Page 1333 – RTO Insider

January 20, 2017

EIM Sees Sharp Increase in Flexible Ramping Test Failures

By Robert Mullin

The Western Energy Imbalance Market (EIM) experienced a “dramatic uptick” in failed ramping sufficiency tests in November and December, CAISO’s internal Market Monitor reported Wednesday.

ramping capacity eim caiso — | © *RTO Insider*

New EIM participant Arizona Public Service was especially prone to failures during the fourth quarter of last year, but other areas saw increases as well, Keith Collins, manager of market monitoring and reporting with the ISO’s Department of Market Monitoring, said during a Jan. 18 Market Performance and Planning Forum.

Some of the increase could likely be attributed to a flawed ISO calculation that underreported ramping capacity available in the market, Collins said.

But the Monitor is still trying to pinpoint the exact cause for such a significant increase in test failures over the period (see graph).

CAISO performs the sufficiency test ahead of the market run for each operating hour. The test relies on base schedules submitted by each balancing authority area (BAA) participating in the EIM.

The objective: to ensure that each BAA enters the hourly interval with enough upward and downward ramping capability to avoid leaning on the resources of other market participants, similar to the requirement that each EIM participant begin each hour fully balanced.

“When a balancing area doesn’t have sufficient ramping capacity, then there are limitations on the amount of EIM [energy] transfers that are allowed into that region,” Collins said. “For instance, if there’s an upward [ramping] limitation, [then the region’s] imports are limited.”

Similarly, the ISO will restrict exports if it finds a shortfall in a BAA’s hourly downward ramping capability.

Those restrictions are intended to discourage EIM participants from relying on the market as a way to avoid developing their own ramping capacity as growing adoption of renewable resources increases the need for such capability.

Collins noted that the flexible ramping sufficiency test “is playing an increased role in some of the market outcomes we’re seeing,” a finding that the Monitor will elaborate on in its upcoming quarterly report.

The sufficiency test is designed to determine whether each EIM participant has scheduled enough ramping capacity to meet both the expected change in “net load” within its system and the “flexible ramping constraint” at its seams.

“Net load” represents total electricity demand minus the output from variable renewable resources. The ramping constraint indicates the factor by which transmission congestion will restrict a participant’s ability to import or export during a specific interval.

Passing the Test

To pass the sufficiency test, an EIM participant must demonstrate sufficient ramping capacity from the start of an hour through each 15-minute interval of that hour. Failure for just one interval translates into failure for the entire hour. Participants can resubmit schedules up to 40 minutes before the start of the hour.

The test considers each participant’s contribution to uncertainty in EIM’s overall load forecast during an interval, as well as its net import/export capabilities. The participant receives “credit” for its ability to reduce exports or imports in order to increase upward or downward ramping capability during the period.

The EIM’s upward ramping capability exhibited the “dramatic uptick” in test failures late last year, but downward ramping capacity tests, which were just implemented in November, have also seen “a pretty consistent level of failures,” especially in the APS region, according to Collins.

Steve Keehn, associate director at Navigant Consulting, asked whether the test failures were predominantly occurring during certain hours.

“I wouldn’t point to any explicit pattern that came up,” Collins said. “We’ve seen it at the beginning of the day, the middle of the day, the end of the day.”

Justin Thompson, director of resource operations and trading at APS, sought to know why so many of the failures were occurring early in the month and diminishing by mid-month.

One possibility is that the increase coincided with the Nov. 1 implementation of CAISO’s flexible ramping product market, which operated with flawed calculations that shortchanged the amount of available ramping capacity through mid-December, according to Guillermo Bautista Alderete, the ISO’s director of market analysis and forecasting.

“That is only one part,” Bautista Alderete noted.

He said other elements of the issue would be discussed in a monthly report produced by the ISO and distributed to APS and other new EIM participant Puget Sound Energy, which would become publicly available as well.

January 20, 2017

MISO Stakeholders Seek Review of MTEP Futures Under Trump

By Amanda Durish Cook

CARMEL, Ind. — MISO is preparing stakeholders for the first reuse of Transmission Expansion Plan futures, but some stakeholders are asking for a pause to review the scenarios for the 2017 plan because of the uncertainty of carbon-emission policies under the Trump administration.

miso mtep futures trump — Ellis | © *RTO Insider*

MISO policy studies engineer Matt Ellis said “barring any significant change in policy or economic drivers,” the RTO’s 2018 Transmission Expansion Plan (MTEP 18) futures will largely mirror MTEP 17 futures, due to be finalized next month. MISO is not planning a “wholesale redevelopment” of futures as in prior years, he said.

Future development in 2018 will be discussed at a yet-unannounced stakeholder workshop in early April. Ellis said MTEP 17 futures were intended for use in multiple cycles, but MISO will still “review definitions and discuss potential changes to ensure validity.” 2018 futures are to be finalized at the Planning Advisory Committee meeting in August and study results are expected in October.

“Futures haven’t changed much in the last 10 years,” Ellis explained at the Jan. 18 PAC meeting.

Ellis said year-to-year uncertainties such as the rate of fleet change and economic and temperature changes will be examined before reusing 15-year futures. He added that variables such as natural gas prices, topology, siting locations and demand could be adjusted annually. Ellis also said MISO would assess the variety of projects in the interconnection queue and public announcements from developers to inform the futures. Reuse of MTEP futures was recently added to Business Practices Manual 020, which covers long-term planning. (See “MISO to Update Long-Term Planning BPM,” MISO Planning Advisory Committee Briefs.)

Stakeholders have asked what fine-tuning might occur annually and which changes would be considered significant enough to spur futures redevelopment, Ellis said. “Ever since November, I’ve received many questions. Any time there’s a change in presidential leadership, there’s bound to be a change in policy. … All fair questions,” he said.

Ellis said MISO will reweight the scenarios annually because of uncertainty over future carbon regulations. MISO’s futures weighting assigns a probability-based likelihood to each MTEP planning scenario. In MTEP 17, existing trends were given 31% consideration, policy regulations were given 43% and accelerated alternative technologies received 26%. (See “MISO Posts Final MTEP 17 Weighting, Siting and Seeks Scope Feedback,” MISO Planning Advisory Committee Briefs.)

Multiple stakeholders, however, asked for re-evaluation of MTEP 17 weighting considering President-elect Donald Trump’s vow to cancel EPA’s Clean Power Plan. They said less emphasis on policy regulations might be in order.

