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September 19, 2024

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FERC Refuses MISO, MDU Complaints Regarding Crypto-strained MISO-SPP Flowgate

FERC has dismissed separate complaints from MISO and Montana-Dakota Utilities Co. over a MISO-SPP flowgate chronically stressed by a North Dakota cryptocurrency mining operation.   

The commission issued a Sept. 10 order, refusing the pair of complaints; it said neither MISO nor Montana-Dakota Utilities (MDU) proved that the Charlie Creek flowgate in North Dakota failed to meet the criteria for market-to-market (M2M) coordination, nor was SPP in the wrong for continuing to insist on M2M coordination (EL24-61).  

MISO and MDU have been sparring with SPP over the flowgate since last year, when cryptomining facility Atlas Power Data Center opened and brought 200-MW load to SPP’s transmission-constrained Northwest North Dakota load pocket, which now has a peak load of about 1.5 GW but only approximately 1 GW of import capability. (See MISO Lodges 2nd Complaint Against SPP over Disputed Crypto Load on M2M Flowgate.)  

FERC said it disagreed with MISO and MDU that SPP violated sections of the MISO-SPP joint operating agreement, that MDU incurred duplicate congestion charges and that the rules MISO and SPP rely on for M2M termination are unreasonable.  

The commission found that “MDU and MISO have not demonstrated that SPP acted unreasonably in declining to grant consent to remove the Charlie Creek Flowgate from the market-to-market coordination process.”  

SPP has maintained that Charlie Creek remains eligible for M2M coordination based on the RTOs’ flowgate studies, which it argued determine hundreds of other MISO-SPP flowgate designations. 

MISO and MDU have argued that although the Charlie Creek Flowgate passes MISO and SPP’s flowgate studies, its M2M status should be revoked because the RTOs’ coordination is helping SPP manage a local issue caused by data center load growth, and not a regional issue. The two said the congesting spikes caused by the Atlas Power Data Center are squarely in SPP’s territory and said SPP’s insistence on M2M coordination is at the detriment of MISO market participants and customers.  

MISO last year initiated a formal dispute process with SPP over the flowgate. By March, it asked FERC to terminate M2M coordination on Charlie Creek and requested refunds on the M2M coordination charges it paid to SPP beginning in April 2023.  

MDU filed a complaint against MISO and SPP early this year, saying it was overcharged $18 million for congestion management because the two RTOs were conducting unwarranted M2M coordination. MDU, a MISO member, has 150 MW of load and two 115-kV lines in the load pocket and relies on network integration transmission service from SPP to serve load when its own transmission is insufficient. 

MISO claimed that improper M2M coordination cost its members $38 million in M2M charges to manage congestion. The grid operator also argued that SPP’s approval of a temporary remedial action scheme for the Charlie Creek flowgate shows that the M2M coordination is being used to address a local issue wrought by load growth.   

MISO’s Independent Market Monitor further argued that, during periods of market-to-market coordination, MISO could provide less than 1 MW of relief on the Charlie Creek flowgate, while curtailment of Atlas’ load in SPP could provide more than 90 MW of relief. 

However, FERC said MISO and MDU were misreading the definition of an M2M flowgate as laid out in the MISO-SPP joint operating agreement. FERC said while a section of the RTOs’ Interregional Coordination Process says M2M coordination should be reserved for issues that are regional and not local in nature, that’s not an explicit prerequisite for a flowgate to be eligible for an M2M flowgate designation. 

Because it determined the regional issue threshold wasn’t a requirement for M2M coordination, the commission declined to determine whether the added cryptomining load constitutes a local issue. 

FERC pointed out that SPP provided evidence that revoking Charlie Creek’s M2M flowgate status might risk SPP needing to resort to transmission loading relief or load shedding.  

FERC also refused to deem MISO and SPP’s Interregional Coordination Process unreasonable because it allows either MISO or SPP to refuse to lift M2M designation even when the other RTO can offer little congestion relief. MISO argued that the mutual agreement condition amounted to an “unconditional veto.”  

But the commission said the rules give MISO and SPP “reasonable discretion on an equal basis to mutually agree to add or remove market-to-market flowgates without any conditions or requirements.”  

FERC decided SPP acted reasonably by not agreeing to remove M2M coordination. It said SPP provided evidence that it can redispatch to alleviate the flowgate in “most” hours. FERC also said keeping up the M2M coordination “helps create an appropriate market signal for MISO to dispatch generating units within its footprint that have a significant generator shift factor on the flowgate,” making for a more efficient market solution versus terminating M2M procedures.  

Because it denied the complaints, FERC likewise denied a related waiver request from MISO that would have allowed the RTO to adjust SPP’s Integrated Marketplace settlements beyond the current 365-day limit (ER24-1586).  

Nearby Basin Electric Power Cooperative announced plans in May to build a 1.4-GW gas-fired power plant to address growing demand from North Dakota’s data center industry.  

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ISO-NE Responds to Feedback on Capacity Auction Reforms Scope

ISO-NE’s Capacity Auction Reforms (CAR) project will include an evaluation of additional resource accreditation modeling enhancements, the RTO told the NEPOOL Markets Committee on Sept. 10. 

