Generation owners that do not qualify for a connection to the PJMNet private communication network would be able to purchase as many as five under a proposal approved by the Operating Committee.
PJM currently pays for at least one PJMNet connection for each transmission owner considered important to system reliability and for generation owners with resources of at least 100 MW. Entities that do not have a PJMNet link connect to PJM by Internet SCADA, which is less reliable.
The committee approved a proposal that would let smaller generating members, and those that already have a PJMNet connection, buy up to five connections. Members rejected a proposal to allow smaller generators to buy only one connection and another that would have required all members to buy their first connection.
PJM says the monthly cost for a non-redundant connection will be about $2,600. Installation will cost about $12,000 or $22,000, depending on the type of protocol used. Redundant connections would cost more.
The Operating Committee last week endorsed changes to Manuals 3, 10 and 14D.
Manual 3: Transmission Operations – Adds language regarding approval of emergency rating changes; added applicability for individual generators greater than 20 MVA; clarified reference to voltage coordination; revised outdated references.
Manual 10: Pre-Scheduling Operations – Annual Review. Minor updates for clarity; added references to forecasted planned outages and reporting outages on synchronous condensers.
Manual 14D: Generator Operational Requirements – Changes made at RFC request, and for consistency. Includes changes to reactive capability testing; replaces outdated references; requires generators operating or scheduled for PJM to operate to notify PJM prior to attempting a restart following a trip or failure to start.
The Planning Committee last week endorsed changes to Manual 14B: PJM Region Transmission Planning Process to improve the procedure for analyzing and addressing short circuits.
Reason for Change: PJM currently analyzes short circuit cases for the current year +1 and +5. System modifications are difficult for transmission owners to implement with a one-year lead time.
Impact: The annual Regional Transmission Expansion Plan will analyze short circuit base cases for the current year +2.
Delmarva Power filed a proposed four-year rate plan with the Public Service Commission that would add $2.40 a month to average customer bills. Rather than the company seeking reimbursement for past expenses, the “forward-looking” plan would create a budget for future spending.
AEP subsidiary Kentucky Power won Public Service Commission approval for the utility’s purchase of half of the 780-MW Mitchell plant from sister company Ohio Power. Meanwhile AEP unit Appalachian Power awaits West Virginia approval to buy the other half.
ITC Holdings Corp. put the first phase of its Thumb Loop, a 62-mile 345 kV line between Tuscola County and Huron County, into service. It said the rest of the 140-mile project is on schedule for completion in 2015. Designed to deliver wind power from the Thumb region, the project will have a capacity of about 5,000 MW.
Critics say a lack of competition and transparency in utility wind power contracts utilities leaves the public ignorant of whether the deals are good for ratepayers.
The Board of Public Utilities is taking a survey on whether to carve renewable energy out of the auction for basic generation service as a report shows ratepayers have paid $388 million for the clean energy program.
Ohio officials traded blame after Ormet said it will shut down its aluminum manufacturing plant because the Public Service Commission approved an electricity rate break smaller than the company had sought. About 750 jobs will be lost.
Former state Senate aide Gladys Brown was sworn in to the Public Utility Commission after unanimous Senate confirmation. Brown has served since 1991 as counsel to the Senate Democratic Leader, where she worked on many major utility issues.
Dominion Virginia Power signed the lease and sent the government a check on 113,000 offshore acres intended for wind power development. The utility won the lease with a $1.6 million bid. (See Will an Old Utility Learn New Tricks?)
FirstEnergy agreed to West Virginia’s terms for approval of the company’s proposed generation asset transfer. The company’s Mon Power unit will own the Harrison Power Station and use local coal. Average customer bills will drop by about $1.50 per month. A citizen group said it would challenge the transfer approval.
PJM and generators squared off against load-serving entities and industrial customers last week in a debate over the RTO’s proposal to change the way demand response clears in capacity auctions. The proposal could cost PJM load $1 billion a year.
The Capacity Senior Task Force last week heard three proposals regarding how offers for Limited, Extended Summer, and Annual demand response are cleared in the Base Residual Auction.
Had PJM’s proposal been in place, according to a simulation by PJM, the 2015/16 Base Residual Auction would have resulted in total costs of $28.9 million per day versus $26.6 million under the current rules, an annual increase of about $840 million (8.6%). For 2016/17, the PJM proposal would have increased total costs by $1.02 billion, a jump of almost 19%.
$1 Billion Hit
PJM’s proposal “is a $1 billion hit” for load, said Dave Mabry, representing the PJM Industrial Customer Coalition. “If generation bid cheaper than DR I don’t know that we would be here” discussing changes.
