Page 1477 – RTO Insider

February 23, 2016

Federal Briefs

ETRACOM and its principal trader Michael Rosenberg said last week they will seek a de novo review of FERC’s allegations that they manipulated the CAISO energy market in a scheme that allegedly netted $315,000 in profits. That would mean a federal court would decide all issues of fact and law in the beginning of the case, rather than the company potentially appealing an unfavorable FERC ruling afterward.

The company announced its decision in its response to FERC’s Dec. 16 Order to Show Cause (IN16-2), which accused the company of submitting uneconomic virtual supply transactions at the New Melones intertie at the CAISO border in order to affect power prices and benefit its congestion revenue rights there. (See FERC Seeks $2.5M Fine in CAISO Market Manipulation.) The company said its bidding was proper and that FERC “cherry-picked facts” to show manipulation, ignoring CAISO’s market design flaws and modeling errors. Its response includes statements from former FERC attorney and economist Shaun Ledgerwood, of The Brattle Group, and Harvard University professor William Hogan in support.

“This proceeding is significant as it is the first public enforcement action by FERC where every document, email and instant message, as well as witness testimony, supports legitimate trading activity; significant undisclosed and unknowable market design flaws and software pricing/modeling errors caused the alleged harms and substantially influenced the underlying trading activity; and a grid operator violated its own tariff,” the company’s attorney, Robert Fleishman, said in a statement.

More: ETRACOM Answer to Order to Show Cause

NRC’s Ostendorff Leaving After Term Ends in June

Nuclear Regulatory Commissioner William Ostendorff said he will not seek another term at the agency and will leave when his current term expires June 30.

Ostendorff has been on the commission six years. He said he will return to a teaching position at the U.S. Naval Academy.

Ostendorff, a Republican, is one of two remaining commissioners from the post-Fukushima period, when the commission came under fire for its response following the meltdown in Japan.

More: The Hill

EPA Says Luminant Coal Plants Violate Federal Standards

EPA has tentatively determined that sulfur dioxide in the air around Luminant’s coal-fired Big Brown, Martin Lake and Monticello plants violates federal standards.

The agency announced a plan in December requiring reductions in SO₂ emissions at those plants and four others in Texas. The test results released Feb. 17 target the same pollutant, but are triggered by a different part of the Clean Air Act.

Luminant questioned EPA’s latest testing. “The proposed SO₂ designations by the EPA are based on computer modeling funded by environmental groups,” spokesman Brad Watson said. “We firmly believe these models do not accurately predict actual emissions measurements and that these designations should be determined by real-world emissions data from air quality monitors.”

More: The Dallas Morning News

NRC Info Officer Moving to USDA Farm Service Agency

Darren Ash, chief information officer for the Nuclear Regulatory Commission for the past nine years, is leaving to take a similar position with the Department of Agriculture’s Farm Service Agency.

While at NRC, Ash prepared the agency for what was expected to be a flood of permit applications for new nuclear plants. But when that didn’t happen, he turned his attention to transitioning the agency to cloud computing and mobile applications.

More: Federal News Radio

NRC Increasing Oversight at Entergy’s Pilgrim Plant

iso-ne Entergy’s Pilgrim nuclear station is coming under increased oversight from Nuclear Regulatory Commission inspectors following a performance review of the Massachusetts station. The commission said the scrutiny is a result of reviews of issues the plant has had with safety relief valves.

The inspection took place in September. The 728-MW plant experienced difficulty during a harsh snow storm last year when it lost offsite power, triggering an automatic shutdown. Entergy took the plant offline earlier this year as a blizzard approached.

Entergy has said it will permanently close the plant by 2019.

More: Reuters; The Patriot Ledger

NRC Finds Five Safety Violations at PSEG’s Salem-Hope Creek

The Nuclear Regulatory Commission said it found five safety violations at the Salem and Hope Creek nuclear plants but characterized the violations as low significance. The three-reactor complex is operated by PSEG Nuclear.

Four of the violations were found at Salem Units 1 and 2: failing to keep appropriate maintenance records for containment cooling fans, failure to conduct proper equipment tests, improper removal of a radiation barrier and failure to properly maintain a radiation monitor. The fifth violation, also ranked “low” by NRC, related to Hope Creek employees’ failure to document and correct a loss of heat and air conditioning in the station’s main control room during a station blackout.

A PSEG spokesman said the violations are being corrected.

