Page 1304 – RTO Insider

July 3, 2017

Doubts About Balancing Markets, State Policies in Diverse PJM

By Rich Heidorn Jr.

When PJM officials sought to prevent a repeat of the generation outages that nearly forced rolling blackouts in the winter of 2014, they quickly realized no solution was likely to clear a two-thirds sector-weighted vote — required to file proposals under Section 205 of the Federal Power Act.

As a result, the PJM Board of Managers filed its Capacity Performance rules unilaterally under FPA Section 206 after only a limited stakeholder review.

Winning approval of the RTO’s five sectors is difficult enough. Now, as PJM attempts to ensure the zero-emission credits approved for nuclear plants in Illinois — and similar measures under discussion in Ohio, New Jersey and Pennsylvania — don’t suppress prices, the needle may be even tougher to thread.

The RTO’s footprint includes D.C. and parts of 13 states — states with disparate energy and environmental policies, including both restructured and vertically integrated constructs. Maryland and Delaware are members of the Regional Greenhouse Gas Initiative (RGGI), a market-based program to reduce emissions.

In contrast, PJM members and coal producers West Virginia and Kentucky don’t even have renewable portfolio standards. (New Jersey appears likely to rejoin RGGI after Gov. Chris Christie, who pulled his state from the compact in 2011, leaves office in January. Both the Democrat and Republican candidates running to replace Christie have promised to rejoin.)

The differences in stakeholder views were displayed at FERC’s May 1-2 technical conference on state policies and wholesale markets, and they were also evident in post-conference comments filed at the end of June. (See PJM Stakeholders Offer Different Takes on Markets’ Viability.)

The commission asked commenters to weigh in on five potential “paths” of action (see table).

In their remarks, PJM officials told FERC they are pursuing three initiatives:

Allowing states to voluntarily join a system incorporating carbon pricing with existing market structures. This approach, which would require a “critical mass” of states to agree on a “common template,” is in the “beginning stage,” CEO Andy Ott told the commission.
A two-phase capacity auction that would allow subsidized resources to be counted as available reserves without influencing the clearing price.
Changes to energy market rules to improve price formation, which PJM says could reduce the need for out-of-market actions by states. It would expand on the issues identified in FERC’s Notice of Proposed Rulemaking on the pricing of fast-start resources (RM17-3). (See FERC: Let Fast-Start Resources Set Prices.)

The RTO had outlined the proposals in a series of white papers, the last of which were released earlier last month. (See PJM Making Moves to Preserve Market Integrity.)

Ott (left) and Joe Bowring, Monitoring Analytics | © *RTO Insider*

PJM said the Path 2 “accommodate” route “is most in need of the earliest feasible commission guidance and ensuing market rule adjustments,” citing concern that price suppression from ZECs and other state generation subsidies could be “exported” from those states to other regions.

Supporters of Path 2 include FirstEnergy and Eastern Kentucky Power Cooperative, which filed jointly, and Public Service Enterprise Group, which is seeking financial support for its Salem and Hope Creek nuclear plants in New Jersey.

PSEG said it will not keep its nuclear plants in service if they are not “economically viable.” Company executives told analysts on an earnings call in April that the units will be cash-flow positive at least through 2019 but that the plants’ finances could worsen by 2020. FirstEnergy, which has been trying for years to win subsidies from Ohio for its merchant fossil fleet, has recently sought aid for its Davis-Besse nuclear plant.

PJM’s Independent Market Monitor, which opposed the Illinois ZECs, said “it would be a mistake for ISO/RTOs to explicitly accommodate state-level subsidies” in their capacity market designs.

The Monitor criticized the focus on so-called “baseload” resources. “The concept of baseload resources is backward rather than forward looking. Baseload units are units that run for most hours of the year. But the term baseload is now frequently used to mean units that used to run a lot of hours based on old economics, that no longer run a lot of hours based on current economics, and that are seeking subsidies to make up the difference in revenues.”

It opposed Paths 1-3, calling for a combination of Paths 4 and 5.

Direct Energy also weighed in on the baseload issue.

