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August 27, 2024

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Judge Approves Brazos Chapter 11 Exit Plan

A U.S. bankruptcy judge on Tuesday conditionally approved Brazos Electric Power Cooperative’s disclosure statement about its deal with ERCOT and its proposed exit plan from Chapter 11 bankruptcy.

The decision of Chief Judge David Jones, of the U.S. Bankruptcy Court for Southern Texas, allows Brazos — which declared bankruptcy in the wake of the February 2021 winter storm after being billed for $2.1 billion in wholesale prices — to begin soliciting votes from creditors and settle its dispute with ERCOT. The grid operator later revised the amount due to the market to $1.89 billion (21-30725).

Under the terms of the settlement, ERCOT will receive $1.4 billion. Brazos will pay $1.15 billion up front and then make annual payments to ERCOT of $13.8 million for 12 years. The cooperative will also contribute about $116 million from the sale of its generation assets to fund payments through ERCOT for market participants still short from market transactions during the week of the storm. (See ERCOT, Brazos Reach Agreement in Bankruptcy Case.)

Brazos agreed to sell its generation assets and transition to a transmission and distribution utility. It owns about 4 GW of natural gas-fired capacity.

Under the agreement, Cliff Karnei, Brazos’ general manager since 1997, and three other members of the cooperative’s senior management will leave their jobs by March 2023. In addition, Karnei and two others will be barred from working for any ERCOT market participant if they’re acting as a financial counterparty to the grid operator.

The votes and any objections are due Oct. 28. Another hearing has been scheduled for November to consider final approval of the settlement and the exit plan.

Brazos filed for bankruptcy in March 2021 after receiving the $2.1 billion invoice from ERCOT. The cooperative responded with a force majeure event letter and by disputing the charges. (See ERCOT’s Brazos Electric Declares Bankruptcy.)

The co-op then opened an adversary proceeding against ERCOT in August 2021, challenging the Texas Public Utility Commission’s emergency orders directing the grid operator to set prices at their $9,000/MWh limit to reflect the scarcity in the market. It sought to reduce the short-pay claim by at least $1.1 billion, the amount it attributed to ERCOT’s administrative adjustment.

The adversary proceeding trial began earlier this year but was suspended after several weeks to allow the parties to mediate the dispute. (See ERCOT, Brazos Agree to Mediation in Dispute.)

Gregory Power to Full-time Ops

Also on Tuesday, NRG Energy (NYSE:NRG) notified ERCOT that it plans to return its Gregory Power Partners gas-fired facility to fulltime operations, effective Oct. 1.

The company submitted a notification of change of generation resource designation for the three units and their 365 MW of capacity. The plant, located outside Corpus Christi, had been on seasonal operations from May through December. It went online in 2002.

The plant was shut down in late 2016 when its cogeneration partner, Sherwin Alumina, filed for bankruptcy and ceased operations. NRG returned the facility to seasonal operations in 2019. (See ERCOT Approves Seasonal Plan for NRG Cogen Units.)

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Gordon van Welie Stares down Another Winter in Charge of ISO-NE

BURLINGTON, Vt. — Gordon van Welie is facing another winter full of worry as the head of ISO-NE, tasked with keeping the lights on amid the possibility that extreme weather will threaten a grid that’s straining to catch up to clean energy policy in the region.

In an interview with RTO Insider after a FERC meeting in Vermont that brought all sides of the New England energy sector into a room to talk about the region’s winter issues, van Welie shared his views on the clash between reliability and the clean energy transition. (See FERC Comes to Vermont and Leaves with a New England-sized Headache.)

“The problem is, we should absolutely build all the renewables as fast as we possibly can, hook them up to the system and then let the stuff go that we don’t want. But we’re doing it the other way around,” van Welie said. “We’re shutting stuff down before the new stuff’s built.”

The clean energy transition isn’t being conducted with “completely rational behavior” right now, he said. His call has been for a “deliberate, measured” and incremental move to get away from fossil fuels.

“That’s not the way things are playing out at the moment.”

