A federal judge on Wednesday rejected a request to halt a federal lease of waters off Long Island for an offshore wind site (16-cv-2409).
Nine commercial fishing organizations and businesses and coastal towns in New Jersey, Rhode Island and Massachusetts sought an injunction in December to halt the lease even before the U.S. Bureau of Ocean Energy Management awarded it to Norwegian company Statoil. The company won the rights to the 80,000-acre New York Wind Energy Area with a $42.5 million bid.
The fishing groups said the lease would cause irreparable harm to fishing areas that produce scallops and squid; the municipalities cited “economic and natural resource interests” in the site.
“To meet the standard for irreparable harm, plaintiffs must present sufficient evidence that the purported injury is certain, great, actual, imminent, and beyond remediation. Plaintiffs have failed to do so,” D.C. District Court Judge Tanya S. Chutkan wrote. “Most significantly, plaintiffs have not shown that their purported injuries are imminent or certain.”
BOEM conducted an environmental assessment of the lease area. The plaintiffs claim the bureau, part of the U.S. Department of the Interior, violated the National Environmental Policy Act and the Outer Continental Shelf Lands Act.
“Plaintiffs’ only argument for why there is an imminent and irreparable harm, despite construction being years away if it happens at all, is that once the lease is issued, Statoil will have made a significant financial investment in the development of a wind facility and will have attained some ‘property rights’ in the ocean area, meaning the balance of harms for whether to issue an injunction later in this case will have changed,” the judge explained. “In the court’s view, this factor does not weigh strongly enough to create an imminent harm sufficient to warrant preliminary injunctive relief. The court maintains its authority to ultimately enjoin the lease in this litigation if necessary. Moreover, Statoil’s decision to invest in this lease is already made with full awareness that its proposals for a wind facility may be rejected and it may never construct or operate such a facility.”
The lease is one of the linchpins of Gov. Andrew Cuomo’s plan to develop 2.400 MW of offshore wind facilities off Long Island by 2030. (See 90-MW Wind Farm OK’d off Long Island.)
WASHINGTON — Energy storage is providing tangible benefits to the grid, and rules need to be implemented to ensure it finds its proper place, a panel of experts told regulators last week at the National Association of Regulatory Utility Commissioners’ winter meetings.
Storage “all felt very on the fringe. And now, especially with the FERC [Notice of Proposed Rulemaking] that was just issued, it’s more in the mainstream,” said Public Utilities Commission of Ohio Chairman Asim Haque, who moderated the panel.
“I think almost everyone believes we’ll have more storage in the future than we do now, and I don’t think we know in the long run how it will develop. … I think if it develops to the extent that we think it might be developing, it will just be its own thing,” acting FERC Chairman Cheryl LaFleur said. “You’ll say electricity is: generation, transmission, distribution and storage, rather than fitting it into the others.”
With its ability to act quickly, storage is providing significant “capacity value,” ICF International’s Ken Collison said. Capacity value is the capability to provide firm energy in the hour of need: A combined cycle unit with a forced outage rate of 5% has a 95% capacity value, meaning it is available on a firm basis 95% of the time. ICF’s research found that a 100-MW storage system with one hour of stored energy can provide 46 MW of firm capacity (46% capacity value), while one with four hours of storage can provide 99 MW of firm capacity.
Storage is unique because it can be both a load when needed and a generation resource when needed, Collison said.
That reaction speed translates to value for customers. Ned Bartlett, Massachusetts’ undersecretary of energy and environmental affairs, said the hours with the top 1% of demand account for 8% of ratepayers’ costs, and the top 10% account for 40%. That represents “remarkable peak opportunities” for storage, he said.
However, storage’s flexibility also creates some regulatory issues, LaFleur said. Previous precedent has limited installations to either cost-based transmission rates or market-based services. FERC believes that is too limiting, she said, and issued a policy statement in January to clarify that the commission is open to opportunities for units to serve both roles but with protections to ensure they aren’t paid twice for the same service. (See Storage Can Earn Cost- and Market-Based Rates, FERC Says.)
