The CAISO Board of Governors and the Western Energy Imbalance Market (WEIM) Governing Body on Thursday agreed to extend controversial wheel-through rules for two more years while naming new members to WEIM’s Governance Review Committee (GRC).
CAISO enacted the wheeling provisions prior to summer 2021 to help avoid capacity shortfalls like those that caused rolling blackouts in August 2020.
The new rules sought to ensure that transfers from the Pacific Northwest to the Desert Southwest through CAISO territory did not take precedence over capacity needed to serve CAISO native load. One provision required non-CAISO entities to designate high-priority wheel-throughs needed for reliability at least 45 days in advance. (See CAISO Approves Controversial Wheeling Limits.)
The Bonneville Power Administration, Arizona Public Service, NV Energy and others protested the changes, saying they were inequitable and ran contrary to FERC’s open-access rules. FERC, however, ultimately accepted the provisions. (See FERC OKs CAISO Wheel-through Restrictions.)
In Thursday’s meeting, the WEIM Governing Body voted in its advisory capacity to extend the wheeling provisions, which were set to expire June 1, to May 2024. Previously the Governing Body had declined to support the change in a rare split between it and CAISO management. (See EIM Governing Body Rejects Part of CAISO Summer Plan.)
Entities from across the Western Interconnection participate in WEIM, CAISO’s real-time interstate trading market, in a sometimes uneasy relationship between California and the rest of the West.
Governing Body Chair Anita Decker had opposed the wheeling provisions in April as a threat to the WEIM and Western cooperation, but she decided to support the extension of the rules last week as a means to achieving a long-term solution.
“In reading through the comments and hearing from various stakeholders, it’s abundantly clear that the underlying interest is to move something forward that actually supports a West-wide effort, and I think this is a step in doing that,” Decker said. “I’ve been skeptical … but I am going to support this.”
CAISO board member Angelina Galiteva agreed the extension was a “stopgap” measure on the way to a more workable plan.
“This is not an ideal solution, but it’s kind of a situation [where] the perfect is the enemy of the good,” Galiteva said.
Reaching a “long-term durable solution that is … equitable to market participants” in two years is “actually a very compressed timeline … [but] I’m confident that with the stakeholder process and inclusivity that we generally see around these processes, we’re going to reach a solution that works.”
GRC Appointments
In a separate decision, the board and Governing Body appointed three new members to fill vacancies on the WEIM Governance Review Committee.
Pam Sporborg, Portland General Electric’s market analytics and performance manager, was named to fill the vacant WEIM entity sector seat. Michele Beck, executive director of the Utah Office of Consumer Services, and Amanda Ormond, principal of energy consultancy Ormond Group, were appointed to fill two vacant public interest and consumer advocate sector seats on the committee.
In August, the CAISO board and WEIM Governing Body approved a new delegation of authority over EIM matters after a lengthy stakeholder process and reassessment required by the market’s founding charter in 2014. (CAISO Agrees to Share More Power with EIM.)
This year, the GRC plans to weigh changes to support the proposed WEIM extended day-ahead market (EDAM), a top priority for CAISO. (See CAISO Takes on Transmission, EDAM in 2022.)
“In addition to the benefits an EDAM market offers our partners, an extended day-ahead market can serve as the next important step in the creation of a regional market that will result in meaningful efficiencies for utilities in the Western interconnection,” CAISO CEO Elliot Mainzer said in a statement on the decision.
The GRC’s next public meeting is scheduled for Feb. 17.
FERC ordered PJM last week to remove the 10% cost adder for the reference resource used to establish the variable resource requirement (VRR) curve in the RTO’s capacity market (ER19-105).
In a 4-1 decision at its monthly open meeting Thursday, the commission said it determined there was “insufficient record evidence to support PJM’s proposed inclusion of a 10% adder,” reversing its original decision in April 2019. Commissioner James Danly dissented.
The D.C. Circuit Court of Appeals in July rejected FERC’s logic for approving the adder, ruling that the commission “did not provide a satisfactory explanation for its approval, which reasoned decision-making requires” (20-1212). (See DC Circuit Rejects FERC Logic on PJM 10% Adder.)
PJM argued that the 10% adder was necessary “based on the uncertainty of natural gas costs” and the “differences between the key assumptions made for the reference resource relative to actual attributes of a similarly situated representative resource.”
“Based on a thorough review of the record, we find that PJM failed to meet its burden of demonstrating that inclusion of the 10% adder in modeling energy market offers for purposes of calculating the E&AS [energy and ancillary services] offset for its VRR curve is just and reasonable,” FERC said. “The record fails to support PJM’s central argument for including the adder: that a 10% adder should be included in the modeled energy market offers of the reference resource during all hours of the year because tariff provisions governing energy market sellers’ cost-based offers permit such adders to be included.”
PJM must remove the adder from the determination of the VRR curve beginning with the 2023/24 Base Residual Auction and submit a compliance filing within 30 days with tariff revisions reflecting the removal.
The commission said although it rejected the adder, it remained “mindful” that the VRR curve is partially based on calculation of the reference resource’s estimated cost of service, which is used to determine the resource’s net cost of new entry (CONE) and “necessarily require the use of assumptions.”