In his more than 20 years as head of the grid operator, van Welie said he’s developed a keen understanding of the economic theories underpinning the region’s markets; the regulatory paradigms; and the politics that shape his job. It’s a far cry from his background as an engineer working on smart grid technology. And the problems he’s trying to solve now are bigger and thornier than ever.

“Sometimes I feel like we’re trying to thread a rope through a needle in this region. It’s very hard to find the solution that is going to satisfy everyone,” van Welie said.

Last winter, van Welie and his staff launched a public awareness campaign, using media interviews to warn about the thin margins on New England’s grid in the winter in the case of extended cold weather. ISO-NE is planning to do so again this year, despite accusations from some critics that the as-of-yet unfulfilled warnings of rolling outages are “fear-mongering.” (See ISO-NE: New England Could Face Load Shed in Cold Snaps.)

“What would you do in our shoes?” van Welie asked. “You know there’s a risk, and if it goes bad, it’s going to impact 15 million people. Do you hide it and say, ‘We’ll deal with it when it comes?’ Or do you talk about it and say, ‘There’s a problem here that we need society to be aware of?’”

The grid operator is planning a few changes to its strategy this year, including to emphasize that under most circumstances, it still won’t have to dip into the most extreme operating procedures involving load shed. ISO-NE is also doing a tabletop exercise with utilities to run through the scenario of an energy shortfall.

“It’s not just about CYA [covering your ass]. It’s so that people know and can take precautions,” van Welie said. “Part of what we’re saying is that we think we’re short. And so that’s a problem for society. And I’d rather have society know that in advance than for them to find out after the fact, and say, ‘Why didn’t you tell us? We could have done something.’”

No Plans to Step down

The tenuous state of the region’s grid means that van Welie, who joined the organization in 2000 and was named its president and CEO in 2001, isn’t ready to start thinking about retiring.

“The thing I would like to do is to try and leave behind something that’s in decent shape; set it up on a solid foundation,” he said. “I don’t feel like we’re on a solid foundation now.”

Last year, van Welie laid out a four “pillar” plan to support the clean energy transition: substantial amounts of clean energy, balancing resources, energy adequacy and robust transmission.

Using a traffic light indicator to gauge progress, he said transmission is green for now, renewables and balancing resources are yellow, and energy adequacy is red.

“I’d like to get things back to yellows and greens, as opposed to reds,” van Welie said. “It’s going to take time. We might, 10 years from now, be still having the same conversation.”

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Monitor Critiques MISO’s Commitment Usage During Summer

MINNEAPOLIS — MISO presided over reliable operations at higher prices this summer, although its Independent Market Monitor said it is concerned about the RTO’s reliance on out-of-market commitments to maintain reliability.

The difference of opinion arose in Tuesday’s session of the MISO Board of Directors’ Markets Committee during MISO’s quarterly Board Week.

The RTO only called a couple of maximum generation alerts this summer during June’s early heat. That same month, MISO registered the summer’s high systemwide peak at 121 GW on June 21, topping a projected 116-GW monthly peak. The system peaked at 119 GW in July and at 112 GW in August, below expectations of 124 and 122 GW, respectively.

The operations performance came with dramatically higher costs because of soaring natural gas prices, supply chain issues for coal and slightly higher load as the COVID-19 pandemic precautions ease.

The Monitor’s David Patton said all-in summer energy prices doubled year-over-year to about $75/MWh. He said that day-ahead and real-time congestion costs doubled over last summer to more than $750 million, primarily in the footprint’s northern region where abundant wind generation struggles to flow out of the region.

Are Units Being Overcommitted? 

Patton also said MISO operators continued to overcommit generation during the summer. The grid operator said it has had a commitment success rate of about 96% during the season, an indication that it regards most of its commitments as optimal or necessary.

“MISO grades itself as an A+, but at this point we think it’s more a C+. … There’s a disconnect,” Patton said.

Patton estimated that the RTO spent about $80 million in revenue sufficiency guarantee (RSG) payments to resources during the summer. He said only about 10% of the RSG payments are necessary to dilute risk.

MISO uses overly conservative criteria to justify making additional commitments, Patton said. He asked staff to support their commitments with a sharper risk analysis that could avoid excessive commitments. He said the RTO’s operators are “squelching” the markets’ ability to incent nimble generation.

