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Republished with permission
Renewables, storage and energy efficiency may get a stronger foothold in Mississippi after utility regulators last week took an unprecedented move to create a formal long-term energy planning process for the electric companies they regulate.
Many argue that the action, the first time regulators have called for a formal energy planning process for electric companies, could significantly boost renewable power. It also could potentially prevent failures like those of Mississippi Power Co.’s power plant known as Kemper.
Kemper was originally slated to be an advanced coal plant with carbon capture before years of cost overruns and delays, but now runs on natural gas without carbon dioxide emissions controls.
The move also could shake up the electricity mix in the Southeast if Mississippi’s move becomes a trend. Coal, natural gas and nuclear power dominate the power sector in the region, although percentages of fuels vary by state.
Last week, the Mississippi Public Service Commission created a framework for Entergy Mississippi Inc. and Mississippi Power, a unit of Southern Co., for how those companies procure power for future years. The utilities have their own long-term forecasts, but commission Chairman Brandon Presley said he wants a transparent process that incorporates all resources, including the one he champions: energy efficiency.
“I feel like we need to be tearing out more Sheetrock and installing more insulation rather than handing out more LED lightbulbs,” Presley said in an interview with E&E News last week. Presley said he hopes the commission can vote on the final planning guidelines by August or September.
The commission’s decision comes at a time when more state regulators and electric companies outside the Southeast are shifting to an all-source planning process, which Mississippi regulators now want to put in place. Doing so expands the type of fuel resources that can be considered if a utility needs to add capacity, giving a boost to renewables and low-carbon energy in many states.
“It’s going to provide a level of transparency and a level playing field for all forms of energy,” said Louie Miller, state director of the Sierra Club’s Mississippi Chapter.
Clean energy advocates have argued that the all-source process allows renewables, energy efficiency and storage to compete more effectively. The costs of solar and wind have fallen to the point where they are cheaper than some traditional baseload fuels in some cases.
Other factors, including reliability, are involved with long-term energy forecasts, however. This is where storage comes into play.
“This is going to provide a seat at the table for anyone and provide some competition in the marketplace,” Miller said. “Entergy and Mississippi Power are going to have to look at cost and reliability and availability, and not just pick winners and losers.”
For now, Mississippi is an early mover in the Southeast with all-source planning. Other utilities in the region use a competitive bidding process, but typically it is for renewable energy projects.
Duke Energy Corp. last year netted about 4 gigawatts’ worth of solar projects through a bidding process, and Southern’s Georgia Power unit solicited bids for up to 540 megawatts of renewable energy as part of its 2016 long-term energy plan.
Georgia Power’s currently proposed integrated resource plan calls for more of that, but officials said last week that there are challenges that come with an all-out free-market approach for replacing baseload generation such as coal. The utility plans to remove roughly 1 GW of coal from its system in the coming years and has other units under review (Energywire, Feb. 1).
Clean energy advocates have pushed the electric company to broaden its proposal requests to test the market for capacity that could replace even more than that. Doing so would jeopardize reliability, said Jeff Weathers, manager of generation planning and development for Southern Co. Services, another unit of Southern.
“For the sake of the reliability for our customers, you have to consider some type of firmness requirements,” Weathers said at a hearing this week.
Outside the Southeast, there’s been more support for the concept. Xcel Energy Inc., for example, received 430 proposals for new generation, mostly wind and solar, as part of its quadrennial planning process. The Minneapolis-based electric company then followed up with a pledge to bring 100% carbon-free electricity to its more than 3.3 million customers by 2050.
Northern Indiana Public Service Co.’s request for proposals for all energy sources eventually pointed to 1,500 MW of solar and storage and 150 MW of wind energy.
Both utilities are using renewables to replace capacity from coal-fired power plants.
Under the proposed plan, Entergy Mississippi and Mississippi Power would have to evaluate all generation assets if there is a capacity need. If an independent power generator offered to produce reliable electricity at a cheaper rate and the company turned down the contract, it would have to formally explain why.
“We want to know why you didn’t choose it: Is there a good reason behind that, or are you simply protecting your own generation assets?” Presley said.
Preventing another Kemper?
Presley, a veteran utility regulator, said he’s been pushing for what’s known as an integrated resource plan — a road map for utilities — since he was elected to the commission more than a decade ago. Roughly two-thirds of utility commissions in the country have an IRP process, according to a Mississippi PSC document.
Presley and others argue that the lack of a transparent planning process led to the commission signing off on the Kemper project years ago. The carbon capture and storage (CCS) project was supposed to gasify lignite coal and capture the majority of its carbon emissions.
Kemper suffered from significant delays and cost increases that customers and Mississippi Power paid for.
The power plant now is a natural gas operation called Plant Ratcliffe, which was the result of the PSC putting the brakes on the CCS portion in 2017. If the commission had had more time to evaluate the utility’s capacity needs, the outcome could have been different, Presley argues.
“It had to be approved; it was rushed; there was a sense of urgency introduced into that docket that, in my opinion, was a false sense of urgency,” he said. “We want to be able to see down the field, as far as we can, with the best data we have, to meet the needs of the state.”
A 2012 PSC document called the Kemper docket the “the most thoroughly analyzed certificate petition ever presented to the Commission.” The PSC reviewed the project to see whether Mississippi Power needed the baseload generation and then again to determine the best type of fuel.
Presley signed off the first time but disagreed that a coal gasification project was the way to go.
Others back his assertion that a better planning process is needed now to prevent history from repeating itself.
“There was a realization that [the IRP] was a tool that the state was missing to prevent things like Kemper from happening again,” said Simon Mahan, executive director of the Southern Renewable Energy Association.
An efficiency laggard
Presley has other reasons for backing an IRP. He’s upset with Mississippi consistently ranking near the bottom when it comes to energy efficiency.
This is after efforts to remove it from dead last in that ranking and ranking No. 1 for how much energy residents use in their homes (Energywire, June 26, 2014).
Both translate to higher bills for a low-income state in the hot and humid Deep South. Presley is calling for what he says is a “proactive, hands-on program” and an option for on-bill financing. Broadly, this means the utility underwrites efficiency upgrades and then gets repaid via someone’s monthly bill.
In short, modernizing someone’s home is going to go further than handing out weatherstripping and a pamphlet about how to conserve electricity, Presley said. Mississippi’s proposed IRP framework would uncuff the utilities and let them be innovative in other efficiency programs, he said.
“Obviously there’s a place for education,” Presley said. “It’s just time to get real about this.”
Reprinted from Energywire with permission from E&E News, LLC. E&E provides daily coverage of essential energy and environment news at www.eenews.net.