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November 24, 2024

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MISO Says Comfortable Wintertime Margins Likely in Store

MISO does not foresee a scenario where it comes close to risky operations this winter, saying even a 107-GW demand peak should be manageable without emergency protocols. 

The grid operator published its annual winter outlook this week, predicting a nearly 21-GW excess in cleared capacity December through February using a coincident peak forecast and normal generation outages. Beyond its traditional supply, MISO has about 12 GW in load-modifying resources and operating reserves to lean on. 

At a Nov. 14 workshop to discuss results, resource adequacy engineer John DiBasilio said that though MISO’s capacity auction cleared 121.6 GW of traditional generation for the winter, offers totaled 137.4 GW. 

Across the board, MISO’s load-serving entities predict a 100.1-GW coincident peak; however, LSEs’ non-coincident peak predictions are 101.9 GW in December, 107 GW in January and 101.5 GW in February. Should a 107-GW peak occur in January, the RTO still predicts a 14.6-GW surplus among its nonemergency supply. 

In a press release, Executive Director of Market Operations J.T. Smith credited MISO’s relatively new seasonal capacity auction for better preparing the footprint. 

Last winter, MISO managed a 106-GW peak Jan. 17 during a wide-reaching cold spell without resorting to emergency procedures. (See MISO Holds Steady in Mid-Jan. Storm with Help from Wind.) MISO experienced its 109-GW all-time winter demand record on Jan. 6, 2017. 

Part of MISO’s anticipated capacity sufficiency this winter is also thanks to an anticipated warmer winter across the footprint. 

Analytics company and weather forecaster DTN predicts above-normal temperatures for the season in MISO’s South and Central regions with slightly warmer or closer-to-normal temperatures in the North region. The RTO splits its Midwest region into the Central, which includes the Dakotas, Minnesota, Iowa and Montana, and the North, which includes Wisconsin, Michigan, Illinois, Indiana, Missouri and Kentucky. 

The National Oceanic and Atmospheric Administration anticipates closer-to-normal temperatures for MISO Midwest and a winter that trends above normal in MISO South.  

Both forecasting authorities call for above-normal precipitation in MISO Midwest, especially around the Great Lakes, and a drier season for MISO South. MISO said the expected below-normal precipitation should decrease generation icing risks across the South. 

MISO’s in-house meteorologist, Brett Edwards, said the season will be similar to last winter, which saw “exceptionally warm” temperatures, except for the mid-January cold snap, and normal precipitation patterns. The grid operator said last year’s temperatures are not a reference point for the upcoming winter. 

Edwards said the best chances for some frigid days in MISO Midwest come in December and February if a weaker La Niña prevails. If a moderate-to-strong La Niña occurs, warmer air is expected to spread farther north. Edwards said the climate pattern appears to be shaping up to be weaker. He said historically, “weaker La Niña events have generated some cold shots and heavier precipitation events for the Midwest.” 

MISO meteorologist Adam Simkowski added that though the RTO is anticipating a warmer winter overall, it is not ruling out the possibility of a few frigid blasts that drive load up, even in the South. He said that an active storm pattern around the Great Lakes could increase generation icing risks. 

The RTO also noted that if all goes well at FERC, it should have an agreement on emergency energy purchases in place with the Tennessee Valley Authority beginning Dec. 24. (See MISO and TVA Strike Emergency Energy Purchase Agreement, Request FERC OK.) 

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Stakeholder Soapbox: Kill Subsidized Energy Efficiency for the Public Good

By Kenneth W. Costello

Ken Costello |

Many state utility regulators, policymakers, utilities and others construct the orthodox, and politically palatable, argument that market failure justifies utility energy efficiency (EE) programs and that the vast majority of those programs would pass a cost-benefit test. 

Electric and natural gas utilities together spend about $10 billion annually on energy efficiency. This is in addition to the billions of dollars the federal government spends, boosted substantially by the Inflation Reduction Act (e.g., an expansion of tax incentives for the installation of energy-efficient building upgrades and the construction of energy-efficient homes). Besides all of this, subsidized EE is a major component of state and federal governments’ energy policies, driven in recent years by efforts to combat climate change.  

Using the label “no-regrets,” policymakers frequently push actions they endorse as unequivocally good —everyone wins, no one loses. The “free lunches” that EE advocates ascribe to EE programs should therefore seem suspicious to anyone after little thought. 

They certainly do to many analysts who have seriously studied the benefits and costs of EE initiatives. If these efforts are such a good deal, then why must government mandate or utilities subsidize them? Why aren’t energy consumers taking advantage of the large benefits that EE supposedly offers them? Are they that irrational and unaware of the benefits from EE to warrant subsidies or mandates; or, more accurately, do consumers just find better ways to invest their limited monies? It may very well be that energy consumers prefer to invest in other things, like home repairs, a new car or college. And it’s not because of market failure. 

I am skeptical for two basic reasons. First, the idea that markets are less than perfect should not infer that intervention in the form of utility subsidies or government mandates benefits society. One of the major errors with government actions in a wide array of areas starts with the premise that since markets aren’t perfect, the government should intervene. This more times than not results in a higher cost to society than the benefits received. There is a concept that is often ignored in public policy debate: “government failure.” 

