Ditto Urges Congressional Leadership To Include Direct Aid In Pandemic Legislation
July 28, 2020
by Paul Ciampoli
APPA News Director
Posted July 28, 2020
American Public Power Association President and CEO Joy Ditto on July 24 sent a letter to congressional leaders in which she outlined APPA’s priorities for legislation responding to the COVID-19 pandemic including direct aid in the form of a forgivable loan for public power utilities that have been negatively impacted due to COVID-19.
“Public power utilities’ top priority during the pandemic has been securing the physical, logistical, and financial resources to continue to operate while keeping their workers and customers safe,” wrote Ditto in her letter to Senate Majority Leader Mitch McConnell, R-Ky., Senate Minority Leader Chuck Schumer, D-N.Y., House Speaker Nancy Pelosi, D-Calif., and House Minority Leader Kevin McCarthy, R-Calif.
However, these utilities are facing a decline in revenue in 2020 of as much as $5 billion (an approximately 6% decline from 2019), she noted. “In part this is due to a decline in commercial and industrial power use and in part due to an increasing number of customers who are unable to pay their bills,” Ditto said.
However, as governmental entities, public power utilities are the only type of utility categorically excluded from the keystone relief provided by the $659 billion Paycheck Protection Program (PPP).
Likewise, public power utilities are required to provide emergency paid sick leave and paid family leave under the Families First Coronavirus Response Act, “but – again – as governmental entities are the only type of utility categorically excluded from receiving the $105 billion in payroll tax credits Congress authorized to offset the cost of these new federally-mandated benefits,” wrote Ditto.
She told the congressional leaders that a forgivable loan program could help public power utilities bridge this financial gap while helping customers.
“Specifically, we support a loan program where loans issued would be forgivable to the extent that proceeds were used to provide assistance to customers unable to pay their bills as a result of the pandemic. This will help public power utilities keep operating while providing relief to customers who need it most.”
Additionally, as a loan forgiveness program rather than a grant, this program would only provide relief to the extent needed, thereby preserving scarce resources, the APPA President and CEO said.
Ditto noted that some provisions of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) have been helpful to public power customers and we strongly encourage continued support. For example, Congress appropriated an additional $900 million for the Low-Income Home Energy Assistance Program (LIHEAP), which benefits electric power and gas utility customers.
However, the National Energy Assistance Directors Association estimates that demand for LIHEAP will more than triple as a result of the pandemic and that another $4.3 billion supplemental appropriation for the program is needed. Likewise, under Treasury guidance, some states, counties, and localities are using Coronavirus Relief Funds to finance utility customer assistance programs. “Again, while this is helpful at the margin, it is not particularly common and unlikely to provide the level of assistance needed by Americans who are out of work and unable to pay their bills,” Ditto noted.
Letter also focuses on small issuers, tax-exempt advance refunding bonds
APPA also appreciates the creation of the Municipal Liquidity Facility at the Federal Reserve. However, to date this has been limited to short-term debt and used only as a lender of last resort. As a result, only one entity, the State of Illinois, has made use of the facility.
To help with longer-term financing and to broaden the benefit, Ditto urged the congressional leaders to include in COVID response legislation the provisions of H.R. 3967, the Municipal Bond Market Support Act.
This bipartisan bill would expand the number of smaller issuers that banks – historically smaller local banks – are encouraged to lend to by increasing the small issuer exception from $10 million to $30 million.
“We also ask you to include legislation to reinstate the ability issue tax-exempt advance refunding bonds as proposed in H.R. 2772, the Investing in Our Communities Act, and S. 4129, Lifting Our Communities through Advance Liquidity for Infrastructure (LOCAL Infrastructure) Act,” wrote Ditto.
Tax-exempt advance refunding bonds saved public power utilities more than $600 million from 2013 to 2017 (the last year tax-exempt advance refunding was allowed) – savings passed onto utility customers or reinvested – and could provide needed financial relief today and in the future, she said in the letter.
