Ukraine Crisis Fueling Natural Gas Exports Debate

The Ukraine crisis is adding fuel to the natural gas export debate that’s been brewing in Congress. Sen. John Barrasso, R-WY, is proposing that an amendment to lift restrictions on U.S. natural-gas exports be added to the Senate aid package for Ukraine. On March 5, Sen. Mark Udall, D-CO, a senior member of the U.S. Senate Energy and Natural Resources Committee, introduced legislation to increase the ability of energy firms to export liquefied natural gas. Sen. Udall preceded the legislation’s introduction by noting that:

The situation in Ukraine shows the urgent need for Colorado and the nation to export more natural gas. When foreign powers like Russia are able to exploit their monopoly on energy exports to coerce their neighbors, it weakens the international community’s ability to promote stability and avert conflicts.

Currently, under the Natural Gas Act (1938), exports of natural gas are generally limited to countries that have a free-trade deal with the U.S.. Sen. Udall’s recently introduced legislation, known as “The American Job Creation and Strategic Alliances LNG Act” would modify a part of the Natural Gas Act to allow natural gas exports to World Trade Organization member countries. Of course, under this provision, Ukraine and neighboring countries would then be eligible to receive exported natural gas.

However, many energy experts say that the real problem with natural gas exports is not the governmental red-tape involved with actually exporting it, but the dearth of infrastructure to liquefy the natural gas for overseas shipment. There are now six applications for LNG (liquid natural gas) export facilities that have been approved, but only one of them is under construction. This is Cheniere’s $10 billion Sabine Pass terminal in Cameron Parish, Louisiana, which just recently received its required approvals from the U.S. Department of Energy and U.S. Federal Energy Regulatory Commission as well as from any state regulators that are needed. LNG shipments from this facility are scheduled to start in late 2015. As approval processes for LNG export terminals are lengthy, it is unlikely that the other applied-for LNG export terminals would be operational soon. As Energy Secretary Ernest Moniz said earlier this week during a major energy conference in Houston:

After the Cheniere license, the most optimistic view for the next set of LNG shipments to leave the U.S. isn’t until 2017 or 2018, according to Moniz. “So, there’s still quite a ways to go,” he says.

Aside from the natural gas export ban and the lack of infrastructure, the exporting of natural gas also begs the question of what will its price be once it is on the global market? The price of U.S. produced natural gas is much, much lower in the U.S. than natural gas sold elsewhere. An earlier Geopostings blog detailed how the spot price of domestic gas is set and how natural gas prices overseas are typically “oil-linked”, which means the price is coupled to the per-unit energy cost of crude oil. Suffice it to say that it is a real possibility that natural gas prices for domestic consumption will rise, and could rise precipitously. It is also a real possibility that as a market-driven commodity, U.S. produced natural gas will be exported not to Europe, but to the Asian market, where it will command a higher price.

As I said before in my earlier Geopostings blog on natural gas exporting/pricing:

All in all, 2014 is already shaping up as a very interesting year for US natural gas, LNG exports, and US energy policy.

 

The U.S. Energy-Climate World Upheaval: 2008-2014

If the recent U.S. energy-climate world seems like it’s in upheaval, that’s because it is. Amy Harder of the National Journal, just posted a good synopsis of the monumental changes in the U.S. energy-climate world with her article – The Five Biggest Energy Changes in the Past Six Years. Harder notes:

In 2008, Washington was grappling with what it thought was a scarce supply of oil and natural gas, energy prices were high, presidential candidates of all stripes embraced action on global warming, and President Obama was riding to victory on his slogan of change you can believe in.

Today, six years later, who would have thought this much change would come to the energy and climate world this fast? Here are the biggest changes over the past six years.

The changes that Harder elaborates on include:

–          America’s oil and natural-gas boom

–          The rise of EPA and the fall of climate-friendly Republicans

–          Environmental movement flipping from top down to bottom up

–          Imports and exports of fossil fuels with exports up and imports down

–          Renewable-energy growth, which is objectively significant but still relatively small

Overall, I think this is a helpful, brief summary of the U.S. energy-climate world – basically a good starting point for those interested in more detail on this area.

Natural Gas and Climate Change

The rise in natural gas production, particularly in the U.S., has unquestionably impacted the global energy equation. Fueled by the unconventional-natural-gas revolution, natural gas is now a significant factor in the U.S. and global energy mix. As Sonal Patel summarized from the International Energy Agency’s (IEA) 2013 World Energy Outlook (WEO-2013):

By 2035, natural gas demand will outpace that of any other individual fuel and end up nearly 50% higher than in 2011. Demand for gas will come mostly from the Middle East-driven by new power generation-but also from Asian countries, including China, India, and Indonesia, and Latin America. Power generation continues to be the largest source of gas demand, accounting for around 40% of global demand over the period. New gas plants, meanwhile, are expected to make up around a quarter (or 1,000 GW) of net capacity additions in the world’s power sector through 2035.

Given the seemingly inevitable scenario of natural gas playing a significant role in the energy mix (and particularly in U.S., given the recent unconventional-natural-gas boom), how will its increased use influence climate change and future energy policies? The tenet that natural gas, being a cleaner-burning fuel, will lessen a carbon footprint has been bandied around for awhile now. Amy Harder, from National Journal, picks up this thread with:

First the aforementioned wisdom: Natural gas is unquestionably helping the United States reduce its climate footprint. Our nation’s greenhouse-gas emissions have dropped to levels not seen since the 1990s, thanks in part to this cleaner-burning fuel. Natural gas produces half the carbon emissions of coal and about a third fewer than oil. This is why everyone in the Obama administration, including the president himself, can’t talk enough about the climate benefits of natural gas.

Three disparate factors make the relationship between natural gas and climate change not so unequivocally simple and good. Concerns about methane emissions persist, but notwithstanding that challenge, two greater problems loom: First, shifting significantly away from coal to natural gas doesn’t get the planet anywhere close to the carbon-reduction levels scientists say we must reach. And second, while the natural-gas boom is great for the economy and the immediate reduction of greenhouse-gas emissions, it has deflated the political urgency to cut fossil-fuel dependence, which was more compelling when we thought our resources of oil and natural gas were scarce. We have a great problem of energy abundance.

