Company Briefs

Dynegy has closed its 500-MW Wood River Power Station near Alton, Ill., eliminating more than 90 jobs.

Company officials announced plans to close the coal-fired plant in November after it failed to recover operating costs. The utility cited unfair market conditions in the deregulated and regulated hybrid footprint in MISO. Dynegy also said Wood River was not necessary to maintain reliability in the region.

In addition to $12 million in lost pay for the workforce, the closure will cost the local government $1.6 million in lost property taxes.

More: The Telegraph

Appalachian Power Enters PPA with NextEra Wind Farm

American Electric Power’s Appalachian Power has signed on to a 20-year power purchase agreement with NextEra Energy to buy 120 MW of wind generation in Indiana to supply its service areas in Virginia and West Virginia by 2018.

The wind power will come from the Bluff Point Wind Energy Center to be constructed in Jay and Randolph counties in Indiana. The company selected NexEra’s proposal over a dozen other bids.

The agreement brings Appalachian Power’s total wind portfolio to 495 MW.

More: Appalachian Power

CIO Cavazos Leaving DTE for Investment Firm

DTE Energy Chief Investment Officer Paul Cavazos is leaving his position at the diversified energy company to join Texas-based American Beacon, an investment firm specializing in mutual funds and corporate pension plans.

Cavazos worked at DTE Energy for nearly nine years, managing about $10 billion in investments, including benefit and contribution plans, a foundation and a nuclear decommissioning trust.

More: Chief Investment Officer

Alliant Treasurer Kratchmer Announces Retirement

Alliant Energy Vice President and Treasurer John Kratchmer announced plans to retire last week.

Robert Durian, Alliant’s current controller, will take over Kratchmer’s duties July 1. Kratchmer will serve in an advisory role during a transition period, according to the company. Durian has been with the company since 1992.

Alliant Assistant Controller Ben Bilitz will fill the position of controller.

More: Alliant Energy

Broadwind Signs $137M Manufacturing Contract

Wind turbine manufacturer Broadwind Energy has been awarded a three-year $137 million supply deal with an unnamed customer.

Broadwind, which has factories in Manitowoc, Wis., and Abilene, Texas, would say only that its customer is one of the largest wind turbine manufacturers in the U.S. Siemens and General Electric are among Broadwind’s major customers, according to a 2015 annual report.

More: Milwaukee Journal Sentinel

Thousands of PG&E Computers Left Vulnerable

Pacific Gas and Electric last month left a “treasure trove” of company data open to Internet hackers, according to a security researcher who revealed the lapse.

The compromised database contained company IP and MAC addresses, hostnames, computer locations and other vital information. More than 47,000 PG&E computers and other devices were left unprotected, the researcher said.

PG&E confirmed the lapse, blaming it on a third-party technology vendor that was developing a new platform.

More: Tech Insider

Municipal Utilities Sign Up with Grain Belt Express

The Missouri Joint Municipal Electric Utility Commission, which buys power for public utilities, said it has signed an agreement for as much as 200 MW of capacity on Clean Line’s Grain Belt Express, bolstering the transmission line’s embattled application with the Missouri Public Service Commission.

The new contract, which is contingent on Clean Line winning approval from Missouri regulators, would replace an electricity contract with Dynegy coal plants expiring in 2021, when Grain Belt is supposed to be operational.

The 780-mile transmission line would carry 3,500 MW of wind power from western Kansas to eastern markets and up to 500 MW of power into Missouri.

More: St. Louis Post-Dispatch

Keeping Westar’s HQ in Topeka Key to Great Plains’ Acquisition

Westar Energy CEO Mark Ruelle said Great Plains Energy was the only bidder among multiple suitors that agreed to keep the utility’s headquarters in downtown Topeka, Kan., one of the deciding factors in choosing it as its $8.6 billion merger partner.

Although an investor-owned company must first consider shareholder value, Ruelle said, Great Plains’ offer to stay true to Westar’s commitment to employees and its philanthropic efforts in the Topeka community weighed in its favor. The merger was announced May 31.

“It’s turned out that after all the work, the best deal is with our next door neighbors,” he said. “They’ve agreed to keep Westar headquarters in Topeka, and not only that, in downtown Topeka. Great Plains has agreed to continue our community commitments, our charitable giving, our connections downtown.”

More: The Topeka Capital-Journal

June 6, 2016

SPP Task Force Prepares to Hand off its Work

The SPP Capacity Margin Task Force conducted its penultimate meeting last week as it continues to set up the stakeholder group that will replace it in determining how low the RTO can go with its planning reserve margin.

The task force won board and member approval in April to lower SPP’s planning reserve margin — previously called the capacity margin — from 13.6% to 12%. The change is expected to save load-serving members about $86 million a year in capacity costs. (See “Lowered Reserve Margin Promises $86M in Annual Savings,” SPP Board of Directors Briefs.)

The CMTF will hold its last meeting June 30, turning over its work to the newly created Supply Adequacy Working Group (SAWG). The group will be responsible for developing and implementing processes that ensure “reliable supply of capacity necessary to meet demand and planning reserve margin requirements/methodologies in SPP.”

The SAWG will also be tasked with ensuring SPP’s processes and policies meet NERC and North American Energy Standards Board standards.

A separate small group is continuing its work on staff’s Resource Adequacy Workbook (RAW). The workbook will be used to gather load-serving entities’ planning reserve margin requirement calculations and data needed for the Energy Information Administration’s Form 411 (Coordinated Bulk Power Supply and Demand Program Report).

SPP’s vice president of engineering, Lanny Nickell, asked the task force for additional input on calculating planning reserve margin requirements for purchases and sales, which are calculated differently than they are for the EIA 411.

– Tom Kleckner

June 6, 2016

CAISO Floats Latest Cost Allocation Plan for Expanded Balancing Area

By Robert Mullin

CAISO is nearing completion of a proposal describing how the ISO would allocate the costs of building and operating transmission assets in an expanded balancing authority that could encompass areas of the West outside California.

