Page 1483 – RTO Insider

February 11, 2016

Prices Down 26% in ISO-NE Capacity Auction

By William Opalka

Prices dropped 26% in ISO-NE’s 10th Forward Capacity Auction as new resources more than made up for retiring generation, the RTO reported on Thursday.

The capacity auction, held Monday for the 2019/20 commitment period, cleared more than 1,800 MW of new generation and demand response.

The clearing price dropped to $7.03/kW-month from last year’s $9.55/kW-month, the first decline in four years.

Almost 36,000 MW of capacity was acquired at a total cost of about $3 billion, down from $4 billion in FCA 9. (See ISO-NE Capacity Prices Likely to Fall in Future.)

“Competition was robust in this year’s Forward Capacity Auction,” ISO-NE CEO Gordon van Welie said in a statement. “The high participation in the auction demonstrates the interest in the New England marketplace and bodes well for meeting future resource adequacy requirements.”

The region is expected to lose 4,200 MW of coal, oil and nuclear generation by 2019, including Entergy’s 680-MW Pilgrim Nuclear Power Station.

RTO officials said 35,567 MW of capacity cleared the auction to meet the 34,151-MW installed capacity requirement for 2019/20:

31,371 MW of generation, including 1,459 MW of new generation;
2,746 MW of demand-side resources, including 371 MW that is new; and
1,450 MW of imports from New York and Canada.

New Generation

Three new gas-fired generators totaling 1,302 MW cleared the auction.

“These resources cleared at a price that was lower than the estimated cost of building a new power plant,” Robert Ethier, vice president of market operations, said during a media briefing. “Even at that price, three new, large power plants cleared at the auction.”

The pre-auction estimate for a new gas-fired plant was $10.81/kW-month. Like all recent construction in New England, the plants will have dual-fuel capability to burn fuel oil in the winter when necessary.

Ethier said ISO-NE and other financial analysts two years ago arrived at the higher figure based on their estimates of where the market was headed. “It certainly came in lower than a lot of industry observers expected,” he said.

The new generation is being built in areas where they are most needed, Ethier said, relatively close to where the Pilgrim plant is located.

About 485 MW of the Burrillville Energy Center 3 in Burrillville, R.I., cleared the auction. Chicago-based Invenergy is developing the $700 million, 900-MW combined cycle facility in the northwest corner of the state.

NRG Energy’s 333-MW Canal 3 in Sandwich, Mass., also cleared. The fuel oil-burning plant is being repowered to natural gas.

“I think it’s fair to project that those resources will provide energy to the region where the Pilgrim generation is retiring from,” Ethier said.

The auction also cleared a new 484-MW natural gas-fired combined cycle plant in Bridgeport, Conn., owned by Public Service Enterprise Group’s PSEG Power. The $550 million plant is expected to begin construction in 2017 and will be located at the site of the existing coal-fired Bridgeport Harbor Station site.

PSEG said Thursday it will finalize plans to retire the 400-MW Bridgeport Harbor and create a $2 million fund to support environmental projects and improvements for city residents to meet a state law that mandates community environmental benefit agreements to mitigate environmental effects of development projects. It also said it will work with Bridgeport to support local hiring. The city has promised “unqualified support” for the new power plant.

Unlike in FCA 9, the same clearing price will be paid to all capacity zones in New England. About 850 MW of the new resources will be built in the reconfigured Southeastern New England zone.

In its former configuration, the Southeast Massachusetts/Rhode Island zone last year failed to attract adequate resources. Administrative prices there were set at $17.73/kW-month as a result.

This year, the region was divided into two zones: Rest of Pool, which comprises Connecticut, western and central Massachusetts, Vermont, New Hampshire and Maine; and Southeastern New England (SENE), which includes Northeast Massachusetts/Greater Boston and Southeast Massachusetts/Rhode Island. (See ISO-NE Proposes New Capacity Zones for FCA 10.)

Firsts

The auction included several firsts, the RTO said.

The first offshore wind farm in the U.S. cleared the auction, with 6.8 MW, or 20% of its nameplate 34-MW capacity. Deepwater Wind is building the facility off Block Island, R.I. It is expected to be operating by the end of the year.

Two large fuel cell facilities, providing 2.5 MW each, also cleared.

ISO-NE said 27 MW of new wind and 44 MW of new solar cleared the auction; in all, 135 MW of wind and 65 MW of solar facilities cleared in FCA 10.

