Page 1208 – RTO Insider

February 11, 2018

MISO Monitor to FERC: Order Sloped Demand Curve

By Amanda Durish Cook

MISO’s Independent Market Monitor is seeking to use the RTO’s recent refiling of its resource adequacy construct to force a FERC ruling on changing its capacity demand curve.

In an out-of-time Feb. 8 protest, the Monitor contends MISO’s use of a vertical demand curve in its annual Planning Resource Auction is a “critical design flaw” that results in “inefficient, unjust and unreasonable prices” (ER18-462).

MISO FERC demand curve resource adequacy — | *Potomac Economics*

On Dec. 15, MISO pre-emptively refiled its entire resource adequacy construct — Module E of its Tariff — following a D.C. Circuit Court of Appeals ruling that FERC overstepped its jurisdiction when prescribing revisions to PJM’s minimum offer price rule. MISO made the filing out of concern that a future ruling could undo some of its resource adequacy rules that were enacted in response to FERC’s suggestions. (See MISO Seeks FERC Reapproval to Keep RA Rules Intact.)

The filing provided the IMM a venue for forcing a FERC ruling on the sloped demand curve, a change Monitor David Patton has been unable to persuade MISO officials to adopt. Patton asked the commission to accept MISO’s filing for the 2018/19 PRA while initiating a proceeding under Federal Power Act Section 206 to force the RTO to make the changes for the 2019/20 PRA.

In 2011, FERC accepted MISO’s current resource adequacy rules, which replaced a monthly capacity auction with an annual auction using coincident peak demand forecasts to establish planning reserve requirements (ER11-4081).

FERC directed MISO in 2011 to remove proposed MOPR provisions from its capacity auction construct and instead use a peak load contribution methodology as its default for assigning capacity obligations.

The Monitor said that had MISO relied on sloped demand curve in its 2017/18 PRA, the auction would have cleared at about $115/MW-day instead of the $1.50/MW-day price in all zones. (See All Zones at $1.50/MW-day in 5th MISO Capacity Auction.) The higher price would have properly valued the reliability of the capacity, the Monitor claims.

The Monitor said the $1.50/MW-day clearing price offers suppliers less than 1% of revenues needed to break even on investment in a new peaking resource in MISO. The auction’s unreasonably low prices, Patton said, cannot support new investment “at levels that would satisfy the one-day-in-10-years reliability standard.”

“The commission relies on well-designed competitive markets to produce prices and market outcomes that are just and reasonable. No objective analysis of the MISO capacity market could demonstrate that the outcomes under the current Module E are just and reasonable by any appropriate standard. In fact, the flawed design of the market precludes it from producing just and reasonable prices. … Further, MISO made no attempt to provide evidence that its capacity market has produced reasonable outcomes or that it is an economically sound market design,” the Monitor wrote.

The Monitor also pointed to MISO’s unsuccessful 2017 filing to implement a partial forward market and downward-sloping demand curve for its retail choice areas — in which the RTO admitted that its capacity market has not produced efficient prices. During stakeholder meetings on the design proposal, Patton often repeated the need for a systemwide sloped demand curve. (See MISO Won’t Seek Rehearing on Auction Redesign.)

The Monitor’s protest came almost four weeks after the Jan. 12 deadline for filing responses to the RTO’s refiling. It said the commission should permit its out-of-time filing, contending it will not prejudice any party in the proceeding because it has not yet acted on MISO’s refiling.

In early January, the Electric Power Supply Association also protested MISO’s refiling, claiming that the RTO’s existing construct is “fundamentally flawed and has failed to support resource adequacy in the region because it lacks critical capacity market elements the commission has approved (or required) for other ISOs/RTOs.” EPSA said MISO should require capacity auction participation by all supply and demand resources, implement a downward-sloping demand curve with auctions held at least three years ahead of time and enforce a MOPR. Those three elements, EPSA argued, would create a “sustainable forward capacity market” in the footprint.

February 11, 2018

MISO Considering Time Limits on Dispute Resolution

By Amanda Durish Cook

CARMEL, Ind. — MISO is proposing to set limits on the amount of time its members have to initiate alternative dispute resolution measures, but stakeholders are saying the RTO might not be leaving them enough room to research and raise settlement issues.

