursuing additional solar projects.

To learn more about public power utilities and bus electrification, click here.

Special Series: Potential Alternatives To Managing Insurance Risks – Part Three

August 25, 2021

by Tonya DeRivi
APPA News
August 25, 2021

Historically we have seen the insurance market cycle from either being competitive with few utilities seeing coverage problems, or “tight” as we explained earlier and see now. The American Public Power Association concludes our three-part insurance risk series by exploring ways in which public power utilities have sought, or could seek, alternatives to the increasingly limited availability and expense associated with traditional individualized commercial insurance options.  

One model that has been successfully used is “pooling” insurance coverage across multiple entities. This is common practice across state and local governmental entities – but it necessarily covers a broader spectrum of services, from police and fire to libraries and public utilities, and therefore may not offer industry-specific coverage that high-risk enterprises may need. Fortunately, this model can also be tailored to a specific industry – provided there is the capital available and know-how to do so.

Nearly four decades ago, some public power utilities in the Tennessee Valley found themselves in an untenable position: some had no options to buy liability insurance – at any price, according to Anthony Salvatore, an area senior vice president with Gallagher.

The Tennessee Valley Public Power Association (TVPPA) – a regional organization representing public power utilities within the Tennessee Valley Authority’s (TVA) multi-state service area – set out to fix that problem. They formed Distributors Insurance Company (DIC) in 1983 with a small amount of start-up cash and a $1 million letter of credit backed by TVA. Its goal was to make coverage available to all TVPPA members, tailor coverage to exposures unique to public power utilities, and to do so at competitive pricing. In the beginning, DIC had three member accounts with approximately $200,000 in total premium. Their portfolio has grown astronomically since: DIC now has 80 accounts with approximately $40 million in assets and $26 million in surplus. They spend a large amount on safety and loss control efforts, mission-critical endeavors specifically designed to help participating members.

Today’s insurance market issues – especially given what is happening in California – are not easily solved. “California is an incredibly difficult state for insurance companies; it’s not easy to do business in, it’s expensive, and there are problems there that the insurance industry simply cannot fix. These are issues that the state needs to address,” Salvatore said. “The wildfire situation has spooked the entire insurance industry to the point where liability and property insurance capacity has almost entirely dried up. We’ve even seen some of this reactivity from the Western states spread to our area here in the Southeast” he noted. “The market overall is very tight and has been tightening for many years. Then the pandemic pushed everyone over the edge.”

Indeed, one California-based public power utility saw their general liability rate increase 111% with their 2021 policy renewal, further indicative of how wildfire exposure is driving liability coverage and pricing. The insurance carrier has already said they will not offer a renewal in 2022. This utility also saw its total premiums for all lines of coverage nearly double over the last three years, with increasingly restrictive coverages. One of their insurance carriers has already said they may not offer a property insurance renewal in 2022.

What, then, could public power utilities do in this hardening insurance market?

We spoke with Washington, D.C.-based Arnold & Porter lawyers Charles Landgraf and Paul Howard to explore options. Together they have nearly 60 years of pertinent energy and insurance policy experience. 

The “pooling” model described above has worked for decades. Forming a model like DIC or the Public Utility Mutual Insurance Company (now a risk retention group) or Aegis (which provides liability and property coverage to mainly investor-owned utilities in the energy industry) would first require conducting a feasibility study, according to Landgraf.

Actuaries would conduct an actuarial study to explore allocations, lawyers would be needed to identify and work through issues, it would have to identify who could serve in the captive manager function – whether for one state, multiple states in a region, or nationally – and then work with brokers and deliver the necessary capital. The more narrowly it is applied, the easier the issues are to work through. Landgraf also noted that while a study exploring only one state’s regulatory law and liability systems would be easier, that also reduces the spread of risk and therefore limits the competitive pricing advantages of the pooling model.

Howard added that the federal Risk Retention Act is relevant because it allows a group captive manager to go national; an entity could be formed in one state to sell insurance to local public power utilities, for example, and then sell or “front” to public power utilities in other states without the added burden of becoming licensed in each state. This offers a nice tool as a multi-state solution – but is limited only to liability lines of business.

