Page 82 – RTO Insider

May 27, 2024May 28, 2024

ERCOT Projects 97-GW Peak Demand by 2034

[EDITOR’S NOTE: This story has been updated to reflect ERCOT’s new unofficial peak demand record for the month of May, set May 27. The previously reported mark for the day was 73.75 GW.]

ERCOT’s latest capacity, demand and reserves (CDR) report projects summer peak demand will increase to more than 97 GW by 2034, assuming normal weather conditions.

However, the weather has been anything but normal recently in Texas. ERCOT is coming off the second-hottest summer in state history, and it just set an unofficial peak demand record for May (77.13 GW) that exceeds the grid operator’s all-time peak from 2018 (73.47 GW).

One Austin resident’s weather projection for the summer. | Emily Eby French via X

The heat index hit 113 degrees Fahrenheit in Austin on May 25 and has already hit triple digits in Houston, where the low temperature dropped to only 80 degrees on May 21. That is about a month and a half ahead of normal, according to a local forecaster.

The National Oceanic and Atmospheric Administration (NOAA) has predicted an “above-average” hurricane season this year, with between 17 and 25 named storms. It says “extraordinarily high, record-warm water temperatures” in the Atlantic Ocean, linked to climate change, are energizing the waters and fueling storm development.

NOAA said another factor influencing this year’s hurricane season is La Niña, a climate pattern that cools surface ocean temperatures and lessens wind speeds, allowing more storms to develop.

The CDR report forecasts peak demand of 83.29 GW this summer, assuming normal weather conditions. Demand is expected to exceed 84 GW in 2026, 86 GW in 2028 and 90 GW in 2030, according to the report.

Energy consultant and Stoic Energy principal Doug Lewin doesn’t think that is enough. He says ERCOT still doesn’t factor climate change into its projections, and he noted the ISO’s current record for peak demand is 85.46 GW, registered last August.

“They only expected 73 GW this month and we’ve already passed that. Had this heat hit outside a holiday weekend, we’d likely be around 80 GW,” he said on X, the social media platform formerly known as Twitter.

ERCOT says its load forecasts are based on normal weather conditions and determined by the methodologies posted to its website. Staff forecasts scenarios through 2033 using a model with historical weather years.

The CDR report is designed to provide forecasted planning reserve margins (PRMs) for ERCOT’s summer (June-September) and winter (December-February) peak-load seasons. The ISO says it is not intended to characterize the risk of scarcity conditions from a real-time operations perspective. It defines the PRM as the percentage of capacity above firm demand that is available to cover uncertainty in future demand, generator availability and new resource supply.

ERCOT’s operational capacity exceeds 100 GW next year but increases to only 101.50 GW by 2033. However, the CDR report indicates the grid operator expects 30 GW of planned capacity by that same time, with solar resources accounting for 28 GW.

May 23, 2024May 27, 2024

BOEM FEIS Cites ‘Major’ Impact from NJ OSW Project

The Bureau of Ocean Energy Management released its final environmental impact statement (FEIS) May 23 that concludes that New Jersey’s foremost offshore wind project, Atlantic Shores, would have a “major” impact on commercial and for-hire recreational fishing, the view from the shore and on-ship traffic.

The 560-page study found that the 200-turbine, 1,510-MW project would impact the commercial and recreational fishing sector through a range of activities, including anchoring, cable emplacement, noise, port use and structure presence. At about 10 miles from the shore, Atlantic Shores is the closest OSW project in development to the land in New Jersey.

But the FEIS also concludes the area would suffer a major impact even if the project were not constructed. Those impacts would stem from factors including fishery management measures taken to ensure that the volume of fish caught is sustainable; the impact of climate change from ocean warming, sea level rise and ocean acidification; and non-OSW construction on land.

Likewise, the study found that although the project would have a major scenic impact on the area — on the open ocean, seascape, and landscape character and views — the coast would suffer a strong scenic impact regardless because of onshore development and construction activities, offshore vessel traffic and the effects of other OSW projects.

