October 30, 2024

ERCOT Technical Advisory Committee Briefs

AUSTIN, Texas — ERCOT staff told the Technical Advisory Committee last week it is preparing a proposal to map registered distributed generation units and a white paper addressing the reliability of distributed energy resources.

Table: | ERCOT FI: TAC Chair Adrianne Brandt, Co-Chair Bob Helton lead the discussion | © RTO Insider Alt FI: ERCOT's Technical Advisory Committee meets | © RTO Insider
Table: | ERCOT

The work builds partly on that of the Distributed Resource Energy and Ancillaries Market (DREAM) Task Force, which produced a draft report earlier this year before going inactive. (See “DREAM Task Force Submits Final Report,” ERCOT Technical Advisory Committee Briefs.)

“We’re trying to look into what we need for the future … and focus our attention on improving our reporting requirements,” Kenan Ögelman, ERCOT’s vice president of commercial operations, told the TAC on Thursday.

As of late October, 541 MW of DG from competitive and “non-opt-in” entities — those not participating in the market, such as Austin Energy and San Antonio’s CPS Energy — had registered with the Public Utility Commission through their local utilities. The commission has estimated there are more than 7,600 DG locations in competitive areas, with the load expected to grow at a 10% annual rate.

Unregistered DG accounts for another 112 MW in ERCOT’s various load zones. Ögelman said there is no requirement for the ISO to gather data on unregistered DG, but that it occurs “more by happenstance.”

Under current rules, distributed resources injecting to the grid are paid the load zone price, allowing them to deliver energy in real time but giving ERCOT no notification of their intent to deploy.

In addition, distributed resources are compensated by load-zone pricing regardless of their location within the zone or their impact on congested elements. ERCOT says development of a resource node for distributed resources would improve reliability and the ability of DER to participate in its market.

ERCOT defines DG as any generating facility of 10 MW or less located at a customer’s point of delivery and connected at a voltage less than or equal to 60 kV.

Ögelman said ERCOT currently compiles DG data on from a variety of sources:

  • Load profiles and annual reports to the PUC for resources less than or equal to 50 kW;
  • Load profiles, PUC reports and unregistered DG reports for resources greater than 50 kW, but less than or equal to 1 MW;
  • PUC reports and unregistered DG reports for resources greater than 1 MW that are not exporting to the grid; and
  • ERCOT resource asset registration forms for non-modeled generation, but only from resources greater than 1 MW that export to the grid.

He explained that ERCOT no longer “ratchets down” its reporting of DG resources. Nodal protocol revision request (NPRR) 719, which was approved by the Board of Directors last December, removed a provision that reset DG registration thresholds when the total unregistered capacity of DG greater than 50 kW in any load zone reaches 10 MW. “There was an expectation of, ‘Hey, what’s going on? We have all this DG on the system, but there’s no ratcheting going on?’” Ögelman said.

He said staff is working with stakeholders and other interested parties to find a way to draft NPRR language “that addresses everyone’s concerns.” The white paper, Ögelman said, will “show the concern for reliability outcomes.”

ERCOT's Technical Advisory Committee meets | © RTO Insider"
ERCOT’s Technical Advisory Committee meets | © RTO Insider

Stakeholders had suggested staff use the annual load data request (ALDR) forms to track distributed resources, but Ögelman said, “The ALDR reports don’t have a very well-defined reporting requirement or change process around them.

“It’s difficult to aggregate and see a very good picture of the submitted load data to ERCOT.”

IT Staff Working to Prevent Further SCED Outages

Steve Daniels, ERCOT’s vice president of application development and IT operations, assured stakeholders that staff is working to prevent a repeat of recent outages of the security constrained economic dispatch (SCED) system.

In July, human error led to a 100-minute outage that affected 20 five-minute dispatch intervals. In October, a software failure with the market-management system’s interface resulted in a 75-minute outage. Two smaller SCED failures related to hardware issues also occurred in August and September. Load frequency control signals were also affected in the first three outages.

Daniels noted while SCED has failed in each of the last four months, the system operated smoothly in his first 16 months on the job. He said staff completed a “very thorough” root-cause analysis after each event, using both internal and external resources.

“I can assure you the attention paid to these [outages] and the amount of effort going into remediation, lessons learned and finding ways to ensure we don’t have this going forward is a very concentrated and focused effort,” Daniels said.

He told stakeholders staff is implementing new monitoring procedures, adding new software and working with its vendors “to make sure we don’t see these same issues pop up again.”

Daniels said additional measures have been added around the SCED system “to give us better visibility when those issues arise and what we can do about them.”

That seemed to satisfy stakeholders, who asked Daniels whether there is a way to avoid future single point-of-failures, where one system affects another. He said staff is continuing to “look at ways where we can make … data available to operate the system effectively and reliably when we have SCED issues.”