Tax credits
Meanwhile, Ditto noted APPA understands that there is a growing interest in making a variety of tax credits, including energy related tax credits, “refundable.”
“If Congress does take this step, we strongly encourage you to ensure that public power utilities could also qualify.”
Congress has sought for years to create financial incentives for key investments. “Providing these incentives through the tax code, though, excludes the tax-exempt entities which serve nearly 30 percent of the nation’s electric utility customers. Allowing these tax credits to be ‘monetized’ by making them refundable could ensure that they work for any project owners with low to no tax liability.”
CARES Act
APPA appreciates the emergency supplemental appropriation provided under the CARES Act to the nation’s Power Marketing Administrations, the Army Corps of Engineers, and Bureau of Reclamation hydropower programs, Ditto told the congressional leaders.
“The CARES Act, however, failed to amend current law, which requires that these emergency appropriations be recovered with rate increases by electric customers. APPA believes that Congress should explicitly state that CARES Act emergency funds may not be recovered in rates from customers of the Federal Power Program. Now is not the time to raise rates charged to federal hydropower customers.”
NSA, CISA Urge Critical Infrastructure Owners And Operators To Secure OT Assets
July 27, 2020
by Paul Ciampoli
APPA News Director
Posted July 27, 2020
The National Security Agency (NSA) and the Cybersecurity and Infrastructure Security Agency (CISA) recently issued an alert in which they said it is critical that asset owners and operators of critical infrastructure take immediate steps to secure their operational technology (OT) assets.
The NSA and CISA said that over recent months, cyber actors have demonstrated their continued willingness to conduct malicious cyber activity against critical infrastructure (CI) by exploiting internet-accessible operational technology OT assets.
“Due to the increase in adversary capabilities and activity, the criticality to U.S. national security and way of life, and the vulnerability of OT systems, civilian infrastructure makes attractive targets for foreign powers attempting to do harm to U.S. interests or retaliate for perceived U.S. aggression,” the July 23 alert noted.
OT assets are critical to the Department of Defense mission and underpin essential National Security Systems and services, as well as the Defense Industrial Base and other critical infrastructure, the alert said.
The agencies said that at this time of heightened tensions, it is critical that asset owners and operators of critical infrastructure take immediate steps to ensure resilience and safety of U.S. systems “should a time of crisis emerge in the near term.”
The NSA and CISA are recommending that all Department of Defense, National Security Systems, Defense Industrial Base and U.S. critical infrastructure facilities take immediate actions to secure their OT assets.
The alert notes that internet-accessible OT assets are becoming more prevalent across the 16 U.S. critical infrastructure sectors “as companies increase remote operations and monitoring, accommodate a decentralized workforce, and expand outsourcing of key skill areas such as instrumentation and control, OT asset management/maintenance, and in some cases, process operations and maintenance.”
The alert details recently observed tactics, techniques, and procedures, as well as impacts.
It also outlines the following mitigation strategies:
* Have a Resilience Plan for OT
* Exercise your Incident Response Plan
* Harden Your Network
* Create an Accurate “As-operated” OT Network Map Immediately
* Understand and Evaluate Cyber-risk on “As-operated” OT Assets
* Implement a Continuous and Vigilant System Monitoring Program
Additional details are available here.
NSA, CISA Urge Critical Infrastructure Owners And Operators To Secure OT Assets
July 27, 2020
by Paul Ciampoli
APPA News Director
Posted July 27, 2020
The National Security Agency (NSA) and the Cybersecurity and Infrastructure Security Agency (CISA) recently issued an alert in which they said it is critical that asset owners and operators of critical infrastructure take immediate steps to secure their operational technology (OT) assets.
The NSA and CISA said that over recent months, cyber actors have demonstrated their continued willingness to conduct malicious cyber activity against critical infrastructure (CI) by exploiting internet-accessible operational technology OT assets.
“Due to the increase in adversary capabilities and activity, the criticality to U.S. national security and way of life, and the vulnerability of OT systems, civilian infrastructure makes attractive targets for foreign powers attempting to do harm to U.S. interests or retaliate for perceived U.S. aggression,” the July 23 alert noted.
