CARMEL, Ind. — MISO and PJM are close to implementing a targeted market efficiency project (TMEP) type and poised to approve six such projects with cross-regional benefits.
During the Nov. 15 MISO and PJM Joint and Common Market meeting, Jesse Moser, MISO manager of infrastructure studies, said the RTOs must make a FERC filing to change their joint operating agreement in addition to individual filings on how they plan to handle cost allocation.
Moser said the RTOs prefer making the necessary three filings simultaneously, but they would file standalone JOA changes before the end of the year if certain regional cost allocation details are not finalized in time.
“We’re happy to see this move forward,” Moser said.
The two RTO’s staff say the final six projects are expected to cost about $17.25 million and deliver $111.6 million in reduced congestion on market-to-market flowgates, an average 6.5:1 benefit-to-cost ratio.
The RTOs examined 50 market-to-market flowgates and produced the final six from a pool of 13 potential upgrades. The final six exclude the previously recommended Klondike-Purdue 138-kV project in north-central Indiana, which did not advance because of the discovery that the congestion the project was designed to relieve was outage-driven. (See 7 Sites Eyed for MISO-PJM Targeted Market Efficiency Projects.) “These are meant to be lower cost projects … that have near-term economic benefits,” Moser explained.
At a Nov. 17 conference call of MISO’s Regional Expansion Criteria and Benefits Working Group, transmission engineer Adam Solomon said the RTO will pursue a bifurcated cost allocation for the TMEPs. MISO proposes to assign cost to a local transmission pricing zone when the constraint is on the transmission of one or more transmission owners. For constraints wholly within PJM, MISO is seeking a postage stamp allocation for all of the MISO North region.
Solomon said MISO decided on a postage stamp for projects within PJM because all local transmission pricing zones would gain from lowered congestion.
PJM officials did not discuss their cost allocation plans at the meeting. Spokeswoman Paula DuPont said the regional cost allocation is being developed by PJM’s Transmission Owners Agreement-Administrative Committee.
The two-option proposal would apply to both RTO’s current batch of TMEPs. “We’re certainly open to looking at it in the future if we can get a better cost allocation,” Solomon said.
Shelly-Ann Maye, representing Midwest Power Transmission Arkansas, said she didn’t understand why a postage stamp allocation could be justified when local beneficiaries in MISO could be identified.
“These projects are avoiding future congestion in MISO, and that congestion gets pretty well spread out in the footprint,” Solomon explained.
Of the six TMEPs currently being considered, the Marysville-Tangy 345-kV project in central Ohio is the only project that would qualify for the postage stamp allocation, as it is located wholly within PJM, Solomon said.
| MISO
Solomon also said the cost allocation rules will only apply to the PJM-MISO seam. MISO staff said they plan to collect more SPP day-ahead market-to-market information and expect to begin discussions with SPP on a similar project type.
“Having this cost allocation spelled out in the JOA and Tariff, I think, will help these projects go through and we can get the benefit of those projects we’re forecasting,” Solomon said.
Wisconsin Public Service’s Chris Plante said his utility was hoping for 50% local pricing zone allocation and 50% postage stamp allocation for all TMEPs.
“We think this is the best proposal that we have at this point with stakeholder feedback considered,” Solomon said.
Retirement Coordination
Neil Shah, MISO adviser of seams administration, also said that both RTOs are planning to file a generator retirement coordination process with FERC by Dec. 15. Shah said the final language was largely unchanged from what was proposed last month. (See MISO Outlines Retirement Coordination with PJM.)
LA QUINTA, Calif. — While the loss of the San Onofre nuclear plant complicated California’s response to the closure of the Aliso Canyon natural gas storage facility last year, planners did benefit from actions taken in the wake of the plant’s 2013 shuttering, according to California Public Utilities Commissioner Catherine Sandoval.
“All of that work helped us to better withstand Aliso Canyon when the number one source of natural gas was no longer available,” Sandoval told an audience at the National Association of Regulatory Utility Commissioners’ 128th Annual Meeting.
