The NEPOOL Transmission Committee voted on March 27 to create a planning process for long-term transmission needs identified by states to meet their clean energy goals.
The new process — Extended-term/Longer-term Transmission Planning Phase 2 — was developed by ISO-NE and the New England States Committee on Electricity (NESCOE) in response to concerns from the states about transmission needs that extend beyond the typical planning horizon.
The proposal builds on the first phase of the transmission planning project — which created a process to study long-term transmission needs and was approved by FERC in 2022 — by creating a process for states to act on needs identified in those studies.
“This effort, Phase 2, establishes the rules that enable the states to achieve their policies through the development of transmission to address anticipated system concerns and the associated cost allocation method,” said Brent Oberlin, ISO-NE director of transmission planning.
In the new process, states can direct ISO-NE to issue a request for proposals for projects addressing long-term transmission needs. After soliciting bids from transmission developers, the RTO will quantify projected costs and benefits for each bid, with the benefits required to outweigh the costs to be eligible to be selected. ISO-NE will then select a preferred solution, with NESCOE then given the option to proceed or cancel the project.
By default, the costs associated with these projects will be regionalized, although NESCOE can also submit an alternative cost allocation method for any project.
The TC approved a supplemental process for when no projects pass the cost-benefit threshold. The costs commensurate with the benefits would be regionalized, while individual states can voluntarily cover any remaining costs in order to proceed with a project.
The committee also approved an amendment to the proposal introduced by Avangrid that directs ISO-NE to conduct an independent cost assessment of bids submitted by transmission developers.
Alan Trotta of Avangrid said different bidders may have different methodologies for calculating their project costs and that “a consistent cost estimating methodology by one entity will put bids on a level playing field.”
Ensuring an independent assessment, either by ISO-NE or a third party commissioned by the RTO, would prevent aggressive cost estimations or differences in project scope from unfairly influencing the results of the project selection process, Trotta said.
ISO-NE indicated that it will incorporate this amendment into the proposal it brings to a vote at the NEPOOL Participants Committee in April.
Industry trade groups warned FERC this week against passing more stringent restrictions on investment funds’ shares in the power industry, but consumer advocates and Republican state attorneys general urged it to move forward with rule changes (AD24-6).
FERC launched a Notice of Inquiry at its December open meeting after consumer advocates had argued that large asset managers such as BlackRock and the Vanguard Group — both of which urged FERC this week to keep its current rules in place — could have market power in the industry. (See FERC Reconsidering Blanket Authorizations for Investment Companies.)
The commission’s current policy allows investors to acquire up to 10% of public utilities’ shares and up to 20% if they are truly passive, as Vanguard and BlackRock told the commission they were. The commission usually grants companies three-year blanket authorizations to do so.
The American Council on Renewable Energy warned FERC against changing its rules, arguing the NOI lacks any concrete evidence that they are falling short.
“The opposite is true, as altering this policy creates a risk of impeding financial investment in much-needed energy infrastructure,” ACORE said. “Moreover, much of the rationale for this notice appears to be based only on speculative concerns that are outside the scope of the public interest consideration.”
Many financial institutions pursue investments in renewable energy for myriad reasons, including their declining costs and their lower risks and higher returns compared to other technologies, ACORE said.
The Edison Electric Institute also argued against any changes, saying they could threaten investments at a time the industry needs to be making them because of growing demand and the ongoing turnover in the generation fleet.
“Given the capital investments required to expand and upgrade existing infrastructure, facilitate a lower-carbon future, reliably serve growing demand and withstand extreme weather, any action by the commission that creates new regulatory friction for those investments or discourages capital investments would not be helpful for the economy, utilities charged with providing reliable service and their customers,” EEI said.
EEI appreciates that FERC is collecting information at this stage, but it said there is no compelling reason to revisit its blanket authorization policy at this time.
“It is not clear from the NOI that the growth in index funds the commission highlights is concentrated in investments in public utilities,” EEI said. “In other words, it is not clear that the growth is completely attributable to the U.S. utility industry; quite to the contrary, the electric industry is competing with all publicly traded companies for investment by investment companies.”
Consumer Advocates
The D.C. Office of the People’s Counsel, Maryland Office of People’s Counsel and New Jersey Division of Rate Counsel encouraged FERC to expand the reach of its regulations so they can adequately protect ratepayers against the abuse of market power.
“Change is needed because the world of diffuse ownership of utility and utility-holding company stock no longer exists,” they said. “Academic analyses confirm the extent of the shift: ‘[By] 2017, institutional investors held 80% of the stock in S&P 500 firms and cast 93% of the votes at [such] firms.’ The aggregation by institutional investors of vast holdings in the nation’s utilities necessarily implies an ability to influence, if not control, utility behavior.”
The agencies suggested cutting the thresholds in half to 5% for most investors, and in case-specific instances, investment companies could own under 10% in aggregate and under 5% for each individual fund controlled by the recipient. Even at just 5% of a firm, that could total hundreds of millions, if not billions, which would give investors significant influence on a public utility, they argued.
Any firm that wants to get up to 10% should be required to effectively “put its stock in a drawer” and not engage in communications with the firm or vote in shareholder meetings, they said.
