Legislation Would Set Up Board to Govern Florida Public Power Utility Gainesville Regional Utilities
May 9, 2023
by Paul Ciampoli
APPA News Director
May 9, 2023
The Florida Senate recently passed legislation that would set up a board to govern Florida public power utility Gainesville Regional Utilities. The bill was sent to the desk of Gov. Ron DeSantis for him to either sign or veto.
At issue is H.B. 1645, which would amend the Gainesville City charter to establish the Gainesville Regional Utilities Authority to govern GRU. The bill details the Authority’s governance and leadership structure, as well as duties and powers.
Among other things, the bill provides that the Authority will consist of five members appointed by the governor, to include at least one member from outside the city boundaries, serving four-year terms. It also sets qualification requirements for Authority members and provides for a citizen nomination solicitation process.
It would also limit transfers from the utility fund to the city “to the aggregate of utility system net revenues less the flow of funds and requires any remaining funds after the transfer to be dedicated to additional debt service or used as equity for future capital projects,” according to an analysis of the bill provided by Florida House staff.
The bill’s language mirrors a referendum rejected by Gainesville voters in November 2018 by more than 59 percent of the vote, the City of Gainesville said in March.
“Political appointees would deny Gainesville voters the right to elect members of GRU’s governing body. This move would disenfranchise Gainesville voters,” said Gainesville Mayor Harvey Ward in March.
“Right now, our neighbors can serve on the Utility Advisory Board, or can come to city commission meetings or can talk to commissioners in the aisles of the grocery store or the hardware store. They have direct access to their decision-makers. This move would silence the voices of an engaged citizenry,” he said.
California Coalition Seeks Action to Address Interconnection Delays
May 9, 2023
by Paul Ciampoli
APPA News Director
May 9, 2023
A coalition that includes cities, towns, and counties in California, community choice aggregators and state energy industry groups recently urged California officials to take action to address interconnection delays that the coalition says are impeding a wide range of projects.
“We the undersigned parties — representing cities, towns, and counties; Community Choice Aggregators; and energy, rural, business, and environmental and climate groups — urge California policy makers to take urgent action to address unacceptable delays in connecting new construction, critical services, renewable energy, building decarbonization, and other projects to the state’s distribution and transmission grids,” the April 26 letter states.
The letter was sent to California Assembly and Senate leadership, the California Public Utilities Commission and the Governor’s office.
“California is facing an unprecedented climate crisis and is pursuing bold efforts to transition to zero-carbon energy. At the same time, California has a housing availability and affordability crisis which demands the rapid construction of new housing,” the letter said.
“These goals cannot be realized because many projects cannot connect to the power grid. Interconnection delays, ranging from months to years, harm residents, businesses, local job creation and economic development efforts, and state and local economies.”
Severely delayed and abandoned electrical projects “are a growing problem in communities throughout California. Hundreds of local projects spanning rural to urban have been delayed or cancelled, including service extensions to new affordable housing units and critical service sites ranging from hospitals to police/fire stations,” the coalition said.
Hookups for new electric vehicle charging stations and utility-scale and customer-sited renewable energy projects are also in peril, the letter said.
Interconnection delays and resulting project cancellations “threaten California’s ability to respond to the climate and housing crises; prevent Californians from accessing important critical services; and harm communities by increasing project costs and reducing job opportunities.”
The coalition urged California policy makers “to take immediate and decisive action to ensure interconnection and service extensions to new construction, renewable energy, building decarbonization, and other electrical projects are completed in a timely manner.”
Lyft, Peninsula Clean Energy EV Ride-Hailing Program Surpasses 250,000 Rides
May 8, 2023
by Paul Ciampoli
APPA News Director
May 8, 2023
A ride-hail electrification pilot program launched in spring 2022 by California community choice aggregator Peninsula Clean Energy, Lyft and one of its Express Drive rental partners, Flexdrive, reached a key milestone by providing more than 250,000 electric vehicle rides across more than three million all-electric miles driven in the Bay Area.
As part of the first pilot program to specifically offer incentives for drivers to rent electric vehicles for use in a ride-hailing service, Lyft drivers have given rides in all of the 100 all-electric Kia Niros being utilized for the program from Flexdrive.
