February’s winter storm outages in Texas signal a need for a broader re-examination of the electric grid and its preparation for extreme weather events of all kinds, members of the House Energy and Commerce Subcommittee on Oversight and Investigations heard on Wednesday.
NERC CEO Jim Robb | U.S. House Energy and Commerce Committee
“The electric and natural gas systems need to plan for and be better prepared for extreme weather conditions, which are frankly becoming more routine,” NERC CEO Jim Robb said. “Regulatory and market structures need to support this planning and the necessary investment to ensure reliability.”
“I believe the lessons to be drawn from these examples may be numerous, which is why we should be inclusive in looking at them,” Ranking Member Morgan Griffith (R-Va.) said. “Texas’ problems occurred despite the state’s leadership in achieving a diversified, all-of-the-above energy mix … and indicates a need for better weatherization.”
Questions Continue on Renewables
However, attendees were far from unified in their takeaways from February’s crisis.
Popular among Republican attendees was Michael Shellenberger, author, self-described “environmental and social justice advocate” and the founder and president of energy-focused think tank Environmental Progress. In his testimony, Shellenberger said the 2021 blackouts in Texas and last year’s outages in California demonstrated the danger of over-reliance on resources that, by their nature, provide undependable and unpredictable output, and showed why thermal generation resources are still a vital part of the energy mix.
“Adding more weather-dependent sources to electricity grids, all else being equal, might not, in itself, make electricity less reliable. But all else is not equal,” Shellenberger said. “The significant integration of variable energies has led to the loss of traditional power plants and the construction of new transmission lines to weather-dependent energy projects that are unreliable in extreme weather events.”
Michael Shellenberger, Environmental Progress | U.S. House Energy and Commerce Committee
Members of the minority repeatedly referred to Shellenberger’s testimony to support their calls to slow the transition to renewable energy; several Republican attendees even noted that they planned to buy his book.
But Democrats pushed back on this argument; without addressing Shellenberger directly, several members noted — along with Turner — that all generation types experienced losses during the winter storms. (See ERCOT was ‘Seconds and Minutes’ from Total Collapse.) Rep. Kim Schrier (D-Wash.) referred to suggestions that renewable resources were particularly to blame for the crisis as “misinformation.”
Texas Republican Dan Crenshaw — who was invited to attend despite not being a member of the subcommittee — indirectly replied to this comment later in the hearing, sarcastically saying that it was unfair to blame wind for the outages “because you can’t blame something that’s inherently unreliable.” He also criticized Turner for asserting that Houston’s city offices are entirely powered by renewable energy, reminding listeners that this is simply not possible when the wind is not blowing or the weather is cloudy.
Robb Urges New Approach to Gas
Robb stayed away from political debates during Wednesday’s hearing, though he was slightly less guarded than he has been on previous meetings on this subject. In response to a question from Chair Diana DeGette (D-Colo.) he suggested that Texas had “absolutely not” followed Senators Grill Robb, Asthana over Texas Outages.)
Rep. Diana DeGette (D-Colo.) | U.S. House Energy and Commerce Committee
Robb’s testimony focused more on needed investments in transmission and long-term energy storage, along with new “regulatory and market structures” to support a more responsive grid of the future. He also highlighted the shortcomings of the natural gas system, which has become increasingly important for providing just-in-time electricity generation but is still governed by regulations that have not been redesigned to recognize this use case.
“The natural gas system is designed primarily to meet [local distribution company] load … and it does that incredibly well, [but] power generation … has not been its first priority,” Robb said. “The gas system’s designed primarily to focus on high utilization of its assets, whereas the electric industry needs tremendous flexibility to meet incredibly rapid power plant ramp rates to accommodate generation.”
Implementing Virginia’s ambitious environmental justice goals could cost the state millions of dollars and require hiring dozens of new full-time employees, as well as consultants, according to a new report from the Interagency Environmental Justice Working Group.
The 44-page report did not specify a dollar amount, but a majority of the 35 state agencies covered in the study said additional funding and time would be needed for them to create and implement robust environmental justice policies. An estimated 34 new full-time positions spread over 24 state agencies would also be required, the report said.
“This report represents an important first step towards securing justice for disadvantage communities that have been disproportionately burdened by the impact of climate change,” Gov. Ralph Northam said in a statement released with the report.
The report and the formation of the working group were mandated as an addendum to Virginia’s Environmental Justice Act, signed into law by Northam last year. The law calls on state government to incorporate environmental justice considerations into policy and decision making affecting low-income and disadvantaged communities.
Some of the report’s key findings included:
Six agencies identified a need for internal assessments of environmental justice-related regulations and policies to develop a baseline level of understanding, including the Virginia Marine Resources Commission, Department of Wildlife Resources and Department of Historical Resources.
Six agencies also reported they would need a third-party consultant to complete an environmental justice study, including the Office of the Secretary of the Commonwealth and Virginia Economic Development Partnership.
Each agency assessment will cost between $50,000 and $100,000, and some agencies reported they would need more than two years to comply with the law.
The law defines environmental justice as “the fair treatment and meaningful involvement of every person, regardless of race, color, national origin, income, faith or disability, regarding the development, implementation or enforcement of any environmental law, regulation or policy.”
