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November 11, 2018

MISO, SPP to Ease Interregional Project Criteria

By Amanda Durish Cook

MISO and SPP last week agreed to file changes to their joint operating agreement that they say will smooth the approval of interregional projects.

The changes, to be filed at FERC early next year, will eliminate the $5 million cost threshold for the projects, add avoided costs and adjusted production cost benefits to project evaluation, and remove the joint modeling requirement in favor of individual RTO regional analyses. The RTOs will also increase the regularity with which they produce a coordinated system plan (CSP), the joint study used to identify interregional transmission needs. (See MISO, SPP Loosen Interregional Project Requirements.)

The JOA revisions will not lower a 345-kV voltage requirement mandated by MISO, though the RTOs last month said they might create a category of smaller interregional transmission projects without voltage requirements. (See MISO, SPP Mulling Small Interregional Project Type.)

The RTOs earlier this year said the criteria currently spelled out in JOA might be preventing beneficial interregional projects from gaining approval.

“I think SPP and MISO are on the same page on these JOA changes,” SPP Interregional Coordinator Adam Bell said during a Nov. 9 Interregional Stakeholder Planning Advisory Committee conference call.

However, Bell said the revisions won’t be considered final until they’re reviewed by both RTO legal teams. He said the RTOs hope to file the changes in February and will likely hold another conference call with stakeholders before then.

But Entergy’s Jennifer Amerkhail said the JOA revisions lack the FERC Order 1000 safeguards requiring transmission developers to first propose projects to RTOs jointly before they are evaluated in each individual regional process. She said it was important for interested parties to review projects, especially because relaxed cost requirements will result in a higher number of proposed interregional projects. Amerkhail promised to provide SPP and MISO with proposed redlines so that a joint review is clearly stated as a first step before projects are put to regional review.

RTO staff said the regional analysis design will be a more efficient process than building a joint model, and other stakeholders pointed out that MISO and SPP have never approved an interregional transmission project.

“It’s not like the world is running amuck and there’s thousands of interregional projects getting proposed,” LS Power’s Pat Hayes said.

The revisions also prescribe that the CSP will take place annually automatically unless staff from either RTO vote to skip a year. The new rules require the CSP be developed no less than once every three years. The JOA currently stipulates that CSPs are produced only when either MISO or SPP staff raise the issue and then both agree to a plan.

“It moves the default from not doing a study to doing a study,” Bell said.

SPP and MISO still have at least one JOA revision to iron out: whether to include negative adjusted production costs (APC) in the evaluation of reliability interregional projects as well as economic projects.

The JOA currently requires that negative APC not be considered in the cost allocation of interregional reliability projects. Each RTO calculates APC using its own regional models.

MISO Planning Adviser Davey Lopez said MISO believes the most equitable cost allocation would include the impacts of negative APC. SPP, however, only commits to supporting “continued stakeholder discussion on whether or not negative APC values should be considered.” Bell said by including negative APC, the RTOs might find themselves in a situation where the JOA won’t allow them to pursue an otherwise beneficial reliability project for both regions.

Bell asked stakeholders to submit their opinions on negative APC to SPP. Some stakeholders at the meeting said excluding negative APC from an interregional reliability project assessment results in a biased and less transparent project evaluation.

M2M Payments Again in MISO’s Favor

MISO recorded its third straight month of market-to-market (M2M) payments from SPP in September, with the latter sending the former slightly more than $165,000.

The total, less than a quarter of what SPP sent MISO the month before, reduced the amount of M2M payments SPP has accumulated to $51.2 million since the two RTOs began the M2M process in March 2015.

Temporary flowgates were binding for 519 hours in September, resulting in $1.2 million in M2M payments to MISO. That was almost entirely negated by $1.1 million for permanent flowgates binding for 110 hours in SPP’s favor.

Tom Kleckner contributed to this report.

November 11, 2018

PJM Stakeholders Hold Their Lines in Capacity Battle

By Michael Brooks

PJM stakeholders last week dug in further on the RTO’s proposed revamp to its capacity market, reiterating comments made last month in FERC’s paper hearing on the proposal (EL16-49, ER18-1314, EL18-178).

In reply comments Nov. 6, PJM rebutted “anticipated” criticisms of its Extended Resource Carve-out (RCO) proposal, which would allow specific, state-subsidized resources to opt out of the capacity market and the RTO to adjust market clearing prices as if the resources were still in.

State renewable portfolio standards and impact on PJM (2009-2033) | *PJM*

PJM’s proposal is a response to the Fixed Resource Requirement (FRR) Alternative FERC recommended when it found the RTO’s minimum offer price rule (MOPR) unjust in June. PJM’s current FRR only allows utilities to opt out of the market if they can serve all of their load through other means, such as bilateral contracts.

“Despite the hundreds of pages of initial comments, barely a handful provided the commission with detailed proposals supported by pro forma tariff changes,” PJM said. “Of those that did, only PJM’s proposal meets both key objectives, i.e., preserving competitive markets while accommodating state policies.” (See Little Common Ground in PJM Capacity Revamp Filings.)

Critics generally fell into two camps. One argued for a rejection of any carve-out, calling instead for a “clean,” MOPR-only construct that extended to all resources. The other generally supported the concept of the FRR Alternative but argued that because of the repricing mechanism, Extended RCO would lead to inflated capacity prices.

Exelon said the FRR Alternative “strikes a just and reasonable balance among equally important policy goals. It makes room for states to pursue energy policy initiatives favoring particular types of generation resources, by allowing states to provide for the procurement of their capacity outside the PJM auction market — but credits load for that capacity, thus avoiding unnecessary costs for customers.”

Exelon said “the Extended RCO results in … massively inflated customer costs because of a fatal design flaw: PJM proposes to set the stage 2 price — which cleared resources would be paid — by removing RCO resources from the supply curve entirely. In other words, rather than resetting the bids of RCO resources to ‘competitive’ levels at stage 2, as the MOPR purports to do, the Extended RCO simply acts as though the RCO resources do not exist. That makes no sense.”

The Maryland Public Service Commission, which also argued that Extended RCO would lead to inflated clearing prices, proposed a separate auction for state-subsidized resources.

“Resources that do not clear the auction but serve to set a higher clearing price would be paid what PJM terms as ‘infra-marginal rent payments,’” the PSC said. “These potentially perpetual payments, in the form of uplift, are characterized as rents those resources would have ‘earned’ had they cleared the auction at the elevated artificial clearing price.”

FirstEnergy Solutions called Extended RCO “a reasonable means of accomplishing the objectives articulated by the commission.” But it also criticized PJM’s proposal to continue applying the MOPR to previously subsidized resources seeking to re-enter the capacity market. “The commission should consider the reality of this proposal: Most resources that elect the [resource-specific FRR] for some period of time would effectively be precluded from ever re-entering” the capacity market, FES said.

