Synapse is providing expert technical consulting services to the District of Columbia’s Office of the Attorney General related to Exelon Corporation’s proposed acquisition of Pepco Holdings. Specifically, Synapse reviewed the Joint Applicants' economic impact analysis; merger-related reliability issues; risks associated with the Joint Applicants’ affiliated non-jurisdictional business operations and issues related to conservation of natural resources and preservation of environmental quality. Synapse is submitting testimony in the legal proceeding on behalf of the District of Columbia Government. Synapse performed similar analysis related to the merger on behalf of clients in Delaware, Maryland, and New Jersey.
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Direct Testimony of Max Chang on Reliability, Risk, and Environmental Impacts of Exelon-Pepco Merger
Answering Testimony of Tyler Comings on the Economic Impact Analysis of the Exelon-PHI Merger
Answering Testimony of Max Chang on Reliability Impacts of the Exelon-PHI Merger
Synapse and Optimal Energy assisted Sierra Club by providing expert testimony on Florida’s achievable energy efficiency (EE) and distributed generation (DG) potential, as well as the policies that are needed to promote these important resources. For both EE and DG, Synapse (a) provided a technical assessment of the economic potential; (b) provided a benchmarking analysis comparing the EE and DG resources that Florida utilities are planning to implement relative to utilities in other Southeastern states; (c) critiqued the utilities efficiency screening process; (d) critiqued the utilities resource planning process; and (e) recommended policies to help promote the development of EE and DG in the current docket and in the future.
The Center for Rural Affairs required technical assistance regarding the future of the Nebraska Public Power District (NPPD)‐owned Sheldon Station generating plant, including research, analysis, and findings presented in a report. Synapse detailed Sheldon’s future capital and operating costs and generation benefits, presented a list of credible options for NPPD’s replacement of Sheldon, and documented these findings in a clear, concise manner.
Synapse researched Sheldon’s future costs (i.e., costs driven by environmental regulation, market forces, and daily operations), as well as estimated the benefits NPPD gained by the plant’s operation, including those related to NPPD’s energy, capacity, and reliability needs. Synapse then outlined Nebraska‐specific options for alternatives, including energy efficiency, wind or solar photovoltaic generation, natural gas generation, market purchases, and/or transmission upgrades.
Frank Ackerman provided editorial comments and assistance at multiple stages in the Regulatory Assistance Project’s analysis of and reporting on the electricity-water nexus.
Synapse’s Patrick Knight presented “AVERT and 111(d)” at the EPA Carbon Standards Technical Meeting for Midwest Advocates in Chicago, Illinois on July 24, 2014.
In its Reforming the Energy Vision proceeding, the New York Public Service Commission has undertaken an ambitious initiative to improve the New York electricity system through better incorporation of distributed energy resources (DERs): distributed generation, distributed storage, energy efficiency, and demand response. To support this initiative, Synapse developed a benefit-cost analysis framework that will provide the Commission and other stakeholders with the information necessary to determine which resources will be in the public interest and will meet the Commission’s energy policy goals. This DER benefit-cost analysis framework outlines the methods for identifying, valuing, and monetizing costs and benefits associated with DERs, including those that have traditionally been hard to quantify, and thus previously ignored. The framework also discusses how to account for the risk mitigation benefits of DERs, and provides guidance regarding the appropriate discount rate to use for evaluating distributed energy resources to meet state energy policy goals.
On October 2, Tim Woolf presented the framework in a webinar. The slides are available below; the full recording with audio can be accessed here.
Webinar: Benefit-Cost Analysis for Distributed Energy Resources In New York
EM&V Forum Presentation: Benefit-Cost Analysis for Distributed Energy Resources In New York
Synapse Energy Economics was retained by Sierra Club to provide feedback on Big Rivers’ 2014 Integrated Resource Plan (IRP) process. Synapse outlined ways that the Big Rivers IRP did not align with the objectives of long-term planning through detailed review of the company’s modeling inputs, outputs, and post-modeling calculations. Synapse evaluated market forecasts, load forecasts, future environmental compliance obligations, assumptions surrounding scenarios and sensitivities, and the economic value of the utility's existing coal units.
