WASHINGTON — Choices made by customers on issues ranging from carbon dioxide to technology could rank alongside decisions made by policymakers in shaping the future of the grid, RTO officials said last week.
McCoy | Smartwires
This was a recurring theme during a Feb. 16 briefing by WIRES, the House Grid Innovation Caucus, the National Electrical Manufacturers Association (NEMA) and the Environmental and Energy Study Institute (EESI). “Unlike ever before, the electric customers are actively participating in the industry,” said Adriann McCoy, a vice president of Smart Wires, which makes advanced power flow control technology. The growing clout of end users is reflected in rooftop solar, plug-in electric vehicles and consumers’ purchasing of renewable power from alternative suppliers, she said.
“Anytime consumers start playing more actively in a market,” it brings about innovation, McCoy said.
Coal plant retirements, such as the recently announced plans to close the Navajo power plant in Arizona, will require that electricity be moved from other sources, McCoy said. The utility owners of the Navajo plant said Feb. 13 that they don’t plan to operate the facility beyond December 2019.
Speakers said people’s choice about where their power is coming from is driving the transmission system. This includes decisions favoring renewable energy and less-carbon-emitting sources.
“The planning is only slightly less complicated than the engineering” these days, said former FERC Chairman Jim Hoecker, counsel to WIRES. “It’s a challenging time, it’s a transformative time, for the electricity business.”
At the same time, a robust transmission system will save consumers billions every year in avoided power disruptions, Hoecker said. “That’s not pocket change,” he added.
Moeller | MISO
MISO Executive Vice President Clair Moeller said it is resilience and the need to move power from new low-carbon resources that is driving new transmission. “There is essentially no load growth in the nation,” he said. “My job at MISO is mostly about planning,” Moeller said. Sometimes “you get cheaper electricity from your next-door neighbor,” rather than from the generating unit in your own area, Moeller said.
Congress in 1992 said it wanted to see more electric competition, said Craig Glazer, PJM vice president for federal government policy. But even since the Energy Policy Act of 1992, lawmakers still engage in picking winners and losers, Glazer said.
The wind production tax credits and state bailouts of struggling nuclear plants can make things complicated, Glazer said. But Glazer cautioned against too much market tinkering, noting that the goal of competition was to shift risk from ratepayers to shareholders.
Ross | SPP
Innovation happens quickly, but “Congress doesn’t move very fast,” said former U.S. Rep. Mike Ross, senior vice president for government affairs at SPP. Congress needs to ensure its laws “don’t get in the way” of innovation, Ross said.
Many panelists said while the concept of regional planning is popular in the abstract, it often runs into roadblocks in the real world. For example, states are all over the board on issues like renewable mandates, Moeller said.
“States have not wanted to relinquish their regulatory authority over utility operations. This is a tremendous burden to interstate commerce,” Hoecker said.
“We want to make sure this [electric transmission issue] is front and center … that people know how important this is,” said Rep. Jerry McNerney (D-Calif.), who co-chairs the House Grid Innovation Caucus along with Rep. Bob Latta (R-Ohio).
NEW ORLEANS — Three years after the region’s integration, MISO South, with its plentiful gas generation, constrained interface into the North and capacity for severe weather, still doesn’t feel fully “in” the RTO, speakers told the Gulf Coast Power Association’s MISO South Regional Conference on Thursday.
Jennifer Vosburg, president of Louisiana generating at NRG Energy, said MISO’s North-South transfer constraint under the RTO’s settlement with SPP limits South’s participation in North. “It’s a challenge to how competitive MISO South continues to be,” Vosburg said.
“The drive to integrate into MISO was, ‘We’re going to be fully in MISO,’” Vosburg said. “We’re proud that the Planning Resource Auction limit is 600 MW more this year. That’s not fully integrated … MISO South is not on the same playing field as MISO North.”
Multiple panelists said the constrained North-South interface has exacerbated an “illiquidity” issue in MISO South.
