State Briefs

Riverside County Looks to Create Power Supplier

Riverside County officials are advancing a plan to create an alternative retail electricity supplier that would supplant Southern California Edison in unincorporated areas of the county. The officials say that the community choice aggregator, which would purchase power directly from producers, would allow county residents to lower their costs and increase reliance on renewables.

The county plans to engage a third-party consultant to develop and run the program, which would require approval from the state’s Public Utilities Commission. Residents and businesses will be automatically enrolled in the program but could opt out and continue using SCE if they choose. Incorporated communities would have the option to join up after the program is implemented.

Community choice aggregators are authorized under a 2002 state law. Though only four have been formed, renewable advocates are promoting them as a mechanism to allow communities to have more control over the source of their electrical power.

More: The Desert Sun

INDIANA

Regulators Approve 2% Hike to Help Duke Plant

Regulators have approved a 2% rate hike for Duke Energy customers to help the company pay for its beleaguered Edwardsport coal-gasification plant.

Under a settlement, Duke will pay $87.5 million of deferred operating costs dating from when the plant went into service in 2013. The plant’s price tag has climbed to $3.5 billion from its original estimate of $1.9 billion.

The settlement was supported by the state Office of Utility Consumer Counselor, along with industrial customers, environmentalists and consumer advocates. It would result in an additional $1.83/month for the typical residential customer. The company has absorbed about $900 million in construction overruns on the plant.

More: The Associated Press

IOWA

IUB Denies Permanent Stay to Dakota Access Construction

The Utilities Board unanimously denied landowners’ request for a permanent stay of construction of the Dakota Access pipeline pending a court ruling on whether eminent domain can be used to access their properties.

The board heard about 45 minutes of testimony before deliberating in closed session. When it returned to open session, Chair Geri Huser said the board found that the potential harm of a permanent stay outweighed the potential benefits, as it found little chance of success in the petitioners’ complaint before the Polk County District Court.

The landowners had requested an emergency session of the board to hear their request. But Huser said “any apparent emergency that may exist was created by the petitioners’ own actions and their own decisions.” The board did extend a temporary stay currently in place until 9 a.m. Monday to give the landowners time to file an appeal in court. Commissioner Nick Wagner voted against the extension.

More: Radio Iowa

MARYLAND

PSC Holding Hearings on PEPCO Rate Hike

The Public Service Commission has scheduled two public hearings to discuss PEPCO’s request to increase its electric distribution rate by $104 million for 560,000 customers in Prince George’s and Montgomery counties. A typical residential customer would pay $13 more a month under the proposed rate. (Case No. 9418)

Hearings will be Sept. 6 at the Montgomery County Executive Building in Rockville, Md., and Sept. 8 at Prince George’s Community College in Largo, Md.

More: Maryland Public Service Commission

NRG Settles Wastewater Pollution Suit with State

NRG Energy will pay $1 million to settle a lawsuit alleging two coal-fired plants illegally released high levels of nitrogen in wastewater.

The state filed suit in 2013 alleging NRG’s Chalk Point and Dickerson stations discharged illegal amounts of nitrogen and phosphorus into the Potomac and Patuxent rivers. The chemicals have been blamed for feeding algae that suck oxygen out of the Chesapeake Bay, creating dead zones for fish, crabs and vegetation.

In some years, the state said, the Chalk Point plant released 20 times as much nitrogen as its permit allowed. NRG will also pay $1 million to fund environmental restoration projects and invest $10 million to upgrade the wastewater systems at the two plants.

More: The Washington Post

MICHIGAN

State Energy Committee Hears Reliability Concerns

Public Service Commission Chair Sally Talberg told the Senate Energy Committee last week that the state would go “dark” in 10 years if policymakers did not address an impending electricity shortage.

The committee discussed the PSC’s recent five-year outlook, which predicts reliability challenges during peak demand in the Lower Peninsula, although it forecasts the state will meet minimum reliability standards through imports for the foreseeable future.

State Sen. Mike Shirkey (R) downplayed the report, telling reporters it could be “ripe with people cherry picking pieces of information and then reframing them to advance their narrative.”

More: The Detroit News

MONTANA

Residents Asked to Conserve Water to Help Colstrip Plant

Colstrip residents were asked to limit their water use so the nearby power plant can continue to safely operate. The notice came at the request of Talen Energy, which operates the 2,100-MW plant.

Colstrip Mayor John Williams asked the city’s 2,300 residents to minimize their use of water for sprinkling and irrigation through the end of August. Williams said low water levels and high temperatures have caused problems with Talen’s water intake system on the Yellowstone River.

More: Billings Gazette

NEBRASKA

Lincoln Electric Plans to Show Off New Solar Farm in September

Lincoln Electric System will dedicate the state’s first commercial solar energy park next month and commemorate the event with tours for customers who helped finance the project.

The utility’s SunShares program allows about 1,200 enrolled customers to pay extra on their monthly bills to support solar energy.

The 5-MW, $8.9 million community solar project is owned by developer Enerparc. LES has a 20-year contract to buy power from the company. Construction began in March, and it went online in late June, producing enough electricity to power about 900 homes.

More: Lincoln Journal Star

NEW JERSEY

Rate Counsel Against JCP&L Tx Spin-off Plan

The Division of Rate Counsel said it will argue against FirstEnergy’s plan to spin off Jersey Central Power & Light’s transmission facilities into a new company to be called Mid-Atlantic Interstate Transmission. The assets include about 2,500 miles of transmission lines and towers.

“We believe that ratepayers are getting the short end of the stick because MAIT is getting these at a very, very favorable price,” said Stefanie Brand, the division’s director.

