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APPA Says Record Shows Support for Joint Transmission Ownership Opportunities for LSEs

October 3, 2022

by Paul Ciampoli
APPA News Director
October 3, 2022

The record of a pending Federal Energy Regulatory Commission (FERC) proceeding offers specific support for the Commission to find that promoting joint transmission ownership opportunities for load-serving entities (LSEs) is likely to provide the benefits the Commission projects, the American Public Power Association (APPA) said in reply comments filed at FERC.

The Sept. 20 reply comments were made in a FERC proceeding related to regional transmission planning and cost allocation (Docket No. RM21-17-000).

In a Notice of Proposed Rulemaking (NOPR), FERC outlined significant changes to its transmission planning rules, including a proposal to promote joint ownership of transmission lines through the use of a conditional right of first refusal (ROFR) to build jointly owned lines.  In comments filed in response to the NOPR, APPA urged FERC to adopt a more narrowly tailored version of the proposed conditional ROFR focused on promoting joint ownership opportunities for public power utilities and other LSEs.

The proposed reforms outlined by FERC in the NOPR are intended to remedy deficiencies in the Commission’s existing regional transmission planning and cost allocation requirements to ensure that Commission-jurisdictional rates remain just and reasonable and not unduly discriminatory or preferential.

“Focusing the conditional ROFR on joint ownership opportunities for LSEs would not be unduly discriminatory,” APPA said in its reply comments.

APPA’s proposal for a conditional ROFR that is focused on LSE joint ownership is consistent with the specific statutory requirement in Federal Power Act section 217(b)(4) that the Commission exercise its authority in a manner that facilitates the planning and expansion of transmission facilities to meet the reasonable needs of LSEs to satisfy the service obligations of LSEs, the trade group went on to say in the reply comments.

APPA said it recognizes that many commenters have expressed concern that any ROFR for incumbent transmission providers, even a conditional one, would be a retreat from competition.

“APPA acknowledges that transmission competition may be a mechanism to control rising transmission costs, which is a significant concern for APPA members and other transmission customers. The premise of APPA’s joint ownership proposal is that it would make it more likely that the benefits envisioned by the Commission would actually be realized,” APPA said.

Those benefits include helping to increase opportunities for investment in the transmission system and promoting market entry and greater diversity of participation and perspectives in transmission ownership, APPA told FERC.

“These goals are pro-competitive and APPA’s proposed narrow ROFR would provide an option to achieve them.”

Moreover, APPA underscored the fact that its proposal for a narrowly tailored conditional federal ROFR would not be mandatory. “APPA does not support proposals or comments in favor of a mandatory ROFR, conditional or otherwise.”

APPA also said it does not agree with comments that if the Commission decides to reinstate some form of ROFR, it should do so on a nationwide basis or permit the states to make determinations regarding competitive processes.

Instead, APPA’s proposal allows that in those areas where regional transmission planning stakeholders believe that transmission competition is beneficial, they could opt not to implement a conditional ROFR approach.

If the Commission declines to adopt a conditional ROFR in any final rule in this proceeding, APPA urged it to promote public power joint transmission ownership through other methods.

There is a substantial record “in this docket demonstrating the benefits that joint ownership opportunities for public power and electric cooperative LSEs are likely to produce.” 

The Commission should pursue policies to promote these benefits even if it decides not to adopt the conditional ROFR, APPA said.

“The Commission could, for example, seek to promote joint ownership through the transmission planning process by specifying that joint ownership of transmission facilities is a positive factor in evaluating transmission solutions in regional transmission planning processes, including competitive solicitations,” APPA said.

SPP RTO Expansion Into Western Interconnection Details Projected Savings

October 3, 2022

by Paul Ciampoli
APPA News Director
October 3, 2022

Expanding the Southwest Power Pool (SPP) Regional Transmission Organization into the Western Interconnection could produce a net total of $55 million to $73 million per year in savings depending on hydrologic conditions, according to a new study commissioned by prospective SPP RTO participants in the Western Interconnection.

The Brattle study evaluated adjusted production cost savings and reported potential market benefits for expanded SPP RTO participation. The study estimates adjusted production cost savings of $71 million per year under average hydrology conditions. The savings increase to $89 million per year under severe drought conditions.

There are also potential operational and reliability benefits provided by RTO participation that are not quantified in the adjusted production cost study.

 “This study, including the specific impacts across WAPA customers, will help inform our next steps and potential future as we adapt to the changing climate and generation mix. We greatly appreciate the effort dedicated to this study from Brattle and other study participants,” said Western Area Power Administration Administrator and CEO Tracey LeBeau. “As always, we are committed to collaborating with our customers and stakeholders as we assess this opportunity. Any decision to move forward with final negotiations for SPP RTO membership will be consistent with our statutory requirements and involve the appropriate public processes.”