OT assets are critical to the Department of Defense mission and underpin essential National Security Systems and services, as well as the Defense Industrial Base and other critical infrastructure, the alert said.
The agencies said that at this time of heightened tensions, it is critical that asset owners and operators of critical infrastructure take immediate steps to ensure resilience and safety of U.S. systems “should a time of crisis emerge in the near term.”
The NSA and CISA are recommending that all Department of Defense, National Security Systems, Defense Industrial Base and U.S. critical infrastructure facilities take immediate actions to secure their OT assets.
The alert notes that internet-accessible OT assets are becoming more prevalent across the 16 U.S. critical infrastructure sectors “as companies increase remote operations and monitoring, accommodate a decentralized workforce, and expand outsourcing of key skill areas such as instrumentation and control, OT asset management/maintenance, and in some cases, process operations and maintenance.”
The alert details recently observed tactics, techniques, and procedures, as well as impacts.
It also outlines the following mitigation strategies:
* Have a Resilience Plan for OT
* Exercise your Incident Response Plan
* Harden Your Network
* Create an Accurate “As-operated” OT Network Map Immediately
* Understand and Evaluate Cyber-risk on “As-operated” OT Assets
* Implement a Continuous and Vigilant System Monitoring Program
Additional details are available here.
CPS Energy RFI Lays Groundwork For Solicitation That Would Seek Solar, Battery Storage
July 27, 2020
by Paul Ciampoli
APPA News Director
Posted July 27, 2020
San Antonio, Texas-based public power utility CPS Energy on July 27 issued a request for information (RFI) that it said will help in the development of a future request for proposal (RFP) that would seek proposals for the addition of solar, battery storage and firming capacity.
The RFI “confirms the utility’s continued interest in solar photovoltaic, energy storage, demand response, and other low-emitting sources to add more year-round, all-weather solutions,” CPS said.
The RFI will inform the design of two strategic CPS Energy initiatives, the “FlexPOWER Bundle” and “FlexSTEP.”
The FlexPOWER Bundle is the next step in CPS Energy’s “Flexible Path,” the utility’s overarching strategy to transform the utility’s generation fleet to lower and non-emitting sources for decades to come.
CPS said the information obtained through the RFI process will help CPS Energy seek a partner or partners through a future RFP process to implement the FlexPOWER Bundle.
The FlexPOWER Bundle package of generation and firming capacity technologies will supplement 1,700 megawatts of aging power generation capacity and be broadly designed to meet the needs of a growing metropolitan service area, CPS said.
The FlexPOWER Bundle RFP will seek to add up to 900 MW of solar, 50 MW of battery storage, and 500 MW of firming capacity.
RFI also seeks information on energy efficiency
The RFI is also seeking information for innovative solutions and technologies for the next phase of the utility’s energy efficiency program, the Save for Tomorrow Energy Plan (STEP).
STEP was launched in 2009 and was designed to empower customers to manage their energy consumption through efforts like energy efficiency, conservation and adoption of renewable energy (i.e. rooftop solar).
The goal of the program was for savings of up to 771 MW over the course of 12 years, which was reached early – in August of 2019 – a year ahead of schedule.
CPS Energy is now in the one-year STEP Bridge program as it prepares to present a new, long-term version of STEP, which will be designed to meet the changing needs of customers and introduce new energy efficiency technologies.
Responses to the RFI are due Aug. 31, 2020.
Additional information is available here.
California CCAs Launch RFO For Long-Term Renewable Energy And Storage Proposals
July 24, 2020
by Paul Ciampoli
APPA News Director
Posted July 24, 2020
Peninsula Clean Energy and San Jose Clean Energy recently launched a long-term renewable energy and storage request for offers (RFO).
The two California community choice aggregators are soliciting competitive proposals for the purchase of long-term renewable energy contracts to fulfill each organization’s energy goals.