More: Asbury Park Press

NEW MEXICO

Regulators Reopen PNM Rate Case, Face Criticism

The Public Regulation Commission is being criticized for its decision last week to reopen hearings for Public Service Company of New Mexico (PNM)’s proposed rate increase. Commissioners said that the case could be extended through December if the utility decides to submit more evidence showing that its energy investments are prudent.

Reopening the proceedings, which began in April, would undermine a determination earlier this month by hearing officer Carolyn Glick, who recommended a 6% increase rather than the 15.8% increase PNM is seeking to cover some $123.5 million in costs. The company has threatened to go to court if the lower increase is approved.

Intervenors said Aug. 25 that the PRC’s decision gives the company too much leeway. If the case is reopened, it would be PNM’s third opportunity this year to provide proof that its investments are fair for ratepayers.

More: The Santa Fe New Mexican

NEW YORK

Entergy Would Get Termination Fee if FitzPatrick Sale Fizzles

The New York Power Authority will pay Entergy a $35 million termination fee if the sale of the FitzPatrick nuclear plant to Exelon falls through.

According to spokesman Steven Gosset, NYPA established a $35 million letter of credit that will pay Entergy if the PSC does not approve the sale to Exelon by Nov. 18. Entergy also would get the money if the New York State Energy Research and Development Authority fails to sign a contract by Nov. 18 that guarantees nuclear subsidies for FitzPatrick.

Both of those scenarios, and others that would trigger the fee, are unlikely, said Gosset, who declined to provide a copy of the letter. Entergy also declined to comment on the agreement.

More: syracuse.com

NORTH DAKOTA

University, Energy Companies Partner in Carbon-Capture Efforts

A diverse group of energy businesses are partnering with the University of North Dakota to develop carbon capture and sequestration technology.

ALLETE Clean Energy, Minnkota Power Cooperative and BNI Energy signed a memorandum of understanding with the university’s Energy and Environmental Research Center to submit a bid to the U.S. Department of Energy for a proposal they call Project Tundra, which aims to devise a way to reduce carbon dioxide emissions from existing coal-fired plants.

U.S. Sen. John Hoeven (R) said he had worked to secure $30 million to assist in the development of commercially viable and retrofittable CCS technology. The bill has passed in the Senate and now awaits House approval, Hoeven said.

More: Forum News Service

OHIO

AEP Asks PUCO for Distribution Hike to Counter Residential Solar

aep American Electric Power has asked the Public Utilities Commission for permission to increase the fixed monthly distribution charges for all of its customers to make up for the number of residential customers who are installing rooftop solar and energy efficient technology.

AEP Ohio says it has seen the number of solar net metering customers rise from 286 in 2011 to 983. AEP is asking to increase the average customer charge from $8.40 to $18.40.

“This increase in net metering customers is currently resulting in a shift of the recovery of fixed costs from net metering customers to non-net metering customers,” company spokeswoman Terri Flora said. The hike wouldn’t result in any more revenue for the company, Flora said, but opponents say the increase would discourage installing solar distributed resources.

More: Midwest Energy News

OKLAHOMA

Regulators Hear Arguments On PSO’s $130M Rate Case

The Corporation Commission last week heard arguments in the long delayed matter over Public Service Company of Oklahoma (PSO)’s requested $130 million electric rate increase. Consumer advocates argue that existing rates should be cut by up to $7 million, and an administrative law judge recommended a nominal rate increase of $676,000.

PSO filed the rate case in July 2015, and the company implemented an interim $75 million rate increase in January after it did not receive a final decision within the required six-month time period. The interim rate increase is subject to refund if the commission finds the utility wasn’t entitled to the extra revenue.

The company said the rate increase was needed to recover $453 million in system investments from February 2014 to July 2015. The utility also spent another $215 million this year on plant upgrades to meet federal environmental regulations.

More: The Oklahoman

SOUTH DAKOTA

PUC Gathering Input on Proposed 201-MW Wind Farm

About 300 people attended a public meeting held by the Public Utilities Commission to gather comments on a proposed wind farm north of Avon.

The 201-MW wind farm, proposed by developer Prevailing Winds, would have 100 turbines generating up to 860 GWh annually. Company representatives gave a presentation about the project and argued for the need for more wind power.

The project has generated opposition from some neighboring landowners. Some see the turbines as “eyesores,” while the others said they were concerned about potential health effects.

More: Yankton Daily Press & Dakotan

TEXAS

Lawmakers Urged to End Coal Company Self-Bonding

Environmental advocates at a Sunset Advisory Commission hearing on the Railroad Commission urged state lawmakers to require coal companies to set aside resources to cover the cost of cleaning up mines. Coal companies are currently allowed to self-bond, a process that could leave residents on the hook for more than $250 million in environmental cleanup costs if the companies renege on their obligations.

The state currently allows four coal mining companies to self-insure the cost of cleaning up seven strip mine operations. With the coal industry’s financial challenges, experts say taxpayers are at risk.

The Sunset Commission, which assesses the continued need for state agencies, held the hearing to get feedback on a scathing report published in April by its staff advisory committee on the inefficiencies and inadequacies of the Railroad Commission, which, despite its name, regulates energy extraction industries in the state.

More: The Texas Observer

WEST VIRGINIA

FirstEnergy Asking for $6.9 Million Surcharge

FirstEnergy asked state regulators to approve a $6.9 million rate surcharge for MonPower and Potomac Edison customers to pay for upgrades at two coal-fired plants.

