WILMINGTON, Del. — Members approved changes to Manual 18 necessary to incorporate Capacity Performance in the upcoming Base Residual Auction.
The motion passed over one objection and 25 abstentions.
PJM officials said stakeholders have expressed concern about approving manual language when some aspects of the new product are still in flux. (See PJM Delays Vote on Capacity Performance Rules.)
They said more educational workshops are planned and that the minutes of Thursday’s meeting will explicitly state that the vote was taken with the recognition that additional details may need to be worked out as the process moves forward.
In separate but related changes to Manual 20: PJM Resource Adequacy Analysis, members set constraints for two limited availability resources that will be permitted to participate in the 2018/19 and 2019/20 delivery years. The constraints are necessary to ensure reliability.
Base Capacity DR is available for interruption every day from June 1 through Sept. 30 and unavailable the rest of the year. Its constraint was set at 8.3% of the resource requirement.
Base Capacity Generation is assumed to be available throughout the delivery year except for one week at the winter peak. Its constraint was set at 18.9%.
Details of the constraint computation methodology were added as Section 6.
Early Capacity Replacement Approved
The committee endorsed manual changes allowing market participants to enter replacement capacity transactions earlier than Nov. 30 prior to the start of the delivery year if the need is linked to a physical reason that would prevent a participant from meeting its commitment. The changes prohibit generation that is replaced early from being recommitted for the delivery year. (See Earlier Replacement Capacity Transactions Approved.)
The PJM motion passed with a 68.8% sector-weighted vote. As a result, an alternative proposal by Baltimore-based CPower was not considered. It would have allowed the early replacement transactions without the restrictive conditions. Consultant Tom Rutigliano, who made the proposal, said that PJM’s restrictions are discriminatory against demand response and energy efficiency resources, prevent resources from following price signals and restrict options for reliability.
Task Force to Study Regulation Market Issues
The Independent Market Monitor won approval of a problem statement and issue charge surrounding concerns that PJM is buying too much fast-responding RegD resources in the regulation market. The initiative also will consider changes to the marginal benefit factor that defines that substitutability between RegA and RegD megawatts, which the Monitor says is faulty. (See PJM Market Monitor: Faulty Marginal Benefit Factor Harming Regulation.)
The motion passed with 65.8% in a sector-weighted vote.
Some stakeholders voiced concern over approving a new initiative while PJM is examining related issues through its Operating Committee and still digesting the transition to Capacity Performance.
Monitor Joe Bowring said it makes sense for the study of market design and of the marginal benefit factor to be considered on parallel tracks.
“I don’t think we can allow the market to be dysfunctional much longer,” he said. “There’s always going to be a million things going on at PJM.”
Added Mike Kormos, committee chair, “We cannot continue to carry as much RegD as we have and maintain control.”
Tariff Harmonization Task Force to Become Subcommittee
Instead of creating a separate group to clean up language in the RTO’s governing documents that is “ambiguous, incorrect or requires clarification,” the committee agreed to remodel the Tariff Harmonization Senior Task Force as a subcommittee and assign it the task. (See PJM Law Proposes Cleaning up Language in Governing Documents.)
Garnering just 59% of a sector-weighted vote, Old Dominion Electric Cooperative fell short of winning approval for a proposal that combined recommendations from PJM and the Market Monitor in redesigning the financial transmission rights and auction revenue rights process. (See ODEC Seeks Last-Ditch Vote on Deadlocked FTR/ARR Issue.)
The committee later unanimously agreed to disband the FTR/ARR Senior Task Force.
Two-tiered Fee Schedule for Order 1000 Projects OK’d
Members endorsed a two-tiered fee schedule for proposed transmission projects. For greenfield projects or upgrades between $20 million and $100 million, PJM will assess $5,000 to cover its study expenses. Projects costing at least $100 million will be charged $30,000. Previously, a $30,000 fee for all projects greater than $20 million had been approved, but planners later realized they likely wouldn’t need to collect that much to cover the costs of reviewing the proposals. (See PJM Lowers Proposed Tx Project Study Fee.)
Tweaks to Merchant Network Upgrade Language Approved
The committee endorsed new tariff language to more accurately reflect how PJM processes requests for merchant network upgrades. The changes address definitions, queue entry, agreements and the capacity market.
Manual 01, 13 Changes Endorsed
Members unanimously approved a significant update and reorganization to Section 5 of Manual 01: Control Center and Data Exchange Requirements, introducing definitions of two major data types: System Control and Monitoring (Instantaneous) and Billing (Accumulated). Changes also update references to OASIS and add requirements regarding synchrophasor data exchange.
The MRC also endorsed amendments to Manual 13: Emergency Operations, including administrative changes, clarifications and updates. The committee added a reference to Manual 12 for member actions when PJM loads 100% synchronized reserves and a reference to the instantaneous reserve check process.
A principal in the Middletown company that wants to build a 63.3-MW fuel-cell power plant in Beacon Falls says the project’s plan will be submitted to the Connecticut Siting Council by the end of month.
The Beacon Falls Energy Park, which was announced in May, will be built on part of 24-acre site near Lopus Road west of the Naugatuck River. The council will have 180 days to rule on the application.
The companies developing the plant have said the project will yield up to $90 million in local property and state sales taxes over the plant’s 20-year life. The Beacon Falls Energy Park will produce enough electricity to power more than 60,000 homes.
Beachgoers can now charge their electric cars at three Tanger Outlets locations in Rehoboth Beach. Each of the outlet stores offers four charging stations. Situated between several parking spaces, they can charge eight vehicles at once.
The charging stations are Level 1, which can provide 4 ½ miles’ worth of juice for a Nissan Leaf in an hour.
The Delaware outlets are among 23 Tanger locations nationwide providing the charging stations as part of the company’s effort to go green. It’s also looking into installing solar panels at its Rehoboth Beach locations.