The goal of the RFO is to provide a competitive, objectively administered opportunity for suppliers to propose projects to fulfill the CCAs desire for long-term renewable resources that have a commercial on-line date of December 31, 2024 or sooner.
Specifically, the CCAs plan to enter into one or more power purchase and sale agreements (PPAs) for energy from eligible renewable resources.
The CCAs intend to collect all relevant energy, environmental attributes, resource adequacy, and ancillary services benefits from the projects, as applicable.
Peninsula Clean Energy and San Jose Clean Energy are looking to contract for 1,000,000 MWh total through this solicitation.
The CCAs will consider offers from all eligible resources, but in consideration of current economic trends, they do not anticipate stand-alone solar projects to be cost competitive.
Offers are due Sept. 4.
Additional details are available here.
The American Public Power Association has initiated a new category of membership for community choice aggregation programs.
New Mexico’s Farmington Electric Installing Its First Public EV Chargers
July 24, 2020
by Peter Maloney
APPA News
Posted July 24, 2020
The Farmington Electric Utility System (FEUS) in New Mexico expects to have five public electric vehicle charging stations completed in the next two months.
The Farmington City Council approved the plans for the charging stations last year, and the public power utility has already completed the primary work for four of the five stations. The utility has also already purchased the five dual port charging stations from ChargePoint at a cost of roughly $15,000 each.
“The primary goal of these installations is threefold,” Hank Adair, FEUS’ director, said via email. First is to increase awareness of electric vehicles in the area. Second is to provide choice for the utility’s customers. And third, he said, is that it helps the utility to have another way “to gauge community and customer interest in electric vehicles as our AMI system advances to allow for rate options in the future.”
FEUS does not currently have any special rates or incentives for charging electric vehicles but is in the process of installing advanced metering infrastructure (AMI) on its system and is “looking forward to the additional capabilities for consideration in future rate studies,” Adair said.
With one exception, the sites chosen for the charging stations are on city property. The city is in discussions with the Animas Valley Mall to locate a charging station on mall property.
The other sites include locations in downtown Farmington, at the public library, and at two city parks. When completed, the fast charging stations will allow an electric vehicle to drive 25 miles after charging for one hour.
As recommended by Farmington’s utility commission and approved by the city council, the charging stations will have an hourly use charge that will be handled through the ChargePoint process, Adair said.
Farmington Electric Utility System has so far installed one charging center at the city’s municipal operations center. It is used to charge the Nissan Leaf the utility purchased last month to provide its workers the opportunity to learn about maintaining and operating electric vehicle charging stations.
Other than the utility charger, the city of Farmington has a couple of Tesla charging stations at hotels in the area, but they can only charge Tesla vehicles.
“We are excited to have our first installations on our system,” Adair said. The chargers are being located in parts of the city where the public spends time,” he said. “We will monitor the data to see how much the stations are actually being used to determine our next installation in the future.”
Farmington Electric is a very rural utility, and electric vehicle penetration remains very low, Adair said. So far, the focus on installing electric vehicle charging stations has been on interstate corridors. “I expect as charging stations expand into the highway systems in the state the interest could possibly increase.”
Earlier this month, the Federal Highway Administration announced the first designation of alternative fuel corridors in New Mexico. The designation allows New Mexico to participate in the national transition to alternative fuels across state borders. Federally designated corridors include routes that have electric, hydrogen, propane, or natural gas stations.
For designation as an alternative fuel corridor, the Federal Highway Administration requires electric vehicle charging stations at 50-mile intervals or at 100-mile intervals for hydrogen stations.
Prior to the designation, New Mexico was one of only four states without designated alternative fuel corridors. Before the inclusion of New Mexico, the Federal Highway Administration had designated 135,000 miles along the national highway system as alternative fuel corridors.
The application was submitted by the state’s Energy, Minerals and Natural Resources Department, the New Mexico Department of Transportation, utility company PNM Resources, and the Land of Enchantment Clean Cities Coalition.
“New Mexico is now part of this nation-wide initiative to help people find electric vehicle charging stations and alternative fuel locations across the state,” Sarah Cottrell Propst, cabinet secretary of the Energy, Minerals and Natural Resources Department, said in a statement.
