SMUD to Collaborate with Japan’s TEPCO on Vehicle-Grid Integration Technologies
November 9, 2022
by Paul Ciampoli
APPA News Director
November 9, 2022
California public power utility SMUD and the Tokyo Electric Power Company Holdings (TEPCO), Japan’s largest electric utility, on Nov. 2 announced an agreement to collaborate on vehicle-grid integration technologies with the purpose of accelerating transportation electrification and decarbonization.
The Memorandum of Understanding between SMUD and TEPCO establishes a framework for shared research and collaboration on how to expand and support EV adoption and vehicle-to-everything technology while maintaining a resilient and reliable power grid.
The collaboration also aims to enhance solar consumption initiatives, reduce on-peak load, prevent strain on distribution infrastructure, increase customer bill savings and share the grid value of these services with customers.
With respect to grid planning, operations, interconnection and utility and customer financial impacts, SMUD and TEPCO will study, develop and pilot complementary programs that further account for, and promote, vehicle-grid integration technologies.
Automated EV load management, managed EV charging, bidirectional EV charging and other advanced grid services also grant customers access to backup power resources for their homes or businesses and Virtual Power Plant technology for battery aggregation in a manner that bolsters grid stability and systemwide decarbonization, TEPCO said in a news release.
Salt River Project’s Mike Hummel to Retire as General Manager
November 8, 2022
by Paul Ciampoli
APPA News Director
November 8, 2022
On Nov. 7, Mike Hummel announced to the Salt River Project (SRP) Board of Directors that he will be retiring from SRP in May 2023.
“As Hummel approaches his fifth year as general manager, he decided the time was right to retire after nearly 41 years of dedication to SRP’s mission, its customers and the Arizona community,” SRP said.
The SRP Board will conduct a search to fill his role with support from executive search firm Korn Ferry.
The Board expects to identify a new general manager before Hummel retires in May.
Public Power Utilities Prepare for Arrival of Tropical Storm Nicole
November 8, 2022
by Paul Ciampoli
APPA News Director
November 8, 2022
Public power utilities are preparing for the arrival this week of Tropical Storm Nicole, which is expected to turn into a hurricane.
Amy Zubaly, Executive Director of the Florida Municipal Electric Association (FMEA), on Nov. 8 said that FMEA and its members were closely watching and monitoring Nicole.
“Like all storms, the where and when landfall will occur is still a fluid situation, but Nicole is likely to make landfall along the central to south-central east coast of Florida,” she said.
Zubaly said that FMEA has been in communication with all of Florida’s public power communities to discuss anticipated needs in advance of and following the storm.
“In addition, we have been in touch with our mutual aid partners across the southeast,” she noted.
Zubaly said that crews from Lafayette, La., Alabama, Paducah, Ky., and Keys Energy, Fla., were being pre-staged in various Florida public power utilities in advance of the storm, “and several others on standby to come in post storm, once conditions are safe and depending on Florida public power’s needs.”
Florida public power utility Kissimmee Utility Authority said it has activated its Emergency Operations Plan.
The utility is currently operating at Alert Level 3 and will advance to Alert Level 4 once the storm is within 24 hours of impacting its 85-square-mile service territory in Osceola County. Once the storm passes, its crews will begin their damage assessment analysis to determine if additional assistance is needed.
“Nicole may be capable of causing power outages and flooding. In addition, restoration may be hampered by flooding, downed trees, high winds, or other obstacles. KUA crews are prepared to work long hours after the storm passes, restoring service to customers as quickly and as safely as possible,” KUA said.
Meanwhile, South Carolina’s Santee Cooper on Nov. 8 said its team members were making preparations for the anticipated effects that Tropical Storm Nicole may have on Santee Cooper’s service territory.
As of noon on Nov. 8, Santee Cooper went to Operating Condition (OpCon) 4 alert status. This means there is a possible threat to Santee Cooper’s electric system, but effects may be limited or uncertain.
