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Wednesday, July 23, 2014

Controlling methane leakage: Opportunity knocks

The Environmental Protection Agency's (EPA) Clean Power Plan Rule is tied very closely to issues surrounding natural gas. One of the four elements that was used to calculate Pennsylvania's target was to transfer, or "redispatch," some electric generation from older and less efficient coal-fired power plants to more modern, natural gas combined-cycle (NGCC) plants.

In 2012, the base year EPA used for planning, Pennsylvania's NGCC plants were running at, on average, about 60 percent of their nameplate capacity. Under EPA's plan, sufficient load would be transferred from coal plants so NGCC facilities would produce about 70 percent of their nameplate capacity. This amounts to about 6.1 million megawatt hours (MWh) of generation moving from coal to NGCC plants, saving around 3.8 million tons of CO2 per year. This appears to be a very reasonable goal for Pennsylvania.

Since 2012, a number of coal plants have either already been retired, or planning is underway to retire the plants. Altogether, these plants generated over 14.6 million MWh in 2012. If all the existing NGCC plants were raised to the planned 70 percent factor, we would still need another 500 megawatts of generation to make up for lost capacity from the deactivated coal plants plus additional generation to make up for any growth in demand. (This should be easily achievable with newer and cleaner power we already expect to be coming on line.)

Since the design of the CPPR is reliant on keeping and expanding natural gas generation, addressing issues such as methane leakage that threaten to derail our progress are even more critical. But, maybe a more interesting point is the ability to use reduction in methane leakage as a compliance option. EPA will almost certainly find reduction in methane leakage creditable as part of a state plan. They actually considered such measures as a part of the "best system of emission reductions" used to calculate goals individual states must meet. Redispatch from coal to NGCC was ultimately used instead after EPA found that "any net impacts from methane emissions are likely to be small compared to the CO2 emissions reduction impacts of shifting power generation from coal-fired [power plants] to NGCC units."

That finding might seem a bit odd to those who are familiar with recent findings on the global warming potential of methane and the fact that leakage rates may be significantly higher that what has been estimated. But, it's less surprising when one realizes that EPA has based its targets on the same suite of measures in every state. Since relatively few states have large shale-gas industries like Pennsylvania and all but a few states have both coal-fired and NGCC generation, basing its targets on more widespread operations is a reasonable approach. (Not to mention a more politically feasible approach.) 

An opportunity for Pennsylvania?

Our state plan isn't an either-or proposition. The Pennsylvania Department of Environmental Protection (DEP) is expected to draft a plan using the most effective measures available in Pennsylvania—even if they are not the same ones chosen by EPA. That means we can get credit for both redispatch of coal-fired power to NGCC plants and from any progress we make stopping methane leakage. As one of the leaders in shale gas production, we have a unique opportunity for significant reductions.

DEP recently released a 2012 air emissions inventory where the Marcellus shale drillers reported over 123,000 tons of methane emissions as well as many other pollutants. There are reasons to believe that this report significantly underestimates actual emissions but for the purposes of CPPR, more emissions in the base year means more potential reductions for which we can take credit.

Using the Intergovernmental Panel on Climate Change (IPCC) 20-year global warming potentials, which find methane has 86 times the potential of CO2, that 123,000 tons of methane is equivalent to more than 10 million tons of CO2. If only half of that reduction was achievable, we would still expect more benefit from reducing methane leakage than EPA expects from improving efficiency at the coal-fired power plants themselves.

It's too early to start counting chickens (or megawatt hours). We have a long way to go before CPPR is finalized and longer still until DEP finalizes our state plan. Along the way we will, hopefully, get much better data on which to base our planning. Through that process, though, DEP needs to keep a close eye on methane leakage. Even though EPA didn't include methane reductions as part of its plan, Pennsylvania shouldn't overlook the opportunity.

Rob Altenburg is senior energy analyst for PennFuture and is based in Harrisburg. He tweets @RobAltenburg.

How Pennsylvania can address crude-by-rail concerns

Pennsylvanians are being exposed to unacceptable levels of risk as a result of volatile shale-based oil being shipped on railroads in outdated tanker cars throughout our state. Pennsylvania's leaders are doing little to nothing about it.

Many argue this issue needs to be addressed by the federal government but there are plenty of things our state and local governments can be doing to help address the situation. In the absence of action, our leaders are allowing rail carriers and the businesses they serve to externalize (i.e. shift) the costs and risk of spills and accidents onto local communities.

Here is a very general overview of federal and state jurisdictional issues, and some ideas for what state and local policymakers can do to better protect Pennsylvanians.

