The Federal Energy Regulatory Commission and Commodity Futures Trading Commission, after long and difficult negotiations, signed two memorandums of understanding concerning information-sharing procedures and jurisdiction over regulation of energy trading. But, disappointing some attorneys, the MOUs do not address questions of enforcement jurisdiction, which means answers will have to come from the courts.
President Obama directed the administration to conduct what the White House said was the first Quadrennial Energy Review. It will focus on developing a comprehensive strategy for pipelines and the power grid, with issues including changing markets, aging facilities and cyber threats.
Natural gas-fired generation will account for 26.8% of generation in 2014, down from 27.5% in 2013 because of rising gas prices, according to the Energy Information Administration. Coal’s share will rise this year, from 39.1% to 40.2%. In 2015, though, coal’s share should drop to 38.6% as federal mercury and air toxics regulations take effect.
In its Short-Term Energy Outlook, EIA estimated total generation averaged 11.1 TWh/day in 2013 and projected it would rise 0.3% this year and 1% in 2015. Per-customer consumption will continue to decline with energy efficiency, but industrial users will increase consumption in 2015, EIA predicts.
Now that the Environmental Protection Agency has published its regulations for greenhouse gas emissions from new power plants, the House Energy and Power Subcommittee has set Jan. 14 to vote on a bill that effectively would block it. The measure introduced by subcommittee Chairman Ed Whitfield (R-Ky.) requires that a standard for coal units must have been achieved for a continuous 12 months, commercially, by a least six units at different plants. This aims at EPA’s requirement for carbon capture and storage.
The measure also requires a separate subcategory for lignite units. Sen. Joe Manchin (D-W.Va.) introduced a companion bill in the Senate.
Meanwhile, EPA’ Science Advisory Board has scheduled a Jan. 21 teleconference to discuss “whether to review the adequacy of the science” behind the rule.
Democratic Sens. Barbara Boxer of California and Sheldon Whitehouse of Rhode Island have established the Climate Action Task Force to raise the visibility of the issue. Boxer, who chairs the Environment and Public Works Committee, said the group has a dozen members and the backing of Senate leadership. “[W]e want Congress to take off the blindfolds,” she said.
Four of the five members of the Nuclear Regulatory Commission said they believe spent fuel could continue to be stored safely in pools and did not have to be moved to dry storage, which some experts say would be safer. Chairwoman Allison Macfarlane was the only member whose questions at a commission meeting last week indicated she could be open to moving more fuel to dry casks.
Time is growing short for stakeholders hoping to reach consensus on rules banning capacity market speculation before May’s auction.
After two meetings last week, the Capacity Senior Task Force was still debating nine “replacement capacity” proposals — almost as many as the 11 packages the panel was considering when it failed to reach consensus in November.
Since Nov. 21, when the Markets and Reliability Committee returned the issue to the CSTF, the task force has held four meetings, including two last week. (SeeArbitrage Fix Returned to Committee.)
PJM officials want to submit a plan to the Federal Energy Regulatory Commission by mid-March in order win approval in time for the Base Residual Auction. The schedule laid out by CSTF Chair Scott Baker calls for a CSTF vote after its meeting Friday, with a first read before Markets and Reliability Committee Jan. 30.
The odds of reaching an agreement may become clearer as a result of a poll CSTF Chair Scott Baker submitted to task force members yesterday.
The poll, which closes at 5 p.m. Wednesday, is an effort to thin the candidates by identifying consensus on core concepts. One question, for example, seeks to measure support for proposals eliminating the ability to profit in cleared buy bids in incremental auctions. The question then seeks to parse support for addressing the issue in time for this year’s auction or whether the task force should take more time to vet solutions.
Versions of this “IA Settlement Agreement” are featured in packages proposed by PJM, J.P. Morgan Ventures Energy Corp., Citigroup Energy and Duke Energy. Taking different approaches are proposals by Market Monitor Joseph Bowring, Old Dominion Electric Cooperative, Calpine, Exelon and Gabel and Associates. Bowring would eliminate replacement of capacity in incremental auctions except for capacity lost to force majeure events.
The poll also will gauge support for using development milestones to reduce credit obligations or capacity deficiency penalties. Another set of questions focuses on proposed requirements that bidders certify their intent to provide physical resources and not plan to buy out of their obligations in the incremental auctions, when prices are much lower than in the BRA.
