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Warren Buffett: Solar and Wind Could ‘Erode the Economics of the Incumbent Utility’

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Billionaire investor Warren Buffett says that renewable energy and efficiency are pushing utilities beyond a “sloppy” operational model and into a more competitive environment.

In his annual letter to Berkshire Hathaway shareholders, Buffett outlined the risks posed by distributed generation to traditional power companies. Berkshire Hathaway, a multinational holding company worth nearly $200 billion, owns 10 energy companies, including three large electric utilities serving territories across 11 Midwestern and Western U.S. states.

The business of electricity is entering a period of uncertainty, wrote Buffett. 

“In its electric utility business, our Berkshire Hathaway Energy (“BHE”) operates within a changing economic model. Historically, the survival of a local electric company did not depend on its efficiency. In fact, a ‘sloppy’ operation could do just fine financially,” wrote Buffett. “That’s because utilities were usually the sole supplier of a needed product and were allowed to price at a level that gave them a prescribed return upon the capital they employed.”

“That’s all changing,” he wrote. Sloppiness is no longer an option.

More and more regulated power companies are facing a world where third parties, like solar service providers, can compete with them directly on cost. (Although Buffett stresses that the only reason for this competition is because of federal subsidies.)

“Today, society has decided that federally-subsidized wind and solar generation is in our country’s long-term interest. Federal tax credits are used to implement this policy, support that makes renewables price-competitive in certain geographies. Those tax credits, or other government-mandated help for renewables, may eventually erode the economics of the incumbent utility, particularly if it is a high-cost operator,” wrote Buffett.

The Investment guru assured investors that Berkshire Hathaway’s utilities will remain competitive because of their adoption of renewable energy, energy efficiency, and increased focus on operational efficiency. 

“BHE’s long-established emphasis on efficiency — even when the company didn’t need it to attain authorized earnings — leaves us particularly competitive in today’s market (and, more important, in tomorrow’s as well),” wrote Buffett. 

Berkshire Hathaway Energy has poured $16 billion into renewables in recent years, according to Buffett. The company’s electricity portfolio now consists of 7 percent wind and 6 percent solar. The company also plans to increase its investments in large-scale renewable energy projects in support of international climate goals. “We’re not done,” wrote Buffett.

Buffett did not mention state policies like net metering, which his utilities have strongly opposed. Berkshire’s power companies, particularly NV Energy in Nevada, have been heavily criticized and even demonized by the solar industry for fighting to get rid of net metering.

Some argue that Buffett and SolarCity Chairman Elon Musk are locked in a battle over the future of solar energy. Both believe in the promise of the technology; however, Buffett thinks centralized solar power plants are the most economic choice, while Musk thinks rooftop solar will dominate.

Whatever the dominant model — distributed or centralized — Buffett believes his utilities will ride the transition.

“None of these problems, however, is crucial to Berkshire’s long-term well-being,” he wrote. Many other companies in Berkshire’s portfolio have adapted to change in the past. “And we will continue to do so.”


Be the first to comment - What do you think?  Posted by Editor - February 29, 2016 at 6:01 am

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Maine Proposes to Replace Net Metering With a Market-Based Alternative

Legislators in Maine have introduced a novel solar policy that could boost solar capacity in the state and offer a viable alternative to net energy metering, a policy at the center of several state-level political battles.

“In Maine, we come together to find innovative solutions to our challenges,” said Assistant Majority Leader Sara Gideon, a Democrat who sponsored legislation that kicked off a dialogue on the future of solar in Maine. “Our challenge here has been growing solar in a way that gives people energy independence, creates jobs and mitigates climate change. Now, we’ve created a way to do that and to do it in a way that remains sustainable into the future and will drive significant solar growth.”

The bill proposes to replace net metering — which credits rooftop solar customers at the full retail electricity rate for excess energy they send to the grid — with a 20-year contract at a set price for net exports measured hourly.

The contract price would be determined by the Public Utilities Commission at a level high enough to drive the rooftop solar market, but subject to an overall program cost cap. Customers would have the option to contract for the purchase of all the solar power they generate, or to use their generation on site and sell only the excess.

