Page 1172 – RTO Insider

March 13, 2018

PJM PC/TEAC Briefs: March 8, 2018

PJM TEAC Duff-Rockport-Coleman project RTEP — Kern | © *RTO Insider*

VALLEY FORGE, Pa. — PJM’s plan to switch which side of a transformer is considered for cumulative ramping impact is “a win-win” because it models the system better without implicating expensive upgrades, the RTO’s Jonathan Kern explained to stakeholders at last week’s Planning Committee meeting.

The RTO was proposing to include in its calculations only transformers whose lowest terminal voltage level is at least 500 kV rather than any whose high side is at least 500 kV. PJM justified the change because distribution factors for transformers are generally closer to the lower-side system they connect to than the higher side. The plan was part of a larger package of revisions to Manual 14B developed through an annual review. Stakeholders endorsed moving the proposal to the Markets and Reliability Committee but not before examining PJM’s determinations.

Kern said an analysis found that two transformers — the 500/138-kV Wescosville and 500/230-kV Ladysmith — could potentially be overloaded by the change at a cost of $18 million and $25 million, respectively. He said the change would only take effect starting with the 2023 Regional Transmission Expansion Plan, an initial analysis of which doesn’t show any impacts.

“There’s very strong evidence for the technical change we’re proposing to make here,” Kern said. “To us, it appears like a win-win change. In other words, it’s meeting the obvious technical intuition we have for generation delivery but also not creating any new overloads.”

However, American Municipal Power’s Ryan Dolan reminded everyone that no cost increases come without impact.

“I would argue that over $30 million of required upgrades wouldn’t be minimal,” he said.

External Capacity

PJM’s Aaron Berner successfully urged stakeholders to endorse rule revisions that would allow pseudo-tied external resources wanting to offer into the RTO’s capacity auctions to deliver into the energy market any additional generation beyond what’s authorized for capacity.

The RTO’s rules for external resources impose requirements that can limit how generation those units can offer into the Reliability Pricing Model.

“That doesn’t mean though that the transmission service is not deliverable for energy use,” Berner explained. “So with the addition of this language, the studies that PJM performed previously or would perform for new generation would still allow that generation to be delivered as transmission service for participation in the energy market.”

The revised language was added to changes developed for Manual 12 to address pseudo-tied capacity resources. Berner fielded several clarifying questions before stakeholders requested that PJM add detail to their proposed revisions.

“The current language does not explain in detail what you explained,” said James Manning with the North Carolina Electric Membership Corp.

Berner agreed to work with stakeholders on that issue, but he asked that they endorse the intent of the revisions so it can move on to the MRC.

Limiting Meetings Causing Stakeholder Strain

In explaining why proposed revisions to Manual 21 were only presented at the Planning Committee, staff said they were only trying to comply with stakeholder requests to limit meetings.

PJM’s Jerry Bell explained the revisions, which would change how generators are tested to receive and retain capacity interconnection rights (CIRs). Stakeholders argued that the changes are wide-ranging, requiring input from experts who don’t typically attend committee meetings, and asked why the considerations hadn’t been put to a task force or other high-level committees.

“This is really a generation operations issue, but we’re looking at it in the Planning Committee. We’ve got mostly transmission planners in the room here. We really need to expose this to all of the people this is really going to affect,” FirstEnergy’s Jim Benchek said. “These changes are pretty major.”

“I don’t necessarily think there’s any ill intent here, but it’s just that sometimes what looks to be just something for the Planning Committee has broader impacts,” said Adrien Ford with the Old Dominion Electric Cooperative. She suggested that PJM’s problem statement/issue charge process could have arrived at a result faster because the necessary stakeholder groups could have been identified up front.

“We’re trying to balance the needs of the stakeholders where we’ve gotten feedback about having too many other meetings and having the agendas jammed and the days of the week jammed with other meetings,” said Ken Seiler, who chairs the Planning Committee. He said he would confer with the chairs of the Operating and Market Implementation committees about how to handle the requests.

Stakeholders noted several concerns with the proposal, which would eliminate June from the summer testing period (leaving July through August) and require simultaneous testing of all resources at a plant except wind and solar units. They would have to be able to start within five minutes.

“If you were to call on all the units at a plant and apply the test simultaneously, the start-up costs could get quite expensive,” Benchek said, adding that his company didn’t favor the reduced testing period either.

Solar and wind would be exempt because they use their average capacity factor during the peak hours included in the testing, but all capacity factors will be determined by calculating the median rather than average performance going forward. Bell confirmed those calculations won’t become fully effective until 2021/2022.

Mike Borgatti with Gabel Associates was concerned that the proposed language changes didn’t adequately enunciate that units’ capacity factors wouldn’t be affected for three years.

Bell also walked stakeholders through analysis that shows that the 650 MW of non-dispatchable hydro generation might be overstated by 520 MW because the expected capacity factor of 20% shows that 130 MW is predicted to be available.

AEP Project Removed from RTEP Modeling

American Electric Power’s portion of Duff-Rockport-Coleman project has been placed on hold and will not be modeled in the 2018 RTEP, PJM told the Transmission Expansion Advisory Committee on Thursday.

Robert Bradish, AEP’s vice president of transmission grid development, informed PJM of the change in a letter Feb. 20. Bradish said the supplemental project was proposed to address voltage stability limitations and eliminate the special protection scheme at the Rockport plant by interconnecting the Rockport 765-kV station with the MISO Duff-Coleman 345-kV market efficiency project.

“The current generation situation at Rockport plant is quite different from the situation when this supplemental project was included in the 2015 RTEP,” Bradish wrote. “There is currently significant uncertainty regarding generation-related conditions which may affect future operation of the Rockport units. Certain of these generation conditions can only be addressed through coordination with third parties, regulatory proceedings and other circumstances outside of AEP’s control.”

Retirement Studies Update

PJM has completed reliability analyses on retirements at six generating stations and is conducting reviews for three others.

The retirements of Buggs Island 1 and 2 (138 MW), Bremo 3 and 4 (227 MW), and Bellemeade CC 1 (265.7 MW) are all effective April 16; Possum Point 3 and 4 (317.7 MW) and Chesterfield 3 and 4 (262.1 MW) are both scheduled for Dec. 1. PJM said it has asked Dominion Energy, the transmission owner for all the plants, to perform additional analysis to identify any required upgrades.