Obviously, natural gas is not the total panacea for “fueling” the transition to a carbon-negative energy mix. But given the current and predicted production/market conditions, it will be a considerable part of the future global energy equation. There is more info over at websites like cooleffect.org for those who want to see what they can do personally to help their carbon emissions be reduced.

Top Five 2014 Energy/Environmental Priorities of the EU

I thought that it’s instructive for anyone interested in US energy/environmental policy to look at what the EU has on its 2014 agenda. Environmental journalist Sonja van Renssen outlines the top 5 EU energy/environmental issues. The issue priorities are:

  • The biggest issue on the agenda will be the climate and energy package to be unveiled by the European Commission on January 22nd.

  • ETS and how to include emissions from international aviation will also be high on the agenda, with  the European Parliament and the biggest Member States disagreeing on the way forward.

  • Shale gas will be back on the agenda with a long-awaited proposal to be tabled by the European Commission also on January 22nd.

  • In 2014, DG Environment’s priority will be waste and resource efficiency with a ‘circular economy’ package expected to be presented by environment Commissioner Potočnik in spring.

  • The alternative fuel strategy with difficult trialogue negotiations between the Council, European Parliament and Commission lying ahead.

View environmental journalist Sonja van Renssen talk about the energy/environment priorities:


 

Whose Land Is It Anyways?

The development of energy resources is typically dependent upon the availability of infrastructure such as hydrocarbon pipelines and transmission lines. Many of the issues concerning energy development and consequently infrastructure construction focus on the impact of climate change generated by a particular energy resource. The continuing controversy over the permitting of TransCanada’s Keystone XL pipeline is a flashpoint in the debate over the development of Canada’s tar sands and its impact on climate change. Likewise, many wind- power advocates champion this use of renewable energy to significantly reduce carbon dioxide emissions and catastrophic climate change.

The issues regarding energy resources and their impact on climate change are paramount to future energy policies. However, there is another significant concern tied to energy/infrastructure development, and that is the associated landowner-eminent domain problem. The movement of energy, whether it is hydrocarbons or electricity, involves infrastructure that is built in large part, on private property. When energy infrastructure is built by private corporations, these entities need to deal with private landowners so that infrastructure can be constructed on their lands. Ideally this is accomplished by corporations and landowners negotiating a fair price for the use of their lands. However, that is truly an ideal world scenario. The reality is that private corporations have lately pushed legislation through numerous state legislatures and court systems to gain the right of eminent domain for their infrastructure projects. The right of eminent domain has historically been used by governments to seize private property for public use and then to fairly compensate the owner for that ”taken” property. However, eminent domain usage for recent private infrastructure projects becomes one where private corporations can take private lands for their private gain. For example, the Montana 2011 legislature passed legislation via House Bill 198 that gives private corporations the right of eminent domain for projects such as nuclear generation and storage, hydro, certain transmission lines, certain major pipe lines, geothermal exploration, transportation links, pump stations and other facilities associated with the delivery of energy that receive permits through the Montana Major Facility Siting Act (see the Concerned Citizens Montana website for background on HB 198 and Geopostings.com for a review on Montana Senate Bill 180, the bill intended for repealing a part of HB 198 during the Montana 2013 legislative session).

In a needed first step for educating the Montana legal and legislative communities about the recent changes in eminent domain law, the State Bar of Montana CLE (Continuing Legal Education) Institute will convene a course on Montana Condemnation Rights on February 14, 2014, at Fairmont Hot Springs, Fairmont, Montana. A link to the course brochure is: MT Condemnation Rights.

The MT CLE course is well balanced in that it contains presentations from many sides of the eminent domain issue. More specific information on the CLE course presentations includes:

–          CONDEMNATION 101—What every real estate practitioner should know about condemnation. An overview of condemnation law in Montana, including condemnation authority, time frames, notices, rights of possession, valuation and attorney fees and expenses. [This element of the program is intended as an overview and not a detailed consideration of the latest developments in Montana law.  However, there should be a brief introduction to the US  Supreme Court decision in Kelo v. City of New London (propriety of using the power of eminent domain for economic development purposes) which placed new focus on the intended scope of the power of eminent domain as well as the Montana response.]  (1 hour presentation by Hertha L. Lund, Lund Law PLLC, Bozeman, Montana.)

–          TAKINGS AND TRANSMISSION— This presentation will explore the range of state laws governing eminent domain authority for interstate transmission lines, particularly those designed to bring renewable energy generated in one state to customers in other states.  It will focus in particular on various state approaches to granting private merchant transmission lines eminent domain authority to build transmission lines, and whether such lines are a “public use” for purposes of meeting state statutory eminent domain requirements.  In addressing these issues, this presentation will discuss the Supreme Court’s Kelo v. City of New London decision, the litigation and legislative activity surrounding the Montana Alberta Tie Line (MATL) project, some historical context with regard to state constitutional and statutory grants of eminent domain to private parties in the West, and the role of “just compensation” in eminent domain disputes involving transmission lines. (1.25 hours presentation by Professor Alexandra B. Klass, Professor of Law, the University of Minnesota Law School.)

–          THE EASEMENT:  PROCESS, TACTICS AND SUBSTANCE- How and what to negotiate to fully protect landowners’ property rights when confronted with the possibility of transmission lines burdening their land. A negotiation/drafting checklist will emerge which prove extremely helpful for any practitioner handling future utility easements. (1 hour presentation by Dennis R. Lopach, Attorney, Helena, Mt.)

