Page 1221 – RTO Insider

January 2, 2018

Fast-Start Resource Pricing Adds to SPP’s Workload in 2018

By Tom Kleckner

FERC’s Dec. 21 order requiring SPP to help fast-start resources set LMPs added one more to-do for the RTO in what is shaping up to be a busy 2018.

SPP’s integration of the Mountain West Transmission Group drew much of the RTO’s attention in 2017. But it also has been working to solve underfunding issues in its financial transmission rights market, address stakeholder concerns over transmission cost allocations, identify seams transmission projects that can be built and incorporate the constantly increasing amounts of wind energy. And as they have for the last several years, stakeholders and SPP officials spent countless hours attempting to unravel the Z2 transmission project accounting mess.

Fast-Start Order

FERC gave SPP and stakeholders 45 days to file initial briefs in the Section 206 proceeding it created to drive Tariff changes to benefit fast-start resources. The commission found SPP’s approach “inconsistent with minimizing production costs” and ordered it to allow the commitment costs of fast-start resources (start-up and no-load costs) to be reflected in prices. SPP said it will decide its plan for responding to FERC’s fast-start order in early January. (See FERC Drops Fast-Start NOPR; Orders PJM, SPP, NYISO Changes.)

Working out the details will likely fall to SPP’s Market Working Group (MWG).

Congestion Hedging

The MWG has been spending the last few months working on improvements to SPP’s congestion-hedging process.

SPP’s Integrated Marketplace rules are intended to allow load-serving entities to translate firm transmission service reservations (TSRs) into a product that allows them to obtain credits to hedge daily congestion costs.

The RTO allocates auction revenue rights based upon firm network or point-to-point transmission reservations. But market participants have complained they are not receiving sufficient hedges.

Keith Collins, executive director of SPP’s Market Monitoring Unit, says the main area of concern is the initial transition from a physical transmission right (the TSR) to a financial right (the ARR).

SPP FERC fast-start resources LMPs — | *SPP*

Because ARRs are allocated months in advance of the day-ahead market, congestion patterns can change in the interim because of transmission outages, derates and upgrades and unexpected generation outages.

The MMU also notes that many prevailing-flow ARRs are not nominated, leaving hedges “on the table.” In addition, the availability of prevailing-flow ARRs is limited because most counterflow ARRs are not nominated.

Charles Cates, SPP’s manager of transmission services, told the Board of Directors in December that the RTO’s congestion market is about portfolios, not single-path entitlements and awards.

Staff say total congestion revenues continue to increase, with the revenues shifting from LSEs to financial entities (the non-ARR holders). Candidate ARRs associated with redispatch are contingent on completion of transmission upgrades, they say.

“Building transmission to help [create] more ARRs is an expensive answer to the problem,” Collins said.

The MMU has suggested hedging congestion from the physical day-ahead flow, taking the emphasis off day-ahead congestion prices.

Among the options SPP is considering are obligating the LSEs to nominate counterflow, reducing percentages in the annual transmission congestion rights auction, and limiting first-round ARR nominations by source and path.

The MWG will provide an update on its progress during the January board and Markets and Operations Policy Committee meetings. If the MWG can’t find a better mechanism, a task force could be created to take up the issue.

Mountain West Integration

The biggest to-do on SPP’s list is completing the integration of Mountain West, which primarily services Colorado, Wyoming and Nebraska. Mountain West announced its intention to join the RTO in January, but it had been holding discussions with SPP’s management team for almost a year prior. In September, Mountain West said it would begin public negotiations. (See SPP, Mountain West Integration Work Goes Public.)

SPP has established a Members Forum and State Commission Forum to assist with its due diligence effort. SPP’s Strategic Planning Committee spent the last quarter of 2017 conducting numerous executive sessions with Mountain West representatives. The discussions are expected to continue well into 2018.

Mountain West said it has had “significant success” resolving issues concerning rate design and cost-shift mitigation. Any changes to governing documents, such as SPP’s Tariff, bylaws and membership agreement, must go through the RTO’s stakeholder process for review before they are considered by the board. The Regional Tariff Working Group (RTWG) has primary responsibility for Tariff changes, while the Corporate Governance Committee will consider changes to the membership agreement and SPP bylaws.

SPP and Mountain West are working on an Oct. 1, 2019, target date for membership but will begin the regulatory approval process this year. FERC filings could come as soon as October, assuming the SPP board approves the integration at its July or October meetings. The RTO expects FERC review to take 60 to 180 days.

The Colorado Public Utilities Commission will play a key role in the process. The commission has jurisdictional authority over Xcel Energy’s Public Service Company of Colorado and Black Hills Energy, two of the eight Mountain West members seeking to join SPP. The PUC held three informational sessions on the merger last year and could hold as many as three more in 2018. (See Colo. Regulators Talk Governance with SPP, Mountain West.)

When it’s all over, SPP will have expanded its current 14-state footprint into the Rocky Mountains, adding Colorado, most of Montana and portions of Arizona and Utah. The new SPP will grow by 165,000 square miles, adding 16,000 miles of transmission lines and 21 GW of generating capacity.

Mountain West will eliminate the pancake transmission rates that led to its search for RTO membership, while SPP members will see 10-year net present value benefits of about $209 million, according to the RTO.

Z2

In October, the board approved a cleanup of Tariff language that it hopes will help it resolve long-standing problems with Attachment Z2 of SPP’s Tariff, which details how financial credits and obligations are assigned for sponsored transmission upgrades. (See “Z2 Fix Allows Short-Term Service Agreements to Expire,” SPP Board of Directors/Members Committee Briefs: Oct. 31, 2017.)

January 2, 2018

Wind Nearing Coal as ERCOT Ponders Thinning Reserves

By Tom Kleckner

ERCOT enters 2018 facing new questions, as the growth in wind energy has begun threatening not only coal but also less efficient natural gas-fired generation.

In late November, the 155-MW Fluvanna Wind Energy Project in West Texas went online, pushing ERCOT’s wind power capacity past 20 GW. The milestone came a few weeks after the ISO approved the retirement of 2.4 GW of coal-fired generation, dropping its coal capacity to 15.1 GW in early 2018. (See ERCOT OKs Luminant Coal Retirements.)

Reserve Margin Reduced

ERCOT reserve margins wind energy — Garza | © *RTO Insider*

The retirements, along with those of several gas resources, has halved ERCOT’s planning reserve margin to 9.3% for summer 2018, leading Beth Garza, director of the ISO’s Independent Market Monitor, to proclaim an end to the “fat and happy times.”