The trend in utility investments is mirrored in the stock market generally. The “Big Three” index funds — BlackRock, Vanguard and State Street — collectively at the end of 2021 held a median stake of 21.9% in all S&P 500 companies, representing about 25% of votes cast in those companies’ annual general meetings.
They are often the largest shareholder in a company, which conveys considerable influence over corporate boards and managers, the consumer advocates said.
“Because the interactions between institutional investors and the firms they own often take place behind closed doors, there is limited public information on how these investors wield their influence,” they added. “But ample empirical research and public statements by institutional investors themselves confirm the obvious — that they can and regularly do influence corporate behavior.”
Horizontal ownership of ostensibly competing companies can generate powerful anticompetitive incentives because the owners no longer want to maximize the profits of just one company, but multiple or every competitor in a market, the advocates said.
“The investor is incentivized to avoid actions that may reduce profits industrywide, even if those actions may be competition-enhancing and economically rational from the perspective of the individual firm,” they added.
Conservative Arguments
While the ratepayer advocates were focused on anticompetitive behavior ultimately leading to higher rates for consumers, most of those urging updates from FERC were focused on the Big Three’s environmental, social and governance (ESG) policies, which they said could threaten electric reliability.
A group of 20 Republican state attorneys general, led by those of Utah and Indiana, argued FERC should update its rules to require that asset managers get approved as “holding companies.”
They also argued that the 20% cap on ownership should also be applied to associations such as the Net Zero Managers Initiative, which more than 300 asset management companies have signed onto, according to its website.
“Key components of the financial system have been used to impose activist policy preferences on companies that are not required by applicable law and thus have not been approved by the democratic process,” the attorneys general said. “Specifically, activists enlisted asset managers to use their assets under management (AUM) to force utilities to set early targets to decommission fossil fuel-based generating assets and replace them with wind and solar on a scale that has never before been seen and is not technologically feasible.”
The attorneys general argued that pressure from BlackRock and the California Public Employees Retirement System pushed PacifiCorp to retire some coal plants early, even though a shareholder motion they backed failed.
“PacifiCorp may have multiple reasons for the closures, but responding to coordinated pressure by asset managers and other owners is not a legitimate one,” they added. “Consumers will be harmed if their costs go up or reliability decreases because of early closures based on activist pressure campaigns.”
FERC on March 27 granted complaints by five utilities against CAISO, nullifying nearly $2 million in penalties for incorrect meter data reporting.
Idaho Power (EL23-94), Tucson Electric Power (TEP) (EL24-15), Direct Energy Business (EL24-11), Tacoma Power (EL23-103) and the city of Corona, Calif. (EL23-99), all submitted complaints last year challenging the application of CAISO tariff section 37, which spells out the ISO’s rules of conduct.
Under the section, if a scheduling coordinator fails to submit meter data 52 days after the trading date, the submission is considered late. Failure to submit revised meter data 214 days after the trading day for the resettlement statement that CAISO issues is considered an inaccurate submission. Either violation subjects a scheduling coordinator to a $1,000 penalty for each trading day after deadlines are missed.
Each of the complainants told FERC that CAISO was applying the provision too strictly for “minor, inadvertent” errors and that the errors had practically no effect on the markets, making the penalties unjust and unreasonable.
The commission agreed “that the penalties assessed are not commensurate with any potential damage caused by the inadvertent errors, which were properly reported upon discovery, promptly fixed and had a de minimis effect” on the markets.
The ISO also supported all the complaints, saying that until the rule is changed, it “supports relief for parties that receive excessive penalties under the existing tariff rules.” In May 2023, it opened the Rules of Conduct Enhancements stakeholder initiative to address issues including the potential for excessive penalties in certain circumstances.
Several of the complaints noted that the tariff provision does not allow CAISO discretion in waiving or reducing penalties.
Idaho Power had appealed $639,000 in penalties for incorrect data associated with the Arrowrock Hydroelectric Project. In July 2022, the utility discovered that transmission line losses were being double counted in the meter data being provided to CAISO, leading to under-reporting of energy produced by Arrowrock. Idaho Power argued that because the quantity did not affect LMPs or market runs in the Western Energy Imbalance Market (WEIM), the penalties should be waived.
Tacoma’s reporting errors stemmed from setting its transmission system loss factor of 1.87%, which resulted in it under-reporting load by an hourly average of the same amount. It said the error occurred because of a misunderstanding in the treatment of line losses that occurred when it joined the WEIM. Upon noticing the error, it immediately reported it to CAISO and corrected it the next day.
Both Corona and Direct Energy challenged their respective $342,000 and $825,000 penalties for errors resulting from Southern California Edison changing its billing system, saying it acted in good faith by notifying CAISO of the error upon discovery.
Like Tacoma, TEP appealed penalties related to an inadvertent miscalculation during its integration into the WEIM. However, the utility did not submit settlement statements with its complaint; rather, it submitted nine CAISO notices of review, issued over the course of 2023, for periods of trading days in 2022.
