Page 1199 – RTO Insider

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.

March 13, 2018

Basin Electric Freed of PURPA Purchases Over 20 MW

By Robert Mullin

FERC on Monday approved Basin Electric Power Cooperative’s requests to eliminate its obligation to purchase power and capacity from generating facilities over 20 MW under the Public Utility Regulatory Policies Act.

The consumer-owned co-op, which provides supplemental wholesale power to 141 rural electric member systems in MISO and SPP, last year assumed the mandatory obligations of its members to purchase output from PURPA qualifying facilities — QFs of 150 kW or more in the case of SPP.

FERC PURPA basin electric power cooperative — Crow Lake facility | *Basin Electric Power Cooperative*

In its rulings — one for QFs in MISO (QM18 –7) and one for SPP (QM18 –6) — the commission agreed to terminate Basin’s mandatory purchase obligation under FERC regulations, which stipulate that QFs in excess of 20 MW of net capacity in the two RTOs have nondiscriminatory access to a market, satisfying PURPA’s requirements.

The commission dismissed the combined protests of two wind farm developers, Thomas Mattson and David VanderLeest, who argued that Basin was attempting to “rewrite” and “violate” PURPA and other laws intended to protect small generators.

Mattson and VanderLeest contend e d that larger developers have received “substantially” better power purchase agreement terms from Basin than smaller developers, causing the complainants to lose out on a number of proposed projects because of expiring option agreements.

“Basin destroys their competition, keeping all small cooperatives under their rule,” their protest said. “QF wind farms would provide less costly power than Basin, reducing customer rates while providing economic stability for the small cooperative.”

The developers asked FERC to take six actions, including an order to reduce interconnection costs.

The commission said the issues raised in the protest went beyond the scope of the proceedings. “Mattson and VanderLeest allege, among other things, delays in providing developers with accurate long-term avoided costs rates and failures in the overall implementation and enforcement of PURPA at the federal and state levels,” the commission said. The Basin proceedings were limited to whether QFs in MISO and SPP have nondiscriminatory access to a market that satisfies PURPA’s requirements, it said.

FERC cited Order 688, in which it “explained that there can be factors unique to individual QFs, including operational characteristics and transmission limitations, that prevent such QFs from having nondiscriminatory access to the markets described in Section 210(m)(1) of PURPA.

“However, Mattson and VanderLeest’s protest does not discuss those factors or otherwise attempt to rebut the arguments in the [Basin] application,” FERC said.

Basin’s territory includes portions of Colorado, Iowa, Minnesota, Montana, Nebraska, New Mexico, North Dakota, South Dakota and Wyoming.

March 13, 2018

AMP Seeks More PJM Scrutiny of TO Projects

By Rich Heidorn Jr.

American Municipal Power contended Thursday that PJM’s limited review of transmission owner projects is not rigorous enough to ensure the RTO is avoiding unnecessary costs or that TOs’ evaluation of other stakeholders’ proposed solutions are accurate and unbiased.

AMP’s Ryan Dolan noted that Manual 14B prohibits PJM from evaluating supplemental projects as part of the Regional Transmission Expansion Plan, meaning the plan can’t capture whether a supplemental project creates or alleviates economic issues. “We can’t assure an optimized build-out of the system,” said Dolan, who presented a list of proposed rule changes at Thursday’s Planning Committee meeting.

Dolan said PJM’s limited review was not a problem in the past but that the RTO should provide more scrutiny now, because supplemental and other TO projects represented 88% of RTEP spending last year.

“There’s information that PJM has that the TOs don’t have, that we [stakeholders] don’t have,” said Dolan, who said the RTO should tap all available expertise in its analyses.

‘Do No Harm’ Reviews

Dolan spoke after Aaron Berner, PJM manager of transmission planning, explained the RTO’s “do no harm” reviews of baseline upgrades, supplemental upgrades and new service requests. The review is intended to identify any reliability issues caused by new upgrades, determine if the upgrades should be more or less “robust” and assess the cost efficiency of packages of upgrades needed to correct reliability violations.

