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September 17, 2024

Trump Nominates Republicans Powelson, Chatterjee to FERC

By Rich Heidorn Jr.

President Trump reportedly has nominated Pennsylvania regulator Robert Powelson and Neil Chatterjee, senior energy policy adviser to Senate Majority Leader Mitch McConnell (R-Ky.), to fill two Republican vacancies on FERC.

Powelson and Chatterjee, who will seek terms expiring in 2020 and 2021, respectively, would restore the commission’s quorum, which was lost in February with the resignation of former Chairman Norman Bay.

Powelson, a member of the Pennsylvania Public Utility Commission, is the current president of the National Association of Regulatory Utility Commissioners — a familiar stepping stone for FERC commissioners. Both Commissioner Colette Honorable and former Commissioner Tony Clark served one-year terms as NARUC presidents before their appointments.

president trump ferc rob powelson neil chatterjee
Acting FERC Chair Cheryl LaFleur (left) and NARUC President Rob Powelson at NARUC’s 2017 Winter Meetings | © RTO Insider

Honorable announced last month that she will not seek a new term when hers expires in June, meaning Trump will be able to nominate two additional commissioners to join acting Chair Cheryl LaFleur.

McIntyre | Jones Day

Multiple outlets reported the nominations late Monday night. The White House has not officially announced the nominations as of press time. Numerous reports have also identified Kevin McIntyre, co-head of the energy practice at law firm Jones Day, as the third nominee and likely chairman.

Powelson

A fixture at NARUC meetings, Powelson is a big, back-slapping man known for his sense of humor. An avid Philadelphia sports fan, he is certain to engage in good-natured trash-talking with LaFleur, who occasionally wears Boston team jerseys to commission meetings.

He was nominated to the Pennsylvania PUC in 2008 and served as chairman between 2011 and 2015. His current term expires in 2019.

Powelson was elected NARUC president last November after serving as president of the Mid-Atlantic Conference of Regulatory Utilities Commissioners in 2014-15. (See “Powelson Replaces Kavulla as President,” Overheard at NARUC Annual Meeting 2016.)

He is on the Board of Trustees of Drexel University and previously served as the president of the Chester County Chamber of Business & Industry, in suburban Philadelphia. He joined the Chester County chamber after serving as director of government relations for the neighboring Delaware County Chamber of Commerce and a stint as staff assistant to former Rep. Curt Weldon (R-Pa.).

He became the subject of some controversy in March when he told an industry conference that opponents of pipeline projects are engaged in a “jihad.”

He later apologized. “I used the word ‘jihad’ while characterizing the actions of individuals who have engaged in threatening or disruptive behavior: interrupting public meetings, preventing officials from speaking, harassing federal and state regulators along with their families, and otherwise attempting to halt the public discussion about important infrastructure projects,” Powelson wrote in a statement, as reported by State Impact. “In retrospect, that was an inappropriate choice of words.”

In 2014, Powelson resigned from the Greater Philadelphia Energy Action Team — a group dedicated to expanding the energy industry in southeastern Pennsylvania — after critics said it put him in a conflict of interest.

He has a bachelor’s in political science and government from St. Joseph’s University and a Master of Governmental Administration in public finance from the University of Pennsylvania.

Chatterjee

Chatterjee, a former lobbyist for the National Rural Electric Cooperative Association, became McConnell’s energy adviser in 2011 after working for two years as a staff aide for the coal state senator.

President Trump FERC Neil Chatterjee Rob Powelson
Chatterjee University of Cincinnati

A November 2015 interview with Bloomberg Government identified Chatterjee as “the McConnell adviser determined to stop the Clean Power Plan.”

“Leader McConnell promised to do everything he could to fight for the people of Kentucky, who were concerned about the impact the Clean Power Plan would have on their jobs, bills and way of life,” Chatterjee, who said he drives a hybrid car, told Bloomberg. “He is going to continue that fight. It is an honor and a privilege for me to staff him.”

Chatterjee told Bloomberg his mentors include C. Boyden Gray, who as counsel to President George H. W. Bush was involved in drafting the 1990 Clean Air Act amendments, the Energy Policy Act of 1992 and a cap-and-trade system for acid rain emissions.

Chatterjee graduated from St. Lawrence University and received a law degree from the University of Cincinnati College of Law. Before joining McConnell’s office, he worked for the House Republican Policy Conference, former Rep. Deborah Pryce (R-Ohio) and the House Ways and Means Committee.

