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November 16, 2024

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MISO, SPP Regulators to Engage on Tx Cost Allocation

MISO and SPP state regulators plan to ensure they are involved in the grid operators’ ongoing discussions about sharing costs from their joint targeted interconnection queue (JTIQ) study.

The RTOs last month identified a $1.755 billion portfolio of seven suggested projects. The portfolio would deliver $724 million and $247 million of adjusted production cost (APC) benefits to customers in the MISO and SPP footprints, respectively, with a cumulative benefit-to-cost ratio of 0.56. (See MISO, SPP Roll out $1.755B Joint Tx Portfolio.)

The JTIQ study team is finalizing its report and plans a series of cost-allocation workshops through midyear. Once it has agreed on a cost-sharing mechanism, it will be filed for approval with FERC.

“Future comments to FERC need to be approved. I see us being involved in every meeting moving forward,” Ryan Silvey, chair of the Missouri Public Service Commission, said during the Seams Liaison Committee’s (SLC) meeting Feb. 22. Cost allocation is “something that we continue to talk about pretty much every time we get together.”

“The biggest knot to untie is cost allocation,” South Dakota Public Utilities Commissioner Kristie Fiegen said, noting differences between the RTOs’ stakeholder processes. “That’s been some of the issues the last few years. We just need to ensure we have a clear understanding of what that looks like in the near future.”

The SLC, comprising members from the Organization of MISO States and SPP’s Regional State Committee, also discussed early results from a working group inventorying rate-pancaking types along the MISO-SPP seam. Grandfathered agreements that result in “hundreds of megawatts flowing across the seam” remains an issue that hasn’t been addressed yet, said Marcus Hawkins, OMS’ executive director.

The working group and the SLC will regroup May 18 for additional discussion on pancaking issues.

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Fierce Bidding Pushes NY Bight Auction to $4.37 Billion

Six companies offered a record $4.37 billion for 5.6 GW of offshore wind capacity in the New York Bight Friday after three days of fierce bidding.

The bids for the six sites, in one case topping $1 billion, even exceeded previous federal auctions for offshore oil and gas leases, according to the Interior Department’s Bureau of Ocean Energy Management (BOEM). The average cost per acre for the auction — $8,837 — was more than eight times the $1,083/acre average in BOEM’s 2018 auction for three sites off the Massachusetts coast, which totaled $405 million.

Interior Secretary Deb Haaland hailed the auction results as evidence that “the enthusiasm for the clean energy economy is undeniable, and it’s here to stay.”

The auction sites in the Bight — a bend in the coast of New York and New Jersey — vary from 20-69 nautical miles from shore, with minimum depths of 31 to 50 meters and maximum depths of 46 to 63 meters.

Covering more than 460,000 developable acres, the six sites have the potential to generate more than 19 million megawatt-hours of electricity per year, enough to power close to 2 million homes, based on BOEM’s estimate of 3 MW/sq km. The 5.6 GW of capacity represents more than one-sixth of the 30 GW of offshore wind President Joe Biden wants online by 2030.

In descending order, the provisional winning bidders and bids are:

      • Bight Wind Holdings | $1.1 billion | 1,387 MW
      • Attentive Energy | $795 million | 964 MW
      • Atlantic Shores Offshore Wind Bight | $780 million | 924 MW
      • OW Ocean Winds East | $765 million | 868 MW
      • Invenergy Wind Offshore | $645 million | 934 MW
      • Mid-Atlantic Offshore Wind | $285 million | 523 MW

The online auction, which began Wednesday with 25 eligible bidders, was a rollercoaster ride for the nascent industry, with bids on some sites climbing precipitously in a matter of hours. Bidding on the largest site — labeled OCS-A 0539 — started at $12.6 million on Wednesday morning, hit $900 million on Thursday and broke $1 billion an hour after bidding opened on Friday morning. At different times during the auction, as many as six companies were vying for the lease, with bids jumping $15 million to $30 million between rounds.

According to BOEM, the next step in the leasing process for the provisional winners is an anti-competitiveness review of the auction, to be conducted by the Department of Justice and Federal Trade Commission. The companies will also be required to pay up on their winning bids and provide financial assurance to BOEM.

The New York Bight auction is the first of seven potential offshore wind auctions the DOI is planning over the next three years, according to a plan Haaland outlined in October. (See BOEM to Auction Six New Lease Areas in NY Bight.) The second auction, scheduled for later this year, will be for a single lease off the coast of North Carolina.

BOEM is also evaluating sites in Central and Northern California, the Gulf of Mexico, the Mid-Atlantic, Oregon and the Gulf of Maine. BOEM has identified three call areas off Oregon with a total capacity potential of 17 GW, according to a presentation the agency made at a Feb. 25 meeting of its Oregon Intergovernmental Renewable Energy Task Force. (See related story, Energy Bar Weighs OSW in Oregon, California.)

Investors Confident in OSW

Bidders and other clean energy stakeholders celebrated the results and the infrastructure, supply chain and jobs it will create.

Prior to the auction, the U.S. offshore wind market had drawn in $6.7 billion in leases and other investments, according to the Business Network for Offshore Wind, an industry trade group. A report from the Special Initiative on Offshore Wind, another industry group, estimates it will require $109 billion in investments to create the supply chain needed to reach Biden’s 30-GW goal.

Liz Burdock, CEO of the Business Network, said the auction reflected “the pent-up demand for new lease areas.”