“We’ve had really two years of clearly unsustainably low prices with high reserve margins,” Garza told the ERCOT Board of Directors in October. “We’re looking at a much different situation going into the summer of 2018.”

The Monitor says it hasn’t seen a summer with such tight reserve margins since 2007. “Will we see coal generators making profits that justify future investment?” asked IMM Deputy Director Steve Reedy during an October conference, noting the Monitor has seen more capacity on the ERCOT system than might be justified.

“If the load doesn’t rise fast enough to justify the generation, we expect to see retirements. So, we will see [in 2018] if retirements in the market work,” Reedy said.

After bottoming out in 2016 with the lowest real-time prices ($24.62/MWh) since the nodal market began operations in 2010, the ISO has seen prices increase to an average of $28.56/MWh through November. Still, that 16% increase lags the 28% rise in natural gas prices over the same period.

Solar, Wind Dominate Queue

All the while, wind and, increasingly, solar projects continue to flood the market. More than 29 GW of wind and almost 25 GW of solar are currently going through some form of study, accounting for the bulk of ERCOT’s latest generator interconnection status report.

Joshua Rhodes, a research fellow at the University of Texas’ Energy Institute, projects ERCOT’s wind capacity to reach 24.4 GW by the end of 2018. Given current capacity factors and coal retirements, that means wind will surpass coal as a fuel source for electricity by 2019. Coal generation has accounted for 32.2% of the ISO’s production this year, compared to wind’s 17.5%. Natural gas exceeds both, at 39%.

So far, cheaper natural gas and wind have driven inefficient coal and gas plants out of the market.

“We haven’t had a true scarcity event in years, but if we have severe weather, we could have one,” said NRG Texas’ Bill Barnes, speaking on the same conference panel with Reedy. “That’s when we can all sit back and say, ‘Yes, that’s how it’s supposed to work.’ Or will there be temptation to intervene in the market?”

Market Rule Changes?

NRG Texas partnered with Calpine to sponsor a report of the ERCOT market, published in May. The report, coauthored by Harvard University’s William Hogan and FTI Consulting’s Susan Pope, recommends several market improvements, including adjusting the operating reserve demand curve (ORDC), adding local scarcity pricing and potentially implementing real-time co-optimization (RTC), to address intermittent renewables and improve incentives for generators. (See ERCOT, Regulators Discuss Need for Pricing Rule Changes.)

The Public Utility Commission of Texas, which regulates ERCOT, has conducted a pair of workshops to discuss price-formation issues in the Texas grid operator’s energy-only market (project 47199). Stakeholders have suggested a wide range of market improvements, from adjusting reliability unit commitment (RUC) mitigation rules and instituting penalty curves for pricing constraints, to incorporating marginal losses’ costs into dispatch decisions and requiring locational reserve requirements.

The question of whether to defer market design changes until after the summer is yet another issue that must now be resolved.

The Monitor has called RTC the “most vital” market improvement. RTC is “foundational” to efficient pricing, it told the PUC, “especially in an energy-only market like ERCOT where participants rely on energy prices to facilitate short-term decisions to commit generation and long-term decisions to invest and retire.”

“The benefits of RTC would be substantial, as supported by the results seen by other [ISOs] where RTC is implemented,” the Monitor said.

ERCOT staff have been working on a study of the costs and time it would take to implement RTC or marginal losses in the wholesale market. A July report indicated it would take at least $40 million and four to five years to make the changes. A September report lowered those figures to at least $10 million and 18-24 months.

In December, the ISO filed a proposed plan to further assess the benefits of implementing RTC and marginal losses. Staff suggest using IMM software code to run a simulation of RTC in historical security constrained economic dispatch (SCED) cases to estimate the cost savings on an interval-by-interval basis, a process they expect to take six months.

ERCOT said introducing RTC into the market would provide additional flexibility in the real-time market in locating ancillary services, which would require modifying the RUC engine “to ensure a reliable operating plan.”

Staff predicted it would take about six months to complete a benefits assessment of marginal losses. ERCOT and the Monitor have promised another status update by the end of the first quarter.

New Loads, Oncor Deal

In the meantime, the PUC will hold a hearing Jan. 17-18 on Lubbock Power & Light’s proposed migration of 430 MW of load from SPP into ERCOT. The commission is also waiting on the results of a joint study on Rayburn County Electric Cooperative’s proposed transfer of another 150 MW of load from SPP to ERCOT.

In February, the PUC is scheduled to conduct a hearing on California-based Sempra Energy’s proposed $9.45 billion acquisition of Oncor and its bankrupt parent, Energy Future Holdings. Sempra and Oncor on Dec. 14 filed a settlement they had reached with key Texas stakeholder groups. (See Sempra, Oncor Reach Deal with Texas Stakeholders.)

January 2, 2018

MISO in 2018: Storage, Software, Settlements and Studies

By Amanda Durish Cook

CARMEL, Ind. — MISO’s 2018 to-do list includes continuing efforts to expand energy storage participation, extensive software upgrades, a tardy five-minute settlements rollout and studies on its changing resource mix.

Storage Dialogue

In August, MISO stakeholders determined that creating energy storage market definitions and rules was the single biggest market issue for 2018. (See “Stakeholders Give Energy Storage Top Spot in Roadmap,” FERC Rule Would Boost Energy Storage, DER.)

In January, the task force plans to create a list of how storage currently participates in MISO markets and when it is and isn’t compensated to identify “gaps,” according to American Transmission Co.’s Bob McKee. Fernandes said that he didn’t want to simply roll storage benefits into a fixed transmission charge “on the backs of ratepayers.”

MISO Executive Director of Market Design Jeff Bladen said the RTO will work on storage attribute compensation “to the extent to which we can identify appropriate uncompensated attributes.” He warned that not all stakeholders will agree that certain attributes ought to be compensated.

External Capacity Zones

MISO hopes in 2018 to conclude yearslong efforts to introduce external capacity zones into its Planning Resource Auction. In response to the increase in intermittent generation and an aging baseload fleet that’s more prone to outages, the RTO also is considering setting capacity procurement requirements for load-serving entities. MISO predicts it will require just more than 17% of reserves for the 2018/19 planning year, a requirement that’s been steadily increasing year-over-year.

