Responding to concerns raised by last spring’s sabotage of a Pacific Gas and Electric substation, the Federal Energy Regulatory Commission has ordered development of reliability standards to protect the grid from physical attack.
The North American Electric Reliability Corp.’s standards, due in 90 days, do not have to require uniformity, FERC said in its order to NERC, nor are they likely to apply to the majority of facilities (RD14-6). NERC CEO Gerry Cauley and FERC commissioners Philip Moeller and John Norris warned last month that an overreaction to the threat could be expensive and counterproductive. (See FERC-NERC: Don’t Overreact to Sabotage Threat.)
Identify Critical Facilities
NERC’s standards must require owners and operators to take at least three actions. The first step is a risk assessment to determine what facilities, if damaged, could have a critical impact on grid operations.
The next steps are to evaluate potential threats and vulnerabilities to those critical facilities and then to develop and implement security plans.
FERC told NERC to include a procedure that would ensure confidential treatment of sensitive information but still allow appropriate oversight for compliance.
“The commission is not requiring NERC to adopt a specific type of risk assessment, nor is the commission requiring that a mandatory number of facilities be identified as critical facilities,” the order said. It added that FERC “expects that critical facilities generally will include, but not be limited to, critical substations and critical control centers.”
Once facilities are identified, FERC said, the standards need not dictate specific protective steps to be taken. But they “need to require that owners or operators of identified critical facilities have a plan that results in an adequate level of protection.”
FERC expects that the number of critical facilities will be relatively small. Most substations, for example, would not be deemed critical under the standards.
“We do not expect that every owner and operator of the bulk power system will have critical facilities under the reliability standard,” the commission said. “We also recognize that the industry has engaged in longstanding efforts to address the physical security of its critical facilities.”
Norris’ Concerns
Commissioner Norris issued a concurring statement expressing concerns that the expedited 90-day deadline and the commission’s ex-parte rules will inhibit the development of intelligent rules.
“I believe the order does not sufficiently justify the uniquely expedited nature of the standard development process, particularly when it will foreclose the Commission from engaging with stakeholders during that process,” Norris said.
The Electric Power Research Institute will lead an educational session on smart inverters March 31 as the Planning Committee begins work on developing standards for the devices.
The Markets and Reliability Committee approved a problem statement/issue charge on Feb. 27 directing the Planning Committee to set rules for the devices, which allow solar PV and other renewables to provide reactive power. (See Enhanced Inverters Clear MRC.)
The Planning Committee will meet twice monthly on the issue. PJM will provide a second educational session April 18.
PJM said it will change Manual 11’s rules regarding compensation for demand response despite a lack of stakeholder support.
In an unusual move, the Markets and Reliability Committee last month balked at endorsing the manual changes, which outline when Economic Demand Response qualifies for payment.
In an email to the Demand Response Subcommittee Friday, PJM’s Dave Anders cited a provision of the Operating Agreement that gives PJM the authority to make manual changes without a two-thirds member endorsement. “While PJM rarely exercises this right and responsibility, PJM has determined that this is the proper course of action in this case,” Anders wrote.
The changes were backed by only 57% of the MRC in a sector-weighted vote Feb. 27, with no End Use Customers and less than half of Other Suppliers voting in support. (See Manual Change on DR Compensation Rejected; 3 Others OK’d.)
Most Generation Owners and Transmission Owners voted in support of the changes, which specify that demand reductions are eligible for compensation only when they “are not implemented as part of normal operations.”
Load reductions “that would have occurred without PJM dispatch, or that would have occurred absent PJM energy market compensation” would be ineligible for compensation, according to the new rule.
PJM officials contend the manual changes only explained the RTO’s existing interpretation of FERC Order 745, and would not change operating practices.
But John Webster, of Icetec Energy Services, said the new language would give PJM too much latitude in determining the motives of DR participants and when they should be compensated. He said any revisions should be made through Tariff changes and subject to full stakeholder review.
“It’s kind of a national crisis,” an Oak Ridge National Laboratory scientist said about the systems vulnerable to shock from climate change. In a report for the Department of Energy to inform the third annual National Climate Assessment, the Oak Ridge author identifies vulnerabilities and challenges to energy systems, including electricity. For example, according to the report, one meter of sea level rise could prompt 4.6 million people in seven Florida counties to relocate, which would stress power infrastructure because those people account for more than 11% of power demand in the area. Before the people moved, however, the seven counties could be susceptible to hurricane-induced sweeping blackouts lasting weeks.
