Page 1759 – RTO Insider

May 18, 2015June 15, 2023

Questions and Answers on NERC’s Proposed GMD Rules

In May 2013, the Federal Energy Regulatory Commission issued Order 779 requiring the North American Electric Reliability Corp. to develop a standard to protect the grid against geomagnetic disturbances caused by solar storms. The commission said it was acting to close a “reliability gap.” (See FERC Orders Rules on Geomagnetic Disturbances.)

In June 2014, the commission approved the first stage of its response with a standard (EOP-010-1) requiring development of operating procedures to mitigate effects of GMDs. (See FERC OKs GMD, Training Standards; Proposes Modeling Rule Change.)

For stage two, FERC required NERC to determine the severity of a “benchmark” GMD event — the threshold against which covered entities would evaluate their system’s vulnerability and develop protective strategies.

What is the threat?

GMD events occur when the sun ejects charged particles that can cause changes in Earth’s magnetic fields. A solar particle can reach Earth in 17 to 96 hours.

NERC determines the severity of a GMD based on the “geoelectric field” — the electric potential measured in volts per kilometer on the earth’s surface — a reflection of the rate of change of the magnetic fields.

The geoelectric field acts as a voltage source that can cause geomagnetically induced currents (GICs) to flow on transmission lines. The magnitude of the geoelectric field is impacted by the geomagnetic latitude — the proximity to Earth’s magnetic north and south poles — and the ability of the planet’s crust to conduct electricity hundreds of kilometers down to its mantle. Local earth conductivity impacts the severity of the geoelectric fields that are formed during a GMD event; a lower earth conductivity results in higher geoelectric fields.

What is covered by the standard?

The standard would apply to planning coordinators, transmission planners, transmission owners and generation owners who own or whose planning coordinator or transmission planning area includes a transformer with a high side, wye-grounded winding connected at 200 kV or higher.

How is the benchmark event defined?

NERC proposed defining the benchmark GMD based on a one-in-100-year frequency of occurrence. Its definition is composed of four elements: (1) a reference peak geoelectric field amplitude of 8 V/km; (2) a scaling factor to account for local geomagnetic latitude; (3) a scaling factor to account for local earth conductivity; and (4) a reference geomagnetic field time series or wave shape to allow analysis of the impact on equipment.

The benchmark estimates that a one-in-100 year GMD event would cause an 8 V/km reference peak geoelectric field at Québec’s geomagnetic latitude and earth conductivity.

The 1989 solar storm that caused the collapse of the Hydro- Québec grid illustrates the potential risk. Shortly before 3 a.m. ET on March 13, 1989, a large impulse in the geomagnetic field was detected near the U.S.-Canada border. That started a series of disturbances that brought down the grid serving Montreal and the rest of Québec within about 90 seconds. The storm also caused large disturbances in the U.S., damaging some transformers severely — including one at the Salem nuclear plant in New Jersey — and nearly knocking out PJM and transmission systems from New England to the Midwest.

NERC’s standard drafting team “spatially averaged” four different station groups of data from Northern Europe, each covering a square area about 500 km wide (310 miles). The team noted that the reliability standard is designed to address wide-area effects caused by a severe GMD, such as increased volt-ampere reactive (var) absorption and voltage depressions.

“Without characterizing GMD on regional scales, statistical estimates could be weighted by local effects and suggest unduly pessimistic conditions when considering cascading failure and voltage collapse,” NERC said.

NERC used scaling factors to adjust the 8 V/km value for different geomagnetic latitudes and earth conductivities.

What is required by the proposed standard?

The proposed standard has seven requirements:

Planning coordinators and transmission planners must determine their responsibilities for maintaining models and performing studies needed to complete the GMD vulnerability assessment specified in Requirement 4.
Planning coordinators and transmission planners must maintain system models and GIC system models needed to complete the GMD vulnerability assessment.
Planning coordinators and transmission planners must have criteria for acceptable system steady state voltage limits for their systems during the benchmark GMD event.
Planning coordinators and transmission planners must conduct a GMD vulnerability assessment every 60 months based on the benchmark GMD event.
Planning coordinators and transmission planners must provide GIC flow information for use in the transformer thermal impact assessment (Requirement 6) to each transmission owner and generator owner that owns an affected transformer within the planning area.
Transmission owners and generator owners must conduct thermal impact assessments on affected transformers where the maximum effective GIC value provided in Requirement 5 is 75 amperes per phase (A/phase) or greater.
Planning coordinators and transmission planners must develop corrective action plans if the GMD vulnerability assessment concludes that the system does not meet the performance requirements.