Plentiful capacity in South is unable to help shortage conditions in North, Vosburg said, and South will remain isolated until it can fully participate in the market. She added that since integration, it is often easier to sell in the PJM capacity market than participate in MISO’s capacity market.
Vosburg said MISO’s once-thriving independent power producers have become “a lonely table.”
Paul Zimmering, an attorney at Stone Pigman who has represented the Louisiana Public Service Commission, said the North-South transfer limit should have been examined by MISO much earlier than its currently underway footprint diversity study. “This is 2017, and we were hoping this would have been looked at earlier. We thought that we would get an evaluation earlier on, but it’s happening now and it’s great,” Zimmering said.
However, Zimmering said MISO is doing a good job through its Transmission Expansion Plan playing catch-up on other transmission projects in the Entergy territory that were ignored prior to the incorporation of MISO South. He said 86% of Public Utility Regulatory Policies Act qualifying facilities in South now participate in the MISO market.
“One MISO is a goal, and I don’t think we’re there just yet,” he added.
Zimmering also said regulation challenges exist in MISO South, where states — Louisiana, Texas and Arkansas — are located in both SPP and MISO. “There are a lot of — I wouldn’t call them divided loyalties — but different interests to look out for,” he said.
MISO President and CEO John Bear pointed out the $2.3 billion in transmission investment since MISO South’s addition in 2014 and said the RTO has created almost $2.5 billion in total savings over the region’s three years of existence.
The value “is real and it’s happening, and I think it’s a really good story,” Bear said.
Although the region hasn’t experienced a hurricane since integration, operations have withstood significant weather events, Bear said: tornados in northern Arkansas in 2014; a Texas dam at risk because of heavy rains in 2015; flooding in eastern Texas and Louisiana; and persistent regionwide heat in 2016.
Matt Brown, vice president of federal policy at Entergy, said MISO’s footprint-wide climate differences are a benefit to MISO South, allowing lower planning reserve margins. Brown said Entergy operating companies saved about $412 million in 2014 and 2015 after joining the RTO. Transmission investment in MISO South has doubled from $359 million in MTEP 14 to $886 million in MTEP 16.
Jim Schott, vice president of transmission for Entergy Louisiana, said the company has noticed that the RTO can better identify congestion for future projects and has sounder congestion management practices, decreasing instances of transmission loading relief (TLR).
“Since December of 2013, TLR and [local area procedures] have hardly been uttered once,” Brown said.
Schott also said MISO membership means Entergy plans projects further in advance to fit into the annual MTEP schedule.
He also made a case for allocating costs of economic transmission upgrades to benefiting local resource zones alone. The RTO is considering changing cost allocation for economic projects in time for 2018, when costs can be shared with MISO South. “Benefits generally flow to some region, and the region should bear those costs,” he said. (See MISO Stakeholders Propose Changes to Market Efficiency Cost Allocation Process.)
Ted Kuhn, consultant at Customized Energy Solutions, said integration has brought pricing transparency — and added bureaucracy — to MISO South. “It takes time to get things through a larger process. It takes time to know which stakeholder meetings to go to, which person to talk to. It’s a process that will kill you if you don’t know it,” he said.
SPP Seam and MISO South
Laurie Dunham, vice president and manager of regional planning for Duke-American Transmission Co., said SPP and MISO need better coordination of the models in their joint studies. She urged stakeholders to get involved in interregional planning meetings.
Dunham said large-scale transmission projects aren’t always needed to resolve reliability issues, and, in some cases, the addition of “2 to 5 miles of line and a reactor” eliminates a problem.
Patrick Clarey, a FERC attorney adviser, noted that SPP is facing challenges with greater wind penetration. MISO and SPP’s possible overlay study, designed to last through 2019, could produce transmission projects to solve SPP’s problem, he said. (See related story, SPP Eyes 75% Wind Penetration Levels.)
Ted Thomas, chairman of the Arkansas Public Service Commission, said his state is in a good position — for now.
