by Julia Pyper
June 30, 2017

It’s officially summer, but that hasn’t slowed the pace of state-level policymaking. At least not yet.

This week’s State Bulletin features a rundown of clean energy policy developments in Connecticut, Ohio, Montana, North Carolina, New Hampshire, Illinois, Oregon, Massachusetts and New York. Read on for more.

Court upholds Connecticut’s renewable portfolio standard 

In a June 28 ruling, a three-judge panel of the U.S. Court of Appeals for the Second Circuit unanimously affirmed the legality of Connecticut’s renewable portfolio standard (RPS) and related clean energy initiatives. The lawsuit Allco Finance Limited v. Klee determined that Connecticut’s policies do not violate the Federal Power Act or the Commerce Clause of the U.S. Constitution.

The ruling is good news for state-level clean energy leaders. "The decision should boost states’ confidence that they can exercise climate and clean energy leadership at a time when the Trump administration wants to move backward,” the Natural Resources Defense Council (NRDC) wrote in a blog post published Friday.

The case was brought by Allco Financial, a New York-based solar developer that opposed Connecticut’s process for selecting projects that qualify under the state’s RPS. The company claimed that federal law forbids Connecticut from directing utilities to enter into long-term contracts with generators outside of the Public Utility Regulatory Policies Act (PURPA). That would mean Connecticut could only solicit proposals from small generation facilities that meet PURPA’s criteria for “Qualifying Facilities," (which Allco’s do) or not solicit any proposals at all. Allco argued the state’s rules were too burdensome, after failing to win projects in 2013 and 2015. 

But the District Court disagreed, as Courthouse News reported this week. The judges determined that utilities have enough flexibility to select projects under the RPS, and that the law does not conflict with an existing national market. The renewable energy target requires state utilities either to produce renewable energy themselves or to buy renewable-energy credits from renewable-energy producers located in the Northeast regional transmission grid or adjacent grid areas.

“Connecticut’s RPS program serves its legitimate interest in promoting increased production of renewable power generation in the region, thereby protecting its citizens’ health, safety, and reliable access to power,” Judge Guido Calabresi wrote for the court on Wednesday. “These means and ends are well within the scope of what Congress and [the Federal Energy Regulatory Commission] have traditionally allowed the states to do in the realm of energy regulation.”

NRDC notes this is the first case to interpret the Supreme Court’s landmark 2016 decision Hughes v. Talen Energy Marketing, LLC, which determined that a plan to encourage a natural gas plant in Maryland impinged upon the Federal Energy Regulatory Commission’s authority. The Second Circuit clarified that the Hughes ruling applies only to a narrow class of state policies (like Maryland’s) and did not apply in the Connecticut instance. The Allco case is also one of the few court decisions to assess the legality of a state RPS under the “dormant” Commerce Clause of the Constitution, which limits the ability of states to favor local commerce over out-of-state competition.

NRDC, the Environmental Defense Fund, Sierra Club, Conservation Law Foundation, and Acadia Center collectively filed an amicus brief in the case last year, supporting the state of Connecticut.

Ohio fails to approve wind policy “fix”

The Ohio State Senate took steps last week to reform the state’s wind turbines setback policy as a part of the proposed biennial budget (HB 49). According to the American Wind Energy Association (AWEA), the change would have “fixed” the state’s setback policy, which the group says is “among the most restrictive in the nation.” The House of Representatives, however, removed that fix this week.

“It’s hard to understand why the Ohio House under the leadership of Speaker Rosenberger would stand in the way of $4.2 billion of economic development,” said Andrew Gohn, Eastern region policy director for AWEA. “House lawmakers turned their backs on Ohio’s businesses and rural communities with this decision.”

The setback fix was supported by the Ohio Chamber of Commerce, Columbus Partnership, the Columbus and Toledo Chambers of Commerce, Amazon and several other Fortune 500 companies.

Hot mic catches an troubling solar conversation in Montana

The Montana Public Service Commission recently voted to significantly cut the guaranteed rates and contracts offered to solar projects 3 megawatts and under. The new rules cut contract terms for small qualifying solar projects under the Public Utility Regulatory Policies Act (PURPA) to five years, with an option to negotiate for five more. According to Vote Solar, the decision also under-calculated Montana’s solar potential for meeting peak energy needs (capacity value) at 6 percent, which reduces how much solar developers are paid for the energy the produce.

