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November 1, 2024

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FERC Order 2023 Gets Rehearing Requests from Around the Industry

FERC received rehearing requests Monday from around the industry on Order 2023, which mandated changes to its pro forma interconnection rules. (See FERC Updates Interconnection Process with Order 2023.)

MISO, PJM and SPP filed a joint request for rehearing, saying they want to ensure that they can continue to innovate with their own changes to their interconnection processes.

The RTOs took issue with the order’s requirement that planners use operating assumptions supplied by energy storage developers, unless they go against good utility practice. Ensuring that storage owners actually follow those assumptions in their operations would be burdensome and impractical, they said.

“Storage would be incentivized to lower their costs by stating in their interconnection application their intent to charge to relieve constraints, when in actuality in real time they will not always be capable of fulfilling that commitment,” the RTOs said. “As a practical matter, there is no effective enforcement of the commitment, and the final rule does not purport to address this critical reliability issue.”

FERC at least should allow ISOs and RTOs to develop standard procedures for dealing with storage projects in their queue, rather than the case-by-case approach in the order, which would at least promote uniformity in treatment of similarly situated interconnection customers.

PJM, MISO and SPP all use multiphase interconnection processes, but Order 2023’s pro forma rules have just one phase, used to base the deadlines and related fines that grid operators face for late studies. That makes it unclear how the rules should apply in their markets, the RTOs said. Rather than making them liable for deadlines in each phase, they asked to have it apply to the aggregate timeline of their multiphase queue processes.

Ultimately interconnection customers want their final studies on time, so as long as the full process is timely, it should not matter if some earlier phases experienced delays that were made up later, the three said. Late penalties also should apply to entire clusters, rather than having planners face them for every project they work on individually.

ISOs and RTOs are nonprofits, so another issue the three raised was how to recover their costs, asking for additional ways beyond collecting fines from their members. If a delay is because of one interconnection customer, as opposed to the grid operator itself or a member utility, then it should be liable for any fines, they argued.

NYISO filed its own request for rehearing, which also questioned the fines, but it focused on the timelines that Order 2023 set out for interconnection studies. The 150-day time frame for a cluster study is not tailored to the realities of New York’s grid and its stricter-than-average reliability requirements, but it still could be used to assess fines.

“These stringent criteria are driven by, among other things, the unique complexities of the transmission system in New York City and Long Island, with their condensed geographic footprint and high population density,” NYISO said. “This existing complexity is being further challenged by the influx of significant offshore wind generation.”

NYISO is working on a package of changes to its queue, and its goal is to speed up the process, but 150 days would prove too tight for it.

New York PSC Argues in Favor of Fines

The New York Public Service Commission filed comments arguing that FERC should make sure that ISOs and RTOs cannot get out of the fines that Order 2023 requires for transmission planners who are late with interconnection studies. The order suggests grid operators could file one-off requests to recover the fines from market participants, it said.

“Allowing RTOs/ISOs to simply pass along penalties to market participants, which will ultimately be borne by customers, would undermine [FERC’s] goal by making RTOs/ISOs indifferent to penalties and failing to induce the intended behavior,” the New York PSC said. “Moreover, forcing market participants/customers to pay increased costs attributable to penalties incurred by an RTO/ISO that failed to comply with the tariff time deadlines would be unjust and unreasonable.”

FERC has expressly prohibited non-ISO/RTOs from recovering the penalties through transmission rates, and it should do the same for the nonprofit grid operators, the PSC said. It also should reverse its finding that they can make a one-off filing to recover penalties from market participants.

“The commission should instead limit RTO/ISO recovery options to alternative mechanisms that do not involve customer funding but could elicit the desired behavior, such as adjustments, both positive and negative, to RTO/ISO salaries/bonuses,” the PSC said.

Utilities Lobby for ‘Reasonable Efforts’ Standard

The Edison Electric Institute also took issue with FERC’s decision to eliminate the “reasonable efforts” standard for getting interconnection studies in on time and the imposition of fines. FERC cited the lengthy interconnection delays experienced around the country as the main reason for eliminating the standard, but it did not connect those delays to the standard.

“Only after the commission has had an opportunity to evaluate the efficacy of other reforms intended to streamline the interconnection process (e.g., reforms to incentivize interconnection customers to reduce interconnection delays) can it determine that the reasonable efforts standard is unjust and unreasonable,” EEI said.

A rapidly changing resource mix, market forces and emerging technologies are among the many factors contributing to the increasing number of interconnection requests and related delays. Transmission owners can control none of those factors, and assigning them penalties will not change that, EEI said.

FERC never has found a transmission provider at fault for interconnection process delays, nor shown that any specific transmission provider was contributing to delayed studies, it said.

“Nonetheless, the commission seems intent on establishing a strange kind of parity in its reforms: If the threat of penalties is appropriate for eliciting certain behavior from one set of stakeholders, then penalties must be appropriate for all stakeholders in the interconnection process,” EEI said. That does not make sense because many factors, including the number of requests and the need to follow reliability standards, are outside transmission providers’ control, it said.

Clean Energy Groups Seek Changes

The American Clean Power Association, Advanced Energy United and Solar Energy Industries Association filed a joint request for rehearing, which applauded FERC for its work to reform the queues. But given how large the order was, the groups said they have some issues where the order would benefit from rehearing.

The groups’ first ask is to remove a change to the definition of “standalone network upgrade” that would limit their construction to cases where one interconnection customer builds them. FERC reasoned the change would reduce disputes by avoiding situations where multiple interconnection customers seek to build the same transmission. But cluster studies for interconnection have occurred for years and have not led to major disputes between projects seeking to build the same standalone upgrade, they said.

“The revised definition of standalone network upgrade removes the ability of interconnection customers to determine whether and how to exercise their discretion or the option to build for the majority of upgrades that will be identified through a cluster study,” the groups said. “It further modifies the status quo by reducing the number of network upgrades that would qualify as standalone network upgrades for which interconnection customers could exercise their discretion.”

The groups generally pushed for more flexibility for interconnection customers, also seeking more time to modify a proposed project’s size and to push back when they have to pick a definitive point of interconnection. The commission required both when the “customer engagement window” ends, reasoning that developers would have enough information at that point to make final decisions.