The working group included top officials from about a dozen state agencies and the governor’s office. The group met four times in October and November 2020 to produce the report, assessing each agency on environmental justice performance in policy and regulations, community engagement and involvement, economic development and infrastructure, and fiscal impact and resources.
Checking Boxes
Based on the report, different state agencies are clearly at different points in their awareness and action on environmental justice issues. The Department of Wildlife Resources, for example, said that while it hired a director of diversity and inclusion in 2018, it “does not have agency-specific environmental justice policy currently in place”; nor has it done a full analysis of the policies and regulations that would be needed.
Meanwhile, the Department of Transportation, the state’s largest agency, does have environmental justice guidelines to provide its various divisions “with a consistent framework for both preparing an EJ analysis and developing an effective public involvement strategy.” However, actual implementation across the department is uneven.
The Department of Environmental Quality is farthest along in its efforts. The agency hired an outside consultant in 2019 to produce a study and recommendations on how to incorporate environmental justice principles into its planning and programs.
In the report the department says, “Success in advancing environmental justice through DEQ’s activities won’t simply involve ‘checking boxes,’ but rather putting a process in place to build trust, share understanding and align values among community members, stakeholders, local state and federal government, industry partners and DEQ staff.”
State-level Action
The report’s primary recommendation is to make the working group an ongoing body with public hearings in which it can gather input from environmental justice communities. The group would work with the Virginia Council on Environmental Justice and the Office of Diversity, Equality and Inclusion, and continue to produce annual reports on the state’s environmental justice performance.
“While an environmental justice assessment is not applicable for every Virginia state agency, the continuation of collaboration across state agencies, with leadership by environmental protection agencies, is beneficial to the continued progression of environmental justice policy in the commonwealth,” the report says.
Virginia is one of a growing number of states that have either enacted or are considering environmental justice laws. According to a recent analysis by Bloomberg Law, environmental justice statutes are on the books in 10 states and pending in 13. On the federal level, President Biden’s executive order on climate change included a Justice40 provision, requiring 40% of all benefits from government investments benefit disadvantaged communities, with results tracked on an Environmental Justice Scorecard. A federal Environmental Justice for All Act was introduced in the House in 2020 but never got beyond committee hearings.
A bill that sets a legally binding 2050 net-zero emissions target for Rhode Island is headed to Gov. Daniel McKee for his signature.
The House of Representatives passed the Act on Climate (House Bill 5445A) 53-22 on Tuesday, following Senate passage of an identical bill (Senate Bill 87A) last week.
The bill updates the state’s emission-reduction targets to 45% below 1990 levels by 2030 and 80% by 2040. The state’s Executive Climate Change Coordinating Council would be directed under the law to create plans to reduce emissions and coordinate them through state agencies. The law would further authorize residents or entities to sue the state if it is not fulfilling any part of its duties as laid out in the act.
Representatives from both sides of the aisle introduced a flurry of amendments to address concerns about the bill’s language governing the climate council’s broad regulatory authority and the right to sue. None of them were passed during a nearly four-hour debate.
House Minority Leader Blake Filippi (R) introduced an amendment to ensure that all plans created by the climate council would be returned to the legislature, which would consider the plans’ merits and pass laws accordingly.
He said it was “legally questionable” whether the legislature could delegate broad regulatory power to the executive branch via the climate council to be used to regulate the actions of residents.
“That’s our job,” he said. “It’s our responsibility.”
House Majority Leader Rep. Christopher Blazejewski (D) argued that the amendment was “untethered from reality.”
“We pass laws, and then the administration promulgates regulations through a public process called the Administrative Procedures Act,” he said. “It happens all the time.”
Rep. Patricia Morgan (R) introduced an amendment to remove the right-to-sue clause.
Giving anyone in the state the ability to sue would be “financially crushing,” Morgan said. “This is the mechanism by which, even if it’s not possible to meet the goals of the plan, the people who live in the state will pay.”
Deputy Majority Leader Jason Knight (D) argued against the amendment, saying that the right of enforcement only applies to whether the state fulfilled the duties required under the law. Nobody, he said, can sue for damages or because they wish the council’s plans were different.
Equity Concerns
The bill includes directives that the climate council’s plan will ensure an equitable transition to compliance for environmental justice communities.
Rep. Anastasia Williams (D) said she could not support the language of the bill and would not vote in favor of passage. She said that language directing the council to “identify” support for workers and “provide” for the development of programs in a manner that addresses inequity is no longer appropriate.
“For years … this body has been making plans and studies to ‘identify,’” Williams said. “We don’t need to do that anymore.”
She said she was standing up to represent the people who have been oppressed in the state.
“If you expect me to vote on this bill the way it’s written without making sure that it’s mandated that we will be part of the plan, not just be identified in the plan, I’m not,” she said.
There were no amendments that sought to change the equity language of the bill.
Nuclear energy is not only one component but “key” to the world’s carbon-free future, Nuclear Energy Institute CEO Maria Korsnick said in her annual State of the Industry address Tuesday.
The pitch, from the head of the nuclear industry’s main advocacy group, was the strongest statement yet in Korsnick’s yearly speeches that nuclear should play a major role in a net-zero landscape.
