Exelon leadership told investors last week Illinois’ transition toward 100% carbon-free power can’t succeed without PJM market reforms to keep the company’s nuclear plants running.
“The bottom line is fundamental market reforms are needed in the United States if we want to meet the nation’s clean energy climate goals, maintain fuel security and a reliable system,” Exelon CEO Chris Crane said. “We need to sustain and increase electrification [and] preserve a significant economic value through good paying jobs and property taxes. We’ll continue to work at the state level and the national level with both Congress and the administration to make this happen.”
The company’s quarterly earnings report said its Dresden, Byron and Braidwood nuclear plants in Illinois are “showing increased signs of economic distress, which could lead to an early retirement, in a market that does not currently compensate them for their unique contribution to grid resiliency and their ability to produce large amounts of energy without carbon and air pollution.”
Exelon said PJM’s most recent capacity auction in May 2018 “resulted in the largest volume of nuclear capacity ever not selected in the auction, including all of Dresden, and portions of Byron and Braidwood.”
Illinois legislators enacted a zero-emissions credit (ZEC) program in 2016 to rescue Exelon’s Quad Cities plant along the Mississippi River. The company collected $150 million in ZEC revenue for the second half of 2017.
“We are pursuing a number of market reforms addressing the financial challenges many of our [nuclear] plants face,” Crane said. “Against this backdrop, I can also again assure you we will not operate our unprofitable or negative free cash flow plants. You’ve seen us close money-losing plants in the past. You should expect that discipline to continue if reforms are not enacted.”
In the longer term, Exelon told investors the company hopes energy price formation and carbon pricing will help address the market inequities currently hurting its bottom line.
The company’s lobbying for clean energy has produced mixed results, so far. While New Jersey approved $300 million in ZECs last year, Pennsylvania lawmakers stalled a plan that would have added nuclear energy into its alternative energy portfolio and saved the remaining operating reactor at Three Mile Island.
“Either we have a clear path to securing them or the units will be shut down,” said Joseph Nigro, Exelon’s chief financial officer. “We will not damage the balance sheet sitting around for years with negative free cash flow or negative earnings.”
As FERC mulls PJM’s proposed revision of its minimum price offer rule (MOPR) — which would carve out subsidized generation and then adjust clearing prices as if the resources never left — Exelon continues campaigning for clean energy policies in states throughout the PJM footprint. The company’s executive team told investors in Illinois that a coalition of stakeholders wants to expand the state’s clean energy mandate from 25% by 2025 to 100% by 2030 to match other progressive states across the country.
That could be a monumental task under current laws, however.
Last month, the Illinois Power Agency warned that the state only secures about 10% of its power from renewable resources. In an interview with WTTW, Director Anthony Star blamed rate caps and a 2016 energy bill that ramped up the agency’s procurement responsibilities. He said he hoped legislation would fix both issues.
Kathleen Barron, Exelon’s vice president of regulatory affairs, said the Citizens Utility Board, the Clean Jobs Coalition and both the labor and renewable resources industries all stand behind an expansion of the mandate, noting “the consumer advocate is heavily focused on this policy as well because the question of the state having to pay twice for capacity has been very much in the forefront.”
In October 2018, Exelon joined with consumer advocates from D.C. and Illinois, the Sierra Club, the Natural Resources Defense Council, the Nuclear Energy Institute and others to ask FERC for a fixed resource requirement (FRR) mechanism that would allow load-serving entities to satisfy their capacity obligations outside of PJM’s capacity market by procuring capacity from state-supported resources (EL18-178, et. al.).
“There are a number of parties who will come together in the end to help communicate the message that Chris [Crane] mentioned this is important for the state, but it’s not going to be possible if we can’t allow these resources to count as capacity,” Barron said. “And that’s why the FRR is foundational to getting this policy done.”
Earnings Drop
Exelon reported earnings of $494 million ($0.50/share) for the quarter, a decrease from $539 million ($0.56/share) a year earlier. Adjusted operating earnings dropped to $0.60/share from $0.71/share in the second quarter of 2018 as revenue dropped to $7.689 billion from $8.076 billion.
Crane noted the company has filed distribution rate cases for Baltimore Gas and Electric, Commonwealth Edison, and Pepco.
On July 22, Pepco and other parties filed a settlement agreement with FERC for PECO Energy’s formula transmission rate that includes a 10.35% return on equity, including a 50-basis-point RTO membership adder.
Crane said the company was happy with the Trump administration’s decision not to impose quotas on uranium, which he said “would have jeopardized the continued operation of commercial nuclear reactors” in the U.S.
VALLEY FORGE, Pa. — PJM’s Operating Committee unanimously endorsed clarifications for non-retail behind-the-meter generation (NRBTMG) business rules on Tuesday, completing the first two key work activities identified in a problem statement/issue charge approved in March. (See “PJM Continues Review of non-Retail BTM Generation Business Rules” in PJM Operating Committee Briefs: Feb. 5, 2019.)
The revisions to Manuals 13 and 14D will clarify the reporting, netting and operational requirements of NRBTMG that will ensure member and PJM responsibilities, processes and procedures are clear and adequately captured, said Terri Esterly, PJM’s senior lead engineer for Capacity Market Operations.
NRBTMG refers to resources used by municipal electric systems, electric cooperatives or electric distribution companies to serve load. They do not participate as supply resources in PJM markets but can be netted against their wholesale load to reduce transmission, capacity, ancillary services and administrative fee charges.