An earlier poll found 90% support for raising the Capacity Resource Deficiency Charge (currently the greater of 1.2 times the Resource Clearing Price or the Resource Clearing Price + $20). A proposal to make the penalty the greater of 1.5 times the Resource Clearing Price or the Resource Clearing Price + $50 also had strong support at 86%
The same percentage of respondents endorsed changing the PJM sell offer price (currently an upward sloping offer curve with a starting price equal to the intersection of the updated VRR curve and current commitment level). A proposal to switch to an upward sloping offer curve with the starting price floored at the BRA clearing price won almost 73% support, although that could drop in a binding, sector-weighted vote.
Cutting the number of incremental auctions from three to two won 83% support while only 67% backed a cut from three to one.
American Electric Power moved its Ohio generation into a separate subsidiary in December and acknowledged that it could consider selling the assets. “They’re ahead of their pack in terms of jumping on the transmission bandwagon,” said a UBS Securities analyst.
Meanwhile, President and CEO Nick Akins assumed the position of chairman as well.
Jim Rogers’ seven-year run atop Duke Energy ends this month in a rush of industry tributes, legacy look-backs and, like a retiring Super Bowl champion, a trip to Disney World.
“My best guess is that Jim Rogers is someone who wanted to do more toward clean energy than he ever found a way to make happen during his time,” environmentalist Jim Warren said. “I favor that over a more cynical approach that he was more a figment of corporate PR or greenwashing.”
University of Delaware wind power researcher Cristina Archer sees the Great Plains as an ideal place for airborne wind turbines in the summertime because of the presence of something called “wind speed maxima,” strong currents of wind that resemble the jet stream but occur at much lower altitudes.
Airborne wind turbines are devices resembling blimps or gliders that can generate electricity as they are flown like kites in the lower atmosphere. Activity on the concept has accelerated in the past five years with at least 20 startup companies working on various concepts, including Makani Power, which was acquired by Google in May.
Big Rivers Electric’s proposal for a rate increase is generating opposition in the state. The hike — about 21% for residential customers and 25% for industry — is meant to make up for revenue the cooperative will lose when a second aluminum smelter leaves its system this month. The increase would “cause us to think about generating our own power,” a Kimberly Clark plant manager said at a Public Service Commission hearing.
A dispute between the Office of People’s Counsel and FirstEnergy’s Potomac Edison about meter reading and billing could go to a Public Service Commission law judge if the parties do not reach a settlement by this week. Customers allege overbilling because the utility did not read their meters as often as required.
The Pinelands Commission was evenly split, 7-7, Jan. 10 when it surprised onlookers by voting down South Jersey Gas’ politically hot proposal for a 22-mile pipeline through the protected area to the BL England power plant. With 8 votes required, the proposal failed, and it is unclear what steps will come next from its supporters, who include Gov. Chris Christie as well as numerous officials who back converting BL England to gas from coal.
The commission’s deliberations on the pipeline have been fraught with charges of political interference, and one columnist linked the dynamics to those involved in the George Washington Bridge lane-closing scandal.
The Assembly’s Telecommunications and Utilities Committee approved a bill sponsored by Chairman Upendra Chivukula aimed at increasing the amount of retail power shopping by residential and small business customers. Utilities oppose the measure. While the bill cannot pass the legislature this session, it is a welcome “beginning of a conversation” about the issue, said Jay Kooper of the Retail Energy Supply Association.
Closing arguments in Fishermen’s Energy case at the Board of Public Utilities ended late in December, and the offshore-wind company is waiting to see if the regulators will approve the state’s first offshore renewable energy certificates to fund the project. Fishermen’s 25-MW demonstration project offshore Atlantic City first went before the BPU three years ago; several months ago the company worked out a deal with the Division of Rate Counsel to lower the cost to customers.
The Board of Public Utilities begins this week to consider Jersey Central Power & Light’s request to recover $640 million in storm costs. The case is one of a number involving more than $1 billion in costs for the state’s utilities.
American Electric Power proposed to the Public Utilities Commission a retail rate cut of 9% over three years, beginning in 2015. It attributed the reduction to oversupply and sluggish demand. The state’s ratepayer watchdog says the cut should be bigger.
The Public Utilities Commission spent $34,660 to send all five commissioners and 15 staffers to the Orlando annual meeting of the National Association of Regulatory Utility Commissioners – a sum that some believe is excessive. “Twenty people to Orlando. There is no excuse for that,” one former commissioner said. Documents released to the Dayton Daily News show the PUC has paid $156,082 in commissioners’ travel since 2009.
