Order 1000 Reversal: Reality Check or Surrender to Incumbents?

PJM’s transmission planning process may exclude consideration of non-incumbent proposals on projects subject to state rights of first refusal (ROFR), the Federal Energy Regulatory Commission ruled last week.

FERC had previously required PJM to remove language designating an incumbent transmission owner as the “Designated Entity” to build a transmission project, “when required by state law, regulation or administrative agency order with regard to enhancements or expansions or portions of such enhancements or expansions located within the state,” and when a transmission project is “proposed to be located on a Transmission Owner’s existing right of way and the project would alter the Transmission Owner’s use and control of its existing right of way under state law.”

But the commission ruled 3-1 Thursday that its previous position would require planners to evaluate nonincumbent proposals that had no chance of getting built because of state rules assigning them to incumbent utilities. The commission said it was persuaded by the arguments of North Carolina Utilities Commission, the Indiana Utility Regulatory Commission and others that the language merely acknowledged state jurisdiction and did not create a federal right of first refusal.

The commission made the change in Order 1000 compliance rulings for PJM (ER13-198, ER13-195, ER13-90), MISO and South Carolina Electric & Gas Co. (SCE&G).

Norris Dissents

In a dissent, Commissioner John Norris said the reversal undercuts Order 1000’s requirement eliminating federal rights of first refusal from FERC-jurisdictional tariffs or agreements.

Norris cited Order 1000-A, in which the commission said “[I]t would be an impermissible barrier to entry to require, as part of the qualification criteria, that a transmission developer demonstrate that it either has, or can obtain, state approvals necessary … to be eligible to propose a transmission facility.

“By excluding proposals from non-incumbents when the proposals are being evaluated based on a consideration of state law, we are effectively excluding non-incumbents from participating in the transmission planning process,” Norris wrote. “This is a fundamental change in direction that I cannot support. I simply cannot reconcile the language in the final rule with the approach taken in today’s orders.

“Clearly, incumbents already are well-positioned through their knowledge of the system, including issues related to reliability and congestion,” he continued. “Today’s orders give incumbents a further advantage over non-incumbents by limiting non-incumbents’ participation in the planning process.

“In my view, allowing non-incumbents to participate in the regional transmission planning process without consideration of potential state law restrictions does not infringe upon the state’s authority,” Norris said. “Using this language to exclude non-incumbents denies states and other stakeholders the opportunity to have all essential information regarding the more cost-effective and efficient transmission solutions.”

‘Coercive Pressure’

The Indiana Commission said that allowing a transmission provider to select a transmission developer that is ineligible to construct a transmission facility under state law would lead to increased litigation and “coercive pressure on state commissions.”

The North Carolina Utility Commission and its public staff agencies said the commission was acting inconsistently in requiring that PJM consider state renewable portfolio standards in its transmission planning process while insisting it ignore state rules restricting transmission development to state franchised utilities.

Other Challenges Rejected

While the commission reversed its position on acknowledging state rules, it largely rejected challenges to its previous orders regarding PJM.

It did, however, order PJM to make some additional Tariff changes and compliance filings, including one describing how local transmission owners incorporate public policy requirements into their transmission plans.

It also ordered PJM Transmission Owners to submit a compliance filing ensuring comparable treatment of AC and DC facilities.

May 20, 2014

Consumer Advocates to PJM: No More Changes, Please

CAMBRIDGE, Md. — Consumer advocates asked the PJM Board of Managers last week to assess the impact of recent capacity market changes before making any new ones and criticized what they called the RTO’s new “inflexibility.” Environmental groups, meanwhile, asked PJM to become “proactive” in addressing climate change and to do more to capture the role of energy efficiency in its planning.

The comments came at the board’s yearly meeting with consumer advocates and public interest groups on the first day of the PJM Annual Meeting here. The tone was a bit less rancorous than 2013’s meeting, with several activists praising PJM for its work maintaining electric service during January and for its response to generator retirements.

Still, the participants weren’t going to let their one shot to talk to the board — and it was almost entirely a one-way conversation — go to waste.

“Five major proposals in the capacity market in the last 12 months is a lot to digest,” said Assistant Pennsylvania Consumer Advocate Dave Evrard, who cited four changes that were approved by FERC and one that was rejected. Evrard noted that PJM had provided cost estimates on only one of the four proposals, a restriction on how demand response clears in the auction. (See PJM Wins on DR, Loses on Arbitrage Fix in Late FERC Rulings.)