And the agency found that the impact of the project on most of the other 19 categories studied — including recreation and tourism, land use and costal infrastructure, water and air quality, and a variety of animal species — would be moderate or minor.

BOEM compiles EIS reports to assess the potential impacts from an OSW project on physical, biological, socioeconomic and cultural resources. The final report informs BOEM’s decision on whether to approve, approve with modifications or disapprove the project’s Construction and Operations Plan (COP), and the FEIS may also be used by other agencies in evaluating the project.

The FEIS evaluates the impact on the area if the project does not go ahead and if the project goes ahead as planned. The agency also looks at the impact if the project were reshaped or adjusted to try to mitigate any effects, such as by reducing the number of turbines or their position in the lease area. But any such adjustments did not generally reduce the impacts of Atlantic Shores that BOEM assessed as “major.”

In response to the release of the FEIS, Atlantic Shores said it “remains dedicated to responsible development [and] environmental stewardship.”

“We are encouraged to see forward progress and getting another step closer to delivering New Jersey’s first offshore wind projects,” said CEO Joris Veldhoven. “We appreciate BOEM’s thorough environmental evaluation and recognize the significance of this milestone.”

Tourism, Whale Impact

Atlantic Shores, a 50/50 joint venture between EDF-RE Offshore Development and Shell New Energies US, was one of two projects — along with Danish developer Ørsted’s Ocean Wind 2 — that the New Jersey Board of Public Utilities approved in its second solicitation in 2021. That followed the agency’s approval in 2019 of Ørsted’s Ocean Wind 1 project. (See NJ Awards Two Offshore Wind Projects.)

Ørsted has abandoned its two projects, saying they were no longer feasible.

New Jersey approved two more projects in its third solicitation, and the combined total of those two and Atlantic Shores would, if completed, account for slightly less than half the state goal of 11 GW of OSW capacity by 2040. The state in April opened a fourth solicitation. (See New Jersey Opens 4th Offshore Wind Solicitation.)

Critics of the projects are concerned about the impact on the commercial fishing and tourism sectors and on the quality of life to local homeowners, especially from an impaired view of the sea.

The study also found the project would have only a minor impact on the tourism industry.

Navigation and vessel traffic in the area would suffer only a moderate impact if Atlantic Shores were not built, but a major impact if it were because of “increased vessel traffic in and near the project area and on the approach to ports used,” according to the report. Traffic would especially increase during the construction period, and the impacts would include “changes to navigational patterns and to the effectiveness of marine radar and other navigation tools” that could result in “delays within or approaching ports, increased navigational complexity [and] detours to offshore travel or port approaches,” the study says.

The study found the project would have only a moderate impact on most mammals but would have a major impact on the North Atlantic right whale, which is an endangered species. That assessment stemmed from the fact that “impacts on individual NARWs could have severe population-level effects and compromise the viability of the species due to their low population numbers and continued state of decline,” the report said.

Opponents of OSW projects regularly cite a series of whale deaths on the Jersey Shore as potentially caused by preliminary OSW activities. But construction has yet to begin on any project in the state, and federal and state investigators have found no link between the deaths and OSW activities, saying they are most likely caused by vessels hitting the whales.

May 23, 2024

Texas Public Utility Commission Briefs: May 23, 2024

A CenterPoint Energy senior executive told Texas regulators May 23 that slightly more than 27,000 of its customers remain without power a week after a derecho devastated the Houston area with winds exceeding 100 mph.

Jason Ryan, CenterPoint’s executive vice president of regulatory services and government affairs, said during the Public Utility Commission’s open meeting that the utility remains in emergency operations.

“We understand that it’s been a long seven days, that it’s been in excess of 100 degrees in terms of the feels-like temperature and that we still have a lot of work to do,” Ryan said. “We will work day and night until we finish the mission. We appreciate all of our customers and for sticking with us through this unprecedented event.”

He said CenterPoint had only about 15 minutes to prepare for the derecho, which national meteorologists define as a continuous or intermittent path of severe wind from a squall line of thunderstorms. Derechos can extend at least 400 miles and at least 60 miles wide and generate hurricane-force winds.

