Page 1574 – RTO Insider

March 26, 2015

Supreme Court Shows Ideological Divide over MATS Rule

By Rich Heidorn Jr.

WASHINGTON — The Supreme Court’s ideological divide was on display Wednesday as justices sparred with attorneys over whether the Environmental Protection Agency should have considered costs before deciding whether to regulate mercury and other hazardous air pollutants from power plants.

The case combined what began as three challenges to EPA’s Mercury and Air Toxics Standards (MATS), which are due to take effect in less than three weeks. After an appellate court upheld the rule in a 2-1 ruling in April 2014, the Supreme Court agreed to consider a single question: Did EPA act unreasonably because it refused to consider costs in determining whether it is “appropriate and necessary” to regulate hazardous air pollutants emitted by electric utilities?

The 90-minute oral arguments saw the court’s liberal wing, led by Justices Elena Kagan and Sonia Sotomayor, defending EPA’s stance that it should consider costs only after a cost-blind determination that the pollutants pose a public health risk and therefore should be regulated.

The regulations were initiated 25 years ago, when Congress amended the Clean Air Act in 1990. The amendments ordered EPA to regulate 189 hazardous air pollutants (HAPS), including mercury, arsenic and cadmium, which had not been previously controlled. (See related story, MATS: 25 Years in the Making.)

Conservatives, led by Justice Antonin Scalia, expressed sympathy for the challenge by Michigan and other coal-dependent states, some electric utilities and the coal mining industry.

As in many past decisions, the ruling may turn on the opinion of centrist Anthony Kennedy. In contrast with his colleagues, who appeared to have staked out firm positions, Kennedy’s questions suggested he was leaning toward EPA but willing to consider the challengers.

‘Capacious’

Early in the argument by Michigan Solicitor General Aaron D. Lindstrom, Kennedy observed that “‘appropriate’ is a capacious term.”

“It is a capacious term,” Lindstrom agreed. But he said that “cuts against the government because one of the things that’s encompassed within the term ‘appropriate’ is that it looks at all of the circumstances in … determining whether or not you’re going to regulate. Costs [are] relevant.”

Justice Kagan said Congress would have explicitly required EPA to consider costs if that was its intent. For sources other than electric generating plants, Congress expressly forbade EPA from considering costs when deciding whether to regulate. “To get from silence to this notion of a requirement seems to be a pretty big jump,” Kagan said.

Scalia said he disagreed with the premise that EPA could ignore costs because Congress did not give explicit instructions to the contrary. “I would think it’s [a] classic arbitrary and capricious agency action for an agency to command something that is outrageously expensive, and in which the expense vastly exceeds whatever public benefit can be achieved. I would think that that’s a violation of the Administrative Procedure Act.”

Uncertainty over Acid Rain Program

Among the issues in dispute is the significance and rationale for Congress’ decision to treat power plants differently from other air pollution sources.

Some provisions of the 1990 Clean Air Act amendments specifically targeted power plants, including the acid rain program that required regulations on sulfur dioxide (SO2) and nitrogen oxide (NOx) emissions from the largest coal-fired generators.

Congress ordered EPA to perform a study evaluating whether the acid rain and other programs had addressed all public health concerns from generators. It ordered EPA to develop additional regulations if the agency determined it was “appropriate and necessary.”

“So what, if anything, can we infer from” Congress’ decision to treat power plants differently from other HAPS sources? Justice Samuel Alito asked. Lindstrom was in the middle of his answer when Justice Kagan jumped in.

“They were trying to create a different regime because they thought that the acid rain program might have a real impact on what these electric utilities were doing,” she said. “So they said, wait and see and let’s see how the acid rain program works, and let’s see if we still have a problem to solve. And that’s the reason why they put the electric utilities in a different category, isn’t it?”

Later, Justice Kennedy said that EPA’s emission threshold — equal to the emission rates of the top 12% of generators in their class — was an “implicit cost consideration.”

Lindstrom said that wasn’t enough. “The fact that some utilities were able to impose things doesn’t mean it would be cost effective for other ones to do it,” he said.

Utility Air Regulatory Group

Attorney F. William Brownell, representing the Utility Air Regulatory Group, an ad hoc association of electric generating companies and industry trade associations, spoke second.

Brownell focused on the cost of the regulation — by some accounts the most expensive EPA regulation in history at an estimated $9.6 billion annually. In addition to controlling mercury emissions, it is also designed to control emissions of non-mercury metals and acid gases.

The rule sets separate standards for different types of oil-fired generators and separates lignite coal generators from others.

“Most of the costs here — the majority, about $5 billion annually — are associated with the acid gas regulation, which the agency has concluded presents no public health risk,” Brownell said.

