Logo for print
Toggle navigation MENU MORE

Insights

Consumers Energy Green Power Surcharge Suffers Setback

A Michigan Court of Appeals has denied Consumers Energy the ability to impose a surcharge on all of its customers to finance green power projects to which only some customers had subscribed. Last May the Michigan Public Service Commission (PSC) authorized the surcharge of 5 cents per meter, which would amount to approximately $1 million annually. Consumers Energy had been using the revenues from the surcharge to fund its expanded renewable energy program, under which about 850 customers had enrolled, agreeing to pay approximately 10% more for green power than they would otherwise be invoiced...

Re-Regulation Moves Forward Quietly

In the midst of a rushed close to Congress, a morass of media coverage concerning the war in Iraq, exploding lobbying scandals in D.C., and the coming holiday season, on December 14th the House of Representatives quietly passed a bill that may substantially impact energy markets. The legislation, H.R. 4473 , is usually described as legislation to reauthorize the Commodity Future Trading Commission (CFTC) , but in reality it represents much more than an extension of the status quo. H.R. 4473 includes a number of measures that should be controversial. The language of the legislation would...

What the Regulator Giveth, Only the Regulator May Taketh Away

A federal judge ruled January 27 that FERC has exclusive jurisdiction over power supply contracts between Calpine Corp. and several California utilities. Because they are underwater, these contracts have been tied up in Calpine's bankruptcy. Although an immediate victory for the California utilities, by reinforcing the primacy of regulatory jurisdiction properly granted by the legislature, the court's decision should also buttress supplier contracts that California utilities and the state have sought to abrogate in recent years, including large multi-year purchases that California Department...

State Ballot Initiative to Boost Renewable Energy in Washington

Renewable energy advocates hope to enact a renewable portfolio standard (RPS) for Washington State. The vehicle will be a ballot initiative as early as November 2006. A coalition dedicated to this purpose launched a campaign to collect by June 30, 2006, the 300,000 signatures necessary for a plebiscite on adopting an RPS. The proposed law would require Washington 's utilities by 2020 to procure 15% of their power from renewable energy sources such as wind energy, and to take steps to increase energy efficiency. At present, approximately 1% of the state's energy is produced by renewable energy...

Illinois Regulators Buck Governor and Approve Reverse Auction for Power

Following months of acrimony over power procurement and electric retail rates, the Illinois Commerce Commission (ICC) unanimously decided the state's utilities should use a state-run reverse auction to procure power for consumers that do not choose competitive suppliers. While the ICC agreed with state utilities Commonwealth Edison and Ameren on the benefits of this procurement method, other state officials, including Gov. Rod Blagojevich , have stridently opposed it. But their opposition appears to have less to do with the use of an auction than the soon-to-end state-imposed retail rate...

New Rules Barring Energy Market Manipulation to Take Effect Soon

FERC has adopted final rules implementing the new sections 4A and 222 of the Natural Gas and Federal Power Acts, respectively, which were added by the Energy Policy Act of 2005 (EPAct 2005) and adopts a scheme pioneered in securities laws for combating fraud. [Prohibition of Energy Market Manipulation, Order No. 670, (2006)] The texts of the natural gas and power rules are the same. See FERC Looks to Past for Future Anti-fraud Enforcement. These final rules adopt word-for-word the rules as FERC originally proposed them last October 20, with one exception. The prohibition against engaging in...

Proposed Rule Would End PURPA "Put" in Some Power Markets

Acting on a directive from the Energy Policy Act of 2005 (EPAct 2005) , FERC has proposed new regulations that automatically would relieve some utilities of their nearly 30-year old obligation to purchase qualifying facility (QF) power. [New PURPA Section 210(m) Regulations Applicable to Small Power Production and Cogeneration Facilities, 114 FERC ¶ 61,043 (2006)]. Enacted as a provision of the Public Utility Regulatory Policies Act of 1978, the purchase obligation is known as the "PURPA put" because it enabled QFs "” both cogenerators and small power producers "” to put their output to...

