Iberdrola SA announced Thursday it is acquiring UIL Holdings, which has electric and gas distribution companies in Connecticut and Massachusetts, in a cash and stock deal valued at $3 billion.
The Spanish energy conglomerate will incorporate UIL’s operations into its U.S. subsidiary, Iberdrola USA.
UIL shareholders will each receive one share of Iberdrola USA and $10.50 for each of their UIL shares, giving them 18.5% of the U.S. subsidiary. Iberdrola SA will own 81.5% of Iberdrola USA, which will be traded on a yet-to-be-determined U.S. exchange.
UIL unit United Illuminating provides electric service to Connecticut’s two largest cities, New Haven and Bridgeport. UIL also owns Southern Connecticut Gas, Connecticut Natural Gas and Massachusetts utility Berkshire Gas. UIL acquired the gas units from Iberdrola in 2010 for $1.25 billion.
The deal implies a share price of $52.75, a 25% premium to UIL’s closing share price on Wednesday.
Iberdrola USA already owns New York State Electric and Gas, Rochester Gas & Electric and Central Maine Power, with a combined 3 million customers.
UIL CEO James P. Torgerson will become Iberdrola USA’s new CEO. Iberdrola said Torgerson will select a U.S.-based leadership team from among UIL and Iberdrola USA executives.
Torgerson and two other UIL directors will join Iberdrola USA’s board, which will have up to nine members.
In earnings reported two weeks ago, Iberdrola highlighted U.S. operations in New York and New England as one of its bright spots as it coped with lower Spanish subsidies for its renewable energy operations.
It is also one of the leading wind energy companies in the U.S., with operations in about 20 states.
UIL Holdings has about 700,000 customers. The deal is expected to close later this year.
The agreement, which has been unanimously approved by both companies’ boards of directors, must be approved by the Connecticut Public Utilities Regulatory Authority, Massachusetts Department of Public Utilities, Federal Energy Regulatory Commission, Department of Justice, Federal Trade Commission and Committee on Foreign Investment in the United States.
The combined company intends to invest $6.9 billion in regulated electric and gas infrastructure and other capital expenditures over the next five years.
Exelon’s year-long lobbying campaign has won bipartisan backing for a bill that would charge Illinois electricity users a fee to ensure continued operation of three nuclear generators that the company says are unprofitable.
The proposal could increase Commonwealth Edison and Ameren bills by $300 million a year, according to the Citizens Utility Board, a consumer watchdog group.
The Low Carbon Portfolio Standard (SB1585, HB3293), announced Thursday, came a week after the introduction of a dueling measure, the Clean Energy Jobs Bill (SB1485, HB2607), supported by environmental and consumer advocates.
Both proposals say they will increase renewable energy and jobs while lowering carbon emissions as required by the U.S. Environmental Protection Agency’s Clean Power Plan. Both have bipartisan support.
Exelon says its plan would ensure the operation of the state’s nuclear power plants, which produce nearly half of Illinois’ power, provide more than 5,900 jobs and represent $9 billion in economic impact.
“There is simply no way Illinois will achieve meaningful carbon reductions and meet the EPA goals without preserving our current nuclear fleet,” said state Rep. Larry Walsh Jr., a Democrat who represents many nuclear plant workers in his Will County district and co-sponsored HB3293.
Walsh told the Chicago Tribune that the final proposal likely would represent a compromise bill hammered out with the proponents of the Clean Energy Jobs Bill. He could not be reached for comment on Friday.
That bill and its companion were introduced by state Sen. Don Harmon and Rep. Elaine Nekritz, both Democrats.
“If we can raise the energy efficiency standard to 20% and raise the renewable portfolio standard to 35%, we can create 32,000 new clean energy jobs every year,” Harmon said in introducing his bill. “The potential for Illinois if we act is great — and at the same time, the risk if we fail to act is enormous.”
The Exelon legislation was drafted in response to a 269-page, House-commissioned report released Jan. 8 that presented options to improve the finances of Exelon’s nuclear power plants. (See Exelon in Lobbying Push to Save Ill. Nukes.)
Under the proposed legislation, beginning next year, 70% of the electricity delivered by ComEd, which is owned by Exelon, and Ameren would have to be generated by “clean-energy” sources: solar, wind, hydro, nuclear, tidal, wave and clean coal.
The fee to customers would fund low-carbon energy credits that would be auctioned by the Illinois Power Agency.