TAC Approves Ancillary Service Change, Tx Element List

TAC Chair Adrianne Brandt, Co-Chair Bob Helton lead the discussion | © RTO Insider
TAC Chair Adrianne Brandt, Co-Chair Bob Helton lead the discussion | © RTO Insider

The TAC unanimously approved staff’s proposal to make two minor changes to its 2017 ancillary service methodology. The first removes exhaustion-rate feedback from the regulation-procurement analysis, and the second adds solar generation when estimating five-minute net-load variability.

“We have 400, 450 MW of solar, so we think it’s useful to start capturing the effects,” ERCOT’s Nitika Mago said.

No changes were proposed to the methodologies for determining responsive-reserve service and non-spin reserve service.

The committee also endorsed the Reliability and Operations Subcommittee’s recommendation to approve ERCOT’s original list of high-impact transmission elements. The list will be expanded once a working group can be chartered.

NRG Texas abstained from the vote, saying it had been “late to the party” and was unable to get its comments in. The list “seems to be more backward-looking, based on an analysis of historical congestion,” NRG’s Bill Barnes said. “If [an element] didn’t cause congestion in the past, it’s difficult to get on the list.”

11 Revisions Sent to ERCOT Board

The TAC pulled NPRR773 from the list of revision requests up for a vote. Barnes, chair of the Market Credit Working Group, said the revision request includes language that expands the types of financial institutions that can offer letters of credit, but that outside counsel has proposed additional changes that are “more substantial” than those approved by his group.

The committee did approve five NPRRs, two nodal operating guide revisions (NOGRRs) and revisions to the load profiling guide (LPGRR), retail market guide (RMGRR), resource registration glossary (RRGRR) and the Verifiable Cost Manual (VCMRR).

  • NPRR783: Revises a requirement for an independent audit to confirm the consistency of ERCOT operations models. The change is to comply with NERC reliability standard MOD-033-1 requiring a documented data-validation process for power flow and dynamic models.
  • NPRR790: Adds phase angle equipment limitations to real-time monitoring, real-time assessments and operational planning analyses, as required by NERC standards. ERCOT will collect this information through the network operations modeling process.
  • NPRR791: Clarifies the initial estimated liability (IEL) description to specify that it is based on estimated sales between qualified scheduling entities (QSEs); restores the IEL for traders (inadvertently omitted from NPRR741); and corrects errors to the minimum-current exposure formula mistakenly overwritten by NPRR743.
  • NPRR797: Creates a new report and display for the actual system load by forecast zone, similar to the capability for weather zones.
  • NPRR801: Revises the physical responsive capability (PRC) calculation to include all load resources and align operating reserve demand curve (ORDC) reserves with the PRC change. It also aligns the ancillary service imbalance settlement with the change to the ORDC reserves.
  • LPGRR057: Updates the load profiling guide by eliminating language, processes and methodologies no longer necessary within ERCOT’s market.
  • NOGRR154: Allows a QSE to designate an agent to connect to ERCOT’s wide area network (WAN) and requires the ISO and market participants to use the WAN to exchange resource-specific XML data.
  • NOGRR159: Modifies the use of the term Texas Reliability Entity to distinguish between references to the NERC Regional Entity and the Texas PUC Reliability Monitor. It also clarifies that the Independent Market Monitor is an included party in several provisions related to the ERCOT stakeholder process.
  • RMGRR139: Modifies market processes to align with NPRR778’s changes to the protocols’ evaluation window for date changes and cancellations.
  • RRGRR010: Amends the seasonal net max sustainable rating definitions by including ambient conditions (including temperature and humidity) representative of conditions that exist during peak load periods in which the generation resource operates. The change is intended to correct an overestimation of summer capacity ratings for gas-fired generation. ERCOT discovered the same temperature value had been used for summer and winter seasonal ratings for a significant number of gas-fired units, with resources reporting temperatures of 36 to 110 degrees F for their summer ratings.
  • VCMRR013: Clarifies the process for appealing ERCOT’s denial of submitted verifiable costs. The changes address timelines and ERCOT representation in the appeal process and align with NPRR769, approved by the board Oct. 11.

Tom Kleckner

FERC OKs PJM, MISO Order 1000 Filing; Denies Rehearing

By Rory D. Sweeney

FERC last week conditionally approved revisions to the MISO-PJM Joint Operating Agreement on cost allocation for cross-seam transmission projects, while denying rehearing requests from PJM and the RTOs’ transmission owners (ER13-1944, et al.).

In rejecting the rehearing requests, the commission said the grid operators and TOs chose the avoided-cost-only method for allocating the costs of such projects, so any issues that method creates should be addressed within the operators’ stakeholder processes.

In a previous filing, PJM and MISO settled on a cost-allocation method that is based on how much the cross-border project saves each grid operator on regional projects it supplants. The commission, however, said the method didn’t consider regional projects that have already been selected, nor did it explain how it would measure if an interregional project is more efficient or cost effective than a regional one.

