PJM Markets and Reliability Committee Preview

Below is a summary of the issues scheduled to be brought to a vote at the Markets and Reliability Committee this Thursday. Each item is listed by agenda number, description and projected time of discussion, followed by a summary of the issue and links to prior coverage in RTO Insider.

RTO Insider will be in Wilmington, Del., covering the discussions and votes. See next Tuesday’s newsletter for a full report.

2. PJM Manuals (9:10-9:25)

Members will be asked to endorse the following manual changes:

Manual 10: Pre-Scheduling Operations. The changes define a generator planned outage and restrict scheduling planned outages during peak maintenance season; define generator maintenance outage; define unplanned outage and clarify notification requirements; and correct the definition of non-synchronized reserve.
Manual 11: Energy & Ancillary Services Market and Manual 28: Operating Agreement Accounting. Changes reflect Tariff revisions approved by FERC regarding the energy market offer cap that went into effect Monday (ER16-76). Cost-based offers for incremental energy are capped at $2,000/MWh and allowed to set prices. Costs above that cap will be recovered through an after-the-fact review and make-whole payments. Market-based offers for individual units are allowed to rise with their cost-based offers. (See PJM Members OK $2,000/MWh Energy Market Offer Cap.)
Manual 14D: Generator Operational Requirements. Revisions reflect the annual review of the manual as well as revisions to the reactive testing process. Revises and renames the wind farm communication model, making it applicable to all jointly owned resources to avoid confusion among control room operators. Adds definitions of generator planned, maintenance and forced outages.
Manual 39: Nuclear Plant Interface Coordination. Updates are the result of a three-year review and include safe shutdown loading requirements developed by the nuclear generation owners user group.

3. LOAD FORECASTING ENHANCEMENTS (9:25-9:40)

The committee will be asked to approve changes to Manual 19: Load Forecasting and Analysis that will allow distributed solar generation to be included in the load forecast. (See “Distributed Solar to be Included in Load Forecast” in PJM Planning and TEAC Briefs.)

4. LOAD FORECAST UPDATE (9:40-10:00)

Members will be asked to endorse amendments to Manual 18: PJM Capacity Market and Manual 18B: Energy Efficiency Measurement and Verification to accommodate the inclusion of energy efficiency resources in the capacity market when those resources are reflected in the peak load forecast. (See “Members Ask for More Time to Consider EE Resource Manual Changes” in PJM Markets and Reliability Committee Briefs.)

5. UNDERPERFORMANCE RISK MANAGEMENT IN RPM/CP (10:00-10:15)

Bob O’Connell, representing PPGI Fund A/B Development, will present a problem statement and issue charge related to underperformance risk management in the capacity market. It would evaluate ways for generators to minimize such penalties by netting them against over-performing generators. (See PJM Generator Risk Proposal Faces Resistance.)

6. DEMAND RESPONSE NON-SUMMER CAPACITY COMPLIANCE CLARIFICATION (10:15-10:30)

The committee will be asked to approve Tariff and manual revisions that clarify the process for establishing customer baseline load for non-summer demand response under Capacity Performance rules. (See “Members Endorse Method for Measuring Non-Summer DR” in PJM Market Implementation Committee Briefs.)

December 15, 2015

SPP Board Approves Budget, SPC Expansion

LITTLE ROCK, Ark. — SPP’s Board of Directors/Members Committee approved a $280.3 million budget and a 2-cent reduction in the RTO’s administrative fee during its year-end meeting here last week.

The board accepted the SPP Finance Committee’s proposal of a 37-cent/MWh administrative fee rate for 2016, down from this year’s 39 cents/MWh. It also accepted the committee’s budget proposal, approving both measures with the unanimous support of the Members Committee on Dec. 8.

SPP Director and Finance Committee Chair Harry Skilton said a small increase in budgeted expenses and an increase in transmission load as a result of the Integrated System’s incorporation were the two drivers behind the committee’s recommendation to lower the fee that pays the RTO’s administrative costs. (See Integrated System to Join SPP Market Oct. 1.)

“The legacy load has been dropping and is fairly flat,” Skilton said. “If it continues to be flat or goes down, we’ll have to address that.”

SPP projects a 12% increase in transmission volume to 407.2 million MWh because of the addition of the IS. The 2015 budget forecast was 353.5 million MWh.

SPP is using that 407.2 million MWh figure as one of the inputs into future projections of the fee. The RTO said its models indicate a sharp increase in the fee in 2019-2021, when it could reach the high 40s in a worst-case scenario that envisions a decrease in load and “expense growth outpacing flat transmission-service usage.” The fee is expected to gradually begin decreasing after 2021.

The 2016 budget comprises $217.1 million in operating expenses — a 3.3% increase from this year’s budget — $24.2 million in debt repayments, $17 million in FERC assessments and $22.2 million in capital expenditures. Staffing will remain unchanged at about 600.

spp Fellow director Julian Brix questioned the committee’s use of an incremental-based budget for operations expenses, instead of the zero-based budgeting that has been its norm in recent years.

“It’s difficult to keep [conducting] a zero-based budget every year. It’s become a little stale,” Skilton said.

Skilton noted that SPP’s budget is now linked to the operating plan. Ensuring the RTO’s strategic initiatives are now “synched” to the operating plan requires additional time to build the budget, he said.

“We’re going to give the incremental approach time,” Skilton said.

The operating plan places SPP’s 2016 activities into three categories: 1) major project investments, 2) major technology investments and 3) “keeping the lights on” (ongoing and incremental investments in its foundation activities).

SPP board Chairman Jim Eckelberger said information technology and keeping its organization “current and active” will drive future increases in the administrative fee. He suggested outside expertise be used to determine whether there are “cheaper alternatives” to IT maintenance costs.