LaFleur’s Dissent
“I dissented on that order. I was concerned with some of the broader language in the policy statement about the potential impacts on wholesale markets of having other payments streams,” she said. “I thought it came awfully close to implicating some of the questions we have pending before us now with respect to state policy initiatives and how they’re valued in the wholesale markets, which I know we’ll be looking at.” (See related story, LaFleur Plans Tech Conference on State Generator Supports.)
Among the flurry of orders the commission issued before former Chairman Norman Bay resigned Feb. 3, FERC also ruled on a complaint by Indianapolis Power and Light, finding that MISO’s Tariff unreasonably limits the services energy storage can provide. It ordered the RTO to craft more inclusive Tariff language within 60 days. (See MISO Ordered to Change Storage Rules Following IPL Complaint.)
Collison noted that one of the biggest advantages of storage is it presents less permitting and siting issues. “You can site it at the place of need,” he said.
And sometimes, it’s even mobile. “The number of people who come up to you and describe the different things they’re doing with car batteries, including charging at work, bringing it home and powering the house from it. Really exciting; really confusing at times,” Bartlett said.
Massachusetts’ “ambitious” goal is to have 300,000 electric vehicles on the road by 2025, he said.
WASHINGTON — Electric vehicles and distributed energy resources are increasing the need for utilities to experiment and conduct market research, speakers at an Institute for Electric Innovation forum said last week.
“What differentiates us from every other competitive service is we have an … obligation to serve 100% of the customers. We don’t have the ability to define our niche market and confine our advertising to that market,” said Karen Lefkowitz, vice president of smart grid and technology for Pepco Holdings Inc. “Serving 100% of the customers used to be easy because everybody had the same stuff. … Now things have gotten really complicated, because now we actually have to understand our customers.”
Regional Preferences
When Pepco rolled out smart meters at its utilities in D.C., Maryland and Delaware, Lefkowitz said, the company tested avatars for a video series explaining how customers could use the data collected by the devices. To the company’s surprise, different regions preferred different avatars, Lefkowitz said.
“It tells us that customers’ opinions and their attitudes can be vastly different in a relatively short geographic difference. They’re influenced by incentives their states are offering; they’re influenced by the culture of the community that they live in. They’re influenced by the rate that the local utility is charging. So when we look to the future and see all the choices that customers have … we need to understand what drives the customer. We need to understand what appeals to them, and we need to understand why they’re looking elsewhere for their services.”
“I think you always want to be experimenting,” agreed Arizona Corporation Commission Chairman Tom Forese. “Focus groups and polling data … could be very helpful in understanding the needs of the customers. Nothing really can compensate for just raw experimentation because pollsters are always shocked and surprised: ‘We didn’t see that coming.’”
Manal Yamout, vice president of policy and markets for Advanced Microgrid Solutions, recalled when the California Public Utilities Commission ordered Southern California Edison to obtain 50 MW of 15-minute storage in response to the shutdown of the San Onofre nuclear plant. The company ended up procuring 250 MW of storage with a four-hour output.
“Why would they do that? They didn’t have to,” Yamout said. “The answer is that, unexpectedly, distributed storage resources had the ability to give Edison something it didn’t quite know it wanted until it had to think about it.”
Although it was the storage target that caused the procurement, it was the multiple functions storage could fill that led the company to exceed the target, she said.
“I think we’re in a place in the elect power industry that’s … like the beginning of the Internet, where serious policy and regulatory change has to occur to let things explode,” said moderator and IEI Executive Director Lisa Wood, quoting from a book by AOL founder Steve Case.
“Our regulators are in a tough place. The world is changing very fast,” said Lefkowitz. “For the very first time, they’re now adjudicating between who should have the ability to put assets on the electric system that historically has been the domain of the utility.”
Forese said he believes the utility must retain a central role. “If the utility is not directing traffic for new technologies, then I think we’ll get the opposite of what we’re trying to accomplish,” he said.
EVs’ Impact
Lefkowitz predicted electric vehicles will “change the world” but said it won’t happen quickly because it takes about 15 years for the entire vehicle fleet to be replaced with newer models. (See columnist Steve Huntoon’s alternate view, Electric Cars – Three Ugly Facts.)
Time will be essential in ensuring Pepco is “ahead of the curve,” Lefkowitz said: Charging an EV requires the equivalent of half of a house load.