Existing rooftop solar customers can choose to stay on Maine’s old net metering policy for 12 years after the new program takes effect. Or they can choose to switch to a long-term contract.

The plan hinges on the concept of a solar “standard buyer” that would purchase and aggregate the output from solar systems, and sell it into New England’s wholesale energy markets. The legislation designates this role to the state’s investor-owned utilities, which could use the market revenue to offset program costs.

The bill proposes that utilities in Maine enter into long-term contracts for a total of 248 megawatts of solar power over the period from 2017 to 2022. Residential and small commercial projects would make up 118 megawatts of the overall target, which is equal to the National Renewable Energy Lab’s median estimate for the amount of distributed solar that would be installed under traditional net metering, according to the bill summary. The remainder would be made up of community, large commercial and industrial and grid-scale solar projects.

Maine currently has fewer than 20 megawatts of solar capacity, nearly all of it at the residential and small-commercial scale.

A next-generation debate

Concepts laid out in the legislation stem from a report conducted by Strategen Consulting on behalf of the Maine Office of the Public Advocate. Strategen’s Lon Huber, author of the report, believes the proposal offers a cost-effective and transparent mechanism to grow Maine’s solar market.

“In essence, the framework we created transforms a customer’s locally produced electrons and enhances it for regional market participation,” he said. “Moreover, this platform is highly adaptable and can evolve as markets and technology evolve.”

The program is designed so that the 20-year contract price steadily declines over five years as the rooftop solar market continues to scale and costs continue to drop. However, the program is subject to review, and utility regulators must look into raising rates if installations fall below 85 percent of NREL targets.

On Thursday, the bill received endorsements from a bipartisan coalition of lawmakers, utilities, environmental groups, solar installers and consumer advocates. It’s estimated to create 800 solar jobs and result in $100 million in savings for ratepayers.

Putting an end to net metering is one of the most controversial elements of the bill. But as Maine’s largest utility, Central Maine Power, approaches the state’s net-metering cap, solar installers view the proposal as a promising path forward.

“ReVision’s top priority is to ensure that residential and small business customers in Maine continue to have a fair opportunity to invest in solar and take control of their own energy future,” said Fortunat Mueller, partner and co-founder of the New England solar firm ReVision. “We think this legislation does that. We also know that distributed solar in Maine provides substantial benefits, not just to solar customers, but to all ratepayers. And because the new solar policy helps ReVision and other companies create hundreds of quality jobs, moving ahead is really good news for our state.”

According to John Carroll, spokesperson for Central Maine Power, the proposal “moves the debate into the next generation of clean energy production” and will “benefit consumers more equally.”

“I think we’ve solved a problem”

Maine Public Advocate Tim Schneider said it took six months of meetings to get stakeholders on board with the plan. The aggregation concept is especially important, he said, because it gives Maine a mechanism to bring distributed resources into other markets in a way that benefits all ratepayers.

For utilities, the standard buyer proposal allows them to end retail-rate net metering, which they say amounts to a subsidy for solar customers and hurts their bottom line. Instead, they can group solar projects together and recuperate some of the program costs in the market. At the same time, customers continue to see an economic benefit for going solar, and the guaranteed purchase rate gives them confidence that their solar savings won’t disappear if electricity rates increase. For installers, it guarantees the solar industry will continue to grow.

While Maine currently has a tiny solar market, this new bill could offer a model for other states considering an alternative to traditional net metering.

“I think we’ve solved a problem other folks are trying to solve,” said Schneider, in an interview. “I don’t want to be so presumptuous to think others will agree…but every time we talk to someone engaged in net metering or in the trenches on [net metering] battles, they want to hear more.”

A recent report by the NC Clean Energy Technology Center found that 46 states took policy action on solar in some way or another in 2015. Twenty-seven states considered or enacted changes to their net metering policy as several states ran up against net metering caps, including Maine’s neighbors New Hampshire and Massachusetts.