The ISO considers development of a new transmission access charge (TAC) plan to be “a central policy element” of expanding into a region with dozens of balancing areas subject to multiple state and municipal rules determining compensation for transmission owners.

CAISO cost allocation plan, balancing area — CAISO’s potential expansion into the West is forcing the ISO to reconsider how it would allocate transmission costs across the region currently divided into multiple balancing areas.

Most pressing for CAISO: Development of new TAC options is essential for enabling Portland-based PacifiCorp to join an expanded system as early as next year.

‘Postage Stamp’ Rate

CAISO Principal of Market Infrastructure and Policy Lorenzo Kristov summed up the issue during a June 1 conference call to discuss the issue with Western industry participants: “The conversation we’re having here is — when you add new customers [to the ISO] — who would be paying for the service charge.”

CAISO currently uses a regional “postage stamp” rate to recover transmission revenue requirements for all ISO-controlled facilities rated at 200 kV or above. All internal load and exports are subject to per-megawatt-hour usage charges to fund those facilities.

Facilities rated below 200 kV and located inside the service territory of a participating transmission owner are covered by “local” rates paid by load within that territory. CAISO’s primary participating TOs are California’s three investor-owned utilities: Pacific Gas and Electric, Southern California Edison and San Diego Gas and Electric.

CAISO market participants are charged for transmission access based only on the regional or local criteria.

The current TAC makes no distinctions among projects driven by economic, public policy or reliability considerations, nor does it factor in-service dates or other non-voltage criteria.

“We’ve determined that the structure does need to be changed with an expansion,” Kristov said.

New ‘Sub-Regional’ Category

CAISO proposes to retain the category of regional — or ISO-wide — projects eligible for broad-based allocation, albeit in an altered format. At the same time, the ISO would introduce a new sub-regional category to accommodate TOs joining what could become a Western RTO in the future.

Under the latest TAC proposal, revenues for existing transmission facilities would only be eligible for recovery under “license plate” rates specific to each sub-region.

The upside for current CAISO members: They would not be charged for projects already operating in a new member’s service territory.

The downside: The sub-regional identification would also apply to CAISO’s current balancing area, meaning new members would not be assessed charges for California’s existing network.

The only projects eligible for regional cost allocation would be regional facilities approved under a new transmission planning process for an expanded ISO. To be considered for ISO-wide allocation, a proposed facility would be required to meet at least one of three criteria:

Having a voltage rating above 200 kV;
Facilitating interconnection — or increasing interconnection capacity — between two sub-regions; or
Creating, increasing or supporting the increase of intertie capacity between the expanded balancing area and a neighboring area.

Project Types

The TAC proposal would also introduce into the Tariff the practice of differentiating among different project types. For example, the new rules would make explicit that facilities approved to meet a reliability need within a sub-region would be allocated solely to that sub-region.

Economic and policy-driven projects would receive different — and more complex — treatment. Decisions regarding construction and cost allocation for those projects would be left to a new body of state regulators created in concert with the integration of a new TO into the ISO — an idea modeled on similar structures in ISO-NE and MISO.

“We know from precedent that agreement among the parties for cost allocation is important for FERC approval,” Kristov said.

CAISO is also considering additional provisions that would allow the expanded system to charge new TOs for costs of new regional facilities previously approved under the expanded transmission planning process. It would recalculate the sub-regional cost-benefit shares for those facilities at least every five years.

The ISO must also determine a regionwide export rate — or wheeling access charge — and develop FERC-required backstop provisions for approving and allocating costs for economic- and policy-driven projects.

“I just want to acknowledge that a lot in this proposal is not complete,” Kristov said.

Still, a draft final proposal for TAC options is slated to be released June 28. CAISO staff plans to present the plan to the ISO’s Board of Governors on Aug. 31.

Comments on the most recent proposal must be submitted to the ISO by June 10.

June 6, 2016

ERCOT to Keep NRG’s Greens Bayou Plant Running for Summer

By Tom Kleckner

ERCOT said Friday it has executed a reliability-must-run (RMR) agreement to keep a 371-MW natural gas-fired generator available through September, with the likelihood of extending the contract through June 2018.

NRG Texas Power’s Greens Bayou Unit 5 was to be mothballed June 27. However, it will now be made available to the ERCOT market from June 1 through September. Under the RMR agreement’s terms, ERCOT will make a standby payment to NRG of $3,185/hour during on-peak hours, regardless of whether the unit runs.

ERCOT NRG greens bayou — Greens Bayou *Source: NRG*

ERCOT said the agreement will ensure transmission stability in the Houston region. The ISO said last month it has enough generating capacity to meet its expected demand into the next decade, even with NRG’s announcement it would mothball Greens Bayou. (See “ERCOT Reports Show Ample Capacity into Next Decade,” ERCOT Briefs: Ample Capacity; Outage Procedures.)

The Texas grid operator will ask its Board of Directors to approve an extension to the agreement for the summer of 2017 and June 2018 during its June 14 board meeting. If the board rejects the extension, the RMR agreement will expire May 31, 2017.

The ISO said it expects the $590 million Houston Import Project, which will improve the region’s ability to draw power from elsewhere in Texas, to be completed by the 2018 summer peak. The RMR agreement does not include off-peak periods (October through May) because planning studies do not indicate Houston-regional reliability violations during that period.

The RMR agreement is ERCOT’s first since 2011. It has executed 73 other agreements since 2002, most of which were for transmission stability. Four RMR agreements in 2011 returned mothballed units to service because of anticipated generation shortages during that summer’s peak demand period.

Greens Bayou 5 is the largest of seven units at the Harris County complex. Built in 1973, it was mothballed in 2010 and 2011, but returned afterward.

June 6, 2016

NYISO Identifies 10 Public Policy Tx Projects

By William Opalka

NYISO has identified 10 proposed transmission projects as finalists to relieve congestion in western New York.

The ISO issued a report last week in response to a 2015 New York Public Service Commission order that said relieving transmission congestion in the Buffalo area would produce environmental and reliability benefits and satisfy a public policy requirement under FERC Order 1000 (14-E-0454).

nyiso, buffalo, public policy — *Source: NYISO*

The PSC order resulted in the ISO’s first Public Policy Transmission Planning Process, a solicitation that generated 15 proposals from eight developers at the end of last year.

