Page 1347 – RTO Insider

February 5, 2017

FERC OKs CAISO Frequency Response Contract Terms

By Robert Mullin

FERC last week clarified that it would allow CAISO contracts for transferred frequency response service to include a provision recognizing that counterparties could fulfill the agreements based on an annual measure of performance rather than a case-by-case accounting of responses to frequency disturbance events.

In the same order, the commission rejected a rehearing request by the Western Power Trading Forum (WPTF) and NRG Energy that challenged the fairness of the process by which the contracts were procured (ER16-1483).

ferc caiso frequency response — FERC’s clarification on CAISO’s transferred frequency response contract terms clears the way for the ISO’s agreements with the Bonneville Power Administration and Seattle City Light. | © *RTO Insider*

FERC last month approved ISO frequency response contracts with the Bonneville Power Authority and Seattle City Light, both of which were contingent on the outcome of the commission’s clarification. (See FERC Accepts CAISO Contracts for Imported Frequency Response.)

CAISO filed a request for clarification after the commission last September approved the ISO’s Tariff authority to procure transferred frequency response from another balancing authority area (BAA). The ISO sought the authority in an effort to comply with NERC reliability standard BAL-003-1.1, which requires all grid operators to carry enough capability to respond to a disturbance.

In that order, the commission stated that the CAISO contracts must result in a counterparty actually providing the ISO with frequency response service and not simply be “an arrangement for counterparties to transfer a regulatory obligation by means of bookkeeping entries.”

The ISO sought more clarity from the commission on that point, contending that contract counterparties could interpret the decision as requiring them to have a net actual interchange measure in response to every single frequency disturbance event.

“Such a requirement would make it virtually impossible for the CAISO to contract for transferred frequency response quantities because balancing authorities cannot assure such a measure in response to every disturbance event,” the ISO said in its request.

CAISO contended that the transferred frequency response performance of a counterparty BAA should not be tied to each disturbance because compliance with the NERC standard itself is not based on performance in connection with a single event.

Powerex, which also sought clarification on the order, backed the ISO, holding that a BAA is able to meet the BAL-003-1.1 obligation through a median measurement of performance across all identified disturbance events during a compliance year.

The commission agreed with those arguments, acknowledging that “NERC determined that the degree of variability in observed frequency response performance values limits the usefulness of imposing a single event-based compliance measure” on BAAs.

“In directing CAISO to revise its tariff to state that it ‘cannot claim on a compliance form that it has received, or that the counterparty has transferred, more frequency response performance than the counterparty has produced,’ the commission did not intend to require BAs to achieve a specific net actual interchange measure for each disturbance event to support transferred frequency response contracts,” the commission said.

The commission rejected the contention by WPTF and NRG that it acted “arbitrarily and capriciously” in determining that the product category of transferred frequency response — the notion of which was introduced by the BAL-003-1.1 standard — consists of both compliance reporting rights and the physical delivery of primary frequency response service.

Under the contracts, the commission noted, CAISO would be acquiring both the reporting rights and the frequency response service, which would act as an “insurance policy” for the ISO in meeting its obligation.

“Contrary to NRG and WPTF’s characterization of the Sept. 16 order as stating that ‘generators are incapable of bidding to provide a physical product to the CAISO,’ the Sept. 16 order determined that generators and BAs are differently situated due to the unique nature of BAs’ BAL-003-1.1 compliance obligations,” the commission said.

The commission said that NRG and WPTF’s argument that BAAs might be circumventing competition provisions set out in FERC Order 888 by bundling service from their generators into transferred frequency response was beyond the scope of the proceeding.

FERC also declined to entertain a WPTF proposal to increase the size of the frequency response market by allowing generators to compete, saying that the issue before the commission was to determine whether the proposed CAISO contracts are just and reasonable “and not whether the proposal is more or less reasonable than other proposed alternatives.”

CAISO late last year launched a stakeholder initiative to develop a market mechanism for acquiring primary frequency response service. (See CAISO Seeks Primary Frequency Response Market.)

February 5, 2017

CAISO: Don’t Lean on EIM for Capacity

By Robert Mullin

Participants in the Western Energy Imbalance Market (EIM) should not rely on it to reduce their capacity requirements, a CAISO official cautioned last week.

Mark Rothleder, CAISO’s vice president for market quality and renewable integration, made the comment when probed on the issue during a Feb. 1 meeting of the EIM’s governing body.

