PJM on Friday filed its long-awaited Capacity Performance proposal with the Federal Energy Regulatory Commission, a two-docket, 1,275-page capacity market overhaul that it hopes will prevent a repeat of last January’s poor generator performance.
EL15-29, filed under sections 205 and 206 of the Federal Power Act, contains proposed changes to PJM’s Operating Agreement and Tariff “to correct present deficiencies in those agreements on matters of resource performance, and excuses for resource performance, in the wholesale markets administered by PJM.”
ER15-623, filed under section 205, proposes changes to the Reliability Pricing Model rules in the Tariff and Reliability Assurance Agreement.
PJM will ask the Federal Energy Regulation Commission this week to raise the cost-based energy offer cap to $1,800/MWh through March 2015, CEO Terry Boston said in a letter to members Tuesday.
The proposal, authorized by the Board of Managers, would let offers up to $1,800 set clearing prices. Generators could recover “justifiable costs” above $1,800 through make-whole payments, but such offers would not set prices for other market participants.
The Section 206 filing comes after stakeholders failed over eight months to reach consensus on changes to the current $1,000/MWh cap.
The issue resulted from the spike in gas prices last January, which pushed some generators’ costs above $1,000. FERC granted PJM’s request for a waiver from the cap to allow some gas-fired generators to cover their costs.
“We believe this action is prudent preparation for the possibility of high fuel costs that could result in generating sources not recovering their costs despite producing power when most needed to meet high demand,” Boston wrote.
Although PJM is not expecting the same weather extremes this winter, Boston wrote, “seeking approval for a higher cap through this winter [allows PJM] to avoid any possibility of having to scramble to submit waivers that seek FERC decisions in 24 hours.”
Boston noted that the concept of allowing cost-based offers in the energy market to set prices up to $1,800/MWh mirrors the proposal presented at the Nov. 20 Members Committee. Old Dominion Electric Cooperative’s Ed Tatum — who negotiated the proposal with Gabel Associates’ Mike Borgatti — withdrew it after it became clear it had little support from members representing load. (See Last Ditch Effort to Break PJM Offer Cap Deadlock Fails.)
Boston said PJM limited its proposed change to the coming winter “in anticipation of FERC developing a longer-term solution to offer cap issues from a national perspective over the next year.”
State Reviewing Company’s Plan to Use Corn-Based Ethanol at New Plant
State environmental officials have agreed to a special review of a company’s plan to make ethylene oxide at a proposed riverfront plant south of Wilmington rather than import the hazardous chemical on rail cars from Gulf Coast refineries.
Croda, a specialty chemicals producer, wants to build a new processing unit at its Atlas Point plant near the Memorial Bridge to convert corn-based bio-ethanol, or alcohol, into ethylene oxide. Croda uses ethylene oxide as a raw material in it production process. The $170 million project could provide 200 temporary jobs and up to 80 permanent ones.
The plan needs a review under the state’s Coastal Zone Act, passed in 1971, which prohibits industrial use of land near the Delaware River, Bay or coastline, and limits use at existing plants.
The Commerce Commission unanimously approved an ambitious direct-current transmission line to deliver power from Iowa wind farms, putting the $2 billion Rock Island Clean Line one step closer to construction.
The 500-mile line, proposed by Clean Line Energy Partners, is the first merchant-owned transmission project approved by the ICC. The project, which advocates say would cut energy prices and help the state meet renewable energy goals, still needs approval from Iowa, where the line would cross 16 counties and local opposition is forming.
But in Illinois, even the Sierra Club endorsed the line. “The project will deliver pollution-free power to Illinois homes and businesses and create good jobs in clean-energy technologies,” said Jack Darin, director of the Illinois chapter of the Sierra Club.
Senate Approves Ameren, Com Ed Smart Grid Rate Plan Extension
The state Senate approved a plan that will allow Ameren Illinois and Commonwealth Edison to raise rates to pay for smart grid improvements through a formula, bypassing potentially lengthy rate-setting procedures with the Commerce Commission.