At OpCon 4, the utility is primarily checking and fueling vehicles, including line trucks, making sure communications equipment is in proper working order and taking inventory and procuring supplies as needed, such as utility poles, electric transformers and associated equipment.
A hurricane warning was issued along the central part of Florida’s east coast on Nov. 8 as Tropical Storm Nicole “churned across the Atlantic and showed signs of further strengthening as it tracked toward” the state, AccuWeather reported. AccuWeather “meteorologists expect this sprawling storm to take a turn and hit Florida’s east coast — as a hurricane — later this week before it takes a run up the Eastern Seaboard.”
Sunrun to Build and Operate Puerto Rico’s First Virtual Power Plant
November 8, 2022
by Paul Ciampoli
APPA News Director
November 8, 2022
Sunrun has been selected by Puerto Rico’s electric utility provider to develop a 17-megawatt virtual power plant (VPP), the first distributed large-scale storage program on the island.
The Governing Board of the Puerto Rico Electric Power Authority, a public power utility, approved the terms of the agreement on October 26, 2022. The agreement is subject to regulatory sign-off by the Puerto Rico Energy Bureau and the Fiscal Oversight Management Board.
Sunrun will spend the next year enrolling customers into the program and begin networked dispatches in 2024.
“Customers will benefit from the cost savings of on-site energy generation and backup power and will also be compensated in exchange for strategically sharing their stored energy with Puerto Rico’s power grid, creating a shared clean energy economy,” it said.
Batteries enrolled in the VPP will continue maintaining adequate backup reserves to power through potential grid outages at participants’ homes. All customers with batteries are also eligible to enroll and can opt out at any point during the 10-year program.
In 2019, two years after Hurricane Maria dismantled the island’s electric grid, the Puerto Rico Energy Public Policy Act was passed by the Legislature to set the parameters for a forward-looking energy system that maximizes distributed generation.
The Puerto Rico Energy Bureau (PREB) determined that VPPs were key to achieving the legislation’s goals of building a resilient and robust energy system and meeting Puerto Rico’s renewable portfolio standards, Sunrun said.
Burbank Water and Power Enters Agreement for First Utility-Scale Battery Storage Project
November 8, 2022
by Paul Ciampoli
APPA News Director
November 8, 2022
ESS Inc. and California public power utility Burbank Water and Power (BWP) have entered into an agreement for ESS to deliver BWP’s first utility-scale battery storage project.
Under the agreement, a 75 kilowatt (kW)/500 kilowatt hour kWh ESS “Energy Warehouse” will be installed and connected to a 265 kW solar array on BWP’s EcoCampus.
The iron flow battery will support the increased use of renewable power and allow excess renewable energy to be stored and used as baseload energy for Burbank, improving the resilience and reliability of the grid, ESS said on Nov. 4.
“BWP is already using small-scale battery technology at our substations, but we see the value in adding considerably more storage to the network. This initiative will be the largest battery installed in Burbank, providing enough renewable power for 300 homes annually,” said Mandip Samra, Assistant General Manager for Power Supply at BWP, in a statement. “The project is a big step forward to help meet our goal of having a greenhouse gas-free power supply by 2040 and providing energy storage for Burbank now and for decades to come.”
The storage system is expected to be installed in Burbank by December 2023.
In September 2022, another California public power utility, SMUD, and ESS Inc. announced an agreement to provide up to 200 megawatts/2 gigawatt-hours of long duration energy storage that will be provided by ESS.
APPA Weighs in on Energy Tax Provisions of Inflation Reduction Act
November 7, 2022
by Paul Ciampoli
APPA News Director
November 7, 2022
In comments filed with the Internal Revenue Service (IRS) and the Treasury Department on Nov. 4 related to the implementation of the Inflation Reduction Act, the American Public Power Association (APPA) weighed in on several key issues tied to the energy tax provisions of the IRA.
