Page 1387 – RTO Insider

October 10, 2016

CAPS Leader Looking to Pass the Torch

By Rory D. Sweeney

It’s been three years since Dan Griffiths became the first executive director of the Consumer Advocates of the PJM States.

Dan Griffiths caps pjm — Griffiths | © *RTO Insider*

Now he’s ready to hand the reins to someone else.

Griffiths describes himself as “a startup guy,” which served the nascent CAPS organization well when it was all just ideas. The concept of a single voice for all of the state consumer advocates within PJM’s territory had been around for some time — Griffiths himself had started thinking about it in the early 2000s — but the opportunity didn’t materialize until 2012 when FERC, in a market manipulation settlement with Constellation Energy, ordered that $6 million in fines should benefit PJM consumers.

Griffiths, who had been representing demand response provider Comverge at PJM after seven years in the Pennsylvania Office of Consumer Advocate and 18 years at the state’s Public Utility Commission, emerged from the hiring search. (See Consumer Advocates Name Director.)

“They had the money, but … they didn’t have the structure,” he said. “I’ve always enjoyed the creative anxiety that makes me perform well in startups. … There’s a lot of problems to solve and there’s not a lot of structure.”

Well, the structure is now there. Protocols, policies, procedures — they’re all in place. Griffiths was able in April to get the members to convene and decide how the organization should be run.

The members developed policies for prioritizing the issues the group will pursue. Members also identified a need for a conflict of interest policy and made improvements to bylaws, financial policies and reimbursement policies, Griffiths said. The updates are scheduled to be approved at CAPS’ next board meeting, he said.

Pleased with the progress, he realized that he had reached the extent of his usefulness to the organization, he said. “The organization was coming together in the right way, and I could step away without feeling like I was leaving gaps,” he said. “It’s been great personally; it’s been great professionally; and it’s time for me to get the right person in here.”

He plans to find his successor and retire by the end of the year.

Rather than someone who can build something from nothing, CAPS’ next executive director should be a strong administrator, Griffiths said. Because most consumer advocates are attorneys and have the legal aspects covered, candidates don’t necessarily have to be lawyers, he said. Engineers and policy experts stand just as good a chance at being the right fit.

“We’re looking for somebody from the RTO space, hoping to find somebody with some consumer perspective,” he said. “If we get somebody who’s been in the stakeholder process, they will know the policy map” and won’t have too steep of a learning curve.

Luckily, the successful applicant will soon have help. Space has been carved out in the budget for the new executive director to also hire an administrative assistant, Griffiths said.

In March, FERC approved PJM’s creation of a funding mechanism to support CAPS through a charge to residential electric customers. Beginning next year, CAPS will receive an initial annual budget of $450,000. FERC approval would be needed for any budget increase of more than 7.5%. (See FERC Approves PJM Funding of Consumer Advocates.)

Application details are available for download on CAPS’ website.

October 10, 2016

EBA Speakers Recall Overcoming Racial, Gender Bias; Decry 2016 Election Rhetoric

By Rich Heidorn Jr.

WASHINGTON — The Energy Bar Association opened its conference last week with four present and former regulators discussing their career challenges as women and minorities. Although the speakers’ recollections dated back decades, they said the issues they confronted remain salient today.

eba (energy bar association) on diversity and overcoming bias, 2016 election rhetoric — Left to right: Cintron, LaFleur, Gee, Bailey and panel moderator and EBA President Emma Hand | © *RTO Insider*

Former Texas regulator Robert W. Gee recalled how he moved to D.C. to find work after being told he wouldn’t be hired by major law firms in Houston because he was Asian American.

Although he found Washington “more hospitable,” he was nevertheless told in an interview at one federal agency that if he were hired, “’we’re going to have to keep an eye on you because we hired [a minority] in the past and she didn’t work out.’”

Overachieving

The “difficulty getting that first job has always been with me,” he said. “It’s sort of like the fear factor that drives you. You have to prove to people that you’re better than the next person.”

Puerto Rico native Carmen Cintron, FERC’s acting chief administrative law judge, felt a similar need to overachieve. As a woman and a Latina, she said, she had “two strikes” against her when started her career at the Federal Communications Commission.

“I still work 24/7. And I work when I’m on vacation. And I think that was because I had to prove, more so than anybody else, that I can do the work and complete the assignments in a timely fashion,” she said.

Former FERC Commissioner Vicky A. Bailey recalled being bused to her high school during the integration of schools in Indianapolis. She praised the “courage” of former Indiana Gov. Robert D. Orr for appointing her to the state Utility Regulatory Commission, where she was the second female and first African American appointee.

FERC Commissioner Cheryl LaFleur, the first in her family to attend college, cited a high school classics teacher and former New England Electric System CEO John Rowe for mentoring and sponsoring her. Although she was not immune to sexism — she recalled seeing “girlie” pinups in a utility locker room — she said her most difficult time came in her 30s when she was trying to raise two young children as a working mother. While other people talked of their five-year plan, she said, her concern was, “How do I get to Friday?”

Divisive Campaign Rhetoric

Although each of the speakers’ stories was one of triumph, the issues they confronted remain — as evidenced, they said, by the rhetoric in the 2016 presidential race.