Federal authority:
  • However, federal policy and oversight has been problematic:
    • The Government Accountability Office (GAO), National Transportation Safety Board (NTSB), U.S. Department of Transportation Office of the Inspector General, and the Congressional Research Service have all issued reports that criticize various aspects of federal rail oversight Examples include lack of inspectors, inadequate funding and staffing, inability to respond to changing safety and oversight needs, and failure to meet statutory deadlines for implementing new safety regulations; there are many more.
    • There are also problematic loop holes in federal law. For example, federal law requires railroads to either have a basic response plan or a more comprehensive response plan, depending on the volume capacity of the rail car transporting the oil. Since DOT-111 units -- the outdated tankers being used to transport crude-by-rail -- are under the 1,000 barrel threshold (they hold around 700 barrels), they only require a basic response plan, which is not subject to FRA approval.
State role:
  • According to the Pennsylvania Public Utility Commission (PA PUC), Pennsylvania has about 9,000 miles of track and approximately 70 operating railroad companies, which is the largest number of rail companies per state in the U.S.
  • FRA is permitted to delegate oversight and enforcement authority to states that enter into voluntary rail safety programs (FRA State Rail Safety Participation Program). Pennsylvania has entered into this program, which is administered by the PA PUC. According to PA PUC, Pennsylvania's rail safety staff includes seven inspectors and six engineers. That is about one inspector per 1,285 miles of rail.
  • The PA PUC has exclusive jurisdiction over the construction, relocation, suspension and abolition of public highway road crossings. 
  • The PA PUC enforces federal regulations promulgated by the FRA, including operating rules, locomotive safety provisions, freight car safety standards, power brakes and drawbars, and more.
  • The PA PUC can:
    • Issue an emergency order if a situation presents a clear and present danger to life or property.
    • Conduct inspections and investigations to determine compliance with federal regulations under its jurisdiction.
    • Process complaints and institute investigations into the safety of a highway crossing.
What are other states doing? (some examples)

  • New York
  • Minnesota
    • Passed a law in May that would require railroad companies to submit disaster prevention plans and emergency response plans to the state; creates an annual assessment on railroad companies to fund more state-level rail inspectors; requires rail companies to provide emergency response training to local fire companies; and enhances railroad company responsibility for accident clean up.
What can be done in Pennsylvania?
  •  Key risks that deserve policy maker focus:
    • Routing trains through highly populated areas -- Creates greater potential public health and safety risks.
    • Inadequate financial responsibility for accident cleanup and liabilities -- Railroads carry commercial insurance, but not in amounts adequate to cover worst-case scenarios. The railroad responsible for the Lac Megantic disaster filed for bankruptcy, shifting millions of dollars of liability to the public.
    • Security concerns -- Oil trains routed through populated areas create greater vulnerability for terrorist attacks. These trains are clearly marked and highly visible to the public.
    • Environmental contamination -- There is the potential for water and other environmental contamination from oil spills.
    • Disparate impacts -- Many crude-by-rail train routes go through low-income communities, creating a disparate risk impact for individuals in these neighborhoods.   
    •  Potential recommendations:
      • The Governor's office should issue an executive order creating an inter-agency working group tasked with developing a report (within nine months) on the risks posed to Pennsylvania by crude-by-rail. transportation and developing a set of recommendations for action.
      • The PA PUC should use its authority (or be petitioned to exercise its authority) to identify high-risk areas and issue emergency orders as needed. The Commission should also conduct a comprehensive investigation of rail company compliance with federal laws.
      • The General Assembly should pass laws based on the recommendations of the inter-agency report.
      • Local governments should focus on emergency preparedness, responder training, and coordination with state officials and local rail companies. Since local responders are typically the first on the scene when accidents take place, preparedness is critical. A key issue should be how to generate revenue to enhance preparedness efforts.

    As recently as this morning, the U.S. Department of Transportation issued two proposed rules (a proposed rule related to enhanced tank car standards and operational requirements for trains transporting high-hazard flammable materials, and a rule on oil spill response planning) aimed at improving crude-by-rail safety. Clearly, the federal government is in the driver's seat when it comes to having the power to improve crude-by-rail safety. However, state and local governments also have a role to play and shouldn't be relegated to the back seat.

    Christina Simeone is director of the PennFuture Energy Center and is based in Philadelphia. She tweets (sparingly) @SimeoneEnergy.

    Energy professionals: Make your voice heard on proposed changes to net metering


    Last week, my colleague Rob Altenburg reported on the proposed changes to net metering that were formally introduced on July 5, starting a 30-day comment period. It is critically important to have your comments on this matter formally logged with the Public Utility Commission (PUC). If you are a company that designs or installs net-metered technologies in Pennsylvania, please make your voice heard. If your are a business or public entity that has installed, or is looking to install, these technologies in the future, please make your voice heard. 

    To make it easier to have your comments formally logged with the PUC, the member organizations of the Pennsylvania Net Metering Coalition (see below) have provided a comment portal geared toward energy professionals. Click here to be taken to that portal. This system allows a company's comments to be attached to six core technical statements that were developed by the coalition. We would also invite businesses and organizations to utilize this portal. For private citizens concerned about this matter, we will provide a link to a separate petition sponsored by a partners' petition in next week's blog. 