Steve Leovy of WPPI Energy said he supported the potential revision of MTEP 17 weights. “Four, five, six months from now, we might have a better idea of what regulations might be in place,” he said.

Adam McKinnie, a Missouri Public Service Commission economist representing the state regulatory sector, said it would be useful if MISO staff could explain why changes cannot be made to MTEP 17 weighting.

Ellis said a presentation could be arranged for the February PAC meeting.

January 20, 2017

Perry Regrets Calling for Ending DOE; Says Climate Changing

By Rich Heidorn Jr.

WASHINGTON — Former Texas Gov. Rick Perry said Thursday he regrets calling for an end to the Department of Energy and is now “excited and passionate” about leading the agency as secretary.

rick perry doe climate change — Perry | *Energy and Natural Resource Committee*

Perry — who famously forgot the department’s name when he called for its abolition during a presidential debate five years ago — addressed the issue in his opening remarks during his confirmation hearing before the Senate Energy and Natural Resources Committee.

Perry also joined President-elect Donald Trump’s nominees for the Interior Department and EPA in saying he believes climate change is real and that manmade activity is a contributor — but that the degree of man’s impact and the proper response remain under debate.

Perry’s solicitous, self-deprecating manner occasionally brought laughs from senators and the audience, a contrast to the tense hearing a day before for Oklahoma Attorney General Scott Pruitt, Trump’s nominee for EPA. But Democrats nevertheless pressed Perry on his contention that climate science remains unsettled. (See Dems Unmoved by EPA Pick’s Charm Offensive.)

Budget Cuts?

Perry also appeared caught off guard when Democrats on the panel asked him about a report by The Hill that the Trump transition team plans to eliminate the Energy Department’s offices of Electricity and Energy Efficiency and Renewable Energy (EERE), along with the Office of Fossil Energy, which has overseen research on reducing CO₂ emissions. Funding for nuclear physics and advanced scientific computing research would be reduced to 2008 levels, according to the report.

In his opening statement, Perry said his view on the department’s value had evolved after being briefed on its “vital functions.”

Democrats said the proposed budget cuts would threaten the research programs Perry claimed to now support.

“It’s hard to see how we can pursue an ‘all of the above’ [energy] strategy if so much of the department’s all-of-the-above capabilities are limited,” said Sen. Mazie Hirono (D-Hawaii).

“They’re cutting the legs out from under you,” said Sen. Angus King (I-Maine).

Murkowski | *Energy and Natural Resource Committee*

“I can’t answer whether that’s true or not,” Perry said of the news report. “I will be in the room advocating for [DOE research]. I’m not going to tell you I’m going to be 1,000% successful.”

Later, Perry said he would evaluate the worth of department programs as a “fiscal conservative,” saying “you can’t change the stripes on this zebra.”

Committee Chair Lisa Murkowski (R-Alaska) said in her opening remarks that she was not concerned that Perry, unlike his two immediate predecessors, is not a scientist. “What we need is a good manager,” she said.

‘Climate is Changing’

Franken | *Energy and Natural Resource Committee*

The hearing returned several times to Perry’s new position on climate change. Democrats noted that Perry had previously been dismissive, claiming in 2011 that scientists were manipulating data for financial gain and contending as recently as 2014 that there was no “settled science” on the subject.

“I believe the climate is changing. I believe some of it is naturally occurring, but some of it is also caused by manmade activity,” Perry said in his opening statement. “The question is how do we address it in a thoughtful way that doesn’t compromise economic growth, the affordability of energy or American jobs. … I am committed to making decisions based on sound science and that also take into account the economic impact.”

Hirono asked if his economic analysis would include the costs of not addressing climate change.

“Absolutely,” Perry responded, citing the emission reductions and wind development that occurred in Texas during his 14 years as governor. Perry, however, rejected Hirono’s call for a national renewable portfolio standard, saying he would leave such targets to states.

Sen. Al Franken (D-Minn.) attempted unsuccessfully to pin Perry down on what share of global warming is manmade, noting data released by the National Oceanic and Atmospheric Administration Wednesday that 2016 was the hottest year on record, surpassing records set in 2015 and 2014.

Daines | *Energy and Natural Resource Committee*

“Ninety-seven percent of climate scientists say that this is real,” Franken said. “So it seems to me that the science on climate change is pretty definitive.”

Perry also received pleas for help from coal state Sens. Joe Manchin (D-W.Va.) and Steve Daines (R-Mont.). Daines decried plans to close two of the coal-fired Colstrip plant’s four units by 2022. He said EPA’s Clean Power Plan will eliminate 7,000 jobs in his state and turn it from an energy exporter to an importer.

Perry responded that he is confident that scientists will develop carbon capture technology ensuring the continued use of coal.

WAPA, LNG and Yucca Mountain

Sanders | *Energy and Natural Resource Committee*

Senators sought commitments from Perry on an assortment of other issues during the nearly four-hour hearing.

Sen. Jeff Flake (R-Ariz.) called for more transparency regarding spending by the department’s Western Area Power Administration. The House Committee on Oversight and Government Reform is looking at a $767 million surplus at the power marketing administration to see if it should have been used to reduce rates.

Maine’s King expressed fear that U.S. natural gas prices will increase if the government allows increasing exports of LNG.

Perry said he would commit to not “artificially affecting supply and demand” and suggested EPA and Interior Department regulations were constricting gas supplies. “It makes abundant good sense to me to sell it to the world,” he said.

Sen. Catherine Cortez Masto (D-Nev.) sought assurances that Perry would not back a resumption of plans to create a nuclear waste dump in Yucca Mountain near Las Vegas. Perry pledged to consider alternatives but added: “I will not say absolutely no way is Nevada going to be receiving high-level waste.”

January 19, 2017

Dems Unmoved by EPA Pick’s Charm Offensive

By Rich Heidorn Jr. and Michael Brooks

WASHINGTON — Donald Trump’s nominee to head EPA attempted to assuage skeptical Democrats on Wednesday, insisting he will enforce environmental rules and seeks only to ensure predictable regulation that respects states’ jurisdiction.

“People of this country are hungry for change,” Oklahoma Attorney General Scott Pruitt told the Senate Environment and Public Works Committee during his six-hour confirmation hearing. He said he would seek to end a “false paradigm that if you’re pro-energy you’re against the environment.”

