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October 30, 2024

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Bill Would Exempt Md. Data Centers with Fossil Fuel Backup from PSC Approval

Getting bills through the Maryland General Assembly often involves compromises and tradeoffs, even with Democrats controlling the House of Delegates, the Senate and the governorship. 

So, compromises and some controversy were very much in the mix for energy bills and programs as the General Assembly raced toward the official close of its 2024 legislative session at 11:59 p.m. April 8. 

The passage of S.B. 474, aimed at allowing data centers to use fossil fuel-powered backup power, was achieved via a controversial compromise. Introduced by Senate President Bill Ferguson (D), the bill would exempt facilities, such as data centers, using fossil-fuel generation for emergency backup power from having to apply to the Maryland Public Service Commission for a certificate of public convenience and necessity (CPCN). 

The impetus for the bill was the PSC’s refusal last year to approve a CPCN for a proposed data center with 168 backup diesel generators in Frederick County, which prompted the center’s developer to pull out of the project. 

The bill had strong support from Gov. Wes Moore (D), who is seeking to draw data centers to Maryland as their development booms in Northern Virginia, but it ran into opposition from environmental groups. The Maryland League of Conservation Voters had opposed the bill and said it would include lawmakers’ votes on it in its annual legislative scorecard. 

But the LCV was mollified with an amendment that would channel 15% of the tax revenues raised from data centers in the state into a fund for clean energy projects, according to a report on Maryland Matters. Both houses of the legislature passed the bill unanimously. 

Compromise amendments also secured passage of the Distributed Renewable Integration and Vehicle Electrification (DRIVE) Act (H.B 1256), which seeks to promote “beneficial electrification” via time-of-use (TOU) rates for residential customers and bidirectional electric vehicle charging. 

TOU rates set high per-kilowatt-hour prices during times of peak demand and significantly lower prices for off-peak hours, with the goal of encouraging residential customers to shift their energy use.  

As originally introduced by Del. David Fraser-Hidalgo (D), the bill would have required default TOU rates, with an opt-out choice for residential customers, but was amended to allow Maryland’s investor-owned utilities to launch pilot, voluntary TOU programs with specific targets for customers to opt in to the rates. By July 1, 2026, the utilities would have to report to the PSC on whether TOU rates had helped defer distribution system upgrades and on the feasibility of making TOU rates the default choice for residential customers.  

The bill would also direct the PSC to establish “expedited processes for interconnecting” bidirectional EV chargers. Utilities would also be required to develop rates for compensating customers who feed power back into the grid via a bidirectional charger. 

The vote was 100-39 in the House and 47-0 in the Senate. 

A House-Senate conference committee was needed to hash out final amendments for H.B. 864, which would update the state’s energy efficiency and conservation plans ― in particular, the EmPOWER Maryland program for low-income consumers. 

The bill would require both electric and gas utilities to meet energy savings and emission-reduction targets that are in line with the state’s goals while expanding the definition of efficiency to include both demand response and electrification. It would set 2016 as the base year and require utilities to develop efficiency programs that cut emissions from retail sales 2% below the base in 2024, 2.25%/year in 2025 and 2026, and 2.5%/year beyond. 

Other provisions call on the state Department of Housing and Community Development to develop energy efficiency programs specifically for low-income residents and direct the PSC to establish a working group to examine how efficiency programs can be extended to moderate-income residents. 

H.B. 864 had strong support from environmental groups, passing 100-36 in the House and 32-12 in the Senate. 

Environmental advocates and the Maryland Energy Administration (MEA) called foul over an amendment slipped into the must-pass budget bill that would block funding for the agency to set building performance standards, as reported in Maryland Matters. 

The amendment would put a hold on funding for MEA to set a metric of building energy efficiency called energy use intensity (EUI), which expresses energy use as a function of building size and other characteristics. The amendment would delay the setting of EUIs ― and building performance standards ― until MEA completes a study on the feasibility of the state’s greenhouse gas reduction goals for the building sector, set at 20% by 2030 in the Climate Solutions Now Act (CSNA) of 2022. 

The budget bill (S.B. 360) passed April 5, 44-0 in the Senate and 124-9 in the House. 

OSW Reset, Geothermal Pilot

H.B. 1296 is aimed at boosting Maryland’s flagging offshore wind industry, which has faced the same inflation and supply chain challenges that have stalled out other offshore wind projects along the East Coast. 

The bill would direct the PSC to open a new proceeding by June 1 to re-evaluate “certain offshore wind projects” while allowing developers to resubmit their applications with revised schedules, sizes and pricing, including prices for the state’s offshore renewable energy certificates (ORECs). 

Danish offshore developer Ørsted canceled its agreement with Maryland for the 966-MW Skipjack Wind project, saying the OREC price it had previously negotiated was no longer economically viable. When it announced the cancellation in January, Ørsted said it would continue to develop the project in the hopes of getting a better deal in the future. (See Ørsted Cancels Skipjack Wind Agreement with Maryland.) 

The bill passed the House 97-36 and the Senate 34-11. 

The Working for Accessible Renewable Maryland Thermal Heat (WARMTH) Act (H.B. 397) is a first step in exploring the use of geothermal energy to replace natural gas. The bill would require gas companies with more than 75,000 customers to develop and submit to the PSC plans for pilot geothermal networks, which are closed-loop geothermal systems that tap the planet’s natural warmth to provide heat and cooling to multiple homes. 

Gas companies with fewer than 75,000 customers can — but are not required to — submit geothermal plans. After the pilot, the PSC, MEA, the Office of People’s Counsel and other stakeholders would decide whether to make the projects permanent. 

With minor amendments, the House passed the WARMTH Act by a 98-34 vote, and the Senate by 36-9. 

Green Buildings and Power

S.B. 258 was passed without major amendments. Despite the budget cuts to MEA’s work on building performance standards, the bill would raise energy savings targets for state buildings from 10% in 2029 to 20% in 2031. 

Other provisions call on the Maryland Green Building Council to update the High Performance Green Building Program to help the state meet the goal of cutting emissions 60% below 2006 levels by 2031, set in the CSNA. 

The bill would also require the state’s Department of General Services to identify state buildings that could benefit from energy performance contracts, in which third-party efficiency providers guarantee a certain level of energy and dollar savings. If the targets are not met, the provider pays a penalty. 

The vote was 37-9 in the Senate and 103-34 in the House. 

