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November 1, 2024

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NEPOOL Markets Committee Briefs: March 13, 2024

ISO-NE on March 13 presented the NEPOOL Markets Committee with additional results of the impact analysis for the RTO’s resource capacity accreditation (RCA) project, which looked at how changes to the resource mix would affect the seasonal distribution of shortfall risks. 

The RCA project is being developing in conjunction with structural changes to the timescale of the Forward Capacity Auction (FCA). The RTO has proposed a three-year delay of FCA 19 to develop and implement the changes. (See related story, NEPOOL MC Backs Further Forward Capacity Auction Delay.) 

In the initial impact analysis “base case,” ISO-NE estimated that loss-of-load risk is distributed 80% in the winter and 20% in the summer. (See NEPOOL Markets Committee Briefs: Feb. 6, 2024.) 

The sensitivity analyses presented to the MC included three scenarios: 

      • the addition of wind, solar and battery resources without corresponding resource retirements; 
      • the addition of the renewable resources accompanied by the retirement of oil-only capacity; and 
      • the addition of renewables accompanied by the retirement of coal capacity. 

The addition of renewables without retirements would be more likely to reduce the number of days with loss-of-load events in the winter than in the summer but would provide greater reductions in the duration of the events in the summer than in the winter, ISO-NE found. 

When coal capacity was retired, ISO-NE found increased risk of multiday loss-of-load events in the winter, shifting the region’s risk profile towards the winter, said Dane Schiro, the RTO’s principal analyst. 

Compared to the retirement of coal, retiring oil capacity “can be thought of as retiring proportionally more summer capacity than winter capacity” because of the model’s winter fuel constraints for oil resources, Schiro said. Therefore, the retirement of oil capacity shifted the overall risk profile toward the summer relative to the coal-retirement scenario. 

“The seasonal output characteristics of retiring and new resources are important to the seasonal risk split,” Schiro said, adding that the findings were in line with expectations. 

ISO-NE will present additional sensitivity results to the MC in April. 

Regional Differences in Gas Accreditation

Ben Griffiths, vice president of wholesale market policy at LS Power, made the case for the RCA updates to incorporate regional differences in pipeline gas availability in the winter. 

ISO-NE is planning to treat access to nonfirm gas as the same across the region, despite LS Power data showing that gas access varies significantly based on where generators are located on the pipeline system, Griffiths said. 

“Observational data, economic modeling and physical analysis all indicate that gas availability is location and fact specific,” Griffiths said. “A failure to reflect locational attributes will lead to inaccurate pricing for gas generators, worse reliability [and] potential premature retirement.” 

Gas units in Connecticut run “at a higher level than we would expect across a range of temperatures, and there is no appreciable temperature-dependent output deviation,” Griffiths said. “This suggests that the gas system is not constrained in Connecticut at any observed temperature.” 

In contrast, generation for some units in Maine and Massachusetts historically has been highly temperature dependent, although this temperature correlation can vary significantly unit to unit, Griffiths added.  

The accreditation of gas resources has been a major topic of the RCA project. ISO-NE has advocated for a “market constraint approach,” in which the RTO would limit the amount of nonfirm gas capacity it procures based on the region’s gas constraints while having gas-fired resources compete for capacity obligations. 

ISO-NE initially indicated it would not be able to design and implement this approach for FCA 19, but it said March 13 that if the proposal for an additional two-year delay of the auction is approved by FERC, it will prioritize implementing a market constraint approach in time for it. (See NEPOOL Markets Committee Briefs: Jan. 11, 2024.) 

Regardless of the approach ISO-NE takes, it must account for local differences, Griffiths said. 

Under the market-constraint approach, ISO-NE could create “a nested zone for Connecticut which has higher levels of fuel availability and is, in effect, unconstrained,” Griffiths said. LS Power’s proposal would not affect the total amount of accredited gas capacity and simply would change how the overall capacity of the fleet is distributed, he added.  

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NY State Reliability Council Executive Committee Briefs: March 8, 2024

Proposed Transmission Criteria for Gas Contingencies

ALBANY, N.Y. — The New York State Reliability Council Executive Committee on March 8 approved for industry review two new proposed reliability rules, 153a and 154a, aimed at revising NYISO’s transmission planning requirements to account for a loss of the gas delivery system and fuel shortages at power plants, respectively. 

Roger Clayton, chair of the council’s Reliability Rules Subcommittee, said the group’s goal is to “basically convert what are currently considered extreme contingencies and extreme system conditions into design conditions.” 

While the failure of the gas delivery system to multiple plants is already included as an extreme contingency in the council’s design criteria, PRR-153a would add the loss of fuel to a single plant as another contingency. Both would be clarified to apply specifically to fossil-based plants. 

“This recognizes the increasing importance of gas going forward amid the increasing development of renewable resources, and the need to have reliable backup base reserves by incorporating a design contingency for the sudden loss of gas fuel,” Clayton said. 

PRR-154a aims to better align the council’s requirements with expected gas plant availability under winter peak conditions. It would add the unavailability of nonfirm gas service during the winter peak to the “credible combinations” of conditions under which the grid would be strained, and it would clarify that extreme conditions include the loss of all gas generation, regardless of supply firmness. 

“As New York becomes a winter-peaking system, the gas supply to electric generation plants is expected to be strained,” the proposal says. “To maintain reliability in the future, New York’s grid should be designed to withstand gas shortages during forecasted winter peak conditions.” 

Zach Smith, vice president of system and resource planning at NYISO, commended the committee for developing proposed rules that respond to evolving market conditions. 

Smith said the ISO’s only concern with the proposals was related to timing, as it would like to incorporate them into its annual Reliability Needs Assessment because it might “identify reliability needs in the wintertime” that it might have previously overlooked. Smith added that, if the timing aligns as intended, the rules would also be integrated into NYISO’s first newly revamped interconnection cluster study, but not its transitional cluster study. 

The proposed rules will be posted online for a 45-day review period. 