Tax-Exempt Bond Financing
A number of IRA sections include a reduction in the respective credit for tax-exempt bond financing.
APPA addressed the question of what additional guidance would be helpful in determining how to calculate the reduction.
APPA said that further clarification is needed to help in determining how to calculate the reduction.
The first clarification relates to the allocation of bond proceeds to qualifying facility costs for purposes of investment tax credits (ITCs).
Qualifying facility projects likely will be quite complicated and include elements that qualify as basis for an ITC and elements that will not, APPA said.
“We respectfully request that Treasury allow a project owner to use the same cost allocation rules for purposes of determining what aspects of a project are financed with tax-exempt debt, thereby applying them with regard to the calculation of any reduction under 26 USC 45(b)(3) or other comparable provisions applying to other energy tax credits.”
The second clarification relates to pledges of tax credit direct payments.
In financing a qualifying facility, a project owner may issue debt that pledges direct payment proceeds to the payment of principal and/or interest on that debt. Insofar as that debt meets the requirements of Internal Revenue Code (IRC) section 103, interest paid on that debt would be exempt from federal tax. In turn, IRC section 149(b) provides, in part, that the requirements of IRC section 103 are not met if the debt is “federally guaranteed.”
APPA believes that a decision to pledge direct payment credits to the payment of principal and/or interest should not constitute a federal guarantee. The reduction in credits for tax-exempt bond financing provided under IRC sections 45(b)(3), 48(a)(4), 45Y(g)(8), 48E(d)(2) “clearly indicate Congress’ intent to allow for the tax-exempt financing of tax-creditable facilities.”
The manner in which the owner of the facility and issuer of debt chooses to use the direct payment credit does not change this intent. “As such, Treasury and IRS should make clear that pledging direct payment proceeds to the payment of principal and/or interest on debt does not constitute a federal guarantee of that debt for purposes of IRC section 149,” APPA argued.
Investment Credit Facility
APPA also responded to the question of whether guidance is needed to determine whether an investment credit facility that elects to claim the Section 48 investment tax credit in lieu of the Section 45 production tax credit is subject to all of the requirements of Section 45, including the requirement that electricity generated by the investment credit facility be sold to an unrelated person.
“APPA strongly believes that IRC section 45 should not include a requirement that electricity generated by an investment credit facility be sold to an unrelated person, at least as far as state and local entities, including public power utilities, are concerned.”
One of the key purposes of making tax credits available by direct payment to state and local entities is to encourage ownership of such facilities, APPA said.
“Direct ownership will allow more of the value of these tax credits to be used to reduce project costs – and so result in lower rates to consumers – or used to make further grid investments. Both would be helpful in meeting the IRA’s clean energy and climate goals,” APPA said.
“Direct ownership also means local jobs, for local generation, under local control. One role of these facilities will be to power local facilities, such as town halls, police departments, fire departments, convention centers, traffic lights, rapid transit, and the like.”
Requiring that power be sold to an unrelated person for purposes of an ITC would preclude a governmental entity from owning qualifying facilities, and thus require them to rely on power purchase agreements to serve its own electric power needs, APPA said.
“Likewise, one of the IRA’s goals is to promote energy security by encouraging entities to pair generation with storage and the appropriate switching equipment to create renewably powered microgrids. Each of these investments is encouraged through tax credits under the IRA, and the concept of independent and energy secure microgrids occurred throughout the development of this legislation.”
However, if an unrelated party rule were imposed and if a municipality wanted to create such a microgrid to service a related governmental entity, it would be required to contract with an outside contractor to own these facilities to qualify for these tax credits. In other words, a municipality would have to privatize such a microgrid for the related grid, generation, and storage to qualify for a tax credit, APPA said.
“This is a perverse outcome that would be contrary to the fundamental purpose of the underlying statute and to the purpose of the direct pay provisions.”
