Event: “Impacts of Ozone Regulations on Jobs In Our Community”

You may be interested in attending this event hosted by African American Chamber of Commerce of Western Pennsylvania,  National Black Chamber of Commerce, and U.S. Chamber of Commerce. The event will take place at the Omni William Penn Hotel in Pittsburgh, PA on Wednesday, September 2, 2015 from 11:30 am – 2:00 pm. A complimentary lunch will be served. You can register here.

In March 2008, the EPA lowered the 8-hour primary NAAQS for ozone to its current level of 75 parts per billion (ppb).  In November 2014, the EPA proposed lowering the ozone standard to a range between 65 to 70 ppb.  By court order, the Agency must finalize the standard by October 1, 2015.  There will be major impacts .  A panel of experts will discuss what’s in the proposed rule and some of the anticipated impacts.

PJM gets what they were looking for in electricity market changes

You may recall the Polar Vortex of 2014 that brought extremely frigid temperatures and a very tight energy supply to our region that winter. Combine that with another colder-than-average winter in 2015 and a major trend from coal to natural gas fired generation, and the folks who are responsible for electric grid reliability started talking about making some pretty big changes to the wholesale electricity markets.

For our region, that reliability-focused organization is PJM Interconnection. PJM has been an independent organization managing electricity generation dispatch and competitive markets since 1997.  Headquartered in Valley Forge,  PA, PJM’s territory includes all or part of 13 states in along the east coast and mid-Atlantic region, plus the District of Columbia.

To get the lowest cost electricity possible to meet demand and ensure resources are available in the future, PJM basically holds a reverse auction where electricity generators submit their lowest bid to supply electricity in different amounts, locations, and situations.  One of the main things PJM proposed to hedge against another close call was by adding a new market offering to the mix called Capacity Performance resources.  This option put more requirements on generators designed to guarantee their availability in times of need, but offered a financial premium for them to do do.  FERC approved these changes saying that generators were “not being properly incented to make the investments required to perform reliably, including during extreme weather conditions.”

The results of the first Capacity Performance auction held earlier this week are in, with aclearing price of $164.77/megawatt-day for most of the PJM footprint, with around 20% of a “reserve margin” procured (or the buffer to ensure demand doesn’t outstrip supply).  The RTO clearing price in last year’s auction was $120/MW-day.

PJM capacity auction results for the 2018-2019 delivery year

The higher clearing price means more money for traditional generators who can guarantee their ability to standby until needed.  But, it does mean that these increased costs will be passed along ultimately to consumers.  As Andy Ott, PJM’s Executive Vice President, explains it:  “The stronger requirements for Capacity Performance represent an insurance policy for consumers against capacity shortages and dramatic price spikes.  The auction prices are in line with the costs of securing this dependable capacity.”

Read more:

PR Newswire:  PJM’s Capacity Auction Draws Landmark Commitment From Electricity Resources To Perform Whenever Needed

RTO Insider:  PJM Capacity Prices Up 37% to $165/MW-day

Energy Manager Today:  Prices and Reliability Up, with PJM’s First Capacity Performance Auction

RTO Insider:  FERC Sides with PJM on Capacity Performance Transition Auctions

What we’re reading this week

Crains: Exelon’s case for how poorly it’s nukes are doing

Exelon provides some financial numbers outlining why the economics aren’t looking good for the long-term viability of several of their nuclear plants. One of the reasons? Transmission line congestion costs.

StateImpact Pennsylvania: Penn State wins grant to develop to develop solar technology

Researchers at Penn State University have been awarded a $2.9 million grant to advance solar technology. The project is part of a $24 million project to improve the efficiency of concentrated photovoltaic cells and overcome market barriers to solar deployment.

Forbes: Can nuclear generation back-up wind generation economically?

A new study examines whether new designs in small modular nuclear reactors are nimble enough to compensate for varying wind generation output

Ben Franklin Center releases study of drilling wastewater treatment and disposal

The Ben Franklin Shale Gas Innovation & Commercialization Center released an update of its 2012 report on shale gas drilling wastewater treatment and disposal, finding the industry is recycling 91 percent of its wastewater, 1.1 percent is  discharged to surface water and 7.9 percent is being disposed by underground injection wells. The report credits members of the Water Resources Advisory Committee and DEP staff who crafted new regulations in 2009 to promote reuse.





New Federal rules for oil and gas sector; Additional PA rules to follow

As part of the Obama Administration’s Climate Action Plan, EPA has released proposed rules targeting methane reductions on a range of new sources in the oil and gas sector. The proposal expands the requirements set in a 2012 rule to now include hydraulically fractured wells, compressor stations and other equipment. And, while the 2012 rules regulated volatile organic compound (VOC) emissions, the new proposal requires sources to control methane emissions.

Oil and gas industry groups and some lawmakers immediately attacked the proposal citing that the industry has voluntarily made substantial cuts in methane emissions making the rule unnecessary. Environmental groups claim the rule does not go far enough to curb emissions.

Whether EPA will follow this proposal on new sources with a rule targeting existing sources, as was the case for power plants, remains unclear. While EPA appears to be focused on new sources for now, when asked if EPA will pursue an existing source standard, acting air chief Janet McCabe said that “we’re not ruling anything out.”

EPA will accept comments for 60 days from the day the proposal is published in the Federal Registry.

On a related note, Pennsylvania DEP Secretary John Quigley hinted that a new package of rules for the industry is currently being developed. More information on the scope of those rules is expected later this year.




What we’re reading this week

RTO Insider:  PJM Concerned About Lead Time on Transmission Needed for Wind
The grid operator for our region released a report that has some specific risks they think will come as a result of states’ compliance with the Clean Power Plan.

Wall Street Journal:  Energy Slowdown Hits One Town Hard
Located in Greene County, just an hour south of Pittsburgh’s downtown, the boom and bust cycles of natural gas extraction are making it hard on Waynesburg businesses and entrepreneurs.

Mashable:  The UK is testing out roads that charge electric cars as they go
An interesting pilot of new technology that would have to do battle with improved battery life to be valuable.

Washington Post:  Opinion – We need a miracle on climate change 
A reminder of the challenges  inherent to making any long-term policy decisions.

San Jose Mercury News:  Three years after Prop. 39, California lawmakers want to know where are the ‘clean’ jobs
Only 1,700 jobs were created in three years by the tax that was supposed to generate 11,000 every year.  Critics also voice their concern that most of the money appears to have gone to consultants and energy auditors.

Pittsburgh Post-Gazette: Pennsylvania regulators say more oil and gas rules are on the horizon.
While the current regulatory proposal is still being reviewed, DEP hints at a new package of rules for the oil and gas sector.