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December 23, 2024

State Briefs

 Delmarva Proposes Four-Year Rate Plan

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.

More: WHYY; Delaware State News

INDIANA

 Lawmakers Eye Modular Reactors

No proposal is on the table, but a General Assembly committee started examining pros and cons of small modular reactors.

More: nwitimes.com

KENTUCKY

Mitchell Power Plant (Source: FirstEnergy)
Mitchell Power Plant (Source: FirstEnergy)

Ky. Power OK’d to Buy 50% of Mitchell Plant

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.

More: The Intelligencer

MICHIGAN

ITC Activates Thumb Loop Phase 1

ITC Thumb Loop (Source: ITC Holdings)
ITC Thumb Loop (Source: ITC Holdings)

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.

More: CBS Detroit

 

 

 

Utility Wind Contracts Draw Criticism

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.

More: Midwest Energy News

NEW JERSEY

BPU Seeks Input on Auction Changes

 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.

More: NJSpotlight

OHIO

Blame Makes Rounds in Ormet Shutdown

Ormet - (source - zoominfo)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.

More: News and Sentinel

PENNSYLVANIA

Gladys Brown
Gladys Brown

Brown Takes Seat on PUC

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.

More: Pa. PUC

VIRGINIA

 Dominion Signs Offshore-Wind Lease

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?)

More: Richmond Times-Dispatch

WEST VIRGINIA

FE Accepts WV Terms

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.

More: The State Journal

 

Demand Response Changes Could Cost $1B Annually

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)
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.”

Federal Briefs

Edward Finley
Edward Finley

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
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
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.

More: Politico; National Journal, Utility Dive

Renewable Tax Credits Seen Likely to Die

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.

More: BloombergBNA

Windmills (Image credit: Pedrosala / 123RF Stock Photo)
Windmills (Image credit: Pedrosala / 123RF Stock Photo)

 

Murkowski Laments Efficiency Bill Blockage

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.

More: Politico

Chambers of Commerce Want Fracking Regs Left to States

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.

More: Midwest Energy News

Task Force Sunset Approved

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 Eyes Reduced Synch Reserve Estimates

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.

Generator Response During 9/10/13 SR Event (Source: PJM Interconnection, LLC)
(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.”

Sponsors Propose Relief for 15 Congested Facilities

Projected Annual Congestion - Top 10 Locations (Source: PJM Interconnection, LLC)
(Source: PJM Interconnection, LLC)

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.

To win approval, developers of regional market efficiency projects must produce at least $1.25 in savings for every $1 in project cost. (See PJM Invites Transmission Projects to Reduce Congestion)

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.

Company Briefs

Constellation LogoFERC “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.

More: Baltimore Sun; Reuters

Exelon Loses Tax Claim on Nuclear Plants

Exelon-LogoThe 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.

More: Bloomberg

 

Beaver Valley (Source: FirstEnergy)
Beaver Valley (Source: FirstEnergy)

FirstEnergy Finds Hole in Reactor Lining

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.

More: The Plain Dealer

Simulations Ongoing for MISO South Integration

MISO LogoThe 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.

More: MISO

ESCO Revenue Expanding Rapidly

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.

More: Lawrence Berkeley National Laboratory

Emergency Demand Response Performance: 85%+

Emergency demand response produced 85% to 97% of promised reductions during the July heat wave, according to an analysis presented to the Market Implementation Committee last week.

Demand Response Performance - July 2013 (Source: PJM Interconnection, LLC)
Demand Response Performance – July 2013 (Source: PJM Interconnection, LLC)

No results are available from the September heat wave because Curtailment Service Providers have 45 days after an event to provide their data to PJM. The lag means charges for DR deployments won’t show up on bills for months after the triggering events.

“It makes it very difficult to understand what went on,” said Barry Trayers, representing Citigroup Energy Inc. “If you look back years later you’ll say `the September event wasn’t so bad.’ No, because [the charge] ends up in January.”

Dave Pratzon, who represents generators, said the results suggested “a little bit of response fatigue” in the ATSI zone, where DR was dispatched three times in July and twice in September.

ATSI’s DR performance fell from 95% on July 15 to 91% July 16 and 87% on July 18. “This may be our first little bit of data on what response to repeated calls will look like,” Pratzon said.

PJM says it expects to call on DR increasingly in the future, leading some to predict performance will suffer. (See Cool Reception for DR “Fatigue” Study)

Increased Installed Reserve Margin OKd for 2014

Recommended Installed Reserve Margin (Source: PJM Interconnection, LLC)
(Source: PJM Interconnection, LLC)

The Planning Committee endorsed PJM staff’s recommendation to increase the Installed Reserve Margin (IRM) to 16.2% for delivery year 2014/15 (up from 15.9% in the 2012 analysis). The committee also endorsed margins of 15.7% for delivery years 2015/16 through 2017/18. The boost is because of the increasing alignment of the RTO’s peak demand with demand outside of the region. (See Installed Reserve Margin May Increase for 2014)

Transmission Studies to Flag Upgrades Earlier

PJM will flag potential upgrade requirements earlier in the transmission study process under manual changes outlined last week to the Planning Committee.

“We’re going to bring you more violations and you’re going to have to give us more upgrades,” said Steve Herling, PJM vice president for planning.

PJM evaluates the expected transmission impact of a new generator based in part based on the historical probability that it will reach commercial operation.

In past years, studies identified many reinforcements which were ultimately not needed as projects dropped out of the backlogged queue.

Improvements in study processing have reduced the backlog. As a result, some projects have cleared the Impact Study phase (studied at 53% probability) without any apparent violations, only to have violations indicated when they are evaluated at 100% in the Facilities Study.

This can delay completion of the Facilities Study, cause costly surprises to project sponsors and hamper base case development.

Commercial ProbabilityAs a result, PJM plans to eliminate the 19% probability for Feasibility Studies and replace it with the 53% currently used for Impact Studies. Impact Studies will use the 100% probability.

PJM will make the change for studies beginning in November (Y3 Impact Studies, due 3/31/2014 and Z1 Feasibility studies, due 2/14/2014).

PJM says the changes will give customers more accurate estimates of required upgrades before entering Facilities Studies. In addition, projects with no identified impacts at the Impact Study phase won’t remain in “limbo” awaiting Facilities Studies.

Herling said planners faced a tough tradeoff: “Do you start with a bigger list and whittle it down or start with a small list and surprise people later?

“To give people clean Impact Studies or [ones incorrectly indicating] minor upgrades … we saw as too much to ignore.”

He said upgrade requirements that occur late in the process are problems for generation developers who “have already been talking to their banks.”

The committee will be asked to endorse the changes, which affect Manual 14B, at its next meeting.

“We have to act on this quickly or we’re just going to compound the problem,” Herling said. “…If we can come up with something better in six months we will.”

PJM contact: Aaron Berner