MISO dispute resolution — Weissenborn | © *RTO Insider*

The RTO is recommending market participants have a 30-day time limit to request either an informal or formal alternative dispute resolution, John Weissenborn, director of market services, told a Feb. 8 Market Subcommittee meeting. Settlement disputes and corrections would be wrapped up within one year from the operating day in question under the proposal, he said.

The process is used in place of a lawsuit or FERC complaint when parties seek to negotiate contractual disputes over settlements. The RTO’s current Tariff doesn’t contain provisions that “categorically bar settlement disputes raised after a long time,” according to MISO.

MISO plans to revise Attachment HH of its Tariff — which governs such disputes — to provide market participants with 30 calendar days from the RTO’s denial of a settlement dispute to ask for an informal alternative dispute resolution, then another 30 days after that to request a formal dispute resolution if the informal request is denied by MISO.

Weissenborn said the deadlines will apply to both transmission and market settlements. The deadlines will promote “market certainty, prevent stale claims and facilitate accuracy in corrections of settlement statements,” he said.

MISO is aiming to file the plan with FERC by May, with the deadlines imposed by July.

Weissenborn said other RTOs have time limits ranging from five months to three years. Both SPP and PJM impose a two-year cutoff, while CAISO follows a three-year limit. NYISO employs the shortest cutoff at five months.

“There is precedent for this type of thing,” Weissenborn said. “It will encourage market participants to file their claim in a timely manner.”

Northern Indiana Public Service Co.’s Bill SeDoris and Dynegy’s Mark Volpe both asked how MISO’s one-year limit will line up with other RTOs’ disparate time limits should disputes involve inter-RTO matters, such as pseudo-ties and coordinated transaction scheduling, and which timeline MISO market participants should follow.

Weissenborn said MISO looked into such transactions and concluded that alternative dispute resolution would be separate for each RTO’s settlement.

Other stakeholders cautioned that the 30-day limit to research and initiate a dispute resolution may be too tight, asking instead for 60 or 90 days to initiate a dispute.

Weissenborn asked for more stakeholder comments over the next two weeks and said the comments could influence the final draft of MISO’s plan.

February 11, 2018

Lubbock Council, Utility Board Approve LP&L Settlement

By Tom Kleckner

Lubbock’s City Council and Electric Utility Board last week both approved a settlement agreement with all parties involved in Lubbock Power & Light’s effort to move 470 MW of its load from SPP to ERCOT.

The agreement, with intervenors from both systems, was approved unanimously in separate votes. Following the board’s vote, LP&L on Thursday filed the stipulation and proposed order with the Public Utility Commission of Texas for its consideration. The PUC is scheduled to take up the issue during its Feb. 15 open meeting (Docket No. 47576).

ERCOT SPP LP&L settlement agreement — LP&L power plant | *LP&L*

Under the agreement’s terms, LP&L will make a $24 million hold-harmless payment to Southwestern Public Service, which serves the utility’s load through a pair of long-term contracts, upon the transition’s effective date (targeted for June 1, 2021). The utility will also make five annual payments of $22 million, credited to ERCOT’s transmission customers in compensation for integration costs, and has committed to opting into the Texas ISO’s competitive market.

LP&L settlement agreement ERCOT SPP — Preferred Option 4OW for Integrating LP&L | *ERCOT*

LP&L said it expects to achieve annual savings exceeding the two payments.

“The agreement … sets Lubbock on the best possible path forward that saves their ratepayers money and opens the door to retail electric competition in Lubbock,” the utility said in a statement.

The only issue left to decide is what entity will build the transmission facilities linking LP&L with ERCOT. The parties signing on the settlement agreement, which include PUC staff, SPS and several consumer groups, have recommended moving forward with a project already identified by ERCOT. A pair of independent transmission companies, Cross Texas Transmission and Wind Energy Transmission Texas, are urging the PUC to open the construction to competitive bidding.

ERCOT in 2016 said its preferred solution was “Option 4ow,” a $364 million project that would result in 141 miles of new 345-kV lines. Staff last week said a competitive bidding process would “consume time and commission resources” not needed if the PUC simply followed ERCOT protocols, which provide “a suitable guide in this unique situation.” (LP&L is not yet registered in the ISO and therefore not covered by its protocols.)

ERCOT SPP Settlement Agreement LP&L — | *ERCOT*

Cross Texas said it envisions a competitive bidding process, conducted by the PUC, that could be accomplished in about 90 days.

LP&L formally announced in September its intention to move after one of its SPS contracts expires in 2021. A second SPS deal that expires in 2044 serves the remaining 130 MW of its load.

