NextEra Energy said Wednesday that it will combine its two Florida utilities into a single entity that will stretch from the Panhandle to Miami Beach.
During its first-quarter earnings call, Florida-based NextEra said it has filed with the Public Service Commission to reflect the expectation that Florida Power & Light and Gulf Power will begin to operate as an integrated system in 2022. The utilities plan to file a combined rate case in the first quarter of 2021 for new rates that begin in 2022, NextEra said.
In its earnings release, NextEra said, “The companies expect that a merger will create both operational and financial benefits for customers.”
NextEra Energy plans to merge its Gulf Power and Florida Power & Light utilities. | NextEra Energy
FPL serves more than 5 million customer accounts along Florida’s Atlantic coast and is the nation’s largest rate-regulated electric utility, as measured by retail electricity produced and sold. Pensacola-based Gulf Power has more than 460,000 customers. NextEra struck a $6.5 billion deal with Southern Power in 2018 to acquire the utility. (See FERC Approves NextEra’s Gulf Power Acquisition.)
The companies filed a “Ten Year Site Plan” that projects an approximately 70% increase in zero-emission electricity that is generated in 2029, relative to 2019, largely through solar power. NextEra said FPL expects to have more than 10 GW of installed solar capacity, including nearly 1.6 GW within the current Gulf Power service territory, by the end of the decade.
CEO Jim Robo said FPL has six new solar energy centers operating, with four more scheduled to enter service in May. The 10 solar centers, FPL said, represent 745 MW of new capacity.
NextEra plans to connect the two systems with a new 161-kV transmission line. According to the PSC filing, the project will be completed before 2022.
The company’s first-quarter earnings surpassed expectations. NextEra reported earnings of $421 million ($0.86/share), compared to $680 million ($1.41/share) for the first quarter of 2019.
When adjusted for nonqualifying hedges, net investment gains and other impairments, and profit from disposal of a business, NextEra’s earnings were $2.38/share. Analysts polled by Zacks Investment Research had projected adjusted earnings of $2.21/share.
NextEra said it continues to expect year-end adjusted earnings of $8.70 to $9.20/share.
“While our expectations always assume normal weather and operating conditions, I have confidence in our ability to meet these expectations even when accounting for a reasonable range of impacts and outcomes that may result from the COVID-19 pandemic,” Robo said.
Asked about another target, South Carolina’s state-run Santee Cooper utility, which the state’s governor has called a “rogue agency,” Robo said state lawmakers are in a budget standoff over the utility’s “hotly debated” sale.
“By no means is Santee Cooper done. There remains a lot of energy still behind wanting to sell Santee Cooper,” Robo said.
NextEra’s share price gained $11.75 on Wednesday, closing at $247.17 as Wall Street stopped a two-day slide.
The nascent U.S. offshore wind industry is faring better than the rest of the energy sector in the face of the COVID-19 pandemic, with no project delays yet attributable to the shutdown, participants in the virtual International Partnering Forum heard this week.
However, federal officials and project developers still differ on whether the status quo is good enough, industry stakeholders learned.
The Business Network for Offshore Wind postponed its premier event of the year until August, replacing the physical conference planned for Rhode Island with a two-day virtual event April 21-22.
“Virtual really is the future,” CEO Liz Burdock said. “Physical, in-person events will always have a place in our planning, but low-carbon conferences are going to play an important role in educational offerings starting on Earth Day 2020, as we help our members meet their CO2 emission commitments.”
Following is some of what we overheard at the virtual conference.
BOEM on Track
James Bennett, chief of the Office of Renewable Energy Programs at the Bureau of Ocean Energy Management, took questions on the potential impacts of the pandemic on the federal permitting process for Vineyard Wind and other projects, as well as the impacts on federal leasing.
“The COVID-19 situation is certainly having its effect on just about all business processes everywhere,” Bennett said. “We are in a full telework arrangement right now, and we’re continuing to work according to the schedule that we have for Vineyard Wind.
“We don’t anticipate any schedule slips just yet, and a lot of it will depend on how things work out with COVID and whether we’re able to have the stakeholder involvement at the level that we’d like to, but overall, we’re on track and on schedule for Vineyard Wind and the other projects as well,” he said.
The demand for offshore wind has never been greater, and it’s going to be a key component of a diversified national energy portfolio, Bennett said.
Through BOEM, the Interior Department has issued 16 commercial leases for offshore wind development. The department is reviewing seven construction and operation plans and anticipates seeing another five in the next year or so, Bennett said.
Aggressive renewable energy goals by the states, followed up by solicitations for offtake — about half of which have been awarded — have combined with federal leasing to create a tremendous market opportunity, he said.
“Hopefully starting next month, we will have steel in the water with the Virginia offshore wind project, and over the course of the decade, we’re looking at 12 to 15 or even more projects just on existing leases,” Bennett said. “This represents a massive amount of economic activity, in the neighborhood of $25 billion per year by the end of the decade.”
The Jersey Pinch
Bennett said BOEM faces immediate challenges, such as keeping up with plan approvals and permitting, and ensuring robust, informative environmental analysis. It also faces long-term challenges.