Prospective SPP RTO participants included in the study are Basin Electric Power Cooperative, Colorado Springs Utilities, Deseret Power Electric Cooperative, Tri-State Generation and Transmission Association and the Municipal Energy Agency of Nebraska along with the WAPA Upper Great Plains region, Rocky Mountain region and Colorado River Storage Project.

Each of these entities is currently participating in the SPP Western Energy Imbalance Service and receives Reliability Coordinator services from SPP. Tri-State, WAPA UGP region, Basin Electric and MEAN are already members of SPP in the Eastern Interconnection.

Although not included in the study, Platte River Power Authority announced in August its intention to join the SPP RTO.

As potential benefits, the SPP RTO expansion could increase the portfolio of tools available to support reliability in the Western Interconnection. This includes consolidated balancing authority operations, coordinated resource adequacy and a fully integrated wholesale market that would optimize real-time, day-ahead and ancillary services.

Additionally, the established SPP RTO transmission processes could improve transmission planning and development needed to support growing electricity demand and addition of more generation resources, including renewables.

“We’re pleased that the study reinforces the promise of an organized power market and our partnership with the Southwest Power Pool,” said Colorado Springs Utilities CEO Aram Benyamin. “For our customers, the benefits are clear – millions of dollars in annual savings by having access to regional energy producers and the reliable and cost-effective integration of additional carbon-free energy resources into our system.”

This study builds on previous evaluations of the benefits of SPP RTO expansion into the Western Interconnection, including a 2020 study commissioned by SPP. The new 2022 study uses updated modeling assumptions about the participant footprint, generation portfolios, natural gas prices and projected hydrology conditions.

The study is not a decision by participants to join the SPP RTO. Each of the participating organizations will continue their internal review and approval processes to determine if they will proceed to the next steps for SPP RTO membership. The 2022 Brattle study results, along with other factors, will help inform those processes.

President Biden Signs Spending Bill that Includes $1 Billion in LIHEAP Funding

October 3, 2022

by Paul Ciampoli
APPA News Director
October 3, 2022

President Biden on Sept. 30 signed a stop-gap spending bill that includes $1 billion in additional funding for the Low Income Home Energy Assistance Program (LIHEAP).

Half of the funds will be distributed using the old formula, which tends to benefit heating states, while the other half will be distributed using a new formula, which provides greater benefit to cooling states relative to the old formula.

In addition, LIHEAP is expected to receive roughly $4 billion in regular appropriations for fiscal year 2023 when permanent spending bills are approved.

The American Public Power Association strongly supports LIHEAP and the funding increase including the bill, which stems in large part because of rising energy prices.

The spending bill will keep the federal government operating through December 16 to allow time for Congress to pass permanent annual spending bills for the fiscal year which begins on October 1.

The Senate passed the measure on Sept.29, with the House passing it on Sept. 30.

Nominations for APPA’s Policy Makers Council Now Being Accepted

October 1, 2022

by Paul Ciampoli
APPA News Director
October 1, 2022

Nominations for the American Public Power Association’s Policy Makers Council (PMC) are being accepted through November 18.

Leaders of public power utilities can nominate members, who are either elected or appointed officials, on the governing authorities of public power distribution utilities, including mayors, city council members, and elected or appointed board members.

The PMC meets twice a year in Washington, D.C. during the APPA Legislative Rally in February and at a separate PMC-only meeting in July to participate in meetings with elected representatives and congressional staff to advance APPA’s legislative and regulatory agendas. 

To nominate a member of a utility’s governing body to the PMC or learn more about the process, contact Steve Medved, APPA’s Government Relations Manager, at: smedved@publicpower.org.

Groups Voice Opposition to Data Reporting Requirements for State, Local Borrowers

October 1, 2022

by Paul Ciampoli
APPA News Director
October 1, 2022

The American Public Power Association (APPA) has joined with 17 other members of the Public Finance Network in writing Senate leaders in opposition to data reporting requirements for state and local borrowers included in the Financial Data Transparency Act of 2022.

The Public Finance Network consists of state and local governments and other tax-exempt bond issuers, borrowers and municipal market professionals.

The bill would require the Municipal Securities Rulemaking Board (MSRB) to require state and local governments to report financial information using uniform reporting categories, or “data standards,” which may require costly updates to financial systems or extensive workarounds.

The changes would take effect no later than two years after final rules implementing the change are promulgated.

The concern is that the provisions of the Financial Data Transparency Act of 2022 (S. 4295) were added as an amendment to H.R. 7900, the National Defense Authorization Act for Fiscal Year 2023 (NDAA). The NDAA passed the House in July, and a companion bill (S. 4534) has passed the Senate Armed Services Committee.