Rothleder shared his views in response to a question by Dan Williams, CAISO markets analyst with Portland General Electric, which is slated to join the market in October. “We often hear about the interplay between planning capacity — to be able to stand alone as an EIM entity or as a balancing authority — versus what happens in real time in the optimization benefits that we get,” Williams said.

Williams wanted to learn more about how the EIM influences how existing participants view their long-term flexible resource needs as a model “for how the rest of us are starting to look at that as well.” “Flexible” resources are those equipped to respond to variability on the grid stemming from the uneven output of renewable generation.

Rothleder said the question comes up during the ISO’s own resource adequacy process at the California Public Utilities Commission: How does a utility value flexible capacity at the interties to the balancing authority area (BAA) and, more generally, from the EIM?

EIM’s Design

The answer lies in understanding how the EIM was designed and what it is intended to do, Rothleder said.

First: It’s a voluntary market.

Second: The market is built on the idea that each participant maintains responsibility for its own BAA, unlike in a full RTO.

“You put those two things together and I think you get to the point where the balancing area, in order to maintain their reliability, can’t rely on EIM to avoid capacity upgrades that they may need to meet their [integrated resource plan], resource adequacy or flexible capacity needs,” Rothleder said.

Any participant that leans too heavily on the market for reliability needs puts itself at risk because the market is oriented toward short-term resource sufficiency. The market penalizes those participants that come into an hour short of resources.

“If you fail those [short-term sufficiency] tests, you basically are isolated and you stand alone, and at that point you have to rely on your own flexibility and capacity,” Rothleder said. “You are not able to rely on the rest of the Energy Imbalance Market.”

caiso eim capacity — Graph shows the frequency of flexible ramping sufficiency test failures for APS during the fourth quarter. Failure of the test ahead of an operating hour puts an EIM participant at risk of being isolated from the market during the interval, requiring it to draw on only its own resources to meet ramping needs. | *CAISO*

The EIM is designed to ensure that participants come into the market with adequate resources while benefiting from the economic efficiencies of intra-hour dispatch. “But you don’t necessarily get the benefit of avoiding long-term capacity,” Rothleder said.

EIM vs. ISO

That’s the difference between the EIM and full participation in the ISO. “Under full participation, those types of issues — long-term capacity, long-term resource adequacy — become subsumed under the umbrella of the footprint of the integrated balancing area,” Rothleder said. “Then you can deal with those things.”

Rothleder pointed out that studies quantifying the benefits of the EIM have addressed only short-term efficiency, not long-term capacity.

EIM governing body member Doug Howe pressed Rothleder on the issue. “You said the benefits of EIM don’t include the value of avoided capacity costs, but that’s not to say that there isn’t avoided capacity costs in the EIM,” Howe said. “Am I correct?”

Rothleder responded that getting credit for EIM-based capacity would come down to a “judgment call” between the participant and its state utility commission. And he also pointed to the risks of taking that approach.

“Do you now avoid getting flexible capacity in the area and setting up your own sufficiency?” Rothleder said. “Because if you do that, you run the increased risk of coming in short. And if you’re short, you’ve got to be able to manage those variabilities on your own.”

Governing body member Carl Linvill pointed out that EIM members have touted the market’s contribution to improving their own knowledge of their systems and ability to optimize processes. “It seems to me that speaks to some flexibility benefit associated with onboarding” with the EIM, Linvill said.

The improvements associated with transitioning from manual to the EIM’s automated dispatch would still be considered short-term benefits, Rothleder said.

Linvill asked whether EIM members could reduce their reserve margins after participating in the market over a period of time.

Reserve margins are generally tied to peak load, which doesn’t change with the EIM, Rothleder said.

“Can they factor in other things? Potentially,” he added. “But I think that becomes a real judgement call to rely on the EIM, so I can’t speak to that.”

CAISO CEO Steve Berberich said the issue pointed to the limitations of the EIM.

“This is one of the benefits of a fully integrated market: You get capacity benefits,” Berberich said. “You don’t get capacity benefits in the Energy Imbalance Market — and I’ll just leave it at that.”

February 3, 2017

FERC Rejects MISO’s 3-Year Forward Auction Proposal

By Amanda Durish Cook

It’s back to the drawing board for MISO, as FERC on Thursday rejected its proposed three-year forward capacity auction in its retail-choice areas, saying it would create too much price volatility and uncertainty.

