FERC Rejects MISO Interregional Cost Allocation Plan

By Rich Heidorn Jr.

FERC on Wednesday rejected MISO’s proposed cost allocation plan for interregional projects outside the RTO, saying it had not demonstrated the reasonableness of the methods detailed in the proposal (ER17-387).

Under MISO’s joint operating agreements with PJM and SPP, a transmission project can qualify as interregional even if it is in only one of the two neighboring RTOs, as long as it provides benefits to the other. MISO said that although no such projects are part of its Transmission Expansion Plan, interregional studies currently underway could result in such projects.

Proposal

In its filing last November, the RTO proposed that its portion of costs from an:

  • Interregional reliability transmission project terminating wholly within SPP or PJM — that is, with no interconnection to any MISO transmission facility — be allocated to those entities who would have paid for the MISO regional transmission projects that the interregional project avoids;
  • Interregional economic transmission project terminating wholly outside MISO be allocated 100% to the benefiting local resource zones based on adjusted production cost savings (interregional reliability projects terminating wholly within SPP that provide economic benefits to MISO would be allocated in the same manner); and
  • Interregional public policy transmission projects terminating wholly outside MISO be allocated to parties who would have paid for the MISO regional projects that the interregional project supplants.

The RTO intended to use the method only until the end of its five-year Entergy integration transition period, which ends in December 2018.

In approving Entergy joining MISO, the commission accepted a revised planning and cost allocation framework with two planning areas, one covering the pre-existing MISO members and a new second planning area (MISO South) including Entergy. The RTO said the transition was necessary because transmission planning for the existing MISO footprint and MISO South had not been done under a common process using the same criteria.

ferc miso cost allocation plan
FERC rejected MISO’s proposed cost allocation plan for interregional projects outside the RTO, sending the issue back to a divided stakeholder body. | MISO

The transition cost allocation rules, which eliminated MISO’s footprint-wide postage-stamp method, are spelled out in Attachment FF-6 of the the RTO’s Tariff.

The RTO said that without the changes it proposed in November, interregional transmission projects wholly outside the MISO footprint would be allocated under Attachment FF. The costs of an interregional economic transmission project that terminates wholly outside of MISO would use the non-transition market efficiency project cost allocation: 80% to the benefiting zone, 20% postage stamp across the entire MISO footprint. The RTO said that would violate the intent of Attachment FF-6.

FERC Misgivings

FERC first indicated its misgivings with the proposal in a deficiency letter in January, which asked MISO to explain why it was just and reasonable to apply different cost allocation methods based solely on the location of the interregional project.

But the commission ruled that the RTO failed to demonstrate that its proposal would allocate costs in a way “that is at least roughly commensurate with the benefits received.”

“Notwithstanding the fact that the commission has determined that both [multi-value projects (MVPs) and market efficiency projects (MEPs)] provide regional benefits and are appropriately cost-allocated regionally, at least in part, MISO proposes to eliminate the regional cost allocation component for its share of market efficiency projects and multi-value projects that terminate wholly outside MISO,” the commission said. “However, MISO provides no evidence or analysis to demonstrate that the benefits of interregional transmission projects that terminate wholly outside MISO … accrue to a more narrow range of customers than the benefits of any other multi-value project or market efficiency project, including those that physically cross the seam between MISO and another transmission planning region.”

FERC rejected the RTO’s contention that it had previously approved similar cost allocation methods, saying that most of the proceedings cited by the RTO addressed interregional cost allocation methods. “Here, however, MISO is not proposing an interregional cost allocation method; it is proposing regional cost allocation methods that it will use to allocate within MISO the portion of the costs of interregional transmission projects.”

FERC said that although it has approved avoided-cost-only interregional cost allocation methods and an avoided-cost-only regional cost allocation method for reliability projects, “the commission has not previously addressed whether a transmission planning region may use an avoided-cost-only regional cost allocation method for public policy-related transmission projects.”

“This is consistent with the commission’s previous explanation that because Order No. 1000 has different requirements for regional transmission planning and interregional transmission coordination, a just and reasonable interregional cost allocation method may nevertheless be an unjust and unreasonable regional cost allocation method.”

Stakeholders Split

FERC’s rejection means that the issue will return to MISO, where it has divided stakeholders. FERC said the RTO told the commission that if its proposal was rejected, it would not apply the non-transition period cost allocation methods under Attachment FF to interregional projects outside the RTO, “and therefore will have to revisit this issue with its stakeholders.”

MISO told FERC that about half its stakeholders supported the revised Attachment FF-6 while the other half wanted to retain the non-transition period MEP cost allocation in Attachment FF for interregional economic projects entirely outside of the RTO.

Because it rejected MISO’s filing, the commission said it did not have to address protests by the New Orleans City Council, E.ON Climate & Renewables N.A. and EDF Renewable Energy.

The two renewable companies complained about MISO’s criteria requiring MEPs be rated at 345 kV or higher and meet a 1.25:1 benefit-cost ratio, saying they were impeding the development of MEPs. They asked the commission to reject the RTO’s proposal or condition its acceptance on removing the 345-kV threshold and lowering the benefit-cost ratio to 1:1.

New Orleans contended that a MISO analysis had shown that individual transmission owners in benefiting local resource zones may not always receive production cost savings from sub-345-kV economic transmission projects.

The commission also declined to respond to regulators from Arkansas, Louisiana and Mississippi, who sought clarification about which cost allocation methods would apply if the commission rejected the RTO’s proposal.

“MISO states that it will revisit the issue with stakeholders if its proposed cost allocation methods are rejected, and we will afford MISO the opportunity to do so,” the commission said.

FERC Approves Cost Recovery for Exelon’s Mystic Plant

FERC on Wednesday approved Exelon’s request for recovery of more than $1.5 million in fuel costs for its natural gas-fired Mystic Generation Station in Everett, Mass. (ER17-933).

The commission order granted Exelon $1,554,854 for Mystic Units 8 and 9 fuel costs that were not recovered because of market power mitigation measures applied last October and November.