“The New York Bight benefited from clear political support, an emerging yet robust local supply chain and a years-long preparation window, which should allow the winning bidders to quickly begin the permitting process and put steel in the water by the end of the decade,” she said.

New Jersey Gov. Phil Murphy has set a goal of developing 7,500 MW of offshore wind by 2035, and to date, the state’s Board of Public Utilities (BPU) has held two solicitations, awarding three projects totaling 3,758 MW. New York’s offshore wind goal is 9,000 MW by 2035. The state has five offshore projects in development, for a total of more than 4,300 MW.

In 2020, consulting firm Wood Mackenzie predicted lease auctions in 2020-2022 in the New York Bight, California, North Carolina and South Carolina could “support 28 GW of offshore wind development and generate $1.2 billion in U.S. Treasury revenue” — an estimate that turned out overly conservative.

Aaron Barr, one of the authors of the report, told Grist the high bids were “a clear signal that offshore wind developers and investors are convinced of the sound business case for offshore wind in the United States.”

Indeed, RWE Renewables, one of the companies behind Bight Wind Holdings, said winning the $1.1 billion lease for the largest site in the bight is “an important step on the road to tripling our offshore wind capacity to 8 GW by 2030.”

RWE Renewables, the U.S. subsidiary of German utility RWE, is partnering with National Grid on the project, reflecting the strong European interest in the U.S. market. OW East is a partnership between Global Infrastructure Partners, an infrastructure fund manager, and the offshore developer Ocean Winds, a joint venture between EDP Renewables, the U.S. subsidiary of Spain’s EDP Renovavéis, and ENGIE, the French multinational utility.

According to a report on offshoreWIND.biz, an industry trade publication, other winning bidders with strong European ties include Attentive Energy, a joint venture of EnBW (Germany) and TotalEnergies (France), and Mid-Atlantic Offshore, which is owned by a Danish firm, Copenhagen Infrastructure Partners. Shell and EDF Renewables are the companies behind Atlantic Shores Offshore Wind.

‘Too Much, Too Fast’

Strong business support notwithstanding, local environmental groups had mixed reactions to the auction results. Doug O’Malley, director of the Environment New Jersey Research and Policy Center, said the auction’s “eye-popping valuations send the market a clear signal that offshore wind is poised to become the key driver of clean, renewable energy on the East Coast.

“Once we tap offshore wind, we’ll be able to green our region’s electric grid and cut the cord with fossil fuels,” he said.

But Clean Ocean Action, a New Jersey-based coalition of fishing, recreation and other community groups, criticized the auction as “too much, too fast.”

“The fast tracking of offshore wind puts marine life and a clean ocean economy at risk,” the group said in a statement released on the first day of the auction.

“There are unanswered questions with this newly proposed industry, especially at the magnitude, scale, and speed of development currently proposed,” the group said. “The leasing of these half million acres is too premature given the current gaps in scientific literature concerning the impacts of offshore wind turbines and related infrastructure on marine species and their habitats.”

The Atlantic Coast fishing industry has also raised concerns that BOEM’s requirements may not ensure that winning companies will seek and act on input from local business, community and environmental groups. (See Fishing Industry Concerned About NY Bight OSW Plan.)

Local Economic Impact

New Jersey and New York have been investing heavily in offshore wind, with their own state-level auctions and investments in local infrastructure.

Both states are also providing financial incentives for offshore wind development and are planning port facilities, spurring an emerging supply chain of local businesses. For example, New Jersey has approved $350 million in tax credits linked to offshore wind-specific facilities in the state. New York has tied its awarding of offshore wind renewable energy credits (ORECs), in part, to economic benefits projects provide, including supply chain buildout, benefits to disadvantaged communities and workforce development programs.

The impact of offshore wind development in both states has already been significant. In its 2022 U.S. Offshore Wind Market Report, the Business Network for Offshore Wind analyzed its database of potential supply chain companies, finding that Massachusetts leads the East Coast with 387 firms listed, but New Jersey (361 companies) and New York (287 companies) are close behind. An analysis of the database also found that close to half of the companies listed are small businesses with fewer than 100 employees.

BOEM has similarly incorporated economic development into the leasing process for the New York Bight, requiring lessees to describe their plans for contributing to the development of a domestic supply chain. As outlined in the January final notice on the auction, lessees that “meaningfully and substantially” assemble or manufacture major components in the U.S. could qualify for a 50% reduction in the “fee rate” for five years, which would cut the fee rate from 2% to 1%.

The operating fee will be based on a proxy for the wholesale market value of the power generated from each project. The proxy will assume a 40% capacity factor for the first six full years of commercial operations, with potential adjustments based on actual generation in future years. BOEM will use the simple hourly average of the spot price for NYISO’s Zone J in New York City. At a wholesale power price of $40/MWh, the annual 2% fee for a 1,028-MW facility, would be $2.9 million.

Officials from the BOEM and the two states have created a supply chain working group that will meet quarterly to coordinate their efforts.

The Transmission Imperative

Capitalizing on OSW’s economic potential will require the states to develop efficient transmission to deliver power to customers.

In its final notice for the NY Bight Auction, BOEM urged strategic planning of transmission, noting that the agency is considering “the use of cable corridors, regional transmission systems, meshed systems, and other mechanisms.” It said it may condition approval of construction and operations plans “on the incorporation of such methods where appropriate.”

