FERC Rejects PJM’s Method for Capacity Offer Caps

By Suzanne Herel

FERC ordered PJM last week to change its method of calculating capacity market offer caps, saying it was inconsistent with its practice in the energy market.

“We find that PJM’s Tariff is unjust and unreasonable because it allows the cost-based energy offer cap to be used as the sole measure of short-run marginal cost in calculating capacity market offer caps,” it said (EL14-94).

Harrison Power Station (first-energy) — Harrison Power Station *Source: FirstEnergy*

“In the energy market, when a generation resource fails the three pivotal supplier test and submits a non-zero market-based offer less than its cost-based offer cap, PJM uses the lower, market-based offer, not the cost-based offer, as the basis for determining the resource’s commitment and dispatch,” FERC said. “When a resource is not subject to market power mitigation, PJM uses its offer as the basis for the resource’s commitment and dispatch. In both cases, PJM’s energy market relies on the offer, not the cap, as reflecting the resource’s short-run marginal cost.”

The ruling stemmed from a 2014 petition by FirstEnergy, which said PJM’s Independent Market Monitor was violating the Tariff by calculating marginal cost using the lower of the market-based offer and the cost-based offer.

But the commission ruled that the Monitor’s interpretation was appropriate and that the Tariff, which dictated use of cost-based offers only, was improper.

Joining FirstEnergy in support of the petition were PJM, Duke Energy, the PJM Power Providers Group and the Electric Power Supply Association. Opposing the petition were the Organization of PJM States, the Public Utilities Commission of Ohio, PJM Consumer Representatives, the Office of the Ohio Consumers’ Counsel and the Monitor.

FirstEnergy contended that cost-based offers are an accurate, transparent method for estimating marginal cost, and that market-based offers reflect factors other than marginal cost.

But the Monitor said using only cost-based offers could lead to the exercise of market power. For example, units that can use multiple fuels could base their higher, cost-based offers on their secondary fuel and their lower market-based offers on the primary fuel, the Monitor said.

The commission ordered PJM to submit a compliance filing specifying a new procedure using a resource’s non-zero market-based offer as proxy for marginal costs in most cases.

The cost-based offer would be used when the resource is mitigated and its market-based offer is above the cost-based offer cap, “as the market-based offer in this circumstance may reflect the exercise of market power,” FERC said.

The cost-based offer also would be used when the market-based offer is less than its fuel and environmental costs, “since the generator is losing money for each megawatt produced, a reasonable projection of its energy and ancillary services revenue should reflect such a reduction.”

March 8, 2016

MISO Market Subcommittee Briefs

A year after rolling out its extended LMP methodology, MISO plans to move into a second phase as it considers expanding online fast-start pricing to more peaking resources and investigating offline fast-start pricing.

MISO said it is considering using a 30-minute window instead of 10 minutes to summon fast-start resources. The change, according to MISO, could increase from 90 units contributing about 4,000 MW to 214 units contributing about 9,000 MW during summer peak capacity.

“Our intention is certainly not to raise prices, but to reflect the true price,” said Jeff Bladen, executive director of market services, told the Market Subcommittee last week. He said if unnecessary costs were hiding in the revenue sufficiency guarantee, including more resources would bring more transparency to ELMP.

“Phase II is meant to capture broader benefits,” MISO Market Design Engineer Congcong Wang said. “By expanding from 10 minutes to 30 minutes with fast-start resources, we would have the capacity almost doubled in terms of megawatts and units.”

Wang said studies on moving the fast-start window would be completed by August. MISO is targeting a FERC filing and new software testing for the first quarter of 2017.

Some stakeholders said it wasn’t reasonable to think fast-start resources would be able to commit to a five-minute interval and were afraid it would depress revenue sufficiency guarantee amounts. Others expressed concern that MISO would remain silent until August.

“This is not a proposal; it’s an investigation at this point. The purpose today is to let you know … we’re scoping out the project. We’re taking a lot of notes on what we’re hearing,” said Dhiman Chatterjee, MISO’s senior manager of market evaluation and design.

Chatterjee said MISO would provide stakeholders updates throughout the study process. He asked stakeholders to submit written questions and comments by March 15.

During the first six months of ELMP operations since last March, MISO said only about 40 units were enabled to set prices. MISO’s Independent Market Monitor said the number represented only about 1% of online peaking resources that were eligible to set prices.

MISO defines fast-start resources, which participate in price-setting, as those that can start within 10 minutes of notification and have a minimum run time of an hour or less.

So far, MISO said ELMP has resulted in “modest” benefits. Using ELMP has decreased uplift charges by 1%, a projected annual savings of more than $165,000. The RTO also said that the deviation between day-ahead and real-time prices was reduced by 2.25%.

More Info Sought from Load-Modifying Resources

Hoping to boost pricing accuracy during shortages, MISO will begin requiring market participants to identify the reductions each of their load-modifying resources will provide in an LMR event. The RTO is adding an additional form to its communications system to capture the data.

The other stages of MISO’s LMR reporting will be unaffected. Market participants will still use the system to report their daily LMR availability, with the RTO responding with scheduling instructions.

No date has been set for the change, but MISO hopes to have the additional reporting page active prior to the summer.

Jeff Knight of Entergy asked if participants could make changes on the form to select a different LMR to curtail without incurring additional charges. MISO Business Analyst Danielle Logsdon said market participants could make changes up to the hour before deployment.

“Just as baseball professionals are immersed in spring training for the upcoming season, this is preparation for emergency pricing implementation this summer, if it’s needed,” said Michael Robinson, MISO’s principal adviser of market design. “This is an effort to better set prices when we’re in these shortage conditions.”

Logsdon said MISO’s 2016 summer readiness training will be held April 14-May 19.

MISO Backs Make-Whole Fuel Payments

MISO has proposed reimbursing system support resources for unburned fuel when real-time schedules diverge from day-ahead schedules.

The RTO is also proposing that generation owners identify their fixed costs in filings with FERC. Currently, SSR units have to file directly with FERC only when MISO, the Monitor and the generation owner cannot negotiate a compensation agreement. MISO said having generation owners deal directly with FERC could reduce delays in implementing SSR agreements.