The requests were made possible by a coal-industry supported bill approved five months ago, which allowed utilities to pass through costs for upgrading their coal-fired plants without having to go through a formal rate proceeding. At the time the bill was introduced, FirstEnergy said it didn’t have any plans to use the provision.

The total cost of the upgrades at the Harrison and Fort Martin plants will be more than $76 million, according to company filings. The surcharges, if approved, will increase a typical residential customer’s rates about $6.60 per year.

More: Charleston Gazette-Mail

August 29, 2016

SPP Briefs

SPP’s Market Monitoring Unit filed its 2015 State of the Market report with FERC on Friday, saying the Integrated Marketplace’s second year of operation showed “significant maturing,” illustrated by high participation, “lower levels of make-whole payments and mitigation compared to other markets, and a modest level of scarcity pricing.”

The MMU’s report noted the market was affected by low natural gas prices, increasing wind generation and an expanding footprint. The RTO’s territory grew about 10% in both generation and load with the October addition of the Integrated System, which covers the Dakotas and parts of several other Upper Midwestern states.

According to the report, average monthly natural gas prices were “generally flat” at about $2.50/MMBtu through September, declining to below $2/MMBtu in December. The energy market’s average all-in price was $23.48/MWh.

The MMU said the amount of wind energy continues to increase and represented almost 20% of total SPP generation in November and December. Although congestion declined systemwide, it increased in areas with wind generation.

Coal generation, on the other hand, has declined from a historical average of 60 to 65% to an average of 55% in 2015. In November, coal represented only 45% of SPP’s total generation, according to the report.

SPP ended the year with 12,398 MW of installed wind capacity, a 44% increase from the 8,606 MW in 2014. The MMU said actual generation resulting from new capacity does not show up in the market for several months after registration, and the full impact of the nearly 4,000 MW in new wind capacity will not be felt until 2016.

“Initial results from 2016 indicate that at times generation is approaching 50% of total load,” the MMU said, a “substantial increase” from the 34% average in 2015. SPP’s current wind penetration record is 48.32%, set April 5.

The MMU said the market saw a 156-MW increase in installed generation capacity to 67,251 MW. Along with a slightly lower system peak load compared to 2014, that resulted in a small increase in the market resource margin, from 48% in 2014 to 49%.

“Given the large resource margin and the frequency with which the LMP represents inexpensive generation,” the report said, “prices generally did not rise to levels high enough to support investment in new generating capacity.”

The MMU presented a draft version of the report during the July Board of Directors meeting. (See “MMU Shares Draft State of the Market Report,” SPP Board of Directors and Members Committee Briefs.)

Fitch Affirms SPP’s Long-Term Debt at A, Gives Stable Rating

Fitch Ratings on Friday affirmed SPP’s long-term issuer default rating (IDR) at “A” and gave the RTO a “stable” rating outlook. Fitch also affirmed SPP’s short-term IDR at “F1” and noted the actions affected approximately $268 million in debt.

The agency cited as positives the $66 million in debt maturities being repaid with available cash through 2018 and the $71 million in capital expenditures through 2018, a 19% decrease compared to the prior three years.

Fitch also noted SPP’s projection that the addition of the Integrated System will produce $334.1 million in savings over 10 years.

It said the RTO’s voluntary membership “is a modest credit concern” but that the departure risk “is mitigated by the requirement that the exiting member pay a fee equal to its share of SPP’s outstanding debt and other committed expenses as an ‘exit charge.’”

SPP RE Sets Week of Meetings in Oklahoma City

The SPP Regional Entity has room for either in-person or webinar attendance for its fall workshop Sept. 20-21 in Oklahoma City. The workshop is sandwiched between a Regional Compliance Working Group meeting Sept. 19 and an RTO compliance forum Sept. 21-22. All meetings will be held at the Skirvin Hilton Hotel.

– Tom Kleckner

August 29, 2016

Company Briefs

DTE Energy says a glitch in its computers caused customers to be charged multiple times in late August.

One ratepayer said she was charged eight extra times for the same $135 bill, and $1,215 was automatically withdrawn from her account.

DTE said customers who made payments on Friday, Aug. 19, or Monday, Aug. 22, could be affected.

More: WDIV

Dominion Virginia Power Proposing $53M Tx Project

Dominion Virginia Power has applied with the Virginia State Corporation Commission to replace the existing 500-kV Carson-Rogers Road Line in Greensville County. The project, if approved, would cost about $52.9 million and be completed in December 2018.

The company says the project will ensure it meets mandatory NERC and PJM reliability standards. The existing line went into service in 1972 and is nearing the end of its service life.

More: Electric Light & Power

Westar, Great Plains Shareholders To Vote on Merger in September

Great Plains Energy and Westar Energy shareholders will vote on Great Plains’ proposed $12.2 billion acquisition of Westar in separate but concurrent special shareholder meetings Sept. 26. The deal would pay Westar shareholders $51/share plus $9/share in Great Plains stock.

Westar will hold its meeting at the Kansas Expocentre in Topeka, while Great Plains will host shareholders at its Kansas City office. Shareholders as of the close of business on Aug. 22 are entitled to vote. The companies expect most individual shareholders to mail their votes.

The two companies filed a proxy statement Aug. 25 detailing the transaction, which must be approved by stockholders and multiple regulatory agencies. They expect the deal to close next spring.

More: The Topeka Capital-Journal

PSO Names 40-Year Veteran As VP of Generation Group

pso Public Service Company of Oklahoma last week named Tommy Slater as vice president of the company’s generating assets. Slater, currently a plant manager at sister company Southwestern Electric Power Co.’s Welsh Plant in Texas, replaces Gary Knight, who is retiring after 35 years with PSO.

