Constellation NewEnergy (CNE) has agreed to pay $4.7 million in penalties for violating CAISO tariff provisions related to the treatment of imports intended for resource adequacy.
FERC on Tuesday issued an order approving a settlement in which the company will pay a $2.4 million civil penalty to the U.S. Treasury Department for violating the RA rules and associated FERC regulations. The company must also disburse $2.3 million in funds to CAISO, which will be distributed to network load (IN22-4).
A subsidiary of Constellation Energy (NASDAQ:CEG), CNE describes itself as “a full-service energy company that provides comprehensive and innovative solutions to meet the energy needs of governmental, large commercial, institutional and industrial customers.”
At issue in Tuesday’s order was CNE’s past practice — until 2017 — of not sourcing electricity for import before selling energy into CAISO’s day-ahead and real-time markets.
“CNE did not have a specific source of power linked to a specific RA import prior to submitting offers and instead intended to rely on the bilateral spot energy market if needed,” the commission wrote. “As a part of this business practice, CNE regularly offered its import capacity into the CAISO day-ahead market at $399/MWh. If those day-ahead offers cleared, CNE would reoffer the import capacity in the real-time market at either $899/MWh or $999/MWh.”
In June and August 2017, CNE failed to meet RA-related dispatches in California because it could not secure electricity in the bilateral market, prompting it to end the practice.
But FERC’s Office of Enforcement found that CNE’s practice violated the commission’s market behavior rules — specifically 18 C.F.R. section 35.41(a) — and sections 4.2.1, 37.2.1.1, and 37.3.1 of the CAISO tariff.
The commission explained that section 35.41(a) states that “where a seller participates in a commission-approved organized market, seller must operate and schedule generating facilities, undertake maintenance, declare outages, and commit or otherwise bid supply in a manner that complies with the commission-approved rules and regulations of the applicable market.”
Enforcement determined that CNE violated that rule by violating sections of the CAISO tariff that require market participants to follow the ISO’s dispatch instructions when the company could not respond to the RA-related dispatch signals in June and August 2017.
FERC found that CAISO’s tariff “requires that market participants have a ‘reasonable expectation’ of being ‘available and capable of performing at the levels specified in the bid’ at the time it is placed in the day-ahead market. Enforcement determined CNE lacked a sufficiently reasonable basis for its expectation that it would be able to wait to secure electricity in the spot market to support its RA imports during times when the market was constrained.”
Enforcement also pointed out that it was “unreasonable” for CNE to expect that electricity would be readily available in the spot markets when CAISO prices were reaching or exceeding $999/MWh, “because such prices usually reflect an environment in which it is difficult to secure sufficient supply to meet demand,” the commission said.
“In particular, we note that CNE’s conduct went against the purpose of RA, which is to ensure that firm resources are available to address supply shortfalls,” FERC concluded.
In addition to paying the penalties, CNE also agreed to only use specific generation sources or firm contracts with respect to importing RA in the future.
The Vermont Senate passed a bill 28-1 Tuesday that would, for the first time, legally define what environmental justice means in the state.
“We are among a handful of states left that have not passed an EJ bill because we long thought this is an urban issue or this is a Black and white issue,” Sen. Kesha Ram Hinsdale, sponsor of the bill, said during a March 25 floor debate.
The bill (S.148) provides a framework to ensure Vermonters “don’t experience the rural isolation of poverty and pollution without also experiencing the political power needed to remedy their situation,” Hinsdale said.
Hinsdale first introduced an EJ bill for the state 14 years ago but has yet to see the policy make it to law. She introduced the current version last April, and it did not move out of the Senate Natural Resources and Energy Committee before the end of the legislature’s first biennium session.
The bill received a significant boost of support in December with the release of the Vermont Climate Council’s Initial Climate Action Plan, which called for adoption of a statewide EJ policy to inform the work of state agencies and departments. And in February, a group of 33 advocacy organizations wrote to the Senate asking for passage of the bill.
Upon passage of the second reading of the bill in the Senate Friday, Vermont Lt. Gov. Molly Gray called the legislation an “important first step” in putting EJ into the workings of the government.
“We know from Hurricane Irene [in 2011] and other extreme weather events, that there are individuals and communities in Vermont who are disproportionately impacted by climate change,” Gray said in a statement. “If we are going to reach our climate goals and protect the environmental health and well-being of all communities, every Vermonter must be able to fully participate.”
With the bill’s passage in the Senate, it now moves to the House Natural Resources, Fish and Wildlife Committee, which has already reviewed the bill and will consider it for recommendation to the full House, Hinsdale told NetZero Insider.
Bill Provisions
The bill would set an EJ policy that says environmental burdens and benefits must be distributed equitably among Vermont’s communities. In support of that policy, the state would review past investments to determine which communities have received environmental benefits associated with those investments. And starting in 2024, nine government entities, including the Public Utility Commission, would coordinate investments in a way that ensures EJ populations receive at least 55% of the benefits.
It also defines an EJ population as a census group in which:
the annual median household income is less than 80% of the state median household income;
Persons of Color and Indigenous Peoples represent 6% or more of the population; or
1% or more of households have limited English proficiency.
To help state agencies and departments collaborate on EJ efforts, the bill would establish a 12-member interagency EJ committee, comprising government officials and a diverse, 17-member advisory council consisting of community members. At least half of the advisory council members would have to reside in an EJ population.