A total of 40,131 MW of resources, including 6,700 MW of new resources, qualified to compete in the auction.

February 10, 2016

EEI: Carbon Reductions to Continue Despite CPP Stay

By Rich Heidorn Jr.

NEW YORK — The Supreme Court’s stay of the Clean Power Plan throws the fate of President Obama’s signature environmental initiative into doubt, but it is not likely to end the shift to gas and renewables and away from coal, the Edison Electric Institute said Wednesday.

“Yesterday’s ruling, while fascinating, doesn’t really change anything,” Quinlan Shea III, EEI’s vice president for the environment, told analysts at EEI’s annual Wall Street briefing in Manhattan. “There’s a lot of drivers. A lot of what we’re seeing now in the domestic utility fleet is occurring anyway.”

Power sector CO₂ emissions and carbon intensity have dropped by about 17% and 11%, respectively, since 2000, according to EEI data. The organization cited an Energy Information Administration projection that non-hydro renewables will more than triple from 2010 levels by 2040. “Greenhouse gas reductions are going to continue in our industry,” Shea said.

That’s not to say the stay announced late Tuesday wasn’t a jolt, said Shea. “I think anybody who wasn’t surprised is somebody you’d like to take with you to Vegas.” (See Supreme Court Blocks Clean Power Plan.)

A lawyer who began his career at EPA, Shea predicted the D.C. Circuit Court of Appeals will rule on the merits of the legal challenges by fall, with a likely Supreme Court ruling within 16 months, before the end of 2017. Other observers have said a Supreme Court ruling is unlikely before 2019. (See Former EPA Official: Clean Power Plan won’t Survive.)

That means, Shea said, that the stay will only affect for certain the September 2016 deadline for states to file compliance plans or seek extensions. Later deadlines — the first emission target in 2022 and the final 2030 target — could be undisturbed if the Supreme Court ultimately upholds the rule.

That is a big “if,” however.

Shea noted that Justice Anthony Kennedy — the swing vote between the liberal and conservative wings of the court, who authored the 2007 ruling that gave EPA the authority to regulate carbon dioxide — sided with conservatives in the 5-4 ruling ordering the stay.

“It makes you wonder what his thinking is.”

The one-page stay order did not disclose the majority’s rationale. “Do [the five justices] have the same reason for agreeing with the stay? None of us know what their reasoning was.”

(The death Saturday of Justice Antonin Scalia, who supported the stay, may also change the rule’s prospects. See Scalia Death Scrambles Clean Power Plan Odds.)

Another question is whether the states and RTOs will slow down their compliance efforts as a result of the ruling.

One thing virtually certain is that Obama will leave office not knowing whether the CPP will be part of his legacy.

EEI officials said it’s unlikely Obama’s successor will seek to revoke the CPP immediately after taking office.

“This probably won’t be the first thing” on the new president’s to do list, said EEI President Thomas Kuhn, who noted the formal process required to revoke regulations. “They will be waiting for the Supreme Court to speak and then figure out where to go from there,” he said.

February 10, 2016

Supreme Court Blocks Clean Power Plan

By Rich Heidorn Jr.

WASHINGTON — The Supreme Court Tuesday blocked EPA from implementing the Clean Power Plan pending legal challenges.

The court ruled 5-4 in favor of a stay, with the court’s liberal wing in the minority.

The court’s one-page order (15A773, et al.), which surprised many observers, means that states won’t have to submit initial compliance plans or extension requests in September, as required by the final EPA rule released last summer.

It also suggests EPA will face a skeptical, if not hostile, court majority if the rule survives challenges now pending before the D.C. Circuit Court of Appeals. Oral arguments before the D.C. Circuit are scheduled for June 2.

A three-judge panel of the D.C. Circuit rejected a stay request last month, ruling that opponents had not proven they had a good chance to prevail in the challenge and that allowing EPA to implement the rule while the case was litigated would result in irreparable harm. (See DC Circuit Rejects Stay on Clean Power Plan.)

States’ Arguments

Twenty-nine states, led by West Virginia, Texas and Oklahoma, asked the Supreme Court to reconsider, saying that EPA had overreached its authority under the Clean Air Act and that the states would suffer “immense sovereign and financial harms as a direct result of the plan, on a scale exceeding any environmental regulations the states have ever faced.”

