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November 5, 2024

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US Utilities Face Scramble to Meet New Demand

U.S. electric utilities have been caught “flat-footed” by the impending demand for electricity, Wood Mackenzie asserts in a new report. 

Growth of the U.S. economy has far outpaced growth in the amount of power needed to run the economy so far this century, but that trend is set to reverse, the analytics firm said in the October edition of its Horizons report. 

The expected growth of new electric-intensive technology in data centers, vehicles and industry sets the stage for constraints as the “move fast and break things” ethos of Big Tech bumps up against the five- to 10-year window in which generation and transmission projects are planned and executed. 

The utilities and developers that can adapt most quickly will reap rewards, according to “Gridlock: the demand dilemma facing the US power industry.” 

It adds that an era of upward pressure on wholesale power prices likely is at hand. 

Author Chris Seiple, Wood Mackenzie’s vice chairman of power and renewables, said in a news release that there will be a period of adjustment. 

“Most state public utility commissioners have little experience … regulating in a growth environment,” he said. “And as technology C-suites realize that energy may be the largest constraint on their growth, they are shocked as businesses that move at light speed learn about the pace at which electric utilities move.” 

Growth of U.S. GDP and U.S. electrical demand roughly tracked one another from the 1950s to the 1990s, and then electric demand tapered off, the report notes. In the 2010s, it said, electric demand was flat while the economy grew 24%. 

That is changing in the 2020s. 

The report forecasts demand growth of 4 to 15% through 2029, depending on region, with some utilities seeing a much greater increase. It suggests an integrated response from utilities, regulators and policymakers to meet this challenge. 

Projected sources of new demand through the end of this decade vary by ISO region. | Wood Mackenzie

The last time the U.S. electrical industry saw such unexpected demand growth was during World War II, Seiple said. Manufacturing output tripled from 1939 to 1944, and electricity demand rose 60%. 

“It was a closely coordinated national effort that brought together industry and policymakers to address the challenge and find innovation along the way,” he said. “A similar effort is needed now.” 

Wood Mackenzie identified data centers and artificial intelligence as a main driver of the increased demand — it said new data center announcements since January 2023 total 51 GW of new capacity.  

Not all will be built, the report notes, but neither is the list complete or comprehensive — there probably are more proposals that Wood Mackenzie did not identify. Oncor alone recently reported 59 GW of data center connection requests. 

The report bases its projections for future data center demand on 15% annual growth from 2025 to 2029, a midrange scenario. 

Meanwhile, a resurgent U.S. manufacturing sector, particularly for products such as batteries, solar wafers and computer chips, could add as much as 15 GW of high-load-factor demand. Electrolyzers for hydrogen production and chargers for EVs could add 7 GW. 

Against this backdrop, coal-burning plants are scheduled to retire in significant number, transformers and breakers are in short supply, and the interconnection process for new generation is sluggish. 

Outside the Northeast, planned retirement of coal generation facilities could place further strain on the supply of electricity. | Wood Mackenzie

This last factor — transmission planning, permitting and construction — is the biggest bottleneck, the report said. 

Seiple said an interesting dynamic to watch would be the number of coal plant retirements deferred and shuttered nuclear plants proposed for reopening in markets where there is no retail choice, compared to the number in markets where there is choice. More natural gas-fired generation is likely to be proposed, as well. 

The report cautions that projections of future growth in electric demand are fraught with uncertainty — it may not materialize as forecast if utilities cannot respond quickly enough. 

Secondary factors further muddy the picture: 

Many of the new factories being proposed would rely on government policies and/or subsidies that could change or be canceled. 

Developers of data centers want 24-7 clean energy at a steady rate to boost their environmental credibility, but most clean energy coming online today is intermittent. Nuclear fission may provide a solution, but not until the 2030s at the earliest. 

Emissions-free generation often is sited far from these new centers of demand, creating a need for new transmission and adding another layer of cost and complication. 

The report notes that developers, regulators and utilities have been looking for innovative solutions — or in some cases, an end run around each other, such as behind-the-meter generation co-located with demand. 

The report offers a suggestion to the electric utility sector: 

“Over the past 30 years, the industry has evolved the process of large-generation interconnection. It now needs to do the same for large loads to protect the financial interests of utility shareholders and ratepayers, to provide a transparent, non-discriminatory process for large loads competing for access to energy and to provide transparency to market participants on possible demand growth.” 

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New England States Seeking Increase of North-South Tx Capacity

The New England states are planning to solicit project proposals to increase the region’s north-to-south transmission capacity, the New England States Committee on Electricity (NESCOE) wrote in a letter to ISO-NE on Oct. 16.

The solicitations would be conducted through ISO-NE’s recently approved longer-term transmission planning (LTTP) process, which sets a framework and default cost-allocation method for transmission procurements to meet long-term needs. Project costs would be regionalized by load unless the states agree to an alternative cost allocation methodology. (See FERC Approves New Pathway for New England Transmission Projects.)

“NESCOE is interested in focusing the first LTTP solicitation on increasing transfer capability within the system to allow more power to flow from Maine to New Hampshire and into southern New England,” the group wrote.

The need for increased north-to-south transfer capability was one of the key high-likelihood concerns identified in ISO-NE’s 2050 Transmission Study, which projected overloads along the Maine-New Hampshire and North-South interfaces starting in 2035.

While the study showed overloads in both summer and winter, the most significant overloads occurred in the winter amid periods of high output from offshore wind resources interconnecting in Maine and New Hampshire. Connecting offshore wind resources from the Gulf of Maine to the grid in Massachusetts, instead of in northern New England, could help alleviate this stress on the grid. (See ISO-NE Analysis Shows Benefits of Shifting OSW Interconnection Points.)

Although offshore wind will require major transmission investments wherever it interconnects, the first LTTP solicitation appears focused on onshore renewables. NESCOE wrote that one of the key objectives of the solicitation will be to facilitate “the integration and deliverability of additional affordable generation resources located in northern Maine.”