PJM’s rules on such resources resulted from a 2005 settlement agreement (EL05-127), before development of the RTO’s capacity market and CP constructs. NRBTMG resources can be called upon during the first 10 maximum generation emergencies annually, while CP resources are required to perform during all performance assessment intervals (PAIs). BTM operators that fail to perform face reduced netting benefits. In 2006, the grid operator identified about 400 MW of NRBTMG.
Esterly said the manual updates will not change the terms of the 2005 settlement agreement. She also told stakeholders preliminary data collection suggests PJM’s existing nameplate capacity clocks in around 1,800 MW. Several generators, however, did not submit summer-rated ICAP values, likely contributing a significant undercount.
Operations Reports Staying in SOS
PJM will no longer review systems operations reports during the monthly OC — unless it is answering specific stakeholder questions or highlighting an unusual event, like a polar vortex, Secretary Don Wallin said.
The reports will be posted along with other meeting documents, as usual, but verbal reviews will only occur at the Systems Operations Subcommittee (SOS).
In its last review with the OC, however, PJM said it set a new weekend peak value of 150,454 MW — displacing the 149,644 MW record set on July 7, 2012. This year’s summer peak of 152,315 MW was hit July 19 during a five-day hot weather alert that covered the majority of the RTO’s footprint.
January 2018 Extreme Cold Weather Report
PJM continues its review of recommendations included in the NERC/FERC January 2018 Extreme Cold Weather report and may bring necessary recommendations to stakeholders at the September OC.
FERC last month called for reliability rules requiring generator owners and operators to winterize their units and provide their reliability coordinators and balancing authorities with information about their preparations. (See FERC Calls for Cold Weather Reliability Standard.)
The commission issued the directive as a result of a joint FERC-NERC investigation into the abnormal cold and higher-than-forecast demand that caused MISO and SPP to seek voluntary load reductions and nearly forced load shedding in MISO South on Jan. 17, 2018. (See FERC, NERC to Probe January Outages in MISO South.)
Alpa Jani, PJM’s senior consultant for dispatch, said many of the report recommendations were previously discussed in the context of previous polar vortexes and the capacity market.
CenterPoint Energy on Wednesday beat both analysts’ expectations and its performance a year ago by reporting second-quarter earnings of $165 million ($0.33/share).
The results exceeded Zacks Investment Research’s projection of 31 cents/share and the second quarter of 2018, when the company lost $75 million ($0.17/share). Last year’s loss included a pre-tax write down of $242 million to reflect the company’s investment in Time Warner, which has since been acquired by AT&T.
“It was a solid second quarter,” CEO Scott Prochazka told analysts during a Wednesday earnings call.
The Houston-based company said its performance was driven by its utility operations and cash contributions from non-utility businesses such as Enable Midstream Partners, a joint venture with OGE Energy and ArcLight Capital Partners. The pipeline company reported $74 million of equity income for the quarter, a $16 million improvement over last year.
CenterPoint is holding on to its gas-gathering business interests. | Enable Midstream Partners
Prochazka said CenterPoint no longer intends to sell common units of Midstream, as “much has changed since we first considered the sale.” He said Midstream, which has contributed $1.7 billion in cash distributions to CenterPoint since 2013, “now reports a smaller percentage of our earnings” with the closing of the $6 billion Vectren merger in February.
Vectren contributed $25 million in operating income.
CenterPoint’s stock opened at $28.85/share Wednesday morning but quickly dropped to $27.47. The stock recovered to close at $28.14, down 2.5%.
SERC Reliability used part of its quarterly open forum last week to provide lessons learned from a series of attacks on Arkansas’ power grid in 2013.
Bill Peterson, SERC’s manager of outreach and training, told the story of Jason Woodring, who was sentenced to 15 years in prison for attacks on grid facilities in the state between August and October 2013.
“We’re trying to share some awareness topics [that will] help you proactively consider some security enhancements to protect your substations,” Peterson said.
Peterson prefaced the presentation with a reference to the April 2013 attack on Pacific Gas and Electric’s Metcalf substation, in which a sniper shot 17 transformers, causing outages in nearby neighborhoods and forcing grid operators to reroute power. (See Substation Saboteurs ‘No Amateurs’.)
The attack ultimately led to NERC reliability standard CIP-014-1, which requires utilities to protect transmission facilities whose loss could cause instability, uncontrolled separation or cascading outages. The standard led utilities to add fencing, cameras and alarms to their facilities. At Metcalf, PG&E removed vegetation near the substation boundary and replaced a chain link fence with a concrete wall to prevent a line of sight into the substation.
Woodring, a pool maintenance worker with a methamphetamine habit, told the court in June 2015 he wanted to cause a power outage to “get everybody’s attention” to what he saw as the deterioration of society. He said he had noticed how people united during an emergency.
“When I went up there on that 500,000-volt power line, I actually thought I was going to be helping people,” he said in his guiltyplea.
Woodring’s sabotage began when he attempted to topple an Entergy transmission tower adjacent to a rail line in the city of Cabot, spending weeks removing about 100 steel bolts that secured the tower to its concrete foundation. He then strung a steel cable from the tower to a tree on the other side of the tracks, hoping that a passing train would hit the cable and pull the tower down.
But the cable — insulated with blue plastic hosing used for pool maintenance — was snapped by a train without causing the tower to budge.
On Aug. 21, Woodring returned, climbing the tower armed with a hacksaw, which he used to cut the connectors holding one of the 500-kV lines, and the line itself, which fell onto the track.