Congress “had years in which to amend draft legislation to extend the PTC’s unrelated party rule to the ITC, and yet there is no indication Congress ever intended to do so. APPA would strongly urge Treasury and IRS not to extend the unrelated party rules to the ITC.”
Nuclear Power Production Credit
APPA also addressed a question related to the IRA’s addition of a zero-emission nuclear power production credit.
Section 45U(a)(2) reduces the amount of the Section 45U credit by a “reduction amount” that is calculated, in part, based on the gross receipts from any electricity produced by the facility. Section 45U(b)(2)(B) provides that gross receipts generally include any amount received by a qualified facility that are from a zero-emission credit program unless an exclusion applies.
APPA responded to the question of whether guidance is needed to clarify the meaning of the term “gross receipts,” especially as it applies to taxpayers receiving revenue through cost-of-service regulation or regulated contracts and who do not sell electricity in a manner attributable to individual nuclear reactors such as through sales into organized electricity markets or via power purchase agreements to third parties.
“Any definition of gross receipts should apply equally across entities claiming the new zero-emission nuclear power production credit, regardless of the ownership of such entities,” APPA said.
For example, if taxable entities are allowed to deduct depreciation and other cost against revenue for purposes of calculating gross receipts, tax-exempt entities should be treated the same for purposes of calculating the new credit, APPA said.
“Failing to do this would mean that owners in similar circumstances, or even co-owners of the same facility, could qualify for differing levels of credits or even have one owner qualifying for a credit and another owner qualifying for no credit at all. This would be inequitable and would also work against the purpose of the provision, which is to encourage the continued operation of these facilities,” APPA argued.
Along with these topics, APPA also weighed in on a number of other areas related to the IRA.
CAISO Touts Successes During Heat Wave, Details Areas For Improvement
November 6, 2022
by Peter Maloney
APPA News
November 6, 2022
A new report from the California Independent System Operator (CAISO) details the successes and failures of the system’s electric grid during the record heat wave at the end of the summer.
From Aug. 31 through Sept. 9, California, and much of the West, experienced 10 days of triple-digit heat with only minimal nighttime cooling and record electricity use. On Sept. 6, record temperatures were set all over California and the West and demand on the CAISO system reached a record peak of 52,061 megawatts (MW). During that time, CAISO issued Flex Alerts calling for voluntary consumer conservation for a record 10 consecutive days.
During the heat wave event, CAISO’s daily average prices rose to $600 per megawatt hour (MWh) with maximum prices reaching $2,000/MWh in the real-time market. Day-ahead average prices reached $300/MWh.
Despite the intense heat, CAISO “was able to keep electricity flowing without interruption thanks to increased capacity added under California’s resource adequacy program, new state programs that provided non-market resources to address extreme events, enhanced collaboration with state and federal agencies and significant conservation by commercial and residential electricity customers,” the ISO said in its Summer Market Performance Report Sept 2022.
The report also cited needed market enhancements to improve how increasingly frequent, extreme, and long heat events are managed, including the clearing of energy exports in the market and real-time testing for resource sufficiency. In particular, the report identified needed software improvements, especially for the clearing of exports and the resource sufficiency test used in the Western Energy Imbalance Market (WEIM).
CAISO credited several factors to the fact that electricity kept flowing during the heat wave and it did not have to call for rotating outages, including increased capacity through resource adequacy procurement since summer 2020, including more than 3,500 MW of lithium-ion battery storage.
CAISO also credited market enhancements, including clarification of scheduling priorities, enhancements to resource sufficiency evaluations and electricity market pricing designed to incentivize generation during periods of high demand.
CAISO noted, however, that demand during the heat wave “far exceeded” the 49,748 MW of resource adequacy shown to the ISO and, thus, was “insufficient” to cover peak demand during some periods.
To fill the gap, CAISO called on up 1,300 MW of demand response, comprised of 500 MW of voluntary demand response bid in the market and 800 MW of emergency demand response.
