FERC on Friday accepted NYISO’s compliance filing for Order 844, which directs each RTO/ISO to establish procedures for reporting uplift payments, operator-initiated commitments and transmission constraint penalty factors.
The commission’s Jan. 4 order found the ISO’s filing “complies with Order No. 844’s requirements regarding zonal uplift reporting,” although approval is subject to the ISO specifying the effective date for its proposed Tariff revisions at least two weeks in advance of that date (ER18-2400).
Uplift costs from guarantee payments by category and region, Q3 2018 | Potomac Economics
FERC’s ruling granted NYISO an extension permitting Tariff revisions related to the zonal uplift and resource-specific uplift reports to become effective March 15, while those related to operator-initiated commitment reporting will become effective “on a flexible effective date between June 1, 2019, and June 20, 2019, subject to a compliance filing.”
The commission accepted the ISO’s argument that it already complies with Order 844’s requirement that its Tariff include transmission constraint penalty factor practices.
Order 844 stipulates that each RTO/ISO post a monthly report of all uplift payments categorized by transmission zone, day, and category. RTOs also must post a monthly resource-specific report containing resource names and total amounts of uplift paid in dollars, aggregated across the month.
The grid operators are further required to post a monthly report listing the commitment size, transmission zone, commitment reason and commitment start time of each operator-initiated commitment.
NYISO agreed to comply with all the requirements, modifying its compliance filing to incorporate reporting of uplift paid to suppliers that schedule import transactions at any of its external proxy generator buses as part of the zonal uplift report. The ISO said it does not pay uplift to entities that schedule export transactions and will post an updated zonal uplift report when it first posts its resource-specific uplift report to ensure the two reports are using consistent data sets.
Massachusetts electricity suppliers won’t have any trouble this year meeting the state’s new mandate for serving a certain portion of their sales with “clean peak” resources.
That’s because the state’s Department of Energy Resources (DOER) last week set the 2019 minimum to zero while it attempts to work out the details of the Clean Peak Minimum Standard.
“After reviewing available information, the statutory definition of clean peak resources, and a number of other factors, DOER determined that approximately 0 MWh were being served by existing clean peak resources during peak load hours as of December 31, 2018, and established the Minimum Standard percentage requirement for retail electricity suppliers in the 2019 compliance year at 0%,” Director Michael Judge said in a Dec. 31 email to industry stakeholders.
Passed into law last September (H4857), the standard requires DOER to mandate that a baseline minimum percentage of retail electricity sales be met with clean generation resources or load reductions during seasonal peak periods.
Under the law, clean peak resources include qualified renewable portfolio standard and energy storage resources, with an in-service date on or after Jan. 1, 2019, but no such resources could have existed as of Dec. 31, 2018. Demand response resources can also qualify without any specified in-service date, but DOER has yet to establish the eligibility requirements for DR.
The rule is also designed to build on previous performance, with every electricity retailer in the state required to provide a minimum of an additional 0.25% of annual sales with clean peak certificates. But that baseline hasn’t been established yet, nor have any clean peak certificates that would allow for compliance.
In his email, Judge told stakeholders his agency will take the similar tack to how it established the state’s RPS program in 2002.
“At that time, DOER established an ‘early compliance year’ for calendar year 2002, in which the Minimum Standard percentage requirement was established as 0%, but allowed certificates to be generated, purchased, and settled at NEPOOL GIS by retail electricity suppliers for use towards requirements in subsequent calendar years,” Judge wrote. “This allowed the market to commence, but delayed actual compliance filings from retail electricity suppliers by one year.”
ISO-NE generation mix, winter 2017-2018 | Massachusetts Department of Energy Resources
Defining Peak Hours
The idea behind the clean peak standard is to reduce high-cost peak hours and incentivize renewable energy generation to be available to meet winter and summer peaks without emissions. (See New England Clean Energy Legislative Roundup.)
The DOER plans to begin designing the Clean Peak Energy Standard this month, starting with questions for stakeholders that will be posted on the Clean Peak Standard webpage. Following review, the agency will release a detailed straw proposal and solicit comments prior to filing a draft regulation.
The law defines a “clean peak certificate” as “a credit received for each megawatt hour of energy or energy reserves provided during a seasonal peak period that represents a compliance mechanism.”
“Seasonal peak periods” are the daily time windows during any of the four seasons when the net demand of electricity is the highest. Those periods would be no less than one hour and no longer than four hours in any season, as determined by the DOER.
In addition, a qualified RPS resource may generate both a clean peak certificate and a renewable energy certificate under section 11F for electricity generated and delivered to the electric grid during a seasonal peak period.
The stakeholder process is intended to help state regulators establish seasonal peak periods and the methodology for setting clean peak certificate values. Electric service providers may eventually procure such certificates from clean peak resources and enter into long-term contracts, subject to approval by the state’s Department of Public Utilities.
The DOER will also establish a minimum percentage of clean peak certificates to be derived from demand response resources, an alternative compliance mechanism for retailers and procedures for each electricity supplier to demonstrate compliance.
ISO-NE generation mix (2016) | Massachusetts Department of Energy Resources
Comprehensive Energy Plan
The state Comprehensive Energy Plan (CEP) published last month says increased electrification in the transportation and thermal sectors may increase electric load — and peak load, depending on the timing of energy use, especially the charging of energy storage and electric vehicles.
The clean peak standard and technologies such as storage that shift peak flatten this load, “especially as load shifts due to increased EVs, heat pumps, and behind-the-meter solar,” the plan said. “Flattened load enables generators to run at more efficient heat rates, reducing costs and emissions. Further, it reduces the need for future investments in transmission and distribution infrastructure, helping to lower costs of implementing future policies.”
At a public forum last summer, Asa Hopkins of Synapse Energy Economics, a consultant on the CEP said, “Once those clean peak resources are there, it’s not like they’re only there on the peak day; they also run all the rest of the time around the year and are impacting what’s going on with dispatch of different resources.” (See Massachusetts Seeks Input on Energy Plans.)
Demand for natural gas on a peak winter day forces the electric sector to rely on LNG or other stored fuels such as oil for generation, which puts the region at risk for price spikes and emission increases during extended cold weather events, the CEP said. (See ISO-NE Fuel Security Measures Approved.)
The future of Pacific Gas and Electric is in doubt as the new year begins.
