State Briefs

Allen Harim Building 6-Acre Solar Installation

Chicken processor Allen Harim broke ground last week on a 1.57-MW solar installation. The 6-acre solar farm will supply about 11% of the energy used by its Harbeson processing facility.

The project, which will be connected with Delmarva Power & Light’s grid, will be owned and operated by Onyx Renewable Partners, which is owned by funds managed by Blackstone.

The installation is expected to produce 2.3 million kWh of power annually and reduce carbon emissions by 1,616 metric tons.

More: Sussex County Post

ILLINOIS

ICC Approves Grain Belt Express Transmission Line

The Commerce Commission last week, by a 3-2 vote, approved Clean Line Energy Partners’ proposed Grain Belt Express, an HVDC transmission line that would pass through four Midwestern states.

The ICC put several conditions on its approval, including a prohibition on expanding capacity without commission approval, completion of financing and a requirement to get commission approval if any of the estimated $2 billion cost is to be borne by ratepayers.

The 780-mile line is designed to deliver Kansas wind energy into PJM. It has also received the approvals of regulators in Indiana and Kansas. Missouri regulators rejected it, but the company has vowed to reapply there.

More: St. Louis Post Dispatch; State Journal-Register

MANITOBA

Manitoba Hydro Picks Shepherd as New CEO

Kevin Shepherd, a telecom industry veteran, has been named the new president and CEO of Manitoba Hydro. The Manitoba Hydro Electric Board recommended Shepherd for the position.

Shepherd rose through the ranks of MTS, the fourth-largest telecommunications company in Canada, and spent the last five years as president. He will assume the new position in December.

More: CBC News

MARYLAND

BGE Seeks Rate Hike to Cover Smart Meters

Baltimore Gas and Electric has applied for a rate hike for gas and electric customers to recover the cost of installing about 1.7 million smart meters. The Public Service Commission, which authorized the smart meter program in 2010, must approve the increase.

If approved, it would add about $15 per month to typical residential customers who receive both gas and electric service from the Exelon subsidiary.

“It is a very significant rate increase for our customers and our households that have combined gas and electric,” said Paula Carmody, head of the Office of the People’s Counsel. “They are asking for a profit level that’s much higher than we think is reasonable, that will likely be challenged.”

More: The Baltimore Sun

MASSACHUSETTS

DONG Offshore Wind Farm Nears Proposal

Denmark-based DONG Energy A/S is proposing a 1,000-MW offshore wind farm 15 miles south of Martha’s Vineyard, outlining its plans less than a year after the proposed Cape Wind project in Nantucket Sound suffered a stunning financial setback.

The Danish company said its Bay State Wind project would install up to 100 turbines off Cape Cod on a lease it recently acquired. DONG Energy has yet to file any applications for the projects with the federal or state government, and the transfer of the lease must be approved by the U.S. Bureau of Ocean Energy Management.

DONG Energy faces lengthy state and federal permitting processes that include environmental reviews and approvals for where its power lines would come ashore. It would take about three years to build the wind farm, and the first phase could include 30 to 35 turbines and be in service by early next decade.

More: The Boston Globe

Proposed Kinder Morgan Pipeline Draws Opposition

FERC Finds ‘No Significant Impact’ from NE Pipeline Expansion.)

State Rep. Garrett Bradley of Hingham filed a bill, which would convey the necessary easements to Tennessee Gas. Sandisfield-area lawmakers refused to file the bill because it would require the removal of protected land from the shelter of Article 97 of the state constitution, the state’s primary conservation law.

State Sen. Benjamin Downing said that the community opposes it, and passage could set a “dangerous” precedent of taking Article 97 lands to build fossil fuel energy infrastructure. He said the bill “flies in the face of the commonwealth’s energy priorities.”

More: The Berkshire Eagle

MICHIGAN

Shuttering Coal Plant Endangers Harbor

Consumers Energy’s announcement that it will retire its coal-burning B.C. Cobb Plant in Muskegon brought cheers from environmentalists but could be trouble for the Port of Muskegon.

Coal deliveries accounted for about half of the tonnage coming into the port, and the volume of traffic is an important consideration if the port continues to be dredged. Without coal deliveries, the volume of cargo moved through the port will fall below the 1 million-ton annual threshold that the U.S. Army Corps of Engineers sets for “high-use” harbors, which are guaranteed to get dredged.

Muskegon city officials are setting up meetings with the corps to determine a way to keep the harbor’s dredging program active.

More: MLive.com

MISSISSIPPI

PSC Approves 3 Solar Plants

The Public Service Commission unanimously approved three solar projects on Nov. 10.

The plants, which will produce a combined 105 MW, will be located in Sumrall, Hattiesburg and Gulfport. They are projected to be in service for at least 25 years.

Hattiesburg Farm will cost $85 million and cover 450 acres; Mississippi Solar 2 will cost $102 million and require 4,085 acres in Sumrall; and CB Energy will spend $6.4 million on its farm at the U.S. Naval Construction Battalion Center in Gulfport.

More: The Clarion-Ledger

NEW JERSEY

Getting ‘Brownfield’ Solar Credits from an Apple Orchard? Nice Try

A state court upheld a decision by the Board of Public Utilities to deny brownfield development solar credits to a company that wanted to build on a former apple orchard.

Millenium Land Development said the orchard qualified as a brownfield because of past pesticide use. The BPU denied the request. The state Court of Appeals agreed, saying the land had been assessed as farmland, not a brownfield. The state’s Energy Master Plan discourages the use of open land and farms for solar development.

More: NJSpotlight

Two Firms Win Leases for Offshore Wind Farms

US Wind Inc. and RES America Developments were the high bidders to win lease rights to about 344,000 acres of ocean floor near Atlantic City to build wind farms.

US Wind bid a little more than $1 million for about 183,000 acres. RES offered $880,715 for 160,480 acres.

Together, the areas could support up to 3,400 MW of commercial wind generation, but it’s likely to take seven or eight years for operations to be developed.

More: The Record

NEW MEXICO

State Supreme Court Denies Petition Against 4 PRC Members

The state Supreme Court last week rejected an environmental nonprofit group’s attempt to disqualify four of the five Public Regulation Commission members from voting on a high-profile case about a coal-fired power plant.

