Page 1597 – RTO Insider

December 23, 2014June 15, 2023

Company Briefs

Duke Energy has agreed to excavate all 3.2 million tons of coal ash at its soon-to-be-closed W.S. Lee Steam Station in South Carolina and to bury the material in a lined landfill.

The move came after lengthy discussions with the Southern Environmental Law Center over the proper disposal of coal ash from the plant.

“This is a historic accomplishment for South Carolina’s rivers and clean water,” SELC lawyer Frank Holleman said. It is the first time environmental groups reached an agreement with Duke on coal ash disposal in either North or South Carolina, he said.

More: Charlotte Business Journal

FirstEnergy CEO Alexander Stepping Down After 10 Years

Anthony Alexander, 63, FirstEnergy’s CEO since 2004, is stopping down Jan. 1 to be replaced by Charles Jones, 59, who started with the company in 1978 as a substation engineer and has managed FirstEnergy’s regulated companies since 2010.

The transition occurs as FirstEnergy is reducing its focus on competitive power-generating markets and is returning to its roots as an operator of regulated utilities. Jones said he doesn’t expect any dramatic changes under his leadership. “I don’t think that means I am going to operate the company significantly differently than Tony,” he said.

Alexander will assume the title of “executive chairman” and will remain on the company’s board.

More: The Cleveland Plain Dealer

Exelon Generation’s Delaware Station May Have Buyer by Jan. 1

Exelon Generation said it expects to name a buyer by Jan. 1 for its retired Delaware Station on the Delaware River waterfront, north of Philadelphia’s Center City district.

More than a dozen prospective buyers have toured the property, according to Exelon spokesman Bob Judge. Delaware Station, built in 1920, was designed by Philadelphia architect John T. Windrim, who also designed the famous Franklin Institute. The 223,000-square-foot building comes with 10 acres of land and another 6 acres underwater.

The site, near the booming Northern Liberties and Fishtown neighborhoods, was the northernmost of three waterfront Philadelphia Electric power stations, each a variation on a classical temple. All three are retired. One has been repurposed as an office.

More: The Philadelphia Inquirer

Exelon Files for License Renewal for LaSalle Nuclear Station

Exelon has filed license renewal applications for both units of its LaSalle Nuclear Generating Station southwest of Chicago, asking to be allowed to operate the plant until the 2040s.

The plant’s reactors went into operation in 1984. Nuclear Regulatory Commission-issued license renewals are good for 20 years. The application is 2,100 pages long.

More: Chicago Tribune; NRC

Dominion to Buy Carolina Gas Transmission for $492.9M

Dominion Resources has signed an agreement to buy SCANA’s Carolina Gas Transmission for $492.9 million.

Carolina Gas is based in Cayce, S.C., and operates nearly 1,500 miles of interstate natural gas pipeline in South Carolina and Georgia. Its customers are wholesale and industrial. When the deal is closed, it will become part of Dominion Midstream Partners, the arm of the business that also includes Dominion Cove Point LNG, a liquefied natural gas terminal on the western shore of the Chesapeake Bay in Maryland.

Thomas F. Farrell II, chairman and chief executive of Dominion Resources, and chairman and CEO of Dominion Midstream, called the acquisition “a compelling strategic opportunity.”

More: Richmond Times-Dispatch

NRG Sells Wind Farm to ALLETE for $15 Million

NRG Energy has agreed to sell its Storm Lake 1 wind farm to Minnesota-based ALLETE Clean Energy for $15 million.

The 108-MW facility at Storm Lake, Iowa, went into commercial operation in 1999. The sale comes after ALLETE bought an adjacent 78-MW wind farm from AES in January.

More: Star Tribune

PPL’s Susquehanna Station Back On Line After Leak

Susquehanna Unit 1, taken off line two weeks ago due to a water leak inside the containment area, returned to service Friday after repairs.

The unit shut down Dec. 13 to allow workers inside the containment area to fix a minor leak. There was no release of radiation during the event, operator PPL said.