About 922,000 CenterPoint customers were without power in the storm’s aftermath. That number was down to fewer than 18,000 following the PUC meeting, according to CenterPoint’s performance tracker.

Ryan thanked the more than 5,000 mutual assistance crews from other states that augmented CenterPoint’s 2,000 crew members, noting they have not suffered any serious injuries or deaths.

“That’s probably the proudest accomplishment that I can stress with you,” he told the commissioners. “I look forward to sending these crews home just as safe as they arrived to help our communities.”

The restoration crews replaced more than 800 miles of wires, more than 700 transformers and about 2,000 distribution poles. CenterPoint said in a statement it has also deployed 13 mobile generators to critical facilities, cooling centers, health care facilities, first responder locations, senior centers and schools.

“Everyone I’ve talked to has said you all have done an amazing job responding to an event that you couldn’t really prepare for,” PUC Chair Thomas Gleeson told Ryan. “I’ve heard nothing but good things.”

Wearing a logoed polo shirt instead of his normal suit and several days’ worth of stubble, Ryan said he was returning to CenterPoint’s emergency operations center after his presentation. He said the company’s headquarters in downtown Houston lost more than 500 windows; officials say it could be months before the business district’s windows are repaired.

“While we don’t know when we’ll have access to our building again, it hasn’t impaired our restoration efforts,” Ryan said.

Loan Program Attracts Interest

PUC staff said they have received 10 completed commitments to apply for disbursements from the $5 billion Texas Energy Fund (TEF), which is designed to incent more dispatchable energy to the ERCOT grid. The proposed projects could add more than 4.9 GW of capacity (56455).

Applicants face a May 31 deadline to file notifications that they intend to apply for the funds. Formal applications can be submitted on or after June 1. The loans will be issued by Dec. 31, 2025.

The commission established the TEF in March because of state legislation passed last year. Qualifying projects must add at least 100 MW of dispatchable capacity to the grid. The PUC says the program can support up to 10 GW of new or upgraded generation capacity in ERCOT. (See Texas PUC Establishes $5B Energy Fund.)

NRG Energy accounts for three of the applications. The company said this year that it plans to use TEF loans to help finance construction of two new natural gas-fired plants that would be available in 2026.

Corona Named Executive Director

The commission announced it has promoted interim Executive Director Connie Corona to the official role. She fills the position vacated by Gleeson when he was appointed Texas PUC chair in January. (See Abbott Names PUC Executive Director as Chair.)

“I don’t think it could be any question you’re the right person for this job,” Gleeson told Corona.

Corona has spent 12 years at the commission, sandwiched around a 14-year stint in NRG’s regulatory affairs department.

The PUC also promoted Chief Program Officer Barksdale English to deputy executive director. English joined the commission in 2018 after six years at Austin Energy.

May 23, 2024

FERC Accepts NERC’s New Cybersecurity Standard

FERC on May 23 approved NERC’s proposed reliability standard for protecting electronic communication between control centers, along with the ERO’s plan for collecting data on winterization of generating units.

NERC began development on CIP-012-2 (Cybersecurity — communications between control centers) in 2020, following a directive from the commission upon the approval of its predecessor CIP-012-1 (RD24-3). At the time, FERC said the standard needed further changes to protect the availability of communications links and data as required by Order 822, the impetus for the original standard. (See NERC Reliability Standards Get FERC Approval.)

The ERO submitted the new standard in January, promising that it “expands the protections required by … CIP-012-1 by requiring responsible entities to mitigate the risk” of lost communications between control centers, along with the loss of real-time intra-control center assessment and monitoring data.

NERC said the applicability and scope of CIP-012-2 are unchanged from the current standard; all responsible entities that own or operate control centers will be required to comply, except for facilities that “only communicate real-time data with other control centers regarding a co-located field asset [such as] a transmission station or generation facility.”

