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HYDROGEN: Advocates worry proposed federally incentivized green hydrogen production facilities in Arizona and other arid states will further deplete already strained water supplies. (Floodlight)
GRID:
UTILITIES: Nevada regulators propose allowing NV Energy to stop charging a single statewide disaster preparedness rate so customers in the southern part of the state will not subsidize wildfire prevention in the north. (Nevada Current)
ELECTRIC VEHICLES: An Idaho sanitation company replaces its diesel-fueled garbage collection fleet with electric trucks. (Idaho Statesman)
OIL & GAS:
SOLAR:
ELECTRIFICATION: Berkeley, California’s city council votes to approve a ballot initiative that would tax large buildings that use natural gas-fueled appliances. (Daily Californian)
CLIMATE: An investigation finds Nevada officials continued to offer contracts to a startup even after its carbon emissions tracking system failed to perform as promised. (ProPublica)
POLITICS: U.S. Rep. Harriet Hageman, a Wyoming Republican, proposes removing Boulder, Colorado’s gas stations and streets, citing the progressive city’s efforts to fight climate change. (WyoFile)
BIOFUELS: A southern California city plans to upgrade its wastewater treatment plant to produce biofuels from organic waste and sewage sludge. (news release)
As Maine considers building a new toll highway to improve commutes in and out of Portland, a state climate working group is drafting strategies to reduce driving in the state.
State officials say the two efforts are not inherently at odds, but experts and advocates caution that continued highway expansion could reverse climate progress by encouraging more people to drive.
The parallel discussions in Maine raise a question that few states have yet grappled with: can governments keep expanding car infrastructure without putting climate goals out of reach?
Transportation is the largest source of greenhouse gas emissions in Maine and many other states. Electric vehicle adoption is growing, but not fast enough to solve the problem on its own, which is why an updated state climate plan is expected to include a new emphasis on public transit, walking, biking, and other alternatives to passenger vehicles.
Zak Accuardi, the director for mobility choices at the Natural Resources Defense Council, said the best way for states to invest in their road systems in the era of climate change is to not build new roads, but maintain and upgrade existing ones to accommodate more climate-friendly uses.
“The states who are taking transportation decarbonization really seriously are really focused on reducing driving, reducing traffic,” Accuardi said, pointing to Minnesota and Colorado as examples. “Strategies that help support more people in making the choice to walk, bike or take transit — those policies are a really important complement to … accelerating the adoption of zero-emissions vehicles.”
Electric vehicles have been Maine’s primary focus to date in planning to cut back on transportation emissions. Goals in the state’s original 2020 climate plan included getting 41,000 light-duty EVs on the road in Maine by next year and 219,000 by 2030. The state is far behind on these targets. The climate council’s latest status report said there were just over 12,300 EVs or plug-in hybrid vehicles in Maine as of 2023.
A 2021 state clean transportation roadmap for these goals recommended, among other things, the adoption of California’s Advanced Clean Cars II and Advanced Clean Trucks rules, which would require an increasing proportion of EV sales in the coming years.
Maine regulators decided not to adopt Clean Cars II earlier this year in a 4-2 vote. A subsequent lawsuit from youth climate activists argued the state is reneging on its responsibility to meet its statutory climate goals by choosing not to adopt such rules.
The original climate plan also aimed to cut Maine’s vehicle miles traveled (VMT), which measures how much people are driving overall, by 20% by 2030. The plan said getting there would require more transit funding, denser development to improve transit access, and broadband growth to enable remote work, but included little detail on these issues. It did not include the words “active transportation” at all.
That appears poised to change in the state’s next four-year climate plan, due out in December. Recommendations from the state climate council’s transportation working group have drawn praise from advocacy groups like the Bicycle Coalition of Maine.
The group’s ideas include creating new state programs to support electric bike adoption, including in disadvantaged communities; paving 15 to 20 miles of shoulders on rural roads per year to improve safe access for cyclists and pedestrians; and, depending on federal funds, building at least 10 miles of off-road trails in priority areas by 2030.
The group also recommended the state “develop targets related to increased use of transit, active transportation, and shared commuting that are consistent with Maine’s statutory emissions reduction goals.”
In unveiling the recommendations, working group co-chair and Maine Department of Transportation chief engineer Joyce Taylor noted community benefits from road safety upgrades to accommodate these goals.
“I think this also gets at housing and land use,” she said. “If you can get people to want to live in that community, that village, I think we could all say that it’s more economically vibrant when people are able to walk and bike in their village and feel like they can get around and it’s safe.”