    Comments submitted through this portal are due no later than 5:00 p.m. on Wednesday, July 30, 2014. If you wish to submit comments directly, outside of this portal, please see instructions, mailing address, and docket number listed in the portal.

    CLICK HERE TO BE TAKEN TO THE COMMENT PORTAL


    The coalition includes PennFuture Energy Center, PASEIA, SDF, Sierra Club, Clean Air Council, MAREA,  and Audubon  and is convened to share information and insights into the threats to net metering in Pennsylvania. 

    Evan Endres is project coordinator for the PennFuture Energy Center and is based in Pittsburgh. He tweets @ER_Endres.
     

    Wednesday, July 16, 2014

    Building codes bill moves in Pennsylvania House

    Act 1 of 2011 made changes to how Pennsylvania evaluates and updates its building codes. A council of appointed representatives known as the Review and Advisory Council (RAC) now must approve all codes, opting in to each code with a 2/3 majority vote. This has resulted in an unworkable building code adoption process in Pennsylvania and led to the state's failure to adopt the 2012 building codes. The RAC must make a decision about adopting the 2015 codes by the middle of next year, and it is way behind.

    This process is fatally flawed. Meanwhile, the health, safety and pocketbooks of Pennsylvanians are being negatively impacted.

    One potential solution to this problem is Senate Bill 1023, which seeks to amend the building code adoption process. As you may recall, SB 1023 passed through the Senate in June with some positive changes, while troubling provisions remained.  

    The Senate bill was then sent to the House for consideration. On July 2, the bill was amended in the House Labor and Industry Committee but tabled before the committee could vote to pass the bill on to the full House for consideration. While the amendment represents a step in the right direction -- and even does some good things -- it falls far short of fixing Pennsylvania's broken code adoption process.  

    Why the amendment is flawed  

    Non-controversial code process - The amendment proposes a process with an initial 120-day comment period for RAC members and the general public.  Within 90 days of the close of the comment period, code provisions that do not receive substantive comments recommending rejection or modification would be subject to a two-thirds majority vote of the RAC in order to be deemed as not subject to further review.  On its face, this seems great because it would allow the RAC to focus efforts on the more controversial code changes.  However, at any time, the RAC can re-classify a non-controversial code change as controversial by only a simple majority (rather than two-thirds). More importantly, during the 2012 code review process, the RAC encountered significant controversy surrounding the idea of a "patchwork" code (i.e. some provisions being accepted and others rejected). How does this process fix this problem, and doesn't the modification proposal exacerbate the issue? 

    Controversial code changes - For code provisions identified as being controversial, the RAC would have to review public comments and consider certain factors (e.g. health, safety, welfare, technical, economic, etc.) before voting to adopt by two-thirds. If they can't come to any agreement, then the codes are rejected. When the RAC considered the 2012 code updates, they couldn't reach two-thirds consensus on any of the code provisions, and instead rejected the entire catalog of code changes. They also failed to perform the require analysis to support their decision. How does this amendment attempt to fix the process? 

    What is needed 

    • Return to pre-Act 1 of 2011 "opt-out" process - This would limit the workload of the RAC by allowing hundreds of non-controversial code changes to take effect while focusing the RAC's work on controversial codes. 

    • Require analysis to ensure against arbitrary decisions - In 2012, the RAC failed to do the legally required analysis (e.g. health, safety, welfare) on each code provision and arbitrarily rejected the entire set of code updates. Failure to perform and document the analysis should result in the invalidation of the RAC's action.

    • Promote public transparency through open rulemaking - The current law requires the Department of Labor and Industry (L&I) to codify the RAC's decision. Specifically, L&I can't make changes to the RAC's recommendations, which go to final-form rulemaking. This puts too much control in the hands of the advisory committee and reduces public input in the regulatory process.

    What is next?

    Hopefully, the Pennsylvania legislature will act this fall to make additional improvements to SB 1023. The House will have time to consider this bill again during its fall session. Pennsylvania cannot afford to continue to fall behind on requiring modern, safe and energy efficient building standards.

    Evan Endres is project coordinator for the PennFuture Energy Center and is based in Pittsburgh. He tweets @ER_Endres.



    Sneak preview: Clean Power Plan Rule comments

    On July 31 and August 1, hundreds of people will be converging on Pittsburgh to make their voices heard at the Environmental Protection Agency's (EPA) public hearing on the Clean Power Plan Rule (CPPR), and to attend a rally that Thursday in support of the rule.

    There are a bunch of resources available for those planning to testify. The EPA's analysis, for example, shows that nationwide, CPPR will reduce power plant carbon pollution by 30 percent between 2005 and 2030. While doing so, it will help us avoid thousands of premature deaths, hundreds of thousands of asthma attacks, lower electric bills, and lead to between $55 billion and $93 billion in health and climate benefits. PennFuture has also provided some excellent starting points for developing testimony.

