Massachusetts Poised to Reshape Natural Gas Distribution Companies to Address Climate Change

About one year ago, the Massachusetts Department of Public Utilities or DPU opened an investigation (D.P.U. 20-80) to examine the appropriate role of gas LDCs in helping to meet the Commonwealth’s 2050 climate goals.  The proceeding sought to identify and evaluate strategies to move to net-zero GHG while simultaneously protecting ratepayer interests.  The potential to “recast” the role of the LDCs was a principal part of the focus.

Consultants were retained by the LDCs and an extensive stakeholder process has been completed.  A material step in the process was to identify and then evaluate the merits of what turned out to be eight “pathways” that each reflected changing roles for LDCs.  A two-volume report – Independent Consultant Report Vol. I and Vol. II – has been released in draft, is being finalized and will ultimately be reviewed by the DPU.  It is clear that the role of the LDCs will evolve substantially.  These “pathways” reflected various ranges of “electrification” and differing roles

Contentious Senate Committee Hearing Highlights the Politically-Charged Nature of FERC’s Recent Pipeline Policy Statements

The Senate Energy & Natural Resources Committee held a hearing today to question Federal Energy Regulatory Commission (FERC) Chairman Richard Glick and Commissioners Allison Clements, Mark Christie, James Danly, and Willie Phillips about FERC’s two recent policy statements regarding natural gas certificates.  Those two policy statements, each of which were issued by 3-2 vote with Commissioners Christie and Danly dissenting with separate statements, were issued on February 18, 2022 and are the subject of a separate Pierce Atwood blog post. Members of the Pierce Atwood Energy team watched the livestream video of the Senate hearing, and, in this post, provide some high-level insights based on the Senators’ questions and Commissioners’ responses today.

To no one’s surprise, the hearing was a politically-charged event. With one notable exception, the participating Senators’ response to FERC’s actions was split along party lines, with Democrats generally supporting the policy statements and Republicans criticizing the policy statements with openly expressed dismay and frustration.  The FERC Commissioners’

FERC Issues Two Controversial Policy Statements on Natural Gas Infrastructure

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On February 18, 2022, the Federal Energy Regulatory Commission (“FERC” or the “Commission”) issued two controversial policy statements that will significantly impact the permitting and construction of new natural gas pipeline facilities.  The policy statements were each approved by a 3-2 majority with Commissioners Danly and Christie issuing separate dissents.

The Updated Policy Statement on Certification of New Interstate Natural Gas Facilities (“Updated Policy Statement”) revises FERC’s 1999 Certificate Policy Statement to give environmental analysis and policy, including environmental justice, a greater role in determining whether FERC should approve new natural gas transportation facilities as consistent with the “public convenience and necessity” under Section 7 of the Natural Gas Act (“NGA”).  A companion Interim Policy Statement on the Consideration of Greenhouse Gas Emissions in Natural Gas Infrastructure Project Reviews (“GHG Policy Statement”) seeks to explain how FERC will assess the impacts of natural gas infrastructure projects on climate change in its reviews under the National Environmental Policy Act (“NEPA”) and the NGA.

Technical Conference Sparks Debate Over FERC’s Legal Authority to Consider Greenhouse Gas Emissions in Pipeline Certification Review

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On November 19, 2021, the Federal Energy Regulatory Commission (“FERC” or “Commission”) convened a staff-led technical conference to discuss methods natural gas companies may use to mitigate the effects of direct and indirect greenhouse gas (“GHG”) emissions resulting from pipeline construction and expansion projects that are subject to Natural Gas Act (“NGA”) sections 3 and 7 authorizations by FERC (the “Conference”). The Conference included three panel discussions:  1) The Level of Mitigation for a Proposed Project’s Reasonably Foreseeable Greenhouse Gas Emissions; 2) Types of Mitigation; and 3) Compliance and Cost Recovery of Mitigation.

