UK Energy Industry Divided Over Free Electricity Debate

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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Ontario-Quebec Electricity Deal explores hydro imports, terawatt hours, electricity costs, greenhouse gas cuts, and baseload impacts, amid debates on Pickering nuclear operations and competitive procurement in Ontario's long-term energy planning.

Key Points

A proposed hydro import deal from Quebec, balancing costs, emissions, and reliability for Ontario electricity customers.

✅ Draft 20-year, 8 TWh offer reported by La Presse disputed

✅ Ontario seeks lower costs and GHG cuts versus alternatives

✅ Not a baseload replacement; Pickering closure not planned

Ontario is negotiating a possible energy swap agreement to buy electricity from Quebec, but the government is disputing a published report that it is preparing to sign a deal for enough electricity to power a city the size of Ottawa.

La Presse reported Tuesday that it obtained a copy of a draft, 20-year deal that says Ontario would buy eight terawatt hours a year from Quebec – about 6 per cent of Ontario’s consumption – whether the electricity is consumed or not.

Ontario Energy Minister Glenn Thibeault’s office said the province is in discussions to build on an agreement signed last year for Ontario to import up to two terawatt hours of electricity a year from Quebec.

But his office released a letter dated late last month to his Quebec counterpart, in which Mr. Thibeault said the offer extended in June was unacceptable because it would increase the average residential electricity bill by $30 a year.

“I am hopeful that your continued support and efforts will help to further discussions between our jurisdictions that could lead to an agreement that is in the best interest of both Ontario and Quebec,” Mr. Thibeault wrote July 27 to Pierre Arcand.

Ontario would prepare a “term sheet” for the next stage of discussions ahead of the two ministers meeting at the Energy and Mines Ministers Conference later this month in New Brunswick, Mr. Thibeault wrote.

Any future agreements with Quebec will have to provide a reduction in Ontario electricity rates compared with other alternatives and demonstrate measurable reductions in greenhouse gas emissions, he wrote.

Progressive Conservative Leader Patrick Brown said Ontario doesn’t need eight terawatt hours of additional power and suggested it means the Liberal government is considering closing power facilities such as the Pickering nuclear plant early.

A senior Energy Ministry official said that is not on the table. The government has said it intends to keep operating two units at Pickering until 2022, and the other four units until 2024.

Even if the Quebec offer had been accepted, the energy official said, that power wouldn’t have replaced any of Ontario’s baseload power because it couldn’t have been counted on 24 hours a day, 365 days a year.

The Society of Energy Professionals said Mr. Thibeault was right to reject the deal, but called on him to release the Long-Term Energy Plan – which was supposed to be out this spring – before continuing negotiations.

Some commentators have argued for broader reforms to address Ontario's hydro system challenges, urging policymakers to review all options as negotiations proceed.

The Ontario Energy Association said the reported deal would run counter to the government’s stated energy objectives amid concerns over electricity prices in the province.

“Ontarians will not get the benefit of competition to ensure it is the best of all possible options for the province, and companies who have invested in Ontario and have employees here will not get the opportunity to provide alternatives,” president and chief executive Vince Brescia said in a statement. “Competitive processes should be used for any new significant system capacity in Ontario.”

The Association of Power Producers of Ontario said it is concerned the government is even considering deals that would “threaten to undercut a competitive marketplace and long-term planning.”

“Ontario already has a surplus of energy, so it’s very difficult to see how this deal or any other sole-source deal with Quebec could benefit the province and its ratepayers,” association president and CEO David Butters said in a statement.

The Ontario Waterpower Association also said such a deal with Quebec would “present a significant challenge to continued investment in waterpower in Ontario.”

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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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New York Solar Milestone accelerates renewable energy adoption, meeting targets early with 8,000 MW capacity powering 1.1 million homes, boosting green jobs, community solar, battery storage, and grid reliability under the CLCPA clean energy framework.

Key Points

It is New York achieving its solar goal early, powering 1.1M homes and advancing CLCPA renewable targets.

✅ 8,000 MW installed, enough to power about 1.1M homes

✅ CLCPA targets: 70 percent renewables by 2030

✅ Community solar, storage, and green jobs scaling statewide

In a remarkable display of commitment to renewable energy, New York has achieved its solar energy targets a year ahead of schedule, marking a significant milestone in the state's clean energy journey, and aligning with a national trend where renewables reached a record 28% in April nationwide. With the addition of solar power capacity capable of powering over a million homes, New York is not just setting the pace for solar adoption but is also establishing itself as a leader in the fight against climate change.

A Commitment to Renewable Energy

New York’s ambitious clean energy agenda is part of a broader effort to reduce greenhouse gas emissions and transition to sustainable energy sources. The state's goal, established under the Climate Leadership and Community Protection Act (CLCPA), aims for 70% of its electricity to come from renewable sources by 2030. With the recent advancements in solar energy, including contracts for 23 renewable projects totaling 2.3 GW, New York is well on its way to achieving that goal, demonstrating that aggressive policy frameworks can lead to tangible results.

The Numbers Speak for Themselves

As of now, New York has successfully installed more than 8,000 megawatts (MW) of solar energy capacity, supported by large-scale energy projects underway across New York that are expanding the grid. This achievement translates to enough electricity to power approximately 1.1 million homes, showcasing the state's investment in harnessing the sun’s power. The rapid expansion of solar installations reflects both increasing consumer interest and supportive policies that facilitate growth in the renewable energy sector.

Economic Benefits and Job Creation

The surge in solar energy capacity has not only environmental implications but also significant economic benefits. The solar industry in New York has become a substantial job creator, employing tens of thousands of individuals across various sectors. From manufacturing solar panels to installation and maintenance, the job opportunities associated with this growth are diverse and vital for local economies.