In addition, the bill would allocate funds for the Agency of Natural Resources to create a state mapping tool that identifies EJ populations and measures environmental burdens “at the smallest geographic level” possible.
The Senate passed an amendment March 25 that reduced a $3 million appropriation for the bill to $700,000, of which $500,000 is allocated to the mapping tool. Sen. Richard Westman, in recommending the amendment, said that the Appropriations Committee sought to move “non-immediate spending” for later consideration in its work developing the full state budget.
MISO will promote and install new officers of its executive management effective April 1.
The grid operator announced last week that it will add three vice presidents and promote three current vice presidents to the senior level.
New senior vice presidents will include current Vice President of System Planning Jennifer Curran, General Counsel and Corporate Secretary Andre Porter and Chief Digital Officer Todd Ramey. Curran and Ramey have been with MISO for about 20 years apiece; Porter joined the RTO in 2016.
New vice presidents will include Executive Director of System Operations Renuka Chatterjee, Executive Director of System Planning Aubrey Johnson, and Melissa Seymour, executive director of external affairs for MISO’s Central region.
Chatterjee is a 21-year veteran of MISO. Johnson and Seymour joined MISO in 2017 and 2013, respectively.
CEO John Bear said the Board of Directors was fully supportive of the promotions. In a press release, he said the six “have individually and collectively made exceptional contributions to MISO’s history by sharing their expertise and consistently demonstrating our core values.”
A New Jersey Board of Public Utilities (BPU) study into the contentious question of how much ratepayers will end up paying in 2030 for the state’s transition to clean energy faces a multitude of concerns from opponents and supporters who fear the proposed study will miss key costs and benefits.
More than two dozen speakers offered suggested improvements at a three-and-a-half-hour online public hearing Friday at which the BPU’s consultant, The Brattle Group, laid out the framework for the study and sought public input on its design and input assumptions — to little commendation from speakers and a wealth of criticism.
The study is designed to evaluate the cost to ratepayers in 2030 if the state implements the policies in its 2019 Energy Master Plan (EMP). The plan calls for the state to reach 100% clean energy by 2050, mainly by improving energy efficiency and shifting to clean energy generation, mainly wind and solar. (See Lawmakers Back Putting NJ’s Clean Energy Plan into Law.)
Supporters of the plan argued at the hearing that a focus only on the cost to ratepayers would be too narrow and leave important costs uncounted. Missing from the assessment, speakers argued, would be the expected, massive costs that would result from not addressing climate change and coping with storms, excessive wind, flooding and other natural disasters. Also unaddressed would be the impact to resident health resulting from failing to cut emissions, speakers said.
“The bottom line here is you need to change your goals for this study,” said Ken Dolsky, a steering committee member for Empower New Jersey, a coalition of more than 120 environmental, citizen, faith and progressive groups.
“The goal of the EMP is to significantly reduce greenhouse gases in order to avoid or reduce the impacts of climate change, not just ratepayer cost of energy,” he said. “Therefore, if you’re addressing the EMP, this cost analysis must include some portion, if not all, of the total expected costs of climate change in New Jersey.”
From the opposite direction, the Chamber of Commerce Southern New Jersey argued that the study would miss key costs, especially the expense to property owners and businesses required to meet the plan’s demand to switch from natural gas to electricity for furnaces, hot water boilers, transportation and in other areas.
Hilary Chebra, a lobbyist for the chamber, said the study, as outlined by Brattle, “falls short” in giving the business community “a more comprehensive assessment of the actual cost associated with implementing the EMP.”
“Energy costs impact competitiveness, and they’re a key factor in a business’s decision on locations and their profitability,” she said. “So, the costs of the EMP that are real expenses to the business community — that they will have to incur with the implementation — should be really thoroughly examined.”
Rate Impacts and Energy Burden
Murphy, a Democrat who instigated the EMP, wants the state to cut greenhouse gas emission levels to 80% below 2006 levels by 2050. The governor’s initiatives to help reach that goal include: a major offshore wind program that aims to generate 7.5 GW of electricity by 2035; reshaping the state’s solar incentives; introducing new rules to curb emissions from building heating and hot water systems; and developing a raft of programs aiming to get more electric vehicle chargers installed around the state and more EVs on the road.
Business groups, and some Republicans, have long expressed concern about the cost of the shift to low-emission energy sources, especially the focus on electrification as opposed to other clean energy alternatives, such as hydrogen and low-emission natural gas. In response, the BPU in May approved the hiring of Brattle to study the cost. The BPU expects to release the final report in the second or third quarter of this year.
The study is “is aimed at understanding the impact of the EMP on customers’ energy bills through a comprehensive analysis of rate impacts and overall energy burden as of 2030,” according to the BPU announcement of the hearing.
“The first question is, let’s just figure out the total costs of implementing these programs as of 2030,” Sanem Sergici, a Brattle principal, told the hearing. “Then, we will quantify the economic benefits and savings to the customers because, as I mentioned, these programs will lead to potentially reduced gasoline expenses [and] reduced natural gas usage.”
The study, according to the BPU, will look at:
the gross costs in 2030 of implementing the plan;
reductions in energy consumption driven by increased efficiency;
shifts in energy consumption in heating and transportation toward increased electricity usage;
changes to electricity and natural gas rates as costs are applied across changing electricity and gas volumes; and
shifts in energy burden from gasoline toward electricity consumption, alongside advances in EV adoption and heating electrification.
