News

States eye wide-ranging energy storage bills

Boulder City Council votes to proceed with municipalization

Boulder faces decision over municipalization settlement offers

Survey unpacks top issues that the utility industry sees for 2017

California saw dip into negative prices as solar generation soared

Trump signs order calling for re-evaluation of Clean Power Plan

Moody's report details "at risk" coal capacity in the Great Plains

Trump budget proposal includes elimination of LIHEAP funding

Standing together to power strong communities

Natural gas still the top generation fuel, says Association report

Public power message to Capitol Hill: leave tax-exempt financing alone

What Public Power Can Learn from Down Under

Fighting for Community

April 19, 2017

States eye wide-ranging energy storage bills

By Ethan Howland
Contributing Writer

State lawmakers across the United States are looking to boost the nascent energy storage sector via tax incentives, procurement targets and other means.

Reflecting the focus on energy storage, which can offer grid benefits ranging from providing ancillary services to helping integrate renewables, the Maryland General Assembly passed by wide margins two bills this month that aim to boost energy storage.

One bill, S.B. 758, provides a 30 percent tax credit for residential and commercial energy storage investments and the other, H.B. 773, directs a state agency to draft a report on regulatory reforms and market incentives that could be used to spur energy storage development.

The residential tax credit is capped at $5,000 and the commercial storage credit has a $75,000 cap. The program, set to run from 2018 through 2022, would be limited to $750,000 a year.

Both bills passed the Maryland Senate unanimously while the tax credit bill passed the House on a 101-11 vote and the study bill passed by 119-20. Maryland Gov. Larry Hogan, a Republican, hasn’t yet signed the bills, which appear to have veto-proof margins. If approved, Maryland would be the first state to offer energy storage tax credits.

The state action comes as the energy storage sector is beginning to see rapid growth, albeit off of low numbers, according to Matt Roberts, Energy Storage Association executive director.

Last year, developers brought online energy storage systems capable of delivering 340 MWh, double from 2015, according to a report released in March by GTM Research and the ESA. The quarterly U.S. Energy Storage Monitor report said that 141 MW of storage came online in the United States in the fourth quarter, up 25 percent from the year-ago period.

California was the largest market for utility-scale energy storage last year, overtaking the PJM Interconnection outside of New Jersey, the report said. GTM Research expects the U.S. energy storage market will grow from 221 MW installed last year to about 2,560 MW installed in 2022.

Meanwhile, in a move that will have long-term effects, according to Roberts, the Federal Energy Regulatory Commission is proposing to require that grid operators make it easier for energy storage and aggregated distributed resources to participate in wholesale power markets.

Separately, FERC in January issued a policy statement that aims to clarify how energy storage resources can recover their costs through cost- and market-based rates at the same time in an effort to remove barriers to the emerging technology.
While the action at the federal level is important, the ESA is focused on states and the “unique ecosystems” at the utility level, according to Roberts.

One of the issues states are dealing with is how to properly value energy storage, which can offer a range of services through its ability to draw energy off the grid and also supply it to the system, Roberts said.

As a starting point, some state legislatures are considering bills that call for studies on energy storage, according to Roberts.
In Nevada, S.B. 204 directs the Nevada Public Utilities Commission to study the costs and benefits of energy storage and to decide by Oct. 1, 2018, whether it is in the public interest to require utilities to procure energy storage.

Under the bill, the PUC would set annual procurement requirements if it determines that the benefits of energy storage outweigh its costs. The PUC could also determine where the storage resources are sited.

In Vermont, H. 501 directs the state’s Department of Public Service to develop policy recommendations and procurement targets for energy storage.

Meanwhile about a dozen energy storage-related bills are pending in California, which has a 1,325 MW storage procurement target set by the California Public Utilities Commission.

Two bills are pending in California — A.B. 1405 and S.B. 338 — that aim to spur the use of renewables, energy storage and demand response in meeting demand during peak periods. The Assembly bill ramps up the amount of power that must come from “clean” resources so that they total at least 40 percent of peak power supply by 2030. The Senate bill calls for the PUC to minimize the amount of fossil fuel-based resources that are used to meet peak demand.

Hawaiian lawmakers are considering several bills that provide tax credits or rebates for energy storage systems, which are viewed as critical in helping Hawaii meet its goal of getting all its power from renewables by 2045.

In the latest action, H.B. 1593, which creates a 3-year energy storage rebate pilot program, and S.B. 665, which establishes tax credits for solar, wind and energy storage, passed both chambers in the Hawaii Legislature. However, the House and Senate disagree with amendments the opposite chamber added to each bill.

Another bill, S.B. 660, would create an energy storage market acceleration program and create storage rebates. The bill is moving through the Senate.

April 19, 2017

Boulder City Council votes to proceed with municipalization

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At the end of a nearly five-hour special meeting and public hearing the evening of April 17, the Boulder City Council voted 6-3 to keep moving forward with its effort to form a city-owned electric utility and take over electric service from investor-owned Xcel Energy, rather than to pursue a settlement with Xcel.

The Colorado city has been pursuing the public power option for a number of years.

At its April 17 meeting and public hearing, the City Council had before it two settlement proposals from Xcel that the city leaders could have decided to place on the November ballot. Both proposals — one to create a partnership between the investor-owned utility and the city, and another to let Boulder buy Xcel’s system, for a price of up to $900 million — would end all litigation between the two parties.

The city also had another option: to reject both settlement proposals and go to an eight-day hearing before the Colorado Public Utilities Commission that is scheduled to start on April 26. That is the option that the city leaders chose.

The PUC is currently reviewing the city’s application, filed in September 2016, asking for approval to transfer the electric system assets necessary to operate a municipal electric utility. Those assets would be transferred from Xcel Energy to Boulder.

Overflow crowd; comments last for 3 hours

Ninety people signed up to speak at the public hearing, and an overflow crowd attended the event, reported the local newspaper, the Boulder Daily Camera. The public comments lasted for three hours and “were overwhelmingly in favor of staying the PUD course and rejecting the current settlement paths,” the newspaper reported.


The city of Boulder has been pursuing the public power option for years, in hopes of getting a power supply that focuses more on renewable resources and less on fossil fuels.

The City Council debated the merits of what city leaders called “a pause” in Boulder’s efforts to municipalize. A pause would have halted the city’s efforts to create its own utility and would have allowed city leaders to put one or more of the settlement proposals from Xcel Energy on the ballot in the upcoming elections in November. Taking this step would have meant stopping the process before the PUC.

Boulder Mayor Suzanne Jones was among those who voted against stopping the PUC proceedings.

"We have spent a lot of time and money to get to this place in order to finally get an answer,” she said. "We need to follow through."

Voting with the mayor were City Council members Matt Appelbaum, Aaron Brockett, Lisa Morzel, Sam Weaver and Mary Young.

Voting in favor of a pause were Mayor Pro Tem Andrew Shoemaker and council members Bob Yates and Jan Burton.

Boulder seeks to de-carbonize its electricity

The Colorado city of 100,000, located 35 miles northwest of Denver, has sought for about a decade to find a way to reduce the carbon content of its energy supply and to add more renewable resources to its power supply — and has been investigating the option of creating a local public power utility as one way of accomplishing those goals.

Voters in Boulder considered this topic, or related issues, in 2010, 2011, 2013 and 2014. In each of those four elections, a majority of voters wanted the city to pursue the creation of a local electric utility.

Over the last six years, the city has developed detailed plans to acquire Xcel’s assets, but the private utility has opposed those plans, resulting in legal fights between the two. Xcel’s two settlement proposals were reached after 15 months of negotiations.

An updated analysis released by the city last November found that creating a public power utility would be cost effective over 20 years. Even with conservative estimates, “a city-operated utility could meet each of the financial charter metrics approved by voters in 2011 and 2013 and would allow the city to reach at least 80 percent renewable electricity by 2030,” Boulder said.

The PUC, which is due to take up Boulder’s application next week, is expected to make a decision in the matter by mid-June.

