May 19, 2015

An Update on State-Level Clean Energy News From Around the Country

In the last few weeks, state-level stakeholders around the country have been busy reforming renewable portfolio standards, proposing changes to net metering policies, and studying the potential effects of the EPA’s Clean Power Plan. Also, in an unprecedented move, the Hawaii state legislature voted to make electricity generation 100 percent renewable by 2045.

More on these developments in our state dispatch below.

As action unfolds in the states, there’s also been some meaningful activity on clean energy at the federal level in recent weeks. Sen. Angus King, an Independent from Maine, introduced a bold piece of legislation last week designed to promote personal energy independence through advanced technologies. The bill would ensure that distributed energy resources are able to be connected to the grid in a reasonable timeframe for a reasonable price, and with reasonable compensation for the benefits they offer utilities. Also last week, Sen. Ron Wyden (D-Ore.) introduced legislation that would boost funding for smart grid technology.

In other federal news, the Supreme Court announced that it would hear the Federal Energy Regulatory Commission's Order 745 demand response case. Also in the courts, judges on the U.S. Court of Appeals of the District of Columbia Circuit appear likely to dismiss the first legal challenge to the Clean Power Plan.
And now to the states. 

Lawmakers in Hawaii passed legislation last week (in a 74-2 vote) requiring the state to generate 100 percent of its electricity from renewable energy resources by 2045. If HB 623 is signed into law by Governor David Ige, Hawaii will become the first U.S. state to attempt complete decarbonization of the power sector.

Today, Hawaii’s energy mix is more than 80 percent fossil fuel, with oil providing the majority of electricity generation on the islands. However, renewables are growing fast. Hawaiian Electric Company, the state’s sole privately owned utility company, previously determined it would be feasible to reach 40 percent renewables by 2030. Getting to 100 percent by 2045 will be difficult, but not entirely far-fetched.

“As the first state to move toward 100 percent renewable energy, Hawaii is raising the bar for the rest of the country,” said Chris Lee, the Chairman of the House Energy and Environmental Protection Committee and introducer of HB 623, in a statement. “Local renewable projects are already cheaper than liquid natural gas and oil, and our progress toward meeting our renewable energy standards has already saved local residents hundreds of millions on their electric bills.”

Hawaiian regulators are now working to adapt electricity rates to accommodate an increasingly renewable-centric grid. At the same time, there are concerns bubbling up around NextEra’s proposed acquisition of HECO and what it would mean for renewables in the state.

New Mexico 
In December, Public Service Company of New Mexico (PNM) proposed applying an $18-$30 per month interconnection fee on distributed solar starting in January 2016. In recent weeks, the New Mexico state attorney general has come out against the proposal, backing the position of solar advocates like The Alliance for Solar Choice. The rate case is likely to continue through the year.

The solar sector in New Mexico also saw a loss last month when Governor Martinez vetoed Senate Bill 391, which would have extended the state’s solar tax credit through 2020. As it stands now, the tax credit will expire at the end of 2016.

With 325 megawatts of solar energy installed at the end of 2014, New Mexico currently ranks 11th in the country in installed solar capacity, according to the Solar Energy Industries Association (SEIA).

As PNM has been working to reform its solar tariffs, it has also been weighing what to do with the iconic San Juan coal power plant that was set to close in 2017. On May 1, PNM and mining company BHP Billiton announced they had reached an agreement with regulators to keep the coal plant open through 2022, the Santa Fe New Mexican reports.

As a largely coal-powered state with no renewable portfolio standard, Utah may be an unexpected place for a solar boom. But it’s happening nonetheless, as Breaking Energy reports.

SunEdison announced last month it has signed agreements to build three new utility-scale solar power plants in Utah, with a total capacity of 262 megawatts. SunEdison now has more than 720 megawatts DC of solar energy in development and 306 megawatts AC of wind power in operation in the state.

The Washington state legislature is currently in a special session with a long list of energy-related bills still on the agenda. A Senate bill (SB 5735) that would give utilities alternative ways to comply with the state’s 15 percent renewable portfolio standard has been reintroduced. And a House bill (HB 2045) that would effectively eliminate net metering in the state is being held at the present status.
Washington is also considering the implementation of a carbon market with bills in both the House (HB 1314) and Senate (5283).

