State Briefs

Delaware City Refinery Drops Expansion Plan, Looking at NGLs Port Possibility

PBF Energy, owner of the Delaware City Refinery, has dropped plans for a $1 billion project to expand low-sulfur fuel production. But it is considering a $100 million investment to support cleaner fuel production and to export natural gas liquids such as propane.

PBF, in its quarterly earnings announcement, said the $1 billion hydrotreater project to produce low-sulfur fuels would have needed extensive permits. The company said it had already largely achieved production targets with improvements at its Delaware City and Paulsboro, N.J., refineries. It wrote off the value of $28 million in studies it had done to lay the groundwork for the project.

The idea of building a terminal to export NGLs at its Delaware River property, south of Wilmington, is in the early stages. There is a growing overseas demand for natural gas liquids, produced from shale-gas formations as well as refineries.

“We have a significant amount of property,” a PBF official said. “We’ve had some discussions with the state on it. I wouldn’t say they stood up and said, ‘This is the greatest idea we’ve ever heard.’” But he added that some parties are “very interested in doing it.”

More: The News Journal

Bloom Energy Misses Salary, Workforce Benchmarks

Fuel cell producer Bloom Energy, a key part of Gov. Jack Markell’s economic development plan, fell short of hitting the workforce benchmarks it had agreed to under a $16.5 million state incentive grant.

Company filings from the end of September disclosed Bloom has 208 employees and an annual payroll of $9.55 million. The state grant called for 300 employees and a $12 million payroll. The company’s incentive payments are generated from a surcharge on Delmarva Power & Light bills that amount to about $5.84 a month for a typical residential customer.

Penalties won’t kick in until 2017 if the company continues to fall short, said Alan Levin, state economic development director. “While I’m disappointed they didn’t hit their number, I am not discouraged because I see them making steady progress,” he said.

More: The News Journal

INDIANA

Commission to Probe IPL’s Underground Network Failure

The Indiana Utility Regulatory Commission held a public meeting Monday to review reports examining the failure of Indianapolis Power and Light’s underground network in August.

IPL experienced a number of underground transformer explosions on Aug. 13, causing smoke to billow from street-level grates and forcing the evacuation of several downtown Indianapolis buildings. There were no injuries, but large parts of the downtown district went dark.

At a Monday hearing, the commission reviewed reports prepared by IPL and an independent consultant. IPL was investigated for similar blasts in 2010 and 2011.

More: IURC

KENTUCKY

State Reviewing Plan for 90-MW Coke-Fueled Plant

The Board on Electric Generation and Transmission Siting is reviewing a proposal by SunCoke Energy South Shore to build a 90-MW power plant that would be fueled by gases from its proposed coke plant on the Ohio Rver near South Shore, Ky.

Coke, which is used in steelmaking, is produced by heating coal to burn off the volatile compounds. SunCoke proposes to capture the gases and use them to generate power.

Electricity would be fed to the grid through a 1-mile transmission line across the Ohio River to an American Electric Power substation in New Boston, Ohio.

More: Public Service Commission

MARYLAND

Chesapeake Bay Cleanup Plan Needs to Include Conowingo

A report from the Maryland Public Policy Institute says that Maryland’s $14.4 billion plan to clean up the Chesapeake Bay to meet federal mandates ignores the effect of the single largest source of sediment flowing into the bay – Exelon’s Conowingo Dam.

The report says that most of the funds will be spent on reducing nitrogen pollution from sewage plants, septic systems and storm water outfalls, which account for only 7% of pollution. “If you decide that nitrogen is the bad guy,” and you wanted “to get rid of nitrogen in the most cost-effective way, why would you want to focus on only 7% of Maryland’s [nitrogen] source?” MPPI member James Simpson said.

The state’s plan was devised in response to a 2010 federal mandate to meet Clean Water Act standards.

More: Maryland Reporter

MICHIGAN

U.P. Generation Shortfall, Rates Draws Crowd at Energy Summit

A looming energy crisis for the Upper Peninsula attracted an unusually large audience to Michigan’s annual Energy Summit.

More than 300 people came to Northern Michigan University in Marquette to hear about potential solutions to the crisis, which was triggered when We Energies proposed shutting down its Presque Isle plant after large industrial customers switched to different suppliers. MISO ordered the plant to stay open to protect system reliability. Michigan retail customers would foot the bill — up to $15 more a month per customer.

“I want people to understand that the problem is serious and avoidable, but in order to avoid it we need the participation of an awful lot of people … and [to] always [keep] in mind the impact on the residential ratepayers as well as the business,” said Valerie Brader, a senior policy advisor to Gov. Rick Snyder.

We Energies, based in Wisconsin, has said it would be willing to construct a new power plant if the Presque Isle plant closes. Other solutions include load control and energy efficiency.

More: Upper Michigan’s Source

NEW JERSEY

BPU Offering Up to $3 Million for Energy Storage Projects

The Board of Public Utilities is offering $3 million in incentives to developers of energy storage systems associated with renewable-energy projects that provide on-site power to facilities.

The grants, up to $500,000 each, will spur power generators to develop energy storage capacity that builds up the state’s resiliency to blackouts. Such storage facilities are also seen as critical to resolving the issue of matching up consumer demand to the intermittent production from renewable-power generators.

The money comes out of the state Clean Energy Fund, which is financed by a surcharge on utility customers’ bills.

More: NJ Spotlight

NORTH CAROLINA

Piedmont Gas Granted Approval for Affiliate Agreements by State

The Utilities Commission approved agreements by Piedmont Natural Gas affiliates to sign up for a proposed natural gas pipeline that would run to the state from West Virginia. The Atlantic Coast Pipeline is a proposed 550-mile natural gas pipeline that would carry gas from the shale regions of West Virginia, Ohio and Pennsylvania.

The pipeline itself still needs regulatory approval from all the states on the route, as well as from the Federal Energy Regulatory Commission. Piedmont needed state approval because it is both a partner in the pipeline project and a proposed customer.

More: Winston-Salem Journal

OHIO

Fracking Pipeline Bursts and Catches Fire in East

A pipeline carrying condensate from shale-gas wells in the state’s east to a gas processing facility in West Virginia burst and caught fire last week, burning for several hours before being brought under control.

The 8-inch pipeline carries natural gas condensate to Dominion Transmission’s Natrium Natural Gas Processing and Fractionation Facility. Condensates are valuable liquids likened to “natural gasoline” that are produced from some oil and gas wells. The accident caused no injuries or property damage, and the state Environmental Protection Agency said there was no sign of leakage into waterways.

