Entergy’s operating companies don’t have to sign new purchase power agreements with most qualifying facilities above 20 MW, FERC ruled last week (QM14-3-000).
Because of their membership in MISO, the commission said, the Entergy companies had met their “statutory standard” under a 2006 order in which the commission revised its regulations implementing the Public Utility Regulatory Policies Act.
In a separate order, the commission granted Arkansas Electric Cooperative Corp. (AECC) similar relief based on the 2006 order, which said that QFs with net capacity above 20 MW were presumed to have “nondiscriminatory access” to wholesale markets in RTOs such as MISO.
The commission denied Entergy’s request for relief regarding one QF, Dow Chemical’s Plaquemine facility south of Baton Rouge, La., which it said faced transmission constraints.
Excluding the Dow facility, FERC said MISO provides all “over-20 QFs” in Entergy’s territories “nondiscriminatory access to independently administered, auction-based day-ahead and real-time wholesale markets for the sale of electric energy and to wholesale markets for long-term sales of capacity and electric energy.”
Entergy’s request was supported by the Louisiana Public Service Commission but protested by several industrial customers with QFs.
The Louisiana PSC said QFs in Entergy’s service territory have nondiscriminatory access to MISO’s markets and noted the company’s request “was made in part to satisfy the Louisiana commission’s requirements — which included removing the PURPA ‘put’ obligation — in approving MISO membership for Entergy Gulf States Louisiana and Entergy Louisiana.”
Justice Department Investigation
Protests by Occidental Chemical and Formosa Plastics cited an open Department of Justice antitrust investigation into Entergy’s transmission practices. Formosa said FERC should deny Entergy’s application pending a resolution of the investigation, noting that the department sought to have Entergy divest its transmission system. Occidental said that MISO had not approved transmission improvements to relieve the Amite South load pocket.
The commission said that because Amite South is import constrained, Occidental’s Taft QF was not prevented from selling energy outside the load pocket, and noted that LMPs at the plant are higher than average LMPs in MISO.
“Moreover, as Entergy points out, any energy which the Taft QF sells to load-serving entities outside the Amite South load pocket, including through the sub-regional power balance constraint to load-serving entities in MISO Midwest would, therefore, most often relieve congestion caused by the constraint, rather than be barred by it, and would instead receive congestion credits,” FERC said.
In contrast, FERC said, Dow’s 1,491-MW Plaquemine QF is located in a generation pocket, which is export constrained and subject to lower LMPs than the rest of MISO.
Entergy told FERC that transmission upgrades are scheduled to go in service around the Dow facility in December 2018. FERC said Entergy will be able to file for termination of its obligation to the Dow QF once the upgrades are completed.
The commission emphasized that granting Entergy’s application “does not relieve Entergy of its obligation to abide by its existing agreements.”
Entergy told FERC it would honor existing contracts “pending satisfaction of applicable contract termination requirements” and said it would not “seek to terminate any existing agreements effective prior to 120 days” after its request was accepted. FERC’s order was effective Oct. 23, 2015, the date of Entergy’s filing.
AECC Request Approved
In a related order, FERC also granted AECC’s request to terminate its PURPA obligations for “over-20” QFs in MISO (QM15-3-000).
AECC made the request in April on behalf of itself and its 17 members, 14 of which are in MISO, but later amended the application so that it applied solely to the cooperative. The commission agreed with AECC that it relies on Entergy Arkansas’ transmission system to serve its members’ load.
FERC last week denied a request by two energy companies to declare they were not affiliates of the investment management wing of Fidelity Investments (EL15-96).
The companies, Backyard Farms Energy and Devonshire Energy, are indirect subsidiaries of Fidelity parent company FMR.
Devonshire was formed to purchase wholesale power for FMR’s multiple operating companies; Backyard Farms Energy purchases wholesale energy for use by an affiliated greenhouse grower of tomatoes in Maine.
The two energy companies argued that the mutual fund accounts managed by subsidiary Fidelity Management & Research are not owned by the parent company itself but by shareholders and institutions.
Backyard and Devonshire said they made the request for a declaratory order because they were concerned that they would be required to file a change of status if their affiliates acquired more than 10% of another energy company.
FERC said that its regulations classify the companies as affiliates of Fidelity Management because they are under the common control of FMR.
“Regardless of the ownership of the Fidelity accounts themselves, the fact remains that the Fidelity advisers manage and control the investments that the Fidelity accounts make and also exercise voting rights for the Fidelity funds in some circumstances,” the commission said.
WASHINGTON — The Supreme Court on Monday upheld FERC’s jurisdiction over demand response, reversing the D.C. Circuit Court of Appeals in a 6-2 ruling.