S.B. 1, sponsored by Sen. Malcolm Augustine (D), would require the state’s retail electricity providers that offer “green power” to their customers to document whether they actually are selling electricity generated by a renewable power project or the renewable energy certificates (RECs) from a project that could be located outside the state. 

To offer green power, a retail supplier must show that the electricity being provided is at least 51% from renewables or RECs or at least 1% more than the amount of clean power required under the state’s renewable portfolio standard. For 2024, the state’s RPS calls for about 37% of Maryland’s power to come from renewables, but Gov. Moore has committed the state to 100% clean power by 2031. 

Prices for green power would be set through a yearly proceeding before the PSC, and retailers would have to have visible disclosures on their websites explaining that the purchase of a REC did not necessarily mean renewable energy also had been purchased. 

The green power provisions are part of a larger bill focused on regulation of retail power suppliers. S.B. 1 passed 32-15 in the Senate and 96-39 in the House. 

H.B. 990 updates provisions in the 2016 Greenhouse Gas Reduction Act and the CSNA exempting the state’s manufacturing sector from complying with any state GHG-reduction goals. Cement manufacturing would be taken out of the definition of manufacturing — meaning cement manufacturers in the state would have to comply with GHG-reduction targets. 

Manufacturers that are producing renewable energy components or other technology that reduces greenhouse gas emissions would be exempted, as would companies producing alternative materials that reduce emissions. 

The bill passed in the House 103-34 and in the Senate 31-12. 

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Stakeholders Seek Clarity on CAISO Interconnection Process Plan

Stakeholders still are seeking clarity on details in CAISO’s plan to streamline its interconnection process after the ISO released its final proposal to address the issue after 10 intensive months. 

“I know it’s been a long haul and has felt a little bit like an endurance sport for a little while, and we’re not done,” Danielle Mills, CAISO principal of infrastructure policy development, said during an Interconnection Process Enhancements working group meeting April 4. “But we’re getting to a point where we’re ready to propose this set of reforms as the final proposal.” 

The 2023 Interconnection Process Enhancements final proposal is designed to deal with the “unprecedented volume” of interconnection requests the ISO received last year by reducing the number it will have to study. It will complement — but not replace — the ISO’s compliance filing for FERC Order 2023, which requires transmission providers to revise their interconnection rules. 

CAISO released the plan March 28, one day before it received FERC approval to close this year’s interconnection request window to allow it more time to study Cluster 15 applications. (See CAISO Can Close 2024 Interconnection Window, FERC Rules.) 

But stakeholders participating in the April 4 meeting sought clarity over a few key aspects of the proposal before it goes to a vote by the ISO’s Board of Governors, particularly around the plan’s “zonal approach” and the scoring criteria used to rank interconnection requests.  

Zonal Approach

A key feature of the CAISO proposal is its zonal approach, which prioritizes the interconnection of resources seeking to use available transmission capacity in areas where planned capacity additions were approved in the ISO’s 2022/23 transmission plan as determined by state and local regulatory authority resource planning portfolios.  

Zones are defined by available capacity based on constraints and the California Public Utilities Commission’s resource planning portfolio. A zone with at least 50 MW of available transmission capacity is identified as a Transmission Plan Deliverability (TPD) zone, while a zone with zero available capacity is called a “Merchant option” zone, indicating it could be available for interconnection by merchant projects. 

CAISO is defining zones based on available and planned capacity from the previous year’s transmission plan base portfolio, using the portfolio to calculate overall systemwide capacity. But some stakeholders have struggled to understand how the ISO determines available capacity and evaluates projects in each zone.  

Sushant Barave of Clearway Energy Group questioned how projects would be evaluated if an applicant is in a TPD zone but with a point of interconnection (POI) with no available capacity.  

“If a project is seeking to be studied in a zone that has available capacity, one of the tests we’re going to do is check the POI of the project to determine if it has available capacity or not,” said Bob Emmert, senior manager of interconnection resources at CAISO. “And if the answer is you’re in a TPD option zone but your POI is actually behind constraints that have no capacity to make your project deliverable, then your project will not be studied.”  

Mills emphasized that the amount of capacity identified for each zone doesn’t need to be exact.  

“This is really just a way of gauging relative LSE interest to align with their portfolios,” she said.  

Scoring Criteria

The ISO also is working on implementing scoring criteria to rank projects based on factors including project readiness, LSE interest and non-LSE — or commercial — interest.  

Stakeholders are concerned the scoring system gives an unfair advantage to projects backed by LSEs.  

Under the system, LSEs can award projects points based on a 1-to-100 scale, with the points representing the percentage of capacity the LSEs would assign to the projects, but non-LSEs can award only a maximum of 25 points. The primary reason for the difference, the ISO said, is that LSEs must meet specific resource adequacy and procurement requirements while non-LSEs have no such obligations, although they might be serving a commercial interest.  

“We’ve had a lot of stakeholder comments about different weighting factors that we should apply to the scores and how much influence the LSE or commercial interest should have on the scoring process as a whole,” Mills said. “The scoring process, and particularly the commercial interest process, is really intended to be a way of getting a ranking of projects that can processed.”  

In an interview with RTO Insider, Chris Devon, director of energy market policy at Terra-Gen, questioned if the scoring process was open and transparent given LSE influence. In particular, he highlighted that CAISO’s proposal calls for FERC-jurisdictional LSEs to outline how they would award points in their tariff. 

“I believe that it would be more appropriate to see the CAISO outline some guidelines and requirements within their tariff. But the final proposal lacks any detail on how those LSEs would need to administer those processes to award the points, other than just kind of indicating the time frame,” Devon said. “We would like to see that be more clearly defined to ensure that there is no negative impact to competition and open access.” 

Additionally, if projects aren’t local or long-lead time, such as offshore wind or geothermal energy, they will have to compete for megawatt allocation with LSEs, which are given priority, Devon said, potentially reducing competition. 

“We have seen the benefits of competition in California, where there’s a robust number of independent developers that have been able to develop projects cost-effectively in a manner that keeps cost borne by ratepayers down and kind of shares in the benefit of diversity of supply,” he said.

Margaret Miller, director of government and regulatory affairs at ENGIE North America, also expressed concern LSEs were given too much influence.