The three lobbies argued more flexibility was warranted because requiring final decisions so early would lead to more withdrawals later on and risk “cascading restudies.” That would be more disruptive than allowing minor changes later in the process, they said.

Heat Map Value Questioned

Several utilities outside of RTOs — Dominion Energy South Carolina, NextEra Energy’s Florida Power & Light and Xcel Energy’s Public Service Company of Colorado — filed jointly asking for a change to the requirement that grid planners place interactive “heat maps” on their public websites. The maps would offer interconnection customers and others a way to explore available interconnection capacity on transmission providers’ systems.

The utilities said FERC failed to perform a cost-benefit analysis on the requirement, which would cost $7.4 million upfront in non-RTO regions and $666,000 annually for maintenance. The requirement will have “dubious value” for interconnection customers in non-RTO regions, they said.

Such heat maps make financial sense when done at scale for several utilities, so it could make sense to require ISO/RTOs to host them, but the three utilities said the lack of scale on individual systems made it too costly.

“Due to the significant cost asymmetry — 37 individual websites required in non-RTO regions versus seven websites in ISO/RTO regions — the cumulative expense and administrative burden on constrained engineering labor caused by the heat map mandate on transmission providers in non-RTO regions is at least five times as significant as the burden on ISOs/RTOs, even though transmission providers in non-RTOs only oversee generator interconnections for roughly one-third of the nation’s transmission systems,” they said.

Flexibility Sought

PacifiCorp spent much of its rehearing request focused on the penalties for transmission providers, but it also argued for more flexibility for it and others to implement the rules. The utility noted that it already has adopted many of the changes required by Order 2023.

FERC set up a transition process for providers still using its old pro forma rules but not for early actors such as PacifiCorp, the utility said. If it does not seek a variance from the pro forma rules, it would have to implement them suddenly regardless of the existing queue, it said.

“PacifiCorp and many of the early adopters are currently in the process of one or more cluster studies,” the utility said. Not allowing early adopters to use a transition cluster study process is both unworkable and goes against FERC’s assurance that Order 2023 would not interfere with interconnection studies in progress, it added.

On rehearing, FERC should find that PacifiCorp and other similarly situated transmission providers can process existing interconnection customers under current, or transitional rules, while applying new reforms to interconnection customers once those are completed, it said.

PJM filed an individual request for rehearing that also was focused on flexibility, given that it has started to implement its own changes, which it said should satisfy Order 2023’s requirements or be superior to them. While FERC said it did not want to disrupt such efforts, PJM said it wants a clearer signal before any lengthy compliance processes that its work will not be overturned.

Without that clarification, FERC will be responsible for creating uncertainty at the very point where certainty around the rules for expeditious processing of queue requests is so critical, the RTO said.

“In short, now, when PJM is ‘mid-flight’ with its new interconnection process, is not the time to require PJM to substantially retool its interconnection processes or to cause substantial uncertainty as to how to comply with the final rule that will last for months and distract from the vital effort to process backlogged interconnection requests as expeditiously and efficiently as possible,” the RTO said.

PJM also wants clarification that it will not be required to implement the final rule in a way that would modify or undermine its recently approved new rules. The commission should consider those changes as a package and not require PJM and stakeholders to engage in “an item-by-item justification of every variation from the minutiae of the final rule’s requirements.”

Along with most other transmission providers filing for rehearing, American Electric Power wants FERC to reverse its decision on imposing fines for delayed studies, but the company also asked for some changes on how new projects can be built at sites owned by retired power plants.

“Generation retirement replacement programs take advantage of current land use and interconnection facilities to swap generation units set for retirement with newer, more efficient capacity,” AEP said. “Such programs will support the reliability of the grid and enhance the efficiency of interconnection study processes by allowing for the timely interconnection of needed new capacity resources.”

AEP and a few other parties brought up the issue in comments, but it was not part of the Notice of Proposed Rulemaking that led to Order 2023, it said, and FERC said it lacked the evidence to approve any pro forma rules around how to replace retiring generators. The utility disagreed, saying the idea is one of the most vital tools to maintaining resource adequacy, as they can quickly connect new supplies of power.

“Ensuring replacement projects are considered outside the cluster study process will help reduce the number of projects within, and increase the efficiency of, the cluster study itself — supporting the timely interconnection of projects consistent with one of the primary purposes of Order 2023,” AEP said.

WATT Coalition Lobbies for DLRs

The WATT (Working for Advanced Transmission Technologies) Coalition filed for rehearing on two issues involving dynamic line ratings (DLRs), which take into account the conditions around power lines such as wind speed and temperature to get a more accurate picture of how much capacity they have.

FERC excluded DLRs from its list of alternative transmission technologies (ATTs) that can be considered in cluster studies. It also allowed transmission providers to “disregard and disadvantage” alternative technologies for traditional upgrades even when alternatives would be more cost effective.

DLRs were part of the alternative technologies to be considered in the NOPR, but in the final rule, FERC removed them despite them being proven, mature technologies that have saved interconnection costs in other countries, WATT said.

One WATT member was quoted $190 million in upgrades for one projected 4% transmission line overload during the shoulder season, with the grid operator assuming it would charge during the worst-case contingency events.

“The battery would provide energy to an area of anticipated economic development but would be uneconomic with quoted upgrades,” WATT said. “DLR is a solution that could bring the project back into viability if permitted by the transmission owner.”

FERC got comments for and against every ATT brought up in the NOPR, but it only removed DLRs, saying their temporary impact “may not be an adequate substitute” for steel in the ground, WATT noted.

“DLRs should be treated on equal footing with the other ATTs included in the final list, and as the NOPR proposed,” WATT said. “Equally, it is arbitrary and capricious, and contrary to law, to give transmission providers unfettered discretion regarding whether ATTs should in fact be used.”

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CARB Starts Mandated Carbon Capture, Storage Program

California regulators have started developing a program to manage carbon capture and storage projects in the state, as mandated by legislation passed last year.

Senate Bill 905 of 2022 directed the California Air Resources Board (CARB) to create a carbon capture, removal, use and storage program.

The program will regulate carbon capture: projects in which carbon dioxide is either captured from industrial or energy-related facilities or removed from the atmosphere. Storage involves injecting the captured CO2 into underground geologic reservoirs.

