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December 21, 2024

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FERC Rejects PJM and Transmission Owners’ CTOA Proposals

FERC has rejected revisions to PJM’s transmission planning process that critics argued would have impinged upon the RTO’s independence in favor of its transmission owners (ER24-2336, et al). 

The Dec. 6 order involves three separate filings, one of which is a complaint that moves the regional transmission expansion process (RTEP) procedures from the operating agreement to the tariff and others that would reform the Consolidated Transmission Owners’ Agreement (CTOA). (See PJM Members Vote Against Granting PJM Filing Rights Over Planning.) 

Transmission owners supported the rules. They were opposed by other stakeholders, including the Organization of PJM States, consumer advocates, municipal utilities, LS Power and environmentalists. PJM had to file the complaint because stakeholders rejected the proposal in an earlier vote.  

“We reject the CTOA amendments because we find that certain CTOA amendments contravene Order No. 2000’s requirement that RTOs be independent of control by any market participant or class of participants in both reality and perception,” FERC said. 

The proposed Article 7, Section 7.9, violates the independence principles of Order 2000 by providing transmission owners with an exclusive opportunity to affect what filings PJM submits under Section 205 of the Federal Power Act. Order 2000 requires organized markets to have a decision-making process that is independent of control of any market participant or class or participants, with which Section 7.9 conflicts. 

Section 205 filings could affect changes to the PJM tariff, Operating Agreement, Reliability Assurance Agreement Among Load Serving Entities in the PJM Region, or any document containing PJM’s rates and charges, or rules and regulations affecting or pertaining to such rules and changes. 

“While the basis of a dispute may be limited to disagreements over contractual obligations, the language of proposed Section 7.9 would allow PJM TOs to dispute any FPA Section 205 filing, not just a filing related to transmission planning, as long as PJM TOs contend that the FPA Section 205 filing could contravene Articles 2, 4, 5, 6 [and] 7 of Attachment B of the CTOA,” FERC said. 

The rules affecting the RTEP process also could affect the RTO’s independence requirements by giving transmission owners too much of a role. 

“While PJM TOs could not unilaterally (i.e., without PJM’s consent) amend the CTOA to include new transmission planning constraints or new substantive provisions that PJM must follow over commission regulations, such that they encumber PJM’s ability to maintain its status as an RTO, these provisions may provide a unique and exclusive opportunity in reality or in perception to unduly influence how PJM operates,” FERC said. “We find that it is inappropriate for PJM TOs to have a process for making potentially binding challenges to PJM’s FPA Section 205 filings that have not yet been filed with the commission.” 

One set of rule changes, called the Overlap Provisions, would have required PJM to consult with transmission owners when regional lines in the RTEP would address the same needs as a local line that is being proposed by a transmission owner. Those local lines still would be able to go forward if the transmission owner determined the RTEP line would not solve the need addressed by their project. 

Protesters argued such debates should be under FERC’s review, with the Harvard Electricity Law Initiative saying the commission previously rejected proposals to include substantive planning provisions in transmission owner agreements because they make more sense in the tariff that is subject to stakeholder participation and the rules give too much control to transmission owners. 

“We find that the Overlap Provisions do not predominantly affect PJM TOs’ rights and responsibilities; rather, they set out substantive transmission planning procedures related to the interaction between RTEP Projects and individually planned PJM TO projects, including when and how PJM and PJM TOs must consult regarding whether regional transmission solutions could more efficiently or cost-effectively address local transmission needs,” FERC said. “Because the Overlap Provisions address a substantive aspect of transmission planning in the PJM region and affect PJM’s regional transmission planning process, they should not be included in the CTOA.” 

The CTOA is meant to contain provisions that affect the rights and responsibilities of transmission owners and RTOs. The right to plan for local transmission is established clearly in other provisions of the CTOA. 

“The Overlap Provisions instead predominantly affect the substantive local transmission planning process, particularly in relation to how it might interact with PJM’s regional transmission planning process,” FERC said. “Although we recognize that the filing rights for Attachment M-3 are held by the PJM TOs, we find that it is not just and reasonable for the Overlap Provisions to be maintained in the CTOA.” 

Commissioner Mark Christie filed a concurrence with the majority, saying he agreed with the rejection of two Section 205 filings to amend the CTOA, and the result of rejecting the complaint that would have shifted the RTEP procedures from the Operating Agreement to the tariff. But he would support shifting the RTEP process to the tariff, without the other provisions infringing on the RTO’s independence, which is the position OPSI took. 

“The practical effect of moving the RTEP Protocol from the OA to the OATT is to transfer the authority over the RTEP’s development from the members of PJM to the PJM Board of Managers,” Christie said. “There is nothing intrinsically wrong in doing so; on the contrary, I agree in principle with OPSI that it should be done. The details of this move, however, are critically important.” 

Christie’s dissent argued that ISO/RTOs should not be treated as “quasi-governmental” agencies whose decisions are decided by rent-seeking participants with little role for state regulators as just another stakeholder. Giving PJM’s board full authority over RTEP would make sense, but not doing so while also giving special interest groups more influence over its decision-making authority. 

“So I see nothing inherently unjust and unreasonable in moving the RTEP Protocol from this unwieldy and special-interest driven process under the OA to the OATT, where the PJM Board can and should take full responsibility for development of the RTEP,” Christie said. “PJM would be free to provide for — and certainly should provide — ample opportunity for its members, as well as stakeholders and other interests, to comment on proposed amendments to the RTEP Protocol, but it should be the exclusive responsibility of PJM to develop and approve any changes to the rules by which the RTEP is developed and approved for submission to the commission.” 

While that change would make sense, it is vital to get the “replacement rate right,” and PJM’s filings fail on that, he added. The rules as proposed could have led to RTEP projects and local projects going forward that address the same needs, potentially wasting billions of dollars. 

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CAISO Considering Fast-start Pricing for Extended Day-Ahead Market

CAISO is considering how to apply fast-start pricing to the Extended Day-Ahead Market (EDAM), a topic that has been a sticking point for some as entities across the West decide whether to join it or SPP’s Markets+. 