The issue was raised by a questioner from the audience, who said the campaign’s rhetoric was reminiscent of 1930s Germany.

Although no one mentioned him by name, it was clear the questioner, and the speakers on the dais, were thinking of Republican presidential nominee Donald Trump.

LaFleur responded by recalling her regret over not challenging a client’s anti-Semitic remarks at a dinner to celebrate a legal victory 40 years ago.

She said she finds “very troubling … what our public discourse has come to [concerning] people who are different than we are.”

“In your own life, I think it’s important to have the courage to speak up if somebody says something that’s inappropriate no matter how difficult and awkward it is to say ‘We don’t do that,’” she said.

Gee also responded.

“If we let this type of rhetoric divide us, we will become another Weimar Germany. We could become that,” he said. “There are people who would like to see that happen. We cannot allow that to happen.”

Bailey, now a Republican, grew up a Democrat, the daughter of a domestic worker.

“It has been hurtful to hear some of the divisive rhetoric that has been spewn across the TV,” she said. “I am now an African American who happens to be a Republican. I’m waiting for someone in leadership to stand up and say, ‘This is not what we’re about.’”

October 10, 2016

Generators: ‘Unjust’ Rule Cost $100M in New England Heat Wave

By William Opalka

New England generators say a rule meant to prevent withholding of generating resources unfairly cost them $100 million during an August heat wave (EL16-120).

The New England Power Generators Association filed a complaint with FERC on Sept. 30, saying ISO-NE’s peak energy rent (PER) adjustment created “absurd” results during a six-hour period of intense heat that featured unexpected outages and high prices.

The PER adjustment reduces capacity suppliers’ monthly capacity payments by an amount that approximates the “peak energy rents” earned by a hypothetical generator in the real-time energy market.

NEPGA asked FERC to order ISO-NE to “return the PER adjustment to a just and reasonable level” effective immediately.

The association said that on Aug. 11, as temperatures approached 100 degrees across New England, energy demand rose to 25,195 MW, the highest peak demand in several years. ISO-NE entered the day with 3,334 MW of reserves.

A morning lightning storm in Connecticut caused voltage problems that led to transmission outages and the loss of 3,113 MW of generation. ISO-NE implemented demand response at 2:25 p.m. At 2:50 p.m., the wholesale price peaked at $2,690.60/MWh, with the hourly price settling at $1,438.97/MWh, according to the complaint.

“Far from earning significant compensation during this emergency, the vast majority of capacity resources incurred significant losses across these operating hours. In other words, suppliers have been put in the untenable position of paying load to run during the electricity system’s most critical hours,” NEPGA wrote. “Suppliers incurred an aggregate penalty through the PER adjustment mechanism of over $100 million for just six hours on Aug. 11, while the total cost of energy paid by load for those six hours was only about $18 million.”

The generators added that 37 hours subject to the rebate over the past 20 months have caused suppliers an estimated $193 million in financial penalties.

iso-ne new england heat wave nepga ferc — | *ISO-NE*

When the hourly real-time energy market price exceeds a predetermined daily “strike price,” the RTO calculates an “hourly PER” value that roughly equals the difference between the real-time clearing price and the strike price. These monthly values are added for the month, averaged over a rolling 12-month period, and then deducted from suppliers’ monthly capacity payments.

The PER adjustment is intended to discourage economic withholding and to provide a hedge to load against price spikes in the real-time market.

“The rebate has become an unjust and unreasonable penalty,” NEPGA said. “The problem is that ISO New England calculates the rebate based on the earnings of a hypothetical generator in the real-time energy market, but the vast majority of generators that pay the rebate earn their energy market revenue in the day-ahead energy market.”

According to the complaint, the Aug. 11 strike price was approximately $233/MWh. Capacity resources in the real-time energy market were paid approximately $1,400/MWh but had to pay a rebate penalty of roughly $1,075/MWh.

NEPGA tried and failed to persuade FERC to eliminate the PER adjustment two years ago. (See ISO-NE Gens. Challenge Capacity Rules Ahead of FCA.) An appeal to the D.C. Circuit Court of Appeals is pending.

FERC last year approved a Tariff change submitted by ISO-NE that eliminates the PER adjustment on June 1, 2019, at the start of the 10th capacity commitment period. The RTO said reforms in the day-ahead energy market and its Pay-for-Performance program that starts on the date have made the rule unnecessary (ER15-1184).

October 10, 2016

PJM Planning Committee Briefs

PJM last week laid out a timeline for compliance with the geomagnetic disturbance reliability standard approved by FERC in September. (See FERC Approves GMD Reliability Standard.)

The RTO told the Planning Committee it will be required to perform a network vulnerability analysis, and owners of 200-kV and larger transformers must perform transformer heating analyses. As of Jan. 1, stakeholders will have six months to establish roles and responsibilities. Within 18 months, they’ll have to provide models to accomplish the analyses. FERC has allowed up to five years to complete the remainder of the implementation plan.

“We’re not stuck with a blank sheet of paper here,” PJM’s Frank Koza said. “We did a lot of this work in 2014 with all of your cooperation, so we’re pretty far down the road in terms of understanding what needs to be done. We will need to do more in terms of gathering better data for doing the study again, but we’re on our way.”