The Gorham Connector project would offer a new, tolled bypass around local roads as an alternative to upgrading those existing routes, an option that’s also been studied. State officials say the new road would smooth the flow of local traffic, including public transit.
Towns like Kittery, in southern Maine, have tried to focus on a more inclusive array of transportation strategies in their local work to cut emissions from passenger vehicles.
Kittery town manager Kendra Amaral is a member of the climate council’s transportation group. She couldn’t comment on the state’s approach to the Gorham Connector, which is outside her region. But she said her town’s climate action plan, adopted this past May, “threads together” public transit, housing growth and emissions reductions.
Stakeholders who worked on the plan, she said, strongly recommended ensuring that housing is in walkable or transit-accessible places.
Amaral said the town has invested in new bus routes, commuter shuttles and road improvements to promote traffic calming and create safer bike and pedestrian access, as well as in EV growth. And she said Kittery was a model for parts of a new state law that enables denser housing development.
“We can’t expect people to reduce (emissions) resulting from transportation without giving them options,” she said. But, she added, “there is no ‘one size fits all’ solution” for every community. “I believe we have to avoid the ‘all or nothing’ trap and work towards (the priorities) that get the best results for each community,” she said.
The Maine Turnpike Authority acknowledges the proposed Gorham Connector project in the Portland area would increase driving. But paired with improvements to transit and land-use patterns, they say the proposed limited-access toll road would decrease emissions overall — though research and other cases cast doubt on this possibility.
“It’s possible for a project like this to be designed in a way that does produce favorable environmental outcomes,” Accuardi said, but “the devil is really in the details.”
For example, he said the new road’s tolls should be responsive to traffic patterns in order to effectively reduce demand. If they’re too low, he said, the road will become jammed with the kind of gridlock it aimed to avert. But set the tolls too high, and the road won’t get used enough.
He said it’s true that this kind of new access road can lead to denser housing development in the surrounding area — but the road will need to be tolled carefully to account for that increased demand.
And the proceeds from those tolls, he said, should ideally go toward new clean transportation alternatives — such as funding additional transit service or safe walking and biking infrastructure around the new toll road, helping to finance subsidized affordable housing in transit-served areas, or allocating revenues to surrounding towns that make “supportive land-use changes” to lean into transit and decrease driving.
Maine has indicated that it expects to use tolls from the Gorham Connector primarily, or at least in part, to pay for the road itself and avoid passing costs to other taxpayers.
But Accuardi said alternative strategies should see more investment than road expansions in the coming years if states like Maine want to aggressively cut emissions.
He said on average, across the country, states spend a quarter of their federal transportation funding on “expanding roads or adding new highway capacity.”
“That’s more money than states tend to spend on public transit infrastructure, and that really needs to be flipped,” he said. “We need to see states really … ramping down their investments in new highway capacity. Because, again, we know it doesn’t work.”
Last month saw another extreme weather milestone with the world’s hottest day on recent record registered on 22 July – yet another indication of the extent to which greenhouse gas emissions from human activities are changing our climate, the World Meteorological Organization (WMO) reported on Wednesday.
Global average temperatures for 13 consecutive months from June 2023 to June 2024 also set new monthly records.
“Widespread, intense and extended heat waves have hit every continent in the past year. At least ten countries have recorded daily temperatures of more than 50 degrees Celsius in more than one location,” said WMO Secretary-General Celeste Saulo.
These trends underline the urgency of the Call to Action on Extreme Heat, a new initiative launched in July by UN Secretary-General António Guterres to enhance international cooperation to address extreme heat.
“Earth is becoming hotter and more dangerous for everyone, everywhere,” stressed the UN Chief.
Extreme heat is causing a ripple effect felt right across society.
An annual 1℃ increase in temperature leads to a 9.1 per cent increase in poverty. Moreover, 12 per cent of all food produced is lost due to a lack of cooling and working hours equivalent to 80 million full-time jobs could be lost due to heat stress by 2030.
The consequences have become deathly. Nearly half a million heat-related deaths occurred each year from 2000 to 2019.
Taken together, extreme heat is tearing through economies, widening inequalities, and derailing the future of the Sustainable Development Goals.
“This is becoming too hot to handle,” said Ms. Saulo.
Listen to: ‘Heatwaves will be more frequent because of human-made climate change’ by United Nations News.
The UN chief launched the Call to Action to mitigate the dire environmental and socioeconomic consequences that are already evident.