Two months after the Camp Fire — the deadliest wildfire in California history — flared Nov. 8, the utility is facing intense scrutiny from state lawmakers, regulators and a federal judge who is overseeing its probation for the 2010 San Bruno gas line explosion.
Lawsuits have proliferated, blaming PG&E for the Camp Fire, and the company is facing billions of dollars in damages for that blaze and the devastating wine country fires of October 2017.
President Trump and California Gov. Jerry Brown toured the scene of the Camp Fire on Saturday, Nov. 17. Trump called it “total devastation.” | California Governor’s Office
PG&E’s stock price has plummeted by half since the Camp Fire and by two-thirds since the wine country fires, fueling speculation about its solvency. (See Destructive Fire Drives Down PG&E Stock.)
And in recent weeks, state authorities, including the California Public Utilities Commission, have publicly questioned whether the company should be broken up or have its leadership replaced. (See Camp Fire Prompts Talk of PG&EBailout of Breakup.)
State Sen. Bill Dodd, a Napa Valley Democrat and one of the authors of a 2018 law, SB 901, that allowed PG&E and other utilities to issue long-term bonds to pay for wildfire liability, said the company needs a major shake-up, starting at the top. Dodd said he was reacting to a Dec. 14 CPUC report that alleged PG&E had falsified safety records for underground gas lines.
“PG&E has demonstrated a pattern of poor management and illegal conduct that has shattered lives across California,” Dodd said in a December statement. “This latest revelation underscores the need for systematic change, which must include change on the board of directors and in the executive suite.”
The senator told RTO Insider Friday that he wouldn’t rule out breaking up PG&E into separate gas and electric divisions. “Everything should be on the table,” he said.
On Friday, NPR reported that even PG&E is considering selling off its gas business to cope with staggering wildfire costs. The report relied on unnamed sources. The utility told NPR it was “reviewing structural options” but did not specifically address the sale of any assets.
PG&E said in a news release Friday that it is engaged in a “board refreshment process” and seeking to recruit new board members with expertise in safety. The utility also said it has “formed a special Board committee that is engaging independent experts to advise on best practices in wildfire safety.” The moves respond to criticism from lawmakers and regulators who have said PG&E needs new leaders to help it cure a flawed safety culture that precipitated two years of catastrophic wildfires.
November’s Camp Fire killed 86 residents in Butte County, destroyed nearly 14,000 homes and leveled the town of Paradise, Calif., population 27,000, in a matter of hours. It followed the wine country fires of 2017, for which PG&E has been partially blamed by state fire investigators, as well as the massive gas explosion in San Bruno, Calif., that killed eight and led to PG&E’s conviction on felony charges. PG&E’s problems continued over the holidays, when Judge William Alsup, with the federal district court in San Francisco, asked the state attorney general’s office to advise him on “the extent to which, if at all, the reckless operation or maintenance of PG&E power lines would constitute a crime under California law.”
The AG responded three days after Christmas with a rundown of the charges PG&E could potentially face, ranging from misdemeanors to murder, should it be deemed to have acted recklessly.
Alsup also required PG&E to provide a thorough account of its role in the Camp Fire and the wine country fires of October 2017. PG&E answered with a detailed description of the problems it experienced with its transmission and distribution lines near the Camp Fire’s point of origin on the morning the fire started and said multiple employees had seen the fire start. (See PG&E Grapples with Line Safety After Camp Fire.)
On Thursday, the judge ordered PG&E to submit more information concerning the Atlas Fire, one of 21 major fires that started Oct. 8, 2017, and burned through large swaths of Napa, Sonoma and neighboring counties. The wine country fires killed 44 people and leveled the northern portion of the city of Santa Rosa, Calif. (The case is No. 3:14-cr—00175-WHA in the U.S. District Court for the Northern District of California.)
“PG&E’s most important responsibility is the safety of the customers and communities we serve,” the utility told RTO Insider in an email Friday. “The cause of the Camp Fire is still under investigation. We are aware of lawsuits regarding the Camp Fire. Our focus continues to be on assessing infrastructure to further enhance safety and helping our customers recover and rebuild.”
Here’s a rundown of where PG&E stands at the start of 2019.
The Tubbs Fire in California’s wine country wiped out the Coffey Park neighborhood of Santa Rosa. | California National Guard
Criminal Charges
Pacific Gas and Electric is no stranger to criminal charges in cases involving its equipment.
In June 1997, jurors in Nevada County, Calif., found the company guilty of 739 counts of criminal negligence for failing to trim trees near its power lines and sparking the Trauner Fire, which destroyed 12 homes and burned a historic schoolhouse near the Sierra foothills town of Rough and Ready in 1994.
In the San Bruno case, jurors found the company guilty in August 2016 of five felony counts of knowingly violating federal safety regulations by failing to inspect and test its pipelines and one count of obstructing a National Transportation Safety Board proceeding.
In January 2017, U.S. District Court Judge Thelton Henderson slapped the company with the maximum $3 million fine and ordered it to serve five years of probation, saying PG&E’s crimes posed “a great risk to the public safety.” (That was on top of $1.6 billion in fines levied by the state.) The company was placed under a federal monitor.
The probation from the San Bruno sentence is the basis for Alsup’s current inquiries, which began just after Thanksgiving. Under its terms, PG&E must not commit any federal, state or local crimes. Doing so could subject the company to further penalties, and its probation could be revoked, federal prosecutors told Alsup.
There is already some evidence that criminal charges are possible.
A section of the 30-foot gas pipeline owned by PG&E that exploded in 2010, killing eight people in San Bruno, Calif.
Investigators with the California Department of Forestry and Fire Protection (Cal Fire) have said PG&E equipment was to blame for at least 17 of the wine country fires. Cal Fire forwarded 12 of those cases to county prosecutors, who retain discretion about whether to charge PG&E. So far, no charges have been filed.
The AG’s office said in its brief that it wasn’t making any factual findings on whether PG&E committed crimes.
“Determining PG&E’s potential criminal liability, if any, for recent wildfires would require an investigation into the cause or causes of those fires,” the attorney general’s brief said. “If PG&E caused any of the fires, the investigation would have to expand into PG&E’s operations, maintenance and safety practices to determine whether criminal states were violated with the requisite mental intent.”
That mental intent would be measured on a sliding scale from mere negligence to reckless behavior that could constitute manslaughter or implied-malice murder, it said.
