Ontario’s deal with Quebec won’t reduce cost of hydro bills

Massachusetts Solar Net Metering faces new demand charges and elimination of residential time-of-use rates under an MDPU order, as Eversource cites grid cost fairness while clean energy advocates warn of impacts on distributed solar growth.

Key Points

Policy letting solar customers net out usage with exports; MDPU now adds demand charges and ends TOU rates.

✅ New residential solar demand charges start Dec 31, 2018.

✅ Optional residential TOU rates eliminated by MDPU order.

✅ Eversource cites grid cost fairness; advocates warn slower solar.

A recent Massachusetts Department of Public Utilities' rate case order changes the way solar net metering works and eliminates optional residential time-of-use rates, stirring controversy between clean energy advocates and utility Eversource and potential consumer backlash over rate design.

"There is a lot of room to talk about what net-energy metering should look like, but a demand charge is an unfair way to charge customers," Mark LeBel, staff attorney at non-profit clean energy advocacy organization Acadia Center, said in a Tuesday phone call. Acadia Center is an intervenor in the rate case and opposed the changes.

The Friday MDPU order implements demand charges for new residential solar projects starting on December 31, 2018. Such charges are based on the highest peak hourly consumption over the course of a month, regardless of what time the power is consumed.

Eversource contends the demand charge will more fairly distribute the costs of maintaining the local power grid, echoing minimum charge proposals aimed at low-usage customers. Net metering is often criticized for not evenly distributing those costs, which are effectively subsidized by non-net-metered customers.

"What the demand charge will do is eliminate, to the extent possible, the unfair cross subsidization by non-net-metered customers that currently exists with rates that only have kilowatt-hour charges and no kilowatt demand, Mike Durand, Eversource spokesman, said in a Tuesday email. 

"For net metered facilities that use little kilowatt-hours, a demand charge is a way to charge them for their fair share of the cost of the significant maintenance and upgrade work we do on the local grid every day," Durand said. "Currently, their neighbors are paying more than their share of those costs."

It will not affect existing facilities, Durand said, only those installed after December 31, 2018.

Solar advocates are not enthusiastic about the change and see it slowing the growth of solar power, particularly residential rooftop solar, in the state.

"This is a terrible outcome for the future of solar in Massachusetts," Nathan Phelps, program manager of distributed generation and regulatory policy at solar power advocacy group Vote Solar, said in a Tuesday phone call.

"It's very inconsistent with DPU precedent and numerous pieces of legislation passed in the last 10 years," Phelps said. "The commonwealth has passed several pieces of legislation that are supportive of renewable energy and solar power. I don't know what the DPU was thinking."

 

TIME-OF-USE PRICING ELIMINATED

It does not matter when during the month peak demand occurs -- which could be during the week in the evening -- customers will be charged the same as they would on a hot summer day, LeBel said. Because an individual customer's peak usage does not necessarily correspond to peak demand across the utility's system, consumers are not being provided incentives to reduce energy usage in a way that could benefit the power system, Acadia Center said in a Tuesday statement.

However, Eversource maintains that residential customer distribution peaks based on customer load profiles do not align with basic service peak periods, which are based on Independent System Operator New England's peaks that reflect market-based pricing, even as a Connecticut market overhaul advances in the region, according to the MDPU order.

"The residential Time of Use rates we're eliminating are obsolete, having been designed decades ago when we were responsible for both the generation and the delivery of electricity," Eversource's Durand said.

"We are no longer in the generation business, having divested of our generation assets in Massachusetts in compliance with the law that restructured of our industry back in the late 1990s. Time Varying pricing is best used with generation rates, where the price for electricity changes based on time of day and electricity demand and can significantly alter electric bills for households," he said.

Additionally, only 0.02% of residential customers take service on Eversource's TOU rates and it would be difficult for residential customers to avoid peak period rates because they do not have the ability to shift or reduce load, according to the order.

"The Department allowed the Companies' proposal to eliminate their optional residential TOU rates in order to consolidate and align their residential rates and tariffs to better achieve the rate structure goal of simplicity," the MDPU said in the order.

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Canada Electricity Grid Decarbonization advances net-zero goals by expanding renewable energy (wind, solar, hydro), boosting grid reliability with battery storage, and aligning policy, efficiency, and investment to cut emissions and strengthen energy security.

Key Points

Canada's shift to low-carbon power using renewables and storage to cut emissions and improve grid reliability.