One glaring problem is that ostensibly objective analysis of specific EE initiatives often reaches different conclusions from evaluations prepared either by utilities or for utilities. 

Why is this, and whose results are more credible? Most utilities or their evaluators fail to apply the best analytical tools to their evaluations of EE programs. These tools include randomized trials and quasi-experimental designs to measure energy savings and account for consumer behavior. The problem with other approaches is that they are unreliable — in some instances grossly flawed — in measuring the actual energy savings from individual EE programs. 

Another evident reality is that utilities have a self-interest in portraying their EE programs as cost-effective and, therefore, worthy of favorable treatment by their regulator (e.g., allowing the utility to profit). We cannot forget that regulators and policymakers themselves receive kudos from the public for supporting subsidies whose intent is to tackle climate change, in addition to promising reduced utility bills. 

Going back, academic reviews of EE programs conclude that such programs are not the “low-hanging” fruit many people believe. They show that utilities grossly overstate energy savings from EE programs because they rely on engineering estimates that fail to account for consumer behavior (the so-called “rebound effect” or price-elasticity effect) in using, say, their higher energy-efficient air conditioners and heating systems more intensively because of lower operating costs. 

Studies also find “free riders” participating in EE programs. These are individuals who would have purchased lower-energy-use appliances or heating and air conditioning systems in the absence of the EE program.  It would be wrong to count their energy savings as real benefits, which can show a program as cost effective when in fact it is not. Some studies have shown that participants in utility EE programs primarily are consumers who are wealthier, own their own homes, and are more informed about and attentive to energy costs. 

Studies also note that government and utilities often fail to consider “hidden costs” for consumers from the time and effort spent on both energy audits and investments. The combination of these factors, according to some academic studies, has understated the true costs of EE programs by as much as 50% or more. 

Policymakers should ask the fundamental question: Why should utilities and the government subsidize EE when energy consumers are capable of making rational decisions for themselves? Is it equitable and good public policy to compel utility customers to pay for EE initiatives that benefit a relative few (who are on average wealthier than the funders of those initiatives) when some of those would have invested in EE without utility assistance? 

Kenneth W. Costello is a regulatory economist and independent consultant. 

Stakeholder Soapbox submission guidelines. 

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NERC Standards Committee Briefs: Nov. 13, 2024

In a teleconference that Chair Todd Bennett, of Associated Electric Cooperative Inc., acknowledged was “heavy with content,” NERC’s Standards Committee agreed to move forward on a number of standards development projects Nov. 13 amid sometimes lively discussions.

Changes to SAR Revision Approved

The agenda began with a proposal to revise a standard authorization request (SAR) intended to address reliability risks in the performance of inverter-based resources (IBRs). The SAR was developed by NERC’s Inverter-Based Resource Performance Subcommittee (IRPS) and endorsed by the ERO’s Reliability and Security Technical Committee (RSTC) at its last meeting Sept. 11. (See NERC RSTC Approves Charter Revisions.)

As drafted by the IRPS, the SAR would update the existing standards FAC-001-4 (Facility interconnection requirements) and FAC-002-4 (Facility interconnection studies) to require transmission owners to establish IBR performance requirements along with their associated transmission planners and planning coordinators. SC members were asked to accept the SAR, authorize posting it for a 30-day informal comment period and assign it to the standard development team for the ongoing Project 2022-04 (EMT Modeling).

Members generally expressed support for the SAR, although Amy Casuscelli of Xcel Energy asked why NERC staff proposed assigning the SAR to the Project 2022-04 team rather than Project 2023-05 (Modifications to FAC-001 and FAC-002), which is already working on the same standards. NERC Manager of Standards Development Alison Oswald explained that staff “felt that this [task] better aligned with the work that the 2022-04 team was already doing.” In addition, she said that Project 2023-05 is considered “low priority” by NERC, so its team has not met recently.

Following this exchange, Casuscelli moved that the proposed informal comment period be changed to a formal one. She explained that she was concerned that the SAR had not received wide support from the RSTC and noted that even at the IRPS meeting that approved it, only 11 of 40 members voted in favor.

“That, to me, does not read like consensus,” Casuscelli said. Her fellow members agreed to accept her modification to the proposal and passed it unanimously.

Approved Standard to be Updated

Next was a proposed correction related to the draft standard TOP-003-7 (Transmission operator and balancing authority data and information specification and collection) and its implementation plan, which recently received industry approval in a third formal comment and ballot period that ended Nov. 4.

TOP-003-7 received a 92.77% segment-weighted approval, with the accompanying standard BAL-007-1 (Energy reliability assessments) receiving 81.53%. Both exceeded the two-thirds majority needed to move to NERC’s Board of Trustees for approval.

According to ISO-NE’s Mike Knowland — a member of the team that developed the standards — two errors were identified during the public comment period. NERC staff considered the issue urgent enough to request as part of the consent agenda that SC members waive the normal five business day limit for agenda changes.

The first error involved the effective dates for the terms “energy reliability assessment” and “near-term energy reliability assessment.” According to the balloted proposal, the terms would become effective at the same time as BAL-007-1, 24 months after the date of the standard’s approval by FERC.

However, the terms are also used in TOP-003-7, which would become effective six months before the other standard, according to the proposed implementation plan. This would mean TOP-003-7 would become effective before the definition was officially entered into NERC’s Glossary of Terms.

