Pepco Holdings Inc. Chairman and CEO Joseph Rigby announced yesterday he will step down as chief executive this year after a turbulent tenure marked by criticism over the company’s reliability.
Frank Heintz, lead independent director of the Pepco board, said the company has hired executive search firm Russell Reynolds Associates and expects to name a new CEO by the end of the third quarter of 2014. Rigby, 57, will remain chairman of the board until the company’s 2015 shareholders meeting.
“The board has been focused on senior executive succession for several years,” Heintz said in a statement.
Pepco delivers electricity and natural gas to about 2 million customers in Delaware, the District of Columbia, Maryland and New Jersey.
The company came under blistering criticism after widespread outages in the Washington region in 2010 and a Washington Post analysis found that the company’s customers suffered longer and more frequent outages than their counterparts in other major cities. One 2009 survey found the company’s customers experienced 70% more outages than customers of large urban utilities and the lights stayed out more than twice as long.
It was called the “most hated company in America” in 2011, based on the American Consumer Satisfaction Index.
Customer outrage led the Maryland legislature to order the Public Service Commission to hold electric providers accountable for service quality.
Rigby became chairman and CEO in 2009. He told the Post in an interview yesterday, “A lot of that criticism was, frankly, deserved.”
“This company needed to recognize that we had a hell of a lot of work to do to improve the day-to-day reliability,” he said.
Pepco doubled its budget for construction and infrastructure improvement between 2009 and 2012 and plans to spend $5.8 billion on infrastructure through 2018.
Rigby began his career at Atlantic City Electric, which Pepco acquired along with Delmarva Power, in 2002. He told the Post that although the company has boosted its reputation with customers and regulators, the perception of improvements is “somewhat tenuous.”
“That’s just a realistic view of the situation we’ve been in,” he said.
FirstEnergy Corp. formed through merger of Ohio Edison Co. and Centerior Energy Corp.
Holding company for Ohio Edison (and subsidiary Pennsylvania Power Co.), The Cleveland Electric Illuminating Co., The Toledo Edison Co.
11th largest investor-owned electric system in the U.S.: annual electric sales of 64 billion kilowatt-hours; total assets nearly $20 billion; 10,000 employees; 2.2 million customers; 13,200 square miles of northern and central Ohio and western Pennsylvania; 12,000 MW generating capacity.
2001:
FirstEnergy merges with GPU Inc.
Nearly doubled revenue (more than $12 billion) and customers served (4.3 million).
GPU acquisition adds 2.1 million customers in a 24,000 square-mile service area in Pennsylvania and New Jersey (Metropolitan Edison Co.; Pennsylvania Electric Co., Jersey Central Power & Light Co.)
2011:
FirstEnergy merges with Allegheny Energy (1.6 million customers in Pennsylvania, West Virginia, Maryland and Virginia).
More than doubled supercritical coal capacity “and provided opportunities for the company to grow and expand into new markets with a stronger, more focused competitive operation.”
Public Service Enterprise Group and the National Football League have installed and tested systems to make sure they avoid power-system failures at the Feb. 2 Super Bowl at MetLife Stadium in East Rutherford, N.J. A blackout at the New Orleans Superdome interrupted last year’s Super Bowl for 34 minutes, an embarrassment for the city and Entergy, the host utility.
That failure, and power losses at other sporting events, put enormous pressure on PSEG and the NFL, particularly because this is the first Super Bowl in a cold-weather-state open stadium. At MetLife, “There are redundancies to our redundancies,” an NFL spokesman said. PSEG says the event will use up to 20 MW.
Constellation said it has more than 164 MW of solar generation in operation or under construction in 10 states and the District of Columbia, making it the third-largest commercial solar developer in the U.S. The company added 38 MW in 2013 at sites in Maryland, Washington, D.C., Arizona, California and New York.