NYISO Updates

Aaron Markham, NYISO vice president of operations, briefed the committee on how the ISO is preparing for the April 8 solar eclipse, predicting it could reduce the afternoon’s solar production by “upwards of 3,400 MW if it is a clear sky day.”  

Markham added that if the eclipse occurs on a cloudy day, NYISO would not conduct a post-event review of its impact on solar production, as the previous cloudy day eclipse event had only minor impacts on solar production. (See “October Operations,” NYISO Braces for the Coming Winter.) 

NYISO staff also addressed Advanced Energy United’s recently released scorecard on ISO/RTO generator interconnection processes. The ISO received a C-, better than only PJM and ISO-NE, though no grid operator scored higher than a B. (See AEU Grades ISO/RTO Queues as Order 2023 is Implemented.) 

COO Emilie Nelson said the study relied on a small sample of interconnection queue datapoints for each ISO/RTO. “Nevertheless, we’re working really hard with our stakeholders to improve the interconnection process, and we take that objective very seriously, so I think that the results of that effort will come to bear in the next few years.” 

Smith followed up, saying, “We’ve reached out to the authors to try to understand what went into their [methodology]. … But what they were intending was to create a reference point, because all of [the ISO/RTOs] are entirely changing their interconnection processes, and we are completely overhauling our current processes. 

“So, in talking to them, and trying to understand their objective, their objective is to put out another report in the future to demonstrate that ‘this is where we were, and where are we in the future?’” 

Gioia, Burman Honored

The committee opened its meeting by dedicating a plaque in honor of former New York Public Service Commission Chair Paul L. Gioia, who helped establish NYISO.  

Gioia, 81, died last month. He was appointed chair by Gov. Hugh Carey in 1981 and served for five years until he was fired by Gov. Mario Cuomo. He then joined law firm Dewey & LeBoeuf, where he became lead counsel for the New York Power Pool and helped oversee its transition into the ISO in the late ’90s. 

The council “recognizes Paul’s outstanding public service and contributions to the health and safety of New Yorkers today, and in the future, by assuring the reliability of the electric power system in New York state,” Clayton said. 

NYSRC commemorative plaque for Paul L. Gioia | © RTO Insider LLC

PSC Commissioner Diane Burman also paid tribute, highlighting Gioia’s impact as a mentor and how much his “personal and professional friendship” meant to her. She shared a personal tribute on LinkedIn. 

The committee recognized Burman for her service at the meeting’s conclusion. She announced last month that she would not seek reappointment after a decade on the commission. Her term ended Feb. 1. 

“I’ve been a public servant over for 20 years; five of that was as a staffer for the commission, and over 10 years has been as a commissioner,” she said. “Leaving is really bittersweet to me, but it is time for me to pass the baton. 

“I really wanted to come here today to thank the Reliability Council as a whole, but more importantly, each of you individually for your continued service. Thank you for making me a better, more well-rounded regulator, and I am truly going to greatly miss being a part of all this with all of you.” 

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House Oversight Examines Grid Reliability and Resource Adequacy

Former FERC Commissioner James Danly told a House Oversight subcommittee March 12 that resource adequacy was being threatened by rapid generation retirements and demand growth. 

The message, given to the House Oversight and Accountability Subcommittee on Economic Growth, Energy Policy and Regulatory Affairs, was not much different from what Danly, now a partner at law firm Skadden, told Congress last year when he was on the commission. (See FERC’s Danly, Christie Again Warn Congress of Looming Reliability Crisis.) 

“Every market is different, the tariffs are different region to region, but there have been problems in properly incentivizing the arrival of new generation to meet load growth,” Danly said. “This problem becomes all the more difficult when the markets have to operate and create those price signals upon which we rely to ensure resource adequacy, when they’re operating in the context of widespread and lucrative subsidies, which have the inevitable effect of warping price signals.” 

Federal subsidies overvalue some resources, while undervaluing others, and because those others are getting less money overall, that means there are fewer of them, he added. 

Subcommittee Chair Pat Fallon (R-Texas) asked Danly whether EPA’s latest proposal on greenhouse gas emissions from power plants would impact reliability. As commissioner, Danly had sent a letter to EPA because he was worried they were not taking its potential impact on reliability seriously enough. 

The rule is going to increase the capital investments of some of the covered power plants, which will have to be reflected when they bid into markets, and that ultimately should lead to higher prices, Danly said. 

“I think that the Clean Power Plan could potentially create extraordinarily expensive prices in the markets,” Danly said. “And what I’m really concerned about is not that, because that’s a public policy decision. What I’m concerned about is that it seems to be undertaken without full knowledge of the consequence.” 

Another issue with cleaning up the grid is that the buildout of renewables favored by many will require a massive expansion of transmission. 

“I’m skeptical that that buildout of transmission is even feasible, given the cost. It’s an extremely capital-intensive proposition to build out that amount of transmission,” Danly said. “And given the regulatory risks that attend any large infrastructure project in the United States, it is very hard to site and construct long, linear infrastructure projects.” 

The committee also heard from the libertarian Cato Institute through Director of Energy and Environmental Policy Studies Travis Fisher, who said the grid is becoming a liability due to multiple subsidies, mandates and regulations. The Inflation Reduction Act extended the production tax credit for renewables, and Fisher said they could cost taxpayers $3 trillion through 2050. 

“These tax credits reward electricity production from unreliable sources and distort the market signals that keep reliable power plants running,” Fisher said. “The result will be a weaker grid over time, not to mention a deepening fiscal crisis in the country.” 

While Fisher and Danly blamed policy for the grid’s performance, the Democrats’ witness — Converge Strategies’ Jonathon Monken, who previously worked for PJM — blamed increasing bouts of extreme weather caused by climate change. The grid is transitioning as clean energy becomes cheaper than traditional power plants like those that burn coal, Monken said. 

“This transition is occurring at a time when the grid is under threat from climate-driven changes in severe weather patterns, as well as targeted attacks on grid infrastructure from homegrown violent extremists conducting physical attacks, and foreign adversaries utilizing cyber capabilities,” Monken said. 

