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April 3, 2022June 14, 2023

GCPA Panelists Go One on One Over SEEM Proposal

NEW ORLEANS — Two panelists on either side of the Southeast Energy Exchange Market (SEEM) argument used several basketball references in debating how the nascent market will work in practice during the Gulf Coast Power Association’s MISO South-SPP conference.

SEEM will facilitate sub-hourly, bilateral transactions at a zero-transmission rate. Bordering the MISO and SPP footprints and with 16 member utilities, it’s set to go live in October.

The Southern Alliance for Clean Energy’s research director Maggie Shober said her concern is SEEM members can pick and choose whom they transact with, effectively blocking out some independent power producers and that it discriminates access to transmission service.

Maggie Shober 2022-03-30 (RTO Insider LLC) FI.jpg

SACE’s Maggie Shober | © RTO Insider LLC

“We aren’t seeing this as a driver to new renewables. We see this as a potential air ball,” she said, working in a March Madness reference as a nod to the Final Four games being held down the street at the Superdome.

Corey Sellers, Southern Company’s general manager of transmission policy, said the member companies don’t have an incentive to block certain transactions. “The incentive is to have this [market] as active as possible to drive down costs,” he said.

Sellers said interested participants are seeking a “low-cost, low-bureaucracy approach” to the market. He said it will cost about $5 million to stand up the market and about $2 million to $3 million annually to maintain it.

“We think it’s a rather elegant approach to modifying the Southeastern market,” Sellers said.

Southern is a founding member of SEEM. Other members include Duke, Dominion, Associated Electric Cooperative, Inc., LG&E and KU Energy, Santee Cooper and the Tennessee Valley Authority.

FERC recently rejected more attempts by environmental, clean energy and community groups to overturn both its approval of SEEM and its orders to implement the market. Some of those groups have also filed an appeal in the D.C. Circuit Court of Appeals, asking the court to prevent SEEM’s creation. (See FERC Again Rejects Efforts to Overturn SEEM.)

SEEM’s footprint would be about the size of MISO, extending from Springfield, Mo., to Savannah, Ga., Sellers said.

Shober said she is worried about the market’s “opaqueness.” She said SEEM will lack the transparency of an RTO wholesale market.

“Once it goes live, it will be hard for us to even know what’s going on in the market,” she said, likening the situation to holding a basketball game without media coverage. “How would the public feel about that? ‘Here’s the winner of your NCAA tournament, and just trust us that it happened this way.’”

Sellers said that while SEEM won’t publish real-time pricing, it does plan to share certain hourly statistics, such as megawatt amounts traded. He said the market might publish average weighted prices from the prior trading day.

“The output is a set of bilateral transactions,” he explained, adding that there wouldn’t be uniform pricing.

Sellers said he wasn’t yet sure if SEEM is the end goal, but that it’s a way to raise a market quickly and realize benefits while keeping conversations open about the future.

But Shober said SEEM is missing several design features that could allow it to transition smoothly into an energy imbalance market or an RTO.

“SEEM is not seeming to be designed in that way to take those steps forward,” she said. She likened the market to a “high school JV squad” when it could be a high-performing college team.

Sellers said SEEM represents the best way to make market transactions and possibly save millions without disturbing the members’ current constructs.

“Now, are we a fast-break team? Probably not,” he said.

“JV might have been a bit of a low blow,” Shober responded.

April 1, 2022

Biden Invokes Defense Production Act for Critical Minerals

The White House on Thursday announced that President Biden had invoked the Defense Production Act (DPA) to step up production of rare minerals that are critical components of the transition to electric vehicles, fuel cells and green hydrogen production.

The announcement came the same day that the Senate Energy and Natural Resources Committee heard from a domestic uranium mining company, a metals mining company based in Minnesota, a D.C.-based minerals trade group and a U.S. Geological Survey expert who explained that a list of “critical minerals” vulnerable to foreign supply disruption has grown in the last four years.

Committee Chair Joe Manchin (D-W.Va.) noted that he and other senators had asked the president to invoke the DPA, a Cold War-era law enacted in 1950 authorizing the president to order private companies to prioritize production for the government.

Ranking Member John Barrasso (R-Wyo.) complained that the administration has made it more difficult to mine domestically and called for Biden to ban imports of Russian uranium as he had proposed earlier.

“Currently it takes an average of 10 years to permit a new mine in the United States and [Biden] wants all of this [decarbonization of the economy] in place in eight years. It just doesn’t add up,” Barrasso said. “If President Biden doesn’t reverse course and stand up to the mining opponents in his own party, it’s only going to get worse. It will mean that we will continue to fund our adversaries as we are doing today with Russia.”

Biden’s invocation, along with his announcement that he would withdraw 1 million oil barrels per day from the Strategic Petroleum Reserve for U.S. refineries in view of the global oil shortage, drew Manchin’s immediate support after the hearing. Barrasso dismissed the move and again called for Biden to ban imports of Russian uranium.

During the hearing, Scott Melbye — executive vice president of the Uranium Energy Corp., based in Corpus Christi, Texas, and president of the trade group American Producers of America — testified that Russia, Kazakhstan and Uzbekistan “now supply nearly half of the uranium consumed by U.S. nuclear utilities.”

“We estimate that more than $1 billion per year in nuclear fuel purchases are flowing from the United States to Rosatom, the Russian State Atomic Energy Company, which is an extension of the Kremlin and clearly part of the Russian military complex.

“It’s simply unconscionable to allow U.S. uranium purchases to continue funding the Putin war machine,” he said, adding that his group supports a ban on Russian uranium imports.

Steve Fortier, director of the USGS’ National Minerals Information Center, said that while the U.S. remains a major mineral producer, the agency has determined that the nation’s industries are “100% import-reliant for 17 mineral commodities and at least 50% import-reliant for an additional 30 mineral commodities.”

“The United States depends on unreliable foreign sources for many of the strategic and critical materials necessary for the clean energy transition, such as lithium, nickel, cobalt, graphite and manganese for large-capacity batteries. Demand for such materials is projected to increase exponentially as the world transitions to a clean energy economy,” Fortier said.

