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Keystone XL still faces hurdle; Coal eyes Trump action on infrastructure

Q2: U.S. Solar and Wind Power by the Numbers

Essential Energy Insights - September 17, 2020

Essential Energy Insights September 2020

Rate case activity slips, COVID-19 proceedings remain at the forefront in August


Keystone XL still faces hurdle; Coal eyes Trump action on infrastructure

Top News

SC lawmakers advance bills gutting VC Summer cost recovery, allowing refunds

As many investors have feared, lawmakers in South Carolina are moving forward with efforts to eliminate cost recovery for the failed V.C. Summer nuclear plant expansion while authorizing refunds to ratepayers.

Permits in hand, Keystone XL oil pipe still faces financial hurdle

TransCanada Corp. finally secured the last major permit for its Keystone XL pipeline after a battle that lasted most of a decade, but it is an open question whether the company will build it after weighing legal, commercial and even new regulatory risks.

Coal sector eyeing Trump action on infrastructure, domestic steel protection

This week, President Donald Trump said the administration will soon pivot back to his plans to improve U.S. infrastructure, which could offer another boost to domestic coal producers.

Power

* The beneficial use of coal ash ticked down slightly in 2016, but one industry group sees blue skies and regulatory certainty ahead even as the U.S. Environmental Protection Agency moves to review some rules associated with the disposal of residuals from coal-fired electric generation.

* Exelon Corp. and Toshiba Corp. unit Westinghouse Electric Co. LLC are said to be in talks to form a consortium to bid for two nuclear power reactors in Saudi Arabia, Reuters reported, citing "industry sources." The consortium may include other U.S.-based companies, including industrial contractor Bechtel Corp.

* Avista Corp.'s shareholders gave their approval to the company's pending acquisition by Hydro One Ltd., with more than 77% of the outstanding common shares voted in favor of the US$5.3 billion all-cash deal, according to an SEC filing.

* Private contractor Whitefish Energy Holdings LLC on Nov. 20 suspended efforts to help Puerto Rico repair its hurricane-battered electric grid, citing over $83 million in unpaid invoices under a controversial contract the company signed with the island's public utility.

* MDU Resources Group Inc. is exploring a potential reorganization to a holding company structure in a bid to make Montana-Dakota Utilities Co. and Great Plains Natural Gas Co. into subsidiaries of the holding company. Separately, the company announced a $2.32 billion CapEx plan for 2018 through 2022, with targeted acquisition being the focus of the expenditure plans, in line with the potential reorganization.

* The environmental group New Energy Economy is asking New Mexico utility regulators to "rehear and reverse" approval of Public Service Co. of New Mexico's renewable energy portfolio plan, which involves investing in 50 MW of solar projects, The Santa Fe New Mexican reported.

* Oncor Electric Delivery Co. LLC secured an unsecured revolving credit facility in an aggregate principal amount of up to $2.0 billion. The company plans to use the borrowings under the facility for general corporate purposes, according to a company filing.

* Great Plains Energy Inc. and Westar Energy Inc. on Nov. 21 said their shareholders approved a revised plan for the two Midwestern companies to merge.

* The Hawaiian Electric Cos. and the University of Hawaii are collaborating to develop a "green tariff" for projects that would increase renewable energy generation, improve grid capacity for renewables and lower energy costs for the university. The initiative is subject to the approval of the state Public Utilities Commission.

Gas/Oil

* The Federal Energy Regulatory Commission approved natural gas compressor stations and other facilities that will make up Transcontinental Gas Pipe Line Co. LLC's 475,000-Dth/d Gulf Connector expansion project to bring more gas to two LNG export terminals on the Gulf Coast.

* Some TransCanada Corp. shareholders are urging the company to proceed with the long-delayed Keystone XL pipeline project in spite of the financial risks tied to the mainline alternative route for the 36-inch-diameter border-crossing pipeline to transport crude oil from Canada's tar sands to Nebraska and ultimately the Gulf Coast, Reuters reported.