“It’s easy to be in my position when gas prices are low. Our utilities aren’t stirred up, our customers are satisfied, the legislature is calm,” Thomas said. However, he added, “if the last three weeks are any indication of the next three years, administrations will change, federal policies will zig-zag … and the consumer needs to be protected throughout.”
MISO South and the Climate
Thomas said the electric industry’s long 30- to 40-year capital cycles create a high risk of stranded costs. He said with Arkansas, Texas and Louisiana’s low-cost energy when compared to California’s prices, MISO South can wait to implement more expensive and experimental carbon-reduction measures.
“We can’t stick our heads in the sand. But we can wait and see. We don’t have to take the risk that the high-cost states take,” Thomas said. “I know that carbon is a long-term problem, and I question if we have a solution. I know that some states have a political appetite to reduce carbon, but I also know that Arkansas, and I suspect Louisiana, aren’t those places,” Thomas said. He added that even if Arkansas eliminated carbon emissions by 2018, it would not be enough to impact global temperature rise.
Other panelists maintain that MISO South is ripe for increased renewable penetration and more energy efficiency programs.
Siobhan Foley, the City of New Orleans’ FUSE Executive Fellow for Climate Action, said solar has come down dramatically in price and now is viable in terms of cost. She said MISO South can reduce carbon through several smaller solar projects. “It really is about smaller wedges and more of them, sharing and distributing in different ways,” Foley said.
Dunham said that the Clean Power Plan’s uncertain future should not stop the adoption of renewables and storage. “I don’t think it’s ever ‘pencils down.’ We need to be always modifying and adapting,” she said.
Low Rates, High Bills
Some officials think MISO South could do with more energy efficiency programs to reduce the region’s high energy consumption.
“We have low rates, but we have really high bills,” said Logan Atkinson Burke, CEO of consumer advocate Alliance for Affordable Energy. She said Entergy New Orleans customers have among the highest energy use rates in the country. Mississippi, Alabama and Louisiana rank among the worst in the country in available energy efficiency programs.
Thomas said energy efficiency programs can help defer “big decisions” and capital expenses by keeping demand low.
Jeff Baudier, chief development officer of Louisiana-based Cleco Holdings, said the company’s addition of a heat recovery steam generator to the Cabot coal plant in the St. Mary Parish in Franklin, La., will add 50 MW of capacity with no additional emissions. The project is expected to be in service in the first quarter of 2018.
Ted Romaine, director of origination for renewable generation developer Invenergy, said commercial and industrial customers, especially Internet companies like Google, Amazon and Facebook, are increasingly making off-site renewable energy deals such as virtual power purchase agreements.
“This is a market that’s really picked up steam in the last few years. … We see more buyers come into the market, and interest continues to grow. This isn’t a Silicon Valley-exclusive market,” Romaine said.
ERCOT, SPP and PJM lead in corporate off-site renewable deals with a 77% share of the U.S. and Mexico, Romaine said. He said although MISO doesn’t have any such contracts, it will in the future. He expects more than 20 first-time corporate renewable buyers nationwide in 2017. He added that vertically integrated MISO South utilities might bend to pressure from big energy users such as Google to create green tariffs — renewable energy purchasing programs — even if they have no legal obligation to do so. He said there is “strong potential” for solar-based virtual power purchase agreements in MISO South.
“If we don’t start recognizing that multinational corporations have sustainability agendas, they’re going to go somewhere else,” Baudier said.
PPL’s earnings from ongoing operations rose 11% to $1.67 billion last year, boosted by a 39% jump in the fourth quarter as the company benefited from a strong performance by its utilities and gains on currency hedges.
Reported earnings more than doubled to $1.9 billion ($2.79/share) for the year, compared with $682 million ($1.01/share) in 2015, which included a $921 million loss from discontinued operations, primarily the spinoff of its competitive supply business to Talen Energy.
PPL workers raising an osprey nesting platform at Owl Creek Reservoir near Tamaqua, Pa. | PPL
The company’s results exceeded the high end of its 2016 reported earnings forecast range of $2.55 to $2.70/share.
