Page 1122 – RTO Insider

October 7, 2018

Kavanaugh on FERC: Keg Half Full

By Steve Huntoon

In the run-up to the Kavanaugh denouement, our industry was not spared claims of disaster from confirmation.

In our case, the claim was that Judge Brett Kavanaugh had it in for independent regulatory agencies like FERC, and the implication was that he might somehow persuade four other justices to override many decades of Supreme Court precedent upholding the constitutionality of such agencies.

Now, whatever else the merits or lack thereof of Kavanaugh as a Supreme Court justice (and no, I’m not going there, so please put the ricin away),^[1] this particular claim is basically wrong.

The claim is grounded in Kavanaugh’s opinion in PHH Corp. v. Consumer Financial Protection Bureau, in which a mortgage lender challenged the delegation of executive branch powers to an agency headed by a single person — instead of to a multi-member agency.

Some press promoted the notion that this opinion is an existential threat to all independent regulatory agencies. Utility Dive,^[2] for example, quotes Joel Eisen, an energy law professor at the University of Richmond, as saying: “In that opinion, he called into question the entire concept of the modern independent regulatory agency, and of course FERC is one such agency.” Now, of course, Eisen is entitled to his opinion, but the referenced Kavanaugh opinion, read in its entirety, does not support that sweeping interpretation.

In fact, quite the opposite. The opinion repeatedly stressed the difference between multi-member agencies and those headed by a single person:

“In other words, to help preserve individual liberty under Article II, the heads of executive agencies are accountable to and checked by the president, and the heads of independent agencies, although not accountable to or checked by the president, are at least accountable to and checked by their fellow commissioners or board members. No head of either an executive agency or an independent agency operates unilaterally without any check on his or her authority. Therefore, no independent agency exercising substantial executive authority has ever been headed by a single person.

“Until now. …

“Because the CFPB is an independent agency headed by a single director and not by a multi-member commission, the director of the CFPB possesses more unilateral authority — that is, authority to take action on one’s own, subject to no check — than any single commissioner or board member in any other independent agency in the U.S. government. Indeed, as we will explain, the director enjoys more unilateral authority than any other officer in any of the three branches of the U.S. government, other than the president.”

FERC got an honorable mention as a multi-member agency Kavanaugh did not have a problem with:

“Have there been any independent agencies headed by a single person? Prior to oral argument, in an effort to be comprehensive, the court issued an order asking the CFPB for all historical or current examples it could find of independent agencies headed by a single person removable only for cause. The CFPB found only three examples … the three examples are different in kind from the CFPB and other independent agencies such as the FCC, the SEC and FERC” (emphasis added).

Kavanaugh emphasized this distinction, again mentioning FERC, on the second day of his confirmation hearing in response to questions from Sen. Amy Klobuchar (D-Minn.), saying in that opinion “all I was talking about was a single-headed independent agency,” and distinguishing that agency from the “SEC, FTC, FERC, NLRB, the Fed” that “are all multi-member agencies.”^[3]

Over the decades Congress has assigned Executive Branch powers to dozens of independent regulatory agencies.^[4] In our ever increasingly complex society we are ever increasingly reliant on these agencies to perform countless governmental functions.

The notion that we could or would ever return to a time when Congress passed highly prescriptive legislation on everything so the Executive Branch would just perform ministerial administration is a joke.

Judge, now Justice, Kavanaugh knows that, and so does every other justice on the Supreme Court.

So FERC, and all of us who rely on and respect you, sleep soundly. The keg is half full.

For anyone who does not know where the keg reference comes from, please see one of the funniest SNL sketches with Matt Damon as Kavanaugh here, https://www.youtube.com/watch?v=VRJecfRxbr8. Again, I’m not taking a position on his confirmation, but hysterical is hysterical. ↑
https://www.utilitydive.com/news/kavanaugh-pick-threatens-epa-policies-ferc-authority-lawyers-say/527552/. ↑
https://www.c-span.org/video/?449705-11/supreme-court-nominee-brett-kavanaugh-confirmation-hearing-day-2-part-3&start=850 (video starting about minute 14). ↑
From the opinion: Interstate Commerce Commission (1887), Federal Reserve Board (1913), Federal Trade Commission (1914), U.S. International Trade Commission (1916), Federal Deposit Insurance Corporation (1933), Federal Communications Commission (1934), National Mediation Board (1934), Securities and Exchange Commission (1934), National Labor Relations Board (1935), Federal Maritime Commission (1961), National Transportation Safety Board (1967), National Credit Union Administration (1970), Occupational Safety and Health Review Commission (1970), Postal Regulatory Commission (1970), Consumer Product Safety Commission (1972), Nuclear Regulatory Commission (1974), Federal Energy Regulatory Commission (1977) [somehow ignoring the creation of predecessor Federal Power Commission in 1920 – ouch!], Federal Mine Safety and Health Review Commission (1977), Federal Labor Relations Authority (1978), Merit Systems Protection Board (1978), Defense Nuclear Facilities Safety Board (1988), National Indian Gaming Commission (1988), Chemical Safety and Hazard Investigation Board (1990), Surface Transportation Board (1995), and Independent Payment Advisory Board (2010). ↑

October 7, 2018

NextEra Settles CRR Complaint Against CAISO

FERC last week approved a settlement that will grant a NextEra Energy subsidiary congestion revenue rights (CRRs) that CAISO denied the company in 2015.

The agreement among the ISO, Southern California Edison and NextEra Desert Center Blythe allocates Desert Center CRRs created by its investment in a Southern California transmission project (EL15-47).

