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Wholesale Electric Prices Rose From 2020 To 2021, EIA Reports

January 12, 2022

by Peter Maloney
APPA News
January 12, 2022

Average wholesale electricity prices rose in 2021 compared with 2020 levels pushed, in part, by higher natural gas costs, according to the Energy Information Administration (EIA).

Constraints on electricity supply as a result of cold weather in the central United States created price spikes in February 2021, EIA said, but the overall rise in electricity prices was particularly steep in the second half of 2021, the EIA noted.

Electricity prices were particularly volatile in the Electric Reliability Council of Texas (ERCOT) market where record low temperatures in February resulted in emergency conditions and rotating outages. The cold weather also restricted the flow of natural gas for power generation, and many wind turbines froze. Those factors combined to push hourly wholesale prices at the ERCOT North trading hub above $6,000 per megawatt hour (MWh) for 70 percent of the time. For the month of February, Texas’s wholesale electricity price averaged $1,485/MWh.

The cold weather also caused near record high spikes in the price of natural gas throughout the country, leading to high electricity prices in other wholesale markets. In the PJM Interconnection, February wholesale electricity prices averaged $42/MWh. In ISO-New England prices averaged $73/MWh.

After the February spike, natural gas prices continued to rise through October as economic recovery contributed to overall growth in natural gas demand, which outpaced the ability of gas supply growth to replace inventories drained during the winter storm.

The price of natural gas, which is used to fuel many peaking power plants, is often the main driver of wholesale power prices. And while natural gas prices have been low in recent years – the cost of natural gas delivered to electric generators averaged $2.40 per million British thermal units (MMBtu) in 2020 – prices are rising.

Last year the delivered cost of natural gas to generators rose from $3.19/MMBtu in January 2021 to an estimated $5.04/MMBtu in the fourth quarter of 2021, EIA said.

EIA is estimating that 2021 will prove to be a record year for U.S. natural gas production.

In 2020 wholesale electricity prices were generally lower than they were in 2019. Wholesale power prices were 5 percent lower in the California Independent System Operator (CAISO) market and 45 percent lower in ERCOT, EIA reported..

Wholesale electricity prices in ERCOT were less volatile and averaged $22/MWh in 2020 compared with $38/MWh in 2019, EIA said.

In CAISO, wholesale electricity prices were 34 percent lower in the first half of 2020 than they were in the first half of 2019, mostly as a result of near record-low natural gas costs and reduced electricity demand resulting from pandemic-related stay-at-home orders, EIA said. However, higher than expected electricity demand in the second half of the year caused rolling outages and resulted in an average wholesale price of $77/MWh in August.

APPA DEED Members Encouraged To Apply For Energy Innovator Award

January 11, 2022

by Paul Ciampoli
APPA News Director
January 11, 2022

Members of the American Public Power Association’s (APPA) Demonstration of Energy & Efficiency Development’s (DEED) program are encouraged to apply for its Energy Innovator Award. The deadline for submissions is Jan. 31, 2022.

The APPA program’s Energy Innovator Award honors utilities that have developed or applied creative techniques and technologies to improve the efficient delivery of energy services in their communities through the implementation of new projects and programs. Awards recognize creativity, resource efficiency, benefits to consumers, transferability, and project scope in relation to utility size.

A list of APPA DEED members is available here.

Energy Innovator Award winners are chosen by an outside panel of judges carefully selected from leaders in the energy industry, public office, the media, and private business.

The most recent Energy Innovator Award recipients are Florida public power utility Orlando Utilities Commission (OUC) and Southern Minnesota Municipal Power Agency (SMMPA).

OUC developed a nanogrid with the aim of achieving transformative strategic objectives that addressed decarbonization of the grid, electrification, and decentralization. OUC’s nanogrid will provide real-world testing of new technologies at a scale that allows OUC to gain valuable operational data, with lower investment risk.

