PJM is making its eSuite tools more functional and more compatible with current web browsers.
PJM’s Gautam Punjabi told the Members Committee webinar yesterday that legacy applications such as eCredit, eMKT, eData and eDART will support Internet Explorer 9, while refreshed applications such as Gas Pipeline, InSchedule, Bulletin Board, and Data Miner will work with IE 9 and the latest offerings from Firefox, Chrome and Safari. These tools will no longer support Internet Explorer 7.
In addition, PowerMeter and ExSchedule will be renamed eMTR and EES, respectively, and updated to improve security and create consistency with other refreshed apps on the PJM website. The changes above are expected to be completed by March 31.
Account Manager and eMKT will be refreshed later this year, with eData and OASIS updates planned for 2015.
The Federal Energy Regulatory Commission granted PJM’s request to lift the $1,000 offer cap as the RTO entered a second consecutive week of frigid temperatures that have strained generators and pushed natural gas prices to new records.
FERC’s order came as PJM issued alerts yesterday warning that resources would be increasingly strained Tuesday and Wednesday. PJM and state regulators also appealed to the public to reduce power use, particularly during today’s evening peak.
Load is projected to approach 140,000 MW tonight, just short of the 141,500 MW winter peak record set Jan. 7.
PJM requested a waiver to lift the cap last week after natural gas prices jumped to triple digits as heating and electrical demand for the fuel surged.
FERC’s order (ER14-1144) effectively lifts the cap on offers beginning Jan. 24 by allowing generators to seek make-whole payments for the difference between their costs and the clearing price.
The commission has not yet ruled on PJM’s separate request to allow generators to offer above the cap for future trading days through March 31, 2014 (ER14-1145). PJM asked FERC to rule by Feb. 10.
Spot prices at Transco Z-5 and Transco Z-6 (non-NY) averaged over $120/mmBtu on Jan. 21 and 22, with prices as high as $140/mmBtu. “These gas prices are record-setting for the PJM Region (if not for the nation), shattering even the records set just earlier this month during the `polar vortex’ extreme cold weather event,” PJM said.
PJM said simple-cycle combustion turbines buying gas at current prices would have marginal costs of about $1,200/MWh. On January 21, PJM said, about 5,000 MWs of generation made day-ahead offers of $999/MWh, indicating their costs were above $1,000. About 4,000 MWs were ordered to operate.
In granting PJM’s waiver request, the commission noted that the Market Monitor reviews all cost-based offers to ensure they are legitimate. The commission ordered the Monitor to submit a report within 30 days of the expiration of the waiver on how much energy was accepted over the bid cap, the cost of that energy and any unverifiable bids that were rejected.
The RTO said it will ask stakeholders to consider changes to the Operating Agreement as a long-term fix for what it called the “unprecedented conflict” between the $1,000 offer cap and the generation must-offer requirement.
“The remarkable conditions present in the `polar vortex’ event less than two weeks ago gave the first clear indication that actual fuel costs could collide with the offer cap, but before PJM could take action to address that concern, this week saw an even greater leap in fuel prices that made this conflict concrete,” PJM said in its filing.
PJM did not ask FERC for relief for generators whose costs may have exceeded the cap before Jan. 24 but said it may make a supplemental filing to seek make-whole payments later.
In a letter to FERC in support of PJM’s request, Calpine Corp. CEO Thad Hill stated, in all capitals: “The stability of the power markets in the PJM region are dependent on the commission’s granting of PJM’s waiver today.”
The waivers will not affect demand response, which is limited to $1,800 ($1,000 plus two times the penalty factor). PJM called on DR several times last week to meet loads as arctic cold followed snow.
PJM’s Chris Pilong told members in a briefing yesterday that unplanned outages from last week’s arctic blast occurred most frequently in the eastern portion of PJM, unlike earlier this month, when outages were more evenly spread across the RTO.
Commuters brave winds outside Union Station, Washington, D.C., yesterday.
The cold is expected to continue throughout the PJM footprint most of this week.
PJM yesterday issued three alerts for Tuesday: a Voltage Reduction Alert, reporting that estimated operating reserves are less than the synchronized reserve requirement; a Primary Reserve Alert, warning that estimated primary reserves are only 1,000 MWs, half the 2,000 MW objective; and a Maximum Emergency Generation Alert, calling Maximum Emergency Generation into operating capacity.