“The commission must ensure that to the extent there is an alleged need to retain baseload units for fuel diversity — which … may inevitably lead back to integrated resource planning — there is demonstrable and verifiable proof that without this retention, the electric infrastructure is in jeopardy from a security perspective,” it said. “Consumers paid far more than they should have in the days when utilities and regulators chose winners and losers through [the] integrated resource planning period. The commission cannot allow the cost efficiency and choices afforded to consumers through competition to be eviscerated without good reason.”

Richard Mroz, NJ BPU (left) and Place | © *RTO Insider*

Andrew Place, vice chairman of the Pennsylvania Public Utility Commission, endorsed Path 4 as the “most prudent approach.” The PUC, however, declined to take a position, citing uncertainty over how legislators in Pennsylvania, Ohio and New Jersey will respond to potential nuclear closures.

The Maryland Public Service Commission also withheld judgment on PJM’s proposed two-stage capacity auction, saying “the scope and scale of the proposal are uncertain.”

In a joint filing, American Electric Power and Dayton Power and Light expressed doubts about the ability to value and integrate state policies into markets. “While a New York carbon policy might be reflected in a carbon adder integrated into the NYISO’s market design, where there is only one state policy to address, such integration would be much more challenging in PJM, where the geographic and political diversity of the covered states would make policy consensus difficult to achieve.”

The companies also said PJM’s proposed two-stage auction could introduce “perverse incentives,” encouraging deregulated units to offer into the first-round auction at zero in order to clear the auction and qualify for the likely higher prices in the second round.

Public power commenters pushed back hard on PJM’s plans.

Old Dominion Electric Cooperative said the PJM proposal is not just and reasonable and called on FERC to avoid the “volatility of reactionary rule changes.”

The American Public Power Association said “PJM’s approach would by its design over-procure capacity resources, further increasing costs to consumers.”

American Municipal Power said FERC should order a five-year transition from the current PJM capacity model to one in which only 20% of capacity is procured through the auction with the remaining 80% procured through bilateral contracts.

Duquesne Light took the opposite position, saying it opposes the expansion of bilateral contracting.

It also said the current 90-day notice for generation retirements should be increased to 210 days. “The current 90-day advance notice of retirement of a unit is inadequate to allow PJM, the market and market participants to study and implement contingency plans to account and properly plan for the loss of generation,” the company said. “Generation deactivations can create local reliability problems whereby the totality of impacts cannot be identified within the current 90-day time frame nor can potential solutions be constructed within that 90-day window.”

The PJM Industrial Customer Coalition said the RTO’s “Capacity Market Repricing Proposal” whitepaper is “worthy of” further discussion but said it is strongly opposed to state mechanisms to price environmental attributes.

AEP and Dayton said FERC should consider the impact of state policies on transmission planning, not just capacity and energy markets.

“State-subsidized renewable generation investments may only be feasible in specific locations that require additional transmission to assure delivery. Market efficiency transmission projects are based on price signals in the energy and capacity markets,” the companies said. “Artificially low price signals, for instance, may cause significant delays in the planning and construction of transmission projects that could provide more cost-effective solutions to addressing generation retirements.”

They also commented favorably on the idea of creating a separate capacity tranche for resources based on their “resilience,” such as on-site fuel supplies, ramping capabilities and ancillary reliability services.

Urgency

There was no consensus on how quickly PJM should act. The RTO asked FERC to set a Dec. 1 deadline on RTOs/ISOs to file rule changes. (See PJM Stakeholders Offer Different Takes on Markets’ Viability.)

The Monitor agreed: “It is urgent that the identified issues be addressed.

“But it is not so urgent as to prevent a rational, forward looking and collaborative approach to addressing the issues that are faced by all,” it said. It noted that three-quarters of nuclear plants covered 100% of their going-forward costs in 2016.

The PJM ICC said there was “no need for rush to judgment.”

The New Jersey Board of Public Utilities said wholesale markets are limiting the diversity of its energy portfolio because they “may not adequately value all attributes.”

New Jersey, which gets about 45% of its power from nuclear units, will likely see that fall in 2019 — when Exelon’s Oyster Creek plant is slated for retirement — even if PSEG keeps its plants running.

The Chicago-based Environmental Law and Policy Center said it has “yet to see evidence that near-term action is needed.” It called for extending the deadline on the RTO’s Capacity Construct/Public Policy Senior Task Force, which was created in January 2016. Its charter calls for it to complete its work by the end of the year.

