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EPA finalizes rule to codify best practices for benefit-cost analyses under the Clean Air Act

December 10, 2020

by Paul Ciampoli
APPA News Director
December 10, 2020

The Environmental Protection Agency (EPA) on Dec. 9 finalized a procedural rule to codify best practices in the preparation, development, presentation, and consideration of benefit-cost analyses for significant rulemakings promulgated under the Clean Air Act.

The goal of the final rule is to assist interested parties to understand and evaluate the adequacy and accuracy of the benefit-cost analyses and the role the analysis played in significant regulatory decision-making.

The final rule consists of three main elements.

First, EPA will prepare a benefit-cost analysis for all future significant proposed and final regulations under the Clean Air Act.

Second, EPA is required to develop benefit-cost analyses following best practices from the economic, engineering, physical, and biological sciences.

The analysis must include a statement of need, an examination of regulatory options which would contribute to the stated objectives of the Clean Air Act, and to the extent feasible, an assessment of all benefits and costs of these regulatory options relative to the baseline scenario.

Third, EPA must increase transparency in the presentation of the benefits and costs resulting from significant Clean Air Act regulations. Specifically, the rule requires the preamble of significant proposed and final Clean Air Act regulations to include a section that contains a summary presentation of the overall benefit-cost analysis results for the rule, including total benefits, costs, and net benefits.

The final rule does not change any other requirements related to Clean Air Act rules specified in executive orders and existing guidance documents. For example, this final rule does not change the requirements for what types of analysis should be included in regulatory impact analyses prepared under Executive Order 12866.

The final rule becomes effective upon publication in the Federal Register but does not apply to final rules for which a proposal was published prior to the effective date.

The new rule was part of a broader effort to address cost-benefit analysis requirements for all new significant EPA regulations for water, hazardous waste, and toxics regulations in the next several years. However, the final rule will likely face legal challenges and revocation by the incoming administration of President-elect Joe Biden.

The American Public Power Association submitted joint comments with the National Rural Electric Cooperative Association offering general support for the overall goals of EPA’s efforts to increase transparency and consistency in undertaking a benefit-cost analysis under the Clean Air Act.

A copy of the pre-publication version of the final rule and fact sheet is available here. 

Decorah, Iowa, city council votes to create municipalization task force

December 10, 2020

by Peter Maloney
APPA News
December 10, 2020

The Decorah, Iowa, city council on Monday voted 6-1 in favor of forming a task force on the municipalization of the city’s electric power infrastructure.

The main job of the task force is to recommend to the city council how to move forward with respect to a feasibility study done about two years ago, Emily Neal, a member of the Decorah city council, who voted in favor of the measure, said.

If successful, Decorah would form a public power utility and would no longer take electric power from Interstate Power & Light (IPL), a subsidiary of investor-owned utility Alliant Energy.

Decorah residents supporting municipalization say a municipal utility would invest more heavily in renewable energy and those investments would remain local and return more money back to the community. “Motivations vary from person to person, but for me municipalization means local power and local dollars staying in our community,” Neal said.

The task force is charged with making a recommendation among four options:

The feasibility study was funded in 2017 by the advocacy group Decorah Power with the support of the Decorah city council. The study, conducted by NewGen Strategies & Solutions, examined the costs and benefits of forming a public power utility – called a Municipal Electric Utility (MEU) in the study – and found that Decorah could save about $5 million annually by setting up its own utility. The study found that Decorah’s 8,000 residents could save about 30% on their electric bills compared with taking service from IPL. Decorah’s 25-year franchise agreement with IPL ended in June 2018.

In the study, NewGen put the cost of municipalization at about $5 million and said the costs could be funded by issuing $5.5 million of 20-year, 5% taxable bonds. In addition, NewGen estimated startup costs for a MEU at about $2 million, about half of which would be costs associated with the regulatory process of seeking approval from the Iowa Utilities Board to set up a utility. The set-up costs could be funded with a $2 million, 20-year, 3.5% tax-exempt bond issuance, NewGen said.