More: The News Journal

TVA Considers Sale of Mothballed Ala. Nuke

Citing a lower-than-expected load-growth forecast, the Tennessee Valley Authority has decided against building two new units at its Bellefonte nuclear plant and is considering selling the two incomplete units, where construction halted in the 1980s.

In filings with the Nuclear Regulatory Commission, the federally owned company withdrew its combined operating licenses for the proposed Units 3 and 4 at the site, a 1,600-acre peninsula on the Tennessee River near Hollywood, Ala. TVA CEO Bill Johnson later said the authority would consider selling the entire site, if it made sense for shareholders.

“It’s time we answer the question of whether TVA is serving the public well by retaining control of the Bellefonte site, or if others could make more beneficial use of it,” Johnson said. “And with economic development as a cornerstone of our mission, TVA wants to know if there is an entity interested in investing and creating jobs at this location.”

More: GenerationHub

February 23, 2016

Mass-Based Plans Best for States, MISO Says

By Amanda Durish Cook

CARMEL, Ind. — Only a heavy, region-wide build-out of solar, wind and energy efficiency could make rate-based compliance less expensive than the mass-based path — and only if all states go along — according to MISO’s near-term analysis of the Clean Power Plan.

Jordan Bakke, senior policy studies engineer at MISO, told the Planning Advisory Committee Wednesday that it would take a major change in the region’s resource mix to make the rate-based option attractive. Even varying natural gas prices don’t change the bottom line.

When looking at the states individually, MISO found that only Michigan and Louisiana realized economic advantages using rate-based compliance. But that benefit was lost when groups of other states choose mass compliance, the models indicate.

MISO used Arkansas’ coal-heavy generation fleet to study capacity scenarios and found the state would need to buy emission rate credits or allowances to achieve compliance unless “a balance of coal retirements and renewables penetration positions it as a seller.” Eddy Moore of the Arkansas Public Service Commission said he was impressed with MISO’s level of modeling, which he hadn’t seen from other RTOs.

The new state-specific results bolster MISO’s earlier conclusion that mass-based compliance would be far cheaper than rate-based compliance. (See MISO: Mass-Based CPP Plan 1/3 Cost of Rate-Based).

MISO said its analysis indicates similar amounts of additional generation and transmission would be needed under both rate-based and mass-based compliance. Although states have a lot of latitude in what generation they choose to expand with, MISO’s near-term modeling is not identifying an optimal resource mix or looking at which pipelines or transmission projects need to be built.

The RTO said mass-based compliance would foster interstate trade in emission rate credits and “produces a more balanced mix of buyers and sellers within MISO.”

MISO said it will present additional near-term results at the March Planning Advisory Committee.

Analysis Continues Despite Stay

Bakke said MISO was continuing its analyses despite the Supreme Court’s Feb. 9 order preventing EPA from enforcing the CPP pending an appellate court challenge. The uncertainty over the impact of the stay only increased with the death, four days later, of Justice Antonin Scalia. (See Scalia Death Scrambles Clean Power Plan Odds.)

The stay “means it’s still in effect but on hold. It’s not overturned. Because it’s only a hold, MISO feels it’s important to continue studying the impacts of the Clean Power Plan,” Bakke said.

Anthony Artman of Ameren asked how long-term study efforts will be affected if states in the footprint decide to delay CPP plan development.

Bakke said the near- and mid-term analyses will be largely unaffected by any delays in compliance resulting from the stay. “The big change will be how the stay impacts the long-term analysis,” he said.

MISO said it intends to use state plans as they become available for modeling.

To date, most states in the footprint are either still reviewing the stay or haven’t announced plans. Kentucky, North Dakota, South Dakota and Montana have suspended planning, while Minnesota said it will continue. Bakke said MISO would continue to be in touch with stakeholders and state officials. He also said questions about how the stay will affect long-term modeling would be best answered in upcoming stakeholder CPP workshops.

“We have a bit of a chicken-and-egg problem here when we don’t know how states plan to comply,” Bakke said. He said the RTO will refine the modeling as it receives more information from states over the next three years. “There’s definitely going to be a lot of uncertainty and a lot of iteration until then,” Bakke said.

Impact on MTEP

Bakke said MISO’s mid-term analysis will still be used to influence its Transmission Expansion Plan 2017 futures and its siting process review. “After the study is complete, we’re feeding this information into our processes, so it won’t be lost,” he said.