“Recent studies, along with the current interconnection queue, indicate that on the order of 3,000 MW of additional generation capacity could potentially be developed in northern Maine. NESCOE is interested in solutions that would facilitate the integration of these resources,” the group added.

Renewable power advocates in New England have long sought to unlock the potential of renewables — onshore wind in particular — in northern Maine, but this part of the region is not directly connected to the ISO-NE grid.

In 2022, Maine selected a proposal from LS Power for a 345 kV line to connect the area to the region’s grid, but the Maine Public Utilities Commission canceled the procurement after the projects’ projected costs increased. The PUC plans separate solicitations for transmission and generation in the area, and a proposal from Avangrid recently received financial backing from the federal government. (See Long Road Still Ahead for Aroostook Transmission Project.)

Alex Lawton of Advanced Energy United expressed his excitement about NESCOE’s announcement and said it is “amazing to see our region being proactive and leading the way on transmission planning.”

He added that northern Maine has “some of the cheapest, most abundant renewable potential” in New England, and unlocking more north-south transmission capacity is “one of the more low-hanging fruit and promising areas for cost-effective transmission in New England.”

Next Steps

NESCOE said it is seeking stakeholder feedback on how best to achieve its goals of increasing north-south transmission capacity and integrating renewables in northern Maine, as well as “any other feedback that may increase the likelihood of a successful solicitation.”

The organization said it is considering a requirement for proposed solutions to “increase the Maine-New Hampshire interface capacity to at least 3,000 MW by 2035 and increase the Surowiec-South interface capacity to at least 3,200 MW by 2035.”

The capacity of the Maine-New Hampshire interface is 2,000 MW, while the more northern Surowiec-South interface has a transfer limit of 1,800 MW.

NESCOE wrote it also is “weighing the tradeoffs of including a requirement for solutions that extend farther north into Maine.”

“While such a requirement would further facilitate the transfer of cost-effective power across these interfaces, NESCOE seeks to avoid an overly prescriptive scope that may hinder the success of a potential [request for proposals] by unduly limiting the pool of bids or by reducing the likelihood of soliciting a cost-effective solution,” the group wrote.

NESCOE will discuss the preliminary scope of the solicitation with stakeholders at the ISO-NE Planning Advisory Committee meeting on Oct. 23, which will be open to the public.

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Regulators Get Look into Monitoring Plans for Markets+

Western regulators on the Markets+ State Committee (MSC) on Oct. 18 probed an SPP Market Monitoring Unit (MMU) official on how the division plans to address the implementation of the new day-ahead market.  

Jodi Woods, SPP director of market monitoring, gave the MSC an overview of the mission and scope of market monitor functions, reiterating that SPP’s monitor is internal to the RTO, functions independently and investigates problems and appeals to FERC, but cannot force a position or set a penalty.  

With the implementation of Markets+, the MMU will engage consistently with the MSC and continue regular functions such as monthly, quarterly and annual reporting.  

New Mexico Commissioner Gabriel Aguilera asked whether the MMU would increase staffing levels to account for Markets+. Woods responded that an increase is accounted for in the budget and that the MMU will likely have a separate set of employees tackle Markets+ issues. 

Arizona Commissioner Nick Myers, who chairs the MSC, asked if there would be staff overlap.  

“There was actually a preference from the Markets+ participants that there not be a lot of overlap and that there [be] assurance that the headcount that Markets+ is paying for, which is completely understandable, is actually working on Markets+ issues,” Woods said. “The construct we’ve proposed would allow for a separate Markets+ team that would be focused primarily just on Markets+ issues.”  

The MMU has budgeted for around 14 additional employees to be added to the team.  

Aguilera additionally asked about the MMU’s process for opposing a tariff change and whether the monitor has its own attorneys.  

“If we do decide to file comments in the docket, once the revisions have been filed, we do have external counsel. Sometimes we do it ourselves … but we don’t have lawyers on our team,” Woods said.  

Aguilera emphasized the value of having an independent group monitoring activity in the new market.  

“It is really essential when we have these incredibly complex machines that are markets and very sophisticated participants who could potentially take advantage of those complex rules,” he said. “I think that the work you do is just invaluable.”  

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SPP Sees Bias in Brattle Western Market Studies, Exec Says

An SPP executive closely involved with developing Markets+ said recent Brattle Group studies on Western day-ahead markets appear to be aimed more at swaying utilities in favor of CAISO’s Extended Day-Ahead Market than providing an unbiased assessment of the two offerings.

“We’ve observed a lot of statements and assertions — and even studies — that really seem more like attempts to pressure Western entities into a market selection rather than work directly with those Western entities to truly understand what their issues and concerns are, and also work to try and accommodate them and address those issues so they want to choose to be within that market,” SPP Vice President of Markets Antoine Lucas said during an interview.

Brattle’s John Tsoukalis, the lead author on the studies, objected to that depiction of his group’s work, saying the company’s clients “are looking for solid analytical support for their decision making, not a biased analysis or advocacy.”

RTO Insider spoke with Lucas and SPP Senior Director of Seams and Western Services Carrie Simpson on Oct. 16 to discuss Brattle’s Oct. 1 comparative white paper on Markets+ and EDAM, which Lucas said “misrepresented” aspects of SPP’s day-ahead platform. (See Brattle Study Likely to Fuel Debate over EDAM, Markets+.)

That study, which compared seven key features of the two markets — such as transmission optimization, fast-start pricing and seams management — offered a more favorable assessment of the CAISO market but stopped short of endorsing it.

Vancouver, British Columbia-based Powerex, the first entity to tentatively commit to Markets+ two years ago, quickly published a rebuttal to the study, with SPP following up with its own set of “corrections” shortly after. (See Powerex Contests Brattle’s EDAM/Markets+ Comparative Study.)

Lucas said SPP has tried to stay outside the fray of Western market debates but felt compelled to respond directly to the comparative study because “there were certain things or statements” made about Markets+ “where we felt it necessary and appropriate to address and try to clarify with facts. And then there were other areas where we just felt like there was either a lack of information or characterization of certain things that misrepresented the product.”

