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November 16, 2024

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NEPOOL Splits with ISO-NE over Pumped Storage Eligibility for IEP

ISO-NE will not incorporate an amendment approved by the NEPOOL Participants Committee to include pumped storage resources in its Inventoried Energy Program, yet another wrinkle into the implementation of the chronically uncertain winter fuel security program.

The D.C. Circuit Court of Appeals in June ordered FERC and ISO-NE to narrow the eligibility of the program, removing certain resources — including hydroelectric — that the court found would benefit from the IEP without any functional change to their behavior. (See Court Strikes a Blow to ISO-NE Winter Plan.)

ISO-NE has moved to comply with that order by preparing a filing to send to FERC for consideration.

But Brookfield Renewable Partners appealed to the PC during its Wednesday meeting to allow pumped storage to remain eligible for the program, arguing that the technology shouldn’t be ruled out.

Brookfield operates the 633-MW Bear Swamp pumped storage facility in Western Massachusetts.

“Brookfield’s view is that when the court ruled to remove hydroelectric resources, it contemplated conventional hydro with pondage but did not contemplate pumped storage hydro operating as storage (i.e., daily pump/charge to generate/discharge),” Aleks Mitreski, the company’s senior director of regulatory affairs, said in a presentation to the PC.

The economic rationale for when to operate pumped storage hydro and a chemical battery resource, for example, is identical, he argued; either all storage should be allowed to participate, or none.

The PC voted to approve Brookfield’s amendment to the ISO-NE compliance filing, which would simply specify that pumped storage is allowed to participate in the IEP. But ISO-NE will ultimately not include the amendment in its filing, the grid operator said.

“We believe the directive from FERC was clear that hydroelectric resources are not eligible under this program, and our filing will adhere to that directive,” ISO-NE spokesperson Matt Kakley said in an email to RTO Insider. “That being said, we welcome FERC’s resolution on this issue and will be prepared to implement the program in accordance with the commission’s ruling.”

The filing isn’t eligible for “jump ball” filings, which would formally pit ISO-NE’s stance against NEPOOL’s. Instead, NEPOOL will file comments to FERC explaining the votes shortly after ISO-NE submits its filing, according to NEPOOL counsel.

Brookfield has estimated that the additional cost to the IEP of inserting pumped storage back into eligibility is about $1.5 million.

Other PC Action

The committee briefly discussed a proposal to raise the age limit for members of the ISO-NE Board of Directors to 75, but it ultimately tabled it for further consideration at its next meeting in December.

It did approve the Hydro-Québec interconnection capability credit and installed capacity revenue values for the upcoming annual reconfiguration auctions.

It also approved by voice vote conforming changes to ISO-NE’s Financial Assurance and billing policies to reflect the implementation of the IEP.

Finally it rejected a request for a waiver of the NEPOOL Generation Information System Operating Rules by NuPower Cherry Street, which has been trying to get corrected renewable energy certificates for February and March of this year.

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MISO Membership Re-elects Incumbent Directors for 2023

MISO’s membership voted to retain three incumbent directors, ensuring the board of directors’ lineup will remain the same next year.

The grid operator said Thursday that current directors H.B. “Trip” Doggett, Barbara Krumsiek and Todd Raba will take their seats at MISO’s U-shaped board table for their final three-year terms.

The trio joined the board on Jan. 1, 2017. Board members are limited to serving three, three-year terms. Raba currently chairs the board.

“Chair Raba and Directors Doggett and Krumsiek have a thorough understanding of the challenges facing our industry, and I look forward to continuing our work together to meet those challenges,” MISO CEO John Bear said in a statement. “Their expertise and institutional knowledge will serve us well as we accelerate our reliability imperative efforts.”

MISO’s board consists of nine independent directors and the CEO.

Although the Nominating Committee interviewed other candidates this year, it ultimately decided to advance for consideration only the incumbent directors up for reelection. (See “Board Will Remain Same in 2023,” MISO Board Week Briefs: Sept. 12-15, 2022.)

MISO membership cast votes this year from Sept. 22 to Oct. 28. The board elections are conducted electronically and require a minimum 25% participation rate among its nearly 140 voting-eligible members to achieve quorum. Members can vote for, against or abstain from selecting any of the candidates. Candidates must earn a majority of supportive quorum votes to be installed.

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Mass. DPU Hears Opposing Views on OSW Finances

Avangrid’s (NYSE:AGR) declaration that the Commonwealth Wind project is no longer financially viable is potentially the latest delay in a long-running effort to site wind power off the coast of Massachusetts.

