LIPA Deepwater offshore wind decision delayed

Tuesday, July 26, 2016

Long Island Power Authority has postponed a meeting of its trustees at which an offshore wind project was expected to be up for approval, after a state energy agency asked for delay to align the process with the expected release of new state energy policy documents.

Long Island Power Authority, or LIPA, is a municipal subdivision of the State of New York. It owns the retail electric transmission and distribution system (T&D) on Long Island, and oversees electric service provided by PSEG Long Island over those assets.

In 2015, PSEG Long Island issued a request for proposals for local resources to serve the South Fork areas of Long Island.  In response, offshore wind developer Deepwater Wind has proposed to supply capacity and renewable energy from the 90 megawatt, 15-turbine Deepwater ONE – South Fork offshore wind project, along with 15 megawatts of onshore lithium ion battery storage.

The Deepwater ONE - South Fork project would be developed in federal waters over the outer continental shelf; in July 2013, Deepwater won the rights to lease sites through the federal Bureau of Ocean Energy Management's first-ever competitive lease auction for offshore wind.  Project power would be delivered to LIPA’s existing substation in East Hampton, so the proposal could serve growing load on the South Fork without adding new transmission lines or fossil power plants.

As reported by the East Hampton Star earlier this month, LIPA has formally recommended to its board that it approve Deepwater's proposal.

But on July 19, 2016, LIPA issued a media advisory that its board meeting scheduled for the next day would be postponed.  The press release stated that LIPA
received a request late this evening by its partner agency NYSERDA (New York State Energy and Research Development Authority) to postpone tomorrow’s consideration of an off-shore wind farm to align the proposed Long Island project with the State’s off-shore wind master plan and the State’s Clean Energy Standard, both of which are scheduled to be released in the next several weeks.
NYSERDA is a public benefit corporation whose mission is to "Advance innovative energy solutions in ways that improve New York's economy and environment."

Governor Cuomo announced the creation of an Offshore Wind Master Plan in his 2016 State of the State address.  It followed his December 2, 2015 decision to direct the state Department of Public Service to design an enact a Clean Energy Standard mandating that 50 percent of all electricity consumed in New York in 2030 come from renewable sources.  Both the offshore wind master plan and the Clean Energy Standard remain under development by the administration.

In light of NYSERDA's request, LIPA postponed its July 20 board meeting.  LIPA's statement states an expectation "to reschedule the meeting after the release of the NYSERDA off-shore wind blueprint."  It closes with a reassurance that, "LIPA remains committed to its renewable energy goals and meeting the energy needs of the South Fork."  Meanwhile, for now Deepwater's proposal remains pending.

Alta, snowmaking pipes and conduit hydro power

Thursday, July 14, 2016

Federal energy regulators have issued Alta Ski Area a written determination that its proposed micro-hydropower project will not be required to be licensed under the Federal Power Act.  If developed, Alta's project would be one of the first to generate electricity from a snowmaking water supply pipeline.

Most grid-connected hydropower projects in the U.S. fall under the Federal Power Act, and generally require a license or exemption from the Federal Energy Regulatory Commission.  The process of securing an original license or exemption for a new project can take years and have high costs.  But under a 2013 law, some so-called "conduit" hydro projects -- using pipelines and other existing manmade water conveyances -- can be developed and operated without a license or exemption.  The Hydropower Regulatory Efficiency Act of 2013 defined criteria for the Commission to declare a project to be a "qualifying conduit hydropower facility," and provided that such facilities are not required to be licensed or exempted from licensing under the Federal Power Act.  Key factors include the use of a non-federally owned, manmade water conveyance that is operated for the distribution of water for agricultural, municipal, or industrial consumption and not primarily for the generation of electricity.  If the Commission determines that a project qualifies, it can be built and maintained without a FERC license or exemption.

Under the Commission's process for evaluating conduit hydro projects, the developer must file a notice of intent to construct a qualifying conduit hydropower facility.  If the developer's filing demonstrates that the project meets the statutory criteria, the Commission will issue a notice of its preliminary decision that the project qualifies.  Following a 45-day period within which others may contest the determination, assuming no adverse facts are uncovered, the Commission issues a letter constituting its written determination that the proposed project meets the qualifying conduit hydropower facility criteria.

