Page 1215 – RTO Insider

February 6, 2018

FERC Judge Faults PJM, TOs on Transmission Upgrade Process

By Rory D. Sweeney and Rich Heidorn Jr.

In a potential victory for merchant transmission developers, a FERC administrative law judge has concluded that PJM’s system impact study (SIS) process is unjust and unreasonable because of a lack of transparency (EL15-79).

ALJ Philip C. Baten’s Jan. 19 initial decision ordered PJM to reinstate three interconnection queue positions he said were unfairly eliminated when developer TranSource refused to pay for a facility study, the next stage of its interconnection process after the SIS. He also ordered the refund of TranSource’s SIS application fees.

Baten dismissed several other remedies TranSource — not to be confused with Transource Energy, a joint venture of American Electric Power and Great Plains Energy — sought, including its claim for $63.6 million in “lost business” opportunities. Parties have 30 days to file exceptions to Baten’s decision.

PJM spokesman Ray Dotter said the RTO will challenge the ruling.

“We have concerns about the judge’s proposed remedy to put the project back into the planning queue because it would be disruptive to other interconnection customers with pending projects,” he told RTO Insider. “PJM has looked at and revised its processes. We have made great progress on the identified transparency points. As the next step in the proceeding, we will file with the commission a brief on exceptions to the initial findings.”

Inflated Costs?

TranSource filed a complaint in June 2015 contending that PJM and transmission owners Public Service Electric and Gas, PPL, Jersey Central Power & Light and Delmarva Power & Light inflated the cost of upgrades necessary to approve three requests for incremental auction revenue rights (IARRs). (See Transmission Developer: PJM TOs Inflating Upgrade Costs for ARRs.)

Baten said he could not determine whether the $1.7 billion in upgrades PJM identified were indeed necessary, noting that the case focused on the impact studies, which are supposed to produce only “good faith” cost estimates.

But he sided with FERC trial staff in faulting PJM for failing to provide transparency throughout TranSource’s efforts to secure IARRs for making upgrades that would reduce congestion on the transmission grid.

TranSource’s upgrade proposals used facility ratings from FERC Form 715 filings made by PJM on behalf of the TOs. Baten said that was a “reasonable” assumption based on “statutory and regulatory provisions” and language in PJM’s Tariff.

But the RTO testified its cost estimates were based on the line ratings expected at the time that the project being studied would be in service — including planned upgrades.

PJM’s estimates also incorporate the host TO’s review of limiting elements based on the methodologies they file under NERC reliability standard FAC-008-3. The methodologies are not public and not the same as those used for Form 715, Baten said.

A TranSource witness, electrical engineer Dale Douglass, testified in the case that FirstEnergy’s FAC-008-3 ratings methodology was “clear and logical” but that the other three TOs did not clearly specify the maximum conductor temperature used to determine the line ratings.

“For some years the commission has fostered policies to pry open the transmission grid to greater competition. … The commission does recognize that interconnection customers should be able to reasonably estimate their cost before entering the queue,” Baten wrote. “Nowhere in the PJM [Open Access Transmission Tariff], Operating Agreement, or manuals or any written manifestation, which may be presented to outside parties, does PJM explain or indicate that the FERC Form 715 ratings are not used to process IARR requests. … The evidence is sufficient to show that TranSource was not advised of these parts of the model within a time frame to afford it the opportunity to make sound business judgments.”

Readington-Roseland Line

A primary conflict was over estimates for upgrading PSE&G’s Readington-Roseland 230-kV line in New Jersey.

PJM’s analysis of transmission upgrade requests under Tariff Attachment EE is done in two steps. The SIS provides developers with an estimate of what their plan will cost with +/- 40% accuracy.

transmission upgrades transource pjm ferc — Analyses of the condition of the Readington-Roseland line was a source of contention in the TranSource case | *PJM*

The first component of the SIS is the simultaneous feasibility test, in which PJM tests whether the developer’s IARR request can be accommodated without diminishing the income of the current ARR holders. After that, PJM identifies the facilities that are impacted by the IARRs and the relevant TOs conduct “desk-side” studies — so called because they do not involve site visits — using the confidential methodology to identify upgrades needed to accommodate the IARRs and their estimated cost.

If the developer chooses to proceed based on the SIS results, PJM conducts an in-depth facilities study that requires a refundable deposit of at least $100,000 and is supposed to provide a more accurate itemization of required upgrades.

A facilities study done for Exelon in late 2014 pegged the cost to repair the Readington-Roseland line at about $14.2 million. Although the towers had been in service for 80 years, “based on visual observation only, tower replacements are not anticipated,” the study said.

But an SIS done for TranSource six months later increased the estimate more than nine times to nearly $126.5 million. When Richard Crouch, a PSE&G electrical engineer, reviewed the project three months later, he called for a complete wreck and rebuild for more than $142.7 million, a $16 million increase that he couldn’t adequately explain, the decision said. In his testimony, Crouch said he based his replacement decision on his “institutional knowledge” of the conditions of several other lines that are similar in age and terrain, which he used as surrogates in his own “desk-side” study.

By 2016, PSE&G engineers had put the line on its list of facilities violating the company’s Form 715 end-of-life criteria.

“If the line had such a dire status by 2016, it could not have been in a better condition in 2014 when the [TranSource study] began. The FERC Form 715 of that earlier period should have noted the condition,” Baten wrote. PSE&G “did not timely report the end-of-life condition of this line on FERC Form 715.”

“PSE&G follows the FERC-approved PJM process for all planning decisions, including with regard to the facilities discussed by Judge Baten in the TranSource decision,” spokesman Mike Jennings said.

TranSource contested the SIS for Readington-Roseland and its other requested upgrades, saying it lost financing because of what it called PJM’s “badly inflated” estimates. The RTO eliminated TranSource’s queue positions when it refused to pay for the studies.

Unduly Discriminatory

Baten ruled that the lack of transparency in PJM’s SIS process made it “unduly discriminatory” to merchant developers by depriving them of business opportunities. He noted that, because IARRs were implemented in 2007, only two projects out of 100 submissions under two separate Tariff sections have been awarded IARRs.

The judge said that trial staff generally sided with PJM in the case, but that a staff witness, economist C. Shelley Norman, agreed that “PJM’s process for reviewing and evaluating IARR requests was significantly lacking in clarity and transparency.

“Even PJM’s witness David Egan [manager of the Interconnection Projects Department] agreed during his deposition,” Baten added.

“PJM’s lack of clarity and transparency in its IARR study process has likely caused systemic issues and contributed to the low completion rate of successful merchant IARR projects,” wrote Baten, who noted the record included hundreds of pages of email correspondence between TranSource and the RTO between June 2013 and March 2015. PJM’s “dribbling out of piecemeal information over time … is not consistent with the level of transparency that the commission orders have envisioned. … These obvious failures in this case are indicative of a severely flawed SIS process.”

Revised IARR Manual

During the hearing in the case, PJM and its Independent Market Monitor developed a manual detailing the procedures that the RTO followed to determine the TranSource upgrades. Baten said that although the manual was intended to improve transparency, it “does not provide any methodologies that the TOs use or will use to rate their facilities when they get the request from PJM to determine the extent and any necessary upgrades to meet an IARR request.”

Because the manual was not litigated at the hearing, Baten said he could not rule on whether it is sufficiently transparent.

“The commission on its own motion may order that PJM should offer the manual to a stakeholder process for proper vetting. At this point, the manual represents the efforts of PJM and the IMM to clarify the IARR process. On its face it does neglect a discussion of the role of the TOs in the process. More flaws could be undiscerned at this point in its development.”

Two-Stage SIS?

