Hannah Polikov is managing director at Superior Vitality Financial system, a commerce affiliation for the clear vitality sectors.
In December, we printed a listing of the highest 10 utility regulation developments of 2019. With 2020 now previous the midway level, we test in on the highest public utility fee (PUC) actions and developments to date this yr.
For the primary time, we’re together with in our prime 10 record a key pattern in federal regulation of wholesale electrical energy markets, because it goes to the query of who’s in command of vitality coverage in a altering electrical energy panorama.
Under is an government abstract of the entire roundup, which has particular examples of state PUC motion. (You’ll be able to learn AEE’s full model right here.)
1: COVID COVID in all places…
Again in March, when the general public well being lockdowns have been simply starting, AEE wrote a COVID-inspired acrostic poem giving a fast overview of the way in which the virus was beginning to rear its head in PUC dockets across the nation. 5 months on, from on a regular basis life to on a regular basis dockets, COVID has managed to infuse all the things, making it unimaginable to speak about something from price instances to utility program budgets to how one can maintain a listening to with out contemplating the impression from COVID.
A slew of state commissions have put disconnection moratoria into impact. A number of states are utilizing dockets to consider how one can maintain financial growth, together with clear vitality initiatives, amid COVID. For instance, in April, the New York PSC solicited enter from the clear vitality business on the impacts being skilled on account of COVID and concepts that ought to be thought-about to maintain crucial workforces. In Hawaii, the PUC thought-about how clear vitality initiatives might meaningfully contribute to the state’s COVID restoration.
In the meantime, a rising variety of states are opening dockets to broadly perceive the impression of COVID on prospects and utilities. Such dockets now exist in New York, Michigan, Texas and others.
2: Extra utility enterprise mannequin innovation
A number of states proceed to push ahead with efforts to look at the evolving position of the utility and different market individuals, and the way the utility enterprise mannequin ought to evolve in parallel.
Particularly, there are a selection of ongoing proceedings on performance-based regulation (PBR), which search to higher align utility monetary incentives with desired outcomes and state coverage targets.
State curiosity in PBR is pushed partly by a recognition that the prevailing cost-of-service utility enterprise mannequin, which has labored nicely for a few years, isn’t as nicely suited to a future the place buyer and third-party investments in distributed vitality sources (DERs) must be higher built-in for max profit to the system as an entire (see Pattern 7 beneath for extra data on DERs).
three: Statewide knowledge platforms emerge
Two states are contemplating statewide knowledge platforms to supply simpler entry to vitality use knowledge for patrons and market individuals.
In 2019, New Hampshire’s Common Court docket handed a invoice directing the state’s Public Utilities Fee to determine a statewide “Multi-Use Vitality Information Platform” to standardize fuel and electrical buyer utilization knowledge. Intervenors filed preliminary scoping feedback and use instances within the Spring.
The New York Public Service Fee (PSC) initiated a continuing on the strategic use of vitality knowledge that’s contemplating two separate initiatives, one to consolidate knowledge entry insurance policies throughout current applications and set up a single certification course of. One is a Information Entry Framework that’s meant to consolidate knowledge entry insurance policies throughout quite a few current applications and set up a single certification course of. The second considers growth of a state-run and administered knowledge platform, dubbed the Built-in Vitality Information Useful resource (IEDR). The IEDR goes additional than the platform proposed in New Hampshire by consolidating each buyer utilization knowledge and utility system knowledge in a single location.
four: Preparing for electrical automobiles
An growing variety of PUCs have been contemplating efforts to spur investments in, and deployment of, electrical automobile (EV) charging infrastructure. A variety of them have just lately moved ahead with so-called “make prepared” applications, which usually contain utilities providing incentives for third-party corporations to put in charging stations whereas the utility takes care of any needed infrastructure as much as the client meter.
In July, the New York Public PSC issued an order establishing a $701 million statewide make-ready program, the biggest program approved by a fee exterior of California. Then in August, the California Public Utilities Fee authorized Southern California Edison’s (SCE) $443 million program, the biggest EV charging program approved for a single utility. Maine and Virginia additionally authorized EV make-ready applications for Central Maine Energy and Dominion Vitality Virginia.
5: Self-scheduling of coal vegetation underneath the microscope
Over the previous few years, the observe of “self-scheduling” coal vegetation has garnered elevated consideration, particularly within the MISO and SPP markets.
This observe can be utilized as a reliability mechanism to make sure that there may be sufficient technology accessible to fulfill vitality wants in intervals of excessive demand, or as a mechanism for sources like vitality storage to handle their distinctive operations (e.g., state of cost). Nevertheless, in states the place vertically built-in utilities are in a position to obtain full cost-recovery via bundled retail charges and gasoline price changes, many utilities have taken benefit of self-scheduling guidelines to run their uneconomic coal models after which cost ratepayers for the distinction between the clearing worth within the vitality market and the precise price of working the plant.
In Missouri, the Public Service Fee has ordered all utilities to supply data on utility self-scheduling. In July, the Minnesota Fee gave approval to an Xcel plan for coal vegetation to take a seat idle for six months of the yr, solely used to fulfill summer time and winter demand peaks. In Could, the Indiana Utility Regulatory Fee determined to not evaluation the self-scheduling practices of Indianapolis Energy & Mild (IPL), however later did comply with evaluation Duke Vitality’s practices. The IURC has scheduled a listening to on this difficulty for September 21 with last motion anticipated by the tip of the yr.
