Comment Period Closes on CPP Replacement Possibilities

Comments were due February 26 on EPA’s advanced notice of proposed rulemaking (ANPRM) to gather information on possible replacements for the CPP.  The total count for comments submitted is over 251,000.  By way of comparison, the proposal to repeal the CPP currently has over 512,000 comments, and the comment deadline was extended to April 26; the proposed CPP received over four million comments.

A sampling of the comments filed on the ANPRM includes:

  • A group of states and cities (including New York, California, Connecticut, Hawaii, Illinois, Iowa, Maine, Maryland, Minnesota, New Mexico, North Carolina, Oregon, Rhode Island, Vermont, Washington, Massachusetts, Pennsylvania, Virginia, D.C., Boulder, Chicago, New York City, Philadelphia, South Miami, and Broward County) oppose the use of an ANPRM in this context, arguing that “EPA already has the necessary information to regulate power plant greenhouse gas emissions, and immediate action is necessary[.]” They argue that the interpretation of Section 111(d) of the Clean Air Act that EPA is considering is inconsistent with the statute and EPA’s regulations.
  • The National Conference of State Legislatures, a bipartisan organization, asked for continuing consultation with states and the preservation of flexibility for and authority of states.
  • The American Public Power Association asked that a replacement rule give affected sources flexibility in demonstrating compliance and offer states a “safe harbor” plan to reduce workload for states.
  • The U.S. Chamber of Commerce (joined by other trade groups) said that any new standard of performance under Section 111(d) should reflect only measures “within the fence line” of a source and asked for flexibility for states, as well as consideration to avoid raising the cost of electricity.
  • Unions for Jobs and Environmental Progress supported a replacement based on “inside the fence” measures.
  • There were several requests for an extension of the comment period to better align with the comment period for the proposed repeal, but EPA has not granted an extension in this docket.
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Study Analyzes Barriers and Opportunities for Broader Adoption of Demand-Side Management Programs at Electric Utilities

In a study released last week, Barriers and Opportunities to Broader Adoption of Integrated Demand Side Management at Electric Utilities, the Lawrence Berkeley National Laboratory explores recent electric utility experiences with demand-side management programs, the drivers of these programs, and the barriers to their development.  Electric utility participants in the study reported that this is a critical time for addressing energy efficiency, demand response, and distributed energy resource technologies, and that Integrated Demand-Side Management (IDSM) may be positioned to play an important role in the grid’s evolution.

The study explains that while demand-side management programs are currently administered as a patchwork of policies, IDSM, i.e., strategically designing and delivering a portfolio of demand-side management programs to participating customers, could improve the collective performance and penetration of these programs.  The study defines IDSM as the coordinated delivery of three or more of the following: (1) energy efficiency, (2) demand response, (3) distributed generation, (4) storage, (5) electric vehicles, and (6) time-based rate programs for residential and commercial utility customers.

To better understand the electric utility industry’s current efforts to implement IDSM programs and the future outlook of those programs, the authors gathered input in the form of surveys and interviews from eight utility and third-party IDSM program administrators.  Respondents reported that the business drivers of IDSM include compliance with regulatory mandates and increasing customer engagement and satisfaction, while the barriers to IDSM implementation include lack of effective metrics for evaluating the cost-effectiveness of IDSM programs and the separation of responsibilities within a utility for administering different demand-side management programs.  From the perspective of the study participants, the deployment of more complex IDSM programs can be expected over the next few years, although doing so will require changes to utility management structures and to regulatory structures.

A webinar presenting the findings and conclusions in the study will be presented on Thursday, March 8, 2018 from 12:30-1:30 pm EST.  Registration is available here.

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Supreme Court to Hear Issue Relating to Solar Developer’s Antitrust Challenge to Public Power Provider’s Retail Rate Design

UPDATED 03.12.2018 The parties filed a joint letter notifying the Court that they are trying to negotiate a settlement.  The case is now scheduled to be argued on April 17, 2018.

UPDATED 03.05.2018 The Petitioner’s reply brief is available here. The motions of the Solicitor General for leave to participate in oral argument as amicus curiae and for divided argument have been granted.

The Supreme Court will hear arguments in Salt River Project Agricultural Improvement & Power District v. Tesla Energy Operations, Inc., fka SolarCity Corp. on March 19.  This case involves an antitrust challenge to Salt River Project’s retail rate changes that impact customers with rooftop solar.  Tesla alleges that the rate changes impose an almost 65% rate increase on these customers (versus the prior rate structure) and that solar panel retailers received 96% fewer applications for new systems in Salt River Project’s territory after the new rates went into effect.

There has not yet been a decision on the merits of Tesla’s antitrust claims; Salt River Project moved to dismiss the lawsuit in district court on several grounds, including an argument that state-action immunity, which exempts state and local government regulation from federal antitrust laws in some cases, bars the suit.  The district court declined to dismiss the lawsuit on these grounds, and on appeal, the Ninth Circuit ruled that the district court’s decision was not yet reviewable.

The Supreme Court is considering an even more narrow aspect of legal doctrine in this appeal: can Salt River Project immediately appeal the denial of state-action immunity under the collateral-order doctrine, or must the parties fully litigate the case before this issue can be reviewed on appeal?  An appeal usually requires a final court order, but the collateral-order doctrine permits immediate review of issues that (1) are conclusive, (2) are analyzed separately from the merits, and (3) would be effectively unreviewable after final judgment. Circuit courts of appeals have disagreed with one another on whether denial of state-action immunity should be immediately appealable under the collateral-order doctrine.