In response to the shutdown of San Onofre — the largest generator in the state’s most populous area — officials ordered transmission upgrades, installation of synchronous condensers to facilitate the flow of electricity into the Los Angeles area and “a variety of things to help keep the system up and running electrically,” Sandoval said.
The loss of Aliso Canyon prompted the CPUC to authorize additional measures to shore up the region’s grid, including accelerated deployment of energy storage and expedited interconnection procedures. The state also stepped up implementation of demand response to shave summer electricity — and, by extension, natural gas — demand.
“This isn’t your father’s demand response; this is auto-DR,” Sandoval said. Among the most successful auto-DR programs: air-conditioner cycling, which allowed utility customers to select from a range of potential curtailments of their cooling units during periods of high electricity demand.
Aliso Canyon | California Governor’s Office of Emergency Services
The program yielded 300 MW in DR, Sandoval said. “That’s a peaker plant. So we were able to get a negawatt peaker through auto-DR,” Sandoval said.
Southern California weathered the summer without incident on either the gas or electricity system. Now planners are turning their attention to winter, when heating requirements create a second peak for gas demand not driven by electricity generation. (See CAISO Seeks to Extend Aliso Canyon Gas Rules Through Winter.)
While Aliso Canyon owner Southern California Gas has been testing the storage facility for leaks, the CPUC still hasn’t authorized reopening. No set timetable has been established for bringing the facility back online.
“We really have to come up with new messages [for consumers] that are actually well-tailored to the winter side,” Sandoval said. “We have to think about what sorts of programs can we adopt to really ensure that there’s gas sufficiency so that we don’t run into problems, especially if we’re not able to bring Aliso back online.”
NYISO and PJM are finding that coordinating transmission across their border is not simple.
After an effort to make it easier for traders to schedule imports from New York failed at the Nov. 2 Market Implementation Committee meeting, stakeholders will resume efforts at a special MIC meeting Dec. 21.
Vitol’s Joe Wadsworth, who has championed efforts to streamline the process for several years, won stakeholder approval in April for a problem statement seeking ways to improve the method of reserving PJM spot-in (non-firm) transmission for energy imports scheduled day-ahead from NYISO. Spot-in service is free but limited and allocated on a first-come, first-served basis.
Additionally, the deadlines for requesting the service from PJM and learning the results of NYISO’s day-ahead energy auction are staggered such that participants looking to import power must reserve spot-in capacity from PJM before knowing how much they’ll need. PJM requests must be made at 9 a.m. to have any hope of success, yet the results of NYISO’s day-ahead market usually aren’t available until after 9:30 a.m.
| Josef Kubes / 123RF Stock Photo
This creates the risk that “there may not be enough spot-in service available for participants who received a cleared day-ahead schedule to import power into PJM,” the problem statement reads, which leaves them “scrambling” to find service. Failure to obtain transmission results in the import being curtailed, which “can create imbalances that must be settled against real-time prices.”
Armed with the problem statement, Wadsworth, PJM and NYISO began discussing potential solutions. NYISO, concerned about those potential imbalances creating costs for its members, proposed a market-based solution that would allocate the costs to PJM’s members.
Wadsworth also favored a market-based solution, but PJM decided, after researching potential solutions, that it would be a much more difficult implementation than the RTO preferred. As a compromise, Wadsworth and PJM developed a proposal that they thought addressed the problem without being overly complex: delay the earliest request for spot-in service from 9 a.m. to 10 a.m. so participants will know how much they need before they request it.
Wadsworth and PJM’s Chris Pacella presented the idea at the Nov. 2 MIC meeting.
“Maybe this is the simple change that eliminates all those risks,” Wadsworth said. (See “NYISO to be Consulted on Changing Spot-in Service Allocation Methods,” PJM Market Implementation Committee Briefs.)
Problem solved!
Software Changes
Except there was one catch: Pacella explained that PJM can make a deadline change for all imports, but that limiting the change to just NYISO would require time-consuming software changes.
