[UPDATED to clarify that although Foster will be the third senior executive to leave PJM since the GreenHat default, she had no role in it.]
By Rich Heidorn Jr.
Interim PJM CEO Susan J. Riley on Monday announced a shakeup of the RTO’s State and Member Services Division, the latest in a series of management changes in the wake of the GreenHat Energy default and continued friction with state officials.
Susan Riley, a PJM board member since 2005, was named interim CEO during the search for Ott’s replacement. | PJM
Riley announced that Denise Foster, vice president of the division, will resign effective Oct. 31 and that her unit will be reorganized under Associate General Counsel Jen Tribulski. “With Denise’s decision to step down, we have decided to realign the State and Member Services Division to further demonstrate the organization’s willingness to listen to key stakeholders and provide a more direct line of communication between the executive team, the states and members,” Riley said in a letter to members.
Also Monday, Chief Administrative Law Judge Carmen A. Cintron reported that PJM and intervenors have reached a settlement in principle in the dispute over how to liquidate financial transmission rights left over from the GreenHat default. Cintron ordered a 30-day extension in the settlement deadline to “allow additional time to finalize settlement documents for their filing with the commission” (ER18-2068).
PJM declined to provide details, but spokesman Jeff Shields said the RTO is “pleased that the parties have reached a settlement in principle” and will “provide some high-level discussion around it” at the Market Implementation Committee meeting Wednesday.
The GreenHat default in June 2018 came as PJM was already facing strained relations with some members over state nuclear subsidies, the RTO’s push for increased “fuel security” and a FERC order to change its capacity rules. (See PJM Stakeholders Reluctantly OK ‘Fuel Security’ Initiative.)
Foster will be the third senior executive to leave PJM since the GreenHat default although — by all accounts — she had nothing to do with it.
CFO Suzanne Daugherty retired shortly before the board released a highly critical report on the RTO’s failings in the GreenHat matter. CEO Andy Ott resigned effective June 30, announcing his departure two months after the report was released. (See PJM CEO Andy Ott to Retire.) Riley, a board member since 2005, was named interim CEO during the search for Ott’s replacement.
Denise Foster will be the third senior executive to leave PJM since the GreenHat default, joining CFO Suzanne Daugherty and CEO Andy Ott. | PJM, PUCO, RTO Insider
Under the changes announced Monday, Tribulski will become senior director of member services, with oversight of stakeholder affairs, member relations, and state and member training. Tribulski, who graduated from the Quinnipiac University School of Law in 1993, has more than 20 years of experience in energy law. Her direct reports will be Jim Gluck, director of member relations, and Dave Anders, director of stakeholder affairs.
Former Ohio regulator Asim Haque, who joined PJM in February, will continue as executive director of strategic policy and external affairs.
Haque and Tribulski will report to Vince Duane, general counsel and senior vice president of law, compliance and external relations.
Foster will remain as chair of the Markets and Reliability Committee until her departure, Riley said.
PORTLAND, Maine — ISO-NE on Thursday continued its decade-long tradition of taking its show on the road — this time to Maine — to hear from the region’s residents and share with them the latest activities at the RTO.
Last week’s Consumer Liaison Group (CLG) meeting drew about 100 participants and featured state energy officials, environmental advocates and the energy analytics manager for a leading university.
CLG Coordinating Committee Chair Rebecca Tepper, chief of the Energy and Telecommunications Division at the Massachusetts attorney general’s office, said December’s meeting in Boston will mark the 10th anniversary of the group.
Here is some of what we heard.
As Goes Maine
Dan Burgess, director of Maine Gov. Janet Mills’ Energy Office, talked about a number of legislative measures that marked the first half-year of Mills’ first term.
Describing the energy challenges facing the state, Burgess noted that more than 70% of Mainers are dependent on fuel oil to heat their homes and that they drive 1,000 miles more per year than the national average, with transportation accounting for 54% of emissions.
He said a state bill (LD 1679) to establish the Maine Climate Council saw “broad bipartisan support” in the legislature and that an act to reform Maine’s renewable portfolio standard (LD 1494) was a particular success.
“For years, Maine lagged behind the five other [New England] states in RPS targets, flatlining at 10%, but now tops the chart with an RPS goal of 80% by 2035,” Burgess said. The ultimate goal is 100% of electricity to be generated from renewable resources by 2050.
Among the other bills in the state mentioned by Burgess:
LD 1844 directs the Public Utilities Commission to evaluate the ownership of the state’s power delivery systems, with the first report-back due in March 2020.
LD 1231 funds energy-efficiency programs through a fee on the sale of unregulated heating fuels.
LD 1711 promotes solar energy projects and distributed generation resources.
LD 1766 boosts the heat pump market to save residents money and reduce energy consumption.
Michael Stoddard, executive director of Efficiency Maine Trust, presented an overview of his agency’s work on energy efficiency, including how the state will spend $8 million from the Volkswagen settlement for both electric vehicle rebates and charging infrastructure.
Energy Security and More
Anne George, ISO-NE’s vice president for external affairs and corporate communications, spoke on several topics, including work on the RTO’s Energy Security Improvements (ESI) initiative and the RTO’s preparations for Forward Capacity Auction 14, scheduled for February 2020.
FERC last month granted a six-month extension for the RTO to file its long-term energy security plan, giving the grid operator until April 15, 2020, to complete additional scenario analysis and fully develop the conceptual framework for market power mitigation, she said. (See FERC Extends ISO-NE Fuel Security Filing Deadline.)
