Page 1031 – RTO Insider

October 23, 2020

MISO Members Back Voting Rights for New Sector

MISO’s Advisory Committee has voted to allow the RTO’s newly created Affiliate sector voting rights in certain committees.

Sector representatives voted 15-9 during the committee’s teleconference Thursday to recommend that the Board of Directors allow MISO’s 11th sector one vote in the AC and one vote on issues before the Planning Advisory Committee.

The minority of AC members voted in favor of splitting the Environmental Groups sector’s existing two votes with the Affiliate sector. The latter sector was borne from the previous Environmental and Other Stakeholder Groups sector. Currently, it is not allowed a vote in committee matters but had one designated non-voting seat during meetings. (See New MISO Sector Gets FERC OK — with a Catch.)

The decision is considered advisory in nature to the board, where the final determination rests, and came after a failed motion from some members to delay the vote. Some representatives complained that the new sector’s purpose was still too shadowy to yet determine if it is worthy of casting votes like other sectors that have clearer intents.

Representatives have said that the sector should receive one vote when the AC votes on advisory items to the board or RTO leadership. But some members this week seemed split on the issue. Some also said it wasn’t clear how the sector would access or communicate with MISO directors about stakeholder issues.

MISO new sector — MISO’s Carmel, Ind., headquarters | © *RTO Insider*

Environmental Groups representative Beth Soholt called for a “comprehensive” understanding of what exactly is the sector’s purpose before deciding to award it any votes on AC recommendations.

“We’ve heard this is a standalone, catch-all sector, and we’ve also heard this will be an incubator sector. … There is a number of outstanding issues,” Independent Power Producers and Exempt Wholesale Generators representative Travis Stewart said.

During the committee’s Sept. 16 meeting, Public Consumer Advocates representative Christina Baker had also said her understanding of the Affiliate sector was that of an “incubator” for new members until enough like-minded entities joined to branch off into a new sector. She said she was unsure if a collection of miscellaneous entities could get along and agree on a vote.

AC Chair Audrey Penner pushed back on the notion that there was confusion about the Affiliate sector’s purpose.

“I don’t know how else it could be interpreted but that it’s a home for all newcomers that can’t find a place in another sector,” Penner said. She also said she viewed voting rights as a separate issue from how the new sector would interact with the board.

Existing sectors will now draft eligibility criteria and mission statements so it’s clearer where new MISO members should be placed.

Unlike the divergent opinions around Affiliate sector voting rights, nearly all sector representatives have opposed the consolidation of some existing sectors, an idea that was presented earlier as the committee was considering restructuring. (See MISO AC Works on Sector Rules as FERC Timeline Ticks.)

“There’s no desire to consolidate, not even to align,” Penner said.

“We believe that one strength of the MISO stakeholder process is the diversity of opinions,” Soholt said at the committee’s September meeting.

Representatives have also asked that the grid operator allow more informal and less stage-managed access to the board.

“We’re looking for more meaningful interaction with the board,” Stewart said.

Many sector representatives have also expressed the desire to curtail new sector creation in the future.

“We hope that the creation of new sectors will be really limited in the future, and MISO will work hard to find places for new members in the existing sectors,” the State Regulatory Authorities sector’s Julie Fedorchak said.

October 23, 2020

Moody’s: NY Faces Long Economic Recovery

Unlike spring, when New York City was the epicenter of the COVID-19 pandemic, health indicators are now pointing in the right direction for the city, but its unemployment rate is still about double the national average, according to Moody’s Analytics.

Moody’s expects the recovery of the U.S. economy to extend over one to two years, given the unlikelihood of an effective vaccine becoming available before spring 2021. But after national GDP fell more than 10% last spring, the economy is slightly more than halfway back, Adam Kamins, a director at Moody’s, said Wednesday at the NYISO Fall Economic Conference.

New York Economic Recovery — Adam Kamins, Moody’s Analytics | *NYISO*

The economy was technically in recession for only two or three months before it began to recover, but the hit was “extraordinarily deep,” he said.

“A lot of the lower hanging fruit was plucked, because firms reopened; people started to re-engage with the economy; you started to see a little bit more restaurant reopenings and stores starting to reopen and a return to something resembling normalcy,” Kamins said. “For sports fans like me, it’s almost a microcosm of what you saw over the course of the summer; you saw sports return, but in a weird and different way, with no fans. That’s how you can think of the economy too.”

Moody’s calls the current period “the pre-vaccine recovery” phase, with a “pretty stagnant economy” projected through 2021, Kamins said.

“First, the fiscal stimulus has expired, and our baseline expectation is that there won’t be more stimulus coming from the federal government until probably after the next inauguration in January,” Kamins said. “The other factor is that COVID-19 cases are rising, and they are starting to rise pretty rapidly in a lot of the country,” especially in the Sunbelt states and in the Upper Midwest.

