IndianaDG

Ohio PUC approves FirstEnergy’s request to suspend energy efficiency programs

Posted by Laura Arnold / November 24, 2014 / Posted in Uncategorized / No Comments

PUCO approves FirstEnergy's request to suspend popular energy efficiency programs

By John Funk, The Plain Dealer
on November 21, 2014 at 8:00 AM, updated November 21, 2014 at 1:33 PM

COLUMBUS, Ohio -- State regulators on Thursday approved FirstEnergy's request to scuttle most of its consumer energy efficiency programs at the end of the year, ending popular rebates and discounts on Energy Star appliances and lighting and rewards for turning in old appliances.

FirstEnergy is the only Ohio electric company that has asked to end its efficiency programs per a new law enacted last spring.

In a complicated 23-page order that reflected the pitched battle over numerous and almost picayune points that the company and its opponents have fought about in the last 60 days, the Public Utilities Commission came down mostly on the side of the company -- partly because under the new law it had few choices.

In doing so, the commission dismissed many of the objections of the Ohio Hospital Association, the Ohio Manufacturers' Association Energy Group, the Ohio Consumers' Counsel, and a consortium of environmental groups including the Sierra Club, Ohio Environmental Council, the Natural Resources and Defense Council and the Environmental Law and Policy Center.

Most of these opponents will probably appeal, an exercise that seldom changes an outcome before the commission.

The bottom line:

>The majority of FirstEnergy's consumer efficiency programs are going away for at least two years.

But consumers will still pay for these programs through delivery rate increases already in place that the commission refused to reduce, dismissing the arguments of FirstEnergy opponents that fewer efficiency programs should mean a smaller budget to run them.

The commission noted that "regardless of the budget, collection is based on a forecast of the costs to be incurred over a six-month [rate] rider period, not on the budget, and are always subject to true-up to actual costs." In other words, over-collections could be trued up later.

>Lower income home energy audit and efficiency upgrade programs will stay, and a program for commercial and some industrial customers will continue.

> Consumers and other customers will have to keep funding bonuses that FirstEnergy would collect if efficiency projects started this year or earlier come on-line in 2015 and help reduce overall demand more than the 4.5 percent reduction (compared to 2009 levels) already achieved this year.

Known as "shared savings," these bonuses have been awarded to utilities that exceed what since 2009 have been mandated annual benchmark reductions that each Ohio electric utility has had to meet.

The commission earlier capped FirstEnergy's shared savings at $10 million a year. But because the state has frozen these annual benchmarks for two years, leaving the 2014 benchmark of a 4.5 percent reduction in place through 2016, the Ohio Consumers' Council argued the "shared savings" bonus cap should also be reduced.

FirstEnergy countered, and the commission on Thursday agreed, that since the freeze extends the 4.5 percent benchmark through 2015 and 2016, the company would be entitled to collect more "shared savings" if it exceeds 4.5 percent. And consumers would pay a little more to create those bonuses.

> Consumers will also continue to pay under Thursday's ruling for "lost distribution revenues" that the company won earlier. These are fees that the company successfully argued it should receive for cooperating with state mandates that it help its customers buy less electricity by upgrading lighting, appliances and equipment. The current lost distribution fees are slated to expire in 2016.

> FirstEnergy's large industrial customers will be able to opt out of the efficiency programs on Jan. 1, 2015, something they fought furiously to win during the long debates last spring over Senate Bill 310, the new law the froze efficiency rules for two years and which allows utilities to scrap efficiency programs.

> The commission will also allow FirstEnergy to get credit for energy efficiency gains -- and demand reductions -- achieved by some of its customers who are not participating in the official programs. The commission approved this new provision, though the company provided few details about how this program might work, and must return to the commission with details.

The Akron-based company asked the PUCO on Sept. 24 for permission to suspend the bulk of its efficiency programs at least through 2016, citing the new state rules that took effect just 12 days earlier and arguing that it can meet the currently frozen state standards without the programs.

Those changes in state efficiency standards were contained in Senate Bill 310, which FirstEnergy had lobbied lawmakers hard last spring to approve. The company argued that the programs would raise electric rates. Killing the programs would lower rates, it said.

But in presentations to investors, the company's executives had also said the state rules were interfering with normal market growth, meaning power sales.