She listed off replacement energy reserves, generation contingency reserves and energy imbalance reserves as the three new market options, and she said that stakeholders also are considering a multiday-ahead market and a seasonal forward market.
“We have been focused on these energy options, which are really geared towards preparing the ISO and the region to operate the system … and move those ahead into the day-ahead energy market,” George said.
She also mentioned the RTO’s public meeting scheduled for Thursday in Boston to discuss its Regional System Plan (RSP), which focuses on moving forward as the electric grid evolves to adapt to a changing resource mix. (See New England Officials Speak on Grid Transformation.)
Emissions Reporting
ISO-NE will be asking FERC to approve an operating budget for next year of $174.2 million, about 3% higher than this year, or approximately $1.02/month per consumer in the region, she said.
Preparatory work for FCA 14 is on schedule and the RTO anticipates a November filing with FERC of its auction-related determinations and calculations.
Asked about delays in the federal permitting of offshore wind projects, particularly the 1,200-MW Vineyard Wind project off Martha’s Vineyard, George said that “a potential delay in any of these resources could affect the energy security of the region. But that’s something that we see several years out, and hopefully the studies continue to move forward and those resources start to get developed.”
“It’s a matter of making sure that our markets are providing the right incentives, these resources are getting developed, and then we’re into a system where we don’t see this being a reliability risk,” George said.
Michael Macrae, energy analytics manager at Harvard University, joined the event via telephone and spoke on improving the RTO’s emissions reporting, especially marginal emissions rates.
“I work for Harvard University, and many of the various roles that I’ve played there have done a lot of carbon accounting for how Harvard thinks about its operational strategy for our carbon-neutrality goals,” Macrae said. “In doing so, one of the core, fundamental pieces of that is understanding what do the power system emissions look like.”
After “diving way deep down in the weeds” of the RTO’s data, Macrae said he found two problems, the first of which is that energy imports are excluded from its system greenhouse gas emissions accounting.
“Problem No. 2 is more nuanced, in that ISO-NE overestimates the contribution of marginal units in small, local export-constrained areas,” he said.
Macrae said the RTO could manage the first challenge by incorporating emissions associated with energy imported from New York and Canada. And it could address the second by adopting its Internal Market Monitor’s methodology for reporting marginal emissions based on a unit’s contribution to system load.
Carbon Pricing
Jordan Stutt, carbon programs director at the Acadia Center, presented on the environmental advocacy group’s thinking on regional efforts to price carbon, noting that “we are seeing a better effort to not just track, but to account for carbon emissions.”
Through the Regional Greenhouse Gas Initiative, Stutt said, 16.4% of New England CO2 emissions are subject to a carbon price.
“When we consider that the RGGI price is $5.77/metric ton, and the social cost of carbon is $50/metric ton, you can see that we only account for 1.9% of the cost of CO2 emissions in New England,” Stutt said.
He highlighted the Transportation and Climate Initiative (TCI), a regional collaboration of 12 Northeast and Mid-Atlantic states and D.C. that aims to improve transportation, develop clean energy and reduce carbon emissions from the transportation sector.
“We’re hopeful that by the end of the year, there will be a memorandum of understanding, possibly a model rule that tells what that program will look like,” Stutt said.
NYISO and PJM are looking to incorporate the full cost of carbon emissions into their wholesale energy markets, he said, with New York’s plan expected to be presented to FERC later this year, he said.
“In six New England states, at least one carbon pricing bill was filed in 2019 in each of those states, and those bills have a variety of content, coverage and support,” Stutt said.
“Some of those are just study bills at this point, others are full-fledged policies. Some are economy-wide, while others would exempt certain sectors,” he said.
Stutt noted that the Massachusetts bill (H.1726) filed by state Rep. Jen Benson exempts the electric sector, while a Rhode Island bill (S.0417) nets out the cost of RGGI allowances “similar to the NYISO carbon pricing plan.”
HOUSTON — When Russell Gold, a senior energy reporter with The Wall Street Journal, decided to write a book on climate change, he naturally chose to focus on the long-haul transmission system.
Say again?
“When I think about climate change — and this is not specifically about climate change — there’s balance between hope and despair going on throughout our entire culture,” Gold said. “What’s happening in the Amazon needs to be balanced by hope. Everything that’s going wrong, all these animals disappearing … I wanted to do something on the hope side, on the people trying to arrest climate change and slow it down.”
“This is an energy story and an entrepreneurial story,” he said. “I wanted to find someone, a group of people out there, and tell their story, give people some hope that there are options out there. If you don’t have hope, despair wins.”
Gold’s book tells the story of Michael Skelly, the title’s “one man” who built the second-largest wind power company in the U.S. — Horizon Wind Energy — and then founded Clean Line Energy Partners. Skelly’s plan at Clean Line was to build HVDC lines hundreds of miles long to transport wind energy from the Great Plains to Eastern and Western population centers.
Unable to clear endless regulatory hurdles and landowner opposition, he eventually sold off Clean Line’s projects and is now a senior adviser with the Lazard investment management firm. (See Out of the Game, Skelly Still High on Wind Energy.)
Gold, who has covered energy for the Journal since 2002, said he was struck by seeing Skelly’s projects run into the same long environmental reviews and bureaucratic delays as natural gas pipelines.
“It would be helpful to get a yes or no [answer] in five years,” he said, to some snickers in the audience.
