Fitch Revises Rating Outlook On Provo City, Utah, To Positive From Stable
February 3, 2022
by Paul Ciampoli
APPA News Director
February 3, 2022
Fitch Ratings has revised the rating outlook on Provo City, Utah, to positive from stable and affirmed the “AA-“ ratings on bonds issued by Provo City on behalf of the electric utility system Provo Power.
The bonds in question are $14.9 million energy system revenue bonds, series 2015A.
In addition, Fitch has assessed a standalone credit profile (SCP) of ‘aa-‘. The SCP represents the credit quality of the electric system on a standalone basis, irrespective of its relationship with and the credit quality of the city of Provo.
Fitch said the positive outlook reflects the electric system’s improved financial profile and Fitch’s expectation that deleveraging will continue through 2026, beyond levels previously anticipated by Fitch.
Leverage, as measured by net adjusted debt to adjusted funds available for debt service was 5.1x in 2021, an improvement over the prior year’s 5.5x. The fluctuation in leverage over the past two years was primarily the result of the impact of COVID-19 on electrical demand at the onset of the pandemic in 2020, followed by recovery in 2021, Fitch said.
Leverage was additionally impacted in 2021 by a spike in the Fitch-adjusted net pension liability. Going forward, leverage ratios are expected to trend below 5.0x by 2024, provided consistent rate increases are implemented to support the electric system’s ongoing capital needs.
The rating also reflects Provo Power’s “very strong revenue defensibility, supported by a growing and economically sound service area and the electric system’s independent legal ability to adjust rates that are highly affordable,” the rating agency said.
Moreover, the electric system’s very low operating risk reflects the all-requirements power sales agreement with the Utah Municipal Power Agency that provides the electric system with a competitively priced and diverse source of power, Fitch said.
Santee Cooper Launches New Demand Response Program
February 3, 2022
by Paul Ciampoli
APPA News Director
February 3, 2022
Santee Cooper, South Carolina’s state-owned electric and water utility, recently launched a new demand response program.
Under the program, called SmartRewards, customers can earn bill credits for helping Santee Cooper reduce electricity use during periods of high electric demand or during times when system resources are constrained.
Santee Cooper has contracted with Honeywell to install a small switching device near participants’ central heating and cooling systems and/or electric water heaters.
During periods of high demand or system constraints, the switch may be activated to periodically cycle heating and cooling systems and/or electric water heaters on and off, resulting in a reduction of electric demand.
Customers who participate in the program will earn initial bill credits for enrolling and having a switch installed, and then annually for as long as they participate.
Participation options include the following:
- Water heater: $20 installation bill credit and $15 annual bill credit.
- Heating and cooling system: $30 installation bill credit and $25 annual bill credit.
- Heating and cooling system and electric water heater: $50 installation bill credit and $50 annual bill credit.
FERC Moves To Close Gap In Reliability Standards For Electric Grid Cyber Systems
February 3, 2022
by Paul Ciampoli
APPA News Director
February 3, 2022
The Federal Energy Regulatory Commission (FERC) on Jan. 20 issued a notice of proposed rulemaking (NOPR) proposing to strengthen mandatory critical infrastructure protection (CIP) reliability standards by requiring internal network security monitoring for high- and medium-impact bulk electric system cyber systems.
The NOPR proposes to direct the North American Electric Reliability Corporation (NERC) to develop and submit new or modified reliability standards on internal network security monitoring to address what FERC regards as a gap in the current standards.
Mandatory electric reliability standards, including the CIP standards, are developed by NERC and approved by FERC. The Commission also has authority to direct NERC to develop new or revised standards, and FERC is relying on that authority in the NOPR.
Under existing CIP reliability standards, network security monitoring is focused on defending the electronic security perimeter of networks that do not equate to an internal security network.
In proposing to direct NERC to expand or revise the existing CIP rules, FERC said that it is seeking to address concerns that the existing standards do not address potential vulnerabilities of the internal network to cyber threats
Internal network security monitoring addresses situations where vendors or individuals with authorized access that are considered trustworthy might still introduce a cybersecurity risk.