Lawsuits
Multiple lawsuits — about a half-dozen, according to various news reports — have already been filed against PG&E by survivors and insurance companies for what could add up to $15 billion in damages for the Camp Fire, according to one Citigroup estimate. That comes on top of another $15 billion in damages for many of the wine country fires, Citigroup said.
Allstate, State Farm and USAA filed suits last month in state court in Sacramento over billions of dollars in claims they expect to pay from the Camp Fire, The Sacramento Bee reported Thursday.
In another suit, filed by a prominent San Francisco plaintiffs’ firm, Lieff Cabraser Heimann & Bernstein, two children of Ernie Foss, a disabled man killed while trying to escape the Camp Fire, claim the blaze was started by “unsafe electrical infrastructure owned, operated and (improperly) maintained by PG&E Corporation and Pacific Gas & Electric Company.”
“The catastrophic damage and loss of life was preventable,” the lawsuit alleges. “PG&E’s failing infrastructure and its inadequate efforts to maintain its equipment and mitigate risk have caused tragedy before, and PG&E has been sanctioned a number of times for virtually identical misconduct.”
The complaint cites other instances in which PG&E was fined or held criminally liable for deadly fires and explosions, including the Trauner Fire, the San Bruno explosion and a fatal gas explosion near Sacramento in 2008.
“PG&E’s corporate policy of putting profits over public safety has resulted in catastrophic loss of life and injury to persons and property, including the tragic and unnecessary death of Ernie Foss,” the suit contends.
The Lieff Cabraser suit is likely just the start; other law firms have been busy signing up clients in Butte County.
The wine country suits, also called the North Bay California Fire Cases, have been consolidated under a single judge in San Francisco Superior Court and are slowly working their way toward a trial or settlement. The same will likely happen with the Camp Fire claims.
Regulators and Lawmakers
In early December, CPUC President Michael Picker said state regulators would expand their investigation of PG&E’s safety practices after the Camp Fire. (See CPUC Expands Probe Into PG&E Practices After Deadly Fire.) The investigation began in the wake of the San Bruno explosion.
On Dec. 21 the commission released a scoping memo and ruling regarding the investigation that asked whether the company’s management should be replaced, whether members of its board of directors should resign, and whether the company should be broken up into separate gas and electric divisions.
“PG&E has had serious safety problems with both its gas and electric operations for many years,” it said, citing a long list of disasters and problems for which PG&E had been penalized.
“The future of PG&E may also be impacted by other actors beyond the Commission,” the CPUC noted. “The Legislature, the court appointed Federal Monitor, the various courts considering claims against PG&E, the Federal Energy Regulatory Commission, and the communities served by PG&E all have a role in determining PG&E’s future.”
With the state Legislature returning Monday (Jan. 7), lawmakers will have to determine if legislation is needed to help keep PG&E solvent — for instance, by extending the bond provisions of SB 901 to 2018 fires — or whether the company should be reconfigured after a series of catastrophes that has grown unacceptable, even to many centrist lawmakers. (See California Wildfire Bill Goes to Governor.)
Dodd, for one, said it will be hard for PG&E to make amends, regardless of its legal compliance and restitution to fire victims.
“It’s too little, too late,” the senator said. With so much frustration and anger built up against PG&E, it may be time for the utility to face more serious consequences.
“I’m not sure there’s anything they can do,” he said.
A group representing MISO power producers filed a complaint with FERC on Monday alleging that the RTO is improperly accounting for the deliverability of some capacity resources, driving down payments to those demonstrably positioned to deliver on their obligations.
The Coalition of Midwest Power Producers (COMPP) urged FERC to force MISO to properly account for deliverability of capacity resources before the annual capacity auction in April in order to safeguard reliability (EL19-28).
MISO control room | MISO
COMPP said MISO’s loss-of-load expectation (LOLE) study process is flawed because it assumes that all capacity resources are fully deliverable on an installed capacity (ICAP) basis. However, the group argued, MISO’s megawatt count from deliverable resources comes up short annually because the RTO allows certain resources to demonstrate deliverability only up to the unforced capacity (UCAP) level.
MISO’s Tariff requires capacity resources to demonstrate either network resource interconnection service (NRIS) or energy resource interconnection service (ERIS) coupled with firm transmission service up to each resource’s ICAP level. While the RTO already requires that all resources be deliverable to load to qualify as capacity resources, its deliverability requirements stipulate that ERIS resources must only secure firm transmission for their UCAP values, which tend to be about 5 to 10% below full ICAP levels.
The discrepancy amounts to a Tariff violation and risks MISO’s adherence to its own planning reserve margin, COMPP said.
“By failing to ensure deliverability on an ICAP basis for all capacity resources, MISO is acting contrary to the assumptions of its LOLE study and failing to procure enough fully deliverable resources needed to meet its [planning reserve margin] as its Tariff requires,” COMPP said.
“The seriousness of this issue is evident in the historically low reserve margins that MISO is experiencing,” COMPP said. “Requiring compliance with the Tariff for the upcoming [Planning Resource Auction] is essential both to maintaining reliability and to ensuring rates are just and reasonable and not unduly discriminatory. Yet, despite the gravity of the situation, the RTO is proceeding in a manner that will continue to improperly count approximately 1,400 MW of undeliverable generation toward satisfying its reliability requirement.”
MISO’s Independent Market Monitor last year also advised the RTO to require a planning resource’s ICAP be deliverable over the network regardless of which interconnection service it uses. (See MISO Concurs with Monitor Ideas, Pledges More Study.) The Monitor found it problematic that MISO’s LOLE study assumes all ICAP megawatts are deliverable when they’re not.
It later pointed out that during past PRAs, as much as 1,400 MW in capacity may not have been capable of delivering to load. At the time, MISO said it would work on rule changes in time for the 2020/21 PRA.
For COMPP, those changes won’t come soon enough. The group pointed out the problem is poised to recur in the upcoming 2019/20 PRA “despite the IMM having recommended that MISO fix it for the past two auctions.” It also maintains that swings even smaller than 1,400 MW “can lead to material differences in the clearing price that fails to send accurate price signals for entry and exit.”
COMPP said that despite MISO’s apparent agreement with the Monitor, it contended that the RTO has designated the issue a low priority by “only targeting to correct its failure” for the 2020/21 PRA.