Colorado Springs Utilities Receives Positive Ratings News From Moody’s, S&P
July 23, 2020
by Paul Ciampoli
APPA News Director
Posted July 23, 2020
Public power utility Colorado Springs Utilities recently received positive ratings news from Moody’s Investors Service and S&P Global Ratings.
Moody’s Investors Service has assigned an Aa2 rating to the Colorado Springs (City of) CO Combined Utility Enterprise’s proposed $195 million of senior lien Utilities System Refunding Revenue Bonds, Series 2020A and $51 million of Series 2020B (Private Activity), and approximately $85 million of new Utilities System Improvement Revenue Bonds, Series 2020C for a combined total of $331 million in debt issuance.
The rating outlook is stable.
The assigned Aa2 rating reflects the utility’s “above average service area characterized by a large regional military presence; the history of sound rate setting and board policies to ensure stable financial metrics and strong liquidity,” Moody’s said.
To date, Colorado Springs Utilities operating income has not been significantly impacted by coronavirus’ related shutdowns as the 7% revenue decline has been offset by a similar reduction in operating expenses, the rating agency noted.
Total electricity load for May year to date has declined by around 1%, with residential load increasing by 5.3% and small and medium commercial load declining by around 4%. At Fiscal Year 2019, sales to residential customers represented around 33% of total electric demand, while commercial and industrial represented around 60% and military and other customers accounting for around 7%.
Through May 2020, year-to-date the utility’s operating revenue decreased by $25.9 million year-over-year, but was offset by a corresponding $26.1 million decrease on the expense side through May 2020 year-to-date — including a $17.4 million decrease in purchased power, gas, and water for resale expense, a $7.9 million decrease in production and treatment expense, and $2.0 million decrease in maintenance expense, the rating agency noted.
While it is still early to assess the full impact that the COVID-19 pandemic may have on the utility’s 2020 financial performance, the rating action “considers the long-term resiliency and essentiality of the utility system which along with its liquidity” should enable Colorado Springs Utilities to manage through the impact of the coronavirus including the potential for a slow economic recovery over the next eighteen months, Moody’s said.
Capital plan
The rating agency noted that the utility has adjusted its five-year (2020-2024) capital plan upwards by around $400 million, given a recently approved Energy Integrated Resource Plan that calls for the retirement of Units 6 and 7 at Drake no later than 2023 and the retirement of Unit 1 at Nixon no later than 2030, in addition to other projects including advanced metering infrastructure and water treatment related projects, among others.
It is anticipated that replacement generation would include a combination of natural gas, non-carbon resources, storage, and energy efficiency initiatives.
With the planned retirement of Drake and Nixon units, the utility will be in a good position to meet current and future regulatory requirements, Moody’s said.
Although the capital program is sizeable, the utility “has demonstrated its ability to manage significant capital projects in the recent past, continues to maintain competitive rates, along with an adequate liquidity profile.”
Colorado Springs Utilities continues to manage its variable rate debt exposure, and since September 2019, it has zero unhedged exposure, Moody’s said.
S&P
Meanwhile, S&P Global Ratings assigned its ‘AA+’ rating to the city of Colorado Springs, Colo.’s utilities system revenue refunding bonds series 2020A and 2020B, and its utilities system improvement revenue bonds series 2020C.
At the same time, S&P Global Ratings affirmed its ‘AA+’, ‘AA+/A-1+’, and ‘AA+/A-1’ ratings on the system’s parity debt outstanding. The outlook is stable.
The rating reflects S&P’s view of the utility’s extremely strong fixed-charge coverage (FCC), diverse customer base, and its decision to eliminate its coal exposure by closing Drake Units 6 and 7 by 2023 and its Nixon Unit 1 by 2030.
“In our opinion, the system’s robust liquidity and coverage metrics provide flexibility and a cushion to mitigate potential short-term disruptions as a result of COVID-19 and the related recession.”