The PUC conducted two days of hearings on the matter in January. (See Texas Regulators Noncommittal After LP&L Hearings.)

February 11, 2018

MISO Accepting Market Roadmap Ideas

CARMEL, Ind. — MISO is seeking stakeholder suggestions on how it can improve its market design under its Market Roadmap process.

The project suggestion window, open through April, is part of the RTO’s biennial process of soliciting input from market participants.

MISO FERC MISO Market Roadmap Market Monitor — Johnson | © *RTO Insider*

This year’s effort will be scaled back because of the ongoing, $130 million project to replace MISO’s market platform, Lakisha Johnson, market strategy adviser, said during a Feb. 8 Market Subcommittee meeting. (See 8 Projects Set for 2018 MISO Market Roadmap.)

Stakeholders have until May 1 to submit new ideas for market improvements, and the RTO has scheduled a June 7 workshop to discuss submissions. Stakeholders will then have until July 12 to rank the new ideas, which will influence MISO staff decisions on what improvements to pursue. Through December, MISO and stakeholders will work to integrate the selected ideas into the RTO’s existing list of Market Roadmap projects.

Minnesota Public Utilities Commission staff member Hwikwon Ham asked MISO if this year’s submission window will line up with the Independent Market Monitor’s annual State of the Market report, which provides market design recommendations.

The Monitor is planning to release the report earlier this year in an attempt to better align the two sets of recommendations, IMM staffer Michael Wander said.

— Amanda Durish Cook

February 11, 2018

EPIC Interest Growing Rapidly in California

By Jason Fordney

SACRAMENTO, Calif. — Nearly 600 people crowded into the California Energy Commission’s EPIC Symposium on Wednesday, doubling attendance from last year.

It was a testament to the widespread interest in securing the hundreds of millions of dollars in grant funding California makes available to research and deploy innovative energy technologies.

California Energy Commission CEC EPIC Symposium — The California Energy Commission’s EPIC Symposium is rapidly growing each year | © *RTO Insider*

Funded through a charge on utility electric bills, the CEC’s Electric Program Investment Charge program was designed to provide $162 million annually from 2013 to 2020 to bring innovative technologies to market. The California Public Utilities Commission created the initiative in December 2011 to promote clean energy technologies, reliability, lower costs and safety. About $130 million of the annual funds are administered by the CEC.

State Sen. Nancy Skinner (D) told a packed room that the EPIC program is a way to explore and develop energy storage technologies that can reduce the curtailment of renewables and foster other efficiency improvements.

“We want to wrestle every bit of output from each unit of electricity or energy we produce,” Skinner said, discussing how her 2010 legislation, AB2514, fostered storage deployment by requiring the CPUC to consider mandating storage procurements for investor-owned utilities. “IOUs bought more storage and the price of storage came down. We want it to come down further.”

“EPIC has contributed to the development of numerous green technologies and facilitated the creation of thousands of jobs,” State Assemblymember Autumn Burke (D) said.

The CEC marked its third iteration of the EPIC program when it submitted its 2018-2020 Triennial Investment Plan last spring. The document lays out in detail the commission’s strategy over the three-year period for allocating the funds provided through EPIC, promising more coordination with local governments and enabling market growth of distributed energy resources.

“When we look at EPIC 3, we are really kind of thinking of that next generation of grid technology,” said Daniel Ohlendorf, Pacific Gas and Electric’s senior manager of electric emerging technologies.

“Electric vehicles and storage continue to be very important to us,” he said, as well as new maintenance approaches using new technologies such as augmented reality (computer-generated imagery) and drones.

Utilities at the symposium also discussed the growing pains associated with implementing storage technology. PG&E’s Morgan Metcalf described the challenges of behind-the-meter implementation.

Left to right: PG&E Senior Program Manager Morgan Metcalf, PG&E Principal Mike Della Penna and PG&E Senior Manager Daniel Ohlendorf | © *RTO Insider*

“Figuring out how to use all these resources is an important next step,” Metcalf said. “It’s not just policy that is driving this, it is our customers as well.” She added that PG&E customers are increasingly exploring solar, electric vehicles and energy efficiency.

Southern California Edison, Lawrence Berkeley National Laboratory, the University of California Berkeley and a diverse group of companies and energy organizations also held panel discussions at the symposium, with a strong focus on engineering issues, new technologies and applications such as food production.