State and local governments “do not oppose transparency and accessibility of information, and in fact, significant financial transparency standards are already in place,” the Sept. 29 letter noted.

“Most issuers of municipal securities (e.g., entities represented by the undersigned groups) adhere to governmental reporting standards established by the Governmental Accounting Standards Board (GASB), while others follow standards as determined under state law. In whole, issuers of municipal securities exhibit transparency to stakeholders through very established and standardized means.”

APPA and the other groups voiced concern about the impact of the Financial Data Transparency Act’s Section 203 on state, county, municipal, public utilities, hospital and education entities required to submit financial information to the MSRB for several reasons.

“Among others, a primary concern is that this provision would result in an unfunded mandate on state and local governments due to the increased costs to ensure systems are able to comply with future standards,” the letter said.

“Further, this provision represents a substantial federal overreach into the content and structure of issuer disclosures, and more broadly the accounting and reporting principles of government entities, contrary to the principles of federalism,” the groups argued.

Also, Section 203 “could create more confusion and ultimately reduce transparency by forcing vastly different kinds of governmental entities to report using a rigidly standardized schema or taxonomy.”

Power Restored to One Million Customers in Puerto Rico

September 28, 2022

by Paul Ciampoli
APPA News Director
September 28, 2022

LUMA Energy on Sept. 27 announced that it has restored electric service to 1 million of its 1.5 million customers in Puerto Rico who lost power as a result of Hurricane Fiona.

As part of the prioritization of restoration to critical customers, LUMA also shared it has restored power to 131 hospitals and 946 Puerto Rico Aqueducts and Sewers Authority facilities.

As part of its overall and regional restoration efforts, LUMA is continuing to shift its field utility workers to areas in the south and west of Puerto Rico that were hit hardest by the hurricane, with impacts that included severe flooding, and up to 103 mph winds.  

LUMA is continuing to project service will be restored to more than 64-77% of customers by September 28, 2022, while 77-91% of customers are anticipated to be restored by Friday, September 30.

Restoration on a given day can fluctuate and continue to depend on a number of factors, including ongoing damage assessments and real-time repairs, adequate generation including energy reserves to protect and balance the system and access to critical facilities most impacted by the hurricane.

Hurricane Fiona impacted many parts of the electric grid and generation facilities across Puerto Rico, especially in the Ponce and Mayagüez regions that suffered severe damage to roads and critical infrastructure.

Grid and generation infrastructure in these regions were also significantly affected by the severe weather brought by Hurricane Fiona which included 12-30+ inches of heavy rain, winds between 85 and 103 mph and widespread flooding.

LUMA is prioritizing repairs for essential critical services, like hospitals, and is increasing the number of crews in the regions hit hardest. Out of the over 2,000 utility workers mobilized across the island, 460 are now working in the Mayagüez region and 244 in the Ponce region for a total of approximately 35% of mobilized workers addressing areas with the most severe damage. 

In June 2020, Puerto Rico Electric Power Authority and the Puerto Rico Public-Private Partnership Authority selected LUMA Energy to operate, maintain and modernize the electricity transmission and distribution system of PREPA for fifteen years through a public-private partnership.

Energy Permitting Reform Proposal Pulled from Government Spending Bill

September 28, 2022

by Paul Ciampoli
APPA News Director
September 28, 2022

Sen. Joe Manchin (D-WV) on Sept. 27 asked Senate Majority Leader Charles Schumer (D-N.Y.) to remove energy permitting reform legislation from consideration as part of a government spending bill prior to a vote on the spending bill, which is known as a Continuing Resolution (CR).

“Over the last several weeks there has been broad consensus on the urgent need to address our nation’s flawed permitting system,” Manchin said in a statement. “I stand ready to work with my colleagues to move forward on this critical legislation to meet the challenges of delivering affordable reliable energy Americans desperately need. “

The Senate passed the CR on Sept. 27.

Manchin released the text of his energy permitting reform legislation, the “Energy Independence and Security Act of 2022,” on Sept. 21. Manchin is chairman of the Senate Energy and Natural Resources Committee.

As part of the Inflation Reduction Act signed into law on August 16, 2022, Manchin secured a commitment from Schumer, House Speaker Nancy Pelosi, D-Calif., and President Biden a vote on comprehensive permitting reform before the end of the fiscal year on September 30, 2022.

The updated bill text is similar to a draft that was previously leaked, although it includes some changes. 

Specifically, there are two new sections on the definition of natural gas and another that would authorize the Mountain Valley Pipeline.

The first new section clarifies that the Federal Energy Regulatory Commission (FERC) has jurisdiction to regulate interstate hydrogen infrastructure under the Natural Gas Act.

