Author Archives Laura Arnold

Terre Haute cashing in on sewage

Posted by Laura Arnold / November 04, 2014 / Posted in Uncategorized / No Comments

Terre Haute cashing in on sewage

Posted: Monday, November 3, 2014 10:05 am

By Arthur Foulkes / Tribune-Star

In an effort to shore up the city’s strained finances, Mayor Duke Bennett has entered the city into a number of agreements that generate new revenue by converting sewage into diesel fuel.

For months, Terre Haute elected officials have been asking the mayor where he was going to find several million dollars for the city’s cash-strapped budget. Bennett, promising about $3 million in new revenue this year and another $3 million in 2015, had said he could not reveal specifics about where the money would come from, citing ongoing negotiations with private companies.

Negotiations are still underway, but city officials have this year signed several contracts with private companies that make up the broad outline of the mayor’s plan. The contracts are public records, opening the agreements to public scrutiny; they can be requested through the city legal department in City Hall.

Mayor Bennett, speaking with the Tribune-Star last week, confirmed that four contracts approved by the Board of Public Works and Safety in May and July make up the framework for the expected multi-million dollar influx of revenue.

“I was trying to find ways to generate new revenue,” Bennett said, seated in his City Hall office. “We’ve been working on this for a couple of years now.” If all goes as hoped, this could make Terre Haute a model for other cities to follow, he said.

Briefly, the four contracts state the City of Terre Haute will provide “sludge” from its wastewater treatment plant to a company known as Powerdyne Terre Haute Holdings, which will convert the sludge into diesel fuel. Powerdyne will then sell 12 million gallons of that fuel to Terre Haute for $2.46 per gallon, and the city will then sell that fuel to Sodrel Fuels, an Indianapolis-based company, for $2.50 per gallon.

Terre Haute is essentially a “middle man” in this, Chou-il Lee, city attorney, told the Board of Public Works and Safety in July, when the board approved the contracts.

“This is just a pass-through contract,” Bennett said when discussing the arrangement. The city is “not going into the fuel business,” he said.

The “pass-through” arrangement amounts to $480,000 in income for the city per year, but officials indicate much more income is likely. The city can provide more sludge than the contracted minimum, said Mark Thompson, director of the city’s Waste Water Utility. That will produce more income because the city will be paid for that extra sludge, he said. Also, the city expects to be paid by other cities to take their sludge, he said.

Utility Dive: The fight over solar moves from net metering to rate design

Posted by Laura Arnold / November 03, 2014 / Posted in Uncategorized / No Comments

The fight over solar moves from net metering to rate design

Utilities say net metering isn’t fair; solar advocates say proposed rate changes aren’t either.

By Herman K. Trabish | November 3, 2014

post

Fights over electricity rates are brewing all across the country.

Utilities say new rate proposals will protect customers who haven’t moved to solar and energy efficiency. But those who have moved say the proposals only protect utilities.

“There are two categories of rate restructuring and rate design changes bubbling up,” explained Environmental Law & Policy Center Sr. Attorney Brad Klein. “The first is to move cost recovery from the variable per-kilowatt-hour charge and increase the monthly fixed charge. The other is to impose a monthly dollars-per-kilowatt charge on owners of distributed generation.”

Many proposals are in states with little distributed generation. “That reflects a lesson some utilities took from recent high profile battles in places like Arizona,” Klein said. “Once a lot of customers have solar, it becomes a really pitched battle to change the rate design.”

The "utility death spiral"

Credit: Edison Electric Institute’s "Disruptive Challenges"

A nationwide trend

Klein said the trend emerged after the Edison Electric Institute’s Disruptive Challenges paper recommended “a monthly customer service charge…to recover fixed costs.”

He listed 23 state fights, including:

a Madison Gas and Electric (MG&E) proposed $69 per month fixed charge with a variable rate reduction from $0.10 per kilowatt-hour to $0.04 per kilowatt-hour
a Wisconsin Energies proposed fixed monthly charge to all customers and a per-kilowatt DG customer charge
a $10 per month fixed charge before California’s commission
a proposed fixed charge increase for Connecticut Light & Powerresidential customers of up to 59%
a proposed Hawaiian Electric Companies $55 per month fixed charge increase with a $16 per month charge for PV owners
a proposed 50% residential/small commercial customers monthly charge proposed by Missouri’s Empire District Electric
an Idaho Power-proposed $5 to $20 per month fixed charge increase just rejected by Idaho’s commission
Illinois-ComEd’s just-announced non-specific residential customer fixed charge
Baltimore Gas & Electric’s proposed fixed charge increases for residential and general service customers
the recently approved NV Energy residential fixed charge increase of 50%
residential customer fixed charge increases filed in August for four subsidiaries of FirstEnergy, including Pennsylvania Power
Rocky Mountain Power’s proposed monthly minimum bill and monthly charge increases for residential customers and fixed charge for PV owners recently rejected by Utah’s commission
Pacific Power’s nearly doubled fixed charge for residential customers just proposed to Washington’s commission

“This trend is exactly what utility regulation was created to prevent—the exercise of monopoly pricing power,” said Regulatory Assistance Project Sr. Advisor Jim Lazar. “What makes it compelling for utilities now is competition from the sun.”

