Page 1392 – RTO Insider

April 17, 2018January 26, 2025

SPP Markets and Operations Policy Committee Briefs: April 17, 2018

KANSAS CITY, Mo. — SPP’s Markets and Operations Policy Committee endorsed a rule change to address member concerns that the Integrated Transmission Planning (ITP) Manual doesn’t appropriately capture purchase power agreement (PPA) pricing in the adjusted production cost-benefit metric.

RR276 removes the PPA pricing from the variable operations and maintenance (VOM) methodology language in the ITP Manual and replaces it with a VOM cost of $0/MWh for all wind and solar units. The Economic Studies Working Group (ESWG) had proposed a VOM cost of $8/MWh but revised the number following stakeholder discussion.

SPP’s Markets and Operations Policy Committee (MOPC) met on April 10th and 11th | © RTO Insider

The ESWG said RR276 better captures the “benefits of incremental transmission investment when reducing economic curtailment or congestion costs associated with transmission customer purchases from renewable generation resources under ‘take or pay’ power purchase agreements.”

The MMU said the zero VOM cost is a “much closer reflection” to the actual number based on its review of all mitigated offers resources have applied for in the SPP market.

“We were sort of surprised to see a number that high,” Collins said referencing the $8/MWh proposal. “It does not in any away affect the bottom prices we have on file. Zero is more reflective of the true number.”

The Nebraska Public Power District’s Tim Owens, the ESWG’s vice chair, said the revision request is necessary as the 2019 planning cycle begins. He said it is an interim solution to objections over proxy PPA pricing, and the group will continue to work with staff on improving the economic studies process.

“We are trying to address this one particular input,” Owens said. “We fully understand that this is not the end-all assumption. Setting it to zero or eight won’t in and of itself address all of these other issues. We’re just focusing on what we’re going to do for the 2019 ITP assessment.”

“I see the benefits of a zero VOM, but my major concern is fixing the process,” said Southwestern Public Service’s Bill Grant.

The measure cleared the two-thirds approval threshold at 68.3% in a roll-call vote. Transmission-using members (TUs) voted 36-7 in favor of the revision, overcoming a 9-8 split by transmission owners.

Members Hash out Charter Revisions by Working Groups

Members revised and endorsed a Transmission Working Group (TWG) charter revision to increase its membership, proposing that the group include all TOs and an equal number of TUs.

The TWG had proposed increasing its membership from 24 members to 26, with no more than 14 TOs or TUs at any one time. Several members expressed concerns about the group handling compliance issues without representation of all 17 TOs.

“It’s very important that the votes presented to MOPC are reflective of the full membership, and that MOPC has that guidance when they vote,” Grant said. “You don’t want the unintended consequences because of what that one person could come up with.”

Sunflower Electric Power Cooperative’s Al Tamimi pointed out his company is one of the TOs currently excluded from the TWG. “If I don’t get a seat, I don’t want this group handling compliance matters,” he said.

Other members pushed back against the membership expansion.

“If we’re going to do this for the TWG, what other groups now can be expanding their membership?” asked Oklahoma Gas & Electric’s Greg McAuley. “With the Mountain West coming with another potential 10 TOs, this group is going to be enormous. I don’t know what you’re going to get done.”

TWG Chair Travis Hyde, of OG&E, said the group’s proposal was a compromise as it tried to seat all 17 of the TOs listed under SPP’s bylaws. He said the TWG has tried to maintain a balance between TOs and TUs but has realized its attempt was becoming unwieldy.

“If we did, we’d get to [34],” Hyde said. “That’s too big for a technical group like we are.”

SPP COO Carl Monroe said the RTO’s bylaws require all stakeholder groups to be balanced, “unless your charters are accepted with some other requirement.” He said the organization uses TOs and TUs as “shortcuts,” in the absence of member-type definitions in the bylaws, but recommended the groups change their governing documents if they disagree with the shortcuts.

“You can change the charter, but all these changes have to go through the Corporate Governance Committee,” he said. “If we had half this many people in a room trying to make the decision, we wouldn’t have the issues we do as the MOPC together.”

Kansas City Power & Light’s Denise Buffington, a member of the CGC, clarified Monroe’s comments. “The bylaws don’t explicitly say stakeholder groups should be balanced. That’s just the way it’s always been interpreted,” she said.

The MOPC also endorsed a change to the charter of the Regional Tariff Working Group that gives all TOs representation, with an “up to” equal number of TUs. The RTWG said it has a longstanding policy that all TOs be represented, as their facilities are under SPP’s functional control “for the provision of transmission service, planning, interconnections and recovery of revenue requirements.”

Members did strike a provision that would have limited members with affiliated relationships to a single vote on the RTWG.

“I am opposed to putting affiliate restrictions in any charter. They’re not in any other charter,” Buffington said. “What I fear is you put the restriction in one charter, then everyone is going to come here and ask for similar language.”

Monroe suggested it would be worth the governance committee’s time to discuss affiliate restrictions and the number of working group members.

“It’s not the number of people, it’s the chair getting organized and ensuring people express their opinions,” he said.

The MOPC also approved modifications to the Model Development Working Group’s (MDWG) charter. The stakeholder group said the changes reflect current practices and adds references to assignments from the TWG, MOPC and Board of Directors and the development of models for reliability standard TPL-007-1 (Transmission System Planned Performance During Geomagnetic Disturbances).

The MDWG reports to the TWG and is responsible for the coordination, development and maintenance of SPP’s transmission system planning models.

OG&E Raises Concerns over Third-party Tx Line Upgrade

Members voted to table a sponsored upgrade of an OG&E transmission line in northern Oklahoma, accepting the utility’s request to give it more time to work out legal issues.

The work would be sponsored by EDF Renewable Energy, which wants to upgrade terminal equipment and rebuild an 11-mile, 138-kV line near Ponca City and its 154-MW Rock Falls wind farm, which became operational in December. EDF has said it will seek cost recovery through SPP’s Attachment Z2 revenue crediting or incremental long-term congestion rights.