NERC staff proposed amending the implementation plan to move the effective date of the definitions forward by six months. In addition, staff proposed removing the term “energy reliability assurance” from TOP-003-7. Knowland explained that this term was erroneously left in the standard from a previous draft and should have been deleted before the ballot was conducted.

Committee members approved both proposals with no votes against them, although Marty Hostler of the Northern California Power Agency and Maggy Powell of Amazon Web Services both abstained, citing discomfort with the idea of changing an implementation date that industry already approved without giving stakeholders another chance to weigh in.

Because the updates are considered non-substantial, no further ballot period is required. The standards and implementation plan will be submitted to the board with the changes applied.

Next Phase of IBR Effort Underway

From there, the committee moved to three SARs concerning FERC Order 901, which requires NERC to submit new standards to improve the reliability of IBRs by 2026.

The ERO recently submitted the first of three planned tranches of new standards intended to satisfy FERC’s order. (See NERC Submits IBR Standards to FERC.) Now NERC is moving to the second tranche, which will cover data-sharing and model validation for IBRs; they are due to FERC by November 2025.

As unanimously approved by the SC members at the meeting, the SARs will be assigned to three existing standards projects:

    • Project 2022-02 — Uniform modeling framework for IBRs;
    • Project 2020-06 — Verifications of models and data for generators; and
    • Project 2021-01 — System model validation with IBRs (the new name of this project is on page 86 of the agenda but not yet on NERC’s website).

SC members also approved a proposal to appoint replacements for the chair and vice chair of the team for Project 2021-01, along with several SDT members. NERC’s Oswald explained that most of the original team members felt they lacked the expertise for their new remit. Only two of the existing team members will remain on the roster going forward, for a total team strength of six.

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CAISO Board Approves Nonprofit PTO, Tx Plan Changes

A nonprofit that wants to invest up to $1 billion in Pacific Gas and Electric’s transmission system — and to spend most of its profits on community benefit projects — has received approval to join CAISO as a participating transmission owner. 

The CAISO Board of Governors approved the application from Citizens Pacific Transmission LLC on Nov. 12.  

In other action during the meeting, the board approved modifications to two projects in CAISO’s 2021/22 transmission plan. The changes are intended to address the rapidly increasing load forecast in the San Jose area that is due partly to data centers. 

Nonprofit, Utility Partnership

Citizens Pacific is a subsidiary of Citizens Energy Corp., whose founder and chair is U.S. Rep. Joseph P. Kennedy II, son of the late U.S. Sen. Robert F. Kennedy. 

Under a partnership with PG&E, the utility will offer Citizens Pacific options to lease some of its electric transmission assets. An investment of up to $1 billion would come from five separate 30-year leases. 

Citizens Pacific plans to make an upfront rent payment to PG&E — allowing the utility to accelerate work on its transmission system. The nonprofit would recover its costs through the CAISO high-voltage transmission access charge. Citizens then would funnel profits from the arrangement into community benefit programs. 

PG&E will be responsible for the development and construction of the projects. Citizens Pacific will become a participating transmission owner after FERC approval and transfer of operational control to CAISO. 

Citizens has participated in similar partnerships with San Diego Gas & Electric. But this time, the nonprofit plans a portfolio of transmission projects rather than seeking approval for one project at a time. 

Among the nine projects are modifying 500-kV capacitors at Table Mountain and upgrading a Tesla substation. 

Neil Millar, CAISO’s vice president of infrastructure and operations planning, described the portfolio as primarily reliability-driven projects intended to meet existing and emerging load growth and bring in renewable energy from other parts of the state. 

“We applaud all efforts taken to ensure the transmission we need is built and built on a timely basis,” Millar said. 

Citizens’ past community benefit projects have included rooftop solar on the homes of low-income residents, a 39-MW community solar project in Imperial Valley, and electric vehicles and charging infrastructure for nonprofits in San Diego County such as Meals on Wheels.  

For the new set of projects, the nonprofit plans to put half its profits into community projects for the first $200 million funding tranche, increasing to 90% on the fifth and final $200 million tranche, Citizens Energy CEO Peter Smith told the CAISO board. Community benefits associated with the PG&E projects haven’t yet been determined. 

“This sure seems like a win-win,” said Board of Governors Chair Jan Schori. 

Transmission Plan Update

The CAISO board also approved modifications to the 2021/22 transmission plan involving two projects that were awarded competitively and are under development. They are a high-voltage direct current line from PG&E’s Newark substation and Silicon Valley Power’s northern receiving station (NRS) and an HVDC line between two PG&E substations: Metcalf and San Jose B. 

The modifications are needed because of load growth in the San Jose area. The 10-year load forecast for the area in the 2021/22 plan was about 2,100 MW. That has grown to 3,400 MW for a base case scenario that includes committed data center requests, according to Binaya Shrestha, CAISO’s manager of regional transmission north. Shrestha cited electric vehicle charging as another factor in the load growth. 

A sensitivity analysis that includes additional data center loads increases the forecast to 4,200 MW. 

The load growth forecast also was discussed during a Sept. 23 kickoff meeting for CAISO’s 2024/25 transmission planning process. (See Data Centers Contribute to 60% Increase in San Jose Load Forecast.) 