One of the threshold questions posed by the Commissioners, and a recurring theme throughout the conference, was whether FERC has the legal authority to consider GHG emissions as part of its certification process. Chairman Richard Glick asserted that FERC has authority to mitigate GHG emissions and that doing so will provide greater certainty for the industry, and expressed concern regarding FERC’s handling of the issue to date, given the flurry of recent decisions

Key Energy Provisions in Biden Administration’s $1.2 Trillion Infrastructure Investment and Jobs Act

On November 15, 2021, President Biden signed into law the $1.2 trillion Infrastructure Investment and Jobs Act. The Act earlier passed both Houses on a bipartisan basis. In conjunction with its passage, President Biden issued an Executive Order outlining the Administration’s priorities for dispersing monies from the infrastructure law, and establishing a task force that will coordinate the law’s implementation among federal agencies and state, local, and tribal governments. The task force will be jointly headed by former New Orleans Mayor Mitch Landrieu and Brian Deese, Director of the President’s National Economic Council, and will include the heads of the Office of Management and Budget, the Domestic Policy Council, the White House Climate Policy Office, and Cabinet members from the affected federal agencies, including the Departments of Transportation, Interior, Energy, and the Environmental Protection Agency (EPA).

The law represents the first part of the Administration’s two-pronged plan for federal investment in U.S. infrastructure. The second part, a proposed $1.85 trillion social spending

FERC Staff Recommends Natural Gas Infrastructure Winterization Measures in Light of 2021 Extreme Winter Weather Events

The Federal Energy Regulatory Commission (“FERC”), in coordination with the North American Electric Reliability Corporation (“NERC”), presented its preliminary findings and recommendations at FERC’s Open Meeting on September 23 regarding its inquiry into the February 2021 Cold Weather Event in the Electric Reliability Council of Texas (“ERCOT”), Southwest Power Pool, Inc. (“SPP”), and Midcontinent Independent System Operator, Inc. (“MISO”).

The February 2021 Cold Weather Event occurred from February 8 through 20, 2021, during which large numbers of generating units experienced outages, derates, or failures to start, resulting in energy and transmission emergencies. The power outages affected millions of customers throughout the ERCOT, MISO, and SPP regions. On February 16, 2021, FERC and NERC announced a joint inquiry to examine the root causes of the event.

The preliminary findings indicate that a majority of the unplanned generating unit outages, derates, and failures to start were due to natural gas fuel supply issues. The major causes of the decline in natural gas

New York State Revises Solar and Wind Property Tax Calculator

On September 17, 2021, the New York State Department of Taxation and Finance came out with a second (revised) preliminary appraisal model for assessing solar and wind energy projects. Its initial preliminary appraisal model was issued on August 2, 2021.  Comments on both proposed property tax assessment models are due on October 1, 2021.

All local taxing jurisdictions in New York will require the use of the tax assessment model to assess renewable energy projects.  Publication and use of a uniform methodology for assessing renewable projects is one of several recent changes to the New York Real Property Tax Laws (RPTL) that the state recently enacted to promote solar, wind, and other renewable energy projects.

One of those changes was requiring local tax assessors to adopt a uniform income capitalization, or discounted cash flow, valuation approach to assess renewable energy property. An income capitalization approach values the project using the net present value of a project’s future cash flows using

House of Reps, TSA Tackle Cybersecurity in the Energy Industry

This week, the House of Representatives approved three measures aimed at improving cybersecurity in the energy industry:

  • Energy Emergency Leadership Act. This Bill requires the Secretary of Energy to assign energy emergency and cybersecurity responsibilities to an Assistant Secretary, including responsibilities regarding infrastructure and cybersecurity.

 

 

  • Cyber Sense Act of 2021. This Bill encourages coordination between the Department of Energy and electric utilities. It also requires the Department of Energy to test products and technologies intended for use in the bulk power system.

These measures, which will now move to the Senate, are in response to the slew of recent cybersecurity attacks against critical U.S.

Connecticut Targets Deployment of 1,000 MW of Energy Storage to all Electric Customers by 2030

In a victory for the energy storage industry, the Connecticut Senate has passed a bill targeting deployment of 1,000 MW of energy storage by December 31, 2030. The bill also establishes interim targets of 300 MW by December 31, 2024 and 650 MW by December 31, 2027. Pursuant to the legislation, the Public Utilities Regulatory Authority (“PURA”) must initiate a proceeding by January 1, 2022, to develop and implement programs and associated funding mechanisms to interconnect energy storage resources with the electric distribution system. The energy storage programs implemented by PURA must include rate design incentives designed to avoid or defer investment in traditional electric distribution system capacity upgrades. Moreover, PURA’s program must achieve the following objectives: 1) provide positive net present value to ratepayers; 2) provide multiple benefits to the grid, including resilience, ancillary services, and leveling peaks in demand; 3) foster sustained, orderly development of state-based energy storage industry; and 4) maximize value from participation of energy storage in capacity markets.