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Clearing Up / Bearing Down

[February 2, 2017 / No. 1836]

Northwest Energy Officials Share Top-of-Mind Issues for 2018

SUMMARY: Clearing Up invited six Northwest energy officials to share their top-of-mind issues as 2018 gets under way. The following are their responses. We thank them for participating.

David Anderson, President/CEO, NW Natural

The outlook for natural gas as an abundant, affordable and clean-energy solution in our region is strong. Technology advances and plentiful North American supply have translated into consistently lower prices for customers. In fact, the commodity portion of Pacific Northwest gas consumers' bills has dropped almost 50 percent since 2008—with NW Natural's customers paying less for gas today than they did 15 years ago.

As our region moves toward a low-carbon future, technology innovations are also providing a greener product for pipelines and vehicles. Biogas produced from readily available sources like sewage, food waste, cow manure, landfills and forest debris can now be conditioned to pipeline-quality renewable natural gas (RNG). A number of these waste-recovery projects are in operation or under development up and down the U.S. West Coast and into British Columbia. Last year, the City of Portland announced a new RNG project at its Columbia Boulevard Wastewater Treatment Plant as its single-largest climate action to date. When completed, the city will be refueling trucks with RNG at its plant and injecting the remainder of the RNG onto the NW Natural system.

We need to pursue cutting-edge hybrid solutions to energy and environmental challenges that cross sectors and industries, such as large-scale seasonal energy storage. Power-to-gas installations, using electrolysis, can convert surplus wind and solar power to hydrogen or RNG, which can then be stored or distributed to customers through the existing natural gas pipeline network. Emissions and air pollution from the transportation sector can be addressed by displacing diesel with compressed natural gas.

Successful approaches and partnerships require flexibility, persistence and patience. Regulators and policymakers tasked with oversight of the energy sector are pressured to meet the growing sustainability demands of customers, while ensuring that benefits to many don't unduly burden those most vulnerable.

It's an exciting time to be in the natural gas industry as we continue to transition to a clean energy future.

Kristine Raper, Commissioner, Idaho PUC

Regulators are monitoring the impact of the federal tax plan, and utilities have been directed to report to the Idaho PUC by March 30. At that time, the commission will evaluate the findings and give direction to the utilities. The law could have an impact on rates and projects, including a wind-repowering project by PacifiCorp. The utility is scheduled to update the commissioners soon about whether the project is still the most reasonable and cost-effective option for meeting demand.

Also of interest is the recent push to reform PURPA, specifically HR 4476, the PURPA Modernization Act of 2017. As this legislation makes its way through Congress, will FERC utilize its open PURPA docket to update the law by promulgating regulations? Will battery storage be addressed in the coming year? If so, how?

Idaho Power is set to enter the Western EIM in April. Commissioners are interested to see how the market can benefit the utility and its ratepayers.

The movement of reliability coordinators is also of interest, particularly the outcome of the split between Peak Reliability and the California ISO as a result of the partnership of Peak and PJM Connext.

These are just a few of the more pressing issues as we head into 2018. Others include a net-metering case currently before the Commission; the multistate protocol used to determine how PacifiCorp's costs are allocated to customers in six states; and the proposed acquisition of Avista Corp. by Hydro One.

It's going to be a busy year!

Tom Karier, Washington Member, Northwest Power and Conservation Council

The underlying forces that have made electricity markets so interesting in recent years show no signs of letting up. We expect to see continuing flat load growth, low market prices, tighter capacity, an expanding Western EIM, more regulatory experiments, greater distributed resources, contentious court battles and roiling volatility from our California neighbors.

In the midst of all this tumult I see a few areas that warrant particular attention:

Carbon Prices—Washington and Oregon are pressing forward on completing a West Coast carbon price following the lead of British Columbia and California. Not only is this an efficient way to reduce carbon, but Council analysis also shows that a Westwide carbon price financially benefits the Northwest—not surprising since we are still a net exporter of primarily carbon-free hydropower. If we do achieve a West Coast carbon price, there is still the issue of consistency in price and structure. The carbon tax in British Columbia is $30/metric ton and the allowance price in California is $15/metric ton. The states can do some aligning but even better would be a national carbon policy.

Demand Response—This may become the next great resource for the Northwest. It is ideally suited for a capacity-short power grid, which we are rapidly becoming. How can a largely idle gas plant compete economically with a properly priced demand-response contract? To make this happen, our public policies and regulations have some catching up to do, not unlike the early history of energy efficiency.

Request a sample to see why Energy NewsData sets the energy news standard for Western North America.

Markets—The Western EIM has generated some significant attention and returns recently. But a major challenge remains for some kind of market to get surplus capacity from Northwest hydro generators to increasingly capacity-short IOUs. Any ideas?

Electrification—This is an essential part of the long-term vision where hydropower and carbon-free resources combine with a smart grid to meet most of our energy needs at the lowest possible cost. The Northwest is on its way.