“How much leasing is enough, and will procurements keep pace, not only with the demand from the states, but with our industrial capability to develop offshore wind?”
Technological issues include developing transmission in an efficient and cost-effective way. Procurements need clarity to address the maximum complexity, and “we need one right of way for each development,” he said.
Bill White, CEO of project developer EnBW North America, said the industry’s main challenge is getting BOEM to pick up the pace on approving permits and processing lease areas.
“We see a real significant opportunity that the Department of the Interior and BOEM can help relaunch this economy in the months ahead” after the pandemic lockdown, White said.
“There are no-cost initiatives that our friends at Interior and BOEM can move forward that would unleash this offshore wind opportunity,” White said. “These are multibillion-dollar projects, and when they’re constructed, they’ll be among the largest construction projects in the United States, and they will mobilize thousands of workers. So moving ahead with the contracted projects … is urgent.”
White hypothesized about a number of new contracts being awarded in New Jersey and New York.
“It’s theoretically possible, I would say quite likely possible, that in 2022, there could be only one project that competes in the New Jersey solicitation for 1,200 MW,” White said. “That could just be Ørsted, or possibly could be just Shell, if Ørsted wins the next New Jersey procurement.”
Few developers are eligible to bid into the New Jersey solicitation in 2022, and no bidders will be able to compete in the procurements for 2024, 2026 and 2028 without additional offshore wind lease areas, he said.
“Our current projections indicate that 2022 will be New Jersey’s last competitive solicitation this decade, and moving forward, New Jersey could fall behind and see more than half their goal [7.5 GW by 2030] not being met,” White said. “It’s trying to demonstrate the urgency for our friends at BOEM … to really move forward this leasing process sooner rather than later.”
Benefits and Reliability
John Dalton, president of energy consultant Power Advisory, said the New York State Energy Research and Development Authority has been very transparent in its offshore solicitation processes and elected to assign 20% of total points to economic benefits.
NYSERDA has developed a 100-point scoring system for project candidates that awards 10 points for viability, 20 points for economic benefit and 70 points for offer prices.
“What this means essentially is that a bidder who is participating in the NYSERDA [request for proposals] is more likely to be in a position where it can make explicit tradeoffs between price and delivering greater economic development benefits to the state of New York,” Dalton said.
Burdock said she would like NYSERDA’s figure for economic benefits to be higher.
“I was a little surprised that it was only 20%,” she said. “There should be more emphasis now on encouraging small businesses to get into the supply chain.”
Eric Hines, director of the Offshore Wind Energy Engineering graduate program at Tufts University, presented the two scenarios common to discussion of transmission buildout. In the first, generators develop the transmission, creating the generator lead line, or radial system. In the second — favored by Hines — an independent transmission developer creates a network system. (See Mass. DOER Explores Transmission for OSW.)
“The interest that we have here is in reliability as we move more and more of the electricity to the grid,” Hines said. “Right now, we’re talking about 30 GW, but if we start talking on the scale of 2050, it would not be at all strange to start talking about 300 GW” or more.
New England has been down this road before when developing land-based wind, he said.
“The idea of a backbone loop is not strange,” Hines said. “In 2009, the New England governors were talking about 12,000 MW of land-based wind plus offshore wind, and now we’re talking about 12,000 MW of offshore wind.”
Much of the region’s thinking about the grid dates back to the blackout of 1965 and experiencing rare, large-scale events, he said. “This is what drive the concepts of reliability, resiliency and our need for a reliable system at times like now, during a pandemic,” Hines said. “This doesn’t happen every year, but these are the things we have to pay attention to in terms of thinking about the long-term infrastructure.”
When people talk about onshore and offshore grids, they’re talking about the same thing, he said.
“The question is, how are we going to generate a whole bunch of power in the ocean and send it across the coastline onto the land?” Hines said. “The biggest issues we have right now are with the points of interconnect, and if we go at the pace we’re going, the developers who have the leases are going to grab all the key points of interconnect, and this is really going to strangle the ability to get electricity onshore.”
Ensuring access to testing and personal protective equipment (PPE) for frontline workers is one of the key challenges to reliable operation of the electric grid during the COVID-19 pandemic, according to a new report from NERC.
In a media briefing this week, NERC staff noted that the report identified no “specific threats or degradations” to the operation of the BPS at this time. However, while this does give utilities some breathing room, industry still must “[prepare] to operate with a significantly smaller workforce, an encumbered supply chain and limited support services for an extended and unknown period of time.”
| Columbia River PUD
Work Force Shortages Expected
Staffing burdens represent the fundamental risk posed by the pandemic: In NERC’s view, the greatest danger is that utilities will lose the trained workers that keep distribution, transmission and generation facilities operating to illness.
While the industry can mitigate the risk by ordering some employees to work from home, many functions — whether in control rooms or in the field — cannot be performed remotely. Because these workers must perform their jobs in person, the question becomes how to reduce the danger that an infected person will unknowingly spread the virus to others on the job.