Of the six FERC-jurisdictional organized markets, CAISO alone does not use fast-start pricing, a mechanism that factors the cost of starting and operating gas-fired peaking units into their wholesale market prices. 

In March, Western Energy Imbalance Market experts called for fast-start pricing as a method to provide more efficient price signals and fix certain price anomalies that can occur when least-cost dispatch starts up block-loaded fast-start units. (See WEIM Expert Calls for Fast-start Pricing to Address ‘Anomalies’.) The benefits of fast-start pricing also were highlighted in an “issue alert” published Aug. 28 by 10 entities that back the development of Markets+. (See 3rd ‘Issue Alert’ Compares Pricing Practices in Markets+, EDAM.) 

During a meeting of the Price Formation Enhancements Policy Development Working Group on Dec. 5, ISO staff and stakeholders considered how long fast-start pricing logic should apply in the real-time and day-ahead markets, as well as the implications for including fast-start pricing in EDAM. James Friedrich, lead policy developer at CAISO, highlighted the importance of amortization for the mechanism, as well as the challenges. 

“At its core, amortization is talking about fixed costs that generators incur when they start up and spread them out over time in a way that makes economic sense,” Friedrich said. “The challenge is that these costs are lumpy: They come all at once. We need to figure out a way to incorporate them into our per-megawatt-hour energy prices.” 

Without amortization, fast-start units that run for short periods rarely would be able to recover their fixed costs through energy market revenues alone, meaning the ISO would have to rely on uplift payments, Friedrich explained. By amortizing fixed costs and converting them into a per-megawatt-hour adder to the unit’s energy bid, the cost of serving load can be better reflected in the market price. 

“The key question that we’ll explore further … is exactly how we should spread these costs … across [both] the megawatts the unit produces and … the time it operates,” Friedrich said. 

Specifically, the ISO asked stakeholders to consider whether costs should be spread out across a unit’s entire minimum run time, concentrate the costs in the period the unit was needed or spread them out across the entire expected output run time. 

Some stakeholders questioned how much better off a particular resource would be under the fast-start pricing construct versus what it gets paid under the status quo. 

“Fast-start pricing is going to increase prices to customers, and in this initiative, I recall that the reason we’re looking at that is to improve price formation itself and, I would imagine, to try and attract higher- or better-quality resources,” said Stuart Kelly, a consultant at Utilicast. “But I’m trying to understand, is it really going to do that? How much better off is that higher-quality resource going to be under one of these examples here compared to the status quo?” 

In a 2016 Notice of Proposed Rulemaking (RM17-3), FERC suggested that costs should be included in prices only “during the resource’s minimum run time.” For start-up costs, the NOPR proposed to “amortize a fast-start resource’s start-up cost over the resource’s minimum run time and its economic maximum operating limit.” For no-load costs, FERC recommended dividing a fast-start resource’s no-load cost by the resource’s economic maximum operating limit. 

Attempting to amortize start-up costs beyond the minimum run time is “problematic,” FERC stated, because after the minimum, “the unit commitment algorithm may de-commit the fast-start resource if it is no longer economic, making the total run time unknown.”  

FERC eventually abandoned the NOPR and ordered specific changes in PJM, SPP and MISO. (See FERC Drops Fast-Start NOPR; Orders PJM, SPP, NYISO Changes.) 

Cost amortization varies across markets. In ISO-NE, MISO, PJM and SPP, start-up costs are amortized across the resource’s maximum output and minimum run time. In NYISO, the adjusted cost for output levels that are less than or equal to the output level that minimizes average cost is equal to that minimum average cost. 

ISO-NE had argued that implementing fast-start pricing in the day-ahead market would be a “complex and time-consuming endeavor” that would have limited benefits because most fast-start resources are committed in real time.  

“Day-ahead markets typically have much more flexibility and options to meet load, which reduces the likelihood of needing to commit fast-start units,” Friedrich said. “Even without explicit fast-start pricing in the day-ahead market, virtual bidding may bridge the gap here, and market participants that anticipate fast-start pricing impact in real time may adjust their day-ahead positions accordingly, which would converge the prices naturally between the two markets.” 

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Stakeholders Seek More Details on BPA’s ‘Evolving Grid’ Projects

Stakeholders are urging the Bonneville Power Administration to provide more transparency regarding the agency’s multibillion-dollar initiative called the Evolving Grid Project (EGP).

BPA launched the effort in April 2023 to address Oregon and Washington clean energy targets, new renewable resource additions, increased electrification of transportation, industry and buildings, and the growing need for resiliency in the face of extreme weather events.

BPA is working on 23 transmission projects with an estimated cost of $5 billion under the EGP. The proposed projects resulted from reliability studies, forecasts and BPA’s 2023 Transmission Service Request Study and Expansion Process (TSEP).

The initiative aims to increase capacity and spur regional growth in BPA’s service area. The agency announced the first 10 “EGP 1.0” projects in July 2023 and revealed the second batch in a news release Oct. 15.

However, during the agency’s Evolving Grid stakeholder workshop Dec. 4, participants called for more clarity about how the EGP will affect customers, funding decisions and other projects the agency is working on.

Lauren Tenney Denison, director of market policy and grid strategy at the Public Power Council, said some EGP decisions on the business case could have benefited from robust public conversations and processes, as has been the case with other BPA projects.

“And so when the first Evolving Grid projects moved through, it was like, ‘Whoa, we didn’t talk about that,’” Denison said.

Some participants in the meeting also targeted a chart in BPA’s presentation, in which the agency outlined factors to distinguish between “regionally needed projects” (RNPs) that would fall under EGP standards and “customer needed projects” (CNPs) that would benefit only a small set of customers.

RNPs would have to meet criteria such as being “critical for load service,” providing transmission service for a “substantial” amount of “mature” generation, supporting the region’s resource diversity and offering “regional level support of public policy.” CNPs, on the other hand, would not represent an expansion of the main grid, would require “substantial customer commitment” to avoid resulting in an incremental rate increase and would possibly provide interconnection for projects that are “not very mature.”

Approval of any project would be subject to the discretion of BPA Administrator John Hairston, agency officials noted.