As of fiscal 2019, the system had more than 298 days’ cash on hand, “which we imagine will likely provide a sufficient cushion in the event of short-term disruptions. Management indicates that the system has experienced minimal load loss to date because of stay-at-home orders and social-distancing measures,” S&P said.
The rating also reflects S&P’s opinion of the system’s very strong enterprise and extremely strong financial risk profiles.
S&P said the enterprise risk profile reflects its view of the system’s:
* Very strong service area economic fundamentals, reflecting its large, primarily residential, and diverse customer base;
* Strong market position, based on the utility’s weighted-average electric system rate that is about 2% above the state average;
* Very strong operational and management assessment, as its diverse power supply relative to that of the region indicates. “We consider the utility’s financial policies and practices very strong. These include regularly updated strategic plans, multiyear capital planning and financial forecasts, and an automatic power cost adjustment mechanism;” and
* Extremely strong industry risk relative to other industries and sectors.
Pilot Project Tests Potential Of Solar Energy For Grand Island, Neb.
July 23, 2020
by Taelor Bentley
APPA News
Posted July 23, 2020
A solar panel array built in 2018 is a part of a pilot project in Grand Island, Neb., which is testing the potential of solar as a source of energy for Grand Island.
The intent is to get operational data on projects and give the City of Grand Island Utilities Department hands-on information on how it might interact with their system.
Grand Island solicited proposals for renewable energy projects in the summer of 2016, with a 50-megawatt wind project being the primary goal, noted Tim Luchsinger, Utilities Director, in an email. A contract was awarded to Sempra Renewables in January 2017. That project has since been assigned to AEP Energy Partners.
The solar project size and term were based on iterations during the contract negotiations, “which enabled a price point that we were comfortable to propose to our city administration and council,” Luchsinger noted.
The solar project is connected to an adjacent substation through a dedicated 13.8 kV feeder breaker. This arrangement minimizes possible system effects on customers and allows the project output to be recorded through the substation Supervisory Control and Data Acquisition (SCADA).
The supplier provides additional information through a web portal that includes forecasted versus actual generation along with inverter performance.
The project represents a 25-year commitment by the city at no cost. The solar farm is owned by private investors who sell the city the power it produces. The solar panels generate 1-MW, producing about 1% of the city’s load when it’s at full operation.
Luchsinger said that Grand Island anticipates that this project will be considered for a future storage arrangement, “but we don’t have a set plan at this time as the current pandemic situation has affected our immediate and short term future outlooks.”
Additional information about the City of Grand Island’s renewable energy supplies is available here.
DOE Issues RFI Seeking Input On Its Draft Energy Storage Roadmap
July 22, 2020
by Peter Maloney
APPA News
Posted July 22, 2020
The Department of Energy on July 14 released a Request for Information (RFI) seeking stakeholder input for its energy storage roadmap.
In January, the DOE released its Energy Storage Grand Challenge Draft Roadmap, which aims to accelerate the development, commercialization, and utilization of next-generation energy storage devices.
The goal of the program is by 2030 to create and sustain U.S. leadership in energy storage utilization and exports, with a secure domestic manufacturing base and supply chain that is independent of foreign sources of critical materials.
The draft roadmap provides planned activities for each of the five tracks:
* The technology development track will focus DOE’s ongoing and future energy storage research and development around user goals and leadership;
* The manufacturing and supply chain track will develop technologies and strategies for U.S. manufacturing;
* The technology transition track will work to ensure that DOE’s R&D transitions to domestic markets through field validation, public private partnerships, bankable business model development, and the dissemination of high quality market data;
* The policy and valuation track will provide data, tools, and analysis to support policy decisions and maximize the value of energy storage; and
* The workforce development track will educate the workforce, who can then research develop, design, manufacture, and operate energy storage systems.
The DOE says that between fiscal years 2017 and 2019, it has invested over $1.2 billion into energy storage research and development, or $400 million per year, on average establishing a long-term strategy to address energy storage.