The Senate is considering an extension of its alternative fuel tax credit through 2025 (SB 5445) with similar legislation in the House (HB 1396). The nonprofit group Solar Washington regularly updates a list of legislation in the state that pertains to solar and other energy-related topics.

In Oregon, Idaho Power has proposed changing the terms under which the utility enters into PPAs with qualifying resources under the Public Utility Regulatory Policies Act. The proposal would set the standard contract eligibility cap for wind and solar projects to 100 kilowatts and change the contract term length from 20 to two years.

With increasing amounts of renewable energy coming on-line, Idaho Power says the changes are needed so that “customers are not exposed to unnecessary and unneeded risk.” Renewable energy advocates in the state believe the changes would add crippling costs to small projects. The Oregon Public Utility Commission is currently reviewing the proposal. The Idaho PUC approved contract changes in February.

In the near term, SEIA expects to see significant solar market growth in Oregon and Washington. The two Northwest states combined are expected to install more than 200 megawatts of solar electric capacity by the end of the year, which is enough to power roughly 25,000 homes.

In other renewable energy news, Oregon is considering a bill (HB 2187) that would explore extending net metering to ocean renewable energy. The state’s net metering law currently allows utility customers that have installed a PV or wind system to be compensated for the electricity they send to the grid.

Montana lawmakers are delaying action on a net metering policy until a mandated study has determined the cost effectiveness of the program. The state’s dominant utility, NorthWestern Energy, supports the delay.

Nevada is bumping up against a net metering cap. According to solar advocates, the cap threatens to bring Nevada’s solar industry to a grinding halt, putting 5,900 solar jobs at risk.

NV Energy, owned by the utility conglomerate Berkshire Hathaway Energy, argues that net metering should be allowed to lapse, not only because it unfairly favors solar customers, but also because solar is not able to compete without the subsidy, which is valued at 7 cents per kilowatt-hour.

Governor Brian Sandoval is now quietly weighing his course of action after meeting with stakeholders on both sides of the issue. Nevada only holds legislative sessions every two years, so any reforms to the cap will need to pass before the end of May this year.

The California Public Utilities Commission proposed major reforms to the state’s residential electricity rates last month, including flattened tiers, time-of-use rates and minimum bills. The proposed changes are a mixed bag for solar. The CPUC is also engaged in an ongoing effort to reform the state’s rules on demand response.

The push for regulatory reform comes as California is seeing accelerated adoption of renewable energy and distributed energy resources. California’s three major investor-owned utilities recently topped the list of utilities that added the most new solar capacity in 2014. According to the Energy information Administration, California is the first state to generate more than 5 percent of its annual electricity generation from utility-scale solar power.

Last month, Arizona utility APS proposed increasing grid access fees on residential solar customers "from 70 cents per kilowatt -- or approximately $5 per month -- to $3 per kilowatt, or roughly $21 per month for future residential solar customers.”

The Arizona Corporation Commission, the regulatory body overseeing APS, determined that a $21 fee would be reasonable back in 2013, but ultimately settled on the lower number amid pushback from solar supporters. According to APS, the $5 fee has done nothing to curb rooftop solar deployment. Last year, the first year the fee was put in place, was a record year for rooftop solar in APS territory -- up 10 percent from 2013.

APS believes $67 per month is a truly fair interconnection fee to charge residential solar customers and will slowly work toward that goal, Barbara Lockwood, general manager of regulatory policy and compliance at APS, recently told Greentech Media. “We know that solar can adapt as we move forward into the future,” she said.
Last week, APS reported improved first-quarter earnings due to a rate increase to cover the costs of a new coal generation, according to AZ Central. APS is also considering joining California's western energy imbalance market, which the utility says could save it $7-$18 million per year.

Tucson Electric Power proposed last month to reduce net metering credits for residential solar in its territory, bringing the purchase price the utility pays for excess rooftop solar down to what it pays for electricity from large local solar arrays. Meanwhile, SolarCity has pulled 85 workers out of Arizona in response to new demand charges Salt River Project imposed on solar customers. SolarCity filed a lawsuit against the Arizona utility earlier this year.

House representatives in Maine voted overwhelmingly last week (138-1) to fix a typo that would restore $38 million in energy efficiency spending, theBangor Daily News reports.