Gray Area

Denison sought more clarity on whether a customer must meet all criteria to have a project developed under EGP and why some projects fall in a gray area.

“Probably nothing checks every box, and something checks a lot of boxes, or half the boxes,” Denison said. “So just understanding a little bit more of how that balances with how BPA is both looking at the projects coming through TSEP, but also how BPA is evaluating from a larger perspective what it needs to call something an evolving grid project and what that means for the other work that BPA has going on too.”

BPA staff presented a chart showing how the agency differentiates transmission projects. | BPA

Henry Tilghman, a consultant representing the Northwest & Intermountain Power Producers Coalition, similarly argued the chart should be considered a spectrum, saying it’s “a concern for NIPPC that there isn’t more transparency around why some projects become considered regionally needed and why some are not.”

Tilghman also called for more details on the different factors in the chart to help customers better understand how the administrator determines which projects fall under EGP standards.

Jeff Cook, BPA’s vice president of transmission planning and asset management, said the agency would investigate how it can increase transparency in the process.

“I know overall, BPA is working on transparency as a general theme, regardless,” Cook said. “We’ve had numerous discussions with various groups, whether it’s projects, how we prioritize them, how we rank them … what’s the status of them. So, we’ll kind of weave that into that whole discussion around transparency, but that’s a key theme that BPA is working on already.”

Richard Shaheen, BPA senior vice president of transmission services, agreed, saying the agency wants to share accounting principles and legal principles. However, he noted that balancing transparency and speed of delivery can be tricky.

“Public processes take time, weeks and weeks off, you know, arranging discussions and follow-ups and so on and so forth,” Shaheen said. “So I’m not disagreeing with the desire, and we want to provide that transparency, but I also want everyone to kind of be conscious of not sacrificing delivering projects as expedient as possible.”

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ERCOT Board of Directors Briefs: Dec. 2-3, 2024

The ERCOT Board of Directors signed off on staff’s recommendation to move forward with executing a reliability-must-run (RMR) contract for CPS Energy’s Braunig Unit 3 while deferring a decision on the gas plant’s other two smaller units until February or later. 

ERCOT General Counsel Chad Seely told directors Dec. 3 that deferring a decision on the other two units will give staff time to continue negotiations with CPS, CenterPoint Energy and Life Cycle Power over moving 15 large generators and their 480 MW of capacity from Houston to distribution sites in the San Antonio area. CenterPoint leased the generators from Life Cycle for $800 million in 2021, but the large units sat idle during July’s Hurricane Beryl and drew heavy criticism from Houston residents and Texas politicians. (See ERCOT to Recommend RMR Agreement for Braunig.) 

“We do believe it is a better reliable solution for the risk that we’re trying to address for the next couple of years until the transmission solutions come into play,” Seely said. 

ERCOT is exploring the generators’ use because Braunig Units 1 and 2 are smaller (217-MW and 175-MW summer max ratings, respectively) and are susceptible to forced outages. Staff said the mobile generators, with shorter ramp times than the gas units, are more flexible and “likely to be more reliable.” 

Staff expect to move forward in mid-December with a request for must-run alternatives (MRAs) to the mobile generation to better understand the market’s appetite for the solution. A previous solicitation for MRAs drew a single response from a 200-MW multi-hour energy storage resource. 

“We want to be fair to the market and see if there’s anything that could compete against the mobile gen,” Seely said. He said ERCOT then would move forward with a recommendation to the board in February or a special meeting soon thereafter. 

ERCOT said the two-year RMR costs will be lower than the value of projected systemwide load shed should the units retire, with Braunig 3 providing the best value. It has a budgeted cost of $76,888/MW for the two years, compared to $113,920/MW and $151,012/MW for Units 1 and 2, respectively. 

CPS told ERCOT earlier in 2024 that it planned to retire the three Braunig units, which date back to the 1960s, in March 2025. However, ERCOT said the resources, with a combined summer seasonal net maximum sustainable rating of 859 MW, were necessary to mitigate the risk of systemwide load shed for the next two years. (See ERCOT, CPS Energy Negotiating RMR, MRA Options for Retiring Units.) 

ERCOT expects the RMR contract for Braunig Unit 3, its first since 2016, to be effective until June 2027, when a new transmission line to the South is completed. 

“Once that line is completed, then the need is no longer there for the RMR unit,” ERCOT COO Woody Rickerson told directors. 

ERCOT Prepared for Winter

Noting that 2024 is likely to be the warmest year on record for the planet, ERCOT’s Chris Coleman, supervisor of operational forecasting, said weather conditions still could lead to extreme cold in January or February. 

“We’re in a pattern now where, when we get a warm, mild winter, more times than not, we’re seeing a cold extreme. … We’re in a pattern now that supports something like a [Winter Storm] Uri,” Coleman told the board, referring to the February 2021 winter storm that almost brought down the ERCOT grid and killed hundreds of Texans. 

Coleman said ocean and atmospheric conditions are very similar to those that preceded the 2021 storm. Five of the past eight winters have brought extreme cold to Texas, including the warmest winter (2016/17), the sixth-warmest (2022/23) and the 11th-warmest (2023/24). 

“The more I look at this winter, the more cold potential I see,” Coleman said. “This is like a tornado watch. Doesn’t mean a tornado is going to happen. It means conditions are there.” 

ERCOT CEO Pablo Vegas said the grid operator’s analysis has indicated a “slightly higher” reliability risk probability from last winter, driven largely by increased load on the system and reduced support from solar resources, which were valuable in meeting demand this summer. 

The grid operator set a new winter peak of 78.35 GW last winter but has added more than 10 GW of capacity since then. Solar resources accounted for 5,155 MW and battery storage 3,693 MW, with natural gas adding 724 MW. 

Vegas pointed to ERCOT’s weatherization program as “one of the most statistically significant changes … that has markedly changed the risk profile of the ERCOT grid.” He said staff have conducted 2,892 inspections of generators and transmission facilities since Uri, with two-thirds of the inspections taking place within the generation fleet. 

“This has more than exceeded what the [Public Utility Commission’s] requirements for the inspections on the cyclical basis have been,” Vegas said. “We think it’s important to stay ahead of this because of the really high impact the weatherization program does have on the reliability of the fleet.” 

