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Louisville, Ky., Eyes Municipalization, Seeks Consultant For Study

February 16, 2022

by Paul Ciampoli
APPA News Director
February 16, 2022

The Louisville/Jefferson County Metro Government is seeking proposals for a municipalization feasibility study.

In early 2020, Louisville Metro Mayor Greg Fischer formally signed Louisville Metro Resolution No. 0009, Series 2020, in which the Louisville Metro Legislative Council resolved to support, among other things, a 100 percent clean, renewable electricity goal for Louisville Metro government operations by 2030.

“Louisville Metro is exploring a variety of supply- and demand-side pathways to achieve this goal, attempting to gather unbiased and decision supportive information to inform next steps to pursue this goal,” the RFP for the study noted.

In an interview with Public Power Current, Allison Smith, Assistant Director, Office of Advanced Planning and Sustainability at Louisville Metro Government, noted that in order to achieve the 100 percent renewable energy goal, “we partnered with” the National Renewable Energy Laboratory (NREL).

In the first phase of working with NREL, “we spent about a year going through what our possible options are to reach our goal,” she said.

Smith noted that Kentucky is in a vertically integrated energy market. “We have a regulated monopoly,” with an investor-owned utility, Louisville Gas & Electric (LG&E).  

“We are not able to contract for renewable energy directly with a company. We have to go through our local utility. That really is limiting,” she said.

“NREL helped us identify what are the routes that we could get to our goal,” Smith said.

“We are now entering phase two. We’ve identified three possible routes.”

One route would be entering a virtual power purchase agreement or purchasing renewable energy credits. “That is certainly an option, but for a local government, that is purely a financial transaction, so there is some risk involved, especially with a virtual power purchase agreement, depending on how the market goes. And really that would not get us any of the local benefits that we are looking for in our transition to renewable energy,” Smith said. “We took that one off the table for now.”

A second option is to work with LG&E. Smith noted that large customers of LG&E can enter into a special contract with the utility “where they will build solar on your behalf and then that large customer negotiates a rate with LG&E that’s locked in for usually twenty years.”

Smith said that “we are working with NREL and LG&E to go through what would the criteria for this special contract have to be for it to make sense and for it to work for Metro Government. We’re talking about taxpayer dollars, so we do have to be financially responsible with that while still meeting our goals.”

The third option is municipalization.

Louisville Metro has identified the possibility of pursuing a partial municipalization of the Louisville Gas & Electric-owned distribution network which serves some or all of the municipal electric load. Louisville Gas & Electric is a subsidiary of investor-owned PPL Corp.

This partial municipalization would involve creating a new municipal electric utility to provide electricity service exclusively to municipally-owned and operated buildings.

In order to bring this partial municipalization into reality, Louisville Metro would need to pursue an “overbuild” of new, municipally-owned electric distribution infrastructure that will co-exist on top of LG&E’s existing distribution infrastructure while not being electrically connected, the RFP said.

This new distribution network would serve some or all municipal electric load with clean energy. This pathway would also involve connecting the new distribution network via a short, high voltage transmission line to the Midcontinent Independent System Operator, “and procuring clean, affordable and reliable electricity through existing market mechanisms (e.g., spot or day-ahead markets) and/or long-term power purchase agreements,” the RFP said.

Overall, the consultant will organize a partial municipalization cost analysis into two major demand scenarios:

The RFP is available here.

New Mexico Utility Regulators Says Legislature Is Best Suited For Public Power Study

February 16, 2022

by Paul Ciampoli
APPA News Director
February 16, 2022

In a recent letter to lawmakers in New Mexico, commissioners with the New Mexico Public Regulation Commission (PRC) said that the New Mexico Legislature, and not the PRC, is the proper body to conduct a study that would evaluate shifting the state’s electric sector to public power.

A group of New Mexico lawmakers recently asked the PRC to launch a study that would evaluate shifting the state’s electric sector to public power. The PRC subsequently held a hearing related to the petition from the lawmakers.

PRC Commissioners sent a letter on Feb. 3 to several New Mexico lawmakers in which the state utility regulators responded to the idea of the PRC conducting the study.

In the letter, the Commissioners said that after reviewing New Mexico House and Senate Memorials (SM 10/HM 20) related to the study, the PRC “takes no position on the merits of a state-level public utility for New Mexico. We believe that is the proper purview of the Legislature.” 

