Leaders Of FERC And NERC Urge NAESB To Convene Forum To Address Reliability Challenges
August 15, 2022
by Paul Ciampoli
APPA News Director
August 15, 2022
Federal Energy Regulatory Commission (FERC) Chairman Rich Glick and Jim Robb, President and CEO of the North American Electric Reliability Corporation (NERC), recently encouraged the North American Energy Standards Board (NAESB) to convene a forum that would identify solutions to reliability challenges facing the nation’s natural gas system and bulk electric system.
In their July 25 joint letter to NAESB, Glick and Robb recommended that NAESB convene the forum, as outlined in one of the key recommendations from the FERC-NERC report on the February 2021 freeze in Texas and the South Central U.S. caused by Winter Storm Uri.
The report, issued in November 2021, recommended that FERC consider establishing a forum to identify actions that would improve the reliability of the natural gas infrastructure system as necessary to support the bulk power system, and to address recurring challenges stemming from natural gas-electric infrastructure interdependency.
NAESB, an American National Standards Institute-accredited convener of both the gas and electric markets with representation from all segments of the supply chain, “is uniquely positioned to provide support in addressing the report recommendation,” Glick and Robb wrote.
“NAESB’s long history with the industry demonstrates its ability to analyze challenging issues concerning market coordination while delivering balanced, consensus-based solutions that lead to improved operations in both markets,” they said in the letter.
Robb and Glick encouraged NAESB to take steps to expeditiously convene the forum discussed in the November 2021 report and others like it.
“We also encourage NAESB to coordinate with FERC and NERC staff, and the National Association of Regulatory Utility Commissioners, who all have BES [bulk electric system] regulatory and reliability expertise and experience with gas-electric cooperation,” they wrote.
The letter is available here.
In response to the letter, NAESB staff announced its intention to reconvene the NAESB Gas-Electric Harmonization Forum, with an initial organizational virtual meeting scheduled for August 30, 2022, from 2:00 pm to 4:00 pm Central. This will be an open meeting and all interested parties are welcome to attend. Meeting registration is available here.
House Passes Bill That Provides Public Power With Direct Access To Energy Tax Credits
August 13, 2022
by Paul Ciampoli
APPA News Director
August 13, 2022
The U.S. House on Aug. 12 passed the Inflation Reduction Act (IRA), which would extend and expand various energy tax incentives and give public power utilities direct access to such credits through a refundable direct payment tax credit.
The bill, which now goes to the White House for President Biden’s signature, also includes additional funding through various programs for renewables development and deployment, transmission projects, and federal permitting staff.
The American Public Power Association (APPA) applauded House passage of the IRA.
“In addition to extending and expanding a variety of critical energy tax incentives, this piece of legislation will ensure that all utilities can benefit from these incentives, which encourage the critical energy investments they need to continue to use cleaner generating technologies,” said APPA President and CEO Joy Ditto. “In the end, this makes these incentives fairer and more effective.”
The Joint Committee on Taxation estimates the value of energy-related tax incentives to be worth $25 billion in 2022 alone. However, because public power utilities are exempt from tax, they have not been able to take advantage of these incentives for projects they own. Rural electric cooperatives face a similar challenge. As a result, using the tax code to incentivize energy investments has excluded utilities serving nearly 30 percent of all retail utility customers in the United States.
Instead, to take advantage of these energy tax incentives, tax-exempt, community-owned utilities have had to enter power purchase agreements with third party developers — who often themselves would enlist a tax equity partner to monetize energy tax credits.
The result has been profound, APPA said. For example, recent surveys of public power utilities showed they own just two percent of the non-hydropower renewable energy used to serve their customers: the remaining 98 percent had to be secured through power purchase agreements.
The IRA corrects this by allowing tax-exempt entities to claim energy tax credits directly. APPA has long supported this approach, which will lead to lower costs, local jobs, and more equitable energy service for all customers.
Power purchase agreements will continue to be useful tools and many public power utilities will continue to use them to secure access to energy facilities, APPA said. “But having the option to own and operate their own facilities means public power utilities can make the best choices on behalf of the more than 49 million Americans and thousands of businesses they directly serve,” APPA said.