Alliant Energy also commissioned a feasibility study and the report, by Concentric Energy Advisors, estimated start-up costs and the cost of buying its assets that serve Decorah at $51 million.

In May 2018, Decorah residents voted on a referendum that would have authorized the city council to pursue a MEU. The measure failed by three votes, 1,385 to 1,382.

“It often takes two or three passes before a municipalization goes through,” said Neal, who was a volunteer for Decorah Power before she was on the city council. She noted that the vote was very close and there has been “tons of misinformation” surrounding the vote and the proposal was “not promoted very well. For those who think it is a good idea, it is worth doing again.”

In addition to considering the four options with respect to the feasibility study, the task force will convene stakeholders and listen to their concerns and interests and will “draft some comments to give to the Iowa Utilities Board to inform them about the MEU process and the undue hardships when even exploring the issue,” Neal said. The aim, she said, would be to see if the utilities board could help “level the playing field. It is a David and Goliath fight” to take on an investor-owned utility. “We are using public dollars.”

Meanwhile, the task force has a year to study the issues and make its recommendations. Beyond that, the city would have to hold another referendum to gain voters’ approval before presenting a proposal to the Iowa Utilities Board. State rules also require that the city establish a legal utility entity before it can apply to municipalize its electric service.

In 2015, Decorah set up a telecommunications utility entity when it was considering municipalizing phone and internet service, but ultimately found the idea was not feasible.

The last Iowa city to create a public power utility was Anthon, in 1976. Since then, a municipalization effort in Iowa City failed in 2005 when 67% of residents voted against the effort. And in 2008, the Iowa communities of Everly, Kalona, Rolfe, Terril and Wellman pursued municipalization but failed when the utilities board rejected their proposal.

The American Public Power Association offers a variety of resources related to municipalization.

Moody’s says 2021 outlook for public power is stable

December 10, 2020

by Paul Ciampoli
APPA News Director
December 10, 2020

Moody’s Investors Service said its outlook for the U.S. public power sector is stable because the rating agency expects the sector to be relatively resilient through the ongoing global recession.

“Public power utilities’ business model inherently helps maintain stability; they provide essential services in a non-profit oriented manner, have strong liquidity and have self-regulated rate-setting ability to help manage cost recovery,” Moody’s said in a Dec. 7 report.

At the same time, the rating agency said that while it expects financial metrics to weaken over the next 12-18 months as a result of lower sales revenues and continued moratoriums on service disconnects, “metrics should still remain within our range for a stable outlook.”

Load demand

Moody’s expects overall net negative load demand nationally for 2020, with continued recovery and demand growth through 2021.

But loads have not declined evenly throughout the country because of varying degrees of shelter-in-place orders and weather-related reasons, it pointed out.

“We also expect demand growth and recovery to vary depending on how long it takes local economies to recover. In the event of another national wave, there could be another significant reduction in commercial and some industrial activity, with more permanent job losses because of permanent closures of commercial establishments unable to recover.”

Depending on the proportion of industrial and commercial customers of particular issuers, as well as the types of industries located in their service territories, “some issuers may actually experience load demand growth, as in food products, hygiene and medical supply-related industries, as well as home improvement industries.”

The report said that although there was an increase in residential load demand across the board given shelter-in-place orders, “for the most part, this increase is not enough to offset the decline in commercial and industrial load expected for the full year 2020, as a result of significantly reduced commercial and industrial activity in the first half.” But demand has continued to improve since the peak declines observed in April and May.

Moody’s said that issuers with service territories with high poverty levels are likely to be more severely affected “because job losses during the pandemic have disproportionately fallen on lower income individuals, many of whom work in the commercial sectors where the virus has caused the most upheaval, such as retail, restaurants, apparel, hotels, entertainment and transportation.”

These workers will continue to face job insecurity as long as COVID-19 remains a health threat, “with implications for consumer confidence and spending, demands for social services, and in some economies, a further divide in access to healthcare.”

Although the Coronavirus Aid, Relief and Economic Security (CARES) Act funded $900 million to a program that helps low income households make home energy payments, “according to the American Public Power Association (APPA), more funding is needed,” the report noted.