SPP’s Lanny Nickell, NTEC’s Jason Atwood and KCP&L’s Denise Buffington lead the April MOPC meeting. | © RTO Insider

EDF presented the project to the TWG under SPP’s new transmission planning process. The TWG approved the project in March after determining there wasn’t a reliability impact. SPP Vice President of Engineering Lanny Nickell told members he was unsure whether the upgrade has ever been studied as an economic project in previous RTO planning studies.

OG&E pushed back against the project, saying it has engaged outside legal counsel to understand the consequences of having a third party pay to rebuild a line. McAuley noted his company is already recovering costs on the line through an annual transmission revenue requirement, but it is unclear what will happen to its depreciation or how to expense additional maintenance costs following the rebuild.

“At first blush, someone comes in and says they want to rebuild a line, you say, ‘Fine. What’s the big deal?’ That’s probably what the TWG said,” McAuley said. “We have an existing line with an ATRR that’s recovering revenue. What happens to that? This has opened up a broader set of legal questions we don’t have answers to yet.”

EDF did not have a representative in the room to participate in the lengthy discussion, but the company’s transmission strategy director, Omar Martino, was eventually patched in to answer questions. He said EDF understood the region is facing congestion issues, but that no one had committed to the upgrade.

“To the extent we can alleviate congestion and protect ourselves from congestion pricing, the upgrade would provide sufficient relief for the wind farm,” Martino said. EDF hopes to see the upgrade in place by June 2019.

“Bottom line, we have a whole lot of questions and not many answers,” McAuley said, suggesting a revision request be drafted if SPP’s Tariff doesn’t supply enough guidance. “I think it is precedent setting, and we might want to take a little bit longer look at it.”

SPP determined that while the vote was to determine MOPC’s endorsement, RTO staff still have the responsibility to bring the proposal to the Board of Directors for its approval. In the meantime, OG&E’s counsel will meet with SPP’s legal staff to resolve its questions.

Six members voted against tabling the proposal and two abstained.

Members did endorse a second sponsored upgrade, the addition by City Utilities of Springfield of a second 161/69-kV transformer at its James River Power Station. The upgrade has a June in-service date.

Members Approve Three-Stage Process for GI Requests

Members easily approved a task force’s white paper that overhauls SPP’s process for handling generator interconnection requests. BP Wind Energy North America abstained from the vote.

The Generator Interconnection Improvement Task Force’s (GIITF) paper outlines a three-stage process comprising a thermal and voltage analysis, dynamic stability and short-circuit analysis, and a facilities study.

| SPP

An increasing security deposit is required before each step, beginning at $2,000/MW and escalating to 10% and 20% of allocated upgrade costs, respectively. A decision period follows each stage, allowing transmission customers to determine whether to proceed to the next step following receipt of study reports.

The GIITF’s work replaces the current convoluted process, which involves feasibility, interconnection and system impact, and facilities studies, bidirectional work flows, and mandatory and optional steps.

Tamimi, the task force’s chair, said the simplified process will be easier for SPP to administer and for customers to understand and navigate. He said most upgrades will be identified in the first stage, allowing customers to make informed decisions before committing to a lengthy and expensive stability analysis.

Tying financial security to upgrade cost allocation will encourage customers to weigh the risks of proceeding at an earlier stage, reducing the number of requests that are withdrawn late in the process, Tamimi said.

The task force was created early last year to address SPP’s overloaded interconnection queue and requirements that could emerge from a rulemaking FERC opened in December 2016 to consider changes to its pro forma large generator interconnection procedures (RM17-8). (See FERC Proposes Changes to Interconnection Rules.)

The commission has not approved any changes in the rulemaking. Earlier this month, however, FERC staff conducted a two-day technical conference to examine how SPP, PJM and MISO coordinate interconnection studies on projects near their seams, after the commission said their practices may not be just and reasonable. (See Developers, Tx Providers Seek Direction on ‘Affected Systems’.)

The MOPC in 2017 granted the task force a one-year extension to develop a replacement for SPP’s current interconnection process.

Ciesiel Delivers Final SPP RE Report

Members gave Regional Entity President Ron Ciesiel a round of applause following what may have been his last update to the MOPC.

Midwest Energy’s Bill Dowling makes a point. | © RTO Insider

SPP’s RE has been dissolved and is in the process of transitioning its data and responsibilities to the Midwest Reliability Organization and SERC Reliability, where its 122 registered entities have been reassigned. (See NERC Board Approves Dissolving SPP Regional Entity.)

Ciesiel said he hopes to complete the work by July. He said 10 of the 17 remaining RE employees have found jobs within the RTO or elsewhere, noting cybersecurity personnel are “in great demand.” Two others have decided to retire.

McAuley complimented Ciesiel and his staff on their work, saying, “While we didn’t always agree with the audits, they were done well.”

Tx Planning Improvement Task Force Delivers Final Work

The Transmission Planning Improvement Task Force wrapped up three years of work by winning the MOPC’s unanimous endorsement of its 20-Year Assessment Manual, which now goes to the board for its final approval.

The assessment is intended to develop an extra high voltage (300 kV and above) transmission road map for the SPP region, with candidate projects helping inform shorter-term planning assessments. According to the manual, “The assessment will result in the identification of projects that economically deliver energy within the SPP region while addressing a reasonable range of future industry uncertainty.”

The manual lays out roles and responsibilities within the 20-year assessment, study process and data inputs. The manual has been approved by the task force, the TWG and the Economic Studies Working Group.