The Interim West of Devers (IWOD) project is meant to move renewable energy from eastern Riverside County to the Los Angeles area, and includes the removal and upgrade of 140 miles of existing 220-kV transmission lines.

ferc caiso crrs nextera energy — CAISO, NextEra and Southern California Edison settled a case involving congestion revenue rights for the West of Devers transmission upgrade project in Southern California’s Riverside and San Bernardino counties. | *CPUC*

In denying Desert Center the CRRs in 2015, CAISO contended that its Tariff awards CRRs under only two circumstances: for facilities proposed and evaluated under the ISO’s transmission planning process; and for network upgrades identified in the generator interconnection process, when the generator funding the upgrades elects to receive the CRRs in lieu of a cash payment.

CAISO said the temporary upgrades for the IWOD — a project undertaken before construction of a permanent transmission solution — did not arise out of either circumstance.

FERC subsequently denied NextEra’s complaint and its request for a rehearing. In January 2016, NextEra filed a petition for review of the commission’s orders in the D.C. Circuit Court of Appeals, and in April 2017, the court remanded the matter to the commission.

Afterward, the parties engaged in settlement talks and came to an agreement, which FERC approved Oct. 4. The settlement stipulates that the CRR entitlements begin Jan. 1, 2019, and will remain in place as long as the IWOD project stays in service.

“For purposes of clarity, no merchant transmission CRRs will be awarded retroactively to Desert Center or SCE for the period of time that the IWOD project was in service prior to Jan. 1, 2019,” the settlement states.

— Hudson Sangree

October 7, 2018

MISO, PJM Endorsing 2 TMEPs for Year-end Approval

By Amanda Durish Cook

MISO and PJM have whittled 20 prospective transmission projects down to two in their search for small interregional upgrades that relieve congestion on market flowgates.

If approved, the two targeted market efficiency projects (TMEPs) will be mostly paid for by MISO, which stands to reap the lion’s share of project benefits, stakeholders learned during an Oct. 5 conference call held by the RTOs’ Interregional Planning Stakeholder Advisory Committee (IPSAC).

MISO and PJM began the study process in spring, identifying 61 facilities that amassed about $500 million in congestion over 2016 and 2017. (See “Possible Interregional Projects,” FERC OKs MISO-PJM Double Charge Fix for Pseudo-ties.)

A TMEP must cost less than $20 million, completely cover its installed capital cost within four years of service and be in service by the third summer peak from its approval. The process has a shorter outlook than the RTOs’ interregional market efficiency project process, which evaluates projects over a 15-year timeline.

Alex Worcester, PJM interregional planning engineer, said the two projects that meet TMEP criteria will be recommended to the RTOs’ boards in December:

An upgrade on terminal equipment on the Marblehead 138/161-kV transformer in southeastern Michigan to increase its summer emergency rating. The facility has had $15.5 million in historical congestion. The RTOs said a $175,000 upgrade could yield $12.4 million in benefits within four years of service. MISO would pay for the entire project because it would reap all the project’s benefits, Worcester said.
A $4.3 million substation equipment upgrade to the Gibson-Petersburg 345-kV facility in southwestern Indiana. The tie has experienced $9.8 million in historical congestion over 2016 and 2017, and the project could provide a $19.5 million benefit within four years. MISO would cover 93% of the project cost, and PJM would cover the balance, pursuant to RTO benefits.

Worcester said the 18 remaining project candidates were disqualified from the TMEP process either because upgrades were already planned, upgrade costs were too high, the flowgate congestion was merely outage-driven or the issue was alleviated by the April retirement of We Energies’ Pleasant Prairie coal plant in southeastern Wisconsin.

miso pjm tmeps interregional transmission — MISO and PJM congested facilities on flowgates | *IPSAC*

MISO and PJM also said two northern Indiana flowgates that were being investigated for potential TMEPs — the Dumont-Stillwell 345-kV tie linking Northern Indiana Public Service Co. and American Electric Power territories, and NIPSCO’s Michigan City-Trail Creek 138-kV line — may be eligible in a future study to identify a larger interregional MEP project.

October 7, 2018

RTO Insider: NEPOOL Can’t ‘Have it Both Ways’ on Press Ban

By Rich Heidorn Jr.

The New England Power Pool is trying to “have it both ways” in claiming FERC lacks jurisdiction to overturn the RTO’s press and public ban while holding special privileges as ISO-NE’s stakeholder body, RTO Insider said in filings Friday.

The publication’s filings followed NEPOOL’s Oct. 1 answer to protests that joined RTO Insider in calling for open stakeholder meetings. New England is the only one of the seven U.S. regions served by RTOs or ISOs where the press and public are prohibited from attending stakeholder meetings.

nepool press ban open stakeholder meetings — Many of NEPOOL’s meetings are held at the Westborough, Mass., DoubleTree Hotel. | *Google*

“While the opposition pleadings mostly repeat arguments previously made by RTO Insider, the opposition pleadings also seek to relitigate whether New England arrangements satisfy the commission’s Order No. 719 requirements,” NEPOOL said, referring to filings by New Hampshire Consumer Advocate D. Maurice Kreis, the Reporters Committee for Freedom of Press and a joint filing by the Sustainable FERC Project, Conservation Law Foundation, Earthjustice and Natural Resources Defense Council.

NEPOOL said preventing the public and press from attending and reporting on stakeholder meetings was necessary to ensure the meetings are “efficient and productive.”

“NEPOOL fully expects that if press reporters are present in NEPOOL meetings, interested members would continue to advocate their positions. But NEPOOL also expects that an increased amount of such advocacy would largely take place outside of NEPOOL meetings. The presence of press reporters in meetings, undeniably, would erode the confidence built among NEPOOL members over its almost five decades of successful history that specific statements made by others in NEPOOL meetings will not be published publicly.”