Planning will kick off at the Feb. 23 MTEP Futures Development Workshop, according to Senior Transmission Planning Engineer Matt Ellis.

Ellis said the futures need “bookends” to determine how anticipated coal retirements, natural gas prices and the economic viability of renewables affect the fleet. He said although MISO would use a presentation with examples to start discussion on the futures’ parameters, the numbers would not be final.

“Anytime we bring numbers to stakeholders, we run the risk of ‘Oh MISO, you’ve already got this figured out,’” Ellis said. “And that’s definitely not the case. These are just to start the conversation. … Future definitions are still to be determined.”

Cross State Rule

In tandem with long-term CPP modeling, MISO will conduct a study to evaluate the impact of the proposed Cross State Air Pollution Standard (CSAPR) on its system. The standard, which could be implemented in 23 states by May, would mandate that states install modern combustion controls such as low NOx burners, operate existing control technologies, shift generation to lower NOx-emitting units and increase dispatch of natural gas combined cycle plants while reducing coal-fired generation.

“All-pollutant modeling is something we do, and we have studied cross-state air pollution in the past,” said J.T. Smith, MISO’s director of policy studies.

“Like with the Clean Power Plan, we need to have discussions with stakeholders … on the nuances of the [state emission limits],” Smith said, noting that CSAPR might be subject to additional court challenges.

He said MISO would examine the standard’s impact on reliability as well as costs, drawing on a business-as-usual model from the 2015 Transmission Expansion Plan for the study. Based on the findings, the standard could be incorporated into MTEP17.

While Smith said MISO would move “as quickly as possible to get this off our plate,” he didn’t place any deadlines on the study.

February 23, 2016

Records Fall Again as SPP Convenes Wind Summit

By Tom Kleckner

LITTLE ROCK, Ark. — SPP conducted its second wind summit in as many years last week, delving into the technical details of a recent study that indicated the RTO could handle wind penetration levels of up to 60% with additional transmission and monitoring tools.

As if to underscore the point, SPP’s balancing authority recorded new records for wind peaks and penetration levels during both nights of the summit.

“I find it ironic that during this summit, we’re predicting 43% wind penetration levels tonight and 48% tomorrow night,” said Casey Cathey, SPP’s manager of operations engineering analysis and support, as he kicked off the presentations and discussion.

SPP set new wind penetration levels of 43.3% Feb. 17 and then 43.9% after midnight on the early morning of the 19th. The penetration levels shattered the previous record of 39.1%, which lasted all of 18 days.

SPP also topped 10,000 MW of wind energy for the first time Feb. 17, recording a new wind peak of 10,439 MW. That eclipsed the old mark of 9,948 MW set in December. The Feb. 19 wind peak was 9,804.5 MW, when load was 22,332 MW.

The RTO began the year with 156 wind resources totaling 12,400 MW of installed capacity, accounting for almost 14% of its fuel mix. It expects to finish 2016 with 16,960 MW of wind generation and to add at least 2,035 MW more in 2017.

Because of the amount of wind generation being brought online in its 14-state footprint, SPP last year commissioned its first wind integration study since 2009. The analysis was presented to the Markets and Operations Policy Committee last month. (See Study: 60% Wind Penetration Possible in SPP.)

“We’re looking at [potentially] 12 [GW] of wind today,” Cathey said. “We want to ensure we continue to operate reliably and economically with this wind.”

The reliability-based study analyzed wind penetration at 30%, 45% and 60% of load during spring and fall seasons and compared them to current system conditions. SPP staff, with an assist from the Electric Power Research Institute, also performed steady-state thermal and voltage analyses, and voltage-stability, re-dispatch and ramping analyses.

spp

Not surprisingly, staff said as wind penetrations increased, they saw “significant” transmission constraints, along with system overloads and wind farm curtailments. Cathey said SPP has sufficient ramping capabilities for today’s wind penetration levels, but vast swings in wind’s intermittency can cause problems.

“We can go from 1,000 MW to 9,000 MW and 9,000 MW to 50 MW over the course of hours,” he said. “We’re preparing for that and ensuring we’re not too fat or too lean.”

Cathey said the study showed the need for additional transmission beyond those projects identified by SPP’s current planning process. The study also calls for expediting approved projects, monitoring ramping issues with real-time operations tools and providing additional flexibility for non-dispatchable variable energy resources.

