Meetings of the Maryland Public Service Commission may get a lot livelier if Gov. Larry Hogan’s pick to replace Lawrence Brenner is confirmed.
Hogan nominated Montgomery County Republican Party Central Committee Chairman Michael L. Higgs Jr., an attorney with Shulman Rogers specializing in telecommunications and media regulations.
Higgs is an unabashed conservative who has used his now-deactivated Twitter account to compare President Obama’s advisor Valerie Jarrett to Rasputin and speculate that former Secretary of State Hillary Clinton had disappeared for several weeks to receive a facelift.
Higgs would be joining a commission that has been one of the most outspoken defenders of the Environmental Protection Agency’s proposed carbon emission rule.
Hogan submitted Higgs for state Senate approval on Feb. 20 to replace Brenner, a former administrative law judge with the Federal Energy Regulatory Commission whose five-year term expires June 30.“I’m thrilled with the trust that the governor has placed in me and I look forward to serving the people of Maryland once I’m confirmed,” Higgs told the Gazette.
The Rockville resident is a graduate of the University of Maryland, with a bachelor’s in government and politics, and received his law degree from the George Washington Law School.
While attending law school, he worked for several firms where he gained experience learning the rules and policies of the Federal Communications Commission. At Shulman Rogers, Higgs’ clients include Internet service providers and radio and TV broadcasters. According to his LinkedIn profile, Higgs has no experience in the electricity industry.
In November’s gubernatorial election, Republican Hogan beat Democrat Lt. Gov. Anthony Brown, a big upset in a state where Democrats outnumber Republicans 2-1.
NEW ORLEANS — Independent Market Monitor David Patton told the MISO Board of Directors on Wednesday that MISO members are paying outsized premiums as a result of transmission loading relief actions (TLRs) called by neighboring SPP, PJM and the Tennessee Valley Authority.
Patton said day-ahead binding on a TVA flowgate caused more than half of the price divergence at the Michigan Hub and much of the premiums in Arkansas in January.
Binding constraints that result in TLRs “tend to be very costly to MISO,” Patton said, blaming SPP TLRs for 20% of the congestion pricing at generator locations in January. Much of that was due to a single constraint that priced 10 times higher in MISO than in SPP, he said.
Patton said the problem should decline with the beginning of market-to-market coordination with SPP on Sunday and the introduction of Coordinated Transaction Scheduling with PJM. (See related story, PJM MRC/MC Briefs.) A joint operating agreement with TVA also would help, he said.
Patton said he will “investigate whether the TLRs are in all cases justified” and what else can be done to moderate price volatility.
Winter Forced Outage Rates Return to Normal
Forced outage rates have returned to typical levels during cold days this winter, with 15,000 to 18,000 MW out or derated, compared with more than 40,000 MW at the peak in January 2014, said Todd Ramey, vice president of system operations and market services.
Director Baljit “Bal” Dail asked whether there was any evidence of generators improperly claiming outages to withhold supply.
“That is something that we are investigating,” responded Patton, who said he would provide a report in March. “We are looking at some of those outages.”
The Board of Directors is considering reducing its Markets Committee meetings from monthly to the seven times a year that the full board meets. MISO staff created a proposed schedule at Director Michael Curran’s request.
“There is an opportunity to tighten up the agenda,” Curran said.
“We tried to do it before, but the members said they like it every month,” cautioned Director Paul Feldman.
The board will discuss the matter this month after getting stakeholder feedback.
Extended LMP Starts
Uplift rises each time a new unit is committed but does not rise dramatically at high levels of demand, because ELMPs are also rising.
MISO launched extended locational marginal pricing (ELMP) Sunday, a new calculation method that the RTO says will allow it to better capture fast-start gas turbines and emergency demand response in clearing prices.
It will allow fast-start resources that are either offline or scheduled at limits to set prices, which was previously impossible because of limitations in the RTO’s algorithm.
Emergency DR will also be able to set prices in the real-time energy and operating reserve markets.
MISO says the changes should minimize price spikes during shortages, provide more accurate price signals and reduce uplift charges.
Patton called it a “very important” initiative that should also allow price-responsive demand.
ELMP was one of four market changes introduced Sunday:
Market-to-market coordination with SPP, which allows the two RTOs to use economic dispatch to improve the cost effectiveness of their congestion management along the seam. The Federal Energy Regulatory Commission approved the initiative in January (ER13-1864). (See SPP, MISO Move Ahead on Flowgate Rules.)