“I didn’t think that would be a laugh line,” Gold said, pausing. “You have your investors saying, ‘This is a fun ride, but we’d like to have something happen.’”
First Mouse … or Donkey
While Skelly may not have been ultimately successful, both he and Gold believe his efforts will help those developers who follow. As Gold writes in his book, “The second mouse gets the cheese … what is usually left unsaid is that the first mouse gets the trap.”
“There’s a really important message here,” Gold said. “If we can find a way to build out the grid to where we can move bulk power around to take advantage of this amazing wind and solar resource we have, Americans can have cleaner and affordable energy.
“I wouldn’t have thought that five or 10 years ago. I think that’s a really powerful message,” he said. “We don’t have one energy policy, one energy grid. We have 50 energy policies and 50 energy grids. It’s difficult to negotiate your way through that.”
Skelly, who has apparently never met a person he doesn’t enjoy talking with — he was a relentless door-to-door campaigner during a failed congressional bid in 2008 — easily emerges as the star of “Superpower.”
“I think there’s a different word for it, and it’s called a ‘donkey,’” Skelly said. “When you work in the transmission business, you feel like a donkey.”
“He’s a fun, entertaining storyteller,” Gold said. “When you’re writing about transmission, you need someone who can make the stories interesting.
“Skelly’s career starts when wind power is emerging from the bad California days. By tracing his career, I was able to write about the wind industry,” he said. “It’s gone from a niche market in the last 20 years, from people who wanted to change the world to a fully functioning industry. I wanted to tell the story, one that you can read and follow along with.”
Skelly gave Gold “unfettered access” to the company and its deliberations as it worked to build as many as five long-haul lines. “People in the company thought this was the stupidest idea they had ever heard,” Skelly said.
The Talking Industry
The Plains & Eastern Clean Line was central to Clean Line’s plans. The 700-mile line from the Oklahoma Panhandle’s wind farms to Memphis, Tenn., was to carry 4 GW of renewable energy for purchase by the Tennessee Valley Authority, proving the viability of Clean Line’s other projects.
Gold remembers sitting in meetings in Clean Line’s fishbowl conference rooms and watching the staff walk by.
“You could tell who didn’t like the project by their scowls,” he told Skelly during the Rice event. “Trying to build a big transmission line is incredibly difficult. It takes a lot of focus. One of my concerns was having this writer in and out of the office would distract you.”
“Heisenberg’s Cat came to be shorthand for the fact that mere measurement of an atom changes it,” he said. “Digging too deep into TVA and how TVA was handling the Plains & Eastern proposal would affect the outcome.”
As a result, Gold was allowed to sit in on Clean Line’s side of the discussions, as long as he held off requests for interview and making details public until negotiations ran their course.
Gold layers story upon story in the book, providing side trips into the long effort to develop renewable energy. He writes about the conception of electricity in Thomas Edison’s Pearl Street Station, Samuel Insull and his nephew’s attempts to build electric monopolies, and a group of students who took on Consolidated Edison in 1970s New York by building a wind turbine atop an East Village tenement.
Industry insiders are likely to come across personally familiar names in “Superpower,” a result of the more than 150 interviews Gold conducted during his intensive research.
Skelly helped Gold pitch the book during the Rice event, saying while he had “no economics in this, we need people to buy this book.”
“I started Clean Line because we realized one of the biggest challenges we faced was getting energy from where the resources are really good to where the power is needed,” he said.
Referencing California’s overabundance of afternoon solar energy, Skelly said, “I’m sure [solar] power is free right now in California. We’re using a lot of power in Texas, so we could use some of it.
“Everyone realizes an interconnected system is an optimal way to build a grid,” he said. “It’s not entirely clear which is bigger: The industry of building a national grid, or the industry of talking about building a national grid? We depend more on a state-by-state approach.”
Reflecting on his experience, Gold said that it will take more than an “entrepreneurial outsider” for the nation to realize the impacts of renewable energy. As he said, “It’s always windy or sunny somewhere” in the U.S.
“If there’s a way to get the different RTOs to cooperate with each other, that would be very helpful,” he said. “The history of the United States grid has gotten bigger and bigger, with more and more networking. Think of an integrated, continent-wide network. There’s a lot of benefits to that.”
And a huge bite of cheese, for the mice that come later.
A call for conservation, lower-than-expected temperatures and slightly higher-than-expected wind energy helped ERCOT avoid taking emergency actions during scarce conditions last week.
The National Weather Service had expected temperatures to reach triple digits in the state’s major metropolitan areas into the weekend. Temperatures ended up being 2 to 4 degrees lower in many of the cities, with rain in some parts of the state helping dampen demand.
Demand dropped as Sept. 6 conditions eased. | ERCOT
ERCOT’s system demand peaked at 68 GW and 68.8 GW on those two days. The latter set a new record for September, elbowing aside the 68.5-GW mark established Sept. 3.
“We are thankful to Texans for helping us conserve,” spokesperson Leslie Sopko said.
On Thursday, wind production was expected to be less than 1.5 GW during the early afternoon hours before coastal winds picked up. However, wind energy contributed an extra half-gigawatt when physical responsive capability was at its lowest.
“When the wind doesn’t blow, it gets interesting,” ERCOT COO Cheryl Mele said last week during the Infocast Texas Renewables Summit. “The driver to the day is how much wind do we have. On our peak days, we’ve definitely had a little less than we did on peak days last year. When [wind] gets down to 2 GW or less, it has an effect on price. We’re all sitting around hoping the wind really does show up.
