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September 9, 2024

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Texas PUC Sets Reliability Standard for ERCOT

Texas’ regulatory commission has adopted a reliability standard for the ERCOT region, one of several policy parameters that will be used in upcoming analyses for the proposed performance credit mechanism (PCM) market design. 

As approved by the Public Utility Commission during its Aug. 29 open meeting, ERCOT must meet three criteria to comply with the reliability standard: frequency, duration and magnitude. To meet the standard, ERCOT outages should not occur more than once in 10 years on average, last more than 12 hours or lose more power than can be safely rotated (54584). 

“Our system must continue to evolve to meet the growing demand for power in our state … it’s critical we clearly define the standard at which we expect the market and system to operate,” PUC Chair Thomas Gleeson said in a statement. “By establishing a reliability standard for the ERCOT region today, we are setting a strong expectation for the market and charting a clear path to further secure electric reliability.” 

The new rule also establishes a process to regularly assess the ERCOT grid’s reliability. The commission directed ERCOT staff to conduct a probability-based assessment every three years, beginning Jan. 1, 2026, to determine whether the system is meeting the standard and is expected to continue to do so over the next three years.  

Should that assessment indicate the system fails to meet the reliability standard, the Independent Market Monitor (IMM) must conduct an independent review and commission staff must recommend their own potential market design changes. The PUC then would review ERCOT’s assessment, the IMM’s review, commission staff’s recommendations and public comments to determine whether any market design changes are necessary. 

ERCOT and IMM staff confirmed during the meeting that they have all they need to begin their respective analyses. Draft results are due to the PUC in early November; the commission will consider the final results in December. 

The ISO said it will use 19 GW as the amount of load it can safely rotate during an outage in its cost/benefit analysis, as it proposed in an April research paper. 

The reliability standard was just one of several actions the PUC took to establish regular assessments of the grid’s ability to meet demand and help determine any necessary future improvements. 

It adopted a value of lost load of $35,000/MWh, using information from a survey of ERCOT consumers and a Brattle study. Staff proposed a $30,000 VOLL, but Gleeson recommended Brattle’s suggested $35,685, saying it was “reasonable” after a “detailed and thorough” analysis (55837). 

“We don’t need the extra numbers in there,” Gleeson said. 

ERCOT will use VOLL for cost/benefit analyses in its planning models. The PUC said it will not be used to update the operating reserve demand curve or any current market-design elements. 

The commission also accepted staff’s final recommendations for each of the PCM’s 37 base case parameters, including a firm $1 billion gross cost cap to comply with state law (55000). ERCOT had proposed a counterfactual of energy-only market equilibrium reserve margin instead of the cost cap, a “purely theoretical number,” according to Stoic Energy principal Doug Lewin. 

PUC staff and ERCOT also differed on four other parameters: the metric to determine performance credit (PC) hours; a duration-based cap for consecutive PC hours; the net-cost cap compliance framework; and non-performance penalties for PCs offered but not cleared in the forward market. 

The PUC selected the PCM from among five other suggested market reforms as its design of choice and approved it in 2023. That same year, the Texas Legislature passed a bill setting a $1 billion annual cap for the PCM. (See Texas PUC Submits Reliability Plan to Legislature.) 

The PCM will use the reliability standard and a corresponding quantity of PCs that must be produced during the highest reliability risk hours to meet the standard. Load-serving entities can purchase PCs, awarded to resources through a retrospective settlement process based on availability during hours of highest risk, and trade them with other LSEs and generators in a forward market; generators must participate in the forward market to qualify for the settlement process. 

CPS Energy MRA, RMR Update

ERCOT told the PUC it has changed course on must-run alternatives for three retiring CPS Energy coal units, postponing an inspection of the largest unit until after the winter season (55999). 

The San Antonio municipality told the commission this year it planned to retire the three coal units, which date back to the 1960s, in March 2025. However, ERCOT said the Braunig Power Station units, with a combined summer seasonal net maximum sustainable rating of 859 MW, were needed for reliability reasons and issued a request for reliability-must-run proposals in July. (See ERCOT Evaluating RMR, MRA Options for CPS Plant.) 

The grid operator said in an update to the commission that while it continues to negotiate a potential agreement with CPS Energy to inspect the 412-MW Unit 3, it would be “more prudent” to allow the resource to operate through the winter’s peak demand period. ERCOT staff said the inspection could be held in mid-February or early March. 

“If we waited until after winter peak load, we believe we’d still have plenty of time, barring unforeseen circumstances, to have the unit inspected and repaired during another shoulder season for outages and before the summer peak load season,” ERCOT’s Davida Dwyer said. 

The ISO extended the deadline for RFP responses to Oct. 7 after receiving fewer than 10 proposals to its initial request. (See “ERCOT Extends MRA Timeline,” ERCOT Board of Directors Briefs: Aug. 19-20, 2024.) 

Chad Seely, the ISO’s general counsel, told the commission the deadline would provide an “important data point” in seeing whether the industry has responded with enough MW to provide relief for a constrained area south of San Antonio. 