The initiative emphasises the need for concerted effort in four critical areas: caring for the vulnerable, protecting workers, boosting resilience of economies and societies using data and science, and limiting temperature rise to 1.5℃ by phasing out fossil fuels and scaling up investment in renewable energy.
It brings together the expertise and perspectives of ten specialised UN entities, underscoring the diverse multi-sectoral impacts of extreme heat on human health, lives, and livelihoods.
“The WMO community is committed to responding to the UN Secretary-General’s Call to Action with better heat-health early warnings and action plans,” said Ms. Saulo, adding that recent estimates indicate that the global scale-up of heat health-warning systems for 57 countries alone has the potential to save around 98,000 lives per year.
OIL & GAS: A Texas lawsuit alleging Chevron and other oil companies failed to properly plug oil wells raises the question of a “colossal liability” that could fall to companies or taxpayers. (Inside Climate News)
ALSO:
GRID:
SOLAR: A Tennessee public housing authority installs solar panels on a property to house a community of veterans at risk of being homeless. (WBIR)
ELECTRIC VEHICLES: Oklahoma transportation officials collect public input on the state’s draft plan to build electric vehicle chargers and other infrastructure. (KSWO)
PIPELINES: Opponents of the Mountain Valley Pipeline praise a provision in federal legislation to create a national office of public engagement to better communicate details about the transport of natural gas. (WFDD)
UTILITIES:
CLIMATE:
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GRID: The Department of Energy awards $2.2 billion in grants to eight transmission projects that, matched with $10 billion in private investment, are expected to support 13 GW of new clean energy. (Canary Media)
ALSO:
CLEAN ENERGY: A key oversight body says nearly one-third of the carbon offset credits on the market do not meet its standards, a sign of further upheaval in a process that is already heavily criticized. (Bloomberg)
CLIMATE: The window for lawmakers to repeal the SEC’s climate-risk disclosure rule closed last week, but the policy still faces legal challenges. (Utility Dive)
OIL & GAS:
TRANSPORTATION:
HYDROGEN: Oregon advocates push back against a utility’s pilot project blending hydrogen into its natural gas distribution system in Portland, joining other critics around the region citing safety concerns, high costs and limited effectiveness at decarbonization. (Oregon Capital Chronicle, Floodlight)
NUCLEAR: Federal regulators are seeking more information about plans to sell power from a Pennsylvania nuclear plant to an Amazon data center to be located nearby. (Utility Dive)
HYDROPOWER: Hydropower associations are suing the Biden administration over new rules to protect vulnerable fish populations. (E&E News, subscription)
COMMENTARY: Advocates urge federal lawmakers to protect the Biden administration’s oil and gas leasing rules from legislative attacks, saying they help protect the West’s outdoor recreation economy from drilling’s impacts. (Colorado Sun)
HYDROGEN: Oregon advocates push back against a utility’s pilot project blending hydrogen into its natural gas distribution system in Portland, joining other critics around the region citing safety concerns, high costs and limited effectiveness at decarbonization. (Oregon Capital Chronicle, Floodlight)
UTILITIES: California Gov. Gavin Newsom proposes legislation aimed at lowering electricity bills, but has yet to disclose details. (Sacramento Bee)
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POLITICS: A debate over the domestic uranium industry’s predicted revival dominates a Utah legislative race in the southeastern part of the state. (KJZZ)
STORAGE: Developers bring a 400 MW battery energy storage system online in southern California. (The Sun)
COMMENTARY:
Snaking under city streets, behind residential drywall and into furnaces, ovens and other appliances, natural gas pipelines are a ubiquitous presence in U.S. buildings. The question of what to do with them as the planet warms has become a serious debate — dozens of U.S. cities and states have crafted plans to reduce reliance on natural gas, and more than 20 other states have passed laws to preempt that type of regulation.
Now, utilities around the nation have begun testing a controversial idea aimed at reducing the carbon footprint of gas lines, while keeping them in place. Nearly 20 utilities have laid out plans to inject lines with a blend of gas and hydrogen, the latter of which emits no carbon dioxide (CO2) — a major greenhouse gas — when combusted. Testing such blends, these companies say, is an essential step towards understanding the practice, which they argue will help reduce emissions and fight climate change.
Deploying more hydrogen is also a federal priority — the Inflation Reduction Act created a tax credit for hydrogen production, and the Bipartisan Infrastructure Law set aside $9.5 billion to support hydrogen development.
But a federal hydrogen strategy released last year suggests blending hydrogen into gas infrastructure should focus on industrial applications. Many environmental and customer advocates agree; they argue that the use of hydrogen blends in buildings — rather than to power industries that are hard to electrify — makes little sense.
