Clarity on the Rubles for Gas Situation // DOE Doles Out For Endangered Nuclear // Fine Print: Quebec Hydro and New York

Clarity on the Rubles for Gas Situation

We're finally getting a clearer picture of just what Russia means when it says "hostile" countries will have to pay for gas in rubles.

Russia’s Foreign Minister Sergey Lavrov clarified things in a recent statement to India Today. Here's the deal: buyers purchasing gas will have to pay Gazprombank, not pay using Gazprom's bank accounts abroad because those funds are vulnerable to sanction.

Lavrov considers this an "obvious and understandable" response to sanctions. After all, half of Russia's foreign assets are now frozen.

“They will pay the same amount that they owe under existing contracts, but they will pay through a special account that they will have to open in this bank,” Lavrov explained.

Oilprice.com reports, "Buyers can still, therefore, pay in the currency of their choice. But Gazprombank will convert the payment into rubles. Gazprom would then be able to access the funds in rubles, assured that those funds would not be subject to sanctions."

“They won’t be able to keep this money in their banks. They will still pay in euros or dollars, but we will have guarantees,” Lavrov said.

The United States, all EU member states, Switzerland, Canada, Norway, South Korea, Japan, and others have all been listed as "hostile." The EU refuses to pay in rubles thus far and Russia has yet to cut off the gas. But the bill for April 1st deliveries comes due at the start of May. This is a serious game of chicken. 

DOE Doles Out For Endangered Nuclear

The Department of Energy has finally released its guidance for the $6 billion it has set aside to help nuclear plants on the brink of closure. Here's the rundown criterion for approval to receive the money:

• Applicants have to demonstrate that the reactor will shut down due to economic factors.

• Applicants must demonstrate that air pollutants would increase if the reactor were to shutter due to being replaced with carbon-emitting generators.

• The Nuclear Regulatory Commission has given the Energy Secretary "reasonable assurance" that the reactor will run in accordance with its licensing.

• The NRC has assured the Secretary that the reactor is safe to continue running and poses no danger.

• Applicants have submitted and completed their application in a timely manner, including: a detailed plan to keep operations running; information on the reactors uranium needs and its uranium supply chain; and that the reactor will do its best to source draw from domestic uranium supply chains to serve its needs.

It's not clear which plants this fund will benefit just yet. The immediate candidate that comes to mind is Palisades in Michigan, which seems to meet all initial criteria. But there's a rub: Entergy, its owner, doesn't seem likely to apply. Unless another potential owner/applicant steps in to buy it and then apply, say Constellation for example, then the plant may switch off next month. 

Fine Print: Quebec Hydro and New York

New York City needs 52 million megawatt-hours per day to keep the lights on. Politico points out that that's "nearly enough to light up the entire state of Massachusetts." And most of the energy used to power NYC comes from fossil fuels, especially after the premature closure of the Indian Point nuclear power plant last year.

Recently, the city has set a goal to curb its carbon emissions by 40% by 2030. To meet this goal, NYC is embarking on a major project. "The city is poised to pay billions of dollars more for its renewable electricity over the next 25 years to finance the Champlain Hudson Power Express, a 339-mile hydropower transmission line that will deliver Canadian hydropower to New York City," reports Politico. 

Here's a rundown on some of the facts about the CHPE:

• It will have 1250 MW of capacity and will move 10.4 TW/h a year.

• NYC estimates it could cost between $2 billion and $4 billion over the next 25 years.

• It will run about a 40 mile length in Quebec and about 340 miles in America.

• It will be commissioned in 2025.

But the CHPE faces some stiff resistance. Indigenous groups, upstate New Yorkers who might have to pay more to receive little of its services, and environmental groups who once supported the idea have all come out against the project. Originally, CHPE was the replacement plan for Indian Point. But now Riverkeeper and Sierra Club have changed their tune. The transmission line scars too much of the earth they now argue. 

But here's the strangest moment in Politico's coverage of the CHPE: "The proposed contract for the Champlain Hudson project doesn’t require Hydro-Québec to sell power on the line in the winter months when demand in chilly Canada for energy is at its peak."

It's true that summer goes hardest on the New York grid, but what happens in winter when NYC needs power QH just can't (and won't) sell them? Nothing good. This is the fundamental problem with shutting down reliable, domestic generators and replacing them with imports. Just ask Germany. 

Conversation Starters

• RJ Scaringe, CEO of Rivian, an electric vehicles company, warns that there's a looming battery shortage for the industry. The supply chain hasn't been established despite the current and expected demand increase.

• JPMorgan says that if the EU immediately cuts off Russian oil we could see prices as high as $185 a barrel.

• The energy crisis has become so acute that ScottishPower's CEO has recommended putting alleviating its impact on the poor by taking 1000GBP off customers' bills and putting it in a deficit fund. Else the "fuel poor" might not make it through next winter.

Crom's Blessing