“The [Federal Power Act] provides FERC with the authority to regulate wholesale market operators’ compensation of demand response bids,” wrote Justice Elena Kagan in an opinion joined by Chief Justice John Roberts and Justices Anthony Kennedy, Ruth Bader Ginsburg, Stephen Breyer and Sonia Sotomayor. (FERC v. Electric Power Supply Association, 14-840, 14-841).
The decision upheld FERC Order 745, which required grid operators to pay DR providers LMPs — equal to generation.
“This decision means that consumers will continue to see the significant benefits of demand response, which enhances competition in the markets, reduces wholesale prices and helps makes the grid more reliable,” FERC Chairman Norman Bay said in a statement.
The Electric Power Supply Association, which filed the lawsuit challenging Order 745, did not respond to requests for comment.
Justice Clarence Thomas joined Justice Antonin Scalia’s dissent. Justice Samuel Alito recused himself in the case, reportedly because he owns stock in Johnson Controls, parent company of DR provider EnergyConnect.
In May 2014, the D.C. Circuit vacated Order 745 in a 2-1 ruling, saying DR is a retail product and thus subject to state, not federal, jurisdiction. It also said FERC’s requirement that DR receive LMPs was “arbitrary and capricious.”
The Supreme Court majority disagreed on both counts.
Growing Importance
FERC sought Supreme Court review because of the growing importance of DR. While the D.C. Circuit ruling explicitly addressed only DR participation in wholesale energy markets, FERC said the ruling also threatened its participation in wholesale capacity markets.
That could have created an upheaval in markets such as PJM, where capacity auctions represent about 95% of total DR revenue. After some uncertainty, PJM decided to include DR in the 2018/19 Base Residual Auction last August.
PJM issued a statement saying it was pleased with the ruling. “Certainty and continuity are important in markets. Demand response brings value to competitive wholesale markets and is a vital component of electric system reliability.”
UBS Securities Monday reiterated its prediction that one-quarter of the DR that bid in to the PJM 2018/19 capacity auction as base product will leave the market when it transitions to 100% Capacity Performance for 2020/21, raising the price by about $14/MW-day.
Three-Part Analysis
Kagan broke the court’s analysis into three parts. “First, the practices at issue directly affect wholesale rates. Second, FERC has not regulated retail sales. Taken together, these conclusions establish that [Order 745] complies with the FPA’s plain terms. Third, the contrary view would conflict with the FPA’s core purposes.”
“The FPA has delegated to FERC the authority — and, indeed, the duty — to ensure that rules or practices ‘affecting’ wholesale rates are just and reasonable. To prevent the statute from assuming near-infinite breadth, this court adopts the D. C. Circuit’s common-sense construction limiting FERC’s ‘affecting’ jurisdiction to rules or practices that ‘directly affect the [wholesale] rate.’ That standard is easily met here. Wholesale demand response is all about reducing wholesale rates; so too the rules and practices that determine how those programs operate. That is particularly true here, as the formula for compensating demand response necessarily lowers wholesale electricity prices by displacing higher-priced generation bids.”
Not Retail
Kagan said Order 745 did not regulate retail electricity sales that are under state jurisdiction.
“A FERC regulation does not run afoul of [the FPA’s] proscription just because it affects the quantity or terms of retail sales. Transactions occurring on the wholesale market have natural consequences at the retail level, and so too, of necessity, will FERC’s regulation of those wholesale matters. That is of no legal consequence.
“When FERC regulates what takes place on the wholesale market, as part of carrying out its charge to improve how that market runs, then no matter the effect on retail rates, [the FPA] imposes no bar. Here, every aspect of FERC’s regulatory plan happens exclusively on the wholesale market and governs exclusively that market’s rules.”
The court said EPSA’s position would “subvert the FPA” and leave DR without any agency able to regulate it.
“EPSA’s arguments suggest that the entire practice of wholesale demand response falls outside what FERC can regulate, and EPSA concedes that states also lack that authority. But under the FPA, wholesale demand response programs could not go forward if no entity had jurisdiction to regulate them. That outcome would flout the FPA’s core purposes of protecting ‘against excessive prices’ and ensuring effective transmission of electric power.
“The FPA should not be read, against its clear terms, to halt a practice that so evidently enables FERC to fulfill its statutory duties of holding down prices and enhancing reliability in the wholesale energy market.”
LMP for DR also Upheld
The court also rejected complaints that FERC was overcompensating DR by requiring LMPs. “This court’s important but limited role is to ensure that FERC engaged in reasoned decision making — that it weighed competing views, selected a compensation formula with adequate support in the record and intelligibly explained the reasons for making that decision. Here, FERC provided a detailed explanation of its choice of LMP and responded at length to contrary views. FERC’s serious and careful discussion of the issue satisfies the arbitrary and capricious standard.”
Reaction
The ruling was celebrated by environmental groups, the White House and DR investors.
EnerNOC, the only publicly traded pure-play DR provider, saw its shares jump more than 70% on the news, rising from $4.09/share to close at $7.03/share.