“Every dollar you’re reinvesting into the gas system could be a dollar you’re using to electrify the system,” said Nat Skinner, program manager of the safety branch of the California Public Advocates Office, an independent state office that advocates for consumers in utility regulation. “Finding the right uses for hydrogen is appropriate. But I think being really careful and thoughtful about how we’re doing that is equally important.”
Nearly 30 projects focused on blending hydrogen into gas lines that serve homes and businesses have been proposed or are in operation in more than a dozen states, Floodlight found, and many more utilities have hinted at future proposals. If all are approved, the projects as proposed would cost at least $280 million — and many utilities are asking that customers pay for them.
As regulators consider the proposals, advocates are calling for them to weigh the prudence of the investment. In California — where electric rates have climbed steeply in recent years — the Sierra Club has argued that the projects are “an inappropriate use of ratepayer funds” and “wasteful experiments.”
Hydrogen blending can be undertaken in a section of pipeline isolated from the rest of the gas network or in a larger “open” system that serves homes. Utilities can inject it in large transmission lines, which ferry gas from processing and storage locations to compressor stations, or into distribution lines, the smaller pipes that bring gas to buildings.
Because hydrogen releases only water vapor and heat when it’s burned, it’s considered a clean fuel. And unlike traditional wind and solar energy, it can produce enough heat to run industrial furnaces. Utilities have framed the fuel as a clear way to slash the emissions associated with their operations.
“These demonstration projects are an important step for us to adopt hydrogen blending statewide, which has the potential to be an effective way to replace fossil fuels,” said Neil Navin, the chief clean fuels officer at Southern California Gas (SoCalGas), in a March statement on its application for hydrogen blending pilots.
Burning hydrogen, particularly in homes, also presents certain risks. Hydrogen burns hotter than natural gas, which can increase emissions of nitrous oxide (NOx), a harmful air pollutant that can react with other elements in the air to produce damaging pollutants including small particulates and ozone.
Hydrogen is a smaller molecule than methane, the main ingredient in natural gas, and can leak more readily out of pipelines. Hydrogen is also flammable. And when certain metals absorb hydrogen atoms, they can become brittle over time, creating risks of pipeline cracks, depending on the materials the pipelines are made of.
There are also outstanding questions about how much hydrogen blending actually reduces greenhouse gas emissions.
Of the utilities that have offered details about the hydrogen source they plan to use for their pilot, roughly half plan to use “green hydrogen,” which is produced using clean electricity generated by renewable sources such as wind and solar. Today, fossil fuels power more than 90% of global hydrogen production, producing “gray hydrogen.”
Most utility blending pilots are targeting blends of up to 20% hydrogen. At those levels, research has shown that hydrogen would reduce carbon dioxide emissions by less than 10%, even when using hydrogen produced with clean manufacturing processes.
Some utilities have estimated the emissions impacts of their pilots. A CenterPoint Energy pilot in Minneapolis using blends of up to 5% green hydrogen was estimated to reduce carbon emissions by 1,200 metric tons per year, which is the approximate energy use of 156 homes. A project in New Jersey testing blends of 1% green hydrogen was estimated to reduce emissions enough to offset the energy use of roughly 24 homes.
Blending gray hydrogen may show no carbon benefit at all, according to some research. That’s in part because hydrogen produces one-third less energy by volume than natural gas, meaning three times the amount of hydrogen is needed to make up for the same unit of natural gas.
And hydrogen requires more energy to manufacture than it will later produce when it’s burned. For these reasons, some environmental groups say hydrogen is an inefficient way to decarbonize homes and businesses; some analysts have called the process “a crime against thermodynamics.”
“There are much better, readily available, more affordable ways to decarbonize buildings in the form of electrification and energy efficiency,” said Jim Dennison, a staff attorney at the Sierra Club.
Advocates including Dennison also worry that investing more in the natural gas system will delay electrification and allow utilities to keep their core pipeline businesses running. “I can see why that’s attractive to those utilities,” he said. “That doesn’t mean it makes sense for customers or the climate.”
While the climate benefits are debated, some research and active projects indicate that burning blended fuel at certain levels can be safe. For decades, Hawaii Gas has used synthetic natural gas that contains 10-12% hydrogen. Countries including Chile, Australia, Portugal and Canada have also run hydrogen blending pilots.
And although pipelines can weather when carrying hydrogen, that’s less likely for distribution lines that reach homes because those pipes are often plastic, said Bri-Mathias Hodge, an associate professor in energy engineering at the University of Colorado-Boulder.
