Page 1185 – RTO Insider

April 1, 2018

Advisory Committee Steps up Criticism of MISO Forecast Plan

By Amanda Durish Cook

NEW ORLEANS — MISO Advisory Committee members last week criticized the RTO’s plan to revamp load forecasting using projections from load-serving entities, saying the amount of data needed is nearly impossible to provide.

Speaking at a March 28 Advisory Committee meeting, Planning Advisory Committee Chair Cynthia Crane said that while MISO must revise its independent load forecast to accommodate growth of distributed resources and changing load shapes, the RTO’s 140-plus LSEs have concerns over how to provide four 20-year forward forecasts using four sets of future assumptions from the Transmission Expansion Plan.

“If you do the math, you’re talking 98 million data points, and there’s the question of how MISO is going to organize all of that,” Crane said, using a calculation of 8,760 hours per year for 20 years across the four MTEP futures.

Wisconsin Public Service’s Chris Plante said he wasn’t convinced that MISO needs that level of detail for transmission planning.

MISO Advisory Committee load-serving entities LSEs — Wisersky (left) and Plante | © *RTO Insider*

“I started my utility life out as a load forecaster. … If I could forecast 8,760 hours for 20 years over four futures, I wouldn’t be in this room,” joked Madison Gas and Electric’s Megan Wisersky. “When I’m told this will improve the planning process, I just laugh,” adding that she doubted that current third-party load forecaster Purdue University provides the same level of detail.

“We’re not going to add staff for such a meaningless exercise,” Wisersky said of her fellow LSEs.

MISO has said it might replace its current independent load forecast prepared by Purdue’s State Utility Forecasting Group with data compiled by LSEs to produce the forecast that informs transmission planning, an effort that will require LSEs to annually assemble four different 20-year load forecasts to fit with each MTEP future. The approach is one of two MISO is vetting to improve its load forecasts. If LSEs decide they cannot collect that level of information, the RTO will continue its practice of hiring a contractor to put together a load forecast. (See Members Skeptical as MISO Explores LSE Load Forecasting.)

Plante said it’s difficult for members to make an informed decision until stakeholders know how much MISO pays Purdue for its independent load forecast. He wondered if the alternative plan would save the RTO any money.

“We see this as an opportunity to try to offset some of these increases we see in the [operations and maintenance] budget year to year,” he said.

Crane pointed out that all other RTOs use an independent load forecast to guide transmission planning.

“I’ll sound like my mother here: Just because someone else is doing it, doesn’t mean you should,” Wisersky said.

MISO staff did not provide comment at the meeting, although Executive Director of System Planning Aubrey Johnson took notes on the members’ reactions and promised to deliver a report to RTO planners.

April 1, 2018

Texas PUC Conditionally Approves Vistra-Dynegy Merger

The Public Utility Commission of Texas last week conditionally approved Vistra Energy’s $1.7 billion acquisition of Dynegy, allowing the combined company to avert a requirement that it divest generation over market power concerns (Docket No. 47801).

The commission amended staff’s proposed order by excluding 820 MW of DC tie import capacity from the Eastern Interconnection as “not being appropriate” in determining the combined entity’s market share. Combined with a previous ruling that excluded a 915-MW gas plant from market power calculations, Vistra’s generation arm, Luminant, would no longer be required to divest itself of at least 1,281 MW of capacity.

ERCOT PUCT Vistra Energy Dynegy — The Texas PUC had an open meeting on March 29 | *AdminMonitor*

PUC staff in February had recommended the divestiture to keep post-merger Vistra below the statutory cap of 20% of ERCOT installed capacity. (See Vistra Balks at Divesting 1,281 MW in Dynegy Merger.) Staff’s proposed order excluded Luminant’s Lake Hubbard power plant from the calculations based on its grandfathered exemption in a previous docket (No. 45429).

ERCOT PUCT Vistra Dynegy Merger — PUCT Chair DeAnn Walker | *AdminMonitor*

PUC Chair DeAnn Walker and Commissioner Arthur D’Andrea both filed memos in the proceeding, with Walker agreeing to D’Andrea’s more substantive changes during the March 28 open meeting.

