ANALYSIS: FERC Giving up on Transmission Competition?

FERC’s proposed transmission planning and cost allocation rulemaking Thursday was a welcome victory for Chairman Richard Glick (D), coming a month after having to walk back a controversial pipeline ruling, and two months before the end of his current term on the commission.

The Notice of Proposed Rulemaking was approved on a bipartisan 4-1 vote Thursday (RM21-17). (See related story, FERC Issues 1st Proposal out of Transmission Proceeding.)

“This is a big deal, a great step and one that is moving forward with bipartisan consensus,” tweeted former Commissioner Neil Chatterjee, a Republican who had frequently clashed with Glick. “Not easy to do on matters that are complex and contentious.”

The NOPR also won praise from groups including the American Council on Renewable Energy, Business Council for Sustainable Energy, Natural Resources Defense Council and Edison Electric Institute, which said it would get new wind and solar connected to the grid while adding resilience.

Glick “forged more consensus than people imagined possible on very tough and complex substance,” said Seth Kaplan, director of governmental and regulatory affairs at offshore wind developer Ocean Winds.

But the proposal also is a retreat from Order 1000’s drive to open transmission development to competition: It offers to give incumbent transmission owners a federal right of first refusal (ROFR) on regional projects on the condition that they partner with an unaffiliated company with a “meaningful level of participation and investment” in the project.

The commission said it was changing course because it feared that Order 1000’s removal of the federal ROFR may be “inadvertently discouraging investment” in regional transmission. Incumbent transmission providers “may be presented with perverse investment incentives” to instead engineer local transmission projects for which they retain development control, the commission said.

Regional transmission facilities subject to competitive procurements represent only a small portion of transmission investment in recent years, it said.

In Order 1000, the commission found that federal ROFRs create “a barrier to entry,” discouraging nonincumbent transmission developers from proposing alternative solutions that could be more efficient or cost-effective. But FERC’s order could not eliminate ROFRs authorized by state laws, and state legislatures in Iowa, Minnesota, North Dakota, Michigan, South Dakota and Texas have supported such protections for their utilities.

‘Practical Reality’

In regions with state ROFRs, “there’s not a practical opportunity for third-party transmission,” said Rob Gramlich, president of consulting firm Grid Strategies. “So, in some sense, I think the commission is just reflecting the practical reality.”

“Competitive transmission is like a 4.8-degree of difficulty in diving. Generation is way easier,” Gramlich continued. “There’s been a 40-year consensus on competitive generation. Not that we have it everywhere, but at least the economic policy is agreed to by every economist who looks at it. In transmission, it’s just harder and it hasn’t worked out well.”

Larry Gasteiger, executive director of WIRES, which represents utilities promoting grid investment, said the commission appeared to be prioritizing transmission development over competition.

“The bigger goal was getting the needed infrastructure built and put in place over other processes,” he said. “I think it’s an acknowledgement by the commission that competition — as it was set forth in Order 1000 and has been implemented for the last 10 years — really hasn’t been working in terms of getting needed transmission infrastructure built. … So we were pleased to see that there wasn’t a further expansion in that direction and, in essence, a doubling down on what wasn’t already working.”

Jeff Dennis, general counsel and managing director of Advanced Energy Economy, said the commission “is looking to build as many coalitions as possible that can move transmission forward.” AEE represents businesses favoring carbon-free energy and electrified transportation.

“Certainly, one could surmise that the commission is sort of offering this renewal of the federal right of first refusal in exchange for incumbents opening the opportunity to invest in transmission to more entities,” he added. “The commission … hasn’t made this kind of political calculation transparent, but one could imagine that is one thing they are trying to do.”

Ed Tatum, vice president of transmission for American Municipal Power (AMP), acknowledged Order 1000 had fallen short, but added, “I’m not sure if elimination of ROFR is the right solution.”

Instead, he said, FERC should adopt the planning process changes that AMP and others proposed in the PJM stakeholder process, which have been rejected by the commission. (See FERC Rejects Challenges to Decision on EOL Projects in PJM.)

AMP and its allies are pressing their case before the D.C. Circuit Court of Appeals. “I think we have a better solution,” Tatum said. “But it might take the courts to help FERC see that.”

Limited Regional Transmission Investments

In the NOPR, the commission indicated dismay that “despite increased investment in transmission facilities overall … recent transmission investment appears to be concentrated in local transmission facility development or regional transmission facilities subject to an exception from competitive transmission development processes, such as immediate-need reliability projects or upgrades to existing transmission facilities, as opposed to investment in regional transmission facilities.”

Baseline and supplemental projects by year | PJM

Although there has been wide acknowledgement that Order 1000’s efforts to open up competition have had only limited success, commenters in the docket were divided on how FERC should respond.

Some, including the California Public Utilities Commission, called for more competition. NRDC, Sierra Club and other public interest organizations said FERC should require transmission providers to plan for local transmission needs as part of the regional planning process. The National Association of Regulatory Utility Commissioners urged FERC to discourage overinvestment in local transmission facilities.

But EEI asked the commission to “remove the complex and costly competitive processes” that it said is delaying transmission development.

FERC noted investment in regionally planned transmission has declined in some regions, including PJM, which averaged $2.76 billion in annual spending on regional transmission from 2005 to 2013 and only $1.65 billion from 2014 to 2020.

Baseline and supplemental projects since 2005 (adjusted by peak load) | PJM

Given the experience since the issuance of Order 1000 in 2011 and the comments it received in this docket, FERC said, it concluded that the order’s elimination of all federal ROFRs for new regional facilities “was overly broad,” resulting in “potentially flawed investment incentives that may be restraining otherwise more efficient or cost-effective regional transmission facility development.”