Exelon also joined in a reply brief in support of the FRR Alternative filed by a diverse group of stakeholders: the Nuclear Energy Institute, the Illinois Citizens Utility Board, the Natural Resources Defense Council, Talen Energy, the Sierra Club, PSEG Energy Resources & Trade and the D.C. Office of the People’s Counsel.

Noting that they frequently disagree on other issues, the groups said, “We are unified, however, in our belief that the commission and PJM must reasonably accommodate states taking actions to achieve their clean energy policies. …

“The only parties arguing against the concept of balancing an expanded MOPR with adoption of a resource-specific FRR mechanism are the companies that have brought — and lost — legal challenges to the states’ authority to implement clean energy programs.”

Clean MOPR

The Electric Power Supply Association, the PJM Power Providers Group and NRG Power Marketing continued to insist on a clean MOPR, in which all resources, with limited exceptions, are subject to the rule. They also criticized FERC’s FRR Alternative proposal.

“As acknowledged by PJM and others advocating such an approach, the FRR Alternative will negate the remedial benefits of an expanded MOPR and thus perpetuate the price suppression problem that the commission properly found to be unjust and unreasonable in the June 29 order,” EPSA said. “Adopting such a replacement rate would be irrational and unacceptable as a policy matter and unlawful as a statutory and constitutional matter.”

“Let’s call FRR-A what it is: a proposal to reregulate a substantial portion of the competitive wholesale market,” NRG said. “Adopting FRR-A would signal a retreat from the competitive markets that the commission has espoused since its landmark Order No. 888. Like all massive government interventions in the market, FRR-A would stifle the efficient allocation of private capital, shift costs and risks to consumers, and replace private, at-risk investment with ratepayer-backed investment.”

EPSA criticized Exelon, whose nuclear plants in Illinois are the beneficiaries of zero-emission credits, for calling for a blanket waiver of FERC’s affiliate transaction rules in espousing the right of states to choose how they procure energy. In its initial brief, Exelon had said, “At the very least, the commission should treat state involvement in the procurement of capacity by a load-serving entity from an affiliated generation company as strong evidence pointing against any affiliate abuse.”

“Leaving aside the fact that it is a bit rich for Exelon to imply that the Illinois legislature spontaneously decided to award Exelon billions of dollars in subsidies, there is simply no basis for the contention that the commission’s concerns about rates negotiated between affiliates are a function of the level of ‘state involvement,’” EPSA replied. “The commission has a statutory duty to ensure that rates for wholesale sales are just and reasonable and … that duty may not be delegated to the states.”

‘Moral Obligation’

Calpine, which had led a challenge to PJM’s MOPR in 2016, argued that Extended RCO was FERC’s best option, and that it had a duty to it and other generating companies to implement the proposal.

“The commission cannot turn its back on existing generators,” Calpine said. “Not only does the commission have a statutory obligation to ensure that capacity market prices are just and reasonable, the commission also has a moral obligation to implement rules that allow competitive generators the opportunity to recover their investments in the market. …

“Competitive generators have flocked to the PJM market, investing tens of billions of dollars of private money with the understanding that they will have a fair opportunity to recover their investment. There was no guarantee that their investment would be recovered, but there was a regulatory compact that PJM and the commission would protect and defend competitive markets, so investors have the opportunity to compete on a level playing field. … If the commission fails to take the necessary action in this proceeding to shore up the structure of PJM’s capacity market, then the commission must be prepared to develop mechanisms to provide stranded cost recovery for these investors who were otherwise tricked into investing capital in a market with no meaningful opportunity to recover that capital, and a fair return with it.”

Calpine’s claim was rebutted by the Harvard Electricity Law Initiative in the opening lines of its comments. “As the commission considers how to avoid raising wholesale capacity rates, it should discount generators’ warnings that they may demand ‘stranded cost’ recovery if the commission does not approve their preferred approach to the PJM Tariff,” it said.

“Generators’ actual expectations about market rules and prices are premised on a mistaken view of the commission’s ratemaking authority and have no equitable force,” Harvard said. “Generators assert that the commission must approve a ‘clean’ market, untouched by direct and certain indirect government interventions, to ensure that the PJM capacity auction is ‘competitive.’” The judiciary has held that the “just and reasonable” standard in the Federal Power Act does not necessarily mean “structurally competitive,” Harvard noted.

Ari Peskoe of the Harvard Electricity Law Initiative created this wheel to illustrate the range of opinions on PJM’s capacity market. “How will FERC decide? Lots of options. Here’s a handy tool FERC can use to pick the design of the next PJM capacity auction,” he tweeted.

Consumer Responses

A group of industrial customers said the Extended RCO should be rejected because it is essentially identical to the capacity repricing proposal the commission rejected in June as an unjust cost shift. “In addition to discriminating against customers that are captive to states that are subsidizing resources, the Extended RCO is likely to produce pricing outcomes that cannot be defended as being just and reasonable.”

State consumer advocates for Illinois, West Virginia, Delaware, Maryland and D.C. said there is no evidence that state resources are suppressing capacity prices, noting that “PJM has two-thirds more capacity than necessary to meet its reliability requirement, the largest excess of any RTO in North America.”

They also said PJM’s proposed resource-specific criteria for the carve-out are too restrictive. “States should be allowed to count carved-out resources toward resource adequacy requirements according to actual grid needs, which are portfolio-wide and seasonal,” they said.

PJM’s Independent Market Monitor lobbied for its proposed “Sustainable Market Rule,” which would allow all nonmarket resources to participate in the energy market but use the capacity market as a “balancing mechanism” to provide incentives for entry and exit.

“If resources offer at competitive levels and clear the capacity market, the resources are paid the market clearing price. If resources do not clear the capacity market, the resources are not paid for capacity,” the Monitor said. “Any nonmarket revenues required to meet the public policy goals associated with these resources would be provided outside the market in whatever manner the supporters of those resources choose.”

Rich Heidorn Jr. contributed to this report.

November 11, 2018

OMS Executive Director to Exit

By Amanda Durish Cook

Tanya Paslawski at the OMS Annual Meeting in October | © *RTO Insider*

The Organization of MISO States said Friday that Executive Director Tanya Paslawski will depart the organization at the end of the year.

Paslawski has accepted a position as president of the Michigan Gas and Electric Association starting Jan. 1, 2019, and will resign her OMS post effective Dec. 31.

Paslawski joined OMS in 2014 as the organization’s deputy executive director, becoming executive director in 2015. Prior to OMS, she worked for ITC Holdings and was a staffer at the Michigan Public Service Commission.

OMS leaders said Paslawski navigated the organization through a transitional stage as the electric industry itself experiences change.

“Tanya has brought leadership, knowledge of the industry and an ability to forge consensus among regulators in the MISO footprint. She has served with distinction, and I wish her well in her new position,” OMS President Ted Thomas, chairman of the Arkansas Public Service Commission, said in a statement.