“In response to the [CPP], the states need to design and enact transformative legislative and regulatory changes, to give their state regulators the authority both to require generation shifting and to react to the rate and reliability impacts of such shifting. Specifically, as several states explained in declarations before the D.C. Circuit, compliance with the plan will require new legislation in the next one to two years to ensure that there is sufficient growth in their domestic natural gas, wind, and solar power sectors to meet the [CPP]’s reductions in coal-fired generation,” the states said in a brief filed Jan 26.

“The sources of energy that EPA assumes will replace coal take years to plan, develop, approve, and then build. Indeed, EPA admitted in the plan that at least some states will need to enact legislation to comply. In addition, states have to revise numerous regulations to ensure that state public utility commissions can respond to and mitigate the plan’s energy price and reliability impacts,” the brief continued.

“These massive legislative and regulatory changes, which are irreparable harms in and of themselves, will also undermine the states’ ability to maintain or achieve their own sovereign priorities. Requiring state regulators to design, mandate and then implement federally mandated ‘generation shifting’ will displace contrary policies that many states have carefully crafted over decades. Once made, many changes will be ‘impossible’ to reverse.”

In a brief on behalf of EPA, Solicitor General Donald Verrilli called stay requests “extraordinary and unprecedented” and said the court had never before “granted a stay of a generally applicable regulation pending initial judicial review in the court of appeals.”

The government argued that states could obtain extensions on filing compliance plans until 2018 and that the first deadlines would not come until 2022. The EPA rule seeks to cut the power sector’s carbon emissions by 32% by 2030, compared with 2005 levels.

The Supreme Court stayed the rule pending a ruling by the D.C. Circuit and the court’s disposition of a petition for a writ of certiorari after that. “If a writ of certiorari is sought and the court denies the petition, this order shall terminate automatically. If the court grants the petition for a writ of certiorari, this order shall terminate when the court enters its judgment.”

Justices Stephen Breyer, Ruth Bader Ginsburg, Elena Kagan and Sonia Sotomayor opposed the stay.

Opponents Rejoice

West Virginia Attorney General Patrick Morrisey called the stay “a great victory for West Virginia.”

“We are thrilled that the Supreme Court realized the rule’s immediate impact and froze its implementation, protecting workers and saving countless dollars as our fight against its legality continues.”

Mike Duncan, CEO of the American Coalition for Clean Coal Electricity, called the stay “a signal the Supreme Court has serious concerns with the” EPA rule.

Without the stay, said Jeffrey Connor, interim CEO of the National Rural Electric Cooperative Association, “co-ops would have been forced to take costly and irreversible steps to comply with the rule, which is a huge overreach of EPA’s legal authority. The Clean Power Plan is a direct threat to co-ops’ ability to provide affordable and reliable electricity to their member consumers and should be erased from the books.”

Enviros Take the Long View

The Natural Resources Defense Council professed confidence that the rule will ultimately be upheld. “The electricity sector has embarked on an unstoppable shift from its high-pollution, dirty-fueled past to a safer, cleaner-powered future, and the stay cannot reverse that trend,” said David Doniger, director of NRDC’s climate and clean air program.

“Nor can it dampen the overwhelming public support for action on climate change and clean energy. Smart industry, financial and governmental leaders will not count the Clean Power Plan out and will keep moving to incorporate strategies and public policies leading toward a clean energy economy.”

Tom Kiernan, CEO of the American Wind Energy Association, expressed disappointment, saying the stay “may signal eventual delays in reducing both the carbon pollution that is causing climate change and getting proven, clean, and affordable wind energy to more Americans.”

Legal Issues

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. Opponents contend that the Clean Power Plan is based on a novel — and improper — interpretation.

The opponents also contend that EPA cannot regulate CO₂ under 111(d) because it is also regulated under Section 112 through the Mercury and Air Toxics Standards. (See Legal Debate over Clean Power Plan Takes Center Stage.)

February 9, 2016

Fortis to Acquire ITC Holdings for $11.3B

By William Opalka

ITC Holdings, the largest independent transmission operator in the U.S., agreed to be acquired by Canadian utility operator Fortis in a deal valued at $11.3 billion, the companies announced Tuesday.

ITC is based in Novi, Mich., where it will remain as an independent company. It has been seeking a strategic partner since November.