Abigail Wulf, director of the Center for Critical Minerals Strategy at D.C.-based Securing America’s Future Energy, said the U.S. is losing to China on mining and mineral processing.

“China is the world’s largest processor of copper, nickel, cobalt, lithium and rare-earth elements, and they control 60% of anode production and 40% of global cathode production. Consider that in 2019, about 70% of the world’s cobalt supply was mined in [China]. But more than 70% of that cobalt was refined in or controlled by China. The first metric is an act of nature. The second is an act of policy,” she said.

Julie Padilla, chief regulatory officer for Twin Metals, said that despite the president’s enthusiasm about more domestic mineral production, the federal bureaucracy, namely the departments of Agriculture and the Interior, have continued to block development.

“If this country wants to produce its own nickel, it has to mine in Minnesota. If we want our own cobalt, platinum and palladium, we have to get it in Minnesota,” she said. “Northeastern Minnesota, where Twin Metals has proposed to operate, sits on top of the largest undeveloped deposit of these minerals in the world. The area contains a stunning 95% of the U.S. nickel resources, 88% of our cobalt, 75% of our platinum group metals and a third of the country’s copper.

“But the United States will not be able to do that under the current regulatory process that is unpredictable, subject to political manipulation, with changing rules in each administration and in conflict with the priorities of our nation. It’s past time for Congress to take action,” she said.

Paul Ziemkiewicz, director of the West Virginia Water Research Institute at West Virginia University — and the only witness to come to the committee with good news — said researchers have developed a process to pull rare and critical minerals out of acid mine drainage.

He said the university is now building a 1,000-gallon-per-minute plant near an old mine in the state to test the process.

“We see this as an opportunity to recover value in the treatment of acid mine drainage rather than simply spending money for an environmental useful purpose,” he said.

The university is also working with officials in Montana, he added, and the early analysis is promising.

“We have a relationship with the Montana resources at Butte, Mont. We’ve characterized the acid mine drainage coming into the Horseshoe Bend plant there. It’s an excellent resource, and the interesting thing is the makeup of the rare-earth elements coming into these hardrock mines and coal mines are almost identical.

“And when I say identical, they’re not only the same distribution of elements, but it’s heavily skewed toward the heavy rare-earth elements. The Chinese … are desperate to get their hands on heavy rare-earth elements.”

April 1, 2022December 13, 2023

Q&A: SERC CEO Jason Blake

SAVANNAH, Ga. — As SERC Reliability held the first in-person meeting of its Members and Board of Directors since the outbreak of the COVID-19 pandemic this week, ERO Insider’s Holden Mann sat down with CEO Jason Blake to discuss how the coronavirus has changed regional entity’s culture and the challenges that lie ahead for the ERO Enterprise. The following exchange has been edited for clarity.

ERO Insider: As this is SERC’s first in-person meeting in almost two years, it seems appropriate to start by talking about some of the lessons you’ve learned from the changes to how SERC operates over the last few years. What kind of efficiencies have you discovered during the shift to remote work, and what are the things that you’ve found really need to be done in person?

Jason Blake: Well, it’s so commingled — I think some of the things that we’ve learned and the opportunities that we’ve had are also so intertwined with [the feeling of], “Oh, my goodness, I miss doing that.”

In terms of lessons learned [and] efficiency gains, [there’s] the way we do our monitoring and our audits. We’ve learned that for certain audits, we can be quite effective doing things virtually, so that’s a bit of a game changer. We may not need to bring everyone on site to conduct a certain audit. And we really pride ourselves on being risk based, so … if it’s a lower-risk type engagement, we should try to utilize these new tools of virtual engagements.

With that said, there are certain things that are hard to do virtually. You know, being able to walk down substations, or just the human interaction with the audit engagement that I believe is critically important. Our auditors don’t want to be seen as a cop out to give you a ticket, but rather an expert coming in to evaluate your programs and identify ways you can get better. And there’s so much value that happens with just the humanization that occurs when you’re in person.

It just feels very different than if we’re on a WebEx or [Microsoft Teams] call. You see body language, and then on top of that, you have the opportunity to have additional conversations in the hallway to seek clarification.

Q: How about SERC itself, and the working culture?

A: It’s really [been] wonderful to be able to move toward recognizing and establishing work life balance [and] creating the type of work environment where people can work remotely twice a week — [which is] our policy — yet, not wanting to let go of the value that we have.

It’s really important to our culture and who we are to be able to get together. I think there’s creativity, there’s connection, there’s just massive efficiency gains by being able to dip in someone’s office and ask a benign question, [which] you might not ever ask if you had to set up a WebEx or Teams [meeting]. And I think that there’s probably a [similar] concept with stakeholders: certain things they may never ask because they’re not in front of us.

I think the way we do our workshops and things like that, opening those up to be hybrid where people attend virtually … has some benefit to it as well for those that can’t make it. Trying to allow as may people [as possible] to hear the lessons learned we’re trying to share, or that type of outreach, I think has proven well. It’s also sparked a little innovation. We have e-learning modules that are on our website; we have an outreach and assistance team that’s voluntary, [where] if an entity’s struggling with something they can call us.

Q: You have a lot of veteran staff who had to adjust to working remotely during the pandemic. But you must also now have a significant cohort that joined during the pandemic and don’t know what it’s like to work in-person at SERC. Has it been a bit of a shock for them, going back to the office?

A: I think one of the great things about people is we’re adaptable. We had a large percentage of our workforce who really struggled when we went full remote; of course, you also have some individuals that felt quite comfortable quickly. We’re all wired in our own ways.

There are definitely upsides about being able to work remotely: all kinds of family-related things become simpler. That’s why I’m so big on the hybrid [model], to help people with work-life balance while also realizing the benefits of returning to the office. It’s been two years, effectively, so we want to make sure people are comfortable with the new world we live in.

