Mountain West, SPP Tout RTO Membership to Colo. PUC

By Tom Kleckner

DENVER — SPP and the Mountain West Transmission Group pitched the benefits of RTO membership Tuesday in an open forum before Colorado’s Public Utilities Commission as the two entities pursue a possible collaboration.

Taking advantage of the opportunity to get the last words in, SPP COO Carl Monroe grabbed a podium microphone just before the meeting adjourned to let his audience know the RTO would be holding its regular quarterly governance meetings in Denver in July, and that it would be a chance to see first-hand how SPP works with its members.

Coincidence?

Maybe not. SPP scheduled the meetings in the middle of last year, about the same time Mountain West was considering joining CAISO, MISO, PJM or SPP. Mountain West announced in January it was entering into discussions with SPP to further explore the relationship. (See Mountain West to Explore Joining SPP.)

The PUC scheduled the forum so regulators, consumer advocates and other stakeholders could gather information and discuss with Mountain West participants the potential benefits, costs and risks of the options under consideration. More than 70 attendees registered to participate, a number Commissioner Frances Koncilja noted was larger than normal.

Mountain West is an informal collaboration of 10 electricity service providers serving 6.4 million customers in the Rocky Mountains. Its members’ coincident peaks total just more than 12 GW, and it generated almost 70 million MWh of energy in 2015. Were it to join SPP, it would create a sprawling organization spread over 17 states.

Monroe told the commission that Mountain West would increase SPP’s size (575,000 square miles of service territory encompassing about 18 million people) by about a third. The new RTO’s Tariff would include seven of the eight DC ties between the Eastern and Western Interconnections, except for one in Canada. SPP also has two DC ties with the Texas Interconnection.

“We own the gateway facilities that go into” the ties, Monroe said. “We’ve spent a lot of time coordinating and understand those ties.”

“This is a very complicated transaction,” Koncilja told RTO Insider. “It will be up to the utilities to persuade us it’s a good thing for the ratepayers. This is just the first of many meetings.”

Mountain West members said they were pursing RTO membership to improve efficiency by eliminating pancake transmission rates and taking advantage of modern market designs to maximize transmission capacity. A 2016 Brattle Group study found Mountain West could save $53 million to $71 million annually through 2024 by participating in a day-ahead market and replacing its nine tariffs with a single one.

“It’s not that we have decided to go forward,” said Steve Beuning, Xcel Energy’s director of market operations. “We are in the process of evaluating what it means to go forward and [determining] the terms and conditions … that Mountain West considers essential before moving forward.”

Familiarity

Beuning said he was impressed by the knowledge in the group’s proposed RTO membership.

“This familiarity with the issues of our proposal, and an understanding of the particular needs of utility service providers in the western U.S., really helped lead to a deep and meaningful discussion,” he said.

Former FERC Commissioner Suedeen Kelly, an attorney with Akin Gump provided an overview of RTOs and ISOs, their functions and their regulatory relationship with FERC, while touting the virtues of regionalization and economic dispatch.

Former FERC Commissioner Suedeen Kelly (right) shares her thoughts on Mountain West’s SPP membership with Colorado PUC Chairman Jeff Ackermann and Commissioner Wendy Moser. | © *RTO Insider*

“The SPP transmission system is managed and operated for the same purpose as an individual system — to maintain reliability across the footprint and to dispatch generation,” she said. “There are no pancaked rates. Energy that flows from the northern end to the southern end pays one rate, no matter how many systems it touches.”

Jennifer Gardner, a staff attorney for Western Resource Advocates, praised SPP’s security constrained economic dispatch and its ability to create more renewable energy.

“By automatically dispatching resources where they’re needed, that allows us to deal with the variability of resources,” she said. “We see the immense potential for getting new renewable energy to the market” with SPP membership.

But Kelly also shared reasons for not joining an RTO.

“Why don’t we have one in the West?” she asked. “A lot of reasons, but to me, the most important, after being in California in 2000 when the California market imploded, is because the market imploded. We said, ‘Wait a minute, whatever they did, we don’t want to do.’”