Recent winter reliability events have shown it’s risky to run the grid with a single fuel type and with limited geographies. Most outages in Winter Storms Elliot and Uri were because of issues around natural gas. 

“More comprehensive evaluations of fuel security are needed to identify the optimal mixture generation types to reduce the risk of disruptions caused by fuel availability,” Monken said. “This should include transmission planning to prioritize connecting regions with a greater diversity of resources to those regions with a high dependency on single fuels that could suffer from these common mode failures.”

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FERC Releases Fiscal Year 2025 Budget Justification

FERC has released its fiscal year 2025 congressional justification, which would have the agency fund itself with $532 million from fees and annual charges assessed to its regulated entities. 

The request is up from $508.4 million last year but is short of its requirement of $565.4 million, though FERC can defer some of that with $33.4 million that it brought in earlier and did not spend. The funding would support 1,576 full-time equivalent employees, 68 more than in 2023. 

“The commission allocates 62% of its budget to directly cover personnel compensation costs of its employees on an annual basis,” said the request, released March 11. “The commission’s request reflects a personnel compensation increase of $39.6 million, or 12.8%, above the FY 2023 enacted level to support an increase of 68 FTEs and accounts for an estimated 2% pay raise in January 2025.” 

FERC is using money from the Inflation Reduction Act to speed its permitting efforts’ timelines and to increase its public outreach in communities with environmental justice concerns. 

The request includes $152.5 million to support information technology investments, an increase of $36.9 million or 31.9% over 2023. The increase would fund improvements including a series of proofs of concept to harness the generative power of artificial intelligence. 

“The utilization of AI promises to enhance efficiencies across various FERC program offices, ultimately leading to substantial benefits in the execution of the commission’s mission,” the request said. 

The funding request includes an $8.9 million cut in rental costs as FERC has consolidated its employees in the D.C. area into its headquarters and has lowered the amount of space its operations require. 

The electric industry is responsible for most of the funding, with FERC expecting to collect $319 million across hydropower ($124.8 million), natural gas ($106.9 million) and the oil industry ($13.8 million). 

The document also includes brief descriptions of what FERC has been up to and its plans to move specific policies along. The paper discussed its transmission NOPR, which has produced Order 2023 mandating changes to the commission’s pro forma interconnection rules. 

“The commission will also consider requests for rehearing of Order No. 2023 and evaluate Order No. 2023 compliance filings with respect to changes to transmission providers’ generator interconnection procedures and agreements,” the document said. 

The industry expects another final rule on transmission planning and cost allocation, and FERC said it would “continue to evaluate feedback from the public” on its NOPR to “help inform whether further commission action is appropriate.”  

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NEPOOL MC Backs Further Forward Capacity Auction Delay

The NEPOOL Markets Committee (MC) voted March 12 to approve an additional two-year delay of ISO-NE’s Forward Capacity Auction (FCA) 19 to develop and implement a new prompt and seasonal capacity auction. FCA 19 applies to the 2028/29 capacity commitment period (CCP).  

ISO-NE has proposed to shift its forward capacity market, which is held about three-and-a-half years prior to the CCP, to a “prompt/seasonal” market held several months before the CCP, while procuring capacity separately for different seasonal periods. (See ISO-NE Moving Forward with Prompt, Seasonal Capacity Market Design.) 

The specifics of an eventual prompt and seasonal market have yet to be determined. The approved proposal would establish a backstop interim schedule that “shifts all FCA 19 activities back by another two years (three years total),” while implementing “a 10-month schedule over many auction cycles to return to three-year forward schedule,” said Chris Geissler of ISO-NE.  

ISO-NE intends for the backstop provisions to be ultimately overwritten by the final market design, which will be developed during the delay.  

Also during the delay, ISO-NE will prioritize developing a “market constraint approach” to accrediting gas resources once the two-year delay is approved by FERC, Geissler said. The RTO previously indicated this is its preferred gas accreditation approach but said it would not have time to develop this approach for FCA 19 with just a one-year delay. (See NEPOOL Markets Committee Briefs: Feb. 6, 2024.) 

If FERC accepts the additional delay, ISO-NE is planning to pause stakeholder discussions on its ongoing Resource Capacity Accreditation (RCA) project “and develop a work plan for a combined accreditation design with a prompt/seasonal capacity market to implement for CCP 19.” 

If the proposal is rejected by FERC, ISO-NE will proceed with the RCA project and target a filing in the fourth quarter of 2024. ISO-NE has not decided whether to pursue expedited treatment from FERC on the filing.  

Internal, External Monitors Offer Support

David Naughton, executive director of the RTO’s Internal Market Monitor (IMM), expressed support for the proposal, calling it a “a more cost-effective and efficient means of procuring capacity compared to the current forward market framework.” 

Naughton said a prompt and seasonal market would help reduce uncertainty related to projecting supply and demand about four years into the future, especially amid significant changes associated with the clean energy transition. 

Stakeholders have expressed concerns that the changes could reduce the forward notice of resource retirements, which are currently tied to the FCA process. ISO-NE has said the retirement process could be separated from the capacity auction to preserve this advanced retirement signal in a prompt format.  

“Under a prompt procurement time frame, the solution space for addressing reliability issues becomes constrained; there may be limited time and scope for transmission solutions or a market response to capacity exits,” Naughton wrote in a memo. 

“Therefore, it is likely beneficial for the retirement process to commence well in advance of the prompt time frame, with details to be developed regarding notification timing, irrevocability of the notification, market power assessments and auction treatment,” Naughton said.  

Potomac Economics, ISO-NE’s External Market Monitor, also expressed support for the move to a prompt and seasonal capacity market, as well as the additional two-year delay to achieve this design.  

Pallas LeeVanSchaick of Potomac Economics noted that the current FCM was initially designed to provide enough advance warning to enable investments in new gas capacity if the projected power supply did not match demand.  

