Page 1234 – RTO Insider

December 8, 2017

PJM Unit to Help Develop Western Markets

By Rory D. Sweeney, Jason Fordney and Rich Heidorn Jr.

PHILADELPHIA — PJM and reliability coordinator Peak Reliability announced Thursday they will explore the development of markets and other services in the West, creating a potential competitor to the expansion ambitions of CAISO and SPP.

Peak Reliability, the NERC-designated reliability coordinator for most of the Western Interconnection, announced the agreement to “explore reliability services and markets in the West” with PJM Connext, a non-regulated subsidiary of PJM Interconnection LLC, operator of the world’s largest wholesale electricity market and North America’s largest grid.

“Peak and PJM Connext will begin review of potential reliability services, market design, governance, product suites, rules, technology and organization,” they said in a press release, promising to report on their finding by the end of March 2018. “We believe that our partnership will lead to a viable and credible alternative structure in the West,” the release quoted PJM CEO Andy Ott.

“I think it’s a good fit,” Ott said in an interview after a meeting of the PJM Members Committee Thursday.

Ott said the initiative resulted from requests Peak had received about whether it could provide more services. “They’re geared toward reliability services. We could provide the market-oriented and operational services,” he said.

“At this point, it’s exploratory,” Ott added. “The notion of having this separate company allows us to do that and keep risk off of PJM members.”

“PJM has an established track record as an innovative and cost-effective provider of system operations and market services,” Peak CEO Marie Jordan said in a statement. “Our partnership seeks to leverage Peak’s West-wide system model, PJM’s markets expertise, and our combined processes, people and tools. Both Peak and PJM share a strong commitment to developing solutions, tailored to the Western Interconnection.”

The two said their research will include an “outreach program” to Western Interconnection “industry leaders and stakeholders.”

pjm peak reliability western electric markets — | *NERC*

The announcement led Montana regulator Travis Kavulla to tweet Thursday afternoon that PJM and Peak “just sent a letter to regulators announcing they’re exploring how to form a new RTO in the West.”

“Big stakes here,” added Kavulla, a member of the Montana Public Service Commission and former chair of the National Association of Regulatory Utility Commissioners. “If Peak against the odds pulled this off, it’d be a huge coup. But Peak’s funders (including those championing rival RTO efforts) probably aren’t going to be very warm on this.”

Kavulla told RTO Insider: “I took the liberty of describing it as an RTO because I figured they are using a euphemism to avoid that description.”

Asked about Kavulla’s interpretation, PJM spokeswoman Susan Buehler said “The agreement allows PJM and Peak to explore opportunities in the West. We are looking at market services but it’s too early to predict anything else.”

Later, Kavulla tweeted a quote from Gary Ackerman, executive director of the Western Power Trading Forum, who weighed in with a report in the Friday Burrito, his weekly newsletter.

Ackerman said he spoke with Jordan and asked her “if the new venture was contemplating a full market including day-ahead, real-time energy and ancillary services? She assured me it was.

“She also said although no anchor balancing authorities have yet come forward, she has been in discussions with many … and there is widespread interest,” Ackerman wrote, according to Kavulla.

Kavulla also shared a portion of the letter to regulators, in which Peak called the announcement “an exciting opportunity to address challenges facing the West and the issues we have been hearing about as we’ve met with many of our stakeholders. We believe that Peak and PJM’s complementary strengths can lead to a viable and credible alternative option at the time when the West is looking at markets to reduce costs.”

RTO Requirements

Any effort to create a full-fledged RTO would require PJM and Peak to meet the requirements of FERC Order 2000. The order sets four minimum requirements for an RTO: “independence from market participants; appropriate scope and regional configuration; possession of operational authority for all transmission facilities under the RTO’s control; and exclusive authority to maintain short-term reliability.”

Headquartered in Vancouver, Wash., Peak runs reliability coordination offices there and in Loveland, Colo., which provide situational awareness and real-time monitoring of all or parts of 14 western states, the Canadian province of British Columbia and a small, northern portion of Baja California, Mexico. Its region totals 1.6 million square miles and includes 110,129 miles of transmission and a population of 74 million.

The venture is the latest development to indicate the West is warming to the notion of organized markets.

Eight members of Mountain West, including Xcel Energy’s Public Service Company of Colorado, are considering joining SPP. (See Col. Regulators Talk Governance with SPP, Mountain West.) Peak Reliability is Mountain West’s current reliability coordinator.

SPP Chief Operating Officer Carl Monroe did not seem concerned about the prospect of competition. “We’re supportive of markets and collaboration between reliability coordinators in the West and welcome the opportunity to work with PJM and Peak Reliability to bring reliability and economic benefits to ratepayers in the west, just as we have been successfully doing in the east for many years,” he told RTO Insider.

California enacted a law in 2015 that requires CAISO and state energy agencies to explore expanding the ISO to help the state meet its 50% renewable energy mandate. CAISO’s Western Energy Imbalance Market (EIM), which includes PacifiCorp, Arizona Public Service, Puget Sound Energy and NV Energy, has produced more than $213 million in gross benefits since commencing operation in November 2014.

But governance concerns have hampered efforts to build the EIM into a full-fledged RTO. One contentious issue for coal-burning states is California’s requirement that its utilities track carbon emissions from generation serving their loads to ensure compliance with emissions caps. (See CAISO Expansion in Question as EIM Grows.)

The Western Electricity Coordinating Council (WECC) said it had no comment on Peak’s plans. CAISO did not immediately respond to a request for comment.

Peak Reliability was formed in 2014 when WECC bifurcated, with it becoming a NERC Regional Entity and Peak Reliability becoming the reliability coordinator. FERC approved the bifurcation in February 2014, making Peak independent of WECC. WECC was formed in April 2002 from the merger of the Western Systems Coordinating Council, and two regional transmission associations.

NERC regional entities are responsible for reliability compliance monitoring and enforcement activities, while reliability coordinators maintain reliability in real-time, coordinating or directing actions to mitigate system issues.

WECC is in the midst of a separate rebranding and restructuring to focus more on its core reliability mission.

Evolution of PJM Technologies

PJM Connext, formerly known as PJM Technologies, was formed in 2000 under PJM’s “other activities protocol,” Ott said.

