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CPUC meets with Wall Street types, too

Critics say it's part of the same problem as backchannel dealings with utilities

By Jeff McDonald | 6 a.m. May 2, 2016


Michael Picker, shown at a forum last fall in San Diego, held a series of meetings with Wall Street bankers and hedge fund investors when he first took office. — Chadd Cady

State electricity regulators have accepted frequent meetings with Wall Street analysts and hedge fund investors, often discussing pending matters with direct bearing on the value of utility stocks.

The meetings may indicate that California Public Utilities Commission members do a thorough job overseeing a significant sector of the California economy. But critics say the discussions raise a now-familiar question — whose side is the PUC on?

The commission is already under scrutiny for its backchannel dealings with utility executives, seeking $12 million for criminal defense attorneys to help respond to ongoing investigations of apparently close ties. Little attention has been paid to the undisclosed Wall Street meetings as a secondary level of commission activity affecting the companies.

Latest: CPUC


“We need private investment in California utilities to build and upgrade infrastructure,” commission spokeswoman Terrie Prosper said. “Low interest rates help keep those costs down for consumers, and a clear understanding of California’s policy goals helps investors to better understand the utility and our policies that the utilities must follow.”

Utilities also say conversations between commissioners and investors help to keep costs down for customers.

“Regulators want to know how Wall Street views the utilities’ financial stability and the regulatory environment in California,” said Stephanie Donovan of San Diego Gas & Electric. “A positive assessment can directly benefit utility customers, because a good credit rating can mean a lower cost of debt and can also affect other factors that help to determine utility rates and customer bills.”

Even a fractional percentage change in interest rates can make a huge difference in costs to utilities — and ratepayers.

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Colorado Court Strikes Down Local Bans on Fracking



A natural gas well in Longmont, Colo., where hydraulic fracturing had been banned. Colorado’s Supreme Court said state law pre-empted the local rule.

Credit Luke Sharrett for The New York Times

Colorado’s Supreme Court on Monday struck down local government prohibitions on hydraulic fracturing, or fracking, handing oil and gas companies a victory in a lengthy battle over energy production in the environmentally conscious state.

In separate rulings, the court said a moratorium in Fort Collins and a ban in Longmont were invalid because state law pre-empted them. A lower court had reached the same conclusion earlier.

Two other cities and Boulder County have prohibitions on fracking that presumably are affected by the decisions. With oil and gas exploration in a slump nationwide, the short-term effect of the rulings in Colorado will be small, industry officials said.

But when the slump ends, activity in urban areas across the Front Range — the eastern foothills of the Rocky Mountains and Colorado’s most populous region, where oil and gas production is concentrated — could be significant.

The land opened to exploration by Monday’s rulings is comparatively small. More significant, said experts on both sides of the conflict, is that the rulings shut down future efforts to stop fracking in local jurisdictions.

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Itron’s Idea Labs: Innovate Or Risk Being Pushed Aside

MAY 2, 2016 @ 10:16 AM

Peter Kelly-Detwiler , CONTRIBUTOR

I cover the energy industry.

    Opinions expressed by Forbes Contributors are their own.

    Last month at ETS16 in Austin, I had a chance to hear Roberto Aiello, Managing Director of Itron’s Idea Labs, discussing the role innovation plays within Itron. Some folks may know of Itron as a metering company, but they actually do much more than just provide metering systems for water, gas, and electricity utilities. These days, Itron is increasingly a technology and services company, involved in collecting, communicating, and managing enormous amounts of data and turning those bits and bytes into useful information.

    Perhaps the most interesting aspect of Itron’s capabilities is embodied in its Itron Riva™ platform which builds on the power of ‘distributed intelligence.’ This deploys more computing capability out to the edge of water, gas, and power networks to more quickly and efficiently address problems and opportunities. With Riva, Itron explicitly decided to create an open application environment that would allow third parties to build onto that platform. In large part, this decision was influenced by Aiello, since it is his team’s job to challenge the status quo and to continuously new come up with fresh ideas for new products.

    I had an opportunity to further explore this innovative leader’s ideas in a follow-up conversation that provided me with some interesting insights into the nature – and necessity of – innovation in today’s high-tech, data-driven world.

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    Report: Tesla to occupy 1 million square feet of warehouse space at new Livermore center

    By Jason Green,

    POSTED:   05/02/2016 11:23:38 PM PDT |

    LIVERMORE -- Tesla Motors has leased over 1 million square feet of warehouse space at the new Oaks Logistics Center, according to a report from the Silicon Valley Business Journal.