    Since I plan on being in Pittsburgh to testify, I thought I'd share some notes that may include a sneak preview of my comments.

    Strong and uniform federal standards are needed

    As the Clean Air Act requires, the EPA is giving individual states a great deal of flexibility in designing their plans under CPPR. Rather than requiring states to adopt specific measures, the agency has instead proposed a goal and will leave the details to the environmental agencies in the various states. Flexibility can lead to much better results than a one-size-fits-all plan, but with flexibility comes the need for oversight.

    Having uniform regulations across states is essential to ensure environmental protection and maintain a level playing field for our businesses. We already have situations where inconsistent federal rules mean facilities in Ohio and other upwind states don't always have to meet the same standards as facilities in Pennsylvania. This is particularly troubling in our deregulated electric generation market, since cleaner facilities don't do any good if dirtier plants can run more cheaply and, therefore, run more often. As Pennsylvania Department of Environmental Protection (DEP) Secretary Chris Abruzzo has said, there is a simple solution: "Have the upwind states implement equally stringent air quality controls."

    Although Secretary Abruzzo is less likely to say it publicly, it's also harder for agencies like DEP to accomplish things they are not specifically required to do. Even when a particular plan is cost effective and benefits the majority of Pennsylvanians, going beyond minimum federal requirements often results in politicians getting involved and second guessing agency experts. We have already seen actions, like Act 60 of 2011 and HB 2354 that recently passed the Pennsylvania House, which add to the already extensive review process. The EPA's proposal has a very tight time frame to enact any new state-level measures--weak federal standards that lead to politicized decision making will make it that much harder to take meaningful measures in a timely manner.

    The EPA is likely overestimating compliance costs

    A number of old coal-fired plants have recently retired or will be retired in the next few years. Much of this capacity will be replaced by more modern and efficient gas plants, by renewable energy sources such as wind and solar, or by improvements in energy efficiency. This will help Pennsylvania meet the EPA's goals with lower costs than the EPA has predicted.

    In addition to these lower costs, an analysis of the EPA's data shows that Pennsylvania could meet the federal goals without the need to shut down any additional coal-fired power plants. That alone is a major takedown to one of the top talking points of the anti-environment crowd.

    Allowing off-site measures gives Pennsylvania the tools it needs

    Because the EPA doesn't limit Pennsylvania's plan to measures taken at the individual fossil fuel plants, Pennsylvania can build on the success of its Alternative Energy Portfolio Standard (AEPS) program to encourage construction of more solar and renewable energy. Not only does this bring more clean energy to the market, but building renewable resources creates jobs and strengthens the economy.

    Allowing off-site measures can also make energy efficiency the star of the show. Pennsylvania can build on the success of its existing Act 129 program to achieve significant cost-effective reductions. The Public Utility Commission's independent statewide evaluator has already determined that the efficiency measures in Phase 1 of Act 129 returned direct economic benefits of $3 for every $1 spent, and its market potential study shows we have just scratched the surface on what is possible.

    Where do we go from here?

    It's important to keep in mind that, rhetoric aside, the EPA is just proposing goals, not requiring a specific plan. Our actual plan is going to be developed by our DEP and will be the result of slow and deliberate processes with detailed analysis and extensive opportunities for public participation and comments.

    Once DEP prepares a draft plan, the agency will post a notice in the Pennsylvania Bulletin and in at least six newspapers across the state, opening a 60-day public comment period. In addition to accepting written comments, DEP will also hold its own public hearings to take testimony.

    The final plan will include an analysis of alternative control strategies considered and the reasons for selecting the final strategies; an analysis of the economic impacts of the strategies and alternatives on the regulated community and local governments; an analysis of the technical resources needed by the department to implement the strategy; and a comment/response document that responds to all comments received during the public hearings and comment period. Also, before submitting the plan to EPA, the plan and the comment/response document must be submitted to the state Environmental Quality Board (EQB) for review, and will be reviewed by DEP's Air Quality Technical Advisory Committee, the DEP's Small Business Compliance Advisory Committee, and the Citizens’ Advisory Council.

    Over the next few months, a lot of loud voices will try to bully EPA into backing down with claims the sky is falling. In response, we need to get across a simple message: Tell EPA you support its plan and that the agency shouldn't back down. Give DEP the time and tools it needs to do its job. 

    Rob Altenburg is senior energy analyst for PennFuture and is based in Harrisburg. He tweets @RobAltenburg.

    Friday, July 11, 2014

    Map reveals oil train blast zones: Pittsburgh and Philadelphia are both at extreme risk

    On the one-year anniversary of the Lac-Megantic oil train explosion tragedy in Quebec, the non profit organization Forest Ethics has released a map of blast zone areas in the path of potential crude-by-rail explosions. Leaders, take note: Philadelphia and Pittsburgh are both bulls-eyes of catastrophic risk associated with oil train derailments.  