“The additional time affords us a more deliberative process on these critical policy issues to see if the industry is going to respond to the must-run alternative,” Seely said, “and then continue to move forward [on] a path where we still think it’s appropriate and prudent for reliability to start to open up the unit in advance of any April 1 RMR agreement.” 

“Is it looking bleak on the MRA?” Commissioner Lori Cobos asked Seely.  

Noting that ERCOT has amended the RFP after stakeholder feedback, he said, “We’re hopeful, with the amendments that we put forward and allowing almost another month of time for people to go do their due diligence, and talk to their shops about options, that we will see a higher [number] of offers come in in October.” 

“Ultimately, I don’t want RMR to be the norm, right?” Cobos responded. 

Seely said the three units are in a “prime” location to relieve the constraint’s interconnection reliability operating limits (IROLs), which makes the pre-RMR inspection work such an “extraordinary situation.” 

“[Braunig] is one of the best assets right now in the system, until we see other solutions to help relieve the overloads of the IROL for the next couple of years,” he said. “That’s why it’s critically important to be deliberative and these critical policy issues on how we approach this.” 

CPS has said it will cost about $22 million to inspect, repair and prepare Braunig Unit 3 to remain in service past March and an additional $35 million for the other two units. 

Utility and energy storage company Eolian announced Aug. 28 an agreement for two storage facilities south of San Antonio totaling 350 MW of capacity. The projects are not expected to come online until 2026, but work to upgrade the transmission infrastructure and relieve the South Texas constraint isn’t expected to be completed until the middle of 2027. 

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Counterflow: Back to the Future

It seems like yesterday I started scribbling about all manner of industry subjects — against the flow, the prevailing wisdom, the latest hype, etc. 

But it’s actually been 10 years. With that passage of time, spanning 90 columns and articles all available here, I thought I’d look back at what I might have gotten right, gotten wrong or whatever. And what such might portend for the next 10 years. 

Let’s start with — who else — Elon Musk and his claims for his new home battery, the Powerwall. Including pairing with his cousins’ SolarCity’s solar panels. Powerwall and SolarCity didn’t live up to Musk’s early hype, as I discussed in follow-up columns (one more), but they finally became a profitable part of Tesla. Maybe I should get partial credit.  

Steve Huntoon |

Next subject was Big Transmission (not to be confused with economic interregional ties). Back then, I summarized the prior 10 years: “It was heady stuff: Big lines and arrows sweeping across the country, depicting massive new transmission projects. But after 10 years of dramatic announcements and proposals, the reality today is that Big Transmission has fallen and it won’t be getting up. And a second reality is this: The fall of Big Transmission is not a public policy failure. Rather, Big Transmission never did make sense. Instead, the experience so far points to a continuation of what we’re doing now — to more of the incremental transmission expansions that have characterized the past 10 years — and not to count on Big Transmission as a solution to any future industry challenge.” Another 10 years and the song remains the same.✔️  

On to microgrids! I showed that microgrids are the irrational antithesis of everything we know about electric system planning and operation. A couple years later, I discussed the threat microgrids posed to national security, did a recap a couple years later, and then this year covered the microgrid boondoggle in Chicago. ✔️  

Next up were utility-scale batteries. I showed that the two claimed value propositions, capacity backup and energy arbitrage, didn’t pencil out. Battery costs have since come down significantly, but batteries remain a niche product absent subsidies and/or mandates. Hmm, maybe another partial credit. 

On to New York’s REV (“Reforming the Energy Vision”). As I said back then, it was the most hyped regulatory initiative since the California restructuring some 20 years prior. REV was mostly word salad, but one of the few specifics was subsidizing utilities to install rooftop solar. I couldn’t imagine a worse idea. ✔️  

Well, except maybe California’s artificial creation of the Duck Curve by layering one bad policy on top of another. Free storage and distribution in the form of net metering, uneconomic time-of-use rates discouraging afternoon usage, subsidies of battery storage reducing afternoon usage. Yikes. Many years later, the Duck is finally getting targeted, but not before helping drive California’s electric rates to astronomical levels. ✔️ 

Another close contender from California was the planned closure of the Diablo Canyon nuclear plant. Perhaps my hair-on-fire column helped save the plant … and perhaps helped the planet. ✔️  

Oh, and lest we forget Bernie Sanders’ promise to ban fracking during his 2016 campaign. Not only to cost consumers some $100 billion annually, but to increase carbon emissions by increasing coal-fired generation. Yikes! ✔️  

Enough reminiscing for one day! 

P.S. Except to add to prior columns’ postscripts about Peace, Love and Understanding. Here’s an audio version by the guy who wrote it, Nick Lowe. Oh, and this cover by Elvis Costello 20 years ago is epic. 

As Spinal Tap said: Turn it up to 11. 

Columnist Steve Huntoon, principal of Energy Counsel LLP and a former president of the Energy Bar Association, has been practicing energy law for more than 30 years. 

