ISO-NE Leaves Boundaries Unchanged for FCA 11

By William Opalka

WESTBOROUGH, Mass. — ISO-NE will propose that the zonal boundaries for its 11th Forward Capacity Auction remain unchanged from those set for this year’s auction.

Transmission projects expected to be in service by 2020 are adequate to leave the boundaries of the four zones intact for the capacity commitment period of 2020/21, ISO-NE Director of Transmission Services and Strategies Al McBride told the Planning Advisory Committee last Tuesday. The zones are also unaffected by resource retirements and additions already accounted for.

The four zones are: Southeast Massachusetts/Rhode Island, which includes Greater Boston; Northern New England, which includes Maine, New Hampshire and Vermont; Connecticut; and Rest of Pool, generally central and western Massachusetts.

The zones were reconfigured last year due to transmission constraints in SEMA/RI caused by generation retirements. However, ongoing transmission projects are expected to mitigate the effects of those retirements: The Greater Boston upgrades north of the city have been accepted by ISO-NE, and several projects in Rhode Island have been either completed or will be in response to the Brayton Point retirement in southern Massachusetts. (See ISO-NE Chooses $740M Land-Based Tx Project for Boston Area.)

In addition, a “significant part” of the Greater Hartford/Central Connecticut upgrades have been certified by ISO-NE and are expected to be in service by June 2019, McBride said.

External transfer limits will not be changed. However, McBride said the Cross Sound Cable that connects ISO-NE with NYISO under Long Island Sound will be re-evaluated with results due by May.

March 28, 2016

MISO Board of Directors Meeting Briefs

NEW ORLEANS — MISO will commence its long-term Clean Power Plan analysis in July regardless of the existing Supreme Court stay, Clair Moeller, executive vice president of transmission and technology, told the Board of Directors last week. Moeller said the RTO would provide individual state data to officials in all states, including those having placed a “hard stop” on CPP preparations.

FERC Chairman Norman Bay at MISO Board of Directors (copyright RTO Insider) — Bay *© RTO Insider*

FERC Chairman Norman Bay, who attended the board meeting, said he hoped MISO states challenging the CPP and halting compliance work had a “Plan B.” He also thanked the RTO for its “uniquely constructive and pragmatic voice” in supporting the measure.

“We know we’re on a glide path already with low-cost wind turbines, lower-cost solar panels and greater efficiency,” board member Tom Rainwater said. He asked how the economics of renewable penetration would play out even if the CPP is struck down.

Moeller called that one of the more complicated questions MISO would seek to answer through remaining modeling, saying the RTO’s “job is to plan into an uncertain future.”

MISO-Board-of-Directors-Meeting-(copyright-RTO-Insider) with Norman Bay — MISO Board of Directors Meeting *© RTO Insider*

Bay said that if analysts are correct in predicting a 50% decline in the cost of storage by 2020, storage technology could be a “game changer” for renewable penetration.

“Everyone knows the cost of energy storage will decline,” Bay said. “It’s a question of how much and when. … This is an area where I expect FERC to do more work and work to remove barriers to entry.”

MISO YTD Financials 1% Over Budget

MISO’s year-to-date February financials came in $400,000 — or 1.1% — over the RTO’s $36 million budget for the period.

Most of the overage — $300,000 in additional costs for “compliance and process-improvement activities” is a permanent variance, said Vice President of Finance Jo Biggers, who said MISO was seeking to trim other spending to make up for the shortfall.

“We’re still forecasting to be on budget by the end of the year,” Biggers said.

Board member Paul Bonavia noted that the board had “only just finalized the budget, and we already have a permanent variance.”

“We’re going to figure out a way to cover it by reducing costs somewhere else,” MISO CEO John Bear told the board.

The overrun occurred despite MISO spending only $6 million of its forecasted $7.1 million capital budget, mostly because of project delays. Biggers said capital spending is expected to fall in line by the end of March when projects catch up to their timelines.

MISO Adds Transmission Developers, Industrial Customer Group to Membership

MISO’s board unanimously approved membership applications for three non-transmission owning entities, including:

Cobra Industrial Services, a Houston-based transmission developer;
Transmission developer PPL TransLink, a unit of Pennsylvania-based PPL; and
Louisiana Energy Users Group, an association of 23 industrial customers.

— Amanda Durish Cook

March 28, 2016

MISO Proposes Adding Forward Auction for Retail Choice Zones

By Amanda Durish Cook

NEW ORLEANS — Deregulated markets in MISO would get a three-year forward capacity auction beginning in 2018, under a proposal unveiled by the RTO last week.

Forward Capacity Auction - Retail Choice Zones - Dynegy's Baldwin Energy Complex in IL — Dynegy’s Baldwin Energy Complex in MISO

The RTO announced the proposal after reviewing stakeholder recommendations for addressing the capacity needs of retail choice regions such as southern Illinois’ PJM-Type Capacity Auction for MISO Zone 4 Proposed.)

“It is now evident MISO’s markets … need to effectively and efficiently signal the need to maintain existing and/or invest in new resources necessary to assure resource adequacy in competitive retail areas that rely exclusively on markets,” MISO said. “Given the existing [Planning Resource Auction] was not designed to meet this need, narrowly focused reforms are required to complement the existing market construct while also preserving the benefits currently derived by most of MISO’s region from simple capacity balancing.”

The proposed Forward Local Requirements (FLR) auction would be held three years in advance of the planning year and employ a downward sloping demand curve. Procured local capacity would be self-scheduled into the existing PRA with costs allocated pro rata to participating load-serving entities.

LSEs not subject to retail choice will continue to procure capacity through state integrated resource plans and the PRA using the current vertical demand curve.

“These enhancements are designed to have no impact on the existing state or local jurisdictional long-term planning processes for those that do not participate,” MISO said. “The effect will be that nonparticipating LSEs and participating LSEs will have different price sensitivities to purchasing … capacity in the auction.”

Design Elements

The RTO proposed to hold the first FLRAs in spring 2018 for planning years 2019/20 through 2021/22. The amount of capacity retail choice LSEs obtain under the sloped demand curve would be variable, within a newly defined “target reliability range.” Any capacity needs not met through the forward auctions will be filled through the existing prompt-year capacity auction.