    The move comes as the Palo Alto-based electric-car company prepares to ramp up production at its Fremont plant.

    The Business Journal also reported that Tesla could occupy an additional 300,000 square feet at the center, located at West Jack London Boulevard and Discovery Drive.

    Developed by the Trammell Crow Co., the Oaks Logistics Center includes three industrial buildingsof 635,000, 368,000 and 295,000 square feet over 70 acres, this newspaper previously reported. Work started on the project in February 2015.

    Tesla has pushed out other uses at its Fremont plant, including parts storage, to focus on manufacturing as production needs have grown, according to the Business Journal. The company has received more than 400,000 preorders for its new $35,000 Model 3.

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    Amidst crisis, Brazil presses oil reform

    Posted by James Osborne

    Date: May 02, 2016


      (Photo: Patricia Santos, Associated Press)

      A former top executive at Statoil and Petrobras, Jorge Camargo had his work cut out for him Monday trying to sell oil and gas companies on expanding into Brazil.

      With oil prices in the gutter and an ongoing public corruption scandal involving state-controlled Petrobras and former Brazilian president Luiz Inácio Lula da Silva, Camargo tried to explain how the current crisis could breed reform.

      “Inside this news you are beginning to see the new shape that is going to take place as soon as we pass this crisis,” Camargo, now the  director of the trade group Instituto Brasileiro do Petróleo , said at the Offshore Technology Conference in Houston.

      Off the Brazilian coast, in the depths of the Atlantic Ocean, are what are believed to be one of the world’s largest oil deposits – known as the Pre-Salt. Some estimates put reserves as high as 56 billion barrels of oil equivalent.

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      Kids Win Again In Lawsuit Blaming Gov’t For Not Fighting Global Warming

      MAY 1, 2016 @ 06:00 AM

      James Conca , CONTRIBUTOR

      I write about nuclear, energy and the environment

        Opinions expressed by Forbes Contributors are their own.

        Against all odds, another group of children who are suing the government to protect the environment against the harm of global warming in their future, have won in court.


        In a surprise ruling on Friday from the bench in the ongoing climate case brought by these youths against the State of Washington’s Department of Ecology, King County Superior Court Judge Hollis Hill ordered the Department of Ecology to promulgate a carbon emissions reduction rule by the end of 2016 and make recommendations to the state legislature on science-based greenhouse gas reductions in the 2017 legislative session. Judge Hill also ordered the Department of Ecology to consult with the young plaintiffs in advance of that recommendation.

        The youths were forced back to court after the Department of Ecology unexpectedly withdrew the very rulemaking efforts to reduce carbon emissions that the agency told the judge it had underway in its previous court appearance, an interesting sleight-of-hand from a state agency.

        The lawsuit brought by the youths alleges that the Federal Government is violating the Plaintiffs’ constitutional and public trust rights by promoting the use of fossil FOSL +0.96% fuels. The basis for these lawsuits is that, for over fifty years, the United States Government and the Fossil Fuel Industry have known that carbon dioxide from burning fossil fuels causes global warming and dangerous climate change, and that continuing to burn fossil fuels destabilizes the climate system.

        This case is one of several similar cases in federal district court in Oregon, and in the state courts of North Carolina, Pennsylvania, Colorado, and Massachusetts, all supported by Our Children’s Trust, seeking the legal right to a healthy atmosphere and stable climate.

        Championed by Professor Mary Christina Wood in the Law School at the University of Oregon under the idea of Atmospheric Trust Litigation, this and several similar lawsuits claim that a government elected by the people and for the people has a duty to protect the natural systems required for the people’s survival.

        According to Wood, if both the executive and legislative branches fail in that duty, then the judicial branch must intervene.

        Most importantly, the courts so far have unequivocally rejected all arguments raised by the Federal Government and the Fossil Fuel Industry in their Motions to Dismiss that seek to deny the youth their fundamental rights under the constitution and public trust doctrine, and claimed that the government has no duty to protect essential natural resources, such as air and oceans.

        Instead, the court found that the federal government is indeed subject to the public trust doctrine. Public trust doctrine asserts that the government is a trustee of the natural resources that we depend on for life, liberty and the pursuit of happiness. For over 200 years the courts have affirmed this concept in various ways.

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        U.S. coal use is down in nearly every state

        By Clayton Aldern on Apr 29, 2016

        On Thursday, the Energy Information Administration added a new brushstroke to the portrait of King Coal in decline. In every state that doesn’t end in “-aska,” coal consumption in the electric power sector dropped between 2007 and 2015.