CARB kicked things off with two public meetings Aug. 15.

Under SB 905, CARB must create a streamlined permit application for carbon capture or storage projects by Jan. 1, 2025. CARB will also develop a database so the public can track the projects.

Other state agencies will be involved too. The California Natural Resources Agency (CNRA) will develop a framework for situations in which a CO2 storage reservoir lies beneath two or more parcels of land.

The framework, known as the Common Reservoir Operation Plan (CROP), will cover issues such as fair compensation for landowners and allocation of liability.

SB 905 requires the framework to be published by July 1, 2025; agency officials said they’re hoping to complete it a year sooner, by June 2024.

“Given the deadlines for other actions under SB 905, including CARB’s regulations, the framework will be more relevant and more supportive of other agencies’ actions if we do it sooner,” Lisa Halko, CNRA’s chief counsel, said during the Aug. 15 meeting.

Also under SB 905, the California Geological Survey has been tasked with identifying “high-quality, suitable locations” for CO2 injection wells.

Through its Geologic Carbon Sequestration Group, CGS will recommend monitoring techniques, such as plume tracking, to make sure the CO2 stays underground. The group will report earthquakes at storage sites or CO2 leaks to CARB, potentially with recommendations to change project operations.

Climate Package

The legislature passed SB 905 as a package with Assembly Bill 1279, which codified the state’s goal of achieving net-zero greenhouse gas emissions by 2045. (See Newsom Signs 40 Climate Bills.)

AB 1279 also set a target of reducing human generated GHG emissions by 85% compared to 1990 levels. It calls for maintaining net-negative GHG after the net-zero goal is met.

Carbon capture and sequestration (CCS) from industrial facilities and carbon dioxide removal (CDR) from the atmosphere both will be needed to achieve the AB 1279 goals, CARB concluded in its 2022 climate-change scoping plan.

Rajinder Sahota, CARB’s deputy executive officer for climate change and research, said the agency has long been aware of CCS — technology that is being used across the U.S. and Europe.

“But it wasn’t until very recently that all the scientists realized that the climate impacts are increasing at rates faster than we expected,” Sahota said during this month’s public meeting. “And so, in addition to reducing emissions, we also have to remove emissions. … That is what is called for by hundreds of scientists.”

Sahota said it’s critical to start deploying and scaling CCS and CDR technology this decade, to hit 2030 milestones on the way to the 2045 net-zero target.

As for the SB 905 requirements, Sahota said CARB plans to create a program portal to help with streamlining the permit process. CCS projects often need an array of permits, she said.

In addition, CARB must adopt protocols to support additional ways to store or use carbon dioxide, including carbon capture for use in products.

CARB already regulates carbon capture through its low carbon fuel standard; those regulations will be updated to meet SB 905 requirements, Sahota said.

Public Weighs In

One meeting attendee was Lorelei Oviatt, planning director for Kern County, where applications for several CCS projects are being processed. Oviatt said the geological survey might have a different view of site suitability compared to local government, which must consider issues such as setbacks and community concerns.

“Kern County has hundreds and hundreds and hundreds of acres that could be used, but they probably will not meet the local government’s requirements,” Oviatt said.

Another member of the public voiced concerns that SB 905 would open the door to widespread use of CCS.

“CCS projects must not be an end run around the primary statewide efforts to reduce and phase out fossil fuels,” she said.

According to the text of AB 1279, studies have found that CO2 removal methods and carbon capture, use and storage technologies are available, “but they do not negate the need to make drastic reductions in fossil fuel use.”

“Prioritizing direct emission reductions will help California to meet both its air quality standards and net zero greenhouse gas emissions,” the bill said.

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TVA Resists Congressional Call to Achieve 100% Clean Energy Sooner

The Tennessee Valley Authority does not appear ready to fast-track its decarbonization plans despite receiving a letter this month from 10 members of Congress urging it to chart a path to 100% clean energy by 2035.

The legislators asked TVA to decarbonize 15 years faster than it is currently planning, telling the utility it has a duty to “thoughtfully re-evaluate and further develop TVA’s long-term energy and decarbonization strategies” through its upcoming integrated resource plan and its ongoing Valley Pathways Decarbonization Study. It is disconcerting that TVA has the second-highest planned natural gas buildout of all major U.S. utilities, they said.

“As the country’s largest public power producer, the Tennessee Valley Authority should be leading the nation’s transition to a clean, renewable energy future, not dragging its feet,” the group of senators and representatives wrote. “Yet TVA continues to rely on fossil fuels that are not only supercharging the climate crisis but are subjecting TVA customers to electric grid blackouts and energy insecurity. It is long past time for TVA to begin the transition to a renewable and reliable electric grid.”

TVA plans to construct a natural gas plant and contract a new pipeline in Cumberland, Tenn., despite a lawsuit from environmental groups. (See TVA’s Cumberland Coal-to-gas Plans Press on over Resistance.)

The legislators said that according to its last IRP in 2019, TVA will generate 34 million tons of carbon emissions by 2038 and likely will not meet a net-zero emissions goal until sometime after midcentury. They said TVA is forcing its ratepayers, who already have some of the highest energy burdens in the U.S., to shoulder the “costs of its delayed transition to clean, renewable power.”

The congressional members also said TVA leaned on MISO’s wind output during December 2022’s wide-ranging winter storm. They said TVA’s aging grid assets are vulnerable to ever-increasing climate risks.

TVA, however, insists it is a “national leader in carbon reduction” and continues to work to decarbonize. In a statement to RTO Insider, TVA said that since 2005, it has reduced carbon emissions by 54%, “one of the largest increases in the industry.”

Spokesperson Elizabeth Gibson said TVA will adhere to its existing plans to reduce carbon emissions 80% by 2035 “without impacting reliability or affordability.”

“We are working towards being carbon neutral by 2050 through an accelerated plan of increasing our solar and energy storage capacity and exploring new technologies, such as small modular reactors [SMRs], that can provide carbon-free power to meet demand at all times,” Gibson said. “We will continue working with our federal, state and local partners as we move forward to the clean energy system of the future.”