The number of pipeline accidents has increased as the fracking boom has taken off in Ohio. There were 13 accidents last year, up from four in 2010. There have been 11 so far this year.

More: Columbus Dispatch

PENNSYLVANIA

Future of PGW to be Addressed in Wake of Deal Collapse

The collapse of a deal to sell aging Philadelphia Gas Works to UIL Holdings has spurred the state Public Utility Commission to hold a session to address plans on what to do next with the nation’s largest municipal gas utility.

The one-day session will be on Nov. 14 at Drexel University and will focus on what to do about PGW’s high rates, crumbling infrastructure and programs for low-income customers.

The contentious $1.86 billion deal to sell PGW was engineered by Mayor Michael Nutter but scuttled by the city council last week. Nutter said the council’s killing of the deal without holding hearings or a vote was the “biggest cop-out in recent legislative history in Philadelphia.”

More: The Philadelphia Inquirer

Corbett Vows to Protect Coal Industry if Re-Elected

Gov. Tom Corbett, trailing Democratic challenger Tom Wolf, promised voters in his state’s coal region that he will protect the coal industry if re-elected.

Corbett, in a speech in Plumcreek Township, said federal government regulation is hurting the state’s economy. “We need to get Washington and the [Environmental Protection Agency] out of our way so we can do more with the industry and continue to keep and grow our coal jobs that President Obama and his supporters are trying to kill in Pennsylvania,” he said.

Corbett also criticized his Democratic challenger for supporting a 5% severance tax on natural gas production.

“We’ve grown the natural gas industry from the fifth largest in the country to the second largest,” Corbett said. “We reduced unemployment from 8.1% to 5.7%, and we produced a balanced budget on time each of the four years I’ve been in office. When we didn’t have the money to spend, we didn’t do it. That’s what [Wolf] wants to do — tax and spend.”

More: Valley News Dispatch

VIRGINIA

Co-Op Wins Against Comcast in Pole Attachment Case

The State Corporation Commission ruled in favor of Northern Virginia Electric Cooperative, which was fighting attempts by cable giant Comcast to cut the rate it pays to use the co-op’s utility poles.

Comcast had sought to pay NOVEC according to the same formula used to compensate investor-owned utilities, but the SCC set a higher rate for the co-op. Comcast wanted to pay $7.16 a year for each NOVEC pole it used. A commission hearing examiner set the rate at $20.60. NOVEC has 52,000 poles.

“We asked to be fully compensated for providing space on our pole infrastructure to Comcast, and the rate determined by the hearing examiner, and affirmed by the commissioners, achieved most of what we were seeking,” said Stan Feuerberg, NOVEC president and CEO. Comcast said the higher cost would inhibit its ability to deliver broadband service in rural areas.

More: ECT.coop

November 4, 2014

PJM Members Seek Fix for Payments to Retired Plants

The Markets and Reliability Committee approved an initiative to ensure that generation fleet owners are properly compensated for reactive power and voltage control services as they add or retire generators.

The effort was prompted by the Federal Energy Regulatory Commission, which said there was no mechanism for obtaining refunds from fleet owners that may be collecting payments for retired plants.

“I think FERC wanted to make clear that the obligation was on the generator to” ensure it has filed updated rate schedules, MRC Chairman Mike Kormos said.

Members approved a revised problem statement including language suggested by Public Service Enterprise Group. PSEG’s Ken Carretta said the original statement assumed that fleet owners that haven’t filed revised cost schedules with FERC after plant retirements are being overpaid.

Carretta said when PSEG updated its rate schedule in 2008, its payments increased to $27 million from $9 million. “We built new units [and] made capital improvements. So it doesn’t necessarily follow that rates should go down,” he said.

PJM officials said they did not know how much ratepayers might be overpaying. “There have been a couple of occasions where this occurred,” PJM’s James Burlew said. “We know units have retired. We don’t know if these units are [still] being compensated.”

Carl Johnson, representing the PJM Public Power Coalition, wasn’t happy with PJM’s inability to answer the question. “It’s hard for me to explain to my members that we don’t know what we’re paying for,” he said.

November 4, 2014

PJM MRC/MC Briefs

The Markets and Reliability and Members committees approved the following Thursday with little discussion or opposition.

Markets and Reliability Committee

Manual Changes

Revisions to Manual 11: Energy & Ancillary Services Market Operations and Manual 28: Operating Agreement Accounting that will set the default Tier 1 synchronized reserves estimates to zero MW for nuclear, wind, solar, batteries and hydro generators. The change means those resources will not receive compensation unless they actually provide reserves during a spinning event.
Changes to Manual 1 to comply with a revised reliability standard given preliminary approval by the Federal Energy Regulatory Commission in September. COM-002-4 (Operating Personnel Communications Protocols) requires the use of a three-part communications process when issuing operating instructions. (See FERC Backs NERC, NAESB Standards.)
Revisions to Manual 14A: Generation and Transmission Interconnection Process that create a pre-application process for new and existing generation resource additions of 20 MW or less in compliance with FERC Order 792. Potential interconnection customers will have to submit a formal written request and a $300 processing fee. PJM is requesting these changes be effective beginning Nov. 1. (See PC Starts Work on Small Generator Interconnection Changes.)
Revisions to Manual 19: Load Forecasting and Analysis clarifying process for adjusting load forecasts due to significant load changes.
Conforming changes to Manual 18: PJM Capacity Market in response to members’ requests for details of the process for requesting and cancelling demand response maintenance outages and a FERC order allowing Annual, Extended and Limited products for DR (ER11-2288).

Transmission Owner Data Feed

Members approved Operating Agreement and manual changes to make it easier for transmission owners to access real-time generator data. The changes are intended to improve situational awareness and emergency response.

Winter Generator Testing

Members approved rules for voluntary winter testing of seldom-used generators. The tests would be limited to generators that haven’t run in the prior eight weeks and days when temperatures are below 35 degrees Fahrenheit. (See Winter Testing Could Cost $15.9M.)

IRM Set at 15.7% for 2018/19

Members approved a recommendation to leave PJM’s Installed Reserve Margin at 15.7% for planning year 2018/19, unchanged from 2017/18.

Manual 29 Revisions – Billing Adjustments

The committee approved a problem statement and issue charge on first read regarding revisions to Manual 29: Billing. The changes are intended to prevent cost shifting when miscellaneous items or special adjustments are underpaid.