The SPP response criticizes the Brattle study in four areas, including its conclusions around “look ahead” unit commitment design, fast-start pricing, greenhouse gas accounting design and congestion rent allocation.

Regarding the first subject, SPP faults the study for conflating the real-time unit commitment design used in RTO’s Western Energy Imbalance Service with the different one to be implemented in Markets+. On the GHG issue, SPP contends the study overlooks the full set of methods Markets+ uses to reduce “leakage” when accounting for emissions from generating resources.

On the last subject, SPP contends Brattle “grossly oversimplifies the complex policy considerations behind fair congestion revenue allocation” by concluding the two markets’ differing models will yield similar results.

Lucas said SPP finds Brattle’s conclusions “concerning” because third-party studies are “typically intended to bring trust to the process.”

“We wanted to make sure that people were aware of the mischaracterizations of Markets+ and also recognize that in every one of those cases, those errors and mischaracterizations tended to depress the anticipated value proposition for Markets+,” he said. “We know that a lot of people are looking at these studies and then using them in different ways to inform themselves around either decisions that they’re going to make or positions that they’re going to take on the markets.”

‘Equitable Distribution’

Lucas said SPP was not yet prepared to comment on a more recent Brattle study zeroing in on benefits for the Bonneville Power Administration (another Markets+ supporter) and the Pacific Northwest at large.

That study, which focused on adjusted production costs (APC), found BPA could earn an estimated $65 million in annual benefits from joining EDAM while facing increased yearly costs of $83 million in Markets+. Similarly, the Northwest could reap $430 million from widespread participation in EDAM but might see net revenues decline by $18 million in Markets+, according to the study. (See Brattle Study Finds EDAM Gains, Markets+ Losses for BPA, Pacific NW.)

Lucas questioned why Brattle produced a study trying to estimate BPA’s benefits “rather than BPA themselves being able to conduct those assessments and if those [benefits] provide what they see as value to them and their customers.”

Asked whether Western utilities’ day-ahead market decisions should come down to estimates of economic benefits based on APC or other factors, Lucas said the discussion should extend beyond the notion of calculating “regional benefits” to considering how those benefits are distributed.

“What we constantly wrestle with in policy development is we’re finding policies that benefit the overall region, but also do it in a manner where there is equitable distribution of value among the participants who are bringing the assets into that market,” he said, adding that APC estimates, while important, are just one component of overall market benefits.

Lucas responded with good humor to a hypothetical question about whether Markets+ could ensure an equitable distribution of benefits in a footprint that included California and the CAISO area or if, as some Markets+ supporters believe, participants would do better to negotiate with the larger entity from behind a market seam.

“Under a scenario where California was part of Markets+, they would be another [balancing authority], just like the other BAs. They would be a very large BA, and from our standpoint as SPP, our approach to facilitation doesn’t change. You just have another BA who’s participating in that stakeholder process that’s advocating for the things that they believe are best for them and their consumers,” he said.

Simpson said the “independent, inclusive” Markets+ governance framework is designed to accommodate a BA the size of CAISO.

“I think the design, the actual market design, in addition to the governance, would support that equity that we’re talking about. So that hypothetical, I think, would work,” Simpson said.

“And in the alternative, then you have market operators representing their respective customers’ interests at the seam on a peer-to-peer basis, and so that is also really helpful, too, if you’re an entity in Markets+, in having that representation by your market operator to look out for the interests of that market,” she said.

No ‘Preconceived Notions’

Reached for comment, Tsoukalis said Brattle “appreciates all responses” to its Western markets work and is “always open to input on our analyses, assumptions, and our understanding of the market options.”

“We do not engage in advocacy work and do not take on work on preconceived notions of what our results will look like. Rather, we strive to do unbiased, high-quality work to support well-informed decision making by our clients, who in this case are Western utilities, cooperatives and public power entities,” Tsoukalis said in an email.

Tsoukalis said he wanted to ensure other “key points” aren’t lost in the Western debate, including the fact that both Markets+ and EDAM represent an improvement over the status quo; that most “market-related benefits to specific entities will be driven by the transmission capabilities, and diversity of loads and generation resources of market participants;” and that Brattle recognizes that estimated cost savings in either market are not the only — or even most important — factor affecting market participation decisions.

He noted that Brattle has found that each market includes design elements that are “more attractive” than the other market.

“The availability of (and competition between) two market options has benefited the development of both EDAM and Markets+ as both markets have worked harder to offer an attractive and efficient market design.  The benefit of this competition is expected to continue as both markets evolve over time,” Tsoukalis said.

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Utilities and Grid Operators Urge Caution on DLRs, State Regulators and Consumers Want Action

FERC got more than 60 comments on its advanced notice of proposed rulemaking (ANOPR) on dynamic line ratings (DLRs), with utilities and grid operators urging caution on new requirements while state regulators, consumers and grid-enhancing technologies (GETs) firms want mandates. (See related story: FERC Gets Mixed Advice on How Quickly to Move on DLR Requirements.) 

The ANOPR proposes requiring transmission providers to reflect the impacts of solar heating on transmission line ratings, reflect forecasts of wind on certain lines, ensure transparency in the development and implementation of DLRs and enhance data-reporting practices in non-RTO regions to identify candidate lines to reflect wind conditions. 

PPL is an investor-owned utility with subsidiaries in the Eastern Interconnection that have been testing DLRs. It said they promote operational performance and save customers money. 

“By measuring wind, sag and conductor temperature directly, a machine-learning tool can fine-tune the external forecasts for each transmission facility,” PPL said. “When these forecasts are accurately incorporated into day-ahead models, RTOs like PJM can dispatch lowest-cost generation where it might otherwise be blocked by transmission line congestion.”  

But the ANOPR needs to better consider where DLR implementation would be most effective. PPL argued that FERC should reconsider mandating that transmission owners calculate and apply ratings using a specific methodology. 

“Doing so would upend the risk tolerances built into the utilities’ existing ratings methodologies and limit their ability to allocate acceptable risks throughout their systems,” PPL said. 