Tie lines between PJM and MISO subject to FERC Order 1000
Tie lines between MISO and PJM | PJM

MISO’s TOs asked for the rehearing because they were concerned that displacing projects that had already been selected wouldn’t allow them to recover millions of dollars in development costs incurred on those projects prior to them being abandoned. MISO’s Tariff, they noted, does not explicitly provide for such recovery.

“To the extent that MISO transmission owners are requesting that the commission mandate full cost recovery for transmission projects selected in a regional transmission plan but displaced by an interregional transmission project, we reject their request as outside the scope of the Order No. 1000 compliance proceedings,” the commission said.

“If MISO transmission owners continue to believe that these costs are not treated appropriately under MISO’s Tariff, they may pursue changes through the MISO stakeholder process and make a filing to amend the MISO Tariff or else file a complaint with the commission pursuant to [Federal Power Act] Section 206.”

FERC approved portions of the grid operators’ compliance filings, including how projects can be categorized, but it ordered additional changes to eliminate some inconsistencies. (See “MISO Order 1000 Compliance,” MISO Planning Advisory Committees Briefs.)

MISO and PJM have 30 days to make additional filings to fully comply with the order.

State Briefs

APS, SolarCity to Air TV Ads to Support Favored ACC Candidates

The fight between the parent company of Arizona Public Service and rooftop solar company SolarCity to elect their favored political candidates to the state Corporation Commission continues, as both are spending big to air advertising on television.

Pinnacle West Capital, which owns APS, is planning to spend $1 million through a newly formed political committee to get three Republicans elected to the five-member commission. SolarCity has spent about $1.4 million supporting one Republican and two Democrats, according to financial disclosures.

It is widely believed that APS spent $3.2 million in 2014 to help elect the present all-Republican commission — an allegation that APS has neither confirmed nor denied. The FBI confirmed in June that it is investigating APS and a former regulator for issues involving the 2014 elections.

More: The Arizona Republic

CONNECTICUT

State Ends Effort to Increase Natural Gas Capacity Following Neighboring Court Decisions

State officials announced last week that they are abandoning their effort to increase natural gas capacity through an upgrade to existing transmission pipelines owned by Spectra Energy.

The decision came after courts in Massachusetts and New Hampshire ruled that the cost of upgrading pipelines could not be passed along to ratepayers in those states.

“If you can’t spread the cost across the entire region, it doesn’t make any sense to continue on,” said Dennis Schain, a spokesman for the state’s Department of Energy and Environmental Protection.

More: New Haven Register

ILLINOIS

Proposed Bill Asks Ratepayers for Up to $265M to Save Nuclear Plants

exelon(exelon)Exelon may be shuttering two of the state’s six nuclear plants beginning in 2017 unless ratepayers statewide pay up to $265 million per year to save them.

Representatives of the power giant and its subsidiary, Commonwealth Edison, are seeking to pass a bill in the Legislature’s November fall veto session that would save the Clinton plant from closure in 2017 and the Quad Cities plant from closure in 2018.

A draft version of the bill — which proposes the state’s most far-reaching energy policy changes since deregulation in 1997 — also would tap ratepayers to fund new wind farms, solar installations, programs to cut power consumption and other items.

More: Crain’s Chicago Business

MICHIGAN

Senate Could Vote in Two Weeks On Compromise Energy Bill

State senators could vote in two weeks on a compromise bill requiring state utilities to generate at least 15% of their electricity from renewable energy sources through 2012 — a 5% increase over what the law presently requires.

Additionally, the bill sets a goal that utilities achieve 35% of their power from a combination of renewable sources and energy efficiency savings by 2030. It also allows alternative energy suppliers to offer competing plans when utilities propose to build new power plants.

The bill ends a logjam between Republicans, who favor letting the market dictate utilities’ choices, and Democrats and environmental groups, who believe utilities will not pursue sources such as wind or solar without a statutory requirement.

More: Crain’s Detroit Business

MISSISSIPPI

NEP Solar Plant Lawsuit Against Aberdeen Postponed

A lawsuit over a solar plant that was to be built in Aberdeen has been postponed for 30 days to allow plaintiff National Energy Partners to retain new attorneys.

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Belle

In December 2012, NEP signed a contract with Aberdeen to build a solar power system and sell electricity to the city over a 25-year period. In September 2014, NEP was assigned the rights for the project. Then-Mayor Cecil Belle subsequently canceled the contract when little progress was made over the next 12 months.

NEP argues that the contract required Aberdeen to make any complaints in writing and allow it time to correct any problems. The city argues that the contract — although signed by Belle — is invalid because the city board did not formally approve it.

More: Mississippi Business Journal

NORTH DAKOTA

Montana-Dakota Utilities Requests 6.6% Rate Increase

Montana-Dakota Utilities has filed a request with state regulators for a rate increase of $13.4 million per year, which amounts to 6.6%.

MDU also asked the state Public Service Commission to implement within 60 days of its filing an interim rate increase, which would be subject to refund if the final authorized increase is less than the interim.