However, the FCA has failed to incentivize these new investments “because developers receive only one year of guaranteed revenue for resources with much longer economic lives and it can create inefficient risk for developers related to the required in-service date,” LeeVanSchaick said. 

LeeVanSchaick added that recent out-of-market reliability mechanisms like the Mystic Cost-of-Service Agreement and the Inventoried Energy Program indicate that the current FCM is not adequately ensuring winter reliability.  

“The most common reason resources are retained out-of-market is that the market does not fully reflect the reliability need the resource is satisfying,” LeeVanSchaick said. He downplayed concerns raised by some stakeholders that a prompt market would increase risk of out-of-market retentions by reducing the advanced notice of resource retirements.  

“When a capacity market (regardless of whether it is a prompt or forward market) is designed to set prices efficiently at each location and all reliability needs are reflected in its requirements and resource accreditation, the need to retain resources out-of-market will be very limited,” LeeVanSchaick said.  

“If the capacity market compensates resources efficiently, retirement-driven reliability needs are usually so localized that a transmission solution can be completed in time to allow the generator to retire rather than be retained out-of-market or to be retained for a relatively short duration,” he added. 

LeeVanSchaick also disagreed with some concerns raised by stakeholders that a prompt market could increase capacity market volatility, arguing that a prompt market would instead lead to more stable prices by providing more flexibility to suppliers and eliminating the “phantom new entry” of delayed generation projects with capacity commitments, “which has led to significant price suppression in some FCAs.” 

The proposal now heads to a Participants Committee vote in early April.

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NJ Legislators Consider $300M for Grid Upgrades

New Jersey legislators are examining the potential effect of two bills designed to strengthen the state’s clean-energy future: one that would allocate $300 million to upgrade the grid and another that would put into law Gov. Phil Murphy’s (D) executive order that all electricity purchased in the state be clean energy by 2035. 

The grid upgrade bill, S258, would require the state’s four electric utilities to develop and implement a plan to modernize their electric transmission and distribution systems and provide a timeline for doing so. The plans could include energy storage, the interconnection of distributed energy sources and other projects to help the state reach its emissions goals. 

The utilities would have a year after enactment of the bill to craft the plan. Once approved by the New Jersey Board of Public Utilities (BPU), the utility would have 90 days to start implementing the plan. The $300 million would award grants to electric public utilities to offset electricity rate increases caused by implementation of the plan. 

In a joint hearing March 12, the Senate Environment and Energy Committee and Assembly Telecommunications and Utilities Committee took four hours of testimony from more than two dozen speakers on the two bills but did not vote, reflecting the committee chair’s intent to take stakeholder input and reshape the bills if necessary.  

“We are moving towards 100% renewable generation,” said Assemblyman Wayne DeAngelo (D), chair of the Assembly committee, at the start of the hearing. “Part of this hearing is to make sure that our infrastructure can handle that, to make sure that we have that generating capability, and that we’re not just putting out potential hopes, we’re not kicking the can down the road.” 

Grid Inadequacy

The hearing marked Committee Chair Bob Smith’s (D) second effort to get Gov. Murphy’s Executive Order 315 into law. The Senate committee in June took testimony on a similar bill and revised it substantially in the fall to incorporate stakeholder feedback. But the legislation could not get enough support before the previous legislative session ended in January. (See NJ Push for 100% Clean Electricity Meets Opposition.) 

The latest version of the bill, S237, which Smith co-sponsored, would revise the state’s renewable energy portfolio standards. It would require each electric power supplier and basic generation service provider to sell a certain percentage of electricity from renewable energy sources yearly. Smith said that unless Murphy’s target of 100% clean energy by 2035 is put into law, it could be changed by the next governor, who may be less committed to clean energy than the incumbent. 

The grid upgrade initiative is an effort to get moving on an issue widely considered essential, he said at the hearing. 

“How do we get to the point where we have a grid that works, or will work better, when there’s really so many more thousands of megawatts coming from renewable sources?” he said. “There are some who would argue to you, and I’m actually in that camp, that our grid really is inadequate, really inadequate. I mean, if we’re ever going to get to 100% renewable, you have to get that renewable energy to the people who are going to need it.” 

Jesse Jenkins, an assistant professor for the Center for Policy Research on Energy and the Environment at Princeton University, said his research team last year modeled New Jersey’s energy system and concluded the state’s 2035 goal is reachable. But, he added, “New Jersey will not reach this goal unless the Assembly and the Senate move soon to pass legislation to codify that target in state law and ensure that we have mechanisms to ensure we reach that goal.” 

Jenkins encouraged legislators to revise the bill in a way similar to Smith’s previous bill. That legislation would have built a policy based on using the state’s existing solar, nuclear and wind clean energy strategies accompanied by a “trailblazing requirement that 100% of the state’s reliability needs are met by clean resources by 2045,” such as storage, nuclear power or green hydrogen, to step in when weather conditions don’t permit solar or wind energy generation. 

Jenkins encouraged the Legislature to adopt a clean energy standard, saying it would protect the state’s nuclear power and permit “existing natural gas plants to operate when necessary to meet reliability needs.”  

Advance Planning

Abraham Silverman, former general counsel of the BPU and now director of the Non-Technical Barriers to the Clean Energy Transition initiative at Columbia University, said the key to grid modernization is addressing the problem early. 

Tackling the issue upfront, he said, “allows the utilities to make larger upgrades and avoid a bunch of very small upgrades. Doing it that way in a coordinated fashion is faster and significantly less expensive.” 

“When you allocate and build and plan your distribution or transmission grid up front, costs go down,” he said. “Further, getting the grid ready in advance results in the faster deployment of electrification and distributed energy resources. It really enhances the ability of corporations to attract low-cost capital to deploy in New Jersey.” 

Silverman said an effective grid modernization program would focus on three issues, including upgrading and adding infrastructure as well as deployment of advanced technologies on the distribution system to reduce the need for “poles and wires.” 

