Energy News Beat

(Bloomberg) – A Swedish oil firm is making a bold move into Venezuela after the U.S. eased sanctions, signaling the potential for more of the country’s crude oil to reach global markets.

Stockholm-based Maha Energy has gained rights to a stake in the PetroUrdaneta project that belongs to Brazilian industrial conglomerate Novonor, Kjetil Solbraekke, the Swedish firm’s chief executive officer, told Bloomberg. Maha could eventually take over all of Novonor’s 40% stake in the joint venture with state-owned Petroleos de Venezuela if the project pans out, he said.

“It will be challenging,” he said in an interview in Caracas, without disclosing how much it plans to pay Novonor. “We don’t intend to make big announcements, but just to to boost gradually and bring competence and capital.”

Maha’s move into Venezuela follows a decision by the U.S. on Oct. 18 to ease sanctions for six months in exchange for greater political freedom in the once-mighty oil producer. Venezuela is expected to both expand its output and steer more of its existing production to refineries in the U.S., a development that could help contain U.S. gasoline prices ahead of the 2024 presidential campaign.

Maha is making a bet that Venezuela won’t go back to being as geopolitically isolated as it was in recent years. The U.S. could reimpose sanctions if Maduro doesn’t follow through on a deal to renew political talks with the opposition and allow its candidates to compete in free and fair elections.

Nicolas Maduro’s government stands to get more revenue from its main export product. The oil ministry and PDVSA, as Venezuela’s state-owned oil company is known, didn’t immediately respond to a request for comment. Novonor declined to comment on the deal, which Venezuela’s oil ministry would have to approve.

The project is expected to increase from 1,000 bpd to between 20,000 to 40,000 bpd in two to three years, after signing a contract with the Maduro administration. Maha will focus on quickly ramping up dormant wells through low-cost interventions. It is on the western coast of Lake Maracaibo, a region that was the birthplace of the country’s oil industry and still delivers about a fifth of the country’s production.

Solbraekke made clear his company will steer clear of the graft that has pervaded the industry.

“There will be zero tolerance with corruption,” he said.

More deals. Maha could be the first in a wave of deals in Venezuela’s oil patch as PDVSA’s long-standing partners like Novonor take advantage of the political opening to exit joint ventures they have with PDVSA. Novonor is under pressure to sell assets to pay off creditors in Brazil.

PDVSA has more than 40 oil partnerships with foreign and local companies, some of whom have suspended activity due to the difficult business climate. Before aiming for Petrourdaneta, comprised of three onshore oil fields, Maha looked into several other ventures.

Maha, which has operations in Oman, the U.S. and Brazil, will pay Novonor 4.6 million euros to have exclusive rights for nine months to conduct due diligence and confirm operational feasibility, and the same amount for an additional 12-month extension, according to a statement.

Source: Worldoil.com

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Energy News Beat

Commonwealth Court is stopping Pennsylvania’s effort to join a cap-and-trade program targeting power plant emissions.

Joining the Regional Greenhouse Gas Initiative was Gov. Tom Wolf’s signature climate policy. Under RGGI, power plants must pay for each ton of carbon dioxide they emit. The move would have made Pennsylvania the first major fossil fuel-producing state to put a price on carbon.

In opinions filed Wednesday in two related cases, Commonwealth Court ruled that money raised through RGGI is an invalid tax. A five-judge panel heard the case. Judge Michael Wojcik wrote the opinion striking down RGGI. Judge Ellen Ceisler wrote a dissenting opinion. (Read the opinion)

The court sided with state Republican Senators and industry groups who claimed the Department of Environmental Protection did not have the constitutional authority to collect revenue from the program, and that only the legislature can levy taxes.

Senate intervenors in the case were then-President Pro Tempore of the State Senate Jake Corman (R-Centre), Senate Majority Leader Kim Ward (R-Westmoreland), Chair of the Senate Environmental Resources and Energy Committee Gene Yaw (R-Lycoming), and then-Chair of the Senate Appropriations Committee Pat Browne (R-Lehigh).

Interest groups that support RGGI have said they expected the state to appeal if Commonwealth Court ruled against Pennsylvania joining the program.

But Gov. Josh Shapiro has raised concerns about RGGI. He has said it’s not clear RGGI will address climate change while protecting energy jobs and ensuring affordable power. A working group he brought together on the issue recently released a report that said a cap-and-invest program would be optimal in supporting an energy transition that can benefit the environment and reduce emissions. But it did not endorse RGGI as the best option.

PennFuture attorney Jessica O’Neill noted the working group included people from industry who were challenging RGGI as well as environmental groups who supported the regulation.

Shapiro spokesperson Manuel Bonder said the administration “is carefully reviewing the Commonwealth Court’s decision as we evaluate next steps.”

The Administration has 30 days to appeal to the state Supreme Court.

Wojcik’s opinion declares the RGGI rulemaking void and prohibits DEP from enforcing the rule.

