Vermont has signed onto the multistate Northeast Clean Hydrogen Hub (NCHH), one of the many joint state proposals competing for some of the $8 billion in federal funding from the Regional Clean Hydrogen Hubs (H2Hub) program.
The state joins Connecticut, Maine, Massachusetts, New Jersey, New York and Rhode Island in the effort, alongside 47 other companies, nonprofits and academic institutions, including Dominion Energy, the Electric Power Research Institute and Princeton University, bringing the total number of partners to more than 100.
The proposal is being led by New York, which “is pleased to welcome the state of Vermont to a diverse group of partners,” Gov. Kathy Hochul said in announcing the move Thursday. “Adding this elemental resource to our clean energy economy toolbox will advance our collective emissions reduction and climate goals because like our joint effort, air has no borders.”
“To tackle climate change, we’ll need a multipronged approach that relies on innovation and cooperation,” Vermont Department of Public Service Commissioner June Tierney said. “In Vermont, we’re working to do our part and ready to collaborate with the other states across our region in exploring ways to promote a clean energy future.”
Hochul also announced that she had named Adam Zurofsky, previously New York deputy secretary for energy and finance, as interim director of the project. Zurofsky “will oversee the process of submitting a final application to the [U.S.] Department of Energy, working with the partner states and other stakeholders to maximize the impact of the hub and its ability to advance shared priorities.”
NCHH is seeking to become one of up to 10 regional hydrogen hubs in the H2Hub program, funded by the Infrastructure Investment and Jobs Act. (See DOE Opens Solicitation for $7B in Hydrogen Hubs Funding.) The New York State Energy Research and Development Authority (NYSERDA) submitted a concept paper for the NCHH on Nov. 7, and it has an April 7 deadline for its full proposal.
“The level of commitment and collaboration amongst this group demonstrates the scope and scale necessary to establish the ecosystem needed for the industry to grow and for the region to be a leader in clean hydrogen,” NYSERDA President and CEO Doreen Harris said.
Officials from other partner states also applauded Vermont’s move, including Connecticut Gov. Ned Lamont: “It’s great to have our neighbors to the north in Vermont join the Northeast Clean Hydrogen Hub and make what was already a strong coalition and candidate to secure designation.”
Data centers have been a major business in Northern Virginia for decades, but a recent acceleration in their growth has policymakers working to make sure their high demand for electricity continues to be met reliably.
“Data Center Alley,” near Dulles Airport outside of D.C., is home to the largest concentration of data centers in the world, easily outpacing Silicon Valley, according to the Loudon County Department of Economic Development.
Northern Virginia has ties to the earliest days of the internet, from when the Defense Department’s Advanced Research Projects Agency (ARPA) set up ARPANET in the 1960s, Steven Gonzalez Monserrate said in an interview with RTO Insider. Gonzalez Monserrate has worked in the industry and is pursuing a doctorate in the Massachusetts Institute of Technology’s History, Anthropology, and Science, Technology and Society (HASTS) program on data centers’ impact on the environment.
“There’s another reason for it, which is national security,” Gonzalez Monserrate said. “So, a lot of the data centers in Data Center Alley are government-related as well.”
The cheap power from Dominion Energy (NYSE:D) has also led many data centers to plop down in its footprint. Data centers generally tend to cluster around each other because it minimizes the latency in internet connections, Gonzalez Monserrate said.
“People who play video games, for instance, or people who are doing trading on Wall Street, they need very low latency in the milliseconds to have a satisfactory experience,” he added. “And so, the closer that your data center is to you the one that you’re accessing and routing information, the lower the latency.”
The importance of lower latency is driving additional construction of new data centers, as are new trends on the internet such as the “metaverse,” Gonzalez Monserrate said.
The Virginia Department of Environmental Quality is taking comments on a proposal that would allow the 300 facilities in Northern Virginia to use their on-site diesel backup generation more often from March through July in case the transmission grid is too overloaded to send them power.
Dominion is accelerating several transmission projects to alleviate constraints around Data Center Alley, which makes up 20% of the utility’s overall demand and is the only major source of load growth there.
“This includes several reconductoring projects, substation expansions and two new 500/230-kV lines,” spokesman Aaron Ruby said in a statement. “The first of the projects will be completed in late June and will help alleviate the constraints.”
DEQ’s proposal, which cannot go into effect until after it has taken written comments from interested parties and held a public hearing late this month, was issued out of an abundance of caution, and the issues will not impact service to residential or small business customers in the area, he added.
Individual data centers can have demand of up to 100 MW. Gonzalez Monserrate said that most of that power is used to run the servers of the cloud or to provide cooling for them. Cooling is often around 40% of the demand for more efficient facilities, though it can be higher than that, he said.
PJM has approved $627.62 million worth of transmission upgrades around Data Center Alley to avoid reliability violations observed in 2024 and 2025, which Dominion will build by 2025. Both houses of Virginia’s General Assembly have unanimously voted out bills, Senate Bill 1541 and House Bill 2482, that call on the State Corporation Commission to approve those upgrades within 270 days.
But load growth from new data centers has outpaced even those new lines, with PJM explaining it was opening a third window to the 2022 Regional Transmission Expansion Plan to deal with expanded data center demand expected through 2028.
PJM’s 2023 Load Forecast Report showed Dominion’s peak load growing at a rate of 5% per year over the next decade. The rest of the RTO is expected to grow by just 0.8% per year, with some regions seeing demand drop over the decade. In a presentation to the Transmission Expansion Advisory Committee in January, PJM said that its summer peak prediction for 2022 was off by 732 MW as Dominion had peak demand of 21,156 MW. That is expected to grow to 35,789 MW by 2033.
“This growth primarily driven by data center loads, which have been increasing at an unprecedented rate and will require significant new capital investment,” Dominion CEO Robert Blue said on the firm’s earnings call Wednesday. (See related story, Dominion Energy Sees Loss in Q4; Earnings Fall for 2022.)
Adding more transmission projects to the 2022 plan will ensure that the infrastructure is available before the demand shows up, PJM Director of System Planning Dave Souder told RTO Insider at the TEAC meeting Tuesday. The rate of load growth driven by the industry is fairly new, and it is starting to impact other regions.
“Until recently, it has been atypical; however, there has been a significant data center load growth in the Dulles Airport area,” Souder said.
The biggest internet companies in the world all have data centers in Northern Virginia, including Amazon, which is a major player industry through its Amazon Web Services subsidiary. The tech giant also picked nearby Arlington as its second headquarters in 2018, and in January it announced it would build another $35 billion worth of data centers in the state by 2040, which was welcomed by Gov. Glenn Youngkin (R).
“Virginia will continue to encourage the development of this new generation of data center campuses across multiple regions of the commonwealth,” Youngkin said. “These areas offer robust utility infrastructure, lower costs, great livability and highly educated workforces, and will benefit from the associated economic development and increased tax base, assisting the schools and providing services to the community.”
While the major players in the industry have committed to efficiency and renewable energy to meet their data centers’ demands, Gonzalez Monserrate cautioned that some in the industry were not focused on such efforts at all.
“It’s important to note that most data centers out there are not Google, or Amazon, or these giant facilities with a lot of capital; many of them are actually really poorly resourced or poorly run, or in aging facilities that don’t have the resources to be energy efficient,” he added.
Devin Leith-Yessian contributed to this article from Valley Forge, Pa.
SACRAMENTO, Calif. — A key state lawmaker introduced a bill Wednesday that could eventually transform CAISO into a regional transmission organization with an independent governing body, including members from other Western states.
Assembly Bill 538, by Assemblymember Christopher Holden, would allow CAISO to develop a governance proposal to reach that end, requiring approval from the California Energy Commission and the state legislature. Under the bill, a Western states committee would have an equal number of representatives from states whose transmission owners participate in CAISO. The bill says the committee would “provide guidance” to the ISO on “all matters of interest to more than one state,” but the body’s exact role — including its part in selecting board members — remained unclear Wednesday.
“Centralizing dispatch operations and transmission planning with the rest of the region would significantly enhance electrical reliability and affordability for California households,” Holden, chair of the Assembly Appropriations Committee, said in a statement. “California could go it alone, but then we would be a proverbial energy island. The bottom line is California can reduce cost, ensure we keep the lights on and importantly, achieve our clean energy goals by collaborating with other Western states.”
Holden’s prior efforts in 2017/18, when he chaired the Assembly Utilities and Energy Committee, failed to persuade enough of his fellow lawmakers to relinquish control of CAISO’s Board of Governors, whose five members are appointed by the California governor and confirmed by the state Senate.
Circumstances have changed since then, with strained supply in the West during extreme weather, especially in California. More states, cities and utilities have adopted 100% clean energy goals like California’s, requiring new transmission to move wind and solar power long distances. And two states, Nevada and Colorado, enacted requirements that their major transmission owners join RTOs by 2030.
In addition, CAISO faces competition from SPP, which plans to establish its own Western RTO, and from the Western Power Pool, whose Western Resource Adequacy Program could be a springboard to an RTO.
Last year Holden won unanimous passage of Assembly Concurrent Resolution 188, which asked CAISO to prepare a report for the state legislature summarizing studies of the benefits of regional market participation as a way to restart regionalization discussions.
The report is due to lawmakers by the end of February. A draft report, prepared by the National Renewable Energy Laboratory, cited a range of studies that show significant benefits for California and the West in terms of cost savings, grid reliability, transmission planning and meeting clean-energy goals. (See CAISO Issues Report on Western Regionalization Studies.)
In recent weeks, the movement toward greater regionalization, and calls for one or more RTOs in the West, have grown.
A plan by CAISO to add a day-ahead market to its Western Energy Imbalance Market cleared the Board of Governors and the WEIM Governing Body on Feb. 1. (See CAISO Approves Day-ahead Market for Western EIM.)
On Monday, a group that calls itself Lights on California, said it planned to advocate for California to be part of an RTO and for CAISO to become a regional organization. The coalition’s members include national trade groups Advanced Energy United and the Solar Energy Industries Association, environmental organizations Natural Resources Defense Council and Environmental Defense Fund, and the California Chamber of Commerce. (See New Coalition Aims for California to be in RTO.)
Trust Needed
Advanced Energy United reacted to Holden’s bill introduction Wednesday with a statement that said, “We applaud Assemblymember Holden for his leadership in jumpstarting a thoughtful and action-oriented conversation around regional grid collaboration. California should work with the rest of the West to strengthen energy reliability, affordability and accelerate our progress toward 100% clean energy.
“This is the moment for action. Today, 85% of electricity demand in the West is under a 100% clean goal,” it said. “California should not miss this opportunity to lead the way.”
Vijay Satyal, deputy director of regional energy markets for Western Resource Advocates, said in an interview that the bill represents a “clearer understanding” of the interconnected West.
“It is connected by resources; it is connected for reliability reasons; and a centralized market would enable more resource diversity, bring in more clean energy resources, and strengthen grid reliability,” Satyal said.
The declining cost of renewable power and increasing demand for it means “you are seeing growing momentum to recognize that we need a larger connected market,” he said.
Passing Holden’s bill during the two-year legislative session that began in December will require greater trust among Western states, he said. Prior attempts failed because California did not want to cede partial control of CAISO, and other states, especially those in the more-conservative interior West, were unwilling to let California control a multistate transmission orginization.
“What hopefully will change this time is trust,” Satyal said. “That trust has to be built with a new market structure.”
CAISO declined to comment, saying it had not seen the bill in print yet. Previously CEO Elliot Mainzer said, “There’s a strengthened recognition of the need to work together in the West and the benefits of working together.” CAISO, he said, stood ready to work with Holden on his push for “broader governance reform.”
[EDITOR’S NOTE: A previous version of this article incorrectly quoted MISO’s Trevor Armstrong as Trevor “Anderson.”]
MISO’s preliminary 2023 Transmission Expansion Plan (MTEP 23) will double recent spending, driven by a record number of proposed baseline reliability projects in MISO South.
MTEP23 has a proposed investment of $7.8 billion, nearly twice that of standalone packages over the last five years.
Almost half of the 2023 transmission planning cycle’s tab goes to essential reliability projects in the South, as deemed by transmission owners. That prompted many stakeholder questions and assurances from MISO that it will examine proposals for larger, combined project opportunities.
The project cost estimate includes $4.1 billion of baseline reliability projects (BRPs), $757 million in generator-interconnection projects, $2 million in market participant-funded projects, and $2.9 billion in “other” category projects. The RTO defines the latter as transmission owners’ projects needed for load growth and to address existing facilities’ age and condition.
MISO South accounts for $3.6 billion of the baseline reliability projects, equal to previous MTEP packages’ total cost. Entergy Louisiana submitted more than half of the South’s BRPs, with 13 projects costing $2.4 billion.
BRPs are proposed by transmission owners, not cost shared, and billed only to the local transmission zone in which they’re located. TOs typically deem the projects necessary to meet reliability criteria. MTEP 22’s BRPs accounted for $545 million of the package’s total $4.3 billion. (See Stakeholders Endorse MISO’s Final MTEP 22.)
This year’s drastic increase in MISO South reliability transmission investment raised eyebrows among stakeholders, who said staff should determine whether some of the larger projects should be classified as regional.
During a Feb. 3 South Subregional Planning meeting, MISO’s Trevor Armstrong said planners are aware of the record number of BRPs put forth by MISO South TOs.
During a series of subregional planning meetings this week and last, staff emphasized that the projects are merely proposals at this point. MISO has yet to perform independent assessments to determine whether the projects can effectively solve system issues.
“We’ll be talking to our transmission owners about alternatives to some of these projects,” Armstrong said. “I’d like to note that these projects have only been proposed; they still have to go through all the usual MTEP analyses.”
Southern Renewable Energy Association Executive Director Simon Mahan asked whether any of the BRPs will be evaluated to potentially become market efficiency projects (MEPs) or long-range transmission plan projects, which are allocated on a subregional basis. Staff promised test results by the third round of subregional planning meetings in September.
“I know that there are a lot of questions around this process,” Furnish said, adding that MISO will hold discussions on the projects’ eligibility at future subregional planning meetings. She also said staff can schedule technical study task force meetings if it appears that South BRPs qualify as regional projects.
“We’ve never had a market efficiency project built in MISO South,” Mahan said.
Armstrong said MISO could even extend its December deadline for approving certain MTEP 23 projects. He said some of the BRPs proposed in the South are complex and it will take several engineering hours to ascertain whether a more comprehensive project is needed.
“When you say that you might delay certain projects out of this MTEP cycle … when might be hearing about this?” Mahan asked.
Furnish said MISO will have a better handle later this spring.
Stakeholders asked whether MISO’s tariff stipulates that it must first conduct a market congestion planning study to recommend MEPs. Those normally identify MEPs. Furnish said she didn’t think the RTO’s rules were that “prescriptive.”
The skepticism over the MISO South BRPs continues a debate over whether the grid operator is adequately exploring project alternatives. Last year, a spate of expedited project recommendations in the region led some stakeholders to question whether the RTO is engaging in thorough and cost-effective transmission planning. (See Stakeholders Doubt MISO Study of Alternative Tx Projects.)
During a West subregional planning meeting Tuesday, planners reassured stakeholders that MTEP 23 project classifications won’t be confirmed until late summer.
Expansion Planning Manager Zheng Zhou said if MISO finds that a project meets the criteria for both a BRP and an MEP, the MEP classification will take precedence and the project will be allocated as such.
“Alternatives are a hot topic,” Zhou said.
He urged stakeholders to remember that MTEP23 amounts are preliminary and subject to change. He also said that it’s sometimes impossible to find a “cheaper, more economic” solution for certain localized issues.
During Wednesday’s East subregional meeting, Thompson Adu, senior manager of expansion planning, said MISO may look into more expensive projects than originally proposed that resolve a host of problem areas. On the other hand, he said, staff may discover that some local upgrades have no viable alternative.
Stakeholders have until May to propose alternatives to the TOs’ project proposals.
Dominion Energy (NYSE:D) on Wednesday announced a net loss for the fourth quarter of $42 million and net income of $994 million for the entire year of 2022.
Earnings were down according to GAAP, but operating earnings for the fourth quarter were $903 million, up from $752 million a year earlier. Differences between the two were from the impairment of some nonregulated solar generation facilities, the market-to-market impact of economic hedging activities, gains and losses on nuclear decommissioning trust funds, regulated asset retirements and other adjustments.
The firm delivered earnings and dividend growth in line with its guidance, while providing safe, reliable and affordable energy to consumers, CEO Robert Blue said on an earnings call.
“We’re very focused on ensuring that our customers are not priced out of the significant long-term benefits that will result from our decarbonization and resiliency investment programs,” Blue said. “On that same theme, 2022 was a significant year in terms of advancing our regulated, decarbonization and resiliency strategy.”
The Virginia State Corporation Commission approved several investment programs eligible for rate riders, including the company’s offshore wind farm, new solar and storage facilities, grid upgrades, and license renewals for its four nuclear reactors in the state at North Anna Power Station and Surry Power Station.
Additional rider-eligible investments currently under SCC review include additional solar and storage projects in Dominion’s third annual clean energy filing, and high-voltage transmission needed to serve growing customer demand and data center load.
Dominion also owns nuclear plants in other states, including the Millstone Nuclear Power Plant in Connecticut that is under a long-term contract with the state that proved beneficial to customers, Blue said, saving them $300 million last year as power prices in New England were up. The plant is important to the entire region of New England, especially in terms meeting its states’ goals of decarbonization reliably, he said.
“We see the possibility of being able to take action with policymakers to give us the certainty we would need in order to extend the life of millstone and have that valuable resource for New England for some time to come,” Blue said. “We don’t have, as yet, a specific approach to that, but we’re certainly interested in engaging with policymakers on that.”
Dominion has been involved in discussions in Richmond, Va., over the future of how it will be regulated in the state, with multiple bills moving through the legislature this session, which runs until Feb. 25. The legislature is working on two bills that Blue highlighted on the earnings call: one with a series of changes to how the SCC sets its rates, and another that would allow Dominion to get a partner to help it build its 2.6-GW Coastal Virginia Offshore Wind project.
The Virginia Senate passed Dominion-backed legislation on the SCC’s ratemaking authority in a 27-13 vote on Tuesday, with all but two of the “no” votes coming from Democrats.
Senate Bill 1265 included language about recovering deferred fuel costs, requiring the SCC to set its rates at the average of a peer group of other large utilities in the South and removing $350 million from rate riders and putting them into base rates. Its companion bill in the House of Delegates, House Bill 1770, passed by a 52-47 vote on Tuesday as well, with the no votes coming from Democrats.
The legislature has to work out any differences between the two bills and others involving the SCC’s authority. The governor would then have until March 27 to sign, veto, or offer amendments to legislation, which could kick the process back to the legislature that meets on April 12 to deal with the governor’s actions. Gov. Glenn Youngkin then has until mid-May to act on any legislation passed or amended during that reconvened session a month prior.
Blue resisted offering any predictions on what would ultimately come out of the process on the earnings call. Dominion is working on a review of its overall business, but the direction that will take will be dependent on legislative outcomes in Virginia.
“Having a clear and definitive understanding of the future Virginia regulatory construct is a key input for the business review,” Blue said. “Therefore, legislation timing will influence the cadence at which we’re able to share more details about the business review in the future.”
Ninety percent of new generation built to meet global electricity demand over the next three years will be renewables and nuclear, according to a new report from the International Energy Agency released Wednesday.
While worldwide energy demand grew only about 2% in 2022, Keisuke Sadamori, director of energy markets and security at IEA, predicted a more robust 3% growth rate in demand per year through 2025. Emerging economies’ demand for power will be a key driver, as will advanced economies’ push for electrification to decarbonize their transportation, industrial and food sectors, Sadamori said during a media briefing on the report Tuesday.
To meet that demand, renewables will add 2,449 TWh of power to global grids by 2025, with nuclear playing a more modest role with an additional 303 TWh, and fossil fuels edging down.
“Renewables will make up over one-third of the global generation mix by 2025,” the report says. “This trend is supported by government pledges to increase spending on renewables as part of economic recovery plans, such as the Inflation Reduction Act in the United States.”
“And we should note that the substantial growth in renewables will need to be accompanied by accelerated investments in grids and flexibility, such as energy storage systems, for their successful integration into the power system,” Sadamori said.
While the U.S. market is not a primary focus of the report, the global trends discussed correspond to the current opportunities and challenges of the electric power sector here.
For example, the report’s view on the U.S. industry is mixed, predicting only modest gains in demand in the next few years. While the U.S. surpassed prepandemic levels of electricity demand in 2022, IEA sees a 0.6% drop this year “due to an expected slowdown in economic activity, before returning to an annual growth of about 1.2% in 2024 and 2025.”
However, renewables will continue healthy growth, with wind energy up 19% over 2022 levels by 2025, and solar up 56%, supported by clean energy spending in the IRA.
The U.S. Energy Information Administration recently released its predictions for new electric power generation in 2023, with renewables, storage and nuclear providing about 86% of the expected growth in supply. Solar leads with more than half of the new generation, a total of 29.1 GW.
IEA also tracks a major shift in power demand, from the U.S. and Europe to Asia. Between 2015 and 2025, China will grow from using 25% of the world’s electricity to 33%.
US has Lowest Power Price Increases
But the growth of renewables may not necessarily result in the broad reductions in carbon emissions needed to meet the Paris Agreement’s target of a worldwide net-zero economy by 2050.
Carbon emissions climbed to record highs in 2022, pushing the world well off a path to net zero, Sadamori said.
Worldwide, the electric power sector produces about 40% of global CO2 emissions, he said. The 2022 increase was largely from increased fossil-fueled generation in Europe, with Russia’s invasion of Ukraine pushing up power prices, especially in the unregulated markets of some European countries. Despite record inflation, the U.S. saw the lowest level of wholesale power price increases among advanced economies, the report says.
Sadamori believes the increase in CO2 emissions is temporary and will come down as the U.S. and Europe ramp up programs for deploying renewables and nuclear. But the decrease in emissions in the West could be offset by ongoing fossil fuel generation in Asia.
Africa presents a particularly sensitive challenge. The continent represents about 20% of the world’s population but only 3% of its electric power generation. Whether it can build out a primarily renewable electric power system remains uncertain.
IEA also sees ongoing complexities in the interaction between increased renewables on the grid and the increased frequency and severity of extreme weather events, which can drive sudden spikes in demand while also exposing system vulnerabilities.
“Mitigating the impacts of climate change requires faster decarbonization and accelerated deployment of clean energy technologies,” the report says. “At the same time, as the clean energy transition gathers pace, the impact of weather events on electricity demand will intensify due to the increased electrification of heating, while the share of weather-dependent renewables continue to grow in the generation mix.”
Energy Efficiency First
“In such a world, increasing the flexibility of the power systems while ensuring security of supply and resilience will be crucial,” the report says. Diversity of supply will be needed to ensure security, Sadamori added.
Accelerating a clean energy transition should focus first on energy efficiency with substantial government support “because the energy efficiency will lead to smaller amounts of new energy requirements,” Sadamori said. “So, that means the renewables and nuclear can provide more of the growth of the entire electricity demand.”
The report also points to vulnerabilities in the U.S. grid, such as the widespread power outages during the December winter storm. Maintaining and making “wise use” of dispatchable fossil fuel resources, in particular for emergencies, should not lead to increased carbon emissions, Sadamori said.
He also said that IEA sees carbon capture and sequestration as a long-term solution for emissions reductions, but not in the next three years. The technology is “kind of a work in progress,” Sadamori said. “It is being developed, but I don’t think they can make a substantial dent in CO2 emissions in the coming years.”
House Republicans and Democrats squared off Tuesday over a series of 17 proposals from the new GOP majority to lessen environmental and other regulatory barriers to domestic energy production.
Each side made their points in exchanges with witnesses generally aligned with their own points of view, stressing the importance of passing or not passing the measures.
As more than one Democrat pointed out, however, entire pieces of the Republican package stand little chance of becoming law because of opposition from the Democrats who control the Senate and White House.
The joint Energy, Climate, and Grid Security Subcommittee and Environment, Manufacturing, and Critical Materials Subcommittee legislative hearing was titled “Unleashing American Energy, Lowering Energy Costs and Strengthening Supply Chains.”
As the name implies, the measures being discussed would codify some items on the wish lists of U.S. fossil fuel companies and their Republican allies.
The GOP took control of the House only a month ago, and most of the 17 bills and resolutions had not yet been formally introduced Tuesday morning as testimony started.
Among other things, the bills would:
bar a moratorium on fracking;
repeal the methane emissions tax included in the Inflation Reduction Act of 2022;
improve state and federal interagency cooperation to build interstate natural gas pipelines;
repeal all restrictions on import and export of natural gas;
repeal the greenhouse gas reduction fund;
authorize the Environmental Protection Agency to issue flexible air emissions permits for certain facilities; and
ban import of certain uranium from Russia.
Witness Testimony
The witnesses at the hearing ranged from a former FERC member to a leader in the environmental advocacy legal organization Earthjustice.
Rep. Brett Guthrie (R-Ky.) sprinkled personal experiences and world events into a statement on the importance of the U.S. producing enough fuel for itself and friendly nations and asked for witnesses’ thoughts.
Jeffrey Eshelman, II, CEO of the Independent Petroleum Association of America, said: “If we continue to produce oil here at home, those are jobs that remain; if we would stop exporting the oil, those jobs disappear. It actually helps when we’re producing more here and … exporting, to keep those wells pumping. … It helps our allies, and it helps our own national security.”
Rep. John Sarbanes (D-Md.) asserted that the GOP drive to “unleash American energy” is often designed to unleash profit-making by big oil companies by eroding bedrock environmental laws at the expense of the health and safety of American people. He asked if there was truly a binary choice between protecting the safety of communities and producing energy.
Raul Garcia, legislative director for healthy communities for Earthjustice, said: “We can absolutely do both. We have the technology, and, in fact, some of the legislation presented today would actually curtail that technology, which is sad to see.”
Rep. Morgan Griffith (R-Va.) spoke of the coal bed methane capture project underway in his district, at the largest coalmine in the state. This technology could work to capture other leaks of the potent greenhouse gas, he said, “but they don’t get any credit for having a clean, efficient way because it’s the dreaded fossil fuel, it’s natural gas.”
Bernard McNamee, appointed a FERC commissioner by President Trump in 2018, said American innovation has produced many advances in energy production, and the methane capture Griffith described is one more useful tool. “It’s great to talk about, ‘We think we can go 100% renewable,’ but the reality is, with the technology we have today, we have to have dispatchable energy, and that’s going to come from natural gas, from the methane that’s captured at the coal seam.”
Mark Menezes, a deputy energy secretary under Trump, said there are multiple existing technologies that can protect the climate. “Remember, our quest here is not to choose one type of energy over another, our quest here to solve the climate problem is to reduce emissions.”
Rep. Larry Bucshon (R-Ill.) called out those pushing for widespread electric vehicle adoption while simultaneously opposing U.S. mines that would produce the lithium, cobalt and other materials needed for EV batteries. America, he said, needs to not rely on slave labor in Africa and the output of Chinese factories for these materials.
Katie Sweeney, executive vice president of the National Mining Association, thanked Bucshon for his words and said the proposed legislation would make more people aware of the critical connection between minerals and energy. “There isn’t any form of energy that doesn’t rely on minerals as the base of that energy … it’s not just the mines themselves but the processing that needs to take place here in the U.S.”
Rep. Scott Peters (D-Calif.) took some swipes at his Republican colleagues but spoke of the need for bipartisan updates to energy policy; he found some agreement from witnesses on both sides of the aisle.
He asked Menezes — who helped negotiate the Energy Policy Act of 2005 — about streamlining the approval process for interstate transmission construction. Menezes replied that then as now, there are probably more difficult things to accomplish than siting and building interstate power lines, but he couldn’t think of any. Such power lines will be critical to the green energy transition, he said, and “I think this is something that’s certainly within this committee’s jurisdiction to take another look at.”
Peters asked Tyson Slocum, director of the energy program at Public Citizen, whether the oil and gas industry would reduce its emissions of methane without the incentives and oversight contained in the Inflation Reduction Act.
“I don’t think so,” Slocum said. “I think you need to have that regulatory structure in order for the industry to make those investments.”
GOP Proposals
The prepared testimony of the six witnesses and the wording of the 17 pieces of proposed legislation are available on the House Energy and Commerce Committee webpage.
A summary of the legislation follows.
Three bills introduced:
H.R. 150, Protecting American Energy Production Act: Prohibits a moratorium on the use of hydraulic fracturing unless authorized by an Act of Congress.
H.R. 484, Natural Gas Tax Repeal Act: Eliminates the tax added to the Clean Air Act last year.
H.R. 647, Unlocking Our Domestic LNG Potential Act of 2023: Amends the Natural Gas Act to repeal all restrictions on the import and export of natural gas.
Fourteen bills and resolutions expected to be introduced:
Promoting Cross-border Energy Infrastructure Act: Establishes a more uniform, transparent and modern process to authorize the construction, connection, operation and maintenance of international border-crossing facilities for the import and export of oil and natural gas and the transmission of electricity.
A concurrent resolution expressing disapproval of the revocation by President Biden of the presidential permit for the Keystone XL pipeline.
Promoting Interagency Coordination for Review of Natural Gas Pipelines Act: Improves coordination among federal and state agencies reviewing applications for the construction of interstate natural gas pipelines.
Securing America’s Critical Minerals Supply Act: Amends the Department of Energy Organization Act to require the secretary of energy to conduct an ongoing assessment of the nation’s supply of critical energy resources, the vulnerability of the critical energy resource supply chain and the importance of critical energy resources in the development of energy technologies.
Critical Electric Infrastructure Cybersecurity Incident Reporting Act: Amends the Federal Power Act to authorize DOE to promulgate regulations to require critical electric infrastructure owners and operators to share information regarding cybersecurity incidents with DOE.
A bill to require the secretary of energy to direct the National Petroleum Council to issue a report on the importance of petrochemical refineries to U.S. energy security, and the opportunity to expand their capacity.
A bill to amend the Clean Air Act to prohibit the phase-out of gasoline and prevent higher prices for consumers and for other purposes.
A concurrent resolution expressing the sense of Congress that the federal government should not impose any restrictions on the export of crude oil or other petroleum products.
A bill to repeal section 134 of the Clean Air Act, relating to the greenhouse gas reduction fund.
A bill to authorize the administrator of the Environmental Protection Agency to waive application of certain requirements, sanctions or fees with respect to processing or refining of critical energy resources at a critical energy resource facility, and for other purposes.
A bill to amend the Toxic Substances Control Act with respect to critical energy resources, and for other purposes to address repeated delays with EPA reviewing and making legally mandated, timely determinations of pre-manufacturing notices for new critical energy resources and new uses of existing critical energy resources.
A bill to amend the Solid Waste Disposal Act to treat the owner or operator of a critical energy resource facility as having been issued an interim permit for the treatment, storage and disposal of hazardous waste, and for other purposes.
A bill to require the EPA administrator to authorize the use of flexible air permitting with respect to certain critical energy resource facilities, and for other purposes.
A bill to prohibit the U.S. from importing unirradiated low-enriched uranium produced in the Russian Federation.
New Jersey officials are moving to overhaul the clean energy strategy that steered the state to becoming one of the most aggressive carbon reducers in the nation, with a year-long revamp of its Energy Master Plan in the works and a legislative initiative to mandate zero emissions by 2035.
The new plans emerged in a flurry of activity over the last two weeks, including the abrupt cancellation of stakeholder hearings aimed at revising the state 2019 Energy Master Plan. Some stakeholders said the effort is a necessary response to the maturation of the state’s clean energy sector and the massive support for clean energy in all states by the federal Inflation Reduction Act.
The push to retool comes after advancements stemming from the policies outlined in the last master plan, among them surging growth in solar generation, a new offshore wind sector and grid upgrades to handle the new power — and amid concerns about cost among business groups and Republicans.
The New Jersey Board of Public Utilities (BPU) initially planned to start a revamp of the master plan with stakeholder input solicited at public hearings scheduled for Jan. 26 and Feb. 16. But Gov. Phil Murphy cancelled the hearings on Jan. 20 when he announced his own plans for the development of a new Energy Master Plan, targeted for release in 2024.
In an apparently unrelated move, but one likely to have a big impact on the same terrain, Sen. Bob Smith on Jan. 27 released legislation that would reshape the state’s clean energy sector.
The bill, a substitute for an existing bill, S2978, would establish and implement a sweeping new clean electricity certificate program to cover all energy sources, replacing the certificates granted to individual sectors such as solar, wind and nuclear power. The bill would require electricity suppliers to purchase a certain number of certificates each year so that they account for 70% of their retail sales by 2026, 85% by 2030 and 100% by 2035.