The nanogrid aims to solve the key challenges of vehicle electrification, demand charge mitigation and resiliency through direct-coupled solar PV and battery storage with electric vehicle chargers.

Additionally, the nanogrid will be integrated with a hydrogen system for backup power, consisting of an electrolyzer, hydrogen storage tanks, and two fuel cells, which are part of a Department of Energy-supported green hydrogen feasibility demonstration.

SMMPA’s Member EV Charging Network was a collaboration between the agency, 17 of its member utilities, and ZEF Energy to facilitate the acceptance of electric vehicles and help with the transformation of both the electric utility and transportation industries.

SMMPA made the investment in the chargers and maintenance programs, while member utilities located suitable sites and handled the installation. This project will bring fast charging stations to the region and reduce range anxiety by providing EV owners with a quick charge when they are traveling longer distances.

For additional details on the SMMPA project and the process for applying for an Energy Innovator Award, click here for the latest episode of APPA’s Public Power Now podcast, which features Chris Schoenherr, Director, Agency and Government Relations and Chief External Affairs Officer, at SMMPA.

Among the 2020 Energy Innovator Award winners was South Dakota’s Heartland Power Consumers District.

During the summer of 2019, Heartland employed a college intern to develop calculator tools to help determine the annual benefit and cost of installing a renewable energy system, particularly a solar array. One calculator is for retail customers who want to install solar panels on their property, while the other is for the utility to determine the cost to the utility itself. The solar calculators are complete and functional within the Microsoft Excel program.

The calculator makes some assumptions but does so based on answers to certain questions including geographic location, making it a useful tool for any utility.

“We developed the renewable cost calculator to help customers make an informed decision when considering the costs and benefits of installing a renewable energy system,” said Ann Hyland, Chief Communications Officer at Heartland Power Consumers District.

“It also helps utilities determine the effect it will have on their system. Heartland has made a commitment to innovation and developing the necessary resources to most effectively serve our customers. As technology continues to evolve, it is vital to stay ahead of the curve, and this award helps recognize those efforts,” she said.

Additional details about the award are available here.

EPB Smart Grid Earns National Recognition For Resilience, Sustainability

January 11, 2022

by Vanessa Nikolic
APPA News
January 11, 2022

Chattanooga, Tenn., public power utility EPB has been recognized by Green Business Certification Inc. (GBCI) for achieving Performance Excellence in Electricity Renewal (PEER) Gold recertification. The recognition builds on EPB’s designation in 2015 as the first public power utility to achieve PEER certification.

Established in 2008, GBCI is a leading certification and credentialing body for several rating systems relating to the built environment, including the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) green building rating systems, the PEER standard for power systems, and others. 

The PEER Rating System evaluates and verifies a power system’s performance and electricity infrastructure across four categories: reliability and resiliency; energy efficiency and environment; operations, management and safety; and grid services. 

The new designation recognizes EPB’s integration of a high degree of environmental stewardship into its advanced electricity distribution system. Companies in EPB’s service area can earn extra points toward the LEED certification of their green development projects.  

The PEER designation also certifies that EPB’s infrastructure is ready for renewables, battery storage and electric vehicles while also achieving a high standard for environmentally sustainable power system operations. 

Volkswagen Group of America, a subsidiary of the Volkswagen Group of automobile companies of Germany, is set to integrate EPB’s Smart Grid designation into its plan to build its new Chattanooga-based Battery Engineering Lab to LEED’s green building standard. 

The Battery Engineering Lab will house battery testing and high-voltage component engineering, and will add the localized production of electric vehicles, shaping Volkswagen’s electric future in America.

vw
Photo courtesy of EPB

EPB president and CEO David Wade said supporting Volkswagen in the LEED development of its Battery Engineering Lab is a great starting point for working with other companies to support job creation and environmental stewardship.

“We appreciate Volkswagen for being the first to join EPB in this effort,” Wade said. “We stand ready to work with other local companies and potential business investors to help facilitate their green building efforts.” 