“Where, as here, the moneys generated and received by the Commonwealth’s participation in the auctions are ‘grossly disproportionate’ to the costs of overseeing participation in the program or DEP’s and EQB’s annual regulatory needs, and relate to activities beyond their regulatory authority, the regulations authorizing Pennsylvania’s participation in RGGI are invalid and unenforceable,” Wojcik wrote. “Stated simply, to pass constitutional muster, the Commonwealth’s participation in RGGI may only be achieved through legislation duly enacted by the Pennsylvania General Assembly …”

Wojcik also noted that RGGI was expected to raise three times the Department of Environmental Protection’s annual state budget in just one year.

Robert Routh, Pennsylvania lead with the Natural Resources Defense Council, said the amount shouldn’t be the determining factor. He said it’s important that the money would have gone to a specific use–reducing air pollution–and not for general revenue.

“Frankly, the amount that is raised is commensurate with the significant amount of carbon pollution that Pennsylvania power plants emit,” Routh said.

Ceisler, in her dissenting opinion, wrote that there was not enough information to side with either party.

“Based upon the record before us, it does not seem that the emissions allowance auction process would impose what could be deemed fees in the traditional sense, but, by the same token, it is not entirely clear that the proceeds raised thereby would constitute a tax,” Ceisler wrote.

The RGGI rule was published in April 2022, but was paused by Commonwealth Court that July while legal arguments played out.

Senators also argued DEP sent the rulemaking to the Legislative Reference Bureau to be published before the state House had time to consider voting it down, that the rule violates the state’s Air Pollution Control Act, and that RGGI would be an illegal interstate compact. The opinion dismissed those claims as moot.

Power PA Jobs Alliance, made up of industries that oppose RGGI, is celebrating the decision.

“Governor Shapiro can clean the slate and move forward as his RGGI Working Group urged and engage the General Assembly on energy policies that ‘retain Pennsylvania’s status as the nation’s number one exporter of electricity and protect existing energy jobs,’” the group said in a statement.

“A bipartisan majority of Pennsylvania legislators have consistently voted against RGGI when the issue has been brought to the floor,” Sen. Yaw said. “I appreciate the Commonwealth Court’s rejection of this unconstitutional maneuver.”

Senate Majority Leader Joe Pittman (R-Indiana), whose district includes a few of the state’s last coal-fired power plants and who has fought against RGGI, called the Commonwealth Court ruling a victory.

“With this decision we have the opportunity to finally close a tumultuous chapter and move forward to determine the best legislative solution to foster greater energy independence, while ensuring the responsible development of our God-given natural resources,” Pittman said.

Environmental groups are hoping to see the case reach the Supreme Court.

“This is a decision point for the Shapiro administration. Are you going to appeal this and continue to press forward on RGGI or not?” O’Neill said. “The administration has been defending the regulation and we believe that they need to continue to do so, particularly in the absence of an alternative. We cannot just let power plant pollution go unabated.”

Conservation Voters of PA Executive Director Molly Parzen called the ruling “a misguided but temporary setback.”

“Governor Shapiro’s record on protecting our air, water and natural resources is a robust one stretching back to his tenure as attorney general, county commissioner and state legislator. We are confident in his commitment to our environment,” Parzen said.

John Dernbach, an Emeritus Professor of Environmental Law and Sustainability at Widener University Commonwealth Law School, said there’s a “good chance” of the Supreme Court overturning Wednesday’s decision.

Dernbach filed a brief in support of the RGGI regulation, arguing in part that joining would support the state’s obligation to its people under the Environmental Rights Amendment. The ERA protects Pennsylvanians’ right to a clean environment, including for future generations.

Dernbach said, during an appeal hearing of the RGGI cases in Supreme Court, it appeared a majority of justices agreed that the ERA “is relevant in deciding whether the RGGI regulation is lawful.”

Under RGGI, power plants must pay for each ton of carbon dioxide they emit, making dirtier sources of energy less competitive. The price of “allowances” is determined at quarterly auctions by market conditions. The states can then use the money to fund clean energy and energy efficiency programs.

Some environmental groups have estimated that the state has lost more than $1 billion by not joining RGGI when the regulation was finished.

That money could have been put toward addressing climate change by boosting clean energy programs. If the legislature and Shapiro had agreed on a plan, it also could have offered relief to fossil-fuel industry workers who lost jobs when power plants closed.

DEP estimated last year that the state could raise around $200 million per year from RGGI. Shapiro’s proposed budget estimated raising $600 million in the next year. The state would pay a small percentage for administering the program.

DEP estimated the rule would prevent up to 227 million tons of carbon pollution by 2030. That’s equal to taking 44 million cars off the road for one year.

Pennsylvania ranked fourth in the U.S. for carbon emissions, according to 2021 data. It produces more natural gas than any state except Texas.

Source: Stateimpact.npr.org

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Energy News Beat
US crude oil production hit a record in August with 13.05 million barrels per day, even as the number of rotary US oil rigs declined.
The Permian basin has been the focal point for US crude supply growth, with improvements in multi-well pad technology and increased lateral well lengths.
Goldman Sachs highlights the continued capital discipline of US producers, emphasizing moderate growth targets and reinvestment rates.

