By Rich Heidorn Jr.

WASHINGTON — American Public Power Association CEO Sue Kelly has been railing for years against RTO capacity markets and stakeholder rules she says are skewed in favor of large transmission and generation owners.

This week, as 600 APPA members gathered at the historic Mayflower Hotel for their annual Legislative Rally, the group could celebrate recent policy victories on both fronts.

On Friday, FERC ordered a technical conference to consider whether PJM should move from a year-round to a seasonal capacity construct, indicating that the newly constituted commission is having second thoughts about the restrictive Capacity Performance rules FERC approved in 2015. (See FERC Rethinking PJM Capacity Performance Rules.) APPA had opposed CP as an overreaction to the 2014 polar vortex, saying PJM and market participants had largely addressed reliability problems through other measures.

FERC also backed public power’s position in a Feb. 15 ruling that PJM transmission owners’ processes for developing supplemental projects violate Order 890’s transparency and coordination requirements. (See FERC Orders New Rules for Supplemental Tx Projects in PJM.)

In California, meanwhile, proponents of legislation that could enable CAISO’s growth into a Western RTO said the grid operator would not back mandatory capacity markets. (See Calif. Lawmakers Relaunch CAISO Regionalization.)

Kelly said, although APPA doesn’t lobby state government, it is pleased with the promise.

“Obviously, the California municipal utilities are an active and involved bunch,” Kelly said. “I will say that our members in the West have witnessed what went on in the East. It’s the old ‘Fool me once, shame on you. Fool me twice, shame on us.’”

A resolution approved by APPA’s Legislative & Resolutions Committee earlier Tuesday called for “consumer benefits and participatory multi-state governance” as essential elements of a Western RTO.

The committee also approved resolutions on supplemental transmission, electric vehicles, disaster response, infrastructure investments, and the Public Utility Regulatory Policies Act of 1978.

After the votes, many of the attendees — including public utility executives, mayors, and council members for cities with municipal utilities — went off to the Capitol to lobby Congress on their concerns.

Fighting Privatization

It hasn’t all gone APPA’s way of late, of course. The group is fighting a rear-guard action to block President Trump’s proposal to divest the transmission assets of the Tennessee Valley Authority, Southwestern Power Administration, Western Area Power Administration, and Bonneville Power Administration.

“We believe that the public power business model is a very strong one,” Kelly said.

APPA also is backing bipartisan legislation introduced in February to restore the ability of public power utilities to advance refund private activity bonds — a way of prepaying higher cost debt (H.R. 5003). “While we were largely successful in the tax bill that just passed at the end of 2017 in protecting and maintaining municipal bond financing — for which we are most grateful to Congress, don’t get us wrong — our ability to advance refund was taken away as part of that legislation,” Kelly said.

APPA leaders also were to meet with all five FERC commissioners this week to press their longstanding concerns about RTO wholesale markets.

“We are quite concerned about wholesale market rules that would make wholesale prices more volatile and impede our ability to self-supply,” Kelly said. “And we would like to see RTOs stop overriding state and local decision making.”

State and local control also was the focus of APPA’s resolution on distributed energy resources. “What works in Arizona may not work in New Hampshire. So, we believe Congress should not seek to federalize rate design or tip the scale [in favor] of any particular resource over others,” Kelly said. “Allow those decisions to be made at the state and local level.”

APPA filed comments Monday supporting EPA’s Advanced Notice of Proposed Rulemaking on replacing the Clean Power Plan. It agrees that the Obama administration’s final rule went beyond its authority under the Clean Air Act.

“We don’t want [there to be] no regulation but we want regulations that comport with what’s allowed in Section 111, and that would be things within the fence line — not this fuel switching from coal to natural gas, natural gas to renewables,” said Desmarie Waterhouse, vice president of government relations.

And what about critics who say inside-the-fence-line regulations will have little impact on carbon emissions? Utilities “have been reducing their CO₂ emissions for quite a while and will continue to do so as they make resource decisions,” she responded. “The bottom line is a rule under the Clean Air Act needs to comport with the Clean Air Act, irrespective of how much it raises CO₂ emissions.”

Cybersecurity Partnership

APPA also would like to see a stronger partnership with the federal government on cybersecurity. APPA has used Department of Energy funding to conduct cybersecurity reviews of some systems and to develop a cybersecurity “maturity model” tailored to public power. Going forward, Kelly said, the group wants to make “sure we have sufficient security clearances to be able to act when there are threats, [being able to] vet employees working in sensitive positions” to ensure they aren’t on terrorist watch lists.

Supplemental Transmission Projects

APPA’s resolution on supplemental projects, which urged FERC to enforce the transmission planning process requirements of orders 890 and 1000, grew out of concerns in PJM. But rising transmission spending is an issue nationwide, Kelly said.

“There is no question we have members in a number of different regions that are concerned about rapidly increasing transmission revenue requirements,” she said. “Don’t get us wrong, we’re not against new transmission, and we realize that reinforcements and extensions — and maybe eventually new facilities — may be needed. But we want to make sure that they’re properly vetted through the process and, frankly, that our members have the opportunity to own some of that. Rather than just: ‘It’s my tinker toys and I’ll impose all this on you.’”

Order 1000, said APPA General Counsel Delia Patterson, “hasn’t panned out to be what it was originally purported to be. There’s room for growth in Order 1000 in terms of actually having an impact on the industry.”

As for PURPA, Kelly said, the group seeks “modest revisions to ensure that the provisions are not abused and that we’re not required to buy power that we do not need at prices that are above market.”