“PJM, however, has not demonstrated that adding 10% to the reference CT’s costs, which raises the net CONE used to develop the VRR curve, is a reasonable assumption that results in a more accurate representation of such costs compared to an estimate without a 10% adder (i.e., PJM’s prior method of calculating the E&AS offset),” FERC said in its order.
Glick Comments
FERC Chairman Richard Glick discussed the decision with reporters after the meeting, saying the adder has been an “ongoing discussion” in PJM for several years and that there was “no justification” for it. Glick dissented on the original order, with former Commissioners Neil Chatterjee, Cheryl LaFleur and Bernard McNamee making up the majority.
Glick said there have been “constant proposals” from PJM, stakeholders and the commission to make “pretty significant changes” to the RTO’s capacity markets.
“We all like to think that there are competitive markets out there, but they’re called market constructs for a reason,” Glick said. “They require a lot of administering, whether it be through the Independent Market Monitor, through PJM or FERC.”
Glick said there’s been an “obsession” by some stakeholders in trying to increase revenues for generators, with some believing they haven’t been able to recover enough revenue and making “constant” proposals that “blatantly increase prices” without any clear justification, citing the minimum offer price rule as the biggest example.
“In some cases, I felt like we were just making stuff up in order to increase prices,” Glick said. “I think it’s very important that we go back to basics and figure out what is truly just and reasonable and not focus extensively on bolstering uneconomic generation.”
Danly Dissents
In his dissent, Danly admonished the majority, arguing that the adder was being removed shortly before a scheduled auction “that had already been delayed to accommodate other recent commission intrusions into PJM’s market design.”
“The fact is, a new commission with different membership has decided to reverse itself, which it is entitled to do, but in so doing, it discounts the evidence submitted by PJM and the market participants in support of the 10% adder,” Danly said. “But since not all generators will include the adder every time, we jettison it. Forget that PJM easily met their burden for a [Federal Power Act] Section 205 rate filing.”
Dany said he also disagreed with the process leading to the dismissal of the adder, noting PJM detailed “numerous reasons” why it should not be eliminated for the 2023/24 delivery year, including that it would have to recalculate the E&AS offset, net CONE and net avoidable-cost rate.
“These are not minor details, but fundamental changes we now require after critical auction deadlines have already passed,” Danly said. “I am not certain it is possible for the commission to make any more of a muddle of the PJM capacity market. I suppose if we really wanted to cause trouble, we could delay the auctions again but, wait … we already have.”
MSOC Decisions
The commission also ruled on two issues regarding PJM’s market seller offer cap (MSOC).
In the first, FERC rejected 10 individual filings each requesting commission approval of letter agreements between capacity market sellers and the Monitor (ER22-474). The agreements concerned alternative MSOCs for each seller’s offer into the 2023/24 BRA.
The commission determined that the agreements did not identify offer cap values, failing to comply with PJM’s tariff requirement that any alternative offer cap must be filed with FERC for approval.
“We find that, when filing these letter agreements, it is insufficient to merely reference the existence of a nonpublic offer cap posted by the IMM,” the commission said. “We cannot evaluate an offer cap value that is not before us.”
The order also instituted a show-cause proceeding in a separate docket on the justness and reasonableness of the tariff provision that allows sellers and the Monitor to agree on and file an alternative offer cap that is inconsistent with the PJM tariff (EL22-22).
FERC also ruled on the Monitor’s request for waiver or clarification to update the net E&AS offsets used in the calculation of default and unit-specific MSOCs for the 2023/24 BRA, dismissing the issue as moot (EL19-47).
The Monitor had requested waiver of four of the revised pre-auction deadlines pertaining to the offer caps in November. But last month, the commission partially reversed its May 2020 decision, impacting several of PJM’s energy price formation revisions. (See FERC Reverses Itself on PJM Reserve Market Changes.) The ruling led to a delay of the BRA for the 2023/24 delivery year originally scheduled for Jan. 25, nullifying the IMM’s request for the waivers. PJM earlier this month filed with FERC proposing to move the upcoming BRA to the end of June to comply with the commission’s order. (See PJM Reveals Preliminary Capacity Auction Timeline.)
A bill to expand the provision of green hydrogen by municipal and rural utilities appears headed for easy sailing through the Washington House.
On Friday, Democrats and Republicans on the House Environment and Energy Committee unanimously recommended that the full House pass House Bill 1792, which provides tax credits for “green electrolytic hydrogen” produced, sold or distributed by municipalities and public utility districts.
Green electrolytic hydrogen is hydrogen produced through electrolysis and does not include hydrogen manufactured by steam reforming or by any technologies using fossil fuels.
Rep. Alex Ramel (D) introduced the bill. “I’m really excited about the future in Washington of green hydrogen,” he said at the committee vote.
This is the latest baby step as Washington tries to set up a renewable hydrogen industry to power fuel cell electric vehicles.
In 2019, the legislature passed a law to allow Washington public utility districts to manufacture and distribute hydrogen. This spring, the Douglas County PUD in central Washington hopes to open the state’s first hydrogen production plant, which will use electrolysis to separate hydrogen and oxygen from water pumped from the PUD’s Wells Dam on the Columbia River.