MISO said it “does not have independent information to evaluate SSR costs and relies on the generator owner for information on fixed cost compensation for the filing.”

Robinson said MISO would accept written comments until March 15. He said it is eyeing filing rule changes by the end of March.

Most Second-Tier Commercial Pricing Nodes Being Eliminated

MISO will terminate 28 second-tier commercial pricing nodes effective June 1. The changes will take effect with the 2016/17 financial transmission rights auction and the annual allocation process for auction revenue rights.

The RTO said it is jettisoning most of its second-tier interface commercial pricing nodes to “reduce administrative burden and be consistent with external balancing authority boundaries.”

“We reviewed these commercial pricing nodes and determined there is no business need for them,” said Zhaoxia Xie, MISO’s manager of modeling and market engineering.

MISO is evaluating the usefulness of six additional second-tier pricing nodes.

First-tier pricing nodes are associated with balancing authorities that are directly interconnected with MISO while second-tier nodes are not.

Illinois and Michigan Hub Definitions Changing

MISO is changing its Illinois and Michigan hub definitions as a result of the March 2016 model update, but the new descriptions are not expected to affect pricing substantially.

The Illinois and Michigan hubs will continue to have 151 and 265 elemental pricing nodes (EPNode), respectively. For both hubs, one EPNode was removed and replaced as a result of a substation closure.

For Illinois, the updated definition will reduce LMPs by less than a penny, according to MISO’s analysis, with average real-time prices expected to decrease from $25.13/MWh to about $25.12/MWh. In Michigan, the switch is projected to also amount to a penny reduction in day-ahead LMPs, from $25.91/MWh to $25.90/MWh.

Prices for MISO’s seven hubs are computed as the weighted average of the LMPs of the EPNodes comprising them.

Staff Considers Reusing Market Roadmap Information

MISO is considering reusing certain data in its Market Roadmap process to improve efficiency. The question of “prioritizing only new projects without reassessing existing projects” marked the beginning of the annual process at the MSC.

“What we’re looking for today is based on feedback we got at the tail-end of last year’s process. There were questions about the necessity of doing a full refresh of the Market Roadmap every year, where every item on the roadmap is looked at as it if were new or if we should only look at a subset of items,” Bladen said. For instance, Bladen said MISO’s roadmap could focus heavily on forward-looking projects beyond 2017 while using existing information for other projects.

MISO’s Mia Adams said the RTO was looking for feedback on the proposal by the end of the month.

— Amanda Durish Cook

March 8, 2016

MISO: Energy Storage Could Work into Existing Market Structure Next Year

By Amanda Durish Cook

MISO could have a limited set of market rules for energy storage as early as 2017, RTO officials told the Market Subcommittee last week.

AES energy storage array — AES’ 20-MW energy storage array in Indianapolis, expected to go into operation in June, will be the first utility-level battery energy storage facility in MISO. *Source: AES Energy Storage*

MISO External Affairs Policy Advisor Jennifer Richardson said storage provisions could be a “combination of using established definitions” and creating new market rules.

In the near term, MISO said it will work with stakeholders on minor revisions to the Tariff and business practice manuals that would open the market to short-term and medium-term storage. By summer, MISO hopes to have a clear idea if storage should be treated as a generation resource or a transmission asset and whether it can participate in MISO’s capacity or ancillary service markets. For that, MISO needs to consider how behind-the-meter storage can function as load-modifying resources or demand response.

AES Project Nears Completion

The storage conversation comes as AES’ Indianapolis Power & Light edges closer to finishing the 20-MW Advancion Energy Storage Array in Indianapolis. The project, slated to be put into operation sometime in June, will be the first utility-level battery energy storage facility in the footprint.

Stakeholders have submitted a first round of comments on the issue in response to MISO’s call for input in January. (See MISO Preparing a Place for Energy Storage in Tariff.)

“A lot of stakeholder comments focused on developing new software,” said Yonghong Chen, MISO’s principal advisor of market development and analysis, during a presentation to the subcommittee. “In the next few months, probably from April to July, we’re going to work with stakeholders to determine what we can do [with existing software]. By next year, we hope to have implementation rules on how storage can participate with our current market software and market rules. … We have some existing language in the Tariff and BPMs that could apply, but some language needs clarification to apply to storage.”

From mid-2017 onward, MISO plans to tackle how storage will fit into five-minute settlement schedules, voltage and local reliability commitments, minimum megawatt participation limits and automatic generation control enhancement, software that deploys fast ramping resources more quickly.

“We want to remain as technology-neutral as possible, but FERC may have to step in at some point,” Richardson said.

AES energy storage — AES’ 20-MW storage facility will have the flexibility of a 40-MW resources. *Source: AES Energy Storage*

Long-Term Plans

MISO said its longer-term storage considerations would run into 2019 and include make-whole payments, cost allocation and impacts to the annual Transmission Expansion Plan.

“We need more time to figure out how to make these work well together,” Chen said.

Jeff Bladen, MISO’s executive director of market design, said storage should work “holistically” with MISO’s market.

“This is very much a topic on stakeholders’ minds, as they’re thinking of developing projects and bringing them to market,” he said. “We have to be careful not to put energy storage into its own silo. It needs to fit into the larger Market Roadmap.”

Stakeholder Comments

Ameren told MISO that it believes energy storage could be categorized as “generation, transmission or other, depending upon its characteristics.” The company proposed that MISO classify storage as a use-limited resource, then perform an “initial asset evaluation” to determine if it should be treated as a generator or transmission asset. Use-limited resources are those “unable to operate continuously on a daily basis, but … able to operate for a minimum set of consecutive operating hours.”

Madison Gas and Electric said storage could fit into a generation or transmission definition. The company went a step further, suggesting that MISO remove prescriptive resource definitions from the Tariff altogether. “To be agnostic or ‘neutral’ when it comes to technology, then we need to be neutral as to what type of resource provides services. The Tariff lists the products and services permitted by each resource type. To become neutral, we should remove prescriptive/descriptive limitations and allow resources to provide any product or service for which it can satisfactorily deliver. We can test and measure performance of resources, eliminating the need to limit products/services by resource type,” Madison’s Megan Wisersky wrote MISO.

ITC Holdings advocated leaving storage unclassified, saying it was “premature” to categorize the technology when it hadn’t yet been integrated into the grid.