The threat to energy efficiency and clean energy

Based on his calculation, using conservative assumptions and data from the 3,300 U.S. utilities, Lazar considers fixed rate charges “the biggest threat to energy efficiency and clean energy the U.S. faces.”

The extreme MG&E proposal, Lazar said, “will cause about a 14% increase in consumption and wipe out an entire decade of energy efficiency.”

Credit: Bradley Klein (used with permission)

Utilities use economic and fairness rationales for the higher fixed charges, Klein said. They say it is more economically efficient to recover fixed costs, anything that doesn’t vary by usage, through a fixed charge because it sends clearer price signals, which allows customers to make better choices.

The fairness argument comes from the cost shift assumption, Klein said. Utilities argue that when customers offset energy consumption through energy efficiency or distributed generation, they don’t pay enough to cover fixed service costs and force utilities to collect from other customers.

The first rationale reduces utility investor risk by shifting cost burdens to customers, Klein said, and especially to customers with lower electricity usage and lower incomes.

Infrastructure investments that change over time are not really fixed, he added. “In the long term, everything is a variable cost. If the customer base uses a lot less energy, over the long term, the utility needs to build fewer power plants and can build fewer transmission and distribution lines.”

The cost shift concept may seem to justify the fairness rationale, Klein said. But it is often not supported by data. “In Wisconsin, even with the most conservative assumptions, the cost shift is something like one-third of one penny per customer per month.”

In rejecting the Rocky Mountain Power proposal, Klein explained, “the Utah Public Service Commission said there just wasn’t enough data to rule on the cost shift question.”

Credit: Jim Lazar (used with permission)

“In the real world, purchasing gasoline does not include separate charges for the oil well, the pipeline, the refinery, and the trucking,” Lazar said. “And nobody pays a fixed monthly charge to the gas station. The billions of dollars in oil infrastructure fixed costs are recovered one gallon at a time. That is how it works with competition.”

The purpose of regulation is to enforce on monopolies the pricing discipline of competitive businesses, Lazar explained. “People should be able to connect to the grid for no more than the cost of connecting to the grid and they shouldpay for the use of the grid in proportion to how much they use the grid.”

A solution or a backlash

“We need to engage in a fundamental conversation about the future of the electric utility,” Klein said. “We don’t disagree that policies and regulations and utility rate structures may need to change. But that needs to be done in a thoughtful and comprehensive way and not by acting quickly and without data.”

Distributed generation and energy efficiency advocates do not yet have a proposal, Klein said. That needs to emerge on a state by state, commission by commission basis. In the MG&E case, Public Service Commission of Wisconsin Staff witness Corey Singletary testified that “there does not appear to be an urgent need” for the new rate structure and recommended “a more measured approach, guided by deliberate and thoughtful policy decisions on the part of the Commission…”

Former Texas PUC Commissioner and Austin Energy exec Karl Rabago called the Wisconsin Energies DG fixed charge proposal an “astounding failure of basic ratemaking.”

In places like California and New England, where the per kilowatt-hour electricity price is already high, Lazar said, modest fixed cost initiatives may succeed. But in places like the Midwest, the Pacific Northwest, and the South, where variable charges are still low, they could produce a backlash.

“In Hawaii, 1,000 customers have left the grid in the last two years because it is cost effective for any customer to have solar and batteries and disconnect from the utility,” Lazar said. “Only those without roofs or good enough credit to lease become victims of monopoly pricing.”

The MG&E proposal also produced a backlash, Klein said. “The utility narrative was about fairness. That’s how it started,” he explained. But it was quickly apparent the proposal would most affect low income and low volume electricity consumers.

“The cure was worse than the disease. Soon, AARP was robo-calling all its members to oppose the proposals. The NAACP was officially opposed. The City of Milwaukee, the City of Madison, and a number of other municipalities passed unanimous resolutions.” MG&E finally withdrew much of its proposal.