Douglas PUD and the Twin Transit Authority in the Lewis County city of Chehalis are building hydrogen fuel stations for their agency’s vehicles. These would be the first such fueling stations in Washington.
The bill has a still-undefined 25-year tax exemption that would be created for the electricity that a utility sells to a green electrolytic hydrogen production business, a renewable hydrogen production business, or a business compressing, liquifying, or dispensing green hydrogen or renewable hydrogen. Existing exemptions from the retail sales tax, use tax, and leasehold excise tax that apply to certain aspects of the production of renewable hydrogen would be also expanded to include the production of green hydrogen.
“We are very grateful to Rep. Ramel for the tax incentives,” said Rep. Mary Dye, the committee’s ranking Republican member.
Washington’s House Democrats have resurrected last year’s stalled attempt to add climate change mitigation to land use planning.
In the first action on the legislationthis year, the House voted 57-41 along party lines Friday to resend House Hill 1099 to the state Senate. Last year, the House approved the same bill 56-41 only to have the legislation stall in the Senate Transportation Committee, then chaired by moderate Sen. Steve Hobbs (D). (See Sponsor Plans to Revive Stalled Wash. Land Use Bill.)
Hobbs has since been appointed Washington’s secretary of state, and a more left-leaning Sen. Marko Liias (D) is now chair of the transportation Committee, improving prospects for the bill.
Last year, the bill by Rep. Davina Duerr (D) successfully made it through the Senate’s Housing and Local Government and Ways and Means committees before being held up. It must go through the same three committees again this year.
Duerr’s bill would add climate change as a factor in Washington’s Growth Management Act, which governs land-use planning by city and county governments. The bill would require comprehensive plans, development regulations and regional plans to support state greenhouse gas emission targets and improve resilience to climate impacts and natural hazards.
Her bill would have required climate change to be considered in land use and shoreline planning for the largest 10 of Washington’s 39 counties and in cities of at least 6,000 people. Washington’s 10 largest counties cover Puget Sound, Spokane, the Yakima River Valley and the Washington-side suburbs of Portland, Ore. A legislative memo said 246 county and city governments would be affected, including 110 jurisdictions outside the 10 most populous counties.
The bill calls for the state’s Department of Commerce to set guidelines by 2025 on how those areas can reduce GHG emissions and vehicle miles traveled. Because 40 to 45% of Washington’s GHGs come from motor vehicles, traffic issues would become a major priority in those guidelines.
“Planning should be about the future. It needs to be about improving the quality of life for our kids,” Duerr said in a press release. “That means reducing our contributions to climate change and planning our communities so they are better protected against disasters like flooding, fires and heat events. It also means creating livable, walkable communities as opposed to expensive urban sprawl.”
ERCOT said Wednesday that a retired gas-fired power plant is being brought back to life by its new owners.
The Texas grid operator said it received a notification that the Wharton County Generation plant, a 69-MW combustion turbine along the Texas Gulf Coast, would become operational as of Feb. 4. The plant was decommissioned and retired by Luminant in late 2020 after a forced outage.
However, after discussions with CenterPoint Energy, the interconnecting transmission service provider, ERCOT said the required studies and facility upgrades to return the unit to service will delay that targeted in-service date. Once the studies and upgrades have been completed, it will be allowed to return to service.
Luminant sold the plant in 2021. It is now owned by Phoenix Power Holdings, according to Texas regulatory filings.
In-person Meetings in March?
After initially planning to resume in-person stakeholder meetings in February, ERCOT also announced Wednesday that next month’s meetings will continue to be virtual.
In-person meetings will begin in March at its new headquarters building in the MetCenter office park in Austin. The new facility is being readied for occupancy, but ERCOT said it needs time to properly move in staff and ensure “all communication technologies are ready for effective stakeholder meetings.”
Travis County, in which Austin is located, has raised its COVID-19 guidelines to its highest threat level.
Environmental justice ran into reliability at FERC last week as commissioners debated whether the “sky is falling.”
The question of whether the Weymouth Compressor Station in Massachusetts, part of Enbridge’s Atlantic Bridge pipeline project, is dangerous for the communities surrounding it was front and center as the commission resolved a paper briefing on the project at its monthly open meeting Thursday (CP16-9-012). (See FERC Rejects Calls to Shut Down Weymouth Compressor.)
But lurking in the background was a familiar debate over whether pipeline constraints and limited gas supply are a threat to the reliability of New England’s grid.
In his concurrence and partial dissent on the order, Republican Commissioner Mark Christie wrote that the facility “under attack” in the proceeding is necessary to help alleviate gas supply concerns in the region.
He made the point as part of a larger argument that the commission’s paper briefing revisiting its original certification of the project was part of a worrying trend.
“Even today in two other cases, the majority is issuing a new procedural rule that will drive up litigation costs and create new avenues to attack certificates after they have been issued,” Christie wrote. “These actions do not appear to recognize the reality that a reliable supply of natural gas will be critically necessary to keep the lights on and homes warm in New England and the rest of the country for years to come.”