PJM Independent Market Monitor Joe Bowring took issue with making a global change, saying it’s not consistent with the problem statement. When the issue first came up, he said, he attempted to argue that it should apply to all RTO interfaces, not just NYISO, but was “told explicitly” that was out of the problem statement’s scope. He said the correct procedural step would be to amend the problem statement to include all RTO seams.
Dan Griffiths, of the Consumer Advocates of the PJM States, agreed. “I’m kind of indifferent to the outcome, but I’d like to see this addressed properly,” he said.
PJM’s Mike Bryson cautioned against the global approach, saying it would create operational problems. “The all-borders issue causes me great concern,” he said.
Wadsworth agreed, saying he preferred to limit the scope of the deadline change to just the NYISO seam. “I think we need to think through all the consequences,” he said.
Other stakeholders, however, wanted to get to the bottom of NYISO’s concerns. “I’d like a better explanation of the mechanics of what it is that NYISO thinks is increasing the costs,” said Roy Shanker of H.Q. Energy Services. “This summary just doesn’t make sense to me. … You may or may not want to pick a fight, but I feel like everybody on both sides should know what’s going on.”
“In these preliminary stages, we’re beholden to New York’s stance,” Pacella said. He later acknowledged, however, that there is precedent for a market-based solution with the cross-seam transmission agreement in place between NYISO and ISO-NE.
An MIC vote on amending the problem statement, which was motioned by Bob O’Connell of PPGI Fund A/B Development and seconded by Jung Suh of Noble Americas, was tabled until the committee’s next meeting on Dec. 14. However, it likely won’t receive much discussion there because of the MIC special session on Dec. 21. It is scheduled from 1 to 3 p.m. at PJM’s Conference & Training Center in Valley Forge.
FERC last week granted Rochester, Minn., a waiver of its Standards of Conduct, finding that the city qualifies as a small public utility.
The commission’s Nov. 17 ruling said the waiver will remain in effect “unless and until the commission takes action on a complaint by an entity that Rochester has unfairly used its access to information to unfairly benefit itself or its affiliates” (TS15-3).
Zumbro Hydro Dam | Rochester Public Utilities
The southeastern Minnesota city sought the waiver in September 2015, claiming it met the definition of a non-jurisdictional utility. Jurisdictional transmission providers are subject to the Standards of Conduct, which require transmission function and marketing function employees to operate independently of each other and prohibit sharing nonpublic transmission information with marketing employees.
Without a waiver, Rochester said it would indirectly be subjected to the standards based on the commission’s reciprocity rules, which ensure nonpublic utilities’ access to transmission service from public utilities. The city pointed out it transferred operational control of its transmission to MISO in late 2014; the waiver requires that utilities own, operate or control “only limited and discrete transmission facilities.”
Rochester’s municipal utility serves about 50,000 customers, mostly with power purchased from the Southern Minnesota Municipal Power Agency. It owns and operates about 86 MW of generation, 42 miles of transmission and 793 miles of distribution. Early this year, Rochester officials announced that the public utility would begin building a new 47-MW natural gas plant in 2017. The utility has proposed a 3.7% rate increase in 2017.
Baltimore Gas and Electric will pay $170,530 to MISO members to end a dispute over cross-system congestion costs under a settlement approved by FERC last week.
FERC’s Nov. 17 order settles a dispute between BGE and almost 30 MISO utilities relating to the cross-system congestion costs known as Seams Elimination Charge/Cost Adjustments/Assignments (SECA). FERC said the uncontested agreement represents “a final settlement of all SECA obligations.”
| Baltimore Gas & Electric
The settlement directs BGE to pay members of the RTO $344,665 and for the RTO to collect $174,135 from its members for BGE, for a net payment by BGE of $170,530. The approval closes out dockets ER05-6-124, EL04-135-126, EL02-111-145 and EL03-212-140.