Oklahoma Attorney General Scott Pruitt answers a question at his Senate confirmation hearing as EPA Administrator. | © *RTO Insider*

But the panel’s Democrats were critical of the nominee, accusing him of being too cozy with fossil fuel producers. Sen. Bernie Sanders (I-Vt.) said he would oppose Pruitt’s confirmation as EPA administrator and most of the others appeared likely to join him.

Pruitt needs a simple majority to clear the committee — which Republicans control 11-10 — and the full Senate, where the GOP holds a 52-48 edge (including two Independents who caucus with the Democrats).

The Democrats cited Pruitt’s campaign contributions from the oil and gas industry and his 14 lawsuits against EPA as attorney general, including challenges to the agency’s Clean Power Plan, Cross State Air Pollution rule (CSAPR), the Mercury and Air Toxics Standards, regional haze rule and emission regulations on new power plants.

trump epa climate change scott pruitt — Protesters lined the hallway outside Pruitt’s confirmation hearing. | © *RTO Insider*

Ranking member Sen. Tom Carper (D-Del.) quoted former Republican EPA chief Christine Todd Whitman, who has said Pruitt is “disdainful of the agency and the science behind what the agency does.”

Pruitt’s Republican supporters said he would address the agency’s “overreach.” Chairman John Barrasso (R-Wyo.) followed up each round of questions by Democrats by quoting Oklahoma environmental officials and news editorials endorsing Pruitt’s appointment.

Pruitt opponents lined up outside the hearing room, some wearing surgical masks with “Stop Pruitt” stickers. A few opponents got into the room and briefly interrupted the hearing on two occasions. Helmet-wearing coal miners also attended the hearing in support.

Climate Change not a ‘Hoax’

As Trump’s Interior Department nominee had done in his confirmation hearing Tuesday, Pruitt said he did not agree with the president-elect’s claim that climate change is a “hoax” by the Chinese. (See Zinke: Climate Change Real, but Coal, Gas Should Continue.)

Pruitt, who has led a legal fight by states against EPA’s Clean Power Plan, said climate change is real but that the impact of human activities and how to fix it are subject of “continued debate and dialog.”

“I do not believe climate change is a hoax,” he said under questioning by Sen. Ed Markey (D-Mass.).

Pruitt acknowledged the Supreme Court’s finding in Massachusetts v. EPA that carbon dioxide was a pollutant under the Clean Air Act. “I think the court has spoken very emphatically about this issue, and the EPA has a legal obligation to respond,” he said.

But he clearly did not share Democratic senators’ sense of urgency over climate change, repeatedly calling it “the CO₂issue” and declining to rank its priority against other areas under the agency’s oversight. “The EPA deals with very weighty issues … water and air quality. It’s a matter of prioritizing resources to achieve better outcomes in each.”

He said he challenged the CPP because the agency created emission limits that coal-fired generators can’t meet — thus requiring a switch to other generation sources and exceeding its authority to regulate “inside the fence line.”

Pruitt also defended his lawsuits against EPA as efforts to ensure the agency implements its policies in accordance with law. His challenge to the CSAPR rule, he said, was not to the agency’s authority but to its implementation of penalties in excess of states’ “allocated share” of emissions.

“They [EPA] need to follow the processes set up by Congress,” he said, arguing that the agency has created uncertainty among those to which its rules apply.

“There are many laws that people look at and say, ‘Well I don’t really like that,’ but so long as they know what’s expected of them, they can plan and allocate resources to comply.”

Republicans joined Pruitt in his critique. Sen. Roger Wicker (R-Miss.) said the CPP would “put us out of business” because his state has little alternative to coal-fired power.

The D.C. Circuit Court of Appeals, which heard arguments on the challenges to the CPP in September, has yet to issue a ruling. Regardless of the outcome, an appeal to the Supreme Court is likely. (See Analysis: No Knock Out Blow for Clean Power Plan Foes in Court Arguments.)

Markey called on Pruitt to recuse himself as EPA administrator from any lawsuits he filed as attorney general, including against the Clean Power Plan. Otherwise, he said, Pruitt would be “plaintiff, defendant, judge and jury.”

Pruitt said he would consult with EPA’s ethics counsel on a case-by-case basis on recusals.

Sanders took on Pruitt’s contention that there remains doubt about the cause of climate change and the conclusion that fossil fuel use must be reduced to address it.

Sanders also asked Pruitt what actions he had taken as attorney general to address the spike in earthquakes in his state, which has been linked to underground injection of fracking wastewater. Pruitt said fracking is regulated by the state Corporation Commission and acknowledged he had not filed any enforcement cases over the practice. “If that’s the kind of EPA administrator you’re going to be, you’re not going to get my vote,” Sanders responded.

Later, in response to a question from Sen. Ben Cardin (D-Md.) about the issue, Pruitt defended his state’s response to the earthquakes. He noted the commission had declared certain areas of the state off-limits to fracking, calling its actions “aggressive” and that they’ve helped reduce the number of quakes.

Doing Industry’s Bidding?

Sen. Jeff Merkley (D-Ore.) pressed Pruitt on a 2014 article in The New York Times that reported Pruitt sent letters to EPA and other federal officials — on state government stationary and signed by him — that had been authored by oil and gas companies. One 2011 letter he sent to EPA that accused federal regulators of overestimating the air pollution caused by natural gas drillers in Oklahoma, for example, was almost entirely written by Devon Energy, one of his state’s biggest gas producers. “You used your office as a direct extension of an oil company,” Merkley said.

Pruitt insisted the letter was “representing the interests of the people of Oklahoma.” He noted that the oil and gas industry is responsible for one-quarter of the state’s budget.

Sen. Sheldon Whitehouse (D-R.I.) said Pruitt’s version of federalism — which the nominee described as “national standards, neighborhood solutions” — would leave his state powerless to combat ozone pollution from other states. “Because those smokestacks are out of state, we need EPA to help us,” he said.

Sen. Cory Booker (D-N.J.) pointedly asked Pruitt whether he knew how many Oklahoman children had asthma, which is linked to air pollution. Pruitt acknowledged he did not. Booker said the American Lung Association puts the total at 110,000 — more than 10% of the state’s children — which he said was one of the highest rates in the U.S.

January 18, 2017

Zinke: Climate Change Real, but Coal, Gas Should Continue

By Rich Heidorn Jr.