The nonprofit group New Energy Economy alleged commissioners Pat Lyons, Sandy Jones, Karen Montoya and Lynda Lovejoy have shown bias and pre-judgment in their public statements about Public Service Company of New Mexico’s plan to shut down two generating units at the San Juan Generating Station, a coal-fired power plant that PNM co-owns and operates.

More: Albuquerque Journal

NEW YORK

State Dept. Refuses Certificate for Entergy’s Indian Point

The Department of State has refused to issue a certificate for the continued operation of Entergy’s Indian Point nuclear generating station, saying that the plant has been “damaging the coastal resources of the Hudson River” for decades by killing fish in its cooling system.

Secretary of State Cesar Perales rejected the coastal zone certificate for Indian Point, noting that the plant is close to two seismic faults and is too close to New York City. But Entergy said Perales’ rejection is moot, as it had withdrawn the application last year after a state appellate court ruled that it was not necessary. Entergy is seeking a 20-year license extension for the two reactors.

The secretary’s refusal is the latest blow against Indian Point. The state attorney general has been critical of the plant’s operation, and Gov. Andrew Cuomo has called for its closure.

More: The Journal News

Cuomo Nixes Port Ambrose LNG Terminal

Gov. Andrew Cuomo has killed a three-year-old proposal to build a liquefied natural gas terminal 19 miles off Jones Beach, citing concerns about the environment and terrorism.

The deep water Port Ambrose docking station was to supply the state with LNG from overseas. Cuomo, in formally announcing his veto, said al-Qaida has threatened to target such facilities and Superstorm Sandy was powerful enough to damage infrastructure built to survive 100-year storms. He also said the fuel port would harm commercial fishing and conflict with a major wind farm proposed for the same waters.

“When you put all of those things together, the reward was not worth the risk,” he said.

More: Newsday

RHODE ISLAND

Developer Says Burrillville Plant less Polluting

Invenergy’s proposed natural gas-fired power plant in Burrillville would lead to an even larger net decrease in regional emissions than initially forecast, the company said last week. The Chicago-based energy developer has argued that because its efficient combined-cycle plant would sell power at a lower price than competing generators, it would replace the output of older, less efficient facilities.

According to the company’s figures, the 900-MW Clear River Energy Center would reduce carbon dioxide emissions across New England 9% if it were to go online immediately. If the project starts generating power in 2019 as scheduled, the effect would be less dramatic because some of the biggest emitters, such as Somerset’s coal-fired Brayton Point Power Station, would already be closed, but the overall decrease would still be about 1%.

In a filing made with the Energy Facility Siting Board, Invenergy claims the decrease could actually be larger because of the recently announced closing of the Pilgrim Nuclear Power Station in Massachusetts.

More: Providence Journal

SOUTH DAKOTA

PUC Approves 103-MW Willow Creek Wind Farm

The Public Utilities Commission has approved a 103-MW wind facility to be built near Newell. Developer Wind Quarry says the 45-turbine Willow Creek Wind Farm should be on line by December 2017.

The state ranks fourth in the nation in potential wind energy, and the Willow Creek facility would bring the state’s wind capacity to 987 MW. “Many people will be surprised to know that the addition of the Willow Creek project is likely to propel South Dakota to be the state with the greatest amount of wind as a percentage of the state’s total capacity, in the nation,” Commissioner Gary Hanson said.

More: South Dakota PUC

TEXAS

State’s Wind Generation Setting All-Time Highs

Wind generation from the plains hit several all-time highs this fall, according to ERCOT and the federal Energy Information Administration. An instantaneous peak of 11,467 MW was set Sept. 13, which was broken on Oct. 21 with a new record of 11,950 MW. That record was eclipsed on Oct. 22 at 12,238 MW.

ERCOT and EIA attributed the new records to increased capacity, strong winds and increased demand due to warm autumn weather. The records were set despite lower capacity factors, estimated at between 75% and 81% during the fall compared to 83% in February.

The government predicts that with new capacity coming online, the latest record is likely to fall soon.

The excess of wind generation in the state is prompting some utilities to offer plans that don’t charge for electricity during off-peak hours, if customers agree to pay a premium during higher demand times. The New York Times recently profiled several customers who are taking advantage of a TXU Energy program that offers free overnight electricity in exchange for higher peak pricing. It said about 50 retail electricity customers are offering similar plans in the state.

Some customers said they wait to run energy-intensive appliances until after 9 p.m., when the power supply is gratis. Most wind generators in the state produce more electricity during the nighttime, when the wind blows more strongly. Wind power now represents about 10% of the state’s overall generation.

“Any plan that creates an incentive for a customer to shift a load off peak [hours] is helpful to grid operations. It’s a better use of the system,” said Paul Wattles, ERCOT senior market design analyst, told the Midland Reporter-Telegram.

More: EIA; New York Times; Midland Reporter-Telegram

Houston Signs 20-Year, $80M Solar Deal with Hecate Energy

Houston will ramp up its use of green energy to keep the lights on and laptops humming at City Hall with the approval last week of a 20-year, $80 million deal to purchase solar power from Nashville-based Hecate Energy.

Hecate, which operates 20 plants around the world, will supply the city with up to 30 MW of solar-generated power annually, beginning in December 2016, from a plant it plans to build near Alpine. Hecate offered a two-decade fixed price of 4.8 cents/kWh, nearly 2 cents less than the city pays under its current contract.

The contract will provide about 7% of the city’s annual electricity needs and will replace electricity that now is purchased from coal-fired generators.

More: Houston Chronicle

Ector County 350-MW Gas Plant Begins Formal Operations

The Ector County Energy Center, a 350-MW natural gas plant, was formally opened earlier this month, heralded by local governmental officials as a boon to the local tax base.

The plant is designed to provide peaking energy and respond quickly when ERCOT requests additional power supply. It uses two GE 7FA simple-cycle combustion turbines fueled by Permian Basin natural gas.

Commercial operation began in September. Generation from the plant has already hit about 294 MW.

More: Odessa American

VIRGINIA

Dominion Applies to Build Above-Ground Tx Line

Dominion Virginia Power has requested permission to construct a 230-kV transmission line that would run above ground for 5 miles along Interstate 66 in Prince William County.

Some county officials and residents had pushed for at least part of the line to be buried.

The State Corporation Commission is expected to make a decision within 18 months.