“We watch somewhat nervously to see what the results of the current base residual auction will be,” Evrard said, noting that demand response offers dropped by 27% between the 2012 and 2013 base residual auctions. The question is whether the recent DR changes “[exacerbate] the decline or if that was simply an aberration,” he said.

Wil Burns, an attorney who represents environmental groups, echoed Evrard’s concerns, saying the board should not make any additional changes until it has analyzed the impact of the recent changes.

PJM’s `Inflexibility’

Brian Lipman, litigation manager at the New Jersey Division of Rate Counsel, criticized PJM for failing to discuss with stakeholders its position on a crucial capacity market rule before filing comments with the Federal Energy Regulatory Commission. PJM sided with FirstEnergy, which petitioned FERC on April 7 to change how the RTO calculates the maximum price generators can offer into capacity auctions (EL14-36).

“We didn’t find out about PJM’s position until it was filed,” he said. “That is concerning to us that we didn’t have any input into that decision.”

PJM’s “recent inflexibility” regarding rule changes “makes stakeholders worry about the future of consensus-building,” he added.

Lipman said PJM should take more time in stakeholder discussions, such as in the current discussions on the use of the Handy-Whitman building cost index in the calculation of the Cost of New Entry (CONE). “We could have been discussing that for a year now,” he said. “Decisions are happening before we have a chance to participate.” (See related story, PJM Proposes Changes to Capacity Auction Parameters for 2015.)

Role of DR, EE

Environmentalists, meanwhile, asked the board to incorporate demand response and energy efficiency into more of its planning efforts. DR and energy efficiency are “factored into one of your eight planning estimates only,” Burns said.

Yorktown Power Station (Source: Dominion Virginia Power)

For example, PJM should consider whether increased DR might allow Dominion Virginia Power to retire its Yorktown coal-fired generators as planned at the end of 2014 rather than continuing to operate temporarily to address reliability problems, Burns said.

Alison Clement, of the Sustainable FERC Project, said PJM could learn from ISO New England, where at least 90% of energy efficiency bids into the capacity market.

Rob Marmet, of the Piedmont Environmental Council, called on PJM to help states find the most effective ways to comply with pending EPA rules on greenhouse gas emissions for existing generators.

PJM Chairman Howard Schneider offered some brief remarks at the end of the session. “We value the issues you bring to us and the way you bring them to us,” Schneider said. “The relationship has improved vastly over the last several years.”

PJM CEO Terry Boston was the only other board member to offer feedback to advocates, saying he liked Burns’ idea of giving DR a bigger role in PJM’s winter reliability plans.

May 20, 2014

Monitor Suggests Price Gouging by Generators

Some generators may have taken advantage of January’s weather to boost their prices, the Market Monitor said in its quarterly State of the Market report Friday.

“The behavior of some participants during the high demand periods in January raises concerns about economic withholding,” the monitor said. “In particular, there are issues related to the ability to increase markups substantially in tight market conditions.”

The Monitor’s report cites the “markup index,” a measure of participant offer behavior. In the real-time energy market, 58% of marginal units had an average markup index at less than or equal to zero in the first quarter. But 14% of marginal units had average markups at or exceeding $150/MWh, compared to only 4% in the first three months of 2013.

In the day-ahead energy market, almost 87% of marginal units had average markups less than zero and an average markup index less than or equal to 0.03. “Nonetheless, some marginal units do have substantial markups,” the report said. Markups increased on days in January when demand was highest.

The markup index is calculated as (Price – Cost)/Price. The index ranges from -1.00, when the offer price is less than marginal cost, to 1.00, when the offer price is higher than marginal cost.

Competitive Offers Required

The Monitor said capacity resources should be required to make “competitive” offers into the energy market, an obligation that is not clear under current Tariff language.

“Selling capacity into the PJM capacity market but making energy offers daily of $999 per MWh would not fulfill the requirements of a capacity resource to make a competitive offer but would constitute economic withholding,” the Monitor explained in the 2013 State of the Market report. “This is one of the reasons that the rules governing the obligation to make a competitive offer in the Day-Ahead Energy Market should be clarified for both internal and external resources.”

The Monitor’s suggestion of economic withholding came a day after Federal Energy Regulatory Commissioner Tony Clark told PJM members that the commission had seen no evidence that market manipulation played a role in the high natural gas and electric prices in January.

In an interview yesterday, Market Monitor Joe Bowring said his staff will be interviewing generators with high markups and may refer the matter to FERC’s enforcement unit if it doesn’t receive satisfactory answers. “The Tariff requires us to refer potential enforcement matters to the commission,” he said.