The only change from CIP-012-1 is the addition of two new parts to requirement R1. Part 1.2 requires entities to implement protections for the availability of data in transit between control centers, while part 1.3 mandates that entities have methods for recovering lost communication links.

In a filing, FERC said the proposed standard was “just, reasonable [and] not unduly discriminatory or preferential,” and addressed the directives in its order. The commission approved NERC’s request for the standard to take effect on the first day of the first quarter that comes 24 calendar months after the effective date of the order; as a result, the standard will become enforceable on July 1, 2026.

ERO Outlines Data Collection Proposal

NERC’s cold weather data collection plan arose from FERC’s order last year approving EOP-012-1 (Extreme cold weather preparedness and operations) and EOP-011-3 (Emergency operations). (See FERC Orders New Reliability Standards in Response to Uri.)

The commission directed NERC to submit within 12 months a plan for gathering data on generating unit winterization; for performing an analysis of the risk posed by proposed technical, commercial or operational constraints in EOP-012-1; and for analyzing the “actual performance of freeze protection measures during future extreme cold weather events.”

NERC provided its plan to the commission in a compliance filing in February, explaining that it intends to submit an annual informational filing to FERC covering the required information; the first such filing will be made Oct. 1, 2025. Data for this first filing will be collected through a Section 1600 data request. This will be done for the second filing in 2026, possibly accompanied by additional data requests under NERC’s Compliance Monitoring and Enforcement Program.

Information to be required from data requests to generator owners includes:

- identity and location of generating units;
- identity and megawatts of generation of units for which owners have declared constraints under EOP-012, along with the constraint declaration type and rationale;
- megawatts of generation within the owner’s fleet that are currently capable of operating at the unit’s extreme cold weather temperature;
- projected megawatts for which the generator owners and operators expect to implement and complete corrective action plans each year;
- the number of generator cold weather reliability events experienced in the previous winter; and
- megawatts of generating units that might be susceptible to the causes of the previous winter’s cold weather events.

In its filing this week, FERC noted that no interventions or protests were filed by the March 12 due date. The commission concluded that the proposal meets its directives, and approved NERC’s data collection plan.

May 23, 2024May 28, 2024

FERC Forecasts High Temperatures, Flat Prices for Summer

This summer should bring high temperatures and electricity demand, but flat prices as cheaper fuel offsets higher load, according to FERC’s Summer Energy Market and Electric Reliability Assessment, released May 23.

The National Oceanic and Atmospheric Administration forecasts a 60 to 70% likelihood of above-normal temperatures in June, July and August across the country compared with the 30-year average.

“High temperatures that are widespread can intensify stressed conditions on the electric grid by creating high electricity demand across a wide geographic area and reducing the availability of imported electricity from neighboring systems because they are also experiencing high demand,” the report said.

Following last summer’s “El Niño” weather pattern, the National Weather Service says there is a 69% chance that a La Niña could emerge this summer. For the U.S., a La Niña means more storms in the center of the country and less precipitation in the South; it can also lead to more Atlantic hurricanes.

NOAA released its hurricane forecast May 23 as well; it predicts an 85% chance of an above-normal season, with 17 to 25 named storms, eight to 13 forecast to become hurricanes, and four to seven of those to be major hurricanes. Forecasters have a 70% confidence in the ranges.

Despite expectations for a hot summer, electricity prices are forecast to be flat or slightly lower than in 2023. The one exception is the Northeast, where regional natural gas prices could mean higher power prices than last year.

FERC is forecasting average ISO-NE prices to be almost $10/MWh higher than last year, while those in CAISO are expected to fall by $23 to $34/MWh.

U.S. installed generation capacity is expected to hit 1,207 GW, up 40 GW from 2023 because of additions of wind and solar, while retirements were dominated by coal capacity, with 3.3 GW retiring through September.

ERCOT leads with 20.1 GW of capacity additions, including 12 GW of solar and 4.5 GW of batteries. CAISO is expected to add 8.9 GW overall, but it beats ERCOT, with 5.1 GW of battery capacity additions.

