Page 1227 – RTO Insider

January 2, 2018

CAISO Bid for Western RTO to Face Competition in 2018

By Jason Fordney

The Western Energy Imbalance Market (EIM) expanded its footprint and ambitions in 2017 while new suitors lined up to compete with CAISO as the vehicle for a Western RTO.

CAISO EIM Western RTO resource adequacy — Current and pending members of CAISO’s Western EIM | *CAISO*

Idaho, Washington, Arizona, Nevada and Canadian provinces are considering how to access regional markets while protecting the financial health of their resources and keeping costs reasonable for consumers.

The EIM has been recognized as a success story. The increased efficiency of regional dispatch and having more offramps for generation are attractive not only for renewables, but also for coal, hydro and natural gas generation in the market’s balancing authorities.

Five utilities have joined the EIM since its inception in 2014, including Portland General Electric in 2017. Six others have announced plans to join: Idaho Power and Powerex in 2018; Los Angeles Department of Power & Water and the Sacramento Municipal Utilities District in 2019; and the Salt River Project and Seattle City Light slated for 2020. In December, CAISO announced plans to expand its EIM offerings with a day-ahead market. (See CAISO Plan Extends Day-Ahead Market to EIM.)

Mountain West, Peak Reliability

But CAISO faces competition in its bid to expand into a RTO.

Last January, Mountain West Transmission Group said it would begin talks to join SPP. Mountain West, a partnership consisting of seven different transmission-owning entities within the Western Interconnection, covers most of Colorado and Wyoming with smaller areas of Arizona, Montana, New Mexico and Utah. The potential move has been of keen interest to regulators in the affected states. (See Colo. Regulators Talk Governance with SPP, Mountain West.)

In December, reliability coordinator Peak Reliability announced it would work with a unit of PJM to develop new market structures for the West. “We are continuing our review with PJM Connext of potential reliability services and markets in the West and our outreach with western industry leaders and stakeholders,” spokeswoman Rachel Sherrard told RTO Insider last week. (See PJM Unit to Help Develop Western Markets.)

Legislation Stalls

The California State Legislature ended its 2017 session in September after failing to pass bills that would have advanced CAISO’s regionalization efforts.

AB 726 and AB 813, which were returned to the Senate Rules Committee, would have repealed a section of the Clean Energy and Pollution Reduction Act of 2015 governing the transformation of the ISO into an RTO and created a Commission on Regional Grid Transformation. The bills would authorize the transformation if the CAISO Board of Governors and the commission took certain actions by the end of 2018.

Lawmakers say they will reconsider the legislation after they return to Sacramento this month. The debate over regionalization in California involves issues of state control over resources and policy, and highlights concerns over energy costs and the influence of labor groups worried over exporting energy jobs.

The legislature also is under heavy pressure to pass zero-carbon legislation that also fell short in 2017. California’s policies to phase out fossil fuels in favor of renewables and new technologies have raised cost concerns and forced changes to long-standing engineering approaches to accommodate more variable renewable output and the complexities of smaller, distributed resources. (See CAISO Regionalization, 100% Clean Energy Bills Fizzle.)

Gov. Jerry Brown has taken a defiant stance against President Trump’s environmental policies, recently traveling internationally to evangelize for fighting climate change.

Brown attributed the recent wildfire devastation in California to climate change, saying the state’s fire season is now months rather than weeks. Fire investigators are focused on utility infrastructure as a possible cause, setting up complicated and contentious proceedings at the Public Utilities Commission over penalties and cost recovery. (See CPUC Targets Wildfires, Multifamily Solar, RMRs.)

During an interview on “60 Minutes,” Brown discussed Trump and climate change in religious terms. “I don’t think President Trump has the fear of the Lord, the fear of the wrath of God, which leads one to more humility,” he said. “And this is such a reckless disregard for the truth and for the existential consequences that can be unleashed.”

This summer, Brown signed a bill that extended the state’s carbon cap-and-trade program until 2030. (See California Lawmakers Extend Cap-and-Trade.) The program will help the state meet its goal of reducing GHG emissions to 40% below 1990 levels by 2030.

Other CAISO, PUC Initiatives

In addition to its regionalization efforts, CAISO has more than a dozen other initiatives underway, with day-ahead market enhancements and resource adequacy at the top of the list in its 2018 roadmap. The conflict between state resource adequacy programs and CAISO’s reliability management are another priority because of the increasing number of reliability-must-run agreements.

The growth of community choice aggregators led the PUC to propose that they be subject to the same resource adequacy requirements as electric utilities. (See California Proposes Resource Adequacy Obligations for CCAs.)

In December, the board of the Western Electricity Coordinating Council, the NERC-designated Regional Entity for 14 Western U.S. states, Alberta, British Columbia and a small portion of Baja California, Mexico, endorsed a new three-year operating plan. The plan continues the transformation that began in 2014, when Peak Reliability split off from WECC as the Reliability Coordinator for the Western Interconnection, except Alberta. (See WECC Finding New Direction in Old Mission.)

January 2, 2018January 17, 2024

CORRECTED: New England Leads East in Renewables Transition

By Michael Kuser

ISO New England will open the new year by filing with FERC a two-settlement market construct to integrate state-sponsored renewable energy resources into the wholesale electricity market.

The New England Power Pool’s Participants Committee voted Dec. 8 on the two-tier market concept called Competitive Auctions with Sponsored Policy Resources (CASPR), but with 57.75% of the vote, the proposal failed to reach the 60% mark needed to be considered supported by the PC. Nonetheless, the RTO plans to file the proposal with FERC this month, according to spokesperson Matt Kakley. (See New England Strives to Find CASPR Consensus.) [Editor’s Note: An earlier version of this article incorrectly stated that the vote would be taken in January.]

Under CASPR, ISO-NE would conduct the Forward Capacity Auction in two stages, allowing existing resources that have capacity obligations and a desire to retire to trade out their obligations with incoming state-sponsored resources in a manner that doesn’t affect price formation in the primary auction.

In the primary FCA, resources would clear based on current rules, including those designed to mitigate offers below competitive prices such as state-sponsored resources. In the secondary or substitution auction, existing resources that cleared in the FCA would be able to transfer their capacity obligations to new sponsored policy resources that did not clear, with the existing resource agreeing to retire early in exchange for a “severance” payment.

