Search
`
October 8, 2024

Posted on

P3 Seeks 3rd Circuit Review of PJM MOPR

The PJM Power Providers Group (P3) on Friday petitioned the 3rd U.S. Circuit Court of Appeals to review PJM’s narrowed minimum offer price rule (MOPR) after FERC deadlocked on issuing a decision on the RTO’s proposal.

PJM’s narrowed MOPR automatically took effect Sept. 29 because the commission’s four members were evenly divided over it. The rule now only applies to resources connected to the exercise of buyer-side market power or those receiving state subsidies conditioned on clearing the RTO’s capacity auction. (See FERC Deadlock Allows Revised PJM MOPR.)

The America’s Water Infrastructure Act, signed into law by President Donald Trump in October 2018, added a provision to Section 205 of the Federal Power Act to allow for judicial review if FERC fails to act on the merits of a rehearing request within 30 days because the commissioners are divided 2-2. P3 and other stakeholders had filed rehearing requests last month (ER21-2582).

P3 said the 3rd Circuit, based in Philadelphia, is the “most appropriate venue for judicial review” because of its proximity to PJM, based in Valley Forge, Pa. P3 also said the court has the “most direct experience” regarding FERC’s prior orders on the MOPR and its “interaction with state subsidies designed to promote preferred resources.”

The water act also required each commissioner to issue a statement explaining how they would have voted and why if the commission fails to act.

FERC Chair Glick and Commissioner Allison Clements, both Democrats, said the commission’s past decision on PJM’s expanded MOPR “created a Byzantine system of administrative pricing — unprecedented in both scope and complexity — that would have imposed on consumers billions of dollars in unjustified costs.” (See ‘Good Riddance’ to Old PJM MOPR, Glick Says.)

Republican Commissioners James Danly and Mark Christie opposed the proposal, with Danly calling it “irredeemably inconsistent” with the FPA.

The commission would be unable to order a rehearing if the 2-2 deadlock continues. D.C. Public Service Commission Chairman Willie Phillips’ nomination for FERC’s vacant fifth seat is pending before the full Senate for a final vote. (See Senate Energy Committee Advances Phillips.) Phillips may decide to recuse himself from the MOPR proceeding, however, because the D.C. PSC filed comments supporting PJM’s proposal.

Posted on

NARUC Calls for Regulators to Work with Military on Resilience

With the U.S. Department of Defense increasingly reliant on civilian electric infrastructure, state utility regulators must be prepared to work with utilities and the military to safeguard national security, according to a new report from the National Association of Regulatory Utility Commissioners (NARUC).

The Regulatory Considerations for Utility Investments in Defense Energy Resilience report, published last week, was prompted by the transformations over the past few decades in both the mission of the U.S. military and in its relationship to the national power grid. Whereas the military previously did its job largely outside the continental United States, the power of digital communications has allowed more and more missions to be conducted from within the nation’s borders — most visibly through the use of remotely controlled drones for intelligence and combat, but also with cybersecurity and signals intelligence.

Shifting these tasks to the continental U.S. meant the electricity needs of domestic military bases kept increasing, and the pre-World War II model of facilities managing their own power needs could not keep up with demand. Fortunately for DOD, by this point the civilian power grid had grown capable enough that bases could tap into commercial utilities.

Similar trends were underway regarding other utilities. According to figures from the Government Accountability Office (GAO), today more than 98% of military facilities rely on the civilian power grid, 98% depend on commercial telecom providers, 87% on the commercial natural gas system and 76% on community water. More than 300 major military and national security installations are served by investor-owned electric utilities, according to Edison Electric Institute, with additional bases served by rural coops and municipal utilities.

Bases No Longer Isolated from Outages

But the integration with the national grid and the end of electric self-sufficiency comes at a price of increased vulnerability to outages. NARUC observed that in fiscal year 2019, DOD “experienced 2,572 unplanned utility outages, of which 542 lasted eight hours or longer, including at installations with missions that cannot tolerate interruptions.”

Percentage-of-Defense-Department-installation-reliance-(NARUC)-Content.jpgPercentage of Defense Department installation reliance on community infrastructure, as calculated by the U.S. Government Accountability Office. | NARUC

Concerning electric outages specifically, the report singled out major events such as hurricanes Irma and Maria in 2017 and Hurricane Michael in 2018, all of which “severely impacted nearby DOD installations and operations” in Florida and the Caribbean. In addition, Superstorm Sandy in 2012 demonstrated a different kind of vulnerability, when response efforts by the National Guard and other military units were crippled by power outages at their bases.

Military installations are also vulnerable to outages from cyberattacks against commercial utilities; such attacks may not be specifically aimed at disrupting defense operations, or in the case of nation-state actors like Russia and China, may be intended as an indirect threat against a rival’s military. Additional dangers come from infrastructure interdependencies; disruptions in the natural gas system can cause failures in the electric grid, as occurred during February’s winter storms in Texas and the Midwest.

The military’s reliance on power from commercial utilities puts pressure on those utilities’ regulators. Not only do they need to work on behalf of ratepayers in their states, but they also must be mindful that their decisions do not jeopardize the security of the U.S.

Within DOD, the Office of the Secretary of Defense handles overall energy policy regarding military installations, but the department has “multiple levels of energy governance and responsibility,” according to NARUC. These include personnel within each branch of the military and staff at the installations themselves that may work with regulators. The report advises regulators to “be mindful of the level of DOD bureaucracy with which they are interacting” and the type of influence that each level holds.

Role of Regulators Still Undefined

Overall, the report acknowledged that the role of state utility commissions in supporting the resilience of military installations “remains nascent,” and predicted that regulators will need to “proactively engage with issues related to defense energy resilience, or … increasingly see issues related to defense energy resilience integrated into their normal course of business.”

Questions that regulators may have to address include who pays for investments related to defense energy resilience: Should it come exclusively from the DOD or other federal programs, or should ratepayers foot part of the bill, since uninterrupted national security operations is an obvious public good? How might regulators calculate the benefits of the needed investments in order to sell them to a skeptical public? Should ratepayers support investments in cybersecurity intended to benefit the military, if such investments benefit the greater public as well?