Several major industrial customers joined with FirstEnergy to upend the state rules. They argued the programs were costing them too much and that they would have installed more efficient equipment without the state's rules in order to stay competitive. Smaller companies argued just the opposite, that they would not have been able to make upgrades -- and stay competitive -- without the assistance.

FirstEnergy's move to get rid of the bulk of its energy efficiency programs comes at a time when the company is also trying to convince the commission to approve a new three-year rate plan that would commit its Ohio distribution companies to buy power for 15 years from two of its large, old power plants rather than rely completely on currently less-expensive power sold on wholesale markets.

Under this instantly controversial proposal also pending before the PUCO, the Illuminating Co., Ohio Edison, and Toledo Edison would have to buy all of the output, at whatever the cost, from the Davis-Besse nuclear power plant near Toledo and the coal-fired W.H. Sammis power plant on the Ohio River about 13 miles north of Steubenville.

The purchase agreement would work this way: After buying the power, the three distribution companies would re-sell it into wholesale markets -- absorbing any losses or, FirstEnergy argues, profiting in future years when wholesale power prices rise. The company has argued that during the 15-year agreement, the deal would save customers up to $2 billion. Opponents have questioned that.

In other words, opponents have countered, FirstEnergy would have the benefits of old-fashioned regulated prices for these two uncompetitive power plants while its entire fleet of power plants would remain unregulated by the state.

In sworn testimony, company executives have told the Commission that without the deal, the company could be forced to close Sammis and Davis-Besse because they cannot compete against modern, gas-fired power plants. They said they expect wholesale market prices eventually to increase significantly, in which case, the Ohio companies buying Davis-Besse and Sammis power would be getting a deal.

Together, Davis-Besse and Sammis have cost the company billions of dollars in safety and pollution control upgrades -- money spent that now would have to be shouldered by rate payers to cover the cost of the more expensive electricity they generate, opponents have countered.

A company spokesman, in an email Thursday, noted that the power purchase agreements would be subject to a "prudence reviews" and that the company would annually submit costs to the PUCO for review.

See http://www.cleveland.com/business/index.ssf/2014/11/puco_approves_firstenergys_req.html

NYT: Solar and Wind Energy Start to Win on Price vs. Conventional Fuels

Posted by Laura Arnold / November 24, 2014 / Posted in solar, wind / No Comments

Solar and Wind Energy Start to Win on Price vs. Conventional Fuels
By DIANE CARDWELLNOV. 23, 2014

For the solar and wind industries in the United States, it has been a long-held dream: to produce energy at a cost equal to conventional sources like coal and natural gas.

That day appears to be dawning.

The cost of providing electricity from wind and solar power plants has plummeted over the last five years, so much so that in some markets renewable generation is now cheaper than coal or natural gas.

Utility executives say the trend has accelerated this year, with several companies signing contracts, known as power purchase agreements, for solar or wind at prices below that of natural gas, especially in the Great Plains and Southwest, where wind and sunlight are abundant.

Those prices were made possible by generous subsidies that could soon diminish or expire, but recent analyses show that even without those subsidies, alternative energies can often compete with traditional sources.

In Texas, Austin Energy signed a deal this spring for 20 years of output from a solar farm at less than 5 cents a kilowatt-hour. In September, the Grand River Dam Authority in Oklahoma announced its approval of a new agreement to buy power from a new wind farm expected to be completed next year. Grand River estimated the deal would save its customers roughly $50 million from the project.

And, also in Oklahoma, American Electric Power ended up tripling the amount of wind power it had originally sought after seeing how low the bids came in last year.

“Wind was on sale — it was a Blue Light Special,” said Jay Godfrey, managing director of renewable energy for the company. He noted that Oklahoma, unlike many states, did not require utilities to buy power from renewable sources.

“We were doing it because it made sense for our ratepayers,” he said.

According to a study by the investment banking firm Lazard, the cost of utility-scale solar energy is as low as 5.6 cents a kilowatt-hour, and wind is as low as 1.4 cents. In comparison, natural gas comes at 6.1 cents a kilowatt-hour on the low end and coal at 6.6 cents. Without subsidies, the firm’s analysis shows, solar costs about 7.2 cents a kilowatt-hour at the low end, with wind at 3.7 cents.