The transmission need was defined in the PSC order and ISO baseline models. They identified overloads on the Niagara-Gardenville 230-kV and 115-kV transmission corridors, which were aggravated by imports from Ontario.

“In general, each project addresses at least some portion of the baseline transmission security issues, but not all projects addressed all of the bulk power transmission security issues,” NYISO wrote. The ISO also says upgrades to three non-bulk transmission facilities may be necessary to satisfy the NYPSC objectives.

The intent of the transmission solution is to allow NYISO to use the maximum 2,700 MW of generation from the Niagara hydroelectric power station and a nearby pumped storage facility, and full access to at least 1,000 MW that would be imported from Ontario in an emergency.

“For each sufficient project, the developer of the project is qualified, the solution is technically practicable and the developer has an approach for acquiring any necessary rights of way, property and facilities,” the report states.

The 10 qualified projects include four from North American Transmission, two from National Grid, one from the New York Power Authority and New York State Electric and Gas, two from NextEra Energy Transmission New York and one from Exelon Transmission.

The PSC will review the assessment made by the ISO and determine if the public policy need still exists. It would then issue an order for NYISO to continue to evaluate and rank the projects identified in the report.

NYISO would then determine which projects are most efficient or cost-effective and eligible for cost allocation and cost recovery under its Tariff. Its findings would be released in the Western New York Public Policy Transmission Planning Report.

The PSC has also determined a public policy need exists to help address transmission congestion into southeastern New York. Proposals from developers were due at the end of April and are currently being evaluated by NYISO. (See NYPSC Directs NYISO to Seek Tx Bids.)

June 6, 2016

Federal Briefs

About 43% of the nation’s 2,758 electric power generation “establishments” are renewable sites, according to the U.S. Census Bureau’s County Business Patterns report. More than half of the renewable locations are in the 10 states in green. However, only 13% of the electricity produced in the U.S. during 2015 came from renewables, according to the Energy Information Administration.

Feds Designate Offshore NY Wind Lease Area

The Interior Department on Thursday proposed a commercial wind lease for 81,130 acres 11 miles off Long Island, an area that the department’s Bureau of Ocean Energy Management identified earlier this year. (See Feds Set Offshore Wind Site near New York.)

“This is another major step in broadening our nation’s energy portfolio, harnessing power near population centers on the East Coast,” Interior Secretary Sally Jewell said.

The notice for the proposed lease includes a 60-day public comment period.

More: Department of the Interior

Appeals Court Upholds NRC’s Onsite Fuel Storage Rule

The D.C. Circuit Court of Appeals on Friday ruled that the Nuclear Regulatory Commission followed all necessary rules when it wrote the regulation allowing long-term storage of spent fuel at nuclear generating stations.

The ruling, which means spent fuel rods can be stored onsite indefinitely, is important because the federal government hasn’t yet fulfilled its obligation to develop a site for depleted fuel, despite spending billions at the now-moribund Yucca Mountain site.

The attorneys general of New York, Vermont, Massachusetts and Connecticut had challenged the rule, joined by the Natural Resources Defense Council. Eric Schneiderman, New York’s attorney general, vowed to continue the fight.

More: The Hill

Clinton Vows Increase in Renewables on Fed Property

As Californians go to vote in the state’s primary elections, Democratic presidential contender Hillary Clinton is pledging to increase the development of renewable energy projects on federal lands and water if elected.

“Now, as we work to combat climate change and build America into the world’s clean energy superpower, our public lands can once again play a key role in unlocking the resources we need,” Clinton wrote in a piece published in The Mercury News. “While protecting sensitive areas where development poses too great a risk, we can accelerate our transition to a clean energy economy by increasing renewable energy generation on public lands and offshore waters tenfold within a decade.”

More: The Hill

NRC to Review Entergy’s Response to Baffle Bolt Issue

The discovery of the failure of more than a quarter of the bolts used to secure baffles crucial to channeling cooling water in Entergy’s Indian Point 2 reactor has spurred an investigation into what caused it and what the company is doing in response.

“We will review Entergy’s analysis and plans before deciding if the company’s proposed course of action is acceptable,” Nuclear Regulatory Commission spokesman Neil Sheehan said.

The Indian Point discovery prompted another operator, PSEG Nuclear, to inspect its Salem 1 reactor, where it found that 18 of that reactor’s baffle bolts were degraded.

More: The Huffington Post

Navy Looking at SMRs To Provide Base Power

The Navy is looking to expand its nuclear operations from shipboard reactors to onshore locations.

Secretary Ray Mabus said he wants the Navy Department to look at the possibility of employing small modular reactors to provide power for shore installations. “With some of the new technology that’s coming along, it’s much safer, produces far less residue and nuclear waste, and it is an option that I think we should explore,” he said.

The Navy and the Marine Corps set a goal in 2009 of getting more than 50% of its shore power from alternative sources. Using solar, wind, geothermal and hydro, they met that goal at the end of last year.

More: Federal News Radio

FERC Approves $2 Billion Kinder Morgan LNG Project

FERC approved Kinder Morgan’s proposed $2 billion LNG export terminal on Elba Island near Savannah, Ga.

The first units will come online in early 2018 and eventually the terminal will liquefy up to 350 Mcfd. Kinder Morgan has a 20-year contract to supply Royal Dutch Shell.

Kinder Morgan already has an import terminal at Elba Island, built in the 1970s, but it has seen little use since domestic natural gas supplies expanded with the shale-gas revolution. The terminal has 11.5 Bcf of LNG storage capacity and 1.76 Bcfd of peak vaporization send-out capacity.

More: FuelFix Blog

EPA Orders 2 Utah Plants To Install New Controls

EPA decided Wednesday that two Rocky Mountain Power coal-fired plants must install pollution controls to improve atmospheric visibility near national parks. The company, which said it would cost $700 million to comply with the ruling, said it is reviewing its legal options.

