Page 1234 – RTO Insider

December 18, 2017

ERCOT Board of Directors/Annual Meeting Briefs

AUSTIN, Texas — The ERCOT Board of Directors last week unanimously approved a $246.7 million transmission project to address growing energy needs along the Texas Gulf Coast.

The Freeport Master Plan Project was endorsed in November by the Technical Advisory Committee before coming to the board Dec. 12. (See ERCOT Stakeholders OK $246.7M in Freeport Reliability Projects.)

ERCOT’s exiting board members gather with CEO Bill Magness, Board Chair Craven Crowell (l-r): Randy Jones, Magness, Donna Nelson, Crowell, Ken Anderson, Jack Durland, Wade Smith | © *RTO Insider*

Freeport is a highly industrialized region with several large chemical facilities and a major seaport. ERCOT projects that by 2019, the Freeport area’s load will increase 92% to 1,979 MW, with much of that growth coming from a large chemical plant. An additional 300 MW is expected by the end of 2022.

“We continue to see growing demand for electricity in the ERCOT region, especially in areas affected by industrial growth and oil and gas activity,” said ERCOT Senior Manager of Transmission Planning Jeff Billo.

Vice-Chair Judy Walsh delivers committee report as PUC Chair DeAnn Walker listens | © *RTO Insider*

The ISO’s independent review of the project confirmed its necessity. Staff analyzed five options and proposed the most cost-effective to support future electric needs in the area.

CenterPoint Energy, which services the area, suggested a two-phase approach to solve reliability criteria violations caused by the increased load. A $32.3 million first phase, or “bridge-the-gap upgrades,” focuses on near-term reliability needs with a 345-kV loop and a series of reactors, autotransformers and capacitor banks at a key substation.

The $214.4 million second phase comprises a new 48-mile, 345-kV double-circuit line and circuit upgrades to another 345-kV line.

Any projects approved by ERCOT that cost $50 million or more are classified as Tier 1 initiatives and require board approval.

The project must also be approved by the Public Utility Commission of Texas. Work is expected to be completed by 2022.

NPRRs Clear Board, Despite Opposition

PUC Commissioner Arthur D’Andrea attends his first ERCOT board meeting | © *RTO Insider*

The board approved two nodal protocol revision requests (NPRRs) recently taken off the table by the TAC, but with varying degrees of opposition.

Brazos Electric Power Cooperative’s Clifton Karnei, representing the cooperative segment, cast the lone dissenting vote against NPRR815. The change increases from 50% to 60% the limit on load resources providing responsive reserve service (RRS), with at least 1,150 MW coming from resources that can provide primary frequency response.

The Protocol Revisions Subcommittee said changing the constraint will allow additional resources to provide RRS at lower costs. However, the Lower Colorado River Authority’s John Dumas, who opposed the measure when it passed the TAC last month, told the board that NPRR815 could harm reliability because of the reduction in generation resources that provide inertia and voltage support. (See “TAC ‘Un-Tables,’ Endorses NPRRs,” ERCOT Technical Advisory Committee Briefs.)

“Our opposition has to do with concerns over reliability risk and commercial risk,” Dumas said. “When you increase the amount of load in responsive reserves, you’re decreasing the amount of potential generation on the grid to manage things like voltage, inertia and ramping capabilities. When you take generation off the grid, you’re reducing reliability, you’re not improving reliability.”

Dumas said the commercial risk comes from a possible increase in RRS price spikes during high-wind, low-load situations.

“You can commit enough capacity to cover your energy position, but you cannot … when you suddenly have a wind variation or a unit trip,” he said. “When you reduce the amount of supply from generation, you’re reducing the offer curve.”

Woody Rickerson, ERCOT’s vice president of grid planning and operations, pushed back on the reliability concerns.

“[NPRR]815 in no way changes what we need for responsive reserves, only how we procure it,” he said. “We’ve gone through probably six months of questions on it. We’ve studied it, and it in no way endangers reliability.”

Rickerson pointed out ERCOT monitors inertia separately from responsive reserves, and that the ISO can always procure more services beyond the minimum amount.

NPRR825 also cleared the board, but with four votes in opposition from cooperative and consumer interests. The revision requires ERCOT to issue a DC tie curtailment notice before curtailing the tie’s load, addressing the ISO’s concerns about declaring an emergency condition before curtailing DC tie load for any reason, staff said.

Several directors were concerned about the NPRR’s price tag — $200,000 to $300,000 in development costs as part of a larger software tool — but staff said the change would result in automated processes and system reports. Rickerson told directors that the day before, staff had to issue a watch to curtail 27 MW.

“It’s increasing transparency in the marketplace,” said unaffiliated director Karl Pfirrmann, speaking in favor of the NPRR. “That should make things more efficient and helps prepare us for emergency situations.”

ERCOT Sees Favorable $8M Budget Variance

CEO Bill Magness addresses ERCOT’s annual Membership Meeting | © *RTO Insider*

ERCOT CEO Bill Magness said the ISO is projecting to end the year nearly $8 million under budget following a warmer-than-normal October.

“Revenues go up, but so does congestion,” he told the board.

A positive variance in October for ERCOT’s system administration fee helped reduce an unfavorable year-end projection to about $100,000. Much of the overall positive variance stems from $4.1 million savings in interest expense because of project funding and minimal revolver usage, and interest income because of higher rates.

Magness said staff has completed their reliability-must-run studies of planned generator retirements and determined none of the units needs to be kept on for reliability needs. He also said the Texas grid is seeing higher-than-expected congestion in the day-ahead market, but that congestion revenue rights funding is not a concern.

