Bill Maher’s New Climate Change Solution
Increase emissions to decrease emissions. From Real Time with Bill Maher via YouTube
Gleanings from the web and the world, condensed for convenience, illustrated for enlightenment, arranged for impact...
WEEKEND VIDEOS, April 20-21:
Increase emissions to decrease emissions. From Real Time with Bill Maher via YouTube
Very Impressive. Eco-friendly high volume energy storage built in weeks and automated. Pilot project soon in service could be a gamechanger. From Quartz via YouTube
“They had to build a natural gas plant to power the carbon capture part of the coal plant.” From greenmanbucket via YouTube
For Earth Day, how Americans see climate change in 5 charts
Cary Funk and Brian Kennedy, April 19, 2019 (Pew Research)
A majority of U.S. adults (56%) say protecting the environment should be a top priority for the president and Congress, while a smaller share (44%) says the same about dealing with global climate change, according to a 2019 Pew Research Center survey…
A majority of Americans see at least some effect of climate change where they live…[45%] pointed to changes in the weather, including increasing frequency of severe storms, droughts, floods and wildfires (45% of those asked cited this reason)…[67%] of Americans who live within 25 miles of a coastline (67%) say climate change is affecting their local community…
[67%] of Americans (67%) said the federal government wasn’t doing enough to reduce the effects of global climate change…[66% of Democrats and center-left independents] said policies aimed at reducing climate change generally provide net benefits for the environment…[27% on the right agreed]…44% of Republicans said such policies make no difference…[and 28%] said they do more harm than good for the environment…[57% of Republicans] such policies hurt the economy…Democrats said climate policies either help (45%) or make no difference (39%) to the economy…
Millennial Republicans were twice as likely as Republicans in the Baby Boomer or older generations to say the Earth is warming due to human activity (36% vs. 18%)…[Only] 43% of Millennial Republicans said they favored the increased use of coal mining, compared with 71% of Republicans in the Baby Boomer or older generations…Partisanship is a stronger factor in people’s beliefs about climate change than is their level of knowledge and understanding about science…” click here for more
Renewable Energy Could Save $160 Trillion In Climate Change Costs by 2050
James Ellsmoor, April 14, 2019 (Forbes)
“With development and energy demands soaring worldwide, there is an opportunity for clean, renewable energy to supplant fossil fuels and take over as the main form of electricity generation… [New findings from the International Renewable Energy Agency (IRENA) show] how the world can successfully implement large-scale renewable programs that will not only help reduce carbon emissions but improve global socioeconomic development…[Global energy demands are expected to double by 2050, and] 86% of global electrical needs could be met by renewable energy…[T]he extra energy load would be carried mostly by wind and solar…[but to do so, growth] must accelerate…
IRENA advocates for stronger national policy focusing on long-term zero-carbon strategies as well as promoting innovation in the fields of renewable energy, technology and smart-grids…[because] benefits stemming from embracing clean, renewable energy go a lot farther than just reducing pollution and carbon emissions…[A] rapid transition could save the global economy US$160 trillion in costs associated with climate change…” click here for more
Global Energy & CO2 Status Report; The latest trends in energy and emissions in 2018 Global trends
April 2019 (International Energy Agency)
Global energy consumption in 2018 increased [2.3%, nearly] twice the average rate of growth since 2010, driven by a robust global economy [which expanded by 3.7%] and higher heating and cooling needs in some parts of the world. Demand for all fuels increased, led by natural gas [which was 45% of growth], even as solar and wind posted double digit growth. Higher electricity demand was responsible for over half of the growth in energy needs. Energy efficiency saw lacklustre improvement. As a result of higher energy consumption, CO2 emissions rose 1.7% last year and hit a new record…
…Coal-fired power generation continues to be the single largest emitter, accounting for 30% of all energy-related carbon dioxide emissions…China, the United States, and India together accounted for nearly 70% of the rise in energy demand…Weather conditions last year were also responsible for almost a fifth of the increase in global energy demand as average winter and summer temperatures in some regions approached or exceeded historical records. Cold snaps drove demand for heating and, more significantly, hotter summer temperatures pushed up demand for cooling…Renewables, which grew by over 4%, met around one-quarter of the growth in total primary energy demand. This was largely due to expansion in electricity generation, where renewables accounted for 45% of the growth in 2018…” click here for more
Millennial Trump Supporters Are Breaking With Their Party Over Climate Change