NEPOOL said its opponents are wrong in citing Order 719 as justification for opening its meetings. The commission said the order was intended to “establish a means for customers and other stakeholders to have a form of direct access to RTO/ISO boards of directors, and thereby increase the boards of directors’ responsiveness to those entities.”

“The ‘access’ referred to that of RTO/ISO customers and stakeholders to RTO/ISO boards. Press is neither a customer nor stakeholder, and they certainly are not a direct representative of either,” NEPOOL said. “Further, NEPOOL is not the RTO/ISO board. As such, any reliance on Order 719 is misplaced.”

On Aug. 13, NEPOOL 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.

Conditioning Authority

RTO Insider responded to NEPOOL’s filing with a Section 206 complaint Aug. 31 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).

RTO Insider made filings in both dockets on Friday, including a 47-page answer to NEPOOL’s motion to dismiss its complaint, in which the power pool claimed FERC lacks jurisdiction to order a change. (See NEPOOL: FERC Can’t Change Press, Public Ban.)

RTO Insider said NEPOOL’s claims that it is not a public utility is “incompatible with having the NEPOOL Agreement on file with the commission, with NEPOOL making [Federal Power Act] Section 205 filings with the commission as a filing party, with NEPOOL having ‘jump ball’ Section 205 filing rights, and with commission orders involving NEPOOL governance,” RTO Insider attorney Steve Huntoon wrote. “NEPOOL’s attempt to avoid commission oversight while enjoying vast powers, privileges and subsidies is a classic case of trying to have it both ways.”

In making its jurisdictional argument, NEPOOL cited the D.C. Circuit Court of Appeals’ 2004 order rejecting FERC’s attempt to force CAISO to replace its governing board. Huntoon said NEPOOL ignored commission precedent in a 2016 ruling approving funding for PJM’s state consumer advocates (ER16-561-001). The commission in that order ruled that the “PJM stakeholder process is a practice that directly affects wholesale rates, and thus approval of a proposal that would enhance that process falls within the commission’s jurisdiction under Section 205a.” (See FERC Upholds PJM Advocates’ Funding.)

Even if the commission determines it lacks authority to force NEPOOL to change its rules, “the CAISO opinion was clear that the commission retains conditioning authority,” Huntoon said. “In CAISO, the court cited with approval a prior decision, Central Iowa Power Cooperative v. FERC, in which ‘FERC conditioned the approval of the power pool on removal of the membership criteria, rather than ordering the power pool to change those criteria directly.’”

Insiders and Outsiders

RTO Insider’s filing included letters submitted by six U.S. senators and 12 members of the House of Representatives calling on FERC to open the meetings. (See Wood, Brownell: Unaware of Press Ban When OK’d NEPOOL.)

Public Citizen filed comments Oct. 3 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.

“When deliberative bodies are transparent and open to the public, information resources regarding details of their proceedings are inexpensive, reflecting the ease with which the information can be obtained and disseminated,” Slocum wrote. “But restricting participation, and making access to deliberations more exclusive, bestows ‘financial market opportunities’ for those granted special access. Those participants on the ‘inside’ can sell their services to those on the ‘outside.’”

The Sustainable FERC Project, Natural Resources Defense Council and Conservation Law Foundation filed a joint motion also opposing NEPOOL’s motion to dismiss RTO Insider’s complaint.

“An RTO/ISO’s formal engagement with stakeholders is … squarely within the commission’s jurisdiction, and the commission should intervene when an opaque stakeholder process that completely excludes the press decreases stakeholder input, decreases public understanding and transparency, and creates a needless risk to the legitimacy of important RTO/ISO decisions,” they said.

October 7, 2018

Can Calif. Go All Green Without a Western RTO?

By Hudson Sangree

California may be able to meet its goal of relying entirely on renewable and other zero-carbon electricity sources by 2045, but it’s going to be more difficult and more expensive without a wholesale market that includes multiple Western states, advocates of CAISO regionalization contend.

“This is essentially like leaving one of your best tools on the workbench when you’re trying to build a very complicated project,” said Carl Zichella, western transmission director for the Natural Resources Defense Council, a staunch proponent of a Western RTO. “You may end up with something jury rigged.”

Gov. Jerry Brown, CAISO leaders and other promoters of regionalization held the same opinion when they tried to pass AB 813 this year. The bill, which failed, would have started the process of turning the ISO into a multistate entity by creating a governing board independent of the governor and legislature.

Supporters reasoned it would greatly help California achieve a carbon-free grid if in-state generators could more easily sell excess solar power to neighboring states and buy clean energy from states that produce more wind and hydroelectric power.

Mojave Desert solar arrays are a large part of the state’s renewable energy production. | *U.S. Dept. of the Interior*

Solar power in the Mojave Desert, for instance, peaks in the late afternoon when it’s often least-needed in California but could be useful in states one time zone to the east — where residents of Arizona, Colorado and Montana are arriving home from work, turning on their TVs and adjusting their thermostats.

Wind from southeastern Wyoming and eastern New Mexico, meanwhile, could provide power after sunset in California, which currently relies on natural gas plants to meet each evening’s peak demand.

Wind power in Wyoming could help California meet peak demand, replacing natural gas. | *Bureau of Land Management*

That was a major reason behind AB 813. The bill stalled in the Senate Rules Committee on the last night of the legislative session Aug. 31. It was the third time in three years that efforts to turn CAISO into an RTO had fizzled. (See CAISO Expansion Bill Dies In Committee.)