IMM: Ancillary Services Market Growing in Importance

Beth Garza, director of the Independent Market Monitor, focused her board report on ancillary services, which have declined with the advent of the nodal market in 2011.

Garza said the services cost $1.03/MWh in 2016 and averaged 87 cents/MWh through Oct. 7, but that is likely to change with the pending retirement of more than 2 GW of aging generation (though those units only have provided 2.5% of regulation up and 6.4% of regulation down in 2017 through October). Regulation up and down have seen the biggest decrease since the zonal market was replaced, with dispatch now occurring every five minutes instead of 15.

“It’s that efficiency of procuring on smaller time frames, and not over-procuring, that has brought the overall average down,” Garza said. “These things we call ancillary will become more important in a future market that has more load to zero-cost variable resources. As the [ancillary services market] becomes more important and [resources] scarcer, as less units are around to provide those services, those prices are likely to become higher and more important going forward.”

Asked if she was comfortable with ERCOT’s ancillary market performance, Garza said the interaction between regulation and security-constrained economic dispatch “continues to be refined,” but she noted total regulation has seen about a two-thirds reduction from the 1,800 MW in the zonal market.

“That balance seems pretty good,” she said.

The Monitor is projecting ERCOT’s real-time prices will be above last year’s record low average of $24.62/MWh. Through the first 10 months of 2017, prices are up 17% to $28.97/MWh compared to the same period last year. Real-time prices settled at $24.

Gas prices averaged $2.44/MMBtu last year but were $3/MMBtu for the first 10 months of 2017.

Membership Approves 5 New Directors

ERCOT’s corporate members approved the election of Terry J. Bulger and the re-election of Peter Cramton to three-year terms during their annual membership meeting. Cramton’s current term will expire on Aug. 1.

Bulger is a 35-year banking professional with ABN AMRO and Bank of Montreal, and has more than 25 years of experience in risk management. Cramton is an economics professor at the University of Maryland and the University of Cologne.

Members also approved four new segment directors, who were previously segment alternates, and their alternates, to serve in 2018. The directors are:

Industrial consumers — Sam Harper, Chaparral Steel Midlothian
Independent generators — Kevin Gresham, E.ON Climate & Renewables North America
Independent retail electric providers — Rick Bluntzer, Just Energy Texas
Investor-owned utilities — Kenneth Mercado, CenterPoint Energy

The new segment alternates are:

Industrial consumers — Mark Schwirtz, Golden Spread Electric Cooperative
Independent generators — Amanda Frazier, Luminant
Independent retail electric providers — Mohsin Hassan, VEH
Investor-owned utilities — Mark Carpenter, Oncor

TAC Gets 6 New Members

The membership also approved six new members to the TAC, which makes recommendations to the board and is aided by five subcommittees:

Independent generators — Ian Haley, Luminant
Independent power marketers — Kevin Bunch, EDF Energy Services, and former ERCOT staffer Resmi Surendran, Shell Energy North America
Independent retail electric providers — Sandra Morris, Direct Energy
Investor-owned utilities — Walter Bartel, CenterPoint
Municipals — John Bonnin, CPS Energy

Board Clears 4 NPRRs, Other Measures

The board unanimously approved revisions to the methodology for computing responsive reserves as a result of NPRR815’s implementation, and two changes to determining non-spinning reserves in 2018; associated with NPRR815 and two changes to determining non-spinning reserves in 2018; accepted a clean system and organization control audit; and approved new key performance indicators.

The directors also unanimously approved NPRR846 by itself, and three other NPRRs on the consent agenda.

NPRR846: Allows previously committed emergency response service (ERS) resources to participate in must-run alternative agreements and modifies the methodology for evaluating the impact of ERS load performance during the first partial interval on calculating the alternate baseline. The change also defines acceptable parameters for an ERS generator’s self-serve capacity, and sets the ERS test performance factor to significantly lower values, in some instances to zero for resources with three consecutive test failures within a 365-day period. The NPRR includes additional administrative changes and clarifications to existing ERS protocol language.
NPRR834: Clarifies processes associated with ERCOT’s repossession of congestion revenue rights following a payment breach or other default by a market participant. The change specifies data transparency requirements; documents the disposition of auction revenue funds above amounts owed to ERCOT; clarifies that the one-time auction bids must be positive; and allows the immediate transfer of CRR ownership to the winning bidder should an auction be necessary.
NPRR839: Updates the protocols to clarify that, upon receiving meter data transactions from transmission or distribution service providers, ERCOT will forward the transactions to the designated competitive retailer.
NPRR843: Addresses four reporting items in Section 3 of the Nodal Protocols (Management Activities) by:
- Changing the logic of short-term system adequacy reports for more consistent treatment of resource status; adding language to provide clarity to the reports’ end users;
- Creating a new report that will show the portion of ancillary service offers at or above 50 times the fuel index price (FIP) when the market-clearing price for capacity of the service exceeds 50 times FIP;
- Adding elements to the “48-hour highest price [ancillary service] offer selected” report, including the highest-priced offer selected in a supplemental ancillary service market (SASM); and
- Creating a SASM disclosure report to provide transparency into ancillary service offers and awards for any SASMs executed within an operating day.

— Tom Kleckner

December 18, 2017

Texas PUC Challenging SPP-Mountain West Intertie Costs

By Tom Kleckner

The costs of maintaining DC ties to allow SPP’s merger with the Mountain West Transmission Group should be allocated based on benefits, Texas Public Utility Commission Chair DeAnn Walker said last week.