FERC agreed to only waive the penalties — $191,000 — described in the last notice, issued Oct. 31, 2023; TEP filed its complaint in November. The other eight “do not provide sufficient information for us to determine whether the instant complaint was filed with the commission within 22 business days from the date of issuance of any of the corresponding settlement statements,” as required by the tariff, the commission said. It set the other penalties for paper hearing, ordering TEP to file evidence that it submitted its complaint in a timely manner.
The nonprofit Gulf Coast Power Association has selected Barbara Clemenhagen as its next executive director.
Clemenhagen, vice president of market intelligence at Customized Energy Solutions (CES) and a member of the GCPA Board of Directors, will succeed Kim Casey, who is retiring in June.
Board President Beth Garza said March 28 the board conducted a “thorough search process” to replace Casey, who announced her retirement last year. She and Clemenhagen will work together during a short transition.
Clemenhagen has more than 30 years of executive experience in the U.S. and Canadian utility industries. She joined CES from Topaz Power, where she was vice president of commercial and external relations, and previously was a regulatory commissioner at the British Columbia Utilities Commission.
She has served on ERCOT’s board, the ISO’s Technical Advisory Committee and as chair of the Wholesale Market Subcommittee. Clemenhagen was president of the Texas Competitive Power Advocates trade organization from 2009 to 2013.
Clemenhagen said she is honored to serve as the GCPA’s next executive director and plans to guide the organization to its 50th anniversary in 2036.
“GCPA is a leader in providing best-in-class networking and education conferences in the ERCOT, MISO and SPP footprints, and I look forward to continuing to provide excellent programming and advancing the GCPA to new heights,” she said.
Garza said the GCPA is “thrilled” to have Clemenhagen on board. “She has a distinguished career in the electric power business and has been involved with GCPA for a number of years,” Garza said.
Clemenhagen will be the GCPA’s fifth executive director since the organization was created in 1986, following David Olver (1989-2003), John Stauffacher (2004-2012), Tom Foreman (2013-2018) and Casey (2018-2024).
Dozens of states have adopted emission-reduction targets aimed at fighting climate change. But how should RTOs account for those initiatives when their effects are delayed, uncertain, expensive for consumers or all of the above?
In New York State Public Service Commission v. FERC (No. 23-1192), the D.C. Circuit is poised to address that question — with potentially significant implications for climate-change laws, energy markets, and the approval process for RTO and ISO tariff amendments going forward.
New York’s Climate Act Spurs NYISO Action
In 2019, New York’s Climate Leadership and Community Protection Act (Climate Act) set a target date of 2040 to eliminate all greenhouse-gas emissions from the state’s energy grid. The act ordered the New York Public Service Commission (NYPSC) to promulgate regulations implementing that target date, but it also authorized NYPSC to create exceptions if necessary for reliability. To date, NYPSC has not promulgated any implementing regulations.
In response to the new law, NYISO proposed a revision to the Net Cost of New Entry (“Net CONE”) figure used in its capacity market. Net CONE is an annualized estimate of new-entry costs, calculated by dividing a hypothetical new gas-fired power plant’s lifetime expenses by an “amortization period,” i.e., the number of years in the plant’s viable economic life. NYISO historically has used a 20-year amortization period, but given uncertainty that gas-fired plants would be viable after 2040, NYISO proposed shortening the amortization period to 17 years.
That proposal comes with a cost. To incentivize market entry in the event of a supply shortfall, NYISO factors Net CONE into its capacity demand curve. Shortening the amortization period (and thereby increasing Net CONE) also would thus increase capacity clearing prices, to the tune of more than $100 million annually.
FERC Approves NYISO’s Proposal — on Take Three
For nearly four years, NYISO’s proposal has been tied up in proceedings before FERC and the D.C. Circuit, generating multiple FERC orders and a D.C. Circuit opinion in between. In FERC’s most recent, third order (the one now before the D.C. Circuit), FERC approved the amendment.
Opponents of the proposal, including NYPSC itself, have made two main arguments. First, they have argued that NYISO made an impermissibly speculative assumption that gas-fired plants must close by 2040 when it relied on the Climate Act’s target date to justify its proposal. They have contended that NYPSC can create exceptions to the act, or new retrofitting technology might enable plants to operate past 2040. Second, opponents have argued the nine-figure spike in capacity costs (and, ultimately, an increase in consumer prices) means the amendment is not just and reasonable.
Jennifer Fischell | MoloLamken
Although FERC initially adopted those arguments, the D.C. Circuit expressed skepticism in the case’s first trip to the appellate court. See Independent Power Producers of New York, Inc. v. FERC, No. 21-1166, 2022 WL 3210362 (D.C. Cir. Aug. 9, 2022). On remand, FERC now has fully rejected the challenges to NYISO’s proposal. N.Y. Independent System Operator, Inc.,185 FERC ¶ 61,010 (Oct. 4, 2023). The amendment, FERC found in its most recent order, is a reasonable response to the Climate Act and is not impermissibly speculative, since the only law on the books all but requires zero emissions after 2040. The proposal’s opponents, in FERC’s view, are speculating about yet-unknown regulatory and technological developments.
