MISO to Tackle Capacity, Queue, Caps and CPP in 2016

By Amanda Durish Cook

It’s been 15 years since FERC approved MISO as an RTO and, like a teenager, MISO is experiencing a growth spurt.

Last month, the board approved an annual Transmission Expansion Plan consisting of 345 projects valued at $2.75 billion. With the exception of 2011, the plan represents the footprint’s largest expansion since the annual process began in 2003.

This year’s spending plan includes a $31 million capital budget and a $225 million operating budget, a 3% increase over 2015.

Busy Year Ahead

MISO expects a busy 2016.

In January, it will begin selecting a developer for its first competitively bid transmission project under FERC Order 1000, southern Indiana’s Duff-Coleman 345-kV project.

In February, design review will begin on MISO’s proposed two-season capacity market construct. Under a draft proposal, the RTO would obtain capacity based on a June-September summer season and an October-May winter, with separate seasonal resource accreditations, reserve margins and capacity import/export limits. (See MISO Proposes Two-Season Capacity Market.) FERC filings are expected in March.

MISO capacity auctions still won’t be mandatory, as FERC struck down the RTO’s request for compulsory capacity auction participation in November.

Resource adequacy will continue its presence on MISO agendas in 2016. In the first six months, the RTO will consider recommendations from a task team appointed by its Supply Adequacy Working Group on how to accommodate merchant generators in Illinois’ Zone 4, where retail choice is permitted. The move followed an October FERC technical conference and two policy sessions of the Illinois Commerce Commission on problems in the area.

“I think what’s been identified in Illinois is a gap,” Jeff Bladen, MISO’s executive director of market design, said in early December. “It is a very targeted, surgical matter that needs to be tackled.” (See Stakeholders to ICC: MISO Resource Adequacy Fine — for now.)

MISO also will continue its modeling of the potential impacts of the Clean Power Plan. According to initial results released last month, compliance costs could vary widely in the footprint, with the price of natural gas a major variable. (See MISO: Coal Retirements, Gas Prices, Flexibility Key to CPP Compliance Costs.)

MISO’s new interconnection queue rules will begin Feb. 20. Following a transition, projects will move through a reformed queue that includes a non-refundable $5,000 study deposit and two “off-ramps” where owners can choose to withdraw projects for a refund. (See MISO Unveils Queue Reform Transition as Wind Advocates Seek Delay.)

SPP Dispute Settled

In October, MISO settled a grid-use dispute with neighboring SPP regarding the 1,000-MW transfer limit in their joint operating agreement. The settlement replaced the RTOs’ operations reliability coordination agreement and the resulting $9.57/MWh hurdle rate that had been in place since 2014. (See SPP, MISO Reach Deal to End Transmission Dispute.)

Late 2015 also saw the adoption of a new stakeholder redesign. The changes, which include closing out completed task forces, merging redundant groups, emphasizing joint meetings and re-evaluating meeting schedules, will take effect over the next three months. (See MISO Stakeholders OK Redesign, Begin Implementation.)

The redesign absorbed or consolidated seven groups. The RTO’s Advisory and Steering Committees will oversee the transition.

Michelle Bloodworth, executive director of external affairs, said the redesign was “a great step to making sure stakeholders are well positioned to address the big challenges our region faces.”

Meanwhile, a mild winter so far has made it easy to live with MISO’s October decision to delay raising its energy offer cap. Instead, the RTO asked FERC to approve another waiver allowing recovery of generators’ costs above $1,000/MWh through uplift payments. MISO says it plans to put together a “permanent solution” in time for next winter. (See MISO: No Change to Energy Offer Cap this Winter.)

January 5, 2016April 22, 2024

State Briefs

These Power Bill Savings Aren’t Chicken Scratch

The Delmarva Poultry Industry predicts that its new energy-buying group will save chicken producers more than $1 million over the next three years.

Poultry producers began seeing those savings in December’s electric bills. The group said more than 200 members will pay 7.78 cents/kWh under a fixed-price electric supply contract with WGL Energy.

More: Associated Press

ILLINOIS

Commission Blocks Landowners’ Appeal of Grain Belt Express

The Commerce Commission has declined to reconsider its approval of the Grain Belt Express, a $2 billion HVDC transmission line that would move power from Kansas wind farms to Indiana.

The commission, which approved the project in a 3-2 vote in November, rejected appeals from landowners who argued that project developer Clean Line Energy Partners of Houston failed to meet expedited approval standards. Opponents of the project include the Pike and Scott County Farm Bureaus, which are considering a court appeal of the ICC’s approval.

Regulators in Kansas and Indiana have also approved the 780-mile overhead transmission line, while the Missouri Public Service Commission has balked.

More: The State Journal–Register

INDIANA

NIPSCO’s Planned Tx Lines Find Little Opposition

Northern Indiana Public Service Co. is backing construction of two transmission lines in the state to deliver power from Midwestern wind farms to markets on the East Coast.

NIPSCO will build a 100-mile line from Reynolds to Topeka in early spring that will cost from $250 million to $300 million. The company also formed a 50-50 partnership with Pioneer Transmission to build a 70-mile line from Greentown to Reynolds that is set to break ground early this year. That line will cost up to $400 million.

Unlike other transmission projects, the two proposed lines have attracted little opposition. NIPSCO spokesman Nick Meyer credited the company’s success with local landowners to the long timelines set by the utility for public meetings. He said that as generation switches from coal to wind and other sources, more transmission projects will need to be built.

More: The Times of Northwest Indiana

MISSOURI

Empire District’s Sale Rumors Leave City of Monett in Lurch

Leaders of the Monett municipal utility say they are taking a wait-and-see approach to news that Empire District Electric, the city’s power supplier, plans to explore strategic alternatives.

Monett is three years into a 10-year contract with Empire, an investor-owned utility. “Empire is really a small fish compared to other power companies,” Monett Utilities Superintendent Skip Schaller said. “They may think they’d be better off being bigger. We could even see lower rates.”