SPP intertie bidding DeAnn Walker — Walker | *PUC of Texas*

In brief comments during the PUC’s Dec. 14 open meeting, Walker, who serves on SPP’s Regional State Committee, updated Commissioners Brandy Marty Marquez and Arthur D’Andrea on the “very interesting debate” taking place as Mountain West pursues SPP membership. (See SPP, Mountain West Integration Work Goes Public.)

The benefits touted by the two entities come in part from using the four DC interties that separate them to schedule power as a part of the SPP market. The four ties have a combined transfer capability of 720 MW.

“I [told SPP] yesterday that Texas believes that whatever [maintenance] costs are related to those DC ties or future ones … be done on a cost-benefit ratio,” Walker said.

Mountain West has proposed those and any future costs be allocated on a load-ratio share, as part of its recommendation for a Westside Transmission Owners Committee.

Hartburg-Sabine Delay

Walker also briefed the commissioners on the MISO Board of Directors’ recent decision to postpone approval of the $130 million Hartburg-Sabine 500-kV market efficiency project in eastern Texas for two months because of a late cost-allocation change. (See “Texas Project Delay,” MISO Board Approves $2.6B Transmission Spending Package.)

The Texas regulators last month asked MISO to create separate zones for it and Louisiana to allow more granular cost allocation. The Louisiana Public Service Commission filed a similar request with the RTO. (See “PUC to Ask MISO to Create Texas Local Resource Zone,” PUCT Open Meeting Briefs: Nov. 17, 2017.)

SPP MISO intertie bidding lost opportunity costs — Packed House at the PUCT on December 14th | *PUC of Texas*

“We have assurances [MISO] will come back after FERC rules on the cost issues,” Walker said. “They’ve made statements they fully support the project.”

With the delay, Walker will hand off her MISO liaison duties to D’Andrea. She had temporarily inherited the responsibilities when Ken Anderson stepped down from the commission in November.

Fending off FERC

Walker said she is continuing to work with the Texas governor’s office and ERCOT on a “potential solution” addressing her concerns that transmission projects along the U.S. border with Mexico may threaten the ISO’s electrical separation from the rest of the country and the PUC’s exclusive jurisdiction over the Texas grid operator. (See Regulators Fear Cross-Border Tx Risks ERCOT’s FERC Exemption.)

SPP intertie bidding — PUCT Commissioners left to right: Brandy Marty Marquez, Chair DeAnn Walker, Arthur D’Andrea | *PUC of Texas*

“I don’t want to talk publicly at this point, because it is a litigation strategy,” she said.

Walker did say ERCOT staff has told her they could develop protocol language that makes it clear the ISO has authority to deny an e-Tag “or go so far as disconnect [its] system” from HVDC connections. The protocol change could be ready in time for ERCOT’s February Board of Directors meeting.

“Hopefully it’s a protocol that won’t have to be used,” Walker said.

ERCOT has several synchronous (AC) and asynchronous (DC) ties with the Mexican grid. Texas regulators are concerned comingled electricity flows from border projects in California and Arizona could lead FERC to claim jurisdiction through the U.S. Constitution’s Commerce Clause.

“These are drastic measures we’re talking about,” Marquez told Walker. “These are huge market disruptors, but they are a last line of defense, so I think it’s important we do it. We’ll continue to seek other solutions as well.”

December 18, 2017

Montana PURPA Solar Saga Continues in State Court

By Amanda Durish Cook

Three solar advocates last week filed a joint challenge to the Montana Public Service Commission’s decision to alter the contract terms available to small generators under the Public Utility Regulatory Policies Act.

PURPA montana solar — Solar farm | *Cypress Creek Renewables*

In a state district court complaint filed Dec. 13, Vote Solar, the Montana Environmental Information Center and solar developer Cypress Creek Renewables argue that Montana regulators “drastically and unreasonably” reduced the standard contract length and energy rate available to small renewable energy projects under PURPA. The commission last month reduced the contract length from 25 years to 15 years and cut the rates utilities must pay renewable projects up to 3 MW from $66/MWh to $31/MWh.

The PSC defended the decision as protecting ratepayers from overpaying for electricity produced by independent generators. NorthWestern Energy initially asked the commission for PURPA rate relief in May 2016.

The complaint characterizes the PSC’s decision as a “death knell for small solar development in Montana at a time when demand for renewable energy is growing, the cost of producing renewable energy is at an all-time low and NorthWestern has claimed a significant need for electric capacity that solar and wind developers are well-positioned to supply.”

The solar advocates say the decision resulted in dozens of solar projects across the state being put on hold. They argue it’s doubtful Montana will see solar expansion “in the foreseeable future” if the commission’s order stands. Cypress said it has delayed four prospective solar projects in Cascade County, where the challenge was filed.

“As a result, the state will lose hundreds of millions of dollars of economic investment, hundreds of construction jobs, affordable clean electricity and significant tax revenues for local governments,” the three organizations said in a statement. They asked the court to find the PSC’s order unreasonable and unlawful.

In June, Montana Commissioner Bob Lake was heard on a microphone appearing to confirm that state regulators put the rules in place knowing that they would stifle development of small solar projects. (See ‘Hot Mic’ Reveals Montana Move Against Solar QFs.) FERC earlier this year declined to enforce PURPA action against the Montana PSC.