Efforts to ensure that community-owned utilities can benefit from energy tax incentives have enjoyed bipartisan and bicameral support from many Members of Congress, “and we greatly appreciate the work of all the Members and staff with whom we have worked on this issue for years,” APPA said.
APPA said it is particularly appreciative of the efforts of House Ways and Means Committee Chairman Richard Neal, Select Revenue Subcommittee Chairman Mike Thompson, Senate Finance Committee Chairman Ron Wyden, and Energy Subcommittee Chairman Michael Bennett. Finance Committee Member Maria Cantwell and Ways and Means Committee Member Earl Blumenauer were also steadfast champions, APPA said.
Senate Energy and Natural Resources Committee Chairman Joe Manchin’s “understanding of the positive energy policy implications of creating this comparable incentive for public power and rural electric cooperatives was critical to passage of this provision,” APPA said.
Manchin “also championed important work toward legislation to speed up siting and permitting of energy infrastructure, which is much needed given the need to maintain reliable and affordable electricity as we continue our evolution to cleaner technologies,” the trade group noted.
The likely date of enactment for the IRA remains uncertain, though some time this week seems possible. The date of enactment is of importance to public power because while much of the bill will take effect gradually over time a tax credit requirement for final assembly in North America for electric vehicles takes effect upon the date of enactment.
Also uncertain is the timing of a follow-on energy permitting and siting bill that Congressional leaders agreed to take up as part of a compromise that allowed the IRA to proceed in the Senate.
Such a bill could be added to a “continuing resolution” bill that Congress will have to take up before the beginning of the new fiscal year on October 1, but no schedule has been announced.
EIA Forecasts Rising Electricity Demand This Year, Higher Retail Prices
August 12, 2022
by Peter Maloney
APPA News
August 12, 2022
Electricity consumption will increase this year by 2.4 percent over 2021 levels, before falling slightly, by an expected 0.3 percent, next year, according to the Energy Information Administration’s (EIA) Short-Term Energy Outlook (STEO).
The increase is being primarily driven by increased economic activity and hot summer weather throughout most of the country, the EIA said.
“This summer has been hotter in the United States than normal, even in the context of the pretty hot summers of the last few years,” Joe DeCarolis, EIA administrator, said in a statement. “High temperatures have contributed to more air conditioning load, which is a significant driver in our forecast for more electricity consumption this year compared to last year.”
Most of the increased electricity demand this year will be met with renewable energy, according to the August 2022 STEO. The EIA expects renewable sources to provide 22 percent of U.S. generation in 2022 and 24 percent in 2023, up from 20 percent in 2021.
The EIA also expects solar power capacity to continue to rise, increasing by 20 gigawatts (GW) in 2022 and 24 GW in 2023, representing an addition of 31 billion kilowatt hours (kWh) of electric power generation in 2022 and 41 billion kWh in 2023, the EIA said.
Meanwhile, the United States consumed more natural gas to meet electricity demand so far this summer than the previous five-year average, according to the STEO.
Natural gas consumption in the electric power sector continues to increase as a result of limited switching from natural gas-fired generators to coal-fired generators for power generation, despite elevated natural gas prices, the STEO said. And continued demand for natural gas to generate electricity has contributed to relatively high prices for natural gas, even as more natural gas enters the domestic market, because of the June shutdown of the Freeport liquefied natural gas terminal.
Rising supplies of natural gas have caused prices to fall over the past two months. The STEO forecasts the U.S. will produce 96.6 billion cubic feet per day (Bcf/d) of gas in 2022, which would be 3 percent more than in 2021, and expects dry natural gas production to average 100 Bcf/d in 2023.
Nonetheless, natural gas prices increased by almost 50 percent, from $5.73/ per million British thermal units (MMBtu), on July 1 to $8.37/MMBtu on July 29, because of continued high demand for natural gas from the electric power sector. “We expect the Henry Hub price to average $7.54/MMBtu in the second half of 2022 and then fall to an average of $5.10/MMBtu in 2023 amid rising natural gas production,” the EIA said.
Rising natural gas prices will drive up wholesale electric prices and, consequently, retail electricity prices, according to the STEO, which forecasts the price of residential electricity will average 14.6 cents per kilowatt hour (kWh) in 2022, up 6.1 percent from 2021. Forecasts of annual average wholesale prices for 2022 range from an average of $62 per megawatt hour (MWh) in Florida to $95/MWh in the ISO New England and New York ISO markets, according to the STEO.