In March, the Maine Public Utilities Commission voted to cut funding for the Efficiency Maine Trust, an independent organization that implements efficiency upgrades across the state, from $60 million down to $22 million. The issue stems from a missing “and” in a 2013 law. Legislation passed in Maine’s Democratic-controlled House restores efficiency funding by fixing the typo. LD 1215 now goes to Maine’s Republican-controlled Senate.

New York
New York’s ambitious Reforming the Energy Vision proceeding has been delayed, Capital New York reports. Two deadlines were delayed by at least a month, according to documents filed with the PSC.
“Considering the critical importance of this initiative, extending the self-imposed deadlines for submittal of certain filings makes perfect sense,” PSC spokesperson James Denn said.

Last month, New York announced $160 million for large-scale clean energy projects to help meet the state’s renewable portfolio standard.

New Jersey
Hawaii isn’t the only state moving toward zero-carbon electricity. Legislation currently being considered in the New Jersey Senate (S 2444) would require the state to get 80 percent of its electricity from renewable sources by 2050. The state’s current policy is 22.5 percent renewable energy by 2022.

But while the bipartisan bill has been voted out of committee, it’s a long shot at best. Even if the bill passed the legislature, Gov. Christie would likely veto it, reports.

A new study by the Massachusetts Net Metering and Solar Task Force, a group created by the state legislature last year, determined that raising the net metering cap is key to continued growth in the state’s solar sector. The net metering caps for solar projects over 25 kilowatts in National Grid’s service territory have already been hit. The Task Force found that unless the legislature acts to raise the caps, the development of hundreds of solar projects throughout the state could come to a halt.

“With hundreds of jobs already at risk, the consequences of failing to provide near-term relief from the net metering caps are profound,” said Fred Zalcman, managing director of government affairs for the Northeast states at SunEdison and SEIA’s representative on the Task Force. “That said, SEIA also strongly supports a transition to a long-term sustainable net metering and solar incentive program and looks forward to continuing to work with the legislature and other stakeholders to responsibly manage that transition.”

New York clean energy firm Allco Finance Limited is suing Connecticut over its energy subsidy program for discriminating against out-of-state business, the Hartford Courant reports.

Solar advocates in Vermont want to reform the state’s net metering policy to allow for larger, grouped projects to benefit from the incentive, Utility Dive reports. The current policy limits net-metered projects to 500 kilowatts.

The Pennsylvania PUC is moving to set limits on net metering in the state, thePittsburgh Post-Gazette reports. The initial proposal would have prevented distributed energy generators from producing more than 110 percent of their annual electricity demand. The PUC recently proposed increasing the cap to 200 percent. Solar advocates argue the change is unnecessary because Pennsylvania already has a 50-kilowatt cap on residential generators.

Tesla Motors may soon have an opportunity to sell its electric vehicles directly to consumers in Maryland, following a recent legal victory on the same issue in New Jersey. The state legislature passed a bill allowing direct-to-consumer sales last month. Gov. Larry Hogan could sign the bill any day.

At the Maryland Public Service Commission, attention will be focused on the proposed $6.8 billion Exelon-Pepco merger. The utility regulator currently has until May 15 to make a decision. Regulators in New Jersey and Delaware have already approved the deal. In addition to Maryland, regulators in Washington, D.C. -- where there’s strong opposition -- will also have to sign off on the merger in order for it to move forward.
Washington, D.C. 

As D.C. regulators wait to act on the Exelon-Pepco merger, utility officials in D.C. and the surrounding area are investigating the cause of a widespread outage that took place last month, RTO Insider reports. The failure, which affected about 2,000 people, stemmed from a small explosion at a substation in Maryland.

The Texas Senate passed a bill (SB 931) last month to eliminate the state’s successful renewable portfolio standard, which is now headed to the Texas state House, Law 360 reports. Members of the clean energy industry and their supporters fear the bill could force them out of the state.

In other news highlights, the Texas Senate recently passed a bill preventing local fracking bans; the state attorney general has vowed to challenge the EPA Clean Power Plan; Oncor completed work on a sophisticated microgrid with S&C and Schneider Electric; and Austin Energy has issued a request for 600 megawatts of utility-scale solar. The Environmental Defense Fund is tracking several other news items pertaining to energy, water and the climate in Texas.

Mississippi’s PSC announced last month that it’s forging ahead with a new net metering policy. Regulators are now collecting public comments on the policy, with a deadline of July 1. The plan has strong backing from many solar groups.