KW River Hydroelectric, a firm that has developed a device to capture power from low-head dams, has opened an office in Hamilton and is seeking investors and grants. The start-up was launched by a former Duke Energy executive and an Air Force retiree who invented the device, a prototype of which is to be tested on the nearby Great Miami River.
The Ohio Energy Initiative Commission LLC, a private group whose members and backers are not identified, said it would begin this month to accept early green-energy project proposals for $1.3 billion in annual funding that would be created if state voters approve the Ohio Clean Energy ballot initiative. Supporters need to collect 385,247 signatures by July 4 to get the issue on the November ballot.
Potential appointees have until Jan. 16 to apply for Public Utilities Commission Chairman Todd Snitchler’s position. Snitchler announced this morning that he will not seek reappointment. During his tenure the PUC has pushed utility restructuring and electricity competition.
Scott Nally, director of the state Environmental Protection Agency, created a stir by resigning abruptly Jan. 7 after three years in the post. He was replaced on an interim basis by Craig Butler, Gov. John Kasich’s senior director of energy and environmental policy. A cryptic resignation letter from Nally provided no reason for his departure, leading to speculation.
Former employees of Ormet’s Hannibal aluminum smelter picketed American Electric Power headquarters Jan. 8 to call attention to the power rates they say forced bankrupt Ormet to shut the facility. Ormet shut the plant in October, blaming its decision on a Public Utilities Commission ruling that did not approve as large a rate discount as Ormet said it needed.
Two wind turbines began operating at Honda Transmission Manufacturing in Russells Point. The company says the turbines’ 10,000 MWh/year will supply about 10% of the plant’s needs, making it the first automotive company in the U.S. to get a substantial amount of its power from onsite wind.
Officials in Bethel are fighting a citizen petition to have the village disband its utility. Sponsor Jeff Coulter wants the village to turn over its electric operations to a company like Duke Energy or American Electric Power, from which the village currently buys its electricity. Coulter says cutting out Bethel Utilities as the “middle man” will save residents money. Town officials disagree.
The Public Utility Commission voted to let customers in PECO’s CAP Rate program sign up with competitive suppliers. Consumer advocates worry that suppliers might win these low-income customers initially and later boost their rates. But the PUC rejected a proposal to limit the suppliers from charging more than PECOs default rate.
Pittsburgh-based Aquion Energy, maker of batteries and energy storage systems, closed a $55 million financing round that includes an investment from Microsoft founder Bill Gates. “We are expecting Aquion Energy’s commercial launch in 2014 to be disruptive to the world of stationary energy storage,” said Ray Lane, partner emeritus at Kleiner Perkins, the first firm to invest in Aquion.
Beacon Power’s 20-MW flywheel storage project at the Humboldt Industrial Park is operating at about half capacity and plans to be at full strength by summer, the company said. The project was among those identified in a recent “60 Minutes” segment about ventures that received Department of Energy stimulus funding and then went bankrupt. Beacon reformed after its bankruptcy, and completed a 20-MW facility in New York state and undertook the Humboldt construction.
The Public Utility Commission approved PPL Electric Utilities’ proposal for a $335 million transmission line expansion and upgrade in the Poconos. The company will build three new substations and 60 miles of new 230 kV lines, and rebuild 20 miles of existing 69 kV lines in parts of Lackawanna, Monroe, Wayne, Pike and Luzerne counties.
Duquesne Light plans to install its first 5,000 smart meters this year, after the Public Utility Commission approved the installation last week. Duquesne is the third utility to receive final PUC go-ahead, following PECO and PPL. By 2020, a spokesman said, all 585,000 customer meters are to be replaced.
Dominion Resources’ four nuclear plants posted a record efficiency rate in 2013, with an average capacity factor of 93.7%, up from a 2009 record of 93.1%. In Virginia, the company’s two nuclear plants supply about 42% of its customer load.
The State Corporation Commission reopened its case involving Dominion Virginia Power’s proposed Surry-Skiffes Creek power line after the utility was unable to get a right-of-way agreement with the James City County Economic Development Authority. The SCC, which approved a route in November, reopened the case not to have it reargued but to allow further review of the on-land portion of the route. It has scheduled a hearing Jan. 29
Members agreed last week to move forward with an initiative that could result in reduced restrictions on up-to congestion transactions.
About 70 percent of stakeholders at the Market Implementation Committee voted in favor of an issue charge to consider lifting the UTC bid cap and restrictions on the nodes that are eligible for such trades.
The measure passed over opposition from the Market Monitor and several stakeholders, who said the product is already exacerbating the underfunding of Financial Transmission Rights.
