The Federal Energy Regulatory Commission will convene workshops beginning this fall to consider rule changes regarding uplift, price caps and other issues affecting price formation in PJM and other RTOs and ISOs.
The commission said its inquiry was prompted by comments made at recent technical conferences on capacity markets and the grid’s response to the recent severe winter.
The workshops will consider ways to address limitations in RTO market software that prevent RTOs from modeling all system parameters, such as voltage constraints and generator operating constraints. “While these limitations are to some extent inherent in the complexity of the electric system, staff believes it is worth exploring whether there may be opportunities for RTOs and ISOs to improve their energy and ancillary services price formation processes,” FERC staff said in a presentation announcing the initiative (AD14-14).
Acting Chair Cheryl LaFleur said ancillary service markets are growing in importance because of the need to balance the increasing volume of intermittent resources.
The first of three workshops will be in early September and will focus on uplift, which can mute price signals. “Sustained patterns of specific resources receiving a large proportion of uplift payments over long periods of time raise additional concerns that those resources are providing a service that should be priced in the market or opened to competition,” the commission said.
Subsequent sessions will focus on:
Offer price mitigation and offer price caps. RTO rules designed to limit generator market power assume the ability of resources to fully reflect their marginal costs in their bids, but $1,000/MWh price caps in PJM and elsewhere prevented some operators from doing so during the gas price spikes in January. “To the extent existing rules on marginal cost bidding do not provide for this, bids and resulting energy and ancillary service prices may be artificially low,” the commission said.
Scarcity and shortage pricing. RTOs may dispatch emergency demand response and order voltage reductions to avoid reserve deficiencies, actions often tied to administrative pricing rules designed to reflect scarcity. “To the extent that actions taken to avoid reserve deficiencies are not priced appropriately or not priced in a manner consistent with the prices set during a reserve deficiency, the price signals sent when the system is tight will not incent appropriate short- and long-term actions by resources and loads,” the commission said.
Unpriced operator actions. RTO operators regularly commit uneconomic resources to ensure reliability or respond to un-modeled system constraints. “To the extent RTOs/ISOs regularly commit excess resources, such actions may artificially suppress energy and ancillary service prices,” the commission said.
Commissioner Philip Moeller predicted the discussion over price caps will be “contentious and long.” In response to a question from Moeller, Jamie L. Simler, director of the Office of Energy Policy and Innovation (OEPI), acknowledged it was “fairly unlikely” that the commission would be able to craft new rules before next winter.
OEPI staffer Mary Cain said one of the goals of the workshops will be to identify best practices among RTOs.
Gov. Jack Markell nominated Wilmington’s economic development director to the Public Service Commission last week. Harold Gray would take the seat of former commission member Arnetta McRae, who left the PSC in 2011. Her seat has remained vacant since then, and plans to reduce the five-member body to a three-member commission were shelved. Gray is a former member of the state Environmental Appeals Board and was an officer with United Way of Delaware. He was president and CEO of TehniData America, an IT consulting company.
Pepco and the District Department of Transportation last week asked permission to move more electric lines underground in a project that would take up to a decade and cost $1 billion. The plan would result in an increase to the average residential electric bill of $1.50 a month in the first year and up to $3.25 a month after seven years. Moving the lines underground is expected to reduce the number and length of service interruptions.
Ameren Transmission Co. completed public comment sessions on its proposed 345-kV transmission line on June 12 and will make recommendations to the Commerce Commission later this summer on the route from Peoria to Galesburg. Ameren says the line is needed to serve an increase in wind and other renewable energy sources in the state.
Gov. Rick Snyder signed a law allowing coal ash to be used in cement and asphalt last week. The law will also protect those who store coal ash and other byproducts from legal liability if proper procedures are followed. Snyder said the law will help keep waste disposal costs low and support the environment.
Just days after signing a bill freezing the state’s renewable energy standards, Gov. John Kasich signed House Bill 483, vastly increasing the setbacks required at wind farms. The setbacks, which increased from 550 feet to about 1,300 from the base of wind turbine bases to the nearest home, will drastically cut the number of turbines at proposed wind farms. Wind energy proponents were upset, with some saying that the new regulations could spell the end of new wind energy projects in Ohio.
The bill “basically zones new wind projects out of Ohio,” said Eric Thumma, director of policy and regulatory affairs for Iberdrola Renewables Inc. Thumma said the practical effect of the new regulations would cut the number of turbines at one project from 50 to seven and from 75 to three at another. “The economics are not going to work if you have such reduced projects,” he said. The new regulations were put in place in response to complaints about wind turbine noise and visual pollution.
Rockies Express Pipeline said its new 24-inch natural gas pipeline will start delivering gas from the state’s Utica shale gas fields to Indiana and Illinois this week. The Seneca lateral in southeast Ohio sends gas from the MarkWest Energy Partners Seneca processing plant to the main pipeline, and from there to markets in the west. Construction of additional compressor stations could allow gas to be sent as far as Missouri, pipeline owners say.
The state Environmental Quality Board has approved a final rule hiking the fees for unconventional well permits, a move that will result in about $4.7 million in additional revenue for the state, according to the state Department of Environmental Protection. “Under the Corbett administration, there has been a strategic, proactive approach to the oversight of this industry,” DEP Secretary and EQB Chairperson E. Christopher Abruzzo said. “The efforts to date have been unprecedented, and this fee increase will give us the ability to continue to grow and strengthen our program along with the growing industry.” The increased revenue will be used on additional staff and information technology projects to aid regulators in monitoring the increase in drilling.
PUC Eyes Settlement with Electric Company for Slamming
The Public Utility Commission is seeking public comment on a proposed settlement with an electric marketer for switching customers’ electric providers without full permission. The PUC proposes to fine ResCom $59,000 and require it to abide by “Do Not Call” lists. The company would also be required to file quarterly reports with the commission. The settlement arose after three ResCom customers complained to the commission that their service provider was switched without their permission.
State Agencies Target Five Energy Suppliers for Slamming
The Bureau of Consumer Protection and the Office of Consumer Advocate are targeting five electricity suppliers for a variety of alleged fraudulent tactics, including switching customers without their knowledge and overcharging them.
The joint complaints were filed before the Public Utility Commission, Attorney General Kathleen G. Kane announced on Friday. The complaints seek the revocation of the licenses of Energy Services Providers Inc. d/b/a Pennsylvania Gas & Electric; IDT Energy Inc.; Respond Power LLC; Hiko Energy LLC; and Blue Pilot Energy LLC.
Among the allegations are that the suppliers promised low or “competitive” rates if customers switched, and then charged them up to 300% more than they had been paying. Other customers complained that they were switched without their consent, a practice known as “slamming.” In addition to license revocation, the complaints seek civil penalties and refunds for the customers.
