Page 1339 – RTO Insider

February 21, 2017

MISO South Conference Focuses on Limits, Investments and Climate

By Amanda Durish Cook

NEW ORLEANS — Three years after the region’s integration, MISO South, with its plentiful gas generation, constrained interface into the North and capacity for severe weather, still doesn’t feel fully “in” the RTO, speakers told the Gulf Coast Power Association’s MISO South Regional Conference on Thursday.

MISO South Conference Focuses on Transfer Limit, Transmission Investment, Climate — Vosburg | © *RTO Insider*

Jennifer Vosburg, president of Louisiana generating at NRG Energy, said MISO’s North-South transfer constraint under the RTO’s settlement with SPP limits South’s participation in North. “It’s a challenge to how competitive MISO South continues to be,” Vosburg said.

“The drive to integrate into MISO was, ‘We’re going to be fully in MISO,’” Vosburg said. “We’re proud that the Planning Resource Auction limit is 600 MW more this year. That’s not fully integrated … MISO South is not on the same playing field as MISO North.”

Multiple panelists said the constrained North-South interface has exacerbated an “illiquidity” issue in MISO South.

Plentiful capacity in South is unable to help shortage conditions in North, Vosburg said, and South will remain isolated until it can fully participate in the market. She added that since integration, it is often easier to sell in the PJM capacity market than participate in MISO’s capacity market.

Vosburg said MISO’s once-thriving independent power producers have become “a lonely table.”

Paul Zimmering, an attorney at Stone Pigman who has represented the Louisiana Public Service Commission, said the North-South transfer limit should have been examined by MISO much earlier than its currently underway footprint diversity study. “This is 2017, and we were hoping this would have been looked at earlier. We thought that we would get an evaluation earlier on, but it’s happening now and it’s great,” Zimmering said.

However, Zimmering said MISO is doing a good job through its Transmission Expansion Plan playing catch-up on other transmission projects in the Entergy territory that were ignored prior to the incorporation of MISO South. He said 86% of Public Utility Regulatory Policies Act qualifying facilities in South now participate in the MISO market.

“One MISO is a goal, and I don’t think we’re there just yet,” he added.

Zimmering also said regulation challenges exist in MISO South, where states — Louisiana, Texas and Arkansas — are located in both SPP and MISO. “There are a lot of — I wouldn’t call them divided loyalties — but different interests to look out for,” he said.

MISO President and CEO John Bear pointed out the $2.3 billion in transmission investment since MISO South’s addition in 2014 and said the RTO has created almost $2.5 billion in total savings over the region’s three years of existence.

The value “is real and it’s happening, and I think it’s a really good story,” Bear said.

Although the region hasn’t experienced a hurricane since integration, operations have withstood significant weather events, Bear said: tornados in northern Arkansas in 2014; a Texas dam at risk because of heavy rains in 2015; flooding in eastern Texas and Louisiana; and persistent regionwide heat in 2016.

Matt Brown, vice president of federal policy at Entergy, said MISO’s footprint-wide climate differences are a benefit to MISO South, allowing lower planning reserve margins. Brown said Entergy operating companies saved about $412 million in 2014 and 2015 after joining the RTO. Transmission investment in MISO South has doubled from $359 million in MTEP 14 to $886 million in MTEP 16.

Jim Schott, vice president of transmission for Entergy Louisiana, said the company has noticed that the RTO can better identify congestion for future projects and has sounder congestion management practices, decreasing instances of transmission loading relief (TLR).

“Since December of 2013, TLR and [local area procedures] have hardly been uttered once,” Brown said.

Schott also said MISO membership means Entergy plans projects further in advance to fit into the annual MTEP schedule.

He also made a case for allocating costs of economic transmission upgrades to benefiting local resource zones alone. The RTO is considering changing cost allocation for economic projects in time for 2018, when costs can be shared with MISO South. “Benefits generally flow to some region, and the region should bear those costs,” he said. (See MISO Stakeholders Propose Changes to Market Efficiency Cost Allocation Process.)

Ted Kuhn, consultant at Customized Energy Solutions, said integration has brought pricing transparency — and added bureaucracy — to MISO South. “It takes time to get things through a larger process. It takes time to know which stakeholder meetings to go to, which person to talk to. It’s a process that will kill you if you don’t know it,” he said.

SPP Seam and MISO South

Laurie Dunham, vice president and manager of regional planning for Duke-American Transmission Co., said SPP and MISO need better coordination of the models in their joint studies. She urged stakeholders to get involved in interregional planning meetings.

