Montana Energy News Roundup

During the last week, several significant energy-related events that peaked my interest occurred. Here’s a brief summary of those that I think are worth noting:

–          Northwestern Energy (NWE) formally requested a withdrawal of the Mountain States Transmission Intertie (MSTI) Right-of-Way application from the U.S. Bureau of Land Management. NWE submitted the request for right-of-way over federal lands in 2007; NWE also submitted a MSTI-related application to the Montana Department of Environmental Quality (DEQ) for a Certificate of Compliance under the Montana Major Facility Siting Act (MFSA) in 2008. As proposed by NWE, the MSTI project consisted of a 500 kV transmission line and a 50+ acre substation that would traverse 400 miles of land in Montana and Idaho. The project met intense public opposition (under full disclosure, I was part of the vocal opposition to MSTI) because of several factors including project need, project impact on rate payers, project impact on land owners, and an unnecessary additional conduit for fossil fuel energy. Although the MSTI MFSA application still stands at Montana DEQ (we are told that there is no mechanism to withdraw a MFSA application), we consider the MSTI project dead. As John Vincent, a former Montana Public Service Commissioner said in reference to NWE’s recent request for the right-of-way application withdrawal:

Finally, we can now say “We told you so” on MSTI. We can go back fully 4 years to find in our records any number of findings and statements proclaiming the lack of need for and the non-viability of the MSTI project. We knew it years before NWE did, or at least before they were willing to admit they had made a major miscalculation and mistake.

Read the NWE request letter for the right-of- way application withdrawal here: MSTI BLM NWE ROW Application Withdrawal January 6 2014

Read more on MSTI and citizen concerns here: CCM website

–          The Northern Plains Resource Council and Carbon County Resource Council (CCRC) are challenging in court a decision by the Montana Board of Oil and Gas Conservation to prevent the public from testifying on a proposed oil well permit for the Belfry, Montana, (the Beartooth Front) area last month. A lawsuit was filed on January 8, 2014 with the Montana 13th District Court in Yellowstone County (Cause No. DV-14-0027 Dept. 3). Read more on this in: NPRC lawsuit

–          The controversy over sage grouse listing on the endangered species list is heating up and potentially impacts various energy and energy-related activities. As Andrew Gulliford notes in his High Country News op-ed on “ Who Speaks for the Sage Grouse”:

Across the West, politicians and oil and gas industry spokesmen are wringing their hands, shaking their heads and saying “no” to Bureau of Land Management proposals to set aside large swaths of land for the greater sage grouse, and for federal plans to list the separate Gunnison sage grouse as an endangered species.

The opposition to sage grouse ESA listing is not limited to politicians and fossil fuel industries, but also includes such diverse groups as utilities and ranchers. Other links on this topic include:

Montana Governor’s Advisory Council on Sage Grouse

BLM’s Greater Sage-Grouse on public lands web page

Montana Rural Electric’s position page: REA sage grouse position

Sage Grouse Initiative: Op-ed and NRCS Sage Grouse Initiative Information: NRCS

Keeping Sage Grouse Off the ESA Listing

U.S. Fish and Wildlife Service: Sage Grouse 

State of Montana – Establishing a Greater Sage-grouse Habitat Conservation Advisory Council: Montana Sage Grouse Advisory Council

 

Whose Land Is It Anyways?

The development of energy resources is typically dependent upon the availability of infrastructure such as hydrocarbon pipelines and transmission lines. Many of the issues concerning energy development and consequently infrastructure construction focus on the impact of climate change generated by a particular energy resource. The continuing controversy over the permitting of TransCanada’s Keystone XL pipeline is a flashpoint in the debate over the development of Canada’s tar sands and its impact on climate change. Likewise, many wind- power advocates champion this use of renewable energy to significantly reduce carbon dioxide emissions and catastrophic climate change.