Meanwhile, Xcel Energy and IBM, which owns a large data center in Boulder, have filed motions with the PUC asking it to dismiss the city’s application. The PUC has said it would consider those motions by April 19.

April 13, 2017

Boulder faces decision over municipalization settlement offers

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In the next two weeks, the City Council in Boulder, Colo., faces a decision about whether to accept one of two settlement proposals from Xcel Energy over the city’s exploration of municipal power. Both proposals — one that would create a partnership between the investor-owned utility and the city, and another that would let Boulder buy Xcel’s system, but at a high price — would end all litigation between the two parties.

The city has a third option, as well: to reject both settlement proposals and go to an eight-day hearing before the Colorado Public Utilities Commission. The PUC proceeding is set to start on April 26 unless the city accepts one of Xcel Energy’s settlement proposals.

The City Council held a study session on the Xcel proposals on April 5, and will hold a public hearing on the proposals the evening of April 17. A vote by the council is expected either that night or the following day.

The question before the City Council “is a limited one,” the city of Boulder said in a March 31 news release. “Should council inform the Public Utilities Commission that it wishes to pause current municipalization proceedings so that council can put one or both of Xcel’s proposals on the November ballot?”

The PUC is currently reviewing the city’s application, filed in September 2016, asking for approval to transfer the electric system assets necessary to operate a municipal electric utility.

If the City Council decides it wants to place one or more of the settlement proposals before voters on Nov. 5, 2017, “it will be best to suspend the current proceeding” through which the PUC is considering the city’s application for transfer of assets, says an April 5 memorandum from Boulder City Manager Jane S. Brautigam and City Attorney Tom Carr.

Boulder wants more renewables, less carbon

The Colorado city of 100,000, located 35 miles northwest of Denver, has sought for the last several years to find a way to reduce the carbon content of its energy supply and to add more renewable resources, and has been pursuing the option of creating a local public power utility as one way of doing those things.

Voters in Boulder have considered this topic, or related funding and other issues, in 2010, 2011, 2013 and 2014. In each of those four elections, a majority of voters wanted the city to pursue creation of a local electric utility.

An updated analysis released by the city in November found that creating a public power utility would be cost effective over 20 years. Even with conservative estimates, “a city-operated utility could meet each of the financial charter metrics approved by voters in 2011 and 2013 and would allow the city to reach at least 80 percent renewable electricity by 2030,” Boulder said.

Over the last six years, the city has developed detailed plans to acquire Xcel’s assets, but the private utility has opposed those plans, resulting in litigation.

Boulder and Xcel Energy began settlement discussions in January 2016, and these were announced publicly last June, the city said in its March 31 news release.

“Over the past 15 months, each party negotiated in good faith with the hope of arriving at a settlement that could address the city’s goals,” the city said. “Earlier this month, representatives from Xcel Energy indicated that they were prepared to make a best and final offer.”

Xcel Energy’s two proposals

Xcel has put forward two settlement proposals. The first would be a new partnership between the city and Xcel that would strive to reach Boulder’s goal of achieving 100 percent renewable energy by 2030. The partnership would require the city to provide Xcel with a franchise, but if the city was unhappy with the partnership after five years, it could terminate the agreement.

The second settlement proposal from Xcel would be an option for the city “to buy Xcel’s system outright at a price and under conditions ultimately set by Xcel Energy,” Boulder said.

Details about the proposals are set forth in the lengthy memorandum issued by City Manager Brautigam and City Attorney Carr ahead of the April 5 City Council study session. The memo includes a preliminary discussion about the potential costs associated with the buy-out option and conditions that would have to exist for the city to be successful in reaching its climate goals under a partnership.

Total costs of the buyout option offered by Xcel could be $900 million, an amount so high that the bonds needed to finance the buyout might not be issued as investment grade and city might have trouble finding a market for all of them, the memo notes.

Vote expected April 17-18

The City Council will discuss the settlement proposals at the April 17 public hearing. The council “may make a decision on this night, but reserves the right to delay taking a vote until its already scheduled meeting on Tuesday, April 18,” Boulder said in its March 31 news release.

In February, the University of Colorado Boulder and the city of Boulder finalized an electric service agreement, should the city begin operation of a municipal electric utility.

On Dec. 14, 2016, the PUC approved the procedural schedule for handling the city's application for the transfer of assets. The schedule set forth by the commission requires that the parties announce any settlement by April 19, 2017.

Another Colorado community, the city of Pueblo, is considering forming a municipal utility. Steve Nawrocki, president of the Pueblo City Council, said in February that he has asked for a report by city staff on the feasibility of creating a local city-owned utility.

More information about Boulder’s efforts to create its own utility can be found at BoulderEnergyFuture.com.

April 11, 2017

Survey unpacks top issues that the utility industry sees for 2017

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The top five issues facing utilities this year are physical and cyber security, distributed energy policy, rate design reform, aging grid infrastructure and the reliable integration of renewables and distributed energy resources, according to the results of a survey of professionals in the utility industry.

The survey found that 72 percent of respondents see physical and cyber security as either “important” or “very important” today, making it the most pressing issue for the sector in 2017, the 2017 “State of the Electric Utility Survey” of Utility Dive readers found. The results of the survey were disclosed in late March.

With respect to distributed resource policy, 33 percent of respondents listed this issue as important, while 32 percent said it was very important. For rate design reform, 31 percent listed the issue as currently important, while 32 percent said it was very important. As for aging grid infrastructure, 34 percent of survey respondents see it as important today, while another 28 percent say it is very important.  The reliable integration of renewables and DERs was listed by 32 percent of respondents as important and very important by 28 percent.

Meanwhile, state regulatory model reform, the aging utility workforce, changing consumer preferences, compliance with state power mandates and stagnant load growth rounded out the top ten issue responses to the Utility Dive survey.

The 2017 State of the Electric Utility Survey was based on an online questionnaire offered to Utility Dive readers in January. More than 600 electric utility employees from the U.S. and Canada took the survey. Of the respondents to the survey, 54 percent listed investor-owned utilities as the type of utility that employs them, followed by municipal or public power utility (32 percent) and electric cooperative (14 percent).

Survey responses in 2017 represented both continuity as well as a gradual shift in priorities, Utility Dive said.

Two years ago, respondents listed aging infra¬structure, the aging workforce and their current regulatory models as the three most pressing challenges for their utilities, followed by stagnant load growth and federal emissions standards. At the time, physical and cyber security ranked sixth.

In 2016, responses followed a similar pattern, Utility Dive said. “Utilities ranked the aging workforce, existing regulatory model and aging infrastruc¬ture as their top three concerns, followed by renewables integra¬tion and stagnant load growth. Physical and cyber security again ranked sixth,” the report on the survey’s findings said.

“Concern about those same issues persisted in 2017, but a large number of respondents indicated they are not as pressing as the issues of grid security, DER policy and rate design,” Utility Dive reported.

Utilities most confident in growth of utility-scale solar, DERs, wind, natural gas

Beyond the top issues that survey respondents listed for 2017, the report details other key takeaways from the survey.

Among other things, the survey found that utilities are most confident in the growth of utility-scale solar, distributed energy resources, wind energy and natural gas generation over the next 10 years. They also expect coal generation to decline significantly, while nuclear generation will stagnate or retire, depending on the region.

With respect to DERs, “utilities were most bullish about the growth of rooftop solar in their service areas, followed by demand-side management and behind-the-meter storage,” Utility Dive said.

Meanwhile, most utility executives do not expect the election of Donald Trump to the presidency to alter the outlook for generation resources in their service areas. “The lone exception was coal — nearly half of respondents indicated they now have a ‘more positive outlook’ on the future of coal after the election. Still, few expect to deploy more coal capacity at their own utilities,” Utility Dive noted.

Trump in late March signed an executive order that directs the Environmental Protection Agency to start the process of re-evaluating the Clean Power Plan, the EPA’s final rule to restrict carbon dioxide emissions from coal-fired and other fossil fuel-fired power plants.

The survey also found that uncertainty over future energy policies and market conditions “is considered by utilities to be the most significant challenge associated with the changing power mix, followed by minimizing customer costs and reliable integration of new generation technologies.”