“I know there are a lot of competing interests in this category, and I appreciate what the ISO has done to try and balance the concerns here on the scoring criteria,” Miller said during the April 4 meeting. “But when I look at the scoring criteria, for project viability as a developer, I just don’t see a lot of actionable steps we can take to show our project is viable outside of LSE interest, which leads me to believe if we don’t get LSE interest we’re not going to be studied. We’re really struggling with this because I think there’s some commercially viable, good projects that just won’t get into the queue at all.” 

Emmert responded, emphasizing the role of LSE interest in ranking projects. 

“If we didn’t have a scoring mechanism, and if we got rid of this and what’s left of the scoring mechanism without a load-serving entity component, we think we’d have so many [scoring] ties that we’d have basically a process for auctions,” Emmert responded, noting that the proposed rules call for the ISO to conduct a market-clearing, sealed-bid auction for the right to be studied in a specific zone in the case of a tie in scoring points. 

“If we don’t have scoring, well, then we go to auction, and we heard pretty darn clearly that nobody wants an auction, not even the load-serving entities.” 

Stakeholders also expressed concern LSEs can pursue multiple projects, while non-LSE off-takers can submit only letters of interest for one.

“LSEs can allocate their points to any number of projects and in fact, multiple smaller projects, as long as they don’t exceed their points … but here, you’re imposing a limitation on non-LSEs,” said Susan Schneider of Phoenix Consulting. “There isn’t any apparent reason why they shouldn’t be allowed also to sponsor several smaller projects.”  

Mills said non-LSEs aren’t given priority because they fall outside the CPUC portfolio. 

“These non-LSE off-takers are not incorporated into the portfolios that we’re talking about here. We’re talking about basing a lot of this on available capacity and portfolios and where there is available transmission. The non-LSE off-takers are sort of outside that process,” Mills said. “This is an opportunity for them to participate and express any interest in going beyond those procurement needs, but it’s also not as central to the need for us to bring on resources to meet reliability needs.” 

The ISO expects to submit its Order 2023 filing in late April or early May. Starting January 2025, the ISO will begin evaluating interconnection requests based on proposed criteria.  

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FERC Approves PJM Involvement in 2nd NJ Offshore Tx Solicitation

FERC on April 1 approved the participation of PJM in New Jersey’s second solicitation for transmission to interconnect offshore wind, as the state Board of Public Utilities evaluates proposals submitted by the solicitation’s April 3 deadline (ER24-1187). 

The decision allows the two parties to work together under FERC Order 1000’s State Agreement Approach (SAA), enabling the BPU to “take advantage of PJM’s expertise and planning process to develop transmission improvements necessary to support the reliable interconnection of public policy resources,” the RTO said in a statement. 

PJM said the process would seek transmission solutions to serve an additional 3,500 MW of offshore wind energy as part of New Jersey’s goal of reaching 11,000 MW by 2040. 

A BPU spokesman said the agency has received four bids but declined to identify the bidders or to comment further. Under the solicitation schedule, the board will make a decision on which, if any, projects to pursue in the third quarter of this year. 

FERC’s approval follows the successful conclusion of the first SAA between PJM and BPU that resulted in the award of $1.07 billion in transmission upgrades that would deliver 6,400 MW of offshore wind generation. About half the funds were awarded for the construction of a new substation known as the Larrabee Tri-Collector Solution in Howell Township, and the other half for a series of smaller onshore transmission upgrades. (See NJ BPU OKs $1.07B OSW Transmission Expansion.) 

At its March 20 meeting, the BPU approved a series of modifications to projects awarded in the first SAA that the agency said would shave $29 million from the cost. The downward adjustments included a series of projects that could be reduced in scope after new inspections or changes showed they were not needed. 

The first solicitation was seen in the industry as groundbreaking because it was the first use of the SAA. It drew 80 proposals by 13 developers, and BPU officials have frequently cited the approach — selecting lines that can serve multiple OSW projects, instead of one line per project — as cost effective. 

The board on Oct. 25 launched the second transmission solicitation to interconnect four OSW projects and land at the New Jersey National Guard Training Center in Sea Girt, where it would connect to the Larrabee station. The BPU planned to recover the cost of the infrastructure through the state’s Offshore Wind Renewable Energy Certificate (OREC) system, which also would fund the OSW projects. (See NJ Revamps Third Solicitation OSW Connection Plans.) 

In a note on the solicitation, the BPU said the scope of the “prebuild” includes “all cable vaults, duct banks and related facilities for four separate qualified projects, enabling qualified project developers to install their cables into the prebuild by pulling them through the completed prebuild infrastructure facilities.” 

Although the BPU would not identify the bidders, National Grid Ventures (NGV) and Con Edison Transmission on April 4 said they had submitted a 6-GW proposal called Garden State Energy Path. The bulk of the project would be underground, “allowing the cables to be protected from storms and other extreme weather that can cause customer outages,” the companies said in a statement. 

Will Hazelip, president of NGV US Northeast, said, “Prebuild infrastructure is a smart and coordinated approach to transmission for offshore wind, reducing the need to separately construct transmission infrastructure for each offshore wind project.” 

“New Jersey communities can rely on the Garden State Energy Path to provide a route that reduces community disruption and maximizes benefits,” he said. 

The companies said if the BPU picks their project, it could be in operation by early 2029.

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PJM OC Briefs: April 4, 2024

PJM Preparing to Open Black Start RFP

VALLEY FORGE, Pa. — PJM plans to open a solicitation window for black start service after the June 2023 request-for-proposal window did not yield fuel-assured black start generation for some transmission zones. 

PJM’s Ray Lee told the Planning Committee it believes part of the issue is a lack of understanding of the requirements and criteria for a black start generator to be considered fuel-assured, so PJM will schedule a special session of the OC for stakeholder education. The RFP window is expected to open April 29. 

Lee explained there are six ways to meet the minimum qualifications, including being connected to multiple interstate pipelines, on-site fuel storage and status as a nonhydro intermittent hybrid resource. Stakeholders voted in 2022 to adopt the fuel-assured black start criteria with the aim of increasing fuel availability for at least one generator, on top of existing regional black start requirements. (See “Black Start Fuel Requirements Advance to Members Committee,” PJM MRC Briefs: Oct. 24, 2022.) 

The black start RFP process occurs on a five-year cycle, with additional windows opened when deficiencies are identified. The current windows are to supply the service starting Jan. 1, 2027. 

