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The term “clean energy” often brings to mind gleaming solar panels, spinning wind turbines or water surging through a hydroelectric dam.
Few people would imagine dark salt caverns a mile underground, but these geologic formations could play a key role in the development of emissions-free green hydrogen.
Hy Stor Energy wants to use such salt caverns in Mississippi and elsewhere to store hydrogen made by splitting water molecules with electrolysis powered by new renewable energy. The fuel could then be stored in the caverns until electricity demand spikes and then used to generate emissions-free electricity when other renewables can’t meet demand.
Hy Stor Energy is among the companies that supports proposed rules for a potentially lucrative federal tax credit for “green” hydrogen fuel production. These companies provide a counterpoint to power companies and other industry players who are pressuring the government to relax provisions that demand green hydrogen production does not use existing renewable or nuclear power that would otherwise be used on the grid.
Companies, including members of federally funded hydrogen hubs, have argued that under the proposed rules governing the tax credit known as 45V, not enough hydrogen will be produced to meet demand and help develop a zero-emission economy.
But environmental advocates and academics point to studies showing that hydrogen production without stringent rules can actually lead to emissions increases. They, along with some industry sources, are calling on the U.S. Treasury Department to enshrine proposed requirements that hydrogen receiving tax credits meet “three pillars”: The renewable energy used to power electrolysis must be newly added to the grid, known as incrementality or additionality; it must be generated near the hydrogen plant, known as deliverability; and it must be generated around the same time it is used, known as hourly matching.
“Without the right rules in place, you’re going to see companies try to make as much hydrogen as possible, since the 45V tax credit is so lucrative,” said Dan Esposito, manager of the electricity program for the consulting firm Energy Innovation: Policy & Technology.
That, in turn, would place additional demand on the existing grid, much of which would be supported by coal and natural gas.
“Not only are you making [greenhouse gas emissions] worse, you’re making it more difficult to clean up our electric system,” Esposito said. “The climate community is saying if we set weak rules it will be a disaster, this will not be clean hydrogen, it will just be a huge greenwashing campaign.”
Hy Stor Energy is among the hydrogen companies and renewable energy developers that have sent letters supporting the rules as proposed. A March 1 letter to Treasury and White House officials from companies including Hy Stor Energy says:
“Clear section 45V guidance that upholds the three pillars is necessary to guard against harmful climate impacts and significant emissions increases that might be driven by increases in fossil fuel-based generation to sustain electrolysis when renewable generation sources are not available. Weak section 45V rules would permit this perverse result, thus imposing significant climate and market risk that would undermine the achievement of U.S. climate goals, further the perception of political risk in U.S. climate regulation, and upset the hard-won momentum currently driving investment in the sector.”
That letter was also signed by renewable energy developers CWP Global and ACCIONA, ACCIONA affiliate Nordex Green Hydrogen, major hydrogen producers Air Products and Synergetic, geothermal energy provider Fervo Energy and others.
The action followed a Feb. 26 letter from seven federally funded hydrogen hubs to the Treasury Department arguing against the three pillars. That letter touts the job creation potential of the hubs, but adds:
“Unfortunately, these investments and jobs will not fully materialize unless Treasury’s guidance, in its current form, is significantly revised, as many of the projects generating these investments and supporting jobs will no longer be economically viable.”
Esposito noted that when the hubs were created by the 2021 Bipartisan Infrastructure Law, the Inflation Reduction Act, including the 45V tax credits, had not yet passed; it was signed by President Joe Biden nine months later. In other words, the federal government expected the hubs to be able to succeed even without tax credits, Esposito argues.
“The public evidence suggests the hubs can do this the right way from the start,” he said. “They’re supposed to be centers of innovation, the whole point is they are research and development, so we shouldn’t give them the easiest path forward.”
Hy Stor Energy CCO Claire Behar said that the company controls 10 salt domes in Mississippi and has necessary permits from the state oil and gas regulatory body to move forward with their hydrogen production and storage project.
“We like to think our location at scale can really serve as a strategic hydrogen reserve, with years worth of hydrogen storage,” Behar said.