The report may help Public Service Electric & Gas’ case for the $3.9 billion Energy Strong program it wants authorized to shore up utility infrastructure against storms like Superstorm Sandy.
The House of Representatives voted 229-183 to block the Obama administration’s plan for power plant greenhouse gas controls. The White House has said it would veto the measure if it passed the Senate as well, which is considered unlikely. The bill, the Electricity Security and Affordability Act, would reverse the Environmental Protection Agency’s proposal for limits on GHG emissions from new power plants, proposed in January, and would bar the EPA from issuing GHG rules for existing power plants until at least six U.S. plants have achieved the carbon capture technology standards for at least a year. The measure also requires EPA to study the domestic and global impact of the proposed rules.
Meanwhile, at the IHS CERAWeek conference in Houston, EPA Administrator Gina McCarthy assured attendees that “conventional fuels like coal and natural gas are going to play a critical role in a diverse energy mix for years to come.” At the same event, American Electric Power chief Nick Akins said he was encouraged by EPA’s outreach on the issue but was skeptical about the outcome.
A bipartisan energy efficiency bill passed the House of Representatives 375-36 in action widely hailed as proof that efficiency is a value honored by both parties in the ongoing political wars. The measure’s provisions are largely voluntary or involve studies, but it could provide a platform for negotiation with the Senate if that body passes its own, much broader, energy efficiency bill. The Shaheen-Portman bill could see a Senate vote soon. The House bill calls for a study of the feasibility of improving efficiency in commercial buildings, with encouragement for owners and tenants to implement high-efficiency measures and a requirement for development of a voluntary Tenant Star program to recognize commercial-building tenants that achieve high levels of efficiency. The program would be similar to the existing Energy Star efficiency labeling program for appliances.
With support voiced from the Federal Energy Regulatory Commission, the Governors Wind Energy Coalition said it would pursue activities this year to promote construction of transmission lines that support renewable energy development. Among things the group will promote: establishing one-stop shops for transmission siting; supporting state and regional cooperation through collaboration among policymakers, utility commissions and system operators; and removing legislative barriers to siting, “such as those that don’t allow state utility commissions to consider economic, reliability, environmental and functional benefits beyond state boundaries in considering transmission siting.”
The solution to the Artificial Island transmission stability problem may be more costly than originally estimated, PJM officials said last week.
PJM planners, who received 26 proposed solutions with costs as high as $1.5 billion, have been concentrating their review on several proposals with estimated costs of $110 million to $270 million.
Vice President for Planning Steve Herling told the Transmission Expansion Advisory Committee Thursday that addressing technical concerns stakeholders have raised about the proposals “could drive costs up.”
PJM’s Paul McGlynn said costs could be increased, for example, due to “the complexity that comes from working in a substation outside a nuke plant.” Artificial Island is home to the Salem and Hope Creek nuclear plants.
Officials gave TEAC members a briefing on the preliminary findings of the constructability review by the RTO’s engineering consultant.
Right of Way Concerns
The review found that the availability of land that Transource Energy proposed using in New Jersey “is in question.”
Proposals by LS Power and Virginia Electric and Power Co., in contrast, would require no additional land for expansion of the existing Salem substation. LS Power has acquired an option on a site for its proposed new switching station in Delaware.
The consultant also raised concerns about proposals that would cross or parallel Delaware Route 9, which is designated as a “Scenic and Historic” highway. Sharon Segner, of LS Power, said her company has obtained a legal opinion that Delaware law does not prohibit transmission lines near scenic highways.
Some proposals also could impact a wildlife refuge in New Jersey.
Artificial Island is PJM’s first competitive transmission project under FERC Order 1000.
McGlynn said planners are doing their best to conduct an “apples to apples” comparison of the proposals. “It’s proving to be more of a challenge than I originally thought,” he said, adding that planners still hope to recommend a solution to the PJM board by summer.
At least seven people were injured, including five PSE&G workers, Tuesday afternoon when a gas explosion ripped through a Ewing Township, N.J. condo complex. The blast destroyed at least one home and others were damaged by what witnesses described as a fireball.