Prior to his 2010 appointment as manager at Welsh, Slater worked as a start-up engineer, plant shift supervisor and manager for SWEPCO’s regional engineering organization.

Slater has a bachelor’s degree in mechanical engineering from the University of Texas at Arlington and is a registered professional engineer in Texas.

More: Public Service Company of Oklahoma

Judge OKs 1st Phase of EFH Bankruptcy Plan

A Delaware bankruptcy judge approved the Chapter 11 plan of Luminant and TXU Energy, the two main operating businesses of Energy Future Holdings.

“I believe at the end of the day, this is the best possible deal,” Judge Christopher Sontchi said Friday. The plan will launch a new company containing Luminant and TXU Energy. It will be taken over by senior lenders, including affiliates of Apollo Global Management, Brookfield Asset Management and Oaktree Capital Management.

Phase two of EFH’s bankruptcy, valued at $42 billion, involves the sale of the company’s 80% stake in Oncor to NextEra Energy.

More: The Wall Street Journal

August 29, 2016

Bankruptcy Court Approves EFH Emergence from Chapter 11

By Tom Kleckner

The U.S. Bankruptcy Court for the District of Delaware has approved a reorganization plan that will take Energy Future Holdings’ competitive businesses out of Chapter 11 after two years.

In a statement posted on its website Friday, Dallas-based EFH said the bankruptcy judge approved Texas Competitive Energy Holdings’ tax-free spinoff of generator Luminant, electric retailer TXU Energy and supporting business services. The Wall Street Journal reported that the companies will be taken over by senior lenders, including affiliates of Apollo Global Management, Brookfield Asset Management and Oaktree Capital Management.

Luminant Sign_Lamar Plant - Energy Future Holdings - Chapter 11 — Luminant Sign outside their Lamar Plant *Source: Energy Future Holdings*

EFH said the “Reorganized TCEH,” as it will be known in the short term, has already received “a majority of the key regulatory approvals required for emergence,” in addition to the bankruptcy court’s approval. EFH expects a final approval, related to Luminant’s mining operations, from the Railroad Commission of Texas in September.

U.S. Bankruptcy Judge Christopher Sontchi said the plan “was the best possible deal” for EFH to emerge from bankruptcy.

The bankruptcy court’s approval doesn’t apply to EFH’s regulated transmission and distribution provider, Oncor. NextEra Energy has reached an agreement to buy for $18.4 billion the 80% share of Oncor currently owned by EFH and Energy Future Intermediate Holdings, another of EFH’s several holding companies. (See NextEra Reaches Deal for Oncor.)

Energy Future Holdings chapter 11 — Map of Luminant Plants *Source: Luminant*

A confirmation hearing on the Oncor assets’ emergence from bankruptcy is scheduled to begin Dec. 1.

EFH, then known as TXU Corp., was acquired in 2007 by private equity firms KKR & Co., TPG Capital LP and Goldman Sachs Capital Partners through a $45 billion leveraged buyout. Low gas prices have bedeviled EFH ever since, forcing the holding company to file for bankruptcy protection in April 2014.

August 29, 2016

Federal Briefs

Lawyers representing EPA last week argued that multimillion-dollar boiler upgrades in 2007 and 2010 at Ameren Missouri’s Rush Island facilities south of St. Louis should have required a permit and review process under the Clean Air Act.

In the 1990s, Ameren decided to switch to a new, ultra-low-sulfur coal rather than install new controls. This resulted in operational problems at the plant, leading the company to make $72 million worth of upgrades, including boiler modifications and a new turbine. It also led, EPA argued, to increased electricity output and, thus, increased emissions.

James W. Beers Jr., of the Justice Department’s Environment and Natural Resources Division, argued that the upgrades are new sources of pollution and should be subjected to more rigid emissions limits. He said that Ameren should install new sulfur dioxide controls at the plants. Ameren said the improvements were part of routine maintenance and should not fall under Clean Air Act standards. The company also argued that EPA cannot prove that the rise in emissions resulted from the upgrades and not from increased electricity demand.

More: St. Louis Post-Dispatch

Ginna Cited by NRC For Document Error

Federal regulators have cited R.E. Ginna nuclear plant owner Exelon for a safety violation because the station’s emergency plan contained a sentence that misused less-than symbols.

If a serious accident had occurred, the written emergency management decision flowchart could have led control room operators to mistakenly call for a mass evacuation, according to the Nuclear Regulatory Commission. The mistake proved harmless, as there was no serious accident during the two-and-a-half years the error existed in the tree-like graph, intended to support decision-making during critical incidents.

The mistake was discovered by an Exelon supervisor this spring as plant personnel prepared for an emergency drill. The commission classified the error as a low-to-moderate level violation.

More: Democrat and Chronicle

FAA Stands by its Greenlight For Proposed Wind Farm

The Federal Aviation Administration is standing by its previous determination that the proposed Chapman Ranch wind farm in South Texas would “not have an adverse effect on the safe and efficient use of the navigable airspace” primarily used by the U.S. Navy for training pilots out of Kingsville and Corpus Christi.

The administration’s decision, along with an agreement between the Navy and developer Apex Clean Energy, still leaves unresolved concerns that the wind farm may make the area less attractive to the military for training. The agreement allows the Navy to shut down the wind farm’s operation any time it interferes with its operations, according to John Kelley, who represents the Chapman family.

The Corpus Christi City Council, which annexed lands to assert some control over the facility’s development, responded to FAA’s decision by stripping $14 million from next year’s budget for capital improvement projects for the newly annexed land.