Among the changes FERC required for the standard is public disclosure of all geomagnetically induced current detector and magnetometer data. Within the PJM region, 47 such devices are in use.

“The science here is not fully done on GMD, so what’s going to be done here is additional research,” Koza said.

Members OK Revised Relay Subcommittee Charter

Members approved an update to the Relay Subcommittee’s charter, which was last amended in 2012.

More Granularity Requested on Winter Reserve Targets

Stakeholders approved PJM’s installed reserve margin study results and recommendations, but they asked the RTO to be more specific with its weekly reserve targets for winter.

The 27% winter reserve target, which is identical to last year, was produced using an average for the entire winter. But the margin needed to meet the one-day-in-10-years loss-of-load expectation ranged as low as 22% in December and peaked at almost 39% for the first week in January.

Stakeholders asked if PJM would switch from a season-long average to monthly ones.

“That’s something that PJM would like to assess internally,” PJM’s Tom Falin said. “I think it’s going to depend on how confident PJM is that the winter peak will happen in January. It doesn’t always.”

PJM to Retire Manual 35

With staff focused on maintaining PJM’s online glossary, the definitions in Manual 35 haven’t been updated in years, explained Janell Fabiano, senior stakeholder process facilitator. That, combined with definitions available in several other outlets, have led PJM to decide to eliminate the manual.

Though the news didn’t generate substantial discussion, it did engender mild protests from some stakeholders. Ed Tatum of AMP and Jim Benchek of FirstEnergy joked about making “Save Manual 35” T-shirts.

Dominion Retiring Bath County Thermal SPS

A special protection scheme used to minimize N-1 overloads and allow for a higher pond level at a pumped storage facility is no longer needed thanks to a number of regional system upgrades.

Dominion Resources plans to retire the Bath County thermal SPS by Dec. 1, but it says the stability SPS there will remain in place.

– Rory D. Sweeney

October 10, 2016

Latest CAISO Proposal Fills out Western RTO Governance Plan

By Robert Mullin

CAISO last week released the third draft of a proposal outlining the governing framework for a Western RTO.

The latest draft fleshes out concepts introduced in earlier versions, including the composition and role of the Transitional Committee to guide regionalization, and sets out a timeline for transitioning to a board independent of California oversight.

The proposal also more thoroughly outlines the process by which a body of state representatives — the Western States Committee (WSC) — would determine whether a proposed RTO policy encroaches upon state regulatory authority. (See Revised Western RTO Governance Plan Highlights State Authority.)

The draft is the first revision since California Gov. Jerry Brown asked CAISO and other state agencies to postpone their joint effort to present lawmakers with a governance proposal in early August. Under state law, the legislature must authorize the ISO’s transition into a regional body. (See Governor Delays CAISO Regionalization Effort.)

“The governance structure of a regional ISO is clearly one of the key topics that must be addressed for regionalization to go forward,” CAISO said.

What is still unknown is whether the proposal will convert enough RTO skeptics inside and outside California to jump-start the process of regionalization and provide California legislators with a well-supported set of principles in January.

‘Collaborative Process’

Preservation of state authority remains a central focus of the revised proposal, which addresses stakeholder requests that the ISO delineate the process for determining whether a proposed policy initiative by a future RTO would “materially diminish” state or local authority. CAISO set out a series of measures modeled on the “collaborative process” currently used in the Energy Imbalance Market when a stakeholder challenges ISO staff assumptions about whether a policy matter falls under the primary authority of the ISO board or the EIM governing body.

The first step: a procedure for state and local authorities to raise concerns with RTO staff — and, if necessary, the board and WSC — during the stakeholder policy development process prior to a FERC filing.

The board would then consult and collaborate with the WSC to determine whether an initiative complies with the RTO’s provisions protecting state authority.

When either body — by majority vote — determines that a policy impairs state authority, the policy will be subject to a combined vote of both bodies. If a majority of the two bodies collectively vote against the policy, it will not be approved — unless members of the WSC unanimously approve it.

Transitional Committee Changes

The revised governance proposal also takes up stakeholder concerns about the Transitional Committee charged with transforming CAISO into an independent RTO and developing a final proposal on governance.

The latest draft narrows the range of issues to be considered by the committee, with the process of selecting a final, independent board delegated to separate Nominating and Approval committees.

“This change is made to ensure that the [Transitional] Committee has a well-defined and achievable scope of work that is focused specifically on the key outstanding issues that are not resolved in these principles,” CAISO said.

The proposal specifies that the committee will include one public official — as opposed to the more loosely defined “representative” — from each state in the RTO’s footprint.

As set out in the previous draft, the committee will also consist of one representative each selected from a cross-section of eight industry sectors. The proposal saw a few alterations to those sectors, including the folding of power generators and marketers into the independent power producer sector, the insertion of community choice aggregators into the publicly owned utilities sector, and the expansion of the consumer advocate sector to include “end-use” consumer groups as well as state-sanctioned ratepayer advocates.

Sectors will now directly choose their representatives, rather than forward two nominees to the current ISO board for final consideration. Still, the board will retain the option to appoint additional members in order to ensure geographical diversity on the committee.

CAISO’s draft also encourages the Transitional Committee to develop a governance proposal supported by all members, while providing for a resolution process if achieving consensus is not possible.

