PJM Markets and Reliability and Members Committees Briefs

Pseudo-Tie Proposals Too Complex for Some Stakeholders

WILMINGTON, Del. — PJM officials Thursday delayed a vote on its proposed standardized agreements for pseudo-ties, but that didn’t stop complaints from stakeholders who say the rules will be overly burdensome.

“From our standpoint, this pseudo-tie business is starting to get out of control,” American Municipal Power’s Ed Tatum said at the Markets and Reliability Committee meeting. “The stakes are getting higher and more draconian.”

The issue is particularly important for AMP, he said, because it put a lot of effort and resources into creating a pseudo-tied unit.

Mike Borgatti of Gabel Associates voiced similar concerns, noting the multiple layers of rules from separate RTOs that they would soon have to follow.

On March 9, PJM made a Section 205 filing with FERC to add criteria for accepting pseudo-ties despite a lack of stakeholder consensus (ER17-1138). (See PJM to Tighten Pseudo-Tie Rules Despite Stakeholder Pushback.)

PJM markets and reliability committee members committee pseudo-tie — Jacqui Hugee, PJM, discussed proposed pseudo-tie agreements, which were tabled | © *RTO Insider*

PJM officials had planned last week to seek stakeholder endorsement of a pro forma pseudo-tie agreement, a reimbursement agreement for pseudo-ties into PJM and related Tariff and Operating Agreement revisions.

But PJM’s Jacqui Hugee announced at the beginning of her presentation that the proposals were being removed from voting consideration. She said a “beneficial revision” had been suggested at the last minute that PJM wanted to include in the proposal, though she didn’t detail what the proposal was.

PJM’s 205 filing renewed calls by MISO Independent Market Monitor David Patton to eliminate pseudo-ties altogether. (See related story, PJM Filing Renews MISO Monitor’s Call for Pseudo-Tie Elimination.)

Stakeholders Quibble with, but Eventually Endorse, Replacement Capacity Investigation

NRG Energy’s Neal Fitch walked through the entire document in his reintroduction for approval of a problem statement and issue charge on investigating replacement capacity, but it was only one word that truly hung up other stakeholders. (See “Stakeholders Deny Replacement Capacity Initiative; Consider Other Incremental Auction Changes,” PJM Markets and Reliability and Members Committees Briefs.)

Characterizing the amount of cleared replacement capacity as “high” didn’t sit well with CPower’s Bruce Campbell. “It’s data,” he said.

“Are you willing to negotiate on the fly here? Why don’t we just delete the word high?” Fitch asked.

While Campbell considered that, others stepped in with an assortment of suggestions. The revision attempts eventually resulted in minor clarifications that removed the word “high.”

Tom Rutigliano of consulting firm Achieving Equilibrium had concerns with requiring “resources to be deemed physical” and asked that the benefits of replacement transactions also be noted in the problem statement. Fitch declined, saying they could be discussed within the group assigned to the problem statement.

“I will make my commitment to you that, to the extent that you or your clients want to identify benefits, you are more than welcome to,” he said.

The problem statement was approved by acclamation with 10 objections and three abstentions.

IMM’s Proposed Fuel-Cost Policy Changes Denied

After months of debate, rule revisions in Manual 15 and the Operating Agreement regarding hourly offers and fuel-cost policies received committee endorsement, but not without a lengthy final debate. (See PJM Fuel-Cost Policy Changes to Take Effect in May.)

Independent Market Monitor Joe Bowring proposed changes that concerned stakeholders and PJM, including posting its evaluation in the online Member Information Reporting Application (MIRA), reserving the right to communicate information to PJM that it doesn’t communicate to the market seller and codifying in the rules that it will provide PJM with a recommendation whether to approve or reject a proposed policy.

Catherine Tyler Mooney, who works for the IMM firm Monitoring Analytics, explained that the changes would provide transparency regarding the Monitor’s participation in the fuel-cost policy approval process, addressing a source of confusion for stakeholders. She said PJM proposed similar additions to Manual 15 as a result of conversations with the IMM. The key differences in PJM’s and the IMM’s versions were the reference to MIRA and the inclusion of the Monitor’s recommendation, which was suggested by FERC in its Feb. 3 order.

Stu Bresler, PJM’s senior vice president of operations and markets, objected to referencing MIRA and the Monitor’s recommendation in the manual because it’s the only manual that requires Board of Managers approval for revisions. If technology or procedures change, it will require a long process to update the manual, he said. The Monitor is welcome to provide its recommendation voluntarily to PJM, but the Tariff doesn’t require it, so the manual shouldn’t require something different, Bresler said.

Bowring said MIRA is mentioned elsewhere in the manual, so it would need to be revised anyway if methods change, and that PJM should not block it from committing itself to providing more information than required.

Stakeholders were concerned that PJM and the Monitor were far apart on this issue, but PJM’s Suzanne Daugherty assured them that wasn’t so.

“I don’t think [the difference] is big. I think it’s specific,” she said.

Stakeholders remained concerned that approval from PJM doesn’t necessarily guarantee approval from the Monitor, which might still make a referral to FERC.

“It’s like your [PJM] approval doesn’t mean anything,” one stakeholder said.

Stakeholders were also concerned with the Monitor suggesting it might keep information from them.

“I’m struggling with what you would tell to PJM that you wouldn’t tell to the market seller,” GT Power Group’s Dave Pratzon said. “If you only share the details of why [a policy passed or failed] to PJM, you put the market seller in a tough position.”

“I understand that you want to know everything that’s said to PJM about your fuel-cost policy,” Mooney acknowledged, adding that the Monitor makes all of its issues with a fuel-cost policy clear to both the market seller and PJM. Bowring later explained as an example that the Monitor might provide information to PJM of discussions it had with the market seller, so the information would be redundant for the market seller.

Mooney concluded the discussion by stating that “when PJM proposes changes to the manual to provide the details of how it implements the Tariff, it is allowed. When the Monitor wants to provide details of how it performs its responsibilities, it is not allowed.”

The manual and OA revisions were ultimately approved following minor language changes.