ISO-NE’s Internal Market Monitor challenged Exelon’s request for cost recovery for mitigated hours on three days in October 2016, arguing that the company did not adequately provide data in its initial request, and that further supplemental information was submitted past the due date under the RTO’s Tariff.

ferc exelon mystic generating station
Mystic Generation Station

“We disagree with the IMM’s position that Exelon’s alleged failure to timely submit information to the IMM for operating days Oct. 1, 3 and 4, 2016, precludes Exelon from seeking additional cost recovery for those days,” the commission said in response. “We do not find that failure to meet that deadline alone necessarily operates as a procedural bar to submitting a [Federal Power Act] Section 205 filing for additional cost recovery or renders such a filing unjust and unreasonable.” It noted that Exelon’s initial filing was submitted on time and that the Monitor did not dispute that certain required information was unavailable to the company at the time.

Exelon also asked to recover nearly $57,000 in regulatory costs in connection with its filing, as well as additional regulatory costs it might incur in connection with the proceeding after the date of its filing. The commission granted this request subject to a compliance filing due in 60 days that details the total regulatory costs.

— Michael Kuser

CAISO Board Approves RAS Modeling Proposal

By Jason Fordney

CAISO’s Board of Governors on Tuesday unanimously approved rule changes that would allow market participants to partake in a program that models generator outages and the impact of remedial action schemes (RAS) on market operations.

caiso ras generator contingencies
Cook | © RTO Insider

During a presentation to the board, CAISO Director of Market and Infrastructure Policy Greg Cook said “stakeholders are generally supportive of the proposal” — but some still worry about unintended consequences.

The board’s vote greenlights modeling of generator contingencies and RAS in the day-ahead and real-time markets, as well as the congestion revenue rights allocation process, but the package still requires approval by FERC.

CAISO’s current modeling only addresses situations in which a transmission line goes down, potentially causing overflow on other lines. The new generator modeling reflects how the system will react to the loss of generation and is meant to ensure that transmission lines are not overwhelmed as the system picks up to address the unexpected shutdown of a generator.

RAS are protective processes that automatically disconnect generators or load to prevent transmission line overload in the event that another line goes out. The new method will update the ISO’s security constrained economic dispatch by modeling the loss of generation within the dispatch, as well as modeling the loss of transmission and generation because of RAS operations. The ISO currently uses manual, out-of-market dispatches to manage generator contingencies.

The changes will alter the congestion component of LMPs so that they consider the cost of positioning the system to account for generator contingencies and RAS operations. A RAS-connected generator does not increase congestion and will potentially receive higher energy prices than other generators at the same bus.

The Western Energy Imbalance Market (EIM) Governing Body on Sept. 6 approved the rule changes for generators that are within the EIM but outside the ISO. (See EIM Body Approves Generator Loss Modeling Plan.) Body Chairman Doug Howe on Tuesday urged the CAISO board to carefully implement the proposal.

caiso ras generator contingencies
The CAISO Board of Governors Met in Folsom on Tuesday | © RTO Insider

Howe said the change will increase the efficiency of the real-time market across the EIM, improve dispatch and lead to more accurate market prices. But he also urged the ISO to ensure the new rule doesn’t create market abuse or too much complexity.

Southern California Edison raised concerns that the program would create a new value stream that could incentivize participants to pursue RAS rather than building new transmission. A company representative questioned whether generators on RAS should be rewarded with higher locational prices.

Trying to value RAS resources “gives us pause,” and the implementation should be carefully monitored, said SCE Director of State Legislative Policy Catherine Hackney. SCE has thousands of megawatts of generation under RAS.

“We need to be vigilant about watching and being wary and being able to respond if things don’t go exactly how we like,” Hackney said.

When it unveiled the proposal in May 2016, CAISO said it had more than 20 RAS modeled within its own system, with more throughout the Western Interconnection. (See Stakeholders Wary of CAISO Contingency Modeling.) The ISO currently factors RAS into its market operations through adjustments to its market software but views that approach as inadequate.

FERC Upholds PGE ISO Incentive Adder, Rebuffs CPUC

By Robert Mullin

FERC on Wednesday rejected an argument by the California Public Utilities Commission that it erred last year in allowing Pacific Gas and Electric to include a 50-basis-point ISO participation adder in the utility’s 2017 transmission rates proposal.

The PUC filed its protest last November after FERC conditionally accepted PG&E’s proposed rate increase while at the same time denying the PUC’s request to throw out the adder, calling it a $30 million “unjustified windfall” at the expense of California ratepayers. (See CPUC Contest ISO Incentive for PG&E.) The Sacramento Municipal Utility District joined the protest.

The PUC at the time contended that the ruling ignored “the need to demonstrate that an incentive must be ‘justified’ pursuant to [FERC] Order 679,” which allows transmission owners to collect the adder as motivation to join an RTO or ISO. Because the PUC requires California’s investor-owned utilities to be members of CAISO, PG&E did not warrant incentive treatment, the PUC said.

The commission’s Sept. 20 order rebuffed that argument, saying that the PUC had raised the same argument more than 10 years ago in its rehearing request of Order 679, which was rejected in a follow-up order (ER16-2320).

ferc pacific gas & electric cpuc pg&e

Pacific Gas and Electric transmission lines | PGE

“If the CPUC disagreed with the commission’s determination in Order No. 679-A, the appropriate course of action was to seek judicial review of Order Nos. 679 and 679-A under Section 313 of the” Federal Power Act, FERC said. “The commission has also already held that arguments opposing the granting of an incentive adder for RTO membership to existing RTO members constitute a collateral attack on Order No. 679-A, and we find that the CPUC’s assertion here is in the same vein and warrants the same response.”

The commission also rejected the PUC’s contention that FERC erred by granting the 50-basis-point adder without weighing the specific facts of the case and considering whether a different incentive might be more appropriate. The PUC noted that FERC’s September 2016 order had subjected PG&E’s final return on equity to a hearing by a settlement judge. (See FERC Sets PG&E Rate Increase Proposal for Talks.)

FERC said it approved the adder subject to it being it being applied to a base ROE that left the full ROE within the “zone of reasonableness” determined by the settlement judge.

“Thus, the commission’s duty to ensure just and reasonable rates for consumers will be fulfilled via the trial-type evidentiary hearing process we have ordered, which will result in an ROE, including the proposed adder, that must fall within the zone of reasonableness, and that trial-type evidentiary hearing process is one in which the CPUC may participate,” FERC said.