5-Minute Settlements Deferment

Some of MISO’s 2018 capital spending will be devoted to a delayed execution of FERC-ordered five-minute settlements.

In mid-November, MISO asked FERC to delay the settlements’ go-live date to July 1, instead of March 1 (ER18-314), after stakeholders said the RTO’s behind-schedule replacement of its overall settlements computer system would result in a rushed process for members to make their own software adaptions to accommodate the new process. The extra time will be used for software testing for both MISO and its member companies. (See MISO Members Seek Delay on Five-Minute Settlements.)

Raising the Offer Cap

The RTO also must regroup and plan direction on a revised Order 831 compliance filing after its energy offer cap design was rejected by FERC (ER18-300) in November.

FERC turned down MISO’s $1,000/MWh soft cap and $2,000/MWh hard cap, saying it would prohibit resources from submitting cost-based offers above the hard cap. (See MISO to Seek Waiver After FERC Rejects Offer Cap Plan.)

Queue Discussion Lined Up

MISO’s new interconnection queue design was accepted by FERC at the beginning of 2017, but there may be more changes coming.

Although the new queue design is meant to reduce the amount of time spent on studies, a very full queue project line-up has MISO staff warning stakeholders of delays.

Some stakeholders have already asked FERC to force additional rule changes. (See EDF Asks MISO to Revisit Queue Overhaul.)

“We just went through a rather exhaustive queue reform, but now that we’ve got the process and implemented it, there are a certain number of stakeholders that don’t believe it’s working,” said Wisconsin Public Service’s Chris Plante during the December Advisory Committee meeting.

MISO energy storage software upgrades — December Advisory Committee | © *RTO Insider*

MISO President Clair Moeller said the last time that the queue was this packed was in 2007.

About 60 GW of proposed generation is seeking interconnection, including 30 GW of wind, 15 GW of solar, 12 GW of natural gas and 600 MW of other resources. The queue also holds about 140 MW of prospective battery storage capacity.

“There’s a lot of capacity in the queue, and a lot of it won’t come online, but a lot of it will,” MISO CEO John Bear said during a Sept. 21 Board of Directors meeting.

Market Platform Replacement

MISO’s information technology department and vendor General Electric will begin in 2018 a seven-yearlong replacement of its market platform, the system responsible for operation of the day-ahead and real-time markets.

“These systems were designed in the late 90s and began operation in the early 2000s, and you think about all the technology advancements since then and how the cybersecurity threat landscape has changed,” Kevin Sherd, MISO director of forward operations planning, said at a December Market Subcommittee meeting.

The RTO expects to spend $21.7 million in 2018 on the project, one-sixth of its planned total spending over the next seven years. (See MISO Makes Case for $130M Market Platform Upgrade.)

MISO is looking for a system that “will best position us for the future,” Sherd said. The RTO’s current inflexible system, which has become increasingly challenged by market changes, will be swapped for a modular market platform allowing programs to be changed without impacting others. “Building something that is more adaptable is our core principle,” he said.

New Website

MISO will fully launch its new external website in the coming weeks. Sometime after January, MISO’s current site will shift to the web address old.misoenergy.com. The RTO will maintain its old public website through the first quarter to make certain that it still has a website in the event of a failure of the new website.

A beta version of the new website has been up since October at beta.misoenergy.org, where the RTO recently added log-in capability for meeting registrations.

Competitive Bidding in 2018

MISO will oversee the competitive bidding of the yet-unapproved $130 million Hartburg-Sabine 500-kV line market efficiency project in eastern Texas this year. (See MISO Board Approves $2.6B Transmission Spending Package.)

The Hartburg-Sabine project will be MISO’s second-ever competitively bid transmission project and the first such project to include a substation. The RTO plans to add two new staff members to oversee the competitive process. The line is intended to alleviate constraints in MISO South’s West of the Atchafalaya Basin load pocket area spanning Texas and Louisiana.

Meanwhile, work is underway on the Duff-Coleman 345-kV transmission project in Southern Indiana and Western Kentucky, MISO’s first competitively bid project. For most of 2018, LS Power subsidiary Republic Transmission will work on project design, environmental permitting and securing rights of way. Construction is slated to begin the fourth quarter of 2018. MISO selected Republic’s $49.8 million proposal for the new, 30-mile, 345-kV line last December. (See LS Power Unit Wins MISO’s First Competitive Project.) Republic said it expects to encounter “construction risks and challenges,” most notably acquiring federal permits to cross the Ohio River.

The PJM Relationship

MISO and PJM also hope to implement a two-part fix in early 2018 to remedy their double-charging of congestion fees on pseudo-tied generation. The RTOs are facing five complaints concerning overlapping congestion charges for pseudo-tied generators. (See MISO, PJM Pursue Pseudo-Tie Double-Charge Relief.)

The fix has been complicated by the discovery that PJM has been making errors on market-to-market calculations.

For years, PJM has been overstating its own transmission loading relief (TLR) because of a calculation error and its failure to order mandated tests required to define M2M constraints between the two RTOs. (See MISO Board, Monitor Seek Response to PJM M2M Missteps.)

“We’re going to explore with PJM what needs to happen retroactively and maybe what needs to happen going forward,” Bladen said during a Dec. 14 Market Subcommittee meeting.

Sign-of-the-Times Studies

MISO is planning studies in 2018 on how to respond to increasing natural gas and renewable generation. One study will gauge how the natural gas supply affects MISO’s dispatch ability.

Vice President of System Planning Jennifer Curran said the RTO and stakeholders will work throughout 2018 to “recognize the impact large gas pipeline contingencies have on the MISO system.”

Curran said MISO already has a good idea of where pipelines are located, but it wants to analyze the footprint’s gas supply and the potential consequences if some infrastructure were to fail.

MISO’s 2018 Transmission Expansion Plan will seek to identify where wind generation is likely to grow the fastest.

At the Annual Stakeholders’ Meeting in June, Board Chairman Michael Curran said he had confidence MISO could scale future obstacles, including portfolio evolution, renewable penetration and future federal and state regulations.

“It’s a very unsettling time. It’s almost as if the earth is moving from under us. And that may be the case in Oklahoma with fracking ― unproven of course,” he quipped.

January 2, 2018

CAISO Bid for Western RTO to Face Competition in 2018

By Jason Fordney

The Western Energy Imbalance Market (EIM) expanded its footprint and ambitions in 2017 while new suitors lined up to compete with CAISO as the vehicle for a Western RTO.