— Rich Heidorn Jr.

May 18, 2015June 15, 2023

FERC Accepts Interregional Cost Allocation Plan for ISO-NE, NYISO, PJM

By William Opalka

The Federal Energy Regulatory Commission on Thursday conditionally accepted the interregional transmission planning and cost allocation proposals by ISO-NE, NYISO and PJM (ER13-1957 et al), completing the commission’s initial review of all of the interregional compliance filings required under Order 1000.

FERC found that the three regions complied with its requirement that neighboring transmission planning regions propose a common interregional cost allocation method by agreeing on the use of an avoided-cost method. As permitted by Order 1000, they proposed to apply their avoided-cost allocation to all selected interregional transmission facilities, rather than having separate interregional cost allocation methods for different types of interregional projects.

FERC said the filing conformed to its requirement that interregional cost allocation methods address regional reliability and economic needs as well as transmission needs driven by public policy requirements.

The commission previously ruled that an avoided-cost method was not permissible as the sole cost allocation method for regional transmission projects because it would “not allocate costs in a manner that is at least roughly commensurate with estimated benefits because it does not adequately assess the potential benefits provided by that transmission facility.”

However, it concluded that an avoided-cost only method is permissible for interregional transmission.

“We find that the interplay between the regional transmission planning and interregional coordination requirements of Order No. 1000 address, at the interregional level, the commission’s concerns regarding use of the avoided-cost only method at the regional level,” it wrote.

The commission rejected avoided-cost-only allocation for regional projects because a regional facility that resulted in a more cost-effective transmission solution than what was included in the roll-up of local transmission plans would not be eligible for regional cost allocation if there was no transmission facility in the local transmission plans that it would displace.

In contrast, the commission said it believed “there will be regional transmission facilities identified in the regional transmission planning process that are needed to meet transmission needs driven by reliability, economic and/or public policy requirements that potential interregional transmission facilities may displace.”

The filing updated the Northeastern Protocol, which the three regions adopted in 2004 to facilitate the exchange of information and establish a committee structure for the coordination of interregional planning. The Joint ISO/RTO Planning Committee, comprised of staff representatives from the regions, will be charged with evaluating interregional transmission solutions with input from the Interregional Planning Stakeholder Advisory Committee, which is open to stakeholders.

The commission required the regions to make only minor ministerial changes in compliance filings due in 60 days.

May 18, 2015June 15, 2023

ISO-NE VP Ethier: Market Rule Changes Will Slow

GROTON, Conn. — Robert Ethier has a dream: A day when ISO-NE no longer needs constant stakeholder meetings to tweak its market rules.

“We’ll know when we’ve hit on the right market design when we don’t need to make changes to accommodate the changes in the fundamentals,” Ethier, vice president of market operations for ISO-NE, said during a panel discussion at the New England Energy Conference and Exposition last week. “A good, stable, robust market design should adapt to pretty much whatever you can throw at it.”

Ethier said that although New England’s market has work to do to improve demand-side response and integrate the dispatch of wind, it has made progress over the last decade.

“The market is being driven much more by the fundamentals and by policy than by market design. … These markets are really being driven by the larger forces that are changing our economy — changes in fuel prices, changes in technology, changes in policy needs and desires. And that’s really what ought to be driving the markets. It shouldn’t be the market design that’s dominating the discussion.

“I hesitate to say this but I almost think we can see the day when the rate of change in the markets really decreases because the markets have the flexibility they need to react to whatever gets thrown at them,” he said.

May 18, 2015June 15, 2023

Electric Retailers Lament Obstacles

By Rich Heidorn Jr.

GROTON, Conn. — Electric retailers have made progress in moving away from the cutthroat price competition that shaved margins, but restrictions on billing and metering and “organizational inertia” continue to be challenges, a panel told the New England Energy Conference and Exposition last week.

Cullen Hay, general manager of Direct Energy’s residential operations in the Northeast and Midwest, said his company used acquisitions to grow in the past, as it joined other electric retailers in seeking price-conscious customers even as their costs went up. Power suppliers have fewer barriers to prevent customer attrition than cable TV suppliers, telecommunication companies or banks, he said.

“We all kind of lived under the same mantra that as one customer came in the front door, one customer would walk out the back door,” he said.

Over the last three years, however, electric retailers have begun to increase their customer engagement by offering additional services such as home warranties and rooftop solar, he said. “These are not gimmicks. These are the value-added things that the telecom industry found successful when they were handed a deregulated market,” he said.

