GTH Energy & Natural Resources Law Blog

Current conventional wisdom in the energy industry holds that the natural gas "fracking" revolution will lead to an era of sustained supply gluts and low prices. Low natural gas prices, in turn, will allow for rapid expansion of gas-fired electric generation, leading to a period of sustained low prices in the electricity markets. According to the conventional wisdom, then, the fracking boom will create a sustained economic headwind for renewable generators forced to compete with low-priced gas generation. But several recent scientific and economic studies suggest that the conventional wisdom might be wrong.

By now, the tectonic changes in energy markets arising from the massive increase in natural gas production brought about by application of horizontal drilling and hydraulic fracturing techniques -- commonly known as "fracking" -- are well known. As usefully summarized in this recent primer by Harvard environmental policy professors Michael McElroy and Xi Lu, fracking reversed a long-term decline in domestic natural gas production, driving prices down as much as 86% from their 2008 highs. Among the many unanticipated results, coal-fired generation has declined precipitously, reaching a record-low of 34% of generation last year. Because gas-fired generation produces only about one-half the carbon dioxide of coal generation, the nation's carbon dioxide emissions have fallen to 1992 levels despite persistent political paralysis on climate issues.

Continue reading "Will The Fracking Revolution Bouy Renewables?" »

On Monday, the Washington House of Representatives passed ESSB 5802, which creates a "Climate Legislative and Executive Work Group" to study the state's options for achieving significant reductions in greenhouse gases. The bill, which is the first of Gov. Inslee's legislative requests to pass both houses of the legislature, will set the stage for more substantive legislative action on climate change in next year's legislative session.

ESSB 5802 is intended to jump-start the debate on greenhouse gas reduction in the 2014 legislative session by delivering a set of recommended policies to the legislature by the end of 2013. The first step in this process calls for the Climate Legislative and Executive Work Group to retain a politically neutral consultant to carry out a comprehensive study of the policy options for reducing Washington's greenhouse gas emissions, including a baseline assessment of current GHG emissions by sector, a review of programs adopted by the federal government and by other states and neighboring provinces of Canada, and an analysis of the costs and benefits of the various policy options. The study must also examine a range of specifically-designated policies, including, for example, a Renewable Fuels Standard, emissions performance standards, and policies to encourage greater energy efficiency. This initial evaluation will be delivered to Gov. Inslee by October 15, 2013.

Continue reading "Gov. Inslee's Climate Change Study Bill Is The First Energy Legislation to Clear the Washington Legislature" »

One of the most difficult questions in energy regulation is how best to encourage technological innovation in the an electric industry still dominated by comprehensively-regulated utility monopolies. Because new technologies carry with them significant risks and generally lack solid data upon which to establish ratepayer benefits, regulators are loath to approve investments in new technology and regulated utilities therefore tend to shy away from such technologies. But a range of new technologies now on the horizon promise to revolutionize the electric utility industry. How best to pave the regulatory path for technological innovation is therefore one of the most important questions facing the industry today.

The "Smart Grid" (best thought of as a range of new digital technologies that can provide benefits in all phases of generation and delivery of power) demonstrates the enormous stakes at issue in properly answering this question. The Smart Grid promises to revolutionize the electric system as completely as digitization, the internet, and cellular technology have revolutionized the telecommunications industry. But the state-federal system of utility regulation raises a variety of barriers to adoption of this new technology. In an article published in the most recent Harvard Environmental Law Review, Joel B. Eisen, Professor of Law at the University of Richmond, offers an important and intriguing solution to this regulatory puzzle.

Continue reading "The Smart Grid and "Cooperative Federalism": The Path Forward for Technological Innovation in the Electric Utility Industry?" »

Several recent developments in Oregon and Washington suggest that ocean energy -- electric generation driven by wave and tidal action -- is about to step onto the renewable energy stage in the Pacific Northwest. These developments include important policy changes in Oregon and the achievement of a major milestone for Washington's most important tidal energy project.

In Oregon, the state's Land Conservation and Development Commission on January 24 adopted a major amendment of the Oregon Territorial Sea Plan that identifies four areas off the Oregon Coast where renewable energy development will be preferred. The sites, off Camp Rilea, Nestucca, Reedsport, and Lakeside, comprise approximately 25 square miles, about 2% of Oregon's territorial sea. Two of the sites are thought to be ideal for shallow-water technologies and two for deep-water technologies. The Plan also identifies areas where renewable energy development might be permitted if conflicts with existing uses can be avoided or mitigated. These areas comprises roughly 163 square miles, about 11% of Oregon's territorial sea. Finally, the Plan identifies areas that will remain off limits to ocean energy development due to potential conflicts with existing uses, sensitive ecosystems, and similar concerns.