The RTO also plans to estimate seasonal tie benefits in its resource adequacy assessment model, it said. The remarks came in response to feedback it solicited on the “straw scope” of the project, which aims to move the Forward Capacity Market to a prompt and seasonal market. (See ISO-NE Outlines ‘Straw Scope’ of Capacity Market Reforms.) 

Some stakeholders argued  ISO-NE’s resource accreditation modeling does not accurately reflect the region’s risk profile, including the duration of events. (See ISO-NE Capacity Accreditation Reforms Spur Energy Storage Concerns.) 

“As part of CAR, the ISO plans to assess whether it can make further enhancements to the modeling and accreditation proposal to better align accreditation values with contributions to resource adequacy,” said Chris Geissler, ISO-NE director of economic analysis. The RTO also plans to consider how it models intermittent and limited-energy resources, along with improvements to the load model, he said. 

Other stakeholders expressed concerns  the new accreditation methodology would not consider the marginal reliability impact (MRI) of tie benefits, potentially causing the RTO to overestimate the reliability benefits of interties. 

In comments submitted prior to the meeting, Calpine argued that “any supply source, including imports, used to meet capacity requirements should be counted similarly and subject to similar performance requirements” and that ISO-NE “should apply this standard to the CAR work.” 

Geissler said the RTO will work with its neighbors to evaluate seasonal tie benefits, which “represent the expected contribution from other regions during emergency conditions.” 

However, ISO-NE does not plan to calculate MRI values for tie benefits, or to subject tie benefits to Pay-for-Performance (PFP) rules, Geissler said. He noted that tie benefits will be modeled in resource adequacy assessments, which are used to determine the RTO’s installed capacity requirement. He added that “tie benefits are not directly competing” with capacity resources to meet this requirement. 

Geissler also told the MC that ISO-NE is not planning to include an evaluation of how the capacity market treats resource retentions. He added that, in a future phase of work, the RTO may consider broader changes to its rules for reliability-must-run contracts if it determines that retentions for energy security reasons are needed. 

The RTO also is not planning to model resource start times because of the constraints of GE MARS, its resource adequacy modeling software, despite interest from some stakeholder groups, Geissler said. 

“Assessing changes to the resource adequacy platform would be a significant, multiyear effort that would take resources away from other parts of the CAR effort and jeopardize the ISO’s ability to complete CAR in time for [capacity commitment period] 19,” Geissler said. 

In a memo published prior to the meeting, environmental advocacy groups pushed the RTO to model startup times, arguing it is a necessary step to fairly compensate resources for their ability to support the power system on short notice. 

“Units with lengthy startup times simply do not offer the same resource adequacy value as more flexible ones,” the organizations wrote. “We understand that this will involve substantial resources, but given that ISO has already committed to spending several years on overhauling its capacity market reform, now is the best time to address this important consideration.” 

The groups also urged the RTO to model “correlated outages and ambient temperature adjustments” as part of the CAR project. 

Gas and diesel resources are “susceptible to both cold and hot temperature-dependent forced outages,” the organizations said while calling on ISO-NE to “model these reliability impacts as accurately as possible.” 

Geissler said ISO-NE still is considering whether to include temperature adjustments and correlated outages in the project scope, noting that the topic “raises technical modeling questions that must be more fully assessed before a decision can be made.” 

He added that ISO-NE is planning to model correlated outages of gas resources related to the region’s gas constraints in the winter. 

IMM Quarterly Markets Report

Wholesale market energy costs were down by 23% this spring relative to that of 2023 because of lower natural gas prices and capacity clearing costs, according to the ISO-NE Internal Market Monitor’s quarterly markets report. 

The real-time hub LMP averaged $24.64/MWh, ranging from 9 to 13% lower than in spring 2023. The average load (11,869 MW) was up by about 180 MW per hour in part from higher temperatures in May compared to the prior year. 

Nuclear generation rebounded after several down seasons because of lower rates and accounted for about 28% of the average output. Natural gas remained the largest generation source at 45% of the average output. Imports decreased because of a drought in Canada that affected hydro reservoir levels. 

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BLM OKs NV Energy’s Greenlink West Line

The U.S. Bureau of Land Management on Sept. 9 issued a record of decision approving NV Energy’s Greenlink West, a 470-mile transmission line that will connect Las Vegas with the northern part of Nevada and be capable of transmitting up to 4,000 MW of energy.

The project will consist of a 350-mile, 525-kV segment from Las Vegas to Yerington, along with two 345-kV lines running from Yerington into the Reno/Sparks area. Construction of the line is expected to begin in the first quarter of 2025 with an in-service date targeted for May 2027.

BLM also opened a comment period for a proposed draft resource management plan amendment and environmental impact statement for the Greenlink North project, a 210-mile east-west line designed to connect Greenlink West with NV Energy’s existing One Nevada Line running along the eastern part of the state.

NV Energy considers the Greenlink projects to be “vital” to tapping the state’s renewable resources and maintaining grid reliability in the face of growing load, an NV Energy executive said in the utility’s most recent integrated resource plan, filed with the Public Utilities Commission of Nevada in May.