The utility cited increased investments in facilities, depreciation, operation and maintenance expenses and taxes as the reasons for the proposed increase.

More: Bowman County Pioneer

OHIO

Report: Clean Energy Policies Good for Job Growth, Consumers

Two national environmental groups issued a report last week forecasting that the state would gain tens of thousands of jobs and consumers would reap millions in savings if the state increases its support for clean energy policies.

The report, issued by the Nature Conservancy and the Environmental Defense Fund, came at a time when some Republican lawmakers are seeking to extend a two-year freeze on the state’s clean energy standards, which are scheduled to be lifted at the end of this year.

The report forecasts that by 2030 state support for clean energy policies would create an increase in jobs ranging from 82,300 to 136,000 and a reduction in consumers’ electricity bills ranging from $28.8 million to $50.9 million per year.

More: The Columbus Dispatch

RHODE ISLAND

Utilidata, National Grid Strike Deal to Expand EE Technology

Technology company Utilidata has announced an agreement with National Grid for a statewide expansion of its energy-efficiency pilot program.

Utilidata has developed technology that lowers the voltage of electricity from substations to distribution lines. In 2013, Utilidata and National Grid signed a $500,000 deal for installation of the technology on its lines in Smithfield.

For this new agreement, the state Public Utilities Commission will need to approve the cost of equipment before National Grid can spend money, said David Graves, utility spokesman. The projected cost will be included in public documents when National Grid files its capital-expenses budget anticipated in late November, Graves said.

More: Providence Journal

SOUTH DAKOTA

PUC Schedules Hearing on Wind Power Price Dispute

The state Public Utilities Commission has scheduled an evidentiary hearing for April 11-14 to determine what price NorthWestern Energy should pay for electricity from three of Juhl Energy’s wind farms.

Under the Public Utility Regulatory Policies Act, NorthWestern must purchase the electricity — but the companies sharply disagree as to the purchase price, which is supposed to be equal to what the NorthWestern would pay for the power through its own generation or bought from another source. Juhl calculated $60.70/MWh, while NorthWestern calculated $24.35/MWh.

The commission is willing to pay up to $38,000 to an outside consultant to assist with the pricing analysis.

More: Rapid City Journal

VERMONT

Governor Candidates Differ on Where They’ll Go for Energy

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Scott

Both major candidates for governor say they want to achieve the state’s goals of meeting 90% of its energy needs from renewable sources by 2050 — but differ sharply on where they won’t go for energy.

Republican Phil Scott said during a televised debate that he would veto any bill calling for a tax on carbon-based fuels. He also does not want to see more wind power turbines on the state’s mountaintops.

Democrat Sue Minter said during the debate that she would not rule out a carbon tax to reduce emissions if other Northeastern states joined in. She does not want more fossil fuel pipelines, but she has said a new technology for “decarbonized natural gas” under development by a California utility could possibly change her position.

More: The Associated Press

PacifiCorp Increases Share of EIM Benefit in Q3

By Robert Mullin

PacifiCorp reaped more than half the $26.16 million in gross benefits yielded by the Western Energy Imbalance Market (EIM) during the third quarter, market operator CAISO said in a report released Wednesday.

nv energy eim pacificorp
| CAISO

The Portland-based utility earned $15.1 million in benefits — versus $5.6 million for NV Energy and $5.4 million for the ISO.  Last quarter, PacifiCorp took in a 45% share.

The EIM’s total benefit increased by $2.56 million over the second quarter.

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.

Transfers from the PacifiCorp East (PACE) BAA into NV Energy’s territory increased sharply during the period, as did transfers from NV Energy into CAISO — reversing a pattern seen during the previous quarter, when California was able to export a significant volume of surplus solar generation because of low springtime loads.

The ISO’s exports into NV Energy fell by more than half, following a 56% jump the previous quarter. (See EIM Report Shows Continued Growth in CAISO Exports.)

The drop-off in exports was largely a function of the change in seasons, Khaled Abdul-Rahman, the ISO’s director of power systems and smart grid development, told the Board of Governors during an Oct. 27 meeting. “This is because of increased [summer] load,” which absorbed more solar production, he said.

Even in their reduced state, those exports enabled the ISO to avoid curtailing 33,094 MWh of renewable generation.

CAISO also touted the EIM’s impact on the procurement of flexible ramping capacity — resources equipped to respond to the variability of intermittent generators.

Because variability can decrease in one BAA at the same time that it’s increasing in another, the EIM enables its participants to share flexible resources — allowing each BAA to procure fewer resources than would have been necessary on a standalone basis. These “flexible ramping procurement savings” were about 35% of total savings during the third quarter, the ISO reports showed.

The next quarterly report will include figures for Arizona Public Service and Puget Sound Energy, which began trading in the EIM at the beginning of October.

Abdul-Rahman gave the two utilities high marks for their market performance so far, noting that both have been coming into hourly intervals with balanced schedules more than 96% of the time.