The amendment has been in the making since 2008, when, faced with a proliferation of FERC preliminary permits for ocean energy exploration and development, then-Gov. Ted Kulongoski declared a moratorium on such development. Since that time, Oregon's Land Development and Conservation Commission has been engaged in an extensive public process to identify existing uses, environmentally-sensitive areas, and important scenic and recreational areas, with the aim of ensuring that ocean energy development does not compromise any of these values. The new amendment is the culmination of that process.

Continue reading "Ocean Energy On the Move in the Northwest: Oregon Adopts New Rules, FERC Finds No Significant Environmental Impacts for Snohomish PUD's Admiralty Inlet Tidal Project" »

On December 17, Oregon Governor John Kitzhaber released Oregon's "10-Year Energy Action Plan," which sets out a long-term framework for Oregon's energy policy. While not binding, the Plan is likely to catalyze action by both the Oregon legislature and Oregon state agencies to carry out the plan's recommendations. Renewable energy producers, utilities, and others in the energy industry will be particularly interested in recommendations that would change Oregon's Energy Facility Siting process, restructuring financing for renewable energy projects, and increase funding for energy-related research and innovation.

The plan is built around three core objectives: (1) to meet 100% of Oregon's electric load growth through energy conservation and efficiency measures; (2) to remove financial and regulatory barriers to development of the infrastructure needed to encourage renewables; and, (3) to transition Oregon's vehicle fleet to electricity or alternative fuels. Many of the specific recommendations to carry out these objectives should be of great interest to those working in the energy industry.

Continue reading "Oregon Releases 10-Year Energy Plan, Emphasizing Conservation, Renewables, Infrastructure Investment, and Alternative Fuels" »

Please join us at the Washington Smart Grid Forum and the Washington Future Energy Conference on November 13 and 14 in Seattle. We are pleased to announce that GTH partner Eric Christensen will be moderating a panel of experts at the Smart Grid Forum on November 13, which is one of three "In-Depth Focus Programs" that will be presented that day . GTH partner Durham McCormick will be speaking on Ownership and Finance Models for Distributed and Community Generation at the main Future Energy Conference on November 14.

The Future Energy Conference attracts a broad range of utility executives, power producers, developers, researchers, investors, and professionals interested in the latest developments from the region's burgeoning renewable energy and research economy. It is one of the best forums to learn about these emerging issues. GTH is therefore proud to be a Silver Sponsor of the Conference.

At its July 19 meeting, the Federal Energy Regulatory Commission ("FERC") issued guidelines developed jointly with the Bureau of Ocean Energy Management ("BOEM" -- formerly the Minerals Management Service) designed to clarify jurisdiction and streamline the permitting process for marine hydrokinetic energy resources, that is, generation devices driven by waves or ocean currents. Marine hydrokinetic resources may be subject to both FERC and BOEM jurisdiction if located on the Outer Continental Shelf ("OCS"), the offshore area under federal control, which generally includes all submerged lands lying three nautical miles or more from the shore to the outer extent of federal jurisdiction, generally 200 miles offshore. The guidelines provide important waypoints for project developers attempting to navigate the complex legal regimes governing electric power development on the OCS.

While FERC's hydro licensing jurisdiction is generally thought of as covering hydroelectric dams on rivers and streams, in fact, any private developer constructing an electric generation project on navigable waters of the United States, or which is interconnected to the interstate grid, is required to obtain a FERC permit under Part I of the Federal Power Act. A developer is also required to obtain a lease from BOEM if its project will produce energy and involves any attachment of a structure or device to the seabed on the OCS, whether temporary or permanent. As a practical matter, this means that nearly every electric generation project located on the OCS will require both a FERC license and a BOEM lease.

In certain respects, the FERC and BOEM legal regimes do not easily co-exist. For example, BOEM leases are generally granted based on competitive bidding, while FERC is required to grant a hydroelectric license to the entity that, in its judgment, is best suited to the comprehensive development of a particular site. In making this judgment, FERC must take into account a number of factors, including giving preference to state and municipal entities. The new FERC-BOEM guidelines, which build on a Memorandum of Understanding between the two agencies signed in April 2009, attempt to simplify and clarify the relationship between these two legal regimes, at least to the extent that can be accomplished without Congressional action.

Continue reading "New Guidelines May Aid Ocean Energy Development" »