The judge rejected as beyond the scope of the docket TranSource’s request that PJM add another phase of impact studies before the facilities study so that requests by merchant transmission developers are handled in the same manner as requests for generation interconnection studies. Baten said the commission “should consider” TranSource’s request. PJM’s Planning Committee began a discussion on whether an additional study phase is necessary in September. Tariff revisions, which include replacing an initial study for projects with a feasibility study prior to an SIS, were approved by the Markets and Reliability Committee in December and the Members Committee in January. PJM plans to present additional manual revisions at Thursday’s Planning Committee meeting. (See “Interconnection Study Process to be Rearranged,” PJM Planning/TEAC Briefs Oct. 12, 2017.)

February 6, 2018

PJM TOs, Customers Continue to Clash on Tx Maintenance

By Rory D. Sweeney

VALLEY FORGE, Pa. — One thing is clear in the PJM turf war over control of the transmission replacement process: Neither side is conceding an inch until a FERC decision forces them to.

Representatives of transmission owners and their customers once again staked their claims at last week’s meeting of the Transmission Replacement Processes Senior Task Force (TRPSTF). TOs argued it’s their sole right and responsibility to manage their infrastructure, while transmission customers called for increased transparency of the processes TOs use to determine when towers and other equipment should be replaced. The projects are part of a class of transmission development that doesn’t require PJM approval, known as “supplementals.”

PJM stakeholders attend last week’s TRPSTF meeting | © *RTO Insider*

PJM staff stuck to a strict definition of the RTO’s role over such projects.

“We look at the reasonability of the information [TOs provide] and that they have followed the procedures that have been specified, but validation is a much stronger word,” Vice President of Planning Steve Herling said. “We validate that they follow their procedures. We cannot validate the individual elements of the actual material condition.”

The task force has made little progress since it was chartered in May 2016 to “develop alternatives for providing more transparency and consistency in the communication and review of end-of-life projects in the Regional Transmission Expansion Plan.” (See PJM Demands Agreement on Tx Replacement Definitions.)

FERC issued a show cause order in August 2016 questioning whether PJM TOs’ procedures for planning supplemental projects provided stakeholders opportunity for “early and meaningful input and participation,” as required by Order 890 (EL16-71). TOs included in their response a proposed addition to the Tariff known as Attachment M-3, which they argue would improve transparency.

The show cause order precipitated a 10-month hiatus of the task force, which ended in July. Since then, American Municipal Power and Old Dominion Electric Cooperative — who say they are advocating for their customers — have proposed an alternative to Attachment M-3 that would give PJM more say over when and how TOs can replace aging equipment. Currently, TOs fully control that process through Form 715.

pjm transmission replacement supplemental projects — Guy | © *RTO Insider*

The sides spent much of last week’s meeting walking through AMP and ODEC’s responses to questions TOs had posed about their proposal. The TOs argued that many of the AMP/ODEC provisions violate PJM’s governing documents and the organizational structure TOs agreed to when they joined the RTO. Exelon’s Gary Guy and Gloria Godson led much of the TO criticism.

“I cannot agree to” the AMP/ODEC proposal, Guy said. “We subjected ourselves to PJM, to their operational control … but not to any other third parties, and we’re not going to use the Tariff of PJM to write rules of compliance between us and third parties.”

PJM staff maintained their neutrality, saying that they expect TOs to provide explanations of their decisions but not information necessary to replicate their studies. Staff said the control they have over projects needed to address system reliability issues — known as “baseline” projects — doesn’t extend to supplementals.

“If it’s a baseline project, we get involved in that conversation [on sizing and specifications]. If it’s a supplemental … I don’t believe we have a role,” Herling said.

“I maintain my water heater … but after a while, when the bottom fell out of it, I went ahead and I had to get a new one. But I’m not characterizing my new water heater as maintenance,” AMP’s Ed Tatum said.

“You may choose to replace your water heater when the bottom falls out. Others may choose to replace it when it starts to get rusty on the top,” PJM’s Paul McGlynn responded.

PJM staff then walked through proposed solutions they developed internally. The proposals received substantial feedback from stakeholders, but TOs clarified at the end that their engagement didn’t represent approval.

“We’re not negotiating against our [M-3 proposal] in the FERC docket,” PPL’s Frank “Chip” Richardson said. “PJM’s proposal may go well beyond what transmission owners filed in that docket. We don’t know yet. We have to take it back and look at it.”

February 6, 2018

DC Circuit Orders FERC to Review ISO-NE Auction Orders

By Michael Kuser

The D.C. Circuit Court of Appeals ruled Friday that FERC failed to adequately explain why it approved capacity market rules for ISO-NE in 2014 like those it had rejected in PJM for suppressing prices.

The Feb. 2 ruling granted petitions for review by Exelon and the New England Power Generators Association on rules allowing new suppliers to lock in their first-year clearing prices for six additional years while requiring them to offer at $0 in years 2 through 7 (15-1071).

FERC ISO-NE D.C. Circuit zero-price bidding — Meade and Prettyman Courthouse | *D.C. Circuit*

The decision remanded to FERC its orders rejecting the petitioners’ challenges (EL14-7, EL15-23), saying the orders had “failed to offer adequate rationale and explanation.” (See FERC Upholds ISO-NE New Entry Pricing; Rejects Challenges by Generators.)

“On the record before us, we conclude that FERC did not engage in the reasoned decision-making required by the Administrative Procedure Act,” the court said. “FERC failed to respond to the substantial arguments put forward by petitioners and failed to square its decision with its past precedent.”

PJM Ruling

NEPGA and Exelon contended the rules reduce clearing prices paid to both new and existing suppliers.

The petitioners said the commission’s approval of the rules is at odds with its 2009 ruling rejecting a similar construct in PJM (ER05-1410, et al.). In the 2009 ruling, FERC ruled that zero-price bidding would result in unjust and discriminatory pricing. It said a bid-floor was needed to ensure that a price-locked new entrant “will not reduce [the] price to the existing resources by submitting a $0 bid in years 2 and 3, knowing that it is guaranteed to be paid its first-year bid price no matter what it bids.”

NEPGA and Exelon contend the New England rules are likely to result in more severe price suppression than would have occurred in PJM, which has only a three-year lock-in. In addition, the lock-in — available to any new market entrant in New England — was rarely triggered in PJM.

No ‘Reasoned Analysis’

The opinion by a three-judge panel led by Robert L. Wilkins said FERC “brushed aside the seeming contradiction” between its ISO-NE and PJM rulings.

FERC ISO-NE D.C. Circuit expedited project review — New England Dispatch Zones | *ISO-NE*

“FERC’s responses to petitioners’ arguments below amounted to conclusory statements that dismissed petitioners’ concerns without providing reasoned analysis. To respond to petitioners’ main contention that the ISO-NE Tariff rules suppressed prices and discriminated against existing suppliers in a way that the commission rejected in PJM, FERC first stated that conditions in the two markets were different, and then pointed to the vertical demand curve in place at the time under the ISO-NE Tariff. The commission issued this explanation despite the fact that it issued an order the very same day adopting an ISO-NE proposal to start using a sloped demand curve.”

The petitioners argued that the commission should have either rejected ISO-NE’s lock-in rules, required it to eliminate the zero-price offer requirement when it accepted a sloped demand curve or found another way to address the price suppression for existing suppliers.

The court noted that FERC cited “numerous cases to stress the broad array of practical difficulties to balance and interests to consider, including higher consumer prices, reliable price signals, producer flexibility, producer confidence, system reliability, and increasing system capacity and efficiency.”

“FERC contends that it truly has changed its view about the lock-in and capacity-carry-forward rules since its PJM decision and even doubled down by suggesting at oral argument that it would be more receptive to the Tariff changes at issue in PJM if they were proposed today,” the court said. “All this may be true. But FERC’s complex mandate doesn’t relieve it of the requirements of reasoned decision-making. … Although FERC may be sincere in its change of heart and, as a substantive matter, correct that its new rationale is just and reasonable, the commission must provide some analysis and explanation in its orders regarding why it changed course.”