The draft roadmap also identifies six use cases that will be translated into a set of technology neutral functional requirements. The use case topics include facilitating an evolving grid, serving remote communities, electrified mobility, interdependent network infrastructure, critical services, and facility flexibility, efficiency and value enhancement.
The DOE intends to use those categories to help identify new and augmented research and development paths for a portfolio of energy storage and flexibility technologies that meet emerging needs.
The draft roadmap focuses on three key challenges that it is applying to each of the five tracks:
* Innovate Here – How can the DOE enable the United States to lead in energy storage R&D and retain intellectual property developed through DOE investment in the United States?
* Make Here – How can the DOE work to lower the cost and energy impact of manufacturing existing technologies, and strengthen domestic supply chains by reducing dependence on foreign sources of materials and components?
* Deploy Everywhere – How can the DOE work with relevant stakeholders to develop technologies that meet domestic usage needs and enable the United States to successfully deploy technologies in domestic markets, as well as export technologies?
Responses to this RFI are due Aug. 21. Interested stakeholders can view the draft roadmap and the RFI on the ESGC website.
Oregon Public Power Utility Gets OK To Monetize Clean Fuel Credits
July 22, 2020
by Peter Maloney
APPA News
Posted July 22, 2020
The Ashland, Oregon, city council has approved the monetization of clean fuel credits accrued by Ashland Municipal Electric Utility.
As of June 2020, the public power utility had 2,876 clean fuel credits. If monetized at the last published price of $120 per credit, the sale would yield $345,120 for Ashland Electric.
The City of Ashland, through its Electric Utility, participates in the Oregon Clean Fuels program, which aims to reduce the CO2 intensity of Oregon’s transportation fuels over time.
The city’s initial goal is to reduce greenhouse gas emissions on average by 8% every year from a 2015 baseline until 2050. The city also aims to reach carbon dioxide neutrality in its operations by 2030 and to reduce its fossil fuel consumption 50% by 2030 and 100% by 2050.
The clean fuel program was authorized in 2009 when the state legislature passed HB 2186, which set up the Environmental Quality Commission (EQC) to adopt a low CO2 fuel standard to reduce the CO2 intensity of the state’s transportation sector. Currently, the program aims to reduce the average CO2 intensity of transportation fuels used in Oregon by at least 10% below 2015 levels by 2025.
The clean fuel program was implemented in 2016. Ashland Electric began participating in the program in 2018 and began generating credits “in earnest starting 2019,” Stu Green, climate and energy analyst for the utility, said via email. In 2020, the credits the utility accrued became available for sale.
Credits generated through the program may be bought and sold using an online exchange hosted by the Oregon Department of Environmental Quality.
Ashland Municipal Electric Utility receives clean fuel credits based on the operation of city owned electric vehicle charging stations and the registration of electric vehicles within the utility’s territory. Electric vehicle registrations generate about 98% of utility’s clean fuel credits. Ashland ratepayers are more than five times as likely to drive an electric vehicle than the Oregon average, Green said.
With city council authorization to monetize its clean fuel credits in hand, Ashland Electric now has to submit a budget amendment to appropriate the funds. “There is a solid argument to be made that the funds should be reinvested in clean fuels projects, primarily electrification of fossil fuels,” Green said. Those types of projects will “decrease emissions, move us closer to our climate goals, provide benefits to ratepayers, increase utility sales, and benefit our general fund through an electric utility tax.” The city council could choose to use the funds to cover shortfalls, but “that is not the course of action that I recommend,” he said.
“I would like to see the funds stay in Electric and be used to incentivize more EV purchases, both for utility sales and to perpetuate the income from the clean fuel credits,” said Ashland Electric Director Tom McBartlett.
In the past, Ashland Electric offered incentives for new and used electric vehicles and for charging stations, but the funding pool was “quite small and ran out quickly,” Green said.
The utility still offers an electric vehicle charger incentive, but it is for commercial customers only. “The incentive program I am cooking up would be more generous and targeted at new/used vehicles less than $30,000,” Green said. “The clean fuel revenue is a critical part of getting the new incentives going.”