New York’s economic outlook is “still pretty bleak,” he said. The shock from being the national epicenter of the pandemic was so severe that the city’s unemployment rate shot up to 20%, easily an all-time high since statisticians started keeping records 50 years ago.

The gaps are starting to narrow between the city, the rest of the state and the rest of the country. But the state was the second-worst performing in terms of three-month annualized growth through August, after Hawaii, he said.

State Handling COVID

In terms of its handling of the pandemic, while infection and death rates are rising everywhere in the U.S., New York is actually better off than most of the country, he said.

“We have an alarming trend here where cases are starting to spread out from the middle of the country,” Kamins said. All but two states are experiencing an increase in daily per capita cases, so the country is in “a pretty tough spot” while it waits for a dependable, widely available vaccine, he said.

Western New York and the capital region have fared particularly well in terms of infection rates, and “two relatively large metro areas are at the top of the list in terms of best performance with respect to COVID-19. … We have fewer than one out of 1,000 residents in both Rochester and Albany that have tested positive, and those are the lowest numbers in the U.S.,” Kamins said.

This fact is all the more impressive considering that New York’s testing capacity is as high if not higher than that of any other state, so it is well positioned to ride out a second wave of COVID infections, he said.

Election Outcomes

Kamins closed out his national presentation with a one-page summary of the policy differences between former Vice President Joe Biden and President Trump.

“Generally, in terms of governing and COVID-19 response, a Biden administration would be looking at a federally led approach, would be looking to strengthen institutions and the federal government,” he said. “The Trump administration’s approach has been more state-led; they’ve taken more proactive steps to weaken government oversight in some ways, weaken some institutions.”

A Democratic-controlled Senate with Biden in the White House would likely pass a hefty fiscal stimulus package, which would create more jobs, he said, noting that the Biden campaign had cited Moody’s numbers. (See ‘Massive’ Clean Energy Stimulus Under Biden Likely)

“Take that for what it’s worth, but our point of view is pretty clear: that that would be the most beneficial outcome for the economy,” Kamins said.

Moody’s model indicates a narrow win for Biden, but “I still remember vividly telling you four years ago that our model predicted a pretty decisive win for [Hillary] Clinton, and then I was sitting in the airport that night flying home, and that’s when,” on Oct. 28, 2016, FBI Director James Comey told Congress the bureau had discovered more of the former secretary of state’s emails sent from a private server. Comey’s letter was “possibly one of the most consequential turning points in the election,” Kamins said.

No one can really diagnose why some of the predictions in 2016 were as off as they were, he said.

“We changed our model a bit to control more for turnout, because that’s what we found was missing. Ultimately, Trump was much more successful in turning out his base than Hillary Clinton was,” Kamins said.

October 23, 2020January 31, 2024

Missouri PSC Looks at IOUs’ RTO Membership

Missouri regulators have opened a working case to determine whether the state’s investor-owned utilities’ continued RTO membership “is in the ratepayers’ best interest.”

The state’s Public Service Commission issued an order on Oct. 14 that directs each IOU to participate in a workshop that has yet to be scheduled and to cooperate with the “investigation.” PSC staff will file a report with their findings by June 30, 2021 (EW-2021-0104).

The order applies to Evergy Missouri Metro, Evergy Missouri West, Empire District Electric and Ameren Missouri. Evergy Metro and Empire are SPP members; Ameren is a MISO member; and Evergy West is a member of both.

The PSC said it “believes there are benefits” to the IOUs’ RTO memberships but that they “exceed the long-term costs and commitments of RTO membership, especially given that the structure, services and membership of both Southwest Power Pool and the Midcontinent Independent System Operator continue to change significantly with the passage of time.

“The commission must inquire into the nature of the benefits of RTO membership, the monetized value of those benefits and what time horizons should be employed to compare asset lives (costs) to the values of benefits streams,” the PSC said.

According to the order, the workshop will determine:

- - the information needed to respond to the commission’s current and previous orders on RTO membership;
  - whether such information is reasonably and economically available, and if not, what kind of information could be used as a proxy to control costs and expeditiously respond to the commission;
  - the cost of gathering, analyzing and interpreting such information; and
  - whether there are any identifiable “deal breaker” events or event categories that would make it unreasonable for an IOU to remain in an RTO.

SPP said it welcomes the study and stands ready to support its members’ efforts to “evaluate the cost and benefits of their membership.”

“We fully respect that the states and utilities we serve need to ensure they’re receiving adequate value from their membership in SPP,” spokesman Derek Wingfield said. “We remain committed to continually finding new ways of adding value in collaboration with our stakeholders.”

MISO said it is aware of the investigation and is waiting for further guidance on how to assist.