“These proposals are being advanced without the analysis needed for long term solutions,” Klein said. “They are defensive or reactionary and meant to shield utilities from energy efficiency and distributed generation losses. But this technology isn’t going to go away. Over the long term, cost effective solar and storage will push customers away from the utility. People that can are going to disconnect.”

Ohio utilities feel burned by solar-energy users; Will Indiana be next?

Posted by Laura Arnold / November 03, 2014 / Posted in Uncategorized / No Comments

Ohio utilities feel burned by solar-energy users

By Dan GearinoThe Columbus Dispatch • Sunday November 2, 2014 9:40 AM

People like Jack Hedge scare utility executives. He has rooftop solar panels that generate more electricity than his house needs.

“My electric bill was zero most of the year,” the 66-year-old Worthington man said.

Utilities, such as Columbus-based American Electric Power, say their current rate structure doesn’t allow them to cover costs related to renewable-energy owners. The result, the companies say, is that the costs get passed on to other consumers.

The debate over how utilities treat rooftop solar is at the heart of a case heading to the Ohio Supreme Court.

“Are the solar customers using the grid? Unambiguously, the answer is yes,” said Jim Lazar, an electricity consultant in Washington state who advises regulators across the country. “One approach is to say, ‘You’re using the grid; you need to pay for the grid.’ ”

As he sees it, the key question is whether renewable energy is an infant industry that needs special treatment and provides a public good.

“At what point does it cease to be an infant industry?” he asked. “When is it time for the kids to pay the rent or move out of the house?”

He thinks the answer will vary depending on the political climate of each state.

Utilities in most states are not yet feeling a pinch because of electricity generated by home-based systems. Fewer than 1 percent of U.S. households have renewable energy installed. But as solar-panel prices continue to drop and the systems become more popular, utility companies fear that electricity sales will take a sudden dive, depriving them of the money needed to maintain the grid for everyone else.

Within the industry, this scenario is often called the “death spiral,” a kind of doomsday for the regulated-utility business model.

To fight this, utility companies and industry groups are proposing additional surcharges for solar owners. They are also ramping up a campaign to frame the issue in terms of income inequality, arguing that wealthy solar owners receive subsidies that are unavailable to the many people who struggle to pay their electricity bills.

Meanwhile, “green” power advocates say utilities are standing in the way of progress toward an economy that relies less on large power plants.

“The fact of the matter is that the utilities have not done the kind of analysis that needs to be done to calculate the benefits of solar,” said Rob Kelter, senior attorney for the Environmental Law & Policy Center.

He lists two main benefits: Solar power is the most productive on the hottest days of the year, which helps to hold down the wholesale electricity price for all consumers. And, solar power reduces demand for fossil-fuel-burning power plants, which reduces health problems related to air pollution.

The Ohio debate has simmered for the past two years as regulators worked on rules governing renewable-energy installations that are connected to the grid. The Public Utilities Commission of Ohio ruled in January that it would maintain policies saying that utilities are required to issue credits for any surplus power that comes from the systems and that utilities cannot have any special charges for these customers.

The case is being appealed to the Ohio Supreme Court, with some of the state’s major utilities — led by AEP and FirstEnergy — saying the rules amount to an unfair subsidy for some customers. The court accepted this case last month and likely will hear oral arguments early next year.

“It was unreasonable for the commission to impose a new regulatory mandate without providing for an explicit mechanism for recovery of costs associated with the mandate,” Steven Nourse, AEP’s lead attorney, said in a filing.

The Edison Electric Institute, a trade group for large electricity utilities, has helped lead a national push for additional charges on owners of solar systems. The group made its case last year in a warning that “grid costs are shifted to those customers without rooftop solar ... through higher utility bills.”

AEP’s top executive, Nick Akins, discussed the topic last year when interviewed at a forum held by the Columbus Metropolitan Club.

“If you don’t pay at least for the grid portion of (electricity service), then all the other customers are subsidizing that, and usually it’s the poor and the middle class,” he said.

Industry groups have won some allies among advocates for minority and low-income consumers. Last month, the National Policy Alliance, a coalition of black elected officials, approved a resolution saying it opposes policies to allow benefits to rooftop solar owners “while penalizing customers with basic energy needs who cannot afford rooftop solar.”

So far, Arizona is one of the only states with a surcharge for rooftop solar customers, charging about $5 per month for a typical system.

Utilities are trying to get this in other states, with several pending cases before regulators.

Hedge, the Worthington man, is an architect who has long been fascinated with the science of energy efficiency. He designed and built his house in 1980 to use as little energy as possible. In a typical month, he uses about 300 kilowatt-hours, which is about one-third of a typical household.

Five years ago, he installed solar panels on his roof, with a combined capacity of 3.35 kilowatts. In most months, the electricity from the solar array is slightly more than his house needs.