CASPR, which arose from the Integrating Markets and Public Policy (IMAPP) process begun in 2016, is just one of the electricity policy issues facing New England.

State-Sponsored Renewable Energy

In January, Massachusetts will select the winners of last July’s solicitation for 9.45 TWh/year of hydro and Class I renewables (wind, solar or energy storage). Contracts with the winning bidders under the MA 83D request for proposals are due to be completed in late April.

The proposals include an HVDC transmission line from northern Vermont to New Hampshire to deliver 1,200 MW of new wind power from Canada; a 375-mile submarine HVDC transmission line extending from New Brunswick to Plymouth, Mass.; and a submarine cable under Lake Champlain to bring 1,000 MW of hydropower, solar and wind from Canada. (See Hydro-Québec Dominates Mass. Clean Energy Bids.)

Offshore Wind in Mass.

Three developers submitted proposals Dec. 20 in response to Massachusetts’ solicitation for up to 800 MW of offshore wind energy, offering projects that include a transmission “backbone” and storage to enable them to perform like a baseload resource.

The state’s 2016 Act to Promote Energy Diversity mandates that the Department of Energy Resources and the state’s distribution utilities sign long-term contracts for 1,600 MW of offshore wind by June 30, 2027.

The state’s first RFPs (solicitation 83C) called for a minimum of 400 MW but said the state would consider bids of up to 800 MW if it determines that a larger proposal is superior to and more economical than the others.

The three developers — all with ties to the state’s utilities — have purchased renewable energy leases off the coast from the federal Bureau of Ocean Energy Management. (See Mass. Receives Three OSW Proposals, Including Storage, Tx.)

The state will announce the winners of the offshore wind solicitation on April 23, and contracts are to be submitted at the end of July.

Storage Coming on Strong

As of December, ISO-NE reported more than 470 MW of energy storage in the interconnection queue, a nearly six-fold increase in one year.

Massachusetts is funding incentives to include energy storage in solar installations, as well as grants for peak demand reduction. Pairing energy storage with solar panels is meant to enhance grid resiliency by reducing the need for traditional generation to ramp up when the sun goes down. Peak reduction grants cover a wide range of projects, from utilities improving the efficiency of substations, to municipalities working to reduce the energy consumption of big-box retail stores, to a thermal energy storage project on Nantucket that will delay the need for a new undersea transmission cable. (See Massachusetts Awards $20M in Energy Storage Grants.)

The state in 2017 launched its Solar Massachusetts Renewable Target (SMART) program to provide incentives for “long-term sustainable … cost-effective solar development.” The program provides incentives based on location, and to projects that provide unique benefits, including community solar and energy storage

Massachusetts’s new Alternative Energy Portfolio Standard is the only one of its kind in the country. The final draft regulations, released Dec. 29, include combined heat and power, flywheel storage, renewable thermal, fuel cells and waste-to-energy thermal technologies. The regulations oblige all retail electric suppliers to acquire a percentage of their power from eligible technologies, starting at 4.25% in 2017 and increasing by 0.25% each year through 2020, and by the same amount each year thereafter, subject to DOER review.

Millstone Debate

Opponents of Dominion Energy’s bid to win state subsidies for its Millstone nuclear plant were cheered in December as consultants hired by Connecticut said the plant is likely to remain profitable through 2035 even under low natural gas prices. The report by Levitan & Associates concluded “there is no ‘missing money’ required to ensure Millstone’s financial viability through the existing term of Millstone’s Unit 2 operating license” in 2035. (See Millstone Likely Profitable Through 2035, Conn. Consultant Says.)

The report projected that in 2022 the plant would earn after-tax net cash flow of $100 million under a low gas price/high operating cost scenario, to more than $200 million under the reference case that assumed “business-as-usual” conditions.

Connecticut Gov. Dannel Malloy ordered state regulators in July to assess the economic viability of the plant and determine whether the state should provide it financial support. Malloy’s executive order also directed the state Department of Energy and Environmental Protection and the Public Utilities Regulatory Authority to assess the role of large-scale hydropower, demand-reduction measures, energy storage and emissions-free renewable energy in helping Connecticut meet its ambitious targets to cut its carbon output. (See CT Gov Orders Financial Analysis of Millstone Plant.)

January 2, 2018March 14, 2024

New York Forges Ahead on Clean Energy

New York’s electricity policymakers were very busy in 2017, setting a U.S.-record offshore wind target, devising an outline for pricing carbon into wholesale markets and facing down legal challenges to efforts to rein in energy service companies and its nuclear subsidies. The state also agreed with Entergy on the staggered closing of its 2,311-MW Indian Point nuclear plant, which will retire the second of its two remaining generators in 2021.

2018 will be eventful as well. Storage targets will be mandated early this year, the technical details of carbon pricing will be ironed out in conferences and public hearings, and a master plan for offshore wind will be released.

Carbon Pricing

Prompted by the state Public Service Commission’s decision to subsidize upstate nuclear plants through zero-emissions credits (ZECs), NYISO commissioned a report by The Brattle Group on pricing carbon into generation offers and reflecting it in energy clearing prices. Released by NYISO and the state Department of Public Service in August, the report found that a $40/ton carbon charge in New York state would have “a relatively small impact” on customer costs, ranging from a −1% to +2% change in total customer electric bills. (See NYISO Study Sees Little Cost Impact from Carbon Charge.)

The ISO and the PSC in October established the Integrating Public Policy Task Force (IPPTF) to explore the carbon pricing issue. In the fall, the task force held public hearings and a technical conference to discuss issues, including the allocation of carbon revenues and border adjustment mechanisms to prevent “carbon leakage” — an increase in emissions in regions neighboring New York. (See New York Hashes out Details of Carbon Policy.)

The IPPTF will next meet Jan. 8 in Albany.

ZECs Win in Court

ZECs are part of the state’s Clean Energy Standard, which mandates reducing greenhouse gas emissions by 40% by 2030, from a 1990 baseline, and by 80% by 2050. It also calls for renewables to meet 50% of the state’s energy needs by 2030.