Members Committee

Manual, Operating Agreement Changes

The MC endorsed revisions to Manual 11: Energy & Ancillary Services Market Operations and Manual 15: Cost Development Guidelines to correct a typographical error. The words “mileage ratio” will be replaced with “mileage” in Section 3.2.7 of Manual 11 and Section 2.8 of Manual 15, where the calculation of adjusted regulation performance cost is described.
Members revised the conflict of interest policy in the Operating Agreement to reflect the increasing number of consumer product companies, manufacturers and technology companies becoming involved in the electric industry. (See PJM Revising Policy on Prohibited Investments.)

Nominating Committee Elected

The MC elected the following to one-year terms as members of the Nominating Committee, which recommends candidates for the Board of Managers:

Electric Distributors: Steve Lieberman, ODEC
End Use Customers: Jackie Roberts, West Virginia Consumer Advocate Division
Generation Owners: Ken Foladare, IMG Midstream
Other Suppliers: Pati Esposito, American Wind Connection
Transmission Owners: Hertzel Shamash, Dayton Power and Light

November 4, 2014June 15, 2023

Michigan: FERC Favors Transmission in Presque Isle Dispute

By Chris O’Malley

Michigan officials and members of the state’s congressional delegation urged the Federal Energy Regulatory Commission last week to rethink its approach to replacing the retiring Presque Isle power plant, saying FERC is favoring expensive transmission over cheaper generation.

The officials are seeking new generation to replace Wisconsin Energy’s 430-MW coal-fired plant in Marquette, Mich., rather than a transmission expansion that could cost $600 million or more.

Invenergy Thermal Development is in discussions with Cliffs Natural Resources to build a combined heat and power cogeneration facility that would serve Cliffs’ mining complex in Marquette County and “substantially replace” Presque Isle’s output, Gov. Rick Snyder, Attorney General Bill Schuette and U.S. Reps. Fred Upton and Dan Benishek wrote in a six-page letter to FERC commissioners.

But the officials complained that a transmission alternative is being given a “procedural advantage” because of “jurisdictional lines that prevent holistic consideration of alternatives.”

“Under the federal rubric that has been set up, transmission solutions are the only solutions that MISO can require be funded, and generation solutions can only be considered once they are essentially guaranteed to come into service,” they wrote. “In short, the current structure’s only tool is a hammer, and it is trying to fix every situation with a nail. We believe that sometimes transmission is the appropriate investment. But sometimes it is not, and we need entities that have a full toolbox — both information and regulatory authority — ready to engage in the determination of what solution is the right one.”

The officials also complained that FERC “is repeatedly being asked to assume more of the responsibilities that have been carried out well by state commissioners for years.”

Failed Deal

Wisconsin Energy’s We Energies decided to retire Presque Isle rather than invest in environmental upgrades to keep the plant running.

Last November, Michigan utility Wolverine Power Cooperative struck a deal with We Energies in which Wolverine would spend $135 million on environmental upgrades in return for a one-third ownership stake in the plant.

Michigan officials said that the deal was attractive because it maintained reliability, provided for environmental improvement and would have been “vastly more affordable for ratepayers than any other solution.”

The deal fell apart after Cliffs Natural Resources agreed to buy power from Integrys Energy Services, a subsidiary of Integrys Energy, instead of We Energies. With no other offers available, We Energies decided it would close Presque Isle.

Wisconsin Energy’s proposed merger with Integrys requires the latter to divest its Energy Services unit.

After the merger, the Michigan leaders noted, Wisconsin Energy would own more than 60% of transmission operator American Transmission Co., “which would own and operate any transmission needed to offset [Presque Isle’s] retirement.”

“The new proposed combined company also stands to benefit significantly from the increased transmission that would be needed to be constructed as a result of the [Presque Isle] retirement without generation replacement.”

The Michigan leaders told the commission it should consider whether new transmission, new generation or a combination of both is the best solution for replacing Presque Isle.

“That is unfortunately not the course of action being pursued in the many dockets now before you, nor is it much evidenced in the decisions made to date by FERC, MISO and other federally regulated entities regarding this problem.

“Unfortunately, to date, it appears that all these entities’ processes are designed to favor one possible solution – running [Presque Isle] until a great deal of transmission can be built, and all at ratepayer expense.”

October 30, 2014June 15, 2023

Coalitions Make Their Cases to PJM Board

By Michael Brooks and Rich Heidorn Jr.

Fourteen coalitions representing more than 80 stakeholders submitted briefing papers to the PJM Board of Managers Tuesday on the RTO’s Capacity Performance proposal. Eight of the groups generally opposed the proposal while six were generally supportive.

pjm — Nine stakeholders have joined more than one coalition. (Click to zoom.)

The largest group, with 19 members, is the Transition Coalition, which focused its comments on the impact of the proposed changes on delivery years 2016/17 and 2017/18.

There are two groups representing load interests and seven representing generators, including ones for gas-fired units, hydropower and pumped storage, renewables and independent power producers.

Other coalitions formed around project finance interests, storage developers and companies specializing in energy efficiency and demand response.

Nine stakeholders joined both the Transition Coalition and an additional coalition, including Dominion’s Virginia Electric and Power, which claims membership in three groups.

The Board of Managers will decide on the final proposal submitted to the Federal Energy Regulatory Commission.

Below is a description of each coalition, the name of its spokesperson and a summary of its briefing paper, listed in order of the size of the coalition.

TRANSITION COALITION

Members: 19 members and groups, including the PJM Industrial Customer Coalition, and more than a dozen cooperatives and other load-serving entities (see chart)

Spokesperson: Michelle Gardner, NextEra Energy Power Marketing

The coalition said the proposal would impose $7.9 billion in additional costs to load for delivery years 2016/17 and 2017/18, providing a windfall to generators that cleared auctions for those years and already qualify as CP resources or have already taken steps to improve performance since the winter.

It said the proposal would violate FERC’s order on ISO-NE’s winter incentives, in which the commission said additional payments should not be made “to incent resources to make the same fuel procurement decisions they would have made, and been compensated for, absent the program.”

The coalition also said implementing all of the proposed changes in time for the 2015 Base Residual Auction was too rushed.

The group proposed spending $200 million to $600 million for winter-only improvements.

“PJM has not demonstrated that Capacity Performance would have a material impact on system operations during the Transition Delivery Years,” the group said. “PJM has not presented any evidence showing how paying more to resources that already have capacity obligations (many of which meet the Capacity Performance requirements) will translate into increased security in its control room.”

LOAD COALITION 2 (Load-Serving Entities)

Members: 11 members and groups, including the PJM Public Power Coalition and the Public Power Association of New Jersey

Spokesperson: Carl Johnson, PJM Public Power Coalition

The coalition said that PJM has made good progress on most of the reliability problems from last winter without the need for a market overhaul and that it shouldn’t seek such broad changes in such a short time frame.