“Anytime we’re seeing a forecast of less than 2 GW in the afternoon or at peak, it means we’re going to have an interesting day.”
Prices briefly hit triple digits on Thursday during the interval ending at 5 p.m., after settling at just over $5,000/MWh in the day-ahead market. On Friday, prices were in quadruple figures, topping out at about $1,778/MWh during the 2:35-4:45 p.m. time period. Day-ahead prices for Friday’s energy and ancillary services were both about $4,500/MWh for the day.
The Texas grid operator this summer has called two energy emergency alerts, its first in five years. (See “ERCOT CEO Briefs Commission on Summer Performance,” Texas PUC Briefs: Aug. 29, 2019.)
ERCOT began the summer with an 8.6% reserve margin. It set a new all-time peak of 74.7 GW on Aug. 12, and it has recorded 11 other demand marks above the record set a year ago. Last year, ERCOT broke its previous record 14 times.
Austin, home to ERCOT, exceeded 100 degrees Fahrenheit during 27 of August’s 31 days.
The New England Power Pool Markets Committee met last week to discuss ISO-NE’s proposed Energy Security Improvements (ESI), but the sense of urgency to act has lifted after FERC extended an October deadline by six months.
Todd Schatzki of Analysis Group was joined by ISO-NE economist Christopher Geissler to present an analysis of the impacts of ESI. Pressed by stakeholders on how the study would move forward with the deadline now pushed out to April, Schatzki said the effort will benefit from the additional time — but that his firm is not expecting any delay in its work.
Geissler said that although the energy security improvements team would no longer be “going at breakneck speed,” it was committed to getting out the best design as soon as possible.
The New England States Committee on Electricity (NESCOE) filed the motion for the delay, asserting that the complex market design effort in the region was being unduly rushed. (See FERC Extends ISO-NE Fuel Security Filing Deadline.)
Forward Market
Rebecca Hunter, Calpine senior analyst of government and regulatory affairs, presented again on the company’s proposed Forward Enhanced Reserves Market, expanding on its current position and suggesting modifications to ISO-NE’s proposal. She said Calpine will use the extension to spend more time on draft Tariff language.
“In terms of the need to run RAA [resource adequacy analysis], I do see it happening as often as you would award for EIR [energy imbalance reserves],” Hunter said. “If you think about it, with the ISO awarding resources for EIR, the operators are not going to have any information about those resources being awarded, so when they go to decide who they should commit under the RAA process, they’re going to be starting down from the bottom of the stack.
Calpine’s Forward Enhanced Reserves Market (FERM) is a market design intended to pay all fuel-secure resources equally. | Calpine
“There’s a chance that maybe they’re picking up that same EIR resource in the RAA process, and I do identify that as getting paid for the same thing, that has been awarded twice, or there’s also a chance that they’re running a completely separate resource,” she added.
Geissler led a discussion of the framework for developing a forward component to the ESI design.
“I don’t know how we’d get the linkage between the forward sale of fuel and the expected obligation in the [day-ahead] market, or how those settle,” Geissler said. “For example, if there is no linkage, there may be concerns about how resources can be compensated for fuel through a couple different mechanisms, but at the same time, without a spot market that looks a lot like this, it’s not necessarily clear to me how to link the two in a sensible way.”
Stakeholder Amendments
Christina Belew of the Massachusetts attorney general’s office presented three amendments to the ESI proposal, each to be voted on separately by the MC:
Restrict use of generation contingency reserves, replacement energy reserves (RER) and EIR to winter months; and require impact analysis and NEPOOL stakeholder process before implementing ESI year-round.
Limit use of 90-minute and 240-minute RER options year-round.
Add a sunset provision to the proposed energy security improvements to trigger review of program need and efficacy.
Belew said her office was no longer going to proceed with its forward stored energy reserve proposal — a seasonal auction format for stored energy options — because after modifications were made to address stakeholder concerns, it no longer met the attorney general’s original objectives of providing the most efficient solution at least cost to consumers, fairness to all resources and responsiveness to future changes in resource mix.
NESCOE Director of Analysis Jeffrey Bentz also presented four possible amendments, including restricting EIR and RER to the winter months, but said the group is “considering these as one set of potential amendments, not four separate amendments.”
Another amendment would implement a must-offer requirement for resources with capacity supply obligations, while another would increase by 25% the strike price for ISO-NE’s proposed hourly energy call options — and create two options.
“Even with these amendments, analysis suggests that ESI as amended would be unlikely to fully solve the emerging concerns around market power mitigation but would be a step in the right direction,” he said. “We may decide to separate, eliminate or modify these based on today’s discussion and those going forward.”
David Errichetti of Eversource Energy briefly presented an amendment to address the company’s concern that the RTO’s interim Inventoried Energy Program would overlap with energy security improvements for winter 2024/25.
ISO-NE has promised to develop netting rules to address paying for both programs but has presented nothing yet, so NEPOOL is being asked to approve these rule changes without knowing if the netting rules will avoid paying twice for winter 2024/25 operations reliability, Errichetti said.
Robert Laurita, on behalf of the Connecticut Public Utilities Regulatory Authority and the Department of Energy and Environmental Protection, presented their amendment to the Tariff language concerning quarterly certification of the competitiveness of the energy call option offers in the day-ahead market and the related clearing prices.