More: The Citizens’ Voice

Calpine Signs Gas Delivery Deal with Eastern Shore Natural Gas

Calpine Energy Services has signed a deal with Eastern Shore Natural Gas to supply fuel for the company’s new 309-MW Garrison Energy Centre in Dover, Del.

Eastern Shore, a subsidiary of Chesapeake Utilities, will deliver natural gas to the combined-cycle plant for the next 20 years. Eastern Shore will build seven miles of new pipeline and a compressor station at a cost of about $30 million to fulfill the contract.

More: Energy Global

Duke Adds to Solar Fleet with 20-MW Plant

Duke Energy continued to expand its solar generation fleet with the purchase of a 20-MW turnkey project in Roanoke Rapids, N.C.

The Halifax Solar Power Project, which went into service this month, was built by solar developer Geenex with backing from ET Capital. The plant was built on a decommissioned airport. The output is being sold through a 15-year agreement to Dominion North Carolina Power.

Duke owns 15 wind farms and 22 solar facilities in 12 states, totaling about 1,000 MW.

More: Duke

December 23, 2014June 15, 2023

FERC Gives Conditional OK to Talen Energy

By Ted Caddell

The Federal Energy Regulatory Commission said PPL’s plan to spin off its generation and energy marketing business and combine it with Riverstone Holdings to form Talen Energy could get its OK — if it beefed up its market mitigation plans.

“We find [the] applicants’ proposed mitigation is insufficient to address the competitiveness concerns,” the commission wrote (EC14-112).

FERC gave the companies 30 days to come back with a new mitigation plan. Among other demands, it wants PPL to sell off 700 more megawatts of generation than originally proposed, for a total of about 2,000 MW.

PPL and Riverstone Holdings announced in June they would join their generation businesses into a publicly traded independent power producer named Talen Energy. The new company would own 15,320 MW of capacity, including 12,000 MW in PJM.

In their application, the companies proposed selling about 1,300 MW of PJM generation to avoid market power complaints. The companies said that no company with more than 10% of PJM’s summer installed capacity would be permitted to bid for the plants. That would leave out Public Service Enterprise Group, Exelon and NRG Energy.

In its proposal to FERC, PPL gave two mitigation packages. One involved six Riverstone plants and one PPL plant in New Jersey and Pennsylvania — all combined-cycle plants — for a total of 1,315 MW. The second involved the same six Riverstone plants, plus a 399-MW coal-fired plant in Maryland and two PPL hydro plants in Pennsylvania for a total of 1,346 MW.

FERC’s mitigation demands closely mirror those suggested by PJM Independent Market Monitor Joe Bowring. The commission said it will:

Require Talen to make cost-based offers in the energy and regulation market; and
Require Talen to offer into PJM markets the same plants and output as PPL did, prohibiting it from holding back generation to drive prices up.

FERC declined to accept Bowring’s recommendation that it add American Electric Power, FirstEnergy, Dominion Resources, Duke Energy and Calpine to the companies barred from purchasing the plants sold in mitigation.

The commission said that it would subject any buyers to a competitive screening process to prevent market power concerns.

“PPL is carefully reviewing the order,” PPL spokesman George Lewis said. “We are assessing the options presented by FERC in detail and will submit a reply within the 30-day response period that addresses the market power mitigation issues FERC has raised.”

December 23, 2014

Connecticut Light Power Wins $130 Million Boost

Connecticut regulators approved a $130 million rate increase for Connecticut Light & Power, endorsing a staff draft decision to cut the company’s requested hike by 41%.

The Public Utilities Regulatory Authority’s ruling boosts the fixed residential monthly charge by 20% to $19.25. Regulators also OK’d the utility’s plan for transmission upgrades.

The decision reduces CL&P’s requested 10.2% return on equity to 9.17%. It also imposes a 0.15% penalty for one year for the company’s performance in preparing for and restoring service from two storms in 2011. A $257 million capital spending budget was also approved.

An average residential customer using 700 kWh of electricity will see an increase of approximately $7.12 per month.