“If we don’t size our distribution transformers appropriately and everybody comes home to the neighborhood and charges their car at the same time, we’re going to at minimum blow the fuses on all those distribution transformers — we’ll be spending a lot of time driving around to replace fuses. And at worst, we’re going to be spending trillions of dollars across the nation upgrading transformers.”
Lefkowitz said EVs will change Pepco’s peak load in the D.C. area from 4-5 p.m. to perhaps 7-8 p.m.
“So our planning has to be a lot more expansive and future-looking and rely a lot less on 100% history that no longer is necessarily a good predictor.”
She predicted an expansion of Pepco’s incentives to encourage off-peak charging, saying a pilot program in Maryland proved very popular.
“We’ve been talking about [time-of-use] tariffs and the right pricing for three decades,” Wood said. “But EVs may be the thing that actually brings that to life.”
CAISO will likely be forced to curtail a massive amount of renewable energy this spring when increased solar output is expected to coincide with unusually “bountiful” conditions for hydroelectric production, the ISO’s top manager said.
“The last several years, the hydro system has been de-rated fairly significantly — [by] up to 4,000” MW, CEO Steve Berberich said during a Feb. 16 meeting of the ISO’s Board of Governors. “We’re going to see that flip and we’re going to have that 4,000 MW this year, plus we’ve added another couple thousand megawatts of solar.”
Last spring, CAISO confronted a number of instances when over-generation reached 2,500 MW, Berberich noted. In those cases, the ISO could “lay off” about 1,000 MW of the excess on the Energy Imbalance Market, while the rest was handled with decremental bids — otherwise known as economic curtailments.
Curtailments are expected to soar this year as the increase in solar capacity combines with high spring snowmelt to fuel possible record surpluses. California’s snowpack currently stands about 175% of normal, according to the state Department of Water Resources.
“We could see [over-generation] as high as 6,000 to 8,000 MW at a time, which will be the biggest over-generation that we’ve had,” Berberich said.
On a related note, Berberich reminded board members that CAISO’s “duck curve” forecast predicted that the ISO would be dealing with 13,000-MW solar-driven generation ramps in 2020.
“This last Sunday [Feb. 12], we blew through 15,000 MW,” Berberich said. “So we’re seeing this quicker and deeper than we expected and we’ll have to continue to monitor that.”
In 2013, CAISO published the California “duck curve” chart to illustrate the long-term impact of increased renewable penetration on its daily operations.
That forecast showed how the adoption of solar and other renewable resources would steadily undercut the ISO’s “net load,” which represents the portion of load being served by dispatchable resources such as gas-fired generation and imports.
The “duck curve” is coming faster than expected. Introduced in 2013, the curve predicted CAISO would be dealing with 13,000-MW solar-driven generation ramps by 2020. The ISO exceeded a 15,000 MW ramp earlier this month.| CAISO
Net load is calculated by subtracting the energy generated by variable renewable resources from total electricity demand. The curve turns sharply higher at sundown, indicating the need to rapidly ramp flexible resources to serve load.
A research report published last year by the ScottMadden consulting firm indicated that the “belly” of the curve was deepening more rapidly than originally predicted, with the corresponding ramping effects spread across the entire year and not just the typical spring day characterized by high renewable output depicted by the graph. (See Report: Calif. ‘Duck Curve’ Growing Faster than Expected.)
WASHINGTON — Little more than a month after taking office in 2009, President Barack Obama ordered the Nuclear Regulatory Commission to stop work on a permit for licensing the nuclear waste depository at Yucca Mountain in Nevada. Obama acted at the behest of then-Sen. Harry Reid (D-Nev.).
The license application for the site, almost 140 miles northwest of Las Vegas, was the product of 30 years of work and $15 billion in spending, and the cancellation outraged nuclear operators and state regulators.
With Reid retired and a new president in office, two major political obstacles to Yucca are gone. But that doesn’t mean it will be quick or easy to solve the problem that has left the waste stored at almost 100 nuclear sites around the country.
“The last eight years has … just been a major setback for our nuclear waste policy,” Andy Zach, a staffer on the House Energy and Commerce Committee, told the National Association of Regulatory Utility Commissioners.