–          THE MONTANA BATTLE: LITIGATION/LEGISLATION RELATING TO PRIVATE EMINENT DOMAIN FOR TRANSMISSION LINES AND OTHER CONTESTED CONDEMNATION ISSUES. A debate to highlight the opposing views by lawyers intimately involved in the process. Participants include: Hertha L. Lund (Private Landowners) Lund Law, PLLC, Bozeman, MT and John Alke (Utilities) Hughes, Kelner, Sullivan and Alke, Helena, MT. Each lawyer will be given 30 minutes to present their case in chief. (Total debate time: 1.5 hours.)

–          HOT TOPIC ROUNDTABLE-  A facilitated panel discussion including all speakers will address “Hot Topics” which have emerged throughout the day. (Facilitator:  Brian Kahn, Attorney, Helena, MT. Total Roundtable time is 1.25 hours.)

The potential use of eminent domain by a private corporation, Northwestern Energy, to build a high-voltage transmission line through a southwestern Montana community.

The potential use of eminent domain by a private corporation, Northwestern Energy, to build a high-voltage transmission line through a southwestern Montana community.

US Microgrid Technology and the U.S. East Coast

Microgrid systems, an alternative approach for integrating small scale distributed energy resources, are becoming a reality on the U.S. east coast. The microgrids are viewed as a way to improve energy resiliency in the face of future impacts related to climate change, as reported by the Hurricane Sandy Rebuilding Task Force. Bill Howley, in today’s “The Power Line” blog, points out a critical necessity for microgrid development – the need for larger capacity, less expensive battery storage. Bill notes that one company, Solar Grid Storage, is making significant strides in this direction. Here’s Bill’s summary:

Larger capacity, less expensive battery storage is the key to building more microgrids in the US. Here is a story about one new company, Solar Grid Storage, that is developing new grid storage systems.   The article also gives you a good overview of new microgrid systems that are popping up on the East Coast.

Solar Grid’s primary focus is commercial customers, but it also works with utilities and municipal governments. Among its customers are a school system in New Jersey and a utility in North Carolina. It partnered with Standard Solar Inc. on the installation of a solar system at the Konterra Realty Corporation that opened last month.

He says grid operators like PJM, a regional transmission organization, pay Solar Grid an installation fee and a monthly fee based on the hourly market rate of access to its battery system.

Leyden says the company is currently in talks with utilities in the Maryland-Washington, D.C. area on solar storage. He declined to identify them but the major operators in the District are Pepco and Washington Gas.

 

The Continuing Saga of the Utilities’ Death Spiral

For those of you who are fighting numerous proposed high-voltage (HV) transmission projects, take some solace in the idea that “time is on our side”. There are lots of reasons for that, but one of them has always been that technology and the market would unfold and develop in ways that would, and should, make HV transmission largely unnecessary. As I’ve said before in other Geopostings’ blogs, I think that is exactly what’s currently happening with the disruptive challenge and the death spiral related to on-site solar and energy efficiency. Every day that passes increases the chances that more HV transmission will never be built. To elaborate on this, I’ve included a soon-to-be published op-ed in the Bozeman (Montana) Daily Chronicle by John Vincent (a frequent contributing author to Geopostings):

The Continuing Saga of the Utilities’ Death Spiral

– by John Vincent,  former Montana state legislator, Bozeman mayor,Gallatin County Commissioner and Montana Public Service Commissioner

Recently two opinion pieces published by the Bozeman Chronicle have addressed energy issues from a single perspective; increasing the supply of electricity. One article advocated for more power from wind. Another, while not dismissing wind power, made the case for coal fired generation.

Certainly reliable energy supply is important, the cleaner and cheaper the better.  But increasing supply isn’t what’s getting the most attention or generating the greatest concern in the utility industry today.

Here’s what is:  The industry is becoming more than a little troubled by the fact that energy efficiency and on-site and locally generated and distributed energy (which reduces demand for the power they sell) is beginning to threaten the way they’ve done business for over 100 years. They see this trend starting to cut into their profits, (profits made possible primarily by building large, centralized power plants and long distance transmission lines at handsome rates of return guaranteed by government regulation of electricity rates).

Consultants for the private utilities’ owned trade group, the Edison Electric Institute, recently acknowledged this threat. They call it a “disruptive challenge.” Others have dubbed it a “death spiral” for the utility industry.

What is “disruptive challenge” or the “death spiral”?

As more and more people and businesses use less and less energy and generate more of what they do use on their own, utilities will sell less power. Rates will have to go up in order to keep profits healthy and stockholders happy.

Customers who haven’t become more energy efficient, or who’ve been unable to find ways to utilize on-site or distributed energy systems, will bear the brunt of these higher rates. But because the cost of distributed energy and improved efficiency will continue to drop, increasing numbers of these customers will become empowered, motivated
and enabled to significantly reduce the amount of power they purchase from their traditional utilities.

The customer base for traditional utilities will shrink, profits will decline, expensive (and previously profitable) power plants and long distance transmission projects will no longer be needed and investors will look elsewhere for the kind of safe, profitable investments
government regulation of utility rates has guaranteed them for decades.  Utilities, as we know them, will no longer exist.

Because one key component of the “disruptive challenge/death spiral” is on-site solar, some may counter that what’s going on in the broader utility industry won’t apply to Montana.

Don’t bet the farm on it. New Jersey, under Republican Governor Chris Christie, trails only California in on-site solar installations; state of the art energy efficient office buildings using on-site solar are going up in Seattle; the chairman of the Federal Energy Regulatory
Commission said last week that on-site “solar will overtake everything” and so the cost of on-site solar will continue to drop. The utility industry’s Edison Electric Institute has warned its own constituency that they have a big problem on their hands; In Georgia, the Tea Party is going to bat for more on-site solar to reduce dependence on the grid; and Bloomberg BusinessWeek just  published an especially timely article, “Why The U.S. Power Grid’s Days Are Numbered”.

On top of all that, and of even more immediate concern for Montana, is the fact that substantial amounts of our state’s electric generation are exported to markets where, for decades to come,  85 to 100 percent of new energy demand is expected to be met through conservation and efficiency.

