President Biden Signs Bill That Provides Public Power With Direct Access To Energy Tax Credits
August 16, 2022
by Paul Ciampoli
APPA News Director
August 16, 2022
President Biden on Aug. 16 signed into law the Inflation Reduction Act (IRA), which will extend and expand various energy tax incentives and give public power utilities direct access to such credits through a refundable direct payment tax credit.
The U.S. House on Aug. 12 passed the IRA after the U.S. Senate passed the bill earlier this month.
The Joint Committee on Taxation estimates the value of energy-related tax incentives to be worth $25 billion in 2022 alone. However, because public power utilities are exempt from tax, they have not been able to take advantage of these incentives for projects they own. Rural electric cooperatives face a similar challenge. As a result, using the tax code to incentivize energy investments has excluded utilities serving nearly 30 percent of all retail utility customers in the United States.
Instead, to take advantage of these energy tax incentives, tax-exempt, community-owned utilities have had to enter power purchase agreements with third party developers — who often themselves would enlist a tax equity partner to monetize energy tax credits.
The result has been profound, the American Public Power Association (APPA) recently noted. For example, recent surveys of public power utilities showed they own just two percent of the non-hydropower renewable energy used to serve their customers: the remaining 98 percent had to be secured through power purchase agreements.
The IRA corrects this by allowing tax-exempt entities to claim energy tax credits directly. APPA has long supported this approach, which will lead to lower costs, local jobs, and more equitable energy service for all customers.
DOE Says It Does Not Plan To Issue Waiver Tied To Transformers At This Time
August 16, 2022
by Paul Ciampoli
APPA News Director
August 16, 2022
In a recent letter to the American Public Power Association (APPA) and the National Rural Electric Cooperative Association (NRECA), a Department of Energy (DOE) official said that DOE is “not planning to issue an industry-wide waiver of enforcement with respect to energy conservation standards for distribution transformers at this time.”
The letter from Kelly Speakes-Backman, Principal Deputy Assistant Secretary for the Office of Energy Efficiency and Renewable Energy at DOE, responded to a request made in May by APPA and NRECA. The groups asked for DOE to institute a temporary waiver of DOE’s distribution transformer efficiency standard in an effort to alleviate the acute shortage of distribution transformers.
DOE recognizes “that supply chain impacts will vary by company, by product, and possibly even by model,” wrote Speakes-Backman. “In exercising enforcement discretion, we take into account the full range of these circumstances and their potential impacts.”
She also acknowledged APPA’s participation in the “Tiger Team” formed under the Electricity Subsector Coordinating Council (ESCC) to further identify and address supply chain problems.
APPA continues to work through the ESCC and other forums to find solutions to alleviate the supply chain shortages, specifically with regards to distribution transformers. APPA has taken a number of actions to address ongoing supply chain challenges. APPA recently rolled out an additional feature to its eReliability Tracker that is available to all public power utilities and allows for voluntary equipment sharing by matching systems with the same distribution voltages. APPA also recently finalized a new supply chain issue brief. APPA members can download the issue brief here.
In a speech in June at APPA’s National Conference in Nashville, Tenn., APPA President and CEO Joy Ditto urged member utilities to share their supply chain challenges with APPA so that the trade group can relay details on these challenges to federal partners and discuss how critical burdens on the sector can be alleviated.
In May, APPA convened a supply chain summit that included participation from public power utility officials who discussed their supply chain challenges and mitigation strategies.
Solar Power Installations Slow Because Of Supply Chain, Other Issues: EIA
August 15, 2022
by Peter Maloney
APPA News
August 15, 2022
Solar power installations are running about 20 percent behind schedule due to supply chain and other issues, according to the Department of Energy’s Energy Information Administration (EIA).
Developers had planned to install 17.8 gigawatts (GW) of utility-scale solar photovoltaic (PV) generating capacity in 2022, according to the EIA’s June 2022 Preliminary Monthly Electric Generator Inventory. However, over the first six months of the year, only 4.2 GW of capacity came online, less than half of what the industry had planned to install, a 20 percent shortfall.
“Our preliminary data from January through June 2022 show that PV solar installations were delayed by an average of 4.4 GW each month, compared with average monthly delays of 2.6 GW during the same period last year,” according to the EIA. In most cases, the reported delays are for six months or less, the EIA added.
Most of the projects that are due to come online in the next 18 months are already under construction, the EIA noted.
About 1.9 GW of solar installations under construction have been delayed but are still scheduled to come online in 2022, and 1.7 GW of projects under construction have been delayed to 2023, the EIA said.