Shares of independent power producers fell sharply, with Dynegy down 11.55%, NRG Energy off 9.5%, Calpine dropping almost 8% and Talen Energy losing 6%. Utilities in PJM also had a poor day, with Exelon (-3%), Public Service Enterprise Group (-2.2%), and American Electric Power (-1.33%) all showing losses, along with FirstEnergy (-1.4%), which had filed a FERC challenge seeking to bar DR from PJM capacity auctions following the D.C. Circuit ruling. The PJM Power Providers (P3) Group, whose members include Dynegy, Calpine and NRG, had no immediate comment.
“We are extremely proud of our involvement in this seminal case that ensures an important role for demand-side resources in our nation’s wholesale electricity markets,” EnerNOC CEO Tim Healy said in a statement. “Today’s decision is a tremendous win for all energy consumers, for the economy and for the environment.”
“This decision allows us to continue realizing billions in annual savings from innovative incentives and business models that ensure we use our electricity system efficiently,” said White House spokesman Frank Benenati, who called the ruling “good news for consumers, clean energy, reliability and the overall economy.”
“It’s going to make consumers an equal participant in the market in a way they never were before,” Jon Wellinghoff, who chaired FERC when it issued Order 745, told Greentech Media. “That was the intention of Order 745, and that has been vindicated.”
Also happy was the Environmental Defense Fund: “Today’s Supreme Court decision is a victory for all Americans who want greater choice and value broader customer access to clean, low-cost energy,” said President Fred Krupp. “Demand response is helping millions of Americans get low-cost, clean and reliable electricity. Today’s court ruling will help expand customer choice, and solidify demand response as a crucial part of our clean energy future.”
Exelon praised the ruling, saying DR is “a valuable tool for our customers to manage their energy costs, and we believe it should play a role in our nation’s energy mix.”
The libertarian Competitive Enterprise Institute was critical. “The Supreme Court sends a clear message by ruling in favor of FERC’s power demand rule: Energy politics are a game that ignores both the rule of law and states’ constitutional authority. The effects of this decision trickle down to each individual consumer,” said Myron Ebell, director of the institute’s Center for Energy and Environment.
NARUC: Coordination is Key
Travis Kavulla, president of the National Association of Regulatory Utility Commissioners, said the ruling’s holding that energy conservation measures can be valued in both a retail and wholesale context “may serve to blur the already fuzzy line between state and federal jurisdiction.”
Kavulla cited a 2010 NARUC resolution on the jurisdictional overlap, which said “the coordination of federal and state initiatives offers the best way to assure the full benefits of demand response are delivered to customers.”
Kagan noted that the “statutory division generates a steady flow of jurisdictional disputes because — in point of fact if not of law — the wholesale and retail markets in electricity are inextricably linked.”
Indeed, the court will deal with another jurisdictional dispute next month. It has scheduled oral arguments for Feb. 24 on two cases pitting New Jersey and Maryland regulators against FERC. The court will consider orders by the 3rd and 4th U.S. Circuit Courts of Appeals that upheld lower court rulings throwing out contracts in which generation developers won state-issued subsidies to build plants in the two states. (See SCOTUS Agrees to Hear Md., NJ-FERC Subsidy Case.)
Wide Margin of Victory
The margin of FERC’s victory was a bit of a surprise. At oral arguments in October, the court’s liberal wing indicated support for FERC’s jurisdiction, but the commission faced harsh questions from Roberts, Kennedy and Scalia. (See FERC Jurisdiction over DR in Peril as Supreme Court Splits.)
In his dissent, Scalia said the majority’s opinion “inverts the proper inquiry.”
“Paying someone not to conclude a [retail purchase of power] that otherwise would without a doubt have been concluded is most assuredly a regulation of that transaction,” he wrote.
“While the majority would find every sale of electric energy to be within FERC’s authority to regulate unless the transaction is demonstrably a retail sale, the statute actually excludes from FERC’s jurisdiction all sales of electric energy except those that are demonstrably sales at wholesale.”
Scalia said the FPA defined the “sale of electric energy at wholesale” as “a sale of electric energy to any person for resale.”
“No matter how many times the majority incants and italicizes the word ‘wholesale’ … nothing can change the fact that the vast majority of (and likely all) demand response participants — ‘[a]ggregators of multiple users of electricity, as well as large-scale individual users like factories or big-box stores’— do not resell electric energy; they consume it themselves. FERC’s own definition of demand response is aimed at energy consumers, not resellers.”
ALBANY, N.Y. — The New York Public Service Commission on Thursday approved a 10-year, $5.3 billion Clean Energy Fund, a centerpiece of Gov. Andrew Cuomo’s Reforming the Energy Vision initiative to shift the state to resources that will fight climate change and provide more resilience.
