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Newsdata’s Energy West podcast delivers in-depth conversations with energy experts and weekly news updates about the energy industry in California, the Northwest and beyond. Stay plugged in with Newsdata’s award-winning journalists.
Intro:
Welcome to NewsData's Energy West.
A podcast about the energy industry today and where it's going
tomorrow.
Dan Catchpole:
Hello, I'm Dan Catchpole, reporter with NewsData's Clearing Up.
And with me is my co-host and editor of NewsData's California
Energy Markets, Jason Fordney.
And we're here with some of the stories that we've been working
on at NewsData.
Jason, happy post-Thanksgiving.
How are you doing?
Jason Fordney:
We're doing great, Dan. Thanks for asking.
Had a good Friendsgiving here in NorCal and got to hang out with
some of my
local friends.
How about you?
Dan Catchpole:
Yeah, we had a great Thanksgiving here.
My family, our three kids, my wife, my in-laws and an aunt.
Just kind of a low-key Thanksgiving, but it was really pleasant.
And now it's full tilt into the rest of the holiday season.
Jason Fordney:
Yeah. Here we go.
Dan Catchpole:
Yeah. So I'm going to ask you something we didn't prep before we
got on here,
so just fake it.
Jason Fordney:
All right.
Dan Catchpole:
Okay. So we didn't have a Thanksgiving Day episode or
Thanksgiving – we didn't have an episode of the weekly wrap up
last week because of Thanksgiving.
You filled us – you did some on the road reporting for that from
NARUC.
What was the most interesting thing that – in like two
sentences – what was the most interesting thing
that you learned from NARUC that wasn't on your reporting from
the road from New Orleans, which listeners should go back and
listen to. There's some really interesting stuff in there.
What was the most interesting thing that got left out of that?
Jason Fordney:
Well, that's a good question. One thing I've really noticed.
I've been covering NARUC probably 12 years now.
And the the differences between different states, like the
conversation about independent
transmission monitor Darcie Houck from the CPUC is all about it.
While the chairman of the Georgia PSC was totally against it,
sort of reflecting.
I see this more and more.
Attitudes towards the federal government and top down planning.
And that's a dynamic I see sort of sharpening here at NARUC,
which is, of course, state commissioners all around the country.
So that's what I find most interesting about these events is all
the different interpretations from depending on what part of the
country people are from.
Dan Catchpole:
Yeah. Yeah.
It certainly, and that actually is a good – not segue because we
got a little bit to go – but that will tie into one of the top
stories that we've got from NewsData's Clearing Up.
So first of all, why don't you let it?
What do you got going on in California?
Jason Fordney:
Sure. Well, our lead story last week was out of the Federal
Energy Regulatory Commission.
Its wholesale power sellers, filing justification and filings for
high prices during the September heat wave.
And then I have billions of dollars of new funding from the
California Air Resources Board for off-road
equipment and clean energy.
I mean, I'm sorry, clean transportation.
And then finally, a little bit reaction to the California Public
Utilities Commission, latest net
energy metering proposal for rooftop solar, which is getting a
lot of attention and some controversy here in California.
Dan Catchpole:
It seems like there's no shortage of controversy over the year.
And well, any of these markets, particularly California.
Jason Fordney:
Yes. With so much happening here and so much changing.
Yep. No doubt. No doubt about that.
Dan Catchpole:
Well, so from the Northwest, I've got a story on some differences
in perspectives on the transition to clean energy
from various state officials, regulatory specialists,
policymakers.
And then from federal regulators, FERC wants more information
about the proposed
Western Resource Adequacy Program.
It's not a market, so how does it interact with federal
regulatory oversight of markets?
Jason Fordney:
Yeah. All right.
Well, looking forward to hearing more about that.
Dan Catchpole:
Yeah, I want to hear some more about that justification, the
justification filings.
Can you get us started with that?
Jason Fordney:
Sure. Speaking of FERC, what happened here?
This is a wholesale power prices during the September heat wave,
which as always happens, went through the roof.
And then the power sellers making these sales then file what are
called justification filings to FERC
to justify these sales.
This happened before or after August 2020, when the blackouts
occurred and FERC ended up ordering refunds
for a lot of the sales that were made at that time.