WASHINGTON — President-elect Donald Trump’s nominee to head the Interior Department told a Senate panel Tuesday that climate change is real but that he would continue to allow fossil fuel production on public lands.

Zinke climate change war on coal — Zinke

“We need an economy and jobs, too,” Rep. Ryan Zinke (R-Mont.) told the Senate Energy and Natural Resources Committee during a nearly four-hour confirmation hearing. The former Navy Seal attempted to steer a path between climate deniers and fossil fuel opponents, citing President Theodore Roosevelt as a model and calling for continuation of an “all of the above” approach to energy production.

Sen. Bernie Sanders (I-Vt.) asked Zinke whether he agreed with Trump, who has called climate change a “hoax.”

“I don’t believe it’s a hoax,” Zinke responded.

“The climate is changing. That’s undisputable. [My district includes] Glacier National Park. I’ve seen glaciers over the period of my time recede,” Zinke said. “Man has had an influence. I think that’s undisputable as well … I think where there’s debate on it is what that influence is and what can we do about it.”

“There is a debate on this committee but not within the scientific community,” Sanders interrupted, before asking whether the U.S. should continue to allow fossil fuels to be produced on federal land.

Zinke said it is preferable to produce energy domestically, “under reasonable regulations,” rather than depend on foreign energy production without environmental rules.

‘War on Coal’

In response to a question from Sen. John Barrasso (R-Wyo.), Zinke pledged to reverse the Obama administration’s moratorium on coal mining on federal lands.

“The war on coal I believe is real,” he said. “The moratorium, I think, was an example of one-size-fits-all [policy]. It was a view from Washington and not a view from the states.”

He called for investing in research and development on coal. “We know we have the asset. Let’s work together to make it cleaner, better. We should be leading the world in clean energy technology and I’m pretty confident that coal can be a part of that,” he said. “But it is about science. It is about investing in our future and not looking at our past.”

Zinke also promised to support Barrasso’s plan to use the Congressional Review Act to overturn the Bureau of Land Management’s Nov. 15 rule regulating venting and flaring rule of natural gas.

Zinke said he was troubled by the volumes of natural gas vented during production. “The amount of venting in North Dakota alone almost exceeds what we get out of the fields. A lot of the wasting can be [eliminated] by having the infrastructure [to capture it]. So let us build a system where we capture that energy that’s otherwise being wasted. That’s an enormous opportunity.”

Mining Restoration

Ranking member Sen. Maria Cantwell (D-Wash.) pressed Zinke on whether he would support an end to current policy allowing surface coal mine operators to “self-bond” for their obligations to reclaim lands. She cited a Government Accountability Office report released Tuesday that found all other energy and mineral producers on federal lands — mineral mines, onshore oil and gas drilling and wind and solar production — are required to purchase third-party bonds.

“I think bonding is important,” Zinke answered. “I think we need to have the courage today to look 100 years forward [so we can] look back and say we did it right.”

“Well, I hope that was a great endorsement of the stream protection rule,” Cantwell responded, smiling. The rule, issued by the Interior Department on Dec. 19, requires coal companies to restore their land to its condition before mining began, an effort to prevent mining debris from contaminating streams. It, too, is a target for Congressional repeal. (See Cost Trends Favor Renewables Despite Coming Policy Shifts.)

January 18, 2017

CRR Initiative Elicits Mixed Reviews from CAISO Participants

By Robert Mullin

CAISO’s decision to consider reforms to its congestion revenue rights auctions as one of its top priorities for 2017 has provoked mixed reactions from stakeholders.

Opponents of the move say the ISO’s pursuit of the CRR issue lacks widespread stakeholder support and therefore doesn’t warrant a top spot within the policy roadmap for this year’s discretionary initiatives. They contend CAISO is elevating the concerns of its internal Market Monitor above those of most stakeholders, who want the ISO to focus on other priorities.

But the initiative has its backers, some of whom argue that the ISO should move as quickly as possible to determine why auction revenues are consistently outpaced by payments made to CRR holders, leaving ratepayers to make up the difference.

CAISO has included the issue in its draft final policy roadmap of “discretionary” stakeholder initiatives in response to concerns expressed by its internal Market Monitor. “Discretionary” initiatives represent policies the ISO can implement out of its own choosing rather than as a result of a regulatory mandate or market necessity.

The Department of Market Monitoring has pointed out that ratepayers lost $520 million from 2012 to 2015 through a market that pays $1 to CRR holders for every 45 cents in revenues received from auctions.

A 2016 report by the Monitor urged the ISO to altogether eliminate the auctions, contending that the program suffers from inherent design flaws that allow speculators to reap large financial gains at ratepayer expense. (See CAISO Monitor Proposes to End Revenue Rights Auction.)

“The consistent underpricing of CRRs calls into question a fundamental assumption of the CRR auction design that competition will drive auction prices to equal the CRR’s expected value,” the Monitor said in its report.

The Monitor’s report offered up a potential alternative to the current auction: a bilateral or exchange market for forward contracts-for-difference for pairs of ISO nodes — also known as locational basis price swaps.

Unlike in the current CRR market, the price swaps would be traded between willing counterparties, rather than leaving ratepayers as the unknowing, and technically outmatched, counterparty.

“We’re not jumping to DMM’s proposed solution,” Brad Cooper, CAISO manager of market design and regulatory policy, said during a Dec. 22 stakeholder meeting. CAISO is taking up the initiative “because DMM has pointed out a significant revenue gap that comes to big money,” he said.

In comments submitted to the ISO supporting the initiative’s inclusion in the roadmap, the “Six Cities” utilities of Anaheim, Azusa, Banning, Colton, Pasadena and Riverside attempted to put the size of that gap into perspective. Revenue deficiencies stemming from the auction equated to $130 million per year over a three-year period, compared with the estimated Energy Imbalance Market (EIM) benefits to ISO market participants in 2015 of $12.7 million, they pointed out.

Congestion Revenue Rights (CRR) — The potential CRR auction reform initiative would seek to address the concern that auction revenues have historically fallen well short of payments made to CRR holders. | *CAISO*

“Thus, the average annual costs to ISO LSEs resulting from the design of the CRR auction process have been more than 10 times the estimated EIM benefits to ISO market participants in 2015,” the utilities said.

Noting that the ISO has signaled a need to perform additional analysis before formally committing to the initiative, the Six Cities encouraged staff to move with all deliberate speed.

