Page 1342 – RTO Insider

August 17, 2018

Line Opponents Set Sights on PJM in Public Campaign

By Rory D. Sweeney

PJM may soon have to choose between continuing to greenlight its “largest-ever” congestion-reducing transmission project or risking a public relations war with opponents of the project who live in its proposed pathway and have gained influential allies in their fight to have it shelved.

The $340.6 million project proposed by Transource Energy would consist of two separate 230-kV double-circuit lines, totaling about 42 miles, across the Maryland-Pennsylvania border — one between the Ringgold substation in Washington County, Md., and a new Rice substation in Franklin County, Pa.; and another between the Conastone substation in Harford County, Md., and a new Furnace Run substation in York County, Pa.

PJM and regulatory filings refer to the project as “9a,” while Transource has dubbed it the Independence Energy Connection.

PJM Transource Independence Energy Connection — Once referred to as the AP South Congestion Improvement Project, Transource’s Independence Energy Connection project would consist of two lines. The western portion would run from the Ringgold substation in Maryland to the Rice substation in Pennsylvania. The eastern line would run from the Conastone station in Maryland to the Furnace Run station in Pennsylvania. | *Transource*

“Until now, landowners have considered Transource to be their opponent, but unless PJM soon exercises its right to withdraw the project, we will hold PJM responsible,” wrote the opponents — consisting of three landowner groups in Harford, York and Franklin counties — in a June 30 letter to the RTO’s Board of Managers.

“PJM will become the target of our media outreach, our legislative efforts and, potentially, our legal efforts as we hold PJM responsible for the tremendous costs incurred by landowners who will ultimately emerge victorious,” the letter warned. “Further PJM support of this project will be viewed as an abuse of process.”

Project 9a

PJM selected Transource’s market efficiency proposal in August 2016 to reduce congestion along the RTO’s AP South interface. As part of PJM’s implementation of FERC Order 1000, the congested interface was included in its inaugural window for proposing such projects and received the most attention, attracting seven of the 17 total proposals submitted. (See AP South, Cleveland Draw Congestion Relief Proposals.)

At the time, PJM CEO Andy Ott called it “PJM’s largest-ever market efficiency project,” projecting it would save ratepayers $622 million in congestion costs over 15 years. The eastern portion would relieve the Graceton-Conastone 230-kV line, which was the most congested line in PJM’s 2016 long-term analysis. Its congestion costs in 2017 were $51.8 million and were expected to rise over the next 10 years to $68.88 million in 2027.

Another line leading into Graceton, the 230-kV Bagley-Graceton, was third on the list with $23.59 million in 2017 congestion costs and estimates of $59.57 million in 2027. A third line in the area, the 500-kV Peach Bottom-Conastone, was second on the current list with $32.78 million in congestion costs, which are expected to drop precipitously to $1.9 million in 2027.

FERC approved a formula rate for the project in January 2017 and a settlement this January on Transource’s return on equity, but it refused to reconsider whether the company should be allowed to make single-issue rate filings or recover all costs if the project is canceled through no fault of the company.

Transource received permission, starting on Jan. 31, 2017, to recover all “prudently incurred costs” if it must abandon the project for reasons “beyond Transource’s control.” All costs prior to that are subject to a cost-sharing policy FERC ordered in Opinion 295, through which Transource could recover 50% (ER17-419).

‘Do the Right Thing’

But opposition has developed among residents who live around the proposed paths, and they have orchestrated an awareness campaign that netted support from high-level elected officials on both sides of the state border. U.S. Rep. Scott Perry (R-Pa.) wrote a letter to FERC in March, calling on the commission to reconsider whether Order 1000 “puts impacted private citizens at a distinct disadvantage” in opposing projects. FERC Chairman Kevin McIntyre responded in April, outlining how projects are selected through Order 1000’s competitive solicitation process and assuring Perry that PJM re-evaluates its decisions annually.

Maryland Gov. Larry Hogan wrote to PJM’s Board of Managers on July 10 to “express concerns” that “the project will take prime agricultural land out of production, including land that is in permanent agricultural easements.” He sympathized with “the need to reduce power congestion in Maryland” but requested that the project be halted pending a re-evaluation or rerouting using existing rights of way, along with greater engagement with residents and state agricultural and energy agencies.

PJM says it never received Hogan’s letter.

“We have no record of receiving it,” PJM spokesperson Susan Buehler told RTO Insider in an email.

But the PJM board did receive the letter from opponents, who mentioned McIntyre’s “favorable response” and called for the project to be removed from the Regional Transmission Expansion Plan because the benefits have dropped substantially since the RTO last analyzed it.

“While we understand that PJM feels a responsibility to Transource to allow them to fail gracefully at the state level after a protracted review, the facts demand that PJM cancel this project immediately,” they wrote.

The opponents argued that near-universal local opposition and unknown environmental impacts should induce staff “to use your professional and moral judgment to do the right thing.”

Citing testimony from PJM’s Paul McGlynn to the Maryland Office of People’s Counsel (OPC), they argued system changes since last year’s annual analysis have reduced the potential benefits while costs have likely risen. The reference was to a data request from the OPC to PJM as part of the Maryland Public Service Commission’s review of Transource’s application for a certificate of public convenience and necessity for the project. In a portion of the data request provided to RTO Insider by the opposition, McGlynn appears to indicate that the congestion savings have fallen from the $620 million expected when the project was approved to $245.75 million in the most recent analysis.

However, that number is not a direct input in PJM’s analysis of such projects. That analysis, which was performed last September and posted in January, still produced a benefit-to-cost ratio of 1.32, exceeding PJM’s 1.25 threshold for considering a proposal. PJM was unable to independently verify the document cited by the opposition but confirmed that the information McGlynn would have used came from the analysis that resulted in the 1.32 benefit-cost ratio. Any changes in the variables will be included in the next analysis coming in September.

“PJM is currently conducting a third evaluation of the project, and we are using up-to-date data in doing so,” PJM spokesperson Jeff Shields said in an emailed statement. “In the past, the PJM board has canceled several major transmission projects in the region — including the [Mid-Atlantic Power Pathway] and [Potomac-Appalachian Transmission Highline] projects in 2012 — as a result of such re-evaluations.”