Pending consideration of an amendment from PSEG Long Island, the RTO on Wednesday postponed a vote on Tariff changes to clarify that a resource retained for fuel security will only be retained until the end of the fuel security need and no longer than the two-year period allowed by FERC. The MC will vote on the matter at its Sept. 18 meeting. (See “Time Limit on Fuel-security Resources,” NEPOOL Markets Committee Briefs: July 30, 2019.)
DTE Energy’s latest integrated resource plan before the Michigan Public Service Commission is attracting several detractors who say it is short-sighted and relies blindly on fossil fuels.
DTE filed the IRP in spring to cover 2020 through 2035. Last month, several environmental and renewable energy proponents called for the PSC to reject the plan when it rules on it in late January (U-20471).
Reaction to the plan is a now familiar salvo in the industry: Environmentalists and renewable advocates maintain the utility is not making enough progressive change and is snubbing alternative energy sources on a grid that they say will soon be brimming with new technology.
Or, as Robert Rafson put it in testimony on behalf of the Great Lakes Renewable Energy Association, DTE relies on “traditional, backward-thinking, business-as-usual practices compared to ideal forward-thinking planning.”
Rafson said DTE’s plan includes a “minimum level of adoption of new technology.”
DTE rendering of Blue Water Energy Center | DTE Energy
The company is currently constructing the $1 billion, 1,150-MW gas-fired Blue Water Energy Center to replace about 2,000 MW of retiring coal plants in southwestern Michigan. The utility will retire the 277-MW River Rouge plant next year, and the 1,260-MW St. Clair and 485-MW Trenton Channel plants by 2022.
The IRP also proposes multiple gas-fired plants rated at about 400 MW, 693 MW of wind generation, 11 MW of solar with on-site storage and 859 MW in demand response programs by 2024.
“It is disingenuous for DTE to pat themselves on the back for reducing their carbon emissions when most of that reduction is derived from inefficient coal generation to more efficient natural gas and energy efficiency which they don’t even pay for,” Rafson said.
Union of Concerned Scientists analyst James Gignac — representing UCS, Environmental Law & Policy Center, The Ecology Center and Vote Solar, among others — said the IRP is so “fundamentally flawed” that Michigan regulators should outright reject it and order an amended filing.
“Doing so will ensure that coal plants are not being operated longer than they should and that investments in clean energy options are being pursued sooner and at the lowest cost,” he testified. Gignac said DTE simply assumed that its Belle River and Monroe plants would operate until 2030 and 2040, respectively, without considering their operations and maintenance costs or possible hundreds of millions of dollars in environmental mitigation retrofits.
DTE has previously committed to end coal use by 2040 and has a 50% renewable energy goal by 2030.
“In several ways, the IRP modeling was effectively prevented from choosing other more cost-effective resources,” Gignac told the PSC. By “hardcoding” the coal plants into its plan, Gignac said DTE assumes that any added capacity provides zero value, even as the costs of wind and solar generation, battery storage and behind-the-meter resources rapidly decline.
“DTE forced its modeling to over-rely on existing, company-owned resources, which produced suboptimal results and portfolios with inflated present value of revenue requirement,” Gignac said.
DTE has told the PSC that its plan is the “most reasonable and prudent means” of meeting demand through 2035. The company said it’s now focused “on more clean energy and less coal,” and has also concluded it won’t have a “persistent capacity need” until 2030, when the mixed-fuel 1,395-MW Belle River Power Plant near the Canada border is expected to retire.
But consultant Robert Fagan — speaking on behalf of the Michigan Environmental Council, Natural Resources Defense Council and Sierra Club — said DTE is failing to account for ITC transmission upgrades in place by 2023 that will increase the Lower Peninsula’s capacity import limits and expand energy purchase options “from the broader MISO region.”
Fagan said MISO Zone 7 capacity import limits are set to increase anywhere from 1,000 to 2,000 MW above the current approximate 3,200-MW limit and called DTE’s decision to use the current limit in out-year planning “not credible.” The environmental groups urged DTE to pursue bilateral purchase alternatives and an earlier retirement of Belle River.
Following nearly a year of internal changes, PJM is now backing off previous indications that it would reconsider the nature of its periodically fraught relationship with its Independent Market Monitor.
In its request to dismiss a separate IMM complaint over fuel-cost policy in January, PJM argued that Order 719 established the Market Monitor as an “element of a jurisdictional RTO/ISO.” Thus, if the commission allowed the IMM to file complaints under Federal Power Act Section 206, a new governance structure was needed that provides “complete independence” for the Monitor and no longer mandates reporting to the Board of Managers (EL19-27).
The commission’s August ruling denying PJM a rehearing opened the door for the RTO to take action on the issue. But interim CEO Susan J. Riley has signaled a softening of PJM’s position, releasing a joint statement with Monitor Joe Bowring on Thursday that reaffirmed their “relationship of mutual respect.”
“We both have a commitment to fair and competitive markets, even though from time to time we have differences of opinion,” the statement reads. “PJM values the Market Monitor, and we are both committed to our contractual relationship. The FERC’s decision in no way changes that relationship.”
Long-simmering Debate Put to Rest — for Good?
Members said PJM’s perceived frustration with its Monitor dates back at least a decade, as their disagreements, few as they may be, became more public.