Utilities are mitigating this risk by restricting nonessential visitors from control rooms; removing unused equipment and furniture to limit surfaces where the virus can incubate; revising operating rules to create more distance between personnel; and requiring mandatory temperature screenings. An essential element of the response is regularly testing employees for the virus so that those who are infected can be isolated from others; however, the ongoing shortage of testing kits makes this a complicated proposition.
“The industry is taking an all-of-the-above approach to testing and working very closely with the Department of Energy, [Department of Homeland Security] and [Department of Health and Human Services] on prioritizing those very critical, hard-to-replace workers,” said Matthew Duncan, senior manager of resilience and policy coordination for the Electricity Information Sharing and Analysis Center. “Those efforts are starting to bear some fruit, but it’s still something that we’re going to continue to push for at both the federal and state levels.”
Shortages of PPE represent another potential danger for essential workers as utilities and health care providers struggle to fairly allocate limited resources. The report noted that some utilities have been able to effectively negotiate for supplies but warned that maintaining adequate PPE stocks remains a challenge for many entities and could be an issue in future epidemics as well.
Cybersecurity, DER Risks Highlighted
Cybersecurity is also a concern. The expanded remote workforce is an attractive “attack surface” for malicious actors who may try to exploit employees distracted from best practices by family or personal challenges, Duncan said.
NERC urged utilities to use the E-ISAC and the Cybersecurity Risk Information Sharing Program to stay abreast of the latest threats.
In addition, John Moura, NERC’s director of reliability assessment and performance analysis, warned that the closing of commercial and manufacturing customers has led to significantly lightened loads in many regions. In areas with high penetration of distributed energy resources, these reduced loads may mean DERs serve a significantly larger portion of overall load than anticipated by grid planners — an issue that is already causing concern among some utilities. (See Rooftop PV’s ‘Hidden Loads’ Challenge Grid Planners.) Load forecasting models will have to be recalibrated to address this change.
Although the grid has continued to function well in the face of COVID-19, NERC emphasized that adjusting to the reality of the pandemic has just begun. Additional efforts will be needed to grapple with new challenges as they emerge.
“I think it’s important to note that while health care workers are working to flatten the curve, the electricity industry is staying ahead of the curve as it relates to the challenges [of] COVID-19,” Duncan said.
MISO’s Advisory Committee is beginning work on a possible new process for prospective members to join the RTO.
The AC is considering whether the newly formed Affiliate sector will serve as an “incubator” for designing new sectors that will allow a more diverse set of companies and organizations to join MISO. The committee plans to examine how the Competitive Transmission Developer sector was formed in 2014.
MISO’s Board of Directors last month cleared the AC to create an 11th sector while instructing the committee’s to come up with a longer-term solution that guarantees members full participation in the stakeholder process. The new sector serves as a home for any member that isn’t participating in another sector, but it lacks voting power in the AC and the Planning Advisory Committee. Prospective members must declare a sector affiliation before they can join the RTO. (See Board OKs 11th MISO Sector, Orders Redesign.)
The AC will consider whether sectors should develop charters and bylaws, and how it will divvy up voting rights among new — and possibly even existing — sectors. The committee votes by sector when it decides to send recommendations to the board.
“The voting in my view is the most sensitive and possibly even contentious issue,” AC Chair Audrey Penner said.
The AC has a year from late March to draft a solution.
AC Hears LMR Saturation Concerns
The AC also briefly touched on a conversation brewing in the Reliability Subcommittee about how to set limits for load-modifying resources participating in MISO’s markets.
Some stakeholders have expressed concern about an overreliance on LMRs and are seeking analysis exploring the potential for oversaturation in the footprint. (See MISO Group to Probe LMR Saturation.)
RSC Chair Bill SeDoris said the subcommittee is asking whether there should be a limit on how many LMRs can clear in the capacity auction — or even in the day-ahead market.
“Are we there with demand response, LMRs and distributed resources?” SeDoris asked rhetorically. “Do we have enough steel in the ground generating electricity?”
Eligible End-User Customers sector representative Kevin Murray said LMRs are essential because they’re designed to be the first load in line to be interrupted during emergencies.
“Are we making sure we have the right resource mix to maintain the system reliability? Load can be cut, but the system’s designed to keep the lights on,” SeDoris said.
Stakeholders in the Resource Adequacy Subcommittee have since voted to formally oppose the LMR filing.
Murray called the accreditation proposal “arbitrary.”
SeDoris said he can’t tell if the leaner accreditation will cause some LMRs to walk away from the MISO capacity market. “I’m working under the assumption that the LMRs will adapt to the changing rules.”
North Dakota Public Service Commissioner Julie Fedorchak pointed out that state regulators consider the effectiveness of LMRs when appraising their utilities’ integrated resource plans.
The RSC will continue to discuss the upper limits of LMR participation in its upcoming meetings.
The New York State Energy Research and Development Authority was authorized Thursday to solicit up to 2,500 MW of offshore wind energy this year — the largest such procurement in the country to date.