We are focused on having people recall what it was like to be together that we so valued before the pandemic. It’s been really refreshing to see the energy in the hallways: people standing in another person’s [doorway] having a conversation, laughing, or talking about work or whatever. But we had to be very thoughtful about trying to bring people in and understanding that we’re going to have different risk tolerances. So we are being thoughtful as we possibly can, while still trying to do what’s best for our mission.

Q: Cybersecurity and cyber hygiene became a major concern early in the pandemic. (See PPE, Testing Top Coronavirus Concerns for NERC.) How did this risk affect your work at SERC, both in the early stages of remote work and ongoing?

A: I think the biggest thing is, it just makes us re-evaluate lots of basic, underlying assumptions. It makes us think about the types of devices we’re disseminating to staff: How well protected are they? How locked down are they? Same with [smart phones]: everyone has one with them, right? Do we have those as secure and as locked down as we possibly can?

So there’s definitely focused energy there, which would have needed to occur regardless because of the nature of what we do. People want to be mobile with their information, regardless of whether they’re in the office for a set amount of time or not. One thing that [we’ve] noticed is the phishing [attacks], the smishing — which is when they do it via text — and all kinds of other things. We just learned that QR codes can be corrupted … and that can be a way to get into your system.

Cyber attackers have gotten so creative, and it’s constantly moving and evolving … [and] it only takes one person to make a mistake, which is scary. One person opening something or downloading something that they could potentially spread. So it’s training, training, training, and practice. We do drills; we have an IT department that enjoys trying to catch people, and they do a really good job. But it’s vigilance, and it’s exhausting because you can’t let your guard down.

Q: One of the things we heard about in the meeting today is the escalating cyber risk caused by the conflict between Ukraine and Russia. (See “Cybersecurity and Ukraine,” SERC Board of Directors/Members Briefs: March 30, 2022.) How do you see SERC’s mission in the bulk power system, not just as a regulator but as a resource for the ecosystem or the utilities? How can you be a productive part of that system?

A: With things like cyber, you have known risks, you have emerging risks and you have unknown risks. There are things that we know are out there, but we also know that the adversaries are getting more sophisticated and motivated; the threats are getting more complex; geopolitical tensions are volatile. So there has to be a great deal that you don’t know about.

I have a medical analogy that I’ve used quite a bit. The first [step] is preventative medicine: you go to your doctor. Your doctor doesn’t want you to get sick, and so they say, eat these types of things, exercise, practice this type of hygiene and so on. This is the best of what we know now, and if you do this, it will reduce the likelihood of you getting ill. So we have an outreach team and assistance team, which does exactly that. They set up workshops about emerging issues, or about proven mitigation strategies.

The second [stage] is like your annual checkup. If your doctor knows about known risks and who you are and your potential issues that you could get sick [from], and they run a periodic annual checkup, you leave feeling a little bit more confident and in a better situation. I think the analogy there goes to our monitoring team. They use the reliability standards, the [Critical Infrastructure Protection] standards, which are robust, to make sure you have controls in place … [and] have a very strong and secure posture.

The third part of my analogy ties to the emergency room … and that is when something has occurred and you’re having challenges. Sometimes it could be nothing more than allergies, [but] sometimes, you may have a programmatic issue. And there’s where I see our role. I think this is one of the most important roles that we have.

It’s not just about fining — that’s important, because we want to send a message that this is not all right. But what I believe is most important are ensuring effective mitigation plans are in place. We don’t want to just check a box; we really want to get in there, roll our sleeves up and understand the root cause to make sure we’re setting our entities up so that we’re not only addressing the issue, but that it’s sustainable for the future.

Q: One of the other things that you talked about was the ERO’s transformation: we’re pivoting to renewable resources, and there’s a lot more public attention being paid to the question of reliability and resilience, especially after last year’s events in Texas. Can you talk about the coming challenges for the ERO and regional entities like SERC?

A: I think what we’re seeing is the maturation of the ERO model. Generally speaking, when things first started out, I think our model was much more centered around compliance. And at some point, I think around 2010 or 2011, we became more focused on understanding the why — why are we doing this? I have a hard time believing anybody wakes up and says, “I can’t wait to be compliant today!” I think the why is, “I can’t wait to wake up and make sure that the grid is reliable and secure.” It powers communities; it’s vital to the health and safety of my hometown, a big city, the economy.

And once you come to realize that, then you move to the concept [that] these are tools. Compliance is incredibly important, but it’s a tool to ensure things are reliable and secure. The standards are designed to [ensure] good utility practice. You need to do these things to make sure you’re secure and resilient. So once you can see the big picture, then you start evaluating — what other tools you have, that you [may be] already using, but maybe not in the most effective way.

I believe the regions — SERC and NERC and other regions — have done a really nice job on upping their collective game with the long-term reliability assessment, seasonal assessments and those things. But we cannot draw up those reports, or observe things such as the Odessa event or the [winter storms] in Texas and just write up a really good report and set it on the shelf.

It’s incumbent on us not only to make sure that our stakeholders know. … You have state legislators, you have policymakers [who are] making really complicated decisions. They’re struggling with ideas that have real reliability [and] security implications, and we really do need to improve our capabilities and ability to get in front of them and make sure that as an independent resource, [we’re] just explaining … the challenges … the opportunities, [and] the limitations … so that they can make their decisions. It’s not about driving decisions in any way whatsoever, but just making sure they are in the best position possible.

April 1, 2022June 14, 2023

Western Power Pool Names New CEO

The Western Power Pool has named industry veteran Sarah Edmonds as its new president and CEO, a role in which she will be responsible for furthering the aspirations of WPP’s Western Resource Adequacy Program (WRAP) throughout much of the Western Interconnection.

“We are truly fortunate to have retained Sarah Edmonds because she brings exactly the right mixture of experience, credibility, and integrity to build on the WPP’s strong foundation, and we are confident she can move it forward with purpose and innovation,” WPP Chairman Bill Drummond said in a March 24 statement.