Impact on the Ground

The opposition argues that PJM does not give enough consideration to utilizing existing infrastructure. They point out that PPL’s existing Conastone-Otter Creek 230-kV line, which largely mirrors the proposal’s eastern path, has capacity to run another line.

PJM confirmed that PPL offered a proposal among the 41 submitted to address the AP South interface congestion, but its benefit-cost ratio did not meet the 1.25 threshold. A PPL representative said the company’s proposal “involved adding equipment to an existing substation.”

[Editor’s Note: An earlier version of this article incorrectly reported, based on information provided by PJM, that PPL had not submitted a proposal.]

Because it’s PJM’s largest market-efficiency project, “they want it to go through at any cost to land owners and local communities,” said Patti Hankins of Harford County, who joined the opposition in 2017 after learning property belonging to her husband’s cousin would be impacted.

Opponents are also concerned about the safety of high-voltage lines and the potential impact on destination agriculture, such as Shaw’s Orchard Farm Market in White Hall, Md., and other farm-to-table operations. New construction should be the last resort, they argue.

“The impact on the ground is so significant that there should be no new construction until it’s absolutely necessary,” said Aimee O’Neill, a Maryland resident and president of grassroots group Stop Transource Powerlines MD, a signatory to the opposition letter.

Political Action

O’Neill has been lobbying state legislators to pass five bills that would require developers to use existing transmission infrastructure where possible before building new. Opponents of the bills, which O’Neill hopes will be reintroduced in the legislature’s 2019 session following mid-term elections, argue that state regulatory oversight is satisfactory and that such laws would significantly upset plans to replace much of the regional grid that is nearing the end of its usable life.

“Maryland is not prepared to protect the interests of the people in the face of a changing energy environment,” O’Neill said. “There’s really nothing wrong with requiring those upgrades to be completed in existing easements with existing equipment, and what we’ve learned is that unless there is legislation requiring that … people [opposing new projects] are doomed to go through this time and again.”

Every property owner along the proposed routes has objected to the project, so Transource will need eminent domain authority to take them, O’Neill said. The company is currently working through permitting and eminent domain proceedings with regulators in both states.

A Transource representative said the company would not a comment on the opponents’ letter because it is directed to PJM.

August 16, 2018

FERC OKs MISO Storage Filing; Rejects IPL Rehearing

By Rich Heidorn Jr.

FERC on Wednesday accepted MISO’s compliance filing spelling out rules for its new energy storage category, rejecting a protest and rehearing request by Indianapolis Power & Light (ER17-1376-002, ER17-1376-003).

MISO was responding to FERC’s March 23 ruling approving the creation of a Stored Energy Resource Type II that ordered the RTO to flesh out the concept further. MISO proposed the new storage category last year following IPL’s complaint against the RTO’s existing storage participation rules. (See FERC OKs MISO Plan to Expand Storage.)

SER–Type II FERC MISO energy storage IPL — IPL Harding Street Station battery interior | *IPL*

In its compliance filing, MISO revised the definition of SER-Type II resources to clarify that they are eligible for up/down ramp capability if technically capable.

It also said that SER-Type II resources will be subject to the same must-offer obligation that applies to other capacity resources. MISO said it would be expensive and time-consuming to redesign its day-ahead market software to exclude such resources from the must-offer obligation. However, MISO also revised its Tariff to allow the storage facilities to derate their capacity to limit their supply to four hours.

The filing also revised the definition of station power to exclude the energy used to charge an SER-Type II resource.

In Wednesday’s ruling, FERC said MISO’s filing was largely responsive to the March order, although it agreed with IPL that Tariff changes regarding up/down ramp capability are incomplete and ordered the RTO to add additional Tariff language.

The commission rejected IPL’s protest of MISO’s proposal to apply the must-offer rules to SER–Type II resources that provide capacity. But it noted that Order 841 required each RTO/ISO to demonstrate that its existing market rules allow storage resources to provide capacity in a way that acknowledges their limitations.

“Therefore, while we accept MISO’s clarification that its must-offer rules apply to SER–Type II resources, we note that MISO still has a compliance obligation under Order No. 841 to demonstrate how its capacity market acknowledges the energy limitations of electric storage resources,” the commission said.

The commission also rejected IPL’s request for rehearing, saying it had addressed the company’s arguments in both the March 2018 order and a February 2017 ruling. “Indianapolis Power does not raise any issues in its rehearing request challenging the commission’s conditional acceptance of MISO’s compliance filing that are new to this proceeding or that Indianapolis Power had not raised earlier,” FERC said.

August 15, 2018

NEPOOL Files Press Ban with FERC

The New England Power Pool filed a proposal with FERC on Monday to codify its unwritten ban on press attendance at stakeholder meetings (ER18-2208).

The proposed amendments to the NEPOOL Agreement add a definition of “press” and bar anyone working as a journalist from becoming a NEPOOL member or alternate for a participant.

NEPOOL ISO-NE FERC stakeholder meetings — NEPOOL’s 2017 Annual Report included a photo of a stakeholder meeting. Of the seven RTOs and ISOs in the U.S., only New England’s bars the press and public from attending. | *NEPOOL*

New England is the only one of the seven U.S. regions served by RTOs or ISOs that prevents press coverage of stakeholder meetings.

NEPOOL’s Participants Committee approved the press ban June 26 with 79% in favor in a sector-weighted vote. An alternative proposal that would have made the press eligible for a non-voting membership failed with only 27% in support, with only the end-user sector strongly in support. (See NEPOOL Votes for Press Ban, Discusses Fuel Security.)

RTO Insider prompted the vote by having reporter Michael Kuser, who lives in Vermont, apply for committee membership as an end-user customer in March. NEPOOL has not acted on the application.

NEPOOL’s filing says that permitting press to become a participant or to represent a participant “would adversely impact NEPOOL’s ability to continue to foster candid discussions and negotiations in its stakeholder meetings. Without such discussions and negotiations among its members, ISO New England Inc. and state officials, NEPOOL would be limited in its ability to narrow or resolve complex issues within the NEPOOL stakeholder process. This could have the effect of increasing the issues and scope of litigation at the commission on ISO-NE Tariff changes and related matters before it.”

It cited concerns that press attendance at meetings “could encourage public posturing, pre-scripted statements and reduced willingness or ability by members to freely explore ideas or solutions.”