The dynamics of the electricity business for the area changed when Empire joined SPP in March, and the region became integrated into the RTO’s markets.

More: The Monett Times

NEW MEXICO

Commission Grants Rehearing on Renewable Charge

Large-scale electric customers have won a new chance to convince state regulators to let them keep fuel savings they currently receive as a result of Public Service Company of New Mexico’s investments in renewable energy.

The Public Regulation Commission voted 5-0 on Dec. 23 to vacate an earlier decision that would have forced industrial and governmental energy users to repay those savings to PNM. The issue will be reheard on Jan. 13 by the full commission, which could still decide to uphold its original order from November.

Industrial consumers and the Albuquerque Bernalillo County Water Utility Authority filed motions opposing the PRC’s November decision, which ordered about two dozen industrial users, including the water authority and the University of New Mexico, to pay a combined total of about $2 million in annual fuel savings back to PNM.

More: Albuquerque Journal

Navajo Energy Pursuing Ownership in Four Corners Power Plant

The Navajo Transitional Energy Co. has received the green light from its board of directors to pursue acquiring an ownership interest in the Four Corners Power Plant.

NTEC officials said they are reviewing the possibility of obtaining the 7% interest held by El Paso Electric in Units 4 and 5. NTEC notified Arizona Public Service, the power plant’s majority owner, about plans to exercise the option to purchase that interest.

APS owns 63% of the generation from Units 4 and 5, followed by the Public Service Company of New Mexico with 13%, the Salt River Project with 10% and Tucson Electric Power and EPE with 7% each. EPE entered into an asset purchase agreement in February to sell its entire interest to APS.

More: Farmington Daily Times

Town Agrees to Solar Agreement with Florida Firm

Construction on a $2 million solar farm will start in January after the Aztec City Commission approved agreements with a Florida developer.

The commissioners approved the deal to enter into a wholesale power agreement and build a solar energy facility on city property with Guzman Energy of Coral Gables, Fla.. The 1-MW facility will be located south of the city.

More: Farmington Daily Times

NEW YORK

Power Marketer Agrees to Refunds

An independent supplier of electricity and gas for residential customers has agreed to refund nearly $1 million to resolve complaints about its billing practices. Ambit Energy issued $950,700 in refunds to 1,566 customers following an investigation by the state’s Department of Public Service’s consumer advocate.

The state investigation was launched following complaints about Ambit’s customer disclosure statements and renewal notices, particularly for customers who were moved from a guaranteed-savings plan into a variable rate plan charging significantly more.

More: Syracuse.com

State Reallocates $6 Million of Solar Fund

The state has reallocated $6 million in its solar incentive program, which will be available to new applicants.

Gov. Andrew Cuomo’s $1 billion NY Sun program includes block grants in each region of the state that run out after a certain amount of money is spent. The reallocation comes after the cancellation of some projects.

More: Times Union

NORTH DAKOTA

SPP Membership Sets Up Company to Become Major Energy Player

A 25-year-old electric cooperative has joined SPP, allowing it to make a bigger mark on the region’s energy map.

Mountrail-Williams Electric Cooperative said that joining the RTO will give it access to export power to other regions, something it has been unable to do before. SPP will also help Mountrail-Williams optimize its transmission system.

Dale Haugen, manager of Mountrail-Williams, said that SPP membership “will position us in the future for wind generation and even natural gas generation and everything else. It puts us into the marketplace.”

More: Williston Herald

Transmission Authority Faces Challenge in Solutions to CPP

The Transmission Authority, which plans and oversees transmission buildout in the coal-dependent state, is facing new challenges to comply with the federal Clean Power Plan.

Authority Director Tyler Hamman said “no one really knows what to do” about the CPP yet. Any solutions that involve constructing more wind power will also require additional transmission infrastructure.

More: The Bismarck Tribune

County Approves Wind Farm, Despite Opposition

The Stark County Commission and its Planning and Zoning Board approved a conditional-use permit for a controversial wind farm to be erected by NextEra Energy Resources.

The public bodies were divided on the issue, reflecting a split in the community over the $250 million, 87-turbine project.

More: The Dickinson Press

OHIO

Dominion East Customers Get a Break on Natural Gas

Dominion East Ohio customers can expect to pay lower natural gas bills this winter, as abundant supply has driven down the price of the fuel and forecasters predict a milder winter compared with the past two years that will reduce demand, the company said.

Under the current rate, the average residential customer will receive a December bill of about $66.12, nearly 40% less than in the same period a year ago.

“One of the major drivers of our supply security is increasing natural gas production right here in Ohio,” said Jeff Murphy, vice president and general manager.

More: Dominion East Ohio

TEXAS

PUC Recommends Reducing EPE Rate Request

El Paso Electric’s proposed rate increase for customers should be reduced by about $17 million, or 24% less than the utility requested, the Public Utility Commission staff recommended.

The state regulatory agency staff recommended EPE’s rate-increase request be decreased from $71.5 million to $54.3 million, according to documents filed Dec. 18 with the PUCT as part of the review process. The City of El Paso thinks the utility should receive only a $23.5 million increase.

The PUC staff recommended approving the utility’s request to create a new rate class for residential customers with rooftop solar systems, which would increase those customers’ electric rates more than regular residential customers. That proposal is being fought by solar installers, homeowners with rooftop solar and others.

More: El Paso Times

VIRGINIA

Governor Pledges to Increase Solar Power

The state government will work toward deriving at least 8% of its electricity from solar power over the next three years, Gov. Terry McAuliffe has pledged.

That’s about 110 MW, about seven times more solar power than is installed across the state.

The initiative grew out of a study by McAuliffe’s Climate Change and Resiliency Commission.