Moody’s said that federal aid to local governments has provided only limited short-term relief and is unlikely to alleviate budgetary stress in 2021.

“The CARES Act stipulates that funds may be used only to cover coronavirus-related expenses, not to replace lost revenue. Further, the relief package has been focused on states, with cities and counties receiving no more than 45% of each state’s allocation. Disbursement of this aid is on a reimbursement basis for costs incurred through 30 December 2020.”

The rating agency’s forecast assumes limited additional federal aid.

Plans unveiled for 550-megawatt virtual power plant in California

December 9, 2020

by Paul Ciampoli
APPA News Director
December 9, 2020

Plans for a 550-megawatt virtual power plant (VPP) in California were unveiled on Dec. 7 by Sidewalk Infrastructure Partners (SIP) and OhmConnect.

The Resi-Station project will be funded by an $80 million commitment from SIP and developed in partnership with OhmConnect and will comprise hundreds of thousands of active customers with a fleet of in-home, smart devices that can deliver targeted energy reductions, orchestrated by OhmConnect technology that predicts, incentivizes, and coordinates energy use.

At full scale, Resi-Station will be the largest residential VPP in the world, according to SIP and OhmConnect.

SIP announced a $100 million transaction as part of its new advanced power grid platform, Resilia, which is focused on making electric systems bidirectional, transactive, and distributed. The transaction includes a $20 million investment in OhmConnect, Inc. and an $80 million commitment to the Resi-Station project.

The funding of the project commitment is subject to customary regulatory approvals.

In order to scale up Resi-Station, SIP and OhmConnect are partnering with Google to offer Nest thermostats to hundreds of thousands of participants in the OhmConnect software program enabling Resi-Station.

Additional information on the VPP is available here.

SIP builds, owns, operates, and invests in both advanced infrastructure projects and technology companies. SIP’s investors include Alphabet Inc., Google’s parent company, and the Ontario Teachers’ Pension Plan.

Moody’s assigns first-time A2 issuer rating to CleanPowerSF, with stable rating outlook

December 9, 2020

by Paul Ciampoli
APPA News Director
December 9, 2020

Moody’s Investors Service on Dec. 9 assigned a first-time A2 issuer rating to California community choice aggregator (CCA) CleanPowerSF. The rating outlook is stable.

CleanPowerSF is a not-for-profit, single jurisdiction community choice aggregator and a component unit of the City and County of San Francisco’s Public Utilities Commission (SFPUC), which has an extensive history of operations, Moody’s noted.

Moody’s said the A2 issuer rating for CleanPowerSF is underpinned by, among other things, the strength of its service area, the SFPUC’s long-standing experience operating large utility enterprises with energy procurement, a common pool of experienced employees, as well as access to the unrestricted portion of the city’s general fund liquidity pool in the case of an emergency.

The rating agency noted that CleanPowerSF is a single jurisdiction CCA, rather than a joint power agency (JPA) CCA.

“In many respects, a city-operated CCA is similar to CCAs operated by JPAs in expanding clean energy choices,” Moody’s said.

Strengths of city-operated CCAs include governance and ownership by the city, linkage to the city’s oversight, with city councils having authority over the unregulated rate-setting process, and experience managing other services such as water and sewer, the rating agency said.

Moody’s said a key strength for CleanPowerSF’s credit quality and liquidity profile is its access to the City of San Francisco’s Treasury pool, which provides additional liquidity to CleanPowerSF.

As of the first quarter of 2020, the City’s pool was made up of approximately $11.2 billion in unrestricted cash, of which $1.2 billion is reserved for the benefit of SFPUC enterprise funds (including $98.3 million for CleanPowerSF).

The stable outlook reflects expectations that CleanPowerSF will maintain an adequate liquidity profile through Fiscal Year 2021 “despite load demand decline given some flexibility built-into its supply contract positions, while temporarily compressing its discount to PG&E rates.”

In addition, the stable outlook incorporates the rating agency’s expectation the CleanPowerSF’s economic service territory will remain strong and supportive of a clean energy value proposition offered by CleanPowerSF through the CCA model for customers in San Francisco, Moody’s said.