Christie was referring to FERC’s approval of requests for additional time from two separate developers to complete construction of their gas projects: Adelphia Gateway, a pipeline upgrade and extension project in Pennsylvania (CP18-46-004); and Delfin LNG, which is constructing onshore facilities in Louisiana to transport gas to a new offshore LNG port, possibly the first in the U.S. (CP15-490-002). Both developers cited the COVID-19 pandemic as causes for the delays.
While both Christie and fellow Republican Commissioner James Danly concurred with the decisions to grant the requests, they dissented over a new procedural rule introduced by the Democratic majority that allows new intervenors each time a request for extension is filed. Christie argued in his dissent that the new policy “will undeniably drive up the legal costs associated with building gas facilities, creating yet another disincentive to the construction of vitally needed infrastructure.”
Christie sparred Thursday with Commissioner Allison Clements, who said that FERC’s two Republicans have been claiming that the “sky is falling on regulatory certainty.”
“Given my experience as an infrastructure project finance attorney who has dealt with the risk of policy change, I’m confident that the path to regulatory certainty does not lie in continuing to ignore the legitimate concerns of stakeholders. It does not lie in hiding behind blanket claims of reliability risk,” Clements said.
Christie retorted that an “honest reliability dialogue” will acknowledge that gas is an essential part of reliability.
“And what this commission has been doing over the last year has been absolutely drawing a lot of uncertainty into whether we’re going to stand behind gas projects or whether we’re going to let gas projects be built at all, or subjected to such additional costs as they become unfeasible. So it’s not a ‘sky is falling’; it’s reality,” Christie said.
Opponents have challenged the Atlantic Bridge project on several grounds, including that it may be used to export LNG to other continents, but FERC shot down that claim when issuing its approval to the project in 2017. (See Atlantic Bridge Project Approved by FERC.)
Region on Edge
ISO-NE offered a familiar but increasingly loud warning ahead of this winter season that gas pipeline constraints was one of the issues threatening the region’s cold weather reliability. (See ISO-NE: New England Could Face Load Shed in Cold Snaps.)
That has led to increasingly loud complaints from New England states that the grid operator hasn’t done enough to ensure that the lights stay on this winter.
Last week, the rest of the New England states joined in with a NESCOE follow-up to that exchange along a similar line, suggesting that the RTO has not adequately replaced winter reliability programs that were halted in 2018.
ISO-NE “identifies immediate risks of sustained cold weather — an otherwise unremarkable occurrence for New Englanders — without any analysis of the magnitude of risk or any proposed way ISO-NE, the entity responsible for regional planning and system reliability, will act to address them,” NESCOE wrote.
ERCOT sailed through its second stress test of its system’s winter readiness over the weekend, easily meeting demand that came within 10 GW of its peak during last February’s winter storm.
The season’s second cold front swept through the state Thursday and Friday, bringing with it freezing temperatures and wind chills that dropped to levels where they could have affected power plant operations. System demand peaked at 63.5 GW, less than last year’s record peak of 69.2 GW, set Feb. 14 before demand and the frigid temperatures overwhelmed the system.
ERCOT declined to comment, but it’s more conservative operations approach and winter readiness activities resulted in a 10- to 15-GW cushion between demand and capacity.
The grid operator issued an operating condition notice (OCN) ahead of last week’s expected “extreme cold weather.”
During the second day of a two-day training session Jan. 18, interim CEO Brad Jones assured the Board of Directors that the OCN is just an initial step in ERCOT’s emergency alert system and that he was confident the grid operator would manage the situation.
“It’s not a significant reliability challenge,” Jones said.
The OCN signified a need for additional resources. An OCN is still three levels away from an energy emergency alert.
ERCOT’s operations alert levels | ERCOT
Staff told the board ERCOT had about 79 GW of operating capacity to meet projected demand of about 61 GW at its peak Thursday night and Friday morning. Dan Woodfin, vice president of system operations, said the capacity was “significant” and a “little more” than the grid operator had at its disposal during a Jan. 2-3 cold snap. (See ERCOT, PUC Say Grid is Ready for Winter Weather.)
Woodfin said that about 11.8 GW of thermal resources are currently on outages, a normal amount for ERCOT.
That did little to comfort some of the directors, who heard much about the lack of transparency between Texas’ electric and natural gas systems. The loss of thermal fuel supplies, primarily natural gas, have been fingered as the primary reason for the widespread power outages during last February’s winter storm. (See FERC, NERC Release Final Texas Storm Report.)
The electric industry has added weatherization requirements with regulatory teeth for its power plants since then, but the gas industry, regulated by the Texas Railroad Commission (RRC), has lagged behind. The commission is not expected to mandate strict weatherization practices until next winter.
Asked if ERCOT would have enough gas supplies for the system’s plants, Jones said staff had already received one notice of a gas restriction that could affect up to 1.5 GW of capacity.
“One of the concerns we have is the great deal of information we don’t have,” Jones said of the gas side. He said he has plans to add a gas desk in the operations center that would monitor gas availability or restrictions, an idea that he said was first brought up in 2015 when he was ERCOT’s COO.
“We had concerns [in 2015 that] we wouldn’t get the information we needed,” he said. “We’re still in the same situation. There’s not a great deal of transparency around the operations of our natural gas system. That information doesn’t usually flow to us.”