With the modifications, the order now says Vistra and Dynegy have met the requirements for approval “by demonstrating that the proposed transaction will not result in the combined ownership and control of more than 20% of the installed generation capacity located in or capable of delivering electricity to ERCOT.”

Staff had said that Dynegy owns 820 MW of generation in the Eastern Interconnection “capable of delivering electricity to ERCOT” and recommended that capacity should be included in the calculation. D’Andrea countered by saying the DC ties should be treated as an exception, “not as a natural extension of the ERCOT market.”

“I like the idea of saying that doesn’t count as our market,” he said.

With the changes, Luminant would no longer have to go through with the prospective sale of up to three gas plants, whose suitors include a trading firm.

“If you look at those three plants, I think I trust Vistra with them,” D’Andrea said. “Would you rather Vistra, who you know and with a ton of skin in the game, run those three plants this summer, or would you rather a trader run those three plants this summer?”

Luminant assuaged the commission by committing that they would not import power over the DC ties. “That commitment is legally binding and enforceable through the coercive power of the state,” D’Andrea wrote in his memo. “To my eyes, that makes the applicants ‘incapable’ of importing power.”

The commission added language requiring the combined entity to annually file an affidavit, “under penalty of perjury, attesting to compliance” with the commitment not to import.

Walker said she was concerned other applicants could make the same commitment in future cases. “If we’re expecting ERCOT to police this, I’m worried about the workload on [the ISO].”

“We’re mostly dealing with really big players with a lot of skin in the game,” D’Andrea said, noting ERCOT’s Independent Market Monitor “can go after them.”

“If [the IMM] finds something, they’ll violate their agreement, and that’s a pretty serious thing. That’s something we don’t take lightly,” he said.

The Texas PUC’s commissioners share a laugh before the meeting | *AdminMonitor*

Vistra announced its intention to acquire Dynegy in October. The all-stock deal will create a generation and retail company owning 40 GW of capacity and serving nearly 3 million customers, mainly in ERCOT, PJM and ISO-NE. (See Vistra Energy Swallowing Dynegy in $1.7B Deal.)

Vistra said the transaction remains on track to close by July. It is only waiting on FERC approval, having obtained all other necessary regulatory approvals, including that of the New York Public Service Commission. Vistra’s shareholders approved the merger in an early-March vote.

ERCOT Directors’ Elections Approved

The commission’s consent agenda included the approval of Terry J. Bulger’s election (Docket No. 47916) and Peter Cramton’s re-election (Docket No. 47915) as unaffiliated directors on ERCOT’s board.

Bulger, a 35-year banking professional with ABN AMRO and Bank of Montreal, fills the vacancy created by Jorge Bermudez’s resignation in 2016. His term will begin in April’s board meeting.

Cramton, an economics professor at the University of Maryland College Park and the University of Cologne, will begin a second three-year term on Aug. 17.

Both directors were elected during ERCOT’s annual membership meeting in December.

— Tom Kleckner

April 1, 2018

Mystic Closure Notice Leaves Room for Reversal

By Michael Kuser

Exelon on Thursday filed with ISO-NE to retire its 1,998-MW Mystic Generating Station in 2022, but the company said it “may reconsider” the decision if the grid operator can reform its markets to properly value the plant’s contributions to reliability and regional fuel security.

The Everett, Mass., facility includes a 576-MW dual-fuel unit (Unit 7); two gas-fired units capable of producing a combined 1,414 MW (Units 8 and 9); and Mystic Jet, an 8.6-MW oil-fired peaker.

Mystic Generating Station ISO-NE Exelon — Mystic Generating Station, on the Mystic River in Everett, Massachusetts. A wind turbine owned by the local water authority to power a pumping station is on the right.

“Changes to market rules are necessary because critical units to the region, like Mystic 8 and 9, cannot recover future operating costs, including the cost of securing fuel,” Exelon said in a statement.

Absent regulatory reforms, “these units will not participate in the Forward Capacity Auction scheduled for February 2019,” Exelon said in a statement.

ISO-NE spokeswoman Marcia Blomberg told RTO Insider that Mystic is “one of the two largest generating stations on the regional power system. The ISO will conduct a study to ascertain how these retirements could affect power system reliability and will release the results as soon as possible.”