Hodge helped author a 2022 review of technical and regulatory limits on hydrogen and gas blending. With blends below 5%, Hodge said customers are unlikely to face risks or notice a difference in how their appliances or furnaces function.
More uncertainty exists around higher blends. “I think we’re not sure if below 20% or say, from 5 to 20% is safe,” said Ali Mosleh, an engineer at the University of California-Los Angeles who is spearheading hydrogen blend pilot testing with 44 partners, including utilities, to address knowledge gaps in the state.
Although Hodge at UC-Boulder thinks electrification is the more efficient choice for homes, he said the pilots can help utilities get comfortable with blending, which may eventually be applied elsewhere. “It’s not going to really move the needle in terms of decarbonization long term, but it’s a step in the right direction,” he said.
Steven Schueneman, the hydrogen development manager at utility Puget Sound Energy, which serves about 1.2 million electric and 900,000 gas customers in Washington, said incremental approaches like utility blending pilots will signal that hydrogen is a “real industry.” That could help the fuel gain a foothold in other areas, like industrial heat and aviation.
But Schueneman also acknowledges there remains uncertainty around whether hydrogen is the most cost-effective way to decarbonize buildings.
“It’s not clear that blending hydrogen is going to be a prudent decision at the end of the day,” he said.
Puget Sound Energy has conducted two small-scale blending pilots at a test facility. In the future, the utility plans to focus its hydrogen efforts on how blends may function in power plants, rather than in buildings. The nearly 30 blending pilots Floodlight tracked include only projects focused on use in buildings, but other utilities have proposed blending hydrogen at natural gas power plants, where the blend will be burned for electricity.
Blending pilots focused on buildings have been spearheaded by some of the largest utilities in the nation as well as smaller-scale gas providers, and are being considered from coast-to-coast.
Dominion Energy, which serves 4.5 million customers in 13 states, has laid out plans for three blending pilots, in Utah, South Carolina and Ohio. National Grid, which has 20 million customers, is pursuing a project in New York. And multiple large California utilities have proposed pilot programs.
Some utilities, such as Dominion and Minnesota-based Xcel Energy, did not reply to several requests for clarification on hydrogen blending plans, or replied to only some queries about their plans. But plans from certain utilities have been detailed in regulatory filings with state utility commissions.
The pilots for which cost data are available range in price from roughly $33,000 for Puget Sound Energy’s small-scale testing (which ratepayers did not fund) up to an estimated $63.5 million for a decade-long pilot proposed by California utility Pacific Gas & Electric (PG&E), which would focus on blending 5% at the start ranging up to 20% hydrogen in transmission gas lines.
If approved, customers would pay up to $94.2 million for PG&E’s pilot, because of the rate of return utilities are able to collect from customers. California utilities are aiming to recover more than $200 million in total from customers for their proposed pilots.
California regulators have rejected some previous blending proposals from utilities, saying companies should use “every reasonable attempt to use existing and other funds before requesting new funds.” Advocates including the Environmental Defense Fund (EDF) have argued that the projects are not in the public interest, particularly amid the state’s spiking utility bills.
“Cost is an essential consideration,” said Erin Murphy, a senior attorney at EDF. “When you’re passing on costs to ratepayers, you have to demonstrate that that is a prudent investment.”
Pilots have gotten pushback in other states, including Colorado and Oregon, where projects were recently dropped or delayed, and opposition has been fierce in California, which has the most pilots proposed to date. The mayor of Truckee, California, which could host a project, submitted a comment to regulators explaining the town does not support it. And following protests at two California universities that planned to collaborate on projects, utilities downsized the plans.
After student opposition at University of California-Irvine, SoCalGas reduced the scope of the project and proposed an additional pilot in Orange Cove, a small agricultural community of about 9,500 people. Ninety-six percent of Orange Cove’s population identifies as Hispanic or Latino, and roughly 47% of residents live below the federal poverty line, according to the U.S. Census.
Some Orange Cove residents also are concerned about blending, which SoCalGas hopes to test at up to 5% hydrogen levels. Genoveva Islas, who grew up there and is the executive director of Cultiva la Salud, a public health nonprofit based in nearby Fresno, said the local approval process lacked transparency and public input.
The project is slated to sit steps away from the Orange Cove football field, near the town’s high school, middle school and community center. “In short, I would just say it is concerning,” Islas said.