Gibson pointed out that eight of the letter’s 10 signatories are from either the Northeast or California, with only Rep. Steve Cohen (D-Tenn.), of Memphis, hailing from TVA’s territory. The letter included signatures from Sens. Bernie Sanders (I-Vt.) and Elizabeth Warren (D-Mass.) and Rep. Alexandria Ocasio-Cortez (D-N.Y.). Sen. Jeff Merkley (D-Ore.) also signed.

This year, TVA signed a multinational agreement on SMR development with GE Hitachi Nuclear Energy, Ontario Power Generation and Synthos Green Energy, a Poland-based wind and nuclear generation developer. The quartet will develop and invest in a standard design for GE-Hitachi’s BWRX-300 that they hope will be licensed and deployed in the U.S., Canada and Poland, among other countries. (See TVA Signs Multinational Nuclear Investment Pact on SMR Technology.)

Gibson also said TVA last year issued one of the nation’s largest requests for proposals for clean energy, at 5 GW, and has pledged to bring 10 GW of nameplate solar capacity online by 2035. She also said that over the first nine months of the year, 60% of its generation was from carbon-free sources, including nuclear, hydroelectric and renewables.

But the Southern Alliance for Clean Energy (SACE) said that if TVA continues its current trajectory and includes new fossil fuel-sourced plants in its upcoming IRP, it will struggle to reach net zero by 2050, “let alone 2035.”

“As an extension of the federal administration and the nation’s largest public power provider, TVA should be leading the way toward our energy future and the Biden administration’s carbon-free goals. Instead, TVA is planning to expand fossil fuel infrastructure and make long-term commitments to fossil fuels, which is a direction that’s clearly out of alignment with reaching our nation’s carbon-free goals,” SACE Executive Director Stephen Smith said in a statement supporting the letter.

Smith said TVA’s determination to build new gas plants is an indication that the public utility “has run afoul of its mission and the administration’s goals and must have oversight from an independent body.”

SACE said much is riding on TVA’s upcoming IRP because the next plan isn’t due until the 2028/29 timeframe, too late for a decarbonization overhaul in the utility’s fleet by 2035.

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Minnesota PUC Mulls Lifting Ban on Aggregated DR in Wholesale Markets

Minnesota regulators last week discussed whether now is the time to allow aggregators of retail customers to bid demand response into wholesale markets.

The Minnesota Public Utilities Commission weighed a decision to lift its 13-year-old ban on the practice at its Aug. 24 meeting (E999/CI-22-600). The commission also considered whether to direct its utilities to develop tariffs to allow third-party aggregators to participate in utility demand response programs, how it might verify or certify aggregators of retail customers for demand response or distributed energy resources before they are permitted to operate, and whether allowing aggregators to operate will require it to establish additional consumer protections.

Minnesota’s regulated utilities said a decision to lift the 2010 ban would be unwise, while commissioners and aggregators said it could move the needle on the sluggish amounts of demand response in the state and leave it better prepared for the clean energy transition.

The commissioners ultimately didn’t vote on removing the ban, instead tabling the docket, though they promised more exploration on demand response going forward.

Otter Tail Power Co.’s Cary Stephenson said he opposes lifting the ban. He said his utility already has made major investments to grow its own successful demand response programs. Stephenson said Otter Tail backs a structure where demand response is treated as a fully regulated program in a utility model.

“In our view, it’s not in the public interest to introduce [aggregators of retail customers] into that structure. … Customer confusion is one of our big concerns [and] cannibalization of the existing DR programs which have worked very well,” he said.

Stephenson predicted “significant administrative costs” associated with utilities coordinating with aggregators.

“Overall … we think there are significant material downsides,” he said.

Stephenson also said it’s premature for the PUC to decide on aggregation before FERC has issued an order in MISO’s Order 2222 compliance plan, which will open its wholesale markets to aggregators of distributed energy resources.

Minnesota Power’s David Moeller said aggregators could erode the state’s legal definition of service territories and the state’s authority to require tariffs. He said he wasn’t sure if the commission had the authority to force regulated utilities to file tariffs for noncustomers to incorporate aggregator participation, which would undercut their own DR offerings.

Xcel Energy’s Ian Dobson said his utility is working to achieve the state’s 2017 directive for Xcel to add 400 MW of additional demand response to its existing, 1,000-MW program. Dobson said to date, Xcel has added a net 170 MW in demand response after it lost some subscribed load.

Xcel Energy’s failure to meet the commission’s 400-MW additional demand response goal set in 2017 sparked the PUC’s discussion on unraveling the aggregator ban.

“We understand, obviously, the reasoning behind wanting to see if aggregators can help as well. … Our concern is just wanting to make sure that however the commission wants to go with this … that it provides the most benefit for our customers,” Dobson said.

Matt Schuerger, Minnesota PUC | NARUC

Commissioner Matt Schuerger said evidence in recent commission dockets shows Minnesota doesn’t have the robust DR program utility executives described. Schuerger said Xcel repeatedly has missed the mark and could have increased DR capacity by 1,000 MW by now. He said there is “lots available we’re not accessing.”

Schuerger said the 400 MW DR target “was a low bar in 2016.”

Commission Chair Katie Sieben asked whether Xcel is planning to include virtual power plants as a resource when it files its next integrated resource plan in February.

Dobson said he wasn’t sure.

“There’s a degree, I think of frustration, that is bubbling up out of me. We’re in this position — all of the utilities — because Xcel hasn’t quite met the standards that were imposed on the company from the 2017 IRP,” Sieben said. She said maybe the commission’s frustration with Xcel Energy not doing enough on the demand response front should be handled in the utility’s upcoming IRP filing, and not handled by blowing up a prohibition on third-party aggregation that could “seemingly disrupt a lot of apples on the apple cart.”

Dan Lipschultz, representing the Minnesota Rural Electric Association, said commissioners should wait a few years to see whether utilities sufficiently expand their DR offerings. He said if they’re not satisfied, they can always take the more drastic step of rescinding the aggregator ban.

“When we look at the need for and the value of demand response, it’s really important that we don’t use the rearview mirror and use a standard of what was needed 10 or 20 or even five years ago,” Schuerger said. “We’re accelerating this energy transition that we’re in; the Legislature has laid out clear guidance that we’re going to go even faster than the fast pace that we’re already moving.”

Schuerger said advance demand response is not just emergency use or peak shaving and is critical moving forward.