Reported fourth-quarter earnings were $465 million ($0.68/share), compared with $399 million ($0.59/share) in 2015. Eliminating special items, fourth-quarter earnings from ongoing operations were $409 million ($0.60/share) versus $294 million ($0.43/share) a year earlier.
CEO William Spence said the company made $3 billion in infrastructure investments last year and plans an additional $16 billion over the next five. “We are confident in our ability to deliver our projected 5 to 6% compound annual earnings growth range from 2017 to 2020 even if the exchange rate declines well below current levels,” Spence said in a statement.
The company announced that it is increasing its quarterly common stock dividend from 38 cents/share to 39.5 cents/share, payable to shareowners of record as of March 10. The increase is PPL’s 15th in 16 years.
Duke Energy saw its 2016 earnings drop more than 20% to $2.15 billion ($3.11/share) from $2.82 billion ($4.05/share) in 2015 largely because of a loss on the sales of its international energy operations.
For the fourth quarter, Duke reported a loss of $227 million ($0.33/share), compared to a profit of $477 million ($0.69/share) for the same period in 2015.
The company’s adjusted earnings were $3.24 billion ($4.69/share) for the year up from $3.15 billion ($4.54/share) a year earlier. Adjusted earnings exclude merger costs, severance charges, asset impairments, a 2015 charge associated with the Edwardsport IGCC regulatory settlement, and the loss on the sale of its hydroelectric and natural gas generation plants, transmission and natural gas processing facilities in Central and South America.
The company said results were bolstered by favorable weather, cost controls and the early close of its acquisition of Piedmont Natural Gas.
Nashville CNG Fueling Station | Piedmont Natural Gas
“2016 was a transformational year for Duke Energy as we acquired Piedmont Natural Gas and exited our international business,” CEO Lynn Good said.
Duke has realigned its reporting segments into three major categories: Electric Utilities and Infrastructure; Gas Utilities and Infrastructure; and Commercial Renewables.
The Electric Utilities segment earned $483 million in the fourth quarter, down from $569 million in the last quarter of 2015. The company blamed higher operations and maintenance expenses, tax rates, interest expenses and depreciation and amortization costs.
The Commercial Renewables unit earned $10 million in the fourth quarter, down from $17 million a year earlier, because of lower investment tax credits resulting from lower solar investments, partially offset by higher production tax credits from additional wind facilities placed in service.
MISO is seeking stakeholder input on improving how it estimates costs in its competitive bidding process.
The RTO is proposing separate approaches for transmission lines and substations, MISO transmission design engineer Devang Joshi said at a Feb. 14 Planning Subcommittee meeting.
For transmission lines, MISO will consider length, voltage, structure and conductor type, terrain type and right-of-way cost.
For substations, the RTO will take into account the number of new lines and major equipment positions added; bus and breaker arrangement; land cost, grading, fencing, any equipment to ground the lines and a control enclosure; and major equipment additions such as a reactors, capacitors or transformers.
MISO uses cost estimates to calculate benefit-to-cost ratios on potential market efficiency and multi-value projects. Before Order 1000, transmission owners or other stakeholders provided the estimates. But with the advent of competition for such projects, TOs’ cost estimates are now confidential information.
In evaluating bids, MISO will continue to weigh cost and design at 30%, project implementation at 35%, operations and maintenance at 30% and transmission planning participation at 5%.
Senior Substation Design Engineer Alex Monn said once feedback is received, the RTO will put together a guide on its cost estimation process.
Rules on Non-Transmission Alternatives Ready for PAC Review
After two years of work, Business Practices Manual language on non-transmission alternatives is nearing completion and ready to move to the Planning Advisory Committee for review, principal adviser Matt Tackett said.
Under the new process in BPM 020, once transmission issues are identified for the annual Transmission Expansion Plan, ”the planning process will explore alternative solutions to those issues with the objective of recommending the best overall solutions.” MISO will provide developers minimum planning requirements “to provide for the consideration of both transmission and non-transmission alternatives.”