The National Renewable Energy Laboratory is partnering with the Pacific Northwest National Laboratory on an Atlantic offshore wind transmission study “to evaluate multiple pathways to offshore wind goals through coordinated transmission solutions.” A final report is expected late in 2023, according to the study webpage.

PJM last year opened the first transmission-only solicitation for the U.S. offshore wind industry at the request of the New Jersey BPU. PJM is currently reviewing the 80 proposals received. Under PJM’s state agreement approach, New Jersey would commit to paying 100% of the cost of the transmission but could seek to allocate some costs to other generation projects that use the additional capacity. (See PJM, NJ Seek FERC OK for OSW Tx Process.)

The Business Network anticipates even broader collaboration, not just between states, but between ISOs and RTOs in “concentric circles of transmission coordination,” especially as offshore wind is developed on the West and Gulf coasts.

“The offshore wind transmission conversation is steadily expanding outwards in terms of complexity, geographic area covered and level of coordination needed by planning frameworks,” the network’s 2022 market report said. “All U.S. regions seeking to integrate offshore wind into their grids face a similar challenge — the electricity transmission system tends to be less robust in coastal areas.”

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NERC Cold Weather Project Moves Forward

The Executive Committee of NERC’s Standards Committee (SCEC) voted to move ahead with NERC’s latest cold weather project, in what Standards Committee Chair Amy Casuscelli, of Xcel Energy, acknowledged to be an “unusual” open meeting Friday.

The SCEC currently comprises Casuscelli and Vice Chair Todd Bennett, of Associated Electric Cooperative Inc., along with Sarah Snow of Cooperative Energy, Venona Greaff of Occidental Chemical and independent member Philip Winston, formerly of Southern Co. Members voted to accept the standard authorization request (SAR) for Project 2021-07 (Extreme cold weather grid operations, preparedness and coordination) and appoint the SAR drafting team as the project’s standard drafting team (SDT).

With approval from the SCEC, the SDT can begin drafting the standard now, rather than wait for the Standards Committee’s next regular meeting, scheduled for March 23. The project is intended to carry out the recommendations of NERC and FERC’s joint inquiry into last February’s winter storms, including requirements for identifying and protecting cold weather-critical components, building and retrofitting generating units to operate to specific ambient temperatures and weather, and performing annual training on winterization plans. (See FERC, NERC Release Final Texas Storm Report.)

The “time-sensitive nature of the project” was the justification for the full Standards Committee delegating its authority over SAR approval to the SCEC at its meeting the previous week; SAR drafting team members wanted to “build on the momentum” of previous meetings so that any new standards could be implemented as quickly as possible. (See NERC Standards Committee Fast Tracks Cold Weather Project.)

At that meeting, Marty Hostler of the Northern California Power Agency was the only member to express misgivings about delegating authority; he worried that leaving the decision up to the SCEC would limit committee members’ ability to question the drafting team’s response to industry comments. Hostler again spoke up on Friday, the only member to do so.

Though he did not object to the SAR overall, Hostler did suggest that more could have been done to “resolve all expressed objections” from industry, and he questioned whether the drafting team could follow through on its promise to address issues raised in the comment period during the standards drafting process.

“There’s been numerous objections to at least one of the recommendations that are in the SAR, and that has been addressed [by] saying that they’re basically going to table it and send it back to NERC for consideration. However, experience has shown that [these issues] don’t get considered later,” Hostler said. “And when you’ve got a SAR that is close to or has been approved, then the legal [department] tells us, ‘Well, you can’t discuss that anymore; now you have to follow the SAR.’”

Specifically, Hostler pointed to the SAR’s proposed requirement for retrofitting existing generating units; despite this being one of the recommendations of the joint inquiry, Hostler pointed out that the measure had been “very contentious” and that even the SAR drafting team’s chair said it would “take a lot of time” to resolve. He suggested that this requirement be “bifurcated” into a separate standards project so as not to distract from the work of Project 2021-07, though he also acknowledged he was not sure how this could be done within the standards process.

“I know the Standards Committee can’t actually tell them to bifurcate it, but that is an issue, and it doesn’t have support, which is also required of a SAR. Now the concept does, I agree with that, but not the entire SAR,” Hostler said.

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Connecticut EV Right-to-charge Bill too Broad, Attorney Says

A new bill that would ensure Connecticut’s condominium owners and renters can access electric vehicle charging at home is “inappropriate” as written, an attorney told legislators Thursday.

Andrea Dunn, a condominium association lawyer at Bender, Anderson and Barba, said the “one-size-fits-all nature” of the bill fails to address the “vast difference” between condos.

The Joint Energy and Technology Committee took up the bill (H.B. 5117) at the request of the Department of Energy and Environmental Protection (DEEP) and accepted comments on it during a public hearing.

“This legislation would … provide a process through which residents can seek approval for charging equipment installation while simultaneously protecting the property interests of associations and landlords,” DEEP Commissioner Katie Dykes said in testimony.

As written, the bill would prevent associations and property owners from restricting unit owners and renters from installing chargers, and it sets out the parties’ responsibilities for their installation.

“In short, this bill places financial responsibility solely on the unit owner or tenant,” Dykes said. Six other states, she added, have enacted right-to-charge laws in recent years that apply to associations and rental properties.

Committee members acknowledged the bill’s importance to the state’s EV goals during a legislative session preview hosted by the Connecticut Power and Energy Society on Wednesday.

