Increased electric infrastructure investments in Illinois helped boost Ameren’s first-quarter profits by 12.4%.
The St. Louis-based utility reported net income of $108 million ($0.45/share) compared to $96 million ($0.40/share) last year. The earnings-per-share results were 7-10 cents higher than analyst estimates.
Revenue was $1.56 billion compared with $1.59 billion a year earlier.
Ameren said it benefited from increased electric delivery and transmission infrastructure investments and from an order by the Illinois Commerce Commission approving recovery of additional costs, which added 4 cents to earnings.
The regulatory climate in Missouri was less favorable, reflecting a reduction in allowable cost recovery for vegetation management, infrastructure investment costs and certain storm costs. The state also reduced return on equity to 9.53% from 9.8%.
Even so, Ameren held firm on its estimated full-year diluted earnings per share of $2.45 to $2.65.
Weather, Integrys Merger Costs Bruise Wisconsin Energy Q1 Earnings
Wisconsin Energy said first-quarter profit fell 6%, citing a warmer winter than a year ago and the costs related to its proposed acquisition of Integrys Energy.
The company reported net income of $195.8 million ($0.86/share) compared with $207.6 million ($0.91/share) in the first quarter of 2014. Revenues fell 18% to $1.39 billion. The company said 2014 revenues were higher due to the polar vortex and higher spot market prices for natural gas.
The Federal Energy Regulatory Commission and the Michigan Public Service Commission have already approved the Integrys deal. The Wisconsin Public Service Commission last month indicated it will likely approve the deal, to the chagrin of industrial and consumer groups that want Wisconsin Energy to promise specific rate savings to customers as a result of the $9.1 billion merger. Regulators in Illinois and Minnesota have yet to sign off on the deal.
Nuke Charge Slams Xcel Energy’s Q1 Profit
Xcel Energy’s first-quarter net income fell 41% from a year earlier on a milder winter and a $129 million pre-tax loss related to a 2013 upgrade of its Monticello nuclear plant.
The Minneapolis-based company reported a profit of $152 million ($0.30/share) compared with $261.2 million ($0.52/share) in the first quarter of 2014.
Profits took a 16 cents-per-share hit due to the loss stemming from the Monticello project. In 2013, Northern States Power-Minnesota completed a project to uprate the Monticello nuclear facility to 671 MW from 600 MW, at a cost of $748 million.
That was more than a 2008 estimate of $320 million. The Minnesota Public Utilities Commission completed a prudence review in March, determining that $333 million of the costs must be recovered over the life of the project.
Revenues of $2.96 billion were down 7.5% from the same quarter last year, largely on milder winter weather that reduced consumption.
Xcel reaffirmed full-year earnings per share of $2 to $2.15.
If the Federal Energy Regulatory Commission keeps its word, virtual traders in PJM should have clarity by the end of October on whether up-to-congestion transactions will be subject to additional charges.
In opening a section 206 docket on the issue last year, the commission said it would rule within five months after it receives comments following a technical conference.
The technical conference was held Jan. 7. On April 29, the commission issued the request for follow-up comments, which are due May 29 (EL14-37).
In September, FERC ordered the 206 proceeding to determine whether PJM is improperly treating UTCs differently than incremental offers (INCs) and decrement bids (DECs). While INCs and DECs are charged uplift and subject to the financial transmission rights forfeiture rule, UTCs are exempt from both.
UTC trading volumes collapsed after Sept. 8, the refund-effective date set by FERC for any uplift assessments. Some financial traders have discussed an interim fee on UTCs in an effort to encourage trading pending resolution of the case. (See Cool Response to Proposed 7-Cent Fee on Virtual Transactions.)
Among the questions on which FERC solicited comment were:
How should the injection/withdrawal points for the virtual transaction be identified?
Should the defined “worst case” node be limited to the market participant’s own transactions?
Should the FTR forfeiture rule collectively assess the net impact of a market participant’s entire portfolio of INCs, DECs and UTCs instead of the current rule, which assesses virtual transactions one at a time?
Should counter-flow FTRs and bids that relieve congestion remain exempt from FTR forfeiture rule calculations? Should financial transactions that improve day-ahead and real-time market price convergence be exempt from the forfeiture rule?
Should UTCs be assessed uplift?
Do UTCs impact unit commitment decisions?
Should market participants be allowed to net INC and DEC transactions for the purpose of uplift allocations?
Extreme winter temperatures, while not as severe as last year, continue to play a major role in companies’ earnings results and business strategies.
PSEG
Public Service Enterprise Group reported 2015 first-quarter net income of $586 million ($1.15/share) compared to $386 million ($0.76/share) for the same period last year, a 52% increase.
While the company cited the strong performances of Public Service Electric & Gas and its generation business PSEG Power, operating earnings only increased slightly from the previous year and revenue dipped slightly. The biggest boon for the company was a $264 million settlement it reached with its insurers to recover losses due to Superstorm Sandy, $159 million of which is reflected in the first-quarter report.