PJM said it identified no impacts from the scheduled May 3 closing of Evergreen Power United Corstack (25 MW) in Met Ed.

It is conducting analyses on the Morris Landfill Generator (1.9 MW) in ComEd and the Reichs Ford Road Landfill Generator (1.7 MW) in APS, both set for May 31, as well as FirstEnergy’s Pleasants Power Station 1 and 2 (1,278 MW), scheduled for Jan. 1, 2019. (See FirstEnergy Shutting down Unsold Coal Plant.)

Market Efficiency Update

PJM planners have selected a $25.4 million proposal by Baltimore Gas and Electric to address constraints on the Conastone-Graceton-Bagley 230-kV corridor after finding it cleared their reliability and cost/constructability analyses. The project (proposal 5E), which involves reconductoring and upgrades to equipment at the Conastone and Windy Edge substation, is expected in service in 2021. It will be recommended for approval at the Board of Managers meeting in April.

Planners said they won’t be recommending any market efficiency projects in the PPL zone after seeing the projected congestion benefits from the proposed Susquehanna–Harwood drop by about half under the base case because of a lower load forecast and changes in generation expansion since the start of the 2016/17 project window.

PJM is now developing assumptions for its 2018/19 RTEP long-term window, which it expects to open between November and February 2019.

Officials also said they expect to open a 60-day reliability project window in May or June.

— Rory D. Sweeney & Rich Heidorn Jr.

March 13, 2018

PJM Operating Committee Briefs: March 6, 2018

VALLEY FORGE, Pa. — PJM will hold its spring restoration drill May 15-16, staff told attendees at last week’s Operating Committee meeting. Invitations will be emailed March 19 to the contacts listed in transmission owners’ restoration plans for the transmission operator, generation operator and training liaisons, PJM’s Alpa Jani said.

PJM Operating Committee Meeting DER Restoration Drill — PJM’s Operating Committee met on March 6th | © *RTO Insider*

Primary Frequency Response

PJM’s Glen Boyle said stakeholders’ work in the Primary Frequency Response Senior Task Force became more complicated and urgent after FERC issued Order 842, which requires all new generation that receives an interconnection agreement to provide primary frequency response. (See FERC Finalizes Frequency Response Requirement.)

The order silenced any debate about new facilities, so staff will instead focus on what should be required of existing units. The order could delay the PFRSTF’s work, but the group plans to vote on proposals after its March 21 meeting. Stakeholder endorsement votes will likely be completed in June.

Unit-specific Parameter Adjustments

Jani also reviewed the statistics about the number of unit-specific parameter adjustment requests that PJM received this year. The request period closed on Feb. 28.

All final determinations will be made by April 15 so they can be implemented by the start of the delivery year on June 1. Jani noted that soak time information is only for reference this year but will be added as a parameter and integrated next year.

Resilience Update

PJM’s Dean Manno reviewed the RTO’s resilience roadmap and highlighted the next steps for 2018. PJM is evaluating the needs for “extreme events,” he said, including reserves and regulation requirements, transmission loading and triggers. Staff are also planning to review the weather/environmental and sabotage/terrorism emergencies sections of Manual 13 to see if anything should be added.

30-Minute Reserves

PJM’s Vince Stefanowicz explained staff’s thought process on developing a real-time 30-minute reserves product and announced that a problem statement and issue charge will be forthcoming in April.

Currently, 30-minute reserves are only procured in the day-ahead market, so when more primary reserves are needed, they’re moved in from secondary reserves, which only serves to reduce secondary reserves rather than bringing in more units. The new product would achieve that, he said, “not just move things from secondary into primary.”

Dave Mabry with the PJM Industrial Customer Coalition said that “perhaps a bigger audience” would be necessary to make such changes and asked if the Market Implementation Committee would become involved.

“Conceptually, I’m in agreement with you,” said PJM’s Dave Souder, the interim chair of the Operating Committee. He said the plan is to figure out the operational needs, then determine what other committees need to be involved.

Implementing DER Ride Through

The RTO is hoping TOs will take the lead on implementing “ride through” for distributed energy resources, PJM’s Andrew Levitt said. Ride through is the process of remaining connected to the grid during abnormal conditions. Despite being a “challenge” for large generators, Levitt said they’re required to do it while DERs are not.

Today, DERs can trip off very quickly and potentially over a wide variety of variables. However, there are already 4,000 MW of distributed solar generation in PJM today with expectations of that tripling in the next three years, making it a significant issue if they all trip when the grid is having issues.

“We think ride through is critical for DER,” Levitt said.

PJM recently published a draft revision of standards for DERs that would require ride through. However, it has no control over the net-metered solar that accounts for all the DER growth.

“We’re looking to follow the utilities’ lead on this topic … but we also anticipate a public stakeholder process” to support stability bulk energy supply and move toward a single standard for implementation, Levitt said.

Changing Tier 1 Reserve Estimates

PJM’s Joe Ciabattoni unveiled planned revisions to how Tier 1 reserves are estimated to address stakeholders concerns about major overestimates. (See “Investigating Improvements Based on Additional Cold Response Details,” PJM Operating Committee Briefs: Feb. 6, 2018.)

The RTO is proposing to cap spin max at a unit’s economic minimum and require that the spin ramp rate equal the economic ramp rate, he said.

“We find that during spin events this is an issue,” he said.

A TO representative who asked not to be named voiced concerns about reducing too much spin and asked that additional data be presented to explain the problem. Ciabattoni agreed.

“I just want to make sure we’re actually seeing a problem there as opposed to fixing a problem that doesn’t exist because there’s no way a resource could tell if there’s going to be a Tier 2 payment,” the TO representative said.

Tom Blair of the Independent Market Monitor said the issue is exacerbated because of how the reserve market is set up.

“There is no penalty for Tier 1 synchronized reserve not responding. There is, however, a significant incentive to overestimate your Tier 1 reserve,” he said.

Blair explained that the reserve market is set up so that units can earn enough money that they still make a profit even with the penalties that occur if they don’t respond when called upon.