“This bill will allow an owner or tenant to approach their association or landlord and petition for a charging station,” ranking committee member Rep. Charles Ferraro (R) said during the event.

Establishing a right-to-charge law for the people living in condos and rental properties is complicated. Condos are “common interest ownership properties,” and what one owner does affects other owners, committee co-Chair Sen. Norm Needleman (D) said at the event.

The intentions of the bill, Dunn said, are good, but it would not allow for the “unique makeup” of condo communities that may have no space for charging stations or immediate access to an electrical source. It also interferes with the authority of associations’ governing documents, she said.

One of Connecticut’s largest property owner organizations opposed the bill’s approach to forcing business decisions on property owners and its ambiguity over cost responsibilities. The bill is not clear, for example, about what would happen to the charging equipment after a tenant moves, it said.

EV charging as an amenity for renters “should be left to the property owners and the tenants to negotiate for themselves,” John Souza, president of the Connecticut Coalition of Property Owners, said in testimony. The free market, he said, should set the pathway for EV charging.

Needleman suggested during the hearing that representatives of the real estate community could help the committee as part of a working group to craft more suitable language for the bill.

Hydrogen Study

The committee will take public comments this week on a priority bill (H.B. 5200) that it introduced Wednesday to create a task force for studying hydrogen in the state.

“We have … all the ingredients to create a very vibrant green hydrogen hub in the region,” committee co-Chair Rep. David Conti (D) said during the legislative preview.

One of the task force mandates would be to examine how the state can take advantage of incentives for hydrogen under the Infrastructure and Investment Jobs Act (IIJA), which included $8 billion in funding over five years to develop Regional Clean Hydrogen Hubs. A U.S. Department of Energy request for information issued earlier this month seeks input on the hydrogen hub funding solicitation process.

The task force would submit its study to the legislature in January 2023 so that the committee can “craft policy” to “incorporate Connecticut into a hydrogen future,” Conti said.

U.S. Sen. Charles Schumer (D-N.Y.) is already taking steps to position New York as the center of a hydrogen hub. In a Feb. 15 letter to Energy Secretary Jennifer Granholm, Schumer urged DOE to work closely with the state as the department begins to implement the hydrogen hubs program.

Four Western states have also made a move to compete for the IIJA funds, signing an agreement Thursday to develop a Western Inter-States Hydrogen Hub. (See related story, Mountain States Partner to Secure Hydrogen Hub.) And in Washington, the State Senate unanimously passed a bill Feb. 12 to create a state office that would support hydrogen development and help put the state in the running for a hub designation. (See related story, Fast-moving Bill Seeks to Win Hydrogen Hub for Wash.)

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MISO Long-range Tx Plan Overlaps with SPP Study

MISO will complete a draft portfolio of billions of dollars’ worth of long-range transmission projects by the end of March, although two recommended projects bump up against its interregional planning effort with SPP to clear backlogs in their respective generator interconnection queues.

“We’re shoring up business cases to proceed,” Jarred Miland, senior manager of transmission planning coordination told stakeholders during a special workshop Friday on the long-range plan’s Midwestern portion.

MISO will add a two-day workshop in late March to focus on the 345-kV projects’ technical analysis and business cases. The Planning Advisory Committee will conduct an advisory vote on the package during its mid-April meeting. (See MISO Promises Long-range Tx Project Reveal Soon.)

Stakeholders expressed discomfort during the workshop with the project’s overlap of routes being pursued in MISO’s and SPP’s Joint Targeted Interconnection Queue (JTIQ) study. They pointed out that the long-range plan’s recommended lines in the Dakotas and Minnesota echo two JTIQ solutions. (See MISO, SPP Roll out $1.755B Joint Tx Portfolio.)

The proposed projects, Ellendale to Jamestown in southern North Dakota and a line from Big Stone South, S.D., to Cassie’s Crossing, Minn., will solve thermal overloading issues and ease congestion on the existing system. MISO planners said solving those reliability issues has been on their radar for some time.

Miland said staff will recommend the two joint projects under the RTO’s regional planning process. He said the projects might be in the distant future because the grid operators don’t have a cost-allocation process in place.

“With the JTIQ, cost allocations are still in discussion, and it probably has a much, much longer time ahead of it,” Miland said.

Aubrey Johnson, executive director of system planning, said MISO stands to benefit more than SPP from the two projects. He also said the long-range transmission plan takes precedence over the JTIQ effort in MISO’s hierarchy of transmission planning.

“It is appropriate for the MISO customers to carry these costs,” Johnson said.

The RTO’s director of resource utilization, Andy Witmeier, said the JTIQ cost-allocation talks are in their “infancy.” He said it would be “imprudent” to sit on beneficial projects while lengthy joint cost-sharing negotiations take place.

“It’s a little unfortunate that not all the beneficiaries will be paying for these projects,” Wolverine Power Supply Cooperative’s Tom King said, referring to SPP members.

When asked, Johnson said MISO has not yet projected in-service dates for either the long-range plan or JTIQ projects.

However, staff said they intend to have the long-range projects in service as quickly as permitting and construction allow. Witmeier said the RTO envisions in-service dates within seven or eight years because of the immediate need for new transmission.  

“Essentially, all of these projects have as-soon-as-possible in-service dates,” he said.