But advocates for offshore wind are optimistic it is likely only a temporary setback. The company itself signals its intention to continue with the project — but it wants to renegotiate its payments from the electric distribution companies (EDCs) that will buy the power.

Avangrid’s attorneys in an Oct. 20 filing asked the state Department of Public Utilities to suspend for one month its review of power purchase agreements for the 1.2-GW project in light of recent interest rate hikes, inflation and supply chain shortages.

“Commonwealth Wind’s purpose in pursuing this motion is to advance the project in an expeditious, transparent and ultimately successful manner, not to cause delay,” the company said. “Commonwealth Wind remains committed to working with the EDCs to keep the PPAs on track to obtain approval and to minimize the impact of any delays on that process.”

The move came after the three EDCs — Eversource Energy (NYSE:ES), National Grid (NYSE:NGG) and Unitil (NYSE:UTL) — and the state Attorney General’s Office asked the DPU to set remuneration for Commonwealth at 2.25% in accordance with a state law enacted in August. When the process began, remuneration was capped at 2.75%.

Avangrid CEO Pedro Azagra Blazquez told financial analysts during an Oct. 26 earnings call that despite all the challenges facing it, offshore wind remains the cheapest energy alternative in New England. Avangrid, he said, renegotiates many projects, and the changes it is seeking here are “modest and achievable.”

“We’re not suggesting we want to make more money. We’re just suggesting we need to find these projects back to the return we were expecting, and basically not to lose money,” he said.

Avangrid in September announced it was pushing the target completion date for Commonwealth to 2028 because inflation was running at 40-year highs. It said the extra year would allow it to take advantage of rapid advances in turbine technology and install units with 17 to 20 MW of capacity, rather than the 13-MW units that are today’s cutting-edge technology.

Meanwhile, Mayflower Wind Energy on Oct. 27 submitted a motion similar to Commonwealth’s, asking the DPU to suspend review of its PPAs with the same three EDCs for 30 days, or perhaps longer, to consider whether its own offshore wind project is economical and financeable under the current terms.

Possibilities to explore would include cost-savings measures, tax incentives under the Inflation Reduction Act and higher payments by the EDCs, Mayflower’s attorneys wrote.

In a separate motion, Mayflower also supported Commonwealth’s request for a one-month delay.

Offshore wind is an important part of the decarbonization strategy in Massachusetts.

Danielle Burney, deputy communications director of the Massachusetts Executive Office of Energy and Environmental Affairs, told RTO Insider on Tuesday that state leaders are monitoring developments.

“The Baker-Polito administration remains focused on increasing clean, affordable energy options and is prioritizing finalizing the latest offshore wind procurement to meet [Massachusetts’] climate goals and the statutory requirement to procure 5,600 MW of offshore wind by 2027,” she said via email.

“Avangrid’s Commonwealth Wind project, once completed, will serve as a critical component of these efforts and will greatly assist the state in achieving net zero in 2050. The administration is closely monitoring the recent efforts by Avangrid to explore altering the power purchase agreements that were previously executed with the electric distribution companies for the project.”

Amber Hewett, offshore wind energy program director for the National Wildlife Federation, said many factors are currently occuring at once, further complicating the already difficult process of creating a large and viable offshore wind industry in the U.S. and all the supporting infrastructure that it will need, which mostly does not exist.

“I’m staying hopeful that this is simply an unfortunate result of the global economy,” she said Wednesday.

Hewett, who has been advocating for offshore wind for nearly a decade, said proposals have been floating around Massachusetts for nearly two decades, so it is important to take a longer view and focus on the progress being made.

Avangrid is also 50% owner of the 800-MW Vineyard Wind I, which will be the first large-scale offshore wind project in the U.S. when it goes online next year, off Martha’s Vineyard. Hewett is cautiously optimistic that Avangrid wants to continue to move forward with the Commonwealth contract rather than scrapping and renegotiating it.

“So, this is hopefully a one-month setback, which is not much,” she said.

Tuesday was the deadline to submit comments on the matter to the DPU.

Avangrid Senior Vice President Saygin Oytan said in a filing that the estimated capital and debt costs of Commonwealth have increased by hundreds of millions of dollars and the project now has negative value. A modest increase in the PPAs, he wrote, would allow the project to obtain financing, still lower ratepayer bills and still have the second-lowest per-megawatt hour contract price among offshore wind projects that have been procured in the U.S.