Abby Briggerman, of counsel with Holland & Hart who generally speaks for large industrial ratepayers in the Rocky Mountains, and speaking on behalf of the ratepayer interests, said she was concerned about the risks of joining an RTO.

“We’ve come a long way since 2001, but we need to look no further than California. We remember the rolling blackouts,” she said. “The ratepayer must have a seat at the table in the decision-making process over whether to join an RTO.”

Briggerman also warned that SPP could be a “Hotel California,” referring to the Eagles’ song in which “you can check out any time you like, but you can never leave.”

“We need to make sure there are no barriers to exit,” she said.

Consumers’ Voice

Other attendees also questioned whether consumer interests would be lost in SPP.

SPP representatives, members and stakeholders countered by praising the RTO’s stakeholder engagement, and Monroe emphasized the diversity of is 94-entity strong membership. “We provide a lot of transparency into SPP,” he said. “Our meetings are open, even up to board level. We had 150 people at our last board meeting. Anybody that has ideas that will help SPP make good business decisions will be listened to.”

SPP General Counsel Paul Suskie brought up Steve Gaw, a former Missouri commissioner and legislator who represents The Wind Coalition at meetings although the coalition is not a member.

SPP COO Carl Monroe makes his point alongside General Counsel Paul Suskie (left). | © *RTO Insider*

“He’s not a member, but he gets just as much input as members,” Suskie said.

SPP and Mountain West have developed a steering committee and working groups focused on governance, rate design and cost allocation, transmission planning, reliability coordination and SPP’s Regional State Committee. Composed of regulators from 10 different states, the RSC will be a key player in the membership negotiations.

Mountain West members said they expect to decide on whether to proceed with SPP membership in the second or third quarter of 2017. Rate cases would be filed shortly thereafter, with a final recommendation presented to SPP’s board in January 2018.

“I would be bold to call [the timeline] aggressive, but it keeps us on track. It keeps us focused on what we’re trying to accomplish,” said Mary Ann Zehr, senior manager of transmission contracts, rates and policy for the Tri-State Generation and Transmission Association.

Mary Ann Zehr (Tri-State), Dan Kline (Black Hills) and Steve Beuning (Xcel Energy) discuss Mountain West’s potential SPP membership. | © *RTO Insider*

Zehr said she anticipates numerous meetings over the next few months devoted to writing a tariff, governance and membership agreements and bylaw changes.

“We’re attempting to answer those questions at the front end,” she said.

March 29, 2017

CAISO, BPA Ink Agreement to Ease Northwest EIM Transfers

By Robert Mullin

CAISO has signed an agreement with the Bonneville Power Administration designed to facilitate Energy Imbalance Market (EIM) transfers in the Pacific Northwest while ensuring that the agency can continue to reliably serve its own transmission customers.

The Coordinated Transmission Agreement (CTA) could provide a model for future joint efforts between the two agencies that operate most of the transmission network along the West Coast, according to Todd Miller, a senior project manager with BPA.

“This agreement kind of seems like a no-brainer,” Miller said during a March 27 call hosted by the EIM Body of State Regulators (BOSR), an informal network of Western utility commissioners that convenes regularly to discuss market issues. “We need to have an operating agreement … so everybody understands the rules of the road.”

The agreement also represents a “milestone” in cooperation between BPA and CAISO, Miller said. “I think it’s really a first step in being able to coordinate seams issues.”

The CTA largely formalizes procedures already put in place before the EIM was launched in November 2014. At the time, BPA worked with PacifiCorp — the EIM’s first member — and the ISO to define practices around exchanging transfer data and setting limits on the use of dynamic transfers on the BPA system.

Since its rollout, the market has expanded farther into the Northwest to include Puget Sound Energy, with Portland General Electric slated to join later this year, followed by Idaho Power in early 2018. All three utilities rely to some extent on BPA, which controls about 70% of the transmission in the region.

“Some of [the original practices were] captured in operating procedures, but until the CTA, there was no contractual obligations regarding these requirements,” BPA said.

The agreement spells out an obligation for both parties to share transmission system data: CAISO must share total market dispatch for EIM resources during a market interval and load forecasts for EIM balancing authority areas, while BPA must convey real-time managed limits and actual flows on its facilities. The agreement clarifies the processes by which that data will be made available, including frequency and granularity.