The testing required depends on the scope of the upgrade, not the type of upgrade, Berner said. No analysis is required for direct in-kind replacements, while minor changes to impedances or ratings undergo “minimal analysis.” Significant changes to impedances, ratings or new topology may require “significant” review — load-flow, short-circuit and stability analyses.

AMP wants PJM to vet supplemental projects to identify interdependencies with baseline projects and quantify the impacts of TO proposals on previously approved economic projects or whether they eliminate previously approved reliability projects or change cost allocations.

Dolan said many TOs create their own base cases with generation dispatch and load profiles that differ from PJM’s practice, but the RTO’s analysis is only applied on its own models. “There are no checks and balances to ensure that the [TO’s] process is being followed and that [that] process is consistent,” he said.

Dolan also expressed concern about the large number of TO projects submitted at the end of the RTEP cycle, saying PJM should establish start and stop dates for TOs to submit needs and proposed solutions, aligned with competitive windows.

He also called for standardizing the data reporting requirements for all project submissions and requiring reporting of all scenarios, models, standards and documentation used to justify and size project facilities; and a process that allows for formal submission and PJM review of alternative proposals.

Supplemental Projects AMP PJM — Stern | © *RTO Insider*

Alex Stern, manager of transmission strategy and policy at Public Service Electric and Gas, said AMP’s proposals were “misplaced.”

“My initial reaction is the PJM stakeholder process might be the wrong forum” for AMP’s proposal, said Stern, noting FERC’s Feb. 15 ruling, which he said accepted PJM’s current role and declined to mandate it do more (EL16-71, ER17-179). (See FERC Orders New Rules for Supplemental Tx Projects in PJM.)

“FERC just advised that it doesn’t believe there is any modification needed to PJM’s analysis. It confirmed the acceptability and appropriateness of PJM’s role with respect to planning for supplemental projects and specifically declined to require greater PJM involvement in planning for and selecting supplemental projects.

“The stakeholder process probably shouldn’t be discounting FERC on this,” Stern added.

“They weren’t saying [PJM] couldn’t do more,” Dolan responded. “They were just saying, ‘It’s OK.’”

Internal Discussions on Sharing More Info on Tx Projects

Earlier in the meeting, Berner described the RTO’s internal discussions about how it can respond to requests for more information on proposed transmission projects.

Berner said PJM is developing a tracking mechanism for identifying information shared without disclosing critical electric infrastructure information. The RTO is considering making more information available through the Planning Community portal launched in September.

The RTO expects to share its proposals within “a couple months,” Berner said. Some information requests to the RTO indicate it should offer additional education on its study process, he added.

TOs Answer Questions at TEAC

At the Transmission Expansion Advisory Committee meeting later Thursday, officials of Baltimore Gas and Electric and Commonwealth Edison answered questions Dolan had posted on supplemental projects brought up for a second read. BGE, for example, said that circuit breakers slated for replacement at its Jericho and Howard substations are 47 and 27 years old, respectively, and have been the subject of expensive repairs.

Dolan appeared pleased to be receiving responses, smiling in the room when the BGE representative spoke up on the phone. He had posed the questions to Berner, who said PJM was still in collecting the necessary information and determining how to respond, but BGE then volunteered the responses. When Dolan later brought up his questions about replacing a transformer and installing two breakers at ComEd’s Wayne substation, Berner deferred to a ComEd representative on the phone, who provided responses.

Earlier in the TEAC, stakeholders received first-read presentations on eight supplemental projects: six by American Electric Power totaling $163.4 million and two by Dominion, totaling $860,000. (See table.) When discussing an AEP project to replace two breakers at its Jefferson station, Berner told Dolan he didn’t have answers to questions AMP had submitted and wasn’t planning to bring the project back to a subsequent meeting to review the responses “unless something changes.” Dolan argued that AMP had submitted questions within the timeline laid out in the TOs’ recently proposed Tariff Attachment M-3, which they developed to codify the “additional detail and transparency regarding the process for planning supplemental projects” they’ve agreed to. It is currently circulating for review and comments.