DR will be allowed to provide multi-part offer curves and maximum regulating reserve and contingency reserve limits daily. It removes the host load zone association for some resources.
External asynchronous resource (EAR) market participation: Market resources connected to the main MISO market by a direct-current tie, such as Manitoba Hydro, were previously able to offer only generation into the market. Now, a bidirectional EAR will allow participants to submit price sensitive bids and offers. It also will allow dispatch of flexible hydro facilities in response to changes in supply and demand.
Pepco Holdings Inc. reported fourth-quarter earnings of $35 million ($0.14/share), a drop from the $58 million ($0.23/share) it earned for the same period last year.
Earnings for the year were up, however, rising to $242 million ($0.96/share) from $110 million ($0.45/share) in 2013.
Pepco CEO Joseph M. Rigby attributed the increase in annual earnings to higher electric distribution and transmission revenue. The decrease in fourth-quarter earnings compared with 2013 was due to higher operation, maintenance and depreciation expenses, he said.
Because of the company’s pending acquisition by Exelon, it provided no earnings guidance for 2015. (See related story, DC Consumer Advocate Seeks Delay in Exelon-Pepco Proceedings.)
Story on ComEd Contributions Spurs Call for Investigation
A state senator called for an investigation of Commonwealth Edison after the Chicago Tribune reported that the utility spent $60 million in ratepayer money over seven years on politically influential charities.
“The allegations in the Tribune article are serious and call for immediate action,” state Sen. Dan Duffy said in a letter to Attorney General Lisa Madigan. “ComEd should be required to disclose these contributions to ratepayers. At best, ComEd shareholders, not ratepayers, should bear the burden of funding these contributions.”
A 1987 law allows ComEd, the state’s largest utility, to pass on the cost of its charitable contributions to ratepayers. The Tribune article listed instances where some charities that received ComEd assistance were in the position to aid it.
County Emergency Management Agency Uses Dresden’s Cooling Pond Water to Battle Ice
Warm water from Dresden nuclear plant is being used to melt down ice flows on the Kankakee River to prevent flooding and damage to homes and docks.
The Will County Emergency Management Agency has devised a system to siphon the 70 F water into the Kankakee River. “The warm water from Dresden’s pond helps break up the ice so it can flow freely downstream,” said Harold Damron, the agency’s director.
Challenges to NIPSCO’s $1.1 Billion Modernization Plan Heard in Court
In a case before the state Court of Appeals, the Office of Utility Consumer Counselor and a group of industrial customers are challenging Northern Indiana Public Service Co.’s $1.1 billion electric modernization plan as too costly.
“These plans can cost ratepayers hundreds of millions, even billions, of dollars,” said Utility Consumer Counselor David Stippler. The Utility Regulatory Commission approved the plan in 2013, which would be funded by yearly rate increases that will total 4.9% by 2020.
A NIPSCO attorney said the improvements are necessary. “The commission determined the plan is beneficial to consumers, and no one has disputed that,” said Brian Paul. The court decision could affect improvement plans proposed by other state utilities.
Kentucky Power Appeals PSC Ruling on ‘Unreasonable’ Fuel Costs
Kentucky Power is appealing a Public Service Commission order requiring it to refund $13 million to customers after the commission determined some of its fuel costs last year were unreasonable.
The American Electric Power subsidiary says the commission disallowed charges associated with having both the Mitchell power plant and Big Sandy Unit 2 in operation simultaneously. Kentucky Power said it was necessary to run both units in Louisa to maintain system reliability and to meet demand, especially during last winter’s polar vortex.
Big Sandy Unit 2 is being retired later this year.
City Upset That DTE Rate Hikes Would Kill LED Lighting Incentive
The city of Ypsilanti says a proposed DTE Energy rate increase for LED street lighting, combined with a cut in charges for conventional sodium-vapor streetlights, would undermine the incentives that prompted the city to spend $500,000 last year to convert its streetlights to the more efficient LED technology.DTE’s proposal would increase the cost of powering a 65-W LED bulb from $138 to $154 a year, while the cost of running a 100-W sodium bulb would drop from $184 to $129. “If this rate hike happens, we’ll really feel like this was a bait and switch,” said Ypsilanti City Council Member Brian Robb.
The utility said the old LED rate was experimental. “As we gained more experience with LED technology, we changed the pricing to reflect a more complete understanding of the costs associated with it,” said DTE spokesman Scott Simons.