Left to right: Schott, Clarey and Dunham | © *RTO Insider*

Dunham said large-scale transmission projects aren’t always needed to resolve reliability issues, and, in some cases, the addition of “2 to 5 miles of line and a reactor” eliminates a problem.

Patrick Clarey, a FERC attorney adviser, noted that SPP is facing challenges with greater wind penetration. MISO and SPP’s possible overlay study, designed to last through 2019, could produce transmission projects to solve SPP’s problem, he said. (See related story, SPP Eyes 75% Wind Penetration Levels.)

Ted Thomas, chairman of the Arkansas Public Service Commission, said his state is in a good position — for now.

“It’s easy to be in my position when gas prices are low. Our utilities aren’t stirred up, our customers are satisfied, the legislature is calm,” Thomas said. However, he added, “if the last three weeks are any indication of the next three years, administrations will change, federal policies will zig-zag … and the consumer needs to be protected throughout.”

MISO South and the Climate

Thomas said the electric industry’s long 30- to 40-year capital cycles create a high risk of stranded costs. He said with Arkansas, Texas and Louisiana’s low-cost energy when compared to California’s prices, MISO South can wait to implement more expensive and experimental carbon-reduction measures.

“We can’t stick our heads in the sand. But we can wait and see. We don’t have to take the risk that the high-cost states take,” Thomas said. “I know that carbon is a long-term problem, and I question if we have a solution. I know that some states have a political appetite to reduce carbon, but I also know that Arkansas, and I suspect Louisiana, aren’t those places,” Thomas said. He added that even if Arkansas eliminated carbon emissions by 2018, it would not be enough to impact global temperature rise.

Other panelists maintain that MISO South is ripe for increased renewable penetration and more energy efficiency programs.

Siobhan Foley, the City of New Orleans’ FUSE Executive Fellow for Climate Action, said solar has come down dramatically in price and now is viable in terms of cost. She said MISO South can reduce carbon through several smaller solar projects. “It really is about smaller wedges and more of them, sharing and distributing in different ways,” Foley said.

Dunham said that the Clean Power Plan’s uncertain future should not stop the adoption of renewables and storage. “I don’t think it’s ever ‘pencils down.’ We need to be always modifying and adapting,” she said.

Low Rates, High Bills

Some officials think MISO South could do with more energy efficiency programs to reduce the region’s high energy consumption.

“We have low rates, but we have really high bills,” said Logan Atkinson Burke, CEO of consumer advocate Alliance for Affordable Energy. She said Entergy New Orleans customers have among the highest energy use rates in the country. Mississippi, Alabama and Louisiana rank among the worst in the country in available energy efficiency programs.

Thomas said energy efficiency programs can help defer “big decisions” and capital expenses by keeping demand low.

Jeff Baudier, chief development officer of Louisiana-based Cleco Holdings, said the company’s addition of a heat recovery steam generator to the Cabot coal plant in the St. Mary Parish in Franklin, La., will add 50 MW of capacity with no additional emissions. The project is expected to be in service in the first quarter of 2018.

Ted Romaine, director of origination for renewable generation developer Invenergy, said commercial and industrial customers, especially Internet companies like Google, Amazon and Facebook, are increasingly making off-site renewable energy deals such as virtual power purchase agreements.

“This is a market that’s really picked up steam in the last few years. … We see more buyers come into the market, and interest continues to grow. This isn’t a Silicon Valley-exclusive market,” Romaine said.

ERCOT, SPP and PJM lead in corporate off-site renewable deals with a 77% share of the U.S. and Mexico, Romaine said. He said although MISO doesn’t have any such contracts, it will in the future. He expects more than 20 first-time corporate renewable buyers nationwide in 2017. He added that vertically integrated MISO South utilities might bend to pressure from big energy users such as Google to create green tariffs — renewable energy purchasing programs — even if they have no legal obligation to do so. He said there is “strong potential” for solar-based virtual power purchase agreements in MISO South.

“If we don’t start recognizing that multinational corporations have sustainability agendas, they’re going to go somewhere else,” Baudier said.

February 21, 2017

PPL’s Earnings Soar, Exceeding Expectations

PPL’s earnings from ongoing operations rose 11% to $1.67 billion last year, boosted by a 39% jump in the fourth quarter as the company benefited from a strong performance by its utilities and gains on currency hedges.