This year, she sold it as the best-qualified leader.
NEI CEO Maria Korsnick | NEI
“Optimism can be in short supply these days,” Korsnick said. “When we talk about the future, we mostly hear about threats,” including the “threat of a destroyed environment if we can’t reduce carbon emissions. Those threats are real. But I’m here to tell you that they are also opportunities — and that nuclear energy is the key to seizing them. From good-paying jobs and carbon-free electricity to U.S. global leadership, nuclear energy is the source that can make it all work.”
Korsnick said that when she spoke last year, there was widespread consensus that the world needs to decarbonize while meeting growing demand, and that to avoid the worst effects of climate change, carbon emissions from generation would need to be nearly zero by 2050.
“Since then, utilities, state governments and the new Biden administration have made concrete commitments for getting there even sooner, by 2035,” she said. “Fortunately, as we strive to meet those commitments, the U.S. leads the world in producing a proven, carbon-free, scalable source of electricity that enjoys bipartisan support. That source is nuclear energy. And there’s no more serious debate: It’s the key to making our climate commitments work.”
Nuclear plants produce more than half of the carbon-free electricity in the U.S., the most of any resource category, Korsnick said. With 55 plants producing 800 million MWh, nuclear is now the second-largest source of electricity in the U.S., having surpassed coal for the first time ever last year, she said. Nuclear plants have generally operated at more than 90% of capacity, with greater reliability than intermittent renewables, she said.
Advocates of wind and solar often speak of the job-creation benefits of the switch to carbon-free energy. Korsnick said nuclear can also be a source of job creation, often for well paid union members. She cited the Vogtle 3 reactor in Georgia, scheduled to go online later this year, as a good example.
“At its height, the project employed 8,000 people, from electricians to engineers,” she said. “Undeterred by a global pandemic, they’re getting the job done. When completed, the two new Vogtle reactors will produce more carbon-free electricity than all 7,200 wind turbines in the state of California.”
The next generation of nuclear will see new technologies such as small modular reactors and microreactors that can adjust their output, unlike the large baseline reactors of today, and can more easily work in combination with wind and solar, she said.
In addition, she said, a new breed of reactors “can bring clean electricity to hard-to-reach places where traditional reactors just don’t make sense. These communities generally rely on expensive, carbon-emitting sources.”
“From Alaska and Puerto Rico to parts of the developing world, nuclear can be a gamechanger,” Korsnick said.
She noted that NuScale Power received approval from the Nuclear Regulatory Commission last year for its small reactor design. Proponents hope the design will help revive the nation’s nuclear industry, while others remain skeptical given the declining costs of renewables and battery storage. (See NRC OKs NuScale’s Small Modular Reactor Design.)
In Canada, she said, Ontario Power Generation has partnered with Ultra Safe Nuclear to build a micro modular reactor. And the U.S. Department of Energy’s Advanced Reactor Demonstration Program will help small, advanced reactors get built, she said.
“These are exciting steps towards getting the next generation of nuclear online before the end of the decade,” Korsnick said.
New Jersey’s Board of Public Utilities on Wednesday backed a plan to create a wind energy manufacturing and transportation hub in South Jersey, signing a collaboration agreement with the state’s economic development agency and allocating $13.2 million to the New Jersey Wind Port project.
As they voted to back the memorandum of understanding with the New Jersey Economic Development Authority, BPU commissioners described the 200-acre project as a game-changing initiative that could help New Jersey become the center of the offshore wind energy sector on the mid-Atlantic Coast.
Gov. Phil Murphy announced plans for the New Jersey Wind Port, which is expected to cost $300 million to $400 million, in June, saying it would be the focus of essential staging, assembly, and manufacturing activities related to offshore wind projects on the East Coast. (See NJ Releases Draft Offshore Wind Plan.) Located in Lower Alloways Creek in Salem County, the project’s first phase is expected to begin this year with the development of a 30-acre marshaling site and a 25-acre manufacturing facility. A second phase would add a 150-acre site for marshaling and manufacturing of turbine components.
Wind power is a key element in Murphy’s plan for the state to achieve 100% clean energy by 2050. The governor wants the state to generate 7,500 MW of OSW by 2035.
The 200+ acre New Jersey Wind Port is expected to be developed over the next five years. | N.J. Economic Development Authority
The wind project “really positions New Jersey to be the supply chain for the entire” wind energy industry, said BPU president Joseph Fiordaliso, speaking before the five-member board, which unanimously backed the agreement with the NJEDA. “The funding really positions New Jersey as the hub for offshore wind.”
Echoing Fiordaliso, BPU Commissioner Bob Gordon said, “New Jersey has the opportunity to become the nexus for the entire offshore wind industry along the Atlantic [Coast], from Virginia to New York. And this wind port will be a critical element of that, and certainly a catalyst for a whole new industry.”
Second Wind Project Soon
The funds approved by the BPU as part of the agreement with the NJEDA will pay for early design work, site preparation and establishing a reliable power connection to the wind port. The money will come from the state’s “societal benefits charge,” a fee included in consumers’ electric bills to pay for programs that provide societal benefits such as low-income programs, nuclear decommissioning and funding for energy efficiency.