FERC also said it was “not persuaded” by the PUC’s contention that PG&E’s continued membership in CAISO is not voluntary. It noted that FERC Order 2000 spelled out that voluntary membership was the “most appropriate” approach for creating and expanding RTOs and ISOs.

“This longstanding commission policy of voluntary RTO/ISO formation and membership remains unchanged,” FERC said. “This longstanding commission policy is also reflected in CAISO’s currently effective Transmission Control Agreement, which is on file with the commission.”

GE Power Pitches its Global Perspective to IPPNY

By Michael Kuser

SARATOGA SPRINGS, N.Y. — Refurbishing an existing combined-cycle plant can squeeze an extra 12 to 15 MW of generating capacity from each gas turbine — and the compelling economics of equipment upgrades provide New York generators a choice beyond building new plants.

GE Power IPPNY
Bob Prantil, executive director of sales and strategic accounts, GE Power North America | © RTO Insider

That was the view of Bob Prantil, executive director of sales and strategic accounts for GE Power North America, who spoke Sept. 14 at the fall conference of the Independent Power Producers of New York.

“After all the debates and discussions, eventually electrons need to be placed on a grid at the lowest LCOE [levelized cost of electricity] to make sure that whoever is providing those electrons can break even,” Prantil said. “We recently combined our power business with our grid business because that’s what the market wanted. When you’re going to speak to a utility, it’s not just necessarily about generation. You have to figure out how to get those electrons around.”

Existing Versus New Generation

While New York has a goal of getting 50% of its electricity from renewable resources by 2030, Prantil pointed out that other states are looking at more. Iowa, for example, aims to reach 100% renewable energy over the next five years.

“You all know the complexity of new generation from the standpoint of permitting and do people want it in their backyards — and the construction, where it makes sense,” Prantil said. “I would just challenge you to understand the existing generation that you have in-state already and what [original equipment manufacturers] can do to reduce overall CO2 emissions, gain more efficiency and get more output from those plants at a quarter of the price of a new plant being built.”

Energy conferences these days focus more on renewables and efficiency than on gas, which strikes Prantil as odd.

“Especially in the northeast United States, if you see what’s going on in PJM, there has been an uptick in the installation of combined cycle plants,” he said. “If you think about the sizes of gas turbines now and the efficiencies of those turbines compared to just 10 years ago, it makes the decision to go with gas, as some people call it, a bridge fuel before 100% renewables, a very smart decision.”

ge power ippny
GE Power’s 9HA.01 gas turbine helped the company earn a Guinness World Records™ title for powering the world’s most efficient combined-cycle power plant in Bouchain, France. |  GE Power

GE Power just set a world record with the company’s first plant in France. Prantil said the combined cycle unit is 99.95% available and achieved a record-setting 62.6% thermal efficiency, 5 percentage points higher than the best combined cycle plants could have achieved just five years ago.

“If you take that efficiency over the life cycle of a plant and then you look at the LCOE for that, and you think about the saved BTUs and CO2, it’s a pretty compelling story,” Prantil said.

Energy Storage and Hybrids

GE built one of the first battery plants in the U.S. in Schenectady, N.Y. “So we know how to do all this,” Prantil said. “We believe that energy storage prices are going to come down.”

He said California has been doing generation-storage hybrids longer than New York, but instead of trying to figure out how to create new markets — which is what New York is doing — GE is looking at how to take an existing market and apply battery technology to it. He cited a case in California where GE applied storage technology to the famed “duck curve.”

“That power needs to be instantaneous, almost like spinning reserve,” Prantil said. “So if you take a 50-MW gas turbine that takes eight or nine minutes to ramp up to speed … you put in a four-hour battery that’s being charged by the grid. We can have the battery take over for the seven minutes of ramping.”

GE sees energy storage as a very cost-effective way to meet some of the ancillary requirements of RTOs and ISOs — and there has to be an ancillary service for any developer to do it and get paid.

GE Power IPPNY
GE workers with GE 9HA.01 gas turbine at factory in Belfort, France | GE Power

“We always want to get the EEI [Edison Electric Institute] award for a 1,200-MW combined cycle plant or some offshore wind farm, but we got the EEI award for a 15-MW battery hybrid system,” Prantil said.

Energy efficiency is also driving changes to the dispatch stack, which will also occur in NYISO, he said.

“A developer will look at what zone they’re in, and if there’s a combined cycle plant in that zone, they want to know the efficiency of that plant. And if a generator can build a more efficient plant in that zone, or increase the efficiency of an existing plant, their capacity is more likely to get dispatched.”

New York Native

A native New Yorker schooled in Brooklyn, Queens and the Bronx, Prantil said GE is also a native of the state.

“The headquarters of our GE Power business from the very beginning, from the Thomas Edison years, is located 20 miles from here in Schenectady,” he said.

Prantil noted that GE technology has outfitted about half the state’s nuclear fleet and wind farms, as well as providing 152 gas turbine units and 116 steam and hydro turbine units.

“We like to say that New York is powered by GE, as 60% of the megawatts generated in New York comes from GE equipment,” Prantil said. “We have 152 gas turbine units, we have 116 turbine units, half of the nuclear fleet is with GE technology and about 50% of the installed blades in wind is with GE technology.”

If New York decides to go heavily into offshore wind, GE’s not going to debate if that’s right or wrong, he said, but will instead figure out how to develop the resources at the lowest cost.

Environmentalists Denounce FERC Millennium Pipeline Ruling

By Michael Kuser

Environmental advocates criticized FERC for ruling last week that New York state failed to act in a timely manner on water quality permits sought by Millennium Pipeline.

FERC EPA Millennium Pipeline natural gas pipelines
New York State Department of Environmental Conservation Headquarters

In its Sept. 15 order, the commission ruled that the New York State Department of Environmental Conservation (DEC) had waived its authority to issue or deny a water quality certification for the project by failing to act within the one-year time frame required by the Clean Water Act (CP16-17).

In a statement, the department said it is reviewing FERC’s decision and would “consider all legal options to protect public health and the environment.” It would have to file any appeal with the D.C. Circuit Court of Appeals.

But opponents of the natural gas pipeline extension — the 7.8-mile Valley Lateral spur to the Valley Energy Center in Wawayanda, N.Y. — were not as circumspect.