Kansas Gov. Sam Brownback’s campaign approached a Westar Energy official for cash earlier this month as part of an effort to pay down its debt. The Topeka Capital-Journal obtained documents that show a Brownback campaign operative contacted Westar Energy executive Mark Schreiber two weeks ago seeking help retiring debt left over from the governor’s re-election campaign last year.
The Kansas Corporation Commission is set to rule this fall on a $152 million rate request from Westar. The KCC is made up of three commissioners who are appointed by the governor and confirmed by the state Senate. If the request is approved, about $93 million would be raised from residential customers, amounting to a 12.1% increase.
Asked about the campaign’s decision to approach the Westar official, a governor’s spokeswoman said his office “does not influence the operations or decision-making process of the Kansas Corporation Commission, which is an independent commission.”
Environmental Groups Allowed to Intervene in Westar Case
The Kansas Corporation Commission ruled last week that a variety of solar and environmental interest groups can intervene in a limited capacity in Westar Energy’s pending rate case before the commission. The KCC held two hearings last week to gather public input on Westar’s proposed $152 million rate-increase request.
At issue is Westar’s proposal to create three new optional service plans. The plans shift more of each monthly electric bill to fixed charges, increasing from $12 per month to $27 per month by 2019, and reducing volumetric charges based on consumption. The proposal prohibits renewable energy users from participating in at least one of the options, resulting in higher base rates while limiting the ability to lower the bills through conservation.
Westar said solar power activists, including some from out of state, are misrepresenting the utility’s “common-sense approach to renewable energy.”
Texas Company to Build New England’s Largest Wind Farm
EDP Renewables North America has filed an application with the Maine Department of Environmental Protection to build New England’s largest wind farm, able to power about 70,000 homes. The 250 MW Number Nine wind farm in Aroostook County would be located near the Canadian border.
The Texas company is proposing to erect up to 119 turbines rated at between 2 and 2.1 MW. The cost of the project is $613 million. EDP has been working on the project for at least two years.
The project would also include a 50-mile transmission line to connect the wind farm to the ISO-NE power grid. In January, Central Maine Power and Emera agreed to allow EDP to use a portion of a key transmission corridor known as the Bridal Path, between Houlton and Haynesville in Aroostook County, to connect its wind farm to the grid.
Winslow is set to begin drafting regulations that could pave the way for a solar farm potentially 20 times bigger than the largest current solar facility.
Ranger Solar, a private Yarmouth-based energy firm, is contemplating siting a 10- to 20-MW solar project estimated to cost as much as $25 million and take up as much as 100 acres. Winslow would be the first municipality in the state to create a utility-scale solar ordinance that would create standards for such projects, according to town officials.
The ordinance has to be in place by October so Ranger can take advantage of federal tax credits. The program provides a 30% federal income tax credit for commercial or residential solar systems, which will decrease to 10% after 2016.
Pepco Fights Back Against Motion to Stay Merger OK
Pepco Holdings Inc. says that a motion to stay the state’s approval of its merger with Exelon is without merit.
The motion was filed July 21 by the state Office of People’s Counsel in the Circuit Court for Queen Anne’s County. In addition to requesting a stay of the Public Service Commission’s decision, the People’s Counsel asked to present additional evidence regarding an alleged conflict of interest of former Commissioner Kelly Speakes-Backman, who took a $200,000/year job with an industry-backed nonprofit three days after the vote.
The merger still needs the approval of the D.C., which is set to make a decision next month.
With the opening of a 3.56-MW solar installation built over a capped landfill, North Adams will become the largest per capita solar city in Massachusetts, according to Mayor Richard Alcombright. The town, which also has a power-purchase agreement to buy electricity generated by two other solar installations, says the reduction in dependence on fossil fuel-produced power will save the community more than $300,000 a year.
The solar farm at the landfill consists of about 7,000 solar panels covering about 13 acres. It is producing at 65% of its capacity because the National Grid substation in Adams isn’t equipped to handle all its output. The utility company is upgrading the substation, Alcombright said.
The city is contemplating building another 1-MW project, but officials say it will wait until net metering caps are lifted by the state.
Ameren Energy Efficiency Hearings Begin Before PSC
The Public Service Commission began hearings last week on a new energy efficiency plan to replace Ameren Missouri’s three-year-old program, which expires at the end of 2015. The PSC is weighing two competing designs that have split environmental groups and state government officials.
State law allows utilities to bill customers to recoup the costs of the efficiency programs and sales lost due to energy savings, but it doesn’t require utilities to participate. Ameren has indicated it does not like how the public counsel and the PSC staff want to structure the program. The state’s utility customer advocate told regulators eliminating energy efficiency rebates for Ameren customers would be better than adopting the utility’s new efficiency plan.
The Natural Resources Defense Council, which has been a critic of what it said were low savings targets in the utility’s prior proposal, is now backing Ameren’s plan. Other environmental groups have sided with PSC staff and public counsel.
Rate Hike Would Cover Upgrades that may Have Been Unneeded
Montana Dakota Utilities spent hundreds of millions of dollars on environmental upgrades at plants to comply with federal emissions standards that are now being challenged. If the federal Mercury Air Toxic Standards, or MATS, is successfully challenged, it might mean that the utility’s improvements were unnecessary.
MDU has applied for a 21% rate increase to pay for the upgrades. Residential bills may rise $178 a year to cover the pollution controls. But the utility says the upgrades, which cost about $348 million for one plant alone, were mandated to meet the mercury standards, which are still in force. “The rule is still in effect,” MDU Spokesman Mark Hanson said. “We still have a deadline to meet. It’s tough to run your business when you don’t know what the rules are.”
The Montana Public Service Commission has not yet granted the increase. “Twenty-one percent is a large increase, and it’s very rare to see an increase from our large utilities that’s in the double digits,” Commissioner Travis Kavulla said.
Nebraska’s Wind Energy Catching Up with Other States
Timothy Texel, executive director and general counsel of the Nebraska Power Review Board, says the state had only three wind turbines generating 2 MW of power when he first joined the regulatory body in 1998. Speaking to the Grand Island Rotary Club last week, Texel said Nebraska now has 475 wind turbines capable of generating 801 MW at 16 separate wind farms.