First Read on Periodic Review Manual Revisions

PJM presented revisions to Manual 3 and Manual 36 drafted through the documents’ periodic review, both of which will be considered for endorsement at the May 2 OC meeting. 

The changes to Manual 3 added OC informational posting requirements for facilities adding dynamic line rating capability, language around the use of the Transient Stability Assessment to measure transient voltage response and rules for rescheduling canceled transmission outages. 

The list of transmission owners detailed in Manual 36 was updated, as well as the list of TOs and their deadlines for submitting their annual restoration plans. 

Operating Metrics and Security Update

PJM’s Joe Callis continued to sound the alarm on the threat posed by Volt Typhoon and other organized hacking groups that may be targeting utilities nationwide. He recommended members be cautious about the data they provide or make available to vendors, highlighting an attack in January that used a breach of Microsoft email to search for information shared by partner companies. 

PJM experienced an average hourly load forecast error of 1.35% in March, below its rolling 25-month average of just over 1.5%, Stephanie Schwarz presented to stakeholders. The RTO did not exceed its 3% benchmark for daily peak forecast error. One high-system voltage action was issued, along with a geomagnetic disturbance warning and six postcontingency local load relief warnings. Nine shortage cases were approved March 10 due to load, interchange and slow steam generation response. 

Grid Security Drill Scheduled

PJM has scheduled its biennial grid security drill for Oct. 29, 2024, and this month will begin sending invitations to members to participate. The drill focuses on physical and cybersecurity issues within PJM’s footprint and is open to government agencies to either participate or observe. 

PJM’s Rebecca Gerber said companies should reach out to her to ensure PJM has the correct contacts for invitations or relaying information about the drill. 

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PJM PC/TEAC Briefs: April 2, 2024

Planning Committee

Stakeholders Discuss Expanding CIR Transfer Issue Charge

VALLEY FORGE, Pa. — PJM’s Planning Committee is considering a change to an issue charge framing a discussion on how capacity interconnection rights (CIRs) can be transferred from a retiring generator to a planned resource in the interconnection queue. 

The issue charge modification, brought by the East Kentucky Power Cooperative (EKPC), would allow consideration of solutions that would include planned resources sited at a different, but electrically equivalent, point of interconnection (POI) from the original generator by striking a paragraph designating such solutions as out of scope. The issue charge was proposed by EKPC and Elevate Renewables and approved by the PC on June 6. (See “Stakeholders Endorse Discussion on Deactivating Generators’ CIRs,” PJM PC/TEAC Briefs: June 6, 2023.) 

Denise Foster Cronin, EKPC’s vice president of federal and RTO regulatory affairs, said ongoing discussion at the Interconnection Process Subcommittee revealed the issue charge could prevent solutions permitting CIR transfer to a planned resource whose POI is on a different breaker, but which is otherwise electrically the same. She said the cooperative’s intent in bringing the issue charge was to ease the process of passing CIRs onto a new resource that would have minimal impacts to the grid, but that the current language ignores the realities of the grid. 

Several stakeholders said just removing the out-of-scope language would open the door to market participants creating their own interpretations of what an electrically equivalent POI could be.  

Vitol’s Jason Barker said the proposed issue charge edits would result in unbounded solution options for CIR transfers, rather than solutions that permit swift transfers at the same, or electrically equivalent, POI as originally intended. He questioned PJM about how it determines electrical equivalence in assessing CIR transfers, to which PJM said it does not have a standard measure.  

Barker expressed concern that, in the absence of agreement on the definition of electrical equivalence, eliminating consideration of expedited CIR transfers only at the same tariff-defined POI could impede the most competitive solutions. 

Independent Market Monitor Joe Bowring said a core focus should be on ensuring competition in the transmission grid and not providing undue access.

Bowring also pointed out that: “The proposal would undermine the newly revised PJM queue process by creating a bilateral queue process that could override the PJM process. CIRs are not a property right. Retiring units should not retain CIRs after the day of retirement. CIRs have value as a result of the upgrades to the transmission system paid for by all transmission customers. In addition, the proposers have failed to address whether they would even agree to offer the replacement resources into the capacity market as renewable resources and storage do not have the same must offer obligation as thermal resources.”

Paul Sotkiewicz, president of E-Cubed Policy Associates, responded that CIRs are property rights that have been paid for by the generation owner seeking to transfer them. 

Asked how PJM would define “electrically equivalent,” the RTO’s Jason Connell said the meaning has not been determined and that should be left up to stakeholders, either through the issue charge or packages to come out of it. 

Transmission Expansion Advisory Committee

PJM Preparing 2 Competitive Transmission Windows in July

PJM is shifting its timeline for running the first competitive window for the 2024 Regional Transmission Expansion Plan and the second round of transmission projects to deliver 3,742 MW of New Jersey offshore wind through the State Agreement Approach (SAA). PJM had planned to open both simultaneously during the first week of July, but Director of Transmission Planning Sami Abdulsalam said the RTO now is targeting the middle of the month and will have a gap of a few days between opening them. (See NJ Opens 2nd State Agreement Approach to Connect OSW with PJM.) 

During recent TEAC meetings, stakeholders suggested that staggering the two windows would allow proposals submitted in the second window to be informed by the projects PJM selected in the first and would avoid straining transmission owner resources in forming proposals for two concurrent solicitations. 

PJM closed the second competitive window for the 2023 RTEP on April 5 and will post window statistics by the April 30 TEAC meeting. The window sought proposals to address concentrated load growth around Columbus, Ohio, thermal violations in the PSEG transmission zone around the Hinchmans substation and the 500-kV Fentress-Yadkin line in the Dominion zone nearing its end of life. The window was shortened to 30 days due to the urgency of the thermal violations in PSEG.

Supplemental Projects

FirstEnergy presented an $18.7 million project to replace a 500/138-kV transformer at its Bedington substation in the APS transmission zone. The unit is about 47 years old and experiencing increasing maintenance issues, the utility said. The project is in the pre-engineering phase with an expected in-service date of Dec. 31, 2027. 

Inspections of three FirstEnergy 345-kV lines in the ATSI transmission zone found deteriorating wood and steel structures, as well as insulators approaching their end of life. The 19-mile Niles-Shenango line has experienced two unscheduled outages due to failed equipment since 2015, the Beaver Valley-Hanna line has had one outage and the Hanna-Mansfield line had two unscheduled outages over that period. The condition of the lines was presented as a future need. 