Murphy’s $44.8 billion budget, released in February, included $200 million for the New Jersey Wind Port project. And the NJEDA in March approved an increase of $354,854 in the engineering contract held by Moffatt & Nichol, to $9.5 million, to create an electricity substation and distribution system. The agency has spent $22.1 million on the wind port so far.
The biggest push to date in the state’s effort to jump start the wind sector was the selection of Ørsted’s to build a 1,100-MW Ocean Wind project, which gained BPU approval in June 2019. (See Orsted Wins Record Offshore Wind Bid in NJ.) The project is expected to provide clean electricity for 500,000 homes. The selection was the result of the state’s first OSW power solicitation, and the award was the largest wind project award in the U.S.
Artist’s conception of the New Jersey Wind Port in Salem County, which state officials hope will support up to 1,500 manufacturing, assembly and operations jobs. | N.J. Economic Development Authority
The BPU is now considering applications for a second offshore wind solicitation, with a goal of generating 1,200 to 2,400 MW. (See New Jersey BPU Oks 2nd Offshore Wind Solicitation.)The winning project is expected to be announced in the Spring, and a third solicitation is expected, for 1,200 MW, next year.
Wind power is not universally embraced, however, with some residents along the Jersey Shore opposing the construction of wind turbines out of concern that the site may deter visitors and damage the shore’s tourism and fishing industries.
PSEG-Ørsted Partnership
In a related development, the BPU on Wednesday also approved Public Service Enterprise Group subsidiary PSEG Renewable Generation’s acquisition of a 25% interest in Ørsted’s Ocean Wind project.
PSEG Renewable’s petition to the board said that after the acquisition, the company would lead the development, permitting and construction of the onshore portion of the project. The company will also be responsible for scheduling and dispatch of the project’s energy output once it starts operating, according to the BPU.
BPU staff who reviewed the petition and recommended that the board support it said PSEG would bring significant experience and knowledge of New Jersey’s energy infrastructure to the project, which would help mitigate schedule and cost risks for ratepayers. Staff also told the board that PSEG would increase the project’s access to energy marketing and hedging, strategies that are important in optimizing revenues credited back to ratepayers.
Speaking during PSEG’s 2020 fourth-quarter earnings call in February, CEO Ralph Izzo said the company was taking a cautious approach to offshore development. (See PSEG Presses for Higher Nuke Subsidies.)
“The commercial risk is completely mitigated by the [power purchase agreement with New Jersey]. And the operational risk is mitigated by making sure you partner with a world-class partner. And we think we have that in Ørsted,” he said.
PJM’s minimum offer price rule (MOPR) is living on borrowed time if the comments at FERC’s technical conference on capacity markets Tuesday are any guide (AD21-10).
FERC Chair Richard Glick and PJM CEO Manu Asthana both said the MOPR is not “sustainable” because it is frustrating state decarbonization efforts.
“We’re causing consumers to spend billions of dollars extra in the name of trying to address price suppression [by state-subsidized resources]. … We need to figure out a better way, in large part because the future and the benefits of the RTOs are really at stake … in the Eastern states,” Glick said, noting that some states within PJM, ISO-NE and NYISO — the only regions with mandatory capacity markets — are considering withdrawing from the markets.
Robert Rosenthal, counsel to the New York Public Service Commission, said the MOPR causes higher capacity prices, provides incentives for uneconomic resources to remain online and violates the states’ role under the Federal Power Act
Clockwise from top left: FERC Chair Richard Glick; PJM CEO Manu Asthana; ISO-NE CEO Gordon van Welie; and NYISO CEO Richard Dewey | FERC
“We believe there’s a need for different legal framework based on cooperative federalism and that FERC can get there by revising some first principles,” he said.
Rosenthal said the commission should “revisit the purpose of the Federal Power Act, which was enacted to address a narrow jurisdictional gap resulting from a 1927 Supreme Court decision. To address this gap, Congress enacted the FPA in 1935 for a specific purpose: to provide FERC’s predecessor the ability to regulate the interstate wholesale sales and rates of electric energy — not capacity.”
Robert Rosenthal, NYPSC | FERC
Democratic Commissioner Allison Clements appears likely to provide a second vote for overturning MOPR in PJM, while Republican James Danly appears to be adamantly against doing so.
That means Glick would need to win support from either Republican Commissioner Mark Christie, who joined the commission in January, or Commissioner Neil Chatterjee, who had pushed the controversial expansion of the MOPR in PJM when he was chair in December 2019. (See FERC Narrows NYISO Mitigation Exemptions.)
Chatterjee promised that he entered the hearing Tuesday with an open mind, saying “I’m not wedded to the policies of the past.”
But he insisted competition should remain central to any future rules. “We shouldn’t overcorrect here,” he said. “We can’t lose sight of how successful our organized markets have been, not only in producing substantial cost savings for consumers but also … for our energy future.”
FERC Commissioner Allison Clements | FERC
Although Christie did not opine on the MOPR, he indicated he would support changes that could make the capacity markets voluntary backstops instead of mandatory.