Edmonds is currently director of transmission and reliability services at Portland General Electric, a job she plans to leave April 18, WPP said. Her prior roles included serving as vice president and general counsel at PacifiCorp Transmission.

Edmonds has been a key player in designing WRAP and in other organizational efforts in the Western grid, including development of the governance structure of the Western Energy Imbalance Market (WEIM).

Sarah Edmonds has been named the new CEO of Western Power Pool. | © RTO Insider LLC

“Her move is seen as an important continuation of her extensive work on regional grid matters,” the WPP statement said.

Edmonds said in the statement she is looking forward to “teaming up with the WPP’s Board and staff to propel the organization into the next stage of excellence to meet the needs and aspirations of the Western Power Pool membership.”

Edmonds will replace outgoing President Frank Afranji, who is retiring after leading the organization for four years and establishing the WRAP. (See Retiring WPP Head Foresees Increased Collaboration on Western RA.)

Earlier this year, the Northwest Power Pool rebranded itself as the Western Power Pool, signifying its expanding reach across the Western Interconnection.

What was once a member-run organization focused mainly on grid reliability in the Pacific Northwest and Intermountain regions, Portland, Ore.-based WPP spent the past two years growing south and east.

WPP has been developing WRAP since 2020, initially to address concerns that Northwest utilities have been unknowingly drawing on the same shrinking pool of reliability resources, but interest in the effort spread to other parts of the West.

The WRAP, which is slated to launch a “nonbinding” iteration in the third quarter of this year, has attracted participants in an area spanning from British Columbia south to Arizona and east into South Dakota. Stage 1 of the WRAP will include 26 participants that together represent a summer peak load of about 67,000 MW and a winter peak of more than 65,000 MW.

In creating the WRAP, WPP has also been forced to repurpose itself as an organization. Once the WRAP enters its “binding” phase in 2023, the program and WPP will become subject to federal oversight and FERC rules.

Anticipating those requirements, WPP has moved to restructure its governance and prepare to adopt some elements of an RTO, such as the appointment of an independent board of directors. WPP has created an RA Participants Committee and will establish a Committee of States to ensure that utility regulators have a voice in discussions related to the WRAP. (See RA Program will Require Restructuring of NWPP.)

Edmonds has played a leading role in those efforts.

WPP has not signaled intentions to expand the WRAP’s offerings beyond resource adequacy but appears increasingly as a possible platform for incrementally developing a Western RTO — one that would compete with CAISO’s stalled regionalization efforts, the ISO’s well-established WEIM, and SPP’s nascent RTO West and Western Energy Imbalance Service.

WPP last year selected SPP to operate the technical aspects of the WRAP, providing the market’s forward-showing functions, modeling and system analytics, and real-time operations.

The WPP board selected Edmonds after a months-long search for an experienced industry professional with “demonstrated knowledge of the increasingly complex regional and interregional grid issues faced by the Western U.S. and Western Canada,” it said.

Edmonds “has stood out amongst her peers in helping to steer the development the Western Resource Adequacy Program development effort,” Debra Smith, CEO of Seattle City Light, said in the statement. “Her keen mind and expertise in utility regulatory and governance concepts, and her relationships across the landscape of stakeholders will be a tremendous asset to the WPP and its membership.”

“Nobody is better positioned to steer the organization through the WRAP implementation into the binding program and whatever comes next,” Smith said.

April 1, 2022January 19, 2024

EPSA Panel Debates Role of ISOs, RTOs in Decarbonization

WASHINGTON ― Competitive power markets just do decarbonization better, according to Brian George, senior director of strategic policy and government affairs for the Electric Power Supply Association (EPSA), moderating a panel on decarbonization at his organization’s Competitive Power Summit at the National Press Club on Tuesday.

Citing figures from the Energy Choice Coalition, George said that from 2005 to 2021, power sector emissions in regions with organized wholesale electricity markets were down 35% compared to a 27% reduction in regions without such markets. Even deeper cuts were reported in wholesale markets with larger amounts of competitively owned generation, such as ISO-NE, which saw a 61% drop in carbon emissions, George said.

But looking ahead, George and five industry executives on the panel, envisioned power markets combining the reliability benefits of RTOs and ISOs with other market structures aimed at coordinating resources and controlling costs in response to a range of increasingly ambitious state, local and corporate clean energy targets.

ISO-NE CEO Gordon van Welie summarized the challenge organized power markets face, especially if the end goal is President Joe Biden’s 100% decarbonized grid by 2035. “If you’re going to run a system where the bulk of the energy is going to come from the sun and the wind and is inherently unpredictable, you have to have some other energy source that is stable,” van Welie said.

Further complicating the picture, George said, the industry’s focus on reliability is often equated with a resistance to the clean energy transition.

Stephen Gallagher, chief commercial officer for developer Brookfield Renewable U.S., also cited the staggering cost of grid decarbonization. “If you lay out all the plans, both public and private sector, in terms of decarbonization by 2050, that’s $150 trillion of investment — that’s trillion,” he said.

His company has grown from developing solar projects to working with corporate clients to plan and finance their transition to clean power. “That’s going to take time,” Gallagher said. Transitioning the economy to “fully green” is not a one-size-fits-all proposition.

“For us, it’s working with everybody, working with complex growth and goals on budgetary constraints.”

“So, how do we apply markets to all this?” van Welie said. “There are markets that utilize uniform clearing price auctions and marginal pricing, and I think those apply very well to attracting the capital needed for balancing resources, and I think they can be modified to attract renewable energy as well.”

John Moore, director of the Sustainable FERC Project, also favors competitive markets for meeting reliability needs —but combined with some kind of forward clean energy market (FCEM) or centralized market for state, local and corporate mandates.

Capacity markets could evolve to “capability markets,” Moore said, “to address some of the different types of needs we’re going to have with meeting much more than just a traditional peak-load day with different types of resources,” including major amounts of distributed power.

“I think the states are going to have to recognize the value of something like a centralized clean energy market, and you’re going to have to cut the number of products a bit,” he said. “There are so many different clean energy mandates, requirements, and they’re not going to work in any decentralized fashion.”