Dominion Faces Opposition to Jamestown Tx Tower Path
Photo simulation of planned James River towers (Source: Save the James Alliance)
Dominion’s plan to build a transmission line across the James River within sight of Jamestown Island and other historic sites is facing opposition from groups who say it would be a blight. The company is seeking permits from the U.S. Army Corps of Engineers to build 17 towers, some as tall as 295 feet, for the four-mile river crossing. Historic preservationists say the project would be a shocking sight among the area’s historic places. “I’m hard-pressed to find a worse place for Dominion to build this power line,” said Rob Nieweg, field director with the District of Columbia office of the National Trust for Historic Preservation. Dominion has argued that the project is necessary to ensure the reliability of service to the area.
FirstEnergy subsidiaries Mon Power and Potomac Edison amended their rate hike requests to include $7.5 million for monthly meter readings. The new filings, prompted by a recent PSC order, boosts the combined rate increases to about $103 million. The commission ordered both companies to ensure each customer’s meter is read monthly. Both companies have already started hiring and training enough new meter readers to comply with the order.
The Federal Energy Regulatory Commission unanimously agreed last week to change the way it calculates return on equity (ROE) rates for electric utilities, moving to a two-step process it has long used for natural gas and oil pipelines that incorporates long-term growth rates.
But the panel split 3-1 over its first application of the new formula, tentatively setting the ROE for New England transmission owners at three-quarters of the top of the “zone of reasonableness,” a departure from the prior practice that used the midpoint in the range.
The case resulted from a complaint filed in 2011 by New England state officials and others that challenged the New England TOs’ 11.14% base ROE as unreasonable. The commission’s ruling (EL11-66-001) sets the ROE at 10.57% for the New England TOs, which include Northeast Utilities, Central Maine Power Co., National Grid and NextEra.
(Although the commission chose a higher position within the range, the New England TOs’ ROE was reduced because the new formula reduced the top end of the zone.)
The commission also ordered hearing and settlement judge procedures in five pending challenges to electric utility ROEs, saying they should be resolved within the new framework. These include a December 2012 complaint that sought to reduce the New England TOs’ ROE to 8.7% (EL13-33) and cases involving Florida Power Corp.(EL12-39), Duke Energy Florida (EL13-63 & EL12-39) and Southwestern Public Service Co. (EL12-59 and EL13-78 & EL12-59).
FERC Staff, Consumers Rebuffed
In setting the ROE at the 75th percentile of the zone of reasonableness, the commission majority sided with the TOs and rejected arguments by FERC trial staff and consumer representatives, who had argued for continuing the commission’s traditional use of the zone’s midpoint.
Acting Chair Cheryl LaFleur, a former executive vice president and acting CEO of National Grid, sided with the two Republican commissioners, Philip Moeller and Tony Clark, saying the change was justified because of the unusually low current interest rates.
Commissioner John Norris — a Democrat like LaFleur — issued a partial dissent, saying that while he agreed that the companies deserved an ROE increase, there was insufficient evidence to support setting the rate so high.
“This order tilts the balance too far,” Norris said in a statement during the commission’s public meeting. “They will clearly be celebrating in the corporate boardroom of Northeast Utilities today.”
New Formula
The order changes the methodology for electric utility ROEs from a one-step discounted cash flow (DCF) model to the same two-step DCF the commission has used for natural gas and oil pipeline ROEs. While the one-step methodology relies on only short-term growth rates, the two-step process includes short-term and long-term growth rate estimates.
The commission said the two-step process will produce a narrower zone of reasonableness because long-term growth rates are more stable than short-term growth rates and because the two-step methodology does not calculate a high-end and low-end cost of equity estimate for each company in the relevant proxy group.
The two-step methodology “is less likely to produce the anomalous results that can result from combining high and low dividend yields with high and low short-term projections of dividend growth to produce two estimates for each proxy company,” the commission said. “The end result is often a zone of reasonableness that is defined by two widely divergent growth rates that do not engender much confidence in the reliability of the estimates.”
The commission ordered a paper hearing to determine whether growth in gross domestic product should be the indicator for long-term growth rates, as it is in natural gas and oil pipeline proceedings. Using the GDP indicator, the commission tentatively set the zone of reasonableness as 7.03% to 11.74%.
The previous zone ranged from 7.3% to 13.1%. Thus, although the commission chose a higher position within the range, the reduced top end resulted in a decrease from the New England TOs’ previous ROE, which also included a post-hearing adder.
Clearing the Backlog
In announcing the ruling at last week’s commission meeting, LaFleur said that she had made acting on a backlog of ROE cases a high priority when she was appointed acting chair in November. “I established specific goals for addressing the ROE cases, including that any resolution would be fair to customers and investors, principled and sustainable, and represent a consensus of my colleagues. While we did not achieve unanimous agreement on all points, I believe that we have met these goals,” she said.
LaFleur said the grid’s shift from coal to natural gas and renewables “will require the construction of a significant amount of transmission in the coming years. I anticipate that this order, along with our recent compliance orders on Order No. 1000 will help provide some certainty to that process.”
Norris: `Troubling Precedent’
Norris praised LaFleur for pushing the commission to act on the ROE disputes, which he said “had been languishing too long.”
But he said the order sets a “troubling precedent” and may subject consumers to unjustly high rates in the future.
He said he would have ordered a paper hearing because there was insufficient evidence to support setting the rate at the 75th percentile.
“Regrettably, today’s order tilts the balance in favor of the New England transmission owners without further recourse and fails to adequately give a voice to consumer interests,” he wrote in his dissent.
“Looking beyond today’s order, my broader concern is that the precedent established through this adjustment could become the new norm that would potentially ratchet up and lock in substantially higher ROEs in future cases. I am further troubled by today’s order in light of recent commission decisions on Order No. 1000 compliance filings that have served to protect incumbent transmission owners from competition in the development of new transmission. Simply put, not only will incumbent transmission owners be more insulated from competition, they will also be the primary beneficiaries of the new precedent established in this proceeding that could provide for substantially higher ROEs.”
Treasury Bond Update Eliminated
The commission’s order also ends its practice of using U.S. Treasury bond yields to make a final ROE adjustment, which reflect changes in capital market conditions after the close of the record in a rate hearing. Instead, the commission’s decision will be based on the latest financial data available in the hearing record.
The D.C. Circuit Court of Appeals had ordered the commission to revisit the issue in a ruling on a 2008 ROE case involving Southern California Edison Co. The court said FERC should consider evidence that U.S. Treasury bond yields and corporate bond yields might be inversely related. The commission acknowledged that “there is not necessarily a one-to-one correlation between U.S. Treasury bond yields and public utility returns on equity.”