January 2014 Outage Rates, Morning Peak (Source: PJM Interconnection, LLC)

Bowring said his staff is also investigating whether any generators engaged in physical withholding by improperly claiming outages. PJM saw as much as 22% of its generation out of service in early January, three times the normal winter outage rate.

Bowring said some gas-fired units took losses to operate in January. “We want to make sure that others also followed through” on their obligations, he said.

Inadequate Incentives

The Monitor’s report said the high generation outage rate in early January was an indication that the current balance of incentives and penalties is inadequate. “At present only half of capacity market revenues are at risk for failure to perform on high demand days. Gas-fired units with a single fuel are exempt from any capacity market revenue impact that results from lack of fuel outages on high demand days,” the report said.

The obligation of capacity resources to offer into the day-ahead energy market “exists regardless of whether gas procurement is difficult, regardless of whether gas prices are high and regardless of whether gas procurement is risky,” the Monitor said.

Stakeholders this month began work on developing potential winter testing requirements for generators. Consideration of incentives for generator performance and penalties for failures will be considered in a separate initiative, PJM said. (See PJM Seeks Action on Winter Lessons.)

Day-Ahead Scheduling Reserves

The Monitor also reported withholding in the day-ahead scheduling reserve (DASR) market, a problem it has cited before which worsened in 2014.

PJM uses the market to acquire supplemental, 30-minute reserves. Because the direct marginal cost of providing DASR is zero, offers greater than zero constitute economic withholding, the Monitor said.

In 2013, 12% of offers in the market exhibited evidence of withholding. The clearing price in the first three months of 2014 was $0.06 per MW, double the price for the first quarter of 2013.

About 74% of resources offered at less than $1 in the first quarter, with 11.5% of resources offered at more than $5 per MW.

The 2013 SOM report recommended incorporating the “three pivotal supplier” test in the market to prevent the exercise of market power during times of system stress, ranking it as a low priority item. PJM said it does not believe the change is warranted given the minimal impact of the market on consumer costs.

May 20, 2014

Exelon Sells Its Share of Safe Harbor Hydro

Exelon last week sold its 67% interest in Safe Harbor Hydroelectric Project, one of four run-of-the-river hydro facilities on the lower Susquehanna River, to Brookfield Renewable Energy Partners, L.P. for $613 million.

Brookfield operates 6,000 MW of generation, primarily hydro, in the United States, Canada and Brazil. It will be sole owner of the facility when the deal closes.

The deal is supposed to be finalized by the third quarter of this year, subject to regulatory approval.

Exelon inherited two-thirds ownership of Safe Harbor when it bought Constellation, parent company of Baltimore Gas & Electric. It still owns and operates Conowingo Hydroelectric Generating Station, the last dam on the Susquehanna River before it empties into the Chesapeake Bay, and Muddy Run Pumped Storage Facility, which is perched on the banks of the Susquehanna upstream from Conowingo.

Safe Harbor went into operation in 1931. It was a joint project of the two companies that would become PPL and BG&E. An affiliate of the LS Power Group purchased PPL’s share in 2011, and Brookfield bought it from LS Power in March of this year.

There are three other power-producing dams on the lower Susquehanna in Pennsylvania and Maryland. Furthest upstream is York Haven Dam, a small, 20-MW facility south of Harrisburg, Pa., owned by Olympus Power. Next is Safe Harbor followed by Holtwood Hydroelectric Plant, both between Lancaster and York Counties in Pennsylvania. Originally a 108-MW plant, PPL completed an expansion of Holtwood in 2013 that added another 125 MW.

The Conowingo dam is a 630-MW facility on the Susquehanna, between Harford and Cecil Counties in Maryland.

May 20, 2014

Members Re-elect Three to Board

The Members Committee re-elected Ake Almgren, Susan J. Riley and Charles F. Robinson to the Board of Managers, a formality given that the three were running unopposed.

The three were recommended by the Nominating Committee, which includes Board Chairman Howard Schneider, Board Member Jean Kinsey and representatives of each of the five voting sectors.

Almgren, a PhD in Engineering Sciences who joined the board in 2003, is the former president of ABB Power T&D Co. Inc. Riley, an MBA and a former finance executive for The Children’s Place, has served since 2005. Robinson, a lawyer and general counsel for the University of California system, joined the board in 2011.

The committee also approved the following:

Revisions to Manual 34: Stakeholder Process — Changes to voting methods at the Standing Committees, and posting and notice requirements.