Stephanie Raymond is PPL Electric Utilities’ new vice president for transmission and substations, a new officer-level position that the company said “reflects the importance to our customers — and to the reliability of our electric system — of our transmission and substation network.” Raymond joined PPL in 2011 and has led the transmission and substation organization since 2012.
UGI Corp. named Daniel Platt treasurer. Platt previously was treasurer of Sunoco Inc. and Sunoco Logistics Partners LLC and held treasury positions at Technitrol, Inc. (now Pulse Electronics), EB Games (now Game Stop), Aetna U.S. Healthcare and Delaware Valley Financial Services.
A bill requiring members of the Public Service Commission to file financial disclosure statements for public view went to the governor’s office for signature after the House of Representatives approved it last week. The Senate approved it in May.
Big Rivers’ D.B. Wilson Station (Source: Big Rivers)
Big Rivers Electric says its closing of two coal-fired plants as a result of the loss of 850 MW of load from two Century Aluminum smelters will be temporary. The cooperative will close the 417 MW Wilson plant in February and the 443 MW Coleman plant by late June.
A spokesman said the cooperative has proposed deals with other customers to replace the smelters’ load but can’t say when the plants might reopen. Although Century said it ended its contract with Big Rivers to find better rates, Big Rivers notes that its average industrial rate is 4.6 cents/kWh, compared with a national average of 6.8 cents.
Lawmakers Say Potential NOx Law Will Hurt AES Plant
State lawmakers from the district where AES’ Warrior Run coal-fired plant is located are trying to head off what they say is draft legislation that would require the 205-MW plant to install nitrogen oxide controls. “The folks at AES said it would be hard on them. It would make it hard for them to stay in business,” one of the legislators said. Their efforts are directed at legislation they say has been drafted by the state Department of the Environment that would “force all carbon-based power plants across Maryland to further reduce nitric oxide and nitrogen dioxide.” According to the group of four lawmakers, the law would make AES cut its already-low emissions by 83%. They want it to be killed or to exempt Warrior Run.
NRG Energy said it told PJM that it wants to retire 1,200 MW of coal-fired generation, five units at two plants in Prince George’s and Montgomery counties, in 2017. The company attributed its decision to low gas prices and the possibility of stronger environmental controls at the units. Gas- and oil-fired units at the plants would continue to run.
The Sierra Club asked the Board of Public Utilities to adopt an energy efficiency portfolio standard that would require annual reductions of 1.5% in electricity use and 1% in natural gas use. “The status quo is untenable,” the club’s petition to the BPU says. According to the American Council for an Energy-Efficient Economy, New Jersey used to be an efficiency leader but its energy savings averaged under 0.5% between 2001 and 2011, far less than some other states in the region. The Sierra Club says utility energy efficiency programs have fallen to $35 million in fiscal year 2014 from $124 million in 2010.
Duke Energy plans to ask the Utilities Commission to reduce the amount it has to pay homeowners for the solar power they produce. Duke’s more than 1,300 solar installations, totaling 11.5 MW, now get Duke’s full retail price of 11 cents/kWh. Duke’s 11-cent price covers generating stations and fuel, CEO Lynn Good said. But “effectively what the solar panel is replacing is the fuel. It’s not replacing the grid.”
Rep. Walter Jones (R) has asked to meet with a Defense Department official about the proposed Mill Pond wind power project, which would consist of about 40 turbines near Newport. Jones identified concerns about radar interference and obstruction of military flight paths associated with Marine Corps stations Cherry Point and New River.
Another wind farm could be added to Catawba County, where eight such facilities have already sprouted and more are on the horizon. Development in the county mirrors activity in other parts of the state, where the Utilities Commission is entertaining numerous applications.
FirstEnergy repaired a reactor coolant leak at its Perry nuclear plant that deposited tritium in groundwater near the plant. The leak, discovered by cameras that monitor a steam tunnel, was reported to the Nuclear Regulatory Commission.