The legislation extends a law allowing the two companies to recover money used to bolster grid reliability, including paying for smart meters. The rate provision is set to expire at the end of 2017, but the bill approved in a 40-4 Senate vote would extend that through 2019. Gov. Pat Quinn, whose veto on the original smart-grid law was overridden, could veto the current legislation too. Legislators have already been sent home for the session, so it’s unlikely the body would have an opportunity to override a veto this time.
A consumer group, the Citizens Utility Board, opposed the extension. “We’ll be talking to the governor about our concerns,” said David Kolata, the board’s executive director.
Co-ops and IOUs Want to Block Munis from Gaining Through Annexation
A turf battle is brewing in the state between municipal electric providers and rival distribution companies.
Rural electric cooperatives and some investor-owned utilities are backing a legislative proposal to block municipal providers from expanding service into territories newly annexed by their cities and towns. Co-ops control about 80% of customers in the state and want to make sure they don’t lose any customers as municipalities push out their borders.
A 2002 law allows municipals to petition the state Utility Regulatory Commission to take over systems in annexed territories. But Sen. Mike Crider is working on a bill to limit the ability of municipal providers to expand. Municipal operators, who now control about 7% of the market, question the need for such a bill. “I haven’t seen cities all of the sudden taking their territory,” Columbia City Mayor Ryan Daniel said. “This sure seems like a monopolistic situation.”
Gov. O’Malley Says He’ll Set Rules for Fracking Before Leaving Office
Outgoing Gov. Martin O’Malley said he will propose strict regulations for natural-gas development in Western Maryland before he leaves office. The O’Malley administration, which issued a draft report on Marcellus Shale drilling, said it is preparing regulations using “best practices” from other states, including restrictions on drilling locations and rules to limit water and air pollution.
The report gives guarded approval of the viability of fracking in the state, saying that “the risks of Marcellus Shale development can be managed to an acceptable level. Some of the proposed best management practices have not been tested, and although we are confident that they will reduce the risks, some risks will remain, as is the case with all industrial activities.”
Governor-elect Larry Hogan said he favors gas development in “an environmentally sensitive way,” but environmentalists are concerned that he will loosen some of the restrictions when he takes office. “The fact that we have a governor-elect who wants to move forward on fracking means we want to get some protections in place as soon as possible,” said Karla Raettig, executive director of the Maryland League of Conservation Voters.
UP Residents on Hook for Higher Fees to Pay for Presque Isle Plant Output
Upper Peninsula electric customers this month began paying most of the $97 million in annual costs to keep the Presque Isle power plant in Marquette operating.
Grid operator MISO ordered We Energies of Milwaukee, which owns the plant, to keep it operating to maintain grid reliability. We Energies had threatened to shut the plant after it lost several large industrial customers to competitors. We Energies customers in Wisconsin successfully petitioned FERC to be excluded from obligations to cover the plant’s cost, shifting the burden to customers on Michigan’s Upper Peninsula, who are protesting.
Widespread Power Outage Points to Need for Grid Improvements in Detroit
A major cable failure on Detroit’s waterfront left a large swath of the city’s buildings and traffic signals without power for most of a day just before Thanksgiving, illustrating the need to update the aging municipal system’s infrastructure.
A cascade of failures of the city’s Public Lighting Department system caused schools to close, hospitals to divert patients and the Wayne County Jail to use emergency backup power. The lighting department, which distributes power to 890 public buildings, five multi-unit apartment buildings, 1,000 traffic lights and public emergency communications systems, is undergoing a $200 million four-year upgrade financed by DTE Energy, which will take over the municipal system.
“Everybody is aware the system has not gotten the attention it needed over the past several decades because of the city’s ongoing financial problems,” DTE Spokeswoman Randi Berris said. “One of the key reasons why this migration is happening is because DTE can provide the reliability and affordability to the customers that are on the system.”