“The third [element] is innovative market signals, and regulatory frameworks that incentivize utilities and customers to make investments that defer additional grid upgrades or make the distribution grid stronger, more efficient,” he said. 

Silverman offered three elements he believes are key to grid modernization, including using new reconductors, the wires that hang between poles, to “substantially increase the throughput across those wires without redoing a lot of the sort of the pylons or the telephone poles and the other infrastructure.”  

He also suggested the state install grid-enhancing technologies, known as GETs, and use “non-wire alternatives,” such as “energy storage, demand response, energy efficiency or distributed energy resources, put in the right places on the grid to alleviate the need for more physical hardening of or expansion of the poles and wires.” 

Natural Gas Replacement

The utilities that would be central players in the two bills’ plans took no position on them. Representatives of Jersey Central Power and Light, Atlantic City Electric and PSE&G spoke of their own clean energy projects but did not weigh in much, even when prodded by Smith and DeAngelo. 

Representatives of the gas sector, however, argued vigorously that the state was far from ready to provide all its energy needs with electricity, and doing so would throw away an extensive gas distribution system. 

Larry Barth, director of corporate strategy for NJR Clean Energy Ventures, said S237 would require New Jersey to purchase energy out of state because it does not produce enough clean energy, and likely would not help achieve the state’s clean energy goals. 

“We remain concerned that this bill is going to have the potential to export billions of dollars from New Jersey ratepayers to subsidize out-of-state jobs without any real reductions in emissions,” he said.  

Bob Kettig, a former staffer of the New Jersey Department of Environmental Protection, now manager of corporate strategy for New Jersey Resources, said most of New Jersey’s out-of-state clean energy would come from wind farms in Illinois, Indiana, Ohio and Pennsylvania that were built 10 years ago. 

“These are not new projects, and therefore they are not creating incremental emissions reductions,” he said. 

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Feds Announce National Strategy for Zero-emission Freight

A newly published federal strategy aims to speed up development of a national network of electric charging and hydrogen filling facilities for freight trucks. 

The Joint Office of Energy and Transportation said March 12 that the framework offers a way to align government, industry and utility actions on policy and investment decisions along designated freight corridors from coast to coast and eventually in Alaska and Hawaii. 

The idea is to meet the trucking industry and zero-emissions technology where they are now, determine how and where they are likely to evolve, then prioritize and sequence infrastructure investment accordingly. 

The first phase of the National Zero-Emission Freight Corridor Strategy establishes priority zones called hubs with a radius of 100 to 150 miles that have the conditions to support freight decarbonization. Those conditions include annual freight volume, projected number of zero-emissions medium- and heavy-duty vehicles (MHDVs), high concentration of MHDV-related air pollutants and state policies conducive to zero-emissions vehicle adoption. 

Initial efforts will focus heavily on local transportation returning daily to the same base. Regional and long-haul transportation is a longer-term proposition, enabled as the number of hubs and the number of corridors between them grows and there are enough recharge sites to confidently plan interregional movement. 

The next three phases are: 

    • connect hubs along critical freight corridors (2027-2030). 
    • expand corridor connections by developing networks (2030-2035). 
    • link regional corridors to form a national network with ubiquitous access to charging and refueling (2035-2040). 

The Federal Highway Administration will develop National EV Freight Corridors in alignment with the new strategy. 

| Joint Office of Energy and Transportation

| Joint Office of Energy and Transportation

| Joint Office of Energy and Transportation

Goals

The United States has committed to a goal of 30% sales of zero-emissions MHDVs by 2030 and 100% by 2040.  

That will be impossible to accomplish without radical expansion of the infrastructure to charge or fuel those vehicles and a radical expansion of the infrastructure to support those chargers and pumps. 

Federal officials said the March 12 announcement is the cohesive strategy by which that can happen. 

MHDVs account for 23% of greenhouse gas emissions in the U.S. transportation sector, the officials said, and they do so to the detriment of specific communities, as 75% of U.S. heavy truck traffic is logged on just 4% of U.S. roads.  

“For over a century, petroleum-fueled freight has transported vital food and resources to American families but at the same time, these vehicles have also contributed to lower public health, especially in densely populated communities,” U.S. Secretary of Energy Jennifer Granholm said in a news release announcing the “landmark” strategy intended to change that. 

“Communities around the country will benefit from zero-emission freight decarbonizing transportation while continuing to support a vibrant economy,” Gabe Klein, executive director of the Joint Office of Energy and Transportation, said in another news release. 

There are some hurdles: 

    • A massive buildout in generation, transmission and distribution must occur because the power grid cannot support heavy-duty EV charging — a single highway charging depot might have a peak demand of up to 40 MW. (See DOE Funds Studies of Heavy-duty EV Charging Network Needs.) 
    • Technology to generate hydrogen at an economical cost and acceptable environmental impact needs to be developed and scaled. 
    • All this infrastructure needs to be paid for. 
    • Electric and hydrogen propulsion technologies for heavy vehicles need to be refined. 
    • Some states are indifferent or hostile to transportation decarbonization goals — fewer than half have embraced the Advanced Clean Trucks rule. 

A key intended function of the strategy announced March 12 is to foster collaboration across sectors — truck fleet operators, zero-emission fuel providers, grid and pipeline operators, energy and environmental regulators, communities — toward creating infrastructure that serves as a national network. 

That, in turn, is expected to send clear market signals to support the investments needed to bring it all about. 

CALSTART, a nonprofit supporting clean high-tech transportation, welcomed the announcement. The strategy “sets a clear pathway for accelerating the adoption of zero-emission medium and heavy-duty vehicles, which is in line with stringent Phase 3 vehicle standards,” said Trisha Dello Iacono, head of policy at CALSTART. “We commend and support the federal government for embracing a phased-in approach, which will not only expedite deployment but also optimize infrastructure investment, foster collaboration, and drive innovation and job creation in the transportation and freight sectors.” 

CALSTART framed the announcement as important for chargers but made no reference to hydrogen, which has uncertain prospects and uneven support despite the Biden administration’s efforts to advance it. 