While LSEs in deregulated areas would be automatically entered into the FLRA, they could opt out by developing a fixed resource adequacy plan in advance of the auction. LSEs outside of deregulated areas could opt-in to the forward auction but would be required to remain for at least five years.

Participation will be voluntary for supply resources except for those in a local resource zone with participating demand. Such resources will be subject to existing market power rules.

Supply resources owned or controlled by LSEs will be exempt from the must-offer requirements if the LSEs have forecasted demand equal to or more than their supply portfolios.

Seasonal Construct

The forward capacity product would match the two-season construct MISO proposed in December for the PRA, with a four-month summer season (June-September) and eight-month winter (October-May). The RTO hopes to implement the seasonal structure for the 2018/19 planning year. (See MISO Delays Seasonal, Locational Capacity Constructs.)

MISO officials said the RTO is committed to working with stakeholders to refine the new auction proposal. “I think the key is keeping that stakeholder dialogue going, and we’ll continue that in the April Resource Adequacy Subcommittee,” MISO CEO John Bear said.

In a recent letter to stakeholders, MISO Executive Director of Market Design Jeff Bladen wrote, “The goal is to ensure MISO’s capacity market design is up to the task of serving as the primary market mechanism for assuring resource adequacy in all time horizons in competitive retail areas of the MISO region while also serving a complementary role in the rest of MISO.”

MISO plans to file a final proposal with FERC in July, according to Bear.

March 28, 2016

State Briefs

ISO-NE Launches 2016 Regional Electricity Outlook

New England’s power grid is on course to becoming a hybrid system in the next decade, where up to 20% of its resources are provided by retail customers or by local distribution utilities, according to ISO-NE’s 2016 Regional Electricity Outlook.

Among the report’s highlights: More than 4,200 MW of the region’s conventional nuclear, coal- and oil-fired generating capacity has retired recently or is scheduled to retire soon; about a third of the 13,000 MW of proposed generation projects are wind resources; and pipeline constraints and few delivery points for LNG will continue to pose challenges for fuel supply.

More: ISO-NE

Study: 569,000 Clean Energy Jobs in Midwest

The 12 Midwestern states are home to nearly 569,000 clean energy jobs, with projected employment growth of 4.4%, according to a study by Chicago nonprofit Clean Energy Trust. Kansas and Indiana both had below-average predicted growth in the sector, while Missouri leads with a projected growth of 8.3%.

The analysis is based on U.S. Bureau of Labor Statistics data and a survey of thousands of businesses in the region. The comprehensive report not only breaks down job numbers by state, but by Congressional and state legislative districts as well.

The study also found that energy efficiency is by far the leading clean energy sector, employing more than 423,000. The runner-up, renewable energy, boasts about 70,000 jobs.

More: Solar Industry Magazine

CONNECTICUT

Emissions Would Spike Without Millstone Plant

If Dominion Energy’s three-reactor Millstone Power Station were to close, more than 1,000 jobs would be lost and carbon emissions in New England would increase by 27%, officials told a legislative panel.

The nuclear plant is not endangered, but the General Assembly’s Energy and Technology Committee discussed the announced closure of Pilgrim nuclear station in Massachusetts as the industry struggles to remain financially viable in a market flooded with cheap natural gas.

“I do not anticipate in the short term the need to shut down Millstone,” said Daniel G. Stoddard, senior vice president of nuclear operations for Dominion. “However, the challenges exist, the challenges are significant and the trends continue to make those challenges more difficult.” The Waterford facility is the largest nuclear power station in New England; it provides about 2,100 MW, or roughly half of Connecticut’s electrical consumption.

More: Hartford Courant

ILLINOIS

ComEd Using Smart Meters To Gauge GHG Effects

Commonwealth Edison will begin using data collected by smart meters to calculate greenhouse-gas reductions that can be linked to initiatives to reduce peak demand.

The Chicago utility is using a metric proposed by the Citizens Utility Board and the Environmental Defense Fund to calculate emission reductions at specific hours. A kilowatt-hour saved during times of high carbon intensity, when more power is generated by less efficient means, is more valuable than one saved during periods when more renewable energy is being pumped onto the grid.

“As the first utility in the country to adopt this greenhouse gas measurement tool, ComEd is leading the way to a cleaner energy future,” said Dick Munson, EDF’s Midwest director of clean energy.

More: SmartGrid News

LOUISIANA

PSC Postpones Action On $4.9B Cleco Acquisition

State regulators on March 21 agreed to postpone until this week whether to reconsider their rejection of international investors’ $4.9 billion bid for Cleco. The Public Service Commission is considering whether to change last month’s order that nixed the acquisition of the utility.

More: The Advocate

MASSACHUSETTS

Former Secretaries Support Baker Bill

Three former state energy secretaries are supporting Republican Gov. Charlie Baker’s proposal to solicit long-term contracts for hydropower.

Maeve Vallely-Bartlett, Rick Sullivan and Ian Bowles, who served under former Democratic Gov. Deval Patrick, offered bipartisan support for legislation requiring utilities to solicit long-term contracts for hydroelectric power. Administration officials have said this would increase the use of hydroelectric power in the state, which is necessary for it to meet its goals for reducing carbon emissions.

The legislation remains bottled up in a legislative committee, although House Speaker Robert DeLeo (D-Winthrop) has said it could be reported out soon. Conventional power generators and environmentalists who support solar and wind energy have criticized the bill.

More: MassLive.com

MICHIGAN

State Wants Pipeline Condition Information from Enbridge

State officials, concerned about the possibility of leaks from pipelines that run under Lake Michigan, have asked Enbridge to provide specific condition information on Line 5, a pair of pipelines that cross the Straits of Mackinac.

The 63-year-old pipelines were recently declared safe by the company, but Enbridge released little detail on its inspections. The state has requested reports from the inline inspection robots used to check on the pipelines’ condition. The state is hiring an outside analyst to review the data.

“The attorney general has said, time and time again, that the days of this pipeline are limited,” said spokeswoman Andrea Bitely. “And doing these independent analyses — this independent risk analysis and the alternative analysis — will tell us what’s next.”