Transmission Owners, Customers Clash over Infrastructure Replacement

PJM’s Paul McGlynn presented an update on work in the Transmission Replacement Processes Senior Task Force that has not been halted by FERC’s Order to Show Cause. In August, the commission questioned whether PJM transmission owners are complying with their local transmission planning obligations, specifically with respect to supplemental projects, as required by Order 890. (See “Transmission Replacement Activity Hiatus Extended,” PJM Markets and Reliability and Members Committees Briefs.)

McGlynn said work has continued on a Transmission Cost Information Center, which the task force feels isn’t covered under the order. Sub-groups have completed the design of the tool, and PJM will construct it, he said.

Despite the hiatus, tension in the task force remains, which was highlighted by an exchange between Exelon’s Gloria Godson, who represented the PJM TOs, and AMP’s Tatum. Godson stated that PJM TOs have a strong commitment to transparency and provide their assumptions, methodologies and detailed project information as appropriate. However, she cautioned against stakeholders expecting uniformity from TOs because their processes are not all the same.

“Companies may do things differently and uniformity may not be an appropriate request,” she said.

Tatum clarified that his impression has been that transmission customers are not seeking uniformity. Rather, he argued, customers are asking for the detailed information necessary to be comfortable with owners’ infrastructure upgrade and replacement proposals. Another $1 billion in supplemental projects has been proposed, he noted, along with $860 million in “immediate need” projects that bypass the Order 1000 competitive bidding process.

Godson took exception to Tatum’s call for additional detail, saying he has “hijacked” the Sub-Regional Transmission Expansion Planning Committee in the past and “held court” for the entire meeting to make his point. Tatum rejected her characterization, and John Farber of the Delaware Public Service Commission staff interjected in his defense.

“Not being an engineer, I rely on Ed’s input,” Farber said. “So I don’t consider it holding court.”

Stakeholders Approve Variety of Actions

Stakeholders endorsed by acclamation several manual revisions and other operational changes:

Manual 13: Emergency Operations. Revisions developed in response to new NERC standards.
Manual 37: Reliability Coordination. Revisions developed in response to new NERC standards.
Manual 1: Control Center and Data Exchange Requirements. Revisions developed in response to new NERC standards.
Shortage pricing and operating reserve demand curve solution and associated manual revisions. (See “Order 825 Implementation Moves Forward,” PJM Market Implementation Committee Briefs.)
A problem statement and issue charge presented by Bob O’Connell of Panda Power Funds regarding calculation of opportunity costs for units with less than three years of historical LMPs. The initiative will evaluate whether the opportunity cost calculator included in PJM’s Markets Gateway produces the same results as that used by the Monitor. It also will consider updating the calculators to reflect the nonperformance penalties under Capacity Performance. (See “Stakeholders Deny Replacement Capacity Initiative; Consider Other Incremental Auction Changes,” PJM Markets and Reliability and Members Committees Briefs.)
A draft charter for the Modeling Generation Senior Task Force, an outgrowth of the Combined Cycle Owners User Group, which concluded that a more detailed generator model for combined cycle units might also be applicable to other steam units. The task force will consider expanding the model used by PJM to improve the ability to represent components of all generation types.
A draft charter for the Incremental Auction Senior Task Force, which will consider changes to the Incremental Auction process and structure, excess capacity sales, and PJM participation in the auctions.

Members Committee

PJM Outlines Potential Impact of FERC Rulings on Auctions

PJM’s Jen Tribulski explained the implications of several FERC proceedings on PJM’s Base Residual Auction in May.

FERC staff issued an order on March 21 that accepted PJM’s November filing on seasonal capacity and resource aggregation. Tribulski said this allows PJM to apply the new rules to the auction, but also that the commission could review the case and require refunds if it comes to a different conclusion when it regains a quorum. The auction, which will begin on May 10, is for the 2020/21 delivery year. (See FERC Staff OKs PJM Aggregation, DR Rules; Refunds Possible.)

Tribulski acknowledged that the staff order was vague regarding what portions of the order it thought might not be just and reasonable. “It was boilerplate language, but I agree with you, we don’t know what aspect if any they are really honing in on,” she said.

NRG’s Brian Kauffman asked what was meant by FERC’s suspension for a “nominal period.” Tribulski said it was a one-day “flash” suspension, but didn’t offer additional details regarding FERC’s intentions.

She also explained the potential implications of PJM’s March 9 filing regarding external capacity enhancements. If FERC doesn’t issue an order by May 9, the rules automatically go into effect and will be applicable for the BRA starting the next day. If FERC orders a suspension subject to refund and further proceedings that expires prior to the auction, PJM will still implement the new rules, Tribulski said. However, if FERC issues a deficiency letter or a suspension that continues beyond the auction date, the BRA will be conducted under the existing rules, she said.

– Rory D. Sweeney

March 28, 2017

PJM Capacity Task Force Considering 60+ ‘Design Concepts’

By Rory D. Sweeney

VALLEY FORGE, Pa. — It took months to get PJM’s latest stakeholder initiative on the capacity market started, but there is no shortage of interest now that it’s begun.

More than 20 stakeholders attended the Capacity Construct/Public Policy Senior Task Force’s second meeting on Monday — with another 100 conferencing in — to spend more than five hours discussing 63 design-concept suggestions for revising the RTO’s capacity market.

Members agreed to form the task force in January, following months of debate on the scope of the undertaking. (See PJM to Review Impact of State Public Policies on RPM.)

Early on in Monday’s session, Steve Lieberman of American Municipal Power asked for confirmation that a suggested November timeline for deliverables is only a general target and not a specific goal. Dave Pratzon of GT Power Group suggested that such a deadline would allow revisions to be in place for next year’s Base Residual Auction.

Lieberman said the main focus should be to ensure the revisions are “complete and not half … complete.”

“There’s another word I would usually use there,” he added.

PJM’s Dave Anders, who facilitated the meeting, thanked him for not enunciating it.

PJM’s Dave Anders (right) talks with PJM’s Stu Bresler | © *RTO Insider*

One stakeholder noted that FERC has scheduled a technical conference May 1-2 on the interplay of state policies and wholesale markets in PJM, NYISO and ISO-NE (AD17-11). “If there is a compliance obligation that comes out of that tech conference, are we able to expand this task force to discuss it?” she asked.