In contrast, lawmakers passed, and Brown signed, the session’s other major piece of energy legislation, SB 100. The new law establishes an ambitious timeline for California to rely increasingly on renewable and zero-carbon energy sources, with the goal of achieving 100% carbon-free electricity by 2045. Along the way, it requires the state to accelerate its renewable portfolio standard program to approximately 50% by 2026 and 60% by 2030. (See Calif. Gov. Signs Clean Energy Act Before Climate Summit.)

That’s a daunting challenge. In 2017, California got about a third of its electricity from natural gas-fired plants and more than 40% from hydroelectric, solar, wind and other renewable sources, according to the California Energy Commission. Ending the reliance on natural gas to meet peak demand will be difficult, especially because wind and solar often aren’t available during the morning and evening peak periods. (The state’s last nuclear generator, Pacific Gas and Electric’s Diablo Canyon Power Plant, is scheduled to be retired in 2025.)

Mixed Reaction

For many supporters, the clean-energy and CAISO regionalization bills went hand in hand, with the goals of SB 100 achievable largely through a Western RTO.

“Right now, management of the Western grid that powers our homes and businesses is severely fragmented, with 38 separate [balancing] authorities managing electricity generation and flows over 14 states, two Canadian provinces and northern Mexico,” Zichella wrote in an NRDC opinion piece. “This makes it harder and more expensive to add renewable energy generation here and elsewhere in the region, because each time the electrons flow through one of the authorities, a new charge is added.”

Without regionalization, California will have to access other states’ electricity through bilateral contracts and pancaked transmission access charges, Zichella said in an interview with RTO Insider. “It’d drive the cost up dramatically not having them in the wholesale market where the lowest cost [power] is dispatched first,” he said.

Other interest groups supported SB 100 but not AB 813. They feared partnering with the coal-burning states of the Interior West could undermine California’s clean energy push. (Today, California has only one small coal-fired power plant and imports just a tiny percentage of its energy from out-of-state coal-burning generators, according to the U.S. Energy Information Administration.)

The Sierra Club, for example, hailed the passage of SB 100.

“It’s impossible to overstate how significant it is for a state as large and influential as California to commit to 100% clean energy,” the group’s executive director, Michael Brune, said in a Sept. 10 statement.

But the Sierra Club opposed creating a Western RTO, saying CAISO regionalization could result in “resource shuffling.”

“That is, it might actually encourage certain coal-heavy power companies to extend the life of their plants in one part of the West and shift the renewable energy to California,” the group said in a message opposing AB 813. “All that extended and increased use of fossil fuel plants to accommodate the ability of California’s ‘excess’ renewable energy to flow east and the Interior West’s supply to flow to California can add up to more localized air pollution, especially for communities already struggling with dirty air, and more greenhouse gas pollution.”

California can and should go it alone, those who opposed AB 813 but supported SB 100 argued.

“Rather than removing California authority over CAISO and eliminating a board appointed by the governor and subject to Senate confirmation, the legislature should direct CAISO to explore other measures that serve the goal of optimizing system operations, reducing GHG emissions, and addressing concerns about overgeneration and curtailment,” read a joint statement to the State Legislature by Sierra Club California, The Utility Reform Network, the State Building and Construction Trades Council of California and other labor unions.

California curtails large amounts of solar energy during many months. | *CAISO*

Among the coalition’s proposals was expanding the Energy Imbalance Market to include additional Western utilities and allow day-ahead scheduling. It said an expanded EIM would significantly reduce curtailments of renewable resources in California while allowing states to retain control over grid reliability, resource planning and transmission investment.

Steven Greenlee, a senior spokesman for CAISO, said the EIM helps avoid curtailment by selling renewable power on the real-time market and could do even more if day-ahead bidding is allowed. CAISO has a day-ahead market-enhancement initiative in the works, he noted.

“That’s going to help, but it’s still not quite as good as having a full-blown regional transmission market,” he said.

“It does appear possible to meet the 100% goal,” he added, “but the cost and challenge of doing so without a robust regional coordination effort will be significantly increased.”

Natural gas and renewables each make up a large part of California’s energy mix. | *California Energy Commission*

Some relatively simple methods could help reduce the state’s reliance on natural gas in accord with SB 100, he said. Such methods might include time-of-use rates to encourage consumers to use solar power when it’s most plentiful and demand response programs to alert consumers to change their energy use in response to peaks and troughs in electrical demand.

No Silver Bullets

Storage also could be a major piece of a solution, especially with improvements in cost and efficiency, Greenlee noted.

“Energy storage is going to be a game changer … if all of a sudden we see it go dirt cheap, and it’s just everywhere,” he said.

In February, FERC issued Order 841, requiring RTOs and ISOs to revise their tariffs to allow energy storage resources full market access and to ensure storage resources are eligible to provide all energy, capacity or ancillary services of which they are capable, while also enabling them to set clearing prices as buyers and sellers. Grid operators will also need to establish a minimum threshold for participation that doesn’t exceed 100 kW. (See FERC Rules to Boost Storage Role in Markets.)

Then in September, Brown signed SB 700, which will provide an additional $800 million in incentives over the next five years for consumers to purchase behind-the-meter storage systems.

Batteries, which have been limited in their ability to store and disperse energy, are improving thanks to companies such as electric carmaker Tesla, which also manufacturers utility-scale battery systems.

Probably more significant going forward, however, are systems capable of storing hundreds of megawatts such as pumped hydropower.