Brattle said it will use three scenarios: a continuation of the state’s current energy strategy; the pathway advocated by the EMP to reach 100% clean energy by 2050; and an “ambitious pathway” of reaching 100% clean energy by 2035.
The study will also look at the economic benefits and savings to consumers as a result of reduced gasoline, natural gas and electricity consumption, according to the BPU. And it will show the impact of the three policy scenarios on net consumer costs, in the form of total energy bills, and on different customer segments, such as low-income consumers.
Shaping the Study
Barbara Blumenthal, clean energy policy consultant for the New Jersey Conservation Foundation, said that by looking at the impact in 2030, the study would catch all the costs but not all the benefits because they take longer to develop.
“The investments come first, and the benefits in terms of emissions reductions in the health impacts and all of the other economic benefits lag,” she said. “So, it’s a little odd to cut off a study in 2030 after a period of investment, where the actual benefits in terms of emissions reductions are not yet cumulatively very significant.”
The New Jersey Division of Rate Counsel, however, said the study should focus on the costs to ratepayers, especially the impact on low-income ratepayers who could struggle to pay any increases.
“Rate Counsel believes that the focus of this analysis should be costs,” Sarah Steindel, assistant deputy rate counsel, told the hearing. “To the extent benefits are addressed, they need to be reported separately so that the board and the public can clearly see the cost customers will be paying. Any analysis of the benefits, like the analysis of costs, should consider how they are allocated among different ratepayer segments, including low-income ratepayers.”
Dolksy, of Empower New Jersey, expressed concern that the study as planned would fail to take into account the cost that would not be incurred as a result of the state pursuing a carbon-free policy. He cited the examples of treatment for people suffering from the effects of air pollution, increased health insurance costs and the loss of employment productivity from “people [who] cannot work because they’re sick due to related heat and unhealthy air effects.”
Tracy Carluccio, deputy director of the Delaware Riverkeeper Network, urged the BPU to expand the scope of the study.
“While we understand the significance of BPU assessing the effects to ratepayers of policy changes that address climate change, the assessment must be performed in the context of the impacts to the human and natural world,” she said. “And these costs must be considered in the study. This context is a world of disasters that will cause increasing damage, health harms, economic hardship and loss of life if we do too little too late.”
Chebra, of the Chamber of Commerce, said the proposed study would not catch the expenses to businesses such as the plan’s call to cut energy consumption and emissions in buildings. She questioned whether, for example, the study would reflect the thousands of dollars it would cost a building owner or manager to switch from a natural gas furnace to an electric heat pump.
Another concern, she said, is whether the study’s estimate of the costs of pursuing clean energy would include the amount spent to modernize the grid to handle the heightened volume of electricity flowing through the system. The BPU is at present soliciting proposals on how to implement that upgrade. (See Fierce Competition in Plans to Upgrade NJ Grid.)
“That is, again, a cost that ratepayers will have to bear,” she said.
Stakeholders last week urged PJM to hold its ground on proposed collateral requirements for FTR traders, saying it should offer more support for a formula FERC rejected in February.
FERC on Feb. 28 rejected PJM’s proposal to modify the FTR credit requirement with an initial margin calculation from a historical simulation (HSIM) model using a 97% confidence interval. The commission said PJM failed to support its proposal because its independent auditors validated the model at a 99% confidence interval rather than the 97% confidence interval proposed.
The commission directed PJM to make a filing within 60 days to show cause why its existing FTR credit requirement remains just and reasonable or explain what tariff changes will remedy the commission’s concerns (ER22-703). (See FERC Rejects PJM’s FTR Credit Requirement Proposal.)
In a sector-weighted vote at the March 23 Members Committee meeting, stakeholders endorsed a motion for PJM to refile the original proposal “accompanied by some new supporting rationale.” The motion received a sector-weighted vote of 3.9 out of 5 (78%).
A second motion calling for PJM to file the FTR credit requirement revisions with a confidence interval of 99% received a sector-weighted vote of 2.25 (45%). A third motion that called for instituting the 97% confidence interval, and then moving to the 99% within one year, received a sector-weighted vote of 3.01 (60%).
Dave Anders, director of stakeholder affairs for PJM, said the RTO’s technical and legal staff “values the feedback it received” and would assess the next steps in the filing process. Anders said “no firm decision” has been made by PJM on the filing, but the RTO will notify stakeholders of a decision within a week. The PJM Board of Managers have the final say on what the RTO files with the commission.
PJM Perspective
PJM’s Chief Risk Officer Nigeria Bloczynski presented the RTO’s perspective on the FTR filing, saying FERC’s order “appears to provide support” for moving to the 99% confidence interval.
The proposal resulted from a two-year stakeholder process at the Financial Risk Mitigation Senior Task Force (FRMSTF), an effort to strengthen PJM’s FTR credit and collateral rules in response to a report by independent consultants on the 2018 GreenHat Energy default. PJM said the proposal addressed one of the last recommendations in the report yet to be implemented: “eliminating the undiversified adder.”
Much of the stakeholder debate in October centered around the confidence interval, with some advocating for 95% and others for 99%, ultimately settling on 97% as a compromise. The confidence interval refers to the “statistical certainty that a given value will exceed the range of possible outcomes (i.e., the losses in portfolio value over the margin period of risk) produced by the HSIM model,” according to PJM.
In its order, the commission said it agreed with arguments made by the Organization of PJM States Inc. (OPSI) and PJM’s Independent Market Monitor that the record “fails to support” a 97% interval.