“Leaving this problem unaddressed for another day fails to abide with [Federal Power Act Section] 206’s requirements and should be deemed unacceptable by the commission. … The lack of urgency on this issue is particularly galling given MISO’s focus on dealing with current reliability issues that have resulted in some 19 emergency actions since the start of the 2016/2017 planning year,” COMPP said.
The organization also requested fast-track treatment from FERC.
MISO said it was in the process of reviewing the complaint.
ERCOT enters 2019 with a major coal plant going into mothballs and two aging gas units set for decommissioning.
After burning the last load of coal at its J.T. Deely plant on New Year’s Eve, San Antonio utility CPS Energy is now in the process of mothballing the two units, which date back to 1977 and 1978.
CPS Energy’s J.T. Deely plant | CPS Energy
The municipal utility in 2011 said it would retire Deely by the end of 2018, 15 years ahead of schedule, thus avoiding millions in environmental retrofit costs. It notified ERCOT of its plans to mothball the plant in 2013, but it must submit a notification of change of generation resource designation (NCGRD) before officially retiring and decommissioning the units.
CPS spokesperson Trace Levos said the utility plans to begin razing the plant in 2025, but utility officials are also pondering converting Deely into a gas-fired plant.
ERCOT spokesperson Leslie Sopko said the grid operator will not have to conduct another reliability-must-run study whenever CPS is ready to retire the units, as the ISO already considers the units to be unavailable.
Deely’s two coal units have a combined capacity of 871 MW. Along with Luminant’s shuttering of three coals plants in late 2017, ERCOT will have seen slightly more than 5 GW of coal-fired capacity shut down over a year. (See ERCOT OKs Luminant Coal Retirements.)
The Texas grid operator survived record-breaking demand last summer without resorting to emergency measures. It is expected to enter this summer with a historically low reserve margin of 8.1%, almost three points lower than last year. (See ERCOT Faces Tight Summer Margins, Market Changes.)
Meanwhile, NRG Texas on Dec. 28 submitted an NCGRD to ERCOT, saying it intends to decommission and permanently retire two previously mothballed gas units at its SR Bertron plant near Houston, effective Jan. 23.
The Eisenhower-era units each have a capacity of 230 MW. They were shut down for economic reasons in 2011.
State utility regulators in MISO and PJM have voiced concerns that FERC’s proposed changes to transmission rate-setting could drive up costs while hampering development of more efficient non-transmission alternatives.
| MISO
In separate letters last month, the Organization of MISO States and the Organization of PJM States Inc. urged the commission to examine whether current return on equity incentives on top of a new base ROE will result in excessive customer costs.
FERC in October signaled it will allow changes to how transmission owners set ROE rates, no longer relying solely on the discounted cash flow (DCF) model it has used for about four decades. Instead, it will rely equally on results from the DCF and three other techniques: the capital asset pricing model, the expected earnings model and the risk premium model. (See FERC Changing ROE Rules; Higher Rates Likely.)
The changes come in response to a D.C. Circuit Court of Appeals 2017 ruling vacating Opinion 531, FERC’s 2014 order on New England TOs’ ROE rates. The new policy would evaluate and incorporate industry-wide risk into ROE estimates — and likely raise rates.
In its Dec. 19 letter, OMS urged the commission to “balance the authorization of sufficient rates of return to encourage the investment on needed transmission against concerns about excessive costs to customers.”
ROE incentives on top of the base ROE should be “targeted and exceptional,” OMS wrote in the letter, signed by board President Ted Thomas, chairman of the Arkansas Public Service Commission.
“Supporters have concerns that at least some incentive adders have become overly generous and do not change or incent the intended behavior on the part of the transmission owners, resulting in excessive costs to customers. Ineffective adders may also be an unintended disincentive to development of non-transmission alternative solutions for reliability and congestion concerns,” OMS said.
Following OMS’s letter, OPSI on Dec. 28 also cautioned the commission that ROE incentives may become too generous under the new ROE. The organization said FERC should be careful to craft ROE incentives that are “truly merited.”
“OPSI has concerns that at least some incentive adders have become overly generous and do not change or incent the intended behavior on the part of the transmission owners, resulting in excessive costs to customers. Such adders may also be an unintended disincentive to development of non-transmission alternative solutions for reliability and congestion concerns,” the organization said.
RTO Adder ‘Questionable’
Both organizations singled out FERC’s 50-basis point adder incentive for RTO participation. OMS said the adder is of “particular concern and warrants scrutiny by FERC,” noting it’s worried the adder “will last in perpetuity.”
“[T]he landscape has changed drastically since 2006 when these adders were first initiated. After more than 15 years of experience with RTOs, the resulting benefits to utility members are now better understood. RTOs are no longer a new policy experiment. Moreover, transmission owners may no longer need an additional incentive adder to simply join an RTO,” OMS said.
OMS also pointed out that FERC over the years has provided other regulatory mechanisms such as formula rates, projected revenue requirements — trued up to reflect under-recovery — abandoned plant and construction work in progress, “all of which reduce transmission owners’ risk.” The group said the mechanisms “should be carefully examined in the context of this and other ROE incentives.”
OPSI called the RTO adder “questionable” since the benefits of RTO participation are now well understood.
OPSI recommended FERC open a notice of inquiry on the ROE issues “for the purpose of examining not only policy around the application of new incentive requests, but also the ability of existing incentives to achieve desired outcomes.”
OMS likewise requested a review of ROE incentive policy “to ensure that customers pay no more than is necessary to develop and to maintain a reliable and efficient transmission grid.”
OMS has previously expressed concern about whether it would be able to contribute its views to the New England ROE docket.
“You have these pretty impactful policy discussions taking place … and it’s not a docket that we are party to,” former OMS Executive Director Tanya Paslawski said during the organization’s Oct. 29 annual meeting.
FERC has approved PJM’s proposal to change how it measures seasonal demand response resources, rejecting a protest by the RTO’s Independent Market Monitor.
PJM currently permits curtailment service providers (CSPs) to combine DR resources within the same transmission zone into a single DR registration, with the capacity value based on the lower of its total summer- or winter-period reduction capability.
Under the changes approved by the commission Dec. 31, resources above 100 kW will be registered individually, with separate summer and winter capacity values (ER19-244).