The New York Public Service Commission granted NYSERDA’s January petition to solicit “at least” 1,000 MW of offshore wind energy in 2020 and be granted the “flexibility” to evaluate a range of bids for up to 2,500 MW (18-E-0071).
“This is an important step forward to advance the opportunity for New York state’s next offshore wind solicitation,” PSC Chair John B. Rhodes said. “We received important inputs in the recently concluded comment period, and this order properly considers those, as well as the principal aspects of the public interest.”
Environmentalists and labor groups were quick to laud the state’s action.
“The PSC order will help ensure that New York is able to take maximum advantage of expiring federal tax credits, limited offshore lease areas and the developing offshore wind supply chain,” New York Offshore Wind Alliance Director Joe Martens said in a statement.
NYSERDA 2019 OSW contract awards, lease and project areas, and proposed points of interest | NYSERDA
Gary LaBarbera, president of the Building and Construction Trades Council of Greater New York, said the decision “paves the way for thousands of good jobs and billions in economic development for New York. We applaud this order and look forward to building New York’s offshore wind industry for years to come.”
Following the commission’s decision, NYSERDA said in a statement that it would not be rushing amid the coronavirus pandemic to put out a request for proposals.
“While NYSERDA fully supports and is poised to execute on this authorization, given the current circumstances, we feel issuing a near-term solicitation would not be responsible nor advisable. … Given the dynamic nature of the situation, NYSERDA is closely monitoring the crisis and stands ready to launch the solicitations when the associated activities can responsibly begin,” the agency said.
Gov. Andrew Cuomo in January announced that NYSERDA would solicit at least 1 GW of offshore wind energy this year. The state last July awarded offshore wind contracts to Equinor’s 816-MW Empire Wind project and to the 880-MW Sunrise Wind, a joint venture of Ørsted and Eversource Energy. (See Cuomo Sets New York’s Green Goals for 2020.)
Among other targets, New York’s Climate Leadership and Community Protection Act (A8429), signed into law last July, nearly quadrupled the state’s offshore wind goals to 9,000 MW by 2030.
Burman Dissents
All five PSC commissioners met via teleconference for its regular monthly session in Albany; only one voted against the offshore wind order.
Commissioner Diane Burman said “that while we are looking to give direction and regulatory certainty to NYSERDA and to those involved in offshore wind, and giving a nod that we are supportive of moving forward in 2020 on an offshore wind solicitation,” she was concerned that the funding of NYSERDA “fails to set conditions on the authorization.”
Burman said that as “stewards of the ratepayer dollars and stewards of the state’s environmental goals,” commissioners “need appropriate information in real time to make those decisions, not in a vacuum; not crossing our fingers and hoping it all works out.”
“We have at times looked at modifying a petition, or asking those petitioners to provide more information,” Burman said. She said it was reasonable to seek “more clarity and information” as “the comments on the petition only came in this week.”
Burman said there are “significant under-the-hood issues. … Commenters repeatedly discuss the transmission study … and yet many times we are left not necessarily having those studies completed in time to inform our decisions.”
“I’m struck by how we’re not demanding real information from NYSERDA,” she said. “I’m not opposed to giving authority, but I am opposed to being kept in the dark from the beginning.”
Burman also noted the concerns raised this week by the Long Island Commercial Fishing Association (LICFA), which as a member of NYSERDA’s Fisheries Technical Working Group (F-TWG) requested an extension of the April 20 deadline to submit comments.
“Though an email was sent on Jan. 30 notifying the F-TWG members of NYSERDA’s petition, no email chain, meeting or webinar was conducted by NYSERDA to discuss the proposal specifically, and as such, none of the fisheries stakeholders from multiple states who fish in the Atlantic from the Mid-Atlantic New York Bight area off of New Jersey to the Southern New England/South of Massachusetts waters have had the opportunity to address or comment as a group on this issue,” LICFA said.
Burman said the order doesn’t properly address the fishermen’s concerns “but says they should not have waited so long, which is not the appropriate approach for a regulator. … We should be seeking how to incorporate their concerns on the front end.”
MISO’s Steering Committee is debating whether to propose a new rule that would require consultants to identify the clients they represent when participating in stakeholder meetings.
A number of stakeholders have pressed for the rule, but the Planning Advisory Committee has reported that some consultants are reluctant to reveal their clients before offering comments or criticisms on MISO presentations. (See “SC Mulls Consultant Transparency,” MISO Steering Committee Briefs: Feb. 19, 2020.)
The Steering Committee again took up the issue during a Wednesday teleconference.
“This is not an issue that I’m personally raising; I’m raising it on behalf of several stakeholders,” said PAC Chair Cynthia Crane, of ITC Holdings.
“This is beyond simple courtesy. It’s so we can understand the perspective of the requests being made,” Crane said. “These consultants are making significant requests of MISO staff to change analyses and processes. … Other stakeholders can’t identify the driver of comments being made, and essentially those remarks are being made in a vacuum.”
The PAC currently requests that all meeting attendees first identify themselves and companies they represent before speaking — a request that is not always followed.
