Currents - Energy Industry Insights: V 7, Issue 4, April 2023

Carrie Grundmann, Mark Heath, William Herlihy, Joseph Unger, Derrick Price Williamson, David Yaussy
Spilman Thomas & Battle, PLLC
Contact
LinkedIn
Facebook
X
Send
Embed
Volume 7, Issue 4
Welcome
First, we want to welcome our 2023 Currents editorial team to help kick off this fourth issue of Currents for the year.
Derrick Price Williamson will be our senior editor. Derrick is Co-Chair of the Utility, Energy & Communications Law Group and Member in Charge of our Harrisburg office. His primary areas of practice are energy and public utility law, with a focus on representing large end-users of electricity.
Carrie H. Grundmann will be serving as co-editor. Carrie is Member in our Winston-Salem and Roanoke offices. Her primary area of practice is litigation with an emphasis on public utility and energy law, as well as labor and employment law.
Joseph C. Unger will continue in his role as co-editor. Joe is a Senior Attorney in our Charleston office. His primary areas of practice are corporate, transactional, environmental, and energy law.
We hope you enjoy this issue and, as always, thank you for reading.

● The Cost of "Electrification"

By Derrick Price Williamson

“Electrification” has become a ubiquitous term these days, although depending on who you ask, it might have different meanings. However defined, a critical component of electrification as a policy choice to reduce reliance on fossil fuels is the need to fully evaluate both its practicality and the transparency of its cost impacts, particularly as that relates to lower income and middle class families, as well as small business.