Memorials introduced in the New Mexico do not have the force of law. Memorials can be either joint or simple and require no action on the part of the governor. Joint memorials are acted on by both houses.

The state utility regulators said they have concerns about the proposed role of the Commission in the study and suggested that the stated goals of the memorials would be better served if it were conducted by the Legislature in cooperation with an outside entity.

The PRC is particularly concerned that the role proposed for it is potentially an improper one for it to fulfill.

“We do not believe that the Commission has authority over the subject matter of the study, nor should it exercise authority given its regulatory responsibilities,” the Commissioners said.

“The statutes delegating responsibility to the Commission, particularly the Public Utility Act, implicitly presuppose the existing electric service landscape of investor-owned utilities and member-owned rural electric cooperatives and direct the Commission to regulate accordingly,” the letter noted.

The New Mexico Public Regulation Commission Act’s “apparent limitation on the Commission’s power to study/investigate, suggests that it should not conduct a study the results and recommendations of which the Commission would be unable to act upon. 

Because the results and recommendations of the studies envisioned in SM 10 and HM 20 “can only be acted upon by the Legislature, a study conducted by the Legislature, independent of the Commission but with the Commission providing data and other information under its control, would be more appropriate,” the letter went on to say.

Putting aside whether, under the current statutory framework, participating in the study is a permissible activity for the Commission, the PRC Commissioners raised a number of additional concerns and questions.

The Commissioners pointed out that the PRC’s primary statutory responsibilities are to adjudicate matters to which the utilities are parties and to issue regulations to which the utilities are subject. 

“Having the Commission potentially advocate for or against a state-level public utility before the Legislature, making recommendations either in agreement with or in opposition to the utilities it regulates would, at the very least, raise the possibility of unresolvable conflicts of interest for the Commission when presiding over future matters to which the utilities are parties.”

Electric Utility Board Votes In Favor Of Lubbock Power & Light Transition to Retail Competition

February 16, 2022

by Paul Ciampoli
APPA News Director
February 16, 2022

The Electric Utility Board for Texas public power utility Lubbock Power & Light (LP&L) on Feb. 15 voted in favor of transitioning LP&L to the competitive electric market in Texas, paving the way for Lubbock to once again have retail electric competition.

The Electric Utility Board vote was the first in a two-step approval process required for LP&L to begin the necessary work to move to retail competition.

Should the City Council also vote in favor at next week’s regularly scheduled meeting, LP&L hopes to transition to competitive retail electric service in late 2023. This would mark the first time a municipally owned utility voluntarily deregulated since Texas Senate Bill 7 first became law in 1999.

Under retail electric competition, LP&L would no longer serve as the city-owned electricity provider. Instead, customers could “shop” from multiple retail electric providers, each offering their own plans, pricing and contract terms. The retail providers would be responsible for buying and selling power, while LP&L would continue to own and maintain all transmission and distribution infrastructure, such as poles and lines.

In 1999, Texas legislators signed Senate Bill 7 into law, aimed at allowing retail electric providers to compete for customers and thereby provide Texas residents with the best possible electric rates and plans to meet their unique needs.

Lubbock residents once had a version of retail electric competition in which customers could choose between two electric providers — LP&L and SPS. In 2010, the City of Lubbock purchased distribution assets from SPS to become the sole electric provider for the majority of Lubbock residents.

The two systems were evenly distributed throughout the city since both companies served customers in nearly every neighborhood, referred to as alley-by-alley competition. Since the time of the sale, LP&L managed both systems, but they were not combined. LP&L took the first step to combine the systems in May 2021, migrating 70% (approximately 83,000 customers) of its system to the Electric Reliability Council of Texas (ERCOT).

LP&L hopes to migrate the remaining 30% (about 24,000 customers) to ERCOT in summer 2023, to get all LP&L customers in the same grid.

LP&L worked closely with the Electric Utility Board and Lubbock City Council to develop a responsible path to retail electric competition, it noted.

Rather than offer customer choice to just 70% of LP&L’s customer base currently in the ERCOT system, the current plan is to transition in late 2023, once all customers can participate.