With core OPEC+ cartel members Russia and Saudi Arabia doing everything in their power to throttle oil output and push the price of oil higher, the US is again emerging as not only a thorn in OPEC’s side but as the marginal producer of world oil. According to EIA data, US crude oil production hit an all-time high in August, as production surpassed pre-covid levels.

US field production of crude oil reached 404.6 million barrels during the month of August, new EIA data showed, for an average of 13.05 million barrels per day, breaking the previous record US drillers set in July of 401.73 million barrels. Compared to this time last year, U.S. production is up by a total of 33 million barrels for the month. Remarkably production hit all time highs even as the number of rotary US oil rigs has slumped in the past year. How is this possible? We answer that question below.

Increases in production were seen in PADDs 1, 2, 3, and 4, with the largest percentage increase in production seen in PADD 4, which comprises Colorado, Idaho, Montana, Utah, and Wyoming. The largest actual increase was seen in PADD 2, which includes North Dakota, Illinois, and Kentucky, among other states.

Crude production in Texas in August – home to a large portion of the Permian Basin and where Exxon will soon be undisputed energy king after its merger with Pioneer closes –  rose from 173.775 million barrels to 174.562 million barrels.

Despite the record-breaking production levels seen in August, inventories of crude oil in the United States are estimated to be within 3 million barrels of where it began the year.

The new record in crude production in the United States comes shortly after U.S. supermajor ExxonMobil spent $60B on purchasing another Permian player, Pioneer Natural Resources, although most oil companies in the United States have chosen fiscal restraint resulting in a slow and steady increase in output versus the no holds barred investment strategies during previous boom cycles.

What is perhaps more remarkable is that in a recent report (available to pro subscribers) from Goldman commodity analyst Daan Dtruyven, the bank found that “the US has driven all the growth in global oil supply over the past decade and the past year, and the Permian basin has driven all growth in US crude supply since early 2020.”

US supply has also grown faster than expected. According to Goldman, US liquids supply is on track to exceed IEA expectations for the 13th consecutive year, except for 2016 and 2020. That said, the 2022 and 2023 forecast errors will likely be smaller than before the pandemic, and US total liquids supply has been roughly flat since June.

Furthermore, the US remains the key short-term marginal oil producer, where flexible short-cycle private producers sit high on the global cost curve.

So is the US falling in the overproduction trap that marked much of the 2010s and which led to the defaulting of dozens of junk debt-funded US energy producers, and sharply oil prices?

According to Goldman, the answer is no as crude output growth in the Permian has slowed from 1mb/d in 2019 to 0.5mb/d year-over-year in September given the drop in the rig count, and the stabilizing well productivity trend.

However, Permian output is still edging up because of rises in the number of drilled wells per rig and well length. In other words, the Permian new well output per rig is still trending higher because of:

A rise in the number of drilled wells per rig given progress in multi-well pad technology
A structural rise in the average lateral well length to 10,000 feet(Exhibit 9)
A boost to output per rig through a composition effect arising from the larger drop in less productive private rigs (“high grading”). The output per rig in 2022 was nearly 2.5 times greater for public rigs than for private rigs since public firms account for over 60% of production, but under 40% of rigs (Exhibit 10).

This is important because the lack of well productivity growth (which reflects an offset between deteriorating rock quality and improving technology) suggest that Permian output growth will slow further. In fact, the emergence of the Permian as the world’s key oil market variable may explain why Exxon recently purchased Pioneer: the new supergiant will have every opportunity to turn oil output in the US on (or off) as only it sees fit.

Finally, a question that Wall Street would love answered: are US producers still capital disciplined?

Goldman’s answer, “yes, three pieces of evidence show that the US upstream sector remains capital disciplined.”

First, US public independent firms are sticking to the moderate single digit growth targets they announced in 2020-2021. As Exhibit 11 shows, we expect crude production growth by the independent US E&Ps under GS coverage to slow from around 235kb/d (or 7%) in 2023 to 135kb/d (4%) in 2024, and just around 90kb/d (2.5%) in 2025. That companies continue to guide to slower growth despite the 2022H1 and the summer 2023 upswing in prices is the essence of capital discipline, and the main driver of the reduction in supply elasticity. These lower growth targets reflect investors’ scarring 2014-2020 experience when excessive growth depressed returns, and growing concerns about inventory quality.

Second, reinvestment rates—capex as a share of operating cash flow—of public producers remain in a 40-60% range, well below the historical average (Exhibit 12, left panel). The 2022-2023 pickup in capex reflects that the 2020-2021 levels were likely unsustainably low, and the boost to nominal capex measures from rapid cost inflation (Exhibit 12, right panel).
Third, broader capital allocation strategies of public E&Ps remain focused on limiting leverage and returning cash to shareholders (see Appendix Exhibit 18). To illustrate further, equity (rather than debt) is now typically used to fund acquisitions (as for ExxonMobil-Pioneer).

Source: Oilprice.com

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Energy News Beat

Hundreds of surfers have paddled out into the turquoise seas off the NSW south coast to create a giant ring of solidarity in opposition to a wind farm the government wants to build 10 kilometres offshore.

Thousands more people covered the grassy surrounds of Wollongong Head Lighthouse at Flagstaff Point on Sunday to rally against the proposal some have dubbed an “environmental diaster waiting to happen”.