Bonneville Power Administration caiso eim rate of change limit — The agreement between CAISO and Bonneville Power Administration is intended to facilitate Energy Imbalance Market transfers on Bonneville’s system, which accounts for about 70% of transmission capacity in the Northwest. | *BPA*

“It also includes a confidentiality provision,” Miller said. “Everybody is doing what they’re supposed to be doing, but now there’s something in the contract that makes the lawyers feel better about things.”

The agreement also codifies BPA’s right to place limits on the upward and downward rate of change in usage that EIM dynamic transfers would impose on its transmission network — making explicit an already existing practice.

“Bonneville will set the upper rate of change limit and lower rate of change limit at its discretion and notify the CAISO of such limits for each Bonneville-managed facility before each market interval,” the agreement states.

The agreement gives BPA the ability to manage system operating limits on its paths at its own discretion, but requires it to alert the ISO to any changes ahead of an interval.

It also provides for the development of “flow-relief tools” related to the EIM. Among those tools: a procedure that, in a curtailment situation, will allow BPA to transmit to CAISO the EIM’s prorated share of curtailed flows on an affected transmission flowgate between the two balancing areas.

New Groups

The CTA additionally calls for CAISO and BPA to convene a Coordinating Committee every quarter to address operational issues related to the agreement, resolve disputes and offer up potential revisions.

The agreement also establishes a working group — consisting of Pacific Northwest EIM members, a select group of BPA transmission customers and the Coordinating Committee — charged with discussing implementation, data exchange and transmission operations under the agreement.

“As far as the selected Bonneville customers, we haven’t decided how we’re going to do that yet, but we want to select customers that are representative of our various classes of transmission customers,” Miller said.

Ann Rendahl, a Washington Utilities and Transportation commissioner and chair of the BOSR, noted that the “whereas” clause at the beginning of the CTA specifies that the Coordinating Committee will discuss seams issues.

“I assume that the working group is also to discuss seams issues, but to get at them from a more granular level,” Rendahl said.

Miller agreed and said the group could also be the body that initiates other “major” types of coordination and constraint relief along the interties.

CAISO and BPA plan to file the agreement with FERC in April. “Hopefully we’ll have another FERC commissioner at some point so it can actually be approved,” Miller said.

March 28, 2017

PJM Monitor Says Low Prices Indicate Competitive Market

By Rory D. Sweeney

WILMINGTON, Del. — Independent Market Monitor Joe Bowring said Thursday that that the PJM market is competitive and healthy, despite what some stakeholders believe are uneconomically low energy prices.

state of the market report combined cycle — Bowring, PJM’s IMM, discusses his analysis of market data that he believes shows the market is healthy and competitive. | © *RTO Insider*

LMPs were lower in 2016 than they have ever been since organized markets began, which “is a testament to competitive markets,” Bowring said during a Members Committee briefing on the 2016 State of the Market report. “Prices are not too low. We don’t need to artificially raise prices. They are what they are.”

Despite the market changes created by the introduction of the Capacity Performance model, “prices have been consistent with historical levels,” he said.

Combined cycle units, for example, did “relatively well” in 2016, he said. “Even though their margins are smaller, they are in fact making it up on volume.”

That does, however, create one issue, he said: While combined cycle units have become baseload resources, coal-fired units have shifted to an intermediate role, which is problematic because they can’t ramp up and down well. Coal steam units recorded a 32.5% capacity factor for the year, down sharply from 2015’s 43.8%. Combined cycle plants had a 62% capacity factor in 2016, almost unchanged from 2015.

Generator Markups

Bowring’s presentation focused heavily on the impact of markups, which is the difference between a market seller’s market-based offer and its cost-based offer, which reflects the generator’s marginal costs. The Monitor’s data showed that coal-fired plants often had negative markups in 2015 and 2016.

“I think [the market] is very healthy. I think it’s competitive. I think it’s showing us Manual 15 is wrong, and coal units don’t need a 10%” adder, Bowring said. The manual permits generators’ cost-based offers to include a 10% adder above their marginal costs; it was intended as a cushion against uncertainties, including fuel prices and heat rates that can vary with temperatures and plant loading.