“That’s probably not a bad idea, to have an outside group look at [IT and technology costs],” Skilton said.

Board, Members Review Survey Feedback

The year-end board meeting also featured SPP staff’s annual review of its survey of the board and members.

spp In presenting the feedback to the board, SPP CEO Nick Brown pointed to a difference in perception between the board and members in two areas: the board’s effectiveness in representing the organization to the stakeholder community, and the board’s evaluation and development of the CEO. The board gave itself scores of 4.8 and 5 on a five-point scale, respectively, while members scored the board at 4.2 and 4.

Brown assured his audience his performance review by the board is “quite thorough.”

“We debate the goals of the organization and whether we’re achieving those goals,” he said. “This year, we finished at 10 o’clock at night, which we’re proud of, because we normally finish around midnight.”

Of the 28 members of the Board of Directors/Members Committee, seven board members and 11 committee members submitted responses.

The board saw improved scores in 10 of its 12 metrics, with one rating dropping and another unchanged.

Stakeholder Survey

In addition to the board/members survey, SPP sent out 2,700 stakeholder surveys and received 410 responses, double the number received last year.

spp The score for the organizational groups’ overall effectiveness was down from 4.4 to 4.2, just above the average for the survey’s seven-year life. Individually, the 25 committees and working groups received scores ranging between and including 3.5 and 4.8.

Brown said the survey results will be reviewed by the Corporate Governance Committee before making any recommendations to the Oversight Committee to approve rosters.

“We’re asking each organizational group to look at this information and make any recommendations,” Brown said.

The average score went up in 2015 for all 10 services surveyed and three of four questions about SPP staff with one unchanged.

Michael Desselle, SPP’s chief compliance and administrative officer, said when respondents were asked about SPP’s performance in relation to other RTOs, the positive comments exceeded negative comments 132 to 100, though not all comments received in the negative category were actually negative.

“Some of the comments were the usual complaints,” Desselle said, referring to the inability to schedule day-ahead tags, staff pushing an agenda and the inability to view online presentations during SPP’s key committee meetings.

RE Survey

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About half of the 88 Regional Entity compliance contacts registered in the SPP RE’s compliance database participated in a third survey asking their assessments on seven RE programs. The 46 respondents rated all programs with average scores in the “meets expectations” range, between 3.2 and 3.6 on the five-point scale.

Of the 21 respondents who interact with other REs, 5% rated the SPP RE somewhat worse, 19% rated it about the same, 43% rated it somewhat better and 33% rated it much better.

CPP Task Force Readies Official Comments to EPA

The Strategic Planning Committee asked for board and member input on its proposed response to EPA’s Clean Power Plan and the default federal implementation plan.

A task force reporting to the SPC is using a staff white paper on the proposed federal plan to formulate its response to EPA, which is due Jan. 21. Staff worked with the task force and other stakeholders to propose revisions that would mitigate the FIP’s impact on grid reliability, should it be implemented upon any states.

The draft white paper calls for regional system operators to review compliance plans to mitigate the CPP’s impact on regional planning and grid operations; EPA consultation with planning authorities and reliability coordinators in developing federal plans; a reliability safety valve in both federal and state plans; yielding to regional or state preferences before considering a blanket mass-based or rate-based approach for FIPs; and resource owners being allowed to retain allowances for retired resources under the proposed mass-based plan.

SPC Chair Mike Wise, senior vice president of commercial operations and transmission for Golden Spread Electric Cooperative, said SPP staff is also drafting the formal comments, which the committee will approve.

“We’re open to comments from everyone,” Wise told the board and members. “You should be represented on this.”

Lanny Nickell, vice president of engineering for SPP, said staff’s comments on the FIP have “keyed on the impacts to the Integrated Marketplace and any reliability implications.”

“We were able to achieve a high level of consensus on the comments,” he said.

Expert Panel Begins Evaluations for Walkemeyer Project

Director and Oversight Committee Chairman Josh Martin said the 2016 industry expert panel is in place and ready to evaluate responses to SPP’s first competitive solicitations under FERC Order 1000. The panel will evaluate bids for the 21-mile, Walkemeyer-North Liberal 115-kV project in Kansas. (See “Board Approves New Order 1000 Evaluation Panel” in SPP Board of Directors/Members Committee Briefs.)

Martin said the panel has 90 days to do its work and is on schedule to present its results to the board and members during the April board meeting.

SPC Grows to 13 Members

The Board of Directors’ consent agenda included two revisions to its bylaws and a membership agreement change, all of which received unanimous support from the Members Committee:

The first revision expanded the SPC’s membership to 13 seats, adding a transmission-owning and a transmission-using member each to ensure “appropriate geographical representation.” The committee will now be composed of five transmission-owning members, five transmission-using members and three directors.
The second revision includes an amendment clarifying that SPP should not credit assessment fees for network-integration or point-to-point service over and above the amount of members’ monthly assessment. This over-crediting resulted in some members receiving credits against other portions of their transmission settlements statements, a $1.5 million error the RTO caught in March. SPP will file the bylaw change with FERC, where it may face opposition from two members benefitting from the current rules — Nebraska Public Power District and Kansas City Power & Light — which contend the RTO is crediting correctly.
The board also approved amendments to SPP’s membership agreement for Central Power Electric Cooperative and Mountrail-Williams Electric Cooperative, two Basin Electric Power Cooperative members embedded within the Integrated System. The amendments, which address dispute resolution, withdrawal rights and the obligation to build, mirror previously approved amendments for Basin Electric.

All three agenda items were recommended for approval by the Corporate Governance Committee in October.

December 15, 2015

MISO Stakeholders OK Redesign, Begin Implementation

By Amanda Durish Cook

CARMEL, Ind. — The Advisory Committee unanimously adopted a sleeker stakeholder process last week, shedding a structure that MISO stakeholders have called cumbersome and hard to follow.