More: The Washington Post

November 17, 2015

Solar Developer Asks FERC for PURPA Enforcement

By William Opalka

A renewable energy developer who has challenged Connecticut’s clean energy procurement practices has taken its complaint to FERC after a federal appeals court ruled it had not exhausted all of its administrative remedies.

Allco Renewable Energy on Tuesday asked FERC to begin an enforcement action against Connecticut under the Public Utility Regulatory Policies Act. Allco says that a 2013 state law that solicited renewable energy generation and directed Connecticut utilities to enter into contracts with selected generators is an intrusion into FERC’s jurisdiction over wholesale electricity markets (EL16-11).

The company cited FERC and federal court rulings that say states have no authority to procure energy except under PURPA, which is limited to qualifying facilities (QFs) of 80 MW or less. Allco, which develops small QF solar projects, alleges Connecticut’s Department of Energy and Environmental Protection and the Public Utilities Regulatory Authority violated PURPA by awarding a contract to a 250-MW wind farm in Maine.

Allco asked the commission to void the contract and enjoin the Connecticut agencies from entering into any other wholesale purchases except with QFs. The company also says a recent solicitation by Connecticut eliminates smaller facilities and imposes onerous fees on applicants.

The developer sued DEEP in late 2013 in U.S. District Court, saying it effectively crowded out smaller developments in its selection. The court ruled last year that prices were set by project bidders and the selections were not an intrusion by state regulators into the wholesale market.

Allco, which had proposed five solar projects that were not selected, appealed to the U.S. Court of Appeals for the Second District, which dismissed the complaint Nov. 6 (Case 15-20).

“Allco failed to exhaust its administrative remedies, a prerequisite for any qualified facility to bring an equitable action seeking to vindicate specific rights conferred by PURPA,” the appeals court wrote.

Allco has also filed a federal lawsuit making many of the same arguments in a challenge to a soon-to-be-released request for proposals by Connecticut, Massachusetts and Rhode Island to jointly procure renewable energy resources. (See Allco Challenges New England’s Renewable Procurement Plan.)

That lawsuit is pending in U.S. District Court in Connecticut.

November 17, 2015

Warm Carolina Summer Boosts Duke Revenue

Duke Energy was able to offset a slump in its international business thanks to increased revenue from its U.S. regulated operations and the early closing of certain strategic initiatives, the company said in announcing its third quarter results.

The Charlotte, N.C., company reported earnings per share of $1.35, compared with $1.80 a year ago. Adjusted earnings — excluding special items and discontinued operations — were $1.47/share compared with $1.40/share over the same period last year.

The company also narrowed and reduced its full-year guidance to $4.55 to $4.65/share from $4.55 to $4.75.

“This range reflects mild October weather as well as storm expenses, unfavorable foreign currency trends and the potential for extending bonus depreciation,” CEO and President Lynn Good said on an earnings call with analysts.

Duke’s international business has experienced a decline, contributing in 2015 about half of the $0.60/share it did in 2013 and 2014, CFO Steve Young said. “About half of this decline is due to the three-year drought in Brazil, while unfavorable exchange rates and lower crude oil prices comprise the remaining half,” he said.

Income from the international business was down to $69 million in the third quarter compared with $80 million in 2014.

Young said the division’s earnings are expected to stabilize by the end of the year and show a modest growth in 2016, when hydro dispatch is predicted to improve.

“Over the past several months, we have begun to see higher water inflows and lower market power prices,” he said. “Further, meteorologists are forecasting a strong El Nino weather pattern through early 2016, which could lead to increased rainfall in Southeastern Brazil.”

Earnings from Duke’s commercial portfolio dropped $0.08/share, primarily as a result of the sale of the Midwest Generation business to Dynegy, which closed in April. Weak wind resources this year have led the company to lower its full-year expectations from $100 million to $75 million, Young said.

However, the commercial business — unregulated renewables and commercial electric and gas transmission — is expected to get a boost next quarter from tax credits related to more than 300 MW of wind and solar generation that is set to come online.

The regulated business benefited from the recently completed acquisition of 700 MW of generation from the North Carolina Eastern Municipal Power Agency. The business also was boosted by the first warmer-than-normal summer since 2012 in the Carolinas.

“On the regulated side, we’re on track to complete construction of 128 MW of utility-scale solar in North Carolina by the end of this year, and are moving forward with investments in both South Carolina and Florida,” Good said.

Young said Duke Energy also has been successful in attracting new business that is expected to add nearly 7,200 jobs in its six-state service area.

— Suzanne Herel

November 17, 2015

Company Briefs

Duke Energy, which earlier this year was hit with $102 million in federal penalties related to the massive Dan River coal ash spill, made its final payments last week with two $5 million contributions to environmental remediation programs.

The money went to a Texas-based firm, Resource Environmental Solutions, to fund remediation in Virginia and the Carolinas.

The payments settle Duke’s guilty pleas to nine misdemeanor violations of the federal Clean Water Act. The pleas came as a grand jury was considering criminal charges against the company relating to its handling of coal ash at 14 North Carolina plants. Duke agreed to pay $68 million in fines and $34 million in restitution.

More: Charlotte Business Journal

Xcel to Offer Green-Only ‘Renewable Connect’ Plan

Xcel Energy is proposing the option of 100% renewable electricity for its Minnesota customers. The “Renewable Connect” program would be offered to all customers, but it is primarily aimed at business and corporate customers seeking to achieve sustainability goals.

The plan, submitted to the state Public Utilities Commission, would offer a package of wind and solar energy at a premium price, but Xcel said it would not take a profit from it. The company said the plan would provide long-term pricing certainty and allow customers to claim environmental awareness, something many companies value.

“Businesses are more careful about how they source everything, including energy,” said Bill Blazar, a vice president of the Minnesota Chamber of Commerce. “It is almost like a kosher seal on a chicken — they are looking for that something to offer to their customers who want it. They are responding to the market.”

More: Star Tribune

‘Mighty Marysville’ Plant in Michigan Demolished

The Marysville Power Plant, a coal-fired generator that stood for 93 years in eastern Michigan on the banks of the St. Clair River, was demolished in a controlled implosion on Nov. 7.

In its heyday, the plant employed about 250 people and produced 1,386 MW. Operations ceased in 2001. Owner DTE Energy sold the 30-acre site to a developer, who plans to convert the waterfront property into a multi-use facility including retail shops, housing, a marina and bike trails.