FERC also found the increase in capacity prices effectively irrelevant. The amendment was limited to changing the Net CONE amortization period (which FERC found reasonable); it did not change the broader capacity-auction structure that incorporated Net CONE into capacity prices (which FERC previously approved as reasonable). Prices resulting from a reasonable rate design using reasonable components, FERC concluded, are necessarily reasonable too.
The D.C. Circuit Petition for Review Raises Issues of Nationwide Significance
FERC’s order now is before the D.C. Circuit on NYPSC’s petition for review. Chief Judge Srinivasan and Judges Randolph and Childs heard argument Feb. 20, 2024 — and the judges’ questioning suggests a pro-FERC majority. Srinivasan and Randolph signaled strong agreement with FERC’s view that relying on the Climate Act’s target is not speculative, while Childs seemed more skeptical, pressing FERC’s counsel to defend the agency’s treatment of the proposal’s effect on prices. If oral argument is a guide, the court could be poised to deny the petition and approve FERC’s reasoning.
Jackson Myers | MoloLamken
Whatever the outcome, the ruling could have nationwide consequences. New York is not the only state with an emissions mandate, and NYISO is not the only RTO trying to account for those laws. And even beyond the climate-change context, the court’s ruling on the “speculation” question will send a signal to FERC and to RTOs about how to deal with regulatory uncertainty more broadly.
How the D.C. Circuit treats FERC’s dismissal of NYPSC’s cost concerns could be even more significant. FERC has argued that price increases caused by a proposed amendment’s interaction with a broader, FERC-approved rate design need not be considered in the just-and-reasonable inquiry. Instead, in FERC’s view, challenges based on resulting price changes must be made using Section 206 of the Federal Power Act. If the court agrees, Section 206 complaints could become routine when stakeholders oppose a tariff amendment because they contend its relationship with existing tariff elements could lead to unjust and unreasonable prices. If the court disagrees, the case likely will return, once again, to FERC. And from there, it might come back again.
Jennifer Fischell is a partner at MoloLamken with a practice focusing on energy and administrative law, appeals and other complex civil litigation. She has clerked for judges at all levels of the federal judiciary, most recently for Justice Elena Kagan of the U.S. Supreme Court.
Jackson Myers is an attorney at MoloLamken with a practice focusing on appeals, complex civil litigation and white-collar matters. Prior to joining MoloLamken, he clerked for Judge Dennis Jacobs of the U.S Court of Appeals for the Second Circuit and Judge John Bates of the U.S. District Court for the District of Columbia.
Michigan’s 800-MW Palisades nuclear power plant, which was decommissioned in 2022, could become the first nuclear plant in the U.S. to be restarted, helped by a $1.52 billion loan from the federal Department of Energy’s Loan Programs Office (LPO).
The agency’s conditional commitment for the loan to Florida-based Holtec International would also be the first offered under the Energy Infrastructure Reinvestment program, which is funded by the Inflation Reduction Act, according to the March 27 announcement. The program aims to “finance projects that retool, repower, repurpose or replace energy infrastructure that has ceased operation,” LPO said.
Once restarted, the plant would protect “600 good-paying, high-skill jobs and clean, reliable power for 800,000 homes,” Michigan Gov. Gretchen Whitmer said in a statement. “Palisades will be the first successfully restarted nuclear power plant in American history, driving $363 million of regional economic impact and helping Michigan lead the future of clean energy.”
Whitmer has been pushing for the Palisades restart, and the Michigan Legislature last year provided $150 million in state funding for the project.
Holtec also intends to build two small modular reactors on the site, according to LPO.
Holtec CEO Kris Singh called the loan “a triumph for the United States in our collective pursuit of a clean and dependable energy future. … The repowering of Palisades will restore safe, around-the-clock generation to hundreds of thousands of households, businesses and manufacturers.”
LPO expects the project to avoid close to 4.5 million tons of carbon dioxide emissions per year and 111 million tons of CO2 in 25 years of operation — the equivalent of taking 970,000 gasoline-powered cars off the road per year.
Holtec has signed two long-term power purchase agreements with two electric cooperatives for the plant’s output. Wolverine Power Cooperative provides electricity for five co-ops in Michigan, and Hoosier Energy, an alliance of 18 co-ops, serves customers in Indiana and Illinois.
Speaking at an industry conference last year, Wolverine COO Zach Anderson said the Palisades PPA met all the co-op’s top priorities for new power. “It’s a long-term, stable, 100% carbon-free, 24/7 power supply, so it’s decarbonized and reliable,” as well as cost competitive, Anderson said.
Reactions
Doug True, senior vice president and chief nuclear officer at the Nuclear Energy Institute, said the loan signals the Biden administration’s “willingness to explore opportunities to preserve our existing nuclear fleet,” as well as support for “the pivotal role nuclear energy plays in our nation’s clean energy future.”
Patrick White, research director at the Nuclear Innovation Alliance, sees the loan as an indication of LPO’s willingness to fund more nuclear projects going forward. The office previously helped fund the long-delayed and costly Vogtle Units 3 and 4 in Georgia with $12 billion in loans.
But White cautioned that the restart likely will be a one-off project, rather than the first of many. Repowering Palisades is not “something that’s generally applicable to plants that have been decommissioned,” White said in an interview with RTO Insider.