Section 8.4: Voting Method:The voting procedures were changed to allow members to indicate their preference for the status quo over proposed rule changes.
Section 10.4: Posting Process Timelines: Members will have five business days to comment on proposed revisions to governing documents before votes of the Markets and Reliability or Members committees (down from the current 10-day requirement).
Section 11.13: Consultation with Transmission Owners and Members: Except in emergencies requiring immediate action, PJM will be required to provide Transmission Owners and PJM members 30 days’ notice before making a Section 205 filing to change the creditworthiness provisions of the Tariff. The notice time for making Section 205 filings on other matters will remain seven days.

Settlement Formulation Review – Phase II initiative — Clarifications to the Tariff and Operating Agreement (OA) on regulation shoulder hour lost opportunity costs (LOCs). As a result of a review, PJM discovered that the documents didn’t adequately describe the calculation of the deviation between the regulation set point and the expected output of each regulation resource.

Credit Available for Virtual Transactions — Revisions to the Tariff to reflect current PJM practices regarding credit available for virtual transactions. PJM instituted the policy as the result of a FERC Order in 2004 but failed to make accompanying changes to the Tariff. These revisions also correct for changes in credit policy since 2004 (e.g., working credit limit discount is now 25%, not 15%).

Synchronized Reserve penalty charges for Tier 2 resources — Clarifications to the Tariff and OA giving generators providing Tier 2 synchronized resources the ability to aggregate these resources in order to avoid retroactive penalties for failing to respond appropriately when called. New language will also be added to Manual 11: Energy & Ancillary Services and Manual 28: Operating Agreement Accounting. Aggregation will not be used in calculating Tier 2 Synchronized Reserve credits; each resource will continue to be credited independently.

PJM’s change of mailing address — Changes to the Tariff and Operating Agreement to reflect PJM’s new mailing address to: 2750 Monroe Blvd., Audubon, PA 19403.

May 19, 2014

PJM Differs with Most IMM Recommendations

PJM said last week it agrees with about one-quarter of the recommendations in the Independent Market Monitor’s 2013 State of the Market report.

PJM’s response to the Monitor’s annual review disagreed with about 40% of the recommendations. The RTO was noncommittal, or said it was unable to act, on about 35% of the more than 70 recommendations.

PJM agreed with about the same share of the IMM’s recommendations in its 2012 report but directly disagreed with about half of them.

The RTO’s 2012 response urged the Monitor to focus its findings on those with the biggest potential payback, noting that more than 90% of the suggestions pertained to subjects comprising less than 20% of total wholesale power market costs. The RTO said it was happy, however, that the Monitor had begun prioritizing the recommendations in the 2012 report.

In the 2013 report, the IMM prioritized only the new recommendations.

“Given the scope of issues to be considered in the stakeholder process, evaluation of priority and materiality of recommendations is an important consideration,” PJM said in its response. “PJM encourages the IMM to include consideration of priority and materiality in discussion and development of all recommendations along with associated detailed rationales for suggested changes to market rules.”

May 12, 2014July 1, 2025

Ready for a Rebound?

FERC Rejects Arbitrage Fix; OKs Most of DR Changes

By Rich Heidorn Jr. and Ted Caddell

PJM yesterday opened the 2017/2018 Base Residual Auction amid modest hopes among generators that the RTO’s rule changes will cause a rebound in prices.

Last year’s capacity auction saw big price drops in most of PJM, compounding the woes of generators, whose energy revenues have been suppressed by cheap shale gas.

PJM stakeholders approved several major changes in an attempt to bolster the capacity market, including a cap on imports and limits on demand response. But lackluster load growth and auction parameters that suggest there may be less price separation this year than last have tempered expectations.

Late Friday, the Federal Energy Regulatory Commission approved most of PJM’s proposal for making demand response an “operational resource.” However, the commission rejected a proposal requiring DR providers to respond to sub-zonal dispatch. The commission also rejected PJM’s proposals for eliminating financial speculation in the auction, instead scheduling a technical conference to develop a solution. (See related story, PJM Wins on DR, Loses on Arbitrage Fix in Late FERC Rulings.)

2013 Results

In last year’s auction, RTO prices dropped 56% to $59.37/MW-day, while prices in ATSI dropped more than two-thirds (to $114/MW-day) and MAAC fell 29% ($119). Prices in the Public Service zone rose 31% to $219.

Generation imports nearly doubled, leading some to question their deliverability. (See Capacity Auction: New Generation, Imports Up, Prices, DR Down.)