“Ultimately, we want the markets to work,” he said. “We want prices to rise under tight conditions so that fast-start resources are rewarded for the reliability they provide.”

“It is our goal to never make an out-of-market commitment. The reality is we have to make out-of-market commitments,” MISO President Clair Moeller said, adding that exact load amounts materialize in real-time, not day ahead.

Renuka Chatterjee, the grid operator’s vice president of operations, called Patton’s criticism a “healthy tension” between MISO and its Monitor. Patton added that to its credit, the RTO’s leadership is open to discussing the problem further and collaborating on a solution.

MISO, which has begun to track its solar output peaks, said it recorded an all-time high of 2.2 GW on Aug. 31, accounting for 3% of load. Its all-time wind peak remains the 23.6 GW generated on Jan. 18.

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Energy-short Europe Importing More US Shale Gas

Thierry Lepercq (Green Hydrogen Coalition) Content.jpgFounder of Hydeal Ambition Thierry Lepercq | Green Hydrogen Coalition

Europe is in a historic energy crisis, and the impact on the U.S. is not going to be good as exports of its shale gas increase, warned a Paris-based industrialist and entrepreneur Tuesday.

Thierry Lepercq — an energy entrepreneur, author and founder of HyDeal, a pro-hydrogen industrial coalition aiming to replace gas with hydrogen — said U.S. gas prices will “skyrocket” because of European demand.

“I can tell you that $150 billion right now are being invested in LNG terminals across the coast of Texas and Louisiana to ship that very cheap” shale gas, he warned in a webinar produced by the U.S.-based Green Hydrogen Coalition.

“You’ll have that arbitrage thing where in the next few years, massive amounts of natural gas are shipped from the U.S. and to go to Europe and Asia. And the prices in Europe are likely to go down, but the price in the U.S. is going to skyrocket.

“Imagine the whole of the U.S. economy with energy prices going up by 100 to 200% because of the contamination from Europe.

“The same thing is going to happen to the U.S. with maybe [a] one- or two-year delay,” he said. “The message here for the U.S. is to think big immediately. You want to go into tens of millions of dollars to upgrade hydrogen [production] very fast.”

LNG Export Terminals Approved (DOE) Content.jpgDOE and FERC have approved the construction of another 13 export terminals with a combined capacity of 25 bcfd. The first-ever exports of domestically-produced LNG from the lower-48 states occurred in February 2016. | DOE

 

Lepercq, who is also on the board of directors of a newly formed U.S.-based HyDeal coalition, said hydrogen is the only real answer.

He said most of the global oil companies are reluctant to invest the billions of dollars or euros to increase production as they did following the 1970s oil crises because they fear the investments will become stranded assets.

“There needs to be a shock therapy,” he said, referring to the governments of industrialized nations. “We’re talking about hundreds of gigawatts that need to be deployed [to produce green hydrogen] very quickly, if the U.S. wants to avert that … tragic situation, which is going to strike Europe in the next couple of months.”

Florian Knobloch (Green Hydrogen Coalition) Content.jpgGerman economist Florian Knobloch | Green Hydrogen Coalition

In the face of that dire outlook, fellow panelist Florian Knobloch, an economist based in Berlin and adviser to the German federal government, outlined a detailed strategy that Germany has developed to help finance the production of hydrogen globally, with contracts to buy it via pipeline or vessels.

German gas prices have skyrocketed 400% in the last year. Knobloch said the government has developed a plan to assist consumers and industry with soaring energy bills this winter. Those subsidies will cost 4% of GNP, he said.

“We have to be quite realistic [that] hydrogen won’t help us to come through the next two winters,” he said, adding that natural gas imports from the U.S. and elsewhere are crucial.

The government’s plan is to push for the use of hydrogen in the hard-to-abate sectors such as heavy industry, steelmaking and chemicals, and heavy transportation. He said the government does not see the value at this point of heating buildings with hydrogen.

But Germany will remain an energy importer indefinitely, he said.

“We will be relying on hydrogen imports at massive scales, which is why we are planning for actually creating these hydrogen production facilities around the globe already, because hydrogen is a new market and we can’t just wait for hydrogen production facilities to pop up around the globe.”