“This is just another warping of the law by FERC,” Maya van Rossum, director of the Delaware Riverkeeper Network, told RTO Insider. “It’s not the first time, and it probably won’t be the last, that FERC acts only to help its friends in the pipeline industry.”

Sierra Club Atlantic Chapter Director Roger Downs said in a statement that “nowhere is FERC granted the right to override” a state’s authority to regulate its water quality.

Timeliness of the Essence

Millennium Pipeline in July filed with the commission a request for notice to proceed with construction, asserting that the DEC had failed to act before the statutorily imposed deadline. The department responded days later that it had not waived its authority, which it exercised on Aug. 30 when it denied Millennium’s application for certification.

FERC EPA Millennium Pipeline natural gas pipelines
| Millenium Pipeline

Millennium and the department differed on when the one-year review process began, with the company contending that the clock started ticking when it submitted its application to DEC in November 2015. The DEC countered that the one-year period did not begin until it received a “complete” application on Aug. 31, 2016. (See Pipeline Sues to Force NY to Issue Permit for CPV Plant.)

FERC said in its order that the “starting point for interpreting a statute is the language of the statute itself,” and that “Section 401 [of the Clean Water Act] provides that water quality certification is waived when the certifying agency ‘fails or refuses to act on a request for certification, within a reasonable period of time (which shall not exceed one year) after receipt of such request.’ Thus the term ‘receipt’ specifies the triggering event.”

The commission ruled that “giving effect to the plain text of a statute, the one-year review period began November 23, 2015” — when the DEC received the application.

New Pattern

Gavin Donahue, CEO of the Independent Power Producers of New York, last week told participants at the group’s fall conference that “the siting of natural gas pipelines is FERC’s jurisdiction, but the DEC has developed a pattern of denying water quality certificates for projects, most recently evidenced by the decision on the Millennium Pipeline.” (See NYPSC Chair Promises ‘Continuity’ on State Energy Policies.)

New York environmentalists might have thought they were succeeding in stopping pipelines after the 2nd U.S. Circuit Court of Appeals last month ruled that the department acted within its authority to deny water quality permits sought by Williams Co. for its Constitution Pipeline.

Now the natural gas industry sees hope. Following the Millennium order, Reuters reported that Williams now plans to seek a similar permit ruling from FERC.

Federal Officials Side with Utilities on Tree-Clearing Bills

By Rich Heidorn Jr.

The Trump administration sided with utility witnesses Tuesday on legislation to streamline approvals for managing vegetation near power lines on federal land, an effort to reduce wildfire risks.

Witnesses from the Bureau of Land Management, the National Forest Service and two utilities endorsed separate House and Senate bills to amend the Federal Land Policy and Management Act (FLPMA) and provide authority to exempt existing rights of way (ROWs) from reviews under the National Environmental Policy Act (NEPA).

The Wilderness Society, however, said it opposed the House bill, the Electricity Reliability and Forest Protection Act (H.R. 1873), because it would impose “counterproductive limitations and obligations on both utilities and federal land managers, inappropriately shift costs from utilities to taxpayers and agencies, and undermine the public interest in the management of their public lands.”

FERC vegetation management federal land
Witnesses from the Bureau of Land Management, the National Forest Service and two utilities endorsed separate House and Senate bills to streamline approvals for managing vegetation near power lines on federal land. Left to right, Glenn Casamassa, National Forest System; John Ruhs, Bureau of Land Management; Mark Hayden, Missoula Electric Cooperative; Scott Miller, The Wilderness Society, and Andrew Rable, Arizona Public Service. Miller said he supports a Senate bill but not the House legislation.

The group told a Senate Energy and Natural Resources Committee hearing Tuesday that it prefers Section 2310 of the Energy and Natural Resources Act of 2017 (S. 1460), a comprehensive energy bill cosponsored by committee Chair Lisa Murkowski (R-Alaska) and ranking member Maria Cantwell (D-Wash.).

Blackout Prompted Standards

It was the August 2003 Northeast blackout — triggered by contact between a power line and a tree — that led Congress to enact mandatory reliability standards as part of the 2005 Energy Policy Act. FERC, which deputized NERC to develop the standards, approved the corporation’s vegetation standards in 2013.

Both bills pending before Congress would provide authority to exempt existing ROWs from reviews under NEPA. They also would allow utilities to trim vegetation within ROWs or “hazard” trees adjacent to ROWs that have contacted or are in imminent danger of contacting transmission lines as long as they notify the appropriate agency within 24 hours, according to summary attached to BLM’s testimony.

FERC vegetation management federal land
Rable

Testifying for the Edison Electric Institute, Andrew Rable, manager of forestry and special programs for Arizona Public Service, laid out utilities’ difficulties in employing integrated vegetation management (IVM), which combines the planting of low-growth vegetation in ROWs with pruning and use of herbicides to ensure sufficient distance between plants and electric facilities.

“Transmission line ROWs crossing federal lands face multiple layers of jurisdiction and decision-making, which can hamper electric companies’ ability to manage vegetation and reduce wildfire risk in a timely manner,” he said.

Rable said that although the two bills are largely similar, the House’s is preferable because it sets shorter deadline for approval of vegetation management plans (90 days versus 180 days) and provides “more flexible and less burdensome” rules.

The two bills both provide limited liability protections. According to the BLM summary, the House version protects a utility from wildfire liability to the U.S. when federal agencies blocks it from addressing hazard trees or vegetation in imminent danger of contact with power facilities. The Senate’s would protect utilities from strict liability following a land agency’s “unreasonable delay or failure to approve or adhere to a vegetation management plan or an MOU,” BLM said.

FERC vegetation management federal land
Hayden

Mark Hayden, general manager of the Missoula Electric Cooperative, which has about 15,000 customers in western Montana and eastern Idaho and 300 miles of distribution lines crossing federal land, told the committee the 2017 wildfire season has devastated his region’s economy.

“I fully recognize that the fires burning in Montana today were all lightning sparked. But for me, these fires serve as a vivid reminder and warning of what could occur as a result of long delays in permit approvals and inconsistent application of policies by federal land managers,” said Hayden, who said the ability of utilities to develop relationships with federal officials is hampered by frequent turnover at Forest Service district offices.