If the project had to be put to competitive re-solicitation today, he said, the PPAs obtained would almost certainly be significantly higher than even the “modest increase” that Avangrid believes is needed. He added that he believes many other offshore wind projects nationwide are facing the same financial pressures.

The Attorney General’s Office submitted a two-sentence letter Tuesday restating its earlier brief, which called for the PPA remuneration cap to be cut from 2.75% to 2.25%.

The three EDCs filed a two-paragraph letter Tuesday saying there was no need for a one-month pause to renegotiate the PPAs because they have no intention of renegotiating.

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COP27: Will Countries Step up on Climate, Financial Commitments?

The 27th U.N. Climate Change Conference of the Parties (COP27) kicks off Sunday in Sharm el-Sheikh, Egypt, with an expected 30,000 attendees all focused on reinvigorating countries’ action on climate commitments in the face of worldwide inflation, the ongoing Russian invasion of Ukraine, and growing fears of food and energy insecurity.

Host country Egypt has laid out ambitious goals for the conference, calling for action on a range of pledges made at last year’s COP26 in Glasgow, Scotland, from reductions of greenhouse gas emissions, to solid progress on international financing for adaptation and “loss and damage.”

But Nisha Krishnan, lead for climate resilience at World Resources Institute Africa, sees significant headwinds going into the conference, such as escalating national debt in developing countries. “We have almost half of the [African] continent going into high debt and debt distress situations,” Krishnan said during a COP preview webinar on Wednesday, sponsored by the Environmental and Energy Studies Institute. “This is obviously influencing what is expected out of COP, as well as what can be delivered, particularly financially this year. …

“We just no longer have a climate conversation,” she said. “It has become an economics and finance conversation.”

Krishnan and other energy experts going to the conference agreed that expectations for Sharm el-Sheikh are muted compared to last year’s COP26 in Glasgow, where attendees reached an agreement aimed at keeping global warming to 1.5 degrees Celsius by 2050, the goal set in the Paris Agreement in 2015.

“One of the things about this COP is that it is almost a process COP,” Krishnan said. “There are plenty of things that need to be discussed this year; that we’ll need to announce them next year or the year after. … This is where the hard work gets done.”

But Ryan Finnegan, deputy manager for U.S. climate policy at the World Wildlife Fund, believes that events and action outside the official negotiating halls could “end up being more impactful, both for the delivery of strong COP outcomes [and] achieving implementation goals on the ground.”

“Since the Paris Agreement was adopted in 2015, we’ve seen a real robust increase in subnational and nonfederal participation and interest in tracking events that are happening at these international negotiations,” Finnegan said.

As countries move toward implementing their climate commitments amid calls for transparency and accountability, “there is interest not only at the national government level, but at the institutional and organizational level [for] using COP as a mechanism to force announcements or share progress points, to share expertise,” Finnegan said.

The U.S. delegation will include at least three state governors (still unnamed) and dozens of state officials and lawmakers, he said.

COP veteran Tracy Bach, co-focal point of the Research and Independent Non-Governmental Organizations (RINGOs) of the U.N. Framework Convention on Climate Change (UNFCCC), also pointed to the agenda of themed days that Egypt has organized.

“The Egyptian presidency is focusing on solutions,” Bach said. “The idea here is, in addition to what we know are the main agenda topics … they’re bringing in a wide array of experts, a fair number of them drawn from Africa as well as the global south … to keep fueling the negotiations and expanding the areas of convergence.”

The schedule includes a Youth and Future Generations Day on Nov. 10, Gender Day on Nov. 14 and Biodiversity Day on Nov. 16.

Biden, Midterms and the IRA

COP27 could also see a potential test of U.S. leadership on global climate action, with the credibility and momentum created by the passage of the Inflation Reduction Act and its $369 billion in clean energy funds at risk pending the outcome of the midterm elections on Tuesday.

While Republicans have acknowledged that even if they win control of the House of Representatives and Senate, they will not be able to repeal the law, they could try to pick off specific provisions, according to E&E News.

The midterm results will almost certainly be a factor in President Biden’s appearance at the conference, where he is scheduled to speak on Nov. 11. In the run-up, his administration has been rolling out programs and funding from the IRA, such as the recent $9 billion in rebates to help homeowners pay for energy-efficient home upgrades. (See related story, States to Receive $9B from IRA to Boost Home Efficiency Upgrades.)

But the IRA in and of itself me ay not be enough to build trust with some countries. Multiple analyses of the law, such as one from the Rapid Energy Policy Evaluation and Analysis Toolkit project based at Princeton University, have found that if fully implemented, the law would get the U.S. only four-fifths of the way to its 2030 goal of cutting its emissions 50 to 52% below 2005 levels.