“The new wave of the industry is knowledge …. Our mission statement is getting our consumers the information they need to make really intelligent decisions. And that goes with consumption-reduction tools like [the] Nest [thermostat] and online portals that allows them to see what their consumption looks like, what their community’s consumption patterns look like” to identify inefficient appliances and make informed decisions.

“That’s the retail, residential industry in the next five years. And it’s already happening.”

Progress, Challenges in Pursuit of C&I Customers

High capacity and transmission costs in regions such as PJM and New England are leading more commercial and industrial customers to welcome companies offering to improve efficiency in return for a share of the cost savings, said Dean Musser, CEO of Tangent Energy Solutions.

“The power customers [are] out there pushing and pushing for ways to innovate. And it’s up to us in this industry to capture that innovation,” he said.

Michael Volpe, who heads SunEdison’s distributed generation business in PJM, said electric retailers could be doing better among C&I customers if not for “organizational inertia.”

“In my experience most energy buyers have a lot of technical acumen but are hesitant to pursue things that they may perceive to be risky due to the long-term nature” of the payback, he said.

The choice, he said, is “getting into the offices of the CFO and sharing how the energy opportunity set has broadened [or] giving the power [to lower-ranking employees] to promote it up” the corporate chain.

Smart Grid Unfulfilled

Musser said the industry and its customers are not getting the full benefits of the billions invested in smart meters.

Philadelphia’s PECO Energy has smart meters for every C&I customer, he said. “But the data is not available until a day later. And if you want a pulse to get the data right away, [it costs] $1,800 and it’s going to take six months.

“That little pulse is two wires coming out of the meter that will enable this … customer to have real-time data every 15 minutes so they can see their consumption and take advantage of all the new products. … But if you’re looking at it a day late that doesn’t help at all.

“Some utilities are adopting methods where there’s free pulses now to get customer adoption. But across the U.S. it’s all over the board for what it costs and how long it takes to get a pulse out of a utility meter,” he said.

Itemized Bills

Hay said limits on itemized bills also are hurting efforts to educate customers about the value of options available to them.

“Customers may not read direct mail pieces and they may not read their email. But they will look at their bill,” he said. “We are limited to the number of line items we have and the amount of information a supplier like us [can provide]. A more engaged customer is going to be interested in the whole product catalog. We have to find a way to give them that information.”

Because of those limitations, Hay said, his company would like to be the ones sending the bills instead of the distribution utility.

“We are pushing for supplier-consolidated billing with any utility in the U.S. market that will allow us to do so. We are pushing it as part of the [New York] REV program.

“It’s going to have costs associated with it, but we’re prepared to bear those costs. I believe that the impact to churn and the impact to customer attrition that comes from us not having that direct relationship will far exceed whatever cost structure we have to take on.”

May 15, 2015May 28, 2025

UPDATE: Md., Del. PSCs OK Exelon-Pepco Deal

By Michael Brooks and Suzanne Herel

The Delaware Public Service Commission on Tuesday unanimously approved Exelon’s $6.8 billion acquisition of Pepco Holdings Inc.

“There is a whole list of very positive things in this agreement,” Chairman Dallas Winslow told The News Journal.

The commission had delayed making its decision earlier this month when it learned that the Maryland Public Service Commission was going to make its decision soon (see below). Commission staff had argued that Maryland’s decision would be helpful, as their settlement with Exelon and Pepco contains a “most favored nation” clause, assuring that Delaware receives the same benefits as other states in the deal.

The commission has yet to make a formal order that reflects the balancing of benefits and did not say when it would do so. The approval leaves D.C. as the only holdout on a decision. The deal has been approved by the Federal Energy Regulatory Commission as well as regulators in New Jersey and in Virginia.

Maryland Approves with 3-2 Vote

The Maryland Public Service Commission voted 3-2 to approve the deal on May 15, saying Exelon’s reputation for service excellence was a deciding factor.

It conditioned the deal on higher reliability standards, $100 rate credits for residential customers and $43.2 million in energy efficiency programs in Montgomery and Prince George’s counties.

Voting in support were Chairman Kevin Hughes and Commissioners Kelly Speakes-Backman and Lawrence Brenner, who noted that Exelon ranked in the top-quartile of reliability metrics, while PHI has lagged.

“Simply put, the evidence demonstrates that Delmarva and Pepco will be better utilities because of the merger,” they said in the order released Friday, which included 46 conditions. “Exelon has demonstrated that it knows how to run electric and gas distribution companies; indeed it is nationally recognized for its standards of excellence.”