Zichella noted, for example, that the Eagle Mountain Pumped Storage Project — a controversial proposal in the California desert near Palm Springs — could store output from 1,300 MW of inexpensive solar power by using it to pump water uphill during the day and then releasing the water at night to spin turbines that would help meet peak demand. He also cited a proposed utility-scale system in Utah that would use renewable energy to compress air into underground chambers and release it later in the day to generate electricity.

Then there are storage projects that look and sound like science fiction. The 110-MW Crescent Dunes Solar Energy Project in Tonopah, Nev., uses thousands of revolving mirrors, called heliostats, to concentrate solar energy on a 550-foot tower and heat molten salt to 1,000 degrees Fahrenheit. The salt is stored in a thermal container, where it retains its heat for hours. That heat can be used at night to boil water and turn power-producing steam turbines, which light up Las Vegas.

The Crescent Dunes solar storage project near Tonopah, Nev., concentrates sunlight to heat molten salt to 1000 degrees. | *Solar Reserve*

With such large-scale storage, “you could have a much smoother variability curve” from wind, which is unpredictable and intermittent, and solar, which traditionally stops working after the sun goes down, Zichella said.

“None of these things by themselves are silver bullets,” he said. But added together they could help California pursue its goal of all-green energy. Then again, he said, another run at regionalization will likely happen in the next legislative session. (See Western RTO Proponents Vow to Keep Trying.)

October 5, 2018

EIPC Finds Eastern Tx Planning Working Well

By Michael Brooks

Transmission planning in the Eastern Interconnection is well-coordinated among its planning authorities, ensuring NERC reliability requirements are met, according to a report released Wednesday by the Eastern Interconnection Planning Collaborative (EIPC).

The “State of the Eastern Interconnection” doesn’t get into the nitty gritty. At only 21 pages, it summarizes EIPC’s efforts since its formation in 2009 to examine the interconnection from the bottom up and ensure that planning coordinators’ individual regional transmission plans do not conflict with each other.

“The EIPC has completed a comprehensive description of Eastern Interconnection Planning Collaborative activities over the last decade, including results from its studies and analyses on the regional transmission plans of the major systems that make up the Eastern Interconnection,” said Stephen Rourke, vice president of system planning for ISO-NE and chairman of the EIPC Executive Committee. “The report details how the Eastern Interconnection grid is being planned in a coordinated manner, facilitated in part by the work of the EIPC.”

The Eastern Interconnection also includes the Canadian Maritime provinces: New Brunswick, Nova Scotia and Prince Edward Island. | *ERCOT*

EIPC is made up of 20 planning coordinators — including the five Eastern RTOs — in FERC-designated planning regions: the RTOs’ territories, the Florida Reliability Coordinating Council, South Carolina Regional Transmission Planning and Southeast Regional Transmission Planning. FERC Order 1000 only requires pairs of neighboring regions to coordinate their planning. SPP and MISO work together, for example, as do MISO and PJM — but PJM and SPP do not.

“EIPC efforts provide an additional forum to complement interregional coordination of the combined plans of the regional planning coordinators from an interconnection-wide basis,” according to the report. “While reliability requirements are achieved in the first instance at the regional level through regional processes, the work undertaken at EIPC confirms that the regional plans mesh properly into a combined plan for the interconnection.”

The heart of the collaborative’s work are its two “roll-up” studies, which involved combining the individual regional plans and their underlying data, such as resource mix and projected demand, into an integrated, interconnection-wide model.

The first study was conducted in 2014 for the summer peak hours in 2018 and 2023. The second, released in 2016, covered the 2025 winter and summer peaks.

As part of the latter study, EIPC identified several interconnection-wide power-flow interactions resulting from the regional plans that could cause constraints, leading planning coordinators to develop “conceptual upgrades” for inclusion in future planning cycles.

Another analysis in the study to locate potential constraints simulated 5,000-MW transfers between regions.

“The roll-up analyses demonstrate that the respective planning coordinator transmission planning and interconnection processes, which explicitly include requirements for coordination, have yielded transmission plans that are well coordinated on a regional and interconnection-wide basis,” the report says.

October 5, 2018

Overheard at 2018 NEEP Summit

MIDDLETOWN, R.I. — The increasing interplay between energy efficiency and electrification was a hot topic at the 2018 Northeast Energy Efficiency Partnerships summit Oct. 1 to 3. But industry leaders and experts also discussed how to measure the benefits of energy efficiency — and how to motivate consumers to do more to save energy.

“The truths of how we did efficiency 10 years ago are not necessarily how we’re going to be doing it the next five years,” said Carol Grant, commissioner of the Rhode Island Office of Energy Resources. “How can we bring more people into the drive, make more people aware?”

To get people to value efficiency, policymakers need to make it more visible, said Mary Sotos, deputy commissioner for energy at the Connecticut Department of Energy and Environmental Protection.

The department realized it needed to set priorities for its limited resources following a state budget crisis this year, which saw a third of energy efficiency funding swept into the general fund, Sotos said.

“One clear priority that came out of that process is that climate needs to be at the front of all of our efficiency work,” Sotos said. “One of the biggest sectors of emissions in Connecticut is actually our home heating. So about half of Connecticut is heated with delivered fuels — fossil fuel, heavy emissions.”

DEEP has long discussed applying a carbon or fuels charge, but officials now are uneasy about “creating another pot of money” that could be commandeered to fix a budget shortfall, she said.

The 2018 Northeast Energy Efficiency Partnerships summit was Oct. 1 to 3 | © *RTO Insider*

“We need to look at the resources we have, including our conservational management plan, and be willing to use those resources to make this transition away from fossil fuels,” Sotos said. “That’s something new for us.”