6: ‘Shiny line’ between state and federal jurisdiction will get blurred
The division of regulatory authority between the federal authorities and the states spelled out within the Federal Energy Act (FPA), as soon as described by the Supreme Court docket as “a shiny line, simply ascertained,” was something however throughout the first half of 2020.
In a December 2019 determination, FERC ordered regional grid operator PJM to impose bid flooring, via a Minimal Supply Value Rule (MOPR), on state-supported sources like renewables collaborating in Renewable Portfolio Normal (RPS) applications, nuclear vegetation receiving revenues underneath Zero Emission Credit score (ZEC) applications, and even demand response and vitality effectivity sources collaborating in retail demand-side administration applications.
This might elevate the prices of those state applications, establishing a direct battle between FERC’s regulation of the wholesale markets and state vitality and environmental legal guidelines. Among the many choices being explored is pulling out of regional capability markets altogether, with states taking the lead in managing useful resource adequacy (see #10, beneath).
FERC’s Order No. 841, which ensured that vitality storage sources might totally take part in wholesale markets, additionally bought pushback on jurisdictional grounds. States and utilities searching for the fitting to “decide out” took FERC to courtroom, however in July america Court docket of Appeals for the D.C. Circuit rejected their arguments.
Simply days later, FERC caught up for state authority, albeit on slender grounds, when the commissioners unanimously dismissed a Petition filed by the New England Ratepayers Affiliation (NERA) that requested the company to declare extra vitality manufacturing from distributed vitality sources (DER) collaborating in state web metering applications to be a wholesale sale topic to unique FERC authority.
7: Regulators grapple with DERs and Distribution System planning
In prior critiques of developments in 2018 and 2019, we recognized a lot regulatory exercise associated to distributed vitality sources (DER) and adjustments in distribution system planning (DSP) wanted to facilitate these DERs. In 2020, that pattern continues.
Connecticut’s Division of Vitality and Environmental Safety and Public Utilities Regulatory Authority have initiated an investigation to evaluation subjects associated to implementation of its 2019 Framework for an Equitable Fashionable Grid. The Hawaii Public Utilities Fee is investigating technical, financial, and coverage points related to DER as they pertain to utilities HECO, HELCO, and MECO. Different ongoing proceedings to deal with implementation of DERs are lively in California, Arkansas, and New York.
Intently associated to DERs are efforts to modernize distribution system planning. In November, the Public Utilities Fee of Colorado opened an information-gathering continuing on DSP and non-wire options. Different states at present concerned in DSP embody Michigan, Minnesota, Colorado, New York, and California.
eight: Greater than 1 / 4 of states go for 100%
From the Jap seaboard to the West Coast, the pattern towards 100 p.c clear or renewable vitality has solely accelerated in 2020.
Fourteen states, plus Puerto Rico and the District of Columbia, have 100 p.c clear or renewable vitality targets as of 2020, with others, equivalent to Illinois, signaling they are going to quickly comply with go well with. Utilities from Idaho and Oregon to Minnesota and Wisconsin have likewise made commitments to 100 p.c clear vitality. Regulators in states like Hawaii, California, and Washington proceed to implement strong clear vitality targets, however we’ve additionally seen motion in in states not beforehand related to clear vitality, together with Virginia, with passage of the Virginia Clear Financial system Act in March.
9: The storage story, from batteries to hydrogen
The declines within the prices of batteries and hydrogen are fueling an growing curiosity in these storage applied sciences to supply enhanced resilience and reliability to the grid.
Policymakers are hitting regulators all through the U.S. with new capability targets for storage in 2020. Virginia, Maryland, South Carolina, and New Hampshire are among the many states with open proceedings on battery storage.
Past batteries, hydrogen vitality storage has more and more been attracting regulators and utility corporations as a possible pathway to attain decarbonization targets. Electrolysis prices are declining, which in flip is driving European corporations to take the lead in mixing hydrogen with pure fuel for energy technology or utilizing hydrogen carriers for seasonal storage.
Hydrogen can be utilized to deal with “duck-curve” points with giant quantities of photo voltaic or wind vitality on the grid. Some states, like California are exploring setting requirements for hydrogen in fuel pipelines and others are exploring options to fuel pathways that embody hydrogen.
10: States search enter on Useful resource Adequacy
Mounting state-federal jurisdictional rigidity (see #6 above) has led some states to query whether or not useful resource adequacy — the duty for making certain adequate sources might be accessible to fulfill demand in a future yr — ought to be returned solely to state management. Particularly, in areas that at present guarantee useful resource adequacy by way of centralized capability markets (PJM, ISO-NE, and New York), a number of state PUCs have begun proceedings to look into reforming and even exiting these markets.
With the growth of the minimal provide worth rule (MOPR), referred to in New York as buyer-side mitigation (BSM), states are confronted with the selection of paying to over-procure capability or strolling away from their clear vitality insurance policies. This has left many states seeking a 3rd means.