The system would result in an average $2/month surcharge to electricity bills, not to exceed a 2.015% annual increase compared with 2009 rates. It would sunset at the end of 2021, or earlier if the state is in compliance with the EPA’s program.
While Exelon has said the legislation is needed to save the nuclear plants it maintains are struggling – Byron, Quad Cities and Clinton — the bill does not require the company to keep them open even if the new standard is adopted.
Critics of the power company’s proposal point to a Crain’s Chicago Business study of Exelon’s Securities and Exchange Commission filings that concluded its nuclear fleet is profitable. Exelon has declined to open its books to prove its contention.
“Exelon has made more than $20 billion in profits over the past decade, its overall nuclear fleet is profitable — and consumers have already paid for those plants several times over, from when the facilities were owned by ComEd,” said David Kolata, executive director of the Citizens Utility Board. “The solution to Illinois’ energy issues requires a much more comprehensive and long-term plan than Exelon’s proposal, which would raise ComEd and Ameren electric bills by an estimated $300 million a year.”
Exelon Senior Vice President Joseph Dominguez addressed the profits issue in an interview with Northern Public Radio.
“No one from Exelon has ever denied that the company is profitable. It is,” he said. “What we’re talking about is the profitability of units that are persistently losing money and our inability to keep those units open unless we recognize the important attributes that they provide.”
Ten people protesting the 550-mile Atlantic Coast Pipeline project were charged after blocking the entrance to Dominion Virginia Power’s Richmond headquarters last week.
About 50 protestors said they object to the proposed pipeline that would supply customers in North Carolina with shale gas from West Virginia. “This proposal would be a dangerous investment in fossil fuel infrastructure at a time when the scientific consensus is clear that we must invest in renewables, such as wind and solar, to avoid further warming of our planet,” said Whitney Whiting, a protester from Newport News, Va.
Nine were charged with traffic obstruction, and another was given a misdemeanor citation for disorderly conduct.
The Delaware River Basin Commission will consider at its March 10 meeting whether to allow Exelon to increase the amount of water the Limerick nuclear plant may draw from the Schuylkill River on days when the air temperature is 87 F or higher.
Exelon’s request seeks to make permanent the temporary permission it was given Aug. 19 to boost the amount of water it can use on hot days by 3.3 million gallons, from 44 million. The company said recent repairs that increased the efficiency of its closed circuit cooling water system led to the loss of more water through evaporation.
Exelon addressed concerns about taking too much water out of the river during heat waves, when river levels are at their lowest, by seeking permission to add water upstream. That would ensure against higher water temperatures dissolving oxygen and harming aquatic life downstream, according to the company.
The plant’s Unit 1 was out of service for three days last week after a main steam isolation valve closed unexpectedly. The Nuclear Regulatory Commission said the unit shut down without any further problems. Unit 2 was not affected by the event.
Ameren Illinois President Named One of Top Business Leaders by Magazine
Richard J. Mark, president of Ameren Illinois, was named one of the top business leaders by African-American Career World magazine.
“The executives on our inaugural list of top African-American business leaders were selected for their business acumen, leadership and vision to drive their company’s success, often during difficult times,” said Joann Whitcher, editorial director of Equal Opportunity Publications.
Mark oversees utility distribution operations to more than 1.2 million electric customers and 812,000 natural gas customers. He has led the company on a 10-year, $3.5 billion upgrade program.
SunEdison’s Maine Wind Energy Project Gets Environmental Staff Approval
The staff of a Maine environmental permitting appeals panel recommended upholding approval of SunEdison’s Bingham Wind project.
Maine’s Department of Environmental Protection in September granted a permit for the 62-turbine, $398 million project in western Maine, but activists appealed the decision. The staff of the Board of Environmental Protection, which hears appeals of the regulatory agency’s actions, said that the company’s plan was financially sound and recommended approval.
The board could rule on the final permit application March 5.
Clean Line Energy’s Rock Island Project Faces Appeal of ICC Ruling
Landowners and Commonwealth Edison are appealing the Illinois Commerce Commission’s approval of Clean Line Energy’s $2 billion Rock Island Line transmission project.
The proposed 3,500-MW direct-current line would deliver wind-generated power to Illinois from Iowa, Nebraska and South Dakota. The 500-mile line is the first merchant-owned transmission project approved by the ICC.