Billions in Costs, More Billions in Benefits

MISO said preliminary analysis of its first cycle of long-range projects “indicates total economic benefits significantly exceed cost.” However, staff hasn’t yet attached specific costs to individual projects or the portfolio. Johnson said a $12-$16 billion cost range contained in a MISO presentation was an “illustrative example” that “represented real numbers.” Staff said they have more work ahead analyzing project alternatives before they can narrow costs.

Should FERC approve MISO’s filed cost allocation for long-range projects, the cost splits will be based on postage stamp rates limited to either the RTO’s Midwest or South regions.

The grid operator’s analyses show that the first Midwestern projects can facilitate 20 GW in capacity additions and could save MISO Midwest $16.6 billion in congestion and fuel costs over the transmission projects’ first 20 years.

Decarbonization benefits could range from $2.25 billion to almost $11.5 billion over a 40-year project lifespan, MISO said. It also said it could achieve $1 billion in savings because the first long-range projects would increase transfer capabilities between local resource zones, thereby lowering capacity-clearing requirements.

MISO said the projects might also prevent a few billion dollars’ worth of load shed over 40 years, and significantly more if it raises its value of lost load beyond the current $3,500/MWh. Many stakeholders say that figure is an underestimate.

The RTO also said it continues to see value in including a massive 345-kV project corridor that would span Iowa, Illinois, Indiana and Michigan and not branch out into smaller city-to-city segments.

The grid operator said it could avoid about $760 million in additional transmission work by using a portfolio package instead of chasing standalone, incremental fixes.

“Past experiences with transmission studies like the multi-value projects indicate that a regional approach will be more cost effective than a purely local buildout,” staff said.

The Midwestern long-term projects come as MISO state regulators face federal pressure to focus on new energy infrastructure.

The U.S. Department of Energy’s Pat Hoffman appeared during a Feb. 14 Organization of MISO States (OMS) meeting to request that regulators concentrate on infrastructure buildout. Hoffman asked the audience to speak with “one voice” on how grid investment should look.

“It’s going to take off, and I’m worried the system is not prepared on what’s to come,” Hoffman said of the MISO footprint. She said the industry is poised to shift rapidly due to fossil fuel plant retirements, integrating renewable energy, and extreme weather changes.

“You do a good job of walking that fine line between optimism and terror,” OMS President Sarah Freeman said after Hoffman’s presentation.

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AEP to Sell Unregulated Renewables Portfolio

American Electric Power (NASDAQ:AEP) said last week that it intends to sell some or all of its unregulated contracted wind and solar energy resources and redirect capital previously allocated to that business to its transmission assets.

Executives told financial analysts during AEP’s year-end earnings call Thursday that it plans to dispose of about 1.6 GW of renewable capacity. That will free up $1.5 billion in capital spending to its regulated transmission business between now and 2026.

CEO Nick Akins said during the call that the company is “fully confident” the portfolio’s sale will “both simplify and derisk” the business and allow it to “assign additional capital to our regulated business.”

The move doesn’t affect AEP’s regulated renewables business, which plans to add 8.6 GW of wind and 6.6 GW of solar by 2030. The company is allocating $8.2 billion of its current $38 billion, five-year capital plan to the regulated portfolio. The capital expenditure plan also includes $24.8 billion for grid investments.

“The migration from contracted renewables to significant increases in regulated renewables will ensure that AEP maintains the talent and resources to execute this plan,” Akins said.

AEP expects to close the $2.8 billion sale of its Kentucky operations, Kentucky Power and AEP Kentucky Transco, in the second quarter. Akins said he doesn’t think the recent withdrawal of a FERC filing related to a coal-fired power plant’s operating agreement to affect the timing.

The Columbus, Ohio-based company reported its “strongest-ever” fourth quarter with earnings of $538.9 million ($1.07/share). A year ago, quarterly earnings were $435.5 million ($0.88/share).

AEP’s year-end earnings were $2.49 billion ($4.97/share), compared to $2.2 billion ($4.44/share) in 2020.

Wall Street reacted favorably to the news, driving AEP’s share price up 5.7%, from $84.64 before the earnings announcement to $89.46.

Vistra Recovers from Winter Storm

Vistra (NYSE:VST) on Friday brought a tough year to a close by delivering $1.94 billion in year-end adjusted EBITDA from ongoing operations. A year ago, the Texas-based company reported $3.77 billion in adjusted EBITDA from ongoing operations a week after February’s devastating winter storm that eventually inflicted a $1.6 billion hit.

Last year “was undoubtedly a challenging year and, in many ways, a pivotal one for Vistra. … The financial strength we worked so hard to put in place was challenged,” CEO Curt Morgan told financial analysts during a conference call. “I’m proud of how our team came together to not only confront and mitigate the impact, but to then shift to building a stronger company. That strong balance sheet we built and the resilience of our team helped us stabilize the company and ultimately get back on track within months.”

<img src="https://rtowww.com/wp-content/uploads/2023/06/140620231686782162.jpeg" data-first-key="caption" data-second-key="credit" data-caption="

Vistra CEO Curt Morgan

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Executives said Vistra was able to “derisk” the company after the storm and shift its strategic direction; begin an improved capital allocation plan with substantial share repurchases; and accelerate Vistra Zero, its portfolio of zero-emission resources. Vistra has announced plans to operate 7.3 GW of zero-carbon generation by 2026, a number that includes its 2.3-GW Comanche Peak Nuclear Power Plant. The company plans to bring two solar facilities offering 158 GW of power and a 260-MW energy storage facility online by this summer.