Voting against the deal were Commissioners Harold Williams and Anne Hoskins. “The merger will impose substantial competitive harm to Maryland’s electricity market by eliminating across-the fence competition, silencing PHI’s unique non-generation voice, and chilling innovation in new energy-related technologies and products,” they said in a 51-page dissent. Exelon still needs to win the approval of Delaware and D.C. to close the deal.

The approval revises certain provisions of a settlement Exelon had reached in March with Montgomery and Prince George’s, in which the corporation agreed to pay a one-time $50 rate credit to each residential customer of Pepco’s two utilities in the state, Delmarva Power & Light and Potomac Electric Power Co. (PEPCO). Exelon had also agreed to invest $57.6 million in energy efficiency. (See Exelon, Pepco Ink Deal with Md. Counties, but Critics Stand Firm.)

The commission also required Exelon to:

Develop 15 MW of solar generation by the end of 2018 — 5 MW in Montgomery County, 5 MW in Prince George’s County and 5 MW in the Delmarva service territory.
Establish a $14.4 million Green Sustainability Fund — $8.4 million for Montgomery and $6 million for Prince George’s — for the counties to fund solar, energy storage and other distributed generation projects.
Exceed Pepco’s level of charitable giving of $656,000 annually for at least 10 years.
Remain a part of PJM at least until the end of 2024.
Develop a pilot program for recreational and transportation use by residents of Pepco’s transmission right-of-ways.

Exelon and Pepco have until May 26 to accept the commission’s conditions. In a statement, Exelon CEO Chris Crane said the company was pleased with the decision and that the commission had recognized its reliability marks, but that the conditions in the order would be “challenging.”

“It poses some stringent conditions that will be difficult to fulfill, but all of us at Exelon accept the challenge and commit to proving ourselves in an expanded role in Maryland,” Crane said.

Critics Disappointed

Commissioners Williams and Hoskins dissented, echoing criticism that has been levied at Exelon throughout the proceeding.

“Maryland w Exelon ill lose its wires-only electric utilities, Pepco and Delmarva, which will be purchased by an energy conglomerate concerned with protecting its vast fleet of electric power plants, from which it derives most of its revenue,” they said. “Exelon’s economic interests to shield that fleet from emerging distributed energy technologies and other competitive threats are inherently misaligned with the interests of the customers of Pepco and Delmarva, who are predominantly concerned with efficient, cost-effective and reliable electric service.”

They also noted that the Green Sustainable Fund would not benefit Delmarva Power’s territory on the state’s Eastern Shore.

While Montgomery County Executive Ike Leggett had reached the county’s settlement with Exelon, the County Council unanimously passed a resolution saying the settlement didn’t go far enough to protect ratepayers and encourage renewable energy. Councilmember Roger Berliner, an energy attorney who spearheaded the resolution, said he was “deeply disappointed with the decision.”

“Exelon has a proven track record of favoring its own nuclear generation holdings over renewable technologies like solar and wind,” Berliner said. “This merger poses an unacceptable threat to both ratepayers and our environment.”

Berliner did acknowledge the beneficial conditions of the approval. He said that he has been “knocking on Pepco’s doors” to open up their rights-of-way, but the utility “stiff-armed us for years.”

The order includes a concession Berliner had sought — a Montgomery County “green bank” through which the county will use Exelon contributions to “leverage” investment in clean energy and energy-efficiency technologies.

But Berliner lamented the fact that these breakthroughs were achieved through the acquisition process, and by the level of Exelon’s commitment to renewable energy, which he said, “just didn’t go far enough.”

Environmentalists agreed.

“We are disappointed by today’s decision, which comes as a blow to the future of clean energy in Maryland,” said David Smedick of the Sierra Club. “The meager conditions added by the commission do not come close to mitigating the harms that the merger will cause to Marylanders.”

Maryland Attorney General Brian E. Frosh also blasted the order.

“Today is a bad day for consumers, and a great day for monopolies,” he said in a statement. “This merger — which the PSC approved by the slimmest of margins — would create a company controlling service to 80% of Maryland’s electric consumers, with the incentive and ability to stifle competition and suppress innovation. The harm to customers under this arrangement are obvious and substantial.”

PJM Independent Market Monitor Joe Bowring was disappointed by the ruling.

“They didn’t accept our conditions, so we didn’t think they did enough,” Bowring said. “What we would have liked was for Maryland to accept the conditions we proposed,” which the Monitor has proposed to all of the involved entities.