Various factors could cause delays, the EIA noted, including broad economic factors, such as supply chain constraints, labor shortages, and high prices of components, as well as factors specific to electric generation projects, such as obtaining permits or testing equipment.
In particular, the EIA noted that in February, the Bush administration eased but did not end tariffs on imported crystalline silicon solar products from China, raising the tariff-rate quota, or threshold for imposing higher tariffs, from 2.5 GW to 5.0 GW and excluding bifacial panels from the extended tariffs.
In April, the Department of Commerce announced an anti-dumping circumvention investigation of solar cells and modules imported from Cambodia, Malaysia, Thailand, and Vietnam, countries that allegedly use parts made in China that otherwise would be subject to tariffs.
In a June executive action, President Joseph Biden sought to advance the deployment of the U.S. solar panel industry by authorizing the easing of import duties for 24 months for solar cells and modules imported from the countries under investigation. Biden also invoked the Defense Production Act to expand domestic production of solar modules.
California Energy Commission Sets Preliminary 25 GW By 2045 Offshore Wind Goal
August 15, 2022
by Peter Maloney
APPA News
August 15, 2022
The California Energy Commission (CEC) recently adopted a report establishing offshore wind goals, bringing the state one step closer to developing its coastal resources.
Preliminary findings of the report set planning goals of 2,000 to 5,000 megawatts (MW) of offshore wind by 2030 and 25,000 MW by 2045.
The report is the first of four that the CEC has been directed to produce by AB 525 by no later than June 30, 2023. Under the legislation, the CEC, in coordination with federal, state, and local agencies and a wide variety of stakeholders, must develop a strategic plan for offshore wind energy developments off the California coast in federal waters and submit it to the California Natural Resources Agency and the state’s Legislature.
Among other conclusions, the CEC said that for 2030 it would be “prudent” to have the AB 525 strategic plan evaluate at least the current adopted 2032 Integrated Resource Plan (IRP) amount of offshore wind of 1,700 MW, potentially up to nearly 5,000 MW, which is what can be accommodated on existing transmission.
Offshore wind capacity beyond that amount “appears infeasible from a transmission perspective by 2030, the report found. For 2045, “there is greater possibility of achieving some or all of the transmission upgrades examined by the state’s ISO [independent system operator],” the report said, concluding that “this suggests the CEC may consider establishing a MW planning goal for 2045 of at least 10 GW to 14.3 GW for 2045.”
The authors of the report also recommended that the complementary nature of offshore wind to solar power outputs, both daily and in the winter, suggests that the CEC should establish offshore wind planning goals that are “reasonably higher” than the current adopted amount of offshore wind in the state’s IRP.
The report’s authors cautioned, however, “the recommended MW planning goals do not consider potential impacts to ocean use and environmental considerations.” They added, “the assessment of potential impacts and the strategies for addressing those impacts that are identified for the strategic plan will inform and may potentially limit the amount of maximum feasible capacity of offshore wind and the MW planning goals that are ultimately identified in the strategic plan.”
CEC staff will next study the economic benefits of offshore wind in relation to seaport investments and workforce development needs. The staff will also create a roadmap to develop a permitting process for offshore wind energy facilities and associated electricity and transmission infrastructure. The entire plan must be submitted to the Legislature by June 2023.
Plans for renovations to prepare for offshore wind activities are already under way at the Port of Humboldt Bay with $10.5 million in funding approved by the CEC earlier this year. Governor Gavin Newsom’s 2022–23 budget proposes an additional $45 million for other needed upgrades at waterfront facilities.
Leaders Of FERC And NERC Urge NAESB To Convene Forum To Address Reliability Challenges
August 15, 2022
by Paul Ciampoli
APPA News Director
August 15, 2022
Federal Energy Regulatory Commission (FERC) Chairman Rich Glick and Jim Robb, President and CEO of the North American Electric Reliability Corporation (NERC), recently encouraged the North American Energy Standards Board (NAESB) to convene a forum that would identify solutions to reliability challenges facing the nation’s natural gas system and bulk electric system.
In their July 25 joint letter to NAESB, Glick and Robb recommended that NAESB convene the forum, as outlined in one of the key recommendations from the FERC-NERC report on the February 2021 freeze in Texas and the South Central U.S. caused by Winter Storm Uri.
The report, issued in November 2021, recommended that FERC consider establishing a forum to identify actions that would improve the reliability of the natural gas infrastructure system as necessary to support the bulk power system, and to address recurring challenges stemming from natural gas-electric infrastructure interdependency.