In an email, the utility told Floodlight that the city “proactively asked SoCalGas to undertake this project in its community” and said it was “expected to bring socioeconomic benefits to Orange Cove.” The utility also said it hosted a community engagement meeting about the project in Spanish and English and has provided fact sheets to the community in both languages.
In Colorado, where Xcel Energy had planned to blend hydrogen in an isolated neighborhood, some residents learned of the pilot from a journalist reporting on the project.
That has made some feel like unwilling test subjects in an experiment that others, like the Sierra Club’s Dennison, say are unnecessary. “The community’s immediate reaction is that they don’t want to be guinea pigs,” Islas said. “They do not understand how this decision was made without their involvement or their consent.”
The great majority of the projects, including the one in Orange Cove, are still under review by regulators. Meanwhile, researchers are undertaking more studies to understand the technical limits of blending.
“There are a lot of unknowns,” said Mosleh from UCLA. “Some fundamental research needs to be done.”
BUILDINGS: The U.S. EPA grants $450 million to a coalition of five New England states to encourage heat pump adoption, aiming for 65% of home heating and air conditioning sales by 2030. (Canary Media)
ALSO:
GRID:
CLEAN ENERGY: Some Pennsylvania businesses say state and federal requirements are making it difficult for them to get involved in clean energy manufacturing, like a Meadville glass maker that wants to hire at least 120 workers to make solar panel glass. (Environment + Energy Leader)
TRANSPORTATION: In New York, two lawsuits aim to revive the Manhattan traffic congestion tolling program, with one claiming the governor’s indefinite pause is an unlawful use of her powers and another making a constitutional law argument. (Sierra)
LEGISLATION: New Hampshire’s governor signs several energy-related laws, including nuclear power studies, renaming an offshore wind office, and rules around involuntary retirement or decommissioning of power generation assets. (InDepth NH)
WORKFORCE: Pennsylvania’s Bucks County Community College receives a $2 million federal grant to invest in a clean energy HVAC technician program and expand a manufacturing apprenticeship. (WHYY)
WIND: As Maine seeks to put an offshore wind port on an undeveloped island that conservationists want to preserve, a reporter does a flyover of the Sear’s Island and Mack Point area to get a bird’s eye view of the current land uses. (Maine Monitor)
COMMENTARY: Massachusetts lawmakers need to reconvene their session to pass a consensus climate bill — which includes project permitting reform — or otherwise “pay a steep price” for the lack of climate action, writes the Northeast Clean Energy Council’s president. (CommonWealth Beacon)
CLIMATE: A compilation of government documents shows climate change was discussed in Congress and the media in the 1960s and 1970s, including a Nixon administration report that said “the greatest consequences of air pollution for man’s continued life on earth are its effects on the earth’s climate.” (Grist)
ALSO: The research, compiled by historian Naomi Oreskes, contradicts assertions in recent Supreme Court rulings that climate change was not a topic of concern when the Clean Air Act was passed in 1970. (Inside Climate News)
UTILITIES: Hawaiian Electric and six other entities agree to pay $4 billion in damages to settle lawsuits stemming from last year’s deadly Maui wildfires. (CNN)
ELECTRIFICATION: Nearly $500 million in federal funding will help encourage heat pump adoption in Alaska and New England. (Canary Media)
COAL:
GRID: An Exelon executive says the record-high prices awarded in PJM Interconnection’s latest capacity auction could lead to double-digit rate increases for some of its utilities. (Utility Dive)
ELECTRIC VEHICLES:
SOLAR: Michigan farmers seeking additional revenue through solar leases are backed by a new state law that gives state regulators greater oversight in the event of local opposition. (Bloomberg)
POLITICS:
COMMENTARY: A utility-funded California program relies on innovative approaches to help low-income homeowners take advantage of electric heat pump rebate programs. (CalNEXT, sponsored)
Indiana ratepayers spend hundreds of millions of dollars per year for power from coal plants that are operating despite the availability of cheaper sources, including wind and solar.
The state is emblematic of a larger problem, as electricity market rules typically allow utility-owned power plants to essentially cut in line even when they are not the most economical option for customers.
A recent report commissioned by the Natural Resources Defense Council examined how this phenomenon plays out in the Midcontinent Independent System Operator (MISO) regional transmission organization specifically, building on previous research by RMI, the Union of Concerned Scientists and others — all of which show that uneconomic coal plant dispatch takes a huge toll on ratepayer wallets and public health.
The problem happens primarily with vertically integrated utilities or municipal utilities and cooperatives, which can recoup costs of fuel and operations from ratepayers even if they are operating at a loss. In most of MISO territory, energy markets have not been restructured as open markets, making such cost recapture the norm.