As an example, FERC said that the SolarWinds attack in 2020 demonstrated how an attacker can bypass network perimeter-based security controls used to identify and thwart attacks. This supply chain attack leveraged a trusted vendor to compromise the networks of public and private organizations, FERC said.
Incorporating internal network security monitoring requirements into the CIP reliability standards would help to ensure that utilities maintain visibility over communications in their protected networks, FERC said. Doing so can help detect an attacker’s presence and movements and give the utility time to take action before an attacker can fully compromise the network.
Internal network security monitoring also helps to improve vulnerability assessments and can speed recovery from an attack, FERC noted.
The NOPR seeks comment on all aspects of the proposed directive to develop and submit new or modified reliability standards for internal network security monitoring for high- and medium-impact cyber systems. Although the proposal is currently limited to high- and medium-impact assets, as classified under NERC’s risk-based classification system, the NOPR also seeks comment on whether internal network security monitoring should be expanded to low-impact assets, or a subset of these assets.
At FERC’s January monthly open meeting, FERC Chairman Richard Glick emphasized that reliability of the bulk power system, including cybersecurity, is a top priority for the Commission.
He noted that, if a hacker does breach an entity’s electronic perimeter, internal network monitoring can allow for a more effective and timely response.
He encouraged interested parties to comment on the applicability of the proposal to low impact bulk electric system cyber systems, calling it “an interesting issue.”
Comments on the NOPR are due 60 days after publication in the Federal Register.
Click here to access the NOPR.
Nebraska Utility Launches New Program To Support Local Businesses
February 2, 2022
by Vanessa Nikolic
APPA News
February 2, 2022
Nebraska’s Omaha Public Power District (OPPD) recently launched a new tool to help provide support to small businesses in the local community.
According to a recent article in OPPD’s The Wire newsletter, SizeUpNebraska is a web platform that offers a variety of tools, data, and research that local businesses can utilize to compare competition, identify market characteristics, and discover ways to optimize marketing efforts.
Interested businesses can also use the new tool to discover potential customers and suppliers. Users can find suppliers closer to their business using the tool’s location functions. The platform also helps to identify where competitors are located.
SizeUpNebraska will be available to the communities served by OPPD. The platform is free for businesses to access, and no formal training is required.
OPPD’s Economic Development team saw how other utilities used the platform to provide value to large and small businesses. The team began working to bring SizeUpNebraska to OPPD’s communities with the goal of helping the local economy thrive.
Other features of SizeUpNebraska include identifying top businesses in the area, analyzing customer characteristics, showing how to make better decisions based on data, and offering recommendations based on the data provided.
The tool also aims to attract new businesses and up-and-coming entrepreneurs.
OPPD says the tool will help businesses grow by giving them access to key market research and data that they otherwise could not find.
Additional information about OPPD’s economic development initiatives are available here.
A Transactive Grid Can Reduce Load Swings And Costs: PNNL Study
February 2, 2022
by Peter Maloney
APPA News
February 2, 2022
Consumers can save about 15 percent on their annual electric bill by coordinating with their utility to control devices that use large amounts of electricity, such as heat pumps, water heaters, and electric vehicle charging stations, according to a new report from the Pacific Northwest National Laboratory (PNNL).
The Distribution System Operator with Transactive (DSO+T) study found that a transactive energy system would reduce daily load swings by 20 percent to 44 percent. The study identified a transactive energy system as one in which there is an agreement between consumers and utilities about the flexible use of energy.
In a transactive system, homes, commercial buildings, electric appliances and charging stations are all in constant contact, the PNNL researchers said, and smart devices receive a forecast of energy prices at various times of day and develop a strategy to meet consumer preferences while reducing cost and overall electricity demand.
PNNL, with Avista and McKinstry, has deployed a pilot version of an urban transactive system in the city of Spokane, Washington’s Eco-District. However, a transactive energy system has never been deployed on a large scale, so the PNNL researchers designed a simulation to analyze how distribution system operators can use transactive energy principles and mechanisms to integrate large numbers of flexible assets into the everyday operation of the electric power system.