Two hours after the explosion, firefighters from West Trenton Fire Co. and surrounding communities in Mercer County and beyond were still dousing the flames.
PSE&G said crews were working on repairs to a gas line that was reported damaged by a contractor when “there was an ignition.” The cause was under investigation.
According to news reports, the accident occurred about 1 p.m. in the South Fork development when witnesses said they heard what sounded “like a thunderbolt hitting” the area. One witness described diving to avoid a fireball.
Details were still unclear late Tuesday afternoon.
Ewing Police Lieutenant Ron Lunetta said five PSE&G workers were injured in the explosion, in addition to two employees of utility contractor Henkels and McCoy. PSE&G said two of its employees were hospitalized.
One of the injured was undergoing emergency surgery for lower body fractures at Capital Health Regional Medical Center in Trenton, according to Chief of Surgery Louis D’Amelio. None of the injuries were considered life threatening.
It did not appear that any residents were injured.
Dozens of homes were evacuated and affected residents were taken to the fire company and a local golf course in the immediate aftermath.
News reports said homeowners whose homes weren’t directly affected by the blaze would have to wait until late evening to return to their homes.
University Hosts Initiative Promoting Offshore Wind
The University of Delaware has launched a “Special Initiative” on offshore wind, which it hopes will serve as
catalyst to “add momentum to a promising industry that is at a critical juncture.” Supported by the Rockefeller Brothers Fund, the initiative plans to draw together information about technology, financing and collaboration opportunities, serving as a nexus for partnerships among private sectors, non-governmental organizations and government. It is housed at UD’s College of Earth, Ocean and Environment.
Commonwealth Edison is accelerating its deployment of advanced meters, with plans to switch all 4 million of its meters by 2018, three years ahead of schedule. Chicago’s South Side started getting meters last week and would be completely outfitted by the end of 2015, assuming the Illinois Commerce Committee approves the schedule. The entire city would be finished by the end of 2017.
State Considers Tougher Rules for Coal Ash Storage
The Illinois Pollution Control Board is considering stricter rules for coal ash storage and monitoring, initially focusing on regular monitoring and reports on groundwater supplies. If contamination occurred, companies would either take corrective action or close the site. The board held its first hearing on the matter Feb. 26 at the state Environmental Protection Agency, hearing from citizens worried about the numerous coal plant sites near them and industry representatives concerned about costs.
House Version of S.B. 340 Kills Efficiency Program
The House of Representatives approved a bill that would eliminate energy efficiency mandates for utilities and dismantle Energizing Indiana, a two-year-old energy efficiency program for homes, businesses and industrial users.
The House was acting on a measure, Senate Bill 340, already passed by the Senate, which exempts large industrials from paying the program’s fees. In the House, however, an amendment broadened the bill to shut down the program altogether. The amended measure was to be returned to the Senate, where its author said he would determine whether to accept the House changes or go back to his original bill.
Fort Wayne International Airport, with Telamon Corp., is exploring the possibility of a solar park on two airport-owned sites. Telamon, which has a 12.5-MW solar farm operating at Indianapolis International Airport, is determining the viability of the Fort Wayne site. If built, the facility would feed power into the system of Indiana Michigan Power, a unit of American Electric Power.
ITC Holdings sees competition in the transmission business growing as regulated utilities demonstrate more enthusiasm for building transmission. The independent transmission company remains open to merger and acquisition possibilities, despite the ultimate failure of its deal to buy Entergy’s transmission system.
Jersey Central Power & Light would be able to recover nearly all the costs it incurred restoring its system after Hurricane Sandy and other storms in 2011 and 2012 under a tentative agreement with regulatory staff and the Division of Rate Counsel. The $736 million settlement — a slight reduction from the $744 million in costs claimed — has to get Board of Public Utilities approval. The company, a unit of FirstEnergy, still faces a possible hit, however, in a base-rate case at the BPU, where staff and Division of Rate Counsel want rates cut by more than $200 million.
‘Energy Strong’ Still Tough As Hearings Begin at BPU
No signs of rapprochement appeared as hearings began last week in the Public Service Electric & Gas “Energy Strong” case at the Board of Public Utilities. The company’s proposal to spend $2.6 billion over five years to harden its gas and power systems against storms continued to draw criticism for the size of the expenditure and the mechanism for cost recovery from customers. Since its initial proposal, PSE&G has reduced its requested amount to $1.9 billion, sources have said.