Anti-Renewables Bill Gets Hearing as Debate Resumes
Wind power opponents spoke out at the year’s first legislative hearing on SB 34, a measure that would eliminate the state’s requirement that electricity companies source 25% of their supply from alternative energy by 2025.
Tesla drivers now will be able to charge their cars in Ohio for free and shop or have dinner as they do it. Tesla has installed two of its supercharger facilities in towns near the Ohio Turnpike: one in Maumee, near Toledo, and one in Macedonia, near Cleveland. The new stations enable Tesla owners to drive across the country, charging quickly for free on the way, the company says. Macedonia’s mayor is excited, seeing a boost to local businesses from drivers as their cars charge up.
Gov. Tom Corbett’s new “Energy=Jobs” plan, which the governor said takes an all-of-the-above approach to energy development, met mixed reviews. The plan touts free markets for customers to choose their energy sources, promotion of the state’s diverse energy portfolio, pushing industry to use state-produced energy, protecting the environment, and more.
John Quigley, a former Department of Conservation and Natural Resources secretary, criticized Corbett’s plan for trying “to appease everybody.” He wants a policy that builds renewables with gas-fired power plants, fueled by in-state gas, backing them up.
The Pennsylvania Coal Alliance’s John Pippy liked Corbett’s plan, which he said “acknowledges the direct link between Pennsylvania energy and economic opportunity.”
Cable and internet giant Comcast may soon have a “quadruple play” offering for customers in the state, says Public Utility Commission Chairman Robert Powelson, which would give Pennsylvania a boost in the quest to ramp up competition. The state already is ahead of most others in the rate of customer shopping, but Powelson said it wants to challenge Texas, the leader by far. According to Powelson, Comcast will be teaming with a retail energy provider to add electricity to its cable, internet and telephone service offerings. The company also offers some home energy-control services.
Philadelphia’s Northeast sewage treatment plant is burning methane to produce heat and power instead of burning it off as in the past, following completion of a $47.5 million project. Ameresco partnered with the city to build the cogeneration facilities. Bank of America owns it, leasing it to the city for 16 years with an early buyout option. The project qualifies for an investment tax credit of about $14 million and a $3.9 million state energy efficiency rebate.
The PennFuture Energy Center launched the Clean Energy Wins campaign, with a website to educate citizens and political candidates about choices the state can make. The organization is taking a survey of clean energy businesses and stakeholders and collecting data to develop a clean energy “roadmap” report that it plans to release in March.
NextEra Energy Resources says it might take months to determine why a turbine at the Mill Run Wind Energy Center collapsed Jan. 16. The turbine was one of 10 that started operating in 2001.
PPL Electric Utilities’ plan to upgrade a 69-kV line in the Pocono plateau won Public Utility Commission approval. The $33 million project involves a 24-mile line that will become 138 kV. The plan drew no local opposition.
PJM is making its eSuite tools more functional and more compatible with current web browsers.
PJM’s Gautam Punjabi told the Members Committee webinar yesterday that legacy applications such as eCredit, eMKT, eData and eDART will support Internet Explorer 9, while refreshed applications such as Gas Pipeline, InSchedule, Bulletin Board, and Data Miner will work with IE 9 and the latest offerings from Firefox, Chrome and Safari. These tools will no longer support Internet Explorer 7.
In addition, PowerMeter and ExSchedule will be renamed eMTR and EES, respectively, and updated to improve security and create consistency with other refreshed apps on the PJM website. The changes above are expected to be completed by March 31.
Account Manager and eMKT will be refreshed later this year, with eData and OASIS updates planned for 2015.
The Federal Energy Regulatory Commission granted PJM’s request to lift the $1,000 offer cap as the RTO entered a second consecutive week of frigid temperatures that have strained generators and pushed natural gas prices to new records.
FERC’s order came as PJM issued alerts yesterday warning that resources would be increasingly strained Tuesday and Wednesday. PJM and state regulators also appealed to the public to reduce power use, particularly during today’s evening peak.
