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December 19, 2025

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ICF Analysis: DOE NOPR Cost Could near $4B/Year

By Rich Heidorn Jr.

The U.S. Department of Energy’s proposed rescue plan for at-risk coal and nuclear plants could cost ratepayers $800 million to $3.8 billion annually through 2030, ICF analysts said Wednesday.

The analysts said the wide range is the result of considerable uncertainty about how FERC might implement the Notice of Proposed Rulemaking issued by Energy Secretary Rick Perry last week. The NOPR directed FERC to ensure that nuclear and coal generation in deregulated states with 90-days on-site fuel supply receive “full recovery” of their costs.

Legal analysts have said FERC could reject Perry’s directive. (See FERC’s Independence to be Tested by DOE NOPR.)

But ICF senior vice president Judah Rose said during a webinar Wednesday that he sees “a significant possibility” that FERC will take some action to address the secretary’s “resilience” concerns, especially in the wake of Hurricanes Harvey, Maria and Irma.

“DOE has rarely, if ever, exercised its authority vis-a-vis FERC in this manner. It is even more rare to act with such very tight deadlines — i.e. 60 days, and with such broad regional coverage — it applies to any ISO or RTO with an energy market (day-ahead and real-time) and any plant not subject to state rate of return regulation,” Rose and ICF principal George Katsigiannakis wrote in a blog post. “In the past, most NOPRs originated from FERC directly. Thus, past experience is not necessarily a good guide regarding handicapping the likelihood of implementation. Also, the political environment is without obvious precedent.”

The “lower bound” annual cost of $800 million ($6.6 billion net present value (NPV) at a 7% discount rate) assumes high natural gas prices, normal energy demand, and that units’ fixed operations and maintenance costs are partially recovered in the market.

The “upper bound” cost of $3.8 billion ($31 billion NPV) is based on an expectation of low gas prices and low energy demand with a minimum offer price rule for all regulated units.

DOE NOPR ICF

The “lower bound” assumes high natural gas prices, normal energy demand, and that units’ fixed operations and maintenance costs are partially recovered in the market. The “upper bound” is based on an expectation of low gas prices and low energy demand with a minimum offer price rule for all regulated units. | ICF

Among the uncertainties, Rose said, is whether FERC seeks to provide cost recovery through energy prices, as proposed in the NOPR, or through capacity prices “because the service is to some degree more akin to a capacity service.”

One particularly important question is whether the rules will include mitigation of buy-side or sell-side market power, an issue not mentioned in the NOPR. If a large share of the generation fleet is subject to rate of service regulation, the analysts said, it could delay retirements and lower supply bids, reducing energy and capacity revenues for remaining units.

If coal plants have bid below costs in the past, prices could increase, but if mitigation is not pursued vigorously, market prices could decrease.

Impact on Gas, Renewables

By reducing coal and nuclear retirements, said ICF Managing Director Michael Sloan, the rule would likely reduce the development of new natural gas-fired capacity by 20 to 40 GW, leading to a reduction of gas demand of as much as 5 Bcfd by 2030, causing gas prices to drop by 4 to 7%.

One uncertainty: whether gas plants with firm pipeline contracts or access to underground storage or local production could qualify for cost recovery.

Renewable generation would be less impacted by the capacity market but could be affected by other FERC actions on price formation, such as restrictions on negative pricing.

The analysts said the NOPR also raised these questions:

  • Will the rules permit expansions at existing units or reopening of mothballed units? If expansions are allowed, how many megawatts?
  • Who will set the rate of return and what will be the amortization period?
  • Why is the NOPR restricted to RTOs and merchant plants? Given FERC’s role in ensuring reliability, “What showing, if any, do rate-of-return states have to show that they have the correct procedures in place to achieve resilience? Will this ultimately apply to all jurisdictional transmission providers?”

“This NOPR could have a major impact on the industry and markets, and could be a huge game changer for baseload plants. Timing is unclear along with most of the details. The only certainty is the uncertainty that this will create in the marketplace as the rule is developed and the details debated,” said the analysts, who questioned whether upcoming capacity auctions in ISO-NE (January 2018) and PJM (May 2018) and monthly auctions in NYISO will be delayed.

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Sempra Reworks Oncor Bid to Erase EFH Debt

By Tom Kleckner

Sempra Energy said Wednesday that it has reworked its proposed $9.45 billion acquisition of Oncor with a new financing structure that wipes out the debt of the utility’s parent company, Energy Future Holdings.

Sempra on Thursday submitted a change-in-control filing with the Public Utility Commission of Texas (Docket 47675) that adds the new financial provisions and offers 47 regulatory commitments, possibly clearing the way for a regulatory approval that eluded previous Oncor suitors.

The California-based company’s top executives told financial analysts Wednesday that the joint application with Oncor stems from discussions with key Texas stakeholder groups and guidance from Oncor CEO Bob Shapard and General Counsel Allen Nye.

EFH FERC Oncor Sempra Energy
Sempra CEO Debbie Reed | Sempra Energy

“We’ve learned a lot from meetings in Austin and working with Oncor’s senior leadership,” CEO Debra Reed said. “We believe the revised financial structure addresses concerns made by certain stakeholders … and substantially addresses many of their key issues.” (See Sempra Begins ‘Listening Tour’ of Key Stakeholders.)

Reed said stakeholder groups likely to participate in the case — PUC staff, Texas Industrial Energy Consumers, a coalition of cities served by Oncor and the Office of the Public Utility Counsel — have agreed to continue working on regulatory settlement discussions with Sempra and Oncor representatives.

“We do feel this improves our likelihood of being able to reach regulatory resolution,” she said. “We made a conscientious decision to make this change after we got a lot of stakeholder input. One of their greatest concerns was the holding company debt. We thought addressing those issues up front would help us get regulatory approval.”

The previous financing arrangement would have added $3 billion in new debt to Oncor, but Sempra’s revisions essentially match a previous deal intervenors agreed to with Berkshire Hathaway Energy. Sempra out-bid Berkshire in August. (See Sempra Outmuscles Berkshire for Oncor.)

Sempra expects to fund approximately 65% of the EFH purchase with equity and 35% with company-issued debt, eliminating the need to rely on third-party investors. CFO Jeff Martin said the “simpler and more conservative financing approach” will erase the EFH debt. Sempra’s original proposal would have given the company 60% of EFH, with the goal of acquiring 100% over a period of time.

“Our revised financing structure for the transaction is both clear and simple. This eliminates the need to take future additional steps to achieve full control of EFH,” said Martin, noting it will allow Sempra “to fund additional growth initiatives.”

Wall Street was cool to Sempra’s revised financing proposal. The company’s stock lost $2.63 off Wednesday’s close of $114.57/share, a 2.30% drop. It finished the week at $111.95/share.

Florida-based NextEra Energy has its own application for a share of Oncor before the PUC (Docket 47453), seeking the remaining 19.75% interest owned by a collection of private-equity funds operating under the name Texas Transmission Holdings Corp. (See Texas PUC Resistant to NextEra’s Minority Interest in Oncor.)