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DOE Approves 1st LNG Exports Since Biden Administration’s Pause

The Department of Energy on Aug. 31 approved a five-year term for New Fortress Energy’s Fast LNG 1 project to export gas produced in the U.S. to countries without free trade agreements (FTAs).

The LNG facility recently started operations in Altamira, Mexico, and will receive U.S.-produced gas via pipeline to export. It announced its first exports in August, having already won approval to ship gas to countries with FTAs.

The authorization comes after a court stayed the Biden administration’s pause on such approvals, announced earlier this year, and while DOE works on a related study on the environmental impacts of LNG exports. (See Federal Judge Stays Biden’s LNG Export Application Pause.)

“This important authorization cements NFE’s position as a leading global vertically integrated gas to power company and enhances the marketability of our FLNG 1 asset,” CEO Wes Edens said in a statement Sept. 3. “NFE is now able to freely supply cheaper and cleaner natural gas to underserved markets across the world and further our goal of accelerating the world’s energy transition.”

DOE approved the facility to ship 145 Bcf/year of U.S.-produced LNG. The gas will flow into Mexico over the Valley Crossing Pipeline, which runs south from Texas, and potentially other cross-border pipelines that have yet to be completed.

The exports to non-FTA countries give NFE more flexibility with the facility, DOE said.

“These re-exports can diversify global LNG supplies and improve energy security for U.S. allies and trading partners,” the department said. “Based on this administrative record, DOE has determined that it has not been shown that NFE Altamira-proposed re-exports of LNG to non-FTA countries will be inconsistent with the public interest over the authorization period.”

DOE’s approval is in effect for five years, until Aug. 30, 2029, but NFE wants to keep exporting gas until 2050. The department will reevaluate its approval once the company formally asks for a new end date.

So far, DOE has approved 46.45 Bcfd of natural gas exports, which includes 6.71 Bcfd of gas shipped to Canada and Mexico before being exported overseas.

North America’s export capacity is on pace to double by 2028, from 11.4 Bcfd to 24.4 Bcfd, the Energy Information Administration said Sept. 3.

The U.S. is home to 9.7 Bcfd of projects under construction, with Canada building 2.5 Bcfd and Mexico 0.8 Bcfd. The Canadian facilities would export gas produced there, but the Mexican facilities are seeking to export gas initially produced in the U.S.

In approving NFE’s application, DOE said it would monitor market developments closely as the impact of successive authorizations of LNG exports continues to unfold.

“DOE also acknowledges that proposals to re-export U.S.-sourced natural gas in the form of LNG from Mexico or Canada to non-FTA countries raise public interest considerations that are not present for domestic exports of LNG,” DOE said. “In the case of re-exports, the U.S. economy does not receive a significant portion of the benefits DOE has recognized for LNG exported directly from the United States, particularly with respect to the jobs and infrastructure investment associated with construction and operation of liquefaction facilities.”

Foreign LNG export facilities are also not subject to U.S. environmental laws, which could lead to long-term issues if local laws are laxer, DOE added.

The export application was opposed by environmentalists, with Sierra Club protesting and Food & Water Watch releasing a statement blasting the approval.

“It’s ridiculous that the Department of Energy would issue this license despite the administration’s ongoing, incomplete public interest review of such exports,” said Mitch Jones, managing director of advocacy and policy. “The department is under no obligation to approve these ill-advised proposals, now or ever. As the disastrous impacts of increased fossil fuel development become more and more obvious here and around the globe, the notion of expanded LNG exports should be dismissed out of hand.”

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State Briefs

IOWA 

Hancock County Approves Resolution Objecting to Eminent Domain Use for CO2 Pipeline

Hancock County last week became the state’s 14th county to approve a resolution objecting to the Utilities Commission’s authority to enact eminent domain for privately owned and operated CO2 pipelines. 

The county board’s action comes less than a week after the South Dakota Supreme Court handed down a unanimous decision that included the finding Summit Carbon Solutions did not prove its common carrier status, which prevents Summit from using eminent domain in that state for its proposed pipeline. The pipeline will also cross Hancock County.

More: Globe Gazette 

Utilities Commission Issues Pipeline Permit for Summit Carbon Solutions

The Iowa Utilities Commission last week issued a construction permit for Summit Carbon Solutions’ proposed liquid pipeline. 

The commission issued the permit without modifying the previously imposed conditions Summit Carbon must meet to begin construction – the most significant of which is that the project must be approved by regulators in North Dakota and South Dakota. The commission also required the company to secure and maintain a $100 million insurance policy and agree to compensate landowners for any damages that result from the pipeline’s construction. 

The company hopes to begin construction next year. 

More: Iowa Capital Dispatch 

KENTUCKY 

Gov. Beshear Makes Appointments to Energy Planning and Inventory Commission

Gov. Andy Beshear last week filled several seats on the new Energy Planning and Inventory Commission created to slow the retirement of power plants fueled by coal and natural gas. 