Anders confirmed that the task force can vote to expand its scope in such a situation, but it must receive approval from the Markets and Reliability Committee to revise its charter. He went on to set other ground rules, including how the wide variety of stakeholder interests in this process will be handled. Instead of allowing “diametrically opposed” goals to both be approved as independent objectives of the group, he proposed using a poll to evaluate levels of support for each option.

“We’ll expose where the differences are,” he said.

Stakeholders took immediate interest in hashing out the definition of “missing money,” which NRG Energy’s Pete Fuller said should adhere to its original concept of focusing on revenue levels that support future investment, not on ensuring individual units are able to break even on a daily basis.

“It’s much more of a market-confidence stance,” he said.

Mike Cocco of Old Dominion Electric Cooperative agreed that the phrase “has lots of different meanings to lots of different people.”

To him, “missing money” means the additional revenue source from the capacity market that is necessary with a cost capped energy market to achieve the desired level of reliability. It does not mean revenue adequacy for all generators. He said the capacity market should provide the designed level of reliability at the lowest possible cost.

PJM’s Tim Burdis provided a review of state policy initiatives that are impacting, or could impact, the RTO’s capacity market. He said such initiatives tend to fall into four categories: standards to attain, such as emissions reductions; direct contracts; appropriations such as zero-emissions credits; and regulations.

Exelon’s Jason Barker took issue with categorizing ZECs as appropriations, saying they are more closely aligned with renewable energy credits, which Burdis had categorized as “standard attainments.”

The task force’s next meeting will be April 21. The location has not been set, but Anders confirmed that it won’t be at PJM’s offices due to scheduling conflicts.

March 28, 2017

MISO to Amend Alternative Dispute Resolution Process

By Amanda Durish Cook

NEW ORLEANS — MISO will soon make a filing to add more confidentiality and legal definitions to its alternative dispute resolution process, stakeholders learned at the March 22 Advisory Committee meeting.

With the changes, data exchanged during alternative dispute resolution meetings covered by nondisclosure agreements will be treated by the RTO as confidential or as Critical Energy Infrastructure Information.

MISO will invite other entities to participate in resolution meetings if their “participation is indispensable to resolution of the dispute.” The RTO will also be allowed to dismiss the dispute or “discontinue the informal dispute resolution process if such entity declines to participate in the dispute.”

MISO to Amend Alternative Dispute Resolution Process — Stephens | © *RTO Insider*

MISO Deputy General Counsel Eric Stephens said the RTO already uses the concept of indispensable parties but is looking to codify it.

The revisions also clarify MISO’s ability to grant relief such as damages, which is “subject to the potential need for a waiver from FERC,” the RTO said.

MISO will also pass its responsibilities to recommend sanctions and give referrals for investigations to its Independent Market Monitor. Stephens said the RTO did not think it was appropriate to recommend sanctions or instigate investigations as a result of the resolution process. The new language also clarifies that MISO will not facilitate dispute procedures for contracts that are not service agreements or rate schedules under its Tariff.

MISO will also extend the initial timeframe for final resolution of an informal dispute from 90 to 180 days. “Our experience over the last two years has taught us that these take on average about 180 days,” Stephens said. He added that the timeframe could be extended by another 90 days before the RTO ends attempts to facilitate discussions, and the dispute is either dropped or escalated into a court proceeding.

The changes will be made to Tariff Attachment HH. (See “MISO Stakeholders to Hear Changes to Alternative Dispute Resolution,” MISO Steering Committee Briefs.)

Stephens said MISO will accept stakeholder input through April 12 and plans to file the new procedures for FERC approval by May 1.

March 28, 2017

MISO Advisory Committee Briefs

NEW ORLEANS — In its first-ever current events discussion, the MISO Advisory Committee focused on moving on after the RTO’s failed capacity auction redesign.

MISO Executive Director of Market Design Jeff Bladen told the committee on March 22 that the RTO is open to revisiting discussion on another capacity auction solution only if stakeholders want it.

On Feb. 2, FERC rejected MISO’s proposed Competitive Retail Solution, which would have applied a sloped demand curve and three-year forward capacity auction to the RTO’s retail-choice areas.

The commission said bifurcating the RTO’s capacity market by holding a forward capacity auction for competitive load three years prior to the current Planning Resource Auction would create too much price volatility and uncertainty. A market-wide clearing process that operates within a single set of transmission capability constraints and supply offers is more efficient than a bifurcated market, FERC said. (See MISO Won’t Seek Rehearing on Auction Redesign.)

Entergy Vice President Matt Brown and other stakeholders said MISO should abandon its search for a solution to resource adequacy concerns in the competitive areas and focus on other ways to improve the PRA, including creating external resource zones and adding a seasonal aspect.

“I think our stakeholders have been very clear — and FERC has been very clear — that an Eastern-style capacity market is not right for MISO,” Brown said. “From our perspective … it’s time to let this go.”

MISO advisory committee forward capacity auction — Schuerger | © *RTO Insider*

NRG Energy’s Tia Elliott said Illinois’ legislation subsidizing nuclear plants and a Michigan law increasing the state’s renewable portfolio standard should not be considered a fix for climate warming concerns. Although the Trump administration hopes to kill EPA’s Clean Power Plan, MISO could be faced with similar environmental regulations in the future, she said. “The political landscape could swing again, and we could be back in the same situation.”

Minnesota Public Utilities Commissioner Matt Schuerger reminded stakeholders that ensuring adequate capacity is the responsibility of individual states.

OMS-MISO Survey Dispute Revisited

The committee also returned to stakeholders’ accusations that MISO and the Organization of MISO States have overstated a possible capacity shortfall through their joint resource adequacy survey. (See Differences Persist over OMS-MISO Survey Improvements.)

After a stakeholder pointed out that ERCOT was sued last year in an ongoing fraud case over misleading capacity reports, OMS member and Arkansas Public Service Commission Chairman Ted Thomas defended the survey.

“There isn’t a perfect way to do it. It’s a survey; it’s not a utility planning document,” Thomas said, adding that the survey was meant to help states understand their neighbors’ actions as they develop their own integrated resource plans.

Thomas said that if a utility is “dumb enough” to use the survey as a planning document, the utility deserves to get sued, not the producers of the survey. He also blamed local media for promoting a sky-is-falling narrative, saying reporters often don’t understand the survey results.

“Try explaining this stuff to a newspaper reporter,” he griped.