Jones and Peter Lake, chair of the Public Utility Commission, both pointed to the Texas Energy Reliability Council (TERC) as where dialogue and coordination between the two industries takes place. Lake said the group was an informal group before the winter storm, but that legislation last year formalized TERC and “designed it specifically for that kind of information sharing.”
TERC meets as often as twice a month, Lake said. However, the meetings are not public.
Director John Swainson pressed Lake on the RRC’s regulatory responsibility. Lake declined to speak for that commission, saying, “They do oil and gas. They’re sitting across the table from us at TERC.”
“Doesn’t that look like sort of a weakness in the system here?” Swainson asked. “We’re trying to ensure our generators can provide power, but if no one’s providing gas to our power plants, that’s a weak link.”
“That’s why the legislature gave us TERC, and that’s why TERC is meeting more frequently,” Lake responded.
Pipeline company Kinder Morgan warned its customers that the severe cold could result in wellhead freeze-offs and lead to gas shortfalls. Energy Transfer, which made $2.4 billion during the storm last year, threatened to cut off supplies to Luminant over what it said was an unpaid $21.6 million penalty for buying too much gas and oversupplying their pipelines. The parties eventually reached an agreement after Luminant filed a complaint at the RRC.
ERCOT’s meteorologist expects another cold front to move through Texas on Tuesday, bringing with it frozen precipitation and light snow over West Texas and the Panhandle on Wednesday.
Staff also updated the board on their weatherization inspections at power plants and transmission facilities, saying they have inspected 324 generation resources and 22 transmission sites. This followed receipt of winter weather readiness reports from 850 generators and 54 transmission service providers. (See ERCOT Generators Near 100% Winter Readiness Compliance.)
David Kezell, ERCOT’s newly hired director of weatherization and inspection, said the inspections found 10 potential deficiencies at dispatchable generation sites, not at intermittent renewable resources, and six at transmission facilities. He said all of the deficiencies are being tracked and that most have been resolved and closed.
“I believe the system is in much better condition this year than it was last year,” Kezell said.
With Kezell’s organization still staffing up, ERCOT was forced to rely on contractors to handle most of the inspections. Staff that were pulled from other departments helped with the more than 3,600 hours of work during the fourth quarter.
ERCOT filed a report on its winter weather readiness inspections with the PUC on Jan. 18 (52786, 52787).
The board also agreed with staff’s recommendation to reschedule its Feb. 8 meeting to March 7-8. Its meeting schedule was set under its previous format, which was overhauled by the Texas legislature following last year’s storm. Several of the new directors had conflicts with the February date.
Below is a summary of the issues scheduled to be brought to a vote at the PJM Markets and Reliability Committee and Members Committee meetings Wednesday. Each item is listed by agenda number, description and projected time of discussion, followed by a summary of the issue and links to prior coverage in RTO Insider.
RTO Insider will be covering the discussions and votes. See next Tuesday’s newsletter for a full report.
1. Enhancements to Dead Bus Replacement Logic (9:20-9:35)
The committee will be asked to endorse proposed revisions to Manual 11: Energy and Ancillary Services Market Operations addressing enhancements to the dead bus replacement logic for assigning prices to de-energized pricing nodes. PJM said the revisions are intended to provide increased transparency in the logic and how it performs replacements for de-energized buses. (See “De-energized Bus Replacement Revisions Endorsed,” PJM MIC Briefs: Jan. 12, 2022.)
2. Fuel-cost Policy Standards and Schedule 2 Penalties (9:35-9:50)
Members will be asked to endorse the proposed solution and corresponding revisions to Manual 15: Cost Development Guidelines and the Operating Agreement addressing clarifications to fuel-cost policy standards and Schedule 2 penalty revisions. PJM said the proposal includes a combination of clarifications and language for more elaboration on fuel-cost policies resulting from the RTO’s examination of the fallout from the February winter storm in Texas and other parts of the South and Midwest. (See “Fuel-cost Policy Standards Proposal Endorsed,” PJM MIC Briefs: Dec. 1, 2021.)
3. Regulation for Virtual Combined Cycles (9:50-10:10)
Stakeholders will be asked to endorse the proposed solution and corresponding revisions to Manual 12: Balancing Operations addressing regulation for virtual combined cycles. The proposal from Vistra was originally endorsed at the Market Implementation Committee meeting in December. (See “Virtual Combined Cycles Regulation Endorsed,” PJM MIC Briefs: Dec. 1, 2021.)
4. Resource Adequacy Senior Task Force Issue Charge (10:10-11)
The committee will be asked to approve a proposed updated issue charge for the Resource Adequacy Senior Task Force. The task force was first approved at the October MRC meeting. (See “Resource Adequacy Charter Approved,” PJM MRC MC Briefs: Oct. 20, 2021.)
5. Max Emergency Correction for Gas CTs (11-11:25)
Members will be asked to endorse an issue charge and proposed revisions to Manual 13: Emergency Operations addressing a temporary change to the maximum emergency requirements for gas combustion turbines. According to PJM, the Illinois Clean Energy Jobs Act restricts the number of run hours for gas CTs in the state. To manage near-term reliability concerns, PJM is recommending a temporary change to the maximum emergency provisions in Manual 13 for CTs to expire April 1. (See “Illinois Energy Transition Act Update,” PJM Operating Committee Briefs: Jan. 13, 2022.)