Examples Cited

Hayden cited a New Mexico cooperative that received a $38.2 million bill from the Forest Service — almost twice the co-op’s $20 million in liability insurance — for the costs of fighting a 152,000-acre fire caused when a tree fell onto a power line.

The Benton Rural Electric Association in Prosser, Wash., applied to renew its ROW permit in August 2015, four months before it was due to expire. “After waiting 15 months, Forest Service officials have now proposed nothing short of a full blown environmental assessment for which costs could exceed $100,000 for facilities that have been in place for more than 70 years,” Hayden said.

In 2009, when the Missoula co-op felled trees killed and weakened by an insect infestation, the Forest Service required it to remove the timber “using an expensive, labor-intensive method to minimize impact to ‘flora and fauna’ from mechanical equipment,” Hayden said. “Ironically, the Forest Service conducted a timber sale on the same tract later in the year using the exact mechanical forestry techniques that we were prohibited from employing. In essence, we were held to a higher standard than they held themselves.”

When the co-op requested permission to bury about 6 miles of overhead lines on Forest Service land, approval took 18 months — granted just days before Hayden was to testify before Congress regarding the delay.

BLM Committed to Streamlining Process

FERC vegetation management federal land
Ruhs

John Ruhs, acting deputy director of operations for BLM, said his agency supports both bills and “is committed to improving and streamlining its permitting processes.”

The agency, which administers almost 16,000 authorizations for electricity transmission and distribution facilities, allows utilities to conduct “minor trimming, pruning and weed management” after notifying the agency, Ruhs explained. Trees that present an imminent hazard can be removed without BLM pre-approval. “For actions that fall outside the scope of the ROW grant and do not present an imminent threat, BLM approval is needed, and additional analysis may be required.”

Ruhs said the legislation “would expand the BLM’s toolbox to help reduce the threat of catastrophic wildfires like those we are currently experiencing.”

FERC vegetation management federal land
Casamassa

Glenn Casamassa, associate deputy chief of the Department of Agriculture’s National Forest System, said his agency supports most of the language of both bills. But Casamassa said some provisions duplicate existing requirements in Forest Service policies.

“USDA is aware of the frustrations some utilities experience as a result of delayed responses for maintenance approvals and inconsistency across agency field offices and has been actively taking steps to address these concerns under existing authorities,” he said. The Forest Service has 2,700 authorizations for 18,000 linear miles of power lines.

Climate Change Impact

FERC vegetation management federal land
Miller

Scott Miller, senior director for The Wilderness Society’s Southwest region, said utility vegetation management (UVM) practices have improved substantially since 2005. “At the same time, the importance of strong UVM practices continues to grow as climate change is causing longer wildfire seasons, larger and more severe wildfires, longer growing seasons, changing plant species distributions, increased insect and disease activity, and more intense, more frequent and longer-lasting drought, wetness and weather events,” he said.

Miller said the society, which claims more than 1 million members, opposes H.R. 1873 because it “fails to appropriately recognize the federal land management agencies’ obligations or the public’s interest in federal land management and because it fails to provide for the necessary cooperation that will improve effective and sustainable UVM on federal lands.”

The Senate bill, in contrast, provides “a thoughtful framework for legislation to advance UVM on public lands” and “corrects the many flaws” of the House bill.

“H.R. 1873 would prevent utilities and land managers from including activities in vegetation management plans that would require anything beyond annual notice, description and certification by the utility for its planned activities. It also would give utilities (including those without approved plans) blanket approval to conduct vegetation management activities to meet clearance requirements, leaving the agencies with no authority but to allow such activities, and leaving the utilities with little incentive to cooperate or even prepare a vegetation management plan.”

Granting a blanket exemption for vegetation management from NEPA “would undermine sound stewardship of our public lands,” he continued. “We note that both the Forest Service and BLM have already established a number of categorical exclusions that apply to many routine UVM activities, and those authorities are routinely utilized by the agencies in the context of UVM.”

The Senate bill, in contrast, would encourage cooperation between utilities and federal land managers, he said.

The group said the House bill’s provisions on liability are “overbroad and unclear.”

“Nothing in the bill states that the release of liability is limited to situations where the secretaries’ decisions are an actual and proximate cause of the damages, potentially leaving the agencies (and ultimately, taxpayers) to cover the damages caused by the utilities’ negligence (or even gross negligence).”

Overheard at the IPPNY Fall Conference

By Michael Kuser

SARATOGA SPRINGS, N.Y. — New York state’s ambitious renewable procurement, New York City’s carbon reduction plan and the costs of offshore wind were among the topics Thursday at the 32nd Fall Conference of the Independent Power Producers of New York. Here’s some of the highlights:

New York Officials Excited by Response to Renewable RFP

New York officials are happy about the competitiveness of the responses to their June solicitation for up to 2.5 million MWh of large-scale renewable energy, which they say is the most ambitious in the country.

(L-R) John Reese, moderator; Doreen Harris, NYSERDA; Anthony Fiore, NYC; Clint Plummer, Deepwater Wind; Michael Ferguson, Standard & Poor’s; Robert Bryce, Manhattan Institute | © RTO Insider

More than 4,000 MW of renewable energy capacity — the equivalent of more than 9.5 million MWh per year — qualified to submit proposals, said Alicia Barton, CEO of the New York State Energy Research and Development Authority.

That is six times the generation that was previously secured under the prior renewable portfolio standard and almost four times the amount that the state sought to procure, Barton said. “We hope that that level of competition will drive really terrific proposals and terrific prices,” she said.

A total of 88 facilities — including utility-scale solar, landfill gas, hydroelectric and wind projects — qualified for the request for proposals, which was issued by NYSERDA and the New York Power Authority.

“We were also very pleased to see that some project developers took us up on our invitation to propose projects that would also provide grid value and included storage in the proposals,” she said.

Bid proposals are due Sept. 28, and the state expects to make the selection awards in November.

NYSERDA Working with Commercial Fishermen, Feds on Offshore Wind Siting

Reese | © RTO Insider

IPPNY Board Chairman John Reese, senior vice president of Eastern Generation, moderated a panel that included Doreen Harris, director of large-scale renewables at NYSERDA. Harris manages the master plan for offshore wind that is due out by the end of the year.