The redesign merges overlapping stakeholder groups and closes out completed task forces while re-evaluating existing meeting schedules. Seven groups were absorbed or consolidated in the redesign.

The model also puts an emphasis on holding joint meetings when two entities are addressing the same issue and reducing repetitive presentations through the use of MISO’s monthly informational forum. The new, pared-down process also calls for entities to cancel meetings when there is nothing pressing on the agenda.

Michelle Bloodworth, executive director of external affairs, said there was a surprising level of consensus among stakeholders. She said that it was “one of the most collaborative” interactions MISO and its stakeholders have had.

“I felt like we were on the same page,” said Bloodworth, who led the redesign effort after joining MISO in March from the American Natural Gas Association.

The undertaking launched in June with a white paper presented to the Steering Committee, including a straw man proposal as a starting point for discussions. The structure was finalized in a Nov. 3 stakeholder workshop. (See MISO Straw Man: Eliminate 10 of 27 Committees.)

‘Not Doing Extra Work if You Don’t Have to’

“I think we’ve got things pointed in a better direction, from my perspective,” said Kevin Murray, chair of the Advisory Committee.

Libby Jacobs, president of the Organization of MISO States, said it was an example of “an excellent partnership among stakeholders and MISO.”

“As the environment has matured, it was a needed measure. It’s the first step of a program of continuous improvement,” Jacobs said.

Kent Feliks, Advisory Committee representative for the Power Marketer sector, said the redesign contained “pretty logical expectations of not doing extra work if you don’t have to.”

Three-Month Transition

The redesign is expected to be implemented over the next three months. The Steering Committee will handle the day-to-day transition and make reports to the Advisory Committee, which will oversee the implementation’s general progress.

The Advisory Committee has committed to having quarterly face-to-face meetings, as opposed to the near-monthly schedule it had been operating under. Other parent entities will assess and then settle on a meeting frequency.

A day after last Wednesday’s Advisory Committee meeting, the Steering Committee voted to give parent committees authority to evaluate their subordinate groups under redesigned guidelines.

“From our perspective, this is a great step to making sure stakeholders are well positioned to address the big challenges our region faces,” Bloodworth said. “As you look at the Clean Power Plan and resource adequacy, it’s important that we’re able to have high-level policy discussions to map out what the challenges are and what MISO needs to do to address those challenges.”

The Right People in the Room

Bloodworth said the redesign is intended to separate policy discussions from technical engineering reviews.

“It’s making sure the right people are in the room at the right time,” she said.

The redesign requires the leaders of top committees to undergo training on meeting rules of order, what issues require voting action and how to conduct a vote.

“It makes a big difference in the efficiency of the meeting,” Bloodworth said.

At its meeting, the Advisory Committee also unanimously approved a pair of motions related to the redesign. As a result, the Seams Management Work Group will be kept a free-standing work group under the Market Subcommittee and the Regional Expansion Criteria and Benefits Task Force will continue to report to the Advisory Committee rather than to the Planning Advisory Committee.

“We can’t solve every issue. What we hope is by setting priorities, we’re going to focus on the most important things, which is good for MISO and good for its stakeholders,” Bloodworth said.

December 15, 2015

MISO Monitor Auditing Tx Outages that Caused Price Spikes

Texas congestion caused by outages and Minnesota’s under-scheduling of wind resources were the lone causes for concern in an otherwise stable quarter bolstered by mild temperatures, MISO’s Independent Market Monitor reported at last week’s Markets Committee of the Board of Directors.

Monitor David Patton said that at the beginning of November, gas prices were under $2/MMBtu and remained consistently low due to reported high levels of natural gas storage. Inexpensive gas contributed to lower overall instances of congestion.

“I believe that’s the lowest average monthly price we’ve seen,” Patton said.

Real-time energy prices were down 26% from 2015 at $25.08/MWh.

However, the Texas Hub faced price spikes in October and November caused by a combination of forced and planned generation and transmission outages. Hourly prices hit $350/MWh on Nov. 3 and 5, rising to about $500/MWh on Nov. 6, causing MISO to declare a local transmission emergency and recall a planned transmission outage.

MISO said October’s outages were examined and ultimately found legitimate but that it is continuing to examine the November outages.

“Because most of these price spikes are being driven by generation outages, we’re going to audit some of these outages,” Patton said.

Meanwhile, Minnesota Hub prices were driven down with high wind production, but a failure to predict all of the wind output created congestion. Patton reported that during high wind output, “congestion was frequently severe enough to generate negative real-time prices at the Minnesota Hub.” Wind day-ahead scheduling in the Minnesota market was approximately 11% lower than real-time wind output.

Patton said wind under-scheduling remains a “persistent phenomenon.”

Shawn McFarlane, ‎executive director of strategy and enterprise risk management, said MISO’s November load averaged 67.8 GW, down 7.7 GW from last November’s colder-than-usual temperatures.

— Amanda Durish Cook

December 15, 2015

Company Briefs

The El Paso City Council last week voted unanimously to reject a $71.5 million rate increase by El Paso Electric.

Unless the city and utility can negotiate a settlement by Dec. 15, which is the deadline for reaching an accord with the city, the dispute will head to the Public Utility Commission of Texas for a final decision.

The utility filed a rate increase request with the city on Aug. 10, asking for a 12% increase for residential and small commercial customers, a 24% rate increase for solar residential customers and large increases for government agencies and other classes of customers.

More: El Paso Times

Rockland Capital Illinois Plant $2 Million Behind on Taxes

Rockland Capital, owner of the Grand Tower Energy Center power plant in Illinois, told The Southern Illinoisan in a statement last week that it is “not in the financial position to make tax payments based on the current assessment.” The company has failed to pay more than $2 million in property taxes on the 490-MW combined-cycle plant to Jackson County.