Over the objections of consumer advocates and others, FERC approved PJM’s plan to create five import zones with a combined limit of 6,499 MW for this year’s base auction (ER14-503). (See FERC Clears Capacity Import Limits.)

The cap represents a 17% reduction from the imports that cleared in 2013. However, external resources can win an exception to the limits if they are pseudo-tied; have confirmed, firm long-term transmission service; and accept the same must-offer requirement as internal resources. PJM’s planning parameters show that only 1,524 MW of the 6,499 MW are available after 4,777 MW in exceptions.

FERC also approved rules requiring DR providers to give more assurances in their offers (ER13-2108), as well as limits on the clearing of limited demand response (ER14-504) that a PJM simulation suggested could increase capacity revenues by $1 billion annually. (See FERC OKs Limits on DR in Capacity Auction.)

Utility Execs Not Excited

In earnings calls over the last two weeks, executives of PJM companies praised the RTO’s rule changes but said they didn’t expect a dramatic rise in prices.

AEP CEO Nick Akins predicted RTO prices of $80 to $100 but added, “But who knows? I mean … the way this capacity construct works … things happen all the time.” Akins’ prediction is in line with that from UBS Securities, which predicted in February that RTO prices will rebound to $80 with MAAC flat at $120.

FirstEnergy CEO Tony Alexander told analysts he was encouraged by these “modest reforms” but more excited that “momentum is growing for changes that can truly help” such as a premium for having fuel on-site, which could boost nuclear and coal plants.

“I don’t think any of the rules currently approved are going to move the auction substantially,” added Leila L. Vespoli, FirstEnergy’s executive vice president of markets.

FirstEnergy President Donald R. Schneider said the “wildcard” will be the volume of offers from new generation in the interconnection queue.

PSEG CEO Ralph Izzo, however, said it is the actions of DR providers that may have more impact. “Really, a large part of the auction turns on what you expect for DR,” he said. The volume of cleared DR dropped 16% last year over 2012.

PPL CEO William Spence said there are too many variables to make a prediction on prices.

“There are a lot of moving parts, a lot of modifications have been made. There is a lot of kind of noise out there around the residual auctions and so forth,” he said. “So I think for this year at least, we are not going to put out an expectation around where we expect RPM prices to settle out, because there is a lot more uncertainty, in our view, coming into this auction than we have seen in past auctions.”

Spence said neither the auction results nor the spike in energy prices over the winter would influence the company’s long-term strategy. The company is reportedly considering selling its generation assets.

“We continue to have, as our No. 1 priority, the aggressive cost control and optimizing the dispatch of our plants,” he said. “At the same time, we do continue to consider other options that could enhance value. There is no particular data point or viewpoint of forward prices that we are waiting for or that would substantially impact our thought process around strategic options for that business.”

IPP Views

Among independent power producers, Calpine was downbeat while NRG was more positive.

Calpine President and Chief Operating Officer John B. Hill said the company has a “flattish to the modestly down view” of this year’s auction prices. “PJM has pushed forward some very strong rules … but we don’t have super high expectations for the auction this year,” he said.

NRG Energy’s Chief Operating Officer Mauricio Gutierrez was a bit more optimistic. “The combined effect of higher requirements and limits on demand response, the limits on capacity imports and the significant levels of un-cleared coal megawatts are positive signs in PJM,” he said.

Load Forecasts

PJM’s load forecast, released in February, predicts the RTO’s summer peak growing almost 7,000 MW to 164,195 in 2017, a 4.4% increase.

PJM predicted growth of 80 to 120 MW in APS from hydraulic fracturing and a 288- to 896-MW boost in the Dominion zone from new data centers. An undisclosed project under construction is forecast to add 50 to 195 MW to BGE’s summer peak beginning in 2017. Peak demand in the AEP zone was reduced by 370 MW, reflecting the loss of an aluminum smelter.

CETO/CETL ratios

PJM’s planning parameters report noted that planners had added three Locational Deliverability Areas (LDAs) — ComEd, BGE and PPL — to the nine modeled in last year’s auction.

Prior to each BRA, the Capacity Emergency Transfer Objective (CETO) and Capacity Emergency Transfer Limit (CETL) are calculated for each of 27 potential LDAs to determine whether separate demand curves should be modeled for them to ensure reliability.

The MAAC, EMAAC and SWMAAC LDAs are always modeled separately.

LDAs are also modeled separately if the CETL is less than 1.15 times its CETO or the LDA had a locational price adder in any of the three prior base auctions.

