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November 6, 2024

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NYISO Business Issues Committee Briefs: June 22, 2022

Constraint Specific Tx Shortage Pricing

NYISO’s Business Issues Committee on Wednesday recommended that the Management Committee approve a pricing proposal for multiple active transmission constraints (MATCs).

Enhancements to the current transmission constraint pricing logic will enable NYISO’s market software to re-dispatch suppliers efficiently in the short term to alleviate constraints, as well as incentivize long-term investment in locations where suppliers could provide the greatest benefits, said Kanchan Upadhyay, energy market design specialist with the ISO.

MATCs can occur for two main reasons, either from topology or from the evaluation of contingencies on the same facility. MATCs arising because of topology, also referred to as “lines in series/lines in parallel,” show the same transmission line represented as multiple segments in the network topology (long radial lines) or parallel line segments. Transmission facilities that are constrained in multiple scenarios (base case and contingency case scenarios) being evaluated are referred to as “MATCs on the same facility.”

NYISO is proposing to develop functionality in the market software to identify redundant constraints across in-series and parallel transmission facilities, the most limiting of which would be binding and utilized for pricing purposes in application of the transmission demand curve mechanism (TDC). The remaining of such redundant transmission constraints would be non-binding and not utilized for pricing purposes in the application of the TDC.

The proposed solution seeks to provide better alignment between the use of physical resources versus the TDC in solving transmission constraints. It also aligns with the operational philosophy that relieving the worst/most limiting constraint across a transmission facility would generally alleviate other transmission constraints across the facility.

If prioritized for 2023, implementation would be contingent on approval by the NYISO Board of Directors and acceptance by FERC.

Critical Infrastructure Load

The BIC also approved a proposal to restrict participation of certain types of demand response in ISO-administered programs in order to protect critical electric system infrastructure load. The limitations were proposed to comply with NERC’s October 6, 2021, Standard Authorization Request to address extreme cold weather grid operations, preparedness and coordination.

Standard Recommendation No. 8 says, “Balancing Authorities’ operating plans (for contingency reserves and to mitigate capacity and energy emergencies) are to prohibit use of critical natural gas infrastructure loads for demand response.”

The proposed tariff revision will address Standard Recommendation No. 8 as it relates to the NYISO demand response programs, said Francesco Biancardi, market design specialist for new resource integration.

The ISO is targeting July 2022 to file the applicable tariff language with FERC for implementation on Nov. 1, the first day of 2022-23 Winter Capability Period.

Bad Debt Loss Methodology

The BIC also recommended that the Management Committee approve a proposal from DC Energy to change the ‘look back’ period used in determining allocations to each participant to recover bad debt losses and payment defaults, expanding the period to three months.

Bruce Bleiweis, director of market affairs for DC Energy, presented the change and said the company believes the goal of the payment default and bad debt loss allocation methodology is to spread the loss fairly based on NYISO stakeholders’ overall billing determinants.

Market participants’ billing activity is not consistent within a month nor throughout the year, and this creates peaks and valleys for participants as a percent of total, whereas the new methodology “will smooth out the peaks and valleys” and represent an average obligation, he said.

The current methodology calculated each participant’s obligation “in the Billing Period in which the payment obligation that resulted in the loss occurred’ — DC Energy is bringing the same motion to MISO because they have a similar clause in their tariff, Bleiweis said.

One stakeholder asked whether NYISO supported the proposal or had any comment.

“We are indifferent to that timeframe,” said Sheri Prevratil, NYISO manager of corporate credit.

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MISO Warming to Patton’s Sloped Demand Curve

MISO Independent Market Monitor David Patton has been calling for a sloped demand curve in the RTO’s capacity market for what seems like forever.

The Potomac Economics president includes it as a recommendation in his annual State of the Market report for MISO every year; he even asked FERC to order the RTO to implement it in 2018. Nevertheless, MISO still has a vertical curve.

This year is a bit different, however. MISO is facing a 1.2-GW capacity shortfall in its Midwest region, and it is driven in part by inefficiently low prices “contributing to a sustained trend of retirements of resources that would have been economic to remain in operation,” according to this year’s report, presented by Patton to the MISO Board of Directors’ Markets Committee on Wednesday.

MISO’s current demand “curve” — a straight vertical line at the minimum capacity requirement — represents the fact that the RTO does not pay extra for surplus capacity, only increasing prices when there is a deficiency in a zone.

“The implication of a vertical demand curve is that the last megawatt of capacity needed to satisfy the minimum requirement has a value equal to the deficiency price, while the first megawatt of surplus has no value,” the report says. “Since prices will be set where the supply offers intersect with the demand curve, a vertical demand curve will almost always set the price close to zero when the market has even a small surplus of capacity.”

Or, as Patton told the committee, “When we impose a vertical demand curve, we’re basically saying, ‘We see no reliability value for any megawatts above the minimum requirement.’ That’s obviously not true.”