Summer is the season with the highest use of natural gas for the sector, with power burn expected to peak in July and August at 47 Bcfd this year.

“Natural gas used to generate electricity — or power burn — is expected to average 43.5 Bcfd in summer 2024, equal to power burn in summer 2023 but up 9.5% compared to the five-year average,” the report said.

Coal stockpiles at power plants are higher this year, and coal delivery over the rail network does not face the same issues as the pandemic years from 2020 to 2022, but the Francis Scott Key Bridge collapse in Baltimore has impacted some local coal plants.

“Coal power plants nearby may experience delays or disruptions to resupply coal stocks via water (barges) if there is protracted disruption to shipping in nearby waterways to clean up the bridge collapse,” the report said. “The bridge collapse temporarily halted coal deliveries by barge to the Brandon Shores and Wagner coal plants, totaling 1,865 MW, which are located directly adjacent to the bridge.”

Baltimore is the second-largest port for coal exports, shipping the commodity from Appalachia to global markets and representing 28% of exports. That traffic was temporarily delayed because of the bridge collapse.

The Energy Information Administration is expecting demand to be 2.7% higher this summer than last year and 4.4% over the average of the past five summers.

“The expected larger electricity consumption this summer results from forecasted warm weather and strong economic growth,” the report said. “Another significant source of electricity consumption growth is the construction of new data centers in many regions of the country.”

May 23, 2024May 28, 2024

Is NV Energy Leaning to CAISO’s EDAM?

An NV Energy executive has provided the strongest public indication yet that the Nevada utility is poised to choose CAISO’s Extended Day-Ahead Market (EDAM) over SPP’s Markets+.

Dave Rubin, federal energy policy director at NV Energy, offered the insight May 22 at a joint session of the CAISO Board of Governors and Western Energy Imbalance Market (WEIM) Governing Body.

A member of the West-Wide Governance Pathways Initiative’s Launch Committee, Rubin spoke during the committee’s presentation on the initiative’s proposal to alter the governance structure of CAISO’s WEIM and — by extension — the EDAM, which will extend the capabilities of the real-time WEIM.

Step 1 of the Pathways proposal calls for the WEIM’s Governing Body to assume “primary” authority over WEIM/EDAM matters, elevating its power from the “joint” authority it currently shares with the CAISO board over such matters. The move represents the limit of ISO governance changes that can be made under current California law, according to legal analysis performed for the Pathways Initiative. (See Western RTO Group Floats Independence Plan for EDAM, WEIM.)

Step 2 of the plan seeks to create “a durable governance structure with a fully independent board that has sole authority to determine the market rules for EDAM and WEIM,” which will require changes to California law, something Pathways Initiative backers are pursuing through engagement with the legislature. (See Pathways Initiative to Act Fast on ‘Stepwise’ Governance Plan.)

In speaking at the May 22 meeting, Rubin said Step 1 “inspires confidence, not only for moving to a form of solid independent authority at some point over the EDAM and EIM in Step 2, but also for the continued engagement of the [Pathways] parties as we expand market services for the benefit of our customers.”

Rubin said NV Energy has been impressed by the “engagement and encouragement” around Step 1 and the Pathways Initiative by CAISO’s staff and board and the WEIM’s Governing Body that “we believe demonstrate a common understanding of the importance of independent market governance.”

“It’s certainly one thing to discuss that as a goal, but it’s far more meaningful to take concrete actions to further that objective. And accordingly, for NV Energy, we’ve strongly supported the work of the Launch Committee, and it clearly helps inform our market evaluation,” he said.

While Rubin’s comments fell well short of an announcement in favor of EDAM, they came during a week when multiple electricity industry sources in the West told RTO Insider that NV Energy officials have been circulating the idea that the utility plans to join the CAISO day-ahead market but probably won’t make an announcement before filing with Nevada regulators.

The utility did not respond to a request for comment.

NV Energy in Key Position

An NV Energy decision in favor of EDAM would be pivotal for CAISO and the Pathways Initiative for at least two reasons.