These questions may be overwhelming for regulators who are still grappling with the idea that their decisions impact the nation’s military readiness, and the report noted that some commissions may wish to wait and see how existing government programs develop before stepping into the debate. But regulators may also want to “proactively define the practices and processes” for utilities’ collaborations with the military.

NARUC provided some steps that regulators could take to engage with the topic of defense energy resilience. First, commissions may identify military installations in their state that might rely on regulated utilities, and work with DOD representatives to identify energy resilience projects with which the commission might need to engage.

Regulators can also work with the military on joint energy resilience metrics, value of resilience investigations, and investigate defense energy-related cybersecurity investments. Finally, secure communications frameworks should be established so that sensitive materials can be discussed without fear of malicious eavesdroppers.

Posted on

US Governors: States More Ambitious, Faster on Climate Action

To the U.N., they are “subnationals” — states and provinces that have committed to climate action more dramatic than the nations of which they are parts.

But speaking at the U.N. Climate Change Conference (COP26) on Monday, Washington Gov. Jay Inslee said the leaders of the 68 states and provinces who met Sunday in Glasgow, Scotland, are calling themselves “supernationals.”

“It’s states and provinces around the world that are advancing this cause that is more ambitious than our nation states, faster than our nation states, more comprehensive than our nation states and more flexible than our nation states,” Inslee said. “So, whatever comes out of the COP, we will beat.”

Inslee was one of four U.S. governors speaking at a press conference to highlight the work of the U.S. Climate Alliance, a bipartisan group of governors from 24 states and Puerto Rico, many of whom have committed to net-zero carbon emissions or similar deep cuts by 2050. He was joined by Oregon Gov. Kate Brown, Hawaii Gov. David Ige of and Illinois Gov. JB Pritzker, all Democrats.

Climate Alliance Accomplishments

On Sunday, the Climate Alliance released a summary of the actions its members have taken since the group was formed in 2017 to counter President Donald Trump’s decision to withdraw from the Paris Agreement. The alliance represents 62% of U.S. GDP, 56% of the U.S. population and 43% of U.S. emissions.

The alliance has identified eight priority policy areas: power; buildings; industry; transportation; just transition and equity; resilience; natural and working lands; and the social cost of greenhouse gases.

Of its 25 members, all but a handful have adopted, or are in the process of adopting, renewable portfolio standards, electric utility energy efficiency standards, resilience or adaptation plans, and 100% clean electricity goals.

In contrast, fewer than 10 have taken action on addressing methane from oil and gas, landfill, and agricultural sources or clean-truck standards. Only two, Washington and Colorado, have acted on building performance standards, and only five (California, Colorado, Massachusetts, Washington and Oregon) have moved on addressing emissions from industrial sources.

California has adopted all but one of 22 major actions highlighted by the alliance, followed closely by Colorado, Maryland, Virginia, New York, Rhode Island and Washington.

The group noted that several states have committed to 100% net-zero operating emissions for new construction beginning in 2030; 100% zero-emission new light-duty vehicle sales by 2035; implementation of a low-carbon fuel standard and conserving at least 30% of land and coastal waters by 2030.

“The climate threat knows no borders, and when we share solutions and expertise — not just with one another in the alliance, but also with other like-minded subnational leaders around the world — we can truly turn the tide,” said Taryn Finnessey, the alliance’s acting executive director and policy director.

Washington: Cap and Invest

At Monday’s press conference, Inslee highlighted Washington’s cap-and-invest program, which he signed into law in May. (See Wash. Cap-and-trade, LCFS Tied to Transportation Package.) The program, to be launched by 2023, will cap emissions in the state and then auction or allocate allowances to major emitters, such as fuel suppliers, industrial sources and electricity generators.

The law’s environmental justice provisions will ensure that 40% of the money from the program will be invested in “inordinately impacted communities, BIPOC communities,” Inslee said, using the term for Black, indigenous and people of color. “It is very much targeted to the people who have been swallowing and breathing this pollution for so long.”

The Climate Alliance includes Republican governors, such as Larry Hogan of Maryland. Still, when challenged by a reporter on why only Democratic governors were speaking at the event, Inslee said that, in general, Republicans “see [climate action] as negative for economic development. It is absolutely the opposite. The best possible economic development strategy for any state or nation right now is to seize the moment to steal the markets from China for clean energy. That’s our destiny; we ought to fulfill it.”

Oregon: Environmental Justice at the Forefront

Gov. Brown echoed Inslee. After reeling off a list of extreme weather events and wildfires that have hammered Oregon since she took office in 2015, she insisted that “we can tackle climate change and grow our economy at the same time. These goals are not mutually exclusive.”

Oregon has set 2040 as the target date for decarbonizing its electricity system. In 2020, Brown ordered state agencies to set caps on climate pollution for sectors like manufacturing, increase energy-efficiency standards for buildings and appliances, and create a statewide plan for electric vehicle charging infrastructure.

Brown also stressed that the programs being developed have environmental justice “at the forefront. … We all know our communities of color, our low-income communities and our rural communities are disproportionately impacted by these climate change events, so we are working very hard to disrupt that.”

For example, the state offers rebates for both new and used EVs so that the “most vulnerable Oregonians have access to these technologies,” Brown said.

Hawaii: ‘Net-zero is not Good Enough’

Battered by hurricanes and “rain bombs,” like the one in 2018 that deluged Kauai with close to 50 inches of rain in 24 hours, Hawaii is the proverbial “canary in the coal mine,” Gov. Ige said.

“We know 2 degrees is not sufficient; we are driving for 1.5 degrees Celsius,” Ige said, referring to the limit the U.N. has set for global warming.

Hawaii was the first state to commit to 100% clean energy in 2015, he said. “We didn’t know exactly how the technologies would play in and specifically how they would be utilized, but we were clear about where we needed to go, and that was the transition from fossil fuels to clean, renewable energy,” he said. “We know it’s the same as we race to eliminate emissions. We know that net-zero is not good enough. In 2018, the state of Hawaii committed to a net-negative goal by 2045 or as soon as practical.”

The state is tackling emissions not only from cars, but from aviation and marine transportation, he said. “We are preparing for electric planes for inter-island flights and sustainable aviation fuels for longer flights. We’re looking at switching our inter-island shipping to locally sustainable biofuels and hydrogen to power our medium- and heavy-duty vehicles and equipment for longer distance transportation.”