EFH FERC Oncor Sempra Energy
Sempra Energy’s headquarters | Sempra Energy

Asked about acquiring the minority interest, Reed reminded analysts, “We have said over time we would like to own the entirety” of Oncor.

Sempra’s regulatory commitments “are intended to preserve the independence of Oncor and help ensure that Oncor is protected for the customers it serves in Texas … and able to continue to perform in accordance with its financial plans for its customers and shareholders,” Reed said.

The regulatory commitments include:

  • Preserving Oncor’s board independence;
  • Maintaining the utility’s current management team, workforce and Dallas-based headquarters;
  • Not incurring any debt at EFH as part of the transaction or in the future;
  • Keeping strong ring-fence provisions to maintain both legal and financial separation among Oncor, Sempra and their affiliates;
  • Ensuring Oncor’s customers don’t bear any of the transaction costs; and
  • Supporting Oncor’s five-year, $7.5 billion capital investment plan.

NextEra’s inability to abide by similar ring-fencing measures imposed by the PUC sank its own bid to acquire Oncor earlier this year. The commission also rejected Dallas-based Hunt Consolidated’s attempted acquisition over concerns that taxing savings wouldn’t be shared with Texas ratepayers.

With the filing, the PUC now has 180 days to render a decision. The 2017 state legislature approved a bill that was recently signed into law giving the commissioners an extra 60 days if they find “good cause.”

Sempra and Oncor already cleared one regulatory hurdle after a U.S. Bankruptcy Court in Delaware approved the merger agreement in September. (See Bankruptcy Court Advances Sempra Bid for Oncor.)

The agreement remains subject to customary closing conditions, including further approvals by the PUC, Bankruptcy Court, FERC and the U.S. Department of Justice.

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California Microgrid Program Advances

By Jason Fordney

FOLSOM, Calif. — California agencies are finalizing a roadmap for commercializing microgrids in the state, aligning with a $45 million grant funding opportunity for the technology.

Gravely | © RTO Insider

“We had a huge amount of questions and answers — in fact, the largest we have had for any solicitation,” Mike Gravely of the California Energy Commission said at an Oct. 2 workshop to discuss the funding initiative. He cautioned that the roadmap is still preliminary and that his agency is “very much interested in the consensus of the industry.”

Microgrids — independent, controllable energy systems with a single point of interconnection to the grid — are increasingly being studied as an option to help integrate renewables, not just in the U.S., but also in Europe and Asia, where solar development is on the rise.

The commission is taking comments through Oct. 28 on its draft roadmap for commercializing microgrids, issued late last month. The agency is offering grants for microgrid development in the state on military bases, ports and tribal lands; in low-income and rural areas; and at industrial complexes and local schools. (See California Awarding $45 Million for Microgrids.)

california microgrid
CEC Has Finalized Its Draft Roadmap For Commercializing Microgrids | © RTO Insider

The funding opportunity is the second to be issued by the commission, and a third one is under review and due to be released by the end of the year. Earlier solicitations provided more than $70 million for 18 to 20 microgrids.

“We will be a big player in this market,” Gravely said, adding that a lot of the activities in the roadmap will be implemented through a CEC research process before going to the California Public Utilities Commission and CAISO, and some will be implemented through existing proceedings.

Some questions around microgrid implementation remain unanswered, including who carries the costs, who pays for interconnection and what fees will apply to microgrids. While there are no particular legislative or regulatory directives to develop microgrids, the issues around their implementation cross over other state proceedings on interconnection, energy storage and distributed energy. The PUC’s “Distributed Resources Plans” proceeding has authorized development of two microgrids: one in Borrego Springs, in San Diego Gas & Electric territory, and another in Mono County, in Southern California Edison’s area.

The services model for microgrids is still evolving, Adam Forni of Navigant Consulting said in a presentation on a recent global survey of the technology. Almost every microgrid in California uses solar in conjunction with energy storage, while overseas applications often utilize back-up diesel generation.

The projects examined in the Navigant study, which is meant to help the CEC shape the roadmap, had to be at least 50% privately funded and be already online or commencing operation within the next year. Navigant studied nine projects in California, 10 others on the North American continent and seven additional projects in China, Singapore, Hawaii, India, Japan and Mozambique. International and North American projects were built more for reliability, while California projects were designed mainly to meet environmental goals.

Facilities included commercial hosts, government entities, landfills, affordable housing, agriculture and food production, with most rated at 1 MW or above and three larger than 10 MW. Navigant recommended that the state focus research and development on technologies that enhance integration to reduce reliance on diesel generators, not to limit funding to just solar plus energy storage and to incorporate more diverse renewable sources. The consulting group also recommended considering the other benefits that microgrids can provide outside of electricity, including thermal energy, water and waste management solutions.

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CEO Panel: DOE NOPR Continues ‘Cycle of Subsidies’

By Tom Kleckner

AUSTIN, Texas — A panel of CEOs from some of Texas’ largest energy companies on Tuesday panned U.S. Energy Secretary Rick Perry’s directive that FERC consider supporting struggling coal and nuclear plants.

FERC DOE rick perry coal nuclear
Wood (left) and Gutierrez | © RTO Insider

Or, as former FERC Chairman Pat Wood III put it in setting up the discussion at the Gulf Coast Power Association’s Fall Conference: “This lovely little Christmas turd that showed up on our desks.”

Wood agreed with the consensus opinion that Perry was within his legal rights to issue his Sept. 29 Notice of Proposed Rulemaking to FERC, which suggests compensating baseload plants in deregulated states for preserving the grid’s reliability and resilience. (See FERC’s Independence to be Tested by DOE NOPR.)

Still, Wood, who also chaired the Texas Public Utility Commission during part of Perry’s tenure as the state’s governor, said he was caught off-guard by the NOPR.

“It was a pretty big deal for me. First thing, it was signed by the governor of this state, that made this room as big as it is,” he said, motioning to a large ballroom filled with conference attendees.

“It was his regulatory approach that allowed this state to benefit tremendously from competitive markets. It also ran counter to some of the key provisions of his staff’s grid study report, especially when talking about the unending cycle of subsidies,” Wood said.

FERC DOE rick perry coal nuclear
Former FERC Chair Pat Wood (left) moderates GPCA’s CEO panel: NRG’s Mauricio Gutierrez, Southern Power’s Buzz Miller, Dynegy’s Bob Flexon | © RTO Insider

Asked whether Perry’s letter was a “cannon” aimed at the RTOs or the natural gas industry, Dynegy CEO Bob Flexon said, “It’s going to really impact PJM, where coal and nuclear plants are surrounded by Marcellus and Utica natural gas [plays], and in Illinois.”

PJM stakeholders have questioned the RTO’s focus on being cost-based and resource-neutral, while Illinois joined New York in issuing zero-emission credits to keep Exelon nuclear plants running. (See PJM Stakeholders Offer Different Takes on Markets’ Viability.)