NYPSC Chair Audrey Zibelman said the commission’s action was a milestone in the nearly two-year effort. “I really feel like we’re turning the chapter to the next stage of REV,” she said.
New York set a new windpower record last Tuesday, generating 1,571 MW at 5 p.m. — 9% of the state’s electric generation and 90% of the 1,746 MW of installed wind capacity.
The commission also advanced the docket for the creation of a Clean Energy Standard that would mandate 50% of New York’s electricity come from “clean” energy sources by 2030. The NYPSC is under a Cuomo mandate to create the regulatory framework for the CES by June. Part of that mandate includes creation of financial incentives to keep New York’s upstate nuclear power plants viable until the renewable resources reach their target in 14 years. (See related story, New York Would Require Nuclear Power Mandate, Subsidy.)
Leaders of the Republican-controlled state Senate asked the commission to delay action on the initiatives, saying that while they support the goals of the fund, it should be considered as part of the 2015-2016 budget.
The Clean Energy Fund will advance solar, wind, energy efficiency and other clean tech industries to spur economic development and reduce carbon emissions, officials said. Cuomo said the $5 billion investment will leverage more than $29 billion in private sector funding.
The fund will be administered by the New York State Energy Research and Development Authority and financed through the systems benefit charge paid by ratepayers. It will receive $585 million this year and will be phased down annually, finally reaching zero after a decade.
Goals
In addition to the $29 billion in private investment, the 10-year goals include: 10.6 million MWh and 13.4 million MMBtu of energy efficiency; 88 million MWh of renewable energy; 133 million tons of CO2 reduction; and $39 billion in customer bill savings.
The order says the traditional method of ratepayer-funded grants and rebates is too limited to effect the changes needed to meet New York’s climate and energy goals.
“The state’s greenhouse gas reduction goals demand that we achieve significantly more than is practical to achieve through current ratepayer-funded direct payment programs,” the orders states. “The status quo must evolve to a model that recognizes the appropriate use of targeted programs combined with spurring private sector involvement to reach the level of scale needed to realize our objectives. Transitioning from predominately government-directed resource acquisition approaches to market-based initiatives that intrinsically recognize the value of clean resources requires careful planning, along with a long-term commitment to the market.”
The projected $39 billion in customer bill savings will come from “innovative projects and private-public partnerships focused on reducing greenhouse gas emissions, making energy more affordable through energy efficiency and renewable energy, and mobilizing private-sector capital,” according to the governor.
Businesses are expected to see lower costs of $1.5 billion over the next 10 years, including an immediate reduction of $91 million from 2016 electric and gas system benefits charges compared to 2015.
The fund includes:
Market Development ($2.7 billion): NYSERDA initiatives are intended to stimulate consumer demand for clean energy alternatives and energy efficiency while helping to build clean energy supply chains. At least $234.5 million must be invested in low-to-moderate income initiatives during the first three years.
NY-Sun ($961 million): The fund finalizes the state’s commitment announced in 2014 for growing solar electricity by supporting rapid and continued cost reduction.
NY Green Bank ($782 million): The fund will complete the capitalization of the bank, which leverages private capital for clean energy projects. The fund will increase the NY Green Bank’s total investment to $1 billion and is expected to leverage an estimated $8 billion in private investment. (See Project Interest Overwhelms New York’s Green Bank.)
Innovation and Research ($717 million): Research and technology development is intended to drive clean-tech business growth and job creation while providing more energy choices.
Other REV Orders
The commission also approved several orders related to the REV proceeding.
Electric and gas utilities were directed to develop new energy efficiency programs, which included budgets and targets over the next three years (15-M-0252).
An earlier program based on rebates and subsidies expired at the end of 2015, but the REV initiative directed the utilities to develop flexible approaches that aligned with the state’s climate and energy goals.
“The commission directed that with this flexibility, utilities should develop programs that are market-based and include market mechanisms that combine resource acquisition with third-party activities to drive greater value for customers, achieve greater market-wide efficiency savings, target specific system needs and depend less on direct ratepayer support,” the order states.
The NYPSC also established a benefit-cost analysis for evaluating new energy proposals to determine whether they meet REV goals (14-M-0101).
The framework was included in the original REV order last year. Appendix C of Thursday’s order spells out the framework in detail. Utilities were directed to file “Benefit Cost Analysis Handbooks” by June 30.
The commission also expanded the scope of its large-scale renewable energy proceeding to bring it in alignment with the state’s Clean Energy Plan (15-E-0302). The LSR docket is the vehicle in which financial incentives for nuclear plants will be released and public comments gathered.
The Clean Energy Plan was released in December and first laid out the 50% renewable energy goal. The concurrent Clean Energy Standard proceeding formalizes that goal as state policy.
ALBANY, N.Y. — Upstate nuclear power plants would earn extra payments for emissions-free energy under a New York Public Service Commission staff proposal announced Thursday.