Rockland has argued for a 93% reduction in assessed value, from $100 million to $7 million. The company has been battling the county on the issue for two years. “Despite our repeated attempts to negotiate in good faith — including initiating mediation efforts with a well-respected retired Illinois judge of many years and making the assessor’s office aware of the plant’s difficult financial situation — our efforts have been rebuffed,” the company said in a statement.

Jackson County Treasurer Sharon Harris-Johnson said the company has until Jan. 18 to pay the tax arrearage, which is accumulating interest. If it does not pay its back taxes by the deadline, she said, it will be subject to a tax sale.

More: The Southern Illinoisan

OCC Hearings Begin for PSO’s $169M Rate Case

The Oklahoma Corporation Commission is focusing on details of a settlement Public Service Company of Oklahoma entered into with EPA over compliance with emissions rules, which is at the heart of the utility’s request to raise rates to pay for $169 million in environmental upgrades.

Steve Fate, PSO’s director of business operations support, said the utility entered into the EPA settlement to resolve part of a federal plan imposed on Oklahoma for regional haze. The utility plans to retire one coal unit in 2016 and another coal unit in 2026 at its Northeastern Station plant to comply with the regulations.

The utility is seeking to boost customer bills by 14% next year to cover its compliance costs.

More: The Oklahoman

Xcel’s SPS Labor Force Requesting Market-Equity Raise

More than 800 employees of Xcel Energy’s Southwestern Public Service subsidiary are requesting a wage increase to keep pace with the pay of Xcel’s other operating units, a demand the company called “unreasonable and unachievable.”

Employees represented by the International Brotherhood of Electrical Workers say they are not being paid equal wages compared to employees at Xcel’s other units, including Denver-based Public Service Company of Colorado.

“Workers in our area have not had an increase in two years,” said Robert Melton, IBEW business manager. “Workers here just want to be paid equal to what everyone else with their skills are being paid.” Negotiations are ongoing.

More: Carlsbad Current-Argus

Kemper Project Costs Continue to Climb

Mississippi Power has announced it will spend another $62 million finishing construction on a coal-gasification power plant in eastern Mississippi, pushing the total cost to almost $6.5 billion.

The company said ratepayers would not be liable for the new set of overruns, which were needed to finance changes and repairs after the Kemper County power plant underwent test runs. About $4.2 billion of the project is eligible for recovery in rates. Southern Co., the utility’s parent, will write down $2.3 billion of the $6.5 billion project.

More: Associated Press

Municipal-Owned Power Plant Shuttered After 100 Years

The municipally owned Peru power plant, a coal-fired generator that has stood since 1911 and was the sole supplier of electricity to the northern-central Indiana city until the 1970s, will retire on Jan. 1.

The Peru Utilities Service Board voted Dec. 4 to shut down the plant, saying it would have been too expensive to upgrade it to comply with regulations introduced under the Clean Power Plan. The plant has only operated for a few days a year since 2009.

Now Peru’s utilities board needs to decide whether to demolish or mothball the facility. A study commissioned by the utility has estimated it would take $4.8 million to raze the plant, while a mothballed facility would cost $140,000 annually to maintain.

More: Kokomo Tribune

NRG to Shutter Illinois Coal Plant

nrg One of the Illinois coal-fired plants that NRG Energy bought out of bankruptcy last year won’t be bidding in PJM’s upcoming capacity auction and will likely be shuttered in a few years. The company said its 510-MW Will County Unit 4 is struggling to be competitive in a wholesale market dominated by low-cost natural gas and an increasing amount of low-cost renewables.

The unit is one of two remaining at the plant. Unit 3, a 251-MW coal-fired unit, was closed by NRG earlier this year. At that time, NRG said it would continue running Unit 4 as long as it was profitable. But the notice that the unit would not be participating in the capacity auction in practical terms means a permanent closure is imminent. The unit has 70 employees.

“After analyzing forecast market conditions, NRG has determined that we cannot justify continued operation of Will County Unit 4 … beyond May 2018,” NRG spokesman David Gaier wrote in an email.

More: Crain’s Chicago Business

GE to Supply Turbines for Pa. Power Plant

General Electric will supply two gas turbines for the 1,029-MW Caithness Moxie Freedom power plant in Luzerne County, Pa., which will generate enough power for nearly 1 million homes when it becomes operational in 2018.

The combined-cycle plant is being jointly developed by Moxie Energy and Caithness Energy.

GE Energy Financial Services is offering $592 million in senior secured credit facilities for the plant’s construction and operation.

More: Power Technology

PPL Names Bergstein Vice President, Treasurer

ppl PPL has named Joseph P. Bergstein its treasurer and vice president for investor relations, effective Jan. 1.

The 16-year veteran Bergstein was previously vice president for investor relations and financial planning. The move is part of a plan to consolidate functions within PPL’s corporate finance organization.

Bergstein takes the place of Mark Wilten, vice president, treasurer and chief risk officer, who will be leaving the company Jan. 31.

More: PPL

GM Assembly Plant to Tap Clean Energy in 2016

The General Motors assembly plant in Arlington, Texas, next year will derive 40% of its electricity from wind power, enough to build up to 125,000 trucks a year.

GM announced Dec. 10 it has signed an agreement with EDP Renewables of North America to purchase power from its Hidalgo Wind Farm in South Texas. Fifteen of the wind farm’s 260-foot tall turbines will be dedicated to GM’s energy needs, the company said.

More: The Dallas Morning News

December 15, 2015

NERC: Tepid Demand, DR Growth Ensure Winter Readiness

By Ted Caddell

An increase in demand response, low load growth and market incentives have the nation’s power system in good shape heading into the winter, NERC said in its Winter Reliability Assessment last week.