The Electric Reliability Council of Texas (ERCOT) region provided the basis for PNNL’s analysis. The researchers created a model that represented ERCOT’s network, including more than 100 power generation sources and 40 utilities. The analysis also included representations of 60,000 homes and businesses and their energy-consuming appliances.
The researchers conducted multiple simulations under various renewable energy generation scenarios to determine how the energy system would react to the addition of differing amounts of intermittent power sources, such as wind and solar power.
The study looked at transactive coordination for two separate asset deployment scenarios: flexible loads (heating-ventilation-air conditioning units and residential water heaters) and behind-the-meter batteries. The results were compared with a corresponding business-as-usual case without flexible assets.
Both cases were subject to two scenarios: a moderate renewable generation scenario to represent current levels of deployment and a future high renewables scenario with 40 percent renewable generation, including the increased use of rooftop solar and about 30 percent of residences having an electric vehicle.
The simulation showed that if a transactive energy system were deployed on the ERCOT grid, peak loads would be reduced by 9 percent to 15 percent, translating into economic benefits of up to $5 billion annually in Texas alone, or up to $50 billion annually if deployed across the continental United States, according to PNNL.
“Because Texas’ grid is quite representative of the nation’s energy system, it not only enabled the modeling and simulation of transactive concepts but provided a reliable extrapolation of the results and potential economic impacts to the broader United States grid and customers,” Hayden Reeve, a PNNL transactive energy expert who led the team that designed and executed the study, said in a statement.
The study also explored the impact of a new kind of entity, a distribution system operator, who would manage a grid that has multiple energy sources owned and operated by distinct entities all contributing energy to the grid at different times and amounts. The distribution system operator would negotiate the transactions with customers that allow flexible load control.
The study confirmed the value of establishing entities, such as a distribution system operator, to manage transactive energy, the PNNL researchers said.
“A smart grid can act as a shock absorber, balancing out mismatches between supply and demand,” Reeve said. “Through our study, we sought to understand just how valuable effective coordination of the electric grid could be to the nation, utilities and customers. Working with commercial building owners and consumers to automatically adjust energy usage represents a practical, win-win step towards the decarbonization of the electrical, building and transportation sectors without compromising the comfort and safety of participating homes and businesses.”
Iowa’s Atlantic Municipal Utilities Enters Capacity Agreement With Missouri River Energy Services
February 2, 2022
by Paul Ciampoli
APPA News Dierctor
February 2, 2022
The board of Missouri River Energy Services (MRES) recently approved a new capacity purchase agreement with Iowa’s Atlantic Municipal Utilities (AMU).
The structure of the agreement is similar to the reserved capacity agreements that MRES has in place with 19 other members, MRES noted in the January issue of its MRES Today newsletter.
These agreements offer a win-win solution to a member’s reliability needs and MRES’ capacity needs by utilizing the members’ local generation resources for backup capacity, MRES said.
Through these purchase power agreements, MRES can call upon member generators to run and supply energy to the regional electric grid during times when other resources cannot meet customer needs.
During the 2021 polar vortex, six MRES members within the Southwest Power Pool’s footprint were called on to generate electricity to help keep the lights on in their communities and throughout the region, MRES pointed out.
In addition, reserved capacity agreements allow MRES member utilities to run their generators and supply power to their customers during other times of emergency, including outages caused by severe weather or random accidents that damage powerlines.
As part of the agreement, MRES pays the member a monthly fee in exchange for making the local generating capacity available to MRES for its use.
This mutually beneficial arrangement can help MRES and its members meet their capacity requirements, while helping participating members add local backup generation to increase the reliability of their operations, MRES noted in the newsletter.
Due to transmission limitations, the maximum amount of capacity that a member can install under this program is equal to the member’s peak demand.
MRES is an organization of 61 member municipalities that own and operate their own electric distribution systems. MRES is governed by a 13-member board of directors who are elected by and from the ranks of our member representatives.
Fitch Outlines Public Power Supply Risks Tied to Crypto Currency Mining
February 2, 2022
by Paul Ciampoli
APPA News Dierctor
February 2, 2022
Digital asset or crypto currency mining in the U.S. could present power supply risks to public power utilities unless they are sufficiently mitigated, Fitch Ratings said on Jan 24.