Echoing other energy industry executives at the summit, Arne Olson, senior partner at Energy + Environmental Economics (E3), said setting a carbon price would be the quickest way to scale clean energy. (See related story, EPSA Members Renew Call for Carbon Price; See Long ‘Bridge’ for Gas.)

While politically unfeasible, a carbon price is “still useful to hold up as a benchmark” for thinking about the next-best alternative, which Olson believes is a bilateral clean energy market.

“We like that better than an organized FCEM because an organized FCEM seems to be defined around one system, one ISO,” Olson said. “There’s no reason that PJM should have a separate price for clean energy attributes, or that ISO-New England should.”

The value of reducing carbon emissions everywhere should not constantly change, he said.

Van Welie agreed that integrating the environmental attributes of different energy sources would be key. “If you don’t put the externalities into the market design, if you don’t take into account the supply-side friction, the markets are not going to work.”

The Four Pillars

Designing these future markets will depend on what van Welie called “four pillars” — increasing amounts of renewables, dramatically expanded transmission, market structures that are generation-technology neutral, and balancing resources for “energy adequacy.”

“When you think about the grid, it’s fairly simple. It’s a collection of wires and a bunch of devices converting energy inputs into electricity,” he said. “If our wholesale market structures and the various regulatory processes we have around the structure don’t give us four pillars of equal strength, something’s going to break down and we’re going to have adverse outcomes.”

A holistic conversation about market evolution is needed, he said. States are primarily focused on clean energy goals, which leaves out transmission and, he said, don’t begin to consider the distribution system.

ISO-NE’s winter peak is now around 20 GW, van Welie said. “The 2050 plan shows it will be close to 60 MW,” and scaling the system up to meet that demand will require “massive amounts of investment in the transmission system.”

ISO-NE’s recent Pathways Study found that existing market structures — the status quo — are “by far the most expensive and the most inefficient” for decarbonizing the grid, van Welie said. One example: “We end up having more storage deployed in order to allow renewables to capture various clean energy attributes,” he said.

Carbon pricing was identified as the most efficient path to decarbonization. (See Draft Study Weighs Tradeoffs of CO2 Pricing, FCEM for ISO-NE.) While a regional or national carbon market is not on the table politically, van Welie’s next-best “is to put [carbon pricing] into the ISO markets, and we’re going to need to have the states tell us what number [of emissions reduction] they want.”

Education, Cooperation, Regulatory Certainty

Looking at the obstacles ahead, panelists raised several issues.

As a developer, Gallagher’s top concern was regulatory certainty. Developers are renegotiating contracts, and in some cases, customers are walking away from projects, he said.

“Not all customers are created equal. Some are very sophisticated, some are not, and they can get scared away with some of the complexity,” he said. “What they need is assurance on executions, so they are willing to pay a premium to make sure” projects are completed, and “right now, that’s not happening.”

Echoing other executives at the summit, Jill Davies, senior vice president of energy trading at Shell Energy Americas, stressed the critical role natural gas will play in the energy transition, providing reliability to markets.

At the same time, she said, “There’s still a lot we can do even to lower emissions across the value chain,” like co-locating solar and storage or carbon capture and natural gas plants.

But Davies also called for “innovation and technology to step in to help us do a better job of forecasting. The role of planning is going to be critical going forward to understand how cities will grow. Where will load be? How will we stress test our systems for climate change … with energy demands that we’ve seen in the U.S. extreme weather events?”

Still another obstacle is the lack of understanding — by regulators, policy makers and the general public — of the complexity and scope of the challenge ahead, and how long the clean energy transition will take, Davies said.

With the accelerating pace of coal plant retirements, people need to realize “it’s not a one-for-one transfer,” she said. “If you retire a coal plant or a gas power generation plant, you just can’t replace it with one solar farm. You need orders of magnitude [of] greater megawatts, and you also need geographic diversification.”

Those pushing for urgent, ambitious clean energy targets also must recognize “that people are not willing to compromise,” she said. “Often times, they don’t want pipelines built where they live; they don’t want to look out their windows and see wind farms.”

Moore agreed with the need for public education. He and other industry insiders “are stunned on a daily basis over the real incomplete level of understanding that policy makers, regulators, legislators all have about how the grid works, and what the implications are for having made at a state level, for example, serious climate commitments in lots of respects, and then not knowing what that ultimately means for consumers and the environment.”

Both he and Davies also called for more cooperation between states and ISOs and RTOs. As more renewables come on the grid, the power a state uses may increasingly come from outside its boundaries, Moore said. States will have to work together, “simplifying products, simplifying the number of local mandates, looking to markets to be more of a resource,” he said. “That’s got to change.”

April 1, 2022January 19, 2024

PJM Requests Rehearing of FTR Credit Requirement Filing

PJM on Thursday asked FERC to rehear a previous decision rejecting the RTO’s plan to modify its financial transmission rights credit requirement calculation, defending its original December filing (ER22-703).

The commission on Feb. 28 rejected PJM’s proposal to modify the FTR credit requirement by implementing an initial margin calculation from a historical simulation (HSIM) model using a 97% confidence interval, saying the RTO failed to support the plan because its independent auditors only validated the model at a 99% confidence interval.

FERC directed the RTO to file 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. (See FERC Rejects PJM’s FTR Credit Requirement Proposal.)

Stakeholders voting at a March 23 PJM Members Committee meeting endorsed a motion for the RTO to refile the original proposal “accompanied by some new supporting rationale.” (See Stakeholders Encourage PJM to Defend FTR Filing.)

“The Feb. 28 order errs by disregarding nearly all of the substantial evidence PJM presented in support of the December Section 205 filing,” PJM said in its rehearing request.

