As we entered 2017, the energy marketplace was expected to be filled with uncertainty and boy, it did not disappoint! With the new Administration came a reversal in initiatives on nearly everything energy, and at the state level the battles continued over subsidies for uneconomic power plants. Can we expect the same for 2018? Below is my lineup of 2018’s hottest issues in the world of energy, both nationally and locally in Ohio.
Battle of Generation Subsidies
Subsidies continue to be a major battle at the state level in Ohio as the current owners of expensive coal and nuclear plants seek rate payer bailouts that will unequivocally raise prices for consumers. Nearly a half a dozen pieces of bailout legislation were introduced last year with no single bill gaining traction; polls show overwhelmingly that Ohioans oppose paying above-market electricity rates. With the utilities employing a full court press of lobbying power coupled with a gubernatorial election this will continue to be a major point of debate in 2018.
At the federal level, the Department of Energy put its own twist on subsidies by releasing a Notice of Proposed Rulemaking (NOPR) proposing preferential economic treatment of coal and nuclear plants. Most experts agree that if implemented, the NOPR will blow up the energy markets, and cost consumers an estimated $3 to $13 billion annually. Also, it is estimated that 75% of those dollars would flow to just five companies, one of which is First Energy. To implement the NOPR, the Federal Energy Regulatory Commission must create rules based on a body of evidence. Last week, FERC rejected the DOE’s NOPR ending proceedings and opened up their own investigation as to how grid operators are addressing reliability. Watch for the zombies on this issue. Just because the issue looks dead may not mean it is dead.
Ohio House Bill 247
Representative Mark Romanchuk introduced HB 247 which was crafted to protect and improve the competitive energy markets for Ohio consumers. This bill aims to provide three solutions that benefit consumers: 1) allows refunds to customers if the Ohio Supreme Court rules that electric utilities improperly charged customers; 2) requires all utilities to prove any above-market charges by opening their books through a rate case; and 3) requires utilities to sell their power plants ending the need for generation subsidies. This bill is in direct response to the subsidy legislation lobbied for by the utilities and will be squarely in the boxing ring in 2018.
U.S. Position as Net Exporter
In 2018, the U.S. will be a net exporter of three of the four major sources of energy in the world; natural gas, petroleum products and coal. The only energy source that will remain net imported is crude oil.
The latest and arguably the most important energy source to join the net export list is natural gas. Since 1950, the U.S. has been a net importer of natural gas. Net imports started to shrink in 2007 as the shale regions started producing large quantities of natural gas and petroleum byproducts. These petroleum products were designated a net export in 2011 while natural gas exports exceeded imports the middle of last year. New pipeline infrastructure to Mexico and Canada, conversion of liquefied natural gas terminals from import to export capable and U.S. domination as the top natural gas producer in the world are all contributors. 2018 will be the first full year that all three of these major energy sources will be marked as net exports.
Blockchain in Energy
Not too far off in the future we will likely begin to start seeing the impacts of blockchain in the energy world. (See previous blog for a more detailed description of blockchain.) Look to the Energy Web Foundation to set the pace of commercializing blockchain technology in the energy sector. It is a non-profit group backed by many of the major worldwide energy companies whose mission is research, development and education of blockchain in the energy industry. Vetting out the most promising use cases of blockchain and creating an eco-system of users will enable the acceleration real life energy applications in 2018.