More: Port Huron Times Herald

DTE Energy to Recycle Gypsum at Port of Monroe

DTE Energy announced plans Nov. 6 to partner with southeastern Michigan’s Port of Monroe to market and transport gypsum produced from the emissions-control system at its Monroe Power Plant.

Under the collaboration, gypsum will be shipped from the Lake Erie port to clients in Canada and the Midwest. The Port of Monroe says it will build a 24,000-square-foot storage building. DTE, which recycled more than 350,000 tons of gypsum last year, said the arrangement will enable the utility to recycle 100% of its gypsum going forward.

Synthetic gypsum is produced from flue gas desulfurization systems, or “scrubbers,” which use lime or limestone as reagents. The byproduct is nearly identical to mined gypsum and can be used in manufacturing cement and drywall.

More: Associated Press

TXU Solar Partnership Offers High-Efficiency Home Panels

Texas retailer TXU Energy last week introduced a program it calls “TXU Solar from SunPower,” providing high-efficiency solar panels that the manufacturer says produce 70% more energy than conventional panels.

The program comes with a simple online and mobile monitoring system so homeowners can track their electricity production. SunPower said its panels, which have an expected lifespan of 40 years, will enable residential consumers to produce more of their own electricity than competing rooftop systems.

The new offer is being launched in North Texas. To be eligible, consumers must own a single-family home with a south-to-southwestern exposure.

More: SunPower

Basin Electric: SPP Membership Helps Prepare Co-op for Future

Basin Electric Power Cooperative CEO Paul Sukut says joining SPP last month has expanded the North Dakota co-op’s access to power.

Sukut, speaking during Basin’s annual meeting earlier this month in Bismarck, said the cooperative’s membership in the regional grid allows it to purchase more power to supply growing demand. He said Basin is trying to keep up with the market while still maintaining its cooperative values.

“I can’t recall a time in the last 30 years we have had this much at stake,” he said, alluding to the Environmental Protection Agency’s Clean Power Plan.

More: The Bismarck Tribune

AEP Closes Sale of River Ops to ACL

American Electric Power has closed the sale of its commercial barge operation to American Commercial Lines for $550 million. AEP bought the river operation in 2001, but the company decided earlier this year to divest the asset and redeploy the capital to its regulated operations. The sale netted about $400 million after taxes, debt retirement and fees.

AEP will retain ownership of a fleet of 12 tow boats and 429 barges to deliver coal to its coal-fired power plants, but ACL will dispatch and operate the fleet through 2016. AEP River Operations, now the property of ACL, has its own fleet of about 56 towboats and 2,300 barges that deliver 45 million tons of commodities on inland waterways, including 10 million tons of coal.

More: American Electric Power

Talen Energy’s Susquehanna Nuke Plant Scrams

Unit 1 at Talen Energy’s Susquehanna nuclear power plant automatically shut down Thursday after a malfunction that is being investigated.

Talen Energy assumed control and partial ownership of the plant earlier this year when it was spun off from PPL. Allegheny Electric Cooperative also owns a share of the plant.

Talen said the unit’s safety features worked as designed and that there was no release of radiation. Unit 2 remained in operation, according to the company.

More: StreetInsider

November 17, 2015

FERC Rejects Rehearing in Entergy Move to MISO Membership, OKs Cost Allocation Filing

By Amanda Durish Cook

FERC last week denied requests by Texas and Louisiana regulators for rehearing of its December 2013 order approving the Entergy operating companies’ incorporation into MISO and Entergy Arkansas’ exit from the companies’ system agreement.

The Public Utilities Commission of Texas contended FERC was wrong because in filing “limited” amendments to the agreement, Entergy didn’t subject its entire system agreement to scrutiny.

The Louisiana Public Service Commission contended that FERC’s order failed to determine what entity is responsible for costs left when an operating company withdraws. It said ratepayers of the last remaining company in the operating company system could unjustly bear the brunt of the costs needed to plan and operate the resources of multiple companies. Louisiana regulators also questioned whether Entergy’s proposed congestion cost would correspond with MISO practices and suggested that Entergy Arkansas’ exit would leave a regulatory gap in state authority over Entergy.

FERC’s Nov. 9 order denied the commissions’ complaints on all fronts, saying that the system agreement doesn’t require withdrawing companies to pay an exit fee or otherwise compensate remaining companies (ER13-432-001).

“[Entergy Arkansas’] integration into MISO does not require a broader review of the system agreement. Nothing about Entergy’s intent to operate as a power pool within MISO is inherently inconsistent with behavior in an organized market,” FERC wrote. “Furthermore, nothing in the system agreement or commission precedent would bar Entergy from integrating the operating companies into MISO as a power pool.”

FERC last week also accepted Entergy’s compliance filings required by the 2013 order (ER14-1263, et al). The commission had ordered the companies to amend their costs and credits allocator to use energy usage instead of peak demand as the basis for calculations.

The Louisiana commission protested that Entergy’s revised allocator “departs dramatically from the criteria articulated by the commission” by using monthly energy usage data instead of hourly energy usage data, as MISO’s Tariff states. They asked FERC to reject Entergy’s method on the basis that it violated cost-causation principles.

FERC instead accepted Entergy’s compliance filing, noting that using hourly energy usage data “would be problematic because it would be inconsistent with the monthly allocation of ancillary services and uplift charges and credits related to generating units.”

“We find that Entergy has provided sufficient detail in its compliance filing to explain how it will calculate the energy-based allocator and has justified why its proposal is just and reasonable,” the commission wrote.

FERC Commissioner Colette Honorable, a former Arkansas regulator, did not participate in either ruling.

November 17, 2015

PJM MRC/Members Committee Preview

Below is a summary of the issues scheduled to be brought to a vote at the Markets and Reliability and Members committees 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.