PURPA requires utilities to pay qualifying facilities the cost a utility would incur for supplying the power itself or by obtaining supplies from another source. The law leaves it to each state’s utility commission to formulate those rates and set contract terms, depending on project size.

Adam Browning, executive director of Vote Solar, said competitive rates and longer contract lengths are needed to avoid utility monopolies.

“Now that solar is cost-competitive, fossil fuel interests in Montana and across the country are attempting to change the rules of the game. Fair treatment for solar opportunity will benefit Montana’s families, economy and environment,” Browning said.

Cypress Director of Market Development Casey May said the complaint is an attempt for a fair chance at competition for independent power producers. “Plainly put, we want to do business in Montana,” May said. “We want to increase Montanans’ access to clean energy, create jobs and increase the tax base of state and local governments, but this decision prevents that. … It’s a bad deal for Montanans and economic development across the state.”

TransAlta Scraps Wind Farm After PSC Ruling

In a related development, TransAlta said it won’t build the New Colony Wind Project because of a Dec. 12 PSC ruling that said NorthWestern should pay the wind farm $23.20/MWh over 15 years on a PURPA contract.

TransAlta had asked to be paid $43.63/MWh over 25 years. Northwestern had proposed paying $13.96/MWh.

Peter Key contributed to this article.

December 18, 2017

Penalty Review Denied, DTE Faces Friendlier EPA

By Amanda Durish Cook

The U.S. Supreme Court last week denied DTE Energy’s petition to review an environmental penalty against one of its Michigan coal plants over increased emissions, but the new tone set by the head of EPA will likely diminish the court’s action.

The court on Tuesday declined to hear the Michigan-based utility’s defense of upgrades it performed on its coal-fired Monroe power plant, clearing the way for EPA enforcement action. (See DTE Initiates Last-Ditch Effort in Clean Air Act Case.)

DTE Energy supreme court clean air act — DTE Energy’s Monroe Power Plant | *Port of Monroe*

However, the agency has performed an about-face under in the intervening months since DTE filed a writ of certiorari with the court. Administrator Scott Pruitt earlier this month released a policy memo specifically citing DTE’s case and adopting some of its arguments against having to pay penalties for excessive air pollution, making it unlikely the agency will pursue penalties.

EPA and the Sierra Club have pursued enforcement against DTE since 2010, when the company started a $65 million upgrade to Unit 2 of the 46-year-old Monroe coal plant without installing additional pollution controls. They contended the upgrade violated the Clean Air Act’s New Source Review (NSR) program because DTE ignored its own projections that the renovation would cause emissions to increase by thousands of tons per year. EPA called the project a major overhaul that should have included new pollution controls and sought civil penalties of up to $37,500 per day.

DTE maintained that the higher emissions from the Monroe plant were a product of demand growth and not caused by the improvements. By 2014, DTE had installed four selective catalytic reduction units and four flue gas desulfurization units at the plant at a cost of about $2 billion.

“It is pretty simple. DTE chose to overhaul their dirty coal plant and not install modern pollution control technology at that time even though their own projection showed that pollution would increase after the overhaul,” said Regina Strong, director of the Sierra Club’s Beyond Coal Campaign in Michigan.

DTE contended that enforcement action could not proceed until after an actual pollution increase occurred, an argument that the 6th U.S. Circuit Court of Appeals twice rejected (14-2274, 14-2275).

However, Pruitt’s memo aligns with DTE’s arguments, saying that EPA will no longer bring NSR enforcement against generators until they’ve had the chance to increase pollution, contradicting the preventative nature of the NSR that the 6th Circuit recognized.

Pruitt wrote that EPA does not “presently intend to initiate enforcement … unless post-project actual emissions data indicate that a significant emissions increase … did in fact occur.”

According to the Sierra Club, EPA will now “no longer seek to challenge even obviously faulty or fraudulent projections by a utility that a proposed modification to a coal plant will purportedly not lead to a New Source Review-triggering emissions increase so long as such projection was procedurally done properly.”

“The new Pruitt approach appears to be little more than an attempt to give coal utilities a sense of empowerment to ignore the critical public health protections of the Clean Air Act New Source Review program,” Shannon Fisk, managing attorney with environmental law firm Earthjustice, said in a statement. “Such [an] approach should not stand as it is contrary to law, public health and common sense.”

December 18, 2017

MISO Designing Automatic Generation Control Program

CARMEL, Ind. — MISO is moving ahead with developing an automatic generation control (AGC) program designed to rapidly deploy 400 MW of fast-ramping resources by regulating either up or down in response to fluctuations in load.

Addepalle (left) speaks to the Market Subcommittee as Chairs Kent Feliks and Megan Wisersky listen | © *RTO Insider*

Speaking during a Dec. 14 Market Subcommittee meeting, Pavan Addepalle of MISO’s market engineering group said the RTO is moving from a conceptual design phase to detailed design with a vendor. MISO hopes to implement AGC by late 2019.

Addepalle said MISO will add new real-time market hourly offer parameters to accommodate the faster units but use the RTO’s existing market and settlement rules to clear regulation. Resources must have a minimum 80-MW/minute ramp rate and a regulation limit of 1 MW or more to be eligible to participate in the program.

In response to a question from Northern Indiana Public Service Co.’s Bill SeDoris, MISO staff said resources under AGC will be cleared in the same market as other resources, but that fast- and slow-responding resources will be divided into pools waiting on separate dispatch signals.

“We’re going to have a single energy market but realize that resources have different parameters and constraints … and design a market that is capable of using separate resources differently,” said MISO Executive Director of Market Design Jeff Bladen, adding that the RTO will not follow in PJM’s footsteps in creating a separate regulation market.