More: Michigan Radio

MISSISSIPPI

Commissioner Says Kemper Will Be Watched Closely

Public Service Commissioner Cecil Brown said Southern Co.’s costly Kemper Project will be closely watched when it goes into operation this year. Brown said monitoring the coal-gasification power plant will be the commission’s biggest challenge in the coming months.

“There are people out there who say Kemper is dangerous,” Brown said at the Stennis Institute’s monthly luncheon. “I don’t know about that, because I’m not an expert. I’ve talked extensively with Mississippi Power and I’ve raised that question and I’ve been assured that it is safe.”

The plant’s gas synthesizer is supposed to go online later this year.

More: Watchdog.org

MONTANA

Judge Nixes Water Permit For Rosebud Coal Mine

A state district judge has struck down a water-discharge permit for a southeastern coal mine, saying officials failed to fully consider the effects of pollutants on several nearby creeks.

In a March 14 decision, Judge Kathy Seeley ordered the Department of Environmental Quality to reconsider the mine’s water discharge permit. She said the agency had shown “clear errors of judgment” in allowing reduced monitoring of pollution from the mine and reclassifying surrounding waterways so they were subject to less stringent pollution standards.

A separate challenge of the state’s approval of a 12-million-ton expansion of the Rosebud mine is pending before the Board of Environmental Review. The Rosebud strip mine produces about 9 million tons of coal a year, primarily for the Colstrip power plant.

More: Billings Gazette

NEW JERSEY

BPU Imposes Cybersecurity Policies on Utilities

Regulated utilities will be required to follow a new set of cybersecurity protocols under policies adopted by the Board of Public Utilities.

The requirements are designed to protect customer information and grid reliability, according to the board. The new standards are based upon recommendations from the state Cybersecurity and Communications Integration Cell, with input from the FBI.

“To ensure that we continually meet the challenges of this ever-changing threat, we have made certain that these policies are uniform yet flexible, promote information-sharing and are capable of evolving as the threat landscape emerges,” BPU President Richard Mroz said.

More: Homeland Preparedness News

NEW MEXICO

Environmental Group Calls for Investigation of Commissioner

Karen Montoya, Democratic candidate for PRC District 1, 2012. mhartranft@abqjournal.com Wed May 02 11:44:17 -0600 2012 1335980652 FILENAME: 130212.jpg — Montoya

An environmental advocacy group has asked the state Secretary of State to investigate Public Regulation Commission Vice Chairwoman Karen Montoya, alleging she has violated the Government Conduct Act through her communications with executives of an electric utility that she regulates.

New Energy Economy, a group that has been engaged in several legal battles with the PRC in the past year, filed the complaint March 17. It said in September several commissioners, including Montoya, were overly friendly with representatives of Public Service Company of New Mexico.

The state Supreme Court considered the complaint in late 2015 before dismissing it.

More: The Santa Fe New Mexican

PENNSYLVANIA

Quaker Group Urges PECO to Embrace Philly Solar Project

The advocacy group Earth Quaker Action Team is demanding that PECO Energy purchase power from potential solar installations in North Philadelphia, one of the city’s poorest areas.

The group predicts that investors will come forward for solar projects if PECO demonstrates there is demand for the output.

A PECO spokesman said that while the utility is open to considering such a program, it is legally required to buy competitively priced electricity.

More: StateImpact; The Philadelphia Inquirer

TENNESSEE

Colbert Fossil Plant Closes after 61 Years

After 61 years of providing electricity to the Tennessee Valley, the Colbert Fossil Plant has been disconnected from the grid.

The Tennessee Valley Authority said more than a year ago that the plant would close by April 15, when new regulations for mercury and air toxins go into effect.

Employees were offered transfers to similar jobs at other TVA fossil fuel plants.

More: The Chattanoogan.com

TEXAS

Environmental Groups Try to Block Nuclear Expansion

Environmental groups want the Nuclear Regulatory Commission to revoke licenses for two new reactors at the South Texas Project, claiming the project is controlled by a foreign owner in violation of the Atomic Energy Act.

Public Citizen, the Sustainable Energy and Economic Development Coalition and the South Texas Association for Responsible Energy say Japanese company Toshiba, which owns 10% of Nuclear Innovation North America, has been fully funding the pre-licensing proceedings for two new reactors. “In our view, the entity who funds it then has the ability to control it,” said Robert Eye, an attorney representing the groups. NRG Energy owns 90% of the project.

NRC recently approved two new reactors at the site southwest of Houston, where two reactors currently produce about 2,700 MW. NRG is holding off on building the reactors because of low natural gas prices and a lack of demand for new energy in the state.

More: Victoria Advocate

VERMONT

Renewable Energy Siting Legislation Opposed

Critics of the state’s process for selecting sites for renewable energy projects are opposing proposed legislation designed to give regional planning commissions greater say in where solar and wind power projects are located.

Leaders of the Energy Transformation Coalition and Energize Vermont said Senate Bill 230 still gives the Public Service Board too much ability to override the wishes of residents when approving renewable energy projects.

“Energy developers are running roughshod over our communities,” said Mark Whitworth, president of the board of Energize Vermont. “The result is an energy rebellion that has now spread to 128 towns.”

More: The Associated Press

WISCONSIN

PSC: State’s Electricity Rates Among Highest in Midwest

Electricity rates in the state are among the highest in the Midwest, but residents pay less than customers in surrounding states because they use less power on than average, according to a recent study by the Public Service Commission.

The study found that 2015 rates in the state were higher for residential, commercial and industrial users than in Michigan and six other Midwestern states. But the same study showed that the typical monthly residential bill was $8 less than those in other states, due to lower consumption.

More: The Associated Press

March 27, 2016

Company Briefs

Duke Energy has announced plans to buy power produced from methane collected from livestock waste.

Duke has contracted with Carbon Cycle Energy, which will build and own a plant that will generate enough electricity from chicken and swine waste to power about 10,000 homes a year.

The plant will likely be located in eastern North Carolina. The state, which falls just behind Iowa as the country’s largest pork-producing state, requires utilities to produce power from swine and poultry waste. The state’s renewable energy law also requires utilities to procure 12.5% of its power from renewable sources by 2021.