The filing notes that FERC ruled in a 2001 order that the NEPOOL Agreement is not a FERC tariff but “a supporting document … [and the] equivalent of a utility’s Articles of Incorporation.”

While it relieved NEPOOL of filing the agreement in tariff form, the commission said the organization must continue to file proposed changes to the agreement with the commission. “The commission will continue to review the proposed changes that fall within its authority under the [Federal Power Act],” the commission said.

NEPOOL said the commission is in “‘an essentially passive and reactive’ role’” and can only reject the filing if it finds the changes not “just and reasonable.”

“Thus, if the commission determines that a provision that precludes press from becoming a NEPOOL participant or participant representative falls within its authority, it can only reject that provision if it concludes that the changes are unlawful,” it said. “The commission’s review does not extend to the question of whether there are other reasonable approaches to the press membership issue.”

NEPOOL requested the change take effect Nov. 1.

RTO Insider began covering PJM stakeholder meetings in early 2013 and expanded coverage to stakeholder meetings of MISO and NYISO in late 2014, SPP in early 2015, and ERCOT and CAISO in 2016. RTO Insider also began covering ISO-NE in late 2014 but has been barred from all stakeholder meetings except for the Planning Advisory Committee, which is run by the RTO.

— Rich Heidorn Jr.

August 15, 2018

NYISO Business Issues Committee Briefs: Aug. 13, 2018

RENSSELAER, N.Y. — NYISO’s Business Issues Committee voted Monday to approve a revised charter for the state’s Integrating Public Policy Task Force (IPPTF), the group exploring how to incorporate the cost of CO₂ emissions into the ISO’s markets.

business issues committee nyiso bic carbon dioxide emissions ipptf — DeSocio | © *RTO Insider*

Michael DeSocio, NYISO senior manager for market design, highlighted a single sentence added to clarify the task force’s mission: “Incorporating the cost of carbon dioxide into the wholesale energy markets is intended to provide the most efficient means to incentivize carbon abatement from a broad set of electric suppliers, supporting the state’s clean energy policies to reduce electric sector carbon dioxide emissions while continuing to leverage market forces to provide affordable, reliable electricity.”

The IPPTF is being run by NYISO after initially being set up in collaboration with the state’s Department of Public Service. The group next meets at ISO headquarters Aug. 20.

Broader Regional Markets Report

Staff continue work on clarifying the minimum deliverability requirements for external capacity from PJM into NYISO’s Installed Capacity (ICAP) market, Nicole Bouchez, ISO principal economist, highlighted from the monthly Broader Regional Markets report.

At the July 31 Installed Capacity/Market Issues Working Group meeting, the ISO presented its proposed market design to improve the supplemental resource evaluation process for external capacity resources. It will communicate next steps after evaluating stakeholder feedback.

In related matters, Bouchez highlighted that the Independent Power Producers of New York last month filed a complaint asking FERC to direct the ISO to disallow PJM resources from selling ICAP into New York City (Zone J) using certain unforced capacity deliverability rights (UDR) facilities.

Public Service Electric and Gas in May had filed a complaint against Consolidated Edison concerning two transmission lines, B3402 Hudson-to-Farragut (B line) and C3403 Marion-to-Farragut (C line). PSE&G alleged that underwater portions of the lines may have been permanently damaged and should be removed.

On June 6, the ISO filed a protest with FERC indicating that removal of the B and C lines would undermine resilience in both New Jersey and New York and requested that PSE&G’s complaint be denied.

Sub-20-MW Constraint Reliability Margin Values

The BIC approved the ISO’s proposal to apply a sub-20-MW constraint reliability margin (CRM) value to certain facilities where warranted. A CRM is a portion of a transmission facility’s capacity kept in reserve to help meet NERC and other reliability standards. A few facilities use the normal 20-MW CRM under most conditions but also use a larger CRM during periods of higher load, such as the Gowanus Substation in Brooklyn.

David Edelson, manager for operations performance and analysis, said the ISO would base its determination to use a sub-20-MW CRM mainly on the desire to keep CRM values at a level representing no more than 10% of a facility’s rating.

NYISO’s Tariff currently requires use of a minimum value of at least 20 MW for any non-zero CRM value employed in the day-ahead and real-time markets. As the ISO continues to consider inclusion of certain 115-kV facilities with lower thermal ratings (relative to 230-kV and higher facilities) into its dispatch, a 20-MW CRM can often represent a significant percentage of the facility limits.

For instance, many 115-kV facilities have post-contingency limits of 150 MW or lower. A 20-MW CRM represents 13% of the rating for a 150-MW facility.

In megawatt terms, a facility with a 150-MW rating and a 20-MW CRM would be secured in the dispatch using a 130-MW limit. By comparison, a typical 345-kV circuit has a 1,550-MW post-contingency rating with a 20-MW CRM representing only about 1% of the rating.

The ISO will seek Management Committee approval at its next meeting Aug. 29, and by the ISO’s Board of Directors during a special call on the issue in early September, with a FERC filing targeted for the middle of next month.

T&D Manual Revisions

The BIC voted to approve incorporating into the ISO’s Transmission and Dispatching Operations Manual (T&D Manual) an existing technical bulletin on the procedures transmission owners must use to secure their facilities into the Business Management System (BMS) day-ahead and real-time market models.

The information would be located in a new section in the manual and would not substantively differ from the existing guidelines, said Ethan D. Avallone, senior market design specialist.

The committee also approved proposed revisions to Section 3.1.3 of the T&D Manual, specifying that the New York Control Area reserve is monitored through the use of the Reserve Monitor Program; and to Section 4.2.11, regarding procedures when a transmission owner or the Northeast Power Coordinating Council observes or reports significant geomagnetically induced currents.

Distillate Prices Up 40% Y-o-Y

NYISO locational based marginal prices (LBMP) averaged $39.58/MWh in July, up nearly 18% from June and 10% higher than the same month a year ago, Bouchez told the BIC.

Year-to-date monthly energy prices averaged $46.64/MWh in July, a 28% increase a year ago. July’s average sendout was 529 GWh/day, higher than 445 GWh/day in May and 454 GWh/day a year earlier.

Transco Z6 hub natural gas prices averaged $2.87/MMBtu, up about 17% from both June and a year earlier. Distillate prices dropped slightly compared to the previous month but were up 40% year-over-year. Jet Kerosene Gulf Coast and Ultra Low Sulfur No. 2 Diesel NY Harbor averaged $15.05/MMBtu and $14.81/MMBtu, respectively.