Feb. 20 Deadline

The EPIC program is actively soliciting applications for a $15 million “Bringing Rapid Deployment to Green Energy” grant, which includes $10 million in applied research and development and $5 million for technology demonstration and deployment. Open until Feb. 20, the CEC developed the solicitation to provide follow-on funding for “the most promising energy technologies” that have previously received an award from an eligible state or federal agency for research, technology demonstration and deployment.

“The purpose of this solicitation is to fund applied research and technology demonstration and deployment energy efficiency projects that will allow researchers to continue their technology development without losing momentum or pausing to fundraise from private sources,” the CEC said. The grant is focused on advancing technology to commercialization, and is not open to public and private universities, national laboratories, utilities, private nonprofit research organizations and technology end users.

February 11, 2018March 6, 2024

EEI Praises Tax Bill, Looks Ahead to Infrastructure Policy

By Michael Brooks

NEW YORK — The Edison Electric Institute celebrated the passage of the Tax Cuts and Jobs Act at its annual briefing to Wall Street analysts last week, touting how it had worked to preserve interest deductibility for the corporate debt of the country’s 49 investor-owned utilities.

EEI President Thomas Kuhn said the original bill did away with interest deductibility and that Speaker of the House Paul Ryan told him he was reluctant to make an exception for the IOUs. The trade association then developed an analysis showing how maintaining the deductibility “would help our consumers, help us build infrastructure … and would be a net positive for the Treasury,” Kuhn told more than 100 analysts on Wednesday.

The result: The utilities industry was only one of two, along with agriculture, to receive the exception.

Under the new law, most corporations will only be able to deduct interest expenses of up to 30% of their earnings, which are now taxed at a flat 21%. The provision is meant to discourage excessive borrowing and keeping large amounts of debt on the books.

But being “the most capital-intensive industry in the United States … maintaining ready access to capital markets and keeping the cost of capital low are important to meeting our investment needs,” EEI said.

Kuhn said EEI is now working to clarify that the exception applies to utilities’ operating companies, not just their holding companies. Because the tax bill was signed into law on Dec. 22, the association is also seeking clarification on if the new rules on bonus depreciation — which allow businesses to deduct 100% of the cost of certain business assets, up from 50% — apply to the fourth quarter of 2017.

The clarifications could from the Treasury Department or Internal Revenue Service, or in technical corrections bill later this year.

Political Outlook

Tax reform was the top priority for EEI last year, and it ended up paying off, Kuhn said. (See EEI Pledges to Fight Elimination of Tax Deductions.)

Based on President Trump’s State of the Union Address on Jan. 30, and statements from Republican Congressional leaders, he said, infrastructure will be theme of 2018.

One thing EEI is not seeking out in infrastructure legislation is federal funding.

“We don’t need federal money, which is a good thing,” Kuhn said, given that “there’s not going to be a ton of federal money to pass around” under the new law.

Instead, said Phil Moeller, executive vice president of business operations and regulatory affairs, EEI will seek policies that increase certainty for building transmission projects, such as more efficient permitting processes, increased cooperation between state and federal regulators, and reforms to return on equity calculations.

The former FERC commissioner repeated the association’s positions the next day in D.C. before a hearing of the Senate Energy and Natural Resources Committee on energy infrastructure.

Moeller stressed the need for “cooperative federalism, so that one state doesn’t deny the benefits [of a project] to the citizens and customers of many other states.” He noted that regulatory deadlines for different jurisdictions are not aligned, creating delays for projects.

FERC can change much on its own, Moeller told both analysts and senators, but legislation would provide utilities more certainty. Much of EEI’s concerns would be addressed in a bipartisan energy bill pending before the Senate, Moeller said. That bill, the Energy and Natural Resources Act of 2017, is similar to a bill that passed the Senate 85-12 in 2016 but could not make it past the House of Representatives before Congress’ session ended.

Kuhn spent a portion of his opening remarks on the upcoming midterm elections, saying the association is monitoring them closely. He noted the unusually high number of representatives retiring at the end of their terms: 55, 38 of which are Republican. Democrats need to pick up 25 seats to gain control of the chamber, which Kuhn said there is a good chance of happening.

Return on Equity

EEI is particularly focused on the issue of calculating ROEs. The D.C. Circuit Court of Appeals threw out FERC’s two-step discounted flow methodology in April last year, saying the commission had not justified how it set the rates for a group of New England transmission owners. (See Court Rejects FERC ROE Order for New England.)