“We are concerned about undue discrimination between resources, unreasonable costs imposed on consumers and interference with states’ environmental policies in order to address a ‘problem’ — low prices — that does not appear to actually be a problem,” the group said in a filing it made on behalf of the Natural Resources Defense Council’s Sustainable FERC Project. “These concerns are exacerbated by not allowing sufficient time and stakeholder process to carry out the work of the CCPPSTF or evaluate proposals addressing similar issues put forth outside of the CCPPSTF. There is no urgency to justify rushing the process, particularly where accelerating the process means key questions are going unanswered and result in poorly considered proposals.”

‘Hot Mic’ Reveals Montana Move Against Solar QFs

By Amanda Durish Cook

A Montana utility commissioner was caught on a hot microphone last week appearing to confirm what renewable energy advocates say they already suspected: that state regulators knowingly put rules in place that will suppress development of small solar projects by altering the contract terms available to generators under the Public Utility Regulatory Policies Act.

PURPA montana solar bob lake — Lake | *Montana PSC*

During a break in a June 22 meeting of the Montana Public Service Commission, a microphone — inadvertently left on — picked up Commissioner Bob Lake speaking privately about a recent decision to reduce the standard contract length and rate available to qualifying facilities up to 3 MW under PURPA.

Enacted by Congress in 1978 to encourage diversification of energy supplies, PURPA requires utilities to pay QFs 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.

QF Death by Attrition

Lake’s comments were captured in a video posted by the Billings Gazette, which shows him and PSC rate analyst Neil Templeton discussing the commission’s move to cut QF rates by about 40% and reduce contract terms from 25 years to five years with the option to negotiate rates for an additional five years. NorthWestern Energy last year complained that QF rates were 35% above its “avoided costs” and asked that they be reduced (Docket No. D2016.5.39).

“It’s essentially a five-year rate, so … it’s going to probably kill QF development entirely,” Templeton said in the footage.

“Well, actually, a 10-year [contract length] might do it if the price doesn’t,” Lake replied. “And honestly at this low price, I can’t imagine anyone going to get into it. So, it becomes a totally moot point because just dropping the rate that much probably took care of the whole thing.”

“We’re live,” Lake worries later in the video. An unidentified staffer in the room assures him that microphones are turned off.

The incident follows FERC’s January decision to decline enforcing PURPA against the PSC. Solar advocacy group Vote Solar had complained that the state regulators violated the law when it allowed NorthWestern to suspend its tariff for solar QFs pending a rate review (EL16-117). (See FERC Won’t Act on Montana Regulators in PURPA Dispute.)

No Surprise for Solar Supporters

Jenny Harbine, an attorney with Earthjustice representing Vote Solar, was unsurprised by the content of the recorded conversation but surprised that the comments were captured.

“It’s remarkable that the concession was caught on tape, but as a general proposition, it’s well understood by the rest of the world,” Harbine told RTO Insider. “You can’t finance an energy project with a five-year contract any more than I can finance my home with a five-year mortgage. Commissioner Lake and the commission staff confirmed on the open mic that they understand that solar development [under the new five-year contract] is not feasible.

“When state commissions set unreasonably short contract lengths, development of those projects fall off a cliff. There’s evidence of that,” Harbine added. “What the commissioner conceded is that he understood a shorter contract length would close the door on those projects.”

Another notable point about the commission’s decision, according to Harbine: While NorthWestern had asked the commission to reduce the amount paid to QFs under PURPA, the utility did not ask for a shorter contract length.

“The commission took that upon themselves,” Harbine said, adding that developers should be “hopping mad.”

PSC’s Defense

PSC Communication Director Chris Puyear said the decision to reduce the QF contract length and rate boils down to price fairness for ratepayers.

“It’s not the role of the commission to pick winners and losers in the energy landscape,” Puyear said in an email. “Federal law says ratepayers shouldn’t have to overpay for electricity produced by independent generators, but that’s exactly what was happening in Montana.”

Customers were “forced to pay nearly double the market price of electricity for power produced by independent solar facilities” under Montana’s previous QF rate, he added.