When Big Rivers Electric Corporation, a small cooperative in western Kentucky, lost its major customers--two large aluminum smelters that formerly accounted for two-thirds of the company's load--the cooperative gained enormous excess capacity. Big Rivers responded by proposing to idle one or two of its coal plants for a few years, while requesting large rate increases for its remaining customers to absorb the costs of the loss of the smelters. In two related rates cases, Synapse provided expert witness testimony critiquing Big Rivers' economic analyses, including its forecast of market demand and the price of electricity; and examined rate design issues, including treatment of stranded assets and the balance between demand and energy charges. As a foundation for our analysis, Synapse developed detailed spreadsheet recalculations of the company's future under more reasonable assumptions. In issuing a decision, the Kentucky Public Service Commission incorporated several Synapse recommendations, including the argument that the Wilson coal plant represents excess capacity and should be excluded from rate recovery. The Commission ultimately granted Big Rivers a base rate increase of 14 percent, which is approximately 51 percent of the cooperative’s originally requested revenue increase.
On behalf of the New Hampshire Office of Consumer Advocate, the Maine Office of the Public Advocate, and the Connecticut Office of Consumer Counsel, Synapse analyzed the expected financial position of the three coal units at the Brayton Point station. The goal was to determine an expected price at which the station would be willing to participate in the 8th Forward Capacity Auction, which had occurred six weeks earlier, and from which the station chose to retire. Synapse also assisted the clients with a comment filing submitted to the FERC to accompany the financial analysis.
Building on Synapse’s carbon dioxide price forecast, “CO2 Price Forecast: Planning for Future Environmental Regulations” explores the paths that the electricity sector has taken to appropriately account for the price of carbon dioxide in resource planning. The article appears in the June 2014 issue of EM Magazine, a publication of the Air & Waste Management Association (A&WMA; www.awma.org). To obtain copies and reprints, please contact A&WMA directly at 1-412-232-3444.
Bruce Biewald presented on Synapse’s Coal Asset Valuation Tool (CAVT) at the Institute for Energy Economics and Financial Analysis' Coal Finance 2014 Conference on March 19, 2014. CAVT is a spreadsheet-based database and model that determines the future economic viability of coal units. CAVT forecasts the costs for individual coal units to comply with environmental regulations and compares these costs to electricity market prices. It aggregates publicly available data (such as capacity, generated power, and heat rate) on non-cogenerating coal units and combines this with publicly available cost methodologies to calculate the cost of complying with environmental regulations. The calculated future cost of each coal unit is compared to the estimated future cost of wholesale market purchases to determine future economic viability on a unit-by-unit basis.
Synapse was retained by Energy Foundation to analyze a wide range of issues related to coal-fired power generation. Project completed May 2014.
Synapse Energy Economics was retained by Sierra Club to provide feedback on Cleco Power’s modeling inputs and direction for its 2014 Integrated Resource Plan, and to provide recommendations to improve the planning process. Project completed May 2014.
In November 2013, the Obama Administration released an updated estimated social cost of carbon that raised the cost per metric ton used in federal regulatory analyses from $21 to $35. On behalf of the Environment, Economics and Society Institute, Synapse submitted comments to OMB with a brief critique of the Administration's methodology, focusing on problems that would result in underestimation. Project completed February 2014.
Synapse assisted Clean Wisconsin with responses to the Public Service Commission of Wisconsin’s (PSC) January 30, 2014 Request for Comments on Focus on Energy, Wisconsin’s statewide energy efficiency and renewable program. Synapse reviewed background materials and drafted comments in five topic areas: meeting federal carbon standards, energy and demand emphasis, overall goal, rate impact mitigation, and renewable energy.
Synapse assisted PennFuture, the Sierra Club, and Clean Air Council on their comments to the Pennsylvania Public Utility Commission regarding the proposed cost-effectiveness tests and program design for Act 129 Demand Response. Project completed January 2014.
Synapse was retained to provide expert reports analyzing the Schiller and Mt. Tom power plant stations owned by PSNH. Synapse calculated the annualized costs of best available technologies (e.g. cooling towers) to minimize thermal discharges, assessed the affordability of the technologies, conducted a cost-effectiveness analysis, and considered whether costs are wholly disproportionate to benefits. Project completed March 2014.