FERC DOE rick perry coal nuclear
Miller | © RTO Insider

“I don’t view it as negative to anyone,” Southern Power CEO Buzz Miller said. “I think it really is just the best way they could find to really prop up coal and nuclear in the competitive markets.”

“Certainly, the [Department of Energy] proposal tries to define resiliency in the form of fuel certainty, said NRG Energy CEO Mauricio Gutierrez. “The narrow definition in this proposal is coal and nuclear, the people with fuel certainty on site.

“To us, resiliency is more than that. It’s the characteristics an asset brings to the grid; whether it can withstand that type of disaster or come back significantly quicker. That characteristic has to be fuel-neutral.

“We have to think about the power delivery,” Gutierrez continued. “Are we recognizing, and pricing correctly, the resiliency value some of our power plants provide the system? If you have a generation unit that is required for reliability and resilience, then let that unit set the marginal price. There are ways to tackle this issue in a fuel-neutral way.”

“We have a long history of disasters in the Southeast, and it’s the distribution and transmission that usually goes down. … The vulnerability is the wire,” Miller pointed out. “It looks like they tried to come up with a scenario that makes coal and nuclear stand out. The problem is, if an electromagnetic pulse happens, nuclear units have more digital parts. It’s hard to cherry pick your disaster scenario and plan around that. … Generation can recover quickly, but it’s the wires that take time.”

FERC DOE rick perry coal nuclear
Flexon | © RTO Insider

Flexon, who manages a fleet with a 60/40 gas-to-coal ratio, said Perry’s letter was a result of hard lobbying by two unnamed energy companies.

“The subsidy war is alive and well,” Flexon said. “For years, we turned a blind eye to wind getting subsidies. Now, nuclear is getting subsidies and it’s disrupting the markets. That letter is just a new subsidy entering the space. This is designed to counter the effectiveness of the marketplace and save assets that should be exiting the market.

“Even though we’re a fairly large coal generator, we’re not supportive of [Perry’s memo]. We believe policy should be fuel-neutral. But if someone is going to pay us a return for our plants with 90 days’ worth of fuel on site, we’ll find a way to store 90 days of fuel at every one of our coal plants.”

Flexon noted the DOE study this summer focused on price formation, but that the generation stack has changed in the last 20 years.

“Energy price formation needs to change too,” he said. “You just can’t ignore the fact the generation stack has changed dramatically. How you price energy has to keep up, so you have new investment coming in and you’re getting the most efficient megawatts to the customer.”

Gutierrez agreed, saying Perry’s memo may have been aimed at energy markets, such as ERCOT’s.

“We need to improve the markets, and this may be the catalyst that does it,” he said.

Energy Groups Seek Longer Response Deadline

In a related development, 14 energy trade groups asked FERC on Tuesday to extend the comment periods in the commission’s consideration of the directive (RM18-1).

Perry’s NOPR called for final action on the proposed rule within 60 days from its publication in the Federal Register. On Monday, the commission issued a notice setting an Oct. 23 deadline on comments on the proposal, with reply comments due Nov. 7. (See FERC’s Independence to be Tested by DOE NOPR.)

The trade groups’ filing requests that FERC set a 90-day initial comment period and a 45-day reply comment deadline.

“The proposed reforms laid out in the NOPR, if finalized, would result in one of the most significant changes in decades to the energy industry and would unquestionably have significant ramifications for wholesale markets under the commission’s jurisdiction,” the groups said. “When agencies consider a proposed rule that could affect electricity prices paid by hundreds of millions of consumers and hundreds of thousands of businesses, as well as entire industries and their tens of thousands of workers, such as the proposal in question, it is customary for an agency to allow time for meaningful comments to be filed in the record so that the agency can make a reasoned decision thereon. In fact, agencies are under an obligation to allow a comment period of not less than 60 days for typical rulemaking proceedings, unless exceptional circumstances exist.”

Signing the joint motion were: Advanced Energy Economy, American Biogas Council, American Council on Renewable Energy, American Petroleum Institute, American Public Power Association, American Wind Energy Association, Business Council for Sustainable Energy, Electric Power Supply Association, Electricity Consumers Resource Council, Energy Storage Association, Interstate Natural Gas Association of America, National Rural Electric Cooperative Association, Natural Gas Supply Association and the Solar Energy Industries Association.

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FERC Approves 6-Year Cycle for SPP RCAR Review

FERC has approved SPP’s request to change the frequency of its regional cost allocation review (RCAR) from every three years to every six, overruling member objections. The change became effective Oct. 1.

Sunflower Electric Power and Mid-Kansas Electric protested the tariff change, saying problems with the RCAR’s study assumptions, analysis and results made it unreasonable to decrease its frequency. The commission ruled their concerns as being out of scope (ER17-2229).

SPP cost allocation RCARs
Sunflower Electric Power was one of two companies that objected to SPP lengthening its regional cost allocation review to every six years | Holcomb Station photograph © Sunflower Electric Power

In their Sept. 29 order, commissioners said that while Sunflower and Mid-Kansas “may be correct that a relatively small change in transmission investment could have a large effect, that does not persuade us that conducting a mandatory review of the entire cost allocation methodology every six years instead of every three years is unjust and unreasonable.”

SPP and the commission both noted that any member that believes it has an imbalanced cost allocation can request relief through the RTO’s Markets and Operations Policy Committee. The RTO has also said it is trying to improve the review process by using more accurate information.

Stakeholders approved the Regional Allocation Review Task Force’s revision request in April, based on its recommendation that the change would save SPP manpower and consulting costs. (See “RSC Approves Six-Year Cost Allocation Review,” SPP Regional State Committee Briefs.)

The most recent regional cost review (RCAR II) showed more positive benefit-to-cost ratios and only one deficient transmission zone, which already has a project in the 2017 Integrated Transmission Planning assessment.

SPP said it took about 2,100 employee hours and more than $417,000 in payments to outside consultants to complete that review. The two RCARs have cost more than $1.5 million in outside consulting just to conduct the analysis, and each study has taken at least six months to complete, according to the RTO.

— Tom Kleckner

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Vermont a Leader in Renewables, PUC Chair Says

By Michael Kuser

BURLINGTON, Vt. — Vermont isn’t just moving in the right direction on renewable energy; it’s helping to lead the country despite — or because of — its modest size, the state’s top regulator told attendees at a recent conference.

ISO-NE vermont renewable energy
Roisman | © RTO Insider

“Unlike New York and California, which want to lead on energy, Vermont is not a battleship, we’re a PT boat, so we can turn on a dime,” Vermont Public Utility Commission Chair Anthony Roisman said Oct. 2 at the Renewable Energy Vermont (REV) Conference.

Gov. Phil Scott appointed the 79-year-old Roisman as chair in June.

ISO-NE vermont renewable energy
Campbell Andersen | © RTO Insider

Vermont is one of the top two states nationwide in terms of clean energy employment as a share of the workforce. The 13,000 jobs created in the state’s sector since 2000 represent 6% of the state’s workforce, REV Executive Director Olivia Campbell Andersen said at the conference.