The SECA cases originated from a 2002 FERC decision allowing American Electric Power, Commonwealth Edison and Dayton Power and Light to move from MISO to PJM. The move created areas in the RTO that were cut off from the rest of the footprint and led to rate pancaking and the eventual elimination of regional through-and-out rates.
FERC approved the 16-month SECA transitional payment mechanism for 2004-2006 and upheld SECA use in 2010, but it said SECA rates recovered from MISO and PJM transmission customers were subject to refund by MISO and PJM transmission owners. The 2010 decision imposed additional SECA liabilities on BGE. MISO laid out SECA amounts in 2013, charging BGE and about 15 other PJM load-serving entities a combined $4 million in SECA charges.
LITTLE ROCK, Ark. — SPP gathered a half-dozen vendors to show off some of the latest transmission technologies before an audience of stakeholders and staff last week. A first for SPP, the Technology Expo was following a trend set by other RTOs.
“Doing these things is necessary because technology is evolving,” said Todd Ryan, director of regulatory affairs for Smart Wires. “It’s good for us because it helps us understand where our product fits in.”
Ryan was on hand to push his company’s PowerLine Guardian, a modular transmission power-flow control that the company says “will change how power grids are designed and operated.” Combined with the company’s Power Router, the Guardian addresses congestion through local control or central dispatch through devices hung on conductors and towers or deployed in substations.
“You ever hear of the Whac-a-Mole problem?” Ryan asked. “When you solve a problem in one place, it just to moves to another. Every grid has this problem, but [with Smart Wires], you have a tool to more finely tune your investment to your needs and whack more moles.”
Other speakers shared the latest on advanced conductors, topology optimization, dynamic line rating, energy storage and HVDC transmission lines. Almost three dozen members of SPP’s staff and stakeholders attended the expo, with others listening on the phone.
“All technologies are about two things: bringing new capacity to the market and integrating renewables,” said Joe Coffey of General Cable. He motioned to the screen behind him, where a slide showed higher-capacity conductors. “Hey look, a new technology!”
Jay Caspary, SPP’s director of research, development and Tariff studies, said the expo was designed to educate staff and stakeholders “of opportunities that exist today to improve grid operations and planning.”
“We look forward to continued dialogue with interested stakeholders, and we will work with members on efforts which could lead to pilot programs in the near future,” Caspary said.
FERC said last week it is considering changing the way it establishes license terms at nonfederal hydropower projects.
| FERC
The Federal Power Act allows the commission to issue original licenses for up to 50 years and renewals for between 30 and 50 years.
The commission’s current policy on renewals is to set a 30-year term when there is little or no new construction, or environmental mitigation required; a 40-year term for projects with a “moderate” amount of such activities; and a 50-year term for projects requiring “an extensive” amount of such activity.
“The purpose of this policy is to ease the economic impact of new costs and promote balanced and comprehensive development,” FERC staffer Carolyn Clarkin said in a presentation at Thursday’s open meeting. “Determining whether the measures required under a license are minimal, moderate or extensive is highly case-sensitive and largely based on a qualitative analysis of the record before the commission.”
The commission’s policy is a forward-looking approach, “such that measures adopted under a previous license term are not considered,” Clarkin added.
In a draft Notice of Inquiry (RM17-4), FERC sought comment on five potential options:
Retaining the existing license-term policy
Considering measures implemented during a prior license term
Establishing a 50-year default license term
Including a “more quantitative cost-based analysis”; and
Establishing the license term based on negotiated settlement agreements when appropriate.
The open meeting also featured a staff presentation on the commission’s dam safety program and a description of the recently opened Meldahl Project, four sets of hydropower turbines at locks and dams on the Ohio River. A joint venture between American Municipal Power and the City of Hamilton, Ohio, the 300 MW project was the first major hydropower project constructed in several decades in the U.S.
Meldahl Projet | AMP Public Power Partners
FERC regulates more than 2,500 dams with 55,800 MW of capacity, more than half of all hydroelectric capacity in the U.S. Almost 1,000 of the dams are classified as posing high or significant hazards and subject to annual inspections. The remaining, low-hazard, dams are inspected every three years.