“We were one of the first RTOs, so some of the concept back then was if we were to monetize any of that intellectual property or groundbreaking ideas, then that feeds back to the membership. That would lower the stated rate,” Ott said.

PJM Technologies includes PJM EIS (Environmental Information Services), which operates the Generation Attribute Tracking System for tracking renewable energy credits. PJM is also looking to license its Dispatcher Interactive Map Application (DIMA) to transmission owners. (See “TOs Must Approve PJM Licensing of DIMA,” PJM Operating Committee Briefs: Nov. 7, 2017.)

In October, PJM announced the unit had signed a contract to help the Chinese province of Zhejiang develop a real-time energy market. That effort will involve three to four full-time equivalent PJM staffers for 18 months. The province, south of Shanghai, has a load equal to almost half of PJM’s.

PJM is consulting with the Chinese on market design, whereas the deal with Peak is for market operation, Ott said.

“There’s more opportunities presenting themselves” now, Ott said “In this case, we see several popping up at once. Just so happens there are more of them, and we’re being more transparent” about announcing the work, he added. “It’s an opportunity for us to further the advance of competitive markets around the world.”

Tom Kleckner contributed to this article.

December 8, 2017

Pruitt Confirms EPA Working on CPP Replacement

By Michael Brooks

WASHINGTON — EPA Administrator Scott Pruitt on Thursday confirmed that the agency is working on a replacement to the Obama administration’s Clean Power Plan.

EPA Scott Pruitt Clean Power Plan — Pruitt | © *RTO Insider*

The revelation came in response to a question from Rep. Raul Ruiz (D-Calif.) at a House Environment Subcommittee hearing on the agency’s activities. Pruitt had previously only committed to considering a replacement plan.

Ruiz had asked whether EPA had relied on any new peer-reviewed studies on pollution to support the proposed repeal of the CPP, criticizing Pruitt for reversing the agency’s stance on climate pollution.

Pruitt denied that he had. “Moreover, we are going to be introducing a replacement rule too,” he said.

His statement came at the very end of an hourlong session of the subcommittee in which he answered questions from six members before he left to attend a meeting with President Trump.

Pruitt would return three hours later to resume the hearing, but no subcommittee members followed up on his statement regarding replacement of the CPP or pressed for details about a new plan. Instead, the members’ questions covered a wide array of topics, including Superfund sites, pesticides, water quality, vehicle emissions and fuel standards, hurricane recovery and Pruitt’s frequent travel to his home state of Oklahoma. Pruitt declined to take questions from reporters after the hearing.

He also gave no indication of plans to overturn the agency’s endangerment finding on carbon dioxide.

Earlier in the morning session, Rep. Joe Barton (R-Texas) encouraged Pruitt to revisit the finding, which both agreed EPA had rushed to put out in 2009 in the wake of Massachusetts v. EPA, the Supreme Court decision confirming the agency’s authority to regulate carbon dioxide as a pollutant.

EPA REV Scott Pruitt Clean Power Plan — Pruitt testifying before the House Environment Subcommittee | © *RTO Insider*

Pruitt also said that he is still working on a “red team/blue team” debate regarding the science of climate change and hoped to announce it at the beginning of next year “at the latest.”

“I think one of the most important things we can do for the American people is provide that type of discussion, because it hasn’t happened at the agency,” Pruitt told Barton. “We need to ensure that type of discussion occurs, and it occurs in a way that the American people know that an objective, transparent review has taken place.”

Thursday’s hearing was predictably partisan in nature. Pruitt received a warm welcome and pats on the back from Republicans, who praised his work at the agency and his so-called “back to basics” approach. Democrats, on the other hand, lambasted him for his rollback of numerous Obama-era regulations, including the CPP.

Many of Pruitt’s answers mirrored those he gave at his Senate confirmation hearing in January. He talked about the importance of the “rule of law” and process, saying EPA had overstepped its bounds under President Barack Obama. (See Dems Unmoved by EPA Pick’s Charm Offensive.)

On Wednesday, EPA announced that it would hold three additional hearings on the CPP after what Pruitt called “the overwhelming response” to the agency’s hearing in Charlestown, W.Va. (See No Unanimity in ‘Coal Country’ Hearing on CPP Repeal.) The agency said the hearings will be in San Francisco, Kansas City, Mo., and Gillette, Wyo., though it did not provide specific dates or venue locations.

December 8, 2017

UPDATED: McIntyre Takes FERC Chair; Wins Delay on NOPR

By Rich Heidorn Jr., Amanda Durish Cook and Michael Kuser

Kevin McIntyre, sworn in as FERC chairman Thursday, will have a month to build support for his response to the Department of Energy’s controversial proposal for coal and nuclear price supports.

On Friday, Energy Secretary Rick Perry granted a 30-day delay from the Dec. 11 deadline set in Perry’s Notice of Proposed Rulemaking. Saying they were needed for grid resiliency, Perry called for compensating coal and nuclear plants in regions with competitive capacity markets that maintain 90 days of fuel on site.

FERC NOPR Kevin McIntyre Kevin — FERC Chief Administrative Law Judge Carmen A. Citron swears in Kevin McIntyre as his wife, Jennifer Brosnahan McIntyre, holds a Bible. | *FERC*

In a letter to Perry, McIntyre said the delay was “critical to afford adequate time” for him and Democrat Richard Glick, who was sworn in Nov. 29, to review the more than 1,500 comments filed in the docket (RM18-1) “and engage fully in deliberations.”

Perry agreed to the request Friday, setting a new deadline of Jan. 10. “The commission is nevertheless authorized to act at any time prior to this deadline and I urge the commission to act expeditiously,” Perry wrote. “… I continue to believe that urgent action must be taken to ensure the resilience and security of the electric grid, which is so vitally important to the economic and national security of the United States.”

New commissioners often choose not to vote on issues subject to deliberations before their arrival. Glick, for example, did not participate in a Dec. 1 order on a state-federal jurisdictional dispute over energy efficiency. (See FERC Claims Jurisdiction on EE, OKs Ky. Opt-Out.)

Although McIntyre and Glick have had access to the comments in the docket, McIntyre has not had time to build a consensus around his own response.

What McIntyre may have in mind is not apparent. His only prior public comments on the NOPR came at his confirmation hearing in September. (See McIntyre to Senate: ‘FERC does not Pick Fuels’.)