The fundamental question for line ratings is how much thermal energy to allow, which has never been dictated by regulators and always left to transmission owners, informed by good utility practice. 

“FERC taking more control of the factors being used in ratings calculations means that regulators in Washington, D.C., not the owners of the assets who are responsible for their reliability, safety and longevity, are the ones deciding on how much risk is acceptable,” PPL said. “FERC does not have, and can never have, all the relevant information needed to make these decisions.” 

Dominion Energy is working with the U.S. Department of Energy to test out DLRs around “data center alley” in Loudoun County, Va., which is home to the largest concentration of the facilities in the world and is a major factor in the load growth in PJM. The utility argued that the technology makes more sense for short-term operational efficiencies or for contingencies. 

“Short-term DLR benefits are not a substitute for the transmission planning necessary to ensure long-term reliability,” Dominion said.

The New York Transmission Owners also voiced some support for GETs in general, but do not want FERC to move ahead with DLR requirements now. 

“Rather than ordering prescriptive DLR requirements, the commission should continue to promote and explore DLR technologies and allow regional flexibility for TSPs and TOs to develop targeted DLR programs that make sense for their respective systems,” they said. “For example, much of the Consolidated Edison transmission network is underground, and DLR implementation clearly should not be required for transmission lines that are not exposed to sun or wind.” 

The issues in New York go beyond underground lines in Manhattan, with the NYTOs telling FERC that much of their system is getting old and it would make more sense to replace aging infrastructure rather than try to squeeze a few more efficiencies out of it. 

ISO/RTOs also Preach Caution

PJM told FERC it supports DLRs in high congestion areas as a real-time optimization tool. But it said FERC should let the benefits of Order 881 that mandated that the related Ambient-Adjusted Ratings (AARs) in ISO/RTOs be better understood before moving onto DLRs. Order 881’s requirements for AARs go into effect in July 2025 and will have line ratings take temperature into account, which has some overlap with DLR benefits. 

PJM supports delaying DLR implementation until after Order No. 881 requirements provide the data “needed to identify changed transmission line congestion patterns,” the RTO said. “The potential benefits of DLR cannot be reliably estimated before implementation of Order No. 881.” 

Projecting the cost-benefit ratio of using an ANOPR-adjusted rating on a congested facility as compared to a seasonal rating “may grossly inflate the benefits if not adjusted for the efficiencies gained using an Order 881 AAR,” it added. 

MISO supports using DLRs as another tool to help reliably deal with the changes its system is going through, but it argued they do not make sense everywhere. It also highlighted overlap with Order 881. 

“DLRs, when selectively deployed, can support the efficient use of existing transmission infrastructure,” MISO said. “But they are not a long-term solution to meet emerging system needs. Like AARs, DLRs can provide operational benefits but cannot solve significant long-range transmission problems. Development of additional transmission investment will be critical to meeting the challenges of grid transformation.” 

CAISO said DLRs make sense where they materially enhance the reliability and efficiency of transmission operations. “Requiring the blanket use of dynamic line ratings — even through a phased implementation and subject to an exception process as set forth in the ANOPR — may not advance reliability and efficiency in all cases,” CAISO said. 

State Regulators and Consumer Groups Support ANOPR

The Organization of MISO States said the reforms in the ANOPR are needed to ensure reasonable rates and the use of DLRs will increase efficiency and reliability while cutting costs to consumers. 

“The ANOPR proposes additional requirements beyond Order No. 881 that require line ratings that account for solar heating, wind speed and wind direction,” OMS said. “Without taking these conditions into consideration, transmission owners are likely not fully utilizing the available capacity on transmission lines.” 

The proposal builds on five years of work looking into GETs with AARs expected to save up to 15% of total congestion in MISO. While many of the benefits come from pushing more energy through lines, OMS noted that DLRs can lower them with a study out of Massachusetts showing that effect 22 to 27% of the time. 

“This lowering of transmission line ratings also suggests that DLRs have additional long-term benefits because overrating a transmission line can lead to safety risks and premature degradation of a transmission line,” OMS said. 

The Organization of PJM States (OPSI) supports the reasonable implementation of DLRs, which is in line with its mission of ensuring reliable service at affordable rates. But the group did caution FERC against being overly prescriptive and ensuring DLRs can be implemented strategically. 

Utilities have been too slow in taking up the technology, which OPSI said requires some regulatory mandates. In PJM’s case, OPSI said the issue was with a lack of competition in the transmission planning process, which in the 2022 Regional Transmission Expansion Plan Window 3 procured $5 billion worth of new lines with zero DLRs. 

“PJM itself has made the case that the sponsorship model is insufficiently competitive,” OPSI said. “In its comments in the ANOPR that eventually became Order No. 1920, PJM noted that only three total project selections were awarded to non-incumbent developers out of 185 total project awards. According to PJM, the reason for this mainly comes down to the availability of existing right-of-way for incumbent developers, which is a major cost and constructability advantage.” 

The R Street Institute supports the ANOPR and pinned utilities’ lack of movement on the technology on a more basic issue. 

“DLRs have been and will continue to be chronically underutilized because of [transmission providers’] perverse incentives under cost-of-service regulation,” R Street said. “This inhibits market trading by inflating congestion costs unnecessarily. Thus, the status quo is unjust and unreasonable.” 

FERC should require DLR with a rebuttable presumption of prudence, unless transmission providers can show they fail a cost-benefit test.  

R Street also argued that FERC needs to start getting more information from non-RTO regions and it should not fail to require DLRs inside organized markets out of a fear of making a disincentive for new participation. DLRs would only enhance the net benefits of RTO participation, R Street said. 

“The determinates of RTO expansion hinge on many factors that tilt in favor of DLR adoption to enrich RTO value proposition, as the perceived net benefits are strong considerations in state RTO expansion conservations, such as those underway in the West,” R Street said. 

The Electricity Consumers Resource Council (ELCON), Clean Energy Buyers Association and Electricity Consumers Alliance represent large customers, and they all want to see DLR requirements move forward. 