More: Richmond Times-Dispatch

WEST VIRGINIA

FirstEnergy Cos. Win Rate Increases

The Public Service Commission has approved rate increases for two FirstEnergy subsidiaries, allowing them to recover $96.9 million, including expenses for beefed-up tree trimming programs and higher fuel and purchased power costs.

Typical residential customers of Mon Power and Potomac Edison can expect to see a monthly increase of about $9 in their January bills.

Since the PSC approved the companies’ vegetation management program in April 2014, tree trimming has taken place along 7,000 miles of transmission lines.

More: Associated Press

WISCONSIN

Republicans Trying Again to Lift State Nuclear Ban

GOP leaders in the state are pushing ahead with two bills that would lift the state’s 32-year-old ban on new nuclear generation.

Three previous legislative efforts in the last decade failed to lift the ban, but last month the State Assembly’s Committee on Energy and Utilities voted 13-0 in favor of reopening debate on ending the moratorium. The Assembly will vote on its bill in January, while the Senate’s bill hasn’t been scheduled for a hearing date yet.

Michael Corradini, a University of Wisconsin-Madison professor of engineering physics, said even though nuclear plants are being retired today for economic reasons, plans for smaller, more inexpensive nuclear plants are being developed and could be put in service within the decade.

More: The Chippewa Herald

January 5, 2016

Stakeholder Soapbox: Most Important Energy Numbers from 2015

By Aaron Tinjum

There were a number of major energy developments in 2015, including historically low oil prices, record levels of natural gas in storage, major policy and regulatory changes, and a groundbreaking international climate agreement.

We’ve assembled some of the most telling energy statistics to help highlight some of the year’s biggest energy trends. Here are the top energy numbers from 2015.

Near 4 Tcf

US Breaks Gas Storage Record

The U.S. Energy Information Administration reported that the country’s working natural gas in storage as of Oct. 30 matched the all-time record of 3,929 billion cubic feet (Bcf).

A few weeks later, U.S. working natural gas in storage broke the all-time record with 3,978 Bcf, just shy of 4 trillion cubic feet.

What conditions helped contribute to a record year for natural gas storage? Record levels of natural gas production — marketed production hit a record high of 81.1 Bcf/day in September — and an exceedingly mild winter in key consumption regions, especially the Northeast.

$49/barrel

Oil Prices Tumble

It was a tumultuous year for global crude oil prices.

According to estimates from EIA, the average price per barrel of West Texas Intermediate crude oil fell to $49.08 in 2015, a drastic decrease from $93.17 in 2014 and $97.98 in 2013.

It was a similar story for Brent crude oil, which averaged $52.93, down from $98.89 in 2014 and $108.56 in 2013.

What helps explain the dramatic drop in oil prices? The decrease is largely due to sustained growth in global production, which has outpaced consumption growth since August 2014, resulting in a surplus in global inventories.

EIA expects crude prices to increase slightly in 2016.

2 Degrees Celsius

Climate Agreement Reached in Paris

On Dec. 12, 2015, 195 countries reached an unprecedented climate change agreement at the 21st session of the U.N. Framework Convention on Climate Change’s Conference of the Parties in Paris.

The new treaty — which was the product of a four-year round of negotiations — aims to halt the global temperature increase well below 2 degrees Celsius above preindustrial levels, with a stretch goal of 1.5 degrees Celsius above preindustrial levels.

By U.N. estimates, halting the increase at 2 degrees Celsius alone will require a total emissions reduction of 40 gigatonnes, which will be no easy feat given that current proposals in aggregate would only keep emissions under 3 degrees Celsius.

So, how can the ambitious target be met? Natural gas, renewable energy resources and increased energy efficiency are all expected to play major roles worldwide.

32% by 2030

Obama Unveils the Clean Power Plan

In August, President Obama unveiled the final version of EPA’s Clean Power Plan.

The highly anticipated plan targets a 32% emissions reduction in the electric power sector — the largest source of carbon pollution in the U.S. — by 2030. The new rule is an increase from the initial proposal of 30% and is projected to cut carbon pollution by 870 million tons below 2005 levels.

Among the plan’s key provisions are flexible compliance options for states and utilities, safeguards for reliability, and an extended compliance period that doesn’t begin until Jan. 1, 2022.

20 Years

Power Sector Emissions Drop to Lowest Levels Since 1995

While the Clean Power Plan was a major development in 2015, a less-covered story was that carbon emissions from the U.S. power sector have already decreased significantly in recent years.

According to an analysis conducted by the Sierra Club, annual carbon emissions produced by the U.S. power sector will total 1,983 million metric tons (MMT) by the end of 2015, which is the lowest level since 1995.

What explains the decrease? Unprecedented coal retirements have played a major role, with 2015 retirements equaling the amount of capacity retired from 1990-2009.

+1%

Total Energy-Related Emissions Rose 1% in 2014

While carbon emissions from the U.S. power sector were projected to decrease in 2015, final analyses indicated that total U.S. energy-related emissions increased in 2014.

According to EIA, emissions rose 1% in 2014 due to increased energy consumption in the transportation, commercial and residential sectors.

Altogether, U.S. energy-related carbon dioxide emissions were 5,406 MMT in 2014, 1% more than their 2013 level. In the transportation sector, CO₂ emissions were 24 MMT higher than the 2013 level. Commercial sector emissions rose by 19 MMT and residential sector emissions by 18 MMT.

Fortunately, compressed natural gas transportation solutions, cutting-edge building analytics and improved household energy efficiency all offer clear ways to reduce overall energy-related emissions.

5,000,000 Homes

Installed Solar Capacity Tops 24 GW

In 2015, U.S. total installed solar capacity topped 24.1 GW in the third quarter — enough to power 5 million U.S. homes.

With the extension of the investment tax credit (ITC) for solar systems, solar installations are expected to continue to grow. However, the bigger story might be that businesses are coming to fully recognize the inherent, long-term value of solar systems.

