2018 State of the Electric Utility Report Predicts Continued Growth in Renewables and Distributed Energy Resources; Cites Regulatory Uncertainty and Cybersecurity as Continuing Challenges

Last month, Utility Dive released its 2018 State of the Electric Utility Report, a summary of the outlook of electric utility professionals in the United States and Canada.  Using responses from a survey administered to around 700 electric utility employees, the report aims to understand the challenges facing the electric utility industry and the means by which utilities plan to update their assets, practices, and business models to respond to those challenges.  A webinar addressing the report is also available on-demand, and may be accessed here.

First among the report’s key takeaways is that utilities are moving toward a lower-carbon and more distributed fuel mix, “despite federal efforts to support fossil fuel production and generation.”  Utility professionals reported the most confidence in growth for solar, distributed-energy resources (DERs), storage, wind, and gas.  Survey respondents expected significant decreases in coal- and oil-fired generation, and significant increases in utility-scale solar.  As a result of these trends, utility professionals cited DER policy, bulk power system reliability, and reliable integration of renewables as pressing issues for the future.

Utility professionals also cited regulatory uncertainty as a top concern, and reported regulatory challenges in justifying investments in emerging technologies like energy storage, microgrids, and electric vehicles.  Survey respondents also reported widespread uncertainty regarding their changing power mix.  Citing the Trump Administration’s actions to repeal the Clean Power Plan and to lend cost recovery to merchant coal and nuclear plants, the report concludes that federal policy and regulatory changes may be partly to blame for this uncertainty.

Cybersecurity issues were also among utility professionals’ most pressing concerns.  Eighty-one percent of survey respondents reported that they are focused on cybersecurity threats and continue to face challenges with respect to developing effective responses.  The report notes that the increase in deployment of smart thermostats, appliances, and other internet-connected devices will increase digital complexity and attack surfaces, and therefore require more intensive cybersecurity protection.

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EIA Data Shows Real-Time Impacts of Weather Events on Energy Infrastructure

The Energy Information Administration (EIA) provides a wealth of, well, information for users interested in better understanding energy infrastructure.  Recent updates to the U.S. Energy Mapping System include features such as power plants with a 1 MW or greater capacity, electric retail service territories, and coal mines.  Using data from other federal agencies, such as the National Oceanic and Atmospheric Administration and the Federal Emergency Management Agency, users can now include additional layers in their maps.  For example, the energy disruptions layers display historical and real-time weather events.  The flood vulnerability datasets can be added to see where infrastructure may be subject to rising sea levels, storm surges, and flash flooding.  Mapping specific to the Gulf of Mexico layers real-time storm information with the locations of oil and gas wells.  Descriptions, sources, and update status of each layer is available in EIA’s guide.

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FERC Approves ISO-New England’s Competitive Auction with Sponsored Policy Resources

Last Friday, FERC issued a divided opinion approving ISO-New England’s (ISO-NE) proposed Competitive Auction with Sponsored Policy Resources (CASPR).  CASPR is ISO-NE’s effort to better accommodate recent actions taken by states, outside of the wholesale markets, to promote new, preferred generation resources.

Before CASPR, resources that received out-of-market state support were prohibited by the Minimum Offer Price Rule (MOPR) from reflecting that support through lower priced bids in ISO-NE’s Forward Capacity Auction.  CASPR creates a second stage to the auction, or a “substitution auction,” in which resources that successfully bid on capacity obligations in the primary auction can offer those obligations to state sponsored resources, who would not be subject to the MOPR in this substitution auction.  If an offer clears the substitution market, the existing resource would agree to permanently exit all ISO-NE markets and receive a one-time payment for the difference between the clearing price of the primary auction and the clearing price of the substitution auction.  The state supported resource would assume the same capacity obligations as the entity that received them through the primary auction, and in future years it will be treated as an existing resource and not bound by the MOPR.

FERC’s decision consists of two main parts.  The first is its decision to approve the specific CASPR plan proposed by ISO-NE.  All of the Commissioners, except for Commissioner Powelson, agreed that ISO-NE had demonstrated that its proposal was just and reasonable and not unduly discriminatory.  Commissioner Powelson, in contrast, wrote that CASPR fails to solve the fundamental incompatibility between supporting state policies and protecting the viability of the Forward Capacity Market.  In his view, states cannot be in control of what resources generate electricity in their states while still relying on the wholesale market to provide resource adequacy and reliability.