— Amanda Durish Cook

March 28, 2017

Stakeholder Soapbox: Replacing Indian Point A Tough Challenge

By Rob DiFrancesco

The economic and environmental challenges of replacing Indian Point are formidable. So are the grid reliability challenges.

Any attempt to minimize these impacts is a disservice to New Yorkers who face, at best, an uncertain energy future due to rising prices, higher carbon and other toxic emissions, and lower grid reliability.

For more than 40 years, Indian Point has been the backbone of New York’s electricity system. It generates 2,069 MW of power, providing 25% of the electricity for New York City and the surrounding region. In fact, the plant generates enough power for 2 million New York homes and the same amount typically produced by four or five natural gas natural plants.

nyiso indian point nuclear plant — Indian Point

Except for scheduled refueling outages, it generates baseload power 90% of the time, with no emissions. Even though we have up to four years to replace Indian Point’s power, it is very difficult to get anything approved and built in New York, including renewable energy facilities, in such a relatively short period of time.

Price Pressures

Replacing the supply of Indian Point’s power to meet the growing demand for electricity in New York will not be easy. But it is not only the resulting supply gap that puts upward pressure on electric power prices.

Improvements in the transmission grid necessary to bring new power to New Yorkers will be enormously expensive. Such infrastructure investments are particularly necessary and costly if the power must be transported over long distances, or if there is greater reliance on intermittent renewable power sources.

Other power sources are also subject to sharp price fluctuations. During the hottest days of the summer and the coldest of the winter, it is difficult for New York to get sufficient amounts of out-of-state natural gas, which also drives up prices at these critical times.

Also, the massive amount of renewable energy power needed to replace Indian Point is daunting and simply not practical. Replacing 1,000 MW, less than half of Indian Point’s generation, with solar power requires 45 to 75 square miles of land and 260 to 360 square miles for wind power.[1] For perspective, Manhattan is only 22.8 square miles of land.

Emissions

Indian Point also generates tremendous amounts of electricity with nearly zero carbon or other toxic emissions. The other critical question is not if toxic emissions will increase when Indian Point closes, but by how much.

California, Florida, Wisconsin and Vermont have all experienced greater reliance on fossil fuels and very significant increases in pollution after closing nuclear power plants.[2]

In fact, when advocating for New York’s upstate nuclear plants, Chairman of Energy and Finance for New York Richard Kauffman said, “Without our upstate nuclear fleet, 31 million tons of CO₂ would be released in just two years, the equivalent of adding 6 million cars to the road — resulting in an additional $1.4 billion in public health and other societal costs. New York would have to rely on more expensive and dirtier power.”[3]

Grid Reliability

New York is fortunate that Indian Point will be operating until 2021. In fact, were the plant to close today, the state’s grid would not be reliable, according to NYISO.[4]

The costs of blackouts are enormous. The New York City comptroller found that the 2003 blackout cost the city more than $1 billion in lost wages, spoiled food and other costs.[5]

Blackouts are also a danger to public health. Researchers from Johns Hopkins University also studied the 2003 blackout and documented that it resulted in 90 deaths.[6]

Looking beyond the societal and economic costs of daylong blackouts, having an unreliable grid will make New York a very unattractive place to do business, especially for companies that are high-intensity users of electricity, such as manufacturers and high-tech companies.

Looking Ahead

Plans by state policymakers to address the issues resulting from the early shutdown of Indian Point should be transparent and thoughtful. Input from affected communities and organized labor are a must. We must address both environmental and economic issues to minimize adverse impacts on the regional economy and the ecology. Believing that Indian Point’s power can simply be replaced by energy efficiency or an enormous increase in renewables is not realistic.

New York consumers and businesses need to brace for the impact that Indian Point’s closing will have and be fully and clearly informed of what the impact will be in terms of monthly electric utility bills, air quality, and grid reliability.

Rob DiFrancesco is the executive director of the New York Affordable Reliable Electricity Alliance (New York AREA), a diverse organization of major business, labor, and community groups including Entergy, the owner-operator of Indian Point. Founded in 2003, New York AREA’s mission is to ensure that New York has an ample and reliable electricity supply, and economic prosperity for years to come.

[1] Nuclear Energy Institute, “Land Requirements for Carbon-Free Technologies,” Analysis, June 2015. Information appears in a chart at the beginning of the document and is discussed throughout. Retrieved on March 14, 2017 https://www.nei.org/CorporateSite/media/filefolder/Policy/Papers/Land_Use_Carbon_Free_Technologies.pdf?ext=.pdf

[2] Nuclear Energy Institute, “Can California Cut Its Carbon Without Nuclear? Doubtful.” Analysis, June 30, 2016. Items appear in charts and are discussed throughout the text. Retrieved on March 13, 2017 https://www.nei.org/News-Media/News/News-Archives/Can-California-Cut-Its-Carbon-Without-Nuclear-Doub

[3] NY State of Politics, “Cuomo Energy Czar Blasts Anti-Nuke Subsidy Campaign,” News story with accompanying link to the letter from Richard Kauffman, October 5, 2016. Information appears in the fifth paragraph of the letter. Retrieved on March 10, 2017 http://www.nystateofpolitics.com/2016/10/cuomo-energy-czar-blasts-anti-nuke-subsidy-campaign/

[4] NYISO, “2016 Reliability Needs Assessment,” October 18, 2016. Page 11, “Indian Point Center Plant Retirement – Resource Adequacy”. Retrieved on March 27, 2017, http://www.nyiso.com/public/webdocs/markets_operations/services/planning/Planning_Studies/Reliability_Planning_Studies/Reliability_Assessment_Documents/2016RNA_Final_Oct18_2016.pdf

[5] USA Today/Associated Press, “Blackout cost estimated at up to $6 billion,” August 10, 2003. Information appears in the 13th paragraph. Retrieved on March 10, 2017 http://usatoday30.usatoday.com/news/nation/2003-08-19-blackout-cost_x.htm

[6] Reuters, “Spike in deaths blamed on 2003 New York blackout,” January 27, 2012. Information is summarized in the eighth paragraph and discussed throughout the article. Retrieved on March 13, 2017 http://www.reuters.com/article/us-blackout-newyork-idUSTRE80Q07G20120127

March 28, 2017

NYISO Board Member Resigns After Less Than a Year

By Peter Key

Bernard W. Dan resigned unexpectedly from NYISO’s Board of Directors last week, less than a year after joining.