The big problem, the challenge of gas-electric coordination, is being addressed by FERC, the coalition said. Thus PJM should await commission action before directing generators to make significant investments.

The coalition urged PJM to continue discussion through 2015, rather than rush a potentially flawed product that may have unintended consequences. It also said that while there would never be a consensus among all PJM stakeholders, more time would allow members “to resolve what we can and enable [FERC] to focus on resolving our differences.”

RENEWABLE COALITION

Members: American Wind Energy Association, Citizens for Pennsylvania’s Future, Community Energy, E.ON Climate & Renewables, EDP Renewables, Everpower Commercial Services, Iberdrola Renewables, Infigen Asset Management, Rock Island Clean Line, SunEdison, Union of Concerned Scientists

Spokesperson: Ryan Leonard, Iberdrola

The Renewable Coalition criticized PJM for overreacting to last winter and warned that the proposal will have unintended consequences for renewable resources. It said that billions were invested in wind and solar resources with the expectation that they would return capacity revenues based on performance during a fixed and known time period, as opposed to being available year-round. It urged PJM to protect renewable capacity that had already cleared in this year’s BRA.

The coalition also said that PJM should take more time to discuss and work on the proposal given the EPA’s proposed carbon emission rules will likely increase the need for more renewable resources.

CONSUMER COALITION (Load Coalition 1)

Members: PJM Industrial Customer Coalition, the Delaware Public Service Commission and public advocates for Delaware, D.C., Illinois, Indiana, Kentucky, Maryland, New Jersey, Ohio, Pennsylvania and West Virginia

Spokesperson: Susan Bruce, PJM Industrial Customer Coalition

The group called the proposal “a far-reaching overhaul of the PJM capacity construct that is far too costly and not justified in its current form.”

“The Consumer Coalition believes the abrupt overhaul contemplated by the CP Updated Proposal, as currently constructed, will adversely affect consumers by sharply increasing the cost of capacity with questionable additional reliability benefits and further restricting demand-side participation. PJM staff has failed to show that such drastic changes are warranted or, if warranted, that these changes are the correct changes. Adding to the Consumer Coalition’s concerns is the extremely short timeframe that has greatly limited the opportunity for stakeholder review.”

GAS GENERATORS COALITION

Members: Competitive Power Ventures, Dynegy, Essential Power, Invenergy, Moxie Energy, Northampton Generating Station, Panda Power Funds, Rockland Capital, Tenaska, Veolia Energy

Spokesperson: M.Q. Riding, Essential Power

The Gas Unit Owner’s Coalition generally praised the changes PJM made in its revised proposal. The coalition supports a number of changes included in the proposal, such as the elimination of the Short-Term Resource Procurement Target and “a reasonable and proactive transition for DR out of PJM’s supply mix.”

The coalition also supported PJM’s idea that clearing prices reflect long-run marginal costs. But it urged PJM to include language in the proposal that “unequivocally states that offers reflective of long-run marginal costs are permissible and not the subject of enforcement investigations.”

The coalition criticized PJM’s penalty structure for generators whose RPM prices fail to mirror long-run marginal costs. It proposed that PJM set the maximum penalty at 150% of the CP product clearing price and eliminate the shortage hours pricing penalty. “This construct is optimal because supply would be subject to a single penalty rate that is not dependent on scarcity events, while also recognizing that risk should be tangibly linked to revenue opportunity,” the coalition said.

The coalition also criticized PJM’s definition of outside management control events as too restrictive.

ADVANCED ENERGY MANAGEMENT ALLIANCE

Members: AEMA, Clear Choice Energy, EnergyConnect, EnerNOC, Enerwise, MidAtlantic Power Partners, Opower, Texas Retail Energy

Spokesperson: Bruce Campbell, EnergyConnect

The AEMA Coalition said the proposal would effectively eliminate demand response from the market. It called on PJM to remove new non-performance penalties on DR, noting the recent changes on the resource.

“It is manifestly unjust and unreasonable to move the goal posts yet again to now categorically exclude customers that have proven reliable and made investments to support PJM system reliability,” it said. It proposed increasing the limit on the amount of Base Capacity DR permitted, saying that the proposal adds “what effectively amounts to an anticompetitive cap on DR.”

The coalition also questioned the timing of the proposal. It said PJM should wait until directed by FERC to respond to the uncertainty resulting from the EPSA decision and FirstEnergy’s complaint over DR participation in wholesale markets (EL14-55).

The coalition also said that the proposal would eliminate renewables from the market, as coal, natural gas and nuclear are the only resources that would be able to meet the proposal’s standards for year-round, 24/7 dispatch. Instead, the coalition suggested focusing market changes on resources that failed to perform during the polar vortex.

ENERGY EFFICIENCY COALITION

Members: EMC Development, Encentiv Energy, EnergyConnect, greeNEWit, Juice Technologies, Keystone Energy Efficiency Alliance, Piedmont Environmental Council, Union of Concerned Scientists

Spokesperson: Tom Rutigliano, EMC Development

The Energy Efficiency Coalition’s main complaint with the proposal is that energy efficiency resources, normally handled by electric distribution companies, would be limited to participating in the reliability pricing model auctions through LSEs.

Because PJM’s measurement and verification process is so complicated and technical, requiring each LSE to administer its own EE program would increase costs and deter LSEs from making the investments needed, the coalition predicted. The group said this raises “the classic problem of why LSEs should pay their customers to use less of their product.”

The coalition said PJM is needlessly linking EE to the EPSA ruling when it only concerned DR.

Finally, the coalition also criticized the Enhanced Liaison Committee process PJM is using to redesign the capacity market. The coalition said that EE is too detail-oriented and technical to be handled by anything but a deliberative rulemaking process by stakeholders before it goes before the Board of Managers.

ENERGY STORAGE COALITION

Members: AES, Demansys, Energy Storage Association, Piedmont Environmental Council, RES Americas, S&C Electric, Union of Concerned Scientists, Viridity Energy

Spokesperson: Tom Rutigliano, Demansys

The Energy Storage Coalition broadly agreed with PJM’s treatment of energy storage in the proposal, but it said it wanted PJM to provide more details and better define storage’s requirements for participating in the market.

The coalition urged PJM to begin a stakeholder process for developing cost-based offer rules for storage, specifically ones that allow for variable intraday costs. It also said that PJM should treat storage’s physical limitations, such as start-up time, similar to how it treats other resources.

CENTRAL SUPPLIERS COALITION (Generation Coalition 2)

Members: AEP, Dayton Power, FirstEnergy, Duke, EKPC, IMG Midstream, PPL

Spokesperson: Dana Horton, AEP

This coalition represents capacity mostly located in PJM’s Rest of Market zone. These companies contend that suppliers in the zone have not been adequately compensated since PJM put its RPM in place.