“What he was trying to do apparently is get the cable to itself attach to a bypassing train in an attempt to pull the entire tower down,” Peterson said. Later that morning, a Union Pacific freight train struck the line, blacking out nearby homes. Again, the tower did not come down.
The FBI offered a $20,000 reward for the person responsible, speculating that the attacker must “possess above-average knowledge or skill in electrical matters.”
Less than a month after the first incident, Woodring broke into an Entergy extra-high-voltage substation in nearby Scott after surveilling it for several days.
Using bolt cutters to get through a fence and padlocks on the door of the control house, he dumped a gallon of gasoline and oil on the control panel and the floor before setting it ablaze. The building was destroyed.
He left a cryptic, crudely written message: “YOU SHOULD HAVE EXPECTED U.S.”
“Local law enforcement assumed that he was trying to hide his identity and show that it was a [foreign] terrorist attack instead of somebody local,” Peterson said.
A week after setting the fire, and after the FBI raised its reward to $25,000, Woodring used a chain saw and an axe in an attempt to cut through a distribution pole near his house in Jacksonville. After that failed, he discovered an unattended tree maintenance vehicle near his house and drove it back to the poles, dragging one of them down and blacking out 10,000 customers of First Electric Cooperative.
“How easy is it to access these vehicles? Are keys … just left in them? Are there fences around these vehicles? Are they parked in certain locations?” Peterson asked. “What other types of equipment do you use that could be used against you?”
Woodring was arrested after a fourth attempt at sabotage when he used a fishing pole to cast a piece of wire over the power lines near his home, causing an explosion.
That led law enforcement agents to Woodring’s house, where they discovered blue plastic hosing like that found at the scene of the transmission tower sabotage. He confessed.
Woodring was sentenced to 15 years in federal prison and ordered to pay almost $4.8 million in restitution to Entergy and almost $49,000 to First Electric Cooperative.
Peterson said the Woodring story “brings up a couple areas for us to … think about improving our awareness of our infrastructure.”
“Stay in contact with local law enforcement. Make sure you preserve evidence if you do think there’s a disruption or damage done to a facility. … Keep in mind that could become a crime scene.”
Audit Evidence
The quarterly forum also featured a tutorial by SERC officials on best practices for providing audit evidence.
Asked whether audit documentation was improving or getting worse, SERC’s Clay Shropshire said it depends on the entity.
“There are entities that we go to and they really seem to get it. And we can even be asking for something a little different and before we even finish the question they go, ‘OK, I know exactly what you want.’ And they go run off grab it and they come back. [And we say], ‘Yeah that’s what we need.’
“There are other entities we ask for [evidence] six or seven times and we finally run out of time.”
CARMEL, Ind. — MISO will next year discontinue submitting data to NERC’s Generating Availability Data System (GADS) on behalf of generation in its footprint.
Executive Director of Resource Planning Patrick Brown announced the move Wednesday during a Resource Adequacy Subcommittee meeting. The RTO will send its last report Feb. 15, 2020, NERC’s deadline for 2019 GADS data. Generators will be on their own for first-quarter 2020 reporting, due May 15. GADS is mandatory for conventional generating units at or above 20 MW, and for wind farms of 75 MW or higher that were commissioned in 2005 or later.
MISO currently submits GADS data for about 56 generators, but staff have previously said the RTO wants to remove itself from the process.
Weighted equivalent forced outage rate by fuel type | NERC
“When we started submitting them, it was a smaller group. … It doesn’t seem like we’re adding much value by doing them, from our perspective,” Director of Resource Adequacy Coordination Laura Rauch said at a July Market Subcommittee meeting.
Independent Market Monitor staffer Mike Chiasson recommended that MISO ensure it still has visibility into GADS reporting. He noted that RTO members have had issues with GADS accuracy in the past.
MISO is still planning to make a formal announcement on the change during the September RASC meeting. To assist its generators, the RTO has begun coordinating a training, scheduling and communication plan with NERC, SERC Reliability, Midwest Reliability Organization and Reliability First Corp.
The electromagnetic spectrum could be the next field for war, and China is already planning for it, an Air Force strategist told NERC’s Electromagnetic Pulse (EMP) Task Force.
Air Force Col. Douglas “Cinco” DeMaio said the U.S. must place weapons in orbit between the earth and the moon to protect against adversaries such as China, which landed a space probe on the far side of the moon in January.
Airborne lasers can temporarily or permanently damage space-based systems. | National Air and Space Intelligence Center
“This is not about growing potatoes. This is a land grab on the far side of the moon from which to build a space station to launch out to further places in the solar system,” said DeMaio, vice commander of the Air Force’s LeMay Center for Doctrine Development and Education in Montgomery, Ala. Defending the electromagnetic spectrum (EMS) means competition in space, he said. “No longer is it just the sea and the air and the land [and] low-earth orbit. It is the space between us and the moon.”
The Defense Intelligence Agency reported in February that China and Russia reorganized their militaries in 2015 to emphasize their “counterspace” programs, which include anti-satellite missiles, jamming of signals to or from satellites and ground-based directed energy weapons (lasers, high-power microwaves and other radiofrequency devices).
“The military is just starting to wake up to the fact this is a place to compete,” DeMaio said during the July 24 workshop. “We grabbed onto cyber very quickly. We didn’t appreciate EMS.” (See related story, EMP Task Force Looks at Black Start, Nukes.)
China Threat
DeMaio cited China as the U.S.’s biggest threat.