Cathey said staff will next develop a cost-benefit analysis comparing the cost of accelerating projects with the benefits of additional wind penetration. The analysis will be vetted by stakeholders, being first shared with SPP’s Transmission Working Group during the next two months.

The cost-benefit analysis and a transient stability analysis are both likely to be part of the wind integration study’s second phase. The scope has yet to be determined, with staff asking for stakeholder feedback.

“We’re definitely looking into what else do we not know,” Cathey said.

“This gives us a baseline to get the discussion off the ground,” said SPP senior engineer Jason Tanner. “With this study, we can look farther into the future.”

SPP wasn’t the only RTO that set records for wind the night of Feb. 18-19. MISO hit a peak of 13,084 MW, surpassing the previous 12,720-MW record. Meanwhile, ERCOT topped out at 14,023 MW with a penetration level of 45%.

February 23, 2016

MISO Planning Advisory Committee Briefs

After a late amendment, the Planning Advisory Committee last week approved a document describing the process for reviewing Business Practices Manual changes.

PAC Chair Bob McKee, with consent from the sector representatives, asked that a single sentence be added to allow an additional stakeholder review of any BPM changes made during MISO legal and compliance review. Previously, stakeholders had no procedure for getting a final look at changes made by MISO’s legal department at the end of the process.

Matthew Tackett, a MISO principal adviser, agreed to the addition.

Based on stakeholder input since December, MISO also included a statement to the language to explain how to update the document itself. MISO has worked on the updated process since November. (See “Business Practices Manuals Review Process Gets a Final Look,” MISO Planning Advisory Committee Briefs.)

However, MISO would not commit to allowing the comment period for new BPM language to extend over two consecutive meetings, as stakeholders advocated. “MISO will endeavor to provide additional time for comments… However, there may be times when BPM changes must be expedited, and under these situations, less time may be available for comments,” the RTO wrote.

MISO staff said it would post the finalized BPM process language on the MISO website under the planning tab, but the document will not be considered an official MISO governing document. MISO said it would be “posted for informational purposes only to codify the general process used by the Planning Advisory Committee and reporting committees regarding the review of BPM changes.”

Attachment Y Adjustments Put on Hold for a Month

Changes to Attachment Y of MISO’s Tariff, which deals with the planning process behind system support resources, will be put on hold for a month, said Neil Shah, an adviser on seams administration.

Shah said MISO didn’t receive enough substantive comments on the proposed changes. As a result, MISO is now planning to file Tariff language by the end of March instead of the end of February. Shah said staff wants to discuss the changes at the March 1 Market Subcommittee meeting before filing.

MISO is proposing that all generation resources planning to suspend or retire, including pseudo-tied units, black start units and generators on a forced outage, be required to submit Attachment Y notices to MISO.

— Amanda Durish Cook

February 23, 2016

Environmental Groups Press for Indian Point Shutdown

By William Opalka

Six environmental groups called Wednesday for the immediate closure of the Indian Point nuclear plant.

The Sierra Club, Riverkeeper, Hudson River Sloop Clearwater, the Indian Point Safe Energy Coalition, Scenic Hudson and Physicians for Social Responsibility asked the Nuclear Regulatory Commission to suspend plant operations until Indian Point’s safety is reviewed by state and federal investigators.

The plant is under investigation following a series of mishaps in recent months, including radioactive water leaks and two unplanned outages. NRC is investigating the leakage of radioactive water into test wells. The New York departments of Health and Environmental Conservation are conducting their own investigation along with the Public Service Commission. (See NRC: No Further Leakage at Indian Point.)

“Currently Entergy is unable to properly access its aging labyrinth of more than 3 miles of pipes beneath the Indian Point site,” said Sierra Club President Aaron Mair. “Entergy focuses on tritium, but the actual leak likely contains a collection of radioactive elements, including Strontium-90, Cesium-137, Cobalt-60 and Nickel-63, that could migrate off the property.”

Federal officials and plant owner Entergy say the incidents have not endangered the public.

Entergy dismissed the most recent criticism. “Some organizations who are longtime opponents of nuclear power will take opportunities to try and frighten the public. The fact is this issue cannot have any impact on public health or safety,” spokesman Jerry Nappi told RTO Insider Friday.

U.S. Sen. Charles Schumer said he understands critics’ frustration and said he was among the plant’s harshest critics. But he also told the Mid-Hudson News Network that the plant’s continued operation is vital to keeping electricity affordable.