“Given the potential economic and reliability benefits of implementing grid enhancing technologies, such as DLR, large consumers urge the commission to expeditiously incorporate the information gathered in this ANOPR into a formal proposal that supports adoption of all beneficial grid enhancing technologies rather than individual technology-specific solutions on a case-by-case basis,” they told FERC. 

GETs Firms Support the Rule Change but Have Suggestions

LineVision argued that the wind ratings proposed in the rule, which FERC would require on some congested lines as opposed to the more universal solar radiance requirements, are the more important of the two. If anything, having one standard with wind and solar radiance rolled into one would make sense. 

“More accurate line ratings that reflect the impact of wind on a transmission line will result in increased line ratings a vast majority of the time, which will relieve congestion and quickly result in more affordable rates for customers,” LineVision said. “Without sensor-based DLR, transmission owners will continue to rate their lines based on simplistic assumptions that do not represent the real-time or [forecast] capacity that lines can deliver.” 

Even when DLRs do not significantly affect congestion, they still can improve overall system efficiency. 

“In those instances where DLR may not relieve congestion, it will still result in more just and reasonable rates because asset life will not be shortened due to running a line at its overstated capacity,” LineVision said. “The need for DLR is critical in avoiding the scenario that occurred in 2003, when a conductor sagged beyond its limits and touched vegetation, causing the Northeast blackout, which caused outages for approximately 55 million customers.” 

Addressing transmission line ratings “was one of the recommendations made by the U.S.-Canada Power System Outage Task Force in its review of the blackout. In the long run, a grid operated according to accurate ratings will be more affordable for all,” LineVision said. 

An open question is whether the wind speed DLRs will even require sensors, noted the Southwest Power Pool’s Market Monitoring Unit. The technology is new, so FERC should allow for some more testing of alternatives. 

“A phased-in timeline will allow transmission providers to explore the least-cost options for wind requirement implementation, identify lines where costs might outweigh the benefits and potentially allow new, lower cost technology to enter the market,” the MMU said. “The commission should solicit comments from transmission providers on what an appropriate phase-in timeline for 100% implementation of the wind requirement would be.” 

GE Vernova Electrification Software said its software can avoid the need for sensors, the cost of which has been a hurdle to DLR deployment. The software also can be used on substations, which often are the limiting element on a line, not just the overhead line conductors. 

Software solutions also can work alongside sensors to develop a hybrid approach that maximizes DLR effectiveness. 

“Such hybrid solutions can be provided by a single vendor with capability in the hardware and software realm, through partnerships between vendors or, more generically, via appropriate data integration projects of separate vendor solutions at a customer site,” GE Vernova said. 

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FERC Accepts SPP’s PRM Compliance Filing

FERC has accepted a second compliance filing from SPP outlining its process for determining its planning reserve margin (PRM) with an Oct. 17 order that found the RTO’s response met the commission’s directives, effective April 10, 2024 (ER24-1221).

SPP was responding to FERC’s May order asking for more information on how it uses loss-of-load expectation (LOLE) studies to determine the PRM. (See FERC to SPP: Show More Work on PRM Determination.)

FERC directed SPP to revise its tariff to include more information related to a “non-exhaustive” list of the factors SPP staff, its board and its state regulators will consider when determining the recommended PRM value.

The commission disagreed with protests filed by several SPP members (American Electric Power, Golden Spread Electric Cooperative, Arkansas Electric Cooperative Corp., Xcel Energy, East Texas Electric Cooperative and Northeast Texas Electric Cooperative) that the grid operator did not explain how it will use the LOLE results to determine the PRM. FERC said the proposed tariff language “makes clear” that the PRM value will be determined based on the LOLE study results and that SPP set forth factors that its staff, board of directors and state regulators will consider when using the study results.

SPP’s Market Monitoring Unit also protested, arguing that the tariff shouldn’t reference available generating capacity and new generator development timelines as considerations for recommending or determining the PRM. FERC disagreed, noting that it already accepted a similar provision in the first compliance order.

“That’s a win, I guess, depending on who you ask,” SPP attorney Justin Hinton said to chuckles during a stakeholder meeting Oct. 18, referencing the stakeholder arguments that preceded the PRM’s revision in 2022.

The board approved changing the PRM to 15% from 12% over opposition from stakeholders advocating a three-year phase-in. Load-responsible entities unable to meet the requirement can incur financial penalties from the RTO. (See SPP Board, Regulators Side with Staff over Reserve Margin.)

Commission OKs LTCR Change

In an Oct. 11 letter order, FERC also accepted SPP tariff revisions to allow the nomination of candidate long-term congestion rights (LTCRs) for firm transmission capacity associated with the Federal Service Exemption (FSE) and for firm transmission service associated with grandfathered agreement (GFA) carve outs in the LTCR allocation process (ER24-2003).

FERC said the revisions, effective July 14, 2024, are likely to benefit load by further reducing uplift charges that load currently pays to compensate for the congestion and marginal loss charges that GFA carve outs and FSEs do not pay.

SPP said congestion charges associated with the carve outs and FSE transmission reservations have been offset by revenues that SPP receives from nominating auction revenue rights (ARRs) attributable to the carve outs and FSEs. The remaining amount is recovered from SPP-wide load as uplift.

The RTO said it will nominate LTCRs attributable to the carve outs and FSEs under the same criteria by which it currently nominates ARRs attributable to the same exemptions. It said the LTCRs’ revenue will be used to further offset the uplift charges that must be paid by load.

FERC rejected Missouri River Energy Services’ protests that the revisions shift costs to market participants with transmission reservations near the carve out and FSE reservations. It said the alleged cost shifts result from better aligning the tariff’s treatment of ARRs and LTCRs attributable to carve outs and FSEs with the tariff’s treatment of ARRs and LTCRs attributable to all other transmission reservations.