He is an evangelist for solar power. He thinks the world is a better place when electricity systems are less centralized and release fewer pollutants. And, he thinks the utility companies are placing short-term financial interests ahead of the public good.

“They’re fighting against us making it green because they want to make money,” he said.

He doesn’t blame the companies for this, but he hopes that the Ohio court rejects the arguments.

dgearino@dispatch.com

@DanGearino

Test post

Posted by Laura Arnold / November 01, 2014 / Posted in Uncategorized / No Comments

Need to test posting new articles.

Posted by Laura Arnold / November 01, 2014 / Posted in Uncategorized / No Comments

Advocates keeping close watch on Ohio energy committee

Posted on 10/30/2014 by Kathiann M. Kowalski

(Photo by Murduck Rubbaduckle via Creative Commons)

Upcoming meetings of Ohio’s Energy Mandates Study Committee will be open to the public, but the extent to which the public will have a voice in the proceedings remains to be seen.

The committee was established by Senate Bill 310, which temporarily freezes and substantially modifies the state’s renewable energy and efficiency standards. It is tasked with studying the results of those laws and making recommendations for future energy policy.

Various reports document economic benefits from the standards and show their popularity with Ohioans. Nonetheless, critics note that the Ohio legislature disregarded much of that evidence when it passed SB 310 earlier this year.

While the committee is required to look at both the costs and benefits of the standards, nine of the 12 committee members voted for SB 310, which has already rolled back some of the laws’ provisions. That and other factors raise concerns among advocates that the process is weighted to achieve an outcome favorable to the state’s fossil-fuel interests.

The committee includes six voting members from the Ohio Senate: Co-chair Troy Balderson (R-Zanesville), Bill Seitz (R-Cincinnati), Clifford Hite (R-Findlay), Bob Peterson (R-Sabina), Shirley Smith (D-Cleveland) and Capri Cafaro (D-Hubbard).

All except Peterson are on the Ohio Senate’s Public Utilities Committee. Peterson sits on the Energy and Natural Resources Committee, along with Balderson, Hite and Cafaro.

The committee also has six voting members from the Ohio House of Representatives: Co-chair Peter Stautberg (R-Anderson Twp.), Ron Amstutz (R-Wooster), Lou Blessing III (R-Colerain Twp.), Christina Hagan (R-Alliance), Jack Cera (D- Bellaire) and Mike Stinziano (D-Columbus).

All six are currently on the Ohio House’s Public Utilities Committee.

Committee meetings have not yet been scheduled, but will “definitely be open to the public,” said legislative aide Rachael Carl in Stautberg’s office. Stautberg will likely be replaced after his term concludes at the end of December.

The committee will likely hear testimony and may review additional materials, Carl added, although the scope of that review has not been determined.

‘Wise not to reinvent the wheel’

Despite any past actions, SB 310 requires the committee to consider both the benefits and costs of Ohio’s renewable energy and energy efficiency standards. Supporters of the standards say the laws have clearly saved Ohioans money.

“The study committee would be wise not to reinvent the wheel and review the reams of information at the [Public Utilities Commission of Ohio] on the cost-effectiveness of these programs,” said Samantha Williams at the Natural Resources Defense Council.

Tom Johnson, who chairs the PUCO, sits on the committee but has no vote. He “anticipates offering technical expertise to the committee whenever possible,” according to PUCO spokesperson Matt Schilling.

“Our hope is that the committee makes use of the thousands of pages of publicly-available utility findings that document just how beneficial energy efficiency has been for Ohio,” said Williams. “Energy efficiency programs run by AEP, Duke, FirstEnergy and DP&L have collectively saved over $1 billion to date on Ohioans’ energy bills. Unfortunately, this information was brushed aside when SB 310 was passed.”

“This study committee needs to study the information that our regulators have already reviewed and reached conclusions on,” agreed Dan Sawmiller at the Sierra Club’s Beyond Coal program. “These cases include studies on the potential for energy efficiency, the costs and benefits of these programs, the job creation associated with the programs and other societal benefits.”

Although no one from the utilities testified in hearings on SB 310, FirstEnergy’s spokespeople have previously argued that the standards suppress electricity demand. By definition, reducing the need for electricity is the goal of the energy efficiency standards.

FirstEnergy has also criticized the PUCO’s cost-benefit calculations for taking a long-term view.

“The total resource cost test [used at the PUCO] is a best-practices testing format used throughout the country to evaluate energy efficiency programs,” Sawmiller explained. Moreover, he continued, Ohio’s electric industry “is totally based on forecasts. For example, look at their coal plant bailout cases pending before the PUCO now, which forecast out more than 15 years.”