In response to stakeholder concerns about timelines, the revised proposal sets a deadline for the ISO’s transformation to a fully independent RTO. It would conclude with a new board selected through a new nomination and approval process, which must occur within 36 months of the adoption of the regional governance plan.

Supermajority Voting

To accommodate the interests of smaller Western states concerned about California’s outsized representation in an expanded CAISO, selection of the new RTO board will be subject to supermajority provisions that will apply to both the Nominating and Approval committees described in the latest proposal.

The final board will consist of nine members, a count the ISO says is consistent with other RTOs in the country — and which spreads responsibilities sufficiently enough without being too unwieldy to bring members together for monthly meetings.

The stakeholder-based Nominating Committee will be chosen by members of up to nine industry sectors, while the Approval Committee will consist of voting members of the WSC.

Board candidates will be forwarded to the Approval Committee only after winning 75% support in a load-weighted vote of the Nominating Committee. Finalists must meet the same vote threshold to be seated by the Approval Committee.

Decisions falling under the “primary authority” of the WSC will be subject to the same 75% load-weighted voting process. The committee — comprising one representative from each state in the RTO’s footprint — will be responsible for approving FERC filings related to “certain regional ISO policy initiatives on specific topics” dealing with transmission cost allocation and resource adequacy.

Exceptions to the WSC approval requirement can made when a reliability threat necessitates that the RTO file with FERC on a temporary basis or if a supermajority of the board determines that a WSC filing would undermine a reliability standard or FERC requirement.

The RTO would also be permitted to file at FERC without WSC approval after “a sustained period of inaction” by the committee, which the latest proposal defines as at least 90 days after a matter has been submitted for consideration.

Despite requests from a number of industry participants, the revised proposal makes no provision for the creation of a formal stakeholder committee — such as a market advisory committee.

“This is an important topic and one that deserves further discussion among all stakeholders, both in comments on this second revised proposal and ultimately in the transitional committee forum contemplated in this principle,” CAISO said.

October 10, 2016

Company Briefs

Calpine is purchasing the U.S. energy business of commodity trader Noble Group, the companies announced Monday.

The companies said Calpine will pay $800 million plus working capital for Noble Americas Energy Solutions, which claims to be the nation’s largest independent supplier of power to commercial and industrial retail customers. Calpine said the working capital totals $100 million; Noble put it at $248 million.

“In addition to expanding our retail customer sales channels and product offerings, we will more than double the volume of retail load we are capable of serving across the country from our complementary wholesale power generation fleet,” Calpine CEO Thad Hill said in a statement. The sale will help Noble reduce debt.

More: Bloomberg; The Wall Street Journal; Calpine

Mission Solar Energy Ends Solar Cell Production

Mission Solar Energy will now use solar cells from Asia to make its solar power modules.

The company announced plans to end its solar cell production line in San Antonio, Texas, because of competition from Chinese manufacturers.

The decision to buy solar cells instead of making them is part of a restructuring strategy that allows the company to focus on its main products, reduce prices and stay competitive, Laura Waldrum, a company spokeswoman said.

More: San Antonio Business Journal

Korsnick Elected President of NEI

Maria Korsnick was elected president and CEO of the Nuclear Energy Institute, effective Jan. 1, 2017. She succeeds Marvin Fertel, who retires on Dec. 31.

Since May 2015, Korsnick has served as NEI’s chief operating officer as a loaned executive from Exelon Generation and Constellation Energy Nuclear Group.

“The NEI Executive Committee is confident that Maria will enable NEI to increase recognition of nuclear energy’s value, further empower the nuclear industry’s commitment to efficiency and reliability, and facilitate the development of next-generation reactors,” said Don Brandt, chairman of NEI’s board and CEO of Pinnacle West Capital.

More: Nuclear Energy Institute

Mississippi Power’s Lignite Plant Adds to Delay, Cost Overruns

Mississippi Power’s Kemper County plant has delayed running on lignite by one month, adding another $33 million in cost overruns to a project that is more than two years behind schedule.

The delay, from Oct. 31 to Nov. 30, raised the total estimated cost of the project to about $6.9 billion.

The new delay is necessary to prepare both of the plant’s gasifiers to use syngas and to integrate systems so that both of the plant’s combustion turbines will operate simultaneously, Mississippi Power spokesman Jeff Shepard said.

More: Mississippi Today

Apex Plans Wind Park In Texas Panhandle

Apex Clean Energy has purchased the up-to 360-MW Novus IV wind project in Texas from Novus Windpower and plans to construct a wind park in the north Texas Panhandle.

Construction could begin as early as 2017, according to Apex.

More: SeeNews Renewables

GE, Southern California Edison Plan World’s First Hybrid System

General Electric and Southern California Edison announced last week a plan to install the world’s first battery storage and gas turbine hybrid in response to the energy crisis in California’s Aliso Canyon earlier this year.

By the end of 2016, SCE plans to install a battery energy storage system from Current, powered by GE, and then integrate the system with a gas turbine in 2017.

The hybrid system will be deployed at two SCE sites.