A recent study commissioned by the PSC found "it is in the best interest of ratepayers to proceed with the development of proposed net metering and interconnection rules.”

North Carolina
A bill (HB 760) that would lower North Carolina’s RPS target from 12.5 percent to 6 percent has passed the state House and is now making its way through the Senate. The bill also restricts the amount utilities can rate-base to support renewable energy to $12 per year, the AP reports.

While the legislature looks to ease renewable energy requirements, North Carolina is experiencing a solar energy boom. But proponents of the industry want to see more action. To facilitate market expansion, a lawmaker introduced a bill (HB 245) that would allow for third-party-owned solar, although it has been sitting in the House since March. Greenpeace is holding a campaign around Duke Energy’s shareholder meeting to stop the utility, which opposes 245, from blocking the bill.

Louisiana’s House Ways and Means Committee has introduced several bills that would roll back tax credits for solar projects. House Bill 510 would move up the sunset date for the state’s solar tax credit by more than two years, from December 2017 to July 1, 2015. House Bills 779 and 817 would cap the tax credit to the first $20,000 of a solar system’s cost; current law gives homeowners that choose to go solar a tax credit equal to 50 percent of the first $25,000 of the system cost.

Earlier this year, a contentious report released by the Louisiana PSC determined that the state’s current net metering policy would shift $31 million onto non-solar customers by 2020. The Green Tea Party, a pro-solar free market group, is actively working to prevent the erosion of net metering and tax credits for solar in the state.

On May 12, Governor Nathan Deal signed a bill (HB 57) into law allowing for third-party owned solar installations. Both the state House and Senate unanimously approved the measure earlier this year, which is likely to benefit national solar installers like SolarCity, Sunrun and Vivint. Georgia Powersupported the legislation because it allows utilities to require that third parties to pay for "all equipment necessary to meet applicable safety, power quality, and interconnection requirements."

Solar advocates from across the political spectrum are continuing their push to put the issue of third-party-owned solar on the state’s 2016 election ballot. The initiative, led by the group Floridians for Solar Choice, received the signatures it needs to seek authorization for the petition from the Supreme Court. However, the campaign still has several hurdles still to overcome, notes Jim Pierobon of the website The Energy Fix.

Louisville Gas and Electric and Kentucky Utilities recently dropped their proposal to increased fixed monthly charges on all customers by 67 percent. In a settlement reached between the utilities and clean energy advocates, customers will see an increase in some of their usage rates, Public News Service reports. These changes will give KU an additional $125 million in annual revenue, and LG&E an additional $7 million.
Also, lawmakers in Kentucky came together to approve the innovative energy efficiency financing tool known as property-assessed clean energy (PACE).

Virginia Governor Terry McAuliffe signed several bills into law last month on Earth Day that are designed to expand the clean energy industry and create jobs in the state. HB 1950 increases net metering from 500 kilowatts to 1 megawatt; HB 2237 allows utilities to recover costs for solar projects larger than 1 megawatt and establishes that projects with a capacity of 500 megawatts are in the public interest; HB 1446 expands financing options for energy efficiency projects.

Separately, a new report by the Advanced Energy Economy Institute found that implementing the EPA Clean Power Plan could create between 5,700 and 12,600 jobs (temporary and permanent) in Virginia.

The Illinois state legislature is currently considering several controversial pieces of legislation.

There’s HB 3328, a bill backed by ComEd, which would encourage utilities to invest in renewable energy, smart grids and other grid-edge technologies. The bill would also change net metering policies and implement demand charges starting in 2018, which is a concern for solar companies.

“We have serious reservations,” said Amy Heart, senior manager of public policy at Sunrun and TASC representative. “It’s not that a conversation on demand charges doesn’t need to happen; it does, but not through legislation. Those are conversations that need to happen at the PUC and in rate cases. It’s an unprecedented change throughout the region for a utility to propose legislation without knowing the impacts.”

Then there’s HB 2607/SB 1485, a “Clean Jobs Bill” that looks to achieve a 20 percent reduction in energy use through efficiency measures, as well as increasing the RPS from 25 percent renewable energy generation by 2025 to 35 percent by 2030. The bill would create an estimated 32,000 jobs and could save Illinois homes nearly $100 per year.