Energy marketing consultant Suzanne Shelton recommended brand marketing and psychological tactics to shift public perception — and find electricity’s equivalent to the “natural” in natural gas.

“We don’t know what we’re doing, we don’t think we need it, and we don’t think it works. That’s our huge problem with energy efficiency,” Shelton said. “Americans want to be greener. Forget education, that’s boring. Think of it in terms of engaging consumers, inspiring them, motivating consumers.”

Who Pays?

Utility and auto industry shareholders should be responsible for the costs of accelerating electrification, Rhode Island Public Utilities Commissioner Abigail Anthony said.

Additional electricity sales increase cash flow, and new load may result in infrastructure upgrades that provide earnings opportunities for the utility, or the utility could receive new incentive-based earnings to absorb increased electric load without new wires, Anthony said.

“From a regulator’s perspective, I am cautious that electric utilities aren’t promoting electrification at scale because they are holding out to see how much preferential regulatory treatment they can get first,” Anthony said. “Why take on any risk if regulators are willing to put all the risk on ratepayers? In any case, we’ll lose the public trust if we don’t have good evidence for asking ratepayers to make the first move in a new business.”

Grant gave a “shout out” to National Grid as the primary utility in Rhode Island: “I’m excited about the leadership they’re providing in continuing to push themselves … their talent and their innovation is really growing, and their focus on new approaches is exciting as well.”

In Connecticut, DEEP this year for the first time asked the utilities to say how they could help homes convert from their current fuels to air-source or ground-source heat pumps, which are good for both heating and cooling, Sotos said.

One challenge in the nation’s capital is that “our energy is too affordable,” said Tommy Wells, director of the D.C. Department of Energy & Environment.

The whole regulatory structure is geared toward keeping electric power rates low, he said, “so when advocates say we want energy to cost more so you use less, it goes directly against the whole construction of our regulatory scheme.”

“In D.C. we have the most valuable, highest renewable energy credits in the country for solar … but the uptake of solar on people’s homes … is slow because their power bills are so low,” Wells said.

Electrification Metrics

Sotos noted that by 2030 Connecticut will need to reduce greenhouse gas emissions across all sectors 40% below 2001 levels, and each year it must save 1.6 MMBtu of energy.

“It’s important to us to make sure that the metrics that we’re applying to our programs actually match what we are trying to accomplish, she said. “Depending on how much you value carbon, or other environmental impacts, the cost-effectiveness of certain programs can potentially look very different.”

Paul Hibbard of the Analysis Group said there are two basic components to measuring the value of energy efficiency and electrification: forecasting and assigning a value to carbon.

“Forecasting avoided costs is incredibly complicated … [it] is really comparing the world with efficiency investments to a world without those investments, and calculating the difference,” Hibbard said.

Assigning a value to carbon is more of a political decision, but it will grow increasingly important for directing investments and determining the right way to use public funding to focus investments, Hibbard said.

Solid metrics benefit the decarbonization effort by providing consistent approaches to evaluating cost-effectiveness in outcomes, said Bruce Biewald of Synapse Energy Economics. He also got “abstract and philosophical” about public policy.

“I have raised six kids … and you have some influence, a little bit of control, but you don’t really control them,” Biewald said. “And that’s also in this nexus of companies and government regulations, and laws and individual consumer choice. So when you see something failing, like the pricing or not pricing of carbon, there’s room for everybody in the solution. The idea that there’s one actor or one policy approach that’s going to solve this is not reasonable.”

Is electrification the new energy efficiency, or is it a new species altogether? asked Rich Sedano of the Regulatory Assistance Project.

Pasi Miettinen, CEO of energy analytics firm Sagewell, said his company gave up energy efficiency to focus on electrification for non-regulated utilities because the latter gives better results for a dollar spent. Nonetheless, “we look at it as one category, maximum yield for dollars,” he said.

Energy Security

Reducing carbon emissions is neither easy nor simple, said clean energy advocate Steve Cowell of E4TheFuture, an organization that promotes residential clean energy.

“Government funding versus regulatory versus market-driven investment, legislative mandates versus rate design, all these are pieces that we have to fit together,” Cowell said.

New England has enormous potential to bring offshore wind and other non-carbon imports into the region, and is also facing the recent or prospective retirements of some really important assets on the grid, said Deborah Donovan of the Acadia Center, a regional, nonprofit advocacy and research organization.

Regarding the wholesale energy market, the region is “in the precarious position of ISO-NE procuring gas capacity through the capacity markets and then saying ‘oh my gosh, we’re over-dependent on gas,’ and really putting their thumb on the scale when we’re confronted with issues like a request for retirement from the Mystic station up north of Boston,” Donovan said.

The region needs natural gas to generate power and to heat its buildings, but the fuel security issue is really just about winter peak hours, she said.

The grid operator sees a natural gas problem and says it must have a natural gas solution, but “we and a lot of other advocates are pushing to stop that. … [It’s] costly to the environment solution,” Donovan said.

Mark Kresowik of Sierra Club’s Beyond Coal Campaign said the Northeast states lead the country in energy efficiency, but he decried the “insanity of [CEO] Gordon van Welie in ISO New England proposing to spend hundreds of millions of dollars to bail out the Mystic plant and push billions of dollars in investment into gas pipelines for fuels that are mandated to decline by state policies.”

NEEP Executive Director Sue Coakley turned the discussion back to scaling up energy efficiency in buildings.

Cowell said New York has decided to eliminate any ongoing residential or energy efficiency work in buildings and homes.

“We had a very difficult stakeholder session a couple weeks ago where the Public Service Commission basically said it’s not worth it, we shouldn’t be helping people insulate and air-seal their homes,” Cowell said. “That makes it tough.”