PSEG had filed a lawsuit against the insurance companies in the summer of 2013, claiming they had denied it full coverage for its losses. A New Jersey Superior Court judge sided with the company in March. “The claims related to Superstorm Sandy insurance coverage are now fully resolved,” PSE&G spokeswoman Karen Johnson said.
Operating earnings for PSEG Power fell slightly by 5%, but due in part to the settlement, the business’s net income rose from $164 million to $335 million, a 105% increase. Most of the settlement money was for damages to the subsidiary’s plants.
“PSE&G is delivering on the promise of its expanded distribution and transmission investment program, while the reliable performance of PSEG Power’s generating assets and its gas market expertise during one of the coldest winters on record helped us deliver value for our customers,” CEO Ralph Izzo said.
Duke
Duke Energy reported 2015 first-quarter net income of $864 million ($1.22/share) on $6 billion in revenue.
While revenue fell from the nearly $6.3 billion it brought in a year ago, Duke’s earnings per share were well above analysts’ expectations of $1.14/share. A year ago, the company posted a first-quarter loss of $97 million after a $1.4 billion write-down of its Midwest Generation business. In March, Duke completed a $2.8 billion sale of the business to Dynegy.
Duke’s domestic utility businesses performed well despite the challenges of multiple winter storms, including Duke Energy Carolinas customers setting a record on Feb. 20 for peak use, CEO Lynn Good said. This offset weak international results, due in large part to an ongoing drought in Brazil that drove up the cost of purchased hydropower.
FirstEnergy
FirstEnergy’s first-quarter net income rose almost 7% to $222 million ($0.53/share) despite a 7% drop in revenue to $3.9 billion, the company said. Last year it reported earnings of $208 million ($0.49/share) on first-quarter revenue of $4.2 billion.
In an earnings call with analysts, CEO Charles Jones cited a revised strategy in the company’s competitive sales business as the primary driver of both the increased earnings and decreased revenue. FirstEnergy reduced its predicted annual load obligation to 68 million MWh, compared to 99 million last year, Jones said. The company also reduced the number of residential and small business customers it serves in weather-sensitive areas.
“This strategy, together with improved plant operations, helped to mitigate the potential downside from this year’s severe first-quarter weather and demand conditions, even though our region experienced four more below-zero days this February than last January,” Jones said. He also noted that PJM set a new winter demand peak in February. (See Cold Sends PJM to New Winter Record.)
The company also cited an increase in earnings from its regulated transmission segment, a result of prior investments, it said.
Dominion
Dominion Resources reported a 41% increase in net income for the first quarter, from $379 million ($0.65/share) last year to $536 million ($0.91/share) this year.
Operating earnings for the quarter, however, fell nearly 4%, and revenue fell 6%, from $3.63 billion last year to $3.41 billion this year. While earnings were largely the same from last year across most segments, Dominion noted a drop in its merchant generation business — earnings fell by nearly 9% — as one of the primary factors in the decrease in operating earnings.
CFO Mark McGettrick told investors that the drop was primarily due to poor power prices for its merchant generation in New England. Otherwise, weather conditions in the company’s service areas were “favorable,” which added 5 cents more per share in operating earnings than normal, he said.
PPL
PPL more than doubled its first-quarter profits, reporting earnings of $647 million ($0.96/share) versus $316 million ($0.49/share) in 2014.
Revenues were $3.17 billion, up from $1.19 billion in the first quarter of 2014, when it recorded $1.46 billion in losses on physical and financial commodity sales.
The company cited strong results from its regulated operations in the United Kingdom, Pennsylvania and Kentucky and earnings from infrastructure investments.
PPL expects to close the spinoff of its competitive generation business into Talen Energy on June 1.
“Moving forward as a purely regulated utility company, we remain confident in our ability to achieve annual earnings growth of 4 to 6% through at least 2017, based on the continued strong performance of our regulated businesses, the rate base growth expected from significant projected infrastructure investment and $75 million in targeted, corporate support cost savings that have been identified as part of our corporate restructuring,” CEO William Spence said.
Con Ed
Consolidated Edison reported first-quarter net income of $370 million ($1.26/share) compared with $361 million ($1.23/share) in 2014.
Revenue for the company’s regulated utilities fell by 4.4%, from $2.22 billion to $2.12 billion.
“The company experienced strong financial performance in the first quarter, and our workforce performed admirably during the challenges of a persistent, lingering winter,” said John McAvoy, chairman and CEO of Con Ed. “We are also very pleased with a proposed settlement with the New York State Public Service Commission that will keep electric delivery rates flat for our customers through 2016.”
MISO and SPP are considering $276 million in potential transmission upgrades under a joint model for identifying congested flowgates that could be relieved by economic projects.
Emerging from that joint process so far are four potential projects that could generate $438 million in benefits to the RTOs over 20 years, RTO officials said last week at a meeting of the SPP-MISO Interregional Planning Stakeholder Advisory Committee.