The approved modifications are a replacement of the HVDC line between the Newark and NRS substations with a high-capacity 230-kV AC line and a 1,000-MW rather than a 500-MW HVDC link between the Metcalf and San Jose B substations. 

Other transmission reinforcements for the San Jose area will be evaluated through the 2024/25 transmission planning process, Shrestha said. 

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FERC-State Collaborative Holds 1st Meeting on Gas-electric Coordination

FERC and a group of regulators from 10 states began discussing gas-electric coordination at the first meeting of the new Federal-State Current Issues Collaborative on Nov. 12 on the sidelines of the National Association of Regulatory Utility Commissioners’ Annual Meeting in Anaheim, Calif.

The new collaborative comes after a similar effort on transmission, which contributed to FERC Order 1920, FERC Chair Willie Phillips said at the meeting. Phillips said he was not tied to any outcome from the effort: It could lead to regulatory changes or suggestions for a legislative response.

“But I am wedded to one basic and, I think, irrefutable fact: In a nation that today is heavily invested in and dependent on natural gas as a dominant fuel in our electric supply portfolio, it is unacceptable for that fuel to not be available to meet our energy supply needs, especially during emergencies,” Phillips said.

While many disagree over the future of natural gas, the fact is that it is leading to reliability issues now and will into the foreseeable future, he added.

The issue has been kicked around for decades. (See RTOs Jointly Call for Improved Gas-electric Coordination and NAESB Forum Chairs Push for Gas Reliability Organization.)

“This forum or collaborative does not need to necessarily end with any specific action,” said North Carolina Utilities Commissioner Kimberly Duffley. “Rather, the purpose is truly discussing the current issues in a roundtable format so each of the NARUC regions and FERC can understand each other’s perspectives and positions and views, along with all of the regional differences.”

Winter storms in recent years have highlighted the risks around failing to improve coordination, which include huge costs as commodity prices spike and can lead to premature deaths when customers lose their heating at the height of winter, Duffley said.

While previous efforts have made some improvements around scheduling and opening up lines of communication between the two interdependent energy markets, they are largely siloed, said New Hampshire Public Utilities Commissioner Pradip Chattopadhyay. Ideally the end result of the task force will be to achieve “greater seamless interaction” between the two markets, he added.

One issue that has cropped up repeatedly is when cold snaps fall on long, holiday weekends, which can lead to significant issues because of the fewer opportunities to schedule delivery of fuel to generators, FERC Commissioner Judy Chang said. ISOs and RTOs increasingly factor risks on the natural gas side as they plan for and forecast reliability, she added.

While no silver bullet is going to solve the longstanding issues, Chang offered a few areas where things could improve, including information sharing and market signals to generators in restructured wholesale markets.

“The nomination process … could be better aligned between the electricity market and gas markets,” Chang said.

Many spoke about the need to expand pipeline capacity as the power sector uses more and more natural gas. But Maine Public Utilities Commission Chair Phil Bartlett said that New England has tried to do that, and it did not work out. The region’s politics also do not support major new pipelines.

“We are seriously constrained at our ability to bring in natural gas by pipeline, forcing us to rely significantly on LNG to try to get us through,” Bartlett said. “The system in New England was built largely to serve heating demand as well as to serve industrial loads. It was not designed to support gas generation, but gas generators have been able to successfully take advantage of excess capacity of the system, which exists for much of the year, most days, in order to power their operations.”

The issues come during winter cold snaps, when the pipelines are at full capacity and many of those generators cannot produce power. “If you have 10 to 14 days of really cold arctic temperatures, there’s a real concern that we’re not going to have access to the gas,” Bartlett said.

ISO-NE is working on capacity market changes that will aim to incorporate those gas constraints, which could lead to generators signing up for firmer gas supply, but Bartlett said success there was not guaranteed.

New England has been dealing with this for 20 years, as its position at the end of the pipelines and its cold winters made the issue obvious in the early days of its electric markets, ISO-NE CEO Gordon van Welie said at the Aurora Energy Transition Forum in New York in October. (See Future of Power Markets Discussed at Aurora Energy Conference.)

“I would have expected Winter Storms Uri and Elliott to have shifted the conversation. I’m shocked that it hasn’t,” van Welie said. “So, I’ve now resigned to ‘we need a 2003 blackout event’ before Congress will wake up and give somebody at the FERC, I think, responsibility for overseeing both of these networks.”

The 2003 blackout led to FERC and NERC’s reliability regime under the Energy Policy Act of 2005. Uri was responsible for hundreds of premature deaths and huge costs in February 2021, but van Welie argued it was written off as something unique to Texas, and for change to happen nationally, some major disaster needs to hit the Eastern Interconnection to move the politics of gas-electric coordination to a place where the issues will be addressed.

“We’ve got all these frictions and resistances in the system, so it’s not going to happen until something really bad happens,” van Welie said.

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RWE Pauses Investments in US Offshore Wind

RWE, which holds offshore wind leases off the Atlantic, Pacific and Gulf coasts, said it is pausing capital expenditures on development there for two years due to increased risk and uncertainty. 

The world’s second-largest wind power developer says it expects complications in the U.S. market in the wake of Donald Trump’s re-election as president.  

RWE Chief Financial Officer Michael Muller said during a Nov. 13 conference call with financial analysts that the company still sees a long-term need for offshore wind power. It still sees value in its projects, and wants to keep its options open, but it needs to be careful about its investments, he said. 