ITC Holdings’ Ray Kershaw said the new designation, while amenable for pumped energy storage, is not an ideal use for batteries.

Addepalle said MISO did not approach the proposal with a specific type of generation in mind.

— Amanda Durish Cook

December 18, 2017

PJM Markets and Reliability Committee Preview: Dec. 21, 2017

Below is a summary of the issues scheduled to be brought to a vote at the PJM Markets and Reliability Committee on Thursday. Each item is listed by agenda number, description and projected time of discussion, followed by a summary of the issue and links to prior coverage in RTO Insider.

RTO Insider will be in Wilmington, Del., covering the discussions and votes. See next Tuesday’s newsletter for a full report.

Markets and Reliability Committee

2. PJM Manuals (9:10-9:40)

Members will be asked to endorse the following proposed manual changes:

A. Manual 1: Control Center and Data Exchange Requirements. Revisions developed to update NERC references and procedures related to outages and system-restoration planning. PJM members will be required to send the RTO data on transmission megawatt and MVAR flows and bus voltages at greater than or equal to 100 kV, down from 345 kV.

B. Manual 10: Pre-Scheduling Operations. Revisions developed to comply with NERC standards as part of a periodic review of the manual. Generators will be required to notify PJM of operating conditions that could result in a single contingency causing an outage of multiple generators.

C. Manual 14D: Generator Operational Requirements. Revisions developed as part of a periodic review. Generators will need to be modeled in eDART consistent with the PJM energy management system model.

3. Manuals 3 and 13 Revisions and Gas Pipeline Contingencies (9:40-10:10)

A. Members will be asked to endorse proposed changes to Manual 3: Transmission Operations and Manual 13: Emergency Operations, which include processes for addressing gas pipeline disruptions that affect generator reliability.

B. Members will also be asked to endorse manual revisions proposed by gas-fired generators to document compensation mechanisms for generators directed by PJM to take action related to a pipeline contingency. (See related story, “Gas Generators Block PJM Pipeline Plan,” PJM OC briefs: Dec. 12, 2017.)

4. FTR Modeling, Performance & Surplus (FTRMPS) (10:10-10:40)

Members will be asked to endorse revisions to the Tariff, Manual 28: Operating Agreement Accounting and Manual 6: Financial Transmission Rights resulting from special sessions on FTR issues. The revisions will address changes to long-term FTR modeling for future transmission expansion, streamlining management of overlapping FTR auctions and allocating any surplus funds from day-ahead congestion and FTR auction revenue. (See related story, “FTR Discussions,” PJM MIC briefs: Dec. 13, 2017.)

5. New Service Request Study Methods (10:40-11:00)

Members will be asked to endorse changes to the procedures for the study of transmission service requests and upgrade requests in the new services queue process. (See “Interconnection Study Process to be Rearranged,” PJM Planning/TEAC Briefs Oct. 12, 2017.)

6. Energy Market Price Formation Problem Statement & Issue Charge (11:00-12:00)

Members will be asked to endorse PJM’s proposed problem statement and issue charge to changes price formation in the energy market. The RTO has proposed revisions that would allow inflexible units to set LMPs. The Independent Market Monitor has proposed an alternative problem statement and issue charge that would take up to two years to examine all components of energy market price formation and determine if changes are needed. (See “Questions Remain as PJM Continues Push for Price Formation Revisions,” PJM Markets and Reliability/Members Committees Briefs: Dec. 7, 2017.)

7. Capacity Construct/Public Policy Senior Task Force (CCPPSTF) (12:45-1:45)

Members will be asked to endorse Tariff revisions associated with the Monitor’s “MOPR-Ex” proposal to change the minimum offer price rule. The Monitor is proposing to amend the version endorsed by the Capacity Construct/Public Policy Senior Task Force to revise exemptions for state renewable portfolio standards. (See related story, IMM Battles Exelon on MOPR-Ex Proposal.)

8. Incremental Auction Senior Task Force (IASTF) (1:45-2:00)

Members will be asked to endorse a proposal developed by the Incremental Auction Senior Task Force to address concerns of excess capacity and low clearing prices. Although Proposal A” did not receive enough support at the IASTF to be automatically considered at the MRC, stakeholders moved for an endorsement vote. (See “Stakeholders Move Incremental Auction Proposal,” PJM Markets and Reliability/Members Committees Briefs: Dec. 7, 2017.)

— Rory D. Sweeney

December 18, 2017

FERC Seeks Info on Ohio Generator’s Reactive Power Claim

FERC last week set hearing and settlement proceedings for a new Ohio merchant plant, saying it had not provided sufficient backing for its reactive power revenue requirement (ER18-92, EL18-32).

The 747-MW Carroll County Energy combined cycle plant, expected to go in service this month, is seeking compensation for its generator, associated exciter equipment, step-up transformers and other equipment under allocation factors representing their contribution to both reactive service and real power.

Carroll County Energy Plant ohio FERC reactive power — Carroll County Energy Plant Schematic | *Power Technology*

The commission said the plant’s owners had not demonstrated that its proposed revenue requirement was just and reasonable. “CCE’s filing has no underlying support for the costs claimed for this new generation facility, and the balance of plant investment allocator and the accessory electrical equipment allocator may be excessive. We further note that the components of the accessory electrical equipment are not provided,” the commission wrote.