Markets and Reliability Committee

2. PJM Manuals (9:10-9:40)

Members will be asked to endorse the following manual changes:

Manual 01: Control Center and Data Exchange Requirements. Adds requirements and changes terminology to be consistent with North American Electric Reliability Corp. standards. Makes minor edits for clarity. Removes dated reference to “floppy disk.”
Manual 03: Transmission Operations. Changes resulting from bi-annual review include project updates, edits and reorganization of sections.
Manual 12: Balancing Operations. Updates due to new instantaneous reserve check implementation. Eliminates mention of MISO as the Interconnection Time Monitor.
Manual 13: Emergency Operations. Updates day-ahead scheduling reserve requirement for Reliability First Corp. effective Jan. 1. Other changes made for consistency. Removes requirement that generators connected below 230 kV participate in voltage reduction.
Manual 14B: PJM Regional Transmission Planning Process. Changes reflect new process of considering energy market uplift in development of candidate RTEP projects.
Manual 14B: PJM Regional Transmission Planning Process. Updates for compliance with NERC standards.

3. LOAD FORECAST UPDATE (9:40-10:10)

Revisions to Manual 19: Load Forecasting and Analysis reflect updates to the PJM load forecast model. Adds variables to account for trends in equipment and appliance saturation and energy efficiency; revises weather variables; updates weather station assignment to zones; and revises weather normalization procedure. PJM will be publishing a white paper in 2016 to provide more detail on the forecast model. (See “Manual Changes on Load Forecast Approved Except for Solar Revision” in PJM Planning Committee and TEAC Briefs.)
Revisions to Manual 18: PJM Capacity Market and Manual 18B: Energy Efficiency Measurement & Verification to accommodate energy efficiency resources in the capacity market when they are reflected in the peak load forecast.

4. GOVERNING DOCUMENTS ENHANCEMENTS & CLARIFICATION SUBCOMMITTEE (GDECS) (10:10-10:25)

The committee will be asked to endorse modifications, clarifications and revisions to 12 terms in PJM governing documents.

xx. UNDERPERFORMANCE RISK MANAGEMENT IN RPM/CP (10:25-10:40)

Bob O’Connell, on behalf of the Supplier Caucus, will present a proposed problem statement and issue charge related to underperformance risk management in the capacity market. It would expand ways for generators to minimize penalties by netting them against over-performing generators. (See Generators Seek to Reopen PJM Capacity Performance Rules.)

Members Committee

ENDORSEMENTS (1:25-2:05)

1. 2015 IRM STUDY RESULTS (1:25-1:40)

Members will be asked to endorse the installed reserve margin study results, re-setting IRM and the forecast pool requirement for 2016/17, 2017/18 and 2018/19 and establishing initial IRM for 2019/20. The study increases the IRM to 16.4% from 15.5% in the 2014 study. The IRMs also rose for the following two delivery years. (See “Committee Endorses Increase in IRM” in PJM Markets and Reliability & Members Committees Briefs.)

2. 2016/17 THIRD INCREMENTAL AUCTION (1:40-1:55)

As part of the transition to Capacity Performance, the committee will be asked to approve Tariff revisions allowing PJM to sell excess base capacity acquired in the third Incremental Auction for 2016/17 in February. (See “Tariff Change Would Allow PJM to Sell Excess Capacity for 2016/17” in PJM Markets and Reliability & Members Committees Briefs.)

3. ELECTIONS (1:55-2:05)

Members will be asked endorse the following elections:

Finance Committee

End Use Customer, David Evrard, Pennsylvania Office of the Consumer Advocate
Generation Owner, Michelle Greening, Talen Energy
Other Supplier, Marguerite Miller, Credit Suisse
Transmission Owner, Jim Benchek, FirstEnergy

Sector Whips

Electric Distribution, Steve Lieberman, Old Dominion Electric Cooperative
End Use Customer, Susan Bruce, PJM Industrial Customer Coalition
Generation Owner, Joe Kerecman, Calpine
Other Supplier, Katie Guerry, EnerNOC
Transmission Owner, Jodi Moskowitz, Public Service Enterprise Group

Members Committee Vice Chair

Susan Bruce, PJM Industrial Customer Coalition

November 17, 2015

PJM TOs Defend Jurisdiction at FERC Conference

By Michael Brooks

WASHINGTON — PJM transmission owners defended their jurisdiction over maintenance of the grid last week under questioning by FERC staff at a technical conference held to gain insight into the RTO’s local planning process.

Commission staff questioned PJM officials for almost four hours on subjects ranging from the difference between its Planning Committee and Transmission Expansion Advisory Committee to what is discussed at its sub-regional committee meetings.

pjm — Zeny Magos, FERC asking a question.

The staffers were particularly interested in learning how PJM reclassifies supplemental projects as baseline projects in its Regional Transmission Expansion Plan and how it determines whether local transmission needs should be opened to competitive proposals under Order 1000.

FERC ordered the conference in September, partially in response to a complaint by Dayton Power & Light over the reclassification of the Cunningham-Elmont 500-kV end-of-life project in Virginia as a baseline project in the 2015 RTEP. Dominion Resources originally proposed the rebuild as a supplemental project, meaning it would bear the full costs. (See FERC Sets Tech Conference on PJM Tx Planning Rules.)

In June, FERC issued a deficiency letter seeking additional information on PJM’s cost allocations for 61 baseline upgrades, including the Cunningham project. In its response, PJM acknowledged that “there is no specific language in either [the Tariff] or the PJM manuals that explains how PJM re-categorizes a supplemental project to a required transmission enhancement eligible for regional cost allocation.”

Supplemental Projects

PJM Vice President of Planning Steve Herling, who did most of the talking for PJM at the hearing, told FERC that supplemental projects are proposed at the discretion of the TOs and are not in response to any violations of North American Electric Reliability Corp. standards or the TO’s own planning criteria. They’re often proposed to replace aging infrastructure. “If you went down the list in our database, I guess half of them start with the word ‘replace,’” he said.

Supplementals “could very well mask a violation that would have otherwise arisen, and it will not be obvious to anyone that such a violation would have arisen,” Herling said. This only becomes apparent if the TO decides not to go forward with the project and, once pulled from the RTEP, PJM finds that a violation would occur. The project would then be converted to a baseline project.

Valerie Teeter, of FERC’s Office of Energy Policy and Innovation, asked PJM what that conversion process entails: “Does that violation kind of go back to the beginning of the stakeholder process? [Does it] go through the process that any other violation would? Is there a proposal window for solutions?”

“It’s all a matter of timing,” Herling responded. If the supplemental was identified three years ago and PJM realizes that absent the supplemental there will be a violation, construction on the project is likely to have begun. “At that point, we’re certainly not going to shut the project down so that we can hold a [proposal] window and see if a better project exists,” he said.

