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APPA Responds to FERC Proposals on Cybersecurity Rate Incentives

November 17, 2022

by Paul Ciampoli
APPA News Director
November 17, 2022

The Federal Energy Regulatory Commission (FERC) should reconsider several aspects of a Notice of Proposed Rulemaking (NOPR) on cybersecurity rate incentives including a proposal that would allow a 200-basis point return on equity (ROE) adder on eligible investments, the American Public Power Association (APPA) said in recent comments filed at FERC.

If the Commission allows an enhanced ROE on eligible investments, it should limit the incentive to 50 basis points, as the proposed 200-basis point adder is more than necessary to promote cybersecurity investment and could impose excessive costs on consumers, APPA said in its comments filed this month.

The comments responded to the FERC NOPR issued in September.

At the outset of its comments, APPA noted that it supports prudent utility investment to address the growing cybersecurity threats faced by the nation’s electric grid.  APPA also recognizes that, in adding section 219A to the Federal Power Act (FPA) Congress has directed the Commission to adopt incentive rate treatments (or performance-based rates) to promote certain cybersecurity-related investments. 

“While many features of the NOPR strike an appropriate balance between encouraging cybersecurity investment and protecting customers from unreasonable costs, APPA respectfully submits that certain aspects of the NOPR do not fully comply with the FPA’s requirements for incentive rate mechanisms, which remain fully applicable to any rule promulgated under section 219A.”

APPA urged the Commission to modify certain of the NOPR’s proposals while preserving the features of the NOPR designed to protect customers and ensure transparency.

NOPR Details

Under the NOPR, cybersecurity expenditures would be eligible for an incentive including both expenses and capital investments associated with advanced cybersecurity technology and participation in a cybersecurity threat information sharing program. 

Also, eligible cybersecurity expenditures would be voluntary and have to materially improve the utility’s cybersecurity posture. FERC proposes to establish a pre-qualified list of cybersecurity expenditures that are eligible for incentives that would be publicly maintained on FERC’s website.

The proposed incentives would take two forms: a return on equity adder of 200 basis points, or deferred cost recovery that would enable the utility to defer expenses and include the unamortized portion in its rate base, on which the utility could earn a return (the Regulatory Asset Incentive).

Approved incentives, with certain exceptions, would remain in effect for up to five years from the date on which the investments enter service or expenses are incurred.

Incentives Should Be Narrowly Tailored to Satisfy the Requirements of FPA Section 219A

Along with its concerns about the ROE adder proposal, APPA also said that FERC must ensure that there is a nexus between the incentives and project investment decision.

Such a requirement conforms the Commission’s regulations to precedent requiring the Commission, in awarding rate incentives under the just and reasonable standard, to see to it that the increase is in fact needed, and is no more than is needed, for the purpose, it said.

“Evaluating applications for incentives to ensure that there is a nexus between the incentive and the applicant’s investment decision is also necessary to verify that incentives are not awarded for actions that a utility has already taken or is already required to take,” APPA said.

While Congress has required FERC to adopt a rule providing incentives, the Commission, in designing such incentives, must conform to longstanding requirements for just and reasonable rate incentives, it said.

In considering the design of incentives under FPA section 219A, the Commission should also take into account evidence that lucrative incentives are generally unnecessary to promote cybersecurity investment, APPA argued.

The Commission Should Limit the Regulatory Asset Incentive to 50 Percent of Project Investment

APPA noted that in connection with the Regulatory Asset Incentive, the NOPR asks whether it would be preferable to permit only 50% of incentive-eligible expenses to be treated as regulatory assets.

“APPA encourages the Commission to adopt this change from the NOPR’s proposal to allow the entire qualifying expenditure to be accorded regulatory asset treatment.”

APPA also said that incentives should not be available for investments that utilities are required to make or that have already been made.

Southeast Energy Exchange Market Begins Operations

November 16, 2022

by Paul Ciampoli
APPA News Director
November 16, 2022

The Southeast Energy Exchange Market (SEEM) on Nov. 9 announced that it has initiated operations.

The new SEEM platform will facilitate automated, sub-hourly trading, allowing participants to buy and sell power close to the time the energy is consumed, utilizing available unreserved transmission. Participation in SEEM is open to any entity that meet qualifying requirements. 

