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New APPA Report Details Electrification Trends, Hurdles For Wider Adoption

July 21, 2022

by Paul Ciampoli
APPA News Director
July 21, 2022

A new report issued by the American Public Power Association (APPA) analyzes trends in electrification and identifies at least three major hurdles that need to be overcome to realize wider adoption of electrification.

The report, which was prepared by Paul Zummo, Director for Research and Development at APPA, said that the electrification of end-use technologies, such as electric space and water heating as well as electric vehicles (EVs), offers potential benefits to the environment and consumers. Electrification efforts that are both environmentally beneficial and comparatively economical have been termed beneficial or efficient electrification.

The report analyzes trends in electrification deployment through the current day and discusses potential developments.

Potential benefits of electrification include, but are not limited to, reduced CO2 emissions, more efficient use of energy, long-term fuel savings, and lower overall monthly energy costs, the report said.

“Yet there are several potential challenges, including the following: electrified space heating is still generally more efficient in warmer climates than colder climates, up-front prices for many EV models are higher than for traditional transportation, and the overall cost of converting to electrified end uses may be prohibitive for many customers.”

The first part of the report analyzes currently available data showing relative percentages of electrification in different parts of the United States. Because adoption of space heating is dependent on certain key variables, the first part of this report primarily focuses on this aspect of electrification, though it does relate some current EV market data and future projections.

The data reveal that in some regions — particularly the Southeast and Southwest — electrification of space heating is more prevalent than in other areas of the country. Furthermore, residential customers who have electric heating in their homes do not have higher energy bills than those who primarily rely on fossil fuels, and this is due to higher incidences of electrification in states with comparatively low electric rates and more temperate or warmer climates, the report said.

The second part of the report focuses on the future of electrification and identifies at least three major hurdles that need to be overcome to realize wider adoption of electrification.

These three factors are: the cost of transitioning energy resources to electric, potential (and existing) supply chain constraints associated with the materials needed for batteries, and limitations of the existing electric grid, both in terms of wires and generating capacity.

This part of the report includes a discussion of the changing resource mix and how this may impact some of the environmental aspects of electrification.

“While there are also associated concerns, these three stand out as the most pressing. There have been multiple studies on all these issues, and this report borrows and expands upon this research.”

The purpose of the report is to draw out and amplify these barriers to adoption and discuss potential approaches to ameliorating them.

State Transportation And Energy Office Groups Awarded Funds For EV Collaboration

July 21, 2022

by Paul Ciampoli
APPA News Director
July 21, 2022

The Joint Office of Energy and Transportation announced on July 20 a $1.5 million award to the National Association of State Energy Officials (NASEO) and the American Association of State Highway and Transportation Officials (AASHTO) that will foster collaboration in the development and deployment of a national electric vehicle (EV) charging network.   

“The partnership will convene stakeholders across local, state, and federal government to ensure that EV charging station infrastructure investments are made in a strategic, coordinated, efficient, and equitable manner with public and private-sector partners,” the Department of Energy said.

Key focus areas of the award include: 

The Joint Office of Energy and Transportation was created through the Infrastructure Investment and Jobs Act (IIJA) to facilitate collaboration between the U.S. Department of Energy and the U.S. Department of Transportation.

NASEO is comprised senior officials from the 56 State and Territory Energy Offices, as well as affiliates from the private and public sectors.

AASHTO represents the highway and transportation departments in the 50 states, the District of Columbia, and Puerto Rico.

The joint office recently announced a partnership to support EV charging with APPA, Edison Electric Institute, and National Rural Electric Cooperative Association to inform electric system investments and support state planning.

New York Governor Recommends Justin Driscoll To Serve As President and CEO Of NYPA

July 21, 2022

by Paul Ciampoli
APPA News Director
July 21, 2022

New York Gov. Kathy Hochul on July 20 recommended Justin Driscoll to serve as President and CEO of the New York Power Authority (NYPA).

Driscoll was appointed by NYPA’s Board of Trustees to serve as Interim President and CEO in October. The governor’s recommendation comes after a national search and recognizes the work Driscoll has accomplished in the previous year, NYPA said.

Driscoll previously served as chief legal officer of NYPA.

Before joining NYPA, he was engaged in the private practice of law and represented clients that included Fortune 500 companies, governmental entities and energy companies, in complex commercial litigation and regulatory matters.