One to Go

Opposition to the Exelon-Pepco marriage continued to grow last week in D.C., where regulators may make a decision as soon as May 27, when the record closes.

Four D.C. Council members and more than half of the District’s 42 local advisory neighborhood commissioners — some of whom rallied on the steps of the Wilson Building Tuesday — are lobbying Mayor Muriel Bowser to take a stand against the transaction, though she doesn’t have an official role in the decision.

Councilman David Grosso submitted a May 12 letter to the D.C. PSC urging the board to reject the deal. The following day, People’s Counsel Sandra Mattavous-Frye filed a brief advising the PSC against the takeover.

“While this merger provides a wealth of benefits for Exelon and PHI’s shareholders, it exposes District of Columbia ratepayers to a number of unnecessary risks,” she said. “I am primarily concerned that Exelon has failed to commit to meeting established reliability standards, that any financial benefit to consumers will be erased with the first rate case and that the major decisions impacting the city’s electrical infrastructure will be made by executives in Chicago.

“As it regards the city, I am concerned that the success the District has achieved in the area of deploying renewables will be compromised by Exelon’s corporate philosophy that favors generation companies. Moreover, I have no confidence in Exelon’s ability to deliver on the promise of more jobs.”

A Year in the Making

The deal, announced last April as an all-cash transaction, has been more than a year in the making. If the deal is approved, it will create the Mid-Atlantic’s largest electric and gas utility.

Exelon is familiar with mergers. The company is the product of the 2000 pairing of Philadelphia’s PECO Energy and Chicago’s Commonwealth Edison. In 2012, it acquired Baltimore’s Constellation Energy.

It hasn’t always been successful in its deal making, however.

Exelon dropped a proposed merger with Public Service Enterprise Group in 2006, and had its overtures spurned by PPL in 1995 and NRG in 2009.

Exelon has said the deal will boost its customer count to almost 9.8 million from 7.8 million and increase its rate base to almost $26 billion from $19 billion.

Exelon hopes to close the deal by the end of the year.

May 15, 2015

Another Meeting Day, Another Drama at FERC

By Rich Heidorn Jr.

WASHINGTON — Despite changing its meeting date to avoid threats of mass demonstrations next week, the Federal Energy Regulatory Commission couldn’t avoid another protest drama Thursday.

FERC instituted a new policy that forced all non-employees — lawyers, lobbyists, reporters and protesters — through a lengthier and more rigorous-than-normal security screening that included photographs. After receiving a paper ID badge and going through a metal detector, the known protestors were directed left, while the others went right to the escalator to the second-floor Commission Meeting Room.

When the protestors were informed they would be quarantined in a commission hearing room where they could watch video of the meeting, they began chanting “Shut FERC down!” (See video.) While organizers claimed the protesters numbered three dozen, only about 15 appeared in a video the group shot after being ejected.

Suits, not T-shirts

Among them was Ted Glick, national campaign coordinator at the Chesapeake Climate Action Network, who wore a suit rather than the red T-shirt he and other protesters had worn in previous meetings. (See Protests Continue — on Camera — at FERC.)

About 20 minutes into the meeting, as the commission was discussing a ruling on an Order 1000 compliance filing, the protesters apparently exited the hearing room. The protesters’ chants were audible — if not discernible — in the meeting room until they were escorted out of the building.

FERC Chairman Norman Bay joked, “I hope the protesters haven’t moved from pipelines to Order 1000,” prompting laughter.

But at least three protesters slipped the dragnet and were able to make brief statements before being escorted out.

PennEast Pipeline

The first two, Patty Cronheim of Hopewell Township, N.J., and Angela Switzer of Delaware Township, N.J., stood up to protest the proposed PennEast Pipeline. The 36-inch pipeline would deliver about 1 billion cubic feet of gas per day from Luzerne County, Pa., to Transco’s pipeline interconnection in Mercer County, N.J., 108 miles away.

“You’re destroying lives, you’re abusing eminent domain,” Switzer said before being led out of the meeting. “This is corporate greed over public need.”

Switzer said afterward she is concerned the pipeline, which would cross her 60-acre farm, could result in contamination of her water wells. “I live in an arsenic-rich zone and there’s a chance when they drill through the bedrock they’re going to release arsenic into my wells,” she said. “… FERC is not listening to us.”

The backers of the project — AGL Resources; NJR Pipeline Company; PSEG Power; South Jersey Industries; Spectra Energy Partners; and UGI Energy Services — are hoping for FERC approval in 2016.

