California ISO, Utilities Outline Path to Increased Integration of Distributed Energy Resources

Last week, the California Independent System Operator (CAISO), in conjunction with More Than Smart and three of the state’s distribution utilities (Pacific Gas & Electric Co., Southern California Edison, and San Diego Gas & Electric), unveiled a proposed set of coordination and process improvements that the group believes are necessary to manage the integration of significant distributed energy resources (DERs) onto the grid.  The report, Coordination of Transmission and Distribution Operations In a High Distributed Energy Resource Electric Grid, notes that there have been relatively low volumes of DER penetration to date, but expects much higher volumes of DERs, of potentially more diverse character, in the future.  In anticipation of this “high-DER” future, the report offers a set of suggestions that the group believes the CAISO and the distribution utilities should undertake to enable smooth integration of these resources.

The report recognizes that efforts are underway in California to reduce barriers to DER participation at both the distribution and wholesale levels, but notes that there is a lack of transparency between the transmission and distribution segments of the grid, which are connected but operated by different entities.  While historically energy has flowed only from the transmission system on to the distribution system, DERs now inject energy onto the system at the distribution level, resulting in multi-directional flows over transmission-distribution interfaces.  To ensure continued system reliability, the report recommends the CAISO, distribution utilities, and DER owners and aggregators work together to increase coordination and communication of operational conditions, constraints, and forecasts between:  the distribution utilities and the CAISO, the distribution utilities and the DERs and their aggregators, and the CAISO and the DERs and their aggregators.  Additionally, the report recommends development of a pro forma “integration agreement” for DER aggregators wishing to aggregate multiple DERs into a virtual resource.  Over the longer term, the report recommends more robust development of real-time coordination processes, system protection and controls enhancements, and feasibility assessments.

Keeping an eye toward the future, the report notes that the working group behind the report will continue to meet to track progress and further advance coordination.

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Nevada Governor Vetoes Higher Renewable Portfolio Standard and Community Solar Incentive; Florida Governor Signs Tax Break for Renewable Equipment

While several states have recently enacted legislation focusing on renewable energy, last week Nevada Governor Brian Sandoval vetoed bills pertaining to Nevada’s renewable portfolio standard (RPS) and incentives for community solar projects.

Assembly Bill 206 would have revised Nevada’s RPS from 25% by 2025 to 40% by 2030.  In his veto statement, Governor Sandoval expressed concerns with how the increased RPS might interact with other energy policies, particularly Nevada’s new net metering legislation, which was signed one day earlier. (A previous effort to amend the Nevada Constitution on the issue of net metering was invalidated by the Nevada Supreme Court.)  He also mentioned larger potential changes that could occur if Nevada citizens pass the Energy Choice Initiative to amend the Nevada Constitution.  Nevada’s Constitution requires citizens to pass a ballot initiative twice before it amends the state’s constitution, and the Energy Choice Initiative passed its first vote in 2016.

Citing similar concerns, Governor Sandoval vetoed legislation that would have established incentives for community solar development.  Nevada law already provides for incentives under the Solar Energy Systems Incentive Program, the Wind Energy Systems Demonstration Program, and the Waterpower Energy Systems Demonstration Program.  Senate Bill 392 would have combined these incentives into a single pool of money and authorized the Public Utility Commission of Nevada to provide incentives of up to $1,000,000 per year for systems that benefit low-income and moderate-income customers.  It also would have extended incentives to “community solar gardens,” which are defined as solar systems of less than 12 MW that are owned and operated by a subscriber organization.

Meanwhile, Florida Governor Rick Scott recently signed into law Senate Bill 90, which exempts solar and renewable energy devices and equipment from property taxes.  In August 2016, Florida voters approved a ballot initiative to amend the State Constitution to authorize the legislature to take this action.

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New Questions about Future of Dakota Access Pipeline after Tribes’ Success in Court

A June 14, 2017 decision out of the U.S. District Court for the District of Columbia has added new uncertainty to the future of the Dakota Access Pipeline.  Earlier this year, the Army Corps of Engineers granted an easement to Dakota Access, LLC, allowing the pipeline to cross under the Missouri River at Lake Oahe.  This prompted opposition and legal challenges from the Standing Rock Sioux Tribe and the Cheyenne River Sioux Tribe, whose reservations are in close proximity to the crossing at Lake Oahe.

The court had previously rejected the Tribes’ arguments that the Corps’ decision violated the National History Preservation Act and the Religious Freedom Restoration Act.  However, the June 14, 2017 decision focused on environmental issues and granted some of the Tribes’ arguments that the Corps’ decision violated the National Environmental Policy Act (NEPA).  As the court explained, NEPA requires agencies to consider the environmental impact of proposed actions, although it does not prohibit actions that have negative environmental consequences so long as those consequences are considered.