Assessing State Progress
Both the Murphy master plan update and Smith proposal are “hugely important for how we expand clean, renewable energy in the state,” said Doug O’Malley, director of Environment New Jersey.
“So, it makes sense to kind of update the energy master plan based on the Inflation Reduction Act, and it makes sense to strengthen our state, clean, renewable energy targets.” He added that the state typically updates the master plan every five years, putting Murphy on that schedule.
In a release explaining his plan, Murphy said the state needs to not only “assess our progress to date, but renew our commitment to a clean energy economy while taking stock of the breadth of resources at our disposal.” The master plan sets a state goal of reaching 100% clean energy by 2050.
The release said that shooting to complete the master plan update by 2024 would give “additional time needed to focus on data-driven modeling” and ensure the plan “demonstrates the full economic and environmental impacts of clean energy policies.”
“Only by developing and diligently pursuing an updated climate mitigation strategy can we build upon our efforts to cultivate resilient and sustainable communities,” Murphy said in the release. “In addition to taking into consideration the implications of new state and federal policies, the 2024 Energy Master Plan will seek to better capture economic costs and benefits, as well as ratepayer impacts, throughout our journey toward a clean energy future.”
Murphy will convene a new Energy Master Plan Committee and reschedule the cancelled stakeholder meetings for later this year.
Cost vs Affordability
The revamp comes amid criticism that four years after release of the master plan, Murphy has not told the public how much it will cost to implement. A report released by the BPU in August showing that some residents could see a 16% energy cost reduction under the plan did little to quell the concern. Critics said the analysis didn’t consider the hefty investments needed to reap those savings, such as buying an electric vehicle and investing in electric home heating systems. (See NJ BPU Approves Report on Costs of Energy Master Plan.)
Raymond Cantor, vice president of government affairs at the New Jersey Business and Industry Association (NJBIA), one of the state’s largest business groups, said the reevaluation of the master plan is timely but raises concerns that it will repeat the focus of the last plan on cutting emissions by shifting the state to a reliance on electricity. NJBIA would like to see greater consideration of alternative fuels such as hydrogen and renewable natural gas.
“We need to understand what this is going to cost,” he said. “Energy is the fundamental basis of our economy and standard of living. We need to know if what they’re proposing is going to be affordable or not.
“They talk about least-cost. But least-cost is not necessarily affordable cost,” he said. “If people can’t afford energy, then they’re going to suffer.”
On the Smith bill, Cantor expressed concern that it sets “unrealistic” targets.
“Setting unrealistic targets, and then asking government to enact policies to meet that, is only going to result in unreliable energy sources — and that’s not acceptable,” he said. “We should be aggressively pursuing rational policies that will get us there, not setting unrealistic deadlines.”
Starting a Discussion
S2978 would provide generators with a clean electricity attribute certificate (CEAC) for each megawatt-hour of energy they produce. The bill would allow suppliers to retire existing energy certificates, among them Offshore Wind Renewable Energy Certificates (ORECs), Solar Renewable Energy Certificates (SRECs), and Transition Renewable Energy Certificates (TRECs) awarded in a now-closed temporary solar incentive program.
The bill also allows for the retirement of zero-emission credits (ZECs), awarded for nuclear generation, and limits the amount of the state’s electricity that can be sourced from nuclear plants to 40% of the 2017 generation figure.
Smith, who heads the Senate Energy and Environment Committee, said the aim of the bill is to “unify the energy incentive programs.”
“It’s going to be a pretty significant change from what we have been doing,” he said. “It’s going to start the discussion in how we do the energy policy in the state.”
“The point of it is to make our incentive programs more effective, and also, believe it or not, to lower costs,” he said. “At the end of the changes, we expect to see a reduction in rates.”
O’Malley said S2978 is needed, in part, because current state law sets a goal of achieving 50% clean energy by 2030 but sets no target beyond that. When that goal was set, for example, the state’s plans for offshore wind were minimal compared to the rapidly advancing sector underway, he said.
“This is where Sen. Smith is filling the gap,” he said. “Most states have clear clean energy goals and mandates through the next decade. We need to clarify that now for the electric market.”
Ed Potosnak, executive director of the New Jersey League of Conservation Voters, called it a “strong” bill, but one the organization couldn’t support in its present form because it allows six trash-burning incinerators around the state to generate some of the needed electricity.
“They’re not clean,” he said. “They shouldn’t be in a clean energy standard.”
The removal of the incinerator support would make the bill acceptable, although the group will also push for other changes, he said, including increasing the amount of clean energy that must be generated in-state to above the current 50% requirement, in part, because of the economic and employment opportunities for the state.
The master plan upgrade is needed because of the enactment of the Inflation Reduction Act, the availability of superior technology to model the impact of climate change and efforts to combat it, the changing social attitudes toward the problem and the apparent acceleration in the impact of climate change, he said.
“There’s both an urgency and a need, and also the ability,” he said. “And I think when those things converge, that’s when you get a real chance to update that plan.”
The electric sector must fundamentally reconsider how it measures and manages grid reliability in response to a changing climate and evolving generation mix that increasingly includes variable resources.
That was a key takeaway from an online panel hosted by WECC on Thursday, the first of the regional entity’s monthly discussion series this year on resource adequacy.
While the message is not necessarily a new one, panelists offered some fresh perspectives.
“I think [what] we’re really coming down to is [that] capacity used to be king; I like to say the king has no clothes,” said Mark Lauby, NERC senior vice president and chief engineer.
Lauby was referring to the industry — and NERC — requirement that an electricity network be designed to meet the one-in-10 loss-of-load expectation (LOLE) standard, which calls for utilities to manage their systems in a way that demand doesn’t exceed available supply for more than one day in every 10 years. At the heart of LOLE is a focus on carrying enough generating capacity to meet the highest expected loads with a safe reserve margin.
But the makeup of the grid has changed since the advent of the LOLE standard, Lauby noted, and so have the conditions under which it operates. With climate change, weather is becoming more volatile, and weather events such as cold snaps are lasting longer, particularly in areas not accustomed to such events. That change has prompted NERC to alter its approach to producing its reliability assessments.
“Now we’re actually laying out different types of scenarios and working with regional entities in the assessment areas to say, ‘OK, what about a cold winter?’ And let’s kind of figure out what that looks like,” he said. “What is extreme cold weather for a particular assessment area? And then we work with them to determine what might be the forced outage rates for the plants, because when things get cold, things kind of break a little bit at a higher rate.”
Instead of focusing on capacity, Lauby said, the industry must shift its lens to measures of energy and essential reliability services, such as frequency and voltage support and ramping capability.
“We were cheating by using capacity because we had firm fuel, and we don’t have that anymore in many cases [and conditions] are less certain, and we’re actually becoming more and more less certain. So how do we firm that up? What does that look like?” he said.