Will PPL shareholders be better off now that the company has decided to spin off its generation?
Wall Street seems far from convinced, with the company’s stock price virtually unchanged since the deal with investment firm Riverstone Holdings LLC was announced. (Though you would have earned a tidy 13.5% return had you bought when rumors of the spin-off began bubbling up in early February.)
But there’s no doubt the tax-free deal creating Talen Energy will shuffle the generator rankings. The new company will have more than 15,000 MW of generation, ranking fifth nationally in competitive generation (behind NRG, Exelon, Calpine and Next Era) and third among independent power producers.
Within PJM, it will rank sixth with more than 12,000 MW of generation, behind AEP, Exelon, Dominion, NRG and FirstEnergy. Its 1,883 MW in Texas will give it presence in the Electric Reliability Council of Texas (ERCOT). PPL said Talen anticipates needing to divest about 1,000 MW of generation to achieve regulatory approval, but it wouldn’t say what plants might be affected.
Meanwhile, Exelon and other integrated utilities are rumored to be considering PPL’s pure-play strategy. The rationale: By concentrating on regulated operations, utilities will be more attractive to shareholders seeking steady earnings and dividends, while more risk-tolerant investors can ride the highs and lows of merchant generation.
Welcoming Volatility
In announcing the deal, PPL Corp. CEO Bill Spence made repeated references to the volatility of the generation markets in PJM and ERCOT and said Talen would be poised to take advantage of it.
PPL, meanwhile, will be left with a “100% rate-regulated business model [that] provides earnings and dividend growth potential.” He said PPL expects “substantial” growth in the rate base in the coming years.
PPL shareholders will own 65% of Talen, with Riverstone holding 35%. The company will be listed on the New York Stock Exchange.
Coal and Natural Gas
Both Riverstone and PPL come with substantial coal generation — both about 40% of their portfolios. The company will also have a 40% share of natural gas, with 15% of its portfolio in nuclear and the remainder in oil (3%) and renewables (2%).
The combination, according to PPL Corp. CEO Bill Spence, will make Talen a “highly competitive player, operating very attractive assets, in the right regions” with “a significant proportion [of generation] with low or no carbon dioxide output.”
The new company will assume PPL Energy Supply’s 10,000 MW of generation, primarily in Pennsylvania, which includes its 90% stake in the Susquehanna nuclear generating station (pending approval by the Nuclear Regulatory Commission), 292 MW of hydro in Pennsylvania and 677 MW of coal-fired generation in Montana. It does not include 11 Montana hydro facilities, whose sale to NorthWestern Corp. was announced in 2013 and is nearing closing.
The Riverstone fleet includes three coal- and natural gas-fired plants in Maryland, five natural gas- or oil-fired plants in New Jersey, one natural gas plant in York, Pa., a natural gas-fired plant in Dartmouth, Mass., and five natural gas-fired plants in Texas. Combined, they produce 5,345 MW.
Not Included
Not included in the generation spinoff are the approximately 8,000 MW of generation PPL owns and operates in Kentucky. “The Kentucky generating plants are part of the rate bases of PPL’s Louisville Gas & Electric and Kentucky Utilities subsidiaries,” PPL spokesman George Lewis said Friday. “The Talen Energy transaction involves only merchant generating plants owned by PPL.”
The regulated delivery business in the United Kingdom – where PPL has 7.8 million electric customers – also will be unaffected by the transaction, Lewis said.
Lewis said Talen Energy headquarters “will be in Pennsylvania, but the specific location has not been chosen yet.” Marketing the generation will be done by PPL Energy’s existing marketing operation, he said.“Talen Energy will have an asset-focused energy marketing operation to get the greatest value for electricity generated by Talen Energy plants,” he said.
Layoffs Expected
Paul Farr, president of PPL Energy Supply, will become president and CEO of Talen at the closing of the deal. Jeremy McGuire, PPL’s vice president of strategic development, will be Talen’s chief financial officer.
“There will be job reductions across PPL as a result” of the transaction, he said. “The number of positions and the timing of the reductions will be determined during the transition process over the next nine to 12 months.”
Regulatory Approvals
Lewis said the partners anticipate completing the transaction by the middle of 2015. Approvals will be necessary from the Federal Energy Regulatory Commission, the Federal Trade Commission, the Department of Justice, the Nuclear Regulatory Commission and the Pennsylvania Public Utility Commission.
The NRC, which has to approve any transfer of Susquehanna’s operating license to the new company, will meet with PPL July 2 to discuss its plans. The meeting, from 10 a.m. to noon, will cover the new owner’s financial and technical qualifications, among other areas. Members of the public will be able to call in to the meeting to participate. The NRC approval process could take up to a year, an agency spokesman said.
Utilities in New Jersey and Maryland are fighting an attempt by a generation developer to enforce contracts that federal courts last year ruled invalid.
Competitive Power Ventures filed requests June 2 asking the Federal Energy Regulatory Commission to declare just and reasonable the contracts that would provide funding for CPV’s generating plants in Woodbridge, N.J., (ER14-2105) and Waldorf, Md. (ER14-2106).
CPV filed the requests with FERC on the same day that the Fourth Circuit Court of Appeals unanimously upheld a district court ruling throwing out the Maryland contracts (PPL EnergyPlus, LLC, et al. v. Nazarian, Civil Action No. MJG-12-1286). The court declared that the contracts violated FERC jurisdiction and were thus “illegal and unenforceable.”
CPV Woodbridge Construction (Source: Competitive Power Ventures)
CPV hopes to build a 661-MW combined cycle generator funded by 20-year “contracts for differences” with Baltimore Gas and Electric Co., Delmarva Power & Light Co. and Potomac Electric Power Co. The electric distribution companies (EDCs) were ordered to sign the contracts after CPV won a competitive solicitation by the Maryland Public Service Commission for construction of a new generating plant in the Southwest MAAC zone.
CPV also won a 2011 solicitation by the New Jersey Board of Public Utilities that resulted in 15-year “standard offer capacity agreements” (SOCA) with Rockland Electric Co., Public Service Electric and Gas Co., Jersey Central Power & Light Co. and Atlantic City Electric Co. tied to CPV’s 663-MW combined-cycle Woodbridge generation plant, now under construction.
Those contracts were struck down in October by the U.S. District Court in New Jersey (PPL EnergyPlus, LLC, et al. v. Hanna, Civil Action No. 11-0745). As in the Maryland case, the New Jersey contracts were ruled in violation of the Constitution’s Supremacy Clause and thus “void ab initio, invalid and unenforceable except for the termination provisions which any party may implement or defend.” The BPU appealed the ruling to the Third Circuit Court of Appeals.