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MISO Queue MW Cap to be Filed Sans Regulator Exemption for RA Generation Projects

CARMEL, Ind. — MISO announced it will move forward on an annual interconnection queue cap based on 50% of peak load for the year in question, this time removing exemptions for projects regulators deem essential.  

Stakeholders learned at an Oct. 16 Planning Advisory Committee meeting that MISO plans to scrap a regulator exemption from the annual megawatt cap it has designed for its generator interconnection queue. The deletion appeared unpopular among some stakeholders and state regulatory agencies.  

MISO’s Ryan Westphal said removal of regulators’ ability to name exempted generation projects will prevent the cap from being diluted with exceptions to the rule. He also said MISO heard stakeholders’ concerns about how MISO would limit the number of regulators’ exemptions and how it would give those exemptions priority.  

FERC last year rejected MISO’s first attempt to institute an annual megawatt cap on the queue based on concerns over too many cap exemptions, the formula to establish the cap and potential resource adequacy deficits from limiting new generation onto the grid. (See FERC Rejects MW Cap, Approves MISO’s Other Stricter Interconnection Queue Rules.)   

Westphal said MISO needs a “reasonable number of resources and a reasonable dispatch” to be able to build sound study models.  

“All of us can agree that in the 2022, 2023 modeling, there are a lot of resources in there that are creating a lot of difficulties, engineering problems,” Westphal said.  

Westphal also said a 50% peak load cap should eliminate the need for “backbone” network upgrades, where interconnection customers are responsible for large transmission projects.  

MISO previously said regulatory authorities would be allowed exemptions to the cap when generation additions are needed for resource adequacy or to serve documented load that regulators have authority over. MISO said it would allow one cap exemption per 3 GW of documented load that the regulatory authority serves. (See MISO: 50% Peak Load Cap, Software Help Key for Crowded, Delayed Queue.) 

MISO has said that even with a cap in place, it could achieve a total 310-GW queue throughput through 2042. The RTO assumed a 68-GW annual cap based on its current annual peak and took its historic 21% completion rate into account to come up with 14.3 GW per year in completed projects. MISO has about 320 GW in active interconnection requests in its queue. 

MISO staff have said controlling the cadence of project submissions is key to improving the quality of initial studies and potentially reducing network upgrade costs by being able to use a more true-to-life resource dispatch in models. MISO said once a cap is met for an interconnection cycle, projects will line up for the next year’s study cycle.  

The RTO has also committed to a three-year review of the effectiveness of the queue cap. 

MISO: 2nd Filing on the Way to Address Regulators’ Necessities

MISO’s Andy Witmeier said MISO dropped regulators’ exemption because planners didn’t see how a single exemption could address the multitude of imminent resource adequacy troubles.  

Instead, Witmeier said MISO will develop a separate, “more holistic” proposal with stakeholders to find ways to speed up queue processing for projects that keep MISO in the black on resource needs.  

Duke Energy’s Jay Rasmussen said he thought MISO is missing an opportunity to address resource adequacy issues within the cap.

Rasmussen pointed out that large load additions are on the horizon for load-serving entities. He said filing to implement a cap without acknowledging generation needs creates a “lag” for interconnection customers. 

Illinois Commerce Commissioner Michael Carrigan said while the Organization of MISO States sympathizes with how difficult queue studies have become for MISO, “states very clearly value their respective authority.” Carrigan said he didn’t see a path to states supporting MISO’s queue cap proposal at FERC without some sort of exception for generation needed to preserve resource adequacy. 

“This is a concern and could be very problematic,” Carrigan said.  

“Our decision is that we need to address these in separate filings because they’re separate issues,” Witmeier said. He said MISO staff plan to discuss how to expedite generation projects necessary to resource adequacy in upcoming Planning Advisory Committee meetings through January. He said MISO could be ready for a separate filing by the first quarter of 2025.  

MISO’s Andy Witmeier | © RTO Insider LLC 

At a Sept. 12 Organization of MISO States board meeting, OMS Director of Legal and Regulatory Affairs Brad Pope said MISO’s queue cap needs a “workable” exemption for regulatory agencies when they are reliant on a developer’s generation submittal. 

While it’s jettisoning its regulator exemption, MISO said it would maintain cap exemptions for existing resources. Those resources may need to enter the queue to replace their output with an approved generation facility, receive provisional interconnection agreements or upgrade their current basic, unguaranteed energy resource interconnection service to the higher-quality, firm network resource interconnection service. Staff said those reasons don’t include proposing speculative generation projects and can earn exemptions.  

Bill Booth, consultant to the Mississippi Public Service Commission, argued that projects regulators approve under utilities’ integrated resource plans are not speculative.  

“The goal of this whole approach is to reduce speculative projects. Do you think projects approved under a state IRP process are speculative?” he asked rhetorically.  

Witmeier said the past few times MISO discussed its proposed cap with stakeholders, the regulator exemption proved to be a sticking point.  

“Folks are concerned about what it means and how it will be managed,” he said.  

Some stakeholders asked MISO to delay its planned early November filing with FERC for a queue cap until it devises a way to address projects deemed necessary by states for resource adequacy.  

NextEra Energy’s Erin Murphy said a “brief pause” makes sense considering MISO is working with tech startup Pearl Street to automate some study processes. She said perhaps MISO could wait to gauge the effectiveness of the new software’s ability to shrink wait times before it limits entrants.  

Witmeier, however, said a queue cap has been in the works in MISO’s stakeholder process for two years. He said the need for a queue cap and creating a means to usher resource adequacy projects through faster are unrelated matters.  

“I see no need to put it on the shelf just because we’re going to go after a separate process,” Witmeier said.  

Booth said MISO required a little “intellectual integrity.” He said instead of MISO polishing and explaining a regulator exemption, MISO simply chopped its filing in half, with no guarantee of when it would address state-required generation projects.  

Consumers Energy’s Dan Alfred said his utility’s support of the queue cap hinges on a companion resource adequacy exemption.  

“I don’t understand why you’re not listening to the feedback here,” Alfred said. 