The agency’s ruling, and its Regional Haze Rule, are aimed at restoring natural air conditions at 156 national parks and wilderness areas by 2064.

Utah officials said the goals can be reached less expensively by following its own regulations. Part of the state-sponsored plan was to shut down one of the company’s plants. But EPA ordered selective catalytic reduction systems installed at the two remaining coal-fired plants in Emery County.

More: Salt Lake City Tribune

Study Calls for ‘Proactive’ Transmission Planning

A report released Monday by a trade group for the transmission industry calls for a new “proactive” approach to transmission planning, saying it could save consumers as much as $47 billion annually.

The report, prepared for WIRES by The Brattle Group, says traditional planning, focused primarily on addressing reliability issues over a five- to 10-year horizon, is too myopic and results in “piecemeal projects instead of developing integrated and flexible transmission solutions that enable the system to meet public policy goals more cost effectively.”

The paper says a more proactive approach is desirable regardless of whether generation changes because of energy markets, technology or EPA’s Clean Power Plan.

More: WIRES

June 6, 2016

Independent Market Monitors Wouldn’t Have It Any Other Way

After allegations of management interference led PJM to replace its internal market monitoring unit with an independent monitor in 2008, FERC had an opportunity to prohibit other RTOs from using the internal structure. Because it chose not to do so, the temptation for RTO officials to muzzle their MMUs remains.

Second in a Series

By Rich Heidorn Jr.

Joe Bowring and David Patton often disagree, as anyone who has watched a FERC technical conference featuring the two independent market monitors can attest.

But while the two — both Ph.D. economists — may clash over seams issues or the virtues of forward capacity markets, they are 100% in agreement on the need for independence in market monitoring.

“I don’t know how we would do this job effectively if we weren’t independent,” said Patton, whose Potomac Economics provides market monitoring for MISO, ISO-NE, NYISO and ERCOT and has done occasional work for CAISO and SPP.

“You cannot do your job as a market monitor if you’re not independent, if you’re not free to criticize the RTO and its members, if you’re told to pull your punches,” agreed Bowring, whose Monitoring Analytics serves as PJM’s monitor.

Stormy Beginning

Monitoring Analytics was born in 2008, after Bowring — then a PJM employee — complained at a FERC technical conference that then PJM President Phil Harris and his allies were attempting to muzzle him. Bowring accused PJM management of censoring his reports, preventing him from presenting his views to a stakeholder committee, raiding his staff and threatening to disband the MMU altogether.

“PJM has made it clear that, from management’s perspective, the market monitor is first an employee of PJM with all the duties of an employee including obeying management orders, i.e. following the chain of command,” Bowring told the commission. “Based on my experience, it is not possible, as a practical matter, to maintain the independence of the MMU while leaving the control of personnel decisions, including hiring, firing, reviews and promotions, with RTO management.”

State consumer advocates, the PJM Industrial Customer Coalition and several electric cooperatives filed a request for a show cause order requiring PJM to answer Bowring’s allegations (EL07-56). State regulatory commissions and the Organization of PJM States Inc. (OPSI) followed about a week later with a complaint seeking a FERC investigation (EL07-58).

independent market monitors — Stu Bresler, PJM senior vice president of market operations (L), and Bowring (R) at the 2016 PJM Annual Meeting © *RTO Insider*

“The independence of the PJM MMU is of paramount importance because a wholesale market that is not competitive and not resistant to market power allows market participants to exercise market power and demand monopoly prices from customers to the detriment of the public,” the OPSI complaint said.

Following a FERC review of 2,700 pages of documents produced in response to data requests, CEO Harris resigned and FERC approved a settlement between PJM and Bowring. (See State Regulators: FERC Investigation into Bowring Allegations Fell Short.)

The settlement called for Bowring — who previously worked at New Jersey’s Board of Public Utilities and Division of Rate Counsel — to form an independent company, which was awarded a six-year contract as PJM’s market monitor (EL07-56, EL07-58).

The PJM Board of Managers was given limited authority over the monitor — specifically, the power to review its budget and to decide whether to retain or replace the firm at the end of the initial term.

2013 Skirmish with PJM Board

The settlement did not end all conflicts. Both Bowring and PJM Board Chair Howard Schneider are strong-willed personalities and can be blunt when they disagree. Bowring also disagrees frequently and forcefully with PJM officials at stakeholder meetings.

Tensions flared anew in 2013 when the board attempted to issue a request for proposals to shop for potential alternatives to Bowring’s firm after the initial six-year term.

It’s doubtful the RFP would have generated many responses. Market monitoring requires an analytical infrastructure that few firms possess, and many of those that do would be prevented from bidding because they have market participants as clients. When the Public Utility Commission of Texas issued an RFP last year for monitoring of ERCOT, only incumbent Potomac Economics submitted a bid.

Nevertheless, state regulators, industrial consumers and cooperatives reacted with alarm to the draft RFP, saying it contained language that would undermine the independence and quality of the monitoring function. They sent letters to the board praising Monitoring Analytics’ performance and threatening to protest to FERC.

The board dropped the RFP in response to the outcry, signing a new contract with Monitoring Analytics running through 2019. (See PJM, Monitoring Analytics Sign New Contract.)

At the OPSI annual meeting in October 2013, Bowring and Schneider symbolically buried the hatchet. The two shared the dais with then-Maryland Public Service Commissioner Lawrence Brenner, chairman of OPSI’s Market Monitoring Committee, who had intervened in the contract dispute.

Brenner said he was happy to be able to call Bowring the “current and future market monitor,” prompting Schneider to interject — “current and future king” — with a chuckle.

“He has managed to annoy just about everybody in this room,” Robert Hanna, then president of the BPU, said of Bowring. “To me that’s a very good sign. He’s not in the tank for anybody. He does it in a principled way and he lets you know the basis.”

Patton not Shy About Criticizing Clients

David Patton hasn’t gotten involved in such drama since founding Potomac Economics in 2001 after stints at the Department of Energy and FERC.

But like Bowring, he has not been shy in criticizing the grid operators that hired him.