Oliver Milman, April 15, 2019 (UK Guardian via Mother Jones)
“…[The White House is getting increasing pushback against its disrespect for climate science as] lives are increasingly ravaged by flooding and wildfires…Democrats have seized the initiative with the Green New Deal resolution, which proposes full-scale social and economic change to eliminate carbon emissions while investing in education, health, transportation, and a federal jobs guarantee…[and younger Republicans are breaking the administration] in an attempt to haul their party toward scientific reality…In January, 41 state college Republican chairs of [the American Conservation Coalition, a Republican youth group founded 18 months ago but already with a presence in 125 colleges, signed a] letter to GOP leaders urging ‘action on clean energy and environmental issues’ to ensure ‘conservative values are not lost on the next generation’…
Almost 60 percent of millennial Republicans agree that climate change is already having some effect on the US, according to Pew Research polling. Nearly half believe the government isn’t doing enough to alleviate the damage…With record numbers of Americans expressing alarm over climate change, it may be that flat denial of climate science is becoming unmoored from political expediency…The US has been rattled by record hurricanes and wildfires in the past two years, with government scientists predicting increasingly punishing storms, crop failures, and coastal inundation. Thousands of people are set to perish in heatwaves…The US Government Accountability Office calculates climate impacts cost the federal government $350 billion in the past decade, with economic losses on course to hit $500 billion every year by the close of the century…There’s a realization on both sides, however, that the Green New Deal and growing public concern has cracked open the debate…” click here for more
These huge towers of bricks are an ingenious solution to our energy storage problem
Adele Peters, April 8, 2019 (Fast Company)
“Energy Vault uses cranes powered by renewables to lift [35-metric-ton bricks] into a tower. When the sun isn’t shining or the wind isn’t blowing, lowering the bricks back down creates new energy. It’s one of Fast Company’s 2019 World Changing Ideas Awards winners…[A full-size commercial demonstration in Milan, Italy, will show how] the system uses gravity to store energy as it raises and lowers the bricks…Running a wind or solar farm is now cheaper than many old coal plants, but the economics of storing energy is still an issue…[W]hen a utility needs to store electricity for more than a few hours, it’s still hard for the cost of that storage to compete with fossil fuels…When a solar farm produces extra electricity during the day, giant cranes use that energy to lift and stack the bricks, storing energy through the elevation gain. When the energy is later needed, software tells the system to lower the bricks, and that spins generators to send electricity back into the grid. The system can respond within a millisecond…
Energy Vault is in talks with other customers about more than 1,200 potential towers…[The cranes can be delivered within months and erected within weeks, without the huge investment of a battery factory. The bricks themselves can be made on-site from materials such as concrete construction debris–which would otherwise go to a landfill–or soil. At a coal plant that plans to close and reopen renewable energy on-site, the bricks could be made from coal ash that companies would otherwise have to spend money to clean up…The [few cents per kilowatt hour] cost of storage over the lifetime of the new system is seven times cheaper than lithium batteries…” click here for more
Arrow Electronics And We Care Solar Co-Operate On Innovative Solar Suitcase Technology
April 8, 2019 (Brand Spur)
“Arrow Electronics and nonprofit We Care Solar won the 2019 Edison Award for Social Innovation for its joint development of Solar Suitcase 3.0, a portable and durable power system that provides sustainable energy for around-the-clock, effective obstetric care in remote and off-grid maternal health facilities around the world…Worldwide, more than one billion people live without electricity – and 300,000 women die in childbirth, often turned away from health centres that lack power…We Care Solar is a nonprofit that has teamed with Arrow to ensure women have access to safe childbirth in well-lit health facilities…
[The Solar Suitcase is] a sun-powered, waterproof, compact system that includes medical-quality lighting, a fetal monitor, rechargeable headlamps, and cell phone charging for remote health workers to make emergency referrals…We Care Solar and Arrow partnered to lower the cost with a] more powerful design that is now easier to manufacture at scale, install and operate. Each unit is expected to work for at least five years before requiring a simple battery replacement. Extensive field testing is continuing in Uganda, and expanded manufacturing in the United States is planned for 2019…” click here for more
New campaign will ask coal users to face the 'cold hard economic case' against them; With 150 GW of U.S. coal still in service, the Rocky Mountain Institute aims to prove the resource is raising electricity costs.