“I believe when Palisades was being kind of shut down and moving from its previous life in operation into decommissioning, there was an idea that the plant [might] be restarted,” he said. “So, the owner took a lot of steps to make sure the plant was kept in essentially ready-to-go condition.”
In a statement provided by the American Nuclear Society, Keith Drudy, a Michigan native and nuclear engineer who worked on Vogtle 3 and 4, said, “Restarting Palisades from its current state is really no more complicated than returning from a significant maintenance outage ― something that nuclear plants do every 18 to 24 months. The nuclear industry knows how to do maintenance, implement upgrades and enhancements, and … keep these plants running for 60 years and beyond.
“The unique challenge here is that, until now, there has been no regulatory process or precedent for declaring that a licensee intends to cease operations of a plant and then return that plant back to operating status from a regulatory perspective,” Drudy said. “That process is now being developed, and I have no doubt that the [Nuclear Regulatory Commission] and other impacted regulatory agencies can and will ensure the restart of these units meets all standards and requirements.”
Holtec began the relicensing process for Palisades with the NRC in October 2023 and is targeting a final decision by the end of 2025, according to Patrick O’Brien, the company’s director of government affairs and communication.
Anderson said Wolverine expects to start receiving power from the plant by 2027.
Holtec’s History
Located on the southeast shore of Lake Michigan, the Palisades nuclear plant began operation in 1971. It was originally owned by CMS Energy and its primary utility, Consumers Energy, and was acquired by Entergy in 2007.
Consumers continued to buy power from the plant, but changing market conditions led to Entergy’s decision to close Palisades in 2022, citing the availability of cheaper power from renewables and natural gas. Power from the plant could cost 57% more than other generation, according to a report by Bridge Michigan.
Even before the plant ceased operation in May 2022 and was sold to Holtec for decommissioning, Michigan officials began looking at options for restarting it. Holtec made an unsuccessful application for funding from DOE’s Civil Nuclear Credit Program, which received $6 billion in funding from the Infrastructure Investment and Jobs Act to help plants at risk of closure.
The company began its application process with LPO in 2023. The announcement of the conditional commitment begins a negotiation process under which Holtec will have to reach specific technical and financial milestones before the loan is finalized.
But the decision could prove controversial for a number of reasons, first and foremost the company’s history of financial missteps. In January, Holtec agreed to a $5 million settlement with New Jersey to avoid criminal prosecution over allegations that it provided inaccurate information to obtain $1 million in state tax credits in 2018. While accepting the settlement, the company denied any wrongdoing.
Holtec has a large campus in Camden. As part of the settlement, it agreed to hire a state-approved independent reviewer to monitor any future applications it makes for New Jersey state benefits.
The company was also barred from doing business with the Tennessee Valley Authority for 60 days in 2010, after it was implicated in a scandal involving kickbacks to a TVA official from a Holtec contractor, according to a report from InsiderNJ.
Another concern is that Holtec’s business is focused on decommissioning nuclear plants; it has never actually operated one.
O’Brien acknowledged that the company’s lack of operational experience is “generally true. … But with the decommissioning, we retained qualified staff, including operators, maintenance, radiation protection and other craft [workers] that have years of experience in plant operations. The Palisades team is comprised of a hard-working team that safely operated the facility for over 50 years. In addition, we will be partnering with a licensed operator for restart.”
NASHVILLE, Tenn. — In remarks to SERC Reliability’s Annual Members Meeting on March 27, FERC Chair Willie Phillips applauded attendees for their work as “the tip of the spear” in the struggle to maintain grid reliability.
Phillips, who attended the meeting along with FERC Chief of Staff Ronan Gulstone and Critical Infrastructure and Resilience Adviser Kal Ayoub, said he originally planned to remind members they are critical to advancing the work of the ERO Enterprise and encourage them to pursue greater efforts. But he continued that “after hearing your leadership talk [over the last two days], you don’t need to hear that from me.”
Phillips explained that it was clear that SERC’s members understood their role, along with the problems and opportunities facing the grid. He praised the regional entity for repeatedly showing its willingness to participate in ERO efforts and urged it to continue its leadership as the industry engages rapidly evolving threats like extreme weather and cyber and physical attacks.
“I was in Brussels just about a week and a half ago, and I met with many of … our colleagues in Europe. And I’m telling you, we are the envy of the world with our fuel resource mix, our grid [and] our reliability regime. But we have more work to do,” Phillips said. “At FERC we’re focused on that work. … You’ve heard me talk about my priorities a million times: reliability, transmission reform [and] environmental justice. … Those are my three top priorities for 2024.”