Alta's course before the Federal Energy Regulatory Commission followed this trail.  In May 2016, Alta filed its notice of intent to construct the Alta Micro-Hydro Project.  That notice and a supplemental filing described a project to tap the existing underground 6-inch-diameter snowmaking water supply pipeline delivering water from Cecret Lake to the Wildcat Pump House.  Parallel to that pipeline, Alta would add a new powerhouse with a 75-kilowatt turbine/generating unit.  Later that month, Commission staff issued a public notice that preliminarily determined that the project met the statutory criteria.  After the 45-day contest period, during which no interventions or comments were filed, in July the Commission issued Alta a written determination that the Alta Micro-Hydro Project meets the qualifying criteria under section 30(a) of the Federal Power Act, and is not required to be licensed under Part I of that law.

The Commission's letter reminds Alta that qualifying conduit hydropower facilities remain subject to other applicable federal, state, and local laws and regulations.  But the ability to develop a conduit hydropower project without requiring a license from the FERC will ease the project's regulatory path.  So far, most projects that have qualified for the conduit hydropower program have been proposed by water districts.  But as ski areas seek to align their operations with sustainability goals, adding low-impact renewable electricity generation may make sense for some.  If Alta's micro-hydro project is successful, other ski areas with existing snowmaking or other water infrastructure over a sufficient vertical drop may follow suit by developing their own conduit hydropower projects.

Maine tidal project preliminary permit issued

Tuesday, July 12, 2016

A tidal energy developer has been granted a preliminary permit to study a proposed project in Western Passage, near the city of Eastport, Maine.

Under the Federal Power Act, most grid-connected tidal power projects require licensing by the Federal Energy Regulatory Commission.  Section 4(f) of the Federal Power Act authorizes the Commission  to issue preliminary permits to allow prospective applicants for a hydropower license time to secure the data and perform the acts required to prepare a license application.  A preliminary permit preserves the holder's right to have first priority in applying for a license for the project being studied.

On December 4, 2015, ORPC Maine, LLC applied for a preliminary permit to study the feasibility of the proposed Western Passage Tidal Energy Project No. 14743.  As described in that application, the project would include fifteen of ORPC's proprietary 500-kilowatt hydrokinetic marine turbine-generator units for a combined capacity of 7.5 megawatts, along with anchoring and mooring systems, and transmission lines running ashore to an existing distribution line.  The materials describe an estimated average annual generation of 2.6 to 3.53 gigawatt-hours.

The Commission granted that preliminary permit by an order dated July 13, 2016.  In that order, the Commission addressed comments filed by the Maine Department of Environmental Protection, the U.S. Department of the Interior, the Passamaquoddy Tribe, and an individual.

In its comments, the tribe raised concerns over what the Commission calls "site banking".  As described by the Commission, the essence of its policy against site banking is that "an entity that is unwilling or unable to develop a site should not be permitted to maintain the exclusive right to develop it."  In some cases, the Commission invokes its policy against site banking to deny applications for successive preliminary permits.

The tribe questioned whether ORPC Maine should be granted a new preliminary permit when it has held two prior preliminary permits for the site of the proposed Western Passage Project -- the first issued in 2007, and a successive permit in 2011 -- without ever filing a development application. 

But in ORPC's case, the Commission noted that the project site has been unencumbered by a permit since ORPC's most recent permit expired in 2013, and that no other entity has filed a preliminary permit or development application for the site.  The Commission concluded that "a sufficient amount of time has passed for any other entity interested in developing the Western Passage Project site to have filed a preliminary permit or development application for the site and none has done so. Consequently, issuing a permit at this time to ORPC Maine for this site would not contribute to site banking."

ISONE External Market Monitor report 2015

Monday, July 11, 2016

A report by the New England electricity market's external monitor has found that "the markets performed competitively in 2015."

ISO New England operates wholesale electricity markets covering most of New England.  It employs two independent market monitors -- one internal to ISO-NE, one a hired external consultant -- to regularly review, analyze, and report on market results, and offer recommendations on market improvements.

Potomac Economics serves as the External Market Monitor for ISO-NE. In this role, it is charged with evaluating the competitive performance, design, and operation of the wholesale electricity markets operated by ISO-NE.  Last month, the external market monitor released its "2015 Assessment of the ISO New England Electricity Markets" (102-page PDF), presenting its perspective on the New England electricity markets.

