LEXINGTON, Ky. — More than 130 regulators, industry officials and other stakeholders attended last week’s EnVision Forum, sponsored by FERC and the University of Kentucky’s Center for Applied Energy Research. The daylong conference, the brainchild of FERC Chairman Neil Chatterjee, featured discussions on energy storage, RTO markets and transmission policy.

Here’s some of the highlights.

Storage Seeks ITC as Standalone Asset

Kelly Speakes-Backman, CEO of the Energy Storage Association, urged Congress to pass legislation allowing standalone storage to qualify for the federal investment tax credit (ITC), citing research for the association by Wood Mackenzie that said the bill (S.1142/H.R.2096) could boost deployment by 16% annually through 2024. Storage currently is eligible for the ITC only when paired with solar generation.

She also called for PJM to change its 10-hour minimum run time requirement on storage, which she said undermined the resource’s ability to help system reliability. On Oct. 17, FERC ordered a paper hearing to investigate whether PJM’s requirement is unjust and unreasonable under Order 841, which seeks to remove market barriers to entry for storage. (See FERC Partially OKs PJM, SPP Order 841 Filings.)

Other grid operators came in for praise from Speakes-Backman. “MISO is taking the lead on storage as transmission. NYISO is taking the lead on [the] capacity evaluation of storage. The California ISO is taking the lead on hybrid storage plus generation power plants. ISO-NE is picking up the first distributed storage in a capacity market ever. And … ERCOT in Texas is taking FERC’s lead and undertaking its own mini-Order 841.

“Together, these efforts are all focused on the same basic goal: Fully utilizing the flexibility that storage offers to lower costs, enable new resources and increase reliability and resilience.”

John Moore, director of the Natural Resources Defense Council’s Sustainable FERC Project, predicted that the U.S. Supreme Court will be asked to decide whether FERC overstepped its authority in refusing to let states opt out of distribution-level storage’s participation in wholesale markets. Commissioner Bernard McNamee dissented, saying FERC was intruding on states’ regulation of local distributions systems. (See NECPUC Day 2: McNamee Reiterates Storage Dissent.)

American Electric Power CEO Nick Akins said his company has been canvassing startup companies to find services to increase customers’ satisfaction. “It was probably two years ago we were looking at battery walls” to allow customers to ride through outages. “Well, fast forward to this year: now companies are looking at not just battery walls; they’re looking at actual storage within in the appliance plugs themselves.

“So if you want to go to Home Depot … to get a storage device for a toaster, it would be in a plug, or if you want it for a refrigerator, it would be in a plug and all of it has technology … to enable the prioritization of those services within that home.”

Transmission Policy: Increasing Efficiency, Adding New Lines

A panel discussion on transmission policy touched on the need for more infrastructure to deliver renewables, the political obstacles to siting and the regulatory obstacles to improving efficiency.

Former FERC Chair Jon Wellinghoff held up the front page of the San Francisco Chronicle, with a headline on Pacific Gas and Electric’s statement that its public safety power shutoffs (PSPS) to prevent wildfires could go on for the next decade.

Wellinghoff, now a consultant, had lost power at his home in the Berkeley Hills for 17 hours. “It was ridiculous,” he said, calling for the addition of more transmission-sensing technology and ways to reroute power to deal with wildfire risks.

“We’re trying to do smart grid at the distribution level with smart meters and all this technology while we’ve totally ignored our transmission system. We need to build it out [to accommodate renewables], there’s no question about it. But we also need to ensure that we can start integrating these same kinds of technologies we’re doing at the distribution level at the transmission level to make the thing work so we don’t have to say we’re going to shut [power] off for the next 10 years,” he said. “It’s going to cost money … but if we do it in smart ways to make the thing overall more efficient, hopefully those costs can be offset by savings that we achieve by delivering more renewables from low-cost areas to the areas that need them and driving down those LMPs.”

Gregg Rotenberg, CEO of Smart Wires, said that transmission technology has only recently improved enough to trust it on mission-critical lines. But he said the adoption of such technologies has been slower in the U.S. than in other countries because state regulators “punish” transmission owners for efficiency.

He praised the U.K.’s model, in which he said regulators set a target price for delivering energy with a 50/50 split between shareholders and ratepayers for any savings or excess costs. U.K. TOs have “been given a massive incentive to solve these problems,” he said.

Rotenberg said a single project in the U.K. will add 1.5 GW of incremental transfer capacity. “That’s enough to power Chicago,” he said. “There is massive inefficiency in our grid that only recently was capturable. … The reality is we can get massive efficiency from our grid — not enough to bring all the renewables online we need; we need plenty of new lines. But if we don’t make use of the grid that’s there, the public is not going to let us build those new lines.”