A UTC combines a day-ahead offer to sell energy at a source with a bid to buy the same quantity at a sink. The transaction is only executed if the difference between the Locational Marginal Prices at the source and sink are under a threshold set by the bidder. Current market rules limit such bids to differentials of $50 or less.
Noha Sidhom, of Inertia Power LP, proposed the review in a problem statement last month, saying the bid cap forces traders to place price insensitive bids that don’t reflect market conditions. (See PJM to Consider Relaxing UTC Rules.)
The current rules also limit such transactions to nodes historically available for interchange transactions, excluding those load buses below 69 kV and buses for generators below 100 MW. “Expanding nodes would make [UTCs] a true hedge when the market is more volatile,” Sidhom said.
The issue charge directs the MIC to consider alterations to UTCs during special sessions in the first quarter of 2014, with a FERC filing for approval of Tariff changes anticipated in July.
As expected, PJM transmission planners said last week they will recommend the PJM Board of Managers approve FirstEnergy’s proposed $8 million congestion-relief upgrade in the MetEd zone.
“We’re already looking at the FirstEnergy project as the project we would like to move forward on,” PJM’s Tim Horger told the Transmission Expansion Advisory Committee Thursday.
The FirstEnergy project bested two proposals by LS Power to relieve congestion on the Hunterstown 230/115 kV transformer. The LS Power projects, estimated at more than $60 million each, had benefit to cost ratios of less than 2, far below FirstEnergy’s B/C ratio of more than 6.
Reliability tests of the LS Power proposals indicated one would require a new circuit breaker and the other caused reliability violations, additional costs that would further reduce their benefit-cost ratios. Adding either LS Power proposal to the FirstEnergy project would have an incremental B/C ratio of less than 1, Horger said.
The FirstEnergy project, expected to be completed in 2017, includes the installation of a second Hunterstown 230/115 kV transformer and reconductoring of the Hunterstown-Oxford 115 kV line
The project has a total revenue requirement of $11.7 million and is expected to produce savings with a net present value of $71.6 million over 15 years, a payback of 6.1 to 1. The calculations are based on a carrying charge rate of 16.7% and a 7.7% discount rate.
The three projects were among 17 congestion relief transmission proposals submitted by developers in September. PJM rejected the other 14, saying they failed to provide sufficient benefits or targeted problems that were already addressed by other upgrades. (See PJM to OK Only 1 of 17 Congestion Relief Proposals.)
$238M in Additional Reliability Projects
The FirstEnergy project will be recommended to the Board of Managers in February along with seven reliability projects totaling more than $238 million, including four in Penelec (total $82 million) and one each in PPL ($350,000), AE ($300,000). The biggest project of the seven is a $155 million upgrade in Dominion to correct overloads on the Franconia 230kV to Van Dorn 230kV line and four other lines.
2014 RTEP Timeline
Transmission owners are conducting a second-round review of inputs to the 2019 Regional Transmission Expansion Plan model. The Model incorporates updated information provided by TOs following their initial review.
PJM staff is updating contingency, interchange and generation dispatch data, with plans to finalize the case by the end of January and begin testing the model in February.
$141M in Upgrades for Generator Retirements
Upgrade Costs for Plant Retirements (Source: PJM Interconnection, LLC)
Planners said they have identified more than $141 million in upgrades needed to correct reliability problems resulting from the retirements of 14 plants announced late in 2013. (See chart)
PPL’s retirements of Sunbury units 1-4 will require upgrades totaling $52 million. Large upgrades were also identified as a result of the closing of the Mad River combustion turbines ($45.7 million) and Dickerson units 1-3 and Chalk Point units 1 and 2 ($43 million).
The reliability analysis on BGE’s Riverside unit 4 identified no issues.
Sub-zero temperatures from Toledo to Tennessee pushed PJM to its limits last week as the RTO overcame the loss of nearly 40,000 MW of generation during an arctic blast that set a new winter demand record.
(Source: PJM Interconnection, LLC)
Demand response, voluntary conservation and imports helped PJM avoid shedding load as demand hit 141,500 MW Tuesday evening, besting the previous winter peak — set Feb. 5, 2007 — by nearly 5,000 MW.
The RTO survived Tuesday’s peak despite about 38,000 MW in generation outages, almost 20% of its installed capacity. “We really exhausted every megawatt we had on the system,” Adam Keech, director of wholesale market operations, told the Market Implementation Committee in a briefing Wednesday.