Eversource Earnings Up, Northern Pass Seen on Schedule

By Michael Kuser

Eversource Energy on Wednesday reported first-quarter earnings of $259.5 million ($0.82/share), up 6.3% from $244.2 million ($0.77/share) in the same period a year ago off increased investment in transmission.

CFO Phil Lembo said in a conference call with analysts Thursday that through March, Eversource has invested more than $146 million in 28 transmission projects comprising the Greater Boston and New Hampshire Solution, with work expected to be completed in 2019. The company also has invested more than $141 million in 27 small projects in Greater Hartford, all of which should be completed by next year.

Transmission earnings were up 11% from a year ago to $94.2 million, the company said. Electric distribution and generation earnings improved 5.26% year-on-year to $114.1 million, reflecting higher distribution revenues and lower property tax expense, which were partially offset by higher storm restoration costs and higher depreciation expense. Natural gas distribution contributed 19.6% of earnings with $50.8 million in the first quarter, a negligible decrease from last year.

The company reaffirmed its 2017 earnings-per-share guidance of $3.05 to $3.20 and its projected 5 to 7% long-term EPS growth rate.

Northern Pass Moving Toward 2018 Construction

Together with partner Hydro-Québec, Eversource will bid the Northern Pass transmission project into the request for clean energy proposals in Massachusetts to bring Canadian hydropower into New England. The RFP is for up to 9.45 TWh annually for up to 20 years; bids are due on July 27; and projects will be selected for negotiations by Jan. 25, 2018. Bay State Wind, a 50/50 partnership between Eversource and DONG Energy, also will bid into a separate RFP exclusively for wind projects south of Martha’s Vineyard.

eversource energy earnings
Hydro-Québec Substation at Ayer, Mass.

The New Hampshire Site Evaluation Committee began hearings on Northern Pass in April. The company expects those to conclude, and the U.S. Department of Energy to have issued a final environmental impact statement, by Sept. 30. The Eversource timeline foresees a presidential permit in the fourth quarter and construction beginning in January 2018.

eversource energy earnings
| Eversource

Regulatory Activity

The Massachusetts Department of Public Utilities in June will begin hearings on the electric rate reviews Eversource filed in January for NSTAR Electric and Western Massachusetts Electric — which include a proposal to combine the two utilities.

“FERC approved that combination earlier this year,” Lembo said. “We expect to get a decision on the case around the end of November with new rates effective in January of 2018.”

In Connecticut, Eversource joined the Office of Consumer Counsel and the attorney general on April 18 in filing a motion to modify the merger agreement with Connecticut Light and Power that was approved by the Public Utilities Regulatory Authority in 2012. The motion jointly requested that PURA extend the deadline for implementing new rates to July 1, 2018, and it was approved on April 20.

The day of the conference call, PURA approved revised rates for residential and business customers of CL&P and Avangrid’s United Illuminating. According to PURA’s statement, effective July 1, 2017, Eversource’s residential generation rate will increase slightly from 7.87 cents/kWh to 8.01 cents/kWh. UI’s residential generation rate will decrease from 9.26 cents/kWh to 7.6 cents/kWh. The new rates will be in effect through the end of 2017.

Return on Equity

Lembo also commented on the D.C. Circuit Court of Appeals’ April 18 ruling overturning FERC’s 2014 order setting the base return on equity for Central Maine Power and other New England transmission owners at 10.57%. The court said the commission failed to meet its burden of proof in declaring the previous 11.14% rate unjust and unreasonable. (See Court Rejects FERC ROE Order for New England.)

“The court decision is still recent, and really, the New England transmission owners as a group need to decide what the next steps will be,” said Lembo, adding that the TOs in June need to file a proposed regional network service rate.

“One could say that the last approved ROE by FERC is the 11.14% … so in the [rate] request, we’re looking for a 10.5% ROE in the case, and the total rate increase is about $60 million at NSTAR Electric and about $36 million at Western Mass Electric,” he said. Lembo later in the call said that NSTAR at the end of 2016 “was probably a little shy of that number of 10.5% when you do all the calculations for Massachusetts, and Western Mass was closer to 9%, so not at the levels that we were looking for in this case.”

Eversource concluded its presentation to analysts by showing how natural gas pipeline projects lack funding or are delayed, trapping gas just west of New England. Pipeline capacity from the west (New York, Pennsylvania and Ontario) is 3 Bcfd, mostly contracted to local distribution companies, while New England LDC load on a cold winter day totals more than 4 Bcfd. Generators must rely on secondary capacity or imported LNG and Canadian offshore supplies to serve their needs, creating price/reliability issues. Meanwhile, offshore natural gas production in Eastern Canada is down more than 50% from its peak and continuing to decline.