Four projects may not sound like much. But it’s progress considering the RTOs’ contentious relationship since December 2013 when New Orleans-based Entergy joined MISO rather than SPP, which had served as the Independent Coordinator of Transmission for Entergy’s system since 2006.
Most visible is a dispute over flows between MISO’s northern region and its new, southern region. MISO began limiting flows between the regions last spring after SPP complained that MISO had breached their joint operating agreement by moving power over its transmission footprint in excess of a 1,000-MW physical contract path.
But that dispute seemed distant as staff from both RTOs convened last week in Little Rock, Ark. Some even joked that they’ve been talking so much with those at the other RTO that they’ve memorized their phone numbers.
“We’ve learned a great deal about each other’s processes,” said Clayton Mayfield, an economic planner at SPP.
Collaboration has also improved modeling practices and provided a better understanding of neighboring stakeholder groups, said Jenell McKay, a senior analyst at MISO.
Stakeholders and staff at SPP and MISO came up with 67 potential economic projects using a joint model based on each RTO’s regional model. It projected transmission needs for 2019 and 2024.
That was whittled down to seven projects with potential, but three of those didn’t provide a minimum 5% benefit set as a threshold under the joint model.
The four projects seen to have the most potential totaled $276 million. They include new and upgraded transmission lines and transformers in Louisiana, Kansas and Nebraska. Benefits range from a 21% congestion reduction to a complete reduction in congestion.
Still Fine-Tuning List
Mayfield cautioned that the project list is preliminary and that more projects will likely emerge from the ongoing collaborative effort.
He noted that some projects initially identified were dismissed, and others added, after assumptions changed about the future of the Tennessee Valley Authority’s Shawnee units. MISO’s 2014 Transmission Expansion Plan originally contemplated that Shawnee Units 1-10, totaling 1,369 MW, would be retired, but TVA has since decided to keep nine of the Shawnee units in service.
The IPSAC joint analysis is expected to result in final project recommendations by June 30. The committee also is looking at a handful of reliability projects to reduce overloads.
More Potential
Other joint studies may be underway. McKay said the RTOs have had discussions regarding a study involving the effects of the Environmental Protection Agency’s proposed Clean Power Plan.
Pat Hayes, senior transmission policy specialist at Ameren, told the committee it could be helpful if staff conducts a “post mortem” regarding what differences the RTOs ran into and how they could have impeded a project from going through.
Kip Fox, director of transmission strategy and grid development at American Electric Power, said his “personal observation” is that the RTOs are working better together. He noted, however, that MISO and PJM have not been able to get moving on a seams project after four years. “I don’t want the same thing to happen here,” he told the committee.
Warren Buffett’s energy businesses have been buying and building wind generation facilities in the Midwest and Great Plains for years.
But the Oracle of Omaha now has his eyes on bringing solar power to the central U.S., according to a recent filing with the Federal Energy Regulatory Commission.
Buffett’s Berkshire Hathaway Energy disclosed that it recently acquired a site for solar generation development in MISO’s central region. The “site” consists of 74 individual “locations” not to exceed 1 MW each, according to the company’s quarterly property acquisition report. (MidAmerican Energy Holdings changed its name to Berkshire Hathaway Energy in April 2014.)
The company did not disclose exactly where the site is located. The company is not ready to make an announcement on the project, spokesman David Caris said.
MISO is a new locale for the company’s solar portfolio.
Subsidiary BHE Renewables has more than 1,200 MW in existing solar generation, primarily in California and Arizona, including its 550-MW Topaz Solar Farms in San Luis Obispo County, Calif., which became fully operational in March. Berkshire Hathaway companies also operate 579 MW of solar generation in Los Angeles and Kern Counties and own 49% of a 290-MW solar generating site in Yuma County, Ariz.
Environmental Regulations Bring Opportunities
Berkshire Hathaway’s planned solar expansion in MISO’s coal-dependent central region — which includes Indiana, Michigan, Wisconsin and parts of Illinois — appears designed to take advantage of increased demand for renewables as a result of federal environmental regulations.
The company has also continued its investments in wind. In October, BHE announced its plans for a 160-MW wind farm in Adams County, Iowa, that could cost up to $280 million.
Late last month, the company filed plans with the Iowa Utilities Board to construct up to 552 MW of additional wind generation in the state at a cost of $900 million. The company said it would announce the location and other details later.
On April 30, BHE announced plans to build a 400-MW wind farm in Holt County, Neb., that would be the largest wind project in the state. The recent FERC filing said that Berkshire Hathaway acquired a site in SPP territory for up to 400 MW of wind-powered generation development. It wasn’t immediately clear whether it’s the same site.
BHE owns and operates more than 3,400 MW of wind, solar, geothermal and hydro generation.
At the Edison Electric Institute’s annual convention last June, Buffett said the company, which has already spent $15 billion on renewables, was prepared to double that investment.
ALBANY, N.Y. — Four former energy regulators who were in the middle of many of the electric industry’s watershed events of the past two decades reminisced — and expressed regrets for paths not chosen — at the Independent Power Producers of New York spring conference Wednesday.