The commission dismissed MISO’s 1,700-page proposal with an unusually short eight-page order — an apparent sign of its haste to rule before it loses a quorum with the resignation of Commissioner Norman Bay effective Feb. 3 (ER17-284).

miso ferc forward auction — Stakeholders discuss the competitive retail solution at the MISO’s September 2016 Board of Directors Week in St. Paul, Minn. | © *RTO Insider*

The commission sided with MISO’s Independent Market Monitor, who opposed bifurcating the RTO’s capacity market by holding a forward capacity auction for competitive load three years prior to the current Planning Resource Auction.

A market-wide clearing process that operates within a single set of transmission capability constraints and supply offers is more efficient than a bifurcated capacity market, leading to better price formation, FERC said.

The commission also pointed out that a single market-wide auction is the current practice in all commission-jurisdictional capacity markets. MISO was attempting to single out its competitive retail areas, which account for less than 10% of total MISO load, FERC noted.

Volatility Concerns

The commission also said the three-year gap between forward auction and PRA could lead to “unpredictable and variable supply participation,” which could drive up price volatility in both auctions.

“Given the limited amount of demand that will be represented in the forward auction, relatively small changes in supply participation from noncompetitive retail areas on a year-to-year basis could result in substantial unnecessary year-to-year differences in forward auction clearing prices, even with a downward sloping demand curve that should reduce price volatility,” FERC said.

The introduction of a downward-sloping demand curve in the forward auction while preserving a vertical demand curve in the PRA also creates an inconsistent amount of capacity clearing in the forward auction and could intensify volatility in the PRA, FERC said.

It also said that MISO had not given enough thought to how transmission capability across zones and the MISO North-South contract path would be divided between the two auctions or how those allocations would impact clearing prices.

The commission noted that in MISO’s past prompt auctions, transmission capability constraints have caused significant price separation between zones. An insufficient amount of transmission capability in the PRA could prevent load-serving entities from procuring lower-cost capacity. A transmission shortage in the forward auction could cause price separation “that does not truly reflect the physical limitations of the system or the locational need for capacity,” FERC said.

“We appreciate the efforts of MISO and its stakeholders to address the important objective of resource adequacy and recognize that the [Competitive Retail Solution] proposal represents a significant undertaking. However … we find that MISO has not adequately supported” it, FERC said.

MISO Ponders Response

Richard Doying, MISO executive vice president of operations and corporate services, said that even though the order was a short read, staff continue to examine it. He said the RTO will approach its stakeholders for suggestions in the coming days.

“There are lots of smart people reading it and looking it over and over,” Doying told the Markets Committee of the Board of Directors during a Feb. 3 conference call. Doying also said MISO is not ruling out a request for rehearing.

Deputy General Counsel Eric Stephens said lack of a commission quorum moves MISO into “unchartered territory” with contested matters, which will be put on hold.

MISO’s proposal, filed Nov. 1, drew more than 40 comments and protests at the end of 2016 from critics, including the Monitor, which included in its protest a proposal for a two-stage prompt auction. (See MISO Forward Auction Filing Draws Protests.)

In a departure from normal practice, the commission did not provide a detailed description of — or response to — the protests.

“I think the FERC order is consistent with the concerns we raised, so we’re not unhappy with that, except that FERC didn’t provide any guidance,” Monitor David Patton said.

Patton said the commission’s lack of guidance in the order “creates uncertainty” and expressed disappointment that his two-stage prompt auction proposal was not addressed.

MISO spokesman Jay Hermacinski said the RTO’s effort to determine its next steps “will be complicated by the lack of detail” in the order concerning the reasons the proposal was rejected and the lack of guidance on how MISO can correct it.

“MISO appreciates the time and effort states and other stakeholders have already contributed to resource adequacy efforts in the MISO region,” he said in a statement Friday. “We will continue to work closely with them while seeking opportunities to gain guidance from the commission.”

Acting Chairman Cheryl LaFleur pledged to issue as many orders as possible before losing Bay, who announced his resignation after President Trump replaced him with LaFleur on Jan 26.

His resignation will leave the commission with only LaFleur and Commissioner Colette Honorable, one short of the three-person quorum required to act on major orders and rulemakings. The commission can continue to issue routine decisions under authority delegated to office directors. (See Backlog, Delays Feared as FERC Loses Quorum.)