The EDCs subject to the contracts filed protests on June 12 opposing CPV’s FERC filings. Also joining the protests were PPL, Calpine, Essential Power LLC and Lakewood Cogeneration LP. As a result of the court rulings, the protestors said, the contracts “do not exist.”
CPV’s “tactic of not only asking the commission to accept the purported `agreements’ for filing, but also to make a just and reasonable determination, is particularly curious and ill-advised in light of these preemption rulings,” the protestors wrote.
CPV Senior Vice President Braith Kelly said the company made the FERC filings to protect its interests in case it does not prevail on appeal. “If these are in fact FERC jurisdictional contracts that means FERC can rule on them,” he said in an interview.
CPV said the contracts do not threaten FERC’s jurisdiction, as the courts ruled, because they are “simply … financial settlements” based on capacity market prices and “do not require or in any way involve the delivery of capacity or energy to the EDCs.”
Contracts Explained
Under the Maryland contracts for differences, if CPV’s PJM energy and capacity revenues are less than the amount specified in the contracts, the EDCs will pay CPV the difference; if the revenues exceed the amount specified in the contracts, CPV would pay the EDCs the difference.
The New Jersey contracts are similar. CPV will receive the benchmark price it bid into the state solicitation minus revenues it receives through PJM’s capacity market. If the plant’s capacity market revenue is less than the benchmark price, the EDCs will pay CPV the difference; if capacity revenues exceed the benchmark, CPV pays the EDCs.
CPV said that while it appeals the court rulings, it was submitting the contracts to FERC “solely for the limited purpose of requesting that the commission review and determine that the rates in the SOCAs are just and reasonable and otherwise comport with the standards for rates in jurisdictional contracts under FPA Section 205.”
Other State Solicitations
CPV says the state initiatives that resulted in the contracts were “no different than the solicitations routinely mandated by state commissions for the procurement of energy to serve those loads that have not selected competitive suppliers,” called basic generation service (BGS) in New Jersey and standard offer service (SOS) in Maryland.
A FERC ruling that the CPV contracts are not just and reasonable and cannot be enforced “would call into question the reasonableness of rates charged by any jurisdictional seller participating in the BGS or in any similar state-mandated solicitations,” CPV wrote in support of the New Jersey contracts.
The fact that the EDCs entered into the contracts “under protest” is irrelevant, CPV said, because the state’s solicitation “resulted in no less an arms-length transaction than the BGS solicitations where the NJ BPU also mandated the procurement of electricity on terms it required.”
Because the contracts resulted from a competitive process, CPV said they meet the Allegheny and Edgar standards the commission applies in evaluating whether contracts awarded by EDCs to affiliates are just and reasonable.
FERC Position in Dispute
The protestors pointed to the Department of Justice’s amicus brief in the New Jersey case, which said the state-ordered contracts have a “price-suppressing and distortive effect on PJM’s wholesale capacity market prices.”
Kelly acknowledged FERC was a signatory to Justice’s brief. But he said the commission’s true position was spelled out in its approval of PJM’s revised minimum offer price rule (“MOPR 2”), which was designed to prevent state-supported generation from undercutting auction prices.
CPV Woodbridge Construction (Source: Competitive Power Ventures)
CPV said its New Jersey generator, which is about 20% complete, offered and cleared in each of the three base capacity auctions since 2012 under MOPR. The company did not disclose whether the Maryland project, for which it is attempting to secure financing, had cleared.
“In adopting MOPR 2 and doing away with the state exemption and defending that in the 3rd Circuit, FERC stated very clearly that these projects were economic,” Kelly said. “The change in the MOPR was designed to ensure these projects – these specific projects – did not adversely affect the market.”
A BPU spokesman declined to comment on the impact of a potential FERC decision on the appellate court case.
WASHINGTON — Cheryl LaFleur will likely remain acting chair of the Federal Energy Regulatory Commission for another year under a deal with the White House that won a Senate floor vote for Norman Bay.
A Senate panel voted June 18 to approve Bay’s appointment to FERC in a deal that will keep LaFleur in her leadership role for nine months after Bay’s confirmation by the full Senate.
The Senate Energy and Natural Resources Committee voted 13-9 to confirm Bay and 21-1 to grant LaFleur a second five-year term. With a floor vote not expected until September, LaFleur could remain in the top spot until June 2015.
LaFleur had sailed through her confirmation hearing May 20 while Bay was forced to defend his limited policy experience and his running of the commission’s enforcement division. The Department of Energy Organization Act gives the Senate authority to confirm members of FERC but gives it no say over which one of the commissioners is appointed chair by the president.
Senator Lisa Murkowski
The president’s concession was enough to win the support of West Virginia Democrat Joe Manchin today but not that of ranking member Lisa Murkowski (R-Alaska) and most of her Republican colleagues. Murkowski said she wanted the president to remove the “acting” designation from LaFleur’s chairmanship so that she had full authority to act in a leadership role.
“I have not been given the assurance that she would be given the full authority as the chairman,” Murkowski said before casting her “no” vote.
Experience Questioned
Earlier in the hearing, Murkowski noted that lights in the Capitol were dimmed to conserve energy and said “there might be rolling brownouts this afternoon” as temperatures hit the 90s. She also cited FERC’s role in ensuring the grid’s reliability in the face of increasing environmental regulations on fossil fuel-fired generators.
“We need the best of the best running the commission,” Murkowski said.
While praising Bay as “a learned man,” she said the FERC chairmanship was not the place for “on-the-job training.”
Bay, who has served as director of FERC’s Office of Enforcement since 2009, is a former federal prosecutor and law school professor. Unlike most FERC commissioners in the last decade, he has never served as a state utility regulator.
Of the 15 FERC commissioners who have served since 2000, 10 served as commissioners or staffers at state regulatory agencies prior to their appointments. Four of the others worked in energy-related posts in state or federal legislative committees or executive agencies; one was a former utility executive.
The last five chairmen served a median of 30 months before becoming chair. Only one, Patrick H. Wood III, served less than a year on the panel before his promotion.
Murkowski and others also raised the issue of gender politics, questioning why Obama announced his intention to appoint the less experienced Bay directly into the chairmanship, “particularly when we have a woman … as the acting head of this commission. By all reports [LaFleur’s] been doing a good job,” Murkowski said. LaFleur is the only woman on the commission.
Senator Joe Manchin
Among those who had expressed concern over Bay’s limited energy policy experience was Manchin, who helped sink the bid of Obama’s previous nominee, former Colorado regulator Ron Binz.