Misc. Approvals

Two transmission projects, a price correction and a protocol change, previously endorsed by the Technical Advisory Committee, all cleared the board with little discussion: 

    • The $202.2 million Oncor Delaware Basin Stages 3 and 4 Project came out of the 2019 Delaware Basin Load Integration Study and addresses reliability issues in West Texas. The project includes upgrading an existing capacitor station, building 22 miles of double-circuit 345-kV lines and 41 miles of 138-kV lines, and converting 41 miles of 138-kV lines to 345 kV. It is expected to be completed in 2027. 
    • American Electric Power’s Brownsville Area Improvements Transmission Project, a $423.8 million initiative addresses thermal overloads on 106 miles of 138-kV facilities in the Rio Grande Valley with either new or upgraded infrastructure. The project has a May 2029 in-service date. 
    • A price correction was issued for the Nov. 1 operating day after several real-time intervals were “significantly affected” by an incomplete weekly database load update. The largest dollar impact to any counterparty was about $2,758, above the criteria for a price correction. 
    • A Nodal Protocol revision request (NPRR1247) requires ERCOT to use a consumer energy cost reduction test to measure congestion cost savings when evaluating economic transmission projects. Generators and marketers opposed to the NPRR cited a lack of transparency and control over the methodology for incorporating “fictitious generation” to solve power flow issues with the projected load growth. 

TAC Membership Approved

Twenty-seven incumbents will return to TAC in 2025 following the board’s approval of its 30-member slate of representatives. 

Oncor’s Martha Henson replaces colleague Collin Martin in the Investor-Owned Utility segment; Vitol’s Seth Cochran, a previous TAC member, replaces National Grid Renewables’ Matthew Morais in the Independent Power Marketer’s segment; and Brazos Electric Cooperative’s Kyle Minnix replaces Pedernales Electric Cooperative’s Eric Blakey, a longtime representative in the Cooperative segment. 

Jupiter Power’s Caitlin Smith plans to return as TAC’s chair, and Henson is expected to replace Martin as vice chair. The committee’s leadership elections and those of its subcommittees will be held before its Jan. 22 meeting. 

ERCOT’s Day to Retire

Betty Day, ERCOT | ERCOT

The board meeting was the last for Betty Day, ERCOT’s chief compliance officer, who is retiring after 24 years with the grid operator and more than 30 in the industry. 

Vegas credited Day with being critical to the development of the zonal and nodal markets, and for integrating cyber, physical and emergency management and maturing the security function. 

“The time I’ve spent here at ERCOT has been the highlight of my career,” Day said after recognition from Vegas and board Chair Bill Flores. “The people have been amazing, both within the organization and with stakeholders, board members and countless people. I can’t even begin to name them all.” 

The directors also welcomed Ben Barkley to the board as the newly appointed CEO of the Texas Office of Public Utility Counsel. Gov. Greg Abbott appointed Barkley as CEO on Dec. 2, making him eligible for OPUC’s board seat. He previously was assistant general counsel for the Office of the Governor. 

ESR Revision Back to TAC

Directors remanded back to TAC a protocol change (NPRR1246) and related changes to the Nodal Operating Guide (NOGRR268), Other Binding Documents (OBDRR052) and Planning Guide (PGRR118) that insert terminology associated with energy storage resources into the protocols. The change aligns the ESRs’ provisions and requirements with those for generation resources and controllable load resources. 

Staff said the recent approval of NPRR1188, which modified the dispatch and pricing of controllable load resources, had a “cascading impact” on baseline language used in other revision requests. Seely said staff will work on additional ERCOT comments and clean up language before sending the change to TAC for its consideration. 

The board’s consent agenda included six other NPRRs, two NOGRRs, an OBDRR and two PGRRs that will: 

    • NPRR1180, PGRR107: incorporate a 2022 state law requiring any ERCOT reliability transmission project review to include the historical load, forecast load growth and additional load seeking interconnection. 
    • NPRR1239, NOGRR266: move reports that don’t contain ERCOT critical energy infrastructure information (ECEII) from the market information system’s secure area to the public ERCOT website. 
    • NPRR1240, NOGRR267, PGRR116: move reports that don’t contain ECEII information from the secure area to the website. The change also conforms the rules with current posting practices, including those for maintaining ECEII lists of equipment in the outage scheduler; making the annual planning model data submittal schedule available in the model-on-demand (MOD) application; and posting weekly demand forecasts, demand analyses for 36 months and beyond, metrics of forecast error, and assessments of chronic congestion on the website. 
    • NPRR1249: requires ERCOT to publish shift factors for all active transmission constraints in the real-time market. 
    • NPRR1254: requires resource entities to submit the initial resource registration data for a generator interconnection or modification (GIM) project four months prior to target inclusion in the ERCOT network operations model. This gives ERCOT and the entities one month to address errors or deficiencies. 
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Former FERC Commissioners Discuss Accommodations to States in Order 1920-A

Several former FERC commissioners on a webinar hosted by the American Clean Power Association on Dec. 5 said the revisions made in November’s Order 1920-A generally are promising for getting transmission built.

“I actually think that the commission ended up in, mostly, in a very positive place,” said former FERC Chair Richard Glick, now with GQS New Energy Strategies.

Most of the comments supported the approach to planning that FERC stuck with on rehearing, which is to move toward longer-term, scenario-based planning for the grid, noted Glick, who launched the Advance Notice of Proposed Rulemaking that led to 1920.

But FERC wound up granting states even more of a role in cost allocation. (See FERC Order 1920-A Wins Approval with Accommodations to States.)

“At the end of the day, if the states don’t buy off on a cost allocation mechanism, it’s very difficult to move forward with transmission projects,” Glick said. “So, you see in MISO, for instance, where there’s been a lot of state discussion, they’ve made a lot of progress because of that.”

The revisions in Order 1920-A ensured FERC would review any cost allocation agreement proposed by the states, even if the regional transmission provider does not support it. Glick said he was hopeful that would win over more states.

