Agrees that all SEMA members must pay for Cape Cod reliability

Update courtesy of Utility Regulatory News #4059: The U.S. Court of Appeals for the District of Columbia Circuit has refused to overturn orders from the Federal Energy Regulatory Commission (FERC) that had declared reasonable a regional transmission organization’s (RTO’s) practice of requiring all participants in the Southeastern Massachusetts (SEMA) wholesale electric market to help underwrite back-up service for Cape Cod. The appellants were a group of municipally owned electric utilities who claimed that the local RTO, the Independent System Operator of New England (ISO-NE), had unfairly required the municipals to pay for auxiliary power supplies for Cape Cod. The municipals, led by Braintree Electric Light Dept., had argued that  it was inequitable for them to be charged by ISO-NE for reserve capacity for Cape Cod because the subject power supplies were uneconomic and because none of the municipals were located on the Cape or were serving any customers on the Cape.  The municipals pointed out that their operating characteristics for service to the mainland were quite different from those of the entities serving Cape Cod, which differences they said justified a FERC order directing ISO-NE to either exempt the municipals from the Cape Cod-related charges already instituted or to divide SEMA into separate Upper (mainland) and Lower (Cape Cod) subdivisions. The FERC, however, had turned down both requests, explaining that ISO-NE’s tariffs were not unduly preferential and that the changes sought by Braintree and the others could cause service reliability on Cape Cod to be seriously degraded. Upon appeal, the court found that the FERC had properly interpreted both the RTO’s tariffs and an associated settlement agreement pertaining to Cape Cod. The court stated that the FERC had reasonably resolved the municipals’ claims and had reasonably construed the stipulation. For the full story, subscribe to URN.

Posted: February 28th, 2012 under energy markets, regulation, reliability.
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Deems public utility moniker inapplicable, special rates unnecessary

Update courtesy of Utility Regulatory News #4059: Although not disputing that there is growing interest in electric vehicles (EVs), the Oregon Public Utility Commission has ruled that the EV industry remains in a nascent stage such that there is no need for the commission to exercise the full extent of its regulatory authority over EV-related services. In particular, the commission held that independent, nonutility electric vehicle service providers (EVSPs), such as those offering charging services at public locations, should not be classified as public utilities. The commission reported that state law specifically exempts from the definition of a public utility an entity that sells electricity for use as a motor fuel. Moreover, the commission said, neither do EVSPs fall within the category of an electric service supplier under state statutes, in that EVSPs do not themselves generate the power they sell. As to setting special rates for EV charging stations, the commission averred that EVs are not yet on the road in sufficient numbers to warrant a mandate that electric utilities devise EV-explicit rates or a separate EV rate class. However, the commission urged utilities to educate consumers about the advantages of time-of-use (TOU) pricing and to encourage EV customers to migrate to TOU schedules. The commission added that while it was not requiring utilities to develop EV-specific rates, it did believe that electric utilities should refine their existing integrated resource plans (IRPs) so as to take into account likely future increases in demand for flexible capacity. The commission therefore instructed the utilities to revisit their IRPs and revise them as needed to accommodate projections of future EV needs. For the full story, subscribe to URN.

Posted: February 28th, 2012 under electric vehicles, regulation.
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Rate increase further blunted by SNF settlement proceeds

Update courtesy of Utility Regulatory News #4057: In authorizing a combined electric and natural gas utility to increase its rates by less than half of what had been requested, the Wisconsin Public Service Commission has ruled that in light of the state’s ongoing economic woes, it would be inappropriate to require the utility’s ratepayers to pay up front for environmental compliance costs that will not actually be incurred until sometime in the future, if ever. The utility, Northern States Power-Wisconsin (NSPW), had sought more than $29 million in electric rate relief and $8 million in natural gas rate relief, the basis for which was attributed in part to a need to prefund two projects, one for improving certain facilities to assure compliance with the new Cross-State Air Pollution Rule (CSAPR) and the other for cleaning up a former manufactured gas plant site. Noting that the CSAPR is under appeal and that questions remained about insurance indemnification as to the gas plant site remediation work, the commission found that it would be better to adhere to its long-standing policy of deferring environmental costs as they are incurred, for future amortization. The commission explained that such an approach has worked well for almost 20 years, has allowed for closer tracking of costs, and has provided for proper ratepayer/shareholder cost allocations. In approving additional gas revenues of $2.9 million and electric revenues of $12 million, the commission observed that NSPW will soon be receiving its share of an award stemming from a breach-of-contract suit brought against the U.S. Department of Energy (DOE), in which DOE was faulted for failing to receive and store spent nuclear fuel (SNF). According to the commission, the Wisconsin portion of the SNF litigation proceeds will total almost $13 million, thus muting the overall effect of the rate increases granted NSPW. For the full story, subscribe to URN.

Posted: February 13th, 2012 under Nuclear Spent Fuel, ratemaking, regulation.
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Consider forward-looking policies despite stay of new rule

Update courtesy of Utility Regulatory News #4055: In acknowledgement that at some point new power plant emissions strictures are going to be implemented and enforced, the Indiana Utility Regulatory Commission and the Missouri Public Service Commission have laid the groundwork for compliance with those regulations, even though the new rules have been temporarily stayed by a federal appeals court. The two commissions focused on the Cross-State Air Pollution Rule (CSAPR), released by the U.S. Environmental Protection Agency in July. The CSAPR sets forth a schedule of state-specific limits on emissions of nitrogen oxide (NOx) and sulfur dioxide (SO₂) from electric generation facilities, and also provides an aggressive timeline for achieving the required reductions in NOx and SO₂. Although cognizant that the CSAPR was under appeal, the Indiana commission afforded Northern Indiana Public Service Co. special rate-making treatment for the recovery of costs incurred in planning for and initiating certain associated plant improvements and pollution control construction projects. The Missouri commission likewise addressed preliminary strategies for complying with the CSAPR, granting Ameren Missouri authority to engage in a form of emissions trading. Under that plan, Ameren would be permitted to exchange excess SO₂ allowances for a number of NOx allowances sufficient to satisfy the CSAPR requirements. Both commissions reasoned that regardless of any temporary stay of the regulations, it is inevitable that new emissions limits will eventually become mandatory. For the full story, subscribe to URN.

Posted: January 30th, 2012 under generation, regulation.
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Cites complexity of issues raised

Update courtesy of Utility Regulatory News #4054: Careful to stress that its ruling should not be taken as an indication of its opinion on the merits, the U.S. Court of Appeals for the District of Columbia Circuit has temporarily halted implementation of the U.S. Environmental Protection Agency’s (EPA’s) new Cross-State Air Pollution Rule (CSAPR). The CSAPR, issued in July 2011 but modified by the EPA itself just three months later, was crafted to address complaints by certain states that toxic emissions emanating from power plants in upwind states were wafting over downwind states. The CSAPR applies to 27 states and sets forth an aggressive timeline for decreases in such pollutants as nitrous oxide and sulfur dioxide. Various states, electric utilities, and industrial groups appealed the rule, however, arguing that the compressed schedule for compliance and the extent of the emission reductions required would cause irreparable economic harm and could jeopardize service reliability. The court found that the petitioners had met the evidentiary threshold for a stay, and it agreed with them that the issues surrounding their appeal should be formally designated as “complex.” For the full story, subscribe to URN.

Posted: January 27th, 2012 under regulation.
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