“It is really quite notable, when compared to where we were just five years ago, to see the decline in the cost of these technologies,” said Jonathan Mir, a managing director at Lazard, which has been comparing the economics of power generation technologies since 2008.

Mr. Mir noted there were hidden costs that needed to be taken into account for both renewable energy and fossil fuels. Solar and wind farms, for example, produce power intermittently — when the sun is shining or the wind is blowing — and that requires utilities to have power available on call from other sources that can respond to fluctuations in demand. Alternately, conventional power sources produce pollution, like carbon emissions, which face increasing restrictions and costs.

But in a straight comparison of the costs of generating power, Mr. Mir said that the amount solar and wind developers needed to earn from each kilowatt-hour they sell from new projects was often “essentially competitive with what would otherwise be had from newly constructed conventional generation.”

Experts and executives caution that the low prices do not mean wind and solar farms can replace conventional power plants anytime soon.

“You can’t dispatch it when you want to,” said Khalil Shalabi, vice president for energy market operations and resource planning at Austin Energy, which is why the utility, like others, still sees value in combined-cycle gas plants, even though they may cost more. Nonetheless, he said, executives were surprised to see how far solar prices had fallen. “Renewables had two issues: One, they were too expensive, and they weren’t dispatchable. They’re not too expensive anymore.”

According to the Solar Energy Industries Association, the main trade group, the price of electricity sold to utilities under long-term contracts from large-scale solar projects has fallen by more than 70 percent since 2008, especially in the Southwest.

The average upfront price to install standard utility-scale projects dropped by more than a third since 2009, with higher levels of production.

The price drop extends to homeowners and small businesses as well; last year, the prices for residential and commercial projects fell by roughly 12 to 15 percent from the year before.

The wind industry largely tells the same story, with prices dropping by more than half in recent years. Emily Williams, manager of industry data and analytics at the American Wind Energy Association, a trade group, said that in 2013 utilities signed “a record number of power purchase agreements and what ended up being historically low prices.”

Especially in the interior region of the country, from North Dakota down to Texas, where wind energy is particularly robust, utilities were able to lock in long contracts at 2.1 cents a kilowatt-hour, on average, she said. That is down from prices closer to 5 cents five years ago.

“We’re finding that in certain regions with certain wind projects that these are competing or coming in below the cost of even existing generation sources,” she said.

Both industries have managed to bring down costs through a combination of new technologies and approaches to financing and operations. Still, the industries are not ready to give up on their government supports just yet.

Already, solar executives are looking to extend a 30 percent federal tax credit that is set to fall to 10 percent at the end of 2016. Wind professionals are seeking renewal of a production tax credit that Congress has allowed to lapse and then reinstated several times over the last few decades.

Senator Ron Wyden, the Oregon Democrat, who for now leads the Finance Committee, held a hearing in September over the issue, hoping to push a process to make the tax treatment of all energy forms more consistent.

“Congress has developed a familiar pattern of passing temporary extensions of those incentives, shaking hands and heading home,” he said at the hearing. “But short-term extensions cannot put renewables on the same footing as the other energy sources in America’s competitive marketplace.”

Where that effort will go now is anybody’s guess, though, with Republicans in control of both houses starting in January.

OUCC opposes Duke Energy’s $1.9B Indiana upgrade plan; CAC agrees

Posted by Laura Arnold / November 20, 2014 / Posted in Office of Utility Consumer Counselor (OUCC) / No Comments

Consumer office opposes Duke Energy’s $1.9B Indiana upgrade plan
Associated Press, @ap 2:15 p.m. EST November 18, 2014

http://www.indystar.com/story/news/politics/2014/11/18/consumer-office-opposes-duke-energys-indiana-upgrade-plan/19227371/

Indiana’s utility customer advocate has recommended that regulators reject Duke Energy’s proposal for a $1.9 billion electric grid upgrade in the state.

The Office of Utility Consumer Counselor says Indiana’s largest electric utility hasn’t provided legally required details about its proposed spending on infrastructure updates, such as electrical lines, transformers and utility poles.