Unanimous Consent Agenda Includes 9 RRs

Members unanimously approved the consent agenda, which included the re-baselining of a Nebraska Public Power District 69- and 161-kV project, from $37.8 million to $27.5 million; removing OG&E remedial action schemes at the Centennial and Crossroads wind farms; and nine revision requests:

GIITF RR267: Eliminates the “standalone scenario,” which considers each interconnection request by itself, from the definitive interconnection system impact study process. This will free SPP resources to focus on the binding cluster study results, permitting results to be available earlier than they currently are. Staff will provide the standalone equivalent study models through existing confidentiality provisions to customers seeking to conduct a stand-alone scenario of their own.
MWG RR252: Assigns an out-of-merit energy (OOME) cap and/or floor, allowing staff to economically dispatch the resource down or up within the ranges.
MWG RR259: Modifies the market settlement posting and dispute timelines being implemented with the new settlement system, reducing the number of resettlement postings and manual processes resulting from revisions to meter and bilateral settlement schedules.
MWG RR273: Automates several the market settlement system’s charge types that are not yet part of revenue neutrality uplift processing, resulting in rounding/residual amounts that must be manually processed and distributed through miscellaneous charges. The new system is scheduled to go live in May 2019.
MWG RR280: Clarifies the settlement system’s reserve sharing group (RSG) processing by modifying the RtImpExp5minQty field with an attribute indicating whether the import/export quantity was because of an RSG event.
ORWG RR268: Clarifies or removes outdated language from the operating criteria, improving SPP’s ability to perform reliability coordinator, balancing authority, transmission service provider and reserve sharing group functions.
ORWG RR269: Clarifies language and removes antiquated and redundant language in SPP’s operating criteria and describes the existence of multiple standalone documents.
ORWG RR270: Converts the operating criteria Appendix OP-2 to a standalone document, clarifies language and adds formatting improvements.
PCWG RR255: Revises business practice 7060 by adding triggers to stop the annual escalation of undefined baseline costs when a designated TO provides 1) SPP a letter of commercial operation, 2) notification that an upgrade is in-service, and 3) notification that an upgrade is complete.

— Tom Kleckner

April 17, 2018March 25, 2025

Vote to Make Variable Resources Dispatchable Falls Short at MOPC

By Tom Kleckner

KANSAS CITY, Mo. — SPP’s Markets and Operations Policy Committee last week failed to endorse a revision request that would have required non-dispatchable variable energy resources (NDVERs) to register as dispatchable variable energy resources (DVERs) within a multiyear transition period.

The Market Working Group’s (MWG) recommended revision request (RR272) will likely be appealed to the Board of Directors for its April 24 meeting.

A roll-call vote resulted in 62.3% of members favoring the measure, short of the necessary two-thirds majority. Transmission-owning members Western Farmers Electric Cooperative and Westar Energy, last in alphabetical order, cast the final two votes opposing the change to seal its fate, at least temporarily.

Non-Dispatchable Variable Energy Resources NDVERs SPP MOPRC

AEP’s Richard Ross explains Tariff revisions. | © RTO Insider

“I’m not saying I’m going to submit one, but I have a feeling there will be [an appeal],” said American Electric Power’s Richard Ross, who chairs the MWG.

NDVERs converting to DVERs would need to ensure they have the proper communication systems in place and the technical capabilities to reduce their output.

Ross said the Tariff change will increase market efficiency through the reduction of manual out-of-merit energy orders to mitigate constraints. The addition of dispatchable resources will only increase reliability, he said.

“Any time you’re taking actions out of market, you are creating inefficiencies,” said SPP’s David Kelley.

The Market Monitoring Unit expressed strong support for the Tariff change, saying it would help reverse the recent growth of negative real-time pricing. The Monitor’s recent quarterly report noted the frequency of intervals experiencing negative prices increased from 2.6% in 2015 to 7% through November 2017. (See SPP Market Monitor: Negative Prices May Require Rule Changes.)

“Negative pricing is a significant issue in our market,” MMU Executive Director Keith Collins reminded members. “Something that increases flexibility is at a premium, which we will highlight in our next report. Having non-dispatchable resources becoming dispatchable is an important piece of that recommendation.”

Collins said an SPP operations study revealed that “the more flexibility you have, you end up increasing [energy market] pricing” by reducing the magnitude of negative prices.

“All resources will benefit from that change, which will allow the integration of more and more variable resources in the system,” he said.

SPP MMU Director Keith Collins reviews his notes. | © RTO Insider

But Westar said the change would hurt SPP’s “market reputation.”

“NDVERs were a condition of several [market participants] agreeing to transition from [the Energy Imbalance Service to the Integrated Marketplace],” the company said in written comments. “If we go back on our word, will other [market participants] lose confidence in the stability of SPP tariff grandfathering and agreements made to prospective balancing authorities, asset owners and market participants considering the benefits of [joining] SPP as a stable settlement and market platform?”

Members accepted a friendly amendment to the revision, extending the registration deadline to January 2021.

The revision request exempts about 2,000 MW of resources without direct interconnection agreements with SPP or registered as qualifying facilities under the Public Utility Regulatory Policies Act. That drew concerns from members over whether Mountain West Transmission Group entities would be able to acquire similar exceptions.

“If the current language excludes those, it does appear to leave questions about those who joined SPP with a previous interconnection agreement, but not one with SPP,” said The Wind Coalition’s Steve Gaw. “Will they have to comply with this [requirement], or does the language exempt them, including the generators in the Mountain West region?”

“That’s exactly right,” said Oklahoma Gas & Electric’s David Kays. “When you’re being prospective about anyone coming in afterwards … I think it creates a hole in the Tariff, and I’m not sure that’s something we should be doing intentionally.”

Ross said there is no specific provision to carve out the Mountain West entities. “They’ll have to be prepared to comply with these requirements when they’re integrated into the SPP system,” he said. The MWG fashioned the change so that “anyone who wants an exception can make a [Federal Power Act Section] 200-whatever filing from that [requirement] at FERC,” he added.

Kelley pointed out that ISO-NE and CAISO have gone through similar conversions. He said the revision would help a grid that has “grown exponentially in size” with new wind resources and continues to hit new wind-penetration peaks.

“I go back to the overall problems we’re trying to address, which is overall market efficiency and reliability,” Kelley said. “When you hit those [constrained] situations, it’s imperative that the operators and markets have the tools to make the most efficient decisions on a systematic basis, rather than take out-of-market actions.”