But, Herling said, that decision is “purely judgmental,” meaning there’s no bright line for when the RTO would open a proposal window to select the most cost-effective solution.

“Where it gets gray is in the middle,” when PJM notices a potential violation a year after a supplemental is proposed, for example. “Depending on the circumstances, we would likely say, ‘OK, put the brakes on, we’re going to open up a window’” for competitive proposals, Herling said. “Again, it’s very judgmental. It’s all going to be case-by-case based on the circumstances.”

Cunningham-Elmont

PJM reclassified the Cunningham line after Dominion revised its planning criteria last year. In its complaint, DP&L accused Dominion of exploiting what it called a loophole resulting from an Order 1000-related filing by PJM TOs that permits a portion of the costs of new 500-kV baseline projects to be shared by load-serving entities throughout the RTO.

Herling said that any party, including PJM, can identify whether a project might need to be converted from supplemental to baseline, especially in the case of aging infrastructure. However, “most often, my gut is it will be the transmission owner who will recognize the likelihood that the project should be converted. It is not always intuitive to anyone else.”

For the Cunningham rebuild, Dominion provided a “condition assessment” that the company said justified converting the project to baseline. Performing a condition assessment “is not the kind of thing that PJM could take as an initial step on their own,” Herling said. PJM then did its own evaluation based on Dominion’s work to confirm that it met the criteria for a baseline.

FERC staff asked why a proposal window was not opened for the need associated with Dominion’s planning criteria for aging infrastructure.

“That’s one we’re continuing to think our way through as a general matter,” Herling replied. “It’s challenging to us to justify going out and seeking other proposals when you’re going to have to tear the line down anyway, [and] the state would prefer you reuse the existing right of way.” In Cunningham’s case, PJM determined a violation would occur if it was taken out of the RTEP, so it needed to be replaced.

Hertzel Shamash, vice president of resource planning for DP&L, spoke up at this. “You [eliminate] any of the existing transmission lines … and you’re going to violate NERC standards, because you need that line. It wouldn’t be there if you didn’t need it.

“Regarding the open window: Yeah, you can build on existing rights of way, but someone can build it for a lower cost,” he said.

Maintenance, not Planning?

TO representatives pushed back at staff’s focus on the lack of a defined conversion process. The Cunningham case, in which a change in planning criteria led to a conversion, “is relatively rare,” said Steve Naumann, vice president of transmission and NERC policy for Exelon. “It’s a unique circumstance.”

pjm — Steve Naumann, Exelon responding to a question

“The drivers [of supplemental projects] can be so different, and many of them are management of the assets, which is not something that has been turned over to PJM,” Naumann said. “That has remained with the transmission owner: to manage their own assets, as opposed to transmission expansion. The TOs as a whole believe there’s no need — nor is there a requirement — to have a … hard and fast set of filed criteria for supplemental projects. Otherwise they wouldn’t be supplemental projects.”

Maintenance of the system is solely the purview of the TOs, said Frank “Chip” Richardson, manager of transmission regulatory and business affairs for PPL. “It’s excluded from PJM’s processes… You don’t see any processes where PJM evaluates the maintenance of the system.”

“We, by definition, don’t think supplemental projects are planning projects,” said Raja Sundararajan, vice president of transmission asset strategy and policy for American Electric Power. When AEP finds things that are broken and need to be fixed, it lets PJM know, he said. “Is that a planning process? No, that is not a planning process. That is fundamentally a maintenance and replacement of the assets.”

Maintenance is a business decision left solely up to the TO. “There’s a clear delineation of where planning is and when operation begins,” Sundararajan said.

FERC Unconvinced

FERC staff seemed unconvinced by these arguments. “I am not seeing that delineation,” replied Zeny Magos of FERC’s Office of Energy Markets and Reliability. “I personally do not see the difference between planning your transmission system and maintaining your transmission system.”

Mark Ringhausen, vice president of engineering for Old Dominion Electric Cooperative, also had complaints about the lack of process. He said one of ODEC’s neighboring TOs presented $250 million in supplemental projects last year, including rebuilds for aging infrastructure. He said PJM told ODEC the co-op didn’t have the ability to influence changes to other TOs’ supplemental projects because PJM said such projects are outside the RTO’s jurisdiction. “Clearly there is no process,” Ringhausen said.

Ringhausen cited FERC’s June 22 rehearing order on the planning and cost allocation requirements of Order 1000. In it, the commission said it read the PJM Operating Agreement as giving stakeholders “an opportunity at the early stages of each individual PJM transmission owner’s planning of supplemental projects (i.e., before each transmission owner actually identifies any potential supplemental project) to review the criteria, assumptions and models each individual transmission owner uses to plan supplemental projects” (ER13-198).

“Is that happening today?” Ringhausen asked. “Clearly … it’s not happening at the early stages.”

“RTEP is the Regional Transmission Expansion Plan,” Richardson countered. “It’s not the ‘Regional Transmission Maintenance Plan.’ There’s never been anything in PJM about how the transmission owners maintain their equipment.

“The definition of ‘supplemental’ is PJM does not need it,” he said. “They would never tell us to do it.”

Going Forward

Magos asked PJM if it thought it needed to update its Tariff or manuals to include a conversion process.

“My gut is we would probably want to take a look at updating the PJM manuals, which probably could be made to point to any number of existing practices that are in the Tariff, just to ensure they are applicable also,” Herling said. “Now if in the commission’s judgment that needs to be in the Operating Agreement or the Tariff, fine, we can certainly do that. But we would do the manuals first.”

“It would be very helpful, I think, for some of the people who have to pay for these projects to have a bright line in the Tariff that explains how you go from supplemental to regional transmission planning,” said Amy Fisher of Linden VFT. “That would be kind of an exclamation point that people should be very engaged in that process.”

FERC staff requested comments be filed by Dec. 10 on several issues discussed at the conference, including the process for reclassifying supplementals, stakeholder input on supplemental projects and the difference between transmission planning and transmission maintenance.

November 16, 2015

Meet NARUC’s New President

By Tom Kleckner

AUSTIN, Texas — The list of state regulatory commissioners in their 30s is a short one. The list of 31-year-old commissioners with five years of experience as economic regulators is even shorter.