“The commission’s action brings rates for independent power in line with what customers would otherwise pay for power produced by the utility, while ensuring that long-term, fixed price contracts do not shift undue risk to the ratepayer,” Puyear said.

“In making its determination on avoided cost and contract length, the commission relied heavily on record evidence, especially the testimony of the state ratepayer advocate, the Montana Consumer Counsel.”

June 30, 2017

California High Court Upholds Cap-and-Trade

By Jason Fordney

The California Supreme Court on Wednesday declined to review a challenge of the state’s greenhouse gas cap-and-trade program, preserving the 2006 law that requires power plants and other polluters to reduce carbon emissions or purchase state-issued credits.

The court declined to review the California Chamber of Commerce’s appeal of an April 6 decision by the Third District Court of Appeal favoring of the program.

cap-and-trade greenhouse gas caiso — NRG’s Etiwanda natural gas plant, Ranch Cucamonga

While the business interests represented by the chamber did not oppose the California Global Warming Solutions Act of 2006, which set the emissions limits, they attacked the associated California Air Resources Board (CARB) regulations that created the cap-and-trade program allowing the sale of some greenhouse gas emissions allowances.

The legislation required covered entities such as power plants to reduce greenhouse gas emissions to 1990 levels by 2020 and designated CARB to monitor and regulate emissions sources.

Under the program, large emitters of greenhouse gases must purchase emissions credits at CARB’s quarterly auctions to cover emissions not accounted for with free credits. The plaintiffs said the auction sales exceeded the State Legislature’s delegation of authority to the board, and that the revenue generated amounts to a tax.

The appeals court in its earlier ruling said “the legislature gave broad discretion to the board to design a distribution system, and a system including the auction of some allowances did not exceed the scope of legislative delegation.” The court said the legislature later ratified the system by specifying how to use the proceeds.

The appeals court also said the revenue is not a tax because it is a voluntary decision driven by business judgments regarding whether it is better to buy credits than reduce emissions, which, unlike a tax, has value.

“Reducing air emissions reduces pollution, and no entity has a right to pollute,” the lower court said.

The chamber did not immediately respond to a request for comment on the high court’s decision.

The Environmental Defense Fund and Natural Resources Defense Council intervened in the proceeding on behalf of CARB.

“This is the final step in this case to affirm California’s innovative climate program, including its carbon auctions, which serves as a vital safeguard to ensure polluters are held accountable for their pollution,” EDF senior attorney Erica Morehouse said in a statement.

Even with the court challenge behind it, cap-and-trade still faces an uncertain future. Gov. Jerry Brown is trying to extend the life of the program, which expires in 2020, through a ballot measure.

caiso cap-and-trade greenhouse gas — The California Supreme Court (photographed above) upheld a lower court ruling

“With this Supreme Court victory, now it’s up to us to take action extending California’s cap-and-trade system on a more permanent basis,” Brown said in a statement.

CARB is expected to auction about half of the program’s total allowances by 2020. As of January 2015, about 500 million allowances had been given away and about 75 million were auctioned.

June 30, 2017

Trump Promises to Make US Energy Dominate

By Michael Brooks

President Trump announced six “initiatives” in a speech at Energy Department headquarters Thursday, saying they would create “American energy dominance” in the world.

The announcements were part of the White House’s Energy Week, an effort to highlight the administration’s energy policies.

Some of the announcements were merely approvals by the departments of Energy, Interior and State. Flanked by Vice President Mike Pence, Energy Secretary Rick Perry, Interior Secretary Ryan Zinke and EPA Administrator Scott Pruitt, Trump announced:

A review of U.S. policies on nuclear energy resources;
The Treasury Department would work to address barriers on financing foreign coal plants;
A Presidential Permit for a petroleum pipeline crossing Mexico;
Sempra Energy had agreed to negotiate a deal to export LNG to South Korea;
Approval of two long-term applications by the Energy Department to export LNG from the Lake Charles, La., facility; and
A new offshore oil and gas leasing program.