When Roisman served on the siting board for New Hampshire’s Seabrook nuclear plant 40 years ago, the people interested in renewable energy wouldn’t have filled one table, he noted. In contrast, the REV2017 Conference drew hundreds of people who not only promote renewable energy, but also work in the field.

Kerrick Johnson with Vermont Electric Power Co. asked Roisman how long he expects to serve in his current role, given his age.

“I have a six-year term and I can’t predict who the governor will be in six years, but I don’t see any finite limit to how long I will serve,” Roisman said. He noted that Berkshire Hathaway CEO Warren Buffett is 87 and U.S. Supreme Court Justice Ruth Bader Ginsburg is 84. “I feel as though I’m a little young for the position, but I’m hoping to make up for that with my enthusiasm and energy.”

Siege Mentality

ISO-NE vermont renewable energy
Donovan | © RTO Insider

During the conference, state officials described how they see Vermont, like the U.S., as standing at a critical crossroads in terms of both climate change and politics.

“When we have a federal government that abdicates its responsibility to protect its people and our environment, the attorney general’s office will be the first line of defense and the last line of defense,” said state Attorney General T.J. Donovan.

ISO-NE vermont renewable energy
Zuckerman | © RTO Insider

“Now we’re realizing that democracy is not just on election day, but all the time,” Lt. Gov. David Zuckerman said.

The growing season is going to be longer and both wetter and drier at the same time, he said.

“You say, ‘How is that possible?’ But we’ve seen it this year,” said Zuckerman, who owns a farm in Hinesburg. “This summer was one of the worst growing seasons, at the beginning of the season, that any farmer I know has seen, with incredible rains for a long time. And now my pond is almost empty because for the last month and a half it’s been very, very dry.”

Project Siting and Policy

Conference panelists also discussed how a 2016 state law that calls for greater local government involvement in the generation siting process has exacerbated the NIMBY syndrome.

ISO-NE vermont renewable energy
Lewis | © RTO Insider

The law (Act 174) represents “a big change from the status quo,” according to Alex “Sash” Lewis, a lawyer with Dunkiel Saunders Elliott Raubvogel & Hand. In the past, state officials had to give “due consideration” to local and regional planning standards when siting resources, but now they must give “substantial deference” to those requirements.

“The PUC is now going to be considering specific municipal plans,” he said.

The law establishes a new set of energy planning standards that municipalities and regions can adopt on a voluntary basis, earning them the right of substantial deference in the siting process. Regions and municipalities that do not wish to update their plans will continue to receive due consideration in the process.

ISO-NE vermont renewable energy
Copans | © RTO Insider

Jon Copans of the Vermont Council on Rural Development considers that holistic approach to energy planning to be a good thing: “You can’t just look at the electric sector without considering many others.”

Catherine Dimitruk of the Northwest Regional Planning Commission pointed to a correlation between prime wind areas and nature conservation areas. She said her commission has a goal of developing 19 MW of new wind generation in the northwestern part of the state, to be achieved only through small-scale wind, and is relying on evolving technology to make it possible.

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Spectrum Between Unsuitable Areas and Preferred Locations | Vermont Public Service Department

ISO-NE vermont renewable energy
Dimitruk | © RTO Insider

Kimberly Hayden, a lawyer with Paul Frank + Collins, said that in the past five years “our CO2 footprint has gone up 2.5% because, while we are retiring nuclear, we’re replacing it with natural gas-fired generation.” The New England Power Pool’s Integrating Markets and Public Policy process “looks very promising … but it’s very political.”

New York and Illinois are doing interesting work, but New York’s Value of Distributed Energy Resources Phase II process “will be going on until the end of time, which scares me,” said Nathan Phelps of advocacy group Vote Solar. “The market is really hurting in New York right now because of uncertainty, which scared off a lot of developers.”

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Texas PUC Resistant to NextEra’s Minority Interest in Oncor

AUSTIN, Texas — Having thrice been rejected in its attempts to acquire Oncor Electric Delivery earlier this year, NextEra Energy is now making a long-shot bid to acquire a minority ownership in Texas’ largest electric utility.

However, the state’s Public Utility Commission has been resistant. During an open meeting Thursday, it invited Texas utilities to file amicus briefs and comments to help the commission determine whether Oncor should be a party to the proceeding (Docket 47453).

NextEra and Texas Transmission Holdings Corp. (TTHC) filed a joint application with the PUC in July seeking permission to complete an acquisition of TTHC’s 19.75% interest in Oncor. However, staff in August ruled the application deficient, saying neither applicant is a public utility under state regulations and that the case should not proceed without Oncor’s involvement.

“Information that is possessed by Oncor relating to Oncor’s facilities, customers and financial records will be necessary to assess the statutory factors to be considered in this proceeding,” staff said.

In September, Oncor filed for intervention as a party to the proceeding, making it clear to the PUC that it is not an applicant and “is not seeking commission approval of the proposed sale.”

“We didn’t want [the case] dismissed on a technicality that the utility wasn’t a part of it,” Oncor CEO Bob Shapard told the commissioners. “That would essentially be us ruling on the issue. We’re clearly not advocating the transaction, but we felt like it should be put it back in your hands, where it belongs, and not ours, to make a decision.”

“Thanks,” Commissioner Ken Anderson responded wryly.

TTHC is owned by Cheyne Walk Investment, BPC Health, Borealis Power Holdings and Hunt Strategic Utility Investment.

NextEra last year tried to acquire the minority share along with the rest of Oncor, but the commission rejected the deal in April. It then turned down two subsequent requests for rehearing. (See NextEra-Oncor Deal Meets Third Denial.)

Anderson said he was not ready to consent to a preliminary order, saying he has a concern as to whether the applicants should include the utility in question, even if the acquisition is hostile or “not friendly.”

“Should the utility be an applicant or joint party, or not an applicant at all?” Anderson asked. “How can you be opposed to a transaction and be both applicant and an opposing party? Oncor has not filed any briefing materials because they weren’t party to order, or didn’t want to be. Can the [utility or its holding company] be forced to be an applicant? Can they be forced to be joined?”

Anderson said the utility’s stockholders and ratepayers should not bear the costs in these kinds of transactions and asked for a “full airing” of the issues. Newly minted PUC Chair DeAnn Walker agreed, asking for additional briefings from the parties.

Parties have until Oct. 12 to file briefs on whether Oncor should be a joint applicant, whether the commission has the authority to order Oncor’s participating in the case, and when the 180-day timeline to consider the application should begin.

The PUC said it may consider the draft order at its Oct. 26 open meeting.

“How we decide this has ramifications that go beyond this,” Anderson said. “Let’s say we have another … hostile takeover bid and [the acquirer] files a [sale, transfer and merger form] seeking to approve it. The consensus in an existing brief is the commission can require you to be a party. If a utility is forced to participate in a proceeding, should the real party, the real applicant be required as a condition to be either an intervenor or a co-applicant, to agree in advance to reimburse the utility for all the expenses by the utility?”