Load is projected to approach 140,000 MW tonight, just short of the 141,500 MW winter peak record set Jan. 7.
PJM requested a waiver to lift the cap last week after natural gas prices jumped to triple digits as heating and electrical demand for the fuel surged.
FERC’s order (ER14-1144) effectively lifts the cap on offers beginning Jan. 24 by allowing generators to seek make-whole payments for the difference between their costs and the clearing price.
The commission has not yet ruled on PJM’s separate request to allow generators to offer above the cap for future trading days through March 31, 2014 (ER14-1145). PJM asked FERC to rule by Feb. 10.
Spot prices at Transco Z-5 and Transco Z-6 (non-NY) averaged over $120/mmBtu on Jan. 21 and 22, with prices as high as $140/mmBtu. “These gas prices are record-setting for the PJM Region (if not for the nation), shattering even the records set just earlier this month during the `polar vortex’ extreme cold weather event,” PJM said.
PJM said simple-cycle combustion turbines buying gas at current prices would have marginal costs of about $1,200/MWh. On January 21, PJM said, about 5,000 MWs of generation made day-ahead offers of $999/MWh, indicating their costs were above $1,000. About 4,000 MWs were ordered to operate.
In granting PJM’s waiver request, the commission noted that the Market Monitor reviews all cost-based offers to ensure they are legitimate. The commission ordered the Monitor to submit a report within 30 days of the expiration of the waiver on how much energy was accepted over the bid cap, the cost of that energy and any unverifiable bids that were rejected.
The RTO said it will ask stakeholders to consider changes to the Operating Agreement as a long-term fix for what it called the “unprecedented conflict” between the $1,000 offer cap and the generation must-offer requirement.
“The remarkable conditions present in the `polar vortex’ event less than two weeks ago gave the first clear indication that actual fuel costs could collide with the offer cap, but before PJM could take action to address that concern, this week saw an even greater leap in fuel prices that made this conflict concrete,” PJM said in its filing.
PJM did not ask FERC for relief for generators whose costs may have exceeded the cap before Jan. 24 but said it may make a supplemental filing to seek make-whole payments later.
In a letter to FERC in support of PJM’s request, Calpine Corp. CEO Thad Hill stated, in all capitals: “The stability of the power markets in the PJM region are dependent on the commission’s granting of PJM’s waiver today.”
The waivers will not affect demand response, which is limited to $1,800 ($1,000 plus two times the penalty factor). PJM called on DR several times last week to meet loads as arctic cold followed snow.
PJM’s Chris Pilong told members in a briefing yesterday that unplanned outages from last week’s arctic blast occurred most frequently in the eastern portion of PJM, unlike earlier this month, when outages were more evenly spread across the RTO.
Commuters brave winds outside Union Station, Washington, D.C., yesterday.
The cold is expected to continue throughout the PJM footprint most of this week.
PJM yesterday issued three alerts for Tuesday: a Voltage Reduction Alert, reporting that estimated operating reserves are less than the synchronized reserve requirement; a Primary Reserve Alert, warning that estimated primary reserves are only 1,000 MWs, half the 2,000 MW objective; and a Maximum Emergency Generation Alert, calling Maximum Emergency Generation into operating capacity.
PJM also issued a Cold Weather Alert for Wednesday.
Cleveland and Columbus, Ohio are expecting lows at or below zero through Wednesday. Below zero lows are also forecast for Chicago.
Lows in Washington, D.C. will be in the teens most of the week.
Plunging temperatures sent natural gas spot prices soaring again this week, prompting PJM to seek approval from federal regulators to lift the $1,000/MWh price cap on generation.
Natural gas prices for generators in PJM peaked at $140/mmBtu Tuesday, pushing operating costs for generators above the price cap.
As a result, PJM officials told members they will ask the Federal Energy Regulatory Commission to allow the RTO to waive the price cap for the remainder of the winter.