Crypto mining “is energy intensive and requires a considerable amount of power that can significantly increase a utility’s overall electrical load. Utilities must balance the revenue prospect of increased electrical sales with the commitment to procure or generate large amounts of power for crypto mining operations,” Fitch said.
The rating agency noted that crypto mining operations are price-sensitive entities that may be quickly scaled back or shut down if mining becomes uneconomical.
To date, Fitch’s rated public power utilities “have successfully limited their risk by restricting the scope of crypto mining operations in their service area or by defining their power procurement commitments in a way that protects the utility from nonpayment, including due to a sudden closure of the mining facility,” Fitch said.
It noted that utilities that have excess generation capacity may have the ability to meet the power supply requirements of crypto mining operations from existing power supplies. “This is the case in the state of Washington, where energy-intensive aluminum smelting operations have gradually closed over the last two decades and wind energy production has increased available energy supplies over the last decade. This, coupled with abundant low-cost hydroelectric generation, made the region an attractive location for data centers historically and crypto-mining operations in recent years.”
A utility with excess capacity “must evaluate the opportunity costs and benefits of a new large crypto load versus retaining capacity for other economic development opportunities,” according to the rating agency.
Crypto mining operations “typically bring in very little additional economic benefits in the form of jobs or ancillary business to a local economy,” Fitch said. While crypto mining operations have a wide range of sizes, in some instances they can become the largest customer in a rural service territory.
“The volatile and unregulated nature of crypto mining and the large influx of load requests led a number of Washington utilities to adopt new practices beginning in 2014 to mitigate exposure to crypto mining entities, including crypto-currency load moratoriums, evolving rate structures to capture the departure risk of a high-risk industry, and defined customer concentration limits,” the rating agency said.
Much of the recent cryptocurrency mining expansion is occurring in Texas, Fitch noted. “Unlike Washington, Texas utilities generally do not have excess generation capacity, but the structure of the regional energy market offers other perceived business advantages. For utilities with a supply and demand imbalance, utilities may need to invest in new generation facilities, sign new long-term power purchase agreements or procure power via real-time market purchases in order to serve additional crypto mining load.”
Fitch said that the first two of these three options pose the greatest risk to the utility should the crypto mining operation shut down, “as utilities could be left with stranded assets and costs that then must be recovered, typically by customers in the form of rate hikes, although the utility may utilize reserves to recover costs if there is little rate flexibility.”
Increased costs or a reduction in reserves could lead to negative credit pressure if operating margins are compressed; similarly, lower liquidity could lead to a weaker overall financial profile.
To date, Fitch-rated utilities have opted to use short-term market purchases with pass-through cost arrangements to mitigate financial risk to the utility, the rating agency said.
Wis. Utility Customers Save Energy While Helping Charities Under Pilot Program
February 2, 2022
by Paul Ciampoli
APPA News Dierctor
February 2, 2022
The Wisconsin public power communities of New Richmond and Mount Horeb have been selected to participate in the second round of a pilot program under which residents will raise money for local charities while they save money learning new ways to save energy.
Focus on Energy’s “Save to Give Challenge” launched in 2020 exclusively for rural communities. The program’s success in Lodi and Bayfield in Wisconsin last year resulted in its being able to expand this year.
Lodi, New Richmond and Mount Horeb are all members of WPPI Energy, which serves 51 locally owned electric utilities.
Focus on Energy Director of Program Operations Erin Soman noted that Lodi residents taking part in the first challenge were able to help keep one of their community charities open.
In both New Richmond and Mount Horeb, any residential customer of the municipal electric utility will be eligible to participate through the utility’s website.
In the same place residents pay their bills online, they can participate in the “Save to Give Challenge” where they will learn and practice no- and low-cost energy actions, tracking their progress on the website or a mobile phone app.
Each time they record how they saved energy they will earn donation points toward their favorite community nonprofits. When enough residents participate and accrue those points, Focus on Energy will donate up to $25,000 to the charities.