Exelon Power President Ron DeGregorio said it was “a difficult day not only for the talented men and women who have dedicated themselves to operating Mystic safely and reliably every day, but also for their families, their communities and all of their colleagues here at Exelon.”

Cost Recovery

Exelon’s announcement referred to a recent statement by the RTO that it “may propose interim and long-term market rule changes to address system resiliency in light of significant reliability risks” identified in its January 2018 fuel security report. (See Report: Fuel Security Key Risk for New England Grid.)

“To the extent that changes are timely filed and approved by the Federal Energy Regulatory Commission, Exelon Generation may reconsider the retirement of the Mystic units,” the company said.

FERC in September 2017 approved Exelon’s request for recovery of more than $1.5 million in fuel costs for the plant (ER17-933). The commission granted Exelon more than $1.5 million for Unit 8 and 9 fuel costs that were not recovered because of market power mitigation measures applied in October and November 2016. (See FERC Approves Cost Recovery for Exelon’s Mystic Plant.)

Fuel Security and LNG

Oil supplies at plants in New England declined rapidly during a cold snap earlier this winter as gas prices spiked and dual-fuel plants switched to oil, but the RTO avoided serious reliability issues thanks to LNG shipments.

Contributions from other types of generators were crucial during the cold snap, according to the RTO’s analysis.

“For instance, electricity produced by the Millstone nuclear station during the cold spell is equivalent to what could be produced by about 880,000 barrels of oil, and the power from the Mystic 8 and 9 units in Boston, which are fueled by LNG from the nearby Distrigas import facility, was the equivalent of more than 360,000 barrels of oil,” ISO-NE CEO Gordon van Welie said in February. (See Van Welie: ISO-NE in ‘Race’ to Replace Retirements.)

Exelon also announced Thursday it will purchase the Everett Marine Terminal, an LNG import facility, from ENGIE North America “to ensure the continued reliable supply of fuel to Mystic Units 8 and 9 while they remain operating.” No contract terms were disclosed.

The facility is the oldest such LNG facility in the U.S. and has connections with two interstate pipeline systems, the Tennessee and Algonquin pipelines, as well as with the local distribution system owned by National Grid.

April 1, 2018

CAISO Storage, DER Plans Progressing

By Jason Fordney

FOLSOM, Calif. — Energy storage and distributed energy resources stand to play a bigger role in markets as CAISO moves forward with its latest proposal to integrate and compensate the emerging technologies, ISO staff said last week.

The scope of the Energy Storage and Distributed Energy Resources Phase 3 (ESDER 3) initiative is still taking shape, CAISO Infrastructure and Regulatory Policy Specialist Eric Kim said as he led a March 29 working group in analyzing the design elements.

“Nothing is set in stone,” said Kim, adding that interested parties should file comments with the ISO by April 9.

“What are some things we are not considering?” he asked.

The all-day session provided a view into the extremely technical process of integrating resources that behave in different ways, with new engineering, regulatory and market rule challenges.

CAISO is still gathering stakeholder input on its ESDER 3 straw proposal, issued in February. The ISO said the purpose of the proposal “is to present the scope and solutions of issues related to the integration, modeling and participation of energy storage and DERs in the CAISO market.” The rules will apply across the Western Energy Imbalance Market (EIM) but will not include EIM-specific items. At a session last fall, stakeholders pushed the ISO to expand the scope of the effort. (See CAISO Urged to Broaden ESDER Phase 3.)

CAISO ESDER energy storage Clean Power Plan — The ESDER 3 working group is refining the scope of CAISO’s latest proposal | © *RTO Insider*

The ISO has organized the proposal under the broad themes of demand response, multiple-use applications (MUAs) that allow storage to provide services and receive revenue from more than one entity at a time, and non-generator resources (NGRs). MUAs are getting more attention, with the California Public Utilities Commission in January passing a suite of 11 rules governing their use for storage.