The strategy is a living document: The Joint Office expects to revise it at least annually. 

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New Wash. Law Seeks to Accelerate Electric School Bus Adoption

Washington is poised to start significantly phasing in electric school buses after lawmakers approved a bill directing the state’s Department of Ecology to manage a program to help school districts convert their diesel fleets. 

But that might take decades: Washington has 10,460 school buses, but only 76 are electric. 

And the price tag? Still up in the air. Ditto with where the bulk of the money will come from. 

The reason for doing this? To cut the pollution getting into kids’ lungs.  

“It is as much about healthy kids as it is for the environment. … I understand the anxiety about this big change, but we can’t wait any longer. Our children’s future depends on this,” said Rep. Tana Senn, D-Mercer Island, who introduced House Bill 1368 to foster the switch from diesel to electric school buses.  

Washington is following the lead of New York, which has required school districts to purchase only electric buses starting in 2027 and convert their fleets by 2035. 

Diesel exhaust hovers around stopped buses, with children more susceptible to the effects because they breathe 50% more air per pound of body weight than adults, according to EPA and the National Institutes of Health. The fumes contain particulates that can lead to asthma and lung cancer. Diesel exhaust from school buses potentially affects one-third of U.S. students, their parents and educators each day. 

A Natural Resources Defense Council study concluded that a child riding inside a diesel school bus may be exposed to up to four times the level of diesel exhaust as someone riding in a car ahead of it. Exposure levels were higher in the back of the bus and when windows were closed. The study said children exposed to diesel exhaust while riding in a school bus for one to two hours a day, 180 days a year for 10 years might result in 23 to 46 additional cancer deaths per 1 million children. 

“I’m shocked and frustrated. I was exposed to unhealthy fumes just to go and from school,” Sarah Lo, a 17-year-old Seattle student, said at a Feb. 24 hearing on the bill before the Senate Ways and Means Committee.  

Relaxed Timetable

The Democratic-controlled Senate on March 7 passed HB 1368 along party lines. The bill will require the Ecology Department to manage grants to school districts to help replace their old diesel buses with electric buses, with funding priority for low-income districts. The districts will be required to buy electric buses when the total cost of owning such buses — which included buying and operating the buses and building the charging infrastructure — drops below the total costs for operating diesel buses. When that parity will be achieved is still an open question. 

The bill also requires the Office of Superintendent of Public Instruction to survey the state’s 295 school districts about how to proceed with adopting zero-emission buses. 

The House approved the amended bill March 6 along party lines. The main change eliminates a timetable to start a gradual but serious transition in 2027, substituting a more open-ended replacement schedule based on when it makes more financial sense to replace the buses. The expectation is that the total costs of buying and operating an electric bus will shrink over the years, Senn said.  

Currently, the average price of an electric school bus is $412,907, compared with $142,154 for a diesel or gas bus, OSPI said in an email to NetZero Insider. 

“This is to move it forward if and when we can move it,” Sen. Lisa Wellman (D) said during a March 1 Senate floor vote. 

Speaking during the same vote, Sen. Brad Hawkins (R) said, “The state is trying to get its tentacles in [school board business]. … This bill is like the Washington Legislature trying to become the local school board’s transportation director.” 

The state budget for fiscal 2024/25 includes $50 million in revenue from the state’s cap-and-invest program to go to economically disadvantaged school districts to immediately begin the transition. “We’re focusing first on those overburdened communities,” Senn said.  

‘Easier Said Than Done’

The changes in HB 1368 reflect concerns raised by school districts and OSPI on Feb. 24 as the bill went through the Senate. Several school officials favored the health and environmental benefits but worried about the originally proposed tight timetables, the massive need to install charging equipment and retrain mechanics to handle electric buses, and the challenge of finding all the money needed to accomplish these tasks. 

OSPI has not yet determined transition timelines for the revised bill, nor has it calculated overall cost estimates for a long-term, statewide transition.  

At the Feb. 24 hearing, Jon Holmen, superintendent of the Lake Washington School District, noted that his school system has more than 130 buses and replaces 10 per year. “Unfortunately, transitioning to electric buses is easier said than done. … We are ready and willing to do the transition, but we can only do so through a partnership and with ample support from the state.” 

“We want to make sure it works,” Mike Hoover, a lobbyist for the Washington State School Directors Association, said at the hearing. “We’ve had technologies overpromised before, and we hope this is not another taste of that.”  

Paul Marquardt, executive director of operations for the Bethel School District, said a typical bus run in his district is about 80 miles. “We would not be able to complete a run with an electric bus,” he said at the hearing. 

OSPI said small buses have an average range of 45-55 miles, while large buses can cover 70-90 miles. 

Senn said the legislation allows school districts to keep enough diesel buses to handle routes that are longer than the range of an electric bus. She expects electric bus ranges to increase as the technology improves. 

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PJM PC/TEAC Briefs: March 5, 2024

Planning Committee

Stakeholders Long-term Regional Transmission Planning Proposal

VALLEY FORGE, Pa. — The Planning Committee endorsed PJM’s long-term regional transmission planning (LTRTP) proposal during its March 5 meeting, advancing manual revisions that would expand the RTO’s planning horizon to 15 years. (See “PJM Presents Long-term Planning Proposal,” PJM PC/TEAC Briefs: Jan. 9, 2024.) 

The changes are centered around two base cases focused on reliability needs eight and 15 years out; two policy scenarios looking at new entry backed by state legislation eight to 15 years in advance; and an additional policy scenario including higher generation entry not backed by signed legislation. The two-year planning cycle would be extended to three years because of the increased number of scenarios. The proposal was endorsed by the PC with 66% support, setting it on a path to undergo a first read at the Markets and Reliability Committee on March 20 with an endorsement vote possible April 25. 

Thermal and voltage analyses would be performed on the eight-year base scenario, replacing the existing 10-year model for voltage analysis, and would then inform the five-year Regional Transmission Expansion Plan (RTEP) near-term process. Thermal and voltage analysis would also be performed on the 15-year scenario. 