69,783 MW

ERCOT Shatters Demand Record

In August, ERCOT shattered its all-time peak demand record.

Demand for electricity reached 69,000 MW for the first time in the grid operator’s history. Electricity demand soared to 69,408 MW between 3 and 4 p.m. on Aug. 10 and rose to a record high of 69,783 MW between 4 and 5 p.m.

How did ERCOT meet the heightened demand? Through a combination of renewable resources — especially wind — and demand response.

$7.3 Billion

Capacity Performance Will Cost Consumers $7.3 Billion

In 2015, grid reliability became more expensive for many customers.

A report produced by the American Public Power Association found that PJM’s Capacity Performance model — which was opposed and challenged by Direct Energy — will cost consumers a staggering $7.3 billion over the next three delivery years.

PJM made the changes to its capacity market structure in response to the polar vortex of 2014, when 22% of the RTO’s generation resources were knocked offline.

While the changes were aimed at ensuring greater reliability during extreme weather events, it’s clear the plan will have an inverse effect on the region’s consumers and businesses.

Aaron Tinjum is Senior Writer for Direct Energy Business.

January 5, 2016

Infrastructure Moves to Forefront in New England

By William Opalka

Winter reliability, the forward capacity market and infrastructure expansion have been the dominant themes in New England in recent years, and 2016 appears to be no different.

Record warmth this winter has kept power prices tame and new reliability incentive programs are expected to ensure adequate fuel supplies. Capacity prices may also moderate due to the addition of new generating resources.

Capacity Prices Expected to Drop

Forward Capacity Auction revenues have almost quadrupled over the past two auctions, from just more than $1 billion in 2013 to $3 billion in 2014 and $4 billion last year. About 1,000 MW of new generation entered the market for the 2018/19 capacity commitment period.

Morningstar says it expects 750 MW of dual-switching capability to be added for winter 2015/16 and 1,000 MW more by winter 2016/17. (See ISO-NE: Little Room for Error in Winter.)

A lingering controversy to be cleared up before the coming auction is how solar resources should be calculated. (See Generators Dispute ISO-NE on Solar Capacity.)

Moving Toward Renewable Energy

Massachusetts is expected to reconsider its net metering cap early this year after proposals to raise it got bogged down in the legislature in 2015. Utilities there are closing in on the 1,600-MW limit.

Massachusetts, Connecticut and Rhode Island have embarked on a joint effort to procure clean energy more cost-effectively. Bids on prospective projects are due at the end of January.

The shift to renewable energy is progressing, as New England continues to lose its nuclear generation fleet. Entergy last year announced its 680-MW Pilgrim nuclear station will close no later than mid-2019, but the final date is expected to be announced by the middle of this year.

Key Milestones

Meanwhile, several proposals for new transmission lines and two natural gas pipelines reached key milestones last year, with more significant decisions on their fates due by the end of 2016.

Spectra Energy’s Algonquin Gas Transmission asked FERC in November for a pre-filing review of the proposed Access Northeast pipeline. The company expects to file a formal application in about a year and hopes to put the first phase of the project in service by November 2018. (See Algonquin Submits Pre-Filing Request for Access Northeast Pipeline.)

Also in November, developers of the Northeast Energy Direct pipeline through Massachusetts and southern New Hampshire filed certificates of need with FERC. The Kinder Morgan project would transport Marcellus shale gas from Pennsylvania. The developers hope for FERC approval in the fourth quarter. (See Northeast Energy Direct Files for FERC Certificate.)

Hydropower Plans Move Forward

Two competing proposals to import Canadian hydropower into the region also advanced last year.

Northern Pass Transmission received its draft environmental impact statement from the U.S. Energy Department. The New Hampshire Site Evaluation Committee is expected to rule by the end of the year on the 192-mile transmission line to move 1,090 MW of hydropower from Quebec. (See Committee Rules Northern Pass Application Complete.)

TDI New England’s Clean Power Link received its final environmental impact statement, which recommended approval of a presidential permit. The cross-border project would transmit 1,000 MW of Canadian hydropower under Lake Champlain.

The first phase of the project’s open season in December received expressions of interest from seven utilities on both sides of the border seeking 3,200 MW of capacity. Negotiation of the agreements will continue through this year.

January 5, 2016

After Year of Change, PJM Faces Questions

By Suzanne Herel

2015 was a year of change for PJM, which said goodbye to CEO Terry Boston, ushered in its new Capacity Performance product and awarded its first competitively bid transmission projects under FERC Order 1000.

Capacity Performance undoubtedly will be in the headlines again in 2016 under new CEO Andy Ott, previously executive vice president of markets. The new year also will see policymakers dealing with cost allocation for new transmission, the future of demand response and potential FERC rulings on financial trading and transmission planning.

That work will take place against the backdrop of a continuing fuel shift. For the first time in 2015, natural gas passed coal as the fuel used to generate the most electricity, thanks to the cheap bounty uncapped in the Marcellus Shale.

Morningstar analyst Jordan Grimes says the RTO, which retired 9.8 GW of coal-fired generation last year, could see as much as 18.5 GW of gas-fired combined cycle units come online through 2019.

Grimes said the new generation will have some of the lowest prices in the PJM dispatch stack after wind, nuclear and hydro and is unlikely to set marginal prices often during on-peak hours. “The combined cycles will displace some coal generation, but at the margin it will be displacing less efficient gas units. This gas-on-gas competition means coal will actually be on the margin more often,” Grimes wrote. “Coal plants amortizing costs over a shorter time period, MATS compliance and less energy revenue should encourage coal plants to raise offers with their new pricing power on the margin.”

Effective March 31, PJM will move its deadline for day-ahead energy offers up 90 minutes to 10:30 a.m. ET to ensure gas units have time to procure fuel before the revised 2 p.m. ET timely nomination deadline for gas. (See PJM, NYISO, ISO-NE Gas Scheduling Filings OK’d.)