The company reduced debt by about $625 million during the fourth quarter and is on target to reduce debt by $1.5 billion by the end of 2022.

“We feel like we’ve turned the corner here and strengthened our company,” Morgan said in closing the conference call.

For the quarter, adjusted EBITDA from ongoing operations was $1.17 billion, compared to $802 million for the same period in 2020.

Vistra’s share price gained 22 cents Friday, closing at $21.90. It had dropped to $17.25 in February after the company disclosed its winter storm losses. (See Vistra Stock Plunges After Market Losses.)

OGE Turns in Solid Year

OGE Energy (NYSE:OGE) on Thursday reported year-end earnings of $737.3 million ($3.68/diluted share), compared to a net loss of $173.7 million ($0.87/diluted share) for 2020.

For the quarter, earnings were $319.2 million ($1.59/diluted share), up from $54.8 million ($0.27/diluted share) for the year prior.

Most of the gains came from OGE’s Oklahoma Gas & Electric subsidiary, which turned in 2.4% load growth and increased revenues from capital investment recovery. That was partially offset by the February winter storm’s effects and higher depreciation on a growing asset base.

“Every single employee contributed to the excellent results we delivered this year especially when you consider the headwinds we faced in early 2021,” CEO Sean Trauschke said in a statement.

The Oklahoma City-based company forecasts long-term utility earnings growth of 5 to 7% per share.

OGE’s share price gained $1.75 and finished the week at $37.18, a 5% increase following the earnings announcement.

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MISO Steering Committee Blocks Adds to Stakeholder Guidelines

MISO stakeholder committee chairs last week elected not to adopt rules regulating stakeholder presentations during meetings.

On Wednesday, the Steering Committee, comprising chairs from eight MISO committees reporting to the grid operator’s Advisory Committee, declined to advance a suggested insert drafted by Clean Grid Alliance’s Rhonda Peters to its Stakeholder Governance Guide.

The addition would have dictated that stakeholders presenting during meetings must be “treated uniformly and without discrimination or preference.” It also would have compelled the RTO to deliver its own presentations and discuss suggested changes by stakeholders before it could adopt them.

“Stakeholders cannot adequately and sufficiently represent MISO’s interests or accountability,” the language said.

Peters said the grid operator’s adoption of stakeholder suggestions without fully vetting them with the larger stakeholder community has been an issue that has come up several times over the 14 years she’s been participating in the stakeholder process. She said staff will sometimes file with FERC tariff modifications on stakeholders’ recommended changes without addressing the edits with stakeholders.

Peters said the most recent example arose after a Planning Advisory Committee meeting when MISO filed tariff changes pertaining to transmission owners’ reinstated option to self-fund network upgrades. She said staff should have vetted the edits pertaining to the self-funding option with the Interconnection Process Working Group before drafting and filing the changes.

MISO in 2018 acted on FERC’s direction and reinstated TOs’ right to self-fund network upgrades necessary for new generation. The decision has been a hot-button issue, spawning three years’ worth of reopened contracts, refunds to interconnection customers and condemnation from one FERC commissioner. (See FERC Upholds MISO Self-fund Order, Glick Dissents.)

“There are some stakeholders that MISO feels represent them,” Peters said. “All stakeholders should be treated in the same manner, and that has not been happening.”

She implied that TO recommendations carry more weight with the RTO than those from other stakeholders.

Committee chairs said while they were sympathetic to the issue, they didn’t see a need to add a section on stakeholder presentations to the governance guide.

“I’m worried if we try to add language to address every situation in the Stakeholder Governance Guide, it will become unwieldy and collapse under its own weight,” WEC Energy Group’s Chris Plante, the Resource Adequacy Subcommittee chair, said.

Plante said he’d rather see committee chairs handle these types of situations. Planning Advisory Committee Chair Cynthia Crane, with ITC Holdings, agreed that the new section would be “overly prescriptive.”

Ameren’s Ray McCausland, who chairs the Reliability Subcommittee, asked stakeholders to bring specific violations of stakeholder treatment to the Steering Committee instead of prescribing vague language in the governance guide.

Market Subcommittee Chair Megan Wisersky, with Madison Gas and Electric, said that the guide’s addition could discourage some stakeholders from coming forward with presentations. In MISO’s stakeholder process, any stakeholder is free to present in meetings if it gives the grid operator enough notice.

Clean Grid Alliance’s Natalie McIntire asked how the issue could effectively be addressed by the committee chairs and vice chairs. “I just feel like there needs to be another solution, one that does function,” she said.

Peters said if she couldn’t get the language accepted, the next step might be taking the issue to MISO’s alternative dispute resolution process.

Customized Energy Solutions’ David Sapper said he’d be interested in hearing MISO’s process for accepting stakeholder suggestions and making FERC filings based on them.

The Steering Committee has no current plans to further address the issue.

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Massachusetts Solar Watchers See Warning Signs in Local Siting

As solar developers eye Massachusetts and its growing incentive program, new challenges are arising that could continue to put up barriers to development in the state.

In December, Massachusetts doubled its solar incentive program, the Solar Massachusetts Renewable Target, from 1,600 MW to 3,200 MW of capacity, a boon to the growth of the solar industry there.

But an unexpected level of resistance and confusion at the local level continues to hinder solar developers.