“We have more wind turbines than people think, but they’re mostly in remote location where people never see them,” he said. Texel said recent regulatory changes have allowed private entities to build “energy export facilities” that can generate power for utilities in other states. He said the expense of building transmission lines is an issue — only one such line has been built since 2010 — but SPP’s cost-allocation process could lead to power being exported through the RTO.
The Logan County Board approved a $400 million wind project after the owners made changes to address earlier board concerns.
The Meridien Project, an 81-turbine wind farm, is being built by Relight U.S. The board deadlocked 6-6 when it voted on the project initially. The new plan addresses noise levels, increases setback distances, pays out more money for community projects and sets up a decommissioning plan. The board voted 8-4 to approve it this time.
The project has been in the planning stages since 2007. One board member said she hoped the latest vote would allow all residents to move forward. “I would encourage everyone on both sides to really put the differences behind and to move forward and not let this have a long time of festering, because that would be a negative for the entire community,” she said.
The New Hampshire Public Utilities Commission announced that the Renewable Energy Fund is running out of money, and the state has put a freeze on new applications for solar, biomass and other renewable subsidies.
The fund had only collected $4.3 million in 2014 to pay for 2015 projects. Adding to the stress on the fund was a decision by legislative budget writers to raid the fund for $2.2 million over the next two years to make up the amount the now closed Vermont Yankee nuclear plant paid to finance the state Department of Homeland Security.
The state Board of Public Utilities is continuing to review utility response to a June 23 storm that left more than 400,000 residents without power.
The “macroburst” thunderstorms brought winds of up to 85 mph in Gloucester and Camden counties, hitting customers of Atlantic City Electric hardest and causing extensive damage to the utility’s infrastructure, according to the BPU.
The company reported that 17 transmission circuits and five substations were knocked out of service. The utility, owned by Pepco Holdings, had to replace transmission towers and distribution poles and rebuild thousands of feet of cable. For at least twelve hours after the storm hit, ACE was forced to revert to radios and manual processes to dispatch crews, as its mobile-data terminals failed.
New York’s top fiscal officer criticized Gov. Andrew M. Cuomo’s 2013 LIPA Reform Act in a report that says the law has left customers facing higher electric bills, increasing debt and less transparency from the utility.
State Comptroller Thomas DiNapoli raised questions about provisions in the law and PSEG Long Island’s contract to manage the distribution company, which stripped away mechanisms for oversight of the utility even as it created a new oversight agency — the Long Island office of the state Department of Public Service.
DiNapoli’s report found that LIPA customers now are facing higher bills “with new categories of charges as well as a proposed three-year rate increase, and bearing a debt burden that is projected to increase” to $8.3 billion by 2018. The report notes that the proposed 3.2% three-year rate hike by PSEG and LIPA “represents the largest rate increase LIPA ratepayers have faced” since LIPA took over from LILCO in 1998.
NYISO Board Approves Comprehensive Reliability Plan
The NYISO Board of Directors has approved the 2014 Comprehensive Reliability Plan for New York’s bulk power system. The plan concludes that the system will meet all applicable reliability criteria under expected system conditions during the study period (2015-2024), and confirms that the reliability needs initially identified in the 2014 Reliability Needs Assessment are being resolved. (See NYISO: Reliability Concerns Raised Last Year Resolved.)
“The NYISO’s comprehensive planning process works in conjunction with our markets that are designed to send price signals for entry of resources that sustain and enhance reliability,” NYISO President and CEO Stephen G. Whitley said in a statement. “The new capacity zone in the Lower Hudson Valley played a critical role in motivating suppliers to maintain existing resources and install new resources needed for system reliability.”
The New York Power Authority is playing a growing role in the Buffalo Niagara region’s economic development. The Power Authority is providing most of the $5 million funding for the 43North business plan competition, which announced recently it had attracted more than 3,000 qualified entrants.
Similar initiatives, some stemming from the agency’s 2007 relicensing agreement for the Niagara Power Project, have helped fund the Canalside project and subsidize dozens of local businesses through allocations of low-cost hydropower from the Lewiston plant.
“Think of it as a dividend,” Gil C. Quiniones, the Power Authority’s president and CEO, said during a meeting with editors and reporters of The Buffalo News.
Target filed an application to install solar arrays on eight more stores in North Carolina, bringing its total to 27 rooftop solar projects in the state.
According to filings with the North Carolina Utilities Commission, Target plans to invest about $22 million to complete the installations.
Pipeline Company Changes Route to Reduce Environmental Impact
The North Dakota Public Service Commission has approved 29 changes to a crude-oil pipeline route to reduce possible environmental impacts.
Sacagawea Pipeline Co. applied in March for approval of a 16-inch crude-oil pipeline that would run from McKenzie County to a rail terminal in Montrail County. Part of the $100 million pipeline will cross Lake Sakakawea. The company appeared before the commission last week to file for the changes, which it said were designed to minimize any environmental impacts.
The pipeline has a maximum capacity of 200,000 barrels a day.
A Shell Chemicals ethane plant proposed for Western Pennsylvania would generate all of its own electricity – more than 100 MW – and then some, according to the Associated Press.
The plant, proposed for Beaver County, would use natural gas-fired cogeneration on-site to create steam and electricity, with any excess power to be sold for use on the regional grid.
Shell, which paid $13.5 million for the former zinc smelting site, has not confirmed it will build the multi-billion-dollar facility.
Entergy Texas has filed a motion with the Public Utility Commission of Texas to dismiss the company’s application to purchase one of the four 495-MW generating units at the Union Power Station in southern Arkansas. The motion, if approved, would allow the unit to instead be acquired by Entergy New Orleans for $237 million, subject to the New Orleans City Council’s approval. The purchase is expected to close later this year.