“Any preliminary analysis considered necessary should commence as soon as possible (and well before the middle of 2017) so that an appropriate solution to the CRR auction revenue deficiencies can be implemented prior to the auction for annual CRRs for 2018,” the utilities said.

Northern California Power Agency (NCPA), a joint powers agency established to serve the region’s municipal utilities, added its support to a measure that would address auction shortfalls.

“Modification of the auction process such that bids from entities willing to sell clear against those willing to buy is a reasonable approach to mitigating the long-standing revenue insufficiency concerns that we believe bears careful consideration,” the agency said in its comments.

Still, NCPA faulted the Monitor for its failure to suggest modifications rather than advocate for “abolition” of the auction process.

“NCPA does not at all support doing away with the CRR auction, which is an integral part of the risk mitigation services we provide our members,” the agency wrote.

Pacific Gas and Electric, the state’s largest investor-owned utility, said it was “eager” for the ISO to address CRR revenue inadequacy and “encouraged” by inclusion of the issue on the roadmap.

“In line with the DMM’s recommendation to assess the value of the CRR auction platform, PG&E hopes this initiative will provide an opportunity to consider and evaluate alternative solutions to CRR revenue inadequacy,” the utility wrote in its comments.

Opponents of the initiative include DC Energy, a proprietary trading firm focused on investments “related to the locational and temporal value and volatility in transport markets for power and natural gas,” according to the company’s website.

The company criticized CAISO for giving too much weight to the Monitor’s concerns about the auction issue when ranking the CRR initiative against other potential discretionary initiatives.

“DC Energy appreciates the need for CAISO consideration of DMM’s input,” the company said in its comments. “However, on its face, it appears that one stakeholder’s views were considered for its ranking, despite the volume of diverse comments received.”

The company said the Monitor’s analysis of the CRR market failed to focus on the benefits of the current system and that the ISO would be “best served” in considering various stakeholder and market perspectives when examining the market’s performance.

The current auction design provides a “superior opportunity for both price discovery and hedge acquisition” compared with a bilateral market, DC Energy argued.

“An entity seeking a hedge in the bilateral market might find it challenging or impossible to connect with a willing seller for an exact path,” the company said. “However, within the current CRR auction structure, network capacity is available to any qualified stakeholder, enabling liquidity and multiparty reconfiguration of electrical-location-specific (e.g., ‘nodal’) hedges.”

Western Power Trading Forum (WPTF), an interest group representing regional power traders, took DC Energy’s criticism a step further, contending that the Monitor’s “influence in the initiative-priority process belies [its] supposed independence and is contrary to [its] core functions” as set out in the ISO Tariff.

“WPTF contends that instead of devoting CAISO resources to a pet project of DMM, the CAISO should treat them like any other stakeholder who complained about a small aspect of the market that was naturally improving on its own — and ignore them,” WPTF wrote in its comments.

In support of that last point, the group pointed out that auction revenues as a percentage of payments increased after the ISO implemented practices that improved transparency into how it represents transmission outages in its market models. The Monitor’s findings indicate that the ISO took in 63 cents of auction revenue for every dollar paid out to CRR holders during the first half of last year. (See CAISO Monitor Seeks Congestion Revenue Rights Auction Reforms.)

In their comments, the Six Cities utilities appeared to anticipate the arguments of opponents of the initiative.

“The ISO should reject the efforts by recipients of the wealth transfers documented by the DMM to dissuade the ISO from addressing this misappropriation of the benefits of transmission assets paid for by ratepayers,” the utilities said.

January 17, 2017

Oncor Demo Center Tests DG, Storage — and Gives Visitors a Jolt

By Tom Kleckner

LANCASTER, Texas — In a darkened room, seven video screens flicker to life. A crack of lightning lights up the darkness as the rumble of thunder suddenly explodes through six speakers in the ceiling and a sub-woofer in the corner.

That’s about the time most visitors have to be peeled off the ceiling.

“We like to give people a little jump … and we’re only running the [sound system at] about 60%,” Oncor Chief Technology Officer Michael Quinn says with an impish grin.

That’s a key part of the experience in the “Immersion Room” at Oncor’s Technology, Demonstration and Education Center (TDEC) on the plains south of Dallas. The facility is a peek into the grid’s future, showcasing almost three dozen vendors and their technologies and testing whether solar power, battery storage and microturbines can be integrated on a small scale to deliver reliable power to consumers.

Oncor’s Michael Quinn explains the TDEC’s three microturbines. | *RTO Insider*

“We want to immerse you in an outage,” Quinn explained. “Everybody who’s been in Texas a fair amount of time can appreciate a good old-fashioned Texas thunderstorm.”

The video begins with a somber voice: “This is life without electricity, without computers, without refrigeration. To meet the expectation of our grid today, we have to … reduce the length and frequency of power outages.”

The narrator then asks, “How do we create a more resilient, secure and even self-healing power grid? How do we integrate an increasing amount of solar and wind power to the grid? Perhaps most important, how do we achieve all this and keep your monthly bill affordable?”

Unlikely Tourist Stop

The facility has hosted more than 200 tours since opening in April 2015, including three busloads of engineers attending an Institute of Electrical and Electronics Engineers conference.

“We didn’t expect this to become a tourist destination,” said Oncor’s Don Clevenger, senior vice president of strategic planning, during the Gulf Coast Power Association’s fall conference in October. It’s Clevenger’s hologram that welcomes visitors to the TDEC with a recorded message.

Power flows on the Oncor microgrids. | © *RTO Insider*

The facility consists of four interconnected microgrids drawing their energy from nine distributed generation sources: two solar PV arrays, a microturbine, two energy storage units and four generators. Everything, it seems, but wind turbines — prohibited by a Lancaster city ordinance barring structures more than 35 feet tall.

The microgrids can be controlled individually or in tandem, and can be connected with the grid or operate independently. The generation resources are capable of providing as much as 989 kW in emergency situations, accounting for two-thirds of the facility’s total load. A fully functioning SCADA system controls the entire facility.

The onsite energy storage, which draws energy from Oncor’s feeders or any of the facility’s generation sources, provides the site’s voltage signal, enables renewable integration, controls the microgrid frequency and is the first generating source to respond during an unexpected loss of power.

“We use energy storage for reliability and grid purposes. That’s it, end of story,” Quinn says, disputing the notion Oncor is trying to “distort” the marketplace by becoming a generator. He says the utility has saved customers connected to the storage devices more than 39 hours of outages they would have likely experienced.