Quotes based on the transcript provided by Seeking Alpha.

WEC Posts Strong Quarter Despite Rate Freeze, Demand Decline

By Amanda Durish Cook

WEC energy group wisconsin public serviceWEC Energy Group turned a larger profit in the first quarter despite warm weather and slumping electricity demand in the company’s Midwest markets — coupled with an ongoing rate freeze.

The company reported $356.6 million ($1.12/share) in net income for the first three months of this year, up from $346.2 million ($1.09/share) during the same period in 2016. Revenue increased 5% to $2.3 billion.

However, retail deliveries of electricity for WEC’s Wisconsin and Michigan utilities were down 1.1% year-over-year, excluding consumption at iron ore mines in Michigan’s Upper Peninsula. Residential use was down 2.1%.

CEO Allen Leverett attributed the extra income to more effective cost controls, better-than-forecasted electric fuel recoveries and the decoupling mechanisms at WEC’s Illinois and Minnesota gas utilities — all of which helped to offset the effects of warm weather. Decoupling separates a utility’s profits from energy commodity sales, with rates of return adjusted to meet revenue targets.

Leverett said WEC will have to continue to operate tightly over the next two years after its We Energies subsidiary last month filed a settlement with Wisconsin regulators agreeing to freeze all business and residential base rates. Twenty-four of the utility’s largest business customers have so far signed on to the agreement, which will hold base rates steady through 2019.

“This will make for a total of four years that base rates will be flat,” Leverett said during a May 2 earnings call. “This would essentially give our customers price certainty through 2019 and require us to continue to manage our costs aggressively.”

The proposed agreement would extend current earnings-sharing mechanisms in which return on equity is shared equally between customers and shareholders, while earnings above a 10.5% return are given back to customers. That arrangement would be extended through 2019 at Wisconsin Electric and Wisconsin Gas, with a similar two-year mechanism put in place next year at Wisconsin Public Service.

“Settlements are uncommon in Wisconsin, but at this point, I expect the process to move expeditiously,” Leverett said, adding that the deal will allow customers with expiring pricing options to avoid a price increase.

UMERC Project Map | WEC Energy

WEC’s bid for regulatory approval for the construction of two new gas-fired plants in Michigan’s Upper Peninsula is also moving as expected, Leverett said. The two plants will serve the newly formed Upper Michigan Energy Resources Corp., a partnership of WEC subsidiaries Wisconsin Electric Power Co. and Wisconsin Public Service. (See Michigan Upper Peninsula Getting its Own Utility.)

The company has obtained all local approvals for the plants and is just awaiting a go-ahead from the Michigan Public Service Commission, which Leverett anticipates will happen.

“As you may recall, our last several major proceedings in Michigan have resulted in settlements which the commission approved. We would welcome a similar outcome in this case,” he said.

WEC will also invest about $300 million to modernize the Peoples Gas distribution system in the Chicago area. Leverett said that program is continuing as planned, even while the company awaits a review decision from the Illinois Commerce Commission that should come later this year.

CAISO Proposes Rules for Distributed Resources, Storage

By Jason Fordney

CAISO is moving forward with an initiative meant to ease the integration of distributed resources into its markets.

The main goal of the program: to make it easier for grid-connected resources such as rooftop solar, energy storage, plug-in electric vehicles and demand response to participate in the ISO’s market operations, creating more system flexibility and reducing carbon dioxide emissions.

“The number and diversity of these resources are growing and represent an increasingly important part of the resource mix,” CAISO said in its revised proposal.

On May 4, CAISO provided an update on phase two of its Energy Storage and DER initiative, which will propose changes that are due to be reviewed by the Energy Imbalance Market (EIM) Governing Body on July 13 and submitted to the ISO’s Board of Governors for approval during its July 26-27 meeting.

The proposals involve improving the accuracy of DR contributions through alternative energy usage baselines, distinguishing between charging energy and station power for storage resources, and developing a net benefits test for DR resources that participate in the EIM.

Expanded Baseline Options

According to CAISO, a majority of market participants support a set of baselines to assess the performance of proxy demand resources — DR aggregations of retail customers — that was developed by a stakeholder working group.

caiso energy storage station power load
| CAISO

While the current “10-in-10” baseline methodology is considered accurate for many large commercial and industrial customers, stakeholders don’t think it is appropriate for all customer types, prompting the working group to propose additional baselines. Using the 10-in-10 methodology, the ISO calculates a baseline by examining the 45 days prior to a trade date and finding 10 “like” days in which no DR was required. The ISO then uses hourly average meter data to create a baseline representing a typical load profile, and the resource is paid for reducing usage below the baseline.