PJM also issued a Cold Weather Alert for Wednesday.
Cleveland and Columbus, Ohio are expecting lows at or below zero through Wednesday. Below zero lows are also forecast for Chicago.
Lows in Washington, D.C. will be in the teens most of the week.
Plunging temperatures sent natural gas spot prices soaring again this week, prompting PJM to seek approval from federal regulators to lift the $1,000/MWh price cap on generation.
Natural gas prices for generators in PJM peaked at $140/mmBtu Tuesday, pushing operating costs for generators above the price cap.
As a result, PJM officials told members they will ask the Federal Energy Regulatory Commission to allow the RTO to waive the price cap for the remainder of the winter.
Demand Response Dispatched
Transco Zone 6 Non-NY Prices as of 1/23/14 (Source: Natural Gas Intelligence)
PJM called on about 150 MW of emergency demand response Wednesday night, and about 500 MW Thursday morning and afternoon. DR was called again this morning. About three-dozen Post Contingency Local Load Relief Warnings — advance notice to a transmission owner of the potential for manual load dump in their area – have been issued since Tuesday.
Adam Keech, PJM director of wholesale market operations, said the RTO called on DR because of concerns about generation lost to breakdowns, fuel shortages and environmental restrictions.
PJM had “thousands of megawatts” of generation trip Tuesday night, particularly in the Baltimore area, Keech told stakeholders at a meeting of the Energy Market Up-lift Senior Task Force Thursday.
With reserves tight, “if you have any [generator] problems you’re going to get into trouble in a hurry,” he said.
All generation capacity resources that do not qualify to take a forced outage under PJM’s rules are required to submit an offer into the day-ahead market subject to the system offer cap of $1,000/MWh. Non-capacity resources may submit emergency offers in excess of the system offer price cap.
Waiver Filing
PJM’s FERC filing will seek a retroactive waiver of the system offer cap to make whole generation resources that can document costs exceeding $1,000. Keech said the waiver would apply to generation dispatched this week but would not affect dispatches from the polar vortex in early January. The waiver would seek permission to reimburse affected resources through uplift payments (Balancing Operating Reserve).
“PJM has consulted with counsel and believes the anticipated retroactive waiver request will likely be accepted by the FERC,” PJM said in a notice to members.
In addition, PJM will seek to lift the cap going forward for cost-based offers from generation resources through March 1, 2014. Such resources would be eligible to set Locational Marginal Prices, Keech said. “That’s the intent in having them submit [prices above $1,000] as an offer rather than making them whole” afterward, Keech said.
The waiver will not affect DR, which is limited to $1,800 ($1,000 plus two times the penalty factor).
Gas Prices
Natural Gas Supply-Demand Balance (Source: EIA)
Spot gas prices in the Northeast and Mid-Atlantic this week exceeded the heights of early January, Natural Gas Intelligence reported. The high on Transco Zone 6 non-N.Y. hit $140/mmBtu Tuesday. Prices for delivery today were $87.13, a drop of $34.09.
Below is a chronology of operator actions in response to this week’s cold.
Wednesday
Load had a “pretty steep pickup” Wednesday morning, Keech said, but the snow that blanketed the area Tuesday provided some relief as closed schools and offices dampened demand.
PJM dispatched demand response and issued a Maximum Emergency Generation Action — dispatching generation above the maximum economic level and warning that off system energy sales may be recalled — at 14:00 Wednesday for the BGE transmission zone, adding the BA/PEP area of PEPCO for transmission contingency control at 17:20.
At 19:30, a Maximum Emergency Generation Alert was called for the AP and Dominion control zones.
Shortly after 20:00, the RTO issued a Voltage Reduction Alert for the PEPCO and BGE transmission zones for Thursday due to fears that operating reserves might fall below the Synchronized Reserve requirement.
Prices hit $1,800 in the areas where DR was dispatched, Keech said.
Thursday
About 04:30, operators called demand response and issued a Maximum Emergency Generation Action in the Mid-Atlantic, Dominion and AP control zones. Twenty minutes later, PJM issued a request for emergency energy from 05:30 through 07:30.