“NERC-wide, sufficient margins are in place. Most assessment areas experienced little to no load growth, and demand response programs … continue to grow,” Tom Coleman, NERC’s director of reliability assessments, said during a conference call Thursday. “Winter of 2015 posed some challenges, but the system addressed these conditions, learning … from previous years’ lessons.”

nerc

“Total internal demand continues to trend downwards and is significantly augmented by the advancement of new energy efficiency programs, distributed energy resources and behind-the-meter generation (BTMG) resources that are being incorporated into planners’ load models and forecasts,” the report said.

While total DR is increasing 2.6 GW to almost 25 GW, NERC reported, resources available in the winter have doubled from about 10 GW to 20 GW.

“The addition of new demand response programs continues to help address potential resource adequacy concerns for areas during their winter peak,” according to the report. “These programs vary greatly in their availability and load reduction capability, but often provide the flexibility needed during extreme conditions.”

The winter-peaking Midwest Reliability Organization-Saskatchewan Power region boosted its winter DR to 244 MW from 158 MW a year ago. PJM, which formerly had only summer DR, has added a year-round product and will have 525 MW available for the winter peak, versus last winter’s 43 MW. (See related story, SPP: Ready for Winter.)

Coleman noted the increased coordination between natural gas suppliers and generators this year is a big improvement over the past two winters, when some generators in ISO-NE and PJM experienced difficulty obtaining gas in times of high demand.

He cited FERC’s approval of New England’s 2015/16 Winter Reliability Program, which established incentives for generators to procure on-site fuel before winter and another program encouraging generators to sign contracts for LNG. A dual-fuel testing and commissioning program will also provide incentives for generators.

NERC also noted readiness improvements in PJM, including pre-winter generator testing and winter preparation checklists as well as better communication on fuel status and improved coordination with natural gas pipelines.

Despite a net loss of 6,163 MW of installed capacity since last winter, NERC said PJM is in good shape, with an anticipated reserve margin of 40%, well above its own 15.6% requirement. (See PJM Prepared for Winter Load, Mild Temps Expected.)

“Because of the nature of the [three-year] forward capacity market in PJM,” NERC said, the benefits of its Capacity Performance rules “will not be seen until the winter of 2016/17.”

December 15, 2015

MISO Board of Directors Briefs

MISO’s Board of Directors last week approved the 2015 Transmission Expansion Plan, which calls for $2.75 billion in spending on 345 projects through 2024.

Board member Michael Evans said MTEP15 was shaped by more than 40 pages of stakeholder comments. “I think it got a thorough vetting and we’re happy to see the level of interest from stakeholders,” he said.

MTEP15 includes MISO’s first competitively bid project, the Duff-Coleman 345-kV line in Southern Indiana. MISO will fund the $67.4 million cost of the Duff-Coleman portion while PJM be responsible for the $85.3 million needed for the double circuit 345-kV tie-in to Rockport.

Evans said MISO’s competitive bidding is “an impressive process, but it’s also a new process so I expect we’ll encounter some bumps along the way.” He assured the room that the bidding, which begins next month, will comply with FERC Order 1000.

Evans added the projects that “slipped” and didn’t make the final plan were typical of the process and won’t affect reliability.

“Lest we forget, the volume of work that goes into this is huge. Some 60 meetings were held over the last 18 months to get this thing done,” Evans said.

MISO South’s share of approved projects represents $1.4 billion, more than half of the total portfolio.

It includes the $122.5 million East Texas economic project, a 230-kV transmission line from Lewis Creek to a new 345/230-kV substation and the rebuild of the Newton Bulk-Leach 115-kV line.

Also of note in the plan are Louisiana’s $122 million Schriever to Bayou Vista 230-kV line, the $114 million New Plains-National 138-kV line in Upper Michigan and the $97.8 million construction of two 120/41.6-kV substations to serve load in Ann Arbor, home of the University of Michigan.

“There’s an awful lot of good stuff in there. When your Christmas gifts are wrapped, you might want to read it,” board member Judy Walsh said of the 429-page document.

“These investments in the region will continue to position MISO for future challenges and changes in the industry,” said CEO John R. Bear. “As our region grapples with the Clean Power Plan and a shifting generation portfolio, MISO’s transmission planning efforts are even more important. Ensuring a robust transmission system will allow us to meet these challenges in a way that protects reliability.”

With the addition of MTEP15, transmission investment in the footprint will increase to 863 projects totaling about $12.9 billion since 2003.

Board OKs 2016 Budget; MISO Overspends by a Slight Margin in 2015

MISO will exceed its 2015 budget by as much as 1.3%, the Board of Directors was told last Thursday.

As of October, MISO had operating expenses of $185.2 million, an overrun of $2.4 million, reported Tonya Brown, executive director of finance and corporate services. The RTO is projected to spend an extra $1.8 million to $2.8 million by year-end.

During the first 10 months of 2015, spending on capital expenses came in under budget by $1.6 million or 7.8%; MISO spent $19.1 million instead of the allotted $20.7 million. However, the grid operator is forecasted to spend $24 million to $24.2 million instead of the budgeted $23.5 million by the end of the year.

The board unanimously approved the 2016 spending plan, a $225 million operating budget and a $31 million capital budget.

Cash reserves are predicted to drop over the next five years, reducing the expected $79 million MISO will have at the end of this year to $13.5 million in 2019 before rebounding to $46 million in 2020. Factors contributing to the reduction are the conclusion of recovery of depreciation on ancillary markets and the 2016 start of principal payments on debt.

Board member Thomas Rainwater reported that MISO’s costs have grown at a compound average rate of 3% while load has increased 30% over the past decade.