Texas Cold Snap Peak Comes Close To A Year Ago, But Grid Holds Steady

February 15, 2022

by Paul Ciampoli
APPA News Director
February 15, 2022

During the recent cold snap in Texas, demand for electricity in the Electric Reliability Council of Texas (ERCOT) peaked at 68,862 megawatthours (MWh), slightly below the peak demand of 69,215 MWh during a February 2021 winter storm that caused widespread power outages in the state, the Energy Information Administration (EIA) reported.

“However, this winter’s peak was still below the demand ERCOT forecast for February 2021 before widespread outages began, which resulted in lower actual demand than forecast,” EIA said.

This winter, demand on the peak day of February 4 was much lower than ERCOT’s day-ahead forecast, largely because temperatures were warmer than predicted.

“Unlike in February 2021, this winter’s storm didn’t cause major declines of natural gas production in Texas, and natural gas-fired power plants in Texas maintained their fuel supply during the cold weather,” EIA said.

In February 2021, weather-related production issues reduced peak natural gas production by 16 billion cubic feet (Bcf), according to data from IHS Markit, compared with a 3 Bcf decline in peak dry natural gas production this winter.

In addition, renewable generators, largely wind, maintained a high level of output during the coldest periods this winter, when demand for space heating was the highest, according to EIA.

Coal-fired and nuclear units did not experience outages, which occurred in February 2021.

In response to the ample supply, the ERCOT prices for wholesale electricity in the real-time market were below $100 per MWh during the recent storm, in comparison to prices that were as high as $9,000 per MWh during the February 2021 storm.

ERCOT Reforms

ERCOT in early February noted that it has implemented many reforms to increase the reliability of the Texas grid, including:

Power Demand In Texas Grid Peaked At 68,862 MWh During Recent Cold Snap

February 15, 2022

by Paul Ciampoli
APPA News Director
February 15, 2022

During the recent cold snap in Texas, demand for electricity in the Electric Reliability Council of Texas (ERCOT) peaked at 68,862 megawatthours (MWh), slightly below the peak demand of 69,215 MWh during a February 2021 winter storm that caused widespread power outages in the state, the Energy Information Administration (EIA) reported.

“However, this winter’s peak was still below the demand ERCOT forecast for February 2021 before widespread outages began, which resulted in lower actual demand than forecast,” EIA said.

This winter, demand on the peak day of February 4 was much lower than ERCOT’s day-ahead forecast, largely because temperatures were warmer than predicted.

“Unlike in February 2021, this winter’s storm didn’t cause major declines of natural gas production in Texas, and natural gas-fired power plants in Texas maintained their fuel supply during the cold weather,” EIA said.

In February 2021, weather-related production issues reduced peak natural gas production by 16 billion cubic feet (Bcf), according to data from IHS Markit, compared with a 3 Bcf decline in peak dry natural gas production this winter.

In addition, renewable generators, largely wind, maintained a high level of output during the coldest periods this winter, when demand for space heating was the highest, according to EIA.

Coal-fired and nuclear units did not experience outages, which occurred in February 2021.

In response to the ample supply, the ERCOT prices for wholesale electricity in the real-time market were below $100 per MWh during the recent storm, in comparison to prices that were as high as $9,000 per MWh during the February 2021 storm.

ERCOT Reforms

ERCOT in early February noted that it has implemented many reforms to increase the reliability of the Texas grid, including:

Maine Governor Unveils Legislation That Opens Door To Consumer-Owned Utility Option

February 14, 2022

by Paul Ciampoli
APPA News Director
February 14, 2022

Maine Gov. Janet Mills on Feb. 2 unveiled legislation that, among other things, opens the door for state utility regulators to evaluate whether an investor-owned utility or a consumer-owned utility is in the best interests of the state.

The legislation establishes a process under which the Maine Public Utilities Commission (PUC) determines whether an electric utility is unfit to provide safe, adequate, and reliable service at just and reasonable rates to Maine ratepayers.

If the PUC determines that sale of the utility is necessary to protect the interests of ratepayers, it will then invite bids from qualified buyers and select the purchase proposal that provides the most benefits to customers in the form of better service and lower rates at a fair purchase price.

Additionally, the legislation stipulates that, in the event the PUC invites bids from qualified buyers, it must also consider a bid to create a consumer-owned, quasi-municipal corporation for the purpose of purchasing the utility.

