Author Archives Laura Arnold

Indiana Court of Appeals ruled the IURC erred in NIPSCO TDSIC; Asks for a “do over”

Posted by Laura Arnold  /   April 09, 2015  /   Posted in Northern Indiana Public Service Company (NIPSCO), Office of Utility Consumer Counselor (OUCC), Uncategorized  /   No Comments

Court deals setback to $1.2 billion NIPSCO plan

NIPSCO workers set steel beams in July at a new substation under construction south of Valparaiso. It is part of the utility's $1.2 billion electric modernization project, which was dealt a setback by the Indiana Court of Appeals this week.

Court deals setback to $1.2 billion NIPSCO modernization plan

The Indiana Court of Appeals on Wednesday dealt a setback to NIPSCO's $1.2 billion electric modernization plan, issuing a ruling that could affect similar plans by other utilities.

The court ruled the Indiana Utility Regulatory Commission erred in several respects in its Feb. 17, 2014 orders approving NIPSCO's plan. It affirmed some parts of the IURC's orders, including its interpretation of a 2 percent cap, which is a key victory for the utility.

In addition to authorizing the $1.2 billion in improvements in its February orders, the IURC approved customer charges to pay for them. Those come in the form of yearly rate increases that will total 4.9 percent by 2020, according to NIPSCO estimates.

NIPSCO and its challengers on Wednesday were still examining how the ruling might affect both the improvements and the customer charges, some of which have already been collected.

"We are analyzing today's order to determine the next steps," NIPSCO stated in an email to The Times. "The projects we've identified are necessary in modernizing our system for the future. The level of detail the Court of Appeals has requested is available, and we are confident it supports our 7-year plan."

The IURC's February 2014 order had been challenged by some of NIPSCO's largest industrial customers as well as the Indiana Office of Utility Consumer Counselor.

NIPSCO brought the case for its electric modernization plan before the IURC under legislation passed by the General Assembly in 2013. It was the first utility in the state to do so.

The industrial group challenging the IURC's orders before the Court of Appeals was composed of BP Products North America, Praxair, USG Corp., and ArcelorMittal USA.

"We are pleased with the Court of Appeals decision finding NIPSCO's plan really failed to follow the requirements of the statute," said Jennifer Terry, an attorney with Lewis & Kappes, the law firm representing the industrial group.

Terry said it is possible the industrial group could ask the IURC to order NIPSCO to refund customer charges already collected under the IURC's orders.

The industrial customers have long contended the utility should be more specific about projects it intends to undertake. The court sided with them, ruling the IURC was not provided with enough detail on the projects to approve the special charges to pay for them.

The Office of Utility Consumer Counselor is also reviewing the decision in order to fully understand its ramifications, said Consumer Counselor spokesman Anthony Swinger.

Since approving NIPSCO's electric plan in 2014, the IURC has also approved a NIPSCO natural gas modernization plan of about $800 million. It also approved a similar Vectren request for a $650 million program. And the commission is considering a $2 billion Duke Energy electric modernization.

The IURC will now have to reconsider major parts of its NIPSCO orders and may have to reopen the case. Any of the parties in the Court of Appeals case could also appeal to the Indiana Supreme Court.

The industrial group had also argued before the court that the IURC had erred in ruling utilities could hike customer bills by an amount equal to 2 percent of annual retail revenues in each year of their seven-year plan.

The industrial group contended that would allow utilities to increase rates up to 14 percent by the end of the plan, which is a far bigger increase than even in a typical rate case. The court ruled against the industrial group, finding the IURC had interpreted the statute correctly.

The court sided with the Utility Consumer Counselor in ruling that the same distribution and transmission factors should be used for industrial and residential customers in setting the new charges.

Click HERE for a link to the Court's decision> http://www.in.gov/judiciary/opinions/pdf/04081503mpb.pdf 

From the Indiana Office of Utility Consumer Counselor (OUCC) concerning other TDSIC cases:

Infrastructure & rate plans:
Duke Energy: The OUCC recommends denial.
Case still pending.
I&M: The OUCC recommends partial denial of the rate recovery request
. Case still pending.

TDSIC = Transmission, distribution and storage system improvement charge.

 

Who else is selling Duke’s “solar power hurts the poor” message? Please tell us!

Posted by Laura Arnold  /   April 07, 2015  /   Posted in solar, Uncategorized  /   No Comments
NC WARN Director Jim Warren

Pastor to Duke Energy CEO: Stop Targeting African-Americans with Your Anti-Solar Campaign

Letter to Duke’s Good cites curious visits by those pushing “Solar Hurts the Poor” message

A prominent Greensboro minister and community leader is calling for a meeting with Duke Energy CEO Lynn Good over the utility’s efforts to derail the growing use of rooftop solar power in North Carolina.  He criticizes Good’s targeting of African American pastors and political leaders with what he calls a cynical and disproven claim that the growing use of rooftop solar harms people with low incomes and people of color.