Reported earnings more than doubled to $1.9 billion ($2.79/share) for the year, compared with $682 million ($1.01/share) in 2015, which included a $921 million loss from discontinued operations, primarily the spinoff of its competitive supply business to Talen Energy.

PPL earnings — PPL workers raising an osprey nesting platform at Owl Creek Reservoir near Tamaqua, Pa. | *PPL*

The company’s results exceeded the high end of its 2016 reported earnings forecast range of $2.55 to $2.70/share.

Reported fourth-quarter earnings were $465 million ($0.68/share), compared with $399 million ($0.59/share) in 2015. Eliminating special items, fourth-quarter earnings from ongoing operations were $409 million ($0.60/share) versus $294 million ($0.43/share) a year earlier.

CEO William Spence said the company made $3 billion in infrastructure investments last year and plans an additional $16 billion over the next five. “We are confident in our ability to deliver our projected 5 to 6% compound annual earnings growth range from 2017 to 2020 even if the exchange rate declines well below current levels,” Spence said in a statement.

The company announced that it is increasing its quarterly common stock dividend from 38 cents/share to 39.5 cents/share, payable to shareowners of record as of March 10. The increase is PPL’s 15th in 16 years.

– Rory D. Sweeney

February 21, 2017

Duke Earnings Dip on Sale of International Operations

Duke Energy saw its 2016 earnings drop more than 20% to $2.15 billion ($3.11/share) from $2.82 billion ($4.05/share) in 2015 largely because of a loss on the sales of its international energy operations.

For the fourth quarter, Duke reported a loss of $227 million ($0.33/share), compared to a profit of $477 million ($0.69/share) for the same period in 2015.

The company’s adjusted earnings were $3.24 billion ($4.69/share) for the year up from $3.15 billion ($4.54/share) a year earlier. Adjusted earnings exclude merger costs, severance charges, asset impairments, a 2015 charge associated with the Edwardsport IGCC regulatory settlement, and the loss on the sale of its hydroelectric and natural gas generation plants, transmission and natural gas processing facilities in Central and South America.

The company said results were bolstered by favorable weather, cost controls and the early close of its acquisition of Piedmont Natural Gas.

duke energy earnings international operations — Nashville CNG Fueling Station | *Piedmont Natural Gas*

“2016 was a transformational year for Duke Energy as we acquired Piedmont Natural Gas and exited our international business,” CEO Lynn Good said.

Duke has realigned its reporting segments into three major categories: Electric Utilities and Infrastructure; Gas Utilities and Infrastructure; and Commercial Renewables.

The Electric Utilities segment earned $483 million in the fourth quarter, down from $569 million in the last quarter of 2015. The company blamed higher operations and maintenance expenses, tax rates, interest expenses and depreciation and amortization costs.

The Commercial Renewables unit earned $10 million in the fourth quarter, down from $17 million a year earlier, because of lower investment tax credits resulting from lower solar investments, partially offset by higher production tax credits from additional wind facilities placed in service.

– Rory D. Sweeney

February 21, 2017

MISO Planning Subcommittee Briefs

MISO is seeking stakeholder input on improving how it estimates costs in its competitive bidding process.

The RTO is proposing separate approaches for transmission lines and substations, MISO transmission design engineer Devang Joshi said at a Feb. 14 Planning Subcommittee meeting.

For transmission lines, MISO will consider length, voltage, structure and conductor type, terrain type and right-of-way cost.

For substations, the RTO will take into account the number of new lines and major equipment positions added; bus and breaker arrangement; land cost, grading, fencing, any equipment to ground the lines and a control enclosure; and major equipment additions such as a reactors, capacitors or transformers.

MISO uses cost estimates to calculate benefit-to-cost ratios on potential market efficiency and multi-value projects. Before Order 1000, transmission owners or other stakeholders provided the estimates. But with the advent of competition for such projects, TOs’ cost estimates are now confidential information.

In evaluating bids, MISO will continue to weigh cost and design at 30%, project implementation at 35%, operations and maintenance at 30% and transmission planning participation at 5%.

Senior Substation Design Engineer Alex Monn said once feedback is received, the RTO will put together a guide on its cost estimation process.

Rules on Non-Transmission Alternatives Ready for PAC Review

After two years of work, Business Practices Manual language on non-transmission alternatives is nearing completion and ready to move to the Planning Advisory Committee for review, principal adviser Matt Tackett said.