Also on the agenda at SERC’s Members meeting — which preceded the quarterly Board of Directors meeting — was the election of directors to serve two-year terms beginning June 1 and ending May 31, 2026. Nominating and Governance Committee Chair Tim Lyons presented the slate of director nominees, all of whom were approved:
Cooperative sector: Denver York, East Kentucky Power Cooperative
Federal-state sector: Vicky Budreau, Santee Cooper
Investor-owned utility sector: Lee Xanthakos, Dominion Energy South Carolina, and Beth McFarland, LG&E and KU Energy
Marketer sector: Eric Laverty, ACES
Merchant electricity sector: Venona Greaff, Occidental Chemical
Municipal sector: Doug Lego, MEAG Power
Independent: Lonni Dieck
Most of the directors are returning after a previous term, but York, McFarland and Budreau will step into the seats held, respectively, by Roger Clark of Associated Electric Cooperative Inc., Adrianne Collins of Southern Co. and Virgil Hobbes of the Southeastern Power Administration.
In addition, members approved Paul McGlynn of PJM to replace Stacy Dochoda, formerly of the Florida Reliability Coordinating Council, as the RTO/ISO/Reliability Coordinator sector representative. Dochoda joined the board last year for a term to end May 31, 2025, but retired effective March 27. (See “Members Approve Director Slate,” SERC Board of Directors/Members Briefs: March 29, 2023.) As a result, McGlynn will serve out the remainder of her term.
SERC’s directors passed a resolution honoring Dochoda at their meeting, along with similar resolutions for former Director Manny Miranda — who stepped down from the board last year — and Barbara Ecton, who recently stepped down as senior executive assistant to join the office of the president at Duke University.
Budget Set to Grow in 2025
The board also approved SERC’s draft 2025 business plan and budget, which will be presented to NERC.
SERC’s Finance and Audit Committee will continue to review the draft and submit a final package to the board at its June meeting, following which it will be submitted to FERC for approval along with the budgets for NERC and the other REs.
CFO George Krogstie said in a presentation to members that next year’s budget is expected to grow by $3.3 million to $35.3 million, driven by rising costs in areas like personnel and rent for a new office the RE will move to in 2025. However, he emphasized that “there are no surprises” in the coming year’s budget.
“We’ve been talking about all of these over the last couple of years; we knew our lease was expiring in January of 2025, [and] that rent was going to increase whether we stayed where we’re at or … relocated,” Krogstie said. “Fortunately, we found a really good facility to relocate [to]; that is going to bring us a lot more benefits to what we’re doing than what we currently have.”
Krogstie also said that “a real success story” underlies the personnel costs, noting that the RE has been carrying a 95% vacancy rate for several years. Although personnel costs were under budget, the organization was understaffed. With SERC expanding its staff recently — Krogstie claimed a vacancy rate of less than 1% for the second half of 2023 — it will be better able to meet the challenges of the evolving grid, the CFO said.
SERC’s remaining board meetings for 2024 will be held at its current office in Charlotte on June 12, Sept. 18 and Dec. 11. The next meeting of the RE’s members will take place March 26, 2025, in New Orleans.
WASHINGTON — While their net-zero emission targets might not kick in until the 2030s, the power industry already is dealing with the issues they create, panelists said at the Electric Power Supply Association’s Competitive Power Summit on March 26.
New York has seen the Indian Point Nuclear Plant, its coal fleet and a number of peaking plants around New York City shut down in recent years, cutting a once-thick reserve margin to near the required target, NYISO CEO Rich Dewey said. With other thermal generation retirements expected in the rest of this decade, new supply is going to need to come online to replace them.
“I have grave concerns about the winters of 2030, 2031, 2032; that’s when we’re going to need to see some of that new supply to come online,” Dewey said.
NYISO already has seen improvements in the speed of its interconnection queue, Dewey said, having embarked on changes before Order 2023 was issued last July. While that is less of a barrier, new development faces other issues.
“So, we’ll solve the interconnection problem, but I’m not sure that there aren’t other problems right behind that,” Dewey said.
For example, the state has made a big bet on offshore wind, but it faces higher interest rates and supply chain constraints, which are affecting projects all along the East Coast, he added.
“Everybody kind of giggled when Rich said, ‘My concern is eight years away,’” said Competitive Power Ventures Senior Vice President Tom Rumsey. “If I started tomorrow, I couldn’t build him a combined cycle in that time frame. Right? You can’t. And that’s why he’s worried. I think people sort of think that it’s a three- to four-year process. It isn’t.”
Construction takes about that long, but from conception through the regulatory process to actual construction makes the total time to build a new gas plant longer than eight years, he added.
That ignores the politics around natural gas, as NYISO is looking for “dispatchable emissions-free resources,” for which it has coined the widely adopted acronym of “DERF.”
NERC has placed policy as one issue that threatens reliability. CEO Jim Robb said at the conference that has started to change some minds.
“I think I read that New York has now either approved, or is considering approving, adding compression to some of the pipelines serving the state there,” Robb said. “So again, kind of counter to the political winds. So that’s great news, right? That we’re getting a little bit more acceptance of the importance of gas in the in the mix.”
That comes after the “politically courageous” decision in California to extend the life of the Diablo Canyon Nuclear Plant after it started running into resource adequacy issues during heat waves, and the deal to keep the Everett Marine Terminal open, which is a vital source of LNG imports for New England in the winter, Robb said. (See Constellation Reaches Agreement to Keep Everett LNG Terminal Open.)