NAESB, an American National Standards Institute-accredited convener of both the gas and electric markets with representation from all segments of the supply chain, “is uniquely positioned to provide support in addressing the report recommendation,” Glick and Robb wrote.
“NAESB’s long history with the industry demonstrates its ability to analyze challenging issues concerning market coordination while delivering balanced, consensus-based solutions that lead to improved operations in both markets,” they said in the letter.
Robb and Glick encouraged NAESB to take steps to expeditiously convene the forum discussed in the November 2021 report and others like it.
“We also encourage NAESB to coordinate with FERC and NERC staff, and the National Association of Regulatory Utility Commissioners, who all have BES [bulk electric system] regulatory and reliability expertise and experience with gas-electric cooperation,” they wrote.
The letter is available here.
In response to the letter, NAESB staff announced its intention to reconvene the NAESB Gas-Electric Harmonization Forum, with an initial organizational virtual meeting scheduled for August 30, 2022, from 2:00 pm to 4:00 pm Central. This will be an open meeting and all interested parties are welcome to attend. Meeting registration is available here.
House Passes Bill That Provides Public Power With Direct Access To Energy Tax Credits
August 13, 2022
by Paul Ciampoli
APPA News Director
August 13, 2022
The U.S. House on Aug. 12 passed the Inflation Reduction Act (IRA), which would extend and expand various energy tax incentives and give public power utilities direct access to such credits through a refundable direct payment tax credit.
The bill, which now goes to the White House for President Biden’s signature, also includes additional funding through various programs for renewables development and deployment, transmission projects, and federal permitting staff.
The American Public Power Association (APPA) applauded House passage of the IRA.
“In addition to extending and expanding a variety of critical energy tax incentives, this piece of legislation will ensure that all utilities can benefit from these incentives, which encourage the critical energy investments they need to continue to use cleaner generating technologies,” said APPA President and CEO Joy Ditto. “In the end, this makes these incentives fairer and more effective.”
The Joint Committee on Taxation estimates the value of energy-related tax incentives to be worth $25 billion in 2022 alone. However, because public power utilities are exempt from tax, they have not been able to take advantage of these incentives for projects they own. Rural electric cooperatives face a similar challenge. As a result, using the tax code to incentivize energy investments has excluded utilities serving nearly 30 percent of all retail utility customers in the United States.
Instead, to take advantage of these energy tax incentives, tax-exempt, community-owned utilities have had to enter power purchase agreements with third party developers — who often themselves would enlist a tax equity partner to monetize energy tax credits.
The result has been profound, APPA said. For example, recent surveys of public power utilities showed they own just two percent of the non-hydropower renewable energy used to serve their customers: the remaining 98 percent had to be secured through power purchase agreements.
The IRA corrects this by allowing tax-exempt entities to claim energy tax credits directly. APPA has long supported this approach, which will lead to lower costs, local jobs, and more equitable energy service for all customers.
Power purchase agreements will continue to be useful tools and many public power utilities will continue to use them to secure access to energy facilities, APPA said. “But having the option to own and operate their own facilities means public power utilities can make the best choices on behalf of the more than 49 million Americans and thousands of businesses they directly serve,” APPA said.
Efforts to ensure that community-owned utilities can benefit from energy tax incentives have enjoyed bipartisan and bicameral support from many Members of Congress, “and we greatly appreciate the work of all the Members and staff with whom we have worked on this issue for years,” APPA said.
APPA said it is particularly appreciative of the efforts of House Ways and Means Committee Chairman Richard Neal, Select Revenue Subcommittee Chairman Mike Thompson, Senate Finance Committee Chairman Ron Wyden, and Energy Subcommittee Chairman Michael Bennett. Finance Committee Member Maria Cantwell and Ways and Means Committee Member Earl Blumenauer were also steadfast champions, APPA said.
Senate Energy and Natural Resources Committee Chairman Joe Manchin’s “understanding of the positive energy policy implications of creating this comparable incentive for public power and rural electric cooperatives was critical to passage of this provision,” APPA said.
Manchin “also championed important work toward legislation to speed up siting and permitting of energy infrastructure, which is much needed given the need to maintain reliable and affordable electricity as we continue our evolution to cleaner technologies,” the trade group noted.
The likely date of enactment for the IRA remains uncertain, though some time this week seems possible. The date of enactment is of importance to public power because while much of the bill will take effect gradually over time a tax credit requirement for final assembly in North America for electric vehicles takes effect upon the date of enactment.