“I think directionally this is worthwhile, probably helpful,” said Carl Johnson, representing the PJM Public Power Coalition.

Calpine’s David “Scarp” Scarpignato said another issue is that scarcity pricing is not being triggered when it needs to be and that “the issue is much broader than this.”

RAS Removed

Commonwealth Edison is removing the Davis Creek remedial action scheme (RAS). The plan was needed to prevent thermal overloads in the event of losing a 345-kV line to the substation by auto-closing a 345-kV bus tie at the station.

A supplemental project to expand the 345-kV bus at the substation is expected to be completed by the end of the year.

— Rory D. Sweeney

March 13, 2018

Overheard at Transmission Summit East 2018

WASHINGTON — Transmission developers, planners and regulators gathered last week at the Washington Marriott Georgetown hotel for the three-day Infocast Transmission Summit East. While grid security was on the minds of all who attended, speakers also had plenty of opportunities to vent about FERC Order 1000 and RTO planning processes — as well as poke fun at Ted Koppel.

DOE Official Briefs ‘North American Model’

Bruce Walker, assistant secretary of the Office of Electricity Delivery and Energy Reliability at the U.S. Department of Energy, briefed attendees Wednesday on five initiatives by the department to enhance grid security.

The most ambitious, by the department’s Grid Modernization Lab Consortium, is developing a “North American all-energy systems model” that includes all the grid operators across North America and identifying their interdependencies.

“Once we’ve got this model, we’ll be able to do real-time analysis [and] next-worst-case analysis, so when an excursion occurs on any one of the major systems in the United States or Canada or Mexico, we’ll be able to run it and understand what that means and what the next-worst piece of equipment or system is to lose, so that we can proactively act to prevent that, whether it’s providing physical security, whether it’s changing the load flows on the grid to lessen the load or demand in one particular place,” Walker said. Many of these actions would be taken by RTOs, he said.

The model will be so comprehensive, he said, that it will be able to do “N-K” load-flow analysis, with the “K” standing for assets that aren’t traditionally considered part of the electric grid. (See related story, “Beyond N-1,” Tx Summit Attendees Struggle to Define ‘Resiliency’ Problem.)

Another initiative is “megawatt-scale storage strategically being utilized throughout the grid.” Walker said this initiative ties in with the North American Model, which will allow the department to “identify where the best investments of these” storage assets would be.

This raised the eyebrow of Rob Gramlich, president of Grid Strategies. “‘Identifying best investments’: that sounds like a market function. How does this initiative interact with the market?” he asked.

“Because we’re focused on the resiliency component — and then we’re specifically focused on critical infrastructure — … the market actually has no place in making the determination for those investments,” Walker responded. “So part of why we got FERC, NERC and DOE looking at the system and building this model is we come at it from slightly different angles. FERC’s angle is a bit more market-driven; NERC’s is more reliability-driven; DOE has got very specific requirements, being the sector-specific agency for cybersecurity in the energy industry, focusing in on critical infrastructure throughout the United States.”

Impact of Ukraine-style Attack Would be Less

A cyberattack on the U.S. grid by a foreign power such as the one experienced by Ukraine in 2015 and 2016 is certainly possible, several experts said in a Wednesday panel on cybersecurity.

But Ukraine lacks the basic protections and infrastructure of the U.S., meaning such an attack would be far less disruptive and destructive here, they said.

From left to right: Mark Scott, D.C. Homeland Security Emergency Management Agency; Michael D. Melvin, NIPSCO; Col. Victor Macias, National Guard; Ralph King, EPRI; Michael Garcia, National Governors Association; and Brian Harrell, George Washington University. | © *RTO Insider*

Or as moderator Brian Harrell, senior fellow at George Washington University’s Center for Cyber and Homeland Security, quipped, “I don’t know too many utilities here in the United States running pirated versions of Windows XP on their systems. So, there are some differences here.”

The general consensus among the panel, which included a National Guard colonel, was that utilities need to be incentivized to do more than the minimum required by NERC, as well as be on guard for insider threats.

But the panelists unanimously labeled as off-base the assertion made by broadcast journalist Ted Koppel in his book “Lights Out” — the mention of which drew laughter from the audience — that the U.S. is susceptible to a catastrophic attack and that industry and government are not taking the threats seriously.

Flaws in Planning Processes

Many speakers complained about the transmission planning processes in RTOs, including the competitive and interregional processes.

On a Thursday panel discussing the effects of renewable energy resources on transmission planning, Invenergy Senior Vice President Kris Zadlo said he doesn’t “think transmission planning is happening.”

“Operating lines that [are] 2% overloaded or replacing transformers: that’s not transmission planning,” Zadlo said. “That’s asset management.”

He pointed to American Electric Power’s Wind Catcher Energy Connection Project, which Kelly Pearce, director of contracts and analysis for the company, had briefed attendees on earlier in the day. The project would be the largest wind energy facility in the U.S at 2 GW, with a dedicated 765-kV tie line from the Oklahoma Panhandle to Tulsa.

From left to right: Kamran Ali, AEP; Barbara Clemenhagen, Customized Energy Solutions; Jack McCall, Lindsey Manufacturing; and Ed Tatum, American Municipal Power. | © *RTO Insider*

“Folks are trying to find end-arounds,” Zadlo said. Wind Catcher is a “360-mile end-around because SPP’s transmission planning process has failed. … Quite frankly it’s disgraceful that we have to wait three to five years for an interconnection study to be processed by utilities and by ISOs.”

Kip Fox, president of Electric Transmission Texas, said, “One thing we do notice across all of the RTOs that everybody should kind of think about is we’re not seeing a lot of interregional” projects. “We are not seeing projects that are going across RTOs. And unfortunately, that’s where the big bang for the buck economically is going to be. And usually I find it’s a fight over who’s going to pay for that project, rather than whether that project makes sense.”

On a separate panel Thursday, Kamran Ali, AEP vice president of grid development, noted that between 2012 and 2016, PJM identified 72 projects that were open for competition. Of those, only three ended up being assigned to nonincumbent utilities, he said.

Trump Admin’s Effects?