✅ Invest in wind, solar, hydro, and transmission upgrades

✅ Deploy battery storage to balance intermittent generation

✅ Support just transition, jobs, and energy efficiency

As Canada moves towards a more sustainable future, decarbonizing its electricity grid has emerged as a pivotal goal. The transition aims to reduce greenhouse gas emissions, promote renewable energy sources, and ultimately support global climate targets, with cleaning up Canada's electricity widely viewed as critical to meeting those pledges. However, the implications of this transition are multifaceted, impacting the economy, energy reliability, and the lives of Canadians.

Understanding Decarbonization

Decarbonization refers to the process of reducing carbon emissions produced from various sources, primarily fossil fuels. In Canada, the electricity grid is heavily reliant on natural gas, coal, and oil, which contribute significantly to carbon emissions. The Canadian government has committed to achieving net-zero by 2050 through federal and provincial collaboration, with the electricity sector playing a crucial role in this initiative. The strategy includes increasing the use of renewable energy sources such as wind, solar, and hydroelectric power.

Economic Considerations

Transitioning to a decarbonized electricity grid presents both challenges and opportunities for Canada’s economy. On one hand, the initial costs of investing in renewable energy infrastructure can be substantial. This includes not only the construction of renewable energy plants but also the necessary upgrades to the grid to accommodate new technologies. According to the Fraser Institute analysis, these investments could lead to increased electricity prices, impacting consumers and businesses alike.

However, the shift to a decarbonized grid can also stimulate economic growth. The renewable energy sector is a rapidly growing industry that, as Canada’s race to net-zero accelerates, promises job creation in manufacturing, installation, and maintenance of renewable technologies. Moreover, as technological advancements reduce the cost of renewable energy, the long-term savings on fuel costs can benefit both consumers and businesses. The challenge lies in balancing these economic factors to ensure a smooth transition.

Reliability and Energy Security

A significant concern regarding the decarbonization of the electricity grid is maintaining reliability and energy security, especially as an IEA report indicates Canada will need substantially more electricity to achieve net-zero goals, requiring careful system planning.

To address this challenge, the implementation of energy storage solutions and grid enhancements will be essential. Advances in battery technology and energy storage systems can help manage supply and demand effectively, ensuring that energy remains available even during periods of low renewable output. Additionally, integrating a diverse mix of energy sources, including hydroelectric power, can enhance the reliability of the grid.

Social Impacts

The decarbonization process also carries significant social implications. Communities that currently depend on fossil fuel industries may face economic challenges as the transition progresses, and the Canadian Gas Association has warned of potential economy-wide costs for switching to electricity, underscoring the need for a just transition.

Furthermore, there is a need for public engagement and education on the benefits and challenges of decarbonization. Canadians must understand how changes in energy policy will affect their daily lives, from electricity prices to job opportunities. Fostering a sense of community involvement can help build support for renewable energy initiatives and ensure that diverse voices are heard in the planning process.

Policy Recommendations

For Canada to successfully decarbonize its electricity grid, and building on recent electricity progress across provinces nationwide, robust and forward-thinking policies must be implemented. This includes investment in research and development to advance renewable technologies and improve energy storage solutions. Additionally, policies should encourage public-private partnerships to share the financial burden of infrastructure investments.

Governments at all levels should also promote energy efficiency measures to reduce overall demand, making the transition more manageable. Incentives for consumers to adopt renewable energy solutions, such as solar panels, can further accelerate the shift towards a decarbonized grid.

Decarbonizing Canada's electricity grid presents a complex yet necessary challenge. While there are economic, reliability, and social considerations to navigate, the potential benefits of a cleaner, more sustainable energy future are substantial. By implementing thoughtful policies and fostering community engagement, Canada can lead the way in creating an electricity grid that not only meets the needs of its citizens but also contributes to global efforts in combating climate change.

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Substation Automation Services help electric utilities modernize through integration, EPC engineering, protective relaying, communications and security, with CAPEX and OPEX insights and a growing global market for third-party providers worldwide rapidly.

Key Points

Engineering, integration, and EPC support modernizing utility substations with protection, control, and secure communications

✅ Third-party engineering, EPC, and OEM services for utilities

✅ Integration of multi-vendor devices and platforms

✅ Focus on relays, communications, security, CAPEX-OPEX

The Newton-Evans Research Company has released additional findings from its newly published four volume research series entitled: The World Market for Substation Automation and Integration Programs in Electric Utilities: 2017-2020.

This report series has observed four major types of professional third-party service providers that assist electric utilities with substation modernization. These firms range from (1) smaller local or regional engineering consultancies with substation engineering resources to (2) major global participants in EPC work, to (3) the engineering services units of manufacturers of substation devices and platforms, to (4) substation integration specialist firms that source and integrate devices from multiple manufacturers for utility and industrial clients, and often provide substation automation training to support implementation.