The other, more contentious, part of the order addressed FERC’s overall approach to state policy efforts and capacity markets.  Chairman McIntyre and Commissioners LaFleur and Chatterjee agreed on a description of “first principles of capacity markets” and that “[w]here participation of resources receiving out-of-market state revenues undermines those principles, it is our duty under the [Federal Power Act] to take actions necessary to assure just and reasonable rates.”

The order also indicates that FERC intends to use the MOPR as the “standard solution,” but not necessarily the exclusive solution, to manage the impacts of state policies on capacity markets, but this statement was supported only by Chairman McIntyre and Commissioner Chatterjee.  Commissioner LaFleur issued a separate concurring statement that specifically disagreed with this one paragraph of the order, stating that FERC should be open to various region-specific solutions rather than try to impose a one-size-fits-all approach.  Commissioner Glick went even further, writing that FERC policy should not merely “accommodate” state policies or attempt to create electricity markets free from governmental programs designed to advance legitimate policy considerations, such as environmental concerns.  He also disagreed with the order’s inclusion of ensuring “investor confidence” as part of the “first principles of capacity markets.”

This order highlights the lack of consensus among the Commissioners on how FERC should approach the interaction between state policies and FERC-regulated capacity markets.  This issue is at the forefront of a number of upcoming matters at FERC, including its Grid Resiliency in Regional Transmission Organizations and Independent System Operators proceeding.

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RTO/ISOs File Grid Resilience Comments

On March 9, each of the FERC-jurisdictional Independent System Operators (ISOs)/Regional Transmission Organizations (RTOs) filed comments in FERC’s resilience proceeding, Docket No. AD18-7. FERC had requested that each jurisdictional ISO/RTO respond to a series of questions concerning: (1) the definition and understanding of the term “resilience,” (2) current methods for evaluating resilience, and (3) methods for evaluating options to mitigate risks to grid resilience. Comments were filed by:

Notwithstanding that Electric Reliability Council of Texas, Inc. (ERCOT)’s grid does not fall under FERC’s Federal Power Act jurisdiction, ERCOT also filed comments in conjunction with the Public Utility Commission of Texas (PUCT).

Additionally, earlier in the week, the American Council on Renewable Energy, American Public Power Association, American Wind Energy Association, Electricity Consumers Resource Council, Large Public Power Council, National Association of Statute Utility Consumer Advocates, National Rural Electric Cooperative Association, Natural Resources Defense Council, Solar Energy Industries Association, and the Transmission Access Policy Study Group* submitted to Chairman McIntyre and the other FERC Commissioners a joint statement on “principles necessary to maximize the benefits of organized wholesale electricity markets.” FERC has docketed this letter in its resilience proceeding.

*The Transmission Access Policy Study Group is represented by Spiegel & McDiarmid LLP attorneys Cindy Bogorad and William Huang.


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The Numbers Behind the Nation’s Electric Portfolio

EPA has released eGRID2016, the twelfth iteration of its Emissions & Generation Resource Integrated Database.  First released in 1998, eGRID makes available plant-specific generation and emissions data for all U.S. electric generating plants that provide power to the electric grid and report data to the federal government.  Previous eGRID data has been used by both governmental and nongovernmental organizations for a variety of modeling and reporting purposes, including by EPA to develop the state-level CO2 emission rate baselines used in the Clean Power Plan. EPA also uses the data for its online Power Profiler which allows users to obtain information about the air emission impacts of their home or business electricity use and to compare emissions in their region to the national average.

eGRID2016 is arranged in two Excel workbooks (one in metric and the other in Imperial units) with eight different aggregate data files (boiler, generator, plant, state, balancing authority, eGRID subregion, North American Electric Reliability Corporation (NERC) region, and the total United States), and a ninth file for regional grid loss data.  The database includes information about, among other things, each unit’s generator type, capacity, fuel input, and net generation; the air programs that the unit is subject to; and the unit’s NOx, SO2, and CO2 emissions.

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