“There are a whole range of vested interests in the PAC. And some are asking to change the inputs to planning analyses. And when you change the inputs, you change the outcome,” Crane said. “This is a very specific example of why this matters.”
“We all hammer MISO for transparency. And I guess I’ll say turnabout’s fair play,” Reliability Subcommittee Vice Chair Ray McCausland, of Ameren, said at the subcommittee’s Feb. 27 meeting.
Some stakeholders have pointed out that MISO has a loose definition of “stakeholder”: anyone with an interest in the RTO’s workings. Customized Energy Solutions’ David Sapper asked how MISO could require individuals to state affiliations when stakeholder meetings are open to “all interested participants,” according to the RTO’s Stakeholder Governance Guide.
However, the Organization of MISO States (OMS) argued the guide should be revised with the expectation that all meeting participants be prepared to announce their affiliation.
“To foster openness and transparency, the MISO Stakeholder Governance Guide should be amended to add language that defines a set of expectations for stakeholder identification in the stakeholder process,” OMS said in comments to the RTO. “These revisions should include details addressing how consultants identify who they represent when participating in any MISO meeting or process. When consultants fail to disclose this information, it puts other stakeholders and the entire stakeholder process at an informational disadvantage and does not foster a fair and level playing field.”
OMS said its members frequently announce in meetings whether they’re offering their personal opinion or the view of their states.
“Some consultants currently do effectively communicate their affiliation(s) during a wide range of stakeholder proceedings, and the OMS believes that applying a consistent rule requiring all consultants to identify their clients would not be unnecessarily burdensome,” OMS said.
Finding the Balance
But Advisory Committee Chair Audrey Penner, of Manitoba Hydro, said she wasn’t sure how far stakeholders can go in insisting that consultants divulge the identities of clients given the “stakeholder” definition and the fact that consultants can maintain that they’re sharing their personal views, not those of the company they represent.
Some stakeholders have raised the issue of consultants executing nondisclosure agreements with clients. Crane said in those situations, consultants could still announce the sector affiliation of their clients. Others have said that any new identification rule shouldn’t have a chilling effect on open discussion in meetings.
“I don’t want this to become so restrictive that good ideas are stifled out,” said Resource Adequacy Subcommittee Chair Chris Plante, of Wisconsin Public Service. He reminded other committee chairs that they can always step in to prevent a stakeholder from dominating a conversation. He also said that most consultants already notify attendees of their affiliation before making comments.
“If we’re getting someone with lots and lots of pushback, it would be nice to know who they represent to determine whether they have standing as a stakeholder — whatever that means,” MISO Director of Planning Jeff Webb said.
As an independent entity, MISO applies its own discretion in taking stakeholder suggestions, no matter the source, he said. “I think we can live with it either way. We have for a long time already.”
“I feel it would be easier for us in the stakeholder process if we knew from what perspective comments are coming from,” Clean Grid Alliance’s Natalie McIntire said.
FERC’s controversial MOPR ruling, the troubles of the petroleum industry and ways to continue manufacturing electric buses were topics of a webinar hosted by the California Energy Commission on Tuesday called “Weathering the COVID Crisis.”
The CEC, which dispenses hundreds of millions of dollars in grants for clean-energy innovation, brought together leaders in electric vehicles, rooftop solar and utility-scale solar to talk about how they were coping with the effects of the pandemic.
CEC Vice Chair Janea Scott, who heads the commission’s research and development programs, said the CEC is taking care of critical business as usual even though most of its employees are working from home.
“We recognize the importance of continuing to invest in our clean energy entrepreneurs, and we are actively preparing to release new solicitations,” Scott said. “In fact, in the R&D team, we anticipate releasing seven solicitations that would make about $150 million available over the next few months.”
The CEC is also supporting its current grant recipients, she said.
“We recognize that people may not be able to get into a lab to do the testing,” Scott said. “We recognize that folks aren’t necessarily able to do wet signatures and things like that.”
The commission is extending due dates and working with the Legislature to make relief funds available, she said.
“Please know that the Energy Commission is a resource for you to reach out to anytime,” she told the 350 people on the webinar, which was co-hosted by New Energy Nexus, a nonprofit that supports green-energy entrepreneurs.
Building Buses
Ryan Popple, executive director of Proterra, the largest North American manufacturer of electric buses, described his company’s efforts to fill orders while protecting workers.
Ryan Popple | Proterra
Electric buses have been one of the fastest growth sectors for EVs and could be the first to fully electrify, Popple said. While airports and some cities have cancelled orders, most cities “still want their electric buses,” and the company has an 18-month order backlog to fill, he said.
“Cities are still thinking long-term about their zero emission and electrify-everything strategies,” Popple said.
The company has three factories in South Carolina and California. In each jurisdiction, he said, “we were informed that public transit vehicles are essential, and if we can keep building, we should.”
The company has been enforcing physical distancing on the factory floor, providing coveralls and masks, and checking workers’ temperatures before they enter the building, Popple said. He urged other businesses to strictly follow government policies.