But the IRP also revealed the rising costs for the projects, now estimated at $4.239 billion, a 70.6% increase from initial estimates made in 2020. NV Energy attributed $124 million of the increase to the BLM’s requirement that the utility use an additional 160 miles of H-frame structures to mitigate risk to desert tortoise and sage grouse habitat. Other environmental mitigations added $30 million to project costs. (See NV Energy IRP Describes $1.76B Cost Jump for Greenlink Projects.)

Given Nevada’s central position between the resource-rich interior West and more populous West Coast, the Greenlink project also likely will play a key role in transferring energy among various regions participating in CAISO’s Western Energy Imbalance Market (WEIM) and Extended Day-Ahead Market (EDAM). In May, NV Energy said it would choose to join EDAM over SPP’s Markets+, a major victory for CAISO in the competition between the two Western day-ahead markets. (See NV Energy Confirms Intent to Join CAISO’s EDAM.)

Massive Solar-plus-battery Project Approved

The BLM on Sept. 9 also approved Arevia Power’s $2.3 billion Libra Solar Project, which will be built across 5,778 acres of public land in Mineral County, Nevada. It will be one of the largest solar-plus-battery storage projects in the U.S., consisting of 700 MW of solar and 700 MW/2.8 GWh of energy storage capacity. NV Energy will be the off-taker for the project’s output.

“From building large scale transmission lines to solar power generating facilities, the Interior Department and our team at the Bureau of Land Management are leading the way in the development of reliable, clean energy across the West,” acting Deputy Secretary of the Interior Laura Daniel-Davis said during a Sept. 10 event in Las Vegas to announce the developments. “The infrastructure projects we are advancing today in Nevada are helping meet President Biden’s ambitious renewable energy goals while making communities more energy resilient and creating good-paying jobs in the clean energy economy.”

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NY OSW: If at First You Don’t Succeed, Try, Try Again

Two of the offshore wind developers that won and then lost contingent New York contracts are trying again, submitting proposals into the state’s latest solicitation. 

Community Offshore Wind and Excelsior Wind could be the fourth and fifth wind farms off the coast of New York, which is pursuing development of an offshore wind sector vigorously but with mixed results. 

Community and Excelsior announced their proposals Sept. 9, the final day to submit proposals without price tags in New York’s fifth competitive offshore wind solicitation (NY5). 

The New York State Energy Research and Development Authority (NYSERDA) would not say how many other proposals it received. It said redacted versions of the proposals would be made public in coming weeks.  

The process is not complete — developers must submit price tags for their proposals by Oct. 18 — but the door now is closed to additional proposals into NY5. 

NYSERDA expects to make contingent awards by Nov. 8, then execute the contracts and announce them to the public in the first quarter of 2025. 

Community is proposed by RWE and National Grid Ventures. Excelsior is proposed by Vineyard Offshore, an affiliate of Copenhagen Infrastructure Partners. 

In October 2023, Community and Excelsior were awarded contingent contracts in NY3, along with Attentive Energy One. All three contracts were predicated on an 18-MW turbine under development by General Electric.  

When the company — now GE Vernova — halted development of that machine, the contracts no longer penciled out. The NY3 solicitation was canceled, and the conditional contracts for 4 GW of capacity from the three projects were canceled in April 2024. (See NY Offshore Wind Plans Implode Again.) 

Excelsior announced Sept. 9 it had submitted a 1,350-MW project in NY5 — nearly the same nameplate capacity it had proposed in NY3. Community did not specify the nameplate capacity of the wind farm it is proposing for NY5. 

Headwinds

New York’s experiences are among the best examples of the growing pains of the U.S. offshore wind industry as it takes root off the Northeast coast. It has not had a project cancellation, like New Jersey has, but it has gone through multiple gyrations.  

New York has the first and so far only completed utility-scale offshore wind farm in U.S. waters, the 132-MW South Fork Wind. It also has Sunrise Wind and Empire Wind 1 under contract, and Sunrise is in early stages of construction. 

Along with the three contracts lost to supply chain problems in NY3, New York saw cancellations of contracts for Beacon Wind, Empire Wind 2 and earlier contracts for Empire 1 and Sunrise when soaring costs made those contracts untenable. The second contracts for Sunrise and Empire 1 carry much higher costs for ratepayers. 

Community is persistent if nothing else. 

It nearly won then lost the NY3 contract. It submitted a proposal into NY4 but was “waitlisted” and then not chosen. It submitted a proposal into NJ3, then withdrew it after concluding the pricing did not work. It submitted a proposal into NJ4 that is awaiting a decision by the state. 

(Community’s lease area is large enough and close enough that it could feed the grid in both New York and New Jersey.) 

The drive continues, and new headwinds arise even as previous problems are resolved. 

Atlantic Shores Offshore Wind this summer rebid into NJ4 a wind farm already under contract in New Jersey, presumably at higher cost. (See 3 OSW Proposals Submitted to NJ.) 

In recent weeks, Leading Light Wind has asked the New Jersey Board of Public Utilities for a delay because it is having trouble securing a supply contract for turbines. 

Earlier this month, the first-ever multistate solicitation was a decidedly mixed bag: Connecticut, Massachusetts and Rhode Island sought up to 6 GW of combined capacity and received 5.45 GW of proposals. But the projects selected totaled only 2.88 GW — 2.68 GW for Massachusetts, 0.2 GW for Rhode Island and 0.0 for Connecticut, which said it was still evaluating bids. (See Multistate Offshore Wind Solicitation Lands 2,878 MW for Mass., RI.) 