Coakley suggested basing the argument for efficiency on the costs of storm damage: “You could insulate and air-seal your house for $5,000 to $20,000 and do a really good job, and instead we’re paying to repair houses from damage from bad weather.”

Leah Bamberger, director of sustainability for the city of Providence, said that following natural gas pipeline explosions near Boston in September, residents in homes knocked off the gas system were reluctant to accept space heaters for fears that their outdated wiring couldn’t handle the extra load.

Sotos said that DEEP is expanding its thinking on what constitutes barriers to adoption of energy efficiency measures, and it now realizes that structural issues in a house, such as a difficult to reach boiler, should qualify for state-funded remediation.

— Michael Kuser

October 4, 2018April 30, 2024

Trump Nominates DOE’s McNamee to FERC

By Rich Heidorn Jr.

President Trump on Wednesday nominated the Department of Energy’s Bernard McNamee to replace former FERC Commissioner Robert Powelson — a pick that could be crucial to the administration’s efforts to support at-risk coal and nuclear generation.

Powelson, who left the commission in August to head a trade organization, was a vocal opponent of the Trump administration’s bid to provide price supports to coal and nuclear generators. McNamee, a former aide to Sen. Ted Cruz (R-Texas), was among the DOE officials who designed and lobbied on behalf of the plan.

Lobbying for Price Supports

Last November, McNamee joined FERC Chief of Staff Anthony Pugliese to make the case for coal and nuclear price supports at a breakfast meeting of the Consumer Energy Alliance (CEA) on the sidelines of the National Association of Regulatory Utility Commissioners’ Annual Meeting in Baltimore. Watchdog group the Energy and Policy Institute has described CEA as “a fossil fuel-funded advocacy group.” (See DOE, Pugliese Press ‘Baseload’ Rescue at NARUC.)

FERC Chief of Staff Anthony Pugliese, left, and Bernard McNamee, center, head of DOE’s Office of Policy, made the case for coal and nuclear price supports at a breakfast meeting of the Consumer Energy Alliance on the sidelines of the NARUC Annual Meeting in Baltimore in November 2017. Michael Whatley, right, CEA’s executive vice president, moderated. | © RTO Insider

In January, FERC voted 5-0 to reject Energy Secretary Rick Perry’s Notice of Proposed Rulemaking to save at-risk coal and nuclear plants and instead opened a docket to consider resilience concerns. In June, however, Trump ordered Perry to save coal and nuclear plants under an obscure Korean War-era law. That effort is still pending, although the Washington Examiner reported Friday that it may have stalled in the face of opposition by conservative, free-market groups.

A graduate of the University of Virginia and Emory University School of Law, McNamee has had a variety of political and legal jobs in Texas, Virginia and D.C. In addition to stints at the law firms of Hunton & Williams (now Hunton Andrews Kurth), Williams Mullen and McGuireWoods, he spent time in the attorney general’s offices in Texas and Virginia and was policy director for former Gov. George Allen’s (R-Va.) 2000 U.S. Senate campaign.

After serving as Cruz’s senior domestic policy adviser and counsel from July 2013 to November 2014, he spent a year as chief of staff to the Texas attorney general, where his LinkedIn profile said his work included “challenging the federal government on environmental regulations, defending religious liberty and promoting federalism.”

He first joined DOE as deputy general counsel for energy policy in May 2017 but left after 10 months to become the director of the Texas Public Policy Foundation’s Center for Tenth Amendment Action and Life: Powered, a project to “reframe the national discussion” about fossil fuels.

‘Blessed’ by Coal, Natural Gas

In an op-ed published in The Hill on Earth Day in April, McNamee defended fossil fuels against criticism over their environmental damage. “America is blessed with an abundant supply of affordable natural gas, oil and coal. When we celebrate Earth Day, we should consider the facts, not the political narrative, and reflect about how the responsible use of America’s abundant resources of natural gas, oil and coal have dramatically improved the human condition — and continue to do so,” he wrote.

He returned to DOE in June as executive director of the Office of Policy.

In July, McNamee defended the administration’s plans for price supports in a hearing of the Senate Energy and Natural Resources Committee. “A lot of the organized markets have distortions in them that aren’t representative of an actual free-serving market, so the thought is you need to remove some of those distortions and get some more parity,” McNamee said.

Reaction

Michelle Bloodworth, CEO of pro-coal group ACCCE, called Wednesday for McNamee’s “swift confirmation.”

“FERC has a critical role in assuring that wholesale markets value resilience attributes, especially fuel security. McNamee’s background and experience at the state and federal levels make him well qualified to be the next FERC commissioner,” she said. ACCCE says about 120 GW of coal-fired generating capacity, about 40% of the remaining fleet, has retired or announced plans to do so.

“If McNamee is confirmed to FERC, he will abuse that authority to lead the charge to force taxpayers to spend tens of billions of dollars to bail out old, expensive coal and nuclear plants, at the expense of cleaner, cheaper competitors like solar, wind and grid storage,” Mary Anne Hitt, senior director of Sierra Club’s Beyond Coal campaign said in a statement when McNamee’s name was floated as a potential nominee in August. “Trump is hoping to install a crony at FERC who will unfairly tip the scales in favor of propping up those failing industries.”

“Powelson’s departure was widely seen as opportunity for the White House to more closely align FERC with its own policies,” said Stoel Rives partner and FERC practitioner Jason Johns. “It is my belief that Powelson’s opposition to certain policy efforts came as a surprise to the White House, particularly the White House’s efforts to subsidize coal and nuclear facilities. I’m confident the White House is looking to address those surprises with this choice. ”

“FERC has a longstanding commitment to fuel-neutral regulation, but Mr. McNamee’s past writings and career track record suggest that he would seek every opportunity possible to support fossil fuels,” said John Moore of the Sustainable FERC Project.