PJM said the change will give it greater flexibility by allowing dispatch of individual DR resources. It will also aid CSPs, who will no longer have to determine which end-use customers should be aggregated on a DR registration to maximize the nominated value, PJM said.
The change will be effective with delivery year 2019/20, beginning June 1.
Under PJM’s old process (left), customers 3 and 4 would be combined in a single demand response registration with an annual value of 3 MW, the lesser of the combined summer and winter values. Under the new process (right), the two customers would have separate registrations with a combined 3 MW in summer and 4 MW in winter. | PJM
The IMM protested the proposed change, saying that it will overstate the capacity value of DR, displacing other resources, and that allowing more intra-zonal matching will erode locational price signals.
The commission disagreed, saying the changes should result in more accurate DR capacity values.
It also noted that CSPs are already permitted to aggregate end-use customers in a single transmission zone within a registration and satisfy a DR capacity commitment with multiple registrations. “The proposed revisions do not modify either of these permissions, and we find no evidence in the record to suggest that the instant changes will erode locational price signals,” the commission said.
The Monitor also objected to how PJM proposed to estimate load reductions for some resources, saying all should be required to have five-minute interval metering.
The commission said PJM’s use of “flat profiling” for DR that lack five-minute metering can “reasonably reflect” DRs’ performance during emergencies.
“In multiple orders, the commission has declined to require demand resources to upgrade to five-minute metering,” the commission said, adding that such technology is not necessary because of RTOs’ ability to create five-minute load and generation profiles using telemetry and hourly revenue-quality data.
The chairman’s health had become the subject of increasing speculation since a fall that left him visibly uncomfortable at the commission’s July open meeting.
Change in Appearance
McIntyre seemed healthy when he and fellow nominee Richard Glick testified at their Senate confirmation hearing in September 2017, but he had a shaved head when he was sworn in as chairman three months later.
Last March — as E&E News was about to publish a story detailing his cancer diagnosis — McIntyre explained his appearance, issuing a statement saying he had undergone “successful surgery” for a “relatively small” brain tumor discovered unexpectedly in summer 2017.
“I was advised … that, with the surgery and subsequent treatment behind me, I should expect to be able to maintain my usual active lifestyle, including working full time, and that expectation has proven to be accurate,” he said then.
He appeared healthy in May, when he was the keynote speaker at the Energy Bar Association’s annual meeting. (See “McIntyre Recalls First Day at FERC,” Overheard at EBA Annual Meeting.)
At the July open meeting, however, he wore a sling and appeared uncomfortable after disclosing he had injured his arm and suffered compression fractures in two of his vertebrae in a fall. It was the last meeting he would attend and one of his last public appearances.
In September, Commissioner Neil Chatterjee began FERC’s open meeting by reading a statement in which McIntyre apologized for his absence, saying his “ongoing recovery” prevented him from attending.
At the October meeting, Chatterjee said simply: “Chairman McIntyre is not here. My prayers are with him and his family.”
A week later, McIntyre issued a statement saying he would remain on the commission but would relinquish the chair’s role “and its additional duties so that I can commit myself fully to my work as commissioner, while undergoing the treatment necessary to address my health issues.” However, he did not participate in any orders following his statement.
In their opening remarks at FERC’s last meeting Dec. 20, the commissioners wished McIntyre and his family well for the holidays. But unlike at earlier meetings, none of them offered hopes of him returning to work.
Accomplishments
Before relinquishing the chairmanship, McIntyre and the commission approved major orders on energy storage, generator interconnections and transmission rates, and opened an inquiry on gas pipeline licensing. Last January, he led a 5-0 vote rejecting the Department of Energy’s proposed bailout of coal and nuclear generation, instituting a new resilience docket. (See Ailing Chair, Resilience Inquiry Topped FERC News in 2018.)
McIntyre joined FERC after two decades at Jones Day, where he represented energy clients in administrative and appellate litigation, compliance and enforcement matters, and corporate transactions. A graduate of San Diego State University and Georgetown University Law School, he was co-leader of Jones Day’s global energy practice.
He is survived by his wife of 10 years, Jennifer Brosnahan McIntyre, chief counsel for Boeing Defense’s Autonomous Systems unit, and three children, Lizzie, Tommy and Annie. McIntyre’s mother, Alice L. McIntyre, was a retired pastoral counselor, and his father, John R. McIntyre Jr., was a retired Air Force colonel.
McIntyre’s widow released a statement through FERC thanking “the entire FERC family for their hard work every day for the American people and for their faithful support of Kevin during his time at the commission, especially in the last few months.”
“Kevin often said that being chairman of FERC was his ‘dream job’ — he truly loved and believed in the agency, its mission and its people,” she said. “He was always energized by the challenge of leading the agency ‘full steam ahead,’ even when his health faltered. His commitment to his duty, and his faith in the FERC team, never wavered. We will always be grateful for the opportunity, however brief, that Kevin had to serve our country as FERC chairman.”
FERC Chief Administrative Law Judge Carmen A. Citron swears in Kevin McIntyre as his wife, Jennifer Brosnahan McIntyre, looks on. | FERC
Condolences
“Today is a deeply sad day for the Federal Energy Regulatory Commission and for all those who had the pleasure of knowing Kevin McIntyre both personally and professionally,” Chatterjee, who replaced McIntyre as chairman, said in a statement. “During his tenure at the commission, Kevin exhibited strong leadership and an unmatched knowledge of energy policy and the rule of law. He exemplified what it means to be a true public servant each and every day, no matter the challenges that lie ahead of him.
“In the face of adversity, Kevin’s dedicated faith, devotion to family and sharp wit never faltered. His unwavering strength was — and will continue to be — an inspiration to us all. I will miss the wise guidance of my colleague, the dear camaraderie of my good friend and the frequent banter with my fellow sports fanatic, Kevin.”
Commissioner Cheryl LaFleur said the commission “was very fortunate to have Kevin McIntyre at the helm for as long as he was, and I was honored to serve with him. I particularly appreciated his keen legal judgment, unstinting commitment to the rule of law and deep concern for the organization even in the face of his personal struggles. On a personal level, I appreciated his warm collegiality and ready Irish wit, and was frequently charmed by his Catholic school vocabulary.”