PJM’s Michael Herman said staff continue to view the RTEP process as focused on ensuring reliability through a holistic approach, and the new process would enhance the existing rounds of analysis by considering the impacts of a wider range of generation scenarios. He said there is potential for the policy scenarios to influence the scope of projects that PJM recommends be added to the RTEP, though more stakeholder discussions are needed to flesh out the process. 

“This is something PJM will have to continue to evaluate and discuss with stakeholders … but the way that PJM envisions this [is that] we can’t be performing the reliability base case in a silo,” he said. 

PJM Vice President of Planning Paul McGlynn gave the example of the reliability scenarios recommending the construction of a new line and the policy scenarios suggesting designing the line with a higher voltage. He said the policy analysis could also lead to PJM preferring expandable solutions. 

Paul McGlynn, PJM | © RTO Insider LLC

PJM’s Jonathan Kern said the distinction between the reliability and policy scenarios would allow the RTO to continue to follow cost-causation principles, adding that the planning process would first identify projects needed for reliability; anything needed to support assumptions beyond that would be allocated as State Agreement Approach projects. 

Paul Sotkiewicz, president of E-Cubed Policy Associates, said the proposal doesn’t follow market principles and would grant the RTO a power akin to developing its own integrated resource plans. He also argued that the quick-fix stakeholder process used to develop the proposal hasn’t allow for adequate stakeholder analysis of the impact the proposal could have. The quick-fix process allows for an issue charge to be brought concurrent with a proposed solution. 

“This is PJM having too much discretion about investments in our assets, whether they’re existing or potentially new,” he said. 

Stakeholders also questioned whether PJM has the authority to implement the changes through manuals revisions alone, arguing that revisions to the governing documents and FERC filings are necessary. 

Transmission Expansion Advisory Committee

PJM Updates RTEP and Market Efficiency Window Schedule

PJM is planning to open a 30-day RTEP window March 12 as part of the 2023 RTEP to address growing data center load in Columbus, Ohio, which is part of the AEP transmission zone.  

PJM’s Wenzheng Qiu told the Transmission Expansion Advisory Committee that there also are thermal violations identified in the PSEG zone around its Hinchmans substation and that the 500-kV Fentress-Yadkin line in the Dominion zone is nearing end of life. 

The window is shorter than the typical RTEP process because of the immediate-need nature of the violations. Qiu said the earliest PJM is likely to do a first read on projects it may recommend from the window is June. 

The RTO has completed the base case assumptions for the 2024/25 market efficiency cycle and is planning to open a competitive window in January 2025 to address congestion on several lines, PJM’s Nick Dumitriu told the committee. He said much of the new congestion identified since the previous base case is driven by changes in the load forecast, changing market conditions and the RTEP upgrades approved by the Board of Managers. 

Supplemental Needs and Project Proposals

FirstEnergy presented a project to replace two 230/46-kV transformers at its Yeagertown substation in the Penelec transmission zone because of their age and increased risk of failure. The cost to replace both is estimated to be about $7.5 million. Completion of the project is expected by Oct. 17, 2025. 

Also in the Penelec zone, the utility said there is a need to replace three segments of its 345-kV transmission corridor between the Erie West and Armstrong substations. The line was constructed more than 50 years ago and is experiencing deterioration of wooden H-frame structures. Sections of the corridor, which intersects with the Handsome Lake and Wayne substations, have experienced multiple unplanned outages since 2015. 

FirstEnergy also presented a proposal to replace three 500/138-kV transformers at its Cabot substation in the APS zone for $24.6 million. The transformers are nearing their end of life and seeing elevated maintenance issues. The transformers would be replaced on a staggered timeline, with the first installation slated to be completed by Dec. 31, 2027, and the third by June 30, 2028. 

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PJM MIC Briefs: March 6, 2024

VALLEY FORGE, Pa. — The Market Implementation Committee voted March 6 to endorse a PJM proposal to revise its approach to measuring and verifying the capacity provided by energy efficiency resources. (See PJM Seeking Expedited Approval of Energy Efficiency Changes.) 

PJM’s Pete Langbein said the proposal aims to clarify which baseline EE providers should use to measure the savings a resource can offer into a Base Residual Auction (BRA); require that they demonstrate to PJM that installations of the more efficient equipment was completed; and show they have exclusive rights with the owner of the equipment to enter its savings into the capacity market. 

The PJM proposal received 52% support, winning out over packages sponsored by CPower and Affirmed Energy, which respectively received 26% and 4% support. The question of whether stakeholders preferred the PJM proposal over the status quo originally tied, but multiple stakeholders cited challenges casting their ballots. The committee opted to reconsider the item, and support for the package grew to 61%. 

The changes are being brought under an expedited process with the aim of receiving stakeholder approval in time to implement for the 2025/26 BRA, scheduled for July. Redlines were first presented at the Feb. 22 Markets and Reliability Committee, where several stakeholders argued that the proposal is moving too quickly to ensure that it’s understood by market participants and fully vetted to prevent unintended consequences. 

The proposal would draw a sharper distinction between the standard baseline — which considers the last efficient equipment that could be installed versus the product being installed as an EE resource — and the current load baseline — which requires there be a cause-and-effect link between the revenues EE resources receive through the capacity market and their participation in the BRA. If a resource is eligible to use the current load baseline, the proposal would set a three-year limit on technical reference manuals (TRMs) to measure the load of the new equipment against; if no TRMs were available, EE providers would be required to use meter data. 

Independent Market Monitor Joe Bowring said PJM’s proposal does not go as far as he would like in tightening EE standards but that it would nonetheless improve market functionality. As he often does, Bowring noted that EE is not a resource in PJM’s capacity market and argued that it should not be paid through the capacity market. 