Kagan said Brownell’s position that EPA consider costs before it decides how to categorize emission sources, was unworkable. “EPA … can’t even figure out the costs until it makes those categorization decisions,” she said.

Solicitor General Defends EPA

Solicitor General Donald Verrilli Jr., representing EPA, said the court should uphold the EPA’s rulemaking because “it is the most natural and certainly a permissible reading of the statutory text, which directs EPA to focus on health concerns and doesn’t mention costs.”

Chief Justice John Roberts pressed Verrilli to concede that EPA “could have interpreted the statutory language to allow them to consider costs.” When Verrilli declined to answer directly, Justice Kennedy repeated the question.

Verilli refused. “I think EPA … read the best interpretation of the statute was [that] it didn’t provide for the consideration of costs at the” stage where it was determining what pollutants to regulate.

Alito said there was no reason for Congress to treat power plants differently except “to hold open the possibility that power plants would not be listed even if their emissions exceeded the levels that would result in listing for other sources.”

Verrilli said he refused to accept Alito’s premise. “The argument that your honor just posed is not in the legislative history, and it’s not in the text,” he said.

Justice Stephen Breyer, who usually votes with the liberal wing, indicated he was looking for a rationale to support EPA. But he said he was concerned that “it begins to look a little irrational to say, ‘I’m not taking [cost] into account at all.’”

Verrilli said the cost consideration comes after EPA identifies the pollutants and classifies the sources into peer groups. “Once EPA lists and defines the category for listing, then the automatic requirement that is applied is that everyone in the category has to match the performance of the best 12%,” he said.

Calpine, Exelon, PSEG, National Grid Support EPA

The final speaker, attorney Paul M. Smith, representing Calpine, Exelon, National Grid Generation and Public Service Enterprise Group, supported the EPA.

“It’s important to recognize that something like 90% of that $9.6 billion — 90% of the capital cost, which is most of that $9.6 billion — has now already been spent,” he said. “And the industry has not experienced the kinds of upheavals that are being described. The rule takes effect in the middle of April, and so the idea that the result here was somehow ludicrous or outlandishly expensive is belied by the fact that the industry is bringing itself into full compliance.”

Significance

Sanne H. Knudsen, assistant professor of law at the University of Washington School of Law, said the significance of the court’s ruling, expected by June, will depend on its breadth.

One scenario is that the court defers to EPA’s judgment under the longstanding Chevron doctrine. “One would wonder, however, if that were the outcome, what inspired the court to take the case,” she wrote in a preview for the American Bar Association.

A second possibility, she said, is that the court vacates the rule in a broadly written opinion that mandates cost-benefit analyses in all public health regulations when Congress is silent.

A third scenario is that the court requires the cost-benefit analysis but upholds the rule on the grounds that a remand would lead to the same result.

March 24, 2015

MISO Board Questions Execs on Entergy Out-of-Cycle Requests

By Chris O’Malley and Rich Heidorn Jr.

Under questioning from MISO board members, senior RTO officials last week defended their support for Entergy’s controversial requests to spend $200 million on out-of-cycle transmission projects.

General Counsel Steve Kozey and Clair Moeller, executive vice president of transmission and technology, told the Board of Directors System Planning Committee on March 17 that MISO planners had followed the RTO’s rules in recommending approval of the projects, the largest of which is a $187 million transmission upgrade near Lake Charles, La.

Committee Chairman Michael Evans did not ask the committee to endorse the projects to the full board, despite a request to do so from Phillip May, CEO of Entergy Louisiana and Energy Gulf States Louisiana. Evans said the goal of last week’s 90-minute meeting was to “ventilate the subject fully.”

Evans said the committee will invite the full board to take part in additional discussions in a conference call before their next face-to-face meetings beginning April 21.

At the Planning Advisory Committee meeting last month, the Transmission Developer and Independent Power Producer sectors voted against MISO staff’s conclusion that the Lake Charles project qualified as an out-of-cycle reliability project. As a result, MISO officials said, the full board will conduct a “full review” of the request. (See MISO Board to Review Entergy Lake Charles Project Following Stakeholder Pushback.)

In previous meetings and in letters to the board, critics have challenged Entergy’s load forecasts as speculative and say the project’s scale suggests benefits beyond that of a baseline reliability project, the only type of project permitted under MISO’s out-of-cycle procedure. They questioned why Entergy didn’t see large industrial growth coming early enough to include it in the MISO Transmission Expansion Plan (MTEP), instead of asking for out-of-cycle approval that deprives transmission developers an opportunity to compete.

The critics also said MISO failed to conduct a thorough review of the Lake Charles project as required under the RTO’s rules. The IPP sector said that the business practice manual for transmission planning (BPM-20) provides for up to six months of study for an out-of-cycle review and that it implies multiple Technical Study Task Force meetings are possible during the review. MISO conducted just one task force meeting before endorsing the proposal at the PAC meeting, the IPP sector said.

