Page 1147 – RTO Insider

January 24, 2020October 30, 2023

Connecticut Weighs Pros, Cons of ISO-NE Markets

By Michael Kuser

NEW BRITAIN, Conn. — State regulators on Wednesday hosted a spirited public hearing to examine whether ISO-NE’s wholesale electricity markets are geared to serving the state’s clean energy objectives.

“Despite the ISO’s best efforts … the markets seem to have been unable to attract and retain the resources that Connecticut has identified as the most valuable to our state from a climate change and policy perspective, as well as for resource adequacy and winter reliability,” said Public Utilities Regulatory Authority (PURA) Chair Marissa Gillett, the first to comment at the hearing held by the Department of Energy and Environmental Protection (DEEP).

Gillett said her view is “evidenced most acutely” by the cost-of-service agreement issued to keep Exelon’s Mystic Generating Station online for reliability reasons and the state’s power purchase agreement to prevent closure of Dominion Energy’s Millstone nuclear plant. (See FERC Approves Mystic Cost-of-Service Agreement and Conn. Zero-Carbon Awards Include Nukes, OSW, Solar.) The out-of-market actions “resulted in increased costs to the ratepayers of Connecticut,” she said.

ISO-NE Markets — PURA Chair Marissa Gillett and Vice Chair Jack Betkoski (front row center) choose to sit in the gallery at the public hearing in New Britain, Conn. | © *RTO Insider*

In the state’s 2018 solicitation for nearly 12 million MWh of zero-carbon electric power, DEEP selected a 10-year bid from Millstone for about 50% of the plant’s output. State officials felt they had “no choice” but to protect the reliability of the grid, Gillett said. (See Conn. Zero-Carbon Awards Include Nukes, OSW, Solar.)

The selection of Millstone’s bid followed a draft decision by PURA categorizing the plant as “an existing resource at risk for retirement” without ratepayer support (Case 18-05-04).

Go Slowly

“We understand that your objective is to transition to the clean energy future, and that you have aggressive decarbonization goals for this, not only for the energy sector, but economywide,” said ISO-NE Vice President of External Affairs Anne George, a Connecticut utility commissioner for five years prior to joining the RTO in 2008.

George recommended the state pursue a general policy discussion rather than a regulatory proceeding, especially as no specific regulation could take effect before the end of the 2020s.

“With regard to looking to the future and what Connecticut may need to do to meet its policy goals, I think that is at the core of what the New England States Committee on Electricity asked for,” George said. “NESCOE made it clear that they didn’t want to necessarily rush into discussion with a deadline in place, because they didn’t want to face making decisions in too fast of a timeline.”

George said ISO-NE’s substitution auction mechanism, Competitive Auctions for Sponsored Policy Resources (CASPR), worked last year for Forward Capacity Auction 13, which saw 54 MW of offshore wind energy clear. She noted that planners purposely kept the renewable technology resource (RTR) exemption from the minimum offer price rule (MOPR) for three successive auctions in order to smooth the transition to cleaner resources. (See “Market Mechanisms,” Overheard at NECBC 2019 Energy Conference.)

About 336 MW of capacity will be eligible for the RTR in next month’s FCA 14, which will cover 2023/24.

Wind and solar, at their FCA 14 offer review trigger prices (ORTPs), the break-even capacity price calculated by ISO-NE, would lock in revenue of only 12 to 21% of their capital costs. | *RENEW Northeast*

MOPR and Carbon Pricing

DEEP Commissioner Katie Dykes asked George for her thoughts on PJM MOPR Rehearing Requests Pour into FERC.)

“We don’t see that it poses an immediate risk to the New England capacity market,” George said. “First, in the order, FERC acknowledged that regions do not need to have the same rules. … Our minimum offer price rule is broader than what existed prior to the PJM order, so we believe there’s no real impetus there to expand the New England MOPR.

“And finally, if it came to discussion, there’d be a significant amount of process around that, and so there would be a lot of time before any changes were in effect,” George said, adding that a carbon price could be “designed and implemented very quickly” to counter the impact of an expanded MOPR for New England.

A top PJM official on Wednesday suggested states embrace carbon pricing rather than exit the RTO’s capacity market in response to FERC’s order. (See related story, PJM: Carbon Pricing the Answer to Subsidy Dispute.) NYISO CEO Rich Dewey on Wednesday told his Management Committee much the same thing, saying that integrating carbon pricing into the markets is the most immediate and effective means to pursue the state’s public policy goals for clean energy production.