First, because of its central location in the West, NV Energy’s transmission network has been a key transit point for energy transfers — or wheel-throughs — among balancing authority areas of WEIM participants since it joined the market in 2015. It likely would continue to fulfill that vital function for the EDAM, while also hindering the ability of potential Markets+ participants in the Northwest and Desert Southwest from transacting freely with each other.

Second, the Pathways proposal stipulates that CAISO’s filing of WEIM primary authority tariff changes with FERC wouldn’t be triggered until EDAM obtains implementation agreements from a “set of geographically diverse” WEIM participants representing load equal to or greater than 70% of the CAISO BAA annual load in 2022.

The EDAM last month secured a full commitment from PacifiCorp and has received tentative — but solid — commitments from Balancing Authority of Northern California, Idaho Power, Los Angeles Department of Water and Power, and Portland General Electric. Given that, a utility of NV Energy’s size and location would provide the trigger for CAISO to file the Step 1 change once it emerges from the ISO’s stakeholder process.

A study published this year by The Brattle Group showed NV Energy could earn as much as $149 million in annual benefits as a member of EDAM versus a top-end benefit of $16 million in Markets+. (See NV Energy to Reap More from EDAM than Markets+, Report Shows.)

May 23, 2024May 27, 2024

Glick, Christie Clash over States’ Role in FERC Order 1920

VAIL, Colo. — Former FERC Chair Richard Glick faced off against his old colleague, Commissioner Mark Christie, over FERC Order 1920 in the general session of the Western Conference of Public Service Commissioners’ annual summit May 21.

The order, which directs regional transmission planners to alter their processes to be more forward-looking and proactive, stemmed from a Notice of Proposed Rulemaking issued in 2022 under Glick’s leadership and with Christie’s enthusiastic support because of its consideration of state input. But Christie dissented from the order, which didn’t contain the provisions that had led to him voting for the NOPR. (See FERC Issues Transmission Rule Without ROFR Changes, Christie’s Vote.)

“The NOPR gave states a very significant role, particularly in the key functions of the selection criteria for determining what projects go into the regional plan,” Christie said. It also gave states the ability to choose benefits, of which the rule outlines seven, that are key in determining who pays for transmission.

“The rule actually mandates benefits, which NARUC [the National Association of Regulatory Utility Commissioners], specifically in their comments, said, ‘Don’t mandate benefits; let each region decide what works for them.’ The rule went in the opposite direction,” Christie said. “And of course, the most important issue of all is cost allocation. The NOPR promised that states would consent. … That was critically important to NARUC; it was critically important to every state organization; and it was critically important to me.”

Order 1920 gives states six months to agree on a cost allocation mechanism with regional transmission planners, who must come up with a default ex ante method. Departing from the NOPR, regional planners are not required to file any agreement with the states or even any state proposals as alternatives.

“What this rule does is leave states in the position of just being a stakeholder,” Christie said.

But Glick defended the order and expressed uncertainty about the role of the six-month timeline, which, according to Christie, would be “extraordinarily difficult” for states to reach an agreement in.

“Heck, I don’t know if six months is too long or too short, but at least there’s an opportunity to get together,” Glick said. “The states have an opportunity in this engagement process to come up with a state agreement cost allocation approach and process.”

Christie also took issue with elimination of the FERC Order 1000 cost allocation principle 6, which held that transmission providers could have a different allocation process for public policy projects. In Order 1920, all projects are in the same bucket, “which is going to make it extremely difficult in the real-world practical application determining how much of a cost in one of these long-term projects is actually public policy,” Christie said.

Glick emphasized that the benefits are for the purpose of project selection, not for the purpose of allocating transmission costs.

‘Massive Wealth Transfer’

Mandating benefits and minimizing state consent over cost allocation will be problematic for the consumers who will bear the burden of transmission costs, argued Vincent Duane, principal at Copper Monarch and former general counsel for PJM. He joined Glick and Christie on the panel.

“The way this rule is drawing a lot of criticism, and in my opinion rightly so, is that it does potentially represent a massive wealth transfer away from generation developers … and picked up by customers,” Duane said.