    Why, you ask? Philadelphia's three area refineries are creating demand for crude oil supply, which is being sourced from the Bakken oil shale basin in North Dakota. Tapping the Bakken has recently become economical thanks to fracking technology, and sufficient pipeline capacity doesn't exist to move the oil. Consequently, the oil is being shipped by rail from North Dakota, often through Pittsburgh, to its final destination in Philadelphia. This type of oil is highly volatile and is being shipped in outdated tankers (DOT-111), the combination resulting in high risk for derailment and explosion.

    Philadelphia Blast Zone
    Pittsburgh Blast Zone
    On January 20, 2014, a 101-car CSX train from Chicago carrying shale-based crude oil from North Dakota's Bakken formation derailed in Center City Philadelphia on the Arsenal Railroad Bridge over the Schuylkill River.

    On February 21, 2014, cars derailed in Vandergrift Pa., north of the City of Pittsburgh. Some the cars were crude oil tanker cars, and four of them were breached and leaked an estimated 3,000 to 4,000 gallons of crude oil in the derailment.

    On July 2, 2014 two trains collided in Sewickly Pa., 10 miles west of Pittsburgh. One of the trains was hauling 21 tanker cars designed to carry ethanol. Luckily, the cars were empty. 

    All of these incidents could have been catastrophes on the scale of the Lac-Megantic oil train explosion that leveled half of a Quebec town and killed nearly fifty people. Pennsylvania is lucky by comparison.

    Click the images for more information. 

    Evan Endres is project coordinator for the PennFuture Energy Center and is based in Pittsburgh. He tweets @ER_Endres.

    Wednesday, July 9, 2014

    Supporting net metering: Let your voice be heard

    Last Saturday, the Pennsylvania Public Utility Commission (PUC) proposed a new set of rules related to net metering that could impact the decisions people make to install solar and other alternative energy systems.

    Releasing any document on a holiday weekend may subject the agency to accusations that it is trying to hide something (the practice, known as a "document dump," even has its own Wikipedia page) but in this case, it's much more likely that it was just how the timing worked out. If the proposal started out with a strike against it, the title "Implementation of the Alternative Energy Portfolio Standards Act of 2004" isn't going to attract many readers, either. This is unfortunate because net metering is an important issue.

    Net metering is the practice wherein homeowners or companies who install qualifying solar systems or other alternative energy generation can sell the excess electricity back to their power company. Typically, this power is used to offset their next month's bill but if they continue to generate more power than they use over the course of a year, they get a cash payment for the balance.

    While this is a good thing for the customer, they aren't the only ones that benefit. Clean and local distributed energy generation can offset dirtier power and the line losses (i.e. energy lost while moving the energy in power lines) it takes to ship that power to the customer. It can help make more power available without the expense of building new plants. And, by not burning coal and other fossil fuels, it can help ensure cleaner air and a healthier environment for the entire community. Places such as Minnesota that have taken a hard look at the costs and benefits have shown that encouraging net metering makes good financial sense.

    Of course, even good ideas have opposition. Anti-environmental groups like ALEC are more focused on the short term gains of certain segments of the power industry and do everything they can to create roadblocks and discourage net metering. The PUC and legislature have so far resisted the attacks but like a game of whack-a-mole, we can be sure the attacks will pop up again. With a new net metering proposal on the table, there is a good chance they will be back at it this summer.

    Like many other organizations, PennFuture will develop detailed technical comments on this proposal. We'll support the good ideas and we will suggest some specific improvements but your voice should be heard, too. In the coming weeks, we'll be providing more tools and information to assist people who would like to comment.

    Rob Altenburg is senior energy analyst for PennFuture and is based in Harrisburg. He tweets @RobAltenburg.

    Solar works for York Solid Waste

    Recently, the York County Solid Waste Authority (YCSWA) commenced operation of a solar farm at its now sealed (as in no more garbage in) York County Sanitary Landfill.  
    The solar farm project consists of a 240 kW system with 806 panels constructed on two acres located on landfill property west of the facility’s maintenance building and along Plank Road in Hopewell Township.
    The project is expected to produce 300,000 kilowatt hours of electricity each year, which is approximately the annual energy usage at the landfill, according to a press release from YCSWA
    This project is an example of a Power Purchase Agreement (PPA) where a host signs an agreement with a third party. That third party owns and operates the system and the host agrees to purchase the electricity it produces for a set price for a predetermined length of time. YCSWA invested $100,000 in the project and serves as host customer. York County Solar Partners is the system owner and will operate, maintain and repair the solar panels. Solar Partners also receives any environmental financial incentives and tax benefits.
    As the cost for solar continues to decline, we hope to see more of these kinds of arrangements with municipalities, authorities, and other public entities. The savings in electricity costs over the life of the agreement can be carried over to tax and service rate payers, making projects like these a win-win.
    Now, municipalities and other public and private entities can leverage Pennsylvania Energy Development Authority (PEDA) funding to help pay for renewable energy projects. Deadline for applications in August 16. Visit the PEDA website for more details.