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Arkansas PSC’s Thomas Makes Way for His Successor

Arkansas Public Service Commission Chair Ted Thomas, a towering presence among MISO and SPP stakeholders, said his decision to step down from the state’s regulatory body and enter the private sector is simply a matter of making room for his successor.

Appointed by Gov. Asa Hutchinson in 2015, and with four years left on his term, he said that with a new governor taking office next year, it is time to move on.

“I didn’t want it to last forever,” Thomas told RTO Insider on Monday. “I had a great working relationship with Hutchinson. I thought it best to let the other person make their own choice.”

Sarah Huckabee Sanders — former White House press secretary under President Donald Trump and the daughter of former Arkansas Gov. Mike Huckabee — is a heavy favorite to win the state’s gubernatorial election in November. Hutchinson is term limited.

Thomas made his decision to resign public last week after submitting a resignation letter to Hutchinson on Sept. 9. The resignation is effective Oct. 1.

Almost always the tallest person in the room, Thomas has been heavily involved in regulatory matters over the last couple of years. In addition to serving on SPP’s Regional State Committee (RSC), several other stakeholder and regulatory groups, and the National Association of Regulatory Utility Commissioners’ Electricity Committee, he was appointed last year to FERC’s Joint Federal-State Task Force on Electric Transmission that was charged with unleashing transmission expansion to improve resilience and connect new renewable generation (AD21-15). (See FERC-State Task Force Considers Clustering, ‘Fast Track’ to Clear Queues.)

That work continues. Thomas expressed regret about stepping away from the task force before it completes its task.

“I’m sure there’s more to do, but we’ve talked about a lot of the issues on the front end,” he said.

“This is sad for all of us who follow utility regulation,” tweeted Matt Christiansen, general counsel at FERC. “I am not sure there’s anyone whose perspective I have been more eager to hear over the last several years than Chair Thomas’.”

“Big shoes!” added energy consultant Karl Rabago, a former Texas commissioner.

Thomas said he has enjoyed working with the grid operators and their staffs, saying it was a big part of his tenure. He named-checked staff from SPP’s Cost Allocation Working Group and the Organization of MISO States (OMS) and said he was “very lucky to get to know some of those people.”

“You’re creating value for the ratepayers” when working with RTOs,” Thomas said. “There are a lot of benefits, but it’s not easy to earn them. You have to work through the stakeholder process.”

If there’s a regret for Thomas, it might be not seeing through the SPP Improved Resource Availability Task Force that he chairs. The group is responsible for addressing recommendations following the RTO’s review of its response to the February 2021 winter storm.

“That’s very important work,” he said, noting the task force is still in the middle of its assignment.

Thomas hinted he may still be visible in future grid operator circles, but right now, he has work to do.

“I’ll run through the tape,” he said.

Arkansas PSC Commissioner Justin Tate will take Thomas’ place on the RSC, beginning with October’s meeting. Fellow Commissioner Kimberly O’Guinn will remain on the OMS, Thomas said.

The resignation came two days after Thomas colorfully recused himself from a solar energy case involving Petit Jean Electric Cooperative and other utilities over alleged unauthorized net-metering practices. He accused Petit Jean of making false criminal accusations against him and said it was “soullessly” wielding “the billy club of the monopolist” and called the utility a “litigation machine paid for by the same ‘members’ that they club.”

The utilities requested Thomas’ recusal after he made comments during a legislative committee hearing earlier this year. They said his comments on interconnection requirements reflected a “predisposition or prejudgment of key issues.”

Thomas told an Arkansas newspaper that his resignation had “nothing to do” with the case, but that “no one will believe that.”

In his recusal Thomas wrote that the utility had four times defied PSC orders to file a tariff that included statutory language to interconnect residential solar customers to the grid.

“Then, like a Saul Goodman stunt, Petit Jean’s counsel falsely accused me of criminal conduct and sought my recusal. Better call Saul!” he said, referring to the lawyer character from the TV shows “Breaking Bad” and “Better Call Saul,” in making his point.

