The Federal Energy Regulatory Commission last week ordered settlement judge and hearing procedures to determine how costs should be allocated for PJM transmission projects of 500 kV or more that were approved before February 2013.
PJM’s “postage-stamp” cost allocation for the projects was challenged in court by the RTO’s Midwestern utilities. The method billed all PJM utilities in proportion to their load, regardless of where the projects were located.
The Seventh Circuit Court of Appeals has remanded the case back to FERC twice, most recently in June. The commission had originally approved the postage-stamp method in 2007 and attempted to justify it in its order on remand. The court, however, ruled that FERC had again failed to show how a western utility would benefit as much as an eastern utility from new transmission facilities in the east. (See PJM: Court Ruling Won’t Upset ‘Hybrid’ Cost Allocation.)
In last week’s order, FERC noted the court’s criticism, saying it expects PJM and the western utilities “to support their respective proposals for cost allocations for these projects with quantitative evidence, or at least an estimate of the benefits, adjusted as necessary to reflect any uncertainty in benefit allocation among the PJM utilities.”
The case concerns 15 projects costing $2.7 billion.
FERC urged PJM and the utilities “to make every effort to settle their disputes before hearing procedures are commenced.” A settlement judge will be appointed by Jan. 2 to oversee the discussions (EL05-121-009).
PJM replaced the postage-stamp method last year with a hybrid formula that allocates half the costs using the former method, with the remaining costs allocated by a solution-based distribution factor (DFAX).
PJM officials are seeking to postpone generation retirements — or accelerate planned new generation — to help the RTO ride through potential shortages next winter.
Officials told the Markets and Reliability Committee Thursday that they will file proposed cost allocation language with the Federal Energy Regulatory Commission before the end of the year to forestall some of the estimated 9,500 MW of retirements expected next year as a result of the Environmental Protection Agency’s mercury and air toxics (MATS) rule and more than 2,000 MW being shut down by New Jersey’s High Energy Demand Day regulations.
In addition to offering reliability-must-run (RMR) compensation to delay retirements, officials said they are considering incentives to encourage some generation slated to come on line in delivery year 2016/17 to accelerate construction and launch earlier.
In total, officials said they will attempt to secure as much as 2,500 MW of generation through April 2016.
PJM Vice President for Operations Mike Kormos said the RTO is acting in light of the 22% forced outage rate from last January and uncertainty over the role of demand response in the wholesale markets.
The final amount procured will be dependent on load estimates and the projected forced outage rate for winter 2015/16 and the volume of capacity procured at the third incremental auction for the year. No demand response will be permitted to clear in that auction, officials said, because of the appellate court ruling threatening DR’s role in the wholesale markets. (See Verrilli to Seek Supreme Court Review of EPSA Ruling.)
Without such actions, Kormos said PJM estimates it would have about 2% less capacity than it had last winter, when it narrowly avoided voltage reductions or other severe actions.
“There is a cost effectiveness [consideration],” he said. “This isn’t 2,500 MW at all cost. This is an insurance policy.”
The FERC filing will seek authority to negotiate contracts with generation owners. Contracts with individual generators would be filed for FERC approval later. “We have no authority to negotiate this” currently, Kormos said.
PJM has negotiated RMR contracts when past retirements have prompted the need for transmission upgrades. The costs of those contracts were allocated over the relatively small areas benefiting from the new infrastructure.
This filing will likely seek RTO-wide cost allocation because of the broader reliability issues involved, Kormos said.
Market Monitor Joe Bowring said the costs should be limited to incremental costs of “speeding up a [new] unit or keeping [an old one] around.”
The Federal Energy Regulatory Commission issued notice Wednesday that it may seek $29.8 million in fines from hedge fund twins Rich and Kevin Gates over a PJM trading scheme that became the centerpiece of a debate over FERC enforcement policy during Commissioner Norman Bay’s confirmation process earlier this year.
FERC issued an Order to Show Cause, the next step in the enforcement process over what it called a “fraudulent scheme” by the Gates brothers, their Powhatan Energy Fund and associate Houlian “Alan” Chen to collect line-loss rebates on riskless up-to-congestion trades. It gave the accused 30 days to tell the commission why they shouldn’t be fined.
