FERC Considering Revisions to Pipeline Certificate Policy

Last month, FERC issued a Notice of Inquiry seeking information as it explores revising its policy statement on the certification of new natural gas transportation facilities.  The Certification of New Interstate Natural Gas Pipeline Facilities Statement of Policy that is currently in effect was issued by FERC in 1999.

FERC is specifically asking for feedback on whether (and how) it should adjust:

  • Its methodology for determining whether there is a need for a proposed project;
  • Its use of eminent domain and other issues related to landowner interests;
  • Its evaluation of environmental impacts; and
  • Its certificate processes, including pre-filing, post-filing, and post-order issuance.

FERC points to a variety of changes that have occurred since it issued its currently effective policy, including dramatic increases in natural gas production, flows on pipelines becoming bidirectional or reversing, and a closer relationship between natural gas and electric generation as natural-gas-fired generation becomes more prevalent.  FERC also notes an “increased interest” regarding its evaluation of greenhouse-gas emissions associated with a proposed project, as well as both suggestions to relax and strengthen FERC’s environmental reviews.

FERC recently extended the deadline for comments to July 25, 2018.  Comments may be submitted in FERC Docket No. PL18-1-000.

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Lab Releases Report Regarding Impacts of High Penetration of Variable Energy on Wholesale Electricity Pricing

The Lawrence Berkley National Laboratory has issued a report entitled Impacts of High Variable Renewable Energy Futures on Wholesale Electricity Prices, and on Electric-Sector Decision Making. The report provides a qualitative examination of various demand-side and supply-side electric infrastructure and program decisions that may change due to higher penetrations of variable renewable energy (VRE).  It notes that many of these decisions are “based on historical observations or assume a business-as-usual future with low shares of VRE” and that the authors’ “motivating question is whether certain electric-sector decisions that are made based on assumptions reflecting low VRE levels will still achieve their intended objective in a high VRE future.” The decisions addressed include, among other things:

  • What kind of demand response services are most cost-effective?
  • How efficient are different retail rate designs?
  • How large of an incentive is needed (if at all) to ensure revenue sufficiency for existing nuclear plants? Is it cost-effective to increase their flexibility?
  • What are the impacts of alternative water flow regimes in hydropower relicensing?

The report also provides simulation results for market conditions in the Southwest Power Pool, New York ISO, California ISO, and ERCOT regions in 2030 based on four penetration scenarios: (a) a low VRE scenario in which each market’s respective wind and solar generation levels equate to their 2016 levels, (b) a high wind scenario with 30% wind and 10+% solar, (c) a balanced scenario with 20% wind and 20% solar, and (d) a high solar scenario with 30% solar and 10+% wind. The modeling finds, among other things, that with the higher VRE penetration scenarios the average annual hourly wholesale energy prices decrease and price volatility increases in each market, especially under the high solar scenario.

A free webinar on the findings will be held on May 23 at 1:00 P.M. EDT/10:00 A.M. PDT.

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EPA Releases Memorandum Outlining Changes to NAAQS Review Process

Last week, EPA Administrator Scott Pruitt released a Memorandum setting out changes to the process by which EPA reviews and sets National Ambient Air Quality Standards (NAAQS).  The procedural changes—dubbed a “Back to Basics” approach—are intended to “help EPA meet its statutory obligations consistent with [its] commitment to cooperative federalism.” Pruitt’s Memorandum also builds on a White House Memorandum released last month that directs EPA to ensure efficient and cost-effective implementation of the NAAQS program, especially with respect to permitting decisions for the construction of industrial and manufacturing facilities.

Pruitt’s Memorandum directs EPA and the Clean Air Scientific Advisory Committee (CASAC) to adhere to the following principles:

  1. Meet Statutory Deadlines. EPA and CASAC are directed to look for opportunities to streamline the NAAQS review process to ensure that new standards are timely set at five-year intervals.
  2. Address all Clean Air Act Provisions for NAAQS Reviews.  EPA will provide a standardized set of key questions to CASAC to frame the entirety of the NAAQS review process, including questions designed to elicit information about the health, welfare, social, economic, and energy effects of NAAQS standards.  The Memorandum acknowledges that under Whitman v. American Trucking Associations, Inc., 531 U.S. 457 (2001), EPA may not consider the cost of implementation when reviewing and revising NAAQS.  The Memorandum suggests that the Administrator may still take into account welfare, economic, and energy effects of NAAQS standards, because the Clean Air Act does not require EPA to establish NAAQS at a zero-risk level, but rather at a level that reduces risk to sufficiently protect public health with an adequate margin of safety: “The selection of any particular approach to providing an adequate margin of safety is a policy choice left specifically to the Administrator’s judgment.”
  3. Streamline and Standardize the Process for Development and Review of Key Policy-Relevant Information.  EPA’s Integrated Science Assessments, Risk and Exposure Assessments, and Policy Assessments should focus on policy-relevant science and on studies, causal determinations, or analyses that address key questions related to the adequacy of NAAQS.
  4. Differentiate Science and Policy Considerations in the NAAQS Review Process.  EPA should establish a clear distinction between the purely scientific findings of the Integrated Science Assessment and the wider range of policy concerns that the Administrator must consider when reviewing NAAQS.
  5. Timely Implementation of Regulations and Guidance.  When a NAAQS is revised, EPA should, where appropriate and consistent with law, also provide implementation regulations and guidance as well as technical information to assist state co-regulators in developing approvable plans to implement and maintain the NAAQS.
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EPA Transparency Proposal May Limit What Agency Can Consider in Rulemakings

UPDATED 05.25.2018 EPA has extended the deadline for comments to August 16.

On April 30, EPA issued a proposed rule, Strengthening Transparency in Regulatory Science, “to increase transparency in the preparation, identification, and use of science in policymaking.”  With this proposal, EPA is targeting dose response data and models that underlie “pivotal regulatory science”; that is, “the specific scientific studies or analyses that drive the requirements and/or quantitative analysis of EPA final significant regulatory decisions.”  EPA seeks to make more of this underlying data and models available to the public when it is used as a basis for rulemakings.  There has been some concern that the rule, if finalized, would effectively limit what EPA could consider in covered rulemakings, since some studies contain information restricted for personal privacy or confidential business reasons that may be difficult to effectively make public.

Several commenters, including the Public Library of Science and the National Association of Clean Air Agencies, have asked for an extension of the comment period and public hearings held around the country on the proposal.  The attorneys general of California, Delaware, the District of Columbia, Iowa, Maine, Minnesota, New York, and Pennsylvania sent a letter to EPA Administrator Pruitt on May 7 asking EPA to withdraw the proposed rule and consult with the National Academy of Sciences and other independent science organizations before proceeding further.  In lieu of withdrawal, the attorneys general ask for a comment period of at least 150 days, and they challenge the current, thirty-day comment period as “woefully insufficient.”  The attorneys general allege that the proposal is vague but could have a far-reaching impact on EPA’s mission.

Comments are currently due by May 30, 2018, and can be submitted in a number of ways, including online.

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EIA Anticipates Growth in New Natural-Gas-Fired Generation Capacity in 2018, While New Renewable Capacity Remains Flat

The U.S. Energy Information Administration (EIA) has released information on new generation capacity expected to come online in 2018.  This report is based on data from January and February and on estimates for the remainder of the year derived from EIA’s Preliminary Monthly Electric Generator Inventory.

The 2018 capacity additions tell two different stories, one for renewable generation capacity and one for natural-gas-fired generation capacity.  The total amount of new capacity expected in 2018 is 32 GW, which is greater than the capacity additions of any other year in the past decade and more than a 50 percent increase over 2017.  This increase, however, is driven exclusively by growth in new natural-gas-fired generation capacity.  New natural gas capacity is expected to more than double from about 9.5 GW in 2017 to about 20.5 GW in 2018.  This is just under the total amount of new capacity that came online in 2017.  About half of the new natural gas capacity in 2018 will come from combined-cycle units added in the PJM region, specifically 5.2 GW in Pennsylvania, 1.9 GW in Maryland, and 1.9 GW in Virginia.

In contrast, new renewable capacity in 2018 is expected to be approximately 11.5 GW, the same amount of renewable capacity added in 2017.  As a result, for the first time in five years, new renewable capacity is expected to comprise less than half of the total annual new capacity.  EIA expects approximately 5 GW of new wind capacity in 2018, 2 GW of which will be located in Texas.  Approximately 4 GW of new solar capacity will be added, half of which will come from solar photovoltaic additions in California, North Carolina, and Texas.

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