FirstEnergy’s Jim Benchek questioned Bowring’s observation, saying coal units have “really legitimate reasons” for offering negative markups.

Bowring explained that higher markups can be exercises of market power — or an indication that the operators simply don’t want the unit to run. He presented a graph that showed the cumulative number of unit intervals with markups above $150/MWh. The graph showed a major spike in mid-February 2015, which he said coincided with a cold snap that might entice market sellers to exercise market power.

Algorithmic Definition

Bowring also said it’s “staggering to me” that PJM refuses to evaluate fuel-cost policies based on algorithmic standards.

In a ruling Feb. 3, FERC sided with the RTO in requiring that fuel-cost policies be verifiable and systematic but not algorithmic, as the Monitor had proposed. (See PJM Fuel-Cost Policy Changes to Take Effect in May.)

FERC’s order quoted the Monitor as saying the policies should be based on broker quotes, bilateral offers or index prices. The commission said the Monitor’s position that policies be “algorithmic under all circumstances” ignores that natural gas markets can become illiquid during stressed conditions, potentially understating generators’ real costs.

The Monitor said it defines “algorithmic” as simply meaning a step-by-step process to get from a defined input to an output.

“It’s very, very simple, very, very basic,” Bowring said Thursday. “You can’t have a verifiable anything unless it’s algorithmic.”

Bowring also questioned the notion that PJM’s energy production is becoming less fuel diverse, presenting a Fuel Diversity Index that shows little change since its beginning in 2000.

Bowring released the State of the Market report earlier this month, warning that state plans to subsidize unprofitable generating resources present “a very real threat” to wholesale electricity markets. (See PJM Monitor Concerned About State Subsidies.)

March 28, 2017

SPP Briefs

Having concluded that renewable energy is “extremely unlikely” to be exported outside SPP’s footprint, staff have begun working on the Export Pricing Task Force’s final report for delivery in July.

SPP Export Pricing Task Force — Loudenslager | © *RTO Insider*

SPP’s Sam Loudenslager said a market exists for renewable resources, but “rate stress” from building additional transmission and uncertainty that the energy would be deliverable led staff to its conclusion. He also pointed to the difficulties SPP has had in agreeing to joint transmission projects across its seam with MISO.

“It’s not impossible, but it’s difficult,” Loudenslager said.

SPP’s Michael Desselle, the task force’s staff secretary, pointed to a list of proposed market and operational improvements to address renewable resources and advocated for canceling the rest of the group’s scheduled meetings. Members objected, however, and the task force agreed to additional meetings before turning over the final report to the Strategic Planning Committee.

“I don’t think we’re done yet. We haven’t laid out anything that looks at the export issue itself,” said Marguerite Wagner, of independent transmission company ITC Holdings.

The group also discussed creating “national renewable resource areas” to enable wind exports to markets outside SPP and avoid placing the costs directly on the RTO’s members or ratepayers.

Referring to himself as a “big-picture guy,” Golden Spread Electric Cooperative’s Mike Wise, the group’s chair, asked whether the federal government should be involved, as it was in building the nation’s highway system following World War II. That would enable exporting resources outside SPP without the cost being paid directly by the RTO’s members or ratepayers, he said.

“We’re facing a problem because no one wants to pay for that transmission,” Wise said. “Renewable energy is really a national resource. Can this area be declared a national resource? Can we get … through Congress a transmission corridor to get to this resource? Is it necessary to have this sort of major dynamic funded and paid for by the federal government?”

Wise likened his proposal for “national renewable resource areas” to Texas’ Competitive Renewable Energy Zones, which facilitated the construction of $6.8 billion worth of infrastructure connecting West Texas wind farms with urban population centers to their east.

Oklahoma Gas & Electric’s Greg McAuley pointed out wind-energy transmission customers were the ones who invested in the CREZ lines.

“In our case, our customers can’t make use of the additional wind, at least not enough to justify significant additional investment,” he said. “It’s not clear to us how our customers would benefit from additional investment when they’re not going to be the ones using the power.”