Amber Motley, manager of market operations for Xcel Energy, said market participants should be given the option of choosing to categorize storage as either generation or transmission, a position supported by MidAmerican Energy.

Chen said work on energy storage rules would play out in MISO’s Planning Subcommittee and Resource Adequacy Subcommittee, as well as other committees, if needed.

“We’re very mindful that stakeholders don’t want to chase these issues in a hundred different committees. Believe me, we don’t want that either. We’ll try our best to iron out those hard questions internally before we bring them to stakeholders,” Richardson said.

Chen asked for another round of stakeholder input before March 18.

March 8, 2016

Traders Deny FERC Charges; Seek Independent Review

By Ted Caddell

A Pennsylvania-based power trading company accused by FERC of making riskless up-to-congestion transactions to collect line loss payments denied any wrongdoing Friday and requested the matter be dismissed.

Coaltrain Energy said that it didn’t manipulate the market, that its trading strategy wasn’t deceptive and that it didn’t engage in wash trades or try to affect market prices (IN16-4).

If the commission doesn’t terminate the case, Coaltrain said it will seek a de novo trial, with a federal court deciding all issues of fact and law, rather than the company potentially appealing an unfavorable FERC ruling afterward.

One of the allegations levied by FERC was that Coaltrain’s use of employee-monitoring software gave investigators evidence of the company’s trading strategy. FERC said Coaltrain employees at first claimed they had forgotten about the software — Spector 360 — when the Office of Enforcement initially asked, and then repeatedly delayed giving up the data. (See FERC: Spy Software Provides Evidence of UTC Scam.)

In its response, Coaltrain denied attempting to conceal the data, which included logs of the company’s trading.

“What actually happened is that it simply did not occur to the individuals involved that Spector 360 was a source of potentially responsive material at the time they were working on Coaltrain’s initial document responses,” the company said. “As soon as the issue was identified, Coaltrain promptly provided this data. The data was exculpatory, not inculpatory and there was no reason to conceal it.”

The response revealed that the owners of Coaltrain, Shawn Sheehan and Peter Jones, did not have Spector 360 installed on their computers, and so their actions would not have been recorded.

The response also says that Coaltrain had several communications with PJM’s Independent Market Monitor, Joe Bowring, and provided FERC with recordings of those discussions. “The content and context of these calls demonstrate that Coaltrain provided the IMM with accurate, truthful information that specifically addressed each of the IMM’s stated concerns,” the company said.

In one discussion, Bowring answered that he considered trades to be illegitimate if “the only reason you’re making money from the transaction is you’re buying and selling at the same price, and making money entirely from the payback of the marginal losses. Dr. Bowring reiterated that, in his view, Coaltrain’s trades were ‘not violating the rules.’”

When Bowring later expressed concern over Coaltrain’s trades, the company said, “Coaltrain agreed to halt trades on specific paths and followed through on that promise.”

FERC is seeking $42 million in penalties and unjust profits.

March 8, 2016

Company Briefs

AES Indianapolis Power & Light’s Harding Street power plant, one of Indiana’s largest, will kick its coal habit completely by spring.

The company announced a $70 million investment to switch the plant to natural gas in 2014, and the conversion is expected to be complete in April, subject to approval by the state’s Utility Regulatory Commission. Coal has been Harding Street’s sole source of energy since the plant began operations in 1931.

IPL anticipates that the move will decrease its reliance on coal from 79% in 2007 to 44% in 2017. The company hasn’t yet said how many jobs might be affected by the change. During 2015, the state lost 500 coal-related jobs.

More: Inside Indiana Business

ATC Plans Tx Line from Wisconsin to Illinois

American Transmission Co. is planning a new transmission line for 2020 to improve the flow of electricity from Wisconsin to Illinois.

The 3- to 5-mile segment targets the same location as a 345-kV line that opened in 2013 between Pleasant Prairie, Wis., and a natural gas-fired power plant in Lake County, Ill.

Since then, “market conditions have continued to change in Wisconsin and Illinois, leading to unanticipated congestion in the Wisconsin-Illinois electrical interface,” an ATC spokesperson said. “This project is needed to resolve that.”

More: Milwaukee Journal Sentinel

Ameren Official Named to ‘Most Influential Blacks’ List

Ameren Illinois President Richard Mark has been named one of Savoy Magazine’s Top 100 Most Influential Blacks in Corporate America, earning the distinction for the second time.

The magazine selects black leaders “who have made a positive impact in corporate America and have made a difference in the communities where they live and work.”

Mark was named president of Ameren Illinois in June 2012.

“Richard is not only a great leader in our organization, but he is a champion for the customers we serve and a true leader in the community,” Ameren CEO Warner Baxter said.

More: Ameren

Hunt’s Proposed REIT Structure Could Scuttle Oncor Purchase

Oncor Two of three commissioners on the Public Utility Commission of Texas indicated last week they would only allow a consortium led by Dallas billionaire Ray Hunt to buy Oncor if some of the tax savings created by the sale are funneled back to consumers.

Commissioners Kenneth Anderson and Brandy Marty Marquez made clear during a March 3 hearing in Austin they will only support what they call a “risky” real estate investment trust (REIT) structure if Oncor’s more than 3 million ratepayers get to share in the tax savings.

That stipulation could be a deal breaker for the Hunt group, which would attempt to transform the Dallas-based transmission company — the state’s largest — into a REIT. The pending sale has attracted attention beyond Dallas because it could set a precedent for other utilities to become such trusts, including CenterPoint Energy, which is considering the same path.

More: Houston Chronicle (subscription required)

Duke Building 6-MW Solar Project on 50 Acres

Duke Energy said it will build a 6-MW solar facility on 50 acres in Rowan County, N.C., the third solar project the company hopes to complete in the state in 2016. If approved by the Utilities Commission, the plant should be online by the end of the year.

Duke is nearing completion of 141 MW of solar projects begun in the state last year and has announced plans to construct an additional 81 MW of solar this year. A 60-MW project is planned for near Monroe and a 15.4-MW facility is to be built in Mocksville.

