NARUC Calls for Changes to PURPA in Letter to FERC

Posted by Laura Arnold / December 19, 2017 / Posted in Uncategorized / No Comments

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The national organization representing state-level utility regulators is calling on FERC to make changes, including moving from administratively set prices to auctions.

DECEMBER 19, 2017 CHRISTIAN ROSELUND

The Trump Administration, its appointees to federal agencies and its Congressional allies have given the solar industry a seemingly endless source of headaches. In addition to scrapping the Clean Power Plan, a proposed coal and nuclear bailout, the tax overhaul and trade action under Section 201, we now have something else to worry about: reform of the Public Utilities Regulatory Power Act of 1978 (PURPA).

In recent years, PURPA has emerged from a wonky energy law obscurity to become one of the biggest drivers of utility-scale solar in the United States. GTM Research estimates that 3.6 GW of solar came online in the first three quarters of 2017 under PURPA contracts, to represent 21% of the total utility-scale capacity installed.

However, the sudden application of the law to utility-scale solar has not been without conflict. Multiple states have made major changes to PURPA to stem the number of contracts that utilities must sign with solar and wind projects. And while changes in North Carolina appear to alter the details of procurement and prices but keep a healthy volume of utility-scale projects, in the worst cases, such as in Idaho, they have gutted the law to make it unusable as a procurement mechanism.

Yesterday the president of the National Association of Regulatory Utility Commissioners (NARUC) sent a letter to the Federal Energy Regulatory Commission (FERC) calling on the body to “update” PURPA to reflect what it describes as the new realities of the power system in the 21st century, including the creation of wholesale power markets in much of the country, open-access to transmission and the rise of competitive procurement.

And perhaps the biggest reason is that PURPA finally became a means to actually procure large amounts of renewable energy.

NARUC President John Betkoski III has called for three reforms to PURPA. The first would be to move away from the “avoided cost” methodology to competitive auctions or market clearing prices. This was the main component of PURPA reform in North Carolina, where Duke Energy and the solar industry came together in a compromise to move to an auction-based system.

The second would be to lower or eliminate a 20 MW threshold under which utilities must offer standard contracts at avoided cost. Betkoski argues that this rule is based on the presumption that electricity generation projects smaller than this do not have non-discriminatory access to the market. He describes that this presumption is “rebuttable” and suggests that the threshold be lowered to whatever is the minimum capacity requirement for a resource to participate in a wholesale electricity market.

Finally, NARUC is calling for changes to FERC’s “one-mile” rule, wherein such power projects must be at least one mile distant to be counted as separate facilities under PURPA. Betkoski claims that this is allowing developers to game PURPA by building multiple projects under the size limit to quality for avoided cost contracts and “evade other regulations”.

Betkoski calls such reforms “important and necessary” at this time, despite the other work that FERC has going on. This includes FERC’s attempt to fulfill a Department of Energy mandate to bail out uncompetitive coal and nuclear plants under the flimsy rationale of “fuel security”.

However, it is notable that Betkoski is calling on a FERC full of newly minted Trump appointees to take on this issue, particularly given that states have already taken significant action to make changes to PURPA.

Additionally while Betkoski complains of transaction costs and administrative burdens cause by PURPA implementation, he cites the opinions of regulators from Montana and Idaho in the letter. In these two states utility regulators have made changes to PURPA that solar advocates describe as closing off those markets to renewable energy.

This is not the only challenge that has arisen to PURPA. The U.S. House of Representatives introduced a bill to gut PURPA in November, including waiving the must-take requirement for qualifying projects and making similar changes to the minimum 20 MW capacity and one-mile rule as proposed by NARUC.

However HR 4476 appears to have languished in the House Committee on Energy and Commerce and is unlikely to see action this legislative session.

Read the full letter here:

https://www.scribd.com/book/367526630/NARUC-PURPA-Reform-Letter-to-FERC

Also see

Public Utility Regulatory Policies Act - Wikipedia

https://en.wikipedia.org/wiki/Public_Utility_Regulatory_Policies_Act

IURC Chair Jim Atterholt Announces Retirement

Posted by Laura Arnold / December 18, 2017 / Posted in Uncategorized / No Comments

Dear Friends and Colleagues,

I wanted to give you a heads up before I formally announce later today that after thirty years, I am going to retire from public service. My bride of thirty-one years, Brenda, has an opportunity to transfer her job to Fort Myers Beach, Florida, and we are looking forward to life at a slower pace.