CEO Markus Krebber said: “In particular, we see higher risks and delays in U.S. offshore wind, and in the ramp-up of the hydrogen economy in our core European market.” 

RWE is developing the Canopy Wind project off the California coast and holds a lease off the Louisiana coast. It also is developing Community Offshore Wind in the New York Bight in a joint venture with Natural Grid Ventures. 

All of these projects are only in planning and are at best several years away from starting construction. But they give RWE exposure to a wide range of the technical, political and economic considerations facing the offshore wind industry as it tries to overcome recent challenges and get steel in the water in the U.S. 

With the election last week of a strident wind power opponent as president, new challenges loom. 

RWE expects its two-year pause on capital investments in U.S. offshore wind and European hydrogen projects will save it about 2 billion euros. 

Krebber said RWE is more optimistic about U.S. onshore renewables. 

The company sees very strong U.S. demand for types of power, and a particularly strong demand for green power through power purchase agreements (PPAs) — more than it can meet, in fact. 

Potential loss of the investment tax credit under the second Trump administration would not reduce the demand for new electricity, Krebber said, although it might change the economics of developing generation to meet that demand. 

Might that mean higher PPAs for RWE? The company cannot predict the future, Krebber said, as there are too many variables.

However, he said RWE has de-risked its supply chain and would undertake only de-risked investments. 

An analyst asked what impact would be felt from higher tariffs, another possibility floated by Trump.  

Krebber said RWE evaluates the supply chain risk on every U.S. project before it makes a final investment decision. And on each project, it has taken steps to protect itself, such as buying domestic products, shifting the risks onto suppliers, buying from suppliers not vulnerable to tariffs, or buying components early and stockpiling them in the United States. 

“We feel very comfortable that we can expect no negative impacts [from] very harsh measures on our projects under construction,” he said. 

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NARUC Board Passes Resolution Advancing Grid-enhancing Tech

ANAHEIM, Calif. — The National Association of Regulatory Utility Commissioners board has adopted a resolution to emphasize the role grid-enhancing technologies (GETs) and high-performance conductors (HPCs) can play in reducing customer costs and improving reliability. 

Board members passed the resolution Nov. 13 at NARUC’s annual conference in Anaheim.  

The resolution encourages Congress to appropriate more funding for programs that support GETs and HPC deployment, including two initial rounds of funding allocated to Grid Resilience and Innovation Partnerships Program grants that will benefit 29 states.  

“State regulators nationwide support using technologies to get more value out of the transmission grid,” Julia Selker, executive director of the WATT Coalition, said in a press release. “Continuing federal programs would help grid-enhancing technologies double capacity for new generation and integrate new load in the coming years.”  

GETs are another “tool in the toolbox” that can help address some of the grid’s biggest challenges — unprecedented load growth, clogged interconnection queues and rising prices — said FERC Commissioner Judy Chang during a Nov. 10 panel at the NARUC conference.  

“There are many potential benefits associated with advanced technologies and grid-enhancing technologies, and here at FERC, we’ve been really asking some of those questions,” Chang said. “What’s currently available, what’s possible in the future, what are the costs and how can grid operators and owners facilitate the use of these technologies?” 

FERC is exploring different GETs, including dynamic line ratings, advanced power flow controls and topology optimization. The commission has opened a docket looking into dynamic line ratings and is also exploring simpler solutions such as tower-lifting, which can increase the rating of the transmission line by allowing more sag and less risk.  

Many of the technologies include benefits without engaging in new transmission siting and permitting — an added benefit given the difficulty of building new transmission. 

The tools can unlock the “dynamic capabilities of the grid,” finding transmission capacity for new generation or electric demand at a lower cost than traditional upgrades. Regardless, benefits still need to be balanced with costs, Chang said.  

“What else can we do to squeeze more out of the existing infrastructure?” Chang said. “But we as regulators need to think about the balance between adopting new technology and the risk and cost to consumers associated with these things.”  

‘Remove the Disincentive’

A challenge in advancing GETs is ensuring proper and established incentives. At FERC, regulators also are grappling with whether they should incentivize or mandate new technologies. Chang said she’s cautious of mandates given the amount of information a regulator needs to establish one properly.  

“I’m a big fan of finding ways to remove the disincentive of investments in the right things,” Chang said. “How do I remove the barriers of adoption and remove the disincentive of making that technology available?”  

But the success of advancing GETs and HPCs will depend heavily on whether regulators can balance costs. Adequate cost containment for transmission and other investments has yet to be achieved, Chang said, and doing so will require more collaboration between the states and FERC.  

“We need to make sure we contain the costs while expanding our grid to accommodate all the needs we have,” Chang said. “This is where FERC and states and transmission owners should come together and find solutions so that we can transparently explain to the consumers what costs we’re spending. Because ultimately, this is the consumer’s pocket we’re talking about.” 

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Wash. Dems Save Inslee’s Climate Legacy, Prepare for Challenges

SEATTLE — Washington Gov. Jay Inslee’s biggest anti-global warming measure — and probably greatest political legacy — remains intact after the state’s voters on Nov. 5 rejected a ballot initiative to repeal the nation’s second cap-and-trade program. 