The task force was chartered last August to establish equitable and “not unduly discriminatory prices” for exports and imports of the abundant variable energy resources in the SPP region. The RTO says it has 22 GW of renewable resources in its interconnection queue.

Since the year began, the group has discussed how other regions handle export issues and heard from representatives from Southern Co., Enel Green Power NA and Clean Line Energy Partners.

Seams Committee Approves Joint Project with AECI

The Seams Steering Committee on Friday approved a potential joint project with Associated Electric Cooperative Inc., sending it to the Markets and Operations Policy Committee and Board of Directors for final approval. Those groups will hold their regular quarterly meetings in April.

The project would include a new 345/161-kV transformer at AECI’s Morgan substation and an uprate of a related 161-kV line, both near Springfield, Mo.

The Morgan transformer was included in SPP’s 2017 Integrated Transmission Planning 10-Year assessment, which was approved by the MOPC and board in January. The project, valued at $9.2 million, is contingent on reaching a cost-allocation agreement with AECI.

The approval came in a special conference call, after members asked for more time during its during its March 8 meeting to evaluate the project. The vote received one abstention, from ITC Holdings. (See “AECI Joint Projects Move Forward,” SPP Briefs.)

— Tom Kleckner

March 28, 2017

MISO, PJM See No Joint Reliability Projects; Evaluating MEPs

By Rory D. Sweeney

MISO and PJM officials will entertain stakeholder proposals for interregional reliability projects even though none of the 19 reliability upgrades currently planned near the RTOs’ seam offers opportunities for collaboration, RTO officials said last week.

The 10 projects in PJM’s Regional Transmission Expansion Plan include four in American Electric Power’s zone, one in East Kentucky Power Cooperative, three in Duke Energy Ohio/Kentucky, one in Rochelle Municipal Power’s zone in north-center Illinois and one that crosses AEP’s and DEOK’s zones on the border of Ohio and Indiana.

This month’s IPSAC meeting included an estimated timeline for approval of interregional market-efficiency transmission projects between PJM and MISO. | *MISO, PJM*

The nine projects in MISO’s 2017 MISO Transmission Expansion Plan include two in ITC Transmission’s zone, three in ITC subsidiary Michigan Electric Transmission Co.’s zone, one in Consumers Energy, one in American Transmission Co. and two in MidAmerican Energy.

Interregional reliability projects are analyzed on the basis of avoided costs. Comparisons of the MISO and PJM plans “have not identified any high potential areas for an interregional reliability project,” the RTOs said at the March 24 Interregional Planning Stakeholder Advisory Committee meeting.

PJM is expected to open a proposal window for interregional projects around May. MISO will accept proposals at any time.

Market Efficiency Projects

Meanwhile, the RTOs are evaluating eight market efficiency project proposals submitted in the window that closed Feb. 28. The grid operators received proposals for three upgrades and five greenfield projects from six respondents. The projects ranged in cost from $1 million to $198 million. (See “2017 MEP Identification Underway,” FERC Signals Bulk of NIPSCO Order Work Complete.)

PJM is currently updating its PROMOD model for 2017 and plans to begin calculations around May 1. Stakeholders who have critical energy infrastructure information (CEII) clearance and been approved to receive the model should expect access somewhere around the end of April or the beginning of May, PJM’s Chuck Liebold said.

The project benefits will be compared during the summer to determine interregional cost allocation, and the best projects will be identified in the fall. Recommendations to the respective boards will be made in November or December.

FERC Filings

On Dec. 30, the RTOs filed joint operating agreement changes defining the study process, benefits and interregional cost allocation for targeted market efficiency projects (TMEPs) (ER17-718).

Related tariff filings, defining the new TMEP project type and how costs of such projects would be allocated regionally, are due from each of the RTOs by April 29.

PJM’s Transmission Owners Agreement-Administrative Committee (TOA-AC) closed a 30-day comment window on March 23.

MISO is considering its regional cost allocation rules for such projects in the Regional Expansion Criteria and Benefits Working Group. Stakeholders discussed a proposal based on congestion contribution at the February and March working group meetings. Another working group meeting is tentatively set for April 7 to continue discussions.