FERC said that, if no settlement is reached, it expects to issue a decision within eight months of the filing of briefs opposing exceptions to the initial decision by an administrative law judge. “If the presiding judge were to issue an initial decision by July 31, 2018, we expect that, if the proceeding does not settle, we would be able to render a decision by May 31, 2019.”

The plant’s owners include TIAA, Chubu Electric Power, Ullico, Prudential Financial and Advanced Power, a Boston-based development company that oversaw construction and will manage the start of commercial operations. Chairman Kevin McIntyre did not participate in the decision.

— Rich Heidorn Jr.

December 18, 2017April 11, 2024

Overheard at the Great Plains Institute SPP Workshop

AUSTIN, Texas — The Great Plains Institute last week convened state officials and other stakeholders from across the Midwest for a one-day workshop exploring trends in SPP’s footprint. The workshop, which was streamed on the Internet, featured multiple perspectives on ongoing challenges and included panels on wind development and SPP’s proposed expansion with the Mountain West Transmission Group.

The Great Plains Institute convened experts, state officials, and stakeholders for a one-day workshop that explored energy developments and trends in SPP’s footprint. | © RTO Insider

SPP Continues to Manage Growing Wind Resources

Lanny Nickell, SPP’s vice president of engineering, recalled a time less than 10 years ago when the RTO thought if it ever exceeded 25% wind penetration, “it’d be a miracle.”

It’s the miracle that keeps on giving. SPP, the first North American RTO to exceed wind penetration levels of greater than 50%, saw that level reach 56.25% on Dec. 4, when wind resources accounted for a record 14,150 MW of energy.

“We’ve exceeded [25%] by far, because of our large geographical footprint,” Nickell said. The RTO added the Integrated System in 2015 and is now working with Mountain West to add its entities to its membership rolls.

SPP has added almost 12.5 GW of wind capacity since 2010, giving it 17.75 GW of installed wind. With the addition of another 5.3 GW that have interconnection agreements but are not yet in service, the RTO’s wind capacity will exceed its minimum load of just more than 20 GW. Another 35 GW of wind capacity is under various stages of review in SPP’s generator interconnection queue.

SPP FERC SPP Variable Generation Integration Workshop Great Plains Energy

| SPP

The RTO has approved $7 billion in transmission infrastructure since 2005 to accommodate the growth in wind energy, with another $3 billion planned. Half of the build are 345-kV facilities; the rest are primarily 100- to 300-kV infrastructure.

| SPP

“We don’t add transmission because we like transmission. We do so because it’s beneficial and helps keep the lights on,” said Nickell, who hinted at the need for 765-kV infrastructure in the future. “In order to reliably deliver the amount of wind that’s been requested, we’re probably going to need something more than just 345-kV.”

Nickell compared one of SPP’s windiest states, Kansas, with Denmark as an example of the RTO’s operational capabilities. He said Denmark had 116% wind penetration in 2015 and noted, “You can’t do that unless you’re exporting wind.” But when Kansas hit a wind penetration level of 106% on April 24, it wasn’t exporting wind out of the RTO.

| SPP

“It’s because we have a regional transmission organization,” Nickell said. “We can facilitate [those wind levels] and still keep the lights on.”

As more wind energy comes online, Nickell said, wind developers must face the question of what to do when energy exceeds load. “Exporting it does make sense, unless wind developers want to have their wind curtailed,” he said.

Landowner Opposition Formidable Obstacle to Tx Projects

Several speakers discussed the opposition Clean Line Energy Partners has faced from landowners and regulators in its plans to connect renewable resources with urban centers via long HVDC transmission lines.

“You’re going right back to the not-in-my-backyard thing,” said Ted Thomas, chair of the Arkansas Public Service Commission. “That’s causing intense pushback. ‘My granddaddy had this land. This is our family property. I don’t want this big, honking thing coming through here. You don’t understand, this property is not for sale.’”

“Siting is difficult,” agreed Missouri Public Service Commissioner Steve Stoll. “Anytime you’re dealing with private rights and eminent domain, it’s difficult. You can say you’re helping our area by giving us the ability to sell our homes and attract business, but [the landowners] don’t see much value in it.”

“But even if [interregional] projects are built, it doesn’t draw down that massive supply of wind in the Oklahoma Panhandle,” Thomas said.

Nickell said another impediment to selling wind outside SPP is the cost of the transmission facilities themselves.

“It boils down to the question of who pays,” Nickell said. “Should the customer who wants to buy that energy pay for the upgrades to deliver it, as well as the cost of renting the transmission facilities? Or should there be a recognition of benefits to others that helps fund these projects?”

“SPP will have to grapple with what’s a fair cost to move wind out of the SPP footprint, and how that should work,” Stoll said. “It’s the biggest challenge since national electrification.”

Wind’s Economic Benefits Cross Party Lines

Xcel Energy’s Steve Beuning, one of the leaders of the Mountain West’s proposed membership in SPP, thanked the RTO for working with the Rocky Mountain entities and helping them increase their access to renewable resources.

“There’s an operational benefit that comes from the pooling of resources,” said Beuning, Xcel’s director of market operations. “That expansion of balancing diversity into a broader footprint is different. It didn’t exist when other RTOs were formed.”

“Any RTO can put a market together. I don’t know that we do a market any better than PJM, or any better than MISO, or any better than CAISO,” Nickell said. “From what we’ve been told, it’s how we do what we do that was important to the Mountain West group. They appreciate our stakeholder-driven culture. They appreciate our collaborative nature, the relationship-based culture.”