Despite winning support from a variety of stakeholders, passing the bill in Maine is not a slam-dunk. Proponents still have to win over a governor who has actively sought to dismantle the state’s renewable energy policies. The proposal is also bound to see pushback from national solar companies, despite the fact that Maine represents such a small solar market, because they see net metering as a fundamental element of their overall business model. This model has helped residential solar grow exponentially in recent years.

Solar installers have fought tough battles in other states to keep retail-rate net metering in place. In Nevada, where the policy was recently changed, solar installers are currently engaged in several legal and political challenges.

The Alliance for Solar Choice (TASC), which represents national solar installers, is still reviewing the Maine legislation, according to spokesperson Lauren Randall. But she noted that in January, TASC joined with 15 other solar advocates to request that traditional net metering continue to be offered alongside the new 20-year contract option. However, that provision was not ultimately included in the bill.

Some lawmakers in Maine seem insistent on finding a new solution.

“It’s time that we update Maine’s approach to solar and other distributed generation resources,” said Representative Nathan Wadsworth, the ranking Republican on the Energy, Utilities and Technology Committee, in a statement. “This bill positions Maine consumers to reap the full benefits of changes in technology and what’s taking place in the energy industry.”


Be the first to comment - What do you think?  Posted by Editor - February 27, 2016 at 6:03 am

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Can This Room-Sized Board Game Help Utilities Plan for Dramatic Changes in the Electric Sector?

Running an electric utility is a complex, serious business. So when 25 professionals gathered in a large meeting room in downtown Toronto to play a board game, some were understandably skeptical.

As the journalist in the room, I was among the skeptical. What could we — a mix of utility executives, technology suppliers, government officials, industry regulators, and outside observers — possibly get out of such a simple exercise?

Quite a bit, it turns out.

As the philosopher Plato is purported to have said, “You discover more about a person in an hour of play than in a year of conversation.”

Dutch utility Eneco commissioned the game, called Newtonian Shift, a few years ago as a way to help users think differently about the disruptive technologies and business models threatening its core business. More than half of its employees have since played the game, and Eneco is now recognized as one of the most innovative gas and electric utilities in Europe.

In North America, the Advanced Energy Center (AEC) at Toronto’s MaRS innovation hub and the Rocky Mountain Institute adapted Newtonian Shift for Canadian and U.S. audiences.

The game accelerates change in the energy sector by cramming 20 years into a half day of game play. Participants take on different roles in a fictional land called Newtonia, which is surrounded by neighboring countries Einsteinistan and Wattland.

The premise is simple: unsustainable growth in Newtonia has led to a dirty, outdated grid. The electric system has become unreliable, and Newtonia relies heavily on nuclear and fossil-fueled power imports from its neighbors. At the same time, the impacts of climate change have become more evident, and citizens are demanding action.

The leader of Newtonia then calls on all players to work together to build a more sustainable electricity system — one that’s greener, more self-sufficient, and robust enough to reliably meet the needs of a growing population.

Oh, and there’s one overarching rule to encourage creativity in planning: “Other than that which is not permitted is allowed.” 

Ron Dizy, managing director of AEC, said utilities have been told for years that an existential threat — the so-called utility death spiral — will force them to transform their businesses if they hope to survive.

“Technology is changing fast, and the cost of alternatives is coming down,” Dizy said. “Industry executives probably go to a session a week where they hear that same message, but when you ask them what they’re doing about it, the answer, usually, is ‘Not much.’”

PowerPoint presentations chock-full of data and graphs may tell part of the story, but the message isn’t being internalized, Dizy said. He suspects many executives and their employees are becoming desensitized to the risk and are starting to tune out. “By running the game, our attempt is to give people a jolt,” he said. “We’ve got to find another way of getting the message through to them.”

Let the game begin

Each of us in the Toronto session had to take on a certain role. I became chief executive at Western Energy, one of two utilities in Newtonia, and had staff to help me with innovation, billing, accounts and grid maintenance.

There was a capital called Voltcity, whose mayor had to make sure the lights were kept on for its growing population. There was an energy-hungry steel maker, railway operator, and farming community, as well as an innovation cluster led by the Sun Society and Boogle, Newtonia’s equivalent of Google. We also had a bank we could turn to for loans.