Market Design

“There was the ability for Dominion to come into ISO New England in the same way that the Mystic units did,” George said. “They chose not to do that. I don’t think that our process didn’t allow for Millstone to have an opportunity to come into the regional market.”

Dykes interrupted to clarify that George was referring to Mystic’s one-year reliability-must-run contract, after which the resource is required to retire.

“In the Mystic situation, they got approval for up to two years, but that was an avenue” available from ISO-NE, George said, adding the RTO will soon file with FERC new energy security provisions that should ensure compensation for needed units. (See ISO-NE Energy Security Plan Looms Large in 2020.)

“This brings me to the broader point of fuel diversity,” Dykes said. “From an operations standpoint, is there a value in terms of maintaining reliability on the grid in having diverse fuel types?”

George replied that it was not an easy question to answer: “I’ve heard our operators indicate that if we had 100% of the same type of resource, as long as we had a strong system and the underlying fuel system was strong, you could operate a system reliably predominantly on one fuel. I think our operators prefer having some diversity of supply, but it’s not an easy answer to say exactly what our operators would need to meet reliability.”

Dykes said she found that response “a little surprising” given the challenges highlighted in the RTO’s 2018 report on the New England grid’s fuel security. That report, she noted, pointed to a lack of firm gas delivery in the region, and to “the critical dependence the grid has on the two remaining nuclear facilities, Seabrook and Millstone, as well as LNG facilities, in order to prevent rolling blackouts from occurring during winter periods.”

“How do I reconcile that with the idea that the grid could be run reliably 100% on one fuel type?” Dykes asked.

“The message of that report was the vulnerability of the fuel infrastructure supplying a large part of the resource mix in New England,” George said. “But in that same report we indicated the importance of LNG, and we also indicated the importance of dual-fuel units, so there are ways to meet reliability without necessarily having prescriptive amounts of different types of fuel.”

The Right Design

Dan Dolan, president of the New England Power Generators Association, said he agreed with the ISO-NE’s assertion that its markets are not designed to get any one technology or resource into the marketplace.

“Part of the issue is making sure that the different attributes are being valued,” Dolan said. “One reason we haven’t seen that level of merchant renewables come in is because one of the largest attributes of their value, lower carbon emissions, isn’t being valued in the marketplace.”

The ISO-NE capacity market doesn’t reduce the investment risk for high-cost renewable resources, which also have low operating costs, said Francis Pullaro, executive director of RENEW Northeast, an industry trade group.

“Even if there were no MOPR, they just wouldn’t get enough revenue from the capacity market, because of its inherent design, to actually be financeable,” Pullaro said.

The Natural Resources Defense Council’s Tom Rutigliano said, “We love wholesale markets; they’re great. Wholesale markets bring us geographic diversity, efficient dispatch, efficient price signals [and] provision of ancillary services; all important in a low-carbon future. And the path to decarbonization becomes much harder and much more expensive without those tools.”

However, the new trend is for reliability to come from a combination of heterogeneous resources, which is a very different picture than reliability being a commodity produced by individual power plants, he said.

“It’s not clear that the fundamental design of capacity markets can accommodate the reliability picture we’re moving towards,” Rutigliano said.

January 24, 2020

CPUC President Vows to be ‘Damn Nimble’

By Hudson Sangree

SACRAMENTO, Calif. — Public Utilities Commission President Marybel Batjer told lawmakers Wednesday the commission would move quickly in its efforts to deal with catastrophic wildfires, intentional blackouts and the bankruptcy of the state’s largest utility.

CPUC President Marybel Batjer | *California State Assembly*

Batjer — an expert on organizational reform, not utilities — said she was trying to get the commission to expeditiously address the crises prior to the state’s 2020 fire season, which starts this summer. (See Newsom Names New CPUC President.)

“Regulators are not known to be nimble. We’re going to be as damn nimble as I can make us for this fire season on many of the things we’re working on,” Batjer told the State Assembly’s Utilities and Energy Committee. Curtailing the power safety power shutoffs that left 2.4 million residents in the dark last October is a top priority, she said.

The committee’s annual CPUC oversight hearing contrasted with last year’s, when then-President Michael Picker said the commission wasn’t the best public entity to address the “enormity” of the state’s wildfire crisis. The commission was set up to deliberate ratemaking, not to handle emergencies, he said.

“I don’t think this is where you’re going to get a sense of urgency,” Picker told the committee. That didn’t go over well with some lawmakers, who got testy with Picker. (See Lawmakers Grill CPUC President on PG&E, Fires.)