In September 2016, the Monitor complained that PJM’s plan for evaluating fuel-cost policies usurped its authority and contradicted the Tariff’s specification of their respective roles (ER16-372). PJM, in its defense, said the Monitor’s complaint crossed the line and muddied their contractual relationship, as overseen by the Board of Managers. In its request for rehearing, the RTO said that Attachment M of the Tariff permits the Monitor to file complaints against market sellers over fuel-cost policy violations, but not against the RTO itself. It also said that its board’s oversight of the Monitor’s budget creates a conflict of interest.
The tension came to a head when the Monitor filed a separate complaint in December 2018 over PJM’s decision not to assess a penalty against a market seller that did not follow its approved fuel-cost policy. The RTO responded the following month by suggesting FERC “revisit” Order 719 and “reform PJM’s governance structure so that PJM’s Market Monitor is no longer accountable to the PJM board and establish it as truly independent from PJM with clear standing to bring complaints.”
FERC has not issued a ruling on the 2018 complaint. But it rejected both the Monitor’s and PJM’s arguments in the earlier docket. It also found “unconvincing” PJM’s conflict-of-interest argument.
“There is no conflict,” Monitor Joe Bowring said during an interview with RTO Insider on Wednesday. “The board can’t tell us what to file. It’s not part of their authority over us.”
Bowring also noted that the board can’t sever ties with his firm, Monitoring Analytics, under the contract terms to which they both recently agreed.
“We can’t ‘cut off’ PJM board oversight of Monitoring Analytics — and nor would we want to, without a different and better governance construct in place,” Jeff Shields, PJM spokesperson, said in an email to RTO Insider on Thursday. “We believe there are better options, but this is a policy choice bound by legal considerations that FERC and the courts respectively would have to embrace.”
Still, PJM gave no indication it would pursue further legal action on the issue. “The board does not have substantive oversight over the positions of the Market Monitoring Unit,” Bowring said. “There is nothing in the FERC order that contradicts anything in the Market Monitoring Plan or in the contract between PJM and the Market Monitoring Unit.”
States Prioritize Stronger PJM/IMM Bond
Jackie Roberts, director of the West Virginia Public Service Commission’s Consumer Advocate Division, said the Monitor plays a crucial role through its independence and “ability to discharge its responsibilities to members.”
“If PJM is sincere about changing the culture, they need to see the Market Monitor as part of the solution, not part of the problem,” she told RTO Insider. “The Monitor needs to be brought into issues early on.”
Indeed, change has swept through PJM throughout the last year. Longtime CFO Suzanne Daugherty resigned in April, CEO Andy Ott retired in June and Nigeria Poole Bloczynski came aboard as the organization’s first chief risk officer in July. She will lead the credit and market reforms anticipated in the wake of the GreenHat Energy default. (See Report: ‘Naive’ PJM Underestimated GreenHat Risks.)
Other stakeholders echoed Roberts’ desire for a stronger partnership between PJM and the Monitor in FERC filings and letters to the head of PJM’s search committee for a new CEO.
“Just as PJM recognizes the rights of states to their policies, PJM must recognize the right of the IMM to be an independent body,” Kristin Munsch, president of Consumer Advocates of the PJM States, in a July letter to the committee. “Arguments parsing Tariff language distract from the larger questions of how to use competitive markets to provide affordable and reliable electricity service.”
“Fact of the matter is that PJM and the Market Monitor agree on far more issues than they disagree upon,” Roberts said. “I think we have to focus on that.”
Consumer advocates weren’t the only stakeholders to intervene in the proceeding. PJM Power Providers sided with the RTO in its dismissal request, saying previous commission guidance supports its interpretation of the Monitor’s ability to file complaints.
The Edison Electric Institute took no official position, but it urged FERC to consider a governance structure that excludes the Monitor from playing a primary role in drafting tariff revisions, manuals or other documents, or implementing rule changes “that they ultimately monitor.”
“When possible, Market Monitors should attempt to address perceived areas of concern associated with behaviors or practices of market participants through a fact-based transparent resolution process before taking formal steps of referrals to regulatory authorities or otherwise,” the EEI wrote. “As part of the process, prior to referrals to regulatory authorities, market participants should have the ability to challenge the Market Monitor’s findings pursuant to a dispute resolution process as outlined in the tariff.”
Taking a cue from PJM’s financial transmission rights market debacle, MISO will this month draft Tariff changes designed to further protect all of its markets from financial defaults — including a measure that could spell bans for defaulting parties.
MISO is proposing to increase collateral requirements in its FTR markets based on perceived risk and give itself discretion over banning a potential participant from joining or re-entering any of its markets in extreme cases.
The RTO is seeking to implement a 5-cent/MWh minimum collateral requirement for FTRs and a mark-to-auction mechanism that would estimate the market value changes of an FTR portfolio by calculating the difference between purchase prices and the most recent auction prices. (See MISO Proposes Protections for FTR Market.)
The plan also aims to prevent known “bad actors” from participating. The provision would extend to those with a material financial default or named in a case “involving malfeasance or manipulative behavior,” said Jordan Cole, of MISO’s credit and risk management team. The RTO would review public charging documents to decide whether to prevent an entity facing manipulation allegations in other markets from entering its market.
While MISO can already suspend trading privileges for those who default within its own market, it is also considering whether to increase collateral requirements and allow for a five-year ban for any company with default values at more than $1,000 in other markets. MISO would decide to take either action on a case-by-case basis.