Immediately, Newtonia fell into complete chaos. A major outage on the main grid left Voltcity without power, and with limited financial resources, we had to scramble to fix it. Do we invest in a Band-Aid solution or an advanced grid with clean, distributed generation? We ended up taking the quickest and cheapest route, which left us vulnerable in later rounds.

Industry, meanwhile, quickly grew impatient. Seeking a more reliable power source, the steel and railway companies partnered to build a more advanced grid that attempted to bypass our incumbent utility. Boogle and Sun Society built wind and solar parks to supply Voltcity and the agricultural sector. From the start, my utility didn’t even think about investing in conservation efforts. Our posture was defensive as we scrambled to meet basic customer demands. Rather than embracing collaboration to better achieve common societal goals, we tried — and failed — to do it all on our own.

Rounds two and three were only marginally better. We started to collaborate more with other players, and this brought mutual benefits, but we also found ourselves playing a game of catch-up.

Every time we felt like we were stabilizing the business, something unexpected would happen — another major outage, or a new government mandate that pulled us in another direction. At one point, a nuclear meltdown in Einsteinistan cut off a major source of imported power, and this was followed by a politically motivated disruption in natural-gas supply from Wattland.

As a fictional utility CEO, I came to appreciate the difficulty of trying to put out multiple fires while balancing so many competing demands. Even the real-world executives in the room felt the pressure.

“Because of how much the time was collapsed, it really puts you under a lot of stress, and makes you think fast on your feet,” said Michael Angemeer, president and CEO of Veridian, a mid-sized electric utility owned by four municipalities in Ontario.

Atul Mahajan, president and CEO of Oshawa Power and Utilities Corporation, which operates east of Toronto, described the game as a high-level demonstration of how industry change can arrive fast and hit hard.

“I consider myself open-minded and an early adopter of change, but it was very telling that as we played the game, we started falling into a trap — the trap of being conditioned to think within a box,” Mahajan said. “I kept looking for the regulator to step in and help.”

Turning to government for rules that protect a utility’s monopoly business is often the industry’s default position. 

It can be observed in Nevada, where the state’s public utility commission slashed net metering payments to residential solar generators, while substantially raising fixed fees that cover NV Energy’s grid maintenance costs. NV Energy executives have been outspoken about their disdain for retail net metering.

Several other states are also pushing back against distributed solar, citing it as a threat to their business model. States like California may be more supportive of new technologies and service strategies, but they still largely shift their business risks onto the rate base.

It’s a reckless trajectory over the long term, said Dizy. As the costs of solar and energy storage fall, it will become easier for households, businesses and entire communities to disconnect from the grid. Raising grid maintenance fees for all and imposing extra fees on those who embrace rooftop solar will, over time, only anger more customers and fuel their desire to reduce their reliance on the centralized system.

“They can’t survive in a pure rate-based world forever, because customers will eventually migrate to others who offer a broader range of services,” said Dizy.

A wake-up call

In Canada, cable and internet giant Rogers Communications, which participated in a Newtonian Shift game session late last year, sees energy services as a major component of its “connected home” strategy. Telstra, a major telecom firm in Australia, has already announced plans to make solar-plus-storage a service option for millions of its customers. In doing so, it is taking a business risk that local and regional electric utilities have typically found difficult to shoulder.

Some are trying. Oshawa Power and nearby PowerStream, Ontario’s second-largest electric utility, have both launched solar-plus-storage pilot projects that have seen dozens of homes in the Canadian province equipped with the technology combo.

PowerStream, for example, aims to network these residential systems together like computers scattered around an office, allowing it to remotely operate what is effectively a zero-emission virtual power plant. The utility owns, maintains and operates the solar-plus-storage systems, treating them like any other infrastructure investment. The customer, in exchange, gets a break on power bills by handing over some system control that allows the utility to operate the grid more efficiently.

Mahajan at Oshawa Power said both utilities and regulators have to think differently about what constitutes infrastructure spending as the industry transitions.