In a discussion on a $53 million project to replace aging transformers at AEP’s Wyoming substation, Dolan asked whether stakeholders would be permitted to review maintenance records on the transformers. “There’s a discussion about whether maintenance records need to be made available,” said Berner.

Vice President of Planning Steve Herling said PJM’s reading of FERC’s February order is that stakeholders should be able to replicate the TO’s planning studies, “not replicate asset conditions.”

“As we’ve been discussing, we’re trying to change the progress of the supplemental upgrades as they come to PJM,” Berner said at one point. “It’s going to take us a little bit of time to get those specifications of the required upgrades to a point where we can present them all in a fashion that would allow identification of the issues earlier in the process, but there are a number of issues out there right now that need to be addressed. We can’t delay that.”

March 12, 2018

McIntyre Discloses Brain Tumor Surgery

FERC Chairman Kevin McIntyre disclosed Sunday that he underwent successful surgery for a brain tumor that was discovered last summer.

The disclosure, made in a statement posted on FERC’s website, appears to explain the dramatic difference in McIntyre’s appearance between his Senate confirmation hearing in September and his swearing in in December, after his hair — apparently having been partly shaved — was beginning to grow back.

FERC CAISO Kevin McIntyre Kevin and Rich Gates — FERC Chairman Kevin McIntyre at his Senate confirmation hearing in September 2017 (right) and his testimony before the Senate in January (left), after his hair — apparently having been partly shaved — was beginning to grow back.| © *RTO Insider*

The health issues also may have played a part in McIntyre’s delayed arrival at FERC. He took office on Dec. 7, more than a week after Commissioner Richard Glick; both were confirmed by the Senate on Nov. 2.

McIntyre said he issued the statement because of inquiries about his health. He said the tumor was discovered unexpectedly last summer. “Through an incidental finding, i.e., a medical issue discovered by accident, I was diagnosed with a brain tumor. I was very fortunate that the tumor was relatively small, that I had no symptoms and that I was otherwise in excellent health.

“Thereafter, I underwent successful surgery, followed by the post-operative treatment that is the standard of care for my situation. I was advised at the time that, with the surgery and subsequent treatment behind me, I should expect to be able to maintain my usual active lifestyle, including working full time, and that expectation has proven to be accurate.”

The chairman expressed gratitude for the support he received from those who had been aware of his situation “especially those in the White House, Congress and the FERC.”

He said he did not intend to provide further details or updates “for reasons of personal and family privacy.”

“I am grateful that my health is now stable and that I am able to devote my full energy to serving the American public every day as chairman of the FERC and continuing to work to earn the trust that has been placed in me,” he said.
McIntyre joined FERC after two decades at Jones Day, where he represented energy clients in administrative and appellate litigation, compliance and enforcement matters, and corporate transactions.

— Rich Heidorn Jr.

March 12, 2018

Competition Gives Everyone Better, Cheaper Energy Choices

By Anne Hoskins and Dan Dolan

Open markets drive competition. Competition drives innovation and affordability. Case in point: Today, more and more consumers are utilizing innovative battery solutions — with many powered by rooftop solar — to provide clean energy to homes and businesses. In the coming weeks, regulators will consider proposals by utilities in Massachusetts and New Hampshire that seek to fully control customer-owned batteries, or seek to reach into peoples’ homes and actually own batteries. There is no reason for regulators to allow utility control or ownership of generation and storage resources that can be supplied competitively. With no natural monopoly to regulate or market failure to fix, enabling utility ownership and control will serve only to stifle innovation and impede competitive solutions. We urge regulators to consider a better future.