“Solar panels have been sitting in the sun not interconnected for months and months, and a formal PSC process would be litigated and appealed for additional months, if not years,” Thomas said. “This result seems to be the monopolist’s intended purpose. I do not wish to be used as a weapon by the monopolist in the endless expensive efforts to keep people … from interconnection to the grid.

“I’m all good, man. I recuse.”

“I’m very contentious. It’s in my DNA,” Thomas said Monday. “If someone wants to throw down, let’s throw down. Perhaps I could be a better person, but if we have to rumble, let’s rumble.”

Thomas has previously served as chief deputy prosecuting attorney for Arkansas’ 20th Judicial District, an administrative law judge for the PSC, Gov. Huckabee’s budget director and a member of the Arkansas House of Representatives, where he was chairman of the State Agencies and Governmental Affairs Committee during his final term.

The Arkansas Advanced Energy Association last year honored Thomas with its Ron Bell Advanced Energy Leadership Award for outstanding contributions to the renewable power, efficiency and energy contracting industry.

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Utilities File Incident Reports in Latest California Wildfires

Pacific Gas and Electric (NYSE:PCG) and Southern California Edison (NYSE:EIX) each filed incident reports with the California Public Utilities Commission last week indicating their equipment may have been involved in the two largest fires burning statewide.

PG&E said the U.S. Forest Service placed caution tape around the base of a 60-kV transmission pole close to the ignition point of the Mosquito Fire, a 47,000-acre blaze burning mostly out of control in the Sierra Nevada foothills, 50 miles northeast of Sacramento. The fire began near the Oxbow Reservoir in Placer County, where PG&E said it recorded “electrical activity” when the fire started on Sept. 6.

“Thus far, PG&E has observed no damage or abnormal conditions to the pole or our facilities near Oxbow Reservoir [and] has not observed down conductor in the area or any vegetation related issues,” the utility said in a report Thursday to the CPUC. “Our information reflects electrical activity occurred close in time to the report time of the fire. The investigation is ongoing. This information is preliminary.”

The California Department of Forestry and Fire Protection (Cal Fire) has not reported any injuries or structural damage from the Mosquito Fire, but the blaze has caused hazardous air pollution in the nearby city of Auburn and threatened rural communities in its path.

More than 400 miles to the south, the Fairview Fire has killed two people and burned more than 28,000 acres, Cal Fire and the Riverside County Fire Department said. The blaze is 53% contained, Cal Fire reported Monday.

SCE filed a report with the CPUC on Sept. 5 saying, “Our information reflects circuit activity occurred close in time to the report time of the fire” at 3:37 p.m. that day near the city of Hemet. “The investigation is ongoing.”

September traditionally marks the start of fire season in California, as autumnal offshore breezes fan vegetation parched by dry summers. The fire season typically continues until rains begin in the late fall in the state’s Mediterranean climate.

SCE and PG&E equipment has been blamed for starting major wildfires in recent fire seasons.

The catastrophic blazes include the Camp Fire, the state’s deadliest wildfire, which was ignited by a broken PG&E transmission line in November 2018, and last year’s Dixie Fire, a nearly 1 million-acre wildland blaze started by a PG&E distribution line.

Government investigators determined that SCE power lines blown together by high winds sparked the 282,000-acre Thomas Fire in Santa Barbara and Ventura counties in December 2017. The largest fire in state history at the time, it killed a firefighter and a civilian. Mud and debris slides in its aftermath killed 21 others when heavy rains drenched fire-scarred mountain slopes, washing away homes and vehicles.

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Acoustic Study to Protect Whales Extended at Empire Wind Site

A marine acoustic study underway in the Empire Wind project lease area will be extended through 2028.

The study by Empire Wind and the Wildlife Conservation Society (WCS) is monitoring large whales in the New York Bight and is expected to yield data that will aid in protection of wildlife before, during and after construction.

The offshore wind farm will be built across 80,000 acres 15 to 30 miles south of Long Island and will generate 2.1 GW.

Two moored acoustic monitoring buoys have already compiled more than 2,000 days of monitoring data and detected more than 18,000 sounds from fin, humpback, sei and North Atlantic right whales. The most frequent sound has been a low-frequency song note produced by fin whales. Detections have tended to peak in early winter.