CAISO EIM Western RTO resource adequacy — Current and pending members of CAISO’s Western EIM | *CAISO*

Idaho, Washington, Arizona, Nevada and Canadian provinces are considering how to access regional markets while protecting the financial health of their resources and keeping costs reasonable for consumers.

The EIM has been recognized as a success story. The increased efficiency of regional dispatch and having more offramps for generation are attractive not only for renewables, but also for coal, hydro and natural gas generation in the market’s balancing authorities.

Five utilities have joined the EIM since its inception in 2014, including Portland General Electric in 2017. Six others have announced plans to join: Idaho Power and Powerex in 2018; Los Angeles Department of Power & Water and the Sacramento Municipal Utilities District in 2019; and the Salt River Project and Seattle City Light slated for 2020. In December, CAISO announced plans to expand its EIM offerings with a day-ahead market. (See CAISO Plan Extends Day-Ahead Market to EIM.)

Mountain West, Peak Reliability

But CAISO faces competition in its bid to expand into a RTO.

Last January, Mountain West Transmission Group said it would begin talks to join SPP. Mountain West, a partnership consisting of seven different transmission-owning entities within the Western Interconnection, covers most of Colorado and Wyoming with smaller areas of Arizona, Montana, New Mexico and Utah. The potential move has been of keen interest to regulators in the affected states. (See Colo. Regulators Talk Governance with SPP, Mountain West.)

In December, reliability coordinator Peak Reliability announced it would work with a unit of PJM to develop new market structures for the West. “We are continuing our review with PJM Connext of potential reliability services and markets in the West and our outreach with western industry leaders and stakeholders,” spokeswoman Rachel Sherrard told RTO Insider last week. (See PJM Unit to Help Develop Western Markets.)

Legislation Stalls

The California State Legislature ended its 2017 session in September after failing to pass bills that would have advanced CAISO’s regionalization efforts.

AB 726 and AB 813, which were returned to the Senate Rules Committee, would have repealed a section of the Clean Energy and Pollution Reduction Act of 2015 governing the transformation of the ISO into an RTO and created a Commission on Regional Grid Transformation. The bills would authorize the transformation if the CAISO Board of Governors and the commission took certain actions by the end of 2018.

Lawmakers say they will reconsider the legislation after they return to Sacramento this month. The debate over regionalization in California involves issues of state control over resources and policy, and highlights concerns over energy costs and the influence of labor groups worried over exporting energy jobs.

The legislature also is under heavy pressure to pass zero-carbon legislation that also fell short in 2017. California’s policies to phase out fossil fuels in favor of renewables and new technologies have raised cost concerns and forced changes to long-standing engineering approaches to accommodate more variable renewable output and the complexities of smaller, distributed resources. (See CAISO Regionalization, 100% Clean Energy Bills Fizzle.)

Gov. Jerry Brown has taken a defiant stance against President Trump’s environmental policies, recently traveling internationally to evangelize for fighting climate change.

Brown attributed the recent wildfire devastation in California to climate change, saying the state’s fire season is now months rather than weeks. Fire investigators are focused on utility infrastructure as a possible cause, setting up complicated and contentious proceedings at the Public Utilities Commission over penalties and cost recovery. (See CPUC Targets Wildfires, Multifamily Solar, RMRs.)

During an interview on “60 Minutes,” Brown discussed Trump and climate change in religious terms. “I don’t think President Trump has the fear of the Lord, the fear of the wrath of God, which leads one to more humility,” he said. “And this is such a reckless disregard for the truth and for the existential consequences that can be unleashed.”

This summer, Brown signed a bill that extended the state’s carbon cap-and-trade program until 2030. (See California Lawmakers Extend Cap-and-Trade.) The program will help the state meet its goal of reducing GHG emissions to 40% below 1990 levels by 2030.

Other CAISO, PUC Initiatives

In addition to its regionalization efforts, CAISO has more than a dozen other initiatives underway, with day-ahead market enhancements and resource adequacy at the top of the list in its 2018 roadmap. The conflict between state resource adequacy programs and CAISO’s reliability management are another priority because of the increasing number of reliability-must-run agreements.

The growth of community choice aggregators led the PUC to propose that they be subject to the same resource adequacy requirements as electric utilities. (See California Proposes Resource Adequacy Obligations for CCAs.)

In December, the board of the Western Electricity Coordinating Council, the NERC-designated Regional Entity for 14 Western U.S. states, Alberta, British Columbia and a small portion of Baja California, Mexico, endorsed a new three-year operating plan. The plan continues the transformation that began in 2014, when Peak Reliability split off from WECC as the Reliability Coordinator for the Western Interconnection, except Alberta. (See WECC Finding New Direction in Old Mission.)

January 2, 2018January 17, 2024

CORRECTED: New England Leads East in Renewables Transition

By Michael Kuser

ISO New England will open the new year by filing with FERC a two-settlement market construct to integrate state-sponsored renewable energy resources into the wholesale electricity market.

The New England Power Pool’s Participants Committee voted Dec. 8 on the two-tier market concept called Competitive Auctions with Sponsored Policy Resources (CASPR), but with 57.75% of the vote, the proposal failed to reach the 60% mark needed to be considered supported by the PC. Nonetheless, the RTO plans to file the proposal with FERC this month, according to spokesperson Matt Kakley. (See New England Strives to Find CASPR Consensus.) [Editor’s Note: An earlier version of this article incorrectly stated that the vote would be taken in January.]

Under CASPR, ISO-NE would conduct the Forward Capacity Auction in two stages, allowing existing resources that have capacity obligations and a desire to retire to trade out their obligations with incoming state-sponsored resources in a manner that doesn’t affect price formation in the primary auction.

In the primary FCA, resources would clear based on current rules, including those designed to mitigate offers below competitive prices such as state-sponsored resources. In the secondary or substitution auction, existing resources that cleared in the FCA would be able to transfer their capacity obligations to new sponsored policy resources that did not clear, with the existing resource agreeing to retire early in exchange for a “severance” payment.

CASPR, which arose from the Integrating Markets and Public Policy (IMAPP) process begun in 2016, is just one of the electricity policy issues facing New England.

State-Sponsored Renewable Energy

In January, Massachusetts will select the winners of last July’s solicitation for 9.45 TWh/year of hydro and Class I renewables (wind, solar or energy storage). Contracts with the winning bidders under the MA 83D request for proposals are due to be completed in late April.