University Report IDs Ways State Could Improve Fracking Oversight
A University of Michigan report suggested the state take a number of steps to strengthen its oversight of hydraulic fracturing, including better monitoring of surface and groundwater and mandating more emergency planning by natural gas exploration companies.
The recommendations were included in a 277-page report compiled by scientists, lawyers and other University of Michigan faculty. “The purpose of the study is to pull together a massive amount of information and analyze the options in a way that is clear, so the state can look at these options and decide which if any they might want to adopt,” said Sara Gosman, one of the report’s authors.
More than 12,000 fracked wells have been drilled in Michigan since the late 1940s, but high-volume fracking of deep shale deposits is a new phenomenon. Michigan has 13 producing wells in the Utica-Collingwood shale formation, but drilling companies have leased hundreds of other sites.
Mississippi Power’s CEO Warns Kemper Ruling Could Result in Rate Hikes of 35%
Mississippi Power CEO Ed Holland said a state Supreme Court ruling that orders the company to refund customers $271 million for plant construction costs will almost certainly lead to higher rates.
Holland, in a Sun Herald op-ed, said the court’s ruling effectively voids a plan the company and the Public Service Commission developed to keep down rate hikes associated with construction of the Kemper County integrated gasification combined-cycle plant. “If the court’s opinion stays in place and the refund is required, we will have little choice but to seek at least the original estimated amount of approximately 35% in rate increases,” he wrote.
The court threw out a PSC decision to allow $281 million in rate recovery for costs associated with the plant’s construction. The court said the PSC never found that the funds were “prudently incurred,” a requirement for recovery. Mississippi Power is challenging the court ruling.
PSC Approves Ameren’s Efficiency Plan Allowing 2013 Recovery Calculations
The Public Service Commission approved a settlement that determined Ameren Missouri’s energy efficiency programs saved 347 GWh in 2013. The amount will determine how much money the utility can recover from ratepayers.
Ameren had claimed that its program saved nearly 400 GWh. The Office of the Public Counsel estimated the savings at 300 GWh. They settled on 347 GWh.
2nd State Judge Signs Injunction Against Keystone XL Eminent Domain Actions
A York County District Court judge became the second state judge to grant an injunction halting TransCanada’s use of eminent domain to secure a route for its controversial $8 billion Keystone XL Pipeline.
The judge ruled in favor of a group of landowners who are challenging a state law that gave TransCanada eminent domain powers to build its crude-oil pipeline to Gulf Coast refineries and terminals.
“I know the war is not won yet, but it’s a start,” property owner Susan Dunavan said after the ruling.
JCP&L Planning $267 Million on System Improvements; Rate Counsel Endorses $107 Million Rate Cut
Jersey Central Power & Light said it will spend $267 million on transmission and distribution improvements this year, including a new transmission line in Middlesex County.
Among the projects planned are nearly $6 million in distribution circuit upgrades, $24 million in tree trimming, and money for planning and constructing a 230-kV transmission line in Monmouth County.
JCP&L’s reliability record has been a recent target of regulators and consumers. The Division of Rate Counsel last month endorsed a decision by an administrative law judge that would force the company to cut rates by $107 million, saying that the utility’s reliability record is poor.
The Rate Counsel argued that the company had earned profits in excess of the amount allowed by the Board of Public Utilities. About 90% of its customers were left without power after Hurricane Sandy.
“JCP&L customers have suffered poor reliability too long and should be provided a remedy immediately,’’ the Rate Counsel argued.
Hearing Scheduled for New Power Plant near Williston
The Public Service Commission will hold a hearing this week on the proposed $161 million expansion of the Pioneer Generation Station near Williston to meet growing electricity demands from the state’s oil and gas industry.
Basin Electric said the proposed expansion is needed to meet a forecasted 1,600-MW increase in load by 2035. The company wants to add 12 reciprocating gas-fired internal combustion engines generating up to 111 MW.
PUCO Rejects AEP’s Guaranteed Income Plan for Coal Plants
The Public Utilities Commission last week rejected American Electric Power’s request for a guaranteed income for two of its coal-fired plants, saying the proposal wasn’t in the best interest of ratepayers.
While PUCO rejected the proposal, it ruled that the power purchase agreement was legal. That gave AEP a kernel upon which to press forward with a similar request for other plants. It has argued that customers would benefit from supply stability if the plants received a guaranteed rate. Critics say its proposal would represent a retreat from market-rate pricing.