Speakers at the conference uniformly dismissed the actions of the Trump administration as having any effect on the growth of renewables and the retirement of coal-fired generation. Even as one attendee announced to the conference that President Trump had imposed tariffs on steel and aluminum imports Thursday afternoon, panelists were not concerned.

“There’s something interesting that’s going to happen in 2020,” Zadlo said. “It’s not that the [production tax credits] are going to run out.” Nor is it the next presidential election year. “In 2020, millennials will be over 50% of the workforce. Have you guys polled the millennials as to what their feelings and thoughts are regarding renewable energy? If you haven’t, you better. Because they want it.”

— Michael Brooks

March 13, 2018

Overheard at Institute for Electric Innovation Spring Forum

WASHINGTON — The Institute for Electric Innovation’s spring 2018 forum Wednesday featured a discussion on corporate renewable energy procurement and an appearance by Rep. Yvette Clarke (D-N.Y.), co-chair of the newly formed Smart Cities Caucus. Here’s some of what we heard.

Electric Industry an ‘Afterthought’ to FCC?

Edison Electric Institute Executive Vice President and former FERC Commissioner Phil Moeller told Clarke that the electric industry feels like an afterthought in the Federal Communications Commission’s discussions on the rollout of 5G cellular technology.

“We have another issue [at the FCC] with pole attachments and spectrum allocation, but particularly with [the] 5G network, our infrastructure is going to play a big role,” Moeller said. “Safety has to come first. We could probably use your help at the Smart Cities Caucus to remind the FCC that our industry should not be an afterthought but should be at the table during some of these discussions.”

Renewable Energy IEI Yvette Clark — Lisa Wood, executive director of the Institute for Electric Innovation (left), and Rep. Yvette Clarke (D-N.Y.), co-chair of the newly formed Smart Cities Caucus, speak at IEI’s spring forum at the Newseum in Washington. | © *RTO Insider*

“I agree wholeheartedly,” responded Clarke. “We’ve had hearings already with that in mind. That’s going to be a challenge in every corner of the nation because we’re going to be expected to utilize the infrastructure that already exists. So there has to be a collaboration. In many towns, cities, municipalities, there’s going to be a struggle about how you site these things.”

Corporate Renewable Procurements, Green Tariffs Growing

Letha Tawney, director of utility innovation for the World Resources Institute, led a panel discussion on corporate renewable energy procurements, noting that green tariff programs in 15 states have helped to bring 1 GW of new solar and wind projects to the grid since 2013.

“There’s been some successes,” said Tawney, whose organization works with utilities and customers to craft green tariffs. “How do we scale this? This is still pretty marginal. We just passed a gigawatt of transactions being signed. That’s not that much, really, in the whole U.S. market. … We need to do a lot more.”

Robert M. Blue, CEO of Dominion Energy’s Power Delivery Group, worked with customers like Steve Chriss, director of energy and strategy analysis for Walmart, in developing a new renewable generation (RG) tariff that functions as a contract for differences.

“The renewable generation tariff that we filed, a lot of it wasn’t working for a lot of customers,” Blue said. “That’s why we revised it. We heard from them what would make it work better and we expect that that will have a substantial impact.”

Last October, Dominion announced Facebook will build its eighth U.S. data center in the utility’s territory outside Richmond, Va., under a proposed new Schedule RF (renewable facility) rate structure, with which the company will offset its 130-MW load with renewables. Facebook’s goal is to power all its operations with renewable energy.

Walmart, which takes service from 1,000 utilities, has a goal of being 50% renewable power by 2025.

“We operate in a lot of states that aren’t deregulated and a lot of states where there’s not necessarily a market in place,” said Chriss. “In SPP or MISO, you can do a virtual [power purchase agreement] … but in Southern Co. or in some of the other big IOUs, there is no market, per se. So really, the market is their system and so you have to figure out structures that work within that.”

Even within Southern’s utilities, rules differ across state lines, Chriss said. “Our deal with Alabama Power [a 72-MW solar farm in southeastern Alabama that went into operation several weeks ago] … is very different from the Georgia [Power] structure.”

Nick Wagner, a member of the Iowa Utilities Board, discussed concerns over corporate procurements resulting in cost shifts to other customers.

“It’s no secret to probably anybody in this room that utility costs have been so highly socialized for a long time. It will take us some time to unwind those as we have the data” from cost-of-service studies, he said. “It’s probably a little more masked in the vertically integrated [states] than in the non-vertically integrated [states]. As we get more data, I think it’s going to become a little bit easier to separate those things out.”

Wagner said regulators’ efforts are aided by interventions by customers and other interest groups. “If nobody’s happy at the end of the day, but no one is really angry, you probably came to about the right place,” he said. “If someone’s walking out high-fiving, we know we messed up somewhere.”

— Rich Heidorn Jr.

March 13, 2018

PJM Market Implementation Committee Briefs: March 7, 2018

VALLEY FORGE, Pa. — PJM stakeholders at last week’s Market Implementation Committee meeting approved two problem statements and issue charges presented by Exelon, over objections from the Independent Market Monitor.

Exelon’s Sharon Midgley presented both proposed investigations. The first problem statement and issue charge focused on PJM’s rule for forfeiting revenue from financial transmission rights if a market participant’s portfolio of day-ahead virtual bids creates a larger LMP spread in the day-ahead market than in real-time auctions.

Midgley argued that changes PJM implemented last year in response to FERC’s order to revise the forfeiture rule have made the rule overly restrictive, which Exelon says resulted in forfeiture of substantially more revenue from legitimate positions. A year-over-year comparison of monthly forfeitures before and after the rule changes took effect in 2017 shows as much as a $1.8 million difference in a single month.

The Monitor’s Howard Haas said that, while the rule changes have yet to be approved by FERC, they follow the commission’s guidance on the required changes. Given all the changes in the rule, he said, it was expected that the forfeiture numbers would be different than under the old rule, and the results under the old and new rule are not directly comparable. He said the observed level of forfeitures to date are in large part a result of the retroactive application of the new rule. Since information has become available under the new rule, participants have changed their behavior and forfeitures numbers are down dramatically. (See FERC Orders Portfolio Approach for PJM FTR Forfeiture Rule.)