“Order No. 1000 failed to recognize that at least some of the most notable expected benefits from competitive transmission development processes (e.g., new transmission developer market entry, greater innovation in and potentially lower costs of transmission development) could be achieved or at least reasonably approximated through other means.”

Joint Ownership Proposal

ACEG’s Gramlich and others said they were intrigued by the proposal for joint ventures, a model they said has proven successful in MISO’s Multi-Value Projects and CapX2020, in which 11 transmission-owning utilities in Minnesota and surrounding states built nearly 800 miles of 345-kV and 230-kV transmission. In addition, LS Power Grid New York (formerly North America Transmission) teamed up with the New York Power Authority to win state approval for the New York AC project.

“The public power community has always advocated for more joint ownership,” Gramlich said.

AEE’s Dennis said enlarging the circle of those involved in planning and developing transmission “builds more and more support for determining that those projects are needed, brings in more sources of capital, including low-cost capital from not-for-profit, municipal entities and things like that. That helps move those projects forward.”

Dennis said there would likely be opposition, however, to a final rule that allowed “incumbent transmission owners being able to essentially ally with each other to exercise a right of first refusal.”

‘Right-sized’ End-of-life Replacements

While the commission’s retreat on the federal ROFR would be a win for incumbent TOs, the commission also proposed new procedures to increase transparency on the TOs’ local transmission upgrades.

The NOPR would require transmission providers to include in their long-term regional transmission planning an evaluation of TOs’ plans to replace aging transmission facilities of 230 kV and above to determine whether they “can be ‘right-sized’ to more efficiently or cost-effectively address regional transmission needs.”

It also expressed concern that local transmission planning processes may lack adequate transparency and stakeholder input, resulting in duplicative spending that increases costs for consumers. The commission noted that local transmission facilities are included in regional plans only as “inputs” for modeling of their reliability impacts, “with minimal opportunity for stakeholder review.”

“My initial read of it is it may not be a very dramatic change at all, in terms of how things are currently operating,” said WIRES’ Gasteiger. “Frankly, I think that’s pretty much being done in most regions right now.”

But Gramlich said it “could potentially be huge, particularly because we have so many transmission assets around the country that are well over 50 years old that will need to be replaced. And the practical limitations on developing new rights of way are so extreme that one of the best opportunities to expand capacity is to expand capacity over existing rights of way.”

Gramlich said there has been poor coordination between local and regional transmission upgrades.

“I’ve heard the heads of very large transmission owners in some of the RTOs say that it was working a lot better before Order 1000. Because it used to be that any upgrade they would identify on the local system, they would bring to the RTO, and the RTO would consider a more optimal regional solution,” he said. “And then Order 1000 came along with the requirement to competitively bid anything in the regional process, and that [coordination] largely shut down.”

Dennis said the change could be significant “if the transparency requirements are paired with accountability … meaning ultimately that there is a consequence to building more expensive, less-than-optimal options.”

AMP’s Tatum questioned the 230-kV cutoff. “There’s a whole lot in the [interconnection] queue I believe that is on transmission facilities below 230 kV,” he said.

Order 890 required that transmission providers’ local transmission planning comply with nine principles, including coordination, openness, transparency and information exchange. “However, implementation of these principles in local transmission planning processes appears to remain uneven,” FERC said.

The NOPR would require transmission providers hold at least three stakeholder meetings on each local transmission planning process: one on the criteria, assumptions and models used (Assumptions Meeting); a second on identified reliability criteria violations and other transmission needs (Needs Meeting); and last a review of potential solutions (Solutions Meeting).

Transmission providers would be required to evaluate whether any facilities rated at or above 230 kV that are planned for replacement during the next 10 years can be “right-sized” to more efficiently address regional transmission needs. “Right-sizing could include, for example, increasing the transmission facility’s voltage level, adding circuits to the towers (e.g., redesigning a single-circuit line as a double-circuit line), or incorporating advanced technologies (such as advanced conductor technologies),” FERC said.

Because the proposed rule would not change existing law allowing the incumbent TO to proceed with developing its planned in-kind replacement transmission facility without right-sizing, the commission said it would establish a ROFR for such facilities located within the utility’s retail distribution territory.

Only the incremental costs of right-sizing the transmission facility would be subject to regional cost allocation.

State Role

Dennis said he was pleasantly surprised by the commission’s effort to engage states in regional transmission planning and cost allocation. “I think that, paired with the requirements for much longer-term, multiple scenario-based planning, that [effort] really addresses the reality of what’s happening on the electric system and the resource mix changes that are occurring,” he said.

“By giving them that opportunity to engage up front, they are also giving the states the ability to really shape what regional transmission plans look like and to really say upfront, ‘These are things that we think will benefit our customers’ … instead of just having transmission be something that happens to them.”

The NOPR’s proposed requirement to seek state agreement on cost allocation “was a clear concession to Commissioner [Mark] Christie [R], as part of getting him on board,” Gasteiger said.

Gasteiger, who served in senior roles at FERC under Chairs Joseph T. Kelliher and Norman Bay, said it was essential that Glick won bipartisan support for such a sweeping rulemaking.

“On something of such potentially great significance … the commission [must] act on a bipartisan, if not unanimous, basis, and certainly not on a partisan basis, a 3-2 vote,” Gasteiger said. “And you don’t need to look any further than the pipeline certificate policy statement to see why that’s important.” (See FERC Backtracks on Gas Policy Updates.)

“I was glad to see that the commission made a strong effort to produce a bipartisan decision on this,” he continued. “It always involves a lot of compromise, and nobody gets exactly what they want. But it provides a lot more certainty to the industry and a lot more durability to the commission’s actions.”

After having praised the consensus-building, however, Gasteiger expressed some concern over the state role that helped win Christie’s vote.