The vote followed one of several vigorous discussions that livened up what staff and members had expected to be a perfunctory MOPC meeting.

“If you’re not careful, you’ll have an MWG meeting break out,” Ross joked.

April 17, 2018

Most of West Signs up for CAISO RC Services

By Jason Fordney

FOLSOM, Calif. — At its first public meeting with potential customers of its reliability coordinator (RC) services Thursday, CAISO divulged that most of the load in the West has signed letters of intent for the new program.

CAISO discussed its new RC services proposal at a Thursday meeting | © *RTO Insider*

In response to a question, CAISO Regional Integration Director Phil Pettingill said he could not say publicly who has signed letters of intent and nondisclosure agreements to receive RC services.

CAISO REV load forecasting Western RTO — Pettingill | © *RTO Insider*

“What I feel like I can say is, most of the load that is in the Western Interconnection has signed those agreements with us,” Pettingill said. “We are really talking to almost everybody.”

He added that the letters of intent are not binding and can be withdrawn. The notifications that have been sent to Peak Reliability from customers planning to depart its RC program are also nonbinding.

NERC’s reliability standards require balancing authorities and transmission operators to procure RC services, which include outage coordination, real-time situation awareness, and system restoration coordination and training.

CAISO on April 5 issued its initial proposal for RC services, which it hopes to have running by May 2019. The ISO and Peak are also developing competing proposals for new energy markets that could develop into a full RTO. (See Multiple Entities, Markets Now Beckon in West.)

CAISO is now developing prices for its supplemental, non-core RC services, such as hosting advanced applications and addressing certain critical infrastructure protection services, Pettingill said in a presentation.

The ISO says its RC services will be much cheaper than Peak’s, but Peak countered that the comparison is not straightforward because Peak has more RC experience and offers certain customer services such as the WECC Interchange Tool, the Enhanced Curtailment Calculator and the Peak Synchrophasor Project. (See Peak/PJM Enter Western Market ‘Commitment Phase’.)

In developing the RC services, the ISO will issue straw proposals and gather feedback to revise the initiatives. The final proposal will be subject to approval by the Board of Governors and FERC.

CAISO hopes for the commission’s approval in October.

The goal is for potential RC customers to export their network models by August and begin data integration and system verification in January 2019. RC service agreements would be executed in November with much of the integration and testing occurring next year, Pettingill said.

CAISO will use its “activity-based costing system,” which has been used for all rate design initiatives since 2011, to determine the costs of RC services.

About 6% of CAISO’s annual costs would be allocated to RC services in the revenue requirement for 2019 and 2020 rates, CAISO CFO and Treasurer Ryan Seghesio said Thursday.

“The ISO is committed to a really level, stable revenue requirement,” Seghesio said. CAISO’s revenue requirement of $190 million to $200 million has been stable for about 11 years. There is a FERC-approved $202 million cap on the revenue requirement, he said, to prevent surprises for market participants.

April 17, 2018

CPUC to Vote on $98M PG&E Settlement

By Jason Fordney

The California Public Utilities Commission will vote later this month on a $98 million settlement agreement regarding its own improper communications with Pacific Gas and Electric related to the fatal 2010 San Bruno gas pipeline explosion and other matters.

The commission will vote April 26 on the proposed decision of Administrative Law Judge Robert Mason regarding ex parte communications with PG&E after the company’s San Bruno pipeline exploded and killed eight people, as well as seven other proceedings.

CPUC ex parte communications PG&E — The CPUC is due to vote on the settlement on April 26 | © *RTO Insider*

The five CPUC members that will vote on the agreement April 26 were not involved with the improper communications several years ago. The parties listed on the settlement include PG&E, the city of San Bruno, The Utility Reform Network (TURN), city of San Carlos, and the CPUC’s Office of Ratepayer Advocates and Safety and Enforcement Division.

But the agreement does not close the San Bruno ex parte matter, instead kicking off a new proceeding to explore additional archived emails that PG&E provided to the CPUC in September 2017 that rocked the yearslong settlement process. (See Probe Reveals More CPUC-PG&E Contacts on Pipeline Blast.)

“This proceeding shall remain open to consider whether PG&E’s newly disclosed email communications violate the commission’s ex parte rules and should result in the imposition of additional fines,” the settlement says.

PG&E said the new batch of emails it submitted to the CPUC last September in the ex parte proceeding were “a recent development” from an unrelated government agency inquiry. The utility said that while the emails dating from 2013 and 2014 were new, “their general nature is not new.”

The “unrelated government agency inquiry” that PG&E referred to appears to be a concurrent investigation into former CPUC Commissioner Susan P. Kennedy that directed her to provide the California Fair Political Practices Commission with communications from 2012 to 2017. The investigation sought communications between the PUC and Kennedy and others at her company, Caliber Strategies, that mention PG&E and legal, legislative or regulatory actions regarding the San Bruno explosion, as well as other matters.

PG&E will pay these penalties under the current terms of the settlement | *CPUC*

That CFPPC investigation led to a $32,000 fine against Kennedy in February for unreported lobbying for ride-sharing company Lyft and San Gabriel Valley Water Co., an investor-owned public water utility, but the CFPPC decision did not mention any communications with PG&E. (See Former CPUC Member Fined for Lobbying Violations.)

Kennedy was chief of staff for former Gov. Arnold Schwarzenegger, deputy chief of staff and cabinet secretary for former Gov. Gray Davis and previously communications director for U.S. Sen. Dianne Feinstein. She is also founder of Advanced Microgrid Solutions (AMS), a prominent California energy storage company whose investors include Schwarzenegger.

TURN was successful in pressuring the CPUC to consider the emails submitted by PG&E in September separately from the agreement to be voted on this month, rather than lumping them together with the previous violations. But TURN spokeswoman Mindy Spatt told RTO Insider last week that the provisions could still be changed in PG&E’s favor before April 26. Still, she said the settlement “looks pretty good from our perspective.”