PJM attorney Jen Tribulski agreed with Haas that the revisions the RTO filed for approval are in line with FERC’s order, but she said that Exelon’s concerns are “probably worth a discussion here” and that the commission’s order doesn’t prevent stakeholders from discussing and seeking approval for additional revisions. PJM’s Asanga Perera later noted in response to a stakeholder question that others have complained about the rule, though he didn’t have an exact number.

“It’s not only Exelon. We have seen other parties express concerns with the forfeiture rule,” he said.

Some stakeholders were unconvinced by Exelon’s argument but also reluctant to buck the tradition of supporting each other’s requests to analyze market procedures.

“I don’t know what we see that there is a problem, but I don’t know that we have much objection,” said Dave Mabry, who represents the PJM Industrial Customer Coalition.

Direct Energy’s Marji Philips said she would support the request but that it “seems premature” given the amount of work already teed up in stakeholder committees and the lack of clarity on how many market participants have been negatively impacted.

On Midgley’s second problem statement and issue charge on the exemption process for the must-offer rule, Monitor Joe Bowring said the focus of the analysis should expand to include how capacity interconnection rights (CIRs) would be handled for units that transition from capacity to energy. Midgley welcomed the revision.

Exelon’s request comes in response to difficulties the company has experienced with the timing of the current exemption approval process, specifically that it may be physically impossible to install dual-fuel capability within the three months between the third Incremental Auction and the start of the corresponding delivery year. Sites without winter fuel supplies may need to construct onsite oil storage, which can’t be completed in the three-month period. Midgley said it’s unclear what documentation needs to be submitted to receive approval for an exemption on such grounds.

The proposal would have stakeholders consider revising the guidelines for documentation required by the Monitor and PJM to grant an exemption, implementing process reforms to improve efficiency and establishing a process for resources with an existing must-offer requirement to become energy-only resources.

Both investigations were endorsed by stakeholders.

Hardware to Improve Day-ahead Performance

PJM announced it had purchased several new computer servers to address issues with delays in posting day-ahead auction results. The hardware was acquired as part of an ongoing two-year cycle to upgrade equipment, so there was no additional budget impact, PJM’s Todd Keech explained.

“We’re right into one of those refresh cycles now, so it was good timing,” he said.

Chantal Hendrzak, who chairs the MIC, acknowledged requests to expand the bidding window but said the RTO is focusing on posting the results sooner rather than increasing flexibility.

Five-Minute Settlements to Begin

PJM’s Ray Fernandez reminded stakeholders that units have until March 16 to sign up for five-minute settlements, which go into effect April 1. After that, resources will have to alert the RTO at least three days ahead of the desired change-over date before submitting five-minute revenue meter data.

Maintenance in Cost-Based Offers

PJM’s Tom Hauske said the RTO is considering whether to include maintenance costs in cost-based offers. Special sessions on variable operations and maintenance (VOM) costs produced three proposals, among which stakeholders will be asked to choose at next month’s meeting.

MIC PJM cost-based offers exelon ACR — The current rules for what can be included in cost-based offers. | *PJM*

Cost-based offers created through current Manual 15 rules do not allow for inclusion of any maintenance costs. PJM’s proposal would allow for maintenance attributed to running the unit and directly tied to electricity production by including FERC accounts minus labor costs. Generators could also add operating costs, such as lubricants, chemicals and other consumables, into incremental energy offers, but not VOM.

MIC PJM cost-based offers — PJM’s proposed changes would allow some maintenance costs | *PJM*

Energy-only resources or units that didn’t clear the delivery year’s Base Residual Auction could add their avoidable cost rate (ACR) fixed costs (such as staffing, taxes, fees, insurance and fuel availability) into their VOM, but capacity resources could not because they should recover those expenses through their capacity payments.

PJM also presented another proposal that would give resources the option of using its package or default resource-class VOM values calculated using U.S. Energy Information Administration data.

The Monitor’s package would replace “incremental” with “short-run marginal” in the Operating Agreement and would operate under the premise that all maintenance and labor costs are included in a unit’s capacity offer. The net cost of new entry (CONE) for each resource class would be modified to include maintenance and labor costs. Manual 15 would be stripped of all costs except short-run marginal ones: fuel, emissions, water, chemicals and consumables. A unit’s ACR would encompass everything else, including project maintenance expenses.

“The IMM package is based on what a competitive offer in the market should be,” the Monitor’s Catherine Tyler said. “We also think this is the most straightforward and simple to implement.”

Once a proposal is approved, stakeholders would discuss implementation and time frame, Hauske said.

PJM ICC’s Mabry said “one of the big heartburns we have” is that overhaul and major inspection costs are included in VOM rather than ACR.

“That frankly weighs into the decision … should I go buy a new resource?” he said.

PJM’s proposal operates under the theory that VOM is recovered after it’s been spent, while ACR is what’s projected to be spent, Hauske said. He pointed out that if gas prices go up and a unit decides to run — and therefore performs maintenance — less often, it would have already received recovery for the higher amount of maintenance if it was recovered through ACR.

A representative of a transmission owner who asked not to be named said the default values are “pretty conservative” and should be based on actual costs, not averages. Tyler said the Monitor publishes its own defaults, but the TO representative said they’re not explained.

Long-term FTRs Undercut Annual FTRs

The Monitor appears to have won over PJM regarding its concerns about long-term FTRs. Haas presented analysis requested by stakeholders that showed the cost to auction revenue rights holders from the long-term FTRs market construct. Among other findings, Haas showed that over the past four planning periods, FTRs sold in the long-term market have been undervalued by more than $337.2 million compared to the annual FTRs for the corresponding delivery year. (See PJM Stakeholders Decline to Change Market Path Rules.)

The current long-term market construct doesn’t allow ARR holders to directly benefit from the sale of congestion rights, despite owning the rights to congestion, Haas said.

“I think we’re on the same page with [the Monitor] about most of the issues,” PJM’s Brian Chmielewski said.

— Rory D. Sweeney

March 13, 2018

2nd Circuit Hears New York ZEC Appeal

The 2nd U.S. Circuit Court of Appeals on Monday heard oral arguments in an appeal of a judge’s decision to dismiss a suit against New York’s zero-emission credits program.