“They are doing very well in managing their system,” he said.

He also pointed out that interconnected balancing areas within the EIM are seeing steady bidirectional transfers, indicating a true sharing of resources.

“We’re happy to see this kind of transfer — and that sometimes they’re importing or exporting,” Abdul-Rahman said. “That means the EIM is doing its job.”

PJM Markets and Reliability and Members Committees Briefs

WILMINGTON, Del. — Both manual revisions on the agenda won Markets and Reliability Committee approval by acclamation without objection.

The revisions to Manual 14A: Generation and Transmission Interconnection Process were recommended by the Earlier Queue Submittal Task Force. They include changes to the assignment of queue priority; timing, including scheduling of deficiency reviews; criteria for inclusion in feasibility studies; and fee structures.

The revisions to Manual 14C: Generation & Transmission Interconnection Facility Construction set technical standards for Order 1000 projects.

IRM Study Approved but Criticized for Lack of Winter Analysis

The MRC endorsed the 2016 Installed Reserve Margin study results. However, Tom Rutigliano of Achieving Equilibrium, who consults for demand response provider WeatherBug Home, announced his abstention because the study doesn’t make any indications about winter reliability. (See No Consensus Among PJM Stakeholders on Seasonal Resources.)

pjm markets and reliability committee members committee
| PJM

Credit Policy Changes Approved

The MRC endorsed proposed clarifications to the credit policy in Tariff Attachment Q that reorganize provisions and make five minor changes to them, none of which affects credit requirements. (See “Attachment Q Modified; Credit Requirements Unaffected,” PJM Market Implementation Committee Briefs.)

MIC Charter Changes Approved

The MRC approved the updated Market Implementation Committee charter, which removes references to working groups. (See “‘Working Groups’ Removed from MIC Charter,” PJM Market Implementation Committee Briefs.)

Dominion Retiring Bath County Thermal SPS

A special protection scheme Dominion Resources used to minimize N-1 overloads and allow for a higher pond level at a pumped storage facility is no longer needed thanks to a number of regional system upgrades.

Dominion plans to retire the Bath County thermal SPS by Dec. 1, but it says the stability SPS there will remain in place.

Tariff Changes Pass Members Committee Easily

The Members Committee endorsed by acclamation two sets of Tariff changes:

Rory D. Sweeney

SPP RSC Approves New Member Cost Allocation Process

By Tom Kleckner

SPP’s Regional State Committee last week approved a process for reviewing new members’ effect on regional cost allocation, but not before rejecting language that stakeholders have been unable to agree on since July.

Stoll | © RTO Insider
Stoll | © RTO Insider

The RSC approved the Cost Allocation Working Group’s New Member Cost Allocation Review Process after deleting an introductory paragraph that dealt with the effective date for highway/byway cost sharing. The committee asked the working group to revise the paragraph and bring it back in October after SPP staff raised objections in July.

John Krajewski, a consultant with the Nebraska Power Review Board, said the CAWG never reached consensus on whether to include the paragraph in the document but felt the language was “reasonable” if the RSC decided to keep it. The revised paragraph specified that “the effective date of cost sharing is an area over which the RSC has primary responsibility.”

At issue was whether the language “tied the hands” of the RSC.

The RSC tied 5-5 on following the CAWG’s recommendation to include the language. The committee then unanimously approved the document without the introductory paragraph.

The document creates a roadmap for the RSC and CAWG to follow when a potential new member asks for significant changes to the Tariff or membership agreement that would affect the committee’s regional cost allocation.

The process became necessary after the Integrated System joined SPP last October, when much of the negotiation over the integration took place between the new members and staff. The parties agreed to propose to current members and the RSC a method to include the new system under SPP’s highway/byway funding methodology, while also providing the Western Area Power Administration’s Upper Great Plains Region a federal service exemption from regional funding.

Committee Elects 2017 Officers

The meeting was New Mexico Public Regulation Commission Chairman Patrick Lyons’ last as RSC chair; he will relinquish the gavel at the end of the year.

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Lyons (left) and Bill Dowling, Midwest Energy | © RTO Insider

“It’s been a learning experience,” Lyons said. “I’ve learned people really do care what the ratepayers have to pay.”

The committee unanimously approved Missouri Public Service Commissioner Stephen Stoll as its chair for 2017, Kansas Corporation Commissioner Shari Albrecht as vice chair and South Dakota Public Utilities Commissioner Kristie Fiegen as secretary and treasurer.

Members also approved a 2017 budget of $321,700, an $8,400 increase over this year’s because of higher travel expenses.

ERCOT Maps out Plan for Changing Reserve Margin Methodology

By Tom Kleckner

AUSTIN, Texas — Texas regulators on Friday signed off on ERCOT’s plan to review its reliability standards and replace its loss-of-load expectation (LOLE) methodology for determining its reserve margin with one based on economics.