Herman K. Trabish, Oct. 22, 2018 (Utility Dive)
Editor’s note: The economics of coal are getting worse and worse and more and more utilities are moving away from it.
Bruce Nilles, who led the charge against coal that shuttered 275 of the 530 U.S. coal plants as director of the Sierra Club Beyond Coal Campaign from 2002 to 2018, will now lead a new effort against coal. Nilles was named a Rocky Mountain Institute (RMI) Senior Fellow in August and awarded a $2 million grant to lead a new effort based on the economics of coal. "By 2020, coal will be gone from most of the country and concentrated in a handful of states," Nilles told Utility Dive. "The way to make progress in the remaining states is to make the cold hard economic case to regulators and customers that the high cost of coal-generated electricity is not good for business." Nilles' new objectives are to replace coal with lower-cost alternatives, and then get fossil fuels out of other economic sectors, such as transportation and building heating and cooling.
The biggest landmark in the economic case against coal were the bids in an Xcel Energy solicitation at $21/MWh for wind plus storage and $36/MWh for solar-plus-storage, Nilles said. Equally important was a June NV Energy filing for a 300 MW solar project at $23.76/MWh. Major coal-owning utilities, like the Tennessee Valley Authority (TVA), say they are evaluating the economics of their coal assets. But they say coal will come out of their resource mixes when their own data — which they insist is confidential — shows it is no longer the least-cost option. Without access to that data to prove utilities wrong, Nilles will instead show that coal is driving up electricity rates in coal-reliant states and will call on consumer groups to verify the harm high rates are doing to state economies. Then, he will use strategies described in a September RMI paper to show there are financial approaches that could make closures a win-win-win for consumers, plant owners and the climate… click here for more
Virtual contracts drive a boom in corporate renewables procurement; As options for renewable energy purchase agreements grow, more businesses are coming into the market voluntarily.
Herman K. Trabish, Oct. 23, 2018 (Utility Dive)
Editor’s note: Corporate procurement is an increasing force in New Energy growth.
More renewables are being contracted by more big businesses in more states than ever before through an evolving set of innovative agreements that now include virtual contracts. Corporate contracting for utility-scale wind and solar had a record year with 4.81 GW of deals completed in just the first ten months of 2018. The majority of renewable capacity is now being built with innovative "virtual" power purchase agreements (VPPAs), though "physical" PPAs are still available. The variety of deals allows companies in unregulated markets to focus on projects that suit their preferences, with some targeting lower costs and others targeting environmental or economic impacts.
Physical PPAs deliver corporate buyers' contracted renewable energy capacity onto the local grid, offsetting the electricity purchased by buyers from the grid at a retail price or a pre-negotiated green tariff price, World Resources Institute(WRI) Clean Energy Innovation specialist Celina Bonugli told Utility Dive. VPPAs deliver corporate buyers' renewable energy megawatt hours into the power markets in the projects' territories where the buyers pay contract prices and receive market prices. In regulated markets, green tariffs approved by state commissions provide corporate buyers the option of purchasing renewables through their utilities, she added. There is now a "toolbox" that corporate customers with sustainability and renewables goals can use to purchase renewable energy, depending on “their risk profile, the market they are in and the kind of impact they want to have," Bonugli said… click here for more
NO QUICK NEWS
Utility Investments In Resilience Of Electricity Systems
Lisa Schwartz, et. al,, April 2019 (Organization of MISO States, National Rural Electric Cooperative Association, Edison Electric Institute, National Association of State Utility Consumer Advocates via Lawrence Berkeley National Laboratory)
While reliability is a foundational attribute for electricity systems, resilience is a related concept that has gained more recent attention. The U.S. Department of Energy included resilience among six core areas for electric infrastructure metrics, envisioning modern grids with greater resilience to hazards of all types. 1 The Grid Modernization Laboratory Consortium published a metrics reference document in 2017, including a set of forward-looking grid resilience metrics and a process for calculating them, designed to:2
• Help utilities better plan for and respond to low-probability, high-consequence disruptive events that are not currently addressed in reliability metrics and analyses
• Provide an effective, precise and consistent means for utilities and regulators to communicate about resilience issues
The reference document defined resilience as the ability to prepare for and adapt to changing conditions and withstand and recover rapidly from disruptions, including the ability to withstand and recover from deliberate attacks, accidents, or naturally occurring threats or incidents. It also recommended adoption of a seven-step process to help specify resilience objectives for utilities (see Figure ES-1).