About 25,000 flyers promoting the rally were handed out by members of the Coalition Against Offshore Wind urging residents to support the cause.

The federal government wants to build a 1461 square kilometre site at least 10 km from the shore, out to 30 kilometres at Kiama, saying it will deliver jobs and clean energy for NSW.

Federal Climate Change and Energy Minister Chris Bowen says Australia has some of the best wind resources in the world, including at Wollongong but has no offshore wind farms.

“This presents a huge economic opportunity for the regions that help power Australia,” he said.

The government argues the site will generate up to 4.2 gigawatts of power, enough to supply as many as 3.4 million homes, but locals say the impact to ocean life would be devastating.

Concerns include the threat to migrating whales and sea birds, as well as unknown impacts on the seabed.

Another major complaint is how the turbines would change the look of the coal coast.

The public consultation period has recently been extended by 30 days until November 15

Signs with “Saving the planet does not mean destroying the ocean”, were held aloft, with the local member for Kiama, Gareth Ward, spotted among the crowd.

Source: Msn.com

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Energy News Beat

Anyone who has listened to the Energy News Beat podcast for the last 3 years, knows that Michael and I have a passion for spreading the word about ending energy poverty. The only way to eliminate energy poverty is through low-cost, sustainable energy, with the least environmental impact.

In this episode, Dan Gualtieri, Executive Director Client Success at Inside Petroleum, Inc. and I cover a lot of critical issues in how oil and gas companies can keep their costs down, and even monitor their carbon footprint. You cannot fix what you don’t know is broken and ComboCarbon is a great way to track to get a baseline and improvements.

The time that oil and gas companies can save with having the right tools is just money to the bottom line for investors.

On a personal note, I have had the opportunity to work with CEOs and get data to accounting and out to the investors with the help of ComboCurve’s financial strength and modeling. Sandstone has not worked with ComboCurve but is gearing up to help get more reviews on that great topic.

The world is in a geopolitical nightmare, and we need our United States oil producers more now than at any time in history. Coupled with the financial markets, investors are moving to energy, specifically oil and gas investments.

Stay tuned for more updates on our extended series on oil and gas financial modeling and incorporating the ComboCarbon into the financial aspect.

Also, I would like to give a shout-out to John and the entire staff over at WellDatabase as a new sponsor to the podcast. We use their data for our well modeling and financial forecasting. They are critical in saving money when drilling. We are just getting rolling!

 

Follow Dan on his LinkedIn HERE:

Dan Gualtieri, Executive Director Client Success at Inside Petroleum, Inc. https://www.linkedin.com/in/dagualtieri/

More information on ComboCurve and ComboCarbon HERE:https://combocurve.com/

00:00 – Introduction

00:37 – Benefits of Combo Curve software for optimizing natural gas and oil prices

01:26 – Shared connection to Oklahoma State University and academic backgrounds

02:53 – Roles at Combo Curve

04:20 – Importance of conversational analytics in oil and gas industry amidst supply chain disruptions

09:13 – Combo Carbon and its significance in carbon capture and measurement

11:07 – The role of integrated data tools like Combo Curve in sustainable energy production

16:13 – Empowering reservoir engineers with Combo Curve for ESG modeling and sustainability

22:07 – Expansion plans for NPR operators like Exxon

24:25 – Importance of automated workflows and accurate data in asset evaluations

28:22 – Automation and data analysis in the M&A market

30:58 – Future plans for Combo Curve International

36:26 – Future plans for Dan Gualtieri

39:01 – Closing thoughts

40:23 – Outro

41:01 – RNCN Video

The post ENB #147 Dan Gualtieri, When energy security, and fiscal responsibility are concerned, tools are critical. How CEOs can save money and get investors. appeared first on Energy News Beat.

 

Energy News Beat

Oil Price

ExxonMobil said on Thursday it had completed the acquisition of carbon solutions provider Denbury in an all-stock transaction valued at $4.9 billion, which makes the U.S. supermajor the holder of the largest owned and operated CO2 pipeline network in the U.S.

The deal, first announced in July this year, obtained Denbury shareholder approval earlier this week.

The combination will further expand ExxonMobil’s ability to provide large-scale emission-reduction services to industrial customers, the company said in its Q3 results release at the end of last week.

Exxon will now have Denbury’s more than 1,300 miles of CO2 dedicated pipelines in the U.S., with operations include oil and gas development, as well as CO2 transportation and storage, including planned sites for future carbon sequestration.

“Acquiring Denbury strengthens our position to economically reduce emissions in hard-to-decarbonize industries, which today have limited practical options. We see the potential to drive strong returns with the capacity to reduce the nation’s carbon emissions by 100 million tons per year,” Exxon’s CEO Darren Woods said on the earnings call with analysts last week.

In the United States, the IRA increased credit values across the board, with the tax credit for carbon storage from carbon capture on industrial and power generation facilities rising from $50 to $85 per ton, and the tax incentives for storage from direct air capture (DAC) jumping from $50 to $180 per ton. The provisions also extend the construction window by seven years to January 1, 2033. This means that projects must begin physical work by then to qualify for the credit.