And, as coal plant shutdowns continue and natural gas prices fall, the EIA expects coal consumption to decline by 9 percent in 2023. The STEO, however, expects U.S. coal production to increase by 21 million short tons (MMst) to 599 MMst in 2022 and to 601 MMst in 2023 and coal exports to increase from 85 MMst in 2021 to 87 MMst in 2022 and to 98 MMst in 2023.
Senate Approves Bill That Makes Energy Tax Credits Available To Public Power
August 7, 2022
by Paul Ciampoli
APPA News Director
August 7, 2022
The U.S. Senate on Aug. 7 approved legislation that would extend and expand various energy tax credits, including by making them available for projects owned and operated by tax-exempt entities, including public power. The House is scheduled to take up the bill on Aug. 12.
The bill passed the Senate Sunday afternoon with a 50-50 party-line vote, with the tie broken by Vice President Kamala Harris. The vote on final passage came after the Senate worked overnight Saturday, voting on 36 amendments and procedural motions. All but two failed, and neither of the two would affect public power.The change related to energy tax credits is strongly supported by the American Public Power Association (APPA).
A last-minute change to the bill would protect these tax credit payments to public power utilities from the current 5.7 percent “Joint Select Committee” sequestration that is scheduled to remain in effect through 2031.
On Aug. 12, the House will vote on H.R. 5376, a bill which originally passed the House as the Build Back Better Act (BBBA), but which was renamed during Senate consideration as the Inflation Reduction Act (IRA).
The bill also includes increased funding for energy-related programs and to speed up much-needed siting and permitting of energy infrastructure.
Study Examines Balancing New England Energy Supply Adequacy, Renewables
August 5, 2022
by Peter Maloney
APPA News
August 5, 2022
Maintaining energy adequacy will be a challenge as non-dispatchable, renewable resources proliferate, according to a new study by ISO New England.
The study, 2021 Economic Study: Future Grid Reliability Study Phase 1, requested by the New England Power Pool (NEPOOL) stakeholders, evaluated how the region’s grid would perform under the double burden of increased levels of variable, i.e., renewable, generation sources and higher demand.
Five of the six New England states have committed to reducing their carbon dioxide emissions by at least 80 percent in the coming years and electrification of heating and transportation is rapidly accelerating, the report noted.
To ensure energy adequacy, the New England region would likely require significant dispatchable resources such as natural gas or stored fuels for periods when variable resources are unavailable, the report found. In addition, battery storage. which is often held up as a remedy for shortfalls in renewable generation, may have difficulty sufficiently charging under predicted system demand curves, the report’s authors said.
The authors also pointed out that the retirement of the region’s two remaining nuclear power plants, which has been assumed in some planning scenarios, would further challenge reliability and state decarbonization goals.
“The region may struggle to maintain necessary operating reserves in scenarios of high electrification and more aggressive retirements of existing resources,” the report’s authors said. “The reserve margin may need to increase by an order of magnitude by 2040.”
The authors also argued that higher levels of renewable resources that would be needed to decarbonize the region’s grid would increase the need for demand flexibility. That would translate into an increased need for regulation services as the flexibility of both generation and demand resources may be needed to maintain the balance of the region’s grid.
The report used several scenarios to study assumptions about the future of New England’s grid. The baseline, moderate and import-supported decarbonization scenarios all contained moderate amounts of renewables and met reliability criteria. The baseline and moderate scenarios, however, did not meet state electric sector environmental goals. The import-supported scenario met state electric sector environmental goals but did not include expected high levels electrification of heating and transportation.
The deep decarbonization scenario lowered production costs and met state electric sector environmental goals while supporting high electrification of heating and transportation, but did not meet required reliability criteria, the report found.
A modified version of the deep decarbonization scenario, resource-adequate deep decarbonization, was adapted to meet reliability criteria through a balanced mix of increased wind, solar, and storage – 89,000 megawatts (MW) versus the current roughly 5,600 MW – but would require such a large amount of wind and solar that it may present “significant challenges” to the region’s transmission system and require an “outsized amount of land or offshore areas to be sited and developed for the necessary wind and solar farms,” the report found. However, the substitution of 3,000 MW of dispatchable units would reduce the necessary new units of wind, solar, and storage by 19 percent, or 17,000 MW, illustrating “the importance of dispatchable resources to the future grid,” the authors said.
