The following post is an excerpt from a report by Regulatory Research Associates (RRA), a group within S&P Global Market Intelligence. To learn more about the full report, please request a call.
Each year, typically before the start of a legislative session or shortly thereafter, the nation's governors generally give their State of the State addresses before their state legislatures, highlighting the fiscal condition of their states, prior-year accomplishments and successes, upcoming priorities for the new year, broad policy proposals, and challenges.
As of March 20, the nation's governors can have a significant impact on the composition of the agencies that regulate the utilities operating in their jurisdictions. Commissioners serving at 35 state-level utility regulatory agencies nationwide are selected by the state's governor. In the District of Columbia, the mayor selects the commissioners.
As part of their State of the State addresses, several governors outlined specific energy and water policy initiatives, while others provided a general energy policy direction. Renewable energy, energy affordability, climate change, and infrastructure were prevalent themes in the 2017 addresses. Summaries of several issues covered in RRA's March 24 report, "2017 Gubernatorial State of the State Addresses — Energy and Water Matters," are provided below.
Renewable energy and climate change
Hawaii Gov. David Ige indicated his state was well positioned to meet its 2020 target for increasing renewable energy use. Legislation was enacted in Hawaii in 2015 that increased the state's renewable portfolio standard, or RPS, requirements that were previously in place and required that renewables comprise 100% of each utility's net electricity sales by year-end 2045.
Illinois Gov. Bruce Rauner highlighted as one of his administration's successes the passage of the Future Energy Jobs Bill, a bipartisan measure that supports both renewable and nuclear energy in Illinois. Gov. Terry Branstad touted Iowa's leadership in low-cost and renewable energy, proclaiming that the state's energy plan and other strategies being implemented put the state on a trajectory to become the first energy independent jurisdiction by 2030.
Massachusetts Gov. Charlie Baker spoke of landmark legislation enacted in 2016 that will reduce the state's "carbon footprint while maintaining a competitively priced and reliable supply of energy." Michigan Gov. Rick Snyder highlighted legislative successes in late 2016, namely Senate Bills 437 and 438, which modify several aspects of the electric and gas utility regulatory framework, including increasing the state's RPS mandate. According to Montana Gov. Steve Bullock, the state's "cheapest and greenest source of energy is conservation," and that is why he advocates more energy efficiency within the state.New York Gov. Andrew Cuomo proposed to lower the Regional Greenhouse Gas Initiative emissions cap by 30% by 2030, which, according to Cuomo, will "set the precedent for recognizing and taking action against climate change to support the future of communities across the globe." The governor's RGGI proposal is just one of his key clean energy programs, including the Clean Energy Standard adopted by the New York Public Service Commission on August 1, 2016, that calls for 50% of New York's electricity to be procured from renewable energy sources by 2030 and creates a zero-emissions credit framework.
According to RRA, the industry average retail price of electricity per kilowatt-hour paid by ultimate customers in 2015 was 10.77 cents, excluding Nebraska, since it has no investor-owned electric operations. Indiana Gov. Eric Holcomb spoke proudly of the low cost of energy in Indiana, which ranks 37 out of 50 by average cost of electricity to the ultimate consumer, with an average of only 8.90 cents/kWh in 2015. New Hampshire Gov. Chris Sununu emphasized that his state has some of the highest energy rates in the U.S., ranking as one of the five highest-priced states with an average of 18.62 cents/kWh in 2015. Sununu proposed to appropriate a portion of the state's renewable energy fund and use it to supplement the state's "current electricity relief programs for low-income families." Read RRA's Financial Focus report on the regulated retail price of electricity here.
In his address, Nevada Gov. Brian Sandoval announced he would issue an executive order to establish The Governor's Committee on Energy Choice. The order, issued February 13, directs the committee to "review, evaluate, and develop written plans for the full implementation of energy choice by 2023," if the citizens of the state ultimately approve a ballot question on the issue.
Cuomo announced the establishment of the Clean Water Infrastructure Act of 2017 to invest $2 billion "in critical water infrastructure across New York State." According to the governor, the act would "upgrade municipal drinking water systems, improve municipal wastewater systems, and protect drinking water at its source."
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