“I’m hopeful that we’ll keep this door open. I think that we’ve got to explore all avenues, all hands on deck, all tools available to get the load flexibility and the demand response that the math is showing us we’re going to need,” he said.

Commissioner Joseph Sullivan said he also viewed demand response as “more than just an emergency resource.” He said DR programs could do more and that there are innovative companies developing products that “quite frankly, utilities haven’t really thought about.” Sullivan said he wasn’t sure that permitting aggregators to operate would be much different from Minnesota’s decades-old decision to allow utilities to source from independent power producers.

“Isn’t this just another entity that can bid into the utility platform so it’s not fundamentally a breach of the compact? It’s just the market has evolved and it’s transforming?” he asked.

Utility representatives said the fundamental difference hinged on that independent power producers enter into power purchase agreements with utilities, and don’t contract directly with customers.

Sullivan said the commission could create a model with tariffs and oversight for third-party aggregators. He also pointed out that aggregators of retail customers in the wholesale market would have to operate under the boundaries of the MISO tariff.

“It’s not a free-for-all. It’s not the Wild, Wild West,” Sullivan said.

Lipschultz said the MISO tariff doesn’t account for Minnesota policies or equality and protecting the public interest.

Jon Wellinghoff, former FERC commissioner and chief regulatory officer at Voltus, testified in favor of lifting the ban. He said it would put pressure on Minnesota utilities and the larger MISO footprint to lower rates.

Wellinghoff said it makes sense the utilities, as competitors in a wholesale market, would try to dissuade commissioners from a repeal to retain their monopolies.

“We’re not talking about retail services. We’re not talking about upsetting the regulatory compact at the retail level. It has nothing to do with that. At all. Nothing whatsoever,” he said. “We’re not talking about a monopoly retail service. We’re talking about competitive wholesale programs.”

Wellinghoff said aggregators behave exactly like merchant generation in the wholesale markets. He also said it’s clear FERC for years has wanted demand response participation in wholesale markets.

Ingrid Bjorklund, speaking on behalf of the Advanced Energy Management Alliance, said the time is right to allow aggregators in the wholesale market.

“So much has changed since 2010, when this issue was last revisited,” she said. “More and more flexible resources are going to be needed as we move towards the clean energy economy and clean energy future, and allowing nonutility aggregators of demand response on both the wholesale and retail levels is really necessary to get there.”

Bjorklund said the administrative costs of allowing aggregators participation are “de minimis” and will be far outweighed by customer savings. She also said the Advanced Energy Management Alliance would support the commission sunsetting the ban at a future date.

Sarah Johnson Phillips, representing several large industrial customers in Minnesota, said mines, mills and factories have been trying for years to convince regulators to undo the 2010 order.

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FERC Approves Lower MISO Reliability Payments to Ameren Coal Plant

FERC on Monday approved a settlement to reduce payments to a Missouri coal plant under its system support resource (SSR) agreement with MISO. The commission accepted a trimmed-down, $8.3 million monthly payment to keep the two-unit Rush Island Energy Center operating (ER22-2721). The new amount brings the total annual Rush Island SSR revenue requirement to almost $100 million.

MISO last year deferred Ameren Missouri’s planned retirement of its 1.2-GW Rush Island plant to keep the grid reliable. Ameren originally proposed a $9.3 million monthly SSR payment as part of the deal, but FERC at the time warned that amount might be too high. (See FERC: Rush Island Plant’s Extension Essential to MISO Reliability.)

Ameren offered the lowered amount in a settlement agreement in May. FERC said the settlement appeared to be fair and in the public interest.

In early summer, MISO said it likely will require the assistance of Rush Island for about two more years to avert reliability issues until members complete transmission upgrades and bring wind, solar and battery storage projects proposed in Illinois and Missouri online. The RTO plans to renew the SSR for another year beginning Sept. 1, and once more in 2024. (See MISO Poised to Extend Missouri Coal Plant’s Life.)

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Gulf of Mexico Wind Energy Auction Falls Flat

The first offshore wind lease auction in the Gulf of Mexico drew minimal interest and extremely low bids.

Soon after it opened Tuesday morning, the U.S. Bureau of Ocean Energy Management announced it was over.

Two $5.1 million bids were submitted in the first round for one of the three lease areas up for grabs. RWE Offshore US Gulf submitted the sole bid in the second round: $5.6 million for rights to the 102,480-acre OCS-G 37334, south of Lake Charles, La.

Two 100,000-acre lease areas off Galveston, Texas, drew zero bids.

The wind energy lease areas offered in Tuesday’s auction are shown. | BOEM

BOEM had prequalified 15 companies to participate in Tuesday’s auction, some of them already major players in the burgeoning U.S. offshore wind market.

The Biden administration put a positive spin on the situation later Tuesday.

Interior Secretary Deb Haaland did not mention the auction in a news release, focusing instead on the larger picture — President Biden’s push for clean energy and a clean energy economy.

BOEM Director Elizabeth Klein focused on the positive, saying: “Today’s lease sale represents an important milestone for the Gulf of Mexico region — and for our nation — to transition to a clean energy future. The Lake Charles Lease Area will have the potential to generate enough electricity to power about 435,400 homes and create hundreds of jobs.”

Challenges

The nation is very late to offshore wind development — U.S. waters host just 42 MW of the more than 60 GW of installed capacity operating worldwide.

But the Biden administration and some states are rushing to catch up, and hope to bring dozens more gigawatts online in the next several years as a climate protection measure.

In the past year, this effort has run into major complications with inflation, interest rates and supply chain constraints. Projects contracted but not yet underway off the Northeast coast say they need more money to proceed; bids for the next round of projects apparently are coming in quite high.

The Gulf of Mexico has another set of problems, BOEM noted in a 2020 report: weaker winds and a softer seabed than exist on other parts of the Outer Continental Shelf, plus the annual threat of hurricanes.

Despite all this, some had expected big things from Tuesday’s auction.

Others were not surprised by the results.

Washington, D.C., research firm Clearview Energy Partners said in a note to clients Tuesday that the macroeconomic trends hammering the offshore wind industry probably diminished interest among developers.