EEI published a whitepaper prepared by ScottMadden on the issue, which Moeller said he hopes will help guide FERC.

Moeller noted that he was on the commission that created the process in 2014, saying it is a complex and difficult issue that took months to figure out. He expects the new commission — Cheryl LaFleur is the only remaining commissioner who voted on the ROE ruling — to take its time to address the court’s concerns, but that a new rule would come out before the end of the year.

“The good news is they have to deal with it based on the remand from the D.C. Circuit,” Moeller said. The other good news, he said, is that the commissioners and their staffs are very knowledgeable of the issue.

“I think we have a chairman in Kevin McIntyre who not only has the experience but also the intelligence and, importantly, the temperament to run an agency that is increasingly in the public view,” Moeller said.

February 9, 2018

ISO-NE Capacity Prices Hit 5-Year Low

By Michael Kuser

Prices in ISO-NE’s Forward Capacity Auction sank to a five-year low on a surplus of available resources, the RTO said Thursday.

The preliminary clearing price in Tuesday’s 12th FCA for the 2021/22 commitment period dropped 13% to $4.63/kW-month, its lowest level since 2013. Last year’s auction cleared at $5.30.

Nearly 34,830 MW were acquired in the auction — 1,105 MW more than the target — at a cost of about $2.07 billion, putting the value of the auction $330 million below last year and about half the level of FCA 9.

FCA 12 ISO-NE forward capacity auction — Annual Value of Wholesale Electric Markets | *ISO-NE*

Resources totaling 40,612 MW qualified to participate in the auction, including 35,007 MW of existing capacity and 206 new resources totaling 5,605 MW.

FERC accepted ISO-NE’s informational filing for FCA 12 last month, rejecting protests from CPower and Tesla, which sought to compel the RTO to re-evaluate the renewable technology resource designation for six solar projects, and from Efficiency Maine Trust, which challenged the methodology for calculating existing capacity qualification values. (See FERC OKs ISO-NE FCA 12 Filing; Rejects Protests.)

Zone by Zone

Like last year, the most recent auction saw the region divided into three zones: Northern New England (NNE), comprising Vermont, New Hampshire, and Maine; Southeast New England (SENE), composed of Southeastern Massachusetts, Rhode Island, Northeastern Massachusetts and Greater Boston; and Rest of Pool (ROP), made up of Connecticut and western and central Massachusetts. System planners modeled NNE as export-constrained and SENE as import-constrained.

Some existing resources dropped out during Tuesday’s auction when prices fell below the level needed to justify carrying the risks of a capacity supply obligation, prompting the RTO to conduct reliability reviews on about 2,775 MW seeking to delist.

The reviews indicated “that transmission lines in a particular sub-region could be overloaded in extreme summer weather, jeopardizing reliability, if about 1,300 MW of submitted delist bids were not available,” Robert Ethier, ISO-NE vice president of market operations, said in a statement. “The ISO will address that potential reliability risk by retaining the resources for the 2021-2022 capacity commitment period. All other delist bids, including other bids in that sub-region, were accepted.”

FCA 12 closed for most resources after four rounds of competitive bidding. The $4.63/kW-month clearing price will be paid to all resources in all three capacity zones in New England, 524 MW of imports from New York and 57 MW from one interconnection with Quebec.

Imports over two other interconnections from neighboring regions, Quebec and New Brunswick, continued into a fifth round, which closed at $3.70/kW-month for 442 MW from Quebec and $3.16/kW-month for 194 MW from New Brunswick.

New and Old

No new large generators cleared in the auction, but included in the 174 MW of new generation that did clear is a new 58-MW natural gas unit and 87 MW of increased generating capacity at some existing power plants, the RTO said.

ISO-NE also noted that 3,600 MW of energy-efficiency and demand-reduction measures cleared the auction, including 514 MW of new resources —the equivalent of a large power plant. Also clearing were 1,217 MW in total imports from New York, Quebec and New Brunswick.

In total, 132 MW of wind and 86 MW of solar facilities cleared FCA 12, including 1 MW of new wind and 21 MW of new solar facilities. Most photovoltaic resources in the region are on the distribution system and don’t participate in the wholesale markets.

Retirement bids that were submitted and accepted before FCA 12 totaled 511 MW of resources, including one large generator — the 383-MW Bridgeport Harbor 3 coal-fired unit. The RTO will file final auction results, including resource-specific information, with FERC later this month.