Among other findings, the report notes that energy market trends "have been dominated by reductions in fuel prices over the last two years.  In particular, from 2014 to 2015:
  • Natural gas prices declined more than 40 percent, falling to multi -year lows in mid -2015 largely because of higher shale production from the Marcellus and Utica regions; and
  • Fuel oil prices fell by more than 35 percent because of increased global supply, and world liquefied natural gas (LNG) prices have fallen similarly. These reductions helped limit the increase in natural gas prices during tight gas supply conditions in the winter. 
The report notes that as a result, energy prices dropped 35 percent over the same time.  According to the external market monitor, "The strong relationship between energy and natural gas prices indicated by these results is expected in a well-functioning, competitive market. Natural gas-fired resources were the marginal source of supply in most intervals in 2015 and competition compels suppliers submit offers consistent with their marginal costs, most of which are resources’ fuel costs."

ISO New England's internal market monitor released its 2015 Annual Markets Report earlier this year.  That report similarly found that overall, "the ISO New England capacity, energy, and ancillary service markets performed well in 2015."

Maine biomass commission to meet

Thursday, July 7, 2016

A commission charged by the Maine legislature to study the state's biomass energy industry will hold its first meeting next month.  The study committee's work will result in a report to the legislature, and could include recommended changes to state law.

The Maine State House.

At the end of its 2016 session, the Maine legislature enacted a resolve establishing the Commission to Study the Economic, Environmental and Energy Benefits of the Maine Biomass Industry.  The resolve directed the commission to:
1. Review and evaluate the economic, environmental and energy benefits of Maine's biomass resources, as well as public policy and economic proposals to create and maintain a sustainable future for the Maine biomass industry;
2. Consider the interconnection of economic markets for biomass and forest products and the energy policy of the State;
3. Consider whether the environmental, economic and energy benefits of biomass support updating the State's energy policy to strengthen and increase the role that biomass and the forest products industry play throughout the State;
4. Consider the costs of implementing any recommendations and the effect of leaving current policies in place; and
5. Examine any other issues to further the purposes of the study. 
The Maine biomass commission has now been formed, and has scheduled its first meeting for August 2, 2016.  As prescribed by the resolve, its membership includes a mix of legislators and others interested in the state's biomass energy policy.

The resolve directed the biomass study commission to submit a report and any suggested implementing legislation for committee consideration by December 6, 2016.

Biomass was a hot topic in the past legislative session.  On a separate track, this spring the Maine legislature enacted a law establishing a long-term contracting program for biomass-fueled power plants.  The Maine Public Utilities Commission has issued a request for proposals under that program, with contract proposals due on or before July 29, 2016.

FERC Order 826 increases penalty power

Tuesday, July 5, 2016

Acting under a 2015 law, the Federal Energy Regulatory Commission has released an interim final rule increasing the maximum civil monetary penalties that it can assess for violations of statutes, rules, and orders within the Commission’ s jurisdiction.  FERC Order No. 826 effectively raises the Commission's maximum penalty authority by nearly 20 percent, to $1,193,970.

FERC, along with some other federal agencies, is authorized by statute to impose civil monetary penalties for violations of Federal law and regulations.  In some cases, the maximum penalty is set and specified in dollars.  But the 1990 enactment by Congress of the Federal Civil Penalties Inflation Adjustment Act established a mechanism to allow for regular adjustment for inflation of civil monetary penalties, primarily to support enforcement and maintain the deterrent effect of civil monetary penalties.

Congress revamped that mechanism last year by enacting the Federal Civil Penalties Inflation Adjustment Act Improvements Act (FCPIA) of 2015.  The FCPIA of 2015 amends the 1990 law, requiring federal agencies to adjust the level of civil monetary penalties through rulemaking to reflect inflation in order to maintain the deterrent effect on regulated entities.

Specifically, the 2015 adjustment act requires the head of each federal agency to issue an “interim final rule” by July 1, 2016 adjusting for inflation each civil monetary penalty provided by law within the agency’s jurisdiction.  The process is driven by changes in the U.S. Department of Labor’s Consumer Price Index for all-urban consumers (CPI-U), relative to the baseline used the last time the penalties were set.  After a "catch-up" round when the penalties are initially adjusted under the 2015 law, the law requires agencies to update penalty amounts on an annual basis every January 15.