The attached enforcement staff report recommended that the parties give up more than $4.7 million in profits collected by alleged wash trades in 2011. The show cause order didn’t include that recommendation.
They can ask for a hearing or pay the fines. If the fines aren’t paid, FERC can file in U.S. District Court to collect.
FERC’s Office of Enforcement alleged that “with Powhatan’s knowledge and encouragement, Chen placed UTC trades in opposite directions on the same paths, in the same volumes, during the same hours for the purpose of creating the illusion of bona fide UTC trading and thereby to capture large amounts of” rebates.
Kevin Gates said Powhatan would respond to the allegations in the enforcement staff report, insisting that everything they did was legal. He said they seek an extension in the filing deadline.
“I still firmly believe that no violations occurred, that there were no ‘wash trades’ and no violations of any kind,” he said in an interview. “There was an economic purpose to the trades, and there were risks.”
Chen said in an interview that he is “struggling” to understand the allegations against him. “I ask myself, ‘are the type of trades we put on, the match trades, are those trades supportive [of the market]?’ And the answer is definitely ‘yes.’ They were necessary trades to provide a healthy market.”
Both he and Kevin Gates said the type of trades they undertook would have been helpful, in fact, during last winter’s polar vortex. “They would have been there to support the market at the very time the market needed them the most,” Gates said.
FERC enforcement cases usually take place quietly via letters and documents filed back and forth between parties, and they nearly always result in settlements.
But Rich and Kevin Gates have taken a much more public route fighting FERC. They hired expert witnesses, and posted video depositions and statements and reams of legal documents on their website, ferclitigation.com.
The brothers argued that Bay, who headed FERC’s Office of Enforcement during the Powhatan investigation, should recuse himself from any dealings with the case. Bay has since done so.
It appeared in October that a settlement might be in the works when the brothers took down the site. However, when FERC issued a notice on Dec. 5 that the commission was heading toward the next step, civil prosecution, the site was reactivated, and the fight was back on.
The next step was FERC’s, when on Wednesday it issued the show cause order.
At Thursday’s FERC meeting, Commissioner Phillip Moeller read a statement citing the show cause order and explaining the FERC investigation and enforcement process. Moeller took pains to say the commission has not made any final determinations, comments Gates said he found “comforting.”
“In the show cause order, the commission noted that issuance of the staff report does not indicate commission adoption or endorsement of staff’s findings,” Moeller said. “This statement reflects the commission’s long-standing practice not to pre-judge the findings made in staff reports. Instead, the commission will consider the entire record in this proceeding to determine whether the assessment of civil penalties is appropriate.”
Chairman Cheryl LaFleur was asked in a press conference after the meeting if the show cause order means the commission has reached a decision on the Gates case.
“We’ve reached the conclusion that’s reflected in our order, which is that, if you will, it rose to a level of an order to show cause to say ‘here respond to this,’ but we have not reached a conclusion as to a finding of market manipulation. We’ll make that determination presuming we get to the next stage of the case when we decide if there’s market manipulation,” LaFleur said.
LaFleur also was asked whether traders should be prosecuted when they were acting within the RTO’s rules, at the time. PJM’s rules on collecting the rebates were changed after officials recognized the loophole Powhatan was exploiting. Although UTCs don’t involve the movement of physical energy, UTC traders then had to reserve transmission service for each transaction, making them eligible for the line-loss rebates.
“Clearly the issue you identified is one of the ones that’s been debated a lot: what are the bounds of market manipulation under our regulations and we’re seeing it evolve more and more as we take on more cases,” LaFleur said.
The Senate last night confirmed Arkansas Public Service Commission Chairman Colette Honorable to the Federal Energy Regulatory Commission. Honorable recently completed a term as president of the National Association of Regulatory Utility Commissioners.
Honorable was nominated in August by President Obama to fill the remainder of departing Commissioner John Norris’ term, which will end in June 2017. She was confirmed unanimously by simple voice vote. Honorable was among a handful of non-controversial nominations that the Senate quickly approved before adjourning until January, making her confirmation among the last acts of the 113th Congress.
“Colette brings a wealth of experience and expertise to the important issues we are facing,” FERC Chairman Cheryl LaFleur said in a statement. “She and I worked together closely during her time as the president of NARUC, and I very much look forward to continuing that strong relationship when she joins the commission.”
The Senate Energy and Natural Resources Committee voted last week to advance Honorable’s nomination to a full vote. Ranking member Lisa Murkowski (R-Alaska) said a majority of the committee met off the Senate floor Thursday, also voting by voice, after the committee failed to reach a quorum at its meeting the day before.
Assist from Cruz
Honorable was expected to be confirmed by the Senate this week, but only after some political kabuki by Sen. Ted Cruz (R-Texas) inadvertently expedited her nomination.
On Friday, the Senate convened to debate a $1.1 trillion omnibus spending bill, which had to be passed by Saturday night to avoid a government shutdown. Party leaders worked out a deal to pass a short-term spending bill that would fund the government through Wednesday before convening again on Monday to pass the omnibus bill.
Under the rules of the Senate, votes need to be scheduled a certain amount of time in advance, but this wait period can be waived by unanimous consent. Cruz and colleague Mike Lee of Utah, however, objected to the waiver in an effort to oppose Obama’s executive order delaying the deportation of 5 million immigrants living in the country illegally.
The move forced the Senate to stay in D.C. Saturday, infuriating members of both parties. But it also gave Senate Majority Leader Harry Reid (D-Nev.) an opportunity to push through 24 of Obama’s nominations, including Honorable’s, which were being stalled by Republicans in the hopes that they would be delayed until the GOP took over the Senate in January.
“While we wait we shouldn’t waste time,” Reid said when the Senate convened Saturday. “The Republican leader has known for weeks, if not months, that we intend to vote on the president’s nominations.”
Senators spent nearly 10 hours voting on procedural motions to advance the nominations while they waited until they could vote on the omnibus bill, which they ended up passing 56-40 Saturday night.
While the Senate was expected to take up the nominations when it reconvened on Monday, Democrats had feared that the process would take too long and some senators would leave for the holidays before all of them passed.
Reid spent most of Monday and Tuesday putting more controversial nominations to a vote, such as Obama’s pick for surgeon general Vivek Murthy, to get them confirmed before the Senate adjourned and Republicans take over in January. While Honorable would have likely been confirmed next year, Cruz’s maneuver guaranteed that she would be confirmed this week and not have to be advanced by the Energy Committee again next year.
Lisa Murkowski (right) thanks outgoing Senate Energy Committee chair Mary Landrieu for her leadership.
The committee met on Wednesday to vote on Honorable’s nomination, but it spent most of its 20-minute business meeting complimenting and thanking outgoing Chairman Mary Landrieu (D-La.) for her service. It adjourned when Landrieu announced it had failed to reach a quorum.
Landrieu lost her bid for re-election earlier this month in a runoff vote against Republican Bill Cassidy, who represents Louisiana’s 6th district in the U.S. House. Murkowski, Landrieu’s likely replacement as chair, said her Democratic colleague has been a “true leader” on energy issues.
Landrieu focused “on the things that are not only important to the people of Louisiana but for the people of this country,” Murkowski told her. “I am very, very grateful for what you have given the United States Senate, for what you have given your state and for what you’ve given to the American people.”
Sens. Maria Cantwell (D-Wash.), Joe Manchin (D-W.Va.), Al Franken (D-Minn.), Ron Wyden (D-Ore.) and Rob Portman (R-Ohio) also offered their appreciation and support for Landrieu. Franken noted that as a former comedian, he would mostly miss Landrieu’s “infectious” laugh.
Power prices briefly spiked above $1,000/MWh on Long Island Wednesday due to a combination of cold weather and an unplanned transmission outage.
The price jolt occurred around noon and lasted for only a few minutes when the East Garden City Bank #2 line failed due to equipment issues between 10:45 a.m. and 2 p.m., according to NYISO spokesman David Flanagan.
The Long Island Zone K jumped to about $1,102/MWh. The adjacent Zone J, in New York City, remained at about $33/MWh.
The Zone K day-ahead forecast was for 2,450 MW from 9 a.m. to 2 p.m., but real-time demand was 2,550 MW.
State regulators and public advocates last week filed a new complaint in their nearly two-year effort to force a reduction in the formula transmission rates for Baltimore Gas and Electric and Pepco Holdings Inc. utilities.
Officials in Delaware, Maryland, New Jersey and D.C. said they opened the new docket (EL15-27) to introduce an updated rate analysis that takes into account updated financial market data and the Federal Energy Regulatory Commission’s June order revising the method for calculating base returns on equity. (See FERC Splits over ROE.)
The complainants asked that the case be consolidated with their 2013 complaint (EL13-48). That case is scheduled to go to hearing next July, after settlement talks reached an impasse last month.
The new complaint seeks to reduce the companies’ base ROE to 8.8%. The companies are currently receiving ROEs of 10.8% on facilities placed in service before Jan. 1, 2006, and 11.3% on facilities added afterward.
PHI affiliates affected are Potomac Electric Power Co. (PEPCO), Delmarva Power & Light and Atlantic City Electric.
Low Oil Prices not Expected to Slow Fracking Next Year
Despite a drop in oil prices brought on in part by increased U.S. production, oil and gas exploration is still expected to begin in southern Illinois, according to industry officials.
“We are going to continue with our evaluation in Illinois even at these prices,” said Mark Sooter, business development manager of Woolsey Operating. The company’s sister corporation, Woolsey Energy, is a leading holder of oil and gas leases in the New Albany Shale formation.
Fracking was approved by the state this year, and permitting is beginning. Pending any legal blocks, the first wells could be drilled by the middle of next year.
ComEd, Ameren Illinois Rate Hikes Gain ICC Approval
The Commerce Commission last week approved overall rate increases of 11% for Commonwealth Edison and 17.4% for Ameren Illinois, increasing annual revenue about $245 million for ComEd and about $137 million for Ameren.
The rates were set using a formula that is based in part on the companies’ investment in infrastructure, such as smart meters and smart grid technology. “The power grid is evolving and it is my belief that these investments will result in positive changes and new innovative energy services for customers,” ICC Chairman Doug Scott said.
The Citizens Utility Board, an advocacy group, said it would appeal the rulings.
State May Look to Hydro for Next Energy Boon After Wind
With the state ranking third in the U.S. in wind energy production, a legislator says it is time to look at increasing hydropower resources.
State Rep. Dan Kelley plans to ask for the state to put aside money to study hydro power. “The state of Iowa has become a national leader in wind energy, and that shows we have the wherewithal and the interest to pursue renewables to a great extent,” Kelley said. “There’s no reason we can’t do the same with hydropower.”
A 2012 U.S. Department of Energy study estimated that the state has 427 MW of untapped hydro power – quadruple its current capacity, but only a tenth of its 5,000 MW of wind capacity. Wind power currently accounts for 27% of the state’s electricity.
Coal Supplies Already Low at Some Midwest Power Plants
A transportation official told lawmakers that rail congestion and cold weather have already limited coal supplies at some Midwest power plants, but a warm up may allow stockpiles to be rebuilt before winter really arrives.
“We are at the whim of Mother Nature at this point,” said Dave Christianson of the Department of Transportation. He told the Legislative Energy Commission that some plants saw their stockpiles drop to 10% of capacity earlier this year, and supplies now average 30 to 40%.
Railroad officials said a sudden increase in coal shipping demands last year was one cause of rail line congestion. But incoming chairman of the House jobs and energy committee, Republican Rep. Pat Garofalo, said trains are too busy hauling oil from the Bakken oilfield to transport coal and crops. Garofalo supports more pipeline construction.
AG: Utilities Should Pass on Savings from Corporate Tax Cut
Attorney General Roy Cooper is appealing a decision of the Utilities Commission that allowed utilities to keep proceeds from corporate state income tax cuts rather than passing them on to customers.