A third protester, Maggie Henry, of Bessemer in Western Pennsylvania, stood up as the meeting was adjourned, shouting “In the shale plays of Pennsylvania, you are killing people!”

In a press conference afterward, Bay turned serious, reading a statement in which he criticized the repeated meeting interruptions as “disrespectful” and ineffective.

“I respect the First Amendment rights of the protesters and I want to hear their views. But there are ways to do that and there are ways not to do that,” he said. “The way not to do it is to disrupt our proceedings. In my view the disruptions are disrespectful, they violate the law [and] they can pose public security concerns. They often violate the ex parte rule. They prevent us from doing our work and it’s a turnoff. It’s ineffective and unpersuasive as a matter of advocacy.”

Bay also noted that the commission does not regulate the production of natural gas. “If someone is upset with fracking, they should probably talk to the states. If I had any advice for the protesters it would be this: tell them to reconsider what they’re doing and I would urge them to stop disrupting our meetings.”

FERC acknowledged that it had rescheduled the meeting at the recommendation of Federal Protective Services, which wanted to avoid demonstrations planned for the week of May 21-29, including the scheduled May 21 session. Beyond Extreme Energy, the organization that has been coordinating the FERC protests, had said it is hoping to attract more than 500 demonstrators to FERC during the week.

In November, about 100 climate change protesters blockaded FERC headquarters, snarling traffic on First St. N.E. About 25 were arrested.

May 12, 2015June 15, 2023

UPDATED: Moeller Leaving FERC

By Rich Heidorn Jr.

More change is coming to the Federal Energy Regulatory Commission, as Commissioner Philip Moeller announced last week that he won’t be returning for a third term.

ferc — Patrick McCormick sits left of Sen. Lisa Murkowski during Norman Bay and Cheryl LaFleur’s confirmation hearing last year.

News of Moeller’s departure set off one of Washington’s favorite parlor games: guessing his replacement. Sources have tabbed Patrick McCormick III, chief counsel for Senate Energy and Natural Resources Committee Chairman Lisa Murkowski (R-Alaska), as the likely nominee.

Murkowski named McCormick as her chief counsel in 2013. He joined Murkowski’s staff as special counsel in April 2011 from Hunton & Williams, where he was a partner and led the firm’s regulated markets and energy infrastructure practice. Among McCormick’s law clients were Xcel Energy and coal giant Peabody Energy.

He was also registered as a lobbyist for FirstEnergy and the CCS Alliance, which promotes carbon capture and sequestration.

McCormick took a big pay cut to join the committee. He reported earning $567,000 in 2010 and $374,000 through April 15, 2011, at Hunton & Williams. His initial salary when he joined the Senate committee staff was about $81,000.

Before joining Hunton & Williams in 2005, McCormick was the managing partner for the Washington office of Balch & Bingham, longtime counsel for Southern Co.

McCormick also served as a deputy assistant general counsel for FERC, where he dealt with electric rates and corporate regulation, and in the law and governmental affairs departments of Potomac Electric Power Co. (PEPCO). He earned a Bachelor of Arts in history at Wheeling Jesuit University in 1977 and his law degree from Catholic University of America in 1984.

McCormick did not respond to a request for comment Monday.

If he is confirmed, and Murkowski has her way, McCormick could be implementing the first major energy legislation since the Energy Policy Act of 2005.

On May 7, Murkowski introduced 17 legislative proposals that she said would modernize the nation’s energy policies, improve infrastructure and speed review of natural gas pipelines on federal lands.

“America’s energy landscape has undergone a dramatic change since Congress last acted on comprehensive energy legislation. Our domestic energy supply has gone from scarce to abundant,” she said. “Our energy renaissance underscores the need to modernize America’s energy policies.”

Moeller to Remain Pending Replacement

Moeller, whose term expires June 30, said he will remain on the commission until a replacement is sworn in. A Republican, Moeller joined the panel in 2006.

“It’s been an honor and a privilege to serve on the commission every single day since I joined the commission in July 2006,” he said in a statement. “I send thanks to President Bush and President Obama for nominating me, as well as the members of the United States Senate who unanimously confirmed me to both terms.”

Moeller’s departure comes as the commission is adjusting to a new chairman, Norman Bay, who replaced Cheryl LaFleur in April. (See LaFleur Chairmanship Ending; Bay to Take Gavel.) The newest commissioner, Colette Honorable, joined the panel in December.

McCormick’s arrival could make for some interesting interpersonal dynamics on the commission given Murkowski’s cool reception to Bay’s nomination. (See GOP Remains Skeptical on Bay Nomination.)