Survey sheds light on priorities by region, utility type

The survey found that physical and cyber security, DER policy and renewable energy and DER integration were national concerns, with a majority of respondents from every U.S. region indicating they are “important” or “very important” today.

Rate design reform and aging infrastructure were also national concerns, listed as “important” or “very important” by a majority of respondents in every U.S. region except one.
Physical and cyber security concern was greatest in the South and Southeast, where 84 percent indicated it is either “important” or “very important,” followed by the Southwest and South Central (73 percent).

Meanwhile, DER policy concern was greatest among respondents from the West Coast, where 79 percent indicated it is “important” or “very important,” followed by the Great Plains and Rockies (77 percent), and New England (77 percent). “Those regions feature states with both robust DER growth and utility reform dockets to reshape power sector business models for DER deployment,” Utility Dive noted.

At least 60% of respondents from all utility types indicated DER policy was either “important” or “very important” today. According to the survey findings, 71 percent of electric cooperative respondents chose one of those options, followed by IOUs at 67 percent and public power utilities at 61 percent, “indicating that many cooper¬atives are seeing DER growth in their service areas.”

Rate design reform was of most concern to the West Coast, where 71 percent indicated it was “important” or “very important,” followed by those from the Great Plains (66 percent). Respondents from the Midwest (49 percent) were the least concerned, the survey found.

In addition, 63% of IOUs and 61% of public power utilities indicated they consider rate design reform to be “important” or “very important,” compared with 49% of co-ops.
Aging infrastructure was of most concern to West Coast respon¬dents, with 75 percent of respondents from that part of the country listing it as “important” or “very important,” followed by New England respondents (67 percent). Those from the Southwest and South Central (48 percent) were the least worried, “indicating aging infrastructure is more of a concern in juris¬dictions with DER growth and utility reform efforts,” Utility Dive said.

Rate design reforms

Diving deeper into rate design reforms, the survey report noted that time-of-use rates were most popular, with 43 percent of respondents choosing them for all customers and 28% choosing them for distributed generation customers.

TOU for all customers was most popular in the West Coast (53 percent) and New England (52 percent) and least popular in the Southwest (27 percent). TOU for all customers was more popular among cooperatives (50 percent) than public power (43 percent) or IOUs at 41 percent.

Fixed charge increases for all customers got support from 40% of respondents, while increasing them for DG customers only received 24%.

Fixed charge increases for all were especially popular in the Great Plains (54 percent) and the Midwest (48 percent) and least popular in the Mid-Atlantic (30 percent) and Canada (18 percent). Respondents who work for cooperatives were more likely to choose fixed charge hikes for all (61 percent) than public power (38 percent) or IOUs (35 percent).

April 11, 2017

California saw dip into negative prices as solar generation soared

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News Director

In March, there were certain time periods when California Independent System Operator system average hourly prices were frequently at or below $0 per megawatt-hour, which coincided with utility-scale solar generation in the ISO territory soaring to new heights last month, the Energy Information Administration reported on April 7.

In its “Today in Energy” report, the EIA said that on March 11, utility-scale solar generation in the territory of the CAISO accounted for nearly 40% of net grid power produced during the hours of 11:00 a.m. to 2:00 p.m.

This is the first time CAISO has achieved these levels, reflecting an almost 50% growth in utility-scale solar photovoltaic installed capacity in 2016, the federal agency noted.

“The large and growing amount of solar generation has occasionally driven power prices on the CAISO power exchange during late winter and early spring daylight hours to very low, and sometimes negative, prices. However, consumers in California continue to pay average retail electricity prices that are among the highest in the nation,” the EIA said.

Utility-scale solar generation includes solar photovoltaic systems as well as a few solar thermal plants. Additional generation from customer-sited solar generators installed in California, such as those on residential and commercial rooftops, further adds to the total solar share of mid-day electricity generation, while displacing demand for power from the grid, the EIA said.

As of December 2016, utilities in CAISO reported 5.4 gigawatts of net-metered distributed solar capacity.

(The EIA reports installed electric capacity data in alternating current terms, which are typically 10% to 30% lower than the direct current capacities sometimes reported for PV systems, it pointed out).

EIA estimates that this capacity would have generated approximately 4 million kilowatt-hours during the peak solar hours on March 11. “This level of electricity reduced the metered demand on the grid by about the same amount, suggesting that the total solar share of gross demand probably exceeded 50% during the mid-day hours,” the report said.

Total solar capacity in California -- including both distributed and utility-scale systems -- has risen from less than 1 GW in 2007 to nearly 14 GW by the end of 2016.

Solar generation follows daily and seasonal sunlight patterns, peaking during the long summer days and reaching its annual minimum during the winter.

“Electricity demand in California also tends to peak during the summer months. However, in late winter and early spring, demand is at its annual minimum, but solar output, while not at its highest, is increasing as the days grow longer and the sun gets higher in the sky. Although the sun is at a similar angle in September and October, electricity demand is still relatively high, leading to lower solar generation shares than seen in March,” the federal agency noted.

Therefore, power prices on both the day-ahead and real-time CAISO markets were substantially lower in March compared with other times of the year or even March of last year.
Specifically, the EIA said that in March, during the hours of 8:00 a.m. to 2:00 p.m., system average hourly prices were frequently at or below $0 per MWh. In contrast, average hourly prices in March 2013–15 during this time of day ranged from $14/MWh to $45/MWh.

The federal agency noted that negative prices usually result when generators with high shutdown or restart costs must compete with other generators to avoid operating below equipment minimum ratings or shutting down completely.

Large price spikes immediately before and after mid-day periods when both utility-scale and distributed solar generation reaches its peak level suggest a need for dispatchable generation sources to help cover ramping periods. The mix of generation on the system also has an impact on prices.

“Notably, above-average rain and snowfall this winter in California has supported high levels of hydropower generation that may also be contributing to recent pricing patterns,” the report added.

The EIA recently reported that high precipitation and snowpack levels suggest that hydroelectric generation in California in 2017 will significantly exceed 2016 levels.

March 29, 2017

Trump signs order calling for re-evaluation of Clean Power Plan

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In an executive order he signed on March 28, President Trump directed the Environmental Protection Agency to start the process of re-evaluating and rewriting the Clean Power Plan — the EPA’s rule, issued in final form in late 2015, to reduce carbon dioxide emissions from fossil fuel-fired power plants.

The order calls for the heads of federal agencies to conduct an “immediate review” of all existing regulations, orders and policies “that potentially burden the development or use of domestically produced energy resources.”

The order “will eliminate federal overreach,” the president said in a speech at EPA headquarters in Washington, D.C., where he shared a stage with members of his cabinet and with coal miners.

“This is about bringing back our jobs, bringing back our dreams, and making America wealthy again,” Trump said.

The executive order will return power to the states, he said. “States and local communities know what is best for them.”

As he took up a pen to sign the order, Trump said to the coal miners who were gathered around him, “You know what this says, right? You’re going back to work.”

In his campaign speeches, Trump promised to do away with the Clean Power Plan, eliminate the 'Waters of the United States' final rule, and make other changes in the nation’s energy sector, including withdrawing from the international climate change accord that was reached in Paris, France, in December 2015. On Feb. 28, Trump signed an executive order directing the EPA and the U.S. Army Corps of Engineers to consider rescinding or revising their Waters of the United States rule.

Final rules are not easy to turn around, though, the Natural Resources Defense Council’s director of government affairs said late last year. These rules took years to be proposed, to go through public comments, be revised, and be issued in final form, and need to be modified the same way, he said.

Public power CEO among those in attendance

Among those attending Tuesday’s signing was Sue Kelly, president and CEO of the American Public Power Association. In a statement released shortly after the order was signed, the Association said it “supports President Trump’s executive order calling for a reexamination of the Environmental Protection Agency’s rules regulating greenhouse gas emissions from new and existing fossil fuel-fired power plants.”

“Few disagree that these rules envisioned broad and transformative changes to the electricity industry. As the voice of utilities that are units of state and local government, the Association firmly believes that states should maintain the authority to plan and implement generation and energy policies that are suitable for their circumstances.”