Total uplift costs and uplift per megawatt-hour dropped from June, but the ISO’s 44-cent/MWh local reliability share in June came in higher than the previous month’s 18 cents/MWh, while the statewide share dropped from 12cents /MWh to -57 cents/MWh. Thunderstorm alerts (TSAs) accounted for 21 cents/MWh for the month, down from 39 cents/MWh in June. TSAs occur when actual or anticipated severe weather conditions lead the ISO to reduce transmission transfer limits on the UPNY-SENY interface, which often leads to severe congestion.

— Michael Kuser

August 14, 2018

PJM Seeks to Delay 2019 Capacity Auction to August

PJM last week asked FERC to delay next year’s Base Residual Auction to Aug. 14 to provide the RTO more time to respond to the commission’s June 29 order requiring changes to capacity market rules.

The commission ordered PJM to expand its minimum offer price rule (MOPR), which now covers only new gas-fired units, to all new and existing capacity receiving out-of-market payments. The commission’s ruling, which rejected PJM’s April “jump ball” capacity filing (ER18-1314) and partially granted a 2016 complaint led by Calpine (EL16-49), initiated a Section 206 proceeding in a new docket (EL18-178). (See FERC Orders PJM Capacity Market Revamp.)

PJM FERC BRA Base Residual Auction Capacity Market — | *123RF*

PJM requested the delay in an Aug. 9 filing supporting the Organization of PJM States Inc.’s (OPSI) motion to extend to Oct. 11 the deadline for filing testimony, evidence or arguments in response to the FERC order (EL16-49, et al.).

The RTO asked the commission to issue an initial order directing a compliance filing by Jan. 15 and a final order on compliance by March 15. “This proposed schedule will provide PJM and capacity market sellers with approximately five months to undertake the Tariff imposed obligations in advance of the delayed BRA,” PJM said.

PJM, OPSI and more than a dozen other parties also have requested rehearing of the commission’s ruling, including industrial customers, the American Public Power Association, Exelon, Old Dominion Electric Cooperative, Dominion Energy, FirstEnergy Services, and regulators from Illinois, New Jersey and Maryland.

— Rich Heidorn Jr.

August 13, 2018

PJM Market Implementation Committee Briefs: Aug. 8, 2018

VALLEY FORGE, Pa. — Stakeholders at last week’s Market Implementation Committee meeting overwhelmingly endorsed PJM’s proposal for revising how it calculates balancing ratios while also rejecting several competing proposals.

PJM’s proposal received 0.88 in favor, surpassing a 0.5 threshold in the sector-weighted vote. Stakeholders also preferred it to the status quo, voting 0.69 in favor of the new proposal.

pjm balancing ratio — The PJM Market Implementation Committee met on August 8, 2018 | © *RTO Insider*

The proposal, known as Package A, would calculate the balancing ratio used in the default market seller offer cap (MSOC) and nonperformance charge rate (PPR) formulas by averaging the balancing ratios from the three delivery years that immediately preceded the capacity auction. For years that don’t have at least 30 hours of performance assessment intervals (PAIs), the actual number of PAIs would be supplemented with estimated balancing ratios calculated during the intervals of the highest RTO peak loads that do not overlap a PAI. PAIs are five minutes apiece.

Some stakeholders like the proposal because it is straightforward and maintains the same number of PAIs used in either the MSOC or the PPR. However, others argue the calculation overestimates the likely number of PAIs, which leads to an artificially high MSOC. Such conditions led Independent Market Monitor Joe Bowring to conclude last week that the clearing prices in May’s Base Residual Auction were higher than they should have been. (See related story, IMM: PJM 2018 Capacity Auction was ‘Not Competitive’.)

“This all turns on your belief that 30 hours is a reasonable number [for PAIs]. I don’t believe that. … I would say it’s pretty clearly not a reasonable number,” Bowring said.

“We don’t have any technology that can solve that problem [of accurately predicting the number of PAIs], so we’re left with what is a reasonable number to put in there,” PJM’s Adam Keech said.

“The 30 hours is definitely an issue for the consumer advocate offices I’ve talked to,” said Greg Poulos, executive director of the Consumer Advocates of the PJM States.

Stakeholders have been debating the issue for months. (See “Balancing Ratio,” PJM Market Implementation Committee Briefs: July 11, 2018.)

PJM’s Pat Bruno announced that staff planned to abandon a second proposal, Package B, unless a stakeholder offered to sponsor it. Dave Mabry, representing the PJM Industrial Customer Coalition, agreed to do so. The proposal would calculate the balancing ratio in the same manner as Package A but would also estimate an expected number of PAIs for the delivery year using data from the prior three years. That estimate would be inserted into the MSOC and PPR formulas.

Each formula would include a floor of PAIs, but they would differ: five hours for the MSOC and 15 hours for the PPR. That difference concerns stakeholders, who argue the numbers need to be the same for the formulas to maintain their mathematical relationship.

“We don’t share PJM’s thoughts that they have some problems at FERC with the” formulas, Mabry said in sponsoring the proposal. American Municipal Power’s Steve Lieberman seconded it, and it received 0.09 in favor.

Additional proposals from Exelon and Calpine differed with PJM on the PAI calculations for the formulas. Calpine’s would floor both at 10 hours and calculate a number based on the past 10 years of data. Exelon’s would use a probabilistic model to look forward. Both would keep constant the number of PAIs used in the two formulas.

“We think it’s illogical to have different assumptions for those calculations,” Exelon’s Jason Barker said.

“The heart of our proposal was to get the expected amount of performance assessment [intervals] to match. It didn’t make sense to us [to have them not match], and I don’t think it would make sense to FERC,” Calpine’s David “Scarp” Scarpignato said.

Scarp withdrew his proposal in favor of PJM’s Package A. Exelon’s received 0.36 in favor.

“I am more in favor of fixing the immediate problem of the” balancing ratio, Scarp said.

“You can’t fix [the balancing ratio] without addressing the problem on a consistent basis,” Bowring said.

A proposal from the Monitor, which mirrored Package B except that it had floors of just five hours for either formula, received 0.02 in favor.