Vineyard Offshore proposed the 1.2-GW Vineyard Wind 2, up to 800 MW of which was selected by Massachusetts. The developer implied its ability to move forward with the project depended on Connecticut signing up for the rest.  

“We look forward to Connecticut’s forthcoming decision on the remainder of the procurement so that we can begin to deliver important economic and climate benefits to the region,” CEO Alicia Barton said in a news release. 

In the background to all this, a turbine blade disintegrated at Vineyard Wind 1 in July, littering beaches and waves with fragments and giving offshore wind opponents a camera-ready moment they are exploiting two months later. (See Blade Failure Brings Vineyard Wind 1 to Halt.) 

On a positive note, the first turbine recently was hoisted into position off the New England coast for Revolution Wind, which is expected one day to send up to 700 MW to Connecticut and Rhode Island.  

But Revolution, too, has had its setbacks. Brownfield contamination where its onshore substation will stand has pushed the anticipated completion date back from 2025 to 2026. (See Revolution, Sunrise OSW Projects Face New Delays.) 

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Potential Seen to Add up to 95 GW to US Nuclear Plants

The U.S. Department of Energy estimates that existing and recently retired nuclear power sites could host an additional 60 GW to 95 GW of new nuclear generation. 

DOE also said an additional 128 GW to 174 GW of new nuclear capacity could be built near existing or recently retired coal-fired facilities. 

In its 2023 report “Pathways to Commercial Liftoff: Advanced Nuclear,” the department estimated the U.S. would need 200 GW of additional nuclear capacity by 2050 to meet the growing demand for electricity and the growing emphasis on emissions-free generation. 

“A good chunk of that could come from a familiar place,” Michael Goff, acting assistant secretary for the U.S. Department of Energy’s Office of Nuclear Energy, wrote Sept. 9 in introducing the new report. 

“Evaluation of Nuclear Power Plant and Coal Power Plant Sites for New Nuclear Capacity” finds that 41 operating and retired nuclear sites could accommodate one or more new large light-water reactors rated at 1,117 MW for a total of 60 GW of new capacity. 

Using advanced reactors rated at 600 MW would bring the total to 95 GW, as more reactors could be built on more sites. 

For its analysis, DOE examined 54 operating and 11 recently retired nuclear power plant sites in 31 states.  

To determine suitability for expansion, it examined site footprint and acreage, aerial analyses, utility plans, a siting analysis tool developed by Oak Ridge National Laboratory, availability of cooling water, proximity to population centers or hazardous facilities, seismic risk and flood hazards. Researchers from Oak Ridge and Argonne National Laboratory contributed. 

Important tangible considerations such as politics and finances were not on the list of factors considered, though Goff acknowledged that capital costs will be a key factor in decisions about nuclear plant construction. 

He cited a study showing the majority of people who live near nuclear power plants consider them good neighbors. And there is hope that a concerted buildout of new nuclear plants will create economies of scale that limit the cost of new nuclear construction, which has seen exorbitant cost overruns. 

For coal-burning plants, which are being retired or scheduled for retirement at a steady rate, the study looked only at sites with a nameplate capacity of at least 600 MW that are active or were retired after 2019. It assumed retired plants had not been converted to natural gas and that their licenses to provide power to the grid were still in effect. 

Replacing coal with nuclear in a timely fashion could benefit the surrounding communities economically and environmentally and take advantage of existing workforces. A 2022 DOE report delved further into the opportunities and challenges that would surround such conversions. 

Goff stressed that this new analysis is preliminary. “Utilities and communities will need to work closely together to make the decisions on whether to build a new plant,” he wrote. 

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MISO, SPP Try Again to Find Joint Seam Projects

After five fruitless attempts to agree on joint transmission projects across their seams, MISO and SPP will use what they call a “blended joint model” in parallel with existing SPP and MISO regional models.

The RTOs’ staffers told stakeholders during a Sept. 9 Interregional Planning Stakeholder Advisory Committee meeting that their Coordinated System Plan (CSP) study, required every two years by a joint operating agreement, will identify near-term upgrades that “incrementally enhance” transfer capability and produce multiple benefits across the two grids. The study will include reliability, economic and transfer analysis using forward-looking models and assumptions (10- and/or 20-year models), they said.

“The hope is that we have some mutually beneficial projects that we can both agree to recommend approval and ultimately share costs and construct,” SPP’s Clint Savoy said. “That’s the way the current process works today, or that’s the way it’s envisioned in the JOA.”

Five previous studies have failed to produce any joint projects over differences in allocating costs. That led the RTOs to try a different approach with the Joint Targeted Interconnection Queue project, which identified a $1.86 billion portfolio of five projects that could support up to 28 GW of interconnecting generation on both sides of the seam. The Department of Energy last year awarded the portfolio $464 million under its Grid Resilience and Innovation Partnerships program. (See DOE Announces $3.46B for Grid Resilience, Improvement Projects.)

Under the blended model, MISO will use its 2023 Long-Range Transmission Planning reliability and economic model sets and SPP will run the 2025 Integrated Transmission Planning’s same model sets. Staff will use three of four base seasonal models (winter peak, summer peak, average load and light load).