It gives the U.S. a stronger hand going in, Bach said. But “the U.S. still has a long way to go in building trust in these negotiations.”

The IRA is “a domestic effort and has no bearing on the international climate finance piece where the U.S. might be worse in terms of its contributions,” Krishnan said.

Loss and Damage

A key test of U.S. credibility will be its position on “loss and damage,” which is one of COP27’s likely flash points between developed and developing nations. The issue turns on whether developed nations, like the U.S., which have been the world’s heaviest GHG emitters, should pay some form of restitution to developing nations that have sustained irreparable damages from the extreme weather caused by climate change.

The issue is on the conference’s provisional agenda, which has already raised concerns about the scope of any discussions, Krishnan said. The UNFCCC has appointed “two co-facilitators, which are Germany and Chile, to help lead a conversation and discussions around what this agenda item should be, such that there is no agenda fight on the first day and that the agenda is adopted,” she said.

The U.S. has dragged its feet on setting up an official structure or mechanism to finance a loss and damage fund, pushing for a watered-down statement in the final agreement at COP26, calling for “dialogue” on this issue. Special Climate Envoy John Kerry took some significant flack in September suggesting that with limited financing available from governments, funds for mitigation and adaptation should be the top priorities for international climate action.

Kerry has since backpedaled a bit. In a recent interview with Time, he said that the U.S. will take part in conversations on loss and damage at Sharm el-Sheikh and is open to talking about “potential financial arrangements” to help developing countries.

But some African stakeholders say loss and damage may not be the right approach. Speaking at an Atlantic Council webinar on Wednesday, Ayaan Adam, senior director and CEO of the Nigeria-based African Finance Corp., said the focus for international finance should be on resilience and addressing Africa’s massive “infrastructure deficit.”

“What we’re saying is, ‘Don’t build it in the old way.’ [If you] integrate resilience, you don’t have loss and damage,” Adam said. “So it’s not about loss and damage. It’s about understanding the science. … It’s a prevention, so you avoid loss and damage.”

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CAISO Reports on Summer Heat Wave Performance

CAISO got through September’s record-setting Western heatwave without blackouts by importing electricity, calling on the public to conserve energy and coordinating with utilities and government agencies, the ISO said in its 2022 Summer Market Performance Report published Wednesday.

During the 10-day stretch of triple-digit temperatures, from Aug. 31 to Sept. 9, CAISO experienced unprecedented demand, reaching a new high of more than 52 GW on Sept. 6. Demand in CAISO’s Reliability Coordinator footprint, which covers much of the Western Interconnection, set a record at more than 130 GW.

“The heat wave of September 2022 was one of the most challenging events in the history of the ISO grid,” CAISO CEO Elliot Mainzer said in a news release. “During events like these, it is important to carefully and transparently examine what went well and to identify issues to address and lessons learned that can be carried forward into future operations.”

In the report, CAISO said new resources procured since the rolling blackouts of August 2020, when demand reached 46 GW, have bolstered reliability. The ISO’s territory has added more than 3,500 MW of lithium-ion batteries in the past two years to store the ample solar power produced in the daytime in California.

Blackouts and near misses in the last three summers occurred during heat waves when solar power ramped down in the evening, but demand remained high from air conditioning use.

CAISO cited “enhanced coordination, awareness and communications internally and with neighboring balancing authority areas,” including participants in the ISO’s Western Energy Imbalance Market, as another reason it was able to keep the lights on. The increased coordination extended to investor- and publicly owned utilities, the California Public Utilities Commission, the state Energy Commission and the governor’s office, it said.

Market enhancements enacted the past two years helped, too, the report said. CAISO has reworked its scheduling priorities, beefed up its resource sufficiency evaluations and adopted “market pricing designed to incentivize generation during periods of high demand,” it said.

The major factor in avoiding blackouts on Sept. 6, the most strained day of the year, was an emergency text message sent out to 27 million cell phones by the Governor’s Office of Emergency Services urging consumers to conserve electricity in the face of imminent blackouts.

When the text message went out at 5:45 p.m., CAISO already had declared a stage 3 energy emergency and told utilities to arm for load shed, but it had not given the final order to start rotating outages.

Within 20 minutes of the alert, demand plummeted by 2,385 MW, to 48 GW, narrowly avoiding blackouts.

Imports from the Pacific Northwest and parts of the Desert Southwest, where the heat was less extreme, also played a large role in maintaining grid reliability, CAISO said.