Quadrennial Review of VRR Curve

Stakeholders endorsed a proposal from Scarp on revisions for PJM’s quadrennial review of the variable resource requirement (VRR) curve in its Reliability Pricing Model capacity market construct. Several other proposals, including one endorsed by PJM, were rejected by stakeholders.

Despite the result, all four proposals will be up for consideration at the August meeting of the Markets and Reliability Committee meeting. Stakeholders had made that request long before the vote in an attempt to overcome the influence of companies with multiple affiliates, which can each vote separately at lower committees.

Scarp’s proposal largely mirrored PJM’s, except that it maintains the current combustion turbine configuration as the curve’s reference technology; the RTO had planned to change it to a newer model. It also maintained the curve’s current calculation, while PJM and the other two proposals would have shifted it 1% left. The shift was part of revisions recommended by the Brattle Group, who were hired by PJM to analyze the curve. (See “VRR Curve Update,” PJM Market Implementation Committee Briefs: July 11, 2018.)

PJM’s proposal received 0.39 in favor.

A proposal from the Monitor agreed with PJM on updating the reference technology, but it differed on several other factors. That proposal received 0.1 in favor.

A proposal from the D.C. Office of the People’s Counsel sought to use a combined cycle unit for the reference technology and otherwise largely mirrored the Monitor’s proposal. It received 0.1 in favor, as well.

Fuel Cost Policy

John Rohrbach of ACES, representing the Southern Maryland Electric Cooperative, presented a proposed problem statement and issue charge to review the first year’s performance of the new fuel-cost policy rules and determine if any improvements can be made.

The proposal was also endorsed by Old Dominion Electric Cooperative and Panda Power Funds. The group hopes to have any potential revisions to the current policy identified by April 19 to target a June filing at FERC. Any potential alternatives to the current policy that are identified would need to be ready for consideration by the fall to target a FERC filing in the fourth quarter.

Transmission Constraint Penalty Factor

PJM and its Monitor have developed a joint proposal to revise how the transmission constraint penalty factor is utilized. PJM’s Angelo Marcino explained that the current process uses “constraint relaxation” so that the penalty factor doesn’t set shadow prices. This “masks” transmission shortages in the market. The proposal would remove constraint relaxation and allow the $2,000/MWh penalty factor to set prices as appropriate.

The proposal received so little reaction that PJM suggested canceling the next meeting of the group overseeing the issue, which stakeholders approved.

After the meeting, PJM posted online an analysis from the Monitor on the potential impact of the proposed revisions. The Monitor found that in 2017 the revisions would have increased the balancing market in the aggregate by $10 million.

— Rory D. Sweeney

August 13, 2018

PUCT Continues Review of Potential Market Improvements

Texas regulators last week issued requests for comments on real-time co-optimization (RTC) and incorporating marginal losses into dispatch decisions, proposals that have varying levels of stakeholder support.

On June 29, ERCOT’s Independent Market Monitor filed a report at the Public Utility Commission indicating RTC could have saved as much as $257 million in reduced congestion costs and $155 million in reduced ancillary service costs during the 2017 test year.

IMM Director Beth Garza told ERCOT’s Board of Directors on Aug. 7 that a significant cost of providing operating reserves is the lost opportunity cost of providing energy.

“The cost of containing those reserves, setting them aside, is the lost opportunity of selling that energy,” Garza said. “When initially selected in the day-ahead market, the costs of providing both energy and reserves are minimized. That is, co-optimized.”

During their Aug. 9 open meeting, the commissioners approved a set of questions as part of its review of RTC (Project No. 48540). They also approved a second group of questions related to incorporating marginal losses’ costs into dispatch (Project No. 48539).

erccot puct real time co optimization rtc — Commissioners (left to right) Shelly Botkin, DeAnn Walker and Arthur D’Andrea discuss market improvements during the PUCT open meeting. | *Admin Monitor*

A second report, filed by ERCOT, found the grid operator would benefit from RTC through its more efficient procurement of ancillary services and congestion management, and reduced reliability unit commitments.

The IMM and ERCOT will host a technical workshop on the two filed reports Sept. 6.

The PUC held a pair of workshops last year following a report coauthored by Harvard University’s William Hogan and FTI Consulting’s Susan Pope that recommended rule changes to address intermittent renewables and add incentives for generators. (See ERCOT, Regulators Discuss Need for Pricing Rule Changes.)

The PUC also published a list of questions on the review and approval of substations. It has scheduled an Oct. 4 workshop on the subject (Project No. 48251).

Commissioners Approve Tweaks to Retail Website

The commissioners approved staff’s suggested recommended changes to the PUC’s Power to Choose website, where consumers in Texas’ competitive areas can shop for electricity providers. The website has drawn the commission’s attention following consumer complaints of pricing gimmicks that result in unexpectedly high costs.

“We’ve been here before,” Commissioner Arthur D’Andrea said. “The commission thought we fixed this website, and now here we are again. I don’t want to be back here in two years doing the same thing.”

“Unfortunately, I think we may be because REPs [retail electric providers] adjust,” Chair DeAnn Walker said. She had reason to be pessimistic, saying she had recently met with a retail representative.

“People are already trying to figure out how to get around these” rule changes, Walker said.

Staff’s proposal adds a filter to weed out plans that offer low average prices at the 1,000-kWh usage level, when they cost significantly more for customers who average more than 1,000 kWh/month. The recommendations will also limit the number of offers a REP can list on the website to prevent them from “flooding” a page.

“Doing so will encourage REPs to use [their] available postings wisely, rather than repeating very similar offers to strategically dominate search results,” staff said.

PUC to Intervene in FERC Entergy Dockets

Following an executive session, the commissioners agreed to intervene in five dockets at FERC involving Entergy Services and cost-reimbursement agreements with its five operating companies (ER18-2079, et al.).

Entergy proposed last year to recover $5.9 million from Texas retail rates for Entergy Texas’ portion of construction costs for a pair of transmission control centers it built in Arkansas and Mississippi.

FERC set the agreements for settlement proceedings in February, but the company said the negotiations between Entergy Service its operating companies, commission staff and other parties were not “fruitful” and further discussions “would not resolve the issues in these proceedings.” The company filed cancellation notices for the reimbursement agreements with the commission in July. Entergy said no payments were made and no benefits received under the agreements.