“Tanya did an incredible job as OMS executive director, providing astute legal and policy analysis on complex and critical issues … and her ability to facilitate consensus on those issues will be deeply missed,” OMS Vice President and Missouri Public Service Commissioner Daniel Hall said.

Paslawski had lauded the organization’s perseverance and collaborative nature during the OMS Annual Meeting and 15-year anniversary celebration last month. (See Overheard at OMS 2018 Annual Meeting.)

OMS’ executive committee will open a search to select a new executive director, who will be subject to confirmation by the organization’s board of directors. Staff said the search for a replacement will be opened next week, with any next steps, including the potential need for an interim director, determined thereafter.

November 11, 2018

MISO to Explore Restoration Compensation

By Amanda Durish Cook

MISO’s Market Subcommittee last week agreed to explore the possibility of creating a new market mechanism to compensate resources for delivering system restoration energy when the real-time market has ceased to function.

The committee decided by consent at a Nov. 8 meeting to both discuss the issue at future meetings and allow a five-year-old white paper on the topic to be the starting point of the discussions, although the paper leaves many details open-ended. (See Old Analysis Could Guide MISO Restoration Pricing Effort.)

The white paper proposes a framework to allow MISO to adjust real-time prices for islanded areas to facilitate market settlements while giving generators the ability to make further revenue adjustments to ensure adequate compensation for providing energy.

MISO Director of Market Services John Weissenborn said the plan requires further evaluation and several specifics. He said the RTO’s current settlement rules still need to be researched for their applicability during restoration events.

“We would like to leverage existing settlement rules when appropriate,” Weissenborn said.

He also said MISO would have to consider that its Inter-Control Center Communications Protocol may be unavailable or performing poorly following a blackout, and that market concepts such as following dispatch instructions may not be relevant in such an event.

MISO must also develop a process to verify and review generators’ costs and a timeline for doing so, Weissenborn said. He said stakeholders may have to examine any resulting compensation rules for their compliance with state regulations.

Weissenborn said MISO will begin scheduling working sessions with stakeholders in January to develop a framework for a possible Tariff filing.

Though a restoration pricing structure is currently on “parking lot” — or hold — status in MISO’s Market Roadmap list of potential market improvements, RTO staff said the project could be called up for reconsideration in light of the Steering Committee’s July directive to the MSC to re-examine the issue after five years of inactivity. (See MISO Stakeholders to Reconsider Restoration Pricing.)

MSC Chair Megan Wisersky said the project should not affect MISO’s yearslong, phased replacement of its market platform. The RTO has put multiple market improvements on hold while it dedicates manpower to the goal of having a partially operational modular platform in place by 2021.

November 11, 2018

NERC MRC/Board Briefs: Nov. 6-7, 2018

ATLANTA — NERC’s Board of Trustees and Member Representatives Committee (MRC) held their quarterly meetings last week at the Grand Hyatt Atlanta. Here are some of the highlights. (See related stories, LaFleur, Stakeholders Anxious over NERC Retirement Study and NERC to Try Again on Inverter Rules.)

New ERO Enterprise Dashboard

NERC is proposing a new approach to how it collects and presents metrics, advancing a “dashboard” that separates measures of industry performance from those indicating how well the organization is meeting its goals.

CEO Jim Robb said the dashboard represents a “very different approach to performance management than what we’ve done in the past” and that executives will use it to allocate resources.

The dashboard shows green for risk indicators that are improving, yellow for stable metrics and red for metrics getting worse.

For 2018, the indicators showed improvements in the number of bulk power system events; forced outages because of cold weather or lack of fuel; outages resulting from operator or other human performance issues; and unauthorized physical or electronic access.

Vegetation encroachment metrics were unchanged from 2017, while protection system misoperation rates and failures of substation and circuit equipment got worse.

NERC’s three-year operating plan lists six goals: developing risk-responsive reliability standards; objective, risk-compliance monitoring, mitigation and enforcement; reducing known reliability risks; identifying and assessing emerging risks; reducing cyber and physical security; and improving its efficiency and effectiveness.

FERC Commissioner Cheryl LaFleur, who attended the meetings, said she supports separating the metrics into two categories but questioned the cybersecurity metric. “Losing load from a cyber incident is a pretty gross standard [for measuring cybersecurity]. There must be leading indicators, [numbers of] incursions or whatever. That’s something that [FERC has] been focused on: … trying to get more data.”

Robb acknowledged that the metric was “anemic” and said NERC is seeking ways to capture other indicative data.

In written comments, the ISO/RTO Council (IRC) supported the bifurcation of the metrics but said tools other than standards and enforcement “needs to be a higher priority” for NERC.

“With steady state standards, efficiency reviews and compliance program enhancements to reduce the compliance burden, NERC must develop alternative methods to effectively address new and evolving reliability concerns without having to undo or jeopardize these past improvements and effective compliance behaviors,” the IRC said, adding that some existing metrics “do not have a direct correlation with NERC programs.”

The IRC also expressed concern over the proposed color choices, saying yellow should be replaced with a “neutral” color to illustrate metrics that are unchanged and satisfactory. “A yellow color is associated with caution or imminent threat and can be misinterpreted,” it said.

The North American Generator Forum, the Northeast Power Coordinating Council, the Cooperative Utility sector, the Canadian Electricity Association (CEA) and the Edison Electric Institute all generally supported the revised metrics.

The CEA called for additional metrics to define an “adequate level of reliability.”

EEI questioned a goal focused on enhancing or proposing new standards. “NERC should consider the use of other tools (e.g., Reliability Guidelines, lessons learned, best practices), in addition to reliability standards, similar to the [electric reliability organization’s] compliance and enforcement philosophy, to efficiently and effectively address reliability and security risk,” EEI said.

Robb said the feedback will be incorporated in the final dashboard model.

Addressing Overlap of CIP, Planning and Operating Committees

Mark Lauby, NERC senior vice president and chief reliability officer, briefed the MRC on a proposal to rethink its committee structure to respond to what he called the “increasing convergence” of subjects overseen by the Critical Infrastructure Protection, Planning and Operating committees.

Lauby said the MRC should consider eliminating those committees and using “mission-driven” task forces that would study an issue, make recommendations and disband when its mission is complete.

Lauby said the current committee structure, in place for more than a decade, is “expensive and time consuming” for NERC members and that the committee “silos” are blurring in part because of new technologies and changing industry models.

Task forces, he said, could ensure the stakeholders have the right subject matter expertise.

Consultant Herb Schrayshuen, representing the Small End‐Use Electricity Customer sector, and Oncor Vice President of Regulatory Affairs Liz Jones, representing the Regional Entity sector, said the committees are necessary for some recurring tasks such as annual reliability assessments. Jones said the PC and OC don’t need to meet quarterly or separately, but “there is value in retaining” them.

NERC said that in addition to Midwest Reliability Organization, the Florida Reliability Coordinating Council, SERC Reliability and Western Electricity Coordinating Council also have reorganized their committee structures.