After a long debate, PJM members voted to raise the energy market offer cap to $2,000 to ensure that gas-fired generators can recover their costs when prices spike during extreme conditions, like those seen during the 2014 polar vortex. (See PJM Members OK $2,000/MWh Energy Market Offer Cap.)

Capacity Performance

It was unusually high generator outages during the polar vortex that also gave rise to the controversial new Capacity Performance model, designed to strengthen reliability by giving bonuses to over-performing generators and assessing heavy penalties on those that fail to perform.

The new year will bring PJM its first operational experience under the new rules. PJM will have about 95 GW of Capacity Performance resources for the 2016/17 delivery year beginning June 1.

Transition auctions to add the upgraded product cleared at $134/MW-day (2016/17) and almost $152 (2017/18). (See PJM Transition Auction Means Reprieve for Exelon Nukes.)

The 2018/19 Base Residual Auction — the first BRA to include the product — saw prices rise 37% to $165/MW-day in most of the RTO, while the ComEd zone broke out at $215 and Eastern MAAC hit $225.

UBS predicts prices will dip to about $100/MW-day for the 2019/20 delivery year and $153/MW-day for 2020/21. The analysts said changes to PJM’s load forecasting methodology — aimed at correcting several years of overly bullish projections — “largely [undo] the upside” from CP. (See “Load Forecast to Include Distributed Solar” in PJM Markets and Reliability Committee Briefs.)

pjm

Bidding behavior could be affected by FERC rulings on PJM’s market rules.

Last month, PJM asked FERC to rule by Feb. 1 on its Capacity Performance compliance filings and outstanding rehearing requests (ER15-623, EL15-29). PJM said it is trying to avoid “operational challenges” that could result from uncertainty over when PJM’s dispatch decisions will result in a capacity market seller being exposed to non-performance charges.

“Some resource owners have told PJM they will turn to self-scheduling (or self-dispatching) and operate at maximum output to avoid non-performance charges,” PJM wrote. “This clearly is an anomalous result which is contrary to the goals of Capacity Performance as a tool to enhance operational performance and system reliability.”

Changes also could result from a problem statement approved by stakeholders in December to consider widening force majeure rules and expanding ways for generators to minimize underperformance penalties by netting them against over-performing generators. (See “Ways to Mitigate Risk in CP Market to be Studied” in PJM Markets and Reliability Committee Briefs.)

Despite the increase in prices under Capacity Performance, FirstEnergy and American Electric Power have asked Ohio regulators to approve proposals to essentially reregulate 6,300 MW of their generation. PJM filed testimony last week expressing concerns over the impact of the proposals on the wholesale markets. (See PJM Seeks Changes to AEP, FirstEnergy PPAs.)

Order 1000 Projects

The PJM Board of Managers ended the year by approving $490 million in transmission projects proposed in response to FERC Order 1000 competitive solicitations.

In July, it finally greenlighted its first Order 1000 project, a stability fix for the Salem and Hope Creek nuclear reactors on New Jersey’s Artificial Island. The approval of the project, which followed a controversial two-year selection process, almost immediately spawned a new dispute as officials in Maryland and Delaware complained that they were being billed for virtually all of the $146 million price tag. The cost allocation issue will be the focus of a FERC technical conference scheduled for Jan. 12. (See FERC Questions Fairness of Artificial Island Cost Allocation.)

Transmission Planning, UTCs, FTRs

PJM stakeholders will be spending a lot of time with FERC in 2016:

Reply comments are due Jan. 15 in FERC’s inquiry into PJM’s local transmission planning process, the subject of a technical conference in November. (See PJM TOs Defend Jurisdiction at FERC Conference.)
PJM traders are awaiting a FERC order telling them whether up-to-congestion trades will be charged uplift and made subject to PJM’s financial transmission rights (FTR) forfeiture rule (EL14-37). In opening the Section 206 docket in 2014, the commission said it would rule within five months after it receives comments following a technical conference. The conference was held Jan. 7 and comments were due May 29. That put FERC on schedule for a ruling by the end of October, but there has been no word from the commission so far. (See Monitor at Odds with PJM, Marketer over FTR Forfeiture Rule.)
Last week, the commission ordered a technical conference on PJM’s proposed changes to its FTR allocation rules. (See related story, FERC Orders Technical Conference on PJM FTR Rule Changes.)
2016 also could see action by FERC to address issues over PJM’s seam with MISO. In February, the commission said it was considering intervening and ordered the RTOs to provide status reports on eight unresolved seams issues (AD14-3). (See Impatient FERC Hints at Action on PJM-MISO Seams Disputes.) Commission staff have attended three PJM/MISO joint stakeholder meetings since.

PJM stakeholders also are anxiously awaiting the Supreme Court’s ruling on an appellate court order that voided FERC’s jurisdiction over DR. With one justice having recused himself, the court could split 4-4, leaving the ruling standing and PJM scrambling to adjust to the impact on its capacity market. (See FERC Jurisdiction over DR in Peril as Supreme Court Splits.)

The court also will review lower court rulings throwing out state-issued contracts Competitive Power Ventures won to build combined cycle plants in Maryland and New Jersey. (See SCOTUS Agrees to Hear Md., NJ-FERC Subsidy Case.)

New Faces and Retirements

In addition to the departure of Boston, the RTO also said goodbye to board member William Mayben, who retired after eight years. South Carolina engineer Terry Blackwell was elected to serve out the remainder of Mayben’s term. Going forward, the board announced, members will be ineligible for re-election once they either turn 75 or have served five terms. (See New PJM Board Member Elected, Re-election Eligibility Changed.)

January 5, 2016

Company Briefs

Ameren Floods closed segments of the Illinois and Mississippi rivers to navigation in the St. Louis area and forced Ameren to use ferries to gets its workers to a stranded power station.

The flooding also caused Enbridge and Spectra Energy to shut down oil pipelines until the waters recede.