Demand Response Dispatched
Transco Zone 6 Non-NY Prices as of 1/23/14 (Source: Natural Gas Intelligence)
PJM called on about 150 MW of emergency demand response Wednesday night, and about 500 MW Thursday morning and afternoon. DR was called again this morning. About three-dozen Post Contingency Local Load Relief Warnings — advance notice to a transmission owner of the potential for manual load dump in their area – have been issued since Tuesday.
Adam Keech, PJM director of wholesale market operations, said the RTO called on DR because of concerns about generation lost to breakdowns, fuel shortages and environmental restrictions.
PJM had “thousands of megawatts” of generation trip Tuesday night, particularly in the Baltimore area, Keech told stakeholders at a meeting of the Energy Market Up-lift Senior Task Force Thursday.
With reserves tight, “if you have any [generator] problems you’re going to get into trouble in a hurry,” he said.
All generation capacity resources that do not qualify to take a forced outage under PJM’s rules are required to submit an offer into the day-ahead market subject to the system offer cap of $1,000/MWh. Non-capacity resources may submit emergency offers in excess of the system offer price cap.
Waiver Filing
PJM’s FERC filing will seek a retroactive waiver of the system offer cap to make whole generation resources that can document costs exceeding $1,000. Keech said the waiver would apply to generation dispatched this week but would not affect dispatches from the polar vortex in early January. The waiver would seek permission to reimburse affected resources through uplift payments (Balancing Operating Reserve).
“PJM has consulted with counsel and believes the anticipated retroactive waiver request will likely be accepted by the FERC,” PJM said in a notice to members.
In addition, PJM will seek to lift the cap going forward for cost-based offers from generation resources through March 1, 2014. Such resources would be eligible to set Locational Marginal Prices, Keech said. “That’s the intent in having them submit [prices above $1,000] as an offer rather than making them whole” afterward, Keech said.
The waiver will not affect DR, which is limited to $1,800 ($1,000 plus two times the penalty factor).
Gas Prices
Natural Gas Supply-Demand Balance (Source: EIA)
Spot gas prices in the Northeast and Mid-Atlantic this week exceeded the heights of early January, Natural Gas Intelligence reported. The high on Transco Zone 6 non-N.Y. hit $140/mmBtu Tuesday. Prices for delivery today were $87.13, a drop of $34.09.
Below is a chronology of operator actions in response to this week’s cold.
Wednesday
Load had a “pretty steep pickup” Wednesday morning, Keech said, but the snow that blanketed the area Tuesday provided some relief as closed schools and offices dampened demand.
PJM dispatched demand response and issued a Maximum Emergency Generation Action — dispatching generation above the maximum economic level and warning that off system energy sales may be recalled — at 14:00 Wednesday for the BGE transmission zone, adding the BA/PEP area of PEPCO for transmission contingency control at 17:20.
At 19:30, a Maximum Emergency Generation Alert was called for the AP and Dominion control zones.
Shortly after 20:00, the RTO issued a Voltage Reduction Alert for the PEPCO and BGE transmission zones for Thursday due to fears that operating reserves might fall below the Synchronized Reserve requirement.
Prices hit $1,800 in the areas where DR was dispatched, Keech said.
Thursday
About 04:30, operators called demand response and issued a Maximum Emergency Generation Action in the Mid-Atlantic, Dominion and AP control zones. Twenty minutes later, PJM issued a request for emergency energy from 05:30 through 07:30.
Load, expected to hit 135,500 MW, came in about 2,000 MW below that, and the DR was not needed, Keech said.
PJM also issued a public appeal for energy conservation Thursday evening and Friday morning.
Operators issued another Maximum Emergency Generation Action at 14:00 for transmission contingency control in Mid-Atlantic, Dominion and FE-South/APS.
DR was dispatched in the AP and Dominion control zones, BGE and PEPCO transmission zones.