More: Insurance Journal

Black Hills Energy Starts Construction on Tx Line

Black Hills Energy has started construction on a 144-mile, $54 million transmission line that will run from northeast Wyoming to Rapid City, S.D.

The 230-kV Teckla-to-Rapid City project is about a year behind schedule because of delays to get permission from property owners, who held out for higher easement payments. The company also needed permission from the federal government to run the line through the Black Hills National Forest.

More: Rapid City Journal; Black Hills Energy

Atlantic Coast Pipeline Sells 96% Of Capacity, Surveys 90% of Route

The operator of the Atlantic Coast Pipeline, a $5 billion pipeline that will deliver natural gas from Appalachian shale fields to Virginia and North Carolina, has sold 96% of the future pipeline’s capacity and surveyed 90% of the 550-mile route, according to an update from the company.

Dominion Energy President Diane Leopold said 90% of the 2,800 landowners along the route have allowed survey teams on their land and 500 have signed easements. She also said that a Pennsylvania steel mill is set to start manufacturing the pipe in a $400 million contract.

More: The Associated Press

Ex-Austin Energy Chief Confirmed As Seattle City Light’s GM, CEO

The former head of Austin Energy was approved as Seattle City Light’s general manager and CEO, despite criticism over his January remarks that Austin’s utility should be run by an independent board and not the City Council.

The Seattle City Council voted 7-2 to confirm a four-year appointment of Larry Weis to run the city’s electric utility. He will earn $340,000 a year.

Council members made few explicit references to Weis’ time at Austin Energy, but his record was central in the public testimony at his confirmation hearings. His supporters praised him for winning over the union that represents Seattle City Light workers and for his decision to hire a director of environment and sustainability issues.

More: Austin American-Statesman

Lincoln Electric Plan Calls for $453M in Upgrades, Expansions

Lincoln Electric System, the Nebraska public utility serving the state capital region, approved a six-year $453 million capital budget to replace and upgrade infrastructure.

Lincoln Electric, an SPP member that has about 120,000 customers, says it expects to add 9,400 customers, move the overhead service lines for 1,800 customers underground and add 44 MW of new load to its system. Its two most costly projects call for $204 million to update overhead and underground distribution and transmission lines and $152 million for power generation facilities.

Almost $100 million is slated to update power plants to comply with EPA’s Clean Power Plan.

More: Lincoln Journal Star

Two Westar Employees Threatened By Residents When Changing Meters

Two Hutchinson, Kan., residents were arrested in separate incidents for threatening Westar Energy employees who swapped out their old electric meters.

County officials charged a resident who held a Wester employee at gunpoint with aggravated assault and kidnapping. Four days earlier, deputies arrested another Hutchinson resident who threatened bodily harm to a Westar employee who had changed his meter.

More: The Hutchinson News

Duke Energy’s California Deal Expands its Solar Stable

Duke Energy Renewables has purchased a proposed 20-MW solar project in California from EDF Renewable Energy. The project, to be built in San Bernardino County near Barstow, will be called the Longboat Solar Power Project.

The output and the renewable energy credits are being sold to Southern California Edison in a 20-year power purchase agreement.

The project, which is expected to come online by the middle of this year, will bring Duke’s solar stable in California to 130 MW. Duke’s regulated and commercial businesses have invested more than $4 billion in solar and wind generation over the past eight years.

More: Duke Energy

Dynegy Announces Closure Of Wood River Plant in June

Dynegy’s coal-fired Wood River plant in Illinois will be shuttered in June after a MISO study concluded it was no longer needed to ensure reliability in the region.

The company said the plant was unprofitable under MISO’s “poorly designed” capacity market. About 90 jobs will be lost when the plant closes. The plant also pays about $1.6 million in community property taxes.

Dynegy anticipates that cleaning up the West Alton plant’s coal ash ponds will cost $18 million. The plant produced 465 MW from its two units, which went into service in 1954 and 1964.

More: The Telegraph

March 23, 2016

UPDATE: Exelon Closes Pepco Merger Following OK from DC PSC

By Suzanne Herel

Exelon closed its $6.8 billion acquisition of Pepco Holdings Inc. on Wednesday, after the D.C. Public Service Commission approved the merger 2-1 on terms it crafted itself.

Two years in the making, the deal will rank Exelon as the largest utility in the country by number of gas and electricity customers.

Pepco shares gained $5.71 (27%) to $26.95 on the news, while Exelon shares lost 28 cents (-0.8%). Pepco stockholders will receive $27.25/share in the deal. PHI’s common stock was removed from the New York Stock Exchange on Thursday.

Pepco’s three operating companies will retain their local headquarters: Atlantic City Electric in Mays Landing, N.J.; Delmarva Power in Newark, Del.; and Potomac Electric Power Co. in D.C.

D.C. also won additional concessions: Exelon will move the offices of the CFO and the chief strategy officer to the district along with that of Pepco Energy Services, which is now in Arlington, Va. David Velazquez will assume the role of president and CEO of PHI, a post previously held by Joseph Rigby, who is retiring.

“Today, we join together as one company to play a vital role as a leader in our industry and the mid-Atlantic region,” Exelon CEO Chris Crane said in a statement. “We’ve made a number of commitments to customers in all of the Pepco Holdings utilities’ jurisdictions — the district, Maryland, Delaware and New Jersey — and we look forward to getting to work to deliver those benefits to our customers and communities.”

An Exelon spokesman said the D.C. agreement triggers the “most favored nation” clauses in the other states’ contracts, and it will be returning to those state regulators to “true up” benefits.

So far, Exelon has committed $430 million for ratepayer credits, reliability improvements and other investments for customers in Pepco’s service territories.

DC PSC Lifeline

Many had expected the deal to fail, after the most recent proposal by Exelon and Pepco was rejected by all but three of the other settling parties.

The companies on March 7 asked the commission to consider three options: Revisit its rejection of the settlement agreement brokered by the administration of Mayor Muriel Bowser; adopt the revised proposal by Commissioner Joanne Doddy Fort; or accept a third alternative that would give the PSC more latitude in how to spend money from the $72.8 million customer investment fund on rate relief. (See Exelon-Pepco Deal Doubtful as DC Officials Reject Alternatives.)