The Rev. Nelson Johnson, in an open letter to Good co-authored by NC WARN Director Jim Warren, also decried Duke’s aggressive lobbying against the bipartisan Energy Freedom Bill that would open the door to third party solar competition in this state, “thereby helping the same low-wealth communities for which Duke Energy now professes concern.”

As pastor of the predominantly African-American Faith Community Church in Greensboro,Rev. Johnson said he has been visited in recent months by three different individuals selling Duke’s “solar power hurts the poor” message.  In seeking the meeting with Good, the authors said Duke’s actions “are adding to its serious credibility problem with the people of this state, and we wish to share some constructive ideas for repairing this divide.”

There is abundant evidence that the “solar hurts the poor” strategy has been coordinated nationally by the electric power industry.  It has recently been rejected by the NAACP’s national board, by various state NAACP chapters, and by the congressional black caucus, among others.

Nevertheless, Rev. Johnson said today, “Duke Energy is vigorously pursuing this same deception in North Carolina.  This cynical corporate activity is an affront to the people of this state, and it is Ms. Good’s personal responsibility to stop it.”

The NAACP agrees that solar power helps communities of color for many reasons.  Chief among them is that every new solar panel helps all customers by reducing overall electricity usage, thus reducing the need to keep building expensive power plants and continually raising customer rates.

“We urge you to stop this duplicitous corporate behavior,” Johnson and Warren told CEO Good.  “We urge you, instead, to open a dialogue with us and other North Carolinians about our common interest in an energy future that benefits all communities by reducing rate increases, creating jobs, and by reducing the pollution that is harming our health and moving an already horrific global climate situation toward a disastrous future for all of Creation.”

A Profound Irony

Solar companies with strong financial backing want to install systems in this state on the property of churches, businesses, homes, and government buildings, and then sell them the power for no up-front cost and at a fixed rate that’s lower than Duke’s electricity.  But they have been inhibited by rules requiring customers to buy from their monopoly utility.  The Energy Freedom Act would change that.

“There is a profound irony in your vigorous opposition to the Energy Freedom Act,”Johnson and Warren told Good:“Because your customers are increasingly choosing solar, you’re trying force other captive customers to pay more for dirty power plants.  Then, from the other side of your corporate mouth, you’re trying to block the very avenue for those other customers to go solar.”

In other words, even if Duke were correct about solar harming low-income North Carolinians, the bipartisan Energy Freedom Bill solves that problem for many of them by eliminating the up-front cost of adding rooftop solar.

Also from the letter:  “To be clear, low-income communities are suffering under your business model.  Our communities cannot continue bearing the higher and higher electric bills that would result from your 15-year projections in the Integrated Resource Plan.

“Our communities need the many thousands of jobs that the solar power industry is bringing to this state. Duke Energy could take a leading role by helping ensure that those economic benefits are shared among traditionally disadvantaged communities. …

“In a nation heavily riven by longstanding inequities and divisions over race – and in a time when multiple parties are gratuitously exploiting and amplifying those divisions – we would welcome, with your involvement, the chance to close the gap between the public well-being and corporate leaders’ narrow focus on profit.”

Rev. Johnson, who also heads the Beloved Community Center, added today, “Reducing the cost of electrical energy for the poor, while reducing North Carolina’s carbon footprint through increased use of solar energy, reflects both moral and economic progress, which the broad religious community supports.

SeekingAlpha: Duke Energy- Solar PV Ambitions Bode Well For The Company’s Future

Posted by Laura Arnold  /   April 06, 2015  /   Posted in solar, Uncategorized  /   No Comments

Duke Energy: Solar PV Ambitions Bode Well For The Company's Future

Grist: What do conservative policy intellectuals think about climate change?

Posted by Laura Arnold  /   April 05, 2015  /   Posted in Uncategorized  /   No Comments

What do conservative policy intellectuals think about climate change?

John Farrell: Electricity’s Un-Natural Monopoly

Posted by Laura Arnold  /   April 04, 2015  /   Posted in solar, Uncategorized  /   2 Comments

Electricity’s Un-Natural Monopoly

 John Farrell  April 02, 2015  |  9 Comments

The U.S. electricity system is undergoing the biggest change in its 130-year history, undermining the rationale for monopoly ownership and control.

Until recently, electricity service was similar to water or roads, where a natural monopoly was most efficient. Only a single, standardized electric grid was needed to connect each building. Technology options were limited to steam-powered turbines fueled by coal and oil, or large hydro dams with massive economies of scale. There was very little long-distance transmission of power, as each utility was responsible for electricity service within its own territory. Growth in demand was exploding and monopoly utilities could wield the most cost-effective financing for new power plants. These natural monopolies paid off for customers, with falling costs of reliable electricity even as demand rose rapidly.

But the 21st century electricity system is radically different.

The scale of electricity generation is rapidly shrinking, from coal and nuclear power plants that can power a million homes to solar and wind power plants that power a few to a few hundred nearby homes. Electricity demand has leveled off, so that every unit of new wind and solar power produced for the grid displaces a unit of fossil fuel energy. Batteries and electric vehicles provide new tools for distributed energy storage. Smartphones and smart appliances are giving electricity customers unprecedented opportunities to manage their energy use.*

It no longer makes sense to preserve last century’s forms of utility ownership and control in a century where cost-effective technology enables widely distribution production and ownership of electricity. And yet, a majority of state laws governing electricity service still preserve this monopoly model. Even those that do not have made little progress on democratizing the electricity system.