More: Corpus Christi Caller-Times; Corpus Christi Caller-Times

TVA Files for Uprates At Browns Ferry Plant

The Tennessee Valley Authority has filed a request with the Nuclear Regulatory Commission to allow power uprates at its Browns Ferry Nuclear Plant.

The Blue Ridge Environmental Defense League opposes the request, saying that TVA’s calculation “under-predicts the reaction of zirconium and steam that would occur in a loss-of-coolant accident.”

“NRC should seek to reduce, not increase, the risk of loss of coolant that will melt the fuel rods leading to meltdown and released radiation,” said Gary Morgan of the group’s Scottsboro-based chapter.

More: The Chattanoogan

Renewable Production Beat Records Each Month of 2016

Renewable energy production set new records each month of 2016, according to the Energy Information Administration.

The measures run through June and include utility-scale wind, solar, hydro, geothermal and biomass plants larger than 1 MW. The records were attained despite low numbers for hydro because of the drought in the West. And while most renewables have been increasing their share, hydro’s share has remained unchanged for the past 20 years.

More: Greentech Media

Tesla Wins FTC Approval To Buy SolarCity

Tesla Car (Source: Tesla) — (Source: Tesla)

The Federal Trade Commission approved Tesla Motors acquisition of the home solar installation company SolarCity, a move the car manufacturing company said would further its goal of providing a one-stop shop for solar panels, home battery storage and electric cars.

The $2.6 billion transaction, announced earlier this month, still needs other regulatory approvals, but SolarCity said it hopes the deal closes by the end of the year.

More: Reuters

Fracking Tied to Migraines, Fatigue, Study Says

A study in Environmental Health Perspectives drew a connection between living near shale gas wells and an increased rate of migraines, fatigue and sinus problems. The report, based on 7,785 randomly selected patients of a Pennsylvania health system, showed that those living closest to fracking sites were 49% to 95% more likely to show signs of chronic sinusitis, migraines and fatigue.

The senior author, Dr. Brian S. Schwartz, admitted there could be other variables and said the study was observational, not one that proved cause and effect.

However, he said, “there have now been seven or eight studies with different designs and in different populations, and while none is perfect, there is now a growing body of evidence that this industry is associated with impacts on health that are biologically plausible. Do we know the exact mechanism? No. That requires further study.”

More: The New York Times

BLM Leasing Program Draws Opposition

blm Environmentalists are challenging a Bureau of Land Management plan to lease more than 19,000 acres of federal land in Montana for oil and gas exploration.

WildEarth Guardians says BLM officials have failed to consider the climate damage done by fossil fuel development. The Center for Biological Diversity and the Theodore Roosevelt Conservation Partnership have also filed protests on the proposed lease, which is slated for auction Oct. 18 in Billings.

The group has been aggressively challenging BLM leases in several Western states, including Wyoming, Colorado and Utah, on grounds similar to those cited by the group in Montana. BLM has leased more than 800,000 acres of federal land for oil and gas development last year alone.

More: Billings Gazette

August 29, 2016

MISO Advisory Committee Briefs

MISO has narrowed candidates for the Board of Directors to six, Nominating Committee stakeholder member Matt Brown said.

Brown told the Advisory Committee that the nominating panel interviewed 10 candidates in mid-August and selected a primary and secondary choice for each of the three open seats. The RTO started with a list of about 30 candidates.

“We’re really trying to pick individuals with the most impressive backgrounds, and not the ones that fit a mold,” Brown said.

MISO Board of Directors in Detroit (RTO Insider) advisory committee — MISO’s current board at their June meeting in Detroit © *RTO Insider*

Under MISO rules, the board must be made up of individuals with varying expertise. For this search, the RTO requires a person with transmission operations expertise, one with transmission planning expertise and one with experience in finance, accounting, engineering and utility regulation. Brown said the committee is also looking for candidates who have experience in technology or cybersecurity.

“It’s been a very enlightening process, and I think the search firm did a great job in locating candidates, and we had a very successful interview process,” Brown said. From a stakeholder perspective, Commissioner Weber and I are very excited about the six candidates and their caliber,” Brown said. Indiana Utility Regulatory Commissioner Angela Weber occupies the other stakeholder seat on the Nominating Committee.

Directors Judy Walsh, Michael Evans and Paul Feldman will hit MISO’s term limit when their current terms expire Dec. 31. MISO enacted a limit of three consecutive three-year terms last year. The Nominating Committee can seek a waiver to allow a fourth term if it believes it is needed “to retain [the director’s] skills or expertise, to maintain geographic or other diversity of the board, or is otherwise in the best interests of” MISO.

The board will review the committee’s six choices and make a selection by mid-September. Members will vote on the candidates between Sept. 15 and the Oct. 24 Informational Forum, at which the results will be announced.

The terms begin in January and expire at the end of 2019.

Close to Fall, MISO Stakeholder Entities Still Setting 2016 Priorities

The Resource Adequacy Subcommittee is seeking the approval of just two priorities for the year.

The RASC’s proposed priorities for 2016 are to improve the Planning Resource Auction and enhance gas-electric coordination.

RASC Chair Gary Mathis said he received scant feedback on the priorities. Mathis said he thought the timing had something to do with it. “2016 is more than half over,” he pointed out.

AC Chair Audrey Penner said stakeholders will begin earlier on 2017 priorities, starting with a strategic planning session at the end of September. She added that the groups would work to streamline the new priorities planning process in its second year.

“This is our first kick at the can, and we’ll get better year after year,” Penner said.