While Tony Clark — a former FERC commissioner who now is executive director of the National Association of Regulatory Utility Commissioners — joked that it’s hard to say that 50 states have any single opinion, early indications are his members appreciate the direction the commission went with Order 1920-A.

Some of the states supported the initial version of Order 1920, but there was enough opposition that NARUC filed a rehearing request that argued for a bigger role for state utility regulators.

“Almost universally, at least from states that I’ve heard from to this point — whether they were in the camp of ‘we like 1920,’ or whether they were in the camp of ‘we didn’t like 1920; we want changes to be made’ — the response has been positive,” Clark said.

While the order faces some litigation, with initial appeals filed before FERC issued 1920-A, NARUC’s major focus is going to be on implementation now, Clark said.

“I’m sure we will continue to participate and watch closely compliance filings,” he continued. “As we learned with Order 1000, there’s sort of the original order phase, and then there’s the compliance filing phase, which is also a very, very big part of it, because that’s where a lot of the small decisions get made — small decisions that have a big impact in implementing the order itself.”

The original Order 1920 gave states a more formal role than they had under the standard Order 1000-based rules that preceded it, said former FERC Commissioner Allison Clements, who voted for the original order in May. (See FERC Issues Transmission Rule Without ROFR Changes, Christie’s Vote.)

“I think the pendulum has switched the other way, and that’s to say the states have gotten a whole lot of opportunity here,” Clements said. The rule changes favoring states will lead to a lengthier, more complex planning process, and Clements said she was unsure how much that would wind up benefiting consumers. “Be careful what we wish for,” she cautioned.

One of the changes in Order 1920-A was to give states up to one year, instead of just six months, to negotiate cost allocation rules if they need more time, said ACP Senior Counsel Gabe Tabak. Many regions should take advantage of that extra time, which will mean a longer compliance process.

“If they can come to an agreement to have a parallel approach filed alongside it in the compliance filing, there will be a lot of pressure on transmission providers to file something that the states have agreed to, rather than make a compliance filing that risks letting FERC choose a different option that the states prefer,” Tabak said.

Transmission providers are not likely to file a clashing cost allocation with FERC, but assuming they do make a “jump-ball filing,” then the commission might not like either one, at which point it is unclear what would happen, Clements said.

“Certainly, the question of the jump-ball is likely to be litigated, in addition to others who think maybe it’s moved too far toward giving states authority that they shouldn’t have,” she added.

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CGA Latest to Nudge MISO to Simultaneously Contemplate New Load and New Generation

Clean energy organizations are prodding MISO to contemplate prospective load and generation simultaneously, with Clean Grid Alliance asking MISO to coordinate its annual transmission studies with its interconnection queue studies.  

CGA said doing so would allow the grid operator to better accommodate new large load additions.  

Speaking at a Dec. 4 Planning Subcommittee teleconference, CGA’s Rhonda Peters said MISO should adopt a policy of sharing new large load data from transmission planning in interconnection studies and conversely, including signed generator interconnection agreements (GIAs) into the year’s current Transmission Expansion Plan (MTEP) studies.  

Peters said if MISO cross-shares data, some generation and nearby large loads can be paired up, negating the need for some extensive network upgrades on the transmission system. 

“Large loads can utilize new generation directly or locally, removing the need for longer or large transmission line network upgrades to move new generation to traditional load centers,” she explained.  

Peters said though the definitive planning phase studies of MISO’s queue start with the latest MTEP modeling and list of new transmission projects at the time, that snapshot quickly becomes outdated, as getting through the queue can take up to five years and MISO doesn’t periodically update models. MTEP, on the other hand, works from an annually updated model that includes large load additions that have been accepted as a reality, with MISO racking up a fresh transmission portfolio every year.  

Peters said that to execute a data-sharing practice, MISO could simply add a check for a “load expansion project” into its business practice manuals describing interconnection studies. MISO’s manuals already stipulate that planners should check the most recent MTEP projects during the study process to figure out if a constraint is set to be mitigated by a transmission project that was approved while a generation project was advancing through queue studies.  

On the MTEP side of the coin, Peters said MISO today allows only fully executed GIAs into its MTEP modeling. However, she said “a generator nearing completion of a GIA may mitigate the need for costly transmission to add new large load.”  

MISO could consider letting a large load customer link up with a generator still in the queue by striking an agreement with the generation developer and providing a surety worth 25% of the proposed generator’s construction costs, Peters suggested. She said that way, generation is likely to be built.  

“MISO has not yet been receptive to policy mechanisms that would pair large load and generation projects while each [is] going through their respective processes,” Peters added.  

Peters said the added considerations can help MISO tackle the unprecedented load growth it’s set to encounter.  

“Certainly we’ve heard from the states that they’re worried about these large load additions,” Peters said, noting that thermal generation takes a few years to construct after an up-to-five-year interconnection queue wait.  

“We just can’t respond that quickly to some of these rapid load additions,” Peters said. “If a load and generator can come together, they can basically net out and help themselves.”  

Peters acknowledged that CGA’s appeal is similar to NextEra Energy’s recent request that MISO create a dedicated study and registration process for new generation contingent on large loads. (See “NextEra Makes 2nd Overture for Bundled Studies,” MISO Previews Future Projects to Improve System Planning.)  

But Peters said NextEra asked MISO to consider only already matched-up load and generation. She said CGA is asking MISO to consider “even circumstances where there’s no affiliation between the generator and the load, but they’re willing to become affiliated.”  

MISO Senior Manager of Resource Utilization Kyle Trotter said at first blush, MISO is hesitant to make any process dependent on large loads, which could wind up not being realities on the system.   

“It’s one thing to have a project dependent on a network upgrade. It’s another thing to have a project contingent on a large load that may not materialize,” Trotter said. 

“The generator interconnection takes five years, while load additions take 1.5 years, creating a fatal flaw in concurrent coordination of the respective models and processes. This leads to inaccuracies and inefficiencies in both processes that prevent viable project development and impose a significant, obstruction in the MISO market,” Clean Grid Alliance’s David Sapper said at an August Market Subcommittee meeting. “This is not hyperbole; this is serious stuff.”  