The Association noted that the public power sector “has previously voiced its legal objection to the rule for requiring utilities to fundamentally alter the way they generate electricity,” adding, “In some cases, utilities would have been forced to abandon functional power plants while continuing to pay them off.”

The public power group said the nation’s transition to energy independence needs to be realized “in a manner that ensures a more diverse energy portfolio while still appropriately balancing affordability, reliability, and sustainability.”

Public power utilities “will continue their substantial progress in reducing greenhouse gas emissions through greater use of non- and low-emitting sources of electricity generation, such as hydropower and other renewables, nuclear, and natural gas, and the implementation of affordable, common-sense energy efficiency and conservation programs,” the Association concluded in the statement.

Perry, Zinke, Pence praise executive order

Three members of President Trump’s cabinet, along with Vice President Michael Pence, spoke at the March 28 signing ceremony.

Energy Secretary Rick Perry called the occasion “an important day,” and said that promoting U.S. energy independence would also make the nation more secure. He recounted meeting with the president, recalling that Trump had said that he didn’t just want America to be energy-independent — he wanted America “to be energy-dominant.”

Interior Secretary Ryan Zinke applauded the action the president was about to take, saying “the hallmark of a great president is one that takes decisive action.”

“We’re no longer going to have a regulatory assault on one section of the American economy,” said Scott Pruitt, administrator of the EPA.

“This is a great day for energy independence,” said Vice President Pence, adding that the president was about to “strike a powerful blow for low-cost energy.”

“The war on coal is over,” Pence said.

Coal resurgence?

The president appears to be hoping for a resurgence in the U.S. coal industry, but whether that will happen is an open question. The nation’s reliance on coal as a fuel for producing electricity was declining even before the Clean Power Plan was issued in its final form in October 2015, as plentiful natural gas from the shale gas boom steadily eroded coal’s share.

The Energy Information Administration, which is part of the Energy Department, reported a year ago that U.S. coal production registered its largest decline ever in 2015.

For years, natural gas ranked just behind coal as the second most prevalent fuel for electricity generation in the United States, but it became the power industry’s primary fuel source for the first time in April 2015, according to the EIA. Natural gas-fired generation “has surpassed coal-fired generation in most months since then,” and generation fueled by natural gas reached record levels this past summer, the agency said in a November 2016 report.

March 28, 2017

Moody's report details "at risk" coal capacity in the Great Plains

American Public Power Association - Moody's report details "at risk" coal capacity in the Great Plains

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News Director

Against the backdrop of low average wind power prices in the Great Plains, a new report from Moody’s Investors Service estimates that about 56 gigawatts worth of coal capacity in the Great Plains has an operating cost higher than $30/MWh and faces lower capacity factors going forward, and potentially early retirement.

About 34 GW of this “at risk” capacity is owned by regulated utilities with at least 2,000 MW at risk, the ratings agency said in its March 15 report, “Rate-Basing Wind Generation Adds Momentum to Renewables.”

Moody’s said that wind power has seen a substantial cost decline over the past few years, making wind much more competitive compared to traditional fuel sources such as coal.

In the Great Plains states, which Moody’s says have the best wind resources, the average long-term all-in purchase power agreement prices for wind power are now in the $20/MWh range. In contrast, the majority of the coal-fired power plants in this region have operating costs that are higher than $30/MWh.

“This cost difference is causing coal-fired power plants to lower their production, especially during the off-peak hours, and in some cases to retire them,” the rating agency noted.

Moody’s pointed out that when one speaks of wind replacing coal, it is about wind displacing coal from the dispatch stack on an energy basis.  

Wind plants only provide a fraction of the “capacity value” of coal plants due to the intermittent nature of the resource, the report said.

Depending upon the wind resource and transmission constraints, this number varies anywhere from 10 percent to 50 percent.

“As more wind is added to the grid, coal plants will continue to operate, albeit with lower capacity factors. This would increase the per unit production costs of the coal units over time eventually leading to their retirement, a decision that utilities make on a case-by-case basis,” Moody’s said.

Research covers 15 states

Approximately 87 GW of existing coal-fired power capacity is located in the 15 states that Moody’s included in its research. “These are all regulated states and do not include unregulated states with strong wind resources such as Texas and Illinois,” the report said.

Moody’s noted that the decline of merchant coal power plants “has been a well-documented trend over the last several years, primarily driven by low natural gas prices. We believe regulated coal-fired power plants may also see a trend of earlier retirements in the Great Plains region, driven by low cost wind resources.”

Moody’s noted that the approximately 56 GW of capacity with an operating cost that exceeds $30/MWh assumes $50/kW-year for fixed operating and maintenance cost and maintenance capex. It said coal plants that have costs of less than $30/MWh tend to be either newer coal plants with higher efficiencies or plants located closer to coal mines, especially Powder River Basin coal, and therefore have a more competitive fuel cost.

Public power

While much of the report focuses on investor-owned utilities, Moody’s also included a section discussing public power utilities.

It said that renewable energy additions for some public power utilities, e.g. in California, is driven by the state’s renewable portfolio standard.

“But like IOUs, the addition of wind capacity in the Midwest is driven by access to the regional energy markets such as the Southwest Power Pool and its abundant supply of low cost wind resources that are more economic than traditional sources,” the rating agency said.

According to the report, most public power utilities are also seeing lower dispatch of coal units by their respective regional transmission organizations.

Moody’s noted that the Omaha Public Power District shut down its nuclear power plant, Fort Calhoun Station, at the end of 2016 to start the early decommissioning process after determining this was the most cost effective route over the long term.

“OPPD is long on power and thus does not have to replace all of the capacity of the plant. In addition, OPPD signed a 400 MW wind PPA to provide the utility with low cost replacement power that will immediately lower generation costs once operational at the end of 2017,” the report said.

Meanwhile, public power utilities such as Lansing Board of Water and Light in Michigan and Unified Government of Wyandotte County/Kansas City, Kansas' Board of Public Utilities in Kansas intend to transition their fleet away from coal and towards natural gas and renewables over the next decade. This includes the addition of new wind — 88 MW and 200 MW, respectively — and either new gas-fired generation or conversion of coal to gas to help manage the intermittency of wind, the report said.

Corporate PPAs driving growth of renewables, says Moody’s

In another recent report, Moody’s said that lower wind and solar power costs are driving a boom in corporate power purchase agreements and displacing utility PPAs as the main driver of renewable energy demand.

 

 

March 20, 2017

Trump budget proposal includes elimination of LIHEAP funding

By This email address is being protected from spambots. You need JavaScript enabled to view it.
News Director

Funding for the Low-Income Home Energy Assistance Program, or LIHEAP, would be eliminated under a discretionary spending proposal for Fiscal Year 2018 released March 16 by the Trump Administration.
 
“Compared to other income support programs that serve similar populations, LIHEAP is a lower-impact program and is unable to demonstrate strong performance outcomes,” the proposal states.

The document released March 16 is the first of a series of budget documents to be released this spring by President Donald Trump.

The National Energy and Utility Affordability Coalition previously launched an effort to secure stakeholder signatures for a letter in support of LIHEAP funding. The letter urges Congress to protect and increase funding to LIHEAP.

“Sufficiently funded, LIHEAP serves a vital, life-saving role protecting millions of families from America’s cold winters and hot summers,” the letter states. “Strong LIHEAP funding is necessary if this program is to continue to allow states and their charitable partners to serve America’s most vulnerable households.”

Additional details about how organizations can sign on to the letter are available here.

Budget also calls for big EPA funding cut, limits on DOE funding

Under the budget proposal rolled out on March 16, funding for the Environmental Protection Agency would be cut by $2.6 billion in Fiscal Year 2018. It would also eliminate or reduce funding for certain Department of Energy programs.

The White House’s Office of Management and Budget said that the full budget, including specific entitlement spending and tax proposals and discretionary spending priorities beyond 2018, will be released later this spring.

