Natural gas a better option than coal
Significant reductions in greenhouse gas emissions from existing fossil-fueled power plants can be effectively and affordably achieved through EPA performance standards and guidelines that result in displacement of power generation from the highest-emitting coal-fired power plants by generation from under-utilized, efficient natural gas plants, at minimal cost.
That’s the lead finding of a new study from Clean Air Task Force, offered as a viable way forward as the U.S. Environmental Protection Agency (EPA) drafts its carbon pollution rule for existing power plants under the Clean Air Act as the linchpin of President Obama’s Climate Action Plan.
The report, which is being presented to EPA as it works to meet its June 2014 deadline for an existing power plants draft rule, was authored by Conrad Schneider, advocacy director for CATF based on economic modeling analysis prepared by The NorthBridge Group.
“What we’ve learned from this analysis,” said Schneider, “is that the U.S. can achieve significant CO2 emissions reductions from the fleet of existing fossil-fueled power plants at minimal cost simply by taking greater advantage of currently underutilized natural gas plants to displace power from the highest-emitting coal plants.
The report recommends that EPA:
• Set separate emission rate standards for fossil-fueled utility boilers at 1,450 lbs CO2/MWh and natural gas combustion turbines at 1,100 lbs CO2/MWh; and
• Facilitate least-cost implementation for states by issuing a model interstate emission credit trading rule with the opportunity to use the free allocation of allowances to protect electric retail ratepayers of all classes.
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When put in place, these strategies will protect system reliability, grid stability and fuel diversity by relying on proven, existing fossil electric units that are already in operation and available today.
“If EPA follows these recommendations, we can expect meaningful emissions reductions at minimal costs” said Bruce Phillips, director, The NorthBridge Group. “We’ve done the math, and the results are enormously encouraging. Our calculations suggest the following:
• “By 2020, we will see a decrease of 27 percent, or 636 million metric tons of CO2, from 2005 levels;
• “By reducing coal consumption in favor of natural gas utilization, this plan will reduce sulfur dioxide (SO2) emissions and nitrogen oxides (NOx) emissions by over 400,000 tons each in 2020 resulting in over 2,000 avoided premature deaths and 15,000 asthma attacks annually;
• “An increase in average nationwide retail electric rates of only 2 percent in 2020 which, based on Energy Information Administration forecasts, should result in no net increase in monthly bills;
• “Monetized health and climate benefits of $34 billion, which is over three times the cost of compliance.”
How it would work
Central to the application of an existing plants rule, under this proposed regimen, is the establishment of an emission budget-based “model” interstate emission credit trading rule by EPA that can easily be implemented by the states.
The rule would facilitate states participating in cost-saving emissions credit trading and allow states to mitigate retail electric rate impacts through free allowance allocations. The rule would also allow states to compensate merchant coal generators for losses in asset value that may occur as a result of the program. The net result of this system, NorthBridge found, would be to create incentives for operators to shift generation to existing under-utilized natural gas units and reduce reliance on the highest-emitting coal units.
“We recognize that our plan is only a first step in reaching the Administration’s long-term goal of an 80 percent reduction in greenhouse gas emissions across all sectors by 2050,” said Schneider. “By that date, every remaining fossil fuel power plant – coal or natural gas -- must have carbon capture and storage technology.”
Ofwat allows retailers to raise prices from April
Retailers can recover a portion of excess bad debt by temporarily increasing prices from April 2022, according to an Ofwat statement.
The regulator confirmed its view that levels of bad debt costs across the business retail market are exceeding 2% of non-household revenue, thereby allowing "a temporary increase" in the maximum prices. Adjustments to price caps will apply for a minimum of two years to reduce the step changes in price that customers might experience.
Measures introduced since March 2020 to contain the spread of Covid-19 could lead to retailers facing higher levels of customer bad debt. Retailers’ abilities to respond to this are expected to be constrained by Ofwat strengthening protections for non-household customers during Covid-19 and the presence of price caps.
In April last year, Ofwat committed to provide additional regulatory protection if bad debt costs across the market exceeded 2% of non-household revenue.
Georgina Mills, Business Retail Market Director at Ofwat said: “These decisions aim to protect the interests of non-household customers in the short and longer term, including from the risk of systemic Retailer failure as the business retail market continues to feel the impacts of COVID-19. By implementing market-wide adjustments to price caps, we aim to minimise any additional costs for customers in the shorter term by promoting efficiency and supporting competition.”
There are also three areas where Ofwat has not reached definitive conclusions and is seeking further evidence and views from stakeholders:
- Pooling excess bad debt costs – Ofwat proposes that the recovery of excess bad debt costs is pooled across all non-household customers, via a uniform uplift to price caps.
- Keeping open the option of not pursuing a true up – For example if outturn bad debt costs are not materially higher than the 2% threshold.
- Undertaking the true up – If a 'true up' is required, Ofwat has set out how it expects this to work in practice.
Further consultation on the proposed adjustments to REC price caps can be expected by December.
"While it’s great that regulators are helping the industry deal with bad debt in the wake of the pandemic, raising prices only treats the symptoms. Instead, water companies should head upstream, using customer data to identify and rectify the causes of bad debt, stop it at source and help prevent it from occurring in the first place," she said.
"While recouping costs is a must, water companies shouldn’t just rely on the regulator. Data can help companies segment customers, identify and assist customers that are struggling financially, avoiding penalising the entire customer in tackling the cause of the issue."
United Utilities picks up pipeline award
A race-against-time plumbing job to connect four huge water pipes into the large Haweswater Aqueduct in Cumbria saw United Utilities awarded Utility Project of the Year by Pipeline Industries Guild.
The Hallbank project, near Kendal, was completed within a tight eight-day deadline, in a storm and during the second COVID lockdown last November – and with three hours to spare. Principal construction manager John Dawson said the project helped boost the resilience of water supplies across the North West.
“I think what made us stand out was the scale, the use of future technology and the fact that we were really just one team, working collaboratively for a common goal," he said.
Camus Energy secures $16m funding
Camus Energy, which provides advanced grid management technology, has secured $16 million in a Series A round, led by Park West Asset Management and joined by Congruent Ventures, Wave Capital and other investors, including an investor-owned utility. Camus will leverage the operating capital to expand its grid management software platform to meet growing demand from utilities across North America.
As local utilities look to save money and increase their use of clean energy by tapping into low-cost and low-carbon local resources, Camus' grid management platform provides connectivity between the utility's operations team, its grid-connected equipment and customer devices.