February 3, 2017

LaFleur Reinstates Morenoff as FERC General Counsel

By Rich Heidorn Jr.

WASHINGTON — Acting FERC Chairman Cheryl LaFleur on Thursday named David Morenoff as general counsel, replacing Max Minzner, a longtime associate of former Chairman Norman Bay.

The move restored Morenoff to the position he held during LaFleur’s previous stint as chair.

LaFleur also named Steven Wellner, her legal adviser since April 2014, as acting chief of staff. Jamie Simler, who had been Bay’s chief of staff, returned to her previous position as director of the Office of Energy Market Regulation in January.

LaFleur also named Terry Turpin as director of the Office of Energy Projects (OEP), effective Feb. 18, following the previously announced retirement of OEP Director Ann Miles. John Wood will succeed Turpin as the number two official in the office, but with an acting title.

The announcements were the latest dominoes to fall as a result of President Trump’s appointment of LaFleur as acting chair Jan. 26. The move prompted Bay to announce his resignation effective Feb. 3, a departure that will leave the commission short of the three members needed for a quorum. (See Backlog, Delays Feared as FERC Loses Quorum.)

Like Bay, Minzner decided to leave the commission rather than accept a demotion. LaFleur’s announcement said that Minzner had “decided to leave the agency to pursue other opportunities.”

Minzner met Bay while working as a law clerk at the U.S. Attorney’s Office in New Mexico about 20 years ago. Minzner was named general counsel in September 2015 after serving as Bay’s adviser and special counsel in 2009-10 when the latter headed FERC’s Office of Enforcement. (See Bay Replaces FERC General Counsel.)

Morenoff served as acting general counsel for nearly two years before LaFleur gave him the full title in August 2014. A graduate of Harvard Law School, he joined FERC from Troutman Sanders in 2006, after serving as a legislative aide to U.S. Sen. Jack Reed (D-R.I.). In addition to his work in the general counsel’s office, he also served as senior legal and policy advisor to former Chairman Jon Wellinghoff.

Wellner, a Georgetown University law graduate, joined FERC in 2012 from Dickstein Shapiro.

February 3, 2017

GDF SUEZ to Pay $82M in PJM Market Manipulation Settlement

By Rory D. Sweeney

GDF SUEZ Energy Marketing will pay almost $82 million to settle market manipulation charges for offering generation below cost to capture make-whole payments in PJM.

FERC on Wednesday approved a consent agreement between the company and the commission’s Office of Enforcement that requires GDF to disgorge $40.8 million to PJM and pay a civil penalty of $41 million to the U.S. Treasury. GDF did not admit or deny the allegations (IN17-2).

The Troy Energy gas-fired plant in Luckey, Ohio, is one of the units GDF Suez used to own in PJM.

Enforcement charged GDF with violating the commission’s Anti-Manipulation Rule for an improper bidding strategy designed to increase its receipt of lost opportunity cost credits (LOCs).

According to the settlement, the Houston-based power marketer offered below-cost bids on some of its 12 natural gas-fired units to clear PJM’s day-ahead market and profit off the LOCs when the units weren’t dispatched in real time. GDF used a probabilistic, risk/reward approach to compare when units were unlikely to be dispatched against the risk of running the units at a loss, the settlement said.

GDF’s strategy was implemented between May 2011 and September 2013, when Enforcement questioned the practice. The scheme involved 12 simple cycle combustion turbines totaling 1,800 MW at four plants. Based on dispatch history, the company initially expected low energy margins from the units, which did not run often, and that their primary revenue source would be capacity payments.

GDF’s parent company rebranded as ENGIE in 2015, and in 2016 Dynegy purchased its U.S. fossil fuel generation assets. (See Dynegy Files Mitigation Plan for Purchase of ENGIE Plants.)

GDF’s practice took advantage of PJM’s LOC rules, in which CTs that clear day-ahead auctions but aren’t dispatched are paid the difference of the real-time LMP and the higher of the unit’s price-based or cost-based energy offers. Because the formula didn’t subtract start-up and no-load costs, a generator with a day-ahead award could earn a greater margin when it received LOCs and was not dispatched by PJM in the real-time market than it would earn if it was dispatched.