The initiative includes exploration of new bidding and real-time dispatch options for DR and removal of a requirement that DR be aggregated under a single load-serving entity. It will also explore a process for facilitating market participation for NGRs, including identifying commitment costs. Also under development is a load-shift product for behind-the-meter storage, and a methodology to measure load curtailment from electric vehicle supply equipment, which is seen as a way to absorb excess output from renewables. (See CAISO Load-Shifting Product to Target Energy Storage.)

Currently, a DR resource that includes EV supply equipment is measured without considering the equipment’s effect on load dynamics. One of many complex tasks confronting the ISO is determining how to meter the data to measure the performance of EV infrastructure, according to a CAISO presentation.

The initiative’s previous phase, ESDER 2, is being prepared for submission to FERC after being approved by the CAISO Board of Governors last July. (See New CAISO Rules Spell Increased DER Role.) ESDER 2 included a set of alternative energy usage baselines to assess the performance of proxy demand resources, which are DER aggregations of retail customers. It also set out new rules that distinguish between charging energy and station power for storage resources, and established a net benefits test for DR resources that participate in the EIM.

Kim said the ISO will host more ESDER 3 working groups. Thursday’s participants included EV charging station company eMotorWerks, California Energy Storage Alliance, DER and DR companies, utilities and others.

March 30, 2018

FERC ALJ Certifies Calpine RMR Settlements

By Jason Fordney

CAISO, Pacific Gas and Electric, and Calpine have settled their differences over the terms of the reliability-must-run agreements keeping three Calpine gas-fired plants operating instead of retiring.

FERC is likely to issue a decision on the agreements by April 30, Administrative Law Judge H. Peter Young said Tuesday after certifying the uncontested settlements that would reduce the annual revenue the plants receive. The controversial out-of-market RMR payments are opposed by the California Public Utilities Commission and were reluctantly approved by the CAISO Board of Governors in November. (See Board Decisions Highlight CAISO Market Problems.)

The new settlements filed March 21 cover two different FERC dockets, one Calpine’s Metcalf plant (ER18-240), and another for the company’s Feather River and Yuba City plants in Northern California (ER18-230).

RMRs calpine caiso metcalf — Calpine’s Metcalf Energy Center | *Calpine*

“In general, the offer of settlement would substantially reduce Metcalf’s RMR service rates and would change the MEC facility’s operating status,” Young said of the Metcalf settlement. (See FERC Orders Hearing, Settlement Talks for Calpine RMRs.)

The Metcalf settlement would reduce the plant’s annual fixed revenue requirement to $43 million from about $72 million through 2020 if it retains its RMR status, and make the plant operator responsible for routine repairs and capital expenses. It would set recovery for planned 2018 capital items to $8 million, to be recovered in 12 installments of $675,000 beginning on Jan. 1, 2018.

If the RMR agreement is extended, capital recovery would remain at about $8 million per year. The settlement would also grant the plant $8 million in 2019 and 2020 if the revised agreement is not renewed and the unit shuts down.

The settlements would also take all three plants from Condition 2 (eligible for full cost-of-service payments) to Condition 1 (eligible for only a portion of their revenue requirement) status, and impose a must-offer requirement, which the ISO’s Department of Market Monitoring has recommended for all RMR units. CAISO is working to revise its RMR program to establish a must-offer requirement for resources. (See CAISO, Stakeholders Debate RMR Revisions.)

RMRs metcalf caiso calpine — Calpine’s Yuba City Energy Center. | © *RTO Insider*

The Feather River and Yuba City settlements would reduce each plants’ 2018 revenue to about $3.5 million from the previous $4.4 million, with a 2% hike for 2019 and 2020 if the RMRs are renewed. They would also impose a must-offer requirement on the plants.

After CAISO approved the RMRs last November, the CPUC issued an order directing PG&E to use energy storage to meet the needs currently served by the plants. (See CPUC Targets CAISO’s Calpine RMRs.) The storage resources must be online before 2019.

March 30, 2018

FERC OKs MISO’s Doubled Offer Cap, Orders Alterations

By Amanda Durish Cook

CARMEL, Ind. — FERC on Wednesday approved MISO’s plan to permanently double its hard offer cap but told the RTO to clarify some details about the proposal in a compliance filing within 60 days (ER17-1570-001).