The RTO said it will “defer, de-scope or cancel the transmission project previously proposed” if a non-transmission alternative is selected over a traditional transmission project.
“I think as we approach the MTEP 18 planning season, most of us would agree to move this on. The vetting isn’t over, but it’s a good time to make a transition to the PAC,” Tackett said.
Generators Identified in MISO Retirement Analysis
MISO has compiled generator data for its MTEP 17 retirement sensitivity study scope.
The study will use 378 forecasted generator retirements from 2004 through 2027 and 30 planned generator additions in MISO, SPP, PJM and SERC Reliability territory to determine transmission system needs.
MISO engineer Anton Salib asked stakeholders to submit any changes to the generator retirement list by Feb. 22. At the beginning of March, the RTO will post the final list of retiring generators and future resource additions to be used in the study. Results will be reviewed in the spring during sub-regional planning meetings.
Salib said the retirement analysis is only an informational study and MISO will not recommend any project in the MTEP 17 cycle based on the study.
The MTEP study will share information with the RTO’s Regional Transmission Overlay Study and market congestion planning study. (See “Studies Could Assist in Relieving North-South Constraint,” MISO Planning Advisory Committee Briefs.)
WASHINGTON — Former FERC Chairman Norman Bay says he told the Trump transition team he would likely leave the commission if he was replaced as chairman.
Bay’s Feb. 3 resignation, which came after President Trump appointed Cheryl LaFleur as acting chairman, left FERC with only two commissioners, one short of the quorum needed to rule on contested cases. (See FERC OKs Pipelines, Delegation Order Before Losing Quorum.)
Speaking at the Energy Storage Association’s annual policy forum at the National Press Club on Wednesday, Bay said he was following FERC tradition that the chair leaves after he is replaced.
“The tradition at FERC, with one exception” — LaFleur — “is for a former chairman to leave,” Bay said. LaFleur remained on the commission after Bay replaced her as chairman in 2015.
But Sen. Dean Heller (R-Nev.), who also appeared at the storage forum, said he was disappointed at Bay’s departure, saying it was “effectively paralyzing the commission.”
For her part, LaFleur told an audience last week that Bay’s departure was “somewhat to our surprise and certainly to our disappointment.”
Although Trump is expected to name a Republican as chairman when he fills the three vacancies, LaFleur said she intends to serve her complete term through June 2019.
“My whole FERC tour of duty has been a little non-standard,” LaFleur said Feb. 14 during remarks at the National Association of Regulatory Utility Commissioners’ winter meetings. “I’ve been a commissioner, then acting chairman, then chairman, then commissioner again. But the last three weeks have been the strangest set of plot twists yet.”
One of the plot twists: LaFleur learned of her appointment on Jan. 25 via a message from the White House dated Jan. 23. It was reportedly delivered two days late because it originally was sent to FERC’s old address, which the agency vacated for its current headquarters more than a decade ago.
She said her focus remains unchanged: reliability and grid security; transmission; and “building a clean and diverse energy mix.” Her priority as acting chair, she said, is to “keep the important work of the 1,300 people who work for the agency moving forward in a time of uncertainty and transition.”
Bay told the storage forum he promised Commissioner Colette Honorable he would be presidential “in the classic sense of the word” and not say what the commission should or should not do.
Nevertheless, he offered some advice for future commissioners. “It’s going to be very important for a future commission to retain a very important tradition at FERC, which is a tradition of bipartisanship, if not nonpartisanship, in the way that the commission addresses energy issues.”
He highlighted the high rate of unanimity in the commission’s orders. “Even when we were only down to one Republican commissioner, there were only two matters where the three Dems were on one side and the Republican commissioner was on the other,” he said. “I hardly need to say this in a ballroom in Washington, D.C., but there seems to be more partisanship than ever, and I think that when partisanship hits an independent agency … it is not a good thing for the American people.”
Asked by Burwen what he was going to do next, Bay said his “real ambition is to become a travel bum for a while.” True to his words, he left the Press Club wearing a backpack.
