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Despite Financial Hurdles, Utility Capital Spending to Remain Elevated

December 31, 2018

Despite higher taxable income and pressure on balance sheets, capital spending by regulated utilities will remain elevated—and much of it will be dedicated to replacing aging infrastructure, hardening or efficiency-boosting measures, and on renewables and environmental projects, said Moody’s Investors Service in a recent sectoral briefing.

The credit ratings agency for the first time this June downgraded the regulated utility sector from stable to negative, pointing to a surge in financial risks as more individual companies funnel funds to debt. In a Dec. 14 briefing, Moody’s said utilities will claim less in depreciation expenses and have higher taxable income under the 2017 Tax Cuts and Jobs Act, and most are starting to pay cash taxes as early as 2019 or 2020.

However, several utilities are still involved in extensive improvement projects, it said, warning: “This could put pressure on balance sheets depending on how much debt is used in the financing plans.”

An Unexpected Surge in Captial Spending

Capital spending for a group of 31 utility holding companies that the agency examined was expected surge to $ 100 billion in 2018, compared to $ 90 billion in 2017, Moody’s noted.…

EPA: Mercury Rules for Coal, Oil Power Units Not ‘Appropriate and Necessary’

December 28, 2018

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Because compliance costs to coal- and oil-fired power plants for the Mercury and Air Toxics Standards (MATS) far exceed quantifiable benefits to regulating hazardous air pollutant (HAP) emissions, the Trump administration has proposed it is not “appropriate and necessary” to regulate HAP emissions from power plants under Section 112 of the Clean Air Act (CAA), according to a document signed by acting Environmental Protection Agency (EPA) administrator Andrew Wheeler on Dec. 27.

However, the EPA did not propose to remove coal- and oil-fired power plants from the list of source categories regulated under that section of the CAA, which means the 2012-finalized MATS remains in place. The EPA’s proposal, released publicly Dec. 28, is outlined in a revision to the agency’s final supplemental cost finding for MATS, which was required by a U.S. Supreme Court decision in June 2015.

The agency on Friday also made public proposed results of the long-awaited MATS risk and technology review (RTR). The separate evaluations of risk and technology are required under CAA Section 112 every eight years after final HAP standards go into effect to determine if new developments should be incorporated into the standards.…

Tianwan Unit 4 Latest Chinese Reactor to Come Online

December 26, 2018

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Unit 4 of the Tianwan Nuclear Power Plant in China entered commercial operation this past weekend after completing commissioning. It began supplying power to the country’s national grid on Dec. 22.

Tianwan NPP is the largest facility built with a Russian-Chinese framework of economic cooperation, with Units 1 through 4 based on the VVER-1000 reactor type. Units 1 and 2 entered commercial operation in 2007, and Rosatom handed over Unit 3 to Jiangsu Nuclear Power Corp. (JNPC) in March of this year.

Tianwan Unit 4 was brought to its minimum controllable power level on Sept. 30, marking the final stage of first criticality procedures, which began Aug. 25 when the first fuel assembly was installed in the reactor. A total of 163 fuel assemblies were ultimately loaded.

Russia’s Atomstroyexport was general contractor for the project, working with JNPC. Alexey Bannik, vice president for projects in China with Rosatom’s engineering division, said the start of commercial operation of Unit 4 “means that a two-year warranty period for the plant operation has commenced, and once expired the Unit will ultimately be handed over to the Chinese Party.”…

POWER’s Top 10 Most-Read Stories from 2018

December 22, 2018

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There’s never a dull moment in the power industry, and like most years, 2018 was filled with many interesting developments. As it has been for more than 135 years, POWER was there to break the news. The following 10 articles were the most-read online stories of the year.

#10: New York Denies Air Permit for New Gas-Fired Power Plant (8/7/2018)

Competitive Power Ventures’ (CPV’s) Valley Energy Center—a natural gas-fired power plant in Wawayanda, New York—had planned to ramp up to full operations in August, but the state’s Department of Environmental Conservation (DEC) denied the plant’s request for renewal of its air state facility permit because it lacked a federal Title V air permit. CPV sued DEC and asked for a hearing on the matter, seeking an injunction that would allow the plant to operate. The state Supreme Court in mid-August said the plant could resume startup tests pending a decision on the federal air permit. The facility achieved commercial operation on October 1, but questions remain regarding the permit situation.…

NERC: Accelerated Coal and Nuclear Retirements Pose Limited Reliability Risks

December 20, 2018

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The accelerated retirement of coal-fired and nuclear generation by 2022 could adversely affect reliability in four regions, including in the east and over a swathe of the central U.S., the North American Electric Reliability Corp. (NERC) warned as it released findings from a “stress-test” scenario.

But the entity tasked with ensuring reliability and security of the North American bulk power system (BPS) also noted six of 10 assessment areas—which cover PJM, New England, MISO, the Electric Reliability Council of Texas (ERCOT), and the Western coast—would have enough generation capacity to maintain peak demand, even if they see high levels of generator retirements over the next five years.

A “Stress-Test” Scenario

The findings stem from NERC’s Dec. 18–released “Generation Retirement Scenario,” which the entity evaluated because, it said, the retirement of traditional baseload generators and their rapid replacement with natural gas–fired, wind, and solar generation “is changing the characteristics of the BPS and introducing new considerations for reliability planning.”

The so-called “stress-test” scenario essentially assumes that areas where coal and nuclear currently make up a large share of resource levels will see accelerated retirements so that by 2022, they will lose 30% of their coal capacity and 45% of their nuclear capacity.…

Regulators Back Dominion Takeover of SCANA

December 18, 2018

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Dominion Energy’s bid to purchase SCANA Corp. and its South Carolina Electric & Gas (SCE&G) utility, approved by South Carolina regulators on Dec. 14, could bring some stability to SCANA. Shareholders hope that’s the case; they’re excited about swapping their devalued SCANA shares for more valuable Dominion stock.

Workers, though, remain uncertain about their futures, fearing job losses with SCANA moving from local ownership to operating under the auspices of a Virginia-based company. On the flip side, workers also know new ownership could help the company’s bottom line and prevent job cuts, which Dominion has addressed in its merger agreement.

South Carolina’s Public Service Commission (PSC) unanimously supported Dominion’s offer for SCANA, despite protests from environmental groups and others who say the deal is not good for state ratepayers. SCANA CEO Jimmy Addison said the PSC’s decision put the companies “one step closer to a final resolution and the certainty that stakeholders have been hoping for.”

Thomas Farrell, Dominion’s chairman, president and CEO, in a statement Friday said his company was “encouraged” by the PSC’s unanimous support, “and awaits an order to review prior to making a final decision to close the merger with SCANA.”…