In response, on June 29, the Federal Energy Regulatory Commission issued Order No. 826.  In Order 826, the FERC noted the previous maximum civil monetary penalty authority of up to $1,000,000 per violation, per day under section 316A(b) of the Federal Power Act.  The Commission then found that inflation during the relevant period -- the ten years from October 2005 through October 2015 -- inflation was 19.397 percent.  Accordingly, the Commission increased the Commission's maximum penalty authority to $1,193,970.

In Order No. 826, FERC also adjusted its maximum civil monetary penalties for other violations, including violations of Sections 31(c) and 315(a) of the Federal Power Act, Section 22 of the Natural Gas Act, and sections of the Natural Gas Policy Act of 1978 and the Interstate Commerce Act.

The regulation is effective upon its publication in the Federal Register.

NH net metering under review

Friday, July 1, 2016

New Hampshire utility regulators have paused their review of a utility’s proposed changes to rates for customers with solar and other distributed energy resources, pending a more holistic review of the state’s net metering policy. Interest now focuses on Docket DE 16-576, in which the Commission may develop new alternative net metering tariffs or other regulatory mechanisms applicable to customer-sited generation.

Under New Hampshire law, the net energy metering section of the Limited Electrical Energy Producers Act, each electric distribution utility must make standard tariffs providing for net energy metering available to eligible customer-generators in accordance Public Utilities Commission regulation.

On April 29, 2016, distribution company Unitil Energy Systems, Inc. (Unitil) filed a petition to the New Hampshire Public Utilities Commission seeking authority to, among other things, implement new permanent delivery rates for distribution service, beginning June 1, 2016. Among Unitil’s proposed changes was a new tariff schedule for Domestic Distributed Energy Resources, called Schedule DDER, applicable to certain residential customers with renewable distributed generation systems installed behind the retail meter. If adopted, it would change how Unitil’s customers may net meter solar panels and other eligible distributed generation.

Changes to net metering policy can be controversial.  Consumers and solar advocates typically support net metering as a key incentive for solar project development, even if it might undercompensate consumers relative to the value of solar.  But some utilities oppose net metering, arguing that it hurts their revenues or shifts costs to customers without solar panels.  Debate over the issue led the New Hampshire legislature to enact a net metering bill, House Bill 1116, earlier this year. Signed by Governor Hassan on May 2, 2016, House Bill 1116 amended several provisions of RSA 362-A:9.

Among the new statutory language is new paragraph XVI, requiring the Commission, within a ten month period, to initiate and conclude a proceeding to develop new alternative net metering tariffs, which may include other regulatory mechanisms and tariffs, taking into consideration a number of specified factors deemed relevant to such development. By Order of Notice issued on May 19, 2016, the Commission opened Docket DE 16-576 to conduct this holistic review of net metering.  That case remains ongoing.

Given the overlap between the holistic net metering case and Unitil’s proposed Schedule DDER, on June 9, the New Hampshire Public Utilities Commission issued an order suspending the investigation of, and staying any litigation regarding, Unitil’s proposed tariff schedule. In its June 9 order suspending the investigation, the Commission concluded that “it it would be inconsistent with the intent of HB 1116 and would represent an inefficient allocation of limited Staff, stakeholder, and Unitil ratepayer resources to address rate design proposals directly affecting net-metered customer-generators in this proceeding as well as in Docket DE 16-576.”

In the Commission’s words, it initiated Docket DE 16-576 based on the legislative mandate “to conduct a proceeding involving all regulated electric distribution utilities to develop new alternative net metering tariffs, which may include other regulatory mechanisms.” Noting that Schedule DDER is effectively a net metering tariff, the Commission found that separately reviewing, evaluating, and litigating Schedule DDER in both the Unitil docket and Docket DE 16-576 would impose additional burdens on the limited resources of Staff and its consultant, as well as on those of other parties and stakeholders, and “could result in conflicting schedules, redundant discovery, and potentially inconsistent results in the separate proceedings.”

The Commission noted that under the HB 1116 amendments to the net metering law, “net metering will continue indefinitely and without limit, unless and until otherwise determined by the Commission in the proceeding we have opened as Docket DE 16-576… In effect, customer -generators will continue to participate in net metering under RSA 362-A:9 even in excess of the 100 megawatt “cap,” but those above this statutory limit ultimately will be subject to the new alternative net metering tariffs approved by the Commission in Docket DE 16-576.”

Accordingly, the Commission placed the suspension and stay of the Unitil case in effect until the completion of Docket DE 16-576.  The net metering review in that case remains pending, with a schedule set through the coming winter.