“Further delays in deciding this issue will postpone our customers’ ability to take advantage of the financial benefits of what we proposed,” AEP Ohio President Pablo Vegas said in a statement. “We will work with the PUCO to address their outstanding issues with our problems.”
Rumors Surround Porter’s Move to PUCO, Johnson’s Tenure
Porter
Gov. John Kasich’s choice of Andre Porter, the state commerce director, to fill a vacancy on the Public Utilities Commission has sparked speculation that Chairman Tom Johnson’s reign may be ending.
Some observers wonder why Porter, who served previously on the commission, would want to make the move back to PUCO if he wasn’t angling for the chair. Johnson, who has been the commission’s chair for less than a year, has faced several controversial issues, including proposals to guarantee prices for merchant power and a legislative proposal to freeze the state’s renewable and energy efficiency standards.
The governor’s office did not comment on his plans for the commission.
PUC Orders FirstEnergy’s Pa. Companies to Give More Details on Improvement Plan
The Public Utilities Commission ordered FirstEnergy’s four companies in the state — Met-Ed, Penelec, Penn Power and West Penn Power — to provide more details on how they intend to address issues raised in a PUC management audit.
The PUC’s Bureau of Audits identified 28 areas of improvement in the companies’ management practices that could produce one-time efficiency savings of $19.2 million and annual savings of up to $3.8 million. The PUC said FirstEnergy’s response was short on specifics and directed the company to devise a more detailed implementation plan.
“Because we have received similar responses to previous audit recommendations in the past with little meaningful improvement, it is imperative that FirstEnergy develop more robust responses to these recommendations,” Commissioner James H. Cawley said in a motion approved by the commission.
Tomblin Vetoes Net Metering Bill, Solar Advocates Applaud
Gov. Earl Ray Tomblin vetoed a bill that would have prohibited utilities from subsidizing solar customers by charging other ratepayers for costs associated with installing and administering solar net-metering systems.
Solar advocates said the bill would have allowed utilities to raise costs for owners of solar installations, reducing incentives for renewable power.
“This bill was fatally flawed,” said Rhone Resch, president and CEO of the Solar Energy Industries Association. “Did it end up that way for political reasons? Or was it a case of sloppy drafting? Whichever the case, Gov. Tomblin did the right thing by vetoing the bill and sending it back to the drawing board.”
NEW ORLEANS — MISO last week signed a new Operations Reliability Coordination Agreement (ORCA) with its southern neighbors, increasing the flow limits within the MISO footprint.
Curran
MISO reached this agreement with SPP and the so-called “Joint Parties” — neighboring systems including Southern Co., Tennessee Valley Authority, Associated Electric Cooperatives, Louisville Gas & Electric, Kentucky Utilities and the PowerSouth Energy Cooperative.
Jennifer Curran, vice president of system planning and seams coordination, told the Board of Directors that the new agreement, which was filed with the Federal Energy Regulatory Commission on Feb. 27, increases MISO’s ability to flow from 2,000 MW to a total of 3,000 MW in the area (ER15-1141).
MISO said the signing of the new agreement will allow it and its neighbors to continue work on a long-term, market-based solution. The original ORCA was due to expire April 1. The new pact will expire on April 1, 2016, or earlier if FERC approves a replacement arrangement sooner.
MISO “continues to believe that current industry-wide reliability measures more than sufficiently protect system reliability and coordination,” the RTO said in a statement. “However, MISO is pleased to have developed a cooperative agreement to accommodate the desire for greater experience for its neighbors.”
No Rush on Review of Entergy Out-of-Cycle Tx Projects
The board will rule “no earlier than April” on Entergy’s request for approval of six out-of-cycle transmission projects totaling $220 million, Director Michael Evans said. Evans said the board would begin its review this month.
Entergy’s request for a $187 million transmission upgrade near Lake Charles, La., has become a lightning rod for transmission developers, who have accused the company of seeking an out-of-cycle designation to avoid opening the project to competition.
New MISO Chair Plans Changes on Governance; Higher Board Profile
Walsh
New MISO Board Chair Judy Walsh said last week she will seek a review of the RTO’s governance principles while increasing the board’s visibility with state regulators.
Walsh, a former Texas Public Utility Commissioner who took the gavel in January, said the RTO has “looked mostly inward” in the past but needs to increase its outreach because of challenges such as the Environmental Protection Agency’s proposed carbon emission rule.
