Energy Exchange

What our climate goals mean for natural gas, and what states should do about it

The transition to a low-carbon economy will have a big impact on the way we think about natural gas: how we produce, use and transport it. One area where this challenge is particularly acute is the state regulatory frameworks governing gas utilities across the country, and in particular, how those rules line up against the climate goals now being set by a growing number of states.

States that don’t re-envision the way their gas utility systems run will be challenged to meet their climate targets. To help states avoid that fate, EDF has developed a new guide suggesting ways that state regulators can navigate this complex challenge.

Read More »

Posted in California, Clean Energy, Colorado, Gas to Clean, Natural Gas, New York / Comments are closed

Federal regulators should reevaluate the incentive model for gas pipelines

The energy industry is in the midst of a massive transformation. Natural gas fired power plants are now the dominant source of electric power in the U.S., and according to numerous studies, natural gas will continue to have a role in our future energy system — even in stringent greenhouse gas reduction scenarios. For the first time ever, renewables supplied more generation than coal in April. New technologies, evolving customer expectations and state laws directing greenhouse gas reductions are driving significant changes in the way we use and consume energy. The pace of this change will be even further accelerated as we turn to electrification as a means of decarbonization.

Regulators must reevaluate their policies and rules to ensure they are keeping up with these major changes. This is particularly true for the current revenue model of gas pipelines, which is built on the idea that “the more you spend, the more you earn.”

Read More »

Posted in Clean Energy, Gas to Clean, Natural Gas / Comments are closed

Gas utility planning is behind the times. Rhode Island has a plan to fix it.

When it comes to how utilities plan for future gas needs and use, challenges abound: Pipelines are built before state regulators have an opportunity to assess whether it is prudent for a gas utility to take service from that pipeline; decisions are made behind closed doors with little opportunity for stakeholder input; and planning efforts do not appropriately consider options other than traditional infrastructure such as energy efficiency, gas demand response, or renewable alternatives to natural gas.

Pending before the Rhode Island Public Utilities Commission (RI PUC) is a proposal that would meaningfully resolve many of these issues. The utility in the state and the PUC staff crafted a joint memo proposing a more robust planning framework and rigorous oversight of utility decisions. As EDF recently explained in its comments to the RI PUC, this framework will serve the public interest and can be used as an important model for other states.

Read More »

Posted in Clean Energy, Energy Efficiency, Natural Gas / Comments are closed

FERC approves pipeline despite concern over controversial business arrangement

Last week, the Federal Energy Regulatory Commission (FERC) approved the proposed Spire STL Pipeline. Blessings for the controversial 66-mile project come even though St. Louis already enjoys excess capacity from other pipelines, and despite the fact that the only customer of the pipeline, Spire Missouri, does not actually have any growth in customer demand. It is estimated that the project will cost ratepayers $30 million annually over the next twenty years.

The proceeding reveals much about how the agency assesses the legally-required “market need” for new pipelines when both buyer and seller in the contract used to demonstrate that market need are two different arms of the same company. These so-called affiliate transactions are a growing trend as retail gas utilities seek new revenue to offset stagnating demand.

The risk with these types of transactions is that we could end up with expensive new pipelines that aren’t needed. What’s more, these deals are specifically engineered to shift financial responsibility for these costly projects away from private shareholders and onto retail ratepayers (i.e., the public). They can also lock utility customers into decades-long gas contracts at precisely the time when competitive alternatives – from renewables to energy storage – are transforming the market. Spire presents a textbook example of these concerns.

Read More »

Posted in Natural Gas, Utility Business Models / Comments are closed

Resilience proceeding gives FERC a chance to advance gas-electric coordination

Last September, the U.S. Department of Energy (DOE) started a conversation on resilience, asking the Federal Energy Regulatory Commission (FERC) to provide new revenues and guaranteed profits to the owners of old, inefficient coal and nuclear power plants to compensate these resources for certain reliability and (undefined) resilience attributes.

FERC swiftly disposed of that proposal in a January 8 order, finding that it was not warranted and would run counter to its pro-market regulatory model. FERC then asked all of the Regional Transmission Operators (RTOs) and Independent System Operators (ISOs) to explain how they are evaluating and addressing resilience within their respective markets.

Read More »

Posted in Gas to Clean, Grid Modernization, Natural Gas, Regional Grid / Comments are closed

DOE’s compensation scheme for coal and nuclear is dead – Now what?

In a January 8 Order, the Federal Energy Regulatory Commission (FERC or Commission) swiftly dismissed the Department of Energy’s (DOE) proposed out-of-market compensation scheme for coal and nuclear units.  DOE’s proposal would have provided guaranteed profits to coal and nuclear plants, despite the fact that these aging units are losing out to more efficient and affordable resources.  Instead, FERC took a more measured approach, asking all regional market operators to submit additional information on resiliency issues within 60 days, and providing interested parties an opportunity to respond to those submittals within 30 days.  Here’s what we can expect next. Read More »

Posted in Clean Energy, Electricity Pricing, Grid Modernization, Utility Business Models / Comments are closed