Jeffrey Webb, senior director of expansion planning, countered that the BPM does not require an “extended series of meetings.” Webb also said MISO had no authority to reject a transmission owner’s load forecasts.

Need Questioned

Kip Fox, representing the Competitive Transmission Developer sector, listed a series of industrial projects that have been shelved or delayed — evidence, he said, that much of the growth expected at Lake Charles is speculative.

“It is not speculative,” responded Charles Long, director of transmission planning for Entergy. “Certainly with any forecast there’s uncertainty. But I can tell you there’s enough need coming to Lake Charles to necessitate this project.” Entergy says more than 500 MW of new load is under contract with another 300 MW “probable” this year.

MISO presented an analysis showing the increased load would cause voltage problems and thermal overloads as high as 146% of line ratings. (See map.)

Board Chairman Judy Walsh expressed support for staff, saying she was “sort of skeptical that [MISO’s review was] not robust enough.”

She also voiced reservations over whether MISO should “become the validators of load” projections.

But she also expressed concern that while Entergy might save eight months by winning approval as an out-of-cycle project rather than submitting it for inclusion in the MTEP process, “you could lose that [time] in a dispute at FERC.”

Moeller said those skeptical of Entergy’s forecasts can challenge the company when it seeks approval from the Louisiana Public Service Commission. He also noted that Entergy was taking on financial risk. “It’s not in their interest to spend almost $200 million to serve load that isn’t there,” he said.

Attorney Noel Darce, representing the PSC, said the commission’s staff wants the MISO board to approve the requests without delay. He said the PSC “retains full authority to approve the certification and to review the prudence of the expenses incurred on this project.”

Scope Challenged

Director Evans asked staff to verify that MISO had met its obligations to follow its BPM and other procedures, wondering aloud: “How can you get a 700-MW load that’s a surprise?”

He also pressed staff on their conclusion that Lake Charles is a baseline reliability project, saying “it would appear from the letters [to the board] that there’s not universal agreement.”

In a March 12 letter, ITC Holdings Vice President Kristine Schmidt noted that Entergy’s request states that, in addition to addressing reliability concerns, the project “will also facilitate future economic development in the area.”

“Facilitation of future economic development is the definition of a market efficiency project, not that of a baseline reliability project. While there may be components of the [Lake Charles] project which are needed for reliability, the entire project possesses a much broader scope than what would be required to meet those reliability needs,” Schmidt said.

NRG Energy said MISO should determine whether the Lake Charles project includes upgrades that should be directly assigned to Entergy’s end users and not socialized across all users of the system. It noted that when one of NRG’s cooperative customers sought to bring new load onto the system, the costs of the “cut-in” for the load were directly assigned to the co-op.

NRG also noted Entergy’s plans to construct a large combined-cycle generator “in and around the same location as where the proposed upgrades are to be done.”

“Under FERC precedent, a new power plant must bear its own development costs and cannot be allowed to benefit from a deliberately timed, self-serving ‘reliability’ transmission project,” NRG said.

In his own letter on March 16, Entergy’s May said that the project is “the optimal and most efficient solution to the identified need.” Construction of smaller, incremental upgrades would be inefficient and difficult to manage and would threaten Entergy’s ability to meet its required June 2018 in-service date, he said.

May said if the Lake Charles project were designated as a market efficiency project, and underwent the full competitive bidding process — “not to mention any litigation that may flow from the process” — it’s likely the in-service date of upgrades would be pushed out to at least 2020.

Moeller noted that often a customer will reveal the need for load at the last minute “and then you can’t move fast enough to meet their needs.”

Moeller said the Lake Charles dispute — the first out-of-cycle project to face any stakeholder opposition, he said — is an example of friction between the traditional monopoly business model and the emerging, competitive developer segment resulting from the Federal Energy Regulatory Commission’s Order 1000. “It’s those two business models that are colliding in many of these comments,” he said.

On this, finally, there was consensus.

“This is an entirely different world,” agreed George Dawe, vice president of Duke-American Transmission Co. The old world was “transmission owners nodding their heads at each other’s transmission owner projects.”

March 24, 2015

Dunkirk Plant Chronology

1950: Dunkirk units 1 and 2, each 75-MW simple-steam coal plants, go into operation on Lake Erie, 55 miles southwest of Buffalo, N.Y.

1959-1960: Dunkirk adds units 3 and 4, 185 MW coal-fired, simple-steam units.

1999: NRG Energy acquires Dunkirk from Niagara Mohawk Power. NRG later converts the plant to use low-sulfur Powder River Basin coal and installs controls on mercury and nitrogen oxide emissions.