I am so very grateful to Governor Holcomb for the opportunity to serve in his administration as Chairman of the Indiana Utility Regulatory Commission. My gratitude also extends to the good people of House District 86 who provided me the privilege to serve them as their State Representative for two terms. I would certainly be remiss if I didn’t thank Governors Pence and Daniels, as well as Congressman Burton, for the opportunities they provided me to serve.

There have been so many people who have helped me and demonstrated kindness towards me along the way that I am hesitant to list them all for fear of leaving someone out. Please know that I will always be grateful. Having long believed that public service is a calling, these past thirty years have been a true blessing. My last day with the State will be Friday, January 12, 2018.

God Bless,

James D. Atterholt

Chairman - Indiana Utility Regulatory Commission

101 West Washington Street, Suite 1500E

Indianapolis, Indiana 46204

Work Cell Phone: (317) 448-6202

Personal Cell: (317) 500-1746

Executive Assistant – Deidre Hansen: (317) 232-2703

Executive Office Line: (317) 232-2845

New Distributed Wind Zoning & Permitting Toolkit

Posted by Laura Arnold / November 24, 2017 / Posted in Uncategorized, wind / No Comments

New Distributed Wind Zoning & Permitting Toolkit

The Clean Energy States Alliance, a national nonprofit coalition of public agencies and organizations working together to advance clean energy, has published a free toolkit to help local governments and planning agencies facilitate the efficient and appropriate development of distributed wind in their communities. Distributed Wind Energy Zoning and Permitting: A Toolkit for Local Governments, covers the following topics:

Introduction to distributed wind
Benefits and challenges of distributed wind
Zoning and permitting considerations, including aesthetics, safety, sound, wildlife, and turbine certification
How to permit a project that maintains the character of a community
Case studies and best practices.

The toolkit also includes a model zoning ordinance that can serve as a template for permitting distributed wind projects. Examples of distributed-wind-friendly ordinances and zoning regulations from across the Northeast are interspersed throughout the document. Town officials and zoning authorities tasked with permitting small and medium-sized wind turbines may find this guide useful as they develop a process to review distributed wind projects in their jurisdictions. The toolkit focuses on states in the Northeast, including Massachusetts, New Hampshire, New York, and Vermont, but the information provided should be relevant to many communities across the country.

Could Michigan be the next PURPA boom state?

Posted by Laura Arnold / November 22, 2017 / Posted in solar, Uncategorized / No Comments

Could Michigan be the next PURPA boom state?

The Wolverine State’s Public Service Commission has spent 2017 quietly setting up a framework under the 1978 law that could position the state’s solar industry for significant growth.

NOVEMBER 22, 2017 FRANK ANDORKA

An aerial view of the Lapeer Solar Park, built by DTE Energy and increased Michigan's solar capacity by nearly 47%.

DTE Energy

With Illinois and Minnesota setting the pace for Midwest solar development, one state often overlooked in the discussion is Michigan. That may be about to change.

Starting in May, the Michigan Public Service Commission (MPSC) has been quietly but doggedly positioning the state’s solar industry for significant growth by setting clear definitions and standards surrounding solar development under the the Public Utility Regulatory Policies Act of 1978 (PURPA).

Congress passed PURPA at the height of the 1978-1979 oil crisis, when Western nations like the United States tried to wean themselves off fossil fuels to counter a move by the Organization of the Petroleum Exporting Countries (OPEC) to raise oil prices significantly

Under PURPA, utilities are legally required to buy power from independent power producers (IPP) if it is below their cost of generation from other sources, also known as “avoided costs”.

The “avoided costs” question is one that has dogged PURPA discussions in other states, but the MPSC chose to set the parameters proactively to avoid such disputes.

In late May, the MPSC solidified its statewide methodology for calculating avoided costs, which could mean more opportunity for distributed solar because it guarantees a 20-year, fixed price contract for projects 2 MW and smaller.

Under the new guidelines, qualifying facilities (QFs) that produce the renewable energy utilities are required to buy can use one of two methods for calculating the “avoided costs”. They can either use the levelized cost of a proxy plant or on forecasted market prices by the Midcontinent Independent Service Operator (MISO), a regional grid operator which covers 15 U.S. states and the Canadian province of Manitoba.

The commission determined that an appropriate proxy plant is a natural gas combustion turbine unit, which it decided was the most logical plant a utility would build if it needed more power.