More: General Electric

PSEG Plans to Close Two Coal-Burning NJ Plants

PSEG Power plans to close two of its New Jersey coal-burning power plants effective June 1, 2017, citing the cost of modernization as its reason.

The plants, located in Jersey City and near Trenton, would need to be upgraded to comply with new rules imposed by PJM to ensure reliability, PSEG President Bill Levis said.

“The sustained low prices of natural gas have put economic pressure on these plants for some time,” Levis said. “In that context, we could not justify the significant investment required to upgrade these plants.”

More: The Record

Duke Plans to Recycle Coal Ash from Salisbury, NC, Basins

Duke Energy last week announced plans to remove coal ash from three basins at the Buck Steam Station in Salisbury, N.C., and recycle the material for concrete.

North Carolina’s coal ash law requires Duke to install three recycling units across the state.

Duke said it is still evaluating locations for the second and third units.

More: Duke Energy

Xcel Completes Transmission Line Across New Mexico, Texas

Xcel Energy has completed a 115-kV transmission line spanning more than 37 miles across the New Mexico-Texas state line.

Xcel built the line, which cost approximately $38 million, after a SPP study identified a need for a stronger transmission link in the area.

The transmission line is part of Xcel’s multibillion-dollar Power for the Plains grid improvement initiative.

More: Xcel Energy

Dynegy Names New COO, Executive Vice President

Dynegy has promoted Martin Daley, who previously served as vice president in charge of the power company’s natural gas-fired fleet, to chief operating officer. It is the first time the company has appointed a COO in nearly four years.

The company also promoted Carolyn Burke to executive vice president of strategy. Burke previously was the executive in charge of business operations.

More: FuelFix

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October 10, 2016

Smooth EIM Transition for Arizona Public Service, Puget Sound Energy

By Robert Mullin

The entry of Arizona Public Service and Puget Sound Energy into the Western Energy Imbalance Market was largely “uneventful,” according to a CAISO official who helped lead the effort to integrate the two utilities into the region’s only real-time market.

“I’ve been through three sets of transitions, and I would say that each one is getting smoother,” Mark Rothleder, the ISO’s vice president of market quality and renewable integration, said during an Oct. 5 meeting of the EIM’s governing body.

Still, Rothleder noted that it took a “huge amount” of work on the part of CAISO to guide the Oct. 1 rollout, which required about 30 staff to be present at the ISO’s Folsom, Calif., headquarters while others joined APS and PSE at their operations sites.

“We found that the APS and PSE teams were very well prepared,” Rothleder said.

APS brought on 16 new hires, created four new operations and trading desks, and undertook 9,000 hours of training related to the EIM, said Justin Thompson, the utility’s director of resource operations and trading. Utility staff had been testing systems since late winter.

“My recommendation to our execs was that you need 20 months to execute this,” Thompson said. “We shoehorned it in 15 to 16 months, and I wouldn’t recommend that for anybody.”

Four days into the transition, Rothleder said that it was “not unexpected” that the ISO had observed price volatility. Staff are still reviewing the issue to determine whether it reflects actual system conditions or stems from a data anomaly or software problem in need of correction.

arizona public service, puget sound energy, eim — | *CAISO*

Delving into the operational underpinnings of the EIM, Rothleder explained that each balancing authority area (BAA) participating in the EIM needs to pass two tests heading into every hour.

The first: A BAA must be balanced between generation and load in order to match its forecast.

The second: It must demonstrate enough ramping capability or resource flexibility to meet expected variability within the hour.

“These two tests are an indication that they’re coming into the system sufficiently resourced without leaning on other parts of the system,” Rothleder said.

During the first four days of participation in the EIM, APS and PSE passed the balance test 95.8% and 100% of the time, respectively. Both utilities have so far rated 100% on the flexible ramp test.

“These are very good results — and don’t take 95.8% as an indication that anything’s wrong,” Rothleder said, adding that it can take time for a utility to adjust to the “new paradigm” of the EIM.

According to Rothleder, APS has so far shown good price convergence between the EIM’s 15-minute and five-minute markets, which have yielded averages of $16/MWh and $20.50/MWh, respectively.

The PSE system experienced more price volatility during the first day, but the market stabilized after that, Rothleder said.

PSE’s prices have been in the “normal range,” averaging in the upper teens to mid-$20s/MWh, “which is consistent with the [bilateral] market,” said Josh Jacobs, director of load-serving operations at PSE. “So that’s a good result.”

puget sound energy arizona public service eim — Arizona boasts ample transfer capacity with its three EIM neighbors – CAISO, NV Energy, and PacifiCorp. | *APS*

Day Four in the market also saw Arizona real-time price averages dip into negative territory, which CAISO attributes to maintenance-driven transmission constraints in Southern California trapping generation in an area currently experiencing low seasonal demand.

“This is the role of the Energy Imbalance Market — to absorb some of that energy which can then go somewhere else at those times,” Rothleder said. “If we didn’t have transfers to APS for that energy from the south, we would’ve probably been economically reducing — or potentially curtailing — renewable resources because there was too much energy at the time relative to the transmission constraints that were binding.”

Rothleder pointed out that the APS system boasts “quite a bit” of transfer capability.

“We can transfer a lot back and forth with PacifiCorp, NV Energy and the California ISO,” Thompson noted. “We’re kind of the freeway of the EIM system there.”