Florida-based NTE Energy would aim to sell power to Duke Energy and electric cooperatives from a 480-MW natural gas combined-cycle plant it wants to build in the southwestern part of the state. The project could be the company’s first wholesale market venture, depending on the timing of development. NTE is also working on projects in Ohio and Texas. The plant, Kings Mountain Energy Center in Cleveland County, would be able to tap into a Transco pipeline and power lines at the site.
The Department of Environment and Natural Resources cited Duke Energy for violations of environmental laws in connection with the spill of coal ash from the shuttered Dan River coal plant. The company could face fines up to $25,000 a day for each violation. More information will emerge after the state completes investigating the incident. Also last week, Gov. Pat McCrory told Duke CEO Lynn Good that coal ash disposal facilities should be moved away from drinking water sources.
Gov. John Kasich chose former state Rep. Thomas Johnson to succeed Todd Snitchler as chairman of the Public Utilities Commission when Snitchler leaves April 10. Johnson, whose term will end in April 2019, was a member of the General Assembly for 22 years and now heads a consulting firm, Ohio Strategic Advocacy Partners.
After leaving the Assembly, he was director of the state Office of Budget and Management for seven years and then joined Ohio State University, where he taught public budgeting and in 2011 became assistant vice president of financial services. Johnson’s nomination requires Senate confirmation.
NRG Pipeline Gets PUC Nod; Will Serve Avon Lake plant
The Public Utilities Commission approved NRG Ohio Pipeline as a utility, enabling the company to build a natural gas pipeline to affiliate NRG Energy’s Avon Lake plant, which will convert from coal to gas. The 24- or 30-inch pipe would take gas from a Dominion East Ohio or a Columbia Gas of Ohio line about 20 miles south of Avon Lake.
The project requires the Ohio Power Siting Board’s approval for an as-yet undetermined pipeline route. NRG hopes to start building the line in the spring or summer of 2015 and to complete conversion of the plant in May 2016.
Attorney General Takes On Cold-Spell Price Spike Issue
Attorney General Kathleen Kane
Attorney General Kathleen Kane is investigating reports of extreme electricity bill spikes for customers on variable-rate plans. The Public Utility Commission was already examining its rules for variable-rate sellers, but last week Kane invited ratepayers to file complaints for investigation.
Kane noted that price gouging — increasing prices above any increased costs — during a state of emergency is prohibited in Pennsylvania. Governor Corbett declared a state of emergency on Feb. 5.
FirstEnergy utilities in Pennsylvania plan about $600 million of investment in system improvements this year, including significant tree trimming and maintenance. In Pennsylvania Electric territory, the company will spend $228 million, $66 million more than last year. The figure includes $49 million for transmission-related projects built and owned by affiliate Trans-Allegheny Interstate Line.
West Penn Power will invest $160 million, including $23 million for TrAIL work. The spending is $41 million more than last year.
Metropolitan Edison plans to spend $140 million, $55 million more than last year, including $30 million for TrAIL projects.
In the Penn Power service area, the company will spend $71 million, $34 million more than last year. $37 million is for TrAIL work and $14 million is tagged for smart meters.
CMU Study: Put Renewables Where Benefits are Greatest
Planners should place solar and wind power generators where they can deliver the most benefits — like Pittsburgh, for example — and not necessarily where the resources are greatest, a Carnegie Mellon University study concludes. “What makes solar benefits in Pittsburgh larger than in other locations is that we would be mostly displacing electricity generated by coal, which has a large amount of air pollutant emissions — and associated health and environmental consequences,” said Inez Lima Azevedo at CMU’s Center for Climate and Energy Decision Making.
A bill allowing Dominion Power to write off most of what it has spent studying whether to build a third unit at the North Anna nuclear station passed the state Senate last week and went to Gov. Terry McAuliffe’s desk. The state attorney general had opposed it, as had environmentalists and Dominion’s largest customers.
As of last week the governor had not expressed his intentions for the bill. The measure allows Dominion to deduct about $400 million of spending from its profits. It would probably avoid the possibility of a state-ordered rate refund in the future.