PPL presented a $244 million project to build a new 500-kV substation, named Bernheisel, to serve a 1,275-MW customer service request in New Kingston, Pa. The project would cut the proposed substation into the Juniata-Three Mile Island 500-kV line, rebuilding the 13.3-mile segment between the new facility and the Juniata substation in the process. The Bernheisel site would include four 500/138-kV transformers, two 138-kV capacitors, a six-bay 138-kV yard and six 138-kV lines. The new load is expected to come online in March 2026 at 40 MW, ramping up to 1 GW in 2030. 

Dominion presented a $23 million project to construct a new 230-kV substation, named Edsall, to serve a data center complex with load exceeding 100 MW in Fairfax County, Va. The new facility would be connected to the Van Dorn substation by two existing 230-kV lines between Van Dorn and the Ox and Hayfield substations. The data centers have an expected in-service date of Oct. 1, 2027.

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PJM MIC Briefs: April 3, 2024

Stakeholders Endorse Proposal on Large Load Capacity Obligations

VALLEY FORGE, Pa. — PJM’s Market Implementation Committee on April 3 endorsed a package revising how capacity obligations associated with forecast large load additions (LLAs) are assigned to electric distribution companies (EDCs).  

The Dominion Energy and American Electric Power (AEP) proposal aims to prevent an LLA expected in a region participating in the Reliability Pricing Model (RPM) from increasing the capacity obligation for Fixed Resource Requirement (FRR) regions and vice versa. 

In prior MIC meetings, AEP’s Joshua Burkholder said once PJM includes an LLA on Table B-9 of its load forecast, the need to procure additional capacity is spread across that transmission zone. When a zone includes both RPM and FRR regions, an FRR entity may be required to procure more capacity than is needed to serve its customers, he said. 

The issue has become particularly prominent as evolving forms of load create pockets of high energy consumption, namely data centers and industrial customers such as steel mills or chip manufacturers, Burkholder said. 

The proposal was revised from the first read conducted at the March 6 MIC meeting to add transparency around how PJM includes LLAs in its load forecast and how they impact auction parameters. The Tariff and Manual 18 revisions would require the RTO to post LLAs and adjusted FRR and RPM scaling factors and align those postings with the pre-auction activity timeline. (See “1st Read of Proposal on Capacity Obligations Resulting from Large Load Additions,”  PJM MIC Briefs: March 6, 2024.) 

The changes also clarify that EDCs may submit LLAs to PJM, although load-serving entities, electric cooperatives and municipal power authorities may elect to submit their own forecasts instead. 

The package would revise the capacity obligation calculation to exclude any LLAs included in Table B-9 from base zonal scaling factors and add those LLAs back into the equation when determining the obligation peak load input. 

Lynn Horning, of American Municipal Power (AMP), said the transparency additions improved the proposal, but they would not resolve potential downstream issues with PJM lacking a process that ensures accuracy in identifying large load forecasts adjustments submitted by market participants. 

Independent Market Monitor Joe Bowring pointed out the proposal ignores the effect of changes in the forecasts of LLAs on customers outside the affected locational deliverability area (LDA). “If large load additions are forecast prior to the capacity auction but fail to materialize, the costs of the large load addition are spread to other LDAs. This proposal addresses only cost shifting within an LDA but not across LDAs.”

First Read of CIFP Governing Document and Manual Revisions

PJM’s Skyler Marzewski gave a first read of the first phase of governing document and Manual 18 revisions to implement capacity market changes approved by FERC following the Critical Issue Fast Path (CIFP) stakeholder process held last year. (See FERC Approves 1st PJM Proposal out of CIFP.) 

The language reworks the RTO’s resource accreditation calculations, how it models reliability risks and the inputs used to determine how much capacity must be procured in Base Residual Auctions (BRAs) and by FRR entities. The changes are effective for the 2025/26 delivery year except those related to performance testing and penalty charges for demand response resources, which are effective for the 2024/25 delivery year. 

The penalties market suppliers must pay for underperforming during emergency conditions would be reindexed to be based on BRA clearing prices rather than the net cost of new entry, effectively reducing both the hourly penalty rate and annual stop loss limit. 

Resources expected to come online between the conclusion of the auction and the start of the delivery year would be required to notify PJM of their intent to participate in the auction ahead of time. 

Marzewski said the draft governing document and manual language codifying the remainder of the changes approved in ER24-99 is expected to be brought to stakeholders after the 2025/26 Base Residual Auction in July with the aim of implementing the changes by December. 

PJM Provides Guidance on Co-located Load Configurations

PJM’s Tim Horger walked through a posting the RTO issued in March providing market participants with information about the rules around the two configurations for load co-located with generation. Horger told the MIC the guidance reflects the status quo rules and not any new interpretation of existing manual language. (See “Proposed Rules for Generation with Co-located Load Rejected,” PJM MRC Briefs: Oct. 25, 2023.) 

Much of the focus is on co-located load that does not receive network service from PJM, which is not considered FERC jurisdictional and therefore does not pay PJM fees or receive firm transmission service. Under such circumstances, the generator must reduce its capacity interconnection rights (CIRs) by the “highest expected hourly demand” for the load and have system protection facilities in place to ensure that if the generator goes offline, the load also trips and cannot receive any energy from the PJM grid. 

A portion of the resource can serve as a backup generator to the non-network load while retaining CIRs if it can continue to meet its capacity and energy must-offer requirements. The load must be reduced to zero before being served by the backup generator, which must be approved for an outage for the period it is serving the load. 

PJM’s recommended co-location configuration is for the load to receive firm transmission service from the RTO, which will study the network impact of the change and subject the load to service charges. Both the generator output and the load must be metered separately for settlement and operational security under the networked configuration, and the generator is able to retain its CIRs. 

The distinction between network and non-network load is enshrined in the generator’s PJM service agreement and is considered permanent unless the agreement is revised and necessary network upgrade studies are completed. 

The guidance comes after several proposals to rework co-located load rules failed to receive stakeholder support in October 2023. One of the core sticking points between the proposals was whether capacity resources should be permitted to retain their CIRs while serving non-network co-located load if that load could be quickly curtailed to allow the generator to meet its capacity obligation. 

PJM attorney Mark Stanisz said modifying a generator’s configuration would require re-entering the interconnection queue, but at a different point that would not place it at the back of the line like an entirely new resource. Due to the number of factors that could influence the potential network impacts, he said there is no typical timeline for how long the studies may take. 

