By Michael Kuser

Avangrid earned $120 million in the second quarter, up 17% because of new rate plans in New York and Connecticut, improved cost management and a 4% increase in renewable energy production, the company reported Wednesday.

Avangrid CEO James P. Torgerson |  Avangrid

The company attributed last quarter’s spike in renewable output to the recently completed 208-MW Amazon Wind Farm in North Carolina but said production at its other wind facilities came in below average. Avangrid plans to sign power purchase agreements equating to 1,800 MW of new wind and solar through 2020.

“We’ve already secured 1,000 MW of that — or 55%,” CEO James P. Torgerson told investors and analysts during an earnings call.

Avangrid controlled more than 6,000 MW of renewable resources by the end of June, 349 MW of which was added this year. Another 600 MW is slated to come online during the second half of 2017, with wind representing 534 MW and solar making up the remainder.

Renewables Rising

The company manages two primary lines of business: Avangrid Networks comprises eight electric and natural gas utilities serving around 3.2 million customers in New York and New England, while Avangrid Renewables operates more than 6 GW of mostly wind power in 23 U.S. states.

Avangrid Renewables Pipeline |  Avangrid

Avangrid is this year focusing on reducing its exposure to wholesale markets by decreasing its merchant capacity from 35% to 27%.

“Year-to-date, we’ve executed 589 MW of fixed-price contracts to reduce our merchant capacity, and we’re really committed to keeping on track and adding even more as we see opportunities,” Torgerson said. “The company targets to be at 75 to 85% PPA plus hedges that we have on merchant capacity, so by adding the long-term hedges, we will actually be over 80%.”

The Networks business continues to dominate the company, contributing 73% of overall adjusted net income year-to-date, up 9% over the same period last year. But the Renewables division is playing catch-up, seeing its adjusted net income rise 26% for the same period.

Offshore wind platform |  Avangrid

The company sees clean energy and offshore wind initiatives in Massachusetts as “key opportunities” to increase income beyond its long-term plan, Torgerson said.

Avangrid plans to bid “multiple transmission and/or renewable solutions” into a collaborative effort by the Massachusetts Department of Energy Resources, Eversource Energy, National Grid and Unitil to solicit clean energy proposals for 9.45 TWh annually of renewable generation.

“They’re looking for incremental hydro on a firm basis, but also new Class I renewable portfolio standard [resources], which would be wind and solar,” Torgerson said. “A combination of both could include transmission projects under a FERC tariff.”

Massachusetts is also soliciting up to 1,600 MW of offshore wind proposals due in December, and Avangrid intends to bid into that in partnership with Copenhagen Infrastructure Partners, Torgerson said. The projects will be selected in April 2018.

NYPSC Quorum Commended

Torgerson lauded the recent appointment of a new chair and two additional commissioners to the New York Public Service Commission, which operated for several months with only two of five seats filled, causing a backlog.

As part of New York State’s Reforming the Energy Vision initiative, Avangrid subsidiaries New York State Electric and Gas and Rochester Gas & Electric have filed a combined proposal with the commission to launch an Energy Smart Community project. The two utilities have already installed 20,000 smart meters under the program.

Quorum Pending at FERC

Avangrid could stand to benefit — or not — from the restoration of FERC’s quorum. The D.C. Circuit Court of Appeals (15-1118) in April overturned FERC’s 2014 order setting the base return on equity for a group of New England transmission owners — including Avangrid’s Central Maine Power — at 10.57%. The court ruled that the commission failed to meet its burden of proof in finding the existing 11.14% rate to be unjust and unreasonable. (See Court Rejects FERC ROE Order for New England.) The TOs are seeking to begin billing at the prior ROE.

“That is the most recent rate that’s legally in effect at this point, and we requested to begin billing that again 60 days after FERC has a quorum, with retroactive billing to June 8 of this year,” Torgerson said. “If no FERC decision is reached, we’ll start doing that.”

FERC has lacked the necessary three-person quorum since the February departure of former Chair Norman Bay, and has been down to one commissioner — acting Chair Cheryl LaFleur — since Colette Honorable left last month.

LaFleur may be joined by four new members if Democrat Richard Glick and Republicans Kevin McIntyre, Robert Powelson and Neil Chatterjee win Senate confirmation. (See Trump Names Energy Lawyer McIntyre as FERC Chair.) Glick is a former vice president of government affairs for Avangrid.