It asked PJM to add a multi-year pricing mechanism and to change the penalty structure to one based on market revenue rather than net cost of new entry. Without these revisions, the companies said they will oppose the proposal.

GENERATION COALITION 1

Members: NRG, Dynegy, Topaz Power Marketing, Northampton Generating Station, Invenergy

Spokesperson: Neal Fitch, NRG

The coalition generally supports PJM’s Capacity Performance product and was pleased by the RTO’s revisions. However, the companies are concerned about the long-term costs associated with the infrastructure needed to meet PJM’s standards. These investments include operational and equipment improvements for cold-weather performance and increases in on-site fuel storage. The companies said these can only be justified if PJM, and FERC, approve a pricing scheme “that allows generators to fully reflect their long-run operational, maintenance, investment and risk costs into their bids.”

The companies are also concerned about the risk of non-performance penalties.

HYDRO-PUMPED STORAGE COALITION

Members: American Electric Power, American Municipal Power, Virginia Electric and Power, Brookfield Energy Marketing, Olympus Power

Spokesperson: Dennis O’Donnell, Olympus Power

The group says proposed changes to the calculation of unforced capacity (UCAP) threatens the viability of hydro resources, which it said were not contributors to the capacity shortage experienced last winter. “Unlike gas generators that were not able to generate any energy, hydro generators did generate as expected. In some cases hydro generators exceeded expectations,” the coalition said.

It requested that PJM retain certain OMC codes that the RTO is discontinuing in the proposal and revise them to be hydro-specific. For example, the code for “Flood” would be revised to mean “high water conditions,” while “Other miscellaneous external problems” would be changed to “Debris.” OMCs are excluded when PJM calculates a unit’s UCAP.

The coalition said PJM should cap the penalty exposure for pumped storage at 10 hours in order to fully value these resources.

“Given PJM’s load profile, the value of flexibility over 10 hours greatly exceeds the value provided by extending operation past 10 hours at a lower, fixed capacity level (i.e., running in a manner similar to less flexible resources) … While PJM has stated that they would try to limit pumped storage runs to 10 hours, they make no promises and have stated that if PJM wants pumped storage longer than 10 hours, the penalty exposure extends to whatever that duration happens to be. This uncertainty is both inconsistent with optimal use of pumped storage and creates a lack of clarity that will cause unnecessary derating of pumped storage facilities due to penalty risk.”

The group also asked PJM to revise its Tariff to allow LSEs to use pumped storage for peak shaving and reducing the LSE’s capacity obligation. “An LSE willing to take peak shaving performance risk with its pumped storage resource should not be constrained to just the capacity market as the vehicle to derive value from the pumped storage resource.”

PROJECT FINANCE COALITION

Members: Competitive Power Ventures, Moxie Energy, Panda Power Funds

Spokesperson: Nate Rushing, CPV

The Project Finance Coalition mostly supports the proposal, but it expressed concern that generators would be forced to pay unreasonably high penalties in a short amount of time. It suggested that instead of paying penalties, non-performing resources should be required to simply forfeit capacity revenue. Additionally, the coalition feels the “stop-loss” provision in the revised proposal, which caps the amount a non-performing resources can be penalized, does not go far enough.

“These penalties could easily cause a default under lending agreements and jeopardize the project’s continued viability to operate, having adverse impacts not just on the project but on PJM’s reliance on that project to operate to meet PJM’s needs,” the coalition said. It proposed an alternative stop-loss cap and echoed other coalitions’ calls for penalties to be tied to revenue and not net CONE.

IPP COALITION

Members: LS Power, Homer City Generation, Tenaska Power

Spokesperson: Tom Hoatson, LS Power

The IPP Coalition generally supports the revised proposal. The coalition also supports PJM’s efforts to introduce the product as soon as possible to prevent a recurrence of last winter.

However, the coalition cautioned against implementing the proposal before the RTO fixes the mechanisms that will transition its members into the new market structure. The coalition said that the proposal fails to take into account the investment and improvement costs that have already been incurred in response to last winter for the transitional delivery year. “As a result, the proposed transition mechanisms will result in the procurement of excess capacity at a higher cost to consumers,” the coalition said.

Similar to other generation coalitions, the IPP Coalition wants it made clear that companies will be able to recover their investments.

GENERATION COALITION 3

Members: Calpine, Exelon, PSEG

Spokesperson: Jason Barker, Exelon

The coalition also broadly supports the proposal. The companies want PJM to make sure that the penalties in the proposal are adequate enough to incentivize investment in cold-weather improvements. They expressed support for a proposal that PJM initially put forth in an Aug. 20: the RTO would institute a requirement that CP resources be able to perform 16 hours per day for three consecutive days under extreme weather conditions. This would ensure only reliable generators offer a CP product.

This coalition supports the penalty based on net CONE, but it also suggested that generators be penalized further when they knowingly fail to make investments in firm-fuel supply or capital improvements.

FINANCIAL INSTITUTIONS COALITION

Members: Morgan Stanley, BTG Pactual Commodities, J. Aron.

Spokesperson: Harry Singh, J. Aron.

No briefing paper was submitted by this group.

Next Steps

On Nov. 4, the coalitions will make oral presentations to the PJM board at an “Enhanced” Liaison Committee meeting at the Cira Centre in Philadelphia. The meeting will be teleconferenced for PJM members and state commission and FERC representatives, but no members of the public or the media will be permitted and none of those who attends is permitted to talk about what transpired.

October 27, 2014June 15, 2023

PJM Grid 20/20 Panelists Debate Solar, New Rate Structures

WASHINGTON — Nowhere is the issue of rooftop solar subsidies more acute than in Hawaii, where state and federal tax credits and net metering means that about 85% of the cost of rooftop solar is subsidized. “Which is why we have five times the [solar] penetration of any place in the nation,” Richard M Rosenblum, recently retired CEO of Hawaii Electric, told PJM’s Grid 20/20 conference last week.

About 12% of the utility’s customers have rooftop solar, and one-third of distribution circuits run “backwards” at least some of hours of the year, Rosenblum said. By 2030, the company expects 30% of customers to be generating solar power, “and virtually every one of our circuits will run backwards.”

“The problem, of course, is that it distorts the market and brings on resources that are not truly cost-effective for all consumers and leads to massive shifting of costs from one set of customers to another set of customers.”

