By William Opalka
The New England Power Pool (NEPOOL) is considering redesigning its market rules to align them with the region’s efforts to reduce carbon emissions from the generation sector.
The first of six scheduled stakeholder meetings on the Integrating Markets and Public Policy (IMAPP) process was held Aug. 11.
The goal is to provide guidance to ISO-NE on how wholesale markets could be adapted to meet the public policy goals of the New England states. The group hopes to complete its work by the RTO’s annual meeting Dec. 2 with market rule changes filed with FERC beginning next year.
NEPOOL, created in 1971, has more than 440 members (with about 260 voting members), including utilities, independent power producers, marketers, load aggregators, end users and demand response providers.
RTO Insider recently spoke to its chairman, Joel S. Gordon, whose day job is director of market policy at Public Service Enterprise Group’s PSEG Power Connecticut unit. The interview has been edited for clarity.
New England has usually had an active public policy agenda related to energy, but this is a rather different way to approach this topic. So, why now?
“If you look at the New England states, there has been a rather large consensus that the environmental objectives that the individual states have are all heading in the same direction. The states have different means to achieve them, but they are all part of the Regional Greenhouse Gas Initiative, and some of them have even more aggressive targets than RGGI.
“They have outlined means to achieve [decarbonization] through mandates for aggressive carbon reduction and renewable energy goals, so in order to meet those targets that have been legislatively mandated, they needed to take some actions that are outside of the market.
“Right now, the markets, as we’ve designed them, are not designed to drive the [decarbonization] of the generation fleet. It is designed to find the most efficient set of resources and to meet a reliability need, which has been the mission of NEPOOL and ISO-NE throughout the entirety of their existence.
“The recognition of our members has been that over the last couple of years, as we’ve seen more programs come out of the states, we’ve recognized that the markets were not really not going to give them what they needed, so the states took these out-of-market actions. [IMAPP] is a recognition that the states have legitimate public policy goals, so the markets should be designed to help achieve those public policy goals.”
The state RFPs and the Massachusetts legislation mandating hydropower and offshore wind are examples of these out-of-market actions. [See Massachusetts Bill Boosts Offshore Wind, Canadian Hydro.]
“From the states’ perspective, the markets weren’t moving fast enough to get them where they needed to be and that’s where these big RFPs come from, and the Massachusetts legislation. Our goal at NEPOOL and for the region is to create a competitive market signal to get the states what they need so they don’t have to act on their own. If we’re successful, the markets on their own will find the most cost-effective means in meeting those state objectives.”
In remarks to stakeholders, you said, “No other RTO has done this before.” Are you optimistic that you can meet these challenges, or is it a bit frightening that New England is out there a bit alone, perhaps the first region trying to integrate markets to this extent with public policy?
“I’m incredibly optimistic that we can find solutions to the problems that we face, the challenges before us. That’s what NEPOOL is really good at as a stakeholder organization. We have six different governing sections that look at our industry from all different perspectives. This is what the IMAPP initiative is, reaching out to the members as they try to find solutions to the challenges.
“I’m also optimistic that the states have encouraged us to do this. They recognized that in [the multistate requests for clean energy] that there’s potential in what the markets have developed. But recognizing they have objectives mandated in their legislation, we can provide a pathway to achieving their objectives using the discipline of competitive markets.”
You seem to have a pretty aggressive schedule in what seems to be a large task ahead of you. Are you confident you will have a consensus document to present to ISO-NE in December?
“The process that we’ve set up [six meetings over four months] is an aggressive schedule. But it’s also important that we put ourselves in that schedule so when we start out in 2017, that we’ll be in a position to respond to the mandates that are out there legislatively. They have carbon reduction goals, so we have to start the process sooner, rather than later, to go to a market-based solution. It also provides the states with an opportunity to see what NEPOOL is doing. They may see there is less pressure for them to act if they see what we’re doing. Really, it’s our first step. I think we’ll be able to get to a high-level framework document by December.