* Polish Oil and Gas Co. signed a deal to receive up to nine LNG cargoes from Cheniere Energy Inc.'s Sabine Pass terminal in Louisiana, a move the state-run company said is part of Poland's efforts to reduce its reliance on Russia's Gazprom.

* The Sierra Club slammed the Federal Energy Regulatory Commission for its inadequate climate analysis of the proposed Sabal Trail natural gas pipeline. According to the group, FERC "rushed through a skeletal analysis in an attempt to assuage" the U.S. District Court of Appeals. "A much more rigorous review is necessary," the group said.

* The South Dakota Public Utilities Commission could revoke TransCanada Corp.'s Keystone pipeline permit if it finds that company violated license conditions after a recent oil spill, Reuters reported. Separately, sources told the news outlet that the company plans to reduce deliveries on the Keystone pipeline by 85% or more through to the end of this month.

* Alaska Gov. Bill Walker touted the benefits of the the proposed $40 billion to $45 billion Alaska LNG project, saying the project will offer low cost natural gas, provide jobs and generate up to $2 billion revenue annually, The Associated Press reported. Earlier this month, the state-sponsored Alaska Gasline Development Corp. agreed to pursue the project with Chinese oil and gas company, Sinopec.

* The Southern Environmental Law Center, on behalf of local and citizen groups, is urging the North Carolina Department of Environmental Quality to withdraw its draft air permit for the Northampton compressor station, a component of the planned $5.5 billion Atlantic Coast pipeline. The group said the draft contains errors and unanswered questions.

* The Pennsylvania House of Representatives adjourned until Dec. 4, leaving the Marcellus Shale gas production tax unsettled, The Associated Press reported. The amendments proposed by the Republicans raise less money than the 6.5% tax proposed by Democratic Gov. Tom Wolf.

Coal

* CONSOL Mining Corp. will control the "largest and lowest-cost coal assets in the eastern U.S." and have excellent access to export markets, an analyst said in a Nov. 21 note initiating coverage of the up-and-coming coal spinoff.

* The California Air Resources Board released carbon-emissions auction results stating that California will collect $860 million from the auction, The Associated Press reported. The cap-and-trade program, renewed in July by the state lawmakers, requires polluters to get a permit for each ton of greenhouse gases they emit.

* Hallador Energy Co.'s Sunrise Coal LLC subsidiary could be facing continued coal delivery cutbacks in 2018 unless coal burn projections improve at Vectren South, an electric utility owned by Evansville, Ind.-based Vectren Corp., according to a new regulatory filing.

Commodities

* Price action for power dailies could be biased lower Wednesday, Nov. 22, as generally softer demand expectations through and coming off the Thanksgiving holiday combine with the recent weakness in natural gas futures trading.

* Following a 3.0-cent decline in the prior session to finish at $3.017/MMBtu, NYMEX December natural gas futures were near unchanged overnight ahead of the Wednesday, Nov. 22, open, as supportive storage expectations ran counter to bearish weather-related demand prospects.

* A broad natural gas market shift driven by strong demand from a growing number of sectors could create a more bullish price environment for natural gas this winter and going forward, market analysts said.

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New from RRA

* On Nov. 21, the Minnesota Public Utilities Commission voted to authorize Minnesota Energy Resources Corp. a $9.5 million interim gas rate increase, premised upon a 9.11% return on equity (50.9% of capital) and a 6.41% return on a $289.5 million rate base.

Quote:

"While today's Keystone XL pipeline approval is an important milestone, it does not provide certainty that the project will ultimately be built and begin operating. Pipeline construction would negatively affect TransCanada's business risk profile through increased project execution risk, and would likely put pressure on financial metrics," said Gavin MacFarlane, a vice president in Moody's Toronto office, in a Nov. 20 research note after TransCanada secured the last major permit for the project.

The day ahead

Early morning futures indicators pointed to a higher opening for the U.S. equity markets. To view more SNL equity market indexes, click here. To view more SNL Energy commodities prices, click here.

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