It also cited factors specific to the Gulf of Mexico:

    • State solicitations have been a strong driver of offshore development in other parts of the country; there have been none in the Gulf states.
    • Production of clean hydrogen with wind energy may be a key motivating factor for its development in the Gulf, but the IRS still has not issued guidance on the clean hydrogen tax credit in the Inflation Reduction Act.
    • Electricity in the region is relatively cheap, and the return on offshore wind investment potentially is negative.

That said, there is movement on other fronts. Louisiana is pursuing wind power development in state waters and is in negotiation with multiple developers.

Construction close to shore eliminates some time-consuming federal oversight. And the waters off Louisiana’s coast already are dotted with oil rigs, so wind power development there may not see the fierce opposition that has erupted in places such as beachfront New Jersey resort communities.

Clearview said the two areas off Texas could yet attract interest.

“We note that project developers could file applications for noncompetitive leases in the two areas in the future. In this context, we wouldn’t rule out the prospect that some developers decided it’s ‘not now’ rather than ‘not ever.’”

Trade group Business Network for Offshore Wind had a similar take on Tuesday’s auction.

“Today’s auction results show the important role state public policy plays in offshore wind market development,” CEO Liz Burdock said via email.

“The network remains fully committed to offshore wind in the Gulf and to supporting our members forming the robust supply chain that is already instrumental to building out a new American energy industry. Gulf expertise in offshore construction is unparalleled, and their innovative solutions will continue to drive the U.S. and global offshore wind industry forward. We congratulate RWE and the state of Louisiana, which is positioning itself as a regional leader and building upon [its] strength as a major national supplier, and we look forward to helping solidify the state’s market.”

BNOW last week published a report exploring in greater depth the opportunities and challenges for wind energy development in the Gulf of Mexico.

History

Tuesday’s auction was lackluster compared with BOEM’s three most recent efforts.

RWE got the rights to its patch of water for $54.64 an acre.

Leases auctioned last year topped out at more than $10,000 an acre. Some winning bids were considerably less than $10,000, but all were much, much more than $54.

In February 2022, developers submitted $4.37 billion in winning bids for six lease areas totaling 488,000 acres off the New York-New Jersey coast — the most lucrative energy auction ever in federal waters, for oil, gas or wind.

The May 2022 wind auction off the Carolinas was a more restrained affair — two bids totaling $315 million for two leases totaling 110,000 acres.

In December 2022, the first Pacific wind energy auction drew $757 million in bids for five lease areas totaling 373,268 acres off California.

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Pa. PUC Proposes Guidelines for Distribution-level Storage

Pennsylvania regulators last week unanimously approved a policy statement that offers proposed guidelines for when electric distribution companies (EDCs) can use storage as distribution system resources.

In a joint statement during the Aug. 24 commission meeting, Pennsylvania Public Utility Commission (PUC) Chair Gladys Brown Dutrieuille and Vice Chair Stephen DeFrank said technological advancements have allowed batteries to become viable energy resources and nonwire alternatives when planning the grid.

“Electricity distribution systems are changing quickly. Distribution energy resources are interconnecting at an almost exponential pace. Electric vehicle adoption continues accelerating. Data centers are establishing themselves in various EDC territories, demanding remarkable amounts of power,” the statement reads. “These factors, among others, have significantly altered the dynamics of managing the distribution grid. It is apparent that energy storage may offer EDCs a tool to better manage these new dynamics. Energy storage can provide grid stability through services such as peak demand shifting, supplemental power, restoration and voltage support.”

The policy statement said the majority of the comments the PUC has received urged against a narrow definition of when storage could be used at the distribution level, in large part owing to the still-evolving technology. The commission encouraged EDCs to implement storage when it can be cost-effectively used to “maintain or to increase the reliability or the resilience of the electric distribution system.”

The commission also declined to adopt a specific cost-effectiveness test and instead take a more individualized look at projects, saying EDCs may consider storage in cases when expense is similar to other traditional upgrades. Potential benefits include peak demand shifting, supplemental power, restoration and voltage support, Dutrieuille and DeFrank said.

The policy statement follows two rounds of comments regarding the role storage can play on the distribution grid starting in December 2020, with over 30 commenters participating.

Utilities argued that storage could be used to provide capacity in regions far from transmission or that experience concentrated peaks in load, voltage support for distributed energy resources (DERs), reducing or delaying the need for transmission upgrades and to support derated facilities in a constrained area. Storage could also be used to provide reactive control and to mitigate short-term peaks on individual lines from electric vehicle charging or electrification.

Trade groups representing generators, including the Solar Energy Industries Association (SEIA) and PJM Power Providers, as well as the Industrial Energy Consumers of Pennsylvania, argued that states with structured markets like Pennsylvania should impose parameters on the use of storage on the distribution grid when the asset would be owned by a public utility. They argued that the storage would effectively compete with the energy, capacity and ancillary services sold into competitive markets.

Duquesne Light commented that cost and value should be differentiated, arguing that some cost-benefit tests may not capture the value of improved resiliency, clean energy delivery, reduced outages and less need for new infrastructure on private property. It said value should instead be compared to the cost and value of alternative solutions.

SEIA said EDCs should be required to compare the value of their proposals with those of private developers to determine if contracting with third parties could provide more cost-effective solutions, including existing portfolios of behind-the-meter storage. Consumer groups said storage should only be installed when benefits outweigh costs and that most issues would be best addressed by traditional distribution upgrades.

Stakeholders have 30 days to comment on the PUC’s proposed guidelines.

PUC Approves 3 Transmission Projects

The commission also approved three transmission proposals from Mid-Atlantic Interstate Transmission (MAIT) to improve reliability in two regions and to interconnect a new 53.6-MW solar generator.

The company sought to construct a five-breaker ring bus at the Cly Substation in York County and construct 0.3 miles of new 115-kV line to loop the existing Middletown Junction-Roundtop 115-kV and the Middletown Junction-Smith Street 115-kV lines into the bus. It said the $942,000 project would increase reliability and reduce the potential for load loss.

Under the existing conditions, MAIT said, a single bus going offline could cut power to the distribution transformer and the 4,814 customers it serves. The project would prevent a single stuck breaker from disrupting more than two components in the new ring bus.

The company was approved to spend $665,000 to construct a 0.01 mile 115-kV bypass line on the Mansfield-Niles Valley line in Tioga County. The project would serve as an alternate feed to prevent a stuck breaker or maintenance from causing an outage for the 289 Penelec customers and around 6,381 Wellsboro Electric customers the line serves.