The RTOs both want a multi-benefit style project type and cost allocation to draw on a broader set of benefits for project recommendations, they said. Savoy said FERC Order 1920, which requires transmission-planning regions use at least a 20-year horizon, has provided something of a guidepost for the RTOs to follow.

“We hope this new approach will let us look into additional drivers for projects other than just economic or reliability benefits, if you will, maybe consider different assumptions as we are developing, the list of needs that we want to fix,” he said. “And so what we hope is a better outcome to look more proactively, maybe have a broader set of issues that we’re looking for or benefits to consider, rather than just the traditional economic reliability and public policy.”

The two staffs will continue to develop the study’s scope, incorporating stakeholder feedback, and share it with stakeholders when complete later this year. The 2024 CSP will run through 2025.

The RTOs will have to file a waiver request with FERC requesting permission to use the blended study process. They said they will partner with states and stakeholders to identify and file any needed changes to their JOA and tariffs.

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Webinar Examines How FERC Could Use Interregional Transmission Study

Congress and FERC will need to act to update the rules on interregional transmission planning, and likely permitting, if NERC’s Interregional Transfer Capability Study is going to be of any use, experts said on a webinar hosted by Americans for a Clean Energy Grid.

The study is only the second thing Congress has ever requested from NERC, after it called for the creation of the Electric Reliability Organization in the Energy Policy Act of 2005, said John Moura, director of reliability assessment and system analysis. NERC recently released its initial results, but the final report is not due to FERC until Dec. 2. (See NERC Examines Transfer Capability in Draft ITCS Installment.)

“The ITCS is really an unprecedented study, both in scale and magnitude of what we have to look at,” Moura said. “It’s a U.S.- and Canada-wide technical assessment that looks at the power transfers between regions, and then also makes recommendations to increase those transfers based on reliability needs.”

Once FERC gets the report in December, it will open it up for comments, which will put it before a much larger group of stakeholders, Moura said. Though Congress directed the study, Canadian representatives wanted their own version, which will be published in the first quarter of 2025, he added.

NERC found greater needs for transfer capabilities in some regions compared to others, with Moura presenting a color-coded slide with green, yellow and red for increasing regional needs. While the red and orange areas would benefit from more transfer capacity, Moura noted that the green and gray regions still require work to maintain reliability.

The study assigned “prudent” transfer capability between regions, which means how much is required to meet load under extreme conditions, Moura said.

In doing the study, NERC had to use the same metrics for different regions, which is not how it operates in its own regional planning efforts, so it could accurately assess transfer capabilities. One key finding of the studies is that increasing interregional transfer capability is not enough to ensure reliability.

“I think the results are pretty clear: Adding transfer capability to a minimum level is not sufficient in resolving reliability issues for some areas,” Moura said. “And for other areas, adding transfer capability where it’s not needed would not appear to be economically prudent, without much benefit to reliability. Also, transmission is only one option and only one solution.”

Transfer capability can help with reliability issues in some regions, but so can adding new generation — especially types that are not subject to the same common mode failures plaguing generator availability, Moura said. Higher transfer capabilities will require significant planning and systemwide reinforcements, he added.

Nicole Luckey, Invenergy senior vice president of regulatory affairs, said the current rules are not working.

“There are no holistic interregional transmission planning or cost allocation processes in place today, aside from what was laid out in Order 1000, which I think we all can acknowledge isn’t necessarily working now,” Luckey said. “We’re all really looking forward to the folks in the transmission development community seeing what FERC does with NERC’s study.”

One question is whether the commission will stick to purely reliability benefits or consider others in that effort, she added.

American Electric Power owns utilities in four different ISOs and RTOs, and many of its territories are located along market seams, so it has had a front-row seat to view how Order 1000’s interregional process has failed, said Stacey Burbure, vice president for FERC and RTO strategy. A key reason is that different regions consider transmission with different metrics.

“When you’re comparing apples and oranges, it’s not always intuitive what the right solution is, which is why coordination simply hasn’t gotten us there,” Burbure said. “The RTOs are on different timelines. They’re looking at different inputs. So, moving towards a more standardized approach, with respect to that engineering information, is going to be critical in order to get the right transmission built.”

FERC should take steps with interregional transmission like it did in Order 1920 with regional planning, so the different regions are examining interregional lines on the same basis, she added.

Brattle Group Manager Joe DeLosa agreed that FERC would need to get more common metrics in place to make interregional planning successful, but he also noted that planners currently use models of the system in normal conditions.

The National Renewable Energy Laboratory “has recently said that about half of the benefits of interregional transmission come from the most stressed 5% of system hours,” DeLosa said. “And so, if your interregional coordination/planning, especially for economics, doesn’t take a look at those hours, you’re going to be overlooking large portion of potential interregional benefits, and you’re not ultimately going to develop the appropriate projects.”

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PJM Asks FERC to Eliminate Energy Efficiency from Capacity Market

PJM has filed governing document revisions that would remove energy efficiency from its Reliability Pricing Model (RPM), in line with stakeholder endorsement of an Independent Market Monitor proposal to eliminate EE from the capacity construct (ER24-2995).