The Republican-led Initiative 2117 would have eliminated the cap-and trade program while also forbidding its revival, with supporters arguing the system has increased the state’s gasoline prices. But Washingtonians voted 62%-38% to keep the program. (See Wash. Voters Resoundingly Reject Cap-and-Invest Repeal Attempt.)   

“That was a fanny whipping,” Inslee said at a Nov. 6 press conference. 

“Legislatures around the country have been watching this. States have never mattered more than now,” Reuven Carlyle, former Democratic state senator and architect of Washington’s “cap-and-invest” program, told NetZero Insider.  

New York and possibly other states are considering implementing their own cap-and-trade programs and have watched the Washington referendum to see how the state’s voters reacted to it, Inslee noted.  

“This win is doubly important because we’ll have a person in the White House who denies climate change,” Inslee said.  

In a separate press conference, Washington’s current Attorney General and Gov.-elect Bob Ferguson and Attorney General-elect Nick Brown said the attorney general’s office has been preparing for months to do battle with the Trump administration on numerous issues, including climate change. 

As attorney general, Ferguson — frequently in collaboration with other attorneys general — filed several dozen lawsuits against the first Trump administration, losing only two or three.  

“No one has a record like that except Perry Mason,” Inslee said. 

However, Carlyle noted that the first Trump administration’s legal efforts were sloppy, leading to failures. “This administration may be better prepared,” he said. 

‘Immovable Force’

After 12 years as governor, Inslee leaves office in January. For about eight of those years, he worked to get the cap-and-invest through the state’s legislature, which approved it in 2021. Since 2023, he has fought to save it from elimination. 

The concept of using cap-and-trade measures to deal with corporate pollution has been around for about 100 years, but it did not begin to receive serious consideration until the 1980s, when American power plants were emitting vast clouds of sulfur dioxide, which was falling back to earth in the form of acid rain. 

Congress wrestled with acid rain, and roughly 70 bills to deal with it were proposed in the 1980s, only to all die. In 1988, the Environmental Defense Fund (EDF) proposed a cap-and-trade system that would have a market to determine the costs of the permits to emit sulfur dioxide, while allowing polluters to figure out on their own how to accomplish reductions. 

EDF convinced the then-new George H.W. Bush administration to try the cap-and-trade approach. The proposal became law in the Clean Air Act of 1990. The concept proved its effectiveness in 1995, when acid rain-related emissions fell by 3 million tons, ahead of the 1990 law’s schedule. Europe soon began adopting the concept. 

Meanwhile, in the early 1990s, Carlyle, then a Harvard master’s degree student in public administration, wrote a paper on the topic, but was not yet passionate about it. In 2007, Inslee, then a congressman from Western Washington, wrote about the concept in a book on clean energy called Apollo’s Fire.  

A 2008 Washington law mandated that the state reduce its carbon emissions to 5% of 1990 levels by 2050. In 2009, then-Gov. Christine Gregoire first proposed that Washington set up a cap-and-trade system for carbon dioxide emissions, but it went nowhere. 

Beginning in his first term in 2013, Inslee began proposing a cap-and-trade system on CO2 emissions, with the details taking years to hash out. But Washington’s legislature became divided between a Democratic-controlled House and a Republican-dominated Senate that opposed almost everything Inslee wanted, including cap-and trade.  

“We faced an immovable force which was the Republican caucus,” Inslee said. 

In late 2017, the Democrats took control of the Senate, opening the way for to cap-and-trade to make it through the legislature. But several Democrats in the House and Senate had to be convinced to support cap-and-trade to ensure the proposal would get the majority of the votes in both chambers. That took a while. 

Carlyle introduced the bill in 2020, intending to get it passed in 2021. “I wanted ample time for public discussion,” he said. 

‘Grand Bargain’

The environmental justice legislators had to get buy-in for the plan. They had to address concerns about Washington industrial companies spending money to cut carbon emissions while keeping up with foreign competitors who wouldn’t face those extra costs. Carlyle met with BP, which owns one of five oil refineries in Washington, to ask it what it wanted in a cap-and-trade program. BP’s answer: predictability.  

The bill’s designers addressed how to spend the money raised through the carbon allowance auctions: The cash would go to numerous programs that addressed climate change, including building hybrid diesel-electric ferries for Puget Sound, plus provide electric vehicle chargers, electric fire engines, buses and other government vehicles. The money would also be used to pay to preserve forest lands, build trails, and make public schools and universities more energy efficient. It would fund purchase of solar panels to generate electricity in public and private buildings and salmon recovery efforts and many health programs. 

Thirty percent of the revenue would go to helping low-income communities affected by carbon pollution. Also, Washington’s cap-and-invest architects in 2021 already wanted to link their program with those of California and Quebec to lower allowance and gasoline prices. That alliance is expected to be solidified in the second half of 2025. 

“This was more comprehensive than anything we considered before,” House Majority Leader Joe Fitzgibbon (D) — the former chair of the chamber’s Environment and Energy Committee — told NetZero Insider. 

“We came up with the concept of a grand bargain to get it over the line together. Most serious challenge at the time is that it had to be technically perfect,” Carlyle said. 

Drafting and tweaking Carlyle’s bill — the Climate Commitment Act, with cap-and-trade dubbed “cap-and-invest” — took two years. The bill had 10 times as many pages as the bill that created California’s carbon cap-and-trade program in 2012. Washington’s legislature passed the bill in 2021 with Democrats supporting it and Republicans opposing it.  