In July, a federal judge dismissed a challenge to the ZEC program by the Electric Power Supply Association and several of its members.

The plaintiffs argued that the program violates the Federal Power Act and the Constitution’s dormant Commerce Clause by intruding on FERC’s authority to regulate wholesale prices and favoring in-state generators. (See New York ZEC Suit Dismissed.)

In August, the plaintiffs appealed to the 2nd U.S. Circuit Court of Appeals to review the ruling. Oral arguments have been proposed for the week of March 18, but the schedule has not been finalized. (The 7th Circuit will hear a similar challenge to the Illinois ZEC program Jan. 3.)

Indian Point Closure and Reliability

The year began with Gov. Andrew Cuomo reaching an agreement with Entergy on his long-sought goal of closing the Indian Point nuclear plant, which the governor worries is too close to New York City. Under the deal, Units 2 and 3 will be deactivated by April 30, 2021. The agreement would allow the plants to operate for two additional two-year increments — with final closure slated for 2025 — if an emergency affected reliability in the New York City area. Unit 1 was shut down in 1974.

NYISO reported in December that gas-fired and dual-fuel generation coming online in the next few years will be enough to maintain reliability after the Indian Point closure.

The ISO report cited three generation projects totaling 1,818 MW under construction: the 120-MW Bayonne Energy Center II uprate in NYISO Zone J, and the 678-MW CPV Valley and 1,020-MW Cricket Valley plants in Zone G. (See New Builds to Cover Indian Point Closure, NYISO Finds.)

Distributed Energy Resources and ESCOs

New York’s utilities will use 2018 to continue developing the analytical tools to deal with distributed energy resources and transition from a one-way transmission system to a multidirectional grid.

The ISO’s DER Roadmap, issued in February 2017, outlines the grid operator’s plans for integrating DER into its ancillary services, capacity and energy markets over the next five years.

In September, the PSC approved an order implementing a new compensation structure for DER. (See NYPSC Limits ESCO Service, Sets New DER Compensation.)

In July, the commission expanded and extended Consolidated Edison’s Brooklyn-Queens Demand Management project and in August approved a Con Ed solar project dedicated exclusively to low-income customers.

In October, the PSC approved an implementation plan to allow municipalities to engage in community choice aggregation initiatives, and enacted the first consumer protection standards for DER. (See New York PSC Adopts DER Rules, Sanctions ESCOs.)

The PSC also faced legal challenges to its December 2016 order banning energy service companies (ESCOs) from serving low-income customers unless they obtain waivers by guaranteeing reduced bills or other benefits (Case 12-M-0476).

State and federal courts temporarily blocked the ban on several occasions during 2017. In November, the 2nd Circuit denied a motion for a stay pending appeal. On Nov. 22, the PSC issued an order setting dates for implementation of the December 2016 order on a rolling basis as contracts expire. In the meantime, the commission approved waivers on about half of the dozen requests it received from ESCOs.

Coming Storage Revolution

On Nov. 29, Cuomo signed legislation requiring the PSC to establish targets for energy storage by early 2018. (See NYISO Readies Market for Energy Storage, State Targets.)

In December, NYISO released a report detailing its plan for opening its wholesale markets to storage. The ISO report, “State of Storage: Energy Storage Resources in New York’s Wholesale Markets,” lays out three stages to facilitate storage participation — integration, optimization and aggregation with other DER. The ISO will allow storage resources to provide all the grid services that they’re capable of, while also reducing the minimum participation size from 1 MW to 0.1 MW.

Storage developers and utilities have been working with the ISO to establish ways storage can participate in both retail and wholesale markets. The ISO report distinguishes between storage in front of the meter and behind the meter, with the former more likely to participate in wholesale market transactions, although BTM storage could become a wholesale player when aggregated with other distributed resources. (See New York Sees Storage in Retail and Wholesale Markets.)

The ISO plans on having storage market rules ready for commercial use in 2020.

The PSC in May took actions to allow large commercial batteries in New York City, and in December approved a three-year, $7.5 million pilot program for Con Edison to control its New York City customers’ air conditioners to help shave peak demand in summer. Con Edison also is working with various companies on demonstration projects to use storage and software to shave peak demand.

Offshore Wind

New York will be the biggest state player in offshore wind if it meets the target set by Cuomo in January 2017: 2,400 MW by 2030. State policymakers are embracing offshore wind for both its utility-scale generation, its ability to be developed close to the major load centers of New York City and Long Island, and its potential jobs. (See New York Seeks to Lead US in Offshore Wind.)

The first offshore wind lease for New York, a nearly 80,000-acre site off the Rockaways in Queens large enough to generate up to 1 GW, went to Norway-based Statoil in December 2016. Statoil says the project, which it has dubbed Empire Wind, is in early-stage development. It hopes to sign a power purchase agreement with a U.S. utility for the project by the end of 2018.

The first project in the water could be the 90-MW South Fork Project off Montauk, which was approved by the Long Island Power Authority in January. Developer Deepwater Wind says construction could start as early as 2019, with the wind farm operational as early as 2022.

The New York State Energy Research and Development Authority is drafting a master plan that will include an offtake transmission element, the crucial part of getting wind-generated power to shore. The master plan will include a timeline and recommendations on how to speed up the offshore planning and permitting process.

December 24, 2017

Stakeholder Soapbox: Your Audit Report may be Worthless

By Terry Brinker

If you are like me, some sounds drive you crazy. For example, nails raking across a blackboard have always made me cringe. Recently, another sound or comment has given me that same response. When I speak with companies about doing a compliance assessment, an internal controls evaluation or even a mock audit, often I hear, “We are good; we passed our most recent audit.” Someone may as well have just raked his or her nails across a blackboard.

Just ask the entities involved in the 2011 Southwest Blackout how passing an audit helped their case in the subsequent investigation. I will tell you. It did not help. Federal regulators assessed $37 million in fines and penalties as a result of that event. Arizona Public Service was assessed a penalty of $3.25 million despite having passed an audit earlier in the year. The Western Electricity Coordinating Council and Peak Reliability, WECC’s successor as the reliability coordinator for most of the Western Interconnection, was penalized $16 million. Peak had recently passed a NERC certification, which is essentially an audit of an entity’s readiness and capabilities. No one received a get-out-of-jail-free card.