A Republican, McIntyre joins FERC after 22 years at Jones Day, where he was coleader of the law firm’s global energy practice. His former Jones Day colleague Don McGahn is President Trump’s White House counsel.

Perry acted within his legal authority in ordering FERC to consider his NOPR. But he has no power to make FERC provide the relief he is seeking, legal experts say. (See FERC’s Independence to be Tested by DOE NOPR.)

McIntyre did not appear to have signaled his plans to fellow commissioners Cheryl LaFleur or Rob Powelson, who indicated in public appearances Wednesday and Thursday that they expected to rule on Monday, as promised by interim Chairman Neil Chatterjee. DOE Under Secretary Mark Menezes said Wednesday that the ruling was likely to be pushed back one day to Dec. 12. (See DOE: German Energy Struggles Sparked NOPR.)

FERC’s website was briefly overwhelmed by traffic after the agency tweeted out a link to McIntyre’s letter at 6:35 p.m. Thursday.

Analysts at ClearView Energy Partners had said before news of the letter that the commission appeared to lack a consensus for responding to the NOPR. “Over the course of this week, Commissioner Neil Chatterjee conceded that he has not successful in persuading his other colleagues to support the interim solution he prefers,” the analysts wrote in an email to the firm’s clients Friday morning. “Last night’s action indicates to us that the new chairman may not be persuaded that closing the docket and issuing a Notice of Inquiry to the FERC-jurisdictional regional transmission organizations — the option purportedly preferred by Commissioners Cheryl LaFleur and Rob Powelson — is necessarily a course of action he prefers.”

LaFleur told MISO’s Board of Directors meeting in Carmel, Ind., on Thursday that the commissioners were “busily scurrying to get something out on Monday.”

“I’m actually to the point where I’m relieved [the deadline] is Monday because if it was March 11, we’d talk about it until March 11,” she said.

Republicans Chatterjee and Powelson have indicated support for Perry’s proposal. On Wednesday, Powelson told the PJM General Session that the commission would craft a “defensible” response to the NOPR that does not upend competitive markets.

LaFleur Previews Ruling

LaFleur, a Democrat, has been noncommittal in her public statements. (See DOE, Pugliese Press ‘Baseload’ Rescue at NARUC.) She told MISO’s board meeting Thursday that if customers are made to pay for generation attributes, it should be done based on data through a transparent market process.

She also said considerations of resilience should include severe weather, cyber threats and transmission. “It probably shouldn’t be confined to the areas with mandatory capacity auctions because their resilience isn’t more important,” she added.

LaFleur said the commission has reached a saturation point on dissecting the resiliency rule. “Finally, last week, even I had too much, and I said, ‘That’s it; pencils down.’”

She said the NOPR interrupted commission work on the backlog of filings that built up during the six months the commission was without a quorum after the resignation of former Chairman Norman Bay. “It’s as if we had all of our jets lined up for takeoff and someone took the airspace,” she said.

Chatterjee, speaking to a meeting of ISO-NE’s Consumer Liaison Group in Boston on Thursday, reiterated his call for providing “interim” relief to at-risk generators while FERC considers the NOPR. (See Chatterjee: ‘We’ve Moved Past’ DOE NOPR.) Chatterjee also sought to calm those who fear the new commission, now dominated 3-2 by Republicans, will be more partisan and less independent than in the past.

Advice for McIntyre

Among those offering McIntyre congratulations was interim NERC CEO Charles Berardesco. “We have a long and productive relationship with FERC,” he said in a statement. “NERC looks forward to continuing work on the key priorities impacting grid reliability, including the changing resource mix, essential reliability services and security challenges.”

Some of those issuing statements welcoming McIntyre also gave advice on how he should rule on the NOPR and other issues.

The Affordable Energy Coalition, an ad hoc group that includes industrial customers and the American Wind Energy Association, urged McIntyre to reject the NOPR. “Chairman McIntyre joins the commission at a critical moment in the agency’s history,” the group said, adding that the ruling on the DOE proposal “will determine the affordability of electricity for tens of millions of American consumers.”

John Moore, director of the Natural Resource Defense Council’s Sustainable FERC Project said the commission “is at a crossroads.”

“As an independent commission, FERC has largely avoided pressure from the White House and Congress in recent years, and hewed mostly to a nonpartisan (if not always harmonious) path,” Moore wrote in a blog post. “In the last several months, however, FERC has faced unprecedented pressure from the Trump administration to subsidize coal plants and nuclear for their claimed ‘resilience’ attributes. McIntyre’s leadership will be a test of the extent to which he can withstand pressure from the White House to bend to its political ends.”

Clients, Contributions

FERC NOPR Kevin McIntyre — McIntyre | © *RTO Insider*

McIntyre replaces Chatterjee, a former aide to Senate Majority Leader Mitch McConnell (R-Ky.), whose nearly four months as interim chair have been marked by his advocacy for the coal industry and sparring on social media with actor James Cromwell.

It is the first time FERC has had a full complement of five members since October 2015, when Republican Philip Moeller left the commission. The panel faces decisions on ways to harmonize RTO markets with state subsidies for nuclear plants, rulemakings on energy efficiency and distributed energy resources, and pipeline licensing.

During his two decades at Jones Day, McIntyre represented clients in administrative and appellate litigation, compliance and enforcement matters, and corporate transactions. According to his Jones Day biography, McIntyre’s clients have included American Electric Power (negotiations to settle claims in connection with the California energy crisis); SCANA (settlement of Calpine bankruptcy claims); South Carolina Electric & Gas (FERC-jurisdictional rates for electric transmission service); Public Service Company of North Carolina (litigation before FERC concerning the Atlantic Coast Pipeline); and E.ON AG ($1.9 billion acquisition of the North American operations of Irish wind farm operator Airtricity).

McIntyre has been a regular contributor to Republican candidates. In the 2016 presidential primaries, he initially backed both Wisconsin Gov. Scott Walker and Sen. Marco Rubio (R-Fla.), giving each $1,000 in July 2015. He gave Rubio another $1,700 in February 2016. He also has contributed to the Republican National Committee, Sens. Tom Cotton (R-Ark.), Pat Toomey (R-Pa.) and Rob Portman (R-Ohio), and Republican presidential nominees Mitt Romney and John McCain.