The significantly higher incentives in the IRA are giving impetus to projects.

“The CCS market has just taken off,” Nick Cooper, CEO at carbon capture and storage developer Storegga, told the Financial Times earlier this year.

“This feels a bit like the U.S. shale boom 15 years ago,” Cooper added.

By Charles Kennedy for Oilprice.com

 

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Energy News Beat

World Oil

(WO) – The American Petroleum Institute (API) called on the Biden administration to help meet growing energy demand by allowing for consistent and predictable access to America’s vast energy resources offshore.

In comments submitted to the Bureau of Ocean Energy Management (BOEM) in response to the Call for Information and Nominations for 2024-2029 Gulf of Mexico Lease Sales, API joined with EnerGeo Alliance, the Independent Petroleum Association of America (IPAA) and the Louisiana Mid-Continent Oil and Gas Association (LMOGA) in reiterating its concern regarding the administration’s repeated attempts to restrict future offshore production and urged the agency to promptly finalize its five-year offshore leasing program without delay and hold each of the lease sales scheduled on a region-wide basis in the Gulf of Mexico.

“The U.S. Gulf of Mexico has been the backbone of U.S. energy production for years, providing more than one million barrels of oil equivalent per day for the last two decades,” API Vice President of Upstream Policy Holly Hopkins said. “The decisions made regarding future leasing will have short- and long-term implications for our nation’s energy and national security, job creation, and government revenue.”

In addition to submitting comments on the Call for Information, the associations joined with the National Ocean Industries Association (NOIA) and the Offshore Operators Committee (OOC) to submit comments in response to BOEM’s Notice of Intent to Prepare a Gulf of Mexico Regional Outer Continental Shelf Oil and Gas Programmatic Environmental Impact Statement.

In both comment letters, the associations highlighted the Biden administration’s repeated attempts to restrict energy production in the U.S. Gulf of Mexico, including issuing an unlawful moratorium on oil and gas lease sales; cancelling offshore sales; allowing the five-year program for federal offshore leasing to expire; adding unjustified restrictions and removing acreage from a congressionally-mandated lease sale and issuing a final five-year program with the fewest lease sales in history. The associations urged Interior to end the bureaucratic delays, including additional NEPA reviews, and move forward with region-wide lease sales as soon as possible.

“Without the right implementation, the administration’s five-year program will become a mere paper exercise instead of an actionable vehicle for strengthening U.S. energy security,” Hopkins concluded.

 

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Energy News Beat

World Oil

(WO) — The American Petroleum Institute (API) joined with over 70 other trade groups representing diverse businesses across the economy in urging the Biden administration to maintain the existing National Ambient Air Quality Standards (NAAQS) for fine particulate matter (PM2.5).

In a letter to White House Chief of Staff Jeff Zients, the organizations warned that moving forward with the Environmental Protection Agency’s (EPA) proposed revisions would jeopardize American jobs and risk substantial economic harm.

The proposed revisions to the standard “would risk jobs and livelihoods by making it even more difficult to obtain permits for new factories, facilities, and infrastructure to power economic growth,” the groups wrote. “This proposal would also threaten successful implementation of the Infrastructure Investment and Jobs Act, the CHIPS and Science Act, and the important clean energy provisions of the Inflation Reduction Act. Our members have innovated and worked with regulators to significantly lower PM2.5 emissions and further progress is being made as part of the energy transition investments.”

The letter emphasized the effectiveness of the current standards which have led to a 42% decline in PM2.5 concentrations since 2000, according to government data. In fact, the EPA reaffirmed only two years ago that the current standards are protective of public health and the environment. Now, without significant new health information, the agency is proposing revisions that will have dramatic effects on the U.S. economy.

A recent Oxford Economic analysis commissioned by the National Association of Manufacturers found that the proposed standard would reduce U.S. GDP by nearly $200 billion and cost as many as one million American jobs through 2031.

“Lowering the current standard so dramatically would create a perverse disincentive for American investment,” the letter reads. “EPA’s proposal could force investment in new facilities to foreign countries with less stringent air standards, thereby undermining the Administration’s economic and environmental goals. We urge you to ensure EPA maintains the existing fine particulate matter standards to ensure both continued environmental protection and economic growth.”

 

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Energy News Beat

​

Climate and clean energy advocates in New Hampshire say a pending proposal to define nuclear power as clean energy could undercut solar and wind power in the state. 

Though the details are still in the works, state Rep. Michael Vose, chair of the legislature’s science, technology, and energy committee, is drafting a bill that would allow nuclear power generators, such as New Hampshire’s Seabrook Station, to receive payments for contributing clean energy to the grid. 

“The broad idea is that, long-term, we can hope and expect that that reliable source of baseload power will always be there,” Vose said. “It won’t be driven out of business by subsidized renewable power.” 

Some environmental advocates, however, worry that the proposal would provide unnecessary subsidies to nuclear power while making it harder for solar projects to attract investors. 

“It’s just another way to reduce support for solar,” said Meredith Hatfield, associate director for policy and government relations at the Nature Conservancy in New Hampshire. 