Rehearing Request

In its filing Thursday, PJM said it presented “abundant evidence” supporting its December filing to show the proposed use of the 97% confidence interval was just and reasonable and that FERC’s February order “addresses little of that evidence.” The RTO said the commission’s order limited discussion of the 97% confidence interval to two aspects, including:

- - an independent auditor’s evaluation of the HSIM model, “offered only as a supplemental check on the model’s technical capability,” which the order discounted because the model reviewed by the auditor used a 99% confidence interval; and
  - the estimation that the overall level of collateral would be lower under the HSIM with a 97% confidence interval “compared to the level of collateral under the current effective rules” and that the proposed tariff revisions don’t show how “sufficient collateral to address the riskiest market participants” will be collected.

“Neither of these bases for the rejection of the December Section 205 filing is well-founded, and both should be withdrawn on rehearing,” PJM said in its request. “The Feb. 28 order never engages with the large bulk of the evidence PJM provided in support of the HSIM with a 97% confidence interval — as if that evidence had never been presented. Such fundamental failure by the commission to address the record evidence is a signal of unlawful agency conduct, which the commission now has an opportunity to correct on rehearing.”

PJM highlighted three issues it took away from the commission’s February order.

First, PJM said the order asserted the RTO did not demonstrate the HSIM model “would operate as represented across extreme events or that the initial margin estimates would cover expected losses.” PJM said back-testing analyses included in the filing “made those very demonstrations” and that FERC “misunderstands the limited purpose of the additional check provided by the independent auditors’ validation of the HSIM model.”

PJM said the back-testing failure rate, or the instances when the initial margin was not adequate to cover potential losses, “did not exceed 3% which is consistent with the model confidence interval of 97%.”

“The Feb. 28 order erred in disregarding PJM’s evidence that the HSIM model with a 97% confidence interval would operate as represented across extreme events, and that the initial margin estimates would cover expected losses,” PJM said.

Second, PJM said FERC’s order disregarded recent RTO tariff revisions regarding the “assessment of participant riskiness” and misinterpreted how the HSIM addresses risk when looking at the 97% confidence interval.

PJM noted that FERC found that the RTO “failed to demonstrate that its proposed FTR credit revisions are reasonably calibrated to ensure that market participants will be required to provide adequate collateral relative to the risks of their positions” because the “proposed 97% confidence interval would result in a reduction in market participants’ aggregate collateral commitments relative to the existing FTR credit requirement.”

“It is possible the Feb. 28 order is using interchangeably the distinct issues of the riskiest participants (which concern a particular participant’s demonstrated ability and willingness to honor its financial obligations) and the riskiest portfolios or positions (which concern the level of risk that the potential losses on a particular portfolio might exceed the posted collateral),” PJM said in its request.

Finally, PJM said FERC’s conclusion that the RTO did not demonstrate the 97% confidence interval is just and reasonable “assumes away most of the evidence PJM did present.”

PJM said it demonstrated that the failure rate under the 97% confidence interval “was less than 2%, compared to an 8% failure rate under the currently effective rules.” It also said testimony from Chief Risk Officer Nigeria Bloczynski showed the 97% confidence interval embodies “a high confidence interval and a significant improvement to the PJM collateral practices.”

April 1, 2022

NHSaves Supreme Court Cases Dropped; Program Approval Still Pending

The nonprofit Listen Community Services has dropped its appeal to the New Hampshire Supreme Court challenging a Public Utilities Commission order last fall that upended the NHSaves energy efficiency program.

Listen’s decision to withdraw the appeal Monday follows similar action from four other parties earlier this month. The nonprofit cited passage of H.B. 549 as the reason for the withdrawal, saying that the law signed by Gov. Chris Sununu in February addresses “many of the substantive issues on appeal.” (See NH Large Business Sector Takes Biggest Hit in Revised EE Budget.)

Parties to the docket for the 2021-2023 Triennial Energy Efficiency Plan (DE 20-092) asked the PUC in December 2020 to approve a settlement they reached governing the new program. The PUC denied the request, reworking the foundation of the program in a way that brought the state’s EE industry to a standstill because of funding uncertainty. Parties asked for a review of the order, but the PUC denied the request. They moved to the courts to appeal the order, reaching the state’s highest court in February.

The Office of the Consumer Advocate was the first to withdraw its appeal, having agreed to do so if the PUC suspended the part of its order specific to program rates and revert them to the levels of the prior triennial plan. H.B. 549 has a similar effect to the OCA’s agreement, putting a formula into law for how NHSaves will be funded. Regulators rushed the law through the legislature to resolve concerns about the PUC’s order.

In its March 3 notice of withdrawal, the OCA said that the new law doesn’t address “every legal infirmity” in the PUC’s order or the procedures used to issue it, but the law makes any outstanding controversy “academic in nature.”

Eversource Energy withdrew its appeal March 3, and Clean Energy NH and Conservation Law Foundation withdrew a joint appeal March 15.

Program Approval

Despite the clarity for program rates and structure provided in H.B. 549, it still requires the PUC to approve an updated plan for 2022-2023, filed by the state’s utilities March 1. The plan cuts the originally proposed NHSaves budget for the two years by about 50%, based on the new rate structure set in the law.

The commission must decide on the plan by May 1. In a March 16 procedural order, the PUC set a hearing for April 21, saying it will seek additional input on whether changes to the program are reasonable based on guidelines of H.B. 549.

March 31, 2022December 13, 2023

SERC Board of Directors/Members Briefs: March 30, 2022

SAVANNAH, Ga. — “It’s so amazing to see people in three dimensions,” joked NERC CEO Jim Robb on Wednesday, as SERC Reliability held its first in-person Members and Board of Directors meetings since the beginning of the COVID-19 pandemic.

In his opening remarks at the Members Meeting, Robb reminisced that one of his first assignments, when “I had been the CEO of NERC for about two days,” was to deliver a briefing to SERC’s board. He said that despite the arrival of pandemic restrictions, the last two years have seen “so much positive change at NERC and the way NERC and the regional entities work together,” with SERC playing a significant role.

“I think because of the proximity of Atlanta to [SERC headquarters in] Charlotte, we had a little bit of a special relationship,” Robb said.