March 2012: NRG says it will mothball Dunkirk effective Sept. 10, 2012.

August 2012: The New York Public Service Commission approves a reliability support services agreement between NRG and Niagara Mohawk parent National Grid to keep Dunkirk operating to maintain system reliability. National Grid agrees to pay NRG $2.9 million per month for the nine-month period of Sept. 1, 2012, through May 31, 2013, with additional cost adjustments for taxes and coal costs, and credits for capacity market revenues earned by Dunkirk.

May 2013: The PSC approves a new RSSA between NRG and National Grid through May 31, 2015, at a cost of $2.1 million per month, with the same cost adjustments as the original RSSA.

February 2014: The Federal Energy Regulatory Commission accepts and suspends National Grid’s proposed rates to cover the cost of the RSSA. FERC accepts the changes subject to refund and further order, saying it was not convinced the changes were just and reasonable.

June 2014: The PSC approves a $140 million plan to upgrade three Dunkirk units from coal to natural gas, with a capacity of 435 MW. The PSC selected the repowering over a plan to invest up to $76 million in transmission upgrades, which would have addressed reliability concerns and allowed the plant to close. Closing the plant, Chautauqua County’s largest taxpayer, would have reduced the city’s property tax revenues by more than 40%. The repowered plant is expected to pay about $8 million in property taxes annually.

October 2014: The Sierra Club files suit against the PSC over the repowering plan.

January 2015: National Fuel Gas and NRG announce a settlement allowing National Fuel to build a 9.3-mile pipeline to supply Dunkirk. National Fuel and Dunkirk Gas, an NRG affiliate, had originally offered competing pipeline proposals to the PSC.

February 2015: Entergy sues the PSC, alleging it infringed on FERC authority by approving the repowering plan.

March 2015: Niagara Mohawk informs PSC it will exercise its option to extend the RSSA for seven months through Dec. 31, 2015.

September 2015: Projected completion date of Dunkirk repowering.

March 24, 2015June 15, 2023

FERC Approves NERC Risk-Based Registry

By Rich Heidorn Jr.

About 500 organizations will be relieved of some grid reliability regulations and another 200 exempted entirely under the North American Electric Reliability Corp.’s new method for classifying entities under its jurisdiction.

The Federal Energy Regulatory Commission last week approved NERC’s Risk-Based Registration (RBR) initiative, with a few modifications and caveats (RR15-4).

The order approves NERC’s proposals to:

Remove purchasing-selling entities and interchange authorities as functional registration categories. Because these entities’ activities are commercial in nature, their removal poses little or no risk to reliability, NERC said. FERC rejected a proposal to also remove load-serving entities from registration, ordering NERC to provide more information to ensure that there are no reliability gaps.
Raise the threshold for registering entities as distribution providers to those with loads of 75 MW or more, up from 25 MW. NERC also will provide a subset list of reliability standards to distribution providers that are subject to NERC rules solely due to their operation of underfrequency load shedding protection systems. The change is expected to affect about 100 entities, representing less than 1% of load served by NERC-registered distribution providers.
Align five functional registration categories with the 2012 revised definition of the bulk electric system.
Make procedural changes to its registration process, including the introduction of a “materiality” test for registration.

NERC’s Compliance Registry currently lists more than 1,600 organizations responsible for about 4,300 reliability functions under 15 functional entity categories.

The commission said the changes would allow regulators to focus resources on entities with the greatest potential impact on reliability.

NERC said the changes will reduce regulation of about 700 organizations, with about 200 exempt from all NERC rules, and another 500 removed from some registrations while remaining regulated under others. For example, interchange authorities, which verify and communicate interchange schedules, are also registered as either a balancing authority or reliability coordinator.

FERC Chairman Cheryl LaFleur called the changes “another significant step in the evolution” of the mandatory reliability standards ordered by the Energy Policy Act of 2005.

In February, FERC approved NERC’s risk-based approach to reliability compliance monitoring and enforcement, which will reduce the kinds of reliability violations subject to NERC enforcement, with “minimal”-level risk issues subject to less oversight (RR15-2). (See New NERC Enforcement Methods Allow Self-Logging Minor Risk Issues.)

Commissioner Norman Bay said that it is “incumbent on NERC to show that reliability is in fact being enhanced” as a result of the changes.

March 24, 2015June 15, 2023

Company Briefs

The Tennessee Valley Authority, releasing its 20-year integrated resource plan, said it anticipates no new major power generation projects after the Watts Bar 2 nuclear facility, which is scheduled to start operations at the end of the year.

According to the plan, TVA predicts slow load growth and says it will be able to replace retiring coal plants with purchased power, energy efficiency or moderate construction plans. It said 26 of its 59 coal-fired plants will retire by the end of next year. There are no plans to restart construction at the Bellefonte Nuclear Power Plant in Alabama, where it has already invested $6 billion.