“Transfer capability is really the grease that makes the Energy Imbalance Market work well,” Rothleder said.

October 10, 2016

EBA Speakers Ponder a Western RTO

By Rich Heidorn Jr.

WASHINGTON — Seattle officials Monday deferred action on a proposal by the city-owned utility to join the Western Energy Imbalance Market. Seattle City Light could become the sixth utility to join the CAISO-run EIM, following recent additions Arizona Public Service and Puget Sound Energy, which began EIM operations Oct. 1, and Portland General Electric, which is scheduled to join in 2017. (See related story, Smooth EIM Transition for Arizona Public Service, Puget Sound Energy.)

An official of the Seattle utility joined several other Western energy leaders at the Energy Bar Association’s Mid-Year Energy Forum last week to discuss the growth of the EIM, “Caliphopia” and how the Western Interconnection is likely to change.

eim western rto seattle city light — Cromwell | © *RTO Insider*

To Robert W. Cromwell Jr., director of regional affairs and contracts for Seattle City Light, the math of joining the EIM is a no-brainer. Cromwell said it will cost the city $8.8 million to join the EIM and $2.8 million a year in operating costs. The payoff? An estimated $4 million to $23 million in annual savings through arbitrage opportunities by “capturing low prices to serve load [and] high prices to sell surplus energy.”

Cromwell said the utility differs from other public power companies because its large hydropower facilities on the Skagit and Pend Oreille rivers “force us to sell into the market.”

He said the utility also is pressured by declining wholesale revenue — a trend likely to worsen as growing wind and solar power create more frequent periods of zero and negative pricing — and declining retail loads. “I’ve got about 60 tall cranes [constructing] very large buildings in my city and my load went down,” he said.

On Monday, the Seattle City Council delayed a vote on the EIM initiative for three weeks. The bill would allow City Light to enter an exploratory phase for joining the EIM, but some council members were concerned about the costs of doing even that.

Jonathan M. Weisgall, vice president of legislative and regulatory affairs for Berkshire Hathaway Energy, also sees the advantages of regionalization as undeniable. Pointing to a map showing the 38 balancing authorities in the Western Interconnection, he joked, “To call this Balkanized is to insult Macedonia.”

Bilateral trading with manual dispatch and little situational awareness of other BAs is like using Craigslist, he said. The EIM, he said, is like “Match.com for electrons,” with five-minute dispatch, which is more accommodating for renewable generation.

Berkshire Hathaway’s NV Energy and PacifiCorp have saved $60 million since joining the EIM — a 20-month information technology project, Weisgall said, that required no new physical infrastructure.

‘Caliphobia’

Not everyone is rushing to join CAISO’s expansion, of course. For some, any sentence containing the words “California” and “energy” sends shivers. It’s not just the state’s liberalism but also memories of the 2000 energy crisis and Enron, which purchased Portland General Electric before imploding following disclosures of accounting and power trading frauds.

“The Northwest didn’t forget. Memories are long up there,” said Jonathan D. Schneider, of Stinson Leonard Street, who moderated the discussion.

Weisgall acknowledged that what he called “Caliphobia” is a challenge to a West-wide RTO.

“You’re trying to marry three incredibly blue states — California, Oregon and Washington — where it’s almost a felony to produce coal — with three very red states — Wyoming, Idaho, Utah — states that do not care about getting to 50% renewables much less … about greenhouse gas emission programs,” he said. “That makes it very, very tough.”

“We should not underestimate the challenge of getting there,” agreed Kenneth G. Jaffe, a partner with Alston & Bird, who represents CAISO.

“There are a large number of public power brethren in the Northwest who simply will not join a centrally cleared market before they die,” agreed Cromwell.

He noted efforts by Xcel Energy and others to create a Day 2 market in the Front Range in central Colorado and southeastern Wyoming, which he predicted will be operated by SPP or MISO. “The Cal-ISO isn’t the only game in town. (See “Xcel Seeking Larger Dispatch Areas in the West,” Overheard at the Transmission Summit.)

BPA’s View

eba western rto seattle city light — Baskerville | © *RTO Insider*

In addition to the political challenges and governance questions, another obstacle to an RTO West has been the Pacific Northwest’s bounty of rivers. Cheap hydropower represents about half of the power generation in the Northwest.

That’s “one of the reasons why a standalone market in the Northwest hasn’t penciled out the way it would in a somewhat more diverse resource base as is so in the east,” Schneider said.

“If you’ve got a local public utility district and your embedded costs of delivering power is about 2 cents/kWh … [any change] is a cost adder,” agreed Cromwell.

Nevertheless, the Bonneville Power Administration has been seeking ways to collaborate with CAISO, said Sonya Baskerville, manager of BPA’s national relations office. The agency is concerned with serving BPA load located within BAs that have joined the EIM as well ensuring it has outlets for marketing surplus energy.

“We can’t just sit by and let things roll on without being a player in that. We are having active conversations with the Cal-ISO, with other utilities in our region to talk about our primary goal, which is to preserve the value of our system — both hydro and our federal transmission system,” she said.

Central to any agreement would be a governance structure that preserves BPA’s financial and operational interests, Baskerville said.