“If, through energy storage, we can make a [significant improvement] in the number of [outage] minutes you have, we think that’s the energy experience you want. We’re trying to get that right, and then propagate it.”

Oncor divides the TDEC into three zones: one comprising all the green-energy sources, another a meter shop with automated technologies and a third with traditional utility elements, such as diesel and gas generators.

“Taking the old and the new together,” Quinn says.

Oncor’s Michael Quinn. | © *RTO Insider*

Few details go unnoticed. One panel in the control room has space for a future energy source, labeled simply “Future Source.”

A gray-on-white pattern and rounded edges help lend an illusion of openness to the Immersion Room’s 25×17 space giving it a sense of “cavernous intimacy,” as one Oncor director described it.

The TDEC has two sets of solar panels, one facing south and the other facing west. That allows Oncor to monitor the different paths and solar peaks during the course of the year. The panels can power the facility’s entire HVAC system and some of the lighting, besides providing covered parking. They’re designed to withstand 2-inch hailstones and 90-mph winds.

“Solar panels and hailstorms are not complementary,” Quinn notes.

Entertain and Instruct

The TDEC exists both to test new technologies and to simplify the grid’s complexity, helping vendors understand what Oncor does and how their products might serve the utility’s needs.

“We recognized we needed to try and influence the DER world, but before we could influence that world, we found out there was a fair amount of education that needed to happen,” says Quinn, comparing the Immersion Room to an “EPCOT-style” performance. “To get to education, we figured out we had to entertain you just a little bit before we got to that transfer of knowledge. If you’re bored with it, you’re not going to remember it.”

Quinn says one of his staff members — a screenwriter in his spare time — offered a suggestion on how to grab the viewer’s attention. “He said in the first 30 seconds, you have to have one of two things: either a love scene or an explosion,” Quinn says. “I knew the former would get me fired, so we did our best to get the explosion element.”

The video not only jolts the viewer with all the subtleness of a cattle prod, it also makes the grid’s complexity accessible to those unfamiliar with the industry, using everyday language to lay out its history and underscore the importance of reliability.

Understanding Storage

The idea for the TDEC came from Oncor’s discussions with energy storage vendors about price points and sales forecasts.

The TDEC’s solar panels | © *RTO Insider*

“We’d bring them in originally for conversations, to see if their project or product overlaps with our needs, and from there start talking about specifics,” Quinn says. “Do [the products] do what the vendor community suggests they’ll do? We wanted our own unbiased perspective.”

Oncor recognizes that DERs can be “parked” in different locations on the grid — behind the meter, or integrated in transmission.

“Our philosophy was to understand what all these resources do for the grid, and if they do something to the grid, let’s understand that too,” Quinn says. “Rather than react constantly to the change, let’s understand and anticipate the change, and then build an electric grid to facilitate it.”

Case in point: Oncor is currently testing three different energy storage devices, allowing the utility to compare and contrast performance for each one.

“You can see which one does better with lots of cycling, which one does better if you leave it dormant for six weeks,” Quinn says. “Those are different needs in the ERCOT marketplace.”

Football-Size Microturbines

Quinn points to a 65-kW natural gas-fired microturbine — “about the size of a football” — housed inside a metallic container as big as a standard domestic refrigerator. The turbine is fueled by a half-inch supply line, “the same thing you have in your home,” he says. When operating, the turbine whirs at 96,000 RPM, emitting a high-pitched sound like a jet engine.

Exhaust comes out at approximately 800 degrees Fahrenheit, making the waste heat useful in providing warmth or other “facility needs.” Quinn says that more than doubles the unit’s efficiency. Combined with its size, who’s to say consumers won’t find a use for it?

“These will be part of the electrical infrastructure,” Quinn says. “Our philosophy is to understand how we interact with it before it gets here.”

Integrating DER with Legacy Components

The center also allows Oncor to test how emerging technologies work with each other and the grid’s legacy components. Quinn uses the example of buying a fully integrated vehicle to make his point.

“Toyota is going to have all Toyota parts in that vehicle, but that’s not what the electric ecological system is going to look like in the future,” Quinn says. “It’s going to have a Toyota chassis, Chevy brakes, a Lexus steering wheel, a Cadillac engine. So to take all those and work them from a safety and optimization and harmony standpoint … we think that’s pretty stinking important.”

oncor energy storage — Oncor TDEC Microgrid | *Oncor*

Quinn says Oncor has found the “controls element” of the integration experiment to pose the biggest issues.

“Most people’s individual battery cells work how they say [they] will. It’s the control of the [entire] system that’s much more challenging.”

Which begs the question: Does Oncor incent one kind of technology over another?

“We don’t make that distinction today, but I think it’s a fair question,” Quinn says. “It’s not what the customer gets out of it, but what does the grid get out of it?”

And what does Oncor, the largest transmission and distribution utility in Texas, get out of the TDEC?

A greater understanding of new technologies and how they mesh with the grid, but perhaps most important, an “optimized” grid that works better for Oncor’s customers.

“Excess” wires and generation translate into higher costs for customers, Quinn says. Reducing those costs can help the utility retain customers.

“If we can facilitate a low bill and facilitate the energy experience that you want, our thought is you’re going to stay connected to our service territory and Oncor.”

Click below for a promotional video by Oncor showcasing the TDEC.

January 17, 2017

MISO Market Subcommittee Briefs

CARMEL, Ind. — MISO is well-positioned to comply with FERC’s recent Notice of Proposed Rulemaking on fast-start pricing, RTO market design engineer Congcong Wang said at a Jan. 12 Market Subcommittee meeting.

The RTO will apply a fast-start definition to any dispatchable resource with a 10-minute start-up time and a minimum runtime of an hour or less.

Comments on the NOPR (RM17-3) are due Feb. 28. (See FERC: Let Fast-Start Resources Set Prices.)

Wang said the first phase of MISO’s Extended Locational Marginal Pricing (ELMP), already implemented, fulfills all the NOPR’s criteria. The second phase will expand the fast-start definition to online units with a one-hour start-up time. (See “MISO to Expand ELMP Price Setting, but not to IMM’s Specs,” MISO Market Subcommittee Briefs.)

MISO is currently drafting Tariff redline changes and hopes to post them publicly by Jan. 20, Wang said. Phase two of ELMP should be in place by May 1.