GDF furthered its strategy by discounting its cost-based offers to the level of its price-based offers to ensure the units cleared the day-ahead auctions. The strategy also ensured that the LOCs it received would continue to be based on the discounted offer and would be higher than if based on the units’ estimated costs.

When the company expected that a unit would be dispatched in the real-time market, it typically offered the unit at or above cost and did not discount its day-ahead energy offer. It also typically offered uncommitted units that were not eligible for LOCs in the real-time market without discounting.

“As [GDF] gained experience in implementing the strategy, it became more aggressive in discounting offers for the CT units to get [day-ahead] awards in order to obtain LOCs, at times offering them with discounts as deep as -$25/MWh,” the settlement said.

The company has instituted additional compliance policies to prevent manipulative behavior in the future and will continue to conduct compliance training, the settlement said.

The company also submitted to monitoring and filing an annual compliance report. Enforcement can require a second annual report at its discretion. The compliance report must identify any known violations of commission regulations that happened during the reporting period and detail all compliance actions taken.

PJM’s payment is to be used at the RTO’s discretion — with Enforcement’s approval — to benefit its members.

February 3, 2017

EIM Benefits up 8% in Q4 with APS, Puget Sound Additions

By Robert Mullin

The Western Energy Imbalance Market (EIM) saw total financial benefits grow 8% during the fourth quarter of 2016 with the addition of Arizona Public Service and Puget Sound Energy as participants, according to a report released by market operator CAISO.

The EIM generated gross benefits of $28.3 million during the quarter, up $2.1 million from the third quarter. The increase came despite typically lower electricity demand in the EIM area during the fall months, the ISO said.

The market has yielded $142.6 million in benefits for its members since being launched in November 2014, the ISO estimates.

EIM operations also helped to displace more than 10,000 metric tons of greenhouse gas emissions during the fourth quarter by enabling the dispatch of 23,390 MWh of surplus renewable energy output from California that would have otherwise been curtailed.

“That avoided curtailment is effectively being used to meet energy needs across the Energy Imbalance Market, and it basically is displacing emitting resources potentially elsewhere in the footprint,” Mark Rothleder, CAISO vice president of market quality and renewable integration, said during a Feb. 1 meeting of the EIM’s governing body.

Rothleder also said that the ISO predicts avoided curtailments to rise sharply with increased renewable energy production during late winter and spring this year. That seasonal pattern will be compounded by increased hydroelectric output stemming from an unusually high water year. The uptick in generation will coincide with low seasonal loads for California and the rest of West.

10-Year Peak for Hydro

Casey Cadle, a real-time operations shift manager for the ISO, said that California faces the heaviest hydro conditions in 10 years. “We’re also going to be having more solar than we’ve ever had in our system, so it’ll be an interesting time of year for us,” Cadle said.

CAISO’s report showed a more even distribution of EIM gross benefits among members compared with the third quarter, when Portland-based PacifiCorp reaped more than half the total among the three participants, which at the time included just NV Energy and the ISO. (See PacifiCorp Increases Share of EIM Benefit in Q3.) APS and PSE began transacting in the market Oct. 1, 2016. (See Arizona Public Service, Puget Sound Energy Begin Trading in the EIM.)

The fourth quarter saw PacifiCorp realize almost $9 million in benefits, compared with $8.7 million for CAISO, $5.9 million for APS, $3.1 million for NV Energy and $1.6 million for PSE.

The benefits represent either cost savings — for example, the reduced need for reserves and greenhouse gas credits — or increased profits from merchant operations. The market’s ability to reduce curtailments also enables participants to collect renewable energy credits that would not otherwise be issued.

The benefits calculation nets out inter-balancing authority area (BAA) transfers that were scheduled ahead of the EIM’s 15- and five-minute market runs to avoid attributing contracted flows to the market.

Arizona ‘Freeway’

The report also showed that a significant amount of energy flowed from the PacifiCorp-East BAA into APS, and then again from APS into CAISO, suggesting that the Arizona utility’s transmission network is fulfilling its potential of becoming a major transit point between the interior West and California based on its ample transfer capability. (See Smooth EIM Transition for Arizona Public Service, Puget Sound Energy.)

“We can transfer a lot back and forth with PacifiCorp, NV Energy and the California ISO,” Justin Thompson, APS director of resource operations and trading, said last year after the company began operating in the market. “We’re kind of the freeway of the EIM system there.”