Batjer, whom Gov. Gavin Newsom appointed last year when Picker retired, took a different approach under fire. She said the commission has a new Wildfire Safety Division with added staff and is pushing the state’s investor-owned utilities to address safety concerns in their 2020 wildfire mitigation plans, which are required by state law.

Committee Chairman Christopher Holden (D) told Batjer the shutoffs by Pacific Gas and Electric and its failures to communicate with customers had “shattered public confidence” in the utility and state regulators. PG&E’s websites and call centers collapsed under tremendous volume, requiring the CPUC and other state agencies to intervene.

Batjer agreed. “It is critical to uncover what went wrong,” she told the committee. The CPUC wants PG&E and other utilities to take a more geographically “surgical” approach to the intentional blackouts and to balance preventing fires with keeping power flowing.

The commission is working with the utilities to get them to more effectively communicate with the public, emergency responders and local officials, she said. (See California Officials Hammer PG&E over Power Shutoffs.)

PG&E employed the shutoffs broadly in the Sierra Nevada foothills and the state’s coastal areas, trying to prevent wildfires in dry, windy conditions like those that fueled the massive, deadly fires in Northern California wine country in October 2017 and the Camp Fire, which killed 86 people and destroyed more than 14,000 homes in the town of Paradise in November 2018.

Capacity Shortfalls

Holden also criticized the CPUC for failing to anticipate the state’s capacity shortfalls projected to start in 2021. The anticipated shortages “seemed to catch the CPUC by surprise,” he said. (See CAISO, CPUC Warn of ‘Reliability Emergency.’)

It was well known, he said, that coal and natural gas plants were retiring and that solar resources, which begin to go offline during evening peak demand, aren’t yet able to compensate.

California PUC — The California Assembly Utilities and Energy Committee held its annual CPUC review Jan. 22. | *California State Assembly*

“It’s difficult to understand why the CPUC did not appreciate the gravity of the shortfall sooner and take action to mitigate its impact,” the chairman said.

Batjer noted that the commission has required all load-serving entities in California to procure a total of 3,300 MW of new resources on a pro rata basis and recommended some older gas plants remain online through 2023.

The commission is working with CAISO and the California Energy Commission to revise its modeling as the grid is changing, with more wind and solar energy and less electricity to import from other Western states, she said.

“As the system tightens throughout the West due to the retirement of coal- and gas-fired resources, planning assumptions regarding available import of energy and the capacity devoted to California will be tested and will likely need to be continually revised,” she said.

Batjer’s measured, polite responses seemed to mollify Holden and others on the committee, who thanked her for taking on the CPUC presidency, which some described as a thankless task.

Her previous role, as secretary of the Government Operations Agency, was heading a team that came up with ways to reform the Department of Motor Vehicles, notorious for foot-dragging and poor customer service. Her efforts there have been widely praised.

Some lawmakers echoed those sentiments Wednesday.

“I think this was a sterling appointment,” committee Vice Chairman Jim Patterson (R) told Batjer.

January 24, 2020

Feb. Vote Planned on 11th MISO Sector

By Amanda Durish Cook

MISO’s Advisory Committee on Wednesday said it will vote next month on whether to recommend that the RTO’s Board of Directors split up the Environmental and Other Stakeholder Groups sector to afford environmental advocates a singular voice.

The debate about the change originated last June when the Lignite Energy Council (LEC) approached MISO for membership. Not fitting neatly into any one of the RTO’s 10 stakeholder sectors, the LEC was ushered to the Environmental/Other sector.

Some stakeholders have said that MISO should create a catch-all 11th sector titled “Affiliate Members” to broaden the scope of new potential members. Others have countered that members of an additional, miscellaneous sector would run into issues with forming a cohesive voice and settling on MISO member voting issues. Still others maintain that MISO should scrap its requirement that prospective members must designate a sector in order to join the RTO. (See Advisory Committee Considers 11th MISO Sector.)

MISO 11th sector — The MISO Advisory Committee meeting in December | © *RTO Insider*

During a conference call Wednesday, the AC settled on two options. The first would allow LEC to join the Environmental/Other sector on a six-month trial basis, maintaining the status quo. The other would recommend that the board consider creating the Affiliate Members sector.

Under the second option, the standalone Environmental sector would retain its two existing votes, while the Affiliate Member sector would assume no voting rights in either the AC or Planning Advisory Committee. AC and PAC votes are only considered advisory to the board and are not binding for creating RTO policy. The Affiliate Members sector would still be able to vote in stakeholder subcommittees and board member elections and submit comments during the AC’s quarterly hot topic discussions.