— Tom Kleckner

August 13, 2018

PJM PC/TEAC Briefs: Aug. 9, 2018

VALLEY FORGE, Pa. — Opponents and advocates of new rules to increase the importance of cost containment in transmission project proposals found themselves in uncommon agreement at last week’s PJM Planning Committee meeting.

Both shared concerns over the RTO’s plan to delay inserting some language for the new rules into Manual 14F.

Staff explained that it was a last-second decision meant to avoid confusion for those reading the manuals, and while stakeholders didn’t fully support the explanation, they eventually agreed to endorse some of the modified manual revisions but defer voting on the cost-containment language.

The wide-ranging changes include revisions to PJM’s processes for selecting “market efficiency“ transmission projects and prequalification for submitting proposals. But stakeholders were focused on how PJM plans to implement the cost containment rules, which were endorsed earlier this year following a controversial stakeholder process. (See Cost Containment Clears MC Vote Despite PJM Plea.)

While some of the changes could be implemented immediately, two frameworks for comparing projects are being developed by PJM and its Independent Market Monitor. The first framework on construction costs is expected to be ready for use in December, while the second comparing return on equity and capital structures is expected by May. Because they aren’t ready for use, staff decided to keep language revisions related to frameworks out of the public version of the manual. They are being maintained in an internal version that will be brought for stakeholder endorsement once the frameworks are finalized.

pjm inverter based generators — PJM’s Jason Shoemaker | © *RTO Insider*

“The manual is a reflection of what’s in effect today, and the comparative process is not a part of that today,” PJM’s Jason Shoemaker explained.

LS Power’s Sharon Segner, who led the campaign to get the cost containment language endorsed, said PJM would be “picking and choosing” which parts of the approved revisions it’s implementing.

“This is kind of different than what was communicated to me just a few days ago as far as the approach, so I’m just concerned,” she said.

Alex Stern of Public Service Electric and Gas, who largely opposed Segner throughout the cost containment battle, joined her in expressing concern because staff was not being clear with exactly what changes it was proposing from what was presented at the first reading last month and its meeting materials did not reflect the changes or represent the statements being made. His concern stemmed particularly from PJM’s representation that it was removing language from the manual that had received stakeholder endorsement. Withholding the language related to the frameworks from the revisions up for endorsement wasn’t clearly spelled out in the issue presentation PJM posted online prior to the meeting, and Stern questioned whether an endorsement should move forward when significant changes were being unclearly communicated immediately before the requested endorsement vote.

“This is a change also from my point of view,” he said. “I’m not clear as to why you’re carving it out.”

PJM’s Sue Glatz assured stakeholders that the withholding was limited to one section in the manual and a note would be included explaining that the material will be added later “so it’s not being lost.” She pointed out it would also be captured in the meeting’s minutes.

PJM’s Steve Herling said it wasn’t the first time staff had used this tactic, so he didn’t understand the “nervousness.” Including it now wouldn’t impact whether — or how quickly — the frameworks are completed, he said, and “it’s highly likely“ that additional manual language beyond what has already been approved will be needed to comprehensively detail the process.

“We can’t post language … [that] will cause confusion if it’s not ready to be implemented. People will be reading the manuals,” he said. “When it is ready to be implemented, it will be posted.”

“I think taking out the note causes more confusion than it helps,” Stern said. “I’m actually confused the other direction how it helps to carve this out when there is the confusion. … I’m really not sure what people are concerned about.”

Once the situation was explained, Tonja Wicks of Duquesne Light said she was supportive of PJM’s plan. American Municipal Power’s Steve Lieberman said he was “sensitive” to Herling’s points.

PJM eventually offered to remove the cost-containment language from the endorsement vote proceeding, with the Manual 14F changes focused on market efficiency procedures.

Following additional debate, Segner eventually decided to trust the process.

“I’m still a little confused, but I think we’re on the right path, and I’m going to support this today,” she said.

PJM’s Mark Sims reviewed staff’s planned timeline for implementing the cost containment measures. He explained that the comparative frameworks will help staff put proposals into a fuller context that includes constructability and financial data, along with risk evaluations.

DER Ride-through

Staff are asking stakeholders for the opportunity to investigate whether certain operating parameters for inverter-based generators create a reliability risk for the grid.

PJM’s Andrew Levitt presented a proposed problem statement and issue charge to determine whether the “ride-through” settings for distributed energy resources like residential wind and solar might create low-voltage risks. For safety and other reasons, DERs are configured to trip off within two seconds if they experience under- or over-voltage. As the amount of DERs grows, all of them tripping during such an event could exacerbate the situation. A new industry standard would address that issue by requiring DER to ride through certain system fluctuations.

Levitt had previously approached the Operating Committee in March about transmission owners taking the lead in implementing the new Institute of Electrical and Electronics Engineers standard. (See “Implementing DER Ride Through,” PJM Operating Committee Briefs: March 6, 2018.)

Normal conditions wouldn’t cause an issue, Levitt said, but “our relay clearing logic doesn’t always work correctly” and could exceed the two-second threshold.

“Really, we would need to change our planning criteria under that kind of a scenario,” he said. “Ride-through is good; lack of ride-through is bad.”

Stakeholders noted several challenges that would have to be addressed, including the safety of utility workers working on lines, engineering and regulatory differences between the transmission and distribution systems, and the appropriateness of focusing on one technology type.

PJM will be hosting a technical workshop on the issue Oct. 1-2, Levitt said.

CIRs

Staff announced that stakeholders impacted by planned revisions to how PJM calculates the output of generating units will have more than six years to prepare for the changes.

Changes planned for Manual 21 would revise and add detail to how PJM would test a generator’s output and determine its net capability each year. Among the changes, the capacity factors for wind and solar units would be calculated using the median factors instead of the average. Throughout the year, PJM’s Jerry Bell has been presenting analysis showing that the median more closely predicts actual performance than the average. (See “Skepticism of Gen Capability Changes Continues,” PJM Operating Committee Briefs: June 5, 2018.)

However, the changes would mean that affected wind and solar units would have their capacity injection rights (CIRs) reduced. The potential reductions have concerned stakeholders because they have to pay for the CIRs. Bell has said the CIRs could be reallocated to other projects, but they would be constrained to projects on the same transmission line.