The partners on the project say the acoustic data, combined with sighting data from aircraft and surface vessels, are providing important baseline information on whale activity in and near the Empire Wind lease area. This will guide efforts to minimize the project’s impacts on them.

Empire Wind is a joint venture of Equinor (NYSE:EQNR) and bp (NYSE:BP). WCS is working with the Woods Hole Oceanographic Institution, which invented and operates the acoustic buoys. WCS began the monitoring in 2016, and Equinor began supporting it in 2019.

“As a new industry, it is crucial that we establish best-in-class practices throughout the development phase of our projects from the start,” Siri Espedal Kindem, president of Equinor Wind US, said in a news release Wednesday announcing extension of the program.

“The data from this acoustic monitoring and our analyses clearly demonstrate that several large whale species are seasonally present, and some for extended periods of time in the New York Bight,” said Howard Rosenbaum, the project principal investigator and director of WCS’ Ocean Giants Program.

“We applaud Equinor and the Wildlife Conservation Society for expanding their partnership and ongoing commitment to environmental stewardship and understanding marine life — setting a strong example for how strategic collaboration can mitigate potential risks and support responsible project development,” said Doreen Harris, president and CEO of the New York State Energy Research and Development Authority.

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PJM Market Implementation Committee Briefs: Sept. 7, 2022

DR Data Proposal Rejected

VALLEY FORGE, Pa. — The PJM Market Implementation Committee narrowly rejected a proposed issue charge from curtailment service provider CPower Energy Management that would have sought to expand access to data from retail demand response customers.

Stakeholders cited pending legislative efforts at the state level and concerns about utilizing statistical sampling instead of collecting data from households directly. (See NJ Eyes Rules to Protect, Gather Advanced Metering Data.)

Paul Sotkiewicz, of E-Cubed Policy Associates, questioned if statistical sampling could be an adequate substitute for direct household data and said that the belief that residential use tends to be homogenous may be a poor assumption. If sampling was to become standard, he said that could discourage states from pushing smart metering technology down to the residential level.

“I don’t find it very appealing that either because somebody didn’t do their due diligence … that PJM and the rest of its membership should be beholden to that and have to settle for statistical sampling,” he said.

Two Alternatives on VOM Advance to MRC

Two competing proposals from PJM and Constellation Energy to address variable operations and maintenance costs advanced to the Markets and Reliability Committee meeting on Sept. 21.

The PJM proposal, which passed with more than 70% support, would include default adders for minor maintenance and operating costs, clarify the definitions of major and minor maintenance, create a new review process and timeline, and clarify the requirements for supporting documentation.

The Constellation package, which passed with 54%, contains the same provisions as the PJM document, but it would include nuclear refueling costs and associated major maintenance under a generator’s capacity offer rather than its VOM energy offering.

Constellation’s Jason Barker said that defining refueling as a variable cost is inconsistent with how maintenance is conducted on nuclear units.

“This is a significant change in that respect because they are deeming most, if not all, the maintenance done in a reactor fueling as variable,” when nearly all of it is fixed, he said. (See “Variable Operations & Maintenance Cost Development,” PJM Market Implementation Committee Briefs: Aug. 10, 2022.)

Rather than vote for their preference of the two proposals, Barker encouraged stakeholders to vote against them both, pushing the revisions back to the Cost Development Subcommittee for additional rewriting. He said those meetings tend to see less participation and said a better package could be formed there through input from more voices. Instead, the MRC will consider both proposals.

IMM, PJM to Collaborate on Manual Revisions Prior to MRC

The MIC endorsed a slate of manual revisions to conform with FERC’s order approving revised energy price formation rules (EL19-58, ER19-1486), but discussion regarding the impact some of the changes will have on hydropower resources led to a request that PJM staff work with the Independent Market Monitor to finetune the language.

The committee endorsed by acclamation revisions to manuals 11, 27, 28 and 29. But before it did, the Monitor raised concerns that the Manual 11 changes were inconsistent with the Operating Agreement’s provisions and would limit the amount that hydro resources could offer as reserves.