The lower corporate tax rate was approved in 2013 by the General Assembly, which also raised the taxes paid by customers on their utility bills. This fall, the commission reversed an earlier ruling and said it couldn’t lower customer rates to reflect the lower corporate taxes.
“Utility shareholders were allowed to pocket the cost savings associated with the reduced state corporate income taxes while most customer bills increased from the combined effect of the other tax changes,” according to the attorney general’s filing with the state Court of Appeals last week.
Duke Plan to Repair Leaking Pipe at Charlotte Coal Ash Dump Gets OK
State environmental officials approved a Duke Energy plan to empty contaminated wastewater from a coal ash dump at its Marshall Steam Station near Charlotte to fix a leaking drainage pipe.
The leaking pipe was discovered about six months ago after a similar pipe collapsed at the company’s Dan River plant, contaminating 70 miles of river and sparking an investigation into all of Duke’s coal ash lagoons. State Dam Safety Engineer Steve McEvoy said it has received requests for permits to conduct repairs at 18 of the company’s 32 coal ash sites throughout the state.
Wolf Appoints Former PUC, DEP Chief to Planning Post
John Hanger
Governor-elect Tom Wolf named John Hanger, the former Department of Environmental Protection secretary who oversaw the massive growth of the state’s shale-gas industry, as his planning and policy secretary.
Hanger, who ran for governor this year but endorsed Wolf after dropping out, served on the Public Utility Commission from 1993 to 1998 under Gov. Robert Casey and was former Gov. Ed Rendell’s DEP secretary from 2008 to 2011. He will work alongside another former gubernatorial challenger, Katie McGinty, whom Wolf named as his chief of staff last month. McGinty was also Hanger’s predecessor as secretary at DEP.
Permits Issued for Fracking Under Ohio River by State
West Virginia has approved three permits to drill for oil and gas under the Ohio River.
The state, which controls the rights beneath most of the land underlying the river, says the money earned from leasing the acreage and any royalties earned from production will be put in the state parks budget. With horizontal drilling techniques, production companies can access the deep shale formation from well sites on the river banks.
The drilling companies must still obtain state Department of Environmental Protection permits before beginning. Josh Jarrell, deputy security and general counsel of the state Department of Commerce, said the state has adequate protections in place to ensure water quality is not hurt by drilling under a body of water. Drilling beneath bodies of water is a common practice in other states.
The Public Service Commission will hold hearings throughout the state to examine a plan by Xcel Energy and American Transmission Co. to build what would be the most expensive transmission line in state history.
The 345-kV Badger-Coulee line would run about 180 miles from Madison to Lacrosse and cost between $540 million and $580 million, funded by rate increases to Xcel and ATC customers. The line, first proposed in 2010, is designed to bring increased renewable power production, mostly wind energy, into the MISO system.
MISO’s Board of Directors last week approved a $2.5 billion transmission expansion plan funding 369 projects, including a 500-kV line to carry Canadian hydropower to Minnesota Power customers.
The $676 million Great Northern Transmission Line is the single most expensive project in MISO’s 2014 Transmission Expansion Plan, the product of 18 months of work by MISO stakeholders. The line, which will connect the Manitoba border to the Minnesota Iron Range, is set for completion around 2020.
The plan also includes 50 baseline reliability projects totaling $269.5 million, six generator interconnections totaling $38 million and 312 “other” projects totaling $1.5 billion, including those supporting lower-voltage transmission systems.
The plan will allow for the interconnection of 726 MW of new wind generation and import of 883 MW of hydroelectric power from Manitoba, said Jennifer Curran, MISO’s vice president of system planning and seams coordination, in a memo to the board.
Interconnection requests are shifting from predominately wind to a mix of natural gas and wind, as gas-fired generation steps in to replace coal plants forced to retire or switch fuels because of federal environmental rules, MISO said. Natural gas interconnection requests in MISO soared to 9,424 MW this year, from 1,994 MW in 2011.
There also have been about 810 MW of new solar request interconnections in 2014. “This could be the result of recent federal energy legislation and the economic stimulus package, and the lower price of solar photovoltaic modules,” the MISO plan states.