The utility counselor’s office says Duke’s seven-year plan includes spending not allowed in a rate-increase request, including radio system replacements, vegetation removal projects and a proposed $3 million energy learning center. It also faults Duke for not providing as much detail as Northern Indiana Public Service Co. and Vectren Corp. when they sought approval for similar projects.

“The information we found in Duke Energy’s filings does not meet the statute’s requirements, while also falling short of the standards established in previous cases involving the approval of other utilities’ plans,” consumer counselor David Stippler said.

Duke spokeswoman Angeline Protogere said the North Carolina-based company has provided hundreds of pages of documentation about its plans and has responded to about 500 information requests from the consumer counselor and others.

“Our electric grid is aging and many components need to be updated and replaced,” she said. “This plan is about modernizing our electric grid and bringing our system into the 21st century.”

If the Indiana Utility Regulatory Commission approves the plan, Duke says its roughly 800,000 Indiana customers would see rate increases averaging about 1 percent a year between 2016 and 2022.

Duke’s upgrade also would include installing new, advanced utility meters the company said would mean fewer and shorter electrical outages for its customers.

Kerwin Olson, executive director of Citizens Action Coalition, said the consumer advocacy group agrees with the utility counselor office.

“It’s a lot of money coming from ratepayers,” Olson said. “Duke has not met their legal burden of proof in showing what precisely these improvements are and how they will benefit the ratepayer.”

A state utility commission hearing on Duke’s request is scheduled to begin Dec. 18, with a March 27 decision deadline.

We Energies Wins a Round at Wisconsin PSC with Solar

Posted by Laura Arnold / November 19, 2014 / Posted in Uncategorized / No Comments

Utility Wins A Round With Solar In Wisconsin

http://seekingalpha.com/article/2694545-utility-wins-a-round-with-solar-in-wisconsin?page=2

Nov. 19, 2014 5:31 AM ET | 2 comments | Includes: SCTY, VSLR, WEC
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More...)

Summary

We Energies scored a significant victory over the solar industry in the most recent rate structure.
The new rate structure significantly protects We Energies from rapidly increasing solar penetration and makes it very difficult for companies like Vivint Solar and SolarCity to succeed in We territory.
We expect this is first in a series of likely utility rate changes that will reduce the growth of solar in the US residential market.

According to an article on GreenTechMedia, the Wisconsin Public Service Commission made several controversial decisions in the context of Wisconsin Energy's (NYSE:WEC) 2015-2016 rate request. In a preliminary approval, the Public Utilities Commission voted 2-1 in favor of many We Energies' proposals and deviated significantly from past precedents that have been helpful to the solar industry.

Among many things that the solar industry finds adversarial, the approval includes a larger fixed charge on residential monthly electric bills, and reduces the amount We Energies will pay for the power that customers generate with solar panels. In a series of articles on solar panel installers and utility rate structures, we have argued that with this type of rate structure changes on utilities part is imminent.

While the solar market in Wisconsin is small today and does not materially impact on any of the national installers, there are several takeaways from this PUC ruling. As we forecasted, utilities are starting to respond to the threat of solar and we expect the We Energies' victory at the PUC a beginning of the tidal wave of utility rate structure changes across the industry.

Some of the salient points of Wisconsin PUC's preliminary approval and their impacts are as follows:

- Customers who install solar systems on their own property will be required to pay We Energies $3.80 per KW per month. For example, a homeowner with a 5 KW solar system will be required to pay $228 annually to We Energies for owning solar. This fee is a major setback to the growth of solar in We Energies' territory. This single change will make many marginal solar systems uneconomical. This type of fee is a significant headwind to the solar industry and especially installers like SolarCity (NASDAQ:SCTY) and Vivint Solar (NYSE:VSLR) that depend on favorable utility rate structures.

- The fixed charge on all residential bills will increase from about $9 to $16 a month - a 75% increase. The amount paid per kilowatt hour will be reduced one-half cent to $0.1349/KWH from $0.139/KWH. Coupled with the above per KW charge, this KWH change will make several solar systems uncompetitive in the state.

- The new rate structure constitutes approximately 1.8% average increase for residential customers. Note that this rate of increase is substantially lower than the escalators that SolarCity and Vivint Solar use in their contracts. We expect that over the next several years the rate increases will initially moderate and then will start declining. This is one of the many headwinds that will destroy the SCTY and VLSR business models over time.