LA QUINTA, Calif. — State commissions have a significant part to play in shaping RTO rules, but they must actively seek a place at the table when key decisions are being made, regulators and RTO representatives said during a panel discussion at the National Association of Regulatory Utility Commissioners annual conference last week.
Another takeaway: States will exercise more influence in the process when they cooperate with each other and strive to speak with a common voice.
Vermont Public Service Board Member Sarah Hoffman, the panel moderator, kicked off the discussion with a close-to-home example of the often-complicated relationship between states and RTOs.
Hoffman cited the challenges facing New England’s Integrating Markets and Public Policy (IMAPP) stakeholder process, which seeks to identify changes needed to align the region’s wholesale market with individual state energy policies, particularly those related to renewable energy. The goal of the process is to translate state policies into market rules that ISO-NE can adopt.
“It is a process that is ongoing and that has really put the states into the center of the discussion about how we are going to integrate these public policies” into the market, Hoffman said.
But it hasn’t been seamless.
“Generators and suppliers want to tear their hair out because the six states don’t all want the same thing,” Hoffman said. “Where Massachusetts wants 1,600 MW of offshore wind, Vermont has different requirements. Market participants would prefer that all the states share the same requirements.
“Based on the fact that we all have legislators, that’s never going to happen,” she added.
State Discord in PJM
“If all of the PJM states can be on the same page, that is very effective advocacy,” said Asim Haque, chairman of the Public Utilities Commission of Ohio.
That kind of unity is desirable whether the states are dealing with a “ground-up” state-initiated policy or a “top-down” PJM initiative, he said.
“The intrigue lies in when states do not agree,” Haque said.
Haque noted that the Organization of PJM States Inc. requires a 51% vote to take a policy position.
“If you’re not able to get that 51% and the states start going it alone on an issue, I think it creates a little friction between the states,” Haque said.
Indiana Utility Regulatory Commissioner Angela Weber emphasized the need for regulators to be engaged with their RTOs.
“There are a lot of commissioners who just aren’t engaged, and I think the idea is that [state commissions] don’t have jurisdiction over the RTO, so it doesn’t matter,” she said.
Weber said her work on the Organization for MISO States can seem like a distraction from state-related work, but she considers her involvement to be vital for her state’s residents.
She pointed out that MISO has approved more than $25 billion in transmission spending since 2003.
“All these costs flow through to our ratepayers,” Weber said. “If regulators in MISO want to have influence on these costs, they are better off doing so at the MISO level before the costs get passed on.”
Weber also pointed to an essential connection between state commissions and RTOs.
“There’s an intersection between the RTO’s responsibility to maintain reliability and the state regulator’s responsibility for ensuring resource adequacy,” Weber said. Through their resource planning processes, “the states effectively determine the tools that MISO has at its disposal to maintain reliability,” she said.
SPP General Counsel Paul Suskie said states wield significant influence within his RTO through the Regional State Committee. The committee has governing authority over transmission access charges, financial transmission rights, planning for remote resources and resource adequacy, while also providing input into market developments, strategy and transmission planning.
“Our CEO will tell you that when he said we were going to give state regulators this authority, some of his counterparts thought he was crazy, that it’s not going to work,” Suskie said.
The SPP model works because of the time and effort state commissions dedicate to working through market issues, Suskie said.
“Other states ask me about our governance model and I tell them, ‘From the state commissioner perspective, the good thing is you have the authority. The bad thing is you have the authority,’” Suskie said.
Stacey Crowley, vice president of regional and federal affairs at CAISO, said that a change in governance is key for enabling the ISO to expand into other parts of the West. The ISO was created in 1998 as a single-state body under California statute, with board members appointed by the governor.
That structure “will not satisfy a regional ISO,” Crowley said.
Crowley noted that regional discussions about a Western RTO have focused on the fact that each state has different policy structures, goals and procurement strategies.
“Those are all important and need to be respected in a regional ISO,” Crowley said.