From left to right: Massey, Wood, moderator and former NYPSC chair William Flynn, Brownell and Kelly.
Former Federal Energy Regulatory Commissioners William Massey (1993–2003), Nora Mead Brownell (2001–2006), Suedeen Kelly (2003–2009) and former chairman Pat Wood (2001-2005) expressed pride in the growth of wholesale competition and wistfulness over political compromises that prevented development of larger, more uniform markets.
In a later session, NYISO CEO Stephen Whitley (2008–present) and predecessors William Museler (1999–2005) and Mark Lynch (2005–2008) also shared war stories from the first 15 years of the ISO’s markets.
Open Access
Massey
Massey voted in 1996 for the landmark Order 888, which ordered transmission operators to open their lines to competition.
“We knew we would get pushback with everything we did, but if you’re going to be a regulator or run an RTO, you’ve got to have political courage,” said Massey, counsel to the COMPETE coalition, which represents more than 700 stakeholders in support of electricity competition.
And political courage failed him at the most crucial time, Massey admitted, recalling the California energy crisis of 2000-2001, which occurred after FERC’s misgivings about the poorly designed California market were cast aside.
Massey related how the 1996 utility restructuring law passed the California legislature unanimously. The entire California congressional delegation then wrote to FERC, saying that any tinkering by the agency would likely cause the plan to collapse “like a house of cards.”
FERC meekly went along. “We had the opportunity to vote yes or no,” Massey said. “That is the vote I’m most sorry about.”
California’s wholesale power market and customer-choice program began in 1998 and seemed to be working well until the summer of 2000, when electricity prices in southern California hit all-time highs, and generation shortages caused rolling blackouts in northern California. Escalating wholesale prices, combined with retail price caps, put the state’s three major investor-owned utilities in a vise, with Pacific Gas & Electric forced to declare bankruptcy.
In December 2000, FERC eliminated the requirement that the three IOUs purchase their power through the California Power Exchange. In June 2001, shortly after Wood and Brownell joined the commission, FERC expanded a price mitigation and market monitoring plan it had issued in April 2001.
The California price spikes and Enron’s implosion stopped restructuring dead in its tracks as a national policy, Wood recalled. “Years later we were still putting the pieces back together,” he said.
Wood
Wood, now chairman of the Dynegy Board of Directors, said the industry is still coping with the lessons from the California crisis, including the balancing of consumer interests and industry needs. “If you want to be an economic regulator, you’ve got to understand the economics [and] what it takes to incent investment,” he said.
What he most seemed to regret was how proposals to divide the country into four RTOs — the Northeast, Southeast, Midwest and West — were stymied. The country is still paying for the “balkanization” of the markets caused by the “hue and cry and pushback,” he said.
“I still think there’s a lot of enterprise that could occur between New York and New England. And the seams issues between PJM and MISO are just awful,” he said.
Present & former NYISO CEO’s: William Museler (1999-2005) (L), Mark Lynch (2005-2008) (M), and Stephen Whitley (2008-present) (R)
Former NYISO CEO Lynch said the vision of a larger, seamless market in the Eastern Interconnection is unlikely to be realized. “We may have missed our opportunity to get there,” he said.
Kelly, who worked on legislation to make restructured markets national policy as a Senate staffer before her FERC tenure, said its failure informed her tenure as a regulator. “Political courage is important, but even more important is political support,” she said. Kelly added that energy policy is one place where partisanship can melt away and consensus built.
Brownell
But Brownell and NYISO CEO Whitley said that consensus-building can be unwieldy — “herding cats,” Whitley called it.
“I think the stakeholder process has grown into a cottage industry,” Brownell said. “I have great respect for the work they do, but I can’t imagine the New York Stock Exchange being developed by 400 people over a three-year period. We need to focus on the larger picture,” she said.
The larger picture, Brownell said, is electric markets’ role in developing the economy. “Where we begin to redefine this industry as economic development, we’ll move away from state versus federal [jurisdiction]. This is really about our competitive position in the world and social well-being.”
A New York clean energy developer has challenged a three-state effort to bring more renewable energy to New England.
Allco Renewable Energy Group filed suit against Connecticut in U.S. District Court in New Haven, claiming the joint effort and Connecticut’s renewable energy subsidies violate the U.S. Constitution’s Interstate Commerce Clause (3:15-cv-00608-CSH). Allco is also asking for an injunction to stop the joint procurement plan by Connecticut, Massachusetts and Rhode Island.
Allco CEO Thomas Melone unsuccessfully sued over Connecticut’s previous clean power plan, claiming the state illegally excluded renewable energy credits (RECs) generated by his facilities in other states from participating in Connecticut’s programs. RECs represent the environmental attributes of a clean energy project and are sold and traded separately from the energy produced. That case is under appeal. The claims made in that suit under the dormant Commerce Clause and the Federal Power Act are repeated in the new lawsuit.