The proposals include an HVDC transmission line from northern Vermont to New Hampshire to deliver 1,200 MW of new wind power from Canada; a 375-mile submarine HVDC transmission line extending from New Brunswick to Plymouth, Mass.; and a submarine cable under Lake Champlain to bring 1,000 MW of hydropower, solar and wind from Canada. (See Hydro-Québec Dominates Mass. Clean Energy Bids.)

Offshore Wind in Mass.

Three developers submitted proposals Dec. 20 in response to Massachusetts’ solicitation for up to 800 MW of offshore wind energy, offering projects that include a transmission “backbone” and storage to enable them to perform like a baseload resource.

The state’s 2016 Act to Promote Energy Diversity mandates that the Department of Energy Resources and the state’s distribution utilities sign long-term contracts for 1,600 MW of offshore wind by June 30, 2027.

The state’s first RFPs (solicitation 83C) called for a minimum of 400 MW but said the state would consider bids of up to 800 MW if it determines that a larger proposal is superior to and more economical than the others.

The three developers — all with ties to the state’s utilities — have purchased renewable energy leases off the coast from the federal Bureau of Ocean Energy Management. (See Mass. Receives Three OSW Proposals, Including Storage, Tx.)

The state will announce the winners of the offshore wind solicitation on April 23, and contracts are to be submitted at the end of July.

Storage Coming on Strong

As of December, ISO-NE reported more than 470 MW of energy storage in the interconnection queue, a nearly six-fold increase in one year.

Massachusetts is funding incentives to include energy storage in solar installations, as well as grants for peak demand reduction. Pairing energy storage with solar panels is meant to enhance grid resiliency by reducing the need for traditional generation to ramp up when the sun goes down. Peak reduction grants cover a wide range of projects, from utilities improving the efficiency of substations, to municipalities working to reduce the energy consumption of big-box retail stores, to a thermal energy storage project on Nantucket that will delay the need for a new undersea transmission cable. (See Massachusetts Awards $20M in Energy Storage Grants.)

The state in 2017 launched its Solar Massachusetts Renewable Target (SMART) program to provide incentives for “long-term sustainable … cost-effective solar development.” The program provides incentives based on location, and to projects that provide unique benefits, including community solar and energy storage

Massachusetts’s new Alternative Energy Portfolio Standard is the only one of its kind in the country. The final draft regulations, released Dec. 29, include combined heat and power, flywheel storage, renewable thermal, fuel cells and waste-to-energy thermal technologies. The regulations oblige all retail electric suppliers to acquire a percentage of their power from eligible technologies, starting at 4.25% in 2017 and increasing by 0.25% each year through 2020, and by the same amount each year thereafter, subject to DOER review.

Millstone Debate

Opponents of Dominion Energy’s bid to win state subsidies for its Millstone nuclear plant were cheered in December as consultants hired by Connecticut said the plant is likely to remain profitable through 2035 even under low natural gas prices. The report by Levitan & Associates concluded “there is no ‘missing money’ required to ensure Millstone’s financial viability through the existing term of Millstone’s Unit 2 operating license” in 2035. (See Millstone Likely Profitable Through 2035, Conn. Consultant Says.)

The report projected that in 2022 the plant would earn after-tax net cash flow of $100 million under a low gas price/high operating cost scenario, to more than $200 million under the reference case that assumed “business-as-usual” conditions.

Connecticut Gov. Dannel Malloy ordered state regulators in July to assess the economic viability of the plant and determine whether the state should provide it financial support. Malloy’s executive order also directed the state Department of Energy and Environmental Protection and the Public Utilities Regulatory Authority to assess the role of large-scale hydropower, demand-reduction measures, energy storage and emissions-free renewable energy in helping Connecticut meet its ambitious targets to cut its carbon output. (See CT Gov Orders Financial Analysis of Millstone Plant.)

January 2, 2018March 14, 2024

New York Forges Ahead on Clean Energy

New York’s electricity policymakers were very busy in 2017, setting a U.S.-record offshore wind target, devising an outline for pricing carbon into wholesale markets and facing down legal challenges to efforts to rein in energy service companies and its nuclear subsidies. The state also agreed with Entergy on the staggered closing of its 2,311-MW Indian Point nuclear plant, which will retire the second of its two remaining generators in 2021.

2018 will be eventful as well. Storage targets will be mandated early this year, the technical details of carbon pricing will be ironed out in conferences and public hearings, and a master plan for offshore wind will be released.

Carbon Pricing

Prompted by the state Public Service Commission’s decision to subsidize upstate nuclear plants through zero-emissions credits (ZECs), NYISO commissioned a report by The Brattle Group on pricing carbon into generation offers and reflecting it in energy clearing prices. Released by NYISO and the state Department of Public Service in August, the report found that a $40/ton carbon charge in New York state would have “a relatively small impact” on customer costs, ranging from a −1% to +2% change in total customer electric bills. (See NYISO Study Sees Little Cost Impact from Carbon Charge.)

The ISO and the PSC in October established the Integrating Public Policy Task Force (IPPTF) to explore the carbon pricing issue. In the fall, the task force held public hearings and a technical conference to discuss issues, including the allocation of carbon revenues and border adjustment mechanisms to prevent “carbon leakage” — an increase in emissions in regions neighboring New York. (See New York Hashes out Details of Carbon Policy.)

The IPPTF will next meet Jan. 8 in Albany.

ZECs Win in Court

ZECs are part of the state’s Clean Energy Standard, which mandates reducing greenhouse gas emissions by 40% by 2030, from a 1990 baseline, and by 80% by 2050. It also calls for renewables to meet 50% of the state’s energy needs by 2030.

In July, a federal judge dismissed a challenge to the ZEC program by the Electric Power Supply Association and several of its members.

The plaintiffs argued that the program violates the Federal Power Act and the Constitution’s dormant Commerce Clause by intruding on FERC’s authority to regulate wholesale prices and favoring in-state generators. (See New York ZEC Suit Dismissed.)

In August, the plaintiffs appealed to the 2nd U.S. Circuit Court of Appeals to review the ruling. Oral arguments have been proposed for the week of March 18, but the schedule has not been finalized. (The 7th Circuit will hear a similar challenge to the Illinois ZEC program Jan. 3.)