Rate Design

Evolving the system in a way that is fair will require real-time pricing and fair compensation for net-metered solar generators, David Owens, executive vice president of the Edison Electric Institute (EEI), told the conference. Basing solar compensation on the cost of carbon (a price above the current cost of power), as some solar tariffs propose, is “totally absurd,” he said, and results in a “false and distorted price signal.”

Ralph Cavanagh, co-director of the Natural Resources Defense Council’s energy program, opposes an “all-you-can-eat approach” in which a high fixed charge reduces incentives for saving energy.

Instead, he favors a “minimum bill” approach in which customers pay based on consumption — after satisfying a minimum to cover fixed costs. “The difference between [the minimum bill] and a high fixed charge is that once you get above that very small threshold of consumption, you’re back paying based on how much you use again and the rewards for saving energy are unaffected,” he said in a lunchtime discussion with Owens.

David Kolata, executive director of the Illinois Citizens Utility Board, said solar power has been unfairly targeted for criticism over cost-shifting.

“It is a little bit revealing that this sort of reverse Robin Hood perspective focuses solely on solar and not on general rate design,” he said. “In Illinois right now, our rate design — because of the way we cover capacity costs — has the exact reverse effect and we don’t hear about that. I’m not saying there’s not an issue, but I do think it’s unfairly picking on solar and unfairly overlooking a lot of the value it provides.”

October 27, 2014June 15, 2023

Company Briefs

3M is offering discounts of 30 to 35% for employees who want to install solar panels on their homes. The Solar Community Initiative will also provide help with planning and installation, the company said.

“Renewable energy is an interest to employees, we know, and we want to increase our engagement with employees around sustainability in general,” said 3M’s global sustainability advisor, Keith Miller, who helped develop the program for the company’s more than 35,000 North American employees.

3M joins two other North American companies offering similar programs: Cisco of San Jose, Calif., and Kimberly-Clark of Irving, Texas.

More: The Star Tribune

Construction Starts on 1,000-MW Combined-Cycle Plant in Md.

Construction has started on a 1,000-MW combined-cycle power plant at the site of an existing Old Dominion Electric Cooperative plant in northeastern Maryland.

The natural gas-fired Wildcat Point Generation Facility will be adjacent to ODEC’s 672-MW Rock Springs Generation Facility near Rising Sun. The $675 million Wildcat Point facility received Maryland regulatory approval in May. It is expected to go into operation in 2017.

More: The News Journal

Utilities Serving Pot Growers: Don’t Ask, Don’t Tell

Indoor marijuana growers expanding to meet the now-legal recreational pot market in Washington state are cranking up the lights and heaters, and utility companies are trying to plan for increased load growth. But marijuana is still an illegal drug by federal standards, and utilities are wary of working directly with growers.

“There are definitely some concerns,” said Bryan Jungers, a research analyst. But he said utilities don’t want to ask too many questions. “They’re still supplying the power, but it’s sort of a ‘don’t ask, don’t tell’ approach.”

A study by the Northwest Power and Conservation Council estimates marijuana operations could increase demand for power in Washington by 60 MW, to 160 MW over the next 20 years. It said regional demand from growers could climb to 250 MW by 2035.

More: UtilityDive

GM to Build 2.2-MW Solar Facility Atop Ohio’s Lordstown Plant

General Motors is building a 2.2-MW rooftop solar facility at its Lordstown assembly plant, the largest photovoltaic system in the company’s U.S. inventory.

The project will install 8,500 solar panels on the roof, part of GM’s plan to roll out 125 MW of worldwide solar production by 2015. It has an 11.87-MW solar facility at a plant in Spain and a 1.8-MW solar array on the roof of its Toledo Transmission plant.

“GM has made a commitment in terms of increasing our use of renewable energy by 2020,” said Sharon Basel, communications manager of GM Energy, Environment and Sustainability. Solar “reduces the impact on the environment and provides a reduction in carbon emissions and lessens the impact on the climate change.”

The Lordstown project is scheduled to be completed by the end of this year.

More: The Vindicator

Delmarva Issues RFPs for 465 MW for Standard Offer

Delmarva Power & Light, which no longer owns any generation, is looking for up to 465 MW of power supply to meet its Standard Officer Service obligations in Delaware.

Delmarva, a subsidiary of Pepco Holdings Inc., is seeking peak load contributions by customer class, including 275 MW for combined residential, small commercial and industrial customers, 145 MW for medium general service-secondary customers, 20 MW for large general service-secondary and 25 MW for general service-primary customers.

The first round of bidding is to begin Dec. 1, and the final round should conclude in early February of next year. Winning bidders start supplying electricity on June 1.

More: The Cape Gazette

Michigan’s Lower Peninsula Getting New Power Plant

Wolverine Power Cooperative said it plans to build a $100 million natural gas-fired power plant in Michigan’s northern Lower Peninsula.

The site, near the town of Gaylord, was chosen because of the proximity of natural gas pipelines and transmission lines. It said it will soon apply for necessary state and local permits, and plans to get the plant online by 2016.

The co-op said the plant will complement Wolverine’s other generating facilities in the region and help preserve reliability of the regional power grid. Wolverine supplies wholesale power to six Michigan electric cooperatives.

More: Crain’s Detroit Business

Southern Company Acquires 150-MW Solar Plant In Calif.

Southern Power, a subsidiary of Southern Co., will boost its solar fleet to 338 MW with the acquisition of the Solar Gen 2 plant in California from First Solar.

Solar Gen 2 is comprised of three, 50-MW systems on 1,450 acres in Imperial County. Construction began in 2013. First Solar is building it and will operate it for Southern. San Diego Gas & Electric has agreed to buy its power for 25 years.

More: EnergyCentral

Duke Energy Establishes $20M Energy Assistance Plan in NC

Duke Energy’s two North Carolina utilities have launched a $20 million energy assistance fund for low-income residents. The company said up to 4,000 households could qualify.

The fund, established as a result of a 2013 Duke Energy Progress and Duke Energy Carolinas rate case, will provide up to $10,000 for individual energy-efficiency upgrades. The Helping Home Fund will pay for energy assessments, heating and cooling replacements, appliance replacements and weatherization upgrades. The N.C. Community Action Association, which is administering the program, will begin distributing the funds in January.

Duke has agreed to pay for the programs out of corporate funds rather than ratepayer money.

More: FierceEnergy

Constellation Energy to Build Solar Farm on Eastern Shore

Constellation Energy Resources is building a 4.3-MW solar project that includes a 25-year supply agreement with the National Aquarium in Baltimore.

The project, to be built on 22 acres near Cambridge, Md., is expected to supply 40% of the aquarium’s energy needs. Constellation will supply the other 60% through wholesale power purchases. The aquarium will get solar renewable energy credits.