“We think this $1,000 is a low enough bar that it isn’t prohibitively insurmountable,” Cole said during a conference call Wednesday. He and other staff stressed the RTO is open to stakeholder suggestions to refine the proposal.
The RTO is additionally proposing guidelines to allow market participants to re-enter the market without posting additional collateral if they cure a default within a week. Participants taking more than a week to remedy a default would also be permitted to re-enter but could face additional collateral requirements up to either twice the default value or their highest exposure over the last 12 months.
MISO is also proposing that parties submitting its Annual Certification Form must attest to past defaults, even if they occurred under a different company name or an affiliate. The RTO would also ask market participants to disclose any bankruptcies, mergers or acquisitions in the last five years.
“This will help MISO respond accordingly under a case-by-case basis,” Cole said.
MISO will also draft language to allow itself to act when any market participants exhibit “financial warning signs.” Cole said any course of action upon discovering red flags would be up to management’s discretion on a case-by-case basis.
Stakeholders on the call asked that MISO consider additional collateral requirements before it issues suspensions or bans.
When asked by stakeholders about the prospect for appealing suspensions or bans, MISO credit analyst Brian Brown said market participants are free to challenge RTO decisions at the FERC level. “We’re obviously not the last voice in this process. We’re an intermediate voice charged with protecting the market,” he said. “The reality is a financial default is a financial default.”
Brown added he doesn’t envision MISO ever utilizing market bans, but he noted it has not ruled out the possibility.
Executive Director of Strategy Shawn McFarlane said MISO had set out to re-examine its FTR market even before GreenHat Energy’s record default in PJM.
“Sometimes we are guilty of being reactionary. … This time we were looking at tightening this up even before GreenHat became public,” he said.
MISO staff have said the RTO will continue to examine its credit practices after the new rules take effect. The RTO plans to file the proposal with FERC by the end of the year.
“I don’t think the book will ever be closed on FTR improvements. At any given time, the market can change, and we will certainly re-evaluate and reopen this, if need be,” Brown told stakeholders at the Market Subcommittee meeting last month.
CAISO and BC Hydro officials recounted their first challenges as newly minted reliability coordinators, while ERCOT and SPP officials talked of surviving a difficult summer at the NERC Operating Subcommittee meeting Wednesday.
James E. Hartmann Jr., senior manager of system operations for ERCOT, said the Texas grid operator had a “difficult August,” which saw it set a new all-time peak of 74,531 MW on Aug. 12 and a new weekend peak of 71,864 MW. Level 1 energy emergency alerts were called on Aug. 13 and 15 because of increased forced outages and a reduction in wind production.
CAISO will provide RC services for about 80% of the Western Interconnection when it and SPP take over from Peak Reliability later this year. | WECC
ERCOT also set a new September peak on Tuesday, hitting 68,546 MW, almost 1,600 MW above the old mark. “Unless something changes, we’ll hit a new September peak probably at least a couple more times this week,” he added.
SPP also reported a challenging summer, starting with flooding along the Arkansas River in late May that resulted in generation outages and a switch to conservative operations on several occasions. An EEA 1 was called Aug. 6, resulting in the RTO calling back from ERCOT some switchable generation. The balancing area hit an all-time peak on Aug. 19, topping the previous record by 40 MW.
The RTO went into conservative operations seven times during the summer because of generation outages, higher loads and subpar wind production.
Tests for New WECC RCs
CAISO, which became the RC of record for California on July 1, was tested that month by an earthquake and wildfires that forced the de-energization of two of the three lines at the California-Oregon Intertie (COI).
Tim Beach, director of reliability coordination for CAISO and its RC West, said the July 4-5 earthquakes caused no apparent damage to the bulk electric system, although a couple of 115-kV lines tripped and reclosed. An inspection afterward, however, found that some 230-kV disconnects “were unseated; in other words, they weren’t at their full stop and closed,” Beach said.
The wildfire forced two shutdowns of Malin-Round Mountain lines 1 and 2 over two days at the end of July. The Captain Jack-Olinda line remained in service.
Beach said CAISO worked with Peak Reliability and the Bonneville Power Administration to reduce the flow on the COI below the threshold that would trigger the separation scheme if the third line had been lost.
“With the open loop in that position — all the power from Oregon having to go all the way around the eastern side of the loop and come all the way up into California to the load centers — it’s a long way to move the power, so we try to balance the power, especially in California,” he said. “So, we get that interface down to less than 600 MW, on an interface that has a limit of 4,800 MW. It’s quite an evolution of redispatch when we go into that mode.
“Once you get the flow down and you’re not worried about the facility tripping and triggering the RAS [remedial action scheme], we worry about the RAS being triggered accidentally, because it’s really not needed at that time. So, we worked to disable the RAS while the flows are that low.”
If the RAS had triggered, it would have broken the West into islands, with California separating from the Southwest, he said. “Hopefully the islands will survive, and if there’s one that’s not going to survive, [we hope] that it goes down by itself — it doesn’t take the whole loop with it,” he said. “It was a pretty interesting operating period, but it was gratifying to see that we were able to work through it as a new RC and coordinate with everybody.”
RC West started shadow operations for its expanded footprint on Wednesday.
The timeline for the transition from Peak Reliability | WECC
BC Hydro ‘Grateful’
Asher Sneed, manager of system operations for BC Hydro, said he was grateful for a “normal summer.”
“We’ve had three exceptionally dry summers [and] three years of exceptional wildfire activity. And after what was quite a warm and dry spring, it was nice just to have a … summer where we had pretty much normal precipitation levels,” he said.