Meanwhile, Planning Advisory Committee Chair Bob McKee submitted five priorities nearly identical to the AC’s own priorities approved in May. (See “Committee Endorses 5 Final Priorities,” MISO Advisory Committee Briefs.)

“There was not a lot of conversation, but no concerns have been raised,” McKee said of the AC’s priority-setting.

Penner said the PAC and RASC’s 2016 priorities would be up for AC approval at the September meeting.

— Amanda Durish Cook

August 29, 2016

SoCal Gas Restrictions Unlikely to Impede Winter Grid Operations

By Robert Mullin

Southern California’s winter grid operations are unlikely to be compromised by natural gas pipeline restrictions stemming from the shutdown of Aliso Canyon, even in the event of a once-in-a-decade cold snap, according to an interagency assessment released Monday.

Still, tight gas supplies could leave the region vulnerable to load shedding during a significant grid contingency — such as the loss of transmission import capability or unexpected outages at outside generators serving the region, the report says.

The Southern California Gas (SoCalGas) storage facility north of Los Angeles was closed after a leak released massive amounts of methane between October and February, prompting the company to impose daily balancing requirements on its customers in order to ensure reliable gas delivery to gas-fired generators during the summer’s peak season for electricity demand. (See CAISO Seeks Rapid Response to SoCal Gas Restrictions.)

california aliso canyon natural gas winter grid operations — Graph plots out CAISO’s utilization rates of gas-fired generation in the Los Angeles Basion over the course of 2015.

The report was produced by technical staff from CAISO, the California Public Utilities Commission, the California Energy Commission (CEC), Los Angeles Department of Water and Power (LADWP) and SoCalGas — the owner and operator of the region’s pipeline system.

Cold Day Design Standard

The region’s one-in-10-year “cold day design standard” would require SoCalGas to send out 5.2 Bcfd on its system, the report shows. However, without the ability to withdraw from Aliso Canyon, the company is limited to a maximum sendout capacity of 4.7 Bcfd, assuming there are no other storage or pipeline outages and a full utilization of receipt point and storage withdrawals.

Gas supplied to electric generation could be curtailed if the region’s total demand exceeds 4.5 Bcfd under a scenario in which generators utilize 100% of their gas receipts or 4.2 Bcfd under 85% utilization, the report said, indicating the importance for generators to tightly balance their schedules with their gas burns.

Nevertheless, the region’s electricity grid is expected to operate reliably “so long as the total SoCalGas supportable gas delivery and supply is greater than 4.1 Bcfd under normal pre-contingency conditions and 4.2 Bcfd to support N-1 contingency conditions” — such as the loss of a key generating unit or transmission line serving a load pocket.

While the report finds that the area affected by the gas restrictions should have sufficient transmission and electricity supply from outside resources during winter, it acknowledges that neighboring balancing areas may have to provide emergency assistance “depending on the magnitude and timing of gas curtailments.”

The report offers another caveat: “If supportable SoCalGas supply falls below 4.1 Bcfd during peak winter gas demand conditions, it may be necessary to withdraw from Aliso Canyon to avoid electric load interruption.”

Recent history suggests that gas should be available despite a lack of injections into the facility for almost a year.

“Because of the effectiveness of the Aliso Canyon summer action plan, as of the time of this report, no gas has been withdrawn from Aliso Canyon to maintain electric reliability,” the report notes.

15 Bcf in Storage

The facility still contains about 15 Bcf of working gas in storage, unchanged from the volume that the PUC last January ordered be left in the facility to cover summer needs.

Summer has seen CAISO manage two heat-driven conservation alerts without having to tap that supply, and the grid’s gas needs are sure to drop significantly during winter. Last year, the ISO utilized less than half as much gas-fired generation in the Los Angeles Basin during winter than in summer.

LADWP, which operates its own balancing area, passed through its summer peak season without the benefit of its 287-kV Mead‐Victorville Line 1, which is slated to return to service by winter. The additional transmission capacity should provide 5,010 MW of winter import capability, compared with a forecast peak load of 4,309 MW. The upshot: The utility could meet its reliability requirements without relying on any of the basin’s local gas-fired generation, absent the loss of any of its four synchronous condensers needed for voltage regulation and support.

The interagency assessment was accompanied by a winter action plan developed to reduce the potential for gas curtailments large enough to interrupt Southern California’s electric service. Among the measures is a recommendation that CAISO impose a generator gas burn ceiling for very cold days.

“Effectively, it curtails some of the electric generation load in advance and increases the probability that SoCalGas will not have to curtail further,” the plan says.

The plan also recommends that:

The PUC require that SoCalGas implement a demand response program that rewards large natural gas consumers for reducing demand when requested;
SoCalGas maintain requirements that non-core gas customers tightly balance their schedules with actual use and develop a similar provision for core customers;
The CEC and PUC investigate what “affiliate impediments” would prevent SoCalGas parent company Sempra Energy from buying LNG from its own Costa Azul LNG facility in Mexico and delivering it into the Southern California gas system; and
The CEC identify and solicit additional sources of gas supply, including more in-state production.

The California agencies are seeking comments on the winter action plan, the subject of an Aug. 26 public workshop.

August 29, 2016

Hydro Owner Wants in on New York Nuke Subsidy

By William Opalka

A hydropower owner is seeking rehearing of New York’s Clean Energy Standard, which limited the state’s new zero-emission credits (ZECs) to nuclear generators (15-E-0302).