Union Power is a 1,980-MW generating facility consisting of four combined-cycle natural gas-fired generating units. Under the original agreement, Entergy New Orleans agreed to buy 20% of the power generated by the two natural gas-fired units purchased by Entergy Gulf States. The company will purchase one of the Union Power Station units in lieu of the purchased power agreement. Entergy Gulf States will still purchase two of the generating unit and Entergy Arkansas will buy the remaining unit.
While New Orleans Entergy customers will now absorb a larger share of the purchase’s cost, Entergy New Orleans President and CEO Charles Rice said the deal “is an ideal way” to meet the city’s need for additional generation at “half the cost of building a comparable new unit.”
The Public Utilities Board granted Manitoba Hydro a rate increase of nearly 4%, a large part of which will go toward paying for its Bipole III transmission project. The 3.95% rate increase goes into effect Aug. 1.
Bipole III is a $4.6 billion transmission line project designed to deliver power from northern generating stations to southern Manitoba and for export to the United States.
Manitoba Hydro said it is on track to spend about $20 billion over the next 10 years on system improvements, including the Bipole III project. The utility said it would need to increase rates nearly 42% over the next 10 years to finance the improvements.
NYISO told the Federal Energy Regulatory Commission last week it does not plan to make any changes in its day-ahead schedule to comply with FERC Order 809, which adjusted the gas market schedule.
In a July 23 filing, NYISO said the existing day-ahead schedule satisfies the timing requirements directed by the order, which moved the timely nomination cycle deadline for gas to 1 p.m. CT from 11:30 a.m. and added a third intraday nomination cycle (EL14-26).
FERC required RTOs and ISOs to adjust the posting of their day-ahead energy market and reliability unit commitment process results “sufficiently in advance” of the revised gas cycles, or explain why it is not suitable for their markets. (See FERC Approves Final Rule on Gas-Electric Coordination.)
The ISO said it posts its day-ahead schedules by 11 a.m. ET (10 a.m. CT) and that day-ahead reliability unit commitments are posted at the same time as successful day-ahead economic bids, giving generators at least one and a half hours before the nomination deadline for the existing timely nomination. “After Order 809 becomes effective, and the nomination deadline for the timely nomination cycle moves to 1 p.m. CT, the NYISO will be notifying electric generators of their day-ahead schedules at least three hours before the timely nomination cycle deadline,” the ISO said.
Illinois Attorney General Lisa Madigan last week joined industrial consumers in calling for changes to MISO’s capacity auction rules, while the RTO defended itself, in filings with federal regulators.
Madigan
MISO’s rules “are no longer just and reasonable and require modification,” Madigan said in comments filed July 20 with the Federal Energy Regulatory Commission (EL15-82). Madigan said last week that she supports proposals the Illinois Industry Energy Consumers made in a June 30 filing.
In May, the attorney general and Public Citizen filed complaints asking FERC to investigate Dynegy’s bidding behavior in April’s Planning Resource Auction, which resulted in a nine-fold price increase for Zone 4 (EL15-70).
IIEC said last May’s auction — which saw Zone 4 clear at $150/MW-day compared with just $16.76 a year earlier — will cost Illinois industrial companies $1.6 million each, on average. Madigan said the dramatic swing in auction prices also hurts Illinois’ residential ratepayers.
“While the people did not propose specific Tariff changes in their complaint, the changes recommended by IIEC address some of the issues raised in the people’s complaint and are necessary revisions to ameliorate the effects of market power in the MISO zones, and particularly in Zone 4,” Madigan said.
Industrials and Madigan say the idea that Dynegy’s bids are justified by the opportunity cost of selling power into PJM is specious. IECC said there is little transmission capacity and “very few” bilateral sales between MISO and PJM. That, Madigan said, calls “into question the existence of the opportunity to sell to PJM at the prices reflected in the initial reference level.”
The initial reference level is set “as if there were no limits on the transmission of MISO-generated megawatts in the PJM areas,” Madigan said.
Citing FERC’s Electric Quarterly Reports, consultant Robert McCullough, a witness for the state, said that prices of the few bilateral sales from MISO to PJM were low — with one at only $1.09/MW-day.
MISO Response
In a response filed July 20 (EL15-82), MISO said the IIEC comments “misapprehend” the concept of opportunity costs.
MISO said IIEC suggests that the RTO may only calculate an opportunity cost prior to the PRA based upon “having perfect knowledge” — not only of resources’ bids into MISO’s auction, but also of bids into PJM’s market.
“Then, MISO is somehow expected to create a clearing price for markets in both PJM and MISO based upon such perfect knowledge,” MISO shot back. “Obviously, this standard is impossible to meet and unnecessary to properly estimate a supplier’s opportunity cost.”
MISO also countered that IIEC’s proposal would result in double-counting resources and incentivize suppliers to not make offers into MISO, “which will lead to a less robust market and potentially higher prices.”
Confidentiality Needed
IIEC and Madigan said FERC should also reconsider how the initial reference level is communicated to generators. In Illinois’ auctions for default electric service, the market administrator determines a benchmark price, but it is kept confidential so that bidders base their offers on their own costs rather than pegging them to a higher level, Madigan said.
“In revising the MISO Tariff, the commission should require that the reference level be maintained as confidential so that bidders cannot structure their bids around the reference level,” Madigan said. “While a reference price that is properly established may be a useful tool to address market power, MISO’s Tariff perverts the role of the reference price from a meaningful cap to an instrument of market power.”
Counter-Flow Concerns
Finally, the attorney general supports another revision to MISO’s Tariff recommended by IIEC: reducing the local clearing requirement (LCR) by the amount of capacity exported into a neighboring market. They say that an LCR that is too high creates more opportunity for a large generator to exercise market power.
Madigan cited the Independent Market Monitor’s 2014 State of the Market report, which stated that the binding of the LCR in Zone 4 was impacted by about 1,200 MW exported from Zone 4 to PJM. The Monitor recommended that MISO file Tariff revisions to treat local capacity exports “as creating counter flow over the interface” into the zone.