Driscoll serves on several boards including The Alliance to Save Energy, New York City’s Urban Green Council, the Large Public Power Council, and the World Resources Institute’s Global Energy Advisory Board.

Capacity Constraints, Rolling Blackouts Not Seen As Near-Term Risk To Public Power: Fitch

July 20, 2022

by Paul Ciampoli
APPA News Director
July 20, 2022

Summer capacity constraints and rolling blackouts are not viewed as a near-term risk to public power and electric cooperative credit quality, Fitch Ratings said on July 15.

Fitch noted that its rated portfolio of public power issuers “typically own or contract for sufficient electric generation during the summer months to match or exceed their expected load demand, providing a financial hedge against market scarcity and volatile energy prices.”

However, general economic inflationary pressures “will necessitate rate increases in the sector, and customer tolerance for rate increases could be diminished by recurring rolling blackouts. To the extent utilities cannot pass through needed rate increases, utility financial profiles would likely weaken and could put pressure on credit quality over the longer term,” the rating agency said.

Supply shortages and the potential for rolling blackouts are likely to happen with more frequency across the U.S., Fitch said.

It said that public power and cooperative utilities tend to own or contract for generation supplies conservatively so that they have more than sufficient reserves to meet potential increases in demand “but there may be residual risk if temperatures cause demand to be substantially higher than anticipated.”

Costs of meeting demand in excess of power supply are typically modest in relation to utilities’ overall budgets, Fitch said, adding that most utilities have a power cost adjustment feature in their rate structure that recovers power costs above budget or reduces rates to customers if power costs are below budget throughout the year.

“As a result of the conservative planning in the sector, public power utilities are often net sellers during scarcity events, protecting the financial profile of utilities during shortage or volatile pricing periods,” Fitch said.

The Electric Reliability Council of Texas (ERCOT) earlier this month asked Texas residents and businesses to voluntarily conserve electricity as extreme hot weather created record power demand across Texas.

Fitch noted that the call for voluntary conservation was successful, reducing peak demand to approximately 78.3 gigawatts on two days, and no rolling blackouts occurred.

If rolling blackouts occur during a heat event in Texas this summer, they will likely last for a few hours, not days, as occurred in February 2021 during Winter Storm Uri, and would not impact long-term public power utility credit quality, the rating agency said.

In a recent episode of the American Public Power Association’s Public Power Now podcast, Woody Rickerson, Vice President of System Planning and Weatherization at ERCOT, detailed ongoing efforts by the grid operator to bolster reliability in the state.

Lawmakers Ask EPA To Detail Plans And Actions Tied To Reliability Risks

July 20, 2022

by Paul Ciampoli
APPA News Director
July 20, 2022

House Energy and Commerce Committee Republicans on July 11 sent a letter to Environmental Protection Agency (EPA) Administrator Michael Regan asking for the agency to respond to a series of questions related to EPA plans and actions regarding risks to electric reliability. The letter was signed by all 26 committee Republicans.

Following similar letters on risks to electric reliability sent to both the Federal Energy Regulatory Commission (FERC) and the Department of Energy (DOE), this letter questions many recent actions and proposals by EPA that may impact reliability. 

“In recent months, you announced a suite of EPA actions to target fossil fueled electric generating units, an “EGU Strategy,” to drive the Biden Administrations climate agenda,” the House members wrote in their letter.

This strategy includes many major new regulations now under development or proposed: the Interstate Transport Rule, Regional Haze, Risk and Technology Review for the Mercury Air Toxics Rule, a new set of greenhouse gas performance standards, effluent limitations, and a legacy coal combustion residue rule, “all of which directly affect power plants that are essential for reliable electric operations,” the letter said.

“We are concerned that EPA actions threaten to accelerate fossil generation retirements, at the very same time electric system operators report growing shortfalls in such baseload capacity will accelerate blackout risks,” the lawmakers told Regan.

“At a time of widespread economic and inflationary burdens, the last thing this nation needs are agency actions that press headlong into creating a major electricity crisis. Therefore, it is important that Congress have information from EPA to assess how the Agency’s actions are affecting electric grid reliability,” the letter said.

Among other things, Regan was asked to describe what specific actions “you are taking or are prepared to take to address energy or electricity emergencies this summer in the bulk power system.”

In addition, the lawmakers want the EPA to list all waivers or other emergency actions being considered or that have been taken over the past two years in connection with electricity reliability.

They also asked for a list of all regulatory actions “you are considering or have taken over the past two years to alleviate electricity reliability risks.”

