Noah Garcia is a coverage principal at Superior Vitality Financial system, an trade affiliation for clear power corporations throughout applied sciences.
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In September, we printed a listing of the high 10 utility regulation tendencies of 2020, up to now. With a tumultuous 2020 largely within the rearview mirror, we now look again on the 10 tendencies that outlined the utility regulatory area this yr. Under is an govt abstract of the whole roundup. (You’ll be able to learn AEE’s full model right here, with hyperlinks to particular proceedings.)
1. A Story of Two FERCs
With President-elect Joe Biden and Vice President-elect Kamala Harris sure to make sweeping modifications to federal power coverage, all eyes are on FERC as a vital lever to make sure that wholesale electrical energy markets and the transmission grid are poised to help Biden’s promised “clear power future.” This heightened highlight on FERC comes after a 2020 through which the company made strikes that each erected new boundaries to the event of superior power assets in wholesale markets and eliminated others.
FERC continued in 2020 to double down on new wholesale market guidelines difficult states’ skill to implement clear power and environmental insurance policies. In late 2019, FERC ordered PJM Interconnection to implement the Minimal Provide Value Rule (MOPR), which units a worth flooring on assets that profit from state insurance policies, making it harder for these assets to compete. FERC did approve provisions of PJM’s compliance plan that might mitigate a number of the MOPR’s anticipated adverse results, with out eliminating them totally, however it additionally rejected requests to rethink an identical coverage it imposed in 2018 in ISO New England, and even expanded utility of it within the New York ISO. Consequently, some PJM states with robust clear power commitments, together with Illinois, Maryland, New Jersey, and Virginia, are contemplating whether or not to depart the PJM capability market.
Alternatively, 2020 additionally noticed FERC order wholesale market operators to open their markets to distributed power assets (DERs) in Order No. 2222. This long-awaited order builds on Order No. 841, which opened markets to power storage, by requiring that DERs have the power to combination and take part on a degree enjoying subject in wholesale markets. This successfully opens the door for brand spanking new income streams for DER house owners, new enterprise fashions for DER aggregators, and new flexibility for the grid.
2. Regulators Rush to Include the Fallout from COVID-19
COVID-19 has essentially altered the outlook for a lot of financial sectors in 2020 and past. Vitality isn’t any completely different: over 13,000 dockets point out the coronavirus, underscoring the myriad methods the pandemic has touched all facets of utilities’ core enterprise. First, whether or not they preferred it or not, public utilities commissions (PUCs) have been thrust additional into the digital age. Just about all facets of normal Fee enterprise moved on-line with various levels of success. Second, many PUCs responded to the financial influence of COVID-19 by placing disconnection moratoria into impact, placing utility prospects on extra secure footing as they navigate the monetary challenges of the pandemic. Nevertheless, by the autumn, 26 states allowed disconnections to renew and one other 15 left it to utilities whether or not to undertake voluntary moratoria. Solely 10 states now have energetic disconnection restrictions in place.
three. PUC Elections Favor Incumbents
In most states, Commissioners are appointed by Governors. Nevertheless, in 10 states — Alabama, Arizona, Georgia, Oklahoma, Louisiana, Mississippi, Montana, New Mexico, North Dakota, and South Dakota — commissioners are elected by voters. All however Mississippi held elections for PUC commissioners this previous November, with each incumbent that ran for reelection reclaiming their seat. Solely the place commissioners have been termed out or declined to run for reelection did Commissions see a shakeup. In Arizona, newcomers Anna Tovar (D) and Jim O’Connor (R) picked up two open seats.
Additionally because of the election, the variety of publicly elected commissions will drop from 10 to 9 as New Mexico voters authorised Constitutional Modification 1. Passing with over 55% approval, the modification transforms the New Mexico Public Regulation Fee from an elected physique to an appointed one and reduces the variety of Commissioners from 5 to a few, with Commissioners appointed by the Governor from amongst candidates nominated by a bipartisan nomination committee, after which confirmed by the New Mexico Senate.
Four. Extra States Attain for 100% Clear Vitality
From coast to coast, momentum behind 100% clear and renewable power targets has continued to develop. Now, 18 states, Puerto Rico, and the District of Columbia have established 100% clear or renewable power targets.
The most recent state to do is Arizona, with an announcement to undertake a 100% clear power purpose by 2050. Receiving a Four-1 vote on the Arizona Company Fee (ACC) in November, the foundations formally direct the state’s investor-owned utilities to retire fossil era by mid-century whereas additionally establishing targets for power storage deployment. The choice shall be launched for public remark with a last ACC vote in early 2021. Nevada voters reaffirmed that state’s dedication to renewables this November by comfortably approving Query 6, the second vote on a constitutional modification that directs utilities to supply a minimum of 50% of their electrical energy from renewable era by 2030. The state legislature handed an similar normal into regulation within the 2019 legislative session, however with approval of Query 6 the 2030 RPS requirement can’t be simply repealed by a future legislature. In the meantime, Virginia grew to become the primary state within the Southeast to affix the 100% clear power membership by passing the Virginia Clear Financial system Act (VCEA) in March, which places the Commonwealth on a path to 100% carbon-free electrical energy by 2045.