“This included net imports of more than 6,500 MW during net peak on September 6 as well as an additional 1,000 MW from WEIM transfers,” the report said. “The ISO both received emergency assistance energy and provided it to other balancing authority areas experiencing stressed system conditions.”

Average daily electricity prices soared to $600/MWh with prices topping $2,000/MWh in some parts of the state. In comparison, the average locational marginal price for September was $106 MWh, it said.

Lessons Learned

The ISO said it learned lessons from the crisis that included the need to improve the use of batteries in the real-time and day-ahead time frames to optimize dispatch and ensure they are used most effectively in heat waves.

“The high prices experienced during the heat wave presented new scenarios for the ISO to learn about the complexities and challenges of managing battery state-of-charge,” the report said.

Batteries that bid above $150/MWh to charge during the day were insufficiently charged when they were needed at nightfall because of a software glitch, CAISO said.

“Despite this, ISO operators were able to position storage resources during the September 2022 heat event to meet net-peak requirements by leveraging minimum state-of-charge market functionality that was implemented as part of a package of 2021 summer readiness enhancements,” it said. “The ISO has now fixed the software issue.”

Another software problem “unintentionally curtailed higher-priority exports … while allowing lower-priority exports to flow,” CAISO said. “Although the ISO largely caught and reversed the error in high-priority curtailments, it deployed a software upgrade on Oct. 13 to ensure the appropriate export curtailment order is followed going forward.”

In addition, there was under- and over-counting of capacity in the WEIM’s resource sufficiency evaluation that resulted in CAISO failing the test two times on Sept. 6 instead of the six times it should have failed, the report said.

Because of the counting errors, “transfers into the ISO were limited, but not material,” it said. “This is because the transfer limits were well above the actual available transfers of 1,000 MW from the WEIM, so transfers into the ISO were not restricted.”

CAISO said it has corrected some of the counting problems and is exploring additional fixes.

The ISO has scheduled a stakeholder call for Nov. 17 to review the analysis and answer questions.

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Crane to Retire, Butler to be New CEO of Exelon

Exelon announced a leadership transition on Wednesday and reported “solid” third-quarter financials on Thursday.

Current President and COO Calvin Butler Jr. will succeed Chris Crane when he steps down Dec. 30 as CEO and director of the board of the Chicago-based utility.

Crane, who has been Exelon’s CEO since 2012, said he had to accelerate his retirement plans because of significant health issues.

Butler has held a series of leadership roles since joining the company in 2008. He was named executive vice president and chief operating officer in February 2022 and was promoted to his current roles just two weeks ago.

Crane presided over his final quarterly earnings call Thursday, updating industry analysts on the company’s outlook and performance, which he described as “solid.”

For the third quarter of 2022, the company reported GAAP net income of $0.68 per diluted share and adjusted (non-GAAP) operating earnings of $0.75, up from $0.47 and $0.53, respectively, in the same quarter in 2021. For the first nine months of this year, Exelon reported $1.65/share, up from $1.33 in the same period of last year.

The company narrowed its guidance for the full 12 months of 2022 to $2.21-$2.29 in adjusted (non-GAAP) operating earnings per share.

Like the rest of the Nasdaq Composite, Exelon’s stock (NASDAQ:EXC) is near a 52-week low. The share price was down 2.84% in heavier-than-average trading on Thursday as the Nasdaq Composite declined 1.73%.

During Thursday’s conference call, Crane addressed the monumental transition to clean energy underway in the electric utility industry.

Exelon, he said, is well-positioned to lead and benefit from the shift.

“Exelon offers an unparalleled exposure to that opportunity,” Crane said. “We serve more electric and gas customers than any other utility in the country in some of the largest cities of the country. We have earned the trust of our customers and our commissions by consistently reliably providing top-notch operation performance.

“And we live our values with steady commitments to our path-to-clean goal as well as through environmental advocacy and support for our communities in a strong governance model. As a result, there is a tremendous demand and support for investments we expect to make in our communities, which, as I said earlier, totals $29 billion of capital from 2022 to 2025.”

‘Privilege and Responsibility’

Crane has spent his entire career in the energy industry, joining ComEd in 1998, shortly before it became part of Exelon.

He was named Exelon’s chief nuclear officer in 2004 and took over leadership of its fossil, hydro and renewables facilities in 2007.

Crane was named president in 2008 and CEO in 2012. Under his leadership, Exelon merged with Constellation Energy and Pepco Holdings in 2012 and 2016 to become the largest U.S. energy company by customer count.