MISO IMM Warns Again of PJM Pseudo-Ties

MISO’s Market Monitor continues to be “very concerned” about the growing number of generators pseudo-tying into PJM.

In a recently issued report, Monitor David Patton identified several events during the period “where congestion management was negatively impacted by pseudo-tied resources.” Patton still advocates for MISO to develop a firm capacity delivery procedure to replace pseudo-ties.

Patton noted that MISO’s firm capacity delivery proposal — offered to PJM staff early last year — was “unilaterally” opposed by the neighboring RTO. He said he is not aware of any proposal developed by PJM.

“You could make the argument that PJM is not complying with FERC,” Patton said. He added that he didn’t blame MISO for the lack of action, as the RTO is not able to prohibit pseudo-ties unless there is a reliability concern or a transmission issue.

“Lights aren’t going to go out — it’s just going to be a lot more expensive to manage the congestion,” Patton said. “I don’t think on an economic basis, MISO can say, ‘We’re not going to allow pseudo-ties.’”

Last October, Patton said that he and MISO were considering opening a Section 206 proceeding against PJM to force a Tariff change, but they were discouraged by MISO’s board, which cautioned against “weaponizing” FERC filings. (See MISO Agrees to Implement Most of IMM’s Recommendations.)

In November, MISO and PJM agreed not to publicly discuss the ongoing problem of pseudo-tie congestion double-counting until the resolution of a FERC complaint (EL16-108). (See PJM, MISO Go Quiet on Pseudo-Ties; Reach Interface Pricing Accord.)

Credit Settlements Working Group on the Rocks

MISO may retire its Credit Settlements Working Group because of a lack of substantive work and stakeholder volunteers willing to chair the group.

A motion to retire the group at its Jan. 10 meeting failed when stakeholders decided against altogether disbanding a forum dedicated to credit settlements, outgoing CSWG Chair Matt Pringle said. Stakeholders instead called for future educational conferences related to credit settlements.

“There’s been a lot of value in this working group over the years, and I think it should continue on in some form,” Pringle said.

The CSWG’s next meeting is tentatively scheduled for April, but it’s still unclear whether it will take place. The group met just three times in 2016.

MISO stakeholder relations representative Alison Lane said the working group could be repurposed into a user group, which means fewer meetings. Market Subcommittee liaison Jeff Bladen said credit settlement topics also could be handled by his subcommittee in the future.

Additionally, MISO’s Real Time Settlements Task Team was retired after the group completed work on Tariff changes for five-minute settlements. The RTO filed with FERC to implement five-minute settlement dispatch intervals on Jan. 11.

— Amanda Durish Cook

January 17, 2017

FERC OK in Hand, NextEra Faces More Questions on Oncor Deal

By Tom Kleckner

NextEra Energy, which received FERC approval of its $21 billion bid to acquire Oncor earlier this month, is still facing questions on the deal from Texas regulators and calls for more protections from stakeholders.

The Public Utility Commission of Texas, which is scheduled to hold a hearing on the merits of the proposed acquisition Feb. 21, issued a seventh set of questions to the companies Jan. 11. The commission must render a decision by April 29 (Docket No. 46238). (See Texas PUC Sets Questions in NextEra-Oncor Merger.)

The PUCT staff’s latest questions focus on credit ratings and NextEra’s funding plan for the acquisition.

Several stakeholders also filed comments on the acquisition last week. The Texas Energy Association for Marketers urged the commission “to ensure that there are no impediments to competition and no cross-subsidization from the transmission and distribution utility to competitive affiliates of the utility.” It asked the commission to change a commitment prohibiting co-branding of the utility with a competitive affiliate to improve its “clarity [and] enforceability.”

NRG Energy called on the commission to “expand the protections that have been in place since 2008 in recognition of the greater challenges posed by the conflicts and incentives created by” NextEra’s proposed corporate structure.

It said the commission should prohibit NextEra from connecting generation to the Oncor transmission system and require NextEra to divest its retail electric providers to ensure it does not favor them over competitors.

NRG also asked regulators to require transmission and other capital projects above a certain cost threshold — NRG proposed $50 million — be approved by the commission, with cost caps and post-completion prudency reviews.

“This requirement is especially important given the potential that Oncor would have competitive generation affiliates and the fact that Oncor would be inherently incented to build transmission to optimize the delivery of power from its affiliated wind resources from neighboring transmission systems,” NRG said.

The PUC last year scuttled Hunt Consolidated’s attempt to acquire Oncor — the transmission and distribution subsidiary of bankrupt Energy Future Holdings (now Vistra Energy) — when it imposed conditions that caused Hunt to back away from its proposal. (See Texas PUC Denies Rehearing on Oncor Sale, Ends Hunt Bid.)

NextEra had no comment on the impending hearings or FERC’s approval. The commission’s Jan. 5 order found the Florida-based company’s proposed deal in the public interest (EC17-23).

While Oncor operates within ERCOT, it owns a 100-MW interest in a HVDC tie between the Texas ISO and SPP. Oncor also provides transmission service over ERCOT’s North and East interconnections and the Rio Grande Valley interconnection under a FERC tariff.

FERC accepted the companies’ assertions that the acquisition would not incent NextEra to exercise market power and that Oncor’s facilities are subject to FERC open access rules.

January 17, 2017

PJM Market Implementation Committee Briefs

VALLEY FORGE, Pa. — On the day PJM submitted its five-minute settlement compliance filing to FERC, the Market Implementation Committee endorsed two proposed Manual 11 revisions related to shortage pricing, both of which were developed in response to FERC Order 825.

The order requires RTOs to align their settlement and dispatch intervals and implement shortage pricing as soon as a reserve shortage is detected in real time, rather than the current practice of allowing an RTO to wait until it has determined that the shortage will last for a sustained period of time.

Stakeholders asked PJM to perform a comprehensive review of the proposed manual changes — which would adjust the operating reserve demand curve — to ensure that all potential impacts are considered. Members were particularly concerned about whether the new three-step shortage pricing created any opportunities to take advantage of the system, or if it affected any existing market rules.

PJM believes the demand curve changes are necessary in order for it to appropriately implement Order 825’s five-minute interval requirement. The RTO hopes to submit revisions as a Section 205 filing sometime around March 1.