The grid isn’t going to disappear altogether and technology will make what remains of it smarter and more efficient.  But our reliance on the grid (the world’s largest machine but also a vast, interconnected system highly vulnerable to cyber attack and terrorism) will become a small fraction of what it is today. The signs are there for all to see and more than a few  industry leaders have started to adapt in order to survive and remain profitable in the coming decades.

We’ve seen this kind of paradigm change before, most recently in the phone industry. Land lines out, wireless in. A quantum leap. We are about to see it again in the utility industry. You can bet the farm on it.

Power Companies Losing Out To Rooftop Solar??

by John Vincent, former Montana Public Service Commissioner

America’s utility industry, “Big Power,” is, by their own admission, scared.  Made up of large corporations with huge and profitable investments in centralized generation and long distance, high voltage transmission (profits mostly guaranteed by monopoly status and government regulation), they are facing what their own industry calls a “death spiral,” – the likelihood that the loss of demand (need) for the power they sell will put an end to “business as usual,” (the old energy paradigm).

On Rooftops, A Rival For Utilities”, a 7.28.2013 NY Times article by Diane Cardwell, details the industry death spiral, and ties the spiral into net metering and its strong appeal to potential rooftop solar users:

Net metering right now is the only way for customers to get value for their rooftop solar systems,” said Adam Browning, executive director of the advocacy group Vote Solar.

Mr. Browning and other proponents say that solar customers deserve fair payment not only for the electricity they transmit but for the value that smaller, more dispersed power generators give to utilities. Making more power closer to where it is used, advocates say, can reduce stress on the grid and make it more reliable, as well as save utilities from having to build and maintain more infrastructure and large, centralized generators.

But utility executives say that when solar customers no longer pay for electricity, they also stop paying for the grid, shifting those costs to other customers. Utilities generally make their profits by making investments in infrastructure and designing customer rates to earn that money back with a guaranteed return, set on average at about 10 percent.

“If the costs to maintain the grid are not being borne by some customers, then other customers have to bear a bigger and bigger portion,” said Steve Malnight, a vice president at Pacific Gas and Electric. “As those costs get shifted, that leads to higher and higher rates for customers who don’t take advantage of solar.”

Whether it’s on-site solar (the main focus of this article), conservation, efficiency, distributed on-site or locally distributed power from other alternative energy sources, smart grid and micro grid technology or more efficient home appliances (the new energy paradigm), “Big Power” sees the day coming when sufficient need and market demand for the power they sell will no longer exist. Of course, they will do all they can to prevent that from happening, and that fight will be coming soon to a legislature and public utility/service commission near you.

One of the huge benefits of the new energy paradigm will be the rapidly decreasing need for any new high voltage, long distance transmission lines. Every day the new energy paradigm gains strength and momentum is a day that further diminishes the need for projects like NorthWestern Energy’s MSTI line and all the environmental, financial and private property rights problems it raises.

So, whether it’s rooftop solar in California or energy efficiency programs and small scale, on-site solar, wind or micro hydro projects in Montana, it all pushes the new energy paradigm forward. And that’s a good thing.

Energy Conservation And Efficiency….. Good For People, Business, And The Environment

– By John Vincent, Former Montana Public Service Commissioner

It’s recently become all too clear that “big power” is “waging war” on energy efficiency and conservation because it reduces the amount of power they sell and cuts into their profits. But for others (residential consumers, private businesses – both large and small, and corporations), energy efficiency is saving energy, saving money, and improving bottom lines. In addition, things like recycling are involved in energy efficiency because less landfill means less transportation and incinerators. Companies like phs Wastekit are a leading supplier of baler machinery and equipment and could be an easy way for businesses to recycle products that they would normally throw into the trash. Less generation, especially, but not exclusively, coal fired generation, reduces CO2 emissions (natural gas produces about half the CO2 of coal but also emits high quantities of methane, a “green house” gas 20 times more potent than CO2).

IDAHO’S J.R. SIMPLOT COMPANY LEADS THE WAY ON ENERGY EFFICIENCY

The J.R. Simplot Company shows the way to energy conservation and efficiency. This is a great example of the conservation/efficiency ethic being taken to heart by a major American business. With more than 10,000 employees, the J.R. Simplot Company is one of the nation’s largest privately owned companies. And, it’s no secret that the Simplots are a politically conservative family and business. They have fully embraced (dare it be said) a good, old fashioned conservative ethic; saving money……….. by using less energy and consequently also cutting costs.

Here’s what they’ve accomplished through energy efficiency and conservation since 2009:

– saved 1.3 trillion btu’s of natural gas (enough to take 29,929 cars off the road and keep 95,056 tons of co2 out of the air),

– reduced electrical use by 390,821,028 kilowatt hours (enough to take 35,400 homes off the grid),

– saved millions of dollars*.

Of course, when individuals and businesses save energy it also reduces the need for new and extremely costly centralized electrical generation plants and long distance, high voltage transmission lines – both of which would cost (not save) electric customers billions of dollars, pose a threat to the loss of private property rights through eminent domain, and harm the environment. When asked recently by the Idaho Statesman newspaper why they undertook their energy saving efforts, the Simplot family fell back on the words of the company’s founder, J.R. Simplot: “do well by doing good.”

Good advice.

*actual dollar amount of savings to be posted soon

Energy Efficiency and Small-Scale Solar Power Threaten Utilities’ Bottom Lines

Power company revenue is under siege by energy efficiency and small-scale solar power, says a Fitch ratings analyst.

Rooftop solar power and energy-efficiency programs will eat into utility revenue and profit margins and discourage investment in new transmission projects within five years, a Fitch Ratings analyst said.

Utilities in stagnant or low-growth markets in the Midwest and Northeast face the biggest losses as more businesses and homeowners install their own generation systems and upgrade to more efficient appliances, said Glen Grabelsky, Fitch’s managing director of utilities, power & gas. Retirees flocking to southern states may offset some losses for local utilities.