“Today’s announcement of an issuer rating of “A2” by Moody’s is a significant next step in the development of CleanPowerSF as San Francisco’s clean electricity provider serving more than 380,000 residents and businesses,” said SFPUC Chief Financial Officer Eric Sandler. “The rating confirms that CleanPowerSF is a high-grade utility enterprise, which will allow us to provide our services on a more cost-effective basis while continuing to meet San Francisco’s ambitious climate action goals.”

The American Public Power Association has initiated a new category of membership for community choice aggregation programs.

CPS Energy collaborates on smart streetlight sensor program

December 9, 2020

by Ethan Howland
APPA News
December 9, 2020

CPS Energy is teaming up with the city of San Antonio, AT&T and Itron to use smart technology to make streetlights more efficient and to be used as sources of environmental data collection.

Under the pilot project, AT&T and Itron are installing 45 smart streetlight sensors in three “innovation zones” in San Antonio, according to CPS Energy, San Antonio’s city-owned public power utility.

The sensors will include remote lighting controls and up to five “smart” use case applications: parking sensing, air quality, temperature, ambient noise and flood sensing, CPS Energy said Dec. 8.

The sensors on CPS Energy’s LED streetlights will tell the utility how its assets are functioning in near real-time, while improving service levels for customers.

The six-month pilot project is part of SmartSA, a consortium that includes CPS Energy, San Antonio, and other local entities. The effort aims to use data and technology to build a connected, inclusive and resilient community that supports high quality of life, according to the public power utility.

The pilot project will include data analysis to help CPS Energy determine how to use the sensors to best serve San Antonio and align with the city’s climate action and adaptation plan and ozone attainment goals, the public power utility said.

CPS Energy and SmartSA will prioritize protecting public privacy as it works on the pilot project and future smart city initiatives, according to the utility.

San Antonio’s innovation zones were established in 2017 to test new technologies. In a survey last year, city residents identified environmental quality, pedestrian safety and traffic congestion as key challenges in the zones, according to CPS Energy.

Setting up pilot projects in the zones is the first step towards developing practical solutions to the challenges, the utility said.

CPS Energy and its partners plan to assess the pilot project in the summer before installing the sensors across the city.

CPS Energy serves 840,750 electric customers and 352,585 natural gas customers in and around San Antonio.

Allison Clements sworn in as FERC Commissioner

December 9, 2020

by Paul Ciampoli
APPA News Director
December 9, 2020

Allison Clements was sworn in as a member of the Federal Energy Regulatory Commission (FERC) on Dec. 8.

Clements, a Democrat, fills the seat on the Commission vacated by Cheryl LaFleur in August 2019. Clements’ term runs through June 30, 2024. 

Her nomination was confirmed by the Senate on November 30, 2020, along with Republican Mark Christie, who has not yet been sworn in. Christie will serve a term expiring June 30, 2025.

EPA finalizes particulate matter National Ambient Air Quality Standards

December 8, 2020

by Paul Ciampoli
APPA News Director
December 8, 2020

The Environmental Protection Agency (EPA) on Dec. 7 announced its final decision to retain the existing National Ambient Air Quality Standards (NAAQS) for particulate matter without changes.

Particulate matter includes fine particles, which are 2.5 micrometers in diameter and smaller. They can be emitted directly from a variety of sources, including vehicles, smokestacks, and fires. They also form when gases emitted by power plants, industrial processes, and gasoline and diesel engines react in the atmosphere.

Coarse particles, which have diameters between 2.5 and 10 micrometers, include road dust that is kicked up by traffic, some agricultural operations, construction and demolition operations, industrial processes, and biomass burning.

EPA has regulated particle pollution since 1971 and has revised the standards four times — in 1987, 1997, 2006 and 2012.

The Clean Air Act requires EPA to set two types of NAAQS for particle pollution: primary standards, to protect public health, and secondary standards, to protect public welfare.

The law requires EPA to review national air quality standards every five years to determine whether they should be retained or revised.

APPA submitted comments in support of EPA’s proposed action and believes that the record provided substantial justification for retaining the existing PM standards.