In an attempt to placate the concerns, Bell announced that the changes won’t go into effect until the 2025 delivery year. Stakeholders will be alerted to CIR reductions by Aug. 1, 2024, and have to identify where they plan to move the CIRs by Jan. 1, 2025. They will then have until the end of that year to utilize them elsewhere. Any unused CIRs won’t technically be lost until June 1, 2026.

“When it comes to incorporating intermittent resources … this has always been a work in progress,” PJM’s Tom Falin said. “This is just a further refinement in that area as we have accumulated more data.”

The longer lead time seemed to have its intended effect.

“These changes are certainly much improved from the initial proposal,” Dayton Power and Light’s John Horstmann said.

TO Supplementals Discussion

PPL’s Frank “Chip” Richardson announced that TOs will be hosting an online conference on Aug. 28 to discuss additional details of their plan to implement FERC’s order from earlier this year requiring TOs to increase stakeholder engagement in the development of supplemental projects.

Supplemental projects are transmission construction initiated by TOs to address their own planning criteria and aren’t in response to any wider planning criteria. FERC determined that PJM TOs’ processes for developing those projects weren’t in compliance with Order 890, sending reverberations through several stakeholder initiatives that most recently culminated in the termination at July’s Markets and Reliability Committee meeting of a task force focused on end-of-life supplemental projects. (See PJM Stakeholders End Tx Replacement Task Force.)

ARR Analysis Finds Infeasible Facilities

PJM’s Xu Xu announced at last week’s Transmission Expansion Advisory Committee meeting that the annual analysis of stage 1A auction revenue rights found one violation within PJM’s territory and eight across flowgates to MISO. The analysis assesses the simultaneous feasibility of the ARRs’ paths for a 10-year period.

The internal violation is expected to be addressed through a project that should be in service in 2020. Proposals to address the others are being considered in interregional planning with MISO.

Cost of Dominion’s Haymarket Line Triples with Undergrounding

A decision by Virginia regulators to settle a controversy over a transmission line planned through a historical community through partial undergrounding will triple the cost of the line, staff confirmed.

A 6-mile 230-kV line planned for the area of Haymarket, Va., to feed new data centers received national attention after protesters raised concerns about Dominion Energy’s plan to site it through a historically African-American community inhabited by descendants of emancipated slaves. The Virginia State Corporation Commission stepped in to approve project revisions under a newly enacted underground transmission pilot program as part of the Grid Transformation and Security Act of 2018, which went into effect July 1.

The revisions will underground roughly half the project, increasing costs from an initial estimate of between $45 million and $57 million to the new estimate of $174 million.

Because the proposal was a supplemental project initiated by Dominion, PJM confirmed that the entirety of the cost will be billed back to customers in Dominion’s zone. However, that might change after the D.C. Circuit Court of Appeals rejected earlier this month PJM’s cost allocation rules for supplemental projects that involve high-voltage lines. The rule, which had prohibited cost sharing for all supplementals, was remanded back to FERC for revision. (See DC Circuit Rejects PJM Tx Cost Allocation Rule.)

— Rory D. Sweeney

August 13, 2018January 21, 2024

Western RTO or Bust? Not so, Says Industry

By Michael Brooks

WASHINGTON — Industry opinions vary on the prospects for a full-fledged RTO in the Western Interconnection, with some optimistic and others thinking there are too many snags for it to work.

But that doesn’t mean market services can’t expand there in some other form, attendees of the Western Power Issues Roundtable said last week.

The 11th annual gathering, held by the Western Power Trading Forum in the offices of law firm Skadden Arps, came after several shakeups in the interconnection this year, including SPP pressing pause on its plan to integrate Mountain West Transmission Group and the announced demise of Peak Reliability. (See Still ‘Committed,’ SPP Halts Mountain West Integration Effort and Peak Reliability to Wind Down Operations.)

SPP’s efforts took a hit in April when Xcel Energy’s Public Service Company of Colorado (PSCo) subsidiary, representing 40% of Mountain West’s load, said it would leave the group. Peak, the reliability coordinator (RC) for most of the interconnection, had been attempting to create a new energy market in partnership with PJM. But in July it said would shut down as early as next year after CAISO moved to leave and provide its own RC services, attracting interest from nearly all of Peak’s customers by offering lower-cost services.

Kenna Hagan, senior manager of planning, policy and strategy at Mountain West member Black Hills Corp., said Xcel’s announcement, made late Friday, April 20, “floored many of us.” She said she called PSCo on Monday morning, saying, “‘I’m just checking to see if your executives were participating in Colorado’s state holiday.’”

But she assured attendees that Mountain West “is not dead.” She said group members are still examining the costs and governance structure of joining SPP without Xcel, but the current priority for everyone in the interconnection, not just Mountain West, is finding a new RC provider. CAISO has said most of the interconnection have signed letters of intent with it, but Hagan said at least two balancing authorities have pledged with SPP.

“I don’t think you can underestimate the time, creativity and effort that it takes to solve” the issues related to integration, Hagan said.

Stu Bresler, PJM senior vice president of market operations, said that though it has ended its relationship with Peak, “to the extent that there is a desire for folks in the West to continue talking about the possibility of developing their own market, we’re still interested in being involved.”

The plan remains the same as before Peak’s end: provide energy, ancillary and financial transmission rights markets. Then, should members “want to go down the path of an RTO,” expand to transmission and interconnection planning.

“We certainly are not saying it’s now or never,” Bresler said. “If now is not the right time to look at this, PJM is certainly not going anywhere.”

All Eyes on California

CAISO has also suffered setbacks in its efforts to expand, but those plans now appear closer than ever to becoming a reality.

A bill that would allow the expansion, AB813, passed the California State Assembly last year, and it’s now before the State Senate’s Appropriations Committee after passing two other committees in June. (See CAISO Regionalization Bill Edges Toward Senate Vote.)

“We are still very optimistic about 813 passing this year,” said Phil Pettingill, CAISO regional integration director. The two-year legislative session ends at the end of this month. If the bill passes the Senate before then, “it’s just a matter of the two houses reconciling it and sending it to the governor.”

But many at the conference expressed skepticism that CAISO would become an RTO, even if the bill passes. The bill would only allow CAISO to expand if it agrees upon a modified governance structure — and at least one transmission owner outside the state agrees to join.