McIntyre is a graduate of San Diego State University (A.B., political science) and Georgetown Law. His wife, Jennifer Brosnahan McIntyre, a former deputy general counsel for the U.S. Department of Transportation and associate counsel to President George W. Bush, became chief counsel of Boeing’s Washington Operations in 2010. Married in 2008, the couple have three children.

Cook reported from Carmel, Ind. Kuser reported from Boston.

December 8, 2017October 31, 2023

UPDATED: California Fires Spark CAISO Transmission Emergency

Updated Dec. 12

By Jason Fordney

CAISO on Monday continued an electric transmission emergency in Ventura County because of raging wildfires in Southern California that have forced the evacuation of almost 200,000 people and destroyed more than 1,000 structures. The emergency was extended until midnight Dec. 12.

As of 9:30 p.m. Monday, Southern California Edison said, the Thomas fire was causing intermittent outages and power surges in the Santa Barbara area, potentially affecting up to 85,000 customers. In the Ventura area, 2,393 customers were without power.

On Thursday, ISO spokesman Steven Greenlee told RTO Insider that the Thomas fire was a threat to four 230-kV lines in the Ventura area “and the fire is burning underneath the lines as we speak. But the lines remain in service.”

Rye Fire in Santa Clarita | SCE

In response, CAISO invoked its capacity procurement mechanism (CPM) to dispatch about 614 MW of local generation positioned to provide power should the lines go down, Greenlee said. The CPM units came online at about 2:30 p.m. Dec. 5 and are compensated outside the ISO’s normal market operations.

The Rye and Creek fires in northern Los Angeles County were considered a minimal threat to high-voltage lines in those areas, but Greenlee said CAISO was watching them closely.

Those fires have since been 90% contained, but the Thomas fire has grown to engulf 230,000 acres, making it the fifth largest in state history.

“The [Thomas] fire experienced extreme fire behavior with rapid rates of spread due to the predicted strong Santa Ana winds,” the state’s Department of Forestry and Fire Protection (Cal Fire) said.

Winds in the Santa Monica Mountains in Ventura County sustained speeds of 66 mph and gusted up to 85 mph. The agency is providing regular updates on the fires.

Red icons show active fires as of Thursday morning, black icons show fires in June-October 2017 | Google Maps and CalFire

“Damage assessment teams have not been granted access to fire-damaged areas of the Thomas fire,” SCE said in a statement last week. “When they gain access, progress of their work will be determined by weather conditions, terrain and the movement of the fires.” The utility is also providing updates on its website.

The cause of the fires has not been determined.

Pacific Gas and Electric is facing lawsuits for a separate set of large fires in October, but the cause of those fires is still under investigation as well. (See Wildfires Color California PUC Utility Decisions.) The California Public Utilities Commission recently denied San Diego Gas & Electric cost recovery for other destructive fires in 2007. (See Besieged CPUC Denies SDG&E Wildfire Recovery.)

December 8, 2017October 31, 2023

Massachusetts Awards $20M in Energy Storage Grants

By Michael Kuser

MARLBOUROUGH, Mass. — Gov. Charlie Baker on Thursday announced nearly $20 million in grants for 26 energy storage projects.

Baker | © RTO Insider

“The opportunity for people to store energy when prices are low and to access that storage when prices are high could have huge positive benefit to everybody,” Baker said. “There are times within the past few years when we have been paying the highest price in the world for our energy — up to $100/kWh.”

Baker spoke at University of Massachusetts Memorial Hospital, which received a $686,000 grant to integrate a 400-kW solar canopy and a 300-kW/800-kWh flow battery with combined heat and power. The project will not only reduce energy use and costs, but also help the hospital better handle unexpected power outages.

The awards ranged from $221,000 for a project at the West Boylston Municipal Light Plant, to $1.25 million awarded to each of four projects proposed by EnerNOC, Tesla, Constellation Energy Group and the Taunton Municipal Light Plant.

Judson | © RTO Insider

The program received nearly 70 strong proposals, which prompted the state to double the funding from a planned $10 million to $20 million, Department of Energy Resources Commissioner Judith Judson said. The projects would also draw an additional $32 million in matching funds pledged by developers or by host municipalities, she said.

The state awarded the grants as part of its Energy Storage Initiative and Advancing Commonwealth Energy Storage program, funded by the DOER through alternative compliance payments and administered by the Massachusetts Clean Energy Center.

Baker could have declared it energy storage week in the state as ISO-NE hosted a storage panel in Boston later in the day, following a Northeast Energy and Commerce Association storage seminar on Tuesday. The Massachusetts Institute of Technology will hold a clean energy and storage event in Cambridge on Friday. (See ISO-NE Preparing for Energy Storage Growth.)

Judson also appeared on the ISO-NE storage panel, as did Christopher Parent, the RTO’s director of market development. As of Dec. 1, Parent said, ISO-NE has 400 MW of energy storage in the interconnection queue, equal to about 3% of all generation applying to interconnect.

Full house as Massachusetts awarded $20 million in grants to 26 energy storage projects | © RTO Insider

Massachusetts also has a goal to have 300,000 electric vehicles registered in the state by 2025. The state’s $2,500 rebates are helping drive EV sales, illustrated by the 282 rebates issued in November, up from 153 a year earlier. (See Mass. Prepares for EV Growth, Alternative Energy Standard.)

December 7, 2017October 31, 2023

ISO-NE Preparing for Energy Storage Growth

By Michael Kuser

ISO-NE is working to ensure that its wholesale markets can accommodate an expected exponential growth of energy storage resources, an RTO manager said Tuesday.

“We want to be sure that our wholesale markets are favorable to all resource types equally, so when we think about energy storage, we want to make sure it fits in the box,” Carissa Sedlacek, ISO-NE director of market development, said during a Dec. 5 energy storage seminar hosted by the Northeast Energy and Commerce Association in Boston.

iso-ne energy storage wholesale electric market

| ISO-NE as of December 1, 2017

With 20 MW of energy storage already interconnected in ISO-NE and nearly 80 MW in the interconnection queue, the RTO is adjusting some of its market rules to accommodate the new and flexible resources coming online, Sedlacek said. (See ISO-NE Plans for Hybrid Grid, Flat Loads, More Gas.)