Lawmakers Craft Bills to Protect Customers from Crafty 3rd Parties
State lawmakers are considering a three-bill package that would tighten regulation of third-party energy providers in response to consumer complaints about dramatic spikes in energy charges during last winter’s extreme cold.
The legislation would require a more understandable explanation of prices from different suppliers, allow customers to switch providers with 30 days’ notice and force the development of a standard, easy-to-read contract. The legislation mirrors the administrative efforts of the Board of Public Utilities to enact tighter regulations on suppliers.
“There needs to be more transparency in the process,’’ said Assemblyman Tim Eustace, a co-sponsor of the package. “We want consumers to continue to make their own choices with clear rules and regulations in place to guard residents who enter into these contracts with chosen suppliers.”
McBride Energy to Build 80-MW Solar Project near Concord
The state Utilities Commission gave McBride Energy Services permission to build a $200 million, 80-MW solar plant near Concord, the latest commercial solar project to win approval in North Carolina.
The proposed McBride Place Energy Project could be operational by the end of next year. If so, it could qualify for tax credits and depreciation allowances totaling more than $100 million. McBride, which has concentrated on much smaller projects in the past, is searching for a buyer of the power.
The Public Utilities Commission has granted American Electric Power a special hearing on Dec. 17 so the company can explain why it thinks it should get a guaranteed rate of return, funded by ratepayers, on one of its merchant plants.
AEP told the commission earlier this year that it wants ratepayers to cover any above-market costs of its coal-fired Kyger Creek plant. Customers would also get a credit if the plant generated excessive returns. AEP says it needs the guarantee to keep the plant in operation to support the regional power grid. Environmentalists and consumer advocates say it’s an unneeded subsidy that would prolong the life of a coal plant.
AEP’s filing is considered a test for the commission. FirstEnergy and Duke Energy have also filed requests for rate guarantees for marginal power plants. The commission has delayed ruling on AEP’s request, which was initially filed nearly a year ago.
State Gas, Oil Production Shows Steady 3rd Quarter Increase
Wells tapping into the state’s oil and shale gas fields produced 3 million barrels of oil and 132 billion cubic feet of natural gas during the third quarter, according to a state report issued last week. That’s an increase of about half a million barrels and 43 billion cubic feet over the previous quarter. The success rate of wells drilled is impressive as well, according to the report. Out of 717 wells drilled in the state’s Utica and Marcellus shale formations, 674 are producing.
PGW Deal Dead After UIL Pulls Out in Face of City Council Opposition
UIL Holdings, the company that agreed to pay $1.86 billion to buy the city-owned Philadelphia Gas Works, said Thursday it was pulling out of the deal because of opposition from the city council. Not a single member of the council stepped forward to introduce Mayor Michael Nutter’s legislation to approve the sale, which was required for the deal to conclude.
“We are extremely disappointed that no ordinance was introduced to approve the acquisition, and we’re equally disappointed that we were not afforded a hearing to present the facts regarding our bid proposal,” UIL President and CEO James P. Torgerson said.
The announcement triggered a flurry of finger pointing.
“The citizens of our city, the customers of PGW and our own city workers will feel the negative effects of this terrible indecision for years to come, and ultimately will regret that city council chose to end a legitimate debate on this issue even before it started,” Nutter said.
Council President Darrell L. Clarke blamed the mayor for the deal’s demise. “Once again, the Nutter administration has learned that the birthplace of American democracy has little tolerance for sweeping policy decisions made unilaterally with no input from the public,” he said.
An 86-year-old woman from Dunmore was killed early Thursday by an explosion that destroyed her home as she waited on her porch for somebody to pick her up after a gas leak was reported in the area.
A water main break had been reported in the area when residents detected the odor of gas. Emergency responders were organizing an evacuation when the explosion destroyed several buildings. Madlyn Mecca, who had called for somebody to come get her, died when her home exploded as she waited, according to neighbors.