More: Duke Energy

Long-Awaited EDP Wind Project Gets Timetable

EDP Renewables could add as many as 49 new wind turbines to the southwestern Wisconsin landscape by 2017 with a 98-MW project located in Seymour Township. The company said the project would create 10 to 15 full-time, permanent jobs and support more than 200 temporary construction jobs.

Josh Bohach, project manager for EDP Renewables, said workers will begin construction in 2017 and spend this year finishing surveying and design work. Jack Sauer, chairman of the Lafayette County Board, said the wind project has been under discussion for more than a decade, with grid interconnection alone taking years to hash out.

“It seems like with some of the bigger projects, you get your hopes up and they take a long time to come together or never get here at all,” Sauer said. “I think a lot of people are a little surprised to see it finally coming together now.”

More: Telegraph Herald

OG&E Moves Tx Project Timeline up by 3 Years

Oklahoma Gas and Electric is moving up the timeline for constructing a $190 million transmission line to help connect wind farms in northwestern Oklahoma, company executives said Feb. 26.

The utility will begin building the 126-mile 345-kV Windspeed II line from Woodward near the Texas Panhandle to its Cimarron substation northwest of Oklahoma City early next year. The line is expected to be in service by mid-2018, three years earlier than expected.

OG&E said the line will relieve congestion issues in northwestern Oklahoma, one of the reasons OG&E declined to commit to additional wind generation during a long-running, $1.1 billion environmental compliance and replacement generation case at the Oklahoma Corporation Commission.

More: The Oklahoman

DTE Energy Announces Trio of Leadership Changes

DTE Energy said it will make multiple shifts in its senior executive structure on April 4.

Company President and COO Steve Kurmas will be appointed vice chairman, while Jerry Norcia, currently president and COO of DTE Electric and Gas Storage and Pipelines, will assume Kurmas’ role.

Kurmas’ new position will have him overseeing multiple large-scale projects, despite his plans to retire in 2017, ending a 38-year run with DTE. Norcia has 14 years’ experience at the company and will head electric and gas business operations, major enterprise projects and the customer service division.

Norcia’s position will be filled by Trevor Lauer, currently senior vice president of DTE’s distribution operations. Lauer joined DTE in 2005.

More: DTE Energy

SPS Energizes $39M Project to Meet Texas, NM Demand

Southwestern Public Service last week activated a new $39 million, 38-mile addition to its transmission network in the eastern Texas Panhandle to meet growing demand and increase reliability, one of several SPP-approved projects to improve service in the region.

The improvements could eventually have a financial impact on customers of the Xcel Energy subsidiary, which already has a request for a $71.9 million annual rate increase pending before the Public Utility Commission of Texas. That request doesn’t include the most recent construction.

Since July 2014, SPS has invested about $1 billion on system additions in service by the end of last year, part of an overall $3 billion plan to make improvements in its Texas and New Mexico service areas by 2020.

More: Amarillo Globe-News

NRG Posts $6 Billion Loss, Slashes Dividend

nrg NRG Energy posted a $6.36 billion loss for the last quarter of 2015 and announced it would slash its annual dividend by nearly 80% to 12 cents/share, saving about $145 million a year.

The full-year loss of $6.44 billion translated into $19.46/share. NRG attributed its poor performance in part to the plunge in commodity prices, which weighed on the company’s coal fleet.

The company also announced that it would reintegrate its NRG Renew business back into the flagship operation after creating the renewables arm just last year.

Under longtime CEO David Crane, NRG made strong moves into renewable energy, solar power and vehicle charging units. Crane was ousted in December after results came up short and replaced by COO Mauricio Gutierrez, who last week said NRG will now concentrate on merchant generation and retail energy sales.

More: 24/7 Wall St.; FuelFix Blog

Invenergy Planning Wind Farm near Bloomington, Ill.

Invenergy is approaching landowners as it works on plans to construct a 120-turbine wind farm it seeks to have online by the end of 2017. Business development manager Allyson Sand said the company is looking in four different townships near Bloomington for sites for the facility, expected to be rated at 200 to 250 MW.

Sand would not discuss the costs of the project, but she said Invenergy expects to file for permits and arrange a power purchase agreement by the end of this year.

The region is seeing a spike in wind project planning and development, with a 240-turbine farm being planned for eastern McLean County. A wind farm in neighboring LaSalle County produced $1.79 million in tax revenue for the county last year.

More: The Pantagraph

Fermi 2, Davis-Besse Both Running at Reduced Levels

Separate, coincidental equipment problems left two Ohio nuclear plants operating at reduced levels last week.

The reactor at DTE Energy’s Fermi 2 was powered down to 59% to allow for repairs on a feedwater system valve. FirstEnergy’s Davis-Besse plant was reduced to 85% after mistaken signals were sent to its auxiliary feedwater system. That problem was fixed, but the plant operated at 100% for only two days before coasting down in anticipation of a scheduled refueling outage.

More: The Blade

Coal Company Asks Feds for OK to Seal Mine

St. Louis-based Foresight Energy last week asked the federal Mine Safety and Health Administration to close the company’s central Illinois coal mine, the site of an underground fire burning since mid-2014.

The company hopes the fire in the Deer Run Mine near Hillsboro will be choked off if the mine is allowed to be sealed off temporarily. Foresight has tried to extinguish the fire by sealing off some mine sections and filling them with inert gas and extinguishing chemicals. In December, the company evacuated the longwall mine, then laid off 100 employees. By January, the company had stopped mine production altogether due to low demand for coal and high carbon monoxide levels underground.

The coal producer is also seeking authorization from the Illinois Commerce Commission to expand mining operations into areas unaffected by the fire.

More: St. Louis Post-Dispatch

Groundbreaking Held for Navy’s Seabee Base Solar Plant

Mississippi Power held groundbreaking ceremonies March 2 for its proposed Seabee Base solar plant. The company is partnering with Hannah Solar and the U.S. Navy on the 23-acre, 3- to 4-MW solar project at the base in Gulfport, Miss.

The project, consisting of about 13,000 panels, will be able to provide power for approximately 450 homes.

“This is one of three utility-scale solar projects that have been approved by the Mississippi Public Service Commission, making our company the state’s largest partner in renewable energy,” Mississippi Power CEO Anthony Wilson said.