“In the Northwest, we like to have control over our own destiny,” she said. Previous regionalization efforts “have failed because [of] that one issue.” (See related story, Latest CAISO Proposal Fills out Western RTO Governance Plan.)

— Robert Mullin contributed to this article.

October 10, 2016

Commenters Weigh in on Tx Needed to Meet NY Policy Goals

By William Opalka

NYISO last week forwarded to New York regulators 12 proposals for transmission projects to help the state meet its public policy objectives (16-E-0558).

The proposed projects, coming at the start of the ISO’s 2016/17 transmission planning cycle, would provide the state with access to offshore wind resources off Long Island, Canadian hydropower and clean energy from PJM. There are also proposals to unbottle clean energy from upstate production areas that are distant from load centers.

| NYISO ; for project map: Anbaric Transmission — | *NYISO*

The proposals follow the Public Service Commission’s adoption of a Clean Energy Standard that seeks to overhaul the state’s generation fleet by producing 50% of its energy needs from renewable resources by 2030. (See New York Adopts Clean Energy Standard, Nuclear Subsidy.)

New York has other public policy initiatives to decarbonize its generation, including its Reforming the Energy Vision initiative, the Clean Energy Fund and compliance with the federal Clean Power Plan.

‘Holistic’ Approach Sought

New York City said a holistic approach is preferable to evaluating individual projects in isolation. “Identifying a single transmission line, or a segment of a line, as a need driven by public policy requirements is insufficient to achieve the state’s public policy goals, and such a piecemeal approach could effectively prevent timely achievement of those goals,” it wrote.

HQUS, a subsidiary of Hydro-Quebec, said proposals to import hydropower could satisfy much of the state’s requirements under the CES. “For example, a new 1,000-MW DC transmission project can deliver up to 8.7 TWh of incremental renewable energy to New York, nearly one-third of incremental renewable energy needed to meet the 2030 target.”

A joint filing by the New York Power Authority, National Grid and Central Hudson Gas & Electric, said the key to satisfying the goals is unlocking bottlenecks in northern New York that limit access to Canadian imports and wind and hydropower along the Saint Lawrence River.

“The possible addition of over 1,000 MW of new wind projects in northern New York, as reflected in the NYISO interconnection queue, potential increased renewable imports from Canada, and possible additional load reductions could exacerbate transmission constraints in delivering clean, renewable energy and its environmental benefits to the state’s load centers,” the filing said.

Transparency Concern

Competitive transmission developer NextEra Energy Transmission New York expressed concern that incumbents could hold advantages in any solicitation for projects.

“Regardless of whether the renewable assumptions include new wind generation and solar development in western New York or northern New York, or increased imports from Canada, all assumptions should be made public so that all transmission developers can begin on a level playing field,” NextEra wrote.

nyiso public policy transmission — | *Anbaric Transmission*

Developers from outside of New York praised the CES provision that gives equal footing to projects from outside of the state. “Adding new transmission capability from PJM will facilitate delivery of the associated hourly matching energy to downstate loads, thereby helping reduce in-state transmission bottlenecks. Access to transmission-enabled, least-cost renewables is critical for New York state to meet the CES while minimizing ratepayer impacts,” wrote Poseidon, the developer of the proposed 500-MW Poseidon Transmission project, a 78-mile underground and undersea HVDC cable from South Brunswick, N.J., to Long Island.

Offshore Wind

PSEG Long Island, which operates the island’s distribution grid, said it and the New York State Energy Research and Development Authority are evaluating scenarios for delivering up to 4,000 MW of offshore wind.

“In all such cases, the offshore wind resources are likely to be distributed to several points of interconnection within [New York City and Long Island], with additional transmission system upgrades being required for deliverability to the rest of the New York Control Area,” it said.

Others making filings were Avangrid; Invenergy; New York Transco; the New York Transmission Owners and NYPA; North America Transmission; and PPL Translink.

PSC staff will review the filings and make recommendations to the commission.

In the previous planning cycle, which began in 2014, the PSC declared public policy needs for an AC project to serve the New York City area and one for western New York.

In response, the ISO issued a request for proposals in February for two projects in the Mohawk and Hudson valleys to deliver energy to load centers in and around New York City. (See New York Transmission Developers Ask FERC to Order a Do-over.)

In June, the ISO identified 10 projects as finalists to relieve congestion in western New York. (See NYISO Identifies 10 Public Policy Tx Projects.)

October 10, 2016

MISO Resource Adequacy Subcommittee Briefs

CARMEL, Ind. — MISO is canvassing feedback on two Independent Market Monitor recommendations that seek to improve the Planning Resource Auction.

Manager of Resource Adequacy John Harmon said MISO agrees with the Monitor’s 2015 State of the Market recommendation to apply its 50-MW physical withholding threshold to affiliated market participants collectively, rather than to each individually. To do that, MISO would have to revise Module D of its Tariff, Harmon said at the Oct. 5-6 Resource Adequacy Subcommittee meeting.

miso resource adequacy — The existing physical withholding framework allows a hypothetical company to increase its threshold by creating multiple market affiliates, according to the Market Monitor. | *MISO*

The Monitor has said its proposal would prevent a supplier from dodging mitigation by creating multiple affiliates to increase its withholding threshold.