The Western Area Power Administration’s Lloyd Linke, a member of the MRO board, said he generally supported the change, calling it “somewhat similar to the process that the MRO” has adopted. “When the MRO did this, they did keep some committees … to provide some of that continuity on some of the yearlong type things,” he said.

Carol Chinn, representing the State/Municipal Utilities sector, said the proposal was a good start but “there needs to be much more dialogue” with MRC members before changes are made.

MRC Vice Chair Greg Ford agreed “it is time to look at our committee structure.”

“The right answer may be: Keep the three committees but streamline them,” he said.

NERC plans to create a staff/stakeholder working group reporting to the board to explore the issue further and develop a restructuring proposal.

“Let’s set some sort of a time frame,” NERC Trustee Dave Goulding said, “because this is a project that could go on and on and on and you’ll never get everybody on board.”

Long-Term Reliability Assessment Sees Shortfalls in CAISO, MISO, Ontario

John Moura, NERC’s director of reliability assessments and technical committees, gave a presentation on the draft 2018 Long-Term Reliability Assessment through 2028, noting it is the first such report to include metrics on “essential reliability services” such as frequency response and ramping capability.

Moura said the projected 10-year compound annual growth rate for North America of 0.57% (summer) and 0.59% (winter) is the lowest on record. None of the regions projects annual load growth of more than 2%.

“For the first time, we’ve seen five areas — New York, New England, Maritimes, Manitoba Hydro and the WECC California-Mexico area — actually reducing [their] peak demand over the 10-year period,” he said. “That’s kind of unheard of.”

The report projects MISO and Ontario will see planning reserve margin shortfalls beginning in 2023. In addition, probabilistic evaluations indicate resource adequacy risks in the California and Mexico region of WECC in off-peak hours after the sun sets and during spring and fall maintenance outages. The loss-of-load expectation for the WECC-CAMX region — most of California and a small northern portion of Baja California — is projected to rise from nine hours in 2020 to 95 in 2022.

Although the grid is losing inertia as renewables replace synchronous generation, all interconnections should have adequate frequency response through 2022, the report says.

The report projects the addition of more than 30 GW of distributed solar PV by the end of 2023, when it said California will have 18 GW and Massachusetts and New Jersey will have 4 GW each.

But Moura said the report should be viewed with humility, saying stakeholders should remember that the only certainty about its projections is that they will be wrong. In 2008, he noted, NERC projected a 30 GW increase in coal generation by 2018. Instead, coal capacity dropped by 50 GW. “That was an 80-GW miss,” he said.

It also vastly underestimated the 200-GW increase in natural gas generation, having predicted an increase of only 50 GW.

Update on Western Reliability Coordinators

WECC CEO Melanie Frye provided the board with an update on efforts by CAISO and SPP to replace Peak Reliability as the reliability coordinators (RCs) in the Western Interconnection. (See Western RC Transition 'Hot Topic' at WECC Meeting.)

She said officials have identified tie lines that begin in one RC footprint and end in another, including 114 such lines between CAISO and SPP. “So we’re doing some additional technical analysis to try to understand what could be the change in flows in the system if there were to be elements out of service,” she said. “What that’s really highlighted is the need for both RCs in that example to model the broader footprint.”

Robb said he was “very pleased” with NERC’s collaboration with WECC, CAISO, SPP and others to address the transition, but he acknowledged concerns over seams in the desert Southwest.

“There’s the potential for a couple seams to be developed between Phoenix and San Diego. That’s a very important path and has been a very vulnerable path in the West. So, there’s a lot going on to understand issues that that topology creates and how to manage through it,” Robb said.

NERC Chair Roy Thilly said “it appears that everything is being looked at very, very thoroughly.”

FERC-NERC Study on Southern Cold Weather Event

NERC officials did not offer any new details on their collaboration with FERC on a report on the Southern cold weather event in January. (See FERC, NERC to Probe January Outages in MISO South.)

But Robb acknowledged concerns heading into winter 2018/19. “We haven’t completed the inquiry … but there was an awful lot of generation offline during that event, which at least raises the question about whether or not cold-weather preparation is adequate for the circumstances.

“This is the third [winter] in a row that we’ve had some large amounts of generation offline.”

Trustee Approvals

The Trustees unanimously approved:

TPL-001-5, a response to FERC’s 2013 O rder 786, which will require assessments of single points of failure and inclusion of them in future transmission studies. Based on a cost-benefit analysis and industry feedback, NERC decided not to require eliminating single points of failure, said Howard Gugel, senior director of engineering and standards. “The response that most of industry and NERC staff [agreed on] is no … there is some risk that — as long as you know what that risk is — it’s a risk that’s acceptable to have and at least know how that risk can be mitigated.” Gugel said that out of 12,000 misoperation events in NERC’s database since 2011, less than 30 involved three-phase faults, and “we only had 10 instances where a three-phase fault was also associated with a relay failure. We also [asked], of all the events that we’ve seen on the system, do any of those correlate with any of those 10? … We cannot find an instance in the data we have.”

The retirement of IRO-006-TRE, which is redundant to other reliability standards. The Texas Reliability Entity board approved its retirement in September.

The Reliability Standards Development Plan for 2019-2021, which focuses on periodic reviews, FERC directives, the Standards Efficiency Review and the standards grading initiative.

Revisions to sections 600 (Personnel Certification) and 900 (Training and Education) of NERC’s Rules of Procedure. The revisions are in response to a July 19 FERC order (RR17-6) that changes regarding NERC’s training and continuing education programs but rejected deletion of its personnel certification rules. (See “Split Ruling on NERC Rules of Procedure,” FERC Orders Expanded Cybersecurity Reporting.)

The execution of a memorandum of understanding outlining MRO’s compliance monitoring of Manitoba Hydro.

New MRC Officers, Seeking Canadian Trustee

Trustee Fred Gorbet, head of the board’s Nominating Committee, said a five-person interview team has met with candidates to replace him as the Canadian representative on the board. The team will share its recommendation with the committee Dec. 10 with hopes to install the winner in February 2019, said Gorbet, who is leaving because of NERC’s term limits.

The MRC elected Greg Ford as chair and Jennifer Sterling vice chair for 2019. Ford is CEO of Georgia System Operations Corp., which manages 38 distribution cooperatives and Oglethorpe Power. Sterling is vice president of NERC compliance and security for Exelon.

Retirements for ELCON’s Hughes, NERC’s Roxey

The quarterly Trustee meeting was the last for retiring John P. Hughes, president of the Electricity Consumers Resource Council (ELCON) and NERC’s Tim Roxey, chief operations officer for the Electricity Information Sharing and Analysis Center (E-ISAC).

“I will miss [Hughes’] voice,” LaFleur said. ELCON, which represents industrial customers, has tapped Devin Hartman, formerly of the free-market think tank R Street Institute, as its new chief executive effective Jan. 1. Hughes, who has degrees in engineering and economics, joined ELCON in 1987 and became its CEO in 2015.