The court declined to rule on whether the petitioners had met their burden to demonstrate that the ISO-NE rules resulted in unjust and unreasonable rates. But it said, “FERC must provide a more robust rationale for its seeming inconsistency with past precedent and practice.”

February 6, 2018January 3, 2024

NextEra Suit Accuses Nuclear Trade Group of ‘Extortion’

By Rich Heidorn Jr.

NextEra Energy, which quit the Nuclear Energy Institute last month over the trade association’s push for subsidies, last week accused the group of “extortion,” saying it was spitefully denying the company access to a database used to screen workers.

The company initially declined to say publicly why it was leaving NEI when it informed the organization of its decision on Jan. 4.

But NextEra ended its silence after NEI notified it on Jan. 30 that it was terminating its access to the Personnel Access Data System (PADS). NextEra said NEI informed it that it would be cut off Feb. 4 unless it paid $860,000, “the vast majority of which is NEI membership fees unrelated to PADS.”

“NEI’s actions were taken for no purpose other than to retaliate against the NextEra companies because of their withdrawal as NEI members,” said the suit, filed Feb. 2 in U.S. District Court for the Southern District of Florida.

NEI CEO Maria Korsnick issued a statement Monday saying she “vehemently denies” NextEra’s allegations and “will vigorously defend our position in court.”

NextEra said losing access to PADS could threaten seven scheduled refueling outages at its nuclear plants in 2018, including one set to begin Feb. 7 at the St. Lucie nuclear plant owned by its Florida Power & Light subsidiary. The company said St. Lucie’s workforce would jump from 700 to 1,700 during the monthlong outage.

The nuclear industry developed PADs in the mid-1990s as a shared database for employee security information such as criminal history reports, fitness-for-duty test results and psychological screenings.

NextEra said it would be “exceedingly difficult” to meet Nuclear Regulatory Commission requirements without PADS, noting that staff can more than double during plant outages. “Many of the additional maintenance workers employed during these refueling outages are highly transient — moving from plant to plant across the country to work during outages,” the company said. “Without access to PADS, nuclear operators would be forced to start from scratch in screening individual applicants for unescorted access, and they would do so without the benefit of consulting information already collected by other nuclear operators in an easily accessible electronic format. Similarly, without universal industry participation in PADS, the database would become incomplete. This would result in additional manual screening efforts even for continuing PADS participants.”

The company contends the PADS participation agreement, which it signed in 1995, does not require participants to be NEI members. “NEI took this retaliatory action notwithstanding that the NextEra companies have been at all times in compliance with the agreement and have paid millions of dollars to develop and upgrade PADS,” it said.

Korsnick disagreed with NextEra’s interpretation of the participation agreement. “When NextEra voluntarily chose to discontinue its NEI membership, it was no longer entitled to continue participating in PADS,” she said. “Even then, NEI conveyed to NextEra that it would supply the information in PADS necessary to maintain strict compliance with the NRC regulations. That exchange has been accomplished and will continue throughout each work week.

“To call NEI’s approach retaliatory, or even suggest the notion of extortion, is both counterfactual and offensive to the good faith effort the offer represents,” she continued. “NEI’s good faith outreach was intended to open a dialogue that would advance the industry’s interest in remaining unified, or as unified as possible, on regulatory and other policy positions. Unfortunately, rather than even opening a dialogue, NextEra immediately followed its rejection of NEI’s offer with a baseless lawsuit.”

Break over Policy

NextEra owns all or part of the Duane Arnold Energy Center in Palo, Iowa; the Point Beach Nuclear Plant in Two Rivers, Wis.; and the Seabrook Station in Seabrook, N.H., equivalent to 6% of total U.S. nuclear generating capacity. In addition to the St. Lucie plant near Fort Pierce, Fla., FPL owns the Turkey Point plant near Miami. As of the end of 2016, NextEra also owned about 16% of U.S. wind capacity and 11% of the country’s solar capacity.

NextEra — which had been paying about $3 million in NEI dues annually — quit last month over what it called the trade group’s “irrational and unreasonable policies that would distort electric energy markets.”

Its suit cited NEI-funded studies “that call into question the reliability and costs of the electric system, attempting to create a false sense of panic and unfairly and incorrectly maligning the operations of its members, including the NextEra companies.”

“NEI claims that the ‘grid-based electricity supply portfolio in the United States is becoming less cost-effective, less reliable and less resilient,’” the complaint continues. “Such a thesis is unfounded. In fact, the policies that NEI is advocating would produce those very results by introducing artificial constraints on the way in which an electric system is planned and operated. … As large nuclear generators, the NextEra companies obviously support nuclear energy. But the NextEra companies cannot financially, or otherwise, support an organization that fundamentally mispresents the state of grid reliability in this country.”

Korsnick said NEI’s lobbying in support of Energy Secretary Rick Perry’s call for price supports for coal and nuclear plants followed “a rigorous process for gathering input from member companies to inform our policy positions.”

“On most issues [NEI] does not advocate a position until it has been approved by members of the Executive Committee. NextEra may not have agreed with NEI’s effort to support the continued operation of existing plants, but our work was guided by the interests of our member companies,” she said.

“NEI remains committed to achieving its foundational mission: to preserve, sustain, innovate and grow the nuclear energy industry. All of NEI’s actions should be and are consistent with that purpose. NEI also ensures all decisions and actions taken maintain a safe, effective and well operated nuclear energy fleet. NEI’s commitment to each of those core principles will always be absolute without compromise.”

NEI did not respond to a question about NextEra’s contention that the group is “suffering from financial difficulties.” NextEra cited NEI’s Form 990 for 2015, which it said “shows negative six-figure net assets for the 2015 and 2014 tax years.”

Entergy also Left NEI

Entergy, which operates seven nuclear plants in the U.S., also quit NEI last month, but it has not commented publicly on its reason for doing so.

“NEI has been one of several vehicles through which to advocate our positions on important policy and regulatory issues impacting the nuclear power industry,” Entergy spokeswoman Emily Bealke Parenteau said in response to a question about the company’s departure. “Entergy has made the decision to leverage its other internal and external resources for advocacy efforts.

“While Entergy will no longer be a member of NEI, we have a system in place that replaces PADS. We will continue to engage actively and cooperatively with the industry in both the operations and public policy arenas,” she added.

One industry official with knowledge of the situation said Exelon and some other NEI members view Entergy as a “traitor” for closing its uneconomic merchant nuclear plants rather than fighting for subsidies.

Exelon purchased Entergy’s James A. FitzPatrick nuclear plant in New York after the latter said it would close the plant regardless of whether the state approved zero-emission credits. Entergy also has agreed to close its Indian Point plant under pressure from Gov. Andrew Cuomo.

“Exelon told other NEI members that Entergy effectively forced them to buy [FitzPatrick] — they believed that … to get ZECs passed, they needed solidarity, and Entergy wasn’t playing ball,” the official said. “The fact that Entergy is closing Pilgrim [in Plymouth, Mass.] without a whimper and Palisades [in Michigan] when their contract ends in a few years has some NEI members upset. … Every time that a nuclear plant closes, it hurts their specialty vendors and, as a result, vendors shrink, and remaining ones have some market power. And that raises costs for every remaining plant.”

Exelon did not respond to a request for comment.

February 6, 2018

Mountain West, Cost Allocation Top SPP RSC Concerns

By Tom Kleckner

OKLAHOMA CITY — Spurred on by two of its newest members, the SPP Regional State Committee last week tasked its Cost Allocation Working Group (CAWG) with drafting a report on adding new members and determining their impact on existing cost allocations.

