WESTBOROUGH, Mass. — The Northeast Energy and Commerce Association (NECA) last week drew more than 100 participants to its 18th Power Markets Conference to explore grid reliability and resilience, carbon pricing, and the federal and state policies impacting the electricity sector.

Conference co-chairs Mary Usovicz, principal of MUConnections, and David Fixler, an attorney with Greenberg Traurig, mixed up the format by doing away with slide presentations — mostly — and just having panelists say a few words before taking audience questions and polls via Slido, a web-based platform.

Following are highlights of what we heard.

‘Dangerous Road’ for Markets

FERC Commissioner Richard Glick shared his perspective on the power markets after two years in office.

“Chairman [Neil] Chatterjee gave a speech a couple months ago in which he said he wanted to make FERC boring again,” Glick said. “Well, I don’t think he’s succeeded yet on that. It’s been pretty crazy lately.”

He said the “sometimes too emotional” commission meetings were “emblematic, unfortunately, of the governmental environment, at least related to the federal government these days.”

The heated battles partly stem from how the transition to a new energy world inevitably creates winners and losers, Glick said. There’s “a lot of money” involved, he added.

“When you have a dissent or disagreement and this kind of doctrinaire policy — that’s my view — a lot of these issues end up getting litigated in a court, and all that does is create more uncertainty for you all in the industry,” Glick said. “It doesn’t mean you’re guaranteed to survive a court challenge if there’s a unanimous commission, but certainly it’s much more likely.

“I never realized until I got to FERC how complicated some of these markets have grown … and we see a lot of proposals to tinker with the markets, particularly the capacity markets,” Glick said. “There’s a very broad difference across the country in how the RTOs and ISOs address resource adequacy,” from highly structured markets in the East, to utility-centered planning elsewhere, to total market reliance in ERCOT.

In the debate over federal and state energy policies competing in some way, Glick said the Federal Power Act “is very clear.”

“Resource decision-making is supposed to be left to the states, not to the federal government. The Supreme Court has spoken, and there are limits on what states can do — they can’t set wholesale prices and so on … but for the most part the court was also relatively clear that … it’s up to the states, not FERC, to make resource decisions.”

Glick pointed to frustration with the lack of a federal carbon policy, leading states to decide to go their own way on carbon pricing or emissions standards, a process that produces its own complications — and risks — for organized electricity markets.

“What we’re seeing is the real danger that we’re going to unravel completely these markets,” he said. “Some people might think that’s a good idea, some not, but if you do support markets, it’s a very dangerous road to go down to continue to stifle the states’ efforts.”

State Perspectives

During one panel, Rebecca Tepper, chief of the Massachusetts attorney general’s energy and telecommunications division, asked how the wholesale markets would have to change in order for Massachusetts to bring on more renewables without state-sponsored procurements.

“We are looking at transitioning the current fleet [of generators], and the Department of Environmental Protection is looking at every cap on natural gas emissions on a declining basis, but we recognize that fossil [fuel] is going down and we have to replace that,” Massachusetts Department of Public Utilities Chair Matthew Nelson said.

“At the same time, the state is also trying to move transportation and buildings over to the electric grid, so electric’s probably going to be growing,” Nelson said. But he acknowledged he didn’t know what prices the ISO-NE market would have to produce to discontinue procurements.

Asked if there is a breaking point price for electricity consumers, Nelson quipped that his staff would advise him not to answer that question.

“Who wouldn’t want electricity? It’s the closest thing we have to magic,” Nelson said.

On the subject of carbon pricing, Nelson said, “When people see something as complex as a clean peak standard in a single state, you start thinking, ‘Is a regional carbon adder the right way to go?’ If we’re going to design a carbon adder … we don’t want to set a price that fails to impact the market the way we want it to.

“I think RGGI is great, and I like carbon pricing, but is that the thing that is bringing offshore wind on? Is that price or policy sufficient to bring energy storage; to support a Millstone? Those are the questions we have to answer when we are thinking about what a carbon price is in the market.”

Cynthia Arcate, CEO of PowerOptions, asked, “What is the path forward for renewables if there is insufficient demand for” Competitive Auctions with Sponsored Policy Resources (CASPR)?

Mark Karl, vice president of market development for ISO-NE, who earlier referred to CASPR as “the friendly ghost,” said the question goes to the heart of what the New England States Committee on Electricity “is asking all of us to work on, collectively, which is, ‘How do we manage these resources?’”

“I think of CASPR not as a friendly ghost, but as the ghost of a promise that we in the states were going to be able to incentivize renewable resources,” said Marissa Gillett, chair of the Connecticut Public Utilities Regulatory Authority. “We need more work by the states.

“You’re never going to get [carbon pricing] from the states, because we are not eager to make anything else FERC-jurisdictional at this moment.”

Defining the Future

Seth Kaplan, director of permitting and development for Mayflower Wind, which just won Massachusetts’ second 800-MW offshore wind solicitation, brought up the potential for the region to export energy to the Midwest, where older fossil resources are retiring. “There were [U.S. Department of Energy] transmission studies 12 years ago that modeled that with a full build of offshore wind generation and onshore transmission,” he said.

After another speaker referred to wind turbines as “intermittent,” he also gave the audience a vocabulary lesson, saying, “Words matter.”

“All energy sources are to some degree intermittent,” Kaplan said. “Nuclear power plants sometimes go offline. … That’s intermittent. Variable is predictable. We can give you a 90% case that tells you how much energy a wind farm will produce over the course of a year, and that’s what you can plan around.”

Deborah Donovan, Massachusetts director for the Acadia Center, was asked how to tell the difference between the goal of zero carbon, carbon-free electricity, reduction of carbon emissions by 100% and net carbon neutral.”

“There are some subtle differences,” Donovan said. “First of all, it does matter whether we’re talking about an economy-wide target versus a sector-specific target, because not all these terms apply to all situations.”

Following what the U.N. Intergovernmental Panel on Climate Change says about net zero carbon, “that definition is that manmade carbon additions are being balanced by manmade carbon removals, so those could be other actions like reforestation,” Donovan said.

Dan Dolan, president of the New England Power Generators Association, called for an “analysis and articulation” of future market needs at the same depth with which the RTO has been studying fuel security.

“The second component is trying to identify what is the most common element driving these [state] procurements and other entry into the market,” Dolan said. “And pretty clearly it’s carbon; it’s meeting the economy-wide mandates that the states have. A dual and second track to all this is a meaningful look at what it requires on an economy-wide basis … to try and obviate the need for a second wave of contracted resources.”

The morning keynote speaker said that on carbon he was only repeating what ISO-NE CEO Gordon van Welie, FERC commissioners and many others have said in the past.

“The cure for what ails the markets, or at least its biggest problem if you think we should be trying to integrate renewables and keep nuclear plants running without depressing prices, is a carbon fee,” said Rich Heidorn Jr., editor-in-chief of RTO Insider. “Incorporate the externalities, and you could reduce [ISO-NE’s] meeting schedule, and FERC’s workload, quite a bit.”

– Michael Kuser