Under the new process in BPM 020, once transmission issues are identified for the annual Transmission Expansion Plan, ”the planning process will explore alternative solutions to those issues with the objective of recommending the best overall solutions.” MISO will provide developers minimum planning requirements “to provide for the consideration of both transmission and non-transmission alternatives.”

The RTO said it will “defer, de-scope or cancel the transmission project previously proposed” if a non-transmission alternative is selected over a traditional transmission project.

“I think as we approach the MTEP 18 planning season, most of us would agree to move this on. The vetting isn’t over, but it’s a good time to make a transition to the PAC,” Tackett said.

Generators Identified in MISO Retirement Analysis

MISO has compiled generator data for its MTEP 17 retirement sensitivity study scope.

The study will use 378 forecasted generator retirements from 2004 through 2027 and 30 planned generator additions in MISO, SPP, PJM and SERC Reliability territory to determine transmission system needs.

MISO engineer Anton Salib asked stakeholders to submit any changes to the generator retirement list by Feb. 22. At the beginning of March, the RTO will post the final list of retiring generators and future resource additions to be used in the study. Results will be reviewed in the spring during sub-regional planning meetings.

Salib said the retirement analysis is only an informational study and MISO will not recommend any project in the MTEP 17 cycle based on the study.

The MTEP study will share information with the RTO’s Regional Transmission Overlay Study and market congestion planning study. (See “Studies Could Assist in Relieving North-South Constraint,” MISO Planning Advisory Committee Briefs.)

— Amanda Durish Cook

February 20, 2017

House Energy Chair Lays out Agenda in NARUC Address

By Rory D. Sweeney

WASHINGTON — U.S. Rep. Greg Walden (R-Ore.) said the agenda of the House Energy and Commerce Committee that he chairs will hew close to traditional party positions, emphasizing the importance of letting states and market forces guide development rather than policies and regulations.

Rep. Greg Walden at NARUC's 2017 Winter Meeting — Walden | *NARUC*

Walden made the comments while addressing the National Association of Regulatory Utility Commissioners at its annual winter meeting. He requested the opportunity to roll out the agenda to the conference, according to NARUC President and Pennsylvania Public Utility Commissioner Robert Powelson. “With a unified government, we actually have a rare opportunity to enact reforms that build on energy abundance, modernize our energy infrastructure and promote domestic manufacturing and job growth,” Walden said. “You can be certain that we will ensure our efforts focus on the issues that matter most to consumers.” (See Interdependence Key to Cyber Efforts, Congress Told.)

The country has been held back by a “Washington-centric, regulatory and environmental agenda,” he said, that was “picking winners and losers, putting reliability at risk and driving up costs.”

The committee will review the interaction between federal and state government on resource planning, such as the Public Utility Regulatory Policies Act, and address “recent efforts by the EPA to erode states’ authority through the Clean Power Plan.”

He called on the new administration to install new commissioners at FERC quickly and indicated the nuclear industry would be a major focus of the committee.

“The Yucca Mountain project must remain central to our nuclear waste-management system,” he said, adding that plans could include authorizing an interim storage facility, along with moving forward on fuel reprocessing. (See related story, Panelists Weigh Prospects for Nuclear Waste Solution Post-Obama.)

Georgia Public Service Commissioner Tim Echols asked Walden’s view on how reprocessing might make the national energy policy more sustainable.

“It’s something, obviously, that other countries do pretty effectively, and I see no reason why we can’t take a look at that seriously in this country,” Walden said. “It’s about time.”

He noted that while the Yucca Mountain project was canceled by the Obama administration, the total future liabilities and payments paid by the U.S. Treasury for nuclear-waste storage doubled to nearly $30 billion over the last eight years. The federal government can no longer collect a nuclear waste fee from ratepayers, he said, but the fund already has $36 billion and collects $1 billion in interest annually.

He also addressed cybersecurity, saying it will require partnerships across industries and input from the state level to implement in a “thoughtful way.” (See related story, States Unsure of Cybersecurity Best Practices; Santorum Seeks ‘Warriors’.)

February 20, 2017

40 Years On, States Still Struggling to Implement PURPA, NARUC Told

By Rory D. Sweeney

WASHINGTON — While FERC has given states a wide berth for determining the avoided-cost rate for qualified facilities under the Public Utility Regulatory Policies Act, other regulatory inconsistencies and utility “recalcitrance” have hindered the law’s implementation, a panel of experts told regulators this week at the National Association of Regulatory Utility Commissioners’ winter meeting.