“Instead of building a substation for a billion dollars, the question is whether you can achieve the same thing with modern technology that benefits everybody,” he said. “If we keep using the same excuses we’ve used in the past for not doing something, progress will never happen.”

“Fortune ultimately favors the brave,” added Mahajan.

That may hold true in some cases, but it wasn’t David Crane’s experience while at NRG Energy, one of America’s largest independent power producers. Crane tried to push through his vision of becoming a major supplier of distributed renewable energy, but investors focused on short-term returns took issue with Crane’s long-term vision. Crane was fired in December.

“Energy incumbents remain a wellspring of potent opposition to climate advocates in the fight against climate change,” Crane wrote in a column shortly after his dismissal from NRG. “Until we find a way to enable the CEOs of these companies to change their business strategy without fear of reprisal, we can count on their dogged resistance to society’s transformation to a clean-energy economy.”

It’s the kind of resistance Mahajan faces regularly, from both his board of directors and the executives who report to him.

“There’s a lot of discomfort in making that change happen,” he said. “I have a lot of lashes on my back to prove it, and it hurts, because it comes from people sitting around me at the executive table. They simply don’t believe the strategic direction I’m proposing makes sense.”

Mahajan said Crane’s firing will only create a chill for others in the industry trying to push through similar change. “What happened to Crane certainly doesn’t help.”

It also suggests that Newtonian Shift needs to be played by a broader group of people — for example, board members and investors — who don’t fully understand the challenges that electric utilities are facing, or the opportunities in front of them.


Be the first to comment - What do you think?  Posted by Editor - at 6:03 am

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Southern Company Goes Big Into Microgrids With $431M Acquisition of PowerSecure

Over the past 15 years, PowerSecure has quietly built what may be the country’s biggest fleet of microgrids. The Wake Forest, N.C.-based company controls some 1,500 megawatts — mostly backup generators, along with some cutting-edge solar-battery integrations — that help hospitals, data centers, grocery stores, food-processing plants and other big commercial-industrial customers ride through blackouts and shave peak power costs.

Now it’s getting bought by one of the country’s biggest utilities, in one of the largest publicly disclosed deals in the still-nebulous microgrid field. On Wednesday, Southern Company announced plans to acquire PowerSecure for $431 million, or $18.75 a share — a hefty premium over the publicly traded company’s recent share price.

Southern Co., which serves about 4.5 million customers through subsidiaries Georgia Power, Alabama Power, Mississippi Power and Florida’s Gulf Power, hasn’t been a big player in distributed or customer-sited energy to date. As it noted in its press release, “these technologies typically receive highest demand largely in markets outside of the Southeast,” where coal and nuclear still provide most of the region’s power.

Even so, the utility recognizes that the “electric utility business model is increasingly expanding beyond the meter,” Southern Co. CEO Thomas Fanning said in Wednesday’s release. “Today there is demand for distributed infrastructure solutions that best meet each customer’s unique energy needs.”

PowerSecure CEO Sidney Hinton said in a Thursday interview that the company managed about 1,500 megawatts of flexible, behind-the-meter energy resources at about 1,200 sites, mostly east of the Mississippi River. While he wouldn’t name customers, he did say they include six of the country’s 10 top grocery-store chains, several well-known data center customers, and a few military bases.

The company has kept a pretty low profile, working primarily via direct negotiations between customers and their utilities, and shying away from public bid opportunities. “I would say we bid less than 20 percent” of the projects in its portfolio, he said. “[Requests for quotations] are not our thing.”

“We never really wanted any publicity. That will obviously be changing because of the Southern Company acquisition,” said Hinton, who spent much of his career at Georgia Power before founding PowerSecure. “My understanding is, we will be the platform they use for their behind-the-meter services.”

Most of PowerSecure’s customer base is outside Southern Co.’s territory, Hinton noted, with projects financed or owned by the customer itself, or by a utility. The company will continue to partner with other utilities under its new ownership structure, he added.

