Category Archives: Ratemaking

Storage Puts Utilities
 In A Big Bind
 On Demand Charges

Electric utility executives already fretting about slow/no growth in their service territories have another item to add to their growing list of worries: the prospect that many of their commercial customers could begin installing behind-the-meter storage to lower their demand charges.

A recent white paper from DOE’s National Renewable Energy Laboratory and the Clean Energy Group, a nonprofit advocacy organization, shows that it could be economic for almost 28 percent of commercial customers across the country to install batteries at their business sites to cut their electricity consumption during specific periods of the day, thereby reducing their exposure to utility-imposed demand charges. This would amount to a one-two punch for utilities: electricity sales would drop if the batteries were linked with solar and the amount of revenue collected from these charges would fall, not a pretty picture for the utility industry.

Continue reading Storage Puts Utilities
 In A Big Bind
 On Demand Charges

Do You Hear That?
 It’s The Fat Lady Singing;
 Nuclear Revival Ends
 Almost Before It Starts

Five years ago almost to the day (Feb. 9, 2012, actually), the Nuclear Regulatory Commission voted 4-1 to issue a construction and operating license to Southern Company for the 2,234 megawatt Vogtle 3&4 project—the first of the new generation of reactors that was touted as the beginning of the industry’s long climb back from 30 years of dormancy.

At the time, Marvin Fertel, then president and CEO of the Nuclear Energy Institute, the industry’s trade association, sounded almost euphoric: “This is a historic day. [The NRC decision] sounds a clarion call to the world that the United States recognizes the importance of expanding nuclear energy….” Fertel’s optimism was hardly unique: A year earlier, Jim Miller, CEO of Southern Nuclear, the company’s operating subsidiary, told Scientific American: “The nuclear revival is under way in Georgia.”

My, how much has changed in just five years. Today, we are waiting for the other shoe to drop in the Westinghouse-Toshiba fiasco, which is expected later this month. When that happens it will serve as the end point of the revival that never really took place—five years from start to finish, not quite the long-running blockbuster the industry had hoped for.

Continue reading Do You Hear That?
 It’s The Fat Lady Singing;
 Nuclear Revival Ends
 Almost Before It Starts

Dominion, SCE
 A Continent Apart
 On Distributed Energy

Dominion’s 2016 integrated resource plan is on the docket at Virginia’s State Corporation Commission this week: The hearings would be a perfect time to explore the utility’s plan for addressing the massive changes sweeping across the electricity industry, but it’s not going to happen. Instead, Dominion will defend a document seemingly developed in a time warp, when there were no options other than central station, utility-generated power and the term distributed energy resources was still a twinkle in Amory Lovins’ eye.

Here’s all you really need to know: In the Richmond, Va.-based company’s 307-page IRP (which can be found here), the term distributed energy resources only shows up once, on page 112, when the company references the federal Department of Energy’s definition of a microgrid: “…a group of interconnected loads and distributed energy resources within clearly defined electrical boundaries that acts as a single controllable entity with respect to the grid…”

Now, to be fair to Dominion, the utility does talk about distributed generation, but generally in terms designed to underscore its potential risks while downplaying any possible benefits. Its discussion of future energy resources, for example, which begins on page 88, includes a number of standard beefs about renewable resources—they aren’t dispatchable, they are intermittent and they add uncertainty to system operations. The topper, though, appears on pages 95-96 when the company talks about distributed photovoltaics: “While the grid may not be adversely impacted by the small degree of variability resulting from a few distributed PV systems, larger levels of penetration across the network or high concentrations of PV in a small geographic area may make it difficult to maintain frequency and voltage within acceptable bands. On a multi-state level, it is possible that the resulting sudden power loss from disconnection of distributed PV generation could be sufficient to destabilize the system frequency of the entire Eastern Interconnection.” [Emphasis added]

Continue reading Dominion, SCE
 A Continent Apart
 On Distributed Energy

Time For A Reality Check:
 More Delays Are Coming
 For Georgia Power’s
 New Vogtle Reactors

Georgia Power executives certainly won’t say it and Georgia’s utility regulators certainly won’t acknowledge it, but the reality is there are going to be additional delays at Vogtle 3&4—the already delayed and over budget new nuclear project being built by Westinghouse for the Southern Company subsidiary and a consortium of Georgia municipal utilities south of Augusta.