The Monitor has argued EE can’t participate as a capacity resource because the load reductions already are accounted for in PJM’s load forecast, and that capacity market revenues to program providers constitute an uplift payment with no corresponding reliability benefit.

Ahead of the Aug. 21 vote, EE providers argued the load forecast does not account for EE installations made possible by RPM revenues and that hastily moving to a vote to bar an entire resource class would curb consumers’ ability to mitigate rising capacity costs. (See PJM Stakeholders Endorse Elimination of EE Participation in Capacity Market.)

The tariff and Reliability Assurance Agreement (RAA) revisions would come with a Nov. 6 effective date, which would preclude EE participation in the 2026/27 Base Residual Auction (BRA) set to begin Dec. 4.

“After years of experience, coupled with a careful review of what energy efficiency sellers have been including in their offers, it has become obvious to PJM, and a sector-weighted super majority of the PJM members, that the current paradigm is no longer appropriate,” PJM wrote in the Sept. 6 filing. “Under the current framework, energy efficiency projects are compensated at the relevant RPM auction clearing price on the supply side even though energy efficiency capability has already been incorporated into the load forecast in aggregate and reduced the amount of capacity that needs to be procured in the RPM auction.”

To avoid double counting the benefits of an EE installation — through both reduced capacity procurement and BRA revenues to the EE provider — PJM instituted the addback process in 2016, which removes EE that clears a capacity auction from the supply stack and increases the load forecast by a corresponding amount. Consumer advocates argued that undermines the ability for EE to displace capacity resources and drive clearing prices lower, while the Monitor argued it is an unnecessary uplift mechanism.

A proposal offered by the New Jersey Division of the Rate Counsel on Aug. 21 would have eliminated the addback with the aim of allowing EE to clear in capacity auctions akin to generation and demand response resources, while the main motion previously endorsed by the Market Implementation Committee would have tightened the measurement and verification (M&V) requirements and mandated a sole causal link between capacity market revenues and EE installations. Both were rejected before the Monitor proposal was endorsed.

In its filing, PJM wrote that state-mandated EE programs will continue to deliver benefits to consumers in the form of reduced capacity costs even in the absence of RPM revenues. Exelon sought amendments to the MRC proposals to add governing document language differentiating utility EE programs from third-party providers driven purely by PJM revenues.

“Energy efficiency projects will continue to receive economic benefits via reduced wholesale costs and the natural incentive of lower energy costs,” the filing said. “There is simply no reason the same energy efficiency should be simultaneously compensated for capacity revenues based on the same underlying project that also receives a reduction in demand costs.”

Petition Urges Technical Conference on EE

A group of EE trade groups and advocates jointly filed a petition with FERC urging it to open a technical conference on RTO rules around EE. Filing as the Alliance to Save Energy, the petition is signed by the American Council for an Energy-Efficient Economy, California Efficiency and Demand Management Council, Energy Efficiency Alliance of New Jersey, Institute for Market Transformation, Keystone Energy Efficiency Alliance, Metrus Energy, Midwest Energy Efficiency Alliance, National Association of Energy Service Companies and National Association of State Energy Officials.

The Aug. 29 petition states EE can effectively rise to the challenges posed by rising demand, the clean energy transition, transmission upgrades and backlogged interconnection queues in a manner that resources requiring long interconnection and construction lead times cannot (AD24-12).

“Energy efficiency offers significant advantages, including reducing the need for new generation and the costly transmission upgrades that come with it,” the coalition wrote. “By lowering demand, it can also free up existing transmission capacity, enabling a more expedited interconnection of additional resources. Moreover, unlike other resources, energy efficiency can be implemented without depending on the interconnection queue, resulting in substantial time and cost savings.”

The rule changes proposed by PJM and several complaints filed by the Monitor and market participants go beyond one RTO to implicate EE across the nation, the coalition wrote. Acting without cross-RTO guidance from FERC since it accepted PJM’s market design for EE in 2009 (ER05-1410), individual RTOs and their stakeholders have created a patchwork of market designs, the petition states.

“It is imperative that any changes to market rules affecting the participation and eligibility of EERs, which could jeopardize their role in these markets, stem from a thoughtful, holistic process led by the commission — not by one-off actions from individual RTOs,” the petition says.

Four panels are envisioned as part of the technical conference, including:

    • Energy Efficiency in Wholesale Markets Today, focusing on current market structures and models for EE participation.
    • Reconciliation with Load Forecast, looking at how EE interacts with RTO load forecasts and whether market eligibility should be tied to inclusion in forecasts.
    • Eligibility, Measurement, Verification and Standards, considering whether a causality principal should be an element of participation, as well as how capacity contributions can be quantified.
    • Value Proposition of Energy Efficiency, focusing on EE compensation and its effectiveness as a supply resource.

American Efficient Pushes Back on Allegations of Tariff Violations

American Efficient is defending itself from accusations the company violated the PJM and MISO tariffs in the design of its mid- and upstream energy efficiency (EE) programs, which provide rebates to manufacturers, distributors and retailers for offering qualifying products (EL24-113).

The Independent Market Monitor has accused several EE market participants of not meeting the RPM participation requirements and has requested FERC prohibit future participation and require revenues be returned. The commission’s Office of Enforcement (OE) also has opened an investigation into American Efficient specifically. (See Monitor Alleges EE Resources Ineligible to Participate in PJM Capacity Market.)