The NRDC study showed that Indiana ratepayers bore the second-highest burden in MISO, paying $338 million for uneconomic coal power from 2021-2023, just behind Louisiana’s $341 million. North Dakota ratepayers spent an extra $120 million, Wisconsin $69 million, and Minnesota $54 million, the study found.
Indiana’s R.M. Schahfer plant, run by utility NIPSCO, cost ratepayers more than $100 million in such uneconomical dispatch from 2021-2023, the NRDC study found.
In an ongoing rate case, Duke Energy is seeking to increase reliance on its Gibson and Cayuga plants in Indiana. These plants were responsible for $29 million and $7.6 million in uneconomic dispatch costs to consumers in 2023, according to RMI’s economic dispatch dashboard.
“This has been a problem plaguing Indiana coal plants for many years, it’s costing our consumers in Indiana millions of dollars and it’s one of the factors driving rates higher and driving clean energy off the grid,” said Ben Inskeep, program director for Citizens Action Coalition in Indiana. “It’s a tale of utilities making bad decisions as part of their profit motive and then utility regulators failing to hold them accountable as they’re supposed to. Certainly utilities should be operating their plants efficiently and economically, and when they fail to do so, they shouldn’t be getting cost recovery.”
Duke spokesperson Angeline Protogere said the study misses important context.
“There are a lot of considerations that go into plant dispatch decisions, and the priority is always reliability of service and economics,” Protogere said. “We weren’t able to replicate the NRDC data, but it appears it’s based on incomplete information. For example, there are times when MISO calls on a unit because of grid reliability needs. There’s a bigger picture that’s not reflected here.”
The NRDC study found that over three years across MISO, about 400 MW of wind power was curtailed in favor of power from coal plants generating at higher-than-market costs.
Power producers bid into regional energy reverse-auctions for real-time and next-day power, offering the price for which they can produce their electricity. Grid operators like MISO and PJM are supposed to dispatch the power starting with the most affordable option, until demand is met.
Even if vertically integrated utilities are not selling their power on the open market but rather serving their own customers, they still need to be dispatched by the grid operator to send their energy onto the grid.
But under the rules for MISO and other grid operators, coal plants can “self-commit” to run for a given time period even if they cannot produce power below the market rate. The idea is that coal plants can’t ramp up or down quickly, so they may need to keep running at a certain level to be ready to provide more power when needed.
If this relatively expensive coal power weren’t on the grid, more wind power would be purchased and demand for new renewables would likely be created.
“That increment of power would be filled through the market selecting the next highest bidder,” providing “an accurate picture of what electricity should cost that gives a signal that incentivizes newer generation,” explained James Gignac, Union of Concerned Scientists Midwest senior policy manager.
The lower the energy prices at a given time and the lower the demand, the worse the coal plant dispatch problem gets. Data from RMI and a 2020 report by the Union of Concerned Scientists shows that ratepayer losses due to uneconomic coal dispatch were lower in 2022, because Russia’s invasion of Ukraine caused natural gas prices to spike, making coal more competitive by comparison. Conversely, when energy demand plummeted in 2020 because of the pandemic, uneconomic dispatch of coal plants soared.
Since 2015, the uneconomic dispatch of coal plants has cost Indiana ratepayers $1.9 billion and ratepayers nationwide $20 billion, according to RMI’s dashboard.
The issue has real impacts on the growth of renewables, experts note. If the practice was prevented, market prices would be higher and there would be more incentive for renewable developers to build projects to sell their power on the open market. Meanwhile if vertically-integrated utilities were not allowed to recoup their costs for uneconomic dispatch, they would be motivated not to run coal plants and might decide to invest in building renewables instead, or at least buy wind power on the open market.
“I’ve talked with [wind] developers who say they look at where coal plants self-commit uneconomically, and they avoid those transmission lines because they know they will be curtailed,” said Joseph Daniel, principal in RMI’s Carbon Free Electricity team and lead author of the Union of Concerned Scientists report.
That report shows that if uneconomic coal dispatch was avoided, Indiana customers would save money — but not as much money as ratepayers in other states, because there is less wind power available around Indiana. Over time, a market unfettered by uneconomic coal plants might correct this situation.
“The greatest immediate savings for customers from stopping uneconomic coal plant operations are in areas where there are existing low-cost resources such as wind power being curtailed by that behavior,” said Gignac. “If the replacement for the uneconomic coal generation is something like a relatively higher-cost gas plant, then the market clearing price is higher and customer savings are not as significant. However, that higher clearing price is a signal and an incentive for low-cost renewables to locate projects in that area and deliver further cost savings.