“Generally speaking, more process doesn’t lead to getting more transmission built in a timely basis,” he said. “So the devil will be the details and in the implementation of what they’ve put in place. But I do have a concern with elevating or expanding the role of states in the process, and creating more process. What will that mean for actually getting transmission infrastructure built?”

April 25, 2022

NJ Awards $7.6M for Local Government EVs

New Jersey on Thursday announced grants of $7.6 million to fund local government purchases of electric trucks, ambulances and other vehicles in an effort to cut transportation emissions and promote municipal electric vehicle use in a strategy that officials also hope will influence private buyers to go electric.

The New Jersey Department of Environmental Protection (DEP) said $6.6 million, a tranche received from the state’s participation in the Regional Greenhouse Gas Initiative, would pay for the purchase of electric garbage and refuse trucks, two ambulances, dump trucks and a rear loader truck, along with charging stations for some of the vehicles. A $600,000 grant would go to help Jersey City, the state’s second largest city, develop an e-mobility program that will reduce vehicle miles traveled through an electric car-sharing program.

The announcement, timed to coincide with Earth Day, came the same day that Paterson, the state’s third largest city, announced its purchase of 38 EVs for use by fire, housing and health inspectors and the city’s Department of Public Works. The $210,000 grant to help Paterson purchase a fleet of Nissan Leafs was the largest award in a fund of $1 million awarded by the New Jersey Board of Public Utilities (BPU) to 16 municipalities under the Clean Fleet Program, which is designed to support EV purchase by local governments. The remainder of the awards range from $37,500 to $40,000.

Gov. Phil Murphy has set a target of putting 330,000 EVs on state roads by 2025. The state had 64,000 light-duty EVs in December, up from 48,000 in June and 41,000 in December 2020, the BPU said.

DEP Commissioner Shawn LaTourette said the $6.6 million award “will enable us to confront environmental challenges head on.”

“The range of vehicles to be purchased with this latest investment will also demonstrate a broad suite of successful electric vehicle applications,” he said.

Cathleen Lewis, e-mobility program manager for the BPU, said the sizable increase in the uptake of EVs over the last six months, which followed the state’s implementation of programs designed to motivate private citizens to purchase EVs and chargers, suggests that the state is making progress toward the 2025 goal.

That shift should be further helped by the funding of municipal vehicle purchases, Lewis said. Government purchases can set an example that will help private citizens overcome concerns such as range anxiety.

“When people see things going on to municipality, they take notice,” she said. “The more that residents see EVs in use, the more confident they are that they are going to be able to use them. [They think], ‘if the town can use it and drive around in it all day, then me going back and forth to my office is not an issue; I clearly can find places to charge.’”

Cutting Idling Emissions

Transportation accounts for about 40% of New Jersey’s emissions. The state in July launched the second year of a program that awarded up to $5,000 to help purchase an EV, but heavy demand exhausted the $30 million in available funds for the incentives in two months. (See NJ Proposes Cutting EV Incentives Amid Big Demand.)

The state has also taken a series of initiatives aimed at increasing the development of charging stations around the state, including reducing the requirements for approval and awarding incentives to help develop stations. The state approved the Clean Fleet Program in August. (See NJ Backs EV Incentive Program for Local Government.)

Paterson, which was founded in 1792 by Alexander Hamilton as the first planned industrial center in the U.S., celebrated the purchase of its EVs by parking three of the vehicles in front of City Hall, presenting a contrast between the vehicle’s status as a harbinger of the state’s potential clean energy future and the state’s historic industrial past.

The new EVs cost $22,920 each through the state’s bulk purchasing system, with BPU funds paying about $6,000 of that, said Fire Chief Brian McDermott, who oversaw the purchase. The vehicles do about 150 miles on a single charge and are a good fit with the demands of the inspectors in a city that is only 8.4 square miles in size.

The inspectors only drive about 30 miles a day but spend a lot of time in the vehicle idling and — if the vehicle is gas-powered — generating carbon emissions, McDermott said. In about eight weeks, the EVs will begin replacing the inspectors’ current vehicles, which include models such as Jeep Liberty, Chevrolet Caprice and Ford Escape, he said.

“For most inspectors, their vehicles are their office,” he said. “So, what do they do when they’re sitting there, on a street corner in between inspections? They leave the car on. They’re looking at their papers. They’ll have their iPad. They’ll do an inspection, then they’ll [sit idling and] prepare for the next inspection.”

He said the city expects each car to be recharged once a week, mostly in off-peak hours to reduce the cost of the electricity used. So far, there are no chargers anywhere in Paterson, he said. But the city expects soon to install them at a firehouse, in the health department building and in the parking authority, he said.

The chargers will be a mix of Level 3 chargers, which can recharge the vehicles in about 45 minutes, and Level 2 chargers, which can recharge them in eight hours, he said. But given the low weekly mileage done by inspectors, he said he expects the cars will often be brought back to full charge in half that time.

April 25, 2022

Maine Legislature Gives Final OK on Utility Accountability Bill

Maine Senators voted 19-10 Monday to pass Gov. Janet Mills’ utility accountability bill with an amendment that removed language related to a consumer-owned nonprofit takeover of the state’s investor-owned utilities.

The bill (LD 1959) directs regulators to seek bids for an IOU if it “consistently fails” to meet specific service standards. Legislators, however, did not include the governor’s proposal for an administration-led committee to supply regulators with a bid from a consumer-owned utility (COU).

Mills introduced her utility bill after vetoing a similar bill last year that provided for a COU takeover without a competitive bidding process. LD 1959 passed the House of Representatives last week and now goes to the governor for approval.