‘Inherent Difficulty’

During MISO Board Week in December, Clean Grid Alliance’s Beth Soholt said the Environmental/Other sector was willing to attempt a six-month test period with LEC.

“We’ll find out more once we have an ongoing relationship,” Soholt said at the time. “We don’t think this solves the ongoing problem of what to do if we get more ‘others.’ … We still need to work on the issue longer term. We still don’t know how big the red box is of members that were trying to join but didn’t.”

MISO does not reveal the names of prospective companies and organizations seeking to join and only publicizes membership of those approved by the board.

The origins of MISO’s practice of relegating “Other” members to the Environmental sector are no longer clear. The division of sectors first occurred sometime over 1998-2000, according to longtime stakeholders.

“I think we have a short-term problem here, and we have a long-term problem here,” Soholt said during the call, noting that even if the Environmental/Other sector accepts the LEC into its membership on a temporary basis, the dilemma remains of what to do with other new, hard-to-pin-down members.

“It doesn’t make a lot of sense to put all other members in a sector that has such a clearly defined view. They have a strong, clearly defined sector that has coalesced around an environmental standpoint,” North Dakota Public Service Commissioner Julie Fedorchak said on behalf of the Organization of MISO States. Fedorchak also pointed out that MISO’s environmental groups and the LEC have “diametrically opposed views.”

“These aren’t just idle differences in opinion,” she said.

AC Vice Chair Tia Elliott said it could be that the LEC becomes a “persona non grata” in the Environmental/Other sector.

Some members voiced concern about the committee recommending a new standalone sector for seemingly just one entity and suggested an incubation period where it only proposes the Affiliate Member sector once a certain number of similarly situated affiliate members join MISO.

Multiple members asked how MISO would define “affiliates” for the sector. The Sustainable FERC Project’s John Moore said there’s an “inherent difficulty” in defining the catch-all sector.

“We don’t know who’s going to join,” AC Chair Audrey Penner said. “We only know that the Lignite Energy Council has been the most vocal about it. … I only know that it’ll be a home for those that wouldn’t otherwise have a home in MISO.”

January 24, 2020

PG&E Settles with Bondholders; Governor Objects

By Hudson Sangree

Pacific Gas and Electric said Wednesday it had settled with the bondholders whose competing reorganization plan may have been the biggest threat to the utility having its own Chapter 11 reorganization plan adopted by the U.S. Bankruptcy Court in San Francisco.

The ad hoc committee of senior unsecured noteholders will withdraw its reorganization plan in exchange for PG&E agreeing to refinance billions of dollars in debt on terms generally advantageous to the bondholders, as described in a filing with the U.S. Securities and Exchange Commission on Wednesday. (See Judge Admits Takeover Plan as PG&E Starts Blackouts.)

“Reaching a resolution with the bondholder group is a positive development to move forward with our plan of reorganization,” PG&E CEO Bill Johnson said in a statement.

Johnson noted PG&E’s prior settlements with fire victims, insurance companies and local governments — “and we’ve now reached an agreement with the bondholder group,” he said. “We remain focused on working with key stakeholders, including elected officials and our state regulator, on how PG&E will look, act and be held accountable as we emerge from Chapter 11.” (See Judge OKs PG&E Deals with Fire Victims, Insurers.)

PG&E Settles — Gov. Gavin Newsom | © *RTO Insider*

Even as PG&E won a major victory, however, California Gov. Gavin Newsom filed an objection to PG&E’s reorganization plan with the bankruptcy court, saying it does too little to ensure safe, reliable and affordable service for Californians. Newsom has repeatedly criticized PG&E in recent months, demanding fundamental changes that its Chapter 11 plan doesn’t yet include.

The company filed for bankruptcy last January as it faced an estimated $30 billion in liability after two years of catastrophic wildfires ignited by its equipment. The blazes sparked by PG&E’s aging transmission lines included the Camp Fire, the deadliest and most destructive wildfire in state history, which killed 86 people and burned down the town of Paradise in November 2018.

“PG&E’s historical failures — including decades of mismanagement and inadequate investments in fire safety and fire prevention — require that any plan of reorganization must position the reorganized entity for transformation, include stringent governance and management requirements and enforcement mechanisms, and provide for a capital structure that allows the reorganized entity to undertake critical safety investments,” the governor’s attorneys told the court.

The governor cannot stop federal Judge Dennis Montali from confirming PG&E’s plan, but the California Public Utilities Commission, whose members the governor appoints, must approve any reorganization plan as well. Both the court and CPUC must approve a plan by the end of June if the utility wishes to participate in a $21 billion wildfire insurance fund established under Assembly Bill 1054, a bill Newsom signed in July.