The state hopes to get 2,400 MW of generation from offshore wind by 2030. Harris’ team has been working closely with residents of Long Island and other coastal areas, and particularly with commercial fishermen.

IPPNY offshore wind
Harris | © RTO Insider

“We’ve been spending a lot of time actually on the fishing dock, understanding how they work,” Harris said. “We’ve also undertaken over 20 different studies and surveys, which are now underway. These are desktop analyses as well as ‘boats in the water,’ so to speak.”

Siting is an important element of the master plan, and that brings in the Interior Department’s Bureau of Ocean Energy Management, which is responsible for offshore wind leasing in federal waters.

BOEM, which has identified more than 100 GW of offshore wind potential off the Atlantic coast, has issued or is preparing to issue leases off New York and seven other states. The first offshore wind lease for New York, a nearly 80,000-acre site off the Rockaways in Queens, went to Norway-based Statoil for $42.5 million last December. (See New York Seeks to Lead US in Offshore Wind.)

Only 2% of the Offshore Study Area is needed to meet New York’s goal of 2.4GW by 2030 | NYSERDA

Barton | © RTO Insider

“New York can make our recommendations to the federal government, but it is ultimately a federal process,” Barton said. “We are also looking at what this means for New York; specifically, what are the rules of the road to operate in New York if you’re a project developer? We intend to develop those guidelines using the information and the outreach we’ve conducted … which would set the stage for longer-term processes and considerations around transmission.”

NYC Seeks 80% GHG Cut by 2050

New York City has its own clean energy goals, including an 80% reduction in greenhouse gases by 2050, starting from a 2005 baseline.

Fiore | © RTO Insider

“In the more near term, we have a goal of 35% reduction in emissions from the building sector by 2025, and that’s truly important and aggressive,” said Anthony Fiore, deputy commissioner of energy management for the city’s Department of Citywide Administrative Services. “The city consumes about 30% of the electricity that’s generated in the state and is responsible for about 40% of GHG emissions in the state.”

Mayor Bill de Blasio said Thursday that he wants to require owners of buildings with more than 25,000 square feet of space to retrofit them for energy efficiency. The plan, which de Blasio announced in Brooklyn, could affect as many as 23,000 properties.

Electricity is responsible for about 30% of citywide emissions, and 50% of the energy consumed by the city is produced by generation within it.

“That fleet of generation, 70% of it is more than 45 years old,” he said. “That is less efficient on average than the rest of the state generation, so that presents some unique risks to the city as that generation fleet continues to age. We all know the difficulty in repowering, and the city has had a strong voice and advocated strongly with [FERC] on changing some of the repowering rules, buyer-side mitigation, to help make that easier. These things are difficult, so there’s a real risk there.”

Though some may debate the effect of GHG emissions on climate change, “what is not deniable is the air quality impacts and public health outcomes from emissions,” Fiore said. “This is really important for New York City. We have large corridors of above-average asthma rates that really affect the most vulnerable populations.”

| New York City

Any improvement in airborne pollutants means fewer lost workdays, fewer lost schooldays, better educational opportunities for our children, better opportunities for career development and an overall better economy, he said. “Health care dollars are real, and avoided deaths and morbidity need to be calculated and factored into the choices we make.”

Offshore Wind Overhyped?

IPPNY offshore wind
Ferguson | © RTO Insider

Michael Ferguson, director of U.S. energy infrastructure at Standard & Poor’s, said his company’s focus is on risk.

“Any time you’re going from an industry that is small right now, with only 30 MW of installed capacity [Block Island], to one in which there are very grand ambitions over time … there’s going to be risk involved,” Ferguson said.

The declining levelized cost of energy for offshore wind in Europe means “that stakeholders in the financial sector are willing to take a lower return on these,” Ferguson said. “That’s indicative of the fact that the market believes there’s less risk in these projects now than there was before.”

IPPNY offshore wind
Bryce | © RTO Insider

Talk of lower risk profiles might be fine for a banker, but for Robert Bryce, a senior fellow at the Manhattan Institute, “offshore wind has been hyped nearly as much as a Kardashian wedding.”

He cited some large projects that were announced but never built — such as the Atlantic Wind Connection by Google — and big plans by the Obama administration that never materialized, such as 10 GW by 2020 and 54 GW by 2030.

“In January, the Long Island Power Authority agreed to a $1.6 billion, 20-year power purchase deal to buy power from the South Fork Wind project from Deepwater Wind,” Bryce said. “For that project, Deepwater Wind will also collect $70 million in tax credits … the South Fork project is 90 MW. I could today build 180 MW of natural gas-fired capacity for about the same amount of money that Deepwater Wind is collecting just in tax credits.”

LIPA has agreed to pay $220/MWh for the power from South Fork, Bryce said. “How many of you in this room are getting $220/MW? None. The prevailing price last year in New York was about $34/MW. Therefore, so far what we’re seeing is that offshore wind is at least six times as expensive as conventional electricity.”

IPPNY offshore wind
Plummer | © RTO Insider

Clint Plummer, vice president of development for Deepwater Wind, responded that LIPA had determined that South Fork was the most cost-effective way of serving eastern Long Island. “Yes, you may be able to build a natural gas-fired plant in the middle of Texas for less, but if you want to build something to supply East Hampton, N.Y., you can’t,” he said.

“Three dollars per dekatherm may be the cost of natural gas delivered to Henry Hub in Louisiana, but it does not reflect the cost of natural gas delivered over a bulk transmission system and then through a distribution system to a local power plant, and it doesn’t reflect the heat rate when you run through an existing or even a new natural gas-fired power plant. So, it’s a false comparison.”

ISO-NE Forecast Sees Flat Loads, More Solar, No Congestion

By Rich Heidorn Jr.

BOSTON — ISO-NE expects growing energy efficiency and behind-the-meter solar generation to more than cancel out load growth over the next 10 years.

ISO-NE NERC energy efficiency Coal-Fired Generation
Audience at last week’s ISO-NE 2017 Regional System Plan Presentation | © RTO Insider

RTO officials outlined their forecasts at a public forum on their draft 2017 Regional System Plan on Thursday.