But over the years, PowerSecure has found itself in the position of taking ownership stakes in a relatively small portion of its projects — about 10 percent or so, he said. “We’ve earned very attractive rates of return for those projects,” he said. But as a smaller company, it has faced limitations in growing that part of its business — at least, until now.

Most of the company’s business is based on its Interactive Distributed Generation, or IDG, systems, he said. These are custom-engineered, proprietary combinations of backup generators and on-site energy controls, built to provide a majority of a site’s power needs and keep it running during times of grid disruption, he said.

At the same time, most of the economic value of its systems come from peak shaving, demand-charge management, and other revenue streams dependent on syncing up the operation of its systems with utility needs, he said. “Most of our customers couldn’t afford backup power — and they used the peak shaving to justify the investment.”

This line of business is something like that provided by demand-response aggregators such as EnerNOC, Comverge and others. PowerSecure isn’t an aggregator or curtailment service provider in this way, Hinton noted, although it has worked with energy companies like Constellation, as well as with utilities or customers directly.

Other companies in the space are forming partnership with energy companies — Enbala is working with GE Energy Ventures and Edison International, and Blue Pillar is working with NRG Energy, to name a few examples. Tangent Energy, a Pennsylvania-based company with about 525 megawatts of flexible behind-the-meter energy under management with industrial customers, municipal utilities and retail energy providers, is another company that bears some resemblance to PowerSecure’s approach to the market.  

We’ve also seen a fair share of M&A activity along these lines over the years. NRG bought Energy Curtailment Specialists in 2013, Constellation Energy and Comverge merged their commercial-industrial demand response portfolios in 2014, and Customized Energy Solutions acquired Powerit Solutions earlier this year.

Over the past four years or so, PowerSecure has also expanded into solar power projects, specializing in what Hinton called “making solar dispatchable. We do complex solar, where people are incorporating storage, high-speed reciprocating engines,” he said.

That side of the company’s business accounted for about $100 million of its $400 million in 2015 revenues, he said. One such showcase project at a well-known tech company headquarters features solar PV, batteries, fuel cells and spinning generators, all integrated with the local utility’s distribution grid control systems, he said.


Be the first to comment - What do you think?  Posted by Editor - at 6:03 am

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BREAKING: DC Regulators Reject Exelon-Pepco Merger, Propose Alternative

The District of Columbia Public Service Commission announced a 2-1 vote on Friday morning to reject the proposed $6.8 billion Exelon-Pepco merger.

The vote dismisses a $78 million settlement agreement the utilities filed last fall with the support of D.C. Mayor Muriel Bowser.  The decision comes after the PSC voted down the original merger proposal last August, throwing plans to create the nation’s largest utility off-track.

But the deal continues to advance. Commissioner Joanne Doddy Fort introduced a proposed alternative settlement agreement to be considered by the parties, which two of three commissioners approved. Stakeholders now have 14 days to consider the new terms. If an agreement is reached, the deal will close.

MDV-SEIA detailed the two votes:

1. Is the proposed settlement agreement (NSA) in the public interest?

Motion: Reject the proposed NSA.

Kane: Yes
Fort: Yes
Phillips: No

2. Fort provides alternative terms. Contained various components, including removal of Exelon as the developer for solar projects as proposed in the NSA, addition of non-compliance penalties, etc.

Motion: Allow settling parties to review the proposed alternative within 14 days and accept the revised agreement, or request other relief. If all parties accept the agreement, then the joint application for approval would be deemed approved as being in the public interest.

Kane: No
Fort: Yes
Phillips: Yes

In the first vote, Commissioner Fort and Chairman Betty Ann Kane determined that the NSA was not in the public interest based on four grounds laid out in the PSC order.

First, regulators took issue with the exclusion of non-residential ratepayers as part of a $25.6 million customer credit. Second, they said that Exelon’s takeover of a competitively sourced 5-megawatt solar project at D.C. Water “undermines competition and grid neutrality.” Third, they determined that sustainability and low-income energy projects included in a customer investment fund (CIF) “do not improve Pepco’s distribution system nor advance the Commission’s objective to modernize the District’s energy systems and distribution grid.” Fourth, commissioners found the proposed method of allocating the CIF funds did not give regulators adequate oversight.