“After 15 years of this experiment … we now have to ask … does the reality of politics and rent-seeking [for subsidies] in a multistate RTO … simply make it impossible for these administrative constructs to consistently deliver on the economic goal of least-cost power and … accomplishing individual state policies?” Christie said. “If the reality is, they cannot … is the most realistic path now for states to reclaim their authority and reclaim their responsibility … for resource adequacy and chart their own course to achieve the resource mix they want?”
Danly said he was skeptical of suggestions that enhanced scarcity pricing or new ancillary services could provide the “missing money” to cover the revenue needs of all resources needed to serve loads.
“I hope that I’m wrong. But if I’m right, that means that we have to look to the cap markets to ensure that we get the proper revenues to provide the proper compensation to keep the required dispatchable resources in the market.”
Glick said he wants the commission to move quickly on the MOPR, even if other capacity market changes take longer to achieve. He indicated he will seek to replace or eliminate the PJM MOPR in time for the 2023/24 Base Residual Auction in December.
Glick also said the commission would act unilaterally if necessary. “I think we should, to the extent we can, allow and enable the RTOs themselves and the stakeholders to come up with their own proposals [for] an approach that’s different than the current MOPR rules around the country,” Glick said. “To the extent they don’t come up with something, I think we have an obligation under the Federal Power Act to act where rates and terms in these markets are unjust and unreasonable. In my opinion, I’ve said several times before, they are certainly in PJM, and so, if for whatever reason PJM and the stakeholders aren’t able to act, I think … we need to do it for them.”
NYISO: Confident in Stakeholder Process
NYISO CEO Richard Dewey | FERC
NYISO CEO Richard Dewey expressed confidence that such intervention would not be required in his ISO, citing its Grid in Transition program to identify changes to energy, ancillary services and capacity market rules to accommodate the changing resource mix. He also said changes could result from the ISO’s comprehensive mitigation review program to modify the BSM test to allow the entry of state-sponsored resources while still maintaining the price signal for dispatchable resources needed for reliability.
“I’m confident that New York’s stakeholder process can generate effective solutions,” Dewey said “I look forward to bringing some of those solutions to the commission in the coming months.”
Few Defenders
Almost none of the 26 witnesses spoke in favor of the MOPR.
“MOPR is quickly becoming an orphan without an advocate,” said Maryland Public Service Commission Chair Jason Stanek.
Abe Silverman, general counsel for the New Jersey Board of Public Utilities, said the MOPR will cost New Jersey ratepayers $300 million in excess costs in 2025, with excess costs of $2 billion for all of PJM.
“I think the commission has the legal authority and the evidentiary record to tell PJM tomorrow to simply return to the tariff language that existed” before FERC’s December 2019 ruling.
Ohio Public Utilities Commissioner Daniel Conway said FERC’s claim that the expanded MOPR was needed because subsidized renewables were suppressing capacity prices was “too theoretical.”
Impact of Removing MOPR
The second panel of the conference focused on how soon the MOPR could be eliminated, and how the timing of its elimination could affect energy and capacity prices.
There was a general agreement that getting rid of the rule would not result in severe price swings or threaten reliability in the short term.
Glick asked how quickly FERC would need to act for the RTO to proceed with its December auction with the elimination of MOPR. September, answered Stu Bresler, PJM senior vice president of market services. He added that “between now and when that process would play out, it would be important for us to get as much stakeholder interaction as we possibly could, because … really robust stakeholder interaction is important to arriving at a durable, sustainable solution.”
Joe Bowring, president of PJM’s Independent Market Monitor, Monitoring Analytics, agreed with the general time frame, but he advised that there is a lot of preparation in the leadup to the auction. “So even if the order were not signed until [September], it would be excellent to have a clear signal to the market that the rules are changing, because there’s a lot of detailed work that people have to do before that,” he said.
PJM Monitor Joe Bowring | FERC
“I fully expect the existing MOPR to be eliminated,” Bowring said, reiterating his position that removing it will have little immediate impact on the ability of most renewables to clear the market. Based on his unit-specific MOPR reviews, he said, “we see a lot of renewable resources that are extremely competitive.”
Because of its high price, offshore wind would be unlikely to clear with or without the MOPR he said.
Marji Philips, vice president of wholesale market policy at LS Power, cautioned that “you can’t just rip the MOPR off without having a backup plan. … Our view of the whole capacity construct needs to be reconsidered in light of the evolving grid. So what we’d like to see is a short-term fix that addresses this,” and then “maybe a yearlong process that really looks at how we define resource adequacy.”
Danly said he was concerned that without the MOPR in place, capacity prices would crash, leading “traditional” resources needed for reliability to shutter. He asked how those resources could be compensated to ensure reliability with the rule in place.
Multiple panelists had talked about the importance of valuing effective load-carrying capability, which they said would ensure inefficient thermal resources retire, while more efficient ones are maintained until they are no longer needed for reliability. Bresler signaled PJM’s support for this approach in response to Danly’s question.
But panelists also disputed the premise of Danly’s question. They said that, in at least the short term, energy market revenues would be high enough to prevent mass retirement of resources. PJM really has until the glut of offshore wind resources being constructed comes online to find the missing money for the capacity market, they said. In that time frame, it was more important to get things right than rush a replacement construct.