In the December filing, PJM argued that imposing a 99% confidence interval instead of 97% might “force some market participants to unwind market positions or to decide not to continue participation in the FTR auctions and FTR markets entirely.”
Bloczynski said PJM is now recommending moving toward the 99% confidence interval because using a higher confidence interval “provides more coverage of tail events” to protect PJM members and ratepayers in a default. She said the 99% confidence interval “brings PJM closer to the standards generally used in other commodity markets.”
PJM “stands behind” its original December filing, Bloczynski said, but the RTO doesn’t believe there is a “high probability of success” with a refiling that includes additional support if there continues to be protests by stakeholders against the 97% confidence interval. She said having a filing that includes a transition from 97% to 99% could have more “success” with the commission.
Stakeholder Perspectives
Steve Lieberman, vice president of transmission and regulatory affairs for American Municipal Power, presented the motion for alternatives in the PJM filing.
Lieberman argued that PJM should continue to support the 97% confidence interval in its filing and demonstrate to FERC that other changes included in the proposal “mitigate the risk of the riskiest market participants.” He said if PJM decides to move forward with the 99% confidence interval in a Section 205 filing, the process could be complicated through stakeholder protests.
“My crystal ball isn’t very clear, but I do believe we’ll see a very contentious docket at FERC, and I’m not sure that will get us the most expeditious path forward,” Lieberman said.
Jason Barker of Constellation Energy said his company was “disappointed” that PJM provided “insufficient analytical support” in its December filing to FERC on the 97% confidence interval. Barker said PJM could have done a more thorough cost-benefit analysis between the 97% and 99% confidence intervals.
“We’re disappointed that PJM doesn’t seem to express any concern for the cost of collateral,” Barker said.
Greg Poulos, executive director of the Consumer Advocates of the PJM States, said the most important part of PJM’s proposal for the advocates was to have some sort of confidence interval in place. Poulos said if PJM goes again to FERC advocating for the 97% confidence interval, it will create the “most uncertainty” on the issue and stall the adoption of other aspects of the proposal.
Market Monitor Joe Bowring said the IMM supports PJM’s position on moving to the 99% confidence interval because it allocates the costs to those that are imposing risks on the market.
Gregory Carmean, executive director of OPSI, said his organization agreed with PJM making a Section 205 filing with the 99% confidence interval. Carmean said other institutions responsible for regulating financial trading require a 99% confidence interval level.
“There’s no reason that the financial traders in PJM should be subject to less of a standard,” Carmean said.
Responsibly sourced natural gas (RSG) is now a “sizeable” and “growing” market, according to Andrew Swinick, commercial director at Kinder Morgan (NYSE:KMI).
The market is “driven by voluntary efforts to do better when it comes to our business practices,” he said Tuesday at the Northeast Gas Association’s Regional Market Trends Forum. “In 2018, we had only five companies that had committed volumes to RSG, and today we’re looking at 28.”
RSG, also called producer-certified gas, is a third-party-certified product based on a supplier’s ability to demonstrate it has reduced environmental impacts from its product and operates under best practices of environmental, social and governance (ESG) criteria.
“Right now, the goal of RSG is to minimize emissions along the natural gas value chain and to continuously look at ways to reduce those emissions levels,” he said. More suppliers are turning to RSG in response to end-user demand that Swinick says “is growing radically and dramatically.”
The three major certifying entities in operation currently are the nonprofits Equitable Origin and MiQ, and TrustWell by data analytics company Project Canary.
Certification is based on an ISO-like framework that “provides verification of responsible practices through rigorous independent audits, like emission reductions, no flaring and methane monitoring,” said Jeff Formica, vice president of environmental, safety, health and quality at Seneca Resources.
Seneca achieved Equitable Origin certification for 100% of its Appalachian assets in December 2021, according to Formica. The facility-level certification, he said, ensures that companies are always working to improve their ESG practices.
MiQ, which is also a facility-level certification, targets methane-intensity reduction by understanding how much methane a producer’s facilities emit versus the amount of natural gas they produce. It also ensures certified entities have comprehensive monitoring technologies in place to detect unintended emissions, Formica said.
The TrustWell certification works at the level of the gas well to reduce greenhouse gas emissions, set responsible water stewardship plans, mitigate operational risks and understand community needs, he said.
Growth Opportunity
Kinder Morgan, the largest U.S. gas pipeline company, could receive approval from FERC in the coming weeks for a new market mechanism that would support expansion of RSG.
The company filed a tariff, via its Tennessee Gas subsidiary, with FERC in December that would allow it to secure contracts specific to transporting RSG on its pipelines (RP22-417-001). Suppliers would need to demonstrate that they meet a predetermined, methane-intensity level certified by TrustWell to qualify for the tariff.
If FERC allows the company to move ahead with the new service, it would “encourage the transportation and trading on the Tennessee system of RSG supply from producers,” Kinder Morgan said in its tariff filing.
The company’s customers have shown broad support for the concept, according to Swinick, who said that Kinder Morgan expects to see an order from FERC in the coming weeks allowing service to begin May 1.
Producers see the offering as an “attractive” option, he said.
The Environmental Defense Fund asked FERC to “carefully consider” the program in a Jan. 24 filing and called for a technical conference.
“As the first request for FERC approval of an RSG-type program, Tennessee’s filing has the potential to create a significant precedent for the pipeline industry more broadly,” EDF said.
Consolidated Edison (NYSE:ED) commended Kinder Morgan in a Feb. 22 filing for taking a step that it said will allow customers to procure RSG, and the utility encouraged other interstate pipelines to provide a similar option.
