Update from the Latest Louisiana Public Service Commission Meeting

At the latest LPSC meeting, it was decided that Acadian Consulting would be hired to collaborate with the Commission on the EPA’s proposed carbon emission plan. Below is a detailed report on the decision, provided by the Cruthirds Report. The Cruthirds Report is a detailed newsletter concerning regulatory developments in the energy industry. It is a must-read for anyone interested in energy policy in the Southeast United States. These informative and detailed reports provide timely insights on the energy industry. To subscribe to this report click here.

About David Cruthirds
David is licensed to practice law in the state of Texas, which enables him to appear before state public utility commissions in states throughout the southeast. David graduated cum laude from South Texas College of Law in Houston, where he was a member of the South Texas Law Review. David earned his MBA from Houston Baptist University, and combines his extensive experience with his legal and business acumen to provide value-added legal and regulatory consulting services to his clients. David gained widespread recognition for his knowledge and insights into the operation of competitive energy markets during his 6 years with Dynegy Inc., where he was Vice President and Regulatory Counsel.

To learn more about David Cruthirds and his work in the energy industry, please click here.


R-33253 : Louisiana Public Service Commission, ex parte In re: The United States Environmental Protection Agency’s Proposed Rule on Carbon Dioxide Emissions from Existing Fossil-Fuel Fired Electric Generating Units under Section 111(d) of the Clean Air Act
7/10/2014: Acadian Consulting/Dismukes hired to work on EPA carbon emissions rule – The Louisiana PSC voted 4-1 (Campbell voting no) during its July 9, 2014 B&E meeting to hire David Dismukes and Acadian Consulting to assist staff with its review of the EPA’s proposed carbon emissions rule.  Staff issued RFP 14-13 on June 6, 2014, and received two proposals.

• Acadian Consulting Group submitted a bid that consisted of Task 1 (preparation of comments and follow-up comments) for $75,090; Task 2 (federal litigation against the EPA) for $40,790; and Task 3 (help develop State Implementation Plan) for $119,370.  The total bid for all three tasks was $235,250 in consulting fees and $1,417 in expenses.  http://www.acadianconsulting.com
• London Economics International submitted a bid that consisted of Task A (cost-benefit analysis of the rule) for $57,525 and Task B (litigation support to challenge the rule) for $124,350 for a total bid of $181,875 (includes expenses not to exceed $7,500).  London also submitted a bid of $30,000 for an optional macroeconomic impact analysis.

Executive Counsel Brandon Frey said both firms were qualified, so staff did not make a recommendation.  Frey noted Acadian’s bid for Task 3 was unsolicited, so the commission would need to clarify whether Task 3 was included if Acadian’s bid was selected.  Similarly, London’s bid to perform a macro-economic study was outside the scope of the RFP.  Chairman Skrmetta made a motion to accept Acadian’s low bid for Tasks 1 and 2, but not for Task 3.  He said they could address Task 3 if necessary.  No opposition was voiced, and it was so ordered.

Public comments overlooked, so vote conducted again (with similar results) – The commission moved to and handled another matter (Exhibit 8) before it was discovered that Casey DeMoss Roberts with the Alliance for Affordable Energy had submitted a request to provide public comments on the EPA rulemaking.  Roberts apparently completed and submitted the request to comment, but the request was not brought to Chairman Skrmetta’s attention until after the commission had voted and moved on.  Skrmetta returned to Exhibit 7 and the EPA rulemaking to allow Roberts to provide her comments.

Roberts began by expressing frustration that public comments were supposed to be accepted before matters are voted on, noting the commission had already voted to hire Acadian.  Roberts and Skrmetta had a short exchange about how her request was overlooked, with Skrmetta apologizing for the snafu.  Roberts said the Alliance wants to contribute to the development of the commission’s position on the EPA’s proposed carbon emission rules.  She said the Alliance’s research shows that only 12% of Louisiana’s power is generated from coal.  She said the Alliance was confused by the EPA’s recommendation that Louisiana needed to reduce its carbon emissions by 40%, so the Alliance researched the issue and determined the 40% reduction would only apply to a subset of the generation in Louisiana.

Commissioner Campbell pointedly asked if Roberts and the Alliance had any concerns about Acadian Consulting and David Dismukes.  Roberts was initially hesitant, but conceded the decision to hire Acadian and Dismukes did raise concerns from the Alliance’s perspective.  She cited the Alliance’s and others ongoing challenge of the commission’s decision to hire Acadian and Dismukes to work on the comprehensive cost-benefit study of solar power and net metering.  (Docket X-33192)

Campbell noted he didn’t vote to hire Acadian for the net metering docket, expressing frustration with the Alliance’s criticism of that decision because the Alliance didn’t note Campbell’s opposition.  Campbell asserted Dismukes has a conflict of interest because of his past work for oil companies.  He shares the Alliance’s concerns about Acadian, but he wants the Alliance to get its story straight.

Roberts noted she was troubled by the altercation Dismukes was involved in when someone tried to serve him with a subpoena.  She said the decision to hire Dismukes was causing stakeholders to lose confidence in the commission’s process.  She urged commissioners to look at the net metering issues from the solar industry’s perspective, noting companies were going out of business because of the situation in Louisiana, asserting that wasn’t the right direction to be going.  She urged commissioners to be sensitive to all stakeholders’ concerns, and to consider the various parties’ motivations.