Ultimately, the court held that although the Corps “substantially complied with NEPA in many areas . . . it did not adequately consider the impacts of an oil spill on fishing rights, hunting rights, or environmental justice, or the degree to which the pipeline’s effects are likely to be highly controversial.”  As a result, the Corps will have to reconsider these portions of its environmental analysis.

How exactly this case proceeds going forward remains to be seen (or, in the words of the court’s decision, “So where does that leave us?”).  The court has two options.  It could vacate the Corps’ permits and easements, forcing the Dakota Access Pipeline to cease operations until the Corps reconsiders those portions of its environmental analysis mentioned above.  Alternatively, the court could permit the Corps to comply with its NEPA requirements without vacating its decision, which would allow the pipeline to continue operations.  The court has ordered the parties to brief this question and will discuss the scheduling of that briefing at a status conference next week.

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EPA Announces That It Has Sent a CPP-Related Proposed Rulemaking to OMB for Review

On Monday, EPA filed a status report in the CPP litigation informing the court that it “has begun the interagency review process of a proposed regulatory action resulting from its review of the” Clean Power Plan.  The status report comes in the midst of the court-ordered 60-day abeyance period, and the court’s pending consideration of whether to remand the rule back to EPA or continue the abeyance period.

In its abeyance order, the Court had directed EPA to file status reports on 30-day intervals.  The first status report, filed on May 30, 2017, stated that EPA was continuing to review the Rule and “may be prepared to begin the interagency review process of a resulting proposed regulatory action in the near future.”  The latest status report (which was unscheduled) informs the court that EPA has sent a draft proposed rule to the Office of Management and Budget (OMB) for its review.  The status of the proposed rule, entitled “Review of the Clean Power Plan” can be found here (RIN 2060-AT55).

The requirement that OMB’s Office of Information and Regulatory Affairs review proposed regulations comes from Executive Order 12,866 (as supplemented by Executive Order 13,563).  Executive Order 12866 directs OMB to ensure that agency proposed rules are “consistent with applicable law, the President’s priorities, and the principles set forth in [] Executive order [12866],” and “that decisions made by one agency do not conflict with the policies or actions taken or planned by another agency.”

In a typical rulemaking, EPA would publish the proposed rule in the Federal Register after it passes OMB’s review (which typically takes two months).

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Environmental Council of the States Pitches “Cooperative Federalism 2.0” for State and Federal Environmental Regulators

In a paper published June 12, 2017, the Environmental Council of the States (ECOS) calls for a “recalibration” of state and federal roles in order to achieve more effective environmental management at lower cost.  ECOS’ proposal, which it calls “Cooperative Federalism 2.0,” encourages states and federal regulators to collaborate more closely to “build on the foundations of national statutes, learn from the innovations and successes of state programs, and confidently meet the challenge of providing 21st century environmental protection.”

ECOS identifies several key roles that the states and the U.S. EPA respectively should assume in working toward development, implementation, and improvement of environmental regulations.  On the state side of the line, ECOS urges states to:

  • partner actively with federal regulators to develop standards as well as shared services, implementation toolkits, and other key resources to facilitate efficient permitting and reporting functions;
  • serve as the primary implementing and enforcement authority for programs delegated to the states;
  • implement national programs in a way that achieves federal standards while accounting for the specific geophysical, ecological, social, and economic circumstances of their states;
  • collaborate with local governments, regulated entities, tribes, and the broader public to identify and address community and equity concerns related to program implementation;
  • ensure transparency and information sharing with federal regulators and the public; and
  • pursue innovative solutions for environmental issues at the state level, including through implementation of state standards more stringent or broader in scope than federal requirements.

On the federal side, ECOS calls on the EPA to:

  •  continue to take the lead on establishing national minimum standards intended to protect public health and the environment, and to ensure states are involved early and frequently in the development of those standards;
  • recognize states as primarily responsible for implementation of federal environmental regulations, but be prepared to lead implementation of those programs where states either decline to do so or fail to implement such programs appropriately;
  • ensure appropriate consultation with Native American tribes in implementing federal environmental policies;
  • audit state implementation programs routinely to ensure adequate achievement of federal standards;
  • facilitate multi-state solutions to pollutant-related interstate issues; and
  • continue to engage in robust scientific research to inform development of national standards based on sound science, responses to complex and emerging environmental pollution challenges.

In carrying out these responsibilities, ECOS urges state and federal regulators to focus on continual review, improvement and reformation of the EPA and states’ working relationship, and highlights ensuring adequate capital and operating resources as a key priority.  In a press release accompanying the paper, ECOS expresses its hope that the paper will lead to improvement of environmental and public health protection efforts and outcomes, efficient allocation and deployment of resources, and fewer disputes over decision-making authority, among other things.

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