“China has competed very well against us, negating our defenses, our forward bases, our static bases that are very vulnerable to attack in the EMS. … It has really taken away our ability to execute our strategy, which is forward deployment. We do not have the range, the speed and the firepower right now that we need to reach from long range. So, what I propose is that we need to get up higher. We need weapons that go up into orbit — cislunar — between here and the moon. … And that’s exactly what the Chinese are doing. That is their strategy. If we do not match that, they will gain the high ground.”
DeMaio said space could be used to site directed energy weapons that could trigger EMPs. “If we’re talking about an electromagnetic attack … I think we have to think a little bit more about not just the shotgun of a nuclear weapon, but a sniper rifle from orbit that can target some very specific places in our infrastructure,” he said.
The U.S. military must place weapons in orbit between the Earth and the moon to defend against China and other adversaries, an Air Force strategist told the NERC EMP Task Force. | U.S. Air Force
Lessons from World War I and II
DeMaio said the U.S. should learn from the 1940’s Battle of France, when that nation’s “static defenses” were overrun in six weeks by nimble, mobile German forces using the new weapons of tanks and aircraft.
“The French built static defenses based on their lessons from WWI against a direct assault: artillery, manpower,” he said. “The Germans learned something different. They learned to integrate aircraft [and] surface weapons together, connecting them with a radio. And they built that upon their history of maneuver warfare. And instead of going direct where the French wanted them to go, they went around, they went under, they went over.
“So, I have to ask, is our nation akin to the French side or the German side? Are we leading the new methodology for maneuver in this coming battle?”
The U.S. now faces continuous competition, DeMaio said. “We’re playing Go, not chess,” he said, referring to the ancient Chinese board game. “We have to shift to that mindset. … It’s not just this [one] catastrophic event.”
“The United States is really good when you get an in-your-face threat: Nazi Germany, Imperial Japan, even the attacks of 9/11. We find the threat and we go after it,” he added. “This is very hard to attribute in EMS.”
NERC’s Electromagnetic Pulse Task Force held a daylong workshop July 25 with discussions on black start, the vulnerability of nuclear plants and a call for weaponizing space.
The task force was formed in April, shortly after President Trump’s EMP executive order and shortly before the Electric Power Research Institute released its report on the impact of a high-altitude electromagnetic pulse (HEMP).
“We’re not jumping to a standard right away. However, I’m not promising there will never be a standard out of this effort,” she said. “What I am saying is we are going to take the methodical steps of first getting some industry input and making some strategic recommendations.”
The task force’s Phase 1 deliverable to the Board of Trustees will be “strategic recommendations we believe should be next steps for industry,” she said.
Phase 2 could result in a “handoff” to NERC’s technical committees for additional work. “That may be [standard authorization requests]; it may be guidelines; [it] may be best practices,” she said.
Phase 3, projected to begin in December, would be the creation of a standard drafting team “if we get to that point and find it’s applicable,” she said.
Phase 1 milestones for NERC’s EMP Task Force | NERC
The task force has been broken into three subgroups, one focusing on system planning and modeling (assessing the potential impacts of EMPs on the grid) and a second on critical facility assessment (how to prioritize mitigation efforts on generators, substations and control centers). The results of the two groups’ work will be used by a third group focused on mitigation, response and recovery (providing guidance to bulk power system owners and NERC committees on mitigation plans and recovery strategies).
Task force Chair Aaron Shaw, of American Electric Power (AEP), said one of the task force’s deliverables will be a bibliography of research. The Department of Homeland Security told the workshop it is conducting peer reviews of EMP studies as part of its response to the executive order.
Disrupting Black Start
The EPRI study concluded a high-altitude nuclear explosion could cause a multi-state electric outage but not the nationwide, months-long blackout some observers have warned of. (See EPRI Report Downplays Worst-Case EMP Scenario.)
One of the speakers at the workshop, an Air Force strategist, said the true threat may come from space-based lasers or microwaves rather than a nuclear detonation. (See related story, Air Force: US Must Take ‘Higher Ground’ in Space.)
Randy Horton, one of the authors of the EPRI study, said the results indicated an EMP attack could disrupt black start plans.
“We did see voltage collapse. We did identify that you could have potential relay damage,” said Horton, senior program manager for EPRI. “So, you could find yourself in the situation where you’re in a blackout and you’ve got damage to digital protective relays, potentially your [communications], your SCADA system and so on. So, you pull the black start plan off the shelf and it no longer works.”
Waveform for a high-altitude EMP | Sandia National Laboratories
Micah Till of Dominion Energy also cited the challenges of a black start following an EMP.
“If a hurricane comes through, we know what to expect from that. If an EMP happens … there’s things that we know and there’s things that we don’t know,” Till said. “Some of what we don’t know we know that we don’t know. And some of it we don’t know that we don’t know,” he said. “Questions like: How will our relays respond? What’s the coupling [the transfer of electrical energy] going to look like and is that going to get into the substation?”
He quoted former PJM CEO Terry Boston as saying, “’If you protect your black start path, then you’ve really protected against the entire threat.’
“Because who’s going to attack you if they know you can get right back up again?” Till continued. “It’s important to keep everyone from going dark, but if you can [restore power quickly], especially if the military bases and such are the ones that come up first, then there’s no real point in having the attack against us in the first place.”
Impact on Load
EPRI’s report called for mitigation to protect the grid from the impacts of E-1 pulses — the first “hazard field” caused by an EMP, which lasts for about 2.5 nanoseconds. The second impact, an E2 EMP, lasts up to ten milliseconds. The last hazard field, an E3 EMP, is marked by a very low frequency pulse that can last for hundreds of seconds. The event would be like a severe geomagnetic disturbance (GMD) caused by solar flares — albeit much shorter.