Load, expected to hit 135,500 MW, came in about 2,000 MW below that, and the DR was not needed, Keech said.
PJM also issued a public appeal for energy conservation Thursday evening and Friday morning.
Operators issued another Maximum Emergency Generation Action at 14:00 for transmission contingency control in Mid-Atlantic, Dominion and FE-South/APS.
DR was dispatched in the AP and Dominion control zones, BGE and PEPCO transmission zones.
Load peaked at 134,988 MW at 8 p.m.
Friday
A Maximum Emergency Generation Action was issued and a call for short and long lead-time DR was issued at 04:30 in the AP and Dominion control zones. Load peaked this morning at 138,522 — above the forecast of 138,289 MW — with available economic capacity of 157,477 MW.
After a brief warm-up this weekend, more arctic cold is expected throughout the PJM footprint next week.
Cleveland and Columbus, Ohio are expecting lows at or below zero Monday through Wednesday, with a possible low of -16 in Columbus Monday. Up to 4 inches of snow is expected to fall Saturday.
Below zero lows are also forecast Monday and Tuesday for Chicago.
Philadelphia is forecast to be below freezing for virtually all of the next seven days, with only a high of 34 Monday breaking the streak. Lows below 10 degrees are forecast on several days and the area may receive another inch or two of snow Saturday.
Lows in Washington, D.C. will be in the teens most of the next week.
RTO Insider will update this story with the FERC filing and other operational developments as they become available.
The Federal Energy Regulatory Commission clarified last week that its April 2013 order approving American Electric Power’s Ohio restructuring plan does not preempt a court challenge by industrial customers.
The April order approved AEP affiliate Ohio Power’s request to transfer its generating units and related assets to AEP Generation at net book value, following a similar approval by the Public Utilities Commission of Ohio.
The Industrial Energy Users-Ohio, an association of large Ohio-based energy users, asked FERC to rehear the case, saying that AEP failed to meet FERC’s Ameren precedent and demonstrate that the net book price did not subsidize AEP Generation at the expense of Ohio Power’s customers.
In last week’s order (EC13-26-001), FERC denied the rehearing request but specified that its action was not intended to pre-empt the industrials’ challenge, which is currently pending before the Ohio Supreme Court. FERC noted that it has not required fact finding under its Ameren precedent for intra-corporate generation transfers at net book value that comply with state restructuring initiatives.
The Federal Reserve is considering restricting big banks’ ability to trade and warehouse physical commodities. But Democrats on the Senate Banking Committee suggested the Fed isn’t moving fast enough to protect the public from the risks of physical disasters and commodity market manipulation.
Chair Sherrod Brown (D-Ohio) said the central bank’s notice of proposed rulemaking is “overdue and insufficient.” Brown chaired a hearing at which a Fed official, plus officials from the Federal Energy Regulatory Commission and Commodity Futures Trading Commission, testified about their concerns and market regulation initiatives. More: Huffington Post; Banking Committee; NPR
Cooling-Water Rule Delayed
The Environmental Protection Agency missed a Jan. 14 deadline for publication of a final rule requiring aquatic-life protections at power plant cooling structures. Riverkeeper, an environmental group which had sued EPA to force the rule, has agreed a number of times to pushing back the completion date. An EPA time line shows the rule was sent for Office of Management and Budget review in July. More: Power Magazine
EPA GHG Rule Under Fire
Nebraska filed suit against the Environmental Protection Agency’s proposed rule limiting greenhouse gas emissions from new power plants. The grounds for the suit are that EPA based its requirement for coal generators on carbon capture and sequestration projects that have received government funding. The suit, filed in U.S. District Court in Lincoln, argues that the funding makes the projects ineligible for use in setting a standard. Administrator Gina McCarthy said Thursday that her agency is preparing to release detailed information that will provide more “clarity” on the topic. Meanwhile, Sen. Mitch McConnell (R-Ky.) is trying to get a vote on a resolution that would block the rule. The proposed rule is ripe for congressional action now, he said, because it would apply to projects started after publication of the proposed rule, not the final rule as is often the case. More: Politico; Nebraska Attorney General; National Journal
Obama Adviser Responds to Green Challenge
President Obama’s senior adviser John Podesta rebuked U.S. environmental leaders Friday for challenging the White House’s energy strategy, saying he was “surprised” they would question his commitment to addressing climate change.