5. Transportation Electrification Expenses Forward
Momentum on transportation electrification grew all year long despite COVID-19. Properly over $1 billion in new utility transportation electrification applications have been authorised, positioning electrical autos (EVs) for continued progress in a post-pandemic economic system. California, the nation’s undisputed EV chief, continued to push the trade ahead with Governor Newsom’s September Govt Order N-79-20, which establishes nation-leading objectives to attain 100% zero-emission light-duty car gross sales by 2035 and a full transition of the state’s medium- and heavy-duty car fleet to zero-emission by 2045 wherever possible. California additionally authorised the most important particular person utility EV program so far within the type of Southern California Edison’s $436 million Cost Prepared 2 program. New York then authorised the most important suite of utility EV applications exterior of California – $701 million unfold throughout the state’s six investor-owned utilities. North Carolina and South Carolina additionally every authorised substantial EV charging station pilot applications.
6. Regulators Grapple With Self-Scheduling of Coal Vegetation
Over the previous few years, the apply of “self-scheduling” coal crops has come underneath elevated scrutiny, particularly within the MISO and SPP markets. In some states, vertically built-in utilities have taken benefit of self-scheduling guidelines to run their uneconomic coal models after which cost ratepayers for the distinction between the value they get within the power market and the precise value of operating the plant. In Missouri, the Fee has ordered all utilities to offer data throughout gas adjustment and cost-recovery dockets to get extra transparency into utility dedication and dispatch practices.
Going one step additional, in Minnesota, Xcel filed a plan, authorised by the Fee in July, to restrict using its remaining two coal crops by transferring to seasonal operations as an alternative of counting on year-round self-scheduling. However Indiana was the place the place self-scheduling actually got here into focus this yr. In a gas adjustment clause continuing, the Indiana Utility Regulatory Fee determined to analyze Duke Vitality Indiana’s coal plant operational practices. The IURC concluded its hearings in November, and events filed their proposed orders and briefs earlier than the vacations, for last motion in early 2021.
7. PUCs Push the Envelope on Utility Enterprise Mannequin Innovation
A number of states proceed to push ahead with efforts to look at how the utility enterprise mannequin ought to evolve to satisfy altering buyer and grid wants. Particularly, there are a selection of ongoing proceedings on performance-based regulation (PBR), which seeks to higher align utility monetary incentives with desired outcomes and state coverage objectives. State curiosity in PBR is pushed partly by a recognition that the prevailing cost-of-service utility enterprise mannequin must evolve to higher reward outcomes fairly than rising capital and containing bills, and to extend compatibility with a future the place buyer and third-party investments in distributed power assets (DERs) have to be higher built-in for optimum profit to the system as an entire. Colorado, Nevada, and Michigan are among the many states exploring PBR this yr.
eight. Distribution System Planning Will get a Laborious Look
Distribution System Planning (DSP) continued to realize momentum all through 2020 as policymakers inspired utilities to extend reliability and DER integration on the grid. Whereas utility investments of their distribution system have historically been a black field, PUCs throughout the nation are striving to make these planning processes extra clear, extra inclusive of DER deployment, and higher aligned with utility buyer pursuits. California, Colorado, and Michigan took noteworthy motion on DSP this yr.
9. Storage Prospects Proceed to Glow
The decline within the prices of batteries and hydrogen manufacturing is fueling an rising curiosity in storage, which can be essential for the deployment of renewable power and distributed era property at higher scale. State legislatures continued to lift the bar this yr, tasking regulators with the implementation of applications to acquire and leverage storage in a fashion that facilitates funding in non-wires options, peaking capability, and ancillary companies. Maryland authorised six storage initiatives for utilities this yr, the Virginia State Company Fee opened a docket to undertake laws to attain the deployment of power storage as required by the Virginia Clear Financial system Act, and the New York Public Service Fee aligned current dynamic load administration (DLM) program guidelines with the state’s power storage purpose and ordered the state’s investor-owned utilities to difficulty solicitations for DLM assets – together with storage.
Past batteries, hydrogen power storage has more and more been attracting the eye of regulators and utility corporations as a possible pathway to decarbonization targets. Some states, like California, are exploring setting requirements for hydrogen in gasoline pipelines and others are exploring options to gasoline. In Massachusetts, as a part of the sale of the property of Columbia Fuel, purchaser Eversource agreed to conduct a enterprise case evaluation of potential decarbonization methods in July, together with using hydrogen. The Massachusetts Legal professional Basic’s workplace additionally referred to as upon the Division of Public Utilities to proactively handle the transition away from pure gasoline to assist obtain the state’s net-zero greenhouse gasoline objectives in a brand new investigation.
10. Knowledge Platforms Take Form
A number of states are contemplating statewide information platforms to offer simpler entry to power use information for patrons and market members. In 2019, New Hampshire’s Basic Courtroom handed a invoice directing the state’s Public Utilities Fee to ascertain a statewide “Multi-Use Vitality Knowledge Platform” to be constructed and administered by the state’s utilities. Intervenors have filed testimony and the continuing is scheduled to go to listening to or settlement in February. In New York, the Public Service Fee is contemplating two separate initiatives. One is a Knowledge Entry Framework that’s meant to consolidate insurance policies throughout a variety of current applications and set up a single certification course of. The second proposes improvement of a state-run and -administered information platform, dubbed the Built-in Vitality Knowledge Useful resource (IEDR). The IEDR goes additional than the platform proposed in New Hampshire by consolidating each buyer utilization information and utility system information in a single location. Minnesota additionally clarified coverage surrounding buyer power utilization information with a November order approving using frequent Open Knowledge Entry Requirements for patrons of huge utilities within the state.
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Hannah Polikov, Ryan Katofsky, Danny Waggoner, Jeff Dennis, Matt Stanberry, and Sarah Steinberg contributed to this weblog put up.