General Counsel Report

APGA's General Counsel, John Gregg of McCarter & English, prepares this weekly report to highlight the industry news for public natural gas professionals.

August 22, 2019

FERC Gets Request to Pre-Approve New Permian Pipeline

As huge quantities of natural gas are flared each day in west Texas associated with oil production, Tellurian has asked FERC to review in stages a new Permian Global Access Pipeline project to link the Permian Basin production to the fastest growing US gas market:  Southwest Louisiana, where petrochemical, industrial and LNG export demand is rising.  The proposed 625-mile, 42-inch-diameter project that would run from the Waha Hub in West Texas to Gillis in southwest Louisiana and carry 2.3 Bcf/d.  An in-service for the project is targeted for the second half of 2023 or the first half of 2024. The company anticipates filing a complete application at FERC in October 2020, with the goal of receiving certificate approval around mid-2022.

Duke Admits Air Pollutant Increases with Solar Growth

North Carolina created taxpayer-funded subsidies to support solar growth—4,491 MWs of installed solar capacity in the second quarter of 2018, second only to California.  Under current law, that is expected to jump to 6,800 MW by 2025 in Duke Energy’s Carolinas and Progress regions.  Donald van der Vaart, former secretary of the N.C. Department of Environmental Quality and State Energy Policy Advisor over ten years ago charges: “After committing $2 billion in tax credits, and more than $1 billion in electricity overpayments for solar power, we now learn from Duke that nitrogen oxides have actually increased, and that CO2 may be headed in the wrong direction.  This should shock everyone responsible for North Carolina’s air quality, and the nation’s energy policy.” 

Duke spokeswoman Kim Crawford has confirmed to media in North Carolina that increased solar power on the state’s electric grid is increasing emissions of nitrogen oxide (NOx); she said that reductions in carbon dioxide (CO2) emissions could also reverse if current solar growth continues without policy changes.  Crawford provided measurements showing that even on sunny days — when solar power is at its maximum output — more NOx pollution is released into the air than would occur if no solar electricity were used and natural gas were used instead.  Traditional power plants — including cleaner burning natural gas plants — must scale back electric generation to accommodate solar energy surging onto the system when the sun rises, and power back up when the sun sets and solar energy dissipates.  That starting and stopping reduces efficiency and incapacitates emission control devices, increasing pollutant levels.  When solar energy comes and goes on cloudy days, more frequent cycling of reserve sources occurs, further decreasing power plant efficiency.  This increased cycling can result in increased emissions and undue wear and tear on the expensive equipment.

Duke is attempting to mitigate the situation by seeking revisions to its air quality permits.  Duke wants regulators to relax restrictions at several of its power plants to handle the surge of solar growth.  Duke wants new permits allowing combustion turbines to throttle up and down from a “low load” idling operation instead of switching completely off and on as solar waxes and wanes.  In its permit applications Duke said that would lower pollutant emissions and reduce stress on equipment.

Solar Interests Sue New Mexico Electric Muni for Discrimination

Solar energy advocates sued a New Mexico city in federal court Friday, accusing its utility of imposing on rooftop solar owners. The Farmington Electric Utility Service was charged with unlawful and discriminatory monthly fees to businesses and homeowners that have their own solar panels, as well as violating the Public Utility Regulatory Policies Act's prohibition on discriminating against qualified small-scale power producers. FERC had declined to pursue a PURPA enforcement case against the utility.   "The utility incorrectly presumes to be entitled to more of its customers' money, even when those customers produce their own electricity instead of buying it from the utility," Earthjustice attorney Dave Bender, who represents the plaintiffs, said. "That's wrong. What's more, it's illegal." The utility says the charges ensure that the costs of maintaining its system's reliability are fairly shared between customers that generate their own electricity and customers that do not.  Utility solar fees have also been challenged on antitrust grounds, most notably in a proposed class action fighting fees imposed by Arizona utility Salt River Project Agricultural Improvement and Power District.

Ransomware Attacks Hit Texas Munis

On August 16, more than 20 entities in Texas, the majority of which were smaller local governments, reported a ransomware attack. There are no known impacts to any public utilities in Texas.  The breach targeted law enforcement agencies at the county and municipal level and was quickly contained apparently. The Texas Department of Information Resources (DIR) announced that Investigations into the origin of this attack are ongoing but recovery is the priority at this time.  Texas Public Power Association Executive Director Russ Keene was first contacted on Saturday morning, Aug. 17 via email from the state Public Utility Commission’s Cybersecurity Division. 

Shell Moves to LNG-Powered Oil Tankers Calling It Decarbonization

Oil and gas Giant Shell has signed a charter deal for a fleet of 14 new LNG-powered crude oil and product tankers, including 10 new LNG dual-fuel Aframax crude oil tankers are expected to be delivered from Samsung Heavy Industries in 2021.  Shell has also signed long-term charters for four new LNG dual-fuel oil products tankers from institutional investors, with delivery of the vessels expected from 2021.  “This is an important step in Shell’s wider drive to help decarbonize the shipping sector, both as a leading supplier and user of LNG,” Shell VP for Crude Trading and Supply Mark Quartermain said.  The International Maritime Organization’s global marine sulfur cap is set to drop to 0.5% from the start of 2020, from 3.5% currently, forcing most ship operators to switch from burning high sulfur fuel oil to more expensive, cleaner alternatives.

View past reports here.