Entities have regarded a good audit report as proof that they have a good compliance program. In fact, your audit report may be worthless. Regional Entities perform audits and send a report to NERC. Often these regional auditors are folks with whom you either worked or see so often you become friends. Many potential violations are often reduced to recommendations or suggestions resulting in a clean audit report. After all, I know “Fred” or “Sue,” and they will clean up these little nits.

What is overlooked or simply not understood is that if there is an event involving your company, an anonymous complaint filed against you or a spot check is performed that results in an investigation, your friends — oops, I meant regional auditors — will not be able to help you. NERC and FERC will step in and kick the regions out faster than a drunk uncle at the family Christmas gathering. NERC and FERC will go through your company with a fine-tooth comb, reviewing compliance documents, listening to voice recordings, conducting interviews and getting staff on the record. They will leave no stone unturned.

Not to mention, NERC and FERC have a higher standard than the regions. I know because I was a senior investigator at NERC and was responsible for conducting the above-mentioned duties, which resulted in millions of dollars in fines and penalties for entities. And remember, you do not have to be the utility that caused the event. Imperial Irrigation District (IID) was penalized $12 million even though they did not initiate the event. This is why I stress to my clients that I am not just preparing them for an audit, but also closing any compliance gaps in case there is a reason for NERC or FERC to come snooping around.

Leadership at utility companies must ask themselves if they are comfortable having a “check the box” compliance program, which meets the letter of the law, or a robust compliance program that meets the spirit of the law and would withstand the rigors of audits and investigations alike. Organizations owe it to their stakeholders to have a robust risk management program that will greatly limit its liability. If internal controls evaluations, mock audits and compliance assessments are not a part of the risk management strategy, I question leadership’s commitment to be the best it can be. There will be another event that will lead to another investigation, and stiff fines and penalties will be handed out. In the words of Bruno Mars, “Don’t believe me just watch.”

“But we passed our audit!” will not help the utilities involved. So, let me ask, has your company conducted an internal controls evaluation, compliance assessment or mock audit lately? And remember, I hate the sound of nails raking across a blackboard.

Terry Brinker, who has 23 years of experience leading, facilitating and implementing improvements in power plant operations, control room operations, compliance and regulatory matters, is the president of Reliable Energy Advisors. Terry previously served in leadership roles during a five-year stint at NERC, where he served as senior manager of standards information and personnel certification, manager of registration services, and senior event investigator.

December 24, 2017

FERC OKs Changes to SPP’s Tx Planning Process

By Tom Kleckner

FERC last week accepted Tariff revisions to streamline SPP’s Integrated Transmission Planning (ITP) process, despite opposition from wind developers.

The commission’s Dec. 21 order accepted the revisions as consistent with the transmission planning requirements under FERC Orders 890 and 1000 (ER17-2027).

SPP’s filing drew protests from the American Wind Energy Association, the Wind Coalition and four renewable energy companies. They contended that SPP’s ITP process did not meet Order 890’s transparency principle because it lacked details of the process currently found in the ITP Manual.

Arkansas transmission lines | *MGN Photo*

AWEA and the Wind Coalition also argued that the Tariff should “specify the transmission elements and voltage levels to which the ITP assessment applies; more clearly provide opportunities for stakeholder input on economic transmission needs; include additional details on the inputs SPP plans to incorporate into its planning studies and how SPP will determine the inputs to use; and explain how SPP will coordinate its aggregate transmission study, generation interconnection and ITP processes.”

The wind developers added that the Tariff, rather than the ITP Manual, “should detail how SPP determines the variable operations and maintenance cost for wind and solar resources; incorporate reasonable, objective standards to identify the amount of wind generation that SPP will use in its planning models; include triggers to address economic market conditions; and specify the criteria for identifying persistent operational issues.

FERC said the concerns “relate to elements of the ITP process that SPP does not propose to change, and thus are beyond the scope.”

“SPP’s proposed Tariff revisions implement this proposal without otherwise modifying the existing ITP process,” the commission said.

The protesters further argued that SPP should hold two planning summits per planning cycle, rather than the proposed annual summit. FERC agreed with the RTO’s argument that reducing the number of required planning summits “will not affect stakeholders’ ability to provide input.”

ITP integrated transmission planning SPP — GridLiance’s Brian Gedrich (l), SPP Director Harry Skilton discuss the new transmission planning process in 2016 | © *RTO Insider*

“Stakeholders may participate at the working group level and throughout the transmission planning process,” the commission noted, saying SPP could always schedule additional planning summits as needed.

Stakeholders approved the process changes, which were developed by a member task force, in July 2016. Under the new process, SPP will combine the ITP’s near-term and 10-year assessments and NERC transmission planning assessments into a single 10-year study. It also modified the 20-year assessment’s timing from at least once every three years to five years.

The changes will result in an annual transmission expansion plan addressing reliability, economic and policy needs. The first study under the new process began in September, and results will be unveiled in October 2019.

December 24, 2017

ISO-NE Planning Advisory Committee Briefs: Dec. 20, 2017

ISO-NE planning engineer Steven Judd on Wednesday described to the Planning Advisory Committee the key differences between the first and second phases of RTO’s System Operational Analysis and Renewable Energy Integration Study (SOARES).

While last year’s Phase I consisted of the RTO’s traditional economic analysis of scenarios provided by the New England Power Pool, this year’s Phase II focused on operations, requiring input data for wind, solar and electric vehicle charging to analyze intra-hour ramping, regulation and reserve requirements. Phase II will help inform stakeholders about the physical range of resource quantities that could be needed and available given the studied scenarios but will not indicate a requirement going forward, Judd said.

The 2017 study will be released in the first quarter of 2018, he said.

RTO’s Neighbors Seeing Similar Conditions

Michael Henderson, ISO-NE’s director of regional planning and coordination, told the PAC the RTO is seeing the same issues across the Eastern Interconnection, including a surge in distributed energy resources and the retirement of conventional fossil-fuel generators.

“Our other needs we see in New England we do not feel could be better met with additional ties with neighboring regions, and PJM and New York feel the same,” Henderson said.