Load peaked at 134,988 MW at 8 p.m.
Friday
A Maximum Emergency Generation Action was issued and a call for short and long lead-time DR was issued at 04:30 in the AP and Dominion control zones. Load peaked this morning at 138,522 — above the forecast of 138,289 MW — with available economic capacity of 157,477 MW.
After a brief warm-up this weekend, more arctic cold is expected throughout the PJM footprint next week.
Cleveland and Columbus, Ohio are expecting lows at or below zero Monday through Wednesday, with a possible low of -16 in Columbus Monday. Up to 4 inches of snow is expected to fall Saturday.
Below zero lows are also forecast Monday and Tuesday for Chicago.
Philadelphia is forecast to be below freezing for virtually all of the next seven days, with only a high of 34 Monday breaking the streak. Lows below 10 degrees are forecast on several days and the area may receive another inch or two of snow Saturday.
Lows in Washington, D.C. will be in the teens most of the next week.
RTO Insider will update this story with the FERC filing and other operational developments as they become available.
The Federal Energy Regulatory Commission clarified last week that its April 2013 order approving American Electric Power’s Ohio restructuring plan does not preempt a court challenge by industrial customers.
The April order approved AEP affiliate Ohio Power’s request to transfer its generating units and related assets to AEP Generation at net book value, following a similar approval by the Public Utilities Commission of Ohio.
The Industrial Energy Users-Ohio, an association of large Ohio-based energy users, asked FERC to rehear the case, saying that AEP failed to meet FERC’s Ameren precedent and demonstrate that the net book price did not subsidize AEP Generation at the expense of Ohio Power’s customers.
In last week’s order (EC13-26-001), FERC denied the rehearing request but specified that its action was not intended to pre-empt the industrials’ challenge, which is currently pending before the Ohio Supreme Court. FERC noted that it has not required fact finding under its Ameren precedent for intra-corporate generation transfers at net book value that comply with state restructuring initiatives.
The Federal Reserve is considering restricting big banks’ ability to trade and warehouse physical commodities. But Democrats on the Senate Banking Committee suggested the Fed isn’t moving fast enough to protect the public from the risks of physical disasters and commodity market manipulation.
Chair Sherrod Brown (D-Ohio) said the central bank’s notice of proposed rulemaking is “overdue and insufficient.” Brown chaired a hearing at which a Fed official, plus officials from the Federal Energy Regulatory Commission and Commodity Futures Trading Commission, testified about their concerns and market regulation initiatives. More: Huffington Post; Banking Committee; NPR
Cooling-Water Rule Delayed
The Environmental Protection Agency missed a Jan. 14 deadline for publication of a final rule requiring aquatic-life protections at power plant cooling structures. Riverkeeper, an environmental group which had sued EPA to force the rule, has agreed a number of times to pushing back the completion date. An EPA time line shows the rule was sent for Office of Management and Budget review in July. More: Power Magazine
EPA GHG Rule Under Fire
Nebraska filed suit against the Environmental Protection Agency’s proposed rule limiting greenhouse gas emissions from new power plants. The grounds for the suit are that EPA based its requirement for coal generators on carbon capture and sequestration projects that have received government funding. The suit, filed in U.S. District Court in Lincoln, argues that the funding makes the projects ineligible for use in setting a standard. Administrator Gina McCarthy said Thursday that her agency is preparing to release detailed information that will provide more “clarity” on the topic. Meanwhile, Sen. Mitch McConnell (R-Ky.) is trying to get a vote on a resolution that would block the rule. The proposed rule is ripe for congressional action now, he said, because it would apply to projects started after publication of the proposed rule, not the final rule as is often the case. More: Politico; Nebraska Attorney General; National Journal
Obama Adviser Responds to Green Challenge
President Obama’s senior adviser John Podesta rebuked U.S. environmental leaders Friday for challenging the White House’s energy strategy, saying he was “surprised” they would question his commitment to addressing climate change.