Participants will also have easy access to energy saving tips and information about other Focus on Energy offerings. Through time-limited campaigns — coupled with longer-term strategies — the pilot engages rural households to implement behavior-based energy savings and participate in Focus on Energy programs, Focus on Energy noted.
For Mount Horeb and New Richmond, the “Save to Give Challenge” is also in line with the communities’ goals to save energy and support local organizations. Both communities have robust networks of volunteers, social networks, and treasured nonprofits.
In New Richmond, the “Save to Give Challenge” aligns with the community’s vision, written by its residents, to protect natural resources and maintain the city’s reputation as a prosperous, civically engaged community.
Mt. Horeb Utilities, in partnership with WPPI Energy, will also be providing additional donations to local nonprofits when reaches participation milestones in the “Save to Give Challenge.”
For more information about the challenge, click here.
Additional details on Focus on Energy is available here.
EPA Proposes To Restate The Underpinnings Of Mercury Emission Standards For Power Plants
February 1, 2022
by Paul Ciampoli
APPA News Dierctor
February 1, 2022
The Environmental Protection Agency (EPA) this week finished reviewing the 2020 Reconsideration of the Mercury and Air Toxic Standards (MATS) Supplemental Cost Finding and Residual Risk and Technology Review (RTR) for coal and oil-fired electric generating units (EGUs).
As part of the review EPA is now proposing to revoke the May 2020 finding that it is not appropriate or necessary to regulate coal and oil-fired EGUs under Clean Air Act section 112.
After considering costs, the agency reaffirms its April 2016 finding that it remains appropriate and necessary to regulate hazardous air pollutants (HAP) emissions from EGUs.
EPA is proposing an “alternative formal benefit-cost approach to make the appropriate and necessary determination.”
Under this approach, the agency proposes to conclude that it remains appropriate to regulate HAP emissions from EGUs after considering costs. The benefit-cost analysis issued with the MATS rule “indicated that the total net benefits of MATS were overwhelming; even though EPA was only able to monetize one of many statutorily identified benefits of regulating HAP emissions from EGUs,” EPA said.
EPA is seeking comments on all aspects of the proposal and wants information on the performance and costs of new or improved technologies to control HAPs.
EPA is seeking this information to inform its ongoing review of the RTR. The result of the RTR review will be included in a separate agency action.
According to the EPA, there are no anticipated costs or benefits because no regulatory amendments or impacts are associated with reviewing the appropriate and necessary finding.
A copy of the pre-publication Federal Register notice is available here. The proposal will be open for public comment for 60 days upon publication in the Federal Register. A virtual hearing will be held 15 days after publication.
APPA, Other Groups Urged EPA To Sustain The Mercury Rule
The American Public Power Association in 2019 was joined by other power industry trade groups, labor unions, generators and an affiliate of the U.S. Chamber of Commerce in urging the EPA to sustain the MATS rule given that industry has already fully implemented MATS.
Tuskegee, Alabama Utility Reflects on Past and Present Leadership
January 31, 2022
by APPA News
January 31, 2022
February marks Black History Month. In 1976, President Gerald Ford recognized Black History Month during the nation’s bicentennial celebration, urging Americans to “seize the opportunity to honor the too-often neglected accomplishments of Black Americans in every area of endeavor throughout our history.”
Today the American Public Power Association pays tribute to the Black American leaders who, over a half-century ago, sought to establish the Utilities Board of Tuskegee (UBT). We also celebrate its leaders today.
Tuskegee, Alabama Public Power Utility Formed
The Tuskegee City Council and then-Mayor C.M. Keever unanimously adopted a resolution on January 27, 1970 in support of incorporating a public corporation responsible for utility services.
The effort was spearheaded by Booker T. Conley, Lawyer Edward Reid, and William C. Allen, who are widely recognized as “the fathers of the Utilities Board of the City of Tuskegee.” These three local citizens had undersigned the Certification of Incorporation presented to the Tuskegee City Council. It sought to incorporate a public utility to operate an electric system, a water works system, and a sewage system. The certificate called for, among other issues, that an electrical system be ran in perpetuity by acquiring, operating, maintaining, improving, and extending an electric system in the City of Tuskegee, and in the territory surrounding the city.