He noted NERC’s recently published 2017 Long Term Reliability Assessment report, which showed slower demand growth across North America, with conventional generation continuing to retire and new additions of natural gas, wind and solar coming quickly online. (See NERC Report Urges Preserving Coal, Nuke Attributes.)

The changing composition of the resource mix calls for more robust planning approaches to ensure adequate essential reliability services and the fuel supplies. NERC said that 6,200 miles of transmission additions are planned to maintain reliability and meet policy objectives.

New Guidance on Asset Condition Presentations

ISO-NE lead engineer Michael Drzewianowski said the RTO is providing additional guidance to transmission owners regarding when they should present their asset condition needs to the PAC for inclusion on the RTO’s asset condition list.

Drzewianowski noted that a presentation is required if an asset condition need occurs on a pool transmission facility (PTF), and the associated cost of modifications on a single circuit or facility is $5 million or more over a period of five years or less.

For all other asset conditions related to PTF modifications, a presentation is optional. Non-PTF presentation thresholds are determined by each TO.

“It’s tough when each TO has its own idea on when an asset needs to be replaced,” but the planning process does work, Drzewianowski said.

National Grid Updates on NPCC Implementation Plan

Varsha Chatlani, a planning engineer with National Grid, told the PAC that his company estimates it will cost $12.4 million (with a tolerance of +50/-25%) to complete Phase 2 of a project to install dual high-speed protection systems on its PTF circuits. The company in June reported that Phase 1 would cost $1.8 million with a +200/-50% tolerance.

The project was developed in response to a 2015 Northeast Power Coordinating Council plan to install the protection systems on all bulk power system circuits over 10 years.

National Grid first laid out its implementation plan for 45 identified transmission circuits to the PAC in June. The company has started to develop conceptual cost estimates for the other three phases, and it will provide additional updates when more refined estimates are available, Chatlani said.

Eversource Replacing Obsolete Oil Circuit Breakers

Eversource Energy has approximately 1,400 transmission circuit breakers in service and expects to spend nearly $20 million to replace 31 aged and obsolete oil circuit breakers (OCBs), company engineer George Wegh said.

ISO-NE REV Eversource Energy Interregional Transmission Planning — 1115kV OCB Catastrophic Failure | *Eversource*

Over the past 10 years, Eversource has been replacing OCBs with sulfur hexafluoride units to upgrade equipment and reduce maintenance costs. These upgrades protect the environment from oil spills and also improve system reliability by reducing equipment failures.

The 31 OCBs remaining on the Eversource 115-kV system are concentrated at three stations: Frost Bridge and Plumtree in Connecticut, and the Agawam station in Western Massachusetts. Three Frost Bridge OCBs are leaking oil.

Eversource recently replaced nine OCBs, not included among the 31 slated for replacement, on an emergency basis.

Further delay in replacing the obsolete OCBs would leave the transmission system vulnerable to age and condition-related reliability risks, and pose safety and maintenance concerns for the remaining circuit breaker fleet, Wegh said.

Eversource 345-kV Structure Replacement Projects

Eversource plans to spend an estimated $231.9 million to replace 1,019 wooden 345-kV structures with steel pole structures, John Case, the company’s director of transmission line engineering, told the PAC.

Planning Advisory Committee ISO-NE Eversource Energy — Poletop rot | *Eversource*

New England has seen a large increase in the population of pileated woodpeckers, “in the hundreds of percent according to some researchers,” and the birds are damaging old wooden transmission poles, Case said.

Eversource manages approximately 1,100 miles of 345-kV overhead lines in the region, or nearly 50% of such lines in New England, and maintains more than 10,000 345-kV structures. Inspections have revealed significant degradation and decreased load-carrying capacity of wooden 345-kV structures, many of which date from the early 1970s.

Replacing the structures resolves multiple structural and hardware issues, and supports safe and reliable operation, Case said. Hardware, insulators and guy wires are to be replaced along with the structures.

SEMA/RI 2027 Needs Assessment Scope of Work

Jon Breard, ISO-NE associate transmission planning engineer described the scope of work for the upcoming Southeastern Massachusetts and Rhode Island (SEMA/RI) 2027 Needs Assessment. The study aims to evaluate the grid’s reliability performance and identify reliability-based needs in the area for 2027 while also considering reliability over a range of generation patterns and transfer levels, he said.

A 2026 SEMA/RI Solutions Study report completed in March 2017 developed solutions to time-sensitive needs, which will be examined if any exist for the study area. Time-sensitive transmission needs are those that occur within three years of completion of a needs assessment. The RTO plans to issue the report in the second quarter of 2018. (See “Time-Sensitive Tx Needs Determination,” ISO-NE Planning Advisory Committee Briefs: Nov. 16, 2017.)

The short-circuit base case used for the SEMA/RI assessment is based on the expected topology in the 2022 compliance steady state base case. That year was chosen because “no significant project is expected in the 2022-2027 time frame, and the 2022 case was considered acceptable,” Breard said.

— Michael Kuser

December 24, 2017

MISO Wins OK for Dynamic Narrowly Constrained Areas

By Amanda Durish Cook

MISO won FERC permission last week to expand its mitigation measures to address intense but temporary congestion.

Thursday’s order allows MISO to begin enforcing dynamic narrowly constrained areas (NCAs) for short-lived congestion and market power Jan. 4 (ER17-2097-001). The RTO will extend Module D mitigation provisions in its Tariff to alleviate instances of momentary congestion that are not accounted for under its existing market power mitigation provisions.

“Establishing dynamic NCAs will improve MISO’s current market power mitigation procedures by providing an additional means to limit the exercise of market power during periods of transient but severe congestion,” FERC said.

MISO has five regular NCAs with conduct thresholds — prices that indicate potential exercises of market power — that range between $22.31 and $100/MWh. NCAs are defined by FERC as those constraints that can bind for more than 500 hours annually. They can be defined in advance and are subject to tighter market mitigation thresholds than broad constrained areas.

Dynamic NCAs will involve areas that do not meet the 500-hour trigger but need stricter thresholds because they are dominated by one or more pivotal suppliers, according to MISO.