Another piece of contentious legislation in Illinois concerns Exelon’s nuclear power plants. HB 3293/SB 1585 would create a Low Carbon Portfolio Standard (LCPS) that would allow Exelon to keep three nuclear plants operating.

Labor groups rallied in support of the nuclear facilities last week, delivering 10,000 signatures in support of the LCPS. The AFL-CIO estimates closing the station would put almost 8,000 people out of work. A state of Illinois report released in January found that closing the three nuclear plants would cost the state $1.8 billion each year in lost economic activity, up to $500 million each year in increased energy costs, and as much as $1.1 billion each year due to increases in carbon and other pollutants.

Others see the situation differently. A study by the non-profit BEST Coalition determined that the LCPS bill “designed to boost revenues for Exelon’s Illinois nuclear plants” would ultimately cost ratepayers $1.6 billion dollars.

According to Exelon, lawmakers must make a decision on HB 3293/SB 1585 this session. If the bill fails to pass, the plants need to be turned off to meet PJM requirements and cannot easily be turned back on at a later date. All three of these energy bills currently sit with the Illinois House rules committee.

Xcel Energy recently announced it plans to strictly limit the size of community solar projects in Minnesota, preventing developers from collocating multiple 1-megawatt projects at a single site. "Developers are proposing projects that look and act like utility-scale solar projects, and at the same time, the participant credit has been set at a value intended to facilitate the financing of much smaller community-based projects," Xcel Energy wrote in a letter to the PUC. The move would cancel more than 80 percent of proposed projects, which has sparked a backlash from solar developers.

Wisconsin recently became the 14th state in a group of states suing the EPA over the Clean Power Plan. Opponents say the proposed carbon cuts are far too costly. 

Democratic state legislators introduced a package of bills last month to reform Michigan’s energy policy, ahead of its expiration at the end of the year (HB 4055, HB 4518, HB 4519, SB 295, SB 297). The “Powering Michigan’s Future” legislation would increase Michigan’s renewable energy target to 20 percent by 2022 (doubling a 10 percent target by 2015 that was established in 2008), double the energy efficiency standard, and eliminate the renewable energy surcharge.

“[The] time to act is now to make electricity more affordable and grow our economy,” said Rep. Sam Singh (D-East Lansing) in a statement. “We have a real opportunity to grow Michigan businesses that are already manufacturing and installing products like energy-efficient appliances and windows, and components for wind turbines and solar panels.”

As the Democrats’ bills make their way through various committees, Michigan Republicans have made it clear they do not support increasing the state’s renewable energy targets and will seek to remove efficiency standards, Midwest Energy News reports. The Republican governor and leaders in the legislature are developing several alternative plans; the commonality is that they all want to move away from mandates.

Ohio’s Energy Mandates Study Committee, established last year by SB 310, which put a two-year freeze on the state’s RPS, is engaged in an ongoing fact-finding quest to determine the future of Ohio’s alternative energy standard. Most recently, data presented to the committee shows that energy-efficiency programs are cost-effective for ratepayers, Midwest Energy News reports. Proponents of renewable energy say they’re concerned the committee is not properly considering the benefits of renewable energy or energy efficiency, and is instead focusing solely on the weaknesses.

Nonprofit groups in Indiana are suing Indiana House Republicans for allegedly corresponding with utilities in secret over a controversial solar bill, theIndianapolis Star reports. The bill (HB 1320), which would have cut net-metering credits and added fixed charges on solar customers, appears to have died this session.

Kansas Governor Sam Brownback unveiled a plan in early May to weaken the state’s target of 20 percent renewable energy by 2020. Under the proposed plan, the state mandate would be changed to a voluntary goal.

Environmentalists are concerned about letting utilities off the hook, as well as the alleged back-room negotiations that lead to the deal. They also oppose the 10-year limit the plan would place on property tax credits for wind projects. Members of the wind industry, however, view the plan as a reasonable compromise. Wind already provides 21 percent of the electricity used in Kansas, surpassing the current renewable energy requirement.

“This isn’t bad. This is long-term tax certainty for us,” said Jeff Clark, executive director of the Wind Coalition, told the Wichita Eagle.

Changes to Kansas’ RPS come as Texas and North Carolina are considering similar action. Taken together, this could signal a broader shift in stakeholder attitudes toward renewable energy policies.

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