“We really don’t see an immediate need for any new large baseload capacity beyond what we already have underway,” TVA Vice President Joe Hoagland said.

More: Chattanooga Times Free-Press

Fire at Xcel’s Black Dog Station Injures Worker

A fire in a coal bunker last week at Xcel Energy’s Black Dog Generating Station in Burnsville, Minn., injured one worker and forced the evacuation of dozens of others, but operations at the 538-MW plant were unaffected.

The cause of the fire and explosion in the Unit 4 coal bunker is under investigation. The same plant experienced a fire and explosion in 2010 that destroyed 200 feet of the plant’s west wall. Three firefighters were injured in that blaze.

More: PennEnergy

Philip Morris, Dominion Building Largest Solar Facility in Virginia

Dominion Virginia Power and Philip Morris USA are building a 2.4-MW solar plant on the grounds of a Philip Morris facility in suburban Richmond.

The 8,000-panel solar farm will be Virginia’s biggest. Dominion has built and operates 4.8 MW of solar generation in Virginia. It plans to increase solar capacity up to 200 MW by 2020.

More: PennEnergy

PSEG Takes Salem 1 Offline After Missing Repair Deadline

PSEG Nuclear took Salem Unit 1 offline after missing a Nuclear Regulatory Commission-imposed repair deadline.

Workers at the 1,150-MW unit were unable to restart one of five cooling units in the containment area. NRC regulations say if one cooling unit remains inoperable for seven days, the reactor must be shut down.

Salem 1 is the oldest of three units that PSEG Nuclear operates at its site on Artificial Island on the Delaware River in southern New Jersey. The company did not say when the plant would go back into operation.

More: The News Journal; NJ.com

NextEra Proposes 150-MW Wind Farm in North Dakota

NextEra Resources has begun to reach out to property owners about its plans to build a $250 million 150-MW wind project in eastern Stark County, N.D.

According to an application filed with the state Public Service Commission, NextEra would spread 87 wind turbines over about 61 square miles. It has secured a 30-year power purchase agreement from Bismarck-based Basin Electric Power Coop. for the output.

NextEra has 11 North Dakota wind farms.

More: Dickinson Press

AEP Wins Permission to Cut Customers’ Power Remotely

The Public Utilities Commission of Ohio last week granted American Electric Power’s request to remotely disconnect delinquent electricity customers, becoming the first Ohio utility to use its smart meters to shut off service without conducting a home visit.

AEP said it will not apply the policy to some vulnerable customers, including those with mental disabilities or who rely on medical equipment. Customers still will receive several warnings before their power is shut off. Consumer advocates opposed the change, saying it will lead to an increase in disconnections.

The new policy, which applies to 132,000 customers, will go into effect Aug. 1 and last for two years, when AEP will have to reapply.

More: Columbus Dispatch

Williams Gets Green Light for Rock Springs Expansion

Williams has received federal approval to construct and operate a $79.5 million, 11-mile expansion to its Transcontinental Pipeline to deliver gas to Old Dominion Electric Coop.’s new Wildcat Point Generating Facility in Cecil County, Md.

The Rock Springs Expansion Project is expected to provide 192,000 dekatherms daily of firm natural gas transportation service to the power plant.

More: FERC; Williams

FirstEnergy Wants to Ship Mansfield’s Ash to Hatfield’s Ferry Plant Site

FirstEnergy wants permission to ship the coal ash from its Bruce Mansfield Plant in Beaver County, Pa., to an existing dump at a closed power station in Greene County to the north.

The Akron company faces a 2016 deadline to close the current landfill that receives Bruce Mansfield’s waste, but its first choice for an alternative, a closed strip mine in neighboring Fayette County, needs a dewatering facility that has not yet received permits. Until the strip mine site is built, FirstEnergy wants to deliver the ash to the Hatfield’s Ferry Power Station site, where the power plant closed in 2013, but its ash landfill still has “several years” of capacity, a company spokeswoman said.

More: Pittsburgh Business Times

— Ted Caddell

March 24, 2015June 15, 2023

Federal Briefs

The Department of the Interior on Friday released its long-awaited rules for oil and gas development on federal and tribal lands, which could set a nationwide standard for the controversial practice of hydraulic fracturing.

The new rules require more stringent standards for storage of wastewater produced from fracking and for drilling companies to disclose chemicals used in the hydraulic fracturing process. Exploration companies will also have to provide more information about nearby existing wells, which can inadvertently become pathways for fracking fluids to migrate into groundwater.

“We need to update our regulations to make sure they can keep up with evolving technologies and innovation by industry,” Interior Secretary Sally Jewell said.