Sapper said from his “economist, lizard brain,” MISO could get a jump on preparing for massive loads down the road and make constructive use of its overflowing interconnection queue, which it currently insists is too large.  

During the Dec. 4 Planning Subcommittee, WPPI Energy’s Steve Leovy asked that MISO develop a formal response to CGA’s request.  

Trotter said MISO plans to return to an upcoming Planning Subcommittee to give its official perspective on the request.  

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Climate Activists Ask ISO-NE Board Members for More Transparency

BOSTON – Climate activists asked ISO-NE board members to make all board meetings open to the public and advocated for more transparency into NEPOOL proceedings at the quarterly Consumer Liaison Group (CLG) meeting Dec. 4.

“Listening to the people who foot the bill for the entire system seems like an important part of your responsibility,” said Mireille Bejjani, co-executive director of Slingshot, a local environmental justice organization. Bejjani thanked ISO-NE board chair Cheryl LaFleur and board member Michael Curran for attending the meeting but said more work is needed to increase the RTO’s accountability to the public.

The board members said the RTO has made progress on transparency, while acknowledging more work is needed.

Curran, who previously chaired the MISO board of directors, said the level of public interest and engagement with ISO-NE “doesn’t exist in any other area of the country.”

Public speakers at the meeting also said the RTO should take a more active role in decarbonization. Kannan Thiruvengadam, the director of an urban farm in East Boston, opened the meeting with a plea for climate action.

“It’s not just that we’re on the brink; we’re also moving in a precarious direction,” Thiruvengadam said. “I appeal to all of you to come together to meet the pace of the crisis by fixing your ways and honoring Mother Earth.”

ISO-NE representatives emphasized the limits of the RTO’s authority and its role as a fuel neutral organization. LaFleur and Curran both spoke favorably about carbon pricing but said the New England states have not coalesced around the topic.

“We strongly favor carbon pricing,” said LaFleur, calling it “the easy way to take an externality and price it in, by putting it in the price stack.”

“I think the ISO has made it clear that we think there would be a lot of benefits from carbon pricing,” said Curran. “As much as we can advocate, we can’t force.”

One speaker asked if ISO-NE’s emissions accounts for methane leaked from the gas network. Methane has intense near-term warming effects on the atmosphere, and studies have found state and federal estimates to significantly underestimate methane leaks from the natural gas supply chain.

“We have not captured the methane emissions … we’re focused on the generators on the system,” said Anne George, chief external affairs and communications officer for ISO-NE. Curran told the audience he would follow up on the question about methane emissions.

Keynote Speech from Commissioner Chang

FERC Commissioner Judy Chang also emphasized FERC’s role as a “fuel neutral” organization in her talk to the CLG. “We basically regulate the roads, the transfers across states,” Chang said.

Chang highlighted the need for forward-looking transmission planning and called Orders 1920 and 1920-A “a solid set of policies to encourage the country to think about planning for the longer term.” (See FERC Order 1920-A Wins Approval with Accommodations to States.)

“Hopefully by planning longer term, we can look into the future … and plan in a more cost-effective way,” Chang said.

The commissioner also said she is a “big advocate for demand response,” adding that demand flexibility is increasingly important with load growth on the horizon.

“I don’t think this is a technology barrier. I think this is more of a policy barrier,” Chang said, noting that retail customers largely are shielded from wholesale prices and have little incentive to respond to peak demand price spikes.

Responding to a question from New Hampshire Consumer Advocate Don Kreis about a potential gap in state and federal oversight on asset condition spending by transmission owners, Chang said there is an opportunity to increase transparency into how asset condition projects are planned. (See New England States Raise Alarm on Eversource Asset Condition Project.)

“To the extent that there is a gap between federal regulation and state regulation … I think we need to close the gap,” Chang said. “I know this region has a lot of interest in that.”

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In a Pickle: FERC Issues $27M in Fines over Ketchup Caddy DR Deceit

FERC has ordered Ketchup Caddy and its owner to pay $27 million in penalties for dishonestly offering demand response services in MISO’s capacity market from 2019 to 2021.

The commission decided in a Dec. 5 ruling that Ketchup Caddy and owner Philip Mango — who originally created the Frisco, Texas-based company to sell an in-car ketchup holder he invented — violated the Federal Power Act, FERC’s policy against market manipulation and MISO’s tariff by “engaging in a manipulative scheme to register demand response resources with MISO without those resources’ knowledge or consent” (IN23-14).

The evidence in the record shows “Mango acknowledged that he had engaged in an illegal and deceptive scheme.  Mango acknowledged that Ketchup Caddy’s activities did not benefit the MISO market and stated that ‘a reasonable person with time to reflect at a minimum would come to the conclusions’ that its activities were illegal,” FERC wrote. It added Mango had a plan to secure “essentially free money” through weekly capacity payments from MISO.

The penalties are unchanged from FERC’s show-cause order issued in February and include $25 million in civil penalties on Ketchup Caddy, $1.5 million in civil penalties on Mango and a directive that Mango disgorge $506,502, plus interest, in undeserved profits for phony load reductions. (See FERC Catches Ketchup Caddy Co. in Another Fake DR Scheme in MISO.)

FERC said Ketchup Caddy’s “manipulative conduct was serious and intentional” and said it based penalties on the “critical need to discourage and deter” similar illicit conduct. Mango and his company have 30 days to ask FERC to reconsider its verdict.

FERC said the company and Mango did not respond to its show-cause order.

FERC staff estimated Ketchup Caddy’s counterfeit capacity offers over three years led to other suppliers missing out on $17.6 million in capacity payments they otherwise would have received through MISO’s capacity auction.

To invent its registered customers, Ketchup Caddy co-founder Todd Meinershagen, a computer programmer, used a random number generator on an Ameren website to land on actual customer accounts and cull data so Mango could contact them about enrolling in Ketchup Caddy’s DR program.

Meinershagen agreed in late 2022 to pay more than $525,000, including interest, for his role in the market manipulation. Mango told FERC staff he kept his business partner “in the dark,” making him believe the demand response enrollment was legitimate.