This is serious business for utilities as Bill Howley of The Power Line notes:

Fitch is issuing this report as a warning of downgrades to come if power companies don’t step and squash rooftop solar power soon.

The demand loss for grid electricity will be significant as further remarked by Grabelsky of Fitch Ratings:

Loss of demand from customers that go solar or reduce consumption in other ways will shift more and more grid costs onto customers that do nothing. As there are more and more successful Off Grid Solar Projects, traditional grid companies will have to change with the new developments or be left behind. Power supplied by U.S. utilities declined 3.4 percent last year, largely from energy efficiency and on-site solar generation, which reduces demand for electricity from the grid, Grabelsky said.

Unless utility rate structures change, that will reduce utilities’ abilities to invest in major new projects and upgrade their transmission systems, Grabelsky said.

“It will have a negative impact on their ability to raise capital,” Grabelsky said. “Regulators will ask, ‘Do you really need all that new transmission when there’s no demand growth?’ There’s the potential for stranded assets.”

A recent study by the Edison Electric Institute (EEI), “Disruptive Challenges – Financial Implications and Strategic Responses to a Changing Retail Electric Business”, basically reiterates Grabelsky’s view of the threat to utilities by energy efficiency and distributed energy generation. The report details corporate utilities’ angst regarding their customers’ shift to go solar and reduce demand for grid electricity. Many are switching over to prepaid energy plans for their grid electricity, which is a greener option and more cost-effective to manage. With fewer people deciding to have a look for certain types of grid electricity, they are less likely to be overcharged by their utility company, which is good news for the customer.

How will utilities compensate for the loss of demand? Howley, in his “The Power Line” blog, gives a good response:

This translates into: do away with net metering and charge higher rates to people who install solar panels and invest in efficiency.

John Vincent, a former Montana Public Service Commissioner (PSC), in a recent op-ed in the Bozeman Daily Chronicle, calls the shift away from using corporate grid electricity the “new energy paradigm”. As Vincent explains:

A new paradigm is grabbing hold in the residential, commercial and public sectors of our economy. That is: local distributed or “on site” electrical generation and consumption (wind, solar, small scale hydro, biomas, geothermal, micro turbines, combined heat and power systems etc.) conservation, efficiency and smart-grid technologies (to increase the efficiency and capacity of existing electrical transmission systems rather than of building costly new ones at rate payer expense).

But, as Vincent cautions us:

The new energy paradigm is, for obvious reasons, being met with strong resistance by those who benefit from the status quo. Unfortunately, these self interests still carry a lot of political clout, witness recent Montana legislative sessions.

The “new energy paradigm” is a model that we must embrace. We need to get people and politicians to move on this.

Blog Postscript – Former PSC Commissioner Vincent adds the following clarification on the EEI study mentioned above:

The Edison Electric Institute is Big Power’s number one ally and voice (funded and supported by Big Power) and so their own consultant has: 1. Clearly identified Big Power’s dilemma and, 2. Recommended ways to beat back the new paradigm and maintain the status quo…… at rate payers expense. I think the recommendations cited in the consultant’s report can be boiled down to raising rates (one way or another) to offset the loss of revenue brought about by on site, distributed generation and improved efficiency.

In other words, Big Power will do everything they can to make us (rate payers) pay for distributed energy and efficiency……..the new paradigm, not their stockholders.

The Uber Grid Push Is Back

The push for the uber grid raised its head again in the New York Time’s 7.12.13 edition. Matt Wald plugs the new EIPC (Eastern Interconnection Planning Collaborative) “hypothetical” nationalized grid as a “step forward”.

As Mr. Wald reports,

When President Obama presented his plans last month for executive action that would cut emissions of greenhouse gases, one item on his list was strengthening the power grid. It was on the lists of President George W. Bush and Mr. Clinton, too. But for the most part, experts say the grid is not being changed, at least not on a scale big enough to make much difference.

Their view is reflected in what they say is a largely hypothetical three-year effort by hundreds of engineers to redraw the grid for the eastern two-thirds of the United States. Engineers in the project, which is now drawing to a close, have proposed a basic redesign for beefing up the Eastern Interconnection, the part of the grid that stretches from Nova Scotia to New Orleans.

You may wonder what is EIPC and what is its function? Here’s how EIPC describes itself:

The EIPC was initiated by a coalition of regional Planning Authorities (see list below). These Planning Authorities are entities listed on the NERC compliance registry as Planning Authorities and represent the entire Eastern Interconnection.

The EIPC will provide a grass-roots approach which builds upon the regional expansion plans developed each year by regional stakeholders in collaboration with their respective NERC Planning Authorities. This approach will provide coordinated interregional analysis for the entire Eastern Interconnection guided by the consensus input of an open and transparent stakeholder process.

The EIPC received funding from the U.S. Department of Energy in 2010 to initiate a broad-based, transparent collaborative process to involve interested stakeholders in the development of policy futures for transmission analysis. Learn more about the DOE-funded project.

The Stakeholder Steering Committee (SSC) is the body of stakeholder representatives that works collaboratively to inform and provide input on the EIPC’s efforts. Learn more about the SSC.

Planning Authorities:

Alcoa Power Generating

American Transmission Company

Duke Energy Carolinas

Electric Energy Inc.

Entergy

LGE/KU (Louisville/Kentucky Utilities)

Florida Power & Light

Georgia Transmission Corporation

IESO (Ontario, Canada)

International Transmission Company

ISO-New England

JEA (Jacksonville, Florida)

MAPPCOR

Midwest ISO

Municipal Electric Authority of Georgia

New Brunswick System Operator

New York ISO

PJM Interconnection

PowerSouth Energy Coop

Progress Energy – Carolinas

Progress Energy – Florida

South Carolina Electric & Gas

Santee Cooper

Southern Company

Southwest Power Pool

Tennessee Valley Authority.