Podesta responded to a letter from 18 leading environmental groups who said the president’s “all of the above” energy strategy was not acceptable, and greenhouse gas reduction should be the focus of all energy decisions.
The Department of Energy said it would award the FutureGen 2.0 carbon capture and storage project $1 billion, conditional on the project getting its storage site permit and private financing. The FutureGen Alliance said construction on the $1.68 billion Illinois project could start this year. More: The State Journal-Register
The Federal Energy Regulatory Commission gave preliminary approval last week to rules to protect the grid from geomagnetic disturbances and a final OK to a reliability standard for frequency response.
Geomagnetic Disturbances – EOP-010-1
The commission’s Notice of Proposed Rulemaking (RM14-1-000) endorsed Reliability Standard EOP-010-1, the North American Electric Reliability Corp.’s initial response to the commission’s July order calling for rules to close the “reliability gap” regarding geomagnetic disturbances (GMDs) caused by solar events. (See FERC Orders Rules on Geomagnetic Disturbances.)
1989 Solar Storm (Source: Metatech Corp.)
Geomagnetically induced currents can flow through transformers and transmission lines, leading to increased reactive power consumption and disruptive harmonics that can cause system collapse.
The standard requires reliability coordinators and some transmission operators to institute operational procedures to mitigate the effect of GMDs. (The rule applies to transmission with a “transformer with a high side wye-grounded winding with terminal voltage greater than 200 kV.”)
Not covered are balancing authorities and generator operators although the second stage of the standards could apply to generators, FERC said.
In stage two, NERC must determine what severity GMD will constitute a “benchmark” GMD event. Covered entities will be required to assess the potential impact of such benchmark events on their equipment and systems.
Comments on the proposed standard will be due in 60 days after publication in the Federal Register.
PJM Procedures
PJM already has GMD operational procedures, which are detailed in section 3.7 of Manual 13. The plan calls for PJM to notify generation and transmission members via the PJM All-Call system and Emergency Procedure posting application when the National Oceanic and Atmospheric Administration (NOAA) issues an alert for a potential GMD with a ranking of 5 or greater on the 9-point “K-index.”
Once a GMD has been confirmed, PJM dispatchers must operate the system under transfer limits determined from studies that modeled several scenarios, including the loss of the Hydro-Quebec Phase 2 DC line to Sandy Pond and the loss of generation at Artificial Island, the site of the Salem and Hope Creek nuclear plants.
Frequency Response – BAL-003-1
The BAL standard sets requirements for the provision and measurement of frequency response, which is not covered by current standards.
The rule establishes a minimum frequency response obligation for each balancing authority, provides a uniform calculation of frequency response, establishes frequency bias settings, and encourages coordinated automatic generation control (AGC) operation.
The commission ordered NERC to increase the violation risk factor for Requirement R1 — mandating minimum frequency response obligations — to high from medium.
“Without sufficient primary frequency control, a frequency decline may not be arrested in sufficient time to prevent instability, uncontrolled separation or cascading failures,” the commission wrote. “…The fact that one entity’s violation of Requirement R1 may be offset by the efforts of others is not a basis for ignoring or downplaying the substantial risk posed by inadequate frequency response.”
It also ordered NERC to remove references to performance of R1 by other entities: “We believe that violation severity levels for this requirement should be set so as to discourage particular responsible entities from `leaning on’ other entities to provide sufficient frequency response collectively to meet the relevant Interconnection Frequency Response Obligation.”
The commission directed NERC to submit two reports, one addressing the results and recommendations of a light-load case study of the Eastern Interconnection, and a second evaluating the use of the linear regression methodology for calculating frequency response and the availability of resources to meet the frequency response obligation.
The commission said the reports will indicate the effectiveness of the Reliability Standard in assuring sufficient frequency response is available to respond to system events and whether changes are needed.