The second new section would authorize the Mountain Valley Pipeline and expedite its approval process. The updated language removes the specific judicial review section that was in the leaked draft bill.

The transmission language in the legislation is mostly the same as it was in the leaked version of the bill.

There are two small changes that were made to the transmission language. The first changes the wording that allows the Department of Energy to designate “any electric transmission facility proposed to be constructed or modified to be necessary in the national interest.”

The second change would clarify that the Department of Interior would be lead agency regarding Outer Continental Shelf lands.

These changes appear to address concerns raised by others on offshore wind transmission facilities, but do not address concerns raised by the American Public Power Association, the Edison Electric Institute and the National Rural Electric Cooperative Association on changes to the Federal Power Act and the scope of FERC’s authority to require the construction of certain electric transmission facilities.

While this is a setback for Manchin’s permitting reform effort, it will likely not be the last attempt to get it attached to legislation this year. 

The CR funds the government through December 16 and full funding measures will need to be taken up before then.  The National Defense Authorization Act (NDAA) also need to pass this year and are likely two vehicles that Manchin would seek to move his efforts forward on.

Click here for additional details on the legislation.

Federal Energy Regulators Propose Incentives for Voluntary Cybersecurity Investments

September 28, 2022

by Paul Ciampoli
APPA News Director
September 28, 2022

The Federal Energy Regulatory Commission (FERC) on Sept. 22 issued a Notice of Proposed Rulemaking (NOPR) to establish rules providing incentive-based rate treatment for utilities making certain voluntary cybersecurity investments.

In the Infrastructure Investment and Jobs Act of 2021, Congress directed FERC to revise its regulations to establish incentive-based rate treatments by encouraging utilities to invest in advanced cybersecurity technology and participate in cybersecurity threat information sharing programs.

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 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.

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.

At the same time,  FERC terminated its earlier cybersecurity incentives NOPR (Docket No. RM21-3), which the American Public Power Association had opposed. 

Comments on the NOPR are due 30 days after publication in the Federal Register.  Reply comments are due 45 days after publication in the Federal Register.  

The NOPR is available here.

NYPA Project Demonstrates CO2 Reduction Potential of Green Hydrogen

September 27, 2022

by Peter Maloney
APPA News
September 27, 2022

The New York Power Authority (NYPA) recently concluded a demonstration project that showed decreased carbon dioxide (CO2) emissions when using green hydrogen blended with natural gas to generate power.

The demonstration project, at NYPA’s Brentwood Small Clean Power Plant on Long Island, was led by NYPA in collaboration with the Electric Power Research Institute (EPRI), General Electric and Airgas, an Air Liquide company.

While NYPA and other power companies already use hydrogen for equipment cooling, the Brentwood project marks the first retrofit of an existing U.S. natural gas facility that enabled use of green hydrogen blended with natural gas to fuel a power plant.

Green hydrogen is produced using renewable resources.

The project used blends of 5 percent to 40 percent hydrogen to identify and document any effects on the operation of General Electric’s LM-6000 combustion turbine engine and found that CO2 emissions decreased as the amount of hydrogen increased.

In addition, at steady state conditions, the exhaust stack levels of nitrogen oxides (NOx), carbon monoxide, and ammonia showed that emissions could be maintained below limits mandated by the New York State Department of Environmental Conservation using the existing post-combustion technologies and with no known detrimental effects on the gas turbine operations.

The results could prove consequential for power plant operators to begin testing and using hydrogen fuels to lower CO2 output with minimal or no required modifications to plant systems, NYPA said.

In March, New York, Connecticut, Massachusetts, and New Jersey formed a coalition to develop a proposal to become one of at least four regional clean energy hydrogen hubs designated by the Bipartisan Infrastructure Investment and Jobs Act. In September, Maine and Rhode Island joined the coalition.

Puerto Rico Sees Power Restoration Progress Over the Weekend

September 25, 2022

by Paul Ciampoli
APPA News Director
September 25, 2022

LUMA Energy reported that as part of ongoing Puerto Rico Hurricane Fiona recovery efforts, approximately 50 percent, or 732,324 of customers had their power restored as of Saturday, Sept. 24.

LUMA said that it has continued conducting damage assessments and critical repairs, and has been focusing on connecting critical customers, such as hospitals and other essential services.

As part of combined restoration efforts, LUMA continues to coordinate with the Puerto Rico Electric Power Authority (PREPA). and other private generation operators to reenergize critical generation facilities and increase the amount of available generation so LUMA can restore service to more customers.

Along with approximately 50% of customers restored as of Sept. 24, LUMA reported:

In June 2020, PREPA and the Puerto Rico Public-Private Partnership Authority selected LUMA Energy to operate, maintain and modernize the electricity transmission and distribution system of PREPA for fifteen years through a public-private partnership.