ITC shareholders will receive $22.57 in cash and 0.752 Fortis shares per ITC share. The companies said the price reflects a 33% premium over ITC’s closing share price on Nov. 27, 2015, before news broke that ITC was shopping itself. The deal is worth $6.9 billion in cash and stock and assumes $4.4 billion in ITC debt.

For Fortis, the attraction of ITC — a pure-play transmission company — is its high regulated returns and the prospect of future growth. It earned an adjusted return on equity of more than 17% in 2014, according to Bloomberg, well above the 11% average of electric utility holding companies.

In a presentation to analysts Tuesday, the company cited a Brattle Group projection that the grid will require investments of $120 billion to $160 billion per decade through 2030 because of the shift away from coal power and integration of more wind power under EPA’s Clean Power Plan.

Fortis said the deal would make it the 13th largest North American public utility — up from its current number 20 ranking— with an enterprise value of $30 billion.

“Fortis has grown its business through strategic acquisitions that have contributed to strong organic growth over the past decade. Our performance in 2015 is a clear demonstration of the success of this strategy,” Fortis CEO Barry Perry said in a statement. “The acquisition of ITC … is a continuation of this growth strategy. ITC not only further strengthens and diversifies our business, but it also accelerates our growth.”

ITC owns and operates high-voltage transmission facilities in Michigan, Iowa, Minnesota, Illinois, Missouri, Kansas and Oklahoma. It serves a combined peak load of more than 26,000 MW extending over 15,600 miles of transmission lines. All of its employees would be retained, Fortis said.

The deal has been approved by both companies’ boards of directors and will be presented to shareholders. Upon closing, ITC will become a Fortis subsidiary, with its shareholders holding approximately 27% of Fortis stock.

Regulators from the various states, FERC, the Committee on Foreign Investment in the United States, the Federal Trade Commission and the Department of Justice will have to approve the deal. Closing is expected in late 2016.

ITC CEO Joseph Welch said the acquisition “accomplishes our objectives by better positioning the company to have a higher level of focus on pursuing our long-term strategy of investing in transmission opportunities to improve reliability, expand access to power markets and allow new generating resources to interconnect to transmission systems and lower the overall cost of delivered energy for customers.”

Fortis, which is now listed on the Toronto Stock Exchange, will apply to list its common shares on the New York Stock Exchange.

Fortis owns New York-based distribution utility Central Hudson Gas and Electric and UNS Energy in Arizona, the parent of Tucson Gas & Electric.

Fortis said the acquisition aligns with its strategy of building its portfolio by acquiring low-risk regulated energy companies with predictable returns. The transaction is expected to provide earnings of 5% per share in its first full year of operation.

The company will finance the acquisition by issuing $2 billion in debt and by selling up to 19.9% of ITC to other investors.

February 9, 2016

NRC Inspector Due at Indian Point Thursday

By William Opalka

A special inspector for the Nuclear Regulatory Commission is expected to arrive at the Indian Point station Thursday to conduct an inquiry into why elevated levels of tritium were found in groundwater under the plant.

Plant owner Entergy reported the finding to New York state officials after routine monitoring found elevated levels in three out of 40 wells at the site in the Hudson Valley, about 40 miles north of New York City.

“Although we don’t have an exact cause, we believe its likely cause is activities done in preparation for an upcoming refueling operation,” Entergy spokesman Jerry Nappi said Monday.

Early indications point to a sump pump failure that allowed contaminated water to leach into the holding wells, according to an NRC spokesman.

The latest incident provides more ammunition for Gov. Andrew Cuomo, who has sought the plant’s shutdown and who ordered state regulators to investigate its operations after two unplanned outages in December. (See NYPSC Denies Entergy Arbiter in Indian Point Investigation.)

Cuomo ordered the state departments of Health and Environmental Conservation to begin investigations of the incident.

“This latest failure at Indian Point is unacceptable,” Cuomo said in a statement on Saturday.

“This failure continues to demonstrate that Indian Point cannot continue to operate in a manner that is protective of public health and the environment,” the governor said in the letter he wrote to the state commissioners.

Entergy said there is no danger to the public or its workers.

“While elevated tritium in the ground on-site is not in accordance with our standards, there is no health or safety consequence to the public, and releases are more than a thousand times below federal permissible limits,” the company said in a statement.

NRC spokesman Neil Sheehan repeated that ground water contamination offers no threat to the public or workers on the site.