As amended, the bill strengthens a provision for imposing an administrative penalty on IOUs for not meeting service standards in a calendar year, allowing for up to a $1 million fine per year. Persistent problems with service would trigger an adjudicatory hearing by the Public Utilities Commission to determine if divestiture to a “qualified buyer” is warranted. The commission would adopt standards for service quality, customer service, field service and interconnection of distributed energy resources.

The amendment added an integrated grid planning provision that supports a “transition to a clean, affordable and reliable electric grid in a cost-effective manner.”

Utility regulators would be required to initiate a proceeding this fall to identify priorities that the state’s IOUs must address in grid planning to help with that transition. Plans would include load forecasts, energy supply data, hosting capacity analysis, emerging grid technologies analysis, and equity and environmental justice analyses.

The amendment also adjusts Mills’ proposal for utilities to file 10-year action plans to address the effects of climate change on grid assets from every two years to every three years.

“For too long we’ve failed to take action to address the failures of [Maine’s IOUs],” said Sen. Stacy Brenner (D), lead sponsor of the bill, in a statement. Supporters of the bill point to historically low customer satisfaction metrics for Central Maine Power and Versant Power as justification for new service standards.

“This bill will ensure our utility companies put the needs of their customers first, that we’re planning a power grid that is reliable and ready for Maine’s independent energy future and that we help protect ratepayers,” Brenner said.

April 25, 2022

Mass. Breaks from New England States on ISO-NE MOPR

Amid a flood of comments last week on ISO-NE’s proposal to delay elimination of its contentious minimum offer price rule, the most significant came from Massachusetts’ top energy official (ER22-1528).

In a letter to FERC, Massachusetts Energy and Environmental Affairs Secretary Kathleen Theoharides expanded on the state’s position, separating it from a coalition of the other New England states by calling on the commission to order the immediate removal of the MOPR.

“The commonwealth supports elimination of the MOPR but opposes an approach to elimination that prolongs the effects of the MOPR any longer than necessary,” Theoharides wrote. “I urge the commission to use its regulatory authority under the Federal Power Act to direct changes to the ISO-NE’s tariff by taking the fewest risks and least time necessary to eliminate the MOPR.”

The New England states, through the New England States Committee on Electricity (NESCOE), had previously said that they would not oppose the two-year transition proposal put forward by the grid operator. It was a near-consensus (barring New Hampshire) position that has been cited repeatedly by ISO-NE, serving as a powerful message to other stakeholders and helping secure enough votes for the grid operator’s proposal to ultimately pass through NEPOOL.

NESCOE reiterated its position in a comment, noting that its lack of opposition to the delay comes with the major caveat that the group will “fiercely oppose any attempts to extend the deadline for full MOPR reform beyond [Forward Capacity Auction] 19.”

And Connecticut stayed in line with the NESCOE position, writing in its own comments that it does not oppose the delay because of worries about the “fragile state of the ISO-NE markets” and the possible negative effects of immediately removing the MOPR.

NESCOE declined to comment specifically on Massachusetts’ new stance, saying that its views are reflected in the filing.

Protests and Support

The states’ comments were among more than 200 submitted by advocacy groups, companies and individuals ahead of last Thursday’s deadline on an issue that has gathered an unusual amount of scrutiny for the grid operator. (See ISO-NE Sends MOPR Filing to FERC, Teeing up Big Decision.)

A large consortium of environmental groups filed a protest asking FERC to order the MOPR be immediately removed.

“ISO-NE’s [FPA] Section 205 filing offers the commission a chance to reconsider the unjust, unreasonable and unduly discriminatory rates that have resulted from the string of commission orders establishing ISO-NE’s current tariff and MOPR rules,” the groups wrote.

They said that keeping the MOPR in place for another two years will keep state-sponsored clean energy resources from clearing the capacity market and impose higher costs on consumers. They also challenged the credence of the reliability worries that have been cited by ISO-NE in extending the MOPR for two more years.

“Despite the ISO’s substantial analytical capabilities and unique access to data — all funded by ratepayers — the ISO’s case for reliability needs contained in its filing is limited to extremely general and speculative concerns about capacity accreditation, retirement of existing resources and potential commercial-operation delays applicable to all new entry in the region,” the protest says. The American Council on Renewable Energy also filed its own separate protest.

Writing in support of the ISO-NE proposal were groups representing power generators and suppliers in New England and nationally, as well as several individual companies.

“The filing strikes a just and reasonable balance among a wide range of stakeholder and ISO-NE interests; is supported by a large majority of NEPOOL, including supporting votes from each of the six NEPOOL sectors; and is the product of input from, and is unopposed by, the New England States Committee on Electricity,” the New England Power Generators Association wrote. “This alignment is remarkable on a market design issue that has compelled countless pleadings and disagreements among stakeholders and policymakers in New England.”

The Electric Power Supply Association concurred and called the filing a “balanced set of revisions.”

Filing together, the three generation companies that had originated the proposal to delay elimination of the MOPR by two years — Calpine, Cogentrix Energy Power Management and Vistra — defended the ISO-NE proposal as a necessary safeguard that was developed and approved through a sturdy stakeholder process.

“It is critical that ISO-NE adopt a transition mechanism that appropriately balances the various interests of consumers and investors while making it easier for sponsored policy resources to enter the [Forward Capacity Market]. The specific transition mechanism ISO-NE has proposed accomplishes those goals in a just and reasonable manner,” they wrote.

April 25, 2022December 15, 2023

HECO Cancels Oahu Battery Storage Project

Hawaiian Electric Company (HECO) this month withdrew its plans to build a key battery storage system on Oahu just months after applying to develop the project. Tight deadlines and supply chain issues appear to be the reason for the cancellation.