This creates a mechanism whereby the PUC could evaluate whether an investor-owned utility or a consumer owned utility is in the best interests of the State.

The bill also requires that the PUC establish minimum standards of service that utilities must deliver for Maine ratepayers. The legislation also empowers the PUC with enhanced authority to crack down on utilities that do not meet these standards by imposing harsher penalties and, if necessary, even forcing the sale of the utility for inadequate service. 

The legislation was developed by the Governor’s Energy Office in conjunction with Maine’s new Public Advocate Bill Harwood.

The legislation further requires the PUC to set minimum standards for safe, reasonable, and adequate service to Maine customers.

It then requires the PUC to issue quarterly reports on whether a utility is meeting these minimum standards. These reports will address utility operations, customer service, such as billing, and initiatives to combat climate change, such as interconnecting to solar projects. 

If these quarterly reports determine that a utility is consistently failing to meet this standard, then the legislation requires the PUC is to impose new, higher administrative penalties — up to $1 million or 10 percent of the utility’s annual revenue — to force the utility to improve service.

“This new approach establishes an ongoing system of review by the PUC that is a transparent and an alternative accountability mechanism to traditional utility oversight,” according to the governor’s office.

In addition, the bill provides for periodic audits for Maine’s distribution and transmission utilities to ensure that the utility’s cost of providing service are consistent with the estimates used to set rates.

Whenever Maine’s utilities have gone more than five years without a rate case, the legislation requires the utility to make a filing with the PUC comparing its current actual expenses to the estimates used in previous rate cases. If the discrepancy is greater than 10 percent, the PUC may conduct a financial audit. This new mechanism allows the PUC to review the utility’s financial books and records outside of a traditional rate case.

The legislation will be considered by the Maine Legislature’s Energy, Utilities, and Technology Committee.

Maine Group Says Legislation Falls Short

In response to the legislation, Our Power, a Maine group working to create a statewide, consumer-owned utility, said the proposal falls short.

While the governor’s bill “is a start, more details are needed to provide a viable path for consumer ownership,” said former Deputy Director of the State Planning Office, Sue Inches. “To allow for this transformative change, which would offer democratic governance and capital at half the cost, the legislation needs to establish specific and sufficient timeframes, resources, guidance, and public process.”

Our Power has been collecting signatures for a ballot initiative that would create the Pine Tree Power Company, a locally-owned, not-for-profit electric utility for parts of Maine currently served by Central Maine Power and Versant.

Our Power recently acknowledged that it was unable to collect enough signatures for a ballot initiative this year and will continue to collect names for a 2023 attempt, according to an article in Maine’s Portland Press-Herald.

PJM Plan For Transition To New Interconnection Process Advances

February 12, 2022

by Paul Ciampoli
APPA News Director
February 12, 2022

The Planning Committee of the PJM Interconnection endorsed a proposal Feb. 8 detailing how PJM will transition to a new interconnection process designed to get generation and other projects through the planning pipeline faster and help clear the current backlog.

Ken Seiler, PJM’s Vice President for Planning, said that while projects that entered the queue before 2021 will be prioritized as part of the transition plan, “We’re not closing the door on new projects.”

He said, “We are prioritizing more than 1,200 projects that we have in our backlog, most of them renewables, and they represent more than 100,000 megawatts of nameplate capacity – that’s half the capacity we have on our system today. We are focused on moving those through the system and streamlining the process as much as possible, and getting real projects interconnected to the queue.”

Seiler said PJM has made significant progress in augmenting staffing in 2021, with plans to continue additional hiring through 2023.

PJM has approximately 225,000 MW worth of projects in the PJM new services queue, 95% of which are wind, solar, storage or a hybrid of renewables with storage. PJM is also increasing its capital budgets for tools and automation to help in the effort to streamline the study process.

The transition proposal garnered 91% approval in a committee vote.

The PJM transition plan, along with the new process itself, now heads to PJM’s Markets and Reliability Committee, with an April vote planned for both that group and the Members Committee.

If the plans are endorsed by the Markets and Reliability Committee and the Members Committee, PJM expects to file necessary changes with the Federal Energy Regulatory Commission in May.

Based on the current work plan, the effective date of the transition would be the last quarter of this year or the first quarter of 2023.