“We have to develop a whole new set of metrics to understand exactly what are the risks we’re dealing with as we transform this grid. And we can do it; we just got to do it in a way in which we can ensure that we can not only deal with the short ramps and the short conditions, but also the long-term widespread conditions,” Lauby said.
Small Perturbations, Bigger Impacts
Oregon PUC Commissioner Letha Tawney | WCPSC
Oregon Public Utility Commissioner Letha Tawney expanded the critique on industry convention, questioning long-held beliefs on what constitutes a reliable resource mix in a warming climate.
“I’m not sure the traditional generation stack is performing particularly well in the face of the stress of climate change,” Tawney said. She pointed out that, during a heat wave last summer, a large coal plant in the Northwest tripped offline because of water scarcity and heat stress, pushing two Oregon utilities into emergency alerts.
Tawney also warned that the changing climate is putting stress on the Northwest hydroelectric system. She said current high natural gas prices in the West are at least partly attributable to relatively low hydro flows.
“I think the variability we may see in the hydro system could really stress us as we get sort of to that outer edge. We’re running sort of with less margin in general, and so small perturbations create bigger impacts then maybe they did when we were much longer on [hydro] resources,” she said.
George Lynch, legal counsel for the Idaho Governor’s Office of Energy and Mineral Resources, echoed Tawney’s concerns about the Northwest hydro system. Lynch said that while his state has seen “really rapid development” of renewable resources, his office has “also worked to support dispatchable resources such as nuclear and geothermal, especially as we see our hydropower declining over time, or at least becoming a little less reliable than has historically been.”
Lynch said Idaho has historically enjoyed cheap electricity because of its hydro system, which has attracted businesses that have taken advantage of the low prices.
“We’ve also had really low natural gas prices, but I think natural gas prices across the region have increased up to threefold this last winter … due to the lower hydro output, so that’s something that we’ve been watching,” he said.
More Humility Needed
Tawney turned her attention to the broader West, pointing to the challenges the Western Area Power Administration faces in preventing Arizona’s Lake Powell from reaching “dead pool” status amid a record-long drought. That would curtail output from the Glen Canyon Dam and hobble the Southwest’s black start capability and ability to maintain a stable grid. “That’s a long-term challenge,” she said.
Tawney said the power sector hasn’t really grappled with the fact that even Oregon is enduring its longest drought in 1,200 years. “I think we don’t think ahead to [whether] the coal plants, or any of the thermal plants, [will] have the temperature of water that they need during one of these heat events to cool. Will they be able to access their water rights, or will they be supplanted because it’s a particularly bad year?”
The Oregon commissioner defended California’s response to the energy emergencies accompanying last September’s scorching heat wave, when CAISO was forced to rely on last-minute conservation measures and a high volume of imports to avoid blackouts in the face of record demand. She called for more “humility” among neighboring states that also would’ve struggled to meet loads that fell so far outside planning margins. (See California Runs on Fumes but Avoids Blackouts.)
Tawney said that while there’s “a lot of finger-pointing at California” around its grid issues, the state was actually confronted with “one-in-10” events.
“They’ve hit their LOLE, and there’s still a lot of focus around keeping them moving forward on staying reliable,” she said.
“Now, is one-in-10 good enough? I think that’s a different question, and it sure doesn’t seem like it is. It sure doesn’t seem like one-in-10 is actually acceptable any longer, and so that adds a real challenge,” Tawney said.
“For all of us in the West, nobody is immune,” concluded panel moderator Kristine Raper, WECC vice president of external affairs. “I think this is the lesson that we should have learned over the last handful of years.”
Commissioners Approve 90-10 Split on JTIQ Cost Allocation
SPP’s state regulators last week approved staff’s proposed cost allocation for the five projects in the RTO’s Joint Targeted Interconnection Queue (JTIQ) study portfolio.
The Regional State Committee, which has specific authority over cost allocation, accepted several recommendations from the Cost Allocation Working Group during a virtual quarterly meeting Jan. 30.
The JTIQ study with MISO was designed to find potential projects on the RTOs’ northern seam that could reduce congestion and allow additional resources, primarily wind farms, to interconnect with the two systems. The RTOs’ staff have proposed a cost allocation that assigns most of the portfolio’s $1.06 billion in costs to generation. (See MISO, SPP Propose 90-10 Cost Split for JTIQ Projects.)
The RSC unanimously approved the CAWG’s recommendations that:
generators bear 90% of the portfolio’s capital costs and that load cover the remaining 10%;
load’s portion of the JTIQ’s annual transmission revenue requirement (ATRR) be based upon adjusted production costs, as outlined by the RTOs’ joint operating agreement; and
allow each building transmission owner to recover the non-capital construction costs allocable to generator interconnection customers through the TOs’ formula rate template in their respective regions.
The commissioners also unanimously approved the CAWG’s recommendation that SPP staff ensure the portfolio is implemented in a “reasonable manner” to improve its chances of securing U.S. Department of Energy funding to improve the benefit-cost ratio for all SPP load. SPP and MISO have joined forces with the state of Minnesota and the Great Plains Institute to apply for DOE grants from the latter’s $10.5 billion Grid Resilience and Innovation Partnerships (GRIP) program. (See “SPP, MISO Applying for DOE Funds to Help with JTIQ Portfolio,” SPP MOPC Briefs: Jan. 17-18, 2023.)
The committee revised the CAWG’s motion by adding the word “reasonable” before “manner” to address a complaint from North Dakota Public Service Commissioner Randy Christmann.
“What I’m reading here is that we are willing to implement this in whatever manner the DOE comes up with in order to get them to pay for our desires,” he said. “That just basically commits us to agreeing to anything they come up with. I’m fine with pursuing the DOE funding, as long as we’re not committed to doing whatever they want.”
Three of the committee’s 11 members — representing Louisiana, North Dakota and Oklahoma — voted against the CAWG’s recommendation that SPP’s 10% load share in the current portfolio and the next study of the southern party of the MISO-SPP seam be regionally allocated on a load-ratio share basis consistent with previous RSC policies.
“I don’t think we should be making our allocation decisions based on balancing our regions,” Christmann said. “I don’t like the idea of passing something based on its pluses and minuses and saying we’re going to do this one regionwide, and in exchange, we’ll do whatever the southern end comes up with regionwide to whether it meets the criteria or not.”
David Kelley, SPP vice president of engineering, said the recommendation was consistent with other policies the RSC has reviewed and approved. He said the grid operator’s experience with importing and exporting power during winter storms proves additional transmission interconnections between regions provides “greater reliability and resiliency … going forward.”
Texas Public Utility Commissioner Will McAdams said he views the JTIQ portfolio as a “building block of a greater reliability framework” where everybody chips in.