In its opening brief to the Supreme Court, Salt River Project argues that an order that denies state-action immunity (as a class of orders) to a public entity falls within the collateral-order doctrine.  Salt River Project contends that rather than involving a merits analysis, state-action immunity assumes the conduct to be anticompetitive and looks only to whether the state authorized the conduct to displace competition.  Salt River Project further argues that the important interests of state sovereignty and the freedom of local decisionmakers to serve the public interest are threatened here.

Multiple groups filed briefs amici curiae in support of Salt River Project: State & Local Legal Center*, American Public Power Association, and a group of 24 states, including Arizona (where Salt River Project is located).

Tesla argues in its brief that state-action immunity shields conduct from liability, rather than defendants from litigation, and is therefore not the sort of immunity that requires immediate appeal to be meaningful. Tesla also claims that the analysis of whether state-action immunity applies is tied up in the merits of the underlying antitrust dispute.  Tesla further contends that state sovereignty and local discretion are involved in other cases, such as preemption claims, where courts have not generally found immediate appeal to be appropriate.

Amici in support of Tesla include: Center for Biological Diversity, Federal Courts Scholars, Public Citizen, American Antitrust Institute, and National Federal of Independent Business Small Business Legal Center.  The United States also filed a brief supporting Tesla, arguing on behalf of the Department of Justice and the Federal Trade Commission, and has asked the Court to grant it a portion of Tesla’s time at oral argument (with Tesla’s consent).

Salt River Project is expected to file a reply brief before argument on March 19.

The Court’s decision in this case will impact whether Tesla’s suit against Salt River Project proceeds on the merits of the rate design.  But the decision may well have broader implications relating to the vulnerability of municipal utility and local government actions to antitrust challenges.

*Spiegel & McDiarmid LLP attorneys Tim Lay, Katie Mapes, Jessica Bell, and Amber Martin authored the brief for amici State & Local Legal Center (National Governors Association, National Conference of State Legislatures, Council of State Governments, National Association of Counties, National League of Cities, U.S. Conference of Mayors, International City/County Management Association, and International Municipal Lawyers Association) in this case.

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EIA Releases State-Level Data on Residential Energy Sales

As part of its State Energy Data System, the Energy Information Agency (EIA) has released consumption and prices and expenditures data on 2016 electricity retail sales.  Corresponding graphs and maps were also posted on the EIA website.

The average U.S. residential electricity customer in 2016 used approximately 10,800 kilowatthours (kWh), although the amount varied significantly by region.  States in the southeast had the highest levels of consumption, largely because of the higher levels of air-conditioning use and the greater likelihood of homes having electric space heating, water heating, and cooking than the national average.  Hawaii, Maine, California, Vermont, and Rhode Island had the lowest levels of residential electricity sales per customer.  Although these states are geographically diverse, they share generally mild climates or have high adoption levels of residential solar systems, which reduce the amount of electricity sold to households.

The EIA data also show that Hawaii has the highest residential electricity prices in the country, averaging 27.5 cents per kWh in 2016.  This is over 35 percent higher than the next most expensive state, Alaska (20.3 cents per kWh).  Louisiana has the lowest average residential electricity price at 9.3 cents per kWh, and the average U.S. residential electricity price in 2016 was 12.5 cents per kWh.

Although Hawaii’s prices were the highest in 2016, it ranked fifth in terms of expenditures because of its relatively lower consumption levels.  South Carolina had the highest level of residential electricity customer expenditures; the average customer in South Carolina paid $1,753 in 2016.  This is nearly double the amount paid by the average customer in the state with the lowest expenditures, New Mexico, who paid just $911.  The national average expenditure was $1,351.

EIA data on nuclear energy and natural gas at the state level are expected to be available later this month.  EIA plans to release the final data for the 2016 data cycle on June 29, 2018.

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FERC Issues Storage Rule

UPDATED 2.16.2018 with link to Order No. 841 and further information on the upcoming technical conference in Docket Nos. RM19-9-000 and AD18-10-000. 

At today’s Open Meeting, the Federal Energy Regulatory Commission approved unanimously a final rule concerning electric storage resource participation in RTO/ISO capacity, energy, and ancillary service markets. Order No. 841 directs each RTO/ISO to file tariff revisions implementing a “participation model” to facilitate and govern the participation of storage resources in the markets, and requires that the tariff revisions be filed with FERC within 270 days of the rule’s publication in the Federal Register. The RTOs/ISOs will have 365 days thereafter to implement their proposed tariff provisions.

According to the staff presentation, the new Rule requires that each RTO/ISO’s participation model:

  1. ensure that an electric storage resource using the model is eligible to provide all capacity, energy, and ancillary services that it is technically capable of providing;
  2. ensure that an electric storage resource using the model can be dispatched and can set the wholesale market clearing price as both a wholesale seller and wholesale buyer, consistent with rules that govern the conditions under which a resource can set the wholesale price;
  3. account for the physical and operational characteristics of electric storage resources through bidding parameters or other means; and
  4. establish a minimum size requirement for participation in the markets that does not exceed 100 kW.

The Rule further requires that the resale of energy from an electric storage resource back to the RTO/ISO markets be at the wholesale locational marginal price.

Order No. 841 takes no action on earlier proposed reforms related to distributed energy resource aggregations. As to those reforms, the Commission and Commission staff will be convening a technical conference on April 10 and 11, 2018 in Docket Nos. RM18-9-000 and AD18-10-000. The technical conference notice states that the conference will cover seven different panels. Parties wishing to participate in this conference should submit a nomination form by 5:00 p.m. on March 15, 2018. Though not required, those planning to attend in person are encouraged to register by April 3, 2018.

Commissioners LaFleur, Chatterjee, Powelson, and Glick each issued a separate statement on Order No. 841.

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