New Hampshire’s renewable portfolio standard — a binding requirement that specifies how much renewable power utilities must purchase — went into effect in 2008. To satisfy the requirement in that first year, utilities had to buy renewable energy certificates representing 4% of the total megawatt-hours they supplied that year. The number has steadily climbed, hitting 23.4% this year. 

New Hampshire was the second-to-last state in the region to create a binding standard — Vermont switched from a voluntary standard to a mandated one until 2015. New Hampshire’s standard tops out at 25.2% renewable energy in 2025, but the other New England states range from 35% to 100% and look further into the future. 

Vose, however, worries that even New Hampshire’s comparatively modest targets could put the reliability of the power supply at risk. 

“Until we can have affordable, scalable battery storage, the intermittency of renewables is going to guarantee that renewables are unreliable,” Vose said. “And if we add too many renewables to our grid, it makes the whole grid unreliable.”

That idea has been widely debunked. Grid experts say variable renewables may require different planning and system design but are not inherently less reliable than fossil fuel generation.

The details of Vose’s clean energy standard bill have not yet been finalized. A clean energy standard is broadly different from a renewable energy standard in that it includes nuclear power, which does not emit carbon dioxide, but which uses a nonrenewable fuel source. Those writing the legislation, however, will have to decide whether it will propose incorporating the new standard into the existing renewable portfolio standard or operating the two systems alongside each other.

Clean energy advocates say they are not necessarily opposed to a clean energy standard, but argue it is crucial that such a program not pit nuclear power and renewable energy against each other for the same pool of money. And they are concerned that that’s just what Vose’s bill will do. 

“While we would welcome a robust conversation about how to design a clean energy standard, I fear that’s not what this bill is,” said Sam Evans-Brown, executive director of nonprofit Clean Energy New Hampshire. 

If a clean energy standard is structured so both nuclear and renewables qualify to meet the requirements, clean energy certificates from nuclear power generators would flood the market, causing the price to plummet. Seabrook alone has a capacity of more than 1,250 megawatts, while the largest solar development in the state has a capacity of 3.3 megawatts. Revenue from renewable energy certificates is an important part of the financial model for many renewable energy projects, so falling prices would likely mean fewer solar developments could attract investors or turn a profit. 

At the same time, nuclear generators could sell certificates for low prices, as they already have functioning financial models that do not include this added revenue. Nuclear could, in effect, drive solar and other renewables out of the market almost entirely, clean energy advocates worry.

“The intention of the [renewable portfolio standard] has always been about creating fuel diversity by getting new generation built, and a proposal like that would do the opposite,” Evans-Brown said.

A single standard that combines nuclear and renewables could also hurt development of solar projects in another way, Hatfield said. When New Hampshire utilities do not purchase enough renewable energy credits to cover the requirements, they must make an alternative compliance payment. These payments are the only source of money for the state Renewable Energy Fund, which provides grants and rebates for residential solar installations and energy efficiency projects. 

“If you add in nukes and therefore there’s plentiful inexpensive certificates, then you basically have no alternative compliance payments,” Hatfield says. “It could potentially dry up the only real source we have in the state for clean energy rebates.”

Though Vose and the bill’s other authors have not yet released the details of the proposal, he has indicated that he would not like the new clean energy standard to significantly increase costs for New Hampshire’s ratepayers. The existing standard cost ratepayers $58 million in 2022, when utilities were required to buy certificates covering 15% of the power they supplied, according to a state report issued last month. 

The legislation may meet the same fate as last year’s effort, Vose acknowledged, but he is still eager to get people talking about the issue. 

“Even if we can’t get such a standard passed in this session,” he said, “we can at least begin a serious discussion about what a clean energy standard might look like.” 

 

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Energy News Beat

​

Lawmakers have advanced six draft bills intended to ensure Wyoming electricity customers pay only what’s necessary for utilities to provide reliable energy without lining executives’ pockets or footing the bill for other states’ demands for renewable energy.

The legislative efforts attempt to fill perceived regulatory gaps in a rapidly changing utility landscape, according to Corporations, Elections and Political Subdivision committee members who debated the bills Friday in Cheyenne. Though some measures were criticized as redundant of existing utility practices and Wyoming Public Service Commission authority, and for adding to the under-staffed commission’s workload, they’re also intended to send a message.

“A big part of what we’re doing is perception,” Rep. Jeremy Haroldson (R-Wheatland) said. “We’re having this conversation and [residents] want to know without a shadow of a doubt that when they pay their utility bill next month they’re not paying for another state’s decisions.”

All six bills will be sponsored by the committee. Bills sponsored by legislative panels are historically more likely to succeed than measures backed by individual lawmakers.

Despite the two-thirds vote threshold required to introduce non-budget bills in February’s budget session, committee members are hopeful the high-profile issue of soaring electric rates will win consideration for the slate of utility measures before the Legislature.

Lawmakers said they’re responding to rising utility costs, in general, and worry the industry’s ongoing shift from fossil fuels to renewable sources of electric generation will result in continually rising rates and less reliable power. 