ISO-NE NERC energy efficiency Coal-Fired Generation
Soltysiak | © RTO Insider

The forum’s 150 attendees were mostly industry stakeholders, regulators and RTO officials. But there was also a three-woman contingent from Mothers Out Front, a climate change activist group, who pressed RTO planners on the region’s continued reliance on fossil-fueled generation. Carol Chamberlain, of Arlington, Mass., raised concerns about methane leaks in the natural gas supply chain. Randi Soltysiak, of Somerville, Mass., criticized the RTO’s plan for not shifting more heavily to carbon-free sources.

“To me, forming a new 10-year plan around increasing fossil fuels in 2017 is not only irresponsible, but it’s morally unconscionable in the face of the climate destruction that we’re seeing,” she said. “We need to do better. This is New England. They’re [setting 100% renewable goals] in Australia and they’re doing it in California.”

Others in the audience questioned transmission spending and the dearth of storage in the region. The RTO got its first grid-scale battery, a 16-MW facility at Yarmouth Station, last year.

ISO-NE NERC energy efficiency Coal-Fired Generation
Henderson | © RTO Insider

Passive demand resources and energy efficiency are expected to more than double over 10 years to 4,475 MW in 2026. Solar PV, including BTM generation and resources participating in ISO-NE wholesale markets, also is expected to more than double over the planning horizon, from 1,918 MW (nameplate) in 2016 to 4,733 MW by 2026. BTM PV will reduce summer peak loads by 1,035 MW in 2026.

But the RTO expects natural gas to comprise 56% of its capacity by 2026, up from 44% now, said Michael Henderson, the RTO’s director of regional planning and coordination, who gave a presentation on the plan.

Declining Net Loads

Although planners expect the gross peak summer load to grow 1% over the 10-year planning horizon, they forecast net load — including energy efficiency and solar generation — to drop 0.6% per year, from almost 126,800 GWh in 2017 to less than 120,000 GWh in 2026.

The 50/50 net summer peak forecast for 2026 is about 26,300 MW, down 0.6% from 2017. The 90/10 net summer peak forecast, however, rises by 0.5% to more than 29,000 MW in 2026.

Energy efficiency — supported by more than $1 billion in spending annually by the New England states — is expected to reduce the 90/10 net winter peak load from almost 21,900 MW to 20,600 MW, easing concerns over having sufficient natural gas for power generation during the heating season.

Resources

Despite declining net loads, the RTO says its net installed capacity requirement will grow from 34,300 MW in 2022 to 35,700 MW in 2026. Barring retirements, New England’s resources would exceed the ICR by at least 1,700 MW throughout the planning horizon.

“However, the region will likely still need to rely on operating procedures that provide load and capacity relief every season from 2018 through 2026, especially under extremely hot and humid conditions, severe winter weather, and during infrastructure-outage conditions of both electric power and natural gas facilities,” the report says. “The region also will likely face additional retirements of aging oil and coal-fired generation.”

The RTO’s interconnection queue has 76 active projects totaling almost 13,000 MW, including 6,400 MW of natural gas, 5,400 MW of wind generation and 77 MW of batteries.

Almost all the proposed natural gas generation is in Connecticut, Massachusetts and Rhode Island, consistent with the plan’s conclusion that “the most reliable and economic place for resource development” remains near load centers in southern New England. About 80% of the RTO’s load is south of Massachusetts’ northern border, Henderson said.

Two-thirds of the wind capacity would be added in Maine, with the remainder mostly offshore projects off the southeast coast of Massachusetts.

Transmission Needs

The report notes changes in the criteria and inputs used in assessing system needs, including the adoption of NERC transmission planning standards. The RTO also is using a new probabilistic methodology to determine the amount of generation assumed out of service in its base case analyses.

The report includes about $4 billion in proposed, planned and under-construction transmission upgrades. Since 2002, the RTO has spent $12.4 billion to add 714 transmission project components. “With these system upgrades in place, combined with the changes in assumptions to needs assessments … the need for additional reliability-based transmission upgrades, as shown by the steady-state studies of peak load, is expected to decline over the planning horizon. Conversely, generation retirements and studies reviewing system performance, accounting for the integration of nonsynchronous resources and improved load modeling, may drive the need for some additional reliability-based transmission upgrades.”

ISO-NE NERC energy efficiency Coal-Fired Generation
| ISO-NE

Future drivers of transmission include integration of large-scale renewable resources and distributed resources, aging infrastructure, adding interchange capability with neighboring systems, and complying with new NERC standards, the report says.

“The overall need for major additional reliability-based transmission projects is expected to decline over the planning horizon. The low growth of net peak load means it no longer is a major driver of the need for new reliability-based transmission projects,” it continues. “The development of [Forward Capacity Market] resources in favorable system locations also defers the need for major new projects.”

The RTO has yet to identify the need for market-efficiency transmission upgrades (METUs), because reliability upgrades have reduced system production costs, particularly out-of-merit operating costs. New economic and fast-start resources also have helped eliminate congestion and uplift costs.

While the study projects sufficient capacity and transmission to meet reliability criteria, it says the limited natural gas pipeline system is a fuel-security risk, especially in winter.

Panel Discussion

In addition to the presentation on the system plan and a keynote speech by former EPA Administrator Gina McCarthy, the forum included a panel discussion on planning for the “hybrid” grid. (See related story, Ex-EPA Chief Angry but Optimistic Over Climate Change.)

Outgoing ISO-NE Board Chair Paul Levy moderated the discussion, which focused on integrating renewables, storage and other distributed energy resources.

ISO-NE NERC energy efficiency Coal-Fired Generation
Root | © RTO Insider

Chris Root, chief operating officer for Vermont Electric Power Co., said his state is showing where the region is headed.

About one-quarter of its typical peak load of 1,000 MW is provided by solar on sunny days. More than 35% of its needs come from in-state run-of-river hydro and hydro imports from Canada and New York. It also has 120 MW of wind, with an additional 30 MW under construction.

“Ninety percent of the time, there is not a single carbon-producing generator running in the state of Vermont,” he said.

But wind output must be curtailed during heavy hydro runoff periods because of insufficient transmission, he said. “There hasn’t been a public policy transmission project yet. Everyone’s scared to be No. 1 on that,” he said.

ISO-NE NERC energy efficiency Coal-Fired Generation
Pike | © RTO Insider

Stephen Pike, CEO of the Massachusetts Clean Energy Center, said he would like to see “a truly educated and engaged customer base.”