‘On the Take’

The cap-and-invest program began auctioning allowances in February 2023. By June, Washington posted the highest gasoline prices in the nation. Many people pointed to cap-and invest as the culprit, claiming the program added 50 cents per gallon to the price of gasoline. (See Cap-and-trade Driving up Washington Gasoline Prices, Critics Say.) 

Writing for Seattle-based news organization Cascade PBS, this author examined what caused Washington gas prices to rise and concluded numerous factors contributed to the fluctuations, making it difficult to pinpoint any single cause. The analysis concluded that the cap-and-invest program could be adding 21 to 50 cents per gallon at the pump. 

Meanwhile, the state Republican Party and a new conservative initiative organization, Let’s Go Washington, gathered signatures to include I-2117 on the Nov. 5 ballot.  

Supporters of that initiative and seven other conservative measures spent $12 million to gather signatures and get placed on the ballot. Most of the money came from one individual, hedge fund manager Brian Heywood of Redmond, who also founded Let’s Go Washington. The organization had little money left in 2024 to spend on campaigns to pass the four initiatives that made it to the ballot, including the one repealing cap-and-invest.  

Meanwhile, supporters of cap-and-invest raised $35 million to campaign for maintaining the program, swamping television stations with ads saying the program had raised $2.1 billion to fund over 100 projects. Supporters included billionaire Bill Gates, several Seattle business leaders, labor unions, environmental groups and BP — about 500 entities in all. The companies owning the four other Washington oil refineries were neutral on this issue. 

“They’re on the take,” Heywood told Cascade PBS in October. “This is a huge grift.”  

He painted a picture of those 500 organizations receiving the cap-and-invest money mainly because they are political allies of Inslee. 

“We took [the repeal effort] very seriously,” Fitzgibbon said. 

“There was no guarantee that [repeal] would make gas prices come down,” Carlyle said, adding that Washington’s gasoline prices have dropped by more than $1 per gallon since the summer of 2023. 

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NJ BPU Updates Proposal for Storage Incentives

New Jersey’s Board of Public Utilities (BPU) on Nov. 7 released an update to its proposed Storage Incentive Program (SIP) that changes how the subsidies for utility-scale, or “grid supply,” projects are determined as the state shoots for 2,000 MW of total capacity by 2030.

The proposal is a revision of a draft released in September 2022. It retains the original version’s segmented structure, with different incentives for grid supply projects and those behind the meter. (See NJ Seeks Stakeholder Input on Pending Storage Program and New Jersey Offers Plan to Boost Lagging Storage Capacity.)

But the original version would have paid utility-scale projects through an “administratively determined fixed incentive plus performance incentive structure” based on the amount of carbon emissions abated through their operation. In the new version, “grid supply energy storage systems will be awarded fixed incentive payments through an annual competitive bidding structure.”

“Grid supply storage resources will initially receive only a fixed upfront incentive, as the [program] will defer an avoided emissions-based performance mechanism until suitable datasets become available,” the proposal says.

The grid supply segment would be launched early in 2025, while the BTM incentives, to be set administratively by the BPU, would begin in 2026.

According to the proposal, the board based its decision to change the structure in part on “the number of storage projects that have remained in the PJM interconnection queue following the imposition of stricter readiness requirements.”

Under the competitive structure, “the board would release a solicitation with the specific amounts, or ranges of amounts, being sought for a given fiscal year. The solicitation would ask participants to identify the level of fixed incentive needed to support project revenue requirements,” the proposal says.

Another change is that the fixed payments for both segments would be paid upfront, as soon as the project begins commercial operations, rather than spread out over 10 to 15 years as was stipulated in the previous proposal.

“Upfront incentives provide a lower level of risk to system owners and developers and reduce the overall administrative burden of the program,” the proposal states.

There will be a public hearing on the plan on Nov. 20.

The BPU’s goal is to encourage the development of storage systems that charge using clean, off-peak energy and improve system reliability. The proposal anticipates a reduction in costs as “New Jersey’s deployment of storage systems increases.”

“Energy storage resources are critical to bolstering the resilience of New Jersey’s electric grid, reducing carbon emissions and enabling New Jersey’s transition to 100% clean energy,” the proposal says.

A BPU spokesperson said the state currently has 560 MW of installed storage, but those projects will not be counted toward the 2,000-MW goal. And the proposed incentives will not be retroactive, according to the proposal. “Only energy storage projects placed into service after the date of the board order establishing this program will be eligible for incentives.”

BTM Incentives

Incentives in the distributed segment would be allocated using a “declining block structure,” in which the BPU would establish an initial capacity of storage sought, measured in megawatt-hours. Once that block is fully subscribed, the board would set a lower incentive for the next block, according to the proposal.

“If a block remains unsubscribed or under-subscribed, the board would have the option to increase the incentive,” according to the proposal. The system would give the BPU “flexibility to establish block sizes, reset incentive levels (if necessary) and adjust programmatic elements on an annual basis, as needed, to meet policy goals and budgetary considerations.”