Indian Point Closure and Reliability

The year began with Gov. Andrew Cuomo reaching an agreement with Entergy on his long-sought goal of closing the Indian Point nuclear plant, which the governor worries is too close to New York City. Under the deal, Units 2 and 3 will be deactivated by April 30, 2021. The agreement would allow the plants to operate for two additional two-year increments — with final closure slated for 2025 — if an emergency affected reliability in the New York City area. Unit 1 was shut down in 1974.

NYISO reported in December that gas-fired and dual-fuel generation coming online in the next few years will be enough to maintain reliability after the Indian Point closure.

The ISO report cited three generation projects totaling 1,818 MW under construction: the 120-MW Bayonne Energy Center II uprate in NYISO Zone J, and the 678-MW CPV Valley and 1,020-MW Cricket Valley plants in Zone G. (See New Builds to Cover Indian Point Closure, NYISO Finds.)

Distributed Energy Resources and ESCOs

New York’s utilities will use 2018 to continue developing the analytical tools to deal with distributed energy resources and transition from a one-way transmission system to a multidirectional grid.

The ISO’s DER Roadmap, issued in February 2017, outlines the grid operator’s plans for integrating DER into its ancillary services, capacity and energy markets over the next five years.

In September, the PSC approved an order implementing a new compensation structure for DER. (See NYPSC Limits ESCO Service, Sets New DER Compensation.)

In July, the commission expanded and extended Consolidated Edison’s Brooklyn-Queens Demand Management project and in August approved a Con Ed solar project dedicated exclusively to low-income customers.

In October, the PSC approved an implementation plan to allow municipalities to engage in community choice aggregation initiatives, and enacted the first consumer protection standards for DER. (See New York PSC Adopts DER Rules, Sanctions ESCOs.)

The PSC also faced legal challenges to its December 2016 order banning energy service companies (ESCOs) from serving low-income customers unless they obtain waivers by guaranteeing reduced bills or other benefits (Case 12-M-0476).

State and federal courts temporarily blocked the ban on several occasions during 2017. In November, the 2nd Circuit denied a motion for a stay pending appeal. On Nov. 22, the PSC issued an order setting dates for implementation of the December 2016 order on a rolling basis as contracts expire. In the meantime, the commission approved waivers on about half of the dozen requests it received from ESCOs.

Coming Storage Revolution

On Nov. 29, Cuomo signed legislation requiring the PSC to establish targets for energy storage by early 2018. (See NYISO Readies Market for Energy Storage, State Targets.)

In December, NYISO released a report detailing its plan for opening its wholesale markets to storage. The ISO report, “State of Storage: Energy Storage Resources in New York’s Wholesale Markets,” lays out three stages to facilitate storage participation — integration, optimization and aggregation with other DER. The ISO will allow storage resources to provide all the grid services that they’re capable of, while also reducing the minimum participation size from 1 MW to 0.1 MW.

Storage developers and utilities have been working with the ISO to establish ways storage can participate in both retail and wholesale markets. The ISO report distinguishes between storage in front of the meter and behind the meter, with the former more likely to participate in wholesale market transactions, although BTM storage could become a wholesale player when aggregated with other distributed resources. (See New York Sees Storage in Retail and Wholesale Markets.)

The ISO plans on having storage market rules ready for commercial use in 2020.

The PSC in May took actions to allow large commercial batteries in New York City, and in December approved a three-year, $7.5 million pilot program for Con Edison to control its New York City customers’ air conditioners to help shave peak demand in summer. Con Edison also is working with various companies on demonstration projects to use storage and software to shave peak demand.

Offshore Wind

New York will be the biggest state player in offshore wind if it meets the target set by Cuomo in January 2017: 2,400 MW by 2030. State policymakers are embracing offshore wind for both its utility-scale generation, its ability to be developed close to the major load centers of New York City and Long Island, and its potential jobs. (See New York Seeks to Lead US in Offshore Wind.)

The first offshore wind lease for New York, a nearly 80,000-acre site off the Rockaways in Queens large enough to generate up to 1 GW, went to Norway-based Statoil in December 2016. Statoil says the project, which it has dubbed Empire Wind, is in early-stage development. It hopes to sign a power purchase agreement with a U.S. utility for the project by the end of 2018.

The first project in the water could be the 90-MW South Fork Project off Montauk, which was approved by the Long Island Power Authority in January. Developer Deepwater Wind says construction could start as early as 2019, with the wind farm operational as early as 2022.

The New York State Energy Research and Development Authority is drafting a master plan that will include an offtake transmission element, the crucial part of getting wind-generated power to shore. The master plan will include a timeline and recommendations on how to speed up the offshore planning and permitting process.

December 24, 2017

Stakeholder Soapbox: Your Audit Report may be Worthless

By Terry Brinker

If you are like me, some sounds drive you crazy. For example, nails raking across a blackboard have always made me cringe. Recently, another sound or comment has given me that same response. When I speak with companies about doing a compliance assessment, an internal controls evaluation or even a mock audit, often I hear, “We are good; we passed our most recent audit.” Someone may as well have just raked his or her nails across a blackboard.

Just ask the entities involved in the 2011 Southwest Blackout how passing an audit helped their case in the subsequent investigation. I will tell you. It did not help. Federal regulators assessed $37 million in fines and penalties as a result of that event. Arizona Public Service was assessed a penalty of $3.25 million despite having passed an audit earlier in the year. The Western Electricity Coordinating Council and Peak Reliability, WECC’s successor as the reliability coordinator for most of the Western Interconnection, was penalized $16 million. Peak had recently passed a NERC certification, which is essentially an audit of an entity’s readiness and capabilities. No one received a get-out-of-jail-free card.

Entities have regarded a good audit report as proof that they have a good compliance program. In fact, your audit report may be worthless. Regional Entities perform audits and send a report to NERC. Often these regional auditors are folks with whom you either worked or see so often you become friends. Many potential violations are often reduced to recommendations or suggestions resulting in a clean audit report. After all, I know “Fred” or “Sue,” and they will clean up these little nits.

What is overlooked or simply not understood is that if there is an event involving your company, an anonymous complaint filed against you or a spot check is performed that results in an investigation, your friends — oops, I meant regional auditors — will not be able to help you. NERC and FERC will step in and kick the regions out faster than a drunk uncle at the family Christmas gathering. NERC and FERC will go through your company with a fine-tooth comb, reviewing compliance documents, listening to voice recordings, conducting interviews and getting staff on the record. They will leave no stone unturned.