March 14, 2017

Standing together to power strong communities

Public Power Lines
By Sue Kelly
President & CEO, American Public Power Association
March 6, 2017

Whether it’s meeting evolving customer needs, assuring safety and reliability, or serving their communities in novel ways — often with limited staff and resources — public power utilities are working hard. Sometimes I marvel at just how much they do to power strong communities.

Much of this is, of course, thanks to folks who are doing some of the grittiest work in the electricity business — maintaining all the equipment that keeps the lights on for our customers. And linework is no easy job. It’s one of the hardest and most dangerous. Hear from the widow of a fallen lineworker in Last Word.

Stories like Tracy Moore’s are precisely why it’s so important to the American Public Power Association that lineworkers stay safe when doing their job. For the 16th time since 1955, we’ve published a new edition of the Safety Manual. (Read more on page 8.)
At the annual Public Power Lineworkers Rodeo in San Antonio in May we’ll reward the teams that perform their work in the safest manner in various simulated conditions.

While the work lineworkers do is vital to our industry’s success and very serious, if I’ve learned one thing about them, it’s that they are very proud of their skills and love to show them off. The Public Power Lineworkers Rodeo is our most memorable celebratory event.

Competition and events aside, one of the best parts of the Lineworker’s Rodeo for me is witnessing the camaraderie. Teams from utilities across the nation compete against each other, but they may have also worked hand-in-hand restoring power, thanks to a mutual aid agreement. They may be competing in the morning and checking out each other’s T-shirt art in the afternoon. (Having sold shirts in the Association’s store more than once, I can personally attest to the strong appetite for T-shirts among lineworkers and their families!) Such relationships are the very fabric of public power’s strength. Our communities vary in size, but we are powerful when we stand together.

For a long time, the mutual aid network for the electricity industry needed to address only physical threats. The biggest threats to our system were unpredictable weather events — wind storms, ice storms, hurricanes … even squirrels! But the world around us has changed and so have the threats to our reliability and safety. Cybersecurity is now a top priority for public power utilities, and this is where new relationships are forming to expand our community’s strength.

I’m talking about cyber mutual assistance — translating everything we know about coming to each other’s aid in physical scenarios to those digital threats. The Electricity Subsector Coordinating Council (on which Kevin Wailes, CEO of Lincoln Electric System, is co-chair) has already assembled a team of utility representatives to build this cyber mutual assistance network. Representing public power on the network’s executive committee is Randy Crissman, vice president of technical compliance operations at the New York Power Authority. Crissman and other utility representatives are developing a cyber mutual assistance agreement that 80-plus utilities have already signed. This agreement spells out the processes utilities would use to ask for support and how they would provide reimbursement in a cyberattack — just like mutual aid agreements public power utilities already employ for physical events.

The process and participants are evolving and this group needs public power’s strength more than ever. I encourage you to participate, especially if your team includes cybersecurity specialists who bring unique skills to the table. The group is actively seeking more participants — email This email address is being protected from spambots. You need JavaScript enabled to view it. for more information.

As the electricity landscape changes, public power utilities are exploring new ways of working together to deal with these changes. The American Public Power Association is here to support you. Find resources throughout this special Engineering issue of Public Power Magazine and on our website And I hope to see you at the rodeo!

March 7, 2017

Natural gas still the top generation fuel, says Association report

By This email address is being protected from spambots. You need JavaScript enabled to view it.
News Editor

Natural gas remains the top source of electricity generation in the United States and is expected to continue that role into the future, says a new report by the American Public Power Association. Wind energy and utility-scale solar power are providing an increasing share of U.S. electrical capacity, as the nation’s fuel mix continues to evolve at a gradual pace, according to the report.

America currently has over 1.19 million megawatts of generation capacity, says the report, America’s Electricity Generation Capacity 2017 Update — the Association’s eleventh annual report on current and forthcoming electricity generation capacity in the United States by types of fuel, location, and ownership.

The largest fuel source is natural gas, accounting for nearly 43 percent of all generation capacity. While natural gas capacity dates back to the 1950s, “the overwhelming bulk” of it is less than 25 years old, the report noted.

Coal is second, with a share of just over 24 percent of capacity. Nuclear power, hydro power, and wind power combine for just over 24 percent of capacity and solar currently constitutes two percent of all capacity, the report said. The figures in the report represent utility-scale solar only — they do not include distributed and other small-scale generating capacity.

“Despite the uncertain fate of the Clean Power Plan (CPP), development of new coal capacity has almost completely halted, while exiting coal capacity continues to retire at a steady pace,” the report said.

“Almost no new coal plants are slated to come online in future years, and other traditional forms of electric generation are being displaced by wind, solar, and other forms of renewable generation,” but natural gas continues to be the most popular fuel choice due to costs and efficiency considerations, the report said.

Wind and natural gas resources are being built nationwide, while solar generating capacity is mostly developing in the West and Southeast.

The report analyzes prospective generation capacity in four categories — capacity that is under construction, permitted, application pending, and proposed.

Over 316,000 MW of new generation capacity is under development in the United States — 96,864 MW under construction or permitted, and just under 219,580 MW proposed or pending application.

“Most of the capacity currently under construction or permitted to begin construction will be fueled by natural gas,” said Paul Zummo, APPA’s manager of policy research and analysis, who wrote the report. Solar and wind together account for nearly one-third of near-term potential capacity additions, he said.

While the Southeast has the most generation currently, with 25 percent of the nation’s total capacity, the Western region “is slated to add the most generation in the near- and long-term,
projecting nearly 95,000 MW of new capacity,” according to the report.

The analysis also provides information on retirements and planned retirements, cancellations, and capacity that has been added over the past eight years.

Natural gas “is the only resource for which additions outnumber cancellations,” the report noted. “For all other resources, far more capacity was cancelled than was added.”

Federal and state-wide regulatory and legislative developments, as well as shifts in fuel costs, “could force sudden changes in resource allocation,” the report noted. “Clearly, slow shifts in generating resources continue. Yet the data show that wildly fluctuating changes in the relative shares of generating capacity should not be expected in the near term.”

The full 19-page report can be found here.

March 1, 2017

Public power message to Capitol Hill: leave tax-exempt financing alone

By This email address is being protected from spambots. You need JavaScript enabled to view it.
News Director

Maintaining tax-exempt financing for public power utilities is one of the most significant messages that hundreds of officials from American Public Power Association member utilities planned to deliver in visits to Capitol Hill this week as part of activities related to the Association’s 2017 legislative rally, top officials from the Association said on Feb. 28.

And those public power representatives will be able to offer up plenty of examples of how municipal bonds and tax-exempt financing have benefitted public power communities in congressional districts, the Association officials said during a briefing for reporters held at the rally in Washington, D.C.

At the rally, the Association approved new policy resolutions on municipal bonds, the Endangered Species Act, the Federal Power Act and pole attachments. The resolutions are determined by members and guide the Association’s policy positions. Four resolutions were approved by the Association’s Legislative & Resolutions Committee at the rally.

The first resolution calls for the preservation of municipal bond financing. Tax-exempt municipal bonds are critical to power system infrastructure investments and the Association will continue to oppose any efforts to tax interest paid on these bonds.

“This is a key issue for us, probably the number one issue that we will be pursuing on Capitol Hill during our legislative rally,” Sue Kelly, president and CEO of the Association, told reporters at the press briefing.

She was joined at the briefing by Desmarie Waterhouse, vice president of government relations and counsel, and Laura Marshall Schepis, senior vice president, advocacy and communications.

“Obviously as units of state and local government, our members use municipal bonds to support and to finance the building of new infrastructure at reasonable rates,” Kelly noted.

“It’s very important to us that we have continued access to this financing tool as we have for many, many years,” Kelly remarked.

“We want to make very clear to our congressmen and senators as we go up to the Hill that tax-exempt financing is very, very key to not only us as public power systems, but to all state and local governments,” she said. With respect to tax reform, the Association is asking that lawmakers “not touch municipal bonds.”

At a later point, she noted that as Association members fan out to congressional offices on Feb. 28 and March 1, they will be seeking co-signatories to a letter circulating on Capitol Hill that says tax-exempt bonds are a very important financing tool and should not be disturbed in any tax reform.