The issues regarding energy resources and their impact on climate change are paramount to future energy policies. However, there is another significant concern tied to energy/infrastructure development, and that is the associated landowner-eminent domain problem. The movement of energy, whether it is hydrocarbons or electricity, involves infrastructure that is built in large part, on private property. When energy infrastructure is built by private corporations, these entities need to deal with private landowners so that infrastructure can be constructed on their lands. Ideally this is accomplished by corporations and landowners negotiating a fair price for the use of their lands. However, that is truly an ideal world scenario. The reality is that private corporations have lately pushed legislation through numerous state legislatures and court systems to gain the right of eminent domain for their infrastructure projects. The right of eminent domain has historically been used by governments to seize private property for public use and then to fairly compensate the owner for that ”taken” property. However, eminent domain usage for recent private infrastructure projects becomes one where private corporations can take private lands for their private gain. For example, the Montana 2011 legislature passed legislation via House Bill 198 that gives private corporations the right of eminent domain for projects such as nuclear generation and storage, hydro, certain transmission lines, certain major pipe lines, geothermal exploration, transportation links, pump stations and other facilities associated with the delivery of energy that receive permits through the Montana Major Facility Siting Act (see the Concerned Citizens Montana website for background on HB 198 and Geopostings.com for a review on Montana Senate Bill 180, the bill intended for repealing a part of HB 198 during the Montana 2013 legislative session).

In a needed first step for educating the Montana legal and legislative communities about the recent changes in eminent domain law, the State Bar of Montana CLE (Continuing Legal Education) Institute will convene a course on Montana Condemnation Rights on February 14, 2014, at Fairmont Hot Springs, Fairmont, Montana. A link to the course brochure is: MT Condemnation Rights.

The MT CLE course is well balanced in that it contains presentations from many sides of the eminent domain issue. More specific information on the CLE course presentations includes:

–          CONDEMNATION 101—What every real estate practitioner should know about condemnation. An overview of condemnation law in Montana, including condemnation authority, time frames, notices, rights of possession, valuation and attorney fees and expenses. [This element of the program is intended as an overview and not a detailed consideration of the latest developments in Montana law.  However, there should be a brief introduction to the US  Supreme Court decision in Kelo v. City of New London (propriety of using the power of eminent domain for economic development purposes) which placed new focus on the intended scope of the power of eminent domain as well as the Montana response.]  (1 hour presentation by Hertha L. Lund, Lund Law PLLC, Bozeman, Montana.)

–          TAKINGS AND TRANSMISSION— This presentation will explore the range of state laws governing eminent domain authority for interstate transmission lines, particularly those designed to bring renewable energy generated in one state to customers in other states.  It will focus in particular on various state approaches to granting private merchant transmission lines eminent domain authority to build transmission lines, and whether such lines are a “public use” for purposes of meeting state statutory eminent domain requirements.  In addressing these issues, this presentation will discuss the Supreme Court’s Kelo v. City of New London decision, the litigation and legislative activity surrounding the Montana Alberta Tie Line (MATL) project, some historical context with regard to state constitutional and statutory grants of eminent domain to private parties in the West, and the role of “just compensation” in eminent domain disputes involving transmission lines. (1.25 hours presentation by Professor Alexandra B. Klass, Professor of Law, the University of Minnesota Law School.)

–          THE EASEMENT:  PROCESS, TACTICS AND SUBSTANCE- How and what to negotiate to fully protect landowners’ property rights when confronted with the possibility of transmission lines burdening their land. A negotiation/drafting checklist will emerge which prove extremely helpful for any practitioner handling future utility easements. (1 hour presentation by Dennis R. Lopach, Attorney, Helena, Mt.)

–          THE MONTANA BATTLE: LITIGATION/LEGISLATION RELATING TO PRIVATE EMINENT DOMAIN FOR TRANSMISSION LINES AND OTHER CONTESTED CONDEMNATION ISSUES. A debate to highlight the opposing views by lawyers intimately involved in the process. Participants include: Hertha L. Lund (Private Landowners) Lund Law, PLLC, Bozeman, MT and John Alke (Utilities) Hughes, Kelner, Sullivan and Alke, Helena, MT. Each lawyer will be given 30 minutes to present their case in chief. (Total debate time: 1.5 hours.)

–          HOT TOPIC ROUNDTABLE-  A facilitated panel discussion including all speakers will address “Hot Topics” which have emerged throughout the day. (Facilitator:  Brian Kahn, Attorney, Helena, MT. Total Roundtable time is 1.25 hours.)

The potential use of eminent domain by a private corporation, Northwestern Energy, to build a high-voltage transmission line through a southwestern Montana community.

The potential use of eminent domain by a private corporation, Northwestern Energy, to build a high-voltage transmission line through a southwestern Montana community.