SPP RSC cost allocation Mountain West Transmission Group — Iowa Utilities Board’s Geri Huser | © *RTO Insider*

Geri Huser, chair of the Iowa Utilities Board, led the push for the motion, which passed unanimously and came during a report from SPP CEO Nick Brown on the integration of Mountain West Transmission Group into the RTO. She was supported by DeAnn Walker, chair of the Texas Public Utility Commission, and long-time RSC member and Oklahoma Corporation Commissioner Dana Murphy.

“I would like to know we are getting information from our staff on the CAWG and be able to discuss that with other members,” Huser said during the RSC’s Jan. 29 meeting. The CAWG, composed of state commission staff members, reports to the RSC and its commissioners.

“I find it’s difficult for information to be shared in a manner that is timely for those of us that serve on other commissions or boards,” Huser said. “We would like to have as much information as early as possible in the process, so we can make decisions.”

Brown told the regulators that a small negotiating team composed of himself, Board of Directors Chair Jim Eckelberger, Director Larry Altenbaumer, Westar Energy’s Kelly Harrison and Golden Spread Electric Cooperative’s Mike Wise have been meeting “almost daily” with Mountain West representatives as part of a “very concerted effort” to reach a final decision by the end of February. (See SPP, Mountain West Resolving ‘Contentious’ Issues.)

He said SPP is intent on scheduling a “decision meeting” in mid- to late February with the board and Members Committee, to review the results of those negotiations and other closed-door meetings.

“Assuming the board and member companies accept those policy statements, we will engage our normal and very public stakeholder process to take those policy decisions and put them into specific language that would become part of our Tariff,” Brown said. He reminded the RSC that Tariff language and other changes would go through the board before being filed with FERC.

“Many had hoped we would have reached a decision by now,” Brown said. “In my personal view, while we are very close, we’re just not quite there. We have a lot of details that need the full vetting of our Members Committee, which has yet to see the details arrived at by our smaller negotiating team.”

Murphy responded that there were “many who had hoped” a decision wouldn’t have been reached by now. She said she has met with Oklahoma SPP members whose constant concern seems to be the timeline.

“The overarching concern I have, and it was raised by the Integrated System [and its 2015 integration], was the pattern of special meetings,” Murphy said. “I know at least three other states had that issue as well. It’s a little bit concerning to be having off-pattern meetings, given the scope and complexity of this potential integration.”

The commissioners have primary responsibility for cost allocation, financial transmission rights, resource adequacy and remote resources planning issues, and have held two Commissioners Forum meetings on Mountain West. Most of the CAWG members have signed nondisclosure agreements that have allowed them to participate in Strategic Planning Committee meetings on the integration.

That is not enough for some members of the RSC.

“SPP staff has done a good job trying to provide us with information that’s needed, but when things change so quickly, we don’t have time to digest them,” Murphy said. “When we talk about a possible decision being made, I get concerned. We just found out what some of the changes are” in a closed education session.

Brown asked the committee whether it wanted the CAWG report before negotiations end and the board and members consider “high-level” policy matters.

“We’re simply telling them to perform the duties that have been laid out [for the CAWG],” Huser said. “If we provide them with this direction, they can begin preparing and providing us with information.”

“If you started today, it would not be a wasted effort,” Brown said. “We’re prepared to provide a lot of information that’s not going to change.”

The CAWG’s John Krajewski, a private consultant, agreed that, under the group’s New Member Review Process document, enough information on Mountain West’s pending integration had been disclosed to trigger a mechanism to allow the work to proceed.

The RSC asked for an action plan and that the CAWG’s report include — but not be limited to — information on the new members’ transmission facilities and planning, generation and load numbers, and proposed modifications to SPP’s governing documents. The report will also include a cost allocation review of rate standards, impacts to existing members, facilities and entities to which cost sharing applies, and a benefit-cost analysis.

Huser, who said transparency is very important to her, did not let the matter rest. Concerned that the previous discussion might not be reflected in the minutes, just before the meeting adjourned she requested a motion for a special meeting or closed session in April so that the commissioners can deliberate the Mountain West integration. The motion carried unanimously.

Committee Takes on Cost Allocation Issues

The RSC also directed the CAWG to work with staff on identifying cost allocation issues and report back to the committee in April. Members unanimously passed an action item rather than a motion, following a lengthy deliberation over how to word the action.

The vote followed a presentation on cost allocation in wind-rich areas by Sunflower Electric Power’s Al Tamimi, chair of the Generation Interconnection Improvement Task Force. The group has been working to suggest improvements in SPP’s study processes that address the “extreme amounts” of new generation in its interconnection queue and new requirements from FERC-proposed rulemakings.

Tamimi, representing a small entity focused on keeping its customer rates low, said SPP has undergone a paradigm shift in why it builds transmission infrastructure. Projects used to be based on changes in load or in designated resources in the same geographical area where the facilities were built, he said, but today’s renewable generation is built at great distances from load centers, with many wind projects in small load zones exported elsewhere.

This additional wind benefits the SPP market, but not necessarily the local zones, Tamimi said. He said those zones are saddled with two-thirds of the costs of byway projects in SPP’s highway/byway methodology but don’t benefit from the reduced energy costs.

“Load growth is mostly stagnant … in our footprint,” Tamimi said, “but we’re still seeing transmission getting built, we’re still seeing wind being integrated on our system.”

The presentation was eventually swallowed up in the larger discussion of cost allocation and how to frame direction to the CAWG.

“I agree with expanding and looking at the total impact,” Tamimi said. “The wind-rich areas, especially those with small loads and ratepayers, are the ones I’m looking to protect.”

“This is something that needs to be addressed. You did a great job of teeing up the issues,” Southwestern Public Service’s Bill Grant told Tamimi. “We ruled out other possible solutions because of Z2 and other issues we have. The study needs to be comprehensive, not just highway/byway funding. It’s how we plan the system … studying wind deliverability is the low-hanging fruit.”

Tamimi shared with the RSC study results that showed Sunflower, which accounted for 2.41% of SPP’s load from 2011 to 2018, wound up paying $143,874/MW in byway costs for its share of the load. It was the only company above six figures, with second-place SPS at $98,788/MW.

The study, which didn’t include the Integrated System entities, was conducted with data from energy management firm ACES. Working with SPP staff will enable the CAWG to widen its pool of data.

“This is obviously well within the RSC’s authority,” said Kelson Energy’s Rob Janssen, who represents Dogwood Energy and helped develop the highway/byway methodology. “[We] came up with a very strong process that led to wind development and a robust grid, but we’ve gone well beyond the amount of wind we originally thought the customers would want to pay for. I’ve become more and more convinced we need to have a serious look at cost allocation again. I see Sunflower’s presentation as a plea for help, but my concern is where does the stakeholder involvement come in?”

“I’d like to move forward, but not on a really narrow path,” Walker said. “This discussion has gone beyond wind-rich areas. I don’t think you can look at the wind-rich areas and what Sunflower has raised in a vacuum or a silo.”

SPP staff pushed back on the RSC’s direction, pointing out the Strategic Planning Committee had just held a long discussion on transmission planning and energy-only resources two weeks prior. (See “Energy-only Resources Report Leads to Discussion, not Results,” SPP Strategic Planning Committee Briefs.)

“We’re respectful of the urgency Sunflower has shown, but this is just one of half a dozen issues that all need to be addressed together, rather than in one-off ways that tend to create unintended consequences,” Brown said. “We’re trying to get our hands around all the issues we’ve discussed over the last six months and determine the best way to tackle these in a comprehensive way.”

“I don’t know if the RSC members are aware of what the SPC issues are,” pointed out RSC Chair Shari Feist Albrecht, of the Kansas Corporation Commission.

Eckelberger expressed his support for the motion, before it was transformed into an action item.