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FERC Reverses Decision on WestConnect Cost Allocation

Responding to an appellate court’s concerns about free ridership, FERC reversed a decision that allowed the WestConnect transmission planning region to include a category of participants not subject to binding cost allocation. 

The order (ER13-75, et al.), issued Oct. 17, could mark the end of a yearslong dispute stemming from FERC Order 1000. 

That order, issued in 2011, requires public utility transmission providers subject to FERC jurisdiction to participate in a regional transmission planning process that produces a regional transmission plan. 

Nonpublic utility transmission providers may also choose to participate in regional transmission planning by “enrolling” in the effort. They are then required to pay a share of costs for future projects that benefit them.  

And in what has become a contentious twist, a FERC-approved framework for WestConnect allows a third category of participants: coordinating transmission owners (CTOs). These nonpublic utility transmission providers participate in determining regional transmission needs and identifying projects that could meet those needs. But once costs of a proposed project are divided up, the CTOs choose whether they want to pay. 

If a CTO decides not to pay, WestConnect reevaluates the costs and benefits of the project to determine if it should move forward.  

In an August 2023 decision, the 5th Circuit Court of Appeals said FERC’s approval of the framework was “incompatible with the FPA’s [Federal Power Act’s] mandate for just and reasonable rates and with Order No. 1000’s application of the cost causation principle.” 

A stated purpose of Order 1000 is to prevent subsidization by ensuring that costs correspond to benefits, the court decision stated, and the cost-causation principle combats “free ridership,” in which an entity is not required to pay for a benefit it receives. 

FERC has now directed WestConnect public utility transmission providers to submit compliance filings to revise their Open Access Transmission Tariffs to remove the CTO framework and to update their OATTs to reflect the current list of enrolled members in the WestConnect region. 

Long-running Case

After FERC issued Order 1000, the WestConnect public utility transmission providers submitted a series of filings beginning in 2012 to comply with the order’s requirements. WestConnect covers parts of Arizona, California, Colorado, Nebraska, Nevada, New Mexico, South Dakota, Texas and Wyoming. 

FERC rejected several of the WestConnect public utility transmission providers’ cost allocation proposals, saying they weren’t consistent with the order’s principles. But FERC accepted the providers’ proposed participation framework in which nonpublic utility transmission providers could participate as either enrolled transmission owners or coordinating transmission owners. 

The public utility transmission providers, led by El Paso Electric, took FERC’s rejection of their filings to court.  

The 5th Circuit vacated FERC’s orders regarding the transmission providers’ compliance filings and remanded the case “for further explanation and fact finding.” 

In 2017, FERC responded with an order on remand. Among the commission’s arguments in support of its decision was that nonpublic utility transmission providers are likely to submit to binding cost allocation so grid-improvement projects meet benefit-to-cost thresholds and can move forward. 

FERC also said it could always revisit its approach if free ridership turns out to be more of an issue than expected.  

The public utility transmission providers asked for a rehearing, which FERC denied. El Paso Electric then took the matter back to the 5th Circuit, petitioning for review of FERC’s order on remand and order denying rehearing.  

The other WestConnect public utility transmission providers intervened in support of El Paso Electric, and the nonpublic utilities intervened in support of FERC. 

The court stayed the petition in 2018 while the parties worked on a settlement agreement. But in 2022, FERC rejected the proposed agreement between the public and nonpublic utilities and the court continued with its review of the case. (See WestConnect Tx Cost Allocation Plan Rejected by FERC.) 

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MISO Dubious of Opt-out Request for DER Affected System Studies

CARMEL, Ind. — MISO is hesitant to grant a request from Michigan to give dispensations to distributed energy resources from its mandated affected studies that gauge transmission system impacts.

Michigan regulators and utilities’ recent bid to allow DERs to altogether skip out on MISO’s affected system-style studies might be shortsighted, said MISO Senior Manager of Resource Utilization Kyle Trotter.

“Generally, we are supportive of this particular issue; however, we’re not quite sold on an exemption from the whole process,” Trotter said during an Oct. 16 Planning Advisory Committee meeting.

Trotter emphasized the need for appropriate reliability assessments for DER additions. He said MISO cannot ignore DERs’ potential to affect local transmission systems and neighboring systems. Trotter said MISO needs some “touchpoint in place” to maintain visibility of DERs, continue to meet NERC reliability standards and have an idea of which interconnection points on the system are congested for its interconnection queue.

“We need to see what’s happening at those transmission-distribution interface. We need to keep visibility into what’s happening whether those DERs go through the MISO study process or not,” Trotter said.

Trotter also said MISO’s upcoming compliance with FERC Order 2222, which will allow aggregated DERs into the MISO markets, presents another reason to keep tabs on DERs.

“We would like to know about these before they show up and register for the market,” Trotter said.

Last year, MISO decided it would evaluate the need for a review of DERs when they can inject 5 MW of power at the substation level during system peak load and if they can force a 1% change in line loading. TOs screen for the 5 MW injection capability, while the RTO ascertains whether the DERs could influence a 1% line-loading change.

If the DER is shown to impact both reliability criteria, MISO issues a report that triggers its existing facilities study and could lead to network upgrades. TOs pay a $60,000 study deposit to MISO per substation that is required to be studied for DER impacts. MISO refunds any portion it doesn’t use for the studies. (See MISO Creating Means to Gauge Impacts of DER Interconnections.)

In July, Michigan utilities and the Michigan Public Service Commission asked MISO to rethink a study requirement for DERs that might influence the grid. They said MISO’s study process is burdensome, costly and limits efforts to integrate DERs on the grid. (See Michigan Utilities Call for Opt-Out on MISO DER Affected System Studies.)

Some stakeholders said MISO’s DER-affected system studies are redundant considering that MISO’s transmission owners already study DERs’ influence under transmission expansion planning and that MISO is devising a registration process for DERs that want to participate in markets.

ITC’s Ruth Kloecker agreed that MISO’s study process seems duplicative. She also said MISO’s 5 MW threshold seems too severe.

“5 MW of injection? I don’t know how that can seriously impact the transmission system,” Kloecker said.