Members Committee
Consent Agenda (1:25-1:30)
B. Stakeholders will be asked to endorse proposed tariff and Operating Agreement revisions addressing various aspects of market participation by solar-battery hybrid resources. The revisions were unanimously endorsed at the Dec. 15 MRC meeting. (See “Solar-battery Hybrid Resources Endorsed,” PJM MRC/MC Briefs: Dec. 15, 2021.)
C. Members will be asked to endorse proposed tariff and OA revisions addressing synchronous reserve deployment. The proposal, which was developed from discussions in the Synchronized Reserve Deployment Task Force (SRDTF), is meant to improve the deployment of synchronized reserves during a spin event. (See “Synchronous Reserve Endorsed,” PJM MRC/MC Briefs: Dec. 15, 2021.)
Endorsements (1:30-1:50)
1. Sector Selection Challenge Process (1:30-1:50)
The committee will be asked to approve the proposed OA revisions to the sector challenge process. Several stakeholders questioned the proposal at the December MC meeting regarding the way members can be challenged on their chosen sectors in PJM. (See “Sector Selection Challenge Process,” PJM MRC/MC Briefs: Dec. 15, 2021.)
Oregon regulators last week voted to move ahead with a formal rulemaking to amend utility wildfire mitigation plans despite the utilities’ concerns about a key provision in the proposed ruleset related to pole inspections on distribution lines.
The decision by the state’s Public Utility Commission (OPUC) on Jan. 18 comes after a six-month informal process in which OPUC staff worked with industry stakeholders and other concerned parties to draft rules for the commission to consider and eventually put to a vote (AR 638).
The commission’s formal proceeding typically allows for public input and deliberation intended to make modest adjustments to proposed rules already largely hashed out during the preceding informal process. But the AR 638 proceeding will likely entail heavier revisions and possible industry counterproposals regarding the pole inspection measures.
The updated wildfire rules come with a sense of urgency, as drier summers fueled by climate change put the heavily forested Pacific Northwest at increasing risk of catastrophic fires like those ignited over Labor Day weekend in September 2020.
It was just ahead of those fires that Portland General Electric (NYSE:PGE) invoked the state’s first ever public safety power shutoffs (PSPS) in the Mount Hood area southeast of Portland. (See High Fire Danger Prompts First Oregon PSPS Event.) Pacific Power and its parent company PacifiCorp (NYSE:BRK.A) face multiple lawsuits from residents who contend the utility should have done the same in Southern Oregon before the company’s power lines sparked four massive fires that together destroyed nearly 2,500 homes. (See PacifiCorp Faces Class Action over Wildfire Response.)
“These rules on wildfire mitigation are one of the commission’s most important missions,” OPUC Chair Megan Decker said during last week’s commission meeting.
More and Less Prescriptive
The amendments proposed by OPUC staff expand on existing rules (AR 648) that became effective Nov. 30, 2021, after the expiration of the temporary rules covering the 2021 wildfire season. The proposed rules call for the wildfire mitigation plans of the state’s three investor-owned utilities (PGE, Pacific Power and Idaho Power (NYSE:IDA)) to include analyses of the wildfire risk within their service territories, as well as areas outside them but within their rights of way for generation and transmission assets.
The analyses would include a “baseline” wildfire risk that includes fixed elements such as topography, vegetation, climate and “utility equipment in place.” They would also include seasonal risks such as cumulative precipitation and fuel moisture content. Each utility would also be required to outline risks to residential areas served by the utility and risks to its substations and power lines. The IOUs must also provide “narrative descriptions” of how those risks inform their decisions around PSPS, vegetation management, system hardening, investments and operations.
Under the proposed rules, amendments to existing rules that require the IOUs to work with communities on mitigation strategies would be “less prescriptive” than the provisions currently in place, Lori Koho, administrator of the OPUC’s Utility Safety, Reliability & Security Division, told commissioners and industry stakeholders.
The changes would provide IOUs more responsibility and flexibility “to establish community-appropriate communication and notification priorities, education campaigns and to identify relevant critical facilities,” a staff presentation explained.
The updated rules would also clarify that telecommunication providers be specifically identified as “critical facilities” in the event of PSPS.
“We had bundled up telecom as part of things that might be identified as critical facilities; they weren’t specifically called out in looking at the wildfires we’ve experienced,” Koho said. “And certainly in the ice storm last February, we recognize that sometimes telecom is almost more important than electricity. … If you have a charged phone, and you have a cell tower that still is active, you can at least tell somebody you’re out of power.”
Koho noted that OPUC staff are recommending “more prescriptive” equipment safety measures in the mitigation plans, including more stringent rules that would require more frequent trimming of fast-growing trees near power lines across the system.
PGE asked the PUC to keep those rules focused on the highest fire-risk areas.
“The proposed rules create a competing interest between the Oregon Public Utility Commission and the local jurisdictions,” said Larry Bekkedahl, PGE senior vice president of advanced energy delivery. “For example, should a utility deem it necessary to increase clearances on fast-growing tree species in high fire-risk zones, it will require additional tree trimming or removal. That same degree of trimming or removal in urban areas may place the utility in violation and noncompliance with many of the local permits and tree code restrictions.”