They estimated that such a study may cost anywhere from the low six-figures, for a limited regional approach, or high six-figures for a national feasibility study.

Landgraf and Howard suggested there may be intermediate steps public power utilities could take too.

“If this became an acute enough problem for state governments in the West, for example, you could in theory work to develop a multi-state compact,” Howard said. Community-owned utilities may carry a much more sympathetic message to relevant state leaders – namely, their governors and insurance commissioners – seeking regulatory relief through a mini risk retention policy model. Politically like-minded state leaders could work together to reach a mutual agreement allowing public power utilities to pool their capacity for self-insurance and to leverage access to global reinsurance. Landgraf explained that having the backing of state leaders through an interstate agreement to simplify and streamline regulations could, for example, allow a single entity to be domiciled and licensed in one state and serve the other states too.

“This may be something the Pacific Rim states could explore” given their like-minded politics and prior efforts by state leaders to work through climate change policies together, Landgraf said. Similarly, other like-minded states in a region could explore such interstate agreements to help their public power utilities navigate this increasingly difficult insurance market.

Landgraf noted that the insurance industry itself may be inclined to explore such efforts. “They are acutely aware of the different regional impacts climate change is having,” he said. The situation may be acute enough now that a mutual effort to work through region-specific solutions is primed. There is credibility on all sides: the insurance companies would want to help public power utilities create an insurance solution they could support, provided that the states work through existing regulatory problems, like multi-state licensing rules and to simplify regulatory hurdles; state leaders have seen first-hand the resulting damages of a changing climate and that more needs to be done to incentivize preventive measures within their own and nearby states; and publicly-owned utilities need affordable insurance solutions.

Another challenge with seeking multi-state relief is political. One must also consider that agreement across states in this arena involves elected governors and elected or appointed insurance commissioners, Howard added.    

The American Public Power Association is the voice of not-for-profit, community-owned utilities that power 2,000 towns and cities nationwide.  We celebrate our members that strengthen their communities by providing superior service, engaging citizens, and instilling pride in community-owned power.

Special Series: How Utilities Are Addressing Rising Risks And Insurance Premiums – Part Two

August 24, 2021

by Peter Maloney
and Tonya DeRivi
APPA News
August 24, 2021

Per member requests, the American Public Power Association presents this in-depth Public Power Current newsletter series on managing insurance risks. Thank you to the utility systems and industry experts for their contributions about what is happening in the insurance market that is affecting policy coverage and prices (Part 1); types of “best practices” utilities can utilize to minimize their exposure (Part 2); and what potential alternatives may be available to help in a challenging insurance market (Part 3). 

Yesterday we detailed how risks to utility operations are rising and, with them, the cost of insurance.

Several utilities are grappling with this problem, particularly in areas that have recently suffered through disasters.

“Insurance rates have gone up and it’s not just wildfires; everything seems to be elevated,” Russell Mills, director of risk management and treasurer at California’s Sacramento Municipal Utility District (SMUD), said.

Historically, SMUD has not made any wildfire claims, but the utility does have some assets in wildfire areas and, more broadly, operates in a region where wildfires are prevalent, and that proximity can affect perceptions of the risks SMUD faces.

In April 2019, Moody’s Investors Service revised its ratings outlook on SMUD’s outstanding revenue bonds to negative from stable to reflect the more challenging operating environment in California resulting from the impact of wildfires. Moody’s revised its rating on SMUD in May 2020, returning the public power utility’s outlook to stable.

The risks were addressed, but the lesson was clear. The risk environment is changing, and it is best to stay ahead of the problem. In returning the outlook to stable, Moody’s cited SMUD’s “comprehensive actions to shield itself from wildfire risk.”

Mills at SMUD said he is seeing premium increases “across the board.” To address that challenge, he said SMUD tries to differentiate its risk profile from that of other utilities when it makes its annual presentation to underwriters and brokers when it comes time to renew its insurance coverages.