Among Beshear’s first eight appointees to the 18-member board were Louisville Gas and Electric and Kentucky Utilities CEO and President John Crockett and Duke Energy Senior Vice President Brian Weisker. The law requires one of the governor’s appointees represent an investor-owned utility. 

Under the new law, most of EPIC’s decision-making power will be vested in a five-person executive committee. The law also requires EPIC to submit a study of the state’s electricity supply and the impact of federal policies on it by Dec. 1.  

More: Kentucky Lantern 

MASSACHUSETTS 

Holtec Appeals DEP’s Denial to Discharge Pilgrim Wastewater into Cape Cod Bay

Holtec Decommissioning International last week announced it is appealing a Department of Environmental Protection ruling denying the company permission to release treated wastewater from the Pilgrim Nuclear Power Station into Cape Cod Bay. 

Holtec wants to discharge up to 1.1 million gallons of industrial wastewater — treated beforehand, but still containing some radionuclides — from the shuttered plant. However, the DEP has identified the bay as “a protected ocean sanctuary” as defined under the state’s Ocean Sanctuaries Act. 

Holtec filed its appeal Aug. 16 with the Office of Appeals and Dispute Resolution and argues the NRC has the sole responsibility of deciding on discharge of “radiological liquid effluent” under the Atomic Energy Act. 

More: Cape Cod Times 

MISSOURI 

Evergy Seeks Rate Increase

Evergy last week applied to the Public Service Commission for a 13.99% increase in electric rates, giving the company up to $104.5 million more in revenue a year. 

Evergy said the higher rates are needed to recoup money it spent on two natural-gas plants and for upgrades to withstand severe weather. 

The commission figures to decide in December. 

More: Missouri Independent 

NEVADA 

BLM Approves Solar, Battery Storage Project

The Bureau of Land Management last week issued a right-of-way for the Dry Lake East Energy Center Solar Project in Clark County, Nev. 

The battery energy storage system will generate 200 MW of solar energy with 600 MW of storage. 

More: Power Technology 

NEW YORK

Senate Republicans Outline Legislation to Delay Renewable Transition

Senate Republicans last week unveiled a legislative package to delay the state’s statutory mandates to transition to renewable energy. 

The legislation would push back deadlines in the state’s climate law, which passed in 2019 and requires a 40% reduction in greenhouse gas emissions by 2030, by 10 years and require a study of its costs. 

Other parts of the package would prevent the state from closing any power plants before new facilities come online and require it to invest in “alternative energy” options. 

More: WSKG 

OHIO 

PUC Proposes $1.45M Fine Against Duke for Billing Errors

The Public Utilities Commission last week proposed a $1.45 million fine against Duke Energy for repeatedly violating state administrative code while making more than 100,000 billing mistakes since 2022. 

The fine is part of a revised settlement proposal, filed by PUC staff on Aug. 12, to address ongoing problems with Duke’s “Customer Connect” software system. The revised settlement would triple an earlier penalty. 

By April 2023, one year after installation, PUC staff said Duke had reported 106,453 billing errors. 

More: WCPO 

PENNSYLVANIA 

PECO Looking for Rate Increase in Philadelphia Area

PECO recently filed for a 12.3% rate increase with the Public Utility Commission. 

The increase would add $16.67 a month more to the typical residential customer bill starting in January. That would be followed by additional increase of $2.07 per month in 2026. 

PECO argues it’s investing billions in infrastructure upgrades and needs the earnings increase to ensure its continued financial health. Without a higher revenue stream, it’ll lose opportunities to attract capital investments. 

More: BillyPenn 

VIRGINIA 

Charlotte County Approves Permits for Dominion Solar Project

The Charlotte County board last week unanimously approved a permit and a siting agreement for Dominion Energy’s Quarter Horse Solar project. 

Dominion has shaved down the project since purchasing it from Apex Clean Energy Holdings. The 125-MW project will sit on 1,678 acres and consist of 291,384 solar panels. 

More: The Charlotte Gazette 

NRC Grants North Anna Extensions

The NRC approved 20-year extensions for North Anna Power Station’s two nuclear reactors, allowing them to operate through 2058 and 2060, Dominion Energy announced last week. 

The two reactors were originally licensed to operate for 40 years beginning in 1978 and 1980. In 2003, the licenses were renewed for an additional 20 years, permitting them to operate through 2038 and 2040.   

More: Virginia Business 

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Company Briefs

Exxon to Sell Non-core Oil Assets in Permian Basin

Exxon Mobil says it’s looking to sell oil assets in the Permian Basin that could fetch $1 billion. The company wants to sell a collection of conventional oil and gas properties across west Texas and New Mexico to focus on higher-growth assets. 

More: Reuters 

Microsoft Signs 20-Year Solar PPA with EDP Renewables in Singapore

Renewable energy producer EDP Renewables (EDPR) has announced a 20-year agreement with Microsoft through which the tech giant will purchase 100% of the renewable energy via EDPR’s SolarNova 8, the largest solar project in Singapore. 