“This would cause the capacity to be replaced by the lowest-cost capacity from any area in MISO, rather than requiring that additional capacity be procured from within the zone,” the Monitor wrote.
IIEC filed testimony claiming that if the 1,200 MW of exported capacity had been excluded from the LCR, the pivotal supplier’s opportunity to exercise market power would have been limited to $8/MW-day, compared to the $150/MW-day Dynegy received in the April auction.
‘Simply Incorrect’
MISO countered that IIEC “is simply incorrect” in stating that MISO fails to account for counter flows when it calculates each zone’s LCR. MISO said it has properly accounted for resources in one zone that are sold into another capacity market when it calculates each zone’s capacity import limit, which is used to establish the LCRs.
Subsequently counting zonal resource credits again when calculating the LCR would amount to double-counting a resource, MISO said.
“Artificially lowering the local clearing requirement would threaten resource adequacy in the MISO region and unjustly and unreasonably suppress capacity prices,” the RTO said.
Original Complaint
Meanwhile, the attorney general and Public Citizen have made filings asking FERC not to dismiss the complaints they filed in May, as Dynegy, NRG Energy and the Electric Power Supply Association have requested.
The New York Public Service Commission has come out against the New York Power Authority’s bid for a nearly 10% increase in its transmission rates, saying its requests for an adder for ISO participation and use of a 60% equity capital structure are excessive.
The Power Authority asked the Federal Energy Regulatory Commission on June 2 for approval of a formula rate including a 50-basis-point adder to its return on equity for participation in NYISO and permission to base its ROE on a capital structure with 60% equity. It also sought recovery of its costs for a transmission project to address reliability concerns if the Indian Point nuclear power plant is closed.
The proposal, which includes a base ROE of 8.85%, would increase the organization’s annual transmission revenue requirement by approximately 9.6%, from $175.5 million to $192.4 million, effective Sept. 1.
The PSC said in a filing last week that the adder for participation in NYISO “is unnecessary and unwarranted” because the authority has already agreed to turn operational control of its transmission facilities over to the ISO (ER15-2102).
Regulators said the requested capital structure also is excessive and unnecessary “since a 50% equity ratio would adequately balance collections from customers and ensure that the utility has access to capital markets at reasonable terms.”
The PSC also said FERC should defer action on proposed performance-based incentives regarding the Marcy-South Series Compensation (MSSC) project, pending resolution of settlement discussions in a separate docket.
ISO Participation Adder
The NYPSC said the ROE adder for participation in NYISO is unnecessary.
The PSC said it supports ROE incentive adders “that truly provide consumer benefits, such as encouraging the use of innovative technologies or providing congestion relief. … An additional incentive for NYISO participation is not justified where the commission’s goals of incentivizing the creation of the NYISO and transferring operational control of their transmission facilities to the NYISO have already been achieved. Awarding NYPA an ROE incentive for what it must do in any event is not warranted since the incentive will have no effect on its behavior.”
Capital Structure
The PSC also said NYPA’s equity ratio should be limited to 50%, consistent with utilities similar to the authority.
The PSC said ratepayers would also pay excessive costs to maintain NYPA’s “exceedingly strong” credit rating. Its equity ratio as of 2014 was 76.4%. The PSC notes that Moody’s Investors Service has called the authority’s debt ratio “one of the lowest of any major U.S. public power electric utility with generation.”
The PSC said the authority’s proposal to cap its equity at 60% “incorrectly suggests that the costs associated with maintaining these high-end financial metrics do not come at an increased cost to ratepayers, relative to investor-owned utilities.”
“While NYPA has certain tax advantages over investor-owned utilities, having financial ratios in the Aaa-range come at a cost to ratepayers due to an overall increase in equity costs. All else equal, NYPA could collect less from ratepayers while maintaining its metrics in the ‘Aa’ range. … Slightly lower credit metrics, due to a lower equity ratio, will in no way hinder NYPA’s ability to raise capital on reasonable terms.”
Marcy-South
The PSC also challenged as “premature” the authority’s request for recovery of its costs if the Marcy-South project is abandoned for reasons outside the NYPA’s control.
The MSSC project is one of the Transmission Owner Transmission Solutions (TOTS) projects being developed by the authority and New York Transmission Co. as a result of recent PSC proceedings to address reliability concerns over the potential retirement of Indian Point.
The authority said it intended to “include the same risk-sharing or performance-based incentive components that are ultimately agreed to by the NY Transco in Docket No. ER15-572 with respect to future competitive projects.”
The PSC said that because of the overlapping issues between the two dockets, FERC should defer the issue pending the outcome of the NY Transco proceeding.
PJM will delay the transition auctions for the new Capacity Performance regime to comply with a Federal Energy Regulatory Commission order that the RTO include demand response and energy efficiency.
FERC ruled 4-1 late Wednesday that the auctions, which were set to begin July 27, would not be just and reasonable without permitting DR and EE resources to participate. PJM must make a filing within 15 days describing how it will comply with the order and setting a new schedule.
The commission ruled in response to a joint complaint by the PJM Industrial Customer Coalition, environmentalists and regulators or consumer advocates from Delaware, D.C., New Jersey, Maryland, Pennsylvania, Illinois and West Virginia. A coalition of DR providers had filed a separate challenge to PJM’s exclusion.
New Schedule
Stu Bresler, senior vice president of market services, told the Markets and Reliability Committee on Thursday morning that the RTO will schedule the transition auctions after the Base Residual Auction Aug. 10-14.
The transition auction for 2016/17 had been set for July 27-28 and that for 2017/18 for Aug. 3-4. In a filing Tuesday, PJM set the 2016/17 auction for Aug. 26-27, with results posting on Aug. 31. The transition auction for the 2017/18 delivery year will be held Sept. 3-4, with results posted on Sept. 9.
PJM had said the transition auctions were designed to “provide a glide path” for generation resources that needed time to make investments to meet Capacity Performance requirements and were not necessary for other resources. PJM also said it was concerned about the continuing uncertainty following the D.C. Circuit Court of Appeal’s EPSA ruling voiding FERC Order 745, which set compensation rules for the resource in RTO energy markets.