“It is going to take us a long time to dig out from where we are. That goes across the board: setting up an organization; reconstituting the key support contractors who did the work on the license application. … There has been an atrophy of talent, physical assets and a knowledge base that is going to have to be rebuilt.”
Michael McKenna, president of lobbying firm MWR Strategies, said the government has to be “nimble” enough to move toward Yucca and also develop an interim storage facility until the site is approved and ready to accept shipments.
But Jack Spencer, vice president of the Heritage Foundation’s Institute for Economic Freedom and Opportunity, said he believes an interim site is a mistake. “I think it releases all the pressure to complete Yucca Mountain,” he said.
Spencer said he believes Nevada’s opposition to the site can be overcome.
“I think that Nevada probably is largely against nuclear waste at Yucca Mountain in the context of it’s been [forced on it].
“I am nothing if not a believer in a free market, and I think most things have a price on them. And I think by … empowering [Nevada] to have some regulatory control — to say, ‘This is what it’s going to cost you’ — I think that we will probably negotiate something that will lead to a solution there.”
Spencer also said the 1982 Nuclear Waste Policy Act, which directed the Department of Energy to build a repository for used nuclear fuel and other high-level radioactive waste, should be rewritten.
“I think ultimately what we need in order to have the system work is to have the waste producers responsible for waste management,” he said. “My theory is [utilities] can do it cheaper than the government.”
The New England Power Pool’s Integrating Markets and Public Policy collaborative process will suspend its monthly meetings until May to allow ISO-NE more time to develop a market design for accommodating state-sponsored clean energy contracts without disrupting the Forward Capacity Market.
In addition to providing the RTO with time to develop a “conceptual market approach that could be implemented in the near term,” the delay will give states time to analyze long-term proposals discussed to date and for them to hold “off-line” discussions with stakeholders, IMAPP Chair William Fowler said in a memo released Wednesday.
ISO-NE’s proposal could be presented to the IMAPP group as soon as May and implemented for FCA 13 in February 2019, which will procure resources for the 2022/23 capacity commitment period. Any proposed market rule changes to its Tariff would require FERC approval.
NEPOOL Secretary David T. Doot told RTO Insider that FERC’s plans for a technical conference were cited by one IMAPP participant in a conference call Thursday as another reason to go slow. (See related story, LaFleur Plans Technical Conference on State Generator Supports.)
The original timeline set out last summer had hoped to have NEPOOL complete its work in December 2016. A revised schedule issued in November contemplated a proposal sent to ISO-NE by the second quarter of this year.
“The ISO’s near-term priority is for the region to develop a workable proposal for accommodating state-supported resources while minimizing their potential to suppress FCM prices and affect regional reliability,” ISO-NE spokesman Marcia Blomberg said.
Stakeholders in the IMAPP process have identified multiple paths to accommodating clean energy resources, including the introduction of a price on carbon or a two-tiered approach to the FCM that creates a separate class for clean energy. (See Markets vs. Climate Goals the Subject at NECA Conference.)
New England is the furthest ahead in contemplating the effects of out-of-market contracts on wholesale electricity markets, but the issue is gaining currency in NYISO and PJM. Three New England states are currently reviewing out-of-market long-term contracts for clean energy procurement. (See New England to Charge Ahead on Clean Energy Makeover in 2017.)
“Once the ISO has a market-based proposal, it would go through the NEPOOL Markets Committee for discussion. With recent state targets in mind, the ISO anticipates needing a near-term solution in place for FCA 13, likely requiring a FERC filing by the end of 2017 to impact the March 2018 FCM windows [for resource qualification]. The ISO is examining options and is targeting additional stakeholder discussions by May 2017,” Blomberg said.
Work on proposals will continue among stakeholders over the next several months, with interim IMAPP updates provided at NEPOOL’s monthly Participants Committee meeting.
“These are very complex discussions and sometimes there were reasons for a high [degree of] optimism and other times a low [degree of] optimism,” said Doot, an attorney with Day Pitney. “But this is hard and it’s going to take some time.”
WASHINGTON — Acting FERC Chairman Cheryl LaFleur said Tuesday that the commission will schedule a staff-led technical conference on how wholesale power markets can accommodate state policymakers’ initiatives to support generation.
