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.
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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.
On behalf of the Nova Scotia Utility and Review Board, Synapse provided testimony on Efficiency Nova Scotia's (ENS) 2015 Demand-Side Management Plan. Testimony focused on ENS's proposal to discontinue providing certain low-income energy efficiency services, and the proposal by Nova Scotia Power Inc. to fund these services by charitable donation to a third party. Project completed July 2014.
Synapse provided consulting services to the New Jersey Division of Rate Counsel related to the Elizabethtown Gas petition to the Board of Public Utilities to extend the Company’s existing gas supply/capacity management arrangement with its affiliate, Sequent Energy Management. The Elizabethtown petition raised issues related to competitive bidding and incentives for the asset manager to provide appropriate levels of margin credits. Synapse analyzed the filing, prepared and reviewed discovery questions, and assisted in hearing preparation and participation. Project completed September 2014.
On behalf of the Sierra Club, Synapse prepared expert testimony in a docket before the Colorado Public Service Commission on the cost-effectiveness of energy efficiency programs. The testimony focused on the appropriate use of the total resource cost test, the need to include non-energy benefits, the need to properly account for environmental compliance costs, and the best way to address concerns about rate impacts and customer equity. Project completed June 2014.
Surrebuttal Testimony Regarding the Public Service Company of Colorado Proposed Energy Savings Goals
For over 25 years, utility-funded energy efficiency programs have proven to be a widely available resource for meeting customer demand at low cost. We now have a wealth of experience demonstrating that energy efficiency programs cost a fraction of the cost of generating, transmitting and distributing electricity, and provide a variety of benefits in terms of lower bills, reduced system risk, increased system reliability, reduced environmental impacts and more. In June 2014, when the U.S. Environmental Protection Agency (EPA) issued proposed regulations under the Clean Air Act (CAA) for reducing greenhouse gas emissions from existing sources in the electricity industry, it created another compelling reason for states to promote energy efficiency programs.
Efficiency programs are among the lowest-cost options for reducing carbon emissions, and can play a significant role in reducing the costs of complying with the EPA’s new plan. However, if we are to unleash the full potential of energy efficiency programs to comply with CAA 111(d), many states will need to improve their procedures for reviewing and approving utility-funded programs. Enormous reservoirs of low-cost efficiency resources remain untapped, primarily because several regulatory practices and conventions hinder the identification and development of the full potential of energy efficiency resources. In an article for Public Utilities Fortnightly, Tim Woolf, Erin Malone, and coauthors describe two of the most important of these barriers and propose strategies for addressing them.
Synapse authored a paper discussing and comparing the amount of energy efficiency bid into U.S. capacity markets (New England’s FCM and PJM’s RPM) over the past several years.
Synapse assisted the National Home Performance Council with a broad campaign to improve the way that energy efficiency resources are screened and approved by commissions. The objectives of the campaign included addressing the current problems with energy efficiency screening practices, developing a new screening framework, and promoting a broader view of the benefits of energy efficiency. The campaign included extensive stakeholder discussions, as well as outreach to key decision-makers. The campaign is national in nature and focuses on several key states.
Recommendations for Reforming Efficiency Cost-Effectiveness Screening in the US: A presentation at the National Association of Regulatory Commissioners Annual Meeting
The Resource Value Framework: Reforming Energy Efficiency Cost-Effectiveness Screening
Synapse developed a whitepaper outlining the benefits of a regional energy imbalance market (EIM), including annual dollar savings and reliability improvements. Synapse examined the proposed integration of PacifiCorp (October 2014) and Nevada Energy (October 2015) into the CAISO EIM. The paper also discusses the ways in which all utilities (IOUs, municipals, and co-ops) would benefit from a regional EIM.
Synapse collected utility Integrated Resource Plans from nearly 200 entities in order to find as many CO2 price forecasts as possible. With this research in hand, Synapse CEO Bruce Biewald testified at a House Energy and Power Subcommittee hearing on the practice of estimating a future CO2 price in electric utility planning.