Heavy Snowfall in Carolina Causes 200,000 Duke Energy Outages
A rare heavy snowfall in North Carolina last week left more than 200,000 Duke Energy customers without power.
Up to 10 inches of thick, heavy snow caused outages in the upper third of the state. The lack of sunlight and weight of the snow on trees caused limbs to break and fall on power lines. The company worked into the weekend to restore service.
NRG Home Solar, fast becoming one of the largest residential solar companies in the U.S., is moving into the North Carolina market.
“North Carolina is an ideal market for solar and specifically for residential solar where we see significant untapped market potential throughout the state,” said Kelcy Pegler Jr., president of NRG Home Solar. The company is offering homeowners solar systems with zero-money down financing. It will open an office in Charlotte this spring.
NEW ORLEANS — MISO plans a Tariff filing in March to create a pool of alternate representatives to serve on the six-member Alternative Dispute Resolution Committee. Deputy General Counsel Eric Stephens told the Advisory Committee the ADR panel can fall short of its four-member quorum in disputes that result in multiple recusals because of conflicts.
MISO lawyers also are drafting changes to language requiring elections of the Board of Directors be conducted at the annual meeting. In the last election, 7% of members voted via electronic ballots before the meeting — the highest response rate ever — said General Counsel Steve Kozey. MISO made paper ballots available at the meeting to comply with the current rules but no one used them, he said.
Kozey said MISO will make a FERC filing this summer to eliminate the need for the paper ballot “safety valve.”
Consumer Reps Seek Funding for ROE Fight
Consumer representatives asked MISO to approve $200,000 in funding so that they can hire outside experts to help them in their bid to convince FERC to lower transmission owners’ return on equity (EL14-12).
Robert Mork, of the Indiana Office of Utility Consumer Counselor, representing the Public Consumer sector, said the group had used its own resources during settlement discussions but that it needs additional expertise now that the case has been scheduled for hearing. “We know how to litigate rate cases at the states; we do that all the time. But we don’t know how to do it at FERC,” he explained.
The consumers and other parties filed testimony in the case last week.
Kip Fox of American Electric Power questioned the need for the spending, saying there were nearly two dozen groups claiming to represent consumers in the docket.
“It’s wonderful that others are involved, but we think we have a central role,” Mork responded.
Fox said transmission owners would be essentially funding their opposition. Mork noted that utilities pay their lawyers and experts from revenues generated from retail ratepayers. In this case, he said, “it’s a matter of the shoe being on the other foot.”
Fox asked Kozey if the request might set a precedent for other groups seeking funding from MISO.
“Yes, and that’s the problem,” Kozey responded, saying the issue raises the question of what constitutes a “MISO expense.”
Kozey noted that MISO got itself removed as a defendant in the case. “It’s not our job to defend the transmission owners’ ROE. Nor do we think it’s our job to oppose” it, he said.
Kozey said stakeholder sectors will be given two weeks to file comments on the request.
“Absent stakeholder feedback, I would not be pushing my board” to authorize the payment, Kozey said.
Three Elected to Finance Subcommittee
The Advisory Committee elected three new members to the Finance Subcommittee: Venkata Bujimalla, manager of policy development for the Iowa Utilities Board (representing State Regulators); Marty Blake, a principal of The Prime Group who has represented Southern Illinois Power Cooperative and Hoosier Energy (representing Transmission Owners); and Mitchell Myhre, a manager of regulatory affairs for Alliant Energy (representing Municipals, Cooperatives and Transmission Dependent Utilities).
Advisory Committee Charter
Members approved a revised Advisory Committee charter with little discussion. The new charter reflects MISO’s 2013 name change (replacing “Midwest” with “Midcontinent”) and its increase to 10 sectors from nine.
‘Hot Topic’ Process Change?
Michigan Public Service Commissioner Sally Talberg said some stakeholders felt excluded from the planning of February’s “Hot Topic” discussion on resource adequacy.
Members assigned the Steering Committee to consider whether there should be a more formal procedure for organizing and conducting the Advisory Committee “Hot Topic” drafting team meetings.
“We’ve expressed concerns that the framing of the questions can sometimes lead to a [policy] direction. The Advisory Committee is designed to be balanced by sector,” said Alcoa Power Generating’s Dewayne Todd, representative of the End Use Customers sector.