The letter also asks Regan to detail the agency’s interactions with the DOE, FERC, grid operators and states.

Regan was asked to reply to the questions by July 26, 2022.

Groups Raise Reliability, Cost And Other Concerns In Response To Idea Of Breaching Northwest Dams

July 20, 2022

by Paul Ciampoli
APPA News Director
July 20, 2022

The idea of breaching the Lower River Snake Dams (LSRDs) in Eastern Washington State fails to take into account a number of potential negative impacts that could result from such a move including an increase in electricity costs for consumers and removing a key pillar of reliable power supply for the region, the American Public Power Association (APPA) and regional public power groups said.

In June, U.S. Sen. Patty Murray, D-Wash., and Washington Gov. Jay Inslee announced the release of an independent draft report intended to help inform the recommendations of their Joint Federal-State Process regarding the Lower Snake River Dams and salmon recovery in the Pacific Northwest. 

The draft report notes that the potential for improvements to West Coast salmon populations is one of the main factors prompting interest in breaching the LSRDs. The deadline for comments on the draft report was July 11, 2022.

Among the groups that weighed in on the draft report was the Oregon Municipal Electric Utilities Association (OMEU).

The draft report assumes the LSRDs will be less important in the future, OMEU said. “However, with 100% clean energy mandates in Oregon and Washington this is clearly untrue. With baseload resources being replaced by massive amounts of intermittent generation, the LSRDs’ ability to provide power — on demand — will become increasingly important for reliable grid operations and public safety, especially during extreme weather conditions,” OMEU argued.

It pointed out that during the heat dome events of last summer, the LSRDs provided much-needed energy, balancing and contingency reserves. “Without those four dams, powering through the heat wave could have been much more expensive and operationally challenging,” OMEU said.

For consumer-owned utility ratepayers, losing the LSRDs could increase consumer electricity rates by 25% or more, OMEU said. “Replacing the generating capabilities of the LSRDs, alone, would cost $15 billion in a zero-carbon future. This type of financial hardship threatens to irreparably harm the communities we serve, particularly our low income and vulnerable customers.”

APPA, which supports the comments submitted by the Washington Public Utility Districts Association (WPUDA) and OMEU, noted that many of APPA’s members buy power produced by the LSRDs, which are part of the broader Columbia River Power System, or own and operate their own hydropower projects.

Making full use of the nation’s hydropower resource is key to ensuring that the nation’s — and the Pacific Northwest’s — grid remains reliable and resilient, and that utilities can meet emission reduction goals, APPA said.

“It is difficult to overstate how critical it is to maintain the LRSDs as the region — and the nation — seeks to lower emissions while maintaining electric reliability and affordability over the long-term,” APPA said in its comments. “Moreover, recent extreme weather events have demonstrated that the LSRDs are an irreplaceable resource not just in the future but right now — both in terms of energy, capacity, and other grid services key to maintaining reliable electricity.”

Public power utilities are committed to scientific, cost-effective mitigation for the impacts of the federal hydropower system, APPA noted. It said that costs related to fish and wildlife mitigation, including the cost of lost power generation, comprise a quarter or more of the Bonneville Power Administration’s power rates.

“The LSRDs feature state-of-the-art fish passage technology that greatly improves in-river fish survival, achieving spring juvenile survival at 96 percent and summer migrating fish survival at 93 percent. Removal of the LSRDs is not a clear path to recovery of endangered species or overall abundance of salmon. More attention is needed to the threats of ocean conditions, avian predation, and over-fishing,” APPA said.

Removal of the LSRDs “may prove to be a tipping point, nudging the Northwest system into acute scarcity of electric supply. The Federal hydropower system, and particularly the LSRDs, are in a critical position to maintain grid reliability and prevent blackouts in the West.”

Moreover, no existing alternative technologies can provide the same combination of low cost, reliable, and flexible attributes, and it is far from clear that dam removal will result in meaningful fish recovery commensurate with costs, APPA added.

WPUDA noted that the draft states that three studies found the energy generated by the LSRD could be replaced by a clean energy portfolio. “It is important that the report emphasize that these studies do not demonstrate that an alternative clean energy portfolio can achieve the other electric system services provided by the LSRDs: peaking capacity, clean energy, grid stability, ancillary and grid services, transmission voltage support and low regional energy rates,” WPUDA said.