NEPGA Sunrun competitive markets batteries — Sunrun’s Brightbox home battery service | *Sunrun*

The way Americans make and use electricity is in the midst of a remarkable evolution. For more than a century, we were unable to store electricity at our homes or businesses the way we store gasoline or recharge devices like our cell phones. Energy needed to be generated and consumed simultaneously. As a result of steep cost reductions in technology and competitive innovation, we are entering an exciting new era of empowerment. Consumers and businesses across the country are pairing batteries with rooftop solar. Large power plants are also now pairing with batteries to smooth spikes in demand. These new resources can enter markets, lowering costs for all consumers.

Twenty years ago, many states unleashed innovation by restructuring and creating competitive markets, no longer allowing monopoly utilities to own generation. That policy choice helped pave the way for consumers to benefit from electricity supply options and unleashed fierce competition in how electricity is produced. The result? More efficiency. Thanks to increased competition in the marketplace, today it takes three plants to generate the same amount of electricity as it used to take four to generate. This in turn helped lower the price to produce power dramatically, though consumers’ bills are still increasing, as utilities continue distribution and transmission spending and charge us more to transmit power. These efficiency gains and competitive investments have also helped power plants in New England drive down carbon dioxide emissions by more than 40% since 1990, now representing only half of the emissions of the transportation sector. The framework of a competitive and dynamic marketplace set the stage for more competitive storage options.

But the glide path for consumers and competitive markets is riddled with bumps along the way. Some utilities are seeking to own batteries in peoples’ homes and businesses. Others are requesting the right to the energy in a consumer’s battery, at the very least. Their goal? To receive returns for their investors by controlling storage that was funded by consumer and business investments. In other words, utilities want to take control of a family’s home battery, which was charged by the family’s home solar system, and bid that electricity into the competitive wholesale markets themselves. That is anticompetitive and counter to public policy goals that encourage investments in a cleaner and more resilient electricity grid.

The New England Power Generators Association and residential solar and storage companies agree that utilities should not impede consumer energy and storage investments when there are competitive options available. Such utility ownership or control is a dramatic step away from open energy markets. Rate-based utility ownership of batteries stifles competition — both at the rooftop and large generator scale — and threatens to raise rates for everyone.

Let’s get this right. Dozens of innovative companies are already stepping up to replace portions of our aging energy infrastructure with innovative storage solutions — competitively and with increased flexibility for consumers and generators. At the same time, however, utilities are spending tens of billions of dollars annually on building poles and wires. Some of these investments are necessary to replace power lines and substations at the end of their useful life, but some can be avoided with distributed energy solutions and large-scale storage. Consumers will foot the bill for utility infrastructure now and for decades into the future — if we don’t allow competitive solutions to emerge. With the right policies in place, investments in competitive electricity supply and storage can improve resilience and affordability. By providing clear price signals, utilities or system operators can incentivize private storage assets, at all scales, to meet system demands. There is no need for utilities to own or control the assets.

As the National Energy Marketers Association, which represents global suppliers and major consumers of natural gas and electricity, wrote, “After nearly two decades of experience with competitive retail markets, it is abundantly clear that the anticompetitive impacts of monopoly utility participation in competitive energy markets … is poor public policy, is not in the public interest and deters and discourages the private capital investment and technology innovation.”^[1]

Dan Dolan, President, New England Power Generators Association. NEPGA’s mission is to support competitive wholesale electricity markets in New England. We believe that open markets guided by stable public policies are the best means to provide reliable and competitively-priced electricity for consumers.

Anne Hoskins, Chief Policy Officer at Sunrun. Sunrun is the nation’s largest dedicated residential solar, storage and energy services company with a mission to create a planet run by the sun.

“Comments of the National Energy Marketers Association.” State of New York Public Service Commission. Case 14-M-0101. Proceeding on Motion of the Commission in Regard to Reforming the Energy Vision. 9/22/14. http://documents.dps.ny.gov/public/Common/ViewDoc.aspx?DocRefId={929C1EFF-B6C6- 4779-934A-23EDD5DA11D2. ↑