New Board Members Elected

MISO’s board agreed to add two new members to its Board of Directors: former general manager of Pasadena Water and Power Phyllis Currie and former vice president of transmission operations for Pacific Gas and Electric Mark Johnson. Additionally, board member and former chairman and CEO of the Boston Stock Exchange Michael Curran was re-elected to another three-year term, and board member Eugene Zeltmann, whose term expired, announced he would not seek another term. With the new appointments, MISO’s board expands from seven to nine seats.

— Amanda Durish Cook

December 15, 2015

Lead or Follow?

Tx Developers Urge ‘Proactive’ Role; OMS: Respect State Jurisdiction

By Amanda Durish Cook

CARMEL, Ind. — MISO stakeholders are deeply split over how proactive the RTO should be in helping its 15-state region comply with the Clean Power Plan.

At an Advisory Committee “hot topic” discussion last week, some stakeholders cautioned MISO against taking policy positions, while others said the RTO should help guide the states to the most economical compliance options.

“MISO is going to have to live with what the states decide,” said Texas Public Utility Commissioner Kenneth Anderson, whose state is among 11 in MISO whose officials have joined in legal challenges to the EPA rule. “Until real decisions are made, you run the risk of running into political minefields. Whether we do rate-based or mass-based [compliance], there are going to be very different consequences.”

No Advocacy Role

The Organization of MISO States also urged MISO to follow rather than attempt to lead the states. “Ultimately, MISO will be charged with incorporating the states’ decisions on CPP compliance into its markets, planning and operations. If those decisions result in some states choosing to ‘go it alone,’ some choosing to be trading-ready, some choosing rate-based or mass-based compliance, or taking legal action against the EPA, such decisions are the states’,” OMS said in its written comments. “MISO should focus on how to best operate a reliable system in these conditions.”

The End-Use Customer sector agreed that MISO’s role should “be limited to providing information and analysis on the cost and reliability impacts” of compliance options “rather than taking on an advocacy role.”

But others urged MISO to help steer the states, with the Environmental sector saying the RTO should “encourage states to adopt consistent, complementary plans that include coverage of new sources and facilitate broad trading opportunities.”

The Public Consumer sector said MISO should provide each state a comparison of rate-based and mass-based compliance “so the lowest-cost and lowest-risk compliance options are clearly identified.”

The Competitive Transmission Developers sector also pushed for a proactive role, saying “it is time for MISO’s role to shift from information dissemination to collaboration and active planning to facilitate state compliance efforts.”

“Without a proactive and accelerated RTO planning effort to ensure necessary transmission infrastructure can be put in place across the region, the ability of each member state to meet compliance requirements could be heavily restricted (if not jeopardized) due to reliability concerns, in addition to the potential loss of efficiencies currently provided by the MISO market,” it said.

Stakeholders also were divided on whether MISO should file comments with FERC on EPA’s proposed federal implementation plan. “MISO has not made any decisions on if we will comment,” said Kari Bennett, MISO’s senior corporate counsel.

Bennett said MISO will not seek to advocate or condemn any state compliance plans and that modeling would be based on “dispassionate calculations.”

But MISO Director Eugene Zeltmann said it might be difficult to entirely wipe out any public policy in CPP modeling. “There’s going to be some very sterile modeling going on,” he said.

MISO Role in Trading

Although there is wide agreement that compliance will be least costly if it includes a broad regional emissions trading program, MISO’s role in trading is uncertain.

The Transmission Owners sector said MISO should look to existing programs such as the Midwest Renewable Energy Tracking System, rather than developing its own trading platform. “There are existing markets … for trading allowances and credits,” the TOs said. “These markets will perform very well.”

The Independent Power Producers sector said MISO “should not have a role in implementing any multi-state implementation plans,” saying both the Regional Greenhouse Gas Initiative and California’s cap-and-trade program “require no interface with the RTO/ISOs beyond allowing suppliers to price the cost of emissions compliance into their offers.”

Many Unknowns

Next month, MISO expects to release its near-term analysis, which will evaluate the implications of various compliance paths based on models used in prior analyses of the draft CPP, with updates reflecting the final rule.

The mid-term analysis, expected to run through June, will use new models based on the most relevant compliance paths from the near-term study to determine likely resource buildouts and their locations under three separate futures. It will be the foundation for transmission development under the 2017 MISO Transmission Expansion Plan.

A long-term analysis, which will run through late 2018, will seek to develop transmission overlays needed to implement state compliance plans. (See MISO Unveils CPP Study Scope, Will Deliver Preliminary Near-Term Results Next Month.)

With state compliance plans unknown, there are limits to what MISO can model, said Clair Moeller, MISO executive vice president of transmission and technology.

Most states are expected to seek a one-year delay from EPA, meaning their compliance plans won’t be filed until November 2017, when MISO will be in the middle of its long-term analysis. EPA will impose a federal plan on states that fail to present an acceptable plan of their own.

Detailed modeling would have to wait “until the states start to tip their hand one way or the other,” Moeller said. “We’re going to run out of time like we always do. There’s going to be a panic in 2017, but we’re going to do all we can.”

Challenges will arise to fit state plans into regional markets, stakeholders said. Several AC members pointed out that Wisconsin is the only state within MISO whose borders are completely within the RTO’s footprint.

“I don’t think we’re going to model our way into quantitative comfort,” Director Michael Curran said. “We may model ourselves to a level of frustration with each other.”

More transmission will likely be needed under any compliance scenario, several stakeholders said.

“MISO should not wait for all state plans to be filed before beginning work on the transmission studies, including overlay studies,” the TOs said, urging MISO to quickly identify “no regrets” transmission projects likely to be needed under a variety of scenarios.