Illinois: A Focus on Jobs

Gov. Pritzker signed the state’s Climate and Equitable Jobs Act in September, making Illinois the first Midwestern state to commit to 100% clean energy by 2050. The law phases out private coal- and oil-fired generation by 2030 and all coal and natural gas by 2045. It also doubles state funding for renewables, making it clear that the state is serious about creating green jobs and building a green economy, Pritzker said. (See Illinois Senate Passes Landmark Energy Transition Act.)

And, he said, the law passed with at least some bipartisan support. “I think what they shared in common, the [Republicans] who voted with us, was a real focus on jobs. … This is about economic development as much as it is about saving our planet.”

Pritzker was the only one of the four governors in Glasgow who talked up the importance of nuclear as a source of low-cost clean power and a “bridge to a zero-carbon future.”

Illinois has the most nuclear reactors (11) and the most nuclear generating capacity (11.6 GW) of any state, according to the Energy Information Administration. Nuclear was responsible for 54% of its in-state generation in 2019, EIA says.

But Illinois is also working hard to become a hub for EV manufacturing, drawing electric truck and bus manufacturers like Rivian and Lion Electric, along with the parts and component manufacturers that supply them, Pritzker said. “We’re fostering an energy sector that reflects the population that it serves, with investments in workforce hubs, a path to prosperity for minority contractors and Illinoisans living in the environmental justice communities,” he said.

While describing the law as “the most significant step that Illinois has taken in a generation toward a reliable, renewable, affordable, clean energy future,” Pritzker also said, “There is so much more to. Everything that can be done, must be done.”

Posted on

Edison Electric Institute and Biden Admin Work Together at COP26

The U.N. Climate Change Conference (COP26) in Glasgow, Scotland, continues this week with an impetus that U.S. National Climate Advisor Gina McCarthy, executives from several U.S. utilities and the Edison Electric Institute agreed was not always clear at previous global climate conferences: a cohesive U.S. mission.

“We were so impressed not only at EEI, but … all of our companies were impressed by how quickly this administration started leading from Day 1,” Pedro Pizarro, CEO of Edison International (NYSE:EIX) and vice chairman of EEI, said during a discussion session Friday sponsored by EEI and held at the State Department’s U.S. Center at COP26.

“In some ways we are a small player relative to the global community that is here, but all of us have our part to play in this,” Pizarro said.

He compared the challenge of dealing with climate change to the successful effort by medical scientists and policymakers around the world to develop a COVID-19 vaccine and make it available. “COVID was an existential crisis. This is another existential crisis.”

McCarthy explained the administration’s objective this way: “I want the world to know that the United States is back. I want the world to know that clean energy is not just the rest of the world’s future, but it is our future, and we intend to lead that future together.

“This is not about technologies. And it’s not about just one country. It’s about our world. It’s about recognizing that climate change demands actions that have to be taken right away and at scale, if we hope to deliver our children a future that we can be proud of,” she said.

Emphasizing that the administration’s goal is to foster domestic public-private partnerships, McCarthy also stressed that “President Biden knows that this isn’t just about clean energy. It’s about two-plus years of people stuck in their homes, wondering what the future is going to look like.

“And that future has to be hopeful,” she said emphatically. “That future has to be filled with new jobs, new growth opportunities. That’s what this is really all about.”

John Pettigrew, CEO of National Grid (NYSE:NGG), seemed to agree with McCarthy’s assessment of Week 1 of the conference and the administration’s goals for the U.S. energy markets.

“I’m finishing the first week with a sense of optimism because of the progress that’s been made,” he said. “Some of the announcements that we’ve seen and the commitments that have been made over the last week — whether it’s methane, whether it’s the phasing out of coal — some of the individual country commitments are much bigger than perhaps we could have anticipated. … We’ve got a real momentum that’s going to build as we come off COP26. The reality is that over the last 10 years, it feels like we’ve been jogging towards a goal line. We now need to start to sprint.

Ralph Izzo, CEO of Public Service Enterprise Group , headquartered in Newark, N.J., said the Biden administration’s efforts to facilitate offshore wind has created “a tremendous amount of investment in the region so that prices of projects “are actually coming down.”

“We’re investing over a billion dollars in offshore wind,” Izzo said. “We have approval to invest $150 million in the next year [for] electric vehicle charging stations. We’re asking for another $250 million to do more of that in New Jersey. All of that pales in comparison to the 13 million tons of carbon per year that we avoid by producing 30 TWh of nuclear power.”

On the West Coast, the challenge facing Edison International subsidiary Southern California Edison is a good example of what it will take to achieve the Biden administration’s goals, Pizarro said. California has set an overall target to have net-zero emissions by 2045 by electrifying transportation and heating and cooling in buildings.

“It’s a transition that’s doable, but it relies on clean electricity to repower a lot of the economy. Clean electricity will require the addition of something like 80 GW of renewables to the bulk power [grid] statewide, along with 30 GW of storage.

“Distributed [generation] is important too. We see the need for 30 GW of distributed renewables with 10 GW of distributed storage. That level of deployment will require a significant investment across the California economy. We estimate $250 billion statewide for those resources along with the grid investments needed to connect,” he said.

New Mexico is another sun-drenched state moving in a similar direction, and Pat Vincent-Collawn, CEO of PNM Resources (NYSE:PNM), recalled her company’s decision to shut down two coal plants when McCarthy was head of EPA, during the Obama administration. This year the company will shut down two more coal boilers and replace them with solar and batteries. New Mexico’s target is to be carbon free by 2040, she said.

Posted on

Overheard at NECBC Energy Conference: NECEC Line ‘Will be Built’

BOSTON — Ideas to build out the energy infrastructure in New England are plentiful. Still, concerns remain about the execution of potential projects to address the region’s ambitious climate change goals in addition to reliability.

American and Canadian business and government officials addressed the ideas-to-execution paradox during the New England-Canada Business Council’s 29th Annual Executive Energy Conference on Nov. 4-5.

The recent referendum rejection by Maine voters of the New England Clean Energy Connect transmission line was top on attendees’ minds.

The following is some of what we heard during the two-day event.