During the session, Wellinghoff also debated Michael Polsky, CEO of independent power producer Invenergy, over whether the costs of transmission expansion can be socialized in regions with multiple states.

Polsky acknowledged Texas was able to do it with its Competitive Renewable Energy Zones. “But when you deal with multiple states, I don’t think we can expect socialization. … I cannot see two states dividing the pie.”

But Wellinghoff noted that MISO socialized 19 multi-value projects (MVP) in multiple states. And he said regional grids are becoming more popular, noting the growth of CAISO’s Western Energy Imbalance Market and South Carolina entities exploring joining PJM. (See South Carolina Power Cooperative Joins PJM.)

“As we expand these regions, I think socialization becomes more viable, potentially,” he said.

Wellinghoff and former FERC Commissioner Philip Moeller recalled how they split in their ruling on Order 1000 over whether reliability projects should be exempt from competition.

“I think you won on that one,” Wellinghoff said ruefully.

“I wasn’t going to rub it in,” Moeller joked.

Earlier this month, FERC ordered investigations under Federal Power Act Section 206 into whether PJM, ISO-NE and SPP are violating Order 1000’s intent to open transmission projects to competition by abusing the “immediate need” exemption for reliability projects. (See FERC to Probe Order 1000 Competition Exemptions.)

Later in the conversation, Moeller, now Edison Electric Institute’s executive vice president for business operations and regulatory affairs, said there is a “need to restart a national conversation … on the [transmission] needs and the political will to get these projects done.”

Wellinghoff agreed: “We do need a national energy plan. ‘All the above’ is a slogan. It’s not a plan,” he said. “The Department of Energy doesn’t develop a national energy plan. The Congress doesn’t authorize a national plan. Somebody needs to do that ultimately and get the states in a room and say, ‘We’re all in this together folks. Let’s get on the same page.’”

Polsky was skeptical. “It’s not going to happen … not in my lifetime,” he said. “It’s just too complex of an issue.”

Pipelines’ Future

A discussion on the future of pipelines provided a forum for landowner and businessman Richard Averitt to make his case against current pipeline policy, which he said results in environmental racism and a trampling of property rights.

“If you look around the room … today I couldn’t count more than about a half a dozen folks of color,” he said of the conference attendees. “I don’t think they were excluded. I think they’re not in the industry at all. That has to be recognized because … these pipelines disproportionally impact [minority] communities. … Their voice needs to be at the table.”

He also said it was improper for profit-making pipeline companies to be given eminent domain rights for projects that are facilitating natural gas exports, calling it “inconsistent with our beliefs around property rights.”

“The idea that eminent domain is a last resort is a false narrative,” he said, because courts have given pipelines “quick take” rights — allowing the taking of property before the projects have obtained required siting permits and undergone environmental reviews.

He said FERC’s policy of issuing conditional approvals for projects that have not received their “foundational” permits, such as endangered species, water quality and national park approvals, “is really unconscionable.”

He cited a family-owned sugar maple farm in Pennsylvania that lost 500 trees to the proposed Mariner 2 project before it was denied a water quality permit. “So that pipeline is likely never to be built. But their sugar maple farm is decimated, and they have no recourse and will likely never get compensation of any kind,” he said. “That’s not an appropriate due process.”

He suggested “fast-track” treatment of disputes in the courts instead.

Stan Horton, CEO of Boardwalk Pipeline Partners, said very little of pipelines’ rights of way go through the eminent domain process. “I think the process works,” he said.

Mike Catanzaro, a partner with CGCN Group, an advocacy and strategic communications firm, criticized siting policies that he said are biased in favor of those “who don’t want to build things.”

“If Congress doesn’t step up and fix the permitting process, we’re in big trouble,” said Catanzaro, a former staffer for the White House National Economic Council under President Trump.

Catanzaro and Karen Alderman Harbert, CEO of the American Gas Association, cited New York Gov. Andrew Cuomo’s opposition to new gas pipelines, which prompted National Grid to announce a moratorium on connecting more than 1,100 new gas customers on Long Island.

Cuomo responded by ordering the company to connect the customers. Harbert said National Grid’s response is to reduce their gas supplies to industrial customers. “And what are industrial customers going to do? Either pay more, so we pay more, or they’re going to burn oil instead, and their emissions are going to go up. So, under the guise of environmental objections to natural gas, we’re going to cause the emissions in New York City to go up,” she said.

Harbert and others expressed confidence that natural gas will remain a major energy player for decades, despite efforts to address climate change.