Glick said he got to know McIntyre during the confirmation process. “It did not take long to recognize that Kevin was a man of great intellect and principle. He brought both qualities to the Federal Energy Regulatory Commission where, as chair, he guided the commission to bipartisan consensus during a particularly tumultuous time,” Glick said. “But there was much more to Kevin than being a FERC chairman. He was extremely kind and witty. I most enjoyed our conversations about our respective lives. Kevin often spoke glowingly about his wife, Jenny, and their three wonderful children … and never failed to inquire about my family.”
Sen. Lisa Murkowski (R-Alaska), chair of the Energy and Natural Resources Committee, also expressed condolences for McIntyre. “As a lawyer, a commissioner and as FERC’s chairman, he always had the utmost respect for the agency and its mission. He was as warm and engaging as he was knowledgeable about the issues that came before him.”
Rep. Greg Walden (R-Ore.), ranking member of the House Energy and Commerce Committee, said McIntyre’s “expansive knowledge and expertise of energy law was a tremendous asset to the commission’s important responsibilities and helped shape U.S. energy policy for years to come.”
John Moore, director of the Natural Resources Defense Council’s Sustainable FERC Project, said McIntyre “led FERC with a steady hand and with an emphasis on preserving open electricity markets and maintaining the independence of the commission. We especially salute his high civic calling.
“As we look to the future, we urge Congress, the administration and the commission itself to preserve both the spirit and letter of fairness and evenhandedness that marked Chairman McIntyre’s tenure,” he added.
“He was smart and kind, and I was glad to have met him, even briefly,” said Katherine Hamilton, former president of the GridWise Alliance.
Successor to be Named
McIntyre’s term would have expired on June 30, 2023. His death leaves FERC with two Democratic and two Republican commissioners, including Bernard McNamee, who joined the commission Dec. 11 but has not yet begun voting on orders.
Once McNamee begins to vote, analysts at ClearView Energy Partners noted Thursday, FERC could face 2-2 deadlocks on votes on “LNG terminals and natural gas pipelines, and potentially on orders that impact the fuel mix of the electric generation sector.”
“It is not clear yet whether Senate Minority Leader Chuck Schumer (D-N.Y.) will try to press [Majority Leader Mitch] McConnell [R-Ky.] and/or the White House to either renominate Cheryl LaFleur — whose term expires on June 30 — or nominate a different Democrat to FERC at the same time as a replacement for McIntyre,” the analysts said. “While conventional wisdom would suggest that pairing a Republican and Democrat (given LaFleur’s expiring term) could smooth the confirmation process, the reality that a simple majority suffices to confirm nominees likely makes this prior custom far less relevant.”
CAISO will tackle its new role as reliability coordinator for much of the West in 2019, and California lawmakers will struggle with preventing wildfires sparked by power lines.
Major events in 2018 prompted both efforts.
CAISO will oversee reliability coordination in much of the West from its headquarters in Folsom, Calif. | CAISO
In July, Peak Reliability stunned the West by announcing it would end its RC operations across the Western Interconnection by the end of 2019. That set off a competition between CAISO and SPP to sign up clients for their own RC services.
Then in November the deadliest wildfire in state history leveled the town of Paradise, Calif., killing 85 residents in the Sierra Nevada foothills. Suspicion quickly fell on PG&E for the Camp Fire, prompting talk of state action to reform or break up the utility.
Other challenges that faced California and the West in 2018, and will continue in 2019, include making CAISO’s congestion revenue rights more equitable to ratepayers and continuing efforts to establish a Western RTO led by CAISO.
Keeping Reliability Coordination Reliable
Peak Reliability stunned the electricity sector in July when it announced it would wind down its role as reliability coordinator for the West and withdraw from its effort to develop a regional electricity market competing with CAISO. The Vancouver, Wash.-based company said it would shut its doors as early as Dec. 31, 2019, after transitioning its customers to other RCs. (See Peak Reliability to Wind Down Operations.)
Several months before the announcement, CAISO, a Peak RC customer, said it would “reluctantly” leave Peak, develop its own RC services and offer them to others at reduced costs. Most of the Western Interconnection signed nonbinding letters of intent to take advantage of CAISO’s RC services.
CAISO’s move was seen as a reaction to Peak entering a partnership with PJM to form a Western RTO to compete with the ISO’s expansion.
FERC approved a set of Tariff revisions covering CAISO’s new RC services in November, clearing the way for about 72% of the region’s load to sign on with CAISO, compared with 12% for SPP. BC Hydro is proceeding with plans to provide RC services for its own territory in British Columbia, representing about 7% of load in the region overseen by the Western Electricity Coordinating Council. (See CAISO RC Effort Gets FERC Go-ahead.)
CAISO, SPP and BC Hydro are scheduled to take over Peak’s duties in four handoffs through 2019. CAISO will assume the RC role for its existing territory on July 1. BC Hydro will become the RC for a large swath of southwestern Canada on Sept. 2. CAISO will then take over RC services for many areas outside of California on Nov. 1, while SPP will take responsibility for other regions of the West on Dec. 3, although NERC is encouraging the RTO to accelerate its timeline to match CAISO’s.
The process provides ample opportunities for errors and shortcomings, including staff attrition at Peak, those involved say. Some employees have already left Peak, and others could follow. The company is hoping that severance packages will encourage most others to stay until they’re no longer needed.
CAISO and SPP will become the reliability coordinators for the Western Interconnection in 2019. | WECC
Jim Shetler, general manager of the Balancing Authority of Northern California and chair of Peak’s Member Advisory Committee, briefed WECC board members on the transition process in December, saying he had concerns about whether Peak would remain in business until the transitions are completed at the end of 2019.
“What keeps me up nights [is worry over] whether Peak is a going concern in the next 12 months,” Shetler said during the board meeting at WECC headquarters in Salt Lake City. (See RC Transition is Fraught with Pitfalls, WECC Hears.)
Others have said they’re confident the transition will go as planned, but all agree it will be important keep a close eye on the RC switchovers in 2019 to avoid lapses in critical services.
“This is a risky year, and I think everyone’s posture is really focused on this,” Linda Jacobson-Quinn, regulatory compliance manager for the Farmington Electric Utility System in New Mexico, told WECC in December. “At the end of the day, it’s the customers that must have an RC.”
Wildfire Policy Could Target IOUs
When the California State Legislature reconvenes Jan. 7, one of its first orders of business will be dealing with the problem of catastrophic wildfires, particularly those sparked by electrical equipment operated by investor-owned utilities.