Moreover, as solar installations increase, the state benefits from reduced electricity costs over time. By investing in renewable energy, New York is paving the way for a more resilient and sustainable energy future, while simultaneously providing economic opportunities for its residents.

Community Engagement and Accessibility

New York's solar success is also tied to its efforts to engage communities and increase access to renewable energy. Initiatives such as community solar programs allow residents who may not have the means or space to install solar panels on their homes to benefit from solar energy. These programs provide an inclusive approach, ensuring that low-income households and underserved communities have access to clean energy solutions.

The state has also implemented various incentives to encourage solar adoption, including tax credits, rebates, and financing options. These efforts not only promote environmental sustainability but also aim to make solar energy more accessible to all New Yorkers, furthering the commitment to equity in the energy transition.

Innovations and Future Prospects

New York's solar achievements are complemented by ongoing innovations in technology and energy storage solutions. The integration of battery storage systems is becoming increasingly important, reflecting growth in solar and storage in the coming years, and allowing for the capture and storage of solar energy for use during non-sunny periods. This technology enhances grid reliability and supports the state’s goal of transitioning to a fully sustainable energy system.

Looking ahead, New York aims to continue this momentum. The state is exploring additional strategies to increase renewable energy capacity, including plans to investigate sites for offshore wind across its coastline, and other clean energy technologies. By diversifying its renewable energy portfolio, New York is positioning itself to meet and even exceed future energy demands while reducing its carbon footprint.

A Model for Other States

New York’s success story serves as a model for other states aiming to enhance their renewable energy capabilities, with its approval of the biggest offshore wind farm underscoring that leadership. The combination of strong policy frameworks, community engagement, and technological innovation can inspire similar initiatives nationwide. As more states look to address climate change, New York’s proactive approach can provide valuable insights into effective strategies for solar energy deployment.

New York’s achievement of its solar energy goals a year ahead of schedule is a testament to the state's unwavering commitment to sustainability and renewable energy. With the capacity to power over a million homes, this milestone not only signifies progress in clean energy adoption but also highlights the potential for economic growth and community engagement. As New York continues on its path toward a greener future, and stays on the road to 100% renewables by mid-century, it sets a powerful example for others to follow, proving that ambitious renewable energy goals can indeed become a reality.

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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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FERC Rejects Trump Coal Plan, denying subsidies for coal-fired and nuclear plants as energy policy shifts toward natural gas and renewables, citing no grid reliability threat and warning about electricity prices and market impacts.

Key Points

FERC unanimously rejected subsidies for coal and nuclear plants, finding no grid reliability risk from retirements.

✅ Unanimous FERC vote rejects coal and nuclear compensation

✅ Cites no threat to grid reliability from plant retirements

✅ Opponents warned subsidies would distort power markets and prices

A decision by an independent energy agency to reject the Trump administration’s electricity pricing plan to bolster the coal industry could lead to more closures of coal-fired power plants and the loss of thousands of jobs, a top coal executive said Tuesday.

Robert Murray, CEO of Ohio-based Murray Energy Corp., called the action by the Federal Energy Regulatory Commission “a bureaucratic cop-out” that will raise the cost of electricity and jeopardize the reliability and security of the nation’s electric grid.

“While FERC commissioners sit on their hands and refuse to take the action directed by Energy Secretary Rick Perry and President Donald Trump, the decommissioning of more coal-fired and nuclear plants could result, further jeopardizing the reliability, resiliency and security of America’s electric power grids,” Murray said. “It will also raise the cost of electricity for all Americans.”

The five-member energy commission voted unanimously Monday to reject Trump’s plan to reward nuclear and coal-fired power plants for adding reliability to the nation’s power grid. The plan would have made the plants eligible for billions of dollars in government subsidies and help reverse a tide of bankruptcies and loss of market share suffered by the once-dominant coal industry as utilities' shift to natural gas and renewable energy continues.

The Republican-controlled commission said there’s no evidence that any past or planned retirements of coal-fired power plants pose a threat to reliability of the nation’s electric grid.

Murray disputed that and said the recent cold snap that hit the East Coast showed coal’s value, as power users in the Southeast were asked to cut back on electricity usage because of a shortage of natural gas. “If it were not for the electricity generated by our nation’s coal-fired and nuclear power plants, we would be experiencing massive brownouts risk and blackouts in this country,” he said.

Murray Energy is the largest privately owned coal company in the United States, with mining operations in Ohio, Illinois, Kentucky, Utah and West Virginia. Robert Murray, a Trump friend and political supporter, has been pushing hard for federal assistance for his industry. The Associated Press reported last year that Murray asked the Trump administration to issue an emergency order protecting coal-fired power plants from closing. Murray warned that failure to act could cause thousands of coal miners to be laid off and force his largest customer, Ohio-based FirstEnergy Solutions, into bankruptcy.

Perry ultimately rejected Murray’s request, but later asked energy regulators to boost coal and nuclear plants as the administration moved to replace the Clean Power Plan with a more limited approach.

The plan drew widespread opposition from business and environmental groups that frequently disagree with each other, even as some coal and business interests backed the EPA's Affordable Clean Energy rule in court.

Jack Gerard, president and CEO of the American Petroleum Institute, said Tuesday that the Trump plan was “far too narrow” in its focus on power sources that maintain a 90-day fuel supply.

API, the largest lobbying group for oil and gas industry, supports coal and other energy sources, Gerard said, “but we should not put our eggs in an individual basket defined as a 90-day fuel supply (while) unnecessarily intervening in private markets.”

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