Incremental Changes

There have been incremental changes. In the last three decades of the 20th Century, federal regulators opened the utility market to competition from non-utility generators who used higher efficiency or renewable-fueled power plants and opened the wholesale market to competition by making the transmission system a common carrier. These moves showed that utilities did not have a natural monopoly over power generation and emphasized the public nature of the grid infrastructure by allowing fair and non-discriminatory access. Competition was introduced between big players who could own and operate large power plants.

Changes in the 1990s also introduced retail sales “competition” that proved elusive. California’s near-bankruptcy due to price manipulation by Enron and others led many states to freeze or reverse retail deregulation. Even in states where retail competition has been maintained, public advocates warn it has offered little innovation in electricity service (other than promotional rates like offered by the cable industry). More to the point, retail competition does little to empower electric users, who are still just consumers of power.

The most potent change has been the growth of conservation and energy efficiency. These tools offer non-utility and cost-effective alternatives to new power plants, and as such, illustrate the unnatural nature of utility monopolies. Many states have shifted to independent, non-utility delivery of conservation and energy efficiency services (e.g. Efficiency Vermont).

U.S. Electricity System Timeline

Retaining Market Power

At the present, however, utilities still maintain monopoly or exercise market power over many aspects of the grid. On the transmission system, for example, planning rules make it very difficult to implement less costly, non power line alternatives to utility power line proposals (see Beyond Utility 2.0 to Energy Democracy, p21). In particular, planning is rarely integrated with distribution level planning, where distribution energy generation (like solar) can serve reliability and energy needs. Distribution planning also suffers from utility monopoly, because as utility expert and former utility manager Karl Rabago says, “utilities simply do not think things they do not own or control can be resources.” Thus, system planning rarely incorporates customer-owned solar, electric vehicles, energy storage, and many other cost-effective strategies for meeting electricity needs.

In other words, the natural monopoly has become unnatural, with utility managers wedded to costly legacy infrastructure solutions (like poles and wires) in an era of remarkable local and non-utility resources.  New utility power plants and power lines will last for 40-50 years, but distributed energy resources will be competitive well within the lifetime of these legacy investments. For example, by 2022, on-site solar power could provide less costly electricity than the electric utility for at least 10 percent of residential and commercial customers in nearly every state. In that time frame, electric vehicles and other energy storage options combined with powerful “apps” will give utility customers unprecedented control over their energy use.

Replacing an Unnatural Monopoly

Monopoly is no longer natural or even cost effective. But what will replace it?

For one, it must be a grid built on the principles of a 21st century electricity system. I offer five pillars of a Utility 3.0 model, or energy democracy. Three of these derive from the prominent Utility 2.0 conversation.

Five Pillars of Energy Democracy

How will these principles be applied to the end of the natural utility monopoly?

On the transmission system, there’s a clear need for policy to re-integrate planning with the local level, where there are many more opportunities for conservation, efficiency, and distributed energy to meet regional needs than ever before. There are a few other suggestions, for federal regulators, in this post.

On the distribution system, the answer is new management and, likely, ownership. The New York Public Service Commission’s Reforming the Energy Vision process has already outlined a plan for an independent manager for the distribution system, but it may fall short of the necessary steps to make the distribution system a tool for energy democracy.

Until the turn of the 21st century, the distribution system was simply the last mile of lines bringing power one-way from utility operated power plants to customers. But now the distribution system can facilitate energy democracy. Individual and community solar arrays can produce local electricity; electric vehicles, energy storage, and smart appliances can manage energy use; networked thermostats and smartphone apps can give individuals and businesses unprecedented power as energy managers. The following graphic provides a very simplified picture.

Energy democracy in action

To facilitate this network, the distribution system needs to be a common carrier, with non-discriminatory access to all. But the infrastructure of the local grid (substations, transformers, etc) also has to be vastly upgraded and smartened to enable local ownership and management of energy systems, and the transactions between these local owners. These investments, in the public interest and not the manager’s interest, necessitate complete separation from utility ownership and management as long as utility’s still have a vested financial interest in particular outcomes (e.g. a guaranteed rate of return from building new infrastructure). The grid could be owned as a commons, like the roads or municipal water supply, or not. But it must be built and operated to facilitate maximum economic opportunity for electric customers.

Maintaining an unnatural monopoly is inefficient, but failing to correct it is enormously costly. Energy efficiency and distributed energy offer electricity customers $48 billion economic opportunity, and the rules for the electricity system should allow them to seize control.

This article originally posted at ilsr.org. For timely updates, follow John Farrell on Twitter or get theDemocratic Energy weekly update.

*This paragraph copied from ILSR’s new report, Beyond Utility 2.0 to Energy Democracy (Dec. 2014)

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