PJM can also model LDAs separately if it believes it necessary for reliability.

PJM said it would model the ComEd, BGE and PPL LDAs separately for the first time because of concern over generation retirements. The RTO said it wanted to “proactively identify locational supply concerns before they actually occur.”

PJM said most CETL values are about equal to or slightly higher than last year’s auction. The exception is the Pepco LDA which dropped to 5,208 MW, a reduction of 22% from last year, due to generator retirements.

The PS, DPL and SWMAAC zones showed the lowest CETO/CETL ratios, all below 1.4.

May 12, 2014

Members Committee Meeting Preview

Below is a summary of the issues scheduled to be brought to a vote at the Members Committee meeting Thursday. Each item is listed by agenda number, followed by a summary of the issue.

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

5. Consent Agenda

The committee will be asked to approve the following:

B. Revisions to Manual 34: Stakeholder Process

Changes to voting methods at the Standing Committees, and posting and notice requirements.

Section 8.4: Voting Method

The voting procedures would be changed to allow members to indicate their preference for the status quo over proposed rule changes.

As under current rules, each member may vote yes, no or abstain on each proposed alternative. If one or more alternatives receives more than 50% support, a second vote will be taken asking participants to choose between the most popular change and the status quo.

If a simple majority does not prefer the proposed alternative over the status quo, the chair will lead a discussion to determine whether to continue working toward a proposal with wider support or to terminate work on the issue.

If the status quo receives less than a simple majority, the most popular proposal will be the main motion at the Markets and Reliability Committee. Other proposed alternatives that received greater than 50% support may be considered by the MRC as alternative motions.

Section 10.4: Posting Process Timelines

Members would have five business days to comment on proposed revisions to governing documents before votes of the Markets and Reliability or Members committees (down from the current 10-day requirement).

Section 11.13: Consultation with Transmission Owners and Members

Except in emergencies requiring immediate action, PJM would be required to provide Transmission Owners and PJM members 30 days’ notice before making a Section 205 filing to change the creditworthiness provisions of the Tariff. The notice time for making Section 205 filings on other matters would remain at the current seven days.

C. Settlement Formulation Review – Phase II initiative: Clarifications to the Tariff and Operating Agreement (OA) on regulation shoulder hour lost opportunity costs (LOCs). As a result of a review, PJM discovered that the documents didn’t adequately describe the calculation of the deviation between the regulation set point and the expected output of each regulation resource.

D. Credit Available for Virtual Transactions: Revisions to the Tariff to reflect current PJM practices regarding credit available for virtual transactions. PJM instituted the policy as the result of a FERC Order in 2004 but failed to make accompanying changes to the Tariff. These revisions also correct for changes in credit policy since 2004 (e.g., working credit limit discount is now 25%, not 15%).

E. Synchronized Reserve penalty charges for Tier 2 resources: Clarifications to the Tariff and OA giving generators providing Tier 2 synchronized resources the ability to aggregate these resources in order to avoid retroactive penalties for failure to respond appropriately when called. New language will also be added to Manual 11: Energy & Ancillary Services and Manual 28: Operating Agreement Accounting. Aggregation will not be used in calculating Tier 2 Synchronized Reserve credits; each resource will continue to be credited independently.

F. PJM’s change of mailing address: Changes to the Tariff and Operating Agreement to reflect PJM’s new mailing address to: 2750 Monroe Blvd., Audubon, PA 19403.

6. PJM Board of Managers Nominating Committee (NC)

The committee will be asked to re-elect to the Board of Managers Ake Almgren, who joined the board in 2003, Susan Riley (2005) and Charles Robinson (2011).

May 12, 2014

State Briefs

Governor Set to Fill Empty PSC Seat

Photo of Governor Jack Markell (Source: Delware) — Gov. Jack Markell

Gov. Jack Markell is ready to fill a seat on the Public Service Commission that has been empty for two years, according to reports. Chairwoman Arnetta McRae left the commission in 2011 to take another job, leaving the part-time five-member panel one commissioner short. Commissioner J. Dallas Winslow Jr. was named chairman a few months later, but the fifth commission seat has been empty since.

“The governor is in the process of setting up interviews and plans to nominate a replacement for consideration by the Senate in June,” Markell spokeswoman Kelly Bachman told The News Journal. “There were discussions regarding the possibility of shifting the PSC to a full-time commission; however, at this time we are moving forward on filling the vacancy while maintaining the part-time make-up of the PSC.”