Also on his watch, ComEd became embroiled in a multiyear bribery scandal at the Illinois Capitol, allegedly forking over $61 million in return for legislation that boosted its profits and bailed out its money-losing nuclear plants. A federal investigation ultimately led to the indictment of several former Exelon executives and a $200 million fine for the company in 2020.

Crane’s successor has three decades of experience in the utilities industry and in regulatory, legislative and public affairs.

Early in his career, Butler worked in government affairs at Central Illinois Light Company. He later had senior leadership roles with R.R. Donnelley, a print, digital and supply chain company. He joined Exelon in 2008 and held various leadership roles at ComEd and Baltimore Gas and Electric before becoming BGE’s CEO in 2014.

He holds a bachelor’s degree from Bradley University, a juris doctor degree from Washington University School of Law and an honorary doctorate of humane letters from Morgan State University.

“Leading Exelon is a privilege and responsibility that I take very seriously,” Butler said in a news release. “Chris is a tremendous leader, mentor and friend. As our world has been undergoing significant change, so too has the energy industry, and Chris has been at the forefront of that evolution. At Exelon, we are uniquely positioned to lead the nation and our industry to a clean energy future that is safe, reliable, affordable and equitable for all. I appreciate the Board’s confidence in me and will do everything I can to serve our customers and communities, keep our employees safe and move the energy industry forward.”

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NERC’s DER Strategy Focuses on Industry Education, Collaboration

In a new report released this week, NERC warned that the bulk power system is in the middle of a major transformation because of the spread of distributed energy resources, creating a learning curve for which stakeholders are in danger of falling behind.

In the Distributed Energy Resource Strategy document published Tuesday, NERC said the ongoing “influx of DERs presents potential benefits as well as challenges for grid reliability, resilience and flexibility,” noting that the cumulative capacity of distributed solar facilities is set to rise from about 25,000 MW last year to more than 60,000 MW by 2031. The organization said its goal in presenting the report is to outline “current and future strategic actions” to ensure the grid can be operated reliably as these resources’ share of generation grows.

The new report is similar to a document NERC produced in September, detailing the organization’s risk mitigation strategy for inverter-based resources, a class of generators that includes large solar and wind farms. (See NERC Outlines IBR Risk Mitigation Strategy.)

NERC’s System Planning Impacts from DERs (SPIDER) Working Group has played a major role in the ERO Enterprise’s efforts to adapt the grid for the impact of DERs. The group defines DERs as “any source of electric power located on the distribution system,” which refers to electrical facilities located behind a transmission-distribution transformer that serve multiple end-use customers. In practice, this most often refers to rooftop solar panels and storage technology at businesses or homes.

DERs are attractive for end users because they offer the opportunity to reduce electric bills and provide some chance of operating independently in the event of a service outage; they can also lighten the burden on utilities during periods of high demand, decreasing the risk that interventions like load shedding will be needed. In a report issued in August, SPIDER noted that because they sit behind the meter, DERs have traditionally been viewed as a part of the distribution system only, with little or no impact on the broader bulk power system. (See NERC’s SPIDER Group Warns of Modeling Difficulties for DERs.)

However, the new report warned that the installation of these resources on the grid has proceeded much faster than BPS planners’ understanding of their potential impacts to reliability. NERC’s DER risk mitigation strategy is primarily designed to help stakeholders share their knowledge and push forward their collective expertise on the subject.

Core Tenets Underlying Strategy

The strategy comprises four core tenets. First is DER modeling; according to the report, SPIDER’s interactions with industry experts have “identified that a lack of DER modeling information, tools and established planning practices is limiting [utilities’] abilities to accurately incorporate DER models into planning assessments.” NERC said the group’s efforts in this category will primarily focus on industry guidance, but they will also require changes to reliability standards that relate to modeling in order to ensure planners have the appropriate DER data for modeling purposes.

Another tenet is to ensure that future studies of BPS reliability incorporate the effects of DERs in aspects including the pre-disturbance base case setup, selection of reliable contingencies and analysis of how aggregate DERs will respond to large-scale grid disturbances. SPIDER is currently working to develop a reliability guideline to encourage entities to account for DER growth in their studies; NERC is updating its standards to “ensure … requirements are adequate and clear on how to model, study and assess” the impact of DERs on planning assessments, with further standards updates likely to come in the future.