NYISO board member resigns board of directors — Dan

Dan announced his resignation at the board’s March 21 meeting. NYISO Chairman Michael Bemis relayed the news to stakeholders at the board’s Liaison Committee meeting afterward.

“Mr. Dan was interested in pursuing other opportunities,” NYISO spokesman Dave Flanagan confirmed. “He felt it was best to leave the board to avoid any potential conflicts.”

Flanagan declined to provide any details about Dan’s plans. Asked about plans to replace Dan on the 10-member board, Flanagan said, “Stakeholders will work that out through their normal process.”

Dan did not respond to an email asking for comment.

Turnaround Exec

Dan’s LinkedIn page describes him as a “Board Advisor, CEO and Turnaround Executive.”

He has been a senior advisor to the board of directors of OneChronos Group since 2015. The company, a startup that has gone through Y Combinator’s accelerator program, says it is building a new type of financial exchange that will make trading cheaper.

Dan was the CEO of Sun Holdings, which trades in stocks, currencies, futures and bonds, for five years ending in July 2015.

Dan also had a nearly two-year stint at MF Global, a broker of exchange-traded futures and options. After joining in June 2008 as the chief operating officer for North America, he rose to become CEO. He resigned in March 2010 and was replaced by former New Jersey Gov. Jon Corzine. The company, which filed for bankruptcy protection in October 2011, settled a lawsuit with its auditors, PricewaterhouseCoopers, on March 23.

Before joining MF Global, Dan was CEO of the Chicago Board of Trade, taking part in its initial public offering in 2005 and its sale to the Chicago Mercantile Exchange in 2007.

March 28, 2017

ERCOT Technical Advisory Committee Briefs

AUSTIN, Texas — The ERCOT Technical Advisory Committee agreed last week not to pursue a change in how ISO operators commit and dispatch resources, agreeing with a Wholesale Market Subcommittee study that the software changes required would not produce sufficient production cost savings.

The TAC then asked the subcommittee to begin working on real-time co-optimization of reserves.

The ISO developed an in-house software platform to perform multi-interval real-time market (MIRTM) simulations for selected operating days from 2015 and 2016. The study found MIRTM is feasible for both fast-responding generation resources and load resources with temporal constraints. But the feasibility study concluded that “the estimated cost[s] are in excess of the measured benefits and therefore insufficient to support [moving] forward with MIRTM at this time.”

ERCOT’s real-time market dispatches and prices energy in single five-minute intervals and does not consider potential changes in system conditions more than five minutes into the future. As a result, it is unable to coordinate the commitment of combustion turbines and demand response resources that are available within 10 to 30 minutes but unable to respond within five minutes.

The study was ordered to determine whether the ISO could improve the efficiency of its short-term commitment decisions by analyzing multiple consecutive five-minute intervals to determine the most economical commitment and dispatch.

ERCOT will share the study with the Board of Directors during its April 4 meeting. If approved, the study will be filed with the Public Utility Commission of Texas.

public utility commission of texas ERCOT Technical Advisory Committee — March TAC Meeting underway | © *RTO Insider*

The WMS now finds itself freed up to take on real-time co-optimization, which shifts the responsibility for providing reserve services to online generation resources with the lowest incremental energy cost. Co-optimization has been the subject of discussion at the PUC, most recently during its last open meeting. (See Texas PUC Wary of Using ERS to Avoid Local Blackouts.)

“We’ve been waiting for [MIRTM] to clear the decks, and the decks have been cleared,” Morgan Stanley’s Clayton Greer said.

“We have an obligation at this point to explore this,” Citigroup’s Eric Goff said. “[The PUC] has given various hints that they’d like additional information. As a stakeholder body, I believe we have the obligation to make those hints and wishes reality.”

TAC Vice Chair Bob Helton, of Dynegy, agreed. With members raising concern over ERCOT’s estimate of $20 million for software changes, he directed the WMS to define a study scope and what components of co-optimization should be analyzed.

Staff Shares Draft Principles for Market Continuity

ERCOT staff shared with the TAC a draft of principles to address the ISO’s lack of guidelines on restarting its markets following outages. The principles do not change existing black start procedures.

Staff raised the issue last year with the board and conducted a workshop in May to frame the discussion around gaps in the processes.

The principles include:

Prioritizing the real-time market’s restart before other markets or activities;
Starting congestion revenue rights auctions and other functions only after the real-time and day-ahead markets are restored;
Expecting limited settlements functionality during market restoration;
Payments being made in “as timely a manner as possible;”
Relaxing credit requirements and releasing cash or other collateral to provide short-term liquidity to market participants;
Seeking emergency funding to pay resources before other alternatives are considered; and
Uplifting market restart costs on a load-ratio share basis after market recovery.

ERCOT staff is expected to build on the principles with more formal procedures.

“This is a good start. ERCOT didn’t have transparent principles before,” Direct Energy’s Read Comstock said.

Committee Approves 16 Revision Requests

The TAC also approved nine other NPRRs, three revisions to the Planning Guide (PGRRs), two revisions to the Load Profiling Guide (LPGRRs) and revisions to the Retail Market Guide (RMGRR) and Nodal Operating Guide (NOGRR).