Panel members repeatedly pointed to Rocky Mountain Power’s request to hike electric rates by nearly 30% — the largest hike Wyoming has seen in more than 10 years and a move lawmakers believe is, in large part, the result of anti-coal and natural gas policies in several West Coast states where the utility’s parent company, PacifiCorp, also operates.

PacifiCorp’s Gateway West transmission project will help boost new renewable energy projects in Wyoming. (PacifiCorp)

The company’s ongoing investments in new Wyoming wind farms and high-voltage transmission lines to send the power to customers in other western states is a primary example, Corporations Committee Co-Chairman Sen. Cale Case (R-Lander) said. Though it’s not a major factor in Rocky Mountain Power’s current rate hike requests, its parent company is investing $8 billion in interstate electric transmission lines, adding more future costs and risks for Wyoming customers without a proportional benefit, according to Case.

“Those lines, the commission is going to find that they’re [a just and reasonable expense],” Case said. “Do you think they’re useful for Wyoming? I don’t. I think we’re getting screwed.”

The committee, over the course of about eight hours, heard testimony from the Wyoming Public Service Commission, Rocky Mountain Power, Montana-Dakota Utilities Co., Black Hills Power, Wyoming Rural Electric Association, Wyoming Industrial Energy Consumers and several members of the public. The discussion often invoked the Rocky Mountain Power rate hike hearing taking place before the Public Service Commission just a couple blocks away from the Capitol, with some of the same parties in that case taking time to hash out their arguments in the legislative setting.

Sen. Case, for example, is participating in the rate case hearing as a citizen. Holland and Hart attorney Thor Nelson represents the Wyoming Industrial Energy Consumers coalition — also an intervening party in the rate case — and testified before the legislative committee in support of several bills the coalition offered and that the committee accepted.

Meantime, the Public Service Commission and Rocky Mountain Power sent staff members and representatives not directly participating in the rate hearing to testify before lawmakers.

The Public Service Commission is expected to rule on Rocky Mountain Power’s rate request before January, long before any potential new legislation might take effect — or even be debated by the full Legislature.

Wyoming Public Service Commission Chief Counsel John Burbridge and Chair Mary Throne testify before the Corporations, Elections and Political Subdivisions committee Sept. 20, 2023 in Cheyenne. (Dustin Bleizeffer/WyoFile)

Nearly all aspects of the draft measures exempt rural electric co-ops because the state has limited authority over their rates or facility investments. Rocky Mountain Power is the primary target for much of the draft legislation affecting all regulated electric utilities in the state because it is the largest in Wyoming, serving some 144,000 customers, according to statements by lawmakers.

Here is a summary of the six draft bills advanced by the committee. 

Public service commission – electricity reliability would direct the commission to establish standards for “adequate, dispatchable and reliable” electric generation and to impose penalties for outages and for not meeting the standards. The committee considered, but backed off from, increasing penalties to a potential maximum of $1 million per day for a major outage.

The new reliability standards would be applied only to electric generation facilities and not distribution systems, such as power lines. 

Utilities are already held to such standards and potential monetary penalties by both state and federal authorities, utility representatives testified. However, the new standards should compel utilities to be careful not to become over-reliant on renewable sources of electric generation, and should give the commission “more teeth” to disallow passing the cost of renewables to Wyoming ratepayers, Sen. Charles Scott (R-Casper) said.

Reclamation and decommissioning costs would direct the commission to hire a third party to study the cost of closing and remediating power plants. The bill includes an appropriation of $500,000, which would be recouped from power plant owners — an expense that committee members said should not be passed on to ratepayers.

However, both the commission and utilities already account for reclamation and decommission costs in rates, according to testimony from their representatives. The money is collected in pace with scheduled closures. Further, the measure would add to the workload of an already understaffed commission and potentially require another $1 million in staff support, according to an estimate by the agency’s Chief Counsel John Burbridge.

Despite existing laws and rules, several lawmakers still worry that divvying up power plant closing costs among ratepayers in multiple states might become more complicated than usual. For example, Wyoming might choose to support a coal-fired power plant long after states like Washington and Oregon have opted out. That scenario, too, according to critics of the draft bill, is already taken into account within the existing regulatory system. 

“Perhaps it’s a solution looking for a problem,” Burbridge told the committee.

Electricity rates for costs that do not benefit Wyoming would direct the commission to conduct a cost-benefit analysis of multi-state, systemwide facilities and disallow any costs that do not benefit Wyoming ratepayers. It attempts to address concerns such as the example that Case mentioned regarding PacifiCorp’s $8 billion investment in new interstate transmission expansions necessary to deliver power from expanding wind and solar energy facilities to out-of-state customers.

“We are not benefiting from that in any proportion to the cost that our ratepayers are being asked to [pay],” Case said.

PacifiCorp’s Seven Mile Hill wind farm in Carbon County generates 111 megawatts of electrical power. (Dustin Bleizeffer/WyoFile)

PacifiCorp’s $8 billion investment accounts for only a fraction of Rocky Mountain Power’s currently proposed rate hike, according to the utility. Just how much Wyoming ratepayers are being asked to cover, and how much is legally justified, is now being contested before the Public Service Commission.