        Overall, the United States saw a 29-percent decline in coal use for electricity generation over this time period. The map below shows the percent change in states’ power-sector coal consumption since 2007. Darker colors indicate larger percentage cuts:

        The new EIA data confirms what many in the struggling coal sector already know. Earlier this month, Peabody Energy became the fourth major U.S. coal company to file for bankruptcy this year. You can blame (or thank) plummeting renewable energy prices, cheap natural gas, and regulatory pressures.

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        A Crusader in the Coal Mine, Taking On President Obama

        By JAD MOUAWADAPRIL 30, 2016


        The Powhatan No. 6 mine in St. Clairsville, Ohio, is nearly depleted after decades in operation.

        Credit Andrew Spear for The New York Times

        ST. CLAIRSVILLE, Ohio — The rolling hills of eastern Ohio show few signs of the frenzied activity unfolding hundreds of feet underground. Inside the Powhatan No. 6 mine, a machine the size of a city bus is slowly slicing the earth, scraping out coal and sending it on a 40-minute ride to the surface.

        “It will see the light of day for the first time in 200 million years,” says Robert E. Murray, the 76-year-old chairman of the Murray Energy Corporation, rolling toward the coalface, where the coal is cut out of the rock, in an electric cart.

        The digging occurs at the distant end of a forbidding maze of tunnels stretching more than 16 miles into the earth. The walls are coated with “rock dust,” or pulverized limestone, which acts as a fire retardant and gives the place a chalky, ethereal appearance. It is mostly silent but for the occasional whoosh of air venting from above.

        This is a special place for Mr. Murray, who likes to tell the story of how he sold his children’s toys and mortgaged his home to acquire this mine — his first — nearly 30 years ago. He went on to build the nation’s largest independent coal producer by pioneering efficient new technologies like longwall mining, where the cavern ultimately collapses in on itself after yielding considerably more coal than traditional underground mining methods.

        Mr. Murray is also the architect of the most serious challenge to the Obama administration’s environmental goals, particularly its policy on climate change. He has filed more than a half dozen lawsuits against the administration, including several challenging its landmark policy to curb greenhouse gas emissions from coal-fired power plants. In February, he scored a big victory when the Supreme Court temporarily blocked the administration’s plan until an appeals court can consider an expedited challenge this summer.

        The expansion of its mining business at a time of deep industry disillusionment, coupled with an activist agenda, has made Murray Energy one of the leading forces combating environmental regulations. And it has made Mr. Murray a galvanizing champion of a once dominant industry fallen on hard times.

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        An $840 Billion Decline In Oil And Gas Reserves

        APR 29, 2016 @ 01:51 PM

        Robert Rapier , CONTRIBUTOR

        I write about energy, the environment, and the economy.

          Opinions expressed by Forbes Contributors are their own.


          Oil pumping jacks and drilling pads at the Kern River Oil Field in California on July 28, 2015. The field is the fifth largest in the United States. MARK RALSTON/AFP/Getty Images

          During the last week of 2015, I wrote Prepare For A Dramatic Decline In Oil Reserves. In that article I explained that as 2015 annual reports were issued for oil and gas companies, there would be a big decline in reported oil reserves. The reason for this isn’t that the oil is no longer there, but rather that it isn’t economical extract it at prevailing prices.

          This caveat is important for understanding oil reserves. This past week articles began making the rounds that made certain conclusions from this paper — A global energy assessment — in which some subtleties about oil reserves have been lost. So let’s review.

          An oil resource refers to the total amount of oil in place in particular area. Generally, most of a resource can’t be technically recovered, but the resource refers to the amount that could potentially be recovered. These estimates can go up and down, but the resource is what could be recovered at 100% recovery based on current estimates.

          As an example, it is estimated that the Bakken Shale centered under North Dakota contains several hundred billion barrels (bbl) of oil (the resource). However, what is technically and economically recoverable in the Bakken has been estimated at less than 10 billion barrels (<10% of the resource).

          The portion that is technically AND economically recoverable at prevailing oil prices may be classified as proved oil reserves. (The same concept applies for natural gas). This means that proved reserves are a function of prevailing oil prices. This qualifier is often misunderstood.

          It was estimated that when oil was $100/bbl, there was a total of 1.7 trillion barrels of proved reserves globally. The aforementioned article argues that this estimate may be overstated by about 875 billion barrels. It may very well be, but that doesn’t mean the oil isn’t there. It just means that at $40/bbl, there aren’t 1.7 trillion barrels that can be economically produced.