Power generation companies, “green steel” mills, and other hydrogen-hungry industries could be co-located near Hy Stor Energy. The company says these industries would basically be powered by renewables built specifically for this purpose, fueled by hydrogen that is created by renewables then stored for when it’s needed.
“It is really about having that large-scale storage that is dispatchable, we’re able to deliver a 24/7 product,” said Behar. “Those end users understand that the zero-carbon solution will have to be hydrogen. We’re focused on both the industry already existing in our region — maritime, large industrial — and also attracting new greenfield customers.”
Behar said requiring new renewable generation is crucial to define hydrogen production as clean.
“We can’t be cannibalizing current demand by using those renewables” already on the grid, Behar said. “We need a strong 45V rule that will protect against harmful climate impacts. If we have weak or blurred rules, it can really carry significant climate and emissions risks that will undermine both the achievement of climate goals and industry credibility.”
Start-up company Q Hydrogen argues that green hydrogen can be produced in ways that use much less energy and water than typical electrolysis. Q Hydrogen CEO Whitaker Irvin Jr. said his company never pushed for tax credits, and he thinks Q Hydrogen can produce hydrogen at a profit without such supports.
But since tax credits are reality, he wants stringent rules making sure that only truly green hydrogen production is eligible.
“The economic incentive is so astoundingly large, that if it does exist people can be creative and make [the three pillars] work,” Irvin said.
Irvin explained that technology pioneered by his father to develop a more efficient heat pump can actually make hydrogen with low energy and water requirements, by using streams of air with wide temperature differential to create a chemical reaction.
The company’s flagship facility is in the New Hampshire town of Groveton, drawing water from the Ammonoosuc River and electricity from a nearby hydroelectric plant, as well as backup power from the grid.
The hydrogen produced can in turn create clean energy that can be sold to industrial users and deployed when needed, Irvin said. This could relieve demand on the grid from existing industries during peak demand times, and help attract new industries to a town that has struggled economically since a paper mill closed in 2007. Irvin said he ultimately hopes the hydrogen-powered plant on the former paper mill site can sell power into New England’s grid.
He said Q Hydrogen would qualify for tax credits under the proposed IRS rules, since they use relatively little energy and since New England’s grid operator already employs technology that makes it possible to log when and where renewable energy is consumed and produced, helping to meet the hourly matching and deliverability pillars of the rules. This capability, along with ample water resources, are the reasons Irvin chose New England for the company’s first commercial-scale plant.
The company has a pilot operation in Park City, Utah, running since 2016, that can produce 10,000-50,000 kgs of hydrogen per day. Plants are also planned in Sweden and Germany, he said.
In December 2022, Q Hydrogen wrote a letter to the Treasury Department in response to its request for input on the tax credits. The letter urges the department to require additionality and stringent accounting for emissions impacts, in awarding tax credits.
“We don’t need [the tax credit] to be financially viable, but the industry does,” Irvin said. “That boost will allow for innovation, technological deployments, mass use at scale. I compare it to the early solar and wind days when subsidies were involved. I see this as the beginning of hydrogen becoming a real player in the market.”
The 45V rules as drafted require hourly matching documentation for renewable energy by 2028, showing that the renewable energy used to power hydrogen production was generated within the same hour.
Currently, energy attribute certificates, or EACS — similar to renewable energy credits — are based on annual matching, denoting how much clean power a user theoretically buys and uses in a year.
But if that power is mostly generated by solar in the summer, for example, the user is actually still relying on fossil fuel generation in the winter. Hourly matching can help ensure that renewable energy is literally powering an operation, but critics have said the software and other technology isn’t available to document hourly matching on a large scale any time soon.
Toby Ferenczi is co-founder and CEO of Granular Energy, a software company that provides hourly matching certification to utilities around the world. He says such documentation is entirely feasible and will drive construction of more renewable energy, including for powering green hydrogen.
“How do you as a consumer choose one type of electricity over another?” asked Ferenczi. “Whether you are a homeowner trying to buy clean energy for your home, or a tech company trying to buy clean energy for your data center, or a green hydrogen developer trying to buy green energy for your electrolyzer, it’s the same question.”