ISO-NE has dealt with energy issues in the winter for 20 years; it was 2004 when it had “8 GW of natural gas generators call in sick one Monday and say, ‘We don’t have any fuel,’” CEO Gordon van Welie said. While the issue is longstanding, van Welie said some notable changes have occurred in the past couple of years.
ISO-NE has developed a “probabilistic energy adequacy tool” to assess adequacy, van Welie said. “And that has given us a much better analytical framework for assessing these risks, both of the near term and the long term.”
That has led to conversations in New England about adding an “energy adequacy standard” to the common resource adequacy standard, he added. ISO-NE also has worked on capacity accreditation.That’s been happening around the country as other regions face similar issues, if not the same acute winter reliability threats.
New England has moved forward on gas-electric coordination. But it still faces issues there, as fuel will continue to be important, though used much differently than today, van Welie said. Electrification is going to mean higher demand as other resources retire.
“The balancing energy source is going to be natural gas,” van Welie said. “And all the studies we’ve done, [and] studies I’ve looked at, show that the dynamic is [that] the average demand for gas is going to drop because of all the renewables on the system, but the peak demand is going to spike up.”
That raises the question of how the market can solve that issue: If natural gas plants run rarely, it will be even less economic for them to get firm service from pipelines, van Welie said. To find the answer, he said the industry needs analytics to gauge how to use natural gas to balance a higher share of renewables.
Texas is ahead of New England when it comes to renewables, though as the country’s largest producer of natural gas, it does not have the same issues, ERCOT CEO Pablo Vegas noted. He said he’s seen some of the same studies as van Welie, and he expects gas plants will run less overall but have much higher peak demands.
The growth of solar in Texas has made it easier to meet those high peak demands in the summer, but ERCOT still can face tight conditions in the winter when that resource is far from peak production, Vegas said.
While the state benefits from plentiful energy supplies, Texas’ role as an energy capital is contributing to large demand growth, as the oil and gas sector continues to electrify its operations.
“In the Permian area of Texas, we saw … a new set of load expectations that were far above what our historical plants anticipated for that area,” Vegas said. “And to put [that] into context, just in the next five, six years in the Permian area, we saw new load forecasts upwards of 25 GW.”
That’s the equivalent of adding another entire Dallas-Fort Worth area to the Texas grid in the next half a decade, he added. About half of the demand is expected to come from the oil and gas industry, with other sources of demand from new hydrogen production, manufacturing and cryptocurrency mining.
While EPSA effectively was set up for firms that build natural gas plants, some of its members also are in the renewable development business, American Clean Power Association CEO Jason Grumet said. He noted that two-thirds of the renewables deployed last year were from firms that also own fossil and nuclear assets.
ACP pushes for the transition to clean energy, but Grumet said the No. 1 priority for anyone who works in the energy industry is reliability.
“If we have interruptions of power supply, that … interrupts the trajectory of our energy policy goals, right?” Grumet said. “So, it is obviously not in the interest of the individual, nor is it in the interest of the policy debate.”
ACP shares the same goals as much of the rest of the energy industry around changing the rules for permitting because, Grumet said, it’s needed for the U.S. to meet its net-zero goals. Permitting reform for “linear infrastructure” can help get renewables built and ensure they have the gas needed to balance them.
“If you have any affinity to engineering or math, you’d say that we are not on target to achieve a zero-carbon grid in 11 years,” Grumet said. “I think people get confused when you tell the truth; they think you’re either being courageous, or you’re suggesting complacency. It’s just the truth.”
Granite Shore Power has reached an agreement with EPA, the Sierra Club, and the Conservation Law Foundation to retire New England’s last coal plant by 2028, the company announced March 27.
Along with the 482-MW Merrimack Station, the company agreed to retire Schiller Station, a 155-MW unit that can burn coal, by 2025. Both generators are in southern New Hampshire.
“This historic victory is a testament to the strength and resolve of those who never wavered in the fight for their communities and future,” said Ben Jealous, Sierra Club executive director.
Jealous applauded both the climate and public health benefits of retiring coal resources, noting that air pollution from coal significantly increases risks of asthma and heart disease in nearby communities.
Granite Shore plans to replace both power plants with clean energy resources, including a large battery at the Schiller station site and co-located solar and storage at the Merrimack site.
“The New Hampshire Seacoast is an area of high energy demand and through the repowering of Schiller Station, we will provide carbon-neutral power to support the businesses and families of New Hampshire,” said Granite Shore CEO Jim Andrews. “Our facilities are ideally situated near the infrastructure necessary to transition the region to the next generation of energy resources.”
Climate and environmental organizations in the region have long advocated for closing New England’s remaining coal plants. Coal generation in the region has fallen dramatically over the past two decades. According to ISO-NE, coal accounted for just 0.5% of the region’s generation in 2023, compared to about 40% in 2000. The decline has coincided with a substantial increase in natural gas generation.
“The transition that Granite Shore Power has announced is a testament to the continued commitment to invest and support the many needs of electricity consumers both today and in the years to come,” said Dan Dolan, president of the New England Power Generators Association.
“As some older, less-efficient power generation gives way to newer sources, it is incumbent on industry and policymakers to continue the hard work to enhance the electricity market to get reliability, affordability and a clean energy future right,” Dolan added.