The proposed West Loch Battery Energy Storage System (BESS) would have consisted of 80 MWh of storage capacity intended to cover a portion of the potential energy shortfall stemming from the planned shutdown of the AES Hawaii Power Plant this September. The 180-MW, coal-fired plant supplies about 20% of Oahu’s electricity. (See Hawaii PUC Weighs Coal Plant Closure Options.)

Over the past year, HECO vacillated on its plans for building the BESS in the West Loch area of Pearl Harbor, the site of an existing 20 MW solar facility. In January, the utility finally applied to the Hawaii Public Utilities Commission for expedited approval to begin initial work on the $2.5 million project, contending that quicker review “would improve the likelihood that the Company could successfully capture this opportunity, as the manufacturing capacity may be sold by the battery supplier at any time” (2022-0019).

In approving HECO’s down payment for the project in February, the PUC cautioned that it would not allow the utility recovery of those initial costs if the project was rejected after more thorough review.

The regulator also warned that “there is no guarantee that HECO will not encounter delays or additional obstacles, due to ongoing global manufacturing and supply chain issues relating to the batteries and/or any other components of the Project, as well as other factors.”

HECO’s cancellation suggests the foresight of that warning.

According to an April 12 PUC order approving the project withdrawal, the company supplying the BESS notified HECO that it would be unable to deliver materials this year, prompting the utility to withdraw its application.

In an email to NetZero Insider, HECO said that both the reasons for the delays and the name of the battery supplier itself are proprietary information.

But the utility noted that it had few specific details about the delay, saying the supplier “just told us” that the equipment delivery would not arrive on time. Other Hawaii clean energy projects, such as the Hale Kuawehi solar project on the Big Island, have recently been subject to delays — and even cancellations — due to supply chain issues stemming from the COVID-19 pandemic.

HECO said the AES coal plant will still be decommissioned on schedule and expressed confidence that its other renewable energy projects can handle any energy shortfalls.

“Hawaiian Electric has initiated several contingency programs to boost generation reserves and increase reliability in preparation for the retirement of AES, such as Fast DR, Battery Bonus, Grid Services procurements, energy efficiency and public education on energy conservation,” the utility said.

The PUC last year approved HECO’s plan to spend $34 million to create an emergency demand response program that will rely on residential solar and battery systems to make up to 50 MW of DR available to the utility in the face of energy shortfalls. (See Hawaii Approves EDRP Plan for Oahu.)

“This [battery] project was never intended to be the sole replacement for the coal plant,” the PUC said when reached for comment.

HECO estimates that it will complete three solar-plus-storage projects on Oahu by the end of the year: AES Waikoloa Solar (30-MW/120-MWh), Mililani 1 Solar (39-MW/156-MWh) and Waiawa Solar Power (36-MW/144-MWh).

It also suggested that the West Loch site could host another battery facility in the future.

“It was always in the plans for the West Loch PV facility to accommodate a BESS,” the utility said.

April 25, 2022January 31, 2024

Western EIM Tops $2B in Benefits

CAISO’s Western Energy Imbalance Market surpassed $2 billion in total member benefits in the first quarter of 2022, hitting the new milestone 20 months after it reached $1 billion in benefits.

The WEIM has grown substantially since it began in 2014 with only CAISO and PacifiCorp as members. It now has 17 participants, including most of the West’s largest utilities.

CAISO attributed the rapid growth in benefits to the entry of new participants.

“This remarkable milestone is further evidence of the value of West-wide market coordination,” CAISO CEO Elliot Mainzer said in a news release. “We are very appreciative of the partnerships established through the WEIM and look forward to working together to bring even greater value to the people we serve.”

More than $172 million in economic benefits in the first quarter of 2022 pushed total benefits to $2.1 billion by February, the ISO said in results announced Thursday. It was the third best quarter on record for the EIM, falling only below the previous two quarters.

The WEIM saw unprecedented quarterly benefits of $301 million in the third quarter of 2021 — more than in all of 2019 and almost as much as in calendar year 2020.

Summer heat waves in California, the Desert Southwest and the Pacific Northwest triggered high demand amid tight supply, pushing electricity prices higher. Participants were able to access less-expensive supply through the WEIM.

As a result, the WEIM realized a record $739 million in benefits in 2022.

In the first quarter of 2022, “WEIM benefits accrued from having additional WEIM areas participating in the market and economical transfers displacing more expensive generation,” CAISO said in its Q1 benefits report.

The Los Angeles Department of Water and Power, Public Service Company of New Mexico, NorthWestern Energy and the Turlock Irrigation District joined the WEIM in 2021.

Washington’s Avista Utilities and Tacoma Power joined in April, and the federal Bonneville Power Administration is scheduled to go live in May. (See BPA ‘Full Speed Ahead’ on May WEIM Entry, but Issues Remain.)

CAISO was by far the biggest winner in Q1, realizing more than $63.5 billion in benefits. PacifiCorp came second with $26.4 billion in benefits, and the Balancing Authority of Northern California was third with $18.6 billion in benefits.

“The measured benefits of participation in the WEIM include cost savings, increased integration of renewable energy and improved operational efficiencies including the reduction of the need for real-time flexible reserves,” CAISO said in its Q1 report.

By 2023, the WEIM is expected to have 22 participants serving nearly 80% of the electricity demand in the Western U.S. Its footprint already includes portions of Arizona, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, Wyoming and British Columbia.

In a major effort, CAISO is seeking to expand the WEIM’s real-time trading market with an extended day-ahead market (EDAM). Stakeholders have been meeting since January to hammer out key design elements of the EDAM, and CAISO plans to release a straw proposal on April 28.

The ISO is planning to finalize the market’s design this year and to on-board its first participants in early 2024.

“The day-ahead timeframe is where the majority of energy transactions occur,” CAISO said in its Q1 news release.

“By optimizing diverse generation resources and transmission connectivity on a day-ahead basis across the WEIM’s wide geographic footprint, market participants and consumers could realize even greater reliability, economic and environmental benefits.”

April 25, 2022June 14, 2023

Overheard at RE+ Texas Conference

Texas at Center of the Renewable Industry’s Growth

SAN ANTONIO — The newly rebranded RE+ Texas conference last week attracted hundreds of renewable energy professionals out to gain information on the latest trends and policies affecting the Texas market.

The event couldn’t have been hosted in a more appropriate state. According to the event’s presenters, the Solar Energy Industries Association and Smart Electric Power Alliance, Texas:

produces more electricity than any other state, generating almost twice as much as Florida, the second-highest producing state;
ranks sixth nationally for solar installations with 2.5 GW and expects to install another 4 GW of capacity over the next five years, which would make it the nationwide leader in solar energy; and
leads the nation in wind-powered generation and produced one-fourth of all the U.S. wind-powered electricity in 2017.

Amy Heart 2022-04-21 (RTO Insider LLC) FI.jpg

Amy Heart, Sunrun | © RTO Insider LLC

Milwaukee-based Sunrun has been involved in the Texas market since 2017, with its main footprints in Dallas, Fort Worth, Houston, Austin and San Antonio.

“Texas is well positioned,” said Amy Heart, Sunrun’s vice president of public policy. “It’s an interesting market, because you can actually have conversations about the value of solar and you can work in that competitive market space.”

Texas Sen. José Menéndez (D), who has represented San Antonio for 25 years either in Austin or on the City Council, said he was relieved that last year’s legislation in the wake of the devastating winter storm left renewable resources somewhat unscathed.

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Texas State Sen. José Menéndez | © RTO Insider LLC

“I was really worried there was going to be a greater attack on the industry than thermal [generation]. I don’t believe we had anything that came out of [legislation] that would hurt renewables,” he said. “There was a desire for renewables to play a greater role in paying for reliability … ‘because they’re not reliable, they should pay more into the grid for reliability.’”

Menéndez — whom Lynnae Willette, EDF Renewables’ director of regulatory and legislative affairs, referred to as “solar champion” — said he found it “laughable” that renewable resources taking advantage of federal tax credits have been criticized for putting traditional energy sources at a disadvantage.

“We’ve been giving tax breaks to the oil industry for years in this state,” he said. “It’s been the investment that the renewable industry has been making in the desolate places of West Texas and all across the state that has produced economic benefits for Texans. Typically, renewable energy is seen as the space of the center-left or left. It shouldn’t be a partisan issue.”

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Michael Jewell, Jewell & Associates | © RTO Insider LLC

Consultant Michael Jewell, a former Republican government staffer and now a board member for Conservative Texans for Energy Innovation, agreed. He said forming the organization took a lot of “cajoling,” but that the end justifies the means.

“We need that conservative voice. We need a conservative voice that has the credentials, but also gets it,” Jewell said. “The true conservative that supports the innovation in the energy space is talking about why clean energy matters from a conservative perspective. More and more conservatives are recognizing that rooftop solar is not only about a clean environment; it’s about resiliency. It’s about having self-control over your energy.”

Panelists Debate New Market Designs

ERCOT market experts engaged in an entertaining discussion on the market redesign proposals being considered at the state’s Public Utility Commission.

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Beth Garza, the grid operator’s former market monitor and a senior fellow at R Street Institute, stressed the need for resource adequacy requirements paired with load-serving entities’ obligations to meet reliability requirements. She was part of a team funded by NRG Energy and Exelon that filed one of several proposals last fall that are being considered by the PUC. (See Study Suggests Texas LSEs Can Provide Reliability.)

“In a world we’re heading toward — in a world where variable energy resources, zero-marginal-cost resources are becoming even more prevalent — the market will not provide enough revenue for all that capacity that needs to be recovered,” Garza said. “Generators need to get paid, but what they’re getting paid today are through energy prices with no scarcity and energy prices with scarcity, which can be a handful of hours a day. Historically, the newest units added to the system were the most efficient, and so that provided a gap to fund the less efficient stuff. That’s no longer the case with zero-marginal-cost resources.”

Jay Zarnikau, a research fellow at the University of Texas’ economic department and one of the authors of a report for the PUC on the storm’s enduring blackouts, said he agreed with Garza’s analysis, but not the focus on capacity.

“One of the things we found out with [Winter Storm] Uri was we had a lot of capacity, but that capacity didn’t work. There was snow on the panels, wind turbines that couldn’t turn,” he said, although the report indicates every source of generation failed. “I don’t like to measure reliability with a goal of capacity. I like to use the existing assets more efficiently. I don’t think the answer is building more power plants; there are a lot of things we can do with existing production, better things we can do with pricing, things we can do with reserve margins and capacity. I like to do things to get more efficiencies out of the market.”

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Alison Silverstein, former FERC and PUC staffer and consultant with an eponymous practice, offered a “sobering dash of realism.”

“Our legislature, our political governing class in the state and the PUC is enamored of the concept of dispatchable resources and of command and control,” she said, “because by God, if you can turn the knobs, maybe those plants won’t freeze up.”

Silverstein said their plan to increase reliability by building more dispatchable gas plants won’t work well because there is a lack of planned gas generation.

“There’s so few gas plants in the interconnection queue today that you could raise the level of payment of prices for gas plants and you wouldn’t get a lot more gas plants online anytime real soon,” she said. “So, great concept. Let’s raise prices really high so that those prices go to the people who are already running inefficient gas and oil and coal plants today. That’s not a solution that makes me happy because it won’t improve day-to-day reliability, nor will it save costs or will it achieve any efficiencies. All it will do is fatten up the existing fleet.”

Integrated DERs Pose a Challenge

Panelists discussing distributed energy resources’ opportunities and challenges in the state were bullish on the customer-site solar batteries and electrification’s ability to meet grid and resilience needs.

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Sterling Clifford, Sunnova’s manager of government affairs, said policy changes are either a result of “a cool thing to do” or a solution to a huge problem.

The grid “is not going to be able to keep pace with demand as we electrify our homes, our vehicles and our businesses. The system can’t keep up, and the problem is only going to get bigger,” he said. “If we don’t take advantage of every solution to that problem, we’re not going to be delivering benefits to homes and businesses.”

“The system as a whole needs more flexibility. It needs more resources that can participate in just ensuring the grid is reliable,” said 17-year ERCOT executive Warren Lasher, who struck out on his own with Lasher Energy Consulting last summer.

PUC Commissioner Will McAdams on Wednesday filed a memo calling for integrating more DERs into the market. ERCOT currently has nearly 3 GW of distributed generation resources, adding more than 740 MW last year alone.

“Participating in that process is going to be critical for us as an industry,” Clifford said. “It will create a pathway where we do all the things we do now, but we can make sure there are channels for growth as the technology improves as well.”

“We have an incredible market here. It’s incredibly vibrant; it’s incredibly strong; it’s incredibly competitive,” Lasher said. “But it’s dealing with changing technologies. … The way the market works, it puts us in a position where the commission doesn’t have a whole lot of knobs and dials to kind of adjust things. In the end, to the extent you’re relying on the competitiveness of the market and wholesale deregulated investment, it doesn’t give you a lot of opportunities to have incentives for some of these new technologies.

“We’ve got these new resources, and we want to put these new resources into the system that we have in place, but where we are is this system is changing at an incredibly rapid pace,” he said. “The problem that we have is we need to be thinking about how these resources fit into where we’re going to be five years from now, 10 years from now. Storage is going to fundamentally transform how we think about energy. Getting everything to fit together is just an amazing challenge at this point.”

April 25, 2022

FERC Rejects Conditional Withdrawals from Tri-State

FERC last week rejected United Power’s request for clarification and to provide Tri-State Generation and Transmission Association with a nonbinding, conditional withdrawal notice (ER21-2818).

The commission agreed with Tri-State’s position that conditional withdrawal notices are not permitted under its contract termination payment (CTP) tariff that FERC accepted in November 2021. (See FERC Accepts Tri-State’s Exit Fee Calculation.)

United provided its conditional withdrawal notice in December and sought clarification from the commission that utility members may begin the two-year advance notice withdrawal period under the currently effective tariff, such that it could rescind its notice at any point up to its January 2024 withdrawal date.

The commission agreed with Tri-State’s contention that conditional, nonbinding or revocable notices of intent to withdraw were not valid under its CTP tariff. It said that conditional notices would create significant risk to remaining members and hamper its ability to plan for withdrawals.

“We find that the conditional notices of withdrawal that have so far been provided to Tri-State are invalid, because the tariff does not permit such conditional notices,” FERC said.

The commission said that “as the all-requirements supplier to its utility members, Tri-State has an obligation to acquire sufficient capacity for all its utility members, and significant uncertainty regarding this amount could have cost impacts for all Tri-State utility members.”

The order also covered conditional notices filed by Poudre Valley Rural Electric Association and Northwest Rural Public Power District. Along with United, the cooperatives comprise about 30% of Tri-State’s peak load, preventing it from reliable system planning given the uncertainty over the load’s continued inclusion in two years.

“FERC’s order supports the important principles of fairness and equity for all of our cooperative members, ensuring remaining members are unharmed should another member pursue the early termination of its long-term, all-requirements power contract,” Tri-State CEO Duane Highley said in a statement.

Tri-State’s first CTP methodology filing was submitted in April 2020. FERC accepted it subject to refund but also established hearing and settlement judge procedures. The process was repeated several times as the co-op filed policies and other calculation methods in response to member protests.

Last May, FERC rejected the CTP methodology without prejudice, leading to Tri-State’s latest filing in September. Many of the complaints centered on members being able to see the calculations. (See FERC Rejects Tri-State Exit Fee Proposal.)

Members seeking to terminate their wholesale electric service contracts and co-op membership must provide a two-year advance notice of their intention and pay its CTP to Tri-State on the withdrawal date.

Tri-State has 45 members, including 42 utility distribution cooperatives and public power district members in four states that supply power to more than 1 million electricity consumers across nearly 200,000 square miles of the West.

FERC has scheduled a hearing next month on the CTP tariff.

April 25, 2022

Whitmer Outlines Final Carbon-neutral Plan for Mich.

Speaking at a solar farm in Traverse City, Mich., on Thursday, Gov. Gretchen Whitmer (D) unveiled the state’s final proposed plan to go carbon neutral by 2050 while ensuring environmental equity and creating economic incentives for new businesses and jobs.

The plan has many of the same goals as the preliminary plan issued this past January: building the infrastructure needed for 2 million electric vehicles on state roads; cutting energy waste; electrifying buildings; phasing out coal-fired generating plants and having 60% of the state’s electricity generated by renewables by 2030; and improving the state’s lands and waters to help capture more greenhouse gases.

But in a reflection of comments received on the effects of climatic change on equity, the plan also includes a provision that at least 40% of state funds used for climate mitigation efforts go to economically disadvantage communities that are more directly affected by environmental pollution.

In making her announcement, Whitmer said the state has already seen the direct effects of climate change. For example, in the Traverse City area — the heart of the state’s cherry country — an unusually warm early spring in 2012 forced cherry orchards to bloom early, and 90% were later killed by a late severe frost, according to the plan.