Horger said the studies are similar to those conducted for a generation deactivation request, though they vary between specific configurations. Any costs associated with reducing CIRs would be assigned to the generator. 

Discussion of Energy Efficiency Resources Continues

Discussion of energy efficiency resources’ role in the capacity market continued after four packages were rejected by the Markets and Reliability Committee on March 20. PJM’s Pete Langbein said staff does not plan to move ahead with a proposal revising its approach to measuring and verifying the capacity offered by EE after its package was rejected alongside three stakeholder alternatives. Langbein said PJM continues to believe that EE rules need to be more robust, and it plans to continue working with stakeholders toward a compromise resulting in a FERC filing. (See “Stakeholders Reject Changes to EE Measurement, Verification,” PJM MRC/MC Briefs: March 20, 2024.) 

Bowring presented on the pathway that led to EE being included in the market, documenting that it was a response to PJM’s load forecasting method that reflected energy efficiency with a four-year lag. When the RTO began including the effect of EE in the forecast without a lag, he pointed out, the explicit tariff language required the removal of EE from the capacity market. While PJM did remove EE from the capacity market, PJM created a convoluted process that continued to pay EE the clearing price despite the fact EE is not a capacity resource under the tariff. PJM’s approach recognizes EE does not help meet the reliability requirement for a given BRA, but nonetheless pays EE the auction clearing prices. Bowring explained the details of the addback mechanism.

Affirmed Energy’s Luke Fishback said the EIA figures capture some of the incentives provided by both states and wholesale market revenues, but according to EIA, results should be interpreted not as predictions of EE, but projections of what EE would be under existing laws and regulations. He asked the IMM and PJM whether and by how much the removal of capacity revenues would reduce the amount of EE projected in the load forecast.

Langbein argued that PJM’s forecasting now accounts for EE and that capacity market revenues being paid to EE providers are not incentivizing program growth or increased energy-saving equipment installation. He pointed to a steady rise in EE participation in RPM even as capacity prices have fallen. 

Other MIC Business

    • Stakeholders closed an issue charge to explore creating an alternative capacity compliance construct for weather-sensitive demand response and price-responsive demand. The discussion was held at the Distributed Resources Subcommittee (DISRS), where package formation has stalled since the only proposal was withdrawn last year, subcommittee Chair Ilyana Dropkin told the MIC. 
    • The committee endorsed a PJM proposal adding synchronous condenser market parameter definitions to its governing documents and manuals. The language would codify existing practices around condense startup costs, condense energy use and condense-to-generate costs. 

Stakeholders questioned the approach the DISRS is taking in drafting potential changes to the rules around solar-battery hybrid resources, arguing that including a broader set of storage resources in any proposal would go beyond the intended scope of the issue charge. MIC Facilitator Foluso Afelumo said an agenda item will be added on the issue charge’s scope for the May 1 MIC meeting. 

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Pro-competition Group Plans to Sue if FERC Reinstates Federal ROFR

FERC has yet to issue a final rule on transmission planning, but supporters of competition for transmission development have said they will appeal it to court if it reimposes a federal right of first refusal (ROFR). 

Order 1000 opened up FERC-jurisdictional, regional transmission lines to competition. The commission’s pending Notice of Proposed Rulemaking would pare that back by granting a ROFR as long as an incumbent partners with another firm on a transmission project. FERC also proposed another ROFR for “right-sizing,” which would apply when an ISO or RTO determines it would make sense to increase the capacity on a transmission line rather than just replace it with new infrastructure at the same capacity. 

“If they proceed to reinstate these two federal ROFRs, then consumers, without question, will take legal action to oppose [them],” Electricity Transmission Competition Coalition (ETCC) Chair Paul Cicio said in an interview. 

ETCC supports expanding transmission infrastructure, but the costs associated with the buildout contemplated by the NOPR’s biggest supporters would be huge, with Cicio saying it could result “in the largest increase in electricity rates in the history of the country.” 

“We support competitively bidding all regionally planned transmission projects to lower costs,” Cicio said. “It’s just that simple.” 

While ETCC and others, including the Federal Trade Commission and the California Public Utilities Commission, support keeping competition in place, many incumbent transmission owners and their trade groups like the Edison Electric Institute and WIRES argue the policy has not played out as expected in Order 1000 and needs reform to actually build out the grid. 

“It was clear after the proposed rule came out that the issue of competitive transmission, and possible restoring rights of first refusal, was highly contentious,” WIRES Executive Director Larry Gasteiger said in an interview. “That follows the history of this competitive transmission process from the get-go from Order 1000. So, I think in a sense, none of that has changed, and the positions over time have probably hardened.” 

The two sides of the argument mean FERC cannot possibly satisfy everyone involved, he added.  

The debate has led to dueling studies, with one side arguing that opening up transmission to competition saves money, while the other argued that those savings do not always come to fruition and that competition can prevent the kind of collaboration that expands the grid. (See Big Savings for Tx Competition Claimed as FERC Considers a New ROFR.) 

For FERC to reimpose the ROFRs, it should have to go through a Section 206 proceeding under the Federal Power Act, in which it must show that it is not working, Cicio said. 

“We think that’s going to be hard to do because there’s ample evidence [that] competitively bid projects, regionally planned, have shown substantial reductions of up to 40% in costs and just and reasonable rates,” he added. 

The transmission and distribution side of the average customer bill has already grown significantly, Cicio argued: Overall bills have gone up 12.5% annually over the past decade when demand growth was generally flat and, more often than not, natural gas was fairly cheap. The wires part of the average bill has gone from 8% to nearly 30% over the past decade, he said. 

“Almost the entire increase in the cost of electricity that consumers are paying is because of a substantial increase and spending in transmission that has not been competitively bid,” Cicio said. He pointed to PJM’s supplemental projects in its transmission planning process, in which projects needed to address local transmission owner needs, such as degrading infrastructure, are not subject to competitive bidding, as they are not regionally planned. 

Gasteiger said the experience with competitive transmission has led to more antagonism in the development process. He also noted that cost savings are not always forthcoming. 

“It’s actually created an environment where you have a bunch of perverse incentives now,” Gasteiger said. “And the whole goal is to see who can come up with or construct the cheapest bid in order to win the ability to build a project. And what we’re finding is in the aftermath of that, they’re using all kinds of escape clauses to recover cost overruns when they go to build the projects.” 