EPB is an independent board of the City of Chattanooga which began serving customers in 1939. For more information, visit epb.com.

DOE Announces $18 Million In Grants To Enhance Its Weatherization Program

January 11, 2022

by Peter Maloney
APPA News
January 11, 2022

The Department of Energy (DOE) has announced an $18 million funding opportunity made available through the Bipartisan Infrastructure Law to help enhance the impact of the DOE’s existing residential Weatherization Assistance Program (WAP).

The Enhancement and Innovation Funding Opportunity Announcement will provide $18.6 million this year and up to $25 million each subsequent year through 2025. Each award will provide a maximum of $2 million over a three-year performance period.

Two-thirds of low-income households have high energy burdens and spend more than 6 percent of their income on utility bills and Black households spend 43 percent more of their income on energy costs, Hispanic households spend 20 percent more, and Native American households spend 45 percent more, the DOE said.

The DOE says the selected projects will focus on:

DOE’s WAP program will also receive $3.5 billion in additional funding from the Bipartisan Infrastructure Law to increase the energy efficiency, health, and safety of low-income households and to reduce their energy costs.

Additional details are available here.

Fitch Says New Denton, Texas, Cryptocurrency Load Unlikely To Impact Credit Quality

January 11, 2022

by Paul Ciampoli
APPA News Director
January 11, 2022

A purchase power agreement (PPA) the City of Denton, Texas, has entered into with Core Scientific to provide power to the company’s anticipated digital asset mining operation is unlikely to affect the credit quality of the city’s utility revenue bonds, Fitch Ratings recently said.

The new mining operation will more than double the city utility’s existing electrical load by 2023, but specific power supply acquisition requirements and terms of the PPA limit credit and financial risk to the city, the rating agency said.

Core Scientific’s load for its blockchain data center is expected to be approximately 300 megawatts. Denton has agreed to purchase power on behalf of Core Scientific through the organized power market operated by the Electric Reliability Council of Texas (ERCOT).

“The PPA terms are designed to minimize electric commodity price risk to the city. The settlement arrangements and collateral agreements with Core Scientific are designed to protect the city’s financial position from an unexpected closure or payment default once energy has been purchased on Core Scientific’s behalf,” Fitch said.

The PPA arrangement “preserves the flexibility of the digital asset mining facility to shut down or reduce operations in the event that ERCOT energy prices are too high to allow it to operate economically,” Fitch said. It noted that Core Scientific is able to operate as a controllable load resource within ERCOT, “which provides value in that ERCOT can purchase grid reliability products from Core Scientific, and ERCOT has the ability to require the load to cease operations in an energy shortage position, which occurred during Winter Storm Uri.” Uri hit the Texas power grid in early 2021.

Core Scientific is working with Tenaska Energy Inc. on this project. Tenaska will build the high voltage interconnection and transformer equipment needed to provide the high volume of electricity to the facility. There will be no additional capital expenditures required of the city, Fitch noted. Tenaska will also provide power management services to the project.

Fitch noted Denton adopted a renewable resource plan in 2018 that sets a goal of providing the city with 100% renewable energy. The city has contracted for renewable supplies, but also owns a natural gas plant, the Denton Energy Center, which firms the intermittent production of renewable energy and acts as a cost hedge. Core Scientific has a net carbon-neutral goal that aligns with the city’s plan, and the company has committed to using emissions-free power supplemented by renewable energy credits to power the Denton facility.

“Increased customer concentration introduced by the Core Scientific facility will not diminish the utility’s very strong revenue defensibility assessment. Financial risk to the city is largely mitigated due to the terms of the PPA. The unexpected closure of the facility, should it occur, would not negatively impact the city’s economy or utility rates, since the facility will not be a large employer,” the rating agency said.