NERC Director of Engineering and Standards Howard Gugel asked Horton whether the research indicated a regional voltage collapse resulting from an E-3 pulse would have an impact on load.
“We don’t know what the impact on load [would be],” Horton responded. “We’re assuming all the load is connected when the E-3 comes through. [But] if you trip off a bunch of load due to the E-1 impacts, you’re also going to have potential voltage [problems] because you’d have a bigtime mismatch between generation and load that you’d have to worry about.”
EPRI’s report did not look at the impact on generation, but the organization pledged to do so. Horton said EPRI also plans research on distributions systems and end users, including roof-top solar.
Skeptics
Tom Popik, president of the Foundation for ResilientSocieties, praised EPRI for the detail of its modeling and for testing the impact of EMPs on relays. But he said he had “concerns about the scenarios” EPRI used and pressed — unsuccessfully — for details on the latitude and longitude of the locations analyzed in the research.
Horton said EPRI did not identify the latitude and longitude of the simulated target locations because of security concerns. “We don’t want to provide a road map for the bad guys,” he said, adding that the scenarios “came straight from Los Alamos” National Laboratory.
Resilient Societies Chair William Kaewert cited Russian research he said found that an E-1 pulse would destroy medium voltage insulators in the transmission and distribution system.
“So, in contrast to the U.S. practice of testing insulator voltage breakdown deenergized, the Russians actually tested with the lines energized. And what they found was the E-1 event would actually start the arc that the line voltage would maintain until the insulator melted,” he said. ” … What we would encourage is a small number of key assets in the power system are protected to a high level such that we can reduce our recovery time should one of these events ever occur.”
Impact on Nuclear Generators
Exelon Generation’s Scott Greenlee discussed the potential impact of an EMP on nuclear generation, rejecting claims it could result in an accident and core meltdown.
“We do not believe that is the case. As a matter of fact, we think the nuclear plants can absolutely maintain safe shutdown following an electromagnetic pulse,” said Greenlee, senior vice president for engineering and technical support at Exelon Generation’s nuclear division.
He noted nuclear plants’ safety systems are typically encased in buildings with at least two feet of concrete and rebar around them, which he said would act as a “Faraday–type cage” to protect them.
“Even in the case where we have penetrations through the building — even if some of the pulse is able to transmit into the building — our safety systems are typically extremely rugged,” Greenlee said. “They’re old analog equipment for the control systems: old analog relays and rugged pumps and motors and diesel generators. … All of our key safety systems can be operated manually.”
He acknowledged, however, digital controls on non-safety systems such as turbines, generators and feedwater systems may lack concrete shielding and could be vulnerable. “It could take weeks, if not months, to restore those systems,” he said.
Conductive concrete, shielded cables and metallic enclosures are three EMP mitigation solutions for substations. | CenterPoint Energy
Another concern for nuclear operators is restocking their diesel fuel after their on-site supplies — a seven-day minimum is required — run out. “We think if there were an EMP, we really need the federal government to ensure we can resupply the nuclear units,” Greenlee said.
He said nuclear plants would not be able to take a lead role in black start operations. “Most of our plants, especially the pressurized water reactors, require 20 or more MW to start up in order to get all the equipment running. So, we would need some source of power to restore the nuclear units.”
Don’t Ignore the Physics
Scott Backhaus, EMP coordinator for the Department of Homeland Security, described his role in managing DHS’s work on EMPs and GMDs and its interactions with other federal agencies and industry. DHS is working under the direction of the president’s executive order, DHS’s EMP strategy and the National Space Weather Strategy.
The executive order calls for “sustainable, efficient and cost-effective” responses to improve resilience to the impact of EMPs. To that end, Backhaus said, the government is committed to using the “best available science” in its analyses.
“Impacts may already be mitigated by existing control systems, redundancy, backup, hardening and restoration plans,” he said.
“There are physics and engineering constraints that can be used in both the analysis of EMP waveforms and EMP impacts to avoid overestimation of risk,” he added. “If you ignore some of the physics and you ignore the engineering, you can quickly get into worst case on top of worst case on top of worst case and you [can] overestimate risk.”
He said other infrastructure sectors have done less sophisticated analysis than the grid.
“The electric subsector is likely the most sophisticated and mature in this respect, but we do have to meet each infrastructure sector where it is currently because of the timelines we’re under,” he said. “So, we have to leverage existing modeling and simulation and test data.”
Enough Generation?
Resilient Societies’ Popik questioned whether the grid has enough fuel secure, resilient and dispatchable generation to restart the grid. “This issue is not just an EMP issue, it’s a cybersecurity issue,” he said, citing the interdependencies between renewable generation and natural gas facilities that ramp to respond to renewables’ variability.
“I think the industry is trying to play the hand it’s been dealt in terms of assets, but maybe we as a society need to ask for more fuel secure assets,” Popik said. “Does anybody share this perspective? Are we kind of the voice in the wilderness on this?”
“I won’t answer that question,” responded NERC’s Gugel. “But one promising thing I’m seeing is the work DOE is doing right now in creating the North AmericanEnergy ResiliencyModel, which looks at all the interdependencies — the communications and gas … so we can finally have a cohesive model of all of those different infrastructures so we can look at the interdependencies of one on the other.” The model is expected to be released in September. (See “North American Energy Resiliency Model” in National Labs Show Their Wares on Capitol Hill.)