The issue stems back to the early aughts, when the PSC initially placed contingencies on IOUs wishing to transfer functional control of their transmission systems to the RTOs. That allowed the commission to maintain jurisdiction and better understand whether RTO membership would provide the IOUs’ expected benefits, former Commissioner Steve Gaw said.

“At that time, there was no track history to go by in the Midwest, and the net-benefit calculations were estimated,” said Gaw, now with Advanced Power Alliance after six years on the PSC.

The problem has been that the IOUs have continually kicked the proverbial can down the road.

In 2011, the Evergy companies — then operating as Kansas City Power & Light — filed an interim report requesting the commission approve their continued participation in SPP beyond October 2013. In May 2013, the commission approved an interim agreement between KCP&L, PSC staff, the Office of the Public Counsel (OPC), SPP and Dogwood Energy that extended its approval through September 2018 (EO-2012-0136).

Four years later, the commission accepted the companies’ motion to extend the interim period to 2021 and to absolve them of the requirement to file the 2017 interim report.

Ameren Missouri, which does business as Union Electric, received PSC approval in 2012 to transfer functional control of its transmission system to MISO, subject to certain conditions. Those conditions required the utility to file a new case addressing its continued participation in the RTO in 2015. At Ameren’s request, the commission extended the date to November 2017 and then March 2020 (EO-2011-0128).

In March 2019, the commission granted a motion by Ameren, commission staff, the OPC and the Missouri Industrial Energy Consumers to delay the rate-case filing until March 2023.

Acknowledging Ameren’s contention that “it would be unduly expensive to perform the comprehensive cost-benefit study” necessary to assess the value of its MISO membership, the PSC agreed that the study’s cost “outweighs the importance of the study.”

October 23, 2020

Glick: FERC Should Help RTOs Work with States

The growth of renewable energy resources stemming from technological developments and the resulting cost reductions has caused more than a few skirmishes, FERC Commissioner Richard Glick said on Wednesday.

“We’re seeing growth on renewable energy, and we’re seeing conflict as well: friction between the states’ efforts to promote renewable energy … and FERC’s regulation of wholesale electric markets,” Glick said in opening the first day of Renewable Energy Vermont’s annual c onference. This year, the group is holding the conference online and over the course of three months.

FERC RTO — FERC Commissioner Richard Glick | *Renewable Energy Vermont*

“I don’t think there’s necessarily a natural competition or divergence there, but we’ve seen for a variety of reasons traditional electric generators, primarily natural gas and coal, fighting it out in regional electricity markets,” particularly in the Eastern RTOs, Glick said.

He referred to the New England States Committee on Electricity (NESCOE) having earlier this month called on States Demand ‘Central Role’ in ISO-NE Market Design.)

“States want their decisions to be heard in these regional markets,” Glick said. “From my perspective, FERC’s responsibility is to figure out a way to help these RTOs design their markets and oversee [these] design changes to ensure that state policies are accommodated, not blocked. If we don’t do that, I think we’re headed towards a bad situation in which some states are going to drop out of RTOs, and certainly states aren’t going to do anything further that would give FERC additional authority over resource decision-making.”

REV Chair Josh Bagnato asked what FERC is doing that impacts Vermonters who are pushing for the clean energy transition.

“The commission has quite a bit of jurisdiction over the New England electricity market through our oversight of ISO-NE, so almost all wholesale transactions throughout the region are subject to FERC regulation and oversight. So, the decisions we make have a great deal of impact on the resource mix, prices and on reliability,” Glick said.

“I don’t think the people at ISO New England … get up in the morning and say, ‘How can we frustrate or block state programs?’ I don’t think they do that at all, but they are looking at the markets from a different perspective. They want to make sure that the lights stay on and that they provide power at a relatively reasonable price.”

The federal government right now “is relatively AWOL on greenhouse gas emissions, [so] it’s really up to the states at this point to address those issues, and I don’t think the commission blocking state policies, whether it be intentional or inadvertent, is the way to go at this point,” Glick said.

He cited a recent Lazard analysis that said wind and solar are now the most cost-competitive energy technologies, not only in the U.S., but around the world.

“That’s certainly been a pretty dramatic change,” Glick said. Though federal and state policies have helped somewhat, he said, far and away the biggest driver has been consumer demand, and that will certainly continue in the future.

Individual consumers as well as corporate America have concerns about climate change and would like to see a much greener mix in their utilities’ resource portfolio.

FERC to help States and RTOS — FERC Commissioner Richard Glick cited a recent Lazard study that shows that when U.S. government subsidies are included, the cost of onshore wind and utility-scale solar is competitive with the marginal cost of coal, nuclear and combined cycle gas generation. | *Lazard*

At first it was just Big Tech companies, “but now we’re seeing it all over the place, with Proctor and Gamble, Anheuser-Busch, Walmart — companies that you wouldn’t normally think of in terms of the energy space,” Glick said. “They’re saying, ‘We want to be 100% green and have a 100% net-zero emissions portfolio as quickly as possible.’ And they’re demanding that of utilities, which are going out and substantially changing the resource mix.”