“How is that energy storage facility going to operate?” Sedlacek said. “Is it going to operate at full capacity for one hour, or is it going to operate at quarter-capacity for four hours? How is it going to respond if it’s coupled with wind or solar? Is it going to be there for longer durations? Is it going to be used more in the winter than in the summer? These are the types of questions we ask in the planning department as we consider new resources, especially something like energy storage.”

Spreading the Risk

ISO-NE predicts energy storage providers will largely focus participation in the RTO’s ancillary services market because many of them are not prepared to assume the financial burden of qualifying for the Forward Capacity Market (FCM) — or to confront the risk of coming up short on a capacity supply obligation (CSO), Sedlacek said.

| ISO-NE

“If you get a megawatt CSO that you cannot achieve, there will be a financial penalty,” Sedlacek said, noting that penalties go into effect June 1, 2018, leaving some storage developers “a little gun shy” about offering into the FCM. She noted that solar and wind participants in the FCM don’t typically attempt to qualify for their nameplate capacity, but only a percentage of nameplate (usually 40 to 42%) to ensure their obligation is achievable.

“Because under the [FCM], you’re on the hook to provide those megawatts,” she said.

Sedlacek explained how energy storage developers might hedge their risk by pursuing incentives offered for over-performing in the FCM.

“So you can figure out what your output would be over a four-hour period, because that’s what you have done analysis on and you think might actually last for a shortage of that [capacity amount],” she said. “That’s the megawatts you want to actually take on as the CSO, but be happy to take on additional megawatts or have more output on real shortage events, days or hours, and kind of scoop up the additional revenue.”

Wholesale Market Revenue

ENGIE subsidiary Green Charge Networks recently signed a 20-year agreement to supply Holyoke Gas & Electric with power from the first combined solar and storage project in Massachusetts, according to Jonathan Poor, Green Charge’s director of business development. While the 5-MW solar farm on the site of the retired coal-fired Mount Tom Station in Holyoke is currently in operation, the 3-MW battery will interconnect around May 2018, Poor said.

The storage project is particularly suited to organized markets in New England and New York because it will help firm up output from the solar farm and reduce capacity costs, he said.

“We see, at least in New York ISO and ISO New England, some of the business case coming from wholesale market revenue,” Poor said.

Future solar projects will likely include storage in the interconnection request, given the value of storage, he said.

“We appreciate how holistic the [Solar Massachusetts Renewable Target] program is in Massachusetts for energy storage, and we see a real opportunity to deploy solar and storage and are looking for repeatable use cases that we can scale,” Poor said.

Massachusetts Programs

Massachusetts Clean Energy Center CEO Stephen Pike said that most people know the state’s 2016 Energy Diversity Act for its solicitation for 9.45 TWh of clean energy, but the legislation also included an energy storage mandate, leading the state’s Department of Energy Resources earlier this year to set a 200-MWh storage target for 2020.

While some industry participants considered that goal to be less than ambitious, Pike said there were only 2 MW of storage deployed in Massachusetts when the department began preparing its 2016 State of the Charge report and 4 MW by the time of publication. (See Massachusetts Underwhelms with 200-MWh Storage Target.)

The state’s $10 million in grant funding from its Energy Storage Initiative spurred nearly 70 proposals for storage demonstration projects, Pike said, hinting that awards could be announced within a couple of days.

Richard Stuebi, president of Future Energy Advisors, said improving economics is driving the energy storage market.

“Batteries were $1,000/kWh a few years ago, and now they’re $300/kWh,” Stuebi said. “And, alongside declining cost of batteries, largely driven by the growing market demand for electric vehicles, the costs of all the other components of a complete energy storage system — inverters, control systems and racks — are falling too.”

| MOR-EV

Most of the 700 MW of energy storage currently deployed in the U.S. is utility-scale, and California dominates with 60% of the installed base and a mandate for nearly 2 GW in storage to be operational by 2020, Stuebi said.

But even places like Florida and Michigan, which Steubi hadn’t initially considered promising areas, could get interesting pretty quickly for behind-the-meter storage applications, he said.

December 7, 2017January 31, 2024

EUCI Panelists: Midwest Tx Plans Must Address Wind, Seams

By Amanda Durish Cook

INDIANAPOLIS — Two topics dominated the discussion this week among industry leaders, RTO officials and transmission planners attending EUCI’s Transmission Expansion in the Midwest conference.

One: The region must focus its transmission expansion efforts on moving wind output from vast resource areas in the west to population centers in the east.

And two: To support that effort, industry participants must overcome ineffective interregional processes among RTOs.

“You’ve got a lot of cheap wind resources where not a lot of people are — Minnesota, the Dakotas, Iowa — and you have to get this clean, affordable energy to where the people are,” Betsy Beck, director of transmission policy for the American Wind Energy Association, said during a Dec. 4 panel discussion. “There’s not enough transmission capacity to move it east where it’s needed.”

Beck said 35 GW of wind capacity is expected to come online in the U.S. by the end of 2020, joining the nearly 85 GW of current wind capacity. She noted that 20-year power purchase agreements are being signed in the Great Plains for less than $20/MWh.

Adam McKinnie, chief economist with the Missouri Public Service Commission, said he has observed a pattern of central states trying to push wind energy toward eastern states where power is more expensive. The eastern states, in turn, claim they can solve their resource adequacy and public policy goals by building new generation and won’t need the imports.

“How do you solve that?” McKinnie asked.

“That’s kind of the million-dollar question,” Beck laughed. “D.C. and the East don’t have a lot of space in their backyards for renewable development, and I think these states are starting to realize that.”

MISO interregional adviser Adam Solomon said the RTO’s 2018 Transmission Expansion Plan will include a new study on the impacts of renewables while also focusing on wind development needs and seeking to predict where future projects are likely to be sited. “We’ll try to find the trend within our footprint and better predict how that’s going to move in the future,” he said.

Seams and Order 1000

An effective wind transmission network in the Midwest will require interregional projects, conference panelists agreed.

Over the past year, MISO has worked with both PJM and SPP to identify large interregional projects, but the two separate efforts failed to produce a viable candidate after identifying just two serious contenders. (See MISO Confident in Tx Process with SPP Despite Lack of Projects.)