Rothleder noted that the prevailing transfers during the fourth quarter came out of PacifiCorp-East, with additional supply being picked up on parallel paths crossing Nevada and Arizona for delivery into California. Some flows continue north into the PacifiCorp-West BAA in Oregon.

The middle of the day often brings a reversal, as CAISO exports its excess supplies to inland areas.

“So there’s times where California is pushing and transferring back out to Arizona, to Nevada and on to [PacifiCorp-East], and that’s exactly how the Energy Imbalance Market is supposed to work,” Rothleder said.

CAISO says that transfers across BAAs are a significant contributor to EIM benefits because they provide participants access to lower-cost supplies, even when factoring in GHG compliance costs for energy imported into the ISO.

“The transfers are reflective of the economics and the system conditions at the time, and you’ll see this change and adapt as you change into different seasons,” Rothleder said.

February 3, 2017

FERC Calls Hearing on Transource ROE Request for AP South

By Rory D. Sweeney

FERC approved a formula rate requested by Transource Energy for its AP South Congestion Improvement Project, but suspended its implementation pending a hearing on whether the company’s proposed return on equity is reasonable (ER17-419).

PJM last year approved a $340.6 million proposal by Transource and Dominion High Voltage to address the congestion issue along the border of southwestern Pennsylvania and northwestern Maryland, despite criticism from other stakeholders. Transource’s part will include two 230-kV double-circuit lines about 42 miles in total: one between the Ringgold substation and a new Rice substation, and another between the Conastone substation and a new Furnace Run substation. (See FERC OKs Transource Pact on AP South Congestion Project.)

Transource, a joint venture of American Electric Power and Great Plains Energy, had requested a 10.4% base ROE, but protesters — including Old Dominion Electric Cooperative and American Municipal Power — argued that Transource incorrectly calculated the median of comparable rate proposals on which it based its request. The commission questioned the proposal as well and ordered an evidentiary hearing. The rate formula, including the approved ROE, will be effective Feb. 1.

The commission also rejected Transource’s proposed 50-basis-point “risks and challenges” adder, saying Transource “has not demonstrated that the project faces risks and challenges either not already accounted for in the applicant’s base ROE or addressed through risk-reducing incentives.”

The commission granted other requests, including a 50-point adder for RTO participation, 100% recovery if the project is abandoned, inclusion of the project under construction into the rate base and a hypothetical 60% equity/40% debt capital structure until the project is in service or secures permanent financing.

ODEC and AMP had protested the hypothetical structure, but Transource argued it was helpful for securing investors during a critical period for the project. Transource noted that it will likely have to negotiate for access to about 300 properties.

AP South is the first competitively awarded transmission project in Maryland and Pennsylvania, as well as the first competitive market efficiency project in PJM. The RTO expects it to produce approximately $620 million in congestion savings over 15 years. It’s expected to be in service by June 1, 2020.

February 2, 2017

FERC OKs NYISO DR Cost Allocation

By William Opalka

FERC on Monday granted partial rehearing of a 2013 order that rejected a NYISO cost allocation method for some uplift costs under Order 745 (ER11-4338-001).

The commission partially reversed itself and said that a cost allocation method it previously rejected appropriately assigns those costs to transmission customers, including the New York Power Authority, which it had previously determined was exempt.

ferc nyiso dr cost allocation demand response — NYPA’s Robert Moses Niagara Generating Station

Order 745 amended regulations for compensation of demand response resources participating in wholesale markets. To pass the required net benefits test, FERC ordered RTOs to develop a mechanism to approximate the price level at which dispatching demand response resources will be cost-effective.

“In the May 16, 2013, order, the commission rejected NYISO’s original August 19, 2011, proposal to allocate demand response costs as Schedule 1 uplift costs that are then allocated to transmission customers on the basis of load ratio shares, because NYISO had failed to demonstrate how its proposal appropriately allocates costs to those that benefit from demand reductions,” FERC wrote. “We grant rehearing of the cost allocation issue and find that NYISO has demonstrated that its original proposal to allocate the costs of demand response as Schedule 1 uplift costs that are then allocated to transmission customers on the basis of load ratio shares appropriately allocates costs to those that benefit from demand reductions.”

NYISO had argued that FERC applied an unnecessarily narrow interpretation of the order’s cost allocation requirements by exempting bilateral contracts from the DR day-ahead program. It also argued FERC was imposing different requirements in New York than it did in other RTOs.