In those meetings, SMUD is able to highlight the steps it has taken with its Upper American River project, a series of 11 dams and eight power houses in a high wildfire risk area on the slopes of the Sierra Nevada Mountains. There, SMUD has focused on vegetation management efforts, undergrounding wires, and hardening assets.

When it returned the utility to a stable outlook, Moody’s cited SMUD’s actions and the utility’s “multi-pronged approach” that included “a sizeable insurance policy and strengthening liquidity.”

Increasing insurance coverage is not the only tool in SMUD’s kit, though. The utility takes proactive steps by conducting probable maximum loss (PML) studies to better understand its risk exposures. SMUD also has been hardening its balance sheet as a precaution against possible disasters.

In 2015-16, SMUD had about $100 million in excess liability wildfire insurance coverage. Over a span of three years, the utility raised its coverage to $300 million and then trimmed it back down to about $250 million.

SMUD also bolstered its commercial paper program by 30 percent to $400 million, raised its operating cash on hand by one month, and is paying down debt to have the capacity to issue bonds if the need arises.

“All three work together – insurance, ratings, and reserves,” Mills said. “It shows our intent and wherewithal.” It also sends a message to the underwriter that the brunt of any liability is not solely on them, he said.

Overall, Mills recommends utilities prepare themselves against natural disasters by taking on mitigation projects, such as grid hardening or undergrounding, that can provide a utility with data they can present to underwriters. For cyber security threats, he recommends utilities take similar steps, such as following the North American Electric Reliability Corp.’s Critical Infrastructure Protection (CIP) standards and conducting in-house training programs and be prepared to show that the procedures are being followed.

So far, Mills said, no insurance company has turned them down or refused to renew a policy. SMUD also has been able to negotiate cuts in proposed premium increases for fire coverage on the order of 10 percentage points.

“At the end of the day, insurance is a means of transferring risk,” Mills said. “You have to own the risk, show that ‘we are part of this.’”

The Northern California Power Agency (NCPA) has worked with their new property insurer to identify further ways the joint action agency could prevent losses and manage their insurance risk exposure, according to Monty Hanks, chief financial officer and assistant general manager of administrative services.

“As many utilities across the nation have experienced, NCPA was faced with a continuation of a hardening property insurance market. Last year was the most challenging one due to some underwriters quoting our program at the last minute,” he said, which left NCPA with little time or negotiating room for better terms or lower premiums. “Despite this, we made a commitment to our members to hit the ‘reset’ button in our approach to procuring property insurance for our facilities,” Hanks said.

NCPA contacted new property insurance market players with expertise in the power generation sector – including FM Global, which insures more than a third of the Fortune 1000 companies. Hanks said that NCPA had traditionally marketed their program about three months prior to the policy’s expiration, but FM Global had never quoted it. “I never understood why – they are a huge player.”

Hanks learned that three months was not enough time for FM Global to perform their own due diligence. 

He found that the company’s engineering-first philosophy and approach, which helps clients become more resilient against natural disasters, matched NCPA’s core principles. 

“We engaged FM Global in early 2021 to build a plan, and that started with scheduling loss control visits,” he explained. “We learned very quickly that they were not like other property insurance companies. They were guided by the belief that most losses can be prevented, and they will dig deep to understand your business needs to help you reduce your risk,” Hanks said. Indeed, the company has its own research campus where they have studied floods, wind, fire, hail, explosions, etc. that provides them with the data spec sheets to help validate and support their engineering recommendations.

Because NCPA’s members are dependent upon power plants running to provide stable, cost-effective resources, their resiliency is critical.     

“One of FM Global’s recommendations was to improve our wildland fire vegetation management around our geothermal plant,” Hanks said. The plant is in a relatively high fire risk area, and although NCPA had always taken a proactive approach to vegetation management, “their studies indicated that we should do more, and recommended we create a clearance zone around the plant that maintains forested areas 330 feet away from plant buildings, especially the cooling towers.” Hanks said.