EDPR announced earlier in 2024 that it had been awarded Phase 8 of the SolarNova program, to install up to 200 MW of capacity across 1,075 Singapore public housing buildings and 101 government-owned buildings. It is the second agreement between the companies in Singapore. 

More: ESGtoday 

Ice Industries to Invest in Production Facility to Supply First Solar

Ice Industries has announced it will invest $6 million to build in the Lacassine Industrial Park, La., that will focus on roll forming steel back rails for solar panels for First Solar. First Solar is expected to begin operations in the second half of 2025. 

More: The Acadiana Advocate 

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Federal Briefs

Researchers: Clean Energy Transition Will Cost $1T in Federal Spending

For the U.S. to meet its clean energy goals, the federal government would need to invest around $1 trillion into local economies by 2031 via tax incentives, according to a new report from RMI. 

So far, through June 2024, the government has distributed $66 billion — or around 6% of the full spending that climate commitments demand. 

The RMI report looked specifically at how well each state has captured federal tax incentives, compared to estimates of their full funding potential. On average, states have received 7% of the total funding they would need to reach their full potential by 2031. 

More: Grist 

USDA Invests $140 Million to Lower Energy Costs in Kentucky, Nevada

The U.S. Department of Agriculture has announced $140 million for clean energy projects in Nevada and Kentucky to reduce bills for households, expand reliable access to clean energy and create jobs for families, small businesses and agricultural producers. 

The Valley Electric Association in Nevada plans to use an $80.3 million investment to install a 37 MW solar and storage system to serve Pahrump and the Fish Lake Valley region. In Kentucky, some of the money will go toward building three hydro plants on the Kentucky River. 

More: USDA 

Former Union Director Indicted on Warrior Met Coal Gas Pipeline Damage

A U.S. District Court in Alabama has indicted James Gale Kerns in relation to Warrior Met Coal gas pipeline damage caused in 2022. Kerns was indicted on one count of destruction of property with an explosive device after allegedly destroying parts of a facility on or around March 23, 2022. 

In April 2021, about 900 members of the UMWA began striking against the Warrior Met Coal Mine after failed contract negotiations and an expired labor contract. 

More: WBMA 

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NYISO Presents Final 2025 Project Budget Recommendation

NYISO last week presented the Budget and Priorities Working Group with its final recommended 2025 budget for in-house initiatives, showing that it responded to stakeholder feedback by reincluding several projects that had been cut.

The ISO’s initial recommendations last month cut several stakeholder favorites, including implementing storage as transmission and market purchase hub transactions. (See NYISO Presents Initial 2025 Project Budget Recommendation.)

“We took the feedback that we got from the initial recommendation, went back, and looked at the projects,” said Kevin Pytel, senior manager of product and project management for NYISO. “We have modified some of our estimates when we further scrutinized those estimates, trying to bring them down as much as possible for the resourcing.” This freed up some resources for other projects, he said.

Most of the projects that had been excised were reincluded by modifying their deliverables, which may change when they come fully online. Pytel explained that some of the changes were possible because NYISO produced new estimates of how many labor hours they would take.

“What you found in the past is that you’ve made conservative estimates, as in protecting yourselves: estimates of how much time projects would take and that they don’t take as much time as you estimate?” said Mark Younger of Hudson Energy Economics.

“That’s what the data suggests, Mark,” said Pytel.

Based on the recommended projects, NYISO estimates the total budget for 2025 to be $42.73 million — up from 2024’s $41.62 million — with $22.56 million for labor, $8.31 million for capital and $11.86 million for professional services.

In response to a stakeholder question, NYISO staff said the total cost is slightly higher than what it initially recommended, mostly because of a $500,000 increase in labor costs.

The Integrating Champlain Hudson Power Express project “could not fit into budget due to resource constraints,” NYISO said. The project aims to develop an operating protocol between Hydro-Quebec and the CHPE line, including identifying tariff revisions, software enhancements and integrating the facility to the system reliability tools. This would not impact the expected deployment in 2026, the ISO said. The line is expected to go into service that year.

The proposed budget is expected to be presented to the Management Committee at the end of this month, with a committee vote a month later and a Board of Directors vote in November.

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Large Consumers Miffed at NYISO Proposal to Shorten SCR Notice Period

NYISO last week proposed shortening the activation notice period for special-case resources from 21 hours to four, which caused consternation among program participants at the Installed Capacity Working Group’s meeting.

SCRs are large consumers that act as demand response resources at the direction of NYISO itself. As part of its Engaging the Demand Side initiative, the ISO has proposed to increase the required duration of SCRs’ load curtailment from four hours to six. That proposal has received broad support from stakeholders, with some caveats. (See NYISO Proposes Changes to Special-case Resource Program.)

Among those discussed at the Aug. 29 meeting was NYISO’s proposal to not give SCRs the option of curtailing load for only four hours. Michael Ferrari, a market design specialist with NYISO, said to have both the four-hour and six-hour options would require an annual elections process in which resources would have to declare ahead of the capability year what class they were in.