So meet Montana’s Travis Kavulla, who is not only in his second term on the state’s Public Service Commission but also, as of last week, the chairman of the board and president of the National Association of Regulatory Utility Commissioners (NARUC).

“It’s a real honor to have the confidence of my colleagues on the utility commissions, but it’s a particular honor to be in a leadership position,” he told RTO Insider in an interview.

Judging by the 1,000-person strong standing ovation the personable Kavulla received after his acceptance speech here Nov. 10, the fourth-generation Montanan appears to command the respect of his colleagues. Kavulla credited his involvement in several Western regional initiatives. He is co-chairman of the Northern Tier Transmission Group Steering Committee and is a member of the CAISO Energy Imbalance Market Transitional Committee.

“I raised my hand in the West and volunteered to head up western commissions’ exploratory efforts around a real-time energy market. These kinds of … enterprises can turn into talkathons on panel discussions, but that sense of initiative needs to be developed into practical actions.”

Kavulla is referring to the expansion of organized markets in the West. The process led to the Integrated System’s incorporation into SPP and CAISO’s expansion of its Energy Imbalance Market in the Western Interconnection.

“I’m delighted [the Western Area Power Administration] and Basin [Electric Power Cooperative] saw the benefit of participating in what I regard to be an efficient and liquid market” in SPP, he said. “It seems to be going very well. I have some concerns about seams issues, as most people do … but they’re not novel issues.”

A Western RTO?

WAPA’s Upper Great Plains region was the first federal power marketing administration to join an RTO. The dominant role of the Bonneville Power Administration, another power marketing administration, is one of the reasons there’s been reluctance to create an energy market in the Pacific Northwest, Kavulla said.

“Bonneville’s legal status as a federal power marketing administration was seen as an impediment to the creation of a market. WAPA reached an accommodation with SPP and that shows that concern to be overstated,” Kavulla said. “Bonneville could participate as a member of an RTO if it chose to, but there’s a very long way to go before that happens.”

Kavulla said that whether or not a Western RTO is formed “comes down to whether there is a trusting relationship between California and the other states, as well as the utilities and commissions realizing there’s a lot of money and a lot of efficiencies being left on the table.

“Once some of those governmental concerns about Cal-ISO are ironed out, I think a Western RTO will be achieved.”

Technological Changes

For now, Kavulla is firmly focused on his term as NARUC’s president and the issues facing economic regulators. Harkening back to the technological innovations that transformed the telecomm industry and that could do the same to the electric industry, he asked his acceptance-speech audience to focus on two important initiatives: greater involvement in and a better understanding of RTOs, and better pricing signals for customers who generate their own power or react to market signals by reducing demand.

“We need to understand that an RTO or an ISO can facilitate competition and the efficient use of resources that our consumers are already paying for,” he said in his prepared remarks. “[And] we need clear and economic price signals that do not overcompensate or undercompensate … customer-side actions.

“Regulation may not fix the price of electric power in RTOs … but regulations prescribe the definition of market products, the way in which those products are bid into and procured from the market, and even the amount of those products one needs to avoid penalties,” Kavulla said. “Most commissioners barely have time to keep up with our own dockets, but we owe it to ourselves to better understand these wholesale markets. NARUC, working together with the existing organizations of state regulators that advise RTOs and ISOs, can help in that role.”

Kavulla praised NARUC’s Electricity and Energy Resources and Environment committees’ work in creating a rate-design subcommittee that will report to Kavulla and his four fellow board members.

“I hope this subcommittee will work to create a practical set of tools — a manual, if you will — for regulators who are having to grapple with the complicated issues of rate design for distributed generation and for other purposes,” he said. “We have an ability, through a staff subcommittee, to produce a practical, expert and most importantly ideologically neutral guide that offers advice to the dozens of states who are grappling with this question, and yet do not have the resources to do it themselves.”

State, RTO Roles in Clean Power Plan

And then there’s the Environmental Protection Agency’s Clean Power Plan, a heavy topic of conversation here. EPA Administrator Gina McCarthy delivered NARUC’s keynote address, and several of the panels focused on the plan and its implications for the industry. (See related story, McCarthy Defends CPP, Asks for Continued Engagement.)

Kavulla said it is clear to him “most states, if not nearly all, will select a mass-based approach and open doors to trading in some form.”

“Then, the issue becomes the allocation of allowances and if you do trade, to whom do you open doors? Is it a regional approach?”

Asked about the role RTOs would have in helping implement regional trading programs, Kavulla noted that CAISO and the Canadian province of Quebec currently participate in a cap-and-trade program “that has no interconnection at all between them.”

“There’s a reason RTOs are going hither and yon and saying they’ll be an important part of this debate … that’s really a decision up to the states,” Kavulla said. “RTOs can come up with options that get away from a command-and-control solution for 111(d) compliance. As an economic regulator, I accept the proposition that whatever the environmental law may be, we should meet it in the most efficient manner … and that means trading.

“I hate to paint myself and other economic regulators as skeptical curmudgeons, but we’re the ones who have to be promoting economically efficient outcomes — which is going to be really hard work in the context of the Clean Power Plan.”

Former Journalist

Kavulla attributes his ability to get to the heart of the matter to his early career as a journalist. “It requires a talent for reading and boiling down a lot of complex materials and translating them into analysis,” he said.

A graduate of Harvard, where he majored in history, Kavulla edited the conservative political journal Harvard Salient and wrote a regular column for The Harvard Crimson, the school’s daily newspaper. Upon graduation, he landed an associate editor’s position at the conservative National Review and several editing and writing jobs, from “8,000-word essays to very short, newsy write-ups” on the economy, politics and culture.

Kavulla returned to his hometown of Great Falls in 2009, intent on finishing a book on American evangelicals’ influence on the African church and continuing his freelance career. However, he wound up “being sucked in the vortex of local politics,” helping elect a city commissioner to undo the city utility’s “ill-conceived” fixed-rate electricity contracts.

Discovering that he enjoyed the process and understood the issues, Kavulla ran for the Great Falls area’s seat on Montana’s five-member PSC in 2010, winning election by 28 percentage points. Kavulla was re-elected last year, and will be term-limited in 2018.

After that? A Republican, he is already being mentioned as a potential FERC commissioner. Both Commissioners Tony Clark and Colette Honorable served as NARUC president before moving to Washington.

“I really don’t know,” he said with a laugh.