Treasury Releases Final Rule For State And Local Fiscal Recovery Funds Program

January 10, 2022

by Paul Ciampoli
APPA News Director
January 10, 2022

The Treasury Department on Jan. 6 issued the final rule for the Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) program, enacted as a part of the American Rescue Plan, which provided $350 billion to state, local, and tribal governments to support their response to and recovery from the COVID-19 pandemic.

The American Public Power Association (APPA) commented on the Interim Final Rule, which was issued in 2021.

APPA praised the decision to allow CSLFRF to be used for utility assistance programs and to allow such assistance to be predicated on the assumption that households or populations experiencing economic harm during the pandemic experienced that harm due to the pandemic, and thus qualify for assistance.

“APPA believes this flexibility is appropriate and will help reduce barriers to relief to those who need it most,” the trade group said.

Utility assistance remains one of the stated eligible uses for CSLFRF, but Treasury said that the final rule further clarifies that CSFLRF recipients “may administer utility assistance or address arrears on behalf of households through direct or bulk payments to utility providers to facilitate utility assistance to multiple consumers at once, so long as the payments offset customer balances and therefore provide assistance to households.”

APPA also asked that utility revenues be allowed to be considered as “lost revenue” for a local recipient of CSLFRF funds. The distinction is significant because CSLFRF funds spent to the extent of “lost revenue” can be spent on any governmental program — a substantial flexibility.

“Treasury has adjusted the definition (of lost revenue) to allow recipients that operate utilities that are part of their own government to choose whether to include revenue from these utilities in their revenue loss calculation. This change responds to comments from recipients indicating that revenue from utilities is used to fund other government services and that utility revenues have declined on aggregate,” Treasury said in the announcement of the final rule.

The final rule is available here.

APPA Launches New Member Webpage On Infrastructure Law Implementation

January 10, 2022

by Paul Ciampoli
APPA News Director
January 10, 2022

Members of the American Public Power Association (APPA) now have access to a webpage dedicated to keeping them up to date on activity and funding opportunities related to implementation of the Infrastructure Investment and Jobs Act (IIJA).

APPA is also encouraging members to use the Federal Register and Grants.Gov to make specific searches for agencies or programs that are of interest, as it cannot guarantee the webpage will be exhaustive of all funding opportunities.

Additionally, APPA said its members should consider signing up for agency-wide or office specific newsletters based on their areas of interest.

APPA’s ILJA webpage is available to members by clicking here.

The ILJA was signed into law by President Joe Biden on Nov. 15, 2021. The law includes $1.2 trillion in funding, including $550 billion in new federal spending not previously authorized, for transportation, energy, and water infrastructure.

The law includes several potential funding opportunities for public power including for electric and hydrogen vehicle fueling infrastructure, grid resiliency infrastructure, smart grid investments, physical and cybersecurity infrastructure, incentives for hydropower production and efficiency infrastructure, energy efficiency and weatherization, and broadband infrastructure.

Grand Coulee Dam Overhaul Project Ensures Another 30 years Of Hydropower In The Northwest

January 10, 2022

by Paul Ciampoli
APPA News Director
January 10, 2022

The U.S. Bureau of Reclamation and the Bonneville Power Administration (BPA) recently announced the completion of the major overhaul of three hydroelectric power generating units inside the Nathaniel “Nat” Washington Power Plant at Grand Coulee Dam.

The project will ensures another 30 years of hydropower delivery in the region.

Located on the Columbia River about 90 miles west of Spokane, Wash., the Grand Coulee Dam is the largest power generating complex in the United States.

The dam can generate more than 6,800 megawatts (MW) and annually supplies more than 20 billion kilowatt hours of electricity to the region.

The project involved complete disassembly of each 805-MW hydroelectric unit, refurbishing each to ensure all of the mechanical and electrical surfaces were restored and returned to like-new condition.