California-based Sempra Energy has since become the third entity to seek regulatory approval of an Oncor purchase. Sempra emerged from a pack of suitors in August and said it would put down $9.45 billion for bankrupt Oncor parent Energy Future Holdings and its 80% interest in Oncor. (See Sempra Begins ‘Listening Tour’ of Key Stakeholders.)

Oncor, Sharyland Face More Work in Proposed Swap

Oncor and Sharyland Utilities went into the open meeting hoping for a final order in their proposed swap of $400 million in assets, but instead they discovered they have much work in front of them (Docket 47469).

Walker filed a memo before the meeting, asking the parties for more specificity on the assets to be transferred and expressed her concern about the proposed treatment of the refunds related to the energy efficiency cost recovery factor (EECRF) for both Oncor and Sharyland.

“I really believe this transaction is in the best interest of the ratepayers,” Walker said. “I’m not trying to be a deal-killer, but I have questions and concerns.”

Walker asked for responses by Oct. 4 to help the PUC meet its Feb. 1 deadline for reaching a decision.

The asset swap would resolve rate cases for both Oncor and Sharyland and would help the latter address customer complaints about Sharyland’s high rates. The two companies are continuing to hammer out details in settlement negotiations.

“Systemwide rates are the goal here,” said Vinson & Elkins’ Jo Ann Biggs, representing Oncor. “After the [new] rates go into effect, Oncor would prefer a single refund under the EECRF. We want to treat Sharyland customers like all Oncor customers.”

One of the issues is whether Oncor can charge incoming Sharyland customers for deploying an advanced metering system (AMS), already in place in much of its service territory.

“We feel strongly that Sharyland customers should be treated like Oncor customers,” said Laurie Barker, with the Office of Public Utility Counsel (OPUC). “We feel like it’s important Sharyland customers be treated like any other customer that comes into the Oncor system. We’ll have that same issue with the AMS charges.”

The PUC approved a preliminary order on the proposed swap in August. (See “PUC Approves Preliminary Order in Oncor-Sharyland Asset Swap,” Public Utility Commission of Texas Briefs: Aug. 31, 2017.)

The order lists a set of 27 issues to be discussed before the PUC renders a decision, which is due by Feb. 1. Oncor and Sharyland filed a settlement agreement in July, asking the PUC to expedite the case by deciding it without referring it to the State Office of Administrative Hearings (SOAH). The companies said Sharyland’s current retail customers will receive “substantial rate relief” under the transaction, in which Sharyland will take over 258 miles of 345-kV transmission from Oncor in exchange for Sharyland’s distribution network and retail delivery customers.

The PUC on Thursday did approve Oncor’s request to recover a retail-customer surcharge over the next nine months of almost $27.2 million, as corrected by an administrative law judge (Docket 46884); Sharyland’s amendment to a certificate of convenience and necessity for an $18.6 million, 7-mile, 138-kV transmission line southwest of Abilene in West Texas (Docket 46726); and applications by Oncor (Docket 47235) and Sharyland (Docket 47248) to adjust their energy efficiency cost recovery factors. Should the transaction be closed, Oncor would be refunded nearly $6.1 million for over-recovered energy-efficiency costs in 2016, and Sharyland would be credited about $243,000 for its over-recovered 2016 costs.

But the commission dismissed a Sharyland request dating back to 2015 to deploy an advanced metering system (Docket 44361) and a rate review rendered moot by the swap (Docket 45414).

Walker Takes Chairman’s Gavel in First Meeting

Walker wasted no time asserting herself in her new role during her first open meeting.

After calling the meeting to order, Walker admitted she was nervous and excited. She then asked for a moment of silence to recognize the many victims of Hurricane Harvey, including, by name, a Kentucky lineman who was killed during the restoration effort.

The meeting marked Walker’s return to an organization she served as an assistant general counsel and an ALJ from 1988 to 1997. She thanked staff and her family for their support, and Texas Gov. Greg Abbott for her appointment.

Abbott “has bestowed a great duty, obligation and honor on me. I take it very seriously,” she said. “He has taught me how to do hard work, and to do it with integrity. I assured him that is my intention while I am here, to work hard and to serve with integrity.”

Adrianne Brandt, who was formerly with San Antonio’s CPS Energy and chaired ERCOT’s Technical Advisory Committee, will serve as Walker’s adviser, effective Oct. 16.

Walker replaces Donna Nelson, who stepped down as the PUC’s chair in May. She will fill out the remainder of Nelson’s term, which expires in September 2021. (See Texas PUC Chair Nelson Stepping Down.)

Previously Abbott’s senior policy adviser on regulated industries, Walker spent 15 years at CenterPoint Energy as director of regulatory affairs and as an associate general counsel.

Walker also agreed to take on Nelson’s role with SPP’s Regional State Committee, which Commissioner Brandy Marty Marquez had been filling.

“I think it’s a great opportunity for you to step into SPP and see what that is all about,” Marquez told Walker. “They’re great people.”

Anderson will continue representing the PUC on the Organization of MISO States. Anderson and Marquez have kept the three-seat PUC running while waiting on Nelson’s replacement. Anderson has served on the commission since September 2008 — a record tenure — though his term expired Aug. 31. Marquez’ six-year term expires in September 2019.

Utilities Make Final Harvey Restoration Reports

Texas utility representatives gave the commission a final update on their Hurricane Harvey restoration efforts, after which the commissioners extended their Aug. 31 order directing retail providers to offer their customers deferred payment plans, “recognizing that many customers are still recovering” (Project 47552).

The utilities said their efforts were aided by the state government, mutual-assistance agreements between each other and community support.

“Customers were bringing us food, even when it wasn’t needed,” AEP Texas CEO Judith Talavera said.

“Texas rocks,” said Kenny Mercado, CenterPoint’s senior vice president of electric utility operations. “I can’t say enough about the friends and neighbors who chipped in.”

Mercado said the heavy rains and flooding resulted in the utilities relying on air boats, drones, amphibious vehicles and mobile substations to restore service.

“We were using different equipment than we’ve ever used before. I’m not sure we even knew we had air boats,” he said.

ERCOT COO Cheryl Mele said the ISO did much of its work in preparing for Harvey’s landfall. Transmission and generation outages resulted in a load drop of 15 to 20 GW below normal August conditions, she said.

“We never had a shortage of generation on the system,” Mele said, noting ERCOT never had to shed load or call for imports. The ISO issued reliability unit commitment instructions just twice.

Walker asked PUC staff to work with the utilities in evaluating the future use of mobile substations, ensuring an accurate outage count and how to better share equipment.

“This to me is about Texans helping Texas,” Walker said. “I know El Paso Electric and [Southwestern Public Service] never got called on. It’s a lot quicker to get them here than people from Kentucky.”

Walker also wondered aloud whether substations should continue to stand in areas that were flooded.

SOAH to Hear Discovery in LP&L’s Migration to ERCOT

After some debate, the commissioners postponed until their next open meeting a final decision on whether they would hear Lubbock Power & Light’s proposal to migrate part of its load from SPP into ERCOT or send the application to SOAH.

