Report on the impacts of utility investment in developing competitive markets, particularly with respect to electric vehicle infrastructure.
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Wild fires rage in California. Communities continue rebuilding after devastating storms. The next financial crisis could lurk around the next corner. Worst-case scenarios are happening, but the current public policy framework leaves communities defenseless against them.
On December 21, 2017, we celebrated the release of Worst-Case Economics: Extreme Events in Climate and Finance, the latest book by Frank Ackerman (Synapse Principal Economist). Dr. Ackerman joined Bruce Biewald for our Third Thursday webinar series to discuss his new book, which Juliet Schor described as "highly accessible but profound" and Samuel Bowles called "an important book and a delight to read."
Here's a brief description from Dr. Ackerman:
The stock market and the climate are well-behaved most of the time – but those are not the times we worry about. Worst-case scenarios are all too real and all too common. The financial crisis of 2008 was not the first or the last to destroy jobs, homeownership and savings for millions of people. Ever-weirder weather includes megastorms clobbering communities from New York to Bangladesh, rising sea levels, and heat waves killing thousands across Europe.
Climate and financial crises are serious events, requiring vigorous responses. Yet public policy is trapped in an obsolete framework with a simplistic focus on average or likely outcomes rather than on dangerous extremes. What would it take to create better analyses of extreme events in climate and finance, and an appropriate policy framework for worst-case risks? Worst-Case Economics offers accessible and surprising answers to these crucial questions.
Pepco Holdings Inc. has proposed to build a new substation in the Mt. Vernon area in Washington, DC at a cost of over $150 million. Synapse analyzed the area to determine whether the proposed substation is required to maintain reliability. In the resulting report, Synapse demonstrates how non-wires alternatives such as energy efficiency, distributed generation, demand response, or storage could maintain reliability at a much lower cost.
Synapse Energy Economics joined with Sustainable Energy Advantage (SEA), as well as members from NECEC, Mass Energy Consumers Alliance, E4TheFuture, and other organizations to analyze the current state of regional renewable portfolio standards in light of many of new policy actions that have been put into place over the last several years. These policy actions include new legislation requiring long-term contracting for renewables and other resources in Massachusetts, Connecticut, and Rhode Island, revised incentives for distributed generation resources, changes to RPS polices in other states in New England, proposed Massachusetts-specific CO2 caps, and newly-revised forecasts for electricity sales that take the full impact of new energy efficiency measures into account.
Since 2005, Synapse has provided analysis of New Jersey's Basic Generation Service (BGS) procurement options for the New Jersey Division of Rate Counsel. The BGS procurement process includes annual auctions held by the State of New Jersey for the procurement of fixed-price, basic electric generation service (BGS-FP). BGS-FP service is the name of the rate plan for those residential and small commercial customers who choose not to use a competitive supplier for their electricity needs. Synapse's BGS procurement analysis takes into consideration the BGS auction process and other factors relevant to procurement options for NJ BGS customers. Synapse's analyses include assessment of procurement options in other states; futures markets for electricity, natural gas, and coal; recent auction/RFP results for BGS-FP-equivalent services from other states; PJM technical issues affecting BGS procurement considerations; and other relevant issues. Based on its analysis of the 2017 proposal, Synapse recommended that the BGS process should not move away from procuring a fixed price product that was meant to protect ratepayers form market volatility to a product that slowly increases protection for bidders at ratepayers’ expense.
On behalf of Consumers for Sensible Energy and a number of other non-governmental organizations, Synapse analyzed the need for, and the cost of, the Access Northeast (ANE) natural gas pipeline. As proposed, the ANE pipeline relies on a new funding mechanism whereby electric ratepayers would pay for new gas pipelines. This unprecedented funding proposal has spurred controversy and litigation: the Massachusetts Supreme Judicial Court and the New Hampshire Public Utilities Commission both rejected this approach, declaring that it violates state laws enacted to restructure the electric utility sector and to protect consumers from undue financial risk. Pipeline proponents claim that the ANE pipeline is needed to relieve capacity constraints on New England’s natural gas pipeline system and that the cost of the pipeline is justified because it will ultimately save money for New England electric ratepayers.
Synapse’s analysis showed otherwise. Any savings created by the ANE pipeline are likely to be outweighed by its costs, which are more than twice what proponents have generally reported. The analysis also indicated that the need for natural gas in New England will decrease dramatically within a few years of ANE’s construction. This would alleviate the capacity constraints cited to justify the pipeline. Synapse modeled energy use, prices, and emissions in a base scenario in which there is no new pipeline compared to a scenario in which the ANE pipeline is constructed.