Moeller’s departure means he won’t have a chance to become chairman if a Republican wins the White House in 2016.

Before joining the commission, he worked from 1997 through 2000 as an energy policy adviser to U.S. Sen. Slade Gorton (R-Wash.). Before joining Gorton’s staff, he was the staff coordinator for the Washington State Senate Committee on Energy, Utilities and Telecommunications. Before becoming a commissioner, he headed the D.C. office of Alliant Energy and worked in the D.C. office of Calpine.

May 11, 2015June 15, 2023

Berkshire Hathaway Banking on Midwest Solar?

By Chris O’Malley

Warren Buffett’s energy businesses have been buying and building wind generation facilities in the Midwest and Great Plains for years.

But the Oracle of Omaha now has his eyes on bringing solar power to the central U.S., according to a recent filing with the Federal Energy Regulatory Commission.

Buffett’s Berkshire Hathaway Energy disclosed that it recently acquired a site for solar generation development in MISO’s central region. The “site” consists of 74 individual “locations” not to exceed 1 MW each, according to the company’s quarterly property acquisition report. (MidAmerican Energy Holdings changed its name to Berkshire Hathaway Energy in April 2014.)

The company did not disclose exactly where the site is located. The company is not ready to make an announcement on the project, spokesman David Caris said.

MISO is a new locale for the company’s solar portfolio.

Subsidiary BHE Renewables has more than 1,200 MW in existing solar generation, primarily in California and Arizona, including its 550-MW Topaz Solar Farms in San Luis Obispo County, Calif., which became fully operational in March. Berkshire Hathaway companies also operate 579 MW of solar generation in Los Angeles and Kern Counties and own 49% of a 290-MW solar generating site in Yuma County, Ariz.

Environmental Regulations Bring Opportunities

Berkshire Hathaway’s planned solar expansion in MISO’s coal-dependent central region — which includes Indiana, Michigan, Wisconsin and parts of Illinois — appears designed to take advantage of increased demand for renewables as a result of federal environmental regulations.

The company has also continued its investments in wind. In October, BHE announced its plans for a 160-MW wind farm in Adams County, Iowa, that could cost up to $280 million.

Late last month, the company filed plans with the Iowa Utilities Board to construct up to 552 MW of additional wind generation in the state at a cost of $900 million. The company said it would announce the location and other details later.

On April 30, BHE announced plans to build a 400-MW wind farm in Holt County, Neb., that would be the largest wind project in the state. The recent FERC filing said that Berkshire Hathaway acquired a site in SPP territory for up to 400 MW of wind-powered generation development. It wasn’t immediately clear whether it’s the same site.

BHE owns and operates more than 3,400 MW of wind, solar, geothermal and hydro generation.

At the Edison Electric Institute’s annual convention last June, Buffett said the company, which has already spent $15 billion on renewables, was prepared to double that investment.

May 11, 2015June 15, 2023

Former FERC Regulators Lament Unfinished Business

By William Opalka

ALBANY, N.Y. — Four former energy regulators who were in the middle of many of the electric industry’s watershed events of the past two decades reminisced — and expressed regrets for paths not chosen — at the Independent Power Producers of New York spring conference Wednesday.

Former Federal Energy Regulatory Commissioners William Massey (1993–2003), Nora Mead Brownell (2001–2006), Suedeen Kelly (2003–2009) and former chairman Pat Wood (2001-2005) expressed pride in the growth of wholesale competition and wistfulness over political compromises that prevented development of larger, more uniform markets.

In a later session, NYISO CEO Stephen Whitley (2008–present) and predecessors William Museler (1999–2005) and Mark Lynch (2005–2008) also shared war stories from the first 15 years of the ISO’s markets.

Open Access

Massey voted in 1996 for the landmark Order 888, which ordered transmission operators to open their lines to competition.

“We knew we would get pushback with everything we did, but if you’re going to be a regulator or run an RTO, you’ve got to have political courage,” said Massey, counsel to the COMPETE coalition, which represents more than 700 stakeholders in support of electricity competition.

And political courage failed him at the most crucial time, Massey admitted, recalling the California energy crisis of 2000-2001, which occurred after FERC’s misgivings about the poorly designed California market were cast aside.

Massey related how the 1996 utility restructuring law passed the California legislature unanimously. The entire California congressional delegation then wrote to FERC, saying that any tinkering by the agency would likely cause the plan to collapse “like a house of cards.”