The proposal was previewed at the conclusion of the regular commission meeting, ahead of a planned staff white paper on Gov. Andrew Cuomo’s proposed Clean Energy Standard
Cuomo gave the PSC a June deadline to provide the regulatory framework for New York to derive 50% of its electricity from “clean” sources by 2030. (See Cuomo: 50% Renewables by 2030, Keep Nukes Going.)
Zero Emission Credits
Under a broad outline, nuclear plants would be eligible to earn Zero Emission Credits (ZECs), similar to renewable energy credits (RECs) earned by wind and solar generators.
Like RECs, ZECs will be tradable, but the two would not be interchangeable under the plan.
“The staff proposal is to establish a requirement for all load-serving entities to procure a pro rata share of Zero Emission Credits … to produce an emission-free value for energy produced by nuclear power plants,” said Scott Weiner, director for markets and innovation.
Weiner referred to the plan as a “nuclear power bridge to a renewables future.”
FitzPatrick Nuclear Plant (Source Entergy)
It would also provide a lifeline to western New York’s financially stressed nuclear plants. The R.E. Ginna nuclear plant is seeking ratepayer subsidies after a reliability need was determined. The James A. FitzPatrick plant announced its closure due to low energy prices, and a third plant, Nine Mile Point, is under financial pressure. (See Entergy Rebuffs Cuomo Offer; FitzPatrick Closing Unchanged.)
Cuomo wants to close the state’s fourth nuclear plant, Entergy’s Indian Point facility, because of its proximity to New York City.
Officials declined to discuss specific details of the CES, which would also include revisions to the way New York procures and credits renewable energy.
New York’s most recent renewable portfolio standard expired in 2014. State regulators have been discussing a revised RPS for months in a so-called large renewables proceeding. Nuclear generation has now been added to the proceeding.
‘Drama’
The meeting started with “drama,” as PSC Chair Audrey Zibelman put it, when the Republican-led state Senate hand-delivered a letter to the commission seeking a delay in action on the CES and the creation of a $5.3 billion Clean Energy Fund.
The letter, signed by Majority Leader John Flanagan, his deputy and the head of the energy committee, said action was “premature” on the CEF, another order that’s part of the state’s Reforming the Energy Vision proceeding. (See related story, NYPSC OKs $5.3B Clean Energy Fund.)
“The CEF is a major fiscal initiative and has the potential to be even larger when taking into account the CES,” they wrote. “While we do not believe the commission is taking the fiscal implications of these initiatives lightly, it is the position of the conference that these proceedings would be strengthened by a real cost-benefit analysis and genuine opportunity for public input.”
The commission held a 38-minute executive session to discuss the letter but decided to proceed. Zibelman was particularly pointed in saying the letter failed to demonstrate any reason for the commission to delay action.
“This petition was filed in 2014 and there has been considerable opportunity for public commentary both in terms of the number of public statements, hearings and meetings … as well as the process before us,” she said. “There’s no question that we have in front of us a very robust record.”
For administrative ease, Zibelman said, the CES has been rolled into the existing proceeding for large-scale renewables (15-E-0302) rather than a new docket.
WASHINGTON — The D.C. Circuit Court of Appeals on Thursday rejected a request to stay the implementation of EPA’s Clean Power Plan while legal challenges are decided.
The decision was not unexpected. The petitioners, PPL’s Louisville Gas & Electric and Kentucky Utilities, had to convince the court both that they were likely to prevail in the challenge and that they would suffer irreparable harm without a stay.
“Petitioners have not satisfied the stringent requirements for a stay pending court review,” a three-judge panel ruled (15-1363).
The judges also rejected a motion in a related case (15-1418) to sever certain issues and hold them in abeyance.
The court ordered the parties to submit a proposed format for briefing of all the issues in the cases by Jan. 27, with initial briefs filed by April 15 and final briefs by April 22.
Oral argument is scheduled for 9:30 a.m. June 2 and could continue into June 3, the court said.
Opponents Hopeful
West Virginia Attorney General Patrick Morrisey said he is considering asking the U.S. Supreme Court to consider the stay request.
“We are disappointed in today’s decision, but believe we will ultimately prevail in court,” Morrisey said in a press release. “The court did not issue a ruling on the merits and we remain confident that our arguments will prevail as the case continues. We are pleased, however, that the court has agreed to expedite hearing the case.”
West Virginia is among 26 states that have joined in the legal challenges, which were filed immediately after EPA published its final rule in the Federal Register in October. (See Legal Debate over Clean Power Plan Takes Center Stage.)
Some observers have suggested the rule’s fortunes in the D.C. Circuit would depend on which three judges were picked to hear the case. It is widely expected, however, that the case will ultimately be decided by the Supreme Court.
Two of the three judges on the panel were appointed by Democrats.