The draft report indicates the cost of dam breaching to be $10-$27 billion, WPUDA noted. “Given the stated purpose is salmon recovery, WPUDA believes it is worth asking whether this is the best use of this enormous sum of dollars. And if so, could this money be spent in alternative ways that better support salmon abundance (e.g., stream bank restoration, culvert replacement, enhanced salmon migration support)?”

Northwest RiverPartners, which serves not-for-profit, community-owned electric utilities in Oregon, Washington, Idaho, Montana, Utah, Nevada and Wyoming, said that “Our already fragile grid is facing unique challenges and threats. Removing the lower Snake River dams would not only create even greater challenges, but their loss would harm our efforts to keep the power on when we most need it.”

Additionally, losing the lower Snake River dams “makes it virtually certain that grid operators will be forced to continue using coal or natural gas generation for years longer than allowed under Washington’s clean energy laws to avoid blackouts,” Northwest RiverPartners said.

Following the public input period, tribal consultation, and other means of engagement, the report will be updated and released in final form. The senator and governor will then make their recommendations.

New York Power Authority Transmission Project Advances

July 17, 2022

by Paul Ciampoli
APPA News Director
July 17, 2022

The New York Power Authority’s Smart Path transmission project in the North Country is two-thirds complete, New York Gov. Kathy Hochul announced on July 13.

Smart Path, an upgrade of 78 miles of transmission lines which span from Massena in St. Lawrence County to Croghan in Lewis County, is designed to strengthen transmission lines against weather events and enable the reliable transmission of clean energy from northern New York into the state’s electric power grid. Construction on Smart Path upgrades began in early 2020 and are on track to be completed next year.

In addition to the Smart Path Project, the rebuilding of several other large transmission projects are in progress across New York State including NYPA and LS Power New York’s Central East Energy Connect project which project which involves the rebuild and expansion of more than 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 Empire State Line Project which recently completed approximately 20 miles of transmission lines in Western New York.

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 two new major transmission line projects selected by Governor Hochul last year to help transport clean energy to New York City: Clean Path New York, a project developed through a collaboration between NYPA and Forward Power (a joint venture of Invenergy and EnergyRe) and the Champlain Hudson Power Express Transmission Project developed by Transmission Developers Inc

NYPA and National Grid are collaborating on another North Country transmission project known as Smart Path Connect which will run East-West from Clinton to Massena and North-South from Croghan to Marcy.

When completed, the two segments of Smart Path Connect will join the Smart Path project, creating one continuous upgraded transmission line from Clinton to Marcy. The Smart Path Connect project is currently under environmental review with the New York Public Service Commission.

Together these transmission projects total nearly 1,000 miles of new and upgraded New York State transmission lines that will help advance New York’s goal of obtaining 70% of the state’s electricity from renewable sources by 2030 and realizing a zero-emission energy grid by 2040.

Fitch Affirms Southern Minnesota Municipal Power Agency’s Bond Ratings

July 16, 2022

by Paul Ciampoli
APPA News Director
July 16, 2022

Fitch Ratings affirmed its ratings on Southern Minnesota Municipal Power Agency (SMMPA) power supply system revenue bonds. The rating outlook is Stable.

Fitch affirmed the ratings on approximately $520 million power supply system revenue bonds at “AA-“ and an Issuer Default Rating (IDR) at “AA-.”

The ‘AA-‘ rating and IDR “reflects the agency’s very strong revenue defensibility, which is supported by the intermediate- and long-term wholesale customer contracts and the very strong credit quality of the largest purchasers, strong operating risk profile and trend of stable financial results with very low financial leverage,” Fitch said.

The agency’s “consistently low operating cost burden and diversifying portfolio of mainly owned-generation assets drive its strong operating risk profile.”

Fitch said SMMPA’s resource mix is diverse and includes ownership interest in a large baseload coal plant, Sherbourne County Generating Unit 3 (Sherco 3), which is set to be retired in 2030. “The cost burden is expected to rise in 2022 with higher fuel-related costs and higher MISO market pricing, but the cost burden should remain low,” the rating agency said.

The future retirement of Sherco 3 is expected to coincide with the expiration of the power supply contracts of its two largest members, resulting in a re-balancing of resources with expected future customer load, and no meaningful change in SMMPA’s operating profile, it said.

SMMPA’s leverage ratio, as measured by net adjusted debt to adjusted funds available for debt service, has been on a steady decline over the past five years. In fiscal 2021, the leverage ratio declined to 4.6x, reflecting a trend of declining debt, stable financial margins, and ample liquidity.