“We don’t have any practices that don’t line up line-for-line with guidance from [states, the federal government and the United Nation’s World Health Organization],” he said. “We make sure we are 100% compliant and up to date with the science behind [the official policies].”
Popple said he doesn’t think the world will go back to normal, at least until a vaccine or therapy lessens the threat from the COVID-19 virus, “but we’ve got to get back to work in the safest way possible.”
Electric bus | Proterra
He said he thinks the U.S. will adapt to COVID-19 the way other countries have dealt with malaria as a persistent threat — for instance, using face masks the way some countries use mosquito netting as a preventative measure.
“If we’re going to get people paid and get the economy recovered, we’re going to have to do that,” he said.
End Game for Fossil Fuels?
Popple also talked about the current crisis in the oil industry, where futures prices fell below zero this week.
“We’ve got to take very seriously that the fossil-fuel industry is backed into a corner right now. And my grandfather, who was an Illinois state trooper, told me, ‘Don’t ever back anybody into a corner because the only way they can get out is through you.”
Despite mounting evidence that vehicle pollution contributes to COVID-19 deaths, he said, the fossil fuel industry will try to roll back electric-vehicle mandates in California and elsewhere.
“If you’re faced with losing a multi-trillion-dollar industry, you’re going to take any shot you can get.”
“I think we are seeing the end game for fossil fuels. We’re seeing a preview of it,” Popple said. “So, don’t be surprised if a policy that was already implemented, that positively affected your business [comes under attack]. You better be prepared to defend it.”
Solar Survival
Lynn Jurich, CEO of Sunrun, a major rooftop solar firm, gave a pep talk of sorts to the green-energy industry.
She said she and her co-founders started Sunrun when they were students at Stanford in 2007 and racked up expenses fast, counting on millions of dollars in financing to bail them out. Then the recession hit in 2008, and the banks that the entrepreneurs thought they had deals with backed out – all except one.
Lynn Jurich | Sunrun
That one bank loaned them the $40 million they needed, and they were able to get a jump on the competition during the downturn, Jurich said.
“Sometimes these crises can be a benefit for entrepreneurs and people who can get through to the other side,” she said. “In many ways, that gave us a head start because we were able to weather this really tough period. So, from a business standpoint it was harder for other new entrants to raise capital and copy [our] model. We got a little bit lucky.”
Jurich said the recession that began in 2008 taught Sunrun to make sure it had plenty of cash on hand and to maintain good relationships with lenders.
“We’re like Depression babies,” she said. “We’ve been conservative about planning for a rainy day.”
In the current situation, Jurich said, “I’m really optimistic we’re going to come out of this as a stronger industry.”
Rooftop solar is too expensive and permitting too difficult, she said. Firms should use the coronavirus crisis as a way to spur innovation and accelerate cost reductions.
“Consumers want this product more than ever,” Jurich said. “They feel let down by institutions in many ways and want to take matters into their own hands.”
The rooftop solar industry relies on face-to-face sales but needs to turn to e-commerce and become more efficient, she said.
“I think this crisis is going to accelerate this industry by one or two years,” she said.
Jurich said she wasn’t denying the difficulty of these times, but “I’m really optimistic that it’s going to force a lot of the discipline that we need to really put the solar and batteries on all infrastructure and decarbonize the energy business quickly. Time is essential, as we all know.”
‘Under Direct Attack’
Dan Shugar, founder and CEO of NEXTracker, is a veteran of the utility-scale solar industry, the biggest driver of California’s growth in renewable power.
The CEC has been a leader in promoting clean energy “in stark contrast to what’s happening on the federal side,” Shugar said. “Every one of the companies on this call is under direct attack from the Trump administration, and so we have to respond.”
The administration’s new tariffs on solar panels and its attack on net-metering, key to rooftop solar, are two examples, he said.
Dan Shugar | NEXTracker
“FERC also had an extremely alarming ruling in the PJM regional transmission operator territory, which serves 65 million customers,” Shugar said, referring to the commission’s order applying the minimum offer price rule (MOPR) to all new state-subsidized resources. “It impacts $10 billion of economic value that’s traded for capacity in the Northeast. Essentially what they’re doing is subsidizing coal and nuclear at the expense of renewables.” (See related story, Stakeholders Appeal Expansion of PJM MOPR.)
The motivation isn’t to save consumers’ money, he said. Wind, solar and electrical vehicles have created more than 2 million jobs. Power from wind and solar now costs significantly less than natural gas, coal or nuclear power, he said.
Shugar urged his colleagues to fight back.
“We have the opportunity to win at everything — create jobs, help the environment and create value for our economy,” he said. “You must engage [politically] this year more than ever. It’s really important because these policies … are really a first-order impact of massive overreach by the federal government to unravel these benefits that we’ve helped create.”
[NOTE: This story was updated to include additional appeals filed after April 21.]
The battle over FERC’s order expanding PJM’s minimum offer price rule (MOPR) moved to the federal courts this week as environmental groups, electric cooperatives and state regulators filed petitions for appellate review.