Fort and Commissioner Willie Phillips voted to approve the second option; Chairwoman Betty Ann Kane dissented.

Fort’s proposal took Bowser’s deal and added changes regarding the use of the CIF, the development of a 5-MW solar generation facility at the Blue Plains Advanced Wastewater Treatment Plant and the role of Pepco in establishing public-purpose microgrids.

The Bowser-brokered deal had earmarked money from the CIF for a handful of D.C. groups, including the Sustainable Energy Trust Fund, the District of Columbia Consumer and Regulatory Affairs Green Building Fund and the Low Income Home Energy Assistance Program.

The PSC’s counteroffer takes those funds, totaling $32.8 million, and places them in an escrow account to pay for projects to modernize the district’s energy system and for energy efficiency and energy conservation initiatives focused on housing for low- and limited-income residents. The PSC would have authority over the funds’ disbursement.

In her dissenting opinion, Kane said that developments in the record since she voted to oppose the Bowser settlement in February “give me even stronger reasons to find that the takeover of the district’s electric distribution company by a multi-faceted, vertically integrated, generation-focused holding company … benefits Pepco and Exelon shareholders but does not provide sustainable benefits to district ratepayers, places Pepco within a structure that is contrary to district law and policy and should be rejected.”

Unlike a rate case, she said, the sale of Pepco can’t be reviewed again. “It is gone forever,” she said. “The stated motive of the sellers is to increase PHI shareholder value. The motive of the buyer is to add regulated revenue to prop up Exelon’s failure to pay dividends to its shareholders. However, the needs of Pepco’s customers and the district are for a safe, reliable, modern electricity delivery distribution system at a just and reasonable cost.”

In their order, Fort and Phillips said Exelon’s first option identified no error of law or fact that would warrant a reconsideration of its rejection of the settlement negotiated by Bowser’s office.

It found the third alternative unacceptable for three reasons: It would allocate a $25.6 million base rate credit solely to residential and apartment customers; there was not enough information to determine the implications of the proposed base rate credits; and the shift of funding to rate credits would come at the expense of projects that would make the grid better able to accommodate distributed energy resources.

In offering the settling parties the retooled agreement, the commission already had judged it to be in the public interest.

Fort and Phillips said their revised settlement ensures that the district receives the $72.8 million CIF, which will be used for rate relief, energy conservation programs and projects to modernize the distribution grid and enable it to accept more distributed resources, “thereby further promoting the district’s sustainability agenda.”

“These are all funds that will not be available to district ratepayers or the district if the merger is not approved,” they said, adding that the changes made to the Bowser settlement “ensure that the district’s market remains a competitive one for suppliers who want to bring more renewable energy resources to our city while still requiring Exelon to invest in 7 MW of new solar in the district and 100 MW of new wind” in PJM.

Disappointment and Surprise

Power DC, a coalition formed against the deal, said, “We are profoundly disappointed and saddened that the D.C. Public Service Commission has ignored the clear opposition to the proposed Exelon-Pepco merger voiced by the district’s elected officials, community and business leaders, and residents.

“By approving the merger, the PSC has exposed our city to decades of higher rates, weakened its own ability to guide our city’s energy future and helped ensure that D.C. will fall behind the rest of the U.S. on clean, efficient energy.”

“I don’t think we’re surprised” at the ruling, said Williams Fields, senior assistant in the Maryland Office of People’s Counsel, which has appealed the Maryland Public Service Commission’s earlier approval of the deal. “It’s been down a long path. We haven’t read the ruling yet. We will have to evaluate on how it impacts Maryland in regards to additional funding from our most-favored-nation status. And, of course, we will have to see how it affects our appeal.”

Montgomery County, Md., Councilman Roger Berliner, who had campaigned against the merger, said in a statement that the merger approval was “deeply disappointing.”

“Its approval now means that Exelon will totally dominate the Maryland market,” he said. “Environmental and consumer interests were needlessly sacrificed. The only winners are Pepco shareholders and Exelon’s bottom line, a bottom line that has been hammered by its huge investment in nuclear power.”

David Bonar, Delaware’s Public Advocate, said he was “pleasantly surprised.”

“I’m glad to see that it is finally resolved. Each jurisdiction has its own idiosyncrasies and partners who have a right to input, and I’m glad they all had an opportunity to add their input,” he said.

“I think the [D.C.] PSC made the right decision. Now, we have to figure out exactly what it means to us in regards to additional funding. It will come out to several millions of dollars. I certainly hope we can give energy users some long-term benefits, like meaningful energy efficiency programs.”

The Apartment and Office Building Association of Metropolitan Washington was the only settling party to file its support of the commission’s revised proposal.

Those opposing it were the National Consumer Law Center, National Housing Trust and National Housing Trust-Enterprise Preservation Corp., the D.C. Office of the People’s Counsel, the Bowser administration and the D.C. Water and Sewer Authority.

They took issue with the PSC’s requirement that $25.6 million of the CIF earmarked for residential rate relief be held in escrow until the next Pepco rate case and then be considered for disbursement, including to nonresidential customers.

“Despite the commission’s perplexing approval of a proposal that OPC and most of the other settling parties rejected, the Office of the People’s Counsel is fully prepared to continue to aggressively advocate for ratepayers and fight to ensure that rates remain affordable for consumers, particularly for our most economically vulnerable residents,” People’s Counsel Sandra Mattavous-Frye said.

The NCLC and the NHT were the only settling parties to voice support for the companies’ third alternative.

“Should option three be rejected, the merger is likely to collapse,” they said. “From the perspective of NCL/NHT, this is contrary to the public interest and particularly contrary to the interests of low-income households in the district.”

The General Services Administration, the largest consumer of electricity in the district, had not signed on to the settlement negotiated by Bowser but had voiced concern that the included rate relief would not be disbursed to non-residential customers. It initially supported the commission’s revised proposal, which addressed that issue, but on March 17 filed comments urging the PSC to reject Exelon’s filing.

Exelon has spent an estimated $259 million over the past two years trying to capture Pepco’s $7 billion rate base.

Ted Caddell contributed to this article.