The clearing price for seven of MISO’s 10 capacity zones in the 2022/23 Planning Resource Auction (PRA) in April was the cost of new entry (CONE) of $236.66/MW-day, while the other three zones, in MISO South, cleared at $2.88. (See MISO’s 2022/23 Capacity Auction Lays Bare Shortfalls in Midwest.) That marked a huge spike from the prices in the previous auction, which ranged from 1 cent in MISO South to $5 in the rest of the footprint. (See MISO Capacity Auction Values South Capacity at a Penny.) The jump signals an urgent need for additional capacity, especially in the northern zones.

With Patton’s sloped, or “reliability-based,” curve, prices are capped until the minimum requirement is fulfilled, and each subsequent megawatt is priced at a diminishing rate. Had it been used in the 2021/22 auction, prices would have ranged from $13 in MISO South to $150 in MISO Midwest. “Although this remains well below the cost of new entry of roughly $250/MW-day, this price would ensure existing resources that were needed to maintain reliability would remain in operation,” the report says.

MISO Response

Patton’s presentation on the curve received favorable responses from MISO officials and directors.

“I really think this is what we need to do,” CEO John Bear said. He argued, however, that generator retirements are not being driven by economics but by environmental policies. “So even if we fix this, we may have some troubles.”

Patton agreed that a different curve would not “magically solve the problem overnight.” But he countered that retirements purely for environmental reasons are rare.

“Sometimes there is an interplay because there can be an environmental requirement that comes out that requires a resource owner to spend money to comply … and that would be embedded in the going-forward costs,” he said. “That may be one of the reasons why the going-forward cost is as high as it is.

“But when a market doesn’t provide the revenues to cover those sorts of costs, then the unit retires, and it may look like an environmental retirement, but had we provided the revenue, some of these units would not have retired.”

Patton also said that “this isn’t entirely a MISO issue. I view this as also being a FERC issue. I don’t know how FERC looks at the actual prices there and finds them to be just and reasonable, because they don’t serve the basic purpose of why you have a capacity market in the first place.”

Director H.B. “Trip” Doggett, chair of the committee, noted that he has “asked MISO to attempt to arrange some training for us later this year … and one of [the] topics would be the sloped demand curve so that we can fully understand it.”

Short vs. Long Term

The report says that as long as the footprint does not experience above-normal heat this summer — a big “if” given the high temperatures already this month — MISO’s resources should be adequate. Though retiring units did not offer into the auction, they will still be operational for at least this summer, and the RTO is able to import power into practically any region of its footprint. And despite the shortfall in the auction, it saw a 200-MW net increase in capacity last year, with a 1-GW gas-fired plant coming online in MISO South and nearly 2 GW of wind resources across the footprint.

“In the long term, however, we are very concerned about MISO’s resource adequacy given the relatively low net revenues generated by MISO’s capacity market,” the report says.

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FERC Investigating ISO-NE over Gas Plant’s Alleged Capacity Market Fraud

FERC is investigating ISO-NE’s role in alleged fraud by a project developer taking part in the RTO’s capacity market, the grid operator disclosed Thursday.

The existence of the investigation was first revealed in a bankruptcy filing by Salem Harbor Power Development, the company behind a natural gas plant north of Boston in Salem, Mass. The company filed for Chapter 11 bankruptcy in March after being ordered to pay $236 million to Iberdrola, its partner on the project, according to Reuters.

According to the filing, dated April 20, FERC’s Office of Enforcement started its investigation in 2017 and released preliminary findings in 2020. Those findings alleged that Salem Harbor violated FERC and ISO-NE rules by failing to provide “accurate and complete critical path schedule updates” to the grid operator.

FERC also alleged that the project’s developers “engaged in a fraudulent scheme to deceive ISO-NE and the market into believing that the facility would meet the” 2017 commercial operation date and to collect capacity payments regardless of the project’s delays.

The company has denied the allegations and is in talks with FERC over a potential settlement, according to the filing.

But potentially more significant is that ISO-NE itself is under investigation for failing to figure out that the project would be delayed, allegedly giving the developer advice to help it skirt the consequences of failing to meet its COD and not forcing it to sell its capacity supply obligation (CSO).

Neither FERC nor ISO-NE provided further details about the alleged violations, but in a statement Thursday, the RTO said it denies them.

It also pointed to changes it made in response to the incident, including an automatic financial penalty for projects in the capacity market that are under development and miss their deadlines.

“The penalty serves as an enhanced incentive for project sponsors to meet their commercial operation date and eliminates the need for ISO New England to assess the veracity of the information submitted to it by project sponsors,” the grid operator said.

ISO-NE said it’s cooperating in the investigation and has asked FERC to dismiss the enforcement case against it.

FERC declined RTO Insider’s request for comment, citing its policy to not comment on ongoing investigations.