Hourly matching does not prevent green hydrogen producers from diverting renewable energy from the grid and causing other customers to rely on fossil fuels. But affixing time stamps to renewable energy credits and mandating hourly matching for tax credits will create market value for renewable energy used in real time, Ferenczi argues, driving the construction of more renewables and energy storage. Batteries or other storage technologies can store renewable energy that would also qualify for hourly matching when dispatched.
“Eventually tradable instruments can be priced according to supply and demand, with revenue streams for things like energy storage and flexibility, as well as more renewable energy,” Ferenczi said. “If you’re a green hydrogen producer, you could either sign lots of individual contracts with individual wind farms or solar farms, or just sign up for a product from your local utility or energy supplier” that can provide clean energy with hourly-matched credentials.
Even hydrogen producers that have exclusive power purchase agreements, or PPAs, with new renewable developments or on-site renewables will still need energy from the grid when the wind isn’t blowing or sun isn’t shining, he argues. So hourly matching will help them ensure all their power is truly green. He thinks hourly matching is a potentially better way to create more renewable energy than PPAs with new renewable developments.
“Additionality is first of all very difficult to prove. Even if you’re the one that signed a PPA, how do you know that someone else wouldn’t have signed that same PPA?” he asked. “Is it the person who signed the PPA who gets to claim the benefit, as opposed to the person who put up the equity or debt for the project or took the risk of developing the site at the very beginning? It’s very difficult to claim additionality and then assign the rights to those claims to any one individual.”
Time-stamped EACs are kept in a registry operated by regional transmission organizations. While technology upgrades will be needed to handle hourly matching nationwide, Ferenczi said PJM and other transmission organizations — including New England’s — already have similar capability.
Ferenczi said it is crucial that tax credit rules retain strong requirements to ensure “clean” hydrogen production doesn’t actually increase emissions, and called on regulators to make sure the proposed rules “aren’t watered down.”
“They’re absolutely essential to preventing what could be a catastrophe in terms of carbon emissions, that pushes up the cost of electricity for everyone,” said Ferenczi, who previously founded an international NGO called Energy Tag focused on time-stamped EACs. “If we build a fleet of gas turbines to meet this increased demand [for electricity to make hydrogen] because you don’t have an hourly matching requirement, you’re going to have a perverse side effect which is the opposite of what you intended.”
Editor’s note: This article has been updated to correct Claire Behar’s title.
ELECTRIC VEHICLES: After setbacks to adopting electric vehicle sales targets in Maine and Connecticut, frustrated New England clean transportation advocates refocus on charging infrastructure and consumer education. (Energy News Network)
ALSO:
POLICY:
OFFSHORE WIND: Boston’s mayor throws her support behind Avangrid Renewables’ bid to develop an offshore wind farm supporting Connecticut, Massachusetts and Rhode Island, saying the city would purchase up to 15 MW from the site. (Boston.com)
SOLAR:
FOSSIL FUELS:
FUEL CELLS: Massachusetts’ governor and other top state officials visit Nuvera Fuel Cells in Billerica to announce $30 million in federal funds for the hydrogen fuel cell company. (Lowell Sun)
INCINERATION: Dozens of community and climate groups ask Maryland’s governor and legislative leaders to hold a vote on a bill to end subsidies for trash incineration plants. (Baltimore Brew)
WIND: After “inflammatory rhetoric” about renewables discouraged bids in last year’s auction of offshore wind leases near Texas, federal officials are shifting their attention to areas off Louisiana instead. (Louisiana Illuminator)
ALSO:
CLEAN ENERGY:
OIL & GAS:
ELECTRIC VEHICLES:
HYDROGEN: Environmental advocates and residents who live near a proposed Appalachian hydrogen hub express concerns about the project’s potential to disrupt their lives and prolong the region’s dependence on fossil fuels. (WV Metro News)
CARBON CAPTURE: A Virginia company claims it successfully used carbon capture technology to grow lettuce at an indoor farm. (Roanoke Times)
CLIMATE:
GRID: Oklahoma lawmakers consider legislation to give utilities more of a stake in building electric transmission lines while moving oversight of bidding, construction and operations from federal to state officials. (NonDoc)
COMMENTARY: Federal money intended to fight climate change in Louisiana is set to pay for carbon capture projects that will perpetuate the oil and gas industry, writes a professor. (The Conversation)
COAL: North Dakota officials prepare to launch a court challenge against a forthcoming final federal rule that aims to cut mercury emissions from lignite coal-burning power plants. (North Dakota Monitor)
GRID:
UTILITIES:
SOLAR:
PIPELINES: In an unusual move, Iowa House Democrats provided no comments before unanimously approving a carbon pipeline siting bill, allowing Republican backers to champion the legislation as a win for property rights. (Bleeding Heartland)
CLEAN ENERGY:
ELECTRIC VEHICLES:
ELECTRIC VEHICLES: Electric vehicle chargers are often inaccessible for people with disabilities, a growing problem as officials forecast millions more electric vehicles on roads in the coming years. (Mother Jones)
ALSO: After setbacks to adopting electric vehicle sales targets in Maine and Connecticut, frustrated New England clean transportation advocates refocus on charging infrastructure and consumer education. (Energy News Network)
CLEAN ENERGY:
HYDROGEN: As the U.S. Treasury Department tries to ensure its hydrogen tax credits go to projects involving clean energy, industry leaders say the federal rules will discourage nuclear-produced hydrogen and make projects prohibitively expensive. (E&E News)
OIL & GAS:
EMISSIONS: The U.S. EPA moves to lower inaccurately high soot measurements taken since 2017, potentially making it easier for some areas to meet new pollution standards. (E&E News)
CLIMATE:
CARBON CAPTURE: A Virginia company says it successfully used carbon capture technology to grow lettuce at an indoor farm. (Roanoke Times)
GRID: The ongoing legal dispute over a $649 million transmission line between Iowa and Wisconsin highlights differences between environmental and clean energy advocacy groups. (Inside Climate News)
WIND: After “inflammatory rhetoric” about renewables discouraged bids in last year’s offshore wind auction near Texas, federal officials are shifting their attention to areas off Louisiana instead. (Louisiana Illuminator)
After setbacks to adopting electric vehicle sales targets in Maine and Connecticut, New England clean transportation advocates are regrouping with a focus on charging infrastructure and consumer education.
Maine’s Board of Environmental Protection voted 4-2 on March 20 against adopting California’s Advanced Clean Cars II rules, which would have required electric or plug-in hybrids to make up 82% of new vehicle sales in the state by model year 2032.
Board members initially signaled support for the proposal, which came from a citizen petition last spring, before their first planned vote was delayed by a severe storm in December.
Last November, Connecticut Gov. Ned Lamont, a Democrat, pulled a comparable proposal from legislative consideration after it was not expected to have the votes to pass.
Neither state had opted to consider California’s Advanced Clean Trucks standard, which sets similar targets for heavy-duty vehicle sales.
Maine and Connecticut are among more than a dozen states that have had earlier versions of California’s clean car standards on the books for years. Both states have also prioritized transportation emissions, the region’s biggest contributor to global warming, in their climate plans.
Some advocates fear progress in this sector will stall in these states until they adopt the updated California rules. They say debate over the standards was clouded by false and misleading claims, often pushed by fossil fuel industry groups, that have ramped up as part of the 2024 presidential campaign.
“It was really an attempt to confuse and agitate consumers, and unfortunately it was successful,” said Charles Rothenberger, the climate and energy attorney at the Connecticut nonprofit Save the Sound.
Even if Connecticut or Maine successfully revisits adopting the California rules next year, it would likely push implementation out to model year 2029 at the earliest, advocates said.
States that don’t use the new California standards will default to federal rules for reducing vehicle emissions. These rules were just overhauled but have a slower timeline than California’s, designed to accommodate states with lower EV sales rates than in much of New England, Rothenberger said.