The filings were set in motion by the commission’s April 16 orders denying rehearing of its June 2018 order that declared PJM’s capacity market unjust and unreasonable (EL16-49-001, et al.) and most of its December 2019 ruling, which directed PJM to expand the MOPR to all new state-subsidized resources (EL16-49-002, et al.).
Four environmental groups, the Natural Resources Defense Council, Sierra Club, Environmental Defense Fund and the Union of Concerned Scientists (UCS), filed a joint petition late Monday with the D.C. Circuit Court of Appeals. Also filing petitions with the D.C. Circuit were the North Carolina Electric Membership Corp. and the American Public Power Association (APPA), filing jointly with American Municipal Power.
The Illinois Commerce Commission filed a petition with the Seventh Circuit Court of Appeals in Chicago.
The New Jersey Board of Public Utilities and the Maryland Public Service Commission filed a joint petition with the D.C. Circuit on April 27 and Energy Harbor, the former FirstEnergy Solutions, weighed in on April 21.
E. Barrett Prettyman D.C. Circuit Courthouse
John McCaffrey, APPA’s senior regulatory counsel, said he wasn’t certain if petitions would come from other organizations but noted that several other stakeholder groups previously filed protective appeals of the December order that were to be held in abeyance until after FERC’s ruling on rehearing.
State consumer advocates from New Jersey, Maryland, Delaware and D.C. asked the court on Feb. 29 to hold their petition for review in abeyance, acknowledging that it could be dismissed under the court’s “current precedent,” which holds that the commission’s rulings are not “final” orders ripe for judicial review while rehearing is pending. (See Consumer Advocates Appeal MOPR Order to DC Circuit.)
Also filing petitions for review in abeyance with the D.C. Circuit were the Natural Rural Electric Cooperative Association on March 31, Old Dominion Electric Cooperative on April 13 and the East Kentucky Power Cooperative on April 14.
As is customary, though, the petitions for review identify only the orders being challenged. The grounds for the challenges will be spelled out later in briefs. But the rehearing requests that FERC rejected outlined several potential lines of attack. One is whether the commission is intruding on state regulation of generation in violation of the Federal Power Act. The commission also is likely to be challenged on its decision to apply the MOPR to state-subsidized resources but not those benefiting from federal subsidies.
In a strongly worded joint press release, the environmental groups said the commission’s rulings could force 65 million customers in the Mid-Atlantic and Midwest to pay billions of dollars more for electricity while undermining state efforts to promote carbon-free resources.
“FERC has overstepped its jurisdiction with its reckless MOPR decision, which will worsen the dangerous health impacts of fossil fuel combustion in communities from Virginia to Illinois,” said Casey Roberts, senior attorney with the Sierra Club. “We plan to aggressively pursue FERC’s harmful orders through the courts, and to support states in exiting PJM’s capacity market so they can pursue the affordable clean energy policies needed to protect communities.”
Mike Jacobs, senior energy analyst at UCS said, “FERC’s choice to overlook numerous existing energy subsidies and attack states’ explicit efforts to reduce air pollution and carbon emissions is bad policy based on flawed and legally questionable reasoning. Every state in PJM has something to lose, and it’s a shame this must now be resolved in court.”
The court filings come even as PJM plans to implement the December order and reschedule the 2019 capacity auction. Comments on PJM’s compliance filing in response to the December order are due May 15.
In its ruling April 16, FERC agreed with PJM’s interpretation that voluntary renewable energy credits and participation in the Regional Greenhouse Gas Initiative will not subject capacity resources to the expanded MOPR. (See FERC: RGGI, Voluntary RECs Exempt from MOPR.)
ERCOT on Tuesday added two weeks to most of its COVID-19 coronavirus response measures, extending virtual meetings and barring most visitors from its facilities through May 17.
The ISO, which manages almost 90% of the Texas grid, said it is closely monitoring the outbreak and following health agency guidance in extending the measures through “an abundance of caution.”
The ERCOT service region accounts for 90% of the Texas grid. (ERCOT)
ERCOT closed its facilities to most outside visitors on March 3, directed all meetings be held virtually and restricted staff travel. It said it will consult with stakeholder leadership in determining how long meetings are held remotely. (See ERCOT, SPP Adapt to ‘New Normal’ in Pandemic.)
The grid operator required employees who did not need to be on-site to work from home beginning March 18. An employee task force has been charged with developing a strategy for returning to work on-site. The team will present its findings to ERCOT’s Pandemic Planning Team and executive leadership for final approval.
A spokesperson said there is “no guarantee” staff will be able to return to their offices on May 18.
ERCOT announced the extension as Texas joins other states in taking steps to reopen its economy. State parks opened Monday, and retail shops will be allowed to sell items for curbside pickup on Friday.
Texas ranks near the bottom of U.S. states in testing per capita at one test per 1,000 people. The state said Tuesday it has 19,548 confirmed cases and 495 deaths. A University of Texas model says the state will face a peak number for deaths on April 26.
SPP Board of Directors Chair Larry Altenbaumer last week asked the Strategic Planning Committee for an education session on congestion hedging following stakeholder disagreement over the best way to proceed with a recommended white paper.