PJM is a regional transmission organization that coordinates the movement of wholesale electricity in all or parts of 13 states and the District of Columbia.

House Passes Bill That Includes Provisions Of Interest To Public Power

February 9, 2022

by Paul Ciampoli
APPA News Director
February 9, 2022

The House on Feb. 4 approved by a vote of 222-210 H.R. 4521, the America Creating Opportunities for Manufacturing, Pre-Eminence in Technology and Economic Strength Act of 2022 (America COMPETES Act), which includes several provisions of interest to public power.

The bill is the product of eleven committees and includes many bipartisan bills that have already passed the House.

Included among the provisions of interest to public power in the House bill is a strategic transformer reserve and resilience program.

The bill authorizes $75 million a year for five years to reduce the vulnerability of the electric grid by establishing a Strategic Transformer Reserve and for the development, testing and monitoring of large transformers and critical electric grid equipment

This language is substantially similar to language included in H.R. 2741, the Leading Infrastructure for Tomorrow’s (LIFT) America Act, which was introduced in the House in May 2019 by House Energy & Commerce Chairman Frank Pallone (D-NJ), and the CLEAN Future Act.

The 2015 FAST Act directed DOE to report to Congress a plan to establish a strategic transformer reserve. DOE issued its report in March 2017 and recommended encouraging and supporting an industry-based option, with the proviso that DOE work with stakeholders after one year to re-assess whether sufficient progress has been made to warrant continuation or alternative actions by Government.

The electric utility industry already has access to equipment sharing programs.

The House bill also includes a title that provides authorization for the Department of Energy’s (DOE) Office of Science and authorizes several DOE research initiatives including around fusion energy, advanced computing, energy storage, and critical materials.

Also of relevance to public power is the bill’s authorizing a DOE program to support incubators that accelerate the commercial application of clean energy technologies. Awards are limited to $4 million per state for one or more incubators for no longer than five years, with the ability to renew for up to three years.

It also authorizes DOE to support relevant technology transfer programs, including information sharing, development of impact metrics, and connecting startup companies to clean energy transfer programs, within DOE.

The bill also directs the Secretary of Commerce to within 180 days establish a Supply Chain Resilience and Crisis Response Office, along with a new Assistant Secretary for it. One of the missions of the office would be to “identify, prepare for, and respond to supply chain shocks to critical industries and…support the availability of critical goods from domestic manufacturers, and relocate manufacturing facilities out of countries of concern.”

In addition, it directs the Office of Supply Chain Resilience to develop and implement a strategy to support the resilience, diversity, security, and strength of supply chains.

Other sections of the bill of interest to public power would:

An amendment from Rep. Mark Takano (D-CA) that was adopted as part of a set of amendments would impose a Public Utility Regulatory Policies Act section 111(d) “must consider” requirement for energy storage systems.

The American Public Power Association does not support these types of requirements given the time and expense they impose on public power utilities.

A similar “must consider” energy storage provision passed the House last Congress as part of H.R. 4447, the Clean Economy Jobs and Innovation Act, but was not enacted into law.

A companion bill, the U.S. Competition and Innovation act (S. 1260), was approved by the Senate last June by a vote of 68-32.

The Senate bill was a bipartisan effort and is significantly different from the House bill, which was put together exclusively by Democrats, although it includes many bipartisan bills that have already passed the House.

The House bill is likely to get cut down significantly in conference to better match what the Senate produced.  

A Transactive Grid Can Reduce Load Swings And Costs: PNNL Study

February 2, 2022

by Peter Maloney
APPA News
February 2, 2022

Consumers can save about 15 percent on their annual electric bill by coordinating with their utility to control devices that use large amounts of electricity, such as heat pumps, water heaters, and electric vehicle charging stations, according to a new report from the Pacific Northwest National Laboratory (PNNL).

The Distribution System Operator with Transactive (DSO+T) study found that a transactive energy system would reduce daily load swings by 20 percent to 44 percent. The study identified a transactive energy system as one in which there is an agreement between consumers and utilities about the flexible use of energy.

In a transactive system, homes, commercial buildings, electric appliances and charging stations are all in constant contact, the PNNL researchers said, and smart devices receive a forecast of energy prices at various times of day and develop a strategy to meet consumer preferences while reducing cost and overall electricity demand.