In filing the appeal, the Electric Power Supply Association and members Dynegy, Eastern Generation and NRG Energy joined Roseton Generating and Selkirk Cogen Partners in arguing that some generators would lose millions in revenue because the subsidized nuclear plants would suppress NYISO capacity and energy prices.

New York ZEC Program NYISO — Indian Point Nuclear Plant

Judge Valerie Caproni, of the U.S. District Court for the Southern District of New York, last year granted motions to dismiss the case by the Public Service Commission, the defendant, and intervenor Exelon, owner of the three nuclear plants that would receive ZEC payments (16-CV-8164). (See New York ZEC Suit Dismissed.)

ClearView Energy Partners issued a statement on Monday’s arguments saying that at least two of the three appellate judges appeared skeptical of petitioners’ pre-emption claims that the ZEC program infringes on FERC’s exclusive jurisdiction over wholesale markets.

Miles Farmer of the Natural Resources Defense Council said in a blog post that the 2nd Circuit will likely provide the final say on the validity of New York’s ZEC program under federal law.

New York’s Clean Energy Standard and its provisions for subsidies for nuclear plants are also being challenged in state court. The Albany County Supreme Court in January rejected the state’s motions to dismiss outright a lawsuit challenging the ZEC program. (See New York Court to Consider ZEC Challenge.)

— Michael Kuser

March 13, 2018

Tx Summit Attendees Struggle to Define ‘Resiliency’ Problem

By Michael Brooks

WASHINGTON — Speakers and attendees at Infocast’s 21st Transmission Summit East last week noted that “resiliency” was the buzzword of the event.

A consensus seems to have emerged on an industry meaning of the word that distinguishes it from “reliability”: the ability to reduce the magnitude and duration of a disturbance in grid operations.

FERC NERC Resilience — From left to right: Mohammed Alfayyoumi, Dominion; Aubrey Johnson, MISO; Paul McGlynn, PJM; and David Townley, CTC Global. | © *RTO Insider*

But there was little to no consensus on how regulators and utilities should measure or value it. Nor was there any agreement on whether there is even a resilience problem to solve.

Michael Spoor, vice president of transmission for Florida Power & Light, opened the conference with a presentation detailing how the utility’s hardening of its system lessened the impact of last year’s Hurricane Irma compared to Hurricane Wilma in 2005. Since 2006, FPL has spent more than $3 billion to replace its wooden transmission and distribution poles with concrete and steel structures able to withstand 145-mph winds, as well as undergrounding some of its lines.

FERC NERC Resilience Howard Schneider — Spoor | © *RTO Insider*

Despite Irma making landfall in Florida as a Category 4 storm (compared to Wilma’s Category 3) and affecting 1.2 million more customers than Wilma, it took eight fewer days for FPL to restore service to its customers.

But that was a case of a utility in a non-RTO state taking the initiative itself, without market-based incentives or federal directives.

“This isn’t a new problem. We’re using a new word, maybe, to define something that we’ve doing for a really, really long time,” Katherine Prewitt, vice president of transmission for Southern Co., said in a Wednesday panel on valuing resiliency.

Transmission Summit East Infocast Resiliency — Clemenhagen | © *RTO Insider*

“I think that the bottom line with regard to the word ‘resiliency’ has a lot more to do with policy and politics than it does with operations and what we’re doing on the ground,” said Barbara Clemenhagen, vice president of market intelligence for Customized Energy Solutions. Utilities have been complying with NERC reliability standards on a nonvoluntary basis, “but certainly I don’t think there’s any utility in the room who would say they wouldn’t volunteer to address all of these standards.”

Paul Kelly, director of federal policy for Northern Indiana Public Service Co., noted that a NERC report published last year found that resilience against weather-related events has been improving. “So there wasn’t so much of an alarm bell being sounded from the reliability organization, but nationally it’s become a very politically focused issue.

“We really want to make sure we make the right decisions, and that we have a really good understanding of ‘is there truly a problem?’”

‘Beyond N-1’

The concept of N-1 — planning for the loss of a grid asset, such as a generator or a transformer — has “served us well for over 100 years,” Mohammed Alfayyoumi, director of Dominion Energy’s transmission system operations center, said in a panel on considering resiliency in grid planning. “But in today’s environment with a focus on resilience, I think we need to go beyond N-1, where we can look at N-2, N-5, depending on the situation.” Technology has progressed so that computers can calculate N-2 across the system, he said.

Paul McGlynn, PJM senior director of system planning, said natural gas pipelines are also important for resilience. “We need to expand [N-1 contingencies] to events on the pipeline system: loss of a pipeline, loss of compressor station or whatever may also impact part of your generation fleet.”

But Clemenhagen said there was a need for discussion on “the difference between a rational economic system that makes sense for … the consumers who are paying for it and, not just a gold-plated system, but a platinum-plated system that you hear some policymakers assume that we can have; not just N-1 but N-∞ contingencies.”

A former member of the British Columbia Utilities Commission, Clemenhagen said, “We need to be very careful to define [resiliency] … based on rational economics for consumer interests, because in the end, they have to pay for it. The end users are the ones who pay; I don’t care how you calculate it, whether it’s market-based costs or reliability-based costs, consumers will pay for these costs in the end.”

“We could platinum-plate the system, but I don’t think that’s what anyone wants,” Prewitt said.

“‘The ability to rapidly recover’ … looks a lot different in Louisiana that’s recovering from a hurricane event, than it does in my state of Indiana if we have an ice storm in the dead of winter,” Kelly said. “I think our standards in America are phenomenal because we emphasize reliability. And if I could take a dollar and invest it somewhere, I’d much rather invest it in reliability. I’d rather keep the lights on for my customers versus taking that dollar and shipping it over to resilience.”

Why Now?

Several moderators asked their panelists why resiliency was such a big focus of discussion lately — and each gave a somewhat different answer.

McGlynn talked about the threat of bad actors and cyberattacks. Aubrey Johnson, MISO executive director of system planning and competitive transmission, cited the reliance on electricity for almost every aspect of modern life, and that people are more aware of outages across the country. Alfayyoumi said that the grid is becoming more complex because of the rise of renewable resources. Clemenhagen, along with many other panelists and attendees, cited recent severe weather events across the country.