Click here to read the entire article.
“Unusually warm winters and the low cost of alternative sources of energy are also cited as causes for the plant’s shutdown.”
Why this is important: The largest remaining coal-fired electrical generating plant in Pennsylvania will close in June 2023. The Homer City Generating Plant closing will result in the loss of 120 jobs. But, the plant has only been operating at 17 to 25 percent capacity the past three years. Due to its closing, the state’s CO2 emissions will drop by 3.5 million tons. There are five smaller coal-fired plants still in operation in the Keystone State. Nationwide, coal-fired electrical generating plants continue to close at a rapid pace causing some to question future electrical grid reliability in major demand events like winter storms. --- Mark E. Heath
“Virginia Clean Economy Act called for closure of plants by 2028.”
Why this is important: Virginia, like numerous other states in the region, had a particularly active legislative session on the energy regulatory front, with numerous bills coming out of the General Assembly. While the Governor’s office had the option to merely sign these bills into law, the Youngkin administration has returned a number of bills to the General Assembly with proposed amendments. While the article’s title mentions Governor Youngkin’s proposed amendments affecting biomass plants in the state, the article itself mentions numerous other proposed amendments to energy legislation that have been proposed by the Governor’s office. The thrust of many of these proposed amendments is to either expand the definition of what constitutes “renewable energy” under the Virginia Clean Economy Act (“VCEA”) or to relax requirements presently imposed by it. On the biomass front, the article notes that while the Youngkin-proposed amendments (to relax biomass requirements and closure obligations) would benefit/favor the forestry industry, the forestry industry has noted its opposition to these amendments in favor of compromise legislation that was passed by the General Assembly earlier in the session. How these amendments are addressed by the General Assembly will be seen in the coming days. --- Carrie H. Grundmann
“The typical project completed in 2022 spent five years in queue for interconnection approval compared to three years in 2015 and fewer than two years in 2008, the report said.”
Why this is important: There are many renewable energy projects that have applied for permission to connect to various regional electrical grids, but the process for approval has slowed to a crawl. The primary reason is lack of interconnection infrastructure, but another problem is the energy imbalance that large amounts of renewable power create. New intermittent sources can only provide reliable electric power if they are complemented by sufficient base power, from fossil fuels, nuclear or hydro. Unfortunately, coal plants, the largest source of baseload, are closing at an alarming rate. --- David L. Yaussy
“The European gas market – until recently nearly isolated, with prices largely depending on pipeline flow dynamics between Russia and Norway – can now be driven by anything across the world, from an LNG cargo diversion in the US to a river drying up in China and tensions over Taiwan.”
Why this is important: The export of low-cost shale gas in the form of LNG has vastly increased the United States’ impact on both international trade and geopolitical power. Expanding the number of LNG export terminals on both coasts would bring tremendous benefit to our country as well as our allies. It is essential to streamline the permitting process so that new LNG terminals can continue this very positive development. --- William M. Herlihy
“Coal made up less than 17 percent of the power market in the first three months of this year — down a quarter from last year’s 22 percent.”
Why this is important: Nationwide, coal-fired electrical generation dropped to 17 percent in the first three months of 2023 -- the lowest number in recent times. That drop is a five percent decline from 2022 as renewables -- wind, solar and hydro -- increased to 22 percent this year. Renewables and cheap natural gas caused the decline, according to an Institute for Energy Economics and Financial Analysis (“IEEFA”) report. Texas is an example of the changing electrical generation markets. In 2014, coal generated 40 percent of its power. Now it’s 12 percent, and renewables increased from 12 percent to 40 percent in the same time frame. The same changes are occurring in Georgia and Alabama. The coal-fired Bowen plant is operating at 20 percent capacity and a new nuclear plant being built will drop its numbers further. These trends are likely to continue. --- Mark E. Heath
“Hopes to slash emissions using nuclear energy are being dashed by U.S. regulators.”
Why this is important: Nuclear power is entering a new age, turning from huge pressurized systems with complex safety requirements toward small, simple modular systems that have safety features baked into the design. The Nuclear Regulatory Commission hasn’t caught up to the change, proposing the same burdensome rules for the new plants as it does for the huge legacy facilities. The NRC runs the risk of killing this promising source of carbon-free electricity if it insists on expensive controls that are unneeded for the new technology. --- David L. Yaussy
“The ARCH2 project, announced last September, would take advantage of the state’s access to natural gas supplies and existing infrastructure to manufacture blue hydrogen and store the carbon emissions underground.”
Why this is important: The Inflation Reduction Act provides billions for creation of “hydrogen hubs” that will create a cleaner energy system, and states are competing for these federal funds. One of the hubs must be in Appalachia. West Virginia has submitted its application, which features development of blue hydrogen, or hydrogen produced by stripping the carbon molecules from methane and sequestering them underground. There are significant concerns about the feasibility of carbon capture and sequestration, but if it can be done cost-effectively, it would open a potentially huge new market for West Virginia’s natural gas reserves. --- David L. Yaussy
“Supporters say reforms are needed to reduce energy bills and prevent blackouts like those that struck Duke Energy customers last December.”
Why this is important: Duke Energy is the incumbent electric utility for most of North Carolina and large parts of South Carolina. Many states in our footprint (Virginia, West Virginia, Ohio, Maryland, Pennsylvania and Kentucky, among others) participate in a regional energy market known as PJM. By contrast, North and South Carolina, which include the Duke Energy service territories, do not participate in a regional market like PJM. The article notes that a study commissioned by South Carolina indicated significant customer savings were that state to join a regional market. Indeed, a third-party study conducted for Duke and other utilities in the Southeast indicated significant customer savings if those states were to join together into a regional-type energy-trading market. Now, a bill before North Carolina legislators proposes a similar study. Unfortunately, Duke Energy – that has long opposed North and South Carolina joining a regional organization – has already signaled its opposition to even studying the idea. HB 503, the Storm Resiliency Study Act, is now pending before the House Rules Committee, and it is unclear whether it will move forward for consideration. --- Carrie H. Grundmann
“The report found that the increase in wind generation, which added 17% in 2022, could have powered almost all of the U.K.”
Why this is important: Wind and solar power continues to grow, but with more than a decade of governmental encouragement and subsidies, their combined generation has not exceeded 12 percent of the world’s electricity supply. Fossil fuels and nuclear remain necessary to backstop renewables, and will likewise continue to expand, until multi-day batteries can be installed that will allow utilities to retain excess power. --- David L. Yaussy
● EIA Energy Statistics
Send Print Report

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations. Attorney Advertising.

© Spilman Thomas & Battle, PLLC

Written by:

Spilman Thomas & Battle, PLLC
Spilman Thomas & Battle, PLLC
Contact
more
less

PUBLISH YOUR CONTENT ON JD SUPRA NOW

  • Increased visibility
  • Actionable analytics
  • Ongoing guidance

Spilman Thomas & Battle, PLLC on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign Up Log in
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide