Page 1779 – RTO Insider

March 3, 2015June 15, 2023

MISO Board of Directors Briefs

NEW ORLEANS — MISO last week signed a new Operations Reliability Coordination Agreement (ORCA) with its southern neighbors, increasing the flow limits within the MISO footprint.

MISO reached this agreement with SPP and the so-called “Joint Parties” — neighboring systems including Southern Co., Tennessee Valley Authority, Associated Electric Cooperatives, Louisville Gas & Electric, Kentucky Utilities and the PowerSouth Energy Cooperative.

Jennifer Curran, vice president of system planning and seams coordination, told the Board of Directors that the new agreement, which was filed with the Federal Energy Regulatory Commission on Feb. 27, increases MISO’s ability to flow from 2,000 MW to a total of 3,000 MW in the area (ER15-1141).

MISO said the signing of the new agreement will allow it and its neighbors to continue work on a long-term, market-based solution. The original ORCA was due to expire April 1. The new pact will expire on April 1, 2016, or earlier if FERC approves a replacement arrangement sooner.

MISO “continues to believe that current industry-wide reliability measures more than sufficiently protect system reliability and coordination,” the RTO said in a statement. “However, MISO is pleased to have developed a cooperative agreement to accommodate the desire for greater experience for its neighbors.”

No Rush on Review of Entergy Out-of-Cycle Tx Projects

The board will rule “no earlier than April” on Entergy’s request for approval of six out-of-cycle transmission projects totaling $220 million, Director Michael Evans said. Evans said the board would begin its review this month.

Entergy’s request for a $187 million transmission upgrade near Lake Charles, La., has become a lightning rod for transmission developers, who have accused the company of seeking an out-of-cycle designation to avoid opening the project to competition.

The Lake Charles project and five smaller out-of-cycle proposals failed to win unanimous support at the Planning Advisory Committee last month, setting up a “full” review by the board. (See MISO Board to Review Entergy Lake Charles Project Following Stakeholder Pushback.)

New MISO Chair Plans Changes on Governance; Higher Board Profile

New MISO Board Chair Judy Walsh said last week she will seek a review of the RTO’s governance principles while increasing the board’s visibility with state regulators.

Walsh, a former Texas Public Utility Commissioner who took the gavel in January, said the RTO has “looked mostly inward” in the past but needs to increase its outreach because of challenges such as the Environmental Protection Agency’s proposed carbon emission rule.

She asked Director Eugene Zeltman, chair of the Governance Committee, to review the term and role of the chair. “If the board will represent MISO before [the National Association of Regulatory Commissioners] and state regulators, perhaps more visibility and continuity may be desirable,” she said.

In the interim, she said, Director Michael Curran will continue to represent the board with outside parties, building on the relationships he developed during his recently completed two-year term as chairman.

Walsh asked the Governance Committee to review “all principles of governance,” including stakeholder relations, conflicts of interest standards and the Nominating Committee process, saying she hoped to have changes ready for adoption by the end of the year.

She said MISO management “has challenged itself to look at all operations and processes [to] ensure we are consistent and that a policy adopted for one purpose does not get in the way of us accomplishing our overall goals.”

She also said the Advisory Committee should consider reducing the number of subcommittees it has and the time spent in meetings.

MISO Names New Security Chief; Plans Additional Cybersecurity Spending

MISO will increase its technology budget “by a confidential amount” in order to eliminate the use of shared infrastructure between critical and non-critical assets, Director Baljit Dail said.

The spending is necessary to comply with tightened Critical Infrastructure Protection standards that will take effect in 2016.

The spending will be overseen by the RTO’s newly appointed Chief Information Security Officer Mark Brooks, who joined the RTO several weeks ago.

Incentive Payout: 68.8%

The board awarded MISO employees 68.8% of their potential incentive awards under its short-term incentive program for 2014.

The incentives are based on achievements measured against a weighted list of seven metrics: reliability standards, unit commitment efficiency, market efficiency, compliance with operations and capital spending budgets, customer satisfaction and strategic initiatives.

The board judged staff’s performance “excellent” for capital budgeting and “mid-range” for most other measures.

— Rich Heidorn Jr.

February 24, 2015June 15, 2023

Ex-Minnesota Commissioner Joins MISO

Former Minnesota Public Utilities Commission Chairman David C. Boyd has joined MISO as vice president of government and regulatory affairs. Boyd, who served eight years on the commission, will be MISO’s primary liaison with the governors and state regulatory and legislative policymakers in the 17-state region.

February 24, 2015

PJM Wins OK on Multi-Driver Tx Projects

PJM and its Transmission Owners won federal regulators’ conditional approval for their plan to integrate multi-driver projects into the regional transmission expansion plan (RTEP).

The Federal Energy Regulatory Commission’s Feb. 20 ruling (ER14-2864, ER14-2867) requires PJM to revise its Tariff to include the criteria it will use to determine whether and how to divide a multi-driver project that combines two or more proposed projects and two or more transmission developers.

The commission also ordered PJM to clarify its definition of multi-driver projects. PJM proposed to define such projects as “a transmission enhancement or expansion that addresses more than one of the following: reliability violations, economic constraints or public policy requirements.”

FERC said the definition “might be read to include reliability or economic transmission projects that also address public policy requirements for which PJM planned during the assumptions stage of the RTEP process,” which would conflict with PJM’s Order 1000 compliance filing.

PJM said the multi-driver concept could lower the cost of states’ public policy transmission projects by incorporating them in upgrades that address market efficiency or reliability.

FERC initially responded to the RTO’s filing with a deficiency notice asking for additional information on definitions, processes and cost allocation. (See PJM, TOs Respond to Deficiency Notice on Multi-Driver Projects.)

February 24, 2015

PJM MRC Preview

Below is a summary of the issues scheduled to be brought to a vote at the Markets and Reliability Committee on Thursday. Each item is listed by agenda number, description and projected time of discussion, followed by a summary of the issue and links to prior coverage in RTO Insider.

RTO Insider will be in Wilmington covering the discussions and votes. See next Tuesday’s newsletter for a full report.

2. PJM Manuals (9:10-9:40)

Members will be asked to endorse the following manual changes:

Manual 02: Transmission Service Request — Changes aim to clarify and more accurately describe the Available Transfer Capability (ATC) processes and the Initial Study process for long-term firm transmission service requests. They include a grammatical cleanup; updated references to the Joint Operating Agreement; and links to the deliverability analysis in Manual14A and Manual 14B.
Manual 14A: Generation and Transmission Interconnection Process — Adds Feasibility Study data form and Impact Study data form.
Manual 14B: PJM Regional Transmission Planning Process — Updated to reflect existing long-term deliverability analysis procedures and cleanup language regarding voltage drop analyses, generator deliverability analyses, load deliverability analyses and cost allocation.
Manual 40: Training and Certifications Requirements — Revisions resulting from the annual review required by North American Electric Reliability Corp. standard PER-005-2; includes a new section on training of operations support personnel.

3. PJM/MISO Coordinated transaction scheduling (9:40-10:00)

Members will be asked to approve the proposed PJM-MISO Coordinated Transaction Scheduling (CTS) product, which is intended to reduce uneconomic trading across the RTOs’ seam. (See PJM, MISO Reach Agreement on New Interchange Product.)

— Suzanne Herel

February 24, 2015

PJM Wins on 2,000 MW Capacity Waiver; Purchase Plan Rejected

The Federal Energy Regulatory Commission approved PJM’s request to retain 2,000 MW of capacity in yesterday’s third Incremental Auction for 2015/16 but rejected its request to purchase capacity outside of the Reliability Pricing Model, calling it “unreasonably vague and ill-defined” (ER15-738).

PJM had requested the one-time waiver on rules that would otherwise require it to release 2,000 MW of capacity, saying it feared that it might run short due to retirements of coal-fired generation.

In approving the request, FERC rejected arguments by interveners who said the RTO’s concerns were speculative. (See PJM Responds to Critics on Capacity Release Filings.)

“The release of approximately 2,000 MW of committed capacity could yield a reserve margin below the established installed capacity needed to assure reliable service to loads,” the commission said. “Moreover, given PJM’s reliance on committed capacity resources, the poor performance of generating capacity resources last year and the expected high level of generation retirements, absent granting the waiver, PJM would face increased risks of being unable to serve load.”

The commission, however, rebuffed PJM’s request for permission to obtain additional capacity outside of its auctions.

“Capacity procured under the proposed Tariff provision would be in addition to the 2,000 MW procured at competitive prices under the waiver, and PJM has not provided just and reasonable Tariff provisions that specify the criteria for determining how much additional capacity it requires, nor how to determine whether those contracts are at just and reasonable prices,” the commission ruled.

It said PJM could refile its request with more specifics to address the shortcomings in the initial filing.

February 24, 2015

Retiring PJM CEO Boston Lauded for Efficiency Improvements, Management Style

By Suzanne Herel

When Terry Boston took the helm of PJM seven years ago, the RTO was in turmoil, its reputation as the model for running competitive deregulated electricity markets in the balance.

Top management was battling allegations by PJM’s electricity price watchdog that the system was allowing generators to inflate rates. Amid the clash, Chief Operating Officer Audrey Zibelman and Chief Executive Officer Phil Harris abruptly resigned within months of each other, leaving the RTO rudderless.

In stepped the former executive vice president for the Tennessee Valley Authority, who early on in the deregulation of the market had focused on the importance of reliable transmission when the conversation — and profits — had drifted toward the generators.

“Terry brought PJM through a difficult period,” said Joe Bowring, the employee who challenged PJM’s credibility under former management and is now Independent Market Monitor for the RTO. “When he first got to PJM, he actively reached out to the Market Monitor unit, which we appreciated very much. He listened to us and all market participants.”

Now, North America’s largest power grid operator finds itself at the edge of another major change as Boston, 64, prepares to retire by the end of the year.

“I’ve been working in the utility industry for 43 years. It’s been a wonderful and rewarding career, but all good things must come to an end,” Boston told RTO Insider. “I am looking forward to spending more time visiting our kids, helping out our daughter Rachel with her career as an actress and getting out on our boat, which I haven’t been on in two years.

“I will continue on several boards and industry/professional groups. Most recently I’m involved with the Bipartisan Policy Center on energy policy and grid security and the National Academy of Engineering working on energy and the environment and improved analytics for the power system. I hope to remain engaged with the industry at a somewhat less demanding pace than working half days — that’s 12 hours per day,” Boston said.

Encouraging Team-Building

Boston is widely regarded by those who have worked with him during his time at PJM as a forward-thinking, approachable leader, a straight-shooter who strives for consensus and encourages team-building. The Tennessee native also enlivens meetings with his quirky sense of humor: To invoke the feel of a “fireside chat” at PJM’s General Session in February 2014, he propped up a tablet showing a video of a burning yule log on the stage.

“He’s been a real positive player in terms of a stable presence at PJM, with the vision of trying to see where it’s going. Particularly in the last year they’ve been very helpful in, No. 1, admitting they didn’t take gas-electric [coordination] as seriously as they should have, and No. 2, doing something about it,” said Federal Energy Regulatory Commissioner Philip Moeller. “He’s a great guy — he’ll be missed. But he deserves a lot of accolades as he winds it down.”

Sonny Popowsky, a former Pennsylvania state consumer advocate, sat with Boston on the board of the North American Electric Reliability Corp.

“He came in to PJM at a time of some turmoil with what direction we were headed and what the role of the markets was in terms of maintaining reliability,” Popowsky said. “When he came from TVA, he came with a strong background that focused on engineering and reliability. But he also came with an openness to the kind of market solutions that PJM is famous for. He’s been able to combine that really well.

“I think he’s just added a real level of stability and openness,” he said.

A Vocal Proponent of Consensus

Boston has publicly expressed his frustration with the number of Section 206 filings — used when stakeholders fail to reach consensus — submitted to FERC last year, including the request to raise the price-based energy offer cap from $1,000 to $1,800.

“Our ability to govern ourselves in the stakeholder process depends in large part on compromise,” he told the Markets and Reliability Committee at its year-end meeting. He opened the first MRC meeting of 2015 with another plea for consensus. The year ahead will hold a number of challenges, he said, especially as the RTO faces “the fastest fuel change in industry history” from coal-fired plants to natural gas.

In announcing Boston’s plans for retirement last week, Board of Managers Chairman Howard Schneider said on behalf of the group, “Terry’s deep knowledge of the electricity industry, strong business ethics and ability to forge strong relationships with PJM’s stakeholders have been instrumental in the success of PJM.”

During Boston’s tenure, PJM increased its billings from $30.6 billion in 2007 to more than $42 billion in 2014 while the RTO’s membership grew from 500 to more than 900 companies.

In 2008, Boston implemented “perfect dispatch,” a metric denoting the lowest production cost possible while maintaining reliability, which the company uses as a baseline to analyze and improve dispatch efficiency. According to PJM, the process has saved a cumulative $842 million — three times the cost of PJM’s annual operating budget.

At TVA, Boston ran the storm center for 20 years, and while at NERC he sat on the steering committee that investigated the 2003 Northeast blackout.

“I’m proud that PJM and our members met three one-in-100-year weather events in the last four years — and the polar vortex was not one of them,” Boston said. “They were the hottest day of record in 2011, followed by the derechos and Hurricane Sandy in 2012. In addition, we’ve met back-to-back all-time winter peaks in January 2014 and February 2015.”

Who Will Take Boston’s Place?

As for who will take the top spot, PJM says a “rigorous succession process” has been underway. “Candidates to succeed Boston will be considered on demonstrated leadership abilities, industry expertise and reputation, as well as commitment to electric system reliability and fair, efficient electric markets,” it said in a press release.

Among potential in-house candidates are Executive Vice President for Operations Mike Kormos and Executive Vice President for Markets Andy Ott, who frequently represent PJM before FERC and in industry forums. With higher titles, but lower public profiles, are Chief Financial Officer Suzanne Daugherty and General Counsel Vince Duane, both of whom hold the rank of senior vice president.

During a break at FERC’s technical conference on the Environmental Protection Agency’s proposed carbon rule last week, Kormos told RTO Insider that he was “absolutely” interested in the job.

His colleagues on the executive team did not respond to requests for comment on their interest in the position.

While the Board of Managers has identified no candidates, stakeholders are firm in the type of person they’d like to see assume the role.

“Somebody similar, with not only the ability to have a vision but to also manage a diverse set of stakeholders that range from, obviously, members of PJM to state commissions and state governments and FERC,” Moeller said. “It’s a lot of relationships to manage, and so you’ve got to have the right personality as well.”

Popowsky suggested that the board choose someone ideologically open, as he said Boston has been.

“Someone who says, ‘What’s the best combination of markets and regulation to produce the paramount goal of a reliable electric system that’s affordable to the folks who depend on it?’” he said.

Boston said his successor will face a number of challenges.

“Certainly, dealing with the largest and most rapid fuel shift in history has many downstream impacts. I believe it’s manageable, but it will take a lot of work to get through it,” Boston said. “The future of demand response and renewables, the introduction of new technologies and new consumer-use patterns, grid security and the growing complexity of the business all are challenges that I expect will keep my successor and the entire PJM team very busy.”

College Classmate-Turned-Sweetheart, Family Life

Boston has served on numerous industry boards and is the immediate past president of the GO15 international association of large grid operators. Last year, he was elected to the National Academy of Engineering.

He holds a bachelor’s degree in engineering from Tennessee Technological University and a master’s degree in engineering administration from the University of Tennessee.

It was at Tennessee Tech that Boston met his wife-to-be, Brenda, when they shared an organic chemistry class. The couple have three children: Rachel, a prolific actor who most recently played Ingrid Beauchamp in the TV series “Witches of East End;” Andrew, who earned a master’s in business administration from Harvard and now is an investor with Founders Circle Capital in San Francisco; and Brian, a graduate student at the University of Hawaii, where he is earning his doctorate in geophysics.

“Andrew was a world-class rower for Harvard and Oxford,” Boston said. Andrew worked on and sold a high-tech startup to a London company before going to Harvard.

“Brian, our youngest, will be the first Ph.D. in the family when he graduates this year from the University of Hawaii in geophysics. Last year, he worked on a Japanese research ship to collect data from the deepest research hole ever drilled through two tectonic plates to better understand the Fukushima earthquake zone off the coast of Japan.

“The kids were always busy with school and sports. They learned a strong work ethic and found that hard work pays off,” Boston said.

February 24, 2015June 15, 2023

Company Briefs

Calpine is building a 345-MW, gas-fired combined-cycle unit at the site of its 375-MW Mankato plant in Minnesota to meet the rising demand of Xcel Energy’s Northern States Power-Minnesota utility.

The Minnesota Public Utilities Commission approved a 20-year power purchase agreement between Calpine and Northern States Power. The new unit is expected to start operations by mid-2018.

More: Energy Central

Navigant Predicts Smart Grid Market to Reach $29 Billion by 2023

A Navigant Research report said the market for smart grid technology will expand to $29 billion a year by 2020.

“The smart grid continues to mature, and communications technologies are also evolving in response,” said Navigant Senior Research Analyst Richelle Elberg. “Whereas five years ago vendors and utilities were consumed with simply enabling grid communications, today they are focused on technology that is anticipated to enable a truly integrated system that links existing legacy technology with new technology from a variety of vendors.”

The report also predicted that as smart grid technology is implemented, security needs will rise as well.

More: Transmission & Distribution World

Oops: PECO Customer Overpays Bill by $33K, Awaits Refund

A PECO Energy customer is waiting — somewhat impatiently — for a refund after his wife accidentally overpaid the couple’s electric bill by more than $33,000.

Steve Onufrey, 71, of suburban Philadelphia, said his wife misplaced a decimal point when paying their $339.38 bill online, and paid the utility company $33,938 instead. Luckily, he had that much in the account because of a real estate transaction. He said it took him about a week to convince the company to issue a refund.

PECO Spokesman Ben Armstrong said the company is sending a paper check in the mail, as part of standard refund practice to prevent fraud.

More: NBC 10

NextEra Building 120-MW Wind Farm on Maui

NextEra Energy, which is completing its $4.3 billion purchase of Hawaiian Electric, is planning to build a 120-MW wind farm on state land on Maui.

The planned facility will be on about 500 acres on the southern slopes of Haleakala, and be built, owned and operated by NextEra Energy Resources.

The NextEra project is the latest wind-generation facility to sprout in Hawaii. Boston-based First Wind operates four wind farms on Maui and Oahu with a capacity of about 120 MW, and Sempra U.S. Gas & Power owns a 21-MW wind facility on Maui. Champlin Hawaii Holdings is in the planning stages of a 24-MW wind farm on Oahu.

More: Pacific Business News

Dynegy Lobbying Against AEP’s Guaranteed Income Plan

Dynegy CEO Bob Flexon spent an hour with Ohio Gov. John Kasich recently to argue against a competitor’s plan to seek guaranteed income for some of its coal-fired plants.

Flexon told Columbus Business First that a proposal by rival AEP to seek long-term power purchase agreements for plants it says cannot compete would stifle incentives to build more efficient merchant generation plants in the region, at the expense of system reliability.

“When you want to create subsidies for a plant, you go into the huddle and pull out a playbook and have three plays: the reliability play, the jobs play and the local community play,” Flexon said. Merchant generator Dynegy is near closing on a $2.8 billion deal to buy 11 Duke Energy plants in the region, including nine in Ohio.

More: Columbus Business First

Dayton Power and Light Names Tom Raga as New CEO

Tom Raga, who has headed up Dayton Power and Light’s communications and government relations departments since 2010, was named the company’s new president and CEO. He replaces Derek Porter, who held the position since 2013.

“Tom brings the business experience and proven leadership skills with a clear strategic vision to the role of president and CEO,” said Ken Zagzebski, president of AES’ U.S. strategic business unit, in a statement. AES is the parent company of DPL.

More: Dayton Daily News

PSEG Names Braun New Chief Nuclear Officer

Robert C. Braun, PSEG Nuclear’s chief operating officer, has been named chief nuclear officer, replacing Thomas P. Joyce, who is retiring in March after 40 years in the industry.

Braun has been chief operating officer for 10 years and has 30 years of experience in nuclear operations. PSEG Nuclear operates the nuclear complex on Artificial Island in New Jersey.

More: NJ.com

NRG Can Be Sued over Coal Ash, Ill. Pollution Board Rules

The Illinois Pollution Control Board has ruled that environmental organizations can pursue a lawsuit against NRG Energy that alleges the Princeton, N.J., company has done nothing to keep harmful chemicals from coal ash dumps at four power plants it bought last year from Midwest Generation.

“The decision by the Illinois Pollution Control Board to allow an expanded lawsuit and investigation into NRG’s coal ash disposal methods brings us one step closer to making sure local communities and bodies of water around these plants are adequately protected,” said Holly Bender of the Sierra Club Beyond Coal Campaign.

Environmentalists allege that ash dumps at the Waukegan, Joliet, Romeoville and Pekin plants are leaking into the ground and into water supplies.

More: Progress Illinois

Darn that Reply-All Button: Ameren Shares Negotiating Position Before Hearings

Ameren Missouri has filed for a $264 million rate increase with the Missouri Public Service Commission, but it inadvertently disclosed that it would be willing accept about $100 million less.

Ameren told its investors in a Securities and Exchange Commission filing that it had accidentally shared its proposed settlement position with all of the parties in a series of electronic document transfers meant to go only to the PSC staff. Ameren said it had “inadvertently” disclosed the proposed settlement to all the parties but made no further comment.

More: St. Louis Post-Dispatch

PPL Transferring Nuke Engineering Staff to Susquehanna Station Amidst Acquisition Rumors

PPL is transferring 88 engineer and technical support staff members associated with its nuclear operations from its Allentown, Pa., headquarters to its Susquehanna nuclear generating station in Berwick, Pa.

The announcement came amid market speculation that PPL might be looking to sell more generation assets. It is currently spinning off most of its power generation assets, along with those owned by Riverstone Holdings, into a new company called Talen Energy.

A company spokesman said engineering and support for the plants under the Talen name will remain in Allentown. The Morning Call reported that rumors are circulating that Talen may already be looking to buy more generation assets, but the company declined to comment on the rumors. The Talen spinoff has yet to achieve approval from the Federal Energy Regulatory Commission.

More: The Morning Call

Exelon Expects Illinois Legislation Benefiting Nukes to be Introduced

Exelon, which has been lobbying hard for legislation to favor its six nuclear reactors in Illinois, said it expects a bill to be introduced in the Illinois General Assembly as soon as March. William Von Hoene Jr., the company’s chief strategy officer, said during an earnings conference call that it expects bi-partisan support for the measure.

Details of the bill haven’t been released, but Exelon has long complained that its nuclear fleet doesn’t get credit for being a carbon-free generation source, making it hard to compete against subsidized renewable energy. It has warned that without some sort of relief, it may have to shut down some or all of its nuclear sites in the state.

More: Midwest Energy News

Compiled by Ted Caddell

February 24, 2015

New NERC Enforcement Methods Allow Self-Logging Minor Risk Issues

By Michael Brooks

The Federal Energy Regulatory Commission last week approved a new risk-based approach to reliability compliance monitoring and enforcement, saying it will allow regulators to focus resources on the most serious issues (RR15-2).

The Reliability Assurance Initiative (RAI), a collaboration among NERC, the Regional Entities, and industry, is intended to streamline what reliability violations come under enforcement of the North American Electric Reliability Corp., with “minimal”-level risk issues subject to less oversight.

The new approach allows qualified facilities to self-log minor issues that they have identified and solved, instead of reporting them immediately to NERC. These logs will be periodically reviewed by NERC’s Regional Entities, FERC said.

The initiative also includes a compliance monitoring program, which provides definitions of risk levels and violations, among other guidelines.

“A risk-based approach is necessary for a proper allocation of resources and to encourage registered entities to enhance internal controls, including those focused on the self-identification of noncompliance,” NERC said in describing the new approach.

The minimal risk issues will not be subject to NERC penalties. Instead they will be treated as “compliance exceptions.” While RAI received broad support, some stakeholders disagreed with NERC’s decision not to make these exceptions public. NERC had proposed to submit them monthly to FERC for review.

“Greater transparency, particularly in the first two transitional years as [NERC] gains experience with implementation of RAI, is essential to educating [the] industry to avoid and mitigate noncompliance with reliability standards and to maintain the credibility of NERC’s compliance and enforcement regime,” a group of stakeholders, including the American Public Power Association and the National Rural Electric Cooperative Association, said in a joint filing.

FERC agreed, requiring NERC to post exceptions similar to how it files Find, Fix and Track reports.

“We find arguments that publicly posting compliance exceptions is unnecessary or will discourage entities from taking advantage of the efficiencies of RAI unpersuasive,” FERC said, alluding to comments by the Edison Electric Institute and the Electric Power Supply Association. “Public disclosure of compliance exceptions would appear to require only minimal additional resources since information will be compiled monthly in a spreadsheet and provided to the commission.”

FERC directed NERC to submit a compliance filing within 90 days of the order outlining revisions to its rules and procedures incorporating RAI.

New Reliability Standard

In a separate order, FERC also approved a new NERC reliability standard, MOD-031-1, which allows planning authorities and coordinators to collect demand data to support reliability assessments (RM14-12). Transmission planners, balancing authorities and load-serving entities are required to provide data such as total internal demand, net energy for load and demand-side management.

FERC said the standard will improve consistency and efficiency as well as help identify where grid improvements are needed.

February 24, 2015June 15, 2023

Duke Reaches $102M Settlement over Ash Spill; Q4 Earnings Down

By Suzanne Herel and Ted Caddell

Duke Energy said Friday that it had reached a $102.2 million settlement with the federal government to end the investigation into the Dan River ash spill and the company’s ash basin operations at other North Carolina plants.

News of the proposed settlement, which must still be approved by a U.S. District Court judge, came hours after federal prosecutors filed misdemeanor criminal charges against the company for illegal ash pond discharges throughout the state.

The investigation began following the February 2014 spill of up to 39 million tons of ash into the Dan River.

‘We are Accountable’

“We are accountable for what happened at Dan River and have learned from this event,” said CEO Lynn Good in a prepared statement Friday. Good mentioned the pending settlement during an earnings call on Wednesday.

Under the terms of the settlement, Duke will pay $68.2 million in fines and restitution and $34 million for community service and mitigation. The settlement calls for the $102.2 million to be borne by company shareholders, not ratepayers. The company’s fourth-quarter results included a charge of 14 cents per share to cover the settlement.

The full terms of the settlement will be released if it is approved by the court.

Good said the investigation was a catalyst to strengthen Duke’s ash management practices and to speed up its ash basin closures.

She also said the company expects to spend $1.3 billion to excavate and close five sites: Asheville, Dan River, Riverbend and Sutton in North Carolina, and W.S. Lee in South Carolina.

The Duke incident led North Carolina legislators to impose stricter rules on how coal ash storage sites can be operated.

In December, the Environmental Protection Agency issued the first-ever federal regulations governing the storage and use of coal ash, a byproduct of burning coal. There are an estimated 1,000 coal ash storage sites in the U.S., primarily under the control of electric generating companies. The industry produces about 140 million tons of coal ash per year.

Earnings Down

On Wednesday, the Charlotte, N.C.-based company reported fourth-quarter earnings of $97 million ($0.14/ share), compared with $688 million ($0.97/share) a year earlier. Year-end earnings were $1.88 billion ($2.66/share), down from $2.67 billion ($3.76/share) in 2013.

Duke said the results for its regulated utility business were affected by higher operation and maintenance costs due to a change in the accounting treatment of nuclear plant outages in the Carolinas. Meanwhile, its nonregulated businesses were impacted by Duke Energy International’s lower earnings, which resulted from a widespread drought in Brazil.

International Operations to Remain

Duke said Wednesday that it has decided to retain the international affiliate, which it had said last year it was considering selling.

The company said it plans to repatriate $2.7 billion in DEI earnings to the U.S. through 2022 through a taxable dividend.

DEI owns, operates or has substantial interests in approximately 4,900 MW of electric generation outside the U.S., primarily in Latin America.

February 24, 2015

NiSource Profits Nudge up in Fourth Quarter

By Chris O’Malley

Fourth-quarter earnings of Northern Indiana Public Service Co. parent NiSource rose to $154.2 million ($0.49/share), up nearly 2% from $151.8 million ($0.48/share) a year ago. Fourth-quarter revenues rose 8% to $1.129 billion.

For all of 2014, net income was $530 million, down from $532 million in 2013 despite a 10% jump in revenues to $4.23 billion.

Highlights for the year included a record $2.2 billion capital investment program.

Pipeline Spinoff

Earlier this month NiSource completed the initial public offering of Columbia Pipeline Partners, the spinoff of its natural gas pipeline business.

NiSource remains on-track to complete the Columbia transition in mid-2015, said president and CEO Robert Skaggs Jr.

Columbia will issue its own long-term debt prior to the separation to fund a one-time cash distribution to NiSource, reducing the latter’s debt. NiSource shareholders will receive a one-time cash distribution in the form of a pro-rata dividend of shares in Columbia stock.

Because of the pending separation, NiSource did not provide full-year earnings guidance.

Electric Revenues Up 2%

NiSource’s electricity segment during the fourth quarter generated revenues of $392 million, compared with $386 million during the fourth quarter of 2013.

For the full year, electricity revenues were $1.68 billion, up from $1.56 billion in 2013. Increased environmental cost recovery and two transmission projects authorized by MISO boosted revenue by $5.1 million.

NIPSCO recently filed with the Indiana Utility Regulatory Commission an electric and natural gas capital expansion plan totaling $2 billion over seven years. Among the major projects in the plan is the 70-mile, 765-kV Greentown-Reynolds transmission line, to be completed by 2018.