PURPA was established in 1978 to diversify the country’s energy supply, increase efficiency, reduce dependence on fossil fuels and develop a market for independent power producers. It requires electric utilities to purchase the output of cogeneration and small power-production “qualifying facilities” (QFs) at the cost a utility would incur for supplying the power itself or by obtaining supplies from another source. The law leaves it to each state’s utility commission to formulate those “avoided costs.”

No Second-Guessing

“We have been very explicit about this: We are reluctant to second-guess a state’s determination on avoided costs,” said Lawrence Greenfield, a senior attorney at FERC.

The Energy Policy Act of 2005 amended PURPA to allow termination of the must-buy requirements if FERC finds that the QF has nondiscriminatory access to make market sales. The commission has ruled that includes QFs of more than 20 MW that participate in RTO markets. (See FERC: Entergy not Required to Buy from Large QFs.)

Greenfield noted that the most recent litigation over PURPA has been in non-RTO regions.

“I’m not sure what that says exactly about RTO markets, whether they are more efficient or less efficient, more pro-QF or less pro-QF, but it is an interesting observation that the litigation seems to be concentrated in non-RTO markets,” he said.

naruc purpa energy policy act of 2005 — Kowalczyk | © *RTO Insider*

He later added that retail choice and resource diversification might draw consumers to other generators “and that might indirectly impact QFs, but we certainly haven’t seen it in the cases we have had.”

Irene Kowalczyk, director of global energy at paper and cardboard manufacturer WestRock, said it’s “probably harder” to get PURPA-based contracts in open-access states because the utilities don’t own the generation and aren’t issuing major requests for proposals.

‘Black Box’ Avoided-Cost Formulas

“In regulated markets, PURPA is somewhat working,” Kowalczyk said, though she added that states’ avoided-cost formulas are often a “black box,” with inconsistent methodologies and no overall framework.

“Notwithstanding the complaint about FERC’s 1-mile rule, today’s complaints about PURPA are nothing new and echo complaints made 30 years ago, when PURPA was initially implemented,” said Ari Peskoe, a senior fellow in electricity law at the Harvard Law School.

The “1-mile rule” requires developers to maintain a 1-mile buffer between projects to qualify them as separate QFs. The commission implemented the provision to prevent developers from “disaggregating” large generation projects into smaller units to qualify under PURPA.

Peskoe argued that much of the blame for slow implementation should be focused on utilities.

“When a utility today claims that it has an abundance of QF energy, I suggest it’s worth investigating how the utilities actions may have contributed to that situation,” he said, noting that many utilities continue to overestimate demand growth in their integrated resource plans. “To what extent utilities’ inaccurate load forecasts, failure to account for those mistakes and lack of foresight about the development of renewable energy technologies contribute to their perceived abundance of QF energy, should the utility be held accountable for these mistakes? How can regulators do so while protecting ratepayers? These are obviously not easy questions to answer, but I suggest they are worth asking.”

Combined Heat and Power

Kowalczyk, who also represented the Industrial Energy Consumers of America, said the rules need to be revised, clarified and standardized across all states so that utilities regard QFs in the proper context.

“The RTO rules treat industrial CHP [combined heat and power] and waste-heat recovery QFs as if they’re merchant power plants that sell power as their primary business,” she said. “To achieve the lowest cost possible for the ratepayers, states should encourage utilities to develop technology-specific avoided cost rates for each resource type. … The minimum term for QF contract should include 10 to 12 years of capacity payments for QFs of all sizes in fully regulated non-RTO areas and in RTO markets for smaller QFs.”

Kowalczyk added that it’s hard for CHP units to perform as capacity resources because their output is entirely dependent upon the steam requirements of plant’s primary manufacturing process. The rule’s inconsistencies have reduced enthusiasm for such projects. “I don’t think any new CHP-type facilities have been installed in those RTO markets … because they can’t get the financing. The RTO markets aren’t sufficient to provide sufficient compensation that is certain to enable those QFs to be built. So what we’ve seen since the passage of the Energy Policy Act of 2005 is a significant reduction in the amount of CHP and waste-heat recovery-type facilities being built.”

Payments to QFs in PJM are often based on energy and capacity clearing prices, she said, though Peskoe noted that courts have ruled that the avoided-cost rate can’t be based on spot-market prices.

Greenfield said FERC prefers that utilities and QFs negotiate mutually agreeable terms, but that it’s also interested in seeing QFs sign long-term agreements. He added that FERC doesn’t have any specific revisions to the law that it would like to see made to the law.