Consumers Energy’s Jeff Beattie said he thought the proposal might be discriminatory, as his company cannot talk to its generation affiliates anyway because of requirements set by the Michigan Public Service Commission.

“It’s like Dynegy over there. I can’t collude with them!” he hollered across the room at Mark Volpe to lightheartedly make his point.

Michigan PSC staffer Bonnie Janssen confirmed that both Consumers and DTE Energy have to file paperwork with the commission promising not to communicate with affiliates.

Harmon said MISO wants all stakeholder feedback by Oct. 21.

MISO is also tackling the Monitor’s 2013 suggestion to remove “inefficient barriers” for generators to participate in the PRA. The change would involve allowing a generation owner with an Attachment Y retirement request to participate in the auction and have the ability to postpone or cancel the retirement if it clears, which is not allowed under current Tariff language.

MISO adviser Neil Shah said the RTO will set aside time for discussions on the issue in future RASC and Planning Advisory Committee meetings to see if a rule change is warranted.

Minnesota Public Utilities Commission staff member Hwikwon Ham said he hoped changes to the rule would not further delay projects in MISO’s interconnection queue.

MISO to Move Ahead with Brattle Demand Curve for Forward Auction

MISO’s forward capacity auction proposal for merchant supply is nearly ready to be filed with FERC, and the RTO is using the final weeks to make presentations to support its stance.

Jeff Bladen, MISO’s executive director of market design, said there have been more than 200 questions, comments and suggested edits since the redesign of the capacity market was first proposed. He said he didn’t anticipate “dramatic changes” at this point.

“We are closing in on that Nov. 1 filing date,” Bladen said. “It is late in the day to be bringing up issues, and we don’t anticipate new issues because we’ve gotten such a robust response so far.”

Bladen said the only unfinished business is MISO working with the Monitor to make any necessary additions to Module D Tariff language pertaining to the Monitor’s role in both the new auction and the PRA.

Meanwhile, some stakeholders are criticizing as too low The Brattle Group’s sloped demand curve price cap of 1.4 times net cost of new entry (CONE). (See Brattle Endorses MISO Forward Auction Proposal, Designs Demand Curve.)

“In spite of the comments we’ve received, we’re still recommending the same curve,” Brattle analyst Sam Newell said.

Per stakeholder request, Brattle ran sensitivity analyses with higher price caps. Brattle analyst David Oates said moving the cap to 1.7 times net CONE moves the foot of the curve to the right but still manages to maintain reliability, at 109% of MISO’s planning reserve margin requirement. Moving the cap to two times net CONE results in procuring 106% of the planning reserve margin requirement.

But Oates also said that with higher price caps, price volatility increases by 30 to 80% compared with Brattle’s proposed curve. The two higher caps attract 100 MW and 220 MW, respectively, more merchant supply than Brattle’s 1,800 MW.

Newell again backed MISO’s forward proposal over the Monitor’s prompt, two-stage hybrid auction. “What most impresses me about this approach and the prompt hybrid that’s been discussed is that this approach allows all different suppliers to compete,” Newell said. “The hybrid proposal actually discriminates; it pays a much lower price to [regulated] supply than merchant supply. … It’s economic waste to buy a $150/MW-day resource when a lower-cost one is available.” He added that while relying solely on a sloped demand curve to price the marginal value of megawatts is “elegant,” it’s not realistic.

Jim Dauphinais of Illinois Industrial Energy Consumers said “it would make sense” to have a discussion to urge MISO to delay the Nov. 1 filing. “I’ll be frank: The word on the street is MISO is anxious to file this before FERC. The question is can some of these issues be worked out before the filing? There are certainly unresolved issues at this point.”

Dauphinais said delaying the filing to the end of the year might clear up issues. He is concerned that MISO’s Tariff language might be unclear, leading to a messy back-and-forth process with FERC, he said.

“I’ve also been walking on the streets and heard some people saying that,” Madison Gas and Electric’s Gary Mathis said. He said some were concerned that while implementation was delayed by a planning year, the filing date was only delayed by four months.

“I don’t think there’s uncertainty around the details. There’s disagreement about the details,” Bladen said. “It’s our conclusion that another month would not bring stakeholder consensus.”

Bladen said that MISO was already uncomfortable with the original “compressed” timeline to implement in planning year 2017/18. “The time we have in front of us is actually less than people realize,” he said. “We expect FERC to take 120 days to get back with an order. We expect it might well include guidance, maybe a technical conference; it might not. We need time to build the conclusion FERC orders. We have to have our systems up and running in the fourth quarter in 2017 in order to register units.”

Other stakeholders urged MISO to get language in front of FERC by Nov. 1 as planned.

MISO is also still weighing accelerating the creation of external resource zones in time for the 2017/18 PRA, ahead of the redesign implementation. Harmon said MISO was going to come back at the November meeting with a suggested approach, even though five of nine responding stakeholders were in favor of holding off on external zones until the 2018/19 planning year.

Dynegy’s Volpe said MISO not making a decision by October would make a 2017/18 implementation out of the question, though Harmon disagreed. In response to another question from Volpe, Harmon said it was possible that Tariff language would be presented by the next RASC meetings.

— Amanda Durish Cook