Podesta responded to a letter from 18 leading environmental groups who said the president’s “all of the above” energy strategy was not acceptable, and greenhouse gas reduction should be the focus of all energy decisions.
The Department of Energy said it would award the FutureGen 2.0 carbon capture and storage project $1 billion, conditional on the project getting its storage site permit and private financing. The FutureGen Alliance said construction on the $1.68 billion Illinois project could start this year. More: The State Journal-Register
The Federal Energy Regulatory Commission gave preliminary approval last week to rules to protect the grid from geomagnetic disturbances and a final OK to a reliability standard for frequency response.
Geomagnetic Disturbances – EOP-010-1
The commission’s Notice of Proposed Rulemaking (RM14-1-000) endorsed Reliability Standard EOP-010-1, the North American Electric Reliability Corp.’s initial response to the commission’s July order calling for rules to close the “reliability gap” regarding geomagnetic disturbances (GMDs) caused by solar events. (See FERC Orders Rules on Geomagnetic Disturbances.)
1989 Solar Storm (Source: Metatech Corp.)
Geomagnetically induced currents can flow through transformers and transmission lines, leading to increased reactive power consumption and disruptive harmonics that can cause system collapse.
The standard requires reliability coordinators and some transmission operators to institute operational procedures to mitigate the effect of GMDs. (The rule applies to transmission with a “transformer with a high side wye-grounded winding with terminal voltage greater than 200 kV.”)
Not covered are balancing authorities and generator operators although the second stage of the standards could apply to generators, FERC said.
In stage two, NERC must determine what severity GMD will constitute a “benchmark” GMD event. Covered entities will be required to assess the potential impact of such benchmark events on their equipment and systems.
Comments on the proposed standard will be due in 60 days after publication in the Federal Register.
PJM Procedures
PJM already has GMD operational procedures, which are detailed in section 3.7 of Manual 13. The plan calls for PJM to notify generation and transmission members via the PJM All-Call system and Emergency Procedure posting application when the National Oceanic and Atmospheric Administration (NOAA) issues an alert for a potential GMD with a ranking of 5 or greater on the 9-point “K-index.”
Once a GMD has been confirmed, PJM dispatchers must operate the system under transfer limits determined from studies that modeled several scenarios, including the loss of the Hydro-Quebec Phase 2 DC line to Sandy Pond and the loss of generation at Artificial Island, the site of the Salem and Hope Creek nuclear plants.
Frequency Response – BAL-003-1
The BAL standard sets requirements for the provision and measurement of frequency response, which is not covered by current standards.
The rule establishes a minimum frequency response obligation for each balancing authority, provides a uniform calculation of frequency response, establishes frequency bias settings, and encourages coordinated automatic generation control (AGC) operation.
The commission ordered NERC to increase the violation risk factor for Requirement R1 — mandating minimum frequency response obligations — to high from medium.
“Without sufficient primary frequency control, a frequency decline may not be arrested in sufficient time to prevent instability, uncontrolled separation or cascading failures,” the commission wrote. “…The fact that one entity’s violation of Requirement R1 may be offset by the efforts of others is not a basis for ignoring or downplaying the substantial risk posed by inadequate frequency response.”
It also ordered NERC to remove references to performance of R1 by other entities: “We believe that violation severity levels for this requirement should be set so as to discourage particular responsible entities from `leaning on’ other entities to provide sufficient frequency response collectively to meet the relevant Interconnection Frequency Response Obligation.”
The commission directed NERC to submit two reports, one addressing the results and recommendations of a light-load case study of the Eastern Interconnection, and a second evaluating the use of the linear regression methodology for calculating frequency response and the availability of resources to meet the frequency response obligation.
The commission said the reports will indicate the effectiveness of the Reliability Standard in assuring sufficient frequency response is available to respond to system events and whether changes are needed.
The Chicago City Council approved a $13 million, 62-building retrofit project, the first and only one stemming from Mayor Rahm Emanuel’s Chicago Infrastructure Trust initiative, which aims to make city buildings more energy efficient. The cost is only 11% of what was envisioned when the trust was launched two years ago. Bank of America is to finance the project, earning 4.95% on its investment for 15 years.