The groundwater will eventually leach into the Hudson “where it will barely be detectable and will pose no threat to the public water supply,” Sheehan said.

Three permanent inspectors are stationed at the plant and they will offer support to the special investigation. If additional action is warranted, NRC will expand the investigation.

“I am urging NRC to fully investigate all the wells surrounding Indian Point and determine why the pump was not working, how far the contamination spread, how to prevent future spills and more importantly determine if local residents’ health and safety are at risk.” U.S. Sen. Charles Schumer (N.Y.) said in a statement.

February 8, 2016

Constitution Pipeline Opponents: Void FERC OK

Foes of a natural gas pipeline that would connect Pennsylvania natural gas fields to New York and New England power markets went to federal court on Friday to stop the project.

Environmental groups asked the 2nd Circuit Court of Appeals to set aside the three FERC orders that approved the $700 million, 650,000-dekatherm Constitution Pipeline.

FERC in late 2014 approved the 124-mile pipeline, granted rehearing in January 2015 and denied rehearing of its order on Jan. 28. (See FERC Upholds Constitution Pipeline OK.)

The group Stop the Pipeline notified the company of its intention to sue in the FERC docket (CP13-499).

Separately, Catskill Mountainkeeper, the Clean Air Council, Delaware-Otsego Audubon Society, Riverkeeper and the Sierra Club asked for review of the original approval and denial of rehearing (16-345).

FERC said the pipeline’s benefits would exceed its impacts on the environment and would supply gas to constrained energy markets in eastern New York and New England.

The commission granted partial permission to Constitution to proceed with limited tree felling along the pipeline route in Pennsylvania but not in New York, where state officials are still conducting environmental reviews. (See New York AG: No Tree Cutting for Pipeline Without Water Quality Permits.)

— William Opalka

February 8, 2016

SPP Seams Steering Committee Briefs

SPP staff called FERC’s acceptance last week of SPP’s regional cost allocation methodology for Order 1000 interregional projects a “fantastic order” that sets the stage for a redrafting of its previously rejected non-Order 1000 proposal.

In separate orders, the commission on Feb. 2 approved SPP’s use of its highway/byway methodology in allocating Order 1000 interregional costs with MISO and the Southeastern Regional Transmission Planning (SERTP) process. The orders accepted compliance filings revising the RTO’s joint operating agreement with MISO (ER13-1937) and its processes with SERTP (ER13-1939).

“The good thing is, it gives us a little clarity,” SPP attorney Erin Cullum told the Seams Steering Committee Feb. 3. “It does at least let us know this type of cost allocation is just and reasonable for interregional projects.”

Brett Hooton, SPP’s senior interregional coordinator, said the rulings mean Order 1000 interregional projects will be regionally allocated using the highway methodology process for any voltage level greater than 100 kV.

The RTO’s rules for projects within SPP designate transmission facilities of 300 kV or above as “highway” facilities whose costs are allocated entirely on a region-wide, postage stamp basis. Facilities between 100 kV and 300 kV are “byway” facilities, with two-thirds of the costs assigned to the host zone and one-third allocated region-wide. Projects below 100 kV are allocated entirely to the host zone.

SPP’s proposal to create a new class of seams projects for non-Order 1000 projects was rejected by FERC on Nov. 30 as being too vague. (See FERC Rejects SPP Proposal for Seams Transmission Projects.)

Staff’s Tariff revisions defined a non-Order 1000 seams project as one operating at 100 kV or above and costing at least $5 million. They proposed a default regional cost allocation for such projects.

“We had many questions when we got that order,” Cullum said, referencing the non-Order 1000 seams projects. “This lets us know what is just and reasonable as we go forward with non-order 1000 seams projects filing. It puts us in position to have a better conversation with FERC.”

“Having the order … helps us out quite a bit. We will have a frank discussion with FERC staff,” said SPP’s Sam Loudenslager, who is managing the non-Order 1000 seams docket.

SPP has to make an additional compliance filing on each order within 30 days. “They will both be fairly minimal and for the most part have been prescribed in detail by FERC,” Hooton said.

SPP Nears JOA with SaskPower

SPP is close to formalizing a JOA with Saskatchewan Power, the principal electric utility in Saskatchewan, Canada, months after the two completed the RTO’s first international transaction.

Hooton said the RTO hopes to have a completed JOA “in a week or so.” He said SPP’s agreement with SaskPower will be different than its JOAs with other seams neighbors, primarily because SaskPower is a planning region and a vertically integrated utility.