Approximately 6.5 million pounds of steel were removed from each unit once every component down to the turbine runner was fully taken apart. While the units were disassembled, each component was sand blasted, welded, ground, polished, and then repainted before reassembly. Restoring the mechanical and electrical components results in less friction. As a result, the generating units operate with less wear and tear, making them more reliable and efficient.

Grand Coulee Dam provides about one-quarter of the total generation of hydroelectric power for the Federal Columbia River Power System and is one of 31 federal dams that generate more than half of the hydropower in the Northwest.

The Nathaniel “Nat” Washington Power Plant was built between 1967 and 1975 and is the largest of the four power houses. The plant contains six generating units capable of producing more than 4,200 MW, and it contributes to about two-thirds of the total power generated by the dam.

Completed in 1941, Grand Coulee Dam serves as a multipurpose facility, providing water for irrigation, hydroelectric power production, flood control, fish and wildlife conservation, and recreation. The Grand Coulee Power facility is comprised of 33 generators in three power plants, the John W. Keys III Pump-Generating Plant, and three switchyards.

BPA delivers power generated by the federal dams, one nonfederal nuclear plant and several small nonfederal power plants, to more than 140 Northwest electric utilities, serving millions of consumers and businesses in Washington, Oregon, Idaho, western Montana and parts of California, Nevada, Utah, and Wyoming.

Michael Browder Announces Plans To Retire As CEO Of Bristol Tennessee Essential Services

January 9, 2022

by Paul Ciampoli
APPA News Director
January 9, 2022

Michael Browder recently announced that he plans to retire as CEO of Bristol Tennessee Essential Services (BTES) on December 31, 2022.

Browder began his career at BTES in 1972 and has been CEO of the organization since 1977.

Under Browder’s leadership, BTES expanded its product offerings in 2005 to add Internet, telephone, and cable television services and now offers the fastest Internet available in the United States with 10 Gigabits of service available to its customers. 

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Michael Browder (photo courtesy of BTES)

“Many accomplishments and awards have been received during my time at BTES that are directly related to BTES’ key success factors of safety, reliability and financial which include an impeccable safety record, consistently improving system reliability, lowering the rates to one of the lowest in the Tennessee Valley, and secure financials to ensure continued operations for a successful future,” he said.

Public Power Utilities Earn Strong Residential Customer Satisfaction Marks

January 9, 2022

by Paul Ciampoli
APPA News Director
January 9, 2022

Public power utilities earned a number of the top rankings in J.D. Power’s latest Electric Utility Residential Customer Satisfaction Study.

The 2021 Electric Utility Residential Customer Satisfaction Study was based on responses from 100,999 online interviews conducted from January 2021 through November 2021 among residential customers of the 145 largest electric utility brands across the United States, which represent more than 101 million households.

In the South region, the following public power utilities were represented in the J.D. Power rankings:

In the West, among large public power utilities, Arizona’s Salt River Project earned the top spot in terms of rankings, with California’s SMUD ranked second. The Los Angeles Department of Water and Power also earned high marks from residential customers as ranked by J.D. Power.

Meanwhile, for the 14th consecutive year, J.D. Power recognized Washington State’s Clark Public Utilities for ranking highest in residential customer satisfaction among midsize electricity providers in the Western United States.

Other mid-sized public power utilities in the West ranked by J.D. Power were California’s Anaheim Public Utilities, Imperial Irrigation District and Modesto Irrigation District, and in Washington State, Seattle City Light, Tacoma Power and Snohomish County PUD. Colorado Springs Utilities also earned high marks from residential customers.

In the Midwest mid-sized segment, two Nebraska public power utilities – Lincoln Electric System and Omaha Public Power District – and City Utilities of Springfield, Mo., earned high marks from their residential customers.

Along with public power utilities, the study also covers investor-owned utilities and cooperatives.

J.D. Power said that overall electric utility residential customer satisfaction was 748 (on a 1,000-point scale) in 2021, a decrease from a record-high 751 in 2020.

Additional details on the study are available here.