NPRR776: Aligns protocol language with currently used verbal communication practices between transmission service providers (TSPs), qualified scheduling entities (QSEs) and generation resources. Also identifies new requirements for data TSPs provide to ERCOT, QSEs and the generators. The committee tabled NOGRR167, which aligns the Nodal Operating Guide with NPRR776.
NPRR799: Requires that TSPs and resource entities — generation and load that can reduce electricity usage or provide ancillary services — submit updates to the outage scheduler within one hour of the facility’s outage start or completion.
NPRR802: Clarifies current settlement practices and protocol language, including how reliability unit commitment resources opting out of settlement are treated in calculating real-time online reserve capacity.
NPRR804: Clarifies that ERCOT should post both a systemwide network model and a set of station one-line diagrams, and that the model posting does not disclose data about private-use networks.
NPRR808: Extends the CRR auction process into the third year forward, revises the percentages sold in the auction’s long-term sequence and aligns modifying load zones to the timetable.
NPRR809: Defines the terms “initial energization” and “initial synchronization;” adds a reference to a quarterly stability assessment for interconnecting generation resources when evaluating the need for a generic transmission constraint; and clarifies a resource’s requirements prior to initial synchronization.
NPRR810: Removes the applicability of a reliability-must-run agreement’s incentive factor to reservation and transportation costs associated with firm fuel supplies, and accordingly separates costs in the RMR standby payment equation.
NPRR812: Clarifies short-term system adequacy report language; aligns protocol language with current ERCOT practices and Public Utility Commission of Texas rules for posting resource and load information; and modifies the requirement for posting a RUC initial-conditions report to only include the process as originally intended in NPRR314.
NPRR813: Requires references to service organization controls for the annual ERCOT market settlement audits.
NOGRR166: Eliminates a redundant report of daily operational information that can be found elsewhere on the Market Information System.
PGRR052: Ensures a new generating unit’s operating limits are established by setting a timeline for stability studies following a full interconnection study (FIS), incorporating model data or transmission system changes, not known during the FIS, before a new unit is brought online.
PGRR054: Clarifies the content, review period and process for posting an FIS’ results, and establishes a process for identifying, proposing and implementing solutions to stability issues identified during the FIS.
PGRR055: Defines the process for revising the Planning Guide to first consider PGRRs at the subcommittee level.
RMGRR144: Eliminates the requirement for transmission and/or distribution service providers to maintain a secure list of retail electric provider data numbering systems for all electric service identifiers (ESI IDs) with “switch-holds” — measures to prevent customers with unpaid bills from changing retail electricity providers.
LPGRR060: Provides additional clarification to the load-profiling guide by removing “orphaned language” not captured in LPGRR057, which was approved by the TAC in October.
LPGRR061: Modifies the annual validation timelines for residential and business ESI IDs by starting the validation activities on March 30 and concluding them on Sept. 30 of each calendar year.

— Tom Kleckner

March 28, 2017

MISO Board of Directors Briefs

Though one director is reaching his term limit, MISO’s nine-member Board of Directors could look the same going into 2018.

Directors Thomas Rainwater’s, Paul Bonavia’s and Baljit Dail’s terms expire at the end of 2017. Rainwater and Bonavia have not reached MISO’s limit of three three-year terms, and both agreed to seek re-election by MISO membership for another term.

capital spending miso board of directors — MISO Board of Directors meeting in New Orleans | © *RTO Insider*

Dail has reached the term limit, but Board Chairman Michael Curran said at the March 23 board meeting that Dail has agreed to seek re-election for an additional term if a waiver is recommended by the Nominating Committee and approved by the board.

MISO’s Principles of Corporate Governance state that the term limit can be waived if the board determines “that a director’s continued service is necessary to retain his or her skills or expertise, to maintain geographic or other diversity of the board, or is otherwise in the best interests of” the RTO.

MISO’s board has seen considerable turnover in the past two years, with two directors — Phyllis Currie and Mark Johnson — added in late 2015 to replace former Director Eugene Zeltmann, and three directors — H.B. “Trip” Doggett, Barbara Krumsiek and Todd Raba — brought on in late 2016 to replace former Directors Judy Walsh, Michael Evans and Paul Feldman.

This year, stakeholders elected Arkansas Public Service Commission Chairman Ted Thomas to serve on the Nominating Committee. The vote for the second stakeholder seat ended in a tie between Madison Gas and Electric’s Megan Wisersky and Entergy’s Matt Brown. Stakeholder relations staffer Alison Lane said the vote for the second seat will be redone, with ballots sent out again this week. She said if all seven voting-eligible sectors participate, the vote cannot end in a tie.

MISO Market Software Adequate for Another 5-7 Years

MISO will be able to squeeze an extra couple of years out of its aging market system, said Dail, chair of the Technology Committee.

Late last year, MISO Executive Director of Market Design Jeff Bladen said officials expected to replace the system in two to three years, announcing that the RTO had hired consultants to study system improvements. (See MISO to Study Aging Software; Market Improvements Planned for 2017.)

But Dail said the system can take on more complexity and remain usable for five to seven years.

The RTO’s staff said the Clean Power Plan’s likely rejection by the Trump administration defers the need for new system technology, because intermittent and behind-the-meter generation is not expected to be added at such a rapid pace. Currie asked how much money MISO could expect to save because of the IT deferral. MISO CEO John Bear said the savings would be reported in future budget projections.

“That’s a welcome, but somewhat dramatic, change in timeframe,” Krumsiek said.

Dail also said that an internal technology audit again ranked MISO low when it comes to removing employee access to MISO systems after they are transferred or leave the RTO’s workforce. MISO had a self-imposed goal of 24 hours to remove both critical system access and perform an administrative cleanup. NERC standards allow 24 hours to remove an employee’s system access and 31 days to scrub employee information from the system. Dail said MISO has since allowed itself a more doable seven days to perform an administrative cleanup, separating it from the 24-hour access deadline.

MISO Operations Under Budget; Project Timing Nudges Capital Spending Over

MISO’s $37.7 million in spending so far in 2017 is under budget by $100,000, or 0.3%, newly hired Chief Financial Officer Melissa Brown said. She said the savings can be attributed to a slower hiring rate and MISO delaying some travel and the hiring of consultants.

However, MISO’s capital spending is over budget by 2.4%. Tony Guisinger, strategic development and operations executive, said capital spending is higher than planned because of some later-than-planned equipment purchases and related installation fees.

Guisinger, who assumed financial duties after former Vice President of Finance Jo Biggers left unexpectedly last year, is still assisting Brown, who joined MISO in late January. (See MISO Appoints Melissa Brown as New CFO.)

Board May Conduct Long-Term Incentive Review

Human Resources Committee Chair Todd Raba said MISO is planning a review of its long-term executive incentive plan.

The long-term bonus plan, which gauges and rewards performance for longer than one year, has not been changed in 15 years. Raba said his committee would complete a review of the current plan in June and act on proposed changes by October.

MISO made changes to its short-term incentive plan, doled out annually, last year. (See MISO Directors to Decide Yearly Executive Bonuses.)