He cited Maine’s experience with the competitively bid Aroostook Renewable Gateway Project to bring onshore wind to market in ISO-NE. The state’s Public Utilities Commission canceled a contract for the project after LS Power said it could no longer build it for its original cost estimate. 

FERC has used competition in the generation space for decades, Gasteiger said. While market rules change frequently, competition is a settled issue, he said. 

“Electrons are fungible, right?” Gasteiger said. “So, it doesn’t matter what the generation source is for creating electrons. And the structure of that portion of the industry lends itself more towards competition.” 

Transmission involves adding new lines to the existing grid, and it helps to be familiar with the local geography, how a new line would fit into the existing system and where existing rights of way are located, he added. 

For Cicio, the difference between the two sides of the industry’s experiences with competition comes down to enforcement. 

“FERC has not enforced Order 1000,” Cicio said. “No. 1, utilities have taken action to avoid it by doing supplemental projects. And No. 2, they have gone to their state legislatures to put in place ROFRs that thence prevents transmission competition.”

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Regulators Approve PNM IRP Despite Staff Criticism

New Mexico regulators have voted to accept Public Service Company of New Mexico’s 2023 integrated resource plan, despite concerns about an escalation in costs and resources since the utility’s 2020 IRP. 

The New Mexico Public Regulation Commission (PRC) voted 3-0 on April 4 to accept PNM’s IRP — even though PRC utility division staff had several criticisms of the plan, including its “incredibly expensive” capacity additions. 

PNM could reduce costs by keeping two gas peaker plants in its resource mix for longer than proposed, staff said. 

Commissioners noted that their approval of the IRP was “narrow,” merely finding that the document’s statement of need and action plan were compliant with IRP rules. The vote did not approve resource acquisitions or costs or determine prudency, steps that will come later. 

“Staff brought up some extremely important points,” Commission Chair Pat O’Connell said before the vote. 

PNM said in its plan that the 2023 IRP “lays out an aggressive plan to achieve a carbon-free portfolio by 2040.” 

“The sustained, rapid pace of new capacity additions needed to meet environmental goals and ensure reliability is unprecedented in PNM’s history,” the IRP stated. 

In a report filed March 14, PRC staff recommended that the commission reject PNM’s plan, saying it did not meet the key objectives of an IRP, namely reliability, environmental compliance and affordability. 

“In the three years since the 2020 IRP, PNM’s net load has not changed significantly and it has not filed a notice of material change with the commission,” staff said in its report. “Yet PNM’s 2023 IRP requires an increase in resources over the 2020 IRP of 2,690 MW at an additional cost of $2.7 billion!” 

Even if adjusted for removal of 300 MW of existing resources and a 500-MW increase in the load forecast for 2042, the increase in capacity additions is 1,890 MW, the report said. 

The increase in resources in the 2023 IRP is because the utility postponed the addition of 480 MW of hydrogen-ready combustion turbines to the 2031-2042 time frame, according to the report. 

As a substitute for the delayed hydrogen-ready turbines, PNM is planning additional solar and battery storage — 800 MW and 905 MW more, respectively, compared to its 2020 plan. 

“PNM represents that it takes over three times as much new solar and storage to provide the same equivalent capacity as hydrogen CT capacity,” PRC staff said in the report. 

According to the IRP, the hydrogen-ready turbines may run on natural gas until PNM transitions to a carbon-free portfolio in 2040. 

The PRC staff report said the four-hour battery storage proposed in the IRP is “overbuilt,” creating a risk of stranded costs when longer-duration storage becomes available. 

In addition, the report said, PNM uses an “island” rather than “integrated” approach to its planning, “by its very limited consideration of regional energy markets and an expanded transmission network.” 

Longer Life for Peakers

The report identified a potential solution to some of the issues it raised: extending the Valencia and Reeves gas peaker plants.  

PNM receives about 155 MW of peaking capacity from the Valencia power plant under a 20-year power purchase agreement ending May 2028. Reeves Generating Station, which the utility owns, is scheduled for retirement in 2031.  

“Extending the lives of the Valencia and Reeves gas-peaking facilities prevents overbuilding [and] out-of-control rate hikes and allows time for the development of long-duration storage,” the PRC staff report said. 

O’Connell said much of what staff said in its report “would have benefited from having a response from PNM.” PNM in February filed a response to issues raised by stakeholders, but the staff report was filed in mid-March, just a few weeks before the commission’s vote. 

O’Connell also cautioned against taking “as fact” the resources detailed in the IRP’s most cost-effective portfolio, particularly in later years. For example, geothermal energy could develop into a more prominent resource in New Mexico. 

“It’s something that could play out over 20 years,” O’Connell said of PNM’s future resource mix.  

“The truth of it is the bids that will be received in the [request for proposals] is what’s going to determine the next resources.” 

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Climate Activists Urge FERC to Reject Results of ISO-NE FCA 18

Climate activists from New England are calling on FERC to reject the results of ISO-NE’s Forward Capacity Auction (FCA) 18, arguing the auction disproportionately favored fossil fuel resources. 

FCA 18 was held in early February and applies to capacity for the 2027/2028 capacity commitment period. The auction procured 31,556 MW of capacity for about $1.3 billion. (See Prices, Renewables Rise in New England Capacity Auction.) 

The auction saw some gains for clean energy resources: Battery storage increased from about 3.5 to 6% of the total capacity procured compared to FCA 17, while solar increased from 3 to 4%. For the second auction in a row, no coal resources gained a capacity commitment, foreshadowing the announcement in March that Granite Shore Power will retire the region’s last coal plant by 2028. (See Last Remaining Coal Resources in New England Set to Retire.) 

However, the majority of the capacity commitments awarded in FCA 18 still went to fossil resources. Natural gas resources accounted for about 44% of the capacity, while oil generators accounted for about 11%.  

In response to these results, activists with the organization No Coal No Gas have submitted comments to FERC arguing the results should be rejected because the auction does not take into account the climate or public health consequences of burning fossil fuels (ER24-1290). 

As the states work to rapidly shift away from fossil fuel generation, “a key barrier we face is ISO-NE’s continued reliance upon outdated modes of decision-making that prioritize short-term financial calculus at the expense of long-term strategic thinking,” said Sonja Birthisel, a member of ISO-NE’s Consumer Liaison Group (CLG) and an environmental scientist associated with the University of Maine. 