The Monitor did not have proposed revisions to present, and some stakeholders expressed frustration that its presentation was only posted the day prior to the meeting. Barker noted that the tight time frame before the Oct. 1 implementation of the manual revisions could make it challenging for hydro operators, such as Constellation, to get a firm understanding of any changes before they’re responsible for compliance.

PJM and Monitor staff pledged to work together, with input from hydro stakeholders, on a friendly amendment that the Monitor would offer at the MRC when the revisions are brought up for a vote at that committee.

Other MIC Business

Because other agenda items ran over their allocated time (See related story, PJM, Monitor Debate Black Start Fuel Requirements Proposals.), work on an IMM proposal addressing capacity offer opportunities for generation with co-located load was postponed. A special session of the MIC will be scheduled to continue discussion of the issue.

The MIC also reviewed PJM’s proposed capital budget, which would increase spending to $45 million, a $3 million increase over current funding. The budget was first presented at the Planning Committee the day before and was also shown to the Operating Committee the next day. (See related story, “Planning Committee Reviews Capital Budget,” PJM Planning Committee Briefs: Sept. 6, 2022.)

Finally, the committee endorsed routine revisions to Manuals 18 and 18B, deleting outdated information, correcting and clarifying existing provisions or practices, and adding administrative updates.

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PJM Operating Committee Briefs: Sept. 8, 2022

Cybersecurity Update

PJM Chief Information Security Officer Steve McElwee briefed the Operating Committee last week, saying that cyberattacks against the U.S. and its allies remain a principal concern. Although attacks from Russia and associated entities have declined, Iran has been increasing its offensives, he said.

Among the major forms of attack seen recently are ransomware, which encrypt a computer and lock users out of data and functionality, and distributed denial of service attacks, essentially bombarding a server with requests to overwhelm a network.

PJM has been hardening its systems by retiring weak encryption tools, blocking international and anonymous traffic and prioritizing external vulnerability remediation, McElwee said.

Committee Endorses Maximum Emergency Package

The committee overwhelmingly endorsed a package from PJM addressing the supply chain for generators and concerns regarding the impact of increased environmental restrictions on maximum emergency generation actions. The PJM option received 92% support over a second package from the Independent Market Monitor, which would have added clarifications and changed references to “fuel” to “fuel and consumables.”

The IMM proposal also would have allowed for resources with less than 10 days of fuel and consumables inventory to be made unavailable for economic dispatch, with a penalty equal to the daily capacity values.

Renewable Dispatch Proposal Vote Delayed

The OC agreed to postpone voting on a joint PJM/Monitor proposal intended improve the dispatch of renewable generators after several stakeholders expressed concern about certain elements.

The proposal would require intermittent resources with capacity commitments to offer economic maximum megawatts equal to or greater than their hourly forecast. Several stakeholders said this could result in renewable output being held back by an under-forecasted value being used.

Other stakeholders were concerned about the elimination of the curtailment flag, which PJM uses to indicate to generation operators that their units have been curtailed and that they should adjust their output accordingly. The proposal would instead use existing basepoints to reflect the RTO’s desired dispatch.

Several committee members said they did not share these concerns but that they would not oppose delaying a vote to address them.

PJM staff agreed to send the proposal back to the DER & Inverter-Based Resources Subcommittee for work and bring it back to the committee for a vote at its meeting next month. They said a one-month delay on approval would still allow for implementation before the second quarter of 2023.

Delays to Scheduled Go-live Date for PPL DLR

The scheduled go-live date for PPL’s dynamic line ratings has been moved out by two weeks, with implementation now slated for Sept. 27 for the day-ahead market and Sept. 28 for real-time. PPL had already delayed rollout from July to this week because additional work was needed for changes to its energy management system with its vendor. (See “PPL Delays DLR Implementation to September,” PJM Operating Committee Briefs: July 14, 2022.)

Review of IROL-CIP Solution Postponed

Discussion of creating a mechanism for generators to receive reimbursement for compliance with NERC reliability standard CIP-002-5.1 was postponed because of concerns raised by the Monitor.

The PJM proposal would have allowed generators deemed critical to interconnection reliability operating limits by NERC to submit their capital and recurring costs to PJM and the Monitor for review and possible monthly payments. According to the problem statement, designation as a critical generator can carry a “significant additional cost burden.”