    Evan Endres is project coordinator for the PennFuture Energy Center and is based in Pittsburgh. He tweets @ER_Endres.

    Thursday, July 3, 2014

    Blaming EPA: The war on facts

    The phrase "war on coal" has been getting a lot of use these days, but slogans and sound bites rarely reflect reality--especially when the subject is as complicated as our energy markets. With the Environmental Protection Agency's (EPA) recent proposal of its Clean Power Plan Rule (CPPR) affecting carbon pollution from coal-fired power plants, the sloganeering is once again kicking into high gear.

    CPPR is based on data from 2012. At that time, Pennsylvania had about 43 large electric generating units (EGUs) burning coal. Since most large power plants have more than one EGU, each of those units was housed at one of 17 power plants. These units had an average nameplate capacity of over 400 megawatts (MW) each, and a number of the units had capacities of nearly 1,000MW. Aside from these large units, there were a handful of smaller units as well. Most of these had nameplate capacities under 100MW and burned waste coal (also known as culm, or gob), which is the low-value refuse left over in massive piles from decades of essentially unregulated mining operations.

    Of the large plants, a number have already deactivated and only seven are expected to be operating by the end of 2017 (which will lessen what must be done to meet the goals of CPPR). Although some folks are no doubt already blaming CPPR for deactivations, that would be a dubious claim. The rule won't be finalized for at least a year and, even if the schedule doesn't slip, the first compliance period wouldn't even begin until 2020. While CPPR is hardly a realistic contributor to any of these deactivations, some folks are still quick to blame environmental regulation in general.

    GenOn Energy, in its 2012 10-K filing with the SEC, blamed the planned shutdowns of nearly 2,000MW of capacity in Pennsylvania between 2012 and 2015 on the EPA's mercury and air toxics standards (MATS), saying that the "current and forecasted market conditions do not justify the required capital expenditures." These shutdowns include the Elrama, New Castle, Titus, Portland, and Shawville plants. GenOn had additional Pennsylvania coal plants at Cheswick, Keystone, and Seward that will continue to operate. For these it said, "we expect the resulting higher market prices to provide adequate returns on investment in environmental controls necessary to meet promulgated and anticipated requirements."

    Since all of these plants must meet the same regulations, clearly the remaining plants must have a competitive advantage. While there are a number of possibilities, one obvious point is that all but one of the coal-fired units that are shutting down are over 50 years old, with a number of them in their 60s. This is compared to Cheswick and Keystone, which are are in their late 40s, and Seward (a waste coal plant) that went into operation in 2004, replacing an older facility built in 1921.

    FirstEnergy also announced shutdowns of over 2,000MW of capacity in Pennsylvania from their Hatfield's Ferry and Mitchell plants. Like GenOn, in their 2013 10-K they explained this was "a result of the cost of compliance with current and future environmental regulations and the continued low market price for electricity." The closing of Mitchell was not a particular surprise as this was another 60+ year-old plant using relatively inefficient sub-critical boilers. Hatfield's Ferry, on the other hand, was less expected. The plant was only in its 40s and used more efficient equipment. FirstEnergy had even previously announced its intent to invest money for the necessary environmental upgrades and the Pennsylvania Department of Environmental Protection had granted the facility an extension until 2016 to comply with MATS, but the company decided to deactivate the plant in 2013, earlier than expected, at least suggesting that the environmental regulations were not the most significant cause.

    In testimony before a Senate Committee in 2013, FirstEnergy president James Lash shed more light on the issues. He said that even without the EPA the plants would be losing money, pointing out that Pennsylvania utilities are serving fewer customers than they did in 2008 and wholesale electric prices are about half of what they were. Under Pennsylvania's market-based system for purchasing electricity, Hatfield's Ferry and Mitchell would typically expect to be called to operate 76 percent and 60 percent of the time respectively, but by 2012 those numbers had dropped to 60 percent and 47 percent. To compound this, the two plants failed to clear the PJM capacity market auction last year so they would not receive additional payments to be available in 2016 and 2017. Lash even indicated the company considered retrofitting these unprofitable plants to burn cheaper natural gas, but ultimately determined it would not be cost effective and instead shut them down.

    While there is a long tradition claiming every EPA action will result in billions of dollars in compliance costs and bring the economy to ruin, the professionals at EPA and in the state environmental agencies have brought significant improvements to our health and safety in the more than 40 years they have been on the job, and have managed to do so without causing increases in retail rates.

    According to the Congressional Research Service, when adjusted for inflation, the cost of electricity is less than it was in 1960. The industry-sponsored Edison Electric Institute even noted growth in electric prices is "still comparable to or less than the pace for a variety of other important consumer products." They further showed that the cost in real dollars is less than it was in 1929.


    Rob Altenburg is senior energy analyst for PennFuture and is based in Harrisburg. He tweets @RobAltenburg.