She asked Director Eugene Zeltman, chair of the Governance Committee, to review the term and role of the chair. “If the board will represent MISO before [the National Association of Regulatory Commissioners] and state regulators, perhaps more visibility and continuity may be desirable,” she said.
In the interim, she said, Director Michael Curran will continue to represent the board with outside parties, building on the relationships he developed during his recently completed two-year term as chairman.
Walsh asked the Governance Committee to review “all principles of governance,” including stakeholder relations, conflicts of interest standards and the Nominating Committee process, saying she hoped to have changes ready for adoption by the end of the year.
She said MISO management “has challenged itself to look at all operations and processes [to] ensure we are consistent and that a policy adopted for one purpose does not get in the way of us accomplishing our overall goals.”
She also said the Advisory Committee should consider reducing the number of subcommittees it has and the time spent in meetings.
MISO Names New Security Chief; Plans Additional Cybersecurity Spending
MISO will increase its technology budget “by a confidential amount” in order to eliminate the use of shared infrastructure between critical and non-critical assets, Director Baljit Dail said.
The spending is necessary to comply with tightened Critical Infrastructure Protection standards that will take effect in 2016.
The spending will be overseen by the RTO’s newly appointed Chief Information Security Officer Mark Brooks, who joined the RTO several weeks ago.
Incentive Payout: 68.8%
The board awarded MISO employees 68.8% of their potential incentive awards under its short-term incentive program for 2014.
The incentives are based on achievements measured against a weighted list of seven metrics: reliability standards, unit commitment efficiency, market efficiency, compliance with operations and capital spending budgets, customer satisfaction and strategic initiatives.
The board judged staff’s performance “excellent” for capital budgeting and “mid-range” for most other measures.
Former Minnesota Public Utilities Commission Chairman David C. Boyd has joined MISO as vice president of government and regulatory affairs. Boyd, who served eight years on the commission, will be MISO’s primary liaison with the governors and state regulatory and legislative policymakers in the 17-state region.
PJM and its Transmission Owners won federal regulators’ conditional approval for their plan to integrate multi-driver projects into the regional transmission expansion plan (RTEP).
The Federal Energy Regulatory Commission’s Feb. 20 ruling (ER14-2864, ER14-2867) requires PJM to revise its Tariff to include the criteria it will use to determine whether and how to divide a multi-driver project that combines two or more proposed projects and two or more transmission developers.
The commission also ordered PJM to clarify its definition of multi-driver projects. PJM proposed to define such projects as “a transmission enhancement or expansion that addresses more than one of the following: reliability violations, economic constraints or public policy requirements.”
FERC said the definition “might be read to include reliability or economic transmission projects that also address public policy requirements for which PJM planned during the assumptions stage of the RTEP process,” which would conflict with PJM’s Order 1000 compliance filing.
PJM said the multi-driver concept could lower the cost of states’ public policy transmission projects by incorporating them in upgrades that address market efficiency or reliability.
Below is a summary of the issues scheduled to be brought to a vote at the Markets and Reliability Committee on 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 covering the discussions and votes. See next Tuesday’s newsletter for a full report.
2. PJM Manuals (9:10-9:40)
Members will be asked to endorse the following manual changes:
Manual 02: Transmission Service Request — Changes aim to clarify and more accurately describe the Available Transfer Capability (ATC) processes and the Initial Study process for long-term firm transmission service requests. They include a grammatical cleanup; updated references to the Joint Operating Agreement; and links to the deliverability analysis in Manual14A and Manual 14B.
Manual 14A: Generation and Transmission Interconnection Process — Adds Feasibility Study data form and Impact Study data form.
Manual 14B: PJM Regional Transmission Planning Process — Updated to reflect existing long-term deliverability analysis procedures and cleanup language regarding voltage drop analyses, generator deliverability analyses, load deliverability analyses and cost allocation.
Manual 40: Training and Certifications Requirements — Revisions resulting from the annual review required by North American Electric Reliability Corp. standard PER-005-2; includes a new section on training of operations support personnel.
The Federal Energy Regulatory Commission approved PJM’s request to retain 2,000 MW of capacity in yesterday’s third Incremental Auction for 2015/16 but rejected its request to purchase capacity outside of the Reliability Pricing Model, calling it “unreasonably vague and ill-defined” (ER15-738).