Stakeholders in NEPOOL have over the last few months been debating changes to the region’s financial assurance rules, with the goal of handing out harsher penalties to companies that are behind on development milestones. (See NEPOOL Participants Committee Briefs: May 5, 2022.)

That effort took on extra significance because of the controversy around a different natural gas plant, Killingly Energy Center in Connecticut, which had its CSO pulled by the grid operator because of its failure to meet milestones and stay on track for its COD.

The results of this year’s capacity auction were significantly delayed while ISO-NE waited for FERC and the D.C. Circuit Court of Appeals to settle the matter. (See ISO-NE Announces Capacity Auction Results After Killingly Delay.)

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California PUC Approves PG&E Regionalization Plan

The California Public Utilities Commission on Thursday approved a proposal by Pacific Gas and Electric to divide its operations into five large service areas, a move that regulators hope will bolster safety and local responsiveness in the problem-plagued utility.

The CPUC made the regionalization effort a condition of its approval of PG&E’s bankruptcy plan in May 2020, following years of devastating wildfires. (See CPUC Approves PG&E Bankruptcy Plan.)

“The CPUC’s bankruptcy decision required regional restructuring so that PG&E would be more present in the community and better able to serve the diverse values and needs of its customers,” Commissioner Clifford Rechtschaffen said a statement following Thursday’s decision. “Regionalization is one of the many ways we are looking to see if PG&E has transformed itself into a safer, more reliable and more customer serving utility since emerging from bankruptcy two years ago.”

Since then, the company has held stakeholder meetings in the five regions to solicit input and report back to the CPUC. It also reached a multiparty settlement on the plan with the California Farm Bureau Federation, the California Large Energy Consumers Association and the Coalition of California Utility Employees, among others.

Commissioners accepted the settlement as part of the proposed decision approved Thursday.

“PG&E asserts its proposal would help the company refocus on core operations, safety, its customers and frontline employees,” the decision said. “PG&E asserts regionalization will also enhance its ability to meet its safety obligations.”

The company emerged from bankruptcy after paying billions of dollars to fire victims and insurers and pleading guilty to 84 counts of involuntary manslaughter in the November 2018 Camp Fire, which destroyed the town of Paradise and led PG&E to file for Chapter 11 reorganization in January 2019. (See PG&E Sentenced; Bankruptcy Plan Approved.)

Catastrophic fires blamed on PG&E equipment also occurred in 2015, 2017, 2019, 2020 and 2021, killing more than 100 people and leveling thousands of homes.

During a conference call in February 2021, then-new PG&E CEO Patti Poppe promised the utility would deliver a “regionalized hometown experience for the communities and customers we serve” by establishing a number of semiautonomous management units around the state.

PG&E’s territory will be divided into five regions: North Coast, North Valley/Sierra, Bay Area, South Bay/Central Coast and Central Valley. Regional executive officers will manage each region and report directly to Poppe. Each region will also have its own risk officer and safety officer.

A regionalization stakeholder group will monitor PG&E’s progress in implementing the plan and report to the CPUC.

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SEEM’s Sellers Pushes Reliability, Continuity to SERC Board

CHARLOTTE, N.C. — A spokesman for the Southeast Energy Exchange Market (SEEM) told SERC Reliability’s Board of Directors Thursday that the market poses no challenges to the regional entity’s work on grid reliability.

“For everybody here in the room, responsibilities are not changing. Everybody still has the same reliability responsibilities,” said Corey Sellers, general manager of transmission policy and services at Southern Company, one of SEEM’s founding utilities. “Because we’re not doing a centralized dispatch, all of those … remain as they do today.”

SEEM is slated to enter operation later this year, after receiving FERC’s de facto approval last October (ER21-1111, et al.). (See SEEM to Move Ahead, Minus FERC Approval.) Currently the market includes 16 participants across 11 Southeastern states and nine balancing authorities, with more than 160 GW of collective capacity.

Many industry stakeholders continue to express skepticism about the ability of the new market to meet its claims of reducing friction in bilateral trading and spurring the integration of renewable energy better than alternatives such as  an RTO or energy imbalance market, debates that Sellers has participated in before. (See GCPA Panelists Go One on One Over SEEM Proposal.) In his presentation Thursday, Sellers focused on the image of SEEM as an enhancement, rather than a disruption, to the current market.

Corey Sellers 2022-06-23 (RTO Insider LLC) FI.jpgCorey Sellers, Southern Company | © RTO Insider LLC

“As we entered into this, we kind of went in with two key principles,” Sellers said. “One, let’s try to keep this simple, and build it upon the bilateral market that we’re already operating in the Southeast. And let’s try to get the most benefit for the least cost.”