“We at FERC are largely agnostic about changing PURPA,” he said. “Our view is: Whatever Congress tells us to do, that’s what the hell we’re gonna do.”

In a separate NARUC session, acting FERC Chairman Cheryl LaFleur had the same message. Changes that people have asked FERC to make to PURPA rules “are really legislative changes,” she said.

February 20, 2017

Bay: Told Trump Team I’d Leave FERC if Demoted

By Michael Brooks and Rich Heidorn Jr.

WASHINGTON — Former FERC Chairman Norman Bay says he told the Trump transition team he would likely leave the commission if he was replaced as chairman.

Bay’s Feb. 3 resignation, which came after President Trump appointed Cheryl LaFleur as acting chairman, left FERC with only two commissioners, one short of the quorum needed to rule on contested cases. (See FERC OKs Pipelines, Delegation Order Before Losing Quorum.)

Speaking at the Energy Storage Association’s annual policy forum at the National Press Club on Wednesday, Bay said he was following FERC tradition that the chair leaves after he is replaced.

“The tradition at FERC, with one exception” — LaFleur — “is for a former chairman to leave,” Bay said. LaFleur remained on the commission after Bay replaced her as chairman in 2015.

Also without a quorum following the departures of their chairs are the Securities and Exchange Commission and the Federal Trade Commission.

But Sen. Dean Heller (R-Nev.), who also appeared at the storage forum, said he was disappointed at Bay’s departure, saying it was “effectively paralyzing the commission.”

For her part, LaFleur told an audience last week that Bay’s departure was “somewhat to our surprise and certainly to our disappointment.”

Although Trump is expected to name a Republican as chairman when he fills the three vacancies, LaFleur said she intends to serve her complete term through June 2019.

“My whole FERC tour of duty has been a little non-standard,” LaFleur said Feb. 14 during remarks at the National Association of Regulatory Utility Commissioners’ winter meetings. “I’ve been a commissioner, then acting chairman, then chairman, then commissioner again. But the last three weeks have been the strangest set of plot twists yet.”

One of the plot twists: LaFleur learned of her appointment on Jan. 25 via a message from the White House dated Jan. 23. It was reportedly delivered two days late because it originally was sent to FERC’s old address, which the agency vacated for its current headquarters more than a decade ago.

She said her focus remains unchanged: reliability and grid security; transmission; and “building a clean and diverse energy mix.” Her priority as acting chair, she said, is to “keep the important work of the 1,300 people who work for the agency moving forward in a time of uncertainty and transition.”

Bay told the storage forum he promised Commissioner Colette Honorable he would be presidential “in the classic sense of the word” and not say what the commission should or should not do.

Nevertheless, he offered some advice for future commissioners. “It’s going to be very important for a future commission to retain a very important tradition at FERC, which is a tradition of bipartisanship, if not nonpartisanship, in the way that the commission addresses energy issues.”

He highlighted the high rate of unanimity in the commission’s orders. “Even when we were only down to one Republican commissioner, there were only two matters where the three Dems were on one side and the Republican commissioner was on the other,” he said. “I hardly need to say this in a ballroom in Washington, D.C., but there seems to be more partisanship than ever, and I think that when partisanship hits an independent agency … it is not a good thing for the American people.”

Asked by Burwen what he was going to do next, Bay said his “real ambition is to become a travel bum for a while.” True to his words, he left the Press Club wearing a backpack.

February 20, 2017

Court Declines to Halt Long Island Offshore Wind Lease

By William Opalka

A federal judge on Wednesday rejected a request to halt a federal lease of waters off Long Island for an offshore wind site (16-cv-2409).

Nine commercial fishing organizations and businesses and coastal towns in New Jersey, Rhode Island and Massachusetts sought an injunction in December to halt the lease even before the U.S. Bureau of Ocean Energy Management awarded it to Norwegian company Statoil. The company won the rights to the 80,000-acre New York Wind Energy Area with a $42.5 million bid.

The fishing groups said the lease would cause irreparable harm to fishing areas that produce scallops and squid; the municipalities cited “economic and natural resource interests” in the site.

“To meet the standard for irreparable harm, plaintiffs must present sufficient evidence that the purported injury is certain, great, actual, imminent, and beyond remediation. Plaintiffs have failed to do so,” D.C. District Court Judge Tanya S. Chutkan wrote. “Most significantly, plaintiffs have not shown that their purported injuries are imminent or certain.”