The CPUC said the settlement agreement “has, to a great extent, put an end to years of disputes … that has spanned at least nine separate proceedings following the San Bruno tragedy.”

Settlement Mentions Ferron, Florio, Peevey

The new settlement document describes some of the ex parte communications at issue, including an email from PG&E consultant Jerry Hallisey to then-PG&E Vice President Brian Cherry in September 2011. The email described a meeting with then-CPUC Commissioner Mark Ferron to discuss support for a gas pipeline project and cost-splitting between shareholders and ratepayers. Ferron served on the CPUC from 2011 to 2014 and is now a member of the CAISO Board of Governors.

Also listed is a November 2011 email from Hallisey to Cherry and others that described meetings with former CPUC Commissioner Mike Florio, now a private consultant, regarding cost recovery and pipelines.

It also lists an email from Kennedy to Cherry that summarized a meeting with former CPUC Chair Michael Peevey and Kennedy regarding “an independent forensics analysis.” A Jan. 1, 2013, email from Cherry to PG&E Senior Vice President Thomas Bottorff described Cherry’s meeting with Peevey regarding gas settlement mediation and return on equity changes, among other exchanges.

In a separate matter, Peevey’s unreported ex parte communications with Southern California Edison during negotiations of the San Onofre nuclear plant closure led to a reworking of the $4.7 billion deal. (See CPUC Orders Renegotiation of San Onofre Settlement.) Peevey resigned from the CPUC at the end of 2014.

April 15, 2018

Solar Industry Looks for Bright Spots on Tariffs

By Rich Heidorn Jr.

NEW YORK — Solar industry officials last week expressed confidence that the sector will continue to grow despite the Trump administration’s tariffs on imported solar cells and modules. But they told Bloomberg New Energy Finance’s Future of Energy Summit that the levies have hurt in the short term.

Trump tariffs solar industry — BNEF’s Hugh Bromley (far left) interviewed (left to right) Vikram Aggarwal, EnergySage; Abigail Hopper, SEIA; Nam Nguyen, SunPower; and Scott Wiater, Standard Solar | © *RTO Insider*

“They were more of a punch to the gut than a complete decapitation, which is what we feared,” said Abigail Hopper, CEO of the Solar Energy Industries Association. “And so, while they will certainly have a dampening effect on the industry — and I think we’ll see that for years — I feel fairly confident that it will continue to grow.”

“It certainly slowed things down. We were seeing a slowing of project flow,” said Scott Wiater, CEO of Standard Solar, which provides financing and management of utility-scale solar projects. “But recently we’ve seen it start to pick up tremendously. I think a lot of developers have been sitting on projects, waiting for the tariff decision and tax [legislation] to settle down. [There was also] some seasonality thrown in there. And now we’re really starting to see it ramp back up.

“I do think in some states where it’s a difficult environment [to operate] it may have iced the markets. But in states that are solar-friendly, I think we’re going to hit the ground running.”

Vikram Aggarwal, CEO of EnergySage, which provides a portal for homeowners researching pre-screened rooftop PV installers, agreed that the impact has varied by geography. Aggarwal said a survey of his company’s installers indicated two-thirds planned to absorb all or most of the cost increases, with one-third saying they would pass most of the increases to consumers.

“It actually seems like it’s playing out that way. … We’re seeing prices roughly 1% down on a national basis compared to last year. In certain markets like California, the prices are actually down quite a bit. In markets that are less developed, less mature, prices are trending up. It’s a tale of two cities.”

Aggarwal said consumers have not been scared away by the tariffs. “The consumer interest is actually very strong this quarter. We’re running about 150 to 200% above year-over-year.”

Wiater said he has no fear of higher prices squelching consumer interest. “I think we may have an oversupply situation coming very quickly and prices could come down below what … analysts are expecting very quickly.”

Hopper said the tariff debate brought it new conservative allies in D.C., with the American Legislative Exchange Council (ALEC), the Heritage Foundation and R Street Group joining SEIA in opposing the levies.

Portrayals of the solar industry as split over the tariff debate were inaccurate, she said. “It really was two companies [who filed the complaint that prompted the tariffs] against 1,000 others.” She said about 20 solar companies have reported the loss of jobs or investments. “It is serious and harmful,” she said. (See Tariff to Pinch US Solar Growth; Factory Surge Unlikely.)

The solar industry lost 10,000 jobs (3.8%) last year, dropping to 250,271, according to the Solar Foundation’s National Solar Jobs Census. It was the first year-over-year drop in employment, said Hugh Bromley, head of U.S. solar for BNEF, who moderated the discussion.

Even so, 29 states added solar jobs. The prospects of job growth has helped open doors for the industry, Hopper said.

“In terms of electricity generation, solar creates more jobs than all fossil fuels combined, which is an incredible statistic that now more people in Washington know,” she said. “One of the great outcomes [of the tariff case] was we did so much education among all these brand new policymakers in Washington. And when we talk about the amount of jobs, and the jobs in relation to other industries and other fuel sources, that was always a point on which I felt like we’re getting traction. Because we’re now talking about jobs in lots and lots of red states.”

April 15, 2018

FERC Rejects CAISO CPM Proposal

By Jason Fordney

FERC last week rejected a major CAISO proposal to expand its backstop procurement process to prevent the early retirement of generation needed to maintain near-term reliability, saying the grid operator needs to “propose a more comprehensive package of reforms.”

In its April 12 order (ER18-641), FERC sided with parties that had protested CAISO’s Capacity Procurement Mechanism Risk-of-Retirement (CPM ROR) program, including the California Public Utilities Commission (CPUC), six California cities, the state’s three investor-owned utilities and the ISO’s Department of Market Monitoring.

CAISO CPM ROR FERC resource adequacy — Calpine’s Yuba City plant is one that is under a reliability-must-run contract

“We find that CAISO has not adequately demonstrated that its proposal addresses the front-running concerns raised by protesters and that the proposal will avoid potentially deleterious effects on the competitiveness of capacity procurement under CPUC’s resource adequacy program,” FERC said.