MISO Adds 2 New Members

The board unanimously voted to grant RTO membership to two non-transmission-owning companies.

Clean energy project developer and operator ALLETE Clean Energy joined the Independent Power Producers sector, and transmission developer Verdant Plains Electric joined the Competitive Transmission Developers sector.

— Amanda Durish

March 28, 2017

ERCOT Stakeholders OK Change to DC Tie Curtailments

By Tom Kleckner

AUSTIN, Texas — Despite opposition from independent generators and competitive retailers, ERCOT stakeholders last week approved a protocol change that clarifies that the ISO can curtail DC tie loads without having to declare an emergency condition.

The Technical Advisory Committee on Thursday approved a nodal protocol revision request (NPRR818) that specifies that ERCOT may curtail DC tie loads during a watch, before declaring an emergency condition.

Representatives from two independent generators (Luminant and Dynegy) and three competitive retailers (Direct Energy, Just Energy and Reliant Energy Retail Services) abstained from the vote but made their opposition known.

Luminant’s Amanda Frazier said she was concerned about the way in which the NPRR was developed. It was written after ERCOT operators issued a power operations bulletin (POB) on Sept. 28 that changed the ISO’s operation of its five DC ties, which have a capacity of more than 1,250 MW. The POB, which took effect two days after its issuance, particularly affected exports into Mexico over Comision Federal de Electricidad ties.

Unilateral Action

“ERCOT has been curtailing DC ties in emergency situations. Then they unilaterally decided to stop doing that — and did that by issuing a [POB], a process not reviewable by stakeholders,” Frazier said. “That materially changed market outcomes for those market participants using DC ties into Mexico. I find that problematic. I think if something needs to be changed in the protocols that has major market impacts, we should know about it. We should be able to look at it, and we should know the policy decisions behind it.”

Luminant’s written comments recommended ERCOT only curtail DC ties during a Level 2 energy emergency alert (EEA), and not during a watch. It pointed out that voluntary load curtailment is not fully deployed until the ISO declares a Level 2 EEA. Involuntary load shed should not be used ahead of other “compensated, voluntary reliability deployments,” the company said.

‘Future Fix’

“I understand that wouldn’t work in a localized problem, but this language [isn’t limited to] a localized emergency,” Frazier said, “I don’t think it’s … appropriate to curtail DC ties before an EEA2 for a systemwide emergency, but I understand that’s going to be looked at in a future fix to this.”

Shams Siddiqi, representing Rainbow Energy Marketing Corp., the NPRR’s sponsor, told the TAC that “future fix” will be an additional protocol change.

Reliant Energy’s Bill Barnes said he would not oppose the NPRR given that additional revisions would be filed. He said that would fix “the problem we see: loosening reliability actions to allow these DC ties to be curtailed sooner, which has market impacts.”

“I think the ops team took what they viewed as appropriate actions, considering some of the changes that occurred,” ERCOT COO Cheryl Mele told the TAC, referring to the issuance of the POB. “The question I’m hearing is POBs with such a significant impact shouldn’t come out [two days] before we implement it. I concur with that. We should use the proper forums and processes.”

Mele’s comments related to recent changes in ERCOT’s capacity, including the Frontera Plant’s move from ERCOT to Mexico, and an increase in DC tie capacity, ERCOT spokeswoman Robbie Searcy said after the meeting. (See ERCOT Board OKs Rio Grande Valley Fixes.)

‘Fair Request’

Garland Power & Light’s Dan Bailey asked ERCOT to report back to the committee on how often curtailments are made during watch events.

“That is a fair request,” Mele responded. She said the reports will be filed with the TAC’s Reliability and Operations Subcommittee, “so you guys will be engaged.”

Rainbow Energy contended the NPRR would “minimize inefficient wholesale market operations and consequent harm to market participants.” The revision would be effective April 5, assuming ERCOT’s Board of Directors approves it the day before.

Before ERCOT issued the operations bulletin, it would accept DC tie e-Tags up to the physical limit of the ties, rarely curtailing the tags close to the operating hour.

Under the POB, e-Tags have been denied when day-ahead prices were relatively high while real-time prices were depressed and DC tie capacity was under-utilized, according to Siddiqi’s “business case” for the change. The result: “an avoidable inefficient outcome for the market and loss for the market participant,” Siddiqi said.

Siddiqi also said ERCOT prefers to take action in advance to avoid the chance of an emergency condition “and subsequent [NERC] scrutiny of why ERCOT did not act in advance to avoid the emergency.”

“Market participants wanting to export power have to procure power in the day-ahead market without knowing whether the e-Tag will be approved or denied,” according to the NPRR. “In turn, they are subjected to a loss and contractual difficulties with their counterparties if the e-Tag is denied.”

By allowing e-Tags to be curtailed in a watch before an EEA2, “ERCOT can revert back to its pre-POB operating procedure of approving e-Tags up to the physical limits of the DC ties,” Siddiqi said. “E-Tag approval can again be done prior to DAM [the day-ahead market] — allowing market participants to correspondingly procure energy in DAM and have the added certainty in its contractual obligations.”

“We have worked with Rainbow to implement what we understand the stakeholder’s intent, so we can be very transparent in the future,” said ERCOT’s Dan Woodfin, senior director of system operations. “The protocols don’t affect how we set limits today. With this change, how we set those limits will be clarified.”

March 28, 2017

Trump Begins Attempt to Undo Clean Power Plan

By Rich Heidorn Jr.

WASHINGTON — President Trump signed an executive order Tuesday directing EPA to begin the lengthy process of undoing its Clean Power Plan, a centerpiece of American efforts to battle climate change.

Trump signed the order following remarks in the wood paneled Map Room at EPA headquarters, surrounded by his top energy lieutenants and a group of coal miners. “You know what this says?” Trump asked the miners, pen in hand. “You’re going back to work.”

Trump’s remarks followed those of Energy Secretary Rick Perry, Interior Secretary Ryan Zinke, EPA Administrator Scott Pruitt and Vice President Mike Pence, who noted the decline in coal mining jobs in recent years. “Those days are over,” Pence promised, “because the war on coal is over.”