Workers at Ameren’s Sioux Energy Center north of St. Louis were being ferried to the isolated coal-fired plant, which remained in operation.

More: Bloomberg News

New Wind Farm Gives Westar 280 MW of Renewable Energy

Westar Energy is working with Infinity Wind Power to construct a 280-MW wind farm in western Kansas. The Western Plains Wind Farm will bring Westar’s renewable energy total to more than 1,500 MW.

Westar says it is finalizing a separate agreement for another 200 MW of wind energy, with an option to own 50% of that power.

The utility company anticipates both wind farms to be operational in early 2017. The projects will supply enough electricity to power 400,000 homes.

More: Wichita Business Journal

PNM Brings Solar Facility Online South of Albuquerque

Public Service Company of New Mexico’s fourth solar energy center is its largest yet, with more than 40,000 photovoltaic panels that will generate enough energy a year for more than 4,000 residential customers.

The Rio Communities Solar Energy went online Dec. 31 south of Albuquerque. PNM invested about $20 million in the project, which was built on 103 acres of land.

More: Valencia County News-Bulletin

ComEd Planning Tx Line Along O’Hare Expressway

Commonwealth Edison is holding open houses throughout January in various suburban Chicago towns to present its plans for a 9-mile transmission line along the Illinois Route 390. The 138-kV line, which will run through DuPage and Cook counties, will be supported by towers ranging from 140 feet to 170 feet tall.

The company said the line is necessary to improve service to Chicago’s western suburbs. It will need approval from the Illinois Commerce Commission. The company wants to complete the project by the summer of 2018.

More: DuPage Policy Journal

PSE&G’s Mount Holly Solar Facility Starts Operation

Public Service Electric and Gas put the finishing touches on its largest solar facility in New Jersey, and the 12.9-MW solar farm is now generating electricity for the grid. The solar farm, consisting of 42,000 panels, is on the former L&D Landfill near Mount Holly.

It is the fourth solar facility the utility has built on New Jersey landfills. It has a 3-MW facility in Kearney, a 10-MW solar farm in Bordentown and an 11-MW facility in Deptford. The L&D landfill was a former Superfund site. PSE&G used 53 acres of the site for this facility and may expand it later.

More: The Philadelphia Inquirer

Dominion Proposes $85 Million to Offset James River Tx Line Impacts

Dominion Virginia Power has proposed spending $85 million to offset environmental and visual impacts of its proposed 500-kV transmission line across the James River near its Surry Power Station. The company said the line, supported by 17 towers up to 295 feet high, is necessary to protect reliability in the region.

Opponents said the project would be an eyesore and harm sensitive environmental areas. National Park Service Director Jonathan B. Jarvis urged the U.S. Army Corps of Engineers to deny a construction permit, saying the power line would “mar the historic setting” of the nearby Yorktown battlefield, part of Colonial National Historical Park.

The company’s proposals include spending $15.5 million in water quality improvements, about $12 million in landscape conservation near the Yorktown site and $4 million to protect a marsh at Hog Island Wildlife Management Area.

More: The Virginia Gazette

Murray Energy Eyeing Cutting Nearly 600 Mining Jobs

The downturn in coal demand is prompting Murray Energy to cut nearly 600 mining jobs, according to the United Mine Workers of America. While a Murray spokesman declined to confirm the number, he said there were changes coming and described upcoming “workforce adjustments.”

CEO Robert Murray has been among the most vocal critics of the Obama administration’s Clean Power Plan, which would accelerate the retirement of coal-fired generation throughout the country.

The decline in coal-fired generation is causing a decline in coal demand, pressuring the Appalachian mining industry, which already is suffering from competition from cheaper coal from Illinois and Wyoming.

More: Associated Press

Dominion Sheds Solar to SunEdison for $180 Million

Dominion Resources completed the first phase of a two-part deal to reduce its solar investments by 425 MW when it sold 33% of its interest in 15 projects to SunEdison for $180 million.

SunEdison turned around and sold the newly acquired portfolio to Terra Nova Renewable Partners, a joint venture SunEdison formed with JPMorgan Chase investors.

The second phase of Dominion’s solar sale will come early this year, when it is expected to sell 33% of its stake in nine more projects, representing 172 MW of capacity. Dominion says it will use the cash from the sales to reduce debt.

More: Richmond Times-Dispatch

Two-Thirds of Duke’s Ash Ponds Rated Medium or High Risk

The North Carolina Department of Environmental Quality ranked 20 of Duke Energy’s 32 coal ash storage ponds in the state as high risk or intermediate risk. A department draft report placed fewer of the ash repositories in the high-risk category than an earlier report.

The DEQ will release its final report within 30 days. Any ponds in the high- to intermediate-risk categories must be excavated instead of merely drained and capped, driving up remediation costs. The company has estimated the cost of closing all 32 ponds at $3.4 billion. Those costs will be passed on to customers through rate increases.

More: Charlotte Observer

Talen Energy Execs’ ‘Golden Parachutes’ Sign of a Possible Merger?

talen Documents filed by Talen Energy with the Securities and Exchange Commission detailing possible severance pay and other benefits could be a sign that Talen might be the target of a merger or subject of an acquisition attempt, according to The Morning Call.

The newspaper reported that Talen filed so-called “change-in-control” agreements with the SEC. Such agreements are often approved by a company’s board to retain key executives when the company is the target of a takeover. Talen spokesman Todd Martin said the filings were routine. “Agreements and provisions similar to those disclosed are not unusual for a public company, and the filing itself is a standard regulatory requirement.”

Talen CFO Jeremy R. McGuire, COO Clarence J. Hopf Jr. and Chief Nuclear Officer Timothy S. Rausch were named in the documents. In addition to severance pay based on their salaries — each makes at least $400,000 annually — they would receive stock options, restricted stock units and performance bonuses. The value of the extras ranges from $840,000 to $1.1 million.