The Future Grid Reliability Study is “a turning point” for our region, the report’s authors said in conclusion. “Many existing long-term assumptions were called into question as part of this analysis, and results show that the methods by which the ISO and region at large evaluate future grids require an overhaul.”
The ISO said it would issue three technical appendices to the report covering production cost, ancillary services, and resource adequacy later this year. The ISO also said a second phase of the Future Grid Reliability Study would analyze how “future grid scenarios might operate under today’s wholesale electricity markets to ensure an economically sound future grid.”
Florida Senator Introduces Legislation That Addresses Utility Sector Supply Chain Challenges
August 4, 2022
by Paul Ciampoli
APPA News Director
August 4, 2022
U.S. Sen. Marco Rubio, R-Fla., recently introduced legislation that would establish an energy grid product manufacturing loan program at the U.S. Department of Energy to expand domestic production as a way in which to address ongoing electric utility sector supply chain challenges.
The new loan program would be fully paid for by the rescission of unused appropriations, as recommended by the Government Accountability Office.
The program would finance $8 billion in loan guarantees for the re-equipping, expansion, or establishment of domestic energy grid product and component manufacturing facilities in the United States.
“Due to international supply chain backlogs, electric utilities in the U.S. are struggling to receive ordered electric grid products in a timely manner, especially transformers,” Rubio’s office said in an Aug. 2 news release related to the legislation. “These delays are resulting in dangerously low stockpiles for new developments and replacement equipment, which threaten preparedness throughout the country, but especially in a state like Florida where hurricanes can severely disrupt the electric grid,” the news release said.
The Florida Municipal Electric Association (FMEA) “has been diligently working this issue since March and applauds Sen. Rubio for his efforts to address the significant issues we have been raising with our federal and state officials,” said Amy Zubaly, Executive Director of FMEA.
A group of federal lawmakers from Florida on June 10 sent a letter to the Federal Emergency Management Agency that highlighted “the dangerous supply chain shortages affecting Florida’s electric cooperatives and municipalities.”
APPA Moves To Address Supply Chain Challenges
The American Public Power Association (APPA) is taking a number of actions to address ongoing supply chain challenges.
APPA recently rolled out an additional feature to its eReliability Tracker that is available to all public power utilities and allows for voluntary equipment sharing by matching systems with the same distribution voltages.
In a speech in June at APPA’s National Conference in Nashville, Tenn., Ditto urged member utilities to share their supply chain challenges with APPA so that the trade group can relay details on these challenges to federal partners and discuss how critical burdens on the sector can be alleviated.
In May, APPA convened a supply chain summit that included participation from public power utility officials who discussed their supply chain challenges and mitigation strategies.
APPA also recently finalized a new supply chain issue brief. APPA members can download the issue brief here.
APPA’s Ditto Says Infrastructure Law Offers Huge Opportunity for Public Power
August 1, 2022
by Paul Ciampoli
APPA News Director
August 1, 2022
The Infrastructure Investment and Jobs Act (IIJA) provides a huge opportunity for public power utilities, and the American Public Power Association (APPA) is working hard to ensure that its members are able to take full advantage of funding opportunities flowing from the ILJA, said Joy Ditto, President and CEO of APPA on July 25.
Ditto made her comments at an event held by Environmental and Energy Study Institute and the House and Senate Renewable Energy and Energy Efficiency (REEE) Caucuses in Washington, D.C., while participating on a panel that focused on the IIIJA.
“The IIJA is a huge opportunity for public power and, I would venture to say, the entire sector,” she said.
The law helps public power utilities and, in particular, many smaller public power utilities, “to really build on what they’ve already done and to meet” clean energy needs and address climate change.
“There is, however, some concern with some of these smaller entities about how they manage even accessing some of these funds because they are small businesses basically,” Ditto said.
Therefore, a lot of APPA’s current focus is “enabling our members to interface with the federal government, giving them resources to access the funds as they become available” and to make sure that as funds become available public power utilities are eligible.
As the legislation was being crafted, APPA worked hard to define public power. “Even though we’re affiliated with municipalities in many cases and all our utilities are public, in some cases we look more like a rural electric cooperative in terms of our service territory…so we have to define ourselves very specifically. We want to make sure those definitions hold as funds are made available and that’s some of our work that we do at APPA as well.”