2016 Global Share Estimates for Professional Services Providers of Electric Power Substation Integration and Automation Activities

The North American market report (Volume One) includes survey participation from 65 large and midsize US and Canadian electric utilities while the international market report (Volume Two) includes survey participation from 32 unique utilities in 20 countries around the world. In addition to the baseline survey questions, the report includes 2017 substation survey findings on four additional specific topics: communications issues; protective relaying trends; security topics and the CAPEX/OPEX outlook for substation modernization.

Volume Three is the detailed market synopsis and global outlook for substation automation and integration:

Section One of the report provides top-level views of substation modernization, automation & integration and the emerging digital grid landscape, and a narrative market synopsis.

Section Two provides mid-year 2017 estimates of population, electric power generation capacity, transmission substations, including the 2 GW UK substation commissioning as a benchmark, and primary MV distribution substations for more than 120 countries in eight world regions. Information on substation related expenditures and spending for protection and control for each major world region and several major countries is also provided.

Section Three provides information on NGO funding resources for substation modernization among developing nations.

Section Four of this report volume includes North American market share estimates for 2016 shipments of many substation automation-related devices and equipment, such as trends in the digital relay market for utilities.

The Supplier Profiles report (Volume Four) provides descriptive information on the substation modernization offerings of more than 90 product and services companies, covering leading players in the transformer market as well.

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US Electricity Sales Decline amid population growth and GDP gains, as DOE links reduced per capita consumption to energy efficiency, warmer winters, appliances, and bulbs, while hotter summers and rising AC demand may offset savings.

Key Points

US electricity sales fell 3% since 2010 despite population and GDP growth, driven by efficiency gains and warmer winters.

✅ DOE links drops to efficiency and warmer winters

✅ Per capita residential use fell about 7% since 2010

✅ Rising AC demand may offset winter heating savings

Since 2010, the United States has grown by 17 million people, and the gross domestic product (GDP) has increased by $3.6 trillion. Yet in that same time span, electricity sales in the United States actually declined by 3%, according to data released by the U.S. Department of Energy (DOE), even as electricity prices rose at a 41-year pace nationwide.

The U.S. decline in electricity sales is remarkable given that the U.S. population increased by 5.8% in that same time span. This means that per capita electricity use fell even more than that; indeed, the Department of Energy pegs residential electricity sales per capita as having declined by 7%, even as inflation-adjusted residential bills rose 5% in 2022 nationwide.

There are likely multiple reasons for this decline in electricity sales. Department of Energy analysts suggest that, at least in part, it is due to increased adoption of energy-efficient appliances and bulbs, like compact fluorescents. Indeed, the DOE notes that there is a correlation between consumer spending on “energy efficiency” and a reduction in per capita electricity sales, while utilities invest more in delivery infrastructure to modernize the grid.

Yet the DOE also notes that states with a greater increase in warm weather days had a corresponding decrease in electricity sales, as milder weather can reduce power demand across years. In southern states, the effect was most dramatic: for instance, from 2010 to 2016, Florida had a 56% decrease in cold weather days that would require heating and as a result, saw a 9% decrease in per capita electricity sales.

The moral is that warm winters save on electricity. But if global temperatures continue to rise, and summers become hotter, too, this decrease in winter heating spending may be offset by the increased need to run air conditioning in the summer, and given how electricity and natural gas prices interact, overall energy costs could shift. Indeed, it takes far more energy to cool a room than it does to heat it, for reasons related to the basic laws of thermodynamics. 

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Hong Kong Electricity Tariff Increase reflects a projected 1-2% rise as HK Electric and CLP Power shift to cleaner fuel and natural gas, expand gas-fired units and LNG terminals, and adjust the fuel clause charge.

Key Points

An expected 1-2% 2018 rise from cleaner fuel, natural gas projects, asset growth, and shrinking fuel cost surpluses.

✅ Expected 1-2% rise amid cleaner fuel and gas shift

✅ Fuel clause charge and asset expansion pressure prices

✅ HK Electric and CLP Power urged to use surpluses prudently

Hong Kong customers have been asked to expect higher electricity bills next year, as seen with BC Hydro rate increases in Canada, with a member of a government panel on energy policy anticipating an increase in tariffs of one or two per cent.

The environment minister, Wong Kam-sing, also hinted they should be prepared to dig deeper into their pockets for electricity, as debates over California electric bills illustrate, in the wake of power companies needing to use more expensive but cleaner fuel to generate power in the future.