He said that when his organization offered businesses a free feasibility study on adding solar or storage, it could find only 30 takers, well below the 50 it sought. “It’s extremely frustrating,” he said. “Frankly I thought we’d be overwhelmed with requests for assistance.”

Root agreed with the need for more customer education, saying few people know that it takes about 6 acres of PV panels to generate 1 MW. People say, “‘I have six panels on my roof.’ [I say,] ‘Great — you can run a hairdryer.’ A typical women’s hairdryer is 1,500 W. That’s [the capacity of] all the panels on the roof during that time you’re running it.”

McNamara | © RTO Insider

Ed McNamara, regional policy director for the Vermont Department of Public Service, predicted consumers will become more educated about the varying cost of power as electric vehicles become more popular.

“Think of how many people you know who know exactly which gas station has the cheapest gas,” he said. “If you’re now moving into electric vehicles, people are going to care about what their rates are.”

Nicholas Miller, senior technical director for GE Energy’s consulting business, said even industry professionals in the U.S. aren’t as informed as they should be. While European engineers have become increasingly comfortable with high renewable penetration rates, in the U.S. “lots and lots of PV starts to get really scary.”

Miller | © RTO Insider

“There are many distribution systems in northern Germany that regularly run at 300% instantaneous [solar] penetration — that is 3 MW of solar for one 1 MW of load. The distribution system looks like a spread-out power plant pushing power onto the grid,” he said. “That makes utility distribution people in the U.S. — including in New England — hair catch on fire. We’ve got a ways to go.”

NYPSC Limits ESCO Service, Sets New DER Compensation

By Michael Kuser

The New York Public Service Commission last week issued a procedural order to begin implementing its 2016 ruling prohibiting energy service companies (ESCOs) from enrolling new low-income customers and requiring them to unenroll existing ones.

NYPSC energy service companies ESCO
PSC Meeting underway

While litigation had delayed execution of the December order, the state’s Appellate Division this month lifted a temporary restraining order and denied a stay on implementation sought by the National Energy Marketers Association, clearing the way for the commission to act.

NYPSC energy service companies ESCO
PSC Chair John Rhodes

The December order included 11 clauses establishing implementation deadlines and a waiver process for ESCOs seeking to offer low-income customers a guaranteed savings product. The more recent order revised the deadlines to account for time lost under the temporary restraining order. (See Court Blocks NYPSC Order Barring ESCO Contracts.)

NYPSC energy service companies ESCO
Paul Agresta, DPS General Counsel

“I think this order is extremely useful, it addresses any possibility for confusion and it brings clarity to the implementation and to the timing,” PSC Chair John Rhodes said during a Sept. 14 commission meeting. He was supported by commissioners Diane Burman, Gregg Sayre and James S. Alesi.

The commission’s general counsel, Paul Agresta, testified that the new order does not affect ESCOs that had filed for waivers consistent with the December order. “Those ESCOs do not need to de-enroll customers from their guaranteed savings products until the waivers are acted upon by the commission,” he said.

One Waiver Granted

Immediately after issuing the procedural order, the commission approved a petition for waiver from one ESCO (Ambit Energy), while denying two others (Drift Marketplace and M&R Energy Resources).

NYPSC energy service companies ESCO
Bruce Alch, DPS Office of Consumer Services

A petition must demonstrate the ESCO’s ability to calculate “what the customer would have paid the utility and to ensure that customers would be paying no more than they would have paid the utility, and appropriate reporting to demonstrate compliance with these assurances,” Bruce Alch, of the Department of Public Service (DPS) Office of Consumer Services, told the commission.

In helping to set the waiver procedures, the DPS Utility Intervention Unit (UIU) recommended that the commission deny any petitions that failed to meet that criteria and impose strict reporting requirements on any ESCO granted a waiver. Alch said the attorney general’s office and the Public Utility Law Project, a consumer advocacy group, both agreed with the UIU’s comments.

DPS staff recommended that the commission approve the petition for Ambit Energy to continue to serve low-income customers.

“Unlike the other ESCOs, the only product Ambit sells in New York state is a guaranteed savings product,” Alch said. “In support of its petition, Ambit provided models which replicate the utility tariffs and enable it to closely bill the customer what the utility would have billed the customer.”

Rhodes noted that “with this order, we also begin to lay out the standards for what it means to definitively establish the ability to provide guaranteed savings. That clarity is important, it’s helpful to the industry and it’s helpful to customers.”

PSC NYPSC CILs FERC Order 1000
PSC Commissioner Diane Burman

Burman cast the only ‘no’ vote on all three waiver petitions, urging that the commission “take a step back.”

“The process has been confusing,” she said.

The commission directed ESCOs to block the enrollment of any new low-income customers on or before Sept. 22 and to unenroll customers within 30 days of receiving customer lists from the utilities.

NEMA on Friday filed comments protesting the PSC’s claim that ESCOs overcharge customers and cited data showing that they have saved New Yorkers more than $10 billion since 2002.

New VDER Compensation System

The commission last week also issued an order establishing a “value of distributed energy resources” (VDER) compensation system as a first step in moving beyond net energy metering. The new order grandfathers solar and other distributed energy systems installed before March 9, 2017, into the existing compensation scheme for the life of their operation.

Homeowners and small commercial customers that install solar or other small distributed systems between March 9, 2017, and Jan. 1, 2020, will be compensated through net metering for 20 years. All other systems installed after March 9 will be placed onto the new VDER compensation system after the utilities file final calculations and tariffs, which will take effect Nov. 1.

The commission in March adopted a new “value stack” pricing mechanism for solar and other DER, along with issuing two other orders to transition utilities into “distributed system platforms” and align their incentives with DER providers (Case NYPSC Adopts ‘Value Stack’ Rate Structure for DER.)

“This is a concrete first step that creates more active and more value-reflective pricing to spur development of those projects that are most valuable to the grid,” Rhodes said.

Last week’s order raises the maximum size of solar projects (from 2 MW to 5 MW) in order to decrease development costs and increase the competitiveness of the community solar market. It also establishes the first compensation values for energy storage systems when combined with eligible forms of DER and requires utilities to work with the state to integrate storage into the electric grid.

The commission anticipates considering final action early next year, following further analysis by utilities, stakeholders and DPS staff.