“We hopefully will have a framework for a suite of solutions that would achieve a set of objectives, then we would get into the traditional NEPOOL process that works with ISO-NE and begins to analyze how it would work with the market rules. Then we would begin to work that into the Tariff revisions that would implement it.”
Do you see this process being informative for other RTOs, or do you see New England’s situation as unique?
“We are looking to the other regions as well to understand other concepts that are out there that may help to achieve our goals, which are somewhat unique to New England. We see some of this discussion in PJM in their Grid 20/20 process. [See PJM’s Grid 20/20 Ponders Mixing Public Policy, Competitive Markets.] But integrating public policy is not part of their mandate. In New England, we are fortunate in there are six states and they’re pretty much aligned, as opposed to [PJM’s] 13 states [which are not].”
Would it lead to inefficient market outcomes if rules that go into effect 10 years from now run counter to commitments that states make now through long-term power purchase agreements?
“Timing is going to be a challenge, there’s no question. We’ve talked about two timelines that we need to deal with [10-year goals and 30-year goals for emission reductions.] … I think we’re going to have to work on integrating the short-term and the long-term. I’m not sure how that happens. That’s one of the things that this process is going to have to deal with.”
The Omaha Public Power District has notified the Nuclear Regulatory Commission that it will permanently shut down its Fort Calhoun reactor on Oct. 24. The OPPD board unanimously approved a recommended shutdown in June, but officials had not provided a date for when the plant would stop operating, only saying it would by the end of the year.
Southwest Research Institute has received a $3.28 million grant from the Energy Department to develop a project that could eliminate smokestacks and reduce emissions from coal-fired power plants.
Energy Department representatives said that retrofitting the Colstrip coal-fired power plant in Montana to reduce greenhouse gas emissions would cost at least $1.2 billion, but that price tag could be partially offset by selling captured carbon dioxide for use in oil fields. Colstrip emitted about 16.5 million tons of CO2 in 2014, two-thirds of the state’s total, according to EPA.
FERC has approved an expansion of one of Dominion Transmission’s natural gas pipelines necessary to serve new generating stations in Maryland and in Virginia. Dominion filed to expand the Leidy South Project in May 2015.
The Nuclear Regulatory Commission cited FirstEnergy for failing to provide accurate medical information after a nuclear operator at the company’s Davis-Besse plant lied about taking his prescribed medication.
A main transformer fault at the Tennessee Valley Authority’s new Watts Bar 2 nuclear station caused a transformer oil fire and tripped the reactor last week. The incident occurred during testing of the unit before it goes into commercial operation.
Imperial Irrigation District, which generated public backlash after it cut off enrollment in its net metering program earlier this year, will allow as many as 1,300 new rooftop solar customers to sign up for the preferential rate.
A state appeals court last week reversed a lower court decision that would have forced the Public Utilities Commission to disclose its communications related to the agency’s settlement with Southern California Edison over the closure of the San Onofre nuclear generating station. 
The Agency for Energy and the Department of Health and Human Services approved $89.5 million in Energy Assistance Program grants last week for 14 nonprofits and utilities.
Land Commissioner Aubrey Dunn last week gave right-of-way approval to the Southline Transmission Project, a proposed 345-kV double-circuit line that would cross into Arizona. Developers must still submit detailed plans about the exact location of structures and roads associated with the line, along with cultural and biological surveys.
The Austin City Council last week unanimously approved Austin Energy’s request to redo its residential electric rates, but not before the city-owned utility first dropped a controversial proposal for an increase. Under the revised rate structure, the municipal utility’s 400,000 residential customers would see bills cut by about $62/year.
A State Corporation Commission hearing examiner rejected an argument by Appalachian Power that third-party solar financing was illegal, paving the way for homeowners to sign up for the popular method of paying for residential solar-system installations.
The Department of Natural Resources has granted a waterway and wetlands permit for Enbridge Energy to replace a section of old oil pipeline.