Under the new proposal, baselines for residential resources would be based on a four-day weather match that estimates what electricity use would have been in absence of DR dispatch under similar weather and on similar days, and using a control group of similar users.

Commercial baselines would be based on the 10-in-10 method with a 20% adjustment cap, an average of the previous five days and a control group. Baselines are adjusted using actual load data in the hours preceding a DR event to better reflect variables that might not be present in the historical data.

“Stakeholders who supported the proposal stated that the use of additional baselines for residential and commercial customers would improve the accuracy and reduce bias when compared to the 10-in-10 baseline,” CAISO said.

Joint Review of Station Power Rules

Another working group is developing new market rules for energy storage resources.

CAISO is working with the California Public Utilities Commission to distinguish between station power and wholesale charging energy with respect to energy storage devices. The regulator is seeking to redefine station power — electricity used by a generator itself — from a retail perspective, and the ISO said it is important that the rules do not conflict with each other.

The ISO is proposing to simplify its definition of station power as energy used to serve a resource’s own load and settled under a retail tariff.

CAISO said it proposed the changes because it is concerned that storage resources will commingle their charging load and station power load and use wholesale, ISO-metered electricity to serve station power load. If this happens, either the local retail electricity provider is not getting paid for serving station power, or the storage resource is getting charged twice at both the wholesale and retail level for the power.

One option would be to require that wholesale load and retail load be metered separately, but the grid operator is examining whether there are other ways to solve the problem.

CAISO has also proposed revisions to the DR net benefits test that establishes the price threshold above which DR bids are measured. ISO staff and the internal Market Monitor agree that there is a gap in the test’s formula.

The proposal would enable the DR benefits calculation to include natural gas price indices beyond California in order to accommodate EIM participants outside of the state, allowing them to participate as DR resources in the CAISO market.

Generation Woes Drive down NRG Q1 Earnings

By Michael Kuser

NRG Energy posted sharp losses in the first quarter on lower hedge margins and declining capacity revenues in the eastern U.S., signaling that 2017 is turning out to be a predicted “trough year,” CEO Mauricio Gutierrez said.

NRG Energy CEO Mauricio Gutierrez | NRG

The company lost $203 million ($0.52/share) during the quarter, compared with net income of $47 million ($0.24/share) for the first three months of 2016.

“The roll-off of higher-priced hedges that were executed after the polar vortex of 2014, lower capacity revenues in the East and a few known one-time items accounted for almost 75% of the total decrease,” Gutierrez told analysts during a May 2 earnings call.

NRG management last quarter established a special committee to make recommendations to the company’s board on its stated initiatives, especially regarding refinancing of debt for subsidiary wholesale electricity provider GenOn Energy, which the company last year said might be forced to file for Chapter 11 bankruptcy protection.

ERCOT Most Promising, Needs Better Price Signals

Market fundamentals make ERCOT the most attractive market for NRG, but management said it wants to see improved price signals before making more capital expenditures there. With future reserve margins in the high teens, the company is focusing on how increased loads, fewer new builds and more retirements can quickly tighten the market and create scarcity conditions in Texas.

ceo mauricio gutierrez
W.A. Parish Power Plant in Thompsons, Texas

“ERCOT has historically understated the actual number of megawatts leaving the system. … Looking forward, we see the same anemic estimate for retirements in the reports, assuming only 840 MW between 2017 and 2022,” Gutierrez said.

NRG last month announced that it will mothball Greens Bayou 5, taking 371 MW out of the ERCOT system.

“And we believe that there are close to 5 to 6 GW of already identified generation at risk today in the market,” Gutierrez said.

East Challenges Margins

Low natural gas prices and new efficient generation in the East continue to challenge NRG margins, although PJM this month will implement its first 100% Capacity Performance auction, helping the company maintain a positive outlook on capacity markets.

ceo mauricio gutierrez
| NRG

The higher reliability requirement under this new construct will be problematic for megawatts that cleared in previous auctions as base capacity, including less reliable generation and demand response.

“These resources will have to make a decision between taking themselves out of the market or pricing in a higher reliability premium,” NRG said.

The company is concerned about recent actions by various states that it thinks could undermine the integrity of competitive markets.