HK Electric supplies power to Hong Kong Island, Lamma Island and Ap Lei Chau. Photo: David Wong

The city’s two power companies, HK Electric and CLP Power, are to brief lawmakers on their respective annual tariff adjustments for 2018, amid Ontario electricity price pressures drawing international attention, at a Legislative Council economic development panel meeting on Tuesday.

HK Electric supplies electricity to Hong Kong Island and neighbouring Lamma Island and Ap Lei Chau, while CLP Power serves Kowloon and the New Territories, including Lantau Island.

Wong said on Monday: “We have to appreciate that when we use cleaner fuel, there is a need for electricity tariffs to keep pace. I believe it is the hope of mainstream society to see a low-carbon and healthier environment.”

Secretary for the Environment Wong Kam-sing believes most people desire a low-carbon environment. Photo: Sam Tsang

But he declined to comment on how much the tariffs might rise.

World Green Organisation chief executive William Yu Yuen-ping, also a member of the Energy Advisory Committee, urged the companies to better use their “overflowing” surpluses in their fuel cost recovery accounts.

Tariffs are comprised of two components: a basic amount reflecting a company’s operating costs and investments, and the fuel clause charge, which is based on what the company projects it will pay for fuel for the year.

William Yu of World Green Organisation says the companies should use their surpluses more carefully. Photo: May Tse

Critics have claimed the local power suppliers routinely overestimate their fuel costs and amass huge surpluses.

In recent years, the two managed to freeze or cut their tariffs thanks to savings from lower fuel costs. Last year, HK Electric offered special rebates to its customers, which saw its tariff drop by 17.2 per cent. CLP Power froze its own charge for 2017.

Yu said the two companies should use the surpluses “more carefully” to stabilise tariffs.

Rise after fall in Hong Kong electricity use linked to subsidies

“We estimate a big share of the surplus has been used up and so the honeymoon period is over.”

Based on his group’s research, Yu believed the tariffs would increase by one or two per cent.

Economist and fellow committee member Billy Mak Sui-choi said the expansion of the power companies’ fixed asset bases, such as building new gas-fired units and offshore liquefied natural gas terminals, a pattern reflected in Nova Scotia's 14% rate hike recently approved by regulators, would also cause tariffs to rise.

To fight climate change and improve air quality, the government has pledged to cut carbon intensity by between 50 and 60 per cent by 2020. Officials set a target of boosting the use of natural gas for electricity generation to half the total fuel mix from 2020.

Both power companies are privately owned and monitored by the government through a mutually agreed scheme of control agreements, akin to oversight seen under the UK energy price cap in other jurisdictions. These require the firms to seek government approval for their development plans, including their projected basic tariff levels.

At present, the permitted rate of return on their net fixed assets is 9.99 per cent. The deals are due to expire late next year.

Earlier this year, officials reached a deal with the two companies on the post-2018 scheme, settling on a 15-year term. The new agreements slash their permitted rate of return to 8 per cent.

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Cooperative Energy bond rating upgrade signals lower debt costs as Fitch lifts GO Zone Bonds to A, reflecting Kemper exit, shift to owned generation, natural gas, and renewable energy for co-op members and borrowing rates.

Key Points

Fitch raised Cooperative Energy's GO Zone Bonds to A, cutting debt costs after Kemper exit and shift to natural gas.

✅ Fitch upgrades 2009A GO Zone Bonds from A- to A.

✅ Kemper divestment reduced risk and exposure to coal.

✅ Shift to owned generation, natural gas, renewables lowers costs.

Cooperative Energy and its 11 co-op members will see lower debt costs on $35.4 million bond; similar to regional utilities offering one-time bill decreases for customers recently.

Bailing out of its 15 percent ownership stake in Mississippi Power’s Kemper gasification plant, amid debates over coal and nuclear subsidies in federal policy, has helped Hattiesburg-based Cooperative Energy gain a ratings upgrade on a $35.4 million bond issue.

The electric power co-op, which changed its name to Cooperative Energy from South Mississippi Electric Power Association in November, received a ratings upgrade from A- to A for its 2009 2009A Mississippi Business Finance Corporation Gulf Opportunity Zone Bonds, even as other utilities announced bill reductions for customers during 2020.

“This rating upgrade reflects the success of our strategy to move from purchased power to owned generation resources, and from coal to natural gas and renewable energy as clean energy priorities gain traction,” said Cooperative Energy President/CEO Jim Compton in a press release.  “The result for our members is lower borrowing costs and more favorable rates.”

An “A” rating from Fitch designates the bond issue as “near premium quality,” a status noted as utilities adapted to pandemic-era electricity demand trends nationwide.

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