No worries. There’s much to do until then.

Other NARUC Officers, Board Elections

Pennsylvania Public Utility Commissioner Robert Powelson was elected first vice president and John Betkoski, vice chair of Connecticut’s Public Utilities Regulatory Authority, was elected second vice president.

Appointed to NARUC’s board of directors were: Judith Jagdmann of the Virginia State Corporation Commission; Ellen Nowak, chairman of the Wisconsin Public Service Commission; New Hampshire Public Utilities Commissioner Robert R. Scott; and Brien J. Sheahan, chairman of the Illinois Commerce Commission.

The NARUC board also confirmed Michigan regulator Greg White as executive director effective Dec. 1. He will replace Chuck Gray, who is retiring.

NARUC immediate past President Lisa Edgar thanked Gray for “37 years of service, regulatory intellect and camaraderie.”

“He has left a lasting imprint on the association,” she said.

White served on the Michigan Public Service Commission for more than five years after working in a variety of staff positions with the agency since 1987. He holds a Master of Public Administration from Grand Valley State University and a bachelor’s in resource development from Michigan State University.

November 12, 2015

Merger Opponents Seek Ethics Investigation of Pepco-DC Stadium Deal

By Suzanne Herel

Critics of Exelon’s proposed acquisition of Pepco Holdings Inc. on Wednesday questioned the timing of a $25 million naming rights deal that D.C. Mayor Muriel Bowser finalized with Pepco days before dropping her opposition to the merger.

Pepco agreed in July to sell district property in the Buzzard Point area for the construction of a soccer stadium for D.C. United. On Sept. 18, Pepco signed a sponsorship deal in which it will pay the district $25 million for the right to rename a street near the stadium “Pepco Place.” The agreement also gave the company the option to install “Pepco Park” signs near a proposed practice facility for the NBA’s Washington Wizards in Southeast D.C.

On Oct. 6, Bowser announced that her administration had reached a settlement with Exelon and Pepco and would support the merger. She previously had praised the D.C. Public Service Commission’s unanimous rejection of the deal in August.

In a press conference at the site of the soccer stadium, representatives of Public Citizen and the Chesapeake Climate Action Network released a letter calling on the District Board of Ethics and Accountability to “evaluate these two high-stakes situations to ensure that there was no impropriety, collusion or unethical conduct of any kind.”

That office did not respond to a request for comment on how the appeal would be handled.

The groups also shared a Freedom of Information Act request they had submitted to the mayor’s office asking for all internal correspondence among the administration, Exelon and Pepco.

“D.C. residents deserve to know if pay-to-play politics or quid pro quos played any role in advancing this massive corporate merger,” said Craig Holman, a lobbyist with Public Citizen.

Bowser was on a trade mission in China. In response to the allegations, her communications director, Michael Czin, said, “Pepco, as a majority land owner at Buzzard Point, has been in contact with the district government regarding a soccer stadium for years. The sponsorship agreement stemmed from that negotiation, which was unrelated to the merger.”

Pepco has said discussions involving the naming rights began in 2013.

“It’s clear the small vocal minority who continue to oppose the merger are becoming increasingly desperate in their last-ditch attempts to disrupt it,” Pepco spokeswoman Myra Oppel said. “They are deliberately ignoring the facts and will say just about anything to distract from the substance of the merger and to serve their special interests.”

The PSC is reconsidering the merger under the agreement brokered by Bowser’s office. (See DC PSC Rulings Give Exelon-PHI Merger a Shot in the Arm.)

Members of the public who aren’t a party to the case will have a chance to speak at hearings before the PSC Nov. 17-18.

At the press conference, the groups also pointed to the pro-Bowser “FreshPAC” as evidence of “pay-to-play” politics. Officials with the independent political action committee told The Washington Post last week that the group, while legal, had become a “distraction” and would be disbanded.

The Post reported that Pepco has declined to say if the company had been asked to contribute to the PAC.

November 11, 2015February 12, 2024

Settlement Reached on New York TOTS Projects

By William Opalka

New York transmission owners filed a proposed settlement with FERC on Nov. 5 establishing the cost allocation and rate of return for three transmission projects intended as contingencies for the potential closure of the Indian Point nuclear power plant in Westchester County (ER15-572-004). (See Divided FERC Trims ROE on NY Tx Projects, Orders Hearing.)

The proposal settles the revenue requirements, including the return on equity and the inclusion of adders, of New York Transco, the organization of investor-owned utilities in the state that will develop and own the Transmission Owner Transmission Solutions (TOTS) projects.

“This settlement agreement results in a total ROE (10%) for the TOTS projects that is lower than the base ROE (10.60%) proposed by the applicants and supported by the applicants’ filing,” the settlement says.

The agreement leaves intact the 50-basis-point adder for the TOTS projects, as granted by FERC, for costs up to $228 million. The agreement says the adder accounts for benefits to customers, including congestion relief.

That resolves the New York Public Service Commission’s objection to having a separate adder for the transcos’ participation in an RTO and the transcos’ inclusion of additional adders for other ratepayer benefits, according to the settlement.

The agreement also includes transmission owners New York Power Authority and Long Island Power Authority as signatories. Because they are public authorities, they cannot join the NY Transco organization without a law allowing them to form a subsidiary company. Also agreeing to the settlement are the New York Public Service Commission; the New York State Department of State Utility Intervention Unit; New York City; the New York Association of Public Power; the Municipal Electric Utilities Association of New York; and an unincorporated group of about 60 industrial, commercial and institutional energy consumers.

The cost allocation is “voluntarily agreed to by all participants who will bear the costs of the TOTS projects under the NYISO [Tariff],” according to the settlement.

NY Transco’s members and their allocations are: Central Hudson Gas and Electric (5.99%); Consolidated Edison of New York and Orange and Rockland Utilities (63.18%); National Grid’s Niagara Mohawk Power (12.16%); and New York State Electric and Gas and Rochester Gas and Electric (10.12%).

The agreement does not include two AC projects in the FERC order from April: the estimated $1 billion Edic-Pleasant Valley 345-kV line and the $246 million Oakdale-Fraser 345-kV line.

Rehearing requests for them will remain pending but held in abeyance, as those projects may be subject to further action by NYISO, according to the settlement. The ISO could issue a “viability and sufficiency assessment,” which would restart their settlement negotiations.