Once the JOA is filed, both parties will have to obtain certificates from their respective national energy departments in order to export power to each other.

In mid-December, SaskPower was able to “facilitate power” during an emergency situation in North Dakota, using its existing interconnections in the state. (See SPP, SaskPower Make First International Trade.)

The JOA will coordinate data exchange, planning, scheduling and “other aspects of transmission operations and planning in accordance with applicable NERC reliability standards, industry standards and good utility practices.” SPP and SaskPower will establish operating and planning committees to administer the agreement’s actions.

SPP, MISO Planning for Joint Stakeholder Meetings

SPP, MISO and their stakeholders will gather at SPP’s Little Rock, Ark., headquarters for a pair of meetings March 8-9 on seams issues and potential interregional projects.

The two RTOs will first conduct a JOA joint stakeholder meeting to discuss market-to-market and other issues. The RTOs are drafting a memorandum of understanding describing “guiding principles” to improve the M2M process and reduce congestion costs along their seams. (See SPP, MISO Working on M2M Improvements.)

Hooton told the committee the meeting “is the only opportunity we have to gain input from our stakeholders on the principles.”

The RTOs’ Interregional Planning Stakeholder Advisory Committee will then gather March 9, giving stakeholders an opportunity to provide their input on whether a joint study is needed over the next 18 months and to suggest issues to study. Members are welcome to submit “anything that doesn’t have a potential solution” already identified, Hooton said.

The SPP-MISO JOA calls for an “issues” meeting in those years when a joint study is not being undertaken. A planning committee comprising SPP’s David Kelley and MISO’s Eric Thomas will then decide whether an interregional study is needed. The 2015 joint study failed to reach agreement on interregional projects.

SPP staff said a joint study will be conducted this year with Associated Electric Cooperative Inc., a group of six regional generation and transmission cooperatives based in Springfield, Mo.

SPP Says Better Seams Metrics Coming

SPP staff promised the seams committee “better metrics” on seams flow data during its monthly review of seams congestion and M2M issues.

“We’re not comfortable that [the metrics] tell the whole story,” Kelley said. “The data comes from a lot of different places, and they’re not synched up.”

M2M settlements between SPP and MISO have become less volatile since the process started last March, when MISO compensated SPP $4.34 million for the latter having to re-dispatch generation to lessen congestion on flowgates. SPP has netted $8.75 million from the M2M process through Jan. 18.

— Tom Kleckner

February 8, 2016

MISO Market Subcommittee Briefs

MISO is drafting Tariff language to address under what conditions it can reopen or extend its day-ahead market when necessary to address technical problems.

The RTO occasionally delays the close of the market, but rules for doing so are implied and have never been spelled out in the Tariff.

MISO is looking to clarify Tariff section 39.1.1, which governs the day-ahead energy and operating reserve market trading deadline. The RTO said it’s in need of language that “clearly establishes MISO’s ability to reopen/extend the market [or] the conditions under which MISO would do so.”

“Currently the Tariff language doesn’t really address this,” MISO’s David Savageau told the Market Subcommittee last week.

MISO staff is proposing that it be allowed to reopen or extend the close of the market when “unanticipated events” occur. In a draft, MISO said the conditions would have to be such that they interfere with a transmission provider’s ability to receive or process bids, offers or interchange schedule data. The RTO said it would also consider delaying close of market when a transmission provider’s bid, offer or interchange schedule data is “plainly inaccurate” and likely to hinder their ability to deliver using the market.

MISO also inserted a provision allowing it to extend market hours when missed or incorrect bids, offers and interchange schedule data “are otherwise likely to have a widespread negative impact on the results of the day-ahead energy and operating reserve market, in a manner that adversely threatens or affects the reliability of market operations or of the transmission system.”

MISO said it would post a notice any time it extends the trading deadline. No expected date has been set for MISO to adopt the proposed Tariff additions.

Soon-to-be Eliminated Demand Response Working Group Works on New LMR Deployment Rules

The Demand Response Working Group has completed a review of remaining open issues ahead of its disbanding as part of the stakeholder redesign, said group chair DeWayne Todd. One of those open issues is a change to how load-modifying resources (LMR) will be deployed this summer.