The proposed resilience metrics are consequence-based and fall into two general areas. Following are specific categories and an example for each:
o Electrical service (cumulative customer-hours of service)
o Critical electrical service (cumulative critical customer-hours of service)
o Restoration (time to recovery) o Monetary (loss of utility revenue)
o Community function (hospitals and fire and police stations without power)
o Monetary (business interruption costs)
o Other critical assets (key military facilities without power)
Definitions and metrics for resilience are evolving. Whether and how utilities and regulators (or boards or city councils) should distinguish between resilience and reliability — in terms of approaches and decision-making criteria for planning and investments — also are developing areas. Many other entities also are involved in critical infrastructure decisionmaking related to resilience.
This report presents differing viewpoints on several key questions related to utility investments to improve the resilience of electricity systems:
1. What level and scope of resilience do we need and how much are we willing to pay?
2. Who’s responsible for resilience, and how should other entities coordinate with utilities when there are mutual benefits?
3. What types of utility investments have the most impact on improving resilience, and how can utilities and regulators tell whether utility investments in resilience are impactful?
4. Should utilities take more proactive approaches to investments in resilience?
5. How can decisionmaking about resilience investments be improved?
Authors representing diverse perspectives provide their responses:
• State regulators – Organization of MISO States, with technical support from Lauren Azar (Chapter 1)
• Utilities o Randolph Elliott, National Rural Electric Cooperative Association (Chapter 2) o Scott Aaronson, Edison Electric Institute (Chapter 3)
• Consumers – National Association of State Utility Consumer Advocates, with technical support from Sheri Givens (Chapter 4)
All the authors point out lack of a common definition, analytical framework and metrics for resilience, while acknowledging recent efforts by federal entities, including the U.S. Department of Energy; national energy laboratories; and the electric power industry. Other common themes include evolving grid threats as well as state and local responsibilities for improving resilience.
Organization of MISO States (OMS) highlights a variety of approaches state utility regulators are taking to address resilience, including specifically targeted measures, broad initiatives addressing reliability, distribution planning or grid modernization, or other activities under enabling-statute obligations. Some state regulators prefer qualitative over quantitative methods for measuring resilience; others are open to quantitative methods if they are collaboratively developed, voluntary and customizable.
The organization supports a federal role in conversations with utilities and states to respond to electric system needs and potentially planning exercises for high impact, low frequency (HILF) events. The organization also sees potential benefits from improving regional and interregional coordination, including sharing information and best practices. Still, HILF events may affect only one state (or part of a state), and each state evaluates resilience through its own unique lens. Specifically, state utility commission decisions on cost recovery for utility investments are fact-specific and case by case. “Considering the same risks and consequences, some commissions may choose to bolster resilience while others may not,” OMS says.
Similarly, the National Rural Electric Cooperative Association (NRECA) sees dispersed authority over the electric system “as a feature, not a bug,” while acknowledging a growing need for coordination as the power grid and electric industry evolve. The organization supports the Federal Energy Regulatory Commission continuing its inquiry into the resilience of the bulk power system. The coops suggested several principles to guide development of policies to address bulk power system resilience for design of centrally-organized wholesale markets, such as regional flexibility to assess needs and devise solutions, technical ability of the resource to provide resilience services, market-based compensation, and allowing self-supply by load-serving entities. In addition, NRECA sees a potential federal role with respect to developing consensus agreement on resilience definitions, analytical tools and metrics to improve “bottom-up” planning, coordination and decisionmaking at the local level. However, even if resilience was defined, measured and analyzed in a standardized way, NRECA maintains that local variations — such as resource mix, grid topology, topography of the utility’s service area, and local weather and earthquake risks — mean that appropriate resilience solutions will vary.
Rural electric coops also stress the need for long-term integrated planning to evaluate resilience risks and alternative measures to address them over the lifetime of potential utility investments, in order to minimize long-term costs and stranded investments. For the near term, the organization finds that hardening distribution systems, pursuing appropriate resource diversity on the generation system, and enhancing cybersecurity appear to offer the best approach in terms of value and minimizing regrets.