    Wednesday, July 2, 2014

    Act 129 extension process begins

    On July 10 and 11, the Pennsylvania Public Utility Commission (PUC) will be hosting two days of stakeholder meetings regarding the Phase III extension process for Act 129, the state's energy efficiency resource standard for electric utilities.

    In 2008, Act 129 was signed into law, establishing a 3 percent energy efficiency and conservation (EE&C) goal and 4.5 percent peak demand reduction target for the first phase of the program, through May 2013. The law gave the PUC authority to set future reduction goals if the programs are determined to be cost effective (i.e. ratepayer benefit is greater than program costs). For phase II (June 2013 - May 2016) of the program, the PUC found the EE&C programs delivered approximately $3 in benefits for every $1 of cost, and therefore set a statewide average reduction goal of 2.3 percent (with each utility territory having slightly lower or higher goals). The PUC did not set peak demand targets for phase II due to concern about program design and cost effectiveness.

    It is great news that the PUC is beginning work on the phase III extension process and hosting stakeholder meetings early in the process. Early stakeholder involvement will allow for input on key technical assumptions and methodologies while the PUC's consultants are in the process of doing their work. It is important that the PUC establish phase III goals a full year before the new phase begins in June 2016 to give utilities enough time to develop implementation plans and to avoid blackout of customer programs.

    The PUC is only taking verbal comments at the meetings; there will be an opportunity for written comments later on in the process. The PUC will also be releasing its full phase III development schedule at these meetings. Here is a run down of next week's meetings and the relevant information:

    Day #1: Thursday, July 10 
    (Hearing Room 1, Commonwealth Keystone Building, 400 North Street, Harrisburg)
    Day #2: Friday, July 11
    (Hearing Room 1, Commonwealth Keystone Building, 400 North Street, Harrisburg)

    Stay tuned for more information. PennFuture will be working with other terrific energy efficiency advocates to promote strong Act 129 phase III goals.

    Christina Simeone is director of the PennFuture Energy Center and is based in Philadelphia. She tweets (occasionally) @SimeoneEnergy.

    Pennsylvania and national solar market evolution

    The cost of solar in Pennsylvania has never been lower.

    For 2013, the average installed cost per installed watt for the average sized Pennsylvania (6.5kw) solar system was $4.38 (and even less for systems over 10kw at around $4.00 per watt). And prices have likely declined since then. Meanwhile, solar is making national headlines for achievements like making up 74 percent of all new electricity generation capacity thus far in 2014. For the first time this year, residential solar growth has outpaced utility scale in new installations nationally.

    For Pennsylvania, solar is still chugging along, albeit much slower than in the past absent robust policy and incentives enjoyed by other states. This is due to the low installed cost and a force of dedicated, and now veteran, solar installation businesses. Other states see the writing on the wall and are combining this low cost opportunity with good policy to compound growth. For those states, markets are evolving at break-neck speed while Pennsylvania watches and waits.

    Take solar leasing, for example. This model, is expected to account for the finance and installation of 68 percent of all new systems in 2014. With names like SunRun and SolarCity leading the pack, they allow customers to install solar with little money down and still benefit by locking in a low fixed price for electricity for a predetermined length of time. Great, where do you sign up in Pennsylvania? Unfortunately, although we did see a short lived "blip" of solar leasing services in the Keystone state, the unfavorable policy landscape and unwillingness to renew and reinvigorate our renewable portfolio standard forced many of these companies to look to other markets.

    Another evolution we're now seeing is in deregulated electricity markets (Pennsylvania is a deregulated market so you can shop for green electricity right now). In these markets, solar customer acquisition is being spearheaded by retail electricity suppliers. In our state, you may know these guys as the ones offering you a competitive electricity rate. They are heavy on the marketing side with calls and mailers, and sometime even knocking on your front door. Despite the fact that they can be pesky, more than half of us are electricity shoppers. Something must be working because these these guys are closers.

    In mature solar markets, these same companies may offer you their electricity products and refer you to a solar installer, even going as far as setting up an onsite review and solar audit at no cost. If it turns out that solar isn't for you, then maybe you'll buy whatever retail electricity product they're selling, anyway. This symbiotic, cross sales-marketing approach is lowering customer acquisition costs for some the nation's largest installers and may become the norm in mature solar markets. If you didn't already know, customer acquisition costs are a big deal in American solar, comprising nearly 10 percent of the cost of a new residential installation. 

    What other solar market evolutions will Pennsylvania miss out on while policymakers fail to act?

    Evan Endres is project coordinator for the PennFuture Energy Center and is based in Pittsburgh. He tweets @ER_Endres.

    Wednesday, June 25, 2014

    Will the Supreme Court's UARG decision impact the EPA's Clean Power Plan?