FERC meekly went along. “We had the opportunity to vote yes or no,” Massey said. “That is the vote I’m most sorry about.”

California’s wholesale power market and customer-choice program began in 1998 and seemed to be working well until the summer of 2000, when electricity prices in southern California hit all-time highs, and generation shortages caused rolling blackouts in northern California. Escalating wholesale prices, combined with retail price caps, put the state’s three major investor-owned utilities in a vise, with Pacific Gas & Electric forced to declare bankruptcy.

In December 2000, FERC eliminated the requirement that the three IOUs purchase their power through the California Power Exchange. In June 2001, shortly after Wood and Brownell joined the commission, FERC expanded a price mitigation and market monitoring plan it had issued in April 2001.

The California price spikes and Enron’s implosion stopped restructuring dead in its tracks as a national policy, Wood recalled. “Years later we were still putting the pieces back together,” he said.

Wood, now chairman of the Dynegy Board of Directors, said the industry is still coping with the lessons from the California crisis, including the balancing of consumer interests and industry needs. “If you want to be an economic regulator, you’ve got to understand the economics [and] what it takes to incent investment,” he said.

What he most seemed to regret was how proposals to divide the country into four RTOs — the Northeast, Southeast, Midwest and West — were stymied. The country is still paying for the “balkanization” of the markets caused by the “hue and cry and pushback,” he said.

“I still think there’s a lot of enterprise that could occur between New York and New England. And the seams issues between PJM and MISO are just awful,” he said.

NYISO-CEOs-at-IPPNY-for-web — Present & former NYISO CEO’s: William Museler (1999-2005) (L), Mark Lynch (2005-2008) (M), and Stephen Whitley (2008-present) (R)

Former NYISO CEO Lynch said the vision of a larger, seamless market in the Eastern Interconnection is unlikely to be realized. “We may have missed our opportunity to get there,” he said.

Kelly, who worked on legislation to make restructured markets national policy as a Senate staffer before her FERC tenure, said its failure informed her tenure as a regulator. “Political courage is important, but even more important is political support,” she said. Kelly added that energy policy is one place where partisanship can melt away and consensus built.

But Brownell and NYISO CEO Whitley said that consensus-building can be unwieldy — “herding cats,” Whitley called it.

“I think the stakeholder process has grown into a cottage industry,” Brownell said. “I have great respect for the work they do, but I can’t imagine the New York Stock Exchange being developed by 400 people over a three-year period. We need to focus on the larger picture,” she said.

The larger picture, Brownell said, is electric markets’ role in developing the economy. “Where we begin to redefine this industry as economic development, we’ll move away from state versus federal [jurisdiction]. This is really about our competitive position in the world and social well-being.”

May 11, 2015

Allco Challenges New England’s Renewable Procurement Plan

By William Opalka

A New York clean energy developer has challenged a three-state effort to bring more renewable energy to New England.

Allco Renewable Energy Group filed suit against Connecticut in U.S. District Court in New Haven, claiming the joint effort and Connecticut’s renewable energy subsidies violate the U.S. Constitution’s Interstate Commerce Clause (3:15-cv-00608-CSH). Allco is also asking for an injunction to stop the joint procurement plan by Connecticut, Massachusetts and Rhode Island.

In February, the states issued a draft solicitation seeking more than 2,300 GWh of renewable energy per year. (See New England States Combine on Clean Energy Procurement.)

Allco CEO Thomas Melone unsuccessfully sued over Connecticut’s previous clean power plan, claiming the state illegally excluded renewable energy credits (RECs) generated by his facilities in other states from participating in Connecticut’s programs. RECs represent the environmental attributes of a clean energy project and are sold and traded separately from the energy produced. That case is under appeal. The claims made in that suit under the dormant Commerce Clause and the Federal Power Act are repeated in the new lawsuit.

Connecticut counts RECs from other New England states, and from New York and Canada, under certain circumstances. Melone is seeking to have his solar facilities in Georgia and New York qualified. The determination should be made by the Federal Energy Regulatory Commission and not the states, the suit says.

“The dormant Commerce Clause prohibits a state from using its regulatory power to discriminate against out-of-state businesses,” according to the suit, filed on April 26.

Allco sued the Connecticut Department of Energy and Environmental Protection and the state’s Public Utility Regulatory Authority.

“The three-state procurement is an innovative approach to meeting our renewable energy goals and securing clean power at the lowest possible price for our families and businesses,” Dennis Schain, a spokesman for DEEP said in a written statement to the Hartford Courant. “We believe the procurement is legally sound and will meet court challenges.”