At some point, the Colorado Public Utilities Commission will be asked to give its regulatory approved to the merger. PUC Chair Jeff Ackermann said he is viewing the expansion in three parts.

“There’s the part about reliability, the part about transmission and the market,” Ackermann said. “It comes through really clear … that the culture and how SPP chooses to operate spills into the governance subject. I’ve heard a lot of good stuff about that pursuit of consensus, but the world we live in doesn’t lead to consensus. As you add more parties to things, and they haven’t had experience with discord, how is that done? How do you deal with discord? How do you factor in whatever is the next iteration, and how does that fit into the market?”

“Bringing those distant resources to urban centers is why we value those regional organizations,” said the National Resources Defense Council’s John Moore, director of the Sustainable FERC Project. “With all of the discussion around this integration, you ask, ‘Is this good for the customer?’ We hope so. We don’t want to see the balkanization that you see in the east, with interregional barriers … the last thing we want to see in the west is three or more RTOs developed.”

Speaking on a panel on wind power, Vanessa Tutos, director of government affairs for EDP Renewables, said the economic benefits of renewables are clear, “irrespective of your political persuasion.” She cited a two-thirds drop since 2009 in the cost of wind energy, $128 billion of private investment and more than 20,000 wind industry jobs.

“Job opportunities are coming back to these rural areas,” Tutos said. “When you have a wind farm, you maintain the agricultural capabilities. The wind turbines, though they alter the landscape, allow [farmers] to maintain that form of life.”

But while the wind industry provides economic benefits, it doesn’t do it alone, Tutos said.

“Transmission planning is very important. I love the idea of a 765-kV overlay. I know reliability organizations don’t work that fast … but what wind generation is trying to do is ensure [that] the maximum amount of wind can be integrated in a reliable and efficient way. SPP has a huge opportunity to help implement policies to help reach a 21st century economy.”

“If you don’t have adequate transmission, things will grind to a halt,” said the Wind Coalition’s Steve Gaw. “If building transmission results in a lower cost of power, you’re doing your consumers a disservice by not examining [those options]. We have not gotten close to what low-cost energy would do to the [SPP] footprint. It’s not just transmission capacity; it’s also the scheduling of power across interfaces, and how much you have to pay for energy in pancake rates.”

Alternatives to DOE NOPR

Several speakers suggested there are better alternatives to the Department of Energy’s Notice of Proposed Rulemaking to provide price supports to coal and nuclear generation. (See McIntyre Takes FERC Chair; Wins Delay on NOPR.)

Rob Gramlich, a consultant who served as an adviser to former FERC Chairman Pat Wood III, said he expects the discussion in D.C. to become focused on price formation and market-based approaches.

“Obviously, the proposed resiliency rule is a major focus,” he said. “But since 90% of [the rule’s] eligible generators are in PJM, and PJM is more committed to markets than anyone else, it’s hard to imagine PJM doing anything to upend those markets. I’m not sure what we get from resiliency that we didn’t get from other new rules.”

“If it was me running the whole thing and giving them advice, it would be 180 degrees from what [the Trump administration is] doing,” Thomas said. “They ought to be embracing the fact that markets serve consumers. Markets serve consumers, and the administration should not squander opportunities to make that point.

“We should let the NERC engineers tell us when we have problems. We always say we might have a crisis in 30 days. Well, we had a crisis. It was the polar vortex, and it got to the edge of reliability problems. The next year, we had a weather event that came close to the polar vortex, but it didn’t cause a problem. Why? Because we had engineers study the problem and come up with solutions. Let the markets serve consumers, and let engineers tell us what the problems are.”

Stoll suggested another potential solution to the reliability issue: small (50-MW) modular nuclear reactors (SMRs) that are brought onsite already assembled. Taking great pains to say he was not shilling for the technology, he offered up SMRs as a source of baseload power.

“I wouldn’t want to put all our eggs in the natural gas basket. We don’t know what’s going to happen with natural gas,” Stoll said. Referencing the Utah Associated Municipal Power Systems’ work with SMRs, he said, “They rely on coal, but they’re going to put the first [SMRs] in their footprint. If everything goes right, they plan to replace their coal plants with SMRs. It’s a very interesting technology, and a technology the rest of the world is working on.”

Thomas agreed, saying the SMR market will likely be ready by the mid-2020s.

“We don’t need to be focused on subsidizing nuclear energy. We probably have a window with gas that will take us to that,” he said.

— Tom Kleckner

December 15, 2017

New Builds to Cover Indian Point Closure, NYISO Finds

By Michael Kuser

New gas-fired and dual-fuel generation coming online in the next few years will be enough to maintain reliability after the 2,311-MW Indian Point nuclear plant shuts down completely in 2021, NYISO said Wednesday.

An ISO report assessing the reliability needs arising from the staggered closure of Indian Point Units 2 and 3 cited three major projects totaling 1,818 MW now 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.

NYISO indian point reliability — Indian Point

NYISO had been reluctant to perform a reliability needs assessment prior to formal notice of deactivation from Indian Point owner Entergy, which it received in November. However, in March 2017 both the Public Service Commission and the ISO predicted that the plant’s closure would present no problems for the state’s bulk power system. (See NYISO, PSC: No Worries on Replacing Indian Point Capacity.)

The report also analyzed a scenario without the three new projects. The Lower Hudson Valley (Zones G-J) would need other solutions to maintain reliability, “including generation, transmission, energy efficiency and demand response measures.” Transmission constraints into the valley from upstate (Zones A-F) and Long Island (Zone K) would make additional resources in any other zone unable to effectively resolve a deficiency, the report said.