Judge Karen Lecraft Henderson was appointed to the appellate court in 1990 by President George H. W. Bush after about four years as a U.S. District Court judge in South Carolina. Before joining the bench, she served in the South Carolina attorney general’s office after working in private practice in Chapel Hill, N.C.
Judge Judith W. Rogers was appointed to the D.C. Circuit in 1994 by President Bill Clinton to replace Clarence Thomas when he joined the Supreme Court. She formerly worked as an assistant U.S. attorney in D.C. and as the district’s corporation counsel.
Judge Sri Srinivasan was appointed by President Obama in 2013. He is a former law clerk to Supreme Court Justice Sandra Day O’Connor and also worked in the U.S. Solicitor General’s office. Srinivasan also worked on Democrat Al Gore’s legal team during the disputed 2000 presidential election.
32% Reduction
The EPA rule seeks to cut the power sector’s carbon emissions by 32% by 2030, compared with 2005 levels.
The Supreme Court ruled in 2007 that EPA had authority to regulate carbon dioxide. At issue is how the agency defined the “best system of emission reduction (BSER),” the standard set in Section 111(d) of the Clean Air Act. Critics contend that the Clean Power Plan is based on a novel — and improper — interpretation.
Other critics question whether EPA can regulate CO2 under 111(d) because it is also regulated under Section 112 through the Mercury and Air Toxics Standards.
WASHINGTON — FERC Commissioner Tony Clark announced Thursday he will not seek reappointment when his term expires in June.
“After discussing with my family over the holidays we have decided to not seek another term on the commission,” he said at the opening of the commission’s monthly meeting. “It has been a wonderful run here and I’ve enjoyed the 12 years prior to this on the North Dakota [Public Service] Commission and a number of years prior to that in state government. I’ve enjoyed it a lot, but there comes a time when you just feel like it’s time to do a little something else.”
Commissioner Tony Clark (Source: FERC)
Clark, 44, was elected to the North Dakota legislature at age 23. “So I’ve been in government a long time,” he said.
With the departure of Commissioner Philip Moeller in October, Clark became the lone Republican on the commission. He said he may serve beyond the end of his term if a replacement has not yet been confirmed.
Clark said he wanted to announce his plans now to give notice to his staff and those who may be interested in replacing him. “So I thought I would announce today rather than play coy for the next six months or so.”
Chairman Norman Bay said he was sorry to lose Clark, promising to celebrate and “roast” him at a future meeting. “You’ve been just an amazing colleague,” he said.
On Thursday, he commented on the repeated interruptions of the commission meetings by protesters opposed to the commission’s approval of natural gas pipelines. “I find it rather ironic, he said, “that just 24 hours before a very major winter storm on the East Coast, we have people protesting the very infrastructure that will keep them alive over the next 72 hours.”
PJM’s proposed rule changes designed to address underfunding of financial transmission rights will be the subject of a FERC technical conference on Feb. 4.
The Financial Marketers Coalition (representing J. Aron & Co., DC Energy, Inertia Power, Saracen Energy East and Vitol), Shell Energy and others challenged the changes, in particular the elimination of netting negatively valued FTRs against positively valued FTRs within portfolios (EL16-6-001, ER16-121).
The conference will consider PJM’s auction revenue rights (ARR) modeling and allocation processes; treatment of portfolio positions in allocating underfunding or surplus among FTR holders; the potential for market manipulation; and balancing congestion in ARR/FTR product design. (See FERC Orders Tech Conference on PJM FTR Rule Changes.)
PJM made changes to improve FTR revenue adequacy between 2010 and 2015, but then said the changes resulted in an unfair shift of revenues from ARR holders to FTR holders.
In addition to the netting change, PJM in October proposed to increase ARR results by 1.5% per year in the Stage 1A 10-year simultaneous feasibility process. (See PJM to File FTR, ARR Rule Changes with FERC.)
The conference will be held from 9:30 a.m. to 5 p.m. in the commission meeting room.
OKLAHOMA CITY — SPP’s Strategic Planning Committee last week agreed to allow its Clean Power Plan Task Force to go dormant after endorsing its comments to EPA.
The committee agreed with Chair Mike Wise’s recommendation during its Jan. 14 meeting that the task force, which developed one white paper comparing the mass- and rate-based compliance approaches and a second capturing SPP and stakeholders’ comments on the proposed federal implementation plan, be allowed to suspend its work.
“These two white papers reflect what you wanted the task force to do,” Wise, who also chaired the task force, told the committee. “I think this task force should stay dormant until the SPC decides we work on Clean Power Plan initiatives that come out of the EPA’s final implementation of the federal plan, or until it’s needed for future work.”
The task force was formed to review the CPP, recommend SPP’s role in assisting states’ compliance and inform staff and member dialogue with environmental regulators. In addition to developing the two white papers, it drafted a set of talking points for members’ use with their state regulatory and environmental agencies.