MISO’s Environmental sector pointed out that the Midwest is home to the nation’s best onshore wind resources. “Planning to quickly, affordably and reliably tap into these wind resources and deliver them to market can be done more effectively if interregional planning processes are improved,” it said. “More action is necessary to identify the transmission necessary to access and transport the energy to MISO and other regions.”

Modeling Priorities

Some stakeholders expressed dissatisfaction with MISO’s modeling priorities.

The TOs said MISO should focus on “providing an impartial comparison of the different means and approaches to full compliance and its impacts on reliability and efficiency of the grid.” They said that scenarios for partial and accelerated compliance would provide only “marginal” benefits.

“The accelerated compliance scenario, while still possible, is highly unlikely, even with technology breakthroughs, given the short timeline,” it said. “Even if, ultimately, more aggressive long-term goals for greenhouse gas abatement were to be adopted, they would likely be sought through steeper reductions in the outer years. Second, a partial compliance scenario may have some value, particularly if scoped as a delayed implementation scenario to account for legal challenges, but MISO should avoid spending too many resources and/or time on this.”

The End-Use sector said MISO should increase its coordination with neighboring SPP and PJM and “benchmark” the results of its analyses against those of the other regions. The sector said MISO should expand its modeling to include not only cost estimates for generation and transmission that may be needed, but also an evaluation of whether the region has sufficient natural gas infrastructure to accommodate the anticipated increase in gas-fired generation.

The Environmental sector said MISO should “more comprehensively model compliance strategies that rely on increasing energy efficiency (EE).”

“Without modeling high EE scenarios, states will not be able to understand the cost and emissions implications of expanding their EE programs as a strategy to comply with the CPP,” it said. “For example, in rate‐based compliance approaches, excluding EE from the supply will artificially constrain the supply of emissions reduction credits (ERCs) and increase ERC prices. Modeling EE simply as lower demand growth would not allow for its incorporation into a rate‐based plan in this manner, and thus would skew model results.”

Changes Coming

The Transmission-Dependent Utilities sector said MISO may need to change some market rules. It said a seasonal capacity construct, now under discussion, could aid compliance. (See MISO Proposes Two-Season Capacity Market, Appoints Team to Address Ill. Zone.) “Entities may choose to only run their coal-fired units during peak demand periods in the summer, and use natural gas as much as possible in shoulder periods,” it said.

It also said MISO should be prepared to replace spinning reserves, black start services and reactive power services provided by baseload units that may retire or limit operations.

The shift from coal- to gas-fired generation argues for a move to a multi-day resource commitment, it said.

“The current next-day economic commitment process can lead to higher costs by not committing long-lead time resources, which are economical over longer periods. A longer commitment process will help to address this issue and improve the economic operation of gas-fueled generation by providing a longer lead time to procure fuel.”

The competitive transmission developers said MISO should “conduct accelerated discussions” with stakeholders on how the RTO will allocate costs of transmission improvements needed for compliance. “Currently, there is too little flexibility in the MISO Tariff to allow for sub-regional or state-based cost allocation for public policy projects, which could impede necessary development if left unaddressed,” they said.

December 15, 2015

Federal Briefs

The landmark climate deal reached in Paris on Saturday will have wide-ranging impacts on utilities and other industries, analysts say. More than 190 countries pledged to reduce their emissions of carbon and other heat-trapping gases following two weeks of negotiations.

Investment funds will move their portfolios from coal and oil to renewables — reflecting utilities’ shifting generation mix — while inventors will seek breakthroughs in energy storage and carbon capture technologies, and automakers will have to expand production of electric cars.

Business leaders have long complained that the lack of a clear political message on global warming was hamstringing their investment decisions.

“We have an opportunity to build a new economy, and business is poised to help make it happen,” said Richard Branson, CEO of the Virgin Group. “The ‘Paris effect’ will ensure the economy of the future is driven by clean energy.”

“It’s very hard to go backward from something like this,” agreed Nancy Pfund, managing partner of DBL Partners, a venture capital firm. “People are boarding this train, and it’s time to hop on if you want to have a thriving, 21st-century economy.”

The success of the Paris meeting was in stark contrast to the failure of the 2009 talks in Copenhagen. But the commitments made last week won’t be enough to meet the agreement’s goal of keeping global warming “well below” 2 degrees Celsius (3.6 degrees Fahrenheit).

More: The New York Times; Associated Press; The Washington Post

NRC Grants 20-Year Extension to FirstEnergy’s Davis-Besse

Despite its own characterization of the plant’s history as troubled, the Nuclear Regulatory Commission issued a 20-year license extension to FirstEnergy’s Davis-Besse nuclear plant in Ohio. NRC reviewed the plant’s operational record for five years, substantially longer than most license-extension reviews.

“We had a couple of issues that took a little longer to understand the full ramifications,” said Sam Belcher, FirstEnergy’s chief nuclear officer.

Davis-Besse experienced a partial loss of coolant in 1985, cracks in its containment building and serious corrosion of the plant’s reactor head in 2002, contributing to its becoming a target of anti-nuclear activists such as Terry Lodge, who called Davis-Besse “a contrivance of regulatory neglect and corporate welfare.”

More: Toledo Blade

NRC Approves Continued Indian Point Operations

The Nuclear Regulatory Commission has told Entergy it can continue to operate the Indian Point nuclear power plant’s Unit 3 under its existing license while its license renewal review continues.

Unit 3’s 40-year license would have expired at midnight on Saturday had Entergy not applied for a license renewal eight years ago, the company said. Entergy can continue to operate the plant in Buchanan, N.Y., under the federal government’s “timely renewal” provision and until NRC makes a final determination on the company’s license renewal request.

The other operating plant at Indian Point, Unit 2, received a similar approval from NRC in September 2013 prior to it entering the period beyond its initial 40-year license.