“It’s increasingly becoming more of an issue,” said Michigan Public Service Commissioner Sally Talberg. “It became abundantly clear there was a problem” on the resource adequacy issue.
“We see it as more of a one-time concern,” said Great River Energy’s Matt Lacey, who noted it is difficult to get members involved in planning most Hot Topic discussions.
The Steering Committee put the issue on its March agenda for discussion.
ISO-NE filed the results of its ninth Forward Capacity Auction with the Federal Energy Regulatory Commission on Friday, starting the clock on a 45-day comment period (ER15-1137).
The RTO said 34,695 MW of capacity was acquired region-wide in the Feb. 2 auction, including more than 1,400 MW of new resources needed to help replace generators that have recently retired or will retire in the next few years. The total cost for the 2018-2019 commitment period is about $4 billion, up more than one-third from the $3 billion for the 2017-2018 commitment period. (See Prices up One-Third in ISO-NE Capacity Auction.)
The RTO cleared at $9.55/kW-month outside of the Southeastern Massachusetts/Rhode Island (SEMA/RI) zone, where a shortage of resources triggered administrative pricing rules that resulted in a price of $17.73/kW-month for new resources and $11.08/kW-month for existing resources.
ISO-NE’s capacity auction results are subject to commission review under the just and reasonable standard, the result of a 2006 settlement to address stakeholder concerns over New England’s market design. Objections to the auction results must be filed with FERC by April 13.
The results of FCA 8 became effective as an “operation of law” in September when the commission — then short one member — deadlocked 2-2 over whether to reject the results due to unchecked market power. (See FERC Commissioners at Odds over ISO-NE Capacity Auction).
Virginia Gov. Terry McAuliffe signed a controversial bill last week that suspends the State Corporation Commission’s reviews of Dominion Virginia Power’s base rates for the next seven years, allowing the company to collect potentially hundreds of millions in excess profits.
The bill (SB1349) was introduced by Sen. Frank Wagner (R-Virginia Beach), who has acknowledged that Dominion helped him write it. The bill freezes the utility’s base rates for five years and prevents the SCC from conducting its biennial reviews until 2022. Dominion, however, would still be able to request increases for fuel and infrastructure costs.
The freeze locks Dominion’s base rates at a level that the commission concluded in November 2013 was resulting in $280 million a year in excess profits.
“This bill is the result of strong collaboration among bipartisan legislative leaders and General Assembly members along with business, consumer, community and environmental groups,” Dominion said in a statement. “As a result, Dominion Virginia Power customers will see a rate cut and long-term rate stability.”
The “rate cut” is a reference to an early reduction in Dominion’s fuel cost surcharge. Bills for typical residential customers will drop by 5.5% in April rather than July, as previously scheduled. Commercial customers will see bills drop about 7% and industrials will save 10%.
The lopsided votes were typical of the treatment Dominion receives in the Virginia legislature.
During the 2015 legislative session, Dominion helped defeat a cap-and-trade proposal, legislation that would have prevented the utility from erecting power lines in parts of Haymarket, Va., and a bill that would have limited Dominion’s ability to conduct surveys on property owners’ land for its proposed Atlantic Coast Pipeline, according to the Associated Press.
In addition to the rate freeze, Dominion also won continuation of a coal-related tax credit.
“Nobody does it better,” Democrat state Sen. Adam Ebbin told the AP. “Unfortunately consumers don’t have full-time, highly paid lobbyists.”
Political Contributions
Dominion is perennially a top campaign contributor in Virginia, which has no limits on the size of donations.
In 2014-15, according to the Virginia Public Access Project, Dominion contributed $744,540 — more than any other donor aside from party and candidate campaign committees. The company’s contributions were more than double that of the second-ranked Virginia Bankers Association. (See chart).
Dominion’s political donations are almost evenly split between Republicans and Democrats, with the largest contributions going to statewide candidates and legislative leaders. McAuliffe campaign committees have received $160,000 from Dominion since 2013.
Wagner’s campaigns have collected more than $38,000 from the utility since 2000.
Dominion also courts allies through its charitable arm, the Dominion Foundation, which gives away about $15 million annually. Three groups that testified in favor of the bill — Senior Connections, the American Red Cross and the Better Housing Coalition — each received donations from the foundation in 2013, the Richmond Times-Dispatch reported.
“No single company even comes close to Dominion in terms of its wide-ranging influence and impact on Virginia politics and government,” University of Virginia political analyst Larry Sabato told the Times-Dispatch.