CAISO spokesman Steven Greenlee said Friday that the ISO is reviewing the order “and will be considering our next steps as part of the ongoing stakeholder process.” In recent meetings, ISO officials have been telling market participants they expected FERC to approve the rule changes.

But stakeholders had been critical of the program throughout the development process. (See CAISO, Stakeholders Debate RMR Revisions.)

CAISO has two major backstop procurement programs, CPM and its mandatory reliability-must-run program that is also raising stakeholder objections for providing out-of-market payments to keep gas-fired generators online. The ISO is considering merging the two programs.

The rejected CPM ROR program would have expanded the existing CPM process to include procurement of at-risk capacity needed for the next resource adequacy compliance year. The process would have included two request windows for generators to seek a CPM designation, one in April and other in November of each year. FERC said that in practice, CAISO currently makes the designation in mid-December at the earliest for the following year, which generation owners complained occurs too late in the year for their planning decisions.

CAISO CPM ROR resource adequacy — CAISO’s proposed two windows for units to pursue CPM designations | *CAISO*

But the CPUC argued that the spring application window would allow resources to “front-run” its resource adequacy process and could lead to other gaming by resources because CPM revenues might exceed market revenues. IOUs raised concerns that a more holistic approach is needed and that CAISO did not consider the interplay with RMR, which is a mandatory contract unlike the voluntary CPM.

The CPUC has also battled with CAISO over RMR designations for gas units, and in February it hastily crafted and passed an order mandating that CAISO-approved RMRs be replaced with energy storage by 2019. (See CPUC Targets CAISO’s Calpine RMRs.)

Stakeholders also complained that the CPM proposal’s cost-based compensation provides for full cost recovery while also allowing resources to retain revenues earned in the ISO’s market. The Monitor had argued the units should not receive compensation beyond their cost of service, and that the changes could affect the bilateral resource adequacy market.

CAISO had contended that “front-running” of the RA process would not occur, but FERC said “the potential for the spring request window to distort prices or otherwise interfere with the bilateral resource adequacy process have merit and are significant enough to render CAISO’s proposal unjust and unreasonable.”

FERC also said that CAISO’s development of the current package of RMR/CPM changes indicate a need to more closely align the two programs. The commission said there is a “need to evaluate the fundamental reliability and market factors associated with resource adequacy as a whole.”

The commission said CAISO should revisit the issues of RMR/CPM compensation, evaluate whether both need to be retained and examine how the CPM designations could affect procurement. CAISO will make quarterly filings beginning June 1 to give updates on the stakeholder process and any changes that occur as it progresses. FERC said it would not move or act on the filings.

April 15, 2018

FERC OKs MISO Queue Deadline Change

FERC last week approved MISO’s proposal to shorten the window of time it allows generation owners to alter estimated capacity volumes for projects in the interconnection queue.

The commission’s decision clears MISO to require interconnection customers to finalize their requested network resource interconnection service (NRIS) megawatt values during “Decision Point II” — roughly 200 days into the queue (ER18-835). The revision became effective April 11.

MISO Decision Point II — | © *RTO Insider*

FERC said requiring a final figure earlier in the process should help MISO achieve its goal of reducing unscheduled queue restudies in order to cut down on the number of months projects spend in the queue.

“MISO’s current proposal is a modification to further streamline its interconnection process and to prevent unscheduled, ad hoc restudies late in the interconnection process. We agree with MISO that unscheduled restudies will be less likely under the timeline established by MISO’s proposal,” FERC said.

The RTO’s previous process allowed interconnection customers to revise their requested level of NRIS up until after the final system impact study of the definitive planning phase of the queue.

MidAmerican Energy protested the change, saying that MISO and neighboring balancing authorities often do not complete affected-system studies on each other’s territories in time for Decision Point II, making an informed decision on NRIS levels impossible. But FERC ruled MidAmerican’s argument was underdeveloped and that “the benefits of reducing the potential for restudies and keeping the queue process on schedule outweigh MidAmerican’s concerns about potentially having less information at the earlier decision point.”

FERC held a technical conference earlier this month to gather ideas on how RTOs can better align their affected-system studies. (See Renewable Gens Face Off with RTOs at Seams Tech Conference.)

— Amanda Durish Cook

April 15, 2018

Overheard at Bloomberg New Energy Finance Summit

NEW YORK — Hundreds of investors, utility executives and others gathered last week for Bloomberg New Energy Finance’s Future of Energy Summit, where electric vehicles, energy storage and renewables dominated discussions. Here’s some highlights.

Murray Weeps over a Future Without Coal

Robert Murray has been trying for more than a year to persuade President Trump and Energy Secretary Rick Perry to provide subsidies for the utilities that buy Murray Energy’s coal. (See Photos Show Murray’s Role in Perry Coal NOPR.)

Last week, he took his message — that the grid cannot be resilient without coal generation — to a skeptical audience at the BNEF conference.

“I’m probably the only coal guy in the room. I’m also an American,” he said, pausing to gather his composure after tearing up. “The recent polar vortex shows our grid is not as reliable as grid operators would like you to believe.”

Murray criticized FERC for rejecting Perry’s proposal to subsidize coal and nuclear plants with onsite fuel and said Perry should approve FirstEnergy’s request for an emergency declaration to protect coal plants. (See Perry Hints DOE Won’t Grant FES ‘Emergency’ Request.)

Hundreds of investors, utility executives and others gathered last week for Bloomberg New Energy Finance’s Future of Energy Summit, where electric vehicles, energy storage and renewables dominated discussions. | © *RTO Insider*

The declaration “has to be [made] or we’re going to have a disaster. … Will we have to have a system collapse before recognizing that something has to be done about the security, resiliency and reliability of the power grid?” he asked. “Barely one-half of [remaining coal] plants generate enough revenue to cover their expenses. There has to be a capacity payment there.”