More: Entergy

NRC Says Indian Point Trip due to Bad Fan Breaker

A faulty electrical breaker controlling a roof fan caused last week’s trip at Indian Point Unit 2, according to the Nuclear Regulatory Commission.

The commission said operators at the New York plant manually shut down the reactor Dec. 5 when the faulty breaker caused a drop in voltage to the mechanisms controlling about 10 of the reactor’s control rods. That caused those rods to drop into the reactor, slowing the reaction and trigging a shutdown.

Operations at neighboring Unit 3 were unaffected.

More: Cortlandt Daily Voice

FERC Tells Atlantic Coast Pipeline to Find Alternate Routes

ferc FERC has told the developers of the $5.1 billion Atlantic Coast Pipeline project that they should look for alternative routes through the Monongahela and George Washington national forests on the West Virginia-Virginia border.

“To ensure that a complete and thorough evaluation of the ACP is presented in the draft environmental impact statement, we request that Atlantic identify and assess an alternative pipeline route across the national forests,” FERC said in a letter to Dominion Resources, the pipeline’s developer. FERC issued the directive after consulting with the U.S. Forest Service.

Dominion said it was not surprised by the FERC notice. “Our goal from the beginning has been to develop a route that meets the critical energy needs of our public utility customers with the least impact on people, the environment and historical and cultural resources — including locations where it crosses the working forests,” a Dominion spokesperson said. The 542-mile pipeline would deliver natural gas from Appalachian shale formations to North Carolina.

More: Charlotte Business Journal

FERC Turns Down Request for Further Pipeline Study

FERC has turned down a request by landowners, local governments and environmental groups in Virginia and West Virginia to conduct a cumulative impact study of several proposed pipeline projects that would cross the region.

FERC said there was no precedent for such a study, which had been requested by the Blue Ridge Land Conservancy and other groups. Advocates say such a study could establish standards for multiple projects being cut through wilderness and farmlands.

“With the recent exponential increase in applications to FERC for new interstate pipelines to transport Marcellus Shale natural gas, FERC’s traditional project-by-project [National Environmental Policy Act] review has proven increasingly ineffective,” said the Water and Power Law Group.

More: The News Virginian

FERC to Consider NEXUS Ohio-Canada Gas Project

FERC is being asked to issue a certificate of convenience to a proposed natural gas pipeline that would deliver shale gas from Ohio to customers in Michigan and Canada.

The NEXUS Gas Transmission project would run 255 miles through Ohio and terminate at the Dawn Hub in Ontario. Spectra Energy is working with other pipeline, gas storage and utility companies to develop the project.

“The NEXUS project will play a key role in helping the U.S. transition to cleaner sources for generating electricity — including new power plants fueled by natural gas — as coal plants are retired due to their age and environmental regulations,” said David Slater, DTE Energy’s president of gas storage and pipelines.

More: Daily Jeffersonian

NRC Allows Entergy to Shrink Vermont Yankee Emergency Zone

The Nuclear Regulatory Commission has agreed to allow Entergy to cease to maintain the 10-mile radius emergency planning zone around its retired Vermont Yankee nuclear generating station. Entergy applied for permission to shrink the emergency zone to just the plant and its perimeter.

NRC spokesman Neil Sheehan said the company had proved it was able to contain any radiological release from the on-site spent fuel storage at the plant, which shut down at the end of 2014.

“Once the reactor is shut down, you no longer have to worry about the sudden kind of event where there’s a rupture of a steam line and there has to be immediate actions taken to protect the public,” Sheehan said. “They had to be able to demonstrate to us that they would be able to do whatever is necessary to make sure that that pool maintains its integrity so that that pool is protected.”

More: Vermont Public Radio

December 15, 2015

Study: Loss of Nuclear Plants Would Cost $1.7B Annually

By William Opalka

New York electricity customers would pay about $1.7 billion more annually over the next decade if the nuclear fleet operating on Lake Ontario shuts down, according to a new study by The Brattle Group.

The report, released Dec. 7, was prepared for three unions representing utility workers and building tradesmen in western New York.

The backdrop is the proposed shutdown of Entergy’s James A. FitzPatrick plant and the eventual closing of the R.E. Ginna plant, owned by Exelon, when a contract providing ratepayer subsidies runs out in 2017. (See Ginna Lifeline to End in 2017; Profits After ‘Unlikely’.)

nuclear Also included in the study is Exelon’s two-unit Nine Mile Point. The company has not indicated that the plant is in danger of closing but said its environmental attributes need to be recognized in the design of the wholesale market.

Nuclear supporters are trying to keep the plants running. Gov. Andrew Cuomo also has some ideas on how to keep the plants operating for the next 15 years for their air emissions benefits while New York transitions to more renewable and distributed energy in its power system. Details could be released at Cuomo’s State of the State address in January.

The three plants, with four reactors, have a combined generating capacity of 3,345 MW. They represent 7% of NYISO’s capacity but 15% of its electricity production.

The study said the plants lower wholesale electricity prices and mitigate the state’s ever-increasing reliance on natural gas for power generation. Without upstate nuclear, natural gas’ share of generation would rise from the current 40% to 54%, it said.

“This alternative generation mix would mean higher average electricity prices in New York, driven in part by energy market effects, but perhaps more importantly by the effect on NYISO capacity markets,” the study said. The power plants contribute approximately $3.16 billion to the state’s gross domestic product, account for nearly 25,000 full-time jobs (direct and indirect) and provide other benefits, such as avoiding 16 million tons of carbon dioxide emissions annually, according the report.

The plants also contribute $144 million in net state tax revenue annually, including more than $60 million in state and local property taxes.

The report was prepared for the International Brotherhood of Electrical Workers’ Utility Labor Council of New York, the Rochester Building & Construction Trades Council and the Central-Northern New York Building & Construction Trades Council.