A federal judge on Wednesday rejected a request to halt a federal lease of waters off Long Island for an offshore wind site (16-cv-2409).
Nine commercial fishing organizations and businesses and coastal towns in New Jersey, Rhode Island and Massachusetts sought an injunction in December to halt the lease even before the U.S. Bureau of Ocean Energy Management awarded it to Norwegian company Statoil. The company won the rights to the 80,000-acre New York Wind Energy Area with a $42.5 million bid.
The fishing groups said the lease would cause irreparable harm to fishing areas that produce scallops and squid; the municipalities cited “economic and natural resource interests” in the site.
“To meet the standard for irreparable harm, plaintiffs must present sufficient evidence that the purported injury is certain, great, actual, imminent, and beyond remediation. Plaintiffs have failed to do so,” D.C. District Court Judge Tanya S. Chutkan wrote. “Most significantly, plaintiffs have not shown that their purported injuries are imminent or certain.”
BOEM conducted an environmental assessment of the lease area. The plaintiffs claim the bureau, part of the U.S. Department of the Interior, violated the National Environmental Policy Act and the Outer Continental Shelf Lands Act.
“Plaintiffs’ only argument for why there is an imminent and irreparable harm, despite construction being years away if it happens at all, is that once the lease is issued, Statoil will have made a significant financial investment in the development of a wind facility and will have attained some ‘property rights’ in the ocean area, meaning the balance of harms for whether to issue an injunction later in this case will have changed,” the judge explained. “In the court’s view, this factor does not weigh strongly enough to create an imminent harm sufficient to warrant preliminary injunctive relief. The court maintains its authority to ultimately enjoin the lease in this litigation if necessary. Moreover, Statoil’s decision to invest in this lease is already made with full awareness that its proposals for a wind facility may be rejected and it may never construct or operate such a facility.”
The lease is one of the linchpins of Gov. Andrew Cuomo’s plan to develop 2.400 MW of offshore wind facilities off Long Island by 2030. (See 90-MW Wind Farm OK’d off Long Island.)
WASHINGTON — Energy storage is providing tangible benefits to the grid, and rules need to be implemented to ensure it finds its proper place, a panel of experts told regulators last week at the National Association of Regulatory Utility Commissioners’ winter meetings.
Storage “all felt very on the fringe. And now, especially with the FERC [Notice of Proposed Rulemaking] that was just issued, it’s more in the mainstream,” said Public Utilities Commission of Ohio Chairman Asim Haque, who moderated the panel.
“I think almost everyone believes we’ll have more storage in the future than we do now, and I don’t think we know in the long run how it will develop. … I think if it develops to the extent that we think it might be developing, it will just be its own thing,” acting FERC Chairman Cheryl LaFleur said. “You’ll say electricity is: generation, transmission, distribution and storage, rather than fitting it into the others.”
With its ability to act quickly, storage is providing significant “capacity value,” ICF International’s Ken Collison said. Capacity value is the capability to provide firm energy in the hour of need: A combined cycle unit with a forced outage rate of 5% has a 95% capacity value, meaning it is available on a firm basis 95% of the time. ICF’s research found that a 100-MW storage system with one hour of stored energy can provide 46 MW of firm capacity (46% capacity value), while one with four hours of storage can provide 99 MW of firm capacity.
Storage is unique because it can be both a load when needed and a generation resource when needed, Collison said.
That reaction speed translates to value for customers. Ned Bartlett, Massachusetts’ undersecretary of energy and environmental affairs, said the hours with the top 1% of demand account for 8% of ratepayers’ costs, and the top 10% account for 40%. That represents “remarkable peak opportunities” for storage, he said.
However, storage’s flexibility also creates some regulatory issues, LaFleur said. Previous precedent has limited installations to either cost-based transmission rates or market-based services. FERC believes that is too limiting, she said, and issued a policy statement in January to clarify that the commission is open to opportunities for units to serve both roles but with protections to ensure they aren’t paid twice for the same service. (See Storage Can Earn Cost- and Market-Based Rates, FERC Says.)