Regional resources and coordination were also a factor. CAISO called on 6,500 MW of imports from outside its system during the height of the heat wave, as well as 1,000 MW from WEIM.
Among the non-market resources that helped keep the lights on during the heat wave, CAISO said they ranged from non-market demand response, to behind-the-meter backup diesel generators, and temporary grid-side natural gas-fired resources that were deployed by utilities and state agencies with coordination from a wide variety of government, utility, and customer and business groups.
In terms of improvements, CAISO recommended changes that would ensure that energy storage resources are appropriately charged and accounted for in ISO systems to avoid manual corrective action, which happened during the event.
CAISO identified a software issue that resulted in storage resources not charging sufficiently early in the day. Specifically, storage resources that bid above $150/MWh to charge were not charged by the market. “The high prices experienced during the heat wave presented new scenarios for the ISO to learn about the complexities and challenges of managing battery state of charge,” the report said.
During the stresses created by the heat wave, CAISO also discovered there was both over- and under-counting of capacity available to the ISO in the WEIM resource sufficiency evaluation.
If a balancing authority fails the resource sufficiency evaluation, transfers into it from other WEIM participants are limited until the insufficiency is resolved.
On Sept. 6, the ISO failed the resource sufficiency evaluation in two instances, and transfers into the ISO were limited, but not material because the limits were well above the actual available transfers of 1,000 MW from the WEIM.
Upon further investigation, CAISO found that there was both over- and under-counting of capacity, the net impact of which would have potentially led the ISO to fail the resource sufficiency evaluation up to an additional four instances.
CAISO said it has “already addressed some of these issues” and is “evaluating fixes or potential enhancements for the others.”
CAISO has scheduled a stakeholder call for Nov. 17 to review details of the analysis and answer stakeholder questions.
CMUA Responds to Report’s Findings
In response to the report’s findings, Barry Moline, executive director of the California Municipal Utilities Association (CMUA), said that “Preparing for such an event this summer, publicly owned electric utilities and water agencies coordinated closely with the Governor’s Office, California Energy Commission, and the California Independent System Operator. We worked diligently to locate, confirm and generate firm power with every available back-up generator; facilitated customer conservation at key times; and pushed existing power supply to its limit. Only by working together did we avoid major disruption.”
Moline said that going forward, “publicly owned electric utility and water and wastewater agencies will continue to coordinate closely with the Administration and CAISO to decarbonize while assuring that California has the infrastructure and power supply it needs to provide affordable and continuous power.”
U.S. Finalizes Offshore Wind Sites To Be Auctioned in Gulf Of Mexico
November 6, 2022
by Peter Maloney
APPA News
November 6, 2022
The U.S. Bureau of Ocean Energy Management (BOEM) has finalized two Wind Energy Areas (WEAs) in the Gulf of Mexico.
Later this year or early next year, BOEM intends to issue a proposed sale notice for the competition to lease the areas. The notice will include a 60-day public comment period.
The first WEA is approximately 24 nautical miles (27.6 miles) off the coast of Galveston, Texas. The area totals 508,265 acres.
The second WEA is approximately 56 (64.4 miles) off the coast of Lake Charles, La. The area totals 174,275 acres.
BOEM said it slightly reduced the size of the WEAs from the original draft versions to address concerns expressed by the Department of Defense and the U.S. Coast Guard regarding shipping, marine navigation, and military operations.
Last October, the Biden administration, to further its goal of deploying 30 gigawatts (GW) of offshore wind energy by 2030, outlined a path for the potential sale of up to seven new offshore leases for wind power projects by 2025.
In February 2022, the Department of the Interior (DOI) held the first competition for offshore wind leases, offering 488,000 acres in the New York Bight. The auction drew winning bids from six companies totaling approximately $4.37 billion, which the DOI said was the highest grossing competitive offshore energy lease sale in history, including oil and gas lease sales.
