ENERGY NEWSLETTER
January 2013
IIEG NEWS:
Mark your calendars. The IIEG Spring Conference is April 9, 2013.
IOWA UTILITIES BOARD:
Interstate Gas Case - RPU-2012-0002.
On November 26, 2012, the IUB issued an order finding the overall proposed settlement proposed by the parties to be reasonable.The approved settlement provides an overall annual increase of $10.5 million to be applied as a uniform percentage increase of 12.95 percent across customer classes based on class non-fuel and non-EECR rate revenues of $82,429,442.90.The overall revenue increase is 3.99 percent based upon the annual revenue increase of $10.5 million and the total annual revenue requirement of $263,047,271.79, which includes the cost of gas.
The IUB also approved a tax benefit rider (TBR)as a method of returning the tax savings to customers. Customers will see the rate increase approved in this proceeding and the TBR credit on their bills and the resulting total amount for customer charges will be less than the customer charge before this proceeding was initiated. The TBR credit will most likely continue for three years, so the increased customer charge will be offset by the tax savings credit until four years after the final rates from this proceeding go into effect. After the TBR is ended, customer charges will be at the level approved, if nothing else changes.
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Interstate Energy Efficiency Plan Docketed as EEP-2012-0001
On December 26, 2012, the IUB issued an order docketing Interstate's proposed energy efficiency plan and budget. The menu of energy efficiency programs is similar to the current plan. However, some programs would be eliminated and some new ones implemented. The total budget for the five- year plan (2014 through 2018) is $399.3 million; annual spending would increase from $76.9 million in 2014 to $81.9 million in 2018. The proposed plan includes average annual electric savings targets ranging from 1.12 to 1.16 percent of retail sales forecast and natural gas savings targets of 0.9 percent of retail sales forecast.
Petitions to intervene are due to be filed by February 28. 2013. So far, the Environmental Law and Policy Center and associated organizations have been granted intervention in the case. A hearing is scheduled for June 17. 2013.
Note: MidAmerican is ordered to file its proposed energy efficiency plan by February 1, 2013.
Rulemaking - Automatic Adjustment Clause:
The hearing for public comments in the proposed rulemaking addressing the use of automatic adjustments in setting electric rates was held in October. Some parties have filed supplemental comments. There has been participation from industrial customers in this proceeding. The IUB has not announced its decision whether to adopt the rule as proposed by Interstate Power Company.
Informational Meeting re: Double Leverage:
Jeff Kaman of Deere & Company attended a workshop on behalf of IIEGon Nov 27th to discuss “Double Leverage” adjustments in setting utility rates. There were five panel participants including Consumer Advocate Mark Schuling and Sheila Parker, Jeff Kaman for IIEG, American Water’s treasurer (parent of Iowa American Water), Barclays Capital Dan Ford, and Roger Morin – PhD economist and frequent witness all over North America (sponsored by the Iowa Utility Association).Jeff did not present an IIEG position but talked about the issue in general, commenting that it may be an issue in a contested proceeding.
NATIONAL AND REGIONAL ISSUES OF INTEREST:
California's Cap-and-Trade Experiment
California's Air Resources Board (ARB) held the country's first Cap-and-Trade greenhouse gas allowance auction last month and according to ARB and the media it was a resounding success. All of the 2013 allowances were sold as well as a good percentage of 2015 allowances. The average price was about as expected too.
The California legislature approved cap-and-trade in 2006 and thestate held its first auction of emissions permits earlier this year. The legislature's efforts to combat climate change were reinforced by the electorate in 2010 when the California voters overwhelmingly rejected a proposition that would have suspended all of the 2006 bill's provisions until the state's unemployment rate dropped under 5.5 percent for a full year. The state' s Chamber of Commerce filed a lawsuit trying to stop the trade.
California's cap-and-trade program puts a cap on the level of emissions a given business is allowed release. If a firm wants to go over that limit, it has to acquire pollution permits. These permits can be traded on the open market, giving companies an incentive to implement procedures reducing emissions so they can then sell their permits and raise revenue.
Note: It will be interesting to watch California and see whether other states want to attempt to implement a similar system.
Lisa Jackson to Leave EPA
Lisa Jackson, the sometimes controversial leader of the Environmental Protection Agency, announced her resignation to be effective after the inauguration. A nomination for her replacement has not been announced.
Industrial Energy Consumers of America Urges FERC
Expressing concern about looming gas deliverability problems and diminished electric reliability, representatives of the US manufacturing sector called on the Federal Energy Regulatory Commission to initiate an in-depth analysis of pipeline capacity and other infrastructure issues. In a December 20 letter to Chairman Jon Wellinghoff, the Industrial Energy Consumers of America pointed to "growing evidence of potential electric reliability and natural gas deliverability issues that stem from coal-fired electric generation unit retirements and natural gas pipeline capacity sufficiency at peak demand." And while the North American Electric Reliability Council is studying electric reliability issues, "we do not see action" by FERC to take a similar look at the ability of the existing pipeline network to handle growing and fluctuating demand, said the group. "This gap in oversight could undermine reliability of both the electric and natural gas markets," it said, adding that "both of these markets could benefit from FERC guidance on how to accelerate build-out of pipeline infrastructure to meet the accelerating demand from the electric and industrial sectors."
Wind Energy
It has been reported that wind-turbine installations are poised to exceed natural gas-fueled power plants in the U.S. for the first time this year as developers race to complete projects before a renewable energy tax credit expires.
New wind capacity reached 6,519 megawatts by Nov. 30, beating the 6,335 megawatts of gas additions and more than double those of coal, according to data from Ventyx Inc.
The company plans to release final tallies in January. “Wind will very likely beat gas, but it may be close,” said Amy Grace, who leads North American wind industry analysis for Bloomberg New Energy Finance in New York. “It’s very likely that we get over 8 gigawatts for 2012.”
Congress has yet to renew the production tax credit, which provides incentives for wind farms completed before Dec. 31. A surge of wind-farm connections in November and December may double the amount of wind capacity added this year to as much as 12 gigawatts, outpacing the additional gas turbines, according to New Energy Finance.
The recent numbers show that Iowa is second only to South Dakota in the portion of its energy (nearly 20 percent) coming from wind. The Iowa Wind Energy Association calculates the industry provides more than 6,000 jobs for Iowans.
Note:The package of tax and spending measures approved by Congress yesterday provides a one-year extension of the wind production tax credit, which an industry official described as a welcome development for Iowa, a leader in wind energy. The bill extends the wind energy tax credit until the end of 2013, making projects that begin construction this year eligible.
Biodiesel Win
Biodiesel producers in Iowa and elsewhere won a big victory yesterday when the fiscal cliff compromise passed by congress included reinstatement of the $1 per gallon biodiesel blenders tax credit sought by the industry.
The tax credit, combined with an increase in the federal mandate for biodiesel use from 1 billion gallons in 2012 to 1.28 billion gallons this year, completes the wish list for the biodiesel industry that has 13 refineries in Iowa.
IIEG INVOICE
Invoices for the 2013 calendar year have been sent to members by email. Please let us know if you have not received yours or if you need a hard copy sent to your company.
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