PJM had requested the one-time waiver on rules that would otherwise require it to release 2,000 MW of capacity, saying it feared that it might run short due to retirements of coal-fired generation.
“The release of approximately 2,000 MW of committed capacity could yield a reserve margin below the established installed capacity needed to assure reliable service to loads,” the commission said. “Moreover, given PJM’s reliance on committed capacity resources, the poor performance of generating capacity resources last year and the expected high level of generation retirements, absent granting the waiver, PJM would face increased risks of being unable to serve load.”
The commission, however, rebuffed PJM’s request for permission to obtain additional capacity outside of its auctions.
“Capacity procured under the proposed Tariff provision would be in addition to the 2,000 MW procured at competitive prices under the waiver, and PJM has not provided just and reasonable Tariff provisions that specify the criteria for determining how much additional capacity it requires, nor how to determine whether those contracts are at just and reasonable prices,” the commission ruled.
It said PJM could refile its request with more specifics to address the shortcomings in the initial filing.
When Terry Boston took the helm of PJM seven years ago, the RTO was in turmoil, its reputation as the model for running competitive deregulated electricity markets in the balance.
Top management was battling allegations by PJM’s electricity price watchdog that the system was allowing generators to inflate rates. Amid the clash, Chief Operating Officer Audrey Zibelman and Chief Executive Officer Phil Harris abruptly resigned within months of each other, leaving the RTO rudderless.
In stepped the former executive vice president for the Tennessee Valley Authority, who early on in the deregulation of the market had focused on the importance of reliable transmission when the conversation — and profits — had drifted toward the generators.
“Terry brought PJM through a difficult period,” said Joe Bowring, the employee who challenged PJM’s credibility under former management and is now Independent Market Monitor for the RTO. “When he first got to PJM, he actively reached out to the Market Monitor unit, which we appreciated very much. He listened to us and all market participants.”
Now, North America’s largest power grid operator finds itself at the edge of another major change as Boston, 64, prepares to retire by the end of the year.
“I’ve been working in the utility industry for 43 years. It’s been a wonderful and rewarding career, but all good things must come to an end,” Boston told RTO Insider. “I am looking forward to spending more time visiting our kids, helping out our daughter Rachel with her career as an actress and getting out on our boat, which I haven’t been on in two years.
“I will continue on several boards and industry/professional groups. Most recently I’m involved with the Bipartisan Policy Center on energy policy and grid security and the National Academy of Engineering working on energy and the environment and improved analytics for the power system. I hope to remain engaged with the industry at a somewhat less demanding pace than working half days — that’s 12 hours per day,” Boston said.
Encouraging Team-Building
Boston is widely regarded by those who have worked with him during his time at PJM as a forward-thinking, approachable leader, a straight-shooter who strives for consensus and encourages team-building. The Tennessee native also enlivens meetings with his quirky sense of humor: To invoke the feel of a “fireside chat” at PJM’s General Session in February 2014, he propped up a tablet showing a video of a burning yule log on the stage.
“He’s been a real positive player in terms of a stable presence at PJM, with the vision of trying to see where it’s going. Particularly in the last year they’ve been very helpful in, No. 1, admitting they didn’t take gas-electric [coordination] as seriously as they should have, and No. 2, doing something about it,” said Federal Energy Regulatory Commissioner Philip Moeller. “He’s a great guy — he’ll be missed. But he deserves a lot of accolades as he winds it down.”
Sonny Popowsky, a former Pennsylvania state consumer advocate, sat with Boston on the board of the North American Electric Reliability Corp.
“He came in to PJM at a time of some turmoil with what direction we were headed and what the role of the markets was in terms of maintaining reliability,” Popowsky said. “When he came from TVA, he came with a strong background that focused on engineering and reliability. But he also came with an openness to the kind of market solutions that PJM is famous for. He’s been able to combine that really well.
“I think he’s just added a real level of stability and openness,” he said.
A Vocal Proponent of Consensus
Boston has publicly expressed his frustration with the number of Section 206 filings — used when stakeholders fail to reach consensus — submitted to FERC last year, including the request to raise the price-based energy offer cap from $1,000 to $1,800.
“Our ability to govern ourselves in the stakeholder process depends in large part on compromise,” he told the Markets and Reliability Committee at its year-end meeting. He opened the first MRC meeting of 2015 with another plea for consensus. The year ahead will hold a number of challenges, he said, especially as the RTO faces “the fastest fuel change in industry history” from coal-fired plants to natural gas.