NERC is also studying the risks associated with the next core tenet, the operational impacts of DER — particularly as it relates to decentralization and the shift of significant amounts of generation to the distribution system. SPIDER is also developing a white paper focused on coordination between transmission and distribution entities to improve BPS reliability.

Finally, the last tenet of the strategy is the contribution of regulatory bodies, particularly FERC, to the conversation. NERC pointed to FERC’s Order 2222, which required RTOs and ISOs to open their markets to DER aggregations, as introducing “unique operational benefits and challenges for grid planners and operators” and showing that other stakeholders will not wait for the ERO Enterprise to take the lead on DERs. The report observed that further regulatory action may target other areas of the ERO’s purview, such as reliability standards, training and education, and cybersecurity.

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Enable in Rear View, OGE Looks to Improve Reliability

OGE Energy management told financial analysts Thursday that it has completed its exit from the Enable Midstream Partners joint venture with the final sale of its interest units, allowing the company’s investors to focus on “a premium electric utility business.”

CEO Sean Trauschke did not sound disappointed during the company’s third-quarter earnings call that it would be the last in which he discussed midstream financial results, saying he wanted to “take a moment to reflect on the end of what has been a decade-long effort to close this part of our business and move forward.”

OGE, and CenterPoint Energy, completed a $7.2 billion sale of Enable to Energy Transfer Partners in December 2021. (See OGE, CenterPoint Complete Enable’s Disposal.)

The company is using the proceeds from the sale to pay down short-term debt and plan for the future by protecting customers with an equal focus on reliability and affordability. It has also increased its storage positions to increase its physical supply of natural gas, one of OGE’s key learnings from the February 2021 winter storm.

“At the end of the day, we’re accountable to making sure that energy is flowing to all of our customers, and we want to control that,” Trauschke said. “We want to make sure that we’re in charge of that, and we don’t want to rely on others to support us.”

OGE reported earnings of $262.8 million ($1.31/share), as compared to $252.5 million ($1.26/share) for the same quarter a year ago, attributed mostly higher operating revenues driven by warmer weather. The earnings exceeded analysts’ expectations of $1.16/share.

The company’s share price was trading at $37.07 in after hours, a gain of 69 cents on the day.

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Multiple Seaports Needed to Support Calif. OSW Goals

To meet its target of 25 GW of offshore wind energy by 2045, California will need about 1,300 floating wind turbines, along with seaport sites to support production and operation of the massive structures, speakers said during a workshop.

Potential locations for those sites were the focus of a workshop on Monday hosted by the California Energy Commission (CEC). The commission is facing a June 30, 2023, deadline to complete a strategic plan for offshore wind, including a blueprint for improving waterfront facilities to support OSW development.

Seaport sites are needed for fabrication and assembly of wind turbine components, a process that requires sheltered harbor space, wide areas, deep, navigable water, and the capacity for heavy loads, said Matt Trowbridge, an engineer with Moffatt & Nichol, a port infrastructure consulting firm.

Other sites may serve as operations and maintenance facilities for the turbines once they’re in place, Trowbridge said during the workshop. These sites will ideally be as close as possible to the wind farms.

California will need an estimated 1,300 floating wind turbines to meet the 2045 target of 25 GW, Trowbridge said, and potentially 10 or more seaport sites to support them. One port might be able to accommodate multiple support sites, he noted.

Currently, California doesn’t have any such sites, he said.

“There is no existing port terminal on the U.S. West Coast that can currently support offshore wind,” Trowbridge said. “There’s space available in the ports, but no facility is adequate for offshore wind without significant investment.”

Searching for Sites

Trowbridge said 17 major ports and harbors have been contacted to see if they’re interested in participating in OSW and, if so, whether they have space to do so. The results of the survey are “promising,” Trowbridge said, but details won’t be released until the ports have a chance to weigh in on the findings.

Small craft harbors are also being explored as potential sites for OSW operations and maintenance.

“We’re trying to turn over every stone,” Trowbridge said. “We’re looking at every possibility to try to identify the pros and cons and the best path forward.”

But Trowbridge emphasized that the search for OSW support sites is not intended to displace existing uses. Rather, the study is looking for undeveloped or underutilized sites.

The discussion of OSW support sites comes as the U.S. Bureau of Ocean Energy Management plans a Dec. 6 auction of five leases off the Northern and Central California coasts. (See BOEM Sets California Offshore Wind Auction Date.) Two leases, with a combined potential for about 1.6 GW of wind energy, are in the Humboldt Wind Energy Area off the coast of Northern California. Three leases in the Morro Bay Wind Energy Area have a combined potential of about 3 GW.