Since launching in April 2022, more than 300 ride-hail drivers have rented an EV, many of them for multiple months at a time. Peninsula Clean Energy is providing $500,000 toward a subsidy for ride-hail drivers to rent EVs at an affordable price.
Drivers are trained on EV use and benefits, and vehicles also carry EV education information for riders. Lyft provides drivers with a chance to opt into an unlimited fast charging plan through Lyft’s charging partners.
The program also features EV onboarding for drivers and access to an unlimited fast charging plan. Collection of EV fleet utilization and charging data will inform and facilitate further expansion among the ride-hailing fleet.
San Francisco Officials Urge PG&E to Reconsider Position on Sale of Grid Assets
May 8, 2023
by Paul Ciampoli
APPA News Director
May 8, 2023
In a May 3 letter to Patricia Poppe, CEO of California investor-owned utility Pacific Gas & Electric, San Francisco officials including Dennis Herrera, General Manager of the San Francisco Public Utilities Commission, urged the utility to reconsider its position related to the city’s plan to buy PG&E’s grid assets, which would allow the city to become responsible for all electric distribution service within San Francisco’s boundaries.
The letter also asked for information on recent power outages that affected the city.
Joining Herrera in the letter were Mayor London Breed, City Attorney David Chiu and President of the Board of Supervisors Aaron Peskin.
City Acquisition of PG&E Assets
“The city is focused on ensuring timely access to affordable, reliable, and clean electricity for our businesses, residents, and essential services,” the letter said. “After a substantial commitment of time and resources on this issue, we remain united in our belief that the only path forward to achieve these goals is for the city to become responsible for all electric distribution service within our own boundaries.”
The city is uniquely positioned to acquire these assets, the San Francisco officials said, noting that for over a century, the city, through the San Francisco Public Utilities Commission, has owned and operated its own electric utility (Hetch Hetchy Power).
Through Hetch Hetchy Power, the city supplies electricity to municipal facilities, schools, hospitals, public transportation, and other facilities. In 2016, the city launched CleanPowerSF, San Francisco’s Community Choice Aggregation program.
Through these two programs, the San Francisco PUC already supplies nearly 80% of the electricity consumed within the city, but both programs rely on PG&E for use of its local distribution grid.
“This arrangement is unusual, a source of friction for both the city and PG&E, and inconsistent with the City’s goals and objectives,” the letter noted.
“In recent years especially, this arrangement has caused substantial delays in the provision of essential services. After many decades, it is time for the city to gain the energy independence that comes from owning its local grid,” the San Francisco officials said.
They pointed out that during PG&E’s bankruptcy, the city submitted a proposal to purchase PG&E’s assets serving San Francisco. After PG&E emerged from bankruptcy, the city reiterated its desire to engage in a mutually beneficial negotiation.
“These calls went largely unanswered under previous PG&E leadership, so the city has moved forward under state law. But we continue to hope you will reconsider the company’s position and realize that a cooperative process leading to an agreement would provide significant value to PG&E’s customers and shareholders.”
The letter said that PG&E’s recently announced asset sales illustrate the company’s ongoing need for capital and the limited capital market options available. “As PG&E explained in a FERC filing, asset sales can ‘strengthen PG&E’s financial condition; allow PG&E to more efficiently access equity capital to fund significant capital requirements to improve the safety and reliability of its system; and be consistent with PG&E’s path to an investment grade credit rating,’” the letter said. “The city’s purchase of the PG&E assets serving San Francisco would provide those same benefits.”
Whether or not PG&E decides to work with the city on a negotiated transaction, “we want to engage cooperatively with PG&E to determine the most reliable, efficient and least disruptive means of separating PG&E’s electric system from the assets that the City intends to acquire,” the San Francisco officials said. “This will benefit PG&E and all ratepayers and allow PG&E to focus more on important matters such as wildfire hardening and improving the overall reliability, capacity, and safety of its system.”
The officials said that engaging collaboratively on the technical aspects of this project is consistent with PG&E’s core goals of providing safe, reliable and efficient service to its customers.
“We request that PG&E’s engineering team meet with the city’s engineering team to identify the preferred engineering solutions for separation. We are prepared to begin these meetings as soon as possible. We look forward to further discussions with you on both of these matters and hope to achieve expeditious and mutually beneficial resolutions.”
Power Outages
The letter also notes that the city recently has experienced several power outages that created significant public health and safety risks and economic disruption.