Continuity was a constant theme in Sellers’ talk, as he sought to assuage SERC’s potential concerns by assuring attendees that “each balancing authority will continue to operate as it operates today” under SEEM. He portrayed the market as an attempt to smooth the business of electricity trading and allow greater use of the region’s wide array of resources.

“It’s really about scale and diversity … There’s time zone diversity, there’s definitely weather diversity, generation, load, all of those things are very helpful when you think about operating the system,” Sellers said. “That was a key component when we put this together … looking at that diversity, [and] at the diversity of resources, in particular around renewables. We have a lot of solar coming online … all across the Southeast.”

SERC’s board includes several representatives of SEEM utilities, who were asked by independent director Shirley Bloomfield to chime in with their thoughts on why their companies signed on to support the new market. The first to speak was Roger Clark of Associated Electric Cooperative; most of the following speakers said he expressed their views better than they could. Clark said the main attraction was the expansion of trading from hourly increments into 15-minute intervals, allowing more responsive scheduling.

“It was a low-cost project; it’s voluntary. We’re optimistic that something will come out of it, but we don’t have a lot of skin in the game,” Clark said. “As a BA, you lay in [resources] the best you can, but that’s what you’ve got, until you get to your next hour. … If I’ve got excess wind that we can put on and sell, [or] there’s excess solar, it’s that intra-hour variability that we’re hoping to get some efficiency out of.”

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Ex-FERC Commissioners Opine on Transmission, Markets

WASHINGTON — Former FERC Commissioners Norman Bay and Colette Honorable recounted war stories and made predictions about where their successors are headed on market and transmission policy Wednesday at the American Clean Power Association’s Energy Storage Policy Forum.

Bay, who served from 2014 to 2017, including a stint as chair, and Honorable (2015-17) were joined by former FERC staffer Christy Walsh, now senior attorney and director of federal energy markets for the Natural Resources Defense Council’s Sustainable FERC Project.

One recurrent topic was FERC’s April Notice of Proposed Rulemaking on transmission planning and cost allocation (RM21-17) and its June 16 NOPR on improving transmission providers’ interconnection processes (RM22-14).

Pivot on Right of First Refusal

Bay said he was surprised that FERC’s April NOPR proposed reinstating transmission providers’ federal right of first refusal (ROFR) to construct transmission projects — a retreat from Order 1000’s attempt to inject competition.  (See ANALYSIS: FERC Giving up on Transmission Competition?)

Bay, a partner with Willkie Farr & Gallagher, said there are two possible explanations for the shift in the NOPR, which was approved on a 4-1 vote, including the commission’s three Democrats and Republican Commissioner Mark Christie. Republican James Danly dissented.

“One is that, as a policy matter, the commission was concerned that this emphasis on competition was having this perverse policy incentive, where it was incenting transmission owners to basically build local reliability projects, and not to build the more ambitious, and frankly more helpful, regional — or even interregional — lines,” Bay said during the discussion, which was moderated by Jason Burwen, ACP’s vice president of energy storage.

The second possibility, Bay said, is that “there was a commissioner who felt very strongly about taking a step back from the removal of the federal ROFR, and basically insisted on this policy position. And to keep that vote, the decision was made to put into place this policy change.”

The June NOPR, which seeks to reduce delays and increase cost certainty for generation developers, was approved unanimously — a rarity since Danly, who has dissented on most rulemakings, joined the commission.

“Five votes on a NOPR like this is significant,” said Honorable, now a partner with Reed Smith. “[For a] NOPR as important and significant as this one, having every commissioner on board is key to provide certainty, and also to provide the proper foundation for FERC to build on.”

But, she added, unanimous support of the NOPR does not mean the final rule will also receive five votes. “You start all over,” she said.

Comments Needed

Honorable encouraged stakeholders to provide comments in response to the two NOPRs and dockets involving energy storage, noting that commission orders must be based not only on the law but also on “what the record says.”

“Your real-life anecdotal experiences about ways in which energy storage has been leveraged in places where transmission wasn’t as robust, that’s critical,” she said. “So, I would urge you to not sit on the sidelines and wait for someone else to put that in there — that you make sure it’s in the record, so that it can be leveraged by those commissioners that are seeking to build that pathway more robustly for storage as an alternative.”

Walsh said stakeholders should also seek to meet with FERC commissioners and staff before filing their comments. “A lot of times you can have a two-way conversation with commissioners and staff, and they can ask you questions about the point you’re making, and they can help you really see exactly what they need to hear in those comments,” said Walsh, who served as an adviser for former Chair Jon Wellinghoff, deputy general counsel and director of the Division of Policy Development during her nearly 19 years at the commission. “This is a rulemaking so there’s no, ex parte [prohibition]. Nothing that’s said in those meetings can be used without you then writing them down and submitting them in comments.”

Market Design

Burwen asked the panelists to predict what might result from FERC’s April order directing CAISO, ISO-NE, MISO, NYISO, PJM and SPP to report on how their system needs are changing due to shifting resource mixes and how they intend to fulfill them (AD21-10). (See FERC Asks RTOs for Plans on Changing Market Needs.)