“I really want to take my hat off also to the SERC staff, because [I’ve seen] them showing up over the last two to three years in very different ways than we would have seen them before. … The team here [is] leaning in and [has] really become very positive contributors to the ERO Enterprise overall.”

SERC CEO Jason Blake returned Robb’s compliments, speaking of NERC’s willingness to include regional entity CEOs in the development of the ERO Enterprise Strategic Plan. Blake likened SERC to “a player on this team” that needs to bring “everything [it] can … to really advance” the good of the entire organization.

Wednesday also marked the one-year anniversary of the first board meeting under SERC’s new governance structure, which was adopted in January 2021. The new structure instituted SERC’s members group, which meets once a year alongside the Board of Directors, and also reorganized the board structure to include three independent directors.

Lonni Dieck, a member of that first class of independent directors who attended their first meeting a year ago, thanked SERC’s board and staff for helping them “up the learning curve,” while also “being very receptive to our suggestions and feedback.”

New Sector Directors Welcomed

Dieck, SERC’s lead independent director, was one of three board officers — along with Chair Todd Hillman and Vice Chair Pandelis Xanthakos — whose terms the board agreed to extend for an additional year. Instead of leaving their posts on May 21, 2022, they will leave a year later. The extension was suggested because the same bylaw changes creating the membership structure and independent directors also specified that officers serve terms of two years. Because the three took office Jan. 1, 2021, leaving this May would have cut short their terms at one year, five months.

The board also approved revising current directors’ terms to end on May 31 rather than June 31 as before, once more due to the new bylaws. The only exceptions were the independent directors, who took office Jan. 31, 2021, and thus would have ended their terms on Dec. 31, 2022. Their terms were modified to end May 31, 2023, for Shirley Bloomfield and Deborah Wheeler, and May 31, 2024 for Dieck (who will stay on as a director for another year after her term as an officer expires).

In addition, the board welcomed three new sector directors at Wednesday’s meeting: Virgil Hobbs of Southeastern Power Administration, representing the Federal-State sector; Adrianne Collins of Southern Company Services, representing investor-owned utilities; and Eric Laverty of ACES Power, from the marketer sector. They respectively replaced outgoing directors Bob Dalrymple of Tennessee Valley Authority, Nelson Peeler of Duke Energy Carolinas, and Brad Cox of Tenaska Power Services.

2023 Business Plan and Budget

SERC’s board approved the RE’s 2023 business plan and budget for posting and submission to NERC.

Next year’s budget is proposed to rise to $27.8 million, up 4.1% over last year’s budget of $26.7 million; the RE’s assessment is also planned to rise 4.8%, to $26 million. SERC plans to release about $1.6 million from its assessment stabilization reserve to cover the balance.

The board’s approval of the draft budget was conditioned on SERC’s Finance and Audit Committee investigating the current employment market to determine whether the market adjustment category — which governs spending on merit-based raises and promotions — should be expanded beyond its current planned increase of 3%. According to the resolution, expansion to this category “shall not exceed an additional 1.5% increase.”

Cybersecurity and Ukraine

Stephen Brown, SERC’s director of cyber and physical security, reminded members to be on their guard against potential cyberattacks by Russia’s intelligence services. Security experts and the government have issued repeated warnings about the potential for Russia to turn its cyber capabilities against global targets as its military operations in Ukraine drag on. (See White House Issues Fresh Russian Cyber Warning.)

Brown said that Russia’s military and intelligence services have multiple cyberattack teams, which have been known to compete with each other by launching multiple attacks on the same target. One of these groups was charged in 2020 for a series of attacks around the world, including assaults on Ukraine’s power grid in 2015 and 2017. (See Six Russians Charged for Ukraine Cyberattacks.)

“This is a critical moment in our history, as we have the opportunity to assist our industry and country,” Brown said. “We want to ask all of our entities and committees to adopt the Cybersecurity and Infrastructure Security Agency’s [CISA] Shields Up recommendations and have a heightened posture when it comes to cybersecurity and protecting their most critical assets. Just as important, if you’re not already a member of the [E-ISAC], we encourage you to join. … They have relationships with [CISA] and the [FBI] that give them the ability to see from a global risk perspective and see potential threats that impact cybersecurity not only from a global standpoint, but specifically for our industry.”

March 31, 2022

New York Proposes Opt-out CDG Program

New York state officials on Tuesday issued a straw proposal for integrating community distributed generation (CDG) into community choice aggregation (CCA) on an opt-out basis (14-M-0224).

The Public Service Commission initiated the CDG program to give utility customers a chance to participate in distributed solar regardless of whether they own a residence or business suitable for installing panels.

“Opt-out CDG encourages municipal governments — and their constituents — to take control of their energy future through locally driven CDG participation,” Department of Public Service said in the proposal. “Staff is confident that a robust opt-out CDG program will encourage a multitude of new administrators to join the CCA market, including public and nonprofit organizations, leading to an increase in market competition which could spur innovation by means of the CCA model.”

CCA “is a municipal model for procuring energy that replaces the utility as the default supplier of electricity and/or natural gas for virtually all homes and small businesses within a jurisdiction.” All utility customers financially support clean generation facilities through surcharges added to their bills.

The commission decided to focus the program on residential and other small customers because they otherwise would not be able to benefit from clean distributed energy resources. The opt-out model of implementation is designed to pull more customers into the program, given people’s tendency to take the path of least resistance: Customers in the municipality would be automatically enrolled, unless they opt out.

Structure and Rules

The commission’s November procedural order directed that the proposal detail the program’s operation, oversight and enforcement. The DPS held two public webinars in February and incorporated some of the comments into its recommendations.

Staff recommended that two unique products be offered to municipalities: standalone CDG, or CDG in addition to becoming a CCA. Much of the proposal is concerned with rules to minimize confusion for those customers in a CCA; the timelines for the CDG opt-out and CCA supply will not necessarily line up. It also accounts for customers already enrolled in a CDG program.