“We are concerned about the frequency and duration of these outages and PG&E’s response to them. The city currently lacks sufficient information about these outages to understand whether or how PG&E could have prevented them or minimized their impact. But PG&E has not met its obligations to provide accurate, responsive, and informative communications to affected customers and local officials,” the officials said.
The city “requires information from PG&E about these recent outages and seeks PG&E’s commitment going forward to provide affected customers and local officials timely and accurate information about the nature of the outage, what PG&E is doing to restore service, and its best estimate of when it will restore service.”
Virtual Power Plants Could Save Utilities $15-$35B in Capacity Investment Over 10 Years: Report
May 8, 2023
by Paul Ciampoli
APPA News Director
May 8, 2023
A new report from the Brattle Group finds that 60 gigawatts of virtual power plant deployment could meet future U.S. resource adequacy needs at $15–$35 billion less than the cost of the alternative options over the ensuing decade.
The report, Real Reliability: The Value of Virtual Power, provides an introduction to VPPs and models their value and performance versus conventional resource adequacy options.
The report, which was prepared for Google, compares the net cost of providing 400 MW of resource adequacy from three resource types: a natural gas peaker, a transmission-connected utility-scale battery, and a VPP composed of residential demand flexibility technologies.
The study also identifies key near-term activities for enabling the deployment of VPPs, which currently are adopted well below their market potential.
VPPs are distributed energy resource portfolios that can include technologies such as rooftop solar, smart thermostats, smart water heaters, electric vehicles, and distributed batteries.
The report also found that 60 GW of VPP could provide over $20 billion in additional societal benefits – such as those related to emissions and resilience – over ten years.
Fitch Assigns A- Rating to Bonds issued by the Lower Colorado River Authority on behalf of Transmission Entity
May 8, 2023
by Paul Ciampoli
APPA News Director
May 8, 2023
Fitch Ratings has assigned an ‘A+’ rating to bonds issued by Texas-based Lower Colorado River Authority on behalf of the Lower Colorado River Authority Transmission Services Corp.
Specifically, Fitch assigned the A- rating to approximately $481.5 million transmission contract refunding revenue bonds, series 2023A.
Proceeds will be used to refinance approximately $62 million in outstanding series 2013A bonds, refinance approximately $420 million in commercial paper into long-term debt, fund a debt service reserve fund and pay costs of issuance.
In addition, Fitch affirmed the ‘A+’ rating on approximately $3.2 billion in outstanding transmission contract refunding revenue bonds.
The rating outlook is Stable.
LCRA is the largest public power wholesale provider in Texas and provides energy services in a 55-county service area. LCRA provides wholesale power to municipal electric utilities and electric distribution cooperatives in Texas. It also manages and distributes water supply and provides flood control along the lower Colorado River in Texas.
Fitch said that the ‘A+’ rating reflects the strong financial profile of the Lower Colorado River Authority Transmission Services Corp. in the context of its very low operating risk profile and the strength of its regulated revenue framework in the Electric Reliability Council of Texas market, in which it operates.
Transmission revenues are regulated by the Public Utility Commission of Texas and collected from all retail customers within ERCOT, Fitch noted. The rating agency said that the largest utilities contributing to the Lower Colorado River Authority Transmission Services Corp.’s transmission revenues have a collective midrange purchaser credit quality and primarily consist of the largest electric utilities operating within the state.
Leverage (measured by net adjusted debt to adjusted funds available for debt service) was below 9.0x over the last decade, despite large additional capex investments in new and existing transmission assets, primarily funded from new debt. The regulatory process in ERCOT allows capex additions to be included in the transmission tariff in a timely manner, allowing revenues to keep pace with the increased debt costs. The planned increase in capital spending at TSC over the next five years should be accompanied by supporting revenues and not result in a material dilution of the utility’s key financial ratios.
In addition, Fitch views the revenue consistency and low operating risk of transmission-only utilities as enabling these utilities to accommodate slightly higher leverage levels than utility peers with generation and retail electric business lines.
LCRA created the Lower Colorado River Authority Transmission Services Corp. as a nonprofit corporation for transmission operations after a 1999 state law changed how electric utilities manage and operate electric transmission facilities.