Speaking to the winter meeting of the National Association of Regulatory Utility Commissioners, LaFleur noted that the commission has pending complaints challenging the zero-emission credit programs created by Illinois and New York to prevent their nuclear plants from retiring. The cases cannot be resolved until the commission regains the quorum it lost with the Feb. 3 resignation of former Chairman Norman Bay.
“We have several cases pending that raise those issues. While we can’t issue orders in those cases, one thing that [Commissioner] Colette [Honorable] and I have talked about that we can do is to organize a staff-led technical conference to bring people in before us, build a record and hear from the states, from the environmental community, from others — from the generators and the ISOs — to try and discuss some of those issues. So that’s something we are going to do.”
LaFleur noted that ISO-NE and PJM made changes to their capacity markets “to try to make sure that they were properly rewarding the resources you could always count on to be there when most needed,” a reference to the Pay-for-Performance program in ISO-NE and Capacity Performance in PJM.
“What the markets do not currently do is compensate nuclear resources for their carbon-free attributes. The markets weren’t designed to do that and that’s something the state programs are seeking to do,” she said.
“I think we only have three choices here: One is for the stakeholders and the ISOs in part to somehow have a design solution that retains the benefits of the competitive markets for customers but in a way that adapts to some of these state issues. That’s door one.
“Door two is we can litigate it out. I loved winning the [Order 745] case in the Supreme Court, but litigation is never my first choice for how to resolve things.
“And door three is some kind of gradual reregulation. … If the states want to reregulate, that’s fine, but I’m concerned that we’ll have unplanned reregulation as the markets just get cannibalized and we lose some of the reliability benefits for customers.
“So door one — making a decision to work this out and adapt the markets — is by far the best solution, and we’ll need the help of all the smart people in this room to do that.”
NARUC President and Pennsylvania Public Utility Commissioner Robert Powelson said he welcomed the conference and also praised PJM CEO Andy Ott for “step[ping] up on this issue.”
PJM is expected to issue a white paper in March on the subject.
CAISO’s straw proposal for procuring black start resources would entail significant collaboration with affected transmission owners.
The draft plan also calls for costs to be allocated to the transmission owner area in which the black start resource is located, rather than across the entire CAISO footprint, as the ISO initially considered.
The ISO developed the proposal after identifying a need for additional black start resources in the transmission-constrained San Francisco Bay Area, which is served by Pacific Gas and Electric. (See CAISO Kicks off Initiative to Procure Black Start Resources.)
CAISO’s developed the black start procurement proposal to address a need to better prepare the transmission-constrained San Francisco area for system restoration. | Visit California
Black start resources serving the Bay Area are relatively far from population centers, unlike in Southern California, where capability is more evenly distributed near major load centers and can provide a more rapid restoration.
The ISO’s initiative represents the second phase of a 2013 undertaking to address NERC reliability standard EOP-005-2, which requires transmission operators to develop plans for system restoration following blackouts.
Under the proposal, CAISO and the TO would jointly develop specifications describing the requirements and selection criteria for the black start resource. Criteria could include generator minimum load, the unit’s proximity to critical loads, interconnection voltage, megawatt output and reactive power capabilities and type of unit.
Responses to the subsequent procurement would be turned over to the TO, which would evaluate them against the selection criteria and then submit a written recommendation to CAISO.
The ISO would then evaluate the TO’s recommendation and approve or reject the choice. Once a resource is approved, CAISO would begin the contracting process with both the black start resource owner and TO.
“The length of any contractual commitment by the ISO and the black start service provider carry different risks and benefits to each party,” CAISO said in its proposal. “A longer commitment term to the ISO will provide greater certainty of sufficient black start capability, but the ISO may also want reasonable exit provisions to address changes in circumstances.”
CAISO is considering basing compensation on a cost-of-service approach rather than providing a capacity-type payment sufficient to support an otherwise unprofitable generator in operation.
“These arrangements should be expected to provide some reasonable expectation of cost recovery and margin to the black start service provider, but predicated on the basis that the resource is providing an incremental service — as opposed to an RMR [reliability-must-run] arrangement,” the ISO said.