Click here for a copy of the pre-publication final rule and fact sheet, which provides details on the standards being retained by EPA.

APPA supports prioritization of COVID-19 vaccine for mission essential workers

December 7, 2020

by Paul Ciampoli
APPA News Director
December 7, 2020

Organizations representing state and local governments should ask their members to designate energy industry mission-essential workers as high priority for voluntary access to initial inoculation against COVID-19, a group of energy industry trade associations including the American Public Power Association and unions said in a Dec. 3 letter.

The letter was sent to the Council of State Governments, International City/Council Management Association, National Association of Counties, National Association of Regulatory Utility Commissioners (NARUC), National Council of State Legislatures, National Governors Association, National League of Cities, and the U.S. Conference of Mayors.

“With so many Americans now working and learning from home, the safe and reliable energy our members and federal electric utilities produce and deliver is more important than ever,“ the letter said.

“Earlier this year, we asked your members to prioritize access to testing and personal protective equipment (PPE) for a small subset of highly skilled, mission-essential energy workers. We appreciate the support you provided,” APPA and the other energy groups and unions said.

With COVID-19 vaccines now nearing final approval and release, “we are asking that your members designate our mission-essential workers as high priority for voluntary access to initial inoculation. These employees are highly specialized and cannot work from home or in isolation from others on the job site. The work they perform is critical to public health and safety, as well as our economic and national security.”

The energy industry trade associations and unions said that prioritizing vaccination access for mission-essential workers is consistent with guidance contained in the October 2, 2020, “Framework for Equitable Allocation of COVID-19 Vaccine” by the National Academies of Sciences, Engineering, and Medicine. The final report recommends that critical infrastructure workers be considered for prioritization based upon their job function and exposure to risks.

“Please encourage your members to reach out to their individual electric and natural gas utilities in their states to discuss vaccine prioritization for mission-essential workers who choose to receive a vaccination—those who operate power generation facilities, staff the control rooms that serve as the nerve centers for transmission and distribution networks, and maintain the system and do emergency repairs as well as maintenance during planned refueling and capital projects.”

Along with APPA, other energy trade groups signing on to the letter were:

Unions signing on to the letter were United Brotherhood of Carpenters and Joiners, International Brotherhood of Electrical Workers and North America’s Building Trades Unions.

NYPA hosts innovative storage project that uses lithium-ion battery technology

December 4, 2020

by Paul Ciampoli
APPA News Director
December 4, 2020

New York State on Dec. 2 announced the unveiling of a new energy storage project that uses an innovation in lithium-ion battery technology. The project will be located at the New York Power Authority (NYPA) headquarters in White Plains, N.Y., and funded in part by the New York State Energy Research and Development Authority (NYSERDA).

The battery technology was developed by Cadenza Innovation to showcase energy storage’s role in enhancing demand management and grid flexibility and will help advance New York State’s climate and clean energy goals, NYPA said.

Cadenza Innovation was awarded a grant from NYSERDA to showcase a safe, low-cost Li-ion battery that would be demonstrated at NYPA’s White Plains offices.

Now in place following extensive development, testing and certification, the fully integrated, metal-enclosed and rack-mounted 250-kilowatt hour, 50-kilowatt battery storage unit will shav the Authority office’s peak electricity demand for up to five hours.

“The success of this project will demonstrate the safety and use of commercial energy storage systems that could enable more integration of renewable energy resources into the grid,” NYPA said.

The total cost of the research and development project will be approximately $3 million. NYSERDA provided $1 million in support with Cadenza contributing the majority of remainder. NYPA contributed approximately $50,000 in addition to hosting the site, performing extensive research, and sharing its development and engineering expertise.

Under the project, NYPA will investigate the effectiveness of the energy storage system at reducing the peak load typical of a commercial building. Once demonstrated, the system could be replicated at other businesses throughout New York State and beyond.

A video related to the project is available here.

The American Public Power Association this year launched a Public Power Energy Storage Tracker, which is a resource for association members that summarizes energy storage projects undertaken by members that are currently online.