I noticed there was a lot fewer filings this time around,
perhaps because traders and sellers were less willing
to do these interactions and to do these deals because, you
know, there's a chance FERC will roll it back.
So this is kind of round two.
We had almost a dozen justification filings from companies like
TransAlta, Brookfield Renewables,
Arizona Public Service, and there were some protests filed from
California Public Utilities Commission, Southern California
Edison, and Pacific Gas and Electric.
So, yeah, these filings are really interesting because they
describe sort of the blow by blow things that
happen during tight supply conditions, the way deals are made.
TransAlta's filing was quite interesting, basically saying, you
know,
they say that when the federal government unwinds these
transactions, it affects the integrity of the market and injects
uncertainty into trading, which appears to have happened.
Here's what TransAlta said.
"We encourage the commission to correct course and prevent the
continued deterioration and destruction of the WEC's spot
market." Pretty strong words there.
These prices were above a $1,000 per megawatt hour price cap,
which is in WEC.
In CAISO, California Independent System Operator, sales above
$2,000 per megawatt hour are allowed,
which kind of creates a, I don't know, two very radically
different regimes right next to each other.
Again, making the Western wholesale trading even more
complicated.
So yeah, these justification filings are based on certain inputs
like the Palo
Verde ICE index price was at about 1000 a megawatt per hour, ICE
being Intercontinental Exchange.
That's the old name.
PNM said that the index price at Palo Verde was about $1,000 per
megawatt hour, which indicates the sales were made at the
prevailing market price.
But these are the precise circumstances that bid cap rules are
meant to limit, according to a joint protest
from PG&E and SCE.
So a fairly technical story, some perspective on it.
Tyson Slocum from Public Citizen, I talked to him.
He said, "these proceedings involve climate change price
gouging." He said, "Companies exploit a climate emergency, in
this case climate change induced heat wave to exploit market
dysfunction and engage in price gouging." So as I said,
FERC ordered refunds the last time around.
We'll see what happens with this one, and we'll be covering more
of this.
Dan Catchpole:
There's some forceful language.
Just real quickly, is that unusual, or is that par for the
course from your experience?
Jason Fordney:
This situation is a pretty big deal because, you know, the laws
of supply and demand
dictate that when your supply is lower, the price goes up.
And you could see this as FERC coming in and interfering with
free trade or,
you know, more on the public advocacy side here, FERC is
protecting consumers.
But yeah, any time you have transactions that are in danger of
being canceled, understandably,
people are nervous about that.
And there were some stories in these filings of people really
ready to bid at these prices and pay for the
power, but the seller doesn't want to do it because they don't
know if it's going to be unwound.
So, yeah, I think this is a pretty fundamental issue.
It's definitely not down in the weeds.
It's a big one.
Yeah.
Dan Catchpole:
Certainly an important story to follow, and we will have more of
it.
Jason Fordney:
You have some news out of the Northwest on a citing.
Dan Catchpole:
Yeah. So this is one of the what I was talking about with the
different perspectives.
So the recent conference by Northwest Energy Coalition last
month or, no, it's still
November. Sorry, listeners.
Earlier this month, my colleague K.C.
Mahaffey sat in on one of the sessions there that had some
different perspectives.
They had the lead of Electricity and Markets Policy Group at the
Oregon Department of Energy, policy analyst from Columbia River
Intertribal Fish Commission, and deputy director of Renewable
Northwest.
So for listeners who aren't familiar with these organizations,
these are some of the key players that are really in the weeds
with hashing out the nitty gritty of power policy and especially
its interplay with
fish and wildlife mitigation in the Northwest.
And they were talking, we're already seeing some clashes that
policy analysts are trying to
work out in the northwest between the huge amount of renewable
energy that is needed to transition to clean energy.
And this is going to lead to some clashes in terms of where to
put all of these resources and how to get that energy to
market. So the Adam Schultz from the Oregon Department of Energy
shared some of the work that they've been
doing. They're working they've got a paper that's coming out
that really kind of involved a literature review
of studies that have been done looking at the 350 gigawatts of
renewable energy, new renewable resources that's going to
have to be built in the West over the next 30 to 40 years.