Roxey, a former nuclear engineer who began working at the E-ISAC in 2009, received a commemorative resolution and a standing ovation from the approximately 200 stakeholders.

“It has indeed been a long strange trip,” Roxey said. “You cannot have a bulk power system or a distribution system [be] reliable without the support and functioning of all of this,” he said, looking at the dozens of stakeholders in the large hotel ballroom. “I’ve come to understand and appreciate [reliability] standards and compliance — which I used to object to, but I now embrace as a necessary part of the [Compliance Monitoring Enforcement Program]. It is critical … that we be proactive in creating standards because that’s what we do. We don’t have to be told.”

— Rich Heidorn Jr.

November 10, 2018

LaFleur, Stakeholders Anxious over NERC Retirement Study

By Rich Heidorn Jr.

ATLANTA — FERC Commissioner Cheryl LaFleur and several stakeholders expressed concern Tuesday that “fuel war” partisans could weaponize NERC’s coming analysis on the impact of a dramatic increase in coal and nuclear plant retirements.

The comments came at the quarterly meeting of NERC’s Member Representatives Committee (MRC), which received a briefing on the draft report from John Moura, NERC’s director of reliability assessment and system analysis. Moura said NERC plans to circulate embargoed copies of the report to the MRC shortly, with the final report submitted to the MRC and NERC Board of Trustees Nov. 27 and a public release in mid-December.

But based on the comments at Tuesday’s meeting, the analysis’ release may be delayed as stakeholders debate ways to prevent its findings from being taken out of context.

NERC Board Chair Roy Thilly | © *RTO Insider*

NERC Board Chair Roy Thilly said the assessment is “the most sensitive” NERC has performed in his seven-plus years on the board and promised the board won’t release it “until we’re comfortable” with it. We have to be “very, very careful about enabling quotes out of context,” he said.

Moura emphasized the analysis was a “stress test” intended to push the system to its breaking point, not a projection of what is likely to happen. It found that retiring 30% of coal generation remaining after the 46 GW of announced retirements and 45% of nuclear after the shutdown of the 10 GW announced would result in seven of 10 regions falling below their reserve margins, including PJM, MISO and SPP.

Seven of 10 regions in the analysis, including PJM, MISO and SPP could fall below target reserve margins under the “worst-case” retirement scenarios, NERC said. | *NERC*

‘Scare Tactic-ish’

FERC Commissioner Cheryl LaFleur | © *RTO Insider*

But LaFleur said the scenarios — based on an Energy Information Administration identification of units facing financial stress — were “scare tactic-ish.”

“The primary thing that makes generation retire is new generation … that’s what’s pushing this to happen,” she said.

“If there’s a specific issue, like frequency response or inverter issues or lack of black start or something else, let’s jump right on it, but I want to be sure that we don’t make an issue by the way we model it.”

The study is “so macro and worst-case it almost overwhelms the specific solutions.”

John Hughes, CEO of the Electric Consumers Resource Council (ELCON), which represents industrial customers, was even more blunt, calling the scenarios “fiction.”

John Hughes, Electric Consumers Resource Council | © *RTO Insider*

“Should NERC be issuing fiction, especially at this time, with the conspiracy within the industry to try to do a second round of stranded-costs recovery of generation that should have been retired years ago?” he asked. “So, this is the battle that NERC is falling into. Any caveat or nuance it puts in the study will be missed by politicians and newspapers. They will take this study and run with it and make a fool out of this organization.”

Thilly lamented that S&P Global Market Intelligence published a story Oct. 31 based on a leaked “very early” draft of the analysis, dated Sept. 5, saying the disclosure “really undercuts our process.”

The story was headlined “Draft NERC report: Power outages possible if coal, nuclear plants close rapidly.”

NERC officials said the draft included even more extreme scenarios — increasing coal retirements to 60% and nuclear to 75% — that have since been eliminated because they did not materially impact the results.

Two Challenges

Moura agreed the results should not be sensationalized.

“I can certainly … understand the difficulties of telling this stress test scenario story without getting the general public and industry and policymakers thinking that the sky is falling. It’s certainly not. There’s a lot of processes and backstops available both at the state level, at the market level and even at the federal level to ensure reliability.”

He said the analysis identified two challenges, including ensuring new transmission where needed to address voltage stability and thermal violations resulting from shifts in generation locations.

The second challenge is managing the “end state” after the transition — the ability to respond to extreme conditions such as the polar vortex and fuel disruptions. The latter could mandate new gas pipelines, he said.

He noted Texas got through last summer without reliability problems despite losing 4,000 MW of coal-fired generation in spring with only a few months’ notice.

Moura defended the use of the EIA expanded retirement scenarios, saying such rapid shutdowns could result from new federal environmental policies or plant owner bankruptcies. “It helps us understand the worst-case scenario,” he said.

“We certainly don’t see this as the future,” Moura added. “It’s an engineering study to understand … what the bookends are.”

Steve Naumann, vice president of transmission and NERC policy for Exelon, the nation’s largest nuclear generator, said NERC should not take any action to block dissemination of the analysis. “Why wouldn’t you want that information?” he asked.

Oncor Vice President of Regulatory Affairs Liz Jones, representing the Texas Reliability Entity, said the report should stick to “independently observable fact” and avoid opinions and projections, which she said “have the potential to be much more problematic.”

“The core recommendation here is ‘manage it,’” said NERC CEO Jim Robb, adding the industry needs to ensure capacity markets and reliability-must-run generators are performing as intended to ensure reliability. NERC’s role should be the “conscience of the industry” and avoid the politics, he added at Wednesday’s quarterly Board of Trustees meeting.

“While it is possible for coal and nuclear retirements to exceed the current announcements and long-term industry outlooks, any such acceleration would also have feedback effects on power and natural gas prices that would tend to slow down any further retirements,” Brattle Group analyst Metin Celebi said in an email Wednesday. “With additional retirements, wholesale energy prices would increase due to lower expected reserve margins and more expensive resources setting the power prices, and natural gas prices would also increase due to an increase in the dispatch of natural gas plants. … The increase in power and gas prices would improve the economic viability of the remaining coal and nuclear plants at risk for retirement, hence acting as a brake on further retirements.”

‘Resilience’ is Part of the Job

In a related matter, the board accepted a Perry Grid Study Seeks to Aid Coal, Nuclear Generation.)

The committee’s conclusion: “Resilience has consistently been, and should continue to be, a central component of NERC’s mission,” the report said.

The committee said the National Infrastructure Advisory Council’s guide for establishing critical infrastructure goals is “an appropriate framework for resilience as refined by the RISC and further informed by NERC’s FERC-filed definition of what constitutes the [adequate level of resilience].”

The report mapped how NERC’s current activities and standards support resilience and said no major changes were required. It did recommend that the organization expand reliability assessments to develop a model or metrics to measure resilience and energy security.