Edison Electric Institute (EEI) represents the nation’s investor-owned utilities and brings an Electricity Subsector Coordinating Council perspective. The Council is the principal liaison between senior officials of the federal government and the electric power industry for coordinating efforts to prepare for, and respond to, national-level incidents or threats to critical infrastructure. The Council also helps government and private-sector partners deepen relationships with other, interdependent critical sectors, including financial services, communications, water, natural gas and transportation.
In its essay, EEI describes the role of electric companies both in enabling resilience and providing a platform for resilient energy services that support customers and national security. As EEI points out, it is impossible to defend against all threats. So resilience planning must consider how to proactively prepare for and respond to threats. The most impactful resilience investments are those that defend against multiple hazards, according to EEI. Further, a focus on managing potential consequences, rather than prevention alone, means “electric companies avoid chasing the latest defensive measure against always evolving threats and, instead, prepare to respond to all hazards.” Given limited resources and evolving threats, prioritizing investments and focusing on consequence management are key components to improving resilience. Finally, EEI acknowledges that addressing questions about costs and benefits, especially when making investments to address high-risk, low-probability events or investments based on evolving research and new data, requires robust information-sharing and collaboration.
The National Association of State Utility Consumers Advocates (NASUCA) notes that few power outages are caused by generation issues and calls for greater attention to investment in resilience measures for distribution and transmission. NASUCA supports development of resilience frameworks that consider the probability of an event and its impacts on the grid, while requiring each utility to conduct cost-benefit analysis of major resilience investments. Specifically, for any proposed investment, potential costs should be fully delineated and just and reasonable, information provided should be transparent, investments should be made prudently and, if approved, utilities should be held accountable to staying within their proposed costs.
According to NASUCA, “The role of consumer advocates is to ensure that utilities and state commissions apply a rigorous cost-benefit analysis, prudence review, and consideration of affordability to evaluate all resilience measures.” Consumer advocates also support distinguishing resilience needs between different consumers in the same customer class (e.g., higher priority for hospitals and emergency services), prioritizing post-event recovery among them, and considering different needs when determining who pays for resilience investments.
State Regulator Perspectives on Utility Investments in Resilience…A Cooperative Perspective on Utility Investments in Resilience…Investor-Owned Electric Company Perspectives on Investments in Resilience…Consumer Advocates’ Perspectives on Utility Investments in Resilience…
Extinction Rebellion Joins The Climate Fight Extinction Rebellion want to get arrested to fight climate change
Stephanie Bailey, April 15, 2019 (CNN)
“…Extinction Rebellion, a grassroots environmental group based in the UK, is responsible for a series of stunts that deliberately break the law to highlight the threat of climate change…[They stripped to underwear in the House of Commons' public gallery and held] a ‘Funeral for our Future’ outside Buckingham Palace…[It has provoked 222 arrests] and thousands have declared they are willing to be arrested, or even go to prison, to demand action on climate change…Extinction Rebellion claims their actions are based on research into how to use ‘non-violent civil disobedience to achieve radical change’ …[which includes] declaring a climate change emergency, reducing greenhouse gas emissions to net zero by 2025 and starting a citizen's assembly…
According to the group, research shows that non-violent uprisings involving 3.5% of the public participating in acts of civil disobedience force a political response because they cannot be ignored…Almost 10,000 people worldwide have signed up as ‘willing to get arrested,’ as of April 8, 2019…[O]ver 80% are also ‘willing to go to prison’…[T]he UN Intergovernmental Panel on Climate Change (IPCC) warned last year that the planet only has 11 years before it reaches disastrous levels of global warming…[Extinction Rebellion next plans to shut down London by blocking traffic at five locations and] playing music, hosting discussions and refusing to move from the street…” click here for more
Beating Climate Change With A New Energy Grid New Study Confirms Benefits of Electrifying CA Buildings
Pierre Delforge, April 15, 2019 (Natural Resources Defense Council)
“…About half the pollution from California's buildings comes from burning [natural gas], primarily for heating and hot water…[Moving to heating and water with electricity generated by New Energy can] slash greenhouse gas emissions (GHGs) from California's single-family homes by up to 90 percent within the next three decades, save consumers money in the process, and support the] state's ability to achieve its goal of carbon neutrality by 2045 [according to a new study from Energy+Environmental Economics]…That means outfitting new homes with high-efficiency, electric-powered heating systems and water heaters, and retrofitting existing homes when the old gas equipment needs replacing…
…[New Energy] is getting cheaper than electricity from gas power plants…[Sustainably-produced renewable gas can play a role but it is in limited supply and has a higher] cost…[Full electrification would reduce greenhouse gas emissions in single-family homes by about 30 percent to 60 percent as soon as next year. As the carbon intensity of the grid decreases over time, the savings increase to about 80 percent to 90 percent by 2050…[For new construction, going all-electric will save] $130 to $540 per year…[87% of existing homes can save] by switching from a gas furnace and air conditioner to an electric heat pump system that provides both heating in winter and cooling in summer…[To achieve the state’s GHG reduction goals,] at least half of existing residential buildings, or more than 7 million homes, will require retrofits…[Policy drivers will be needed because that] is a huge task…” click here for more
Financing Third Party Wildfire Damages: Options for California’s Electric Utilities
Carolyn Kousky, Katherine Greig, and Brett Lingle February 2019 (Wharton Risk Management and Decision Processes Center, University of Pennsylvania)
• Wildfire risk is escalating in the western United States, devastating and disrupting communities and creating billions of dollars in property damage.