The SPC endorsed both white papers and their filing with EPA, but not before accepting a “friendly” amendment at SPP Director Phyllis Bernard’s request to strike the use of “reserve” when referring to a reliability allowance to avoid confusion with reserve margins. The group also amended the language to make it clear SPP won’t make resource decisions for its members.
“These white papers teed up all the issues and concerns associated with them, and all the things we would advocate as an organization,” said Michael Desselle, vice president and chief compliance and administrative officer.
Oklahoma Gas & Electric abstained from both endorsements and the friendly amendment, saying it was not prepared to vote. Kansas City Power & Light and Dogwood Energy also abstained from endorsing the comments to EPA.
“I think it’s fine SPP wants to review this,” OG&E’s Jake Langthorn said, “but it should be clear this review doesn’t affect in any way how OG&E believes it should respond and how the state [of Oklahoma] should respond.”
The task force compared the mass- and rate-based compliance approaches by analyzing how allowances and credits are supplied; monitoring, verification and tracking; allocation issues; leakage under mass-based plans; and reliability implications.
Its comments to EPA on the federal plan call for a reliability safety valve in both the federal and state plans; an incremental reliability allowance for FIPs; considering regional precedent in FIPs; allowing resource owners to retain allowances for retired resources under the mass-based plan; and a consolidated review process for both plans.
“We identified reliability concerns with a lack of conformity, or consistency, across the region,” said SPP Vice President of Engineering Lanny Nickell. “We think it’s preferable that as many states as possible come up with a common approach.”
Asked whether there was a need to have the task force look at specific impacts to SPP’s market, Nickell said not until there is a request to do a reliability assessment. “We won’t do that until we see all the state plans as they are developed,” he said.
“Strategically, I think it’s important for every state in the region to be the same, because that’s the least cost for the region,” Wise said.
More Detail Requested on Technology Committee
The SPC resisted SPP’s suggestion to form an advanced technology steering committee that would provide input into staff research and development, share best practices for technology deployments and perform studies. The committee told staff to return with additional detail on its proposal.
“The scope needs to be fully developed, better than it is now,” said Lincoln Electric’s Dennis Florom.
SPP staff pitched its technology steering committee as providing a forum to help SPP make policy decisions when deciding how to incorporate technologies such as smart grid, demand response, energy storage, distributed energy resources and grid-optimization techniques (dynamic line ratings and topology control).
Jay Caspary, SPP’s director of research, development and special studies, said the committee would be helpful in determining broader applications of these new technologies and provide a way to gain input from members on how to prioritize organization research and budgets.
Stakeholders were divided over the need for SPP to get involved in R&D — “Specific technological issues are already assigned to specific technical groups,” Florom pointed out — and whether the task force should report to the SPC or the Markets and Operations Policy Committee.
“Whether it reports to MOPC or the SPC, I don’t care,” Caspary said. “I need a forum where I can get input and direction … to drive technological transfer and deployment within the SPP footprint for the benefit of SPP members.”
Caspary said SPP funds research within the industry but does not do any of its own in-house.
Several members expressed a desire to manage their own R&D budgets. Xcel Energy’s Bill Grant said, “I don’t want to see SPP running around spending money on efforts where the companies are not interested in them.”
The Wind Coalition’s Steve Gaw, while not a member of the committee, said, “This is a broader issue than that. This has to do with new, changing dynamics that everybody is dealing with and how the grid has to be more flexible and deal with new technologies.”
“Technology is moving at such a rapid pace, this group should be talking about what do with big data and what do with big technology,” KCP&L’s Denise Buffington said. “I would encourage this group to be educated about it and work it into the strategic plan.”
“I sense from the discussion, the committee would like you to go back and look at this some more … take this information back and mull it over,” Wise told Caspary.
Several members volunteered to work with Caspary on improving the proposed committee’s scope and responsibilities.
Postage Stamp Rate a ‘Valid Conversation’
The SPC took a hard look at the potential unintended consequences of the Transmission Planning Improvement Task Force’s work, given previous MOPC discussions about the Z2 Payment Plan Task Force. (See related story, Latest Z2 Credit Project Delay Renews Old Frustrations).
“We’re locking down some of the fundamental things the group wants to do,” said Antoine Lucas, SPP’s director of transmission planning and the TPITF’s staff secretary. “We’re looking at resources, the actual scope of work that’s been requested and the schedule … where we can shave those [work effort] peaks.”
Lucas and the task force’s chair, NextEra Energy Transmission’s Brian Gedrich, have been guiding the work on the planning process’s methodologies and modeling and the appropriateness of the planning cycle and assessments. They plan to host an educational forum and present their final recommendations to the SPC, MOPC and Board of Directors in April.
Langthorn suggested “the next step in the conversation should be … how to leverage the market in order to meet obligations to serve that load.”