“We haven’t been sitting around for the past 15 years,” said Ed Tatum, vice president of transmission at American Municipal Power. “There have been many changes to our energy rules. We’ve got fast-start pricing; we’ve got this [operating reserve demand curve].”
Consultant Roy Shanker was about the only witness to mount a defense of MOPR, and even he acknowledged it is a “crude tool.”
But he said the capacity market would not remain competitive without it, expressing skepticism over the idea of a “targeted” MOPR that only applied to buyer-side market power.
Shanker said it’s not sustainable to maintain a “supply-side paradigm” with one segment of the market receiving no subsidies and another segment offering prices lowered by subsidies.
There is currently no “midpoint” between the full MOPR and cost-of-service regulation, Shanker said.
“In the middle, you’re going to be stuck with somebody making subjective judgments and expressing their favoritism, picking winners and losers in one way or another,” Shanker said.
Such a change would make the market “untenable,” Shanker said. “I can’t say two years or 10 years, but I know that’s where we’re going.”
Elise Caplan, a consultant for the Sustainable FERC project, called for “extreme caution” in developing a targeted MOPR. Referring to buyer-side market power, she said, “I don’t think we know what that looks like.”
Ohio’s Conway said that whatever changes are made must recognize that “reliability is not subservient to decarbonization.”
“If we improperly value resources and, as a result, we end up having reliability problems or cost shifting, there’s going to be hell to pay,” Conway said. “And you can just look to Texas to see what’s happened when not enough attention is paid to that primary point.”
Other Capacity Market Issues
Witnesses said the shortcomings of the capacity markets don’t end with the MOPR.
PJM’s Asthana cited a need to strengthen qualification and performance requirements for capacity resources and to re-evaluate the appropriate level of capacity procurement.
Bowring spoke about the importance of defining key elements of the capacity market for it to work correctly and to function while accommodating state authority over the resource generation mix.
The Monitor called for addressing market power and tighter definitions of reliability. “If we’re going to have the right mix and a reliable mix of renewable resources and traditional thermal resources, it’s essential we define reliability and the reliability contribution of each resource correctly, otherwise we will end up building an unreliable system,” he said.
Stefanie Brand, director of the New Jersey Division of Rate Counsel, said the states view capacity markets as a “backstop” and not the only way to ensure adequacy in the region. States are making policy decisions on what resources to rely on, Brand said, resulting in a capacity market that doesn’t determine entry and exit of generation units as they did in the past, she said.
D.C. Public Service Commission Chairman Willie Phillips said capacity markets can be useful, but he’s concerned with the cost to customers. “If we cannot do this affordably, we will not do it successfully,” Phillips said.
New Jersey’s Silverman said the markets won’t be just and reasonable until they internalize the costs of carbon emissions.
ISO-NE: Markets Must Evolve
ISO-NE CEO Gordon van Welie said in his opening remarks that he believes that while capacity markets “ensure both the clean energy transition and reliability,” he also acknowledges “they must evolve” to address concerns about state-sponsored resources that do not clear the market because of the MOPR.
ISO-NE CEO Gordon van Welie | FERC
Eliminating the MOPR, however, creates risk for investors in unsponsored resources because increasing numbers of renewable resources will tend to reduce energy prices, and capacity prices will fall as well without the rule.
“Accordingly, we believe it is important to identify market rule changes that will eliminate the MOPR and thereby give capacity created to sponsored resources, while appropriately compensating merchant resource investment for that higher level of risk,” van Welie said.
New Hampshire Public Utility Commissioner Kathryn Bailey said she fears that eliminating MOPR would disrupt momentum toward her state’s preferred solution, such as a Forward Clean Energy Market.
“So rather than just throw out the MOPR, I think we need to focus on creating market reform that values carbon reduction, while at the same time, some market reform to compensate for the reliability that we need to shore up from the intermittent resources that we expect the system to add in the future,” Bailey said.
Katie Dykes, commissioner of the Connecticut Department of Energy and Environmental Protection, said her state is frustrated that New England’s capacity market is thwarting state policies.
Conn. DEEP Commissioner Katie Dykes | FERC
“Connecticut is not contracting for clean energy resources to manipulate the market; we’re doing so because our state laws and policies require us to reduce emissions,” Dykes said.
Connecticut is not receiving credit for contracted resources within the capacity market, she said. The Competitive Auctions with Sponsored Policy Resources mechanism has cleared only 54 MW of the “hundreds” that Connecticut and other New England states have contracted in recent years.
Dykes said capacity markets have the potential to shield consumers from volatile prices, and they have a role to play in the evolving electric sector. Still, they are also administrative constructs that require heightened scrutiny for the “assumptions and preferences that underlie them, and special consideration for the views and policies of the states these markets are intended to serve.”
The Public Utilities Commission of Nevada on Monday approved NV Energy’s request to build a 525-kV transmission line from Las Vegas to the northern part of the state.
The project, Greenlink West, is the first phase of the utility’s $2.5 billion Greenlink Nevada initiative. In addition to a 350-mile, 525-kV line from Las Vegas to Yerington, Greenlink West includes two 345-kV lines from Yerington into the Reno/Sparks area. NV Energy estimates that Greenlink West will be completed by December 2026.