NCPA agreed and implemented the recommendation. “Now, NCPA feels like we have found a partner in the property insurance business. Working with FM Global to evaluate risk and complete recommended improvements will help us increase the resiliency of our plants against natural disasters – the work that we’ve done as a result will ultimately help us better manage our risks and control operational and maintenance costs,” Hanks said. 

Midwest Flooding

In the middle of the country, Nebraska’s Omaha Public Power District (OPPD) is facing similar challenges, though from a different type of natural disaster. In Nebraska, flooding is more of a concern than wildfires, but the effects can be just as devastating.

OPPD filed a claim as a result of the severe flooding that hit Nebraska in 2019. Researchers at the University of Iowa have linked such flood events to warmer weather, particularly higher temperatures in the Gulf of Mexico, a phenomena they say triggers “The Midwest Water Hose.”

For many utilities, rising flood waters have also meant rising premiums. For OPPD, that challenge is made even more difficult because they have coal-fired assets in their generation portfolio.

 Insurance coverage for new coal projects is already difficult to find in Europe, but it is a trend that is becoming more widespread and could become prevalent in America in the coming years, Daniel Laskowsky, director of risk management at OPPD, said.

In 2019, Chubb, a major insurer in the U.S., said it would no longer underwrite the construction and operation of new coal-fired plants or companies that generate more than 30 percent of their revenues from coal generation or mining. By one count, 19 major insurance companies now refuse or restrict their coverage of new coal projects.

“We are doing all we can” in the face of rising threats from natural disasters and increasing premiums, Laskowsky said. The insurance environment is “very challenging.” In the renewal process, OPPD has seen “some very large increases, double digit increases,” he said.

The district’s approach to rising insurance rates includes having a solid understanding of the utility’s risk tolerance, using market competition to his favor, and working with underwriters and brokers as partners where he can.

“Understanding your organization’s risk tolerance” is critical, Laskowsky said. “Internally you need to know how much risk you can take.” The usual way to do that is to look at historical risks. The challenge is predicting the future. That is something OPPD is trying to better understand. “It is not a perfect science,” Laskowsky said.

Laskowsky also recommends shopping around to compare insurance coverages and rates. “Competition is good,” he said. “It may not be something you do every year because you don’t want to burn the market,” he said, but if you can find a lower rate, “you have to be willing to fight for it” and “you have to be willing to commit” when that time comes in the negotiating process.

Laskowsky also says OPPD tries to form strong partnerships with its insurance underwriters and brokers. A utility should lean on its insurance brokers and use them as a resource because they have a broader view of the market and know what the rest of the industry is doing, he said. “We know them, and it helps when it comes to negotiations.”

In addition, Laskowsky said the district works with insurance underwriters that are structured as mutual companies that cater to the public power and energy sector. There is more of a partnership approach to doing business and, if a utility participates in the governance process as a member of the organization, “you can have some say in the insurance company’s processes,” he said.

Those are all considerations that public power utilities should consider when shopping for insurance or when they are engaged in coverage renewal process, Weber said. Insurance still remains the top method of risk transference, he said, and most public power utilities buy insurance for at least one line of coverage, but every utility differs in terms of size, location, assets and services offered.

Weber advised that insurance programs should be structured differently to provide proper coverage for a given utility’s risk exposures. A utility with generation assets is much different than a transmission and distribution utility, he said. “It’s not a one size fits all approach.”

Weber also noted that there are a handful of insurers that specialize in the public power space for American Public Power Association members. “Therefore, each insurance carrier has a pretty good idea of the exposures and landscape of the public power sector.” He recommended that members “should make sure their trading partners are financially stable and know what coverages they are getting from their insurance provider.”

Utilities can “differentiate themselves in the market by providing thorough underwriting data and starting the renewal process well in advance,” Weber said. “Underwriters are requiring more data than ever before, and it is important for each utility to be ready to answer and have prepared the underwriting data that might be requested.”

“We recommend also getting to know your underwriter and building the relationship,” Weber said. “At the end of the day, it is a relationship business.”

In Part 3, tomorrow, we will explore ways in which public power utilities have sought, or could seek, alternatives to traditional individualized commercial insurance options.