‘Concessions’ for McAuliffe
McAuliffe (D) said that he negotiated directly with Dominion Resources CEO Thomas Farrell II, at the latter’s request, while the bill was being debated in the General Assembly. McAuliffe asked the company to accept several proposed amendments as a condition for his support, the governor told reporters at the state Capitol on Wednesday, the day after he signed the bill.
“When this bill was introduced, I expressed concerns about several of its provisions,” McAuliffe said in a statement. “However, after working with the General Assembly to make several key changes, I have concluded that this legislation represents a net positive benefit to Virginians and to our economy.”
Those changes include encouraging the utilities to invest in up to 500 MW of solar generation and requiring them to implement energy-assistance programs for low-income, elderly and disabled ratepayers. The solar project was already planned, but the announcement was accelerated to win environmentalists’ support, the Times-Dispatch reported.
Rate ‘Certainty’
Wagner said the purpose of the bill was to provide stability while the U.S. Environmental Protection Agency’s proposed rule on carbon emissions from existing power plants is being finalized. In a statement, Wagner praised McAuliffe for signing “a clear and unmistakable, bipartisan call for electric rate certainty during this time of regulatory turmoil.”
Virginia would be forced to reduce its emissions by 38% under the proposed EPA rule. Dominion, which has said it could have to close coal-fired power plants worth up to $2.1 billion as a result, agreed to cover the cost if the plants close before 2020.
While base rates are frozen, the suspension of biennial reviews means customers won’t get refunds if the company’s profits exceed what was approved by the SCC. Normally, the commission can reduce base rates if profits are judged too high for two consecutive reviews.
Dominion paid $78.3 million in refunds after its 2011 review. The SCC also reduced the company’s return on equity to 10.9%, down from 12.5% (PUE-2011-00027).
In 2013, the commission found that Dominion’s annual revenues were $5.15 billion, $280 million more than the $4.87 billion needed to recover its cost of service and earn a fair return. The SCC reduced the company’s ROE further to 10% but did not order refunds (PUE-2013-00020).
The rate freeze bill signed last week also requires all electric utilities in the state to file their integrated resource plans annually. Previously, utilities were required to file them every two years.
It was amended to apply to American Electric Power subsidiary Appalachian Power as well, though its review suspension period begins and ends earlier.
The bill starts Dominion’s suspension period on Jan. 1, so the SCC can conduct its rate review of the utility for the past two years. Originally, the suspension would have begun in 2013 and lasted until 2023.
Because of the freeze, SCC spokesman Kenneth Schrad said, the commission won’t be able to adjust base rates regardless of what the review finds, although there could be a partial refund of any over-earnings.
However, he noted that while the 2011/12 review suggested that base rates might be higher than necessary, the 2014 General Assembly passed legislation allowing the company to recover an estimated $600 million in expenses it incurred exploring the possibility of a third nuclear unit at North Anna.
“Allowing that recovery to be included in the coming biennial review more than likely ensures that the company’s earning fall within the authorized range,” he said.
Three New England states are combining their buying power to purchase clean energy resources and transmission to deliver it.
Connecticut, Massachusetts and Rhode Island on Wednesday released a draft request for proposals (RFP), starting a 30-day comment period. The states will issue the final RFP, which will seek power purchase agreements totaling more than 2,300 GWh of renewable energy per year, this spring.
“The joint procurement process opens the possibility of procuring large-scale projects and transmission to deliver clean energy on a scale that no single state could secure on its own,” Connecticut Gov. Dannel Malloy said in a statement.
The RFP will seek bids on new Class I renewable energy projects of at least 20 MW and large-scale hydro power projects that were constructed after Jan. 1, 2003. Class I includes wind, solar, small hydro, biomass and fuel cells.
The draft RFP seeks power that can be delivered with and without transmission upgrades.
Bids received will be evaluated by the combination of host utilities, state energy and environmental departments, and other officials. ISO‐NE will be asked to provide high-level advisory information.
Under their state laws, Connecticut is seeking 1,500 GWh per year of qualified energy and Massachusetts 817 GWh. Rhode Island has no specific quantity.
“This solicitation is broader in scope and geography than those state‐specific legal requirements and therefore, certain aspects of this RFP may require legislative and/or regulatory action in order to ensure cost recovery for certain types of proposals,” the document states.