“What I hear is sort of this presumption that [local] rules should take precedence for clearance and tree trimming and so on, and I guess from a fire safety perspective, how will those 51 cities [served by PGE] know that their codes are safe for wildfire risk?” Commissioner Letha Tawney said. “And I don’t think wildfire risk is an exurban issue versus an urban issue; I think in Oregon, we have a lot of overlap. And as we continue to see this, we can get ignitions in relatively densely populated areas that then go on to create just real havoc.”
Joint Inspection Doubts
But the utilities most strongly objected to proposed rules requiring them to engage in “joint inspections” of utility poles that include any co-owners or shared users of the poles, such as telecommunications providers. Koho noted that utilities are often the only users to regularly inspect the poles, leaving the cost of inspections borne by ratepayers. In crafting the rule, OPUC staff sought to defray those costs.
Bekkedahl pointed to the complexity of orchestrating such inspections, especially given that in some high fire-risk areas, PGE shares ownership of poles with seven different users.
“We have significant concerns that the proposed joint inspection mandate will cause delays to find and remediate issues found in high fire-risk zones and inevitably increase wildfire risk,” Bekkedahl said, pointing to potential delays stemming from unresponsive third parties in scheduling inspections and disagreements over cost-sharing. “We’re doing [the inspections] today, and we want to continue to be able to do that.”
Allen Berreth, vice president of transmission and distribution operations at Pacific Power, said that while his company did not envision any “formal barriers” to engaging in joint inspections, it sought more clarity in the rules regarding what it will take to achieve such inspections.
Mitch Colburn, Idaho Power’s vice president of planning, engineering and construction, said his utility shared concerns about the joint inspection requirement.
“While we do not wish to further delay this important rulemaking, we do feel more discussion is necessary in the formal rulemaking to ensure that all the rules are clear and are ultimately going to effectively mitigate wildfire risk,” Colburn said.
Ahead of the vote to proceed with the formal rulemaking, Commissioner Mark Thompson expressed doubt about voting in favor of it because of doubts about the commission’s ability to work out the joint inspection issue during the formal process.
“I think that often works, but I think it doesn’t work very well if we feel like we’re maybe barking up the wrong tree, because then you’re asking a lot of that formal process to kind of extract yourself from that, and then replace it with a more meaningful path,” Thompson said. “And I will say on the topic of inspections … it doesn’t feel to me like a great solution to the problem. I’m concerned that it’s going to take a lot of resources for people to gear up to do joint inspections” and will slow down the process.
Chair Decker’s concerns centered on delaying a needed rulemaking ahead of the upcoming fire season, including implementation of the other measures proposed in the ruleset. She proposed that OPUC staff continue to work with the state’s IOUs on the joint inspection issue to develop an alternative before the commission’s regular public meeting on Feb. 8.
Decker moved to adopt PUC staff’s recommendation to proceed with the formal process while indicating “clearly in our order that we are still considering alternatives as we would for all the rules, but in particular, in the areas that have been discussed today.”
SPP’s Board of Directors and its state regulators this week will consider a pair of transmission revision requests that did not pass stakeholder muster earlier this month over cost-allocation and equity concerns.
The Regional State Committee, comprising regulators from the RTO’s footprint, will vote Monday on a measure (RR483) to address FERC-identified deficiencies in the grid operator’s byway facility cost-allocation process. The RSC has primary authority over cost allocation for SPP-directed transmission projects; any methodology allocating costs that the committee approves must be filed at FERC according to the RTO’s
bylaws.
On Tuesday, the board will consider that and RR477, which establishes uniform local planning criteria within each transmission pricing zone and has also been rejected in its previous form by the commission.
Both measures came within 3 percentage points of SPP’s 66% majority approval threshold during the Jan. 10-11 Markets and Operations Policy Committee. Transmission owners split 6-6, with five abstentions, on RR483 and favored RR477 9-7; transmission users favored the change requests 30-8 and 27-12, respectively.
Approval authority for SPP’s key committees | SPP
The Strategic Planning Committee endorsed both RR483 and RR477 during its Jan. 12 meeting by 10-4 and 11-2 (with an abstention) margins, respectively.
Under SPP’s bylaws, the board has independent authority over all RTO matters and it can approve a revision request, even if it is rejected by MOPC or another committee.
Both measures were among 21 recommendations from the Holistic Integrated Tariff Team in 2019, intended to integrate increased renewable energy, boost reliability, and improve transmission planning and the wholesale market. SPP General Counsel Paul Suskie told MOPC that all HITT recommendations must go the board for final approval. (See SPP Board Approves HITT’s Recommendations.)
“There are a lot of very entrenched opinions on this,” said John Krajewski, who consults for the Nebraska Power Review Board and led the Cost Allocation Working Group’s (CAWG) work on the subject. “If you’re not expecting opposition at FERC, you’re kidding yourself.”