BOEM conducted an environmental assessment of the lease area. The plaintiffs claim the bureau, part of the U.S. Department of the Interior, violated the National Environmental Policy Act and the Outer Continental Shelf Lands Act.

“Plaintiffs’ only argument for why there is an imminent and irreparable harm, despite construction being years away if it happens at all, is that once the lease is issued, Statoil will have made a significant financial investment in the development of a wind facility and will have attained some ‘property rights’ in the ocean area, meaning the balance of harms for whether to issue an injunction later in this case will have changed,” the judge explained. “In the court’s view, this factor does not weigh strongly enough to create an imminent harm sufficient to warrant preliminary injunctive relief. The court maintains its authority to ultimately enjoin the lease in this litigation if necessary. Moreover, Statoil’s decision to invest in this lease is already made with full awareness that its proposals for a wind facility may be rejected and it may never construct or operate such a facility.”

The lease is one of the linchpins of Gov. Andrew Cuomo’s plan to develop 2.400 MW of offshore wind facilities off Long Island by 2030. (See 90-MW Wind Farm OK’d off Long Island.)

February 20, 2017

No Longer ‘Fringe,’ Storage Earning its Keep, Panel Says

By Rory D. Sweeney

WASHINGTON — Energy storage is providing tangible benefits to the grid, and rules need to be implemented to ensure it finds its proper place, a panel of experts told regulators last week at the National Association of Regulatory Utility Commissioners’ winter meetings.

Storage “all felt very on the fringe. And now, especially with the FERC [Notice of Proposed Rulemaking] that was just issued, it’s more in the mainstream,” said Public Utilities Commission of Ohio Chairman Asim Haque, who moderated the panel.

“I think almost everyone believes we’ll have more storage in the future than we do now, and I don’t think we know in the long run how it will develop. … I think if it develops to the extent that we think it might be developing, it will just be its own thing,” acting FERC Chairman Cheryl LaFleur said. “You’ll say electricity is: generation, transmission, distribution and storage, rather than fitting it into the others.”

‘Capacity Value’

With its ability to act quickly, storage is providing significant “capacity value,” ICF International’s Ken Collison said. Capacity value is the capability to provide firm energy in the hour of need: A combined cycle unit with a forced outage rate of 5% has a 95% capacity value, meaning it is available on a firm basis 95% of the time. ICF’s research found that a 100-MW storage system with one hour of stored energy can provide 46 MW of firm capacity (46% capacity value), while one with four hours of storage can provide 99 MW of firm capacity.

Storage is unique because it can be both a load when needed and a generation resource when needed, Collison said.

That reaction speed translates to value for customers. Ned Bartlett, Massachusetts’ undersecretary of energy and environmental affairs, said the hours with the top 1% of demand account for 8% of ratepayers’ costs, and the top 10% account for 40%. That represents “remarkable peak opportunities” for storage, he said.

However, storage’s flexibility also creates some regulatory issues, LaFleur said. Previous precedent has limited installations to either cost-based transmission rates or market-based services. FERC believes that is too limiting, she said, and issued a policy statement in January to clarify that the commission is open to opportunities for units to serve both roles but with protections to ensure they aren’t paid twice for the same service. (See Storage Can Earn Cost- and Market-Based Rates, FERC Says.)

LaFleur’s Dissent

“I dissented on that order. I was concerned with some of the broader language in the policy statement about the potential impacts on wholesale markets of having other payments streams,” she said. “I thought it came awfully close to implicating some of the questions we have pending before us now with respect to state policy initiatives and how they’re valued in the wholesale markets, which I know we’ll be looking at.” (See related story, LaFleur Plans Tech Conference on State Generator Supports.)

Among the flurry of orders the commission issued before former Chairman Norman Bay resigned Feb. 3, FERC also ruled on a complaint by Indianapolis Power and Light, finding that MISO’s Tariff unreasonably limits the services energy storage can provide. It ordered the RTO to craft more inclusive Tariff language within 60 days. (See MISO Ordered to Change Storage Rules Following IPL Complaint.)

NARUC panel energy storage — Bartlett | © *RTO Insider*

Collison noted that one of the biggest advantages of storage is it presents less permitting and siting issues. “You can site it at the place of need,” he said.

And sometimes, it’s even mobile. “The number of people who come up to you and describe the different things they’re doing with car batteries, including charging at work, bringing it home and powering the house from it. Really exciting; really confusing at times,” Bartlett said.