Planning is also underway for Greenlink North, a 525-kV line that will span about 235 miles from Yerington to Robinson Summit near Ely. PUCN approved the conceptual design, permitting and land acquisition for Greenlink North; NV Energy will return for approval of construction.
The Greenlink projects would complement NV Energy’s existing One Nevada line, which runs through eastern Nevada from Las Vegas to Robinson Summit. The three lines would join together to form a triangular transmission network.
Economy and Clean Energy
NV Energy said Greenlink Nevada would have many benefits, such as increasing electric reliability, creating jobs and helping the state’s economy recover from the COVID-19 pandemic, the company said.
Nevada regulators approved construction of the Greenlink West line, while greenlighting design and permitting activities for the northern segment. | NV Energy
Greenlink Nevada would also help the state meet its clean energy goals, NV Energy said. At least half of electricity sold to retail customers in the state must be from renewable resources by 2030.
“Greenlink Nevada will transform Nevada’s clean energy landscape by tapping into resource-rich renewable energy zones throughout western and northern Nevada, helping accelerate the responsible development of clean energy on public lands,” NV Energy said in a news release on Monday.
PUCN agreed that enhanced transmission is needed.
“These [renewable energy] goals cannot be achieved without opening up the state such that renewable energy resources can be accessed from all areas of the state — and that can only be accomplished by expanding the existing transmission system,” the commission said in its order approving construction of Greenlink West.
“Additionally, the economic benefits which are desired from decarbonizing the state’s electrical energy needs are not going to materialize solely by importing large amounts of renewable energy from out of state.”
NV Energy said in its application to the PUCN that the West is the only U.S. region without a regional transmission organization. Utilities and state officials are starting to realize that an RTO might be necessary in order to meet the requirements of renewable portfolio standards, the company said.
“Whether the companies eventually join an RTO or not has yet to be determined,” NV Energy said. “But the Greenlink Nevada plan creates the type of electrical network required to make Nevada a major hub in the western market.”
Project Phases
NV Energy had initially planned to build the Greenlink North transmission line first, with Greenlink West to follow. But constructing Greenlink West first would bring benefits to the state more quickly, the company determined.
In particular, Greenlink West would eliminate the single contingency of the One Nevada Line and result in a larger immediate increase in import capacity than Greenlink North, the company said in its application to the PUCN.
The project would also provide access to more solar resources in Nevada and boost economic investment into the state sooner, NV Energy said.
Although NV Energy sought a critical facility designation for Greenlink West, the commission declined to grant it. The designation would have allowed NV Energy to incorporate construction work in progress into its rates.
Unlocking Benefits
Nevada Gov. Steve Sisolak tweeted his approval of the commission’s decision, saying the line “will unlock for all Nevadans the sustainability and economic benefits that come from providing essential transmission access to our State’s vast renewable energy resources and exemplifies the potential of my vision for NV’s new energy economy.”
Environmental group Western Resource Advocates (WRA), a vocal advocate for creating an RTO in the West, also welcomed the decision.
“The transmission buildout will provide economic development and ratepayer benefits for Nevada and beyond, by providing the infrastructure to connect renewable energy resources for import and export across the West and opening up economic opportunities for Interior West states to market their renewable resources to West Coast states while improving efficient use of energy resources across the region,” Cameron Dyer, WRA staff attorney in Nevada, said in a statement.
Attorneys for Avangrid told a Texas administrative law judge on March 19 that all parties in the case had reached a unanimous agreement in principle and that a stipulation with revised regulatory commitments was being circulated (51547).
The Texas Public Utility Commission on Monday cancelled a hearing on the acquisition scheduled for later this week. The parties have until the close of business on March 30 to file documents related to the agreement.
Avangrid’s acquisition of PNM Resources would give the combined company utilities in six states and renewable energy operations in 24 states. | Iberdrola
The Office of Public Utility Counsel, Texas Industrial Energy Consumers, Cities Served by Texas-New Mexico Power, Alliance for Retail Markets, Texas Energy Association for Marketers and Walmart are among the organizations and entities that have intervened in the proceeding.
Avangrid announced the acquisition in October. Its parent company, Spanish energy giant Iberdrola, says the merged company would have assets worth $40 billion and generate around $2.5 billion in earnings and a net profit of $850 million. (See Avangrid to Acquire PNM Resources for $4.3B.)
The deal must be approved by the New Mexico Public Regulation Commission, FERC, the Nuclear Regulatory Commission and the Federal Communications Commission. It has been cleared under the Hart-Scott-Rodino Act and the Committee on Foreign Investment in the United States.
PNM Resources shareholders approved the merger in February, with 93% favoring the acquisition.
New York officials on Monday held the first of three public hearings as they prepare the first annual report of statewide greenhouse gas emissions required by the state’s Climate Leadership and Community Protection Act (CLCPA).
The state Department of Environmental Conservation (DEC) is preparing the report to be issued this year and is seeking public input on its format and the methodology used to determine annual statewide GHG emission levels.
“There is no deadline at all for public input, but if you really want to inform the annual report you should get it in by May,” Suzanne Hagell, climate change policy analyst at the DEC’s Office of Climate Change, said. A second hearing on Friday will cover oil and gas emissions accounting, and the third hearing on Monday will cover net emissions accounting.