Groups that responded to NERC’s request for comment on the report generally agreed that resilience has been central to the organization’s work.

“There is ample evidence that the concern regarding ‘resilience’ is politically motivated, and we urge NERC to be sensible and stay the course,” ELCON said. “There is no compelling need for NERC to take any further action related to the bulk electric system. NERC should consider helping to elevate the discussion related to distribution system resilience.”

Editor’s Note: A previous version of this story incorrectly reported that S&P Global’s story was published Sept. 5. S&P had obtained a draft of NERC’s report that was dated Sept. 5. S&P’s story was published Oct. 31.

November 9, 2018

NorthWestern Energy to Join Western EIM

By Robert Mullin

NorthWestern Energy said Thursday that it will join the Western Energy Imbalance Market in spring 2021, making it the 14th utility to announce plans to sign on.

Northwestern Energy generating facilities | *Northwestern Energy*

The Butte, Mont.-based company said joining CAISO’s real-time balancing market will result in more efficient use of renewables, increased grid reliability and lower costs to customers.

“The EIM will allow NorthWestern to make better use of our transmission and electric generation resources,” CEO Bob Rowe said in a statement. “Expanding our use of the regional electric grid through the EIM will help integrate variable renewable energy. We have seen significant growth in wind generation in Montana, which highlights the need to have access to other generation resources that are available on demand, 24/7.”

NorthWestern serves about 718,000 electric and gas customers in Montana, Nebraska and South Dakota. But only its facilities in Montana — and Yellowstone National Park in Wyoming, where it has transmission — would participate in the EIM. The company’s Nebraska and South Dakota operations already trade in organized markets in the Eastern Interconnection.

NorthWestern’s Montana service territory covers about 73% of the state’s land area. It will bring an additional 6,700 miles of transmission into the EIM and increase the market’s access to a potentially wind-rich region that could serve West Coast load centers subject to increasingly ambitious renewable energy standards and tightened carbon-emission rules.

The utility owns about 442 MW of hydroelectric generation, nearly 50 MW of wind, a 222-MW share of the coal-fired Colstrip plant and 150 MW from the gas-fired Dave Gates Generating Station. It has power purchase agreements for an additional 135 MW of wind and will next year integrate another 80 MW of wind capacity from a Public Utility Regulatory Policies Act qualifying facility in south-central Montana.

“Participating in the EIM will help ensure that NorthWestern’s electric generating resources are used in the most economic manner possible,” said John Hines, the company’s vice president of supply.

“We welcome NorthWestern participating in our market and hope they will see the same benefits as the other participants,” CAISO CEO Steve Berberich said. “NorthWestern’s participation will only add to the market’s efficiency and resource diversity.”

CAISO said last month the EIM has produced more than $500 million in benefits for participants since its founding five years ago, including more than $100 million in the third quarter of 2018. (See Western EIM Reports Record Benefits.)

The EIM is steadily filling out the map of the Western Interconnection, with current participants APS, Idaho Power, NV Energy, PacifiCorp, Portland General Electric, Puget Sound Energy and Powerex. The Balancing Authority of Northern California and the Sacramento Municipal Utility District plan to begin participating in April 2019, while the Los Angeles Department of Water and Power, Arizona’s Salt River Project and Seattle City Light are scheduled to begin participating in April 2020.

Public Service Company of New Mexico is seeking permission from its regulators to join the EIM by 2021, officials announced in August. (See PNM Seeks to Join Energy Imbalance Market.)

November 9, 2018

Wind Groups Challenge SPP Exit Fee

By Tom Kleckner

The American Wind Energy Association and The Wind Coalition have asked FERC to eliminate SPP’s “exorbitant” exit fee, saying it is a barrier to membership for independent power producers and others that do not own transmission or serve load (EL19-11).

The two wind energy advocacy groups filed a Section 206 complaint on Nov. 2 asking FERC to find the “Financial Obligations of Withdrawing Members” section of SPP’s bylaws and membership agreement unjust and unreasonable.

The Wind Coalition’s Steve Gaw shares his opinion at an SPP stakeholder meeting, as SPP’s David Kelley listens. | © *RTO Insider*

AWEA and The Wind Coalition said that, based on conversations with SPP staff, the exit fee charged to any non-TO or non-load-serving entity seeking to terminate its membership “could range from $700,000 to $1 million.” They noted that the exact amount is not known prior to termination, making it impossible for potential members to gauge their exit fee when considering membership in the RTO.

SPP said it is reviewing the complaint and will file a response at FERC, but it also told RTO Insider that the exit fee’s calculation is based on factors that include debt and financial obligations at the time of exit. A spokesman said the obligations “trend downward over time” and that the RTO frequently provides withdrawal estimates “to the dollar” for members.

The wind groups said the exit fee is “almost entirely intended to cover SPP’s existing and future obligations, which are unrelated to the exiting member.” They alleged exiting members are subsidizing future members’ business in the RTO, paying for costs for which they will receive no further benefit once they withdraw and for those they did not cause.

The groups also said SPP’s exit fee is unique among all other RTOs and ISOs, saying “no other organized market imposes general RTO/ISO costs on non-TO/non-LSE members through membership fees.” They said other grid operators only consider the withdrawing member’s open positions in the markets.

Wind farms and other independent power producers oppose SPP’s hefty exit fee.

“Other markets merely charge exiting members a nominal amount related to their obligations,” AWEA spokesman Evan Vaughan said. By discouraging participation from non-TOs and non-LSEs, Vaughan said, “consumer advocates, independent power producers, power marketers, energy storage, demand response and environmental groups are all, in effect, excluded from the decision-making process in SPP.”

“Membership in SPP is a meaningful designation,” the wind groups said in their complaint, referring to membership votes for SPP’s Board of Directors and initiatives, serving on stakeholder groups, and filing revision requests to change the Tariff.

“Simply put, without the ability to vote on SPP or provide leadership on SPP committees, non-members typically are unable to influence policy in a direction that considers or reflects their interests,” they argued. Noting SPP’s frequent claims to being a member-driven organization, they said “membership and the rights that it entails are critical.”

“We recognize the value of the diverse perspectives of our members and non-members, which is why we welcome them into our transparent stakeholder process,” SPP General Counsel Paul Suskie said in a statement.

Suskie noted SPP’s governance structure and the exit fee provision have been approved by FERC.

The Wind Coalition’s Steve Gaw speaks up. | © *RTO Insider*

The wind groups agreed that SPP allows non-members to comment on initiatives and participate in the stakeholder processes, but they said, “Such participation is not the same as having membership rights.”

The Wind Coalition’s Steve Gaw, a founding member of SPP’s Regional State Committee as a Missouri regulator, is a regular attendee and frequent contributor to the discussion at stakeholder meetings. Gaw has long been open about his dissatisfaction with the exit fee, which has earned him playful ribbing from some members.