MTEP 14 was the first planning cycle that included full participation of MISO’s south region in economic and reliability planning.
The south region is targeted to receive about $359 million in transmission investments, including two of the largest projects in MTEP 14: a $60 million, 115-kV line by Entergy in Mississippi, and a $56.3 million, 230-kV line in Louisiana.
Since MTEP ‘03 about $19 billion of transmission project investment has been identified, with roughly 40% of it completed. MTEP 14 covers projects expected to be completed by 2023.
If you want to know why many think that demand response hasn’t fulfilled its potential in MISO, talk to Brian Helms.
Helms, the director of energy services at new MISO member Century Aluminum, said that when he attended a MISO workshop he was unable to get an answer about what form of approval would be needed to register his plant as a Load- Modifying Resource. And when he asked his local utility how to sign up, it told him it wasn’t interested.
“The path to providing those resources is kind of tortuous and murky,” Helms recounted at the MISO Advisory Committee’s “hot topic” discussion on demand response last week.
The committee sought stakeholder input on how to make the most of demand response programs, and whether MISO should take any action while waiting for final word on whether last May’s appellate court ruling voiding the Federal Energy Regulatory Commission’s Order 745 will stand.
Unlike PJM, most of MISO’s demand response assets are administered through state programs. While that means less disruption if the D.C. Circuit Court of Appeals ruling in the Electric Power Supply Association v. FERC case stands, stakeholders told the committee the disparate state rules make it more of a challenge for the RTO to maximize such resources. (The D.C. Circuit yesterday granted the U.S. Solicitor General’s request for more time to seek a Supreme Court rehearing of the case.)
Representing end-use customers, DeWayne Todd, energy services manager at Alcoa in Newburgh, Ind., said that MISO has done a good job of integrating available Load-Modifying Resources through legacy interruptible electric service rates.
Demand Response Resources ‘Untapped’
But Demand Response Resources are largely untapped in the energy and ancillary services markets due to retailers’ restrictions on participation and compensation, the End-Use Sector said. They cited the Independent Market Monitor’s State of the Market report, which shows there are just 75 MW of controllable Demand Response Resources — all attributable to Alcoa, which often interrupts production when electric price signals rise. (See chart.)
“I think there’s a huge opportunity, and not just [in] smelting, but other customers and consumers, as well,” Todd said.
The Environmental Sector agreed, saying MISO’s minimum threshold of 5 MW for participation in energy and ancillary services markets is too high. PJM’s threshold, they noted, is 100 kW.
The Environmental Sector recommended MISO employ demand response as a “transmission-like resource” in its planning, saying DR resources could help maintain reliability at lower cost than System Support Resources while longer-term transmission or generation solutions are implemented. “DR can also reduce or eliminate the need for costly transmission upgrades, or be paired with a transmission upgrade or voltage support to help eliminate potential reliability issues,” it said.
Aggregators ‘Frozen Out’
The environmentalists lamented that third-party providers, which play a big role in PJM, are “largely frozen out” of MISO’s markets. Among MISO states, only Illinois permits aggregators of retail customers (ARC) to participate, they said.
The Organization of MISO States said MISO “has done an adequate job of meeting FERC requirements for DR, while balancing stakeholder desires for sometimes conflicting market parameters.”
It urged the RTO to work with market participants to accommodate new demand response technologies and remove barriers to participation. OMS cited methods of directly controlling customer-owned electric water heaters to support grid reliability. Participants “would like to develop programs to offer this DR in MISO’s ancillary services market, however current MISO protocols, relating to metering and zonal boundaries, may be prohibiting participation,” OMS said.
The Transmission-Dependent Utilities Sector said MISO has allowed DR fair access to its markets and said load-serving entities should continue to have the option to operate their DR programs at the retail level, without offering it as a wholesale product.
Reliability Benefits
The Public Consumer Group acknowledged that the state-by-state variation in demand response programs is a challenge for MISO but that the RTO should nonetheless make increasing DR a top priority, saying such resources could aid reliability and reduce rates.