That sparked a flurry of negotiations over the last several days among the White House, Murkowski and Energy committee Chair Mary Landrieu (D-La.), which resulted in the president’s concession not to appoint Bay chairman immediately.
The lone vote against LaFleur apparently came from Vermont Sen. Bernie Sanders, an independent who caucuses with the Democrats. Sanders said he was not opposed to LaFleur’s second term but was protesting the delay in Bay’s ascension. “I think Mr. Bay would be an outstanding chair,” he said.
The committee’s vote sends the Bay and LaFleur nominations to the full Senate, where Bay has the backing of Senate Majority Leader Harry Reid (D-Nev.). In an interview with The Wall Street Journal June 8, Reid said bluntly, “I don’t want [LaFleur] as chair.”
Reid told the Journal he was concerned LaFleur would not adequately enforce market manipulation rules or support building transmission for renewable energy. Reid also said he feared LaFleur would undo initiatives of former chair Jon Wellinghoff, a Nevadan allied with Reid who retired last year.
“This is not the outcome Sen. Reid would have preferred but he accepts the compromise negotiated by Sen. Landrieu and he will move forward with confirming the nominees,” a Reid spokeswoman told The National Journal after the vote.
Enforcement Criticism
The criticism over Bay’s management of FERC’s Office of Enforcement was sparked by members of the energy bar, led by former FERC general counsel William Scherman. In a 49-page article in the Energy Law Journal, Scherman accused Bay of driving Wall Street banks out of energy trading with heavy-handed enforcement tactics. Several senators continued to probe the issue in post-hearing questions to Bay and LaFleur.
In her answers, LaFleur acknowledged differing with Bay and her fellow commissioners on procedural matters regarding seven investigations, including four in which the subjects were represented by Scherman. While LaFleur characterized the disagreements as “procedural” and not substantive, the disclosures did lend some credibility to Scherman’s critique.
PJM planners today recommended Public Service Electric and Gas be awarded the contract to fix the Artificial Island stability problem with a new 500-kV line from Hope Creek, N.J. to Red Lion, Del. at a cost of about $300 million.
The planners recommended PSE&G construct the 18-mile line and upgrades to its Hope Creek 500-kV station. Pepco Holdings Inc. will upgrade its Red Lion 500-kV station at the other end of the line under the recommendation.
The stability fix for Artificial Island — home of the Salem and Hope Creek nuclear plants — is PJM’s first competitive transmission project under the Federal Energy Regulatory Commission’s Order 1000.
The competition attracted 26 proposals from five utilities and three independent developers, led by PSE&G with 14 alternatives. In May, planners identified a shortlist of 10 proposals, including the 500-kV proposal by PSE&G and a similar project by Dominion Virginia Power.
The two projects — which had been in the middle of the pack in cost and did poorly in their original forms in an analysis of risk factors and technical concerns — had their standings improve dramatically when PJM reevaluated them after eliminating a second tie line between the two nuclear plants.
The revised Dominion and PSE&G proposals got top scores in the analysis and also saw their costs reduced by $34 million and $43 million, respectively. PJM estimated either project would cost between $211 million and $256 million, the same range it assigned to a 230-kV proposal by LS Power that had been the cheapest proposal prior to the change. (See Dominion, PSE&G Proposals Gain in Artificial Island Race.)
The estimates do not include an additional $80 million for a static VAR compensator (SVC), which PJM added to all of the proposals. In total, the winning project is expected to cost $291 million to $337 million.
Paul McGlynn, general manager of system planning, said that planners chose the 500-kV proposal because it provided greater transmission capacity than the 230-kV alternatives and would use an existing Delaware River crossing rather than a new southern crossing employed by the 230-kV proposals. PJM said the river crossing “represents the greatest component of schedule risk” for all proposals.
McGlynn said planners chose PSE&G over Dominion because PSE&G is a party to the Lower Delaware Valley (LDV) Transmission Service Agreement, which controls an existing 500-kV right of way in New Jersey that the new line will largely parallel. Although PSE&G will need expand the right of way for 8.5 miles, Dominion would have needed to acquire the right of way for the entire route, PJM said.
The planners will recommend the Board of Managers include the project in the Regional Transmission Expansion Plan at the board’s July 22 meeting. McGlynn said PJM will accept comments on the recommendation through July 16.
The winning project is a modification of PSE&G’s proposal (#7K), which was originally proposed at a cost of $1.066 billion. PJM planners reduced the cost by eliminating a 500-kV line between New Freedom and Deans, making changes to breaker configurations and eliminating the second tie line between the two nuclear plants. Eliminating the second tie line also eliminated the need for the 500-kV line to cross another 500-kV line, which would have created a risk of a multiple facility trip.
The SVC will be added at PSE&G’s New Freedom switching station. PJM added the SVC despite opposition from PSEG Nuclear LLC, the operator of the nuclear plants, which said SVCs have never been used to correct “transient angular stability.” PSEG Nuclear said the SVC would pose “unknown and potentially challenging regulatory risks,” including an “in-depth review” by the Nuclear Regulatory Commission.” (See Contestants Make Last Pitch for Artificial Island Prize.)
PJM acknowledged that the selected route faces land-permitting challenges because it will cross the Supawna Meadows National Wildlife Refuge, the Alloway Creek Watershed Wetland Restoration Site and the Abbotts Meadow and Mad Horse Creek Wildlife Management Areas. The New Jersey Board of Public Utilities said PJM’s analysis of the 500-kV option underestimated likely public opposition.
Sharon Segner, vice president at LS Power, said afterward that she was “profoundly disappointed” by PJM’s decision and predicted PSEG will be unable to win approvals to build the line across the New Jersey wetlands and wildlife areas.
McGlynn said the project’s cost allocation will be “very similar” to the allocation outlined in May, which spread the cost among two dozen transmission zones and merchants. The Jersey Central Power & Light zone would be responsible for about 27% of the project, with the Atlantic City Electric zone picking up almost 20%. No other zone was as high as 8%.
FERC Order 1000 eliminated incumbent utilities’ federal right of first refusal (ROFR) on new transmission projects, opening the business to competition from independent transmission developers.
Others submitting proposals in addition to PSE&G, Dominion and LS Power were Transource Energy, a partnership between American Electric Power and Great Plains Energy (owner of Kansas City Power & Light Co.); FirstEnergy Corp.; Atlantic Wind Connection; and a partnership between Pepco Holdings Inc. and Exelon Corp.
A subsidiary of NRG Energy announced late last week that it will buy the largest wind farm in North America for $870 million. The deal is seen as another move by NRG to bulk up its portfolio of renewable energy, especially important now that the Environmental Protection Agency has issued its carbon emission reduction rules.