Paul Sotkiewicz, PJM’s chief economist for markets, insisted “it is not a pocketbook issue, per se. It’s a reliability issue.”
All three proposals would include a cap — or “reliability target” — on the amount of Limited DR permitted to offer into the auction.
PJM’s proposal would subtract all of the 2.5% Short-term Resource Procurement Target (STRPT) from the Limited DR cap. The proposal would have reduced the volume of Limited DR clearing by nearly two-thirds for 2015/16, according to the simulation.
An alternative submitted by James Wilson on behalf of consumer advocates in New Jersey, Maryland and Delaware would subtract only a portion of the 2.5% STRPT “holdback” from the cap on Limited DR.
Another alternative by the Southern Maryland Electric Cooperative (SMECO) does not address the holdback but does ask PJM to consider increasing the DR caps to reflect the increased operational flexibility that DR resources are being asked to provide under separate CSTF initiatives.
Once the Minimum Annual Resource Requirement is satisfied, both the Consumer Advocate and SMECO alternatives would allow Extended Summer and Annual DR to compete until the intersection with the Variable Resource Requirement curve.
1994 Rolling Blackouts Invoked
Sotkiewicz said neither of the two alternatives addressed PJM’s concerns that the increasing volumes of DR are undercutting capacity market prices and reducing incentives for new generation. Sotkiewicz invoked the memory of January 1994, when PJM was forced to order rolling blackouts because of a generation shortage as subzero temperatures reduced fuel supplies and caused increased plant breakdowns.
“What you’re doing here is exactly what we’re trying to get away from: a vertical demand curve for annual resources,” Sotkiewicz said regarding the SMECO proposal.
Sotkiewicz and generators said the two non-PJM proposals increase the risk of “boom-bust cycles.”
“I really think that under current circumstances that argument doesn’t work very well,” responded Wilson.
DR vs. Generation
Impact of PJM’s Proposed Changes (Source: PJM Interconnection, LLC)
The task force session was part of a broader debate over the reliability value of excess capacity and the fairness of PJM’s treatment of demand response versus generation.
One generator representative said demand response has an unfair advantage in competing against generation in the capacity market. “I have a must-offer requirement for every megawatt I have and I have to offer at a capped rate. We’ve had a lot of new [generation] entry but we’ve had a lot more retirements” because the capacity market is not sending the right price signals, he said.
Ken Jennings, of Duke Energy, said that although demand response offers into the capacity market at lower prices than generation those savings could be offset by DR’s impact on the energy market. He noted that DR set prices at $1,800/MWh in some zones during the heat waves in July and September. DR’s effective maximum price is scheduled to rise to $2,700/MWh by 2015.
In contrast with DR role in reducing consumption, Jennings added, “It is the generators that tend to spur economic development.”
Former Colorado regulator Ron Binz withdrew from consideration as chairman of the Federal Energy Regulatory Commission because opponents had succeeded in painting him as an environmental extremist, he said. Binz abandoned his candidacy Oct. 1 after he was unable to win any Republican support within the Senate Energy and Commerce Committee and West Virginia Democrat Joe Manchin announced he would oppose his confirmation.
Regina Speed-Bost
“The caricature that they created had nothing to do with who I am and nothing to do with what I might’ve brought to FERC. It was just a blood sport,” Binz told POLITICO.
Colette Honorable
Arkansas Public Service Commission Chairwoman Colette Honorable; Edward Finley, chairman of the North Carolina Utilities Commission and Regina Speed-Bost, an attorney with Schiff Hardin and a former FERC staffer, are reportedly among those being considered for the vacant fifth seat on the commission. Some observers say President Obama will name one of the two other Democrats on the commission, Cheryl LaFleur or John Norris, as chairman.
Federal tax credits for wind, geothermal and closed-loop biomass are due to expire in December, and many see little sign they will be renewed. Even if they are reinstated retroactively later, it would continue the credits’ longtime pattern of uncertainty.
The Senate should be embarrassed by its failure to pass a simple energy efficiency bill, says Sen. Lisa Murkowski, the top Republican on the energy committee. “There is so much blame to go around here,” she said. Bill backers are contemplating ways of getting past roadblocks.
Chambers of Commerce in 17 states told the Environmental Protection Agency they want regulation of fracking left to states. Differences among states make uniform federal regulation problematic, they said.
The Market Implementation Committee last week endorsed the sunset of a task force created in 2012 to develop a process for limiting compensation when resources do not operate within reliability limits.
The Reliability Limited Generator Compensation Task Force (RLGCTF) completed its work after developing Tariff and Operating Agreement language limiting lost opportunity costs and tightening rules on generators’ behavior. FERC approved the changes in an order May 29.