Louisville Gas & Electric and Kentucky Utilities asked the Public Service Commission for approval to build a second natural gas combined-cycle plant and a solar facility. The 700 MW gas plant would be at the Green River plant site, where the utilities are retiring coal-fired generation capacity. They already plan to build a 640 MW gas unit at the Cane Run plant site. The utilities also plan a 10 MW solar facility at the Brown station.
LG&E and KU also asked the PSC to let them expand several energy efficiency programs and add an option for customers to get advanced meters. The programs to be expanded are those for home energy rebates, home and commercial energy analyses and commercial demand conservation. The utilities also would extend education and public information programs.
Dianne Solomon, wife of a former president of the Board of Public Utilities, was appointed to that position last week when Bob Hanna left the presidency to assume a judgeship on the state Superior Court. Solomon’s husband, Lee Solomon, who preceded Hanna in the presidency, is also a Superior Court judge.
Gov. Chris Christie made no announcement of his appointment of Dianne Solomon, who has been a commissioner since last summer. A paralegal, she is a former commissioner at the South Jersey Transportation Authority.
U.S. Deputy Energy Secretary Daniel Poneman met with state business and community leaders in a roundtable at Public Service Enterprise Group’s headquarters to discuss electricity infrastructure needs and PSEG’s controversial grid-investment plan, Energy Strong.
The Southern Environmental Law Center filed court papers on behalf of seven water conservation groups that want to participate in state environmental officials’ lawsuits against Duke Energy over coal ash disposal sites. The Department of Environment and Natural Resources’ enforcement actions involve seven operating and retired plants.
Invenergy Wind Development reached an agreement with the Department of Defense to mitigate impacts of the company’s Pantego Wind Energy Project in the eastern part of the state. Turbines would be placed no closer than four nautical miles from the centerline of a flight route used by Seymour Johnson Air Force Base.
The project is not a certainty, however, and Invenergy continues to evaluate its development plans, “with a specific time line still to be determined.”
A market researcher ranked the state as second highest for solar demand in 2013, behind only California. In NPD Solarbuzz’s year-ago report, the state ranked fifth. The director of the Nicholas Institute for Environmental Policy Solutions attributed the state’s rise to solar-friendly policies, which include a 35% solar tax credit and a 12.5% renewable portfolio standard.
A fired worker allegedly threatened to blow up Dayton Power and Light’s coal-fired Stuart Station on the Ohio River, but no bomb was found there. DP&L had to shut down one of four units at the plant while law enforcement agencies investigated.
FirstEnergy’s American Transmission Systems Inc. and Ohio Edison asked the Ohio Power Siting Board for authorization to build a 3.5-mile, 138-kV line to the Hickory Bend cryogenic gas-processing plant operated by Pennant Midstream, a NiSource subsidiary.
The plant, which is almost operational, will separate wet from dry gas from the Utica shale formation. The siting board put the transmission application on an accelerated consideration track, and FirstEnergy said it could start construction as soon as February.
FirstEnergy is replacing a transformer at its Beaver Valley Nuclear Power Station after the plant shut down January 6. It was not clear whether the severe cold weather played a role in the sudden shutdown. The company did not say how long the transformer replacement would take.
Two members of the state legislature expressed concern about PJM’s generation adequacy in the wake of the severe cold snap that tested the grid’s strength. In letters to the Public Utility Commission and PJM, Sen. Tim Solobay and Rep. Pam Snyder said the RTO’s difficulty during the polar vortex raised questions about the closure of the Hatfield’s Ferry and Mitchell plants, which PJM has said would not affect reliability.
A NextEra Energy Resources wind turbine on a ridge in Springfield Township apparently fell over and crumpled. The company said it was investigating the cause. A nearby resident said the night was still, although the area has had high winds this season. According to a NextEra official, the turbines are on private property away from buildings, and “The risk to the public (from a collapse) is zero.”
A bill to protect birds and bats from wind turbines passed the state Senate Committee on Agriculture, Conservation and Natural Resources 9-5, advancing to the full Senate for consideration. The bill would require the Department of Game and Inland Fisheries to consult with the Department of Environmental Quality when it writes regulations for wind and other renewable energy projects.