“People want gas for fireplaces, for cooking, for heating,” said Harbert, whose organization represents gas distribution companies. “We’re adding a customer every minute of every day.”

Joe Blount, CEO of Colonial Pipeline, which claims to be the largest refined products pipeline in the U.S., said there will be little “displacement” of demand by 2030, saying pipelines are the safest and cheapest form of fuel transportation.

“A lot of people come to us and go, ‘What about your gasoline [pipelines]? You’re going to lose that to electric cars.’ We have to remember, only about 2% of all car sales in the U.S. today are electric. And even if you go out to 2030, it’s still a pretty insignificant number. So [we have a] strong future.”

RTO CEOs Discuss Market Challenges

ISO-NE CEO Gordon van Welie, MISO CEO John Bear and interim PJM CEO Susan Riley took part in a panel discussion that focused largely on their markets’ challenges in dealing with state policies to reduce carbon. They were joined by NRDC’s Moore, Vistra Energy CEO Curt Morgan, Calpine CEO Thad Hill and Iowa Utilities Board Member Nick Wagner, the president of the National Association of Regulatory Utility Commissioners.

Van Welie and others agreed that a nationwide price on carbon would simplify the challenge for organized markets — and that there is insufficient political will to make such a change.

“These are really unsettled times in the markets,” said van Welie, who acknowledged “nobody’s happy with the compromise” ISO-NE tried to strike to incorporate state-subsidized renewables into the capacity market, the Competitive Auctions with Sponsored Policy Resources (CASPR) construct.

“Our stakeholders have said they want to have another round of discussion,” he said. “We have a very sophisticated capacity market. We don’t see a better solution right now, but we’re open to the conversation.”

Riley acknowledged PJM’s challenges in preventing subsidized nuclear and renewable power from suppressing prices but said the RTO’s markets have “worked very effectively over a long period of time,” noting the billions in investment in generating capacity, the 40% reduction in energy prices and 25% reduction in carbon emissions over the last decade.

“We’ve got to find ways over the next 10 years to incorporate more of that state policy,” she said.

Invenergy’s Polsky and Hill outlined the concerns of independent power producers, who have been frustrated by low energy and capacity prices caused by subsidized generation and low natural gas prices.

“I’m a little surprised that people think markets are working the way they’re supposed to work,” Polsky said from the audience. “We need a complete market redesign. How can we put zero-cost variable resources [in a market] with the fossil fuel [resources]. Fossil fuel has been decimated.”

Hill criticized “hybrid” markets such as CAISO and MISO, saying they will never attract new merchant generation investments.

Bear questioned whether reserve margins remain relevant, noting that “the last seven times we’ve been stressed on our system, it’s never that day” of the summer peak demand. “That day we’re well equipped. Everything’s on and running. Access to the transmission system is good. Now [the challenge] is coming in November, January [and] February.”

That has led MISO to reconsider how it accredits its resources, as well as how to price reserves. “In real time, you’ll see us moving a lot toward what they’re doing” in ERCOT, he said.

Moore questioned whether the PJM demand curve should continue to use a cost of new entry based on combustion turbines. “Does that make sense when you’re not building a lot of CTs now?”

From the audience, Tyson Slocum, director of Public Citizen’s energy program, asked Riley how its markets can successfully evolve when consumer and environmental groups are not permitted to vote in stakeholder committees. Public Citizen has been a frequent critic of the RTO. On Oct. 17, FERC ruled against the group’s request to require the RTO to publicly disclose its political contributions. (See PJM Political Spending OK, FERC Says.)

Riley declined to respond to Slocum’s question, saying the issue was beyond the scope of the panel’s discussion and that she couldn’t comment because of pending capacity proposals before FERC.

Moore questioned whether PJM was meeting the transparency requirements of Order 719. “In RTOs like PJM, you actually have the regulated companies involved in decision-making. That just raises questions … that [need] to be examined a little more thoroughly by FERC,” he said.

“My point is that PJM is governed by its members, who are mostly generators, transmission owners and other suppliers,” he explained afterward, citing the D.C. Circuit Court of Appeals’ 2015 NRG Power Marketing v. FERC decision limiting the commission’s ability to modify FPA Section 205 filings. “With all that, it’s not surprising that PJM’s capacity market rules increase generator revenues and promote oversupply — and those rules also are increasingly frustrating state clean energy policies. All of this suggests a need to reassess PJM’s governance outcomes against FERC’s Order 719 independence requirements, including decision-making transparency, independence from undue influence and fair representation of all stakeholders.”

— Rich Heidorn Jr.