Some plants failed to start, suffered tube leaks or were unable to convert to backup fuel. “We’ve seen everything,” Executive Vice President for Operations Mike Kormos said during a press conference Tuesday morning.
What sent temperatures plunging and power and natural gas prices skyward was an unusual visit by the polar vortex, a low pressure system that normally circles around the North Pole.
Temperatures of -10 or below were recorded Tuesday in Ohio, Michigan and Pennsylvania. The negative numbers reached as far south as Kingsport, TN, which reported -1 and Blacksburg, VA, which registered -5.
PJM power prices were above $200/MWh for most of the period from Monday evening through Tuesday evening, peaking at more than $1,800/MWh during Tuesday’s morning and evening peaks.
Natural gas for Tuesday delivery hit a record $95/mmBtu at Transco’s Zone 6 non-New York hub in PJM, Natural Gas Intelligence reported. U.S. gas demand hit a record 130 billion cubic feet per day Monday, topped by a new record of 134 Bcf/d Tuesday, according to Bentek Energy.
Generators told PJM, “`I can get gas but it’s very expensive. Do you still want it?’” Executive Director of System Operations Mike Bryson told Platts Energy Week later. “And we were in a position where we needed every megawatt we could get on the system.”
One bright spot: The gusts that accompanied the cold boosted PJM wind production to more than 3,000 MW, according to the American Wind Energy Association.
Below is a chronology of PJM’s response to the arctic blast, based on PJM records and briefings from PJM officials and industry news reports.
Monday, Jan. 6
PJM braced for the arrival of the vortex Monday as subzero temperatures began moving east from the western portion of the RTO. Shortly before noon, PJM issued a Maximum Emergency Generation Alert for Tuesday for the entire PJM RTO — a signal that the RTO may need every available megawatt of generating capacity. They also issued a press release calling on consumers to conserve power the following day.
PJM and state regulators urged consumers to reduce energy use during the emergency. “Every little bit helps,” Kormos said. “There’s 60 million people in our footprint. If everyone does their part, that could easily add up to one nuclear plant, which is 1,000 MWs.”
“We’re very close [to generation limits],” Kormos added. “The last couple hundred megawatts could allow us to not have to take any forced interruptions.”
PJM received a waiver from the Federal Energy Regulatory Commission under Order 787, allowing RTO officials to share information with natural gas pipelines serving the region. PJM held conference calls with pipelines Friday and Monday and individually validated gas nominations for the RTO’s gas generators. Keech said there were no natural gas curtailments.
“The pipelines came through pretty well,” Gary Helm, lead market strategist, told the Market Implementation Committee in a briefing. “We only saw two compressor outages.”
At about 5 p.m., the RTO lost about 1,500 MW of generation, including the FirstEnergy’s 911 MW Beaver Valley nuclear unit 1, which tripped after a transformer malfunction. Operators requested synchronized reserves and shared reserves from NYISO. Load mounted faster and higher than expected, topping off 5,000 MW above forecast at 131,900 MW.
Keech said operators’ ability to forecast load was hamstrung by a lack of comparable temperature data. “We couldn’t find a temperature set [with extreme cold throughout the RTO] for the last decade. And if you go back that far the [RTO] footprint was so different it’s probably not even useful.” Keech said.
The synch reserve event was ended after a little more than an hour at 6:09 p.m. Shortly before 7:30 p.m., another large generator tripped.
At 7:50, with reserves growing short, operators reduced voltage across the RTO by 5% to help them through the evening peak. The action, which lasted about an hour, triggered scarcity pricing — sending prices briefly above $1,000/MWh.
Tuesday, Jan. 7
Overnight, operators became alarmed after the “valley load” — the lowest load of the day —came in 4,000 MW higher than the projected 116,000 MW. About 2 a.m., expecting a morning peak of 140,000 MW, operators issued a request for emergency energy for 6 through 11 a.m.
Shortly before 3 a.m., they issued a warning that they might again reduce voltage.
At 4:30, they issued a call for 1,900 MW of emergency demand response and issued a Maximum Emergency Generation Action, notifying market participants that off system energy sales from PJM capacity resources may be recalled. Demand response provider EnerNOC Inc. said it was the largest winter dispatch in PJM history.
About 1,100 MW of emergency energy began flowing from MISO and NYISO at 6 a.m., but at 6:30 operators called on 100% synchronized reserves to respond to a low Area Control Error. A second spin event was initiated shortly after 8 a.m., when an unnamed unit tripped.