March 22, 2016

DC PSC Set to Decide Exelon-PHI Merger Fate Wednesday

[SEE UPDATE: DC PSC OKs Exelon-Pepco Deal.)

By Suzanne Herel

The D.C. Public Service Commission is poised to decide Wednesday the fate of the controversial proposed merger of Exelon and Pepco Holdings Inc.

dc psc, exelon, pepco, exelon-pepco merger — DC PSC Commissioners at the bench *© RTO Insider*

The $6.8 billion deal looks in doubt, as the most recent proposal by Exelon and PHI was rejected by all but three of the other settling parties.

The companies on March 7 asked the commission to consider three options: Revisit its rejection of the settlement agreement brokered by the administration of Mayor Muriel Bowser; adopt the revised proposal offered by the commission; or accept a third alternative that would include no additional money for a customer investment fund, but would give the PSC more latitude in how to spend it regarding customer rate relief. (See Exelon-Pepco Deal Doubtful as DC Officials Reject Alternatives.)

It asked the commission to rule by April 7.

The Apartment and Office Building Association of Metropolitan Washington was the only settling party to file its support of the commission’s revised proposal.

Those opposing it were the National Consumer Law Center, National Housing Trust and National Housing Trust-Enterprise Preservation Corp., the Office of People’s Counsel, D.C. government and the D.C. Water and Sewer Authority.

They took issue with the PSC’s requirement that $25.6 million of the roughly $78 million customer investment fund earmarked for residential rate relief be held in escrow until the next Pepco rate case and then be considered for disbursement, including to nonresidential customers.

The NCLC/NHT were the only settling parties to voice support for the companies’ third alternative.

“Should option three be rejected, the merger is likely to collapse,” they said. “From the perspective of NCL/NHT, this is contrary to the public interest, and particularly contrary to the interests of low-income households in the district.”

The General Services Administration, the largest consumer of electricity in the district, had not signed on to the settlement negotiated by D.C. government, but had voiced concern that the included rate relief would not be disbursed to non-residential customers. It initially supported the commission’s revised proposal, which addressed that issue, but on March 17 filed comments urging the PSC to reject Exelon’s filing.

The first option proposed by the companies should be rejected because it did not include grounds that the commission’s rejection was “unlawful or erroneous.” The second should be dismissed because it was not approved by all of the settling parties, as the PSC required. The third should be refused as either a petition for reconsideration or a new settlement agreement that would be subject to normal commission proceedings, it said.

Chris Crane testifying on the exelon-pepco merger at the DC PSC — CEO Chris Crane *Source: DC PSC*

Exelon has spent an estimated $259 million over the past two years trying to capture Pepco’s $7 billion rate base.

CEO Chris Crane said in a Feb. 3 earnings call that the company was prepared to immediately begin buying back the 57.5 million shares it issued for the $6.8 billion deal if the merger fell through.

The uncertainty of the merger has taken a toll on Pepco’s stock. In late afternoon trading, it was down 52 cents (2.37%) at $21.45. Exelon shares have remained largely unaffected. In late afternoon trading they stood up 30 cents (0.85%) at $35.18.

March 21, 2016

Market Policies, Emissions Goals on Collision Course in New England

By William Opalka

BOSTON — ISO-NE market rules favoring natural gas are on a collision course with state and federal environmental mandates, speakers at the EUCI US/Canada Cross-Border Power Summit said Tuesday.

Left to itself, renewable energy advocates said, the market would dictate a shift to natural gas, and only natural gas, ignoring the impact on greenhouse gas emissions.

Backers of gas generation countered that renewables are benefiting from government-backed subsidies and long-term contracts that threaten to reintroduce government-mandated integrated resource planning.

Dan Dolan of NEPGA at EUCI Summit discussing renewable energy, natural gas — Dolan *© RTO Insider*

Dan Dolan, president of the New England Power Generators Association, told the conference that state policies are giving renewables undue advantage and undermining conventional generators’ investments in the market.

He cited state-backed long-term contracts that could introduce more than 2,000 MW of Canadian hydropower into the region. “You can’t add that much stuff onto the plate without some of the soup getting spilled over the side,” Dolan said.

In the last two Forward Capacity Auctions conducted by ISO-NE, about 3,200 MW of new gas-fired generation has successfully bid into the market, he said. “Of all those megawatts of cleared resources, not a single one of those has a state-backed long-term contract or other subsidy,” Dolan said.

Francis Pullaro at EUCI summit discussing renewable energy, natural gas — Pullaro *© RTO Insider*

Francis Pullaro, executive director of RENEW Northeast, which represents renewable energy developers and environmental organizations, said current market rules skew toward natural gas and disadvantage clean energy resources. Natural gas “resources are going to be built over the next couple years with generous capacity payments” that make financing easier to obtain, he said.

Under the FCAs run by ISO-NE, resources are able to lock in prices for seven years. Renewables, Pullaro pointed out, have little capacity value and are only able to obtain financing through long-term contracts, which states have required from the electric distribution companies.

“We really can’t add any more gas to the system than what is already expected to come onto the system over the next few years if we are going to meet our greenhouse gas reduction laws,” he said.

Primary among them is the Massachusetts Global Warming Solutions Act, which requires a 25% reduction in carbon emissions from 1990 levels by 2020. Several New England states have followed suit with similar emission-reduction goals.

Janet Besser at EUCI summit discussing renewable energy, natural gas — Besser *© RTO Insider*

To meet its target, Massachusetts Gov. Charlie Baker has proposed a bill, S. 1965, that would allow electric distribution companies to enter into long-term contracts for large hydropower resources and offshore wind.

Janet Besser, vice president of policy and government affairs for the Northeast Clean Energy Council, a trade group for clean energy businesses, said the legislation’s support of offshore wind is “a critical component of the bill.” Wind, combined with hydro resources, could provide firm capacity, especially with a transmission buildout to connect remotely sited resources, she said.

Bartlet at EUCI, discussing renewable energy, natural gas — Bartlett *© RTO Insider*

“It’s an overarching policy goal and it is also a goal of customers. They want resources something other than gas … they are not resources being delivered by the market alone.”