Christie agreed. “This rule is absolutely about a massive transfer of wealth from consumers to developers, no question about it,” he said.

Glick again pushed back, saying the rule will ensure that costs can only be allocated to customers to the extent they benefit.

“It’s not a wealth transfer,” he said. “The customers are only going to have to pay where they benefit.”

To ensure protection of consumers, Christie said state regulators should have a more robust role than the order gives them.

Duane boiled the conversation down to weighing the inevitable compromises that will be made as Western electricity markets expand and utilities and power providers decide which day-ahead market to join.

“There’s going to be some degree of surrendering of state sovereignty as a result of regionalizing. … There’s going to be some potential that you’re going to be told you’re a beneficiary when you may not feel you’re a beneficiary,” Duane said. “As state policymakers, the question you’re facing is, do the benefits of being a part of a regional organization that plans regionally across multiple jurisdictions — that requires some give and take, and some rough and tumble, and some unscientific, at the end of the day, benefits and costs — is it worth it?”

May 23, 2024

FERC OKs Allete Securities Sale Prior to Acquisition

FERC has granted Allete permission to sell several hundred million dollars in securities to raise funds for its clean energy transition.

In a May 23 order, FERC said Allete is clear to issue stock and up to $977 million in short-term debt, up to $275 million in long-term debt and a maximum of $516 million in the sale of tax credits and tax equity financing (ES23-71). The commission’s authorizations are good for two years.

Allete’s ask to FERC predated its acquisition announcement this month. The company said it needs money for continued investments in renewable energy, “environmental technology” for its generating units, transmission investments and distribution grid modernization, and other business expenses.

FERC said Allete’s request to raise money appeared consistent with the public interest and “reasonably” necessary for Allete’s utility services.

Allete said it filed for FERC permission out of an “abundance of caution” because its utility, Minnesota Power, owns and operates wind generation in North Dakota. Last year, the Minnesota Public Utilities Commission authorized the company to issue long- and short-term debt.

At the time of filing, Allete said it expects its affiliates’ capital expenses to overtake its internal cash flow from January 2023 through June 2024.

Allete said with “internally generated cash insufficient to fund the planned capital outlays,” it will need to turn to issuances of long- and short-term debt and common stock alongside tax equity financing. Allete also noted in the filing it had been exploring acquisition “and other investment opportunities to diversify [its] revenue base in order to reduce its dependence on revenues from a concentrated industrial base of taconite and paper customers in northeastern Minnesota.”

Allete’s hunt for a buyer proved successful. Weeks ago, it announced an agreement to be acquired by Canada’s pension investment board and private equity firm Global Infrastructure Partners for more than $6 billion. The acquisition and ensuing transition to a private company would help it access even more capital to navigate fleet transition, the company said. (See Canada Pension Board, Global Infrastructure Partners to Buy Allete.)

Allete said it hopes to finalize the deal in 2025. The sale requires approvals from FERC, Minnesota and Wisconsin regulators, the Federal Trade Commission and company shareholders.

May 23, 2024

MISO: Worsening Uninstructed Deviation Needs Attention

Five years after it introduced rules to curb generators’ uninstructed deviations from dispatch instructions, MISO said such departures are worse than ever and it likely needs to strengthen rules and software.

“Despite an initial increase in dispatch-following performance since the 2019 uninstructed deviation changes, the fleet is now performing below” pre-rule levels, MISO Market Settlements Adviser Mollie Dawson said at a May 23 Market Subcommittee meeting. She said the high number of departures from dispatch instructions remains attributable to renewable energy sources.

MISO said it will mount a “multifaceted approach” that may include new market rules and operational tools. The RTO said it will draft the changes in collaboration with its Independent Market Monitor and stakeholders.

“Our current rules are not meeting the challenge of the impact,” Dawson said.

Dawson said new potential fixes might include MISO introducing settlement penalties, stepped-up requirements to follow MISO-generated setpoints, capping use of manual dispatch and improving its forecast output of intermittent resources.