 

As aptly noted in The Power Line blog in response to Mr. Wald’s uber grid writings:

See all that talk about “transparent,” “stakeholders” and “grassroots”?  That is corporate mumbo jumbo of the first order.  Ain’t nothing grassroots about EIPC.  Mr. Wald should go back to reporter school.  You don’t write an article and leave out all the important names.  Unless you are trying to hide something.

I also agree with The Power Line on the clincher to the EIPC’s uber grid vision stated by Christopher Russo, an energy consultant at Charles River Associates (a company that helped with the grid redesign):

“We said, ‘Here’s what we could do,’ ” he said. “We haven’t said how we would pay for it.”

I’ve wondered about that “pay for” part in regards to proposed high-voltage transmission in the western U.S.

Energy Efficiency Can Save Big Money And Greenhouse-Gas Emissions In Urban Transport Systems

The International Energy Agency just released a new report that shows how energy efficiency of urban transport systems could facilitate savings of up to USD 70 trillion that would be spent on vehicles, fuel and transportation infrastructure from now until 2050.

The report,  A Tale of Renewed Cities, draws on examples from more than 30 cities across the globe to show how to improve transport efficiency through better urban planning and travel demand management. Extra benefits include lower greenhouse-gas emissions and higher quality of life.

The report comes at a critical time: More than half of the world’s population already lives in cities, many of which suffer from traffic jams and overcrowded roads that cost hundreds of billions of dollars in lost fuel and time and that harm environmental quality, health and safety.

“As the share of the world’s population living in cities grows to nearly 70 percent by 2050 and energy consumption for transport in cities is expected to double, the need for efficient, affordable, safe and high-capacity transport solutions will become more acute,” said IEA Executive Director Maria van der Hoeven as she presented the report. “Urgent steps to improve the efficiency of urban transport systems are needed not only for energy security reasons, but also to mitigate the numerous negative climate, noise, air pollution, congestion and economic impacts of rising urban transport volumes.”

The IEA report, A Tale of Renewed Cities, is available for download at: http://www.iea.org/publications/freepublications/publication/name,39940,en.html

Or – check out the slideshare:

North American Oil Supply Jolts Global Markets

The International Energy Agency (IEA) released its annual Medium-Term Oil Market Report (MTOMR) today. I doubt if it will surprise anyone who has been paying attention to the energy markets, but the report’s main assertion is that:

The supply shock created by a surge in North American oil production will be as transformative to the market over the next five years as was the rise of Chinese demand over the last 15.

IEA Executive Director Maria van der Hoeven introduced the report at the Platts Crude Oil Summit in London by saying:

The good news is that this is helping to ease a market that was relatively tight for several years. The technology that unlocked the bonanza in places like North Dakota can and will be applied elsewhere, potentially leading to a broad reassessment of reserves. But as companies rethink their strategies, and as emerging economies become the leading players in the refining and demand sectors, not everyone will be a winner.

The IEA report makes the following prediction for the North American oil supply:

The MTOMR forecasts North American supply to grow by 3.9 million barrels per day (mb/d) from 2012 to 2018, or nearly two-thirds of total forecast non-OPEC supply growth of 6 mb/d. World liquid production capacity is expected to grow by 8.4 mb/d – significantly faster than demand – which is projected to expand by 6.9 mb/d. Global refining capacity will post even steeper growth, surging by 9.5 mb/d, led by China and the Middle East.

The rapid emergence of the rising oil supply will play havoc with the development of other energy sources such as the renewables. It will be extremely interesting to watch how the various energy markets evolve.

For an overview of the MOTR, go to – http://www.iea.org/media/news/MTOMR_2013_OVERVIEW.pdf

Eminent Domain in Montana – The Montana House Fails Landowners

Now that the Montana legislative session is over, here is my tally is on what landowners got out of the session regarding private property rights and specifically those rights related to merchant transmission lines:

–          HB 417: this bill requires that a condemnor provide landowners a final written offer prior to initiating a condemnation complaint. This is helpful to landowners because condemnors often manipulate offers before a final award for damages and this can adversely affect the determination of the prevailing party for reimbursed attorney fees. This bill passed the Legislature on 4/24 and was signed by the Governor on 5/1.

–          HB 45: this bill requires that the current Environmental Quality Council handbook on eminent domain be included in the condemnation complaint. This booklet may provide landowners with some information relative to their rights under Montana law. This bill was signed into law by the Governor on March 28.

All in all, not much for landowners came out of this past session, and nothing was really gained for landowners regarding private property rights in relation to merchant transmission lines. SB 180, a bill that would have repealed the power of eminent domain granted to private, for-profit corporations via the Major Facility Siting Act (MFSA), made it through the Senate and then was tabled in the House Federal Relations, Energy & Telecommunications Committee. Leesa Zalesky, of Western Ag Reporter, wrote a good summary of what happened to SB 180 during the session, and I’ve included it below. There are a couple of points in Leesa’s article that are slightly in error, such as HB 198 was more related to a patch for MATL (Montana-Alberta Tie Line) than explicitly written for MSTI, and the extent of an HB 198 repeal via SB 180, but at least there’s information about what happened to SB 180 out in the media. It is also important to note that SB 180 was traded for HB 417 by some House legislators/lobbyists, and that became a major obstacle in trying to get SB 180 through the House.

Here’s Leesa’s article:

Montana House Fails Landowners

By Leesa Zalesky – published in Western Ag Reporter, May 2, 2013

When the Montana legislative session ended last week, Senate Bill 180 — sponsored by Senator Debby Barrett, a Republican from Dillon, MT — died for lack of a champion in the Montana House of Representatives. SB 180 would’ve restored landowner protections and private property rights by repealing the expansion of eminent domain powers granted through last year’s passage of HB198.

Eminent domain is the power to take private property necessary for public use, a power typically held by the individual states and the federal government. Readers will remember that, during its previous session, the Montana Legislature passed the highly contentious HB 198, which delegated the power of eminent domain to an entity or a person issued a permit by the Montana Department of Environmental Quality (MDEQ). The controversy over the bill surrounded Northwest Energy’s planned Mountain States Transmission Intertie (MSTI), a 500 kV electric transmission line that would extend from Townsend, Montana, through the Whitehall and Butte areas south along the Interstate 15 corridor to a substation in south-central Idaho, a route that involves a great deal of privately owned land.