The revisions would insert an additional step in the curve at the $300 penalty factor allowing the reserves to be “extended” or increased. Under current practice, PJM can only extend reserve requirements in specific situations related to the issuance of hot or cold weather alerts. (See “Protocol Changes Proposed for Implementing Order 825,” PJM Market Implementation Committee Briefs.)

Citigroup Energy’s Barry Trayers asked whether the new steps would affect the “Four-Tick Rule,” which affects how some costs, such as balancing uplift charges, are allocated based on the number of intervals within an hour that certain conditions exist. PJM’s Dave Anders said that issue is being discussed through the Energy Market Uplift Senior Task Force.

“It seems like we’re finding [issues created by the new rules] instance by instance, and it might be better if somebody went through and … found [all of] the impacts,” Trayers said.

Other stakeholders asked about the potential for “opportunistic behavior” among some market participants if shortage pricing is implemented without simultaneously switching to five-minute settlements. PJM Independent Market Monitor Joe Bowring acknowledged that there is no rule against such activity, but he said “if people are taking advantage of that rule, we will refer them to FERC.”

While Order 825 specified a May 11, 2017, implementation date, PJM is requesting that its proposals on five-minute settlements and shortage pricing be implemented simultaneously on Feb. 1, 2018. The compliance filing seeks a response from FERC by Feb. 15.

If FERC approves the delayed implementation date, PJM would relax its timeline for the Section 205 filing related to the demand curve until April. Otherwise, it will keep its March 1 target for the filing and request that shortage pricing be implemented simultaneously with five-minute settlements.

PJM Gives First Take on NOPRs

PJM staff offered their initial impressions of two Notices of Proposed Rulemaking recently distributed by FERC.

One NOPR addresses price-setting related to fast-start resources, while the other considers rules for storage and distributed energy resource aggregation.

The fast-start NOPR issued on Dec. 15 has five proposed requirements to better integrate fast-start units in market pricing. PJM’s Lisa Morelli said the commission will likely need to expand its fast-start definition to cover resources with start-up times of an hour or less in order to realize intended benefits. The proposed rule limits the definition to units capable of ramping up within 10 minutes.

“We really have minimal resources that fall into the 10-minutes-or-less bucket,” Morelli said.

PJM’s response to FERC will clarify that it believes the fast-start category also applies to demand response. The RTO also believes that FERC intends for the rule to provide more flexibility for block-loaded resources such as combustion turbines, but Morelli said staff think disincentives for over-generation will be need to developed. RTO staff also have “some hesitation” about FERC’s proposal to allow offline resources to set the fast-start price, she said.

To fulfill FERC’s final proposal on including fast-start pricing in both day-ahead and real-time markets, PJM would focus on keeping the modeling and rules appropriate for each market, although not necessarily the same.

“In general, we like to keep the modeling consistent,” Morelli said, but she acknowledged the RTO is “not guaranteeing” it.

The deadline for filing comments is Feb. 28.

The DER and storage NOPR issued on Nov. 17 includes multiple proposals.

“It’s pretty broad,” PJM’s Andrew Levitt said. “Even within those sections, there’s quite a lot in play.”

Regarding the storage provisions, “PJM has already checked a lot of those boxes,” he said. The NOPR could be read to indicate that RTOs should be managing the state of charge for new offers, and “that’s something we’re chewing on internally.”

The DER section has prompted an “extensive” discussion about coordination with electric distribution companies, Levitt said.

Several stakeholders representing state interests expressed reservations about the proposal.

“In general, we states like to keep our hands on the mechanisms that control retail, and FERC [and RTOs] handle wholesale,” said Debbie Gebolys, a research analyst with the Public Utilities Commission of Ohio. “If we’re going to have them at the same party, how do we handle that?”

John Farber of the Delaware Public Service Commission said that debate is a “touchstone issue” because it’s not possible to “unmingle electrons.”

“Unless that issue is fully satisfied, it could create problems for states,” Farber said.

Levitt acknowledged the concerns. “We’re recognizing there’s much closer contact between retail and wholesale with DER.”

Problem Statement Endorsed to Address Pseudo-Tie Meter Correction

Stakeholders endorsed by acclamation a problem statement and issue charge proposed by the North Carolina Electric Membership Corp. to develop a protocol for monthly pseudo-tie meter correction.

Currently, no mechanism exists for monthly corrections of reported energy flow. Dave Pratzon of GT Power Group questioned whether the issue will be solvable within PJM or require collaboration with neighboring RTOs. PJM’s Ray Fernandez acknowledged that the question will be addressed in the research performed by the Market Settlement Subcommittee.

Spot-in Transmission Analysis Expanded to all Interfaces

Stakeholders approved revisions to a problem statement and issue charge intended to address spot-in transmission issues, expanding the analysis to consider all of PJM’s interfaces, not just that with NYISO.

The committee has already identified two potential solutions.

The first, more complex solution would entail NYISO modeling PJM’s available transfer capability (ATC) alongside its own in the ISO’s economic clearing engine. Spot-in transactions would then be allowed to clear economically up to the lower of the transfer values.

The second solution would move PJM’s earliest request time for spot-in service to 10 a.m. from the current 9 a.m. The delay would allow potential market participants to learn if their NYISO bid has been approved before requesting service into PJM. While this option would be easier to implement and easier to apply universally, it doesn’t directly address the issue.

The Monitor has insisted that any change to one interface should be applied to them all and urged that the problem statement and issue charge be expanded to consider all seams. (See PJM Considering Expansion of Spot-in Tx Solution to All Borders.)

Joe Wadsworth of Vitol, who has long sought resolution of the issue, prefers the first solution. “We wouldn’t oppose solution ‘B’, but it doesn’t get to the heart of the situation,” he said.

PJM Has No Objection to IMM’s ‘Paper Capacity’ Report

Bowring presented updated results of his team’s ongoing study on replacement capacity. The report found that some market participants are offering “paper capacity” into Base Residual Auctions and buying out of the obligations during subsequent Incremental Auctions to take advantage of price differences. (See PJM Monitor Asks FERC to Act on ‘Paper Capacity’.)

EnerNOC’s Katie Guerry contended that Bowring hadn’t sought comments from stakeholders before publishing the report and filing it at FERC. She asked what PJM’s stance was on the topic.

“Generally speaking, we don’t disagree with the report,” PJM Senior Counsel Jen Tribulski said. “We wouldn’t file anything with FERC to say we disagree with the report.”

– Rory D. Sweeney