Jonathan Persaud 2022-02-25 (RTO Insider LLC) FI.jpgJonathan Persaud, Grasshopper Energy | © RTO Insider LLC

“I think we’ve certainly bruised our knees a tremendous amount on the coordination that needs to go on between the regulator, utility and even local townships themselves,” said Jonathan Persaud, chief commercial officer of the Canadian solar company Grasshopper Energy.

Ensuring that local townships understand the projects’ objectives has “proven to be a much, much more heavy lift than certainly we ever imagined coming into Massachusetts,” he said during RE+ Northeast on Thursday.

Speaking at the conference, Persaud and other industry and government representatives described a difficult landscape when it comes to dealing with local governments.

Municipalities, they said, are uneasy about the financial and safety prospects of having solar projects come to town and feel harried by developers.

The Tax Question

Tim Roughan 2022-02-25 (RTO Insider LLC) FI.jpgTim Roughan, National Grid | © RTO Insider LLC

“Siting reform is critical,” said Tim Roughan, director of regulatory strategy for National Grid. At the base level, he added, the simplest way to incent cities and towns to want solar development is to “bribe them.”

He suggested that developers and policymakers should look for ways to incentivize solar projects to give more back to communities.

“You need a way so that folks will have certainty; the town will have certainty about how they’re going to pay their bills,” Roughan said.

Massachusetts law exempts many solar systems from property taxes, and some solar farms skirt taxes by using their output to heat or cool buildings and take advantage of an old state solar water heating incentive, Roughan added.

“That town doesn’t want any more solar,” he said. “Can you blame them?”

Paying more in taxes is not necessarily a dealbreaker for developers.

“I don’t think many solar companies would say that we’re unwilling to pay property taxes,” said Jessica Robertson, director of New England policy and business development for Borrego. “I think we’re absolutely willing to pay and contribute to the local economy.”

By removing the risk, she added, paying property taxes can be borne by the project economics.

Frustration and Education

Elizabeth Mahony 2022-02-25 (RTO Insider LLC) FI.jpgElizabeth Mahony, assistant attorney general and senior energy policy adviser to Massachusetts Attorney General Maura Healey | © RTO Insider LLC

Creating a good relationship with communities involves more than money, said Elizabeth Mahony, an assistant attorney general and senior energy policy adviser to Massachusetts Attorney General Maura Healey.

“There are big questions out there because it’s not just necessarily a cost issue; it’s a ‘they’re tired’ issue,” Mahony said “A lot of [developers] have hit up the same towns quite a number of times.”

The towns are frustrated and “worried about their future agricultural needs,” she said.

Also serving as a hindrance to further development is a continuing lack of information and education about solar.

In some instances, Persaud said, he has had to explain that solar modules don’t give off radiation and that lithium-ion batteries are not nuclear bombs.

“We need to provide incentives and also education,” he said, “And we need to provide assistance from an urban planning point of view.”

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FBI: Conspirators Planned Grid Attack to Start Race War

Three men who pleaded guilty Wednesday to conspiring to damage U.S. electric substations hoped to “sow hate [and] create chaos” inspired by “racially or ethnically motivated violent extremist view,” the Justice Department said.

According to a press release, Christopher Cook of Ohio, Jonathan Frost of Indiana and Texas, and Jackson Sawall of Wisconsin each admitted to one count of conspiring to provide material support to terrorists for the purpose of destroying energy facilities. The charges carry a maximum prison term of 15 years.

Prosecutors further recommended a 30-year term of supervised release after the men are released to include the installation of monitoring software on all their computing devices, a ban on the use of encrypted communication platforms and mandatory counseling for violent extremism and mental health. Defendants would also need to clear any new email or social media accounts with probation officers.

As alleged by prosecutors and confirmed by defendants in their plea agreements, the plot began in October 2019 when Frost, age 24, and Cook, 20, met in a chat room.

Because Cook “appeared … to be serious about engaging in action,” Frost suggested they attack power substations across the country with high-powered rifles. By damaging the transformers in the substations, the plotters hoped not only to distract the government and sap its resources in repairing the transformers; they also wanted to spark “confusion and unrest” in the affected regions and possibly even start a civil war.

The conspirators’ plans were reminiscent of the attack on Pacific Gas & Electric’s Metcalf substation in California in 2013, when several gunmen opened fire on the facility, severely damaging 17 transformers. (See Substation Saboteurs ‘No Amateurs’.) The prosecution did not say whether Cook and Frost were specifically inspired by the incident, but the Metcalf attack was mentioned in Large Power Transformers and the U.S. Electric Grid, a publication of the Department of Energy discussing the impact of transformer outages that Frost shared with his fellow planners.

Recruitment Continued Online

As they continued to build their plans, Cook and Frost began to divide the labor, with Cook focusing on recruiting more operatives (seeking younger targets who were “less likely [to be] members of law enforcement”) and Frost taking over the logistical side of the operation.

Cook’s appeals revolved around white supremacist and neo-Nazi ideology, drawing on writers such as James Mason and Alexander Slavros, founder of the far-right message board Iron March. Among the pair’s more ambitious goals for the project was to disable power across the entire country for an extended time, leading to an economic depression that would cause Americans to lose faith in political leaders and inspire new white leaders to rise up and overthrow the system.

Sawall, 22, joined the group in 2019. Already a friend of Cook, he helped with the recruitment effort and also ran the group’s web presence “The Front,” through which he and Cook screened potential new operatives. Those who showed promise were invited to join a more exclusive group called “Lights Out,” dedicated to the planned attack. Specific details of the plan were restricted to yet another forum called “Lights On,” which included only a few people besides Sawall, Cook and Frost. Those other participants have not been identified.