Constellation, a subsidiary of Exelon, said the solar farm will offset about 4,409 tons of carbon dioxide emissions each year. The project is expected to be completed in March.

More: Zacks

Judge Rules Against Ameren in Missouri Tx Line Dispute

A Missouri judge says he will reject Ameren Transmission’s request to build a transmission line across northeast Missouri without a certificate from the Missouri Public Service Commission.

Ameren said it doesn’t need the commission’s approval because it isn’t regulated by the commission. Landowners have intervened to try to block construction of the line.

Cole County Circuit Court Judge Dan Green noted that the PSC hasn’t taken action yet, and so he said he would refrain from making a “hypothetical advisory opinion.” The 100-mile line is part of a longer, 480-mile line to run from Ottumwa, Iowa, to western Indiana.

More: Fox2 News; Columbia Missourian

AEP Commercial Customer Coalition Protests Price Guarantee Move

A group of 12 large commercial American Electric Power customers is urging the Public Utilities Commission of Ohio to refuse the utility’s request for guaranteed prices for some of its power plants. The large customers said AEP’s proposal is “unfair to shopping customers and harmful to competitive markets.”

AEP, along with FirstEnergy, has asked PUCO to allow it to enter into power-purchase agreements with some of its plants. It says the price guarantees are necessary to keep the plants profitable and running, and therefore are in the public interest.

But Compete Coalition, which includes companies such as Staples, Macy’s, Lowe’s Home Improvement and Boston Market, said the utility’s proposal would amount to an unfair tax and will “deny Ohio businesses the right to purchase electricity at the lowest possible price.”

More: Columbus Business First

FirstEnergy Dropping Customers, but Charging them if they Drop First

FirstEnergy Solutions is dropping its retail residential customers in Pennsylvania as the company reevaluates is participation in the retail market.

But the FE subsidiary, in letters mandated by the Pennsylvania Public Utility Commission, also reminded customers that they may face an early termination fee if they choose to leave FirstEnergy before their contract terms expire. The fees are as much as $295.

“Please note that if you cancel your existing contract with us before your December meter read date, you may incur a … termination fee,” say the letters sent to residential customers. “You can avoid this fee by remaining a valued FirstEnergy Solutions customer until the end of your agreement.” Many of those agreements expire at the end of the year.

More: Pittsburgh Post-Gazette

PSEG Exec Leaves to Run Illinois Generator

Donald Gaston, fossil generation director of Public Service Enterprise Group, is leaving to run Prairie State Generating Company.

Gaston, who has worked in the generation industry for more than 30 years, will become CEO of Prairie State, which operates a two-year-old, 1,600-MW coal plant and adjacent coal mine. Prairie State has been through several CEOs since May. The plant has been plagued by construction delays, cost overruns and the defection of power purchasers trying to escape contracts.

More: NJ BIz

October 27, 2014June 15, 2023

Gates Bros., FERC Seeking Settlement?

The hedge fund twins accused of gaming up-to-congestion trades in PJM abruptly ended their public relations campaign against the Federal Energy Regulatory Commission last week, announcing they had taken down their website and would no longer talk to the media or at industry conferences.

Despite their earlier vow not to settle with FERC over the allegations, the move by Rich and Kevin Gates suggests that — after spending more than $1.5 million on lawyers and consultants fighting the investigation — they may be seeking to end hostilities.

Reached by phone Friday, Kevin Gates and Larry D. Gasteiger, acting director of FERC’s Office of Enforcement, both declined to comment.

Going on Offense

In March, after being the subject of a FERC investigation for more than three years without being charged, the brothers had decided to go on offense by launching a website on which they posted correspondence with FERC and opinions from energy experts that they said proved they were being unfairly hounded. The dispute became a case study for critics, including some former FERC officials, who say the agency has sought to punish legitimate, if opportunistic, trading.

The brothers hounded now-Commissioner Norman Bay, FERC’s former enforcement chief, through his Senate confirmation, spoke at industry conferences and won support from The Wall Street Journal editorial board.

In August, the day after Bay was sworn in as commissioner, FERC staff issued a notice of alleged violations accusing the brothers and their partners in the Powhatan Energy Fund of engaging in “manipulative” up-to-congestion trades in PJM in 2010. (See PJM UTC Case Likely Headed to Court After FERC Notice.)

FERC alleged that the brothers’ investment funds placed “millions of megawatt-hours of offsetting trades between the same two trading points, in the same volumes and the same hours” to capture line-loss refunds without facing any risk from the underlying trades.

Although FERC’s confidential preliminary findings challenged $4.7 million in profits the investors made between February and August 2010, the notice cited only trades made after June 1.

The Gates brothers said their trades were legal until the loophole they exploited was closed later in 2010. They vowed to fight the allegations and said they had rejected a previous settlement offer from FERC.

With the facts not in dispute, the case would have turned on legal interpretations: Were Gates’ trades riskless, and thus improper, “wash” trades, as FERC contends, or permissible “spread” trades? Did FERC provide proper notice that seeking profits through the line-loss rebates alone was improper? And if FERC thought it had a strong case, why did it wait nearly four years to bring it?

If there is no settlement, the next major step would likely be a commission vote on whether to issue an order to show cause. (On Oct. 6, the Gates brothers filed a motion seeking to force Bay to recuse himself from the case.)

William M. McSwain, attorney for the brothers, told RTO Insider in August that if the commission decided to proceed, the case would end up in a U.S. District Court where he said the merits would be reviewed by a “neutral decision maker.”

Based on last week’s disarmament, however, it appears the brothers may never get their day in court.

One company that engaged in similar trades, Oceanside Power, agreed to settle the charges against it by disgorging profits of $29,563 and paying a fine of $51,000 (IN10-5).

FERC staff also filed a notice of alleged violations in August against City Power Marketing and its principal, K. Stephen Tsingas, for a similar trading scheme. Tsingas and his attorney have declined to comment.

October 27, 2014June 15, 2023

Federal Briefs

Allison M. Macfarlane, chairman of the Nuclear Regulatory Commission, is leaving at the end of the year to become director of the Center for International Science and Technology Policy at George Washington University.

Observers credit Macfarlane with bringing peace to the five-member commission, which was embroiled in controversy under the previous chairman, Gregory B. Jaczko. Macfarlane helped push for safety improvements at U.S. nuclear plants following the 2011 Fukushima disaster in Japan. But she lost a battle to expedite transfer of used fuel rods from on-site cooling ponds to dry cask storage.

“I came to the commission with the mission of righting the ship after a tumultuous period and ensuring that the agency implemented lessons learned from the tragic accident at Fukushima Daiichi, so that the American people can be confident that such an accident will never take place here.”