Zach Smith, senior project manager for NYISO, said adding the additional options would delay implementation and it did not want to delay a reliability program with broad stakeholder support.

Aaron Breidenbaugh, senior director of regulatory and government affairs for CPower, said this was the first time he heard NYISO say it was not doing something for a reason other than operational difficulty.

“Previously we’ve heard that operations can’t handle multiple durations in real time, and I suspect they’ll have a harder time if they only have four hours,” Breidenbaugh said.

NYISO staff acknowledged this was the primary issue with having multiple durations.

Notice Period

The ISO wants to reduce the current notice period to help maximize the grid operator’s flexibility and reduce the likelihood of false notifications, Ferrari said.

But this proposal left some stakeholders surprised and frustrated.

One stakeholder who represents Multiple Intervenors — a group of large industrial, commercial and institutional consumers — said the proposal was a “dramatic change” to spring on the demand side.

NYISO said in July it was considering shortening the notification period, though it did not say by how much.

“This whole project is supposed to be about NYISO engaging the demand-side participants in these programs,” the stakeholder said. “While participants could perform with less than 21 hours’ notice, they strongly desired some advanced-day notification, preferably prior to the end of the prior work day.”

To adjust load or activate generation, work schedules needed to be shifted in the event of a call, they said. The manufacturers who participate in the program go to great lengths to reduce their load when called on.

“They will see this proposed change as the straw that breaks the camel’s back and causes them to leave the program,” they said. “If that’s not a concern for NYISO, that’s fine. But I think NYISO should be aware that this could have a dramatic impact on participation.”

The stakeholder said Multiple Intervenors would be happy to have more meetings with NYISO, but they would not perform survey work for the ISO to assess their members’ sentiments.

“We’re not going to do a survey and do the NYISO’s work for it,” they said. “If you want that information, hold a meeting. We’ll participate.”

Jay Goodman, another representative of Multiple Intervenors, asked whether NYISO could provide any historical data on events in which it has called on SCR program participants and did not get corresponding activations. A NYISO staff member said they don’t believe such information is published.

“I do want to note,” Goodman said, “it’s frustrating in the context of a project that is supposed to be engaging with the demand side, where requests for information not only from the demand side but the MMU, is met with the response of ‘No, we can’t provide that information. We won’t provide that information.’”

Goodman went on to ask why NYISO hadn’t brought up the four-hour notice period with the demand side directly, during earlier meetings with Multiple Intervenors. Ferrari said the four-hour notice period had not been decided on by NYISO internally yet.

“The city is shocked as well to this significant change to the program,” said Couch White attorney Amanda De Vito Trinsey, speaking on behalf of New York City.

“This causes a lot of industrial issues, but even for non-industrial customers, this is still a very significant impact on their operations and their ability to respond in a four-hour period,” she said. “I encourage NYISO to come back right away with something to review.”

A representative of the New York State Energy Research and Development Authority said they were disappointed that NYISO wasn’t presenting a more flexible program and didn’t have more information available for reasonable stakeholder follow-up questions.

Another stakeholder compared the various revisions to the SCR programs to multiple ruptured bulkheads on the Titanic. No one issue was going to kill the program, but all of them together would drive participants out.

“The first hole was having revenue reduced by one-third because of capacity accreditation; wham bam, now we’re up to four bulkheads,” they said. “Like, how much more do you think you can do in the guise of catering to operational needs and desires and still have a viable program? I’d say you’re past that point.”

They went on to say this felt like evidence NYISO wanted to get rid of the SCR program entirely. If NYISO wants to save the program, it needs to tone down some of the changes, they said.

“Thank you for your comments,” said Ferrari. “If you’ll allow me to take liberties with your analogy, there are a lot more icebergs in the water. … The grid is changing; it’s a much more dynamic system; and you know we haven’t made changes to this program in a quarter-century.”

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Mass. DPU Approves 1st Round of Utility Grid Modernization Plans

The Massachusetts Department of Public Utilities has approved grid modernization plans from electric distribution companies that outline longer-term strategies for handling increased electrification and the deployment of distributed resources.

The electric sector modernization plans (ESMPs) include five- and 10-year load forecasts, investments to meet forecasted demand and boost resilience, and cost-benefit analyses for the proposed investments. Overall, the plans predict major new costs for ratepayers. (See Mass. Utilities Submit Grid Modernization Drafts.)

The plans were mandated by 2022 legislation requiring utilities to submit new ESMPs every five years, along with two reports per year providing updates on investments and forecasts.

“The department expects the ESMPs to be each utility’s roadmap outlining how the discrete investments proposed will achieve the statutory objectives,” the DPU wrote in its Aug. 29 ruling.

The DPU largely accepted the utilities’ proposals, despite concerns raised by the Massachusetts Attorney General’s Office, Department of Energy Resources, and several environmental and consumer advocacy groups.