The commission also approved a 0.09 mile loop connecting the Hunterstown-Lincoln line to MAIT’s proposed Riley Substation in Adams County, which would serve the 53.6-MW solar generator being planned by Adams Solar.

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NYISO Cautions FERC on Solar Dev’s Request for More Time in Queue

NYISO last week raised a caution flag on a solar developer’s request for FERC to waive certain interconnection queue procedures, which the ISO said could have marketwide implications (ER23-2559).

Oxbow Hill Solar — a 140-MW utility-scale solar project to be built in Madison County, in rural Central New York, by Cypress Creek Renewables — completed NYISO’s interconnection studies for large facilities and joined Class Year 2021 after accepting its cost allocation. It was expected to be operational by the end of 2026, but because of “circumstances beyond its control,” the developer failed to meet a subsequent regulatory milestone to finalize its siting and interconnection agreements, so it requested an extension to Aug. 11, 2024.

In comments filed with the commission Thursday, NYISO did not take a position on the request, but, citing Order 2023 and FERC’s prior emphasis to adhere to deadlines, the ISO highlighted the importance of milestones in the interconnection process and expressed concern that granting the waiver without limits could negatively impact other projects in the queue.

Both FERC and NYISO have sought to unclog its interconnection queue, with Order 2023 setting penalties on projects that fail to progress through the queue and the ISO streamlining portions of its study processes. (See “FERC Order 2023,” NYISO Previews New York City PPTN.)

The ISO acknowledged that granting Oxbow’s one-time request might not pose an immediate threat but argued that prolonged delays could increase the potential for adverse impacts. It did support Oxbow’s request for FERC to act by Oct. 30, and it said if the commission approves the waiver, its requested deadline was acceptable.

Oxbow said it was on track to submit its siting and interconnection permits on time, but a directive from the New York State Energy Research and Development Authority, which tightened energy deliverability requirements for obtaining renewable energy credits, halted its progress.

A solution to NYSERDA’s concerns was identified, but Oxbow worried the delays would force it “all the way back to the first step of the NYISO’s extensive interconnection process,” where it would be placed into a new class year and be operational significantly later.

Oxbow said the waiver will not harm other market participants, is limited in scope to mitigate potential negative impacts and will remedy a “concrete issue” while helping New York achieve its climate and energy goals.

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Large Wind and Solar Farm Panned by Washington State Locals

Many Benton County, Wash., residents believe they do not have a voice in the fate of a controversial renewable energy project proposed for a large site south of the city of Kennewick.

They say that’s because the recommendation on whether to proceed with the Horse Heaven Hills Clean Energy Center rests with a board of state government appointees who are aligned with Democratic Gov. Jay Inslee’s climate change agenda, which includes pushing for alternative power sources.

That belief was evident Wednesday at a public hearing for the project before the Washington Energy Facility Site Evaluation Council (EFSEC), a board of representatives from several state agencies.

“The outcome is predetermined,” said Dave Sharp of Tri-Cities C.A.R.E.S. (Community Action for Responsible Environmental Stewardship). Kennewick is one of the three interconnected Tri-Cities that also include Pasco and Richland.

“Odds of being denied are slim,” said Pam Manelli of Tri-Cities C.A.R.E.S.

Barbara Buckmaster, a farmer at the foot of the Horse Heaven Hills, said, “People are mad and they are angry. They do not want their skyline to look like an industrial site. … Let the community decide what is best for us.”

“Final approval should rest with Benton County,” said local resident Samuel Dechter.

Developers of solar and wind farms and other alternative energy sources in Washington can pick one of two paths to obtain government approval. One path is getting approval from the host county, while the other is to earn a good recommendation from EFSEC, which then goes to Inslee, who makes the final decision. Individual developers have been selecting paths based on which presents the best chances for approval of a project.

When questioned by NetZero Insider this past spring, Inslee said he won’t rubber-stamp such projects despite his green agenda. (See Inslee Approves 160 MW of Solar in Central Wash.)

Inslee has been crusading against global warming for at least a couple decades, even basing his short presidential candidacy on combating climate change.  In 2016, the state’s Ecology Department developed regulations calling for the state to rely on 100% carbon-free power by 2045. A major plank of achieving that goal is solar and wind power. In 2019, the Legislature passed legislation ingraining that goal into law.

Heavy Opposition

The carbon-free power target has sparked a surge of solar farm proposals in Washington.

With the Horse Heaven Hills project, Colorado-based Scout Clean Energy has proposed building up to 224 wind turbines — about 500 feet tall — on 112 square miles of mostly private land. About 294 acres of that land also would hold solar panels, and the project will also include battery storage. The project has a combined nameplate capacity of 1,150 MW, roughly the same as the Columbia Generating Station (CGS), a commercial nuclear reactor just north of the Tri-Cities.

If built, the wind project would be the second in Benton County. Richland-based Energy Northwest, which owns and operates CGS, operates 63 wind turbines several miles to the southeast of the northern face of the Horse Heaven Hills. Completed in 2007, that site covers about eight square miles and produces about 96 MW.

Energy Northwest’s turbines are not controversial, but they cannot be seen from the Tri-Cities. Scout’s turbines would be visible, a major factor in Benton County residents opposing the project. The location is also a nesting area for ferruginous hawks. Last year, the Washington Fish and Wildlife Commission downgraded the status of ferruginous hawks from threatened to endangered. (See Climate, Turbines Help Land Hawk on Wash. Endangered List.)

Up to 69 of the proposed turbines would be too close to the nesting areas, which need a two-mile buffer zone from the structures, Trina Bayard, director of bird conservation at Audubon Washington, said at Wednesday’s hearing.

“It’s too close to our homes. It’s too close to ferruginous hawks,” Manelli said.

Overall, 18 people spoke against the project on Wednesday and three supported it as a job creator. Supporters cited the economic benefits from building and operating the turbines.

“It’ll provide family-wage jobs,” said Rylan Grimes of the local chapter of International Brotherhood of Electrical Workers.

Editor’s Note: An earlier version of this story said 118 people spoke against the Horse Heaven Hills project.