“Out-of-market subsidies and contracts bestowed pricing that was needed to attract new capital investment, but often [by] raising prices for the end users,” Gutierrez said. “We and a number of other parties have filed legal challenges to the nuclear subsidies in both New York and Illinois because we believe they’re not legal and because regulators should focus on crafting competitive solutions for public-policy objectives.”

Other first-quarter highlights included the transfer of 311 MW of utility-scale solar to subsidiary NRG Yield for $130 million. The company also offered NRG Yield its remaining 25% interest in NRG Wind TE Holdco, an 814-MW portfolio of 12 wind facilities.

NRG also started construction on the 600-MW Carlsbad Energy Center in Southern California, which it expects to complete on deadline in the fourth quarter of 2018.

Texas PUC Agrees to Take up SPP, SPS Request on ROFR

By Tom Kleckner

The Public Utility Commission of Texas last week agreed to take up SPP and Southwestern Public Service’s joint request to determine whether Texas law includes a right of first refusal that overrides FERC Order 1000.

SPP and SPS filed a petition in February asking the commission to consider whether the RTO can designate entities other than the incumbent utility to construct and own regionally funded transmission facilities in Texas outside the ERCOT service area. (See SPS, SPP Ask Texas to Rule on Transmission Competition.)

The commissioners briefly debated sending the matter to the State Office of Administrative Hearings, which manages contested cases and conducts hearings for other state agencies, before agreeing to hear the case instead.

“I think this issue is squarely in front of the commission,” PUC Chair Donna Nelson said. “I think the commission needs to weigh in on this issue, and I think this is the appropriate venue to decide that.”

ferc order 1000 puct spp
PUCT Commissioners left to right: Ken Anderson, Donna Nelson and Brandy Marty Marquez | © RTO Insider

Commissioner Ken Anderson agreed, saying the docket (46901) is “going to be a pure question of law.”

Anderson also proposed suspending the procedural schedule and setting a revised timetable for filing briefs and replies. Staff is also preparing a preliminary order.

“I think the various proposed list of issues for the parties were a bit broad in some areas,” Anderson said. “I think the parties would benefit from us not only laying out exactly what the issue is before us but laying out the issues we’re not going to decide — one of which is rights under Order 1000 at FERC.”

SPS contends that the state’s Public Utility Regulatory Act (PURA) allows it, as the incumbent utility operating outside ERCOT, the ROFR to build in the service area prescribed by the PUC. That would prevent a potential competitive project under Order 1000.

The project in question, the 345-kV Potter-Tolk transmission line in the Texas Panhandle, was pulled from SPP’s 10-year planning assessment last month. SPP’s Board of Directors has directed staff to conduct a congestion study in the area, due by April 2018. (See SPP Board Cancels Panhandle Line, Seeks New Congestion Study.)

PUC staff said the project’s deferral meant the joint petition was “no longer ripe for consideration” and recommended dismissing a declaratory order.

SPP and SPS responded with another joint filing May 2, saying the RTO’s decision to pull the Potter-Tolk project “has not rendered this action moot.”

“Parties still need guidance on an important issue of Texas utility law, and dismissal of this docket would simply transfer the responsibility for providing that guidance from the commission to a federal district court,” SPP and SPS said. The commission was more experienced in “construing and implementing” PURA than a court, they said.

SPS filed a lawsuit in a state district court in January, seeking approval to build the project and an injunction prohibiting SPP from issuing a notification-to-construct. The two parties agreed to suspend the proceeding to give the PUC an opportunity to decide how to interpret PURA.

PUC Approves CCN for Entergy Line

The PUC awarded a certificate of convenience and necessity to Entergy Texas (ETI) for a 23-mile, 230-kV transmission line near Beaumont, Texas. ETI was last month able to reach an unopposed agreement with all parties for the project, which is expected to cost $66.8 million (46248).

ferc order 1000 puct spp
Donna Nelson’s new studio portrait | PUC of Texas

“This is an example of a transmission line, the process being done very well,” Anderson said, noting “what amounts to unanimous agreement from all the landowners.”

The commissioners also extended their time before ruling on a rehearing request from Southern Cross Transmission in its effort to build an HVDC transmission line capable of carrying more than 2 GW of electricity from Texas to Southeast markets (Docket 45624).

All three commissioners were unpersuaded by Southern Cross’ arguments, but Anderson said he was leaning to grant its rehearing request. He said he plans to file a memo in the docket to “strengthen the order.”

A Teary Farewell to Nelson

The meeting was Nelson’s last after almost 21 years with the PUC, after announcing in April that she would be stepping aside. Nelson has been on the commission since 2008 and was named chairman in 2011. (See Texas PUC Chair Nelson Stepping Down.)