Sponsor Sen. Tom Garrett (R) rejected allegations by some wind power advocates who criticized the measure as anti-wind. “We will, I hope, generate a greater and greater percentage of our power in the coming years via renewable energy resources… That doesn’t mean we should do so irresponsibly.”
Below is a summary of PJM’s proposed changes to the incremental auctions. Alternative proposals are also described where they differ from PJM’s plan or current rules. See the matrix for full descriptions.
Capacity Resource Deficiency Charge:
Under current rules, bidders who fail to deliver on promised resources must pay a capacity resource deficiency charge equal to the higher of 1.2 times the weighted average resource clearing price or the resource clearing price plus $20.
PJM would increase the penalty by about 25% to 38%, according to an analysis based on clearing prices from the 2013 base residual auction (BRA). The strictest proposals would increase that penalty by 50% to 67%, though one of them, by RC Cape May Holdings, LLC, would allow a reduction in the penalty for new resources that met certain development milestones short of completion (see chart in “Capacity Panel to Vote on Arbitrage Fix”).
Number of incremental auctions (currently three):
PJM would retain the final IA, one year before the beginning of the delivery year, with the other two occurring only if needed for PJM to obtain additional capacity due to increases in its reliability requirement.
PJM would release capacity only in the final IA, the only one in which other capacity buyers could participate.
Another proposal, by RC Cape May Holdings, LLC, would reduce the number of IAs to two.
PJM sell offer price:
PJM would continue the current practice — an upward sloping offer curve with starting price determined based on intersection of the variable resource requirement (VRR) curve and vertical line at current commitment level — but the price would be floored at the clearing price in BRA.
RC Cape May would continue the current practice but with a non-zero offer floor at 10% of BRA clearing price.
The Market Monitor would bar PJM from selling any excess capacity.
Allocation of 2.5% Short-term Resource Procurement Target:
Current rules allocate 0.5% each to the first two IAs with 1.5% in the final IA. That would continue under PJM’s proposal, assuming all three auctions are held. If not, the allocation from any cancelled auctions would be carried over to the next auction.
Incremental Auction Settlement Calculation:
Cleared sell offers and buy bids currently settle against the IA clearing price. PJM would continue to clear sell offers against the clearing price. Buy bids, however, would have to pay the clearing price plus the difference between the BRA and the IA clearing prices — eliminating the ability of market participants to profit by selling at a high price in the BRA and buying back at a cheaper price in the IA. “The goal of the settlement adjustment is to eliminate the ability to profit from the IA,” said Stu Bresler, PJM vice president of market operations.
Implementation Schedule:
PJM would implement most changes for all auctions related to delivery year 2017/18, starting with this year’s BRA.
The sell offer price and mitigation changes would become effective immediately upon FERC approval.
The Market Monitor would implement all changes to all future auctions upon FERC approval “with appropriate transition.”
At the annual National Association of Regulatory Utility Commissioners conference in Orlando last November, the Todd Snitchler Show was one of the hottest tickets.
NARUC gatherings are not known for their production effects or sense of humor, but Snitchler — the moderator of a session titled “The Environmental and Economic Implications of Carbon Restrictions” added a bit of show biz flair. The session opened with a soundtrack featuring Pink Floyd’s Money and a clip from a Will Ferrell movie. The six speakers stood at podiums, debate-style, while Snitchler strode among the audience like Oprah with a handheld microphone.
Snitchler won’t be enlivening any future NARUC conferences. The colorful, controversial chair of the Public Utilities Commission of Ohio announced last week he won’t seek reappointment, ending a three-year run during which he championed electric choice and alienated environmentalists with his Twitter posts expressing skepticism about renewable power and climate change. The 43-year-old Republican’s term as head of the 320-person agency ends April 10.
Legacy
Don Mason, an energy attorney and former PUCO member called Snitchler “one of the finest regulators that Ohio has ever had.”
“Wicked smart,” was the way Gov. John Kasich described Snitchler when he appointed him to the commission. Kasich praised the chairman in a statement last week as an “effective leader” and a “fierce defender of the PUCO’s independence.”
The Columbus Dispatch summed up his legacy in less glowing terms, writing, “Snitchler has been part of decisions that angered utility companies, consumer advocates and large businesses, sometimes all at the same time.”