UGI, which provides gas service in the Scranton suburb, was investigating the deadly explosion.
State Regulators Approve ‘Standby Fee’ for Using Solar
The State Corporation Commission has approved a plan for Appalachian Power to charge home solar users a fixed charge of up to $100 a month to reflect their use of the energy grid, no matter how much net power they consume from the distribution system.
The plan would only apply to homeowners whose solar setups produce more than 10 kW. An Appalachian spokesman said only five customers would be affected. The idea is to charge those customers whose solar arrays put power back into the grid for resale, offsetting their own energy consumption. The utility argued that such customers should pay for the use of the grid.
WASHINGTON — Colette Honorable, President Obama’s latest nominee for the Federal Energy Regulatory Commission, appeared headed toward Senate committee approval last week after a confirmation hearing that saw Republicans and Democrats praise her “moderate” views on fossil fuels and her pledge to put a high priority on grid reliability.
Less clear was whether the full Senate will vote to confirm Honorable before it adjourns. Sen. Ron Wyden, an Oregon Democrat who led the Thursday hearing of the Senate Energy and Natural Resources Committee, promised “to do everything we possibly can to see if we can get you confirmed before Congress wraps up.” The 113th Congress is scheduled to close on Dec. 12, but Majority Leader Harry Reid (D-Nev.) said he may extend the session by a week or more to assure votes on key measures.
A Democrat, Honorable has been a member of the Arkansas Public Service Commission since 2007 and its chairman since 2011. She recently concluded a term as president of the National Association of Regulatory Utility Commissioners. Underscoring her bipartisan popularity was an introduction by Arkansas’ Republican Sen. John Boozman, who joined the state’s Democratic Sen. Mark Pryor in praising the nominee as a fair, hardworking and intelligent public servant. “It’s not just bipartisan support,” Pryor said of Honorable’s backing in Arkansas, “it’s from business, consumer groups.”
The committee announced it will meet Wednesday to vote on Honorable’s confirmation.
Some members of the energy committee pressed the nominee to pledge support for their policy views.
Sen. Lisa Murkowski (R-Alaska), who will assume the committee chairmanship in January, prodded Honorable to criticize the Environmental Protection Administration’s proposed carbon emission rule. (See related story, RTOs Raise Concerns over Reliability, Schedule in EPA Clean Power Plan.) The senator said the proposed rules “could seriously challenge the reliability of our nation’s grid system and push more Americans into energy insecurity.”
Murkowski also read from comments on the rule jointly filed by the Arkansas PSC and Department of Environmental Quality. In the comment cover letter, Honorable and the interim head of the state environmental agency said that the EPA proposal is “technically flawed” and that its goals were “unobtainable under the current time frame.”
Honorable didn’t repeat those criticisms at the hearing, but she said the rule’s implementation would require EPA and other federal agencies to cooperate with the states and utilities. She pledged to Murkowski that “I will continue to be a proud participant in our mission to ensure reliability” of the grid.
‘Significant Overreach’
Wyden, who led the hearing in the absence of Chairman Mary Landrieu as she campaigned ahead of a run-off election in Louisiana, wanted Honorable’s assurance that she would oppose an expansion of FERC Order 1000. (Landrieu lost her bid for re-election on Saturday, giving Republicans a total of 54 seats in the Senate.)
Wyden, who represents a region served mostly by the Bonneville Power Administration and other government utilities not subject to FERC jurisdiction, described the order as a “significant overreach.”
FERC has long required federal power authorities and other non-jurisdictional transmission providers purchasing open access transmission service from utilities under FERC authority to reciprocate by providing those utilities access on their own systems. Order 1000 extends this reciprocity, allowing transmission developers outside of FERC jurisdiction to propose transmission projects in the regional transmission planning process as long as that developer “abides by the same requirements as those imposed on public utility transmission providers.”