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          Low Oil Prices Pinch Exxon and Chevron Earnings

          By CLIFFORD KRAUSS APRIL 29, 2016


          Oil pumping jacks in Bakersfield, Calif., in a field primarily operated by Chevron. Earnings for oil companies are expected to improve in the second quarter because oil prices have rebounded.

          Credit   Mark Ralston/Agence France-Presse — Getty Images

          HOUSTON — The two mightiest American oil companies don’t look so mighty any more.

          With oil and natural gas prices at record lows and refining profit margins weakening, Exxon Mobil on Friday posted its smallest profit for any quarter since 1999, while Chevron reported a large first-quarter loss of $725 million, in contrast to a gain of $2.6 billion in the period a year earlier.

          Weak results were expected, given that oil prices plunged to below $30 a barrel during the first quarter — a 13-year-low — while natural gas prices fell to their lowest level in nearly 17 years. Investors were mixed on the results; Exxon Mobil shares closed about 0.4 percent higher and Chevron’s fell 0.2 percent.

          The oil and gas industry has weathered its most severe crisis since the price collapse in the 1980s. There have been at least 62 oil and gas company bankruptcies over the last year or so, and roughly 120,000 American oil and gas workers — nearly one out of four nationwide — have lost their jobs.

          Worldwide, oil companies have debts surpassing half a trillion dollars, which energy experts say will force many to sell assets to meet interest payments.

          Neither Exxon Mobil nor Chevron is going out of business soon, and their large refinery businesses, which benefit from low oil and gas prices, have helped both survive the downturn better than most of their competitors.

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          Halliburton and Baker Hughes Call Off $35 Billion Merger

          By LESLIE PICKER MAY 1, 2016


          The Justice Department sued last month to block the merger of Halliburton and Baker Hughes.


          Mira Oberman/Agence France-Presse — Getty Images

          For a year and a half, Halliburton and Baker Hughes, two big oil field services companies, had been focused on their $35 billion merger. That distraction, even as commodity prices deteriorated and their peers cut costs to survive, is finally over.

          The two companies announced in a statement on Sunday that they had decided to terminate their merger. The news came after an excruciatingly long regulatory review process that culminated in a lawsuit last month by the Justice Department to block the deal on antitrust grounds.

          “While both companies expected the proposed merger to result in compelling benefits to shareholders, customers and other stakeholders, challenges in obtaining remaining regulatory approvals and general industry conditions that severely damaged deal economics led to the conclusion that termination is the best course of action,” said Dave Lesar, chairman and chief executive of Halliburton, in Sunday’s statement.

          The deal was one that raised eyebrows from the start on whether it would get past regulators. The two companies were seeking to band together to compete with the likes of Schlumberger, and, in the meantime, to erase billions in costs related to operations and research and development. Things changed drastically soon after the deal was signed in November 2014. Oil prices sank to their lowest levels in years, a burden that has affected the entire industry.

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          Investor Carl Icahn claims responsibility for ouster of Cheniere CEO Charif Souki

          Posted by Bloomberg Date: April 29, 2016

            Billionaire shareholder Carl Icahn said he was instrumental in the ouster of Charif Souki as chief executive officer of Cheniere Energy Inc., and he cited Souki’s “harebrained ideas” as the reason.

            Souki was a co-founder of Cheniere, the Houston-based company that’s the first to export U.S. shale gas. He was removed as CEO by the board in December, just two months before the first shipment of shale gas set sail. At the time, Souki said he lost his job because he planned to speed up development of liquefied natural gas projects, a strategy opposed by Icahn.

            “I was very instrumental in getting him out — no question about it,” Icahn said in an interview on CNBC on Thursday. “I take full responsibility for it.”

            This is the first time that Icahn confirmed his role in the leadership change, and his comments signal the influence he may wield in selecting the exporter’s next leader. Neither Souki nor a spokeswoman for Cheniere immediately responded to a request for comment.

            In an April 25 interview with Bloomberg TV, Cheniere’s interim CEO, Neal Shear, said he expects the board to announce a replacement before summer. Since February, the company has shipped six more cargoes of LNG overseas.

            In the future, Cheniere needs a leader who will “be watching over how you build,” Icahn said in the CNBC interview.

            ‘This is Insane’


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            Spectra gas pipeline explosion cuts flows to Eastern U.S.

            Posted by Bloomberg Date: April 29, 2016

              An explosion and fire on a major Spectra Energy Corp. pipeline that crosses half the U.S. is disrupting natural gas shipments from western Pennsylvania to the Northeast.