Connecticut counts RECs from other New England states, and from New York and Canada, under certain circumstances. Melone is seeking to have his solar facilities in Georgia and New York qualified. The determination should be made by the Federal Energy Regulatory Commission and not the states, the suit says.
“The dormant Commerce Clause prohibits a state from using its regulatory power to discriminate against out-of-state businesses,” according to the suit, filed on April 26.
Allco sued the Connecticut Department of Energy and Environmental Protection and the state’s Public Utility Regulatory Authority.
“The three-state procurement is an innovative approach to meeting our renewable energy goals and securing clean power at the lowest possible price for our families and businesses,” Dennis Schain, a spokesman for DEEP said in a written statement to the Hartford Courant. “We believe the procurement is legally sound and will meet court challenges.”
MISO and ISO-NE said last week they have sufficient resources to meet this summer’s demand, but they warned that their reserve margins are shrinking due to plant retirements.
Reserves Good — for Now
MISO estimates that summer demand in its territory will peak at 127.3 GW, with 23 GW of reserve capacity available. That amounts to an 18% reserve margin, above the target of 14.3%.
However, the RTO projects reserve margins will erode because of “current environmental and microeconomic pressures.” That could result in emergency operations, such as suspending planned generation maintenance and the curtailment of non-firm energy sales.
Coal-fired generators are being forced into retirement by cheap natural gas and current and pending emissions limits on mercury and carbon dioxide.
“Starting in the next few years, we are seeing a dramatic shift in the resources available to meet demand during the hottest days of the year,” said Todd Ramey, vice president of system operations and market services at MISO.
ISO-NE Expects Sufficient Resources
ISO-NE also said it will have enough electric generation and demand response resources to serve its forecasted summer peak.
Under normal weather conditions of about 90 F this summer, electricity demand is forecasted to peak at 26.71 GW. Extreme summer weather, such as an extended heat wave of about 94 F, could push demand up to 29 GW. These forecasts take into account the demand-reducing effect of 1,685 MW of energy-efficiency measures acquired through the Forward Capacity Market.
Last year’s retirement of the 615-MW Vermont Yankee nuclear power plant will reduce the region’s reserve margin. Last summer, demand for power peaked on July 2, 2014, at 24.44 GW. The all-time record for peak demand was set on Aug. 2, 2006, when demand reached 28.13 GW after a prolonged heat wave.
Developers have released plans to build the world’s largest fuel cell park at a former gravel pit in Beacon Falls. CT Energy & Technology would develop and own the 63.3-MW park, which would surpass the 59-MW Gyeonggi Green Energy park in South Korea as the world’s largest.
“For practical purposes, the project location in Beacon Falls is perfect because it is next to an electric switch yard, a natural gas tie-in and water,” said William Corvo, president of CT Energy.
Under a letter of intent, FuelCell Energy of Danbury will supply the cells and is expected to operate and maintain the plant under a long-term service agreement. O&G Industries owns the property. CT Energy is developing and will own the project. Corvo declined to disclose the price tag for the project.
State Braces for Large Wind Expansion Because of Clean Power Plan
The state, which generates the majority of its electricity from coal, is anticipating a rapid expansion of its wind portfolio due partly to the Environmental Protection Agency’s proposed Clean Power Plan.
Only five other states are projected to boost wind power as much as or more than Indiana, according to the U.S. Department of Energy. The state could triple its wind power capacity over the next decade from 1,744 MW to more than 5,000 MW, said Sean Brady, Midwest policy manager for Wind on the Wires.
That would require 2,000 more wind turbines to join the 1,031 now located in the northern half of the state.
Gov. Paul LePage has nominated a University of Tennessee economist for the remaining slot on the Public Utilities Commission. Bruce Williamson, senior economist at the Institute for Nuclear Security at the university’s Howard Baker Center for Public Policy, told the Portland Press Herald, “I have no agenda in coming to Maine. I’m not bringing any prejudice about one type of energy versus another. It’s all about making sense financially.”
LePage favors policies that encourage expansion of natural gas pipelines and is opposed to subsidies to promote renewable energy and energy efficiency.
SunEdison, developer of the proposed 22-turbine Weaver Wind project near Ellsworth, recently released a statement saying it was withdrawing its power purchase plan and would try to sell its electricity elsewhere in New England, due to issues with the commission.
LePage’s Plan to Attract Nukes Blasted by Environmentalists
Environmentalists and anti-nuclear activists are blasting Gov. Paul LePage’s proposal to make it easier to bring small nuclear power plants to the state, because it would strip voters of the power to sign off on new plants, they say. Currently, voters must approve the construction of any nuclear power plant in the state.
LePage wants to remove that requirement for plants that generate 500 MW or less. But opponents say LePage’s proposal would silence those who could be greatly impacted by a potentially risky energy resource. The state’s only nuclear plant, Maine Yankee, closed in 1997, but only after surviving three referendums led by anti-nuclear activists — it closed due to operations and management problems. Patrick Woodcock, director of the Governor’s Energy Office, said the public would still have plenty of opportunities to weigh in through municipal permitting hearings.