Gugel also cited NERC’s annual long-term reliability assessments and the study it released in December on the potential impact of accelerated coal and nuclear generation retirements. The study, which some criticized as unrealistic, found faster-than-expected coal and nuclear plant retirements could jeopardize reliability if grid operators are not prepared. (See NERC Releases ‘Stress Test’ Analysis of Gen Retirements.)
The New England Power Pool Markets Committee last week continued to discuss impact assessments of ISO-NE’s proposed energy security improvements (ESI).
Analysis Group’s Todd Schatzki gave a presentation on additional preliminary results of a study on the risk premium on day-ahead energy option offers, as well as on two scenarios for the winter of 2025/26: a current market rules case, and one reflecting proposed ESI rules and expected market responses. (See “Assessing ESI Impacts,” NEPOOL Markets Committee Briefs: July 8-10, 2019.)
Unrecovered cost of actions taken to secure energy inventory will be compared to the change in net revenues associated with taking each action, Schatzki said, reading from the slides.
The risk premium depends on factors that affect the riskiness of the option position, including the expected marginal cost of production given a resource’s fuel inventory; the option strike price; and LMP volatility.
Estimated cleared prices for day-ahead energy options under the high future case | Analysis Group
The analysis will consider three different winter scenarios for model year 2025/26: mild (based on 2016-17), moderate (2017-18) and severe (2013-14).
Analysis Group’s production cost model does not capture every market feature, such as congestion; commitment/start-up and min-load costs; and full EIS calculations, he said.
Schatzki said the results provide reasonable estimates of impacts, although they are preliminary, with some ESI elements and assumptions still being refined.
Analysis Group will present preliminary scenario results this month, and respond to stakeholder feedback and present a draft report in September, ahead of the RTO’s planned October compliance filing with FERC Denies ISO-NE Mystic Waiver, Orders Tariff Changes.)
Margin for Uncertainty
ISO-NE Principal Analyst Andrew Gillespie gave a presentation providing additional detail on energy imbalance reserves (EIR) and replacement energy reserves (RER), two of the three day-ahead energy call options being proposed.
EIR awards will fill “known and needed” energy, akin to energy to meet demand in real time. RER and generation contingency reserves (GCR), the third call option, will supply energy that might be needed if a major contingency occurs, the equivalent to operating reserves in real time.
Combined, the three provide the “margin for uncertainty” in an increasingly energy-limited system, Gillespie said, referring to the presentation.
The RTO plans to allow imports across external interfaces to receive EIR awards, but imports would not be permitted GCR or RER awards because Northeast Power Coordinating Council standards require balancing authorities to provide its reserves using its own resources.
The RTO said resources with an EIR award should expect to be committed to meet the forecast for the next day.
“A unit with an EIR option awarded to meet the day-ahead forecast energy requirement should expect to receive a commitment instruction, which would be consistent with its start-up and notification times,” it said. “But it might not always be committed, if it has only an EIR option award, that is, if it has no day-ahead energy schedule.”
The day-ahead co-optimization will seek the most economical solution, meaning a unit that offers both energy and options could receive a day-ahead energy schedule only; an EIR award/schedule only; both a day-ahead and call option award; or no award.
The sum of any EIR option award and any day-ahead energy schedule within the same hour will be at least equal to the unit’s economic minimum, and not greater than the unit’s economic maximum, according to the RTO.
No M-DAM in October FERC Filing
The RTO’s vice president for market development, Mark Karl, on July 29 sent a memo informing the MC that the grid operator will not include the multiday-ahead market (M-DAM) in its Oct. 15 compliance filing.
“The M-DAM design warrants further assessment and additional review with stakeholders before being proposed to the commission,” the memo said.
“While multiple day-ahead markets may have benefits to the region as the power system continues to evolve, we believe it would be prudent to spend the remaining time ahead of the Oct. 15 filing discussing the design and impacts of the new proposed day-ahead ancillary services,” Karl said.
The RTO plans to continue assessing the potential impacts of an M-DAM design and to discuss recommended next steps with stakeholders in 2020.
Time Limit on Fuel-security Resources
The RTO’s director of NEPOOL relations, Allison DiGrande, and its assistant general counsel, Christopher Hamlen, led a presentation on proposed Tariff changes to remove the potential for a fuel-security resource to be retained in the Forward Capacity Market for more than the two-year period allowed by FERC.
The proposed revision would clarify that a resource retained for fuel security will only be retained until the end of the fuel security need.
The RTO’s goal is to address reliability concerns through competitive solutions.
“When resource owners submit retirement bids and demand bids in the [Forward Capacity Auction], they are indicating their economic decision to exit the markets,” DiGrande said, reading from the slides. “Out-of-market retentions should be limited in scope and timing.”
Without a change, a resource retained for fuel security could be retained beyond the intended capacity commitment period, which further impacts the competitive processes in New England.
ISO-NE is requesting that the change become effective prior to the issuance of the Order 1000 request for proposals in December.
The RTO plans further discussion and final review of the proposed changes at the MC’s summer meeting in New Hampshire this month. The committee is expected to vote on the proposal in September before a vote by the Participants Committee on Oct. 4.
The Natural Resources Defense Council attacked PJM,1 accusing it of suppressing renewable resources relative to other RTOs, wasting billions of consumer dollars in the process and contending, in effect, that a cheap and reliable zero-carbon future could be ours if entities like PJM would just mend their evil ways.