In a process that resembles a Kabuki dance, every six months Georgia Power is required to file a construction monitoring report with the Georgia Public Service Commission detailing its progress and justifying its expenditures in the last reporting period. (Georgia Power filed its 14th such report, covering the six months from June-December of 2015, in February 2016; it is now pending before the PSC.) Intervenors get to comment during this process, but once that is done, like clockwork, the commission signs off on the report, the utility gets to charge ratepayers for the approved expenses and the whole process starts anew. However, when you look closely it is clear that all is not well with the long-running Vogtle production.

In particular, it is worth taking a long look at the testimony presented by Dr. William Jacobs and Steven Roetger, who represent the Georgia PSC’s public interest advocacy staff in overseeing construction activities at Vogtle. Jacobs is the project’s independent construction monitor and has raised questions about the plant’s construction schedule virtually since the first dirt was turned (see this story). Roetger is the leader of the staff’s oversight team and has been involved with the project since the beginning. We will get into the details of their testimony below, but their conclusion is striking:

“We conclude that the company has not demonstrated to staff that the current CODs [commercial operation dates] have a reasonable chance of being met.  It is our opinion that there exists a strong likelihood of further delayed operation dates for both units.”

Continue reading Time For A Reality Check:
 More Delays Are Coming
 For Georgia Power’s
 New Vogtle Reactors

What Is Prudent?
 Red Flags Clearly Ignored
 In Vogtle 3&4 Project

Georgia Power is in the midst of a prudence review of its spending at the Vogtle 3 and 4 nuclear project—a review that undoubtedly will be lengthy, comprehensive, and mind-numbingly dull, turning on such issues as whether given decisions were “reasonable given the facts and circumstances which were known or reasonably should have been known at the time the decision was made.”1The real question though isn’t whether Georgia Power has spent customers’ money (and believe you me it is customers, not the utility, that are paying for this long-delayed, much over-budget project) prudently, but where the hell the adults where when the decision was made to go ahead with construction in the first place.

A close review of Georgia Power’s own documents (the filing can be found here) in the case shows two things: First, there were red flags aplenty when someone, anyone in the decisionmaking process would have been justified in standing up and saying, ‘Hey, wait a minute, what are we thinking?” Second, executives at Georgia Power apparently are color-blind and can’t see the color red, and continue to insist that everything—and I mean everything—they have done during the past decade to build the two new Vogtle units has been appropriate. For example, writing in the introduction to the company’s 885-page filing to the public service commission, Paul Bowers, Georgia Power’s chairman, president and CEO, offered up this classic: “Every dollar, and every day, that has been invested has been necessary to complete these new units safely and correctly. Our reports will establish that the new units could not have been built for less money or in less time than it has taken.” That may be, but that kind of logic can justify almost any expenditure. If the utility had paid attention to the red flags hanging everywhere it might have more accurately estimated the project’s cost and required construction time in the first place, which in turn might have led to a different decision by the commission.

The problems with the project go back to the very beginning. For starters, what were Georgia Power and Westinghouse executives thinking in April 2008 when they signed an engineering procurement and construction (EPC) contract for the two new nuclear units that was essentially a fixed price affair—even though detailed design drawings for the reactor’s construction were still years from completion, meaning, for the clear-eyed, that the contract price was little more than an estimate scribbled on the back of a cocktail napkin.

Continue reading What Is Prudent?
 Red Flags Clearly Ignored
 In Vogtle 3&4 Project