• Under a unique legal regime in the state of California (inverse condemnation), electric utilities are held strictly liable for property damage associated with any wildfire where utility infrastructure is found to have been a significant cause of ignition, even if the utility was not negligent in their risk management actions.
• Wildfires in 2017 and 2018 have shown that these liabilities can reach into the billions, threatening the financial health and solvency of utilities, with consequences for ratepayers, shareholders, and the state’s ability to meet its climate and energy goals.
• This liability poses challenges for traditional approaches to risk financing as it is concentrated and potentially catastrophic.
• When utilities act negligently, they should bear costs proportional to their negligence. Absent reform to eliminate or modify the application of the doctrine of inverse condemnation to utilities, however, utilities need financing mechanisms that enable them to cover this growing liability.
• There are a range of mechanisms that could facilitate a utility’s ability to access capital to cover this risk, including funded self-insurance, commercial insurance, catastrophe bonds, industry captives, an industry risk pool, and recovery bonds. These financing options are not mutually exclusive, and several should be layered together to ensure funding for third-party liability from wildfires of various magnitudes.
• Each of these strategies would require an annual contribution and/or initial capitalization. How those costs are distributed has implications for who ultimately bears the costs of wildfires. To align with the regulatory compact, ratepayers would shoulder cost-effective pre-wildfire financing and shareholders would pay post-loss costs in proportion to utility imprudence.
• With the significant increase in wildfire risk due to climate change and continued development in the wildland urban interface, risk mitigation by all stakeholders will be needed to complement financing efforts. This includes land use planning modifications, adoption and enforcement of strong building codes, broad education campaigns for those living in high-risk areas, and costeffective mitigations by land owners and business owners.
In California and across the west, the frequency and severity of catastrophic wildfires are increasing, as are the damages. Eight of the twenty most destructive wildfires in California history occurred in 2017 and 2018, destroying more than 31,000 structures—double the number consumed by the other twelve.2 In the 1980s, the California Department of Forestry and Fire Protection (Cal Fire) spent an average of $61 million (2018 USD) per year on fire suppression. Since then, costs have escalated steadily and significantly, reaching an average of $121 million in the 1990s, an average of $304 million from 2000- 2009, and averaging roughly $450 million annually since 2010 (all in 2018 dollars). 3 Beyond the direct property damage and suppression costs, these fires have substantial indirect damages, as well, such as lost tax revenue to local governments, health impacts from the smoke, increased carbon emissions, and lost environmental values.
In most places outside California, the direct property damages from wildfires—the focus of this paper— are borne by property owners, insurers, and taxpayers (via state or federal disaster assistance programs). In California, however, electric utilities can be required to pay all property damages for wildfires where utility infrastructure was a significant cause of wildfire ignition. The California state constitution says that private property may be “taken” or damaged for public use only when just compensation is provided.4 Several courts in California have held this doctrine applies to electric utilities, since they have a state-granted monopoly and provide a public service. As such, in California, electric utilities are strictly liable for property damages arising from wildfires traced to their equipment; that is, they must pay for the damages even if they are without fault.5
Note, the reasoning for inverse condemnation, as explained by the courts, is that costs associated with activities that generate broad public benefits should be “distribute[d] throughout the community...to socialize the burden...that should be assumed by society.”6 The courts have held that utilities are able to socialize costs through rates and thus spread wildfire related costs on all those who benefit from electricity. In contrast to a classic “taking” where a government entity can raise taxes to cover the costs, whether or not these costs can be passed to ratepayers is under the control of the California Public Utilities Commission (CPUC) and is not guaranteed. In making decisions, the CPUC adheres to a standard of evaluating whether the utility acted “reasonably and prudently” in operating and managing its system.7 This is a distinct standard from legal negligence. A party can be found negligent for a single act, whereas a reasonable and prudent operator is one who operates its system consistent with the standards in place at the time even if an adverse event nonetheless occurs.