More: The News Journal

MARYLAND

DC Suburb Wants Exelon To Promise Improvement

Campaign Flyer for Montgomery County Councilman Roger Berliner (D-1)

A Montgomery County councilman introduced a resolution asking state regulators to require Exelon to improve reliability as a requirement for its takeover of Pepco. Councilman Roger Berliner’s resolution urges the state Public Service Commission to require Exelon to make a “firm commitment” to deliver top quartile performance as a part of its approval of the proposed takeover. Pepco has ranked poorly in performance metrics.

Exelon last month offered to purchase Pepco’s parent company, PHI Holdings, for $6.8 billion. Exelon has promised $100 million in rate credits and other assistance to customers as part of the terms of the purchase.

The commission is currently reviewing a Pepco request for a $43 million rate increase, money the utility has said it needs for infrastructure improvements.

More: BethesdaNow

NEW JERSEY

PSEG Reaches $1.2 Billion Settlement on Energy Strong

Public Service Electric & Gas and the state Board of Public Utilities reached a settlement last week on the utility company’s plan to harden its infrastructure to better withstand storm damage. The settlement sets the cost for the system-wide project at $1.2 billion over three years, far less than the original price tag of $3.9 billion. The settlement allows PSEG to recover $1 billion of the costs from customers.

The plan, dubbed “Energy Strong,” was proposed in the wake of the damage done by Superstorm Sandy, which left millions of customers without power. The settlement means cutting the amount of improvements. PSEG Chief Executive Officer Ralph Izzo said he was disappointed that the program was scaled back but glad work will commence. “Clearly, we are not able to make every improvement we planned, but this settlement will allow us to begin to make meaningful upgrades, including upgrading substations that were flooded in Superstorm Sandy and Hurricane Irene,” he said.

Consumer advocates were more optimistic about the settlement. “This has gone from a massive, undefined and frankly unfair program in terms of method of cost recovery, to a now well-defined, targeted work that benefits customers,” said Rate Counsel Director Stefanie Brand.

More: The Star-Ledger

OHIO

Senate Passes 2-Year Pause in Green Standards

The state Senate last week passed a two-year freeze in the state’s “green” energy standards and called for studies on their effectiveness. The green standards, mandating renewable energy and energy-efficiency programs, will go back into effect in 2017 without further legislative action.

The original version of SB 310 called for a permanent freeze in the standards, but Gov. John Kasich’s office pushed for the two-year “pause” and further study. Environmentalists, consumer advocates and some business groups have criticized the state’s green standards as too pro-utility. Supporters of the standards freeze, including FirstEnergy, argue that mandating further standards would lead to higher energy bills.

More: The Columbus Dispatch

PENNSYLVANIA

Bill to Cap Rate Hikes Stalls in Pa. House

Photo of PA State Representative Bob Godshall — Rep. Bob Godshall

A House-sponsored measure that would cap variable electric rate hikes at 30% – introduced in the wake of the skyrocketing rates during this past winter – made it out of committee but didn’t make it to the floor for a vote before the House recessed.

Rep. Bob Godshall (R-Montgomery) introduced HB 2104 and gathered bipartisan support for the bill. But Godshall said a “full-scale attack” on the bill was launched by electricity suppliers. Some consumers who had signed up for variable rate plans saw bills double or triple this winter.

Electricity suppliers oppose the 30% cap. “HB 2104 in its current form would impose rate caps and price controls contrary to the original intent of electricity deregulation,” said Richard Hudson of the Retail Energy Supply Association. The House may reconsider the bill when it reconvenes in June.

More: The Morning Call

VIRGINIA

Dominion Virginia Power Seeks Rate Increase

Dominion Virginia Power is seeking a 6% rate increase to cover the unexpected spikes in winter fuel costs and to fund transmission line improvements. The request, filed with the State Corporation Commission last week, would raise a typical residential monthly bill from $107.99 to $114.36 if approved. About $4.46 of that is for fuel costs; the rest is for transmission work.

More: The Daily Press

WEST VIRGINIA

FirstEnergy Files For Rate Increase

FirstEnergy subsidiaries Mon Power and Potomac Edison filed a joint rate increase request for $96 million with the state Public Service Commission. Mon Power and Potomac Edison serve about 385,000 and 135,000 customers, respectively. If approved, it would mean an increase of about $14 a month to a typical customer’s bill. The last base rate increase approved by the commission was five years ago.