Bagnato asked what three magic buttons Glick would push to help the transition to renewable energy.

“The first is more of an esoteric one, which is follow the science,” Glick said. “The U.S. is the only country in the world having this debate. … Two, massively build out the transmission grid to be able to accommodate offshore wind and … onshore wind and solar. Third, we have to have a federal policy. States have been doing a great job, but whether on carbon pricing or whatever, cooperation on a regional basis doesn’t work without a federal overlay.”

October 23, 2020

MRO, Texas RE to Lead Align Software Training

NERC is set to begin training registered entities on its new Align software project and Secure Evidence Locker (SEL) by the end of the year. Training will follow a staggered schedule, with the Midwest Reliability Organization and Texas Reliability Entity going first.

Align — formerly known as the CMEP (Compliance Monitoring and Enforcement Program) Technology Project — is intended to improve and standardize compliance monitoring and reporting processes across the ERO Enterprise. The SEL was conceived as a way to provide secure storage where potentially sensitive information collected as evidence can be kept separate from work papers managed through the Align tool itself.

NERC Planning 3-phase Rollout

In a joint webinar Tuesday, representatives from MRO and ReliabilityFirst provided more details about the timeline for Align’s rollout, currently scheduled to begin in the first quarter of 2021. The tool is to be released in three stages covering escalating levels of functionality:

Release 1 — Q1 2021. To be introduced as a pilot in MRO and Texas RE before expanding to other regions. Functionality includes allowing registered entities to create and submit self-reports and self-logs, create and manage mitigating activities and mitigation plans, and respond to requests for information.
Release 2 — Q2 2021. Includes technical feasibility exceptions, periodic data submittals, self-certifications and additional needed enhancements identified in Release 1.
Release 3 — Q4 2021. Includes compliance planning and audits, spot checks and compliance investigations.

NERC is finalizing training materials for RE representatives, who will train registered entity staff from their regions in turn. Training for Release 1 will cover functionality for the initial release and features of the SEL supporting that functionality, along with regional changes in business procedures and transition plans for legacy systems. All training sessions will be conducted remotely.

Align Software Training — The current schedule for the release of the Align tool. The ERO Secure Evidence Locker is still under construction but planned to be introduced alongside Release 1. | *NERC*

“During the short time frame between Release 1 and Release 2, the information listed under Release 2 will be maintained in the current platforms, such as WebCDMS or any other platforms that [your regional entities] are having you work in now,” said Ray Sefchik, director of reliability assurance and monitoring at RF. “So there’ll be a couple of months’ gap where you may have to maintain [these platforms] for TFEs, periodic data submittals [and self-certifications] until rollout for Release 2 happens in Q2.”

Entities Free to Develop Private Lockers

The SEL is still under development, with plans to introduce it alongside Release 1 and expand it to store data for the functionalities covered under each subsequent release. NERC had initially planned to include this feature — which for security reasons is not part of the main Align tool — in an update, but the organization added it to the initial release because of concerns from registered entities over the software provider’s ties to a Hong Kong-based private equity firm. (See NERC Investigating Chinese Tie to Software Vendor.)

While all entities will be required to use a secure evidence locker to store relevant data, participants in the webinar stressed that they are free to deploy their own lockers if they prefer to keep potentially sensitive information in their own systems. This is already done by many entities for evidence associated with NERC’s Critical Infrastructure Protection rstandards, though Sefchik and MRO’s Desiree Sawyer said no entities have indicated definite plans to do so for CMEP information. (See FERC Approves NERC’s Align Spending Request.)

However, Matthew Thomas, RF’s director of compliance monitoring, emphasized that entity-developed lockers must be “authorized for use by CMEP activities” by NERC and the REs to ensure their reliability and security according to the specifications provided by NERC in April. A webinar is scheduled for Oct. 29 to answer entities’ questions about developing their own tools.

October 22, 2020

NextEra Energy Eyes Greater RTO Involvement

NextEra Energy’s recent acquisition of GridLiance and its three subsidiaries gives the company a greater voice in RTO transmission-investment decisions and renewables development, CFO Rebecca Kujawa said Wednesday.

“There are investment opportunities … we would have in GridLiance,” Kujawa said during NextEra’s third-quarter earnings call with financial analysts. “But it also positions us to have a seat at the table in these [RTOs] as they contemplate new transmission projects. And obviously, GridLiance would seek to compete effectively for those opportunities.

“As we think about a broad and substantial expansion of renewables across the U.S., it becomes important, and increasingly so over time, to continue to invest in the transmission grid across the U.S.,” she said.