Nelson received several rounds of applause from the room, and she choked up when trying to thank those around her.

“Seriously, I’m just sick. That’s why I’m so teary. It’s not because I’m sad,” she said.

Nelson thanked her fellow commissioners, the PUC staff, the legal counsel that “practices in front of us” and the court reporters in what has become her home away from home.

“The PUC is really my family,” she said. “I’m not sure where my future will take me other than a long vacation for several months.”

Ironically, the meeting was Nelson’s first since her official portrait was mounted in the hearing room.

Nelson’s last day on the PUC will be May 15. Texas Gov. Greg Abbott will nominate her successor, but he has given no indication of a timetable. The state legislature is in its last month, which could be delaying any announcement.

Commissioner Brandy Marty Marquez will fill in for Nelson on SPP’s Regional State Committee and any other interactions with the RTO.

NiSource Pegs Q1 Success on Infrastructure Investments

By Amanda Durish Cook

NiSource owes its “strong” first-quarter performance to the success of its infrastructure spending strategy, which the company intends to keep pursuing, according to CEO Joseph Hamrock.

infrastructure modernization program NiSourceThe company earned $211.3 million ($0.65/share) last quarter, compared to $186.6 million ($0.58/share) in the first quarter of 2016. Operating income was $416.5 million, up from $381.4 million a year ago.

NiSource will invest up to $1.7 billion on new utility infrastructure this year and plans to continue spending along those lines for the next few years, company leaders said during a May 3 earnings call.

“We … expect to invest $1.6 billion to $1.8 billion annually in our utility infrastructure programs from 2018 through 2020,” Hamrock said. “The program investments are part of our more than $30 billion of identified long-term investment opportunities.”

Early this year, the company saw favorable outcomes on multiple rate cases related to gas pipeline investments, including settlement of a base rate case in Virginia and approval of bill surcharges for gas infrastructure programs in Massachusetts and Ohio. The company also filed a base rate case in Maryland, as well as a long-term gas infrastructure replacement plan update in Ohio that would allow for recovery of about $235 million in investments made last year.

In February, NiSource subsidiary Northern Indiana Public Service Co. began recovering about $46 million in costs incurred as part of a seven-year, $1.25 billion electric infrastructure modernization program extending to 2022. NIPSCO’s $824 million gas infrastructure modernization program is being completed alongside the electric upgrades.

NIPSCO is also seeking approval to perform $400 million in environmental upgrades at its Michigan City and R.M. Schahfer coal-fired plants in northwestern Indiana to store coal ash and prevent groundwater pollution, despite the planned closure of two Schahfer units by the end of 2023. (See NIPSCO Considers Closing 4 Coal Units in 7 Years.) NIPSCO officials have said that new EPA rules on coal ash contributed to the partial Schahfer closure. The utility filed the request with the Indiana Utility Regulatory Commission in November 2016 and expects a ruling sometime this year.

Michigan City Generating Station | © Adam Elmquist

NiSource officials also said that NIPSCO is on schedule to complete two major transmission projects designed to move wind power into the eastern U.S. Slated to be in service in late 2018, the 100-mile, 345-kV Reynolds-Topeka line in northern Indiana and 65-mile, 765-kV Greentown-Reynolds line north of Indianapolis have combined costs of nearly $600 million.

Con Edison Q1 Earnings Up 2.3%

By Michael Kuser

Consolidated Edison on Thursday reported first-quarter revenues up broadly across its operations, with results reflecting regulatory charges, changes in rate plans and weather’s impact on steam revenues.

The company’s $3.23 billion in revenue for the period represented a 2.3% increase over the $3.16 billion recorded in the first quarter of 2016.

Con Edison earnings
ConEd

According to its earnings presentation, Con Ed’s electric distribution business earned $1.93 billion in the quarter, up 1.2% from $1.9 billion in the same period a year ago. The natural gas segment’s earnings jumped 27.5% to $862 million, and steam revenues — the unit mostly serving Manhattan skyscrapers — climbed 15.5% to $298 million.

Related Developments

The New York Public Service Commission in March issued an order that changes the way distributed energy resources are compensated, which affects the holding company’s two regulated utility subsidiaries, Consolidated Edison Company of New York (CECONY) and Orange & Rockland Utilities. (See NYPSC Adopts ‘Value Stack’ Rate Structure for DER.)