“If you have a need on a seam, you’re going to build transmission just like road planners build highways. If you build a highway, everybody gets to use that,” he said. “We’re going to need to replace new generation, and the guiding principle for me is I would rather that new generation settle in our SPP footprint to where our RTO can control those resources … and then if they have excess, sell into MISO during scarcity periods at a profit to help reduce the cost on their loads.
“To me that makes sense, and if we see that occur in both the SPP northern area as well as the South, then that benefits everybody,” McAdams added.
Christmann proposed a separate motion that the JTIQ portfolio only receive construction notifications when the executed generator interconnection agreements can pay for 50% of the eligible engineering and construction costs.
“We’re preparing to do an approval to construct based on the fact that GI customers are going to pay 90%. That can be our plan, but if they don’t come through, somebody is going to pay the costs of that project or these projects,” he said.
Minnesota Public Utilities Commissioner John Tuma acknowledged Christmann’s concerns but pointed out that no one is forcing companies to invest in generation and that they’re capable of making their own judgments.
“I’m hoping they make the right judgment because they got to come in front of me for recovery,” Tuma said.
“If you’re a generator interconnection customer going through the process, you don’t have any certainty that the transmission will be there,” Kelley said. “Signing up to pay for transmission that may or may not be there is not something that they could get financing for.”
“My concern is that this unravels the way we normally get these people signed up for projects. … This solves a lot of the problems,” Tuma said. “I think it also jeopardizes the DOE funding because a condition like this could put a lot of the projects and ability for these projects to go forward in jeopardy. We are messing with some financial situations that I think are going to unravel what we’re doing with JTIQ and the ability to get this paid at a reasonable rate.”
Christmann’s motion failed, receiving only supporting approval from members representing Louisiana, Nebraska and Oklahoma.
Saying she valued the conversations during the discussion, SPP CEO Barbara Sugg expressed a “high degree of confidence that the generators will be there.”
“We still have a lot of work to do in the partnership with MISO that is already proving to be beneficial for both SPP and MISO and our states and our end-use customers,” Sugg said. “We’ve got to keep this moving forward.”
Missouri’s Rupp Opposes RCAR III
The RSC approved the Regional Allocation Review Task Force’s third Regional Cost Allocation Review (RCAR III) of SPP’s highway/byway transmission cost-allocation methodology.
The mechanism assigns 100% of all 300-kV or above transmission upgrades’ ATRR to all 17 transmission zones on a regional basis using a load-ratio share. One-third of upgrades with voltage ratings between 100 and 300 kV are allocated regionally and two-thirds to the host zone’s transmission customers.
RCAR III, the first such review since 2016, indicated every zone exceeded the RARTF’s 0.80 benefit-cost threshold and w above 1 when analyzing projects approved for construction since June 2010 and in service prior to 2020.
The review was conducted using the Integrated Marketplace’s daily results paired with analysis on transmission planning models, limited to those projects in service before 2020. The task force said the methodology is expected to provide more reasonable results and avoid technical issues from past RCAR studies.
Still, RCAR III drew the ire of Scott Rupp, chair of the Missouri Public Service Commission, who cast the only vote against its approval, saying he couldn’t in “good conscience” attach his name to something “that’s just so bad.”
“I feel like I’m Pontius Pilate. I’m just washing my hands with this,” Rupp said. “We’re being told that, ‘Hey, this is the one that’s the best. This is the one that’s going to fix everything and look, everybody’s great.’ I can tell you personally, that things are not great.”
Utilities in southern Missouri have long complained about the RCAR process, saying system congestion has limited their ability to move energy. The City Utilities of Springfield transmission zone was the only one found deficient in the 2016 study; it was also among six zones, mostly in the Midwest, that was deficient in the 2013 review. (See “Cost Allocation Review Cycle Could Extend to 6 Years,” SPP Markets and Operations Policy Committee Briefs.)
In December, the southern Missouri region experienced extremely low voltages caused by resource trips, lack of deliverability and parallel system flows. Empire Electric District had to shed about 25 MW of load for 15 minutes on Dec. 22.
“Basically, what SPP has done is they’ve just taken the formula and they’ve tinkered with the methodology again until they got a result that they wanted, that would just quiet everybody that’s been having concerns,” Rupp said. “Southern Missouri has been saying, ‘Hey, we need help down here’ for 10 years. Every year, we do a lessons learned after one of these things, but the lesson we’ve learned is [we’re] going to get hosed.”
Saying she felt compelled to defend SPP’s honor, Sugg said she is very aware of the region’s problems and that she respected Rupp’s position.
“This is not the place for me … or anybody else to try to unpack all of the things that you said,” she told Rupp. “I will say … I am committed to us working to … alleviate some of the challenges that we face in that area. You’ve not seen the last of this, and please don’t think that I’m dismissing anything that you’ve said.”
The previous RCARs were completed every three years. FERC in 2017 approved SPP’s request to conduct the review every six years; the grid operator said that would save staff time and consulting costs. (See FERC Approves 6-Year Cycle for SPP RCAR Review.)
Safe Harbor Criteria Unchanged
The RSC also approved the CAWG’s recommendation to keep the current $180,000/MW safe harbor criteria for a network study’s directly assigned upgrade costs (DAUC) after customers request transmission service.
To qualify for safe harbor treatment from some or all DAUC, transmission customers must meet three base-plan funding criteria: a five-year minimum commitment term; 125% or less of load in all designated resources; and, if the designated resource is wind, that 20% or less of the designated resources come from wind.
Customer can request a waiver of the criteria, and the RSC and SPP’s Board of Directors have approved the requests under certain circumstances.
The CAWG reviews the safe harbor limit and criteria each year and conducts a more in-depth analysis every five years. The group has also opened an action item to continue studying performance-based accreditation’s effects on the 20% wind rule and the 125%-of-load resource limit.
John Krajewski, who consults for the Nebraska Power Review Board, told the committee the safe harbor criteria keeps transmission customers from being charged the full rate for service and the cost of any upgrades.
This policy “basically keep customers with these long-term requests from paying twice for the same facilities,” he said.
Krajewski shared the CAWG’s recent analysis of the safe harbor requirements. It indicated 18 of 49 load-serving entities are over the 20% limit, but that a vast majority of requests qualified under the safe harbor limit.
Former Kansas regulator and past RSC President Shari Feist Albrecht has returned to SPP as the CAWG’s chair.
Albrecht chaired the Kansas Corporation Commission during much of her eight-year tenure as a commissioner. She was succeeded by Andrew French in June 2020 after her second term expired.
She has rejoined the commission as a part-time consultant. As a member of the Utilities Division’s SPP Workgroup, her responsibilities include representing Kansas on the CAWG.