In a Dec. 13 letter to PG&E CEO Bill Johnson, Newsom “made clear that the debtors’ plan, and the restructuring transactions contemplated therein, did not, in his judgment, result in a reorganized utility capable of satisfying the requirements of Assembly Bill 1054,” Newsom’s lawyers told Montali in their filing Wednesday.

Among his demands, Newsom said he wanted more Californians on PG&E’s board of directors. The current board includes out-of-staters such as Johnson, the former head of the Tennessee Valley Authority.

Newsom has repeatedly said, including in his court filing Wednesday, that a state takeover of PG&E remained a possibility if the utility fails to comply with his requirements. (See Newsom Budget Reiterates PG&E Takeover Threat.)

The governor’s attorneys asked Montali to hold off on approving aspects of PG&E’s plan to exit bankruptcy until it meets the requirements of AB 1054, as described by the governor.

The judge postponed a hearing on PG&E’s Chapter 11 plan, originally scheduled for Thursday, until Jan. 29.

January 24, 2020February 19, 2025

McNamee Declines to Seek Reappointment

By Michael Brooks

WASHINGTON — FERC Commissioner Bernard McNamee on Thursday announced he would not seek another term, opening up yet another slot on the commission for the White House and Senate to fill.

Speaking at the commission’s monthly open meeting, McNamee said he would at least complete the remainder of his term, which ends June 30, and serve beyond that date until the Senate confirms a replacement. Legally, if there is no replacement, he is allowed to remain on the commission past the expiration of his term until the end of the current Congress at the end of the year.

FERC Commissioner Bernard McNamee addresses staff in November 2019. | FERC

“I’m not just going to leave on June 30 if there’s no one to replace me … and leave the commission without a quorum,” McNamee told reporters after the meeting.

McNamee lives in a suburb of Richmond, Va., with his wife and 14-year-old son, who will be entering high school next year. But he said he stays in D.C. during the work week, only going home on the weekends because of the commute. “Depending on traffic, it can be either two hours and 15 minutes or it could be five hours,” he said.

“This has been one of the most interesting and rewarding jobs I have ever had,” McNamee said. “And I enjoy the work, the issues, the people; in short, I love this job. But I love my family more.”

He said he has no plans yet on what he will do after he leaves, but “I anticipate I’m still going to be active in addressing important energy issues facing the nation.” He also stressed both during the meeting and to reporters that he will be at the commission for at least five more months. “There’s a lot of work to get done here at the commission between now and the end of my term. I’m going to be fully engaged.”

President Trump nominated McNamee in October 2018, and the Senate confirmed him 50-49 later in December. (See Senate Confirms McNamee to FERC.) He filled a seat left open by Robert Powelson, who departed after only a year to become CEO of the National Association of Water Companies. During his last commission meeting in July 2018, Powelson also cited wanting to spend more time with his family as a reason for his departure. (See FERC Says Farewell to Powelson.)

FERC Chairman Neil Chatterjee told reporters he did not “foresee any change in direction” or reprioritization of work as a result of McNamee’s decision. “It’s entirely possible he could stay here until the end of the year,” Chatterjee said. “I can tell you with complete confidence that, barring some unforeseen incident, we will not lose a quorum this year.”

Trump nominated FERC General Counsel James Danly to be a commissioner last year, but he would fill a seat left open by the death of Commissioner Kevin McIntyre and serve a term to expire in 2023. Though his nomination advanced to the floor, the Senate did not act on it before the end of the year, meaning Trump must resubmit it, which he has yet to do.

“Given today’s announcement, the White House may have been waiting for McNamee to make his announcement to clear the way for nominating Danly to a longer term,” ClearView Energy Partners said. McNamee’s successor would serve a term that ends in 2025.

Regardless of the White House’s plans, Trump’s impeachment trial in the Senate grinds the body’s work to a halt for now.

“Given the beginning of impeachment proceedings in the Senate, we are not expecting any progress on nominations — should they even be made by the White House over the next several weeks — until that process concludes,” ClearView said.

January 24, 2020

FERC Rejects Rehearing on NEPOOL Press Rules

By Rich Heidorn Jr.

FERC on Thursday declined to reconsider two orders upholding New England Power Pool’s gag rule but allowing an RTO Insider reporter to join the organization’s End User sector.