CAISO is also considering a standard five- or 10-year contract with a clause requiring one year’s notice for termination in order to provide sufficient time to obtain a replacement resource or reach an RMR agreement to keep the contracted resource in place until a replacement is in service.
Under the proposal, the ISO would allocate the black start contract costs to the host TO, which could then recover the expense from its customers through its reliability services rate schedule. The ISO will likely need to revise its own Tariff to include black start services in the schedule.
“CAISO recognizes this approach would allocate incremental black start costs to all transmission customers within a PTO [participating transmission owner] transmission access charge area. However, to the extent this capability assists in restoring the PTO’s system, all transmission customers will benefit from this restoration,” the ISO said.
CAISO has scheduled a Feb. 21 call to discuss the proposal and is asking stakeholders to submit comments by Feb. 28. ISO staff are specifically seeking input on the proposed contract terms.
PJM’s Board of Managers on Wednesday approved more than $1.5 billion in transmission upgrades, led by a project to rebuild aging lines in Burlington, Mercer and Middlesex counties in New Jersey.
The project, in the territory of Public Service Electric and Gas, will replace transmission equipment as old as 80 years. It will rebuild and upgrade the 138-kV lines in the Metuchen-Edison-Trenton-Burlington corridor to 230 kV.
“The growing need to replace aging infrastructure, energy efficiency and the resulting reduction in the growth of demand for electricity are affecting transmission development,” PJM CEO Andy Ott said in a statement. “The current round of projects approved by the board reflects the trend.”
Other projects approved include transformer replacements and line rebuilds in the PSE&G, Metropolitan Edison, PPL, American Electric Power, Dominion, and Duke Energy Ohio and Kentucky areas.
PJM has now authorized more than $30.8 billion in transmission additions and upgrades in its Regional Transmission Expansion Plan since 2000.
PJM’s Board of Managers on Wednesday approved more than $1.5 billion in transmission upgrades, led by a project to rebuild aging lines in Burlington, Mercer and Middlesex counties in New Jersey.
The project, in the territory of Public Service Electric and Gas, will replace transmission equipment as old as 80 years. It will rebuild and upgrade the 138-kV lines in the Metuchen-Edison-Trenton-Burlington corridor to 230 kV.
Helicopter repairing transmission line | PSEG
“The growing need to replace aging infrastructure, energy efficiency and the resulting reduction in the growth of demand for electricity are affecting transmission development,” PJM CEO Andy Ott said in a statement. “The current round of projects approved by the board reflects the trend.”
Other projects approved include transformer replacements and line rebuilds in the PSE&G, Metropolitan Edison, PPL, American Electric Power, Dominion, and Duke Energy Ohio and Kentucky areas.
PJM has now authorized more than $30.8 billion in transmission additions and upgrades in its Regional Transmission Expansion Plan since 2000.
Stakeholders have lingering questions about CAISO’s proposal to protect small transmission owners from bearing the costs of network upgrades needed to interconnect generation serving load outside their service territories.
While the proposal was introduced to accommodate the specific circumstances faced by Valley Electric Association, the most recent draft allows CAISO to apply the plan to other small TOs that may join the ISO in the future. (See CAISO Issues Final Plan for Small TO Interconnection Costs.)
It was the ISO’s effort to retain that flexibility that prompted most stakeholder concerns.
“If we’re really trying to make this specifically helpful for this particular instance, it makes a lot of sense for us to make this as narrowly applicable as possible,” John Newton, a regulatory analyst at Pacific Gas and Electric, said during a Feb. 13 call to discuss the proposal.
Under the proposal, CAISO would examine case-by-case whether a TO should be allowed to fold low-voltage generator interconnection costs into high-voltage transmission revenue requirements — which would spread those costs across the ISO’s full rate base to avoid burdening ratepayers of small TOs with outsized fees.
Without the change, a $5 million network upgrade would increase Valley Electric’s low-voltage transmission access charge (TAC) by 18.75% to $7.44/MWh, said Steve Rutty, CAISO’s director of grid assets. A $25 million upgrade would nearly double the utility’s low-voltage TAC to $12.15/MWh.