“Removing the market distortion of uneconomic coal operations helps move us toward the cleaner, lower-cost energy system we need.”
Studies show that coal plants that sell their power on the open market – known as “merchant” plants – rarely decide to operate when they are not getting market prices at least equal to their cost of operating – the way vertically-integrated or publicly-owned coal plants do when they know they can recoup their costs from ratepayers, without compensation from the market. In other words, merchant plants do not ask grid operators to be uneconomically dispatched.
These merchant plants nonetheless seem to ramp up in time to operate when their power is needed, experts note, indicating that vertically-integrated plant operators in MISO are understating their ability to ramp up and down quickly, as noted by NRDC policy analyst Dana Ammann and other experts.
“There’s so little incentive to ramp up quickly, because the market really accommodates their inflexibility,” said Ammann, lead author of the recent NRDC study. The vertically-integrated coal plants in MISO are “much less flexible than coal plants in other markets. In PJM you see coal plants turning on much more quickly, since the merchant plant operators are reliant on the price signals to turn a profit. They don’t have the guaranteed rate recovery, so they’re very responsive to price signals.”
State utility commissions can prevent regulated utilities from recouping costs when coal plants are dispatched uneconomically. Michigan regulators did exactly this last year in a rate case for Indiana Michigan (I&M) Power, preventing the utility from passing on such costs for its share of the Rockport coal plant, located in Indiana.
Daniel said Indiana regulators should likewise protect Indiana customers from paying for uneconomic power from the Rockport plant. The RMI dashboard shows that plant dispatched $142 million worth of such power last year. Meanwhile the Michigan ruling could be considered precedent for Michigan utilities like DTE and Consumers Energy in future rate cases.
Ammann noted that states can also use the Integrated Resource Plan process to curb uneconomic dispatch, as Minnesota’s utility commission did when it recently decided that Otter Tail Power’s Coyote coal plant can only recoup costs during a designated power emergency.
“It’s an interesting approach for getting ratepayers basically off the hook for coal plants that aren’t retiring, that might still be economic to run for a small number of hours,” Ammann said.
Grid operators like MISO may have the most important role to play in better managing markets, refusing to dispatch coal plants that aren’t necessary and doing deeper analysis to figure out exactly how much power is needed. Experts say multi-day markets – rather than just real-time and day-ahead ones – could better match supply with demand and avoid unnecessary coal plant dispatch.
MISO’s Independent Market Monitor has recommended such measures, including de-committing coal power producers who sold into the day-ahead market if it turns out that others – including renewables – could sell power more efficiently in the real-time market once the time comes.
“MISO works closely with our members, state regulators and our independent market monitor to ensure our markets are efficient,” said MISO spokesperson Brandon Morris. MISO’s June 2024 monthly operations report shows that in June, 18% of coal-fired power dispatched in the region was uneconomic self-committed dispatch.
Experts note that fuel delivery contracts often include a minimum purchase, so utilities committed to buying a certain amount of fuel might as well burn the fuel even if they are not making a profit on the power. This might not have been an issue in years past when coal plants operated at high capacity most of the time, but as coal plants have become increasingly uncompetitive, the NRDC study notes, they are more likely to be committed to buy fuel they actually don’t need. Fuel contracts are usually of short duration, with 88% of those reviewed by the federal Energy Information Administration expiring by 2025, meaning there is ample opportunity for fuel delivery contracts to be revised, the NRDC study said.
Such fuel contracts have meant massive stocks of unneeded coal piling up at Duke plants in Indiana, Inskeep said, forcing the company to burn it even if the power isn’t needed.
Protogere said the coal supplies are necessary, as “the goal is to ensure a reliable supply in an increasingly uncertain market. The aim is to manage volatility as well as maintain long-term supply reliability and security, so that we don’t have to resort to higher cost options in the market.”
Inskeep hopes state regulators deny requests by Duke and other utilities to increase coal-fired generation and the recouping of the costs from ratepayers.
“The bottom line with this uneconomic dispatch situation is it means utilities are keeping their old expensive coal plants open longer than they should,” Inskeep said. “Utilities should be rapidly transitioning to a renewable energy-based portfolio of resources. Instead, utilities are feeling pressure to justify a lot of the bad economic decisions they’ve made in the past, foolish decisions to invest millions or even billions of dollars to keep these plants open.”
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