The bi-partisan letter from Reps. Randy Hultgren, R-Ill.  and C.A. Dutch Ruppersberger, D-Md. will be sent to the leadership of the House Ways and Means Committee.

The Association is seeking co-signatories from both parties in the House to support and to sign on to the letter, Kelly said.

She noted that there is also a Municipal Finance Caucus that has been formed by Ruppersberger and Hultgren “and we are trying to get other members of the House to join that caucus.”

Schepis said that “I think it’s safe to say with over 600 public power advocates headed up to the Hill this afternoon, many dozens of Members of Congress are going to be reminded of stories from their districts about the power of municipal bonds to strengthen communities and create jobs.”

Kelly noted that one of the sponsors of the resolution at the Association meeting was the city of Idaho Falls.

When Jackie Flowers, general manager of Idaho Falls Power, “got up to support the resolution she talked about how they had financed local generation with municipal bonds” and retired a series of bonds.

“They held a bond burning party” to highlight the fact that these bonds had built a hydropower facility, “which is now available for a long time to come” and, without any associated debt, can provide low-cost, carbon free power to their community.

“So it’s just a great story about how we build facilities with bonds,” Kelly remarked, noting that the Association has a hashtag “built by bonds,” which the Association is using during the rally.

(Laura Marshall Schepis, Sue Kelly and Desmarie Waterhouse take questions from reporters at legislative rally)

Federal Power Act oversight

Another resolution passed at the rally involves Federal Power Act Oversight. The Association is calling on Congress to examine the administration of the act and how environmental policies and technological changes in power generation and delivery are impacting the federal/state role set out by the act.

Kelly noted that the Federal Power Act was passed in the 1930s and “we believe it’s served the nation very well.”

However, in recent years, “interpretation of that act has created some tensions between state and local governments and wholesale electric power markets and, as a result, there’s been some increased interest in Congress in reviewing how the act works and what it does and we support that oversight and educational effort,” Kelly told reporters.

“We are not necessarily supporting re-opening the act itself. We believe that the act is very broadly written and that many of the reforms and processes we’d like to see can be accomplished without amending the act,” she said.

But the Association feels that it is important to have substantial oversight of the act “and we support that in Congress.”

A reporter asked Association officials to provide examples of a proposed policy change to the Federal Power Act that the Association would support.
In response, Waterhouse cited legislation called the Fair Ratepayer Accountability, Transparency, and Efficiency Standards Act, or Fair RATES Act, which was passed by the House in January.

The bill would ensure that where rate changes take effect because the Federal Energy Regulatory Commission is deadlocked, parties still would have recourse to seek a review (and an appeal of that review) of the rate changes.

The legislation, introduced by Rep. Joseph Kennedy, D-Mass., is supported by the Association and the National Rural Electric Cooperative Association.

The issue the bill seeks to address stems from a requirement under the Federal Power Act that a utility — this usually means an investor-owned, for-profit utility — must give FERC and the public 60 days' notice before making changes to its rate, charge, or classification structure.

If FERC is deadlocked, such changes take effect without any further action by the commission. FERC has said that changes taking effect after such a deadlock cannot be appealed because there is no decision by the commission to rehear or appeal.

The Fair RATES Act would fix this technical flaw, allowing any person, electric utility, state, municipality, or state commission aggrieved by a rate change that takes effect under such circumstances to seek rehearing within 30 days.

Other resolutions address Endangered Species Act, pole attachments

The other two resolutions approved at the rally relate to the Endangered Species Act and pole attachments.

In one resolution, the Association urges Congress to preserve the federal law giving public power utilities local control over pole attachments and to exempt them from related Federal Communications Commission rules and regulations.

Another resolution relates to reform of the Endangered Species Act. The Association supports Congress’s efforts to protect endangered species while ensuring responsible land, resource and water management, but feels that the law is due for Congressional review after more than 25 years to make it workable for all stakeholders.

(Officials from Association member utilities vote at legislative rally on Feb. 28)


Association priorities in 2017

Meanwhile, Waterhouse provided an overview of the Association’s priority issues for 2017.

Along with maintaining tax-exempt financing, the Association is focused on preserving the federal power program, protecting against a one-size-fits-all approach to distributed generation, supporting common sense environmental regulatory reforms and maintaining and strengthening industry-government partnerships in the area of grid security.

Wholesale markets

With respect to wholesale electricity markets, the Association remains concerned about the ability of public power to self-supply in the eastern regional transmission organizations, Waterhouse noted.

“This is an issue that we have been working on for a number of years,” Kelly noted.  “It seems like we’re getting a lot more traction with our arguments now than we did a few years ago.”

She noted that prior to his departure from FERC in early February, then-chairman Norman Bay wrote concurrences “where, in effect, he said very much what we’ve been saying for the last few years about the mandatory capacity markets – that they are in need of reform and that limitations such as the minimum offer price rule, the much lamented MOPR, really do need to be revisited.”

FERC vacancies

FERC has been without a quorum since Bay’s departure and has two commissioners – Cheryl LaFleur, who is acting chairman, and Colette Honorable.   

A reporter asked Association officials to describe what they would be looking for when it comes to new commissioners in terms of how they can assist in reforms of wholesale power markets.

“What I would be looking for in new FERC commissioners are ones that are frankly sensitive and well versed in the kind of jurisdictional proper boundaries of both states and localities on one side and the federal government on the other,” Kelly responded.

“In the case of our members, the issue of self-supply is a big one,” she pointed out. In the two Eastern RTOs with mandatory capacity markets – the PJM Interconnection and ISO New England – “and to a lesser extent in New York,” the ability of public power utilities to supply their own loads with their own resources “has been adversely impacted by market rules.”

Kelly said that “we would be looking to see commissioners who are taking a broader view of the need to allow more self-determination by states and localities as to what they want their power supply mix to look like” and to offer more deference as to what is going on in states and regions.

February 28, 2017

What Public Power Can Learn from Down Under

By Bill Gaines, Director and CEO, Tacoma Public Utilities and Colin Hansen, Executive Director, Kansas Municipal Utilities — Directors, Board of the American Public Power Association

In November 2016, we had the great opportunity to represent the American Public Power Association in a fact-finding mission to Australia organized by the Smart Electric Power Alliance. We’d like to share this overview of the electric system Down Under and our takeaways from the land of kangaroos, koalas, and vegemite.

Australia: a country of just 20 million people spread out over an island the size of the entire United States. And a country that contends with an interesting mix of electricity issues — frequent policy changes; declining solar subsidies; complex disaggregation of generation, transmission, and distribution; and the unique reliability challenges posed by its geography.

unknown-3The State of the System
All electric utilities in Australia were state owned until the late 1990s. At that point, the country adopted a competitive electricity model based on privatization and vertical separation of industry functions. Today, there is a regulated national wholesale energy market and a transmission grid that links the major population centers.

We quickly learned that Brisbane is tropical and Melbourne is cosmopolitan. And that Melbourne and Sydney have an intense rivalry. But it was a bit more challenging to figure out which entity takes care of which electricity function in each state or region. Add to that the vast number of utilities, generators, transmission companies, marketers, and the numerous agencies that pursue energy innovation — CSIRO, ARENA, Australian Research Council, CEFC, etc.

The generation and electricity retailing functions are completely privatized and competitive. Right now, Australia is about to disaggregate metering from distribution, adding yet another layer of complexity, and contention.

While we did not see any technologies in Australia that are not already in the US, we did see interesting and innovative applications of familiar technologies. For example, the distribution companies in Victoria are making innovative use of Lidar, AMI, and other remote sensing technologies to manage their networks. There is a very high penetration of rooftop solar — up to 28 percent — in some areas. This has spurred much interest in battery storage and improved use of demand side management measures such as water heater control, which has apparently been deployed on the distribution networks for quite some time.

As in the US, the utility industry and government policies vary widely across states and regions. While Queensland has massive amounts of rooftop solar, its overall renewable energy portfolio remains somewhat thin. Tasmania has much less rooftop solar but claims a 99.9 percent renewable energy penetration with large amounts of hydropower.