Trump did not go into specifics about the announcements. They made up a brief segment of a speech punctuated by praise for his administration’s elimination of “job-killing” regulations, celebration of the withdrawal from the Paris Agreement on climate change and jabs at CNN for recent resignations over a retracted story about alleged ties between a Trump ally and a Russian investment fund.

american energy dominance trump — Left to right: Pence, Trump and Perry

Like his speech announcing the withdrawal from Paris, Trump’s remarks had nationalistic overtones, arguing that the U.S. has been taken advantage of by other countries that “used energy as an economic weapon.” The president did briefly mention that America’s “clean, beautiful coal” was in high demand from countries such as Ukraine. And he said the pipeline to Mexico would go “right under” his proposed border wall.

Nuclear Energy Institute CEO Maria Korsnick, who attended the speech, thanked the president for the study on the challenges facing the nuclear energy industry.

“If the president wishes for our nation to achieve nuclear energy dominance both at home and abroad, he’ll do it by preserving the existing nuclear fleet, paving the way for the deployment of advanced nuclear designs and stimulating exports abroad,” she said in a statement.

Left to right: Zinke, Pence, Trump, Perry and Pruitt

Tom Kiernan, CEO of the American Wind Energy Association, issued a statement Thursday expressing support for Trump’s “strategic vision to seek American energy dominance.”

“The administration’s all-of-the-above energy strategy, including resources like wind, can work to make America safer and more self-reliant while growing the economy,” Kiernan said.

Sierra Club Executive Director Michael Brune said Trump’s “Energy Week” showed “just how weak he is on energy solutions. Trump’s rhetoric on energy falls short of the reality in which he’s canceling life-saving public health standards that protect clean air and water just to boost the profits of fossil fuel executives. Trump isn’t leading America, he’s trying to drive us backwards and he will not succeed.

“Trump’s head is stuck so far into the sand that it’s no wonder the only thing he can speak of is fossil fuels — he can’t see that solar and wind energy are creating more jobs and powering homes and businesses across the country. If he truly cared about energy dominance, Trump would be investing in growing the booming clean energy economy rather than trying to turn back the clock for dirty fuels.”

June 30, 2017

Access Northeast Put on Hold by Utilities

By Michael Kuser

Eversource Energy and National Grid notified FERC on Thursday that they are suspending the permitting process for the $3 billion Access Northeast natural gas pipeline expansion project in New England until they can find a way to finance it. The two utilities made the filing (PF16-1) together with pipeline operator Enbridge, according to a report in the Boston Globe.

The story quoted Brian McKerlie, a vice president at Enbridge, as saying that after the companies persuade state legislators to allow a special tariff for electric ratepayers to fund the project, “we’ll be able to re-engage the FERC filing process and be back on track.”

The companies’ action was not unexpected.

Last August, Eversource and National Grid withdrew requests to bill customers of their four electric distribution companies for natural gas capacity from the proposed pipeline expansion after the Massachusetts Supreme Judicial Court vacated an order by the state regulators approving pipeline capacity contracts. (See Eversource, National Grid Withdraw Requests to Bill for Pipeline.)

The increasing reliance on natural gas to generate electricity in New England has led to reliability concerns, while the source of much of the gas, fracking in Pennsylvania, has led to environmental protests over new pipelines or plans to expand existing ones.

On Tuesday, Massachusetts gubernatorial candidate Setti Warren (D) visited a gas compressor station in Weymouth that serves the Algonquin and would serve its expanded version. Warren, mayor of Newton, criticized the pipeline expansion as a “mistake for Massachusetts” and said Gov. Charlie Baker (R) should oppose it.

June 29, 2017

Storage Advocates Urge CAISO on DR Product

By Jason Fordney

Tesla and other energy storage companies have urged CAISO to accelerate development of a new demand response product that is based on excess generation, but the grid operator says it must first address many concerns before including the product in any proposal.

The electric automaker and other storage proponents last week submitted comments on a draft proposal of CAISO’s Energy Storage and Distributed Energy (ESDER) Phase 2 initiative, which is unlikely to include establishment of a new proxy demand resource (PDR) that would consume load based on an ISO dispatch instruction, including providing regulation service.

CAISO wants to omit the load consumption product from the ESDER Phase 2 package to be presented to its Board of Governors for approval during its July meeting. (See CAISO Finalizes Rules for DR, Distributed Generation.) The ISO plans to defer the product until a third phase in order to better understand the limits of non-generator resources and other issues identified in its separate “multiple-use applications” initiative related to storage.