Barely mentioned, however, was Energy Secretary Rick Perry’s proposed Grid Resiliency Pricing Rule, which called for RTOs to pay the full operating costs for generators with 90-day onsite fuel supplies. In testimony before Congress, Perry cited the polar vortex of 2014 as evidence for the rule’s need. (See Perry Defends Call for Coal, Nuclear Supports.)

However, the proposal was apparently based on an “action plan” from coal producer Murray Energy that called for “immediate action … to require organized power markets to value fuel security, fuel diversity and ancillary services that only baseload generating assets, especially coal plants, can provide.” (See Photos Show Murray’s Role in Perry Coal NOPR.)

FERC eventually rejected the proposal, instead opening a new docket to document how each RTO and ISO assesses resilience and use the information “to evaluate whether additional commission action regarding resilience is appropriate.” The summit came on the eve of the due date for the grid operators’ responses. (See related story, RTO Resilience Filings Seek Time, More Gas Coordination.)

“Resiliency means different things to different people,” John Lawhorn, senior director of policy and economic studies for MISO, said in a Thursday panel on the status of wholesale market reforms. “From my personal perspective, I think the risk associated with overbuilds is much less than the risk associated with underbuilds. But we need to be able to quantify that information for presentation to our stakeholders and our regulators to have them weigh in to evaluate how much risk they want to take.”

“There are different ways to address [resiliency], but the definition of what it is and how you solve that and measure it, from my perspective, is very important,” said Keith Collins, executive director of SPP’s Market Monitoring Unit.

“I don’t know what FERC’s going to do with this,” PJM General Counsel Vince Duane said, sounding almost weary. “They’re going to have a tremendous amount of information, and it’s going to be leading in a lot of different directions, so I don’t envy their task. And it’s hard to offer tangible and concrete suggestions, but at PJM we’ve tried to do that in our comments tomorrow as best we can.”

March 13, 2018

MISO Closing in on External Capacity Zones

By Amanda Durish Cook

CARMEL, Ind. — After almost three years of deliberation, MISO is putting the final touches on a plan to create external resource zones for its annual capacity auction by 2019.

Under the proposal, which is poised for a FERC filing at the end of this month, MISO would alter its Planning Resource Auction to include external resource zones based on neighboring balancing authority areas (BAAs). In cases of price separation, the RTO would also distribute historical supply arrangement credits from excess auction revenues as a refund to external resources with long-term and consistently used historical supply agreements.

The proposal would also establish new zonal capacity export limits in time for the 2019/20 planning year auction. Those limits would be based on the unforced capacity values for external resources participating in the auction in each external zone.

External zones would not have capacity import limits, planning reserve margin requirements or local clearing requirements. Resources in zones based on BAAs that border MISO Midwest zones will clear at one price based on a subregional unconstrained auction clearing price, while those in BAAs bordering MISO South will receive another price. BAAs that border both MISO Midwest and MISO South — Tennessee Valley Authority, SPP, Associated Electric Cooperative Inc. and Southwestern Power Administration — will receive a blended price. (See MISO Postpones External Zones Until 2019 Auction.)

MISO external resources — Rauch | © *RTO Insider*

Speaking at a March 7 Resource Adequacy Subcommittee, Laura Rauch, MISO’s director of resource adequacy coordination, said the RTO would provide capacity hedges only to external resources with historical capacity arrangements, despite stakeholder requests for hedges for other newer external resources.

MISO intends to tweak the proposal before filing, including adding potential penalties for external resources that don’t offer into the PRA after qualifying and registering for the auction. Under the current proposal, those resources would only face “questions” from the Independent Market Monitor but face no specific consequences for withholding, Manager of Resource Adequacy John Harmon said.

Rauch also said stakeholders are still asking how MISO will differentiate a “border external resource” from other external resources. In November, MISO said it identified 3,837 MW of capacity from potential border external resources, which have direct electrical connections to the RTO but are located in another balancing authority. Some stakeholders last month said that the concept of border resources amounts to preferential treatment of some external resources.

Rauch clarified that a border external resource’s point of interconnection must be a substation on the border.

“We really want these to be resources physically on the border,” she said.

MISO will rely on the volume of zonal capacity registered to participate in the auction to calculate an external zone’s capacity export limits, which will be posted each November ahead of the auction, Rauch said. Participating resources must maintain firm transmission to at least the MISO border, she noted.

“Trying to study a slice of PJM or SPP” to determine a capacity export limit is too complex a task, Rauch said.

She said MISO does not foresee any binding external capacity export limits, except in rare cases that exports fail a simultaneous feasibility test.

If FERC approves the filing, MISO will begin developing business practice manual language with stakeholders beginning in June, Rauch said.

Meanwhile, MISO will open its 2018/19 PRA offer window at 12:01 a.m. on March 27 and close it on March 30 at 11:59 p.m. Results will be posted by April 12.

March 13, 2018

SPP Briefs: Week of March 8, 2018

SPP has scheduled an executive session of its Board of Directors and Members Committee for Tuesday to discuss admitting Mountain West Transmission Group’s members into the RTO.

The meeting is being held at an undisclosed location. SPP has often used Dallas/Fort Worth International Airport to meet for its ease of access and onsite hospitality facilities.

SPP CEO Nick Brown told the Board of Directors in January the RTO was hoping to hold a “decision meeting” for members at the end of February for those stakeholders “who need to engage outside counsel and consultants, who previously were not engaged in the debate.”

SPP and Mountain West members have been meeting behind closed doors since October. SPP COO Carl Monroe told stakeholders in January that a small negotiating team had been working to resolve a subset of “real contentious” issues. The Mountain West entities have suggested several governance changes important to their side of the footprint. (See SPP, Mountain West Resolving ‘Contentious’ Issues.)

Brown said SPP’s primary goal for 2018 is integrating Mountain West. “Our goal is to get it over the line in early 2018,” he said.

With members primarily serving Colorado, Wyoming and Nebraska, Mountain West began discussing joining or creating an RTO in 2013. It announced in January 2017 it was pursuing membership in SPP, and discussions entered a public phase in October. (See SPP, Mountain West Integration Work Goes Public.)

The two entities are working on an Oct. 1, 2019, target date for membership.