The battle for generation market share is unlikely to end any time soon, as the region also faces the prospect that almost 6,000 MW of coal and oil-fired generation that is at least 40 years old will retire in the next few years.

That, observed Ned Bartlett, undersecretary of energy and environmental affairs for Massachusetts, is “enough power to supply Maine, New Hampshire, Vermont and Rhode Island combined.”

March 21, 2016

FERC Transmission Metrics Report IDs Potential Underinvestment

By Rich Heidorn Jr.

All but one of the organized markets under FERC jurisdiction have regions that show signs of transmission underinvestment, according to the commission’s first transmission metrics report.

FERC’s Office of Energy Policy and Innovation (OEPI) was tasked last year with collecting data to evaluate the impact of Order 1000 and other commission policies intended to encourage competition and infrastructure growth. The research also sought to determine whether regions have “appropriate levels” of transmission infrastructure. (See “Transmission Investment Metrics,” FERC Briefs.)

The staff report identified 13 areas — including every ISO and RTO under FERC jurisdiction except ISO-NE — in which there were persistent high or low prices, suggesting a lack of transmission was preventing load pockets from accessing cheaper generation. Some of the areas — including the Baltimore area and Delmarva Peninsula in PJM, North-Central MISO, the Chicago area, the Upper Peninsula of Michigan and Northern New York — have shown price separations for nine or 10 years.

The report also confirmed that Order 1000 has unleashed competition, with nonincumbent transmission developers submitting almost half of the proposals received by CAISO and PJM from 2013 through 2015. (Data was not available from other regions such as MISO and SPP, which are just beginning to open competitive windows.)

“One hope in issuing this report is that people will look at the assumptions we’ve made and provide feedback and perhaps ideas for additional metrics,” OEPI staffer Rahim Amerkhail said at the conclusion of a presentation to the commissioners at Thursday’s open meeting.

Below are the metrics and key conclusions:

Percentage of Nonincumbent Transmission Project Bids

Nonincumbents submitted 48% of all competitive transmission project proposals in CAISO’s and PJM’s regional planning processes from 2013 to 2015 (excluding a PJM window that closed last September, for which the RTO had not posted proposals). Nonincumbent proposals accounted for the majority of proposals in all three years in CAISO. In PJM, nonincumbents submitted the majority of proposals in 2013 and 2015, but less than 40% of proposals in 2014.

Staff identified incumbents as those making proposals in their own retail distribution service territory.

Load-Weighted Curtailment Frequency

Staff assumed that persistent congestion in an area suggests there is not enough available transfer capability to deliver power from the cheapest resources.

For RTO and ISO markets, staff looked at LMPs. For non-RTO/ISO market regions in the Eastern Interconnection, staff used NERC transmission loading relief (TLR) data. (Such data was not available for the Western Interconnection, which manages unscheduled flows with schedule curtailments and controllable devices such as phase shifting transformers.) Staff normalized the TLR data based on the region’s retail load.

The data found that SPP, MISO and the Tennessee Valley Authority had the highest levels of load-weighted TLRs.

Although MISO’s and SPP’s markets optimize dispatch based on congestion, reducing their internal use of TLRs, they use the procedure to manage unscheduled loop flows originating outside their footprints. “Both MISO and SPP have extensive borders with non-organized market areas, which may help explain their continuing use of TLRs,” staff said.

The data showed SPP’s TLR rate dropped after the RTO launched its day-ahead market in March 2014.

RTO/ISO Price Differential

This metric shows how long RTO/ISO market nodal price differentials have occurred persistently.

Staff looked at real-time prices at each load and generator point — focusing on the 95th and fifth percentiles of prices rather than maximum or minimum prices — then calculated market-wide average highs and lows to identify locations whose high or low prices were at least one standard deviation from the averages.

Staff found relatively high or low real-time LMPs occurred at 1,986 generator or load points from 2012 through 2014. Thirteen areas had differentials spanning at least three years.

Load-Weighted Transmission Investment

A third set of metrics, which compared transmission investment to load and project sizes, was designed to provide a longitudinal analysis comparing values before and after FERC policy changes took place.

Load-weighted transmission investment averaged more than $2/MWh of retail load over all regions from 2008 to 2014. The highest average investment was in the Texas Regional Entity, at more than $4/MWh across all years, reflecting the $5.7 billion spent in the state’s Competitive Renewable Energy Zone (CREZ), an initiative to alleviate congestion and integrate wind generation.

The smallest load-weighted investments were in the SERC Reliability Corp. and Florida Reliability Coordinating Council regions in the Southeast.

A related metric, load-weighted circuit-miles added, produced similar results.

Circuit-Miles per Million Dollars of Investment

The Midwest Reliability Organization added 1.7 circuit-miles of transmission per million dollars invested, the highest of any region, according to the report. PJM’s reliability region, Reliability First Corp., had the most expensive transmission with less than one circuit mile per $1 million spent. The average was 1.1 miles per $1 million.

The differences “may be due to a range of factors, including terrain, population density, and state policy choices, among others,” staff said.

March 21, 2016

Company Briefs

TransCanada, spurned in its attempts to push through the Keystone XL Pipeline last year, announced it will buy Columbia Pipeline Group for $13 billion, including the assumption of $2.8 billion in debt. The deal will give it access to the Appalachian shale plays.

“The acquisition represents a rare opportunity to invest in an extensive, competitively positioned, growing network of regulated natural gas pipeline and storage assets in the Marcellus and Utica shale gas regions,” TransCanada CEO Russ Girling said. Columbia Pipeline has 15,000 miles of pipelines, as well as underground storage and processing facilities.

TransCanada, which just last month bought the 778-MW Ironwood natural gas-fired generating station in Lebanon, Pa., said it will sell off some of its other generating assets in the Northeast to finance the Columbia deal, including Ironwood. Among its plants are the 2,480-MW Ravenswood Generating Facility in Queens, N.Y., and the 560-MW Ocean State Power station in Rhode Island.

More: TransCanada; Bloomberg Business

AEP’s Pablo Vegas Leaving for Columbia Gas

AEP Ohio President Pablo Vegas, who has been the face of the company during its ongoing battle to secure guaranteed rates for some of its aging generating plants, is leaving the company to run Columbia Gas.