“Standards that really cater to the laggards when it comes to EV adoption are really not beneficial to states that are well ahead of that curve,” he said. “I fear that it will lead to us losing ground to states that continue with the California standards,” such as Massachusetts and New York, Rothenberger added.
This could mean less choice and supply for both new and used electric vehicles as carmakers focus on those other states, he said.
In the meantime, Connecticut EV advocates are backing a bill in the General Assembly to allow state bonds for charging infrastructure and EV incentives and create an Electric Vehicle Infrastructure Coordinating Council to work with utility regulators on system planning, among other provisions.
Peter LaFond, the Maine program director for the Acadia Center, a regional nonprofit, said the delay in adopting California’s rules provides time for combating misconceptions and for utilizing increasing state and federal funds for charging infrastructure.
“Every month that goes by, I think there’ll be more and more chargers, and once there are, I think people will see the clear advantages,” LaFond said. “(EVs and plug-in hybrids) lower the carbon footprint and they’re less expensive to operate, and the cold doesn’t present as much of a challenge as the misinformation would have you believe. I think education is going to be a big part of this.”
Scott Vlaun, the executive director of the Center for an Ecology-Based Economy, a nonprofit in the small western Maine town of Norway, said he sees a snowball effect of EV acceptance in his region.
“It’s happening, it’s just not happening fast enough,” Vlaun said. “This is the future, and if Maine doesn’t get its share, then … we’re going to be kind of stuck — in, especially rural Maine — with people driving beat-up, old, inefficient cars, and it’s not good for anybody.”
CEBE has led a push for a large public EV charger network in and around Norway, which Vlaun said has helped make EVs and hybrids a more common sight everywhere from Main Street to nearby ski resorts.
“We do this annual EV expo, and if you get people driving an F-150 Lightning, or a Chevy Bolt, depending on what their needs are, they get it,” he said. “So much of the misinformation — it’s almost comical, because it’s obvious that these people have never gotten behind the wheel of an electric car.”
Vlaun was speaking from his own EV parked at a public charger outside CEBE’s office, having just driven back from a meeting in Portland, Maine, about an hour away. He said he would have liked to take a train or bus instead of driving, but doesn’t have an easy option for doing so.
“We don’t see electric cars as a one-to-one replacement for gas cars,” he said. “We see electric vehicles as an interim step and a better solution to individual transportation than gas-powered vehicles — not the answer to the world’s transportation problems by any stretch.”
Advocates in Connecticut agreed that encouraging cleaner public transit, more walkable cities and less driving overall is as much or more important to reducing transportation emissions as EV adoption.
Those emissions are linked to disproportionate asthma rates, low school test scores and other adverse public health ripple effects in Connecticut, said Dr. Mark Mitchell, the co-chair of the Connecticut Equity and Environmental Justice Advisory Council.
“The people who have the least ability to afford cars and to drive suffer the most from the pollution caused by cars, and so we need to change that — we need to invest in public transportation and making cities walkable and bikeable,” he said. “We’re not going to get rid of cars… but we should make sure that the cars that drive through our communities are as clean as possible, as quickly as possible.”
Mitchell said he lives in an especially low-income part of Hartford, the state capital — one of the lowest-income cities on the East Coast, with a mostly Black and Latino population. Mitchell said many of his neighbors don’t drive at all and can’t afford new cars, so they don’t yet “see themselves in EVs.”
“But that’s not the point,” he said. “The point is that they’re very concerned about asthma, they’re very concerned about ADHD, they’re very concerned about school test scores.”
EV adoption across the state is one solution to those problems, he said.
Jayson Velazquez, the Acadia Center’s Hartford-based climate and energy justice policy associate, used the term “through-emissions” to describe pollution from diesel trucks and other vehicles that traverse low-income neighborhoods and communities of color in Connecticut’s cities en route to nearby highways.
Unlike those vehicles and their non-local drivers, Velazquez said, “the lasting health effects that come from that pollution don’t just get up and go.”
Despite concerns about misinformation, advocates acknowledged that they share certain concerns with opponents of the California rules — such as affordability, charging access, the sustainability of minerals mining to build batteries, and strain on the power grid from increasing EV use.