February 9, 2018

MISO Resource Adequacy Subcommittee Briefs: Feb. 7, 2018

CARMEL, Ind. — Preliminary estimates show that MISO’s capacity requirements and available supply for the 2018/19 Planning Resource Auction will be in line with last year’s figures.

MISO RASC resource adequacy — Bachus | © *RTO Insider*

MISO has been planning for a systemwide coincident peak load of nearly 122 GW, a zonal coincident peak of 126 GW and a planning reserve margin requirement of 135 GW since the beginning of the year, Tim Bachus, capacity market administration analyst, told the Resource Adequacy Subcommittee on Feb. 7. (See MISO RASC Briefs: Little Change to Capacity Forecasts.)

While the forecast is — so far — steady year-over-year, RTO staff are still reviewing the data and won’t present final numbers until March, Bachus said.

The RTO’s zonal predictions show a capacity surplus similar to last year’s capacity auction, with all zones having enough installed capacity to meet local clearing requirements:

Zone 1, covering Minnesota, the Dakotas and western Wisconsin, is forecast to have a 16.5-GW coincident peak forecast, an 18.4-GW planning reserve margin requirement and a 15.7-GW local clearing requirement. The region has 25.2 GW of total installed capacity.
Zone 2, covering eastern Wisconsin and Michigan’s Upper Peninsula, is predicted to have a 12.2-GW coincident peak, a 13.5-GW planning reserve margin requirement and a 12.7-GW local clearing requirement. The region has 15.4 GW worth of total installed capacity.
Zone 3 in Iowa and Zone 5 in Missouri (combined by MISO to keep pivotal suppliers’ information private) together have a 16.6-GW coincident peak forecast, with an 18.3-GW planning reserve margin requirement and a 14.4-GW local clearing requirement. The zones have just under 27 GW of total installed capacity.
Zone 4 in Illinois is expected to have a 9.1-GW coincident peak, a 10.1-GW planning reserve margin requirement and a 5.2-GW local clearing requirement. The zone has just under 14 GW worth of total installed capacity.
Zone 6, covering Indiana and Kentucky, so far has a 16.6-GW coincident peak forecast with an 18.6-GW planning reserve margin requirement and a 12.5-GW local clearing requirement. The zone has 20.4 GW worth of total installed capacity.
Zone 7 in Michigan’s Lower Peninsula is expected to peak at 19.9 GW, have a 22-GW planning reserve margin requirement and a 20.7-GW local clearing requirement. The region has nearly 25 GW in total installed capacity.
Zone 8 in Arkansas, Zone 9 in Louisiana and Texas and Zone 10 in Mississippi (also combined to protect utility information) are expected to have a nearly 31-GW coincident peak, a 34-GW planning reserve margin requirement and a 28.8-GW local clearing requirement. MISO South combined contains almost 42 GW in total installed capacity.

MISO will conduct its sixth annual PRA during the second week of April.

Scrapping Out-Year Import and Export Limit Estimates?

MISO is recommending that it discontinue its practice of making long-term predictions of capacity import and export limits, saying the results are too unreliable to be used in planning.

“Out-year results are volatile due to uncertainty around future generation dispatch. We don’t have a good picture of what these will be,” said MISO’s Matt Sutton.

MISO each year produces both near-term and long-term predictions for capacity import/export limits between zones to inform its loss-of-load expectation (LOLE) study.

After examining the out-year limits, MISO could not identify any processes that “rely upon these transfer values in resource planning,” Sutton said, adding that creating the forecasts no longer makes sense because the RTO cannot predict with certainty what resources will retire. Although MISO has been producing the long-term forecasts for about four years, no staff member at the meeting could say why they were proposed in the first place.

Customized Energy Solutions’ David Sapper disagreed with MISO’s view, saying there was value in seeing long-term predictions of decreases or increases.

“We might miss out,” agreed Consumers Energy’s Jeff Beattie.

WPPI Energy’s Steve Leovy also said he found value in the long-term predictions and never disparaged MISO for what he deemed to be expected volatility.

“We’ve been thinking about the value of this analysis and what it’s used for ever since a stakeholder comment last year on process improvements,” Sutton said.

CES’ Ted Kuhn asked if the volatility and uncertainty surrounding the process was “a stake in the heart” to any possible effort to conduct a three-year forward capacity market. Sutton said MISO would be forced to make such long-term predictions should it ever decide to adopt a three-year forward market design.