“From my point of view, broader would be better,” he said. “What bothers me a lot is that we’ve seen this come along for three to four years now in the wind-collection areas. They’re being hurt. We need to do something to make sure equity comes out of the planning process as soon as we can. Let’s take that small step to see what’s really wrong here with the lack of equity and who’s paying the bills.”

RSC Agrees with Working Group’s Recommendations

While not being saddled with additional work, the CAWG also brought forward several recommendations to the RSC, all of which passed.

The committee endorsed the working group’s lessons learned from its work on SPP’s aggregate study safe harbor criteria. Safe harbor is applied when the utility granted a transmission service request (TSR) has no more than 20% of its designated resources (used to meet a load-serving entity’s capacity margin requirement) coming from wind or has designated resources greater than 125% of forecasted load, and when it has a five-year minimum commitment for the TSR.

Among the CAWG’s suggestions were to work with staff and stakeholders to come up with a reasonable methodology in updating the $180,000 safe harbor amount, determine whether the 125% criterion adversely affects smaller transmission customers and verify whether the original concerns that led to the 20% wind limit still exist.

“We just don’t have the algebraics [on the CAWG],” joked Adam McKinnie, chief utility economist with the Missouri Public Service Commission who was deeply involved with the group’s work.

The CAWG also recommended the RSC endorse the Supply Adequacy Working Group’s revision request (RR251) that addresses three issues FERC used in rejecting SPP’s resource adequacy package last year. (See FERC Again Rejects SPP’s Resource Adequacy Revisions.)

SPP Works on Response to FERC Resiliency Inquiry

But the CAWG didn’t monopolize the RSC’s agenda. Brown also briefed the committee on SPP’s planned response to FERC’s review of how RTOs define and ensure resiliency, which was initiated following the commission’s rejection of the Department of Energy’s call for cost-of-service payments to coal and nuclear generators. (See FERC Rejects DOE Rule, Opens RTO ‘Resilience’ Inquiry.)

Brown said staff have crafted its initial thoughts on the set of 39 questions FERC has asked in the docket (AD18-7) and will work with the SPC to compile stakeholders’ thinking on a “topic that is extraordinarily broad.”

“FERC raises any number of questions, many of which are outside the roles of at least this RTO,” he said. “We initially considered seeking an extension of time, but after seeing the questions, they’re so broad that the most the commission could be looking for at this point is initial thinking. We realized there’s no way in the world we could attain any consensus.”

The SPC has scheduled a Feb. 23 webinar to discuss the draft of responses, which will be distributed by Feb. 20, and will solicit additional input. Final comments will be due March 2, so that SPP can meet FERC’s March 9 deadline.

“It will be interesting to see what this morphs into,” Brown said. “I could see this going nowhere on one extreme, or on the other extreme we end up with a whole portfolio of resiliency standards, to which the industry must comply.”

RSC-Related Membership Changes

January’s RSC meeting was the first for Albrecht as its chair. She replaces Steve Stoll, who left the committee when his term on the Missouri PSC ended. Stoll was replaced on the RSC by Missouri Commissioner Scott Rupp.

The committee expects to add Louisiana Public Service Commissioner Foster Campbell for April’s meeting.

Albrecht and Paul Malone, chair of the Markets and Operations Policy Committee, are working to fill two vacancies on the Regional Allocation Review Task Force, which works with both committees to define the analytical methods using in reviewing the reasonableness of regional and zonal cost allocation.

Dennis Grennan, with the Nebraska Power Review Board, assumed the task force’s chairmanship on Jan. 1.

— Tom Kleckner

February 6, 2018

Stakeholder Soapbox: Bomb Cyclone Shows Need for Coal Fleet

By Paul Bailey

On Jan. 24, the Senate Energy and Natural Resources Committee held a hearing “To Examine the Performance of the Electric Power System Under Certain Weather Conditions, Focusing on the Northeast and Mid-Atlantic Regions.” The witnesses included Andy Ott, CEO of PJM. (See FERC, RTOs: Grid Performed Better in Jan. Cold Snap vs. 2014.)

In 2016, PJM’s fuel mix was 35% nuclear, 34% coal, 26% gas and almost 5% renewables.¹ The data PJM collected during the recent bomb cyclone proves at least two important points. The first is that we need coal-fueled power plants. The second is that we should be cautious about relying too much on natural gas to generate electricity.

Coal Fleet

Over a four-day period (Jan. 3-6, 2018), when the average daily temperature was 12 degrees Fahrenheit, PJM relied heavily on so-called conventional sources of baseload electricity, namely coal and nuclear. Some have implied that these fuel-secure sources of baseload electricity are outmoded, which seems to suggest that we don’t really need them anymore. However, over the four-day period, these “outmoded” electricity sources were responsible for almost two-thirds of PJM’s electricity:²

Jan. 3: 61% (coal + nuclear)
Jan. 4: 64% (coal + nuclear)
Jan. 5: 64% (coal + nuclear)
Jan. 6: 64% (coal + nuclear)

Overall, coal was responsible for 37% of PJM’s electricity over the four-day period, with nuclear providing 27%, natural gas 22% and wind 2%.

Natural Gas

PJM provided data on forced (unplanned) outages caused solely by fuel supply problems, as well as forced outages for all causes.³ The chart on the left below is based on PJM data and shows that on Jan. 5 when electricity demand peaked (wind chill temperature was minus 5 degrees that day⁴), natural gas-fired power plants experienced 14 times more forced outages (4,395 MW) because of fuel supply issues than the PJM coal fleet (306 MW). The chart on the right shows all forced outages. This chart shows that natural gas-fired power plants experienced 9,252 MW of forced outages versus 6,082 MW for the coal fleet. In short, the coal fleet outperformed the gas fleet when electricity was needed most by PJM.

FERC coal fleet cold snap Paul Bailey ACCCE PJM — | *ACCCE*

What’s my point?

During the bomb cyclone, PJM relied heavily on its coal fleet. Unfortunately, some 54,000 MW of coal-fueled generating capacity in PJM, MISO, ERCOT and SPP will have retired by the end of 2020.⁵ Nationwide, more than one-third of the coal fleet — 111,000 MW, so far — has shut down or plans to close.⁶ According to the U.S. Department of Energy, the retirement of fuel-secure electricity sources, such as coal, is threatening the reliability and resilience of the electricity grid.⁷ There are a number of steps that should be taken to preserve the coal fleet, including properly valuing the reliability and resilience attributes of the fleet in wholesale electricity markets.

Paul Bailey is CEO of the American Coalition for Clean Coal Electricity.

¹Testimony of Andy Ott, “Examining the Performance of the Electric Power Systems Under Certain Weather Conditions,” Senate Energy and Natural Resources Committee, Jan. 23, 2018. https://www.energy.senate.gov/public/index.cfm/files/serve?File_id=F15697F8-F7F1-411B-AC26-40AF0337DF2D

²Data based on PJM Operating Committee PowerPoint presentation, “Cold Weather Summary, Dec. 27, 2017–Jan. 7, 2018,” Jan. 9, 2018 http://www.pjm.com/-/media/committees-groups/committees/oc/20180109/20180109-item-04-cold-weather-summary.ashx

³Data based on PJM Operating Committee PowerPoint presentation, “Cold Weather Summary, Dec. 27, 2017–Jan. 7, 2018,” Jan. 25, 2018. (“Jan. 25 PJM presentation”) Besides unplanned outages due to fuel supply problems, PJM lists other causes as “boiler system, fuel system, electrical, emissions/environmental, pumps/fans, start failure, unit trip and other.” http://www.pjm.com/-/media/committees-groups/committees/mrc/20180125/20180125-item-10-cold-weather-summary.ashx

⁴Jan. 25 PJM presentation.