However, the deal could still be approved.

Commissioner Willie Phillips, who voted to approve the NSA on Friday, also voted in favor of Fort’s proposed alternative. The alternative (summarized in a press release) includes four conditions:

  • Deferring decision on allocation of $25.6 million Customer Base Rate Credit until next Pepco rate case
  • Removing a provision that designates Exelon as the developer of a 5-megawatt solar generation facility at D.C. Water, and requiring Pepco to facilitate the interconnection through a competitive process
  • Creating an escrow fund with two subaccounts at Pepco to hold $32.8 million of the proposed $72.8 million customer investment fund created by Exelon in the proposed settlement, $21.55 million of which is to be used to modernize the D.C. grid
  • Striking as premature provisions regarding Pepco’s role to develop public purpose microgrids, requiring Pepco to facilitate and support pilot projects under a separate proceeding (FC 1130)

“The commission’s order prescribes new provisions that we and the settling parties must carefully review to determine whether they are acceptable,” Exelon spokesperson Paul Elsberg said in a statement.

Exelon previously stated that if a settlement isn’t reached by March 4, the utility would cut its losses and walk away from the merger. The 14-day review period passes the March 4 deadline. But after two years of negotiations and having spent $259 million on the acquisition, experts believe the Chicago-based utility is likely to accept the proposed alternative.

In her dissent, Chairwoman Kane argued, as she did in the August ruling, that the merger represents an inherent conflict of interest that is not addressed in the proposed alternative.

“In particular, the return of Pepco to an ownership structure that includes energy generation, supply, marketing and sales will result in an entanglement of management, financial health, and decision-making,” she wrote. “This is fatal flaw which will adversely affect Pepco and create a diversion of focus that carries it in the opposite direction from D.C. law and policy.”


Be the first to comment - What do you think?  Posted by Editor - at 6:02 am

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Nevada Solar Ballot Initiative Faces Utility-Backed Legal Challenge

Solar advocates continue to advance a ballot initiative that would restore Nevada’s retail-rate net metering policy, despite legal challenges from a utility-backed political group.

Earlier this month, the Nevada Public Utilities Commission voted not to grandfather existing customers onto a new rooftop solar tariff that was initially approved in December. Solar companies say the new rates are unfair to current solar customers and have made it impossible to attract new ones.

The No Solar Tax PAC, the political action committee spearheading the solar ballot initiative, announced this week that it had secured the support of more than 90,000 residents, collecting 18,000 signatures during the Nevada caucuses.

On February 12, Carson City-based attorney James Cavilia filed to create a separate PAC called Citizens for Solar and Energy Fairness, designed to “advocate for, or oppose” net metering programs. Days later, PAC filed a legal challenge to the pro-solar referendum.

Bob Greenlee, spokesperson for the Bring Back Solar Alliance, the organization supporting No Solar Tax PAC, said he was “disappointed but not surprised” by the “baseless” legal challenge.

On Wednesday, NV Energy confirmed to Politico that it is backing Citizens for Solar and Energy Fairness. The utility did not immediately reply to a request for comment on their motivation for supporting the PAC, or how it sees the distributed solar market evolving in Nevada under the new rate scheme.

NV Energy argued last year that retail-rate net metering results in an unfair subsidy for rooftop solar customers. Based on NV Energy figures, the PUC determined there was a $16 million annual cost shift onto non-solar ratepayers.

Solar advocates maintain that distributed solar provides a net benefit to the grid.

The No Solar Tax PAC referendum specifically proposes to strike out portions of Senate Bill 374, legislation that enabled the Public Utilities Commission of Nevada to change the rates for rooftop solar. Greenlee said public support for the measure has spiked with the revelation of NV Energy’s opposition.

So far, the campaign has secured commitments of support from more than 90,000 residents. However, the PAC will still have to secure official signatures once the referendum language is confirmed.