Because the Morro Bay lease area is far from existing ports, the State Lands Commission is studying whether there’s a suitable site for a new port between the San Francisco Bay Area and Long Beach.

So far, that option doesn’t seem viable, although it hasn’t been ruled out, Trowbridge said. Much of the coastline was deemed unsuitable because it’s near a residential area, a military base, a state park or national forest, or a marine sanctuary. And while the study hasn’t been completed, it appears that building a new port in one of the remaining areas would be less feasible than developing a site at an existing port.

The port infrastructure study won’t stop at identifying potential OSW support sites. Additional steps will include looking at improvements needed at the sites and potential impacts.

Head Start at Humboldt

The Humboldt Bay Harbor, Recreation and Conservation District is actively exploring playing a role in the OSW industry, Rob Holmlund, the district’s director of development, said during the workshop.

Humboldt Bay’s Northern California location is between two wind “hot spots,” Holmlund said, and the harbor has the potential to support OSW in both the Morro Bay and Humboldt wind energy areas. The harbor lacks constraints such as limited channel width or depth, or bridges that could block turbine transport, he said.

The Port of Humboldt Bay developed a conceptual master plan for the site, which was followed in March by a $10.45 million CEC grant to prepare the bay for offshore wind. The grant will help pay for preliminary engineering and design work, site surveys and special studies, environmental impact assessments, early construction, and environmental mitigation.

Last week, the port announced it will exclusively negotiate with Crowley Maritime to develop and operate the Humboldt Bay Offshore Wind Heavy Lift Marine Terminal. The terminal will support tenants in the manufacturing, installation and operation of offshore wind floating platforms, as well as the use of large heavy cargo vessels and crewing and marshaling services in the ocean.

The agreement with Crowley involves a 98-acre Phase I, with an option for future phases.

AB 525 Requirements

Port infrastructure development is one piece of a five-part strategic plan for OSW required by last year’s Assembly Bill 525. Other sections of the plan will focus on sea space identification, transmission planning, permitting and potential impacts of OSW.

AB 525 also requires the CEC to determine the state’s maximum feasible capacity for OSW and set planning goals for 2030 and 2045.

In August, CEC adopted the nation’s most ambitious long-term offshore wind goals, with targets of up to 5 GW by 2030 and 25 GW by 2045. (See Calif. Adopts Country’s Most Ambitious OSW Targets.)

CEC will accept comments related to the workshop through Nov. 18 at 5 p.m. Comments may be submitted here.

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FERC Rejects Iowa Coalition’s Complaint over ITC Structure

FERC said Wednesday that ITC Midwest can keep the capital structure it has had in place since 2007, blocking an Alliant Energy-led complaint in the process (EL22-56).

Alliant’s coalition of Iowa utilities, industrial customers and consumer advocates in May challenged ITC’s capital structure as excessive and too skewed toward equity. They asked the commission to reduce ITC’s equity ratio to 53% and establish hearing and settlement procedures to grant refunds to transmission customers. (See Alliant Energy Leads Challenge of ITC Midwest Capital Structure.)

ITC Midwest, an independent transmission company, uses a capital structure reflecting 60% equity and 40% debt in its formula rate to calculate its overall rate of return.

FERC said the coalition did not prove that the utility’s existing capital structure is unjust and unreasonable. It ruled that ITC’s target capital structure is comparable with those used by other investor-owned MISO transmission owners and is not unusually high.

The commission also pointed to its policy of using the actual capital structure “of the entity that provides the financing, whether that entity is the utility or its parent company.”

Iowa customers argued that FERC’s approval of ITC’s 60% target equity ratio 15 years ago was “based on the expectation that ITC Midwest would have its own credit rating separate from its parent company,” ITC Holdings. They argued that both the utility and MISO have undergone seismic changes since the capital structure was approved, with ITC Midwest’s rate base increasing 550% since 2008 and ITC Holdings being acquired by Fortis, Inc.

Both the Iowa Utilities Board and the Minnesota Department of Commerce intervened at FERC in support of the complaint.

However, the commission said the Iowa customers didn’t establish that either ITC Holdings or Fortis guarantees ITC Midwest’s debt or that they would assume its debt obligations if the utility defaulted. FERC also said that contrary to allegations, ITC Midwest has a different bond rating from ITC Holdings and Fortis.

“Although ITC Midwest does not have its own management-level employees and relies on ITC Holdings’ management, this does not demonstrate that ITC Holdings guarantees ITC Midwest’s long-term debt,” FERC said.