In its response to a 1b.19 notice from the OE — which notifies parties to an investigation that the office intends to recommend an administrative proceeding or civil action — American Efficient wrote that neither the Monitor’s complaint nor the OE investigation had substantiated claims of fraud. While the open investigation is confidential, FERC publicly posted American Efficient’s response to the 1b.19 notice, an executive summary of the response, a primer with background about the company and its request for a technical conference, and materials PJM submitted about the stakeholder process.

In the primer, American Efficient wrote that allegations that the company had engaged in fraud are unsubstantiated and the details of its program were reviewed and approved of by RTO staff.

“While the Market Monitors in PJM and MISO have strong policy preferences that EERs be removed from the markets, they are not arguing (nor could they, based on the record) that American Efficient misrepresented its program when seeking approval,” the company wrote. “Instead, the allegations go directly to the fundamental features of American Efficient’s EER program. There is no support for the allegation in the Preliminary Findings that American Efficient had a scheme with an intent to defraud the markets when the features were transparently presented to the RTOs, scrutinized by RTO staff, and subsequently approved.

“Put simply, an enforcement action based upon fundamental features of American Efficient’s EER program that MISO and PJM knew and approved of would be inequitable.”

In the executive summary, the company argued that PJM’s statements in the stakeholder process that the tariff does not require a link between capacity market revenues and EE programs run against the OE’s allegations. American Efficient said its PJM subsidiary Affirmed Energy followed the tariff as written and the OE is seeking to hold it to prospective rule changes.

“The plain text of the tariffs alone demonstrates that OE is wrong — EER providers are not required to pay end users, contract with end users, or prove that end users bought energy efficient products solely because of the provider’s program,” the company wrote. “Now that PJM has publicly stated its views about the tariff, affirming American Efficient’s position and rejecting OE’s position, that should conclusively settle the matter — OE has been wrong all along.”

The materials PJM provided to the OE state the tariff interpretation the RTO offered throughout the stakeholder process is in contradiction with the OE’s allegations.

“Through this process, PJM has clearly communicated in both verbal comments and public documents its view of the current rules — a view that is in direct contradiction to the Office of Enforcement’s assertions about the requirements of PJM’s tariff,” the RTO wrote.

In its filing to eliminate EE, PJM again stated there is no requirement that there be a causal link between capacity market revenues under the status quo rules and EE programs and that it is seeking only to bar EE participation for future auctions.

“PJM seeks to apply the proposed market rule change on a prospective basis and is not proposing to unsettle RPM auction results or undo any existing energy efficiency resource commitment under the current tariff and RAA rules,” PJM wrote. “The filed rate doctrine precludes retroactive changes for past actions where legal consequences have attached. As a result, energy efficiency resources that cleared the RPM Auctions for the 2025/2026 delivery year will need to follow through on their commitments and submit compliant post-installation measurement and verification plans in advance of that delivery year to substantiate their cleared quantities.”

In its 1b.19 response, American Efficient also wrote that the OE is singling out the company for a “market-wide policy matter” that should be resolved by rule changes rather than enforcement actions. The company repeated recommendations that FERC hold a technical conference to discuss how EE participates in capacity markets, focusing on whether they should be a supply-side resource, how capacity contributions can be measured and verified, and the rules around ownership of capacity rights to EE savings.

In addition to the allegations made regarding its participation in PJM’s capacity market, American Efficient wrote that MISO had found deficiencies in the capacity offered by its subsidiary Midcontinent Energy following an audit in 2021. While the company disputed the filing, Midcontinent opted to not seek to offer capacity in MISO’s market once the OE had supplied notice of its investigation.

A second complaint seeks the elimination of EE from the RPM and argues that the addback violates PJM’s tariff — a position also taken in a complaint the New Jersey, Maryland and Illinois consumer advocates filed. A complaint submitted by CPower alleges PJM overstepped in issuing guidance ahead of the 2025/26 BRA that tightened the auction participation requirements, substantially curtailing EE participation.

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PJM Stakeholders Voting on Hourly Reserve Notification Times

PJM’s Reserve Certainty Senior Task Force (RCSTF) is voting on a PJM proposal to add hourly differentiated notification times to the RTO’s day-ahead (DA) energy market. (See “Hourly Notification Times,” PJM MRC/MC Briefs: Aug. 21, 2024.) 

During a Sept. 5 task force meeting, PJM’s Joe Ciabattoni said generation notification times have become an important input for determining reserve eligibility, especially for offline, non-synchronized resources.  

The vote is being conducted virtually through Sept. 12, with expedited endorsement sought at the Markets and Reliability Committee and Members Committee on Sept. 25. The tightened schedule would allow for the changes to become effective for the upcoming winter. 

Hourly notification times can only be submitted in the real-time (RT) market, creating a discrepancy that Ciabattoni said can lead to units being assigned a DA reserve commitment that they cannot carry with their RT notification times. 

Joel Romero Luna, senior analyst with the RTO’s Independent Market Monitor, said the main use case for changing hourly notification times is to allow gas-fired generators to reflect pipeline restrictions that cause them to become less flexible. He said the Monitor has guidelines for how generators should use notification times to reflect gas nomination cycles, so there shouldn’t be much variety in how notification times are used. 