FERC’s ruling means the cost allocation will apply to the NYPA, which sells power to retail customers in bilateral contracts, including businesses that participate in the state’s economic development programs. That load is mostly served by the authority’s hydropower system, but it also participates in the NYISO wholesale market.

The commission granted the ISO’s request for a flexible effective date and ordered a compliance filing within 60 days.

In other issues addressed by the order, FERC:

Dismissed a rehearing request by DR supporters claiming discrimination against behind-the-meter resources. The commissions said it was beyond the scope of the proceeding and moot as NYISO has resolved the issue.
Found the ISO had justified its exclusion of off-peak hours from the calculation of the net benefits threshold by “demonstrating the different thresholds for applying the net benefits test using all hours and using only peak hours (HB13 through HB19) for the reference months” in its original compliance filing.
Said the ISO has supported selection of the highest point on its representative supply curve at which supply becomes inelastic as the threshold point for the net benefits test. “We find persuasive NYISO’s description that the lower of the possible points of unitary elasticity is an artifact of the mathematical smoothing function rather than a point on the supply curve with economic significance.”
Ruled NYISO’s existing cap for the in-day adjustment and its proposed measurement and verification methodology comply with the requirements of Order 745.
Agreed with the ISO that the hourly calculation of load ratio shares for cost allocation should be performed instead of the current daily calculation.

February 2, 2017

Court Rules for Northern Pass on Right-of-Way Access

By William Opalka

The New Hampshire Supreme Court ruled on Tuesday that state transportation officials — not landowners — can determine if the Northern Pass transmission line can be buried in a highway right of way.

The Society for the Preservation of New Hampshire Forests sued in late 2015, maintaining that Eversource Energy needed its permission to bury the line through its property, even though previous owners granted a right of way to the state Department of Transportation for a roadway that is now the four-lane Route 3.

The court ruled that jurisdiction rests with the department. It also said there is no material difference in the permission granted in 1931 between a surface highway and a developer’s attempt to build an underground transmission line today.

The unanimous ruling agreed with a lower court that ruled against the group. (See Court Dismisses Complaint vs. Northern Pass.)

“We conclude that use of the Route 3 right of way for the installation of an underground high voltage direct current electrical transmission line, with associated facilities, falls squarely within the scope of the public highway easement as a matter of law, and that such use is within the exclusive jurisdiction of the DOT to regulate,” the court wrote.

Jack Savage, a spokesman for the Forest Society, was surprised by the ruling when contacted by RTO Insider on Tuesday, as he was awaiting a schedule for oral arguments. Atop the ruling was a notation from the court that “oral argument is unnecessary.”

The organization owns a parcel of land along Route 3 in northern New Hampshire known as the Washburn Family Forest, and it granted easements to the DOT.

“As we’ve previously noted, the Forest Society has frequently demanded Northern Pass be buried, yet in this case, had filed this lawsuit to prevent its burial,” Northern Pass said in a blog post.

The Forest Society said the ruling merely delays resolution of eminent domain questions that will eventually return to the Supreme Court.

“The Supreme Court’s decision regarding the Forest Society’s lawsuit against Northern Pass is unfortunate in that it puts off until later a private property rights issue of extraordinary importance to New Hampshire landowners. In short, the court punted,” it said in a statement.

Northern Pass is a proposed 192-mile transmission line that would import 1,090 MW of Canadian hydropower from Quebec to be fed into the New England power grid. Sixty miles of the route is proposed to be underground.

Eversource says additional burial would make the project uneconomic. Opponents want the entire route underground.

The project is before the state’s Site Evaluation Committee, with its ruling due in September.

February 2, 2017

UPDATED: GOP Overcomes Democrat Boycott on EPA Pick

By Ted Caddell

Republicans on Thursday suspended committee rules to approve Oklahoma Attorney General Scott Pruitt as EPA administrator, sending him on to the full Senate.

The Senate Environment and Public Works Committee voted 11-0 for Pruitt after suspending rules requiring the presence of at least two Democrats to hold votes. The Finance Committee took a similar step Wednesday to overcome a boycott that had blocked the confirmations of President Trump’s Treasury secretary and Health and Human Services secretary nominees.