PJM is planning changes to the way it estimates Tier 1 synchronized reserves after SR performance fell far short of expectations during the Sept. 10 heat spike. The RTO wants to make at least some of five proposed changes by the end of the year.
On Sept. 10, PJM received only 200 MW of Tier 1 reserves in the RFC region (the RTO excluding the Dominion zone), less than one-fifth of the 1,435 MW estimated by system operators. Members had claimed 4,000 MW of reserves, PJM staff told the Operating Committee last week.
“Wacky,” remarked one member.
(Source: PJM Interconnection, LLC)
Operators’ lack of confidence in reported reserves led PJM to call on a record amount of demand response on Sept. 11. Gaps are not critical most days, but referring to the stressful September event, a staff member said, “These are the days we need to worry about.” (See Big To-Do List from September Heat Wave)
If all five changes that staff has proposed had been in place, the Sept. 10 estimate would have been about 301 MW, about 100 MW above the actual response, according to Senior Reliability Engineer Chris Pilong.
Pilong said staff wanted feedback on the changes although it does not need member approval to implement them. PJM plans to “nail down” their changes at the next OC meeting, Nov. 5.
The changes being considered would:
Cap Tier 1 estimates based on the lowest of EcoMax, SpinMax or Emergency Max. An analysis of the last 42 spinning-reserves events found less than 4% of units outperformed their EcoMax, Pilong said.
Remove from Tier 1 estimates hydro and combined-cycle units, most of which do not respond to Tier 1 spin events because they lack required equipment such as duct burners and fuel guns. The units would still be eligible for Tier 2 assignments.
Exclude units providing regulation from the Tier 1 estimates. Manual 12 allows such units to respond to spin events as long as they return to their regulating band within 10 minutes.
Remove from the Tier 1 estimate any units being backed down for constraint control.
Cap units’ Tier 1 estimates based on the degree of generator performance (DGP) modifier, which measures how units respond to dispatch instructions and estimates their future response. Staff is conducting additional analysis to determine whether to implement this change 24×7 or just during peak load periods and emergency procedures. Two committee members recommended applying this change only in emergency situations to assess its impact on reserves and shortage pricing.
Staff said the proposed changes would likely result in more Tier 2 clearing than did this summer.
Pilong said he also plans to propose rule changes to make PJM more confident it has enough of a synchronized-reserve requirement. He plans to bring the matter up at November’s meeting, taking into account the feedback he received from generator representatives.
“Market participants need to have a good feel for when PJM will be raising the SR requirement, or the triggers for it,” one generator representative said. When generators know they will be held back, he said, they won’t “chase LMP because PJM will compensate them for reserves.”
Six sponsors submitted proposals to relieve 15 transmission constraints in the “market efficiency” window that closed Sept. 26, officials told the Transmission Expansion Advisory Committee last week.
PJM said it will release a list of the proposed regional projects this week along with any interregional proposals for relieving congestion on market-to-market (M2M) and other congested facilities serving paths between PJM and MISO. The window for interregional projects closed Oct. 11.
PJM’s top 25 “congestion events” are projected to cost $237.8 million in 2017 (97% of all congestion for the year), rising to $514 million (95% of the total) in 2023. Eight of the 25 locations are market-to-market flowgates. Three spots are located in Commonwealth Edison and two each in Dayton Power & Light, MetEd and PECO.
FERC “preliminarily determined” that Constellation Energy Group violated market-behavior rules by not providing accurate information to the California Independent System Operator, the commission said in a notice. A company spokesman said the investigation concerned two months in 2010. “There is no allegation of manipulative conduct,” the spokesman said.
The U.S. Court of Federal Claims ruled against Exelon over the company’s claim of $1.69 billion in tax liabilities associated with decommissioning costs for three nuclear plants. The plants, which Exelon bought in 1999 and 2000, were not near decommissioning, the court said. Exelon said the ruling had no impact on earnings; the company has not decided whether to appeal.
FirstEnergy reported finding a rusted hole in the lining of the reactor containment building at the Beaver Valley nuclear plant in Pennsylvania. The company found the hole — about a quarter inch by one-half inch — during a visual check of the lining during a refueling outage. It began making such checks routinely s since discovering a similar hole in 2009.
The Midcontinent Independent System Operator began market day simulations for entities in MISO South, which is to join the regional grid operator in December. “We believe we’re on target for a seamless integration,” MISO’s Todd Hillman said.
Energy service company revenues grew by 9% annually from 2009 to 2011 and could double by 2020, the Lawrence Berkeley National Lab reported. Depending on scenarios, the industry could reach more than $15 billion by that year.