Illinois Joins States Reducing Mercury Emissions

Earlier this month, Illinois Governor Rod Blagojevich (D) announced he would mandate reductions in mercury emissions from the state's 22 coal-fired power plants by 90 percent by June 30, 2009, joining Connecticut, New Jersey, Maryland, Massachusetts, Minnesota, North Carolina and Wisconsin, in calling for mercury reductions stricter than those called for by the U.S. Environmental Protection Agency in its March 10, 2005 Clean Air Mercury Rule . The EPA Rule calls for reductions of 47 percent by 2010 and 79 percent by 2018. Power plants emit approximately 43 percent of mercury emissions in the...

Energy Advisor to Coordinate State Energy Policy in Rhode Island

Rhode Island Governor Donald L. Carcieri (R) issued an executive order in mid-January creating the Office of Chief Energy Advisor to the Governor, and named Andrew Dzykewicz, Senior Project Manger at the Rhode Island Economic Development Corporation (RIEDC) , to fill this new role. Mr. Dzykewicz will be responsible for coordinating tiny Rhode Island's energy policy, and one of the first tasks assigned to the new Advisor is to oversee the enactment of a five-point energy agenda intended to assist in accessing affordable energy supplies and increasing energy conservation. The Governor's five-...

Grid West Parties, BPA Go Separate Ways

The potential for an independent transmission operator in the Pacific Northwest grew murkier in January, as the two principal factions headed in opposite directions. On January 10, the remaining members of Grid West released a cost/benefit analysis examining the organization's continued viability following the decision by the Bonneville Power Administration (BPA) not to participate. The report touted decreased cost estimates, and, perhaps stating the obvious, determined that BPA's decision not to join will both create operational complexities and at the same time simplify internal procedures...

California to Spend $2.9 billion to Promote Solar Power

California is home to some of the best solar energy potential in the U.S. as well as real or threatened energy shortage problems caused by its ever-increasing population. Putting these two factors together, the California PUC has approved a $2.9 billion incentive program intended to help install up to 3,000 MW of solar power over the next decade. Financed through increases in gas and electric retail prices, the program will help fund solar projects for residential, public and commercial facilities. The funds will initially be used for rebates on solar power systems, and subsequently for...

FERC to Mirant: Keep Power Flowing to Nation's Capital

Finding that a power-supply emergency existed in the Washington, DC area, Secretary of Energy Bodman on December 20 issued an emergency order directing Mirant to continue to operate its Potomac River, 482-MW power plant. The plant had stopped operations to avoid violating its air quality permit. Secretary Bodman explained that, absent the Potomac River plant, should either of Potomac Electric Power Company's (Pepco) 230-kV lines become unavailable, power supply to the Capital would be in jeopardy. Following the Secretary, in a January 9 order FERC ordered PJM Interconnection L.L.C. (PJM) and...

Calpine & California Halt FERC Litigation, but MISO Threatens to Dump Calpine

Calpine Corp. and California January 12 jointly asked FERC and the agency agreed to suspend proceedings on California' complaint against Calpine. This followed the decision by the U.S. District Court for the Southern District of New York to take jurisdiction over the dispute, which has been brewing in the bankruptcy court for some time. The district court scheduled a hearing in late January to determine whether to allow bankrupt Calpine to reject the contracts. The move by the district court to take jurisdiction may signal its agreement with FERC's interim guidance offered in a January 3...

FERC Approves Increase in CAISO Bid Cap, Examines West-Wide Cap in 206 Proceeding

The California ISO and FERC recently addressed the long-simmering issue of the appropriate level of the CAISO's offer caps. Those caps are controversial since they are lower than in other parts of the country. For that reason, many argue that these caps are a barrier to new investment in much-needed power in the state. On January 13 FERC approved the CAISO's request to increase the soft offer cap in its real-time market to $400/MWh, up from a $250/MWh, but rejected its request to transition to a hard bid cap. A soft cap is the amount above which a seller must justify its prices to FERC; a...

FERC Purports to Advise Bankruptcy Court on Debtor Contract Rejection

In the latest chapter in an ongoing jurisdictional struggle between FERC and U.S. bankruptcy courts, on January 3, FERC issued an order providing some interim guidance as to which power supply contracts companies filing for bankruptcy protection must continue to honor. The proceeding involves Calpine Corporation , which filed for bankruptcy under Chapter 11 on December 21, 2005 in the Southern District of New York . Just before Calpine's filing, on December 19, the California Electricity Oversight Board , California Attorney General Bill Lockyer , and the California Department of Water...