“I have told some of the environmental people, if you can show me a plan to figure out a way to replace that electricity, fine, but if you can’t, it’s going to raise electricity rates 30% or 40%, [rates] which are high enough on average people and that’s not the way to go. In the meantime, I have emphasized very strong safety,” Schumer said.

Gov. Andrew Cuomo has advocated the plant’s closure due to its proximity to New York City.

“The NRC shouldn’t ask the public to take its chances when so many questions are unanswered and the stakes are so high,” said Riverkeeper President Paul Gallay. “Since May 2015, Indian Point has suffered seven major malfunctions, from pump failures to transformer explosions, to radiation leaks, power failures, fires and oil spills. … Pending completion of the state and federal investigations, we must close Indian Point. These mishaps are happening on an accelerated pace. We shouldn’t be asked to wait for the next one.”

February 23, 2016

Con Ed Reports Higher Earnings

By William Opalka

Consolidated Edison on Thursday reported 2015 net income of $1.19 billion ($4.07/share) compared with $1.09 billion ($3.73/share) in 2014.

Excluding the impairment of certain assets held for sale, the gain on sales of solar electric production projects, the impact of lease in/lease out transactions and the net mark-to-market effects of the competitive energy businesses, the company earned $1.2 billion ($4.08/share) in 2015, compared with $1.14 billion ($3.89/share) the year before.

For the fourth quarter of 2015, unadjusted net income totaled $176 million ($0.60/share) compared with $81 million ($0.28/share) in the fourth quarter of 2014. Adjusted, earnings were $178 million ($0.61/share) in 2015 compared with $171 million ($0.58/share) in fourth quarter 2014.

The company expects adjusted earnings of $3.85 to $4.05/share for 2016. The forecast reflects capital investments of $4.15 billion, which includes $985 million for the competitive energy businesses’ renewable and energy infrastructure projects.

“We embrace new technologies that are changing the energy industry and use them to partner with our customers,” CEO John McAvoy said in a statement. “Customers want more options, including the ability to generate power in their own homes or businesses and greater access to cleaner energy. We see potential throughout our businesses, and are confident that our experience and expertise make us a leader in our field.”

Con Ed said it will meet its 2016 capital requirements from cash flow and by issuing $1 billion to $1.5 billion in long-term debt at its utility subsidiaries. Additional debt will be secured by its renewable electric production projects. Con Ed also plans to issue up to $200 million in new common equity, in addition to equity created through its dividend reinvestment, employee stock purchase and long-term incentive plans.

February 23, 2016

MISO/PJM Joint and Common Market Meeting Briefs

MISO and PJM said last week they’re ready for the March 1 transfer of 300 MW of MISO pseudo-tied resources to PJM, and a 2,000-MW transfer set for June 1. The transitions will result in the creation of 80 new flowgates.

The 2,300 MW PJM and MISO will pseudo-tie over the 2016/17 planning year is a big jump from the 156 MW in pseudo-tied resources added in 2015/16.

MISO has said it wants to address price convergence and congestion management issues resulting from pseudo-ties before the June 1 transfer. MISO staff say there is little language on pseudo-ties in their Tariff.

During a Joint and Common Market meeting on Thursday, MISO proposed requiring the host RTO to provide capacity, schedule the firm exports, abide by a day-ahead must-offer requirement and provide resource status information. It also said that both RTOs should have a say in approving planned outages.

While PJM did not provide its own proposal, multiple PJM stakeholders criticized MISO’s plan, saying it was too similar to one proposed by MISO in 2012 and later scrapped. When some stakeholders suggested that the RTOs back a policy fix rather than an operational fix on capacity flows, Stu Bresler, PJM’s vice president of market operations, said a policy solution may exist, but it’s “much, much bigger than this group.”

“Our main concern was to ensure reliability. And to do that, we needed two things in place: good modeling … and an operating agreement,” Andy Witmeier, MISO’s senior manager of reliability coordination, said at a Feb. 10 Reliability Subcommittee meeting.

Witmeier said some details will not be resolved in time for the March and June implementation. “We are continuing to develop a compensation mechanism for use when unit commitment is needed for local congestion and cannot use [market-to-market],” he said. In the meantime, Witmeier said, “Safe Op Mode” will be used to compensate such units.