More: Mississippi Power

March 8, 2016

State Briefs

RGGI Auctions Competitive, Potomac Economics Says

The Independent Market Monitor for the Regional Greenhouse Gas Initiative found no evidence of anti-competitive behavior in the secondary market for CO₂ allowances in the fourth quarter of 2015, according to a recent report.

Part of Potomac Economics’ ongoing monitoring of RGGI auctions and the secondary
markets for CO₂, the report includes futures prices, market activity and allowance holdings. The analysis addresses the period from October to December 2015 and is based on data reported to the Commodity Futures Trading Commission and the Intercontinental Exchange, as well as other sources.

ISO-NE Capacity Auction Results Filed

ISO-NE’s 10th Forward Capacity Auction cleared at $7.03/kW-month for all resources within New England and imports from Québec, lower than the previous auction. There was no price separation between capacity pricing zones.

The Feb. 8 auction, for the 2019/20 commitment period, procured 35,567 MW of capacity to meet a 34,151-MW installed capacity requirement. In all, 40,131 MW of resources, including 6,700 MW of new resources, qualified to compete in the auction.

The auction acquired 31,371 MW of generation, including 1,459 MW of new generation. Three new power plants will help close the gap created by recent or pending retirements of more than 4,200 MW of coal, oil and nuclear generation. The auction also cleared 2,746 MW of demand-side resources, including energy efficiency measures and demand response assets, as well as 1,450 MW of imports from New York and Canada.

More: ISO-NE

ARKANSAS

Wind Project Withdrawn Following Repeal of Annexation

Dragonfly Industries International has withdrawn a proposal for the state’s first wind farm following a March 1 vote by Elm Springs residents to repeal annexation of land set aside for the facility.

The Elm Springs City Council voted to annex the land into the city last year, but the project met opposition months before the acquisition. Disagreement between opponents and proponents of the project became even more contentious when it was revealed Dragonfly CEO Jody Davis had a federal embezzlement conviction, while a Dragonfly spokesman had financial troubles of his own.

More: KFSM

DELAWARE

Opponents Wary of Proposed Natural Gas Plant

Opponents of a proposed natural gas-fired power plant in Middletown staged a protest last week, asking the city’s mayor for more information about the project, which has dominated local politics because of concerns about pollution.

Cirrus Delaware plans to build the facility as a backup power supply for a 228,000-square-foot data center.

The plant would generate 52.5 MW and operate during peak times, selling power back to the grid.

More: The News Journal

MICHIGAN

AG Opposes Second DTE Rate Increase Request

dte DTE Energy residential ratepayers could be handed another $75 annual hike in electric bills just three months after an increase of $114, but Attorney General Bill Schuette wants to halt the request.

“Electricity is a basic need for families and businesses across Michigan,” Schuette said in a prepared statement. “I am asking the Michigan Public Service Commission to closely examine the request being made by DTE that will raise rates for a second time in just a short period.”

DTE’s second rate hike would amount to a 6.6% increase in electric rates, after regulators approved an 11% increase in December. The latest request seeks to place costs associated with peak demand solely on residential customers, compared with the current practice of sharing those costs with business and industrial customers. The PSC has twice denied similar requests from DTE.

If the increase is approved, the state would have the highest electric rates in the northern Midwest, according to the U.S. Energy Information Administration.

More: Birmingham Patch

MINNESOTA

Community Solar Generating Uptick in Complaints

The push to build community “solar gardens” — facilities in which homeowners can hold individual shares of the output — has translated into increased calls to the attorney general’s office.

Deputy Attorney General James Canaday says people are confused about the proliferation of unsolicited offers they are receiving. “The solar garden business is very new,” he told Minnesota Public Radio. “It’s the Wild West right now.”

Although there are only 17 community solar facilities currently operating in the state, that number is expected to increase to 200 by the end of the year. Each operates differently, with some offering monthly billing and others requiring large upfront charges and long-term commitments. Any long-term commitment deserves careful study, said Canaday, noting that for the most part, solar gardens are not regulated.

More: Minnesota Public Radio

MISSOURI

PSC Approves KCP&L Solar Facility Application

The Public Service Commission last week granted KCP&L-Greater Missouri Operations a certificate of convenience and necessity to construct, own, operate and maintain a solar generation facility in Jackson County.

When completed, the solar plant will generate around 4,700 MWh annually, or enough electricity for about 440 customers, according to KCP&L’s application. The company said it wants the facility to begin operating by late July.

The PSC noted that KCP&L proposed to build the plant as a pilot to give the company “hands-on” experience for designing, constructing and operating additional solar facilities. “Gaining that experience now is important so that GMO can remain in front of the upcoming adoption curve,” the commission wrote.

More: The Missouri Times

NEW HAMPSHIRE

State DOT Added to Northern Pass Complaint

The Society for the Protection of New Hampshire Forests has filed a motion to add the state Department of Transportation to its lawsuit against Northern Pass Transmission.

The group included the department because Northern Pass argued that it is the only party with the authority to allow developers to bury the cable along highway rights of way. The society says it owns land under and along certain state highways, including Route 3, which is being eyed by Northern Pass as part of the cable’s route and is adjacent to the Washburn Family Forest.

“We have a legal and ethical obligation to defend conserved lands like the Washburn Family Forest from private commercial development such as Northern Pass,” said Jane Difley, president of the society.

More: New Hampshire Union Leader

NEW JERSEY

BPU Approves $5.3M in EE to Reduce Demand

The Board of Public Utilities has approved $5.3 million in energy efficiency incentives that it said will enable several entities in the state to make investments expected to reduce annual power demand by 19.5 MWh.

The incentives will be provided through the state’s Clean Energy Program. The recipients are NJ Transit, Clement Pappas & Co., Eickhoff Supermarkets, Village Supermarkets, ShopRite, Grand LHN 1 Urban Renewal and New Jersey American Water.

More: New Jersey Board of Public Utilities

NEW MEXICO

Opposition Firms up as PNM Readies for Hearings

Public Service Company of New Mexico could face an uphill battle in its bid to win approval of a 14.4% rate hike from the Public Regulation Commission. The utility is seeking $123.5 million in additional annual revenue to recover capital investments since 2010 — the last time it requested a rate hike — and to offset a decline in sales.