    The recent decision by the U.S. Supreme Court in the Utility Air Regulatory Group (UARG) v. EPA is the big news this week. Despite the Court ruling against the Environmental Protection Agency (EPA) on a number of points, this has to go in the books as another EPA victory. EPA ended up getting most of what it wanted and, as a bonus, the agency is not forced to implement provisions of the act that it felt would be too costly for businesses.

    It would be nice to put a check mark in the win column and move on, but we have to ask if there will be wider repercussions for other EPA actions like the newly proposed Clean Power Plan Rule (CPPR).

    A reason to worry: Does "any" mean "any?"


    Justice Scalia (U.S. Gov't Image)
    In the UARG opinion, Justice Antonin Scalia tells us that while the term "air pollutant" includes greenhouse gases, the Clean Air Act's requirement for major emitters of "any air pollutant" to obtain permits doesn't include those same greenhouse gases. We can count on plenty of commentary and debate surrounding this conclusion. But, for now, the Court has spoken and settled the matter: "any air pollutant" does not necessarily mean "any air pollutant."

    But what about the Clean Power Plan?

    Justice Scalia mentioned in a footnote that the part of the Clean Air Act giving EPA the authority for CPPR was not at issue in this decision, but the two are still related. CPPR relies on Clean Air Act language that says states will need to establish standards of performance for existing sources of (you guessed it) "any air pollutant" that meet certain criteria. In light of this new ruling, we need some sort of test to tell us what "any" really means.

    It would have been helpful if Justice Scalia gave us some sort of checklist to apply, but no such luck. Instead, we are told "any" doesn't mean "any" when it's "incompatible with the substance of Congress' regulatory scheme." And, it might not mean "any" when that would result in "an enormous and transformative expansion in EPA's regulatory authority." For someone who chastised Congress in this very opinion for definitions that are "not conducive to clarity," we could have hoped for something more clear.

    Comparisons with Best Available Control Technology 

    Lacking a simple test, we need to dig into the opinion in more detail. The Court found that nothing prevented the word "any" from requiring Best Available Control Technology (BACT) to limit greenhouse gases at certain sources, so we can look and see if the same considerations apply to CPPR as they did to BACT.  If we compare CPPR to quotes from the UARG opinion regarding BACT, it appears they do:


    • Because of the restrictions in the Clean Air Act and the reliance on state developed plans, CPPR like BACT "cannot be used to order fundamental redesign of [a] facility."
    • EPA analyzed the costs and benefits and found that while CPPR could cost $6 to $9 billion, the monetized benefits would be somewhere between 6 and 12 times the cost. So, like BACT, the EPA has considered "if the proposed regulatory burden outweighs any reductions in emissions to be achieved."
    • The Clean Air Act also specifies that the achievability of the goals under CPPR must be adequately demonstrated. Like BACT, this suggests CPPR isn't "disastrously unworkable."
    • CPPR also will only apply to relatively large existing generating facilities. Again like BACT, "we are not talking about extending EPA jurisdiction over millions of previously unregulated entities, but about moderately increasing the demands [on those] already subject to regulation." 

    We also have a previous decision, AEPS v. Connecticut, where the court made it clear that the Clean Air Act "speaks directly" to carbon pollution from power plants and at least implied that this applied to existing sources as well. It seems EPA has some strong arguments that they are on the right track with CPPR.

    On site vs. off site?

    Even if EPA is permitted to regulate carbon pollution from existing sources, some people are suggesting it can't establish targets nearly as stringent as those it has proposed. The claim here is that EPA lacks the authority to look to off-site or outside-the-fence-line measures such as redispatch of generation, renewable energy, and energy efficiency in setting its goals as it has done in CPPR. Justice Scalia touched on this in his discussion of BACT, but it was far from a ringing endorsement. He used the phrase "assuming without deciding that BACT may be used to force some improvements in energy efficiency" and then went on to discuss some reasons why doing so wouldn't result in "unbounded regulatory authority." Once again, it seems that EPA can make an argument that the CPPR requirements are analogous to BACT and the same considerations should suggest the EPA is within its authority to require such things. But, when the Supreme Court decides not to decide something, it's a bad idea to try and draw conclusions.  

    Where are we now?

    Is there any doubt CPPR is going to end up being challenged in court? EPA certainly expects this, as the agency took the extra step of including a 104-page legal memorandum with its proposed rule.  Justice Scalia seems to expect this too as a number of comments in his opinion could be interpreted as him laying down markers for the next case.

    It seems a reasonable bet that CPPR will survive in some form, as even conservative members of the Court are increasingly more comfortable with EPA's authority to regulate carbon pollution. In 2007, the landmark Massachusetts v. EPA decision was a narrow 5 to 4 victory with all four conservative justices dissenting. Now, only Justices Thomas and Alito felt the need to state that, while they concurred in the judgment, it was on the assumption that the decision in Mass. v. EPA was correct.


    Rob Altenburg is senior energy analyst for PennFuture and is based in Harrisburg. He tweets @RobAltenburg.