My responding column showed that reality is different.2 PJM hasn’t obstructed renewable resources and, in fact, is outperforming its RTO brethren given the renewable cards the region was dealt. PJM’s capacity market (like other RTO capacity markets) doesn’t save uneconomic coal plants, doesn’t impose excessive costs on consumers, doesn’t suppress renewable resources and is a bulwark against bailout claims for uneconomic coal units that should retire.
NRDC ostensibly replied to my column.3 Not, mind you, to address much of what I said.
NRDC basically changed the subject. But its new claims are no more valid than the ones it made before, and its policy prescription is bigly counterproductive.
Natural Gas Plants Do the Heavy Lifting in Carbon Reduction
NRDC’s first new claim is that all retiring coal plants should be replaced with renewable resources because natural gas units won’t help reduce carbon emissions.
Specifically, NRDC says that carbon (CO2) emissions will “plateau” if coal units are replaced with natural gas units, basing this on a claim that in PJM, carbon emissions increased in 2018 relative to 2017.4
In fact, carbon emissions per megawatt-hour in PJM decreased from 948 pounds in 2017 to 925 in 2018, another decline continuing the downward trend that I discussed in my column. This downward trend is shown in the graph below.5
PJM says its percentage of renewable energy, while small, is growing. | PJM
Let’s look at that graph for something else: the decline in carbon emissions from the advent of the capacity market until now, going from about 1,225 pounds/MWh in 2008 to about 925 pounds/MWh in 2018, a reduction of 300 pounds/MWh.
Here’s a pop quiz question: How much of that 300-pounds/MWh reduction is attributable to wind and solar generation?
90%
50%
10%
The answer is c, only 10% of the reduction is attributable to wind and solar generation.6 The reality is that new natural gas plants, and higher dispatch of gas plants generally, are responsible for 90% of the carbon-emission reduction in PJM.
This reality makes perfect sense. Remember that we’re not replacing average coal units with average natural gas units; we’re replacing old, inefficient coal units with new, efficient natural gas units. So it’s not just the rule-of-thumb 50% reduction in carbon; it’s more like a 65% reduction in carbon, along with a staggering 97% reduction in nitrogen oxides (NOx) and a 99.8% reduction in sulfur dioxide (SO2).7
Natural gas plants do the heavy lifting.
The PJM Capacity Market Works to Reduce Carbon Emissions
NRDC’s second new claim is that the PJM capacity market is flawed because the RTO could procure the targeted level of resources at a much lower price than it does.
NRDC gives a graphic example with a hypothetical clearing price of about $60/MW-day at the target reserve margin. NRDC’s example has the fatal flaw of its supply curve not actually intersecting the demand curve at that price.8
So it’s not a clearing price at all. ECON 101: Clearing price is where the supply and demand curves intersect. NRDC creates a fantasy.
In practical terms, NRDC is saying that PJM should procure the target reserve margin for about $60/MW-day — when the cost of new entry is about $300/MW-day.9
Under NRDC’s approach, new entrants would never recover the CONE. They will know that. Ergo, no new entry.
The inefficient old coal units would no longer be forced out by new, efficient natural gas plants. The coal plants hang on and continue polluting. Except for the small contribution from renewables discussed above, PJM’s downtrend trend in carbon (and other pollutants) would come to an end.
4- NRDC claims “carbon pollution in the region (and nationwide) increased year over year in 2018.” This is true (barely), but only in a literal sense because of an overall increase in PJM generation in 2018 relative to 2017.
6- Wind and solar generation accounted for 2.8% of total PJM generation in 2018, http://www.monitoringanalytics.com/reports/PJM_State_of_the_Market/2018/2018-som-pjm-sec8.pdf (page 356). So without that 2.8%, the 925-pounds/MWh emission rate in 2018 would have been about 950 pounds/MWh, which would have been a reduction of 275 pounds/MWh from the 2008 level. So wind and solar are responsible for a 25-pounds/MWh reduction, and natural gas plants — new plants and higher dispatch generally — are responsible for a 275-pounds/MWh reduction.
7- Using the Energy Information Administration’s eGRID data available here, https://www.epa.gov/sites/production/files/2018-02/egrid2016_data.xlsx (PLNT16 tab, columns PLCO2RTA, PLNOXRTA, PLSO2RTA), for a sample of five new natural gas plants (Newark, Woodbridge, Panda Liberty, Panda Patriot and Brunswick County) and five recently retired coal plants (Will County, Conesville, J.M. Stuart, Miami Fort and Bruce Mansfield).
8- Please note that what NRDC calls “Huntoon’s Alternative Supply Curve” actually does intersect with the demand curve, at a clearing price of about $300/MW-day.
9- The estimated net cost of new entry for the overall PJM region was about $320/MW-day in the last capacity auction. Estimated net CONE in the next auction is about $260/MW-day. Competitive markets continue to drive down costs.
The Department of Energy on July 24 celebrated its research collaborations with the electric industry at the annual National Labs Day on Capitol Hill, featuring remarks by members of Congress, a reception and displays on current projects. Here’s some of what we heard.
Sen. James Risch (R-Idaho) said he and many of his colleagues on the Select Committee on Intelligence are convinced “that the next large incident that we have in America is not going to be a kinetic attack; it’s going to be a cyberattack that can be just as devastating.”
Risch, co-chair with Sen. Dick Durbin (D-Ill.) of the Senate National Laboratory Caucus, said utilities have overcome their reluctance to cooperate with the federal government on cybersecurity.