Environmental and clean energy organizations, consumer advocates and industrial and institutional power users are lining up against PNM’s proposals, which the commission will review during two weeks of public hearings starting March 14.

Opponents say the company is seeking much more money than is justified and that the rate hikes will shift more system costs to residential and small consumers. Company executives say the rate request is critical to keep the grid running reliably without interruption.

More: Albuquerque Journal

NEW YORK

Cuomo Requests Another Indian Point Investigation

Gov. Andrew Cuomo ordered state agencies to ask FERC to immediatelyhalt construction of the Algonquin natural gas pipeline until a safety review is completed.

The FERC-approved pipeline would run close to the Indian Point nuclear plant, which has experienced several safety incidents in recent months, prompting the state to conduct its own investigation into the facility.

“Although the project applicant has agreed to more stringent construction measures near Indian Point, ongoing state investigations will assess the adequacy of these measures and may also reveal new information about the environmental, health and safety risks posed by the project’s siting,” the governor’s statement said.

More: Gov. Andrew Cuomo

Entergy: Bird Droppings Shut down Indian Point

Bird droppings likely caused the three-day shutdown of the Indian Point plant in December, according to plant owner Entergy.

The reactor shut down automatically when bird excrement apparently produced an electric arc between wires on a feeder line at a transmission tower, Entergy said in a report to the Nuclear Regulatory Commission. The company said it is revising preventive maintenance for additional inspection and cleaning and installing bird guards on transmission towers.

More: CBS

NORTH CAROLINA

Duke Gets OK for Two Natural Gas Plants in Asheville

The Utilities Commission has approved Duke Energy’s plan to build two new natural gas-fired units at its coal-fired power plant in Asheville. The company was denied permission for a third gas unit intended for use as a backup peaker.

The commission did not address the estimated $1 billion cost of construction, which is likely to be passed through to customers.

In its ruling, the commission also ordered Duke to consider retrofitting four coal-burning units at the company’s Roxboro plant to improve efficiency.

More: The Charlotte Observer

SOUTH DAKOTA

Bill Would Spread Wind Revenue Throughout State

A state task force charged with increasing teacher salaries has proposed legislation that would distribute tax money collected from wind farms to school systems throughout the state, rather than allowing the jurisdiction hosting a facility to keep all the revenue. Critics contend the bill would dampen incentives for localities to site wind farms.

The redistribution plan is being proposed alongside a separate increase in the state’s sales and use tax. Both pieces of legislation would blunt wind farm development in the state, critics say.

“I see more projects going into North Dakota, Minnesota and Nebraska than here,” said Steve Wegman, who recruits investors for state wind projects. “Raise the tax and nobody will build. End of story.”

More: Midwest Energy News

TEXAS

EPE, El Paso City Council Agree to $37M Rate Hike

El Paso’s city council has agreed to grant El Paso Electric a $37 million rate hike, about 8% above current rates. The increase is $44.5 million less than the original $71.5 million request, which was revised down to $63.3 million in January.

Under the proposed settlement, EPE’s West Texas residential customers would see monthly bills rise an average of almost 10%, while bills for small commercial customers would increase by about 3%. The rate settlement would also implement a surcharge of up to $11/month for residential customers who have installed or applied to install rooftop solar systems after Aug. 10, 2015, a provision being challenged by solar organizations and the state’s consumer advocate.

The agreement is still subject to approval by the Public Utility Commission.

More: El Paso Times

VIRGINIA

McAuliffe’s Vetoes Bill Giving Legislature CPP Authority

A bill that would have given the General Assembly control over implementation of the federal Clean Power Plan mandates was vetoed by Gov. Terry McAuliffe.

The governor said the bill represented an “impermissible breach of Virginia’s constitutional separation of powers.” He said the power to delegate such environmental power properly goes to the state’s Department of Environmental Quality. “This process rests squarely in the executive branch of state government,” not the legislative, McAuliffe said.

Lawmakers are crying foul, however. The impact of the federal mandates “impacts far too many Virginians to be left to unelected bureaucrats,” said one Republican lawmaker.

More: Richmond Times-Dispatch

County Urges Dominion to Reconsider 230-kV Tx Line

Culpeper County’s Board of Supervisors is urging Dominion Virginia Power to re-examine its plan to construct a 38.1-mile transmission line between Remington and Gordonsville. The board is concerned about property values along the line and the effect on landowners where a wider right of way will be needed.

Dominion plans to upgrade an existing link between the towns with a 230-kV line on 106-foot monopoles that are nearly double the height of the existing poles. The county board also voted 6-1 to become an official respondent in the case before the State Corporation Commission, making it eligible to later intervene in opposition if necessary.

The project is slated for completion in 2019.

More: The Daily Progress

WISCONSIN

Bill Would Cut Funding For Energy Efficiency

A bill that aims to cut “double charging” to fund state energy efficiency programs through both wholesale and retail electricity sales would slice about $7 million from the Focus on Energy program.

The bill, which passed the State Assembly and is currently before the State Senate, aims to recalculate how funds are collected by limiting charges to just retail sales. While lowering the costs customers pay directly, energy efficiency proponents say those customers will lose out on benefits of the program.

“This change is going to hurt customers; they’ll have less opportunity to take advantage of the programs that Focus on Energy offers, and those programs help customers lower their bills,” said Mitch Brey, campaign organizer of the citizen group RePower Madison.

More: Midwest Energy News

March 8, 2016

SPP: FERC not Budging on non-Order 1000 Seams Projects

FERC staff is hesitant to entertain consideration of a regional cost allocation methodology for seams projects approved outside of an Order 1000 process, SPP staff told the Seams Steering Committee last week.

In recent discussions, said Brett Hooton, SPP’s senior interregional coordinator, FERC staff seemed concerned about ensuring Order 1000 will be the only process “under which a planning region will include a regional cost allocation in [its] tariff for seams projects.”

FERC Rejects SPP Proposal for Seams Transmission Projects.)

Some SPP stakeholders expressed concern with FERC’s position, saying it hurts the RTO’s ability to approve a large number of potential projects not eligible under Order 1000.

SPP staff noted that no interregional projects have been approved anywhere in the country under Order 1000.

Meetings This Week

The committee also previewed two meetings with MISO this week related to the joint operating agreement and interregional planning.