Also uncertain is the timing of a follow-on energy permitting and siting bill that Congressional leaders agreed to take up as part of a compromise that allowed the IRA to proceed in the Senate.
Such a bill could be added to a “continuing resolution” bill that Congress will have to take up before the beginning of the new fiscal year on October 1, but no schedule has been announced.
New York Regulators Approve NYPA Transmission Line Project
August 13, 2022
by Paul Ciampoli
APPA News Director
August 13, 2022
The New York Power Authority (NYPA) and National Grid NY recently announced the approval of a transmission line build in the North Country, known as Smart Path Connect.
The New York State Public Service Commission (PSC) approved the 100-mile transmission line project at its regularly scheduled monthly meeting on Aug. 11.
Smart Path Connect is a multi-faceted project that includes: completion of the second phase of NYPA’s Smart Path Moses-Adirondack rebuild; building approximately 45 miles of transmission eastward from Massena to the Town of Clinton, known as the Northern Alignment; and building approximately 55 miles of transmission southward from Croghan to Marcy, known as the Southern Alignment; and several substations along the impacted transmission corridor.
The work falls primarily within existing transmission rights-of-way in in Clinton, Franklin, St. Lawrence, Lewis and Oneida counties. The rebuilt lines will connect renewable energy into the statewide power system, including low-cost hydropower from NYPA’s St. Lawrence-Franklin D. Roosevelt Power Project as well as power from newly constructed and proposed renewable energy sources such as wind and solar.
The project, then known as the Northern New York Priority Transmission Project, was identified in 2020 as a priority transmission project that should move forward expeditiously under New York’s Accelerated Renewable Energy Growth and Community Benefit Act.
The project was approved for acceleration in order to help the state meet its climate and clean energy goals set forth in the Climate Act, enacted in July 2019, which calls for a zero-emissions electricity sector by 2040, 70 percent renewable energy generation by 2030, and economy-wide carbon neutrality.
NYPA said the project will help unbottle existing renewable resources in the region, and also will yield significant production cost savings, emissions reductions, and decreases in transmission congestion. NYPA estimates the project will provide more than $447 million in annual congestion savings in northern New York.
In addition to Smart Path and Smart Path Connect, several other New York State transmission line rebuild projects, as well as new transmission projects, are on deck for construction and in various stages of the permitting process.
These include NYPA and LS Power New York’s Central East Energy Connect project which involves the rebuild and expansion of nearly 100 miles of historically heavily congested transmission lines in the Utica/Albany corridor; New York Transco’s New York Energy Solution which involves the rebuild of approximately 54 miles of transmission lines in the Hudson Valley and NextEra Energy Transmission New York’s recently completed and energized Empire State Line Project of approximately 20 miles of transmission in Western New York.
Construction on Smart Path Connect is expected to begin sometime this Fall.
Snohomish County PUD Cites Supply Chain, Manufacturing Issues In Advanced Meter Project Delay
August 13, 2022
by Paul Ciampoli
APPA News Director
August 13, 2022
Due to supply chain and manufacturing issues, Washington State’s Snohomish County PUD is delaying the deployment of its Connect Up program until mid-2023. The program is an infrastructure and technology improvement project that will install new electric and water advanced meters on all customers’ homes and businesses.
The PUD was originally scheduled to begin deployment of new meters at the start of 2023. Depending on when it receives meters from its meter provider, the PUD plans to delay deployment of residential meters until the summer of 2023 and commercial and industrial meters until later in the fall of 2023.
Installation of advanced meters on the homes of PUD water customers should still begin in early 2023.
The new meter upgrade is free of charge for customers, who will receive physical and digital communications from the PUD in the months and days leading up to installation, the PUD said.
Installation of the communication network that will support the new meters started earlier this year and is on schedule to be completed prior to meter deployment. The PUD has installed 43 of the 141 base stations and antennas that will eventually communicate with advanced meters on customers’ homes and businesses.
The PUD’s Board of Commissioners recently approved the Connect Up program’s opt-out policy. Customers who do not want a communicating meter will receive an advanced meter with the communication radio disabled.
PUD customers who live in multi-unit residences with more than four units, water customers and commercial and industrial customers are not eligible to opt out of the PUD’s Connect Up program.
Connect Up will deliver a variety of new benefits for PUD customers, including the ability to monitor energy usage in 15-minute increments, opportunities to take advantage of new rate designs and conservation programs, and more flexible billing options.