Record $6.9M in January for Market-to-Market Payment

SPP’s Riverton-Neosho-Blackberry flowgate — quickly becoming recognized by just its 5375 ID — was binding for 350 hours in January, resulting in a record $6.9 million market-to-market (M2M) payment from MISO. The Kansas-Missouri border flowgate was responsible for $6.2 million of the charges, more than all the flowgates combined in any other single month.

SPP has accumulated almost $44 million in M2M payments since the two RTOs began the process in March 2015. MISO has not had a month in its favor since last July and only nine overall.

SPP staff told the Seams Steering Committee on March 7 that they have been implementing an “enhanced shadow price override” non-monitoring RTO process on swing-related flowgates since Jan. 4. The two RTOs are also considering implementing a “monitoring RTO reverse role,” where MISO would control the physical flow on a flowgate and SPP control the market flow.

Permanent and temporary flowgates were binding for 632 hours in January, SPP staff told the committee.

Staff also briefed the committee on FERC’s April 3-4 technical conference related to how SPP, MISO and PJM coordinate generator interconnection studies on projects near their seams. The commission called the conference to address issues raised in an October complaint by EDF Renewable Energy, which contends that inconsistencies and a lack of clarity in the RTOs’ rules for “affected systems” interferes with developers’ ability to judge the commercial viability of proposed projects. (See FERC Orders Review of PJM, MISO, SPP Generator Studies.)

SPP, AECI Wait on Joint Study Scope

SPP and Associated Electric Cooperative Inc. last week failed to reach an agreement with their stakeholders on a scope for a 2018 joint study during an Interregional Planning Stakeholder Advisory Committee meeting. Another IPSAC will likely be scheduled in a few weeks, giving members a chance to review the draft scope with their companies and providing staff additional time to revise its models.

SPP staff said they had drafted a scope that identified needs from its 2018 near-term assessment that are “electrically significant to the SPP-AECI seam.”

The RTO plans to use its near-term assessment models, which have already been approved by its stakeholders. AECI regularly participates in the near-term model-building process, which allows the two entities “to explore a broader set of projects which could potentially provide benefit to both systems,” SPP staff said.

— Tom Kleckner

March 13, 2018

MISO RASC Zeroes in on Priorities

By Amanda Durish Cook

CARMEL, Ind. — MISO’s Resource Adequacy Subcommittee will devote time this year to several projects focused on improving the RTO’s resource adequacy construct, stakeholders learned last week.

Key among the efforts: a continuing discussion on how to deal with the shifting availability of resources.

MISO RASC resource adequacy Dominion Resources Inc. — Harmon | © *RTO Insider*

Speaking at a March 7 RASC meeting, Manager of Resource Adequacy John Harmon said the seven projects are the result of a draft work plan MISO began in January. They were prioritized based on previous commitments to stakeholders in 2017, the urgency of each project, and the staff and capital spending available to devote to each project. (See MISO Seeks To-Do List for Resource Adequacy Panel.)

Harmon noted that the RASC will naturally dedicate time to discussing the nearly completed proposal to create external resource zones for the RTO’s Planning Resource Auctions. (See related story, MISO Closing in on External Capacity Zones.)

Resource Availability and Need

The RASC’s 2018 priorities will also include a larger discussion on resource availability and need, a topic evolving from MISO’s former proposal to create seasonal capacity procurement requirements, a generally unpopular move among stakeholders.

MISO will now consult with stakeholders to determine whether it should revise current resource availability requirements and price signals in the face of shifting availability, itself a product of tightening supply, increased renewables, more frequent extreme weather events and an aging baseload fleet more susceptible to outages. RTO officials say the proposal is no longer as simple as applying separate clearing requirements to two-season and four-season capacity auctions.

The effort will also explore the possibility of MISO factoring the effect of outages during peak load into its loss-of-load expectation study in time for the 2019/20 planning year, which could boost the planning reserve margin requirement. MISO is planning to inform its modeling with an average of outages on peak during the last five planning years, translating to an average 729 MW in outages and a 0.6% increase in the reserve margin, Resource Adequacy Coordinator Ryan Westphal said. MISO’s current modeling assumes generation owners do not schedule any planned outages during the peak. (See MISO to Fold Outage Forecasting into Larger Resource Effort.)

“Zero seems we’re not modeling the reality — the risk — correctly,” said MISO Director of Resource Adequacy Coordination Laura Rauch.

“Current modeling practice could be relying on resources that might not be available. … These ought to be captured,” Westphal added.

Speaking on behalf of the Coalition of Midwest Transmission Customers, attorney Jim Dauphinais warned against “socializing the cost of planned outages” with an increased planning reserve margin if only a few units are the culprits of planning outages on peak.

“I disagree; we’re a risk-sharing insurance pool,” responded Consumers Energy’s Jeff Beattie, adding that generation operators agreed in MISO’s Tariff that even companies covering reliability with several smaller units would share risk with companies relying on a single large unit that carries more outage risk.

Westphal asked stakeholders to provide more feedback by March 21, noting that MISO would need to complete a proposal by June to allow it to model planned outages on peak in the 2019/20 planning year.

Other RASC priorities this year will include:

Improving alignment between MISO’s loss-of-load expectation study and its annual resource adequacy survey with the Organization of MISO States;
Discussing how energy storage resources could earn capacity accreditation;
Discussing how behind-the-meter generation can fit into MISO’s resource adequacy construct;
Deciding whether MISO should bar units on extended outages from offering into the capacity auction;
Determining the best approach to potentially importing capacity from Ontario’s Independent Electricity System Operator into MISO.

Harmon said MISO plans to postpone until next year a project that would alleviate partial unit clearing, which occurs when the RTO’s algorithm clears a marginal offer on a pro rata basis, resulting in revenue shortfalls for resources that clear a fraction of their unforced capacity values.

The RASC will not focus on two other previous suggestions: developing forward capacity price indices and raising the PRA price cap above MISO’s approximate $250/MW-day cost of new entry (CONE). Harmon said MISO “has no role in bilateral markets” and “should not be involved in facilitating pricing information outside its markets.” He also said there’s no indication at this time that MISO’s cost of new entry needs to be raised because auction clearing prices are far from closing in on the CONE.