Ketchup Caddy cleared 211.1 MW in MISO’s 2019/20 MISO capacity auction, 303.2 MW in the 2020/21 auction and 372.3 MW in the 2021/22 auction. The commission said Ketchup Caddy’s false registrations and offers slipped by undetected because MISO didn’t order curtailment in any of those planning years and required only mock tests for performance. Mango admitted he entered false information to satisfy MISO’s mock testing criteria using customer use data Meinershagen obtained from Ameren.

According to FERC, Ketchup Caddy “regularly distributed” MISO capacity payments to Mango’s and Meinershagen’s personal bank accounts totaling more than $500,000 apiece.

“Mango carried out a brazenly fraudulent scheme that had no purpose other than to mislead MISO and enrich Mango and Ketchup Caddy’s co-owner,” FERC said.

FERC in the past two years has uncovered two other companies manipulating MISO’s demand response market and collecting unwarranted payments. In addition to Ketchup Caddy, FERC found that an air separation facility in Indiana accepted payments for fabricated load reductions and an Arkansas steel mill for years made faux use reductions.

MISO’s Independent Market Monitor warned over the summer and fall that MISO’s market likely contains more deceptive demand response players. The IMM’s review of demand response performance in MISO from 2023 to 2024 showed that resources routinely fall short of their load modifying promises. (See MISO Demand Response Under Increasing Scrutiny; IMM Warns of More Potential Schemes.) Considering that since 2019, MISO demand response resources have received more than $800 million in capacity payments, the IMM said the issue is pressing.

“We have a lot of concerns about this. MISO’s rules, penalties and participant conduct all raise concerns for us,” Carrie Milton, of the IMM staff, said at an October Market Subcommittee meeting.

The IMM has recommended MISO discontinue its practice of accepting mock tests instead of actual performance testing, eliminate a batch-load demand response category, enforce stiffer penalties and automate validation of end-use registrations so end-use customers can’t contract with multiple market participants. It’s also asked MISO to require utility-grade meters and five-minute data for DR providing reserves.

MISO stakeholders have warned that the IMM’s recommendations might make DR participation in the MISO markets unappealing.

MISO plans to introduce more stringent demand response participation rules and hopes to have stricter requirements in place sometime in 2025. (See MISO Subcommittee to Act on Bad Actor Demand Response.)

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FERC’s Chang Emphasizes Need for Demand Flexibility to NEPOOL PC

BOSTON — FERC Commissioner Judy Chang emphasized the importance of demand response, long-term transmission planning and gas-electric coordination in her address to the NEPOOL Participants Committee meeting Dec. 5.

“We have to capture more demand-side flexibility,” Chang said. “Whether it’s regulatory barriers or process barriers, I’m very interested in working with the ISO, states and developers to discuss how we can do better.”

Demand response has been a focus of the New England states over the past year. The New England Conference of Public Utilities Commissioners created a working group on retail demand response and load flexibility, which has been meeting throughout the year. Utilities in multiple New England states are in the early stages of rolling out advanced metering infrastructure in their service territories.

Regarding transmission planning, Chang called FERC Order 1920-A “a really solid order.” She said it includes “many of the features that I think ISO-NE has been doing for a number of years,” pointing to ISO-NE’s longer term transmission planning process. (See FERC Approves New Pathway for New England Transmission Projects.)

“Transmission remains to be one of my priorities at the commission,” Chang said. She also highlighted gas-electric coordination as a key area of interest and asked stakeholders for feedback on potential gas-electric coordination improvements.

“Hopefully we can make some incremental improvements to enhance reliability on both the gas and electric side,” Chang said. “I hope to be able to identify a few things that we can do to incrementally improve the situation in New England.”

ISO-NE Monthly Operations

ISO-NE COO Vamsi Chadalavada said energy market revenues were down by about 20% in November (through Nov. 25) relative to 2023. He noted that mild weather and growth of behind-the-meter solar led to record low loads on the month.

He noted that exports to Canada have increased amid drought pressures in Quebec; exports from New England reached their highest level over the past year in November.

His report also indicates that power sector emissions for 2024 continue to track ahead of 2023 levels due to a significant year-over-year increase in natural gas generation. Emissions have declined in the year from both coal and oil generation.

Officer Election

The PC approved a slate of officers to run the committee in 2025:

    • Chair Sarah Bresolin, Alternative Resources Sector, ENGIE North America
    • End User Sector Vice-Chair Jackie Bihrle, Massachusetts Attorney General’s Office
    • Publicly Owned Entity Sector Vice-Chair Dave Cavanaugh, Energy New England
    • Generation Sector Vice-Chair Michelle Gardner, NextEra Energy Resources
    • Supplier Sector Vice-Chair Aleks Mitreski, Brookfield Renewable Energy Group
    • Transmission Sector Vice-Chair Dave Norman, Versant Power
    • Secretary Sebastian Lombardi, NEPOOL Council
    • Assistant Secretary Pat Gerity, NEPOOL Council
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Granholm: ‘It Would be Political Malpractice to Undo’ IRA Incentives

WASHINGTON ― In her four years leading the Department of Energy, Secretary Jennifer Granholm has never been anything less than enthusiastic, if not downright exuberant, about the U.S. clean energy transition, and taking the stage as the closing speaker at DOE’s Deploy 2024 Conference on Dec. 5, she did not disappoint. 

DOE was charged with distributing hundreds of billions of federal dollars from the Infrastructure Investment and Jobs Act and the Inflation Reduction Act, and, Granholm said, “98% of the programs that the department was given [under the laws] … have had at least one round of funding go out the door; 98% is amazing in government. The only reason it’s not 100% is because some of the programs require a start date beyond our term. … 

“These laws have made investing in America irresistible,” she said. “It has made this energy transition inevitable and inexorable. … It is a transition that is built to last.” 

Granholm reeled off a list of examples, beginning with the 60 GW of clean energy that have been added to the grid in 2024, twice as much as has been installed in any other year, with developers “very busy making sure they can get their projects in the ground and take advantage of the [IRA’s 30%] tax credit.” 

Those tax credits and other DOE grants and investments have sparked about 300 announcements of new battery storage manufacturing facilities that could halve U.S. dependence on China for lithium, the critical mineral used in most electric vehicle and grid-tied batteries, she said.  