Increasing instances of generation oversupply and solar curtailments is creating urgency for a market mechanism that facilitates consumption of surplus power, and stakeholders have generally agreed that CAISO should not let jurisdictional rate issues interfere with development of the bidirectional PDR product capable of both consuming and producing energy.

“CAISO staff has indicated that owing to the retail billing implications of customer participation in a hypothetical load consumption product, such a product is too fraught to consider developing and implementing until such implications are addressed,” Tesla said in its comments. The company “strongly disagrees with this perspective,” provided that customers understand that their retail bills will be impacted by a decision to charge a storage device based on the billing determinants they are subject to pursuant to their retail tariff.

Tesla said that customers of the program should be able to determine for themselves whether to provide load consumption based on the difference between retail rates and wholesale pricing. Customers would find value in offsetting their retail bills through negative wholesale prices while helping California mitigate oversupply, the company contended.

While storage advocates are urging CAISO to develop a bidirectional PDR product, “a broad cross-section of stakeholders” said it should “take more time to resolve issues, consider options and coordinate with” the California Public Utilities Commission, CAISO said.

Among these concerns are the effects on retail rates, customer interest, demand charges and technical implementation issues.

Pacific Gas and Electric’s “excess supply pilot has delved into these issues and has reported that participants are concerned about rate impacts and ratcheting demand charges,” CAISO said in its revised proposal.

“Contrary to comments from the storage community, the CAISO does not view these barriers as jurisdictional in nature, but as real impediments to customer interest and robust customer participation in a bidirectional PDR product,” the ISO said.

Energy storage companies said CAISO should also work on enabling behind-the-meter storage to participate in the wholesale market via the PDR product. There is unused potential in BTM energy storage because to do so currently requires participation as a non-generator resource, said Tesla, energy storage company Stem and EV charger manufacturer eMotorWerks.

Tesla Distributed Battery Storage Power Plant | *Tesla*

There has also been discussion within the Load Consumption Working Group, which Tesla said CAISO staff “appears to defer to stakeholders to revive and manage.” Storage companies want the ISO to take a leadership role in the working group.

The California Energy Storage Association (CESA), which represents more than 60 companies, said it “supports rapid action” on the group performing further work and having CAISO lead it, adding that the ISO should ensure ESDER promotes nondiscriminatory access to markets.

“CAISO should focus on how to ensure resources like PDRs can show up in CAISO markets to compete to provide services,” CESA said.

June 29, 2017

FERC: MISO Gas Data Sharing Plan Falls Short

By Amanda Durish Cook

A MISO plan to share generators’ hourly gas-burn estimates with select natural gas pipeline operators will require more explanation before getting federal approval, FERC staff said Tuesday.

Agency staff issued the RTO a deficiency letter in response to a proposal to share nonpublic, day-ahead gas-usage profiles with pipeline companies — which currently include Northern Natural Gas, ANR Pipeline and DTE Energy — before this winter as part of a pilot program meant to improve gas reliability (ER17-1556). (See “3 Pipeline Companies to Receive Gas Profiles Before Winter,” MISO Reliability Subcommittee Briefs.)

In filing the proposal, MISO stressed that it would share only aggregated data, while also contending that sharing nonpublic operational data was allowed under FERC Order 787. The RTO plans to execute nondisclosure agreements with relevant pipelines and utilities under the proposal.

But FERC staff were primarily concerned with a provision that would also allow MISO to share data with local distribution companies (LDCs) and intrastate pipelines in addition to interstate operators.

While the deficiency letter acknowledged that Order 787 recognized the “significant” role of LDCs and others in maintaining reliability of both interstate pipeline systems and electric transmission systems, it also noted the order “declined to provide blanket authorization for the disclosure of nonpublic, operational information” to LDCs, intrastate pipelines or gas gatherers, instead requiring a case-by-case approach. FERC staff determined that “MISO does not provide support for this aspect of its proposal” and gave the RTO 30 days to provide more supporting information to justify sharing nonpublic information with LDCs.

Agency staff also said that MISO’s proposal failed to expressly prohibit the use of nonpublic, operational information “to the detriment of any natural gas and/or electric market,” as an earlier, similar proposal from PJM promised. MISO’s proposed nondisclosure agreement merely prohibits the “receiving entity from illegal and non-legitimate use of the nonpublic, operational information,” FERC staff said, asking MISO to explain the omission.