The morning peaked at 138,600, a new — if short-lived — winter record. Prices were in the $1,800/MWh range from 7 to 11 a.m.
At 3 p.m., operators again called on DR for an evening peak projected at 142,000 MW. However, an unexpected influx of imports — as much as 10,000 MW — allowed them to cancel the DR call shortly after 6 p.m.
The evening peaked at 141,500 — below projections but a new winter record nonetheless.
Bryson credited voluntary conservation. “There were times when we thought we were going to be short on reserves and the load just didn’t come in,” he said. “And it’s probably representative of a very good consumer response.”
Wednesday, Jan. 8
Expecting a morning peak of 136,600 MW, PJM again issued a Maximum Emergency Generation Action, called on DR and issued a request for emergency energy.
Generator outages would peak Wednesday morning at 39,520 MW. But with temperatures rebounding, the morning peak would hit only 134,500. With load coming in lower than expected, the RTO cancelled the DR call at 6:30 and the Maximum Generation Action at 9 a.m.
Adam Keech, director of wholesale market operations, told the Market Implementation Committee last week that reactive credits in the real time market were inflated by $25 to $30 million between August and December as a result of a software error.
In December 2012, PJM changed the way it allocated local reactive power costs: Costs that were previously allocated to all Day Ahead load, DECs and exports were allocated to the individual transmission zone.
A subsequent change to the logging process, effective Aug. 1, also inadvertently changed the settlement process. As a result, resources committed in the DA market for reactive support were credited with make whole payments in real time.
“Anytime a unit wasn’t following dispatch we assumed it was redispatched for reactive” service, Keech explained.
Officials discovered the error after noticing RT reactive credits, which had been negligible compared with DA credits, grow to more than $5 million per month. The error was corrected for settlements beginning Dec. 20.
With two new types of demand response about to be introduced, members last week took steps to clarify rules on substitutions and maintenance outages for the products.
Extended Summer DR (7 days a week between May-Oct.) and Annual DR (12 months) will be available for the first time in the 2014/15 delivery year, joining the existing Limited DR (available for 10 dispatches annually on weekdays during June-Sept.).
Manual Change OKd for DR Substitution
Members last week approved changes to Manual 18: PJM Capacity Market governing how demand response providers may substitute for underperforming resources when called to dispatch.
Under the changes endorsed by the Market Implementation Committee Wednesday, the substitute and under-performing registration must:
Be located in the same dispatch area;
Have comparable capacity commitments (defined as the within ±25% or ±0.5 MW); and
Have the same designated lead time (e.g., long lead or short lead)
Under the rules, providers may use Limited DR to replace Annual DR but the substitution will not count against Limited’s 10 dispatch-per-year cap, said PJM’s Pete Langbein. Annual DR has no limits on the number of dispatches.
Maintenance Outages
The MIC also agreed to develop rules for approving maintenance outages for Annual DR.
The Tariff allows Annual DR to take maintenance outages between October and April, but members asked for rules to specify the application and approval procedures.
Under an Issue Charge approved by the MIC, the Demand Response Subcommittee will seek to develop manual changes that clarify what is eligible for a maintenance outage and how Curtailment Service Providers can apply for one. Members hope to complete the proposed changes for MIC endorsement by March.
PJM is adding more items to the to-do list resulting from the September heat wave, during which officials ordered limited load sheds to prevent a wider system collapse.
A 104-page analysis of the operational events and market impacts resulted in 22 recommendations, including 11 not previously announced (see sidebar). RTO officials briefed members on the report last week — ironically amidst the arctic blast that set a new winter demand record.
The analysis reads a bit like a thriller, documenting PJM dispatchers’ minute-by-minute decision-making — and identifying mistakes and missed opportunities for reducing or eliminating some of the five load sheds Sept. 9 and 10.
The city of Sturgis, Mich., emerges as a hero in the drama, as the city’s behind-the-meter generator and conservation measures by residents combined to provide 8 MW of relief, preventing a third day of load shedding on Sept. 11.
The report attributed the load sheds in part to inaccurate transmission, weather and load forecast models and also cited errors in synchronized reserve estimates. Load sheds did not significantly affect prices, the report concludes. But the dispatch of demand response caused both price increases and decreases and shortfalls in Financial Transmission Rights funding.
The report also illustrates the limits of demand response in relieving transmission constraints and identified operator errors and communication lapses.
Among the previously undisclosed details in the report:
Closing the South Akron-Clay 138 kV line might have prevented the Sept. 10 load shed in FirstEnergy’s Tod area near Warren, Ohio.