NextEra earnings — NextEra Energy Resources’ Pinal Central Energy Center in Arizona, combining solar with storage | *NextEra Energy Resources*

NextEra Energy Transmission announced last month it will pay $660 million for GridLiance. The company’s three subsidiaries, members of both MISO and SPP, own 700 miles of high-voltage lines in Illinois, Kansas, Kentucky, Missouri, Nevada and Oklahoma. (See NextEra Buying GridLiance for $660M.)

The company said its NextEra Energy Resources subsidiary added nearly 2.2 GW of renewables since July to its now 15-GW backlog: 580 MW of wind, 911 MW of solar, 594 MW of energy storage and 86 MW of wind repowering.

The Juno Beach, Fla.-based company reported third-quarter earnings $1.23 billion ($2.50/share), compared to $879 million ($1.81/share) for the third quarter of 2019.

NextEra’s board of directors last month approved a four-for-one common stock split intended to make ownership “more accessible.” Trading on a stock split-adjusted basis will begin Oct. 27.

The company’s share price opened Wednesday at $299.06 but slowly lost steam during the day and was trading at $297.68 in the after-hours session.

October 22, 2020

New York Holds Final CLCPA Emissions Hearings

New York on Tuesday held its final hearings on emissions standards, with Administrative Law Judge Molly McBride conducting two public comment webinars for the recently proposed statewide emissions limits for 2030 and 2050.

The limits are proposed as 60% and 15%, respectively, of estimated 1990 greenhouse gas emissions, a baseline that increased by 70% under new statutory requirements that include upstream emissions in the calculation. Final comments on the proposed (Part 496) emissions limits are due at the Department of Environmental Conservation (DEC) by 5 p.m. Oct. 27. (See NY Seeks Comment on Proposed Emissions Limits.)

The Climate Leadership and Community Protection Act (CLCPA) mandates, among other targets, that 70% of the state’s electricity come from renewable resources by 2030 and that generation be net zero, or 100% carbon-free, by 2040. (See Cuomo Sets New York’s Green Goals for 2020.)

CLCPA Emissions Hearings — New York state annual net carbon emissions | *NYSERDA*

Climate Action Council Involvement

Robert Howarth, Cornell University professor of ecology and environmental biology, and a member of the state’s Climate Action Council, summarized his written comments, citing his own recent study for how New York should account for methane emissions under the CLCPA. (See NY Study Highlights Rising Methane Emissions.)

“I appreciate the difficulty in estimating greenhouse gas emissions for back in 1990, and given this difficulty, I feel the estimates derived for the new [GHG] emission limits are reasonable overall,” Howarth said. “I particularly commend DEC for their inclusion of the carbon dioxide emissions that occurred outside of the state but that were associated with the development, processing and transportation of fossil fuels used within the state in 1990.”

The direct emissions of carbon dioxide in New York state from the combustion of fossil fuels also seem well estimated by the DEC, he said. But its estimate of methane emissions associated with the use of fossil fuels is lower than what he estimated by about 16%.

“I believe my estimate is a better one, as it’s consistent with the analysis by [Johns Hopkins University professor Scot] Miller, et al. published in 2013, and as I explained in a peer-reviewed paper in 2014, that estimate is based on data from the late 20th century using top-down estimates, and I believe those are more reliable than the estimates upon which DEC relies,” Howarth said.

The difference is relatively small, he said, but the DEC nonetheless should reconsider their choice.

“Moving forward over the next year to look at modern emissions, it becomes much more important to use the top-down approach,” Howarth said.

He commended the DEC for using the 20-year global warming potential as derived from the Intergovernmental Panel on Climate Change (IPCC) to compare methane and carbon dioxide emissions, which is consistent with the CLCPA requirement and his own recommendations.

“I would be happy to work with DEC and others as they work on their approach for modern emissions, and I strongly urge that the Climate Action Council be more directly involved in the process moving forward over the next year,” Howarth said.

Other Voices

Setting emissions limits is arguably one of the most difficult elements in implementing the CLCPA when it comes to the impact on people’s jobs and the state’s economic and environmental future, said Kevin Schwab, a vice president of CenterState CEO, an economic development organization in Syracuse.

“We’re really going to need a full and accurate baseline of CO2 equivalents to make sure that the work results that [the Climate Action Council is] trying to produce are going to produce the best outcomes for the environment,” Schwab said.

He noted concern among upstate businesses about the IPCC protocols as they relate to imported energy and fugitive emissions.

“Historical reporting in these areas is certainly going to produce some competing data, collection methods and estimates,” Schwab said. “For example, our overall emissions related to energy production have gone down since 1990, but there are estimates available that would suggest that our emissions from energy imported into New York have risen over that period … [which] requires more scrutiny.”