The Public Utility Commission agreed that a letter filed with the commission by ERCOT Director of System Planning Warren Lasher on Oct. 24 outlined a sound process. “Go forth and do good,” Chairman Donna Nelson said.

Commissioner Ken Anderson pointed out the project’s (Docket 43202) intention is to replace ERCOT’s LOLE methodology with the economic optimal reserve margin (EORM).

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PUCT Commissioners Left to Right: Commissioner Ken Anderson, Chairman Donna Nelson and Commissioner Marty Marquez | © RTO Insider

The LOLE is “not really baked into any of our rules, but it is baked into the protocols at ERCOT,” Anderson said.

ERCOT staff will go through its protocols to find language that needs to be modified and make changes “at the appropriate time,” Lasher replied.

In 2013, The Brattle Group and Astrapé Consulting conducted a study of the market’s EORM, which it defined as minimizing total system costs by weighing the cost of more generation to achieve higher reserve margins against decreasing scarcity-event-related costs.

Higher reserve margins help to avoid load shedding, reserve shortages, demand response calls and other emergency event costs, the study said.

The firms had to customize the study’s methodology, Lasher wrote, “to reflect the region’s unique energy-only deregulated wholesale market design and region-specific market behavior.”

The study simulated ERCOT’s recently implemented operating reserve demand curve. Lasher said that methodology and other study assumptions will need to be reviewed by ERCOT and stakeholders “if the results of future EORM studies are to be used in place of the existing target reserve margin.”

Lasher’s proposal involves conducting workshops with market participants in the first half of 2017 and completing its next EORM study in 2018 based on the documented methodology. He recommended future EORM analyses be conducted every other year coincident with NERC’s required LOLE studies.

Following the 2018 EORM study, Lasher said ERCOT would amend its market rules as appropriate to accommodate the move to a target reserve margin based on EORM criteria, and away from the one-event-in-10-years LOLE.

“Currently, NERC has two numbers that go to them,” Lasher told the PUC. “First, what the region says is an appropriate reserve-margin expectation. That’s whatever the region wants to define it as. Some regions use the economic optimal number.

“NERC also has a standing data request every year for the region to say, given our expectations for the reserve margin, what will actually be the expected unserved energy with that margin.”

Lasher said ERCOT conducted loss-of-load probabilistic studies in 2014 and 2016 to comply with data requests from NERC and the Texas Reliability Entity. The ISO worked directly with Astrapé to complete the studies, using the same models and assumptions comparable to those employed for the 2013 study.

The commissioners debated whether to have ERCOT continue providing its regular capacity, demand and reserves (CDR) report until the new reliability standards are in place, without coming to a decision.

“The CDR is at the heart of the problem, because its load assumptions are beyond four years,” Anderson said.

Anderson suggested ERCOT take the 2013 study results and incorporate them in the CDR, using the economical, optimal and expected equilibrium as information data points. Lasher noted ERCOT’s May CDR didn’t provide data for a target reserve margin, but he said staff could include the Brattle study’s results.

MISO Advisory Committee Briefs

MISO is requesting a 4% increase in operating expenses for 2017 while moving away from a one-year forecast in favor of a five-year business plan.

The requested increase will bring the 2017 operating budget to $289.6 million, said Mitch Myhre, chair of the MISO Finance Subcommittee, who presented the budget to the Advisory Committee during an Oct. 26 conference call.

The operating budget includes:

  • $229.6 million in “base” spending;
  • $51 million in structural expenses (including amortization of membership integration costs, depreciation of cybersecurity investments and infrastructure upgrades and funding of the Independent Market Monitor and Organization of MISO States); and
  • $9 million for strategic initiatives, including the Competitive Retail Solution, seasonal and locational capacity, improving gas modeling, and automatic generation control enhancements.

MISO forecasts it will end 2016 with operating expenses of $225 million — its budgeted amount — to $227.3 million, which would be 1% over budget.

Myhre said MISO’s new five-year budget approach will be an “evolving, rolling” budget. The RTO is predicting a 1.9% compound annual growth rate for the next five years. The subcommittee and MISO staff are still working on the details of the five-year plan, Myhre added.

The plan projects an identical $289.6 million spend in 2018. In 2019, the figure increases to $293.5 million, then $299.5 million in 2020 and $306.7 million in 2021. In every budgeted year, MISO plans to spend exactly as much as it brings in.

MISO also is requesting a 2017 capital budget of $29.9 million — a drop from 2016’s $31 million — and an average capital spend of $32.9 million over the next five years.

However, the RTO said it might request out-of-cycle budget approvals in 2017 for initiatives in the works, including the construction of a new security operations center, more software quality control, improved server utilization, positioning an off-duty police officer at MISO control sites and insourcing some outside contracts. For those possible expenses, the Finance Subcommittee recommended MISO create business cases to present to the appropriate stakeholder groups.

American Electric Power’s Kent Feliks thanked Myhre and MISO for the budget work. “A lot of this work isn’t very exciting, but it’s vital to MISO,” he said.