Beech Ridge Energy has asked for approval to install battery storage systems at its wind farm in Nicholas and Greenbrier counties. The Invenergy company asked the Public Service Commission to waive the need for an amendment to its existing site certification in order to add the storage. Beech Ridge now has 100 MW operating, and says that the storage, plus a second set of turbines, would not exceed 186 MW. The storage device would have a nominal output of up to 32.4 MW.
FirstEnergy utilities that serve West Virginia plan to spend more than $250 million this year to improve their systems and trim and maintain trees. Mon Power will invest about $110 million, $32 million more than last year, in projects that include raising capacity on the Collins Ferry-Osage 138-kV line and supporting the expanding Marcellus Shale gas industry operations.
Potomac Edison, which serves customers in western Maryland and West Virginia, plans to spend about $143 million on a variety of projects, $80 million more than last year, including $42 million for transmission-related work on projects built and owned by FirstEnergy affiliate Trans-Allegheny Interstate Line. The utility will also be extending service to fast-growing areas of both states.
AES Corp. announced last week that it is attempting to sell DPL Inc.’s generation fleet rather than spinning it off into an unregulated subsidiary.
The Public Utilities Commission of Ohio has ordered AES to separate DPL’s generation into an unregulated subsidiary by mid-2017, but Chief Financial Officer Tom O’Flynn told analysts Wednesday that the company may sell instead.
“We’ll explore all potential options to optimize the solution, and we recently began to evaluate the sale of DPL generation assets to an unaffiliated third-party…” O’Flynn said during an earnings call. “Obviously we can’t comment much as we’re in the very early stage of this process.”
$307 Million Charge
AES bought DPL, parent of Dayton Power and Light Co., in November 2011 for $3.5 billion in cash. The company said it wanted to increase its presence in the Midwest, where it already owned Indianapolis Power & Light Co.
Although the purchase price was a modest 9% premium to DPL’s stock price, the company now concedes the deal isn’t looking so smart. “To date, we have not realized the benefits that we anticipated at the time of acquisition,” AES said in its 10-K, filed last week.
The company recorded a $307 million charge ($0.41/share) for goodwill impairment at DPL in the fourth quarter of 2013, citing “lower than expected PJM cleared capacity prices for 2016/2017, lower expectations of future PJM capacity prices and lower projected energy margins.”
Retail Competition
(Source: AES)
Higher maintenance costs from planned outages and switching by retail customers also hurt DPL’s results for the year.
In 2013, about 42% of customers, representing two-thirds of the energy usage within DP&L’s service area, purchased power from competitive suppliers.
DP&L has been the default power supplier to those not shopping. But beginning this year, it will lose its monopoly on these Standard Service Offer customers. Ten percent of the SSO load will be sourced through competitive bids in 2014, rising to 100% in 2017.
DPL Energy Resources Inc., DPL’s competitive retail marketer, has more than 308,000 retail customers in Ohio and Illinois, including 130,000 of DP&L’s 515,000 distribution customers.
2013 Results
AES Corp.’s foreign businesses drove most of the company’s earnings news last week, with an unprecedented drought and bad currency exchange rates in Latin America to blame for much of its downturn in fortunes.
Its fourth quarter per-share earnings were 29 cents, compared to 31 cents in the previous year. Its year-end results were $1.29 per share, compared to $1.21 for 2012.
Like many other utilities, AES said it is going to concentrate on regulated business, and it is looking to sell generation assets. The company, which derives 75% of its earnings outside the U.S., announced late last year that it was shedding assets in Cameroon, India and Poland.
Generation Sale
Hutchings Station (Source: DPL)
AES will find a crowded field if it moves forward with a sale of DPL’s 3,453 MW of generation. Ameren Corp. sold five coal-fired merchant plants in Illinois to Dynegy Inc. last year.
Last month, Duke Energy announced its intention to sell its shares in 13 plants in the Midwest, including seven plants co-owned with DPL.
Dayton Power and Light owns 2,897 MW of capacity, most of it coal-fired. DPL subsidiary DPL Energy LLC owns 556 MW of peaking capacity in Ohio and Indiana.
A White House official dampened expectations that the Environmental Protection Agency will issue a greenhouse gas rule for existing power plants by the June 1 date set by the president last summer. Heather Zichal, deputy assistant secretary to the president for energy and climate change, said it would be premature to issue a rule for existing plants while still reviewing two million comments filed on the proposed GHG rule for new power plants, which was published in January, later than expected. The EPA extended the March 10 public comment deadline to May 9 at Congress’ request.