The JOA stakeholder meeting Tuesday will focus on ongoing operational issues between the regions and potential improvements to the market-to-market process.

At the March 9 Interregional Planning Stakeholder Advisory Committee meeting, stakeholders will discuss high-value M2M flowgates, the results of the RTOs’ Clean Power Plan studies and whether the RTOs should conduct a joint transmission study this year.

— Tom Kleckner

March 8, 2016

New England Stakeholders Debate Solar Subsidies

By William Opalka

NEWTON, Mass. — More than 150 people attended the Northeast Energy and Commerce Association’s 13th Conference on Renewable Energy Thursday. Here are some highlights of the speakers’ comments.

Timothy Rougan, National Grid’s director of energy and environmental policy, and Cynthia Arcate, CEO of PowerOptions, said it’s time for Massachusetts to reconsider its generous solar subsidies.

“What people are getting paid — whether it was $6 a watt on their house, or $1.50 a watt on a 5-MW solar farm — it’s much more than in surrounding states,” Roughan said. “There’s only so much money in the pie and we need to make intelligent decisions on where it needs to go.”

“The incentives in Massachusetts have done a phenomenal job in jump-starting the industry, but we’re beyond the beta stage,” said Arcate, whose company helps more than 500 nonprofits with $200 million in annual energy spending maximize their buying power. “I believe the incentives are too rich and we need to reconfigure it somehow.”

Michael Cuzzi, senior vice president of VOX Global, a strategic communications firm, said the challenges of siting new infrastructure are especially acute in New England, “where our traditions of local control remain very strong and where resistance to change seems bred into our DNA.”

“Questions about cost-competitiveness and subsidies still linger [and have an] ability to unite strange political bedfellows, with opposition to projects coming from the environmental left and the fiscally conservative and libertarian right. So for the politicians in the host communities, there is no political safe space.”

John Fernandes, director of policy and market development for Renewable Energy Systems’ North American unit, which has built or has under construction more than 80 storage and renewable energy projects, said one benefit of storage is its flexibility. “I can do a lot more with a storage plant than I can do with 40 miles of transmission. All I can do with 40 miles of transmission is move electrons,” he said. “Not to oversimplify it, but I can pick up and move a storage plant a lot easier.”

Bryan Sanderson, senior vice president of Anbaric Transmission, made a pitch for the company’s proposed Vermont Green Line, which would deliver Canadian hydropower and New York wind power over a transmission line partly under Lake Champlain.

“We view transmission paired with wind and hydro as the most cost-effective way to deliver clean energy at large scale into the region,” he said.

March 8, 2016

IPPs Push 3-Year Forward Auction for MISO; Consumer Advocates Urge Caution

By Amanda Durish Cook

MISO stakeholders continued their debate over the RTO’s capacity market rules Monday with independent power producers saying the RTO should borrow elements from PJM and consumer advocates warning that the proposals were premature and could increase prices.

The discussion, which focused largely on Illinois’ Zone 4, came at a meeting of the Competitive Retail Solution Task Team.

NRG Energy, Noble American Energy Solutions and Mainline Energy called for a transition to a downward sloping demand curve from the current vertical curve, which critics say results in excessive price volatility.

Abraham Silverman, NRG Energy’s assistant general counsel for regulatory affairs, presented a proposal that also called for a mandatory three-year forward auction for retail choice zones in Illinois and Michigan.

The auctions would be optional in the rest of MISO, which depends on state-run integrated resource plans — although load-serving entities in those states would be required to demonstrate three years in advance that they have sufficient resources to meet their capacity needs through the auction, self-supply or bilateral transactions.

NRG’s proposal was based on a study it commissioned by The Brattle Group. Brattle’s study said MISO’s survey of LSEs’ capacity resources, conducted with the Organization of MISO States, “does not adequately ensure reliability.”

“Shortages for retail choice customers would affect the reliability of the whole system, including traditionally regulated states,” Brattle said.

Mainline Energy likewise advocated for procuring capacity three years in advance. “We’re not trying to recreate the markets, we’re trying to create a price signal here,” said Michael Borgatti, director of RTO services for Gabel Associates, who appeared on behalf of Mainline Energy.

Borgatti said competition could drive down prices and volatility. “Let’s be honest, in the last three years, we’ve seen capacity prices around $3 [per megawatt-day], we’ve seen $17 and we’ve seen $150,” he said.

Noble American Energy Solutions’ Roy Boston proposed a three-year auction and downward sloping demand curve modeled after PJM. MISO’s “short-term procurement auctions do not give potential entrants an opportunity to participate in the auction, which increases the potential for incumbent generators to exercise market power,” Boston said.

At a meeting of the task team last month, Exelon and Dynegy also proposed a move to a PJM-like construct. (See Dynegy, Exelon Propose PJM-Type Capacity Auction for MISO Zone 4.)

However, the Illinois Citizens Utility Board and AARP said MISO’s goal of filing proposed new rules with FERC by May 5 was premature.

“Presentations made to this working group have so far been nothing more than ways to increase capacity prices for existing generators,” said Bryan McDaniel of the CUB. “While generators give lip service to not making Zone 4 ‘an island,’ their proposals would make Zone 4 even more of an island.”

AARP staffer Bill Malcolm encouraged MISO to slow down, saying MISO’s “sufficient capacity” afforded the RTO time to thoroughly vet available auction options.

Susan Satter, public utilities counsel for the Illinois Attorney General’s Office, likewise said there was a “substantial surplus” of capacity in Zone 4 and there was no need to rush changes. She urged waiting on a long-term solution until the MISO-OMS survey is completed in July.

Satter’s office said presentations to the task team so far “have failed to provide data or analysis to show that the [Planning Resource Auction] as constructed will result in insufficient resources.”

“Generator desire for more revenue should not be the basis for radical changes in the PRA to increase capacity prices for Illinois,” the office said.

MISO officials again withheld comment on whether they favored any of the proposals.

Jeff Bladen, MISO’s executive director of market design, did offer one critique. “When you have three-year forward procurement, you have higher uncertainty about what’s going to happen three years into the future. What you have is a higher installed reserve margin to meet that one-day-in-10-year standard,” he said.