The activists also argued that fossil resources often “don’t perform as advertised” during grid stress events. Nathan Phillips, a professor of ecology at Boston University who also is an elected member of the CLG, pointed to ISO-NE’s findings that 36 generators in New England experienced some form of unplanned outage during Winter Storm Elliott, resulting in 2,277 MW of capacity reductions. 

Phillips also wrote that ISO-NE has not tapped into the full potential of demand response resources, which could reduce the need for fossil peaker plants. 

“Demand response is the simplest, most cost-effective and reliable solution to peak demand, which ISO-NE ignores with increasingly deafening silence,” Phillips said, adding that demand reductions could help limit need for additional transmission capacity. (See ISO-NE Prices Transmission Upgrades Needed by 2050: up to $26B.) 

Responding to the protests, ISO-NE spokesperson Matt Kakley noted more than 2,600 MW of demand resources cleared the auction.  

“Demand response can and does participate in all of our wholesale markets,” Kakley said. “Additional participation at the residential level will need to be driven at the state/retail level,” he added, highlighting a New England Conference of Public Utilities Commissioners working group that’s investigating the role of demand response on the grid. 

Regarding emissions, Kakley said ISO-NE “has no jurisdiction by which to assess the environmental attributes of different resources.” 

He added that ISO-NE has “long recommended carbon pricing as a way to account for environmental factors within the wholesale markets,” but said the RTO would need support from the states to have a chance of FERC approval.  

“Thus far, there has not been state support for carbon pricing in the wholesale markets,” Kakley said. 

Environmental organizations made similar arguments in 2023 in opposition to the previous FCA. FERC ultimately sided with ISO-NE and approved the results, writing that the protests were “outside the scope of this proceeding because they do not bear on the sole question here — namely, whether ISO-NE conducted FCA 17 in accordance with its own tariff rules” (ER23-1435). (See FERC Accepts Results of ISO-NE FCA 17.) 

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NERC Answers IRC Cold Weather Standard Objections

In comments submitted to FERC on April 4, NERC pushed back on the ISO/RTO Council’s objections to its proposed cold weather standard, urging the commission to deny the IRC’s “extraordinary requests” and approve the standard “without further delay.” 

EOP-012-2 (Extreme cold weather preparedness and operations) is under consideration by FERC, having been submitted by NERC on Feb. 16 after its approval by the ERO’s Board of Trustees (RD24-5). If approved, it will replace EOP-012-1, which FERC approved in 2023 with the caveat that NERC must submit a successor within a year to address numerous “undefined terms, broad limitations, exceptions and exemptions, and prolonged compliance periods” before the standard takes effect in October. (See FERC Orders New Reliability Standards in Response to Uri.) 

The IRC submitted a petition March 21 expressing its members’ “united opposition” to approving the standard as currently written. Despite expressing support for the prevention of cold weather-related outages such as those experienced during winter storms Elliott and Uri, the IRC said the ERO’s standard drafting team had left its “most significant concerns … unaddressed” and approving the standard could lead to more reliability issues, additional work for FERC, and great costs for generator owners and the public.  

It asked the commission to remand the standard to NERC and direct the ERO to submit revisions addressing the IRC’s issues within 120 days. (See IRC Urges FERC to Remand NERC Cold Weather Standard.) 

IRC Called Standard Too Generous

In its filing, NERC summarized each of the IRC’s objections and explained why they did not justify remanding the standard.  

A common theme expressed by the IRC was that the proposed standard gave too much latitude to industry on its implementation, which could create auditing difficulties. For example, the standard would specify that freeze protection measures would not “be limited to optimum practices, methods or technologies,” but could include measures “generally implemented … in areas that experience similar weather conditions.” The IRC suggested revising the standard to require measures “that would reasonably be expected to result in effective … performance.” 

Another concern the IRC identified was that GOs could claim an exemption to implementing some freeze protection measures if doing so would “require prohibitively expensive modifications or significant expenditures on equipment with minimal remaining life.” The council said cost issues were outside the scope of reliability standards and the proposed requirement could “invite a ‘race to the bottom’ as [GOs] face economic incentives to keep their compliance costs lower than those of their competitors.” 

NERC said in its response that while the standard drafting team’s priority was to “provide a high bar for generators that operate in cold weather,” members had to balance this with concerns that high costs or technical limitations might cause generators to choose not to operate in cold weather, leading to increased reliability risks. The SDT also felt that GOs should neither be required to adopt “unproven technologies” nor discouraged from implementing “new freeze protection methods as they are developed.” 

“The commission is not being asked in this proceeding to choose among the ‘best’ or most just and reasonable of all potential options, only to assess whether NERC’s proposed definition is just and reasonable,” NERC said.  

The IRC also objected to excluding generators that do not normally operate in freezing conditions from implementing freeze protection measures, arguing that they may be called on to operate during emergency situations, including in cold weather. It asked FERC to order that all units “that may be committed to operate” in freezing temperatures be required to use freeze protection measures. 

NERC replied that “avoiding undue burden on those generating units that are not expected to operate in cold weather,” even though they may be needed in an emergency, is “a fundamental premise of the EOP-012 standard.” The ERO further observed that FERC’s directive approving EOP-012-1 and ordering a new standard specifically quoted the language exempting those units not typically used during freezing weather — along with the fact that they could be used in emergency conditions — and did not demand any changes to it. 

In addition, the IRC criticized NERC on the time provided for freeze protection measures’ implementation in EOP-012-2— which the IRC wanted to shorten from as little as 24 months to a minimum of 12 months — and for required inspections and maintenance, for which the standard does not provide a time requirement.  

NERC said the freeze protection implementation timelines provided are “based on a reasonable and measured consideration of all relevant factors” and that shortening the default timelines could result in additional administrative burdens from entities requesting deadline extensions. The ERO also asked that FERC delay any move to require specific timelines on inspection and maintenance until data is available on the standard’s overall effectiveness. 

“Should NERC’s experience monitoring the implementation of the standard provide factual support for revising the standard, NERC will promptly initiate its standard development process to make any needed changes and to use all the reliability authorities at its disposal to ensure reliability in the interim,” NERC said. “In the interest of reliability, however, entities must begin to implement the important protections this standard will provide without further delay.”