The RTOs are considering as many as five TMEPs. (See MISO-PJM TMEP Projects Drop to Five.)

March 28, 2017

ERCOT Says DER not yet a ‘Reliability Concern’

By Tom Kleckner

AUSTIN, Texas — The growth of distributed energy resources is not yet causing reliability problems, and accurate mapping and localized pricing signals should address concerns in the future, ERCOT said last week.

Based on installed capacity and current growth rates, DER does not pose “an immediate or near-term reliability concern,” the Texas grid operator said in a report released Thursday.

The report says ERCOT’s DERs are “characterized by a combination of low energy prices and an absence of regionwide regulatory incentives, leading to a penetration growth rate” much slower than in California and other regions.

“[We] are making sure we don’t have any reliability issues,” COO Cheryl Mele told members of the Technical Advisory Committee during its monthly meeting. “No current issues exist. That’s not the driver here, other than trying to stay ahead of what can be a growing resource in the ERCOT grid.”

Mele said the ISO’s first priority is to begin discussions with transmission and distribution service providers (TDSPs) about mapping resources larger than 1 MW. Those discussions will take place within the TAC’s Reliability and Operations (ROS) and Wholesale Market subcommittees.

ERCOT estimates there were 900 MW of DER interconnected with the grid as of December 2015, based on annual reports filed at the Public Utility Commission of Texas by TDSPs in competitive-choice areas. Another 200 MW are thought to be deployed in non-opt in entity (NOIE) service territories (those not competing in the ERCOT market).

The ISO said there were about 90 registered DER units, primarily diesel generators and some rooftop solar, as of March.

ercot localized pricing signals — | *Meridian Solar*

“As these resources grow, deployment of DER with capacity greater than 1 MW could result in some reliability concerns, depending on their location and level of concentration on the grid,” the report said.

ERCOT currently compensates DERs with zonal prices. Mapping those resources will allow for locational pricing and result in their more appropriate response to transmission constraints.

Definitions

The report said DER can be anything from large, fossil-fueled reciprocating engines to small rooftop solar systems. It includes an updated definition of DER: “Generation, energy storage technology or a combination of the two that is interconnected at or below 60 kV and operates in parallel with the distribution system.”

Further discussion will be needed if the definition is expanded to include demand response, ERCOT said.

The ISO said it believes “the foundation to the reliable and efficient management of this future distributed grid is visibility” through more detailed collection of DER data from TDSPs. It does not propose to model or operate the distribution system, leaving that to the distribution providers.

However, ERCOT said it will work with market participants through the stakeholder process to develop a standardized method for mapping DER units to their loads. The ISO said this will improve situational awareness of DER activity on the grid and “allow for stakeholder consideration of localized pricing signals” to support reliability.

The ISO also proposes working with stakeholders on a process for competitive choice and NOIE distribution providers to monitor the accumulation of clusters of unregistered DER (less than 1 MW). It estimates there are more than 11,000 such facilities in its market and more than 12,000 in NOIE territories.

When the combined connected capacity of these smaller units exceeds an agreed-upon threshold, the TDSPs would work with ERCOT to determine the best method for mapping them.

The new report updates a concept paper published in August 2015 that laid out a potential framework for DER participation in the wholesale market, which identified reliability concerns from a large deployment of DER.

The TAC is expected to refer the report to the ROS and WMS at its April meeting.

March 28, 2017January 17, 2024

State Officials Brief NE Roundtable on Renewables Plans

By Michael Kuser

BOSTON — The nation’s smallest state doesn’t get to crow very often. But at the New England Restructuring Electricity Roundtable on Friday, Commissioner Carol Grant of Rhode Island’s Office of Energy Resources basked in applause as moderator Jonathan Raab said the state deserved to take a “victory lap” for putting into operation the first offshore windfarm in the U.S.

Not just the U.S., Grant corrected: “The first in the Western Hemisphere.”

The 30-MW Block Island Wind Farm, which began commercial operations in December, is a small step toward meeting the state’s “strategic goal” of 1,000 MW of “clean energy” by 2020, announced by Gov. Gina Raimondo on March 1. The state currently is little more than one-tenth of the way, with 138 MW operational, Grant said.