MISO will return to the RASC in March with a decision on whether to discontinue the long-term limit planning.

Possible End to LOLE Work Group

MISO is proposing to disband the Loss of Load Expectation Working Group (LOLEWG) and move its policy discussions into the RASC — but several stakeholders aren’t keen on the idea.

Laura Rauch, MISO resource adequacy manager, said the group has recently had light agendas, while its discussions frequently overlap those in the RASC.

“It’s about efficiency and making sure we have the right people in the room when we discuss policy,” she said.

The LOLEWG is responsible for reviewing and making recommendations about the methodology and assumptions that inform MISO’s annual LOLE study, which calculates planning reserve margin requirements for each load-serving entity.

American Electric Power’s Kent Feliks said he “cringed” at the thought of bringing the group’s technical discussions before a larger audience.

Other stakeholders asked about simply reducing its meetings. Rauch said MISO has already both reduced the number of meetings and shortened their duration.

Dynegy’s Mark Volpe said the LOLE study will face new challenges in the future, including accounting for external zones in the PRA and possible changes to MISO and PJM’s pseudo-tied generation rules. Other stakeholders said the LOLEWG also must work on adequately capturing and estimating MISO’s ever-evolving fuel mix.

“That’s new and unchartered waters,” Volpe said.

Rauch asked stakeholders to provide opinions on the fate of the LOLEWG by Feb. 20. The group is next scheduled to meet on March 6; the lone agenda item is discussion of MISO’s recommendation to sunset the group.

— Amanda Durish Cook

February 9, 2018

NERC Board Approves Dissolving SPP Regional Entity

By Tom Kleckner

FORT LAUDERDALE, Fla. — NERC’s Board of Trustees on Thursday voted to dissolve the SPP Regional Entity (RE) by terminating the RTO’s regional delegation agreement, ending a reliability oversight role that concerned both the reliability organization and FERC.

With the termination of the NERC-SPP delegation agreement, most of the RE’s 122 registered entities will be reassigned to the Midwest Reliability Organization (MRO), with the remainder joining SERC Reliability Corp. At the same time, NERC will take over compliance monitoring and enforcement of the RTO for two years following the dissolution’s effective date. SERC has been responsible for compliance monitoring and enforcement since 2010.

SPP NERC SPP Regional Entity — NERC’s Board of Trustees gathers for its February meeting | © *RTO Insider*

SPP CEO Nick Brown said he supported the trustees’ decision but was disappointed in NERC assuming SERC’s monitoring role. The RTO said it preferred having ReliabilityFirst take that responsibility. (See NERC Seeks to Oversee SPP Reliability Compliance.)

“Their decision to provide compliance enforcement services for two years was not what we hoped for, but we’re ready to move forward,” Brown said in a statement. “We look forward to working in the NERC arena to improve processes related to regional assignment and compliance monitoring and enforcement.”

NERC will determine a successor for SPP’s compliance monitoring and enforcement after completing its two years of oversight, said the organization’s interim CEO, Charles Berardesco.

SPP said last July that it would dissolve the RE, which is responsible for auditing and enforcing reliability rules in three balancing authorities: SPP, Southwestern Power Administration and parts of MISO. (See SPP to Dissolve Regional Entity.)

SPP was appointed by NERC as an RE in 2007, but Brown said last year it became clear that agreement was “in jeopardy” as the RE’s footprint did not grow to match the RTO’s current 14-state territory. NERC also expressed concerns about the relationship between SPP, the RE and the RTO’s corporate compliance responsibilities.

That dual role also caused problems with FERC, which criticized SPP in a 2008 audit for failing to ensure the RE’s independence from the RTO (PA08-2, AD09-3). The audit called for improved oversight from the RE Board of Trustees to prevent conflicts of interest.

The termination agreement is expected to be approved by MRO next week. Berardesco said the agency will then move “expeditiously” to file for FERC’s “prompt” approval, easing the RE’s concern that it will continue to hemorrhage its staff.

NERC staff said they plan to make the FERC filing as soon as early March. SPP hopes to complete the transition by the end of July.

“We all recognize as the SPP RE goes away, there is the potential for a gap with people leaving,” Berardesco said.

Ken McIntyre, NERC vice president and director of standards and compliance, reassured the trustees that the agency is working closely with the RE to stem further staff losses, saying, “We are closely aligned on the issues as we move forward.”