Booker T. Conley (1923-2019)
His family said that Booker Conley embodied the best of Conley family virtues: humble, intelligent, brave, and adventurous. He would surely be proud of the legacy he left for public power today.
Booker Conley greatly admired his older brother, Coleman, and would follow him to Tuskegee University, where Coleman had enrolled in the very first class of Tuskegee Airmen. That first class of U.S. Army Air Corps cadets graduated from Tuskegee Army Air Field on March 7, 1942; the class began with only 13 cadets.
Booker Conley had instead decided to continue a century-long family carpentry tradition by studying architecture at Tuskegee University. He later drafted the plans to build the airplane hangars that housed Tuskegee’s famous “Red Tail” fighter planes.
When his older brother was tragically killed in a combat exercise, Booker took his place and joined the civil pilot training program at the Tuskegee Institute in 1940. Upon graduating from the Army’s Reserve Officers’ Training Corps, he went on to serve with the 92nd “Buffalo Soldiers” infantry division in Italy during World War II, flying P-51 Mustang fighter planes. The Buffalo Soldiers Division was the only Black infantry division that participated in WWII combat, serving in Italy from 1944 to the war’s end.
Booker Conley flew missions over Italy and Northern Africa. He and Coleman Conley are the first known brothers to be documented amongst the 996 Tuskegee Airmen pilots.
Conley returned to Tuskegee after World War II. He lived near the Tuskegee University campus with his wife, Dorothy, where they raised their four children, and he enjoyed a 50-year long career. In his forties, he continued to serve his country by helping advance the formation of a public power utility to improve the utility services in his hometown. It still thrives today.
UBT Today
UBT operates with 72 employees. The 103-square mile service area includes the City of Tuskegee, the towns of Franklin and Shorter, and much of Macon County, Alabama. The utility has approximately 6,714 electric customers – 88% are residential customers. The utility’s two largest customers are Tuskegee University and the Veterans Affairs medical center.
The public power utility is overseen by a five-member board of directors. All five members are Black men, with Black men and women comprising the predominant majority of UBT’s leadership team.
Gerald B. Long, UBT General Manager
Gerald Long, CPA, CGMA, graduated from the University of Alabama, Birmingham in 1983 with a degree in accounting. He joined the Alabama Public Service Commission in 1988 as an advisor concerning the state’s telecommunications issues. He was later promoted to director of the telecommunications division. During his tenure with the Commission, he started his own accounting firm and later left the Commission to operate it full-time in 1996. In 2008 he became the Chief Financial Officer of UBT and, later, its General Manager.
“I love working for UBT because we provide indispensable services to the community, and through the provision of those services, we are able to plot a future for the community that will lead to economic growth and prosperity,” he said.
Alvin Woods, UBT Light & Power Supervisor
Alvin Woods has been with UBT for nearly 35 years. Since 1987, Woods has seen the Lighting Department grow into a well-rounded utility with trained staff and a fleet of work trucks and various equipment necessary to get the job done. When he began, the department thrived from on-the-job training. UBT’s linemen and journeymen are now trained through the Tennessee Valley Public Power Association’s nationally accredited program. Much of the light staff is now substantially certified so the utility no longer needs to subcontract work to outside professionals.
Woods has been the Light & Power Supervisor for over 20 years now and is proud to be part of UBT’s growth and development serving a city with such a rich history.
UBT has won several awards for its reliability. Indeed, UBT’s most recent electric reliability metric percentage stands at 99.9886 percent.
“Outside of serving our community with excellence, we are also proud of being Electric Cities members that go out and assist other cities as well as other states during times of disasters. We love serving the people,” said Woods. The American Public Power Association awarded UBT a Mutual Aid Commendation certificate for supporting electrical restoration efforts to the Vinton Public Power Authority in Louisiana after the utility was hit hard by Hurricane Laura in August 2020.
UBT continues to give back to the community. Most recently, the public power utility donated $10,000 to the Macon County-Tuskegee Public Library to help expand the number of titles the library offers to help further expand learning opportunities for the community. UBT recently donated to the Booker T. Washington High School Boys Basketball team to acquire new equipment and uniforms before the 2022 season began.