The service will “aid natural gas distribution companies … in their efforts to reduce upstream greenhouse gas emissions associated with production or gathering of natural gas,” Con Ed said.
PJM detailed changes in a proposal to update the process timing for generation deactivations at last week’s Markets and Reliability Committee meeting after some stakeholders previously requested that the RTO slightly modify the language.
David Egan, manager of PJM’s system planning modeling and support department, reviewed the proposal, presenting the revisions to Manual 14D and the tariffin a first read at the MRC. Stakeholders previously gave near unanimous support of the issue charge at the March 8 Planning Committee meeting. (See “Deactivation Process Timing Update Endorsed,” PJM PC/TEAC Briefs: March 8, 2022.)
Egan said current language in the tariff provides 90 days advance notice and 30 days to complete deactivation studies, which is causing “insufficient and unsustainable” time for PJM staff to determine adverse impacts on reliability if more than one deactivation notice is made in a single study period. Industry trends and state energy policies are increasing the number of deactivation notices, Egan said, putting even more pressure on staff to finish studies in a timely manner.
“Thirty days to perform what is the equivalent in the interconnection process of a system impact study leads to overly conservative assumptions, which generally lead to inaccurate results,” Egan said.
The issue charge calls for changes to the tariff and manual to “provide more time to complete analyses, allow additional and improved studies, and provide the ability for more efficient work control and consistency regarding timing of deactivation studies,” Egan said.
The proposed deactivation process establishes quarterly study times for requests, with periods beginning Jan. 1, April 1, July 1 and Oct. 1. PJM staff would study deactivations “holistically” as a batch, Egan said, providing more accurate study results for impacts on the system.
The quarterly schedule would allow enough time for additional required seasonal, interim year and short-circuit analyses, scheduling upgrades, and cost estimates, Egan said, and for PJM operations to identify additional needed operational measures.
A series of 11 deactivation requests in July of 2021 prompted PJM to seek solutions to the review schedule for the RTO’s staff. | PJM
Egan said PJM is a “significant outlier” compared to other RTOs and ISOs in the deactivation process. MISO requires advance notice of 26 weeks for a deactivation, and the studies include 75 days to identify issues and 26 weeks to complete the deactivation study. NYISO requires advance notice of 365 days for deactivation, and studies are conducted in the subsequent quarter.
PJM granted a stakeholder request to insert tariff language that doesn’t constrain a generator to a specific time frame for deactivation and to create exemptions if a unit is forced to deactivate through state legislation or actions by the federal government.
Jason Barker of Constellation Energy asked how a generator that experiences a catastrophic failure will be studied or considered by PJM. He requested that PJM provide an opportunity for an expedited review so that owners don’t undertake carrying costs for waiting to decommission a unit that is “clearly not going to be operating any longer.”
Egan said the impact from a unit that has a catastrophic failure “doesn’t really change anything” because it will still have market obligations and have to look for alternative sources to fulfill the obligations.
“This whole process requires coordination with both transmission owners and generation owners to make sure we are able to mitigate problems on the system,” Egan said.
PJM will move conforming Manual 14D language through the Operating Committee and the Systems Operation Subcommittee if stakeholders endorse the proposal at the April 27 MRC meeting and the final tariff language endorsement at the May 17 Members Committee meeting.
Dave Anders, director of stakeholder affairs for PJM, reviewed a proposed issue charge from the Resource Adequacy Senior Task Force (RASTF) addressing the procurement of clean resource attributes and the creation of a new senior task force.
Anders said the first key work activity in the RASTF’s own issue charge was to determine whether the “forward procurement of clean resource attributes” should be pursued by stakeholders and to examine the inclusion of the social cost of carbon in PJM markets.
After discussions in the task force over the last few months, Anders said, stakeholders recommended a new issue charge for continued discussions and the development of potential market rules to implement the “preferred” design for clean resource procurement. Anders said 70% of RASTF members endorsed pursuing a new issue charge.
Anders said the new issue charge calls for a “comprehensive discussion of market enhancements” that would enable states and other buyers to procure clean resource attributes “on a voluntary basis, through a regional and centralized procurement or market.”
Walter Graf, PJM | FERC
Walter Graf, PJM’s senior director of economics and market services, provided details about the issue charge. Graf said stakeholders expressed interest in having a forum for a “comprehensive discussion on enhancements to the PJM markets.”
Work would start with education on the procurement of clean resource attributes, including defining clean resource attributes across jurisdictions, markets and procurement mechanisms. The second step calls for discussing the objectives of a market construct to enable voluntary procurement of clean resource attributes.
Graf said PJM and stakeholders will determine an approach to conduct analysis and select one or more market design solutions for further development.
The expected deliverables in the issue charge include the education and analysis identified in the scope of work and any proposed market rules to implement the preferred design if one is found.
Discussions would take place in a new Clean Attribute Procurement Senior Task Force reporting to the MRC, and work would continue through the second quarter of 2023.
Denise Foster Cronin of East Kentucky Power Cooperative asked if PJM anticipates moving forward with some type of market change even if the analysis resulting from the new task force doesn’t fully satisfy stakeholders.
Graf said PJM is initiating the conversation “with the hope that we would get something useful out of it.” He said PJM is looking to come to a consensus or compromise on the issue, but endorsing a solution is not necessary.
The committee will be asked to approve the recommendation at its April meeting.