The commission dismissed NEPOOL’s request for rehearing of its January 2019 order rejecting a proposed change to the organization’s rules to prevent members of the press from joining (ER18-2208-002). The commission rebutted NEPOOL’s claim that FERC lacked jurisdiction, saying its membership rules “directly affect commission-jurisdictional rates” because members can vote on market rules.

Separately, the commission also denied Public Citizen’s request for rehearing of its April 2019 ruling rejecting RTO Insider’s complaint seeking to void NEPOOL’s policies prohibiting non-members, including the press and public, from attending stakeholder meetings (EL18-196-001). RTO Insider also had challenged a rule barring the press from reporting on what is said at the meetings.

NEPOOL press rules — New Hampshire Consumer Advocate D. Maurice Kreis turned his photo of Supreme Court Justice Louis Brandeis upside down in protest of FERC’s April 2019 ruling rejecting RTO Insider’s bid to force the New England Power Pool to open its meetings to the public and press. | *D. Maurice Kreis*

Public Citizen said FERC erred in finding that press or public attendance at NEPOOL meetings does not impact votes and therefore cannot impact rates. It also disputed the commission’s opinion on the limits on its authority to regulate RTO governance matters.

“What Public Citizen refers to here are, at best, indirect effects on rates, whereas it is direct effects that create commission jurisdiction,” FERC said.

Commissioner Richard Glick filed a concurring opinion agreeing that the commission lacks jurisdiction but urging NEPOOL to change what he called its “misguided” rules.

“NEPOOL meetings address a broad range of important issues, including, among other things, the reliability of the electric grid, state policies for addressing climate change and the integration of new technologies into the resource mix. The public and, by extension, the press have a legitimate interest in how NEPOOL, the entity charged with administering ISO New England’s stakeholder process, is considering these matters public of interest,” Glick wrote.

“To paraphrase Justice Louis Brandeis, sunlight is the best disinfectant, and it is hard for me to understand how barring public and press scrutiny will further NEPOOL’s mission or, ultimately, its legitimacy as the forum for considering how ISO New England’s actions affect its stakeholders.”

Tyson Slocum, director of Public Citizen’s energy program, said the group will “petition the courts to review this terrible and misinformed FERC order.”

RTO Insider correspondent Michael Kuser, an electric ratepayer in Vermont, has been attending NEPOOL meetings since May 2019, after the group granted him membership. But he remains barred from reporting what is said at meetings and must quote only from posted documents and statements obtained outside the sessions.

January 23, 2020

Western EIM Fills Last Board Vacancy

By Hudson Sangree

The Governing Body of CAISO’s Western Energy Imbalance Market filled the second of two unexpected vacancies Wednesday, selecting Robert Kondziolka, who recently retired after four decades with Arizona’s Salt River Project.

Western EIM Board — Robert Kondziolka | *CAISO*

Kondziolka fills a seat on the five-member board left vacant when Travis Kavulla — a former member of the Montana Public Service Commission and energy director at R Street Institute, a D.C.-based think-tank — announced in August he had to resign from the Governing Body after accepting a job with a market participant. (See EIM Governing Body Gains Member, Loses Another.)

Kavulla joined NRG Energy as vice president for regulatory affairs in September. His three-year term on the EIM Governing Body had 22 months remaining.

Kondziolka will fill out the remainder of that term, starting Feb. 1 and extending through June 30, 2021.

At SRP, Kondziolka held a half-dozen management positions, including director of transmission line design, construction and maintenance, and director of transmission and generation operations. At the time of his retirement he was a management consultant for grid resilience and security.

“Welcome, Rob. We look forward to seeing you soon,” Chair Carl Linvill said at the Governing Body’s meeting at CAISO headquarters in Folsom, Calif.

Kondziolka did not address the meeting.

Randy Howard, general manager of the Northern California Power Agency, served on the nominating committee that selected Kondziolka and presented its recommendation to the four current Governing Body members.

“We had a great set of candidates,” Howard said by phone. He explained that the committee came up with a short list from those who applied for the position or were identified by a search firm. The eight committee members had some trouble reaching a consensus but ultimately settled unanimously on Kondziolka, he said.

The committee said in a memo that it “believes Mr. Kondziolka would ensure the EIM Governing Body’s overall composition continues to reflect appropriate independence requirements and a diversity of experience, expertise and geography, as well as the continued effectiveness of the EIM Governing Body.”

The nominating committee included representatives from eight constituencies — EIM entities, transmission owners, public utilities, state regulators and the CAISO Board of Governors. John Prescott, vice chair of the Governing Body, also served on the committee, calling the nomination process “robust.”

Governing Body members Valerie Fong thanked the committee, saying, “I know these things take a lot of time, and I know that the nominating committee doesn’t take its responsibility lightly.”