“We already have a system that makes it difficult to make improvements. One person pays for [the improvement], and everyone benefits from it,” Langthorn said. “It’s also time to rethink how we pay for transmission … that’s not regionalized. Who pays for that? Maybe it’s time we start looking at a postage stamp rate … to take full advantage of the market.”
SPP Executive Vice President and Chief Operating Officer Carl Monroe responded, saying “That is a valid conversation we need to have.”
Wise said the issue would be part of the discussion during the committee’s May retreat.
The House of Representatives last week voted to block new EPA regulations protecting streams and requiring restoration of mountains damaged by coal mining. The vote, 235-188, means the measure now goes to the Senate. President Obama has vowed to veto the bill.
The administration said the new rules are needed to protect streams from coal-mining damage. But Republicans said the rules would mean the end of tens of thousands of coal industry jobs at a time when the industry is already under pressure from low natural gas prices and increased emissions rules.
“West Virginia is blessed to be abundant in natural resources,” said Republican Rep. Alex Mooney of West Virginia. “Unfortunately, the president is intent on destroying coal as a domestic energy source.”
Obama to Push for Changes in Federal Land Energy Use
Jewell
The Obama administration on Friday announced a moratorium on new coal leases on federally managed land after the president pledged in his final State of the Union speech to change the way federal lands are used for fossil fuel development to “accelerate the transition away from dirty energy.”
The moratorium was announced by Interior Secretary Sally Jewell, who said it was time to re-examine the coal-leasing program. “It is abundantly clear that times are different in the energy sector now than they were 30 years ago,” she said.
The move won plaudits from clean energy advocates. “It’s time to not only reform our fossil fuel leasing program; we need to keep fossil fuels in the ground,” said Erich Pica of Friends of the Earth.
President Obama, in his final State of the Union address, bragged on the progress the country has made in building out solar and wind facilities in the effort to cut emissions.
“Listen,” he said, “seven years ago, we made the single biggest investment in clean energy in our history. Here are the results. In fields from Iowa to Texas, wind power is now cheaper than dirtier, conventional power. On rooftops from Arizona to New York, solar is saving Americans tens of millions of dollars a year on their energy bills and employs more Americans than coal — in jobs that pay better than average.”
“We’re taking steps to give homeowners the freedom to generate and store their own energy — something, by the way, that environmentalists and Tea Partiers have teamed up to support. And meanwhile, we’ve cut our imports of foreign oil by nearly 60% and cut carbon pollution more than any other country on Earth.
House Committee Approves Bill for Nuclear Energy Research
Smith
A House committee has approved a bill that will direct research and development money toward nuclear energy. The bill, approved by the Science, Space and Technology Committee, directs the Department of Energy to set nuclear energy research as a priority.
While calling for the use of resources of national labs, such as use of supercomputers, to help in the research, the bill also calls for the design and construction of an experimental reactor within the next 10 years.
“Strategic investments in advanced nuclear reactor technology should play a much more meaningful role in reducing global emissions,” said Committee Chairman Lamar Smith (R-Texas) during a hearing last week.
More than 150 environmental groups have signed a letter calling on the Government Accountability Office to investigate FERC, calling it “a rogue agency that is blatantly biased towards pipeline companies it purports to regulate.”
The letter, sent to Democratic Sens. Bernie Sanders (Vermont) and Elizabeth Warren (Massachusetts), who are members of the Senate Committee on Energy and Natural Resources, says the commission “is misusing legal loopholes and ignoring court orders to advance gas infrastructure projects while preventing the public from exercising their rights to judicial review or fair public participation in the process.”
The letter was signed by groups such as Delaware Riverkeeper, the Sierra Club and Environment NJ, which have lined up to oppose an increase in pipeline development to deliver energy derived from new Appalachian shale production.
Pipeline Finds New Opponent in Northeast Energy Solutions
Tennessee Gas Pipeline’s Northeast Energy Direct project attracted yet another opposition group when public advocacy group Northeast Energy Solutions filed a formal protest with FERC about the project.
The group listed more than 50 problems with NED’s application for the $5 billion, 400-mile pipeline that is planned to bring natural gas to constrained markets in New England. The group said the application is incomplete and contains errors, especially in the mandated listing of names of owners of property the pipeline would traverse, as well as an incomplete environmental assessment.
“The industry has never witnessed a proposal for an energy project seeking government approval that is as patently defective as the one submitted by Tennessee Gas Pipeline,” said Vincent DeVito, the group’s attorney.
More than 150 environmental groups have signed a letter calling on the Government Accountability Office to investigate FERC, calling it “a rogue agency that is blatantly biased towards pipeline companies it purports to regulate.”
Tennessee Gas Pipeline’s Northeast Energy Direct project attracted yet another opposition group when public advocacy group Northeast Energy Solutions filed a formal protest with FERC about the project.