PUC staff will meanwhile conduct an Oct. 9 prehearing conference to set a procedural schedule in the case (Docket 47576). Staff expects an LP&L filing this week, which will set a 180-day deadline for a decision on the migration.

The commission appears to be leaning toward letting SOAH handle discovery for the docket. Several intervenors support that decision, pointing to the “extensive discovery” needed to explore the large number of modeling studies that have been conducted on the issue.

“There aren’t a bunch of documents, but questions about modeling assumptions and what happens under different scenarios,” said Katie Coleman, legal counsel for Texas Industrial Energy Consumers (TIEC). “That could get extensive, given the number of studies in the case.”

ERCOT, SPP and LP&L have all filed studies in the case, which began in 2015 when Lubbock announced it intended to move 470 MW of its approximately 600 MW of load into ERCOT. LP&L is hoping for a decision before March 2018, which will enable it to maintain its plan to integrate with ERCOT by June 2021, after extending a power purchase agreement with SPS.

Anderson noted that while SOAH would develop “specific facts” that would help the commission reach a decision, “90% of that decision is going to revolve around big policy issues.”

“The ALJ’s decision would be purely advisory,” he said.

Walker agreed with Anderson, saying the decision would be “policy-driven.”

“I guess we’ll hear it ourselves,” Anderson said.

SPS, TIEC, ERCOT, the Office of Public Utility Counsel and Golden Spread Electric Cooperative have intervened in the case. Oncor and the Alliance for Retail Markets have filed pending motions to intervene.

Commission Approves RMR Rule Change

The commissioners approved revisions to its reliability-must-run (RMR) service rules, accepting Anderson’s modifications that exempt seasonally mothballed units from the must-run alternative (MRA) solicitation process (Project 46369).

Staff’s draft order adjusts the suspension-of-operations notice requirements and complaint timeline, requiring written notification to ERCOT at least 90 days before a generating resource is seasonally mothballed. The ISO would then have 60 days to respond.

The order also gives ERCOT discretion to decline entering RMR service agreements based on the economic value of lost load; requires ERCOT board approval of staff recommendation regarding RMR and MRA service; and requires capital expenditure refunds related to the service agreements in certain circumstances.

The ISO and its stakeholders have already taken action to address RMR contracts, driven by a 2016 agreement with NRG Texas Power’s Greens Bayou Unit 5 in Houston. The contract was terminated last month. (See ERCOT Ending Greens Bayou RMR May 29.)

ERCOT’s recent protocol revisions require that RMR units only be procured when they have a material impact on expected transmission overloads, clarify the grid operator’s commitment process for RMR units, and update the contracting and reimbursement process for RMR units.

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FERC Opens Proceeding over Entergy Nuclear Power Sales

By Amanda Durish Cook

FERC last week opened settlement proceedings to address a two-state complaint against an Entergy subsidiary’s proposed return on equity for nuclear power sales to four other company affiliates.

Utility commissions in Arkansas and Mississippi earlier this year filed a protest claiming that the ROE used by System Energy Resources Inc. (SERI) in its current formula rate for energy sales from the Grand Gulf nuclear plant is excessive and outdated. They’ve asked FERC to open an investigation to determine the fairness of the return.

SERI owns 90% of the 1,400-MW facility in Port Gibson, Miss., and sells the plant’s output under a FERC-regulated wholesale rate to Entergy Arkansas, Entergy Mississippi, Entergy Louisiana and Entergy New Orleans under a power sales agreement.

The commission said it will forward the matter to a still-unnamed administrative law judge who will oversee settlement discussions and report whether parties can negotiate a fair ROE. Barring a settlement, the issue would move to a trial-type evidentiary hearing (EL17-41).

Regulators from the two states contend that Grand Gulf should sell its energy to Entergy affiliates at cost-based rates “to avoid overcharging retail customers.” They point out that SERI’s current ROE of 10.94% was calculated using an average of three discounted cash flow analyses produced in 1996 and seek to reduce the figure to 8.5%, in part reflecting a reduction in income tax from $125 million to $97 million.

A “re-examination of [the] current cost of equity is more than due,” the two states argued, especially considering that the Nuclear Regulatory Commission last year extended Grand Gulf’s license another 20 years, until 2044.

In opening the proceeding, FERC brushed aside SERI’s argument that its existing ROE falls into the “zone of reasonableness” and does not require adjustment. The commission said it “has repeatedly rejected the assertion that every ROE within the zone of reasonableness must be treated as an equally just and reasonable ROE.”

Depreciation Rates also Under Review

The proceeding will also include an examination of SERI’s depreciation rates for Grand Gulf.

In a separate August FERC filing prompted by the license extension, SERI sought to revise Grand Gulf’s depreciation rates to an average 2.66% under the same power sales agreement for the four Entergy utilities (ER17-2219). The current 2.85% depreciation rate was based on the assumption that plant would operate only until Nov. 1, 2024. The Arkansas and Mississippi commissions, along with 10% plant owner Cooperative Energy, argue that SERI has not provided enough support for the new rates.

While FERC has for now accepted SERI’s proposed rates effective Oct. 1, it said its own review “indicates that a further decrease may be warranted” and consolidated the matter into the larger ROE settlement procedures.

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PJM MRC/MC Briefs

Markets and Reliability Committee

Give me a B…

VALLEY FORGE, Pa. — PJM is attempting to calculate the market seller offer cap (MSOC) for Capacity Performance units for the 2021/22 delivery year, but it’s come across a hitch in the process, stakeholders learned at last week’s Markets and Reliability Committee meeting.

The MSOC is calculated using the balancing ratios, often represented as “B,” from the three calendar years prior to the Base Residual Auction. The BRA for 2021/22 will happen next May.

B is calculated when emergencies, or performance assessment hours (PAHs), are called. It is used to determine each generation capacity resource’s obligation to deliver energy during the PAH.

market seller offer cap, MSOC, PJM

Keech | © RTO Insider

However, no PAHs happened in 2015 or 2016, and none has happened so far in 2017. Even if one did, the resulting B might not be known in time for the MSOC values to be posted mid-December, PJM’s Adam Keech explained. That timing is important because market sellers will need to determine in early January whether they want to use the default MSOC values or pursue unit-specific valuations, he said.

PJM has proposed revising the Tariff to carry over the B used in the 2020/21 BRA of 78.5%, along with a problem statement and issue charge to explore a long-term solution that would be filed with FERC by October 2018, in time for the 2022/23 BRA. The focus of the investigation would be to determine if B should remain based on historic performance or something more prospective. Keech gave a presentation on the issue at September’s Market Implementation Committee meeting.

market seller offer cap, MSOC, PJM

Bowring | © RTO Insider

Joe Bowring, PJM’s Independent Market Monitor, disagreed with the proposal, saying the current Tariff language addresses such a situation. The math, he said, implies that B goes to zero and the MSOC values revert to each unit’s avoidable cost rate (ACR). Keech disagreed with that interpretation.

“In the absence of data, we don’t just assume that it is zero. And that’s the case that we don’t have balancing ratios to use,” he said. “PJM is not comfortable assuming that it’s just zero because that’s not the way the Tariff reads.”

“I’m not assuming anything,” Bowring responded. “It is a fact that there is zero performance assessment hours. It is a fact that the average of the last three years is zero.”

Calpine’s David “Scarp” Scarpignato asked how PJM planned to address other formulas that use B, such as the CP penalty calculations.

“If you’re changing your assumptions or calculations related to performance assessment hours [and how B is calculated], you should change it elsewhere in CP also because it’s all tied together,” he said.

Stakeholders raised additional concerns, such as the use of 30 expected PAHs in the formula. Borgatti suggested adopting ISO-NE’s flat fee for the penalty instead of being formula-based. Following the discussion, PJM agreed to review the proposed Tariff revisions, problem statement and issue charge and bring the revised versions for a vote at next month’s meeting.

Amendment on DER Charter Sparks Debate

PJM proposed a draft charter to transfer all of its work on distributed energy resources into a subcommittee, but a friendly amendment by FirstEnergy sparked debate on how stakeholders should defer to local and state governments.

FirstEnergy proposed that the charter include a statement that “market rules must respect the distribution system and state/local jurisdictional agency standards and protocols to ensure safety and reliability. Rules should adhere to all pertinent jurisdictions and respect the Relevant Electric Retail Regulatory Authority (RERRA).”

Under FERC Order 719-A, demand response resources served by large electric distribution companies (>4 million MWh) are permitted to participate in wholesale markets unless their RERRA — such as a state regulatory commission — prohibits it. DR resources served by small EDCs (<4 million MWh) are prohibited from participation without RERRA approval.

PJM’s Chantal Hendrzak presented the proposed charter, saying the current problem statement and issue charge on DER is “very narrow” and should be broadened to incorporate issues such as microgrids, coordination with EDCs, the visibility of non-wholesale resources and the pending FERC Notice of Proposed Rulemaking on DER and energy storage RM16-23, AD16-20). (See FERC Rule Would Boost Energy Storage, DER.)

Hendrzak said special sessions of the Market Implementation Committee are not the right forum for the issues, which affect markets, operations and planning.

FirstEnergy’s Jon Schneider said the additional language was necessary to ensure the involvement of EDCs. “We think it’s important to have the right folks at the table, specifically distribution operators,” he said. “We don’t think it’s appropriate to assume that transmission operators will fully represent the interests of distribution utilities.”

“There is nothing that PJM does that would violate a reliability rule at the distribution company,” responded Direct Energy’s Marji Philips. “My concern is this is a very evolving industry. … To flatly say … that we’re not going to even talk about something because it violates an existing rule today doesn’t do anyone any good. The purpose of PJM is to provide a platform for discussion.”

Several stakeholders were concerned with another addition to the charter, which would require the subcommittee “proactively collaborate with states.” American Municipal Power’s Steve Lieberman said that commitment could lead to conflict about favoritism or prioritization.

“With 13 states [in PJM], if two of them feel you weren’t as proactive with them as you were with the other 11, then things could start to snowball unnecessarily,” he said.

Susan Bruce, who represents the PJM Industrial Customer Coalition, objected to the charter’s definition of DER including any generation or storage resource “behind a load meter.”

“Visibility into an industrial customer’s behind-the-meter generation that becomes visible to the world gives them a competitive disadvantage, and that’s a sensitivity that we would hope that PJM would respect for retail customers that are looking to just mind their own business, support their own operations,” she said. “The principle of what goes on behind a customer’s meter really is not anyone else’s business. It’s their economic decision from that perspective.”

Scarp found security in FirstEnergy’s amendment.

“If we’re going to delete that friendly amendment, I’m not sure I can still support the [proposed charter] because I don’t want to guarantee DER participation in the wholesale market. I think that’s a little bit strong when there’s lots of other things going on,” he said.

Hendrzak said staff will consider the comments in revising the charter before seeking an approval vote next month.

MTSL ‘Not Going Away’

market seller offer cap, MSOC, PJM

Price | © RTO Insider

The Monitor sought to resume a debate on calculating the minimum tank suction level (MTSL) for black-start units, arguing that the vote at September’s MIC meeting to forego changes was “clearly wrong.” However, Ruth Ann Price of the Delaware Division of the Public Advocate, who intends to sponsor the Monitor’s proposal, asked Bowring to delay his comments until the issue can be brought back to the committee after further consideration. (See “MTSL Revisions Kaput,” PJM Market Implementation Committee Briefs: Sept. 13, 2017.)

market seller offer cap, MSOC, PJM

Poulos | © RTO Insider

Greg Poulos, the executive direction of the Consumer Advocates of the PJM States, explained that he had advised his membership “that this might not be the best time” to bring up the issue, which represents a relatively small amount of money, when there are many larger topics being debated.

Still, proponents warned that the issue wasn’t dead.

“There is a bit of heartburn if this comes off the table,” Bruce said. “To the extent that this is a vehicle being used for resilience, we would hope that there would be explicit recognition of that fact, that we are paying for this as a service.”

“As far as we’re concerned, this issue is not going away,” Bowring said. “It’s being postponed for a meeting or two. If you want to get it over with quickly and not waste any more time, just vote.”

‘Jump Ball’ on IA Changes Indicates Compromise Possible

None of six proposals considered by the Incremental Auction Senior Task Force won support of more than 39% of those taking part in a recent poll, but half the respondents called for some change to the status quo, giving some stakeholders hope that the issue is not dead. (See Consensus Fades on PJM Incremental Auction Solution.)

Chmielewski | © RTO Insider

PJM’s Brian Chmielewski, who administers the task force, said the “jump ball” suggests that compromise is possible.

“Ending up with the status quo from a customer standpoint is not the right result,” Bruce said. “In the interest of not ending up with status quo, we are willing to negotiate, so I hope we get a chance to do so.”

“In the old days, we all gave blood,” said Philips, whose company proposed the problem statement that founded the group. “It looks like nobody wants to give blood anymore. The art of compromise is part of this process, and I hope we haven’t lost it.”

The group’s next meeting is Oct. 17.

Stakeholders Endorse Manual Revisions

Stakeholders endorsed several manual revisions and other operational changes:

Members Committee

Stakeholders Approve Proposals

The Members Committee approved all proposals presented to them, including Tariff and Operating Agreement changes associated with PJM’s dynamic schedule pro forma agreements. (See Critics Protest PJM Dynamic Transfers Plan.)

Members also approved Tariff and OA revisions on limitations of billing claims and changes extending the proposal window for short-term transmission projects from 30 days to 60 days. (See “RTEP Cycle Revisions Approved,” PJM PC/TEAC Briefs: July 13, 2017.)

Nominating Committee Nominations Approved

Stakeholders appointed a representative from each of the five stakeholder sectors to a one-year term on the committee. The committee will be tasked with considering whether to nominate Neel Foster, Howard Schneider and Sarah Rogers, whose terms expire next May, for re-election to the Board of Managers.