The other key factor in PURPA-fueled solar development – contract length – have also been determined by the commission this year. The 20-year contract length that Michigan decided to use is standard for most power-purchase agreements (PPAs), but has been disputed in other states by the utilities, which argue that the prices set at the beginning of the contract could be wildly inflated by the end of the contract.

Michigan rejected such reasoning, which will likely be a significant factor in favor of a healthy solar market under PURPA.

Michigan currently has 35 MW of installed solar, according to the most recent U.S. Solar Market Insight Report, but the PURPA framework established by the MPSC could significantly increase those numbers in the years to come.

MPSC approves final inputs, avoided costs for Consumers Energy PURPA contracts

Posted by Laura Arnold / November 22, 2017 / Posted in Uncategorized / No Comments

MPSC News Release Header

Contact: Nick Assendelft
517-284-8300 (office)
517-388-3135 (cell)
Consumer Contact: 800-292-9555
www.michigan.gov/mpsc

Nov. 21, 2017

MPSC approves final inputs, avoided costs

for Consumers Energy PURPA contracts

LANSING, Mich. – The Michigan Public Service Commission (MPSC) today finalized a new avoided cost formula Consumers Energy Co. must use to buy power from independent, qualified facilities under the federal Public Utilities Regulatory Policies Act (PURPA).

PURPA requires the Commission to establish how much a utility is obligated to pay the owner of a small electric production or cogeneration facility – such as landfill gas, hydroelectric, solar, biomass or wind -- for the power it produces. The law says the Commission must set avoided cost rates that are “just and reasonable to the electric consumer of the electric utility and in the public interest;” and that do not “discriminate against qualifying cogeneration and small power production facilities.”

The avoided cost is how much a utility would have to pay to produce the energy itself, and is the sum of capacity and energy costs. Avoided costs have not been recalculated in almost 30 years and many contracts are coming due. In today’s order (Case No. U-18090), the Commission set the rates for the next two years, when they will be reviewed again.

“With the development of regional electricity markets and the advancement of renewable energy and other fuels used to generate electricity, the electric industry has undergone significant change since the Commission last updated the payments Consumers Energy must make to small, independent power producers under PURPA,” said Sally Talberg, chairman of the MPSC. “The Commission has approved a payment structure based on the utility’s updated avoided cost that reflects these changing market conditions and gives small power producers an opportunity to compete on a level playing field as required by the federal law.”

Talberg also acknowledged the extensive input provided by stakeholders throughout this process.

In its ruling today, the Commission approved the avoided capacity cost of $117,203 per megawatt year or $140,505 per zonal resource credit (ZRC) year. It also approved use of regional U.S. Energy Information Administration forecasted natural gas delivered price, and a 2.37 percent line loss factor should be added to the sum of energy avoided cost and investment cost attributable to energy and line losses.

Previous MPSC rulings determined the standard offer tariff is available for qualified facilities (QF) with a design capacity of up to two megawatts, and QFs can select contract lengths of five, 10, 15, or 20 years.

The ruling marks a change in the way avoided cost payments are structured. Current contracts are based on the costs of running a coal plant. New contracts will be based on the energy costs associated with running a natural gas combined cycle plant, and capacity costs based on a natural gas combustion turbine power plant, both of which better reflect the trend in producing power today.

Another change is that current PURPA contracts pay a qualified facility for capacity at a contracted rate per kilowatt hour. Based on the way capacity is measured and bought in today’s electricity markets, the new PURPA contracts will pay a fixed monthly capacity payment based on the ZRCs the qualifying facility can provide, and a per kilowatt hour price for the energy the utility purchases.

In the several PURPA proceedings that were initiated in 2016, the Commission was required to establish accurate and up-to-date avoided capacity and energy costs for each rate-regulated utility that it oversees. It ruled in September (Case No. U-18094) that UPPCO’s current contract prices for capacity are a reasonable proxy for avoided capacity cost until May 31, 2020, and directed UPPCO to file its next PURPA review application by Feb. 1, 2019.

PURPA cases for DTE Electric Co., Alpena Power Co., Indiana Michigan Power Co., Northern States Power Co., and Upper Michigan Energy Resources Co. are pending before the Commission.

For an Issue Brief about PURPA and the Commission’s action, click here.

For more information about the MPSC, please visit www.michigan.gov/mpsc or sign up for one of itslistservs to keep up to date on MPSC matters.

DISCLAIMER: This document was prepared to aid the public’s understanding of certain matters before the Commission and is not intended to modify, supplement, or be a substitute for the Commission’s orders. The Commission’s orders are the official action of the Commission.

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