“Interregional projects have remained elusive,” Solomon said.

PJM Manager of Interregional Planning Chuck Liebold said MISO and PJM will try again next spring to identify a large interregional project, commencing another two-year coordinated system plan between the RTOs. Officials from both RTOs last week announced that the next Order 1000 project submission window will open in November 2018.

“All that study, hours and hours of analysis, and we have yet to pass a big interregional project,” Liebold said. “We have 200-something joint coordinated flowgates on the MISO-PJM seam. … It seems like there’s a natural area where there could be joint coordination on a project, but that hasn’t happened yet. There are some issues with our process that we keep ironing out over the years.” He also reminded attendees that “there’s no measuring stick that says you have to have an interregional project.”

“I don’t think people understand how jagged the seams are,” McKinnie said.

“I think it’s safe to say that meeting the goals of Order 1000 so far today have been elusive,” said Alan Meyers, ITC Holdings director of regional planning.

Order 1000 has failed to “uniformly encourage” transmission development and may actually be stifling it, he said. “I think there’s a tendency to focus on the competition rather than the planning and cost allocation. The competition is only the sizzle, but the planning and cost allocation is the steak.” ITC has transmission holdings in MISO, PJM, SPP and NYISO.

Meyers criticized RTOs’ past “arbitrary” cost allocations and voltage thresholds on interregional projects but said practices are improving. He said that while RTOs excel at regional transmission planning, they come up short when trying to plan interregional projects. “It may be the biggest area we can improve on,” he said.

Some audience members asked about the next steps for the $2.3 billion Grain Belt Express, a 780-mile HVDC transmission line that would move wind energy from the Midwest to eastern markets. Developer Clean Line Energy Partners last week asked the Missouri Supreme Court to review state regulators’ decision to refuse a development permit. The Grain Belt Express did not result from an RTO process and is not seeking cost allocation.

Mark Lawlor, Clean Line’s vice president of development, said that while SPP and MISO are creating small west-to-east lines, those projects don’t go far enough — literally.

“They’re needed, but they’re not connected. There’s failure to create a process that allows for interregional projects such as the one Clean Line is developing. There’s not a place for us. … Perhaps that’s for Order 1001,” he joked. “I don’t want to say this hasn’t gone right, but there’s no mechanism to facilitate these projects.”

Lawlor added that Order 1000 is still young and “really only created competition for a fraction of the transmission projects out there. There could be more room for competitive projects.”

TMEPs

MISO and PJM are poised to approve a five-project interregional portfolio this year, but it doesn’t contain the extended HVDC lines for which some in the industry had hoped.

This month, the RTOs’ boards of directors are expected to individually approve their targeted market efficiency project (TMEP) portfolio, composed of smaller, congestion-relieving interregional projects. PJM and MISO worked for three years to define the project type before getting FERC approval this year. (See FERC Conditionally OKs MISO-PJM Targeted Project Plan.)

All five TMEP projects this year are upgrades to existing systems. The projects, which have individual $20 million cost caps, will coincidentally cost $20 million combined.

On average, project costs will be allocated 69% to PJM and 31% to MISO, based on projected benefits, which are expected to reach $100 million.

“I think what MISO and PJM have done with TMEPs is prove that they can get something done. And I hope they’re not too discouraged that they don’t yet have a large interregional project,” Beck said.

However, Beck maintains that large, public policy interregional projects are going to be vital for the future of the Midwest, but unwieldy seams criteria and differing public policies will hold them back. “By having different rule sets, they create a lot of impediments,” she said.

“A lot of consensus will be needed,” Solomon said.

“As soon as they solve public health care, they’ll start in on public transmission policy,” Liebold joked.

“In the future though, we need to really look at what the Eastern Interconnect looks like and how we can move large amounts of power,” Beck said. She predicted that a handful of new HVDC lines will begin to take shape in the next few years, with others to follow.

“There’s a lot of folks out there that also think that microgrids are the wave of the future, and we don’t need any more transmission projects, and we should begin to take lines down, so I’m not betting just yet,” Liebold said.

McKinnie asked why MISO and SPP haven’t created their own TMEP process to deal with smaller congestion issues along their seam. Solomon said the TMEP process was largely driven by Northern Indiana Public Service Co.’s 2013 complaint against the MISO-PJM interregional planning process, but that MISO would like to implement a similar smaller interregional project type with SPP.

“So if I went back to commission and said the ‘squeaky wheel gets the grease,’ would that be correct?” McKinnie asked.

Solomon said that SPP is a relatively young RTO with less historical data, and while he thinks some SPP stakeholders might not be ready for such a cross-seams project type, he is hopeful they will be convinced of the benefits by observing the progress between MISO and PJM.

“I don’t want there to have to be a FERC complaint for this to get attention. We used to joke that the MISO stakeholder process was a FERC comment period. … We sometimes feel that we’re the kid sibling over on the SPP-MISO seam,” McKinnie said.

Bob Pauley, chief technical adviser with the Indiana Utility Regulatory Commission, urged gentler treatment of RTOs that must plan transmission systems with sometimes limited information.

“I don’t know of any empirical evidence where an RTO developed transmission where there was a better option available.

“I think it behooves us to remember the time before RTOs,” he reminded attendees, before adding jokingly, “When I worked with Thomas Edison and others, each utility had to plan their own needs as if they were an island.”

Pauley said “everyone would be better off” if utilities used the same degree of candor with RTOs as they do with their respective state regulatory bodies. He also said states should take a more active role in forecasting load.

Wind Catcher

American Electric Power’s Raja Sundararajan said his company’s $4.5 billion Wind Catcher project in Oklahoma is also bypassing the RTO transmission planning process in favor of self-funding to ensure it is realized. The project includes what will be the largest wind energy facility in the U.S at 2 GW and a dedicated 350-mile, 765-kV tie-line from the panhandle to Tulsa.

“This is the largest investment AEP has ever made; $4 billion is a massive amount, and we understand that,” Sundararajan said. He pointed out the project circumvented the RTO process because AEP did not have enough time to mount a complex transmission planning process for an expensive 765-kV line before wind production tax credits expire in 2020.