“There are real issues,” said Mitchell. “We do need to build up the infrastructure, both the charging infrastructure and the electric grid. … But until we set goals, we don’t know how quickly we need to do that. And it’s much easier to put things off if you don’t have a goal.”
POWER PLANTS: As economic growth drives new electricity demand, utilities such as Georgia Power look to natural gas as a quick fix, but customers and clean energy advocates say the strategy lacks ambition and ignores the giant pool of federal money currently available for cleaner alternatives. (Grist/WABE)
ALSO: A new report urges state regulators to be skeptical about “a panicked rush” to build new gas plants and says utilities could mitigate near-term load growth with a myriad of tech and policy solutions. (Latitude Media)
GRID: Software and smart meters are unlocking new potential for price-based demand response — using variable rates to change customer behavior — with Georgia Power and Entergy Louisiana among the utilities exploring the concept as a way to manage loads. (Utility Dive)
ELECTRIC VEHICLES: The shift to electric vehicles in North Carolina is happening faster than state officials anticipated, with electric vehicle registrations surpassing a state goal two years ahead of schedule with more than 80,000 on the road. (WRAL)
SOLAR: The developer of a Virginia solar project informs county officials that it is withdrawing its application for a special use permit. (Farmville Herald)
COAL:
CLIMATE: Indoor farming offers producers steady growing conditions amid increasingly unpredictable weather, but their energy consumption represents a potential threat that could worsen climate change. (Washington Post)
COMMENTARY: Duke Energy’s proposed carbon plan in North Carolina ignores a 2030 emissions target, doubles down on fossil fuels, and leans too heavily on expensive, unproven technology, an advocacy group writes. (SELC)
CLEAN ENERGY: A new report ranks Illinois best in the country for state policy that supports community ownership of clean energy, while most states earn failing grades. (Canary Media)
PIPELINES:
COAL: A federal judge criticizes Ameren for drawn-out legal proceedings involving remedies for a Missouri coal plant that repeatedly violated the Clean Air Act. (St. Louis Post-Dispatch)
RENEWABLES:
OIL & GAS: An Ohio agency has investigated 26 oil and gas incidents over the past five years in a single county, and more than 1,500 incidents statewide over the same period. (Athens County Independent)
ELECTRIC VEHICLES:
BIOFUELS: Minnesota biofuel advocates are still waiting on the Biden administration’s analysis of which fuel stocks could capture lucrative tax credits to produce sustainable jet fuel. (Star Tribune)
EFFICIENCY: At a stop in Madison, Wisconsin, Energy Secretary Jennifer Granholm and residents tout the benefits of energy efficiency and federal clean energy investments. (Wisconsin Examiner)
COMMENTARY: Former Ohio U.S. Senate candidate Tim Ryan abandons his populist brand as a spokesperson for big oil and gas companies that are opposed to halting liquefied natural gas exports, a Sierra Club leader writes. (Columbus Dispatch)
TRANSPORTATION: The Biden administration announces a new rule that aims to ensure 25% of all new long-haul trucks and 40% of medium-duty trucks are zero-emission by 2032, earning praise from environmental groups but concern from truck and engine manufacturers. (New York Times, NPR)
ALSO:
POWER PLANTS:
CLIMATE:
CLEAN ENERGY: A new report ranks Illinois best in the country for state policy that supports community ownership of clean energy, while most states earn failing grades. (Canary Media)
GRID: Software and smart meters are unlocking new potential for price-based demand response, using variable rates to change customer behavior. (Utility Dive)
OIL & GAS: Hundreds of people attend a public hearing in Colorado to debate proposed legislation to ban oil and gas drilling in the state by 2030. (CBS News)
NUCLEAR: A court vacates a company’s license to develop an interim spent nuclear reactor fuel repository in southeastern New Mexico, saying federal regulators lacked authority to issue the permit. (Carlsbad Current-Argus)
OFFSHORE WIND:
The Maine House rejected a bill Wednesday that would direct regulators to explore performance-based ratemaking for Central Maine Power and Versant, which last year beat back a referendum to replace the companies with a consumer-owned model.