The table shows the approximate increase in each TOs low-voltage TAC for network upgrade costs on their respective systems under CAISO’s current cost allocation methodology. | CAISO
By contrast, spreading the $25 million upgrade across the entire ISO would result in a 0.09% increase in the combined high-voltage and low-voltage TACs for Valley Electric and PG&E, while Southern California Edison would see a 0.06% bump.
Proposed Criteria
The ISO will determine eligibility for the relief based on whether the TO is:
Very small relative to other TOs, with a gross load of 2 million MWh or less (currently about 2.2% of the load of the ISO’s largest TO);
Located in a renewable resource-rich area gaining “elevated” interest for generator procurements; or
Not subject to a renewable portfolio standard or does not need the new interconnecting generation to meet that requirement.
Joseph Abhulimen, program and project supervisor at the California Public Utilities Commission’s Office of Ratepayer Advocates (ORA), wondered how the ISO landed on the 2 million MWh threshold, nearly triple Valley Electric’s load.
“Why is that number significant?” Abhulimen asked.
“Originally, in the draft proposal, we had proposed 5% [of the largest TO’s load], which would’ve equated to around 4 million MW,” Rutty said. “It would allow a utility such as [Valley Electric] to really significantly increase their size.”
Some stakeholders thought the 5% figure was too generous, Rutty explained, so the ISO narrowed it down to closer to 2%.
“We also wanted an even number, so we picked 2 million [MWh],” Rutty said. “The reason why we’re sticking at a fixed number is so that it’s not a moving target on them. As you know, loads change over time.”
The ISO was also concerned that a lower gross load threshold could subject relatively small TOs — and their ratepayers — to sharply increased low-voltage TAC rates once they exceeded the cap, Rutty noted.
‘Resource Rich’
Abhulimen also wondered about how the ISO would determine what qualifies as a “resource-rich” area. “What is the primary determinant for that designation?” he asked.
Bill Weaver, CAISO senior counsel, said the term was intended to allow case-by-case, rather than formulaic, determinations.
Stakeholders “can go to our board, they could comment at FERC, and we could really make a case-by-case determination whether we think someone meets this criteria, rather than trying to establish a bright-line test that may prove infeasible for future areas,” Weaver said.
“I’m still very concerned that I would have expected that there would be certain criteria established that would say that this particular [TO] is in a resource-rich area for X and Y reasons,” Abhulimen said. “It’s very hard for someone to comment on this particular principle when you don’t know what criteria were used to make this determination.”
Kallie Wells of Resero Consulting stumped ISO staff with a question about whether the proposal would apply to TOs that don’t serve any load.
“Most likely that would be something we would have to take up on a case-by-case basis with a different set of criteria,” Rutty said. “I don’t know that we would have any low-voltage, transmission-only type [TOs] that would be under 200 kV under those scenarios. But if it did come into play we would have to take a look at it at that time.”
PG&E’s Newton wondered how the new proposal would apply with the potential for the ISO to expand into other parts of the West. “Do you anticipate that is policy will apply broadly?” he asked.
Rutty replied that it — and anything in the Tariff — would be applied to similarly situated customers.
“That said, we’re not hiding anything here,” Rutty said. “We’re not trying to sneak this in. We have no new [TO] with less than 2 million MWh in the pipeline for [TO] participation.”
Gaming Concerns
Charles Mee of the California ORA posed what he called an “extreme” hypothetical situation in which a small TO contracts with external resources to serve all of its local load while all generation within its area is contracted to serve load in other TOs — thereby evading any upgrade costs being rolled into its low-voltage TAC.
“So do you consider all the generators that, contractually, are not serving the local load be qualified for this treatment?” Mee asked.
“I think so,” Rutty responded. “We see what you’re getting to — that we don’t want to create a system that can be gamed. But at the same time, we want to ensure that each [TO] can find the lowest-cost capacity for its load-serving needs, which is why we started this” proposal.
Rutty added he couldn’t imagine Mee’s hypothetical being cost-efficient for a transmission-owning utility and that any hint of manipulating the system could result in a “very easy” Section 206 complaint at FERC.
“I think we need to think about that, so include it in your comments,” he added.
Comments on the proposal must be submitted to CAISO by Feb. 22. The ISO expects to seek approval for the plan at next month’s Board of Governors meeting March 15-16.