Walsh predicted the docket would prompt changes but said it’s unclear whether they will be dictated by FERC or proposed by individual RTOs.

“FERC has done a white paper, four technical conferences, and now this order directing reports,” Walsh said. “That’s a significant amount of FERC staff time and industry time, and they would not be doing that unless they had intention to move forward with something.”

In previous orders directing reports, Walsh said, “sometimes the RTOs do the reports and kind of see their own flaws by doing some self-reflection and start fixing it themselves.”

Walsh said she expects more emphasis on using the energy and ancillary services markets, “so that you are really providing services in the hours that they’re needed, rather than in three years, or in case of New York, six months beforehand [through capacity markets]. … I think that we are coming to a system that is going to shift from hour to hour based on load and the resources, and we just need to be more dynamic.”

Capacity Accreditation

The panel also discussed FERC’s two June 16 NOPRs intended to improve the bulk power system’s protections against severe weather risks. One proposes to direct NERC to modify reliability standard TPL-001-5.1 (transmission system planning performance requirements) to set expectations for long-term planning by utilities (RM22-10). The second directs transmission providers to submit one-time reports describing how they assess and mitigate their vulnerability to extreme weather (RM22-16, AD21-13).  (See FERC Approves Extreme Weather Assessment NOPRs.)

Bay said the issue of capacity accreditation — the subject of RTO-specific effective load-carrying capability (ELCC) rules — will require input from FERC as well as NERC.

“I don’t think NERC can do it all, because the issue here is not only technical, involving engineering, but it’s also economic,” Bay said. “I think there is an opportunity for FERC to step in and basically standardize the rules … but it would be difficult. It would be contentious, [but] it might be in the long run better than letting each RTO kind of figure out its own path forward.”

Honorable said she would welcome standardized rules. “Having stepped down from the 888 tower [FERC headquarters], it’s rough out here when you have to deal with a number of RTOs and ISOs that have different frameworks, different rules, different procedures. It’s cumbersome; it’s clunky.

She said FERC could provide “some structure … at the outset, and then leverage other resources. Maybe there is a role for NERC to play in the very technical evolution of it. But I’m concerned that if FERC rides herd over all of it, it could, it might take longer than it should.”

Walsh suggested FERC could have different rules for single-state ISOs in California and New York. “The states are really driving what resources are going to be on line, so it seems to me that, for example, the ELCC in New York might be different than any ELCC in ISO New England or PJM.”

State-Federal Relations

No discussion of FERC would be complete without discussing the perpetual tension between state and federal policymakers.

Honorable said states could become allies of FERC if the agency addresses inefficiencies in market operations and transmission planning across regional seams.

“That’s a place where we can really gain support from states who are grappling with the reliability impacts and the resilience outcomes as a result of long tenured congestion and the uncoordinated ways in which the seams are operating,” she said. “That’s an area that definitely could use more love and attention.”

Walsh praised FERC for creating the state-federal task force on transmission, and the transmission planning NOPR for creating “a really robust process for states” to have input.

But she said the state commissions need FERC guidance on the minimum set of benefits that the system should be planning for.

“State commissions are overburdened,” she said. “Asking the state commissions to figure out [transmission] benefits that aren’t immediately identifiable easily, it’s going to be hard for them.”

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Michigan PSC OKs CMS Plan to End Coal Use by 2025

LANSING, Mich. — The Michigan Public Service Commission approved CMS Energy’s integrated resource plan Thursday under an agreement that will end the company’s use of coal-fired generation by 2025 and boost development of renewable resources and electric storage.

The commission’s order finalized a settlement announced in April (Case U-21090). (See Consumers to End Coal by 2025 in IRP Deal with Mich. AG.)

Consumer groups and environmentalists praised the order as a historic moment for CMS (NYSE: CMS), which got almost 35% of its power from coal last year.

Environmentalists and community groups also said they would continue to push CMS to stop use of a wood-burning plant and to take more steps toward environmental justice.

The agreement calls for CMS to close three coal units at the J.H. Campbell plant in Ottawa County in 2025.   It also approves CMS’s purchase of the natural gas-fired Covert Generating Station in Van Buren County. The agreement also requires CMS to keep its D. E. Karn Complex, powered by natural gas and fuel oil, running until 2031 instead of its initial 2023 planned closure.

The agreement also expects CMS to add up to 8,000 MW of solar power by 2040 and 75 MW of energy storage by 2027, with 550 MW of storage by 2040.

“The clean energy plan is a sea change that positions our company as a national leader and empowers us to deliver reliable energy while protecting the planet for decades to come,” said Garrick Rochow, CEO of Consumers Energy, CMS’ main subsidiary.