The House voted 75-67 against LD 2172, sponsored by Rep. Gerry Runte (D-York). Republicans largely opposed the legislation but a handful of Democrats also voted against it. The proposal then moved to the Senate on Thursday, where it was tabled, meaning it will be taken up at a later date.
Runte’s bill would require the Public Utilities Commission (PUC) to examine performance-based metrics that could be implemented for utilities and conduct that examination every three years thereafter. Generally speaking, performance-based ratemaking (PBR) creates specific benchmarks for utilities to meet. The utilities could then get rewarded if they meet the targets or be penalized if they don’t.
The performance of Maine’s primary investor-owned utilities, CMP and Versant, has been a frequent topic of discussion in recent years. The companies’ relative unpopularity with Mainers, frustration with their quality of service and concerns about their for-profit business model spurred the referendum last fall to replace CMP and Versant with a nonprofit, consumer-owned utility. However, Mainers voted down the measure amid a deluge of spending against the proposal.
During Wednesday’s debate in the House, Rep. Sophia Warren, a Democrat from Scarborough, argued there isn’t sufficient evidence that LD 2172 would benefit ratepayers and improve the utility system.
“We cannot with any guarantee know the outcome of this legislation, and I believe that is a potentially quite harmful consequence we must take seriously,” said Warren, adding that she would support a targeted study on PBR policies in Maine.
Warren — a critic of CMP and Versant who supported the referendum to replace the companies — also pushed back against proponents who have argued that the bill will hasten Maine’s clean energy transition. She said nothing in the legislation ties a utility’s performance to making the grid more sustainable.
Republican Rep. Steven Foster of Dexter also expressed opposition to the bill. Among other issues, Foster argued that some parts of the proposal are duplicative of a 2022 bill that requires the PUC to adopt rules for CMP and Versant. Specifically, the PUC was tasked under that law with creating quantitative metrics around service quality along with coming up with a report card to evaluate utilities.
Runte said LD 2172 is meant to build on that previous measure. And he added that if the state wants CMP and Versant to perform better, it needs to create rules that incentivize the companies to further Maine’s grid-related policy goals — which he argued is currently lacking.
“LD 2172 attempts to solve this problem by directing the PUC to begin a process to define how we want our utilities to perform in the 21st century, as well as consider modern models of utility regulation that better align a utility’s performance with these new goals,” he said.
Under Runte’s proposal, the PUC would have to establish goals and evaluate options for creating metrics to determine how well utilities meet certain criteria. In creating those goals, PUC would have to keep in mind the following: benefit to ratepayers, promotion of cost efficiency and affordability, increased planning for extreme weather and climate hazards, a comprehensive response to outages, and support of renewable resource and greenhouse gas reduction goals. The goals would also have to be consistent with the state’s climate action plan.
Runte said the process for coming up with goals for utilities to meet and metrics to evaluate them is kept deliberately flexible in the bill, giving appropriate latitude to the PUC to determine what will work best for Maine and to adjust policies as needed.
The bill would further require that the commission get input from various stakeholders, mandate that the PUC provide a summary of its performance-based ratemaking actions, task the organization with coming up with recommendations for forming a regulatory policy group within the commission, and require the PUC to implement emerging reforms if such changes better align with state goals.
Runte pointed out that 17 states have approved similar reforms, although Warren noted that just two states have moved to extensively implement PBR policies, and she argued the experience of one of those states — Connecticut — has not been positive.
But Rep. Valli Geiger (D-Rockland) said that although Mainers voted down the November referendum to replace CMP and Versant, that doesn’t mean they are happy with the service provided by the companies. She said implementing PBR would provide the state the tools to bring the utilities into alignment with important goals, particularly when it comes to the clean energy transition.
Both CMP and Versant have been tepid about the bill. During a committee hearing earlier this year, a representative from Versant said the company is willing to take initial steps toward performance-based ratemaking but called for the goals established by the PUC to be brought back to lawmakers for review. And CMP argued the time isn’t right for Runte’s bill because lawmakers should first see how recent regulations, like the 2022 bill, work out.
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