Although the governor’s challenge is not a legislative mandate, Grant said the legislature has enacted policies that will get Rhode Island halfway to the goal.

“The success of the Block Island Wind Farm is a big help in persuading people that anything is possible,” she said. “The reason we’re really fortunate in this region is that we actually have the ability to collaborate across states. In a small jurisdiction like Rhode Island, that helps because there’s brain power just across the border to the north.”

Grant joined Massachusetts Secretary of Energy and Environmental Affairs Matthew Beaton and Connecticut Deputy Commissioner for Energy Mary Sotos in briefing an audience of policymakers, stakeholders and analysts on how their states are attempting to transition to clean energy with minimal market disruption.

“I wouldn’t underestimate how much the rest of the country looks to New England for our experience in renewable energy and a lot of this thought leadership, experience with regional gas transmission,” Sotos said.

“The core of our energy strategy boils down to three elements: cost, carbon and reliability,” Beaton said. “We have some of the highest costs in the nation and we have to be cognizant of that in the commonwealth. … We have some of the most aggressive carbon reduction goals, the legislature having mandated a 25% reduction by 2020 and 80% reduction by 2050.”

After his presentation, Beaton left for a meeting with Gov. Charlie Baker, while his deputy, Undersecretary Ned Bartlett, stayed behind to answer questions. The first came from Raab, who asked for the main ingredients in the “secret sauce” for a sustainable renewable energy policy. Bartlett answered that “the challenge is to bring the reality of time-differentiated pricing into the solar market,” adding that open and inclusive markets create choices.

ISO-NE Previews Economic Study

A second panel at the roundtable featured Bob Grace, president of consulting firm Sustainable Energy Advantage; Jamie Howland, director of climate and energy analysis for the Acadia Center think tank; and Michael Henderson, ISO-NE director of regional planning and coordination.

Henderson presented a draft version of the RTO’s 2016 Economic Study, soon to be finalized before the grid operator’s Planning Advisory Committee. Phase I of the report analyzes production costs and related metrics, while Phase II discusses several market and operational issues.

Henderson referred his listeners to “a lot of great work being done by the U.S. Department of Energy, and particularly [the National Renewable Energy Laboratory], in modeling what the ISO needs to use in terms of wind and photovoltaics. A lot of those databases are essential to the planning process. But I leave it to you and the developers to come up with the costs. We don’t do that at the ISO.”

Responding to Henderson’s slideshow, Richard Levitan of Levitan & Associates asked, “It looks like there’s an annualized transmission [cost] of $1.5 [billion] to $2 billion to accommodate the build of clean energy and green energy in northern New England. … That transmission result [locks] onshore wind in northern New England.”

Henderson acknowledged that a “very, very large-scale wind development” in northern New England would require a “quite expensive” transmission expansion. “To facilitate it in some of the first steps, the ISO is doing a number of cluster studies now where we’re looking at inputs on the order of 2,400 MW in the north country. … Whether or not it’s economical — the way we want to go in the region — [I] leave that for others: someone who wants to consider policy, costs or metrics other than what we considered in this report.”

Grace used his own metrics to show the increase in renewable supply entering the New England market. “This is the wind projects coming online, this is increasing imports, this is biomass refurbishment. It’s a lot of different things hitting us at once, but it puts us in a new place.”

Howland discussed the potential of incorporating distributed resources into planning through “active load management, which is our term … for smaller-scale demand management that is more flexibly dispatched and automatically dispatched.

“So it could benefit hot-water heaters … and then energy storage in the region,” he said.

The last question of the day went to Henderson: Have you looked at the effect of pricing pressure from solar and wind?

Henderson said the RTO’s analysis found that even with a large-scale development of renewables, “there are still very, very, very significant periods of time when natural gas remains on the margin” in the region.

The analysis also showed renewables on the margin, particularly in light-load periods like May. “And by the way, all that load occurred in the middle of the day, so … there were many days when [energy storage] would be feeding the network at night and drawing from the network during the day, which is kind of the opposite of the way we think of storage operating today,” Henderson said.

March 28, 2017

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.