BC Hydro did have one wildfire impact the BES shortly after beginning its RC shadow operations.
The fire in the Okanagan region of British Columbia caused the shutdown of one 500-kV and three 230-kV lines. “The system loads and temperatures were fairly moderate, so there was really no concern [over] a next contingency preparation. But it definitely was a good test for our RC in the shadow period,” Sneed said.
Other Regions
Other regions also provided updates.
Alberta started the year with forest fires in the northwest, but rains helped eliminate the threats. The province was considering a capacity market, but a new government decided to remain with its energy-only market.
Subcommittee Chair Chris Pilong, director of dispatch for PJM, said the RTO’s summer peak of 152,000 MW, set July 19, was about what was predicted in its 50/50 forecast and well below its all-time peak of more than 164,000 MW.
Lacy Skinner, assistant chief system operator for NYISO, reported an uneventful summer. Temperatures above 90 degrees Fahrenheit only lasted for two or three days at a time with no prolonged heat waves, he said. For the first time, the summertime peak — 30,400 MW — was on a Saturday.
The ISO is conducting parallel testing of its new ABB emergency management system, nearing the end of a three-year project. The switch is expected to be complete in mid-October.
Michael McMullen, MISO’s director of regional operations, reported a “relatively calm” summer with the yearly peak July 19 below its 50/50 forecast.
John Norden, ISO-NE’s director of operations, said the RTO experienced its hottest month on record in July. Temperatures approached 100 F throughout New England on July 20-21, when loads hit about 24,000 MW. The two days placed among the RTO’s top five weekend loads.
In Ontario, a cool spring extended into June resulting in power surpluses that forced the shutdown of a nuclear unit on some weekends until heat pushed up loads in July.
Francis Monette, manager of system scheduling and operations for winter-peaking Hydro-Québec, also reported a quiet summer. “Sometimes we have thermal constraints in the south region in summer due to outages. However, this year, the outages in the south weren’t that bad, and we have a new 735-kV circuit that was commissioned at the end of May, which gave us more transmission availability in the south,” he said.
The Carolinas were bracing for Hurricane Dorian following an uneventful summer. Duke Energy’s Brunswick nuclear plant was expected to have to come offline because of hurricane-force winds. South Carolina entered a moderate drought stage about a month ago.
Solar generation is continuing to accelerate, but onshore wind appears to be losing momentum outside ERCOT and Alberta, RTO officials told the NERC Operating Reliability Subcommittee on Wednesday.
Committee members discussed the growth of wind and solar generation following Committee Chair Chris Pilong’s observation that wind growth has plateaued in PJM while solar and batteries are “starting to ramp up.”
“There’s still wind coming online, maybe not at the velocity that it was in the previous few years, but there’s still some in the queue,” said Michael McMullen, MISO’s director of regional operations. “The solar is definitely picking up.”
Cumulative U.S. wind capacity | American Wind Energy Association
Lacy Skinner, assistant chief system operator for NYISO, said New York is seeing more behind-the-meter solar. “The last couple years, we [had] a rush [of wind]. We got about 1,700 MW of wind at one point in time. And then over the last couple years, we’ve only added another 150 [MW]. So, it has kind of slowed down.”
NYISO’s first battery project is in the testing stage. “I know there’s a bunch more in the bucket,” he said.
Alberta expects to add 600 MW of wind this year to its existing 1,400 MW with another 700 MW next year — nearly doubling its capacity. A 400-MW solar farm is expected for 2021, its largest installation yet.
ERCOT, with 22,000 MW of wind installed, is showing no signs of slowing down, said James E. Hartmann Jr., senior manager of system operations. “We still have a lot coming,” he said.
The Texas grid operator has about 2,000 MW of utility-scale solar, “and we have at least twice that much coming,” he said. ERCOT will be adding a five-minute solar forecast into its energy management system.
Solar power was responsible for half of the generating capacity added in the first quarter of 2019. | Solar Energy Industries Association
“One thing we’re seeing [with] these big utility-scale solar farms, whenever a big cloud will go over them, you’ll see almost an instant drop of the generation. Not as fast [as] a unit trip, but it ramps very fast.”
SPP did not report on its wind growth at the meeting. As of Jan. 1, wind nameplate capacity was almost 23% of the RTO’s total capacity. Wind produced almost a quarter of its electricity in 2018.
ISO-NE is adding about 50 MW of solar a month, said John Norden, the RTO’s director of operations. “Five years ago, there was no solar in New England. We’re over 3,000 MW now. Our average load is about 15,000 [MW], so it’s not insignificant for us. We definitely see the duck curve.”
Norden said the biggest change coming to the region’s generation mix will be offshore wind. The RTO is planning to send some of its engineers to the North Sea “to see how they did it” in preparation for its first large farm, the 800-MW Vineyard Wind project off Martha’s Vineyard and Nantucket.
Annual U.S. solar installations | Solar Energy Industries Association
He noted that the planned turbines will not be visible from land.
“If anybody followed the offshore programs in New England for the last couple decades, anything that could be seen from any landmass was killed. So, these are all over the horizon, and we suspect they will be built because they’re sponsored with state money.
“People are coming to us now [wanting] co-located batteries and solar farms and possibly wind farms included as a single asset. So, we’re trying to develop a product to dispatch those all together. And I think it will look like a battery when all is said and done.”
