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Fitch renews warning of utility 'death spiral'; SunEdison considering sale of TerraForm Global stake

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Apolicy that has helped boost the U.S. residential solar market could threaten thecreditworthiness of investor-owned utilities, Fitch Ratings said. Net-energymetering, which requires utilities in many states to pay customers retailprices for their excess solar power, is often criticized as subsidy that shiftsthe cost of electric service on to nonsolar customers. While the solar marketis still small, accounting for only about 1% of U.S. power generation in 2015,the fear is that problems associated with net metering could become acute ifthe residential sector continues to expand rapidly.

Threelow-cost Marcellus Shale natural gas producers are in the best position to rideout a coming bump in the road and then thrive on improved natural gas pricingin 2017, S&P Global Market Intelligence equities analyst David Holt said ina research note. Marcellus drillers RangeResources Corp., CabotOil & Gas Corp., and EQTCorp. all have positive cash flows due to low costs, ampleliquidity, and no near-term debt due, Holt said, and will easily handle what hesees as a short-term correction in natural gas prices coming because of hugesummer storage inventories.

Attorneysgeneral from 15 states issued an appeal for congressional action to limit thereach of federal agencies that create and enforce regulations, alleging thatthey often circumvent the law, fail to consider related costs and override thelegal systems of the state. In a letter submitted to Senate and House leadersof both parties, the 15 state officials asked that the U.S. Congress step inand pass laws that would limit agencies from their current approach to legalguidance and regulatory oversight.


* SunEdisonInc. is yet to find a suitor for the entirety of its businessthough continues to garner interest in specific assets, including for bundlesof wind and solar farms, and for its entire commercial and industrial unit,sources tell Bloomberg News. The bankrupt renewable energy developer alsoreceived at least one inquiry about its controlling stake in , BloombergNews said.

* SunEdison is considering a sale of its ownership interestsin TerraForm Global an unaffiliated third party, according to a filing.A sale or transfer may occur during SunEdison's bankruptcy, subject to theapproval of the bankruptcy court.

*Several state officials, including those that oppose the Obama administration'sClean Power Plan, are preparing for the climate change regulation in case therule prevails. For instance, Wyoming Gov. Matt Mead — who is fighting theregulation — has asked his environmental officials to prepare for a contingencyin which the plan survives. "Obviously we're suing and going to fight. Butfrom my court experience, I know you have to prepare not to win," he told TheNew York Times. Earlier this year, the U.S. Supreme Court stayed thecarbon plan until legal challenges could be resolved.

*The Obama administration announced the CleanEnergy Savings for All Initiative — a cross government partnership thatseeks to increase Americans' access to solar energy and promote energyefficiency. The goal is to introduce 1 GW of solar energy, particularly in low-and moderate-income communities, by 2020 — up from a previous commitment ofinstalling 100 MW of renewable energy on federally-assisted affordable housing.

* Ina move heralded as a victory for coal-fired power plants in Texas, a federalappeals court stayed the implementation of the regional haze rule in that stateand slammed the U.S. EPAfor causing years of delay and failing to consider the grid reliability impactsof the rule.

*Economist Paul Brewbaker of TZ Economics believes that the Hawaii PublicUtilities Commission's rejection of the NextEra Energy Inc. deal to acquire wassimply the state government consolidating its political control. "It's aclear effort to consolidate political control: You must be on my team andembrace my … renewable energy policy strategy, tax the public to reward ouranointed investors, or you will never do business in this city again,essentially. Get out of town," Brewbaker told the PacificBusiness News.

Natural gas/midstream

* New research from the Johns Hopkins Bloomberg School ofPublic Health suggests a linkbetween hydraulic fracturing and increased risk of asthma attacks. Researchersfound that people with asthma who live near bigger or larger numbers of activeunconventional natural gas wells operated by the fracking industry inPennsylvania are 1.5 to four times likelier to have asthma attacks than thosewho live farther away.

*The Hawaiian Electric Companies — which comprises , and Maui Electric Co. Ltd.— have withdrawn anapplication to secure LNG from FortisInc. subsidiary Fortis Hawaii Energy Inc. The move follows NextEraEnergy's decision to terminateits long-running pursuit of Hawaiian Electric Industries, the parent of theHawaiian Electric Companies.

* A federal appeals court asked FERC to explain why a deal allowing to giveup contracted services at DominionResources Inc.'s Cove Point LNG import terminal was not unfair toBP Energy Co., anotherDominion customer that did not get the same opportunity.

* KinderMorgan Inc. is likely to meet British Columbia's conditions for thecompany's Trans Mountaincrude oil pipeline expansion, a finaldecision on which now rests with Canadian Prime Minister JustinTrudeau, BloombergNews reported citing British Columbia Energy Minister Bill Bennett.

* Ergon Asphalt & Emulsions Inc., a subsidiary ofErgon Inc., is acquiring100% of Blueknight GP Holding LLC, the general partner of anoperator of complementary midstream energy assets.


*Production atCloud Peak Energy Inc.coal mines continues to drop,though there are some signs that the dive may be slowing for the Powder RiverBasin energy company. Overall production is down 7.3% to just over 11.8 milliontons in the second quarter of 2016, from 12.8 million tons produced in theprevious quarter. The amount produced in the most recent quarter dropped 25.8%from the nearly 16 million tons produced in the second quarter of 2015.

* AsRepublicans kicked off the party convention in Cleveland, its platform emergedwith a focus on promoting the continued use of "clean" coal andpushing back on Obama administration environmental policies often cited for theindustry's prolonged decline. Releasedafter a vote on the first day of the party convention, the platform takesspecific issue with the administration's "war on coal" and thecontentious U.S. EPA Clean Power Plan, promising to "."

*Duke Energy Corp. isseeking protectiveorder from a federal court to prevent Kenneth Mark Rudo's partialdeposition transcript from being released publicly, arguing that it wouldaffect a fair and impartial trial in connection with alleging groundwatercontamination and unpermitted discharges into rivers and streams caused by damfailures and leaking coal ash impoundments at Duke's Buck, Cape Fear and H.F.Lee Energy coal-fired power plants.


*Shale production ofnatural gas is expected to dropfor a sixth consecutive month in August, but the size of the decline is smallcompared to an upward revision made to the record peak set earlier in the year.Shale production of crude oil should fall in August, albeit at a slower ratethan in July.

* Followinga mixed session on Tuesday, rising demand forecasts should power dailies across theU.S. on Wednesday, July 20, despite lackluster action in the natural gasmarkets. At last glance, August natural gas was trading just 3.0 cents lower at$2.698/MMBtu, giving back the 0.6 cent added in the previous session butlacking any decisive moves for more than a week.

*After clawing 0.6 cent higher to a close at $2.728/MMBtu in the prior session,August natural gas futures lostfooting overnight ahead of the Wednesday, July 20, open, as themarket succumbed anew as total inventories remain robust and on track toward arecord-high end-of-season level. At last glance, the August front-month contractwas trading 2.0 cents lower at $2.708/MMBtu.

New from RRA

*On July 18, followingthe announcement that NextEra Energy was formally terminating its proposedacquisition of Hawaiian Electric Industries, Democratic Gov. David Ige,indicated thatseveral investor groups have approached him and expressed interest in acquiringHawaiian Electric Industries.


"Theyare the dark matter of the electric energy industry, and one shouldn't reallybe able to take on the government's efforts to curb climate change or mercurypollution and do it anonymously," Natural Resources Defense Councilofficial David Doniger saidabout the Utility Air Regulatory Group, which wages legal battles on behalf ofelectric utilities.

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.