The proposal marked MISO’s second attempt to comply with FERC Order 831, which required RTOs and ISOs to raise their hard caps for verified cost-based incremental energy offers to $2,000/MWh. The commission issued the order in response to the 2014 polar vortex, which sent natural gas prices soaring and left some generators unable to cover fuel costs.

MISO offer cap FERC — MISO control room | *MISO*

FERC late last year rejected MISO’s first attempt at complying with the rule, saying the RTO wrongly proposed a provision that prohibited resources from submitting cost-based offers above the required $2,000/MWh hard cap. (See MISO’s Plan for Wintertime Offer Caps Stalled by FERC.)

The commission had also ruled that MISO:

failed to describe what factors it would consider when verifying cost-based offers or distributing uplift;
was silent on its treatment of external supply offers in excess of the cap;
neglected to specify a verification process for demand response; and
failed to limit the cap on all adders above cost to $100.

On Wednesday, FERC determined that MISO’s second filing had cleared up the offer validation process, which gives the Independent Market Monitor discretion to validate market participants’ data. The RTO additionally complied with a requirement that external energy transactions not exceed the hard cap but also not be subject to validation.

However, FERC said MISO still must pledge to apply the new hard cap to adjusted energy offers from fast-start resources.

The commission acknowledged that its previous ruling mistakenly understood “proxy offers” to include fast-start resources’ adjusted offers, but it said it now recognizes the term applies to resources deployed during emergency operating procedures.

“The commission did not intend to change the definition of ‘proxy offers,’” FERC said.

MISO had proposed to apply the $2,000/MWh hard cap to most proxy offers used during emergency conditions for price-setting purposes, but it said emergency demand response proxy offers would not be included. The RTO has long allowed emergency DR resources to exceed the hard price cap up to the value of lost load, which is currently $3,500/MWh.

FERC said it viewed MISO’s value of lost load as an “administratively determined pricing mechanism beyond the scope of the offer cap reforms in Order No. 831.”

The commission also accepted the RTO’s plan to have its Monitor verify offers from DR resources above the $1,000/MWh soft offer cap before market clearing in order to allow them to set the LMP. FERC also approved edited Tariff language that allows resources to submit cost-based incremental energy offers above $2,000/MWh and recover verified costs through make-whole payments, although such offers are barred from setting LMPs.

But the commission is requiring MISO to provide more detail on the Monitor’s verification process for resources that submit incremental energy offers above $1,000/MWh that cannot be verified prior to the market clearing. FERC said MISO must also describe when the Monitor will verify the prices and revise reference levels, and when a market participant can dispute revenue sufficiency guarantee make-whole payments.

“Additionally, we direct MISO to propose Tariff language describing how the amount of the make-whole payment will be determined,” FERC added.

FERC also ordered MISO to update its Tariff to include references to its Operating Cost Survey, which is used to determine reference levels by collecting more than 200 “pieces of data for a single plant,” according to the RTO.

FERC additionally said MISO must clarify the use of its adder for “outage risk,” a term the RTO used in its amended offer cap filing but is not found in Tariff provisions that define reference levels, which instead employs the term “legitimate risk.”

FERC also said MISO appeared to violate a rule that limits to $100/MWh the sum of any adders for cost-based incremental energy offers above $1,000/MWh by allowing two types of adders within its offer cap: the legitimate risk adder and a fuel cost uncertainty adder. The commission gave the RTO 60 days to explain the differences, if any, between the two terms and describe how it will stay within the $100/MWh adder limit.

March 29, 2018

Massachusetts Bids Adieu to Northern Pass

By Michael Kuser

Massachusetts on Wednesday revoked its selection of Northern Pass as the sole winner of a massive clean energy solicitation, saying it will instead enter contract negotiations with the rival New England Clean Energy Connect (NECEC) project.

The decision capped a tumultuous two months since the state chose Northern Pass in its MA 83D solicitation for 9.45 TWh per year of hydro and Class I renewables (wind, solar or energy storage). The joint project between Eversource Energy and Hydro-Quebec won the contract Jan. 25, only to see the New Hampshire Site Evaluation Committee (SEC) unanimously reject the 1,090-MW transmission line a week later. (See New Hampshire Rejects Permit for Northern Pass.)