During last winter’s polar vortex, the group said, MISO did not even consider calling on DR resources, unlike PJM. “As a result, capacity margins were unnecessarily tight, and prices, which were ultimately passed on to consumers, were likely higher than necessary,” it said. “In addition to paying higher prices when DR is not called upon in near-emergency circumstances, end-use consumers in MISO are not getting appropriate use of DR resources for which they are paying in their rates. … Because DR is so rarely called upon, customers are not enjoying the full value of these resources.”
IPPs: Demand Response Has No Place on Supply Side
MISO’s independent power producers took a position similar to that of generators in PJM and ISO-NE, citing the EPSA ruling in arguing that demand response has no place in the supply side of wholesale markets. “MISO will need to establish parameters for load-serving entities and state regulators in order to use these assets focusing on their primary function: load modification, also known as load shaving,” they said.
“There’s a lot of uncertainty, but it’s pretty clear if you look at ISO New England and PJM, they’re being very proactive in what they’re doing with DR and moving it back over to where it traditionally was prior to the advent of organized wholesale markets,” Mark Volpe, senior director of regulatory affairs for Dynegy, told the committee.
Advisory Committee Vice Chairman Kevin Murray said that’s problematic.
“You could take an approach as Mark suggested and force all the demand response back on to the load side of things,” he said. “The problem with that, as MISO has observed, [is] it produces a result where it’s not integrated into MISO’s market when it’s dispatched, [and] it has the effect of reducing load, [depressing] prices during a point in time when the system is stressed during an emergency.”
A number of commenters noted that DR programs among the states differ widely, with some going back decades.
Directors Judy Walsh and Michael Curran said MISO might consider offering incentives to replace the many differing utility contracts with a model that would be easier for MISO to manage.
“I wonder if there’s a way to structure a new opportunity for these players where they would opt-in to some other opportunity to participate in the market where in fact [they] get paid for participating,” Walsh said. “Perhaps we could move out of these old contracts.”
The Federal Energy Regulatory Commission will hold four technical conferences next year to discuss the effects of the Environmental Protection Agency’s Clean Power Plan on reliability and wholesale electricity markets.
FERC announced the conferences in response to a request from three Republican lawmakers, including Alaska Sen. Lisa Murkowski, who will likely become the chair of the Energy and Natural Resources Committee when Republicans take control of the Senate in January. The Republicans said in a letter to FERC that the EPA “lacks the mission and the expertise to determine what is necessary to maintain the reliability of the nation’s electric grid.”
The first conference will be held on Feb. 19, with a “National Overview” session led by the commission itself. It will be a part of FERC’s monthly open meeting, which will start an hour earlier to accommodate the conference. Staff will conduct three more regional conferences in D.C., St. Louis and Denver on dates to be announced.
Participants in the first conference will discuss whether state regulators “have the appropriate tools to identify reliability and/or market issues that may arise” as a result of compliance with the plan, as well as how to coordinate with RTOs on how to comply.
“The commission clearly has a role to play in ensuring that the nation’s energy markets and infrastructure adapt to support compliance with the proposed Clean Power Plan,” FERC Chairman Cheryl LaFleur said. “These technical conferences will be an opportunity for the commission to hear from a wide range of stakeholders across the country on issues related to reliability, market operations and energy infrastructure.”
Murkowski said she appreciated FERC announcing the conferences. The conferences are “no substitute for EPA’s failure to engage FERC and [the Department of Energy] in a formal, documented process to address the impact on electric reliability of EPA’s series of major rulemakings in recent years,” she said.
“I remain hopeful, however, that the conferences will be useful to develop a better public record on these crucial questions, and I will remain as vigilant on this issue as I have been since 2011.”
Republicans have made blunting the EPA’s Clean Power Plan a top priority for when they take full control of Congress, following a wave of Republican victories in Senate elections in November. (See GOP Election Victories Unlikely to Thwart EPA Carbon Plan.) One of the casualties was Sen. Mary Landrieu (D-La.), the current chair of the Energy Committee. (See related story, Honorable Clears Senate Energy Committee.)