NRG Yield Inc. is buying California’s 947-MW Alta Wind Energy Center. NRG formed NRG Yield in December 2012 to own and operate its “clean energy” fleet. The project is located in Tehachapi Pass in California’s Kern County and sells its power under long-term power contracts with Edison International.
The Nuclear Regulatory Commission began a surprise inspection last week at Dominion’s Millstone nuclear generating station in Waterford, Conn., after both units shut down unexpectedly May 25. Millstone Units 2 and 3 shut down safely after a problem at one of three off-site high-voltage lines that feed power to the plant.
Unit 2 shut down without complications. At Unit 3, however, several problems arose during the shutdown, including a problem with a reactor coolant system drain. The inspection of both units started last week. There is no word on how long the inspection will take. The NRC said it will issue a report 45 days after the end of the inspection.
PPL Corp and Riverstone Holdings LLC said yesterday they would combine their generation businesses into a new publicly traded independent power producer.
The new company will be called Talen Energy Corp. and will own and operate 15,320 MW of capacity. Talen will be listed on the New York Stock Exchange, with PPL shareholders owning 65% of the company and Riverstone owning 35%. Financial terms of the deal were not disclosed.
The Wall Street Journal reported last week that Dynegy is among those bidding for Duke Energy’s 11 fossil fuel-fired plants in the Midwest, going up against Blackstone Group and Riverstone Holdings. Citing unnamed sources, the Journal said that Dynegy, less than two years from emerging from bankruptcy, is looking increase its customer base. The plants, in Ohio, Illinois and Pennsylvania, are expected to sell for about $2.5 billion.
Leading Republicans on the Senate Energy and Natural Resources Committee said last week they remain skeptical of President Obama’s nomination of Norman Bay to chair the Federal Energy Regulatory Commission.
Cheryl LaFleur and Norman Bay being sworn in to the Senate hearing.
Their comments came after the release of Bay’s and acting FERC Chair Cheryl LaFleur’s responses to written questions posed by the committee following their confirmation hearing May 20.
“Even though Senator Barrasso doesn’t always agree with Ms. LaFleur’s policy positions, he believes she is unquestionably qualified for her position. That’s why at the nomination hearing, he asked why the Senate should demote Ms. LaFleur to make room for Mr. Bay,” said Laura M. Mengelkamp, press secretary for Sen. John Barrasso (R-Wyo.). “Senator Barrasso continues to have concerns about Mr. Bay’s qualifications for the commission. His written responses following his nomination hearing raise more questions than answers.”
Robert Dillon, communications director for ranking member Lisa Murkowski (R-Alaska), said the senator also remains unconvinced that Bay is qualified to lead FERC and would prefer to see LaFleur remain chair.
“Don’t mistake us for loving LaFleur,” Dillon said. “We think she’s fair. We think she’s qualified. But she’s not a Republican.”
Among the questions Murkowski posed was whether Bay would accept a position on the commission if LaFleur remained chair.
Bay said he didn’t know whether he would have accepted the nomination if the president had not offered him the chairmanship. “It would not be appropriate for me to speculate on what I would do if I were designated for a position other than what the president has indicated,” he said.
No Horse Trading
“Senator Murkowski’s not dangling something out there as a proposal,” Dillon said, noting that Democrats outnumber Republicans on the panel 12-10. “There’s no horse trading going on. We don’t have the horses to trade.”
But he added, “Maybe the president and the Democrats will decide on their own it doesn’t look good to demote Cheryl LaFleur.”
Bay needs 12 votes to clear the committee and proceed to a floor vote. If Republicans remain united in opposition, the loss of one Democrat would result in an 11-11 tie, sinking his chances.
Last year, West Virginia Democrat Joe Manchin killed the nomination of President Obama’s first choice, former Colorado regulator Ron Binz, whom he portrayed as anti-coal. Although Manchin has not accused Bay of being a soldier in the “war on coal,” he joined the Republicans in questioning his qualifications for the chairmanship.
Manchin prefaced one post-hearing question with the assertion that Bay had “no direct experience in regulation of energy infrastructure or markets.”
“The previous five chairmen all had more than 20 years of experience in the energy industry and as regulators before becoming chairman,” Manchin continued.
Defends Policy Experience
Bay rejected Manchin’s predicate, citing his five years as the director of FERC’s Office of Enforcement (OE).
“As one of the 11 office directors, I participate in weekly meetings with the chairman and other office directors on a wide array of important issues,” Bay said. “OE has a broad portfolio that requires a deep understanding of the markets, including market rules and market fundamentals.”
While Bay — like LaFleur — was careful to avoid taking definitive stands on controversial issues, his answers did demonstrate a familiarity with a broad range of topics beyond enforcement, including Standard Market Design, capacity markets, qualifying facilities, Order 1000, returns on equity, smart grid and liquefied natural gas.
As at the hearing, many of the questions followed the script of former FERC general counsel William Scherman and other critics of FERC’s enforcement policies.
Enforcement Policy
Scherman’s critique was laid out in detail in an article in The Energy Law Journal, and summarized in an op-ed in The Wall Street Journal, days before Bay’s confirmation hearing.
In his written responses, Bay provided a more forceful rebuttal than he mounted during the in-person questioning.
Bay said the law journal article “confused SEC administrative hearing and investigation rules; failed to describe FERC’s actual investigation process and the significant transparency provided in that process; failed to discuss the significant transparency, guidance and analysis of how the Commission has implemented and applied Congress’s prohibition against market manipulation in FERC-jurisdictional markets; made various statements of law for which they provided no legal authority; and numerous other errors and unsupported assertions.”
“If confirmed, I would be open to considering how FERC can improve the way it does its work and always willing to listen to market participants who have constructive suggestions,” Bay continued. “But this article’s allegations of due process and substantive violations in FERC enforcement, and the analysis underlying those assertions, are wide of the mark.” (See related story, LaFleur Parts with Bay on Enforcement Procedures.)
No date has been set for a committee vote on the nominations, said Dillon, who noted the Senate has 150 other nominations pending on the floor.
“There is really no reason to rush this one through,” he said. “[Senate Majority Leader] Harry Reid has his hands full.”
Calpine Corp. led Gov. Jack Markell and Environmental Protection Agency Secretary Gina McCarthy on a tour of its under-construction Garrison Energy Center in Dover last week. “This project is putting people to work and will bring the cost of energy down,” Markell commented after the tour of the $400 million combined-cycle plant. “What is there to argue about?” Calpine expects to expand the plant to eventually produce 618 MW of power with the first 309 MW scheduled to go on line in mid-2015.