⁵ACCCE, “Retirement of U.S. Coal-Fired Electric Generating Units, Status as of Jan. 17, 2018.” As of mid-January, some 45,000 MW of coal-fueled generating capacity in RTO/ISO regions had retired. An additional 14,500 MW are expected to retire over the 2018-2020 period. Two-thirds of these future retirements have been attributed to wholesale electricity market conditions. http://www.americaspower.org/wp-content/uploads/2018/01/Coal-Unit-Retirements-Jan-2018.pdf

⁶Ibid.

⁷Sept. 28, 2017, letter from Energy Secretary Rick Perry to FERC Commissioners Neil Chatterjee, Cheryl LaFleur and Robert Powelson regarding the need for grid resiliency rules. https://energy.gov/sites/prod/files/2017/09/f37/Secretary%20Rick%20Perry%27s%20Letter%20to%20the%20Federal%20Energy%20Regulatory%20Commission.pdf

February 6, 2018November 13, 2023

SPP Board of Directors/Members Committee Briefs: Jan. 30, 2018

OKLAHOMA CITY — Southwest Public Service last week withdrew its appeal of a rejected revision request, saying it was satisfied with SPP’s direction to address reporting behind-the-meter network load.

Staff told the Board of Directors and Members Committee on Jan. 30 that it will continue to foster discussion and educate its members, with the intent of determining consistent reporting practices of network load. SPP is digging into the data from a recent survey of members with network integration transmission service (NITS) load and said it will work through the Strategic Planning Committee to develop a common methodology. It hopes to produce a final report in April.

The RTO’s legal staff have met separately with FERC to gain a better understanding of what is and what isn’t net metering, and are continuing their effort to clarify BTM rules. (See SPP Stakeholders Still Struggling on BTM Reporting.)

That was enough for SPS, which filed an appeal with the board after the Markets and Operations Policy Committee rejected a proposal in October that would have required a 1-MW threshold for reporting BTM retail load. (See “Stakeholders Unable to Reach Consensus on Network Load,” SPP Markets and Operations Policy Committee Briefs.)

In its appeal, SPS said RR241 was “critical to ensuring that the costs of network service are fairly distributed to SPP network service customers and to prevent some SPP customers from subsidizing network service used by other customers.”

“Our retail tariff requires everybody to follow the tariff and enter an interconnection agreement with us, so we do track that [load],” SPS President David Hudson said. “By others not reporting it, it is creating some sort of cost shift. We just want to ensure we take care of this problem.”

“We’re not opposed to working through the stakeholder group,” said Bill Grant, SPS’ vice president of regulatory and strategic planning. “If the stakeholders want to do that and make an attempt at consensus and file something at FERC, we’ll participate in that. Once we understand what the requirements are and the stakeholders want to come together, we will embrace that effort.”

Board Chair Jim Eckelberger summarized stakeholders’ agreement to move forward, saying the board’s point of view is “equity across the system.”

Staff, MWG ‘Looking into’ Cold-Weather Price Spikes

Bruce Rew, SPP’s vice president of operations, said staff are “looking into” several five-minute price spikes that occurred Jan. 16-17, when the RTO set several new highs for winter peak demand. (See ERCOT, SPP Extend Winter Peak Records.)

“The story is related to scarcity pricing,” said Nebraska Public Power District’s Tom Kent. He said he was concerned about “volatility in the market,” but that staff have been “very helpful.”

The Market Working Group (MWG) has also taken up the issue.

Rew said unit trips and outages on the neighboring MISO South system during a Jan. 2 cold weather event “created extra flows on our system that were quite challenging.”

When the meeting ended, Rew handed out lapel pins celebrating 20 years of SPP’s reliability coordinator (RC) function.

“It would not have been a pretty picture two weeks ago, but for the consolidation of balancing authorities, the regionalization of the Tariff and the Integrated Marketplace, that has enabled us to commit units in the day-ahead [market],” SPP CEO Nick Brown said. “I think it’s most appropriate we mark 20 years as an RC.”

Stakeholders Remember Gerry Burrows

Stakeholders opened the meeting with a moment of silence for SPP Regional Entity Trustee Gerry Burrows, who died of cancer on Jan. 9. Burrows had a long industry career, much of it with Kansas City Power & Light. (See “SPP RE Trustee Gerry Burrows Dies,” Company Briefs.)

“No one understood the importance of working together to consensus like Gerry did,” Brown said. “Frankly, it was people like him who made me want to come and work at this corporation and help drive people to consensus.”

“This organization is going to miss Gerry, and we already are,” Trustees Chair Dave Christiano said.

Board Clears 13 Revision Requests

The board approved a Supply Adequacy Working Group revision request (RR251) that addresses three issues FERC cited in rejecting SPP’s resource adequacy package last year. (See FERC Again Rejects SPP’s Resource Adequacy Revisions.)

The working group said the measure responds to FERC with numerous changes, while maintaining the previously approved foundational policy. It also moves the planning reserve margin percentage to the SPP planning criteria and keeps the study process for determining the margin in the Tariff.

Westar Energy’s Kelly Harrison and Brent Baker abstained from the members’ vote.

The board also approved an MWG proposal (RR257) that responds to a FERC compliance requirement (EL16-110) obligating SPP to limit the eligibility for auction revenue rights and long-term congestion rights of network customers with service subject to redispatch. The changes will ensure network service subject to redispatch is treated comparably with point-to-point service subject to redispatch. (See FERC Again Rejects SPP Rules on ARRs, LTCRs.)

The board and members approved 11 other revision requests on the consent agenda:

- BPWG-RR250: Documents market import service (MIS) as a transmission product in the Tariff (it has been offered in SPP’s Integrated Marketplace since 2014) and places all information related to reserving and scheduling MIS in one location as a new business practice.
- CPWG-RR249: Corrects, updates and clarifies unclear or outdated letter of credit language to make it more acceptable to financial institutions.
- MWG-RR182: Removes the term “control area,” which is no longer used by SPP, from the market protocols and Tariff.
- MWG-RR200: Removes bilateral settlement schedules (BSS) at hubs and generation settlement locations from the over-collected losses (OCL) distribution calculation. The revision allows only BSS at a withdrawal point to be included in the OCL distribution calculation. It caps the BSS at the maximum amount of the real-time withdrawal, minus any amount of grandfathered agreements and federal service exemptions.
- MWG-RR245: Allows market participants to include major maintenance costs associated with the number of starts or run hours in their mitigated start-up and no-load offers and recover true variable costs.
- MWG-RR247: Clarifies language to reflect how the market-clearing engine treats contingency reserves in the real-time balancing market when a contingency reserve event is deployed.
- MWG-RR253: Changes how dispatchable variable energy resources (DVERs) provide regulation down service. The change will lower structural barriers to DVERs providing regulation service and allow the system to operate more efficiently in times of high wind when SPP could use online turbines rather than requiring uneconomic commitments of other resources.
- MWG-RR256: Cleans up language in RR116 to eliminate a potential gaming opportunity and make clarifications necessary to implement the new quick-start logic correctly and with its true intent.
- MWG-RR258: Recommends modifications to the list of frequently constrained areas (FCAs) and resources from the Market Monitoring Unit’s 2017 study. FCAs are electrical areas with one or more constraints that are expected to be binding for at least 500 hours during a given 12-month period and within which one or more suppliers are pivotal.
- MWG-RR265: A compliance filing in response to FERC’s order on handling ramp shortages under Order 825. (See FERC Approves SPP Shortage Pricing Changes.) Modifies the methodology through which scarcity pricing reflects the value of regulation and operating reserves. The Tariff language was filed in October (ER17-772).
- ORWG-RR162: Requires phasor measuring units (PMUs) at new generator interconnections to aid in oscillation detection, generator model validation and post-event analyses.