More: The Morning Call

January 5, 2016

Changes to PJM Load Forecast Cuts Benchmark Peaks

PJM’s new load forecasting methodology cuts projected peaks for several key benchmarks by 3.5% or more, the RTO said last week.

In response to criticism that its forecasts overestimated loads, PJM has made a number of changes to its methodology. Among them is the treatment of weather, added variables to gauge trends in equipment and appliance saturation and efficiency, and accounting for energy efficiency resources and distributed solar generation. (See “Load Forecast to Include Distributed Solar” in PJM Markets and Reliability Committee Briefs.)

The new methodology has particular ramifications for both the capacity market and transmission planning. It reduces the forecast peak for the 2019/20 Base Residual Auction by 5,660 MW (-3.5%) and that for 2021 — the next Regional Transmission Expansion Plan study year — by 8,406 MW (-5.1%).

The forecast released Wednesday projects a 2016 RTO summer peak of 152,131 MW. That’s a reduction of 5,781 MW (-3.7%) compared with PJM’s forecast a year ago but an increase of 1,836 MW (1.2%) from the 2015 normalized peak.

The RTO’s summer peak is predicted to grow 0.6% annually over the next 10 years, with growth rates for individual zones ranging from -0.1% in the Atlantic Electric zone, which has been hurt by a decline in casino gambling, to 1.2% in the Dominion zone, which is seeing “substantial on‐going growth in data center construction.”

The winter peak load is expected to rise an average of 0.8% per year over the decade, bracketed by Atlantic Electric, which shows no growth, and Dominion, up 1.6%.

The forecast for the APS zone reflects increasing load from natural gas processing plants, which are expected to add 120 MW to 280 MW annually for 2016-2020. The zone’s summer peak is expected to increase 0.8% per year through 2026 with a 1.1% annual increase in winter peaks.

— Suzanne Herel

January 5, 2016

Transmission, REV Dominate NYISO’s Landscape

By William Opalka

Bradley Jones, who stepped in as CEO of NYISO late last year, recently told RTO Insider that his three top initiatives “have always been transmission, transmission, transmission.”

He came to the right place. Transmission upgrades dominated activity in the NYISO footprint in 2015 and promise to occupy headlines in 2016.

The improvements are occurring amid a changing energy landscape. State officials and regulators are deciding how to handle aging and unprofitable power plants in western New York. Meanwhile, the Reforming the Energy Vision initiative seeks to encourage the growth of distributed and renewable resources throughout the state.

The New York Public Service Commission last month declared a public policy need for an expected $1.2 billion in upgrades to move 1,000 MW of power from upstate generation sites to load centers in and around New York City. The project has been discussed for more than three years; now, NYISO will seek bids on the projects. The PSC hopes to evaluate siting proposals by the end of the year, with approvals anticipated in 2017. The upgrades are expected to be in service in 2019. (See NYPSC Declares Public Policy Need; Directs NYISO to Seek Tx Bids.)

Future of Nuclear Uncertain

Will the transmission projects come too late to save aging and unprofitable nuclear and coal-fired power plants in the western part of the state? Or, as environmental and consumer advocates might ask: Are those plants even worth saving?

In his State of the State address on Jan. 13, Gov. Andrew Cuomo is expected to announce details of a plan to shift the state to 50% renewable energy by 2030, along with a strategy to keep the nuclear plants open until then by offering some financial recognition of their carbon-free emissions. (See Cuomo: 50% Renewables by 2030, Keep Nukes Going.)

Nevertheless, Entergy is standing by its decision to close the James A. FitzPatrick nuclear plant on Lake Ontario in late 2016 or 2017.

Exelon and stakeholders are finalizing a reliability support service agreement for the R.E. Ginna nuclear plant that would run through March 2017 — after which, the company says, the plant is likely to retire. The PSC has extended the negotiating window for that deal to Feb. 29. (See Ginna Lifeline to End in 2017; Profits After ‘Unlikely’.)

At the same time, the state’s REV proceeding is continuing with development of demonstration projects, including microgrids and energy efficiency programs.

Much attention will be paid to the anticipated Track 2 Order that addresses rate design for the new business models. (See NYPSC Outlines Reforming the Energy Vision Changes.)

RMRs Winding Down

In the meantime, several reliability-must-run agreements that pay unprofitable plants above-market rates are starting to wind down. Some of the facilities hope to repower with natural gas, proposals that will be addressed by regulators this year.

One of these, the coal-fired Dunkirk station outside of Buffalo, was mothballed Dec. 31, when its RSSA expired. Owner NRG Energy has suspended the repowering plan pending resolution of a lawsuit filed by Entergy. (See NRG Plant Closures Could Impact Reliability in NY.)

The 312-MW Cayuga coal-fired plant outside of Ithaca is operating under an RSSA through mid-2017. Although its owner has proposed converting it to natural gas, a transmission project proposed by a distribution utility and endorsed by environmentalists could make the plant unnecessary.

Plans to convert the idled Greenidge power plant on Seneca Lake to gas are on hold as EPA has said it must undergo a “new source” review.

January 5, 2016

SPP, ERCOT Set New Wind Peaks

SPP, which has already set six wind peaks this fall, established another on Dec. 19 with 9,948 MW, the second time it has eclipsed 9,000 MW. The RTO said wind’s penetration level was 33.5%, off the record 38.3% set Nov. 4.

ERCOT closed out 2015 with its eighth wind peak of the year, a record 13,883 MW on Dec. 20, representing more than 93% of its installed wind capacity and 44.7% of load served.

The wind generation easily topped the previous peak set Dec. 19, when the ISO exceeded 13,000 MW for the first time with 13,029 MW.

ERCOT generated almost 4.4 million MWh of wind energy in November, accounting for 18.4% of energy used.