“The committee members should recognize that saving money on our monthly bills through efficiency and developing cleaner sources of energy are good for Ohio and overwhelmingly popular,” Sawmiller stressed.

Recent polls confirm that popularity. For example, a 2014 poll by Public Policy Partners found that more than 90 percent of Ohioans want the state to invest in energy efficiency, and two-thirds would prefer their utilities to replace coal-powered electricity with clean energy sources.

Another statewide survey commissioned by Ohio Advanced Energy Economy found 72 percent of voters favoring renewable energy over traditional sources and 86 percent supporting mandated energy efficiency programs.

And last year, the Yale Project on Climate Change Communication reported that 59 percent of Ohioans want utilities to provide at least 20 percent of their energy from renewable sources, even if bills were higher.

“Investing in clean sources like wind, solar and energy efficiency can help reduce the amount of harmful emissions of toxic pollution and reduce our contribution to climate disruption,” Sawmiller noted.

“Energy efficiency is cheaper than any other source of electricity,” Sawmiller added. “The cheapest power plant for Ohio’s electric customers is the power plant we don’t have to build because we’re using less electricity and saving money.”

Williams also noted that “efficiency and renewables will get Ohio far down the road to meeting its 2030 carbon reduction target” under the EPA’s proposed Clean Power Plan.

And in testimony on SB 310 earlier this year, Ohio Consumers’ Counsel Bruce Weston urged that any study committee should also scrutinize related issues adopted in 2008 “that tilt the balance of ratemaking in favor of Ohio’s electric utilities and against Ohio’s electric customers.”

Those issues include shared savings provisions that reduce consumer benefits and payments for “so-called ‘lost’ transmission and distribution revenues to electric utilities,” Weston said.

Past partiality

Substantial parts of this information were already available and discussed in testimony before the Ohio legislature’s utilities committees when they considered SB 310 earlier this year.

Except for Cafaro, all the committee’s Ohio Senate members voted for SB 310. The four Republican members from the House voted for SB 310 as well.

Materials from People for the American Way and the Center for Media and Democracy also show that at least seven of the committee members are or have been members of ALEC, the American Legislative Exchange Council. Funded primarily by corporate interests, ALEC actively pushes for the repeal of renewable energy standards.

That group with ties to ALEC includes board of directors member Bill Seitz (R-Cincinnati), several other Republicans, and Democrat Stinziano.

Seitz tried to repeal Ohio’s renewable energy standards entirely in 2011. In 2013, he sponsoredSB 58 to cut back the standards and then cosponsored SB 310 after it added key provisions from that earlier bill.

Seitz has called supporters of renewable energy and energy efficiency “enviro-socialist rent-seekers,” and he has compared renewable energy standards to “Joseph Stalin’s five-year plan.”

Beyond this, SB 310 sponsor Balderson was a keynote speaker at a rally this summer showing support for the coal industry.

And while Cera voted against SB 310, he has said he wants “to make sure” that both the Sammis and Cardinal coal plants stay open to produce “reliable coal-based electricity.” FirstEnergy and AEP want the PUCO to require all ratepayers in the respective distribution areas to guarantee sales from those and other coal plants

Also, the Ohio Secretary of State’s online records and Project Vote Smart show that Ohio utilities and companies in the fossil fuel energy business have given thousands of dollars in campaign contributions to most of the committee members over the last five years.

Reports show that FirstEnergy has donated to 11 of the 12 voting committee members. American Electric Power (AEP) has given to at least nine members’ campaigns. Duke Energy and Dayton Power & Light (DP&L) have also given money.

Indeed, the state’s four utilities alone have given more than $1.3 million to current Ohio legislators since the state’s renewable energy and energy efficiency standards were adopted in 2008, according to a report from Innovation Ohio.

Other prominent contributors for various members include the Ohio Coal Association, the Ohio Oil & Gas Association, NiSource, Vectren, Dominion and Chesapeake Energy. Unions and employee groups linked to fossil fuel energy production are also notable donors.

Donations to individuals make up a small minority of those lawmakers’ total contributions, with funds from state party committees often outstripping direct giving from any industrial sector. Yet the donations represent a substantial investment in the political process.

Nonetheless, advocates ask the committee members to give fair consideration to all the evidence supporting Ohio’s energy efficiency and renewable energy standards.

“The record is very clear on the benefit of these programs, and the study committee will reach that conclusion if they conduct a fair and detailed review,” said Sawmiller.

The Natural Resources Defense Council and Sierra Club are members of RE-AMP, which publishes Midwest Energy News.