Earthjustice Appeals Fed OK of Cove Point Terminal
Environmental group Earthjustice is suing the Federal Energy Regulatory Commission to reverse the agency’s approval of Dominion Resources’ Cove Point liquefied natural gas export terminal near Lusby, Md.
The group said FERC approved the project without conducting a rigorous environmental review. While the environmental studies did cover effects at the plant site, the group argues that it should have considered how increased demand for gas would result in increased pollution in the Marcellus Shale region where the gas is produced, as well as water pollution from increased shipping in the Chesapeake Bay.
Earthjustice — on behalf of state environmental groups Chesapeake Climate Action Network, the Patuxent Riverkeeper and the state chapter of the Sierra Club — filed the suit in the D.C. Circuit Court of Appeals after FERC denied its request for a rehearing last week. “After months of delay, we will finally get our day in court to challenge the fundamentally flawed approval of Dominion’s climate- and community-wrecking project,” said Mike Tidwell, director of the organization.
The takeover has met significant opposition in the state, where critics believe it would give the Chicago energy giant too much influence over electric service in the region. Criticism also has been fierce in D.C., which is expected to make its decision shortly after Maryland rules.
The acquisition already has won support from the Federal Energy Regulatory Commission and state officials in New Jersey, Virginia and Delaware.
Constellation, CCBC Team up to Build Solar Project
Constellation Energy and the Community College of Baltimore County are partnering to build a 5.1-MW solar generation project.
The system, spread among the college’s three main campuses, is expected to generate enough electricity to meet about 27% of the school’s electricity needs.
Constellation also will install 10 duplex electric vehicle charging stations as part of the project.
Constellation, the state’s top solar energy producer, will own and operate the systems. CCBC will buy the electricity under a 20-year purchase agreement.
The system will consist of about 16,500 photovoltaic panels on carports across the campuses.
The Pittsfield Community Development Board has approved a site plan for a commercial-scale photovoltaic power generation facility planned on three adjacent undeveloped lots in an industrial park. Solar panels on each lot are expected to produce 650 kW of energy at peak generation, according to officials with U.S. Light Energy.
William Heffernan, operations manager with the firm, said it plans to purchase the lots from Betnr Industrial Development and will produce electricity for distribution through Eversource Energy.
Tesla Motors has reached a deal to buy the Grand Rapids-based auto supplier Riviera Tool, marking the Silicon Valley tech company’s first acquisition, according to the Detroit Free Press.
Riviera makes stamping parts used by Tesla’s assembly plant in Fremont, Calif. Tesla is expected to continue adding jobs at Riviera.
PSC Approves Acquisition of Former Alliant Customers by Co-Ops
The Public Utilities Commission has approved the transfer of about 43,000 electricity customers from Alliant Energy to a consortium of co-ops. Alliant agreed in 2013 to the sale of its business to a group known as the Southern Minnesota Energy Cooperative, which will divide the southern service territory among adjacent co-ops.
The co-ops involved are: BENCO EC, Mankata; Brown County REA, Sleepy Eye; Federated REA, Jackson; Freeborn-Mower Cooperative Services, Albert Lea; Minnesota Valley EC, Jordan; Nobles Cooperative Electric, Worthington; Redwood EC, Clements; Peoples Energy Cooperative, Oronoco; South Central Electric Association, Saint James; and Steele-Waseca Cooperative Electric, Owatonna. Sioux Valley Energy, headquartered in Colman, S.D., would also add members in its Minnesota territory.
An independent state research institute has walked away from a $66,000 contract with Kinder Morgan to study the impact of a proposed natural gas pipeline, citing a disagreement over the terms of the research. The New Hampshire Center for Public Policy Studies has been at work on the Kinder Morgan proposal since early March and was scheduled to release its report in June. The non-profit think tank was hired by the energy company to conduct an objective analysis of its proposal for a new pipeline through southern New Hampshire. The work was under the direction of the center’s Executive Director Steve Norton, with most of the research conducted by economist Dennis Delay. A disagreement over the “terms of engagement” led to the cancellation of the deal, according to Norton.
Ambit Energy, an alternate energy marketer in the state, is under investigation by the Public Service Commission. Customers have complained about a lack of notification at the expiration of their contracts and the calculations used for guaranteed savings. Ambit says it is cooperating in the investigation.
The company said it met with the Department of Public Service “to explain how it calculates savings from its Guaranteed Savings Plan. The conversation expanded to include a discussion of the complaints the DPS received in 2014 and 2015 after consecutive, unseasonably cold winters in the state.” The newly formed Consumer Advocate office within the department is heading the investigation.
Hundreds of people turned out at the first of two Public Service Commission hearings on a proposal to subsidize the Ginna nuclear power plant. The hearing in Webster, a town close to the financially troubled nuclear facility and populated by many Ginna workers, was mostly supportive of the plan to prop up the plant to maintain system reliability.