US Microgrid Technology and the U.S. East Coast

Microgrid systems, an alternative approach for integrating small scale distributed energy resources, are becoming a reality on the U.S. east coast. The microgrids are viewed as a way to improve energy resiliency in the face of future impacts related to climate change, as reported by the Hurricane Sandy Rebuilding Task Force. Bill Howley, in today’s “The Power Line” blog, points out a critical necessity for microgrid development – the need for larger capacity, less expensive battery storage. Bill notes that one company, Solar Grid Storage, is making significant strides in this direction. Here’s Bill’s summary:

Larger capacity, less expensive battery storage is the key to building more microgrids in the US. Here is a story about one new company, Solar Grid Storage, that is developing new grid storage systems.   The article also gives you a good overview of new microgrid systems that are popping up on the East Coast.

Solar Grid’s primary focus is commercial customers, but it also works with utilities and municipal governments. Among its customers are a school system in New Jersey and a utility in North Carolina. It partnered with Standard Solar Inc. on the installation of a solar system at the Konterra Realty Corporation that opened last month.

He says grid operators like PJM, a regional transmission organization, pay Solar Grid an installation fee and a monthly fee based on the hourly market rate of access to its battery system.

Leyden says the company is currently in talks with utilities in the Maryland-Washington, D.C. area on solar storage. He declined to identify them but the major operators in the District are Pepco and Washington Gas.

 

Energy Efficiency and Small-Scale Solar Power Threaten Utilities’ Bottom Lines

Power company revenue is under siege by energy efficiency and small-scale solar power, says a Fitch ratings analyst.

Rooftop solar power and energy-efficiency programs will eat into utility revenue and profit margins and discourage investment in new transmission projects within five years, a Fitch Ratings analyst said.

Utilities in stagnant or low-growth markets in the Midwest and Northeast face the biggest losses as more businesses and homeowners install their own generation systems and upgrade to more efficient appliances, said Glen Grabelsky, Fitch’s managing director of utilities, power & gas. Retirees flocking to southern states may offset some losses for local utilities.

This is serious business for utilities as Bill Howley of The Power Line notes:

Fitch is issuing this report as a warning of downgrades to come if power companies don’t step and squash rooftop solar power soon.

The demand loss for grid electricity will be significant as further remarked by Grabelsky of Fitch Ratings:

Loss of demand from customers that go solar or reduce consumption in other ways will shift more and more grid costs onto customers that do nothing. As there are more and more successful Off Grid Solar Projects, traditional grid companies will have to change with the new developments or be left behind. Power supplied by U.S. utilities declined 3.4 percent last year, largely from energy efficiency and on-site solar generation, which reduces demand for electricity from the grid, Grabelsky said.

Unless utility rate structures change, that will reduce utilities’ abilities to invest in major new projects and upgrade their transmission systems, Grabelsky said.

“It will have a negative impact on their ability to raise capital,” Grabelsky said. “Regulators will ask, ‘Do you really need all that new transmission when there’s no demand growth?’ There’s the potential for stranded assets.”

A recent study by the Edison Electric Institute (EEI), “Disruptive Challenges – Financial Implications and Strategic Responses to a Changing Retail Electric Business”, basically reiterates Grabelsky’s view of the threat to utilities by energy efficiency and distributed energy generation. The report details corporate utilities’ angst regarding their customers’ shift to go solar and reduce demand for grid electricity. Many are switching over to prepaid energy plans for their grid electricity, which is a greener option and more cost-effective to manage. With fewer people deciding to have a look for certain types of grid electricity, they are less likely to be overcharged by their utility company, which is good news for the customer.

How will utilities compensate for the loss of demand? Howley, in his “The Power Line” blog, gives a good response:

This translates into: do away with net metering and charge higher rates to people who install solar panels and invest in efficiency.

John Vincent, a former Montana Public Service Commissioner (PSC), in a recent op-ed in the Bozeman Daily Chronicle, calls the shift away from using corporate grid electricity the “new energy paradigm”. As Vincent explains:

A new paradigm is grabbing hold in the residential, commercial and public sectors of our economy. That is: local distributed or “on site” electrical generation and consumption (wind, solar, small scale hydro, biomas, geothermal, micro turbines, combined heat and power systems etc.) conservation, efficiency and smart-grid technologies (to increase the efficiency and capacity of existing electrical transmission systems rather than of building costly new ones at rate payer expense).