While the rules will govern only about a tenth of drilling sites, mostly in Western states, the new regulations set a national standard that might be applied to states where oil and gas regulations are more lenient. “We think this is going to be a template for how the federal government expects the states to regulate water as part of their own oversight of fracking,” said Kevin Book, managing director of energy research firm ClearView Energy Partners.

The oil and gas industry’s supporters criticized the rules as too harsh and said they would increase costs for drillers whose margins already have been depressed by slumping energy prices. “America’s energy boom is one of the best things going for our economy and keeping it going should be one of the federal government’s top priorities,” said House Speaker John Boehner (R-Ohio).

Some environmental groups said the rules weren’t stringent enough. The rules have been in the works since 2012 and took into account 1.5 million public comments.

“There is a lot of fear and public concern, particularly about the safety of groundwater and the impact of these operations,” Jewell said. “We believe these standards are essential.”

More: The Wall Street Journal (subscription required); The Hill

NRC Gives Westinghouse OK to Test Modular Reactor

The Nuclear Regulatory Commission has given Westinghouse Electric permission to test its small modular reactor design after the company satisfied a safety review that began in 2012.

The NRC issued its Safety Evaluation Report after the company submitted detailed analyses on what would happen in the event of a small loss of coolant accident, or LOCA. Westinghouse said its passive safety systems eliminate the potential for a larger LOCA.

The 225-MW pressurized water reactor’s design is adapted from the company’s larger AP1000 reactor, which received a design certification amendment from the NRC in 2011.

More: Nuclear Street

NRC Denies Vermont’s Request to Delay Review of Vermont Yankee Decommission Plan

The Nuclear Regulatory Commission denied a request by Vermont officials to delay a review of the permanent shutdown of the Vermont Yankee nuclear plant.

State officials have expressed concern that Entergy, the plant’s operator, wants to cut emergency preparedness procedures for the plant during decommissioning. The NRC said the state did not file a timely request to delay the review by the Atomic Safety and Licensing Board. The commission said the state could refile its request.

More: Bennington Banner News

NRC Paying for Yucca Groundwater Studies

The Nuclear Regulatory Commission plans to spend $2 million to complete a groundwater impact study for the site of the Yucca Mountain nuclear waste storage facility.

The Department of Energy, which is no longer interested in developing the site, decided not to fund the groundwater study. The NRC, which is considering revitalizing the nuclear waste storage project, announced it will fund the study ahead of public sessions scheduled for September.

More: Las Vegas Review-Journal

DOE Buying 5 Million Barrels of Crude to Replace Stock Sold Last Year

The Department of Energy is buying 5 million barrels of crude oil to replace an amount it sold last year out of the U.S. Strategic Petroleum Reserve in a test sale.

The markets are working in the government’s favor, as oil prices have plummeted more than 50% since March 2014, when it sold the oil for an average price of $93.75 a barrel. The average price of sweet crude was about $47.05 a barrel last week.

By law, the department is required to replace any stocks sold within a year. The strategic petroleum reserve, with a total capacity of 727 million barrels, currently stands at about 691 million barrels.

More: The Wall Street Journal (subscription required)

University of Delaware Declines Congressional Request for Funding Info on Climate Denier

The University of Delaware declined a request from the ranking Democrat on the House Committee on Natural Resources to disclose the funding received by David R. Legates, a climate-change skeptic.

U.S. Rep. Raul Grijalva of Arizona demanded to know the sources of funding for Legates, a climatology professor who has co-authored several contrarian studies with Wei-Hock Soon, who received funding from the Southern Co. Legates was the state climatologist until he was fired in 2011, in part for refusing to stop using his title when spreading his skeptical views on climate change.

The university cited academic freedom for declining to provide Legates’ funding sources.

More: Inside Climate News

NRC Gives Environmental OK for TVA’s Sequoyah Nuke Plant

The Nuclear Regulatory Commission has approved the environmental assessment required for a 20-year license extension at the Tennessee Valley Authority’s Sequoyah Nuclear Power Plant in Soddy-Daisy, Tenn.

The NRC approved the assessment at the twin-unit plant despite challenges from activists who argued that TVA hasn’t made necessary safety improvements in response to the Fukushima disaster in Japan. “The NRC side-stepped most of the complaints that we raised,” said Louis Zeller, executive director for the Blue Ridge Environmental Defense League.

If the final license extension is approved, TVA would be able to operate both 1,148-MW units until 2041.

More: Chattanooga Times-Free Press

— Ted Caddell

March 24, 2015June 15, 2023

LaFleur Chairmanship Ending; Bay to Take Gavel

By Rich Heidorn Jr.

WASHINGTON — Chairman Cheryl LaFleur gaveled her final Federal Energy Regulatory Commission open meeting last week, nearing the end of a tumultuous 16-month term.