While a generic addition of at least 200 MW by 2023 anywhere within Zones G-J would resolve the deficiency over a five-year horizon, a deficiency through 2027 would require additional resources ranging from 400 to 600 MW, depending on type and location of the resources within the valley, the ISO found.

The ISO determined the new capacity needed to compensate for the loss of Indian Point under the scenario by adding generic “perfect capacity” resources to zones in 100-MW blocks. “Perfect capacity” represents a hypothetical resource not subject to derates and not tested for transmission security or interface impacts.

NYISO Indian Point Nuclear plant reliability — | *NYISO*

New York City and Westchester County depend on Indian Point for 25% of their electricity, and the village of Buchanan and surrounding area rely on it for jobs and taxes. Gov. Andrew Cuomo in February formed the Indian Point Closure Task Force to explore ways to mitigate local tax and workforce impacts. The group next meets on Dec. 19 in Cortland.

Entergy agreed to deactivate Units 2 and 3 by April 30, 2021, under a deal reached with Cuomo in January. 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 at the plant was shut down in 1974.

Cuomo had long sought the total closure of the plant, saying it was inherently unsafe to risk having a nuclear accident occur just 40 miles north of midtown Manhattan. (See Entergy to Shut Down Indian Point by 2021.)

December 15, 2017

Analyst: FERC Likely to Modify DOE NOPR

By Tom Kleckner

With a permanent chairman and full complement of commissioners now in place, FERC will likely modify “and keep moving” the Department of Energy’s controversial proposal to offer price supports to coal and nuclear plants, according to one industry analyst.

Christine Tezak DOE NOPR FERC — Tezak | *ClearView Energy Partners*

Christine Tezak, managing director of research for ClearView Energy Partners, said Wednesday her firm expects the commission to acknowledge the administration’s concerns and to take some action on the department’s Notice of Proposed Rulemaking (RM18-1).

Chairman Kevin McIntyre, who was sworn in Dec. 7, requested a 30-day delay for FERC to address the NOPR, which was granted by Energy Secretary Rick Perry. The commission now has until Jan. 10 to take action. (See McIntyre Takes FERC Chair; Wins Delay on NOPR.)

“The NOPR DOE sent over articulates a pretty straightforward concern that closing [baseload] power plants is bad,” Tezak said during a Texas Renewable Energy Industries Alliance webinar on the proposal. “It couches that concern by saying there could come a day under extreme circumstances where we would be really sorry not to have those plants around.”

Given broad opposition to the NOPR, Tezak thinks Commissioners Cheryl LaFleur, Robert Powelson and Richard Glick would all like to set aside the directive. She said LaFleur and Powelson reportedly prefer to close the docket and issue a Notice of Inquiry to RTOs with a 90-day timeline. Glick is also thought to be amenable to that option, Tezak said.

“I’m not sure that’s going to control the day,” she said. “The chairman does set the agenda. We think a variety of unusual circumstances are likely driving the commission to keep moving on the proceeding and to be responsive to the DOE’s concerns.”

It’s “feasible” FERC could issue an Advanced Notice of Proposed Rulemaking or a revised NOPR and keep the docket open if McIntyre can persuade two commissioners that action is required, Tezak said. “A revised rulemaking is not a final rule.”

Base on comments filed, Tezak said FERC has several other options to consider besides adopting the NOPR as written — unlikely, she said, given its lack of support and criticism for being vague:

To “go even bigger” and offer 15-year cost-of-service contracts to all coal- and nuclear-fired generators;
Adopt cost-of-service payments now and devise a permanent fix later;
Revise or refine the NOPR, define “resiliency” and procure it starting in 2019;
Study first, and act later; and
Just say “no” and close the docket.

While serving as interim chairman before McIntyre’s arrival, Commissioner Neil Chatterjee proposed a “show cause” order requiring grid operators to compensate resources that may provide resilience benefits and are at risk of retirement as an interim measure while the commission conducts a longer-term rulemaking.

“With apologies to Lynyrd Skynyrd, we called the variant Neil Chatterjee seemed to endorse ‘Gimme Two Steps,’” Tezak said. “[The NOPR] is a very, very broad proceeding, notwithstanding the criticism. It’s not a popularity contest or an election. Expert opinions matter, and there is a lot of different evidence in the docket. Looking ahead, that’s important to consider even if [many parties] would like to see FERC shelve the whole mess and move on.”

Industry consultant Alison Silverstein, who — “through a bizarre chain of events” — helped organize and write the DOE’s “Staff Report on Grid Reliability and Markets,” referred to the NOPR’s “premature” retirements of baseload plants as “road kill.”

“The DOE staff said there was no such thing as premature retirements,” Silverstein said during the webinar. “If you believe in markets, then those things retired when they were no longer needed. Almost all of them retired because they were no longer economic.”

The root causes — low natural gas prices and the growth of renewables — were so obvious, the DOE report did not address them, Silverstein said.

She defined grid resiliency as the system’s ability to absorb, restore and quickly recover from major adverse events. Reliability has short-term (withstanding sudden disturbances) and long-term (resource adequacy) dimensions, Silverstein said.

“It’s important to articulate the problem we’re trying to solve here,” she said. “Resiliency and reliability is very different for a power plant than the grid as a whole. For my money, we can buy a lot of transmission and distribution improvements and provide economic support for coal miners for the billions of dollars it would cost to subsidize uneconomic coal and nuclear plants.”