PJM staff noted that they have adequate time to explore other avenues.

Committee Approves Slate of Manual Revisions

The committee approved several changes by acclamation, with little discussion and no debate:

  • tariff and manual changes to streamline the process of scheduling internal network integration transmission service; (See “Issue Charge OK’d on Internal NITS Process,” PJM Operating Committee Briefs: July 14, 2022.)
  • revisions to Manual 14D and Manual 13 to conform with NERC standards EOP-011, IRO-010 and TOP-003; and
  • changes to Manual 10, 12 and 13, associated with reserve price formation.
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PJM, Monitor Debate Black Start Fuel Requirements Proposals

VALLEY FORGE, Pa. — PJM and its Independent Market Monitor got into lengthy debates at two different committee meetings last week over each other’s proposed fuel requirements for black start resources (BSRs) as they tried to win last-minute stakeholder support.

Voting on the proposals opened online after the Operating Committee’s meeting concluded Thursday and will close Tuesday at 5 p.m. ET. In a unique situation, voting is open to both the OC and Market Implementation Committee; stakeholders who are members of both need only participate in one committee’s vote, and PJM will remove any double votes. A special joint teleconference of the committees is scheduled for Friday to review the results.

Because the issue was assigned to both committees, each heard identical presentations from PJM and the IMM last week — and sat through nearly identical debates on the proposals’ merits among RTO staff, Monitor Joe Bowring and stakeholders who were confused by certain elements. Both Wednesday’s MIC and Thursday’s OC meetings threatened to run long, but the committees’ respective chairs deferred or shortened other items on their agendas to keep things on schedule.

Both proposals are the culmination of a four-year-long process intended to ensure that BSRs are available when they are needed. They would create two tiers of service, the higher of which provided by fuel-assured BSRs. While the criteria of “fuel assured” varies by resource, they can include dual-fuel capability, on-site fuel storage and connections to multiple gas pipelines.

Each transmission zone would be required to have at least one fuel-assured BSR. Such resources would be selected based on their level of fuel assurance. Also included are additional reliability criteria to mitigate extreme cases in which the unavailability of non-fuel-assured BSRs would result in a large increase in zonal restoration time.

The main differences between the proposals were highlighted at last month’s committee meetings. The Monitor’s plan, for example, would not allow intermittent resources, other than run-of-river hydro, to be BSRs because they cannot currently meet the requirements. (See Members near Vote over PJM, IMM Black Start Fuel Requirements.)

At last week’s meetings, Bowring argued that PJM’s package of revisions — jointly proposed with Brookfield Renewable and the D.C. Office of the People’s Counsel — could result in overpayment for BSRs, as an existing hypothetically “perfect” BSR — one that meets all the physical standards to be fuel assured — would not be required to offer to provide the higher-tier service and meet the performance obligations that came with it; therefore, PJM would not recognize its fuel-assured status.

In such a scenario, Bowring argued that PJM would be required to select another fuel-assured BSR in the same zone in the procurement process, resulting in customers paying twice for the same service. He said all resources that already meet the physical standards to be fuel-assured should also be required to meet the proposed requirements to be designated as such, report on their current status and not receive payment if they cannot not provide the service.

“Customers are already paying these resources to be fuel assured,” Bowring said. “PJM should simply require those resources to meet that obligation.”

Several stakeholders took this to mean that the Monitor was proposing that all existing BSRs become fuel assured. Bowring repeatedly clarified that was not in the proposal, though he did state that all new black start resources should be required to be fuel assured.

PJM staff noted that every transmission zone already has at least one fuel-assured BSR. They acknowledged that the Monitor’s hypothetical scenario was possible, but they argued it was highly unlikely, as the RTO would not necessarily be required to procure another fuel-assured resource and that it could look for other mitigation steps. Bowring responded that the fact that it’s possible “makes my point for me.”

“The zones meet the fuel-assurance requirement based on resources that already meet all the physical standards to be fuel assured but that are not required to become formally fuel assured under PJM’s proposal,” he said. “That is the ‘paying twice’ problem.”

If approved the proposals would go before the Markets and Reliability Committee for a first read next week and voted on at the committee’s meeting next month.