The New England States Committee on Electricity, which includes all six states, is not directly involved in this process. The proposal notes NESCOE staff helped draft the RFP but will not select potential projects. NESCOE is pursuing natural gas infrastructure projects to provide that resource to its members.
Three Republicans, including the chairman of the House Energy and Commerce Committee, say they are concerned that federal agencies are making plans to use the Yucca Mountain site for something other than a nuclear waste repository.
Reps. Fred Upton of Michigan, John Shimkus of Illinois and Tim Murphy of Pennsylvania — all proponents of the waste site plan — told Energy Secretary Ernest Moniz that they heard the Department of Energy and the Defense Threat Reduction Agency (DTRA) have “discussed the possibility of conducting activities at or near the Yucca Mountain site that are not related to the statutorily required uses for the site.”
The agency denies it is looking at the site for testing activity. “The Defense Threat Reduction Agency has never used the Yucca Mountain site for any testing activity, and we have no plans to do so in the future,” a spokesman said. The department declined comment.
Opponents to PennEast Pipeline Want FERC to Grant More Speaking Time
A Federal Energy Regulatory Commission public scoping meeting in New Jersey on the proposed $1.2 billion PennEast natural gas pipeline ended at 11 p.m. with 22 people still waiting to speak, spurring a call on FERC to extend the public comment period.
“People stayed for five hours,” Hopewell Township Committeeman Kevin Kuchinski said at the meeting in Ewing, N.J. “They want to be heard.”
A FERC spokeswoman said the hearing was concluded because of time limits on the rented venue, and that the public could submit written comments. The proposed 104-mile pipeline, which would transport gas from Pennsylvania’s Marcellus Shale region to a pipeline interconnection in New Jersey, has drawn opposition on both sides of the Delaware River.
Vermont Joins Petition to Ask NRC to Examine Vermont Yankee Finances
Vermont is the latest entity to join a petition before the Nuclear Regulatory Commission to investigate the finances of the Entergy unit overseeing the decommissioning of the Vermont Yankee reactor.
“While Vermont Yankee recently disconnected from the electric grid, there are a number of immediate and long-term activities that will occur at the plant that could affect the safety of Vermonters,” Vermont’s motion to join the petition reads. Entergy has asked the NRC for permission to reduce emergency plans for the site and indicated that money to fund decommissioning activities is limited.
The attorneys general of Massachusetts and New York have filed similar petitions. The plant was shut down in December.
NRC Inspecting Damage to Summer Unit 2 Containment Caused by Workers
The Nuclear Regulatory Commission sent inspectors to SCANA’s under-construction Summer Unit 2 in South Carolina after workers accidentally damaged the reactor containment vessel bottom head last month.
Workers from Chicago Bridge & Iron were cutting reinforcement bar when they accidentally cut into the containment vessel itself. The actual damage appears to have been “minor,” but the NRC said it wanted to make sure it understands its potential impact and “the apparent breakdown in controls that might have prevented it.”
SCANA says that Unit 2 will be completed in the first half of 2019, with Unit 3 following a year later.
Petition Calls for Security Upgrades at Entergy’s Pilgrim Nuclear Plant
Two watchdog groups are petitioning the Nuclear Regulatory Commission to modify or suspend the operating license of Entergy’s Pilgrim nuclear generating station near Plymouth, Mass., until the plant’s security is upgraded.
Pilgrim Watch and Cape Downwinders cited recent warnings about possible terrorist activity and noted the plant experienced 10 trespassing incidents in the past three years. They also noted the station’s dry cask spent fuel storage is only about 175 feet from Cape Cod Bay. “Granted, the probability of attack is very small, but the consequences are very large,” said Mary Lampert, director of Pilgrim Watch.
Entergy spokeswoman Lauren Burm said the company recently upgraded its signage to warn beachgoers they are subject to arrest if they stray onto the plant’s property. “Entergy takes the security of our power plants and the safety of our employees and the communities in which we operate very seriously,” she said.
Niagara Mohawk Power has agreed to reduce its return on equity in a settlement with groups representing public power and municipal utilities.
If accepted by the Federal Energy Regulatory Commission, the settlement would reduce the ROE in Niagara Mohawk’s transmission service charge to 10.03% from the current 11.5%. The new rate would be backdated to Nov. 2, 2012, resulting in a refund of $3.16 million.