Republicans on the environment committee acted after Democrats boycotted a meeting Wednesday, in response to Chairman Sen. John Barrasso’s (R-Wyo.) rejection of their request for a delay so Pruitt could answer more questions.

epa democrat boycott scott pruitt — Pruitt at his Senate confirmation hearing | © *RTO Insider*

“Committee Democrats and I sent many questions and document requests to Mr. Pruitt over a month ago. We believe these inquiries, and our questions for the record, elicit information from the nominee that he possesses and that he should be able to provide to the committee,” the ranking Democrat, Sen. Thomas Carper (D-Del.), wrote in a letter to Barrasso. “Failure on his part to do so is not only an affront; it also denies Democratic committee members, and all members of the Senate, information necessary to judge his fitness to assume the important role of leading the EPA.”

In the Democrats’ absence Wednesday, the Republicans spent nearly an hour rebuking their colleagues.

1,200 Questions

“Let’s be clear. Attorney General Pruitt has answered … 1,200 questions. He answered over 1,000 more questions than the EPA administrator nominees for the incoming Obama, Bush and Clinton administrations,” Barrasso said. “The minority may not like all of Attorney General Pruitt’s answers, but he has given them answers.”

“If a student doesn’t show up, they flunk the class. If an employee doesn’t show up, they get fired,” said Sen. Shelley Moore Capito (R-W.Va.). “Failing to show up does not serve our constituents.”

Sen. Joni Ernst (R-Iowa) said the move by Democrats has gone past vetting. “There comes a point where vetting has been turned into obstruction,” she said. “I would ask my colleagues on the other side: What is the true purpose of their witch hunt?”

Sen. Jerry Moran (R-Kan.) was more blunt, calling the boycott “governing by tantrum.”

During Pruitt’s six-hour confirmation hearing before the committee Jan. 18, Democrats cited Pruitt’s campaign contributions from the oil and gas industry and his 14 lawsuits against EPA as attorney general. They included challenges to the Cross State Air Pollution rule (CSAPR), the Mercury and Air Toxics Standards, regional haze rule and emission regulations on new power plants. Pruitt did say he did not agree with President Trump’s claim that climate change is a hoax, but he has led the legal fight by states against EPA’s Clean Power Plan. (See Dems Unmoved by EPA Pick’s Charm Offensive.)

‘Deeply Concerned’

Carper’s letter to Barrasso on Monday said he and his Democratic colleagues were “deeply concerned” about the answers Pruitt gave in response to the senators’ written questions.

Carper cited Pruitt’s refusal to provide communications he had with representatives of agricultural companies regarding water quality litigation between Arkansas and Oklahoma. Pruitt said the records could be obtained under the Oklahoma Open Records Act.

“Mr. Pruitt provided this answer 19 times in response to questions several Democrats posed on a variety of matters. We are deeply concerned that senators are being directed by a nominee to obtain information on his record outside of the confirmation process — especially given that the Oklahoma Office of the Attorney General has a two-year backlog on such record requests,” Carper wrote.

Carper said Pruitt also was unable to name a single EPA regulation that he supports, responding “I have not conducted a comprehensive review of existing EPA regulations.”

“Based on the lack of substance with respect to many of his answers,” Carper said, “it is unclear whether Mr. Pruitt supports any clean air or clean water federal regulations.”

Democrats were particularly upset that Pruitt refused during the confirmation hearing to commit to recusing himself from agency matters dealing with pending litigation he initiated, or in which he participated, as Oklahoma attorney general. Pruitt said he would consult with EPA’s ethics counsel on a case-by-case basis.

Sen. Jeff Merkley (D-Ore.), one of the senators who boycotted the meeting, issued a statement explaining why. “Until Scott Pruitt answers these important questions, until he clarifies his positions and tells us how he is going to resolve the many conflicts of interest his nomination poses, it would be irresponsible for the committee to vote on his nomination,” Merkley said.

Because only Supreme Court nominees are subject to a filibuster on the Senate floor, Democrats won’t be able to block Pruitt’s nomination without Republican defections.

On Tuesday, the Senate Energy and Natural Resources Committee approved Rep. Ryan Zinke (R-Mont.) as secretary of the Interior Department and former Texas Gov. Rick Perry as energy secretary. Zinke’s nomination was approved 16-6 with four Democrats joining all Republicans in support. Perry was approved 17-6. The two nominations move to the full Senate, where they are expected to be approved.