“We understand that a combined offering for [municipalities] who choose to offer both supply and CDG will allow for greater energy options and consumer choices,” Michael O’Donnell, DPS utility analyst, said during the first webinar. “We need to guarantee that customers who already have a supply product are not confused by another product offering or misguided by the timing of the offerings.”

The straw proposal also recommends that the following customers, who are ineligible to be opt-out enrolled in CCA supply, be eligible for opt-out enrollment in CDG:

time-of-use or time varying rate customers;
Assistance Program Participant (APP) customers;
customers with energy service company (ESCO) blocks on their utility accounts; and
customers who are being served by an ESCO.

The proposal recommends that low-income APP customers be the first members to be subscribed in the municipalities’ programs, and that they should continue to receive their CDG credits and not be dropped or unsubscribed because of any change in their APP status.

Crediting Methods

The proposal recommends that programs use the state’s current net-crediting model — for now.

“Under net-crediting, the utility keeps 1% of credits generated each month for billing administrative purposes, a minimum of 5% of credits go to the customers, and the remaining value is paid to CDG owners by the utility, according to the proposal. “This model guarantees savings for customers participating in CDG.”

However, under the proposal, the state could adopt a credit pooling mechanism, proposed by New York State Energy Research and Development Authority (NYSERDA) and National Grid and approved by the PSC in January for the Expanded Solar for All (E-SFA) program (19-E-0735).

Credit pooling was adapted from commercial and industrial practices to allow residential customers to share the energy produced from an eligible renewable resource and receive bill credits based on the production of the facility. It potentially offers considerable efficiencies for CCA administrators, customers and utilities, Max Joel, assistant director of the NY-Sun program at NYSERDA, said at the first webinar.

Admin Details

The state also recommends that CCA administrator fees for opt-out CDG be paid exclusively by the owner of the project serving the aggregation. In addition, fees can be calculated based on percentage, per kilowatt-hour or per customer. CCA administrators must clearly present their proposed fee structure in proposals to municipalities, made through a competitive municipal bid process with NYSERDA’s assistance, including the method by which fees will be calculated.

The state is requesting further stakeholder feedback on CDG capacity to decide whether a cap, block, carve-out or some other mechanism needs to be put in place to ensure all New Yorkers have access to CDG, either through an opt-in or opt-out model.

Customers living in utility territories with limited potential for CDG development, or with insufficient project pipeline capacity, “should not be jeopardized by opt-out CDG programs operating within their utility service territory,” the proposal said.

March 31, 2022November 12, 2023

Nevada Joins Multistate Effort to Electrify Trucks, Buses

Nevada Gov. Steve Sisolak said Thursday that he has signed on to a multistate agreement to work toward a goal of 100% sales of zero-emission medium- and heavy-duty trucks by 2050.

Sixteen other states, the District of Columbia and the Canadian province of Quebec previously signed the memorandum of understanding, which was announced in July 2020.

The aim of the agreement is to accelerate the market for electric trucks, ranging from large pickups and vans to delivery trucks, school and transit buses, and long-haul vehicles. The group’s interim target is at least 30% zero-emission truck sales by 2030.

In addition to Nevada, signatories of the agreement include the states of California, Colorado, Connecticut, Hawaii, Maine, Maryland, Massachusetts, New Jersey, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia and Washington.

The jurisdictions represent 40% of the U.S. population and 35% of registered medium- and heavy-duty vehicles, according to Sisolak’s office.

Sisolak made the announcement via a pre-recorded video during a Las Vegas event hosted by the nonprofit Electrification Coalition.

“By working across states and with many partners, we can accomplish much more together than we could do individually,” Sisolak said.

Sisolak said the agreement will help Nevada meet its goal of net-zero greenhouse gas emissions by 2050 and position the state to respond to federal regulatory changes.

Reducing Risks

The Electrification Coalition welcomed the announcement.

“States are playing a key role in the vital work to transform our transportation system, and Nevada’s participation in this commitment represents a substantial boost to our momentum,” Katherine Stainken, the coalition’s vice president of policy, said in a statement.

In a June letter to Sisolak, the coalition urged Nevada to join the agreement to address the public health, economic and national security risks arising from the transportation sector’s oil dependence. The letter was signed by representatives of 41 businesses, including Amply, EVgo, Mack Trucks, Proterra, Rivian, Siemens, Volvo Group North America and Nestle USA.

Western Resource Advocates also commended Sisolak for bringing Nevada into the agreement.

“We applaud Gov. Sisolak for this important step that recognizes the need to reduce the harmful fossil-fuel emissions from medium- and heavy-duty trucks in Nevada that contribute to climate change,” Cameron Dyer, Western Resource Advocates’ managing senior staff attorney in Nevada, said in a statement.

But WRA called on the state to do more, including following California’s lead in adopting an Advanced Clean Trucks regulation. The regulation requires vehicle manufacturers to sell zero-emission trucks as an increasing percentage of their annual California sales from 2024 to 2035.

Draft Plan Released

Signatories to the agreement are working together through a ZEV task force being facilitated by the Northeast States for Coordinated Air Use Management (NESCAUM).

Last month, the group released a draft action plan that includes more than 60 recommendations for state policymakers to promote widespread deployment of zero-emission trucks.

The recommendations cover areas such as sales and fleet purchase requirements; purchase incentives for ZEVs and related infrastructure; electric utility and utility regulator actions; financing for fleet conversions; and outreach and education.

One of the plan’s recommendations is that states work together to support development of a standardized and reliable fast-charging network for trucks. States should also advocate for changes to federal law that would allow user-pay charging at interstate rest areas, the plan recommended.

And states should consider increasing weight limits for electric trucks, a step the federal government has already taken for trucks on interstate highways, the plan said.

“Current weight limitations can impact the payload capacity of battery-powered trucks, particularly long-haul freight trucks, because the additional weight of the battery system can result in reduced payload capacity,” the draft plan noted.

Comments on the draft plan will be accepted through April 25 and may be submitted through NESCAUM’s public input portal.