The potential costs arising from this strict liability regime in California have recently been substantial. For fires in 2007, San Diego Gas and Electric had to pay $2.4 billion in wildfire costs.8 PG&E estimated it could face up to $15 billion in liability and hundreds of lawsuits if their infrastructure was involved in the ignition of 2018’s Camp Fire.9 The company’s financial viability in the face of these liabilities has been so tested that it filed for bankruptcy at the end of January 2019. All three major rating agencies have downgraded the investor owned utilities in response to California’s application of strict liability for wildfire damages. 10 Lower ratings may discourage investors from purchasing utility-issued bonds and from buying equity in the company. This makes it more difficult and expensive for utilities to refinance debt maturities and raise debt and equity capital for critical projects.
All stakeholders agree that when utilities have acted negligently, they should bear costs proportional to their negligence. However, when they have not acted negligently, this strict liability legal regime will subject California’s utilities to financial hardship with risks now recognized as potentially so large, it could threaten their viability, impacting ratepayers, shareholders (who tend to be older and middle income11), and undermining the state’s ability to meet climate and energy goals that require investments by the utility. While PG&E’s bankruptcy has raised myriad questions, this paper does not address PG&E’s past or future management, decision-making, or actions. The paper looks at the broader issue for all utilities of how to finance a catastrophic risk, for which traditional risk financing approaches are stressed, absent reform of the application of inverse condemnation.
Recognizing concerns about the unsustainability of the status quo, the California Legislature created a Commission on Catastrophic Wildfire Cost and Recovery to “examine issues related to catastrophic wildfires associated with utility infrastructure.”12 The Commission, seated in January 2019, is tasked with recommending policy options for action by the governor and legislature that would “socialize the costs associated with catastrophic wildfires in an equitable manner,” as well as options for establishing “a fund to assist in the payment of costs associated with catastrophic wildfires.” 13 Legislation has also recently been introduced to create a risk pooling mechanism for California’s utilities.
To inform the ongoing policy dialogue, this paper discusses potential financing options for third-party wildfire damages for California’s electric utilities, assuming that the current liability regime remains in place. We focus on the state’s investor-owned utilities (IOUs) since they have had the largest liabilities to date, they cover a significantly larger service area, and have commensurately greater exposure to wildfire risk. The three largest IOUs in the state—Pacific Gas and Electric (PG&E), San Diego Gas and Electric (SDG&E) and Southern California Edison (SCE)—are responsible for providing roughly threequarters of all electricity used in California (see Figure 1 for service areas). That said, publicly-owned utilities (POUs), of which there are over 40 in the state, could also face these concerns and we discuss POUs explicitly where relevant. Indeed, the CEO of the Sacramento Municipal Utility District (SMUD) noted in a hearing to the California state legislature on August 9, 2018 that if a POU were ever found to have had equipment igniting a wildfire, that could lead to massive rate increases for customers or bankruptcy for a smaller POU.
Section 2 begins with an overview of the current arrangements for utilities to cover wildfire damage. Section 3 presents a range of risk financing strategies that could help facilitate access to capital to cover property damage from wildfires for which utility equipment is deemed to be a cause of ignition. This includes discussion of funded self-insurance, commercial insurance, catastrophe bonds, industry captives, an industry risk pool, and recovery bonds. The financing options are not mutually exclusive, and several could be utilized simultaneously to ensure funding for various magnitude wildfires. We discuss this in Section 4. Each of these financing strategies would require an annual contribution and/or initial capitalization to be viable. In Section 5, we present potential funding sources and mechanisms, and their distributional implications. Section 6 concludes with high-level policy recommendations…
The effects of climate change, along with development in the wildland urban interface are continuing to drive up the risk of wildfire damages in California. The state needs to adopt a sound financing strategy for its electric utilities to protect all parties and to ensure continued progress on broader climate and energy goals. The most straightforward way to achieve this may be to eliminate strict liability for thirdparty wildfire damages coupled with a cost recovery standard at the CPUC that is tied to universally agreed upon risk reduction activities (such as could be articulated in the utilities’ SB 901 wildfire management plans). The current regime has created a risk that is difficult to finance due to its concentrated and catastrophic potential. Eliminating strict liability for third-party damages for wildfire, while simultaneously adopting new regulations on wildfire mitigation activities for electric utilities, could preserve incentives for proper risk reduction yet not threaten the ability of utilities to provide electrical service in high-risk areas by forcing them to cover escalating costs even when they are not negligent.