NECEC Project Vote

Voters in Maine went to the polls on Nov. 2, and a majority of them cast ballots to block construction of NECEC’S 145-mile transmission line through western Maine to deliver 1,200 MW of hydropower from Quebec to Massachusetts. However, on Nov. 3, Avangrid, the parent company of project developer Central Maine Power, filed a lawsuit in Maine Superior Court challenging the constitutionality of the referendum. (See Maine, NY Voters Prioritize Conservation on Election Day.)

Dennis-Arriola-2021-11-05-(RTO-Insider-LLC)-FI.jpgAvangrid CEO Dennis Arriola | © RTO Insider LLC

Speaking on a panel Friday, Avangrid CEO Dennis Arriola did not pull any punches about the future of the $1 billion project, which he said will be built on existing rights-of-way and commercial logging lands. NECEC, Arriola said, is good for the economy and environment and is “respectful of the local lands where the transmission lines are going to go.”

“The arguments that this project is doing really bad things to the forest, and everything, is totally false,” Arriola said. “I think that the narrative has been manipulated by, candidly, some characters that will be on the losing end of the energy transition.”

Arriola did not mention any specific “characters” by name.

More baseload fuels are needed to complement the intermittent electricity from offshore wind and solar, according to Arriola. It is essential to understand, he added, that “especially here in the Northeast,” projects specific to transmission have been blocked by companies that only care about “the bottom line.”

“When you look at what we need in this country, we don’t just need the renewables, we don’t just need more battery storage, we don’t just need more green hydrogen, we need a lot of transmission to be able to transport that clean energy to where it’s needed,” Arriola said.

If the U.S. and New England are serious about hitting “bold, audacious goals for carbon reduction” and getting to net-zero emissions in the next 15-30 years, he said, it will not happen without transmission.

“We’ve got to stop just talking about things,” Arriola said. “We got to put things into action.”

Government policymakers must “stand up and help push these projects along when they’re done right by the rules” established by them, he said.

Hydro-Québec can be “part of the solution in the Northeast,” Dave Rhéaume, senior director of development, strategy and commercial relations outside Québec, said during the panel discussion. He recognizes that whenever Hydro-Québec develops new deals, “obviously they come with very expensive transmission projects” like NECEC. As a renewable energy supplier, Hydro-Québec finds a market that requires renewables and sees the value proposition in building transmission lines that take energy in one direction … for now, Rhéaume said.

“We believe that in the long run, these lines won’t be unidirectional anymore,” he said. “They will be used to reduce the amount of curtailment periods in neighboring markets.”

Speaking of Tx

The referendum in Maine should be “sobering,” according to NERC CEO Jim Robb. He believes it put a “stick in the spokes of progress.”

There is a “robust transmission system” in New England, according to ISO-NE CEO Gordon van Welie. Still, there is more work to be done ahead of the integration of more renewable energy.

NECBC-Panel-2-2021-11-05-(RTO-Insider-LLC)-Alt-FI.jpgFrom left on stage: Gordon van Welie, ISO-NE; John Gulliver, Pierce Atwood Bill Quinlan, Eversource. On video: Richard Dewey, NYISO; Francis Bradley, Canada Electricity Association; Doreen Harris, NYSERDA. | © RTO Insider LLC

Eversource Energy operates about 50% of the transmission assets in the region, and Bill Quinlan, president of transmission and OSW projects for the utility, said that despite some of the headwinds for extensive energy infrastructure, “there are some paths forward.”

Quinlan cited Eversource’s $49 million project with National Grid in Boston, the first competitive transmission solicitation under FERC Order 1000. ISO-NE issued the RFP to address transmission violations expected after the retirement of Exelon Mystic Units 8 and 9, whose closing was extended to May 2024, under a two-year, $400 million cost-of-service contract. The Eversource-National Grid project has a projected in-service date of Oct. 1, 2023, eight months before the end of the contract. (See ISO-NE Chooses Incumbent as Boston RFP Winner.)

Quinlan said the retirement of a significant fossil-fuel asset like Mystic would help with decarbonization efforts.

“I know there are challenges, but I think if you’re creative and you deal effectively with stakeholders, you can build infrastructure, and that is going to be the challenge of the future,” Quinlan said.

Posted on

Inslee Order Electrifies State-owned Fleet by 2040

Washington will convert its entire state-owned vehicle fleet to electric by 2040, according to an executive order issued by Gov. Jay Inslee on Sunday.

Inslee discussed the order at a virtual press conference Monday morning with the Washington media. He is attending the 26th U.N. Climate Change Conference of the Parties in Glasgow, Scotland.

The executive order calls for the electrification of all the state’s light-duty vehicles by 2035 and medium- and heavy-duty fleets by 2040. The order covers roughly 5,000 vehicles.

The plan will be implemented by replacing gas-powered vehicles as they wear out. Inslee will work with the state legislature to obtain state funding, which will then be leveraged to obtain additional federal money.

“The capital costs will not be an insignificant figure,” Inslee said at the press conference. However, the state will save money because of smaller operating and maintenance costs, he said.

Last spring, Washington lawmakers passed a bill that ordered carbon emissions from gasoline and diesel fuel sold in Washington be cut by 10% below 2017 levels by 2028 and 20% by 2035. (See LCFS Bill Passes Washington Legislature.) A 2008 law sets overall carbon-reduction targets of 45% below 1990 levels by 2030, 70% by 2040 and 95% by 2050.

A 2021 Washington Department of Ecology report put the state’s carbon dioxide emissions at 99.57 million metric tons in 2018. The report shows that from 2016 to 2018, the transportation sector was the largest contributor at nearly 45% of emissions.

“This is the kind of nuts-and-bolts thing that enables us to reach our target,” Inslee said.

Inslee’s announcement comes roughly a week after Seattle Mayor Jenny Durkan announced a similarly sweeping climate-based executive order at the Glasgow summit.

Durkan’s order creates new carbon-based building performance standards, bans fossil fuels in city-owned buildings by 2035, and expands access to public transportation, according to KING-TV.

The order calls for Seattle’s Office of Sustainability and Environment to create legislation for carbon-based building performance standards for commercial and multifamily buildings that are 20,000 square feet or larger by July 2022, KING-TV reported. The executive order also bans the use of fossil fuels in city-owned buildings by 2035.