Final approval of the 2017 budget and adoption of the five-year spending plan will take place at the Board of Directors meeting in December.

AC to Approve One of Two Sets of 2017 Priorities

The Advisory Committee will adopt one of two revised sets of priorities for 2017, choosing between one that is a slight revision of existing priorities and another that takes its cues from subcommittee mission statements.

| MISO
| MISO

Gary Mathis, representing MISO’s Transmission-Dependent Utility sector, said the committee’s approved priorities for this year are unclear and hard to remember. Mathis said the subcommittees’ mission statements could become the committee’s overarching priorities themselves. He presented five proposed priorities: implementing best planning practices; preserving and enhancing reliability; improving market efficiency; ensuring resource adequacy; and ensuring equitable cost allocation.

Advisory Committee Chair Audrey Penner presented the alternative, which was slightly changed from the 2016 priorities list. It moves the gas-electric coordination priority under a broader environmental policy and portfolio evolution priority. A strategic guidance priority was added in its place that includes hot topic discussions and a broad current issues subcategory. (See “Committee Endorses 5 Final Priorities,” MISO Advisory Committee Briefs.)

Penner said both priority documents capture “the essence of what the priorities should be.”

The committee will vote to adopt one of the two approaches at its December meeting. Penner said committee leadership hopes to keep the committee’s priorities on the books for multiple years while performing six-month “check-ins” to assess their continued relevance.

AC’s Strategic Session Prompts Possible ‘Hot Topic’ Change

Advisory Committee members noticed that the committee spent quite a bit of time on this year’s stakeholder redesign and said it looked forward to paying more attention to other issues in 2017, reported Penner, who gave an overview on the committee’s strategic planning session held at the end of September in San Antonio.

Penner also said the committee is looking to change its hot topic forum back to its original format, with wider stakeholder participation in drafting questions, instead of MISO facilitating the discussion. Director of External Affairs Kari Bennett said the RTO had no problem with re-establishing the old arrangement.

The Advisory Committee is considering holding hot topic conversations in 2017 that focus on transmission, including cost allocation, pseudo-ties and the competitive bidding process. Penner said the committee would solicit votes by email to its voting sectors to decide on a March topic. She added that the committee might suggest MISO hold an educational session prior to sectors submitting their written positions on hot topic subjects.

Penner also urged stakeholders to attend a Nov. 3 Stakeholder Governance Guide workshop. During the Oct. 26 Steering Committee conference call, Chair Tia Elliott said agenda items could include conference call logistics; meeting procedure education; an overview on Robert’s Rules of Order; criteria for establishing closed groups; and the creation of a definition for task teams with a process for creating and retiring them.

— Amanda Durish Cook

Earnings Up, Xcel Touts ‘Steel-for-Fuel’ Strategy

By Tom Kleckner

Xcel Energy reported an increase in earnings for the third quarter as the company said its “steel-for-fuel” strategy of replacing fossil fuel plants with wind turbines will provide a solid blueprint for future growth.

The company reported third-quarter earnings of $458 million ($0.90/share), up 7.5% from the $426 million ($0.84/share) a year earlier. The results bested analysts’ expectations of 87 cents, according to Zacks Investment Research.

“The whole premise of steel-for-fuel is you can do things on an economic basis cheaper than the fossil alternatives,” CEO Ben Fowke told analysts during a conference call Thursday. “In reality, the environmental benefits will be icing on the cake. So, when you’re not impacting customer builds and you’re driving environmental leadership, it’s really a unique position for us to be in.”

Xcel proudly points to its designation by the American Wind Energy Association as the nation’s No. 1 utility wind-energy provider for 12 years running. Wind energy accounted for 17% of the energy Xcel generated in 2015, and it projects that figure to grow to 24% by 2020.

xcel energy steel for fuel results in more wind generation
| Xcel Energy

Much of that has been produced by long-term contracts with third parties, but the Minneapolis-based company announced earlier this week it would build four new wind farms in Minnesota and North Dakota with a total capacity of 750 MW.

In September, Colorado regulators approved Xcel’s plans to begin construction on its $1.1 billion, 600-MW Rush Creek Wind Project, allowing Xcel to claim $443 million in federal tax credits. The Rush Creek project is expected to come online in 2018.

“We expect [these] wind projects will generate hundreds of millions of dollars in fuel savings for our customers, which will more than offset the capital cost [to build them],” Fowke said.

CFO Bob Frenzel told analysts the company has updated its five-year capital forecast and now expects to invest $18.4 billion through 2021, including $3.5 billion on renewables. That includes the Rush Creek project and the Minnesota-North Dakota wind farms.

“When you look at the economic price point … that we are seeing with wind, I think we have opportunities potentially in Texas and New Mexico too, just on the economic merits alone,” Frenzel said.

Analyst Angie Storozynski of Macquarie Capital questioned whether adding renewables to the rate base in a time of no load growth is the “low-risk” growth strategy the company claims.