A dynamic NCA would be declared when conduct has occurred that would warrant mitigation on a non-NCA constraint, and that constraint has bound in 15% or more hours over at least five consecutive days. The new category sets a conduct threshold at $25/MWh. MISO said it will terminate a dynamic NCA when either the outages or other conditions causing the binding transmission constraints have been resolved or the Independent Market Monitor hasn’t had to mitigate economic or physical withholding or uneconomic performance for 30 days.

“MISO explains that although a given transmission constraint is not expected to bind for a total of 500 hours or more in a given year based on historical data, thus not warranting an NCA designation, that constraint can ultimately bind over shorter periods at a rate that exceeds 500 hours per year (e.g., at a rate greater than approximately 9.6 hours per week),” FERC summed up.

FERC had issued a deficiency letter Sept. 6 seeking more detail on MISO’s proposal. In response, the RTO clarified that a dynamic NCA can be designated in the same area where a standard NCA already exists and provided FERC with a list of conduct categories and the conduct and impact thresholds for designating dynamic NCAs and mitigation. (See MISO to Address FERC Query on Constrained Areas.)

The Monitor first recommended creating dynamic NCAs in its 2012 State of the Market Report.

In accepting MISO’s new definition, FERC rejected NRG Energy’s argument that the RTO failed to take into consideration the differences between its Midwest and South regions by applying a uniform $25/MWh conduct threshold. NRG said that placing “unduly low thresholds” in MISO South could prevent generators from recovering their actual costs.

December 24, 2017

Clean Line Sells Okla. Portion of Plains Eastern to NextEra

By Tom Kleckner

Clean Line Energy Partners announced Friday that it has sold all the assets of the Oklahoma portion of the multistate Plains & Eastern Clean Line transmission project to NextEra Energy for an undisclosed sum.

In a press release, Clean Line said the transaction would continue the “forward momentum” of the Plains & Eastern project and “install a new sponsor to a transmission solution to the burgeoning wind sector in Oklahoma” and SPP. Under the agreement, the company will retain its assets east of Oklahoma.

NextEra, which bills itself as the world’s largest generator of wind and solar energy, is the largest owner of wind generation in the Oklahoma, with 1.7 GW of operating capacity.

Plains & Eastern Clean Line Project Schematic | *Clean Line Energy Partners*

Clean Line spokesperson Sarah Bray told RTO Insider that while the Plains & Eastern’s goal is to “deliver low-cost renewable energy … to communities where there is substantial demand,” the market has evolved and eastern Oklahoma “now presents a strong delivery point for Plains & Eastern.” Alluding to NextEra’s financial strength and operational capabilities, Bray said, “We believe that they are the right owner to take the project over the finish line.”

Officials from the two companies have not disclosed the transaction’s terms, though it apparently includes the transfer of the “significant portion” of the Oklahoma right of way Clean Line has already acquired.

The Plains & Eastern is a proposed 720-mile HVDC transmission project that would move 4 GW of wind energy from the Oklahoma Panhandle through Arkansas to Memphis, Tenn., with a 500-MW drop-off in Arkansas. Clean Line has been involved in commercial negotiations with potential customers, both wind generators and load-serving entities seeking power.

Clean Line has said the project’s construction would begin once developers have contracts for 2 GW of capacity.

The project has been under development for eight years and has regulatory approvals from the Oklahoma Corporation Commission and the Tennessee Regulatory Authority. The U.S. Department of Energy issued a “record of decision” in 2016 after nearly six years of study and evaluation, saying it would participate in the project’s development under Section 1222 of the 2005 Energy Policy Act. (See DOE Agrees to Join Clean Line’s Plains & Eastern Project.)

However, Clean Line has yet to receive a go-ahead from regulators in Arkansas, where the project has met stiff resistance from landowners and the state’s all-Republican congressional delegation. The lawmakers in March asked Energy Secretary Rick Perry to “preserve states’ rights” and reverse the department’s decision to partner on the project. They also are sponsoring a bill that that would prevent DOE from using eminent domain for Section 1222 transmission projects without the approval of both the governors and utility commissions of affected states.

But on Thursday, a federal judge in Arkansas rejected a lawsuit by two landowner groups challenging the department’s authority to partner with Clean Line. In his order, Judge D.P. Marshall Jr. of the U.S. District Court for the Eastern District of Arkansas overruled Downwind LLC and Golden Bridge LLC’s contention that the federal government exceeded its authority and denied landowners a chance to participate in the process.

“In the circumstances presented, Arkansas doesn’t get to decide where the transmission line is located,” Marshall wrote. “And the state doesn’t have a veto over whether this line gets built.”

Clean Line Executive Vice President Mario Hurtado applauded the decision.

“This critical decision confirms the strong legal basis for the Department of Energy’s decision to participate in the Plains & Eastern project, and keeps the door open for future infrastructure projects and the use of Section 1222,” he said.

December 24, 2017

MOPR-Ex Faces Uphill Battle as PJM Declines Recommendation

By Rory D. Sweeney

WILMINGTON, Del. — PJM’s long-awaited capacity construct redesign will have to wait at least another month for endorsement by a key stakeholder committee, and its path to implementation includes additional hurdles after that.

Stakeholders at last week’s Markets and Reliability Committee meeting voted to defer an endorsement vote on the Independent Market Monitor’s MOPR-Ex proposal until the committee’s Jan. 21 meeting. PJM confirmed that even if it does receive endorsement, staff won’t recommend that the Board of Managers approve filing it for FERC approval; they will instead recommend their own proposal, despite not earning stakeholder endorsement.

Capacity Construct PJM MOPR-EX — Horstmann | © *RTO Insider*

John Horstmann of Dayton Power and Light made the deferral motion, which was seconded by Bob O’Connell of Panda Power Funds. Horstmann offered that a delay would give stakeholders a chance to review FERC’s response to the Department of Energy’s Notice of Proposed Rulemaking on price supports for coal and nuclear facilities, which is due by Jan. 11. It also provides additional time, without delaying a scheduled vote at the Jan. 25 Members Committee meeting, to review changes to the proposal requested by stakeholders and incorporated by the Monitor to secure endorsement. (See PJM Monitor Battles Exelon on MOPR-Ex Proposal.)