“We have been asking for changes to the exit fee in the SPP stakeholder process for several years, however, no changes have moved forward,” Gaw told RTO Insider via email.

November 9, 2018

Texas PUC’s Botkin Applies Life Lessons to Work

By Tom Kleckner

AUSTIN, Texas — Shelly Botkin, the Texas Public Utility Commission’s newest member, has hardly followed a conventional path to becoming a utility regulator.

An avid reader, the Lubbock native chose comparative literature as her college major before finding her way into cultural anthropology. That led to several years as an English teacher in Mexico City, where Botkin honed her Spanish and toured the country. Eventually, she returned to the U.S. and enrolled in The University of Texas’ Institute of Latin American Studies, where she wound up bogged down in academic jargon.

“I found it difficult to communicate with ordinary people,” Botkin said. “It wasn’t for me.”

Shelly Botkin — Botkin visits with a market participant representative following a recent GCPA luncheon. | © *RTO Insider*

So what does one do with an anthropology degree? In 2000, Botkin’s only career choices were an entry-level job at the Texas State Capitol or a position with the advertising company behind the Southwest Airlines and “Don’t Mess With Texas” campaigns.

Botkin chose wisely and found herself answering phones and processing data in then-state Sen. David Sibley’s office. Sibley was one of the key architects behind Senate Bill 7, which had just deregulated the electric utility business in Texas.

After her first day on the job, she said, “I had to ask, ‘Somebody please tell me what Senate Bill 7 is about.’”

Sibley retired soon afterward, and Botkin spent the rest of the 2000s bouncing from one state political office to another. She worked for the lieutenant governor and in both the House of Representatives and the Senate, tackling air quality and electric utility issues, water policies and environmental regulations. Botkin was present for both the Competitive Renewable Energy Zone debates and the private-equity leveraged buyout of TXU, Texas’ largest utility.

She found the work fascinating, though it involved 750 bills in the House and 350 in the Senate each five-month session, depending on where she was.

“I spent 10 years learning how to pass or kill a bill. … I learned some important lessons,” Botkin said. “Do your homework and read the documents in front of you. Listen to people; talk to people; look for options. If you don’t know something, say you don’t know, then educate yourself. If you want people to understand your issues, you have to talk to them in a way that they understand you.”

Hitting Refresh

Botkin’s work attracted the attention of Theresa Gage, then ERCOT’s corporate communications director. Gage called Botkin in 2010 and asked if she would join the grid operator to run its governmental relations group.

“It was one of the best phone calls I’ve ever made,” said Gage, now ERCOT’s vice president of external affairs and corporate communications. “We promptly paid her back by putting her through one of the most incredibly stressful years known to the ERCOT market.”

At the time, the grid operator was focused on meeting a December deadline to go live with its delayed nodal market. ERCOT and the PUC were both facing sunset reviews to decide the agencies’ continued life, while the state was in the midst of a severe drought that would only be exacerbated in 2011 by a late-summer heat wave that pushed the Texas grid to the limit.

Botkin calls it a “meaningful exercise in crisis communications.”

“That was punishing,” she said. “I learned to hit refresh on the computer and [monitor] the prices and reserve levels.”

Although out of her comfort zone, Botkin said she gained a much better understanding of corporate governance and a business enterprise’s inner workings.

“She was a huge asset and helped us in immeasurable ways every single day,” Gage said.

When the Texas governor’s office reached out to Botkin earlier this year regarding a vacancy on the PUC, she hesitated. Noting the term is “a yearish” — it expires in September 2019 — and reflecting on her own job security at ERCOT, Botkin said her first reaction was, “I don’t know.” (See ERCOT’s Botkin Named to Texas PUC.)

But then she recalled her days at Girls State, a program designed to educate high school children on the duties, privileges and responsibilities of U.S. citizenship. As a teenager in the flat lands of West Texas, where, she said, “You feel like you’re in the middle of nowhere, but you feel like you’re the center of the universe.” Girls State helped Botkin escape the long shadow of her older brother and carve out her own place in the world.

“It gives you a sense of, ‘Why not you?’” she explained. “It’s not just ‘girl power.’ It gives you the impression that it’s going to be your turn to serve someday, so get in there and help the state move forward.

“The Girls State words started working on me. ‘I do know something about this. I can help.’ So far, it’s been great.”

‘A Spacious Place’

Botkin is a woman of few words on the bench, yielding to the more vocal DeAnn Walker and Arthur D’Andrea during the commission’s open sessions. Just don’t mistake that for a fear of public speaking.

“I’m not averse to speaking, but there’s so much talking behind the scenes that by the time we come out, there’s really not much to say,” Botkin said during a recent Gulf Coast Power Association luncheon address.

She may not be a lawyer like the other two commissioners, but “because of my legislative experience, I’m very aware words have meaning, and I understand why they do,” she told RTO Insider.

Botkin has quickly adapted to the pace of the regulatory world, where much of her time is spent reading legal filings and documents. She said she enjoys the certainty of making a dental appointment and keeping it. It’s a luxury she didn’t have at ERCOT.

“All the truisms about it are, in fact, true. ‘You’ll be spending a lot of time reading’; that’s 100% true,” Botkin said. “My role at ERCOT was up-to-the-minute, responding to things, getting back to people as soon as possible. In this role, there’s a lot more room to reach out into the future.”

And it’s a busy future for the PUC. Texas’ next legislative session begins in January, which means budgets and reports will be coming due. Commission staff have spent time at the Capitol reviewing the recent federal tax cut legislation and its effects on utilities. The PUC’s dockets include investor-owned utility rate proceedings, recovery of Hurricane Harvey’s costs, ERCOT market changes and the use of non-traditional technologies, such as battery storage, in electric delivery service.

Comments on the last issue are due Nov. 16, and Botkin is looking forward to reviewing them.

“It’s kind of hard to get their arms around it,” she said. “It’s like trying to pick up an octopus.”

Asked about the concept of wires companies owning storage assets, a concept opposed by many generators, Botkin said she has “no grand prognostication.”

“One of the reasons I find this industry so interesting is that things change. That’s interesting to me,” she said. “Given the schedule we have in the fall, I don’t think I’ll develop any Commissioner Botkin initiatives, because there’s plenty of work to do.”

Country crooner Mac Davis writes in his song, “Texas in My Rear View Mirror,” that he once thought “happiness was Lubbock, Texas, in my rear-view mirror.” It’s a common joke in Texas, one Botkin alludes to when she refers to the Lubbock area as “a spacious place.”

Botkin once felt the same way, but that was before she left Lubbock for Washington University in St. Louis and her anthropology degree.

“It’s the study of why people do what they do, why they think what they think and the institutions they create to organize their world,” she said.

And so, having studied the people and the institutions around her, Botkin has found her place in the world. For the time being.