AEP settled on a 765-kV rating because it minimizes transmission line losses and doesn’t require converters, he said. Although AEP has not yet established a preferred route, most of the 350-mile stretch is located on farmland in Oklahoma, Arkansas, Louisiana and Texas. The company is planning to use 25-year extendable land leases with landowners. Regulatory approval is needed in all four states, which AEP hopes to obtain by April.

“Are we the only ones doing this? No. Especially in the Midwest, wind farms are so economical, especially for the ratepayer,” Sundararajan said, pointing to current wind projects by Public Service Company of Colorado, Northern States Power, Southwestern Public Service, MidAmerican Energy, PacifiCorp and Empire District Electric.

One audience member asked how AEP balances the massive wind project with apparently competing support for coal and nuclear subsidies.

“I’m not aware of it. I’m a transmission guy,” Sundararajan replied.

December 7, 2017

DOE: German Energy Struggles Sparked NOPR

By Rory D. Sweeney

PHILADELPHIA — The U.S. Department of Energy’s proposal to save coal and nuclear generating plants is intended to avoid a repeat of Germany’s energy woes, Under Secretary Mark Menezes told a PJM General Session on Wednesday.

DOE NOPR nuclear power German Energy — PJM’s Craig Glazer moderated the first panel at the PJM General Session, featuring FERC Commissioner Rob Powelson, DOE Undersecretary Mark Menezes and Jason Stanek, senior counsel for the House Energy Subcommittee. | © *RTO Insider*

Menezes recounted an international energy meeting this spring, where he said Energy Secretary Rick Perry and Secretary of State Rex Tillerson listened as German officials recounted economic hardships created after the country renounced nuclear power following the 2011 Fukushima nuclear disaster. To mitigate the price spikes, Germany built plants to burn lignite, a lower-quality coal than the traditional anthracite used at most coal-fired facilities.

“They are digging up lignite all over Germany. I have nothing against lignite, but you’ve got to dig up an awful lot of lignite to get the BTU content to produce [power],” Menezes said.

He said German officials told Perry: “If in fact you believe in what you’re saying in [using] ‘all of the above’ [energy resources], please stick to ‘all of the above.’ Try to avoid what happened here.”

FERC Commissioner Robert Powelson, speaking after Menezes, said PJM looms large in his deliberations on DOE’s Notice of Proposed Rulemaking. The NOPR called for additional compensation for “fuel-secure” power stations that sell electricity into organized energy markets and maintain a 90-day fuel supply.

“I think [the commissioners are] working constructively to put forth a potential solution and really work with our RTOs around problem-solving. … We’ll be able to address this issue in a way that, as I said, respects the balance within the organized markets … continues to deliver the value proposition of these organized markets” and maintains a balanced resource portfolio.

He said he discussed the issue with Perry and guaranteed an eloquent solution.

“I said to him, ‘I took high school calculus,’ and he said, ‘I didn’t.’ But, I said, ‘I hopefully can solve this one.’ … I’ve been in this rodeo long enough. I know how to calibrate and make decisions, and those decisions will be defensible.

“We are now seeing what we never thought we’d see, and even Democratic DOE secretaries have admitted it,” Powelson continued. “We’re seeing nuclear plants close, and we’re seeing them close at a rapid pace. And we’ve got to look at those issues. … I agree with the secretary when he says these markets aren’t pure. … As a state commissioner, I didn’t understand that back then until Mark gave me this homework assignment.

“I sat through plant closure announcements; it’s not a fun thing,” he added. “You’re going to see more state interventions. Get ready.”

Jason Stanek, senior counsel for the House Subcommittee on Energy and a former FERC staffer, said the committee isn’t planning a hearing on the issue, but it’s “looking forward to [FERC’s] thoughtful and deliberative process.”

“We have yet to have a hearing on that topic, and it’s one that has split our members not necessarily by party but by region,” he said. “They recognize that the entire industry is in a state of flux right now.”

Powelson also announced that incoming FERC Chairman Kevin McIntyre would be sworn in Thursday at 10 a.m.

“Tomorrow, we’ll have five” commissioners, he said. He added later that he did not know how that would affect FERC’s decision on the NOPR.

“If I knew, I would tell you. I’m usually very candid,” he said.

McIntyre’s arrival beats — by one day — the 120-day deadline before interim Chairman Neil Chatterjee could start appointing FERC staff.

Menezes also suggested that FERC might miss DOE’s requested deadline for a decision by one day.

“I think we have a big deadline you gave us; Dec. 11?” Powelson said to Menezes.

“I understand FERC may have a different date, maybe the 12th,” Menezes replied.

“The 12th? ’Tis the season,” Powelson responded.

December 6, 2017

FERC Claims Jurisdiction on EE, OKs Ky. Opt-Out

By Rich Heidorn Jr.

FERC has waded into yet another state-federal jurisdictional dispute, claiming “exclusive authority” over the participation of energy efficiency in wholesale markets but preserving a carveout it approved earlier for Kentucky utilities.

The commission’s ruling came in response to Advanced Energy Economy’s request for a declaratory order on FERC’s authority over energy efficiency resources (EER). AEE, which represents companies such as General Electric, Nest and Johnson Controls, filed the petition in June after the Kentucky Public Service Commission ruled that retail customers cannot participate in any PJM wholesale market without the state’s permission.

The PSC’s order was in response to a filing by East Kentucky Power Cooperative, which said it was buying more capacity than needed because of providers bidding EER products from its service territory into PJM’s capacity auction.

wholesale markets energy efficiency ferc kentucky utilities — | *Enervee.com*

AEE’s concerns focused on third-party EERs, such as those created when an aggregator contracts with the manufacturer and retailer of high-efficiency appliances, light bulbs or heating and cooling systems.

FERC energy efficiency — | *Enervee.com*

FERC sided with AEE, saying the commission “has exclusive jurisdiction over the participation of EERs in wholesale markets,” and that relevant electric retail regulatory authorities (RERRAs) “may not bar, restrict or otherwise condition the participation of EERs in wholesale electricity markets unless the commission expressly gives RERRAs such authority.” Commissioner Richard Glick, who was sworn in Nov. 29, did not participate in the Dec. 1 order (EL17-75).

PJM Integration

However, FERC said it would honor its 2004 order approving Kentucky Power’s integration into PJM, which granted the utility the right to prevent its customers from participating in the RTO’s demand response or load interruption programs. The opt-out stipulation was later extended to Duke Energy Kentucky and EKPC when they joined PJM.