DC Energy’s Bruce Bleiweis asked whether term limits could be waived “since we only have one original board member and we would not want him to leave” — a reference to Schneider, who has served on the board since its inception in 1997.

In 2015, PJM instituted term limits making board members ineligible for re-election once they either turn 75 or have served five three-year terms. (See New PJM Board Member Elected, Re-election Eligibility Changed.)

“I think waivers can be done through the board,” PJM CEO Andy Ott said. “I think I’ll just leave it at that.”

Reducing the Workload

MC Vice Chair Mike Borgatti of Gabel Associates announced that the MRC, MIC, Operating Committee and Planning Committee will be directed to determine if any timelines can be relaxed to “free up a little room in the schedule.” The directive came at the request of stakeholders, who have been complaining about the roughly 500 stakeholder meetings PJM conducts each year.

The workload concern is nothing new. In 2013, one member likened the stakeholders to ponies who will eat themselves to death if given unlimited access to food. (See PJM Faces Resource Limits.)

— Rory D. Sweeney

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PJM Pressed on Plans to File Capacity Changes

By Rory D. Sweeney

VALLEY FORGE, Pa. — With a myriad of proposals emerging to revamp PJM’s capacity market, stakeholders are focused on what the RTO will do, but staff aren’t tipping their hand.

Attendees at Tuesday’s meeting of the Capacity Construct/Public Policy Senior Task Force (CCPPSTF) peppered PJM’s Stu Bresler with questions about his plans should stakeholders decide, after nearly a year of discussion, that the capacity market is better in its current design than anything else proposed. The RTO has proposed a two-stage “repricing” process that would ignore units that don’t clear the initial auction but clear in a second auction in which subsidized units are removed. Those so-called “in-between” units still wouldn’t receive a capacity commitment. (See NOVEC Offers 10th Capacity Proposal.)

DER PJM withholding requests for proposals

Bresler (left) and Anders| © RTO Insider

Stakeholders fear that, short of a clear mandate on which proposal to file with FERC for approval, PJM plans to file its own rather than maintain the status quo. They pressed Bresler to at least hint at PJM’s inclination, but he repeated that he would not be able to “definitively say” what staff will recommend to the Board of Managers by the next meeting of the task force on Oct. 16.

“It depends on too many factors,” he said. “We need to defend our markets.”

“It puts us all in the same predicament because we’re all trying to prevent something that we don’t really want to happen, and that is to have a unilateral filing made. We really want to avoid that,” said John Rainey of Northern Virginia Electric Cooperative (NOVEC).

Rainey said the “quandary” is that PJM has requested stakeholders declare their preferences among the proposals without indicating “whether status quo is a viable option.”

IMM Plan Leads Poll

Earlier in the six-hour discussion, the latest of 18 such meetings since March, attendees reviewed the results of a long-awaited poll on 10 proposals. The Independent Market Monitor’s extended minimum offer price rule (MOPR) proposal received the most overall support with a weighted average of 2.74. The three main two-stage “repricing” proposals from PJM, LS Power and NRG Energy received the next-highest levels of support of 2.05, 1.86 and 1.9, respectively.

The results also broke down how well the proposals addressed certain criteria, such as removing the price impact of a subsidy or driving a competitive outcome. The Monitor’s proposal received the most support in all but one question: whether it accommodated state initiatives. There, PJM’s design narrowly edged the other repricing proposals.

Four non-members also submitted responses. Their votes, which were presented separately from the member results, heavily favored a proposal from the Natural Resources Defense Council that would reduce the capacity requirement to the needs of the off-peak season and allow seasonal resources to account for the additional demand during the peak season.

Stakeholders complained that the structure of the poll was restrictive, so they provided comments to add nuance to their votes. However, PJM’s stakeholder process purposefully withholds any comparison to the status quo until stakeholders have chosen an alternative proposal on which to vote.

Strong Support for Status Quo

DER PJM withholding requests for proposals
Johnson (left) and Sharon Midgely, Exelon | © RTO Insider

Some stakeholders, however, have already made up their minds.

“We’ve given this a huge amount of consideration,” said Carl Johnson, who represents the PJM Public Power Coalition. “How do we get across that we think that the current process is still the best process?”

Representatives from the Consumer Advocates of the PJM States and Old Dominion Electric Cooperative also said they preferred the status quo.

DER PJM withholding requests for proposals

Fields | © RTO Insider

For the first time, the group hosted a substantial contingent of state representatives. In addition to Ruth Ann Price from Delaware’s Division of the Public Advocate and John Farber of the Delaware Public Service Commission, who are often involved in stakeholder meetings, the audience included Bill Fields from the Maryland Office of People’s Counsel, Kristin Munsch of the Illinois Citizens Utility Board and Brian Lipman from the New Jersey Division of Rate Counsel.

DER PJM withholding requests for proposals

Munsch | © RTO Insider

Lipman said his office’s understanding was that PJM is “going to file something,” which would indicate a change, and that the poll didn’t make it “obvious” how to indicate support for the status quo.

PJM’s Dave Anders, who administers the task force, acknowledged the complaints but declined to suggest any implications from the poll.

“I achieved consensus in a very difficult committee: Nobody liked the poll,” he said. “You’re all entitled to your interpretation of the results. I’m not trying to lead you [to any conclusions].”

Several stakeholders said their frustration was aimed at the topic, not Anders.

“Don’t take this as a knock on the poll design,” Johnson said. “I think it was a useful exercise, even though I didn’t want to do it. … Sometimes you can’t tease [your specific wishes] out until you have to make a decision about a question that’s right in front of you.”

NRG’s Neal Fitch asked that the poll results be used to “winnow down” the proposals still in contention to focus attention on viable candidates. PJM’s Adam Keech agreed that “maybe that’s a good place to start,” but Steve Lieberman of American Municipal Power, whose proposal polled near the bottom, cautioned against becoming narrowminded.

“Let’s be careful about latching onto one side,” he said.

DER PJM withholding requests for proposals

Ford | © RTO Insider

To begin narrowing the options, Adrien Ford withdrew ODEC’s proposal, which took a different approach to the repricing concept, but also didn’t want to limit the focus.

“I struggle to agree that we should focus on the repricing proposals,” she said.

A Poll, not a Vote

Stakeholders also differed on how to treat non-member poll results. Calpine’s David “Scarp” Scarpignato said it “doesn’t mean much in regards to a pass/fail vote at the senior committee level.” Direct Energy’s Marji Philips said examining the results of an anonymous, four-voter poll is “inappropriate” and “could actually distract from the conversation.”

However, EnerNOC’s Katie Guerry said “it’s actually helpful to see what non-members think” in comparison to member preferences. “It’s so different,” she said.

Farber reminded stakeholders that “this is a poll, not a vote,” and that they should consider “the optics” of saying non-members can watch but not express opinions.

Anders requested that proposal sponsors indicate for the next meeting whether they intend to withdraw their proposal and, if not, to update the stakeholder matrix and develop a presentation with any changes. He also requested an “executive summary” describing the proposal.

“I don’t want a book. I don’t want 20 pages, but I want enough,” he said.