John Rath, director of operations for NY Geothermal Energy Organization (NY-GEO), said he had recently moved to New York from Texas and that “it’s great to be living in a progressive state that recognizes climate realities and the need for action. … In addition to the larger goals, I think it would be helpful to incorporate some interim targets along the way.”

Eric Weltman, a senior organizer in Brooklyn for the national advocacy group Food & Water Watch, said, “We want to send a message to Gov. [Andrew] Cuomo and the DEC that it’s time to match rhetoric with action and demonstrate the commitment, provide the resources and implement the policies necessary to meet the urgency of the climate crisis. Five years ago, Cuomo banned fracking in New York, but since then he’s allowed a buildout of pipelines and power plants that have increased our reliance on fracked gas, a dangerous inconsistency in policy.”

John Bartow, executive director of the Empire State Forest Products Association (ESFPA), said his organization is committed to addressing climate change in a way that recognizes the value of wood products and the role that private forest land owners contribute to climate resilience.

“The CLCPA does not require the DEC to report emissions related to bioenergy produced in another state and imported into New York, which could create a competitive disadvantage of bioenergy production in New York,” Bartow said. “For example, wood pellets produced in New York would be accounted for both their production and consumption emissions, while a Pennsylvania facility would only be accounted for their New York consumption emissions. Why would any bio-energy production facility want to produce in New York?”

Tara Vamos, a member of New Yorkers for Cool Refrigerant Management, said that setting the emissions limits is a tremendous opportunity to include all refrigerants, which are incredibly potent short-lived climate pollutants (SLCPs).

New York joined with other states to form the U.S. Climate Alliance, which issued the SLCP Challenge to Action to meet the goals of the 2015 Paris Agreement on climate change, she said.

“Page 19 of that roadmap says that states can take steps to support the global transition away from HFCs [hydrofluorocarbons], detect and repair leaks, and collect and destroy used refrigerants,” Vamos said. “By addressing all three areas, states can reverse trends in emissions from this fast-growing sector and reduce them by as much as 40 to 50% by 2030, which would be tremendous.”

October 22, 2020January 30, 2024

Avangrid to Acquire PNM Resources for $4.3B

Avangrid is poised to expand into the Southwest after announcing Wednesday that it will spend $4.3 billion in cash to acquire PNM Resources, which operates regulated utilities in New Mexico and Texas.

Connecticut-based Avangrid has agreed to pay $50.30/share for PNM, a 19.3% premium over its average closing price over the last 30 days, and will assume $4 billion in debt.

Avangrid’s parent company, Spanish energy giant Iberdrola, said the merged company would have assets worth $40 billion and generate around $2.5 billion in earnings and a net profit of $850 million.

PNM shareholders unanimously approved the transaction. Additional approval from state and federal regulators is needed, including FERC, the New Mexico Public Regulation Commission, the Public Utility Commission of Texas, the Federal Communications Commission and the Nuclear Regulatory Commission. The deal must also be cleared under the antitrust provisions of the Hart Scott Rodino Act and receive approval from the Committee on Foreign Investment in the United States. Regulatory approvals should take approximately 12 months.

Avangrid CEO Dennis Arriola will continue in that role for the combined company. In a statement, Arriola said the merger is “a strategic fit and helps us further our growth in both clean energy distribution and transmission, as well as helping to expand our growing leadership position in renewables.”

PNM’s utilities provide electricity to nearly 800,000 homes and businesses in New Mexico and Texas; Avangrid has 3.3 million customers in Connecticut, Maine, Massachusetts and New York. PNM also owns power plants and wind farms in New Mexico. Avangrid currently owns 1,900 MW of renewable energy in 22 states and has a pipeline of 1,400 MW of renewables assets in New Mexico and Texas.

Iberdrola CEO Ignacio Galán said during an earnings call Wednesday that the merger “fits our strategy and improves our position and growth potential significantly in the United States … one of our key geographies.”

It also creates one of the biggest clean energy companies in the U.S., with 10 regulated utilities in six states and renewable energy operations in 24 states. The enlarged company will be the third-biggest U.S. renewables operator, with about 7.4 GW of capacity, nearly all of which is onshore wind, and a growing pipeline of offshore projects including Vineyard Wind and Park City Wind in New England.

Vineyard is an 800-MW joint venture between Avangrid and Copenhagen Infrastructure Partners (CIP). The project’s expected in-service date has been pushed back to no earlier than 2023 because of delays from the U.S. Bureau of Ocean Energy Management in issuing its final environmental impact study and record of decision. (See BOEM Issues Revised EIS for Vineyard Wind.) Avangrid also partnered with CIP to develop the 804-MW Park City project, which has an expected in-service date of 2025.

“When nobody believes [that] the electricity can be produced with clean sources and everybody thought coal would remain for centuries, and the oil and gas are absolutely needed, we were already the only one saying that we can already generate and produce electricity with clean sources,” Galán said.