Some MISO stakeholders earlier this year voiced opposition to the pilot program, saying it could affect reliability if participating gas operators make burn rate decisions relying solely on partial day-ahead data. (See MISO Stakeholders Question Electric-Gas Info Sharing.)

June 29, 2017

ITC ‘Tour’ Includes Call for Increased Tx Investment

By Amanda Durish Cook

ITC Holdings on Tuesday offered a rare look into its Michigan control room as part of a company update that included an appeal for increased investment in transmission.

ITC holdings transmission — ITC Control Room

During the online “virtual tour” and accompanying web seminar, CEO Linda Blair called for a sense of “urgency” for the industry to develop new electric infrastructure.

“Now is a critical time to support investment for the years ahead,” Blair said, adding that “no meaningful interregional planning process” exists to address extra demands being placed on the grid, particularly from the growth of wind generation.

“We have to have a requirement that transmission lines have a way to come to fruition. … I think it requires action from FERC,” she said.

ITC was acquired by Canadian utility Fortis last October. Immediately following the $11.3 billion sale, Blair took over as president and CEO of the Michigan-based company.

Blair said ITC has not changed its company vision since the acquisition. “We’re a transmission-only company. We breathe, sleep and eat transmission. That’s what we do, and we do it well,” she said.

“A strong grid promotes economic development,” Chief Operating Officer Jon Jipping added.

Jipping said ITC is awaiting approval by the U.S. Army Corps of Engineers on the Lake Erie Connector project, a 1,000-MW, bidirectional, underwater HVDC transmission line that will ship electricity between Ontario’s Independent Electricity System Operator and PJM territory in Erie, Pa. He expects the company to wrap up the permitting process for the $1 billion project in late summer.

ITC executives also touted the reliability of the current ITC system that spans Michigan, Iowa, Minnesota, Illinois, Missouri and Oklahoma.

Vice President of Operations Brian Slocum said ITC’s system remained operational during Michigan’s historic March 8 wind storm and weather-related outages that affected more than 1 million people.

“Over the years, we’ve seen less unplanned outages on this wall,” Slocum said from a virtual ITC control room. But more needs to be done to improve the country’s transmission grid, which was not designed to handle so many renewable sources of generation, he said.

“Fortunately, there’s a dialogue underway” on infrastructure improvements in this country, Slocum added.

June 29, 2017

Trump Taps Senate Aide, Former Lobbyist for FERC

By Michael Brooks

The White House late Wednesday announced that President Trump intends to nominate Richard Glick, general counsel for the Democrats on the Senate Energy and Natural Resources Committee, to replace outgoing FERC Commissioner Colette Honorable.

trump richard glick ferc — Glick | *Avangrid Renewables*

Glick has been with the committee since February 2016. Prior to that, he was a lobbyist at Avangrid Renewables, PPM Energy and PacifiCorp. Glick also served under the Clinton administration as an adviser to Energy Secretary Bill Richardson. He earned his bachelor’s from George Washington University and his J.D. from Georgetown University.

Glick’s term would end in 2022. The announcement came two days before Honorable’s term at the commission ends, leaving acting Chair Cheryl LaFleur, a Democrat, as the only commissioner. (See FERC’s Colette Honorable Says Goodbye.)

Pennsylvania Public Utility Commissioner Robert Powelson and Neil Chatterjee, energy adviser to Senate Majority Leader Mitch McConnell (R-Ky.), have already advanced out of committee and are awaiting confirmation votes by the full Senate.

Powelson and Chatterjee, both Republicans, would restore the commission’s quorum, but it is unknown when McConnell intends to schedule the votes: The Senate has been consumed by Republicans’ efforts to replace Obamacare, and reports say that Democrats have refused to consent to votes on other items while debate on the bill is ongoing.

The confirmation of the three nominees would leave only the seat vacated in February by former Chair Norman Bay, a term that would end next year.

ferc trump richard glick — FERC’s membership will see a nearly complete turnover if Republicans Robert Powelson and Neil Chatterjee and Democrat Richard Glick are confirmed by the Senate to join acting Chair Cheryl LaFleur. President Trump has not yet nominated a third Republican.