LaFleur’s Dissent
“I dissented on that order. I was concerned with some of the broader language in the policy statement about the potential impacts on wholesale markets of having other payments streams,” she said. “I thought it came awfully close to implicating some of the questions we have pending before us now with respect to state policy initiatives and how they’re valued in the wholesale markets, which I know we’ll be looking at.” (See related story, LaFleur Plans Tech Conference on State Generator Supports.)
Among the flurry of orders the commission issued before former Chairman Norman Bay resigned Feb. 3, FERC also ruled on a complaint by Indianapolis Power and Light, finding that MISO’s Tariff unreasonably limits the services energy storage can provide. It ordered the RTO to craft more inclusive Tariff language within 60 days. (See MISO Ordered to Change Storage Rules Following IPL Complaint.)
Collison noted that one of the biggest advantages of storage is it presents less permitting and siting issues. “You can site it at the place of need,” he said.
And sometimes, it’s even mobile. “The number of people who come up to you and describe the different things they’re doing with car batteries, including charging at work, bringing it home and powering the house from it. Really exciting; really confusing at times,” Bartlett said.
Massachusetts’ “ambitious” goal is to have 300,000 electric vehicles on the road by 2025, he said.
WASHINGTON — Electric vehicles and distributed energy resources are increasing the need for utilities to experiment and conduct market research, speakers at an Institute for Electric Innovation forum said last week.
“What differentiates us from every other competitive service is we have an … obligation to serve 100% of the customers. We don’t have the ability to define our niche market and confine our advertising to that market,” said Karen Lefkowitz, vice president of smart grid and technology for Pepco Holdings Inc. “Serving 100% of the customers used to be easy because everybody had the same stuff. … Now things have gotten really complicated, because now we actually have to understand our customers.”
Regional Preferences
When Pepco rolled out smart meters at its utilities in D.C., Maryland and Delaware, Lefkowitz said, the company tested avatars for a video series explaining how customers could use the data collected by the devices. To the company’s surprise, different regions preferred different avatars, Lefkowitz said.
“It tells us that customers’ opinions and their attitudes can be vastly different in a relatively short geographic difference. They’re influenced by incentives their states are offering; they’re influenced by the culture of the community that they live in. They’re influenced by the rate that the local utility is charging. So when we look to the future and see all the choices that customers have … we need to understand what drives the customer. We need to understand what appeals to them, and we need to understand why they’re looking elsewhere for their services.”
“I think you always want to be experimenting,” agreed Arizona Corporation Commission Chairman Tom Forese. “Focus groups and polling data … could be very helpful in understanding the needs of the customers. Nothing really can compensate for just raw experimentation because pollsters are always shocked and surprised: ‘We didn’t see that coming.’”
Manal Yamout, vice president of policy and markets for Advanced Microgrid Solutions, recalled when the California Public Utilities Commission ordered Southern California Edison to obtain 50 MW of 15-minute storage in response to the shutdown of the San Onofre nuclear plant. The company ended up procuring 250 MW of storage with a four-hour output.
“Why would they do that? They didn’t have to,” Yamout said. “The answer is that, unexpectedly, distributed storage resources had the ability to give Edison something it didn’t quite know it wanted until it had to think about it.”
Although it was the storage target that caused the procurement, it was the multiple functions storage could fill that led the company to exceed the target, she said.
“I think we’re in a place in the elect power industry that’s … like the beginning of the Internet, where serious policy and regulatory change has to occur to let things explode,” said moderator and IEI Executive Director Lisa Wood, quoting from a book by AOL founder Steve Case.
“Our regulators are in a tough place. The world is changing very fast,” said Lefkowitz. “For the very first time, they’re now adjudicating between who should have the ability to put assets on the electric system that historically has been the domain of the utility.”
Forese said he believes the utility must retain a central role. “If the utility is not directing traffic for new technologies, then I think we’ll get the opposite of what we’re trying to accomplish,” he said.