FERC rejected opponents’ claims that AEE’s petition was premature. “We agree with AEE that the novel issues of federal and state jurisdiction presented here warrant commission guidance,” FERC said, noting that PJM also asked the commission to weigh in.

The commission also said that FERC Order 719 “does not provide for a RERRA to exercise an opt-out and bar or restrict the sale into the wholesale electricity markets of EERs originating in their state or local area.” The 2009 order required RTOs and ISOs to permit aggregators to bid DR on behalf of retail customers directly into the grid operators’ markets unless the RERRA bars participation by retail customers.

“Although in Order No. 719 and Order No. 745 the commission granted RERRAs an opt-out from allowing resources to participate as wholesale demand response, we find that the commission was not obligated to do so,” FERC said, citing the Supreme Court’s 2016 ruling in FERC v. Electric Power Supply Association. The EPSA ruling upheld Order 745, which required RTOs to pay DR the same LMPs as generation. (See Supreme Court Upholds FERC Jurisdiction over DR.)

The commission also said the effects of EER participation on the retail markets “are not substantial.”

“Unlike demand response resources, EERs are not likely to present the same operational and day-to-day planning complexity that might otherwise interfere with [a load-serving entity’s] day-to-day operations. Even if PJM’s add-back mechanism failed to ensure that an LSE’s procurement obligation was unaffected, we agree with AEE that any such impacts should be addressed through PJM’s tariff provisions and not through a broad prohibition on EER participation in wholesale markets.”

But FERC said it was “appropriate” to allow the Kentucky opt-out “as a longstanding agreement relied upon by the parties and entered into prior to the clarification of jurisdiction over wholesale demand-side management in EPSA and this order.”

The commission said although some EERs originating in Kentucky have cleared in PJM capacity auctions, “we find that any necessary market changes should be implemented in a manner that does not require changes to the [auction] results.”

The commissioners declined to state the requirements they would impose in the future if a retail regulator seeks to restrict third-party EER sales.

Back to the Courts?

The Supreme Court has issued three rulings interpreting state-federal jurisdiction under the Federal Power Act since 2015. The commission’s preservation of the carve out would seem to foreclose a court challenge by Kentucky regulators. But it’s no guarantee that other states lacking such agreements won’t seek to overturn the ruling. (See Court’s Reticence Frustrates Energy Bar.)

AEE nevertheless praised FERC’s ruling as a “win for advanced energy innovators and consumers alike.”

FERC’s assertion of jurisdiction “is critical for maintaining free and open competition, with all technologies competing on price and performance,” the group said.

December 5, 2017

NERC Parts Ways with Chief Security Officer

By Rich Heidorn Jr.

Just days after losing its CEO, NERC has seen another senior management departure.

Senior Vice President and Chief Security Officer Marcus Sachs, one of seven direct reports to NERC’s CEO, “resigned” effective Nov. 27, the organization said in a statement.

However, three sources knowledgeable about the matter said Sachs was forced to leave. One former NERC staffer said Sachs was ousted because of concerns by industry officials on the Electricity Subsector Coordinating Council (ESCC) that he lacked the background to lead the planned expansion of the Electricity Information Sharing and Analysis Center (E-ISAC).

“The ESCC didn’t have confidence in him taking the ISAC forward,” the former staffer said. “I don’t know if it was GridEx-related; I don’t know if it was storm-related or that Marc came from a communications background.”

Sachs joined NERC in May 2015 from Verizon, where he was vice president of national security policy. Prior to Verizon, he was deputy director of the computer science lab at SRI International and the founder of a computer security consultancy. He also worked for several months as cyber program director at the U.S. Department of Homeland Security and served more than 20 years in the U.S. Army. He has degrees in civil engineering and computer science in addition to a Ph.D. in public policy.

A second former NERC official said he was told Sachs was forced out but that he didn’t know the reason. “All I heard was that NERC forced him out,” the ex-staffer said. “My understanding is his departure was very sudden.”

But the first ex-staffer said the resignation “was supposed to be in the works before” Cauley’s Nov. 9 arrest on domestic abuse charges.

NERC did not respond to a request for comment Monday.

Sachs has joined Ridge-Lane LP, a merchant bank co-founded by former Homeland Security Secretary and Pennsylvania Gov. Tom Ridge. In an email, Sachs called his departure from NERC “a strategic move for me, which will allow me to assist other companies and organizations as they grow and develop.”

“I look forward to the next chapter of my career, and to be able to give back to others many of the lessons I have learned,” he added.

The ESCC, which serves as a liaison between industry and the federal government, is dominated by CEOs of investor-owned utilities.

Tim Roxey, a NERC vice president who serves as chief operations officer for the E-ISAC, was named interim chief security officer with responsibility for overseeing the E-ISAC and directing security risk assessment and mitigation activities. Bill Lawrence, a senior director with the E-ISAC who led GridEx IV last month, will assume day-to-day management of the center. (See Ukraine Attacks, ‘Fake News’ Color NERC GridEx IV Drill.)

MidAmerican Energy CEO William Fehrman, vice chair of the NERC Members Executive Committee, will provide “strategic counsel and guidance” on the E-ISAC’s expansion during the search for Sachs’ replacement, NERC said. Fehrman referred an interview request to NERC.

The E-ISAC is the primary security communications channel for the electricity sector, helping grid operators and others prepare for and respond to cyber and physical threats.

NERC’s 2018 Business Plan calls for improving the E-ISAC’s “technical and analytical capabilities with a goal of becoming the electricity industry’s leading, trusted source for analysis and sharing of security information.” The E-ISAC’s staffing will increase to 29 full-time equivalent employees from less than 20, funded by a $21.9 million budget, a $3.3 million increase from 2017.

“The long-term strategic plan is to transform the E-ISAC into a world-class intelligence collecting and analytical capability for the electricity industry,” according to the plan.

NERC General Counsel Charles Berardesco, who was appointed interim CEO following the Nov. 20 resignation of former CEO Gerry Cauley, said in a statement that he was “confident the E-ISAC, under Tim and Bill’s leadership, will continue to effectively carry out its responsibilities.” (See Cauley Resigns; NERC Launches Search for Replacement.)