While California represents a large population in the West, “its policies need to be seen as equal amongst all the states” in an RTO, she added.
CAISO has developed a model for state involvement with its Energy Imbalance Market, which features a regionally representative governing body and an advisory body of regulators that provides states with a forum to discuss market issues.
“It’s been a good way to develop a relationship and a way to communicate amongst the states,” Crowley said.
“FERC recommended MISO should explore and work with stakeholders to see if we need to change the confidentially provisions,” explained Neil Shah, MISO adviser of seams administration, during the Nov. 16 meeting of the Planning Advisory Committee.
FERC made the suggestion in an August order (ER16-1758) that largely accepted changes to MISO’s system support resource procedure. (See “MISO Planning Confidentiality, Notification Changes to Attachment Y Procedure,” MISO Planning Advisory Committee Briefs.) The commission recommended that MISO might follow PJM’s lead in notifying the public of future suspensions and deactivations as the notices are received.
“We recognize that PJM provides for even greater transparency by subjecting all official future generator deactivation requests to public notice,” FERC said. “We also encourage MISO independently to explore the possibility of allowing for greater transparency due to changing market conditions, further experience with the SSR and transmission planning processes, or other factors.”
If confidentiality is lifted, MISO would be able to publicly identify all generators that submit Attachment Y notices. Currently, the RTO keeps Attachment Y information confidential until the effective date of retirement unless its reliability study uncovers a reason to keep the unit online as an SSR or the resource owner has already disclosed the upcoming retirement.
“We definitely see merit in removing confidentiality,” Shah said. “It does help other resource owners understand the changing resource mix in MISO on a proactive basis rather than reactively.”
Shah said some generation owners submit Attachment Y notices as much as two years in advance. MISO requires six months’ notice.
MISO also said making the information public would help owners make new investments and site new projects more quickly and would facilitate more transparent discussions about reliability needs and the most useful transmission projects. Shah said having retirement notices from the start would be useful to the RTO’s Subregional Planning Meetings and its Economic Planning User Group.
Hwikwon Ham of the Minnesota Public Utilities Commission said state regulators should be involved at the beginning of retirement and suspension notices. “I think it’s now more relevant to release this data ahead of time so everyone can make a fair evaluation” for state resource planning processes, Ham said.
Shah asked for written feedback by Dec 2.
Storage Projects to be Included in Queue Rules — For Now
MISO is amending its generation interconnection Business Practices Manual to include interconnecting energy storage devices.
Shah said storage projects wishing to enter the interconnection queue will be treated like other resources and language will be added to Business Practices Manual 015 to expressly include such devices.
Energy storage projects seeking a new interconnection can follow the documented standard process to interconnect a new facility. Customers that already have an interconnection and wish to connect storage projects must request either a material modification study if their project will not exceed the megawatt estimate on their generation interconnection agreement or request an increase in generation capacity study if the megawatt amount will exceed what was estimated in the agreement.
Finally, customers wanting to connect a storage project to a pre-existing point of interconnection that they do not own must either make sure their connection will not exceed the megawatt value from the original agreement or be an affiliated company with a separate generation interconnection agreement.
Shah said the point of the BPM change is to cut a clear path for energy storage wishing to provide generation or capacity. He asked for stakeholder input by Dec. 2 and said MISO would return with updated language at the December or January PAC meeting.
Sam Gomberg, an energy analyst in the Midwest office of the Union of Concerned Scientists, asked if the rules would be open to future changes that accommodate the unique abilities of storage. He said he was seeking reassurance that MISO isn’t “foreclosing” on a more flexible process in the future.
MISO PAC liaison Jeff Webb said a larger discussion on storage integration will continue. “We do need to be prepared with basic procedures to handle immediate requests, and I think that’s what this language sets out to do,” Webb said.
Shah said the clarifying language does not require a Tariff change.
Quarterly Operating Limit Studies Charge Moved to Separate Filing
Because FERC has rejected MISO’s queue reform filing, the RTO plans make a separate filing to begin charging interconnection customers for Quarterly Operating Limit (QOL) studies, MISO’s Paul Muncy said.