Electric Deregulation
In an interview with RTO Insider yesterday, Snitchler expressed few regrets and said he was proud of his agency’s role in the state’s transition to electric deregulation.
Ohio PUC Chair Todd Snitchler at FERC technical conference on capacity markets, September 2013.
“I think we have moved steadily and consistently into a more competitive posture,” Snitchler said, citing the “dramatic increase” in the number of competitive suppliers and the increased shopping activity by individuals and municipal aggregators. The PUC announced last month that, for the first time, more power customers are buying their power from alternative suppliers than incumbent utilities.
Consumer advocates give Snitchler and the commission he headed mixed marks, acknowledging that electric prices declined since 2009, due to the combined effects of the recession and the influx of cheap natural gas.
“The outgoing chair is very much a devotee of the free market, à la the Texas model, which our organization doesn’t see as very advantageous to consumers,” said David Rinebolt, executive director of Ohio Partners for Affordable Energy. That model forces everyone to shop rather than allowing default service providers, which Rinebolt said forces consumers to absorb marketing costs.
While Ohio law requires default service in electricity, it doesn’t in natural gas. Rinebolt’s group is currently challenging a move to eliminate default service for some commercial gas customers.
Rinebolt praised Snitchler, however, for pushing electric distribution companies to use competitive procurement to obtain energy for their standard service offer.
Sam Randazzo, counsel to the Industrial Energy Users-Ohio, faulted PUCO for allowing utilities to collect “massive amounts” of transition, or “stranded” costs. As a result, he said, Ohio businesses and individuals are paying rates that are much higher than what are reflected in PJM capacity prices.
ALEC
Gov. Kasich appointed Snitchler in January 2011 to complete the term of former Chairman Alan Schriber.
Then a member of the Ohio House of Representatives, Snitchler was, like Kasich, active in the American Legislative Exchange Council, a conservative group that promotes free markets and reduced regulation. Snitchler was a keynote speaker at an ALEC task force meeting in April 2011 after joining the PUC.
Last year, Ohio legislators battled over legislation backed by ALEC to weaken or repeal the state’s renewable portfolio standard (RPS).
The legislation targeted Ohio’s “25-by-25” standard, which requires power companies to get 12.5% of their electricity from renewables and an equal amount from “advanced energy,” such as fuel cells, “clean coal” or new-generation nuclear power by 2025.
The legislation stalled in committee in December in the face of opposition from stakeholders including the Ohio Manufacturers Association and the Ohio Office of Consumers’ Counsel.
Snitchler and PUCO took no public position on the legislation. But he has made clear his misgivings about renewable power in frequent Twitter postings.
Tweets
The Columbus Dispatch reported a year ago that among more than 1,000 tweets from the previous year, “Snitchler did not once share anything positive about renewable energy.”
Among the tweets: “After [Hurricane] Sandy no one lined up for wind turbines,” and the “‘green’ religion is taking over from Christian religion.”
He also shared posts expressing doubts about climate change, quoting a report that noted that “the Himalayas and nearby peaks have lost no ice in past 10 years.”
On another occasion, he re-tweeted a story from the Communist Party newspaper Pravda, titled “Elites of West have cranked up myth of Global Warming.” Snitchler said he found the article “interesting.”
State Rep. Mike Foley, a Democrat, called Snitchler’s posts “radical.”
“The First Amendment entitles Snitchler to say what he wants. But Ohio isn’t paying Snitchler to do stand-up,” the Cleveland Plain Dealer wrote in an editorial. “Ohio is paying Snitchler to do the judgelike job of setting utility rates. That requires an open mind, not a juvenile one.”
“The guy is a right-wing ideologue and he doesn’t belong in a regulatory body that’s supposed to be impartial and protect the consumers, which he’s not doing,” Henry Eckhart, former commissioner who now represents utility consumers, told the Massillon, Ohio, Independent.
He quoted America’s Natural Gas Alliance so often that one commenter said “on some days @snitch92 might be confused for the ANGA’s feed.”
In fact, Snitchler has expressed concerns about the state becoming overly dependent on natural gas as an electric source, and called for a continued role for coal.
“While shale gas may be a major component in the here and now planning by our utilities there is no doubt coal needs to continue to play a major role in our future generation mix,” he told an Ohio House committee in October.