In May, a BOEM auction for two lease areas in the Carolina Long Bay drew competitive winning bids from two companies, Duke Energy and TotalEnergies, totaling approximately $315 million.
In August, the DOI released a request for interest for leasing potential offshore wind energy sites in the Gulf of Maine, a first step in preparation for holding a competitive bid for the site.
Vermont Public Power Supply Program to Provide Rebates, Free EV Chargers
November 6, 2022
by Peter Maloney
APPA News
November 6, 2022
Vermont Public Power Supply (VPPSA), in partnership with Efficiency Vermont, is offering free electric vehicle chargers to customers of its member utilities.
Through the PowerShift program, VPPSA plans is offering a free FLO X5 level 2 charger and a $500 rebate to assist with charger installation costs on a limited-time, first-come, first-served basis.
Participating customers must have purchased or leased an all-electric vehicle on or after Jan. 1, 2022.
The goal of the program is to shift the times that grid-enabled devices in VPPSA member homes use energy. Customers participating in the program will set their electric vehicle charger to a daily schedule that shifts away from peak times in the evening energy demand hours so that electric vehicle charging occurs when costs are lowest.
VPPSA expects electric vehicles to replace a large number of gasoline-powered cars in the coming years and sees that change as beneficial to meeting its emission reduction goals as Vermont’s largest source of greenhouse gas emissions (GHG) comes from the transportation sector. VPPSA views flexible load management is a key component to sustainable electric vehicle growth.
Technologies like electric vehicles can flex their usage to times when utility costs are lowest and powered by the cleanest sources, VPPSA said, adding that when peak demand is high it causes increased operational costs and can impact electricity rates.
“EV adoption is an important strategy in lowering GHG, but as we make this transition it is important to keep electricity reliable and bills affordable,” Julia Leopold, VPPSA’s director of public affairs, said in a statement. “The PowerShift program helps the VPPSA community learn more about how EV adoption impacts our grid, and how to work with our customers to keep their energy burdens low.”
Efficiency Vermont works with partners to help them transition to more affordable, low carbon energy use through education, incentives, and support for our clean energy workforce.
VPPSA provides municipal electric utility members with services, including regulatory assistance, financial planning, and power supply. VPPSA members include Barton Village Electric, Village of Enosburg Falls, Hardwick Electric Department, Jacksonville Electric Company, Village of Johnson, Ludlow Electric Light Department, Lyndonville Electric Department, Morrisville Water & Light, Northfield Electric Department, Orleans Electric, and Swanton Village.
Fresno, Calif., Officials Eye Possible Formation of Public Power
November 6, 2022
by Paul Ciampoli
APPA News Director
November 6, 2022
Officials in Fresno, Calif., are taking a closer look at the potential formation of a public power utility for the city. The city is currently served by investor-owned Pacific Gas & Electric (PG&E).
At an Oct. 31 news conference, Fresno Mayor Jerry Dyer said, “The City of Fresno is also a utility provider. We provide sanitation. We provide water and we provide sewer and perhaps it’s time we provide electricity.” Rising PG&E rates were also mentioned at the news conference.
A media advisory issued by Fresno Councilmember Garry Bredefeld related to the news conference cited PG&E’s “ongoing failures to timely energize facilities in the city.” The advisory said that the consultant picked for the study would “provide all options including the possibility of the City of Fresno forming its own district as is done in some other cities in California.”
The City Council of Fresno, Calif., on Nov. 3 considered a proposal that would direct its staff to hire a consultant to perform a feasibility study related to the possible formation of a public power utility. Discussions over the proposal lasted for more than three hours.
At the council meeting, Dyer made the case for the council to authorize a study.
Councilmember Miguel Arias called for a vote to table the motion for a study, saying, among other things, that additional information was needed, but the vote fell short due to a 3-3 tie among councilmembers.
A subsequent motion calling for the proposal to be tabled until a meeting of the council next month was approved by councilmembers.