FERC said, however, that Tariff provisions barring DR and other non-generation resources from participating in the transition auctions were “unduly discriminatory as applied to technically capable resources willing to perform as a Capacity Performance resource” (ER15-623, EL15-29).
Similarly Situated
“PJM has failed to provide an adequate explanation … as to how non-generation resources are not similarly situated to generation capacity resources for purposes of providing the capacity services PJM plans to procure through the transition auctions,” FERC continued.
The commission rejected PJM’s argument that participation in the transition auctions should be limited to resources that need to make investments to meet performance and fuel assurance requirements. “The purpose of the transition auctions is to procure a more reliable portfolio of capacity resources, and we see no basis for excluding non-generation resources capable of providing that service from participating,” the commission said.
FERC also dismissed PJM’s attempt to justify the prohibition on DR on the uncertainty over FERC’s jurisdiction. The commission’s appeal of the EPSA ruling is now pending before the Supreme Court.
The commission noted that it had previously rejected similar arguments as premature. It also observed that DR and EE resources selected in prior auctions are still expected to deliver on their capacity commitments. (See FERC: PJM Demand Response Stop-gap Measure ‘Premature.’)
The commission said PJM must file revisions to Attachment DD of its Tariff to allow all resources that qualify as Capacity Performance to participate in the transition auctions.
In its response to the complainants, PJM offered two alternatives for including DR and EE in the auctions, saying the “less risky” option would be to limit participation to previously cleared resources.
FERC said neither option was sufficient because they would bar participation in the auctions by DR and EE that did not previously submit sell offers for the delivery year.
“PJM’s current [Tariff] does not place such restrictions on generation capacity resources, and the commission finds that PJM has failed to support a disparate treatment of other Capacity Performance resources in its proposed alternatives,” FERC said.
Dissent
Commissioner Tony Clark dissented, saying the order was improper procedurally because the commission had previously approved “unambiguous” Tariff language barring DR and EE from the auctions.
“It is not PJM’s burden to now prove that an already agreed on transition incremental auction methodology is just and reasonable. Rather, it is complainants’ burden to explain why now, just weeks after the commission’s Capacity Performance order and just days before the first transition incremental auction, the plain Tariff reading of Attachment DD, section 5.14D(B)(3) is unjust and unreasonable.”
Commissioner Philip Moeller responded in a concurring statement. “While a close reading of PJM’s proposed Tariff provisions indicates that non-generation resources would be excluded from participation in the transition auctions, PJM’s voluminous filing did not make this fact, or its underlying justification, clear to PJM stakeholders or the commission,” Moeller wrote.
“PJM initially represented that its Capacity Performance proposal ‘preserves its current approach’ to demand response participation, in contrast to its more recent position that it intended to limit non-generation resource participation in the transition auction due to the uncertainty surrounding EPSA.”
Clark also said he agreed with PJM’s call for caution in the handling of DR because of the legal uncertainty.
“Rather than proclaiming, ‘damn the torpedoes, full speed ahead!’ I would prefer a modest approach whereby we avoid buying ourselves more potential trouble and refrain from actively adding more demand response megawatts into PJM’s capacity construct while it faces an uncertain future and possible disorderly ‘unwinding.’ While the pendency of Order No. 745 is not alone dispositive, it should cause us to proceed more cautiously than we are doing here.”
Below is a summary of the issues scheduled to be brought to a vote at the Markets and Reliability Committee on Thursday. Each item is listed by agenda number, description and projected time of discussion, followed by a summary of the issue and links to prior coverage in RTO Insider.
RTO Insider will be in Wilmington covering the discussions and votes. See next Tuesday’s newsletter for a full report.
Markets and Reliability Committee
2. PJM Manuals (9:40-9:55)
Members will be asked to endorse the following manual changes:
A. Manual 01: Control Center and Data Exchange Requirements — Major update and reorganization to Section 5 introducing definitions of two major data types: System Control and Monitoring (Instantaneous) and Billing (Accumulated). Also updates references to OASIS and adds requirements regarding synchrophasor data exchange.
B. Manual 13: Emergency Operations — Includes administrative changes, clarifications and updates. Adds reference to Manual 12 for member actions when PJM loads 100% synchronized reserves and a reference to the instantaneous reserve check process.
3. CAPACITY PERFORMANCE (9:55-10:45)
A. Manual 18: PJM Capacity Market — Updates the manual to incorporate Capacity Performance. Includes clarifications on non-performance assessments, acceptable replacement resources for CP and Base Capacity commitments, the CP effective date for Fixed Revenue Resource entities and the physical option for non-performance for FRR entities. (See PJM Delays Vote on Capacity Performance Rules.) Members endorsed an update to Section 4.8 of the manual regarding credit requirements at a special MRC meeting July 15. Relevant forms have been posted for member use.
B. Manual 20: PJM Resource Adequacy Analysis — Changes related to the determination of limited-availability resource constraints under Capacity Performance. Because Capacity Performance rules allow participation of limited availability resources for the 2018/19 and 2019/20 delivery years, constraints must be established on Base Capacity DR and Base Capacity generation to ensure reliability. Details of the constraint computation methodology were added as Section 6.
4. FERC Order 1000 Proposal Fee Update (10:45-10:55)
Members will be asked to approve a two-tiered fee schedule for proposed transmission projects. For greenfield projects or upgrades between $20 million and $100 million, PJM will assess $5,000 to cover its study expenses. Projects costing at least $100 million will be charged $30,000. Previously, a $30,000 fee for all projects greater than $20 million had been approved, but planners later realized they likely wouldn’t need to collect that much. (See PJM Lowers Proposed Tx Project Study Fee.)
5. MERCHANT NETWORK UPGRADE (10:55-11:10)
New tariff language is being proposed to more accurately reflect how PJM processes requests for merchant network upgrades. The changes address definitions, queue entry, agreements and the capacity market.