Dawson said MISO will consult with its Independent Market Monitor in July and bring a slate of potential solutions to stakeholders for evaluation in August.

MISO four years ago placed harsher tolerance limits on generation operators’ deviations from its dispatch orders. The rules determine a generator’s deviations by comparing the time-weighted average of a real-time ramp rate with a day-ahead offered ramp rate, while allowing for 12% tolerance from setpoint instructions. The rules at the time eliminated the RTO’s “all-or-nothing” eligibility for make-whole payments, instead allowing generators to collect full payments when they respond to dispatch instructions at 80% or higher over an hour, while excluding payouts when performance rates fall below 20%. Units operating between those two thresholds earn make-whole payments in proportion to performance.

Before then, generators in MISO were flagged when they deviated by more than 8% from dispatch signals over four consecutive intervals. (See MISO Plans for New Uninstructed Deviation Rules.)

MISO IMM David Patton last year recommended MISO improve its near-term wind forecasting to better reflect the characteristics of wind generation output. He said MISO currently uses a “persistence” forecast that assumes wind resources will produce the same amount of output as it most recently observed. MISO stakeholders have said that forecasting style is problematic when wind dies down suddenly. (See MISO Shelves IMM’s Transmission Planning Recommendation in State of the Market Report.)

After MISO implemented its uninstructed rules in mid-2019, Patton said more wind operators migrated to using MISO’s wind forecasts instead of their own, less accurate forecasts.

May 23, 2024May 27, 2024

National Grid Plans $35B Investment in NY, Mass.

National Grid plans to invest $75 billion in its infrastructure over the next five years, nearly half of it in New York and Massachusetts.

The UK energy company announced the plan May 23 with its year-end financial results and said the $35 billion investment in the two states would be over 60% higher than in the past five years.

National Grid also announced it would sell National Grid Renewables, its U.S. onshore renewables business, and Grain LNG, its UK LNG asset, as it focuses more closely on its energy networks.

In a news release, National Grid said the New York and Massachusetts projects would harden the electric grid, reduce emissions and provide benefits to both customers and local economies.

The company noted the Department of Energy in its 2023 National Transmission Needs Study forecast a need for a 255% increase in transmission development to support the two states’ anticipated clean energy growth.

The news release emphasized the investments in electric networks and the resulting benefits for states’ decarbonization goals. But the financial report indicates a little more than 40% of the $35 billion would be spent on natural gas infrastructure, including a proposed three-year, $5 billion modernization of National Grid’s downstate New York gas businesses.

Continued investment in gas infrastructure has been a friction point between utilities and decarbonization advocates. National Grid notes that the work planned would be for safety and reliability purposes and would provide environmental benefits by reducing leaks.

In total, National Grid said it plans to invest about $21 billion in New York through March 2029. More than $4 billion of this would go to the Upstate Upgrade, a portfolio of more than 70 transmission enhancements designed to increase reliability, resilience and capacity.

As it announced the upgrade in March 2024, the company called it the largest investment in the grid in its century-plus existence — building, rebuilding or modernizing more than 1,000 miles of transmission line. As a result, 45 substations would be built, rebuilt or modernized.

The New England investment would total about $14 billion and include smart meters, modernized infrastructure, hardening against extreme weather and quality upgrades to electric and gas assets. Part of this would be National Grid’s Electric Sector Modernization Plan, a $2 billion proposal submitted to Massachusetts regulators as part of the state’s drive to upgrade the grid and accelerate connection of renewables.

The dollar figures are approximate and are based on present UK-U.S. currency exchange rates.

The plan involves an equity raise of 7 billion British pounds, or nearly $9 billion.

The company’s share price, which recently traded near 52-week highs, took a dive after the plan was announced, closing 10.9% lower May 23 on the London Stock Exchange and 14.3% lower on the New York Stock Exchange.

For the fiscal year ended March 31, National Grid’s operating profit was down 8% from the previous fiscal year, its pre-tax profit was down 15% and its earnings per share were down 19%.