Ampersand1 (Ampersand) - Ampersand Hydro New York Clean Energy Standard — *Source: Ampersand Energy Resources*

In a petition filed Aug. 23, Ampersand Hydro said it was arbitrarily excluded from the New York Public Service Commission’s “discriminatory” Aug. 1 order. The filing appears to be the first in what is anticipated to be numerous challenges to the commission’s order.

Ampersand said the PSC erred by “arbitrarily and capriciously failing to develop an implementation plan that permits small hydro generation resources to also be treated as a zero-emission facility and unjustly and unreasonably discriminat[ed] in providing nuclear generation facilities a significant competitive advantage over competing generation resources, including small hydro generation.”

Ampersand says small hydropower should enjoy the same treatment as nuclear under the standard: 12-year contracts with a subsidy of $17.48/MWh for the first two years with adjustments every two years thereafter.

The commission order calculated the subsidy based on EPA’s social cost of carbon, minus revenue paid to the state under the Regional Greenhouse Gas Initiative.

The PSC said the payments were justified because nuclear plants are unprofitable in a low natural gas price environment and New York’s clean energy goals are at risk if the plants close. Ampersand said it is subject to the same market and clean energy dynamics. (See New York Adopts Clean Energy Standard, Nuclear Subsidy.)

Ampersand2-(Ampersand) Ampersand Hydro New York Clean Energy Standard — *Source: Ampersand Energy Resources*

“The CES order explicitly recognized that an important generation resource with zero emissions, small hydro generation resources, may be not able to survive in the competitive wholesale energy market in New York and therefore might be forced to retire,” the company wrote. “Significantly, however, the CES order failed to provide any discussion of why generation resources that no party challenges are zero-emission, renewable resources should be denied ZECs. Instead, the CES order merely deferred any action in favor of additional studies.”

Ampersand specializes in acquiring and rehabilitating small hydropower stations. The Boston-based company controls 12 small merchant hydro stations in New York totaling 18.7 MW with an expected annual production in excess of 70,000 MWh.

August 29, 2016

Proposal to Revisit PJM Capacity Model Receives Tepid Response

By Rory D. Sweeney and Rich Heidorn Jr.

WILMINGTON, Del. — A stakeholder group calling for a comprehensive review of PJM’s capacity market won support from consumer advocates and state regulators last week, but industrial consumers and generators were cool to the idea.

The one point no one disputed at Thursday’s Markets and Reliability Committee meeting: Winning consensus on rules to replace the Reliability Pricing Model is a long shot.

“We might have a very low probability of coming to consensus on this process,” acknowledged American Municipal Power’s Ed Tatum, who introduced the proposal. “But it’s not zero.”

The proposed problem statement seeks a structure that will be more “resilient” to unforeseen shocks, such as state-subsidized generation.

The framework for the capacity market is the result of a FERC-brokered settlement in 2007. But there have been numerous rule changes since then, including most recently the introduction of Capacity Performance, which increased penalties and rewards for performance.

Delaware Municipal Electric Corp., Old Dominion Electric Cooperative, the PJM Public Power Coalition, the Public Power Association of New Jersey, Dominion Virginia Power and retailer Direct Energy have signed on as co-sponsors of AMP’s initiative. (See Co-ops, Munis Call for Reset of PJM Capacity Model.)

Direct Energy’s Jeff Whitehead said changes to the capacity constructs are “already happening,” citing the stakeholder initiatives created to address concerns over CP. In addition to task forces addressing seasonal capacity and mitigating generators’ risk of nonperformance, there are ongoing debates over calculating CP penalties, generator ramp rates and treatment of external assets.

To those who don’t support the problem statement, he asked, “Where do you want these debates [to occur] if not here?”

Additional Supporters

The coalition picked up support at the meeting from Dan Griffiths, executive director of the Consumer Advocates of PJM States; John Farber of the Delaware Public Service Commission staff; and Greg Pakela of DTE Energy Trading.

Farber said ad hoc reactions to CP, such as the seasonal capacity initiative, have created uncertainty. “That uncertainty only creates risk, and risk creates cost,” he said. “The worst position for PJM is to do nothing.”

Pakela said PJM needs to prepare for the future, predicting it’s “a matter of time” before states find a way to subsidize in-state generation that passes muster at FERC. Such efforts may increase as states seek to meet their emission targets under EPA’s Clean Power Plan, he said.

But Susan Bruce, who represents the PJM Industrial Customer Coalition, said although her group “has never been a big fan of capacity markets,” it wasn’t eager to open up the issue again.

“The devil we know may be better than the devil we don’t,” she said.

Stakeholders representing generators were particularly wary. “While I encourage you to look at other market designs, I’ll challenge you to find one that’s better,” Dynegy’s Jason Cox said. Models used by MISO and CAISO, he said, are “vastly inferior.”

He also questioned the premise of the initiative, asking “How can you design a construct to deal with issues you don’t even know about yet?”

Nothing in it for Supply?

Neal Fitch of NRG Energy and Tom Hyzinski of Talen Energy said it was unclear to them what the “problem” is and questioned Tatum on the scope of the proposed inquiry.

“Soup to nuts within resource adequacy?” Fitch asked.

Yes, responded Tatum.

Based on input from stakeholders, Tatum revised the proposed issue charge before the meeting to narrow its scope. The revised charge says it will limit its discussion of shortage pricing and the energy and ancillary services markets “to those that would be necessitated by any recommended changes to the capacity construct.”

“We don’t want to take on the world here,” Tatum said.

“You’re assuming that you’ll come up with something that will be bulletproof?” Hyzinski asked Tatum.

“No,” Tatum responded. “I think there might be something more resilient. I don’t know if there is or not.”