The law required utilities to separate electric generation and transmission operations as part of preparations for a deregulated retail electric market. The law also allowed LCRA to expand its transmission facilities and operations beyond its traditional Central Texas service area.
On Jan. 1, 2002, LCRA transferred ownership of its transmission facilities to the Lower Colorado River Authority Transmission Services Corp. to satisfy the state’s requirements.
Since its creation, the Lower Colorado River Authority Transmission Services Corp. has invested more than $3.9 billion in transmission projects to meet the growing demand for electricity, improve reliability, connect new generating capacity, address congestion problems that affect the competitive market and help move renewable energy to the market.
Pacific Northwest Forecast Projects a 20% Increase in Load Over the Next Five Years
May 8, 2023
by Paul Ciampoli
APPA News Director
May 8, 2023
The Pacific Northwest Utilities Conference Committee released its 2023 Northwest Regional Forecast on May 4, which projects a 20 percent increase in load over the next five years. This equates to roughly 4,000 average megawatts.
“The 2023 forecast reflects accelerated and steeper regional load growth compared to previous years. Much of this load growth is attributed to more certainty in prospective new industrial loads over the next five years,” the report said.
“The forecast is significant in light of recent extreme weather conditions that have already resulted in higher demand, emphasizing the importance of having enough capacity to meet rising energy needs,” the PNUCC said.
“Utilities in the region are increasing the pace of their plans for new renewable resources and energy storage, and identifying new transmission needs in their preferred resource portfolios,” said PNUCC Executive Director Crystal Ball in a statement. “As demand and resources grow, working together to increase regional coordination and develop innovative solutions will be crucial to maintaining a reliable interconnected grid.”
PNUCC’s updated 10-year forecast serves as an annual barometer for the region’s electric power system and provides a snapshot of electricity demand and the existing and proposed generation resources Northwest utilities are planning.
Ball said that the 2023 forecast doesn’t include emerging technologies, such as advanced nuclear, offshore wind, renewable hydrogen, and long-duration storage, that are considered part of the future grid.
“However, utilities anticipate technological advancements will be required to further diversify the mix of clean generation, and utilities are expected to update their plans as they gain more information about future loads, resources and transmission opportunities,” the PNUCC said.
For the first time, the forecast projects the region needs higher amounts of summer capacity resources to meet summer peak hour demand compared to the winter capacity needs. Winter peak hour demand remains higher than summer. In addition to summer and winter peak needs, the forecast monitors annual energy needs.
This year’s forecast shows more growth in the annual energy deficit as well. Watching changes in these trends provides the region with greater situational awareness and identifies areas where more coordination can help, the PNUCC said.
Utilities are predicting greater energy efficiency savings compared to last year’s forecast, recognizing energy efficiency as a key resource in the region. The ten-year savings projected in the 2023 forecast are slightly higher as utilities seek more savings to meet growing capacity and energy needs during the clean energy transition.
“Utilities also continue to deploy and find new ways to rely on customers to reduce energy use at peak times, such as incentivizing shifting energy usage to different times of day,” the PNUCC said.
Two elements that will impact future load are electrification and climate change, both of which are expected to unfold and affect loads differently across the region. The potential impact of electric vehicle and heating system adoptions is slight in this year’s forecast but is expected to increase over the next several years.
Utilities have a strategic focus on the need for upgraded and new transmission infrastructure to ensure a reliable and resilient grid that can accommodate the forecasted changes, the PNUCC said.
“Planning and construction of new transmission infrastructure is underway and more enhancements to the transmission system will be needed as it is a critical component to integrating new resources and delivering generation to load centers,” it said.
The PNUCC is a not-for-profit trade association of consumer-owned and investor-owned utilities and other power industry partners.
U.S. Offshore Wind Is Growing, With Nearly 51,400 Megawatts in Development: Report
May 8, 2023
by Peter Maloney
APPA News
May 8, 2023
The U.S. has a pipeline of offshore wind projects totaling nearly 51,400 megawatts, according to a report by the American Clean Power Association.
The Offshore Wind Market Report noted that there are 32 leases in active development and within those leases there are 18 projects in early development and 18 projects in advanced development. Early development projects make up the majority of the pipeline, representing 33,875 megawatts, the report said. There are also 16,564 megawatts of offshore wind projects in advanced development, and 938 megawatts under construction.