Previously, small solar projects were offered a 25-year contract and payment for power at roughly double the spot market price.

Renewable energy advocates complained that the changes would hurt the state’s solar market, which recently started to take off now that solar prices have come down. A conversation caught on a hot mic last week reveals that the new terms might have been intentionally set by the PSC to discourage solar development.

In a video shared by The Billings Gazette, Public Service Commissioner Bob Lake acknowledges that the rate cuts and contracts offered to small renewable energy projects are likely to kill future development. In the recording, Lake speaks to PSC Rate Analyst Neil Templeton, who pointed out that the new terms are unworkable for qualifying facilities.

“Just dropping the rate that much probably took care of the whole thing,” Templeton said, and then went on to discuss the five-year versus 10-year contract term option.

“Well,” Lake replied, “the 10-year might do it if the price doesn’t. And at this low price, I can’t imagine anyone getting into it.”

With the release of the recording, Vote Solar is now calling on the commission to reconsider its order.

“The commission’s disappointing decision and the recorded conversation are a reminder that solar and clean energy will no longer have access to a level playing field in Montana,” said Ed Smeloff, managing regulatory director at Vote Solar. “The clear language of PURPA requires states to allow the development of local clean energy when solar and other renewables are competitive with polluting alternatives. Now that solar is cheaper than ever, Montana commissioners should welcome solar businesses and their benefits to ratepayers, the economy and the environment. There is still time for the Montana Commission to correct its mistake.”

North Carolina passes solar reform bill with wind moratorium

Early Friday morning, the last day of North Carolina’s legislative session, lawmakers passed a bill (HB 589) that overhauls the state’s solar rules. It also includes an 18-month moratorium on wind energy development.

Senate Majority Leader Harry Brown introduced the moratorium, citing concerns that wind projects could interfere with military flight training at the Seymour Johnson Air Force Base and Marine Corps Air Station Cherry Point. The Department of Defense has repeatedly said that currently proposed wind projects in North Carolina would not interfere with the flight path. The new law could affect the Timbermill Wind and Alligator River wind projects that are already under development.

"People don't realize -- the generals will tell me, off the record -- how important this is. They won't say it in public. It's the biggest threat to their bases of anything out there at this point," Brown told WRAL News early Friday.

Changes to North Carolina’s solar policies include establishing a competitive bidding process for new solar, new guidelines for a community solar program and opening up the state to third-party solar leasing. The bill is meant to be a compromise, but it failed to satisfy some pro-solar groups.

"Changes from the Senate limit the ability of the state to procure renewable energy in the future through competitive bidding," the group Clean Air Carolina wrote in a blog post. "This version also undervalues solar power in many ways that could harm the solar industry in the state."

Gov. Roy Cooper endorsed the solar reforms in the bill, but it’s unclear if he’ll support the new version with the wind moratorium.

New Hampshire approves new net metering tariffs

On June 23, the New Hampshire Public Utilities Commission approved new net metering rates, bringing an end to a several-year-long dispute.

The PUC order lifts the 100-megawatt limit on net metered systems that was put in place last year. It stipulates all existing net metered systems are grandfathered in on their current rates through 2040. Going forward, residential systems will be credited monthly at 100 percent of retail energy and transmission charges, but receive only 25 percent of the distribution charge. They will also receive cash credits on their electric bills instead of credits per kilowatt-hour.

The new rates aren’t likely to last forever, however. The decision also requires Eversource to conduct a study on the value of distributed generation over the next 12 months. The study is to focus on solar and small hydro, using a 10- to 15-year framework for the analysis. Grandfathering applies to customers who already have solar or who are in the queue while the study takes place.

"Following completion of the DER valuation study, and with the availability of additional customer load and system data, the Commission will open a new proceeding," the order determined.

Some of the stakeholders involved also wanted the PUC to approve a more holistic grid study, but that was not included in the final decision.

The New Hampshire net metering decision is the result of positive collaboration and compromise. The solar industry and utility initially proposed more extreme solutions that would keep the credits higher or make them lower. In general, however, the two sides agreed to lower the distribution credit, revise how the credits are netted and agreed on establishing time-of-use rate pilots.

One potential problem is that the decision failed to adequately address community solar for low- and moderate-income customers, according to the state-appointed consumer advocate for utility issues, attorney Donald Kreis.

“We believe it is critical to provide meaningful opportunities for all Granite Staters to take part in distributed generation, even if they lack the financial resources or live in the shade or rent their premises,” he said, the New Hampshire Union Leader reports. “We will consider a motion for rehearing to address this issue.”