The General Assembly passed a bill that frees up $30 million in existing state funds for renewable energy generation investment. House Bill 2427 calls for the money, which comes from the Renewable Energy Resources Fund, to be used for distributed solar generation projects with less than 2 MW of capacity. The money is to be administered by the Illinois Power Agency, which has so far committed only $3 million of the existing $54 million in the fund. HB 2427 sets out new procedures calling for IPA to commit the $30 million on solar projects by June 2015.
Indiana Attorney General Greg Zoeller has decided to stop pursuing criminal charges against the former head of the Utility Regulatory Commission after a state trial court judge dismissed the charges. Zoeller said it was unlikely an appeal would be successful.
David Lott Hardy was fired in 2010 and indicted on official misconduct charges in 2011 for allowing the commission’s lead attorney to continue to work on cases involving Duke Energy even after he knew the lawyer was seeking a job with the utility.
The judge dismissed the case after the legislature amended the official misconduct statute to exclude the conduct Hardy was accused of from being considered a criminal act.
State Erred in Killing Program, Watchdog Group Says
A consumer watchdog group said that lawmakers were “short-sighted” when they killed the state’s fledgling Energizing Indiana program at the end of last year without funding a replacement.
The energy-efficiency program could have helped Indiana meet the new Environmental Protection Agency carbon emission limits, according to Citizen’s Action Coalition Executive Director Kerwin Olson. “We kind of shot ourselves in the foot here in Indiana by eliminating these programs,” he said. “It was a short-sighted decision and more so now that we’ve seen these carbon rules that would allow efficiency programs to be used as a tool to meet these goals.”
Bathymetry (underwater depth) survey of the Maryland-Delaware coast, with Wind Energy Area outlined. (Source: Maryland Energy Administration)
A high-definition oceanographic and geophysical survey of Maryland’s Wind Energy Area, expected to be crucial for the development of offshore wind projects off Maryland, was released last week by the Maryland Energy Administration. The survey, which mapped the seafloor geology of the state’s designated Wind Energy Area, is thought to be the first such mapping done by any state in the U.S. The engineering firm contracted to do the study plotted depth, seafloor conditions and seabed geology, and looked for shipwrecks. “The data we are making available will reduce the risks and costs of offshore wind energy developments, protect the marine environment and contribute to our scientific understanding of the oceans off our coast,” MEA Director Abigail Ross Hopper said.
The U.S. Court of Appeals in Richmond last week upheld an earlier federal court ruling prohibiting Maryland from subsidizing new power plants in the state, saying Maryland’s proposed plan would usurp the Federal Energy Regulatory Commission’s authority over interstate power rates.
The ruling invalidates the Maryland Public Service Commission’s April 2012 order directing Baltimore Gas and Electric Co., Potomac Electric Power Co. and Delmarva Power & Light Co. to enter into contracts that guaranteed CPV Maryland LLC an income stream so that it could finance construction of the Charles County facility. PPL Corp., PSEG Power LLC and Essential Power LLC were the plaintiffs against Maryland.
“A wealth of case law confirms FERC’s exclusive power to regulate wholesale sales of energy in interstate commerce, including the justness and reasonableness of the rates charged,” the court said. “Maryland has sought to achieve through the backdoor of its own regulatory process what it could not achieve through the front door of FERC proceedings.”
The state Attorney General’s office last week charged Chesapeake Energy Corp. with felony fraud charges, saying Chesapeake leasing agents conned land owners out of the ability to seek competing bids for oil and gas leases in 2012. The state earlier charged the company with engaging in a bid-rigging conspiracy with another energy company to keep lease prices artificially low during a 2010 auction.
“I will defend and protect the taxpayers of Michigan in the face of fraudulent business practices,” Attorney General Bill Schuette said in a news release. “Scamming hardworking Michigan citizens is not how we do business in this state.” Last month, the other company involved in the bid-rigging case with Chesapeake, Encana Corp., agreed to pay a $5 million fine and cooperate with authorities in the ongoing case with Chesapeake.
Chesapeake spokesman Gordon Pennoyer called the new charges “baseless allegations.”
The Lansing Board of Water and Light, a publicly owned utility, announced last week that it intends to build a 5-MW solar facility that would be the largest solar energy project in the state. The board said it will be seeking bids to start the project. Currently, the board receives 6% of its electricity from renewable sources. The solar project will help it reach the state’s goal of getting 10% of electricity from renewable sources by 2015, the board said.
The Board of Public Utilities last week sued three third-party energy providers – Palmco Power, HIKO Energy and Systrum Energy – for alleged fraudulent practices. “These three companies allegedly lured consumers with promised monthly savings that turned out to be fictional,” Acting Attorney General John J. Hoffman said. “Even worse, consumers who hoped to save money instead saw their bills increase to unconscionable levels.”
The commission alleges that all three companies approached customers with misrepresentations about “competitive” monthly pricing or guaranteed reductions if they switched from traditional suppliers, and then charged far more than customers had been paying, in some cases up to 300% more. The state also accused Palmco and HIKO of switching customer gas or electric accounts without the consumers’ knowledge.
The Board of Public Utilities last week approved a 2.6% rate cut for Atlantic City Electric customers. In its annual rate review, the utility sought to adjust several pass-through charges, including the non-utility generation charge, societal benefits charge and system control charge. An average residential user using 1,000 kWh should see a savings of about $4.55 in the next billing cycle.
The Board of Public Utilities deferred action on a petition by the Sierra Club calling on New Jersey to increase efforts to promote energy-efficiency projects. The BPU said it wanted to await the results of several working groups already set up to investigate energy-use reduction by residential and business customers before acting on the petition. “I do not believe it’s necessary to do it at the present time,” BPU President Diane Solomon said.
The Sierra Club of New Jersey wants the state to adopt an energy-efficiency portfolio, similar to a renewable energy portfolio, saying New Jersey is falling behind other states in efforts to promote energy efficiency.
“They all say they support this, but then nothing happens,” complained Jeff Tittell, New Jersey Sierra Club director. “How long are we going to lag behind? The board really does not want to do anything.”
An Arizona company has filed with the Orange County Board of Commissioners for permits to build a 4-MW solar farm near Hillsborough, north of Chapel Hill. The North Carolina Utilities Commission has already approved the company’s plan for a solar facility on the 50-acre property.
But some area residents question the effect Sunlight Partners’ project would have on the rural area. “This facility, with its 18,000 panels over 20 acres, will permanently transform what is one of the most bucolic and tranquil residential neighborhoods in the county into what amounts to an industrial zone,” neighbor Bob Cantwell said. Sunlight Partners, founded in 2010, has 48 potential North Carolina sites under consideration, company officials said.