Massachusetts’ “ambitious” goal is to have 300,000 electric vehicles on the road by 2025, he said.

February 20, 2017

Role of Experimentation, Market Research Increases for Utilities

By Rich Heidorn Jr.

WASHINGTON — Electric vehicles and distributed energy resources are increasing the need for utilities to experiment and conduct market research, speakers at an Institute for Electric Innovation forum said last week.

“What differentiates us from every other competitive service is we have an … obligation to serve 100% of the customers. We don’t have the ability to define our niche market and confine our advertising to that market,” said Karen Lefkowitz, vice president of smart grid and technology for Pepco Holdings Inc. “Serving 100% of the customers used to be easy because everybody had the same stuff. … Now things have gotten really complicated, because now we actually have to understand our customers.”

Regional Preferences

When Pepco rolled out smart meters at its utilities in D.C., Maryland and Delaware, Lefkowitz said, the company tested avatars for a video series explaining how customers could use the data collected by the devices. To the company’s surprise, different regions preferred different avatars, Lefkowitz said.

electric vehicles distributed energy resources — Forese | © *RTO Insider*

“It tells us that customers’ opinions and their attitudes can be vastly different in a relatively short geographic difference. They’re influenced by incentives their states are offering; they’re influenced by the culture of the community that they live in. They’re influenced by the rate that the local utility is charging. So when we look to the future and see all the choices that customers have … we need to understand what drives the customer. We need to understand what appeals to them, and we need to understand why they’re looking elsewhere for their services.”

“I think you always want to be experimenting,” agreed Arizona Corporation Commission Chairman Tom Forese. “Focus groups and polling data … could be very helpful in understanding the needs of the customers. Nothing really can compensate for just raw experimentation because pollsters are always shocked and surprised: ‘We didn’t see that coming.’”

Exceeding Storage Mandates

Manal Yamout, vice president of policy and markets for Advanced Microgrid Solutions, recalled when the California Public Utilities Commission ordered Southern California Edison to obtain 50 MW of 15-minute storage in response to the shutdown of the San Onofre nuclear plant. The company ended up procuring 250 MW of storage with a four-hour output.

“Why would they do that? They didn’t have to,” Yamout said. “The answer is that, unexpectedly, distributed storage resources had the ability to give Edison something it didn’t quite know it wanted until it had to think about it.”

Although it was the storage target that caused the procurement, it was the multiple functions storage could fill that led the company to exceed the target, she said.

“I think we’re in a place in the elect power industry that’s … like the beginning of the Internet, where serious policy and regulatory change has to occur to let things explode,” said moderator and IEI Executive Director Lisa Wood, quoting from a book by AOL founder Steve Case.

“Our regulators are in a tough place. The world is changing very fast,” said Lefkowitz. “For the very first time, they’re now adjudicating between who should have the ability to put assets on the electric system that historically has been the domain of the utility.”

Forese said he believes the utility must retain a central role. “If the utility is not directing traffic for new technologies, then I think we’ll get the opposite of what we’re trying to accomplish,” he said.

EVs’ Impact

Lefkowitz predicted electric vehicles will “change the world” but said it won’t happen quickly because it takes about 15 years for the entire vehicle fleet to be replaced with newer models. (See columnist Steve Huntoon’s alternate view, Electric Cars – Three Ugly Facts.)

Left to right: Wood, Forese, Yamout and Lefkowitz | © *RTO Insider*

Time will be essential in ensuring Pepco is “ahead of the curve,” Lefkowitz said: Charging an EV requires the equivalent of half of a house load.

“If we don’t size our distribution transformers appropriately and everybody comes home to the neighborhood and charges their car at the same time, we’re going to at minimum blow the fuses on all those distribution transformers — we’ll be spending a lot of time driving around to replace fuses. And at worst, we’re going to be spending trillions of dollars across the nation upgrading transformers.”

Lefkowitz said EVs will change Pepco’s peak load in the D.C. area from 4-5 p.m. to perhaps 7-8 p.m.

“So our planning has to be a lot more expansive and future-looking and rely a lot less on 100% history that no longer is necessarily a good predictor.”

She predicted an expansion of Pepco’s incentives to encourage off-peak charging, saying a pilot program in Maryland proved very popular.

“We’ve been talking about [time-of-use] tariffs and the right pricing for three decades,” Wood said. “But EVs may be the thing that actually brings that to life.”