Patton’s first client was NYISO, followed in 2003 by ISO-NE and ERCOT in 2005. His firm also has done work for CAISO and SPP. It employs more than two dozen employees, most in its Fairfax, Va., headquarters, with several others in Texas and at MISO headquarters.

The firm’s role varies by region. At ISO-NE, for example, the internal monitoring staff of 20 handles day-to-day monitoring and market power mitigation; produces monthly, quarterly and annual markets reports assessing market competitiveness and making recommendations; and conducts investigations of participant behavior and refers violations to FERC’s Office of Enforcement. Patton’s firm produces monthly and quarterly reports for internal use and an annual public assessment critiquing market performance and making recommendations.

The company provides virtually all monitoring for MISO, NYISO and ERCOT. (The monitors work in ERCOT’s headquarters in Austin.)

New York shifted to an external monitor — from an internal MMU with an external market adviser — after FERC Order 719 in 2008. (See Order 719: FERC Balanced MMU Independence against RTO Autonomy.)

All recommendations from Potomac are considered in the NYISO’s annual project prioritization, a stakeholder process in which costs and benefits are weighed to determine the highest priority projects for the upcoming year.

Recommendations

It can take a while for monitors’ recommendations to result in changes — if ever. When MISO did a periodic review of Patton’s recommendations last August, 22 were pending, some dating back to 2005. (See What Happens to All Those MISO Market Monitor Recommendations?)

As of March, about one-quarter of Bowring’s recommendations between 1995 and 2015 had been fully adopted by PJM. (See Bowring Urges Return to ‘Fundamentals.’)

“This is the one job I can think [of] where an economist can not only just observe something they have no control over, but observe, draw conclusions and contribute to improving the performance of the market by making recommendations,” Patton said in an interview in his office. That, he said, “is extremely satisfying.”

“Because we’re independent of the RTO and the participants and FERC, we are in the position to be completely objective about what we see, what we think is right,” he continued. “We have no client that has an interest that we need to worry about. Our client is the market and our objective is to maximize the competitiveness and the efficiency of the market.”

Virtues of Independence

The RTO itself, Patton notes, is one of the entities the monitor is charged with policing. “Nobody affects the market more than the RTO does, with the decisions that they make as they operate the market; the reliability actions they take; the parameters they set in the software. And a lot of those actions are nonpublic; they can’t be observed by participants. So I’ve always viewed one of the most important jobs we have is to monitor what the RTO is doing and ensure that the RTO is following its own Tariff and not exceeding the authority provided under the Tariff, and not engaged in actions that could conceivably be deemed manipulative. … I don’t know how you would do that effectively as an internal market monitor.”

Patton said that independence also allows him to take positions that may be unpopular with stakeholders.

“We can get out in front and propose things that the stakeholders might come around [to], like the sloped demand curve, or that FERC, frankly, might take up and compel the RTOs to address,” he said.

Patton said internal MMUs are subject to what he called the “the customer satisfaction conflict.”

“Because RTOs are voluntary and FERC has not enforced a very high standard on entities that want to leave RTOs or switch RTOs, the RTOs have a pretty strong incentive to make their customers happy. Generally, that’s a really good thing. But a lot of what you do as a market monitor may make individual customers or groups of customers very unhappy,” Patton said.

Indeed, SPP saw Entergy spurn it for MISO in 2014, after acting as the company’s independent coordinator of transmission for more than seven years. MISO member American Transmission Systems Inc. moved to PJM in 2009, followed a year later by Duke Energy Ohio and Duke Energy Kentucky. Just last month, Dynegy called on Illinois legislators to approve a bill that would move Central and Southern Illinois to PJM from MISO. (See Dynegy Introduces Bill to Move All of Ill. Into PJM.)

“So I think it’s a benefit for the RTO and for us to be independent,” Patton continued. “If [the monitor] is a group of employees of the RTO, then it’s pretty easy for the customers to be upset with the RTO when something happens that they’re not happy with. So that conflict is nearly completely resolved by having the market monitor be independent.”

Patton has demonstrated his independence repeatedly in his criticism of MISO’s capacity market.

Most recently, he criticized the three-year forward capacity auction MISO has proposed for Southern Illinois’ Zone 4. (See MISO Board Orders Negotiation in Longtime Auction Disagreement.) ISO-NE and PJM use a similar construct.

“The economic theory underlying a three-year forward procurement is not sound,” he said. “The notion that … new participants can offer efficiently in that auction and have that guide their decision to invest when you’re giving them a one-year contract on a 40-year asset is” unproven.

He has long proposed that MISO switch from a vertical to a sloped demand curve.

At MISO’s Annual Meeting last June, Patton engaged in a debate with board members Michael Curran, Judy Walsh and Paul Feldman over the issue. (See MISO Monitor Debates Capacity Rules with Board.)

At the end of the meeting Curran thanked Patton for his analysis, but couldn’t resist a little jab. “You’re going to have a sloped demand curve on your tombstone.”

“Cause somebody’s going to kill me?” Patton responded, laughing nervously.

“No,” Curran said. “This is the Midwest. These are nice people.”

– Tom Kleckner, William Opalka and Amanda Durish Cook contributed to this article.

June 6, 2016

FERC Approves 1st Storage GIA in MISO

By Amanda Durish Cook

INDIANAPOLIS — FERC last week accepted a generation interconnection agreement between MISO and the first utility-scale battery storage project in the footprint.

The commission approved a GIA for Indianapolis Power & Light’s Harding Street Station Battery Energy Storage System, which is planned to go online this month, in spite of IPL’s protests that the project was being mischaracterized. IPL had urged the commission to view the storage facility as a transmission asset.

The agreement isn’t a straightforward storage-to-grid situation. The contract includes Harding Street’s two existing gas turbine generators — designated as black start resources — alongside the newly constructed 20-MW storage facility. The batteries — eight 2.5-MW blocks — will use the existing interconnection facilities of the two existing gas turbine generator units, which connect to the Harding Street South substation. The commission accepted the GIA “in the interest of expeditiously connecting the battery facility to MISO’s transmission grid” but said that it will not create a precedent for future storage facilities (ER16-1211-001).

