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August 28, 2018

NERC Seeks to Balance Oversight, Collaboration

By Robert Mullin

SEATTLE — NERC CEO Jim Robb said last week his organization is sidestepping Washington’s fuel war politics and striving to maintain its independence from industry while still collaborating to identify best practices and emerging threats.

NAES NERC FERC Jim Robb — Robb | © *RTO Insider*

Robb has had no shortage of issues to address in the four months since he joined NERC from Western Electricity Coordinating Council (WECC). In his keynote address at last week’s third biennial NAES-NERC conference, Robb said the organization is focused on making sure its reliability standards evolve in response to the changing generation mix and the growth of electric vehicles and distributed generation. (See related story, Overheard at the NAES-NERC Conference.)

“Do [the standards] need to be evolved in particular ways to be compatible with the industry as it’s evolving?” Robb asked. “Are we keeping our eyes far enough down the road on reliability issues to make sure that we have a good sense of how this new restructured industry is going to work — and going to work reliably? If we don’t have a sense of what we need to have in the ground 10, 15 years from now, we may have lost the battle, and that’s becoming particularly clear on issues like gas infrastructure.”

Relationship with Industry

Robb, who replaced longtime CEO Gerry Cauley, said the organization is seeking to balance its role as enforcer of reliability standards with the need to work closely with industry to respond to new threats, such as cyberattacks.

“We are an independent authority; however, we are very tightly linked with industry in terms of being able to leverage technical expertise and capability in order to do our work,” Robb said. “Our work is much better because of the relationship we have with industry, but we can never be viewed as not being independent from industry.”

Robb said NERC and its Regional Entities face the challenge of “how to manage the yin and yang of independence and partnership in a way that gets us to the right answer from an oversight perspective.”

Other speakers at the three-day conference also discussed that balance.

Midwest Reliability Organization CEO Sara Patrick emphasized that “authority should defer to expertise” with respect to reliability issues. NERC and the REs must be sensitive to actual operations, “understanding how things work, not just how they’re supposed to work.”

Patrick said her organization has changed from its early focus on enforcement of standards. “Enforcement is only one of the tools in our toolkit and it may not be the most effective,” she said, encouraging companies to self-report violations and devise strategies for avoiding them in the future.

Jeff Craigo, vice president of reliability assurance and monitoring at ReliabilityFirst, cautioned against companies adopting practices that superficially achieve compliance without actually improving grid security, often the product of organizational silos and inadequate communication among different departments.

“The key is that you’re coordinating your compliance program across your organization,” Craigo said.

“You can be minimally compliant, but that won’t get you security,” said David Godfrey, WECC vice president of entity oversight.

Curtis Crews, director of compliance assessments for Texas Reliability Entity, talked about the “circle of competence” between oversight agencies and plant operators.

“I audit; you do maintenance. We need each other,” Crews said.

James Merlo, NERC vice president of reliability management, warned against the tendency for companies to drift from reliability standards.

“You can’t see drift in your own organization” in the same way that “you can’t smell your own room,” Merlo said, referring to the phenomenon of “sensory adaptation.”

“I believe NERC standards are the floor, not the ceiling, so the work of [NERC] is critical,” FERC Commissioner Neil Chatterjee said.

The Politics of Resilience

Robb also acknowledged the highly charged debate over resilience and the Trump administration’s push to protect coal and nuclear generation.

“There’s a tremendous amount of political influence in place right now, whether it’s ‘Can we survive without coal plants?’ or ‘What are we going to do if we don’t have our nuclear fleet?’ ‘How much renewable can we really put on the system?’

“Many of these issues are important technical issues for the industry and NERC and the REs to deal with, but they’re also highly politicized, and our job is to stay out of the political fray and be ideologically independent,” Robb said.

Mark Lauby, NERC’s chief reliability officer, told the conference that resilience has always been part of his agency’s mission.

“It’s our definition of reliability,” he said. “Resilience is something we have to keep our eye on, particularly as the risks change.”

EVs, Behind-the-Meter Generation

Robb also pointed to uncertainties stemming from the increased adoption of EVs and how they will interplay with solar generation.

“We used to always operate the system on a very simple, straightforward baseload, mid-merit peaking array, with a fairly well-known load curve,” he said. “We have to kind of ’fess up. We don’t even know what the load curve looks like. So much [generation] is masked by behind-the-meter generation.

“We’ve learned a tremendous amount over the course of the last two years around how inverter-based resources respond to disruptions on the system, and it’s been a little bit like following a ball of yarn through a house,” Robb told conference participants. “One issue you think you’ve corrected, and then another one appears, and so forth.”