Columbia Gas oversees natural gas transmission and distribution in Ohio, Kentucky, Maryland, Massachusetts, Pennsylvania and Virginia. Vegas, 42, was also named executive vice president of Columbia parent NiSource.

Vegas has been with American Electric Power since 2005. He will join Columbia Gas in May, by which time Ohio regulators are expected to decide on AEP’s proposed power purchase agreements.

More: Columbus Business First

Duke’s Gates Going to Calpine, Repko Assuming His Position

Duke Energy’s Charlie Gates is leaving the company to become executive vice president of power operations for Calpine. Gates had overseen all non-nuclear generation assets at Duke, a fleet of about 42 GW. Gates is to oversee Calpine’s fleet of 84 power plants with a capacity of about 27 GW.

Gates will be replaced at Duke by Regis Repko, currently senior vice president of nuclear governance, projects and engineering. Repko will assume the title of chief fossil and hydro officer, in charge of the company’s coal, natural gas and hydro units in six states.

Repko has been with Duke since 1985.

More: Charlotte Business Journal

Coal, Alternative Energy Deal with Money Troubles

Two energy companies from opposite ends of the spectrum — coal producer Peabody Energy and alternative energy developer SunEdison — are reporting financial woes.

Peabody reported to the U.S. Securities and Exchange Commission that it probably won’t be in compliance with its financial requirements by the end of the month, and it might have to file for Chapter 11 bankruptcy protection.

SunEdison said problems in its accounting processes led to a delay in its annual stockholders report. It was also dealt a blow this month when it could not secure the financing necessary to acquire rooftop solar company Vivint.

More: USA TODAY

Alevo Sites Energy Storage System in Del.

Energy storage company Alevo is locating an 8-MW battery storage system in a retired oil-fired generator building in Lewes, Del. The grid-linked system, which is capable of delivering 4 MWh, will be the largest of its kind in the state.

The project, called GridBank, is the first for the Concord, N.C.-based company. The company said it plans to deploy more GridBanks in PJM this year under an agreement with Customized Energy Solutions.

Alevo will be able to sell ancillary power into the PJM regulation market while also providing the Lewes Public Works Department with the ability to shave peak demand for its customers, the company said.

More: Alevo; Charlotte Business Journal

Investors Sweeten the Pot In Cleco Acquisition Bid

Louisiana utility Cleco would give a credit of $370 for the average residential and small-business customer, amounting to a free month of electricity this summer, under a proposal to sell the company for $4.9 billion to a consortium of foreign investors. Cleco President Darren J. Olagues said the credit would be paid within 30 days of the closing of the sale.

The state Public Service Commission last month refused to allow investors to purchase the 80-year-old utility that serves about 286,000 customers in southern Louisiana. The investors have requested a rehearing, which the commission will consider this week.

The Cleco coalition, led by Macquarie Infrastructure and Real Assets, and which includes British Columbia Investment Management Corp., has committed to paying $101 million in upfront rate credits.

More: The Advocate

Sharyland Proposes Tx Upgrade To Meet Wind Energy Demand

Sharyland Utilities has filed a request with the Public Utility Commission of Texas for a $77.4 million transmission line upgrade in the Texas Panhandle to accommodate the growth of wind energy in the region.

The project would add a second set of high-voltage lines on 166 miles of transmission infrastructure that Sharyland completed about three years ago. A study by ERCOT, which runs 90% of the Texas grid but not the Panhandle, estimates the area’s wind capacity is 4,300 MW and is growing.

“Given the dramatic and continued expansion of wind generation in the region, Sharyland should proceed with installation of the second circuit,” PUCT Commissioner Kenneth Anderson wrote in a September memo supporting the move.

More: Amarillo Globe-News

Nebraska’s Largest Solar Farm Opens for Business

Nebraska’s largest solar array is now in business following a March 14 ribbon cutting near Callaway in Custer County. Innovative Solar developed the 600-kW project.

The project was partially funded by a U.S. Department of Agriculture renewable energy grant. Custer Public Power District has agreed to buy the solar farm’s power output.

More: North Platte Telegraph

Peabody Energy Selling Share Of Prairie State Energy Campus

Peabody Energy, fighting to stay out of bankruptcy, is selling its 5.06% share of the Prairie State Energy Campus in Illinois to Wabash Valley Power Association for $57 million. Its original investment in the troubled power plant was $247 million.

The coal-fired plant endured cost overruns and construction delays and is struggling to compete on the open wholesale energy market. The remaining shareholders, mostly Illinois cities such as Batavia and Geneva that own shares through their membership with the Northern Illinois Municipal Power Agency, should not be affected by Peabody’s sale of its shares, a Peabody spokesperson said.

An industry observer, Sandy Buchanan, executive director of the Institute for Energy Economics and Financial Analysis, said municipal shareholders will be left with a large amount of debt that will be a burden on their ratepayers. “All these communities were promised that the cost of power from Prairie State was less than market [price], and the reverse has happened,” Buchanan said.

More: Kane County Chronicle

Report: Aqua America Made Abortive $11B Bid for ITC

Water utility Aqua America apparently made an unsuccessful bid for transmission owner ITC Holdings before the company agreed to be acquired last month by Fortis, according to The Philadelphia Inquirer. The Inquirer quoted from a Fortis merger statement that said “a director of ITC affiliated with Party G, a U.S. publicly traded company, informed [ITC] that Party G might be interested in exploring a potential merger” at a price of about $11 billion.

The only two directors of ITC “affiliated” with public companies, according to the Inquirer, are Aqua CEO Christopher Franklin and Lee Stewart, who is also on the board of a New Jersey plastics maker called AEP Inc. (no connection to American Electric Power). A Wall Street analyst identified Aqua America and Warren Buffett’s Berkshire Hathaway as potential buyers of ITC in a report to investors.

If successful, the Bryn Mawr, Pa.-based company, which runs water and sewer companies in eight states, would have been offering almost twice its own $6.4 billion stock market value. ITC chose instead to be acquired by Fortis, which offered $11.3 billion. Aqua America declined to comment on the report.

More: The Philadelphia Inquirer