MISO Senior Director of Regional Operations David Zwergel said other commercial issues could arise as a result of the additional resources. MISO officials have said they do not expect full implementation of new pseudo-tie market rules before the 2017/18 planning year.

Regions Begin FFE Exchanges

PJM’s Tim Horger said the first day-ahead exchange of firm flow entitlements took place on Jan. 28, with the transfer of about 40 MW from MISO to PJM. About seven exchanges have occurred since, he said. A firm flow entitlement is the amount of firm flow on a flowgate an entity is entitled to use based on historical usage.

“I don’t think it was substantial as far as dollars are concerned, but it was the first one,” Horger said. “We think this is going to be very beneficial. We’re going to keep doing exchanges as long as it’s efficient for the markets. I think it’s good news here.”

Horger said the RTOs will monitor FFE exchanges and report on their progress during upcoming JCM meetings.

No Consensus on Interface Pricing

MISO and PJM said they have not reached a compromise on their interface pricing rules, so current rules will remain in place for at least a year.

Discrepancies in the RTOs’ interface pricing methodologies can result in double counting congestion, causing a revenue imbalance and uplift. The RTOs said the issue would be put on hold until mid-2017 while MISO conducts an analysis that uses data from December.

Jason Barker of Exelon said traders won’t use coordinated transaction scheduling without common interface pricing in place first.

MISO had proposed a solution using a “centroid-to-centroid” approach, with the non-monitoring RTO excluding a transaction’s impact on the constraint while PJM preserved its 10-bus common interface definition. (See “MISO-PJM Interface Pricing Project Heads to Final Four,” MISO Market Subcommittee Briefs.)

PJM, however, said that approach would have an “adverse impact on PJM market-to-market constraints” because the approach only accounts for half of the misplaced incentive for transactions and fails to eliminate the pricing overlap that exists in the RTOs’ current interface.

JOA Work not Done

FERC approved the RTOs’ revised joint operating agreement just last month, but officials concede there’s more work to be done on the pact (ER15-2613, et al.).

“If you look at the language in the JOA today, it’s cumbersome. We don’t think it makes a lot of sense for these quick-hit, targeted studies. … Some have said that there’s too many hurdles to interregional projects,” said Paul McGlynn, PJM’s senior director of system planning.

MISO is considering revising the JOA to give consideration to projects with lower voltage than the current 345-kV limit. McGlynn said he’d be interested in eliminating “undue thresholds” from the cross-border project approval process. Currently, interregional projects between MISO and PJM require both regional and interregional approval, and the RTOs use different evaluation metrics.

The new JOA includes rules for coordinating outages of pseudo-tied units and stipulates that a market-to-market approach should be followed when dispatching pseudo-tied generation for capacity and congestion.

It also establishes communication protocols between host balancing authorities (the physical location of the pseudo-tied generator), attaining balancing authorities (the region importing the generator’s output), transmission operators and market participants.

In approving the agreement, FERC praised the addition of FFEs, noting they “increase efficiencies in the day-ahead market, better align the operations of the day-ahead and real-time markets, and enhance revenue adequacy for other markets, such as financial transmission rights.” It was a marked change in tone from a year ago, when FERC expressed exasperation over PJM and MISO’s boundary disputes. (See Impatient FERC Hints at Action on PJM-MISO Seams Disputes.)

On Feb. 5, FERC also approved the RTOs’ request to remove their $20 million threshold on interregional market efficiency projects (ER16-488 and ER16-490).

The RTOs are soliciting stakeholder feedback for an annual issues review in April.

— Amanda Durish Cook

February 23, 2016

ISO-NE Planning Advisory Committee Briefs

MILFORD, Mass. — Stakeholders have until April 1 to submit written requests for economic studies to be done in 2016 on generation additions or transmission upgrades that can relieve congestion and reduce LMPs.

ISO-NE will develop a scope of work and cost estimate for all requested studies and may add its own proposals. The RTO also will develop a preliminary prioritization based on expected benefits.

Presentations on proposals will be made at the April 20 PAC meeting.

“We need to have some specificity — the locations, the what, where and when,” said Michael Henderson, ISO-NE director, regional planning and coordination.

The PAC is scheduled to select up to three studies to be conducted, and determine the final order of priority, by June 1.

Last year, the RTO considered wind expansion scenarios in the Keene Road area of Maine, Northern New England and offshore Rhode Island and Massachusetts. (See “Draft Study Shows Greater Wind Penetration Benefits,” ISO-NE Planning Advisory Committee Briefs.)