PNM has received regulatory approval to more than triple its renewable power capacity to 2 GW by the end of 2022, with a goal to be 100% emissions-free by 2040. There is also an approved exit plan for the 2022 retirement of the coal-fired San Juan Generating Station, of which PNM owns 66.3%, with securitization bonds used to recover the investment, a portion of decommissioning and other costs.

Pedro Azagra Blázquez, corporate development director for Iberdrola, said the company and its subsidiaries “will have no control of any coal asset” by 2022.

October 22, 2020

Proponents Tout Combined Heat and Power Potential

Combined heat and power (CHP) systems harbor great potential for small applications, but adopters face the current reality that system costs do not fall in proportion to size, according to proponents.

CHP systems, or cogeneration, are an efficient way to generate electricity and heat from a single fuel source, such as biomass or natural gas. CHP is fuel-efficient, as it uses otherwise wasted heat productively for heating or cooling. It also reduces the need to purchase distributed electricity from the grid, which increases energy security.

The Environmental and Energy Technology Council of Maine on Tuesday hosted a webinar to discuss emerging markets for the technology.

David Dvorak, director of New England Combined Heat and Power Technical Assistance Partnership and professor of mechanical engineering technology at the University of Maine, said more than half the 80.7 GW of CHP installed capacity in the U.S. are “typically very large-scale systems.” Dvorak said these types of CHP systems “work very well,” but they also need to be installed by on-site engineers.

In smaller applications, Dvorak sees changes. “Out of 4,000 sites that we currently have in our installation database, what we’re seeing is that in the past four years, there have been quite a few smaller-scale systems, for instance in multifamily [homes] and schools, that are put into place,” he said. “These tend to be smaller systems where there may or may not be in-house expertise to do a full engineering analysis.”

Combined Heat and Power Potential — Combined heat and power installations through Dec. 31, 2019 | *New England Combined Heat and Power Technical Assistance Partnership*

Dvorak said this represents “technical potential” in New England.

Ian Burnes, strategic initiatives program manager for Efficiency Maine, said that CHP is “a great technology, but the upfront installation cost “is really challenging.” Large-scale CHP installed at an assisted-living facility can cost $300,000 for the total system cost and $80,000 for electrical engineering.

Dvorak added that even with small-scale or micro-CHP systems, the interconnection costs and associated expenses do not scale down with them.

“There’s a certain aspect of [cost] that’s fixed, and it becomes a larger fraction of the total cost, and this is a real challenge, but we see more and more opportunities in these smaller systems,” Dvorak said. “We’re hoping to find ways actually to see more of these small-scale systems installed.”

Burnes said Efficiency Maine offers capped financial incentives on total project costs and 50% coverage up to $20,000 for a technical assistance study and free scoping audit of utility data that includes a final report.

Lizzy Reinholt, senior director of sustainability and corporate affairs for Summit Utilities, added that getting people to realize the benefits of CHP is “really important.”

Reinholt said local distribution companies have leadership roles in building a sustainable energy future. Summit — which operates in five states, including Maine — is focused on renewable natural gas and its role in reducing emissions and helping states meet their climate goals. She said Maine Gov. Janet Mills has been pushing an aggressive agenda around emissions reductions and creating the Maine Climate Council, which recently released a draft of its four-year Climate Action Plan that included recommendations for CHP.

It is an “exciting time to work in the energy field,” she said, adding that it is also a critical and transitional time, as regulatory and legislative frameworks need adaptation to better link to goals for reducing emissions and mitigating climate change impacts. Building strong partnerships with lawmakers and regulators is essential, she said.

“Right now, there is a strong push to find a silver bullet to solving all the problems we face, both reducing emissions and reducing costs, and there are no easy answers,” Reinholt said. “I feel grateful for the work that’s already been done that has stayed technology agnostic and instead focused on outcomes. How do we keep that moving forward so that we can be ready to seize on those innovations and emerging technologies in the marketplace?”

October 22, 2020

WECC Examining August Heat Wave with West-wide Lens

WECC will take an interconnection-wide approach as it analyzes the events stemming from the mid-August record “heat storm” that prompted CAISO to initiate California’s first rolling blackouts since the energy crisis of 2000/01, officials said Tuesday.

The regional entity sees the effort as a “subset” of its larger, ongoing focus on resource adequacy in the Western Interconnection, WECC Vice President of Strategic Engagement Jordan White said during a call with stakeholders.

WECC signaled that direction last month when Director of Reliability Risk Management Vic Howell told a group of stakeholders that the RE would examine the developments of Aug. 15-18 as a Western “heat wave event” rather than just a California load-shed event when it performs its event analysis submitted to NERC. (See CalCCA Seeks ‘Objective’ Review of Blackout Report.)