In announcing Boston’s plans for retirement last week, Board of Managers Chairman Howard Schneider said on behalf of the group, “Terry’s deep knowledge of the electricity industry, strong business ethics and ability to forge strong relationships with PJM’s stakeholders have been instrumental in the success of PJM.”
During Boston’s tenure, PJM increased its billings from $30.6 billion in 2007 to more than $42 billion in 2014 while the RTO’s membership grew from 500 to more than 900 companies.
In 2008, Boston implemented “perfect dispatch,” a metric denoting the lowest production cost possible while maintaining reliability, which the company uses as a baseline to analyze and improve dispatch efficiency. According to PJM, the process has saved a cumulative $842 million — three times the cost of PJM’s annual operating budget.
At TVA, Boston ran the storm center for 20 years, and while at NERC he sat on the steering committee that investigated the 2003 Northeast blackout.
“I’m proud that PJM and our members met three one-in-100-year weather events in the last four years — and the polar vortex was not one of them,” Boston said. “They were the hottest day of record in 2011, followed by the derechos and Hurricane Sandy in 2012. In addition, we’ve met back-to-back all-time winter peaks in January 2014 and February 2015.”
Who Will Take Boston’s Place?
Andy Ott
As for who will take the top spot, PJM says a “rigorous succession process” has been underway. “Candidates to succeed Boston will be considered on demonstrated leadership abilities, industry expertise and reputation, as well as commitment to electric system reliability and fair, efficient electric markets,” it said in a press release.
Among potential in-house candidates are Executive Vice President for Operations Mike Kormos and Executive Vice President for Markets Andy Ott, who frequently represent PJM before FERC and in industry forums. With higher titles, but lower public profiles, are Chief Financial Officer Suzanne Daugherty and General Counsel Vince Duane, both of whom hold the rank of senior vice president.
During a break at FERC’s technical conference on the Environmental Protection Agency’s proposed carbon rule last week, Kormos told RTO Insider that he was “absolutely” interested in the job.
His colleagues on the executive team did not respond to requests for comment on their interest in the position.
While the Board of Managers has identified no candidates, stakeholders are firm in the type of person they’d like to see assume the role.
“Somebody similar, with not only the ability to have a vision but to also manage a diverse set of stakeholders that range from, obviously, members of PJM to state commissions and state governments and FERC,” Moeller said. “It’s a lot of relationships to manage, and so you’ve got to have the right personality as well.”
Popowsky suggested that the board choose someone ideologically open, as he said Boston has been.
“Someone who says, ‘What’s the best combination of markets and regulation to produce the paramount goal of a reliable electric system that’s affordable to the folks who depend on it?’” he said.
Mike Kormos
Boston said his successor will face a number of challenges.
“Certainly, dealing with the largest and most rapid fuel shift in history has many downstream impacts. I believe it’s manageable, but it will take a lot of work to get through it,” Boston said. “The future of demand response and renewables, the introduction of new technologies and new consumer-use patterns, grid security and the growing complexity of the business all are challenges that I expect will keep my successor and the entire PJM team very busy.”
College Classmate-Turned-Sweetheart, Family Life
Boston has served on numerous industry boards and is the immediate past president of the GO15 international association of large grid operators. Last year, he was elected to the National Academy of Engineering.
He holds a bachelor’s degree in engineering from Tennessee Technological University and a master’s degree in engineering administration from the University of Tennessee.
It was at Tennessee Tech that Boston met his wife-to-be, Brenda, when they shared an organic chemistry class. The couple have three children: Rachel, a prolific actor who most recently played Ingrid Beauchamp in the TV series “Witches of East End;” Andrew, who earned a master’s in business administration from Harvard and now is an investor with Founders Circle Capital in San Francisco; and Brian, a graduate student at the University of Hawaii, where he is earning his doctorate in geophysics.
“Andrew was a world-class rower for Harvard and Oxford,” Boston said. Andrew worked on and sold a high-tech startup to a London company before going to Harvard.
“Brian, our youngest, will be the first Ph.D. in the family when he graduates this year from the University of Hawaii in geophysics. Last year, he worked on a Japanese research ship to collect data from the deepest research hole ever drilled through two tectonic plates to better understand the Fukushima earthquake zone off the coast of Japan.
“The kids were always busy with school and sports. They learned a strong work ethic and found that hard work pays off,” Boston said.