The consent agenda’s acceptance also resulted in the approval of a sponsored upgrade study for Central Power Electric Cooperatives, several staff recommendations on transmission projects and adjusted baseline costs for three previously approved projects. (See “North Dakota Sponsored Upgrade Study Approved,” “MOPC Agrees to Pull Basin Electric Project’s NTC-C” and “Consent Agenda Clears 10 Revision Requests,” SPP Markets and Operations Policy Committee Briefs: Jan. 16-17, 2018.)

— Tom Kleckner

February 6, 2018

NECA Panelists Talk Carbon Pricing, Northern Pass

By Michael Kuser

AUBURNDALE, Mass. — Speakers at the Northeast Energy and Commerce Association Renewable Energy Conference on Feb. 1 discussed the merits and viability of different methods to achieve New England’s aggressive emission reduction goals.

These topics included carbon pricing, the Northern Pass transmission project and offshore wind energy. Utility and energy service representatives were joined by state and federal officials.

ISO-NE Northern Pass Carbon Pricing — NECA’s Annual Environmental Conference was held on February 1, 2018 | © *RTO Insider*

Carbon Tax, Anyone?

NECA Northern Pass — Gardner | © *RTO Insider*

Michelle Gardner, Northeast director of regulatory affairs for NextEra Energy Resources, promoted her company’s alternative market model, the Forward Clean Energy Market, developed with the Conservation Law Foundation and Brookfield Renewable Partners. The model is designed to attract new clean energy resources and also retain existing clean energy resources to reduce greenhouse gas emissions in New England.

Gardner said the first question of any state policy is: Does it work?

“To date, the answer has been yes,” Gardner said. “But over time, now in the [ISO-NE] system we’re seeing wind displace wind. We’re not necessarily seeing the same synergies moving forward that mean, if you build a wind farm you move the ball towards a clean energy future.”

NextEra’s alternative market proposal could work with a carbon tax, or carbon pricing, “though to date we have not received a warm reception from the other New England states about moving a carbon tax,” Gardner said.

In fact, many Massachusetts legislators favor a carbon tax, said state Rep. Jennifer Benson (D), who spoke during the conference lunch.

Benson’s bill, H.1726, calls for a $20 tax on every ton of carbon produced by corporations, with 80% of the revenue rebated to taxpayers and the other 20% going to fund a green bank for the state. It and a competing Senate bill are scheduled for a vote Feb. 7.

The bill weights a larger proportion of the rebates to low-income residents, who often miss out on the benefits of existing energy-efficiency programs. “Because if we can’t touch them, our 2050 goals will never be met,” Benson said. “And we really are not on track to meet those today. We have to do something.

“So is it a tax?” Benson said. “Is carbon pricing a tax? This is the debate. I don’t care. Because we have to start putting real money behind these issues. We’re not going to solve the problem of coastal communities that we just saw a few weeks ago drowning in seawater.”

Pass on Northern Pass

Several speakers expressed disappointment at Massachusetts’ decision to award Eversource Energy and Hydro-Québec a contract to deliver 1,090 MW of hydropower each year via the Northern Pass transmission project. (See Northern Pass Cleans up in Mass. RFP.)

They spoke before word buzzed through the crowd near the end of the conference Thursday that New Hampshire siting officials had voted unanimously to reject the project. (See related story, New Hampshire Rejects Permit for Northern Pass.)

Benson said “a legislator cannot go in and try to regulate … but it’s wild that they could find an option that met none of the criteria.”

Colin Schofield of Altenex, an Edison Energy subsidiary that advises non-utility energy buyers, said corporate buyers were largely “agnostic” about the Massachusetts solicitation.

Northern Pass “is probably somewhat of a lost opportunity to pair a utility procurement with some corporate deals that could enable transmission to move resources, but on the other hand, there may be projects out there that would have been contracting with the utility that maybe sharpen their pencil and get creative about other ways to fund and bring a project to market,” he said

“We’re also disappointed in the decision and have the same process concerns that were mentioned,” said Jamie Howland, director of climate and energy analysis at the Acadia Center. “We certainly would have preferred a project that picked up other renewables along the way if you’re building a new transmission line. It also picked the highest-impact transmission line of all the ones that were on the table.”

“I think there was disappointment from a lot of people, but I don’t think there was a lot of surprise,” said Peter Zaborowsky, managing director of Evolution Markets, an institutional brokerage service for energy and environmental markets. “If the issue is meeting the Clean Energy Standard at the lowest cost, [Northern Pass] probably is a low-cost solution … Economics were the big driver likely.”

Massachusetts Assistant Secretary for Energy Patrick Woodcock did not address the Northern Pass issue but spoke on a panel about the grid of the future.

“While the state has been very successful with deployment of clean energy performance-based rate design, more sophisticated price signals and additional grid modernization are areas of focus for Massachusetts to provide a stronger foundation for long-term growth,” Woodcock said. He added that since taking office last April, he’s seen the state focus especially on energy storage and promoting electric vehicles. (See Mass. Prepares for EV Growth, Alternative Energy Standard.)

Offshore Wind has ‘Turned the Corner’

New England has “the trifecta with regard to wind resources and wind energy,” said Jim Bennett, chief of the Office of Renewable Energy Programs at the Bureau of Ocean Energy Management. “First off, we have world-class winds on both the East Coast and on the West Coast, but particularly up here in the Northeast.”

ISO-NE REV Northern Pass Transmission carbon emissions — Bennett | © *RTO Insider*

The second piece of successfully developing wind energy projects is “a buildable environment, and we have a shallow slope on the outer continental shelf, particularly up here in the East and the Northeast, which is not the case where there are other good resources, like out on the West Coast,” Bennett said.

Finally, the recipe for success must include market demand, and the Northeast has world-class markets, he said.

As a result, BOEM has conducted a number of sales over the last several years and now has 13 leases for offshore wind farms. Seven competitive lease sales generated $68 million, and nearly 1.4 million acres are under lease.

“We have at least one commercial lease off every state from Massachusetts to North Carolina, from Cape Cod to Cape Hatteras,” Bennett said. “We think the wind industry has turned the corner. It’s economically viable, and we should be looking, as the industry tells us, to have a steady stream of leases for years to come.”

February 6, 2018

SPP FERC Briefs: Week of Feb. 6, 2018

FERC approved an SPP waiver request that allows the RTO to forego performing standalone evaluations in favor of a time-saving cluster scenario for three generator interconnection study groups (ER18-421).

The RTO asked for a limited waiver of its Tariff to enable it to expedite interconnection study requests in its Definitive Interconnection System Impact Study (DISIS) queue, which evaluates the effect of proposed generators on transmission system reliability. The request was limited to three DISIS clusters: DISIS-2016-002, DISIS-2017-001 and DISIS-2017-002.

SPP said the standalone scenario has proven costly, requiring significant time and resources to perform while providing minimal value to interconnection customers. The RTO noted standalone results are informational and not binding, unlike the cluster scenario’s results, and said that as the size of its queue continues to grow, the standalone will become less valuable.

The RTO told FERC it intends to revise its Tariff to eliminate the standalone evaluation and will make the base case study models available earlier in the study process, allowing interconnection customers to perform their own standalone analysis. Several generation developers said their concerns about the loss of information from the standalone scenario would be mitigated by accessing the base case study models earlier, SPP said.

NextEra Energy Resources, Westar Energy, Sunflower Electric Power and Mid-Kansas Electric intervened in the proceeding.

SPP Granted Waiver Request to Resolve Billing Dispute

The commission granted a second SPP waiver request to help resolve a billing dispute over approximately $175,000 in transmission charges and penalties with Missouri’s Carthage Electric & Water Plant (ER18-385).