CCSTF Sunset Endorsed
Members unanimously endorsed the sunset of the Capacity Capability Senior Task Force (CCSTF), bringing the work of the group to a close after nearly two years of discussions.
Melissa Pilong of PJM reviewed the sunset proposal and also presented the final report of the work completed by the task force. The CCSTF was originally created in March 2020 to consider using effective load-carrying capability (ELCC) to set the capacity value of limited-duration resources such as battery storage.
Stakeholders endorsed a joint proposal in September 2020 to use the ELCC method to calculate the capacity value of limited-duration, intermittent and combination (limited-duration plus intermittent) resources. FERC approved PJM’s proposal in August. (See FERC Accepts PJM ELCC Tariff Revisions.)
Pilong said work originally endorsed by stakeholders for a second phase of discussions at the CCSTF was moved to the RASTF. The additional work includes a discussion of other rules or rule changes that may be necessary for limited-duration resources to participate in energy and ancillary service markets.
Calpine’s David “Scarp” Scarpignato asked if work by stakeholders to examine using ELCC for all resources and evaluate its usefulness should be done at the CCSTF in the future rather than the RASTF because of the amount of detail needed to be discussed on the issue.
“It’s a ton of work, and I think it would take awhile to do,” Scarp said.
Anders said two different key work activities in the RASTF issue charge relate to the ELCC issue, including activities dealing with the risks and drivers and their relationship to accreditation of resources.
“There would be no reason to keep this CCSTF open to deal with that issue,” Anders said.
Max Emergency Changes Endorsed
Stakeholders unanimously endorsed PJM’s proposal to extend a temporary change to the maximum emergency status for gas combustion turbines and steam generators and an issue charge to look at a long-term solution.
Chris Pilong, of PJM’s operations planning department, reviewed the revisions to Manual 13: Emergency Operations in a problem statement and issue charge. Pilong said PJM made a temporary change to section 6.4 of Manual 13 in a “note” to modify the remaining hours under which a resource may be offered as maximum emergency generation to address recent concerns with fuel security and new emission standards in states.
The changes, which were endorsed in October, said PJM may request a generation owner to move steam units, which are mostly coal-fired, into the maximum emergency category if their remaining run time falls below 240 hours, or 10 days. The units could be restricted from operating during that time unless required to meet reliability needs for the grid. (See Global Fuel Supply Prompts PJM Manual Changes.)
Pilong said units could remain in maximum emergency status until their fuel inventory rose above 21 days, or 504 hours, and the designation would only be implemented to address concerns with local or regional reliability resulting from fuel supply shortages. The previous run-hour threshold for a maximum emergency was 32 hours.
Pilong said the manual change was set to expire April 1, but it needed to be extended to give PJM and stakeholders more time to work on a permanent solution.
The work on the long-term solution was requested to take place under a new problem statement and issue charge titled “Max Emergency Changes for Resource Limitations,” which stakeholders unanimously endorsed at the MRC.
The issue charge calls for reviewing and modifying existing rules in response to concerns with the fuel and non-fuel supply chain, as well as the increasing environmental restrictions on generators that are creating challenges with managing run hours. Pilong said key work activities include examining the hours remaining at which max emergency can be used on a unit, along with the procedures and communications associated with a max emergency event.
The expected deliverables include education on unit eligibility and the opportunity cost calculator, as well as potential revisions to Manual 13 and “enhancements” to existing processes.
Pilong said PJM wants to spend four months working on the issue in the Operating Committee and have a solution before the summer 2022 peak period.
Combined Cycle Minimum Run Time Guidance Endorsed
Members unanimously endorsed a proposal and manual revisions that have been discussed for several months in committees to address pseudo-modeled combined cycle minimum run time guidance.
Hauske said market sellers can model a combined cycle generation unit as multiple “pseudo units” that are made up of a single combustion turbine and a portion of a steam turbine. But he said the potential exists for one or more of the pseudo-modeled units to operate for a period beyond the minimum run time parameter limit compared to an identical non-pseudo-modeled combined cycle unit if the market units of a pseudo-modeled combined cycle unit are dispatched at different times because the steam turbine takes extra time to reach operative levels.
Hauske said the proposed solution calls for adding language to Manual 11 to require market sellers to update the minimum run time of any subsequent pseudo-modeled unit to remove the associated steam turbine start-up time included in the parameter limit when it’s dispatched.
PJM wanted to have the final endorsement in place at the March MRC meeting because the RTO’s unit-specific parameter adjustment process started earlier this month, and determinations on requests must be made by April 15.
Consent Agenda
Stakeholders unanimously endorsed four manual revisions as part of the MRC consent agenda. They included:
revisions to Manual 12: Balancing Operations resulting from a periodic review. The changes include attachment references and other minor revisions.
revisions to Manual 13: Emergency Operations resulting from a periodic review. The changes include new columns with winter values for estimated peak load and estimated load reduction in the voltage reduction summary table.
revisions to Manual 18: PJM Capacity Market to conform with several recent FERC orders, including those on the minimum offer price rule, the market seller offer cap and the removal of the 10% cost adder for the reference resource used to establish the variable resource requirement curve.
revisions to Manual 37: Reliability Coordination resulting from a periodic review. The language would properly label Silver Run Electric as a transmission owner in Attachment A of the manual.
Members Committee
Remote Voting for Annual Meeting
PJM wants to revise Manual 34 before the Annual Meeting on May 17, which includes the Board of Managers election and General Session, to allow for remote voting.
