Friday, July 28, 2017

Federal Court in New York Upholds the ZEC Program

The U.S. District Court for the Southern District of New York dismissed all challenges brought against New York’s nuclear generation subsidies and upheld New York’s Zero Emissions Credits (ZECs) program established for Exelon’s three upstate nuclear facilities (R.E. Ginna, FitzPatrick and Nine Mile Point). Exelon stands to gain some $7.6 billion in subsidies over several years.

The court said that the ZECs “do not directly adjust, alter or affect the wholesale rate” of electricity. The court further said that there is no “principled basis to hold that the ZEC program is preempted even though its sibling REC program is not.”

New York’s nuclear generators comprise 31% of New York’s electricity generation mix and collectively avoid the emission of over 15 million tons of carbon dioxide per year.

Monday, July 24, 2017

States Push To Keep Nuclear Plants Alive In The United States

Nuclear reactors provide close to 20 percent of domestic electricity generation, and approximately 60 percent of carbon-free generation, in the United States. Closure of six nuclear reactors since 2013 and the likelihood of closure of several other reactors in the coming years has brought to the forefront a range of short- and long-term challenges nuclear power is facing in an ever evolving energy sector. The nuclear power industry has found it difficult to compete with low-cost natural gas power plants in restructured electricity markets.

Tuesday, July 11, 2017

Massachusetts Issues RFP for Offshore Wind

by Jacob Yaniero, in Washington

Following the success of the Block Island Wind Farm, states have started adopting policies to encourage development of offshore wind facilities in the United States. One such state, Massachusetts, is moving forward on offshore wind with the assistance of investor-owned utilities Unitil, National Grid and Eversource.  In coordination with the Massachusetts Department of Energy Resources (DOER), the joint group issued an RFP last week for 400-800 MW of offshore wind generation off the coast of Massachusetts.    

Wednesday, July 5, 2017

Solar Developer loses PURPA challenge to State renewable program

by Bob Shapiro, in Washington

A federal appellate court rejected a challenge by a solar developer to a Connecticut competitive solicitation for renewable power that would permit winning bidders to receive wholesale power contracts to sell the power to the state's utilities. The developer claimed that the state violated federal law because it did not limit the eligible bidders to qualifying facilities under the federal Public Utility Regulatory Policies Act, or PURPA. The court found that the state action was not inconsistent with federal law and that it was not an undue burden on interstate commerce.

As a general matter,  another federal law, the Federal Power Act  gives the federal regulatory agency known as FERC the exclusive authority over wholesale electric rates in interstate commerce. 

There are exceptions. State are given limited authority over wholesale rates of “qualifying facilities” under PURPA that use renewable energy and that are not above a maximum size. A key issue in this case was whether the state had the authority to direct its regulated utilities to sign wholesale contracts that resulted from the bidding for projects that did not qualify under PURPA.

The issue became more significant as a result of the recent US Supreme Court decision of Hughes v. Talen. In that case the state required the state's utilities to sign contracts  with winning bidders who would construct gas-fired power plants and sell the output into the competitive regional market known as the PJM market. The state required the winning bidder to participate in the PJM auction for its sales of capacity, and to clear the auction and net the auction payments against the contract prices under the contract. The Supreme Court found that this state action interfered with FERC's exclusive rights over wholesale rates, since the PJM auction was approved by FERC.

The federal appellate court here, in dismissing the solar developer challenge, distinguished the Connecticut solicitation from the case in Hughes v. Talen. The court found, that, unlike Hughes v. Talen, the contracts here were bilateral contracts that did not require participation in the wholesale market auction. It also found that the Connecticut law authorized but did not compel the state's utilities to accept specific bids, unlike the state commission action reviewed in Hughes v. Talen.

This decision is likely to be cited by litigants in current federal court proceedings challenging the state of New York and Illinois' recent creation of zero-emission credits (or ZECs) to support the prices of operating nuclear plants that are competing in the wholesale power markets.