6. TIMING OF REPLACEMENT CAPACITY TRANSACTIONS (11:10-11:25)
Manual changes would allow market participants to enter replacement capacity transactions earlier than Nov. 30 prior to the start of the delivery year if the need is linked to a physical reason that would prevent a participant from meeting its commitment. The changes prohibit generation that is replaced early from being recommitted for the delivery year. (See Earlier Replacement Capacity Transactions Approved.)
7. MARKET DATA CONFIDENTIALITY CLARIFICATIONS (11:25-11:40)
Members will be asked to approve a problem statement and issue charge designed to relax confidentiality rules regarding uplift payments and generator outages. Stakeholders have requested more granular data, especially following severe weather events. Current rules allow the release of aggregate market data only if it includes information about at least three market participants and it is no more specific than a PJM transmission zone. PJM also is prohibited from releasing data that already has been made public elsewhere. As a result, it’s unable to be more specific about such issues as conditions surrounding weather events, closed-loop interfaces and transmission planning. PJM also is offering a proposed solution. (See PJM Considering Release of Uplift, Outage Data.)
8. REGULATION MARKET ISSUES (11:40-12:00)
The Independent Market Monitor will seek approval of a problem statement and issue charge on concerns that PJM is buying too much fast-responding RegD resources in the regulation market. The initiative also will consider changes to the marginal benefit factor that defines that substitutability between RegA and RegD megawatts, which the Monitor says is faulty. (See PJM Market Monitor: Faulty Marginal Benefit Factor Harming Regulation.)
9. MARKETS RELATED GOVERNING DOCUMENTS UPDATE (12:45-1:00)
The PJM Law Department is proposing an initiative to clean up language in the RTO’s governing documents that is “ambiguous, incorrect or requires clarification.” PJM’s proposed problem statement and issue charge would assign the task to the Market Implementation Committee, separating it from an effort already underway involving the Tariff Harmonization Senior Task Force. (See PJM Law Proposes Cleaning up Language in Governing Documents.)
10. FTR/ARR TASK FORCE (1:00-1:15)
Old Dominion Electric Cooperative will seek approval for a proposal that combines recommendations from PJM and the Independent Market Monitor in redesigning the financial transmission rights and auction revenue rights process. (See ODEC Seeks Last-Ditch Vote on Deadlocked FTR/ARR Issue.)
11. TARIFF HARMONIZATION SENIOR TASK FORCE (1:15-1:30)
RTOs, ISOs and exempt wholesale generators will no longer have to file Form 566 (Annual Report of a Utility’s 20 Largest Customers), a minor but annoying requirement.
The Federal Energy Regulatory Commission eliminated the requirement for 82% of the current 1,082 filers in an order last week (RM15-3).
The commission noted that the report is intended to capture sales to end-use customers as opposed to those purchasing for resale. As a result, RTOs and ISOs have had to report only that they had no applicable sales. The same goes for exempt wholesale generators, which by definition cannot make retail sales.
FERC’s order computes down to the dollar the impact of the changes. Eliminating the requirement to provide the name and address of any residential customers will save 29 utilities 15 minutes each a year. In total, the rule change will save $390,312, FERC estimates.
But why did this rule exist in the first place? And what purpose does it serve today? Those answers are nowhere to be found in the 25-page order, which notes only that the form is the result of Section 305(c) of the Federal Power Act, dating to 1935.
FERC’s Frequently Asked Questions provides limited guidance, saying that the commission uses the form along with Form 561 (Annual Report of Interlocking Positions) to “determine whether public or private interests will be adversely affected by the holding of officer or director positions of both a public utility and its customers.”
Have the two forms ever uncovered any problems or resulted in enforcement actions? A FERC spokeswoman couldn’t say Monday.
FERC’s action exempts all but 196 of current filers, who are expected to spend a total of 1,071 hours annually on the paperwork at a cost of $77,094 (assuming an hourly cost of $72/hour).
FERC rejected the Edison Electric Institute’s request to extend the exemption to qualifying facilities or utilities participating in RTO and ISO markets. The commission said utilities participating in organized markets “may well also make sales ‘for purposes other than for resale.’”
“Adopting EEI’s suggestion would virtually eliminate the filing requirement, contrary to the statute,” FERC said.
The commission also declined to exempt transmission-only companies, but it said they may escape filing requirements because the commission is eliminating the reporting obligation for public utilities that make no reportable sales for the preceding three years.
It did, however, adopt EEI’s suggestion that it eliminate the requirement that utilities notify the 20 largest purchasers that their names are being reported.
The Obama administration on Thursday toughened rules to protect waterways from coal mining by requiring mining activity to take place at least 100 feet from streams.
The administration said the updated regulations, which clarify earlier rules, require mines to monitor streams near their operations and call for companies to restore areas impacted by earlier operations. The Interior Department estimates that the rules will safeguard 6,500 miles of streams in the next 20 years.
Industry supporters denounced the new mandate. “It’s no secret that this overreaching rule is designed to help put the coal country out of business,” said Sen. John Barrasso (R-Wyo.). He called the regulation “job-crushing” and “anti-coal.”
EPA Watchdog Says Agency Should Track Fracking Chemicals
The Environmental Protection Agency’s Office of Inspector General recommended the agency improve oversight of chemicals used in hydraulic fracturing. The OIG said the agency needed to crack down on the unlicensed use of diesel fuel in fracking and figure out whether to mandate public disclosure of fracking chemicals.
Although EPA’s oversight on fracking is limited by a 2005 law, it does have control over the use of fuels and chemicals that could affect the quality of drinking water. The agency has approved the use of diesel fuel in some fracking operations, but the OIG said there are instances where “EPA and primacy states have not been fully successful in their efforts to effectively control the use of diesel fuels for well stimulation.”
The OIG also said the agency should also address calls for the mandatory disclosure of chemicals used in fracking. “To date, however, the agency has not addressed the comments or developed a plan of action for the next steps,” the report said, adding that EPA “needs to develop an action plan with a timeline to address the public comments and determine whether to propose a rule to obtain information on chemical substances and mixtures used in hydraulic fracking.”