Rochester Gas & Electric officials have said the transmission system is insufficiently robust to be able to deliver enough power to replace Ginna’s supply, should the plant be shuttered. A study done for the company raises the possibility of electricity shortages during periods of peak summertime demand if Ginna were to close now. Under that plan to guarantee rates, residential customers would pay an extra $163 over the next 3.5 years to keep Ginna running. Monthly charges would start at $6.11 and drop in subsequent years.
National Grid transmission-line upgrades would add $20 million to the tax base in the state’s Capital Region and lead to 264 new permanent jobs locally, according to a new study commissioned by the utility. The figures include data from Albany, Columbia, Montgomery, Rensselaer and Schenectady counties, where the construction would take place. Other counties involved in the project include Oneida, Herkimer and Dutchess counties. The total tax base benefit would be $30 million, and the addition to the job base would be 389 jobs.
National Grid is proposing a $1.2 billion upgrade to its high-voltage electric transmission system in the Mohawk Valley and the Hudson Valley.
Nuclear Transformer that Caught Fire was Subject of State Concerns
The state has had concerns for years about the reliability of transformers at the Indian Point nuclear generating station, where a transformer at Unit 3 exploded on Saturday night, spilling oil into the Hudson River.
The unit, which shut down automatically, could be out of service for weeks, according to a spokesman for plant owner Entergy. The fire, which sent black smoke into the sky, was extinguished by a sprinkler system and on-site personnel, the company said.
In 2007, state officials filed a petition with the Nuclear Regulatory Commission, saying the plant failed to operate an age management plan for transformers. The “failure to properly manage the aging of electrical transformers could have safety implications for the plant, such as affecting station blackout recovery,” the state told the NRC. Entergy responded that neither industry practice nor NRC staff guidance called for such a monitoring regime, according to a filing last year by the state as part of Indian Point’s licensing renewal application.
In 2013, the NRC’s Atomic Safety and Licensing Board ruled that the transformers fall under the scope of an age-monitoring review. An engineer called by the state as a witness testified that failure to properly manage transformer aging may compromise the safety of Indian Point, which is located about 35 miles north of midtown Manhattan.
The Republican-led House voted 77-32 to freeze the percentage of electricity sales mandated to come from renewable sources or energy efficiency as part of a regulatory reform package. It would stop an annual progression in a bill passed in 2007, setting the cap for renewable retail sales at 6%. And while the bill provides for local property tax breaks for solar, it also decreases the capacity threshold for solar and wind projects selling back to utilities. That particular amendment was seen as a major loss for solar advocates.
Officials Warn Against Drinking Water near Duke Coal Ash Pits
State environmental officials are warning residents near Duke Energy coal ash pits against drinking or cooking with well water after tests showed that 93% of the 163 wells tested so far showed high levels of toxic metals. It was the second warning about contaminated groundwater. Last month, state officials said 87 wells near eight Duke power plants failed to meet state groundwater standards.
Duke has 32 ash dumps at 14 power plants in the state. A law passed in the wake of a massive coal ash spill last year mandates testing at every site.
Senators Call for Better Tank Car Standards After Fiery Derailment
A crude-oil train’s derailment and explosion spurred the state’s U.S. senators to call for rapid upgrades of tank-car fleets to reduce the chance of future accidents. A 107-car BNSF train derailed and several cars burst into flames near Heimdal, but no injuries were reported.
“We must get the tanker car fleet updated,” Sen. John Hoeven (R-N.D.) said. “It’s all about safety and everyone … has a role to play.”
“Today’s derailment of a crude oil train is the second one in our state in the past year and a half,” Sen. Heidi Heitkamp (D-N.D.) said. “We cannot allow these to become the norm.”
Democrat Appointed to Chair PUC; Wolf Eyes Renewable Energy Policies
Gladys Brown
Gov. Tom Wolf has named fellow Democrat Gladys Brown chairwoman of the Public Utility Commission.
She replaces Robert Powelson, a Republican, who has led the five-member group since 2011. His term expires in 2019.
Wolf has not revealed his intention to reappoint or replace the other Democrat on the panel, James Cawley, whose term expired March 31.
Brown, 51, is a Harrisburg lawyer and former legislative aide who was named to the PUC in 2013.
Wolf said he looked forward to working with Brown “to ensure there is a stable balance between consumers and utilities, as well as utilizing PUC to advance the development of Pennsylvania’s infrastructure to support the natural gas industry.”
“I also believe we have a real opportunity to reposition the commonwealth as a leader in developing renewable energy and energy efficiencies,” Wolf said in a statement. “Gladys shares my vision and has the experience to help advance policies to achieve this.”
LITTLE ROCK, Ark. — SPP officials and market participants last week celebrated the first year of its Integrated Marketplace, boasting of its on-time, under-budget delivery, while acknowledging there is more work to do.
From left to right: Seth Cochran, DC Energy; Cliff Franklin, Westar Energy; and David Walters, Walters Power.