“The SPC’s role needs to come into sharper focus,” Altenbaumer, who also chairs the committee, said during its conference call Wednesday. “The best way to be successful with these recommendations is if they come up through the stakeholder process.”
The Holistic Integrated Tariff Team (HITT) last year recommended that SPP develop a market mechanism to hedge load against congestion charges. The team suggested modifying the existing market design to use only excess auction revenues to fund counterflow optimization positions.
The HITT directed the Market Working Group (MWG) to develop a white paper documenting a recommended path forward. The group came up with three counterflow optimization options:
Assigning counterflow cost to the market participant after the annual auction revenue rights (ARR) auction’s first round.
Assigning the counterflow cost to ARR surplus after the annual transmission congestion rights (TCR) auction.
Creating a new round in the long-term congestion rights (LTCR) allocation, with the counterflow cost directly assigned to the market participant. If the LTCRs become infeasible, the cost is assigned to the ARR surplus.
The MWG rejected all three options during its February meeting, after having earlier voted to keep the current design for congestion hedging. The group has said the second option satisfies the HITT initiative, but the Markets and Operations Policy Committee rejected the option last week, directing the group to further develop the first option.
“You’re not going to get consensus on this, because a majority of the companies are happy with their hedging portfolios,” warned Bill Grant, with Southwestern Public Service. “When we designed the market, we decided against counterflows. The majority of the group is not recognizing there’s a problem. They’re looking at the monetary value their customers are receiving from current hedging activities.
“The do-nothing option seems to be the one that’s winning the day.”
Keith Collins, executive director of SPP’s Market Monitoring Unit, said his team doesn’t have a preferred proposal but is considering developing its own mechanism “that could address the concerns of HITT and others.”
“Our view, as a neutral entity, is that the options have pros and cons. There are no clear-cut winners,” he said. “These are very complex issues. The TCR process is complex, but some of these solutions have additional layers of complexity. We’re happy to be engaged to find a solution.”
Committee Endorses 2 HITT Recommendations
The SPC endorsed two additional HITT recommendations that passed the MOPC the day before: the establishment of uniform Schedule 9 local planning criteria and the elimination of Z2 revenue crediting.
The committee approved the local planning criteria 9-1, with three abstentions. The elimination of Z2 crediting passed 12-0, with one abstention.
SPC members repeated some of the same concerns they had expressed during the MOPC meeting. The measure cleared the MOPC’s two-thirds approval threshold at 73.44%, evidence of transmission customers’ pushback over their perception that the process lacks transparency and does not treat all loads equally. The revision request relies on a “facilitating transmission owner,” determined yearly by the network customer with the largest load, scheduling an open meeting with other TOs, transmission customers and firm-service customers to establish the zonal planning criteria or any changes to it.
Golden Spread Electric Cooperative’s Mike Wise, SPC vice chair, said he felt the criteria’s language fell short as he shared with the committee the concerns of transmission-dependent utilities.
“The wholesale customers within the zones really wanted a collaborative process to be at the table,” he said. “Secondly, they understood there would be no cram-downs by the TOs. They hate it. They’ve lived with it for 60 years. We have to ensure all loads within a zone are treated equally and affiliates would not be favored through local criteria.”
American Electric Power’s Richard Ross said the idea that all loads will be treated equally would be the easiest “to scratch off the list as being nonexistent.”
“There will be one, singular policy that applies across the zone,” he said. “You’ll have the RTO applying that policy equally. It does require a collaborative process. At the end of day, someone has to make a decision if there’s not 100% agreement. We just need some experience with it. If people are not happy with it, we can revisit it.”
SPP Engineering Vice President Antoine Lucas said staff have been working to determine what “consensus-building” means in the context of local planning criteria.
“We came to the conclusion from staff’s role of facilitating the overall process that, within the zones, it’s probably more appropriate that they work together to define their view of consensus, or what levels of agreement are appropriate for moving forward,” Lucas said. “Does everyone have to agree with it? Maybe some voting structure needs to be put in place.”
SPC Adds New Members, Contracts with Facilitator
Barbara Sugg’s promotion to SPP’s CEO position and director Bruce Scherr’s recent passing has resulted in several changes in the SPC’s membership.
Bruce Rew, SPP senior vice president of operations, has replaced Sugg as the SPC’s staff secretary. Sugg, meanwhile, joins the committee as a member, while Director Susan Certoma replaces Scherr.
The committee has also entered into an agreement with an outside consultant to help facilitate and guide its future discussions. Strategic Offsites Group, a boutique Boston-based firm, was selected last month.
“We’re at a point now, with the way things are changing in the industry; we need to give it a fresh shot of thinking,” Altenbaumer said.
“We do not prescribe answers. I feel you have plenty of expertise in the organization,” Cary Greene, a partner with the firm, told the SPC. “Our job is not to tell you to go left or right, but to have a process in place where you decide what the strategies are.”
Greene said he expects to have a final strategic plan put together for the board in April 2021.