The independence and geographic composition of the Governing Body, with representatives from Western states other than California, has been a main concern among participants in the continually growing EIM, which has become the major interstate trading market in the Western Interconnection.

Many from the interior West are wary of taking direction from Californians, but that hasn’t stopped the EIM’s growth. Three Colorado utilities recently announced they would join, as the EIM said its benefits to members had exceeded $800 million in the five years since its inception. (See EIM Lands Xcel, 3 Other Colo. Utilities.)

SPP is hoping to compete with the EIM with its Western Energy Imbalance Service but so far has gained little traction.

The EIM allows participants to trade wholesale electricity in real time across state borders. CAISO is considering expanding it to a day-ahead market.

Another unexpected vacancy on the Governing Body was filled in August, when the remaining three members picked Anita Decker as a colleague.

Decker, a Pacific Northwest industry veteran, filled the seat left vacant in April when Kristine Schmidt, the Governing Body’s inaugural chair, left to join the board of embattled PG&E Corp. (See PG&E Departure Leaves EIM Vacancy.)

January 23, 2020

PSO Officially Retires Oklaunion Coal Plant

Public Service Company of Oklahoma formally notified ERCOT on Tuesday that it will retire the coal-fired Oklaunion Power Station in the Texas Panhandle.

PSO filed a notification of suspension of operations for the plant, effective Oct. 1. Market participants have until Feb. 11 to file comments before the grid operator makes a final decision.

American Electric Power, PSO’s parent company and the plant’s operator and majority owner, said in September 2018 that it planned to shut down Oklaunion by October 2020 over concerns that the plant’s production costs were no longer competitive. (See AEP Announces Closure of Oklaunion Coal Plant.)

The 34-year-old, 650-MW plant’s ownership is split among utilities in both ERCOT and SPP. AEP Texas owns a 54.69% interest in the plant. The other owners are the Brownsville Public Utilities Board (17.97%) in South Texas, PSO (15.62%) and the Oklahoma Municipal Power Authority (11.72%).

The retirement leaves ERCOT with 22 operational coal units, accounting for the mothballing of CPS Energy’s two J.T. Deeley units, which have 871 MW of capacity. ERCOT has lost almost 6 GW of coal-fired generation since 2017. (See CPS Energy Shutters Deely Coal-fired Unit.)

— Tom Kleckner

January 23, 2020

SPP Planning Approach to Battery Storage

By Tom Kleckner

SANTA FE, N.M. — SPP and its stakeholders have begun to grapple with the complex issue of how to use battery storage, but they must first determine who will guide the process moving forward.

Meeting Jan. 15, the Strategic Planning Committee heard from some members who wanted to create a task force and others who pushed for a steering committee.

Larry Altenbaumer, chair of both the Board of Directors and SPC, posited that SPP should take a strategic approach to the issue. He suggested the SPC again take up the subject at its April meeting in Little Rock, Ark.

“It sounds like a really good idea that we need to work out,” Altenbaumer said.

SPP battery storage — Members of the Strategic Planning Committee listen to SPP’s Casey Cathey (far right). | © *RTO Insider*

SPP Senior Vice President of Engineering Lanny Nickell agreed that the decision should be a strategic one. “What degree does SPP want to invest in the growth of batteries?” he asked. “Once we know that vision about storage, that will help guide what we know about batteries.”

“Someone has to take on a big-picture view of this thing, to get the discussion going and organize it,” Midwest Energy’s Bill Dowling said. “We have to do some of this up front in an organized fashion. We have to organize this herd of cats.”

SPP is working to get up to speed on FERC Rules to Boost Storage Role in Markets.)

FERC in October found that SPP’s first response “generally enable[s] electric storage resources to provide all services they are capable of providing.” However, it also required the RTO to adopt Tariff rules covering minimum run-time requirements for resource adequacy. (See FERC Partially OKs PJM, SPP Order 841 Filings.)

“Energy storage has the potential to change the way this industry operates,” said Richard Dillon, SPP’s market policy technical director. “Until now, energy had to be generated immediately. Energy storage changes that paradigm.

“But Order 841 removes barriers to ESR participation. That can be too much of a good thing. It responds so fast that the rest of the system can’t keep up with it,” he said.

Dillon presented a white paper on energy storage to the Markets and Operations Policy Committee at its Jan. 15 meeting. He returned that afternoon to discuss the paper with the SPC.