“China had dominated this space because they had an industrial strategy, and we now have one to rival them,” Granholm said. 

Noting that Deploy likely would be her last major public appearance as energy secretary, Granholm acknowledged the uncertainty ahead as President-elect Donald Trump takes office with an energy agenda heavily weighted toward fossil fuels.

But she sees hope in the fact that about 80% of the federal dollars from the IIJA and IRA are going to red states and districts.  

“For every $1 that’s invested by the federal government, $6 are invested by the private sector, and all those dollars are going to red states,” Granholm said. “It would be political malpractice to undo the incentives that are causing all of this economic activity in those red states.”  

‘Every Available Electron’

Arguments in defense of the IIJA and IRA were repeated throughout the two-day conference, with speakers linking the economics of clean energy technologies to the industry’s current concerns about demand growth from artificial intelligence, data centers and electrification. (See Podesta: Economics of Clean Energy Have Simply Taken Over.) 

Winning the AI race with China has become a national security priority, said Neil Chatterjee, who chaired FERC during the first Trump administration and now is a senior adviser at Hogan Lovells, a multinational law firm. “It’s going to totally upend energy policy and the conventional wisdom that Republicans are for fossil fuels and Democrats are for green energy. … 

“We’re going to need every available electron and … every available megawatt,” Chatterjee said Dec. 5, during an onstage conversation with Jigar Shah, director of DOE’s Loan Programs Office, and Heather Reams, president of Citizens for Responsible Energy Solutions, a Republican-leaning advocacy group. 

LPO Director Jigar Shah (left) explores the emerging energy landscape for the second Trump administration with former FERC Chair Neil Chatterjee (center) and Heather Reams, CRES. | © RTO Insider LLC 

“We’re going to figure out energy efficiency, demand response, virtual power plants,” Chatterjee said. “How can we get grid-enhancing technologies [online]? How can we get greater optimization for our current grid? All of this will be essential to winning the AI race while simultaneously bringing down the cost of electricity for consumers.” 

Reams said clean energy entrepreneurs will need to focus on how they can provide cost-effective solutions to meet demand growth and ensure they are meeting with White House staff and with lawmakers on both sides of the aisle.  

“I know there’s a lot of talk about President-[elect] Trump being a climate denier, not really valuing reducing emissions,” Reams said. “But let’s get away from emissions and talk about the demand we need. How are you solving the problem? How are you part of the solution?” 

Her advice to conference attendees is to come with solutions and pivot a bit on their messaging. “You’re not changing your business but pivoting the words you use,” she said. 

Reams said she expects the incoming administration and Chris Wright, Trump’s nominee to lead DOE, will put a pause on IRA and IIJA funding “to get a lay of the land” she said. “But that doesn’t mean that once that pause is there, it’s going to remain.”  

Organizations like CRES are in favor of continuing the LPO and other DOE divisions, such as the Grid Deployment Office, which Reams said will be “very, very important, because of all the challenges the grid will face in the coming years.” 

Pivoting the Message

DOE appears to be pivoting its message toward Trump’s rhetoric of energy dominance and independence. A video shown at the conference promoted the department as a core driver of “unlocking” U.S. innovation and “unleashing” U.S. clean energy.  

Another source of hope for Granholm is that IIJA and IRA funds support clean technologies that have broad bipartisan support, including advanced nuclear, geothermal, carbon and direct air capture, and clean hydrogen.  

“Four years ago, who was talking about nuclear?” she said. “We have created a revolution [in] this clean energy. … Small modular reactors, the whole fuel cycle … [are] being developed in the United States. High assay, low-enriched uranium [is] being developed in the United States for small modular reactors; keeping sites online, so making sure they are redeveloped and … that the reactors can have a much longer shelf life.” 

IRA and IIJA funding have generated 42 new company announcements in the nuclear space, she said. 

That focus on emerging technologies added to a general sense of optimism that federal dollars will continue to flow, said Nathan Kroeker, chief financial officer of Eos Energy, a long-duration storage developer. “It’s been very positive. I was pleasantly surprised,” he said. 

“A lot of these people, I think, … either [are] thinking about applying for a loan or a grant, have recently applied for a loan or a grant [or] are eagerly awaiting their conditional commitment,” Kroeker said. “In some cases, maybe they’re looking forward to closing on the loan. Different people I’ve talked to are at different stages, but overall, [they are] very optimistic about this, about the dollars and this public-private partnership, and how do we use that in order to accelerate growth and really differentiate ourselves in the energy space?”  

Eos recently finalized a $303.5 million loan guarantee from the LPO, to scale up production of zinc-based, 16-hour batteries. With federal money, “we have turned the corner from being an undercapitalized startup company that everybody was watching to see ― are they going to make it? ― and now we’re a fully funded growth company,” he said. Eos is expanding production at its manufacturing plant outside Pittsburgh, in a former Westinghouse factory.  

White House Doesn’t Matter

Aram Shumavon, CEO of Kevala, a grid data analytics firm, shared Kroeker’s optimism, but sees a more complex landscape ahead. “The industry was there in force,” he said during a post-conference interview with NetZero Insider. “The transition has built enough momentum, that the economics of it just make sense. … 

“Even in the face of or the prospect of very significant swings associated with some tariffs and things along those lines, and potential significant challenges to some of the programs that create subsidies right now, the economics of zero-marginal-cost fuels and a bunch of technologies that support the evolution of the grid are undeniable,” Shumavon said. 

Demand growth also will be a huge driver for clean tech, he said. “We’re seeing a great many people in the industry just looking at the demand for electricity that is coming, and all of that then creates opportunity.” 

End-use, customers ― “who, by the way, are also employers and also voters ― are going to be demanding a broad spectrum of products and services from the attendees of that conference. And I think attendees of the conference see that and are excited by the potential. The administration ultimately doesn’t matter in those regards.” 

Ending her speech with a symbolic passing of the baton, Granholm agreed, “It does not matter who is in the White House,” because “this transition is happening. This transition is moving forward, with or without a president in the White House that is a clean energy advocate,” she said. “I hope you are willing to take the time and run with it.”