In recent years, the writing has appeared on the wall for the region’s remaining coal plants. Schiller Station has not operated since summer 2020 but has not officially retired. Merrimack Station remains in operation but failed to win capacity supply obligations in the forward capacity auctions for the 2026-27 and 2027-28 procurement periods. (See FCA 17 Shows Clean Energy Boost, Endgame for Coal in New England.)
Merrimack also exceeded federal emissions limits in a February 2023 stack test and has had to abort multiple attempts to retake the test over the past year. The New Hampshire Department of Environmental Services has said the plant is not in compliance with federal standards, which could make the facility subject to fines.
“It was clear that this day was coming,” said Nathan Phillips, a member of the No Coal No Gas campaign and a professor of ecology at Boston University. “But yet, when you see them say it themselves, it’s still monumental … it’s a shock but not a surprise.”
Phillips added that the announcement is “a shot in the arm to all of us to escalate our campaign to every other dirty peaker plant going forward.”
The Sierra Club and the Conservation Law Foundation also emphasized their aim to retire all remaining fossil fuel generators in New England.
“Now we must vigorously push for the phaseout of other polluting fuels like oil and gas,” said Tom Irwin, vice president of the Conservation Law Foundation in New Hampshire. “New England is positioned to be a leader in building a future where our energy comes from 100% clean sources, and fossil fuels no longer pollute the climate and threaten the health of our communities.”
Along with the Merrimack and Schiller Stations, the Mystic Generation Station, a 1,413-MW combined-cycle plant, is set to retire in May. While the New England states have ambitious clean power goals for the coming decades, some energy officials have expressed concern about retirements outpacing deployment.
“We cannot remove conventional generation before we stand up its replacement,” said Charles Dickerson, CEO of the Northeast Power Coordinating Council, at an event March 22. “We need to have renewable resources that we can control.”
The U.S. Bureau of Ocean Energy Management has approved the Sunrise Wind offshore wind project sited off the end of Long Island, greenlighting a 924-MW project that could power 320,000 New York homes and become the state’s second offshore farm.
BOEM’s approval March 26 comes about two weeks after the state’s — and the nation’s — first OSW project, the 130-MW South Fork Wind, began generating power. The state on Feb. 29 announced conditional contract awards to Sunrise Wind and the 810-MW Empire Wind project, which could be the next OSW projects to come online in the state. Together they would generate about one-fifth of the state’s 9-GW goal for 2035. (See First Large US Offshore Wind Farm Complete.)
In the wake of the approval, known as a Record of Decision (ROD), Ørsted and Eversource — the two partners in Sunrise Wind — said they’ve taken a final investment decision and will move ahead. The two companies also developed South Fork Wind.
“We are poised and ready to start constructing the transmission system to connect Sunrise Wind’s clean power to the New York electric grid,” said Joe Nolan, CEO of Eversource Energy. “We promised to put New Yorkers to work building the energy of the future, and now we’re ready to deliver on that promise.”
The partners said in a release that the decision “precedes the anticipated approval of Sunrise Wind’s Construction and Operations Plan (COP)” in the summer. Ørsted in January agreed to acquire Eversource’s 50% ownership share in Sunrise Wind, though the company will lead the project’s onshore construction.
The New York State Energy Research and Development Authority is finalizing agreements with Sunrise Wind for the project’s Offshore Wind Renewable Energy Certificates contract. Sunrise Wind had planned to cancel its previous contract as construction costs increased, and the developer said the project had become untenable under the financing offered in the earlier contract. (See Sunrise Wind, Empire Wind Tapped for New OSW Contracts.)
Capacity Reduction
BOEM said it reduced the size of the project, which is located 26 nautical miles east of Montauk and 14 nautical miles off Rhode Island, from 1,024 MW, shrinking the capacity by about 10% as well as cutting the number of turbines to 84, in response to stakeholder and public comments.
The reduced project would meet the state’s capacity requirement, “would protect the environment” and would satisfy more than 10% of the goals of the Climate Leadership and Community Protection Act (CLCPA), which was established to combat climate change, according to BOEM’s ROD.
The agency’s decision includes measures aimed at “avoiding, minimizing and mitigating” effects of the construction and operation of the project, and includes “a commitment by Sunrise Wind LLC to establishing fishery mitigation funds to compensate commercial and for-hire recreational fishers for any losses directly arising from the project.”
As part of its project, Sunrise Wind pledged to create a new operations and maintenance hub in Port Jefferson that would be a “key anchor point for New York’s offshore wind future and use facilities in the state’s capital region to fabricate “key components” for the foundations and turbines.
BOEM Director Elizabeth Klein said the agency’s approval — the Department of the Interior’s seventh — is another step toward reaching President Biden’s goal of 30 GW of OSW capacity by 2030.
“Through constructive, broad-based engagement, we are navigating potential conflicts and advancing the responsible growth of offshore wind. As we propel this industry forward, we eagerly anticipate further cooperation and progress with our partners,” she said in a release.
The Sierra Club of Massachusetts welcomed the approval, saying it would bring the region “closer to a future where every home in the northeast is powered by clean energy.”