Saying she was reluctant to comment on matters that may still be pending before the commission, Honorable said that any participation in RTOs or ISOs should be voluntary and that she has been impressed by “the ability of each state to plan what works best for them.’’
West Virginia Sen. Joe Manchin, a Democrat, asked Honorable to address concerns about last winter’s polar vortex, which strained the grid’s ability to deliver power for heat. “How close are we to having a repeat?” he asked.
“I read somewhere that the grid bent but didn’t break,” she said. “We need to think not only of reliability but also resilience.”
Honorable also fielded questions about the reliability of freight rail deliveries of coal to generators, an issue she said should be addressed cooperatively by FERC and the U.S. Surface Transportation Board.
The Federal Energy Regulatory Commission has ordered NYISO to begin a stakeholder proceeding to resolve a dispute over the installed capacity market on Long Island, which was excluded from a previous attempt to address transmission congestion in the areas around New York City.
The ISO is to report its findings to FERC by June 1, 2015. FERC rejected a recommendation by the ISO’s Market Monitor that it complete tariff changes to address the issue by June.
In August 2013, FERC approved NYISO’s proposal to create a new capacity region encompassing New York City and its northern suburbs. The zone did not include the Long Island suburbs because NYISO said insufficient transmission existed there for it to participate.
Critics said Long Island (Zone K) contributes to overloading of the Upstate New York/Southeastern New York (UPNY/SENY) Interface — which led to the creation of the new capacity region — but has escaped any cost responsibility for the overloads, thus causing higher capacity prices for New York and the Hudson Valley (Zones G, H, I and J), which were included.
FERC’s order follows a February 2014 technical conference that considered whether Long Island could be modeled as an export-constrained zone for future ICAP Demand Curve proceedings.
“We agree that it would be worthwhile for NYISO and its stakeholders to explore whether a proposal can be developed that could reduce the cost of procuring capacity while meeting the NYISO [loss-of-load expectation] objective,” FERC said (AD14-6).
FERC directed the report to include points raised by the Market Monitor, which said that the ISO should be required to improve its methodology for modeling deliverability constraints and calculating local capacity requirements.
The new capacity region went into effect in May over the strenuous objections of utilities, consumer groups and the New York Public Service Commission. NYISO said it was necessary to send price signals to encourage development of additional generation and transmission in the area.
FERC agreed with NYISO that June was too soon to require tariff amendments but added “market rule changes that could reduce costs should not be unduly delayed.”
PJM’s most recent competitive window for transmission projects attracted 63 proposals from 12 entities, the majority of them transmission owner upgrades.
The second window in the 2014 Regional Transmission Expansion Plan was open to proposals addressing transmission owner criteria, 2019 baseline n-1 voltage, 2019 n-1-1 voltage and 2018 light load reliability criteria problems. The proposals address about 49 facilities with thermal violations and 69 with voltage problems in nine TO zones.
Of the 63 proposals, 43 were transmission owner upgrades (ranging in cost from $200,000 to $71 million) and 20 are greenfield projects ($6.1 million to $450 million).
The window, the result of the Federal Energy Regulatory Commission’s Order 1000, was open from Oct. 17 through Nov. 17, although PJM extended the deadline for proposals regarding violations in one area to Dec. 5.
Industrial customers, consumer advocates and state regulators called on the Federal Energy Regulatory Commission to reject a request by MISO transmission owners for a 50-basis-point adder as an incentive for their participation in the RTO.
The Nov. 6 filing by MISO and its transmission owners (ER15-358) came weeks after the commission ordered an evidentiary hearing on complaints from industrial customers that the base rate of return of MISO’s 24 transmission operators is not just and reasonable (EL14-12). (See FERC Orders ROE Hearing on MISO TOs.)
FERC made return on equity (ROE) adders available to RTO members in Order 679, a response to a Congressional mandate in the 2005 Energy Policy Act. “Subsequent commission orders have made clear that this incentive for RTO participation remains available both to new and continuing RTO members,” the TOs said.