The bill does appear duplicative of the commission’s core mandate to scrutinize the costs of multi-state, systemwide facilities and to only allow utilities to recover the portion that’s proven to serve Wyoming customers, Case acknowledged. But he and most of his colleagues on the committee are convinced the current level of regulatory scrutiny still leaves Wyoming customers vulnerable to paying more than their fair share. 

Also, Case said, the regulatory calculations don’t take into account the environmental, cultural and natural resource losses imposed on Wyoming by industrializing landscapes with wind farms and transmission lines.

“Those lines are being built for the major purpose of taking renewable energy out of the state of Wyoming,” Case said. “We don’t need that power. Our customers don’t need that power. Our growth doesn’t justify that power, and on and on and on.”

Only a small portion of a multi-state utility’s wind farms and interstate transmission lines might serve Wyoming customers. But they more broadly benefit them via economies of scale when it comes to geographically large, systemwide savings, according testimony from utility representatives. Though utilities didn’t oppose the measure, the bill merely adds another layer of work and expense for something the utilities and the commission already do, they said.

“It really doesn’t advance the ball very much because this is essentially what is done anyway,” said Bruce Asay, who represents Montana-Dakota Utilities Co.

Public service commission-integrated resource plans was brought to the committee by the Wyoming Industrial Energy Consumers coalition, and it has tentative support from the Sheridan-based landowner advocacy group Powder River Basin Resource Council.

The bill would direct state regulators to more closely review a utility’s long-range planning and provide guidance for how the utility can better meet Wyoming’s needs and policies.

Utilities routinely update what’s referred to as their integrated resource plan — a roadmap of sorts for how they will provide electrical service well into the future. Rocky Mountain Power, for example, filed its most recent 20-year integrated resource plan update in April, setting tentative retirement dates for several coal-fired power units in Wyoming and neighboring states as well as plans for major investments in new transmission lines, renewable energy and battery storage.

The internal utility-by-utility planning process tends to set an agenda and investment plan in motion ahead of deeper scrutiny by state-level authorities such as the Wyoming Public Service Commission and the broader public, proponents of the bill say.

“So it ends up having an elevated presence and less scrutiny, I argue, than if we had scrutinized it at the very front end,” Case said.

Utility representatives said the bill would result in additional layers of work for both them and the commission, but they did not oppose the measure.

“We do this in Utah. We do it in Oregon. We’re happy to do it in Wyoming,” Rocky Mountain Power Vice President and General Counsel of Government Affairs Richard Garlish said.

One particularly unpopular aspect of Rocky Mountain Power’s contested 21.6% (or $140.2 million) “general rate” increase proposal is another request couched within it. 

Currently, the utility operates under a “cost sharing band” — a regulatory mechanism that splits fuel cost overruns between the utility and its Wyoming customers. Ratepayers are tapped for 80% and the utility is responsible for 20%. The same 80/20 ratio applies when fuel costs come in lower than the amount fixed into rates, sometimes resulting in a rebate to customers.

That type of shared risk and benefit is a good “insurance” policy for ratepayers, and incentivizes the utility to do its best in forecasting prices for wholesale coal and natural gas to fuel power plants, as well as electrical power it sometimes purchases on the open market, according to the Wyoming Office of Consumer Advocate. 

Richard Garlish, foreground, who represents Rocky Mountain Power, and the utility’s President and CEO Gary Hoogeveen, attend a hearing of the Corporations, Elections and Political Subdivisions committee Sept. 20, 2023 in Cheyenne. (Dustin Bleizeffer/WyoFile)

But Rocky Mountain Power wants Wyoming authorities to shift that cost sharing band to 100/0 — requiring Wyoming ratepayers to accept all the risk and reward, depending on how well the utility has estimated future fuel costs. 

The Public utilities-net power cost sharing ratio draft bill would disallow a 100/0 ratio and mandate that the risk and reward be shared to some degree. Though many proponents of the measure support a permanent 70/30 split, the committee declined to establish a specific ratio — only that it could not be 100/0.

Rocky Mountain Power representatives strongly opposed the measure.

Lawmakers and large Rocky Mountain Power customers, particularly the Wyoming Industrial Energy Consumers coalition, worry that the utility’s process for inviting bids from contractors puts potential fossil fuel developers at a disadvantage.

Public utilities-energy resource procurement mimics existing laws in Utah and Oregon that call for an independent evaluator to judge whether a utility’s “requests for proposal” faithfully solicit a full range of technology options for new power generation facilities regardless of their primary energy resource.

Though the commission considers it redundant of current practices and authority, utilities did not oppose the measure. A Rocky Mountain Power representative noted the company already undergoes similar scrutiny in Utah and Oregon.

One measure, Third party electrical generation, which would have allowed groups of customers to generate and potentially sell their own electricity, failed to move forward. 

It’s a form of deregulation, according to critics, and an ongoing legislative effort that’s been defeated in the past. But it’s likely to reappear before the Legislature given strong support among Wyoming’s trona, natural gas and manufacturing industries, as well as bitcoin miners.

WyoFile is an independent nonprofit news organization focused on Wyoming people, places and policy.

 

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