LaFleur, who was confirmed to a second, five-year term on the commission in July, is turning over the chairmanship to former FERC Office of Enforcement Director Norman Bay effective April 15.

Bay will assume the chairmanship under an unprecedented deal between the White House, which wanted Bay named chairman immediately, and Senate Republicans, who wanted LaFleur to remain in charge.

While LaFleur won confirmation 90-7, Bay — attacked by some Republicans for his lack of regulatory experience and controversies over his role as Enforcement director — cleared on a 52-45 party-line vote. With the Republicans now in control of both houses of Congress, he will enter the chairmanship without LaFleur’s reservoir of goodwill.

Among the immediate challenges Bay will face is how to handle protesters who have become fixtures at commission meetings. (See Protests Continue — on Camera — at FERC.) He also will be seeking consensus on the commission’s role in ensuring reliability isn’t harmed as a result of federal regulations on carbon dioxide emissions. (See FERC Seeking Its Role on Carbon Rule ‘Safety Valve’.)

LaFleur was appointed acting chairman in late November 2013 to replace Jon Wellinghoff. After LaFleur and Bay were confirmed by the Senate, President Obama removed the “acting” from LaFleur’s title.

At Thursday’s meeting, LaFleur’s fellow commissioners, FERC staffers and audience members celebrated her tenure with a standing ovation. Bay thanked her for what he called her “outstanding leadership.”

“As passionate as she is about Boston area sports teams,” he said of LaFleur, who dons Red Sox and Patriots jerseys at commission meetings when her teams are in the playoffs, “I think she’s even more passionate about the work of FERC.”

In a press conference after the meeting, LaFleur cited the commission’s work on capacity and energy markets, natural gas infrastructure, physical security of the grid and geomagnetic disturbances as among the accomplishments of her tenure in the commission’s center chair.

She also will leave her mark with appointments of new heads for the Office of Energy Market Regulation, the Office of Energy Policy and Innovation and the General Counsel’s office.

“The work of the commission takes place over a long time horizon and so I built on the work of my predecessors,” she said. “And that work will still be ongoing in the new configuration of the commission.”

She also took note of the turbulence of 2014, with uncertainty over her reappointment, the early departure of Commissioner John Norris and an inspector general’s investigation into the release of sensitive security information under Wellinghoff. (See DOE IG Warns FERC Information Security ‘Severely Lacking’.)

“From a very personal perspective, I think providing what I hope was steady and sustained leadership to the commission — at a time when it had been through a lot of upheaval during the inspector general investigation and some unexpected things that took place at a time when I didn’t even know my own future — is what … I take most satisfaction from.”

Bay’s ascension to the chairmanship may not be the last of the changes this year on the 11th floor of 888 First St. N.E.

Republican Commissioner Philip Moeller’s term expires June 30. Moeller said earlier this month he would consider a new term but gave no indication that he will be renominated.

“I’m still enjoying it,” he told RTO Insider. “I’ve gotten a lot of encouragement to stick around. But ultimately it’s up to the Senate and president. Stay tuned.”

March 24, 2015

FERC: Hearing or Settlement on Dunkirk RSSA Charges

By William Opalka

The Federal Energy Regulatory Commission last week ordered hearing and settlement procedures in a dispute over the costs of keeping NRG Energy’s Dunkirk, N.Y., generating plant online for reliability.

At issue are charges National Grid — whose subsidiary Niagara Mohawk Power serves the region — proposed adding to its transmission service rate to reflect its costs under a reliability support services agreement for the coal-fired generator.

The New York Association of Public Power, Allegheny Electric Cooperative and the Municipal Electric Utilities Association of New York (MEUA) protested the charges as excessive and said they should be shared by other users of the transmission system in western New York, such as New York State Electric and Gas.

Need for Fact Finding

In February 2014, the commission accepted National Grid’s proposed rates subject to refund and further order, saying it was not convinced the changes were just and reasonable.

FERC said last week that it needed to conduct fact finding to make a definitive ruling on the rate changes and underlying RSSA charges. It said a hearing would be conducted if National Grid and the protesters were unable to reach a settlement (ER14-543).

In a related order last week, FERC also denied a separate rehearing request by MEUA, which had challenged the commission’s decision to waive the 60-day prior notice requirement to permit National Grid’s filing to become effective July 1, 2013. The association had also objected to the commission’s decision not to impose a full five-month suspension period (ER14-543-001).

“National Grid’s customers were on notice that RSS-type costs were being incurred and were to begin to be passed through in [transmission service] charges beginning July 1, 2013, even though the exact costs would not be determined until a later time,” FERC wrote.