The CLCPA mandates that GHG emissions be reduced to 40% of 1990 levels by 2030 and 85% by 2050. It directs the DEC to measure emissions on a common scale using the carbon dioxide equivalence metric and the 20-year global warming potential of each gas, as derived from the U.N.’s Intergovernmental Panel on Climate Change.
The DEC in October completed its public hearing process on the (Part 496) emissions limits and in December finalized the regulations to reduce GHG emissions, the first regulatory requirement of the climate law. (See New York Holds Final CLCPA Emissions Hearings.)
EPA Model
The department is basing its report on the EPA draft Inventory of U.S. Greenhouse Gas Emissions and Sinks from 1990-2019, the final version of which will be published in April.
Inventorying manufacturing emissions would depend on their type, which may be confusing for industries with emissions that go under different categories, Hagell said. For example, CO2 emitted from a foundry would fall under the category of “industrial process and product use,” while emissions associated with combustion of fuel to drive or energize the process would go under “energy.” “I’d love input on how the EPA takes these emissions and categorizes them in different ways to present them for a different purpose, like for economic sectors as opposed to emissions sectors,” she said. “If there is something that is particularly helpful for New York state, a different way of organizing, we can always organize in multiple ways and provide figures in this report that would be helpful for the purpose of policy.”
Officials can evaluate whether to include the social cost of carbon in the GHG emissions report, though they are not aware of any other jurisdiction doing so, she said. Also, emissions data will not be reported at the county level, as such data is not always reported at a granular level and a hydrofluorocarbon inventory is not yet available.
The state is working to cut GHG emissions (including methane and hydrofluorocarbons) from buildings, food waste and other sources outside the power and transportation sectors, and data in the report will reflect that goal. (See NY Proposes Food Scrap Regs to Cut Waste, Emissions.)
In addition, the state plans to collect data on non-GHG emissions, such as particulate matter (PM2.5).
“We do calculate emissions from heating fuel use as well as from a host of other categories, and several pollutants from each,” Ona Papageorgiou, DEC chief of mobile source and climate change planning, said. “There are criteria pollutants as well as some others that may be included, and PM2.5 is part of that.”
Feedback may be provided at any time and can be mailed to DEC Office of Climate Change, 625 Broadway, Albany, NY 12233-1550 or emailed to [email protected] Include “Annual Report” in the subject line of the email.
New York has launched a study to identify how the state could tap wind resources on Lake Ontario and Lake Erie in meeting its climate goals.
The New York State Environmental and Research Development Authority assembled a team to complete a Great Lakes wind power feasibility study for release early next year, Gregory Lampman, environmental research program manager, said Friday.
A variety of factors concerning citing on the two lakes suggest the “study needs to be very dynamic,” Lampman said during a public outreach webinar.
“Certain site conditions will allow for fixed foundations, while other site conditions may require floating foundations, or they may be on different development timelines, and as a result the timing in which they would come into play will be different,” he said.
The New York State Public Service Commission directed NYSERDA in an October order to conduct the study with a $1 million budget.
NYSERDA retained the National Renewable Energy Laboratory to coordinate the report in conjunction with Pterra, Brattle Group and Advisian Worley Group.
Viewshed analyses in NYSERDA’s Great Lakes wind feasibility study will show what turbines might look like on Lake Ontario from popular destinations like Rochester’s Charlotte Pier. | Magnolia677, CC BY-SA 3.0, via Wikimedia Commons
Pterra and Brattle will study grid infrastructure components of the study, while Advisian will cover environmental concerns and regulatory processes, Lampman said.
Friday’s webinar was the first in a series of outreach events NYSERDA has planned for this year. Dates for two webinars will be announced for the second and third quarters to provide an update on the study’s progress. Another webinar will be held in the fourth quarter when a draft of the study is completed.
Study Scope
NREL’s experience with floating wind turbines will inform the study’s review of the technologies that could be deployed in the Great Lakes.
The NREL team will look at the infrastructure and physical constraints associated with technology deployment and assess the timeline for new product developments, Lampman said. In addition, NREL will identify what site conditions, such as icing and wave action, will affect project development.
Technology selections and location of deployments play into costs and generation opportunities, Lampman said, adding that NREL will define how costs fit into any potential project portfolio.
The study will also help the state understand what it can do to advance the development of offshore technologies and “capture the economic development opportunities,” he said.
Pterra and the Brattle Group will bring their regional grid and interconnection expertise to the study.
Their primary focus will be on the interconnection opportunities associated with existing infrastructure to ensure that projects can deliver energy cost-effectively, Lampman said.
Advisian will be addressing a diverse set of factors, such as permitting and interconnection applications.
While permitting processes exist for offshore wind, Lampman said Advisian would address, for example, interregional issues within those processes and concerns about how to gain site control in the lakes.
The group will also address avian risks and work to present pathways to development that consider the needs of other waterway constituents, such as the shipping, fishing and recreational communities.
Further analysis will be provided on historical and cultural areas and public health benefits of the projects themselves, as well as visual impacts from the wind turbines.
Lampman said the scope of the project does not cover collecting new site condition information.
The study, he said, will be based on existing data that will be analyzed “in new ways to inform thinking.”