Erik Hanser, a staffer with the Michigan Public Service Commission, asked if MISO sees a way to cut back study requirements on DERs.

Trotter said MISO would like to continue DER awareness and likely would maintain MISO’s policy of having TOs vet DER additions and notify MISO if an impact study is warranted. He said there’s a possibility DER additions could skip a “full MISO study and associated costs in some instances.”

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New IIJA Funding Targets Grid Resilience and Demand Growth

With downed power lines and poles from hurricanes Helene and Milton still a painful memory for many, the U.S. Department of Energy on Oct. 18 announced almost $2 billion in new funding from the Infrastructure Investment and Jobs Act aimed at improving grid reliability and resilience. 

The latest round of Grid Resilience and Innovation Partnerships (GRIP) awards will go to 38 projects across 42 states and the District of Columbia. The grants will be used to expand grid capacity and speed up interconnection to meet burgeoning power demand from new manufacturing and data centers, said Secretary Jennifer Granholm during an advance press call Oct. 17. 

“The funding couldn’t come at a more critical time,” Granholm said. “Energy demand, as we know, is rising nationwide, and it is straining our outdated grid infrastructure, and as climate change worsens, we’re seeing more frequent and devastating storms like Helene and Milton.” 

The projects selected for the GRIP awards will expand capacity on regional grids by 7.5 GW and add 300 miles of new lines and upgrade an additional 650 miles of lines with advanced conductors and other grid-enhancing technologies (GETs), according to a DOE press release.  

President Joe Biden announced six of the projects ― all located in the Southeast ― during a visit to Florida on Oct. 13. The Tennessee Valley Authority (TVA) scored the largest award, $250 million, which will fund 84 “subprojects” in disadvantaged communities across eight states, adding more than 2,400 MW of capacity, according to a DOE fact sheet. 

The federal dollars also will be used for the first interconnection tie — cables — allowing for power transfers between TVA and the Southwest Power Pool, providing TVA and its local utilities with an additional 800 MW of electricity.  

In Florida, Gainesville Regional Utilities (GRU) is slated to receive $47.5 million for distribution grid upgrades including reconductoring, undergrounding and transformers. DOE’s project description notes that this “diverse portfolio of grid hardening and modernizing technologies and equipment will increase the grid’s intelligence and build system capacity for the adoption of clean energy, grid-edge technologies and electric vehicles.” 

GRU CEO Ed Bielarski said he wants the utility to be a model “to further innovate and enhance [system] resilience and storm response, including in disadvantaged communities.”  

The new projects are part of the second round of GRIP awards, following an Aug. 6 announcement of eight projects across 18 states receiving $2.2 billion. (See DOE Announces $2.2B in Grid Resilience, Innovation Awards.)  

The GRIP program includes three separate funding streams: the Grid Innovation grants, announced in August, and the just-announced Grid Resilience Utility and Industry grants and Smart Grid grants. Pending the election results, DOE is planning a third round of funding for 2025. 

Speaking at the advance press call, John Podesta, Biden’s senior adviser on international climate policy, said the U.S. needs the grid to be “larger, stronger and more reliable. To effectively tackle the climate crisis and stay on course to reach 100% clean energy by 2035, we need to double our current transmission capacity in that time frame.” 

Getting there will mean continued public and private investments, better interregional transmission planning and “cutting through red tape” to get projects sited, permitted and built, Podesta said.  

Project Priorities

The IIJA provided $10.5 billion for the GRIP program, heralded as one of the largest public investments in the nation’s electric infrastructure. With the Oct. 18 announcement, $7.6 billion has been awarded.  

In general, awardees must at least match the number of federal dollars, and with the current announcement, DOE said the almost $2 billion in GRIP awards would draw in an additional $2.2 billion in private investment.  

Announced exactly one year ago, on Oct. 18, 2023, the first round of awards, totaling $3.46 billion, included 58 projects in 44 states. According to a senior administration official, 53 of those projects now have signed contracts with DOE. The projects announced in August are in contract negotiations, which also will begin for the latest round of awardees. 

DOE officials have said repeatedly that once an awardee has a signed contract, the funds will be committed and safe from any claw-back, regardless of the outcome of the election. 

Each round of GRIP awards has focused on different administration priorities. The first round leaned heavily toward projects that could improve resilience at the distribution level, had strong support from state and community officials and could move forward quickly. 

The largest award in the first round ― $464 million ― went to the five transmission lines in MISO and SPP’s joint targeted interconnection queue (JTIQ) portfolio. (See DOE Announces $3.46B for Grid Resilience, Improvement Projects.)  

Transmission projects were the top priority for the awards announced in August, with projects deploying GETs securing six of the eight awards. The largest award, $700 million, went to the North Plains Connector transmission project, a 420-mile, high-voltage direct current line running from Montana to North Dakota. 

This round clearly prioritizes grid upgrades to improve resilience in areas especially vulnerable to extreme weather and to get more power online to meet rising demand. The projects are geographically diverse, with money going to red and blue states. Investor-owned utilities, municipals and electric cooperatives are on the list, as well as some technology companies. 

In North Dakota, the Montana-Dakota Utilities Co. and Innovative Energy Alliance Cooperative were awarded close to $15.6 million for a project to upgrade a 54-mile segment of the state’s grid, adding new advanced conductors to expand capacity. Other upgrades include “installing software, sensors and interfaces for online weather data, allowing for dynamic line rating and quicker system response,” according to DOE. 

Alabama’s Tombigbee Electric Cooperative, with about 45,000 members, is slated to receive $11.1 million for system upgrades including new storage to shave peak demand and distributed energy management and outage management systems. The project also will reconductor existing lines and install new lines.  

In Florida, Chicago-based Switched Source will partner with Florida Power & Light to deploy its automated distribution power flow control technology on lines in disadvantaged communities especially vulnerable to extreme weather. The $47.7 million award could help cut outages by 10%, improve energy efficiency across the system and help integrate distributed resources, such as solar and electric vehicles.