Some in the West are concerned that a new RTO would be subject to California’s influence more than any other state’s. California has been one of the most aggressive in the U.S. in trying to curb carbon emissions and address climate change, while states such as Wyoming and Utah still heavily favor coal.

Former FERC Commissioner Tony Clark, senior adviser at Wilkinson Barker Knauer, wondered, even with “the most independent board you could possibly imagine … can you still get to a broader regional market, because you still have the inherent tensions between competing state public policies, state mistrust of each other… Maybe the [Energy Imbalance Market] is as far as we get.”

Wyoming Public Service Commission Chair Bill Russell said, “It’s probably a bigger risk for California than it is for the rest of us. I think California would be giving up more than the rest of us, and I don’t know if that happens.”

He noted that California wants to offload its abundance of renewable energy. “California is trying solve a problem. … We are open to the idea of an RTO, but for us, it’s just an option. We’re not trying to solve a problem.”

Russell opened the roundtable by admitting that “everyone in this room knows more about [RTOs] than I do.” When PacifiCorp told the PSC it was working with CAISO on expansion in 2015, none of the commissioners had even heard of RTOs, he said.

Now, he said, they are watching CAISO, SPP and PJM very closely. Given the concerns over governance, “the best solution for the West might be two markets, or three, that have various comfort levels for whoever’s doing those markets,” Russell said.

[EDITOR’S NOTE: An earlier version of this story incorrectly stated that AB813 would not allow CAISO to expand unless at least one transmission owner outside the state agrees to join by the end of 2018.]

August 13, 2018

PJM Operating Committee Briefs: Aug. 7, 2018

VALLEY FORGE, Pa. — PJM is hoping to simplify its communication of items that require stakeholder action through a new “stakeholder impact slide” in appropriate presentations, PJM’s Rebecca Carroll told members at last week’s Operating Committee meeting.

The slide will identify what action is needed, the deadline and which stakeholders it impacts.

“It will spell out very clearly what the action is that is required for the stakeholder,” Carroll said.

The concept will be piloted in the OC and the Tech Change Forum before it’s rolled out elsewhere, she said.

Low Frequency

Grid operators handled an unusual number and variety of issues in July, staff explained.

Chief among them was a low-frequency event on July 10 between 3 and 4 p.m. Operators had been targeting a frequency of 59.98 Hz to account for a “time error correction,” but it fell to 59.903 Hz by 3:45 p.m. The event occurred in two frequency drops, and staff are puzzled over what caused the first one.

A timeline of the July 10 low-frequency event with brief analysis of several events. | *PJM*

In the five minutes after 3:30 p.m., the frequency gradually dropped by 0.04 Hz, and PJM staff are working with NERC’s Resource Subcommittee to determine why. PJM’s Chris Pilong said the analysis is “not to point fingers” and that RTO tools intended to determine the cause of such issues “right now … aren’t pointing to anything.”

“It’s going to be outside the PJM system,” he said. “We’re thinking there may be some data errors in there somewhere.”

A second 0.03-Hz drop that began around 3:40 p.m. was caused by an 800-MW pseudo-tied unit tripping, Pilong said. Just before the drop, PJM initiated a synchronized reserve event, which deployed all the RTO’s synchronized reserves. PJM’s pseudo-tie error was roughly 900 MW under its target leading into the reserve event, and it dropped further down to 1,800 MW at the frequency’s lowest point.

PJM called a “simultaneous activation of reserve” (SAR) with the Northeast Power Coordinating Council at 3:50 p.m., about five minutes after the second frequency drop. The frequency rebounded to above its target level within five minutes.

Staff said the event isn’t normal but does happen every three years in the Eastern Interconnection. While this was the lowest they’d seen, it would have had to fall another 0.1 Hz for operators to call for a load action.

The puzzle for staff is what caused the initial drop, which drifted down rather than dropping immediately in a way indicative of a unit tripping.

“We drifted low. It wasn’t a step function low,” PJM’s Glen Boyle said.

Spinning Events

Grid operators also dealt with “obviously a higher volume of spinning events” than usual during July, Pilong said. The cause was multiple generators tripping, he said, but initial analysis indicates they were all unrelated. He said staff would analyze whether the system is experiencing more generators tripping or if there are any other takeaways.

“This could have just been a fluke month, or it could be a trend of something more,” Pilong said.

Load Shed

Staff confirmed that the load shed ordered July 18 was dissimilar to the load shed that occurred just months earlier in the same transmission zone.

The July 18 event occurred in the Lonesome Pine area on the border of Virginia and West Virginia after tripped equipment caused low voltage in the area. The events in American Electric Power’s zone were the first since PJM implemented Capacity Performance and its financial penalties and bonuses for generator performance during reliability events such as load sheds, though neither event triggered those calculations. (See 2nd Load Shed of PJM’s CP Era Follows Closely on 1st.)

PJM Operating Committee Load Shed — A diagram of the area around the July 18 load shed. | *PJM*

Staff said the events differed in that the Lonesome Pine event was in response to actual system conditions while the previous Twin Branch event was based on concerns identified through simulations.

“That was a little more complex,” Pilong said. “This one was a little more straightforward.”

Citigroup’s Barry Trayers asked if PJM would develop additional CP event categories for situations like this with no financial repercussions. Staff confirmed the Lonesome Pine event did not create a balancing ratio since no generators were involved.

User Interface Fuel Security Changes

PJM’s Brian Fitzpatrick announced “voluntary” gas usage data requests, but stakeholders were skeptical whether the requests would be implemented that way.

Fitzpatrick said PJM is asking gas-fired generators to report through its Markets Gateway online interface all gas nominations made to the appropriate city gate. PJM is attempting to correlate the amount of gas requested at a location with its ongoing study of gas pipeline contingency plans.

“We’re not looking for what the [local distribution company] is nominating,” Fitzpatrick explained. “We’re looking for what the generators are nominating to the LDC.”

PJM’s Dave Souder confirmed that “it’s not a mandatory field” that must be completed for a generator’s energy market bid to be accepted, “but it is information we’re asking for” and staff will be contacting those who don’t comply to help them become “comfortable” with providing the information.

“It’s voluntary to the extent that if you don’t enter it, we won’t reject your bid … but this is information that we want so that we can move this gas contingency process forward,” Souder said.

— Rory D. Sweeney