The CAWG drafted a white paper in response to HITT’s recommendation to “evaluate creating a narrow process through which costs for specific projects between 100 and 300 kV can be fully allocated prospectively on a regionwide basis.” The document was approved by the board and RSC in July 2020, leading to tariff language that was filed at FERC.
Under SPP’s highway/byway methodology, transmission costs are allocated on a voltage threshold basis. Highway facilities, or those above 300 kV, are allocated 100% on regional, postage-stamp basis. Byway facilities, those between 100 and 300 kV, are allocated on a regional basis (33%) and to the pricing zone (67%) in which the facilities are located. Facilities at or below 100 kV are fully allocated to the zone in which they are located.
However, the commission rejected SPP’s filing last June without prejudice, finding that the proposal gave too much discretion to the board in allocating costs and did not include clear standards for making decisions. (See FERC Rejects SPP’s Cost-allocation Waiver Proposal.)
RR 483 responds to the filing with a “surgical approach” to evaluate byway projects in wind-rich zones. It allows a byway-funded transmission upgrade to be funded through a regionwide allocation after meeting certain criteria under the “narrow review process.” Projects eligible for this “narrow and limited process” must have base plan upgrade costs eligible for cost allocation under the SPP tariff.
Members in wind-rich pricing zones have long complained their small system loads have been unfairly saddled with costs for exporting largely unaffiliated generation. They argue the process should take regional benefits into consideration.
“Seventy, 80% of the time we’re exporting to SPP. We encourage SPP to continue working on a solution,” said Sunflower Electric Power Cooperative’s Al Tamimi, who has frequently asked for support for his zone, during the MOPC discussion.
Oklahoma Gas & Electric’s Usha Turner said SPP’s regional cost allocation review (RCAR) process provides a remedy “to resolve grievances around cost” and pointed to FERC Commissioner Mark Christie’s dissent. Christie said SPP’s previous application provided “insufficient detail” with respect to the various roles of stakeholder groups, states and load-serving entities in reviewing the waiver requests.
“I think this is going to make its way back to SPP, because I don’t think we’ve resolved FERC’s concerns,” Turner said before voting against the change.
“The RCAR uses lot of hypothetical assumptions,” Tamimi said. “It’s not used for cost allocation.”
“This is a waiver process that [an entity] is going to have to go through lots of hoops and hurdles when a wind-rich zone wants something considered,” said Golden Spread Electric Cooperative’s Mike Wise, a proponent of the measure. “We don’t want something crammed down. This surgical approach is ideally suited for what we’ve been trying to resolve over the last five years. This is an effective, appropriate approach to alleviate or allow a process to help a zone that has surely been harmed by our tariff in this way.”
FERC also rejected RR477’s previous iteration in 2020, siding with stakeholders who argued the proposal would give a pricing zone’s facilitating TO ”unilateral power” and “unduly” benefit them and the zone’s largest network load customer. GridLiance High Plains, Tri-County Electric Cooperative, Kansas Power Pool and a group of eight cooperatives argued the proposal would allow a single customer, based on the size of its load, to dictate planning criteria for everyone else in the zone. (See FERC Rejects SPP’s Zonal Planning Criteria.)
SPP’s proposed zonal planning criteria to create uniform local planning criteria within each transmission pricing zone | SPP
RR477 retains the facilitating TO concept but introduces a formal process to influence its decision-making in establishing the zonal planning criteria. SPP staff said the measure also establishes an avenue to ensure input from the zone’s other TOs, customers and stakeholders is considered and add a two-step voting process.
Some stakeholders have pushed back, saying the new language is overly burdensome on the FTO and includes hard dates that are inflexible. They said a requirement to perform the exercise annually is not in reliability planning’s best interest.
Evergy said in its comments that the “one-size-fits-all” approach includes rigid vote procedures in two early steps and weights that are not equitable in zones where the largest TO also has a clear majority of the load. The utility said local planning would cease to exist in transmission zones that don’t reach consensus because the planning criteria does not identify a zonal reliability upgrade.
“Status quo is not an answer,” Southwestern Public Service’s Bill Grant said at MOPC. “I think SPP will tell you there’s a lot of different TOs and each one has different criteria in each zone. That gets to be where it’s not workable.”
MOPC’s members suggested entities send their specific concerns to Evergy’s Denise Buffington, the committee chair. She said her company’s reliability concerns have not yet been addressed, but that work underway “could push the Evergy team over to support the proposal.”
“We’ll have that debate and dialogue at the board meeting,” she said.
“We’re close. We’re going to see if we can’t close that gap in the next two weeks,” American Electric Power’s Richard Ross said at MOPC. “We’d like to get this taken care of at the board.”
Heather Starnes, who represents Missouri Joint Municipal Electric Utility Commission, an alliance of municipalities, said RR477 is not perfect, “but it’s a good start.”
“If we can bolster SPP’s criteria to make people comfortable, we’d like to do that,” she said. “I don’t think we’ll make everybody happy.”
Starnes was part of a sub-team with Ross, Wise and Grant working to resolve differences between TOs and the protesting groups on RR477.
“Everybody understands it’s a great thing to work together on consensus,” Grant said. “There are some situations where people don’t agree, but that doesn’t tie your hands. I do agree a lot of good work has gone into [RR477] that addresses FERC’s concerns.”