December 23, 2014June 15, 2023

NYISO Ordered to Refund $700K in Superstorm Sandy Billing Dispute

NYISO must refund more than $700,000, plus interest, to an energy supplier due to overcharges caused by missing meter data in the aftermath of Superstorm Sandy, the Federal Energy Regulatory Commission ruled (EL14-89) Thursday.

GDF Suez Energy Resources filed a complaint in August asking FERC to order NYISO to reopen billings for electricity supplied in November and December 2012 by Consolidated Edison to 55 Water Street, a commercial office building in lower Manhattan.

Estimated bills for the affected period, based on historical data, were off by approximately 9.7 GWh, or by more than 260%. NYISO’s Tariff bars resettlements after a five month “finalization” deadline without an order by FERC or a court.

FERC said GDF Suez should receive the refund because Superstorm Sandy caused the loss of the building’s meter data and Con Ed did not obtain the available corrected meter data until six weeks after Tariff deadlines had passed. The commission wrote that “significant injustice would result absent commission action because Suez had no recourse for the failure of Con Ed to submit corrected meter data needed for NYISO to issue corrected invoices within the required 150-day meter data finalization period.”

December 23, 2014

PJM Markets and Reliability Committee Briefs

The following items were approved unanimously by the Markets and Reliability Committee Thursday with little discussion or debate.

Tariff Revisions to Metered Load Aggregates

The MRC approved an alternate method for establishing bus distribution factors for zonal and residual metered load aggregates used by the day-ahead energy market. If there are technical problems that prevent PJM from obtaining the load distribution factors from the snapshot one week prior to the operating day, it will use the load distribution factors from the most recently available day of the week that the operating day falls on.

Harmonizing PJM’s Governing Documents

The committee approved an issue charge creating the Tariff Harmonization Senior Task Force, which will report to the MRC. It will be tasked with identifying and resolving inconsistencies in definitions, indemnification, limitation of liability and alternative dispute resolution procedures in the current Tariff, Operating Agreement, Reliability Assurance Agreement and Manual 35 provisions. (See Task Force Proposed to Resolve Inconsistencies in PJM Governing Documents.)

The task force is expected to deliver proposed revisions in six to 12 months.

Standards for Enhanced Inverters

The committee approved standards for inverter-based generators defined as asynchronous generation that have an Interconnection Service Agreement or a Wholesale Market Participation Agreement. The standards, which apply to Federal Energy Regulatory Commission jurisdictional inverters, regard the inverters’ provision of voltage support, reactive power, frequency response and ramp-rate control. The changes will not affect merchant transmission facilities, HVDC inverter-converter facilities or existing generation. (See Enhanced Inverters Clear MRC.)

Manual Changes

The MRC approved changes to the following manuals:

Manual 10: Pre-Scheduling Operations was updated as part of an annual review. “Local Control Center” was changed to “Transmission Owner” in the introduction. A section clarifying outage reporting requirements for facilities providing black start service was added.
Manual 14D: Generator Operational Requirements was modified to be consistent with the revised North American Electric Reliability Corp. standard VAR-002-3, which became effective Oct. 1. The revisions address notifications of status changes on automatic voltage regulators, power system stabilizers and reactive capability.
Manual 01: Control Center and Data Exchange Requirements was amended with the addition of a section regarding user agreements related to the purchase of PJMnet connections.

Compiled by Suzanne Herel

December 23, 2014

Natural Gas, Distributed Generation, Environmental Rules Highlight NYISO Strategic Plan

Concern about natural gas infrastructure is a leading theme of the NYISO 2015-2019 Strategic Plan, released Thursday.

“Growing reliance on natural gas to generate electricity, the expanding role of distributed energy resources and the potential effects of rigorous environmental regulation are key factors influencing the future of the electric system and our strategic priorities,” NYISO Board Chair Michael Bemis said in a statement.

The plan says NYISO’s efforts over the next five years will focus on:

Improving coordination between the gas pipeline delivery system and the New York bulk electric system;
Integrating demand response and distributed energy resources in collaboration with the New York State Public Service Commission’s Reforming the Energy Vision proceeding;
Improving capacity and energy price signals to promote greater fuel assurance and improved unit performance from capacity resources;
Taking advantage of interregional connectivity to lower system costs; and
Employing smart grid technology to respond to the variability of renewable resources.