CMS executives also said the agreement would save ratepayers $600 million in energy costs over the 20-year life of the plan.

In approving the plan, the PSC ordered CMS to conduct “added analysis” in its next IRP, including total emissions, the effects of particulate matter on health, an environmental justice tool, low-income energy efficiency participation rates and rooftop solar adoption rates.

Among activists involved in the decision, Nayyirah Shariff of Flint Rising said the decision inspired her group, and that group members would continue efforts to shut down a CMS wood-burning plant and incinerator in Flint.

Derrell Slaughter, the Michigan Clean Energy Advocate for the Natural Resources Defense Council, said the agreement was a “significant step” in Michigan’s fight against climate change.

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NJ Boosts EV Charging Program for Tourist, Multifamily Locations

New Jersey has added $6 million to two incentive programs designed to encourage the development of electric vehicle charging stations at tourist locations and multifamily buildings, as the state prepares to launch the third phase of a program that has to date awarded incentives for the purchase of more than 12,000 EVs.

The New Jersey Board of Public Utilities (BPU) allocated $4.5 million to the tourist program last month. Launched in the fall, the program closed its second round of applications on Wednesday. The project in the first phase awarded more than $1 million in grants for the installation of chargers at 24 tourist sites, resulting in the installation of 61 chargers, including to four state parks and at least eight sites on the Jersey Shore.

The program awards an incentive of up to $2,000 for Level 2 chargers and 50% of the make-ready costs, up to $5,000, and up to 50% of the cost of a DC fast charger and up to $75,000 in make-ready costs. (See NJ Seeks to Lure Tourists with EV Chargers.)

The board also allocated $1.5 million to strengthen the program that awards incentive packages to stimulate the development of chargers at multifamily dwellings. The program, now in its second phase, awarded about $1 million for the purchase of 223 chargers and funded the preparation of sites at 67 multiunit dwellings in 41 municipalities, the BPU said. (See NJ Greenlights Incentives for Multi-dwelling EV Chargers.)

Cathleen Lewis, e-mobility program manager for the BPU, said the increased popularity of EVs and the future need for home chargers is already leading to multiunit dwelling developers planning for charging at their properties.

“What you’re seeing is developers know that this is coming; this is going to be an amenity that people are going to want,” Lewis said. She said there had been a “huge diversity” in applications, stretching from suburbs to overburdened communities and dwellings of different sizes.

The funding shifts come as the BPU also prepares to launch the third phase of its Charge Up New Jersey program, which provides incentives for the purchase of an EV. The agency at the end of last month released a straw proposal for the next phase of incentives, with a cut from $5,000 to $4,000 of the maximum incentive available, and an incentive of $250 for the purchase of a Level 2 smart charger for residential use.

The BPU says the program has so far incentivized the purchase of 12,225 vehicles with another 1,235 pending, for a total cost of $57.7 million. The agency expects the third phase, which will require board approval once the final draft is prepared, to start some time after the beginning of the state’s new fiscal year in July.

The state will also receive $15.5 million in federal funds under the National Electric Vehicle Infrastructure Formula program to buy and install chargers, funding that the Biden administration earlier this month said must be used to create a national network that has minimum reliability standards and charging speed, works for all cars and takes common payment methods. (See Biden Administration to Order EV Charging Standards.)

State plans are due in August. Proposed rules released by the Federal Highway Administration (FHWA) include requirements that EV infrastructure “operate on the same software platforms from one state to another”; that they be installed, operated and maintained with qualified technicians; and that basic information, such as location, connector type, power level, real-time status and real-time price, be available free of charge and easily publicized.

Growth in EVs, Charger Installations

The state’s portfolio of EV incentive and charger programs provide a window into the demand patterns in New Jersey as the state pursues aggressive EV and electric charging goals. The state’s Energy Master Plan calls for the state to deploy 330,000 light-duty EVs on the road by 2025 on the way to reaching 100% clean energy by 2050, and cutting emissions by 80% of 2006 levels by the same date.

The state in January 2020 enacted a law that called for the installation of at least 400 DC fast chargers, which can add about 60 to 80 miles to an EV in 20 minutes of charging, and 1,000 Level 2 chargers, which add 10 to 20 miles per hour of charging time, by Dec. 31, 2025.

The law also called for fast chargers with 150 kW of charging power to be located on travel corridors and spaced less than 25 miles apart. The law said by the same date, 15% of multiunit dwellings much have chargers of some sort and 20% of franchised overnight-lodging establishment must have chargers.

The law also required at least 25% of state-owned emergency light-duty vehicles to be plug-ins by Dec. 31, 2025, and 100% of state-owned nonemergency light-duty vehicles to be plug-ins by 2035.

The state had 64,300 registered plug-ins at the end of last year, compared to about 42,000 a year earlier, about one-fifth of the 2025 target.