Michigan must take more focused, intentional steps to slow and mitigate the effects of climate change, the plan says. If adopted, the state will be one of just 16 with planned efforts to control greenhouse gas emissions, it says. Whitmer said it “identifies actions we can take to address climate change head-on, lower costs for Michiganders, ensure every Michigan worker has a good-paying, sustainable job, and every family has clean air, water and a home powered by clean, reliable energy.”

The plan was developed by the Council on Climate Solutions — comprising 14 residents and the heads of several state departments — which met through 2021. It was created by Whitmer in 2020 when she signed Executive Order 182 and issued several executive directives to take action on climate change.

Along with outlining broad goals for reducing carbon emissions, the plan issues goals for making the effort affordable. During the drafting stage there were many comments by both council members and the general public on handling the costs of, for example, buying an EV or changing the heating and cooling system in a home. The plan calls for ensuring that low-income households have to spend no more than 6% of their income on powering and heating their homes.

To help develop renewable energy sources quickly, the plan calls for a system to aid in siting solar systems — though not wind farms — on publicly owned lands. It also calls for the state to develop at least 4,000 MW of storage capacity by 2040, with short-term goals of 1,000 MW by 2025 and 2,500 MW by 2030.

The plan also calls for creating a fund to provide financial incentives to buy EVs; considering incentives for electric off-road vehicles, boats and e-bikes; and boosting the use of electrified public transit by 15% each year.

During the public testimony phase, some environmental groups called for banning the use of natural gas. The plan does not include that provision, but it does call for building codes to encourage EV charging systems and further mitigate emissions.

It also outlines steps the state is already taking to reduce carbon emissions, as well as those it will take, such as ensuring that 100% of the state’s vehicle fleet be electric.

The plan received praise from a number of groups. Liza Wozniak, executive director of the Michigan League of Conservation Voters, said the plan is “a major proof-point that our state is committed to addressing the climate crisis by rapidly investing in clean, renewable energy to reduce pollution and ensure a healthy future for our children and grandkids.”

Derrell Slaughter, clean energy advocate for the Natural Resource Defense Council and a member of the state’s climate council, said, “The MI Healthy Climate Plan has the potential to help speed up our state’s shift to clean energy in a way that helps everyone.”

April 24, 2022December 1, 2023

‘Innovative Rate Design’ Key to Bus Electrification, ConnDOT Says

The top beneficial action Connecticut regulators can take to help electrify CTtransit’s 600-bus fleet is to ensure “predictability in costs,” Rabih Barakat of the Connecticut Department of Transportation said Thursday.

“Innovative rate design is really needed for enabling the conversion for the statewide bus fleet to battery electric,” said Barakat, who is transportation division chief for facilities and transit in the Bureau of Engineering and Construction. “It’s very difficult under the current design to meet … mandates for a 30% [transition] by 2030 and 100% by 2035.”

Affordable charging would support the bus fleet transition and ConnDOT’s goal to maintain service levels, he said in a presentation for the Public Utilities Regulatory Authority’s investigation into integration of medium- and heavy-duty electric vehicles (M-HDEV).

PURA launched the investigation last fall and sought ConnDOT’s input on the Connecticut Electric Bus Initiative for the first technical meeting in the proceeding Thursday. The authority’s investigation will examine potential rate design and infrastructure solutions, with a particular focus on transit buses.

CTtransit, which is a ConnDOT-owned bus service, currently has 10 battery electric buses (BEB) in operation, with another five in preservice preparation, according to Graham Curtis, assistant transit administrator for bus capital programs at the Bureau of Public Transportation.

“We anticipate ordering another 50 buses this year,” he said.

Under ConnDOT’s current bus electrification plan, the department expects to convert 60% of its fleet by 2030, more than doubling the requirement for that year. It expects all its buses to be electric by 2031, which would be four years ahead of the 2035 requirement.

In the first quarter of this year, the department paid Avangrid subsidiary United Illuminating 23 cents/kWh for on-peak charging and 22 cents/kWh for off-peak, with a $10.81/kW demand charge and $10.06/kW transmission charge.

ConnDOT is trying to work with the utility to arrange a better charging rate design, Graham said, adding that he is “optimistic” that they can find a “suitable solution.”

Task Force Report

Improved rate design for M-HDEV charging is one of the major recommendations in a Multi-state Zero-emission Vehicle Task Force’s March 10 draft framework for reducing truck and bus emissions. The task force is an initiative of an M-HDEV memorandum of understanding signed by Connecticut, 15 other states, D.C. and Quebec. PURA said it launched the M-HDEV investigation to support the goals of the MOU.

“Rate reform is needed to mitigate demand charges and incentivize fleet charging during lower-cost off-peak periods and periods of high renewable energy generation,” the task force report said.

The task force recommended that utility regulators establish commercial charging rates and customer incentive programs that recover utility costs and lower charging costs. Commercial rates would mitigate demand charges and give commercial customers price signals that benefit the grid, the report said.

In addition, the task force recommended that regulators design revenue-generating vehicle-to-grid services for M-HDEV fleets that have the same value as traditional grid services.

Rate structures should focus on “long-term sustainable rate design solutions that offer time-variant rates, promote off-peak charging and charging during periods of peak renewable energy generation, avoid non-coincident peak demand charges, and are consistent for all utilities,” the report said.

Utilities in California, Hawaii and Colorado already have novel rate models that regulators can look to for ideas, the report said.

Hawaiian Electric, for example, has a pilot rate for critical peak pricing that eliminates demand charges for bus fleet customers during periods of high solar generation or low electricity demand. And Pacific Gas and Electric has a high-use business rate that carries a monthly subscription charge and a tiered time-of-use rate.

PURA expects to hold additional technical meetings over the summer for its M-HDEV investigation and issue a final decision in December.