December 23, 2014

ROE Talks Between MISO Industrials and TOs Collapse

By Chris O’Malley

The transmission rate dispute between MISO’s industrial customers and its transmission owners appears headed for a Federal Energy Regulatory Commission hearing after an administrative law judge recommended last week that FERC terminate settlement proceedings.

Settlement Judge Dawn E.B. Scholz said the parties had reached an impasse (EL14-12).

That clears the way for a pre-hearing conference as early as next month, according to the Organization of MISO States, whose executive committee last week discussed the status of the case.

This fall, MISO industrials filed a complaint contending that the TOs’ current base return on equity — 12.38% except for ATC, at 12.2% — is too high.

MISO industrials contend the base ROE for TOs should not exceed 9.15%, citing changes in financial markets and other factors. Industrials say the lower rate would cut transmission rates by $327 million.

Industrial representatives met with TOs several times to attempt a settlement, to no avail.

At last week’s OMS meeting, Executive Director Bill Smith estimated the case could be resolved by fall 2015.

The dispute follows FERC’s June ruling introducing a new two-step method for calculating electric utility ROEs. Ruling in a case involving New England TOs, FERC tentatively set the “zone of reasonableness” at 7.03% to 11.74%.

Plaintiffs in the MISO case include the Illinois Industrial Energy Consumers, Indiana Industrial Energy Consumers, Minnesota Large Industrial Group and Wisconsin Industrial Energy Group.

A second dispute erupted between the groups on Nov. 6. That’s when industrials, along with consumer advocates and state regulators, asked FERC to reject a request by TOs for a 50-basis point adder as an incentive for their participation in the RTO (ER15-358).

The opponents said that the adder request is an attempt to claw back some of the revenue TOs might lose if unsuccessful in the base ROE challenge. (See Consumers, Regulators Respond as New Front Opens in MISO ROE Battle.)

December 23, 2014

FERC OKs 2018 Entergy System Agreement Exit

By Chris O’Malley

The Federal Energy Regulatory Commission last week conditionally accepted Entergy’s request to terminate the system agreement for its Gulf Coast operating companies beginning in 2018, but it ordered a hearing and settlement proceedings to consider the concerns of regulators in Texas and Louisiana (ER14-75 et al).

The system agreement among Entergy and its operating companies has been the basis for planning and operating its generation and transmission facilities as a single system since 1951.

After Entergy’s April 2011 announcement that it would join MISO, the Public Utility Commission of Texas said the benefits of joining the RTO would be diminished by Entergy Texas’ continued participation in the agreement and called for terminating it sooner than the eight-year notice period required by the pact. Texas regulators argued that Entergy would need no more than three years to achieve operational readiness to participate in MISO’s capacity markets.

Entergy responded by asking FERC permission for a five-year exit. For Entergy Texas that would be in October 2018; for Entergy Louisiana and Entergy Gulf States Louisiana, the withdrawal would be effective in February 2019. (Entergy Arkansas withdrew from the system agreement in December 2013; Entergy Mississippi’s withdrawal is effective in November 2015.)

The company said the original eight-year notice requirement was based on the time frame for constructing a new coal-fired generating plant. It said a five-year notice was now sufficient because that is enough time to plan and build a new gas combined-cycle unit and that the MISO capacity market provides a “backstop” for any shortfalls.

The New Orleans City Council balked, saying that it was uncertain whether all of Entergy’s operating companies would join MISO. It also said five years might not be enough to plan new generation, citing delays in the development of Entergy’s Ninemile Point Unit 6.

The Louisiana Public Service Commission, meanwhile, called for a new “modern, comprehensive tariff” addressing planning and operation of the Entergy system in the MISO market, saying it is improper for Entergy to continue operating under an “anachronistic” agreement developed before RTOs existed.

Louisiana asked FERC to consolidate proceedings concerning the notice question with dockets ER13-432 and ER14-73, which involve revisions to the system agreement related to Entergy’s entry into MISO.