The Municipal Electric Utilities Association of New York, the New York Association of Public Power and Niagara Mohawk, a unit of National Grid, filed the settlement with FERC last week.
The settlement arose from complaints filed by the associations against the transmission owner and NYISO claiming that the current rate was too high (EL12-101, EL13-16 and EL14-29). FERC consolidated the cases and an administrative law judge facilitated negotiations.
The case began in September 2012, when the public power association filed complaints to reduce the current 11.5% ROE to 9.49%, including a 50-basis-point adder for participation in NYISO. The municipal utilities filed a similar complaint two months later seeking to reduce ROE to 9.25%, also including the participation adder. Last year, the public power group filed another complaint seeking a further reduction from its original complaint to 9.36%, citing the fall in interest rates.
The Federal Energy Regulatory Commission last week increased its pressure on PJM and MISO to resolve their longstanding boundary disputes, saying it was considering taking action “to improve the efficiency of operations” at the RTOs’ seam.
Despite 12 years of joint meetings that have resolved some issues, the two RTOs remain locked in a standoff over issues such as interface pricing, which MISO Market Monitor David Patton says is costing consumers millions.
At a presentation during FERC’s Jan. 22 meeting, Patton asked the agency to help resolve the disputes.
On Tuesday, FERC ordered the RTOs and their market monitors to answer questions on eight unresolved issues by April 10 (AD14-3). The commission indicated it is considering its own solutions to at least two of the issues.
FERC Solutions?
On the issue of capacity deliverability, the commission told the RTOs to identify “any reliability problems associated with modeling capacity in each RTO as a single product across the two markets.”
FERC also required the RTOs to report on what they “would need to do to implement day-ahead market coordination.”
At Thursday’s Board of Directors meeting, MISO Director Michael Curran said he was surprised by FERC’s action. “Are we moving into a phase where if we don’t fix it, [FERC will] fix it for us?” he asked .
The commission ordered the RTOs to report on proposed solutions, obstacles to solutions, and a timeline for overcoming them and making filings at the commission on the issues of:
Interface pricing
Capacity deliverability
Day-ahead market coordination
Firm-flow entitlement freeze date
Use of commercial flow in the market-to-market process
Modeling of the Ontario/Michigan phase angle regulators for congestion management
Room for Improvement
The commission noted the RTOs’ progress in areas such as RTO-to-RTO data exchanges and financial transmission rights market coordination. It also acknowledged that the RTOs are moving to improve interchange optimization through coordinated transaction scheduling. (See related story, PJM MRC/MC Briefs.)
In December, the commission ordered a technical conference on Northern Indiana Public Service Co.’s complaint over the interregional transmission planning provisions in the RTOs’ joint operating agreement (EL13-88). NIPSCO, a MISO member that is flanked by PJM in eastern Indiana and Illinois to its west, complained that the MISO-PJM seam is highly congested and that the RTOs have not approved a single cross-border transmission upgrade project under the JOA.
The commission also said the RTOs have completed a coordinated study on deliverability despite their differing modeling approaches. The study concluded that “more than 96% of MISO and PJM units are jointly deliverable to the aggregate MISO and PJM load footprint and [that] the total transmission capability between the two systems is quite significant.”
The RTOs found that the transmission capacity in the MISO-to-PJM direction is fully subscribed, while capability in the PJM-to-MISO direction is “minimally utilized for capacity.”
“Therefore, there could be benefit in the PJM-to-MISO direction, even in the near-term,” the commission said.
FERC ordered the RTOs and their market monitors to respond to the commission’s questions within 45 days with reply comments from stakeholders due April 27.
Interface Pricing
PJM and MISO have been working for two years to resolve differences in the way they price transactions at interface buses. Patton told FERC in January that transactions are overcompensated when expected to relieve a constraint and overcharged when expected to contribute to congestion. (See Patton Asks FERC to Set Deadline on PJM-MISO Interface Pricing Dispute.)
The RTOs agree that current methods are inaccurate because they both model the same constraints, resulting in double-counting. But they have been unable to agree on a solution.
Bowring told the commission that there will continue to be issues between the RTOs “as long as there are very substantial differences between the design for procuring capacity in MISO and the design for procuring capacity in PJM.”
Iberdrola SA announced Thursday it is acquiring UIL Holdings, which has electric and gas distribution companies in Connecticut and Massachusetts, in a cash and stock deal valued at $3 billion.