Muncy said MISO has decided to pull the QOL cost responsibility language out of the larger queue reform filing in the hopes of quicker FERC approval. QOL studies determine a generating facility’s maximum permissible output.
The revised QOL language would require customers to make a $10,000 study deposit 60 days before a binding quarter begins. Differences between the actual study cost and deposit will be refunded or billed to the interconnection customer.
Because MISO plans to charge for the studies, interconnection customers will be able to opt out of the study, Muncy said.
“The QOL study may give you additional capacity for each quarter, but we do have some customers who may decide that ‘eh, it’s only one or two additional megawatts,’” Muncy said.
Muncy asked for stakeholder feedback on the proposed filing by Dec. 7.
LA QUINTA, Calif. — While the election of Donald Trump as president of the United States has clouded the future of federal energy policy, one thing is clear: President Obama’s Clean Power Plan won’t figure into it.
Such was the consensus view of a panel convened last week at the National Association of Regulatory Utility Commissioners annual conference to discuss the election’s potential impact on energy sector regulation.
“The Clean Power Plan is done — for the time being,” said Ray Gifford, past chairman of the Colorado Public Utilities Commission and formerly president of the Progress and Freedom Foundation, a now-defunct conservative think tank that advocated for reduced federal oversight of the telecommunications industry.
Gifford said the unwinding of the CPP could be part of a broader effort by Congress “to undertake broad-based regulatory reform,” which would also include eliminating the doctrine of “net neutrality” in telecommunications regulation.
Former Colorado Gov. Bill Ritter, now director of the liberal Center for a New Energy Economy, agreed with Gifford’s assessment, though he didn’t share his enthusiasm that the change would be positive.
“Ray’s right, [the CPP] is likely to be undone,” Ritter said, adding that “it’s connected back to Congress reasserting itself.”
Not So Bleak
Still, the prospects for reducing greenhouse gas emissions aren’t so bleak, speakers said.
“The interesting thing about state work is you realize that, apart from the Clean Power Plan — markets are already driving us to a variety of different methods of decarbonization,” Ritter said, acknowledging that state public policies are driving markets “to some extent.”
But markets have their limitations and cannot “dictate the timing” of dealing with issues such as climate change in a serious way, Ritter contended.
“So, what you’re going to see is a variety of states that are going to say, ‘We’re not going to let the markets control this because we think climate change is this important thing and we need to act,’” Ritter said, referring to the ambitious renewable energy standards enacted by states such as California, Hawaii, New York, Oregon and Vermont.
“It feels to me like there’s some momentum there that’s not going to be necessarily impacted by a course direction at the federal level,” Ritter said.
Moderating the panel was Montana Public Service Commissioner and outgoing NARUC President Travis Kavulla, who asked Gifford whether newly empowered Republicans would allow states to continue to pursue policies favoring renewable resources or intervene on behalf of traditional resource industries.
“I think that’s the big question, Travis,” Gifford replied. “I think Republican orthodoxy is to let the states be laboratories of democracy. You send power back to the states; you let those decisions be made closer to point of contact with the voters and the citizens.”
States’ Impacts on RTOs
But Gifford asserted that RTOs and ISOs are “being roiled by state action underneath them,” citing New Jersey and Maryland legislators’ attempt to fund new generators for their states and efforts by New York, Ohio and Illinois to subsidize existing in-state fossil and nuclear plants. (See related story, Bill to Save Coal, Nuclear Plants Introduced in Illinois.)
“That’s a big issue for the next FERC, and how they deal with it is anybody’s guess because you’ve got a lot of strains going on in markets and you’ve got a lot of states very unhappy with what markets are yielding,” Gifford said. “By watching New York, Ohio and Illinois the next six months to a year, and watching how FERC reacts and how the administration reacts, I think says a lot about the future of these wholesale energy markets.”