Snitchler declined yesterday to talk about specific postings or his view of climate change science.
“That’s not been a focus of my effort at the commission,” he said. He acknowledged, however, “You always learn lessons about better ways to communicate, and that was a lesson learned on my part.”
AEP Solar Project
The tweets came to light after Snitchler voted with a 3-1 majority to reject American Electric Power’s proposed Turning Point solar energy project.
The 50 MW project — about 250,000 solar panels on a reclaimed strip-mine — would have been the largest solar farm east of the Rocky Mountains. It had been championed by Gov. Ted Strickland, a Democrat, during his unsuccessful 2010 reelection campaign against Kasich.
The PUCO staff supported it, saying additional solar capacity was needed to comply with the state’s renewable mandates.
Ohio’s industrial energy users and FirstEnergy Corp. were among those who opposed the project, criticizing the funding mechanism AEP sought — a surcharge on all AEP distribution customers, including those who purchase power from competitive suppliers.
Snitchler joined with Commissioners Lynn Slaby and Andre Porter — now Kasich’s Commerce Department director — in finding that the project sponsors had failed to demonstrate it benefited ratepayers and was in the public interest.
“It wasn’t a question of being anti-renewables or anti-solar,” Snitchler said. “The Ohio Power Siting Board, on which I also served, approved a number of renewable projects, particularly wind, during my tenure.”
Former PUCO Commissioner Cheryl Roberto, now the Environmental Defense Fund’s Associate Vice President of Smart Power, said although she disagreed with Snitchler on environmental issues, she found him “pragmatic” and cooperative.
“I really enjoyed working with Todd,” said Roberto, who left the commission in December 2012. “I think Todd works very hard to understand some very complex and arcane issues.”
Travel Expenses
Snitchler came under criticism this month after the Dayton Daily News reported that the commission spent nearly $35,000 to send the five commissioners and 15 staff members to the NARUC conference.
The Ohio PUC delegation was the largest among those attending from PJM states. The Pennsylvania Public Utilities Commission was second with 16 attendees. None of the other state regulatory agencies sent more than seven attendees.
“You don’t need 15 staff people listening to a bunch of lectures,” former PUCO chairman Henry Eckhart told the Daily News. “Get a copy of the handouts and bring it back.”
A PUCO spokesman responded to the criticism by noting that the commission is the fifth largest state regulatory agency in the country.
Voluntary Departure?
Kasich and Snitchler described the end of the chairman’s tenure as Snitchler’s choice. After five years of commuting weekly to Columbus from his Canton-area home two hours away, Snitchler said, he wanted to spend more time at home, particularly with a daughter about to enter her senior year of high school.
Some in Columbus, however, speculated that Snitchler wanted to keep the post, which pays more than $124,000 annually, but was rebuffed by the governor.
“Those folks are wrong,” Snitchler insisted. “I thought long and hard about it…Everybody has an expiration date.”
Snitchler, who previously had a private legal practice, said he hopes to continue working in the energy field but has no landing place yet.
Before his term expires, he hopes to complete PUCO’s investigation into whether the state’s electric utilities have a true separation between their regulated and unregulated sides. A staff report issued last week recommended the commission audit utilities every four years to ensure compliance with code of conduct rules that bar sharing of competitive information between regulated and competitive subsidiaries.
Replacement
Under state law, the five-member commission can have no more than three from any political party. Snitchler’s departure will leave it with a single Republican, Slaby, Democrat Steven Lesser and two members not registered with either party, Asim Haque and Beth Trombold.
Twenty-seven aspirants applied to replace the chairman by last week’s deadline, including two PUCO staffers, former elected officials and several attorneys and engineers. All but two of the candidates are men.
A 12-member nominating council that includes consumer, labor and industry stakeholders will screen the candidates and forward a list of four finalists to Kasich.
PJM’s dispatch of demand response helped avoid the need to shed load during the polar vortex Jan. 7, when the RTO set a new winter demand record of about 141,500 MW.
PJM dispatched DR for both the morning and evening peaks. An estimated 2,029 MW responded for hour ending 1800, according to the graphs released by PJM last week (above). Actual reductions will be known after customer meter data is provided.