Absent reform, addressing third-party wildfire liability for California’s electric utilities will require layering together multiple risk financing options. Utilities likely need a dedicated rate component for some level of funded self-insurance as the initial financing layer. Commercial insurance and catastrophe bonds may be able to play a small role, but currently, the private market has seen rising prices and decreasing interest in assuming this risk. As such, utilities likely need to pursue, in consultation with the CPUC, some type of risk pool or industry captive. If utilities could be guaranteed pre-disaster state backing or CPUC approval of rate recovery, recovery bonds are another viable financing option. Without more certainty, *however, they may not provide needed financial assurances. Ex-ante financing and guidelines are necessary to have in place, because without them, post-wildfire there are protracted negotiations between the utility, CPUC, the state legislature, and other stakeholders on how to divide costs between ratepayers and shareholders. Reducing this post-disaster confusion is in the interest of all stakeholders.
Only about 5% of wildfire ignitions are from power lines (this is just over 10% of acres burned).56 For the state as a whole, then, property damage from wildfire is a much broader issue than electric utilities. As concerns mount about the affordability and availability of property insurance in highly wildfire-prone regions,57 the state must have a larger policy discussion with utilities, insurers, and all other stakeholders, about how to equitably fund this growing risk and provide greater incentives for risk reduction to all parties, including local governments and households.
Climate Change’s “Extreme Pollen” Ups Allergy Struggles Allergy Season Is Getting Worse, Thanks To Climate Change
Steven Salzberg, April 15, 2019 (Forbes)
“Allergy sufferers are having a rough time of it this spring…and climate change is at least partly to blame…[Airborne pollen data from 17 locations, spanning the entire globe, and stretching back an average of 26 years, shows increases in] both pollen loads and pollen season duration over time…The NY Times reported that North Carolina is facing “extreme pollen” which has turned the air yellowish…
[O]ver-the-counter antihistamines help, although they only treat the symptoms. Allergy shots can provide long-term relief, if you have the time to go through the months-long regimen. Other than these options, the best you can do is stay inside and wait for pollen season to end…” click here for more
Solar Breaking Through In The Southeast Solar In the Southeast; Second Annual Report Highlights Corporate Leadership Driving Solar Expansion Throughout the Region
April 11, 2019 (Southern Alliance for Clean Energy)
“…[Solar energy development in the Southeast reached over] 8,000 megawatts (MW) of solar capacity in 2018…[and the annual report from the Southern Alliance for Clean Energy] has increased its forecast to 17,000 MW by 2021 and nearing 20,000 MW for 2022…Corporate leadership is playing a big role in driving new solar capacity, with major project announcements from corporations including Facebook, Google, Target, Walmart, and Johnson & Johnson…Florida is emerging as a regional leader, now forecast to surpass North Carolina in solar capacity by 2022…
Tennessee and Alabama continue to lag behind other states in the Southeast with less than half the average forecast solar ratio, even with several new solar project announcements, largely driven by corporate solar demand…There are some new entrants on this list of solar leaders - Walton EMC, FPL, and Orlando Utilities Commission (OUC) join four returning "SunRisers" demonstrating leading levels of planned solar growth over the next four years…There are also some repeat offenders - Santee Cooper, Seminole Electric Cooperative, and TVA remain on the list of “SunBlocker” utilities whose forecast solar ratio for 2022 will remain below the regional average from 2018…” click here for more
Some climate change comedy. From Climate Reality via YouTube
Natural gas was a bridge resource, but with affordable battery storage and low cost wind and solar, the U.S. power system is about across the bridge. From National Sierra Club via YouTube
Texas wind is the state’s new powerhouse. From American Wind Energy Association via YouTube