The paper lists energy storage’s benefits as its flexibility and ability to inject or receive energy; its instantaneous response to grid events; its ability to balance supply and demand; and its potential as an economic market resource and an economic alternative to traditional transmission.

It says SPP should capitalize on ESRs’ flexibility, maximize their reliability and economic benefits, develop cost-recovery for ESRs, and resolve issues on whether they’re used as generation and/or transmission assets.

“We have a great asset coming into our region and we don’t want to limit it,” Dillon said.

Dillon said ESRs’ decreasing costs — an 87% drop in real terms from 2010 to $156/kWh last year, according to Bloomberg New Energy Finance — and recent tax law changes have significantly increased requests to interconnect the resources to the grid. SPP’s generator interconnection queue contained less than 1 GW of ESRs in 2016. By mid-2019, ESR requests had expanded to nearly 7 GW.

The white paper makes several recommendations that touch six different working groups and SPP’s Market Monitoring Unit.

Southern Power’s Tim Hall suggested SPP take a page from ERCOT Technical Advisory Comm. Briefs: Sept. 25, 2019.)

Betsy Beck, with Enel Green Power NA, agreed with Hall. She said ERCOT felt things were moving too slowly and changed its approach.

“They put everything in. They’re moving really, really quickly to resolve these issues. It’s worked extremely well,” Beck said. “We need storage to come on and provide the maximum flexibility for ramping issues we’re seeing on the operational side.”

January 23, 2020

PJM Industrials Challenge MOPR for Voluntary RECs

By Christen Smith

PJM industrial customers said Tuesday that voluntarily buying and selling renewable energy credits shouldn’t count as subsidies in the RTO’s capacity market, urging FERC to reconsider its broad definition of the word to exclude those transactions (EL16-49, EL18-178).

FERC, in its Dec. 19 ruling expanding PJM’s minimum offer price rule to all resources, said distinguishing between RECs mandated through state renewable portfolio standards and those bought as part of power purchase agreements is impossible. The new MOPR, meant to address price suppression from state subsidies, has drawn criticism from a broad section of stakeholders who say FERC went too far in attempting to control states’ generation choices. (See related story, PJM MOPR Rehearing Requests Pour into FERC.)

Both the RTO and the PJM Industrial Customer Coalition (ICC) note that if resources can certify that all the RECs it sold were voluntary — rather than within the confines of state-sponsored RPS programs — then those resources should be exempt from the MOPR. At the very least, PJM argued in its rehearing request, FERC should have adopted a “safe harbor” for voluntary REC transactions.

The ICC was joined in its rehearing request by the Illinois Industrial Energy Consumers, the Electricity Consumers Resource Council (ELCON), the Industrial Energy Consumers of America, the Pennsylvania Energy Consumer Alliance, the Industrial Energy Consumers of Pennsylvania and the American Forest and Paper Association.

PJM MOPR — Hershey’s original, now demolished chocolate factory in Hershey, Pa., in 1976. The company was one of many industrial market participants protesting FERC’s MOPR ruling.

In their filing, the groups said they share FERC’s goal “of ensuring just and reasonable prices in both the short-term and the long-term through proper and sustainable operation of the PJM capacity market” and appreciate that the “order conveys a clear signal that states’ efforts to subsidize capacity resources will not be permitted to interfere with the efficient functioning of the PJM capacity market.”

But the ruling, they said, does not “enable its practical implementation without unlawfully upsetting existing commercial arrangements and market dynamics.”

“In a voluntary REC transaction, the RECs are not needed or used by the retail customer or its load-serving entity for state RPS compliance,” the groups said. “Because there is no nexus between the customer’s load and any state RPS, the generating resource does not obtain any state subsidy from its sale of the RECs.”

Hershey, the famed chocolate company, also filed a motion to intervene in the proceedings Tuesday upon learning that its pending PPAs that include voluntary REC transactions would be subject to the MOPR. The agreements were designed to help Hershey meet its greenhouse gas emission-reductions goals in line with the Science-Based Targets Initiative. The company said in its filing that FERC’s decision has “effectively stalled Hershey’s project and impeded its ability to meet Hershey’s environmental goals and the expectations set by the company’s consumers and investors.”

ELCON, in a separate filing it made against the MOPR, reiterated that such contracts should not be subjected to the new price floors.

“In particular, private capital that pursues voluntary capacity contracts in bilateral markets should not face administrative corrections,” the group said. “For example, corporate consumers are increasingly deploying their own capital to voluntarily purchase power through the bilateral market or procure renewable energy credits, which do not constitute subsidies. Voluntary payments received outside of the capacity market should receive categorical exclusion.”