Gov. Pat McCrory signed a bill last week lifting a 2012 moratorium on hydraulic fracturing. “The expansion of our energy sector will not come at a cost to our precious environment,” McCrory said after signing the Energy Modernization Bill last week. “This legislation has the safeguards to protect the high quality of the life we cherish.”
Critics disagreed. “There are more than 1,000 documented cases of contaminated water from fracking across the country,” Environment North Carolina Director Elizabeth Ouzts said. “By rushing to frack, Gov. McCrory and legislative leaders are putting North Carolina’s rivers and the drinking water for millions in jeopardy.”
North Carolina legislators are pushing for inclusion of firm deadlines in a proposed law that would require Duke Energy to stop unlined coal ash dumps from leaching pollution into waterways. Gov. Pat McCrory introduced legislation in May that would require Duke to clean up four ash dumps but allow the company and state environmental officials to set the timeline.
The ash cleanup project was spurred by a giant ash spill on the Dan River earlier this year. Duke continues to spend millions cleaning up that spill. “The public, the people we represent, the people we serve here in the legislature across North Carolina, they want to see some specific timetables,” said Sen. Gene McLaurin (D-Richmond).
A week after the Environmental Protection Agency issued rules calling on states to reduce greenhouse gas reductions, Gov. John Kasich is expected to sign a bill freezing renewable energy standards for two years. Senate Bill 301 was backed by Republicans as a way for Ohio to review standards and their effects on the state’s economy.
“The purpose of the study committee is to determine what standards are economically reasonable and to promote job creation and economic growth in Ohio,” a spokesman for state Senate Republicans said. Backers of green energy think the bill will be a barrier to complying with the new EPA carbon emission rules.
A bipartisan bill asking the state Environmental Protection Agency to come up with a strategy to meet the new EPA carbon emissions standards was introduced in the Ohio House. Sponsored by Republican Rep. Andy Thompson and Democrat Rep. Jack Cera, the bill attempts to minimize the impact of the federal EPA rules while complying with them. Thompson said the bill specifically eyes the use of coal as an energy source. “Why would we eliminate that as part of our portfolio?” he asked. “Let’s continue to look for ways to make it cleaner but let’s not just discard it.”
The Public Utility Commission last week voted to fine Pennsylvania Gas & Electric $150,200 in a settlement for alleged “slamming” incidents by a company vendor. An investigation by the commission alleged that the vendor switched the electric and natural gas accounts of 309 large commercial customers without their authorization. The investigation began after the commission received complaints about the company’s marketing practices. It concluded that one telephone sales representative circumvented quality controls of the company’s sales system.
“PaG&E did not appear to have any internal controls in place to prevent the volume of slamming that allegedly occurred here,” the commission report said. “We have said many times that this commission will not tolerate behavior that erodes the public trust in Pennsylvania’s retail energy markets.” The commission is accepting public comment before finalizing the settlement.
PUC Appoints Director of Competitive Market Oversight
The Public Utility Commission last week appointed a 30-year member of the agency as its new director of the Office of Competitive Market Oversight. H. Kirk House will report to the commission’s executive director on retail competitive electric and gas markets.
The commission also appointed Daniel J. Mumford as deputy director. House was previously lead counsel with the commission’s Office of Special Assistants and worked in all areas of regulatory oversight. Mumford comes to the position after 24 years with the commission’s Bureau of Consumer Services.
Exelon Funding Dam Removal Projects as Part of License Bid
Muddy Run (Source: Exelon)
Exelon Generation, operator of the Muddy Run Pumped Storage Facility on the Susquehanna River, is providing the Pennsylvania Fish and Boat Commission with $800,000, which will be used to remove small dams in the lower Susquehanna River Basin. The dam removal projects will improve water quality and allow migratory eels and American shad to move up and down the river, according to the commission.
The money is part of the company’s remediation efforts for the pumped storage facility, which is located upstream from the company’s Conowingo Dam. Exelon is providing the money as part of its relicensing efforts for Muddy Run. The commission said there are several hundred small dams in Lancaster and York counties that could be removed to improve water quality and fish populations.
The Tennessee Electric Cooperative Association is telling its customers that the Environmental Protection Agency’s 120-day public comment session is time for their voices to be heard. The group is asking its members to urge the EPA to make sure its recent emissions rules don’t cause more harm than good.
“The economic challenges faced by many cooperative members make it critical that EPA regulatory programs be cost-effective and provide environmental benefits that exceed the implementation and compliance costs,” said David Callis, the group’s executive vice president. “Estimates indicate that Tennessee will be among the hardest hit by the state requirements, calling for a 38% reduction in carbon dioxide emissions by 2030. These regulations will hurt Tennessee families, and we are just beginning to understand how severe the impacts will be.”
Gov. Terry McAuliffe Wednesday created an Energy Council to help develop recommendations for a state energy plan, which is to be submitted to the General Assembly in October. The governor said Virginia must come up with a strategic energy plan in order to maintain jobs in the energy sector and create new energy technologies. He called on the council to come up with ways to develop energy-efficiency programs and renewable energy sources.
Alexandria officials are questioning a Dominion plan to bury a 230-kV transmission line between the city and Arlington County, saying it appears most of the benefit of the line will go to businesses outside of the city.
Alexandria City Manager Rashad M. Young said the city was told the $160 million project was a way to “enable better regional electrical reliability and capacity.” Young said they later learned that “part of the need for this project is to feed data centers being constructed in Fairfax and Loudoun counties.” Dominion said the proposed transmission line would improve local reliability and was not in response to development in surrounding counties.
The company will appear at an Alexandria City Council meeting Wednesday to provide an overview of the proposal.
West Virginia University’s Center for Energy and Sustainable Development is teaming with environmental firm Downstream Strategies to help the state come up with ways to comply with the Environmental Protection Agency’s new emissions standards and reduce carbon dioxide emissions from coal-fired power plants by 20%.
The combined effort to develop the report is expected to be completed within the next year, according to Downstream Strategies’ Evan Hansen. “What’s important to realize is that a 20% reduction in carbon emissions doesn’t mean we would be mining 20% less coal or losing 20% of our coal jobs,” Hansen said. “There’s so much flexibility in this rule and it means that it can be achieved in many different ways. Coal production will continue.”
The workshops will consider ways to address limitations in RTO market software that prevent RTOs from modeling all system parameters, such as voltage constraints and generator operating constraints. “While these limitations are to some extent inherent in the complexity of the electric system, staff believes it is worth exploring whether there may be opportunities for RTOs and ISOs to improve their energy and ancillary services price formation processes,” FERC staff said in a presentation announcing the initiative (AD14-14).