SPP filed the request with the commission in December, along with revised transmission service agreements showing Carthage as the customer and the Southwestern Power Administration as the host transmission owner. The agreements included terms and conditions that did not conform to the RTO’s Tariff, but they were included to implement the results of SPP’s dispute resolution process related to Carthage’s unreserved use of the transmission system.

The RTO said the agreements were intended to correct errors “made in good faith” and limited to only penalty amounts assessed to Carthage for instances of unreserved use between March 2014, when SPP’s Integrated Marketplace came online, through February 2015. SPP said its billing process was delayed because of changes made in implementing the new markets.

FERC found the revised agreements’ nonconforming changes “appropriately reflect” SPP’s dispute resolution process, enabled the RTO to resolve the billing dispute and will not “lead to undesirable consequences, such as harming third parties.”

MRES Escapes Obligation for QF Purchases

FERC approved a request by Missouri River Energy Services to terminate a mandatory obligation to purchase electric energy or capacity from qualifying facilities within SPP’s footprint and with a net capacity larger than 20 MW (QM18-2).

SPP FERC Tri-County Electric Cooperative ZECs — The Missouri River | *American Rivers*

MRES, an organization of 60 member municipalities that own and operate their own electric distribution systems, made the request on behalf of itself and 33 of its members, which are all SPP members. It said QFs within SPP have nondiscriminatory access to a market that satisfies the requirements of the Public Utility Regulatory Policies Act and warrants termination of a utility’s mandatory purchase obligation under the act.

The commission agreed, rejecting a protest from a wind farm developer as being outside the proceeding’s scope. FERC said the protest did not rebut MRES’ application by showing factors unique to individual QFs, such as operational characteristics and transmission limitations that prevent them from having nondiscriminatory access to markets.

Tri-County CEO Loses Bid to Serve on 2 Boards

The commission denied a rehearing request from a utility CEO prohibited from serving on the boards of directors for both South Central MCN and Golden Spread Electric Cooperative (ID-8117).

SPP FERC Tri-County Electric Cooperative — Tri-County CEO Zac Perkins | *Tri-County*

FERC denied Zac Perkins, who has served as Tri-County Electric Cooperative’s CEO since May 2016, from holding the interlocking positions in April 2017. He claimed a position on the Golden Spread board by virtue of being a CEO at one of its distribution co-op members, and he said a long-term agreement between South Central and Tri-County entitled him to serve as the co-op’s designated board member with South Central.

The commission said it “generally disfavors” interlocks between two or more unaffiliated public utilities, and that Perkins’ justifications did not distinguish themselves from Federal Power Act’s rules intended to curb corporate relationships.

Perkins said FERC did not satisfactorily explain why its findings were appropriate and did not substantively address the arguments in his application. He said no public or private interests would be adversely affected by his holding interlocking board positions.

The commission disagreed, saying his arguments did not overcome its “well-documented concerns” about interlocks among unaffiliated public utilities and the “arm’s-length bargaining process” that could adversely affect competition and consumers.

Both South Central and Golden Spread are SPP members.

— Tom Kleckner

February 6, 2018

NYISO Management Committee Briefs; Jan. 31, 2018

RENSSELAER, N.Y. — Soaring natural gas prices, customer satisfaction and credit requirements were all on the agenda during a meeting of NYISO’s Management Committee on Wednesday.

The committee also approved several measures recommended by the ISO’s Business Issues Committee, including modifying price correction deadlines to use business rather than calendar days in the period calculation, and changing the Tariff to recover costs related to acquiring solar forecasts for front-of-the-meter, utility-scale solar facilities in New York. (See NYISO Business Issues Committee Briefs: Jan. 17, 2018.)

Cold Snap Spikes Natural Gas Prices 1,374%

This winter’s cold snap saw New York City’s Transco Zone 6 natural gas prices surge to an average $47.34/MMBtu during a 13-day period, a 1,374% increase over the average for the period in December before the deep freeze hit on Christmas Day.

But grid operations were largely unhindered by the price jump, according to NYISO Vice President of Operations Wes Yeomans, who presented a cold weather operations report to the committee.

credit requirements natural gas prices NYISO — | *NYISO*

“Transmission was really excellent this time around, and transmission owners rescheduled maintenance outages to after the cold snap,” Yeomans said. “The two Ramapo [phase angle regulators] really provided value. We saw full utilization of the 500-kV line, which definitely wouldn’t have been possible without the replacement of the second PAR last fall.”

Yeomans noted that the Central East interface was the primary binding constraint — as predicted in the ISO’s winter preparedness report. Load-weighted electric locational-based marginal prices averaged $135.96/MWh during the cold snap, a 297% increase over December’s pre-Christmas average of $34.27/MWh. Power prices did not increase in line with gas prices because NYISO market systems selected lower-cost resources, primarily dual-fuel units capable of operating on lower-cost oil.

The recent cold snap differed from the January 2014 polar vortex in occurring over 13 consecutive days rather than spread over a month of fluctuating temperatures, Yeomans said. New York City went two weeks with temperatures never rising above freezing, but interstate and local delivery company gas pipelines all remained in service.

The period of extreme cold ended with a Jan. 4-6 blizzard that “originated in Florida, which is hard to believe, but that’s what the weatherman said,” Yeomans said.

NYISO’s load peaked at 25,081 MW on Jan. 5, exceeding the seasonal forecast of 24,365 MW but falling short of the high of 25,738 MW recorded in January 2014. Hydro-Québec registered a new all-time peak of 39,710 MW on Jan. 6, Yeomans said, noting that Montreal relies heavily on electric baseboard heating.

FERC early last month granted NYISO’s request to waive incremental energy offer caps for Jan. 4 through Feb. 8, allowing generators to recover minimum costs in excess of $1,000/MWh. As of Jan. 24, the ISO had not received any such cost recovery requests, Yeomans said. (See FERC Grants NYISO ‘Cold Snap’ Offer Cap Waiver.)

Customer Satisfaction and Performance Assessment

Don Levy, director of the Siena College Research Institute, presented a full-year 2017 survey of customer satisfaction and assessment of NYISO performance showing respondents are satisfied overall with the ISO.

NYISO has now completed two full cycles of the program, with about 27% of market participants responding to the survey, Levy said.

“I’d love to get up to a full third, and would be doing cartwheels if we got to 35%, but the participation we get is a statistically significant response. When we did it monthly, the fatigue was palpable,” Levy said. The new method entails surveying market participants twice a year.

The satisfaction survey comprises three platforms: a customer inquiry survey, a market participant survey and a CEO strategic outreach survey. An “assessment of performance” combines the CEO survey and the performance portions of the market participant surveys, which have stayed consistent throughout the year.

Respondents said they liked the professionalism of NYISO personnel and saw the ISO and its procedures as fair and efficient, but the results suggested the ISO could improve on how it explains policies and procedures and how it conducts long-term planning for New York’s electric power system.

Projected True-Up Exposure Enhancement

The Management Committee approved changes to the ISO’s credit requirements implemented in February 2015 after the 2014 polar vortex. The changes, recommended earlier in the month by the BIC, are slated to be deployed in June following approval by the board in April and FERC in May.

Corporate Credit Manager Sheri Prevratil presented the proposed filing under Section 205 of the Federal Power Act, which would revise Attachment K of the Tariff.

Under the current methodology, NYISO calculates the projected true-up exposure credit requirement for all market participants in the energy and ancillary services markets. A market participant is required to post credit support in the amount of its projected true-up exposure if its four-month true-up shows an average credit exposure greater than 10% of the initial settlement, or if the participant is no longer active in the markets but will still be subject to unsettled true-up obligations.

The alternate methodology would still retain the 10% trigger and require market participants to post credit support in the amount of the projected true-up exposure, but it would simplify the method for calculating the true-up to better align the credit requirement with market risk.

— Michael Kuser