Mike Borgatti of Gabel Associates called it “a pocketbook issue.”

“Suppliers don’t want to be paid less. Load doesn’t want to pay more,” he said. “I struggle to explain to my clients on the supply side of the house what the opportunity is” pursuing the discussion.

Whitehead acknowledged his company’s interests, saying the current uncertainty is undermining competitive retailers’ business model. Predictable prices based on market fundamentals, he said, “allows us to contract forward and sleep at night.”

Tatum and Steve Lieberman of ODEC said their employers are caught in the middle as load-serving entities that also own generation. This issue “hits us on both sides,” Lieberman said.

Tatum said AMP likes the opportunity provided by markets to build its own generation or seek cheaper options offered by others. “If we can get supply for less than building our own, that’s a good thing,” he said.

PJM, Monitor Weigh In

PJM officials and Independent Market Monitor Joe Bowring were silent during the 70-minute discussion, until a stakeholder asked for their positions.

“There’s no harm in discussing things,” Bowring said. “I actually think CP is pretty robust and a pretty good design. It can always be improved.”

“If the intent is to replace the capacity market with a bilateral approach,” he added after the meeting, “I think that is a bad idea.”

PJM CFO and MRC Chair Suzanne Daugherty responded: “PJM believes in the stakeholder process. If the stakeholders support [the initiative], we do also.”

Facilitator Sought

A vote on the problem statement could come as soon as next month’s MRC meeting. PJM stakeholders rarely reject problem statements, which require only majority support to proceed. Winning approval for Tariff changes, however, would take a two-thirds sector-weighted vote.

If the problem statement moves forward, Bruce suggested, the discussions should be moderated by a facilitator independent of market participants and PJM. Other stakeholders supported Bruce’s request.

“I’m guessing that we’re not all looking for the capacity market to do the same thing,” she said. “It’s beyond ‘missing money’ at this point.”

August 29, 2016

CAISO Proposes Broadening LSE Definition

By Robert Mullin

CAISO is proposing to amend its Tariff to expand the definition of a “load-serving entity” to include any organization granted authority to serve its own electricity needs.

The Tariff currently recognizes as LSEs only those entities that sell electricity or serve load to end users, a description that covers utilities, federal power marketing agencies and community choice aggregators. A special exception was made for the State Water Project (SWP), a California agency that directly engages the wholesale market to cover its own energy requirements.

CAISO Load-serving entity — CAISO is seeking to expand the definition of an LSE to accomodate San Francisco’s Bay Area Rapid Transport agency. *Source: Bart*

The ISO is seeking a broader definition to accommodate the San Francisco Bay Area Rapid Transit District (BART), which, like the SWP, serves its own load but does not meet the standard definition of an LSE.

“We’ll see what other entities will participate under this definition, but we’re not sure there are any at this point,” Perry Servedio, senior market design and regulatory developer at CAISO, said during an Aug. 23 stakeholder call to discuss the proposal.

At the end of the year, BART’s transmission contract rights on the Pacific Gas and Electric network, which predate the existence of the ISO, will expire. Those rights will convert to CAISO service, leaving the agency exposed to congestion charges.

For a recognized LSE facing a similar circumstance, CAISO provides a remedy: The LSE can cover its exposure by seeking an allocation of congestion revenue rights (CRRs) in the initial round of the ISO’s annual allocation process. The ISO treats the expiring contract rights as if they were expiring annual CRRs.

But that process is not available to BART.

As an interim measure, CAISO last month filed with FERC to seek another temporary exception to the definition in order to enable BART to participate in this fall’s 2017 CRR allocation (ER16-2327).

By expanding the definition, the ISO hopes to eliminate the need for one-off exceptions. The revised Tariff would categorize BART and SWP as LSEs “granted authority pursuant to California state or local law, regulation or franchise to serve their own load.”

The amended language sent up red flags for some stakeholders, who worried that any California entity granted such authority would qualify as an LSE and therefore be required to procure adequate reserves to support their load.

Ernie Hahn, senior resource manager with the Metropolitan Water District of Southern California, said his agency is concerned about what the change would mean upon expiration of its transmission contract rights with Southern California Edison.

“This came out of the blue and we’re a little distressed by it,” he said. “We don’t understand what the [resource adequacy] implications will be.”

“Our intent is not to require entities to do this,” said Brad Cooper, CAISO senior manager of market design and regulatory policy. “To the extent that there’s an arrangement like yours, you’re not considered an LSE.”

But David Zlotlow, CAISO senior counsel, confirmed that the district would face the requirement once its contract expires.

“I object to the change because you haven’t given us enough time to prepare for the [resource adequacy] requirement,” Hahn said. He encouraged the ISO to make an “incremental change” to the definition, similar to the SWP exception.

“When I read this, it suggests to me that entities serving load behind the meter will get captured by this,” said Steven Kelly, director of policy at the Independent Energy Producers Association.

“A day or two ago, in anticipation of this call, we had that same thought,” Zlotlow said. “There might be a word or two to add to this definition.”

“Do storage devices or pumped storage qualify as LSEs because they serve their own load?” asked Mark Smith, vice president at Calpine.

“No, because they’re not serving end users, they’re just sending back to the grid,” Zlotlow replied.

Jan Strack of San Diego Gas & Electric said the change raises questions about what entities are affected, and how.

“I think you need to be sort of thoughtful about how wide this net gets thrown,” Strack said.

“We definitely want to hear from you if we’re missing something with this definition — or if we need to tighten it up,” Servedio said.

Stakeholder comments on the proposal are due Sept. 2. ISO staff plan to submit the changes for board approval in October.