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PJM MRC Briefs: Aug. 24, 2023

Stakeholders Defer Vote on Generation Deactivation Issue Charge

VALLEY FORGE, Pa. — PJM’s Markets and Reliability Committee voted to defer a decision on an issue charge that would create a new senior task force to investigate changes to the generation deactivation process.

PJM and the RTO’s Independent Market Monitor are jointly sponsoring the problem statement and issue charge. (See “PJM and Monitor Present Generation Deactivation Issue Charge,” PJM MRC/MC Briefs: July 26, 2023.)

The scope includes discussion of the triggers for when PJM can offer a reliability-must-run (RMR) contract to a generator seeking retirement, the compensation for RMR resources and the timing of when a resource owner must notify the RTO of its intent to retire a unit.

Following feedback from the initial first read in July, the issue charge was revised to break out the discussion of resource compensation into its own phase to be considered prior to the other elements.

Paul McGlynn, PJM | © RTO Insider LLC

Presenting the proposal, PJM’s Paul McGlynn said the current compensation structure lacks clarity, as resources that opt not to use the formula rate for determining RMR compensation instead make FERC filings that can offer differing interpretations on cost recovery.

McGlynn envisions an additional RMR contract trigger for a resource that would create a shortfall in black start capability in a region if it were to retire.

PJM is seeking to lengthen the 90-day notice generators are required to provide before a desired deactivation date because the timeline leaves little time for planners to make necessary upgrades to ensure that the grid can remain reliable without the resource. Advanced knowledge of deactivations will be increasingly important given the scale of retirements PJM expects to see over the next decade, McGlynn said.

Stakeholders discussed PJM’s change to the issue charge, stating that expanding use of RMR contracts to maintain resource adequacy would be out of scope for the task force. Cost allocation for RMR contracts under the existing transmission violation trigger and changes to the capacity market also are listed as out of scope.

GT Power Group’s Tom Hyzinski said considering whether RA should be a rationale for offering an RMR contract could offer an additional tool if a large number of generators simultaneously decide to deactivate.

“We don’t want to approve an issue charge that prevents things from being discussed that need to be discussed,” Hyzinski said.

McGlynn said the RTO is already looking into improving the capacity market’s ability to ensure resource adequacy.

PJM Senior Vice President of Market Services Stu Bresler said there are backstop provisions in the tariff that allow additional capacity to be procured outside of the Base Residual Auction (BRA) cycle if the RTO falls below its targets.

Whether the process should preclude interactions with the capacity market was discussed at length both during the July meeting and on Thursday, with several stakeholders concerned the task force and its solutions could be fragmented from market changes being considered in other forums.

Paul Sotkiewicz, president of E-Cubed Policy Associates, said several areas of the issue charge were ambiguous and could lead to procedural arguments distracting from core issues. He and other stakeholders suggested amendments to clarify that language in the issue charge, which were adopted by PJM and the Monitor.

Vistra’s Erik Heinle said the revisions had improved the issue charge from its first read but that he believes the first phase should be RMR compensation and timing.

Monitor Joe Bowring said he would support breaking the issue charge into two separate stakeholder processes, with his focus being primarily on compensation.

Peak Market Activity Credit Changes Endorsed

Stakeholders endorsed tariff revisions to address the amount of credit market participants must maintain to satisfy their peak market activity (PMA) requirement, which is their highest exposure in the past year. (See “First Read on Peak Market Activity Credit Activity Proposal Expected in August,” PJM MRC/MC Briefs: July 26, 2023.)

The changes include redefining the PMA surplus and shortfall parameters, introducing minimum exposure and minimum transfer amounts to the tariff language and increasing the PMA reset from occurring semiannually to weekly. The reset reconciles over- and under-collateralization that occurs as energy prices and demand fluctuate.

The revisions also increase the number of permissible early payments from 10 to 13 to provide more flexibility, and the rolling invoice period was increased from three weeks to four.

PJM’s Yong Hu said staff had backcast numerous solutions and believe the proposal is optimal.

Denise Foster Cronin of the East Kentucky Power Cooperative (EKPC) said the utility had concerns with PJM’s initial proposal but that stakeholders and PJM were able to produce a strong compromise.

Bresler said because the proposal was endorsed by the Risk Management Committee (RMC) on Aug. 22 without objection, it would normally have been a consent agenda item for the MRC; however, staff are aiming to implement the tariff revisions before winter.

PJM Provides First Read on Reserve Certainty Issue Charge

PJM gave a first read of an issue charge and problem statement that seeks to address several areas of the reserve market, largely to address a decline in the response rate since the two tiers of reserves were consolidated in a market overhaul implemented Oct. 1. (See “PJM Seeks Stakeholder Process on Reserve Certainty,” PJM MRC/MC Briefs: July 26, 2023.)

Since presenting the issue charge to the MRC in July, PJM has revised the timeline laying out the order in which it seeks to address each of the work areas and added more education on the topics. The bulk of the immediate needs would be initiated upon approval of the issue charge, with an expected duration of six to nine months, followed by discussion on the longer-term items expected to take 12 to 18 months. Also, several changes were made to the work areas.

The immediate needs are reserve performance and penalties, aligning the offer structure with fuel procurement, deployment, and ensuring that procurement reflects system need. Longer-term needs include the eligibility requirements for reserve resources and incentivizing flexibility to meet system needs.

Bowring said he think the out-of-scope portion of the issue charge — which would allow PJM to prevent discussion of changes that could impact the RTO’s “ability to maintain reliability and compliance with NERC standards” — should be more specific and could be used by PJM to curtail discussion.

Bowring said PJM has previously made such assertions in response to participants, including the IMM, who disagreed with PJM’s approach.

“No one will propose changes that they believe will reduce reliability or compliance with NERC standards. The issue is how best to maintain reliability and compliance. There are multiple paths to those objectives. The ability to discuss options should not be arbitrarily limited,” he said.

The declining reserve response rate led PJM to increase its reserve requirement by 30% in May, overriding stakeholder objections. The Monitor at the time objected that the change was not needed and not supported by the data. PJM’s Donnie Bielak said the issue charge is intended to produce a permanent solution that is more satisfactory for stakeholders. (See “Stakeholders Reject PJM Synch Reserve Manual Change; RTO Overrides,” PJM MRC/MC Briefs: May 31, 2023.)