Posted on

NJ’s Murphy Expected to Stay the Course on Clean Energy Policies

Despite Gov. Phil Murphy’s (D) narrow margin of victory in last week’s gubernatorial race, environmental and business advocates believe his sweeping clean energy initiatives will advance as planned through his second term.

Murphy squeaked back into office with a margin of 2.6 percentage points more than Republican challenger Jack Ciattarelli, who has not conceded. Democrats’ grip on the legislature eased somewhat, emerging with 23 out of 40 senate seats with two still to be decided, compared to 25 in the current session. The party now holds 43 of 80 seats in the General Assembly, with nine seats still to be decided, compared to its current 52.

To add to Democrats’ woes, Senate President Stephen Sweeney lost his re-election bid to a truck driver Edward Durr, who has never held elected office. Sweeney, a former ironworker and union business manager who led the Senate for 12 years, is a supporter of Murphy’s offshore wind initiatives and the New Jersey Wind Port, which is sited in his legislative district.

Those losses aside, the Democrats will continue to hold all three levers of power. And environmentalists say they expect the main planks of Murphy’s climate change policy — his commitments to advance solar energy, champion the offshore wind sector and heavily promote the uptake of electric vehicles — to continue.

One reason is that environmental issues were not a central part of the election, said Doug O’Malley, director of Environment New Jersey.

“I think [the] results speak more broadly to national trends and some lingering conservative anger on a set of economic and pandemic issues,” O’Malley said. “But they’re not a repudiation of the environment.”

In fact, one of the Democratic bright spots on election night was the victory of Assemblyman Andrew Zwicker, a vigorously pro-environment legislator who won a Senate seat in a formerly Republican stronghold that was redistricted, O’Malley said.

Jeff Tittel, former head of the Sierra Club in New Jersey, also is not concerned that the governor’s climate change initiatives will slow down.

“Nothing’s going to really change,” he said. “The laws have been set. The money’s going out. The programs are being approved.” The impetus for those initiatives comes from the New Jersey Board of Public Utilities (BPU) and the New Jersey Economic Development Authority, where Murphy appoints the key players and his sway is unchanged by the election outcome, Tittel said.

Raymond Cantor, vice president of government affairs for the New Jersey Business and Industry Association (NJBIA), one of the state’s largest business trade groups that disagrees with some of Murphy’s clean energy initiatives, said a win is enough for him to hold his course.

“He’s the governor,” said Cantor, whose organization believes the state should go more slowly on some of the initiatives. “He doesn’t need to have a large margin of victory to exercise his executive powers. So, we’re assuming he’s going to move forward with his plans.”

First-term Energy Initiatives 

In his first term, Murphy placed a high priority on environmental issues, and called for the state to reach 100% clean energy and reduce 80% of 2006 emissions by 2050. He put the state back into the Regional Greenhouse Gas Initiative after his predecessor, Republican Chris Christie, pulled the state out of the initiative. (See NJ Senate Ushers in Revamped Nuclear Bailout Bill.)

Working with the legislature, Murphy also created a master plan that set aggressive targets for clean energy and jump-started the state’s offshore wind program that had been slow-walking for years. The state has now approved three offshore wind projects totaling 3,758 MW of power that are expected to be operating by 2029. The state expects to bring the total of approved projects to 7,500 MW in three more rounds of awards.

Murphy shrunk the incentives in the state’s Solar Renewable Energy Certificate (SREC) program, which some analysts considered overly generous and burdensome to ratepayers. It was replaced with the Successor Solar Incentive Program, which paid about half the SREC value. (See NJ Sees Solar Growth in Reduced Incentives.)

Murphy also placed a high priority on putting more electric vehicles on New Jersey roads, creating incentive programs to encourage private and government EV purchases and the installation of chargers to overcome the so called “range fear” that there are too few chargers available to recharge vehicles.

The state wants 330,000 more registered light-duty EVs on state by roads by 2025, and the master plan assumes that 75% of medium-duty trucks and 50% of heavy-duty trucks will be electric by 2050. To move the state toward that goal, the state Department of Environmental Protection is moving towards the adoption of rules from California – Advanced Clean Trucks regulation – that would require truck manufacturers to make EV trucks an increasing proportion of their sales in New Jersey. (See NJ Electric Truck Rules Face Many Questions).

For all that, the environment, and climate change, did not feature much in the election, prompting one news outlet to run a story under the headline “Climate change: An urgent issue that figures little in NJ governor’s election.”

Murphy’s opponent, Ciattarelli, is not a climate-change denier, and his platform called for the state to “minimize pollutants and carbon emissions, reduce dependence on fossil fuels and ultimately transition to cleaner, renewable energy sources.” But on the campaign trail, he criticized Murphy for moving too fast on clean energy strategies and failing to calculate, or make public, the cost of his plans.

Ciattarelli said he would divert $200 million designated for offshore wind to be spent on “impactful projects such as dredging and electric vehicle charging stations.”

Strong Public Support for Wind

Greg Gorman, conservation chairman for the Sierra Club in New Jersey, noted the absence of climate change as an election issue and said the state is generally behind on climate change initiatives. He cited a recent poll by Nexus Polling, the Yale Program on Climate Change Communication and the George Mason University Center, released on Oct. 28, that found that 75% of New Jersey voters support expanding offshore wind in the state. The public also supports the governor’s solar initiatives, Gorman said, noting that the recent BPU solicitation for community solar proposals attracted 412 applications, about 60% more than a similar solicitation in 2020. (See NJ Selects 165 MW in Community Solar Projects.)

“I don’t think the election is actually going to have a big effect on initiatives for climate change,” he said.

Still, several groups have proposals that they would like to see Murphy pursue. O’Malley said he would like to see Murphy continue to spend heavily on subsidies to help get more EVs on state roads, as he did in the award of $100 million in January from the Volkswagen settlement for the purchase of trucks, buses and port vehicles. O’Malley also said he hopes that the governor will dedicate a fund for NJ Transit, the state’s mass transit agency, to use for the purchase of electric buses. (See NJ Gov. Unveils Green Transportation Plan.)