New England's Shrinking Need for Natural Gas
Synapse’s Rachel Wilson provided analysis and testimony on an Avista Corporation rate case before the Washington Utilities & Transportation Commission. Ms. Wilson evaluated Avista’s production cost modeling, which used the AuroraXMP model, to determine if its requested increase in power costs was reasonable. She found that Avista’s modeling methodology led to a sustained overestimate of annual power supply costs, as evidenced by the compounding of credit deferral balances in its Energy Recovery Mechanism. Ms. Wilson recommended that Avista recalibrate its modeling to allow the Energy Recovery Mechanism to function as intended—to capture the variability between modeled and actual power supply costs. She further recommended that Avista more fully explore the possibility of joining the Western Energy Imbalance Market, which is a real-time wholesale energy market in which participants can buy and sell energy when needed.
Synapse prepared a summary of best practices in utility demand response (DR) programs and then compared those practices with HydroQuebec Distribution's planned DR resource and programs in their 2017-2026 Supply Plan, resulting in a set of recommendations for programmatic activities and revised planning processes. Synapse produced an expert report as well as a presentation used during live testimony.
Best Practices in Utility Demand Response Programs (Testimony Slide Deck)
In February 2017, the utilities with ownership of Navajo Generating Station in Arizona voted to cease operations of the coal-fired power plant. Two months later, Peabody Energy, operator of the mine that supplies fuel to Navajo, presented an analysis before the Arizona Corporation Commission demonstrating that Navajo is economically viable. On behalf of Sierra Club, Synapse examined this study, which was commissioned by Peabody and conducted by Navigant. Synapse found that Navigant relied on overstated market energy prices and understated Navajo's fuel prices, resulting in nearly $2 billion in errors.
The Los Angeles City Council has mandated that the Los Angeles Department of Water and Power (LADWP), the largest municipally-run utility in the United States, analyze powering 100 percent of demand with renewable energy. To date, LADWP's efforts have been insufficient, as the utility has only published an analysis of a slight increase over current renewable energy targets and is not planning to finalize their 100 percent renewable study until 2020 at the earliest.
Food & Water Watch engaged Synapse to analyze a potential pathway to 100 percent clean energy in Los Angeles by 2030. In our study, we found that it is possible for LADWP to exclusively use renewable resources to power its system in every hour of the year. What's more, we found that under one of the clean energy pathways analyzed, the transition to 100 percent renewable energy in every hour of the year can occur at no net cost to the system. The resulting report, Clean Energy for Los Angeles, provides a roadmap for how to achieve 100 percent renewables by integrating and harnessing renewable energy more efficiently and investing in additional efficiency, storage, and demand response.
Although the report only focuses on a single city, the results are important and applicable to many other parts of the country. Los Angeles's 4 million residents make the city larger than 22 entire states, while the annual energy served by LADWP is greater than sales in 13 individual states, indicating that if this transition is possible in Los Angeles, it is feasible in other parts of the country as well.
Clean Energy for New York: Replacement Energy and Capacity Resources for the Indian Point Energy Center Under New York Clean Energy Standard (CES): Report prepared by Synapse Energy Economics for Riverkeeper and Natural Resources Defense Council.
Synapse analyzed the impacts of increasing the Connecticut Renewable Portfolio Standard.
Synapse reviewed assumptions in Delmarva Power and Light’s benefit-to-cost analysis of its Advanced Metering Infrastructure (AMI) Initiative. Max Chang submitted testimony on behalf of Maryland OPC demonstrating that, due to unreasonable assumptions, DPL overestimated the benefit to cost ratio of the AMI program for the 2015-2024 period. Mr. Chang recommended that the Commission disallow $34 million in order to protect ratepayers.
On behalf of the Office of the People's Counsel for the District of Columbia (OPC), Synapse evaluated several aspects of distributed generation in Washington, DC. This project consisted of three research topics. First, Synapse researched and offered recommendations regarding policies that can sustainably support the development of distributed generation in the District, while avoiding adverse consequences. Second, Synapse assessed the technical and economic potential for distributed generation in the District, particularly solar photovoltaics (PV). Finally, Synapse conducted a benefit-cost analysis of solar in the District.