The proposal was developed by the Monitor as an extension of the minimum offer price rule (MOPR) in effect in PJM until FERC rejected it earlier this month on remand from a U.S. appeals court. (See On Remand, FERC Rejects PJM MOPR Compromise.) Its critics have been vocal, but it was the only proposal to receive endorsement at the Capacity Construct/Public Policy Senior Task Force (CCPPSTF), which spent the past year considering revisions to PJM’s capacity design. As the task force concluded earlier this year, many stakeholders preferred the status quo, but the RTO’s rules prevent that from being a voting option. Fearing that, without a clear stakeholder mandate, PJM would file its own two-stage repricing proposal, voters coalesced around the Monitor’s proposal, which is seen as having the least impact on the existing design.

But to secure enough votes for endorsement at the MRC, the Monitor revised the version approved by the CCPPSTF. That move has muddied the endorsement process and confused some stakeholders. It has also incensed other stakeholders, who argue that the Monitor is hypocritically picking winners and losers in drafting a rule ostensibly designed to avoid picking winners and losers.

Exelon’s Jason Barker questioned Monitor Joe Bowring on revisions to an exemption to the MOPR for resources developed under state renewable portfolio standards. Exelon, which offered its own two-stage repricing proposal in the CCPPSTF, contends that the Illinois zero-emissions credit (ZEC) program, which benefits several of its nuclear facilities, should be included in the exemption.

Bowring argued that he doesn’t “get to write the rules,” so his proposal must operate within the structures developed by states.

“We are taking those standards as they exist. … We deleted portions that would have resulted in most, if not all, RPS programs being not in compliance with this,” he said. “I know you would like to conflate ‘zero-emissions’ with ‘renewable,’ but they are not the same thing. This is the RPS, not the ZEC standard.”

In a subsequent email to RTO Insider, Bowring added that FERC has ceded regulatory authority over RPS programs and that the U.S. Supreme Court provided additional leeway for states in setting renewables standards in its decision rejecting Maryland’s plan to subsidize generation. (See Supreme Court Rejects MD Subsidy for CPV Plant.)

As a result, there is only a limited ability for FERC-approved rules to affect the market participation of generation developed under RPS programs. The MOPR-Ex is intended to respect existing programs while introducing an element of competition, Bowring said.

“I can tell you most of the [state] advocate offices would not vote for the other version, but with this modification made … I think you gained the support of most of the advocate offices,” said Greg Poulos, executive director of the Consumer Advocates of the PJM States (CAPS). “Status quo is the preferred option, but this is the next best option because of the RPS exemption.”

Monitor’s Lead

The situation is further confused by PJM taking a back seat in developing necessary revisions to its governance documents.

“We are trying to facilitate at this point,” said PJM CFO Suzanne Daugherty.

Carl Johnson, who represents the PJM Public Power Coalition, took the RTO to task for what he saw as the “extraordinary” situation in which it would “not actively draft the Tariff language” for a proposal endorsed by a task force and said he plans to address it in the future.

Staff defended themselves, saying they “didn’t decline” to write the language but “engaged with the IMM staff and legal counsel” to determine that it might be better for the Monitor to write the first draft to ensure its intentions are accurately reflected.

“PJM is continuing to do its legal analysis, but PJM has been in close connection with the IMM,” PJM attorney Chris O’Hara said.

He noted that analysis might determine that applying the MOPR to any qualifying facility (QF) under the Public Utility Regulatory Policies Act isn’t defensible, “but that would entail a complete rewrite to what the stakeholder group did.”

PJM Recommendation

PJM’s Stu Bresler announced that staff’s “recommendation to the board would be that we not file that proposal” because “it does not accommodate state public policy decisions” and raises discriminatory concerns.

Bowring responded that in the event of a “super-majority” stakeholder endorsement, “we would then consider making that filing ourselves, so one way or the other, we expect the proposal to get to the commission.”

Such a filing would be under Section 206 of the Federal Power Act, he confirmed.

Poulos asked whether PJM would recommend the status quo; Bresler clarified that is the pre-2012 MOPR rule, which was in place prior to the filing FERC recently rejected.

“No, that would not be our recommendation to the board,” he said, adding that PJM would recommend its repricing proposal to replace the existing MOPR rule.

MOPR Status

FERC’s rejection also muddies PJM’s capacity auction schedules. The RTO asked FERC for a waiver on its deadline for filing MOPR exemptions for its Feb. 26 Incremental Auction, PJM’s Jen Tribulski said. Generators will have until Jan. 12 to request exemptions for the third IA for delivery year 2018/19. Unit-specific exemptions for the Base Residual Auction for 2021/22 will be due on Jan. 10. All exemptions are based on the pre-2012 rule.

December 24, 2017

PJM Markets and Reliability Committee Briefs: Dec. 21, 2017

WILMINGTON, Del. — PJM’s initiative to internalize all generator payments moved forward at last week’s Markets and Reliability Committee meeting when stakeholders endorsed the RTO’s proposed problem statement and issue charge to examine price formation procedures for its energy markets.

Adam Keech, PJM’s executive director of market operations, faced scrutiny during an initial presentation Thursday, but returned later in the meeting with a significantly revised version that was endorsed by acclamation with 12 objections and 14 abstentions.

James Wilson, who consults with consumer advocates for several states within the RTO’s footprint, took issue with PJM defining the “price formation goal” as “maximizing the social welfare objective.”

“It sounds like the problem statement is trying to narrow what the stakeholder process can focus on,” he said.

Keech assured that wasn’t the intention. Caveats were added to the endorsed version to explain the objective and indicate that it was “in addition to” other goals.

He also said he was unsure if FERC’s order that day for the RTO to clarify or modify its fast-start resource pricing would be part of that evaluation. (See related story, FERC Drops Fast-Start NOPR; Orders PJM, SPP, NYISO Changes.)

Stakeholders sought assurances for a variety of tangential evaluations that Keech said PJM would undertake, though the endorsed proposal does consider as out of scope any discussions about impacts on and changes to capacity markets, among other things.

“I don’t think we have any intention of skipping out on the analysis here,” he said, but acknowledged “there may be other changes we’d like to make, but they’re not necessarily needed … for this group to move forward.”