Holloway counters – Commissioner Holloway quickly countered that Louisiana had given the solar industry “everything” it asked for.  Holloway then asked if the Alliance opposed natural gas and gas-fired power generation.  Roberts said no, clarifying the Alliance “isn’t an environmental group.”  Holloway was shocked by that comment in light of the Alliance’s involvement in numerous environmental issues and cases, asking Roberts “what in the hell” the Alliance is if they aren’t an environmental group.  Roberts said the Alliance is for “affordable energy” as well as for consumer independence and choice.

Roberts said the net metering cost-benefit study is supposed to determine whether there are any subsidies.  If subsidies are found, solar customers should be required to pay their fair share.  But if not, the commission needs to recognize the full value and net benefits from solar power and net metering.  Holloway contended the solar industry’s growth may stop when the legislative subsidies end in 2017.  Roberts acknowledged solar growth may be slowing, but countered solar is growing even in states without any programs.  She cited the work being done in Georgia, noting the Tea Party supports solar on the basis of individual freedom and independence.

Holloway switched gears, asserting stakeholders are being unfair to Acadian and Dismukes.  He said people shouldn’t assume Dismukes is biased against solar, asserting the firm wouldn’t have been hired if the commissioners didn’t have confidence in it.

Commissioner Angelle followed up on Roberts’ observation that only a portion of Louisiana’s generation would be subject to the EPA’s rule.  He wondered whether the 40% target could be more significant because it would be measured against a smaller portfolio of generation.  Roberts acknowledged the EPA’s proposal is confusing, saying she expects continued analysis and dialogue between now and when comments are due in October.  Roberts said most of the emission reductions would come from nine specific plants, including four coal-fired plants.  She said the costs would be spread across a large number of ratepayers, so the overall impact on rates should be modest.

Angelle said it sounded like the proposed rule could be a “death penalty” for those plants.  Roberts acknowledged that could be the case, but contended those plants are old and might be shut down soon anyway.  She noted the EPA suggested the plants be converted to more efficient natural gas-fired plants.  She also noted new nuclear and energy efficiency were part of the EPA’s suggested compliance strategies.  She also said the EPA didn’t give proper credit on some issues, contending they can convince the EPA to lower its target by presenting a compelling case.

Angelle said he wanted to know the ultimate impact of the rule on ratepayers.  Roberts said the electric utilities’ pending IRP cases would be the perfect proceedings to address those issues.  The IRP cases can help determine the least-cost approach to meet the EPA’s targets.  She reiterated her belief that the issues can be managed without major impacts on ratepayers, but contended the state needs to diversify its generation base, including support for “home-grown” industries like solar.  Angelle thanked Roberts for her efforts to dig into the rule, and he looks forward to working with her on the issues.  He appreciated her digging into the issues and bringing new information to the commission’s attention.

Accolades for everyone’s demeanor – Commissioner Boissiere acknowledged the concerns about Acadian and Dismukes before commending Roberts for taking a “rational and reasonable approach.”  He said she addressed some issues that some people didn’t want to hear about, and did so in a calm, reasonable way.  He also expressed appreciation for commissioners treating her courteously in return, an apparent reference to previous public witnesses that weren’t treated very respectfully.  Boissiere said he was proud of her and proud of the commission for hearing and considering her views, noting she raised issues staff hadn’t identified.  He said her efforts were helping educate staff and commissioners.

Chairman Skrmetta said he appreciated Roberts’ help, but complained about receiving an email from an Alliance member that asserted Skrmetta was trying to “destroy solar.”  He said the commission’s cost-benefit study is designed to identify the relative costs and benefits of solar, contending the Alliance was misleading people.  He acknowledged he is a “public figure,” so people can say just about anything they want about him.  Nonetheless, that kind of factual inaccuracy hurts the Alliance’s credibility.  Roberts apologized, noting the Alliance discourages personal attacks.  Skrmetta reiterated the objective of the study is to find the right rate structure, so the net metering caps can be eliminated.

Skrmetta said he has had his own conversations with the EPA, citing the unknown factor about what will be considered.  He said the proposed rule’s focus is on CO2 emissions, so it will affect natural gas-fired generation as well as non-power producing industrial facilities.  He said the lack of fines or penalties in the rule was very surprising because there wouldn’t be much motivation for the states to comply.  He thinks there will be significant price increases, citing his discussions with DOE Secretary Ernest Moniz about the expected reduction of coal-fired generation before he became DOE secretary.  He said Louisiana has some of the lowest rates in the country, but high consumption leads to high bills and a lot of power generation.  He said part of the EPA’s strategy is to discourage consumption by increasing rates.

Skrmetta also addressed the decision to hire Dismukes, asserting the commission hires consultants and lawyers based on facts.  He noted reports prepared by outside consultants are subject to public vetting and comments, and aren’t just accepted by the commission.  Skrmetta noted he disagrees with the views of some of the commission’s outside consultants, asserting it would be hard to hire anyone if commissioners had to agree with all of the consultants’ views.

Reconsider and vote again – Chairman Skrmetta wanted to make sure the vote to hire Acadian/Dismukes couldn’t be challenged because of the failure to accept public comments before the vote, so he moved to reconsider the question.  Commissioner Campbell seconded, and no one objected to the reconsideration.  Skrmetta re-urged his original motion to accept Acadian’s bid for Tasks 1 and 2, and defer a decision on the proposal for Task 3.  Commissioner Holloway seconded.  Campbell said he was opposed, asserting Dismukes is too close to the oil industry and can’t be objective.  Skrmetta’s motion to hire Acadian and Dismukes passed by a 4-1 vote, with Campbell voting no.