He also reminded stakeholders that the PRA isn’t meant to function as the primary mechanism for ensuring sufficient capacity.

Independent Market Monitor David Patton also questioned the advantages of abandoning MISO’s “prompt” auction, which procures capacity two months before the delivery year.

“I’m not sure the economic theories surrounding mandatory forward procurement have been robustly tested. We need to rigorously test the assumptions,” Patton said. “There’s not a lot of difference in prompt auctions and three-year forward auctions in how it motivates investments…The real question here is revenue.”

Patton did reiterate his support for a switch to a sloped demand curve.

March 8, 2016January 25, 2024

Storage, DR Dominate Talk at ERCOT Market Summit

By Tom Kleckner

AUSTIN, Texas — Energy storage, demand response and solar have a place alongside wind in the Texas market, speakers at Infocast’s ERCOT Market Summit said last week.

PTC Reductions will Challenge Wind

Susan Williams Sloan, the American Wind Energy Association’s vice president for state policy, said the extension of the wind production tax credit provides “five years of certainty. It’s what we have been looking for to compete in this industry, which requires so much capital.”

Matthew Burt, senior vice president for Renewable Energy Systems, said the gradual reduction of the PTC will be a challenge to the wind industry. Over “the next few years … we have to get the prices down,” he said. “The wind itself is free, but the equipment is very expensive.”

William Golove, whose eponymous firm provides consulting services to renewable energy project developers, agreed. “If wind wants to remain competitive, it will have to find ways to generate more out of the assets it has, or reduce the costs of doing so,” he said.

Ward Marshall, director of business development for independent power producer Pattern Development, said despite legal challenges, “We’re definitely being very bullish on the [Clean Power Plan]. We think it will have an effect on the ERCOT market. It’s kind of happening. It’s coming.”

Jeff Ferguson, senior vice president for project development for Apex Clean Energy, which builds utility-scale renewable projects, said ERCOT has helped make renewables attractive to corporations not in the energy business.

“I would like to pat ERCOT on the back, because a lot of the [commercial customers] Apex is doing business with can only do business if they’re operating in some sort of synthetic” power purchase agreement, he said. “They need an open market where they can get that synthetic PPA and swap it. You can’t do that in a lot of markets. … I see more explosive growth this side of the business once the PTC expires.”

Solar Needs Infrastructure

Paul Wattles, senior analyst for market design and development for ERCOT, said Texas needs to invest in more infrastructure to maximize solar power. “The best solar potential is West Texas, but the further west you get, the fewer lines we have. If we’re going to get to areas where you have the best solar irradiance, we’re going to need more wires outside the [Competitive Renewable Energy Zones] process.”

Kate Sherwood, senior director of central project development for SolarCity, said her company’s contracts with Wal-Mart have all been economic deals, rather than premised on their green attributes. “The large customers don’t see the risk” of bad contracts, she said. “They see the credits they receive helping them offset the risks.”

“We’ve matured to the point with utility-scale solar where we’re competing with traditional forms of generation,” said Randall Jenks, director of commercial operations for OCI Solar Power, which owns and operates projects in the U.S. and Mexico. “Now, when I go out and talk about PPAs, I’m talking about the future variables of gas. … If you wanted to build a simple combined cycle 15 years ago, it was easy to get a 20-year gas contract. Try to do that now. The average gas contracts are one, two years.”

Like wind, solar power will need to reduce costs with the phase-out of the investment tax credit, said Colin Meehan, director of regulatory and public affairs for First Solar. “Having some predictability is going to be important. The good thing with the phase-out is we’re going to find cost improvements.”

Charlie Hemmeline, executive director of the Texas Solar Power Association, also was confident. “As the [subsidy] fades out, the solar industry will find a way to sell, one way or the other,” he said.

A Place for Storage?

“We do have a lot of policy lifting to do with [energy] storage,” said Mark Bruce, a principal with Cratylus Advisors. “There’s nothing about storage in the [ERCOT] protocols, for instance. The system sees generation and loads. It’s going to be a while before we reach the point where we have strong storage policy from a system perspective.”

Bruce and Ryan O’Keefe, senior vice president of business development for equipment provider Ideal Power, said increasing demand charges will increase the number of customers who abandon the grid.

“A business can say, ‘I’ve got meters, I’ve got connected meters ready for storage … I can defect from the grid or at least have a choice of doing so,’” said O’Keefe. “We’re starting to see the economics make sense for businesses managing their energy profile.”

Jeff Wehner, vice president of renewables operations for Duke Energy Renewables, sees value in upgraded lithium batteries. “We see the value in ancillary services more than anything else,” he said. “I can’t speak for ERCOT, but I think they see the value we provide.”

“One of the things that’s holding back storage and other resources is how much of a comfort level does ERCOT have with these resources being there,” said Chad Blevins, senior consultant with The Butler Firm, which provides legal and consulting services on clean and renewable energy transactions.

Khalil Shalabi, vice president of energy market operations and resource planning for Austin Energy, said the impact of large renewables can be seen in pricing. “What I can’t wait for is all the solar penetration on the grid,” he said.

Demand Response

David Oberholzer, vice president of business and partner development for Weatherbug Home, said ERCOT is attractive to companies like his that are trying to increase the penetration of grid-connected thermostats, now about 12% nationally. “There’s a lot of customer churn in the [retail] space that makes it difficult to monetize thermostats or take on the risks. … In Texas, you have a whole market you can go to at once.”

Evan Pittman, associate director of corporate strategy for Comverge, said third-party demand response providers’ lack of access to ERCOT’s energy market is a challenge for expanding DR.

But he said non opt-in entities — electric cooperatives and municipally owned utilities that do not operate as competitive retailers and don’t allow customers to choose alternate suppliers — provide an opportunity for DR. “They don’t have to worry about customers leaving in two years and they can operate their own distribution systems, so they can decide where this goes. [They] have a golden opportunity to act now.”

Nathan Mancha, director of demand response for EDF Energy Services, said ERCOT’s penetration rate of connected thermostats creates a market for residential DR. “We know some older generation in ERCOT will have to go away. If we take the time to replace them, we need to think how the residential side can be used to bridge the gap,” he said. “We have an open market [in Texas] that is willing to try new things.”