Illinois acts on efficiency and PACE

ComEd announced it filed with the Illinois Commerce Commission on Friday for a new energy efficiency program that will provide $350 million in funding per year for each of the next four years. The new funding is a key provision of the Future Energy Jobs Act (FEJA), passed by the Illinois General Assembly and signed into law by Governor Rauner last year. FEJA officially went into effect this month.

According to ComEd, the new program will provide “significant funding to grow existing programs for residential and business customers, such as product rebates, energy assessments, weatherization offerings and retrofitting initiatives. There also will be significant funding for low-income energy efficiency programs and research and development of new and innovative products and services.”

“Illinois already enjoys some of the lowest electricity bills in the Midwest because of energy efficiency, and the Future Energy Jobs Act expands on that, establishing one of the nation’s most ambitious efficiency programs,” said Dave Kolata, executive director of the Citizens Utility Board. Residential customers will enjoy at least $4 billion in lower electric bills over the lifetime of the law, which also includes important safeguards to cap any cost impact on consumers, he added.

Earlier in June, Illinois legislators passed a bill (HB 2831) that would create a property-assessed clean energy (PACE) program in Illinois, allowing property owners to finance or refinance one or more energy projects. The bill was sent to Gov. Rauner on June 15, and he has 60 calendar days to sign or veto it. If he does nothing, HB 2831 will automatically become law after the 60-day period.

Oregon advances community solar program

The Public Utility Commission of Oregon (PUC) has adopted new community solar rules that could enable more than 150 megawatts (AC) of community solar projects statewide, or enough to serve around 22,000 households. All electricity customers are eligible to participate -- including homeowners, renters, businesses, schools and local governments -- and at least 10 percent of the program will be reserved for low-income households. But the new rules, prompted by Senate Bill 1574, do not give developers a green light.

Solar industry leaders called the new rules a “significant step,” but cautioned that the PUC still has work to do before developers can begin constructing projects and signing up customers to participate. Most notably, the PUC did not finalize the bill credit that customers will receive for participating in the community solar projects. The industry has been urging the PUC to establish an interim bill credit by the end of the year, so that the first round of community solar projects can be built.

“We are excited to see community solar move forward in Oregon,” said Jeff Cramer, executive director of the Coalition for Community Solar Access. “Our member companies are looking forward to investing in clean energy infrastructure for the state and helping meet consumer demand for solar. Following on today’s order, we urge the PUC to finalize key details of the program as soon as possible to ensure equitable access to solar for all Oregonians, whether through solar panels on their roof or in their community.”

Also in Oregon, Governor Brown signed HB 2132 into law on June 14, which adds energy storage and smart electric vehicle charging stations to the list of improvements eligible for PACE financing.

Massachusetts passes a 200-megawatt-hour storage target

On Friday, the Massachusetts Department of Energy Resources (DOER) unveiled the state’s energy storage target amount. And the magic number is: 200 megawatt-hours by 2020, which equates to around 80-150 megawatts.

As GTM’s Julian Spector reported: “That target comes with additional sweeteners like $10 million in additional funding for demonstration projects and a pledge to investigate eligibility for storage systems under the state Alternative Portfolio Standard. And, depending on how this first round goes, the DOER may add another target after 2020.”

The target stems from a law passed last summer. Depending on how the roll-out goes, policymakers could decide to boost the target, rather than ending the initiative in 2020. The energy storage industry rallied behind a 600-megawatt target (note the difference in units from the announced amount). The 600-megawatt number was proposed in a report released by Massachusetts in September.

Energy storage stakeholders said they’re working to make the Massachusetts initiative more robust by creating new programs and mechanisms to help drive a stronger target.

"The decision by DOER to set a soft energy storage target of 200 megawatt-hours is a moderate first step in providing long-term market surety,” said Chris Rauscher, director of public policy at Sunrun. “We look forward to working with legislators to expand the potential for storage by encouraging private investment in Massachusetts through programs like the Alternative Energy Portfolio Standard."

New York legislature passes an energy storage bill

The New York legislature passed a bill this week authorizing the Public Service Commission to set an energy storage target for 2030 -- the same year the state plans to achieve a 50 percent renewable electricity mix. The PSC must choose the goal by the start of 2018. If the measure is signed into law, New York will become the fourth state to pass an energy storage target.