Founding members of SEEM include Associated Electric Cooperative, Dalton Utilities, Dominion Energy South Carolina, Duke Energy Carolinas, Duke Energy Progress, Georgia System Operations Corporation, Georgia Transmission Corporation, LG&E and KU Energy, MEAG Power, N.C. Municipal Power Agency No. 1, NCEMC, Oglethorpe Power Corp., PowerSouth, Santee Cooper, Southern Company, and TVA. 

Four Florida energy companies – Duke Energy Florida, JEA, Seminole Electric Cooperative and Tampa Electric Company – have signed agreements to join as members of SEEM effective Jan. 1, 2023 and expect to initiate active energy trading in mid-2023. 

With their addition, the SEEM footprint would include 23 entities in parts of 12 states with more than 180,000 MW (summer capacity; winter capacity is nearly 200,000 MW) across two time zones.

TVA Pilot Program to Examine Installing Solar Projects at Closed Coal Ash Sites

November 16, 2022

by Paul Ciampoli
APPA News Director
November 16, 2022

The Tennessee Valley Authority (TVA) Board of Directors recently approved a pilot program to determine if closed coal ash sites are suitable for utility-scale solar projects.

Pending environmental reviews and regulatory approval, the $216 million pilot project would explore an innovative approach to repurpose a closed coal ash site at the Shawnee Fossil Plant to advance TVA’s clean energy efforts, TVA said.

TVA previously issued a request for proposals for conducting a Valley Decarbonization Study in calendar year 2023. The study is intended to model pathways to further reductions in emissions throughout the economy.

The Board recognized TVA’s fiscal year 2022 decarbonization initiatives guided by the agency’s strategic priorities and guiding principles:

Columbus, Ohio, Unveils First Solar-Powered Microgrid

November 16, 2022

by Paul Ciampoli
APPA News Director
November 16, 2022

The City of Columbus, Ohio’s Department of Public Utilities recently put into operation its first-ever solar-powered microgrid.

The purpose of the microgrid, which is located at the Tussing Water Booster Station, is to serve as a backup power source to the main power grid.

If grid power is lost or disrupted, the microgrid will enter “island mode” and utilize the onsite solar and battery energy storage system to operate one of the three booster pumps at the station, ensuring residents continue to receive safe and clean drinking water, the city noted in a Nov. 3 news release.

The microgrid consists of two main components — a 100-kilowatt solar panel system and the battery energy storage system. The solar energy can be stored in the batteries or converted for use in island mode to power the pump station. The battery system has a power rating of 442 kW.

The water towers can supply drinking water for 1-2 days without electricity, but the microgrid is designed to extend its ability to supply water during an outage for a minimum of six hours with the potential to extend it for many days using energy supplied by the solar panels.

“This microgrid will support residents continuing to receive safe, clean drinking water during times of climate crisis and emergency situations,” said Kristen Atha, director of the Department of Public Utilities.

In an interview with Public Power Current, Phil Schmidt, project manager for the Division of Water Tussing Water Booster Station Solar Microgrid, detailed why the water booster station was chosen for the project’s location.

He noted that available space on the site was a key driver for the microgrid’s site selection. “About a decade ago we built a second water tower and as part of that process we acquired some additional land,” Schmidt said. “We had some green space available, and I think that was just the big driver for this project…we needed the footprint to be able to put these solar panels on the property, so this site was a good candidate.”

The city’s climate action plan commits Columbus to achieve carbon neutrality by 2050. One of the actions under the plan aims to evaluate microgrids and storage projects, with targets to complete a prioritization study by 2025 and implement five microgrid pilot projects by 2030. 

Erin Beck, Assistant Director in the city’s Sustainable Columbus office, told Public Power Current that the climate action plan “is really meant to be our roadmap” for how the city will achieve carbon neutrality by 2050 “and how we’re imparting equity and environmental justice to our residents here in Columbus.”

Beck noted that “another key goal in our climate action plan is we’re looking for at least a 45 percent reduction in emissions by 2030.” The plan includes five sections, 13 strategies and 32 distinct actions.

The microgrid project has been in development since 2019 and was supported through a funding initiative and partnership with investor-owned AEP Ohio.

When asked about where things stand with planning for the other microgrid pilot projects, Beck said, “From the wider community perspective, the goal is to do five by 2030 and that is across our entire community, so that could be either with” the city’s Division of Power or working again with AEP Ohio “to identify some potential other sites.”

She noted that “one other thing we’re really looking to do throughout the community is establish a network of resiliency hubs and so we’re really trying to tie some of the microgrid work into that resiliency hub work as well.”

The climate action plan notes that “every neighborhood is unique, and as such the needs of its members vary. The development of localized resilience hubs can respond to its community depending on the situation. Whether it is natural disasters or utility outages, a trusted community member will know how to reach and assist its most vulnerable citizens.”

Department of Energy Announces Nearly $9 Billion for Home Energy Rebate Programs

November 15, 2022

by Paul Ciampoli
APPA News Director
November 15, 2022

The U.S. Department of Energy (DOE) recently announced nearly $9 billion will be available to states and Tribes from the Inflation Reduction Act for consumer home energy rebate programs.

DOE estimates that the home energy efficiency and electrification consumer rebates authorized will save households up to $1 billion annually.

From November through January, DOE will hold a series of listening sessions to engage a wide array of stakeholders, including direct engagement with states and Tribes, labor, industry, and others, on these consumer rebate programs.

Following the listening sessions, DOE will issue a Request for Information for public input in early 2023.

DOE anticipates that the funding to states and Tribes will be available by Spring 2023, and the rebates will be available to the public later in the year.

The Inflation Reduction Act includes multiple tax incentives and investments to bolster consumer home energy rebate programs.

Programs that states will implement include:

The home energy performance-based, whole house rebates (HOME Rebates) for:

The high-efficiency electric home rebate program to:

To learn more about home energy efficiency and electrification rebates available through Inflation Reduction Act, visit https://cleanenergy.gov/.

NYPA’s Sylvia Louie Receives DOE Clean Energy Education and Empowerment Award

November 15, 2022

by Paul Ciampoli
APPA News Director
November 15, 2022

Sylvia Louie, a director of business development at the New York Power Authority (NYPA), is the recipient of a Department of Energy (DOE) 2022 Clean Energy Education and Empowerment (C3E) award.

The C3E Initiative aims to close the gender gap and increase the participation, leadership, and success of women in a diverse array of clean energy fields.

As part of the NYPA development team, Louie focuses on development of large-scale renewables, energy storage, and transmission projects. Along with a variety of projects, she supports opportunities for public–private collaborations to help achieve state energy goals. 

Louie joined NYPA in 2009 as a mechanical engineer, providing engineering design skills to the Energy Services & Technology group and supporting implementation of energy-saving initiatives for NYPA customers. In 2012, she joined the Clean Energy Technology group, focusing on development of clean energy technology projects.

In 2014, she entered the executive office as a Special Project Manager, helping NYPA leadership set strategic initiatives for a clean energy future. Prior to joining NYPA, she spent four years as a design engineer of HVAC systems for a small consulting engineering firm.

Each awardee receives a cash gift of $8,000 and national recognition of their efforts. 

Now in its 11th year, the C3E Initiative is led by DOE in collaboration with the MIT Energy Initiative, Stanford University’s Precourt Institute for Energy, and the Texas A&M Energy Institute.

Additional information about the awards including other winners is available here.

California PUC Issues Revised Proposal on Solar Net Metering Rates

November 14, 2022

by Peter Maloney
APPA News
November 14, 2022

The California Public Utilities Commission (CPUC) recently issued a proposal to revise the state’s Net Energy Metering (NEM) solar tariff to better reflect the value of solar power generation to the state’s grid.

The proposal would replace NEM payments to utility customers tied to the retail electric rate with payments linked to the avoided cost a utility would pay to buy the electricity elsewhere. The CPUC said the aim is to provide the largest incentives for solar exports during the late afternoon and early evening hours when the grid is the most stressed and prices are highest and minimize incentive payments during times when demand, and prices, are lowest, such as midday during a week day.

The proposed tariff would also provide extra electricity bill credits to residential customers who adopt solar or solar paired with battery storage in the next five years, which would be paid on top of the avoided cost bill credits. Customers would be able to lock in the extra bill credits for nine years.

The proposed tariffs would also provide low-income customers more access to solar power by providing a larger amount of extra bill credits to ensure the solar system payback is just as attractive as the payback for higher-income customers.

The proposal would cover 150 percent of a customer’s electricity usage to accommodate future electrification of appliances and vehicles, the CPUC said.

The proposal would have no impact on existing rooftop solar customers who would maintain current compensation rates.

“NEM has helped California make significant progress toward meeting its climate goals, but now that California has nearly 25 gigawatts (GW) of solar on our grid, needs have shifted,” the CPUC said in a statement. “It is now essential to address grid reliability shortfalls during ‘net peak’ hours in the early evening when the sun is down and we rely on fossil fuels to meet demand.”

In December 2021, the CPUC issued an initial proposal to reform its NEM tariffs and to encourage customers to combine energy storage with their solar systems. The proposal also included a grid participation charge of $8 for every kilowatt hour of rooftop solar power produced. The proposal met with heavy criticism from many stakeholders, and in January the commission postponed a vote on the proposal.

Like the December proposed revisions, the new proposal would use avoided costs to determine incentive levels, but the new proposal does not include the controversial participation charge.

Under the new proposal, the CPUC said “average residential customers of Pacific Gas and Electric, Southern California Edison, or San Diego Gas & Electric installing solar will save $100 a month on their electricity bill, and average residential customers installing solar paired with battery storage will save at least $136 a month.”

While CPUC decisions apply only to investor owned electric and natural gas utilities and not public power utilities, the commission’s effort has a broad impact on the state’s electric grid.

The CPUC said the revised proposal on NEM tariffs will be on its Dec. 15 voting meeting agenda.

California Energy Commission Grant Will Fund Long Duration Storage for Calif. Tribe

November 14, 2022

by Peter Maloney
APPA News
November 14, 2022

The California Energy Commission (CEC) earlier this month made a $31 million grant to fund a long duration energy storage system for the Viejas Tribe of Kumeyaay Indians in Southern California.

The grant is the first award under California’s $140 million Long-Duration Energy Storage Program, which is part of the state’s efforts to fight climate change and to achieve 100 percent clean electricity by 2045.

The CEC said the 60-megawatt-hour (MWh) project is one of the first of its kind in the country and will provide renewable backup power to the Viejas community in the event of local outages and provide the opportunity for the tribe to shift electricity use away from California’s electric grid during calls for conservation.

The CEC awarded the grant to Indian Energy LLC, a privately held Native American-owned developer that is building a microgrid project on the tribe’s behalf.

“This solar microgrid project will enable us to create a reliable and sustainable source of clean energy for our gaming, hospitality, and retail operations going forward,” John Christman, chairman of the Viejas Band of Kumeyaay Indians, said in a statement.

The Viejas Band is one of 12 bands of the Kumeyaay Indian Nation that lives on a 1,600-acre reservation in the Viejas Valley, near Alpine in San Diego County, where the tribe owns and operates the Viejas Casino and Resort.

The microgrid system is designed to deliver power to the casino and resort. The energy storage system will connect with an existing, onsite 15-MW solar power installation. Eos Energy Enterprises is supplying a 35-MWh, zinc-based flow battery to the project. Invinity Energy Systems is supplying a 10-MWh vanadium redox flow battery. The energy storage system will have the potential to discharge for up to 10 hours.

The remaining 15 MWh will also be non-lithium ion and will provided by the tribe at a later date, CEC spokeswoman Lindsay Buckley said via email.  The initial 45 MWh are scheduled to enter service by summer 2023, and we expect the full 60 MWh to be operational by the summer of 2024.”

Flow batteries use electrolytes moving through tanks to produce electricity. They are rechargeable and do not degrade. And, because they do not use lithium ion, they avoid the potential first hazards associated with those batteries.

Vehicle To Grid Charging Could Provide Grid Savings, Report Finds

November 14, 2022

by Peter Maloney
APPA News
November 14, 2022

Vehicle-to-grid (V2G) charging could provide substantial system savings for New England as it transitions to a clean energy future, according to a new report.

The report, Can vehicle-to-grid facilitate the transition to low carbon energy systems?, published in the journal Energy Advances, examined V2G potential in the context of the greenfield buildout and operation of renewable energy resources in the New England power system in 2050 in which there is high electric vehicle penetration and tight emissions constraints.