Ditto noted that public power utilities are closely tied to what their community needs are. “We can be very nimble, and we can deploy resources that have an immediate impact on the communities that we serve.”
Public power already has a proven track record in this regard, she pointed out, citing community solar and small wind energy projects as examples.
“We’ve done this already, but now as we accept some of these funds, we can be even more innovative. We can take advantage of newer technologies or build on those existing technologies to really meet the needs of our communities and we look forward to doing that,’ she said.
When asked to discuss her vision for public power in 2030, Ditto underscored the ongoing need for the electric sector to focus on affordable and reliable energy. APPA and public power communities “recognize sometimes this clean energy transition is going to be more expensive. It’s why the IIJA is so important because it helps defray some of that expense,” Ditto said.
Public power’s concern is that “if we see reliability suffer, we might have to take a step back from driving toward” a clear energy future “because people will start to get a little bit worried about what that means, so we have to keep those things front of mind” as the transition continues with new technologies.
By 2030, Ditto envisions public power having effectively managed the transition “and that we’ve moved forward to enable some of these new technologies – maybe we’re farther along with hydrogen. We have additional hydropower technologies we are looking at. We have things like small modular reactors.”
But the power sector can’t discard baseload power as part of the future energy mix, she said. “We need to have some type of electricity that you can produce 24, seven,” throughout the year. “That has to be there or else we’re going to have reliability concerns.”
She said that “we need to enhance that reliability, particularly on the green side.
Click here for resources and opportunities for public power tied to the IIJA curated by APPA.
The Heart of Public Power
July 30, 2022
by Joy Ditto
APPA President and CEO
July 30, 2022
I just came back from visiting the heartland, literally and figuratively. I made my way to Madison, South Dakota, for the Heartland Consumers Power District meeting. Heartland was established in 1969 and is a joint action agency serving 29 cities in South Dakota, Minnesota, Iowa, and Nebraska. I had been to South Dakota previously, including last year during a family trip to Mount Rushmore and the Crazy Horse monument. Note that my kids asked me if I was going back to those monuments when I mentioned the location of my trip – they loved them so much! But I had never been to Madison, which is about 45 minutes from Sioux Falls. What a cute town! It has a quaint, historic downtown and a beautiful lake community.
Upon arriving at the meeting on a crisp Tuesday morning — a nice change from the humid summer temps I had been experiencing in the former swampland of Northern Virginia/Washington, D.C. — I noticed that there was some great signage touting “Heartland Energy.” My sleuthing skills took over and I quickly verified that a new brand was going to be unveiled for the group. As was described by Ann Hyland, chief communications officer, and Russ Olson, president and CEO, after doing a thorough job vetting the look and feel of the brand and the direction of the organization, the Board of Directors chose a name that included the term “energy” to convey action and forward movement while also depicting the literal delivery of energy the group provides to its member communities and keeping the term “Heartland.”
Heartland Energy has an incredible reputation among policymakers in South Dakota, as evidenced by participation in/attendance at their event by Governor Kristi Noem, staff members from the offices of both the state’s U.S. senators, state representatives, and commissioners from the Public Utility Commission (even though public power utilities are not directly regulated by the PUC), and the state economic development office. This is no fluke. Russ and his team focus on these relationships. These policymakers also recognize the tremendous value Heartland has provided South Dakota and the other states it serves through affordable and reliable electric rates and a major focus on economic development.
Heartland is one of about 60 joint action agencies across the country that aim to do the same thing for their member communities. The joint action model, which was pushed by many public power leaders, first in the 1950s and ‘60s and continuing into today, is so powerful because it pools the resources of small and medium communities to enable solutions they likely would not be able to achieve on their own. It marries the on-the-ground, specific community attributes that public power utilities embody with the economies of scale that can enable these communities to optimize their power supply, transmission access, and economic development priorities. The joint action model also allows communities to address other, more recent, challenges like managing supply chains, cybersecurity, and sharing line workers.