U.S. Supreme Court West Facade (Source: Wikimedia Commons)
The Supreme Court declined to hear questions raised by some states and utilities about cost allocation for regional power lines. Utilities and regulators in Illinois and Michigan had challenged an appeals court ruling upholding the Midcontinent Independent System Operator’s broad cost allocation design for “multi-value projects,” but the high court declined to take up the case. MISO’s cost-sharing regime is thus left in place.
The coal ash spill at Duke Energy’s shuttered Dan River plant in North Carolina has increased pressure on the federal government to issue strong disposal regulations. The power industry believes the Environmental Protection Agency will not regulate ash as a hazardous waste, and will leave regulatory choices to states, but environmental groups continue to argue for a hazardous designation and a strong federal role.
NREL Studies State Roles In Solar Market Development
A new National Renewable Energy Laboratory report concludes that the effectiveness of state solar policies is influenced by demographic factors such as median household income, solar resource availability, electricity prices, and community interest in renewables. NREL said the study provides “insight into the policy scope and quality that is needed to spur solar PV markets.”
The report includes case studies on three PJM states, citing Maryland’s “comprehensive policy portfolio with equal emphasis on all policy types;” North Carolina’s “strong interest in clean energy-related policy,” and Delaware’s experience, which it said “illustrates how targeted market preparation and creation policies can effectively stimulate markets.”
Shaheen-Portman Re-filed; Changes Aimed at Passage
An energy efficiency bill that has been stalled for months was reintroduced last week with some new provisions that could pave the way for passage, though timing of Senate floor action is still uncertain. The Energy Savings and Industrial Competitiveness Act, introduced again by Sens. Jeanne Shaheen (D-N.H.) and Rob Portman (R-Ohio), would strengthen model-building codes, create a building efficiency financing program, provide incentives for energy-efficient industrial motors, and more. Numerous new provisions, which brought more senators onto the measure, include repeal of a 2007 law requirement that new federal buildings use no fossil fuel energy sources.
Detroit-area Democratic Rep. John Dingell announced he would retire from the House of Representatives after a record 59 years. His wife, Debbie Dingell, is among those reportedly planning to run for his seat.
In his tenure, Dingell presided over the Energy and Commerce Committee’s passage of major energy and environmental legislation, including the Clean Air Act Amendments of 1990, which established the Acid Rain Program. He also was involved with the Energy Policy Act of 1992, which established incentives for renewable energy and conservation and created a full-fledged independent power business by allowing “exempt wholesale generators.”
He also led the committee during writing of the American Clean Energy and Security Act of 2009, referred to as the Waxman-Markey bill, which passed the House but died in the Senate. It would have created a greenhouse gas cap-and-trade program. Rep. Henry Waxman (D-Calif.) has also announced his retirement, placing Democratic leadership of the energy committee in contention.
Stakeholders last week agreed to develop technical standards for “smart” inverters that can allow solar PV and other renewables to provide reactive power.
The Markets and Reliability Committee approved a problem statement/issue charge directing the Planning Committee to develop standards and accompanying rule changes.
The increasing penetration of solar PV and other asynchronous generation resources, combined with the retirement of traditional generation, has made managing voltage more difficult in some regions. Smart or enhanced inverters allow such resources to provide reactive power support and increase their abilities to remain operating during frequency swings and low voltage. (See `Smart’ Inverters May Give Solar Reactive Capability.)
The new standards would apply to new sources of renewable generation, while allowing existing units to maintain the status quo, said PJM’s Frank Koza.
Many smart inverters are already installed on existing PV solar generators, but their enhanced capabilities have been disabled due to current conservative IEEE standards, which force generators to trip offline quickly to avoid islanding. Smart inverters are already being used successfully in Europe.
“These (regulations) could apply to any type of generation seeking interconnection,” said Koza, who noted that smart inverters could aid transmission and distribution projects, too.
Several stakeholders noted that the distribution system — where many inverters will be installed — is beyond the purview of PJM and urged the RTO to work with state regulators to determine jurisdictional boundaries and policy implications. This was added as a friendly amendment to the proposal, which passed without opposition.
PJM hopes to complete work on the issue in time for an August FERC filing.