Lynn Doan, head of power and renewables for Bloomberg News, asked Murray about reports by NERC and others that some coal plants were unable to run during recent cold spells because of frozen coal piles. “Did not happen ma’am,” he insisted.

“The poorest 25 million families in this country are putting out 31% of their income for energy — gasoline, oil and electricity,” he continued. “We have an energy poverty problem in this country. We don’t have a global warming problem.

“All of you are building your businesses around climate change. The best thing that could happen is overturning the [EPA’s CO₂] endangerment finding — that artificial thing that has put political correctness ahead of getting the lowest-cost electricity for the people on fixed income, for that single mom, for that manufacturer.”

Power Markets Under Stress

Although most of the conference focused on advances in renewable technologies, there was some discussion of the impact of those resources on organized power markets.

“We know that clean, zero-marginal cost energy does fundamentally change the way the power markets work,” said Albert Cheung, BNEF’s head of global analysis. He cited BNEF modeling on the impact of adding 5 GW of solar in Texas. “It creates $300 million going toward solar. But you also destroy about $2 billion worth of revenue for other generators, whether it’s gas or coal or wind or nuclear. In California we already see this happening,” he said, with even solar “cannibalizing itself already.”

“Be wary of capacity mechanisms which bake in solutions of the past,” he added.

Former FERC Commissioner Nora Mead Brownell said she is confident organized competitive power markets will survive state and federal interventions to protect favored generation resources.

Brownell (left) and Nason | © *RTO Insider*

“I think it’s easy to sit in a vertically integrated market where you have elected regulators who pretty much approve what [utilities] wish and say this life is perfect. What we’ve seen in organized markets is a decrease in price, an increase in innovation and an increase in reliability and investment.”

FERC, she said, is acting properly in considering market redesigns to respond to decreased prices resulting from renewables and cheap shale gas. “They’re doing it in a methodical way based on a fact pattern, unlike kind of throwing subsidies at old solutions. They want to keep the market open for this continuing innovation that you will only see if you let the market drive decisions. You don’t see big huge mistakes in organized markets with big huge ratepayer-funded R&D projects. You don’t see that at all. There’s financial discipline, there’s transparency and there is encouragement of new solutions. It’s not happening fast enough … but I think it’s moving forward now. So, we need to step back and make economic decisions and not political decisions.”

Storage vs. Gas?

David Nason, CEO of GE Financial Services, was asked whether he sees storage as a threat to investments in gas-fired generation.

“I don’t know if storage is a complete competitor to gas yet,” he said. “It’s just one of the variables that we [consider in projecting] a long-term return for these investments. The difficulty with investing in gas without a structured market or without [power purchase agreements] is that these are 30-year, very capital-intensive investments. So, if I can’t get some level of confidence that I’m going to get an adequate return on my cost of capital, I’m just never going to put the money to work there.”

Seeking Deeper Penetration for Electric Vehicles

Reza Shaybani, co-founder and interim CEO of The EV Network, said the EV industry must not be paralyzed by concerns over which charging technologies and business models will survive. “This is going to evolve. This is going to change. What we see today is not necessarily going to be the future business model,” he said. “But it has to start from somewhere.”

Shaybani’s company, which is developing the charging infrastructure in the U.K., conducted a survey of EV buyers in the country and found that 90% were “middle-age men, well educated, very affluent and living in the Southeast and they have at least two or three other cars in their household. That’s … not going to take this revolution forward.”

The revolution will need cheaper vehicles and many more charging stations so that the drive from London to Manchester takes only three hours. “That should not take 18 hours if you are going to stop every 150 miles to charge,” he said.

FERC ISO-NE Allco Renewable Finance Infocast New York Energy REVolution Summit — Urban | © *RTO Insider*

Bryan Urban, executive vice president of Leclanche North America, said there is already a compelling business case for EVs and fast-charging infrastructure for mass transit and fleet vehicles. His company is conducting a pilot project in India for its plan to separate city buses from the batteries to make the capital expenditure model similar to that for diesel vehicles.

The company’s plan — which he dubbed, “taking the sun and putting it on the run” — replaces buses’ depleted batteries for charged ones three or four times daily, a swap which he says takes about three minutes each.

Mary Nichols, chair of the California Air Resources Board, said EVs need more marketing. “Even in California, where we pride ourselves that half of all EVs have been sold in the U.S., we … have done polls that show most people who are in the market for a new car aren’t even aware that there might be an electric car that could serve their needs,” she said. “So, we have a long way to go to really penetrate the thinking of customers.”

Nichols talked of Nissan’s hope to lease the batteries for its Leaf when it launched the first widely available all-electric car in Los Angeles. The plan was to include a mileage guarantee on the batteries, like the miles-per-gallon ratings for gasoline vehicles. “The only way they could do that at a level price was if they could negotiate with the electric utilities a product that would cut across state lines and local lines,” she said. “And after a period of time, they gave up on that idea. There was no practical way to do it.”

“And that’s in a relatively vertically integrated market, as most of the Western U.S. is,” added Colin McKerracher, the head of BNEF’s advanced transportation coverage. “It’s … even harder if you were to be in an unbundled market.”

Utilities are “unfortunately a very fragmented industry in the United States,” acknowledged Pedro Pizzaro, CEO of Edison International. “I think as an industry, we realize that and we’re trying to come to terms with that to help solve that issue. … We get your point, that from an automaker perspective or from a charger manufacturer perspective, they’re looking for as cohesive a national market as possible.”

LNG: No Glut Worries

Speakers at a panel on U.S. LNG exports expressed little concern over a potential glut in supply.

Meg Gentle, CEO of LNG exporter Tellurian, said she expects strong demand from China, which is converting coal furnaces to gas and adding natural gas-powered autos. Gas only represents 6% of total primary energy in the country, she said. Boosting that share to 10% would represent a nearly 70% increase in Chinese demand for the fuel.

She predicted Henry Hub benchmark prices will stay at $3/MMBtu or less for the foreseeable future, noting that it can now be produced for less than $1.