Lawmakers thought they’d made significant progress in 2018 when they passed SB 901, a 71-page bill of wildfire prevention measures that included new vegetation management and reporting requirements for the IOUs. The measure, signed into law by Gov. Jerry Brown in September, also provided a means for IOUs to issue long-term bonds to cover wildfire liability costs. (See California Wildfire Bill Goes to Governor.)
PG&E’s costs have been estimated in the billions of dollars for a series of devastating fires in Northern California wine country during the 2017 fall fire season. State fire officials have declared the utility at fault for at least 16 of the fires, though the Tubbs Fire, which wiped out part of the city of Santa Rosa, remains under investigation.
Brown and other policymakers worried about PG&E’s solvency following the 2017 blazes and enacted the bond provision, but that measure didn’t cover fires in 2018, and the Camp Fire’s estimated costs could equal or exceed all the wine country fires combined. PG&E’s stock price took a pounding in the days after the Camp Fire and remains less than half of what it was before the blaze.
The Camp Fire started at 6:33 a.m. on Nov. 8 near Tower :27/222 on PG&E’s Caribou-Palermo 115 kV transmission line, the California Department of Forestry and Fire Protection (CalFire) and PG&E reported in December. PG&E told the California Public Utilities Commission it had experienced a fault and fire near Tower :27/222 shortly before the Camp Fire ignited. (See PG&E Grapples with Line Safety After Camp Fire.)
If CalFire investigators eventually find PG&E equipment caused the fire, the utility could be held liable for all resulting damage, even without a showing of negligence, under the controversial legal doctrine known as “inverse condemnation,” the strict liability standard California applies to utilities for fires sparked by power lines.
During their 2019/20 session, state lawmakers likely will consider clean-up legislation that allows utilities to issue bonds to pay for 2018 fires. With public anger high, however, elected officials may fear a backlash for any bill deemed a bailout for PG&E or other IOUs.
Another possibility being discussed is state action to break up PG&E and hand over control of some of its parts to cities such as San Francisco. (See Camp Fire Prompts Talk of PG&E Bailout or Breakup.)
Changing PG&E’s corporate governance also is on the table.
National Guard soliders searched through rubble in November after the Camp Fire tore through Paradise, Calif., killing 85 and casting suspicion on PG&E. | California National Guard
Sen. Bill Dodd, one of the authors of SB 901, has called for a management shakeup at PG&E in the wake of the fatal 2010 San Bruno gas line explosion and the massive fires of 2017/18.
“PG&E has demonstrated a pattern of poor management and illegal conduct that has shattered lives across California,” Dodd said in a Dec. 20 news release. He called for “systematic change, which must include change on the board of directors and in the executive suite.” The utility currently has a “bunker mentality” that prevents improvement in its safety practices, Dodd said.
“This is the kind of thing that keeps me awake at night,” Picker said at the time.
On Dec. 21 the commission released a ruling regarding the investigation that asked whether the company’s management should be replaced, whether members of its board of directors should resign, and whether the company should be broken up into separate gas and electric divisions.
In the meantime, PG&E has vowed to do better. “We are acting decisively now to address these real and growing [wildfire] threats, and we are committed to working together with our regulators, state leaders and customers to consider what additional wildfire safety efforts we can all take to make our communities safer,” company CEO Geisha Williams said in a December news release.
CRR Shortfalls and Regionalization
CAISO’s other priorities in 2019 will include its continuing efforts to rein in congestion revenue rights insufficiencies that have left ratepayers footing a bill of about $100 million per year, according to the ISO’s Department of Market Monitoring.
The chronic shortfall in CRR revenues, which are allocated based on power consumption, has been an ongoing problem for CAISO. This year the ISO sought FERC’s approval for changes it hoped would help in 2019, but the commission only gave CAISO part of what it wanted.
In November, FERC accepted an ISO revised proposal, providing for CRR holders to be paid for their entitlements “only to the extent the CAISO collects sufficient revenue through day-ahead market congestion revenues and other sources to fund those entitlements.” (See FERC OKs CAISO Plan to Deal with CRR Shortfalls.)
CAISO may also continue to pursue its efforts to form a Western RTO, despite the failure of several proposals in recent years to begin the process. The latest, AB 813, failed to make it out of a legislative committee in 2018. The bill would have started the process of turning CAISO into an RTO by initiating changes in its governance structure to allow for out-of-state members.
California lawmakers have been opposed to relinquishing state control. CAISO’s governors are now appointed by the California governor and confirmed by the Senate. At the same time, industry leaders from other Western states don’t want to cede authority to a CAISO board controlled from Sacramento.
As Ralph Cavanagh, co-director of the energy program at the Natural Resources Defense Council, put it to a Northwest industry group in October: “We need a big bipartisan win, and I don’t think we’ll get it on carbon tax in the short term, but I’ll tell you a place where we can get it … enhanced regional grid integration.”
ISO-NE closed out 2018 like a trucker wheeling a wide load down a twisting service road on the flanks of Mount Washington. Despite a few bumps, scrapes and scares along the way, it delivered on time — in this case dispatching key market initiatives.
The RTO’s most important issues are winter fuel security and addressing the states’ desire to bring in more carbon-free resources, but it also must plan to operate a grid that is already experiencing a surge in renewable energy resources — with massive amounts of offshore wind energy now visible on the horizon. (See Mass. Offshore Lease Auction Nets Record $405 Million.)
The bumps and scrapes last year came in a contentious stakeholder process over both issues and in FERC approvals accompanied by criticisms, dissents and partial dissents by various commissioners.
FERC last month approved the ISO-NE’s interim proposal to use an out-of-market mechanism to address concerns about fuel security in a region heavily reliant on natural gas and in March approved its two-stage capacity auction to accommodate state renewable energy procurements. (See Split FERC Approves ISO-NE CASPR Plan.)
Controversy in the Details
Soon after a severe cold snap last January, ISO-NE published an operational fuel security analysis that found the New England grid is vulnerable to a season-long outage at any of the region’s major energy facilities. (See Report: Fuel Security Key Risk for New England Grid.)
In a related issue, Exelon in March said it would retire its 2,274-MW Mystic Generating Station in Massachusetts after the facility’s capacity obligations expire in May 2022.