The NERC chief pointed out that inverters are not just a problem for solar-heavy California. (See Solar Inverter Problem Leads CAISO to Boost Reserves.)

“It’s an industry issue because inverters will be highly central to the deployment of batteries, which we’ll see in multiple jurisdictions,” Robb said, adding that solar will also continue to be “one of the resources of choice” over the next 10 to 15 years. He also noted that inverters have “pretty extraordinary capabilities” to promote reliable operations. “We need to be ahead of that.”

Robb also said the industry needs to shift its operating model to one that is “just more stochastic in nature.”

“Policies in general need to be rethought,” Robb said. “Most of our frameworks and rules of thumb around things like resource adequacy were based on largely coal and liquid fuel resource mix and a metal-bending [heavy manufacturing] economy, and that’s not what we have anymore.”

August 28, 2018

Overheard at the NAES NERC Conference

SEATTLE — “Buckle your seatbelts; it’s going to be an interesting ride,” NAES CEO Bob Fishman said as he kicked off last week’s third biennial NAES NERC conference, where nearly 140 power plant operators, engineers and back-office professionals spent three days being schooled in the finer points of complying with NERC standards.

Fishman wasn’t so much referring to the nature of the conference — billed “Sustaining Reliability: Balancing Operations and Compliance” — as the changes forcing the electricity sector to re-examine its approach to reliability.

“To look at the market, we’re entering an era of unprecedented change,” said Fishman, whose company helps generators, transmission owners and others comply with NERC reliability standards. “In my career, I’ve seen the rise of the gas turbine and the combined cycle plant. During my stint at Calpine, we were building 8,000 MW a year for a while, and that was a big shift. But this shift is different and very fundamental.”

Demonstrating his point, Fishman listed several concurrent developments: the decline in electricity demand relative to economic growth; growing reliance on renewables and efficiency; plant retirements; and persistently low power prices driving an increasing number of bankruptcies by generators.

What do those changes mean for compliance, grid operations and the future of the industry? Fishman posed rhetorically.

“The good news is that people can’t live without electricity, so the grid’s not going away soon,” he said. “But we are going to see a very different grid infrastructure and operation than we’ve seen before. The integration of renewables into the grid has and is causing a dramatic shift in where power is generated, how it’s generated and how the grid copes with the intermittency of renewables.”

NAES held their third biennial NAES NERC conference August 20th through 23rd | © *RTO Insider*

The three-day conference, which featured NERC CEO Jim Robb and FERC Commissioner Neil Chatterjee, touched on EPA’s replacement for the Clean Power Plan, the politically charged debate over grid resilience, cybersecurity, and the impact of electric vehicles and solar generation. (See related story, NERC Seeks to Balance Oversight, Collaboration.)

Here’s more of what we heard.

FERC Discusses Resilience

Mark Hegerle, director of the Division of Compliance in FERC’s Office of Electric Reliability, pondered the meaning of resilience: “Is it encompassed by reliability? Is it part of reliability? Is it something separate from reliability? Does it mean fuel security? Does it mean hardened transmission? Cybersecurity? Recovery from thunderstorms or distribution outages?”

Hegerle noted that FERC in January rejected the Department of Energy’s Notice of Proposed Rulemaking to provide price supports for coal and nuclear plants. Instead, FERC opened its own resilience proceeding setting out three goals: to develop a common understanding of resilience, understand how each region assesses resilience, and use that information to evaluate potential commission actions (RM18-1). (See DOE NOPR Rejected, ‘Resilience’ Debate Turns to RTOs, States.)

“We wanted to actually think before acting. I know that’s a rarity in Washington,” he said.

“FERC has a lot of responsibilities, but protecting the reliability of the bulk power system is among the most important,” Chatterjee said. “It’s a point that I made during my Senate confirmation hearing, and one year into my time at FERC, I remain committed to this mission.”

Chatterjee said he has “gotten under the hood of the system” as commissioner, helping him understand even more what it takes to maintain the high level of reliability enjoyed by the U.S. He also cautioned that historically low natural gas prices and technological innovation are driving “unprecedented changes” in the country’s resource mix.

“These trends promise tremendous benefits to consumers through lower prices and great choice, but they also highlight a need for vigilance to ensure that reliability is not adversely impacted,” Chatterjee said. “Ten years from now, I do not want to regret not having asked the hard questions about the effects of these changes in resource mix.”

On Cybersecurity

“It’s no secret that America’s critical infrastructure is under threat from foreign actors,” Chatterjee said, referring to the potential for cyberattacks on the grid. “Could the grid hold up against a cyberattack that take out a [gas] pipeline? What about a cyberattack that takes down a substation?”