The NJBIA would like to see the state slow down in its adoption of clean energy, and wait for the development of other new technologies that can provide low-emission energy, said Cantor, the agency’s lobbyist.

“We’re not comfortable right now with where we think they’re going, which is 100% electrification of transportation and building sectors and, essentially, all sources of power past 2050,” he said, adding that the organization would like to see greater consideration of natural gas until other technologies are developed to provide energy without emissions.

Support for Aggregated Energy

In Teaneck, voters approved by a 2-to-1 margin setting up a program giving residents the option to use an electricity provider that is heavily sourced with clean energy. The approval means the township must now strike a deal with an provider that would enable residents to buy electricity of which 50% or more is from clean resources.

Residents led by Food & Water Watch, a nonprofit environmental advocacy group, collected enough voter signatures to trigger a state law that requires the governing body to either enact an ordinance allowing the municipality to purchase electricity through community choice aggregation (CCA), or to place it on the ballot. The law requires the collectors to reach 10% of the number of votes from the last General Assembly election.

The township rejected signatures collected electronically online because of the COVID-19 pandemic. But a New Jersey Superior Court judge on Sept. 13 ruled that the signatures were valid and required the issue to go before voters. (See NJ Municipalities Tackle Carbon Emissions.)

Mayor James Dunleavy released a statement two days after the Nov. 2 vote, saying that the township would “begin discussions with our town manager to map out the process needed to undertake and find the best possible program for our residents.”

The township will need to solicit bids for energy aggregation services, he said, and nonresidential energy consumers would be given the chance to either opt into the program and residential consumers would get the chance to opt out.

“The program must show it will help improve New Jersey’s air quality and public health, while reducing harmful climate pollution and decreasing its reliance on fossil fuels,” the mayor said.

Posted on

PUC Spins its Wheels on New ERCOT Market Design

The clock continues to tick on the Texas Public Utility Commission’s self-imposed December deadline for the ERCOT market redesign, with the regulators no closer to consensus than they were during their last design work session.

During the PUC’s fifth work session on a new market design Thursday, PUC Chair Peter Lake again brought up a load-serving entity obligation as a means to provide firm dispatchable generation in a market flush with renewable resources. Again, he faced pushback from the other three commissioners concerned over the mechanism’s effect on ERCOT’s “crown jewel” of a retail market. (See Texas PUC Nears Market Redesign’s Finish Line.)

Lori Cobos, who was CEO of the consumer-oriented Office of Public Utility Counsel before being appointed to the PUC, reminded the commission that ERCOT’s market was deregulated more than 20 years ago to take investment risk away from consumers served by regulated utilities and place it on investors.

Peter-Lake-(Texas-PUC)-FI.jpgPUC Chair Peter Lake | Texas PUC

“I feel that we’re taking that risk and putting it right back on the consumers and steering away from the reliability principles of [the 1999 legislation],” she said. “We must be vigilant and ensure we’re not weakening the market and putting the risk back on consumers. I continue to believe we need to move in a strategic, targeted manner while we take the time to thoughtfully, deliberatively, holistically evaluate all long-term options that must be fully evaluated and considered before pulling the trigger.”

“I’m trigger happy. The grid is demanding we be trigger happy,” said Lake, who often refers to legislation passed earlier this year in the wake of February’s Winter Storm Uri and the compliance burden it places on the PUC.

The LSE obligation addresses resource adequacy concerns by introducing a formal reliability standard and a mechanism to ensure sufficient resources meet this standard. (See Study Suggests Texas LSEs Can Provide Reliability.)

In an October memo, Lake suggested parameters for the LSEs’ obligation. They would need to have firm resources to meet 50% of their forecast net peak load three years out, 70% two years out, 90% one year out and 100% one month out.

“I’m worried about suppressing the animal spirits of the real-time market,” Commissioner Will McAdams said, calling for market flexibility to price-responsive behavior.

“We’ve been asking for ideas and gotten a very narrow scope of ideas,” Lake said. “An LSE obligation is not a risk on consumers; it’s a risk on companies that have promised to provide power to those consumers. Those retail companies also have investors. In no way would an LSE obligation move risk to consumers.”

To back up his point, Lake recounted a recent meeting he had with a retailer, who said “we don’t provide power; we sell things,” Lake said. “Which is not, in my mind, providing reliable power to our consumers or businesses.”

“I have no problem adding some risk [on LSEs],” he said.

Capacity Market in Disguise

Attorney Catherine Webking, general counsel for the electric retailer lobbying group Texas Energy Association for Marketers, said her constituents have “very grave concerns” about the LSE obligation’s capacity requirements.

“That’s not to say that [retail electric providers] don’t hedge and buy firm power … they do, today,” she said. “It still looks to the LSE to demonstrate a capacity procurement, specific to a physical resource, which is not how it’s done today.”

Webking said that qualified scheduling entities (QSEs) procure resources on behalf of the retail electric providers (REPs) in ERCOT’s market.

“Ultimately, a physical obligation is there, but the individual REP does not necessarily have to demonstrate which unit and which megawatts at that resource are being procured,” she said. “As I understand the proposal, the LSE would have to say I understand these physical resources are where I’m buying power. It’s still tied to physical generation and physical capacity of that unit. There’s no revenue stream with that forward capacity purchase.”

Independent consultant Alison Silverstein, who advocates for demand response and energy efficiency measures, said the LSE obligation “looks pretty much like a capacity market” in disguise.

“It also requires both the commission and ERCOT do a significantly better job of planning and forecasting than either of them have shown the capability of doing to date,” she said.

Stoic Energy’s Doug Lewin, who has been live tweeting the PUC’s recent work sessions, lamented other solutions that have been sidelined in favor of the LSE obligation’s discussion.

“They’ve spent so much time talking about the [LSE obligation], which won’t make a difference for a couple of years anyway,” he told RTO Insider. “They could have implemented some of the other things that could have been implemented much faster, like demand response and targeted energy efficiency.”

In drawing the discussion to a close, Lake said, “It’s clear we still have a lot of work to do.”

He asked the commissioners to “put pen to paper” before the next work session and provide their thoughts on firming mechanisms, a reliability adder, and other market changes.

The PUC delayed decisions on revisions to the operating reserve demand curve and other changes until The Brattle Group completes an assessment of alternative ORDCs. An overview of the study dropped Friday.