Affirmed’s Luke Fishback and CPower’s Ken Schisler raised issues they said would prevent EE providers from complying with the proposal. They argued that the three-year limit on TRMs would disqualify the majority of those produced by PJM states. Their companies had offered longer windows in their own packages. 

Langbein told RTO Insider that older TRMs may include equipment that is no longer representative of what is being installed in that region, possibly leading to an inflated baseline. 

Bowring said a five-year TRM may include data from at least three years prior to the TRM date and that the eight-year-old results are then used to estimate savings for four years into the future. The baselines even for a three-year-old TRM are not relevant to any actual savings, he argued. 

Schisler said PJM’s language requiring a causal link between capacity market participation and the revenues it offers comes from an understandable desire to ensure that capacity revenues are producing a reduction in load. But he argued the proposal is too strict and would exclude projects from participating in the market if they have multiple benefits, including capacity revenues. At the February MRC meeting, he gave the example of a project to improve home insulation that would reduce climate control load while also alleviating health issues from building materials exposed to humid air. 

Bowring said the fact that EE providers assert that there does not need to be a link between the wholesale PJM capacity market and the assumed savings for which customers pay $100 million per year demonstrates why EE should not be paid through the capacity market. He argued that the market is not intended as a vehicle to subsidize broader social goals. 

Fishback said Affirmed’s proposal was aimed at taking a more data-driven approach to the question of how often TRMs are updated and would have included updates to PJM’s attestation requirements, the way they verify installations and how they verify unique ownership of capacity rights. He said PJM’s language would likely prove especially onerous incentivizing adoption of efficient products through retailers. 

“This language as written in the redline runs the risk of taking the vast majority of utility programs and removing them from the table, because the majority of them are run through retailers and retailers will not be able to get an address for each lightbulb they sold,” he said. 

Fishback also argued that the changes are being made too quickly without any apparent need ahead of the next auction. He motioned to defer the vote to the April MIC meeting, arguing that the three proposals were similar in many ways and more time could allow for a compromise to be found. The motion failed with 57% in opposition. 

1st Read of Proposal on Capacity Obligations Resulting from Large Load Additions

Dominion Energy and American Electric Power presented a joint proposal to accurately assign the capacity obligations from large load additions (LLAs) to entities within a transmission zone, including entities operating under fixed resource requirement (FRR) and Reliability Pricing Model (RPM) rules. (See “Capacity Obligations for Forecasted Large Load Adjustments,” PJM MIC Briefs: Oct. 4, 2023.) 

When bringing the issue charge, AEP’s Josh Burkholder argued that the data center growth can lead to the obligation to procure capacity to serve that load being split between market participants in a transmission zone even when the load falls entirely within one’s footprint. 

In February, FERC granted AEP a waiver of the capacity obligation for four of its vertically integrated utilities to not include about 1,860 MW of data center load expected in AEP Ohio (ER24-545). The waiver is applicable for only the 2025/26 auction; in its filing, AEP noted that a stakeholder process had been initiated to consider changes to how capacity obligations for large load additions are calculated. (See FERC Grants AEP Utilities Waiver of Capacity Obligation.) 

Dominion has submitted a similar waiver request, though Old Dominion Electric Cooperative (ODEC) and Northern Virginia Electric Cooperative (NOVEC) have protested, arguing that the circumstances around the Data Center Alley in Northern Virginia differ from those AEP faced in Ohio (ER24-1037). 

The proposal would exclude LLAs from the calculation of base zonal scaling factors and apply that load to the obligation peak load (OPL) of the zone it is projected to be added to. LLAs are determined by PJM using information from load-serving entities about expected load growth and detailed in the RTO’s annual load forecast reports under Table B-9. 

Much of the discussion centered around how PJM uses the hourly load forecasts provided by LSEs to determine the LLAs it enters into Table B-9. 

ODEC’s Mike Cocco said that because the transmission provider will be assigning LLA directly to transmission-dependent utilities, this shifting of incentives and associated costs will necessitate the ability for the TDUs to provide their own LLA forecast to the Load Analysis Subcommittee. In addition, he could understand the arguments as to why the proposal should not be voted on without language detailing how PJM approves the LLAs, suggesting there should be some documented process PJM follows that should be established in the manuals. 

Dominion’s Jim Davis and MIC Facilitator Foluso Afelumo said changes to the development of Table B-9 are out of the scope of the issue charge approved in October. 

Rory Sweeney of NOVEC argued that because that process is not laid out in the manuals, it would not constitute a change to existing practices and therefore is within the issue charge’s scope. 

Bowring said the proposal needs to have explicit rules governing the treatment of changes in the load forecast for large loads. The final amount of capacity paid for is a result of a final forecast just prior to the delivery year that can vary significantly from the forecast in the proposal. The final forecast also defines the level of capacity transfer rights, the capacity market equivalent of financial transmission rights. 

Other Committee Business

The MIC endorsed a PJM quick-fix proposal seeking to outline its existing practices around interface pricing points, which groups buses together when calculating LMPs for energy transfers between external areas. The revisions to Manual 11 include a definition of interface pricing points and establish an annual review of power flow impacts on each interface and a recommendation from the Monitor to adjust the weighting of component interfaces to maintain congruity between prices and system conditions. 

PJM also presented a joint proposal with the Monitor to add more details to the parameters that synchronized condensers include in their market offers. PJM’s David Hauske said the proposal is focused on adding Operating Agreement and manual definitions of condense startup costs, condense-to-generate costs and condense energy use; there would be no change to PJM practices, he said. 

There will be some overlap between the 2025/26 BRA and the initiation of pre-auction activities for the following auction, Langbein told the committee. Pre-auction activity deadlines that will fall before the conclusion of the 2025/26 auction include: the deadline for planned resources to notify PJM of their notice of intent, minimum offer price rule certification, requests for an exception from the must-offer requirement, the Monitor’s posting of unit-specific energy and ancillary services (EAS) offset, and seller requests for winter capacity interconnection rights. Langbein said PJM is not currently considering any delay to the 2026/27 BRA, which is scheduled to open in December.