— Tom Kleckner

January 5, 2016

A Few Growing Pains for SPP as it Celebrates 75 Years

By Tom Kleckner

During the past two years, SPP has added new markets for its members, some 5,000 MW of peak demand and 7,600 MW of generating capacity in the Upper Great Plains, extending its footprint to the Canadian border in the process.

So what does it plan for an encore in 2016?

Celebrating its 75th anniversary, for one. SPP will mark the occasion this fall with several ceremonies and a commemorative publication chronicling the RTO’s history, which began in the days after the attack on Pearl Harbor.

That’s when 11 regional power companies in the Southwest — including predecessors of today’s SPP member companies — signed an agreement to pool their energy resources and ensure Central Arkansas’ aluminum production could maintain 24/7 operations. When World War II ended, an executive committee decided to continue the organization to maintain reliability and coordination.

From those modest beginnings, SPP has grown into a sprawling member-driven organization, coordinating electricity flows over 56,000 miles of high-voltage transmission lines across 575,000 square miles in all or parts of 14 states, from the Deep South to the Dakotas and westward. It counts 97 members representing cooperatives, power producers, marketers and independent transmission companies along with the usual transmission owners, and has 170 registered participants in its markets.

A ‘Success Metric’

SPP’s growth has been good news for its members.

The RTO projects the addition of the Integrated System (IS) last October will yield $334 million in member benefits over a 10-year period. It also has said the Integrated Marketplace — comprising day-ahead, real-time balancing and congestion-hedging markets — generated approximately $210 million in total regional net savings in its first year, in addition to $170 million in savings from SPP’s previous energy imbalance service market. SPP plans to release a study quantifying the transmission benefits its members receive in January.

“It’s been another interesting year for the corporation and our members,” SPP CEO Nick Brown said during October’s board meeting. “If ever there’s a success metric, it’s the members who have decreased costs or rates.”

SPP will focus much of this year on improving its rapidly maturing markets with three projects: enhanced combined cycle (ECC) logic, gas-electric “harmonization” and the Z2 crediting tool.

Improved Economic Dispatch

The ECC project is designed to provide more sophisticated modeling that captures the flexibility of combined cycle plants. Each combined cycle configuration will be modeled in the market-clearing engine as a separate resource.

SPP expects the increased flexibility to allow “optimization of the combined cycle resource configuration throughout the unit commitment processes,” projecting in its 2016 budget a $3 million to $5 million reduction in generation costs. The savings are expected to grow as new combined cycle plants join SPP in the future.

SPP has targeted March 2017 for completion of the $1.5 million project. (See “Enhanced Combined-Cycle Project Moves Forward” in SPP Board of Directors/Members Committee Briefs.)

The ECC work will be done in conjunction with system changes needed to close the Integrated Marketplace’s day-ahead market earlier and shorten the solution time for posting results by 30 minutes. Both have significant impacts on the market operating system’s solution time.

SPP said the gas-electric harmonization work will be completed by the fall, at a projected cost of $6.2 million.

The initiative is a result of FERC Order 809, which moved the timely nomination cycle deadline for gas from 11:30 a.m. CT to 1 p.m. (See “Board Approves Gas-Electric Timeline Change” in SPP BoD/Members Committee Briefs.)

SPP says the schedule changes are “an incremental improvement over the existing timeline.”

Years of Incorrect Credits

The Z2 crediting project dates back to the last decade as a result of years of incorrect credits for transmission upgrades. (See “Z2 Crediting Task Force Remains on Track” in SPP Markets and Operations Policy Committee Briefs.)

A project team is developing software that will properly credit and bill transmission customers for system upgrades under SPP’s Tariff attachment Z2. The problem has been avoiding over-compensating project sponsors and including a way to “claw back” revenues from members who owe SPP money for other reasons.

The task force has estimated creditable upgrades of $750 million, with up to $90 million in transmission customer improvements and the remainder from sponsored upgrades.

The task force hopes to present a better estimate during the Markets and Operations Policy Committee and Board of Directors/Members Committee quarterly meetings in January.

SPP says the new system should reduce errors, disputes and resettlements.

Eyes on Expanded Footprint

SPP’s day-to-day business in 2016 will remain focused on maximizing the addition of the IS to its footprint.

The IS tripled SPP’s hydroelectric capacity, which represented only 1.1% of the RTO’s capacity in 2014. It also added winter-peaking regions, increased seams coordination issues and greatly expanded the geographic area for SPP’s reliability monitoring function.

SPP says the addition of the IS has “opened opportunities to expand SPP’s services to affiliated entities in the Western Interconnect” through membership or contracted services. SPP has an ongoing market-consulting contract with the Northwest Power Pool, which has been exploring the possibility of opening an energy market for several years.

Because of the surge in wind production, the RTO will refresh its 2009 wind-penetration study in February.

Navigating the Clean Power Plan

SPP will continue its work helping states comply with EPA’s Clean Power Plan. The RTO expects “significant impacts in the near term and well into the future.”

SPP’s 2016 operating plan says it intends to encourage regional compliance. But it acknowledges some states may decide to go it alone. Several SPP states have joined litigation to block the rule.

“The lawsuits will muddy the water in terms of how SPP interacts with its stakeholders as they work to comply with the standards,” it said.

SPP’s 2016 operating plan says it intends to encourage regional compliance. But it acknowledges some states may decide to go it alone.

The RTO will include CPP compliance in the 2017 Integrated Transmission Planning 10-year assessment. A near-term transmission study also will be conducted this year, with the results presented to MOPC and the board in April.

At that time, MOPC and the board should be taking up for consideration SPP’s first Order 1000 project, the 21-mile, Walkemeyer-North Liberal 115-kV project in Kansas. An industry expert panel is currently evaluating responses to SPP’s request for proposals.

SPP expects to receive 3,200 proposals for competitive projects in 2016, double the number it saw in 2014.

It also expects a “significant increase” in generation interconnection studies. SPP projects a 12% bump in transmission volume to more than 407 MWh in 2016.