“Although much of the focus [around the event] has been California because the customers in that state lost power, this truly was a West-wide heat event that prevented neighboring states from being able to export surplus power to California to avoid shutting firm load,” White said Tuesday.

From the perspective of many California residents and outside observers, the heat wave climaxed on Aug. 14 and 15 when CAISO was forced to cut power to about 812,600 households, representing about 2.4 million people.

The call for blackouts immediately sparked a wave of finger-pointing, with CAISO blaming the California Public Utilities Commission for managing a “broken” resource adequacy program. The CPUC countered that the state’s investor-owned utilities had procured sufficient resources to meet forecasts, and it questioned why those resources had not been available in the ISO market to meet the heavy demand. (See CAISO Blames Blackouts on Inadequate Resources, CPUC.)

WECC heat wave — Five Western balancing authorities issued advanced energy emergency alerts on Aug. 18, along with one short EEA-1. CAISO is “BA-1,” but WECC declined to identify the others. | *WECC*

CAISO, the CPUC and the California Energy Commission earlier this month jointly published a “root cause” analysis that largely attributed the blackouts to constraints on interties into California, under-scheduling by load-serving entities and ISO market design flaws, among other factors. (See CAISO Says Constrained Tx Contributed to Blackouts.)

“It’s important to understand that the heat wave was not just experienced in California; it was a wide-area heat wave event … that prevented neighboring states from being able to export their surplus energy to California,” Howell said. “This event really illustrates the importance of the resource adequacy discussions that have been happening at WECC and across the interconnection.” (See WECC Seeks to ‘Invent’ Future with RA Forum.)

Howell noted that the five-day event saw 28 energy emergency alerts (EEAs) issued across the Western Interconnection, 65% of the total issued for all of 2019. The alerts range from EEA-1, in which a balancing authority has already curtailed non-firm loads and is still concerned about meeting its contingency reserves requirement, to EEA-3, in which shedding for firm load is imminent or in progress in order to maintain that requirement.

Tim Reynolds, WECC’s manager of events analysis and situation awareness, recounted how the event unfolded, pointing out that on Friday, Aug. 14, only CAISO issued alerts, quickly jumping from an EEA-1 to EEA-3 before shedding 1,087 MW of load. On Aug. 15, CAISO issued an EEA-2 late in the afternoon that escalated to an EEA-3 around 7 p.m., leading to the shedding of 692 MW. Only one other balancing authority area — left unidentified by WECC — issued an alert (EEA-1) that day, just before CAISO initiated rotating outages.

The picture began to change on Monday, Aug. 17, when five unidentified Western BAAs issued EEA-1 warnings. CAISO again issued an EEA-3 but avoided shedding load because of conservation measures put in place.

On Aug. 18, four BAAs — including CAISO — entered EEA-3 at some point during the afternoon or evening. Another BAA issued an EEA-2 that evening. That day also saw the Western Interconnection’s summer peak demand of 162,000 MW (a figure WECC is still verifying), potentially beating the interconnection’s previous all-time peak set in July 2018 by 100 MW.

“What was every interesting was that on the 18th … there were a lot of things happening regarding energy conservation and other things coming into play, where the Western Interconnection didn’t have to shed any firm load,” Reynolds said. “So, going from the beginning of the heat wave to … Tuesday, there are some lessons that have happened, things that we want to get out there and let other people know.”

RA Side of Things

“This event is a new one for us and my team in particular,” said Matthew Elkins, manager of WECC’s performance analysis and resource adequacy efforts, referring to the fact that his group usually focuses on transmission system performance when it contributes to the RE’s events analyses.

“But this one was more about the resource adequacy side of things, so my team is excited to put that other hat on and really look at different things that we could do better,” including how WECC can improve its forecasts, he said.

Elkins presented a series of slides illustrating that, during most of the heat wave, CAISO’s demand far exceeded WECC’s 50/50 — and even 90/10 — forecasts for the period.

“Are our [forecasts’] range of possibilities really looking into what could occur?” Elkins said.

Meanwhile, CAISO’s renewable output came up far short of forecasts during the event. Elkins said WECC is interested in learning more about the performance of all resource types against forecasts. It also seeks to gather similar performance data from all Western BAAs.

“We want to understand what each of the areas were facing at that time, and more than just understanding if the energy was available. We can go through this and say, ‘Yeah, there was energy available somewhere in the system,’ but we have to be able to understand if there was transmission available to move that energy,” Elkins said.

He said one of the “great things” about the Western system is that its constituent BAs peak at different times, allowing for mutual assistance, but WECC wants to know how that practice could have been constrained during the heat wave.

“We’re not trying to point any fingers,” Elkins said. “What we’re trying to get out of this is really just a better understanding of how we can model a heat wave event … that really impacts so many balancing authority areas. Everyone was being impacted in some way, and I just to make sure our models are picking that up and we can look at these types of scenarios.”