Joseph Baugh, senior compliance auditor for the Western Electricity Coordinating Council (WECC), addressed the need for “low-impact” facilities — such as smaller power plants — to be hardened against cyberattacks, a new requirement under a NERC’s CIP-003 standard.

“Smaller sites can become a vector for attacks on more critical facilities,” Baugh said.

“If you just own a single generation location, that’s a low-impact [bulk electric system] asset — but you still communicate,” Baugh said. “You probably communicate with either a [generation operator] or a [balancing authority] somewhere. And if you have someone providing transmission services for you, you [are] probably communicating with a [transmission operator]. Know where those communications paths lie, know what they look like, know what they use, and develop the protections necessary and applicable to those communication paths.”

“Cyber is a rapidly evolving threat. It’s a threat that morphs day in, day out,” Robb said. “Your ability to protect yourself from a security perspective is much, much more complex than operating a system reliably and securely.”

On the Demise of Peak Reliability

Robb said the single most important reliability issue facing the U.S. over the next two years is Peak Reliability’s announcement that it will end operations as the Western Interconnection’s reliability coordinator as soon as the end of 2019. Peak will be replaced by “at least three, maybe four [RCs], depending on how you do the math,” Robb said. “The Western Interconnection is structured very, very differently than the East. It really operates as one integrated machine and has had the benefit of Peak Reliability being the reliability coordinator for the entire interconnection.”

The CEO noted that CAISO, SPP and Canada’s BC Hydro could all be functioning as Western RCs within the next two years and would require NERC certification.

“Most importantly for the West are [that] seams agreements are going to need to be put in place to make sure those RCs operate seamlessly and effectively as one,” Robb said.

Chatterjee said FERC is “closely monitoring” the transition from Peak.

“While I appreciate the desire for greater participation in markets and reduced costs that prompted this change, moving away from a single reliability coordinator in the West reintroduces many of the difficult seams issues that prompted the formation of Peak in the first place,” he said.

Maury Galbraith, executive director of the Western Interstate Energy Board (WIEB), expanded on the potential seams issues in a post-Peak West, listing concerns over outage coordination, system operating limits, awareness of remedial action schemes, data sharing and overall communication.

Galbraith acknowledged that CAISO was likely to become the RC for most of the interconnection and said WIEB was concerned about governance under the ISO — or any other RC that is stood up in the region.

“We think the decision-making of the RC needs to be transparent. It needs to be independent. There ought to be a role for the states and provinces to provide input into that decision-making process,” Galbraith said.

Solar, Storage and Flexible Generation

Chatterjee said his staff gets annoyed when he refers to energy storage as a “gamechanger.”

“They say it’s too cliche of a comment, but there’s truth in that cliche,” Chatterjee insisted. “Storage will be the transformative technology. But for us to be able to realize storage’s full value, we must ensure communication between the customer, the distribution utility, the transmission utility and the RTO in a way that’s never been done before.”

Galbraith pointed to the “explosion” of distributed solar in the West, which is expected to double in the next 10 years. That development is coupled with the significant retirement of coal resources, with about 15,000 MW being shuttered between 2010 and 2025.

A major implication of those two developments: “We are seeing, with all of the renewable generation, a premium placed on flexible operation of other generators,” Galbraith said.

Galbraith noted that Western Interconnection coal units that in 2001 on average operated at near capacity for 52% of their operating days are now functioning as baseload just 22% of the time. In 2016, coal units were offline for 22% of operating days, compared with 9% 15 years ago.

“So one big question for [WIEB’s Western Interconnection Regional Advisory Board] and its members are, ‘Where are we going to get ancillary services, not next winter or summer, but five, 10, 15 years down the road when those coal units are retired or offline?’” Galbraith said.

— Robert Mullin

August 28, 2018

MISO Grants Storage Task Force More Authority

By Amanda Durish Cook

MISO’s Steering Committee last week approved an expanded role for the Energy Storage Task Force — with the proviso that the task force doesn’t impede on discussions in other stakeholder forums.

The committee allowed the task force more authority by approving a charter that allows it to evaluate energy storage issues instead of simply identifying them for committee assignment, and to recommend approaches directly to MISO and stakeholders, without first approaching the committee. The group can also provide subject matter expertise to committees that have been assigned storage policy issues. The task force has been seeking an expanded role for a few months. (See MISO Energy Storage Group Seeks Expanded Role.)

miso steering committee energy storage task force — MISO Steering Committee in March 2018 | © *RTO Insider*

However, Steering Committee members removed proposed charter language that would have allowed the task force to evaluate proposed storage solutions that have already been assigned to other stakeholder committees. The committee made the decision based on MISO’s two-year-old stakeholder redesign, which discourages duplicate discussion topics across stakeholder committees.