While the Grid Modernization Advisory Council, a stakeholder group set up to provide recommendations on the plans, advised that the ESMPs “should be the central distribution system planning document” for “whole-of-business” electric utility planning, the DPU rejected this suggestion.

“This approach would add requirements that the 2022 climate law does not envision,” the DPU ruled, writing that their review of the plans “is limited to the new, discrete and incremental investments proposed in the ESMP.”

The department did note the difficulties “regarding the need to monitor and attempt to influence multiple department proceedings that touch upon distribution system planning.” It wrote that it “sees value in the companies reporting high-level, informational-only data in the ESMP reports relating to non-ESMP investments.”

The investments proposed by the utilities are significant: Eversource Energy presented more than $600 million in additional spending over five years, while National Grid proposed more than $2 billion. The mounting costs are in part a reflection of projected growth in peak demand. Eversource anticipates a 21% increase in electricity demand over the next 10 years, while National Grid forecasts about a 29% increase.

The department’s approval of the plans is not a preapproval of the investments. The DPU wrote in a February 2024 interlocutory order that it will review the proposals “in the context of strategic planning documents only.”

However, the scale of the investment spurred concerns from advocacy groups and the AGO, which wrote that “the magnitude of the planned EDC investments is a sobering challenge to ratemaking and to affordability for ratepayers.”

Representatives of climate and environmental justice organizations expressed disappointment that the DPU did not take a broader approach to the ESMP proceeding.

“I wish they had gone further,” Kyle Murray of the Acadia Center told RTO Insider. There were “not a lot of significant changes from what the companies proposed,” and the DPU “didn’t take a lot of suggestions from the intervenors.”

However, Murray said the move toward long-term planning is a step in the right direction, and he applauded the DPU’s decision to lengthen the stakeholder process for the next round of ESMPs.

Larry Chretien of the Green Energy Consumers Alliance said the DPU’s decision not to use the ESMPs as central planning documents could make it difficult for the department and intervening organizations to evaluate and engage with proposals across separate dockets, filings and stakeholder advisory groups.

“The oversight is going to be tremendous, and it’s going to be every year,” Chretien said. “It’s just not practical to think that the public interest groups and the EJ groups will have the bandwidth to play this game over time.”

Demand Forecasting

The AGO and the DOER both expressed concern about deficiencies in the utilities’ load growth forecasts, writing that they lack consistent inputs and do not account for certain peak load reductions strategies.

“The forecasts offered by the companies fail to meet the standards established; are not transparent; are not comparable across the companies; do not provide a full accounting for underlying assumptions; and lack consideration of important tools like load management, which can reduce costs for ratepayers,” the DOER wrote.

The DOER argued that the EDCs appear to underestimate the potential of peak demand reduction strategies including managed electric vehicle charging, new rate designs, new building codes and energy storage.

The DPU ruled that ESMP load forecasting complied with the law, and that variance between the utilities’ approaches could help accommodate differences in the characteristics of their respective service areas.

“The department finds that each company’s forecasting method and assumptions are reasonable, appropriate and reliable,” the DPU found.

To evaluate the accuracy of future forecasts, the DPU directed the companies to include a comparison of forecasted and actual demand in their biannual filings, and to compare their ESMP five- and 10-year forecasts with their more recent figures. The DPU also required utilities to include separate modeling of demand reduction and energy efficiency programs in the next round of ESMPs.

Climate Resilience

The state’s 2022 climate law also required utilities to detail their plans to prepare the grid for the effects of climate change. The DPU determined the utilities’ proposals complied with the requirements of the law but found “the need for greater consistency in the climate vulnerability assessments prepared by the utilities.”

The DPU noted the utilities proposed different horizons for their climate projections and included limited detail on how they plan to mitigate the risks identified in climate vulnerability assessments. It directed utilities to identify resilience investments using “major event-inclusive performance data” to analyze cost-effectiveness and account for the location of critical facilities.

“In their biannual ESMP reports, the companies shall provide updates on their progress toward finalizing their frameworks for climate vulnerability risk assessments as well as on their targeted resiliency investment identification and prioritization method,” the DPU wrote.

Gas Planning

Environmental advocacy groups expressed concern that the plans do not include enough information on coordinated gas-electric planning and wrote that aspects of the plans citing the potential of hybrid heating systems and blending alternative fuels in the gas network are not compliant with a recent DPU order on the future of gas (20-80-B). (See Massachusetts Moves to Limit New Gas Infrastructure.)

The DPU wrote that it cannot rule on the viability of the gas companies’ decarbonization strategies in the ESMP proceeding, and that it will evaluate these proposals when the companies submit their Climate Compliance Plans in spring 2025.

The department did note that it expects the EDCs to be compliant with orders on gas decarbonization in ESMP filings and directed the companies to “account for any future department decisions on the propriety of these technologies in their future ESMPs.”

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Brattle New Mexico Study Shows EDAM Benefits Outpacing Markets+

A new study may dispel the notion that New Mexico utilities must follow the day-ahead market choice of their Arizona counterparts in order to realize benefits from market participation.