In short, what Heartland Energy and other joint action agencies do is expand and strengthen the heart of public power so that it can beat in places it might not have otherwise: in state legislatures and governors’ offices, in regional transmission organizations’ planning committees, on the member representative committees of reliability groups, and in state economic development discussions. That public power heart beats strongly and loudly to the benefit of the customers they serve – families, the elderly, students, small-, medium-, and large businesses, and non-profit groups.
Jim Brooks Elected To Serve As Chair Of APPA’s Policy Makers Council
July 25, 2022
by Paul Ciampoli
APPA News Director
July 25, 2022
Jim Brooks, chair of the Evansville, Wis., Municipal Services Committee and president of the City Council, was elected this month to chair the American Public Power Association’s (APPA) Policy Makers Council (PMC).
“The PMC brings together about 40 elected officials from across the country whose main task is to call on Congress and policy writers in Washington to present the concerns of public power communities with a single voice,” Brooks said in a Q&A with Public Power Current published earlier this year.
Members of the PMC meet twice a year in Washington, D.C., and at least once a month by Zoom. The group advocates on issues such as climate policy, grid security, energy infrastructure investments, and preserving local control for public power communities.
Evansville Water & Light is a public power utility and member of the APPA. The utility is also a member-owner of WPPI Energy, a not-for-profit, wholesale power supplier located in Sun Prairie, Wis.
In addition to his other duties, Brooks serves as the chair of WPPI Energy’s Policy & Communications Leadership Council, the committee responsible for counseling staff and the organization’s executive committee on the best means of increasing policy-making influence and strengthening grassroots capacity for legislative, regulatory and policy initiatives.
Brooks is the second public power leader associated with WPPI Energy to serve as chair of the APPA’s Policy Makers Council. Paul Fisk, previously the mayor of Lodi, Wis., was also active with the joint action agency and was elected to chair the Policy Makers Council in 2016.
As chair, Brooks also serves on the national APPA Board of Directors.
His chairmanship will last until July 2023.
Lawmakers From Alabama Raise Utility Supply Chain Concerns With FEMA
July 25, 2022
by Paul Ciampoli
APPA News Director
July 25, 2022
A group of House Representatives from Alabama recently sent a letter to the Federal Emergency Management Agency (FEMA) in which they voiced concerns over “the dangerous supply chain shortages affecting Alabama’ s electricity sector.”
In a news release, U.S. Representative Jerry Carl (R-AL) noted that the letter was sent to FEMA Administrator Deanne Criswell regarding supply chain shortages affecting Alabama’s electric cooperatives and public power utilities.
Labor shortages and competition from other industries for steel have made equipment procurement difficult, and as a result, critical electric grid equipment delivery times have increased 20-fold in the past two years, the July 14 letter said.
The lawmakers noted that in 2018, transformers took only three months to be delivered. But delivery delays for transformers are now averaging 18 to 25 months in Alabama, and some manufacturers are not even taking orders, the letter noted.
This is troubling because this year’s Atlantic hurricane season is forecasted to produce hurricanes and tropical storms of above-average strength, and several communities along the Alabama coast have not recovered from Hurricane Sally, the lawmakers told FEMA.
As the 2022 Atlantic hurricane season gets underway, “we urge FEMA to mitigate this issue before a severe hurricane, tropical storm, or other natural disaster impacts communities in Alabama,” the lawmakers said.
The House members said that FEMA must employ mitigation efforts with the local Alabama electric community to ensure critical electric equipment such as transformers, bare wire, meters, and other electric grid equipment will be available “ahead of the first disaster.”
The letter was cosigned by all seven members of Alabama’s House delegation.
A group of federal lawmakers from Florida sent a similar letter to FEMA in June.
APPA Moves To Address Supply Chain Challenges
The American Public Power Association (APPA) is taking a number of actions to address ongoing supply chain challenges.
APPA recently rolled out an additional feature to its eReliability Tracker that is available to all public power utilities and allows for voluntary equipment sharing by matching systems with the same distribution voltages.
In a speech in June at APPA’s National Conference in Nashville, Tenn., Ditto urged member utilities to share their supply chain challenges with APPA so that the trade group can relay details on these challenges to federal partners and discuss how critical burdens on the sector can be alleviated.
In May, APPA convened a supply chain summit that included participation from public power utility officials who discussed their supply chain challenges and mitigation strategies.
APPA also recently finalized a new supply chain issue brief. APPA members can download the issue brief here.