In filings last week and in late November, opponents said that many TOs have been members of MISO for more than a decade and there’s no threat that they would leave if they couldn’t collect the adder.
“Instead, at a time when base ROEs must decrease to remain consistent with prevailing conditions in capital markets, the MISO TOs are simply using the RTO adder as a means for attempting to claw back some of that revenue,” industrial consumers from Illinois, Indiana, Minnesota and Wisconsin said in a Nov. 28 filing.
They contend that electric customers would pay about $50 million annually toward the adder without any corresponding benefits. “The MISO TOs have not demonstrated whether an additional $50 million in revenue each year plays a pivotal role in their economic analysis of MISO membership.”
The Organization of MISO States also filed a protest to the proposed adder, saying it “appears intended to mitigate against any refunds that may result” from the pending ROE reduction case.
OMS said the adder should be awarded only when it influences decisions to join or remain in an RTO. “The historical record has simply shown there are no instances of MISO members leaving its membership except to transfer to a different RTO,” OMS said.
OMS asked the commission to consolidate the adder filing with docket EL14-12, contending “that the TOs’ waiver and deferral requests clearly demonstrate the linkage between the RTO adder and the level of the base ROE and the zone of reasonableness.” A settlement conference in the ROE case is set for Dec. 16.
A number of other groups also have asked FERC to deny the adder, including Hoosier Energy Rural Electric Cooperative, Southern Illinois Power Cooperative and Dairyland Power Cooperative. They contend that the TOs included no rate of return analysis as part of the adder request.
FERC opened the door to ROE fights in June, when it changed the way it sets ROE rates for electric utilities to a two-step discounted cash flow methodology similar to what it uses for natural gas and oil pipelines. (See FERC Splits over ROE.)
ISO-NE generators asked federal regulators to change market rules ahead of February’s capacity auction while state officials complained consumers face excessive costs because of unrealistic load forecasts. In all, the ISO’s load and supply interests opened three capacity market dockets at the Federal Energy Regulatory Commission in the last two weeks. (See related story, ISO-NE Stakeholders Challenge Capacity Rules Ahead of Auction.)
By William Opalka
New England consumers could purchase hundreds of millions in excess capacity in the upcoming auction because ISO-NE has underestimated the impact of distributed generation and its pay-for-performance (PFP) program, state officials told FERC.
The New England States Committee on Electricity made the allegation in a challenge to ISO-NE’s Nov. 4 filing on its installed capacity requirement (ICR), local sourcing requirements and Hydro-Quebec interconnection capability credits (HQICC) for the 2018/19 delivery year (ER15-325).
The New England Power Pool Participants Committee also criticized the ISO’s failure to incorporate the distributed generation (DG) forecast in its ICR value.
The ISO proposed an ICR value of 35,142 MW, which includes 1,970 MW of emergency generation assumed obtainable from New Brunswick, New York and Quebec. The net amount of capacity to be purchased, after deducting the HQICC value of 953 MW per month, is 34,189 MW, the ISO said.
NESCOE said it does not dispute ISO-NE’s adherence to the market rules and methodologies in calculating the ICR to be used for the ninth Forward Capacity Auction (FCA). “However, NESCOE expects that assumptions used in setting the ICR for future years — beginning with FCA 10 — will incorporate contributions to resource adequacy from incremental ratepayer investments in renewable DG resources and investments in improved performance,” it said.
ISO-NE’s DG forecast completed earlier this year projects that solar DG resources will increase in New England from roughly 175 MW in 2013 to 489 MW in 2018 and 632 MW by 2023.
“ISO-NE’s calculation of the ICR used for FCA 9 wholly disregards the very forecast it developed, ignoring hundreds of megawatts of solar resources required by state policies, which ISO-NE itself tracked and verified will come online over the next three years,” NESCOE said. “In addition, while one of the purported benefits of ISO-NE’s proposed PFP program was to ensure better resource performance, the ICR value for the first year under the PFP construct, the 2018-2019 Capacity Commitment Period, fails to reflect any projected increase in resource availability resulting from this new market design.