PNNL, with Avista and McKinstry, has deployed a pilot version of an urban transactive system in the city of Spokane, Washington’s Eco-District. However, a transactive energy system has never been deployed on a large scale, so the PNNL researchers designed a simulation to analyze how distribution system operators can use transactive energy principles and mechanisms to integrate large numbers of flexible assets into the everyday operation of the electric power system.

The Electric Reliability Council of Texas (ERCOT) region provided the basis for PNNL’s analysis. The researchers created a model that represented ERCOT’s network, including more than 100 power generation sources and 40 utilities. The analysis also included representations of 60,000 homes and businesses and their energy-consuming appliances.

The researchers conducted multiple simulations under various renewable energy generation scenarios to determine how the energy system would react to the addition of differing amounts of intermittent power sources, such as wind and solar power.

The study looked at transactive coordination for two separate asset deployment scenarios: flexible loads (heating-ventilation-air conditioning units and residential water heaters) and behind-the-meter batteries. The results were compared with a corresponding business-as-usual case without flexible assets.

Both cases were subject to two scenarios: a moderate renewable generation scenario to represent current levels of deployment and a future high renewables scenario with 40 percent renewable generation, including the increased use of rooftop solar and about 30 percent of residences having an electric vehicle.

The simulation showed that if a transactive energy system were deployed on the ERCOT grid, peak loads would be reduced by 9 percent to 15 percent, translating into economic benefits of up to $5 billion annually in Texas alone, or up to $50 billion annually if deployed across the continental United States, according to PNNL.

“Because Texas’ grid is quite representative of the nation’s energy system, it not only enabled the modeling and simulation of transactive concepts but provided a reliable extrapolation of the results and potential economic impacts to the broader United States grid and customers,” Hayden Reeve, a PNNL transactive energy expert who led the team that designed and executed the study, said in a statement.

The study also explored the impact of a new kind of entity, a distribution system operator, who would manage a grid that has multiple energy sources owned and operated by distinct entities all contributing energy to the grid at different times and amounts. The distribution system operator would negotiate the transactions with customers that allow flexible load control.

The study confirmed the value of establishing entities, such as a distribution system operator, to manage transactive energy, the PNNL researchers said.

“A smart grid can act as a shock absorber, balancing out mismatches between supply and demand,” Reeve said. “Through our study, we sought to understand just how valuable effective coordination of the electric grid could be to the nation, utilities and customers. Working with commercial building owners and consumers to automatically adjust energy usage represents a practical, win-win step towards the decarbonization of the electrical, building and transportation sectors without compromising the comfort and safety of participating homes and businesses.”

Iowa’s Atlantic Municipal Utilities Enters Capacity Agreement With Missouri River Energy Services

February 2, 2022

by Paul Ciampoli
APPA News Dierctor
February 2, 2022

The board of Missouri River Energy Services (MRES) recently approved a new capacity purchase agreement with Iowa’s Atlantic Municipal Utilities (AMU).

The structure of the agreement is similar to the reserved capacity agreements that MRES has in place with 19 other members, MRES noted in the January issue of its MRES Today newsletter.

These agreements offer a win-win solution to a member’s reliability needs and MRES’ capacity needs by utilizing the members’ local generation resources for backup capacity, MRES said.

Through these purchase power agreements, MRES can call upon member generators to run and supply energy to the regional electric grid during times when other resources cannot meet customer needs.

During the 2021 polar vortex, six MRES members within the Southwest Power Pool’s footprint were called on to generate electricity to help keep the lights on in their communities and throughout the region, MRES pointed out.

In addition, reserved capacity agreements allow MRES member utilities to run their generators and supply power to their customers during other times of emergency, including outages caused by severe weather or random accidents that damage powerlines.

As part of the agreement, MRES pays the member a monthly fee in exchange for making the local generating capacity available to MRES for its use.

This mutually beneficial arrangement can help MRES and its members meet their capacity requirements, while helping participating members add local backup generation to increase the reliability of their operations, MRES noted in the newsletter.

Due to transmission limitations, the maximum amount of capacity that a member can install under this program is equal to the member’s peak demand.

MRES is an organization of 61 member municipalities that own and operate their own electric distribution systems. MRES is governed by a 13-member board of directors who are elected by and from the ranks of our member representatives.