Synapse provided in-depth comments on the Duke Indiana Integrated Resource Plan (IRP) process, following stakeholder meetings and presentations by the utility. Synapse evaluated commodity prices, scenarios, alternatives considered, future environmental compliance obligations, and the economics of the utility's existing coal units. The final report was published February 2014.
The Nova Scotia Utility and Review Board retained Synapse to review the operation of Nova Scotia Power Inc.'s (NSPI) load retention rate (LRT) to ensure that NSPI is recovering its incremental production costs plus a contribution to fixed costs. Synapse reviewed the generation planning and scheduling assumptions and algorithms NSPI used to develop the week-ahead, day -ahead and hour-ahead forecasts of cost quantity (CQ) pairs it offers under this rate. The Synapse February 2014 audit concluded that the CQ-pair methodology originally used by NSPI did not produce a sufficiently accurate estimate of the incremental energy costs to bill PHP, and proposed that NSPI use a “differential method” instead.
After reviewing the Synapse February 2014 audit report and the comments on that report filed by interested parties, the Board issued a Decision Letter dated May 23, 2014 directing that Synapse be engaged to proceed with a supplementary audit of the newly implemented differential method of calculating costs of supplying PHP under the LRT. Synapse worked with NSPI to refine the differential method and released a supplementary report in September 2014.
Supplementary Audit of Port Hawkesbury Paper Load Retention Tariff
Synapse provided expert services to Sierra Club related to Indiana Michigan Power Company’s application for a Certificate for Public Convenience and Necessity (CPCN) for an SCR at Rockport 1. Synapse conducted thorough analysis of Company workpapers and identified key issues to the client.
Public Service Electric and Gas Company has petitioned the New Jersey Board of Public Utilities to approve the first five years of the $3.94 billion, ten-year Energy Strong program to harden utility infrastructure and guard against increasingly extreme weather. On behalf of the New Jersey Division of Rate Counsel, Synapse performed a technical and engineering assessment of the Energy Strong program as well as a comparative examination of the proposed program with PSE&G's Capital Infrastructure Program. In addition to this analysis, Synapse prepared and reviewed discovery questions and responses to discovery, assisted in the development of the Rate Counsel's policy position regarding the Energy Strong proposal, assisted in preparing comments and pre-filed direct testimony, and attended Board hearings. Synapse also filed direct and supplemental testimony, and provided cross-examination and live surrebuttal testimony. Project completed May 2014.
Synapse assisted the Sierra Club with reviewing Vectren South's request for Certificate of Public Convenience and Necessity (CPCN) at four coal-fired units in Indiana (Culley 2 & 3, and EW Brown 1 & 2). To evaluate the investments, Synapse reviewed Company workpapers and reconstructed an extended analysis of the short economic evaluation conducted by the Company, and proposed alternative mechanisms of valuation, as well as additional risks not considered by Vectren in the retrofit. Synapse provided expert testimony before the Indiana Utility Regulatory Commission.
Kenji Takahashi presented "Expected U.S. Climate and Environmental Policy: The Future of Coal Power and Clean Energy" at the Citizen's Alliance for Saving the Atmosphere and the Earth (CASA) seminar in Osaka, Japan on July 10, 2014. Presentation in Japanese.
Synapse assisted the Regulatory Assistance Project in an initiative to coordinate the activities and campaigns of environmental and consumer advocates. Topics addressed included protection of low-income customers, promotion of energy efficiency, promotion of renewable resources, and addressing climate change. Project completed May 2014.
Synapse presented testimony on behalf of the Pennsylvania Office of Consumer Advocate on whether the request by the Pennsylvania utilities of First Energy to accelerate the deployment schedule for their smart meters was reasonable (Docket No. M-2013-2341990 et al). Project completed June 2014.
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