Eversource said it understood why Massachusetts needed to move on with its clean energy plans but that “despite recent delays, we continue to believe that Northern Pass is the best project for the region and New Hampshire, and we intend to pursue all options for making it a reality.”

The company had appealed the New Hampshire decision, but the SEC voted March 12 to wait until its permit denial is published later this month before considering the appeal, effectively killing the 192-mile HVDC line’s chance to meet Massachusetts’ March 27 contract deadline. Any contract awarded under the request for proposals must be submitted to the state’s Department of Public Utilities by April 25.

The Massachusetts committee charged with reviewing proposals selected the NECEC as an alternative to Northern Pass. (See Mass. Picks Avangrid Project as Northern Pass Backup.) The committee consists of representatives from the state’s Department of Energy Resources and distribution utilities Eversource, National Grid and Unitil.

Northern Pass Clean Energy NECEC — | *Eversource, Central Maine Power*

Central Maine Power, an Avangrid subsidiary, partnered with Hydro-Quebec on NECEC, a 145-mile transmission line that would deliver up to 1,200 MW of Canadian hydropower to the New England grid. The partners estimate the project will cost $950 million.

No Free Pass for NECEC

Massachusetts Sierra Club Director Emily Norton on Wednesday lauded the rejection of Northern Pass as “good news,” saying the project “would have increased electricity costs in the state, destroyed pristine wilderness in New Hampshire and continued the destruction of traditional hunting and fishing grounds of First Nations in Quebec, all while failing to reduce climate pollution in the region.”

During a three-day hearing in February, New Hampshire’s SEC voted 7-0 to reject Northern Pass after expressing concerns that it would harm property values, tourism and land use.

Testifying on behalf of the city of Concord, N.H., during the hearing, wetlands scientist Rick Van de Poll said that the project’s temporary and permanent impacts to wetlands in the city would be significantly greater than the developers assumed in their October 2015 wetlands permit application.

Van de Poll said permanent impacts would include reduced habitat fish and aquatic life habitat; loss of habitat for rare and endangered species; and reduced scenic quality, flood storage and groundwater recharge.

But NECEC is not getting a free pass from environmentalists and other industry stakeholders. New Hampshire Sierra Club Director Catherine Corkery joined Norton in saying, “It is too soon to celebrate, however.” NECEC “carries many of the same problems as Northern Pass.”

“MA has gone from the fatally flawed Northern Pass to the nascent NECEC, which doesn’t have any permits,” New England Power Generators Association President Dan Dolan tweeted. “If the original goal was to meet 2020 climate targets, that’s now out the window. All while leading to potentially the largest electric rate increase in state history.”

Three top generators in Maine are already contesting the NECEC. Calpine, Dynegy and Bucksport Generation, which together own one-third of the state’s installed electric generating capacity, have asked the Public Utilities Commission to allow them to intervene late as full parties in the proceeding to review the project. (See Generators Challenge HVDC Line at Maine PUC.)

March 29, 2018

ALJ Rules New England Tx Owners’ ROEs not Unjust

By Michael Kuser

A FERC administrative law judge ruled Tuesday that municipal utilities and commission staff failed to prove that the New England Transmission Owners’ (NETOs) base return on equity of 10.57% (11.74% with incentives) is unjust and unreasonable, rebuffing requests to reduce it.

The March 27 initial decision by ALJ Steven A. Glazer found that the discounted cash flow (DCF) analyses by the complainants — the Eastern Massachusetts Consumers-Owned Systems (EMCOS) — and FERC staff were “fatally defective” because they failed to include Algonquin Power & Utilities in their proxy groups, “despite this company’s ample qualifications to be included” (EL16-64-002).

FERC Base ROE Emera Maine — | *Avangrid*

The EMCOS, whose case was supported by state regulators and industrial consumers, asked FERC in a April 2016 complaint to reduce the NETOs’ base ROE to 8.93% or lower (11.24% with incentives). It was the fourth challenge since September 2011 to the ROE for the NETOs, which include Emera Maine, Northeast Utilities, Central Maine Power, National Grid and NextEra Energy. (See FERC Denies New England Tx Owners ROE Rehearing.)