Michele Greening, manager of PJM’s stakeholder process and engagement department, reviewed proposed revisions to Manual 34: Stakeholder Process to update the ballot process during the Annual Meeting at last week’s Members Committee meeting.
Greening said Manual 34 includes language requiring written paper ballots for the elections of board members and the Members Committee vice chair. She said as the current remote meeting format has gone on for more than two years as a result of COVID-19 protocols, PJM identified the need to “exercise flexibility” to conduct the 2020 and 2021 board elections using an alternative to written paper ballots.
The 2020 board election was done remotely through the PJM Voting Application with special auditing provisions to “ensure ballot confidentiality,” Greening said, and the 2021 board election was conducted through a secure, third-party online election service, Survey & Ballot Systems.
Greening said PJM wants to continue to use a secure third-party voting system for stakeholders not attending the Annual Meeting in person. To make the change permanent, PJM is proposing to modify the current Manual 34 provisions requiring a written paper ballot by striking the language.
The committee will be asked to approve the proposed Manual 34 revisions at the April MC meeting.
President Joe Biden’s $5.8 trillion federal budget request for 2023 contains a raft of line items aimed at cutting greenhouse gas emissions, advancing clean energy research and deployments, and propping up the nation’s energy security.
The budget rollout on Monday included announcements from the Department of Energy, the Environmental Protection Agency and the Bureau of Ocean Energy Management detailing the federal dollars for energy and climate projects that are included in their budget requests.
The tax credits and other incentives for clean energy development contained in the failed Build Back Better Bill are not specifically listed in the budget, but, according to a report from Bloomberg, will be included in a placeholder “deficit-neutral reserve fund.”
DOE
The DOE announced a $48.2 billion budget request for 2023 — a $2 billion increase over the $46.2 billion requested in 2022 — with significant clean energy investments but a strong focus on national security. Specifically, close to half of the 2023 budget, $21.4 billion, is earmarked for the National Nuclear Security Administration “to make necessary investments to maintain a safe, secure and effective nuclear weapons stockpile,” according to the DOE’s announcement.
The department is also asking for $202 million for the Office of Cybersecurity, Energy Security and Emergency Response to address cybersecurity risks.
On the energy side, the request focuses heavily on energy efficiency and clean energy research and development. “The investments reflected in this latest budget will cut costs for Americans and secure our energy independence on our path towards a net-zero future,” Energy Secretary Jennifer Granholm said in the announcement.
The budget request includes the following clean energy spending:
$502 million to weatherize at least 50,000 homes, including $100 million to retrofit and decarbonize low-income households, installing energy-efficient appliances and systems to cut energy bills. Another $105 million in grants will go to states to help them create “more reliable and affordable clean energy systems.”
$200 million “to bolster the U.S. supply chain for solar energy technologies through a new Solar Manufacturing Accelerator.” Another $18 million will go toward building international partnerships to “bolster secure supply chains and expand economic opportunities.”
Other supply chain spending includes $5 billion for the Loan Programs Office for investments that will support domestic supply chains for critical minerals.
$4 billion “to accelerate research, development, demonstration and deployment of technology and solutions to cut energy costs through low-cost clean energy resources.”
Another $7.8 billion is slated to support research at the DOE’s national labs and at universities across the country “to accelerate novel technologies for clean energy solutions to mitigate climate change.”
EPA
EPA Administrator Michael Regan said the budget includes “historic investments” in support of the agency’s FY 2022-2026 Strategic Plan, “including tackling the climate crisis, advancing environmental justice, protecting air quality, upgrading the nation’s aging water infrastructure and rebuilding core functions at the agency.”
“For the first time, EPA’s final [Strategic] Plan includes a strategic goal focused exclusively on addressing climate change, as well as an unprecedented strategic goal to advance environmental justice and civil rights,” EPA said. “At the foundation of the plan is a renewed commitment to the three principles articulated by EPA’s first Administrator, William Ruckelshaus — follow the science, follow the law, and be transparent – while adding an additional fourth principle: advance justice and equity.”
In addition to $4 billion to upgrade drinking water and wastewater infrastructure, the plan includes:
$1.1 billion to improve air quality, reduce localized pollution and exposure to radiation, and improve indoor air quality;
$100 million in grants to tribes and states to support greenhouse gas reductions and increased resilience;
$35 million to implement the American Innovation in Manufacturing Act to phase out hydrofluorocarbons, a greenhouse gas; and
$13 million in wildfire prevention and readiness.
In support of Biden’s Justice40 commitment to ensure at least 40% of federal investments in climate and clean energy benefit historically overburdened and underserved communities, EPA would spend $1.45 billion to “create good-paying jobs, clean up pollution, advance racial equity and secure environmental justice,” Regan said. EPA has proposed creation of an environmental justice program office to oversee the effort.
To “rebuild the agency’s capacity” following cuts under the Trump administration, the spending plan would also fund more than 1,900 new full-time equivalents, boosting EPA’s staffing to more than 16,200 FTEs.
BOEM
The Interior Department’s Bureau of Ocean Energy Management would receive $237.4 million in funding, including $51.7 million for BOEM’s renewable energy program, which is supporting the administration’s goal of deploying 30 GW of offshore wind energy capacity by 2030.
BOEM’s conventional energy program, supporting oil and gas leasing, would receive $63.6 million, while its marine minerals program would get $15.4 million to help procure sand and sediment for coastal restoration.