According to the company’s most recent filing with the U.S. Securities and Exchange Commission, to provide a gradual transition from net energy metering, the PSC allowed “all existing resources to keep their current rate treatment and will delay making significant changes to policies affecting new residential and small commercial rooftop solar until 2020. Larger installations, including new commercial and industrial projects and new community solar projects, will be paid for the value of their exports to the electricity distribution system.”

con edison earnings
Upgrading generating stations | ConEd

The New Jersey Board of Public Utilities in February approved a stipulation of settlement for a Rockland Electric rate plan commencing in March 2017, which provides for “an electric rate increase of $1.7 million, reflecting a return on common equity of 9.6% and a common equity ratio of 49.7%.”

Con Ed reported its Clean Energy Businesses subsidiary had 1,133 MW of renewable energy projects in service and 398 MW under construction at the end of the quarter. Regarding Con Ed Transmission, FERC in March issued a revised schedule for the Mountain Valley Pipeline, setting June 23, 2017, for completion of the environmental impact statement and Sept. 21 as the 90-day federal authorization decision deadline.

Energy Panel Weighs Efforts to Defend Against EMPs

By Wayne Barber

WASHINGTON — Senate witnesses agreed Thursday that the threat posed by electromagnetic pulse attacks is a major concern but differed on the adequacy of public and private efforts to protect the electric grid.

The Senate Energy and Natural Resources Committee heard testimony from six witnesses on EMPs, policy options for protecting energy infrastructure and improving capabilities for restoring the system after an attack.

Chair Lisa Murkowski (R-Alaska) said there is heightened concern over the threat of EMPs — blasts of electromagnetic energy from a nuclear weapon that can disrupt or destroy microprocessors and other electronic devices — because of the potential spread of nuclear weapons to nations such as North Korea and the ubiquity of electronics.

electromagnetic pulse EMP
Murkowski (left) and Gingrich | © RTO Insider

“This has magnified the impact, as compared to the potential impact in the 1960s, that an EMP burst could now have on the electric grid, the technologies that rely on electronics and our daily lives,” she said.

The broad discussion also veered into risks associated with cyberattacks as well as naturally occurring geomagnetic disturbances (GMDs).

Bleak Picture

electromagnetic pulse EMP
Cooper | © RTO Insider

The bleakest pictures were painted by former House Speaker Newt Gingrich and Ambassador Henry F. Cooper, a Ph.D. engineer and former director of the Defense Department’s Strategic Defense Initiative.

Cooper said that most federal and state efforts to safeguard the electric system against low-probability, high-risk attacks have been “grossly inadequate.” He said the U.S. government has not devoted enough attention to EMP attacks that are “known to be included in the doctrine and planning of Russia, China, North Korea and Iran.”

Because no defense is perfect, Cooper said more effort should be made to “harden” critical infrastructure against “the full complement of threats.”

Gingrich said that while North America has done an excellent job of developing an efficient electric grid, this efficiency makes it inherently “fragile.”

A widespread grid failure that lasts a long time could be more damaging than the terror attacks of Sept. 11, 2001, Gingrich said. The former congressman, who wrote about the threat in a 2011 book, “To Save America,” alluded to the possibility of hospitals having patients die for lack of clean water and other services.

“Here we are gambling with our civilization,” Gingrich said. He also cited NASA research that he said suggests Earth could be overdue for a major solar storm that could disrupt much of the grid.

Government is on the Case

While the domestic electric grid is a “complex ecosystem” where disruptions can cascade, much work has been done to safeguard the power system, said Caitlin Durkovich of strategic consulting and advisory firm Toffler Associates.

“There is no doubt we live in a dangerous world,” said Durkovich, the Department of Homeland Security’s assistant secretary for infrastructure protection under President Barack Obama. “The bottom line is the risk to digital and physical infrastructure has grown and our critical infrastructure is more vulnerable than it was a few decades ago,” Durkovich said.

“I want to be clear: We have not ignored the threat of an EMP,” Durkovich told the committee.

Sen. Jim Risch (R-Idaho) also defended the government’s efforts to protect the grid. “These issues have not been ignored by the United States,” Risch said.

But many of the defense efforts are not something that can be discussed in public sessions, Risch said. At the same time, “there is not enough money in the world to protect us 100%,” he added.

FERC, EPRI Recap Ongoing efforts

Acting FERC Chair Cheryl LaFleur offered a rundown of FERC’s and NERC’s efforts to protect against grid disruptions.

The subject of EMP and GMD events have been the topic of “significant scientific research and debate, as well as broad discussion among regulators, elected officials, industry and other stakeholders,” LaFleur said.