- According to the new tariff, business customers will see a slight decrease in electric bills in 2015 and an increase of about 1% in 2016. This, once again, this type of rate structure is to be expected as Utilities will increasingly make an effort to retain their high value commercial customers from migrating to renewable alternatives.

- We Energies will change net metering from annual netting to monthly netting and will also reduce the credit for excess generation from the 14 cents/KWH to 3 cents/KWH. This is yet another change that can significantly reduce the economics of a solar system.

However, the PUC ruling is not all bad news for the industry. Hidden in the bad news are some concessions to the solar industry and companies like SolarCity and Vivint Solar.

- Existing owners of solar systems will be grandfathered for a period of 10 years. The new net metering changes will not apply to existing owners until December 31, 2024. If not for the grandfathering, any current solar PPA/lease contracts would have likely been immediately underwater.

- PUC denied We Energies' request to ban solar or wind projects from connecting to the grid and net metering with the grid if it is not owned by the customer. This is about the only good piece of news in this PUC ruling for installers like SolarCity and Vivint Solar.

In what is likely an ominous sign for the solar industry, the 2-1 vote was on party lines. The vote was split down partisan lines with Gov. Scott Walker appointees Phil Montgomery and Ellen Nowak supporting the changes and Eric Callisto, an appointee of Gov. Jim Doyle, opposing the changes. With Republicans taking control of both houses of congress, and increasing their advantage in key states, this type of decision may be a harbinger of things to come.

While these types of changes will certainly impede the penetration of solar, we are optimistic that the solar technology cost curve will, over time, overcome the utilities resistance to solar. However, for companies like SolarCity and Vivint Solar that depend on favorable solar rate structures, the salad days may be coming to end.

Our sentiment on VSLR and SCTY: Avoid.

Richmond Power and Light approves $170,000 for solar panels at park

Posted by Laura Arnold / November 19, 2014 / Posted in solar, Uncategorized / No Comments

RP&L approves $170K for solar panels at park

Bill Engle, bengle@richmond.gannett.com 6:35 a.m. EST November 18, 2014

Richmond Power & Light Board of Directors on Monday approved by a 7-1 vote a plan to invest $170,000 in construction of a solar paneled roof on a new downtown park, as long as the city administration is able to find and spend an equal amount on the project.

The downtown park is the city's first and furthest-along of its Stellar Communities projects. The solar panels will cover a building in the new park that will house a farmers' market.

City director of Metropolitan Development Tony Foster told board members that the project was $600,000 over budget and asked for help after former RP&L General Manager Jim French suggested a partnership.

Foster said some reductions were being made, but that the partnership would be the best way to reduce the overrun. He said without the partnership there would be no farmers' market building at the park.

Foster said the design firm hired for the project was "at a point where they have to know if they can move forward."

"We're not asking you for a check. We're asking you to set aside dollars so we can move ahead with the project," Foster said.
Board members Doug Goss, Kelley Cruse-Nicholson, Bruce Wissel, Don Winget, Larry Parker, Ron Oler and Phil Quinn voted in favor of the partnership while Misty Hollis voted against.

Goss said the partnership "gives us the opportunity to look at how we might work with companies who are considering using solar paneling in the future."

"I think it's a positive thing. It's a project we will have total control over," he said.

But Hollis said, "From my personal preference, I just don't it's a project that RP&L should be funding."

"They are coming to us because they could not find other funding. That disturbs me," she said.
Randy Baker, RP&L corporate services director, supported the project and built it into the utility's 2015 budget.

Baker said the panels will produce 500 kilowatts of electricity per day and estimated that it would bring in about $173,000 during the 20-year life of the project.

The electricity will go to the Indiana Municipal Power Agency but proceeds will benefit RP&L. The electricity generated will be used locally.

Foster said he was pleased with the vote even though the administration must now find the additional $170,000 for the project.

"I'm very excited the RP&L board agreed to partner with us. I think this is a great project," he said.
Foster said he hopes to have bid information out to possible contractors in January or February.

"We are ready to move ahead," he said.

Staff writer Bill Engle: (765) 973-4481 or bengle@pal-item.com Follow him on Twitter at http://twitter.com/billengle_PI.