The Brattle Group performed the study for Public Service Company of New Mexico (PNM) and El Paso Electric (EPE). It compared the projected benefits from joining either CAISO’s Extended Day-Ahead Market (EDAM) or SPP’s Markets+. The study models a scenario in which three Arizona utilities — Arizona Public Service, Salt River Project and Tucson Electric Power (TEP) — join Markets+.

Brattle Principal John Tsoukalis presented the study results Aug. 29 during a New Mexico Public Regulation Commission workshop.

PNM’s annual benefits would be $20.5 million in the EDAM case, the study found, compared with $8 million from participating in SPP’s Markets+. For EPE, projected benefits are $19.1 million a year for EDAM, versus $9.1 million for Markets+.

Compared to previous analyses, the new study modeled transmission connectivity in the two day-ahead market options in much more detail, including how third-party transmission rights could be used, according to Kelsey Martinez, PNM’s director of regional markets and transmission strategy.

“What we realized through this study is that we do have a choice,” Martinez told the commission.

That realization means that factors not included in the study may become more influential in PNM’s market choice, Martinez said. She noted the potential operational challenge of having large amounts of wind energy moving through the PNM system.

“One market would be dispatching our resources, and another market would be dispatching all the resources that are using and connected to our system,” she said.

Comparing Seams

Tsoukalis said the study was designed to look at the impact of two potential seams resulting from a day-ahead market choice.

“One of those key study questions was looking at which seam was worse,” he said: “that seam with Arizona, or the seam with all the wind in New Mexico that has off-takers in California?”

Brattle looked at the results of the New Mexico utilities joining EDAM or Markets+ as compared to a “current trends” case, which is “a representation of where we think the WECC could go,” Tsoukalis said.

In the current trends case, the Arizona utilities join Markets+ along with a cluster of Northwestern entities, including the Bonneville Power Administration, Powerex and Puget Sound Energy. Western Area Power Administration (WAPA) Upper Great Plains and WAPA Colorado Missouri go with SPP’s RTO West in the scenario.

Entities including CAISO, PacifiCorp, NV Energy, Portland General Electric and Idaho Power would participate in EDAM in the current trends case, while PNM and EPE would remain in CAISO’s real-time Western Energy Imbalance Market (WEIM) but would not join a day-ahead market.

Brattle chose 2032 as the study year.

The study found that for PNM, adjusted production costs fall from $55.4 million in the current trends case to $45.4 million in EDAM and $43.9 million per year in Markets+.

Annual congestion revenues are higher in the EDAM case, at $25.6 million for day-ahead and real-time markets combined, compared with $14.3 million in the Markets+ case. Bilateral trading revenue in EDAM is $3.3 million compared to $0.7 million in Markets+, a reduction from $8.6 million in the current trends case.

EPE also sees a difference in congestion revenues between the two cases: $16 million in EDAM versus $12.5 million in Markets+, relative to $7.8 million in the current trends case. EDAM also gives EPE a big potential boost to bilateral trading revenue: $14.4 million a year in EDAM compared to $6.6 million in the current trends case. Bilateral trading revenue drops to zero in the Markets+ case.

Because of increased imports from the Four Corners trading hub in the EDAM case, New Mexico “becomes flush with low-cost power,” Tsoukalis said. EPE then has an opportunity to sell that power to TEP in the Markets+ footprint.

In response to a commission question, Tsoukalis said Brattle did not study a case in which TEP or the other Arizona utilities joined EDAM, saying the results would be almost a “no-brainer.”

“I tend to think it would skew the benefits more for EDAM, of course, by adding more to that footprint,” he said.

Building Transmission

Scott Dunbar, a partner with Keyes & Fox representing the Clean Energy Buyers Association, asked whether congestion revenues projected for the New Mexico utilities in the EDAM case were likely to fall as new transmission is built.

Tsoukalis said the congestion revenue is a signal that more transmission, or greater availability of transmission rights, would be valuable. He said more transmission would shift a number of metrics.

“If you build more transmission, my intuition would be that benefits would go up overall,” Tsoukalis said. “It just might shift from congestion revenue to adjusted production cost reduction.”

Emmanuel Villalobos, EPE’s director of market development and resource strategy, said the company is still reviewing details of the Brattle study. But a big takeaway was the $14 million in potential revenue from bilateral trading in the EDAM case.

“[It’s] really enough to kind of sway [us] back and forth between the EDAM decision and the Markets+ decision,” he said, noting the figure was potential revenue and not guaranteed.

EPE will weigh other factors such as governance and start-up costs in its day-ahead market decision. And the company may ask Brattle for analysis of additional scenarios, which could include EPE and PNM choosing different markets.

The PRC’s Aug. 28 meeting was the third workshop the commission has held on regional markets. Commissioner Gabriel Aguilera said he now plans to work with his staff on a set of guiding principles for market participation, which will come to the full commission for a vote.