In 2014, FERC directed NERC to develop a reliability standard that addresses physical security threats. (See FERC Nixes Gov’t Veto Power from NERC Physical Security Standard.) Last September, FERC approved a NERC reliability standard requiring grid operators to assess and protect against the threat of geomagnetic disturbances. (See FERC Approves GMD Reliability Standard.)

“As noted above, the GMD and physical security standards help provide protection against particular aspects of the EMP threat,” LaFleur said. “However, FERC has not directed NERC to develop a standard specifically targeting EMP. To be clear, I believe this is the result of reasoned consideration of the issue.”

Robin Manning, the Electric Power Research Institute’s vice president for transmission and distribution, briefed the Senate panel on his organization’s research on GMDs, EMPs and “high-altitude EMP” (HEMP) events.

“EPRI has been researching GMD for many years, with significant applications now implemented across the electric industry,” Manning said. “Implications and solutions for EMP and HEMP are less understood. Much of the available information is not specifically applied to electric utilities, making it very difficult for utilities and regulators to understand effective options for protecting energy infrastructure,” Manning said.

Wailes | © RTO Insider

Lincoln Electric System CEO Kevin Wailes, co-chair of the Electricity Subsector Coordinating Council, testified on behalf of the American Public Power Association.

Wailes said he is skeptical of suggestions in some quarters that the power sector “fully gold plate” the entire grid so it could “theoretically, at least partially survive a high altitude nuclear event.” There is no consensus on what measures should be taken or how effective or costly they might prove, Wailes said.

PGE Affirms Strategy to Help Meet Calif. Environmental Goals

By Robert Mullin

Despite President Trump’s moves to dismantle his predecessor’s climate change policies, Pacific Gas and Electric isn’t having second thoughts about its strategy of capitalizing on California’s greenhouse gas reduction goals, the utility’s new chief executive said.

“We believe that, regardless of what happens at the federal level, California will continue to lead the way in transitioning to a clean energy economy and we are absolutely committed to remaining a key partner in the state’s efforts,” PG&E CEO Geisha Williams said during a May 2 call to discuss quarterly earnings.

PG&E earned $576 million ($1.13/share) during the first quarter of this year, compared with $107 million ($0.22/share) during the same period a year ago, when the utility recorded $381 million in expenses related to the September 2015 Butte Fire. The blaze was sparked after a tree came into contact with a company-owned power line.

Operating revenues for the quarter were up 7.4% to $4.27 billion on a 43% increase in natural gas sales, just under a third of which was attributable to booking out-of-period revenues stemming from a 2016 decision by the California Public Utilities Commission related to the previous under-collection of gas transmission fees. PG&E’s electricity sales were down 2% from a year earlier to $3.07 billion.

Williams said that California’s transition to a cleaner economy would require state regulators to enact measures that “ensure a fair allocation” of electric supply costs to investor-owned utility customers that choose to depart for the state’s growing number of community choice aggregators (CCAs) and direct access energy providers.

Last month, the state’s three IOUs — which also include Southern California Edison and San Diego Gas & Electric — recently filed a proposal with the PUC seeking changes in how the utilities’ costs for legacy energy contracts are allocated among existing and departing customers. That plan is intended replace the current power charge indifference adjustment (PCIA) with a new system the utilities have dubbed the portfolio allocation methodology (PAM). (See Utility Proposal Would Increase Legacy Costs for California CCAs.)

“As California continues to engage in discussions on the ‘utility of the future,’ we view this as a foundational step for the continued growth of CCAs or other choices that our customers may have in the future,” Williams said, noting that the state’s CCAs also agree about the need to reform the PCIA.

PG&E has also kicked off a $130 million pilot to build the infrastructure to support 7,500 electric vehicle charging stations over the next three years. The utility’s service area currently contains about 5,000 charging stations, a number that’s expected to reach 150,000 by 2025.

PG&E charging stations california
Sony eVgo Chargers | NRG

The company earlier this month filed an additional request to spend $250 million to support the charging of medium- and heavy-duty vehicles, such as transit buses.

Williams couldn’t provide a definitive answer to an analyst question about whether PG&E would enter the competitive space of retail charging in addition to participating in the regulated side of providing the supporting infrastructure.

The utility is in a “great position to put in the make-ready” for the charging stations that will facilitate the adoption of EVs, Williams said.

“Looking beyond a regulatory play, we have to really take a look at the economics and the financing and the whole nine yards to see whether [the retail side] really makes sense for us,” she said.