“The Harding Street GIA is narrowly focused on the terms necessary to interconnect Indianapolis Power’s battery facility and two existing combustion-turbine generators; the commission’s action in this proceeding, therefore, does not prejudge potential improvements to the procedures or agreements that govern the interconnection of electric storage resources in the future,” FERC explained.

Comprehensive Market Rules Needed

The commission also said that more comprehensive market rules for storage are needed.

“Although we accept the Harding Street GIA … we appreciate that MISO’s pro forma GIA was not originally intended to govern the interconnection of electric storage resources to MISO’s transmission grid,” the commission said.

MISO and IPL disagreed over whether the pro forma agreement was an appropriate vehicle for the project. The RTO contended interconnecting under the GIA was correct, while the utility insisted that the storage facility should not be subjected to GIA provisions or referred to as a “generating facility.”

FERC said a “generating facility” designation was appropriate because the pro forma definition includes “device(s) for the production and/or storage for later injection of electricity identified in the interconnection request.” The commission also pointed out IPL’s battery storage was bundled with two other generating units. However, the commission ordered MISO to add one instance of “energy storage resource” to the agreement.

MISO regarded the battery facility as an upgrade because it shares the same interconnection facilities as the existing generation. IPL had objected to this treatment, maintaining that the non-generating battery facility is a transmission asset that provides ancillary services.

IPL had also argued that the GIA’s appendix does not apply to storage, but FERC decided it was unnecessary to “delete non-applicable provisions of a pro forma GIA.”

The agreement was approved as MISO is considering expanding its definition of demand response resources to include medium-term energy storage. In April, stakeholders urged MISO to develop a cost of new entry for storage technology. MISO said a final proposal to change Tariff or Business Practices Manual revisions to accommodate near-term storage would be presented late summer or early fall. (See MISO Stakeholders Provide Ideas on Incorporating Storage.)

June 6, 2016

MISO Market Subcommittee Briefs

MISO next month will implement two new offer floors for emergency pricing to alleviate what the RTO calls “price depression.”

MISO filed the measures with FERC seeking a July 1 effective date and intends to implement by then even if the commission doesn’t respond in time — leaving the plan subject to refund or recalculation.

“We don’t anticipate that since [FERC] already accepted the [emergency pricing] Tariff revisions,” Bob Merring, MISO’s manager of market engineering, said at last week’s Market Subcommittee meeting. The filing is what MISO refers to as a “true-up” between the Tariff and the already-accepted emergency pricing construct complete with offer floors, which won FERC approval in August (ER15-1776).

Merring also noted that the comment period on the filing has passed without any responses.

Accurate emergency pricing is needed “as we move into a world of tightening resources,” he said.

After issuing an emergency alert, MISO would establish a first emergency pricing floor representing the highest economic offer in the market. A second, higher price floor based on offers would be established after the declaration of an emergency event requiring the call-up of emergency generation.

The RTO discussed raising offer floors last year and again at MISO’s May 6 summer readiness workshop. (See MISO Sees Enough Capacity for Summer.)

MISO’s extended LMP allows demand response to set prices under emergency conditions, but the RTO says the construct needs to be expanded to include more emergency resources. Prices can remain depressed if emergency offer prices are lower than prices for economic dispatch prior to an emergency declaration.

Merring said the gap could result in emergency resources entering the market at $0/MWh. “That’s an undesired outcome,” he added.

MISO Clarifying Network Resource Designation

MISO has reworked portions of its Tariff to address stakeholder concerns with a proposal to remove duplicate network resource designations found in Module B and Module E.

The RTO earlier this year proposed changes that would define network resources simply as those that clear in the annual capacity auction. MISO’s Kun Zhu said stakeholders were concerned that resources failing to clear would lose their network resource status. Others pointed out that the resource designation in Module E — dealing with resource adequacy — lasts just one year, while Module B — which focuses on network service — covers multiple years.

MISO is now proposing a new resource designation that would include those with interconnection service, a transmission service request or a scheduling right.

“Whatever we propose here will not disqualify any current network resource,” Zhu said.

The revised designation also specifies that network resources are “owned by market participants but dispatched by MISO.”

Zhu said the new designation will not impact other future uses of network resource status, including transmission planning, auction revenue rights nomination and MISO’s possible “freeze date” reference point change.

Valy Goepfrich, WPPI Energy’s vice president of operations and analytics, said the revised proposal alleviated some of her company’s concerns with the March version of the proposal.

Feedback on the revised proposal must be submitted by June 17. No filing date has been set.

Changes to Uninstructed Deviation Thresholds Longer than Anticipated

MISO’s work with its Independent Market Monitor to re-examine thresholds for uninstructed deviation by generators is taking longer than anticipated. Implementation of a new approach to the issue is not expected until the first half of 2017 because of a delay in scoping the project.

MISO earlier said an alternative to the existing practice would be in place by the fourth quarter of this year.

“While we initially intended to begin briefing stakeholders … as early as this month, the fact that it’s taking longer means a later implementation,” said Jeff Bladen, MISO executive director of market services and liaison to the Market Subcommittee.

The Monitor first recommended tightening thresholds in 2012. Last year, Monitor David Patton said MISO is losing as much as 400 MW to derates during peak conditions because of a “lenient” tolerance band of 8%, with measurement based on four consecutive dispatch intervals. (See MISO Monitor Debates Capacity Rules with Board.)

The RTO will provide an update on the issue at the June 28 MSC meeting.

MSC Tweaks Charter to Avoid Stepping on Resource Adequacy Subcommittee’s Toes

The MSC approved a motion to remove all mention of “capacity” from its charter following a recommendation from the Steering Committee.

“The rationale [is] all things capacity belong in the Resource Adequacy Subcommittee,” said Kent Feliks, MSC chair. “To avoid that overlap, we’re simply moving capacity from the mission statement.” (See “Market Subcommittee won’t Undergo Name Change, will Modify Charter,” MISO Steering Committee Briefs.)