“Consumers should not pay to strengthen financial incentives under PFP and then be forced to purchase more resources than are needed to achieve resource adequacy standards as if these strengthened incentives were not in place.”
In its 2014 Regional System Plan, ISO-NE cited uncertain market rules as an impediment to using the forecast in resource adequacy studies for the ICR, including treatment of pay-for-performance. It says it is awaiting guidance from FERC “before being able to determine the best methods for potentially incorporating the DG forecast into the resource adequacy process.”
The U.S. Supreme Court has agreed to hear a challenge of the Environmental Protection Agency’s mercury emissions cap that alleges the emissions limits will impose huge costs on local economies.
Industry trade groups and almost two dozen states told the court that the Clean Air Act requires the EPA to consider compliance costs at an earlier stage in the regulatory process. “EPA’s decision to ignore entirely the costs of its decision has led to one of the most far-reaching and costly rules — if not the most costly rule — ever imposed” under the Clean Air Act, the Utility Air Regulatory Group wrote in its appeal.
Environmental groups are closely watching the case. “Mercury and other air toxins from coal-fired power plants are a threat to public health, and all Americans must be protected from them,” said Vickie Patton, general counsel for Environmental Defense Fund. The group has filed an amicus brief in defense of the Obama administration. The court has not set a date for oral arguments.
House Extends Wind Production Tax Credit Until End of 2014
The House passed legislation that extended wind production tax credits, along with other renewable incentives, until the end of 2014, retroactively extending those credits from when they expired at the end of last year.
The $42 billion bill, passed by a vote of 378-46, extends nearly $10 billion in energy tax credits. Although it’s good news for wind and other renewable-energy advocates, wind energy and environmental advocates say it is short-sighted and that a multi-year credit is needed to support the growing industry.
“The three-week extension being considered by the House does not provide the certainty and stability needed to keep U.S. factories open and keep workers on the job,” Tom Kiernan, chief executive officer of the American Wind Energy Association, said in a statement. Since the credit expired last year, new wind installations have dropped 92% compared to 2012. Fossil fuel groups such as the American Energy Association have fought the extension, saying it gives wind energy an unfair economic advantage.
FERC Approves 5th Settlement with NERC, CAISO in 2011 Blackout
The Federal Energy Regulatory Commission approved the fifth settlement related to the 2011 Southwest Blackout that left 5 million people in California, Arizona and Mexico in the dark for 12 hours.
The settlement between the commission, the North American Electric Reliability Corp. and CAISO includes a $6 million civil penalty against CAISO that ends the investigation. FERC and NERC concluded that CAISO had failed to appropriately monitor the transmission system in Southern California, contributing to the tripping of the San Onofre nuclear plant and a blackout of the San Diego and Baja California areas. According to terms of the settlement, $2 million of the fine will be split between NERC and the U.S. Treasury, and the remaining $4 million will be invested in reliability improvements.
Settlements have already been reached between FERC and four other parties linked to the 2011 blackout: the Western Area Power Administration’s Desert Southwest Region, Southern California Edison, Arizona Public Service Co. and the Imperial Irrigation District.
Constitution Pipeline Gains FERC OK to Take Gas to New England
The Federal Energy Regulatory Commission approved a pipeline that will deliver natural gas from the Marcellus Shale fields to New England. Construction could start as soon as next quarter.
The Constitution Pipeline will run 124 miles from an existing pipeline in northeast Pennsylvania to New York, connecting with lines into New England. Once in operation, it will ease gas transportation constraints into those regions. Those constraints led to gas and electricity price spikes last winter. The pipeline will be owned by Williams Partners, Cabot Oil & Gas, Piedmont Natural Gas and WGL Holdings.