80 of these gigawatts are expected to be in the northwest.
30 gigawatts are needed just for Oregon's transition, some
slightly more for Washington, less so for Idaho
and Montana.
But, you know, as he acknowledged, there's going to be some –
there's going to have to be some give and take on some of these
in terms of what we're going to prioritize how to really get
that full buildout.
So Oregon Department of Energy, it's already looking ahead at how
that they're going to, the state is going to try to parse some of
those areas where priorities clash over land use and the
transition
to clean energy and other priorities that overlap with these, in
this area.
And, you know, there's a lot to go into here.
So I'll let listeners, they can go and check this out, K.C.
Mahaffey's reporting.
But it was an interesting panel about some of the clashes
ahead, and it's good to know that
policy analysts are taking this work seriously now and trying to
figure out how to handle some of this
before we get too deep into it.
Jason Fordney:
Yeah. You do wonder if public acceptance of renewables might be a
little bit higher because they see the public benefit.
But the footprint of your average utility scale solar or wind
facility is quite large.
Then you need the transmission and you know, there's the
offshore wind question.
So yeah, there's always hurdles.
Dan Catchpole:
Yeah, well, we've already seen some of these clashes in central
Washington, in particular in the Northwest here with wind
farms and where they're sited and just the impact on land use.
And for a variety of reasons, environmental issues, a lot of
esthetic concerns.
But it certainly yeah, we will see more and more of these.
Jason Fordney:
Yep. And wildlife issues too.
Dan Catchpole:
Yep. So going back down to California, you've got a story on CARB
allocating funding for some of that transition.
Jason Fordney:
Yeah. California.
Dan Catchpole:
Clean transportation transition.
Jason Fordney:
Yes. We're talking billions of dollars in new funding for
off-road engines, clean
transportation. This is CARB's November 17th and 18th meetings.
This follows CARB's release of its latest scoping plan for
California to hit carbon neutrality by 2045.
These were amendments to current regulations.
First up was the off-road regulation.
CARB hopes to accelerate the process of getting more than
150,000 diesel vehicles.
These are older, dirtier construction and mining vehicles,
things like that.
They want them retired.
This is really driven by the 2022 State Implementation Plan,
which mandates a reduction of nitrous
oxide by four tons per day by 2037.
So, yeah, looking for a cleaner air.
CARB Chair Leanne Randolph said, "The oldest off-road diesel
fuel vehicles with no emission controls are 80 times as polluting
as a similar sized off-road vehicle purchased today." The
off-road sector in this case is
defined as construction, mining and industrial operation
vehicles.
Excluded are locomotives, aircraft, waterborne vessels and
agricultural vehicles.
This will actually be a huge change for this sector.
In some cases you see CARB requiring banning the sales of new
equipment.
This would actually require older equipment to be retired, which
means replacing those fleets.
And we'll see how that goes.
But yeah. The First Amendment has about a $1.9 billion
cost and the board approved a total of $2.6 billion investment
plan, including more than $2 billion for zero
emission vehicles, including school and transit busses, off-road
equipment, and diesel fueled heavy-duty freight trucks and
several hundred million dollars for other areas.
But yeah, seeing a lot of action from CARB lately and big
changes coming to the energy landscape in
California from these amendments.
Dan Catchpole:
Yeah, those are some big numbers, but even bigger ones to come.
Jason Fordney:
I'm sure. Yeah.
Dan Catchpole:
Well, so my last story, and I know we're running a little later
than we're trying to here, but.
Jason Fordney:
It happens.
Dan Catchpole:
Thanks. Thanks dear listeners.
So yeah, FERC wants more information from the good folks at The
Western Power Pool, who are leading the
effort to stand up the Western Resource Adequacy Program, a
West-wide, or with a footprint
that's West-wide outside California.
Actually, technically, there is a slim thin – there are actually
some parts of California that
some participants involved with the design of this program, but
they have stressed throughout this year's long process
of designing and moving towards implementation of this program
to avoid resource
inadequacy with energy surplus being outstripped by demand.
Throughout this year's long process of designing it, they have
WPP officials have stressed this is not a market.
But even though the program facilitates transfer of energy
between buyers and sellers
participating in the market.