The commission rejected the consolidation request, saying the factual and legal issues were too disparate to combine in a single docket.

FERC did agree to combine the six notice dockets, and it ordered appointment of a settlement judge within 15 days. If the parties cannot reach a settlement, FERC said, the case will go to a public hearing to resolve the factual disputes.

Entergy has more than 2.8 million customers in Arkansas, Louisiana, Mississippi and Texas.

December 23, 2014June 15, 2023

FERC Bundles Entergy ‘Bandwidth’ Disputes for Hearing

By Chris O’Malley

Saying the “time is ripe,” the Federal Energy Regulatory Commission has consolidated four years of Entergy Corp.’s disputed annual cost allocation cases for hearing and settlement.

At issue is how Entergy allocates production costs among its half-dozen operating companies under its system agreement. The companies essentially operate as one system, although each have different operating costs.

Each year payments are made by low-cost operating companies to the highest-cost company in the system, using a “bandwidth” remedy that ensures that no operating company has production costs more than 11% above or below the Entergy system average.

Under the 2014 bandwidth implementation — its eighth —Entergy Texas would pay $15.3 million to Entergy New Orleans.

Regulators in each state where Entergy operates have regularly challenged the annual bandwidth filings. FERC agreed Dec. 18 to review not only the 2014 filing but also Entergy’s fifth, sixth and seventh bandwidth formulas (ER14-2085).

The commission said the filings raise factual issues that it could not resolve based on the existing record. It set a refund effective date of June 1, 2014.

In Entergy’s 2014 filing, the New Orleans City Council sought a hearing to determine if Entergy’s rate calculations and accounting practices are in agreement with the bandwidth formula and previous FERC orders.

The council also raised an issue with the 2013 bandwidth filing, noting that it includes the cancellation costs of the Little Gypsy Repowering Project that a FERC judge in an initial decision (ER12-1384) excluded from the bandwidth calculation.

The Louisiana Public Service Commission, meanwhile, said it wanted a hearing to determine whether Entergy’s inputs are unjust and unreasonable due to incorrect calculations, “misapplications of the formula or imprudence.”

The Public Utility Commission of Texas also sought a hearing on the 2014 filing but asked that it be delayed until the accounting for the previous years are resolved.

“Our preliminary analysis indicates that Entergy’s proposed rates have not been shown to be just and reasonable and may be unjust, unreasonable, unduly discriminatory or preferential, or otherwise unlawful,” FERC said.

December 23, 2014June 15, 2023

FERC Orders Proceedings to Decide PJM’s Postage-Stamp Cost Allocation

By Michael Brooks

The Federal Energy Regulatory Commission last week ordered settlement judge and hearing procedures to determine how costs should be allocated for PJM transmission projects of 500 kV or more that were approved before February 2013.

PJM’s “postage-stamp” cost allocation for the projects was challenged in court by the RTO’s Midwestern utilities. The method billed all PJM utilities in proportion to their load, regardless of where the projects were located.

The Seventh Circuit Court of Appeals has remanded the case back to FERC twice, most recently in June. The commission had originally approved the postage-stamp method in 2007 and attempted to justify it in its order on remand. The court, however, ruled that FERC had again failed to show how a western utility would benefit as much as an eastern utility from new transmission facilities in the east. (See PJM: Court Ruling Won’t Upset ‘Hybrid’ Cost Allocation.)

In last week’s order, FERC noted the court’s criticism, saying it expects PJM and the western utilities “to support their respective proposals for cost allocations for these projects with quantitative evidence, or at least an estimate of the benefits, adjusted as necessary to reflect any uncertainty in benefit allocation among the PJM utilities.”

The case concerns 15 projects costing $2.7 billion.

FERC urged PJM and the utilities “to make every effort to settle their disputes before hearing procedures are commenced.” A settlement judge will be appointed by Jan. 2 to oversee the discussions (EL05-121-009).

PJM replaced the postage-stamp method last year with a hybrid formula that allocates half the costs using the former method, with the remaining costs allocated by a solution-based distribution factor (DFAX).