Alerts and Updates

Energy, Environment and Resources Update

Issue 17 | November 2016

ENVIRONMENTAL

Trichloroethylene is Now Formally Listed as a “Known Human Carcinogen”

By Seth v.d.H. Cooley

After many years of being listed as a possible or probable human carcinogen, the widely used—and widely released to the environment—solvent trichloroethylene (TCE) has now been listed by the National Toxicology Program (NTP) of the U.S. Department of Health and Human Services as a “known human carcinogen.” See NTP’s 14th Report on Carcinogens (November 3, 2016).

TCE is an industrial solvent. Its principal uses are as a raw material in hydrofluorocarbon chemical manufacturing, and as a metal degreaser. In light of a number of human studies showing a causal connection between TCE exposure and an increased risk of kidney cancer, NTP reevaluated and ultimately reclassified TCE. In addition to cancer risk, other harms that have been attributed to TCE exposure include immunotoxicity, neurotoxicity, reproductive toxicity and developmental toxicity, such as potential fetal cardiac defects.

Exposure to TCE has been associated with its use in commercial (including dry cleaning) and industrial operations, and with its historical release to the environment. Reportedly, TCE has been found at over 1,000 of the approximately 1,700 current and former federal Superfund sites. It will be interesting to see whether this reclassification will give rise to any increase in toxic tort litigation relating to TCE exposure.

ENERGY

New Revisions to the ISO-NE Capacity Market Enhance Resource Flexibility

The Federal Energy Regulatory Commission (“Commission”) recently accepted tariff changes proposed by ISO-NE that add flexibility for generators and other entities with respect to meeting and structuring their capacity supply obligations (“CSO”) in the forward capacity market. Capacity suppliers that clear in the forward capacity auction received a CSO that commits them to provide capacity during a future delivery period commencing on June 1, three calendar years after the forward capacity auction.[1] Prior to the delivery period, capacity suppliers have opportunities, through annual reconfiguration auctions, monthly reconfiguration auctions or bilateral transactions, to transfer away or acquire CSOs. The new tariff provisions, which became effective on October 19, 2016, enhance those opportunities.

The tariff revisions increase liquidity in the forward capacity market in two principal ways: 1) if a new capacity resource can demonstrate that it will be ready to provide capacity by the start of a capacity commitment period prior to the one associated with the forward capacity auction in which it first participated, ISO-NE could qualify it to participate in an annual reconfiguration auction or capacity supply auction for an earlier capacity commitment period; and 2) import capacity resources may begin to supply capacity within a shorter time frame after participating in their first forward capacity auction. Other changes accepted by the Commission introduce a new seasonal bilateral CSO, eliminate barriers to participation in the real-time energy market and remove certain filing requirements associated with a CSO termination. With these changes, capacity resources will have more options to tailor their CSOs to their operating circumstances.

Lastly, the Commission’s order acknowledged information provided by the New York Independent System Operator (“NYISO”) in the proceeding concerning the export of capacity from a constrained area and associated pricing inefficiencies. In response, the Commission required the NYISO to submit an informational filing with the Commission on or before November 4, 2016, to update the Commission on its efforts to resolve those concerns. ISO New England Inc. and New England Power Pool Participants Committee, 157 FERC ¶ 61,025 (2016).

[1] Forward capacity auctions are held in February, and the CSO associated with that capacity auction commences on June 1 three years later.

Maryland Commences Grid Modernization Proceeding

By Phyllis J. Kessler

In previous newsletters, we reviewed various aspects of New York’s grid modernization initiative, known as Reforming the Energy Vision (“REV”), and advised that similar initiatives are taking place in California, Hawaii, Minnesota and Maryland. 

Maryland’s case was initiated on September 26, 2016, in part as an outgrowth of the merger of Exelon and Pepco Holdings, Inc. (“Pepco”). The order issued by the Maryland Public Service Commission (“PSC”) in that merger case required Pepco to file a plan for transforming its electric distribution grid and to fund up to $500,000 for a consultant to advise the PSC on those issues. The PSC’s September 26, 2016 Notice of Public Conference (“Notice”) established a statewide proceeding “to ensure that electric distribution systems in Maryland are customer-centered, affordable, reliable and environmentally sustainable,” acknowledging that it was following similar proceedings that had been initiated elsewhere in the country. 

The Notice proposed “a targeted review of key aspects of Maryland’s electric distribution systems,” including: 1) rate design; 2) benefits and costs of distributed energy resources (“DERs”); 3) advanced metering infrastructure (“AMI”); 4) energy storage; 5) interconnection process; 6) distribution system planning; and 7) limited income Marylanders. Public comments were due October 28, and the PSC expects to convene a public conference in early December.

The foregoing topics, unlike in New York, include only specific electric distribution issues, and the Notice does not specifically address the potential impacts of any the proposed changes on Maryland utilities, how to keep them in business or whether proposed changes to the Maryland grid will be used to avoid investments in the state’s electric distribution systems. Also unlike New York and California, both of which have single state independent system operators (“ISOs”), Maryland is part of the PJM Interconnection (“PJM”), a multistate ISO, which includes New Jersey, Pennsylvania, Delaware and other states. How the proposed changes to the distribution grid in Maryland will be impacted by ISO regulations and practices because of its utilities membership in PJM remains to be seen.

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