Synapse assisted the Sierra Club in providing comments regarding alternatives to Nevada’s Lost Revenue Adjustment Mechanism (LRAM) for demand side management programs. Synapse developed comments contrasting the LRAM to full decoupling, and discussing key design considerations for full revenue decoupling mechanisms, including establishing appropriate revenue targets, appropriate schedules for making decoupling adjustments, caps on decoupling adjustments, return on equity reductions, and utility commitments related to energy efficiency and distributed generation.
Synapse prepared a report for RAP in response to the expressed interested of European policymakers, including the electric power team at Europe’s Agency for the Cooperation of Energy Regulators (ACER). The report focuses on the ways that demand response resources effectively participate in and improve the performance of coordinated electric systems in the United States. Additionally, the report reviews the many types of services that demand response can provide, and the early history of demand response programs in the United States. The bulk of Synapse's research examined the specific applications of demand response in several US regions. This report includes numerous examples of demand response successfully providing reliable system services at competitive prices, and ends with lessons learned and key challenges for the near future.
Based upon the report, Synapse's Doug Hurley prepared materials for and then presented at two events with European Regulators. The first was a workshop in Ljubljana with the staff of the ACER, and the second was a demand response symposium in Brussels.
Synapse assisted a coalition led by PennFuture with its participation in an initial stakeholder meeting designed to provide feedback to the Pennsylvania Public Utility Commission and the statewide evaluator regarding a proposed design for a demand response program under PA Act 129. Synapse reviewed the scope of the Total Resource Cost test to be used to evaluate the program upon its completion. Project completed August 2014.
Synapse assisted the Sierra Club in proceedings regarding ERCOT’s ability to maintain and incentivize sufficient future resources. ERCOT’s December 2011 Capacity, Demand and Reserves (CDR) report indicated that the independent system operator would soon drop dangerously below its targeted reserve margin and reach a negative value in 2020. Concerns about ERCOT’s reserve margins deepened following grid emergencies caused by unanticipated generator outages during an ice storm in February 2011 and the summer heat wave of 2011. More recent CDR reports showed improvements to future reserve margins, but long-term concerns remained. Synapse reviewed the CDR report and determined that with reasonable adjustments to forecast values, the target reserve margin will be met or exceeded for the next ten years. In two scenarios, “Counting What Already Exists” and “Augmenting Demand-Side Resources,” reserve margin levels exceed the 13.75 percent target level through 2023.
Synapse Comments on FAST Proposals in ERCOT
In 2013, under contract with the EPA, Synapse developed AVERT (the Avoided Emissions and Generation Tool). AVERT is an intermediate-complexity, publicly accessible tool for estimating the potential of energy efficiency and renewable energy programs to displace sulfur dioxide, nitrogen oxides, and carbon dioxide emissions within the continental United States. AVERT is a flexible modeling framework with a simple user interface designed specifically to meet the needs of air quality managers and other stakeholders. It allows non-expert users to easily, quickly, and flexibly evaluate individual unit emissions displaced by energy efficiency and renewable energy programs with a reasonable degree of accuracy, and yet requires little or no electricity system expertise and no specialized resources to operate. After rigorous peer review and beta testing, AVERT was released to the public in February 2014.
Erin Malone presented “Driving Efficiency with Non-Energy Benefits” at the ACEEE National Symposium of Market Transformation on April 1, 2014. The presentation discussed answers to the following questions: What are non-energy benefits (NEBs)? Why should NEBs be included in cost-effectiveness testing? What is the impact of including NEBs in cost-effectiveness testing? How can NEBs be estimated? How are states treating NEBs? Project completed April 2014.
Duke Energy Ohio filed an application before the Public Utility Commission of Ohio seeking approval of an electric security plan (ESP), which included a request for approval of what the company calls a “Price Stabilization Rider” (PSR). Duke proposed this rider as a non-by passable charge through which the company would pass on to its customers the costs associated with its 9 percent ownership interest and contractual entitlement in the Ohio Valley Electric Corporation’s two aging coal-fired power plants. Customers would then be credited for any revenues earned from selling the OVEC generation into the PJM energy and capacity markets. Duke claims that over the life of the rider (which runs until 2040), a net benefit will accrue to customers, though it offered no evidence for this claim.