Missouri River Energy Services Unveils Program To Raise Awareness Of Public Power
August 13, 2022
by Paul Ciampoli
APPA News Director
August 13, 2022
Missouri River Energy Services (MRES) unveiled its new MRES Ambassador Program to members during its annual meeting. The program is intended to raise the awareness of public power and the value of membership in MRES through community and policymaker education in member communities.
Participating ambassadors will receive a quarterly package of information and talking points on a particular topic of interest. A short webinar on the topic will be held to discuss the topic further and answer any questions the ambassadors may have.
Armed with this information, the ambassadors will proactively advocate for public power and joint action in their communities with key influencers over coffee, lunch, or while attending civic clubs or community events, MRES noted in an Aug. 5 news release.
The MRES Ambassador Program is one of several efforts by MRES to help their members communicate the value and benefits of their local public power utility, as well as the benefits of belonging to the larger organization of 61 utilities working for the common good, it said.
It builds on the ongoing Value of Public Power communications campaign which has provided quarterly marketing materials and monthly social media posts for member use since 2018. In addition, the Municipal Power Advantage® program, which launched in 2013, provides members with a detailed analysis and report of the economic value of all the benefits the local electric utility provides to the community.
MRES is an organization of 61 member municipalities in the states of Iowa, Minnesota, North Dakota, and South Dakota. Each member owns and operates a municipal electric utility.
MRES, which provides its members with energy and a wide range of energy-related services, held its annual meeting this past spring.
EIA Forecasts Rising Electricity Demand This Year, Higher Retail Prices
August 12, 2022
by Peter Maloney
APPA News
August 12, 2022
Electricity consumption will increase this year by 2.4 percent over 2021 levels, before falling slightly, by an expected 0.3 percent, next year, according to the Energy Information Administration’s (EIA) Short-Term Energy Outlook (STEO).
The increase is being primarily driven by increased economic activity and hot summer weather throughout most of the country, the EIA said.
“This summer has been hotter in the United States than normal, even in the context of the pretty hot summers of the last few years,” Joe DeCarolis, EIA administrator, said in a statement. “High temperatures have contributed to more air conditioning load, which is a significant driver in our forecast for more electricity consumption this year compared to last year.”
Most of the increased electricity demand this year will be met with renewable energy, according to the August 2022 STEO. The EIA expects renewable sources to provide 22 percent of U.S. generation in 2022 and 24 percent in 2023, up from 20 percent in 2021.
The EIA also expects solar power capacity to continue to rise, increasing by 20 gigawatts (GW) in 2022 and 24 GW in 2023, representing an addition of 31 billion kilowatt hours (kWh) of electric power generation in 2022 and 41 billion kWh in 2023, the EIA said.
Meanwhile, the United States consumed more natural gas to meet electricity demand so far this summer than the previous five-year average, according to the STEO.
Natural gas consumption in the electric power sector continues to increase as a result of limited switching from natural gas-fired generators to coal-fired generators for power generation, despite elevated natural gas prices, the STEO said. And continued demand for natural gas to generate electricity has contributed to relatively high prices for natural gas, even as more natural gas enters the domestic market, because of the June shutdown of the Freeport liquefied natural gas terminal.
Rising supplies of natural gas have caused prices to fall over the past two months. The STEO forecasts the U.S. will produce 96.6 billion cubic feet per day (Bcf/d) of gas in 2022, which would be 3 percent more than in 2021, and expects dry natural gas production to average 100 Bcf/d in 2023.
Nonetheless, natural gas prices increased by almost 50 percent, from $5.73/ per million British thermal units (MMBtu), on July 1 to $8.37/MMBtu on July 29, because of continued high demand for natural gas from the electric power sector. “We expect the Henry Hub price to average $7.54/MMBtu in the second half of 2022 and then fall to an average of $5.10/MMBtu in 2023 amid rising natural gas production,” the EIA said.
Rising natural gas prices will drive up wholesale electric prices and, consequently, retail electricity prices, according to the STEO, which forecasts the price of residential electricity will average 14.6 cents per kilowatt hour (kWh) in 2022, up 6.1 percent from 2021. Forecasts of annual average wholesale prices for 2022 range from an average of $62 per megawatt hour (MWh) in Florida to $95/MWh in the ISO New England and New York ISO markets, according to the STEO.
And, as coal plant shutdowns continue and natural gas prices fall, the EIA expects coal consumption to decline by 9 percent in 2023. The STEO, however, expects U.S. coal production to increase by 21 million short tons (MMst) to 599 MMst in 2022 and to 601 MMst in 2023 and coal exports to increase from 85 MMst in 2021 to 87 MMst in 2022 and to 98 MMst in 2023.