ICR Forecast Shows Slowing Rate of Increase

ISO-NE is reducing its installed capacity requirement for commitment periods four to nine years into the future by an average of 500 MW compared with last year’s forecast, due to slowing load growth and the increase of behind-the-meter solar generation.

The calculations are based on the RTO’s 10-year forecast for capacity, energy, load and transmission, otherwise known as the CELT forecast. The models were adjusted to account for the announced closure of the Pilgrim nuclear power plant, slated for no later than mid-2019.

The RTO cited behind-the-meter solar in reducing its load forecast by 390 MW for the recently concluded 10th Forward Capacity Auction for the 2019/20 capacity commitment period. (See FERC Accepts ISO-NE’s Solar Count over Protests.)

The new ICR study period includes the years for FCA 11-15.

— William Opalka

February 23, 2016

Duke to Sell International Business

By Suzanne Herel

Duke Energy last week confirmed it plans to sell its international business, which has been bedeviled by drought and weak currency exchange rates, the company said as it announced its fourth-quarter earnings.

“The returns over the last two years are inconsistent with our commitment to investors to provide predictable, stable earnings and cash flows. We believe there will be demand for this international portfolio at a reasonable valuation. The proceeds will be used to strengthen our balance sheet and help fund growth in our core businesses,” CEO Lynn Good said on a call with analysts.

“We expect that a sale will be dilutive,” she said. “Nonetheless, the strategic exit significantly improves our risk profile and enhances our ability to generate more consistent earnings and cash flows over time.”

Good said it was too early to provide a timeline for the transaction, which involves facilities in Brazil, Chile and Central America. Year over year, the international business saw adjusted income of $225 million, down from $428 million in 2014. In reporting Duke’s third-quarter 2015 earnings in November, CFO Steve Young had predicted the division’s earnings to stabilize by the end of the year and show modest growth in 2016.

Net income for Duke for the fourth quarter was $477 million, compared with $97 million for the same quarter in 2014. For the full year, the company reported earnings of $2.8 billion, compared with $1.9 billion in 2014.

Earnings per share for the fourth quarter were 87 cents, up slightly from a year earlier. For 2015, earnings per share were $4.05, compared with $2.66 the previous year.

“Fourth-quarter adjusted results were supported by increased retail pricing and wholesale margins in the regulated business, helping to offset the impact of record mild December weather in the Carolinas,” the company said in a release.

Discussing the company’s overall strategy, Good said, “Our industry is undergoing transformation with new technologies, evolving customer expectations, increasingly impactful public policies and abundant low-cost natural gas. These factors will have a profound impact on our business in the years ahead and are informing our strategic investments. We are focusing our long-term strategy on our core domestic regulated businesses and our highly contracted renewables portfolio.”

She also noted that Duke has “taken what we learned from the Dan River spill in early 2014 and applied it throughout our organization to strengthen operational discipline and results.”

A near-term focus has been working through closing the company’s coal ash ponds.

“Our intent would be to seek recovery in connection with a general base rate increase, which … would be toward the latter part of this planning period,” she added.

February 23, 2016

Exelon Appeals ISO-NE Zero-Price Offer Requirement

Exelon has asked the D.C. Circuit Court of Appeals to overturn two FERC orders that reaffirmed the zero-price offer requirement in ISO-NE’s new entrant pricing rule (16-1042).

FERC last month again rejected complaints by Exelon and Calpine that the rule unreasonably suppresses capacity prices and discriminates against existing resources. The commission upheld the rule in January 2015 and denied rehearing last month. (See FERC Again Rejects Challenge to ISO-NE New Entry Pricing.) ISO-NE’s rule allows new resources to lock in their first-year clearing price for up to six subsequent delivery years by offering as a price taker with a price of zero.

Exelon and Calpine argued that the rule creates a discriminatory two-tiered pricing scheme, with existing resources receiving lower prices than new ones if clearing prices fall in subsequent Forward Capacity Auctions.

The commission had acknowledged that the existence of the lock-in option “may result in lower capacity clearing prices” but said this was part of “a reasonable balance between incenting new entry through greater investor assurance and protecting consumers from very high prices.”

In the FCA 10 auction this month, capacity prices dropped for the first time in four years, as new resources more than offset generation retirements. (See Prices Down 26% in ISO-NE Capacity Auction.)

— William Opalka