Vice President of Investor Relations Paul Johnson acknowledged that the company will be adding capacity that might not be needed until it retires coal plants. “We’re just taking opportunity to capture the full” production tax credit, he said.

“This is our resource plan. … We can build wind competitively, and I think we’ve earned the right to own wind in our backyard,” Fowke added. “It does require alignment with your regulators, but I think we have it.”

Xcel narrowed its 2016 earnings guidance to $2.17 to $2.22/share, down from the previous estimate of $2.12 to $2.27/share. “Our year-to-date weather-adjusted electric sales remain relatively flat,” Frenzel said, explaining the company’s caution.

The company’s stock price opened at $40.33/share before Thursday’s earnings announcement. It closed Friday at $40.68.

Earnings call transcript courtesy of Seeking Alpha.

SPP Board Lets Action on Z2 Stand; Litigation Likely

By Tom Kleckner

LITTLE ROCK, Ark. — The SPP Board of Directors and Members Committee decided last week to take no further action on the contentious Z2 crediting issue, leaving unhappy stakeholders likely to seek redress from FERC or the courts.

The board discussed the Markets and Operations Policy Committee’s recommendation to “follow the Tariff” and reject requests that $114.1 million in directly assigned Z2 network upgrades be allocated to SPP’s base plan. However, it took no votes on the matter Oct. 25, which let stand the MOPC’s decision, which was supported by 83% of members voting. (See MOPC Rejects Z2 Waivers; Task Force Seeks Changes.)

The board in July formed a task force to review requests from members who SPP staff had said didn’t qualify for waivers from $36.9 million in directly assigned upgrade costs, while also addressing “equity concerns.” The group also reviewed another $77.2 million in direct costs from members who didn’t request waivers.

Evans proposes solution to Southwest Power Pool Z2 Issue
Evans | © RTO Insider

Les Evans, COO of Kansas Electric Power Cooperative (KEPCo), one of the companies requesting a waiver, once again expressed his dissatisfaction with the process after being “wrongly assigned” $6.2 million because its resource-to-load ratio exceeded a 125% threshold.

“The 83% that voted to follow the Tariff does indicate that 17% of us feel disenfranchised and that things are not equitable,” Evans said.

Evans argued KEPCo was granted four transmission service requests from a 2012 aggregate study, and that there were no directly assigned costs in the agreements.

Pointing to the directly assigned costs he said KEPCo was assessed four years later, Evans said SPP’s treatment of his company fails the RTO’s “but-for” test, which requires transmission customers to fund transmission improvements that would not be required but for their additional load. The test is triggered by a 3% increase on a line’s directional flow in the same direction as the power flow that caused the upgrade.

“Under the process we’re using right now, a sponsored upgrade can be put back into a model from years ago, and if I have a 3% flow on that facility, I would be responsible for directly assigned upgrade costs under that possibility. I would say that is not fair, it’s not equitable and I don’t think there’s anybody that can stand here with a straight face and say that passes a ‘but-for’ test.”

Evans worked with staff to draft language for two different motions addressing his arguments. One required transmission reservations assigned a payment obligation for an upgrade be included in the original aggregate study model. The other would mandate that service agreements explicitly include directly assigned upgrade costs in order to be directly assigned to a transmission customer.

Evans failed to get a second on either motion, the only two offered up by the board and committee.

“We have an opportunity here, as a group, to solve the problem,” Evans said. “If the problem’s not solved [today], from my perspective and KEPCo’s perspective, we’ll seek other solutions. SPP loses control of how the problem is resolved. This is the place to do it.”

Staff pointed out either motion would cause about a six-week delay to calculate the historic Z2 credits and obligations, which date back to 2008. Invoices settling charges and credits under Attachment Z2 for the March 2008-August 2016 period are to be issued this week.

“Following the Tariff should be clear, but how clear can 5,275 pages be?” Director Phyllis Bernard asked. “Perhaps it’s time for …  alternative dispute-resolution with a possible third party, or to go to FERC.”

“We’ve been waiting eight years to get this done. Let’s get it done,” said The Wind Coalition’s Steve Gaw, noting SPP’s transmission-dispute resolution process could still provide an avenue for members to plead their case. “I would encourage us to move forward.”

“I’d love for consensus to be unanimous, but that’s not what we have,” SPP CEO Nick Brown said. Reversing the MOPC’s endorsement would mean “we’ll be supporting 17% at the expense of 83%.”

“Bottom line, this will go to FERC,” Brown said. “I have no doubt what KEPCo’s response to this will be.”

Evans’ response was terse. “KEPCo is evaluating all possible venues for a remedy to its issues,” he told RTO Insider on Friday.

Staff told members Thursday it is billing almost $110 million in regionwide, aggregate net payable historic amounts. It said $94.8 million will be invoiced as a lump sum, and the remaining $15.1 million will be billed in 20 installments through August 2021 to those members who chose the payment plan approved in April.