Energy Storage Task Force Chair John Fernandes, of Invenergy, said some members of the task force have become frustrated by its previous charter’s limitations on discussion.

“When the conversation veers to market structures, hands go up and they say, ‘you shalt not go there,’” he said. “The Energy Storage Task Force is getting a little punchy not being able to talk about market structures.”

Fernandes warned that if task force members continually hit limitations in discussion, they might convene privately and put together nonpublic proposals for MISO staff.

“It will go against everything you want to protect in the stakeholder process,” Fernandes told Steering Committee members.

But some on the Steering Committee said task force members should simply track storage topics in the stakeholder committees to which the Steering Committee assigned them. “I’m really not appreciating that it’s an implied threat, either black or white,” said Planning Advisory Committee Chair Cynthia Crane. She said stakeholders could simply attend other stakeholder committees rather than resorting to nonpublic meetups.

Fernandes also said the task force must be allowed to consider topics outside of the scope of FERC Order 841.

He said the order also places a “really tight fence around which storage issues” can be discussed in the organized markets. He said that’s in contrast to member companies currently developing storage for use beyond Order 841 rules.

“Really what industry is doing is out-of-scope; industry is going beyond Order 841,” Fernandes said.

Steering Committee Chair Tia Elliott said she didn’t see anything in the task force’s current charter that would preclude it from discussing matters beyond Order 841.

August 28, 2018

PJM MRC/MC Briefs: Aug. 23, 2018

Delay Approved for Cost Containment Comparisons

VALLEY FORGE, Pa. — The Markets and Reliability Committee last week agreed to a one-year delay in adding cost-containment measures to PJM’s transmission planning process as proponents made clear that their support of the initiative hasn’t wavered. (See Cost Containment Clears MC Vote Despite PJM Plea.)

“We’ve listened to PJM, we’ve heard PJM, and we want this policy implemented and designed correctly,” LS Power’s Sharon Segner said. “This motion could also be called a motion for excellence.”

pjm rev cost containment provisions january 2018 cold snap — Stakeholders consider a variety of issues at PJM’s MRC meeting. | © *RTO Insider*

The proposal, which pushes back the deadlines for implementing two comparative frameworks by a year, was endorsed by acclamation with three abstentions and one objection. The first framework, which will focus on construction costs, will be effective for transmission proposal windows commencing after Jan. 1, 2020. The second focused on return on equity and will be effective for windows after May 1, 2020.

Segner said the motion “in no way changes” the policy direction of the proposal that was endorsed by the Members Committee in June but was made in response to concerns from PJM staff that the original schedule would not allow enough time to ensure the initiative could be incorporated into the RTO’s Regional Transmission Expansion Plan. It does add detail to the implementation structure.

“There’s unfinished business from the June MC meeting that needs to be addressed in this motion,” Segner said.

“This is the right decision for excellence,” said Susan Bruce, who represents the PJM Industrial Customers Coalition and seconded the proposal.

She called for a “transparent” process and regular progress reporting from PJM staff “to reflect the fact that this is not delay for the sake of delay, but delay to get the rules appropriately crafted.”

Greg Poulos, executive director of the Consumer Advocates of the PJM States, was also supportive.

“It does add more competition to the market,” he said.

PJM Vice President of Planning Steve Herling agreed that the new timeline addressed staff’s concerns.

BTM Visibility

PJM’s Pete Langbein presented proposed Tariff and manual language to increase visibility of behind-the-meter generation, an effort to reduce load forecast errors and the impact of local load shedding.

The changes would create an annual process to model all BTM resources over 1 MW using Energy Information Administration data and transmission owner input. They would also allow TOs to coordinate with BTM generation owners during emergency load sheds to mitigate a grid emergency.

Several stakeholders objected to the proposal, which came out of PJM’s Distributed Energy Resources Subcommittee, being presented at the MRC as a first read. John Horstmann of Dayton Power & Light noted that while the language itself received 88% support at the subcommittee’s July 30 meeting, 58% favored retaining the status quo rather than make any change. Adrien Ford of Old Dominion Electric Cooperative also protested, saying the subcommittee had not discussed the vote before the proposal was sent to the MRC.

Committee Chair Suzanne Daugherty said she would consult Manual 34 to see if the proposal would require a second read at the next meeting.

Market Efficiency

The MRC approved a package of Tariff and manual changes that would alter how PJM evaluates and selects market efficiency transmission projects.