NM Fines DOE $54M for Nuclear Material Storage Violations
New Mexico fined the U.S. Department of Energy $54 million for more than 30 violations of state regulations that caused the contamination of workers and indefinite closure of the nation’s only underground nuclear waste repository.
The violations at the Waste Isolation Pilot Plant and the Los Alamos National Laboratory caused the rupture of a canister of nuclear waste at the pilot plant in February, which contaminated 20 employees and forced the facility to shut down. The state accuses Los Alamos of mixing incompatible waste, treating hazardous waste without a permit and failing to notify regulators about changes in the way waste was being handled.
“DOE now has an opportunity to learn from these mistakes and implement meaningful corrective actions that will ensure the long-term viability of the Los Alamos National Laboratory,” Ryan Flynn, New Mexico’s environment secretary, said in a letter to the lab.
Martha’s Vineyard Wind Energy Leases up for Auction Jan. 29
More than 1,160 square miles of open water off Martha’s Vineyard and Nantucket will be auctioned to commercial wind energy developers on Jan. 29.
The tract – larger than the state of Rhode Island – will be the largest off-shore wind energy tract in the U.S. Twelve companies, including Fishermen’s Energy, which was recently rebuffed from developing a wind energy project off the coast of New Jersey, are qualified to bid for the four leases.
Offshore Fracking in California May Spur Lawsuit Alleging Violations
An environmental group has threatened to sue the federal government to halt the use of hydraulic fracturing techniques in California offshore oil drilling.
The Center for Biological Diversity filed a notice of intent to sue the U.S. Interior Department over fracking, which it says violates federal law. The center said oil companies have used fracking at least 21 times without performing an analysis of the effect on coastal communities and wildlife. The center said it will file suit if federal authorities don’t step in to stop it within 60 days.
“The federal government’s turning a blind eye as offshore fracking threatens to poison our beautiful beaches and coastal waters,” said Miyoko Sakashita, an attorney and director of the group’s oceans program. “We need offshore fracking stopped immediately before chemical contamination or an oil spill devastates California’s coastal communities and kills sea otters and other endangered marine wildlife.”
Sen. Barbara Boxer (D-Calif.) accused the Nuclear Regulatory Commission of ignoring vital safety recommendations made after Japan’s Fukushima Daiichi disaster.
“The reality is that not a single one of the 12 key safety recommendations by the Fukushima Near-Term Task Force has been implemented,” Boxer said at a hearing of the Environment and Public Works Committee, which she chairs.
All five NRC commissioners attended the Senate hearing, and they defended the nuclear agency’s response to the 2011 disaster in Japan. “The NRC continues to make significant progress in implementing post-Fukushima safety enhancements,” NRC Chairwoman Allison MacFarlane said. She added that U.S. nuclear stations are already working on more crucial improvements, including reinforcing spent fuel pools, bolstering backup generation and bringing in more emergency equipment.
“As a result of these activities, nuclear power plants in the United States will have more defense and depth to cope with long losses of offsite power and other severe accident conditions,” MacFarlane said.
Connecticut Light & Power’s proposed distribution rate increase was cut by 41% by the state’s Public Utilities Regulatory Authority in a draft decision.
The utility asked for $221 million in additional revenue with a 10.2% return on equity (ROE). The draft ruling would allow recovery of $130.1 million, including some previously approved costs from major storms in 2011 and 2012. The ROE was cut to 9.17%. The base ROE was further cut to 9.02% for one year as a penalty for the utility’s performance in preparation and service restoration from Tropical Storm Irene in 2011 and an October 2011 snowstorm.
CL&P also proposed increasing the monthly service charge that most residential customers must pay regardless of consumption to $25.50 from the current $16. The draft decision allows the fixed rate to increase to $19.50 monthly.
An average residential customer using 700 kWh of electricity would see an increase of approximately $7.12 per month. PURA said the increases will be sufficient to allow CL&P to fund capital improvements to upgrade its distribution system.
A final vote by PURA’s commissioners is scheduled for Dec. 17.