At one point each participant was to recruit and manage a cell of attackers for his region; however, this approach proved “unrealistic,” and the members decided to handle the destruction themselves. Further refinements to the plan included building explosive devices to distract law enforcement during the attack and making necklaces containing suicide pills to be worn by each participant in case of capture.

In-person Meetings Begin

Frost gave the necklaces to Cook and Sawall during a meeting in Ohio, the first time all three met in person. As part of the meeting Sawall and Cook spraypainted neo-Nazi graffiti on a bridge. They had planned to continue painting graffiti, as well as hanging posters and cutting down a telephone pole to raise awareness of The Front, but “these plans were derailed after a traffic stop, during which Sawall swallowed his suicide pill.”

Sawall survived his suicide attempt, while Frost and Cook continued to travel without him. Frost sold Cook a homemade rifle and taught him how to shoot it. The two went to Texas in March 2020 when Frost was on spring break, with Cook planning to recruit contacts he had made in the state. However, one of the contacts lost their phone and couldn’t meet with the pair.

The person who found the phone saw the messages and white supremacist material on it and told the two they were notifying law enforcement. Cook and Frost had several more run-ins with police over their travels, which led them to split up. Cook visited more potential recruits over the next few months in various cities.

Prosecutors did not disclose the circumstances of the group’s arrest, but according to the Milwaukee Journal Sentinel, the FBI’s counterterrorism task force picked up the case after a Canadian man detained for crossing the border with several guns in 2019 told agents he was visiting Cook. Investigators visited Cook, who discussed his political views with the agents. Undercover agents later joined the group’s message boards and surveilled the three men when they met in 2020.

“Those inspired to commit terrorist acts in the name of hate pose a serious threat to our nation,” said J. William Rivers, head of the FBI’s Cincinnati Field Office. “I am thankful for the Joint Terrorism Task Force and our law enforcement partners who work each day to prevent this type of violence from occurring in our communities.”

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Avangrid CEO: Benefits of OSW Restructuring Not Reflected in Stock

The full benefits of Avangrid’s recent Vineyard Wind joint venture deal with Copenhagen Infrastructure Partners are not yet “fully appreciated” by the stock market, CEO Dennis Arriola said Wednesday.

With the completion of a JV restructuring in January, Avangrid Renewables, the U.S. offshore wind arm of Avangrid (NYSE:AGR), now solely owns a 4.5 GW project portfolio along the East Coast, Arriola said during an earnings call Wednesday.

“This control allows us to more easily deliver incremental value and future growth and to fully capture the value of our offshore wind investment,” he said, adding that the value is not “reflected” in Avangrid’s stock price.

On Thursday, the company’s shares opened at $42.50 and had a 52-week range of $42.24-$55.57, according to Yahoo Finance.

Avangrid and CIP agreed last fall to split up the assets of their Vineyard Wind JV. They closed the transaction in January, allowing Avangrid to buy the lease area (OCA-A 0534) that has the proposed 804-MW Park City Wind project and the 1.2-GW Commonwealth Wind project. In turn, CIP took full control of a nearby lease area (OCS-A 0522), and the companies are continuing to co-develop the 800-MW Vineyard Wind 1 project.

Avangrid’s total OSW portfolio is 4.9 GW, which includes Park City, Commonwealth, half of Vineyard Wind 1, and the estimated 2.5-GW Kitty Hawk lease off the cost of North Carolina.

“By being an early mover in offshore, we have lease areas which are undervalued based on current market prices,” Arriola said.

Avangrid paid $168 million for the lease area where Park City and Commonwealth are sited. Together with the location of Vineyard Wind 1, the lease areas are “currently valued in the hundreds of millions of dollars,” he said.

That estimate, he added, is “before we continue to develop the portfolio and further increase its value.”

Avangrid’s transaction with CIP will allow the company to generate a gain of $175 million for the first quarter of this year, Arriola said. By securing direct ownership of its portfolio, the company can control project financing structures, including new partnerships that will generate further gains beyond what it will report for the current quarter.

“There are various potential partners that don’t want [power purchase agreement] or permitting risk, but they’re able to pay a higher valuation premium for a piece of a project once those development steps have been completed,” Arriola said.

Avangrid Renewables is an approved bidder in the Bureau of Ocean Energy Management’s (BOEM) New York Bight OSW lease area auction that started Wednesday. The bids for six lease areas ranged between $140 million for 43,000 acres and $900 million for 126,000 acres when BOEM took a recess in bidding at the end of Thursday. By comparison, the company Offshore MW paid $150,197 in 2015 to secure the 167,000-acre original lease area covering Vineyard Wind 1, Park City and Commonwealth.

Earnings

Avangrid, which is a subsidiary of Spain-based Iberdrola, reported 2021 earnings of $707 million ($1.97/share), up $126 million ($0.09/share) from 2020. For the fourth quarter, the company reported earnings of $164 million ($0.42/share), down $2 million ($0.12/share) from the same period in 2020.

For the renewables unit, Avangrid reported a loss of $14 million ($0.04/share) in 2021, compared with a $4 million ($0.01/share) loss in 2020. The company reported renewables unit earnings of $131 million ($0.37/share) for the fourth quarter, up $28 million ($0.04/share) from a year earlier.