Maria Pope, President/CEO, Portland General Electric

Oregonians are at the forefront of a dramatic transformation to a clean-energy future. Several cities have proclaimed resolutions to move to 100-percent renewable power, and over 170,000 PGE customers voluntarily participate in the nation's top renewable power program. Our customers want clean energy, and also expect it to be safe, reliable, affordable and secure.

At Portland General Electric we want to help lead the way to an energy future that allows our customers to achieve their goals. My priority during the year is to work with regulators, stakeholders and customers to accelerate this transition. Our participation in the Western EIM is an illustration of how technology allows renewable integration at the lowest cost to customers. By embracing technology and working alongside regional partners, we can make real progress in this transition.

Oregon has a history of getting things right. In this case, that means preserving our legacy of safely delivering affordable electricity and our record of bringing stakeholders together to collaborate for the benefit of all customers. We've done this before and we can do it again.

We must decarbonize our own resource mix and do our part to help Oregon and our growing customer base achieve their carbon-reduction goals. That means working with stakeholders, focusing on renewables deployment, grid resiliency and flexibility, smart energy use, transportation electrification, green tariffs and smart communities.

These topics are integral to PGE's agenda in 2018 as well as our long-term clean energy strategy. In every discussion and forum, you'll also hear us relentlessly reaffirming a commitment that hasn't changed—this transformation must also protect the affordability and reliability of electric service. Our customers want clean energy—delivered equitably and seamlessly to all through an integrated, secure, smart grid platform.

Roger Gray, CEO, Northwest Requirements Utilities

Folks who know me might guess that I would not have a "normal" response to Clearing Up's query about top-of-mind issues as the year begins, and they would be right!

My main concern for 2018 is an accelerating trend of major decisions, policies, legislation and legal actions based on "beliefs" rather than critical thinking. This is actually a broader societal issue. Are beliefs OK if they are backed by good intentions? I used to have a saying in California: The Path to California is paved with good intentions and beliefs.

I support renewables, new technologies like storage, and addressing climate change and environmental issues. I think new markets like the Western EIM and options like demand response will be important pieces of our future. I know that energy efficiency and hydropower have been cornerstones of our Northwest legacy and hopefully will remain our most economic and carbon-free resources. I also think we are on the verge of exciting change in our industry—if it is done well.

Some believe that more wind and solar generation via prescriptive policies like renewables portfolio standards will reduce carbon emissions. Looking at the data after more than a decade of operating under these policies, you have to wonder: Are we seeing the intended result? If we are not, should we double down on our beliefs? A recent Public Generating Pool/Energy and Environmental Economics study presents some solid thinking on how to most economically reduce carbon emissions.

Some people believe spilling more water at federal dams (and thus losing carbon-free electricity) will save salmon. What we do know is that this will increase costs and spew up to another million tons of CO2 into the atmosphere. At the same time, one federal court believes salmon are going extinct; another federal court believes we can still eat them. Not sure what I think about this.

The thinking and analysis that goes into complex processes like utility integrated resource plans and the Northwest Power and Conservation Council's 7th Power Plan are too easily tossed to the side because they conflict with strongly held beliefs. For example, some believe that banning natural gas will lead to economic carbon reduction when the opposite may be likely.

We need to ensure that critical thinking is applied to these complex issues and we communicate effectively with the customers and public we serve. However, we should also embrace change and examine our own beliefs. Let's accept the challenges before us and think about and offer solutions. I'll tweet mine out next week!

Elliot Mainzer, Administrator, BPA

BPA Administrator Elliot Mainzer outlined for Clearing Up several topics high atop his 2018 watch list.

One is "the continued evolution of Western markets," including developments involving potential California ISO expansion, the Southwest Power Pool and Peak Reliability. Mainzer also said he is "very interested" whether a potential CAISO day-ahead flexible capacity market takes shape and, if so, what it looks like, as this could generate more revenue for Bonneville.

"Another big area we're watching is development of carbon policies" in Oregon and Washington, he said. Technology evolution, including flow-control devices and batteries, is another issue on BPA's radar.

Also very high on Mainzer's list is load-growth patterns, particularly in the high-tech sector. In addition, "we're obviously closely watching wholesale energy prices and the evolution of capacity markets in general," he said.

BPA is also sponsoring a process on renewable resource development potential in Montana, with a focus on policy, operational and infrastructure challenges and opportunities.

Specific to BPA, "We're just very, very engaged with our customers, focusing on our power competitiveness and our transmission efficiency and responsiveness. We're going to be very focused on executing our new strategic plan," Mainzer said. [C. U.]

Bearing Down is excerpted from Energy NewsData's Clearing Up publication. If you aren't a current subscriber, see for yourself how NewsData reporters put events in an accurate and meaningful context -- request a sample of Clearing Up.

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