The state has more than 300 public charging locations, and about 95% of the state is located within a 25-mile radius of a fast charger, according to the Drive Green website operated by the New Jersey Department of Environmental Protection (DEP). In total, there are about 750 chargers in the state, compared to about 675 a year ago, according to the recent state budget.

Local and state government has been slow to transition, however. The additional funding for the tourism and multiunit programs came from the $7 million set aside for the state’s Clean Fleet program, which was launched in 2019 and designed to encourage local and state government entities to convert their fleets to EVs.

“Due to logistical and budgetary reasons, the Clean Fleet program has not generated sufficient interest to utilize all the existing, remaining funding,” according to the BPU order detailing the shift in funds.

Some communities have nevertheless embraced them, with the help of other programs. The DEP on June 15 said the city of Paterson, in North Jersey, would soon receive a prototype electric ambulance, purchased with $908,686 in state funds that will also pay for two fast-charging stations. The city had earlier announced the purchase of 38 Nissan Leafs purchased with the help of $210,000 in state funds for use by fire, housing and health inspectors and the city’s Department of Public Works.

The ambulances, which are expected to go into service in about a year, will replace diesel vehicles, the DEP said in a release. Replacing ambulances has a strong impact in cutting emissions because they spend a large proportion of their time idling as they wait for a call, the department said.

Middle-income Purchasers

The BPU also believes it has had some success in bringing EVs, which are often seen as the domain of mainly wealthy buyers, to those in more modest income brackets.

The second phase of the Charge Up New Jersey Program provided incentives for the purchase of 3,791 EVs, of which 47% got the maximum incentive, according to figures released by the BPU at a June 13 public meeting on the program straw proposal. The figures showed the impact of the board’s decision to limit the maximum incentive of $5,000 to vehicles costing no more than $45,000, with an incentive of only $2,000 for higher-priced vehicles, to a maximum of $55,000.

The rule change was introduced for the second phase of the program, in June, after Tesla vehicles accounted for 83% of the incentives in the first phase, and 93% of the incentives were for the maximum grant. The BPU introduced the $45,000 vehicle cost cap — which meant that only the cheapest Tesla was eligible for the maximum incentive — in an effort to award the subsidies to “incentive essential” customers: those who would only buy an EV if there was an incentive available.

BPU officials also said that they were trying to incentivize the purchase of EVs among middle-income families, rather than just those with higher incomes.

Data for approved incentives and pending applications from the second phase show the impact of the shift, with Teslas accounting for only 66% of the incentives approved or with applications pending in the second round.

“So, we’ve seen a more diversified field in year 2 than we did in year 1,” said the BPU’s Lewis. “We’ve seen many more of the more affordable vehicles and those under $45,000 receiving incentives.

She noted that the BPU has seen “a significant increase” — to 40% of the total — in applicants who got incentives of $2,000 or less. That allows the BPU to “provide incentives for more vehicles with that same budget,” she said.

The next-placed make of vehicle was Ford, mainly the Mustang Mach-E, which accounted for 7% of awards. Hyundai also accounted for 7%, with awards for Kona Electric, Hyundai Ioniq Electric and Ioniq PHEV vehicles. Chevrolet Bolts accounted for 6%.

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Climate Bonds Initiative Issues Draft Steel Certification Criteria

The Climate Bonds Initiative (CBI) on Thursday asked for public comment on draft requirements for allowing steel-sector bonds to obtain certification under its Climate Bonds Standard.

“We’re really looking to expand our suite of criteria for the standard … and that expansion is effectively trying to move us into a wider array of sectors,” Anna Creed, CBI’s head of standards, said in a launch webinar for the draft steel sector criteria.

CBI’s standard focused originally on eligibility criteria for assets and projects in the energy sector, but Creed said the organization now plans to move “at scale” into heavy industry and harder-to-abate sectors.

“Each sector-specific criteria sets climate change benchmarks for that sector that are used to screen assets and capital projects so that only those that have climate integrity, either through their contribution to climate mitigation, and/or to adaptation and resilience to climate change, will be certified,” CBI explained in its draft document.

Certification of a climate bond or green bond under the standard prior to issuance allows the issuer to claim compliance with criteria for the asset or project related to the bond.

“We have criteria in the latter stages of development also for chemical production and for cement production, plus we’re working on hydrogen at the moment, and then we’re going to move on to oil and gas,” Creed said.

CBI’s draft criteria for steel production proposes one segment to address new facilities and another for facilities that existed prior to 2022, according to Fabiana Contreras, industry transition analyst at CBI.

For bonds related to new, fossil fuel-based facilities to achieve certification, the facilities must capture 70% of emissions for storage or use. And new electric arc-based facilities that use scrap metal for production will need to use at least 70% scrap or 100% hydrogen in iron-ore processing. CBI is working on additional cross-cutting criteria that will apply to hydrogen use to address emissions from electricity used in electrolysis, Contreras said.

Certified bonds related to pre-2022 fossil fuel-based facilities would require the facilities to achieve certain emission reductions by 2030, ranging from 15 to 50%, depending on age and emissions per metric ton of steel. Pre-2022 electric arc-based facilities using scrap metal would need to increase renewable energy use to reduce emissions from electricity.

The goal of the draft criteria is to help meet the Paris Agreement target of holding global warming to below 1.5 degrees Celsius.

“That is extremely ambitious … and for a lot of steel businesses the target and the criteria will appear very challenging,” said Max Åhman, associate professor at Lund University and member of the working group behind the criteria development.

Despite the challenge, Åhman believes that the steel sector is already demonstrating positive momentum in transitioning to clean and sustainable practices, and it could be a “role model” for other hard-to-abate sectors.

“If steel can show the way, there is a possibility even for those other sectors to take action to make it profitable and make it sustainable,” he said.

CBI is accepting comments on the draft criteria until Aug. 22.

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SERC: Ransomware Threats Continuing to Evolve

The threat of ransomware is only increasing amid Russia’s conflict with Ukraine, and electric utilities must be ready for the worst-case scenario, cybersecurity experts said last week at a SERC Reliability-hosted webinar.

In The Scoop: Ransomware, representatives from the law enforcement, electric industry, and cybersecurity communities discussed the changes in the worldwide threat landscape since Russia invaded Ukraine in February. Although fears that a global cyber offensive against Ukraine’s allies have yet to be realized, the U.S. Cybersecurity and Infrastructure Security Agency (CISA) has continued to warn about the capabilities of both Russia and the cybercrime groups with which it is unofficially affiliated. (See CISA Issues Fresh Russia Cyber Warnings.)

Those criminal groups took up a significant amount of attention at the webinar, with participants noting that some prominent threat actors seem to have added political allegiance to their traditional financial motivations.

“We’ve already seen some Russian-speaking ransomware groups voice their support for Russia, with the Conti ransomware gang showing their support within hours of Russia’s invasion into Ukraine,” said Lauren Cirillo, a cyber threat intelligence analyst with the Electricity Information Sharing and Analysis Center (E-ISAC). “Other ransomware and data breach groups such as Karma, Freecivilian, and CoomingProject have declared support for Russia as well.”

Cirillo pointed to last year’s ransomware attack on Colonial Pipeline, which shut down the company’s entire 5,500-mile system carrying almost half the supply of fuel products for the eastern U.S., as an early indication of the kind of disruption that ransomware groups could accomplish. The FBI attributed the attack to a criminal gang based in Eastern Europe called Darkside, which demanded a ransom payment of 75 bitcoin (then about $4.4 million).

“I personally find it fascinating that Colonial Pipeline paid the ransom in its entirety on the day of the ransomware’s deployment in their environment, but it still took five days to fully restart the pipeline,” Cirillo said. “This doesn’t include returning the pipeline supply chain to the state it was in before, which took several additional days to accomplish.”

Media reports following the incident claimed that while DarkSide provided Colonial with a decryption tool in exchange for payment as promised, the tool itself was too slow to be usable and the company had to rely on its backups to restore the affected systems. In testimony to Congress, Colonial’s CEO neither confirmed nor denied these stories. (See Colonial CEO Welcomes Federal Cyber Assistance.)

Despite an uptick in ransomware activity over the last year, Cirillo acknowledged that the E-ISAC has seen no sign of a sustained effort against the electric sector. One reason may be that the majority of actors in this space operate on a ransomware-as-a-service model, in which a core group develops and operates the ransomware while recruiting affiliates to hack into networks and deploy the app.

Cirillo said that for these organizations, “service definitely [appears] to be one of the top priorities,” and developers take pains to guard their reputations. For example, both DarkSide and its apparent successor group BlackMatter have promised to avoid attacking civilian infrastructure such as hospitals, water treatment facilities, and nuclear electric plants. Other groups have made similar pledges, such as donating their profits to charity.

However, this too may be changing, particularly among the ransomware groups that have aligned themselves with Russia’s invasion of Ukraine. Conti in particular became “one of the most heedless and unpredictable” actors in this space last year, with the E-ISAC recording multiple reports of attack attempts against small and medium-sized utilities, along with ransom demands far above those seen from other operators.

Conti appeared to be dealt a major blow earlier this year after a former member allegedly leaked the group’s internal chats online, exposing its tactics and processes. But Cirillo said that while researchers say the main group appears to have shut down operations, it is more likely that the leadership is pursuing a more distributed model by partnering with smaller ransomware groups to share expertise and plan attacks.

“Essentially, the Conti brand is allegedly being decommissioned, but their operations are expected to return,” Cirillo said. “Under this model, the smaller ransomware groups gain countless experienced operators while Conti gains mobility and greater evasion of law enforcement by splitting into smaller cells.”