PJM might have avoided the load shed in the AEP Summit area Sept. 10 by dispatching 395 MW of combustion turbines that were off line. It did not do so because of a modeling error and because it was not monitoring a 138 kV line not under RTO control.
The Sept. 9 and 10 load sheds in AEP’s Pigeon River area in southern Michigan might have been avoided had a scheduled rebuilding of a 69-kV line been complete. PJM is working with AEP to “fast-track” the project, which is currently scheduled for completion in June 2017 under the Regional Transmission Expansion Plan.
PJM should have ordered the Sept. 10 load shed in Erie South area of Penelec 40 minutes earlier than it did, immediately after an analysis indicated it was the only solution to prevent a potential cascading outage. The load shed was preceded by the unplanned outage of two hydropower units (Seneca #1 and #2) that were scheduled to run at full output, a combined 421 MW.
The Environmental Protection Agency’s Mercury and Air Toxics Standards (MATS) indirectly contributed to one load shed. The planned outage of the South Canton 765 kV/345 kV transformer — required to support an upgrade needed prior to the retirement of five New Castle generators —contributed to less than 1 MW of the 16 MW FirstEnergy (ATSI) Tod area load shed.
Access to recently retired generation would not have eliminated the load sheds, although the five Bay Shore and East Lake generators retired in September 2012 could have reduced the Tod load shed by 75% and the AEP Summit outage by almost half.
Modeling
Many of the report’s findings and recommendations deal with PJM’s transmission modeling:
PJM’s contingency analysis of the Pigeon River area failed to include both a planned outage on the 69-kV Moore Park Tap-Industrial Park line and a relay limitation on the Lagrange-Howe (NIPSCO) section of the line. Because of the relay limitation, the most severe real-time contingency would automatically relay the Lagrange-Howe 69-kV line out of service. The Moore Park Tap-Industrial Park line was not modeled by PJM because it is below the 100-kV level; current PJM rules do not require reporting of outages below 100-kV.
Ratings on the Summit-Industrial 138 kV line, which figured in the 25 MW load shed in the AEP Summit area, were incorrectly listed as 251 MVA for normal (24 hours), emergency (four hours), and maximum (15 minute) conditions. “The reason for having different ratings is to give the dispatcher time to trend and validate the flows as well as take action to reduce the flows on the line,” the report said. “The impact of all the ratings being the same is there is no time for the dispatcher to perform anything but the most extreme action that must be taken once the load dump rating is reached. In this case, it was to issue the PCLLRW [Post Contingency Local Load Relief] and ultimately shed load.”
PJM incorrectly modeled a 138 kV series device, resulting in a 20 MVA difference between PJM and AEP’s state estimator solutions. PJM correctly compensated for the difference in real-time by conducting a cascading outage analysis at AEP’s lower threshold.
Because of the modeling error and because the Industrial-Summit 138 kV line is classified as a monitored priority 2 (MP 2) facility — which is above the 100 kV NERC Bulk Electric System (BES) level but not turned over to PJM for control — PJM did not dispatch 395 MW of combustion turbines that were off line, “which may have eliminated the need for the load shed.”
Synchronized Reserve
The heat wave also exposed problems with PJM’s estimates of synchronized reserves.
PJM issued a call for synchronized reserves Sept. 10, believing it had 1,665 MW available. It never got more than 400 MW of relief, with only 200 MW showing up in the first 10 minutes. As a result, the spinning event — which normally last only 10 minutes — ran for more than an hour.
The report concluded that some generation operators do not respond to PJM requests to confirm their synchronized reserves — called an Instantaneous Reserve Check (IRC) — or “provide stale or unreliable data.”
It also cited errors by operators who manually reduced output from some generating units to relieve transmission constraints Sept. 10. Because they failed to log the units as “Manual Dispatch,” PJM’s Security Constrained Economic Dispatch (SCED) software returned the units to a higher output and calculated available Tier 1 reserves from some units on the sending end of transmission constraints, although those units could not increase their output.
Heat Wave Forecasting Errors
RTO Temperatures During Sept. 13 Heat Wave (Source: PJM Interconnection LLC Technical Analysis of Operational Events and Market Impacts during the Sept. 13 Heat Wave)
Forecasting temperatures also proved problematic. Temperature forecasts for 10 PJM zones missed actual conditions by an average of 2 to 3 degrees over the three days, with errors as high as 10 degrees.