OPC Reply Comments Regarding Pepco Comments on Value of Solar Study
Synapse was retained by Earthjustice to draft a whitepaper discussing grid resiliency issues in the context of the United States Department of Energy (DOE)’s “grid resiliency pricing rule” proposal. DOE’s proposal directed the Federal Energy Regulatory Commission (FERC) to design rules that would guarantee full recovery of costs for all generating units operating in competitive wholesale markets with 90 days of fuel supply on-site (conventionally understood to refer to nuclear and coal-fired units). Synapse’s whitepaper discusses several key problems associated with this proposal: first, the authorities in charge of the nation’s wholesale energy markets (including FERC itself as well as ISO/RTOs and state agencies) have devoted substantial efforts to increasing the reliability and resiliency of the grid system and have reasonable, market-based approaches for accomplishing this goal. Second, fuel supply disruptions have not historically been a significant cause of service interruptions. Third, coal units in particular are vulnerable to both fuel supply disruptions and other failures during extreme weather and temperature events, and have demonstrated decreasing reliability over time. Synapse’s whitepaper was filed under FERC docket RM18-1-000 in support of comments submitted by Earthjustice, Environmental Defense Fund (EDF), Natural Resources Defense Council (NRDC), Sierra Club, Sustainable FERC Project, the Union of Concerned Scientists (UCS), the Center for Biological Diversity, the Environmental Law and Policy Center, the Southern Environmental Law Center (SELC), Conservation Law Foundation (CLF), Environmental Working Group, and Fresh Energy.
The Dakota Access pipeline, proposed in 2014, was designed to carry crude oil from the Bakken oil field in western North Dakota, through South Dakota and Iowa, to a pipeline hub in southern Illinois. The final stages of construction, not yet completed, have become the subject of a wide-ranging controversy involving multiple environmental, legal, cultural, and economic issues.
In February 2017 Synapse produced a report based on research performed for Fredericks Peebles & Morgan LLP, attorneys for the Cheyenne River Sioux, addressing one dimension of the controversy: the economic impacts of completing the Dakota Access pipeline.
As a continuation of previous work, Synapse provided NS UARB with consulting services on energy efficiency issues. Specifically, Synapse provided technical support and analysis with respect to rate and bill impacts, low-income program participation and performance, methodology to determine program incentives, and benefits of location-specific efficiency targeting.
Reply Comments on CLEAResult EfficiencyOne Incentive Setting Methodology
Comments on Revised CLEAResult EfficiencyOne Incentive Setting Methodology
Comments on EfficiencyOne 2016 Rate and Bill Impact Analysis
Comments on Efficiency Nova Scotia 2017 DSM Progress Report
The Maryland Office of People’s Counsel retained Synapse to review the independent assessment of two offshore wind applications before the Maryland Public Service Commission in Case 9431. The two proposals under consideration are from US Wind for a 248 MW wind farm and Deepwater Wind for a 120 MW wind farm. Maryland's Offshore Renewable Energy Credit legislation establishes administrative thresholds for each offshore wind application and evaluation criteria for the Commission to use in its review. Synapse reviewed the findings, inputs, and calculations of the independent assessment and the two applications to provide recommendations regarding the renewable energy credit payments, ratepayer impacts, economic impacts, and net benefits attributed to each proposed project. Max Chang submitted testimony on behalf of MD OPC in March 2017.
Synapse is providing expert testimony in an Eversource rate case, with rate design, net metering, and other issues related to distributed energy resources.
Surrebuttal Testimony of Woolf and Whited Regarding Eversource Rate Case [nid:2572]
On behalf of Not Another Power Plant and Sierra Club, Synapse’s Bob Fagan submitted Direct and Surrebuttal expert testimony to the Connecticut Siting Council regarding the Killingly Energy Center, a 550 MW combined cycle power plant proposed for Killingly, Connecticut. He testified at two separate Siting Council hearings concerning the proposed plant. Mr. Fagan’s testimony clearly demonstrated that there are no short-term or longer-term reliability needs for the proposed plant. Further, increased renewable resources and energy efficiency required to meet increasing greenhouse gas emission limits will provide more than sufficient energy and capacity to meet reliability needs.
Surrebuttal Testimony of Bob Fagan Regarding Proposed Killingly Energy Center
Madison G&E is seeking to build 66 MW of wind in Iowa in Docket 3270-CE-127. Synapse provided expert testimony on behalf of Sierra Club regarding the Company's assumptions and modeling. Key questions included whether or not larger turbines or simply a larger project would have been more economic.
Synapse reviewed the Maritime Link Interim Cost Assessment. Specifically, Synapse analyzed the value of the Maritime Link asset to ratepayers given costs associated with a delay in delivery of energy via the Maritime Link. Further, Synapse assessed if the Maritime Link Project, approved by NS UARB in 2013, would be “used and useful.” Bob Fagan and Tyler Comings submitted joint direct testimony on these issues to the NS UARB.