— Amanda Durish Cook

June 6, 2016

State Briefs

CO2 Allowance Sale Raises $68.3 Million

The nine Northeastern and Mid-Atlantic states that participated in the 32nd Regional Greenhouse Gas Initiative auction of carbon dioxide allowances on Wednesday sold more than 15 million at a clearing price of $4.53.

Bids for an allowance, which allows for the emission of one ton of CO₂, ranged from $2.10 to $12.65 each. It was the second of four quarterly auctions of 2016 and generated $68.3 million for energy efficiency, renewable energy and other programs in the member states.

Cumulative proceeds from all RGGI CO₂ allowance auctions since 2008 exceed $2.5 billion.

More: Regional Greenhouse Gas Initiative

CALIFORNIA

Aliso Canyon Shutdown Prompts SCE Energy Storage Procurement

State regulators have ordered Southern California Edison to expedite procurement of large-scale energy storage to deal with possible service interruptions stemming from the closure of the Aliso Canyon gas storage facility.

The utility’s request for offers states that straight storage projects must be a minimum of 500 kW, and a separate “design, build and transfer” category seeks projects capable of delivering four hours of energy in increments of 5, 10, 15 and 20 MW.

Projects must be grid-connected, meaning behind-the-meter storage is excluded. SoCalEd is expected to select winners by mid-September, with Dec. 31 being the deadline for commencing operation. The Public Utility Commission acknowledges the timelines could be too aggressive.

More: Greentech Media

COLORADO

Boulder Intervenes in Xcel’s Plans for $1B Wind Farm

The City of Boulder and more than a dozen other agencies and government bodies have asked to intervene before the state Public Utilities Commission in Xcel Energy’s bid to build a $1 billion wind farm. The Rush Creek Wind Project would cover 90,000 acres in the state and would be among the state’s largest wind energy producers.

Boulder, which is engaged in an ongoing dispute with Xcel before the PUC over its municipalization efforts, said its primary contention is that Xcel filed the wind farm application more than two weeks before filing its electric resources plan (ERP), which sets what facilities it will need in order to serve its customers. “Our issue is that we think that this proposal should be evaluated in the context of the ERP,” said Boulder spokesperson Sarah Huntley.

The connection of the wind farm to Boulder’s efforts to take over Xcel’s assets is indirect, Huntley said. “The only linkage to municipalization we’re making is that the amount of energy they need to be able to provide could change if the city is no longer drawing our energy from them,” she said.

More: Daily Camera

CONNECTICUT

United Illuminating to Seek Rate Increase

United Illuminating will file for stepped-in annual increases of about $9/month for each of the next three years later this summer.

The company told the Public Utilities Regulatory Authority on Wednesday that it needs $141 million in new revenue to pay for ongoing modernization of its distribution network, tree trimming and infrastructure improvements.

Regulators froze rates until 2017 as a condition of its approval of UI’s merger last year with Iberdrola USA to form Avangrid.

More: New Haven Register

IOWA

Dakota Access Gets Partial Approval from IUB

The Utilities Board allowed the Dakota Access Pipeline to proceed on parts of the route not covered by federal authority. It is the last state regulatory body to get aboard the $3.8 billion, 1,168-mile pipeline to deliver crude oil from North Dakota to Illinois.

Some obstacles remain for project developer Energy Transfer Partners. The state chapter of the Sierra Club filed a suit to block the pipeline, along with some local landowners and Native American tribes.

Energy Transfer Partners says it has received permission from 96% of the landowners along the route. It is awaiting approval from the U.S. Army Corps of Engineers to work on 2.5% of the route it controls.

More: Bismarck Tribune

MARYLAND

PSC Rejects Bulk of BGE’s Rate Increase Request

The Public Service Commission will allow Baltimore Gas and Electric to raise its rates for gas and electricity by $89.5 million, about 40% of the utility’s request of $224.5 million.

The new rates will increase monthly bills by $2.67 for electricity customers and $4.86 for gas customers. Had the PSC granted the full request, customers would have seen a bump of $7.05 for electricity and $8.01 for gas.

The commission denied BGE’s request for a bill surcharge to cover an increase of $30.7 million in conduit fees for the City of Baltimore.

More: Maryland Public Service Commission

MICHIGAN

Senate Fails to Vote on Energy Bill

The Senate adjourned last week without voting on a utility-supported package of bills to reform the state’s energy market.

Senate Majority Leader Arlan Meekhof said most legislators were unfamiliar with the complicated legislation and it was too much for them to digest. “For folks that don’t serve on the committee and aren’t engaged in this every day, it’s a lot of stuff,” he said.

The bill aims to cut emissions 35% by 2025 through increased use of renewables, to give the Public Service Commission control in utilities’ rate changes and to place restrictions on alternative energy suppliers. Businesses, schools and government agencies say the legislation would remove the state’s retail choice, currently capped at 10%.

More: The Detroit News

Anti-fracking Petition Falls Short Before Deadline

$committebanfrackinginMichigan(cbfracking)$ The Committee to Ban Fracking collected about 82% of the 252,523 signatures it needed to get an anti-fracking measure on the ballot for November’s election before a deadline expired.

The group says it will sue to challenge the constitutionality of a 180-day limit for petition signature drives. It says it will continue to collect petitions in hopes of getting the measure on the 2018 ballot.

But under a bill recently passed by the House and Senate, the 207,000 signatures already gathered would be considered “stale” and the group would have to start over. Gov. Rick Snyder has yet to sign the bill, however.

More: MLive

MISSOURI

PSC Declines to Study Grid Modernization Bill

The Public Service Commission decided not to vote on opening a working case that would have studied the impacts of a bill that has stalled in the General Assembly.

The bill would dramatically change ratemaking for utility companies, with Chairman Daniel Hall calling it “a radical departure from 100 years of ratemaking.” But the legislation was filibustered in the Senate.

Another factor in the PSC’s decision to pull the vote from the agenda was Ameren Missouri, which said it would not participate in the working case for fear that it could be used against it in future rate cases.