Not to mention, NERC and FERC have a higher standard than the regions. I know because I was a senior investigator at NERC and was responsible for conducting the above-mentioned duties, which resulted in millions of dollars in fines and penalties for entities. And remember, you do not have to be the utility that caused the event. Imperial Irrigation District (IID) was penalized $12 million even though they did not initiate the event. This is why I stress to my clients that I am not just preparing them for an audit, but also closing any compliance gaps in case there is a reason for NERC or FERC to come snooping around.

Leadership at utility companies must ask themselves if they are comfortable having a “check the box” compliance program, which meets the letter of the law, or a robust compliance program that meets the spirit of the law and would withstand the rigors of audits and investigations alike. Organizations owe it to their stakeholders to have a robust risk management program that will greatly limit its liability. If internal controls evaluations, mock audits and compliance assessments are not a part of the risk management strategy, I question leadership’s commitment to be the best it can be. There will be another event that will lead to another investigation, and stiff fines and penalties will be handed out. In the words of Bruno Mars, “Don’t believe me just watch.”

“But we passed our audit!” will not help the utilities involved. So, let me ask, has your company conducted an internal controls evaluation, compliance assessment or mock audit lately? And remember, I hate the sound of nails raking across a blackboard.

Terry Brinker, who has 23 years of experience leading, facilitating and implementing improvements in power plant operations, control room operations, compliance and regulatory matters, is the president of Reliable Energy Advisors. Terry previously served in leadership roles during a five-year stint at NERC, where he served as senior manager of standards information and personnel certification, manager of registration services, and senior event investigator.

December 24, 2017

FERC OKs Changes to SPP’s Tx Planning Process

By Tom Kleckner

FERC last week accepted Tariff revisions to streamline SPP’s Integrated Transmission Planning (ITP) process, despite opposition from wind developers.

The commission’s Dec. 21 order accepted the revisions as consistent with the transmission planning requirements under FERC Orders 890 and 1000 (ER17-2027).

SPP’s filing drew protests from the American Wind Energy Association, the Wind Coalition and four renewable energy companies. They contended that SPP’s ITP process did not meet Order 890’s transparency principle because it lacked details of the process currently found in the ITP Manual.

Arkansas transmission lines | *MGN Photo*

AWEA and the Wind Coalition also argued that the Tariff should “specify the transmission elements and voltage levels to which the ITP assessment applies; more clearly provide opportunities for stakeholder input on economic transmission needs; include additional details on the inputs SPP plans to incorporate into its planning studies and how SPP will determine the inputs to use; and explain how SPP will coordinate its aggregate transmission study, generation interconnection and ITP processes.”

The wind developers added that the Tariff, rather than the ITP Manual, “should detail how SPP determines the variable operations and maintenance cost for wind and solar resources; incorporate reasonable, objective standards to identify the amount of wind generation that SPP will use in its planning models; include triggers to address economic market conditions; and specify the criteria for identifying persistent operational issues.

FERC said the concerns “relate to elements of the ITP process that SPP does not propose to change, and thus are beyond the scope.”

“SPP’s proposed Tariff revisions implement this proposal without otherwise modifying the existing ITP process,” the commission said.

The protesters further argued that SPP should hold two planning summits per planning cycle, rather than the proposed annual summit. FERC agreed with the RTO’s argument that reducing the number of required planning summits “will not affect stakeholders’ ability to provide input.”

ITP integrated transmission planning SPP — GridLiance’s Brian Gedrich (l), SPP Director Harry Skilton discuss the new transmission planning process in 2016 | © *RTO Insider*

“Stakeholders may participate at the working group level and throughout the transmission planning process,” the commission noted, saying SPP could always schedule additional planning summits as needed.

Stakeholders approved the process changes, which were developed by a member task force, in July 2016. Under the new process, SPP will combine the ITP’s near-term and 10-year assessments and NERC transmission planning assessments into a single 10-year study. It also modified the 20-year assessment’s timing from at least once every three years to five years.

The changes will result in an annual transmission expansion plan addressing reliability, economic and policy needs. The first study under the new process began in September, and results will be unveiled in October 2019.

December 24, 2017

ISO-NE Planning Advisory Committee Briefs: Dec. 20, 2017

ISO-NE planning engineer Steven Judd on Wednesday described to the Planning Advisory Committee the key differences between the first and second phases of RTO’s System Operational Analysis and Renewable Energy Integration Study (SOARES).

While last year’s Phase I consisted of the RTO’s traditional economic analysis of scenarios provided by the New England Power Pool, this year’s Phase II focused on operations, requiring input data for wind, solar and electric vehicle charging to analyze intra-hour ramping, regulation and reserve requirements. Phase II will help inform stakeholders about the physical range of resource quantities that could be needed and available given the studied scenarios but will not indicate a requirement going forward, Judd said.

The 2017 study will be released in the first quarter of 2018, he said.

RTO’s Neighbors Seeing Similar Conditions

Michael Henderson, ISO-NE’s director of regional planning and coordination, told the PAC the RTO is seeing the same issues across the Eastern Interconnection, including a surge in distributed energy resources and the retirement of conventional fossil-fuel generators.

“Our other needs we see in New England we do not feel could be better met with additional ties with neighboring regions, and PJM and New York feel the same,” Henderson said.

He noted NERC’s recently published 2017 Long Term Reliability Assessment report, which showed slower demand growth across North America, with conventional generation continuing to retire and new additions of natural gas, wind and solar coming quickly online. (See NERC Report Urges Preserving Coal, Nuke Attributes.)

The changing composition of the resource mix calls for more robust planning approaches to ensure adequate essential reliability services and the fuel supplies. NERC said that 6,200 miles of transmission additions are planned to maintain reliability and meet policy objectives.

New Guidance on Asset Condition Presentations

ISO-NE lead engineer Michael Drzewianowski said the RTO is providing additional guidance to transmission owners regarding when they should present their asset condition needs to the PAC for inclusion on the RTO’s asset condition list.

Drzewianowski noted that a presentation is required if an asset condition need occurs on a pool transmission facility (PTF), and the associated cost of modifications on a single circuit or facility is $5 million or more over a period of five years or less.

For all other asset conditions related to PTF modifications, a presentation is optional. Non-PTF presentation thresholds are determined by each TO.

“It’s tough when each TO has its own idea on when an asset needs to be replaced,” but the planning process does work, Drzewianowski said.