November 8, 2018

High Failure Rate for Western Ballot Measures

By Hudson Sangree and Robert Mullin

Backers of energy-related ballot measures faced defeat on nearly every front in the West on Tuesday as voters in Arizona, Nevada and Washington rejected a series of proposals that became the subject of costly campaigns.

The lone exception: Nevadans overwhelmingly approved an ambitious clean energy standard that still faces a second hurdle two years from now.

Arizona

In Arizona, voters overwhelmingly rejected Proposition 127, a measure that would have required the state’s power providers to generate at least half their annual sales of electricity from renewable resources by 2030.

The measure was defeated roughly 70% to 30%, according to results posted on the Arizona Secretary of State’s website.

APS contended that passage of Arizona’s failed Proposition 127 would have threatened the economic viability of its massive Palo Verde nuclear generating station west of Phoenix. | *Arizona Public Service*

The race became a high-priced battle between competing interests. California billionaire Tom Steyer, whose environmental advocacy group NextGen America backed the proposal, and Arizona utilities, including Arizona Public Service (APS), spent more than $50 million in the fight.

Proponents argued Arizona should rely more on solar. “Arizona is America’s sunniest state, but only 6% of our energy comes from solar power. Prop. 127 takes advantage of our state’s unique potential to generate nearly unlimited, cheap, clean energy,” Alejandra Gomez, co-chair of Clean Energy for Healthy Arizona wrote in support of the measure.

The measure’s supporters said Arizona Public Service, the state’s largest utility, had wielded money and political influence for too long to maintain the status quo. In response to the measure’s failure, Prop. 127 campaign chairman Eric Hyers said that “the biggest thing we wanted in the cycle we already got, which is doing significant damage to APS’ stranglehold on our politics,” The Arizona Republic reported.

Opponents said Steyer was trying to impose California’s energy standards on Arizonans, with the potential to greatly increase their utility bills. California recently adopted legislation, SB 100, that requires the state to get 60 percent of its energy from renewables by 2030 and to use 100% zero-carbon electricity by 2045.

APS’ parent company Pinnacle West Capital fought Prop. 127, saying it could lead to the shutdown of the nation’s largest nuclear power plant, the Palo Verde Nuclear Generating Station, which sits in the desert about 45 miles west of downtown Phoenix.

“Nuclear power plants are designed to run at 100% every day of the year,” Donald Brandt, Pinnacle’s CEO, wrote in an open letter to Arizonans in September. “Maintaining the nation’s largest nuclear plant to the highest standards of safety and reliability while running only part-time makes for extreme operational and economic challenges.”

“Lest anyone think I exaggerate, a similar situation in California energy markets contributed to the recently announced closing of California’s Diablo Canyon nuclear plant,” the state’s last nuclear generating facility, Brandt wrote.

Southern California draws a significant portion of its energy from the Palo Verde plant in Arizona.

In a statement after Prop. 127’s defeat, Brandt said: “We’ve said throughout this campaign there is a better way to create a clean-energy future for Arizona that is also affordable and reliable. The campaign is over, but we want to continue the conversation with Arizonans about clean energy and identify specific opportunities for APS to build energy infrastructure that will position Arizona for the future.”

“As the nation’s largest producer of reliable emission-free energy, Palo Verde is the anchor of Arizona’s clean-energy future,” said Brandt. “Any serious plan to reduce carbon emissions has to include nuclear energy and Palo Verde.”

Nevada

Nevada voters went the opposite direction from their Arizona neighbors by approving new renewable energy mandates in the form of Question 6 by a vote of about 59% to 41%, the Nevada Secretary of State’s office reported.

The measure, also backed by Steyer and NextGen, would amend the state constitution to require utilities that sell electricity to retail customers in Nevada to source at least 50% of their energy from renewables by 2030.

Opponents insisted it would raise rates.

Constitutional amendments in Nevada must be voted on in two consecutive elections, so the ballot measure will be taken up again in 2020.

With regard to another ballot measure, Question 3, the state’s voters allowed NV Energy to keep its electricity monopoly in the state by 67% to 33% of votes counted.

The measure would have required the state legislature to provide for the “establishment of an open, competitive retail electric energy market that prohibits the granting of monopolies and exclusive franchises for the generation of electricity.” It would have allowed customers to exit NV Energy and obtain electricity from others without paying an exit fee.

Las Vegas casinos, which have had to pay hefty exit fees, helped finance the measure.

Question 3 was approved by 72% of voters in 2016, when NV Energy didn’t contribute. But this time around the utility, owned by billionaire Warren Buffett, reportedly spent $63 million to defeat the measure, while supporters doled out $21 million. That made it the most expensive ballot measure in state history with a combined $100 million in contributions over two election cycles.

Question 3 supporters vowed to continue their efforts to let Nevadans choose their energy provider.

Washington

Washington voters solidly defeated a ballot initiative that would have placed a fee on the state’s carbon emissions, with collected revenues used to fund environmental programs. I-1631 went down with 56% voting “no,” despite polls leading up to the election showing about 50% of potential voters favoring the measure and about 36% opposed.

Unlike a proposed “revenue-neutral” carbon tax (I-732) that failed to win passage in 2016, I-1631 was not designed to return its revenues back to residents. Instead, the monies raised by the fee would’ve been allocated to state-directed investments in “clean air and clean energy” (70%), “clean water and healthy forests” (25%) and rural communities heavily affected by climate change (5%).

The measure sought to charge energy producers and suppliers a $15/ton fee on CO₂ emissions starting in 2020, rising $2/ton each year (plus inflation) until 2035, when the price would have hit an estimated $55/ton. While manufacturers were not to be directly subject to the fee, they would have paid indirectly through higher fuel costs.

The bill was broadly supported by groups and companies as diverse as the Sierra Club, Microsoft, Union of Concerned Scientists, the American Federation of State, County and Municipal Employees, the Service Employees International Union and several tribes in the state. Gov. Jay Inslee also backed the bill.

But opponents spent a state record $31 million to defeat the measure. The “NO on 1631” campaign was spearheaded by the Western States Petroleum Association and its top five contributors, including BP America, Phillips 66, Marathon Oil, American Fuel and Petrochemical Manufacturers, and Valero Energy. The editorial boards of most of the state’s newspapers also urged readers to vote against the measure. Investor-owned utilities in Washington largely stayed on the sidelines, only expressing opposition on grounds the carbon fee would raise electricity rates.

“Our coalition is tremendously grateful that an overwhelming majority of Washington voters looked at the facts about Initiative 1631 and overwhelmingly rejected this poorly written, costly and unfair measure,” said a message on the “No on 1631” group’s website.

In a blog p ost Wednesday, UCS President Ken Kimmell called the measure’s defeat a “major disappointment.”

“Unfortunately, the big oil companies, many of whom claim they support carbon pricing as a climate solution, spent about $30 million to defeat this initiative, arguing cynically that the initiative did not go far enough. This hypocrisy needs to be strongly called out,” Kimmell said.