Greg Vesey, CEO of LNG Limited, which provides liquefaction for LNG export terminals, said he expects demand for gas to continue despite the growth of energy storage.

“Obviously the trend toward renewables and the need for storage with those is something to keep watching. … But in all cases, natural gas is going to provide that backup,” he said. “It’s been called the bridge fuel. I think we’re going to see that for a long time.”

Peak Oil Demand by 2035?

Bloomberg energy storage renewables future of energy — Gilvary | © *RTO Insider*

Even if EVs supplant internal combustion vehicles, BP Chief Financial Officer Brian Gilvary said, oil will remain a “baseload” fuel.

“When I first joined the industry 32 years ago, people talked about peak oil supply. We now talk about peak oil demand,” he said. BP projects that peak to hit between 2035 and 2040.

“But we don’t think of it as a peak; we think of it as a plateau,” he added. Even under a scenario in which all internal combustion engines are banned by 2040, “we can see oil demand plateauing at round about 100 million barrels, which is what it is today.”

Corporate Purchasing of Renewables

Rob Threlkeld, global manager for renewable energy General Motors, said he’s been encouraged by the increasing number of utilities offering “green” tariffs to corporate buyers who want to purchase renewables. “I want price stability. I want to be able to understand what my costs are today and tomorrow. That allows me to be able to then [make] long-term commitments.”

“For a while, there was this huge tension between the renewable energy market and the regulated utilities. There was a significant pushback for years and years,” said Conor McKenna, managing director at investment bank CohnReznick Capital. “It was like when you were going into the regulated markets, you just had to put your mouthpiece in because it would be a battle. Now it feels like a lot of the guys that are coming to us [to deploy renewables] are regulated utilities [asking], ‘How can we incorporate a greater allocation of these resources into our portfolio?’”

— Rich Heidorn Jr.

April 15, 2018

MISO Market Subcommittee Briefs: April 12, 2018

MISO last week said it has concluded that a short-term capacity reserve product would be cost-effective and beneficial to reliability.

An evaluation paper released last month said the product would “strengthen MISO’s vision for reliable and economically efficient markets.”

MISO Market Design Advisor Bill Peters told an April 12 Market Subcommittee meeting that the RTO plans to design a market product that can provide capacity within 30 minutes on the recommendation of the Independent Market Monitor, who last year said a local reserve product could provide voltage support, local reliability and subregional capacity. (See MISO Board Hears State of the Market Recommendations.)

Last year the RTO incurred about $35 million in revenue sufficiency guarantee payments to cover load pocket needs and regional dispatch transfers over its contract path on SPP transmission from MISO Midwest to MISO South. The annual amount was “much more in some previous years,” MISO said.

MISO short-term capacity reserve — Make whole payments MISO has incurred to manage the MISO-SPP contract path between MISO Midwest and MISO South | *MISO*

The RTO currently makes “inefficient, out-of-market commitments to address operational needs” in both load pockets and regional areas, Peters said.

Staff have said that a short-term capacity reserve would be especially helpful in South, which has less than 500 MW of offline capacity available within 30 minutes. West of the Atchafalaya Basin (WOTAB) has 100 MW of 30-minute reserves, while Amite South has none. (See MISO Researching 30-Minute Reserves, Multiday Commitments.)

Peters said MISO envisions the short-term capacity reserves as an ancillary service to be deployed in late 2019. The RTO will now move into a conceptual design phase.

Minnesota Public Utilities Commission staff member Hwikwon Ham asked how MISO arrived at the requirement that the reserve product must be delivered within 30 minutes rather than another length of time.

“Some of the needs, particularly the [regional dispatch transfer] constraint, are 30 minutes,” Peters replied.

Northern Indiana Public Service Co.’s Bill SeDoris asked if the cost of maintaining a reserve product would be shared footprint-wide.

Peters said MISO is considering employing a “nesting” approach for the product in which load needs are determined by specific demands on load pockets.

“I’m just concerned that the entire footprint could be responsible for what are very localized problems,” SeDoris said.

Peters said MISO must still iron out numerous details of a new reserve product, including determining how the service would interact with other existing ancillary services, creating scarcity pricing and demand curves for the new reserves, and identifying how commitment would be justified in settlements.

MISO Manages Chilly February

MISO reported a 76-GW average load during February, down from the average 83 GW in January as winter wound down across the footprint.

Average prices likewise decreased month over month from $41.75/MWh to $25.05/MWh in the day-ahead market and $39.68/MWh to $25.36/MWh in the real-time. Systemwide energy prices in February were “kept flat” with the help of natural gas prices below $3/MMBtu. Average Henry Hub gas prices were $2.64/MMBtu.

Load peaked for the month at 94.6 GW on Feb. 8, 7.5 GW above the previous February’s peak load of 87.1 GW. MISO said average monthly temperatures were lower than the prior two years but higher than in February 2015.

— Amanda Durish Cook

April 15, 2018

Former Intergen CEO Recommended for PJM Board

PJM’s Board of Managers announced in a letter to members last week that the Nominating Committee is recommending former InterGen CEO Neil H. Smith to replace Chairman Howard Schneider, who will retire from the board at the RTO’s Annual Meeting next month.

The committee also recommended re-electing current board members Neel Foster and Sarah Rogers. The Members Committee will vote on the candidates at the Annual Meeting.

Smith was selected following a national search, assisted by the Heidrick & Struggles search firm, that included candidates suggested by current board members. He retired from InterGen in 2016 after 25 years with the company, working his way up from development director.

InterGen operates 11 power plants with a generation capacity of 7,686 MW, three compression facilities and a 40-mile gas pipeline. The facilities are located in the U.K., Netherlands, Mexico and Australia. The company is jointly owned by the Ontario Teachers’ Pension Plan and China Huaneng Group/Guangdong Yudean Group.

Smith also served as a non-executive director and board member of The Wood Group, a worldwide service provider for the oil-and-gas and power generation industries. He was on the board for nine years, between 2004 and 2013, according to his LinkedIn profile.

— Rory D. Sweeney