The 2011 challenge resulted in FERC lowering the base ROE to 10.57% from 11.14% in 2014. But the ruling was vacated by the D.C. Circuit Court of Appeals last April, which found that the commission failed to prove the higher rate was unjust and unreasonable, as required before setting a new rate (Emera Maine et al. v. FERC). (See Court Rejects FERC ROE Order for New England.)

The commission has not responded to the court’s remand.

Setting the Proxy Group

Glazer sided with the NETOs in ruling that the EMCOS’ and staff’s DCF analyses should have included Algonquin because the company pays dividends and operates within the contiguous U.S., and its credit ratings are within the “comparable risk band” for the NETOs. Glazer said FERC staff improperly rejected the company because it is headquartered in Canada and also broke with commission precedent in ignoring the credit ratings of the NETOs’ parent companies.

The EMCOS’ economist rejected Algonquin because it was not included in the Value Line Investment Survey and did not have a five-year Institutional Brokers Estimate System (IBES) earnings growth rate published in Yahoo Finance, the source of earnings growth forecasts used by the commission. IBES later added the company to its ratings; inclusion in the Value Line survey is not required by FERC, the judge said.

Including Algonquin’s IBES-based ROE of 16.14% would significantly alter staff’s and EMCOS’ DCF analyses, making the current 10.57% base ROE within the zone of reasonableness, Glazer said.

“Their zones of reasonableness would shift upward from approximately 6 to 11% to approximately 7 to 16%, and the midpoint of their zones would shift from approximately 8.4% to approximately 11.8%,” Glazer wrote.

Moving the Goal Post

The judge was particularly critical of the EMCOS’ analysis, saying it contained “numerous errors and changed significantly throughout this proceeding,” including on the last day of the hearing in the case. “Both the EMCOS and staff made several unwarranted changes to the commission’s typical DCF analysis,” he said. “In short, the goal post was moved repeatedly by the EMCOS and staff to wherever the football was in order to score points.”

Glazer said he did not need to determine a new ROE because of the inability of staff and the EMCOs to provide reliable analyses that proved the existing rates were not just and reasonable. “The failure of the EMCOS and the staff to meet their burden of proof means that the case is over, because they have produced no DCF analysis that is usable in this case for any purpose.”

He also said that their failure also “renders moot the EMCOS’ further argument that the base and maximum ROEs should be adjusted downward in order to mitigate alleged harm to consumers” caused by the NETOs’ maintenance of equity–heavy capital structures.

Exceptions to the decision are due in 30 days, with objections to the exceptions due 20 days later. If no party objects, the ALJ’s decision would take legal effect without further action by the commission.

That’s unlikely, ClearView Energy Partners said in an analysis of the ruling, which predicted challenges to the inclusion of Algonquin.

Response to Remand

The analysts said FERC could respond to the D.C. Circuit’s remand of the 2014 ruling by opening a Notice of Inquiry or by issuing a revised decision.

“If the remand proceedings ahead for the Emera Maine decision result in the FERC upholding the June 2014 revision of the ROE to 10.57%, then we expect the commission might also affirm the ALJ’s finding here that the most recent complaint fails,” the analysts wrote.

March 29, 2018

NYISO Management Committee Briefs: March 28,2018

RENSSELAER, N.Y. — NYISO’s Management Committee on Wednesday approved Tariff revisions intended to provide external resources with Rest of State (ROS) deliverability rights to improve their ability to participate in the ISO’s capacity market.

The March 28 vote recommended that the ISO’s Board of Directors authorize staff to file the revisions with FERC under Federal Power Act Section 205.

Ethan Avallone, NYISO senior market design specialist, said Hydro-Quebec US (HQUS) proposed the ISO develop a method for awarding capacity resource interconnection service (CRIS) to entities that create increased transfer capability through transmission upgrades over external interfaces. (See “External Deliverability Rights,” NYISO Business Issues Committee Briefs: March 15, 2018.)

NYISO management committee deliverability rights — | *NYSEG*

FERC last year granted HQUS eligibility to receive CRIS in proportion to the incremental transfer capability created by its Cedars Rapids Transmission intertie project (ER17-505). National Grid also stands to benefit from the change after it completes upgrades on its 115-kV Dennison-Alcoa line in Zone D in Q4 2019.