One interesting project we learned about was the Huntlee Community Energy Company, a local community that has been given a $5 million grant by the Australian Renewable Energy Agency to develop a residential microgrid for approximately 1,000 homes. The microgrid will include rooftop solar, battery storage, gas and diesel generators, and a microgrid management system.

We also learned about some interesting uses of AMI analytics by distribution utilities — customer to substation mapping, using “abnormal” feeder detection algorithms to detect and locate faults, and even detecting energy theft!

Solar Subsidies
A slew of solar subsidies in the early 2000s enabled many Australians to install private solar at incredibly cheap prices.

According to 2015 data, one in seven Australian households had some form of solar installed. Queensland has the highest penetration of rooftop solar in the world — about 28.8 percent of single family households have installed rooftop solar. The initial growth was most definitely fueled by government subsidies and policies. At one point, customers in Queensland could take advantage of a feed-in tariff in excess of 40 cents per kWh.

While those subsidies are largely rolling off, officials now talk about the “mass scale tipping point” caused by the reduced cost of solar compared to retail rates. One Australian official said that with subsidies, the estimated cost of rooftop solar is 10-12 cents per kWh, nearly half the average residential rate.  Where subsidies once drove investment in solar energy by average Australians, that continued growth is now driven by economics.

It was fascinating to turn on the TV (BTW, Aussies are obsessed with American politics in their programming) and see commercials for full solar systems at an installed cost of less than $4,000.

Recently however, the Australian government started implementing a plan to significantly downgrade subsidies, leaving many customers frustrated with what they now see as inadequate return on their investments.

Australia has been at the forefront of experimenting with pro-solar policies, and the many — and sometimes surprising — results of this experiment have lessons for U.S. utilities. Australia’s reliability-focused investments in the transmission and distribution grids, combined with the heavy solar incentives, drove electricity rates up during 2008-2015.

Looking to the Future
What we heard the most about from industry experts was the need for a multifaceted approach as Australia looks to the future. Despite the decrease in subsidies, solar is not going away, and many customers are exploring battery storage as well.

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The “prosumers” of the future are likely to be actively involved with customizing and designing products for their own needs. All aspects of the value chain seem to be shifting to a customer-centric model.  Utilities must prepare for an increasing number of customers moving away from centralized power and toward onsite generation and should be communicating the value of the grid to stakeholders. There will also be more electric vehicles to charge.

However, it became clear to us over the course of our fact-finding mission that Australian utility customers have been somewhat frustrated by high prices and low reliability over the years. So one cannot help but ask whether the majority of customers will actually have the desire to be involved in-depth, moving forward.

A “Future Grid Forum” that we learned about has estimated that perhaps as many as a third of Australian customers could eventually leave the grid, using a combination of solar panels, storage, energy efficiency, and gas generation. Experts estimated that this departure may be economically viable as soon as 2030 or 2040.

So what can the electric utility industry do in the face of so much change? We didn’t hear clear answers. But it is widely acknowledged that the coming decade will be a period of historic change for Australia’s electric utilities.

 When In Australia…
unknown-8…we tried to do as the Aussies do and learned that Foster’s is no longer the “it” beer — it’s now all about craft beer, like here in the US.

Vegemite is not used as one would use peanut butter. Instead, you put a thick layer of butter on a piece of bread or a cracker and then use only a thin layer of Vegemite on top of that. Even buttery goodness could not overcome the taste of Vegemite — perhaps that’s just for the locals. But Tim Tams are way better than Kit Kats!

Cricket, lawn bowling, and Aussie rules football are all very vogue – but for an American, figuring out the rules of those games is a different matter. And the sinks and toilets really do drain in the opposite direction from the Northern Hemisphere.

The Aussies drive on the wrong (left) side of the road, and they walk on the sidewalks that way too.

Other Lessons Learned
In a country known for its impressive assortment of animals that can kill you, some danger is to be expected. However, the danger can be mitigated by making smart choices. Going into the water? Wear a wetsuit to avoid jellyfish stings. Trekking through the outback? Check your shoes every morning for snakes and scorpions.

 To stretch the analogy here, a certain amount of danger is to be expected as the electricity sector undergoes massive change.

 However, the Australian electricity industry has been buffeted by the inconsistencies of federal and state energy policy over the years as various governments have moved in and out of office. The ramp-up and scale-back of extreme solar incentives, government grid investment mandates, and the imposition and subsequent removal of a nationwide carbon tax are examples. The critical need is for stable and predictable policy.

In the face of greater change, government must understand that the electric industry, unlike the administration, doesn’t turn on a dime. Policymakers must factor in the time required for the industry to adapt to new ideas.

We tried throughout the trip to think about what small public power systems might pursue as a “no regrets” approach to distributed generation and AMI. What we saw reinforced that small public power utilities in the U.S. first and foremost to get their ratemaking right. For many, that means a fairly rapid move from variable to fixed pricing, with well thought out net metering policies and interconnection standards.

Very small utilities can confidently invest in GIS, but some may want to wait on AMI until they have a better system or means of handling the deluge of customer information that comes with it. Small systems need to “get big” by working with their joint action agencies or associations to gain economies of scale and master the level of complexity and sophistication likely to dominate the future electric industry.

And finally, we learned from the great folks at SEPA while we were in Australia to shout out “Elmo” when a subject matter seemed to have exhausted itself but the discussion continued. Elmo is — “Enough, Let’s Move On” :)

February 24, 2017

Fighting for Community

By This email address is being protected from spambots. You need JavaScript enabled to view it.
Editorial Consultant

Advocating for public power communities with all three branches of government in Washington is a core part of the American Public Power Association’s mission. The Association prioritizes issues where the need is greatest to protect the interests of public power customers, and to preserve decision-making at the community level.

In 2017, the Association expects regulatory and legislative activity to change substantially under President-elect Donald Trump’s new administration. Comprehensive tax reform will be a key issue addressed this year, which could impact the tax-exempt status of municipal bonds. Thus, it will be a top issue for public power.
As the next four years take shape, public power’s Washington advocates are working harder than ever for the interests of community-owned power. Here are some issues on the legislative horizon for 2017 and ideas for how public power communities can get involved.

Priority 1: Distributed Generation and New Technologies

What is it?
It’s not a cliché — the entire utility business is, in fact, changing. The American Public Power Association is working to help utilities prepare for this future by focusing on solar and other distributed energy resources, energy storage, and customer-side technologies like smart thermostats, grid-connected appliances, and electric vehicles. This strategic initiative, called Public Power Forward, aims not only to help utilities prepare, but also to make sure legislation maintains state and local control.

Why is it important?
Raise your hand if you’ve considered buying an electric vehicle. As a utility employee, you probably know what — if any — time-of-use rates are available. Many utilities haven’t even considered new rate structures for technologies like EVs. But consumers are adopting these technologies faster and faster. Public power communities are in the best position to work with their customers to enable the integration of these new technologies.

What is The American Public Power Association doing?
The American Public Power Association will educate regulators and legislators at the federal level and support policies that keep decision-making on the local and state level, pushing back on efforts to federalize them. The Association is working to bring stories from public power communities before legislators to drive this message home. The American Public Power Association is also creating tools that members can use to devise paths forward to the utility of the future.

What can my community do?
Position your utility as the trusted energy advisor — encourage your customers to talk with you before they invest in new technologies. Train your staff to give them expert advice with confidence. Monitor the use and impact of distributed generation and share stats with your legislators to show that you support distributed generation in a way that doesn’t shift costs unduly to customers who do not install distributed generation.

Priority 2: Tax-Exempt Financing

What is it?
Tax-exempt financing, like municipal bonds, helps public power utilities create $11 billion new infrastructure annually. But this tax exemption often comes under attack by opponents who aim to cap or eliminate it.

Why is it important?
The incoming administration’s campaign appeared to support efforts to cap municipal bond interest. While it’s still unclear whether the incoming Trump administration will seek to eliminate the tax-exempt status of municipal bonds or cap municipal bond interest, comprehensive tax reform is very likely to occur in 2017 with both chambers of Congress remaining in Republican control.