These contributed to load forecasts that fell up to 3.6% short. “Backcasting” — rerunning the load forecast using actual temperatures to separate the effect of the weather forecast errors — still produced average errors of 2% to 4.5%.
PJM said this is because its “Neural Net” forecasting tool relies on the previous day’s temperature and load trends. “When temperatures change significantly from one day to the next, it takes time for the Neural Net to catch up. Therefore the model inherently does not handle this first day of change well.”
Communications
The report also raises questions about how PJM operators communicated their actions to others on the grid and within PJM headquarters.
It noted that operations management chose not to call a System Operations Subcommittee Transmission (SOS-T) conference call on Sept. 10, because although “temperatures were higher than normal there were no forecasted events that would adversely impact the bulk electric system.” The calls are scheduled on an as-needed basis during emergency events to share information.
After the five load sheds, on Sept. 9 and 10, a conference call was held on Sept. 11. “While most SOS-Transmission members agreed that the communications of the conference call were adequate, some conference call participants stated that they would have liked more detailed information provided for the operations issues being discussed.”
Generic Logging
Dispatch staff logged the load sheds as generic transmission events because they were unaware of a category in the Emergency Procedures application for a “Local Load Relief Action.” Officials said dispatchers were unaware of the category because it had rarely if ever been used before and because its name did not exactly match the “Post Contingency Local Load Relief Action” instructions in PJM Manual 13: Emergency Operations. “As a result, those parties who depended on the Emergency Procedures application for notification were not notified of the load shed events.”
Many PJM officials, including the State Government Policy, Member Relations, Federal Government Affairs, and Corporate Communications departments were not informed about the load sheds, delaying their ability to communicate with stakeholders. “Dispatch has no formal notification checklist to follow except for certain emergency procedures steps requiring specific notifications pursuant to DOE, FERC, NERC, or PJM Manual requirements.”
Demand Response
The September heat wave illustrated that demand response — which proved a valuable tool during capacity shortages during the July heat wave — is less useful in relieving transmission constraints.
PJM dispatched DR on Sept. 10 and 11 after load forecasts fell 4,000 to 5,000 MW short of actual load. Of 740 MW called in ATSI and the South Canton subzone, 695 MW responded (94%).
Curtailment service providers provide street addresses for their resources but this information is not mapped electrically to the nearest substation. “When using these resources for transmission constraints, it is important for the dispatchers to know precisely where the curtailment will occur so that they can better understand the impact on the observed constraint,” the report said. “Too many DR resources on the wrong side of a constraint can make a constraint worse.”
The report identified 11 MW of demand response in the Summit area, which it said could have reduced, but not eliminated, that Sept. 10 load shed. The exact impact of the DR is unknown because of the lack of electrical mapping.
In addition, the long lead time of most of the DR resources does not lend itself well to addressing transmission constraints, which often need controlling actions within 30 minutes.
Starting in delivery year 2014/15, DR is required to respond on a subzonal basis if PJM establishes subzone the day before issuing a dispatch order. Only seven subzones are currently defined.
In December, members approved changes that will allow PJM operators more flexibility in dispatching demand response, including a reduction in the lead time to 30 minutes. (See Members OK DR Dispatch Rules after Late Amendments.)
Price Impact
The load sheds “did not have significant impacts on market outcomes,” the report concluded. Demand response, however, set prices in the ATSI zone at about $1,800 for hours ending 15 through 20 on Sept. 11 while causing prices to crash from more than $200 to less than $70 in some other regions in HE 16.
PJM said such a price drop usually results from a sudden influx of imports coming into PJM as price-takers. In this instance, it resulted from operators calling for more DR than was ultimately needed.
The DR deployment was called based on an expected peak load of 153,000 MW — nearly 6,600 MW above the actual peak. “Since PJM does not account for these MW as additional reserves, LMP is set by the marginal resource and demand response did not … set price when dispatched because this volume of demand response was not ultimately required,” the report explained.
After dropping below $70 in HE 16, prices rebounded to more than $200/MWh in HE 17.
FTR Funding Shortfalls
The dispatch of DR contributed to large differences between day-ahead and real-time prices in the ATSI zone, increasing FTR funding shortfalls for the month.
September 10 and 11 showed $29.3 million in FTR underfunding, more than half of the $56.3 million shortfall for the month. “Under the current market rules, FTR holders can be adversely impacted significantly by such emergency procedures taken to maintain system reliability when they have no impact to the Real-Time Market or system operations. PJM believes that this is a flaw in the market design that needs to be addressed.”