              Crews shut off the gas feeding the flames, which burst out of Spectra’s 36-inch Texas Eastern pipeline in Salem Township about 8:30 a.m., John Poister, a spokesman for the Pennsylvania Department of Environmental Protection, said in an e-mail Friday.

              While repairs will start as soon as possible, it’s unclear when service will be restored, Spectra said in a notice. The Houston-based company declared force majeure at midday, sending natural gas futures surging as much as 5.6 percent on the New York Mercantile Exchange on speculation that the outage will limit supplies to the Northeast.

              One of the country’s largest pipelines, Texas Eastern runs from the Gulf Coast up through the booming Marcellus and Utica shale regions all the way to New Jersey, where it hooks up with other lines into New York and New England. The Penn-Jersey section had been transporting 1.3 billion cubic feet of gas a day through the Delmont compressor in Westmoreland County, according to Het Shah, an analyst at Bloomberg New Energy Finance.


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              Using seawater for heating? Alaska aquarium takes the plunge.

              Latest Neheated by seawater and carbon dioxide loop technology instead of fossil fuels.

              By Ben Thompson, Staff APRIL 24, 2016 Save for later


              1. Al Grillo/AP/File
                In another sign of the global shift from fossil fuels toward innovative clean energy solutions, an Alaska aquarium has switched to a heating system that runs on seawater.

              The Alaska SeaLife Center (ASLC), a public aquarium, research center, and wildlife rehabilitation facility in Seward, Alaska, announced this week that it has successfully transferred 98 percent of its heat supply from fossil fuels to an alternative system that uses ocean water and carbon dioxide (CO2), a shift that the aquarium’s management hopes will lower operational costs and greenhouse gas emissions.

              “This project reflects the core mission of the Alaska SeaLife Center ‘to generate and share scientific knowledge to promote understanding and stewardship of Alaska’s marine eco-systems’,” ASLC Special Projects Director Darryl Schaefermeyer said in a release from the center.

              “It illustrates the broad and tangible ways in which our day-to-day work can contribute to the long term health and sustainability of the city of Seward, the state of Alaska and the global community,” he said.

              The new ASLC system was designed by Andy Baker, owner and project manager of the energy efficiency consulting firm YourCleanEnergy, and draws heat from the waters off nearby Resurrection Bay to warm a mixture of glycol and water. The heated glycol then comes into contact with liquid carbon dioxide, which then boils. The CO2 vapor is compressed to 2,000 psi, well beyond the compound's critical pressure point, causing its temperature to rise. The hot CO2 is then used to heat water, which is pumped into the building's heat loop

              “The big news in the final implementation of the system is the use of trans-critical CO2 heat pumps. This is absolutely unique in the field,” Mr. Baker said. “We were delighted to work with the ASLC on this project.”


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              Greener generation begins with CleanPowerSF

              By Lizzie Johnson

              May 1, 2016 Updated: May 1, 2016 7:16pm

              1. pastedGraphic.pdf

              Photo: Paul Chinn, The Chronicle

              A car drives on Montezuma Hills Road below wind turbines generating power in Birds Landing. CleanPowerSF is now fully operational.

              Tucked among the undulating Solano County hills of Birds Landing, hundreds of wind turbines dot the landscape. Their blades pirouette through the air, whirring softly with each turn.

              For years, the electricity they generate went to power companies and local energy programs in the Bay Area. Now the turbines are also powering homes and businesses in San Francisco through CleanPowerSF. After almost 12 years of political gridlock and stiff opposition from competitors, the green energy program began operating Sunday.

              “We are being rewarded for the amount of time it took us to launch this program, because it is now better and more cost-effective than it would have been had we launched five years ago,” said Barbara Hale, assistant general manager for power at the San Francisco Public Utilities Commission.

              CleanPowerSF is delivering electricity to more than 7,800 residences and businesses. For a program that faced multiple hurdles, including resistance from Mayor Ed Lee and attempts by Pacific Gas and Electric Co. to undermine it, the launch is considered a victory.

              California’s goals of producing 33 percent of its power from green sources by 2020 and 50 percent by 2030 helped push CleanPowerSF across to the finish. As a city, San Francisco aimed even higher, with a goal of 100 percent renewable energy by 2030. As state and local policy drove the market, the renewable energy economy flourished, local green energy programs started in Sonoma and Marin, and prices dropped. The state’s Energy Commission estimates that almost 25 percent of electricity came from renewable sources in 2014.


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