Synapse provided technical assistance and expert testimony on behalf of Conservation Law Foundation regarding the grid modernization plans of Eversource, National Grid, and Unitil in Massachusetts Department of Public Utilities dockets 15-120, 15-121, and 15-122. Synapse reviewed the methodologies and assumptions used by the companies in their plans. Synapse also assessed the extent to which the proposed plans meet the Department’s objectives for grid modernization, with particular focus on the plans’ incorporation of distributed energy resources as a key contributor to grid modernization.
Sierra Club retained Synapse to review the draft parameters for Michigan’s impending IRP process proposed by the state’s governing agencies. Synapse found that, while most of the parameters were appropriate and up to standards for IRPs, Synapse identified a few areas in which changes could be beneficial for both planning participants and customers impacted by the IRP. Synapse’s comments to the Michigan Public Service Commission Staff outlined such changes, for example clarifying the relationship between the IRP process and the transmission and distribution and fuel planning processes; defining how utilities should select a preferred scenario; and modifying some modeling assumptions to better align with utility planning and ensure a more accurate, detailed, and robust analysis.
Synapse is assisting the Michigan Public Service Commission in the development of a strategy to comply with EPA’s Clean Power Plan. To support the state planning process and evaluate compliance options, Synapse has built a detailed representation of the regional electrical system in System Optimizer, a utility-scale capacity expansion model. The model optimizes specific electric generating unit build and retire decisions, cost-effective energy efficiency, unit retrofit decisions, emissions trading programs, and emissions targets through 2034. Synapse developed Michigan-specific inputs to the model in collaboration with staff of the Public Service Commission, the Michigan Department of Environmental Quality, and the Michigan Agency for Energy. Synapse will use the model to test compliance plans developed by the joint agencies and stakeholders, including Michigan utilities, consumer, industry, and environmental groups.
Synapse worked for the National Efficiency Screening Project (NESP) to develop a National Standard Practice Manual (NSPM). The purpose of the NSPM is to improve the way that utility customer-funded electricity and natural gas energy efficiency resources are evaluated for cost-effectiveness throughout the United States and to inform decision-makers regarding which efficiency resources are in the public interest and what level of investment is appropriate. The NSPM updates and expands upon the California Standard Practice Manual and will provide the principles, concepts, and techniques for sound, unbiased evaluation of energy efficiency and other demand side resources. Synapse's primary role was as the lead technical consultant and was responsible for the overall drafting of the manual, managing the Drafting Committee of five experts, and incorporating input from the Review Committee.
Synapse is providing the Division of Public Utilities and Carriers with technical support for the National Grid rate case. The project includes expert testimony and addresses issues related to performance incentive mechanisms, multi-year rate plans, advanced metering, rate designs, and electric vehicles.
Testimony of Tim Woolf and Melissa Whited on National Grid Rate Case
Synapse and Raab Associates provided technical and facilitation support to New Hampshire PUC staff for a stakeholder process to address grid modernization issues and policies for the state. Synapse assisted with developing agendas for stakeholder meetings, providing technical and policy analyses, and communicating the results of those analysis. After the stakeholder process, Synapse assisted with compiling initial and final reports with recommendations from the stakeholder group.
Advanced Energy Economy Institute (AEEI) retained Synapse to review earnings adjustment mechanisms (EAMs) proposed by National Grid in New York. Tim Woolf and Melissa Whited filed testimony before the New York Public Service Commission on behalf of AEEI. Woolf and Whited recommended which EAMs to approve, as well as appropriate financial incentive allocations for those EAMs. Synapse is also preparing a report on state-wide EAMs that builds off of the National Grid case. The report will focus on the measurement of output-based versus action metrics.
Rebuttal Testimony of Woolf and Whited on National Grid EAM Proposal
Sierra Club retained Synapse to analyze Northern Indiana Public Service Company’s (NIPSO) request for rider on $400 million in capital costs at three coal-fired power plants in Indiana (Bailly, Michigan City, and Schahfer) as they seek to comply with the United States Environmental Protection Agency’s Coal Combustion Residual (CCR) rule and Effluent Limitation Guidelines (ELG). In this docket, NIPSCO seeks to retire four coal-fired units (Bailly 7 & 8 and Schahfer 17 & 18) while retaining three units (Schahfer 14 & 15 and Michigan City 12). Synapse assessed NIPSCO’s economic analysis and supporting “qualitative assessment” and examined whether the retention of the three units would be in the interest of ratepayers, and if the company’s qualitative assessment was reasonably constructed. Dr. Jeremy Fisher filed testimony demonstrating that NIPSO’s ratepayers see $200-$600 million in benefits with the incremental retirement of Schahfer 14 & 15 and that the Company’s application does not support the decision to install retrofits at the units.
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