Devin Hartman, electricity policy manager at R Street Institute, a think tank that promotes competitive electricity markets and “limited, effective government,” said his organization “doesn’t see a clear need to reform any of the core aspects” of the Federal Power Act, although clarity is needed on what forms of state intervention in the energy sector would be viewed as acceptable under the act.
A specific area of concern: the need for a clearer line between federal and state authority over policies concerning distributed energy resources.
“It’s important to keep the core principles of the Federal Power Act intact, which has been correctly interpreted by FERC to uphold competitive markets,” Hartman said.
Conservative lawmakers might turn their attention to “tackling” the Public Utility Regulatory Policies Act, according to Gifford, who referred to the act as “strange, outdated law” with “a very bad track record.”
False Price Signals
“You can maybe give it credit for juicing the independent power production world,” Gifford said, but PURPA also created “false price signals.”
“It doesn’t fit with Devin’s competitive wholesale market model at all, and it has brought many states to their knees,” Gifford said. “So I’d start with, ‘Let’s erase it and start the bidding from there.’”
Ritter said the potential for grid modernization represented the “biggest difference” between a Hillary Clinton and a Trump administration on issues related to electricity.
“It’s something that you as commissioners should care a great deal about,” Ritter told the audience, referring to the deployment of microgrids, “smart grid” technologies and transmission network improvements.
Ritter said he hopes grid modernization will end up as part of a broader infrastructure package under the new administration.
“But there are a lot of people that hear infrastructure and they don’t think the grid,” Ritter said.
Panelists were asked to conclude the session with a bit of advice for the incoming president and Congressional leadership.
“Pay attention to science,” Ritter said. “I really respect the attention that we need to pay to markets, but markets can’t always dictate timing.” He added that the U.S. needs to understand its “role and obligation in trying to address the very serious global problem” of climate change.
Hartman said it’s important that the country take a “long-term view” on the efficacy of environmental policies that he thinks could cause economic harm without making much of a dent in overall global emissions.
“When we see international environmental progress work well, it’s when the emissions abatement technology was cheap,” Hartman said. “That’s where a long-term innovation agenda is so important.”
Gifford wrapped up with a humorous solution.
“Appoint state commissioners to federal agencies and regulatory commissions,” he said to laughter. “Pandering to the audience, you can never go wrong.”
Clark: Trump Election to Have Limited Impact on FERC
In a separate question-and-answer session with Kavulla, former FERC Commissioner Tony Clark said it was too early to tell exactly what impact Trump’s election would have on the CPP.
“We know that the new administration has indicated that they’re going to look to pull it back in some way,” he said, adding that states will likely have “more time and flexibility” to deal with the changes that would come with the plan.
Clark doesn’t see significant post-election implications for FERC as an agency.
“You tend to not see huge swings out of FERC” after elections, he said. “You’ll have a little more of a bully pulpit, maybe, on some of the reliability issues where reliability and environmental regulations come up.
“But any new group of commissioners brings a [bit of a] different perspective,” Clark said.
Clark said he thinks there’s been “an unraveling of the regulatory consensus” during the 16 years he’s worked as a utility regulator. He said regulators at one time focused on answering the question of what are the most safe, reliable and affordable forms of energy to serve ratepayers.
Now the questions are myriad.
“In some cases it’s things like, ‘How do I preserve these generation jobs in my state?’” said Clark, who agreed to join law firm Wilkinson Barker Knauer after four years on FERC and 12 years on the North Dakota Public Service Commission.
“How do I preserve my tax base? How do my utilities plan for a carbon-constrained future? How do they reduce their carbon footprint?”
Clark hedged on a question about whether electricity regulation has become more partisan.
“Maybe in some way,” Clark said. “I think so much of environmental politics has come into the job that utility commissioners do.”
Still, Clark said that utility commissions are relatively insulated from politics compared with other federal and state agencies.
Speaking of his time at FERC, Clark noted, “We often said there is no Democrat or Republican way to keep the lights on, and I think that consciously trying to keep politics at bay and out of the regulatory commission was something that was very important for the long-term integrity of the agency.”