“We’re no longer going to have regulatory assault on any given sector of our economy,” Pruitt said. “We’re not going to allow regulations here at the EPA to pick winners and losers.”

trump clean power plan epa — President Trump signs executive order seeking to undo the Clean Power Plan as coal miners, Interior Secretary Ryan Zinke, EPA Administrator Scott Pruitt and Vice President Mike Pence watch.

“Our nation can’t run on pixie dust and hope,” Zinke said.

The administration’s promises that coal mining jobs will return may be equally fanciful, however. Natural gas and renewable generation have become cheaper than coal-fired power in many regions, and the most productive mines are increasingly automated.

Years of Litigation to Come?

Trump’s bid to undo the CPP, meanwhile, could take years.

The Supreme Court stayed the rule in February 2016 pending a legal challenge by more than two dozen states that contended the rule overstepped EPA’s regulatory authority. The D.C. Circuit Court of Appeals heard arguments in the case in September. (See Analysis: No Knock Out Blow for Clean Power Plan Foes in Court Arguments.)

Legal experts differ on whether the D.C. Circuit will dismiss the states’ challenge based on the Trump administration’s withdrawal of support for the CPP. Environmental groups immediately promised to fight the reversal of the plan.

Trump’s order will put EPA officials in the odd position of having to contradict the findings the agency cited when it issued the final rule in August 2015, which incorporated feedback from 4.3 million comments and months of meetings with state regulators, utilities and RTO officials. (See Revised Clean Power Plan Allows More Time, Sets Higher Targets.)

EPA also will have to overcome its 2009 finding that greenhouse gases endanger the public health and must be controlled.

Paris Agreement Threatened

Although the order does not indicate whether the U.S. will withdraw from the 2015 Paris Agreement on climate change, eliminating the CPP would make it far more difficult for the nation to meet its obligations to cut its carbon emissions to 26% below 2005 levels by 2025. The CPP requires a 32% reduction in power plant CO₂ emissions from 2005 levels by 2030.

Economic consultancy company Rhodium Group estimates the U.S. would reduce carbon emissions by 21% below 2005 levels in 2025 under the CPP but that the reduction would flatten at 14% under Trump’s rollback.

The Paris Agreement is intended to prevent the planet’s temperature from increasing by more than 3.6 degrees Fahrenheit, which many experts say would lead to an irreversible future of rising oceans and extreme weather, leading to drought, flooding, and food and water shortages.

Other Provisions

The executive order also ends a moratorium on federal coal leasing and eliminates the requirement that federal officials consider the impact of climate change when making decisions.

Press Secretary Sean Spicer said the order directs federal agencies to review all rules “that put up roadblocks to domestic energy production and identify the ones that are not either mandated by law or actually contributing to the public good.”

It also orders a review of the standards for new generators, which effectively banned new coal plants without carbon sequestration. The levelized cost of a new coal generator with sequestration is about double the cost of new solar PV and wind, according to the Energy Information Administration.

Coal Jobs

EIA’s annual coal report last November found that U.S. coal production dropped 10.3% in 2015 to less than 900 million short tons, the lowest annual production level since 1986. Employment at U.S. coal mines dropped 12% in the year to less than 66,000, the lowest since the agency began collecting data in 1978.

More than 21 GW of coal generation retired in 2015 and 2016, largely as result of the Mercury and Air Toxics Standards, and EIA says another 14 GW is at risk of retirement by the end of 2028.

Energy economist Robert W. Godby, of the University of Wyoming, told The New York Times that Trump’s order could delay the closing of some endangered coal mines for as long as a decade. But because of increasing mechanization, “they’re not hiring people,” he said. “So even if we saw an increase in coal production, we could see a decrease in coal jobs.”

Economic Impact

Trump’s cabinet members portrayed the Obama administration’s environmental policies as a drag on the economy, with Perry decrying “poorly designed government policies, distorted markets” and a power grid whose reliability is being “tested because fuel diversity has been diminished in order to benefit one technology over the other.”

“The executive order will begin the process to unravel the red tape that’s been keeping investment on the sidelines and innovation stymied,” Perry said.

EPA’s Regulatory Impact Analysis of the CPP — which is not given credence by the agency’s critics — predicts the rule would produce economic and health benefits far exceeding its costs.

Critics say walking away from the Paris Agreement would hurt American leadership in clean energy technologies.

“The Trump administration is turning the nation’s back on the historic opportunity to build a clean energy future — a future that will modernize our energy system, offer consumers better value for their energy dollars and invest in state and local economies while taking the right steps to reduce climate pollution,” said Daniel Sosland, president of Acadia Center, which supports clean energy policies.

EIA predicts renewable electricity generation will grow 3.9% annually through 2030 without the CPP and 4.7% a year with it.

Regardless of what happens with the CPP, utilities, major corporations and many states are likely to continue their efforts at decarbonizing the generation mix.

New York Gov. Andrew Cuomo and California Gov. Jerry Brown issued a joint statement reaffirming their commitment to exceed the CPP’s targets.

“Climate change is real and will not be wished away by rhetoric or denial,” they said. “Together, California and New York represent approximately 60 million people — nearly one-in-five Americans — and 20% of the nation’s gross domestic product. With or without Washington, we will work with our partners throughout the world to aggressively fight climate change and protect our future.”

Reaction

Other reaction to Trump’s order was, unsurprisingly, mixed.

Environmentalists said the order could damage climate change efforts while producing no benefits for the coal industry.

“The fact that major utilities in Ohio are planning to shut down a number of dirty coal-fired power plants throughout the state should be an indication that the market is moving on to less costly and cleaner resources,” said Shannon Fisk, managing attorney for the Earthjustice coal litigation program. “We will be advocating to maximize energy efficiency and renewable energy as the best options for replacing coal plants, and for providing a just economic transition for coal workers and communities.”

David Doniger, director of the Natural Resources Defense Council’s Climate and Clean Air Program, tweeted: “Coal country needs a path to the economy of the future, not false hopes Trump won’t deliver.”

Paul Bailey, CEO of The American Coalition for Clean Coal Electricity, called the CPP “the poster child for regulations that are unnecessarily expensive and have no meaningful environmental benefit.”

The American Public Power Association also supported the president’s action. “Public power has previously voiced its legal objection to the rule for requiring utilities to fundamentally alter the way they generate electricity. In some cases, utilities would have been forced to abandon functional power plants while continuing to pay them off,” the group said.