More: The Missouri Times

NEBRASKA

Wind Project on Hold Over Local Opposition

A second wind farm in the state has been put on hold after it attracted public opposition. The Cherry County Planning Commission has delayed consideration of a 50-MW farm planned by Bluestem Sandhills, pending a review of public notice requirements.

The commission delayed a vote on a conditional use permit until it can decide whether the state Game and Parks Commission, which operates the nearby Cowboy Trail, should have been informed of the meeting. That legal review could take a few weeks, officials said.

Consideration of a 350-MW farm near Brunswick was also postponed to allow for more consideration of testimony about the project.

More: Omaha World-Herald

NEW JERSEY

PSE&G’s Solar Farm Plan Draws Mixed Reactions

Public Service Electric and Gas’ $275 million plan to add 100 MW of solar power through 10 new solar farms has drawn kudos from environmentalists, but others are concerned about the potential effect on solar credits.

Part of the company’s Solar 4 All program, the farms will be sited on old landfills and industrial brownfields.

PSE&G’s application includes a 10% guaranteed rate of return. “PSE&G is asking ratepayers to assume the risk for this solar generation,” said Stefanie Brand, director of the Division of Rate Counsel.

More: NorthJersey.com

NORTH DAKOTA

Ground Broken on State’s Largest Community Solar Farm

State officials broke ground last week on the state’s largest solar array, near Fargo. The 102-kW project has 324 panels, with room on the 350-by-150-foot lot to double in size if demand from Cass County Electric Cooperative increases.

The co-op received a $140,000 grant from the state Commerce Department, much of which came from the federal Department of Energy. That subsidy cut the project’s cost by 58%.

About 70 co-op members have purchased panels, and applications from 100 more members are in the works, said Paul Matthys, Cass County Electric’s vice president for member and energy services. The solar array will produce an estimated 142 MWh a year.

More: The Forum of Fargo-Moorhead

OHIO

Sierra Club Director Among 19 Applying for PUCO Seat

Daniel Sawmiller, senior representative with the Sierra Club’s Ohio Beyond Coal campaign, is one of 19 applicants for a vacancy on the five-member Public Utilities Commission. Others to apply included State Rep. Dave Hall and a Columbus utilities attorney, Howard Petricoff.

Sawmiller was a vocal opponent of both the FirstEnergy and AEP Ohio power purchase agreements and eventually joined in a settlement for the AEP plan after the company vowed to commit resources to renewable energy.

The 19 will be interviewed by the PUCO nominating council by June 16, and four finalists will be forwarded to Gov. John Kasich for consideration.

More: Columbus Business First

OKLAHOMA

Newspaper Questions OPPD Decision to Restart Nuke

Current and former Omaha Public Power District executives defended their decision to continue to invest in the Fort Calhoun nuclear plant, even as all market signals pointed to nuclear power being uncompetitive in the face of declining natural gas prices.

The Omaha World-Herald interviewed eight current and three former OPPD board members, questioning why the utility sunk $300 million in an effort to restart Fort Calhoun in December 2013 only to conclude last month that the plant “is not financially sustainable.” The board is expected June 16 to vote on a recommendation to close the plant by the end of the year. (See Omaha PPD Recommends Closing Fort Calhoun.)

More: Omaha World-Herald

PENNSYLVANIA

Judge: Drilling Critics’ Speech is Protected

A judge struck down a lawsuit by natural gas leaseholders who said anti-drilling activists had interfered with their rights by filing an unsuccessful legal challenge that they said had caused costly delays.

Judge Michael Yeager of the Butler County Court of Common Pleas ruled that the critics’ objections to a pro-drilling ordinance were protected by the right to free speech.

The decision does not affect the judge’s previous order in which he rejected the environmental group’s challenge and upheld the town’s zoning ordinance, which opened up nearly much of the township to potential shale gas drilling.

More: State Impact

PUC Takes Aim at Unlicensed Electricity Supplier

Public Utility Commission investigators have filed its first formal enforcement action against a power broker operating without a license.

Electricity supplier Fair View Energy, based near Erie, has signed up hundreds of commercial customers. Investigators say the supplier’s principals should have known they needed a license, as they’ve worked for other suppliers.

The commission’s enforcement arm is seeking $89,800 in civil penalties as well as refunds of fees paid by customers.

More: The Philadelphia Inquirer

VIRGINIA

Archeologists Uncover Artifacts In Path of Mountain Valley Pipeline

Archeologists surveying properties in the path of the proposed Mountain Valley Pipeline in Franklin County have found a trove of Native American artifacts, calling into question the job done by archeologists hired by the pipeline company.

The Mountain Valley Pipeline is a proposed $3.5 billion, 301-mile pipeline to transport natural gas from West Virginia through five Virginia counties to feed into a larger pipeline.

Pipeline opponents hope that the discovery of the artifacts may help them obtain historic designations for properties and impede the pipeline. The artifacts include arrowheads, tools and pottery shards.

More: The Roanoke Times

Dominion Virginia Power Advances Coal-Ash Storage Project

State regulators last week issued a draft of one of two permits Dominion Virginia Power needs to store more than a million tons of coal ash at the site of a defunct power plant in Chesapeake, the state’s third most populous city.

The draft of the other permit is expected to be issued this week.

Meanwhile, Chesapeake officials are fighting to have a say in how the site is regulated, and Dominion is battling a federal lawsuit by environmentalists who say the ash should be removed, not stored onsite.

More: The Virginian-Pilot

WASHINGTON

Seattle Passes Resolution Opposing Nuclear Power

The Seattle City Council has passed a resolution calling for its city-owned utility to seek power from non-nuclear sources and push provider Energy Northwest to investigate non-nuclear, carbon-neutral sources.

Energy Northwest operates the Columbia Generating Station, the region’s only nuclear station. Its power goes to the Bonneville Power Administration, which supplies about 4% of the Seattle City Light Department’s electricity.

The company says the council only heard one side of the story before its vote. “They just got a lot of really bad information that went unchallenged and, unfortunately, they acted on it,” a company spokesman said.

More: Tri-City Herald