“When I first got here [11 years ago] … they were very, very resistant to engage with the United States government as a partner in cybersecurity. … It was less than 36 months later that they were begging for us to help because they realized the magnitude of the cybersecurity threat — and also, by that time there had been some breaches. They realized how catastrophic it would be. So today we are very much partnering with the electric utility industry — and have to be — on cybersecurity.”
North American Energy Resiliency Model
Among the exhibits on display was one on the North American Energy Resiliency Model, which DOE plans to release in September. The model will input threats such as severe weather and cyberattacks and provide outputs such as the possibility of voltage collapse and gas pipeline outages.
Craig Miller, chief scientist for the National Rural Electric Cooperative Association (NRECA), which has advised the national labs on the project, was on hand to explain it to visitors.
Miller said it will provide grid planners and federal officials with an “integrated analysis” tool to help them determine the most cost-effective investments in resilience and reliability. “For example, should we harden against a wind storm in Florida, or is it more important to deal with earthquakes in Missouri with the New Madrid Fault?”
He called the new tool “a massive improvement” over the first attempt at developing a model after Hurricane Sandy in 2012. “There was a quick [effort] to pull it together. It was good, and lessons were learned, and some fine thinking was done. But this is a much more sophisticated, integrated model,” he said.
Bruce Walker, assistant secretary of DOE’s Office of Electricity, has been touting the model since after FERC rejected the department’s proposed rule to require “full cost recovery” for coal and nuclear plants with on-site fuel supplies.
But Miller said he is convinced the project has not been tainted by politics or special interests. “The work is being done by the national labs. And the national labs are fundamentally committed to doing honest analysis. They are at heart scientists and engineers,” he said.
Miller said NRECA, which represents more than 900 electric cooperatives covering two-thirds of the U.S. by geography, plans to offer recommendations on how to improve the tool after its release.
“Even though we only have 40-some million customers … the national infrastructure doesn’t operate without us,” he said.
DarkNet: Moving Critical Infrastructure off the Public Internet
The project has been tested through a partnership between the lab and Chattanooga, Tenn.’s municipal utility, EPB (formerly the Electric Power Board).
“We use our system as a test bed,” said James A. Ingraham, EPB’s vice president of strategic research. “We’ve had almost a five-year relationship with Oak Ridge. We have a 6,000-mile fiber optic network, along with over 1,200 automated switches and interrupters on our system, so the entire thing is automated. We think it’s the most automated electric distribution system in the world. So, it gives us a unique path to generate a lot of data instantaneously. So we’re doing cybersecurity, sensors, transformer design, renewable generation, energy storage, electric vehicle, microgrid design, microgrid networks. All of these things are going on in cooperation with DOE on our system.”
Ingraham said the utility built the fiber optic capacity when it modernized its 70-year-old system.
“We entered the computer age. We deployed 29 software platforms, state-of-the-art [supervisory control and data acquisition] and [emergency management system]. We deployed all the switching and automated metering, but you had to have the high-speed communications to make it all work,” he said. “We built a modern infrastructure and integrated energy and communications together. And people see the difference. We’ve eliminated 60% of our outage minutes in the last five years. People know when the power goes off, it’s going to come right back on as the switches reroute power.”
Sandia’s SCADA Simulator and WeaselBoard
Brian J. Wright demonstrated Sandia National Labs’ SCADA emulator, which is used in training and the evaluation of malware. “It’s kind of a sandbox environment. It also enables us to do hardware-in-the-loop” simulations, he said.
Wright showed a screen showing the CrashOverride malware that Russians hackers deployed in the December 2016 attack on a utility in Ukraine. (See Experts ID New Cyber Threat to SCADA Systems.)
“It had a specific module aimed at ABB’s power relay. So, we actually put it in as hardware-in-the-loop to this simulation.
“You’ve got a power simulation in the background informing emulated models of relays and power systems, a SCADA module, HMI [human-machine interface], everything in a substation. It allowed us to execute the malware and effect that physical relay as if we had built a real substation.”
Wright also demonstrated Sandia’s WeaselBoard, which allows operators to see and respond to physical and input/output (I/O) changes on their system.
“So, if I wiggle out an I/O module, you can see it’s alerted this card that sends a message to the HMI to alert that there is a module that’s been removed,” he said.
Wright said the WeaselBoard protects against malware such as Stuxnet, which the U.S. and Israel allegedly used to attack Iran’s nuclear weapons program — deceiving operators about what was actually going on in the physical process.
“What the WeaselBoard allows us to do is see the communications between cards and between the card and CPU, between the CPU and the network port out. It enables us [to know] the ground truth of what’s actually happening, so we can alert to anomalies in I/O, hardware changes, firmware changes.”
Why it called a WeaselBoard? “I am not privy to the history of the name,” he laughed.
Rita A. Foster of the Idaho National Lab demonstrated an open source visualization tool called the Structured Threat Intelligence Graph (STIG) that can be used for understanding cybersecurity vulnerabilities.
It was funded by the California Public Utilities Commission under its California Energy Systems for the 21st Century (CES-21) program and included involvement by the state’s investor-owned utilities.
“Those lines are showing the relationship between attack patterns and indicators of compromise,” she said pointing to a fan-like pattern on her screen. “We’re going to query on this attack pattern and get all the other malware associated with that attack pattern, because one attack pattern has a lot of different malware associated with it. … You can tell that’s the attack pattern you want to look at because fixing that fixes a big, huge set of problems.”
An example of a Structured Threat Intelligence Graph analyzing a system infected with CrashOverride malware | Idaho National Lab