The passage of HB198 left Montana landowners vulnerable to private property takings whether the land usage would be related to the public good or private use. SB180 would have protected landowners’ rights and would have ensured they received procedural and constitutional protections for private property. SB180 would NOT, as some opponents claimed, have brought development in Montana to a screeching halt, and utility companies like NWE and rural electric cooperatives would have been able to construct distribution power lines. It would have, however, protected private property rights in the process.

SB180 passed through the Montana Senate on February 27 in a 28:22 vote. But when it arrived in the House, the bill was assigned to the House Federal Relations, Energy & Telecommunications Committee (FRET) on March 27, essentially a political strategy to kill the bill. Knowing the FRET Committee would be unfriendly to the bill, SB180’s original sponsor asked House leadership to route the bill through the House Natural Resources Committee, but the request was rejected, and sure enough, the bill was promptly tabled by the FRET Committee. Proponents of the bill were unsuccessful at blasting the bill out of the FRET committee (60 votes are needed for a successful blast), and the bill simply died when the legislature adjourned. Rob Cook — a Republican from Conrad, Montana, and chair of the legislature’s Joint Appropriations Subcommittee on Long-Range Planning — was one of the most vocal opponents of the bill. In fact, supporters of the bill found not one single champion on the Republican side of the House, where they expected to find their strongest support.

Deb Hanneman, PhD, is a landowner and geologist who lives near Whitehall, Montana. Hanneman is a member of Concerned Citizens Montana, a group that fought HB198 last year and supported SB180 during the latest legislative session. Hanneman, who worked the Montana legislature seeking support for SB180, summed it up: “A lobbyist that has been in Helena for decades pulled me aside during the last part of this session and told me,”You need to understand that Anaconda Company, then Montana Power and now Northwestern Energy, have owned the Montana legislature since day one. They found it easier to control 150 people in a confined space than to deal with people spread all over the state. You’re just beating your head against the wall trying to get your vote through.”

 

Montana’s Legislative Response to Secretary Chu’s Use of Power Marketing Administrations to Upgrade the Electric Grid

Last Saturday, the Montana Senate unanimously adopted Senate Resolution (SR) 2 in response to the Department of Energy (DOE) Secretary Steven Chu’s March 16, 2012, memorandum that outlined his plan to upgrade the electric grid using power marketing administrations. The plan would utilize the nation’s four power marketing administrations (PMAs) – the Bonneville Power Administration, Western Area Power Administration (WAPA), Southeastern Power Administration and Southwestern Power Administration to transition to “… a more resilient and flexible grid”  (Joint Outreach Team Draft Recommendations, pg. 4) and to create more cooperation among system users. As envisioned in the 3/16 memorandum, this would be achieved by:

1. WAPA and Southwestern joining with third parties to develop needed transmission,

2. The PMAs creating rate structures that provide incentives for energy efficiency, demand response, integration of renewables, and prepare the grid for electric vehicle deployment,

3.The PMAs partnering with all owners and operators of the grid to improve grid reliability, and

4. The PMAs working with Congress to help streamline the complex regulatory system that governs them.

The Chu memorandum has generated much controversy. The National Rural Electric Cooperative Association (NRECA) quickly jumped into the fray and contended that under Chu’s plan, most of the upgrade costs would be borne by local energy users. Thus, customers’ power bills could dramatically increase to pay for the new grid system.

NRECA’s concerns hit home in Montana because WAPA is taking the lead in Chu’s plan and WAPA is a primary PMA for that part of Montana east of the continental divide. This means that several of the Montana electric cooperatives get their federal allocations from WAPA and utilize WAPA transmission. Consequently, the cooperatives have been very vocal about the potential negative impact of the Chu plan on their customers’ future rates.

DOE and WAPA formed an initiative called “Defining the Future” and a Joint Outreach Team (JOT – a joint team of experts from WAPA and DOE) in response to Chu’s grid upgrade plan. Hearings about the initiative were held in six locations throughout WAPA’s territory during the past summer. Rural electric cooperative reps showed up at the Billings, Montana hearing, and all expressed apprehension about the potential of increased rates. The JOT draft recommendations were published in late November 2012. Of note are some changes that the JOT made from the Chu plan –  … “the JOT decided not to pursue any recommendations specifically targeted at energy efficiency, demand response, or electric vehicles. Further, a number of the areas addressed through the recommendations are considered on a regional basis…” (JOT Draft Recommendations, pg. 5).

This brings us to the start of the 2013 Montana legislative session. JOT representatives gave a brief summary of their draft recommendations to a combined Senate Committee on Energy and Telecommunications and the House Federal Relations, Energy, and Telecommunications Committee during the session’s first week. This allayed some concerns, but SR 2 was still introduced the next week, which according to Montana Senator Olson at the 1/17 SR 2 hearing, “stems from communications between the Montana Legislative Interim Energy and Telecommunications Committee and DOE”.  Senator Olson further noted during the hearing that WAPA and DOE had recent meetings regarding the future of transmission needs in this part of country, but that none of the policy was communicated to the Montana legislature. A letter from the Senate Energy and Telecommunications Committee was sent to DOE about the lack of communication, but Senator Olson characterized DOE’s response as “snarky”. Thus, SR 2 was crafted in order to make sure that DOE received the Senate’s remarks on the initiative by the close of the comment period on 1/22/2013.

It will be interesting to see what happens with the initiative and SR 2, but this all is reminiscent of the last Montana legislative session and the hearings on HB 198 (the bill that granted the power of eminent domain to many a corporation). Several of the same concerns, including increased power rates and lack of notification, were raised during these hearings. What goes around comes around.