EVs’ Impact
Lefkowitz predicted electric vehicles will “change the world” but said it won’t happen quickly because it takes about 15 years for the entire vehicle fleet to be replaced with newer models. (See columnist Steve Huntoon’s alternate view, Electric Cars – Three Ugly Facts.)
Time will be essential in ensuring Pepco is “ahead of the curve,” Lefkowitz said: Charging an EV requires the equivalent of half of a house load.
“If we don’t size our distribution transformers appropriately and everybody comes home to the neighborhood and charges their car at the same time, we’re going to at minimum blow the fuses on all those distribution transformers — we’ll be spending a lot of time driving around to replace fuses. And at worst, we’re going to be spending trillions of dollars across the nation upgrading transformers.”
Lefkowitz said EVs will change Pepco’s peak load in the D.C. area from 4-5 p.m. to perhaps 7-8 p.m.
“So our planning has to be a lot more expansive and future-looking and rely a lot less on 100% history that no longer is necessarily a good predictor.”
She predicted an expansion of Pepco’s incentives to encourage off-peak charging, saying a pilot program in Maryland proved very popular.
“We’ve been talking about [time-of-use] tariffs and the right pricing for three decades,” Wood said. “But EVs may be the thing that actually brings that to life.”
CAISO will likely be forced to curtail a massive amount of renewable energy this spring when increased solar output is expected to coincide with unusually “bountiful” conditions for hydroelectric production, the ISO’s top manager said.
“The last several years, the hydro system has been de-rated fairly significantly — [by] up to 4,000” MW, CEO Steve Berberich said during a Feb. 16 meeting of the ISO’s Board of Governors. “We’re going to see that flip and we’re going to have that 4,000 MW this year, plus we’ve added another couple thousand megawatts of solar.”
Last spring, CAISO confronted a number of instances when over-generation reached 2,500 MW, Berberich noted. In those cases, the ISO could “lay off” about 1,000 MW of the excess on the Energy Imbalance Market, while the rest was handled with decremental bids — otherwise known as economic curtailments.
Curtailments are expected to soar this year as the increase in solar capacity combines with high spring snowmelt to fuel possible record surpluses. California’s snowpack currently stands about 175% of normal, according to the state Department of Water Resources.
“We could see [over-generation] as high as 6,000 to 8,000 MW at a time, which will be the biggest over-generation that we’ve had,” Berberich said.
On a related note, Berberich reminded board members that CAISO’s “duck curve” forecast predicted that the ISO would be dealing with 13,000-MW solar-driven generation ramps in 2020.
“This last Sunday [Feb. 12], we blew through 15,000 MW,” Berberich said. “So we’re seeing this quicker and deeper than we expected and we’ll have to continue to monitor that.”
In 2013, CAISO published the California “duck curve” chart to illustrate the long-term impact of increased renewable penetration on its daily operations.
That forecast showed how the adoption of solar and other renewable resources would steadily undercut the ISO’s “net load,” which represents the portion of load being served by dispatchable resources such as gas-fired generation and imports.
The “duck curve” is coming faster than expected. Introduced in 2013, the curve predicted CAISO would be dealing with 13,000-MW solar-driven generation ramps by 2020. The ISO exceeded a 15,000 MW ramp earlier this month.| CAISO
Net load is calculated by subtracting the energy generated by variable renewable resources from total electricity demand. The curve turns sharply higher at sundown, indicating the need to rapidly ramp flexible resources to serve load.
A research report published last year by the ScottMadden consulting firm indicated that the “belly” of the curve was deepening more rapidly than originally predicted, with the corresponding ramping effects spread across the entire year and not just the typical spring day characterized by high renewable output depicted by the graph. (See Report: Calif. ‘Duck Curve’ Growing Faster than Expected.)
The RTO is proposing separate 
MISO uses cost estimates to calculate benefit-to-cost ratios on potential market efficiency and multi-value projects. Before Order 1000, transmission owners or other stakeholders provided the estimates. But with the advent of competition for such projects, TOs’ cost estimates are now confidential information.