FERC in July denied an ISO-NE a Tariff waiver to enter a cost-of-service agreement to keep Mystic Units 8 and 9 running after the expiration, instead directing the RTO to revise its rules to allow such agreements to address fuel security.
The commission last month finally approved a Mystic agreement, including payments to the Exelon-owned Distrigas LNG facility that supplies the plant with fuel, while also ordering a paper hearing on the issue of return on equity for the units. (See FERC Approves Mystic Cost-of-Service Agreement.)
Winter LNG deliveries to New England interstate pipelines | ISO-NE
Reserve Energy Bank
In a concurring opinion in last month’s fuel security order, FERC Commissioner Richard Glick said “ISO-NE’s apparent need to retain units for fuel security is the result of a market failure” (ER18-2364).
“Winter energy security is a good problem for markets,” said a report on fuel security prepared by Brattle Group on behalf of NextEra Energy Resources. “New England’s energy security challenge can be converted into demand for clearly defined products that many, diverse resources can compete to provide at least cost … [but it’s] essential that any chosen solution will provide planners/operators with the certainty that winter reliability will be maintained, thus avoiding any need for out‐of‐market intervention.”
In a related effort to address fuel security issues holistically, ISO-NE Vice President for Market Development Mark Karl said in November that the RTO is proposing to incorporate into the real-time market an additional constraint that looks at the ability to provide energy storage — or an energy bank.
“I want to be careful here because it’s easy to think about this from the standpoint of conventional generator fuel, but this will apply to any sort of resource that has the ability to maintain essentially a reserve bank of energy that can be converted into electricity when needed,” Karl said.
The idea is to optimize the use of limited energy over more extended periods compared with how markets are currently designed to optimize energy over the course of an operating day, he said. (See New England Talks Energy Security, Public Policy.)
New Renewables
ISO-NE proposed the Competitive Auctions with Sponsored Policy Resources (CASPR) construct last January to address state regulators’ concerns about ratepayer costs for policy-driven resources and generators’ fears that out-of-market procurements would suppress capacity prices.
In the commission’s March ruling on CASPR (ER18-619), Commissioner Robert Powelson dissented, while commissioners Cheryl LaFleur and Richard Glick criticized the minimum offer price rule (MOPR) included in the measure.
Under CASPR, ISO-NE will clear the Forward Capacity Auction as it does today, applying the MOPR to new capacity offers to prevent price suppression. In the second Substitution Auction generators with retirement bids that cleared in the primary auction will transfer their obligations to subsidized new resources that did not clear because of the MOPR. The RTO will phase out the renewable technology resource exemption, which has allowed it to clear 200 MW of renewable generation in its capacity auction annually (to a maximum of 600 MW) without regard for the MOPR.
Integration of new renewable resources is not a problem for the RTO and likely won’t be for the next decade, ISO-NE Vice President of Market Operations Robert Ethier told industry stakeholders in November. It’s a two-fold economic challenge involving the energy and capacity markets.
“Bring in these zero-marginal-cost resources and insert them into our real-time supply stack, and it lowers energy prices for everyone … [and] when the states contract for these resources, they don’t just affect the energy market, they also affect our capacity market,” Ethier said.
Having new state-sponsored resources buy out old resources in the market will help manage and ration the entry of these resources into the market and prevent price suppression, he said. (See Canada, New England Talk Trade, Politics and Clean Energy.)
The CASPR filings include proposed Tariff revisions to allow a renewable technology resource to be located out of state — such as in federal waters offshore — and still qualify for a MOPR exemption.
Renewable energy advocates RENEW Northeast supported the RTR revision, as did Vineyard Wind, a partnership between Avangrid Renewables and Copenhagen Infrastructure Partners that last May won the contract to supply Massachusetts with 800 MW of offshore wind energy. (See Mass., R.I. Pick 1,200 MW in Offshore Wind Bids.)
Progress on Emissions
The RTO last month issued its draft 2017 ISO New England Electric Generator Air Emissions Report, which showed that since 2001 sulfur-dioxide emissions have declined 98%, nitrogen oxide by 74% and carbon dioxide by 34%.
Regional emissions of SO2, NOX and CO2 declined in 2017 compared to the previous year, according to preliminary data, with lower emissions due largely to a decline in electricity generation by power plants that use fossil fuels, said the report. The year-over-year declines continued long-term reductions in the emissions produced by New England power plants.
ISO-NE Total System Emissions: 2016 and 2017 New England system emissions (ktons) and emission rates (lb/MWh) (all figures are preliminary). | ISO-NE
NEPOOL Press Ban Proceeding
In August, the New England Power Pool asked FERC to approve amendments to its Agreement to codify an unwritten policy of banning news reporters and the public from attending the group’s stakeholder meetings (ER18-2208). The group drafted the revisions after RTO Insider reporter Michael Kuser applied for membership in NEPOOL’s Participants Committee as an End User customer in March.
RTO Insider responded to NEPOOL’s filing with a Section 206 complaint asking the commission to overturn the organization’s ban or terminate the group’s role and direct ISO-NE to adopt an open stakeholder process like those used by other RTOs (EL18-196). New England is the only one of seven U.S. regions served by RTOs or ISOs where the press and public are prohibited from attending stakeholder meetings.
RTO Insider’s filed response included letters submitted by six U.S. senators and 12 members of the House of Representatives calling on FERC to open the meetings. (See New England Senators Urge FERC to End Press Ban.)
It also included a copy of a Sept. 6 RTO Insider article quoting former FERC Commissioners Pat Wood and Nora Brownell as saying they were unaware of NEPOOL’s closed-door policy when they approved it as ISO-NE’s stakeholder body. (See Wood, Brownell: Unaware of Press Ban When OK’d NEPOOL.)
Public Citizen filed comments challenging NEPOOL’s claim that its members “voted overwhelmingly against having press reporters as NEPOOL members” at the June 26 Participants Committee meeting. Only 115 of NEPOOL’s more than 500 members were present or had proxies at the meeting.
While 32 votes were cast in favor of the press ban, 24 members were opposed and 59 abstained. In addition, NEPOOL records show that six officers or their associates represented companies that provided 21 of the 32 votes for the ban.
The six have conflicts of interest in voting for the ban because they earn income selling “intelligence” about NEPOOL proceedings, said Tyson Slocum, director of Public Citizen’s Energy Program.