But, as Vincent cautions us:

The new energy paradigm is, for obvious reasons, being met with strong resistance by those who benefit from the status quo. Unfortunately, these self interests still carry a lot of political clout, witness recent Montana legislative sessions.

The “new energy paradigm” is a model that we must embrace. We need to get people and politicians to move on this.

Blog Postscript – Former PSC Commissioner Vincent adds the following clarification on the EEI study mentioned above:

The Edison Electric Institute is Big Power’s number one ally and voice (funded and supported by Big Power) and so their own consultant has: 1. Clearly identified Big Power’s dilemma and, 2. Recommended ways to beat back the new paradigm and maintain the status quo…… at rate payers expense. I think the recommendations cited in the consultant’s report can be boiled down to raising rates (one way or another) to offset the loss of revenue brought about by on site, distributed generation and improved efficiency.

In other words, Big Power will do everything they can to make us (rate payers) pay for distributed energy and efficiency……..the new paradigm, not their stockholders.

The Uber Grid Push Is Back

The push for the uber grid raised its head again in the New York Time’s 7.12.13 edition. Matt Wald plugs the new EIPC (Eastern Interconnection Planning Collaborative) “hypothetical” nationalized grid as a “step forward”.

As Mr. Wald reports,

When President Obama presented his plans last month for executive action that would cut emissions of greenhouse gases, one item on his list was strengthening the power grid. It was on the lists of President George W. Bush and Mr. Clinton, too. But for the most part, experts say the grid is not being changed, at least not on a scale big enough to make much difference.

Their view is reflected in what they say is a largely hypothetical three-year effort by hundreds of engineers to redraw the grid for the eastern two-thirds of the United States. Engineers in the project, which is now drawing to a close, have proposed a basic redesign for beefing up the Eastern Interconnection, the part of the grid that stretches from Nova Scotia to New Orleans.

You may wonder what is EIPC and what is its function? Here’s how EIPC describes itself:

The EIPC was initiated by a coalition of regional Planning Authorities (see list below). These Planning Authorities are entities listed on the NERC compliance registry as Planning Authorities and represent the entire Eastern Interconnection.

The EIPC will provide a grass-roots approach which builds upon the regional expansion plans developed each year by regional stakeholders in collaboration with their respective NERC Planning Authorities. This approach will provide coordinated interregional analysis for the entire Eastern Interconnection guided by the consensus input of an open and transparent stakeholder process.

The EIPC received funding from the U.S. Department of Energy in 2010 to initiate a broad-based, transparent collaborative process to involve interested stakeholders in the development of policy futures for transmission analysis. Learn more about the DOE-funded project.

The Stakeholder Steering Committee (SSC) is the body of stakeholder representatives that works collaboratively to inform and provide input on the EIPC’s efforts. Learn more about the SSC.

Planning Authorities:

Alcoa Power Generating

American Transmission Company

Duke Energy Carolinas

Electric Energy Inc.

Entergy

LGE/KU (Louisville/Kentucky Utilities)

Florida Power & Light

Georgia Transmission Corporation

IESO (Ontario, Canada)

International Transmission Company

ISO-New England

JEA (Jacksonville, Florida)

MAPPCOR

Midwest ISO

Municipal Electric Authority of Georgia

New Brunswick System Operator

New York ISO

PJM Interconnection

PowerSouth Energy Coop

Progress Energy – Carolinas

Progress Energy – Florida

South Carolina Electric & Gas

Santee Cooper

Southern Company

Southwest Power Pool

Tennessee Valley Authority.

 

As aptly noted in The Power Line blog in response to Mr. Wald’s uber grid writings:

See all that talk about “transparent,” “stakeholders” and “grassroots”?  That is corporate mumbo jumbo of the first order.  Ain’t nothing grassroots about EIPC.  Mr. Wald should go back to reporter school.  You don’t write an article and leave out all the important names.  Unless you are trying to hide something.

I also agree with The Power Line on the clincher to the EIPC’s uber grid vision stated by Christopher Russo, an energy consultant at Charles River Associates (a company that helped with the grid redesign):

“We said, ‘Here’s what we could do,’ ” he said. “We haven’t said how we would pay for it.”

I’ve wondered about that “pay for” part in regards to proposed high-voltage transmission in the western U.S.