He said staff are already working on the filing and are only waiting on final approval from the MRO board. “We have every incentive to move forward as quickly as we can. That’s in the best interest of everyone involved.”

McIntyre also said staff have collaborated with MRO and SERC to “ensure a high level of continuity during and after the transfer occurs.”

“I believe the level of staffing they have requested is correct and necessary to handle the number of entities that are transitioning,” he said. “We are confident … that both REs are capable of handling the oversight of the entities in their regions.”

MRO and SERC are both adding staff — including some from the SPP RE — to handle their additional responsibilities. NERC will also provide the REs with additional support.

“Staff has been working with both entities regarding their new responsibilities,” McIntyre said. “We’ve told both entities we would be enhancing our oversight in the next few months, to help them do the work.”

Registered entities were reassigned without looking at RTO or market boundaries, McIntyre said. (See NERC Assigns SPP RE Registered Entities to MRO, SERC.) He told the trustees that incumbent MRO and SERC entities will see only a small increase in cost, if that.

February 8, 2018

NRG Selling Renewables, Other Assets for $2.8 Billion

By Peter Key

NRG Energy on Wednesday said it has agreed to sell several of its businesses in transactions that will bring the company $2.8 billion in cash and take $7 billion in debt off its books.

The deals, which NRG expects to close in the second half of the year, involve its renewables businesses, its interest in NRG Yield and its South Central Generating subsidiary.

The sales, which require numerous regulatory approvals, are part of the transformation plan that NRG launched last July in response to pressure from hedge fund Elliott Management and private investment firm Bluescape Energy Partners, which a year ago revealed they owned a 9.4% stake in NRG and said they believed its shares were “deeply undervalued and that there exist numerous opportunities to significantly increase shareholder value, including operational and financial improvements as well as strategic initiatives.”

NRG expects to announce more sales over the course of the year and is revising its total asset sales cash proceeds target under the plan to $3.2 billion.

Global Infrastructure Partners (GIP) agreed to buy NRG’s controlling stake and 46% interest in NRG Yield, as well as its renewable development and operations and maintenance businesses, for $1.375 billion in cash.

GIP is a $40 billion private equity fund that “makes equity investments in high quality infrastructure assets in the energy, transport and water/waste sectors where we possess deep experience and strong relationships,” according to the company’s website.

“We view each of the three acquired businesses — the [NRG Yield] stake, the O&M business and the development business — as highly complementary and well positioned to capitalize on the increasing market demand for low-cost, clean energy,” GIP Chairman Adebayo Ogunlesi said in a statement.

The sale is subject to antitrust review under the Hart-Scott-Rodino act and must be approved by FERC, the U.S. Department of Energy, the California Public Utilities Commission, the Connecticut Public Utilities Regulatory Authority and the Pennsylvania Public Utility Commission.

As part of the deal, NRG also has agreed to sell two assets to NRG Yield for about $407 million: the 527-MW Carlsbad Energy Center, a natural-gas fired power plant in Carlsbad, Calif., scheduled to come online by the end of the year, and the 154-MW Buckthorn Solar farm in Pecos County, Texas.

Additionally, NRG will sell its South Central business to Cleco Corporate Holdings for $1 billion in cash. The South Central unit owns and operates 3,555 MW in generation assets consisting of a 75% stake in the 300-MW Bayou Cove natural gas plant in Jennings, La.; the 430-MW Big Cajun-I natural gas plant in Jarreau, La.; the 1,461-MW Big Cajun-II coal and natural gas plant in New Roads, La.; the 1,263-MW Cottonwood natural gas plant in Deweyville, Texas; and the 176-MW Sterlington natural gas plant in Sterlington, La. NRG will lease back the Cottonwood plant through May 2025.

That sale is also subject to antitrust review and must be approved by FERC, the Committee on Foreign Investment in the United States and the Louisiana Public Service Commission.

Cleco Sees Big Growth from NRG Acquisition

Eric Schouest, vice president of marketing-South for Cleco Power, told the Gulf Coast Power Association’s MISO South regional conference in New Orleans on Thursday that his company’s acquisition includes full service wholesale power supply contracts for nine Louisiana cooperatives, five municipalities in Arkansas, Louisiana and Texas, and one investor-owned utility. “We serve about 23 of the 64 parishes in the state of Louisiana. It adds about 23, 24 new ones,” he said.

Rich Heidorn Jr. contributed to this article.