Numerous reports have identified Kevin McIntyre, co-head of the energy practice at law firm Jones Day, as the third Republican nominee and likely chairman, but he has not been formally named.

Glick’s nomination may be an effort to appease Democrats and enable simultaneous votes on all three nominees. If that’s the case, FERC will have to wait on a White House notorious for its slowness in officially submitting nominations and for Glick to go through the committee process.

Honorable’s “departure again underscores the urgent need to re-establish a quorum at FERC,” Committee Chair Lisa Murkowski (R-Alaska) said yesterday. “Getting the agency back to the normal course of business remains a top priority for me. I will continue to push for a confirmation vote for Neil Chatterjee and Robert Powelson. … I hope my colleagues among the Senate minority will join us in enabling a quick vote for Mr. Chatterjee and Mr. Powelson.”

June 28, 2017

FERC Tentatively OKs New MISO-PJM Project Type

By Amanda Durish Cook

CARMEL, Ind. — FERC on Monday approved a proposal by PJM and MISO to create a new category of small interregional transmission projects while cautioning that the measure could see future revisions.

The proposal updates the PJM-MISO joint operating agreement with a targeted market efficiency project (TMEP) type, which applies to projects that reduce historical congestion along the RTOs’ seams.

Still, in its June 26 delegated order, FERC staff said that preliminary analysis indicates the proposal has “not been shown to be just or reasonable” and left open to the possibility that it could be subject to refund after being implemented (ER17-721). The RTOs are eligible to use the project type starting June 28.

The RTOs filed jointly last year to create TMEPs to encourage construction of cost-effective and congestion-relieving seams projects that might otherwise be overlooked because of their low cost and small size. Their proposal stipulates that TMEPs cost less than $20 million, be in service within three years of approval, and within four years of operation provide congestion relief equal to or greater than the cost of construction. Costs will be apportioned to MISO and PJM based on the percentage of congestion relief benefits accruing to each RTO.

The RTOs have so far identified $17.25 million worth of upgrades in five TMEP candidate projects, and expect those projects to deliver a 5.8:1 benefit-cost-ratio and realize $100 million in benefits within four years of going in service. (See MISO-PJM TMEP Projects Drop to Five.) Both RTOs hope to finish evaluation of TMEP candidates by September and seek respective board approvals by the end of the year.

Exelon, the Organization of MISO States, Northern Indiana Public Service Co., the Indiana Utility Regulatory Commission and ITC Mid Atlantic Development supported the proposal in comments to FERC. MISO South regulators protested the filing, claiming that the RTOs’ benefits analysis fails to take congestion hedging revenues into consideration.

Speaking on behalf of the MISO Transmission Owners sector, Ameren Senior Director of Transmission Policy Dennis Kramer said that the factoring in of congestion hedging revenues would “complicate” the TMEP study process.

“Excluding the congestion hedge costs is consistent with the TMEP goal of straightforward, efficient metrics that can be easily reproduced by stakeholders,” Kramer said in comments submitted for a June 13 FERC workshop on the TMEP issue. “Adding congestion hedges … would fundamentally change the nature of the TMEPs by changing the study from a simple analysis of historical flowgate congestion to a multifaceted deconstruction of a series of complex financial hedging instruments which differ in each RTO. Such action would counteract the RTOs’ ability to implement the quick-hit, high-value project types.”

Regional Cost Allocation

FERC must still also act on separate proposals by MISO and PJM regarding how they plan to allocate their portion of TMEP costs regionally.

MISO plans to pursue a bifurcated cost allocation, using a local transmission pricing zone when the constraint exists on lines belonging to one or more MISO transmission owners. For constraints wholly within PJM, MISO is seeking a postage stamp allocation for the entire MISO Midwest region.

However, MISO missed its targeted April filing deadline to complete a regional cost allocation because it needed more time to develop the process with stakeholders. Spokesman Mark Adrian Brown said the RTO will submit an allocation proposal “as soon as possible.”

PJM in April filed a regional cost allocation proposal that would assign TMEP costs to zones and merchant transmission facilities “that are shown to have experienced net positive congestion over the two historical years prior to the TMEP study period” (ER17-1406).