2017 CARIS Report Moves to Board

The committee also approved the 2017 Congestion Assessment and Resource Integration Study (CARIS) Phase 1 draft report on the potential costs and benefits of relieving congestion on the transmission system through generic transmission, generation, demand response and energy-efficiency solutions. (See “2017 Congestion Assessment and Resource Integration Study,” NYISO Business Issues Committee Briefs: March 15, 2018.)

Tim Duffy, economic planning manager, said NYISO has identified three main areas of the state where transmission congestion is: Edic-Marcy, Central East and New Scotland-Pleasant Valley.

To provide additional value to stakeholders, Duffy said the ISO developed a system resource shift case, which assumed retirement of the Indian Point nuclear plant by 2020/2021 and all coal units in the state by 2020, and a resource mix consistent with attaining Clean Energy Standard targets by 2026.

— Michael Kuser

March 28, 2018

PG&E to Seek Storage, EE to Replace Dynegy Plant

By Jason Fordney

Pacific Gas & Electric is requesting proposals for the development of up to 45 MW of “clean energy” resources including at least 10 MW of energy storage, as the centerpiece of its plans to replace the aging Dynegy Oakland jet fuel-fired power plant.

The utility said it will open a two-month request for offers process in spring, inviting “innovative and competitive solutions for the portfolio.” It hopes to bring the new mix of resources online in mid-2022; the procurement total will depend on the exact resource mix, the company said.

PG&E Oakland Power Plant Dynegy Energy Efficiency — A historical photo of the Oakland Power Plant, which went into operation in 1888. The current jet-fueled generators, owned by Dynegy, went into service 40 years ago. | *PG&E*

The 165-MW Dynegy plant currently operates under a CAISO reliability-must-run contract to meet local reliability needs.

CAISO identified PG&E’s proposal, the Oakland Clean Energy Initiative, as a preferred solution in CAISO’s 2017/18 transmission plan approved by the ISO’s Board of Governors last week. (See CAISO Moves Ahead With Market Changes.)

The plan includes:

transmission line rerates and system upgrades to remove limiting elements;
at least 10 MW of 4-hour utility-owned in-front-of-the-meter storage in the Oakland C and Oakland L 115-kV substation pocket;
competitive procurement of 10 to 24 MW of “preferred resources” — energy efficiency, demand response, renewable generation and storage — in the substation pocket, at least 19.2 MW of which is “load modifying in nature;”
continuing to rely on transferring Alameda Municipal Power load from Cartwright (North) to Jenny (south) during peak load conditions and after an N-1 contingency, in preparation for an N-1-1.

The project marks the first time that clean energy resources would be deployed as an alternative to fossil fuels for transmission reliability in the PG&E area. It will be working with local community choice aggregator East Bay Community Energy to determine the clean energy and reliability solution.

“PG&E and the system operator worked collaboratively over the last several transmission planning cycles to study how distributed clean energy resources could become part of the solution,” the company said in a news release. The utility said it will seek cost recovery for the battery storage facility from FERC and for distributed energy resources from the California Public Utilities Commission. It expects to file with the PUC by the end of the year.

Since 2010, CAISO has increasingly focused on non-transmission alternatives in its planning. The ISO cannot specifically approve non-transmission alternatives part of its annual plan, but it can identify them as preferred solutions, as it did with the PG&E proposal.

CAISO’s transmission plan said the closing of the 40-year-old generator would cause thermal overloads on the Oakland 115-kV system without new local generation. The estimated cost of the PG&E proposal is about $102 million (2022 dollars), while other alternatives, including transmission lines and generation, ranged from $367 million to $574 million.

The Dynegy plant’s RMR agreement with CAISO was renewed in September 2017, based on local reliability analysis. The ISO said that based on real-time operations data for 2015 and 2016 there is a need for at least 98 MW for a one-in-three heatwave scenario that would cause heavy loads. It also cited instances where all three 55-MW Oakland units were running for local reliability. A 2018 forecast showed a need of 56 MW because of a discrepancy in substation load forecast distribution that the ISO said it would work with PG&E to correct.