The orders followed the commission’s decision last month directing NYISO to draft standard rates and cost allocation provisions for reliability-must-run (RMR) services (EL15-37). (See FERC Orders NYISO to Standardize RMR Terms in Tariff.)

Entergy Suit

Meanwhile, a new front opened in the Dunkirk dispute last month when Entergy sued the New York Public Service Commission, alleging it interfered with FERC authority in regulating wholesale electricity markets in June 2014 by approving an agreement between NRG and Niagara Mohawk to repower the plant with natural gas, allowing it to continue operating through 2025 (5:15-CV-230).

“NYPSC issued an order … that will keep the uneconomic Dunkirk generator in the market for a decade (through 2025), propped up by subsidies from a local utility and from a state agency,” Entergy said in the complaint, filed in U.S. District Court for the Northern District of New York.

Dunkirk will receive out-of-market payments of $20.4 million per year from National Grid and a $15 million one-time subsidy from New York state.

Entergy, owner of the 838-MW James A. FitzPatrick nuclear plant in western New York, claims the agreement will suppress capacity auction clearing prices.

FERC last week rejected a similar “price suppression” argument by the Independent Power Producers of New York in a complaint over Dunkirk and a second generator receiving payments under RSSAs. (See related story, NY Generators’ ‘Price Suppression’ Complaint Dismissed.)

Entergy’s complaint raises constitutional challenges similar to those that led federal courts to void actions by regulators in New Jersey and Maryland to incentivize construction of new generation. (See Rebuffed by Courts, CPV Seeks FERC End-Around.)

(For a timeline of events surrounding the Dunkirk plant, see Dunkirk Plant Chronology.)

March 24, 2015

FERC Staff Endorses Niagara Mohawk ROE Settlement

Trial staff at the Federal Energy Regulatory Commission has recommended approval of a settlement that would reduce transmission owner Niagara Mohawk Power’s return on equity to 10.03% from the current 11.5%.

Niagara Mohawk, a unit of National Grid, reached the agreement with the Municipal Electric Utilities Association of New York, the New York Association of Public Power and the Allegheny Electric Cooperative.

Under the agreement filed with FERC last month, the new rate would be backdated to Nov. 2, 2012, resulting in a refund of $3.16 million. (See Niagara Mohawk, Public Systems Reach ROE Settlement.)

“The public interest is well served by a negotiated compromise,” FERC staff wrote (EL12-101, EL13-16 and EL14-29).

March 24, 2015June 15, 2023

NYISO Rejects Protests on Voltage Compensation

By Rich Heidorn Jr.

NYISO last week defended its proposed redesign of voltage support compensation, telling the Federal Energy Regulatory Commission it should reject calls by generators for additional inflation adjustments (ER15-1042).

On Feb. 13, NYISO proposed paying voltage support service (VSS) providers $2,592/MVAr for both leading and lagging capability, with annual increases based on the consumer price index (CPI). MVAr is the unit of measurement for reactive power capability.

The current rate is $3,919/MVAr annually based on lagging reactive power capability alone. Although the new rate is lower, the inclusion of both leading and lagging capabilities in the calculation is expected to result in total compensation about equal in the first year to how it has been in past years.

The proposal, the result of more than a year of discussions, won support of almost 80% of stakeholders, including more than half of the generation owners that voted, at the Nov. 20, 2014, Management Committee meeting, the ISO said.

On March 6, however, the Independent Power Producers of New York and Dynegy Marketing and Trade filed separate protests asking FERC to order the ISO to increase the compensation rate to reflect inflation since the existing rate was set in 2002.

IPPNY said it agrees with the ISO in using the CPI to escalate future payments. “If this reasoning serves to justify the use of the CPI to track inflation of costs from this point forward, the commission should apply the same reasoning retroactively to the escalation of costs over the last decade,” the group said.

NYISO said the proposal to include an inflation adjustment in the compensation proposal “was one of the most contentious issues addressed in the stakeholder process.” The ISO’s initial proposal in September 2013 did not include any escalation for past or future inflation. The ISO added a going-forward inflator to its revised proposal to stakeholders in December 2013.

“Although a majority of stakeholders supported increasing the annual VSS compensation rate, they considered, and rejected, a proposal to escalate the proposed starting point for the 2014 VSS compensation rate by applying the annual CPI for each year from 2002 through the present,” the ISO told FERC. “Neither did any NYISO market participant present any evidence during the stakeholder process to indicate that the existing compensation rate, as approved in 2002, was unreasonably low.”

NYISO said it proposed the compensation changes due to the increased need for leading reactive power support. Since 2010, the number of requests for leading reactive power support has increased due to higher off-peak transmission voltages, the ISO said. More than 90% of the ISO’s reactive power support requests since 2010 have been for leading reactive power; before 2010, more than 90% of the requests were for lagging reactive power support.