In total, there are 51,377 megawatts of offshore wind in the development pipeline in the United States, of which 84 percent, or 43,115 megawatts are on the East Coast with the remaining 8,262 megawatts spread across five leases on the West Coast.
New York State, with 4,362 megawatts, has the most offshore wind capacity in the development pipeline, followed by New Jersey with 3,758 megawatts, the report said.
Public power utilities in New York State are pursuing offshore wind energy. In January 2017, the Long Island Power Authority’s Board of Trustees approved a power purchase agreement to buy energy from New York’s first offshore wind farm.
Offshore wind project development, construction and operations are expected to support up to 83,000 American jobs by 2030, with industry investment set to deliver up to $25 billion per year in economic output, the report found.
The report also found that offshore wind development has domestic shipbuilding, with more than 30 new vessels on order or under construction to support the industry. There are also 14 facilities announced or under construction and investment announcements for major offshore wind components exceeding $1.7 billion.
Nevertheless, despite the growth of offshore wind development, project costs are rising because of supply chain disruptions, commodity price increases, macroeconomic inflationary pressures, and higher interest rates, the report’s authors said, noting that rising steel prices pose a particular challenge for offshore wind developers, as steel represents a significant portion of project material costs.
In addition, lengthy and unclear permitting and regulatory timelines pose further challenges for offshore wind developers, the report said.
First-Ever LADWP Women’s Career and Wellness Expo Details Utility Career Paths
May 8, 2023
by Paul Ciampoli
APPA News Director
May 8, 2023
More than 1,500 Los Angeles students, community members, employees and prospective job candidates gathered on May 6 at the Los Angeles Department of Water and Power’s Truesdale Training Center for the inaugural Women’s Career and Wellness Expo.
The location usually used for line worker training was transformed to showcase a variety of utility careers, many available to women, in a family-friendly setting, the utility said.
The regional event included a recruitment fair with information about skilled craft and professional jobs at LADWP, along with equipment demonstrations and other hands-on activities.
The event aligns with the LADWP goal to help narrow the nation’s gender and racial pay gaps by improving access to employment, promoting the benefits of civil service and union representation, and connecting high school students, particularly underrepresented female students, to career paths in STEM (science, technology, engineering and math).
Out of the more than 11,000 employees working for LADWP, approximately 25 percent are women.
Attendees were able to discuss careers at LADWP directly with current employees, who helped provide relevant knowledge, experience and expertise. Staff members also participated in live demonstrations focusing on line workers, electric safety and utility equipment.
LADWP’s partnerships with local non-profit and community-based organizations helped result in a strong turnout with a “Caravan to a Career” that brought several hundred students to the expo.
The event was conceived by the Board of Water and Power Commissioners and the Department’s Women’s Council, an LADWP employee resource group formed in 2021 with a mission to support, elevate and advance women in the LADWP workforce by promoting opportunities for leadership, mentorship, recognition and work-life balance, while promoting equity, diversity and inclusion.
Bills in Florida That Would Have Undercut Public Power Fall Short in Legislative Session
May 8, 2023
by Paul Ciampoli
APPA News Director
May 8, 2023
Legislation in Florida that would have substantially limited the ability of public power electric utilities to transfer revenues to cities’ general funds failed to cross the finish line in the recently completed state legislative session, which came to an end on May 5.
The Florida Municipal Electric Association, which opposed the legislation (HB 1331 and SB 1380), previously said that the bills would inordinately affect rural, often economically distressed, communities that have a weaker tax base. In late March, the City Council of Jacksonville, Fla., passed a resolution critical of the legislation. Several other Florida public power cities followed suit, including Leesburg, Newberry, Havana, Green Cove Springs, New Smyrna Beach, and Wauchula.
Historically, public power utilities in Florida and across the United States have, under their constitutional Home Rule Authority, transferred enterprise fund revenue from assets owned and operated by the local government to the general government budget.
The transfer rate varies city by city based on operating expenses, debt service costs, and the desired level of reinvestment in the assets owned. Municipal utilities focus on reinvestment in their communities.
Florida legislators have in recent years unsuccessfully filed legislation aimed at capping or culling the general fund transfers of Florida’s municipally owned utilities. This year’s legislation addressed additional issues such as representation of outside-the-city customers, outside city surcharges, and limits on utility revenue transfers related to all municipal utilities.