Before becoming NRC chair in 2012, Macfarlane was a professor at George Mason University. “I accomplished what I wanted to do at the NRC and I really miss academia,” she said. There is no word on her replacement yet.

More: The Washington Post

DOE Eyeing New Conservation Standards for Water Heaters, Lamps

The Department of Energy said it is developing updated energy-efficiency standards for water heaters and fluorescent lamps.

The department is examining the standards for fluorescent ballasts, as well as new energy conservation standards for solar-thermal water heating systems, commercial water heaters, hot water supply boilers and hot water storage tanks.

More: The Hill

MOX Recycling Plant Asks NRC for 10-Year Extension

The contractor working on a project to recycle Russian nuclear warheads into reactor fuel at the federal Savannah River site has asked for another 10 years to get up and running, the Nuclear Regulatory Commission said.

Shaw AREVA MOX Services said the South Carolina facility is about 60% complete, but the company said it still needs to construct several buildings and safety systems. The plant was started in 2007, part of a plan to repurpose weapons grade plutonium into nuclear reactor fuel in a process called mixed-oxide fuel, or MOX.

The facility was supposed to have been completed by 2015. The company blamed budgetary constraints, vendor shortages and difficulty finding qualified construction workers for the delays. Cost overruns are already into the billions of dollars. President Obama placed the project in “cold standby” earlier this year, but it was rescued by Senate and House committees that found millions of dollars to keep it going.

More: Greenville Online

Limerick Security Problem Results in Closer NRC Oversight

The Nuclear Regulatory Commission said it will perform an inspection of Exelon’s Limerick Generating Station to “ensure Exelon fully understands the root causes … and has implemented long-term corrective actions” following an unspecified security issue.

The security issue occurred between June 16 and June 20, but no details were given. The NRC doesn’t provide specifics of security problems at plants, a change that occurred after the 9/11 attacks. Plant spokeswoman Dana Melia said the problem has been corrected.

“Due to security precautions, we are unable to provide additional details, but Limerick stakeholders should know that at no time was the security of the facility, our workers or local residents compromised,” she wrote. “Our comprehensive corrective action program ensures that we identify and correct issues, including those of low safety significance.”

The announcement came just three days after the commission granted the two Limerick units 20-year license extensions, allowing operations until June 2049.

More: The Mercury News

DOE Says URS, Bechtel Refuse to Turn Over Hanford Documents

Department of Energy Inspector General Gregory Friedman says two contractors at the center of a whistleblower dispute concerning the Hanford site cleanup are refusing to turn over more than 4,500 documents that investigators requested.

Friedman said in a memo to Energy Secretary Ernest Moniz that Bechtel National and URS Energy Construction have withheld documents that his office sought to determine whether URS employee Donna Busche was terminated in retaliation for disclosing problems with a plan to treat radioactive waste at the Washington state site.

“[W]e did not have access to the full inventory of documents, which we felt were necessary to conduct our review,” Friedman wrote. “Thus, we were unable to complete our inquiry and accordingly disclaim any opinion regarding the circumstances of Ms. Busche’s termination.”

Bechtel said that it had gone “above and beyond in cooperating with the … investigation” and blamed its subcontractor, URS, for the firing decision. URS said the employee’s claim of wrongful termination is “without merit.”

More: The Washington Post

Moniz Announces $53 Million in Solar Research Funding

Energy Secretary Ernest Moniz announced more than $53 million in grants for research aimed at driving down the cost of solar energy.

Moniz, speaking at the Solar Power International 2014 conference in Las Vegas, said the projects are investigating next generation photovoltaic cells, new manufacturing processes and the “soft” costs of solar installation.

“The projects announced today will help the U.S. solar energy industry continue to grow, ensuring America can capitalize on its vast renewable energy sources, cut carbon pollution and continue to lead the world in clean energy innovation,” Moniz said.

More: Renewable Energy Focus

NY Pipeline Gets Final FERC Environmental OK

The Federal Energy Regulatory Commission published its final environmental review of the Constitution Pipeline, a 124-mile line connecting the Marcellus Shale natural gas region in northeastern Pennsylvania to New York. The action is a key step toward the commission’s decision on the project, which is expected as early as November.

“FERC’s Final Environmental Impact Statement confirms that the Constitution Pipeline can be constructed in a manner that minimizes environmental impacts, while adding a key piece of natural gas infrastructure to the U.S. Northeast,” the project sponsors, Constitution Pipeline and Leatherstocking Gas, said in a joint statement. The pipeline will allow interconnection with two other major gas pipelines, the Iroquois and Tennessee pipelines.

The pipeline’s builders say it could deliver natural gas to New York and New England for the winter 2015-2016 season.

More: MarketWatch

October 27, 2014June 15, 2023

New York Utilities Increase Gas Hedges Ahead of Winter

By William Opalka

ALBANY — Chastened by January’s price spikes, New York’s electric utilities are hedging 70% of their natural gas purchases this winter, up from 55% last year.

Last year, about 35% of gas was bought on the spot market; this year, utilities intend to cut that down to 20%. The change is intended to insulate the companies from price volatility as natural gas demand for home heating and power generation continues to rise.

“Utilities are better prepared and have modified their portfolios,” said Raj Addepalli, the New York Public Service Commission director of the Office of Electric, Gas and Water, during a briefing at last week’s commission meeting.

After the havoc wrought by last winter’s polar vortex, New York officials say they are ready for severe weather that may come.

New York set a winter peak of 25,738 MW last year, breaking a record set a decade before. The PSC is reporting a capacity margin of 10,400 MW for this winter.

Last year’s cold weather caused electricity prices to rise to unprecedented levels in New York.

Average prices for customers receiving default service or on variable rate contracts with competitive suppliers jumped by an average of almost 12 cents per kWh from December 2013 to January 2014, a 175% increase. Gas prices have stabilized as new production from the Marcellus Shale in Pennsylvania and Utica Shale in Ohio has reached eastern markets. Price projections are 21% to 27% lower than last winter’s forecasts.

That could change some of the fuel mix in New York. Dual-fuel capable power plants frequently switched to oil last winter as natural gas prices jumped above oil 18 times in January.

PSC staff said the Department of Environmental Conservation has promised faster response to requests for fuel waivers needed to switch from natural gas to the more polluting oil. The department took longer to grant waivers than generators and power market officials would have liked last winter, according to PSC officials.

The PSC said it is looking at neighboring regions for long-term policy refinements. “The incentives in place may not be enough” to ensure reliability, Addepalli said, mentioning New England’s pay-for-performance program as a possible model.