Strategy

ClearView Energy Partners suggested McNamee, a Republican, might be paired with a Democratic nominee to replace Commissioner Cheryl LaFleur if the GOP retains a majority in the Senate. LaFleur, whose term expires June 30, 2019, is unlikely to be renominated, ClearView said.

However, Senate Majority Leader Mitch McConnell (R-Ky.) could push McNamee’s confirmation more quickly to restore the 3-2 Republican FERC majority, the consultants said.

Although LaFleur and fellow Democrat Richard Glick have repeatedly been on the losing end of 3-2 natural gas pipeline orders, the departure of Powelson has raised the prospect that pipeline approvals could stall in the face of 2-2 deadlocks.

Last month, E&E News reported that the Trump administration also was vetting Florida Public Service Commission Chairman Art Graham, a self-described conservative and nuclear power supporter, for a FERC seat.

October 4, 2018

CAISO Modifies CRR Plan, Seeks Quick Approval

By Robert Mullin

CAISO is asking FERC for expedited review of a revised proposal to protect electricity ratepayers from funding shortfalls in the ISO’s congestion revenue rights market.

The ISO filed the revision Monday after FERC last month rejected an earlier plan to eliminate full funding of CRRs and instead scale payouts to align with revenue collected through the day-ahead market and congestion charges (ER18-2034). (See FERC Rejects CAISO Congestion Revenue Scaling Plan.)

CAISO’s most recent filing notes that CRR revenue shortfalls have continued into this year, and it urged the commission to quickly approve the revised plan to relieve ratepayers from paying costs for fully funding CRRs in 2019. The ISO’s Department of Market Monitoring has estimated that CRR revenue shortfalls — which are allocated based on power consumption — cost California ratepayers about $100 million a year.

Under the scaling plan FERC rejected on Sept. 20, CAISO proposed to compare the CRR auction revenue and revenue from counterflow CRR holders for each constraint to the payments due to prevailing CRR holders for the constraint. When it does not collect enough revenue to pay prevailing flow CRRs the full value for an interval, the ISO would have reduced the payments proportionally.

The plan called for scaling only the payments to holders of CRRs in the prevailing flow direction, while not scaling the payments due from counterflow CRR holders on the same constraint. The ISO contended that discounting counterflow CRRs would increase revenue insufficiency because those CRRs help fund prevailing flow CRRs.

congestion revenue rights crr caiso — CAISO said the trend of CRR revenue insufficiency has persisted into this year despite a recent uptick in congestion rents due to unusually high flow patterns. | *CAISO*

In denying CAISO’s proposal, the commission noted that it “has long held that counterflow and prevailing flow CRRs should be netted against one another such that the expected net value of two obligation CRRs of equal megawatts from A to B and B to A will be equal to zero.” The commission added that “we continue to believe that a symmetric approach is just and reasonable, while an asymmetric approach has not been shown to be just and reasonable.”

FERC also pointed out that the proposal would have the “undesirable” effect of reducing transparency in the CRR market.

“Market participants could face difficulties valuing a counterflow hedge relative to a prevailing flow hedge, since one would be discounted while the other would not,” the commission said.

In its Oct. 1 filing, CAISO acknowledged that its revised proposal relies on “essentially the same methodology” found in its prior proposal, with one “important” modification: a provision to net CRRs with both prevailing flow and counterflow CRRs within a holder’s portfolio before scaling the payment to that holder.

“In this Tariff amendment, the CAISO proposes a methodology that ensures that a CRR holder with a prevailing flow CRR from A to B can offset its obligation by holding a counterflow CRR from B to A,” the ISO said. “The CAISO proposes to first net a CRR holder’s portfolio of obligation CRRs of prevailing flow and counterflow CRRs with modeled flows on a particular constraint. After it nets these flows, the CAISO then would implement the same procedure it previously proposed through which it would scale CRR payments based on day-ahead market congestion revenue collected on individual constraints.”

CAISO said that it was addressing the commission’s concerns by creating “a procedure through which it can ensure a CRR holder’s modeled flow in both the prevailing and counterflow direction on a specific constraint offset each other.” It contended that complete symmetrical treatment of CRRs would prevent it from addressing the CRR funding issue by Jan. 1, 2019, because it would require greater redesign of software enhancements already underway to support the rejected proposal.

“The CAISO is able to follow the commission’s guidance without a major redesign with the proposal it submits here today because it can net the prevailing flow and counterflow a CRR holder’s CRRs place on a constraint upstream in the process and then feed that information into the scaling methodology the CAISO developed as part of its original CRR Track 1B proposal,” the ISO said.

CAISO contends its proposal “completely addresses” the concerns spelled out in the commission’s Sept. 20 order.

“Because the CAISO’s proposal is just and reasonable and it can be implemented by Jan. 1, 2019, it is unjust and unreasonable to force the CAISO and market participants to have to deal with the risks of revenue inadequacy for another year,” the ISO said.

CAISO asked that FERC set a shortened comment period ending no later than Oct. 11 and issue a ruling by Nov. 9.

October 4, 2018

EIPC Finds Eastern Tx Planning Working Well

By Michael Brooks

The first study was conducted in 2014 for the summer peak hours in 2018 and 2023. The second, released in 2016, covered the 2025 winter and summer peaks.

Another analysis in the study to locate potential constraints simulated 5,000-MW transfers between regions.