Under “Package G,” PJM would exclude from its base case generating units with facility study agreements and suspended interconnection study agreements. The RTO says including these units causes unrealistic benefit estimates for proposed transmission projects.

Package G received the most support out of nine proposals at the Market Efficiency Process Enhancement Task Force in July. It passed the Planning Committee with 88% in support at its Aug. 9 meeting.

Segner requested a sector-weighted vote on the proposal, calling excluding FSA units a “significant change” and saying she was concerned that PJM was favoring transmission over market-based solutions. It passed with 3.87 out of 5 in favor.

A second set of changes, which would specify that market efficiency proposals must address an RTO-identified congestion driver, passed by acclamation without discussion. Congestion drivers would include current or future market-to-market flowgates and internally binding flowgates.

VRR Curve Quadrennial Review

PJM’s Gary Helm confirmed that FERC has approved an extension until Oct. 12 of the RTO’s deadline to file the quadrennial review of the variable resource requirement curve in its capacity auctions. The extension allows time to push back approval votes as well.

MRC voters will choose among four proposals. Voters at the Market Implementation Committee heavily favored a proposal from Calpine. (See “Quadrennial Review of VRR Curve,” PJM Market Implementation Committee Briefs: Aug. 8, 2018.)

Calpine’s David “Scarp” Scarpignato questioned inclusion of a proposal from the D.C. Office of the People’s Counsel, but the OPC’s Erik Heinle defended it, saying “it’s not a new proposal by any respect” and it’s “been in the process” since it was unveiled at a July 6 special session of the MIC.

Awareness Issues

An initial review of proposed revisions to PJM’s governing documents proved controversial when American Municipal Power’s Steve Lieberman questioned inclusion of a requirement that stakeholders “properly” serve the RTO with rate and waiver requests filed at FERC. Lieberman noted that the change could put stakeholders at risk of being referred for FERC discipline for administrative errors.

PJM staff said the language is necessary to address clerical oversights that happen often enough to be an issue. PJM’s Jen Tribulski said it creates “a basis” for action if staff miss the deadline to intervene in a case or if an applicant is attempting to avoid allowing the RTO to weigh in on the issue.

Lieberman said the “change is rather substantive” and urged other stakeholders to consider its implications.

Interconnection Clarifications Approved

Stakeholders endorsed by acclamation revisions to Manual 14C that clarify procedures for construction of interconnection facilities for generation and transmission assets.

— Rory D. Sweeney and Michael Brooks

August 27, 2018

Overheard at the NAES NERC Conference

Overheard at the NAES-NERC Conference

SEATTLE — “Buckle your seatbelts; it’s going to be an interesting ride,” NAES CEO Bob Fishman said as he kicked off last week’s third biennial NAES-NERC conference, where nearly 140 power plant operators, engineers and back-office professionals spent three days being schooled in the finer points of complying with NERC standards.

What do those changes mean for compliance, grid operations and the future of the industry? Fishman posed rhetorically.

Here’s more of what we heard.

FERC Discusses Resilience

Hegerle noted that FERC in January rejected the Department of Energy’s Notice of Proposed Rulemaking to provide price supports for coal and nuclear plants. Instead, FERC opened its own resilience proceeding setting out three goals: to develop a common understanding of resilience, understand how each region assesses resilience, and use that information to evaluate potential commission actions (RM18-1). (See DOE NOPR Rejected, ‘Resilience’ Debate Turns to RTOs, States.)

“We wanted to actually think before acting. I know that’s a rarity in Washington,” he said.

On Cybersecurity

“Smaller sites can become a vector for attacks on more critical facilities,” Baugh said.

“Cyber is a rapidly evolving threat. It's a threat that morphs day in, day out,” Robb said. “Your ability to protect yourself from a security perspective is much, much more complex than operating a system reliably and securely.”

On the Demise of Peak Reliability

The CEO noted that CAISO, SPP and Canada’s BC Hydro could all be functioning as Western RCs within the next two years and would require NERC certification.

“Most importantly for the West are [that] seams agreements are going to need to be put in place to make sure those RCs operate seamlessly and effectively as one,” Robb said.

Chatterjee said FERC is “closely monitoring” the transition from Peak.

Solar, Storage and Flexible Generation

Chatterjee said his staff gets annoyed when he refers to energy storage as a “gamechanger.”

A major implication of those two developments: “We are seeing, with all of the renewable generation, a premium placed on flexible operation of other generators,” Galbraith said.

— Robert Mullin

August 27, 2018

NERC Seeks to Balance Oversight, Collaboration

By Robert Mullin