Brattle suggested a $10/MWh adder to cover start-up costs of marginal resources could be imposed around 5,550 to 5,800 of online reserves to encourage self-commits and reduce the need for reliability unit commitments.

The commission tabled a rulemaking that will lower the high system-wide offer cap (HCAP) from its current $9,000/MWh to $4,500/MWh to time its publication with changes to the ORDC. The HCAP was dropped to $2,000/MWh after February’s winter storm and is set by rule to revert back to $9,000/MWh on Jan. 1 (52631).

Posted on

PJM Operating Committee Briefs: Nov. 4, 2021

Stakeholders at last week’s Operating Committee meeting endorsed a PJM proposal seeking to improve the deployment of synchronized reserves during a spin event.

The proposal, which was developed from discussions in the Synchronized Reserve Deployment Task Force (SRDTF), was endorsed with 164 members voting in favor (72%). PJM first presented the proposal at last month’s OC meeting. (See “Synchronous Reserve Deployment Initiative,” PJM Operating Committee Briefs: Oct. 7, 2021.)

Ilyana Dropkin, an engineer in PJM’s performance compliance department, provided a review of the task force initiative endorsed at the March OC meeting. Stakeholders were educated about synchronized reserves and created a matrix to develop proposals through the task force. (See PJM OC Endorses Synchronized Reserve Discussion.)

Synchronized reserve events are emergency procedures triggered by PJM to maintain grid reliability in accordance with NERC’s Resource and Demand Balancing (BAL) standards. PJM invokes those procedures under conditions such as the simultaneous loss of multiple generating units or a sudden influx of load.

The SRDTF examined ways to secure controlled deployment of synchronized reserves throughout emergency events by using tools such as real-time security-constrained economic dispatch (RT SCED) to maintain consistent pricing and dispatch signals. The goal was to ensure BAL compliance during the recovery process and maintain a reliable transition in and out of emergency events and to define clear rules and expectations that address how PJM operators approve RT SCED cases around a synchronized reserve event.

The task force developed two different proposals: PJM’s intelligent reserve deployment (IRD) proposal, and another by the Independent Market Monitor. In a nonbinding poll taken by stakeholders, PJM’s proposal received 75% support, while the IMM’s received 9% support. Sixteen percent of stakeholders preferred the status quo.

Michael Zhang, senior lead engineer in PJM’s markets coordination department, reviewed the PJM proposal. Zhang said no changes were made to the proposal since it was first presented at the October OC meeting.

The IRD proposal is a SCED case that simulates the loss of the largest generation contingency on the system and for which approval of the case will trigger a spin event, Zhang said.

The PJM proposal calls for taking the megawatts of the largest generation contingency and adding them to the RTO forecast to simulate the unit loss, Zhang said. PJM would then be allowed to flip condensers and other inflexible synchronized resources cleared for reserves to energy megawatts and procure additional reserves to meet the next largest contingency.

Zhang said some of the significant changes over the status quo in the proposal include updating the economic basepoints to replace all-call instructions and having active constraints controlled by IRD so that deployed resources don’t have negative impacts on the constraints.

PJM is looking to conduct a phased approach of IRD with the initial phase of 6 to 12 months beginning in early 2022, Zhang said, possibly by March. The RTO will reconvene the SRDTF toward the conclusion of the initial phase to review performance metrics, solicit stakeholder feedback and adjust and finalize deployment approach and adapt to market changes.

“IRD is production ready,” Zhang said. “It’s been designed to be highly flexible and customizable so we can make changes on the fly as needed.”

Siva Josyula of Monitoring Analytics asked what changes could be made “on the fly” by PJM.

Zhang said one of the major changes is the use of the largest contingency, which was a major focus of the effort. Zhang said the development of using the largest contingency was driven by fears of both over- and under-deployment of resources.

Josyula reviewed the IMM proposal, saying the concept was to ensure reserves are deployed in proportion to the cause of the spin event. He said the resources deployed during a spin event would be those that clear and are being compensated for providing synchronized reserves.

The proposal called for using a reserve deployment tool that generates new dispatch signals, and the total megawatts to deploy would be equal to those lost or required for area control error recovery.

Stakeholders voted down the IMM proposal, with 159 votes against (76%).

Brock Ondayko of AEP Energy questioned the effectiveness of both the PJM and IMM proposals, saying it wasn’t clear what problems they solve. Ondayko said units will be forced into a market system that “doesn’t model things correctly” and that will ultimately have ramifications for other market products and systems, opening a “pandora’s box” of issues.

“You’re trying to fix a problem with solutions that don’t address the main issue while you’re trying to force people to update things in a system that’s not adequate for updating,” Ondayko said.

The PJM proposal will go on to the Nov. 17 Markets and Reliability Committee meeting for a first read and a final endorsement vote at the January Members Committee meeting.

Day-ahead Schedule Reserve Endorsed

Members unanimously endorsed changes to the 2022 Day-ahead Scheduling Reserve (DASR) requirement.

David Kimmel, senior engineer in PJM’s performance compliance department, reviewed the proposed changes to the DASR requirement, which is the sum of the requirements for all zones within the RTO and any additional reserves scheduled in response to a weather alert or other conservative operations. (See “Day-ahead Schedule Reserve (DASR),” PJM Operating Committee Briefs: Oct. 7, 2021.)

Under-forecasts-of-load-forecast-error-(PJM)-Content.jpgPJM chart of under-forecasts of load forecast error from November 2018 to the present. | PJM

DASR is the sum of the three-year averages of both the under-forecasted load forecast error (LFE) and eDART forced outage rate component.

The final endorsed 2022 DASR requirement was 4.43%, Kimmel said, slightly lower than the 2021 requirement of 4.78%. Kimmel said the number comes from the LFE component of 2.04%, which is down 0.14% from last year, and the forced outage component of 2.39%, down 0.21%.

The value is incorporated into Manual 13 changes and effective through Sept. 30, 2022, after which it will be replaced with the day-ahead secondary reserves. Kimmel said the change is dependent on FERC’s review and action on reserve price formation and PJM’s operating reserve demand curve (ORDC).