The agency will amortize $320 million in existing debt through 2026, allowing leverage to remain very low even through a Fitch’s stress scenario.

SMMPA provides wholesale power supply to 18 participating cities, all of which own and operate municipal electric utility systems.

The agency’s load center is concentrated in the southern portion of the state, with the largest member, Rochester Public Utilities representing roughly 40% of energy sales.

Collectively, the participating systems serve approximately 129,000 largely residential and commercial customers and a total population of over 250,000. Power is supplied to the members primarily through a mix of agency and member-owned generation resources and a growing renewable portfolio.

Nebraska Public Power District CEO Details Proactive Approach To Supply Chain Challenges

July 15, 2022

by Paul Ciampoli
APPA News Director
July 15, 2022

In a recent media briefing, Tom Kent, President and CEO of Nebraska Public Power District (NPPD), detailed how NPPD has taken a proactive approach in response to ongoing supply chain challenges facing the utility sector.

“We are seeing, just like any other business, impacts in supply chain and the ability to get needed resources,” Kent said in the virtual press briefing on July 8.

“We do plan ahead and have materials set aside and reserved for emergencies,” he noted.

Kent said that spring is a very active storm season in Nebraska, “and so we typically see damage to our system from tornados, high winds, et cetera, that we have to repair, and we’ve had several cases of that this spring. We were able to get all those facilities repaired expeditiously and in service because we had stocks available and set aside what we call storm stock.”

The reserves have decreased and NPPD is “monitoring the time it’s going to take to get those supplies restocked in our system.”

Kent said that the “supply chain is congested right now, so to get resupplies right now, it’s taking longer. The costs to get materials is higher than it has been traditionally. But again, it’s part of what we manage.”

Kent said that “we saw this coming – even a year ago, as we were planning for power plant maintenance outages,” NPPD started “working very closely with our customers, put special teams together to focus on ensuring we had the materials we need with enough time so that we could do the work we” needed to do.

He went on to say that “in the case of utilities, one of the areas that we are monitoring really closely is transformers and getting transformers to support other activities in the communities.”

Kent said that part of the supply chain story involves inflationary pressures that are being seen “across the nation, quite frankly. We account for that and look at those types of issues in terms of future costs as we forecast what we need for rates in the future. Right now, there’s a lot of uncertainty about future prices, but we are in a really good position financially.”

He noted that “we’ve held our rates stable on the retail side of our business for the last nine years, on the wholesale side of our business for the last five years. We’re currently running with about a $30 million surplus this year.”

APPA Moves To Address Supply Chain Challenges

The American Public Power Association (APPA) is taking 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.

In a speech in June at APPA’s National Conference in Nashville, Tenn., 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.

APPA also recently finalized a new supply chain issue brief. APPA members can download the issue brief here.

New Mutual Aid Committee Established At APPA National Conference

July 15, 2022

by Paul Ciampoli
APPA News Director
July 15, 2022

A new Mutual Aid Committee (MAC) was established last month at the American Public Power Association’s National Conference in Nashville, Tenn.

Previously, national-level public power mutual aid efforts had been conducted under the auspices of the Mutual Aid Working Group (MAWG), which coordinated and facilitated the mutual aid program for APPA for well over a decade.    

“The MAWG had effectively coordinated and facilitated the mutual aid program for APPA for well over a decade,” noted Santee Cooper’s Neil James, who will serve as Chair of the MAC. “The creation of MAC simply reflects an effort to take things to the next level.” 

The creation of the MAC formalizes APPA member oversight of the mutual aid program. The MAC remains focused on networking, supporting emergency response, facilitating mutual aid, and sharing ideas and resources.  

 Acting Co-Chairs of the MAWG, Amy Zubaly (FMEA) and Kenny Roberts (ElectriCities of North Carolina), oversaw establishment of the MAC and the elections for the MAC Executive Council. Neil James was elected as the Chair.  Mike Willets (MMUA) was elected as Vice Chair.   

JT Flick (NYPA), Brandon Wylie (Electric Cities of GA), and David Hefner (GRDA) were elected as At-Large members. 

“I want to personally thank Amy, Kenny, the MAWG/MAC members, and the MAC Executive Council for their service,” said James.

For more information on the MAC and mutual aid processes or becoming an active member of the MAC, contact mutualaid@publicpower.org.