Calling it a “dramatic change,” Independent Market Monitor Joe Bowring proposed an alternative analysis that called for individual examination of energy market components.

“If we’re going to do this review, let’s do it comprehensively so we come to the right conclusion,” he said.

“It’s a lot cleaner than PJM’s in terms of identifying the problem and what needs to be worked on,” Wilson said of Bowring’s proposal.

“I think there are some things in here that maybe give us a little bit of concern,” Keech said, but “the concept of including operator actions in LMP certainly [does] not.”

Because PJM’s proposal was endorsed, the Monitor’s was never considered for a vote.

Fuel-Switch Clarifications Endorsed

A debate that escalated at the Dec. 12 Operating Committee meeting was resolved after stakeholders endorsed clarifying text along with manual changes addressing gas pipeline contingency plans. The text box indicates that PJM “may need to direct” switching to an alternate pipeline or fuel on a pre-contingency basis and that it “will use best operator efforts” to move interruptible users off before firm service users. The revisions were endorsed by acclamation with seven objections and four abstentions.

Earlier in the meeting, stakeholders endorsed revisions to Manual 3: Transmission Operations and Manual 13: Emergency Operations, which include processes for addressing gas pipeline disruptions that affect generator reliability.

price formation pjm mrc — Souder | © *RTO Insider*

PJM’s Dave Souder announced that his staff are developing a problem statement and issue charge on the topic to be unveiled at the Jan. 10 Market Implementation Committee meeting.

Dave Pratzon of GT Power Group expressed concern that PJM “doesn’t have authority to tell a generator which” fuel source to use.

“This is a major expansion of PJM’s authority,” he said. “We need to think about it in terms of Tariff changes.”

O’Connell, who proposed the clarifying text, acknowledged the concern but said it will need to be addressed later.

“There needs to be some kind of bright line. How far inside the fence can PJM go?” he said. “We were in general agreement that trying to address those issues was more than we could bite off in the time frame we had.”

Incremental Auction Revisions Endorsed

Despite some stakeholder frustrations, proposed Incremental Auction (IA) revisions received endorsement with a sector-weighted vote of 3.55, surpassing the 3.33 threshold. They next go for endorsement at the Jan. 25 Members Committee.

The revisions — which would change in what IAs and for how much PJM can offer excess capacity commitments — received criticism at the Dec. 7 MRC for being presented as if the Incremental Auction Senior Task Force (IASTF) had endorsed them. In fact, the task force vote fell seven votes short of endorsement. Exelon’s Sharon Midgley moved for the vote.

Bowring criticized the proposal for making it “too easy to get out of your capacity commitment” and voiced support for PJM’s original proposal. The endorsed version was a variation of that proposal.

Marji Philips with Direct Energy reiterated previous criticism that “the process was subverted into a lot of other interests” away from the company’s original goal when it proposed initiating the IASTF.

“In this case, we believe this is actually worse than the status quo at this point,” she said. “This addresses a lot of other problems, but not the ones that it was initially designed to.”

“We support this package as a compromise,” said Susan Bruce, who represents the PJM Industrial Customers Coalition. “It is not perfect, but in this case, we do not want perfect to be the enemy of good enough. … We look at this as PJM taking on a commitment on behalf of load.”

“It’s not a benefit for load. It’s a benefit for suppliers because those suppliers with excess will be able to undercut” PJM’s mandated BRA price offer, CPower’s Bruce Campbell said. He offered to support anyone who motioned Package D, a competing proposal, but received no takers.

Customers, Competitors Battle TOs on Project Cost Caps

The fight over whether PJM should consider cost cap guarantees on more than construction costs in transmission-development proposals rages on.

PJM’s Sue Glatz presented proposed changes to the Operating Agreement that would include caps on construction costs in the RTO’s proposal evaluation, but LS Power’s Sharon Segner presented a counterargument that cost cap considerations should extend to factors such as return on equity and annual revenue requirements.

The proposal is “very divergent from other FERC-approved tariffs” and “doesn’t actually answer the question about how PJM will consider cost estimates versus cost-containment provisions,” Segner said.

American Municipal Power’s Steve Lieberman “strongly” supported Segner’s position, and Bowring also endorsed it.

Representatives of several transmission owners supported PJM’s proposal. Alex Stern of Public Service Electric and Gas and Tonja Wicks of Duquesne Light acknowledged they were initially against adding cost cap provisions but eventually changed tack.

“It was a balanced negotiation, so we relented to have cost cap language” included as long as it remained restricted to construction costs, Wicks said.

PJM’s proposal will be up for endorsement at the January meeting, and Segner will need to make a separate proposal if desired.

Acclamation Votes

Stakeholders endorsed by acclamation several manual revisions and other operational changes:

Manual 1: Control Center and Data Exchange Requirements. Revisions developed to update NERC references and procedures related to outages and system-restoration planning. PJM members will be required to send the RTO data on transmission megawatt and MVAR flows and bus voltages at greater than or equal to 100 kV, down from 345 kV.
Manual 10: Pre-Scheduling Operations. Revisions developed to comply with NERC standards as part of a periodic review of the manual. Generators will be required to notify PJM of operating conditions that could result in a single contingency causing an outage of multiple generators.
Manual 14D: Generator Operational Requirements. Revisions developed as part of a periodic review. Generators will need to be modeled in eDART consistent with the PJM energy management system model.
Revisions to the Tariff, Manual 28: Operating Agreement Accounting and Manual 6: Financial Transmission Rights resulting from special sessions on FTR issues. The revisions will address changes to long-term FTR modeling for future transmission expansion, streamlining management of overlapping FTR auctions and allocating any surplus funds from day-ahead congestion and FTR auction revenue. Members endorsed the auction surplus proposal at the Dec. 13 MIC meeting, which allocates all surplus to auction revenue rights holders. The changes will be implemented for the 2018/19 planning period. (See related story, “FTR Changes in the Works,” PJM MIC briefs: Dec. 13, 2017.)
Members will be asked to endorse changes to the procedures for the study of transmission service requests and upgrade requests in the new services queue process. (See “Interconnection Study Process to be Rearranged,” PJM Planning/TEAC Briefs Oct. 12, 2017.)

— Rory D. Sweeney