National Grid Updates on NPCC Implementation Plan

Varsha Chatlani, a planning engineer with National Grid, told the PAC that his company estimates it will cost $12.4 million (with a tolerance of +50/-25%) to complete Phase 2 of a project to install dual high-speed protection systems on its PTF circuits. The company in June reported that Phase 1 would cost $1.8 million with a +200/-50% tolerance.

The project was developed in response to a 2015 Northeast Power Coordinating Council plan to install the protection systems on all bulk power system circuits over 10 years.

National Grid first laid out its implementation plan for 45 identified transmission circuits to the PAC in June. The company has started to develop conceptual cost estimates for the other three phases, and it will provide additional updates when more refined estimates are available, Chatlani said.

Eversource Replacing Obsolete Oil Circuit Breakers

Eversource Energy has approximately 1,400 transmission circuit breakers in service and expects to spend nearly $20 million to replace 31 aged and obsolete oil circuit breakers (OCBs), company engineer George Wegh said.

ISO-NE REV Eversource Energy Interregional Transmission Planning — 1115kV OCB Catastrophic Failure | *Eversource*

Over the past 10 years, Eversource has been replacing OCBs with sulfur hexafluoride units to upgrade equipment and reduce maintenance costs. These upgrades protect the environment from oil spills and also improve system reliability by reducing equipment failures.

The 31 OCBs remaining on the Eversource 115-kV system are concentrated at three stations: Frost Bridge and Plumtree in Connecticut, and the Agawam station in Western Massachusetts. Three Frost Bridge OCBs are leaking oil.

Eversource recently replaced nine OCBs, not included among the 31 slated for replacement, on an emergency basis.

Further delay in replacing the obsolete OCBs would leave the transmission system vulnerable to age and condition-related reliability risks, and pose safety and maintenance concerns for the remaining circuit breaker fleet, Wegh said.

Eversource 345-kV Structure Replacement Projects

Eversource plans to spend an estimated $231.9 million to replace 1,019 wooden 345-kV structures with steel pole structures, John Case, the company’s director of transmission line engineering, told the PAC.

Planning Advisory Committee ISO-NE Eversource Energy — Poletop rot | *Eversource*

New England has seen a large increase in the population of pileated woodpeckers, “in the hundreds of percent according to some researchers,” and the birds are damaging old wooden transmission poles, Case said.

Eversource manages approximately 1,100 miles of 345-kV overhead lines in the region, or nearly 50% of such lines in New England, and maintains more than 10,000 345-kV structures. Inspections have revealed significant degradation and decreased load-carrying capacity of wooden 345-kV structures, many of which date from the early 1970s.

Replacing the structures resolves multiple structural and hardware issues, and supports safe and reliable operation, Case said. Hardware, insulators and guy wires are to be replaced along with the structures.

SEMA/RI 2027 Needs Assessment Scope of Work

Jon Breard, ISO-NE associate transmission planning engineer described the scope of work for the upcoming Southeastern Massachusetts and Rhode Island (SEMA/RI) 2027 Needs Assessment. The study aims to evaluate the grid’s reliability performance and identify reliability-based needs in the area for 2027 while also considering reliability over a range of generation patterns and transfer levels, he said.

A 2026 SEMA/RI Solutions Study report completed in March 2017 developed solutions to time-sensitive needs, which will be examined if any exist for the study area. Time-sensitive transmission needs are those that occur within three years of completion of a needs assessment. The RTO plans to issue the report in the second quarter of 2018. (See “Time-Sensitive Tx Needs Determination,” ISO-NE Planning Advisory Committee Briefs: Nov. 16, 2017.)

The short-circuit base case used for the SEMA/RI assessment is based on the expected topology in the 2022 compliance steady state base case. That year was chosen because “no significant project is expected in the 2022-2027 time frame, and the 2022 case was considered acceptable,” Breard said.

— Michael Kuser

December 24, 2017

MISO Wins OK for Dynamic Narrowly Constrained Areas

By Amanda Durish Cook

MISO won FERC permission last week to expand its mitigation measures to address intense but temporary congestion.

Thursday’s order allows MISO to begin enforcing dynamic narrowly constrained areas (NCAs) for short-lived congestion and market power Jan. 4 (ER17-2097-001). The RTO will extend Module D mitigation provisions in its Tariff to alleviate instances of momentary congestion that are not accounted for under its existing market power mitigation provisions.

“Establishing dynamic NCAs will improve MISO’s current market power mitigation procedures by providing an additional means to limit the exercise of market power during periods of transient but severe congestion,” FERC said.

MISO has five regular NCAs with conduct thresholds — prices that indicate potential exercises of market power — that range between $22.31 and $100/MWh. NCAs are defined by FERC as those constraints that can bind for more than 500 hours annually. They can be defined in advance and are subject to tighter market mitigation thresholds than broad constrained areas.

Dynamic NCAs will involve areas that do not meet the 500-hour trigger but need stricter thresholds because they are dominated by one or more pivotal suppliers, according to MISO.

A dynamic NCA would be declared when conduct has occurred that would warrant mitigation on a non-NCA constraint, and that constraint has bound in 15% or more hours over at least five consecutive days. The new category sets a conduct threshold at $25/MWh. MISO said it will terminate a dynamic NCA when either the outages or other conditions causing the binding transmission constraints have been resolved or the Independent Market Monitor hasn’t had to mitigate economic or physical withholding or uneconomic performance for 30 days.

“MISO explains that although a given transmission constraint is not expected to bind for a total of 500 hours or more in a given year based on historical data, thus not warranting an NCA designation, that constraint can ultimately bind over shorter periods at a rate that exceeds 500 hours per year (e.g., at a rate greater than approximately 9.6 hours per week),” FERC summed up.

FERC had issued a deficiency letter Sept. 6 seeking more detail on MISO’s proposal. In response, the RTO clarified that a dynamic NCA can be designated in the same area where a standard NCA already exists and provided FERC with a list of conduct categories and the conduct and impact thresholds for designating dynamic NCAs and mitigation. (See MISO to Address FERC Query on Constrained Areas.)

The Monitor first recommended creating dynamic NCAs in its 2012 State of the Market Report.

In accepting MISO’s new definition, FERC rejected NRG Energy’s argument that the RTO failed to take into consideration the differences between its Midwest and South regions by applying a uniform $25/MWh conduct threshold. NRG said that placing “unduly low thresholds” in MISO South could prevent generators from recovering their actual costs.