So FERC, their Office of Market Regulation, want some more
information from the WPP
about how the surplus sharing mechanism of the Western
Resource Adequacy Program will interact with FERC regulation of
markets,
specifically the authority that FERC grants for entities to sell
wholesale energy capacity
or ancillary services, what's called "market-based rate
authority mechanism." FERC's market-based rate authority
mechanism. And so, the purpose of it is to recognize that
entities either are not big enough
or have taken steps to mitigate their ability to manipulate
market prices, given their
size in energy markets that are selling at market-based rates,
rather than cost of
service rates.
And so essentially, FERC wants to know, hey, if you guys are
moving around energy, we're talking these are some big entities
that you've got a footprint that stretches across the West.
How is this not going?
How are you? Show us.
Give us more information so we can figure out whether or not
this could influence market prices.
The officials at the Western Power Pool say that this is kind of
standard questions that come up during these tariff filings to
get approval for adding new regulatory or mechanisms like this.
And they're not worried about ultimately getting FERC approval.
They do acknowledge that this will delay their timelines
somewhat, but not significantly.
So they're moving ahead, but they still hope to move to the next
phase of implementation in
early next year.
That's it from the Northwest.
What do you got?
The net metering proposal.
Jason Fordney:
Okay, our final story.
This is reaction piece to the CPUC's latest energy metering
proposal that we talked about last
week and wrote about in our previous issue.
That proposal released November 10th by the PUC.
I won't get into the details of it.
It does.
It's generally better accepted than the proposal from the
previous one from, I guess that was
2021, that had a grid access charge.
But solar interests still not happy with this one and same with
some public commenters.
This is coverage from our new reporter, Anne Ernst.
She covered a special hearing November 16th where dozens of
people called into a CPUC voting meeting.
This is a very emotional issue.
People see it as an attack on solar.
Here's a quote.
"President and commissioners, your solar proposal is a
betrayal." Alan Marling of Livermore said, "It will kill the
rooftop solar industry.
Once people figure out what you've done, we'll demand your
resignations." So pretty, fairly extreme commentary
there. Others saying this will deter people from getting solar.
But there's also some support for this and for people that don't
know what the CPUC is trying to do, they're actually acting on
legislation, but they're trying to basically make solar more
equitable
by cutting the payback a little bit for what solar units or
panels earn
as far as net metering.
There's a principle of advocacy communications at PG&E.
James Noonan said that PG&E supports reforming the 25-year old
program to
ensure that all electricity customers, those with solar and
those without, pay their fair share towards grid maintenance and
other costs.
Of course, PG&E is saying that.
A lot of people would say, "Well, they're a utility trying to
protect themselves." But there was others.
Here's Doug Peterson of San Jose.
"I fully support the sensible, balanced proposal.
I urge the CPUC not to weaken these long overdue reforms any
further due to misguided expressions of public
outrage." So the CPUC is due to vote on this December 15th.
There's rallies planned.
This will be just like the first time around, a major public
conversation.
And yeah, this is still a proposed decision from a CPC
administrative law judge.
But the PC will be under a great deal of pressure from solar
community clean energy advocates.
And again, that's coverage from Anne Ernst.
Dan Catchpole:
Yeah, and that is, to your point, that is very much a heated
issue anywhere net metering comes up.
I've covered that in some proposals on that in Idaho and
Montana, and there's no shortage of emotions.
They run high when it comes to net metering and solar.
Jason Fordney:
So yeah, we've been covering this for a long time, and my opinion
is that there are some
reforms that need to happen, but of course CPC wants to be
careful and not stymie the growth of rooftop solar at the same
time. And yes, solar is just, man, people really feel strongly
about this issue.
Dan Catchpole:
Yeah. Well, that's it for me, Dan Catchpole.
Thank you for listening.
And please rate and review this podcast wherever you listen.
EnergyWest is edited and produced by our colleagues at Pioneer
Utility Resources and Lucky Sound Studio.
You can find me on Twitter. I'm @DCatchpole.
Jason Fordney:
I'm also on Twitter at @FordneyEnergy.
And we also have our California Energy Market's Twitter
@CMNewsData.
Hey, thanks for listening, everybody.
We'll see you here next week.