First, the ballot initiative will have to survive the legal challenge, which will be heard in a Nevada circuit court before March 28. If the court rejects the petition, solar advocates can reintroduce it or appeal.

Meanwhile, rooftop solar applications have dropped precipitously since the new solar rates came into effect on January 1. NV Energy figures show that 1,311 residents in southern Nevada had submitted solar interconnection applications in December. In January, that number fell to 90 applications — a decrease of more than 90 percent.

Nevada Governor Brian Sandoval, who appointed the three-member PUC and is a potential Supreme Court pick, has been distancing himself from the unpopular PUC decision (as well as the Supreme Court). He said the PUC’s decision not to grandfather existing customers onto the new solar rates was disappointing.

On Tuesday, Sandoval signed an executive order to convene a task force that will help the governor’s Office of Energy support the development of renewable energy and distributed energy resources in Nevada going forward.

“There are few more critical issues to Nevada’s future than clean and renewable energy,” Sandoval said in a statement. “Not only does this sector drive many economic development opportunities, but it also helps us improve the quality of life for many Nevadans by helping keep our air clean, water fresh, and allows us to explore our unlimited potential in the wealth of renewables Nevada has to offer.”


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U.S. Gasoline Use Slows With Uptick in Fuel Efficiency

Gas is cheap — about $1.73 on average nationwide today — and that means Americans are driving more miles than they did back before the recession when gasoline topped $4 per gallon.

Thanks to greater fuel efficiency, however, gasoline consumption is lower than it was at its peak in 2007, even though Americans are driving more than they did nine years ago, according to a report published this week by the U.S. Energy Information Administration.

U.S. gasoline consuption vs. vehicle miles traveled.
Credit: EIA

“There’s a tremendous run-up in fuel efficiency since 2007,” EIA analyst Michael Morris said. “You can have static gasoline consumption because of fuel efficiency.”

Average fuel efficiency for all cars nationwide — old and new — has increased about 1 percent in the past nine years, from about 21.25 miles per gallon for light-duty vehicles in 2007 to about 22.5 miles per gallon today, he said. Average fuel economy for new vehicles is about 33 miles per gallon.

Burning gasoline in cars and trucks is a major contributor to global warming, so less gasoline used in vehicles benefits the climate. Carbon dioxide emissions from vehicle tailpipes account for 27 percent of U.S. greenhouse gas emissions — America’s second largest single source of those emissions, just behind electric power plants.


Americans drive a lot — about 8.9 million miles each day during the summer driving season last year, an increase of about 3.7 percent over the year before. Total miles driven last year were about 4 percent higher than in 2007. By 2017, we’re expected to be driving 7 percent more miles than we did in 2007.

But even as we drive more, growth in gasoline use is expected to flatten out. Gasoline consumption will likely be 0.6 percent below 2007 levels both this year and next year, EIA data show.

“The combination of an increasing share of the baby-boomer generation reaching retirement and continued increases in vehicle fuel economy is expected to limit growth in motor gasoline consumption,” the report says.

Carbon dioxide emissions from the U.S. transportation sector peaked in 2007 before bottoming out in 2013. They’ve been increasing slightly since then.
Credit: EIA

Increasing fuel efficiency and flattened gasoline consumption fits into the U.S. Environmental Protection Agency’s greenhouse gas emissions standards for light-duty vehicles, which are expected to reach about 54 miles per gallon by 2025, reducing cars’ and trucks’ greenhouse gas emissions by 6 billion metric tons over that time.

Beginning in 2017, carmakers are required to improve their new cars’ carbon dioxide emissions by 3.5 percent per year, and beginning in 2022, carmakers will have to improve their vehicles’ emissions by 5 percent each year.

Light-duty vehicles are just a part of the transportation sector, which, overall, has a long way to go to reduce emissions.

Carbon dioxide emissions from burning fossil fuels for transportation — that’s cars, big trucks, trains and airplanes — peaked in 2007 before the recession, falling to 126.7 million metric tons of carbon dioxide in Feb. 2013 from their monthly peak at 174.7 million tons in August 2007. They’ve been ticking up slightly since then, but still far below 2007 levels.



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