“We don’t have all the bells and whistles of everybody [else’s market]. But we do have a good pick-up truck to move us down the road,” said Jim Krajecki, Southwest director of wholesale services for Customized Energy Solutions, who moderated the headline session at the Gulf Coast Power Association’s briefing on SPP last week.
Krajecki noted that in its first year, SPP got 95% of its generation from the day-ahead market, while only 2.2% came through self-commitments and 2.5% from the reliability unit commitment (RUC) process. “Other regions took four to five years to get to these commitment levels,” he said.
David Walters, a former Oklahoma governor (1991–1995) who now runs his own international power development company, called the market “a game changer for developers.”
“I’ve been in this business for about 20 years. I think I spent the first … maybe 18 years complaining about SPP. I’ve been quoted as saying it was managed like the Bada Bing club,” the strip joint frequented by mobsters in “The Sopranos,” he said, prompting laughter from the audience of about 70 — and winces from SPP officials in attendance.
“But it’s a lot different now,” Walters continued. “I’m really excited about this Integrated Market. [It is] somewhat delayed compared with the other areas of the country but a remarkably complex system was established with very few hiccups.”
“From an operational aspect things have been very smooth compared to what I saw in ERCOT,” agreed Seth Cochran, manager of market affairs and origination for DC Energy. “Not only that but they didn’t have any slippage in the timelines and I think they did it for a quarter of the cost. So there’s a good story to tell there.”
Improvements Needed: Ramping Product
Speakers also discussed changes they’d like to see. Several speakers called for developing a ramping product to take advantage of the region’s wind resources and incentivize quick-start generators.
Cliff Franklin, senior regulatory specialist for Westar Energy, said SPP is overly reliant on RUCs compared with MISO, which he said makes better use of the day-ahead market.
“The reason that’s bad is because then deviations get hit with all that cost and that discourages imports [and] exports in real time,” he said. “When you need help you don’t want people worrying about their RUC distribution charges. You want people to efficiently trade in the market in real time.”
Krajecki noted that SPP’s available ramp has declined from about 375 MW/minute in August 2014 to 200 MW/minute in February 2015, which he said is leading to more constrained periods and market volatility.
Franklin said ramping can be improved with better compensation.
Fast-ramping units are “getting [payment for] energy and they’re typically at minimum load. That’s not real good incentive,” he said.
But it won’t be easy to achieve, said Richard Dillon, SPP’s director of market design. “It sounds very easy. I’m going to pay somebody for how fast they can press on the gas pedal and get out of the way of the truck coming up the back end. It sounds really easy but you set yourself up for: Am I offering ramp or am I offering energy? And they actually start contradicting each other if you don’t do the design correctly. … That is not going to be a small project.”
Jodi Woods, SPP’s manager of the day-ahead market, said the RTO is working to minimize use of the RUC process. “Some of it’s just been a learning process for the operators who are doing some of those commitments,” she said.
Transmission Congestion Rights Funding
DC Energy’s Cochran said the underfunding of transmission congestion rights has been a big disappointment for his company.
SPP’s 84.5% funding in March 2015 is “bottom-of-the-barrel,” he said, noting that ERCOT averages about 95%.
“If this goes on, it will ultimately drive out liquidity. People won’t want to participate. I’ve talked to numerous traders. When their targeted amounts are getting hair-cut by [as much as] 40% … it just disincentivizes trading. They no longer want to participate in that kind of market.”
Overcollection of Losses
SPP’s Dillon said overcollection of marginal losses is causing too much day-ahead trading at the expense of the real-time market. “As in many designs you go in and you have a lot of theories. And overcollected losses was one of those where it actually played out and we went, ‘Oops, this is providing the wrong incentive.’”
RTO officials hope a revised rule, effective May 29, will solve the problem.
Seams Coordination
Dillon said SPP also is considering changes to rules setting a single interface price for the seam with MISO, which leaves the RTO vulnerable to gaming by traders — an issue that will become more acute when the Heartland Consumers Power District, Basin Electric Power Cooperative and the Western Area Power Administration’s Upper Great Plains Region join SPP in October. (See Spurned by Entergy, SPP Expands in Great Plains.)
“Our border is very long to begin with,” Dillon said. With WAPA “you have a single price representing from the Gulf Coast all the way up to Canada, [although] the Entergy area is very different from [the] Kansas City area, which is very different from the North and South Dakota area. SPP is looking at [whether it can] mitigate the gaming such that we can break it into multiple prices.”
The St. Louis-based utility reported net income of $108 million ($0.45/share) compared to $96 million ($0.40/share) last year. The earnings-per-share results were 7-10 cents higher than analyst estimates.
The company reported net income of $195.8 million ($0.86/share) compared with $207.6 million ($0.91/share) in the first quarter of 2014. Revenues fell 18% to $1.39 billion. The company said 2014 revenues were higher due to the polar vortex and higher spot market prices for natural gas.
The Minneapolis-based company reported a profit of $152 million ($0.30/share) compared with $261.2 million ($0.52/share) in the first quarter of 2014.