The change would require revisions to Manual 11: Energy & Ancillary Services Market Operations and Tariff Attachment K. 

Rebecca Stadelmeyer, Gabel Associates’ director of RTO services, suggested that the proposed language allowing hourly notification times used to commit non-synchronized and 30-minute reserves be consistent with references throughout Manual 11 and suggested replacing the 30-minute reserve with secondary reserves. Ciabattoni said PJM will consider the amendment. 

Task Force Shifting to Long-term Work Areas

PJM’s Danielle Croop said the RTO is not planning to rework a proposal to replace the 3,000-MW target for 30-minute reserve procurement with a formula that accounts for forecast peak loads and gas contingencies. Following the MRC’s rejection of the package in July, stakeholders told PJM they were uncomfortable with the lack of tariff language to accompany the change. (See “Stakeholders Endorse Reserve Rework, Reject Procurement Flexibility,” PJM MRC Briefs: July 24, 2024.) 

Croop said PJM believes the status quo language allows the change by pointing to the manuals to determine the reliability requirement. In the absence of further direction from stakeholders, she said it is not clear how PJM should proceed. 

Task Force Chair Lisa Morelli said in future meetings, the working group will pivot to its long-term work, which includes creating reserve product participation requirements and incentivizing resource flexibility. 

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FERC Approves $3B BlackRock Deal for Global Infrastructure LLCs

FERC on Sept. 6 approved a deal in which BlackRock seeks to buy all the limited liability company interests in Global Infrastructure Management for $3 billion in cash and 12 million shares of BlackRock Funding (EC24-58). 

Global Infrastructure owns or controls 6,937 MW of generation in CAISO, 606 MW in PJM, 463 MW in ISO-NE, 787 MW in SPP and generation outside RTO/ISO markets. The company also is trying to buy 50% interest in North East Offshore, Revolution Wind and South Fork Wind, which are developing offshore wind off the Northeast, and it has investments in FERC-regulated natural gas infrastructure. 

BlackRock is a publicly traded investment management firm that controls gas-fired resources in various parts of the U.S., including 3,374 MW in PJM, 1,042 MW in Arizona and 945 MW in Georgia, as well as other facilities that fall under FERC jurisdiction. 

The application drew a joint protest from Public Citizen, and the Private Equity Stakeholder Project and Sierra Club separately protested it.

The two firms’ capacity overlaps in CAISO and PJM, where, after the deal is completed, BlackRock would control 10 and 2.2%, respectively, of generation in those markets. The percentage in California was high enough to require the applicants to run a delivered price test, which showed the combination lacks a material competitive effect on CAISO’s market. 

The joint protest argued otherwise, saying BlackRock should have to include any utility in which it holds 10% or more voting shares, which represents more than 20 firms. BlackRock said its shares in those firms are covered by an effective blanket authorization from FERC and it does not control them. (See BlackRock Decision Unearths FERC Wariness of Investor Influence on Utilities.) 

FERC agreed with the applicants’ findings that the deal would not impact horizontal market power and agreed that BlackRock does not need to include its investments covered by the blanket authorization in the analysis. 

BlackRock does not exercise any control over those utilities, so it does not need to include their generation in the delivered price test, FERC said. 

The joint protest argued the application is silent on how BlackRock can manage its passive ownership of voting shares of utilities that compete with its active, direct holdings. They argued FERC should conduct a formal reassessment of the blanket authorization as part of its review of the deal with Global Infrastructure. 

FERC said under the blanket authorization, BlackRock agreed it would not exercise control over the day-to-day management of any covered utilities. It would be required to file a separate application if it sought to exercise direct control over the management or operations of a utility outside of that authorization, as it did with the Global Infrastructure deal. 

“We decline to reassess BlackRock’s blanket authorization in this proceeding or to hold a hearing on BlackRock’s blanket authorization at this time,” FERC said. “Questions about the conditions applicable to BlackRock’s blanket authorization are beyond the scope of this proceeding.” 

‘Economic Reality’

Commissioner Mark Christie wrote a concurrence to the order saying he’s long been concerned about huge asset managers like BlackRock seeking to acquire interests in utilities. (See FERC Reconsidering Blanket Authorizations for Investment Companies.) 

“The influence that large shareholders, BlackRock or otherwise, can potentially exert across the consumer-serving utility industry should not be underestimated,” Christie said. “Such horizontal shareholdings pose the threat of decreased innovation, reduced competition and ultimately higher prices to consumers, as well as the prospect of chilling investment in exactly the new generation resources we need to meet increased demand for power and to enhance the reliability of the grid. So this is an issue that deserves much greater scrutiny, as I have stated before.” 

BlackRock already owned passive shares in IPPs in California and is expanding its active control over more of them, but FERC cannot examine the issues cited in the protests due to the blanket authorization. 

“You do not need a Ph.D. in economics to see the potential for anticompetitive conduct and outcomes when an investment entity like a huge asset manager seeks to own generation assets that will be — or should be — competitors,” Christie said. “Market power is an ever-present concern, and one rule I taught my law students is that any seller with market power will use it. That’s not a moral judgment, just economic reality.”