To evaluate an appropriate incentive level, a consultant hired by the BPU conducted a “gap analysis” of the “revenue and savings potential of behind-the-meter storage projects for a variety of different building types, rate classes and tariffs associated with the New Jersey” utilities, according to the proposal.

The results showed a “consistent shortfall” of revenue of about $220 to $330/kWh, which amounted to between 37 and 47% of the cost of the systems. In response, the proposal suggests a starting incentive of $300/kWh for a small storage system (less than 100 kW) and $200/kWh for a medium project (100 to 500 kW). A large project (over 500 kW) would get an incentive of $150/kWh.

On top of that, distributed projects could get performance incentives, which would be awarded when they respond to dispatch events.

To further encourage developers to build in overburdened communities, the proposal suggests an additional incentive of $100/kWh for small, $67/kWh for medium and $50/kWh for large projects.

“Distributed storage plays an important role in reducing emissions and enhances the resilience of the electric grid — both important factors in meeting Gov. [Phil] Murphy’s environmental justice and equity directives,” according to the proposal. “Because distributed storage resources are customer-sited, energy storage projects serving overburdened communities will provide improved energy resilience to the local communities and may help offset ‘dirtier’ backup generation options during emergency conditions.”

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ISO-NE Updates Plans for Capacity Reforms for CCP 19 and Beyond

ISO-NE has reiterated its plans not to include in its capacity auction reform (CAR) project the development of ambient temperature modeling capabilities or a new simultaneous seasonal auction clearing engine. 

Presenting to the NEPOOL Markets Committee (MC) on Nov. 13, the RTO said it instead plans to consider these reforms for a second phase of work, targeting implementation after the 2028/29 capacity commitment period (CCP 19).  

The CAR project encompasses ISO-NE’s work to improve capacity accreditation, reduce the time between capacity auctions and CCPs, and break up annual CCPs into distinct seasonal periods. The initial CAR changes are intended to take effect for CCP 19, with more work planned for CCP 20 and beyond. 

In previous MC meetings, representatives of the generation and end-user sectors expressed interest in developing a simultaneously clearing seasonal auction format allowing bidders to incorporate annual costs into their seasonal bids. (See ISO-NE Refines Scope, Schedule for Capacity Auction Reforms.) 

Implementing simultaneous seasonal auctions “would require the development of a new clearing engine and new offer/bid parameters to allow resources to offer separately into each season as well as across the year,” said Chris Geissler, ISO-NE’s director of economic analysis. 

No other RTO has developed a comparable clearing engine, Geissler said, adding that it would be challenging to complete development in time for CCP 19.  

He noted that ISO-NE is still considering how to account for generators’ annual costs within a sequential seasonal format and “will spend time with stakeholders discussing competitive offer prices and mitigation … as part of the seasonal accreditation reforms.” 

Regarding ambient temperature adjustments, Geissler said ISO-NE will base capacity accreditation on resource performance at 90°F for the summer and 20°F for the winter and will model the effect of temperature on winter gas availability. However, the RTO is not planning to include any further temperature adjustments in the CAR project.  

Clean energy advocates have argued that ISO-NE should model correlated outages associated with ambient temperatures, noting that forced outages pose risks to the grid during periods of extreme cold weather.  

Geissler said the RTO is constrained by its modeling capabilities and “limitations in data availability related to audited, temperature-based output ratings for applicable resources.” 

Instead, ambient temperature adjustments have been added to the RTO’s post-CAR road map, which also includes consideration of a simultaneous auction clearing mechanism, he said.  

“Evaluating this as part of the post-CAR road map will allow the ISO and stakeholders more time to thoughtfully assess the various approaches to ambient temperature adjustments that could be considered, including the pros and cons associated with each approach,” Geissler added.  

Capacity Accreditation Concerns

Prior to the MC, the clean energy trade association Advanced Energy United, along with 12 renewable developers, issued a memo expressing concern that ISO-NE has not allotted enough time in the CAR project to reviewing the resource accreditation changes.  

ISO-NE had already completed substantial work with stakeholders on proposed capacity accreditation reforms prior to pausing accreditation discussions and broadening the scope of the project to include changes to the auction format. 

However, clean energy developers had substantial concerns about the accreditation framework at the time, as impact analysis results released prior to the pause showed a significant loss of revenue for battery storage resources. (See ISO-NE: RCA Changes to Increase Capacity Market Revenues by 11% and ISO-NE Capacity Accreditation Reforms Spur Energy Storage Concerns.) 

“We believe accreditation will continue to be the most complex and impactful piece of the CAR project,” the groups wrote.  

They advocated for stakeholder sessions in early 2025 to discuss resource adequacy modeling and marginal reliability impacts and called on ISO-NE to conduct its final impact analysis earlier in the process to provide time for more changes if needed. ISO-NE plans to resume accreditation work with stakeholders in late 2025, aiming to file the accreditation aspects of the CAR project with FERC in late 2026.  

“While we recognize that aspects of accreditation cannot move forward without an informed prompt and seasonal design, there are many aspects of the current accreditation framework that will remain relevant and applicable,” the groups added. 

Geissler said ISO-NE is still evaluating how accreditation in the CAR project will compare to the previous resource capacity accreditation (RCA) framework and said the RTO “will bring items related to accreditation to stakeholders as soon as they are ready for discussion” and “will prioritize explaining how the design is the same or how it has evolved since the RCA presentations.”