In that scenario, V2G in aggregate could shift load via demand response and shift excess renewables generation to periods of low availability and high net loads across a range of carbon constraints and participation rates, the report found.

If V2G electric vehicles were to participate in both power and ancillary markets, they could provide substantial value, primarily by displacing stationary storage.

With relatively little participation of just 13.9 percent of the New England light duty vehicle fleet, “14.7 gigawatts (GW) of 6-hour stationary storage is completely displaced and amounts to over $700 million in savings,” the report’s authors said.

Additional savings could come in the form of reductions in firm generation capacity and more efficient utilization of renewable resources, that is, reduced curtailments, they said.

“Not only does this analysis demonstrate V2G’s utility, but also the importance of how one chooses to measure its value (i.e., counting investment deferral), particularly in the context of future systems,” the report said.

The magnitude and nature of V2G savings also changes as the electric system changes. Under more aggressive emissions caps, for instance, V2G decreases the need to compensate for the intermittency of renewable resources by increasing the size of the deployed resources or by using fossil fuel generation with expensive carbon capture technologies, thus increasing the marginal value of V2G, the report found.

In addition, the nature of optimal V2G dispatch changes with participation rates. At low electric vehicle participation rates, V2G power injection is called on at a higher rate in order to shave uncontrolled evening charging loads, while higher participation rates rely on less injection through charge load shifting, the report said.

Similarly, the value of V2G could change depending on geography and the energy storage marketplace. Shorter duration storage, such as the 6-hour lithium ion batteries studied in the report, are not sufficient to remedy extended periods of low renewable generation availability, so firm generation is required to satisfy electric vehicle loads.

However, long duration storage and V2G could add flexibility to each other’s ancillary service offerings, with EV batteries providing rapid frequency regulation and long duration storage increasing operating reserve contributions. Pumped hydroelectric storage in the Northwest, for example, could provide “significant utility” throughout the region, the report found. The implications and interactions of more prevalent long duration storage with V2G are areas that “stand to be investigated further in future works,” the report’s authors said.

Combined Cycle Gas Plants Reverse Trend, Adding Nearly 8 GW This Year: EIA

November 14, 2022

by Peter Maloney
APPA News
November 14, 2022

By the end of the year, eight natural gas-fired combined-cycle gas turbine (CCGT) plants have either come online, reversing a four-year decline in CCGT start-ups, according to the Energy Information Administration (EIA).

The new plants will add 7,775 megawatts (MW) of generating capacity to the electric grid, according to the latest estimates and data from EIA’s Monthly Electric Generator Inventory. The EIA expects CCGT capacity to reach almost 290 gigawatts (GW) by year-end, or 24 percent of total U.S. generating capacity.

Output from CCGT plants, which use combine a gas and steam turbine in a single plant, will likely rise from the 1,326,278 gigawatt hours (GWh) they generated in 2021, which was 32 percent of total electric generation last year. Coal-fired generation ranked second at 22 percent of total generation and nuclear power was third at 19 percent in 2021.

The EIA expects 4,215 MW of CCGT capacity will be added in 2023, when five new plants are slated to open. All of those facilities are under construction and expected to enter service before the end of 2023.

About half of the existing CCGT fleet currently operating entered service between 2000 and 2006. CCGT additions have continued since then albeit it at a slower pace. This year’s additions are about 80 percent below the record level of CCGT additions set in 2002 and 2003, the EIA noted.

Seven of the eight CCGT plants opening this year are either in the upper Midwest or in Florida where they are being built to meet rising demand for electricity and to replace retiring coal-fired power plants, the EIA said.

In Michigan, 1,403 MW of new CCGT capacity will replace the 1,560 MW of existing coal-fired generating capacity scheduled to retire this year.

In Florida, the 2,222 MW of new CCGT capacity will replace 1,486 MW of coal-fired capacity retiring this year.

Three CCGT plants, with 3,918 MW of capacity, are opening this year in the PJM Interconnection region where they will help replace the 5,346 MW of coal-fired capacity in PJM that is retiring this year and the 3,774 MW of coal capacity scheduled to retire next year, EIA said.