 

 

Coal Could Overtake Oil As Number 1 Global Energy Source By 2017

I watched a coal unit train zip through the Belgrade-Bozeman, Montana, area yesterday. The Montana Rail Link unit train was 125 cars in length and presumably bound for Pacific Northwest seaports. The coal is sourced from the Powder River Basin, an approximately 20,000-acre part of Wyoming that supplies about 40 percent of U.S. coal. An informative guide to the Montana-Pacific Northwest coal train situation is the July 2012 Western Organization of Resource Councils’ publication – RAIL IMPACTS OF POWDER RIVER BASIN COAL TO ASIA BY WAY OF PACIFIC NORTHWEST TERMINALS.

My viewing of the coal train passage coincided time-wise with a press release on the International Energy Agency’s (IEA) Medium-Term Coal Market Report. The IEA contends that by 2017 coal will closely rival oil as the number one global energy source.

“Thanks to abundant supplies and insatiable demand for power from emerging markets, coal met nearly half of the rise in global energy demand during the first decade of the 21st Century,” said IEA Executive Director Maria van der Hoeven. “This report sees that trend continuing. In fact, the world will burn around 1.2 billion more tonnes of coal per year by 2017 compared to today – equivalent to the current coal consumption of Russia and the United States combined. Coal’s share of the global energy mix continues to grow each year, and if no changes are made to current policies, coal will catch oil within a decade.”

The growth trend for coal will increase globally except for in the U.S. where cheap natural gas will bring a decline to coal usage. China and India will be the big markets for coal over the next five years, accounting for than 90 percent of the increase in coal demand.

In a Huff Post Green Blog, van der Hoeven notes that although affordable coal has aided emerging economies …” the surge in coal burning is not good news. Despite industry’s effort to promote “clean” coal, the black matter remains the dirtiest of all fossil fuels. The average coal-based power plant emits a tonne of CO2 per MWh generated, about twice the level of a power plant using combined-cycle gas turbines.”

The relentless growth trend for coal currently appears untouched by either climate policy or the economic slowdown. Given the present political situation, it may well be that cheap natural gas continues to be our biggest hope for carbon emission reductions.

2 Degrees Celsius – An Inevitable Global Average Temperature Increase?

The Global Carbon Project’s recent analysis on current carbon dioxide emissions published in the latest issue of Nature Climate Change underscores the necessity for action in emission reduction. The commentary’s authors concluded that the rapid growth in fossil fuel emissions makes a global average temperature increase of 2 degrees Celsius (3.6 degrees Fahrenheit) inevitable. It is this 20 Celsius global average surface temperature limit that was agreed to during the 2009 United Nations Climate Change Conference in Copenhagen, Denmark. And it is the goal of the in-progress 18th annual United Nations climate-change summit in Doha to create a world treaty, which would be signed in 2015, to slow global green-house gas emissions so that global average surface does not rise by 20 Celsius.

The commentary conclusions put this goal in question. As the authors state in the abstract, “The latest carbon dioxide emissions continue to track the high end of emission scenarios, making it even less likely global warming will stay below 2 °C. A shift to a 2 °C pathway requires immediate significant and sustained global mitigation, with a probable reliance on net negative emissions in the longer term.”

The commentary’s abstract is found at Nature Climate Change – The challenge to keep global warming below 2 °C.

The Global Energy Map Is Changing

The 2012 edition of the International Energy Agency’s (IEA) World Energy Outlook (WEO) was released on 11/12/2012. The changes in the global energy map will alter outlooks on how various countries, regions and fuels interact in the global energy system in the foreseeable future.

According to the WEO, North America leads the change in the global energy balance. “North America is at the forefront of a sweeping transformation in oil and gas production that will affect all regions of the world, yet the potential also exists for a similarly transformative shift in global energy efficiency,” said IEA Executive Director Maria van der Hoeven. “This year’s World Energy Outlook shows that by 2035, we can achieve energy savings equivalent to nearly a fifth of global demand in 2010. In other words, energy efficiency is just as important as unconstrained energy supply, and increased action on efficiency can serve as a unifying energy policy that brings multiple benefits.”

Other key points of the WEO are:

North American Oil and Gas – The growth in oil and natural gas production in the U.S. will result in a tremendous change in global energy flows. The WEO’s New Policies Scenario predicts that the U.S. will be a net exporter of natural gas by 2020 and will be almost self-sufficient in energy, in net terms, by 2035.

Fossil Fuels – Fossil fuels will remain dominant in the global energy amalgam. These fuels will probably remain supported by subsidies that jumped by almost 30% to $523 billion in 2011.

Renewables – Renewables become the world’s second-largest source of power generation by 2015 and begin to replace coal as the primary source by 2035. The increase of renewable energy, however, is dependent upon continued subsidies. Are you contemplating making the switch to a more renewable type of energy? If so, you might be tempted to do some research into environmentally friendly electricity provider options such as Gexa Energy plans.

Water – Water is key to energy production. The need of water for this makes water a critical component for energy projects.

Energy Efficiency – WEO asserts that this is a huge opportunity that is being unrealized. As stated within the report by Fatih Birol, IEA Chief Economist and the WEO’s lead author, “Our analysis shows that in the absence of a concerted policy push, two-thirds of the economically viable potential to improve energy efficiency will remain unrealized through to 2035. Action to improve energy efficiency could delay the complete ‘lock-in’ of the allowable emissions of carbon dioxide under a 2oC trajectory – which is currently set to happen in 2017 – until 2022, buying time to secure a much-needed global climate agreement. It would also bring substantial energy security and economic benefits, including cutting fuel bills by 20% on average.”

Download the Executive Summary at: World Energy Outlook

A slide presentation of the report is at: WEO slides

Home Heating With Volcanic Heat

Volcanic heat from Icelandic volcanoes may end up heating British homes. The UK government has signed a memorandum of understanding with Iceland to further study this option. The project would be technically challenging. Electricity produced from the geothermal energy would go to the UK via an underwater cable that would be at least 620 miles long. Icelandic officials say that the project could be in place by 2020. Read more at: Icelandic Geothermal Energy