The Obama administration nominated a former Bush administration official to fill an empty seat on the five-member Nuclear Regulatory Commission.
If confirmed by the Senate, Jessie Hill Roberson, who served in the George W. Bush administration as an assistant secretary for environmental management, would be the third new commissioner on the NRC since September.
Roberson has been vice chairwoman and a member of the Defense Nuclear Facilities Safety Board for the last five years. She has held positions with several utilities, including nuclear-power giant Exelon.
An annual report by the National Oceanic and Atmospheric Administration and the American Meteorological Society said the world’s oceans are warm and getting warmer.
According to the report, the ocean surface temperatures are the warmest in the 135 years that records have been kept. One reason: About 93% of the heat from burning fossil fuels goes into the oceans, which serve as giant heat sinks. The seas are holding record levels of thermal energy as deep as 2,300 feet below the surface.
The trapped heat in the oceans provides energy that feeds into tropical cyclones, according to NOAA oceanographer Greg Johnson. The report was compiled by more than 400 scientists.
Federal Judge Dismisses Oklahoma’s Second Lawsuit Against Clean Power Plan
Egan
A federal judge on Friday dismissed Oklahoma’s second attempt to block the Obama administration’s climate rule for power plants, saying the state cannot challenge the Environmental Protection Agency’s regulation until it becomes final.
“The court finds no exceptional circumstances that would warrant judicial intervention at this time, and plaintiff’s claims should be dismissed for lack of subject matter jurisdiction,” ruled U.S. District Court Judge Claire Egan of the Northern District of Oklahoma.
It is the second time in two months a federal judge has dismissed an Oklahoma challenge to the Clean Power Plan, both for similar reasons. EPA is expected to issue its final rule next month.
KANSAS CITY — SPP’s Strategic Planning Committee on Thursday endorsed a plan to make incumbent transmission owners responsible for providing cost estimates for non-competitive projects.
The plan recommended by the Competitive Transmission Process Task Force — Solution 2A — easily cleared the Markets and Operations Policy Committee earlier last week. It adds additional cost analysis of competitive-projects by transmission owners. SPP and third-party vendors would still evaluate competitive projects subject to Federal Energy Regulatory Commission Order 1000.
Although the overall timeline remains the same, Solution 2A adds three and a half weeks of study development, allowing for a better cost analysis, said Xcel Energy’s Bill Grant, the task force’s chair.
“For the projects that have been identified as non-competitive, we will receive the estimate from the transmission owner instead of the third-party vendor,” Grant said. “At this point in time, the project has already been selected. We’re just proving the estimate is non-competitive.”
Carl Monroe, SPP’s executive vice president and COO, said the additional screening “improves the estimating process, so we can give the [SPP] board better information” for selecting projects to build.
Because the process change could require revisions to the Tariff and governing documents, FERC approval will likely be required, along with the normal SPP approval process.
Load Responsibility White Paper
Golden Spread Electric Cooperative’s Mike Wise updated the SPC on the Capacity Margin Task Force’s Load Response Entity (LRE) white paper, which cleared the MOPC earlier in the week. The document is intended to ensure all load served by SPP’s balancing authority has sufficient capacity.
“If an entity is not responsible for a load forecast or contract,” Grant asked during the MOPC discussion, “should the customer be an LRE?”
“The first and most critical step is to make everyone adhere to the policy,” said Richard Ross of American Electric Power. “Secondly, we need to transfer the responsibility obligation to those with wholesale contracts. … It’s not my responsibility as a legacy BA.”
Developing a policy to enforce the requirement will take additional time, Wise said.
The task force asked that its charter be extended for an additional year to July 2016, a request approved by the MOPC and endorsed by the SPC.
Wise told the SPC that SPP staff is developing a deliverability study process that will allow for non-firm transmission service for planning reserves. The study will analyze all generators registered in the Integrated Marketplace and determine whether they are deliverable to all loads within the SPP balancing authority.
Engaging Prospective Members
The SPC also reviewed the final report from its Task Force on New Members and approved a recommendation to improve the process of engaging prospective transmission-owning and load-serving members.
The task force was commissioned in 2014 to develop formal processes to be followed during negotiations with prospective members.
Michael Desselle, SPP’s Chief Compliance and Chief Administrative Officer, said much of the task force’s work centered on how to involve the regulators on SPP’s Regional State Committee during the negotiation period. The task force tried to balance transparency with the need for confidential negotiations.
The report notes that SPP staff “remains solely responsible for the direct negotiations with the prospective member,” while stakeholders provide input on policy and changes to the governing documents.
The SPC discussed the legal costs for smaller entities and the threshold for “triggering events” when a prospective new transmission-owning member formally requests changes to SPP’s Tariff and governing documents or RSC bylaws.
The committee also considered the report’s definition of stakeholders: “Stakeholders include existing transmission owner members, transmission-using members and RSC members and their staffs.”
“Stakeholder means anybody and everybody in the world who feels affected in some way,” said SPP board member Phyllis Bernard, urging “SPP” be used as a modifier for “stakeholder” across all governing documents.
The task force will make several language modifications to the report before sending it to the SPP Board of Directors for its approval.
Behind-the-Meter Generation
Wise teed up a discussion on behind-the-meter generation by noting that the amount of such unaccounted-for energy is growing. “I know some market participants are not adding [behind-the-meter generation] back in[to the pool],” Wise said, “and it’s not fair.”
The Regional Tariff Working Group will take up the issue for further discussion during its Thursday meeting.
Integrated System
Monroe told the committee that SPP is continuing to incorporate members of the Integrated System and their facilities under the RTO’s Tariff. He said the majority of the IS load that would be placed under the Tariff has already been accounted for.
Monroe said that while the Northwest Power Pool has suspended its solicitation for bids to manage its energy imbalance service market, SPP continues to consult with the pool on EIS markets.