Manual Changes Endorsed

Several manual updates were unanimously endorsed. They included:

  • Manual 14D — Vince Stefanowicz, senior lead engineer with PJM’s generation department, reviewed updates to Manual 14D: Generator Operational Requirements as a part of the periodic review. The updates featured the addition of several new sections, including one describing eDART modeling requirements.
  • Manual 10 — Stefanowicz also reviewed updates to Manual 10: Pre-Scheduling Operations as a part of the periodic review. The updates resulted from FERC’s approval of changes to black start unit testing.
  • Manual 3 — Dean Manno of PJM’s transmissions operations department reviewed updates to Manual 3: Transmission Operations as a part of the periodic review. Updates included minor changes such as removing a reference to NERC standard PRC-001 because of its retirement.
  • Manual 13 — Brian Oakes of PJM’s dispatch department reviewed updates to Manual 13: Emergency Operations as part of the periodic review. Updates include notes to articulate the expectations of members’ load shed plans.

The manual changes will be voted on at the November MRC.

Posted on

FERC Levies $242M in Fines on GreenHat, Owners

FERC on Friday said it had determined that GreenHat Energy and its owners violated the Federal Power Act by “engaging in a manipulative scheme” in PJM’s financial transmission rights market, issuing a total of $242 million in fines for the company’s 890 million MWh default in 2018 (IN18-9).

The commission assessed civil penalties of $179 million on the company and $25 million each on owners John Bartholomew and Kevin Ziegenhorn. FERC also directed GreenHat, Bartholomew, Ziegenhorn and the estate of Andrew Kittell to disgorge more than $13 million in unjust profits, plus applicable interest.

GreenHat acquired the largest FTR portfolio in PJM between 2015 and 2018 but defaulted on the portfolio in June 2018, leaving PJM stakeholders to cover more than $179 million in the market to the present. When the company defaulted, FERC said, GreenHat had only $559,447 in collateral on deposit with PJM. (See Doubling Down — with Other People’s Money.)

<img src=”//www.rtoinsider.com/wp-content/uploads/2023/06/140620231686783648.jpeg” data-first-key=”caption” data-second-key=”credit” data-caption=”

GreenHat’s significant growth in exposure and MTA loss

” data-credit=”PJM” style=”display: block; float: none; vertical-align: top; margin: 5px auto; text-align: center;” alt=”GreenHats-significant-growth-in-exposure-and-MTA-loss-PJM-Content-2-1″>GreenHat’s significant growth in exposure and MTA loss | PJM

“Respondents, over several years, deliberately carried out one of the largest frauds in the history of organized energy markets, leading to the largest default in the history of those markets, resulting in losses of more than $179 million,” FERC said in its ruling. “Staff notes that Bartholomew and Ziegenhorn showed no commitment to compliance, did not self-report their violations and provided limited cooperation.”

FERC Findings

The commission found that GreenHat and its owners violated the FPA in four different ways, calling it a “classic fraud,” similar to a “bust-out” scheme involving selling assets that one does not intend to pay for. The violations cited by the commission included:

  • engaging in a manipulative scheme in PJM’s FTR market to acquire a portfolio made up of primarily long-term FTRs with “virtually no supporting, upfront capital, planning not to pay for losses at settlement” and selling profitable FTRs to third parties at a discount to obtain cash for the owners;
  • buying FTRs not based on market considerations but to accumulate as many FTRs as possible “with minimal collateral, thereby engaging in a course of conduct for the purpose of impairing, obstructing or defeating a well functioning market”;
  • making false statements to PJM concerning money supposedly owed by Shell Energy North America with the intent to convince the RTO not to proceed with a planned margin call; and
  • submitting inflated bids into the PJM long-term FTR auction to “artificially raise the clearing price” of FTRs that Shell had purchased from GreenHat and offered for sale in the auction.

FERC said the Office of Enforcement found documents showing GreenHat’s “continued reliance” on the PJM Credit Calculator, instead of “traditional market fundamentals,” to purchase FTRs “despite multiple indications that such strategy was resulting in an increasingly negative portfolio for the firm.” The office said the owners failed to provide any “reasonable economic rationale” for using the calculator.

The commission said staff also discovered emails during the investigation “demonstrating that GreenHat sought to sell its profitable FTRs to third parties using other valuation methodologies” rather than the calculator, while “continuing to grow its negative portfolio using the PJM Credit Calculator.”

“Respondents intentionally misled PJM to enable GreenHat to buy FTRs that it otherwise would not have been able to afford to buy and extract profits from the PJM FTR market with the intent to default on their portfolio losses,” FERC said.

Kittell Estate

The decision is slightly complicated by an ongoing investigation by the Department of Energy’s Office of the Inspector General (OIG) into an email exchange between FERC Enforcement’s Division of Investigations (DOI) lawyers Thomas Olson and Steven Tabackman regarding the GreenHat case. FERC released the emails in October after Olson, who is part of the litigation staff in the GreenHat proceeding, disclosed them to Enforcement management.

The estate of Kittell, who killed himself by jumping off the San Diego-Coronado Bridge in California on Jan. 6, made a filing for FERC to drop its enforcement action and investigate the two employees. (See Estate of GreenHat’s Kittell Lobbies FERC to End Enforcement Action.)

The commission said the email exchange between Olson and Tabackman “addressed procedural matters that might arise under California probate law” in a proceeding addressing the Kittell estate, but it was not a conversation about the “issue currently before the commission in this proceeding.”

FERC said with the OIG investigating the matter, it was not ruling on the Kittell estate motion “at this time” and will instead “address the merits of the motion” in a separate order once the OIG rules on the case.

Danly Dissent

Danly dissented from the views of the commission, saying, “Enforcement failed to provide the proof necessary to meet its burden.”

Having reviewed GreenHat’s answer and Enforcement’s reply, Danly said he remained “deeply skeptical” of GreenHat’s explanations, but he said his skepticism is “irrelevant.” He said it was not necessary for GreenHat to prove its innocence, but it was for Enforcement to “prove its case to a preponderance of the evidence.”

Danly had harsh words for PJM, saying the RTO was partially to blame for the result of the default.

“While not the subject of the instant proceeding, we would do well to keep in mind the share of the blame that must rightly be assigned to PJM,” Danly said.