Under emergency pricing beginning in July, market participants with multiple LMR assets will have to identify which asset will be deployed at least 10 minutes prior to an LMR event. Asset owners formerly were required to identify the asset within 24 hours after the event.

Michael Robinson, MISO’s principal adviser of market design, said the RTO is having its legal team look into whether the new rules would necessitate Tariff changes. “We just started the process of having legal look into it. Because the LMR language was written so long ago, there’s nothing in the Tariff to address deployment,” he said.

Last August, FERC accepted MISO’s Tariff revisions to institute emergency pricing (ER15-1776). A vendor working with MISO found that calculating emergency pricing requires information on LMR deployment at the resource pricing node and wouldn’t work with MISO’s current treatment of LMR resources.

MISO Works ‘Triple E Flags’ into Real-Time Offer Enhancements Project

MISO will be including excessive energy exemption (EEE) requests into its real-time offer enhancements project.

The EEE process replaced the uninstructed deviation calculations and penalties. MISO dispatchers can waive excessive or deficient energy deployment charges by setting the EEE “flag.”

“This is under construction, but the project is still scheduled to be implemented in July,” said MISO Senior Real Time Operations Engineer Steve Swan during a presentation. He said that MISO is primarily adding the exemptions so offer overrides get into the five-minute dispatch sooner and automatically, although the option for manual entry would still exist.

MISO plans to test the software in March through June and take the project live sometime in July. Meanwhile, real-time offer enhancements will be the subject of a technical workshop on Feb. 25.

MISO-PJM Interface Pricing Project Heads to Final Four

MISO has until March 1 to decide which option it wants to take concerning pricing enhancements and interchange modeling with PJM.

Dhiman Chatterjee, MISO’s senior manager of market analysis, outlined the next steps for MISO and PJM’s interface pricing project, which is intended to settle longstanding differences in the way the two RTOs price transactions at interface buses. The goal is to end the double-counting that leads to overcharging during congestion contributions and overcompensating when a constraint is relieved.

Chatterjee said four options exist:

The MISO Monitor’s original proposal that favors a centroid-to-centroid approach where the non-monitoring RTO excludes a transaction’s impact on the constraint;
PJM’s original proposal that makes use of a 10-bus common interface;
A MISO and PJM collaborative approach in which financial transmission rights and day-ahead limits are modified if needed to reflect a transaction’s impact; and
A MISO incremental proposal suggested by MISO’s Monitor in which the centroid-to-centroid method is used alongside MISO excluding a transaction’s impact on PJM constraints while PJM preserves its common interface definition.

“We have all these options on the table, so we need something to compare them against. We did work a lot on developing a baseline,” Chatterjee said.

Chatterjee said if the RTOs decide to go with the collaborative approach, no Tariff changes would be needed, but MISO’s commercial model would be adjusted. MISO Monitor David Patton said he preferred the incremental approach over the collaborative approach because it could solve the issue completely.

Although MISO has until March 1 to make a decision, the RTO said it would have the analysis finalized and be ready to provide a recommended option before a Feb. 18 joint and common market meeting of PJM and MISO stakeholders. MISO said it would follow that up with discussion on the topic at March meetings of the Seams Management Working Group and the Financial Transmission Rights Working Group.

MISO Seeks Leaders for New Resource Adequacy Subcommittee

MISO continues its march toward a revamped stakeholder process. A system-wide note went out requesting leaders for MISO’s newly created Resource Adequacy Subcommittee. Stakeholders and MSC leadership said the portion of the MSC’s charter dealing with capacity needs to be revised so it doesn’t intersect with the RASC’s charter, a point that was raised at January’s Steering Committee meeting.

“There was a pretty robust discussion at the Steering Committee. I imagine that will continue throughout the new stakeholder process,” said Kent Feliks, chair of the MSC.

Feliks said there has also been discussion among the MSC on whether the Steering Committee should absorb the responsibilities of the Data Transparency Working Group and the Stakeholder Governance Working Group.

He also said the topics dissected in the Data Transparency Working Group could be a little dense for the Steering Committee to come in cold. “We don’t want to lose the work that we’ve done in that group, but there’s concern that the Steering Committee isn’t the appropriate place to hold those discussions,” Feliks said.

Jeff Bladen, MISO’s executive director of market design, said the RTO is still working on common issues that may be recurrent in separate meetings. He said the informational forum may be a good outlet for topics that can be examined in multiple groups and committees. “There’s also been the discussion that the Steering Committee will help guide issues to the appropriate venue,” he said.