Synapse was retained by Sierra Club to review the company’s application, supporting testimony, workpapers, and discovery in the proceeding, focusing on the proposed PSR. Synapse found that the PSR could be adverse to state and public interests in several ways, including the fact that, based on the company’s own analysis, it will result in cumulative net costs to consumers through at least 2024. If the company’s predictions about future energy and capacity prices are wrong, or if costs of power from the OVEC assets increase significantly in the coming years as a result of environmental regulations, it is possible that Duke Energy Ohio’s customers will never see any financial benefits from the PSR. The Commission agreed with Synapse and with intervenors who shared this concern, and rejected the PSR on the grounds that the rider, as proposed, would not benefit ratepayers
Sierra Club retained Synapse to review East Kentucky Power Cooperative's (EKPC's) application for a certificate of public convenience and necessity (CPCN) for re-ducting of Cooper unit 1 to meet compliance requirements under the federal Mercury and Air Toxics Standard (MATS). Synapse testimony evaluated the assumptions used in EKPC's supporting market analysis, capacity and energy position, and potential compliance costs of future environmental regulations. Project completed February 2014.
Testimony Regarding East Kentucky Power Cooperative Application for Cooper Station Retrofit and Environmental Surcharge Cost Recovery
Atrazine, a chemical weed killer used on most of the U.S. corn crop, is the subject of ongoing controversy, with increasing documentation of its potentially harmful health and environmental impacts. Supporters of atrazine claim it is of great value to farmers; in 2011 Syngenta, the producer of atrazine, sponsored a set of studies reporting huge economic benefits from atrazine use. But a Synapse study on behalf of the Natural Resources Defense Council (NRDC) finds that the Syngenta analyses overlooked less harmful weed management alternatives, and greatly exaggerated the economic benefits of atrazine use. Syngenta’s most complete analysis implies that in the absence of atrazine, farm revenues would increase by more than $1 billion annually, while consumers would face price increases of no more than $0.03 per gallon of gasoline and $0.01 per 4-ounce hamburger. To view a related journal article, “Would banning atrazine benefit farmers,” please visit: www.maneyonline.com/doi/abs/10.1179/2049396713Y.0000000054. Please contact Synapse with questions related to this article.
Atrazine: Considering the Alternatives
Synapse assessed the economic and emissions impacts of retiring TVA's Shawnee Station as part of the Kentucky Environmental Foundation's Health Impact Assessment of the plant.
At the request of two British environmental NGOs, Synapse reviewed the HMRC CGE model, an economic model developed to analyze tax policies that has been applied to British climate policy proposals. The model has reportedly found that these proposals would be quite expensive. Synapse identified omissions and biases that lead to exaggeration of the costs and dismissal of the benefits of climate protection measures. The model assumes there can never be any net job creation benefits from climate policy; it ignores the health benefits of reduced air emissions under low-carbon scenarios; and it analyzes the UK in isolation, despite the global nature of the climate problem. Better analyses show that there are enormous economic and environmental benefits from rapid reduction in carbon emissions. Project completed April 2014.
On behalf of New Energy Economy, Synapse evaluated the economic modeling performed by Public Service Company of New Mexico in support of its application for certificate of public convenience and necessity for the acquisition of San Juan Generating Station (SJGS) unit 4 and Palo Verde 3 as replacement resources for the abandonment of SJGS units 2 & 3. Dr. Jeremy Fisher reviewed the Company’s economic modeling using the Strategist model, a common capacity-expansion model often used to evaluate long-term resource decisions, and provided recommendations to the New Mexico Public Regulation Commission in the form of direct testimony.
Direct Testimony of Jeremy Fisher Evaluating the Stipulation Supporting Public Service Company of New Mexico Application for Acquisition of San Juan and Palo Verde Units
Surrebuttal Testimony of Jeremy Fisher in Opposition to the Stipulation Supporting Public Service Company of New Mexico Application for Acquisition of San Juan and Palo Verde Units
Direct Testimony of Patrick Luckow Reviewing Public Service Company of New Mexico Modeling in Support of Supplemental Stipulation
Synapse’s Bruce Biewald presented “The Economics of Coal Generation under Various Environmental Regulatory Scenarios” at the 11th Annual “Energy in the Southwest” Conference in Santa Fe, New Mexico on June 21, 2014.
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