What is The American Public Power Association doing?
The American Public Power Association will continue to work with its members and other stakeholder groups to educate policymakers on the importance of tax-exempt financing. The Association’s lobbyists will enable members to testify before Congress, and to continually express public power’s views on any potential tax reform measures that threaten to eliminate tax-exempt financing or cap municipal bond interest.

What can my community do?
The Association will partner with local policymakers to deliver the message to Congress that municipal bonds are integral to public power communities. See the legislative priorities infographic on page 24 for talking points to share with your policy makers. Your community can also tell its story — take to social media! Use the hashtag #BuiltWithBonds to showcase how tax-exempt financing is improving your community.

Priority 3: Greenhouse Gas Emissions

What is it?
In 2015, the Environmental Protection Agency finalized the Clean Power Plan that would regulate greenhouse gas emissions from all fossil-fuel-fired power plants — new, modified and existing. According to the EPA, the regulations would reduce carbon dioxide emissions 30 percent by 2030. More than 20 states and the industry sued the EPA, believing the regulations go far beyond what the EPA can do under the Clean Air Act. Other environmental regulations have kept public power’s lobbyists busy too, including the EPA’s 2015 Ozone National Ambient Air Quality Standard, Coal Combustion Residuals, Cross-State Air Pollution Rule Update, and Waters of the United States.

Why is it important?
While the electricity industry at large spent much of 2015 and 2016 preparing for implementation of the Obama administration’s Clean Power Plan, the Trump administration is expected to do away with it. But the method the incoming administration may use to unwind the plan remains unclear. Regardless of whether public power communities are located in states that may or may not meet or their emissions targets, a rolling back of these rules will have implications for the entire electricity sector.

What is The American Public Power Association doing?
Providing members with information about the changing regulatory landscape is a top priority. Members can expect updates, webinars and continued correspondence from Association lobbyists, who will continue working with congressional staff and federal agencies to convey the impact of environmental regulations on public power communities.

What can my community do?
Talk to your customers — explain where your electricity comes from and what you are doing to protect the environment. Monitor American Public Power Association media channels — especially Public Power Daily and our blogs — to track legislation and regulation and keep your stakeholders up to date on what’s happening around the country and how it impacts your community.

Priority 4: Wholesale Electricity Markets

What is it?
In parts of the country, the purchase and sale of wholesale power by utilities are administered by Regional Transmission Organizations or Independent System Operators — RTOs and ISOs. The RTOs and ISOs determine the rules for wholesale electricity markets, which include markets for electric capacity. Capacity markets pay a generator to stand ready to supply load or tell a customer to curtail their use when needed.

Why is it important?
If utilities self-supply power to serve their customers’ loads by generating it or buying it through bilateral contracts, they can save money and reduce dependence on the RTO and ISO-operated wholesale electricity markets. This is essential for public power. Participating in mandatory capacity market auctions, where prices are artificially inflated by merchant generators, is not a viable alternative. But the ability to self-supply is no longer protected. In addition to reforming the mandatory capacity markets, having rules for the energy markets that protect consumers from excessive prices is also important. In 2017, congressional committees are likely to hold oversight hearings on the Federal Power Act, which governs wholesale electricity markets.

What is The American Public Power Association doing?
The Association is continuing to focus its advocacy effort on wholesale markets by filing comments with the Federal Energy Regulatory Commission, meeting with public power members in the West to help advocate on common issues regarding the potential expansion of the California Independent System Operator, drafting white papers, and educating legislators at oversight hearings on the Federal Power Act about the problems in wholesale markets.

What can my community do?
Electricity markets issues may seem esoteric and remote to your customers and local policymakers. However, if you can demonstrate how legislative and regulatory changes would
impact the electric bill, you can interest them and involve them in advocacy.

Priority 5: Comprehensive Energy Legislation

What is it?
The Energy Policy Modernization Act of 2016 addresses reliability, hydropower licensing reform, energy efficiency, emerging utility workforce challenges, and natural gas pipeline permitting. The Senate passed the bill in April after significant debate.

Why is it important?
In the Senate, Lisa Murkowski, R-Alaska, could bring an energy bill back for consideration. New chairmen of the House Energy & Commerce Committee and the Subcommittee on Energy & Power are variables as they work to establish new staff teams and set priorities.

What is The American Public Power Association doing?
If the energy bill conference report is approved before the end of the 114th Congress, the American Public Power Association will advocate on implementation issues in 2017. If the bill is not signed into law, but energy legislation is reintroduced in 2017, the Association will continue to advocate on provisions of importance to public power.

What can my community do?
Every voice matters. Get your stakeholders to weigh in with their members of Congress when important issues arise. Stay tuned for action alerts from the American Public Power Association with issue highlights and template messages you can send to your elected representatives.

Priority 6: Federal Power Program

What is it?
Power Marketing Administrations and the Tennessee Valley Authority are federal agencies that provide power to millions of Americans. There have been attempts to change the terms under which these services are provided as well as potentially eliminate the TVA.

Why is it important?
The not-for-profit PMAs are currently structured, power is provided at rates that cover all of the costs of generation and transmission, as well as repaying the federal investment. TVA is a robust public power partnership that on its own provides low-cost power to more than 9 million people. Modifying or disbanding these organizations could result in substantial rate increases for public power customers.

What is The American Public Power Association doing?
The Association continues to advocate against any proposals that undermine PMAs or the Tennessee Valley Authority.

What can my community do?
Educate your customers — residents and business owners — and local public officials on why the TVA and PMAs are integral to emissions-free, reliable and affordable electricity in your community. Make sure that your representatives in state government and in Washington know what the TVA and PMAs are and how important they are to economic development and a diverse energy portfolio.

Priority 7: Grid Security

What is it?
Protecting the electric grid is always a top priority. While physical security has been a long-standing issue, cybersecurity and the associated threats are relatively new and rapidly changing. As the grid evolves, unfortunately so do threats to its integrity.

Why is it important?
The industry has made great strides in addressing threats and vulnerabilities, but emergency situations warrant federal involvement, which is why information sharing is critical.

What is The American Public Power Association doing?
The Association’s goal is to educate the public power community to better understand, install and implement new cyber and physical resiliency and security systems. The Association is also continuing to work toward improved coordination between industry and government while educating legislators and regulators. Members can find risk assessment tools and get information about security technologies from the Association.

What can my community do?
Let your community know that no utility is immune from threats but that you are taking steps to prevent and prepare for cyber and physical attacks on the grid. Let customers know what they can do at home to support safety and security. Explain to them how you are protecting their data and also collaborating at the local, state, and federal level to share information on grid security threats and best practices.

Raising Awareness of Public Power
Underlying all the policy and regulatory issues that public power confronts, is an image problem.

Even in public power communities, only 1 in 5 public customers under 55 knows that their electricity comes from a community-owned utility. We need to change the paradigm. We need to advocate from a position of strength, and our strength comes from our unique, not-for-profit business model that invests right back in the community. We need to better tell our story so policymakers and key influencers will know who we are.

Under its Raising Awareness of Public Power strategic initiative, the American Public Power Association is helping members better tell their story, to expand the value and knowledge of public power utilities in their communities. Utilities need stakeholders to understand where they come from, especially as looming regulations and ongoing technological changes rework the utility business. We’ve developed turnkey resources for members to adapt and use for public education and will continue to provide an increasing array of resources. In 2017, we are launching a pilot program to work with a select group of communities on a year-round awareness program. Participants in the pilot will serve as testers for new communications initiatives. The Association hopes to use what it learns across the pilot to provide more resources for all of its member utilities.

What can my community do?
• Work with customers, not against them, as the utility of the future takes shape.
• Educate your customers on the unique benefits of public power.
• Engage them in your decision-making and invite them to share their views.
• Nurture your customers, employees, mayors and city council members to be your advocates — at the grassroots level. Break down policy issues — at every level — and translate their impact in terms your audiences can relate to.

Use social media as a tool to engage and educate customers. Follow @Publicpowerorg and use the hashtag #PublicPower