Meanwhile, Bladen is calling for stakeholders to offer their input on next steps on energy storage issues.

Bladen also said MISO may have to accelerate its timeline for addressing energy offer caps in light of FERC’s Jan. 21 order proposing a $1,000 “soft” offer cap for all RTOs’ day-ahead and real-time markets. (See FERC Proposes Uniform Offer Cap Across RTOs.)

Comments on the Notice of Proposed Rulemaking are due 60 days after its publication in the Federal Register. MISO was expecting to begin conversation on energy offer caps in May.

— Amanda Durish Cook

February 8, 2016

Eversource Posts Strong 2015 Results Despite Weak Quarter

By William Opalka

Despite mild temperatures that dampened its fourth-quarter performance, Eversource Energy posted 2015 results that easily bested its previous year’s earnings.

The company also increased its quarterly dividend 6.6% to $0.445/share.

Eversource reported 2015 earnings of $878.5 million ($2.76/share), compared with 2014 earnings of $819.5 million ($2.58/share). Full-year results included after-tax integration costs of $15.8 million in 2015 and $22.1 million in 2014 from the 2012 merger of NSTAR and Northeast Utilities. Excluding those costs, Eversource earned $894.3 million ($2.81/share) in 2015 and $841.6 million ($2.65/share) in 2014.

In the fourth quarter, the company reported earnings of $181.8 million ($0.57/share), compared with $221.6 million ($0.69/share) in 2014.

Eversource projected 2016 earnings per share of between $2.90 and $3.05 and long-term EPS growth through 2019 of between 5 and 7%. The company reduced its long-term EPS growth rate from the previous 6 to 8% primarily because of the impact of the extension of bonus income tax depreciation through 2019.

“We invested the most dollars ever in New England’s energy delivery systems, achieved our best ever level of electric service reliability, connected record numbers of new natural gas heating customers, posted very strong financial results and made significant progress in addressing the region’s energy infrastructure challenges,” CEO Thomas J. May said.

The company is an investor in the Northern Pass transmission project to bring Canadian hydropower into New England and Spectra Energy’s Access Northeast natural gas pipeline. Both projects are undergoing regulatory review.

February 8, 2016

FERC Denies Bid to Block Algonquin Pipeline Expansion

By Tom Kleckner

FERC turned aside attempts to block Spectra Energy’s Algonquin pipeline expansion, allowing construction to continue on the 37-mile span, which is expected to be completed in November.

The commission rejected requests for a rehearing and a stay by eight parties, primarily impacted landowners, municipalities and environmental interests (CP14-96).

The ruling reiterated the commission’s order last March granting Algonquin Gas Transmission a certificate of public convenience and necessity for the Algonquin Incremental Market (AIM) project in New York, Connecticut, Rhode Island and Massachusetts.

The challengers complained that FERC erred in not ordering an evidentiary hearing and said it violated the Clean Water Act. They also raised questions over the staff’s National Environmental Policy Act analysis and whether the project was required “by the public convenience and necessity.” (See related story, Dueling Studies Dispute Need for More Pipelines in New England.)

Algonquin Incremental Market (AIM) Project (Source: Spectra Energy)

The commission found the written record was sufficient for it to act and said a “trial-type hearing” was unnecessary. It said its March order complied with the CWA, despite objections from several applicants that the “conditioned certificate order” came before state agencies in Connecticut, Massachusetts and New York had issued their water-quality certifications.

“The commission routinely issues certificates for natural gas pipeline projects subject to the federal permitting requirements of the CWA,” FERC said. “The practical reason is that, in spite of the best efforts of those involved, it may be impossible for an applicant to obtain all approvals necessary to construct and operate a project in advance of the commission’s issuance of its certificate without unduly delaying the project.”

The commission affirmed its original finding that Algonquin demonstrated a need for the AIM project, pointing to “executed long-term firm transportation agreements” with its 10 project shippers for the expansion’s full capacity.

The AIM project will include six new compressor units and have an expected capacity of 342,000 dekatherms/day.

Spectra Energy said the Algonquin and a related Maritimes expansion were a response to the New England governors’ initiative on new energy infrastructure. It said the AIM project will provide the Northeast “with a unique opportunity to secure a cost effective, domestically produced source of energy to support its current demand, as well as its future growth.”