The budget includes $86.4 million to fund BOEM’s environmental analyses.
BOEM plans to issue nine environmental reviews of offshore wind projects in FY 2023 and to hold up to three lease sales in FY 2022 and up to two lease sales in FY 2023.
FERC on Thursday accepted Kestrel Acquisition’s updated market power analysis as partially compliant with the commission’s standards for market-based rate authority (MBRA), and directed the PJM generation owner to submit a further compliance filing within 30 days (ER18-1106-002).
In doing so, FERC rejected a protest by PJM’s Independent Market Monitor, which said that “current PJM market rules for market power mitigation are insufficient to support [market-based rate] authorizations.”
The commission said the Monitor failed “to submit any specific evidence … demonstrating that Kestrel Acquisition has market power.” Rather, the Monitor’s protest was directed at PJM’s rules and not Kestrel’s analysis itself.
“In granting market-based rate authority, the commission does not certify markets as competitive; it determines whether individual sellers have market power,” FERC said. “Here, IMM makes no attempt to show that PJM’s monitoring and existing market power mitigation provisions would fail to mitigate any market power possessed by Kestrel Acquisition.”
The Monitor argued that Kestrel’s MBRA should be conditioned on offering into the energy and capacity markets at cost-based offers. But FERC said that “many of the allegations in IMM’s protest apply to all sellers in PJM, including those that are not part of the protested proceedings. Such sellers have not been given adequate notice and opportunity to comment on IMM’s proposal.”
FERC noted that the Monitor’s criticism of PJM’s capacity market echo those made in a separate complaint, in which the commission approved its proposal to conduct a unit-specific review of all offers in the capacity market. It is also conducting a review the RTO’s rules on parameter-limited offers. “We believe that proceeding, which will provide all sellers in PJM the opportunity to intervene and participate, is the appropriate forum to consider changes to the relevant PJM mitigation rules,” it said.
Kestrel owns the 810-MW Hunterstown Generating Station combined cycle gas-fired power plant located in Gettysburg, Pa.
Commissioner James Danly concurred in a separate statement to highlight that the Monitor’s “concerns in this case would properly be rejected even if the commission had not recently ordered PJM to adopt” the Monitor’s unit-specific proposal.
“I opposed unit-specific review of all offers because doing so likely will result in over-mitigation,” Danly said. “Unit-specific review is not required to adequately mitigate market power concerns, and today’s order in no way indicates otherwise.”
Leaders of an SPP task force charged with designing and developing a consolidated transmission planning process and associated cost-sharing mechanism said last week they will wait until the generator interconnection queue’s backlog has been cleared before building the models for the process.
Staff told the Seams Advisory Group Wednesday that they expect it will take two years to get consolidated planning processes approved, with the first study being produced in 2026 at the earliest.
“We want to get queue clear before beginning the consolidated process,” SPP’s Kelsey Allen said. “It’s very hard to coordinate across the various study processes.”
The RTO’s queue backlog dates to 2017 and includes nearly 100 GW of IC requests, as of November. Renewables and storage account for all the potential projects, with a bit more than 6 GW of thermal requests. FERC in January approved SPP’s plan to clean up the backlog by 2024. (See “GI Backlog Plan Approved,” FERC Denies Co-ops’ $79M Complaint vs. SPP.)
The Consolidated Planning Process Task Force, created last year by the SPP board, has held a couple of education sessions and laid out a high-level work plan, said SPP’s Sunny Raheem, who is chairing the task force. Over the next few years, he said, the group plans to write as many policies as it can and build out technical requirements.
The task force will coordinate with and gather input from affected stakeholder groups in proposing methodologies, approaches, assumptions, parameters, criteria, data requirements and/or outcomes for successful consolidated planning design, implementation and approval.
“Sounds like job security to me,” joked American Electric Power’s Jim Jacoby, the SAG’s chair.
The meeting was the first in-person stakeholder meeting at SPP’s corporate campus in Little Rock, Ark., since the onset of the pandemic.
SPP, MISO to Set Joint Stakeholder Meetings
SPP and MISO staff are planning a series of stakeholder meetings over the next four to six months as they work on a cost-allocation methodology for their joint targeted interconnection queue (JTIQ) study.
The final study report is comprised of seven projects at a total cost of about $1.65 billion. If approved, the projects are projected to resolve 48 reliability constraints and deliver about $724 million in adjusted production costs savings to MISO and $247 million to SPP. (See MISO, SPP Finalize JTIQ Results with MISO Tx Duplicates.)
However, MISO has included two of those projects in its first tranche of long-range transmission projects, raising questions about how that affects the JTIQ’s portfolio.
“That’s one of the first things we have to work out in the upcoming stakeholder meetings,” SPP’s Neil Robertson said. “It does change the complexion of how cost allocation will be approached. …That was one of the primary objectives of [the JTIQ study].”
The stakeholder meetings are expected to be scheduled later this week.
SPP’s M2M Settlements Exceed $250M
SPP accrued almost $7.9 million in market-to-market (M2M) settlements from MISO during January, staff told the SAG, pushing the amount MISO owes its neighbor for congestion to nearly $255 million.
Permanent and temporary flowgates were binding for 1,812 hours during the month. The two grid operators exchange settlements for redispatch based on the non-monitoring RTO’s market flow in relation to firm-flow entitlements.
It was the 11th straight month M2M settlements have accrued in SPP’s favor, and the 26th time in the last 28 months. The grid operators began the process in March 2015.