More: West Virginia MetroNews

May 12, 2014

Federal Briefs

Norman Bay, President Obama’s nominee for chairman of the Federal Energy Regulatory Commission, is about to get his day in the Senate, along with acting FERC Chairwoman Cheryl LaFleur. Obama nominated Bay, the director of FERC’s Office of Enforcement, on Jan. 30. The president nominated LaFleur to a second five-year term May 1.

It is Obama’s second attempt at filling the chairmanship left vacant since former Chairman Jon Wellinghoff’s term expired. Former Colorado regulator Ron Binz withdrew his nomination in October after failing to win enough support from the Senate Energy and Natural Resources Committee, which will conduct the confirmation hearing for Bay and LaFleur May 20.

Wellinghoff, an ally of Senate Majority Leader Harry Reid (D-Nev.), reportedly lobbied for the nomination of Bay, a former U.S. attorney whom Wellinghoff brought to the commission in 2009.

Committee Chair Mary Landrieu (D-La.), said last week she was impressed with Bay, calling him “very, very knowledgeable about energy markets and structure.” Sen. Joe Manchin (D-W.Va.), however, expressed concern about Bay’s energy experience. Unlike most FERC commissioners in the last decade, Bay has never served as a state utility regulator. Bay had no energy experience before joining FERC. (See FERC Pick a Blank Slate.)

Bay also may face tough questioning over the commission’s enforcement policies, which some critics have labeled heavy-handed. (See FERC, CFTC Reject Due Process Complaints.)

More: E&E Daily

TVA Cutting 10% Of Workforce

The Tennessee Valley Authority is cutting more than 10% of its workforce through early retirements, attrition and layoffs, its largest staff reduction in more than 20 years.

The federal utility, which has accepted 750 early retirements and won’t fill 1,000 vacant positions, said layoffs will be announced later this year. The company will also lay off 390 Bechtel contract workers from the Wyatt Bar Nuclear Plant in Texas. Staffing levels are at 12,612, down from 51,709 in the 1980s.

TVA says the cuts are necessary to bring staffing levels and electric rates in line with other utilities as power consumption in its service territory drops. TVA President Bill Johnson says he wants a $500 million reduction in annual expenses by next year. TVA supplies power to about 9 million people in Tennessee, Alabama, Mississippi, Kentucky, Georgia, North Carolina and Virginia.

More: Mississippi Business News

DOE Awards Grants To NJ, Va. Wind Farms

The proposed Fishermen’s Energy project off the coast of Atlantic City and Dominion Resources’ project off Virginia Beach each will receive up to $47 million in federal funding, the Department of Energy announced last week.

Fishermen’s Energy won the grant even though the $188 million project was rejected by New Jersey regulators, who said it would cost utility customers too much. The company wants to build five 5-MW turbines as a laboratory for researchers to learn about offshore wind and investigate interactions between turbines.

The company’s chairman Dan Cohen said the grant was a recognition that “No other project in America is more prepared to put steel in the waters.” A spokesman for the Board of Public Utilities said he could not comment on the grant, noting that Fishermen’s Energy is appealing the agency’s rejection in state court.

Dominion’s project is a 12-MW wind farm to be built 26 miles off the coast of Virginia Beach. It will demonstrate installation, operation and maintenance methods for wind turbines located far from shore, and test hurricane-resistant designs.

A third project to be built off the Oregon coast will also get federal money, the Department of Energy said.

More: Department of Energy; NJ Spotlight

NRC Clears Exelon of Cleanup Fund Violations

The Nuclear Energy Regulatory Commission is backing off allegations that Exelon purposely violated reporting regulations regarding its nuclear decommissioning funds.

The NRC last year charged that Exelon purposely misled regulators about the funds, but in a ruling issued May 1, it said that it found “insufficient evidence to support a conclusion that Exelon officials acted willfully.” The NRC ruling went on to say, however, that the inaccurate reports in 2005, 2006, 2007 and 2009 about the amount of money in the decommissioning funds was “avoidable.”

More: Crain’s Chicago Business

White House Solar Array Goes Live … Finally

Re-installing Solar Panels on The White House Roof (Source: The White House) — (Source: The White House)

The solar array project atop the White House, a project started in 2010, went live last week, White House officials said. It is expected that President Obama will use the installation in announcements this week about further government-backed solar projects. A White House spokesperson described the solar array as capable of generating 6.3 kW and is “part of an energy retrofit that will improve the overall energy efficiency of the building.”

Energy Secretary Ernest Moniz called the installation “a really important message that solar is here. We are doing it, we can do a lot more.”

More: The Washington Post